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September 9 , 191m UNITED STATES AGRICULTURAL EXPORTS T0 GERMANY, 1910-1938 United States Agricultural Exports To Germany, 1910-1938 A Thesis Submitted in partial fulfillment of the requirement for the degree of Master of Arts Michigan State College by Curtis Worth White 1940 ACKNOWLEDGMENT The writer is grateful to Dr. Harald S. Patton for his helpful suggestions and criticisms in directing the preparation of this thesis. , ram/‘- ’.‘ 41 3.134201: J1 TABLE OI‘CONTENTS INTRODUCTION PART I Influences Affecting United States Agricultural Trade With Germany. CHIPTER I. Outline of United States-German Trade Relations, 1910-1938. Period Preceding the First‘world'War The Iar'Period, 1914-1918 Early'Postdiar Period, 1919-1923 .IReconstruction Period, 1924-1929 World Depression of 1930-1933 Trade with Germany under the Nazi Regime CHKPTER II. Place of United States in Germany's Agricultural Import Trade Prior to 1930. Nature of Germany's Agricultural Economy German Agricultural Tariff Policy Character and.Sources of German Agricultural Imports CHAPTER III. German Commercial and Agricultural Policy Since 1929. Germany's International Debtor Position and the Crisis of 1931 Emergency Import Controls in Republican Germany 17. page 10 11 12 15 15 22 26 83 Page Foreign Trade and Exchange Policies under the Nazi Regime 32 Germany's Drive for Agricultural Self~Sufficiency 37 Diversion of German Trade 89 Chronology of GermandUnited States Relations, 1914-1939 43 PART II Recent Changes in Principal United States Agricultural Exports to Germany 46 CHAPTER IV. General Course of United States Agricultural Exports to Germany Since 1929. 4? Exports to Germany by Economic Classes 4? Exports ofJSpecific Agricultural Commodities to Germany 55 CHAPTER V. Cotton and Tobacco. 60 Cotton 60 Tabasco 67 CHAPTER VI. Grains and Feedstuffs. 75 Introduction 75 Cheat and wheat Flour 82 37° ‘ 86 lead Grains 88 Corn 88 Harley 90 Oats 90 Other Feedstuffs 90 Va CHAPTER VII. Animal Products. Lard Edible Animal Fats and Oils, other than Lard Hbat Products CHAPTER‘VIII. Fruits. In the Twenties, 1926-1929 In the Early Thirties, 1930-1934 Since 1934 CHAPTER II. Summary and Outlook Summary The Late TIenties The Early Thirties, 1930-1933. The Late Thirties Outlook Selected Bibliography 710 Page 94 94 98 101 106 106 107 110 113 113 113 114 116 117 Table 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 16. 17. 18. 19. 20. TEBIIS Trade Between Germany and the United States. How Germany and the United States Have Ranked in Each Other's Trade in Certain Selected Years. German Imports of Certain Agricultural Products. Germany's External Trade, 1924-1939. Distribution of Germany's Foreign Trade. Proportion of United States Agricultural Exports Taken by Germany. Exports of Domestic merchandise from.United States to Germany by Economic Classes, 1928-1938. Percentage of United States Exports by Economic Classes Taken by Germany, 1928-1938. Domestic Exports of Principal Agricultural Products from.United States to Germany. German Agricultural Imports from United States. United States Exports of Uhmanufactured Cotton, 1926-1938. German Imports of Rat Cotton, by Countries, 1926-1938. German Production of Textile Raw materials. United States Exports of Unmanufactured Tobacco, 1926-1938. German Imports of Leaf Tobacco and Stems, by Countries, 1926-1938. United States Grain and Feed Exports to Germany, 1926-1938. German.Production of Grains and Feedstuffs, 1925-1938. German Net Imports of Grains and Feeds, 1925-1937. United States Exports of Edible Animal Fats and Oils, other than Lard, 1926-1938. United States Fruit Exports to Germany, 1926-1938. 711. P889 28 41 48 52 54 57 59 61 64 66 69 72 79 81 100 108 Figure 1. 2. 3. 4. 5. 6. 7. 10. 11. GRAPES Exports of Domestic merchandise from united States to Germany, 1928-1938. United States Exports of Unmanufactured Cotton, 1926-1938. United States Exports of Tobacco to Germany, 1926-1938. United States Exports of Grains and Preparations to Germany, 1926-1938. United States Exports of Fodders and Feeds to Germany, 1926-1938. United States Exports of Wheat, 1926-1938. United States Exports of Wheat Flour to Germany, 1926-1938. United States Exports of Cottonseed Cake and meal to Germany, 1926-1938. United States Exports of Lard, 1926-1938. United States Exports of meat Products to Germany, 1926-1938. United States Exports of Fruits and Nuts to Germany, 1926-1938. V1110 P883 51 62 70 76 78 85 93 96 103. 109 Introduction One of the most disturbing problems confronting the American economy during the past decade has been the continued shrinkage in this country's agricultural export trade, particularly with the continent of Europe. It has been prtmarily this situation which has compelled recourse to such measures of surplus control as have been attempted.under successive agri- cultural adjustment programs. In the period preceding the world tar of 1914-18»Germany ranked next to Great Britain as a national foreign market for American agricultural products. Germany continued to hold second place throughout the twenties, but by 1935 had dropped to fourth place behind the united Kingdom, Japan and France, in the order named. By 1938 Germany was in sixth place, ranking behind the United Kingdom, Canada, Japan, The Netherlands, and France, in the order named. From 1929 to 1938 agricultural exports from the United.3tates to Germany declined in value by approximately 85 per cent. mereover, whereas in 1929 almost 13 per cent of all agricultural exports from the United States went to German markets, in 1938 the Reich took only about 4 per cent of these experts. The study presented here attempts to analyze the extent and the nature of the decline in agricultural exports from.the United States to Germany, and to survey the underlying causes and influences responsible for this decline. In doing this, a picture is first presented of total German-United States trade relations from 1910 to the outbreak of the second world lar in 1939. Then attention is given to the place of the United.States in Germany's agricultural import trade prior to the world economic crisis of 1929-30. Next, the commercial and agricultural policies of the two countries during the last decade are examined to provide a general background for a more detailed study in Part II of recent changes in principal United States agricultural exports to Germany. In making this study, agricultural exports are first discussed as a whole, then by economic classes, and finally by groups and individual commodities. The situation is then summarized and the outlook is surveyed briefly. PART I MOE AFFECTING UNITE STATES AGRICULTURAL TRADE WITH GERMANY CHAPTERI OUTLINE OF UNITED STATE-GERMAN TRADE RELATIONS, 1910-1938 The reciprocal importance of trade between any pair of countries may be examined from four approaches, according as one considers the relative place which either country occupies in the total export and import trade of the other country. Changes in the position of Germany in the export and import trade of the United States, and of this country in the export and import trade of Germany since 1910, are indicated in Tables 1 and 2. Table 1 shows the proportion of each country's total exports and imports which were taken by or supplied by the other in dif- ferent periods or years within the last three decades. Table 2 shows changes in the national ranking of each country as a foreign customer for the experts, and as a foreign supplier of the imports of the other. The striking thing revealed by Table l is the extent to which trade between the United States and Germany has been curtailed since the late twenties. United States exports to Germany shrank in value from an average of 439 million dollars in the years 1924-29 to an average value of 107 million dollars in the years 1935-38. Germany took 9.1 per cent of this country's exports in the former period, but only 3.8 per cent in the latter. When Germany is considered as a source of imports into the United States during the same period, the situation is essentially the same. Table 1 also shows that Germany has been relatively more important as an outlet for United States goods than as a source of imports. It reveals further that the United States has had an active balance of trade with Germany throughout the period, but that this export excess has 4 A .000H .00 hHSh .00000000 00000050 pom opdpfipqu 008900 on» no anoqom 0HM003 “000000 009000 000 no 00905800 awaonom no 0A08800 0anuoz “000000 ceaanb on» no 000090004 Huoapufiaoam “000000000 ooeoaaoo “axoonueew eouoaaoo 0000000 unconsom eCQPQOE OPHH 38.1“.“ Adv ”NOH any .omannomo go even owwnobo 0Hnooh an nanHou can“ venuebqoo mannamnoaom .eodpufipopu nuaneo Ac. 0HOH A». 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00 000H x .3 0.0 0.00H 0.0 0.00 0.0 0.00 0.0 0.00H 000H 0.0 0.0HH 0.0 0.00 0.0 0.00 0.0 0.00H 000H 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00H 000H 0.0 H.00 0.0 0.00 0.0 0.00 0.0 0.00 000H 0.0 0.00H 0.0 0.00 0.0 0.00 H.0 0.00H 000H 0.HH 0.00H H.0 0.00 0.0 0.00 0.0 0.00H 000H 0.0H 0.00H 0.0 0.HOH 0.0 0.0HH 0.0 0.00H 000HI000H 0.0H 0.000 H.0 0.00H 0.0 0.00H H.0 H.000 000Hn000H H.0H H.000 0.0 H.0HH 0.0 0.H0 0.0 0.H00 000H|0HOH 0: E .oHneHaeba 0000 oz 0. 0.0H 00. 0.0 0H0H30H0H 0.0H L30.000 H.0 {0000.00H 0.0H 0.00H 0.0H H.000 0H0H00H0H nanomaH sopovm nouomxm 009000 hmwaueo Amuuomweom Hepoe oopaqp H0009 coquD nanomaH scum apnomum weaanonH. use» 00 Bonk no on Hence we upuoan Hence no anesuoo no vqoo hem nanogaH 0000 000 nanomnu coco Hem Heuonoo name hem on nanoqun omenohd hHuemw 03 .830 0330 a»; 880 nuance 9330 03. .08.“. .m .0 $333 go 232:! .330 0330 .2. can banshee c.2500 .030 .H .28 narrowed from an annual average of 130 million dollars in the period prior to the first World War to an average of 28 million dollars in the years 1935-38. In fact, in the first five months of 1939 the United States actually had a passive balance of trade with Germany of nearly 3 million dollars. Table II indicates the decline in ranking of each country in the trade of the other. The table shows that Germany has always been an important market for United States goods, but has drOpped from.third to fifth place since the twenties. As a supplier of United States imports the decline was much more severe, Genmany falling from second place in 1913 to twelfth in 1937. The United States has long been the chief source of German imports, but has become much less important as a market for German exports since the twenties, drapping from.third place in 1929 to eleventh in 1938. ' Period Preceding the First werld war In the years preceding the first Ibrld war the foreign commerce of both countries was gradually expanding, and the growth in trade between the two countries was a natural accompaniment of this total increase. Germany's foreign trade increased by 250 per cent between 1871 and 1914, while her pepulation increased only about 63 per cent.1 By 1914 German exports con- sisted mainly of manufactures. Pepulation and industrial growth had cut- stripped agricultural develOpment, and the German Empire was no longer even approximately self-sufficing. The great articles of import had come 1 Day, Clive, A History of Commerce, pp.408-9. .mopspm 00¢H0pce09 «o 0000000>02 000 00000000 0000000 ”Moophmmw oonmssoo 0000000 "0000000 H HH 0 0 000H 0 m «a 0 0000 0 0 0 0 000H H 0 0 0 000H H 0 0 0 00 0H H 0 0 0 00 0H H 0 0 0 000H H 0 0 0 0HOH nauoan . spuonnm epaogau 0000000 000» 0000.30 no 00009 H309 0H .0 .0 no 3000 000.09 00.3.3.0. .0 .D 00 0000.30 no M000 0.30% 00900.30 003.30 00 000.8. «.00000 eoem :0 coaqam .>am ampspm 0.0000 one an» huuauoc :00 .0! 000.0 to be foodstuffs and raw materials, and only about one-fifth of total imports consisted of manufactures. 0n the other hand, in 1913 iron and steel, machinery, chemicals, dyes and cotton manufactures constituted over one-third, in value, of all German exports.l In regard to the United States, in 1900 crude materials and all food- stuffs constituted about 65 per cent of United States exports and.manufacturesz about 35 per cent. By 1913 the two groups were about evenly divided, the corresponding figures being 51 and 49 per cent. ihile the changing composi-_ tion of the exports of both countries reflected rapid pregress in industrial- ization, their trade with one another consisted mainly in the exchange of American raw materials and foodstuffs for German manufactures. In the period 1910-14 United States exports to Germany averaged 304 nullion dollars annually, while imports from Germany averaged 176 millions. Germany served as a market for approximately one-seventh of our total ex- ports and as a source of one-tenth of our imports. Is a market for our exports Germany was exceeded only by the United Kingdom and Canada, and as a source of our imports was surpassed only by the United Kingdom. In these same years the'United States took one-fourteenth of Germany's exports and supplied almost one-sixth of Germany's imports. The United States was the third most important market for German goods, ranking behind the United Kingdom and Austria-Hungary.5 The main imports into the United States from Germany were metals and metallic products, dyes, toys, fur skins, 1 Killough, H. B., International Trade, p. 272. Including both semi-manufactures and finished manufactures, but excluding manufactured foodstuffs. 3 Deg, F..A., Economic DevelOpment of Modern EurOpe, p. 299. cotton manufactures, china tableware, woolen cloth, chemical wood pulp and artificial flowers. On the other hand, the United States had become the leading source of German imports. Germany was able to finance her excess of imports during this period because of her position as a creditor country, enabling her to pay for a surplus of imports by interest and dividends due from.foreigners and to reinvest abroad every year considerable sums in forms which helped to ex- tend German commerce and industry. To a considerable extent Germany's large passive balance of trade with the United States and other overseas countries was offset, through triangular exchange, by her active balance with such EurOpean countries as Great Britain, France, Italy and The Nether- lands. The lar Period, 1914-18 The World War resulted in trade between the two countries being reduced to almost negligible preportions. In the first three years the Allied blockade was mainly responsible for the reduced trade. In 1915 Germany fell to sixteenth place as a market for United States exports and to sixth place as a source of United States imports. The decline continued until the entry of the United States into the war in 1917 stepped all experts to her enemy, Germany. For the years 1915-18 United States exports to Germany averaged oniy'3.5 million dollars annually, with imports curtailed to an annual average of less than 13 millions. Germany came out of the war a debtor nation. She had lost practically all of her foreign investments, considerable credits formerly provided by Jher shipping, and in addition had to remit large sums due as reparations. 10 The peace settlement took from.her the iron ore fields of Alsace- Lorraine, which produced three-fourths of her pre-war supply, the coal fields of the Saar, the mineral and industrial resources of a large part of Upper Silesia, and deprived her of about 15 per cent of her arable land and 12 per cent of her livestock. In addition she was forced to surrender all her colonies. Earlngost-War Period, 1919—23 Germany was in a desperate condition in the early post-war period from.l919-23. Her industries were run down and unable to obtain ade- quate supplies of raw materials from abroad. She was consequently de- finitely limited in her exporting capacity. No foreign exchange was available for import purposes from reparation deliveries in kind. In- flation made the situation worse. Germany enjoyed no favors abroad, and at home she suffered from.a dearth of capital which.made it expensive or impossible to stimulate sales in foreign countries by extending short-time credits or making long-time loans to foreigners. Germany's total trade in 1921 was only about 30 per cent by volume of the 1913 trade, and from.1922 to 1924 it averaged about 40 per cent as much as in 1913.2 Germany's share in the total international trade of the world fell from.14 per cent in 1913 to only 6 per cent in 1922. Fellowing the separate peace treaty between Germany and the United States in November 1921, the two countries took steps to revive trade be- tween them. As a result, they concluded a new comercial treaty on December l Angell, I. W., The Recovery of Germany, pp. 12-16. Ogg, F. 1., Economic Development of Modern EurOpe, p. 689. 11 8, 1923, incorporating the unconditional form of the most-favored- nation principle.1 This was the first important treaty in which this principle was involved. During these years Germany and Japan shared fourth place, behind Great Britain, Canada and France, as a market for United States exports, and was only eleventh as a supplier of United States imports. From.the German side of the picture, the United States was exceeded only by The Netherlands and Great Britain as an outlet for German goods, and was the leading source of German imports. Reconstruction Period,_l924-29 By the end of 1923 the mark was worthless. The creditor countries finally realized that the internal economic and fiscal conditions in Germany were of vital importance if the country was to be able to continue reparations payments. The Dawes Plan of 1924 recognized this. The currency was stabilized by means of the Dawes international gold loan and the re- organization of the Reichsbank, and Germany recovered its economic strength with extraordinary rapidity. Reparations were paid punctually and in full. However, it should be noted that Germany was enabled to meet her payments by borrowings from abroad. About 70 per cent of these borrowings came from the United States. Germany had a net importation of capital from.l924 8 to 1928 of around 3.7 billion dollarlo \ 1 Dietrich, Es Be. World Trade, p. 2090 2 Angell, J. I., The Recovery of Germany, p. 191. 12 Trade between Germany and the United States flourished from.l924 to 1929, but did not reach the 1910-14 level in terms of quantities of goods involved. Table I shows that trade between the two countries was considerably greater, on a value basis, than in 1910-14, but this increase is accounted for by a rise in the price level. ‘Whereas, Germany took 14 per cent of United States exports and supplied 10.4 per cent of'United States imports in the period 1910-14, these percentages were only 9.1 and 4.7, respectively, in the period 1924-29. Frmm the German viewpoint, the Uhited.States was almost identically as important, on a percentage basis, in Germany's trade in the latter period as in the former. Germany had moved up behind Great Britain and Canada as a market for American goods, and had advanced to seventh place in supplying American imports. The ranking of the United States in German Trade remained the same as in the 1919-23 period. During this period, iron and steel, machinery, leather and leather manufactures, glassware and musical instruments became notably more important as United States import items from Germany. werld Depression of 1930-33 The success of the Ybung Plan, instituted in 1929 to replace the Dawes Plan, depended on continued extensive trade and the willingness of creditor countries to accept excess imports from Germany. The world depression doomed it to failure and cseated special difficulties for Germany as the world's greatest debtor nation. The German governments' measures to protect domestic agriculture by use of protective tariffs, together with the cessation of foreign lending and investment in Germany, reduced German imports on a quantity basis. The decrease in dollar values was even sharper because of the fall in prices. United States 13 exports fell from an annual average of 439 million dollars in the years 1924-29 to an annual average of 179 millions in the years 1930-33. . In this period Germany took a smaller percentage of U. S. exports and furnished a larger percentage of American imports than in the late twenties. The United States was responsible for a smaller share of Ger- many's trade--both exports and imports. By 1932 Germany was in fourth place, behind Great Britain, Canada and Japan, as a market for American exports, and was sixth as a source of our imports. The United States Twas in seventh place as an outlet for German goods. Trade With Germany Under the Nazi Regime Since 1933, when the disintegrating leimar Republic gave way to Hitler's Third Reich, German-American trade has been still further our- tailed, the low point being reached about 1935. Germany's policy of carrying on trade by barter and her use of arbitrary exchange restrictions has been largely responsible for this decrease in trade. Agricultural exports have been especially hard hit because of Germany's attempts at self-sufficiency. Moreover, much trade that previously flowed between Germany and the United States has been diverted by Germany in recent years to Southeastern EurOpe and Latin America. In 1937 Germany ranked behind Great Britain, Canada, Japan and France as a market for American goods and had drapped clear down to twelfth place as a supplier of our imports. Figures in Table I for the first five months of 1939 indicate that for the first time Germany is more important as a source of United States imports than as a customer for our experts. However, it should be noted that Germany is now taking part in only about 3 per cent of United States foreign trade. The United States in 1937 had dropped to ninth place as a market for German exports, and to third as a supplier of imports, ranking be- hind Great Britain and Argentina. In 1938 the United States regained first place as a source of German imports. 