Evening star., 1921-08-28
BY SHELDON S. CLINE.

DI cIS1OVIN - SAslNEs, :.
~ INANc1AL authorities who are making a
- study of the question of the debt owed
this country by Europe and Of the forms
in which payment Of interest and princi-
pal could be made and received are agreed that
it would be desirable to transfer much as
possible Of the obligation outside of Europe. BY
preference, they would transfer it to South
America.
This does not mean. necessarily. that they
think the South American republics afford bet
ter security than do our present European
debtors, though in a number of cases this un-
doubted!y is true. Their chief reason is that
payments on a debt owed by South America
could be received with less embarrassment to
this country than in case Of a debt owed by
Europe.
* X X X
South America today is in very much the
condition the United States was fifty years ago.
It's great expanses Of territory and its great
natural resources remain largely to be de-
veloped. and in order to make possible their
development outside capital is necessary
Money could be left in South America on In
vestment for century or more. and the dfvi-
dends it earned could. with advantage. be re-
invested there.
This is not the with Europe. As a
rule. the European countries which owe money
to America have their resources fully de-
veloped, and under normal conditions themselves
have a surplus of capital for Investment abroad.
They do not need and do not want permanent
investments Of American capital. and while
they probably would welcome any plan which
offered temporary relief from the embarrass-
ments in which they find themselves. the no.
ton Of permanent investment of billions OF
American dollars in the western cou 5tries of
Europe Is unsound and would be Undesirable
when those countries have recovered from the
effects Of the war.
X X
But American Investments in South America
would be desirable even aside from the fact
that payment. Of interest charges on them
would present no menace to American indus
tries It is often heard that trade follows the
flag, but 1t is even more true that trade follows
the dollar, the pound sterling the franc and
the mark In pre-war competition for South
American trade American exporters always
were handicapped by the fact that England.
Franco. Germany, and even Italy. had large
Investments Of capital in those countries. They
looked to London Paris Berlin. and Rome for
the financing Of their public works and utii-
ties ana the development OF their resources,
and II followed. az q natural result, that they
looked to the same sources for the, goods they
had need Of importing. There were British.
French. German and italian banks. and bills Of
exchange were drawn the European finan-
cial centers. Even goods from the United
States were paid for largely Ia sterling and
other European exchange. and South American
securities Of all kinds were listed on the Eu-
ropean bourses.
Research here has failed to disclose any
thing like a dependable estnats Of the total
of European investments in South America. but
in authoritative British quarter the state
ment is made that England alone has billion
pounds sterling, or approximately fve billions
Of dollars invested there. French. German and
italian Investments probably are not large.
but combined they undoubtedly amount to
other five billion dollars. The South American
investments Of the four nations together prob
ably about equal the amount Of the debt Of the
European governments to the government Of
the United States If this Is true the interest
and dividend returns ought to about Offset the
interest charges on the debt owed by European
governments to the United States.
\ \ \
It IL impossible. Of COURSE that the whole
Of these investments. even a major part Of
them, could be transferred to the United States