Europe Is Back

THE AMERICAS Europe is Back

To test a machete, a Colombian campesino sticks the point into a wooden floor and bends the bladedouble. If the heavy knife springs back upright, the countryman is satisfied that it is good. If it has a bone handle and nickel-plate finish besides, the customer cannot get his money out fast enough.

Last week busy salesmen, speaking a guttural Spanish, were showing just such a machete to Colombian hardware dealers. It was the German Mosquito-brand machete, and its agents said that they could deliver it for $2 a dozen less than any U.S. knife. A standard Collins machete, made in Collinsville, Conn., costs $14 a dozen, and does not always offer the prized (though nonessential) nickel finish.

Buy for Less. All over Colombia and all around Latin America, U.S. businessmen were running into this sort of competition from Europe. In Caracas, Importer Eugenio Mendoza explained that he had stopped buying U.S. structural steel because Belgian, German and Luxembourg firms were offering him the same goods for $40 less than the $104-a-ton U.S. price. In Chile, the national airlines ordered British De Havilland transports. Salvadorean textile men found they could buy Italian rayon fiber for io/ a Ib. less than the U.S. article. In Lima's streets, women wore British nylons.

The drift was continental. Luxury shops in Rio's narrow Rua do Ouvidor featured Czech china, Danish porcelain, Italian pottery. British cars rolled along the boulevards. In Argentina, U.S. goods had all but disappeared. Across the river in Uruguay, the trade trend to Europe also ran strongly. There, where three years ago the U.S. supplied almost half of all imported goods, the British and the Germans had seized the lead. By the terms of a January agreement, Uruguay will buy $70 million worth of goods, perhaps one-third of its 1950 needs, from Germany. The Uruguayan deal was the biggest of seven bilateral pacts that would bring Western Germany at least $138 million worth of business in 1950—more than half the value of Germany's annual prewar trade south of the border.

Buy from Your Customers. What did all this mean? It simply meant that after war's dislocation, Latin American trade patterns were getting back to something like normal. Twelve years ago, Europe supplied about half Latin America's needs, took about half its exports; the U.S. took & received about one-third. At war's end, with Europe unable to resume its customary trade, U.S. exports to the Latin American market climbed to a peak of $4 billion in 1947 compared to Europe's $1 billion. But the U.S. could not absorb the same proportion of Latin America's exports. The result was a terrific dollar shortage throughout Latin America.

One by one, latino republics clamped down on dollar imports. At the same time European countries began to re-enter their old South American markets. When most of them devalued their currencies last September, their exports really began to click in competition with U.S. goods. U.S. Latin American exports dropped from $3.1 billion in 1948 to $2.7 billion in 1949; in the judgment of most responsible economists, they are likely to fall further.

Buy for Democracy. European recovery does not mean that U.S. business is going to be driven out of Latin America.