The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1921-03-11
Editorial
of the Day
AN ASSET THAT Is PARTLY
LIABILITY

To most Of us it has seemed clear
that to the extent the allied coun-
tries take payment from Germany in
goods, or in money that Germany
derives from the sale of its goods
in other countries, they will embar-
rass their own industries. But the
New York Times, an eminent au-
thority in political economy, assures
us that notion is fallacious, and it
quotes the London Economist in
support of its assurance Home
goods is explains, will be swap
ped for foreign goods; trade will
increase and profits with it." But
If home goods are swapped for for
eign goods, the transaction will not
liquidate any part of the reparations
debt. To constitute payment, the
foreign goods must be delivered
without taking home goods in re-
turn, and such a transaction, in
stead of occasioning a demand for
home goods, would satisfy demand
for them. Foreign goods can not
be made both TO effect a purchase
and pay a debt. To the extent that
they do the one they must fail to
do the other.
The Times makes the mistake of
attributing an effect which follows
under the conditions of free trade
to a transaction under conditions
quite the reverse of those of free
trade. 1t is true, undoubtedly, that
all but AN infinitesimal percentage of
international trade is an exchange
of goods. Our customers buy from
us with the products of their own
industry, 50 that the more we buy
the more we sell. But when, as
a result Of a short term of abnormal
conditions, the people of one coun-
try become indebted to the other,
they liquidate the debt by selling
more goods to the creditor country
than they buy from it. Only in that
way can they pay their debt and put
themselves in a condition 10 make
change of goods If the debt becomes
too great to be paid in cash or in
the rendering of service or in the
cancellation of interest payments
due them. This will be the condi-
tion of Germany. 1t will not have
cash TO pay its reparations debt,
Neither for long time at least, will
/ it be able to give service such as
shipping service, in payment of it.
! Neither can it deliver interest cou-
pons in payment of it. 1t can pay
only by the delivery of goods to its
creditors or by The delivery of cash
received from the sale of its goods
in other countries. In either case ii
will earn release from its debt in
a way which will subtract from the
opportunity of the industries Of their
creditors to dispose Of their prod
ucts. Hence it follows that the more
the allied governments exact from Ger
many the more, if they are to ge
what They exact, they will contrac
the demand for the products Of theii
own industries.
The payment of the reparation'
debt will be a transaction betweeI
governments. BY directly takinl
German goods in payment of tn,
debt, the allied governments, beinl
in little need OF the goods them
selves, would be under the necessit.
of disposing of all hut a fraction o
the goods 50 received. How coul'
they dispose of them? BY sale L
their own citizens? Assuming the
could so sell any considerable par
of them, they would by so doin
diminish the domestic demand 70
the goods Of home production, an
so would they diminish the foreig
demand for the goods of home pre-
duction IL they sold the goods /,
ceived from Germany TO the peopl
of foreign countries. There Is al
other alternative they could gi'
away the goods so received TO the
own citizens. But that dispositio
> would hardly be profitable since Il
, one thing, it would bring no cas-
] to the government, and since, f,
. another, It would impose idleness {
their industries and their labor
:. the extent that the goods give
away satisfied the consumption r
quirements, ending In the incapaC
tation Of the Industries and the q
=, disposition OF the labor TO resun
a operations and work when the no
day closed That would be social
disastrous in addition to being &c
9 nomically futile.
The reparatlon debt against Ge
many is a liability as well as I
n asset to those who own 1t, and q
more It will become liability a,
the less an asset the more it
made to exceed the amount viii
German industry can normally ca
u by the sale OF It's products. II
p consequence imposes a limitauc
al not on the amount which may
as exactcl from Germany, but on 4
q, amount which may be oxacted wit
out mpaIrIng the opportunities
'' the countries which assess the debt