The Washington herald., 1921-05-10
LIBERTY BOND
REFUND HINGES
ON ALLIEDDEBT.
America Depends on Eu-
rope for Means to Meet
Obligations.
ENTENTE DEPENDS
ON TEUTON DRAFTS
U. S. Is Unescapably In
volved in Payment of
Reparations.
By ROBERT J. BENDER.

This governments course in re-
establishing American representa-
tion in the allied councils affecting
settlements under the treaty of YER
sailles has a direct bearing upon
every man. woman and child in the
country who owns a Liberty bond.
This governments interest in Eu-
ropean affairs Is not political, nor
even sentimental. In the accepted
meaning of that word, but entirely
economic. Its position, briefly, is
this:
Depend on Collections.
Within the next seven years some
$4,000, 100000 in government war
bonds must be liquidated or other
wise accounted for. The manner Of
meeting this obligation is depend
ent to a considerable degree upon
how much and how soon European
powers can pay off either interest,
principal, or both of their iudebt-
ednesses to the United States. Both
the time and extent of these allied
payments, in turn, depend largely
upon how soon and how much the
allied powers can collect repara-
tions due from Germany.
With the leading European coun-
tries now in an economic situation
where the interest alone on their
respective indebtednesses totals a
greater amount annually than the
total revenue they have been able
to derive annually in the past for
running their governments. II may
be seen how remote is the oppor-
tunity for any immediate collection
by the United States of considerable
sums either in principal or interest
from her European debtors.
Looks to Europe.
And it is with this situation con-
fronting it that the Treasury De-
partment is seeking means of TAX
ing care of it's vast obligations. bill
lions of which mature within the
next two years. and the money for
which Is not available exespt from
Increased taxation, unless Europe is
in a position to pay off some of her
borrowings.
The total outstanding America in
debtedness in Liberty bonds today
is something over $4,000. 100000, of
which over $4,000. 100000 natures
in two years from the twentieth of
this month. In addition. there is
over $4,000, 100000 in floating in
debtedness and in war savings Sc
cITities, which also must be met
within the next few years. With
out payment by the allied powers
on their indebtedness. this govern
ment. under its scheme of annual
payment. would have funds far
short of those required to liQui-
date the maturities-
Refund of Loans.
The suggestion that the Liberty
loans be refunded to mature over a
period of forty years, a stipulated
amount to be paid off annually, with
an increased interest rate and other
measures designed to maintain them
at par. has been seriously discussed
in sessions of the Cabinet. No de-
cision, however, was deemed prac-
ticable until the reparations ques-
tion was settled to permit of def
note arrangement on allied pay
ments of their Indebtedness, which
would work hand in hnd with the
Liberty bond refunding scheme.
Therefore. because it was vital
that the reparations problem be set
tied, so that the American fiscal
policy could be definitely deter
mined, this government took the
course which it believed would lead
most rapidly to a settlement, and
entered the European councils.
Notice to Germany,
And this same desire for a rep
arations settlement is responsible
for the attitude this government has
taken, and which is understood to
have been informally communicated
to the Berlin government, that the
best thing for Germany to do now
is to sign the allied ultimatum de-
manding payment of 100000, ,0oC
gold marks indemnity, SO that Eu-
rope can get to, work.
Once the program of German pay
ments on reparations is establish
ed, work can begin .on developing
a definite plan for payment of the
allied Indebtedness to the United
States, and this in turn will per-
nit of a practical solution of the
Liberty loan problem here, such as
will reassure the millions of Amer.
ican bondholders who met this wal
appeal with their savings.