Exports outran imports by a seasonally adjusted $213.1 million last month, the Commerce Department said, as overall imports paced by increasingly costly oil, surged 14% from January. The February trade surplus was much slimmer than the adjusted $643.8 million black-ink showing in January, but a vast improvement over the $411.6 million deficit in February 1973.

The February report demonstrated how the monthly surpluses that the U.S. has had since mid-1973 are increasingly vulnerable to the rising cost of petroleum. The volume of oil imports dropped about 4% last month, but their value jumped 22%, reflecting the spectacular price boosts of recent months.

RENEWAL OF SHIPMENTS

Renewal of shipments of high-priced Arab oil to the U.S., following the recent lifting of the six-month embargo, is sure to accelerate the rise in the nation's oil import bill and imperil its trade surplus. The surging oil bill is the main factor behind Nixon administration predictions that the trade balance will swing into the red during the year and may show a deficit for all 1974 after last year's surplus of $1.68 billion.

The department said U.S. exports rose 7% in February to an adjusted $7.61 billion from January's $7.11 billion, and were a hefty 50% above the year-earlier level of $5.07 billion.

Commerce Secretary Frederick Dent said the February export advance was broadly based. The largest single factor, he said, was a surge in shipments of commercial aircraft. Agriculture exports "were mixed," he said, with a sizable gain in soybean shipments partly offset by declines in rice, wheat and corn exports.

The "major element" in the 14% climb in imports, Mr. Dent said, was the higher cost of foreign oil. Detailed figures issued by the department showed imports of petroleum and related products totaled 164.2 million barrels, down 4.4% from January. But the value of these products rose to $1.51 billion, up 22% from $1.22 billion in January.

IMPORTANT FACTORS

"Although U.S. foreign trade has been consistently in surplus since last July," Mr. Dent said in a statement, "it is clear that the volume and price of petroleum imports will be important factors in the balance of trade this year." He didn't make any new forecast for the U.S. trade balance for 1974, but he indicated earlier he expects a deficit about as large as last year's surplus.

For the first two months of 1974, the U.S. had a cumulative surplus of $856.9 million, compared with a deficit of $700.7 million in the 1973 period.

The department said the U.S. trade account was in deficit by $297 million in February when calculated on the basis used by most other nations, compared with a $165.4 million surplus on that basis in January. The dual bookkeeping on trade figures was started in January to provide one set of figures comparable to those of other nations.

UNITED STATES-WEST GERMAN TRADE COMPARISONS

Our administration asserts that our labor costs are too high. That despite two dollar devaluations, our increased labor costs have driven us right out of the international marketplace. They assert that this is the reason why we are great exporters of agricultural products (a low labor intensive industry) and cannot be very large exporters of manufactured goods.

I should like to submit for the record these various newspaper accounts of the German wage earner. He makes more than his American counterpart, yet the Germans are still very well able to increase their exports of manufactured goods. The West German balance of payments is soaring into surpluses despite the fact that they have to import most of their petroleum.

There seems to be a blatant contradiction in what the administration is telling us on this particular matter.

[From the Washington Post, Oct. 14, 1973]

WEST GERMAN PAY RATES SOAR

(By David Haworth)

Pay rates in Western Germany are equal to and in some industries even exceed salaries paid in the United States, which until now has always been the world's highest-paying nation.

According to a study published here by a management consultant firm, a German marketing executive in an engineering company gets an average of $32,200 a year compared with his U.S. counterpart who will receive an annual $29,540. A manufacturing manager in Germany this year is getting an average of nearly $2,000 more than he would in America, and the finance manager will get an extra $400 above his U.S. opposite number's income.

Although these differences are not large, they indicate a new trend. The study also points out that the recent variations in the exchange rate caused a further increase of some 20 percent in the German pay levels in relation to those in the U.S. since the inquiry's figures were completed earlier in the year.

The survey concludes that French pay levels are not far behind the German ones, averaging at the moment some $2,000 a year less for comparable executive jobs, but rapidly closing the gap. In contrast, Britain and Ireland, the two worst-paying countries in the nine-member Common Market, seem to have little prospect of catching up with their more dynamic partners.

Working hours have gone up in Germany, however, though they have dropped in all other European Economic Community countries. The report shows up one oddity. German executives insist on having an "elegant office" and this is their most commonly expected bonus. In the U.S. a paid-up club membership, a company car and an entertainment allowance are the most valued job bonuses.

It is better to retire in France, Italy or Luxembourg, the report says, but France and Belgium give the best social security handouts to families. Italy is at the bottom of the ranking for per capita wealth.

Bonuses and other cash payments are shown to be an important part of West German and U.S. salary structures, but virtually none is given in Britain. Special types of remuneration, such as representational fees, extra holiday and subsidized housing are less in the U.S. than elsewhere. They are most numerous in Japan.

Despite America's slipping position in the salary league, the report points out that the country still has by far the highest gross national product of any other nation in the world: $1.15 trillion last year. The survey cites Japan as the second leading economic entity, with a GNP of about $274 billion, followed by West Germany with an estimated $258 billion.

