"Blood Over Gold"

The United States must give up the idea of forcing its economic conditions on Germany or Europe. . . . To what extent we conduct trade with the United States [after World War II] depends absolutely upon Americans themselves . . . . As long as calumny is heaped on German products, such trade is, of course, problematical.

Thus spoke balding, be-jowled Walther Funk, Adolf Hitler's all-powerful Minister of Economic Affairs, in a 45-minute harangue last week to U. S. foreign correspondents. His pointed primer of Germany's world economic aims put U. S. businessmen on notice--that if Germany beats England and consolidates Europe, U. S. trade with the area that has been its biggest market will thenceforth be conducted, if at all, on Nazi terms.

When you play marbles and one fellow wins away all the marbles, the game ends. You must then think of some new game. When all the gold is in the United States and it doesn't come out again, the world must think of some other medium of exchange.

Almost out of marbles, Herr Dr. Funk, with a wave of his hand, whisked away the U. S. Treasury's $20,400,000,000 gold hoard--about 75% of all the world's monetary gold. If dumped on an island which then disappeared, said he, its lack would not hurt the world economy. For in the new world economy the dominant currency would be the Reichsmark, whose value, as at present, would be "assigned to it by the State." And if the U. S. wishes to adjust itself to the Nazi system, it must lower the dollar price of gold (revalue its currency upward) so that gold will flow out of the U. S., and goods flow in.

This was obvious preparation for a postwar drive to get U. S. gold for Germany. If Dr. Funk could really peg all European currencies to a Reichsmark "work dollar," he could fix the value of labor in all countries that had to trade with him, would have perfected a streamlined form of international slavery. But though he has demonstrated that Nazi collectivism can wage war, he has yet to show it will work in peace. Gold, he granted, would still have a use in settling international balances. But nations use gold primarily because it is prized by individuals. Dr. Funk's aspersion of the U. S.'s "marbles" suggested that even in Germany, there are still individuals who prize them.

If the United States desires to contribute to re-establish continuity in world commerce, it must abandon the wrong method of wanting at the same time to be both the greatest creditor nation and the greatest export country.

Thus did Dr. Funk poke the U. S. economy in a vulnerable spot. A creditor nation ever since World War I, the U. S. vainly hoped the Smoot-Hawley and other tariffs would keep it that way, forgetting trade is a two-way street. Cordell Hull, knowing that, has long preached reciprocal commerce. World War II put an end for the present to his small successes.

To conduct trade with South American states, we do not need North American mediation. Either economic exchange between Germany and South America is based on free, untrammeled arrangement, or it will not take place at all.

Thus did Funk blast the cartel scheme with which, at last week's Havana conference, the U. S. was trying to build a solid hemisphere front. Well did Herr Funk know that the U. S. (with her exportable surpluses of agricultural products) would not be able to buy enough from South America (which has mainly agricultural products to sell) to provide her with the money to buy the products of U. S. industry. But Germany (and all Europe), which needs food and raw materials, could pay for them with the industrial products South America lacks. Most disquieting thing about the Reich Minister's argument was that he was obviously telling the truth--not only about Germany's intentions but about the economic situation in which the U. S. finds itself.

Herr Funk's grim warning was only confirmation of the view taken by the New York Times's No. i foreign correspondent, Otto D. Tolischus, in his book They Wanted War (TIME, July 29). Contemplating a U. S. left, if Britain is beaten, to face a new Nazi economy of "blood over gold," he observed: "Such an upheaval . . . would put America's entire foreign trade . . . under the control of Germany and her allies. . . . America would find the competition of a consolidated Europe, behind whose salesmen stood the military might of Germany. . . ."

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