The New York herald., 1920-01-15
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largest possible burden they may safely
assume. But care will have 10 be taken
that this burden does not exceed the
measure of the highest practicable taxa
ton and that it does not destroy the power
of production. which forms the very source
OF effective taxation. For the sake Of
their creditors and for the sake OF the
world. whose future social and economic
development is iuvoved Germany and
Austria must not be rendered bankrupt.
III. for instance. upon close examination.
the Commission OF Preparations finds that
even with the most drastic plan of taxa
tion, income. trade and consumption, the
sums that these countries Will be able to
ontribute Immediately toward the cur
rent expenses of their creditors will not
reach the obligations now stipulated, then
the commission might be expected to take
the view that the scope OF the annual
contribution must be brought within the
limits within which solvency can be pre-
served. even though il might be necessary
for that purpose to extend the period OF
instalments. The load of the burden and
the period during which ii Is TO be borne,
must not however, exceed certain bounds
1t must not bring about so drastic lower
ing OF tho standard OF living that a will
ingness to pay just debt is converted into
a spirit of despair and revolt
Ee0nOmic Situation Grave.
ut IL also true that among the victori-
GUS countries there are some whose eco
nouic condition 10 exceedingly grave, and
which will have TO reach the limits OF
their taxing powers. IL appears there
fore to the undersigned that the position
of these countries, too. should be exam
ined from the same point of view or keep
ing taxation within the power of endur-
ance and within a scope that will not be
conducive to financial chaos and social
unrest.
when once the expenditure OF the va
Gus European countries has been brought
within their taxable capacity (Which
should be a first condition of granting
them further assistance), and when the
burdens of indebtedness. as between the
different nations, have been brought
within the limits of endurance. the prob
lem arises as to how these countries are
to be furnished with the working capital
necessary for them to purchase the inn
ports required for restarting the circle OF
exchange, to restore their productivity.
and to reorganize their currencies.
The sienatoriss submit that. while
much can be done through normal bank
ing channels the working capital needed
is too large in amount and Is required
too quickly for such channels to be ade-
quate. They are of opinion, therefore,
that n more comprehensive scheme Is
necessary 1t Is not a question OF afford
ing aid cniy to a single country, or even
q single group OF countries which were
allied IN the war. The interests Of the
whole OF Europe. and indeed or the whole
world, are at stake.
TbeIr Views on Credits.
"It is not our intention 10 suggest IN
detail the nsthcd by which such interna-
tic nal cooperation in the grant of credit
may he secured. But we allow ourselves
the following observations:
"u) The greater part OF the funds
must necessarily be supplied by those
countries where the trade balance and
the exchanges are favorable.
"(2) Long term foreign credit, such
as Is here contemplated is only de-
srable in so far as IL ig absolutely
necessary TO restore productive proc
esses. II s not substitute for those
efforts and sacrifices on tho part of
each country. by which alone they can
sovo their internal problem. IL is only
by ;hc real economic conditions press
ing severely. as they must, on the indi-
vldual that the equilibrium can be re-
stored,
"CO For this reason. and also be-
cause OF the great demands on capital
for their own internal purposes in tho
lending countries themselves, the
credit supplied should be reduced 60
the minimum absolutely necessary.
80 Assistance should as far as pos
finle be given in form which leaves
national and International trade free
from the restrictive control of govern
ments