The New York herald., 1921-06-26

Special Cable to THE New YoRK HERALD.
Copyright, 1891. BY THE New YORK HERi.o
New York Herald Bureau.
London, june y5.
Defining what many British experts
call the boomerang folly" of the allied
form of reparation demanded of Ger
many. Reginald McKenna, formerly
Chancellor of the Exchequer and now
chairman of the London Joint City and
Midland Bank. rold the Institute of
Chartered Accountants that England
was in danger of being ruined by Ger
many's cash payment of the war in
demnity. He said that Germany might
be made to pay to the utmost limit Of
her power. but IL she paid in manu-
factured goods England's world trade
would be imperilled. He said the only
hope of England was TO insist on Ger
many's payment in raw materials and
food
Mr.. McKenna ranked with manufac-
tured goods services in shipping, bank
ing and insurance and argued cogently
that II Germany were allowed to pay in
any of these the whole structure of the
British export trade would be under
mined. He said the indemnity was only
forcing cheap labor In Germany and in
viting her to undersell England Boiled
down to a cold business basis. it was a
question of sacrificing thousands of
millions in order to make Germany pay
eighteen millions. ...
THE reduction in wages due TO the
compulsory payment by Germany of the
26 per cent. export duty will not be
confined to the trades engaged In the ex
port business" he said THE effect on
Germanys shipping industry is obvious.
Ships will be built and manned on the
German basis OF cost. but freight and
passenger rates will be on an interna-
tional level. The export duty will con-
stitute a bonus or preference of 20 per
cent. in favor of German shipping.
Affects Banking and Insurance.
THE same is true of the banking and
tho insurance business. The conclusion
toward which I am driving is that II
Germany Is able to meet her obligations
her doing so will gravely impair our in
ternational trade. Her highly developed
manufacturing and commercial power
brings her directly into competition with
us more than with any other nation in
the world, and whether she pays in in
visible or visible exports ii will be our
trade that will bS mainly affected H.
on the other hand, she fails to meet her
obligations we Will De thrown pdCn
again into a condition of political un-
settlement perilous TO European peace
and harmful to trade revival.
"It will perhaps be said that here is
a. paradox II Germany pays her debt
to us. It is argued. 1t will benefit Ger
man trade and injure ours. / think the
paradox is capable OF a simple explana-
ton. It is not the payment in German
goods that constitutes an injury to our
trade but Germanys capacity to pay us.
1--WE force labor conditions on the
German people which enable them, In
competition with US, to produce goods OF
every kind cheaper than we can Thus
we permit trade rivals to live under con-
ditions which enable them to undersell
US In foreign markets.
"Our share of the indemnity is ESQ.,
900 900 yearly, but conditions which en-
able Germany to pay this amount en-
able her TO imperil our export trade to
the extent of we'll over a billion and one
hundred millions yearly.
No BAR on German Exports.
Nothing stands in the way OF Ger
many being required 10 send to this
oountry. TO France and the rest of the