14 CHAPTER II PIACE OF UNITED STATE IN W's AGRICULTURAL IMPORT TRADE PRIOR TO 1930 Nature of Germany's Agricultural Economy Germany is about equally divided between a dissected plateau region in the south and west and a broad belt of plains--the German lowlands-- stretching across the north and east.1 In spite of its large size and its wide range of latitude, the climate of the country is exceptionally uniform. In general it is a modified continental type, the influence of the ocean being especially conspicuous in the northwest. The rainfall of the northern plains draining into the North.Sea and the Baltic averages twenty to thirty inches annually and is fairly well distributed seasonally. In general the precipitation decreases from.west to east and southeast, Silesia receiving the least. In.most parts of Germany the soil is of a quality which agricultural experts in America would describe as 'submarginal'. Labor is cheap in Germany, whereas land is dear. Thus German agriculture relies on a highly deve10ped technique of plant cultivation, on natural and artificial fertil- izers, on intensive deep tillage, and on the combination of plant culti- vation with stock farming, rather than on the employment of labor-saving 2 machines. 1 Blanchard and Visher, Economic Geography of EurOpe, p. 240. 2 Brandt, Karl, ”The Crisis In German Agriculture“, Foreign Affairs, July 1932, p. 633. 15 16 Most of the large estates are found in eastern Germany and the Prussian province of Saxony. The soil here is mostly light and sandy, and the level tOpography makes it suitable for large-scale cultivation. Cereal and fodder craps are raised almost exclusively. Potatoes are the most important crap on the plains of northern Germany, and in the central Elbe valley sugar beats are very extensively raised. The small farms are found mostly in southern and western Germany. Soils are better here, but the rough t0pography is a limiting factor. Here intensive cultivation is the rule. The goods marketed by the small farmers are mainly animal and horticultural products such as meat animals, milk, eggs, poultry, vegetables and fruits. To these small farmers an avail- able supply of cheap feeds is very important.1 The large estate owners had long been the dominating influence in German political and economic life. Before the first World War they imported cheap Polish labor each summer to do their work. This led to a lowering of the standard of living for German agricultural workers. The great mass of small holders could eke out a living only by dint of hard work and efficient management. The republican constitution abolished some of the privileges of the large landowners-qmore especially their monOpoly of the higher government posts, and also the exemptions which they had enjoyed in regard to taxation. Nevertheless, they remained very powerful. In regard to agricultural production, Germany had experienced a phenomenal expansion in the forty years preceding the first lbrld War. l Brandt, Karl, op. cit., p. 634. l7 Germany's economic and tariff policy definitely aimed at the largest practicable production of food, so that in case of war she might be substantially independent of the outside world. With a rapidly in- creasing population but a restricted area, the growing demand for foodstuffs was met by increasing the yields.' This was accomplished through more intensive cultivation, the larger use of commercial fertilizers and the scientific selection and use of seeds, breeding stock, and food- stuffs, as well as by a comprehensive system of agricultural education.1 In spite of this increased production.Dlperia1 Germany was estimated to be only about 70 per cent self-supporting. Table III shows that in 1913 Germany was importing large quantities of grains, meats, lard, fruits, cotton, tobacco, fodder and cattle hides and calfskins. Germany was especially dependent upon the United States for her imports of lard, cotton, wheat and wheat flour, It might be noted here that both Germany and the United States had become highly industrialized by 1913. However, the United States was a net food exporter, while Germany was a net food importer. Agricultural production drapped during the War because of the re- moval of workers to other industries and to the trenches to fight. The use of fertilizers was curtailed, resulting in soil depletion, and there was a relative shortage of horses and new farm.machinery. German agri- 2 culture lived on its capital and emerged from the War badly crippled. l Blanchard and Visher, 0p. cit., pp.241-2. 2 Day, Clive, Economic Development In Modern EurOpe, p. 285. 18 The period of inflation following the war offered to owners of mortgaged.farms the Opportunity to rid themselves of their debts by payment in depreciated marks. The urge to get rid of money before it depreciated led also to many permanent improvements, and to the purchase of a great amount of farm equipment. The stablization of the currency (1924) put an abrupt end to these conditions. The products of other countries, cheaper and often better graded and more attractive to the purchaser, flooded the market.1 The farmer received prices which con- tinued low in relation to his costs. Agriculture was in a state of depression. In four years of stable currency German agriculture incurred debts approaching two billion dollars. many estates in the East were mortgaged up to the full value of the land, and it was evident that they had ceased to be profitable.2 Meanwhile, the small famners continued for the moment to enjoy prosperity because of efficient management, relative freedom from.debt and favorable prices for their products. The collapse of the grain prices in the world market after 1929 made the situation critical, and it seemed that the supremacy of the large estate holders would finally come to an end. However, they were regarded as the guardians of the detached province of East Prussia and were still very powerful politically. Consequently, they were able to influence the German govern- ment to revise steeply the protective tariff on grain, establish a system of milling quotas and manipulate the grain market. This resulted in the virtual insulation of the German grain price structure from world market movmments. 1 Day, Clive, 0p. cit. p. 285. 2 Brandt, Karl, 0p. cit., p. 636. 19 After the German bank crisis of July 13, 1931, it was generally thought that the doom of the large estate owners was finally sealed. But they achieved another lease of life. They evaded individual bank- ruptcy by obtaining a general moratorium. The actual physical volume of agricultural production in the late twenties was less than in the pro-war period. For rye, the largest of the German grain crepe, the average for 1924-28 was 22 per cent less than the average for 1909-13; for oats, 18 per cent; wheat, 14 per cent; barley, 2 per cent; potatoes, 1 per cent; and sugar beets, 23 per cent. Taking the principal creps tagether, the average decline was about 14 per cent.1 One reason for this decline, of course, was that Germany lost about 15 per cent of her pro-war arable land by the Treaty of Versailles. The average yield per acre, however, was from 5 to 15 per cent lower in 1928 than in 1913. The pressure of existing debts, lack of working capital, etc., prevented farmers from.making needed improvements and using adequate ferti- lizers. Agriculture was one of the weakest spots in the German economy from 1924 to 1928, and one of the principal sources of internal stress.2 In 1929 domestic production as a percentage of total consumption for a number of foodstuffs was estimated as follows: sugar, 112 per cent; milk, 100 per cent; potatoes, 98 per cent; all meat, 93 per cent; bread grains, 87 per cent; fruit, 83 per cent; vegetables, 81 per cent; eggs, 66 3 per cent; butter, 70 per cent; lard, 61 per cent. l Angell, J. U. The Recovery of Germany, p. 248. 2 Angeli, Jo We, op. Cite, p. 253. 3 Compiled from reports of The German Institute for Business Research. 20 The dominating influence of the grain-producing large land holders of East Prussia largely explains why the raising of grain, although no longer a profitable branch of economic production, was artificially ex- panded after 1929 instead of being contracted; whereas the output of animal products such as milk and eggs, for which natural conditions were much more favorable, was kept down because of the higher prices which the small land holders had to pay for feeds. German Agricultural Tariff Policy Under Prussian leadership a Zollverein, or customs union, had been formed in North Germany in 1818. By the middle of the century it included the whole of Germany except Austria, the Mecklenburgs, and the free cities of Hamburg, Bremen and Lubeck. For the next twenty-five years the Prussian authorities sought systematically to manipulate both foreign relations and the internal affairs of the Zollverein in the direction of free trade, in order to gain markets for the agricultural products of'Prussia and to de- crease the price of manufactured imports. The free trade movement by England was also an influencing factor. For a while after the complete political unification had been achieved with the proclamation of the German Empire in 1871, under Prussian hegemony, the policy-of free trade was continued. In 1877 ninety-five per cent of all imports entered the country duty free.1 The competition of Russian and American grain, however, was being felt with increasing severity, and in 1879 Germany returned to agrarian protectionism. Up until this time l 0&8, F. A0, Op. Cite, P. 2900 21 Germany had been a grain-exporting country on balance. Now she became a grain-importing country; and as this transition proceeded, she became one of the foremost exponents of agricultural protectionism. Protection, as one writer has put it, was the German tradition, and free trade was a plain infraction of that tradition.1 The industrial interests in southern and western Germany had always favored protection, and now the landowners were joining in with them because of the increased competition from Russian and American grain.2 After 1879, the German producers of breadstuffs and meats secured additional duties and sanitary regulations to hinder imports; and in 1902 they obtained not only a general increase in agrarian duties but also a specific provision‘ which prevented the government from.reducing these duties below certain minimum.levels in treaties which it might make with other powers under Germany's general and conventional tariff system.3 During the World War, Germany lowered her tariff duties to encourage much needed imports of foodstuffs and raw materials. Following the War, the Treaty of Versailles prohibited Germany from raising import duties for a period of six years. In 1925, however, Germany again returned to a protective policy toward agricultural production. In spite of the war experience this l Dawson, Protection in Germany, p. 26. 2 088, Fe ‘e, 0P0 Cite, Pa 2910 3 Day, Clive, op. cit., p. 417. 22 again developed along pro-War lines. Rye became the most highly protected product, and for a time a similar support was accorded cats. The tariff aid granted to wheat flour was lower. Feed grains, other than rye and oats, were only moderately protected. Butter, eggs, vegetable oils, etc., were treated in a manner similar to the pro-War practice. The duties on livestock and meat were fixed at higher levels than before the war. This policy of unbalanced protection proved untenable in less than two years, during which time demand increased at a relatively slow rate, and production shiftadfrom.products with less favorable prices to those of .higher returns.1 By 1928 large surpluses of both rye and oats had accumulated. Imports of butter, which were at the pro-war level as early as 1924, doubled in the course of the next three years. Imports of eggs in 1928 exceeded the highest imports of pro-War years. Imports of feeds, other than rye and oats, also increased rapidly, but soon reached their peak, considerably under the figures of the last pro-War years. Character and Sources of German Agricultural Imports In the period 1924-28 over 40 per cent of all the wheat and barley con- sumed in Germany was imported from.abroad, 10 per cent of the potatoes, and a large proportion of meat, fish and butter. In those years just about one-third of the value of all German imports consisted of foods and animal products.2 Table III gives an indication of the importance of the United States as a source of some of the leading German agricultural imports before l ”Bermany's Capacity to Produce Agricultural Products“, Foreign Agri- culture, May 1937, p. 230, U. S. Department of Agriculture. 2 Ansell, J. WC, OP, Cite, p. 402. 28 again develOped along pre-War lines. Rye became the most highly protected product, and for a time a similar support was accorded cats. The tariff aid granted to wheat flour was lower. Feed grains, other than rye and cats, were only moderately protected. Butter, eggs, vegetable oils, etc., were treated in a manner similar to the pre-War practice. The duties, on livestock and meat were fixed at higher levels than before the war. This policy of unbalanced protection proved untenable in less than two years, during which time demand increased at a relatively slow rate, and production shiftadfrom.products with less favorable prices to those of _higher returns.1 By 1928 large surpluses of both rye and oats had accumulated. Imports of butter, which were at the pro-war level as early as 1924, doubled in the course of the next three years. Imports of eggs in 1928 exceeded the highest imports of pro-War years. Imports of feeds, other than rye and oats, also increased rapidly, but soon reached their peak, considerably under the figures of the last pre-War years. Character and Sources of German Agricultural Impgrts In the period 1924-28 over 40 per cent of all the wheat and barley con- sumed in Germany was imported from.abroad, 10 per cent of the potatoes, and a large preportion of meat, fish and butter. In those years just about one-third of the value of all German imports consisted of foods and animal products.2 Table III gives an indication of the importance of the United States as a source of some of the leading German agricultural imports before l “Hermany's Capacity to Produce Agricultural Products“, Fereign Agri- culture, May 1937, p. 230, U. S. Department of Agriculture. 2 Angell, J. W., 0P, Cite, Po 4020 23 .mMoopasmw oohoaaoo .oonmaaoo Ho pmoauhsmom mopspm copaqb acousom mama a .opaaauonmmd a aa a a oooqnoa.aooo.eamaaooo.wmmqa aaa.mma anniaaa ama.aaa ..enav mass was uaasna m.a a.a m.a mme.eea www.maa mmo.aae aaa.a aee.m moa.m a.nsav meaae -aaeo can noeaa nausea a e a maa.mma aae.aaa aea.oma maa.ea mmo.aa aam.e a.mnav hupadom .oadm .mpmoz «a ma em mam.ama «ma.maa nea.aaa maa.ama ooa.aoa mmo.aaa a.anav epaa D o. a. unpofiUOHR Hcaudd a a ma ana.a mmm mma.a om an mmeaaqosv aeee ens mane aao .Heuuo .ooaa .senn “noceoh ma a ma mea.aa aaa.ma mma.aa aam.e oma.a mmm.a a.snv shoe 9 ea aa oem.m mae.oa ama.ea oaa mam.e com.» a.aav spec oa ma 0 eao.aa eam.ma aam.aea mam.m aam.aa aam.a a.snv eoaaem m oa a aam.a mmm.m maa.aa com aam.a mam a.sn. mam om an an aea ama.a aoa aaa mom em a.eappv usoaa swans aa ma om eaa.ma mam.mm mem.am ome.m oam.aa nem.ma a.en. seen; «nhhaaPMdOOH can mflagw oa oa m «ma.maa aaa.eaa eae.maa nae.aa ama.na maa.ea a.epav aeoa .oooenoe me am ea ooo.oem ooo.ama ooo.mea.a ooo.aaa ooo.mem ooo.maa a.maav mamaeaa use eoaaoo mama mama mama mama mama mama mama mama mama aaaeoesoo «6 .p sob ammo .Sm moanpssoo Has soak aoaeam emaaap oaa.aoaa .uuosconm Hensuasoauwd saspnoo no uphoan asauoo “ceauaooqm spam: on» no nossmsonav on manna 24 the first lorld War and in the late twenties. Germany was almost wholly dependent upon the United States, both in 1913 and in the late twenties, for her imports of lard and cotton. The'United States seemed to be gaining during the twenties in importance as a source of fruit and nut imports, and to be declining in relative importance as a supplier of fodder and hides and skins. In the case of grains, whereas Germany's total im- ports declined in the late twenties, imports from.the United States declined even more so. In the case of meets, the United States showed some relative gain, but on the basis of smaller total imports at the end of the twenties. In regard to tobacco, the United States held its own in relative importance- supplying about 10 per cent, and this was on the basis of larger total tobacco imports. At the end of the twenties Germany was importing smaller amounts of grain, lard, fruits and nuts, cotton, fodder, and hides and skins, than she had in 1913. Meets and tobacco were the only ones to show substantial increases over 1913. The same thing was true of Germany's imp ports from the United States, with the exception of fruits and nuts which showed a definite upward trend in the late twenties. (See the graphs in Part II for a more detailed presentation.) Such items as butter, eggs, rice, wool, silk, Jute, vegetables, COffee, cacao beans, wines, and h0ps, which were important in Germany's import trade in the late twenties, were supplied by the United States either in negligible quantities or not at all. In 1913 the United States supplied 15.9 per cent of all German imp ports and this percentage was about the same in the twenties. But notice should be taken of the changed position of Russia and Southeastern EurOpean countries in German import trade. In 1913, 13 per cent of German imports came from Russia, but by 1925 Russia's contribution was only 1.6 per cent. 25 In 1929 it was 3.2 per cent. This is largely explained by the breaking up of the great estates in Russia, with a subsequent decrease in Russian production and an increased consumption by the masses, with the result that Russia almost disappeared as an exporter. On the other hand, South- eastern EurOpean countries supplied less than 2 per cent of Germany's imports in 1913, but by 1929 this had risen to 3.8 per cent and was 1 destined to rise to 10.5 per cent in 1937. The diversion of German trade to Dannbian countries is discussed more fully in Chapter 3. CHAPTER III mm COLSERCIAL 1ND AGRICULTURAL POLICY SINCE 1929 In chapters one and two an exanination was made of the general course of German-United States trade from 1910 to 1938 (see Tables 1 and 2), and of the changed position of the United States in Germany's agricultural import trade prior to 1930. It was shown that United States trade with Germany has declined greatly since 1929, with agricultural exports being especially hard hit. In this chapter a general examination is made of the causes and course of the commercial and agricultural policies pursued by Germany during the thirties which have been broadly responsible for American agricultural exports to Germany declining to a much greater ex- tent than to the world at large. Germanyjs International Debtor Position and the Crisis of 1931 The Versailles treaty fixed Germany's total direct and indirect liability on reparations account at 31.4 billion dollars, with Germany to be responsible for the whole amount in case of default by her former allies.1 The Dawes Plan instituted in 1924, placed reparation liabilities on a graduated annual basis, with some consideration of Germany's capacity to pay, and with safeguards as to transfer. The mark was stabilized on a gold basis, and foreign capital then proceeded to pour into Germany in large amounts. The United States was the chief supplier. These foreign credits were on a scale which made it possible for Germany from 1924 to 1 Scroggs, W. 0., ”German Debts and Export Bounties", Foreign Affairs, val. 12, (1953-34), pp. 520-21. 26 27 1928, not only to transfer its reparations payments under the Dawes schedule, but also to finance a net excess of imports (see Table 4.) This vast volume of foreign borrowing meant, however, that the Reich was obligating itself for a rising annual scale of debt service on this account, in addition to its continuing annual reparations obligations under the YOung Plan, and that when foreign lending dried up after 1929, she was confronted with an acute crisis in her balance of inter-national payments. While the Young Plan of 1929 had further reduced reparations payments, Germany's export excess of 1929-31 fell for short of meeting her annual debt obligations. During 1931 Germany lost gold abroad to the amount of 1.1 billion Reichsmarks, and complete financial collapse was averted only by the Hoover Mbratorium in June of that year, suspending inter-govern- mental debt payments, and by the subsequent Standstill Agreement accepted by foreign bank creditors. Germany's total external debt on February 28, 1932, has been estimated 1 as follows: Foreign Debt mullion Million Reichsmarks Dollars Long-term debt 8,200 1,953 Short-term.debt Standstill 5,040 1,200 Non-standstill- Commercial, Industrial banking 2,400 570 Reich government 614 146 States and Communes 201 48 Reichsbank and Gold Discount Bank 904 215 Total Short-term 9,153 2 180 Total Debt 17,353 4, 33 National Industrial Conference Board, The Situation in Germany at the Beginning of 1933, p. 44. Table 4. Germany's External Trade, 1924-1939. (Millions of Reichsmarks) Year Imports for Exports of Balance Consumption German Products of trade 1924 9,083 6,552 -2531 1925 12,362 9,290 -3072 1926 10,001 10,414 / 413 1927 14,228 10,801 ~3427 1928 14,001 12,276 -l725 1929 13,447 13,483 / 36 1930 10,393 12,036 {1643 1931 6,727 9,599 {2872 1932 4,666 5,739 {1073 1933 4,204 4,871 f 667 1934 4,451 4,167 - 284 1935 4,159 4,270 f 111 1936 4,218 4,768 g 550 1937 5,468 5,911 ; 443 1938 6,052 5,619 - 433 1939a 2,756 2,816 K 60 on reparations account, valued at $150,132,000 for 1926, $137,246,000 Note.