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everything entering into farm labor, is about double. It is fair to attribute the fact that nitrate prices have not gone up to the influence of the Chilean Government and the Chilean Nitrate Producers' Association. We are all a little "leery" of price-fixing combinations, national and international. But I think without question the effect of the Chilean Nitrate Producers' Association has been to stabilize prices downward, because relatively they are downward. That is one result in which it justifies itself. It has kept nitrate below any other fertilizer, natural or artificial. Nature has provided, as I understand it, three great sources of fertilizing for plant life. One is phosphate rock, of which we have our share. Another is potassium salts, of which Germany and Alsace have virtually a monopoly. And the third is Chilean nitrate.

Dr. Curtis has not exaggerated the importance of those factors to the future of American agriculture. The question is coming up, of course, not only as to nitrates from the air but as to other fertilizers. He mentions sulphate of ammonia, and it is also worthy of note that the price of the nitrate is lower by relatively a dollar a hundredweight than sulphate of ammonia.2 That shows the possibilities of Chilean nitrate production.

I was very glad indeed to hear his comment, courteously made, on a report from another department of the Government that the prices were fixed in London. Unfortunately, some of our newspapers, in publishing a synopsis of that report, had it that we were paying tribute to the London committee. I was in Chile last May during all that

2 Sulphate of ammonia contains about 20 per cent of nitrogen; sodium nitrate from Chile (95 per cent pure) contains about 15 per cent of nitrogen. As fertilizers they compete on the basis of their nitrogen content.-B. B. W.

squabble over prices, and can fully confirm Dr. Curtis in saying that the London committee did not fix the price. London fixes the price of a good many raw materials, but does not fix the price of nitrate. When it comes to nitrates there is the usual squabble between contending interests holding out for high prices, low prices and medium prices, respectively, but the result is that London is turned down.

Last May, when this squabble was going on-and it was worse than any previous years-there was a strong demand for high prices. The last year had been so good that a very large element wanted to raise the prices. It is not disclosing any secrets to say that the real pressure for very high prices came from London and the so-called London committee, and it was the Chilean owners and the other foreign interests which very largely overcame that. But the real influence, after all, was the Chilean Government. Whether they call it moral coercion or bulldozing, the Chilean Government has maintained moderate prices for nitrates, and it was its influence last May, undoubtedly, that caused the present scale to be fixed, which is similar to that of last year and is moderate.3

Now on the big, broad, general proposition as to the future of nitrates, they are Chile's greatest national asset. She has copper and other assets of much value, but in some years 60 per cent and some years 40, or an average of 50

$ Both Mr. Pepper and Dr. Curtis seem to assume that if the price is fixed in Chile instead of in London, and if it is not fixed at the highest price demanded by a considerable proportion of the producers, it is therefore a moderate price of which the consumer (at least in Mr. Pepper's opinion) should not complain. The assumption seems equally valid that the consumer is justified in complaining of any combination which fixes prices at any level higher than the lowest at which a large number of producers are willing to compete.-B. B. W.

per cent of her revenues, come from the nitrates. So naturally she is bound to take an interest in whatever relates to them.

The Chilean form of government is somewhat more paternal than ours,although if our present tendency is continued I do not know that it will be. Let us assume, then, that the nitrate industry being so vital to Chile, the Government has a right to use its influence to regulate it. For that reason the Government insists on four members of the directorate. It insists on knowing what is being done. Its policy is to insure moderate prices. As Dr. Curtis says, the Chileans recently have begun to buy back some of the interests in those nitrates with which they parted. They had a feeling that a great asset was getting away from them. This was not exactly true, but that a very large element went into foreign hands and that as a consequence of the war some of it is going back into Chilean hands is true. I do not know the per cent of Chilean ownership, but it is larger than it was four years ago and is becoming more and more a Chilean industry. Three to 5 per cent would represent the United States' proportion to the nitrate production. We have, however, a very much larger interest, because as merchants some of our people handle the product. As manufacturers of explosives a considerable quantity is handled by our people, who have their own oficinas.

The question of efficient production is constantly before the nitrate owners. I agree to some extent with Dr. Curtis that as a whole the industry is not as economically managed as it might be; it has not the economic efficiency that it should have. A few weeks ago one of the engineers of one of the great American companies which is trying out new processes in nitrates said to me: "The trouble is that the whole in

dustry is not conducted on the basis of scientific production, but it just jogs along." Some of the plants are as efficient as are industrial plants in the United States. That is especially true of the oficinas controlled by the American companies, by some of the English and by some of the Chilean companies. The industry as a whole is making progress.

