Evening star., 1920-03-21
EUROPE REDUCING
PURCHASES IN j. s.
forced to Do So Because of
RuinouS Exchange and
I Hating of Credits.
BY PAUL SCOTT MOwRER.

BY PAUL SCOTT MOWRER.
CabIeErnm to The Star and the Chi
cnEo Daily News, Copyright, 1920.
PARIS, March 20.-The outstanding
fact in the present situation is that
Europe is finally making a serious ef-
fort to organize its economic life the
oest she can without American aid.
To do entirely without America is an
obvious impossibility. Americas wheat
and cotton surpluses are world neces-
sites.
1t is recognized that America will
give no further official credits. Since
The beginning of the war the Ameri-
can dollar has replaced the round
sterling as the standard in interna-
tional exchange. BY the full resUmp
ton of foreign payments in gold aft
er the armistice the United States
firmly established the dollar standard.
II the United States did not pay coun-
tries like Spain and Japan in gold.
then the yen and peseta would soon
be at premium as regards exchange.
II is to every ones interest that
coin having wide currency like the
dollar should remain the international
standard rather than limited coins like
Ihe yen and peSeta.
Yet free gold payments by the Unit
ID States have resulted in rapid exc
us of gold from America.
The United States has credit limits.
ut as the European nations are I'M
BILE to supply their own needs and
re unable to make purchases in
tmerica at the present ruinous eX-
'hauge without fresh credits their
'nly recourse is to try to get along
without the United States as far as
'ossible and for the rest try to i'm
prove the exchange and obtain what
:redits they can.
Cut Purchases to Minimum.
The first step they have taken is
the reduction of the purchases in
America to strict minimum. Thus
France, needing wheat, recently pur-
chased it in Argentina and trans
ported it in British ships instead of
purchasing it in the United States and
transporting it in American ships.
The second measure will be the re-
payment of the $500, ,0O0, 900 Anglo
French loan which soon falls due. To
make this repayment France and Bri-
tain have announced that they will
send s250.000,000 in gold to New York.
The third measure will be an at
tempt to reorganize Europe's eco
nomic life. Under Britain's leadership
and to a certain extent Br1talnS
domination is only natural. as it con-
trolls all the available shipping and
much of Europe's available supply of
coal and machines-certain interal-
lied organizations for the control and
distribution of raw stuffs and ton
mage will be revived. This is also the
explanation of the sudden change of
attitude on the part of the British
government toward Russia and Ger
many. Peace with Russia will. it is
hoped, enable. Britain and also France
and Italy to obtain wheat, fax and
wood 1t would indirectly help Ru-
mania, and supplying Germany with
credit will enable that country to re-
sumo production.
From these measures Britain would
probably be the first to profit The
second to profit would be Italy. Italy's
exchange is so low that it is almost
impossible for her to do business Ell
ther in the United States or Britain.
The only other place where she can
hope to get the coal and machinery
she needs is Germany. The sooner
Germany is restored the better it, pre-
sumably, Will be for Italy.
France Is Fearful.
The allied nation that feels most
doubtful of the beneficent effect of
the proposed measures regarding
Russia and Germany is France.
France fears that eastern Europe is
SO thoroughly disorganized that no
exports can be made for a long time.
AS regards Germany, France would
like to be able to make purchases
there at a favorable rate of exchange,
but fears that if Germany is restored
before Frances devastated regions
and consequently Frances industries
are restored France will remain in
definitely at a serious disadvantage in
the world competition.
However. Frances present economic
dependence on Britain is so great
that Premier Millerand will probably
be obliged ultimately to surrender
to the views of London and Rome
Indefinitely under Britain's tutelage
France would bow her head with pro-
found bitterness, but French econo-
mists are hopeful. 1t is anticipated
that sooner or later real competition
between Britain and the United
States will develop to such an in
tensity that other nations may play
one against the other and so free
themselves from domination by
either Until this time comes France
will try to obtain coal from Britain
and Germany, wheat from Argentina
Rumania and Russia; sugar from
Czechoslovakia. wool from Britain and
machinery from Britain and Ger
many.
But this is not all. The present
plan to allow Germany to seek credit
in neutral countries and at the same
time authorizing France to make
loan for the devastated regions
against future German indemnities
seems to France to place the devaS-
tators and the devastated on the same
footing. At time when credits are
exceedingly difficult to obtain a Ger
man loan will be competing with a
French loan on the foreign bourses.
France will almost certainly ask pri-
ority for the devastated regions. To
this, in return for the concessions to
the British and Italian economic de-
mand, will be added another exceed
ingly firm demand. namely. the right
to occupy the west bank of the Rhine
as a guaranty as long as it seems
necessary to insure the ultimate pay
ment of the indemnities promised to
France by the Versailles treaty.