Evening star. [volume] (Washington, D.C.) 1854-1972, 1921-02-09
FINANCE
|SBAgSOF CLASH
q iSHs~sS
misunderstanding Of Con-
gress and Treasury Due 10
FOREIGN Loan Bookkeeping.
Nv DAVID LAWRENCE.

Nv DAVID LA" hHANSA'
{ Congress and the Treasury pepa''
ment have managed to mlsunoers'aiu
each other on the question OF cancel
ing foreign debts and making tut
Their loans to European governments
z The Treasury never had the fenlo
est idea of canceling the present va
debt. but the necessity OF advanG!ins
$4,000, 900 more is really the pu--'ihs
: factor in the situation
{, Roth tho Treasury and Congress
mean the same thing and propapiy
have the same idea of what cons.i
stutes commitment TO aoNanee
money. but the testimony thus Ia
taken Indicates that all is not cIear
ON the question of making further
The tangle can all be set down
. as the result of bookkeeping ana uh :.
adjusted contracts growing OUT VI
the war.
MANY people have the idea that the
Treasury department lent money
outright to the allies during the war
Such was not the case Ahleiica
promised to advance large sums ol
, money. but to pay out cash as 1T was
actually needed The understanding;
moreover. was that the allies "ould
6 purchase most of their goods in the
United States.
Thus the allies got many millions
: of dollars from the Treasury "hici'
never went to Europe. but went III :,
rectly to American manufacturers ahu
their wOrkmen. ,,.
, In transactions with the allies
amounting to ten billions of dollars.
something like seventy-hve mlliiohs.
a relatively small sum. hangs over as
unpaid by the Treasury. 1t IS not
new Indebtedness. Strictly speaking;
If the bookkeepers of the United
RI
keepers of European governments
could have balanced their books on
. the day after the armisticp the sew
enty-five millions would then nave
been paid and Americas promise
would have been kept.
Delayed Negotiations.
Delayed negotiations over war con-
tracts and a thousand and one other
tangIes which have arisen since the
war about war credits have made it
impossible to tell just how much
money must be paid out. 1t will not
be in excess of seventy-five million
dollars.
If Senator Reeds bill should go
through, and it may pass unless CON
sgress and the Treasury get closer to-
gether, the American government
would be in a position of repudiating
an obligation, or, as Secretary Hous-
ton terms it. "a commitment
AS international finance goes. seven
ty-five million is small sum. but II
America repudiated its obligation the
fear is that Europe might accept the
American action as precedent and
consider that it could repudiate some
other debts entered into in more or
less the same way.
= Moreover, officials here point out that
America cannot afford to go back on
her promise and that the seventy-fiye
million dollars is part of commit
ment made during the war.
! The outburst in Congress resulted.
England that Great Britain had in
formally proposed a cancellation of
war debts. There is an anti-British
element in the American Senate
which never fails to make an attack
on any policy that appears to have a
benefit for Great Britain concealed in
1t. Some of the senators believed the
seventy-fve millions were still owing
to Great Britain. but that Is not true.
The Treasury has not disclosed which
government is involved. but it is stated
officially that no more money has bee
paid or is due Great Britain.
Loans to Russia.
Another misunderstanding has aris-
en-. too. over the loans to Russia. Some
newspaper accounts have given the
erroneous impression that since the
fall Of the Kerensky government the
United States paid out 100000 of her
own money to one of the representa-
tives of the succeeding Russian re-
gime. The fact is that when the
kerensky government fell the liabili-
ties of Russia were in the neighborhood
of one hundred millions of dollars.
while her assets were about fifty-six
millions The United States govern
ment prevailed upon the bank which
had the f1fty-six millions not to pay
out any of that money if the Depart
ment of State or Treasury interYlosed
any objection. 1t came about that
several American contractors were
owed money by the Russian govern
ment. Had the Treasury Department
insisted upon preventing any of the
Russian money from being paid out.
several American firms would have
gone into bankruptcy. Instead. the
Treasury expressed no objection when
the bank which handled Russian funds
paid money to certain American firms
which had sold their goods to Rus
STA prior to the fall of the Kerensky
government 1t was Russian assets
that were paid out and not money out
Of the American Treasury.
Protection Of u. $. Firms.
There is much that is pulling about
american Indebtedness to Russia. but
handled foreign loans shows that the
advancing of credits was largely a
case of protection for American firms
that had shipped their goods to the
European governments. 1t was natural
under the circumstances, however,
that Congress should be surprised
that American obligations were not
yet paid, as the details Of int.rna-
ttonaI finance are not easily grasped
And on this point Gen. Pershing told
a story last night at the National
Press Club which illustrates why Con-
gress bestirred itself over new loans
AN American doughboy." said Gen.
Pershing. was on leave in Paris He
stood reverently before the tomb of
Lafayette for several minutes Then
he said: Lafayette. we have paid our
debt; who the hell else do W. owe
now"
Copyright. 1921