Evening star., 1921-08-21
BY SHELDON S. CLINE.

BY SHELDON S. CLINE.
nv o subject is receiving more serious con-
M sideration by leaders Of the adminis-
" tration and in Congress than that of
4 the huge debt owed by Europe to this
country. And the phase that troubles and per-
p,exes them is not how and when Europe can
pay but in what form this country could af-
ford to receive payment
review of the problem which is presented
is sufficient show how difficult 1t is going to
be Of solution.
Government loans owed by Europe to the
United States principal and interest. now ag-
gregate nearly $1,000. 100000. They will
amount to almost $12,oOo.Qoo.00o by the time
set for the beginning of interest payments.
Commercial credits extended by this coun-
try to Europe since the armistice. and yet to be
liquidated estimated at from 81. 900 900 600
to $3.0o0.00.000.
Constituting a total Indebtedness owed by
Europe to America of approximately $4,000
100000.
The annual interest charges on this indebt-
edness at per cent would be $7o0.o00.oo0.
Amortization of the principal over a period
Of fifty years would require additional pay
ment Of 32s0.Q00,000.
Calling for "a total annual payment from
Europe to America. in the beginning. of almost
,UVV,VuB,VVV-STAOudIly reducing dS Tie pELA"
cipal was paid of.
.' X X X
Payment of. this enormous annual sum IN
gold is out Of the question. Europe could not
find the gold to meet the obligation for a single
year. and any attempt to do SO would deprive
her paper currencies of what little value they
now have and bring utter chaos to exchange.
Europe has largely sold back the $4,000. .000.-
900 Of American securities formerly owned
there. and thus is deprived Of the interest and
dividends these. which before the war
helped settle the trade balance favorable to
America. -s,-
If America is to have a merchant marine.
Europe will be unable to make ocean freights
help to any considerable extent in paying the
debt. - =
A former means Of payment which will re-
main to Europe is the expenditures of Ameri-
can; tourists and remittances from America by
immigrants, amounting. bsfore the war. to be-
tween s2oo.ooo.ooo and ssoo.ooo.ooo year
tEstimatss s.aI.. . e the M sspsRdissH,Iss I'VE, of
profits Of the flush years and TO the
sse nas aas fsT the rsPs
- to normal times. expenditures Of tour
lists are not likely to be much above :.
This would leave between $7ooooo.oo0 and
5000. 100000 year which Europe must find
means Of paying-and America a way to ac-
cept .s .ss's -
X *ik r.
Shall it be in goods? 4 -
Before the war we exported about $500, o,ooo.-
900 year more goods than We imported. Eu-
rope paid. this balance of trade" favorable to
the United States through offsets of which she
is now largely deprived-returns on American
Investments, ocean freights, marine insurance,
etc-having left only the expenditure Of tour
lists and remittances by immigrants.
MAJ is tn he made n a
war trade balance favorable to the United
States of $500. 100000 must be converted into
a postwar trade balance against the United
States Of at least soc. .00O, ,o00-an adverse diff
ference of $1,200,0O000O in the foreign trade
Of this country. --.-r.-e
If we are to concern ourselves only with
interest payments. posptoning payments on the
principal sum to some time in the distant fu-
ture. the adverse difference in trade balances
still would be only a little short of billion
dollars a year..
Such a trade reversal would mean Industrial
ruin. bankruptcy and unemployment SO wide-
spread to destroy the purchasing power Of
the American people, and in consequence it
would be impossible to market here any such
tremendous volume of European imports.
- t X k~k X f
The problem as outlined above was submit
ted by The Star to list Of more than sixty
leading economic. financial and business authori-
ties and they were asked to lay aside the ques-
ton OF Europe'S ability or inability to pay and
to answer simply the question: I'm what form
can the United States afford to receive pay
ment Of Europe's debt to this country?"
Although responses were received from a
large majority Of those to whom the query was
addressed. only few had constructive sugges-
tions to offer. Men who stand high in the world
of International finance made no bones Of an
swering that they didn't know; that the problem
presented SO many difnculties that only time
could point the way, to solution.
1t is notable. perhaps. in view Of hope
which yet fingers In Europe. that in none of
the replies was there any suggestion that the
United States should cancel any part OF this
indebtedness or forfeit interest thereon. Ex-
pression was general that this country should
be considerate-even generous-in the matter Of
deferring payments. but it was accepted as q
matter Of course that at some time in some way
the debt will be .lqufdated, or that it will re-
main as q permanent Understanding invest
ment abroad @' - ~,
+ X 4 X .-s9. N, -sF
The notion Of permanent Investments in
Europe apparently makes a strong appeal to
American nnanciers, but dificulty which pre-
sents itself is that most of our principal Eu-
ropean debtors, under normal conditions, are
themselves investing nations which before the
war sent their surplus capital to help build up
the undeveloped parts of the world. Russia.
Of course. would present an! extensive field for
the Investment of American capital and the
reinvestment Of earnings. but under present
conditions Russia cannot be- taken into account
in any reckoning Of the future. Poland and
some Of the new nations created by the treaty
Of Versailles offer fields flor Investment but