Opportunity

The basis of U. S.-Latin American policy is that the bonds of trade are stronger than non-aggression pacts, more enduring thin military alliances. Last week, the U. S. and the 20 Latin American republics sat down at the council table in walled Panama City to close a united trade front against commerce-ruining European war.

The British blockade has cut off the wind of Nazi Germany's Latin American trade, putting the U. S.'s No. 1 competitor in this hemisphere out of the market. Britain still shops heavily in the Latin American market for war and food supplies, but is too thoroughly occupied by war to maintain her exports. France is in the same boat, and jittery Italy does not yet know where she stands.

Of the $1,200,000,000 of goods which Latin America last year bought abroad, she obtained from:

The U. S. 36%

Germany 17%

Britain 12%

France 4%

Italy 3%

Japan 3%

Thus if the U. S. could take over the markets dropped by the belligerents it could practically double its exports to Latin America. The only competitor still free to bid against the U. S. for the market is Japan, and the U. S. has a big lead on her. For not only has the U. S. long since entrenched itself as the No. 1 Latin American trader, but Cordell Hull's Good Neighbor policy and reciprocal trade agreements have begun to persuade Latin America to believe that Dollar Diplomacy is dead.

By last week the Latin American trade winds had already begun to blow toward the U. S., bringing inquiries and orders (not yet tabulated by the U. S. Department of Commerce) for goods once bought in Europe. Typical examples:

> Brazil, which last year favored Germany and dealt heavily in barter and in trade for ''aski'' marks, ordered close to 100,000 tons of rails from U. S. Steel Export Corp.

> A firm in Uruguay looked in the U. S. for wool-processing machinery formerly bought from France.

> Sao Paulo, Brazil, made inquiries in the U. S. for knitting machinery once bought in Europe.

> Bolivia, which did a $28,956,000 trade with Britain in 1937 (1938 figures unavailable), looked for a U. S. market for her hides, horns, cocoa in order to build up a credit balance to buy U. S. goods.

The possible U. S. market in terms of specific goods sold by the present belligerents to Latin America in 1938:

Iron and steel: Germany $54,124,878; Britain $29,721,000.

Machinery: Germany $37,623,984; Britain $25,169,000.

Textiles and fibres: Britain $76,823,000; Germany $19,711,266.

Vehicles: Germany $17,748,300; Britain $5,266,000.

Electrical equipment: Germany $14,868,744; Britain $4,197,000.

Coal: Britain $15,196,000; Germany $6,419,200.

Chemicals: Germany $29,159,070; Britain $11,451,000.

For the opening in the chemical business, the U. S. could particularly thank its lucky star. World War I boosted the U. S. permanently to the position of chief trader with Latin America, but in chemicals Germany was still chemistry's Big Store, with plenty of exclusive products, and when the war had ended it hopped right back to the top of the market. But World War I left the U. S. in possession, through seizure, of certain of Germany's most prized secret chemical processes, which went to the U. S. industry. Today it is possible to take Germany's market for keeps.

But before hemisphere trade solidarity is achieved, there is many a headachy problem to be solved. One of these is straightening out foreign exchange, now all muddled because: 1) of the financial sleight-of-hand worked by Germany in building up its Latin American markets, 2) some South American currencies (notably the Argentine) have been tied to the bouncing British pound.

The biggest problem is not merely to stabilize exchange but to find it. For much of the trade given last year to the U. S., Latin Americans got the bulk of their credits from sales of wheat, coffee, meat and other agricultural products to Europe. Today, with the German market gone, and the European neutrals hamstrung by the war's disruption of shipping, Latin America has to find somewhere to sell her goods in order to get money to buy from the U. S. For the present the war needs of the Allies will help fill the gap. But in the long run another answer to the problem must be found and the only permanent answer is that the U. S. must buy more Latin American goods.

The obstacle to this is that much of what Latin America has to sell is crops and commodities of which in many cases the U. S. has more than enough at home. Given time and ingenuity, mutually profitable trade can be built up. In 1915 U. S. exports to Latin America dropped about 19%, but before the war was out they increased more than 100% over the prewar figures (a substantial increase although partially deceptive because of higher prices). This time the problem is being tackled at the beginning of the war, and the U. S. is no longer a greenhorn in Latin American trade.

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