-Fram 1925 to 1932, the figures of eXports are inclusive of deliveries for 1927, $158,147,000 for 1928, $195,164,000 for 1929, $168,491,000 for 1930, $93,539,000 for 1931, and $14,788,000 for 1932. ceased in 1932 under the Lausanne Agreement. a First 8 Sources: ix months. Deliveries 28 Foreign Commerce Yearbooks; German Institute for Business Research. Half of the total debt was in the form of short-term credits maturing before February 28, 1933. About 50 per cent of the total long-term foreign debt was owed to the United States, and about 32 per cent of short-term credits advanced to Germany came from the United States. Of the total debt, American creditors had advanced about 40 per cent. On June 16, 1932 the Laussnne Reparations Agreement reduced the entire reparations debt to about 714 million dollars:L The "standstill“ agreement of September 1931 was periodically renewed, and on June 9, 1933, the German Government decreed a transfer moratorium for six months on all public and private debts contracted before July 1931, except those covered by the 'standstill" agreements. The total of Germany's public and private external debts at this time had been reduced to 2.5 billion dollars. This decree was modified shortly afterwards so as to exclude the Dawes and Young Plan loans and to provide for a maximum payment of 50 per cent of the amount due on other loans, with the remaining 50 per cent to be paid in scrip. Germany's insistence that she could maintain the services on her huge external debts only by a sharp increase in her exports, was in part rendered more difficult of realization by her own refusal to devalue the mark. This tended to keep the prices of German goods high in terms of depreciated currencies and made it difficult for them to compete on world markets with- out drastic internal deflation or subsidization of her exports. Moreover, Gemsny's foreign debt and her redemption of a part of it, led to a de- pletion‘of gold and foreign exchange holdings of the Reichsbank, in turn leading to the institution of import and exchange controls and clearing and barter arrangements. Killough, H. B., International Trade, p. 406. 80 Emergency Import Controls in Republican Germany The problems of agriculture, foreign trade and debt payments faced by Republican Germany in the early depression years made emergency import controls more or less inevitable. These measures were designed to maintain the exchange value of the mark, by curtailing imports and controlling ex- change transactions, to maintain exports by a deflationary policy of low wages and consequently low prices of German goods; and to protect German agriculture from.falling prices and depreciated currencies of other countries, by ldnimizing the extent of competitive agricultural imports. Germany rejected devaluation as a solution partly for domestic psycho- logical reasons in‘a country in which the memories of hyper-inflation were still fresh. Also, devaluation would have involved higher mark priceror imported raw materials and external debt obligations payable in foreign currencies would have demanded larger budgetary allocations. Moreover it was likely that devaluation would have been met by countervailing re- strictions on German imports in other countries. The refusal to devalue caused a growing diaperity between German and foreign prices, and German merchants were compelled either to curtail their imports or to sell goods at ruinously low prices. The unfavorable position of German agriculture led t0‘a policy of government aid after 1928. In the summer of 1929 import duties on most grains were raised to a level above those in the last pre-War years. A period of rather indefinite increases in import duties on grains ensued. In addition to the tariff, the German government used a number of other devices to support prices of agricultural products, control production 31 and regulate imports. In general, the main devices for protecting grain producers in Germany were: (1) tariff rates, (2) mulling regulations, (3) a so-called “grain-exchange plan”, (4) combination sales of domestic and foreign grain, (5) special aid to rye producers, (6) baking regulations, and (7) crap financing measures.l An example of the measures undertaken was the compulsory admixture of a specified percentage of alcohol (from potatoes) in all motor fuels,. introduced in 1930, in order to support indirectly the potato industry. Brewers were required to use a minimum of 75 per cent of German hOps, and those who did not use imported h0ps in 1930 could not subsequently begin using them. A.mon0poly for corn was established march 26, 1930. It had the exclusive right to import and sell corn. It could prohibit importation by private importers, fix internal prices and regulate the distri- bution of corn among internal purchasers. However, it should be pointed out that the Corn MbnOpoly was a special case necessitated by the fact that a treaty with Yugoslavia prevented Germany from.raising the tariff on corn. Import monOpolies were not extensively used until after the Nazis came into power. Germany also resorted to a system of foreign exchange control by reducing the amount of foreign exchange which importers could purchase to an extent corresponding to the decrease in foreign prices and domestic incomes from 1930 to 1931. A first decree restricted the amount of foreign exchange which importers could acquire to 75 per cent of the amount used in a corresponding period of the preceding year. In may 1932 this was re- 2 duced to 50 per cent. For a fuller discussion of these devices see Chapter 7. 2 Heuser, H., Control of International Trade, p. 128. 32 Thus foreign trade restrictions by Republican Germany took the form on the one hand of raising tariff rates and imposing import quotas, and on the other hand of limiting and rationing the amount of exchange legally available for payment of imports. The various internal market regulations, however, often overshadowed the foreign trade control measures, and the cumulative effect was particularly harmful to the United States because, under normal conditions, our sales to Germany are a great deal more than our total purchases from that country. Foreign Trade and Exchange Policies Under the Nazi Regime The measures undertaken in Republican Germany were of an emergency nature, designed to deal with the depression and the financial crisis. Readjustment was sought by a policy of drastic deflation, and by the end of 1932 the stage had been set for a gradual cyclical recovery along orthodox lines. The external debt had been substantially reduced, and a passive trade balance of 5.2 billion marks in 1927 and 1928 had been changed into an active trade balance of 5.6 billion marks during the three- year period 1930-1932. However, the vast amount of unemployment and the lowered standard of living were more than the German peOple were willing to endure, and so they turned to a dictatorship under Hitler. The Nazis had two main objectives, the relief of unemployment and the creation of military preparedness. Unemployment was attacked first, as outlined by Hitler on may 1, 1933 in his First FburiYear Plan. This Plan was carried out largely through an expansion of public works projects, financed by authorizing contractors to draw Special bills which would be accepted and endorsed by special institutions and thus be eligible for 33 rediscount at the Reichsbank as three-name paper. Then came the drive for’military preparedness, beginning about 1935. At first, this pro- gram necessitated increased imports of essential raw materials in order to build up war industries and create reserve stocks, so that Germany would have a supply to fall back upon in case of war. The Reich's difficult foreign exchange position, however, meant that imports for domestic consumption would have to be drastically controlled while giving priority to imports of these strategic raw materials. These were to be paid for not only by curtailing less essential imports, but also by increasing exports and by suspending, as far as possible, German debt payments abroad. In a final effort to unify and tighten the controls already in force, and to secure a powerful bargaining weapon in commercial negotiations, Dr. Schacht, Minister of Economics, on September 24, 1934 instituted the ”New Plan', designed to hold imports strictly to the available amount of foreign exchange, to confine purchases as far as possible to countries which bought equivalent amounts from.Germany, and to give preference to imports of raw materials, particularly those necessary for the armament industries. Under the New Plan, debt payments were either suspended or made only to countries which bought more from Germany than they sold to the Reich. Such countries as Great Britain, France and The Netherlands were in a position to insure debt service on Dawes and Young Plan bonds held by their citizens, because they could threaten to withhold payments to German exporters if the Reich refused to pay its debts. The United States was unable to do this, however, since it had a favorable balnce of trade with the Reich. 34 The Plan also drastically curtailed the amount of foreign exchange available for the purchase of new imports. The quotes, introduced in July 1931, had been repeatedly and drastically reduced, until in Auggst 1934 they averaged only 5 per cent of basic requirements in 1930-31. Dr. Schacht now went a step farther and allotted foreign exchange by commodities. Twenty-five commodity boards were established to supervise the entire import trade, and payments for foreign products were permitted only when the importer, prior to each importation, secured a foreign ex- change certificate from one of these boards. In some cases, import monopolies were established, so that the government was the sole hmporter, and could determine how much would be imported, the price to be paid for it and where it would be purchased. This was the most effective method of import restriction used. Naturally, imports of essential raw materials received preference. While Germany was limiting her imports, she was also taking steps to increase her exports, so as to increase her supply of foreign exchange. One method of increasing exports was by the use of subsidies, both direct and indirect. As early as 1932 the so-called “additional export" procedure had been introduced in order to counteract to some extent the export advantage ogtained by other countries through the depreciation of their currencies. Under the Schacht plan the money for the subsidies was obtained from profits made in the purchase and resale of:(l) blocked marks, l Fereign Policy Reports, vol. 10 (1934), p. 234. 2 Foreign Policy Report, vol. 10 (1934), p. 231. 35 or the mark equivalent of foreign balances frozen in Germany since the introduction of foreign exchange control; (2) scrip issued in accordance with the partial transfer moratorium effective from July 1, 1933 to June 30, 1934; and (3) German bonds on foreign markets.1 The stimulation of exports became extensive only in 1933, when, according to German figures, about a fifth of the goods sold abroad was aided by subsidies averaging about 25 per cent of the sales price..2 After 1934 most of the above sources of profit for export subsidy dried up, and thereafter funds were obtained primarily from special secret taxes on gross incomes of German business, assessed and collected through cartels. Beginning in the autumn of 1934, the system of Aski marks was intro- duced under which Germany made large purchases of agricultural products, particularly in Balkan and Latin American countries. Payment for these imports was not made in free exchange, but in special classes of marks which could be used in purchasing in Germany only certain classes of goods which otherwise could not have been sold abroad. As these Aski marks were generally quoted at substantial discounts from the ”free" rate, they acted as an indirect subsidy for those industries from which the purchases of commodities are limited.3 Aski compensation or barter has been particularly successful in promoting trade with Latin America. Compensation agreements 4 have been called a SOphisticated form of barter. 1 cf. Dietrich, E. B., World Trade, pp. 135-36, for explanation of various types of blocked accounts. Weekly Report of the German Institute for Business Research, Supplement, September 12, 1934, "The Financing and Promotion of EXports in Germany". 3 Dietrich, E. B., 0p. cit., p. 136. 4 Ibide, pp. 224-270 36 Clearing and payments agreements are other types of bilateral agreements which have been used by Germany in promoting foreign trade. Germany negotiated the earliest of these agreements in 1932 with countries in Central and Southeastern EurOpe. They established Special accounts in the central bank of each state, into which payments for imports were required to be made, and out of which the claims of exporters were met. In this way the use of foreign exchange was obviated, except for the transfer of balances. Since these agreements enabled German importers to pay in marks, the Reich covered as much of its foreign requirements as possible through this procedure, while reducing imports from non-clearing countries, such as the United States. In 1937, according to German esti- mates, something like one-half of Germany's total foreign trade fell under the clearing principle; about 20 per cent was conducted on the basis of Aski accounts and barter arrangements; and another 15 per cent was with countries with which payment arrangements were in force.1 This regimentation of imports has had an aggravating effect on United States exports to Germany, especially those of an agricultural nature. Since this country concluded no clearing agreements with Germany, but had a favorable balance of trade with her, the Reich retaliated by restricting imports from us. On the other hand, the United States charged that Germany, by her policy of bilateral clearing and exchange agreements, had pledged a large share of her foreign exchange, but refused to allocate to the United States a suitably prOportionate share of the small remaining amount of free exchange. Accordingly, under Section 350 of the Trade Agreements Act, the Reichs-Kredit-Gesellschaft, 'Germany's Economic Situation at the Turn of 1937-1938", p. 92. 37 United States government on July 11, 1936 imposed countervailing duties ranging from 22.5 to 56 per cent on a wide variety of German manufactures. On August 3, the Reich Foreign Exchange office issued an order banning the use of Aski and registered marks in trade with the_United States, and this country then lifted the countervailing duties. Countervailing duties, however, were again invoked against Germany in march 1939. Moreover, this country has refused to grant to Germany the generalization of con- cessions provided for in the Trade Agreements Act. As for Germany itself, trade has been diverted from its natural and most economic channels. 'Germany has bought not where she could buy most economically, but where she could conclude agreements, even though the goods purchased were often higher in price and inferior in quality. The Reich has secured the raw materials necessary for sustaining the internal economdc boom and completing the rearmament program only at the expense of drastically reducing imports of foodstuffs and consumption goods. Germany's Drive for Agricultural.Selfhaufficiengy While the German government was extending its control over the country's foreign trade, it also undertook a drive to become more nearly self-sufficing in the production of agricultural products. This drive was another part of its program of military preparedness. One objective of the Second Four- Year Plan, announced by Hitler in September 1936, was to make Germany independent, as far as possible, of all essential foodstuffs and raw materials. General Goering was appointed supreme head, under Hitler, with overriding powers over all the other uhnisters, including Dr. Schacht. Considerations of cost were to be subordinated to the interests of national self-sufficiency and defense. It was primarily in protest against the subordination of the 38 interests of the export industries to those of rearmament and the Four- Year Plan that Dr. Schacht resigned as Minister of Economics, and was replaced by Walther Funk in January 1938. The economic inconsistencies inherent in the Four-Year Plan are perhaps nowhere more apparent than in connection with the agricultural program. Following the creation of the Reich Fbod.Estate (Reichsnaehrstand) under the law of September 1933, coordinating all branches of German agriculture and the food processing and distributing industries, there was launched in the autumn of 1934 the “Battle of Production“. The maximization ‘ of self-sufficiency in food supply was sought to be attained by means of adequate price incentives, combined with organization, demonstration and patriotic appeals. With the inauguration two years later of the Second Four-Year Plan, special emphasis was placed upon the expansion of the production of agricultural raw materials for industry, and an increasingly comprehensive measure of inspection and regimentation was instituted with reapect to land utilization and cr0p deliveries.1 Under the Food Estate farm products were placed under Reich mon0poly offices, which had the power to control production, prices, marketing and the margins of processors, wholesalers and retailers. Efforts to encourage agricultural production, in addition to the price incentive, included the payment of subsidies to growers of oilseeds and textile fibers and also for the planting of fruit trees, a moderate reclamation of land and stimulation of agricultural improvements (irrigation, drainage, consolidation of scattered holdings), intensification of scientific efforts to raise more desirable breeds of livestock, increased use of fertilizers, the allottment Department of State, Adviser on International Economic Affairs, The Econmmic and Financial Position of Nazi Germany, August 29, 1938, p. 40. 39 of subsidies for building houses for farm workers and for various kinds of land melioration and improvements, mechanization of agriculture and the elimination of waste.1 The Plan called upon German agriculture to expand simultaneously the production of food crops, of feed cr0ps, and of raw materials for industry (flax, hemp, wool, hides, oilseeds, potatoes for alcohol and wood for cellulose). In a country whose cultivated acreage has already reached its practical maximum and whose yields have long been among the highest in EurOpe, the possibilities of simultaneous expansion in both extensive and intensive land utilization are extremely limited. moreover, Germany's pepulation is constantly increasing. Physical volume of German farm production rose only about 6 per cent from 1933 to 1937.2 An average domestic production of 85 per cent of total food and feed requirements is close to a maximum level under conditions of normal consumption. It should be mentioned here that the system of agricultural protection and regimentation gradually evolved in Germany under the National Socialist regime represents largely a planned agricultural economy rather than a system.of farm.aid and relief such as is found in most other countries, including the United States. Diversion of German Trade Where Germany has been unable to meet her total requirements of essential foodstuffs and raw materials by domestic production, she has been forced, of course, to continue importing them. Germany has sought * 00 German Agriculture in the Four-Year Plan”, Foreign Agriculture, Perch 1937, U. S. Department of Agriculture. 2 ”German Foreign Agricultural Policy", Foreign Agriculture, January 1938, p. 26, U. S. Department of Agriculture. 40 to divert these imports, however, not only to countries willing to acquiesce in her foreign trade policies, but also to countries less likely to be cut off from the Reich by a wartime blockade. Accordingly, Germany has extended its trade relations with South- eastern EurOpe, imports doubling and exports trebling, from 1934 to 1937.1 (See Table 5 for percentage shares of various countries.) The Reich can use the tobacco, fruit, eggs, lumber, fodder, fibers, oils, fats and ores of the Balkans, where in turn it finds a ready market for its iron and steel, chemical and pharmaceutical products, machines and a wide range of manufactures. German trade in Southeastern EurOpe is in accordance with Nazi ideas to reorganize trade along regional lines, particularly with countries with which communications would not be severed in time of war. Moreover, unlike most other customers of Germany, the Balkan and Danubian countries acquiesced in Germany's bilateral canalization and balancing of trade. It should be pointed out, however, that this area can supply only a small part of German imports of cotton, wool, silk, c0pper, manganese and mercury, and supply none of the need for coffee, cocoa, tea, rubber, tin, tungsten, vanadium, molybdenum, platinum, phosphates, jute, manila hemp, sisal, palm oil and c0pra. The annexation of Austria grgatly increased the trade dependence of Southeastern Europe on the Reich. It placed Germany in a strategic position to control EurOpean railway communications between the Adriatic 1 League of Nations, Review of World Trade, p. 39. 