Evening star., 1920-05-24
HOPING TOGET us.
into SCHEMESFO
RESTOR|NGEUR0PE
Frank H. Simonds Sees Re-
vivaI of "Trial Balloons"
Flown at Peace Conference.
BY FRANK H. sIMoNDs.

From the cable dispatches from
Hythe it becomes manifest that the
British and French oonferees are en-
gagged in sending up another flock OF
trial balloons, like those flown sc
often during the peace conference al
Paris. Always the actual situation re-
mains the same, the whole purpose
of the European nations, on the finan
cial side of the peace settlement is to
find some way of bringing the credit
and the capital OF the United States
into the operation of restoring condi-
fions.
So far there have been two we'll de-
fined proposals for the financial ad-
justments. The better known sug-
gestion. 50 far as the United States
is concerned, is that advocated by
Keynes and the so-called liberals
of Great Britain, who proposed that
.he United States should cancel the
debts owed it by the nations with
which it was associated in the war
with Germany.
Explains the Keynes Proposal.
Worked out in detail Keynes prop
osition was this: The restoration Of
Germany, on the economic side. is
essential to the health of the world.
This restoration will be impossible II
the conquerors demand huge indem-
mites. But given German destruc-
European nations In defeating. Ger
many, huge indemnities are fnevi-
table, unless some way can be round
to lessen the burdens of the French.
in particular. Moreover. the TACT
that the European nations owe each
other large sums, promises to create
grave animosities In the future. But
every possible condition would be met
if the United States would make
big sacrifice.
This sacriflce was to be the renun-
citation of the $4,000, 100000 borrowed
from US during the war by Britain,
France. Italy, Belgium and the small
er nations which fought Germany.
Following suit. Britain and France
were to cancel the debts owed to
them, but succeeded by their indebt-
edness to the United States. When
the whole transaction was accom-
pIished Britain would come out even,
France would gain upward OF $4,oOo,-
100000, Italy almost as mucn, Bei-
eium and the smaller states the bal
ance up to the $4,000, 100000.
What France Could Grant.
Spared the necessity Of meeting her
obligations to the United States and
10 Great Britain, France, the princi-
pal creditor of Germany, could then
consent to the reduction OF the GER
would be within the easy capacity
of the Germans to pay-someth1ng
like $4,000. .O00. 900 in Keynes computa-
ton Thus the British liberals pro-
posed to shift from German to Ameri-
can shoulders very considerable
part of the costs of the war. If
America consented then the necessity
TO watch Germany. to enforce the
treaty terms, would be greatly les
sened. the whole problem of European
peace would be simplified.
Now the French proposition was
slightly different in form. but carried
with it the same implication At
first the French proposed a general
pooling of debts and assets for the
whole alliance against Germany. Out
Of this would emerge a division of
the debts which would greatly in
crease the American responsibility
and reduce that of the French and
the Italians. But at Paris American
representatives promptly rejected this
idea.
same Idea Reappears.
After many mutations the same idea
now reappears in the Hythe confer
ence. The size of the German indem-
nifty is to fixed at upward of $780,
or for a considerable time pay any
thing. Therefore. she is to be required
70 issue bonds covering her debt.
These bonds will be distributed among
the French and IS TO the British Bel
gium receiving a somewhat more
modest share.
The next step is logical. France and
Belgium owe the United States and
Britain much money. Britain owes
the United States up~ ard of $4,000
100000. Instead of endeavoring to pay
these debts in money, Britain, France
and Belgium would turn over to the
United States German bonds to the
amount represented by their deot u
MS In addition France would trans
fer to Britain bonds equal in face
value to her debt to the British.
Distribution Of Bonds.
When the whole transaction was
completed the United States woule
hold upward of s10.000.O0O 900 of Ger,
man bonds. France would be freet
from all outside debts. Belgium woult
be In the same position and the Brit
ish would have turned over to tn'
United states the German bonds palt
70 her to discharge the Indebtedness
OF the nations allied with her agalns
Germany in the recent war. Rough!
speaking, France, Great Britain AM
the United States would then hol'
some $4,000, 100000 German bond
apiece and would thus be equally in
terested in the ultimate redemption
the bonds by the Germans.
II will be manifest at once what TO
Europe are the advantages of tn
Hythe proposal, which is the ia
miliar French proposal in sllghti
changed form. First of all i'm
mediate financial difficulties wi
ba met. The exchange situation wi
be improved because instead OF haV
Ing to meet American obligations !
gold, the French and the British ca
nav in German bonds. In the secon
recent allies over mutual obligation
will be escaped. Finally, and mos
important Of all, the United State
will be placed In a position of havin
great interest in seeing the treaty {
Versailles enforced. since non-er
forcement, that Is non-payment of tn
German bonds, will cost US $4,000
900. .000-
Choice offered to United States.
Briefly, the choice now offered tn
United States by the two concret
proposals. which have been advance
in Europe, that Of the Keynes schot
of British liberalism and that of tn
French. is between cancellation of til
allied debts to US and the acceptanc
of German bonds as payment for th
Indebtedness involving a close parl
nership with our recent associates
her bonds. This, in turn, means
thirty or forty year intermixture !
the political situation of Europe.
From the European point of vie
these two solutions are about tn
only remedies for the present eco
nomic chaos. Still, in Paris tn
American representatives urged
third, which consisted in fixing tn
German indemnity much lower, lol
enough. In fact. to insure Germa
plication of force. American figure
for the total of German payments i
few cases exceeded $4,000 00O. 900, 0
approximately half of the Hythe sun
At the same time the American rep
resentatives argued that the Who'll
of this sum should be applied 70 m