The combined GNP of the nine European Economic Community countries is rapidly approaching that of the U.S., last year reaching some $824 billion.

[From the Washington Post, Sept. 2, 1973]

THE RELATIVE WEALTH OF NATIONS

West Germany has now equalled the United States in national wealth per person. It happened last Thursday. The exchange rate of the dollar, sinking steadily on the Frankfurt exchange, hit the point at which the German level in marks is worth as much as the American in dollars. On Friday the dollar sank a bit more and left the Germans, technically at least, just a bit richer than we.

This new fact is going to change the way that Americans look at the world and at themselves. It may strengthen the current disinclination to carry the burdens of world leadership. It will probably stiffen this country's economic negotiations with other countries. It will certainly set off a long slightly defensive debate on the defects and omissions of the conventional methods of measuring wealth. But there is no doubt about the message that those conventional methods currently convey.

To the extent that national wealth can be reduced to a single figure, it is Gross National Product. GNP is, as the textbooks say, the grand total of all the goods and services sold for money in a country. In the United States, GNP per capita for 1973 will probably be about $6,100.

Sweden overtook the American figure earlier in the dollar's long slide downward. Sweden's GNP per capita this year, at current exchange rates, is over $6,500. But Sweden's population, a little over 8 million, is less than half of California's alone. West Germany, with its 62 million people and its rising political position, is another matter.

In West Germany the GNP per capita this year, at last weekend's exchange rate, translates to roughly $6200. The Deutschemark traded at 3.21 to the dollar at the beginning of this year. By last Thursday it was down to 2.48 and, on Frday, fell to 2.43.

These figures are, obviously, only a rough approximation of a reality that cannot be entirely reduced to statistics. While Germany has reached 102 per cent of the American level, the same calculations show France around 84 per cent, a disparity that may reflect the mysteries of the international exchange rates more than any substantial difference in real wealth between those countries.

Britain, on the other hand, is still at about the same position in relation to us that it has occupied for many years. A decade ago it stood at about half the American level, and there it stands today. It has the lowest growth rate of any of the major industrial powers, and the price of the British pound, in dollars, has remained comparatively stable.

The other extreme is, inevitably, the case of Japan. In 1960 it had a GNP per capita that was one-sixth of the American level. Currently it is almost twothirds of the American level. If the trends of recent years are maintained, according to Isaiah Frank of Johns Hopkins University, the Japanese will equal us, per capita, by about 1980.

These comparisons are based on currency exchange rates, which means that they are based mainly on the value of goods traded in world commerce. But the goods traded across borders are only a small part of any country's GNP. The prices of services can vary sharply from one country to another. So do housing and real estate.

Sometimes economists try to compare purchasing power from one country to another, by constructing and pricing a hypothetical market basket of all the things that a typical family buys. But here the statistics run into an altogether different kind of questions--the questions that one experienced economist. Lawrence B. Krause of the Brookings Institution, calls the philosophical issues. Whose market basket shall we use? The typical American family's, reflecting American culture and tastes? A German basket? A Japanese basket? Housing is vastly more expensive in Japan than here, for example, but most services are a good deal cheaper.

Using any basket, the American dollar now buys more in the United States than its Deutschemark equivalent can buy in Germany. In other words, the international value of the mark somewhat overstates its current purchasing power at home. Even though wealth per capita is equal in the two countries. the average American still lives more comfortably than his German counterpart. The GNP figures are anything but exact in reflecting standards of living. Americans, for example, regard leisure as an important item in the standard of living. But, as Krause points out, the Japanese put much less value on it. The five day work week has been standard here since World War II, but the Japanese still generally work five and a half days. Leisure does not show up in the GNP accounts since it is, in effect, the labor that people choose not to sell.

But the Japanese do not live as well as the raw GNP figures might suggest because, among other reasons, they are a nation of savers. Their savings rate is, by the measure of any other country, phenomenally high.

Americans, to take another example, put a higher value on education than most other countries do. Although we are now equally wealthy, the proportion of young people pursuing higher education is almost four times as high in this country as in Germany. With its vigorous drives to discourage high school students from dropping out, the United States is making a full 12 years of education the normal minimum. In Germany, most youngsters still leave school and go to work at the age of 15, after nine years of education.

We now appear to be coming into a time in which a good many of the industrial countries will be clustered around the same general level of wealth per person, with the numerical differences depending heavily on the various statistical methods by which wealth is measured. The more interesting disparities will lie in the individual ways that these countries choose to spend their similar incomes. Americans are accustomed, of course, to being by far the richest nation in the world. The assurance of wealth, and the highest standard of living in human experience, are woven through the American psychology. As Americans slowly realize that other nations have worked their way up to our economic level, American attitudes will doubtless change in some incalculable degree. Political concepts seem to be lagging about a decade behind economic realities. This shift in the distribution of the world's industrial wealth was going on at great speed through the 1960s, but the fixed values of currencies veiled it until the devaluations, revaluations and floats of this year.

In 1970 the top three nations, in rank of wealth per person, were the United States and, at a considerable distance behind, Sweden and Canada. Today the order is Sweden, West Germany, the United States, and the rest of the field closing up fast.