2 The Economist, may 14, 1938. 41 .mnma .HH humsnmh .goycmmom mmoqwmsm non opapapeqH assume .puomom haxooa Eon» comes a u--- 5.H e.H m.a n--- H.m m.m n.n assumes 5.m m.m o.n m.n e.m m.m e.e m.e esmepoamoaoano m.o m.H m.m m.n n.o o.m m.oa m.m noses season 0.5 m.m 5.ma n.n~ 5.m n.n m.e «.5 mousse ceases m.m 5.m m.n ¢.e m.e n.5 m.5 5.m enepaum among m.aa m.ma a.mH 5.ma n.am m.am m.an u.e~ eeeauoupasm one oceans .eosnpeeoo seq e.m n.m e.m m.m m.m m.a a.m H.m Hemepuom one enemm m.e H.e a.» n.n o.o n.n m.n m.e moaeoaoo ego haepH m.5 m.m «.5 e.m e.m H.m m.» H.@ ones assumes a.e 5.e m.n n.n m.a o.a 5.0 o.a sesame Heseoaoo 9.5 5.5 n.m e.oa o.m a.m m.n m.n meoaeaaon smspflum n.n H.n a.» H.« ~.e m.m m.m e.e eeeaom mefiesaoefi .mofiapesoo oflpaem .m.Ha «.0H «.0 n.5 e.ma H.ma e.m m.oa eeeaaam meaeeaoea .eapeeseeeom m.mH m.na m.m e.HH «.ma o.aa H.e n.5 «unease aspen n.n e.n n.m e.H n.m n.e n.a e.a enema ens sweeps meaesaoea .pmem nooz mom n.0H o.n m.n H.0H ¢.m n.n n.w omousm quoamuonpdom “.moa m. a.moa my mama 5an mama mmma mama 5nma mama mama mpuomaH auhomam nuance ma onenm omopnmonom assume a“ onenw omeononom ovens amfiouOh u.heesuoc uo qoflpsnaupman .m canoe a 42 l and the Baltic, as well as between France and the Balkans. However, whereas the Reich can supply about 82 per cent of its total food re- quirements, Austria can supply only 74 per cent of its own needs and Sudeten Germany probably still less.2 In 1936 Austria purchased half of its raw materials abroad; the Reich only one-fifth. 0n the other hand the two countries together can add greatly to Germany's timber resources. They can also supply some magnesite, iron, zinc, uranium, radium, brown coal and water power. Starting in 1935, Germany also undertook a trade drive in Latin America, which was for the most part willing to accept compensation agreements.4 German commercial policies have met with the greatest success in Brazil and Chile. Any permanent German competitive advantage in Latin-American markets will depend on the extent to which Germany continues to purchase Latin-American raw materials, and, aside from.coffee, there are few commo- dities which could not be purchased elsewhere should it become expedient, economically or politically, to do so. Table 5 shows the distribution of Germany's foreign trade in certain recent years. It is easy to see the decline in importance of the United States and the increased importance of’Southeastern EurOpe and Latin- America. It is apparent that German commercial and agricultural policy has been especially effective in restricting trade with the United States and Russia. 1 Financial News, April 26, 1938. 2 Foreign Policy Reports, march 1, 1939, pp. 294-95. 5 Cf. Walter Hildebrand, ”The Austrian Contribution to German hatarchy", Foreign Affairs, vol. 16, p. 719. 4 Foreign Policy Reports, September 15, 1957, pp. 160-61. 43 Chronology of German-United States Relations, 1914-1939. Jellowing is a brief chronology of events which have particularly affected trade relations between the two countries during the past quarter November 1918 June 1919 1921 may 1921 November 1921 1919-1923 1922 January 1923 December 1923 September 1924 1925 1925-1929 Armistice. Thrift Act of 1921. U. 3. treaty of peace with Germany. Fordney-NMCumber Tariff Act. U. 8. concluded commercial treaty with Germany of a century:- Date In the Uhited.8tates In Germany August 1914 First Iorld lar began. April 1917 U. 8. entered the war. Revolution - provisional republic proclaimed. Peace treaty of Versailles. London agreement. (Reparations provisions of the Versailles Treaty.) Inflation of the mark. Occupation of the Ruhr by French and Belgians. Collapse of the mark. Dawes Plan; Hark stabilized. Return to a protective tariff for agriculture. Inflow of foreign funds. 44 Date In the United States In Germany 1929 Beginning of world depression; tariff on most grains “130de 1929 YOung Plan. 1930 Smoot-Hawley Tariff Act. June 1931 Financial crisis; Hbover Meratorium.on intergovern- mental debts; First Stand, still Agreement. June 1932 Further increase in.import ant108e July 1932 Museum Agreement reduced November 1952 January 1933 march 1933 April 1933 September 1933 January 1934 June 1934 September 1934 October 1934 February 1935 June 1935 Roosevelt becomes President. Repeal of the gold clause. U. S. devalues the dollar. President signs Reciprocal Tariff Bill reparations to 714 million dollars. Yen Papen's government resigns. Hitler becomes Chancellor. Nazis establish rood Estate; Hereditary Farm Laws passed. Germany suspends payments on Dawes and Ibung Loans. “New Plan! for strict adjust- ment of hmpcrts to esports. Germany denounces commercial treaty of December 8, 1923, with U. 8., as from October 13, 1935. Breakdown of negotiations on the subject of exchange of American cotton for German industrial products. Commercial treaty of December 8, 1923 prolonged for an unlimited period with the exception of the most-favored nation clause. 45 Date In the United States _gp Germany August 1935 neutrality Resolution Increases in agricultural signed prices forbidden. Bovambar 1935 Decree issued controlling raw ,material and food exports; export of war.materia1s pro- hibited. siren 1955 Benuncietion of the Treaty of Locarno and remilitariaation of the Rhineland. June 1936 Antiedumping duties be- come effective on imports from Germany. ‘ August 1936 Anti-dunping duties‘termis- Use of blocked carts prohibited September 1936 havembar 1936 march 1937 July 1937 October 1937 wovemDer 1937 March 1938 September 1938 November 1938 march 1930 ItOde Roosevelt re-eleeted President. Us 3e bl. concluded 19 reciprocal trade treaties. in transactions with the United 3$QtC.e Hitler announces Four-Year Economic Plan. Decree on fourbyears' programme of intensification of agricultural production. Decree ordering compulsory de- livery of wheat and rye to the StatOe Dr. Schacht resigns as minister or EQODGQICUs neither Funk becomes minister of Economics. Germany annexes Austria. German trOOps occupy sudeten area. U. s. again.immoees countervailing duties on imports ‘ggmm Germany. v _ EART II RECENT CHANGES IN PRINCIPAL UNITED STATES AGRICULTURAL EXPORTS TO GERMAHY The graphs in the following chapters portray the fluctuations in United States exports to Germany of various individual, groups, and classes of agricultural commodities. The graphs also indicate the percentage which Germany re- ceives of United States exports to all countries, in each instance. On a few of the graphs an additional line is used to show the total exports from the United States to all countries. The data for all of the graphs has been taken either directly from or calculated from data obtained in c0pies of Foreign Commerce and Navigation of The United States. 46 CHAPTER IV GENERAL COURSE OF UNITED STATES AG ICULTURAL EXPORIQ TO GEBEKL"SINCE 1929. ngorts to Germany by Economic Classes While United States exports to Germany fell from.an annual average of 423 million dollars in the period 1926-29 (See Table 6) to 131 millions in 1932, a decline of 69 per cent, exports to all countries decreased by almost the same percentage (68). After 1932, however, exports to all countries recovered markedly, 1938 figures being 94 per cent above those for 1932. On the other hand, eXports to Germany continued downward, and in 1938 they were 20 per cent lower than in 1932. The decline in our exports to the Reich is reflected in the decreased percentage taken by that country. In the period 1926-29 Germany took 8.6 per cent of United States eXports. In 1932 this percentage was about the same, but by 1938 it had drOpped to 3.4. United States agricultural exports to Germany were not reduced to any greater extent during the early depression years than were our agricultural eXports to all countries, the decline in both cases being 65 per cent from the late twenties to 1932. Our agricultural exports to Germany, however, continued downward from 105 million dollars in 1932 to 37 million in 1938, a decrease of 65 per cent. In the meantime, our agricultural exports to all countries increased 26 per cent, from 738 to 928 million dollars. 4? 48 “smog axon no cosnfipaoov .maeep when no ozone masonw Headpasofiawe obam on» no Hopoe o w.mn m.me e.mo 0.00 m.eo o.m5 m.om m.mm 0.50 ¢.H5 .mamauoo on mpaoaxo ofipmoaoo ampOp no name mom mo mamahoo o» mpnomnm HenspHSOHnmo «o annoy m o.e 0.0 0.5 e.o n.m o.ea m.ea m.HH m.na e.ea seeaaoo 5a seam» peso Ham 5& mm nm em mo moa moa NHH ema mom .mnwaaoo mo macaHHHEIlmmaanoo o» appoaxo ampspasoaamm Hepoe m55 mmm mam 5mm 0mm enm map was mwm «and mmom .mnwaaoc no mnofiaafiannmoflnpqsoo Ham 0» mpuomao anazpasoaemo Howey m m.H a.» 5.& N.e o.e H.m e.m w.m m.o m.a m.m mneauoo an more» name new we eoa nma Hoa om boa mna «ma Hod m5m nmv .mnmaaoc no meoflaawannmqmauom on mpaomam ofipweaoc Has no Hence eman 5mon mmmm maem. nemm ooam 5eoa m5mH m5nm mw5n eamw .mnmaaoc no meoHHHHa :smpnomxo afipmoaoo Add Mo Hence mama mama 5an mama mama enma mama mama Hmma onma omeao>4 mmnomma mamauoo mp momma manomxm Heaspaaoaaww mmpmpm cepfieb no nowpnomonm .m manna 49 .moveum dopwnp on» no ooaoasoo mmfimaom mo humaadm manpaomn .mopmpm wepwmb era no noapewfi>wz can oonoaaoo awfionohu .mxoopnoow eoaoaaoouuoouoaaoo mo paoapaomom powwow oopfiab «moopsom o.e o.m m.nH e.ea m.o~ e.ma m.ma e.ma m.ma m.nm o.em .pemo nod Inmnmsnoc Opiumaopaaa can soupoo m.H H.m o.m 5.m o.m 5.» m.e m.n m.e n.m .peoo use Inmamaaoo ounucoos new unseen pamoao .oanfiooaa uposuonm oapmpomob H.e n.m H.m m.n 0.5 e.m 5.m m.5 m.m H.5 .psoo ammunseeauee op--mome tampon can mpodboaa coon oHnmpowob e.a 5.H m.m o.» m.m 5.5 m.nH 5.m m.m n.m .pemo aoau-aeeaaow opuuoanaeo In“ .mposconm «means can maoaaq4 o.a m.H a.» . o.m m.e 5.ea H.5H 5.ma m.m m.ea .eeoo amau-aeaauoo 0» Ileanwoo .mposconm Adages can managed mama mean 5an mama mama anon mama mama Heme onma omeaoee mmaemma Aumsnfipqoov manaaoo an momma mpuoqam Homepasoaams mopepm cepfiqo no qoflpaomonm .o manna While Germany took on an average of 14.6 per cent of United States agricultural exports in the years 1926-1929, and 14.2 per cent in 1932, this share was only 4 per cent in 1938. It is thus clearly seen that the commercial and agricultural policies of the Reich, discussed in Chapter III, had a particularly harmful effect on our agricultural exports to that country. It can easily be observed from Table 6 that while agricultural exports constituted almost three- fourths in the late twenties and four-fifths in 1932 of the value of this country's total exports to Germany, in 1938 these same agricultural ex- ports were responsible for little more than a third of our total exports to that country. .As for commodity groups, Table 6 indicates that exports to Germany of animals and animal products of the edible variety have suffered the most, on a percentage basis. In 1932 Germany took 17.1 per cent of this country's exports of this group of commodities, but in 1938 took only 1 per cent. Vegetable food products and beverages have been affected least, the per- centage being 8.7 in 1932 and 4.1 in 1938. However, it should be noted that exports of all the groups have dropped markedly since 1932. This fall reflects the attempts of the Reich to become self-sufficing in food products, and divert such imports as are still essential to other countries. Table 7 shows the extent of the decrease in United States exports to Germany by economic classes. It is readily seen that the fall has been most marked in the cases of crude materials, crude foodstuffs and menu- factured foodstuffs and has been relatively light for semi-manufactures and finished manufactures. This is what one might expect from Germany's drive for agricultural sufficiency and her policy of shifting trade in raw materials to Southeastern EurOpe and Latin America. he I . I I. I I I5 .. . .. I I- 5 T I I . . I 5 _I _ . 5-5 .. III“ III .I 5I5 5I r 5‘ I . ILI. .. . II. . I IefL I 5 I 1. I I I l.. 5 I 5 I II I II _. I 5 I I. . .s . IIcI . 5 III .L III. 5 I. I I r A II. . I I. .. I .- .H . - L... I .. Y . I. 5 I5II 5 I5 . .I. 5 . 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II II I I . 5 I a 5 55 I 5 5 e I 5.! | 5I I I. I . . I I5 a» .Ie .I . . 5» 5 .. I5 . 5 III . I5 . 5 I- _ . 5 . I I5 _ I 5. . .5 . r I I _ I 5 A eI .I I . . . v I I . .I 5 r I. . I .. I5 5 I. .5 I. 5 . IN!» . . 5 . l . . 5 . 5 . . I I L I 5 I II II. . . . l I I . I. I. t Ioav 5 . I II IL ” . I. . I . 5 | .5 . .. 5 . . .. .II 5 . .5 I .5 . l 5 5 I 5 b 5 e .5 .. .5 _ 5 I . 5 . . II _I . . a L . I5 .. _ I. . II. I .. 5 I. I I I . . 1 . I . ...I. .. - 5 L 1 . . . . II Is I I. . . . . r I ..I . I. II .0 5 II 7. s 5 n I I 5 5 .I O . s e 5. 'l. n e I D I— m 5* 5..5 a__ II .9 I n. .I . LL... . pt .5. lot 5 _ L, 51 I ..I III .I. . I I. __ I c . _ 5a.. . . LI ll 55 I_ -.I I'll-itll .s*- _ II_ .5 I . Isa? L . ._.w__ uh JIII the . .. ea 5 .5 .9 u+I5I I I _ _ . _ II. us. . an A I s n I _ _ _ ..I I5 5 I I .L1 _‘ w.l | .5 a . 5 e I I U. . I II I I I s .. n. I II n 5 I. ha Imqu e I F Irlsrl l _ 5 5 _ _ . . 15F L I r . I II . 5 o a a e I 15 I 5 LI 9 . a an In _ I IF I .. I. I I I LI I 5 . 52 .mmpwpm @0000: on» yo n0050m0>02 one monoaaoo amaouom “oopdom 0.00 0.00 5.00 0.00 0.0 00.0 0.00 00.00 0.00 0.00 0.000 0000 0.00 0.00 0.00 0.00 0.0 00.0 0.0 00.0 0.00 0.00 0.000 0000 0.00 0.00 0.00 0.00 0.0 00.0 0.0 00.0 0.00 0.00 0.000 0000 0.00 0.00 0.00 0.00 0.0 00.0 0.0 00.0 0.00 0.00 0.00 0000 0.00 0.00 0.00 0.00 0.0 00.0 0.0 00.0 0.00 0.00 0.000 0000 0.00 0.00 0.00 5.00 0.00 0.00 0.0 00.0 0.00 0.00 0.000 0000 0.00 0.00 0.0 0.00 0.00 0.00 0.0 00.0 0.50 0.00 0.000 0000 0.00 0.00 0.00 0.00 0.00 0.00 0.0 00.0 0.00 0.00 0.000 0000 0.00 0.00 0.00 0.00 0.00 0.00 0.0 00.0 0.00 0.000 0.000 0000 0.00 0.00 0.50 0.00 0.00 0.00 0.0 00.00 0.00 0.000 0.000 0000 0.00 0.00 0.00 0.00 0.00 0.00 0.0 00.00 0.00 0.000 0.000 0000 0000 000 000.0000 0000 000 0000000MI 0000 000 000.0000. 0000 000 000.0000 0000 000 000.0000I 000.0pmw mouspowksnam mondpomwdamm mumspmnooh 0595900005 mamflumpfia 000% coanQHh Iflamm nondpommsqmz 00:00 00:00 0000I0000 .0000000 00800000 00 .50anka 09 00.50pm @3055 055.0.“ omSEagohmx 0.300805 .00 03.0000me. .5. 3.0.09 53 United States exports of crude materials to Germany drOpped 76 per cent from 1929 to 1938. At the same time the decline was 26 per cent for crude foodstuffs, 96 per cent for manufactured foodstuffs, 44 per cent for semi-manufactures and 66 per cent for finished manufactures. If 1937 figures are used the decrease for crude foodstuffs was 89 per cent. It should be mentioned here that our eXports of crude foodstuffs to the Reich in 1938 were abnormally high because of large exports of corn and wheat to that country. Germany undertook to build up her reserve supply of these two grains in 1938, and found the United States, with its large eXport sur- plus and low prices, a desirable place to purchase a large share of it. From.Table 7 it is also evident that in 1929 crude materials (consisting of such items as cotton, tobacco, coal, crude petroleum, phOSphate rock, etc.,) was by far the most important United States export to Germany, absorbing almost one-half of the total. This was still true in 1937, but in 1938 crude materials accounted for only one-fourth of the total. Kuch of this decline was due to decreased cotton exports to Germany in 1938. Crude materials, in fact, ranked only second in 1938, just ahead of finished manufactures and well behind semi-manufactures. Crude and manufactured foodstuffs together furnished only about one-seventh of our total exports to the Reich in 1929, and the same prOportion in 1938. In 1937, however, they constituted only 4.7 per cent of the total. Table 8 brings out some interesting contrasts in United States exports of these economic classes to Germany. The table shows that Germany served as a market for 10 per cent of this country's total exports of semi-manu- factures and 3.2 per cent of our finished manufactures in 1928. Both have fallen, on a percentage basis, since l928, but the drOp has not been so drastic as in the case of the other three economic classes, and it appears .mmmH Ga unamafimo Spur“... waywam GQPHQD on.» we wanna $8.3m @332 on» no nofiuawng one mohmeaaoo mmflmpom "moopdom e.H 0.5 H.H m.m n.e e.m mama n.a n.m H.m o.m n.m e.n enma o.a e.m o.m e.m H.m m.e mama m.H H.m m.m e.m H.e o.e mama m.m e.m o.o n.o e.m o.m enma e.m 0.0 m.aa H.m e.e~ N.m mama e.m m.m e.ma n.m a.ea n.m mama o.m n.e n.0H m.o H.na 5.0 anma m.m m.e o.m m.m m.oa H.e coma m.m m.m o.HH m.m n.0H m.b mama N.n o.oa m.oa o.m o.ma H.m mama . m ondpo Panama m 055 033:8“ mmwdpmooob mmwdpmcooh mamfinopmz commas; awamm. owudpoausqaz 35.5 35.5 .339 new» . moanmmma .aqeeumc an nexus mommmao oaoqoom k3 mpnomxm mmpwpm @0335 no ammunmouok .m canon. 55 to have been arrested in 1937, both showing an increase in 1938. on the other hand, crude materials, crude foodstuffs and manufactured foodstuffs did not decline, on a percentage basis, until after 1952, but since that time the decrease has been quite drastic, with crude materials and manufactured foodstuffs falling to record lows in 1938. Exports of Specific Agricultural Commodities to Germany Prior to the development of the depression in 1930, the United States enjoyed a substantial export business to Germany in a variety of farm.products. The leading ones, ranked in order of dollar values, were cotton, wheat, lard, barley, fruits and nuts, rye, raw furs, oleomargarine, tobacco, fodder, wheat flour, cattle hides and calfskins, corn and.meats. Since 1930, however, such items as wheat, wheat flour, feed barley, rice, minor dried fruits, pears, pork, and occasionally rye and corn, have become of little or secondary importance in trade between the two countries. The disappearance of the trade in cereals reflects Germany's achievement of a high degree of self-sufficiency in grain production and the diversion of imports to other sources, and has the appearance of permanency, as does the drOp in pork products, other than lard. Special circumstances govern the trade in the minor fruits, both fresh and dried. Imports from.the United.States were generally restricted, being secured so far as possible, from countries having clearing arrangements with Gemany.1 'United States exports to Germany of grains, meats, oleomargarine and cattle hides and calfskins declined drastically even in the early depression years. Since the advent of the Razis to power in 1933, exports of these I'—l'oreigri Craps and markets, may 11, 1936, p. 547. 56 products have practically ceased. Exports of cotton, lard, tobacco and fodder have fallen rather steadily throughout the thirties; but the drOp has been particularly apparent since 1933. an the other hand, exports . of fruits and raw furs failed to decrease, even in dollar values, in the early depression years, but have dwindled away since 1933, as the Nazis have curtailed nonpeseential imports. Leading united States agricultural exports to the Reich in 1938, ranked in order of dollar values, were cotton, corn, wheat, fruits, tobacco, sausage casings, cottonseed and linseed cake, lard and undressed furs. All of them, with the exception of sausage casings, were exported on a much smaller scale than in the late twenties. Table 9 shows the extent on a quantity basis of some of our agri- cultural exports to Germany in certain specified years. Practically every commodity declined sharply about 1934, and by the fiscal year 1956—37 Germany was importing either none or insignificant quantities of'many of then» Grains, animal products and fats and oils were most drastically re- duced. This was due not only to German restrictions, but also to the increased price of these commodities in the United.States, as a result of the drouth and the a. A. A. program. Variations in production in other . countries, of course, also help to make the figures fluctuate rather un- evenly. The sharp downward trend, however, is easy to observe. Iran Table 10 can.be seen the decreased relative importance of the ‘United States in supplying German imports of some of the leading agri- cultural products since 1928. Although the number of commodities in- cluded is small, the results are quite definite and striking. lhereas 57 .aoueawpoam_aensaaeoanw< «cannon new new 3n.“ «3.... m8... «3.3 7:: 80.: 358 $32.38 «as.» med.” nan.a emu.» man.a eau.a A..na ooo.av au.ne .uauom nae.” mum.a Hem.m oo«.ma ooe.aa sac.» A..na ooo.a. e.«ue ..»ooaua4_ Hon.a oun.a moo.o flea.oa ano.«~ nme.aa ...pa ooo.av e.fiue .uoaaaq own.“ one see one.«a «am.ea ono.ea A..na ooo.a. .nanaem 3.25 Soc. Saga notes «3.3 «2.3. 72: 80.: 82 on no” can one.e can.aa ono.ea ...na ooo.av Ha. o.ao n am a one en man ...na ooo.av gouache .xnom mad c an den.» nee.“ moe.m A..sa ooo.a. noose mew.” «be.a was.» aom.«e «on.mea epo.oma ...pa ooo.a. sung ewe.” ewe vow.“ «ea.ma oeo.ae nam.en ...na ooo.aa .oam mmn.oa o a on «as o Anaenusn ooo.a. anon mm» o o o ee Han.a .eaoauea ooo.~. moanum e an ma no sea nae. Andaman» ooo.a. cacao seag- nan.a o o 0 one.» mme.e .oaoauen ooo.a. «eons «so moH.H amn.a aoa.~ amp.“ ona.~l..pa ooo.av .aaamuae .uuoe .oooonoa new.» mum.m eon.n meo.o «oo.e can.m A..na ooo.e. eeeaeaqoa a knosvaau .oooenoa Hem.e one.“ ado.e mnm.e ado.e ona.m ...p~ ooo.a. e.ue.