Dec. 20, Y8 THE NATIONAL INCOME CONCEPT Profiteering by U. S. Companies in Europe There has been considerable empha- sis upon the volume of national income Through Loophole in ERP Pact Reported and the gross national product re- quired in order to achieve post-war "full employment." Such estimates By ALBION ROSS leave the impression that national in- Special VIENNA, to THE NEW YORK TIMES. come can be estimated with precision. Dec. 19-United States companies, profiteering on ropean trade agreement provide for This is far from the case. In the cur- central clearing and obligate mem- rent issue of Monetary Notes, Prof. loophole in the European Re- bers to trade on this basis. An Walter E. Spahr of New York Univer- covery Program's intra-European American can remove a vital prod- sity raises a number of interesting trade agreement, with the tacit uct from the conditions of the questions concerning this concept. understanding of certain partic- agreement, it is explained, by pur- Just what is "national income" ipating European countries, are chasing with dollars. The bait to Is this concept measurable and is it hurting the reputation of both the measured statistically with any ac- United States and the ERP in this the producing industry usually is curacy? Does a large "national in- the offer to provide machinery ob- come" cause spending, or is it the re- part of Europe. tainable only in the United States. sult of spending? What, specifically, Austria, because her narrow Such deals are permitted by the is its relation to spending? And economic base, has been one of the national banks of the respective is it 'national income" or spending first places where the damage that, along with the goods and serv- countries involved because they ices sold, determines prices? And caused by American corporations are glad to obtain part of the pur- where does greater production, sav- has been evident enough to become chase price in free dollars in the ing and investment fit into these known to authorities directly re- interest of their constant effort factors as causal agents? Did not sponsible for trying to make the to increase their dollar holdings. the "national income" of the Ger- ERP a success. No one suffers, it is stated, except man people reach fantastic heights The trick used by these Amer- the unfortunate buying country, in 1921-23 when their currency was ican corporations is to buy up in dependent on the product, which depreciating rapidly and their spend- ing was frantic? Did great spending an ERP member country all or a the intra-European trade agree- and great "national income," in part of the available supply of ment was designed to benefit. terms of their money, mean eco- some scarce commodity, upon In one recent case now said to nomic health, or heavy employment, which another ERP member is de- be under investigation, one of the or greater production, or saving, or most important Austrian export prosperity? Are not our "national pendent for industrial purposes. The country that is the victim of industries was reported to have income" figures in terms of money too? With our "national income' this technique then learns it can been "held up" by a New York now said to be roughly twice that of only get the essential material by corporation. The corporation al- the average year of the Nineteen paying free dollars, usually out of legedly acquired control of the Twenties, are we twice as well off? very restricted reserves. supply of a vital chemical in Italy, The emphasis on national income The profiteering concern gets and the Austrians suddenly found places the cart before the horse. The its advantage out of the deal they could only buy against dol- either by forcing up the price or lars irrespective of the require- emphasis should be upon producing the by a compensation deal with the ments of the intra-European clear- goods and services which people will producer from whom it made the ing arrangements. desire. If we have a balanced output purchase. In the latter case it In another case it is reported an of goods, we will have em- makes payment partially-usually industry in the German bizonal area ployment and a high national in- half-in dollars and contracts to was "held up" in the same fashion deliver the other half in United in securing from Austria a certain come. But the latter are the result, not States machinery, on which it is raw material. the cause. We must focus our atten- able to realize an exceptional There is reason to believe, ac- tion on the causes. profit because the machinery could cording to authoritative sources, not otherwise be readily obtained. some of these New York corpora- A favorite field for this practice, tions may be dummies set up by it is reported, is certain scarce producing industries within certain chemicals and raw materials. countries participating in the ERP The trick is successful because to buy up their own production the requirements of the intra-Eu- and force their European trade partners to buy with dollars.