A WORLD ADJUSTMENT NOW NECESSARY
I wrote to several friends to help me out with
this issue of The State’s Voice. Read the articles
and see what bewilderment a fair cross-section of
Korth Carolina thought shows to exist in the
minds of the people. Editing those articles
convinces me more than ever that the administra
tion, its critics and its friends alike, have not mas
tered the abc’s of economics.
Twelve daiys ago I went to a Fayetteville hos
pital for a diagnosis. A true diagnosis is based
upon facts, whether those facts he pleasing or
displeasing. It is the diagnostician’s business to
discover the facts, the very basic ones as well as
the superficial, and to render a true judgment
based upon them. It was not any business of
mine nor of his as to whether those facts should,
prove pleasant or not..
A World Diagnosis Needed.
The need of the times is a diagnosis of world
economic conditions—a diagnosis utterly impar
tial, biased by no proconceived notions. I have
been renderign such diagnoses quite a number of'
years. I have written few prescriptions and have
taken comparatively little interest in those writ
ten without being based upon facts revealed by
an impartial diagnoses. I have declared, time
after time, that all that«the administration did the
first year was to recognize the fact that we were
lost m an economic wilderness and to try to
make conditions as comfortable as possible while
v,e should be finding our way out of the wilder
ness, and that the only foot of progress gained
was that of the beginning of economic planning,
however faulty the planning thus far may have
been. ‘
Six' years ago^whep -world
crazy, I diagnosed the ^economic condition of this
country. I could scarcely, get any ope to read
that diagnosis. Yet the events followed', almost
to the letter, the course I predicted they would
take. The diagnosis is in black and white to be
perused by any one who will read it. Its state
mem s, to the minds of the superficial, who proved
to he a multitude, were pure foolishness.
A year or two later, I discussed perpetual fa
vorable world trade balances and found them not
only valueless to a country,1 but actually having
the effect of a gift of the amount of the favor
able balance to the other nations of the earth.
That view was generaTy considered silly; yet th§
World has now virtually agreed -with it,- though it
cannot remember it in practice after being so
long a slave to the contrary conception. It would
be a bold economist or statesman who'would to
day contend, that an international trade balance,
particularly one against the whole world, can be
paid otherwise than in goods and services. Yet
only four years agp I didn’t find a. single eco
nomist or statesman-in North Carolina who fully
accepted the thesis. The leading editor in the
state frankly stated that he didn’t know what I
was talking about’ or words to a similar effect.
Our leading statesmen of this year 1935 said that
such a trade balance would get paid in some way
or another. If he thinks so today, he would just
as well be in Raleigh practicing law.
When the dollar was devalued in gold, 1 was
pleased, but immediately stated that it would not
affect the price of any goods except those enter
ing export trade, unless there should be more dol
lars put in circulation. The devaluation of the
dollar proved the salvation of the cotton and to
bacco growers, though that salvation has been as
sisted by the payment of bonuses for decreasing
the crops. The billions poured out by the gov
ernment sufficiently accounts for increases in
"'ages and in prices of non-exportable commo 1
ties. Those borrowings have increased the num
ber of dollars in circulation and have produced a
degree of inflation that the devaluation of t e
dollar in terms of gold failed to produce. If t e
banks, had not loaned the government those i
lions of dollars and were keeping them in their
"vaults, as they very probably would be, the
eent dollar would buy today more than the
°cnt dollar was buying in the spring of 1933, ex
«pt in the case of those commodities whose prices
ha"e been affected by international exchange
rates. ’ . - - • W - ‘ ‘ '
A World Condition 'Opposed Upon the
National Condition.
The maladjustments in the national economic
body are largely the same as in the days of those
earlier diagnoses. But the world condition has
changed. Of course, the world change was being
effected all .the while. . But the progress of that
change has reached that stage that makes it now
the first matter of consideration by each nation
and all nations. The problems of 1935 are more
numerous and more complex^ than, those of 1933.
Those of 1933,. many of them at least, cannot be
solved till the newly developed problems have
been cleared away. Illustrating, I felt handi
capped before by the cataracts fast clouding my
eyes. But cataracts are small matters beside
angina pectoris to which I am now declared to be
subject. It was a simple matter to solve the na
tional economic problems existing six years ago
if they had been identified and if the economic
and political doctors had known the abc’s of the
science. But now the world condition has
changed, and treatment of the two sets of condi
tions can at best only proceed simultaneously.
Yet if the new world condition shall not be recog
NOTICE.
Please read the article at the
top of page 4.
nized for what it is and treated as such,' all the
efforts of the new deal or any other deal to pro
duce prosperity will prove as fully bewildering
to observers as have the acts of the last two years .
proven to our contributor of the. second-page
article.
Former Conditions Cannot Be Restored.