-.eae .ooounpa one o 0 we «5*.a oem.m .uaoaa Hues e...no»»oo mon.m~ 0 «an new emo.ea «ne.oa A.aa». .ueo coo-nuance enm nae mam «on.a omm.a oem.a ...a¢p ooo.a. euoaqaa a season undead 5-32 3.33 3A3. $.32 8&«2 33°an on can. cause snowing-woo 3 .38» :35 gene .aoaeona Hausuauaenmq Hoaaonaum no appease oaau.aua. .o adage 58 the united States supplied over four-fifths in 1928 and nearly three- fourths in 1932 of German lard imports, in 1937 this country furnished only a small fraction of one per cent of the Reich's purchases of this item. American trade in lard has suffered from arbitrary German res- trictions more than have other sources of supply. The share of cotton imports furnished by the United States fell from four-fifths in 1928 and 1932 to one-third in 1937. This decline reflects not only a diversion to other sources, but also decreased total hnports, because of a drOp in German textile exports and an increased production in the Reich of fiber substitutes. The percentage reduction for wheat, fruits and.meats was in the face of drastic curtailment of total purchases of these items, reflecting Germany's drive for sufficiency in food products. lwen sausage casings, a product in which the united States did not become hmportant as a source until the thirties, has shrunk notably since 1932. Tobacco is the only cmodity of importance in which the United States has even come close to maintaining its relative position. Germany has shown a preference for certain of the American brands. (See chapter v for a fuller discussion.) I Imports of meats were so curtailed after 1934 that this item ceased to be of much importance in trade between the two countries. The can thing has been true of a nulber of other articles, notably fats, oils, oilcake, fodder, hides and skins, rice and other grains. Thus Germany in 1937 was securing a very small share of these important agricultural products from the United States. future trends will depend largely on the co-ercial and agricultural policies of the two countries, especially those of the Reich. Table 10. German Agricultural Imports from United States Porcentage of total imports coming true U. S. Gc-odity 1928 1930 1932 1934 1936 1937 lard 84.4 79.3 73.2 54.8 6.6 0.15 Sausage Casings 18.1 18.9 5.6 3.5 lheat 20.1 15.1 20.1 2.5 2.9 1.4 Fruits and nuts 14.1 13.2 15.5 13.3 2.2 0.9 tobacco, leaf 8.3 9.8 8.7 6.0 5.9 4.8 Cotton and linters 80.9 74.2 78.9 63.2 36.0 33.3 lest, game, poultry 2.0 4.4 2.0 3.9 a a a Insignifi cant . Source : Connerce Yearbook; (data are compiled from figures given in above sources.) Foreign Commerce Yearbook 59 CHAPTER Y COTTON AND TOBACCO. Cotton Germany produces none of its own cotton, and for many years raw cotton has been the leading export from the united.states to the Reich. In the twenties Germany and Great Britain were virtually tied for first place as markets for America cotton. One of the most important of the German exports in these years was cotton textiles and reexported cotton. This country supplied the Reich with both long and short staple fiber, the varieties being American upland, American-Egyptian and American- sea island. Host of our experts to her, however, consisted of American upland of the short staple type. Table 11 shows United States exports of unmanufactured cotton, 1926- 1938. Figure 2 portrays this information graphically. It should be remembered, in enmining this table, that United States statistics of exports of cotton to Germany have always included goods consigned to the free ports of Hamburg and Bremen, a part of which is reexported to various Central European countries. .as a result, these statistics have generally overstated the trade with Germany proper. fromtthe table it is apparent that United States exports, both to all countries and to Germany, reached their peak in 1927, in which year this country exported nearly 2.5 million bales to the Reich. During the late twenties Germany consistently pur- chased between one-fourth and one-fifth of our total cotton exports. 60 Thble 11. 'United States Exports of'Unmanufactured Cotton, 1926-1938. (Thousands of bales) Thar Total to Total Percentage Rank of all countries to to Germany Germany' Germany as a market 1926 9,384 2,021 21.5 2 1927 9,794 2,452 25.0 1 1928 9,158 2,038 22.8 1 1929 7,964 1,652 20.8 2 1930 7,176 1,637 22.7 1 1931 6,956 1,402 20.2 1 1932 9,060 1,787 19.7 2 1933 8,530 1,715 20.1 1 1934 6,297 740 11.8 2 1935 6,448 655 10.2 5 1936 5,948 691 11.6 3 1937 5,728 800 14.0 4 1938 4,562. 319 7.0 4 Source foreign Comoros and Navigation 0f the United States. 62 _.._._ ——1 _-.— .—4‘ .— . . .. ., .rT. ufs b III~IOII L. _w l-.- - __; .t. A .. . J -‘. ._-._‘ H7...» 7H_.. .._._... .. .\.v‘.. .7 ._ . .e, .. . ..L _ .t ..... . _ . v _ .. .v. he I , . d; Btu . . f . . . t . . . . e . IIII: t SE; a ... -L. ... . . .. ,. .,_. .. , .. . .,_ _.,.. ., .... .... - 7“,.-. . . . an. s . . . . A . u . a + ,HH. 0. 63 Since 1927 united States exports of cotton have fallen steadily, with the exception of the years 1932 and 1933. Our total exports dropped from 9,060,000 bales in 1932 to 4,562,000 in 1938, a decrease of 50 per cent. Betwoen the same years exports to Germw fell 82 per cent. The more drastic decline to the Reich is reflected in the snaller percentage going to that country. Uhereas in 1932 Germany took 19.7 per cent of our experts, in 1938 she took only 7 per cent. It is interesting to note, however, that in spite of the great reduction in cotton exports to Gemany, cotton has remained our largest agricultural export to the Reich, in 1838 accounting for 43 per cent of all agricultural exports to that country. American cotton exports, both to all countries and to Genany, declined in the period 1929-1931. This was the result of the high prices for cotton prevailing under the Federal rarm Board's stabilization operations. Iith government control removed in 1932 and most of 1935, our cotton exports were greater than at any time since 1928. It was only after 1933 that our experts declined steadily, and it was also after 1933 that the proportion going to Germany decreased. Germany also lost her top rank as a market for this country's cotton during these years. Since 1933 Japan has been the principal outlet for our cotton. Low labor costs and the low exchange value of the yen have nude it possible for Japan to undersell competitors in international textile markets. In 1938 Germany ranked fourth, behind Great Britain, francs and Japan, as a market for American cotton exports. Iron Table 12'can be seen the reduction in total German imports of raw cotton. The 1933 figure is higher than the annual average from 1926 to 1930, but from 1933 to 1936 total imports fell from 1.9 to 1.1 million 64 .333 nefiooen {ego-«son deuaom mangoes-3 see some eeaoiaosz 33330: one avocado-anon Hog—om seashore—.4 he: noun 2.3930 «season ..n.anousoo guano. no eoesaoao .auu on 8 39.35 use» you p osflovfldd Isvfldoflfl I 92 2.8.8.” 0.3.2. 8.3.2» 328m 38;“: 36.8» 88.92.." 8an s.om «Ho.nam meo.em mum.mma oam.aoa nem.oaa use.aon ado.oaa.a anus 0.8m ooa.ao~ eoe.ee ,on¢.mna emu.ena oom.oaa omo.oan o.a.mmo.a mama «.em oeo.m«n one.oo onm.aen mna.ama «Ho.oma www.men oae.a«e.a mama 8.80 own.ana omo.eu wea.mn oea.nom eoe.oma own.oam omn.ao¢.a «was u.oe «we.moa enn.ea o eom.aaa enn.eoa eoo.eee.a ema.a«m.a mama Haauq< a.no nom.aoa www.ma «No.5oa une.oaa ooa.~ea one..ao.a san.moo.a on-anma a 8.0m mom.ae nna.ma Heu.o oom.nm meo.mma son.nee.a mam.aam.a on-oam~ seesaw 3.73568 2: anew: H.393 :3 365 so» can H38. omens: 25.25 mega a anagram v3.39 .0 sou.“ .3 on afloo hon downs Hush 1...: season we. no .oaum. onaauoaoa ...anpasoo as .ssasoo use no eauoaan nuance .ua .Hasa 65 bales, a drOp of 43 per cent. There was a slight increase in 1937 and 1938. There have been two chief reasons for the reduction of German cotton-imports from all countries: (1) The decline in German exports of cotton textiles and (2) the development of substitute fibers. The progress amde by agricultural and raw-anterisl countries in the manu- facture» of textiles has had an adverse effect upon Goran textile exports. Increased competition from cheap Japanese textiles in the thirties has been especially harmful- In addition, the German armament program diverted labor and capital to other enterprises. Thus cotton f textile production for export purposes was reduced, thereby necessitating a reduction of raw cotton imports. Germany's total exports of finished textile products fell from 1,021 million Reichsmarks in 1929 to 361 millions in 1937, a decline of 66 per cent. During the first nine months of 1938 exports were about 14.3 per cent lower than in the corresponding months of 1937 .1 Lnother reason for decreased German imports of cotton has been the increase in Gems production of textile raw materials. The German Institute for Business Research has satin-ted that whereas domestic production of textile raw materials in 1932 was only about 5 per cent of consumption requirements, production in 1937 was more than 22 per cent of domestic consumption. for more than twenty years, Germany has been experimenting with the use of wood cellulose in the production of artificial textile fibers. Processes of mnufacturing continuous filament rayon were I Reichs-Kredit-Gesellschaft, Germany's Economic Situation at the Mn 0: 1938-39, p. 23. 66. developed; but it was not until the advent of its program of self-suf- ficiency that Germany attempted production of staple fiber on a large scale. from.l933 to 1937 the production of staple fiber was increased fraa less than 6,000 short tons to more than 110,000 short tons. Ilean- while, production of rayon increased from.3l,600 short tons to 62,800 short tons.1 German production of natural fibers such as flax, hemp and.wocl also has increased. Tnble 13 shows the combined production of textile raw mterials in Germany for selected years. Table 13. German Production of Textile Raw laterials (short tons) Year Agriculturally Industrially Total Percentage Produced Produced Industrially Produced 1925 42,300 14,000 56,500 24.8 1928 20,700 25,400 46,100 55.1 1933 9,400 37,600 47,000 80.0 1936 46,200 101,400 147,600 68.7 1937 53,900 173,100 227,000 76.3 {Sourcez German.Institute for Business Research. In 1938 production of home fibers increased 24 per cent over 1937, staple fiber being the main source of the increase. new plants under construction in 1938 are expected to further increase the production of staple fiber. “f ‘U. 8. Department of’lgriculture, Bureau of'Agricultural Economics, The Agricultural Situation, Hay 1938, p. 11. 67 The greater reduction in German cotton.imports from the United States than from the world at large is accounted for by: (1) high prices for American cotton and (2) diversion of German cotton.imports to other sources. Under the A. A. A. program American cotton prices reached levels out of line with cotton prices in other exporting countries. The high loan value on cotton.nade it more profitable for American farmers to store cotton than to sell it. In spite of reduced acreage, the United States had large carry-over stocks of cotton in the thirties. There was a large exportable surplus but the price made it difficult to sell, the loan value being as high as 12 cents per pound in 1934. German cotton imports from.the United States fell to a record low in 1938 (see Table 12.) Partly as a result of the high American price, Germany has diverted her cotton unperts to other countries. This is reflected in the decreased share coming from the United States. In the late twenties the Reich se- cured four-fifths of all her cotton imports from.this country, and in 1933 this share was still threeequarters. By 1938, however, only 18 per cent of’German cotton.imports came from the United States. In this year Brazil vas the chief German source, and Egypt had.moved into a virtual tie with the united States for second place. American upland cotton has suffered especially from‘competition with Brazilian cotton. In general, these other sources have been willing and able to accept Ger-an goods in exchange, and trade with them has been largely on a clearance basis. TObacco The United States leads the world in tObacco production, followed by British India, Russia and Brazil. Germany produces only small quantities 68 of tobacco, normal production being only about 5 per cent of normal production in the United States. Germany has expanded production by approximately 50 per cent in recent years, but still produces only about oneofourth of its consumption requirements. Tobacco is the oldest export-crOp of the United States, and this country ordinarily experts about 40 per cent of its annual production. line-cured tobacco is the most important type exported. It constitutes about one-half of our annual production, and about 60 per cent of it is customarily sold abroad. {A large share of it is used in the manufacture of cigarettes. The United States also exports large amounts of dark types, notably dark-fired Kentucky and Tennessee and Dark Virginia. In the late twenties the United.States annually exported about 27 million pounds of tobacco to Germany. The peak year was 1927, in which year 6.1 per cent of our tobacco exports sent to the Reich. Germany ranked fourth, behind Great Britain, china and Australia as a market for American tobacco. (See Table 14). Exports to Germany were checked.in 1928 and 1929, and in the latter year Germany ranked only eighth as an outlet. Among the factors responsible were: (1) heavy government taxes on tobacco in Ger- many, (2) increased consmmption of cigars and decreased consumption of cigarettes and pipe tobacco, and (3) increased competition fron.Burley and flue-cured tobacco in Canada, cigarette tobacco in the British‘African colonies and dark tobaccos in Europe. American tobacco exports to Germany declined to some extent in the early depression years, but the reduction was no greater relatively than the decrease to all countries. Among the factors limiting our tobacco exports to Germany in the early depression years were: (1) Increased Table 14. United States Exports of Unmnufactured Tobacco, 1926-1938. (Thousands of pounds) Total to Total to“) Percentage Rank of Gene; Year all countries Germany to Germany as a market 1925 487,000 27,854 5.7 5 1927 512,000 31,387 6.1 4 1928 584,000 30,164 5.2 4 1929 566,000 20,451 5.5 8 1930 580,000 23,044 4.0 6 1951 524,000 18,100 5.5 7 1932 411,000 18,300 4.5 5 1955 458,000 13,800 5.1 7 1954 441,000 12,700 2.9 8 1935 396,000 14,800 3.7 7 1936 425,000 7,700 1.8 9 1957 455,000 8,300 1.9 8 1938 489,000 5,500 1.2 10 Source: Foreign Commerce and Navigation of the United States. 70 11 4 _ 1 4 _ 4 4 4 _ . _ 4 4. . 4. 7 7 M 777 ..z- .. . . 4. . 4 . w. 7 . .. ..977 . _ . w . . . 7 7. 4 . . — u _ . . 7 .. . _ m l _. * _ — . 7 . ... 4.... 7 . . . . . . _ 4. I . . . 4 a * . . . _ i . . l . 4 . .4 _ . 7. 4 . WL . V. . . . . I trl .7 a 4... l1 . ul'al: 4|vlvlc .7. i 7.I97Y..:7cl . . 4 4 k . . . _ .... : 4 . . . . , 4 ; 3 _ . . . 4. . p. . 7 _ 7. n . .. .. _ 4 . * .. * n . 4. h . 4 .. .. 7. . .4 . . . . 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F» . 71 substitution of European growths in smoking mixtures, (2) reduced stocks because of poor business conditions and credit facilities; (3) exchange difficulties, (4) increased.Germen production, (5) the relatively high price of American tobacco and (6) increased competition from Turkish tobacco. 7 Since 1932 total‘United States exports to all countries have risen, 1938 figures being 19 per cent above those for 1932. On the contrary, our exports to the Reich dropped from 18.3 million pounds in 1932 to 5.5 millions in 1938, a fall of 70 per cent. This is reflected in a decline in the percentage share going to Germany from 4.5 in 1932 to 1.2 in 1938. In the former year the Reich ranked fifth as a purchaser of american tobacco, in the latter year she ranked tenth. The principal outlets for our tobacco in 1938 were Great Britain, Australia, China and The Philippine Islands. Table 15 indicates German imports of leaf tobacco and stems, by countries. Total imports from.all sources were down somewhat in 1933, but have climbed steadily since that time until in 1938 they were equal to the annual average from 1926 to 1930. At the same tnme imports from the _ United.States declined from.over 20 mdllicn pounds to less than 10 millions, a drop of more than 50 per cent. The percentage supplied by this country decreased from approximately 10 per cent in the late twenties and early thirties to 4.6 per cent in 1938. In 1929 the Uhited.States ranked fourth, behind Netherland India, Greece and Turkey, as a source of Geman tobacco imports; in 1938 this country ranked a poor sixth. The'United.States, Netherland India and Daninican Republic have been the chief losers in trade with Germany during recent years. Greece, Bulgaria and Brazil have been the chief gainers. 72 .vaogoaason Acumen dengue-sod sec .83.: ego-Boom 308.3302 IP84“ 83.3950 .88888888 888 88888888 .888888 ..88888.8 8.8888888 .8888 .8888888 8 u lug” £38.88. 8888 8.88985 .3388 38.883785 38588888 s 8.8 888.8 888.8 888 888.88 888.88 888.888 888.8 888.888 8888 8.8 888.8 888.8 «88 888.88 888.88 888.88 888.88 888.888 8888 8.8 888.8 888.8 888.8 888.88 888.88 888.88 888.88 888.888 8888 8.8 888.8 888.8 888.8 888.88 888.88 888.88 888.88 888.888 8888 8.8 888.8 «88.8 888.8 888.88 888.88 888.88 888.88 888.888 8888 8.88 888.8 888.8 888.8 888.88 888.88 888.88 888.88 888.888 8888 888.53 8.88 888.8 888.8 888.8 888.88 888.88 888.88 888.88 888.888 88.8888 8.8 888.8 888.8 888.8 888.88 888.88 888.88 888.88 888.888 88-8888 8 seem as 8.88.8860 . 8.8888 8.888 88888 888.88 «888884 88888 .8888" 8.8.88 88888 .888884 88.8 8888.8 3.88.5.2 8.8.8.8538 8.88.46 pace mom a . one 8 shoe» 3888.588 8.88.8.8 ..88 888.8. .8888i8888 .3888an he .32; use escapes «see no 3.88888 888.88 .87... c.8818. 73 There have been several reasons for the decrease in imports from the Uhited.8tates. {After 1931 the increase in domestically grown to- bacco in Germany replaced some of the dark types previously imported from this country. Also, there was a tendency for consumption to shift toward cigarettes and cigars containing domestic and.imported tobacco other than.dmerican, and away from.amoking mixtures and chewing tobacco, in the manufacture of which the greater part of American leaf heretofore imported was used.1 After November 1, 1936, the Gemn industry was limited in its use of Nbrth.lmerican tobacco, with.the exception of United.States flue-cured, to 90 per cent of the quantity used in the period from October, 1935 to September, 1936. This order covered American dark types. re: flue-cured tobacco, the order covered both united.8tates and Japanese leaf, taken together or separately, limiting total imports of these types to 90 per cent of the total basic quantity of both types.2 By 1938, American tobaccos coming into the German market arose from three sources: (1) amall quantities cf‘bright Virginia and dark Kentucky tobaccos obtained against old barter contracts; (2) small quantities pur- chased with foreign exshange on special approval; and (3) small quantities resulting from the exportation or barter of foreign tobaccos, the proceeds of which were allowed to be used for purchasing American tobacco. Tobacco in Germany is under government monopoly. It provides large and steady revenues for the State, and has social and even political implications 1 Foreign Crops and Markets, October 5, 1936, pp. 403-405. 2 Foreign Grape and Markets, February 1, 1937, p. 63. 74 which make the maintenance of supplies highly important. Thus imports seen quite likely to be well maintained. However, most of the imports now can from countries which have clearing or compensation trade arrange- ments with Germany, and it is problematical whether the United States will benefit from continued high imports into the Reich. CHLPTER VI GRAINBIIND FEEDSTUFES Introduction In the late twenties Germany ranked fourth, behind Canada, Great Britain and The Netherlands, as a market for United States eXports of total grains and preparations. Germany took on an average about 6 per cent of our total exports of all grains. Germany commenced restricting imports of’grains, however, even before the depression, our exports to the Reich falling steadily from 1927 to 1936. That the decrease was even more marked than the decline in exports to all countries is seen by the fact that the share going to Germany drapped until in 1936 it was only .35 of one per cent. Total exports to all countries increased considerably in 1937 and 1938, but the increase to Germany was even greater, and in 1938 the Reich again took nearly 6 per cent of our grain exports. Germany ranked sixth as an outlet in 1938. Much of this rise in 1937 and 1938 was due to increased imports, particularly of corn and wheat, for war reserve purposes. (See figure 4.) Germany also ranked fourth (behind The Netherlands, Denmark and Belgium) in the late twenties as a market for united States exports of total fodders and feeds (includes hay, oil cake and oil-cake meal, fish meal for feed, mixed dairy and poultry feeds, oyster shells and bran, middlings, etc.) Both exports and the preportion going to the Reich fluctuated unevenly until 1933, in which year there was a sharp drOp in both. Exports 75 8.... E . ‘. - i - L... .... --.-.. . 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V --—.——-—--.—-—.—1.—.————.—-—.o~~48.——-—.-——.—....v.A H-a8.—- ~H—-b -L—-—~--- 8.. -T-- ——-— ——--a p‘ f"“" ......8.. 8.—88--.. .... .. ~.~ . . .y . . .. ..l .. . . . . .. ...... .... ...I .o . _ .. o. 8.. .-..,8. .....¢-». ...-...,,.. ......... ......... .. ,.s.. .. .....t...-.. .. .... . ......) ...,. .. .. .... . .. . . e .- .-.. ..--.8... e--.s.8. ....»..-. . ..... . .... ‘.. . .. ...» ... . , .. ,, ... ... ........ ....... ... . ..is..8..,..-... -. ....-.-.. .....-.. ........ ... .. . ...... .. ... __ ........ ........, ... .... .. ... ~ . . e¥0‘0 0.7 'tOOfiCele Ibesoe-8. .. styb. awa...‘ a .n..y.- --e -ve - e ‘ 'a> o-aaaaan. 898.8 .-a e. . 8 . rt---88.n-—.s....... 8. ...-. ......... ..-y. ..L ..... .. ...