The Washington herald., 1921-03-18
Economic Precedents
From Which to Forecast
Lacking, Says Bank.
u. s. ENDS IGNORED
Our Failure to Closely Follow
Situation viii Bear No Grief
Students Declare.

Britain, are receiving scant atten-
tion In the newspapers and other
publications of this country. The
probable explanation. according to
the National City Bank In the March
issue OF its magazine. The Ameri-
can" lies in the extreme difnculty
OF the subject and the fact that
economic precedents from which
conclusions might be drawn are al
most entirely lacking. Perhaps all
that can be done 10 to point out the
dificulties Of the subject. but II
there are any measures which the
United States can take to prevent
this country being left holding the
bag now Is the time to ascertain
what they are
BY reason Of the peculiar circum-
stances growing out of the failure
Of the United States to ratify the
Versailles treatyNa and the consequent
absence of any representative of the
United States from the discussions
which have taken place with repre-
sentatives of the German govern
ment at Paris, Spa and London. the
economic interests of the United
States In the method Of paying the
indemnity have been almost entirely
ignored But students Of economics
know that certain effects are bound
to follow certain causes and that
results will assert themselves in
obedience to laws that neither peace
treaties. parliaments, reichstags,
threats Of reprisals nor the fats OF
premiers can alter. The peace set
Element is at heart not one of boup-
daries or nationalities, but of eco
nomic agreements. and in those
agreements the United States has
an interest profound and far-reach-
ing.
World an Economic Unit.
The world is an economic unit. and.
in the end. great losses of wealth
through such wholesale agencies of
destruction as the late war fall on
those who possess the most 1t is
impossible to cause loss to an indi-
vidual or a nation that has nothing.
I'm one way or another, during the
next fifty years. the United States
will pay most of the cost of the
European war.
There may be aNlesson for the
Nictors of the present conflict in
what happened to Germany after
France had successfully and tri-
umpn6uLly LIausIeEEGu 10 OcTndny
the gold and credits that made up
the indemnity of that war. The war
OF 1870 cost Germany s27s.00o. 900.
The total indemnity receipts from
France were sf.141, OILS, 900, leaving a
net profit for the Germans of ss63.-
100000. without counting the value
of Alsace-Lorraine- This sum sud-
denly introduced into the economic
life of Germany caused a great in
dustrial expansion and a degree Of
imitation comparable with the ex-
perience of the United States during
the recent boom period. But when
the movement came to its Inevitable
peak and reaction set in. the results
were deplorable and were an import
ant factor in bringing on the world
wide depression that existed from
1873 to 1878.
In. the present case both England
and France are determined that
Germany shall pay, but neither
wants to have its markets flooded
with German goods. Mr.. Lloyd
George has repeatedly admitted the
seeming fmpossfbility of any means
Of payment by Germany other than
a large volume Of exports, but where
these exports are to be sold Is
point seldom discussed by the states
men Of either England or France.
Clearly, public opinion in both coun-
tries regards the United States as
the great clearing house through
which German goods may find a
market and credits be created for
eventual transfer to England and
France. principally, Of course. the
latter.
Transfer OF Funds the Real Problem.
That Germany can pay in full Is
scarcely open to doubt. but trans
ferring the amount to be paid to
France and the other countries par
tfcipating In the indemnity Is an en-
tirely separate problem. The Ger
man government can. through strin-
gent taxation and other expedients.
assemble within Germany a huge
sum. but the handing of that sum
over to France and England will
inevitably cause serious dislocatIon
in the economic lives of both of the
principal recipients. France raised
the money for the payment to Ger
many In 1870 by exchanging its own
bonds for the foreign Investments of
rhe French people. These foreign IN
vestments were then sold on the
markets of London. Amsterdam and
Frankfort and the resulting credits,
generally, in sterling bills. turned
over to Germany. No such expedientl
can be used by Germany. The for
eign investments of that nation are
trivial compared to the sums de-
manded for reparations Germany
has only two avenues open-the
building up of a large volume of ex-
ports to be sold In markets as yet
unknown. and secondly. by means
of the labor of its nationals in
northern France.
After describing the very large
OF materials--ships. prof.
erty. animals. coal. etc, which Ger
many has already delivered, the
London Times reports Lloyd George
as having said before the house of
Now come to the other point.
The honorable gentleman did not
betrsy the slightest appreciation of
the practicsl dificulty of exacting
an Indemnity from another country
and paying II in this. You can COL |
lect In Germany. II you like. easily.
you can collect any indemnity you |
Impose. within some sort Of reason |
!, bile limits. In Germany. but how are
you going to transfer IT here? This
= the sort Of loose thinking there /
has been upon the subject. The
gentleman says. Why do
rou not 60 there and collect the cus-
.oms7 Send me there to collect the
'ustoms on commission supposin~
,e goes over there TO collect th>