Dorothy Thompson

Enid Morning News/August 13, 1937

The announcement some three weeks ago that the United States government had made a loan of $50,000,000 to Brazil, allegedly for purposes of exchange stabilization, was mystifying to Wall street economists It would have been less mystifying if they had associated it with news which quickly followed—that Brazil had canceled a deal whereby Germany was to purchase from her 100,000 bags of coffee, to be paid for in blocked marks and to be used not for German consumers but for resale to Central European countries. Now on top of these items comes another more extraordinary. The State Department has asked Congress quickly to authorize the lease to Brazil of six American destroyers, for the cost of the full marine insurance.

In recommending this measure, which, as far as I know, is unprecedented, Mr. Hull merely states that “Brazil is concerned with recent tendencies in world politics and is apprehensive of the desires of some nations for raw materials . . . and is seeking to build a modest navy of her own.” He points out that “Brazil is a vast territory with a relatively small population and that “if the governments of other American countries find it necessary to turn to foreign governments for assistance . . . it is preferable that such assistance should be extended by the United States.”

These items all add up to something, and what they add up to is that the State Department and the Navy are both greatly concerned about Germany’s activities in Brazil. They are first of all concerned with Germany’s trade policy, and secondly they are not sure that German activity will be limited to trying to capture the Brazilian market. In considering the possibilities of German colonial expansion, most Americans have always thought merely of the return of the African colonies. But it would appear that Brazil, and perhaps some other South American countries, fear that Germany may look elsewhere than to Africa. And the Monroe Doctrine, far from being dead, has been built out into a pan-American system of collective security.

The German trade policy is in direct opposition to the reciprocal trade agreements of Cordell Hill. Under Hull’s policy the signatories to trade agreements contract to give each other the benefit of any trade concessions which they may give to other countries. The policy does not demand that any one country buy as much from the United States as it sells to us or vice versa. Hull’s program is to open up all the channels of world trade in the widest possibly way based upon fair and non-discriminatory treatment.

The German policy is, first, never to buy more from a country than that country buys from Germany. Second, wherever trade balances run against her, payment is made through blocked marks held in Germany for the account of the buyer and dischargeable only through purchase of German goods. Third, heavily to subsidize exports out of government bounties so that they can undersell competitors.

Now, of course, these blocked marks really amount to an enforced loan from Germany’s customers. At the present moment Brazil has got blocked in Germany marks amounting to 35,000,000 American dollars. Under this system she has got to take German goods whether she wants them or not; German automobiles, although she may prefer American—in order to get her money. But Germany takes Brazilian goods and if she doesn’t use them at home sells them in the world market for gold or other goods, at arbitrary prices.

Actually, what Germany has been doing has been to disorganize the Brazilian market in the small countries of central Europe. Germany buys Brazilian coffee for goods. Then she sells this coffee for cash or other goods below the Brazilian price. So that when Brazil takes her coffee into her old markets she finds that Germany has been there with it already. It’s a colossal dumping campaign in which Germany is not only dumping her own goods but other peoples—against those other peoples’ interests, using her customers’ goods to destroy her customers’ trade, and to disorganize anything like a free market.

This game has been practiced all over the world, from China to Canada. The result is tht countries who have trade agreements with the United States, and who trade with Germany, discriminate against the United States in a manner that violates both the letter and spirit of their trade agreements with us.

From the American viewpoint the Brazilian case is particularly flagrant. For years the United States was the first supplier to Brazil, followed by England and Germany. England is now in third place and Germany is close to pushing the United States from first place. Yet the United States annually buys from Brazil about twice as much as we sell her. We are her largest customer for her most important export. We therefore have a club which we could use against Brazil, but Mr. Hull refuses to wield it, not only because he is interested in improving relations with out near neighbors but because if we wield clubs against others, others will wield them against us.

We are, therefore, seeing in this Brazilian affair a real struggle between barter principles of Dr. Schacht, made possible by rigid political control and the liberal trade policies of Mr. Hull. And in Brazil it is apparently complicated by the fear of the Brazilians that German economic penetration, by means of Dr Schacht’s, bludgeon may be the prelude to penetration of a different and even more dangerous sort. Brazil is a sparsely populated country, filled with natural resources sorely needed by Germans and a large and thriving German colony is there already. The German government has just appointed as ambassador to Brazil, Herr Ritter, one of the most important men in the German foreign office. For years he has been in charge of the department of economics.

The offer to lease destroyers cannot, therefore, be interpreted merely as a friendly move toward a neighboring American country. It is apparently a warning to the Germans. It is also not without significance that 37 governments—a list in which Italy, Germany and Japan are conspicuous for their absence—have just signified their allegiance to four principles formulated last month by Mr. Hill, as the basis of an international policy. Those principles were: Treaties must be scrupulously regarded; obligations maintained; commercial barriers shattered, and armaments reduced.