-..» .. . .. .-... ....-.... .-.......‘.. ..... .. ..... r.....8~~.. -.. ..... .....--. .. ..... ....-8 . ...... . ...... 1"- --.. . . .. ........ ..-. ....l.....- .. .. ' . L.~.-.... .....8... 8.888--... ...»... ..-.A..-. ......_. .. .... - ->- ....- -»8 ...-4 .7....... . ....... ... .. ....... . . . in. ii. Li...+A_-n , i .1 f . i L ._. ii‘ .1. . ..L. r 81. .1 - A - . '7? reached a new low in 1938, with Germany taking less than 2 per cent of the total (as compared with a high of over 32 per cent in 1932) and ranking only ninth as a market. (See figure 5.) Much of the decline has been the result of the Reich's attempts to become independent of external sources of supply. Table l? shows the extent of increased German production of certain grains and foodstuffs in recent years, and Table 18 indicates the decline in Gemn net imports of most grains and feeds in recent years. Much of the Germn reduction in imports of grains and feeds after 1927 can be attributed to government measures to protect cereal producers and feeders of livestock. It reflects (l) the regional conflict of interest ' between the large grain growers of the Northeast and the small farmers of the South and lest who must buy feed grains to feed to livestock and poultry, and (2) the fact that danestie production of certain grains fluctuates from a deficit to a surplus basis from year to year. This resulted in an intri- cate system of measures which at the same time were highly elastic and could be adapted to changing conditions of supply and demnd. The govern- ment attempted to isolate the German grain market from world-market devel- opments. Germny has also tended to bring about changes in the utilization of grains that can be used for more than one purpose, for instance, wheat, rye and corn. This has been done by various milling and feeding regulations. As an example, the shortage in bread grains (wheat and rye) in 1936 resulted in a variety of measures in 1937 to restrict consumption, to prevent the feeding of bread grains to livestock, and to accumlate supplies in govern- 1 mont hands. The utilization of bread grains for distilling purposes was 1:"German Foreign Agriculturalurolicyfl Foreign Agriculture, January 1936, ' p. 23, U. S. Department of Agriculture. u Table 16. United States Grain and Feed Exports to Germany, 1926-1938. (Thousands of the unit specified) Year lheat 'heat Rye Barley Corn Rice Cottonseed (bu.) flour (bu.) (bu.) (bu.) (lbs.) Cake and (bbls.) . Meal (tons) 1926 6,377 657 533 1,205 520 10,560 125 1927 5 ,472 6 56 1 , 918 10 , 315 310 41 , 000 87 1923 2,177 541 945 12,370 2,765 42,500 54 1929 5,754 409 94 4,545 5,635 42,235 55 1950 2,451 563 0 o 1 55,944 4 1951 2,321 175 0 26 63 53,241 ll 1952 1,745 53 290 174 256 41,157 4 1933 274 23 O O 13 21 , 960 l 1934 19 18 O 0 58 14 , 768 O 1955 ll 19 0 0 0 5,500 0 1936 0 . .5 O 0 O 585 .6 1957 669 17 139 o 171 1,555 14 1953 5,215 14 41 543 15,397 444 2 Source: Foreign Omerce and Navigation of the U. S. Table 17. German Production of Grains and Fbedetutts, 1925-1938. (lullions or units unleaa otherwise specified) Ybar ‘lheat Rye Oats Barley Potatoea Sugar Hay, rbdder (Me) (Me) (1)11.) (Me, (1311.) ”0t. Alfalfa Beets (Mbtric and (Mbtrie tons) clover tons) (lletric tons) 1925 118 317 385 119 1,533 10,326 33,169 24,752 1926 95 252 436 113 1,103 10,495 33,536 23,073 1927 121 269 437 126 1,380 10,854 35,407 24,389 1938 142 335 482 154 1,516 11,011 30,185 22,644 1939 123 321 509 146 1,473 11,091 31,237 24,208 1930 131 302 390 131 1,628 14,919 36,988 30,402 1931 156 263 427 139 1,612 11,039 37,015 29,826 1932 184 329 458 148 1,728 7,875 37,058 34,486 1933 206 344 479 159 1,619 8,579 32,836 30,717 1934 167 299 376 147 1,719 10,394 26,424 33,805 1935 171 294 371 156 1,507 10,569 33,181 34,708 1956 163 291 387 156 1,702 12,095 40,180 37,601 1937 164 266 405 167 2,032 10,091 37,272 50,349 a 1938 202 333 432 192 1,870 14,966 37,225 ‘lbadov hay and 1uoerne clover. Sources: Coneree Yearbooks; Foreign Cansrce Yearbooks; Beichs-Kredit-Geeellechart (Berlin). Tubls 18. German Net Imports of Grains and reads, 1925-1937 (German Statistics - Thousands of unit specified) a a a a a a a Year Ibeat lheat Rye Corn Barley Oats Rice Ibddsr (bu.) flour (bu.) (bu.) (bu.) (bu.) (lbs.) (tons) (bbls.) 1925 54,000 4,400 c 21,900 42,800 0 1,070,000 c 1926 69,000 1,400 b 27,700 79,900 12,000 551,000 898 1927 92,000 700 26,000 82,900 91,900 12,400 441,000 1,560 1928 80,000 400 b 50,600 83,600 b 244,000 757 1929 67,000 500 b 26,500 31,100 b 92,000 592 1950 45,000 250 b 25,600 69,900 b 75,000 406 1951 19,000 120 900 20,000 54,700 5,500 154,000 386 1932 20,000 90 22,000 30,000 26,000 400 850,000 786 1955 9,000 b 6 10,000 11,000 b 630,000 499 1934 17,000 b b 15,000 25,000 b 630,000 113 1955 5,000 b 7,200 11,100 7,500 b 420,000 298 1936 3,000 b b 6,900 2,700 b 381,000 88 1957 45,000 b 85,000 f 11,100 b 486,000 150‘1 81 ‘7Lpproxinate. b Negligible, 1: any. ° Data not available. 4 n.t1Mt.de Source: Foreign Commerce Ybarbooks. 82 prohibited. Total quotas for all grains to be delivered to the govern- ment by farmers every year were set up for each farm and included speci- fied mini-a for bread grains alone. I1"his measure prevented a restriction of bread-grain growing (because of the surrender obligation) in favor of feed grains, which were not requisitioned. Iheat and that Flour In the twenties the German policy was to both import and export wheat and wheat flour. Domestic Gernnn wheat is of the soft variety. In addition, durum wheat cannot be produced in Germany. Thus the policy was to export part of the domestic crop,chief1y to Baltic countries, and import some of the better grades of bread-making wheat to mix with the German soft wheats. The predominating type of bread consumed in Germany is, in some sections, mixed wheat and rye bread and, in other sections, rye bread. Very little wheat bread of the loaf type is consumed, but consumption of wheat flour rolls is quite high, amounting to about 30 per cent of the total bread consumption. ‘Straight' and 'baker's' grade wheat flours of less than medium gluten strength are used in the production of the co-on quality rolls and leaf breads. Short extraction and patent wheat flour of medium strength is used in the production of the best quality rolls and leaf breads. Total net imports of wheat into Germany from all sources reached a peak of 92 million bushels in 1927. The United States ranked third, behind Canada and Lrgentina, as a country of origin. 01: the other hand, this country's exports of wheat to the Reich reached the highest level in 1926, 85' the figures being 6,877,000 bushels of wheat and 657,000 barrles of wheat flour. This represented about 5 per cent of our total exports, and Germany ranked seventh as an American market for these commodities. (See figures 6 and 7.) After 1926, our exports to the Reich fell (as did our exports to all countries in the thirties) until in 1936 they vanished entirely (see Table 16). In August 1931 the old import-certificate system was replaced by a so-called 'grain—exchange plan". The purpose of the 'plan' was to allow German mills to cover their most urgent needs for hard and high- gluten varieties of wheat which were not grown within the country. Wheat could be imported at reduced tariffs or duty free, but only to the extent to which a foreign market was found for German wheat and flour. Additional wheat imports were subject to the full mmount of the high tariff prevailing at that time. . By 1932 a duty of $1.62 per bushel, together with milling quota systems had greatly reduced American exports to Germany.1 By 1933 Germany was practically self-sufficient in bread grains. moreover. under clearing agreements completed in the middle thirties, the Danube Basin gained prominence as a German source, not for reasons ofprice or quality (these countries do not produce hard spring wheat of high protein content), but because these countries were willing to take German goods in payment. By the end of 1935, German agronomists were of the Opinion that if the country were to become permanently independent of foreign sources of supply for wheat, it would be necessary to develop varieties that not only had a high ‘1 Foreign Cr0ps and markets, July 5,1932. ._-...... ..-.... . .. ... . , .. ._....n...- .,,,. - .. - - ‘ ' ...-. . 1 _ V , . ..,., -..-._._. ...- -_ ._. ——-——--— fi*-~-—~4 .......-.. .. ‘F . . ,. b—n ~04--.- vua . .. . . .. 0 - '- v v , . Q . . . - 1 . 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A» , - _ . .--_. -....-.... .. . . .- ... 1. . ....-. _ . .. .1 . ....... .. .. . .. . . .- . .... . .. 1r. ...... . . .....-- ... ... -.....1. ..... . .. .. . -.- .. .. . . 1...-.. . .-.... . ..... .. . ..a .-. .-. ..... ....... . .. -..1 ,,.,.. .y ..... ... . . .. .1. .. . . ..... . .-. .. 1... .. . .. v <4. .......1. ....... . ......L ......» -......1 .. .. .... . . .. .. .. . .. ._ . 1. .. .. . .. 4 .....se~.. e --ee .—-1 ... . r. .11....». 1...... . . .-. .. .. .. ...... ..I..... . ..... . .. .... .1. . .. --.. ...-—..-..... ......... ..... .. ..... ... ....,.... ....,.... .........l.... .. ...... .. .. ' 1‘ 1 1111* 111 111 111i 1‘1 111_. 1 1.11111 1 1 111‘ 15111111 1 1 1 1 1 1 1 111 1 1 86 gluten content but also gluten of desirable quality. The various arti- ficial price maintenance measures of the previous ten years had increased wheat production in Germany to the extent that the country was quantitatively self-sufficient. The rapid increase in production, however, had been accom- plished partly at the expense of feed grains, and partly either by seeding wheat on land that was unsuitable for that crop or by neglecting desirable crop rotation with a consequent sacrifice of soil fertility. Yields per acre, on the other hand, had been showing an upward tendency due to the use of higher yielding varieties and to the increasing use of fertilizers. Thus there remained the serious problem of the baking quality of the wheat. Total wheat imports into Germny reached a low point of only 3 million bushels in 1936. The large increase in 1937 and 1938 followed the govern- ment's policy of accumulating reserve stocks for war purposes. In 1938 Germany imported 48 million bushels of wheat. The United States was the leading country of origin. This country had a large exportable surplus in 1937 and 1938, and the increase to Germany was a part of the rise in exports to all countries. Other leading sources of German wheat imports in 1938 were Rumania‘, British India, Argentina, Hungary, Canada, Yugoslavia and Australia. 22. 0f the total area used for agricultural purposes in Germany, 60 l . per cent consists of light soil. Since a light soil is at a greater disadvantage in a cold than in a warm climate, Germny is doubly handicapped. 1 'Germany's Capacity to Produce Agricultural Products“, loreign Agriculture, My 1937, p. 221, Ue 8e DOpt. Of Agriculture. . , 8? There are but few crops that can withstand cold and at the same time flourish in a light soil. Some lands can produce only rye and lupines. The latter cr0ps are usually plowed under for the succeeding rye crop, which, because of the short season, is harvested every other year. The soil requires heavy applications of fertilizers, in addition to the lupines plowed under; consequently the cost of producing rye is quite high. In spite of this, Germny has made efforts to maintain production on a high level and to minimize imports. Rye is a very important crop in the Reich, and during the thirties the production of it has annually exceeded wheat pro- duction by 50 to 100 per cent (see Table 18). In 1938 Germny produced ' 333 million bushels of rye as compared to 202 million bushels of wheat. Germany fluctuates in its rye trade, being on an import basis in some years, while exporting rye in others, depending mainly on the size of its harvest. Germany was on a total not import basis in 1927, 1931, 1932, 1935, 1937 and 1938, and an exporting basis during the other years of the period 1926-1938. United States exports of rye to Germany have been relatively unimportant, the peak being only 1,918,000 bushels in 1927. Since 1929 this country has exported rye to the Reich in only three years (1932,1937,1938). The experts to Germany in 1932 came at a time when the United States govern- mnt was not influencing production or prices, and although it amounted to only 290 thousand bushels, this represented one-fourth of our total rye exports to all countries. As a result of the scarcity of bread-grain supplies in Germany, the minim extraction percentage for rye flour was raised on larch 27, 1937 1 from 75 to 30 per ”fit: and beginning on November 1, 1937 all rye flour 1 foreign Crops and Markets, April 12, 1937. 88 for bread mking was required to carry an admixture of 6 per cent of potato flour.l On October 1, 1938, following a season of good crap yields, the compulsory admixture of 6 per cent of potato starch-flour was abolished and the admixture of ground potato-flour was reduced from 3 to 2 per cent.2 At the same time the milling percentage was shortened once more. The embargo upon the use of bread cereals for feed purposes was maintained. In November 1938 Germany and Poland completed a barter arrangement whereby Gen-1w agreed to take 23,000,000 dollars worth of Polish cereals over a period of nine years, and Poland agreed to take 23,000,000 dollars worth of German-made industrial machinery. The principal cereal involved is rye. The arrangement, however, may benefit American exporters of grain to other Iestern EurOpean markets since it gives assurance that the Polish grain export surplus will not be a competitive factor in markets outside of Gamay for a number of years.3 reed grains 9333 - The counon feed grains are corn, barley and oats. A limited amount of American corn was used in Germny in the late twenties and early thirties for the manufacture of corn products such as corn flour, starch, syrup and meal. The big outlet, however, was for hog feeding. In 1932, for the first time in many years, United States corn prices achieved parity in Germany with the two competing types, Danubian Galfox and agentine River Plate. United States number 2 mixed and number 2 yellow were I “German Foreign Agricultural Policy', cited, p. 23. 3 Germany's Economic Situation at the Turn of 1938-39, p. 39, Reichs-Kredit- Gesellschaft. 5 Foreign crepe and Markets, November 26, 1938. 89 recognized as having superior hog fattening value per unit of weight over the other competing varieties.1 After 1932, however, practically no United.States corn entered Germany until 1938 (see Table 16). Factors responsible were (1) restrictions imposed by the German Corn Monopoly, (2) relatively high United States corn prices,(3) restriction in United States production under the A. ‘m ‘m, and (4) drought in 1934 and 1936. Argentina, Emmania and Yugoslavia accounted for practically all of Germany's much-reduced corn imports during these years.2 The basic German bread law of June 9, 1931, was modified march 2, 1937, whereby up to 10 per cent of potato flour, dried potato products, dried butter-ilk and milled corn cculd.be mixed with rye or wheat flour for bread making without notice being given to this effect er'markings placed on the flour containers;3 and beginning march 13, 1937, it became obligatory to mix corn meal with wheat flour, in the making of bread and bakery pro- ducts, to the amount of 7 per cent. Imports in 1937 were increased to replenish depleted stocks, supplement barley and domestic reet crops, and encourage an increase in hog production.4 The embargo on the use of bread grains for feed purposes brought about a con- siderable increase in imports frem.the United States, as well as total im- ports, in 1937 and 1938. Imports into the Reich for war reserve purposes in 1938 resulted in United States exports of corn to that country reaching a record total in the year mentioned. jj_ Cf. Foreign Creps and markets, issues for August 1, August 29, and December 27, 1932. 2 foreign Crepe and markets, may 11, 1936, p. 553. 3 Jereign Crepe and markets, April 5, 193?. 4 , Of. Fereign Crepe and markets, issues for January 4, 1937 and November 27, 1937. 90 .EEEEEZ - Experts of feed barley to Germany have suffered a very marked decline, and vanished entirely from 1933 to 1937. This was partly the result of increased domestic supplies, barley acreage in Germany increasing about 13 per cent from 1927 to 1937.1 Also, the position of American barley was undermined after 1928 by unfavorable feeding experience with fungus-infected impertations. Argentina and Rulania have often exported large quantities to Germany and.new account for the bulk of the reduced imports. ‘2333_- In most years Germany has been on a net exporting basis in regard to cats. Only in 1926, 1927, 1931 and 1932 was Germany a net importer. Germany was a net importer from.the United States until 1930, but since that time our experts to the Reich have disappeared. In con- trast to the increase in barley acreage, oat acreage in Germany has de- clined in recent years.2 This redistribution of the grain acreage has resulted in a much better balance between domestic production and con- sumptien. Other reedstuffs reedstuffs play a very important part in the agricultural economy of Germany. The production of animal products is largely a question of the availability of foodstuffs. Feedstuffs include,besides the grains mentioned in the preceding sections, such items as potatoes, sugar beet pulp, legumes, 1 'Germany's Capacity to Produce Agricultural Products“, cited, p. 247. 2 Ibid., p. 240. 91 oil-cake meals and various hay crops. In accordance with the German Government's policy of helping livestock, dairy and poultry producers, cheap foodstuffs for farmers has been the rule. Two groups of feeds have to be considered in connection with the German feed situation, carbohydrates and proteins. Grain and potatoes are the chief carbonaceous feeds, while legumes, cover crepe, and oil cakes (which are imported either as a finished product or as raw'material) name up the chief protein feeds. The climate and the soil favor the production of the former, but Germany has always been largely dependent upon imports of the latter in order to meet domestic requirements for the production of dairy products and fats.1 Two factors of great importance in solving the preblem.are: (1) The arable land available in Germany cannot be significantly increased, and (2) yields fluctuate greatly be- cause they are easily affected by changes in the extremely variable climate. An increase in the acreage of feed crops can only take place at the cost of the crops which are also of importance. To overcome this Germany is trying to increase yields, shift acreage to mere valuable crepe and cultivate crepe grown in between two annual crops, 1. e. inter- mediary or cover creps.2 There was a marked reduction in German net imports of carbohydrate feeds after 1927, largely the result of import restrictions on feed barley and corn, these being replaced by domestic rye, potatoes and sugar beets. Net imports of protein feeds were fairly well maintained from.1927 to about Cf. "Germany's Capacity to Produce Agricultural Products," cited. 2 Foreign Creps and Markets, march 4, 1939. ‘ 92 1933, but since then there has been a significant decline, and this is reflected in the reduced production of oilcakoe and bran resulting from restricted imports of oilseeds and wheat and high milling extraction ratios fer'bran supplies. The case of cottonseed cake and meal is a good example of what has happened to United States exports of foodstuffs to Germany. In 1926 this country sent 125 thousand tons of cottonseed cake and meal to the Reich, in which year Germany took nearly one-fifth of our total exports and ranked second only to Denmark as a market. By 1934 these experts had vanished entirely and have remained quite low since then. (See figure 8). Our small export totals of foodstuffs to the Reich since 1954 have been partly caused by Germany's attempts to replace high-value imported concentrates with domestically produced foodstuffs, potatoes, sugar beets, catch crepe, etc.-oin other words to replace proteins largely with starch.1 moreover, the German government has guaranteed high prices to growers of oilseeds and has subsidized the oilseeds crushing industries. Consequently, the area sown to oilseeds is gradually expanding, notably that of flax.2 Also, the root crop harvest reached record levels in 1937 and 1938. Thus American experts of grains and foodstuffs to the Reich in recent years have fallen drastically, not only because of increased German production but also because of diversion of imports to other countries willing to enter into agreements with Germany. Under the circumstances, the increase in 1937 and 1938 appears to be only temporary, and our experts to the Reich will probably remain low. 1 "German Agriculture In The four-Year Plan,’ Foreign Agriculture, March 1937, pp. 110-111, U. S. Department of.Agriculture. 2 'German Foreign Agricultural Policy", cited, p. 24. 93 ._-—7., a _ iii.) - {I} . 7 v . .. . a , . _ .. . t V .. W 1. V ‘ .p.... . . . . . ..i . _ . p a ...A. . i W. a. . .. ..w. . .. _ r n _. : . A a. ..a. ...r l,.. ., . . — Y A. . ..a— . .A‘k _ i n . V. . .6 . 1... . A: . 1.8 nv. . 5 . T . We . ._ _ .1..:: a. . . . 4. _. r , 1 .L. 1- . . . t i _ . .. a; . , 1 2-41)-?) ..Av.. . 1i , _ . . . ”if . . . . . .. .- "VP. r . L... , ifi . . . . . .a _ . . v . ... . . I a . e . , . p ,_ . .. . . ,i . . . ., . _. . A . . a i . . . . . A A. . . . . . .. . . , , . .. ., 1+ . . A . a . , .— ._v a .. . . a . .. . . .. , ... . . . . . . .i . .. . .. . . . . .. . 