The New York herald., 1921-10-29
BUDGET REDUCTION
Is EUROPE'S NEED
Arms Conference May Show
Ways to Make Cuts, Says
Eliot Wadsworth.
CURRENCY TOO INFLATED
Money Deflation Would Fol.
low When Countries Could
Make Ends Meet.

At the armament conference In Wash
ington some plan may be devised to cut
down the national budgets OF European
countries and get those countries. one by
one. perhaps into positions In which
they can make both ends meet declared
Eliot Wadsworth, Assistant Secretary
Of the United States in charge OF
foreign loans. at the first monthly
luncheon of the season given in the
Bankers Club by the Bond Club OF New
York. He continued: "The minute
they can do that they can stop initiating
their currency. perhaps put out some
new kind OF currency In place of the old
in very much fewer units and begin
again to do business with the rest of
the world. This Is the one great hope Of
the situation
Mr.. Wadsworth expressed the opinion
that although the United States may
have troubles In business and financial
way, 1t Is in glorious era Of prosperity
compared with most of eastern Europe /;
1t Is sound beyond any question grow
ing more sound every day and is in the
unparalleled situation Of controlling the
destiny of the worlds economic and
financial structure.
After enumerating in general terms
pared with its liabilities, Mr.. Wadsworth
declared that the position of this country
was so sound that the Government and
people did not have to resort to any
quack remedies to bring itself back. He
said: THE United States does not need
to resort to imitation or to Government
ownership or to putting more business
into Government hands, but we can
bring the situation back to normal by
individual initiative and sticking to the
honest dollar.
The plight Of the German bondholder
with the mark, In which German bonds
are, payable, deprecated to one-thirtieth
to one-fortieth of the value 1t was
when his money was put in them, has
been due, Mr.. Wadsworth said. to the
Governments policy of initiating the
currency. That method Of the German
Government In reducing It's internal
debt. he called "a gigantic scheme of
appropriation Of liquid capital, which
happened because there, was no other
way for the Government to pay its
bills" Two sidelights regarding that
appropriation Of capital Mr.. Wads-
worth described as follows:
TN the first place. all Of the physical
property. the houses. the good reads,
telegraphs. telephone. and everything
that has been put up by that liquid
capital In the past Is still there. That
does not go away, and they have got
It, and they can use It. But the saw
ings, which we all consider so i'm
portant in going on in the running on
OF country. have dwindled down until
they almost have ceased to have any
value.
"Now the other effect is that they
have enormous prosperity. because any
man who has money In his pocket to-
day wants to spend 1t right away for
something tangible. II he is going to
I, need a pair OF shoes next summer he
will buy them to-day. because to-mor-
row they may cost him 25 per cent
more to buy. And SO they are having
a great Industrial boom In Germany
Now 4 am not prepared to say where
that leads to. Perhaps Mr.. Lamont
can tell us. But T'have inquired and
read a good deal. and just what hap
pens when you get to the end Of that
situation 1t Is hard to know. But
want to make very clear to you where
the bondholder stands to whom bonds
were sold by organizations exactly SINH
lar to this during the great bond cam
paigns in Germany.
"Of course we know that In Russia
the situation Is very much worse. In
Austria and Poland It is going from bad
to worse all the time"