Department of Commerce,
Bureau of Foreign and Domestic Commerce,
Washington, February 4, 1918.
Imports and Exports, by Grand Divisions and Countries.
Total values of merchandise imported from and exported to each of the principal countries during December, 1917, and the 12 months ended December, 1917, compared with corresponding periods of the preceding year, were made public to-day by the Bureau of Foreign and Domestic Commerce of the Department of Commerce, as follows:
It will be seen from this table that our commodity trade balance with Spain was in our favor by fifty-five million, five hundred eighty-seven thousand, six hundred and ninety dollars. Therefore, Spain needed fifty-five million dollars more than was due her on the difference of shipments to Spain from the United States of commodities, and the shipment of commodities by Spain to the United States. Why, then, was not the dollar at a premium instead of the Spanish peseta being at a premium? The reason was that the United States had loaned to her Allies two billion dollars more than the favorable “trade balance” of the United States, and these loans in terms of dollars had been used by our Allies to settle their debts with Spain, as an international commodity trade creditor to an approximate amount of over a hundred million of dollars in value, who did not need these dollars, or pounds sterling, or francs. The Spanish banks did place substantial balances in Paris, London and New York, but there was still due to Spain for commodities a large amount which had to be settled in some way. Great Britain, France and the United States had an embargo on gold and we could not settle these balances by gold because of the gold embargo. If we had settled the balances in gold the dollar would have gone to par and so would have the pound sterling and the French franc, but we were compelled, because gold was not available, to borrow this money from Spain in some form or other, and it was borrowed in some form or other from Spanish merchants, business men, and Spanish banks in many ways, but those who borrowed the pesetas from Spain, or those who loaned our people the pesetas in Spain, sold those pesetas to the citizens of the United States at a tremendous price. The credit extended is taking advantage of war conditions to extort an unendurable price for the use of this Spanish credit during the war, and fully justifies adequate steps being taken to correct it.
PENALTY OF APPRECIATED CURRENCY
In fact the natural laws of economics impose at once a severe penalty upon Spain, for example: America has quit buying Spanish oil; America is substituting peanut oil, and the world is finding means to get along with a minimum use of Spanish commodities. In the meantime it is dislocating Spanish business, which will reappear later as a very substantial loss to Spanish commerce.
The Allies are buying only essentials in Spain, and the non-essential business of Spain is going through commercial depression.
Spain lost almost her entire grape crop, her tomato crop and other perishable articles because there was no adequate market.
Because Spain was piling up credits not properly employed in being loaned at acceptable interest she was led to purchase non-essentials at war prices, doing Spain a commercial injury. While certain individual banks or bankers might profit by the sale of pesetas at the high rate, it has the effect of permanently diverting trade from Spain, stimulating exports to Spain of commodities at high prices and depressing exports from Spain to other countries, lowering the status of the commercial life of Spain so that Spain pays a serious penalty under the economic law.