The New York herald., 1921-02-13


German manufactured articles must have
a -correspondipgy depressing effect upon our
own. manufactures
The trouble with the whole financial ques-
ton, which now oppresses the world is that
il is not seen single problem. People
talk Of the German reparations the allied
loans. the European markets as If they were
totally distinct questions. Yet the A c
OF the whole proposition is this: Unless Ger
many pays at least 1000, 100000 as cap
ital sum, which means $56,000,000,000 in
principal and interest stretched over forty
two years, Europe cannot pay us all of our
1000. 100000 in loans. Reduction OF the
$21 600, 900. 900 means automatically reduc-
ton of our returns on our loans, because
the balance OF the German reparations must
go to rebuild the ruins in Belgium, France
and Italy and meet German destruction OF
British shipping.
But if Germany pays $21, ,ooo. .ooO. 900, our
share 1l.0000 100000, can only be paid in
goods, which means that for over forty-two
years we shall have to take upward OF
s1.000,0OO,000 of German goods annually. and
these goods will in the main compete in our
own markets with our own manufactured
articles. since Germany can send only COM
petitive products. Thus in the last analysis,
the question win be whether we can afford
to collect our loans, not whether we should
cancel them.
The whole question has been complicated
by moral and sentimental issues which have
no real bearing. The incoming Adminstra
ton will have to decide whether the United
States shall cancel it's fsreign lendings and
put the burden of the $1,000, 100000 upon
the shoulders Of the American taxpayer or
whether it shall allow Europe to fund this
debt fixing an annual payment which will
amount, with sinking fund contribution, to
r.1. e. mn
only fund it il German reparatons supply
the underlying security. But If they do,
then the sum can only be paid by the
forcing into the American market of approx
imately $1,000. 100000 Of European and
chiefly German manufactures.
U. S. viii Be Chief Loser
IF Germany Fails to Pay
Such an inflow OF European and Of Ger
man manufactures can conceivably do in
finite damage TO our own industrial life, since
German costs Of production will be low ana
much less than American. 1t is against
just such competition that we have main
tanned tariff wall, and the new Republican
Administration is bound to reinforce the
existing wall, by it's proclaimed policy. This
is the economic peril.
In addition there is the political danger.
If we hold $1,000. 100000 of German paper,
or il German capacity to pay is the under
lying security of our foreign loans and it
must be. then we become the chief inter-
ested party IN coercing German payment.
The whole burden of the task of making
Germany pay devolves upon us, the chief
beneficiary II Germany does pay: the most
considerable loser If she falls to pay.
When the Allies at Paris imposed a 12h
per cent export tax on Germany as
reparations detail they we're really thinking.
not of reparations but Of the protection OF
their own domestic markets. They had
taken alarm at the prospect Of the inunda-
tion of their home markets by German
products sent to pay German reparations
Indebtedness In the only way Germany could
pay What Congress-the new Congress-
will consider Is increasing American protec
ton against tfie same danger But the
better the protection the smaller the chance
Of Germany's paying the sum total of
reparations.
Such argument as there is for American
cancellation of allied Indebtedness lies right
here. How valid it may be do not under
take to say II we can afford to take pay
ment wise policy certainly recommends that
we take It. But il insistence upon payment
means prostration or even grave handicaps
to our own industry. together with endless
intermixture in Europe's affairs then can
collation. can be the only wise course.
Here is no question Of making the world
safe for democracy. Here is no matter for
moral homiy. Europe owes us $11,000.o0o-
900. There is no question as to the obliga-
ton to pay, there IL no valid reason for not
getting the money. so far as law and
abstract Justice are concerned. But the debt
can only be collected IL Germany can he
compelled to pay u, and Germany can only
pay It by dumping Something like billion
dollars worth of manufactured goods upon
our markets annually for almost half a
century Can we afford to take this pay
ment? That is the question.
u. S. Example of Canceifing
Will Be Followed by Allied Powers
III we cancel the whole world will cancel
that is, the allied world. The German
reparations will be reduced to the single
figure Of the costs OF reconstruction. the
danger of German resistance and French
action. insuring the prolongation Of economic
disturbance will be conjured. There will be
a. certainty OF getting back TO business and
reopenins the world markets. But the price
is just 1900, 900, 900 to us. Is II worth IT,
all things considered?
Mr.. Harding when he takes Office, few
weeks hence. will have the whole situation
In his hands. Our holding of allied notes
enables us TO dictate the terms OF world
readjustment mean economically not
politically. The last election Indicated Amer
lean views on intermixture In European
politics. But the choice for him and for his
Administration must be between making
Europe pay, with the forcknowledge that