As to the prices in the future at which nitrate can be sold, I do not think anybody can make a good guess, because we do not know the conditions that may develop. There will be no disagreement in Chile with the proposition that the United States is entitled to provide for the manufacture of nitrates as a means of national defense. There will be no question that if we choose to subsidize nitrate plants at heavy expense in order to give the farmers cheaper nitrates, we have a right to do so. The matter is a practical one, however, whether the necessary subsidies will be within limits which the American people will justify.

Now, in conclusion, I only want to say a word about the mutual interest, after all, of nitrates to Chile and the United States. To Chile they are almost the breath of life, and for us they are becoming for our agriculture almost the same. But there are several other aspects. We may put on a very high tariff and resort to subsidies and shut out Chilean nitrates entirely. I do not think there is any probability of that. But there would be a reverse action if it were done. The income from those Chilean nitrates goes to the purchase of American machinery and American supplies; some of it goes to pay the interest on the loans which Chile has contracted in the United States. This year a million dollars or more will go into the Panama Canal tolls. Our imports were about 900,000 tons in the last fiscal year. That means a good

deal to the United States. If that figure is maintained, as is probable, the benefit will be mutual.

It seems to come down, after all, to the question of gradual reduction of the price in Chile. Of course Chile is going to get what she can within moderate limits. But with the Government there virtually controlling the price policy, I think the consumers in the United States can be sure of a fair price for nitrates. It may be shaded a little below what it is. Certainly there is

nothing to indicate that it will go up. Our American companies in Chile have been criticized at times because they did not enter the Nitrate Producers' Association and help to regulate the price. But as Dr. Curtis has said, they cannot do this under the Sherman antitrust law. Generally the interest of the American people in the nitrates of Chile is to encourage production, to help stabilize prices downward, and to recognize the intimate relation between trade and the nitrate industry.

The Importance of the Near East in Problems of Raw Materials and Foodstuffs

By EDWARD MEAD EARLE, PH.D.
Columbia University

HE Ottoman Empire, as it existed before the Great War, was of supreme economic importance to the industrial nations of Europe. The The Sultan's dominions were rich in certain important raw materials—notably chrome, antimony, manganese, copper, emery and meerschaum, among the minerals; oil, among the fuels and lubricants; cotton and silk, among the textiles. With the aid of irrigation, furthermore, it was believed that Anatolia, Cilicia and Mesopotamia could be converted into important granaries. The great natural wealth of Asiatic Turkey was a lure to European traders and investors. The coincidence of the economic interests of the business men and the political interests of the statesmen caused the Near East to become one of the imperial "danger zones" of the world.

GERMANY'S INTEREST IN THE NEAR EAST

To the German Empire the problems of raw materials and foodstuffs were particularly pressing. To feed a rap

idly increasing population the nation was becoming more and more dependent upon importations of foreign grain. Heroic measures taken to stimulate agricultural production-such as the imposition of high protective tariffs and the encouragement of scientific farming-could not obviate the necessity of feeding about one sixth of the population on foreign foodstuffs.

As the German worker was dependent upon imported grain, so the German manufacturer was dependent upon imported raw materials. Many indispensable commodities were not produced at all in Germany, and a large number of German industries were almost entirely dependent upon the outside world for their raw materials. Perhaps the best example of this condition was the textile manufactures, which had to obtain from abroad more than nine tenths of their raw cotton, jute, silk, and similar essential supplies. Interruption of the flow of these or other raw materials would have visited upon German industrial centers the same economic paralysis which af

flicted the British cotton manufactures during the American Civil War.

German imports of foodstuffs and raw materials had to be paid for in goods and services. The increase of the population of Germany, the development of her industries, and the resultant growth of her import trade, were closely associated, therefore, with the expansion of German exports and the rapid increase in German shipping and foreign investments.

But

The building of a German colonial empire was an attempt to solve some of the Empire's economic problems in the traditional European manner. But Germany came late into the field of colonization and found that the most productive of the areas of the world had been previously appropriated by Great Britain, France and Russia. The German colonies in Asia and Africa were extensive in size, but singularly unpromising in other respects. With the exception of German East Africa, the colonies produced insignificant quantities of raw materials and foodstuffs; it has been estimated that the colonies produced less than one half of one per cent of the raw materials consumed by German industry before the Great War. Finally, German overseas possessions were open to attack, in the event of war, by the powerful British fleet. German colonial ventures were a distinct disappointment.