The gentleman last referred to would much
like to s%e the days of full individual liberty of
enterprise restored in their full bloom. That is as
impossible as returning to the day before yester
day Turn to Claude Moore’s story of a Sampson
county lad who over in Tennessee exploited the
rich virgin lands and had reached that stage of
munificence that he could have taken from him
t»y the Yankees a vast store of goods and see sev
eral scores of slaves set free. That cannot hap
pen again. Very probably that great plantation
today is included in the redemption scheme of the
Tennessee Valley Authority. _
Individuals can no' longer exploit virgin lands
and their fellow beings at will. And the time is
approaching, if not at hand, when one bumptious
nation cannot exploit other nations.
Facts are stubborn. What has been could well
be at earlier times. For instance, I “have been
ordered to run on low gear. I.might get by a
short while on high gear, but one day the whole
machine would smash up. I would better not
try to dash a hundred yards as I used to do when
I was about to miss the bus at Pittsboro. That
is the fact whether I like it or not. And there
are certain facts that America would as well
recognize now as later, unpalatable as they may
be She is no longer master of her own fate ana
able to exploit her own resources and other na
tions at will. _
A Leveling Up of National Living Scaled
On the Program.
For a lone time America was an aristocrat
among the nations. She boasted of her superior
standard of living; her money was the dearest
in the world. She had unbounded, resources! and
exploited them without knowledge or conscience.
Mass production in industiy and in ag™ultur«
was first mastered here. America sathigh .
proud among the nations and received tribute
from them as her right When we deiced to
buy from others we demanded and obtained
goods priced in terms of brawn, skill, and pos
fibly actual capital, two or^hree units for one
A Mexican dollar, which in China, because of the
small per capita circulation, -would buy more
labor ‘ or goods fhan two gold dollars m America,
would buy only forty c.ents worth of American
goods. Not only through terms of exchange, all
in our favor because of value’s being based upon
content of the coin, but through the raising of
tariff walls, we forced producers of foreign goods
to render immense tribute to us 'as values are
measured by the true measures of brawn and
skill, time and capital, to produce commodities. '
But America and the few other favored ex- ‘
ploiters of other years can no longer ride their
high horses with their former arrogance. Mach
inery and mass production are now common her-*
itages, except among the more laggard countries.
Labor readily trained is abundant. And as in
the case .of the Southern cotton mill operator. N
of forty, years ago in comparison with the North
ern mill owner, the Japanese, the Chinese, and
similar factory operators may enrich the former
half-starved population while still securing-labor
at only a fraction of what it has been costing
American mills. The consequence is, America
can no longer successfully compete with such na
tions in the lines of manufacture they have’ al- ?
ready entered. But they will enter all or pur
chase what they need of the articles they choose
not to produce from nations which produce them
upon equal terms of brawn, skill, and capital.
And the world is learning that capital is only a
product of labor applied to materials and that no
nation is bound to pay another nation three-fold
prices for it. If that nation hasn’t the material
needed, it can get it from the nations that do have
it and which produce it upon an exchange basis
similar in terms of brawn and capital to its
own.
Thus all nations, except the jjriost backward,
are becoming more self-sufficient and more inde
pendent in their ;foreignWade* and till the liv
ing standards oT thepations are more evened up
the arhrantage9~iB~ ^ign 4*34^! ^ _
with those nations which have formerly oeen
compelled to cultivate habits of economy—of the
bare eking out of. life. Even when wages are *;
paid in the same units of value, for many years
the people of such nations, when they have se
cured the! necessary machinery and acquired the "
comparatively little skill needed to operate mod
ern machines, will be able to underbid America..
for what little foreign trade shall be left. .
Foreign Trade Is No Longer an American
Dependence.
The consequence is, America need no; longer
depend upon foreign trade. Mr. Snider need not
attribute the ultimate loss of our foreign cotton
market to the Roosevelt policies. Those policies
may have hastened- the loss of that trade. The
time was at hand. As he says, there is plenty of
cotton land in other countries. People to whom
the price of one pound of Ameriian cotton is a
day’s Wage will no longer consent to buy at any;
such price in the real measure of compensation—
that of brawn; time, and capital. America may
count upon producing little more than the cotton
needed for home consumption.
II .runcilCct Uclv.I\. 1IC1 IU1 ugu LVIVU11
ket it must be on a world basis of cost, and that
not in money cost, as exchange i;ates have gone,
but on the true unit cost of bfawn, skill, and capi
tal expended. A person who can produce five
pounds of cotton with one day’s labor in his own
country will no longer consent to pay the income
of the one day for one pound of American cotton.
Similarly ,the cheap labor of the nations as fast
as they are equipped, as Japan already is in the
textile business, will not only supply their own
people with manufactured commodities but take
the trade of other nations from America. Japan
is already doing this in textiles, and despite high v
tariff walls can compete with our own people ;
right here at home. America, it may be granted,
has already practically lost its foreign trade in 'a
raw cotton and in textiles.
The one. means to regain it is to reduce cost
levels to that of the cheap-labor and cheap
money countries. That would necessitate the .
reduction of all other wages, salaries, and prices
to the same level if the American cotton growers
and textile operatives are to live. But that is a
cost too high to pay..
America Can Still Prosper, But Many ,
~ Adjustments Must Be Made.
. With the production* of goods and agricultural
- >• .(Continued on Page Five) V -