FOREIGN TRADE: Back in Business

The U.S. took the first cautious step last week to open Japan to private foreign trade. A Government trade mission arrived in Tokyo to survey Japan’s shattered industry. The mission wants to find out what Japan can make, what raw materials will be needed, and how material imports can be financed. Then, some time this summer, it hopes to lift the ban on private trade. Even then, trade will be strictly regulated, and bulk commodities like tea, raw silk, and cotton goods will still be handled by the U.S. Commercial Co.

Until now U.S.C.C. has monopolized Japanese foreign trade. Its job of reviving Japan’s biggest export industry, textiles, has been good enough already to make Chinese textilemen cry that they have been betrayed, and U.S. textilemen are grumbling. The Chinese had expected to have at least ten years to build up their own textile industries before there was any Japanese competition. But of the 12 million prewar Japanese spindles, 2.5 million are now operating, thanks to shipments of 900,000 bales of cotton owned by the Commodity Credit Corp. Some 90% of the cotton goods is being exported to 26 textile-hungry countries, is expected to net $40 million to be applied against occupation costs.

Surplus Cotton. But the production of “gray goods” (unbleached cottons) has already run ahead of the export demand. Now, with 120 million yards of gray goods on its hands, U.S.C.C. has had to turn to U.S. textile mills for help. Last month, it asked U.S. exporters to buy the cloth and finish it in U.S. mills for export. But with the sellers’ market about gone in cotton goods, U.S. textilemen are protesting against the finishing of cloth that may soon be in competition with their own products.

U.S.C.C. may run into trouble on another front. Mississippi’s Senator James Eastland recently talked the Army into using only American raw cotton in Japan until at least the end of 1947. Other big raw cotton exporters, like India, one of U.S.C.C.’s best customers for Japanese cloth, are sure to fight for their prewar share of the Japanese market.

Surplus Silk. U.S.C.C. has already badly snarled Japan’s exports of raw silk by paying no attention to the fickle taste of U.S. women. After five silkless years, they had learned to like Nylon better than silk in stockings, slips and girdles. Nor did U.S.C.C. mind its economic law. The first silk shipments sold at an average of $9.79 a pound. But as more silk came into the U.S. the auction price skidded until it hit $4.70 last February. Manufacturers who had been caught in the falling market stopped buying. To protect them, U.S.C.C. pegged the price average at $4.70 and guaranteed to keep it there until the end of the year. With this artificially high floor under silk and with good quality Nylon available at $2.55 a pound, high-priced silk has gone begging. U.S.C.C. has imported some 86,000 bales, sold only 30,000. And Japan’s 72,000-bale surplus is being increased by 5,000 bales a month.

U.S.C.C. has tried to curtail silk imports into the U.S., but General MacArthur has insisted that it is up to U.S.C.C. to solve the problem of selling it. As one way, U.S.C.C. and the International Silk Guild plan to spend nearly $1,000,000 in an advertising campaign intended to regain silk’s lost prestige with American women. This should help. But drastically lowered prices, barred until the end of the year, may be the only way to move the stockpile. Then the bottom may drop out of the retail price of silk goods.