The New York herald., 1921-07-17
PAYING ALLIED DEBT
IS ECONOMIC DANGER
Frank Fl. Simonds Shows
Real Problem Is How to
Let Europe Pay.
ANALOGIES ARE DRAWN
German Coal and Goods
Credits Injure Britain's
Export Trade.
g. S. TIES ALLIES HANDS
America Wants to Be Paid but
Balks at Imports Hurting
Our Industries.
q. S. TIES ALLIES HANDS
BY FRANK H. sIMoNps.


With the application of the Secre-
tary Of the Treasury, backed by the
President, for power to deal with the
foreign loans, that is for authority
to proceed to making Of arrange
ments for the liquidation of that vast
sum, which represents our loans to
our associates of the war, the whole
subject has been reopened Once
more, too, we encounter Immediately
the clash between the political and
the financial views of this difficult
question.
Secretary Melons figures present
ed to Congress disclose the fact that
Europe, our partners of the war, owes
US in Government loans the stupen-
dous sum of $4,000, 900, 900 in capt
tai and rather more than $1,000, ,000,-
600 in unpaid interest, that is, SILL
C00.000,000 in all. For comparison
we may at once set this figure
against the $4,000. .ooo,o 900, which
Germany in the latest agreement
made with her conquerors, has un-
Certaken to pay as a first and fixed
instalment upon her totol obligations
incurred by her conduct of the war.
Since the interest upon our loans
is still piling up, pending the adjust
ments still to be made by our Treas.
ury Department, which is seeking
the authorization Of Congress to deal
with the matter. 1t requires little
analysis to perceive that in all hu-
man probability before the debt due
US by our associates can be placed
upon regular basis, the total of
capital and unpaid interest will very
closely approximate the capital sum
Germany is now beginning to dis
charge, namely $12 2,oo0, 900, 900.
Private Indebtedness.
shall have occasion presently to
Geal with that other phase of Euro
pean Indebtedness to us, namely, the
vast sums which have been lent in
the form OF credits. private as con-
trasted with governmental, which must
to-day represent not less than $4,000
100000. and are steadily being In
creased by further credits to enable
Europe TO absorb our foodstufts and
cotton. as we'll as certain minerals,
like copper.
But assuming for the moment. as is
obviously reasonable. that in the end
the total of European Indebtedness to
US in an Official way. that is in the
shape or the principal and interest of
loans made by our Government
during the war and armistice period
will be approximately that OF the Ger
man fixed payment now decided upon,
namely. $4,000. .o00, 900, II is possible at
once to obtain certain figures for use
in indicating what this fact means
And the further assumption can be
made that In any event. we shall not
seek to impose more onerous terms
upon our associates OF the war than
have been imposed upon the nation re-
sponsible for the struggle and its de-
structions.
Now Germanay has undertaken to
discharge the capital sum OF $4,000
100000 In the period Of a third of a
century. approximately by the annual
payment OF s72o.0 900. two thirds in
direct payment. one-third in an inter-
nal tax levied upon exports. or rather
upon the whole external trade of Ger
many. This tax OF 25 per cent must
yield s24o. .000,0 annually and thus
prcsupposes a foreign commerce for
Germany OF s1.ooo.oo0. 900. that is an
expert trade TO this amount
Germany's Initial Allegation.
But II Is significant for US TO note at
once the effects OF this method Of pay
nnent, as II has worked out In Europe
and In the case OF the German operation
since this operation must in general
lines serve as q parallel for our own
In fact Germany has undertaken to pay
a very considerable part OF her annual
contribution In coal she has also bound
herself TO make certain payments In
the form of completed ships. In reality
she has for two years been making pay
ments of this sort. but they have hith-
erto been charged against an initial
obligation of $4,000. ooo. 900. totally out.
side the $4,000. 900. 900 decided upon az
London several months ago.
The effect OF payment In coal and
shipping has been disclosed unmistak-
ably In recent months. Tho bulk OF the
coal has gone 70 France as the chief
creditor. with italy and Belgium as
minor beneficiaries. All three have had
from Germany something less than 2o.-
100000 tons OF coal a year. to which
must be added some $4,000. 900 tons COM
ing TO France from the Sarre.
France, Belgium and Italy are three
OF Britain's best customers for coal. or
they were up to the moment when the
war ended and German coal payments
began. But the costs OF coal production
In Germany are greatly lcss than those
in Britain. as result of the deprecia-
ton OF German currency. In part. at
least As consequence all three of
these countries have enormously reduced
THAR purchase Of coal In Great Britain.
The result has been, first the paralysis
OF the coal industry through the rcstric-
tion of the foreign market and. seconu
the coal strike, which followed an effort
20 reduce the cost OF production IN
Britain. that Is the wage cost, In order
20 enable British coal to compete with
German.
You may rea son out the thing sue
cincty and accurately by saying that
the ALLIES In making Germany pay an
Indemnity and IN agreeing TO accept
payment In part In coal, the chief means
of payment In German hands. tempo
rrrily ~ least. ruined the British coal
trade ard brought on one OF the severost
,.-oroy,1tc rxruOCl.o th~ frnttod Kio~1c~,