It was this situation which attracted Germans to the Near East. Turkey was wealthy in raw materials and held out possibilities for the production of foodstuffs. These much-sought-after commodities could be transported to Germany through the Balkans and Austria-Hungary over a railway which would be immune from naval attacks in time of war. Thus came into existence the idea of an economically self-sufficient Middle Europe under German hegemony.

THE BAGDAD RAILWAY

Around the Bagdad Railway centered all German interests in the Near East. When the first of the German railway concessions in Turkey were granted in 1888, there was every indication that it was being undertaken as a purely business enterprise. In fact, at the time, Bismarck wrote the Deutsche Bank that the risks involved in the enterprise "must be assumed exclusively by the entrepreneurs, and the latter must not count upon the protection of the German Empire against eventualities connected with precarious enterprises in foreign countries." It is sometimes asserted that imperialism exists only where active governmental support is given foreign enterprises; but in this case, as in many others, governmental interests developed after the enterprises had become established facts.

The economic security which Germany sought by the development of Asiatic Turkey was looked upon by other European powers as involving economic insecurity for them. Russia, for example, feared that the agricultural renaissance of Mesopotamia would lead to serious competition with the great Russian wheat fields; therefore Count Witte announced quite frankly that Russia would do everything possible to block the German advance in Turkey. Similarly, the French were concerned lest the Germans should interfere with the French supply of raw silk from Syria. The British believed that their Persian oil interests were menaced and were uneasy over the possibility that the cotton supply of Mesopotamia might be developed into a powerful competitor of that of Egypt and India. And associated with these economic considerations were grave strategic questions involving national defense and

imperial safety. Thus the Bagdad Railway became a serious bone of contention in the diplomacy of Europe.

There were two interesting attempts to settle the Bagdad Railway controversy: the first by internationalization; the second by division of Asiatic Turkey into spheres of interest. In 1903, German and English bankers arrived at an arrangement by which the Bagdad enterprise was to be jointly and equally controlled and owned by German, French and British capital. The arrangement received the approval of Mr. Balfour and Lord Lansdowne, Prime Minister and Secretary for Foreign Affairs of the United Kingdom, respectively, but met with such bitter opposition on the part of the London press that it had to be repudiated. In 1913-1914 a series of diplomatic negotiations, consummated on the very eve of the Great War, almost solved the difficulty by dividing up the empire of the Sultan into spheres of interest within each of which one of the great European powers was to have exclusive economic control. Unfortunately, however, both internationalization and spheres of interest failed to adjust the conflicting economic and political interests of the powers in the Near East.

THE DEVELOPMENT OF AMERICAN

INTERESTS

At the moment, the United States appears to have developed substantial economic interests in Anatolia and Mesopotamia. Of these interests the Chester concessions and the AngloAmerican diplomatic controversy regarding the Mesopotamian oil fields

1 For details of these negotiations cf., E. M. Earle, Turkey, the Great Powers, and the Bagdad Railway, Chapter X, and "The Secret AngloGerman Agreement of 1914 Regarding Asiatic Turkey," in the Political Science Quarterly, Volume XXXVIII (1923), pp. 24-44.

are but two tangible evidences. American business men are interested in Turkey as an important source of supply of raw materials, as a profitable market, and as a fertile field for the investment of American capital. A striking illustration of our increasing activity in the Near East is to be found in the trade statistics: in 1900, American exports to Turkey amounted to only $50,000; in 1913, they had risen to $3,500,000, and in 1920 to $42,200,000. Imports into the United States from Turkey increased from $22,100,000 in 1913, to $39,600,000 in 1920. From 1919 to 1922 American trade with Constantinople alone has averaged over $30,000,000 annually.

EFFECTS UPON AMERICAN FOREIGN
POLICY

The question of the effects upon American foreign policy of these economic interests is yet to be answered. Will it lead the United States into the old game of imperial rivalries in the Near East? It must be admitted that the outlook is not promising for the anti-imperialist. As an illustration of the dangerous road we are treading, I should like to quote the following from a most significant book, The United States Navy as an Industrial Asset, published by the Navy Department in 1923:

Early in 1919 several American destroyers were ordered to Constantinople for duty in the Near East. Although these destroyers are good fighting ships, it costs some four million dollars a year to maintain them on this particular duty, which does not train the crews for use in battle.

. . The possible development of the economic resources of this part of the world was carefully investigated by representatives of American commercial interests. These representatives were given every assistance by the Navy, transportation furnished them to various places, and all

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