The Washington herald., 1921-07-17

such spendings as our tourists make
annually in Europe, the services are
chiefly competitive. Before the war
we had no merchant marine and the
British and the Germans collected
toll from US, but today we have a
great and idle merchant marine and
the larger the percentages of car
riage earnings which falls TO the
British the smaller the earnings of
our own shipping and the greater
the loss to US upon our marine in
vestments.
But what shall one say of goods.
To meet the costs of the official
loans and unpaid interest. thereon,
now amounting to more than $1l.-
OO0, 900 900 and certain to reach
$4,000. .O00. 900, Europe must pay US
approximately s720.O00. 900 annually.
On the $4,000. .000. 900 in private
credits now outstanding and in
creasing almost daily. the payment
annually, interest and sinking fund
included would be more than $780,
100000 annually. Thus, in round
figures Europe. to discharge it's debt
to us must sell US s1,000.000. 900 in
goods annually. in excess of what
we sell 1t less the relatively insig-
nificant item Of service.
Says Payment Makes Us Poor.
To do this Europe must do two
things. increase it's exports to us,
decrease it's imports from US. Yet
IL is quite obvious that both pro-
cesses contribute to work harm to
N-I he
process of the restriction of imports
is disclosed in the rapid decline of
our export trade. 1t is the fear of
the expansion of the expectations Of
Europe to US. which dominates the
minds of those who are undertak-
ing to make the new tariff bill a
barrier protecting the American
producer from the foreign competi-
tor.
Meantime. to meet an immediate
crisis, We are extending new foreign
credits, but at the same time we are
seeking to limit their nature by in
sisting that Europe shall take from
US. not money, which might be
spent in other markets, but goods.
We are, in effect. lending money to
Europe to buy our cotton, copper
and wheat. AS a result We keep
the money but they get he COM
modities. But obviously the net
effect of this Is merely to swell the
sum total of what Europe owes US
and must pay ultimately in goods.
or not at all.
Thinks II Great Puzzle.
The situation might be improved,
measureably, at least, II American
investors were prepared to go into
Europe. Asia and Africa and spend
not alone the principal but the in
terest of European obligations in
commercial and Industrial under
takings there. Thus. in the long
run, we should become great hold
ers in land and other values all over
the world. But the thing which is
only vaguely perceived yet. save in
professional quarters, is the su-
preme difficulty of transferring a
foreign obligation from one side to
the other of a political frontier.
without general dislocation of busi-
ness inside that frontier.
During the war all the discussion
was over what the defeated was to
pay. During the peace conference
the question of the sum of the pay
ment divided interest with that Of
the methods to be employed to COM
pei payment. But in the last two
years. ever increasingly, the prob
lem has been how to accept pay
went, and this holds good quite as
much with the American foreign
loans, governmental and private. as
with the German indemnity. And
the first efforts to make Germany
pay, as disclosed by the British coal
situation have brought disaster, not
to the German, but to one of his
principal creditors.
One Way of CancelIng Debt.
Today, so far as the United States
is concerned, there exists an over
whelming opposition to the cancel
lation of the allied loans. Obviously
there is no obligation, moral much
less material, for such cancellation
1t is clear that IL Europe does not
pay what it owes, the American
taxpayer will have to continue to
bear the burden. Congress has met
Mr.. Melons proposal that he be
granted full authority to dispose of
the question with manifest hostility
and there is no mistaking the sus-
picion with which the country as a
whole views the subject. suspicion
coupled with determination to get
its money back.
Yet, at the same time there is a
general public demand that Con-
gress enact legislation which will
permit American industry to escape
ruinous competition with European
industry, which means in fact the
erection of a tariff wall. But the
higher the tariff wall the more diff
hcult the inflow of goods from Eu-
rope, goods which represent the
sole considerable means of payment
OF what Europe owes us. In effect
We insist upon payment but decline
to accept payment in the sole me-
dium available, quite correctly per-
ceiving that to accept such payment
Is to suffer immediate hardships.
Another sivicious CircIe.s
Finally, as IL further to commit
cate the situation we insist unon
further extensions Of credit to En-
rope. with the condition that these
credits shall take the form of
American goods. We decline to lend
Europe money to spend where and
as IL pieases. but we consent to lend
II money to buy our goods. Yet
this merely results in a further ex-
pansion of the capital sum of Eu-
ropes Indebtedness to us and the
similar increase in the amount Of
European goods we must absorb
annually. IL Europe is to paw u, at
all. Thus, at one time we refuse 10
allow Europe to pay us and we in
sist upon the daily increase of the