This article indicates that both West Germany and Japan are building up an unprecedented drive in order to earn more foreign exchange to buy oil. (Japan must import virtually 100 percent of its oil.)

The article follows:

[From the Washington Post, Mar. 31, 1974]

GLOBAL OIL AUSTERITY?

(By Hobart Rowen)

The end of the Arab oil embargo still leaves the industrial world with a terrible dilemma and the poor countries facing a disaster of unmanageable proportions. Although it has become fashionable in banking circles to suggest that financial gimmicks of one sort or another can "solve" the problem, it is important for the public to keep in mind that loans and investments-while great for the banking business-solve neither the difficulty of growing trade deficits nor the loss of purchasing power due to the higher price of oil.

There are two facts that should be remembered when anyone tells you that the energy crisis is over because the Arab oil embargo has been lifted:

First, despite some easing in the auction price for oil in the Persian Gulf, the "mainstream" of supplies, as oil consultant Walter Levy points out, still ranges upward of $7 a barrel, compared to $3 as recently as October 1973, $1.25 in 1971 and 90 cents before that. Thus, the world oil bill for 1974 is something like $65 to $75 billion higher than last year's.

Moreover, the secretary general of the Organization of Petroleum Exporting Countries, Dr. Abderramman Khene, forecast on Wednesday that the cartel will boost prices after the current freeze expires in July. Oil prices are "artificially low," Dr. Khene alleges. The OPEC governments, watching the rate of inflation around the world climb, are talking of a "take" in taxes and royalties that will yield them about $12 a barrel instead of the present average of $7.50. Second, as George W. Ball cautions, the end of the embargo "must still be regarded as provisional-for the embargo cannon will continue to be loaded and ready for firing until the Arab-Israeli dispute is finally settled which-even if we are lucky-is not likely to occur for another two to three years."

So, even with the oil embargo lifted, the oil problem remains. For the lessdeveloped countries which last year had a combined trade deficit of $11 billion, the staggering oil price increase means that they will wind up with a deficit of $20 to $25 billion in 1974.

For the industrial nations, as West German central banker Otmar Emminger pointed out here the other day, the situation varies. But even the supposedly wealthy United States faces an Arab oil "tax" which will cut consumer purchasing power by perhaps $15 billion this year. And if prices go up, the situation will be worse.

Europe and Japan are feeling pressure to boost exports to earn more foreign exchange. Former Commerce Secretary Peter Peterson, now head of Lehman Brothers, says that this "may wipe out the advantage the United States increasingly enjoyed during 1973 from an under value dollar and restore roughly the same conditions that existed prior to Aug. 15, 1971, when American goods encountered serious problems of price competition in world markets.”

Emminger, it should be said, thinks that the major nations will not engage in a cutthroat competition for export markets typified by exchange-rate wars or "beggar-thy-neighbor' 'policies.

But Japan-which must import virtually 100 per cent of its oil-already has indicated that it will junk the plans once made to improve the standard of living at home and return to the old emphasis of an export economy to improve its foreign exchange earnings. That can only mean a return to the bitter fights among Japanese, American and European manufacturers to obtain and secure outlets for their goods.

Where does all of this leave us? First of all, we must ignore the advice of such as Roy Ash, head of the Office of Management and Budget, that all allocation controls should be dropped once imports reach last August's levels. That would be stupid and short-sighted. We must accept as reality that the Arab oil weapon has not been discarded, only temporarily suspended.

ECONOMIC IMPACT

Second, we have to make Project Independence believable, rather than something-as Peterson says "which currently suffers from a credibility gap."

The United States government, if it truly believes that price is the real problem, can bring pressure on the Arab monopolists only by setting specific production schedules and goals for oil shale, tar sands, offshore oil, solar energy, and so on, that will diminish our dependence on Arab oil.

If we yield to the temptation suggested by Ash to believe that the energy crisis is over, all necessary efforts to achieve major conservation in the use of oil will go down the drain.

IN A NEW analysis called "Implications of World Oil Austerity" which is gaining wide attention in Washington circles [Levy comes to the conclusion that there must be a substantial cut in world oil consumption until the latter part of the 1970s, with the burden of reduced production falling on Saudi Arabia, Kuwait and Abu Dhabi.]

Those are the countries in the cartel which are under the least pressure to generate increased revenue and also the ones least able-because of their small populations to absorb added goods and services from the Western World in exchange for their oil.

Whether these countries would agree to reduce output while Iran, Iraq and others are expanding is an unanswered question. [But high oil prices unquestionably will force some kind of austerity in oil consumption on the West.]

Economic Council Chairman Herbert Stein, in a thoughtful speech on Project Independence, said this past week that "we will find it prudent to hold oil imports to a lower level than a free market would bring about and to try to avoid an increase in the import share of our energy supply."

This is necessary not only because we no longer can afford all of the oil we would like to use, but because the cartel has demonstrated it is an unreliable source.

This will require some new disciplines. It means smaller and more economical cars-by legislative order if necessary-and a conservation program to cut energy wastage of the same order of urgency that once was the accepted ethic in wartime.