4 H T r i ..., . .. . . ... v ,., . _ ,. . ...». . . . . i ...L . . V .as. .. ._. ... . .. ...» V..s... . . ,...L .l‘. . m in . . ,. .. .. . .l. . . a»... ..4 . i l . , _. , . ... . .. a l . . .Illbl. lv 1 n .v LITA) nil. .5 IaI,OIr|rl1 . . W. . A . « . . ........ , . _ . , H... . . ...... . .. v. . . . .. .t , .......i . .m .. .. .. ...»,u . .. . .. ., .. ... , ... . .... “_. . m. _ . .h... .i , . . _I... .. ...: .. .. , V. . a. ...i .. ... .-. .1 .,. .. a: . .... .., ..,.,.. . . , . . a .4., ... _. y .. . W . . . *w a. y .L. , «tr... .. ..l. t .i I” . .... . .. ... x .. ._ . . . . . ,... .... . .... _ . .7. .. . .» .... .> . _ .. ._ .. r ... ... ,........ . a, . . . . .H A... . . ., . .. I»; » . r .. . . . . ......v .. . . . .. . .. .. ... . L i i. . I) q A -vlf. . .. . 1L ... ., .. . . . .L ......L ... ._. )V .. . ....»p .. ..... ...i . L h. . . , .. ....._...i K . L i . . .... .. .... . .\.s-. . , ...._ . ..... ..l L. . l. r .L . . . ...,... TV . .. ... .f» a ., . . ..l . . T. . L . . . l . . a . . . . . o, V\T .f t). . . . . _ . .. . . . . A . . . 9L .. s: 1: _h ‘ . : . (.1. r . . r . . . . l. r). #7.) . . . .. . . . a . . . . v). . I A L . .. . i . . .v . L...L. a . . ., .... ..J .. vw . . w .. ., .. . . .. . .... . .v . . .. a . . ... ..L . vi .tlT, 1 .....-) ...)1 l3.) _ . 1 .II. (if) ..I. I'll). CHLP‘I'EB VII mmu. PRODUCE Animal products have represented another important group in our agricultural export trade with.Germany. This group includes such comedities as lard and other animal fats and oils, meats and meat products, dairy products, fish, eggs, suasage casings, cattle hides and calfskins, etc. Germny's drive for maximum self-sufficiency has been well adapted to a number of these articles, and all of them have been affected to some extent. Experts of animals and animal pro- ducts from the United States to the Reich dropped in value from 46 million dollars in 1929, at which time such exports to Germany represented 12.7 per cent of exports of this class to all countries to only 1.3 million dollars in 1938, amounting to only 1.2 per cent of the total. At the same time, United States exports of edible animal products (includes edible animal oils and fats, meat products, dairy products, fish and eggs)to Germany declined in value from 34 million dollars to only 694 thousand dollars, a decrease of 98 per cent. Experts of edible animal pro- ducts tc all countries fell 72 per cent within the same period. In 1929 Germany took 14.2 per cent of our experts of these products; in 1938 she took only 1 per cent. Lard In the late twenties the United States exported nearly 200 million pounds of lard annually to Germany. The Reich ranked second only to 94 95 Great Britain as a market, and took between one-fourth and.one-fifth of our total exports of this product. This country supplied over feurbfifths of all lard imports into the Reich. Our experts of lard to Germany held up well in the early years of the depression, but after 1932 they dreppod sharply (as did our total lard exports), from 158.million pounds in 1932 to 1.5 million pounds in 1936, a decline of over 99 per cent. In 1938 our lard exports to the Reich fell to a new low, with Germany taking only 8 per cent of the total (see figure 9) and ranking ninth as a market. Total imports of lard into the Reich varied from.a high point of 237 million pounds in 1932 to a low of 66 million pounds in 1936. From 1928 to 1934 the United States was theprincipal country of origin, but by 1938 this country was supplying only 1.6 per cent of Germany's total unperts of 94:million pounds. In 1938 Denmark, Hungary, China and Yugoslavia accounted for 80 per cent of Germany's takings of foreign lard. In Germany lard is used not only for cooking but also as a spread for bread, being actually preferred to butter in some parts of Germany. There are also other substitutes available, such as oleemargarine and marmalade. In the late twenties, our experts of lard to Germany depended .largely on production and price factors. The controlling factors were hog production in Germany, the United States, and other countries, and the expert prices for lard and the various other fate, as well as business conditions (purchasing power) in Germany. Experts in 1930 fall sharply, reflecting the reduction in German purchasing power. On a volume basis, exports actually increased in 1931 and 1932, as greatly reduced lard prices checked the upward trend in the production of lard substitutes. Even in 97 the years 1925 to 1932, however, there was a steady downward trend in total German lard imports, because of increased lard production within the country. German hog numbers increased from 16.2 millions in 1926 to 23.8 millions in 1932. Hog slaughterings rose fremaan annual average of 11.7 millions in the period 1923-1937, to 20.5 millions in 1931.1 During this period, the Reich refused to restrict imports to any great extent, since this would have caused some increase in the domestic hog supply in an effort to increase domestic lard production, with a resulting excess supply of pork and a lowering of German hog prices.2 Prior to February 15, 1933, the import duty on lard was $1.08 per 100 pounds, but the duty was subsequently raised from time to time until on July 19, 1933 it became $15.70 per 100 pounds.3 Effective February 23, 1934, imported and domestic lard came under the control of the Reich office for Dairy Products, Oils, and rate. Importers were required to secure a “certificate of acceptance' from the monOpoly administration covering preposed imports, in addition to paying special monopoly fees. Those fees were superimposed on the regular import duties and were designed to keep unperted_1ard from competing on a price basis with the domestic product.4 Beginning with march 1934, monthly imports of'lard were limited to 40 per cent of the average imports for the corresponding months of 1931- 5 1933. Each country was placed on a quota basis. Finally, in July and Cf. Commerce Yearbooks. 2 Foreign Crops and markets, November 28, 1932. 3 Cf. Foreign Crepe and markets, 1933 issues for January 30, April 3, may 22, and July 31. 4 Foreign Creps and markets, march 5, 1934, p. 241. 5 Foreign Grape and Markets, April 2, 1934, p. 361. 98 August of 1934 German imports of.American lard were entirely stepped because of the unavailability of dollar exchange. The government fats menOpoly, however, continued to grant exchange permits for’imports from Eurepean sources, especially Denmark and Bungary, and also some from Yugoslavia, France and Latvia.1 Since that time our lard exports have remained at a low level, with Germany not only increasing hog production but also the production of lard substitutes.2 The War which broke out in.September 1939 stopped our lard exports to the Reich. The benefit from any increase in German lard imports following the war would probably be mostly secured by countries with which Germany has trading agreements. Production of lard in the United States was considerably reduced after 1933 largely because of the A. A. A. corn-hog program and the drought of 1934 and 1936. These factors made American lard prices relatively high in regard to world prices and greatly reduced our total experts as well as our experts to Germany. moreover, German exchange restrictions militated against the United States more than against other sources of supply. Eflible Animal Fats and Oils, Other Than Lard. As in the case of lard, United States exports of other edible animal fats and oils (includes oleo oil, oloo stock, tallow, neutral lard, oleo stearin and oleemargarine of animal or vegetable fats) have fallen drastically in recent years. In 1926 this country exported 152 million pounds of this group of commodities, Germany taking 35,330,000 pounds. Thus the Reich furnished an outlet for 23.2 per cent of the total, and ranked third, behind Great Britain and The Netherlands, as an.American export market. Germany 1 Foreign Crepe and markets, may 11, 1936, p. 550. 2 Foreign Crepe and markets, November 5, 1938, p. 292. 99 continued to rank high as a market and to account for approximately one-fifth of Our experts until 1934. However, these experts, both to all countries and to Germany had already dropped considerably (see Table 19). After 1933 the decline was accelerated. Between 1926 and 1938 United States experts to all countries fell 94 per cent, but experts to the Reich practically disappeared, being only 66 thousand pounds in 1938. In 1938 Germany took only .7 per cent of our experts and ranked only twelfth as a market. Even in the late twenties there was a definite tendency to substitute vegetable oils for animal fats. margarine made of a mixture of cottonseed oil, sesame oil and peanut oil was chiefly used as a substitute for butter, while compound 1ard.made of a mixture of pork fat and peanut, sesame and cottonseed oil was used as a substitute for lard. In February 1932 Germany levied a generally higher scale of duties on imports of edible fats and oils.1 Effective April 1, 1933, an order gave the German government the power to compel margarine manufacturers to utilize butter, tallow and lard and their by-products in the manufacture of margarine; and it also granted the government power to require that imported margarine be mixed with the animal fats indicated before being offered for sale.2 The purpose was to stimulate and aid domestic production of fats and oils. Also in April 1933, the German pregram.for the protection of the domestic animal fat industry was advanced by the establishment of production quotas for margarine and a government sales monopoly of competitive products, together with higher import duties and new domestic taxes covering those 1 Foreign Crepe and Markets, February 15, 1932. 2 Foreign Crepe and markets, April 3, 1933. Table 19. United States Exports of Edible Animal Fats and Oils, Other Than Lard, 1926-1938 (Thousands of pounds) Total to all Total to Percentage Germany's Year countries Germany to Germany Rank as a market 1926 132,000 35,330 23.2 2 1927 133,000 30,952 23.3 3 1928 105,000 23,295 22.2 3 1929 107,000 22,481 21.0 3 1930 60,000 16,051 26.8 3 1931 76,000 13,081 17.2 3 1932 67,000 14,574 21.8 1 1933 61,000 11,642 19.1 2 1934 42,000 3,097 7.4 4 1935 16,000 191 1.2 10 1936 16,000 390 2.4 7 1937 10,000 31 .3 16 1938 9,000 66 .7 12 e Approximate. Source: Foreign Commerce And Navigation of the United States. 100 101 products. The result of these measures to raise domestic fat prices was to raise the price of farm.milk and decrease the aggregate consumption of fats, largely at the expense of margarine and foreign lard. And in addition, the government subsidized the production of neutral lard from domestic hogs, in order to increase the domestic supply of fat, create a new outlet for’grain and support hog prices. By the end of 1935, however, it was still necessary for the Reich to import about 45 per cent of the country's total food requirements of animal, vegetable and margarine fats and oils.1 It was decided, therefore, to reduce fat consumption on the average of 25 per cent from recent levels,’ bringing it back to the 1931 level of about 40.8 pounds per capita. The result was a program of rationing fats in 1936. As German fat supplies continued low, this program was expanded in 1937. The increase in the national income in 1938 brought about a further demand for fats.2 Since, however, the home production of butter and lard had fallen somewhat, considerable sums had to be spent on imports. But the United States failed to reap much of the benefit. The principal sources in 1938 were Denmark, Hungary, The Netherlands, Sweden, Finland and Yugoslavia. Nbat Products Germany has never been very dependent on the outside world for its supplies of these commodities. Even in 1933, the Reich produced 97 per 3 cent of its meet requirements. Germany is the most important Continental 1 - ”German Agriculture in the Four-Year PlanP, Foreign Agriculture, march 1937, p. 113, U. S. Department of Agriculture. Reichs-Kredit-Gesellschaft, Germany's Economic Situation at the Turn of 1938-39, p. 42. 3 “German Agriculture in the FouréYear Plan”, cited, p. 107. 2 102 RurOpean hog producing country. Pork is the most important article in the German meat diet, with consumption varying somewhat with economic conditions. In times of prosperity total meat consumption tends to rise, and beef becomes more important relative to pork. Thus our exports of pork to the Reich have depended largely on German slaughterings, which in turn have depended a great deal on supplies and prices of the various feedstuffs. United States exports of meat products (exclusive of lard and other edible animal fats and oils) to Germany reached a peak of 36 million pounds in 1929, in which year the Reich ranked third, behind Great Britain and Cuba, as a market, taking 10.6 per cent of the total. Since 1929 our ex- ports to Germany have fallen steadily until in 1938 they were only 5 million pounds. In this year the Reich took only 3.2 per cent of the total, and had dropped to fifth position as an outlet. At the same time our exports to all countries decreased from.446 million pounds in 1929 to 158 million pounds in 1938, a reduction of 65 per cent. The drought of 1934 and 1936 and the A. ‘m ‘m corn-hog program were very effective in reducing our exportable surplus after 1934 and in increasing prices to the point that it was difficult to sell these products abroad. As indicated in figure 10, Germany has taken on an average only 6 to 8 per cent of our total exports of these commodities, and inasmuch as only a very small share of the total.Nmerican production of'meat products is marketed abroad, exports to Germany alone have had only a very limited effect on the American livestock industry. Nor has the united States ever ‘been a very important source of German.imports of meat products. Since 1934 this country has become even less important from both an absolute and 103 t n 1.1 1 . 11% 1 . J1 1.1 .1 1 1 1 1. . .:.1 . 1 . 1 i171. 1.111.. 1 . 1 1.. v . .- y . .. . 1... . 1_1 w. .1. .I . 1 . 1 H . e . 2.... . a. L (.17; _ .. . 5 ..1 _. 1:1 8 P1. .11. . 1.1 . ..... .1. . ..--.-z--1:1+11-w 55:2. 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Our eXports of meat products to the Reich continued to fall after 1935, but total German imports rose steadily from the low point in 1933, and in 1938 they were back to pro-depression levels. After 1929, United States exports were hampered by the German govern- ment measures to support domestic prices or agricultural products. Fbr instance, in 1930 imports of frozen.meats were discontinued and import duties on other meats and on livestock were considerably raised.1 Further increases in duties followed in 1931 and 1933.2 Although the slump in livestock prices was overcome, they remained relatively the lowest prices of all major agricultural products. Subsequently, price policies under the system of market regulation became a very important instrument for influencing the course of the “Battle of Production' launched under that slogan in the autumn of 1934.3 The drought in Germany in 1934 resulted in a feed shortage and conse- quently in heavy slaughterings of livestock, especially cattle. This eventually led to a more liberal attitude with respect to imports, and in 1936 Germany resumed imports of'South American beef, which had been stopped in 1935. These imports came from.Argentina and Uruguay by means of clearing agreements then in existence. A number or agreements were also reached, in the latter part of 1935 and early 1936, between Germany and such.countries G as Poland, Denmark, Holland, Hungary and certain Baltic states. 1 “Germany's Capacity to Produce Agricultural Products”, FOreign Agri- culture, May 1937, p. 235, U; S. Department of Agriculture. 2 Foreign Crops and markets, July 24,1933. ~3 Foreign Crops and Markets, July 16,1934 and October 8,1964. 4 Foreign Grape and markets, July 13, 1936. 105 These involved undertakings on the part of Germany to import materially increased quantities of such products as live pigs, lard, butter, eggs, cheese, etc., in exchange for German orports of industrial products. Thus imports from.all sources rose while imports from the United States continued to fall. Beginning in 1935, Germany increased its fishing fleet and made attempts to increase its catch of fish, to be substituted for other foods, particularly meats. This was intended to be a means of saving foreign exchange.1 The plan was.more or’less successful, and in 1937 and 1938 American exports of salmon to the Reich were cut in half. fist exports, of course, were also affected adversely. German livestock numbers continued high in 193? and 1958, in spite of a shortage of stockmen. By 1938 Argentina, Denmark, Hungary, Uruguay, Poland and yugoslavia ears the most important sources of German imports of meat products. In 1938 these countries accounted for 86 per cent of the total. Thus it is seen that German imports of animal products,sith the exception of meat products, have been markedly curtailed in the last de- cade, particularly since 1954. These commodities are consumer's goods and have been restricted in order to give preference to materials having :military significance. The United.States has only a small share in the remaining imports. This is so partly because of relatively high American prices and partly because of diversion of German.imports to countries willing to conclude trade agreements and.nore favorably situated in case of a war blockade, notably the Danubian countries. 1 “German Agriculture in the Four-Year‘Plan', cited, p. 114. CHIPTER VIII FRUITS ‘;n The Twenties,_1926-1929. The United States exported a wide variety of fresh, canned, and dried and evaporated fruits to Germany in the late twenties. many of them.were relatively unimportant when con- sidered singly, but taken as a group they accounted for 3 per cent of this country's total exports to the Reich in this period. Germany took large amounts of such individual comedities as apples, prunes and raisins. 0n the whole, United States exports of fruits to the Reich increased steadily in the late twenties (see Table 20). During these years Germany ranked third, behind Great Britain and Canada, as a market for our total fruit exports, and purchased, on an average, about 10 per cent of the I total (see figure 11). Germany ranked second only to Great Britain as an outlet for American dried and evaporated fruits, and in the case of prunes was in first place. United States exports of fruits to all countries rose during this period, but not to as great an extent as did sales to the Reich. The increase in American fruit exports to Germany in the late twenties was part of a general increase into Germany from.all sources during this period. There was a growing demand for fruits in the diets of the peeple. Dried fruits were considered an.important article of consumption among the working classes. According to German statistics, total imports of fruits and nuts increased from.l,734,000 pounds in 1926 to a peak of 2,487,000 pounds in 1930. This country was annually furnishing approximately one- 106 107 seventh of the Reich's fruit imports. All imports in this period were largely financed by the huge foreign loans made to Germany. A considerable part of the dollar exchange thus made available was used to purchase fruits abroad, and since the United States was the largest lender, it was only natural that the Reich should in turn make heavy purchases from this country. .29 The Early Thirties,_1930-l934. United States fruit exports, both to all countries and to Germany, held up well in the early depression years, even showing a decided increase in the case of apples. In fact, our exports of'most fruits to the Reich reached record totals, on a volume basis, in 1931 and 1932. Dollar values of eXports fall, of course, because of the drop in prices. The preportion of this country's fruit exports going to Germany also tended to rise. In 1935 the Reich took 14.9 per cent of the total, the greatest preportion taken during any year from.1926 to 1938. One would infer from what has been said that the Germans had developed quite a liking for American fruit. This was true, but it should be pointed out that German imports from all sources were higher in the early thirties than in the late twenties. In this regard, it is also well to observe that the fruit industry is a long time prOposition and production cannot be readily altered in response to changes in business conditions. The supply is inelastic, and fruit exports were probably maintained at considerable loss to producers. During this period, the United States was the principal source of German fruit imports. This country annually supplied about four-fifths of German prune imports and about one-fifth of her raisin imports. 0n the other hand, the Reich continued to rank third as a market for our total fruit exports and second as an outlet for dried and evaporated fruits. 108 £33m. copaab one no acauomabez use canoe—goo amazon .eaogeneaeun one e35 Have» .3.“ one schema.“ mama e u 3.30m a. omnia n.e enm.na o.oa oow o.¢ ono.ma a.m mac." mama, m.a one.” m.m .on.ma e.m own a.» amo.em a.“ man.» enma e. can a.m «mm.ma n.aan ewe o.n oom.ma o.m nmo.m mama a. one e.oa mon.om o.oa was 9.9 con.sn a.e new.» mama o.ua mno.aa a.ea mme.on n.om nae.a «.ma oom.eo o.aa nea.m enma m.na www.ma m.om nea.am «.mm «nm.a n.o« ooo.eoa m.ea noe.oa mama e.na oee.na n.nm www.me «.0m mmo.m e.mm ooa.mm «.aa mme.m mama m.na mm5.ma «.on amm.aa m.e~ mee.m a.om ooo.ana n.ma mmn.na anma e.oa omm.ma «.mm «an.mo n.nm can." m.em eeo.noa o.ma eem.na onma «.m aao.ea «.99 men.no «.ma smm.a s.nm mne.oaa «.aa «no.0a mama a.