Evening star., 1921-05-28
Broad Visicn on Future Prob
lens Seen in Conference
With Bankers.
AMERICA MUST CONTINUE
TO MAKE FOREIGN LOANS
Even Germany Will Borrow to Pay
War acknowledgements Diff
fculties Perplexing.
BY DAVID LAWRENCE.

President Harding has undertaken
job unparalleled in American history
if not unprecedented in world eco
nomics. He has asked the bankers OF
America, who, he recognizes, Will
practically finance the world in the
next ten years. to cooperate with the
United States government, not for
governmental purposes, not for the
handling of government obligations.
but for the safeguarding of every
class of people-investorS, large and
small farmers, business men, pro-
ducers. consumers.
Flanked by Secretary Mellon of the
Treasury and Secretary Hoover of the
Department of Commerce. whose Wis
ion OF what is ahead Of America is a
controlling influence in government
nowadays. President Harding has
bankers of the east, but before many
weeks have elapsed he will have con-
ferred with the bankers and business
men Of every section of the country.
Obviously Mr.. Harding wants to
BRING about a return to normalcy and
doesn't want the government to i'm
pose any artficial measures that will
impede suoh a return, but his cabi-
net secretaries have pointed out GER
tain dangers, certain pitfalls, II every
class goes ahead individually. with
out regard to the interests of other
classes. in our economic life. Mr..
Harding calls it the beginning of an
era Of understanding. What he
really wants is conference and pro-
vision before America takes the big
step-giVing its financial resources to
rehabilitate the world.
Must Finance World.
Now that Mr.. Harding has outlined
the essentials of his foreign policy
and has delimited the extent to which
The United States government will
cooperate with the allies in seeing to
1t that Germany will pay her war in
demnity. the big facts of the economic
situation thrust themselves forward
with unmiStakable emphasis.
Mr.. Harding admits frankly that
America must finance the world. He
doesn't dispute the fact that Germany
must borrow lots of money to pay
rectiy much of that borrowing will
be done in the United States, and. in
congruouS AS IL may seem. the in
vestors of America wihefSzify be
loaning Germany money wherewith to
pay her war indemnity. This always
happens when the creditor nation is
victorious. 1t may be a surprising
fact to the layman. but to the finan-
cier it is automatic. For instance.
the German people in 1871 actually
lOdUco tHe rTeHCn tne very money
which France needed to pay Germa ny
an indemnity for her defeat Gov
ernments borrow from their own peo-
pie or from the peoples of other
countries. In this instance America
has the largest supply. of gold of
prosperous Her people will loan
their money out at attractive rates
of interest. The French have already
offered successfully a one-hundred-
million dollar bond issue at per cent
and it has been gobbled up as
good proposition.
More loans like that are. of course
coming. President Harding and his
cabinet began to wonder whether
Europe would slowly but surely take
States that money needed to finance
American railroads. for example.
would be hard to get, except at high
rates of interest. In other words. he
wanted to know from the interna-
,fonal bankers what would happen
ed States il a continuous How cf
American money abroad were start
ed.
Social Order Essential.
The international bankers ex-
planned their viewpoint in convincing
manner. They seemed to feel that
American exports would increase just
bility came to Europe. They in
sisted that there wouldn't be any
need of export finance corporations
or special measures of relief il some
how there was an assurance of an
abiding social order in the countries
to which Americans had sold and
would sell large quantities of goods.
In other words. il peace were in
sured for Europe. there would be
more business for the American far
nd Fao
tories opened and the return TO nor
malcy would he hastened.
But there's the rub. The interna-
tional bankers would like to see
America in the league OF nations, be-
cause they think that would furnish
the necessary insurance. President
Harding sees further ahead. however.
He believes that America would in
evitably have to use her military and
naval forces TO insure peace. He
along which the American people do
not wish to travel even at the ex-
pense of a slower return to normal
than Ugh, otherwise be the case.
All Goes to Creditor.
Having been committed to a program
of aloofness from European political
problems Mr.. Harding therefore ap-
pears TO turn to other kinds OF relief
Ard il surely is perple king. for.
amazing II may seem, those very
international bankers who years ago
were the champions of a protective
tariff are today frankly against the
imposition of customs duties. They
say America must buy from abroad In
order to help European industry back
to its feet and unless Europe can nd
markets she cannot recuperate sum
cietnly to pay for the loans she is
making. But President Harding again
interpcseS an objection. The call oil
III. west is for a tariff so as to safe
guard the domestic market. More
than ever before the interests OF tht
manufacturing east and the agricUl-
tural west and south. the interests oi
the city and country. are in conaict
Mr.. Harding admits that the Ameri-
can people will loan their money tc
European countries. but seems To
feel that the bankers can make il nos.
s.b,e for that very money TO be used
by Europeans in paying for Ameri
can exports. In tracing what hap.
pened to the proceeds of the Belgian
ioa9 made recently il was found tina,
the money went to Argentina to pa ,
Ior wheat. The President wanted tc
know il that wasn't a good illustra
non of what would happen with Other
.oans.
He was told that while that money
went TO A rgentina. the latter prompt
y used IT 20 pay bills she owed &c
Europe, and In turn Europeans paid
OF some of the bills they owed TO ex-