Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1919-03-04
Problem Of War Debts
New York Evening EOS.


The cables OF the past "a hours show that
the European governments are now taking up
the grave problems of public finance which
the war has left. Our own Federal Reserve
Board lately estimated the total cost of the
European war at Sl7o 000000000. Part of this
pcrtentous sum was paid through taxes. But
in no belligerent country did taxation provide
for more than a third of the total war ex-
penditure; in some countries, such as Germany,
only a trfng per centage of it was thus met.
The national debt of the leading bellgerent
states before the war was something less than
$4,000 100000; it is now not far short OF SlIO-
00u0O000O. Careful observers noticed, more
than a year ago, that the mere annual interest
on the debt of several belligerents exceeded
their total public revenue as reported be-
fore the war.
AS there was reason to expect, it is France
and Germany whose situation presents the
greatest difficulties. The financial burden lett
on each is of appalling magnitude This is not
only because these two nations were the main
protagonists, but because, in the case OF
France, the fact of invasion and the enemy
prolonged occupation OF part of the national
domain crippled the Country's economic power,
and because, in the case of Germany, the gov
ernments overweening confidence in a short
war and a huge indemnity led to absolutely
unsound methods of war finance. AS a re-
suit, both nations have resorted on a large
scale to imitation of the currency for the direct
financing of the war. The paper money OF
France represents today nearly five times as
great a sum as it did in July of 1914; $6,500,
100000 is outstanding. In Germany including
the loan bank" issues, more than $8700000000
is outstanding, or II times much as in 1914,
and IT is even now increasing at the rate OF
500 100000 weekly.
What is the prospect for the public finances
of either belligerent? NJ. Clemenceau lately
pointed out that the French are still large
holders of foreign securities, even aside from
the repudiated Russian bonds. Some hope is
based on expectation that the tourist expen-
diture," which formerly made up so great
part of the country's national income, will
soon be resumed on a large scale. Moreover all
past experience has shown how rapidly the
thrifty and active French producer brings
about the recuperation of his country from the
losses of war.
But there remain the actual burden of in
terest on the funded war debt, the immense
floating debt not yet provided for (the Paris
estimate is $4,800000000) and the sums
borrowed by France from the government of
her allies, exceeding $5000,000000. When to
these are added the great sums required to
reconstruct the area devastated by the Ger
mans, it is not strange that the French minis
ters are relying on the part which the rep
aration indemnity" from Germany will play,
and at limiting at leniency on the part of the
foreign creditor.
But the case of Germany is worse; first
because of the unsoundness of her war fl
nance but very largely because, in addition
to meeting existing obligations, her government
will have the war indemnity to pay. There is
evident, in the discussions of the fiscal situation
as reported from Weimar, a general reluctance
even to confront the problems which this in
ternational payment will create. The case is
bad enough, without that complicating consd-
Grafton Yesterdays review of the position by
the new finance minister, DR.. Schiller, could
hardly have provided cheerful reading for the
German people. Germany's whole financing
of the war, he tells them was "a program
of desperation" Paying for war expenses al
most entirely with bonds bearing per cent
interest and sold at a discount, the government
will need $4750000,000 this year to meet in
terest payments alone. He asks for fresh Dor
rowing powers in the sum of $6325O0O,000,
or 81, 500000000 greater than the largest credit
granted by the Reichstag, even in wartime.
This, let it be observed, makes no pro-
vision for such indemnity as may be assessed
on Germany, and the minister's own view of
the nature Of the outlook may be judged from
his remark that mo one is yet in position
to say whether Germany will be able to ex-
tricate herself financially" There would, in
deed, appear to be no human possibility of such
extricaton, all the circumstances considered, ex-
cept through such direct levy on the aggregate
capital and resources of her citizens as would
reduce her from rich to poor community.