«a mmn.am «.mm sea.ms n.ma nan.a s.m~ «am.mna m.aa mae.na mama m.m mae.ea «.on moo.oe m.oa mno.a 0.9m ooo.maa «.oa emo.ma puma n.aa www.ma n.ma www.mm n.~a mum n.5a ooo.mo m.s oom.m mama A3583 A3563 $033 25553 7.3.303 nuance humane". hen—race hen—race .3853 has“. menace ham—Face hang—now bungee use» on m o» annoy on a o» aeaoa o».e o» annoy o» a 0» assay on m o» aepoe upward 0393930 3.92 can aaauaem engage auoae ..oaaa4 ea. guano agape spanks agape d aeoauaooa. page .a».eo neaaaeoaa. .mnma-omma .hauanoe o» .saoana sauna nausea dosage .oa oases 110 There was some decrease in German fruit imports from the United States in 1932, 1933 and 1934. This reflected to a large extent a turning from.high grade American fruit to inferior EurOpean grades. The Reich also tended to buy a somewhat cheaper grade of American fruit. In addition, a turnover tax of 2 per cent on all fruit imports, which became effective rebruary 15, 1932, had an adverse effect. Since 1934. Since l934 American fruit exports to the Reich have been drastically reduced, the drOp being especially sharp in 1935. Whereas our» exports to all countries reached their low point in 1933 and have shown a decided improvement since that time, exports to Germany continued to fall, reaching a new low in 1938, in which year their value was only one-fifth of that in 1933. By 1938 the Reich took only 2.1 per cent of American fruit exports, and ranked only seventh as a market, trailing Great Britain, Canada,_ France, The Netherlands, Belgium and Sweden. The decline was particularly noticeable in the case of raisins. In 1938 Germany took less than 1 per cent of our raisin exports (compared to 13.9 per cent in 1933) and ranked fourteenth [as an outlet (she ranked second in 1933). At the same time, German imports of fruits from all sources were very well.maintained, being in 1938 only about 3 per cent less than in 1934. In fact, imports of fruits of the type exported by the United States had even shown some increase, especially in 1938. Thus it is seen that while imports from.all countries were being maintained, hmports from this country were being drastically curtailed. By 1938 Germany was obtaining only 1 per cent of her total fruit imports from the United States. As for individual fruits, the same general trends can be observed. .A large part of Germany's prune imports have been diverted from the United States to Yugoslavia, and in the 111 case of raisins, Greece and Turkey now receive many of the orders which fomerly went to this country. Much of the reduction in fruit imports into the Reich after 1934 can be attributed to the New Plan which diverted dollar exchange to the purchase of essential raw materials and foodstuffs. Since fruits were not generally’ regarded as essential, imports were reduced. The desire to keep the domestic market for apples and peers as free as possible from.foreign competition in 1935 and 1936, led the Import Control Board to refuse to permdt barter transactions except in such unfavorable ratios for American exporters as to exclude, in most instances, the possibility of any compensation business being closed.1 The increased sale of aski marks at a substantial discount in the United.States killed, to a great extent, the remaining possibilities for barter trade, as this discount was greater than Hamburg importers could afford to absorb on straight compensation business.2 In addition, the German mass purchasing power remained low in 1935 and 1936 because of the fact that wages remained low while living costs rose. A heavy EurOpean prune crOp in 1936, tOgether with a short crOp in the United.States, and increased competition from.dustralia in the raisin.market, contributed to the further decline in our fruit exports to the Reich in that year. The small increase in 1937 was made possible by larger exports of fresh pears and dried fruits, and reflected a relatively small German fruit crop. In 1937, Germany had a record apple crop as well as a large crOp of meat of the other fruits. Mbreover, treaty obligations with surrounding countries required her to take considerable quantities of fruit. It was small wonder then that American fruit exports to the Reich fell to a new record low in 1938. 1 Foreign Crepe and Markets, January 13, 1936. Cf. Foreign Crepe and markets, issues for January 14, 1935, march 18, 1935 and may 11, 1936. 112 In recent years Germany has improved its storage facilities and has subsidized the planting of more and more fruit trees. Also, the policy of concluding trading agreements with countries other than the ‘United States has persisted. These facts make for a gloomy outlook for American fruit exports to the Reich. German hmports of dried fruits have been increased in recent years be- cause of their importance as a food among the working classes. Turkey and Greece have been the chief beneficiaries, and in 1938 these two sources supplied four-fifths of all German imports. Yugoslavia, Bulgaria and Iran have also showed considerable increases in recent years, although imports from the first two were sharply curtailed in 1938. As for total fruit imports in 1938, Italy, Turkey, Bulgaria, Yugoslavia, Spain and Colombia, in the order named, were the principal countries of origin and accounted for nearly three-fifths of the total, on a value basis. The United States supplied only 1.2 per cent of the total and ranked only eleventh as a source. CHAPTER II. SUNWHRY'AND OUTLOOK Summary The Late Twenties. During the period covered by this thesis (1910- 1938) two wars involving Germany have taken place. In both of them.United States exports to the Reich were eliminated as a result of British‘blockades. However, even in peace years significant changes in our experts to Germany have occurred. In the years immediately preceding the first‘florld war, this country annually exported approximately 210 million dollars worth of agricultural products to Germany. This accounted for one~fifth of our agricultural exports to all countries, and Germany was exceeded as a.market only by Great Britain. Seventy per cent of all our exports going to the Reich were of an agricultural nature. Germany took large amounts of our cotton, lard, wheat, cottonseed cake, tobacco, oleo oil and prunes. Cotton and lard were especially important, with the Reich purchasing more than one-fourth of our total exports of these commodities. After being interrupted by the war, this trade was restored in the twenties, but under different conditions. Germany emerged from the war a debtor country, while the Uhited.States was a creditor country, the exact reversal of the pre-war situation. it first, trade between the two nations was relatively small in amount because of the reduced purchasing power of the Reich. Inflation made the mark worthless by the end of 1923. However, a commercial treaty concluded in December 1923, and involving the unconditional 113- 114 most-favored-nation cluase, laid the foundation for increased trade between the two countries. Following the stablization of the mark in 1924, with the aid of the Dawes gold loan, foreign credits poured into Germany. As a result, Germany recovered rapidly and her trade with the United.States flourished. In the period 1926-1929 the United States annually exported 300 million dollars worth of agricultural commodities to Germany. This represented one-seventh of our agricultural exports to all countries, and the Reich was again second, behind Great Britain, as a market for these products. is in the pre-lar years, agricultural commodities accounted for about 70 per cent of this country's total exports to the Reich. Cotton was the most important single item, followed by wheat, tobacco, fruits, lard and.neat products, in the order named. Approximately one-fourth of our exports of cotton and lard went to Germany. Trade in these years was carried on under conditions of relatively free competition. The amount of a commodity entering into world trade depended upon such things as tariffs, production and the exportable surplus (or deficit) in the various countries, prices and economic conditions in general, and consumption tastes in the potential importing countries. German trade, however, was largely financed by foreign credit. The United States was theprincipal source of foreign loans, and it was only natural that Germany should respond by buying heavily from this country. Germany's imports exceeded her exports every year until 1929, and, in addition, she was trying to make reparations payments. Thus she was laying the foundations for foreign exchange difficulties in subsequent years.‘ The Early Thirties, 1930-1933. When foreign capital ceased to flow in after 1929, and the effects of a iidening depression began to be felt, 115 Germany found herself unable to:meet her obligations. Her gold reserves were drained to a low point and holdings of foreign exchange dwindled rapidly. In June 1931 the Reich suffered an acute financial crisis, re- sulting in the Hoover moratorium.on intergovernmental debts and the First Standstill agreement, in an effort to alleviate the situation. Germany refused, both for psychological and for financial reasons, to devalue the mark, with the result that German products became high in price relative to those of many other countries, and exports drOpped sharply. The decline in the value of’imports, however, was even more pronounced, because of the arbitrary restrictions placed upon them, and also because of the fact that the prices of raw materials and foodstuffs which Germany imported fell more than did prices of the manufactured goods which she exported. As a result, the Reich had an active balance of trade from 1929 to 1933. Under these conditions, it was inevitable that United States agri- cultural exports to Germany should suffer. However, while our agricultural exports to the Reich drOpped from 269 million dollars in 1929 to 109 millions in 1933, a decrease of 59 per cent, our agricultural exports to all countries fell 61 per cent. Germany continued to serve as an outlet for about one-seventh of our agricultural exports, and to be exceeded in importance as a market only by Great Britain. The decline in this country's agricultural products going to the Reich despite the drastic fall in prices, was not as great as the decline in total exports to that country, and in 1932 and 1933 agricultural commodities accounted for four-fifths of all of the exports which this country marketed in Germany. Cotton continued to be our leading agricultural export to the Reich. Tobacco and fruits had become relatively mere important, while grains and animal products 116 had become relatively less important. Apart from wheat, the physical volume of our agricultural exports to Germany during these years was not markedly below that of the twenties. The Late Thirties. When the National Socialists came into power early in 1933, they began a policy of making Germany more economically independent of the rest of the world. The idea was to save foreign exchange and become as nearly self-sufficient as possible, regardless of the cost. were foreign exchange would then be available for buying raw materials for armament purposes, and in case of war the selfbsufficiency pregram.would make the Reich less dependent on foreign food supplies, and less vulnerable to blockade. As an aid to carrying out this policy, German trade became regimented with various arbitrary restrictions, such as export subsidies, import control boards, blocked accounts and bilateral trade agreements. The “New Plan", instituted in September 1934, aimed at adjusting imports strictly to exports,with individual countries. Imports of agri- cultural commodities were particularly hard hit because raw materials to be used in the rearmament pregram were considered essential, and many of themvcould not be produced in Germany. .As a result, foreign exchange for agricultural imports’ was restricted so it could be saved for use in securing these strategic materials. Exports of agricultural products from.the United States to Germany were very seriously affected for a number of reasons. One was the large ”favorable“ balance of trade which this country had with the Reich. The German government attempted to balance its trade with each individual country, and inasmuch as we refused to take more German goods, they retaliated by restricting their imports from.us. Also, the German policy 117 of export subsidization and bilateral trading is in direct conflict with the commercial policy of the United States under the Trade Agreements program, and has led us to deny them the most-favored-nation privileges accorded other countries. Partly because of this, much German trade has been diverted to other countries, notably Southeastern EurOpe and Latin America, which were willing and able to take German goods and do business under clearing agreements and other arrangements. In addition, Southeastern Europe is looked upon in.Nazi circles as an important source of foodstuffs and raw materials, which are easily accessible and not so apt to be cut off in case of war. Mbreover, the A..A..A. program.in the United States, together with the droughts in 1934 and 1936, raised the prices of our products above competitive world levels, thus making it more difficult to sell them abroad. Thus United States agricultural exports to Germany fell in value from 109 million dollars in 1933 to 37 million dollars in 1938. At the same time our agricultural exports to all countries rose from 776 to 928 million dollars. By 1938 the Reich was taking only 4 per cent of our total agri- cultural exports, and ranking only sixth as an outlet. Moreover, agri- cultural products now accounted for only three-eflthe of all our domestic exports to Germany. The curtailment was most pronounced in the cases of lard and grains. Cotton was still the leading single item, but by 1938 Germany was taking only 7 per cent of our total exports of this commodity. Outlook The war which began in September 1939 has, of course, wiped out our direct trade with Germany, and the British blockade is now affecting our trade with EurOpe as a whole. The result is that the United States is 118 accumulating large surpluses of agricultural commodities, and prices of these products are falling. At the same time, EurOpe greatly needs our products. As a consequence of war destruction, unfavorable weather con- ditions and diversion of man power to other occupations, EurOpe is already facing a famine. Naturally, the course of this country's future trade with Germany depends to a large extent upon the outcome of the war. For the present, it is possible only to speculate on the results of a possible German victory or defeat. If the Reich is victorious, Dorothy Thompson1 believes their plan is to make a customs union of EurOpe, with complete financial and economic control centered in Berlin, and with Germany enjoying special privileges. The planners of the World Germanica say that the United States will be forced to trade with them, since there will be no other important foreign.market for the raw materials and agricultural products of this country. Under this system.our immense gold reserve would be worthless. The international currency would be a managed currency, the German mark, with all external trade based upon clearing agreements. The United States would have to deal with government import monOpolies, and unless this country made loans, trade would be on a compensation basis with Germany determining what would be exchanged and also the rate of exchange. In case of victory, Germany will probably relax her efforts towards self-sufficiency. The large imports of war materials will be reduced, because they will have served their purpose. Germany will want to compensate her peOple for the war sacrifices which they have made, and will thus imp port foodstuffs more freely. She will compel countries under her control 1 PThe Ibrld Germanica', p. 115, The Reader's Digest, July 1940. 119 to turn over their food surpluses (largely wheat and animal products) to her. Her cotton will probably be imported largely from.Brazil and Argentina. Should the Nazis be defeated, the situation might very well be like that which existed in the twenties. In that event, if a liberal govern- ment came into power in Germany, this country might Open her comercial and financial markets to the Reich. This would probably lead to a much increased trade, under relatively free competition, between the two countries. 120 SELECTED BIBLIOGRAPHY United States Government Publications. 72nd Congress, 2nd sess., House Doc. 422, Third Annual Report of the Federal Farm Board, 1932. 73rd Congress, 2nd sess., Senate Doc. 70, “Ibrld Trade Barriers in Relation to American Agriculture", 1933. U. S. Department of Agriculture.' Agricultural.Adjustment Administration. Agricultural Adjustment 1933 to 1935; Agricultural Adjustment 1937-38. Bureau of Agricultural Economics. Foreign Agriculture (monthly issues), 1935-1939. Fbreign Crepe and markets (weekly issues), 1926-1939. The.Agricultural Situation, may 1938. Agricultural Statistics (annual), 1936-1939 Economic Trends Affecting Agriculture, July 1933. U. S. Department of Commerce. Bureau of the Census. Statistical Abstract of the United States, 1938. Bureau of Foreign and Domestic Commerce. Commerce Yearbooks (annual), 1925-1932. Foreign Commerce Yearbooks (annual), 1933-1938. Fbreign Commerce and Navigation of the United States (annual) , 1925-1938 . Foreign Trade of the United States, calendar year 1936. Mbnthly Summary of Foreign Commerce of the United States, 1938-1939. 121 Trade of the United States With Germany in 1938. U. S. Department of State. Adviser on International Economic Affairs. The Economic and Financial Position of Nazi Germany,.August 29, 1938. German Publications. Der Auswartige Handel Deutschlands and Mbnatliche Nachweise uber den Auswartigen Handel Deutschlands, December issues, 1926-1938. Reichs-Kredit-Gesellschaft. Germany's Economic Situation at the Turn of 1937-38. Germany's Economic Situation at the Turn of 1938-39. Weekly Report of the German Institute for Business Research, Supplement, September 12, 1934, "The Financing and Promotion of Experts in Germany.” Books. Angell, James W., ”The Recovery of Germany', New Haven, Yale University Press, 1929. Blanchard, I. 0., and Visher, S. 8., "Economic Geography of EurOpe", McGraw-Hill book company, New York and London, 1931. Brady, Robert A., “The Rationalization Movement In German Industry", California University Press, 1933. Day, Clive, €A.History of Commerce“, New Yerk, London, Longmans, Green and Co., 1938. . Day, Clive, "Economic DevelOpment in Mbdern EurOpe", New Yerk, The Hmcmillan Company, 1933. 122 Dietrich, Ethel B., ”World Trade”, New Yerk, H. Holt and Company, 1939. Ellsworth, Paul T., ”International Economics”, New York, The thmillan Guilleband, Claude H., ”The Economic Recovery of Germany, 1933-1938', London, thmillan and Co., limited, 1939. Heuser, Heinrich, ”Control of International Trade”, London, G. Routledge and Sons, limited, 1939. Killough, Hugh B., ”International Trade”, New Ybrk and London, mcGraw- Hill book company, 1938. . Lewis, Cleona, ”America's Stake In International Investments“, 'Washington, D. C., The Brookings institution, 1938. mathews, John M5, ”American Foreign Relations”, New Ybrk and London, The Century company, 1928. _ Mbrley, Felix, RAspects of The Depression”, Chicago, Illinois, The university of Chicago press, 1932. Mbulton, Harold C., ”The Reparation Plan”, New Yerk, McGraw-Hill book Nbulton, Herold G. and McGuire, Constantine B., ”Germany's Capacity to Pay”, New York, Mc Grew-Hill book company, 1923. Mbhlen, Norbert, ”Schacht: Hitler's Magician”, Toronto, Longmans, Green and Company, 1939. . National Industrial Conference Board, ”The Situation In Germany at the Beginning of 1933”, New York, 1933. 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XV, No. 3, April 15, 1939, p. 22. de‘lilde, John C., ”Germany's Trend Toward Economic Isolation”, Foreign Policy Reports, Vol. I, No. 18, November 7, 1934, p. 226. de lilde, John C., ”German Trade Drive in Southeastern EurOpe”, Foreign Policy Reports, vol..XII, No. 17, November 15, 1936, p. 214. de Wilde, John C., ”The German Economic Dilemma”, Foreign Policy Reports, Vol. XIII, NOe 1, March 15, 1.937, p. 2e de tilde, John 0., ”Social Trends in the Third Reich”, Foreign Policy Reports, vol XIII, No. 4, may 1, 1937, p. 42. de Hilde, John C., ”Germany's Controlled Economy”, FOreign Policy Reports, Higgins, Benjamin, ”Germany's Bid for Agricultural Self Sufficiency”, Journal of Farm Economics, vol XXI, No. 2, may 1939, p. 435. Hildebrand, Walter, ”The Austrian Contribution to German Autarchy”, Foreign Affairs, Vol, XVI, No. 4, July 1938, p. 719. Pribichevich, Stoyan, ”The Nazi Drive to the East--Yugoslavia, Rumania, Hungary,” Foreign Policy Reports, Vel..XIV, No. 15, October 15, 1938, Pa 174e Schacht, Hjalmar, ”Germany's Colonial Demands”, Foreign Affairs, V01. XV, No. 2, January 1937, p. 223. Scroggs, Iilliam 0., ”German Debts and Export Bounties”, Foreign Affairs, V01. XII, N00 3,Lpr11 1934’ 1). 520a Trueblood, Howard J., ”Trade Rivalries in Latin America”, Foreign Policy Wertheimer, Nuldred 3., ”Economic Structure of the Third Reich”, Foreign Policy Reports, Vbl..X, No. 15, September 26, 1934, p. 182. Wertheimer, Mildred 3., ”Aims of Hitler's Foreign Policy”, Foreign Policy Reports, Vbl. XI, No. 7, June 5, 1935, p. 70. . Wheeler, L. A.,”The Outlook for Agricultural Exports”, Journal of Farm Economics, Vbl. II, No. 1, February 1938, p. 338. 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