The Washington herald., 1920-04-18
ny ELISHA HANSON.
tcopyright, 1900
ARTICLE VII

A
the rehabilitation of our govern
mental fiscal system is dependent
largely upon the disposition of the
loans which we made to our allies
and associates during the world
war.
When Congress first authorized
the loans of money to allied ma
tions, there was q general rush
from all over the world on the
United States Treasury. A limit OF
$4,000 100000 was fixed by Con-
gress on the total amount to be
loaned and before the loaning
stopped this limit very nearly was
reached. During the war, the al
lies offered every promise of re-
payment. II we would help them
out. We had their admissions
then. that without our help they
could not finance the conflict fur
ther. We have had similar ad-
missions since. But Immediately
after the cessation OF hostilities,
when it became certain that within
few months the United States
money bags no longer would be
open to the world, the allied ma
tions began q drive, first for q de-
lay In the payment of the inter-
est, and then for the wiping out
OF their entire debt to US.
Want Loans Cancelled.
At the present time. there is a
very insidious propaganda afoot in
this country for the cancellation
of all of the allied loans, and for
the extension of new credits for
reconstruction purposes. Informal
spokesmen of European countries
have come forward with the nat
statement that the United States
should assume these debts as q
proper portion of it's war cost.
Not satisfied with this, they would
have us extend Europe additional
credits for commercial purposes.
In other words, they come to us
as man would go to his banker
and say:
Il can't pay the money 1 owe
you. Won't you wipe it of your
books? Then after you do tn .s
won't you loan me more money so
can start all over again"
or course any sane banker would
reject such a proposition instanter
but there is the possibility that a
government might not have the
sagacity of a banker.
According to the last annual re-
port of the Secretary of the Treas
ury, credits to the amount OF
1851. 419.4s4s4 were established
for the allies. and there was ad-
' Nrn L.
ss,41s.371.ssS.55.
Congress Checked Loans.
The United States not only ad-
vanced money to its allies during
the war. but after the armistice
was signed It loaned them $685.
PSI, 1855. We would still be loan
ing them money II Congress hadn't
set high limit and former Secre-
tary Glass hadn't put his foot
down on further advances
Mr.. Glass had hardly uttered his
opposition to further loans before
the allies began to protest their
inability to pay the interest due
on the amounts already loaned
them and the Secretary was forced
by their representatives to go to
Congress for authority to allow
them to apply to the total indebt-
edness the interest which will fall
due in the next few years. as well
as that already over due.
Up to the present time, our gov
ernment. in all of its calculations,
has looked upon the allied indebt-
edness as a good loan" in bank
ing terms. In other words. it is
carrying the advances on the
books of the Treasury at 100 per
cent face value. Included in this.
is the s1S7.0O0.000 loaned to Rus
sia. which probably never will be
paid back.
British Our Largest Debtors.
The British. who are our largest
debtors. are second to US in the
creditor position. They carry
their loans to the other allies at
so per cent valuation and have
doubt as to their ability to COL
! lect that. They would willingly
wipe their whole slate clean if we
would do the same thing. In other
words. If the United States, which
owes no nation. would cancel all
obligations due it. Great Britain.
which owes us $500. 600, 900. would
cancel the amounts due her from
other nations.
Financially. the United States
would be the only loser by such a
procedure. but that fact doesn't de-
ter the other governments one bit
in their efforts to persuade us to
proceed. According to J. NJ. Keynes.
one of the British advoc,tas ~
this plan of eliminating the in
terallied indebtedness, this is what
would happen:
The United States would wipe out
the loans of approximately s10,-
OOO,o00.0o0 which it has made to
its allies.
Would Return to Pre-war Basis.
Great Britain would wipe out
the loans of approximately S.
zoe. 100000 which it has made to
the allies.
France would wipe out the loans
which she made to Russia and the
other allied. nations, approximat-
ing $500. 100000.
All OF the other allied countries
would have their indebtedness to
the United States, Great Britain
and France wiped out. They could
eliminate future interest costs on
this Indebtedness, and fiscally, they
would be back about to their pre-
war basis.
But. and let us pause over this,
while ostensibly Great Britain and
France would be wiping out loans,
practically they would be putting
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