The New York herald., 1921-02-20

\A/ come over the whole face Of the
discussion of American relations
with Europe o change which is almost
omplete. Debate over the League OF
Nations has well nigh terminated. The
questions as to Article y, and the response
ulltos the United States would keN to
undertake toward European nations il the
league were even now accepted has been adj
iourned indefinitely AT Washington. at
least. the verdict of the last election is taken
MS indicative of the determination of the
great majority Of the American people to
have nothing to do with the political ques-
/ ions of the peoples dwelling on the European
Continent.
Yet the cessation of the discussion of the
Treaty Of Versailles and the League OF Ma
lions has not brought corresponding close
lf the argument over the relation or the
United states to Europe. On the contrary
ne fact is daily becoming clearer that 1t Is
not by political but by financial, chains that
We are actually bound to Europe and that 1t
Is not European but American financial and
political conditions which are Immediately
affected by the existing situation.
To put the thing quite simply. Congress is
now wrestling with conditions existing in the
home market, with problems OF unemploy-
ment and of paralysis in the agrarian dls-
tricts due to the practical closing OF our
European markets, not because there Is not
demand for our supply, but because there Is
lacking credit or money with which the for
eign purchaser might pay for our available
surplus in grain, in cotton, in manufactured
articles.
And slowly the fact is dawning upon the
statesmen upon Capitol Hill that this is not
a temporary situation, but condition lkely
10 endure for an indefinite period and TO
constitute the supreme problem of the in
coming Republican Administration
What course will Mr.. Harding take toward
Europe?
This is henceforth the great puzzle. VIII
he seek to keep Europe out of our markets.
thus protecting our producers, out as re-
suit excluding US from European markets.
or will he risk producing paralysis in our
markets by opening them to Europe?
The Situation in Simple Terms
Shows $4,000 900 900 Debt to U. 5.
The situation is complex but not beyond
simple statement Europe owes us Sll.ooo'-
900 000 representing the principal and IN
terest of our loans in the world war Eu-
rope owes us in addition .000,00O,000, rep
resenting private credits advanced since the
governmental loans stopped. The sum OF
European Indebtedness is to-day ABOVE
S15 900 900 900. This indebtedness at hve
per cent. interest rate would represent an
nual payment of $3.50 1000, 900. But add to
Z q contribution of say an equal sum
toward the principal to extingush the debt
and ii means that have to exact from
Europe an annual payment of sl.5oo'-
900, 900.
Europe can only pay in goods. Except
for Great Britain, all the European coun-
tries have exhausted their holdings OF
American securities They cannot pay us
now in service, that is, through ocean car
riage save as that payment reduces the
earnings of our newly created merchant
marine. They cannot pay us in raw ma
terials because there only a. very few
raw materials which we lack, coffee, rub
ber. potash and silk chiefly, and all of these
represent a relatively insignificant total.
Moreover, these would not exceed the
amount which Europe would pay us to meet
the continuing exports on our part of raw
materials required in Europe.
The problem of the Harding Administra-
ton is patent With respect Of the foreign
loans. three courses have been discussed;
namely, (1) full payment, the payment to
begin relatively promptly, that means the
commencement of the stream of European
exports which must henceforth flow
toward us IN ever increasing volume; CD
of the loans. which means I'M
posing upon the American taxpayer burden
Of S11, 900, 900 900; (3) postponement of the
demand for all payments, but the retention
of the claim as a political asset, enabling us
to exert influence in European affairs.
It will be seen, however, that this last
course temporary suspension of payments
by Europe, has the same penalty for the
American taxpayer as the cancellation
during the period of suspension. 1t will he
seen, further, that it carries with it a tre-
mendous peril for American interests. since
it opens the way to enormous intermixture
in European affairs. 1 shall discuss this
point further in a moment.
Suppose that the United States, through
the new Administration insists that Eu-
rope proceed to the payment Of the debt.
This is our right. Moreover fancy that
the mass of the American taxpayers would
denounce any statesman or party
which proposed any other course. But the
mass of the American people do not yet
perceive that the debt cannot be paid in
money, for there does not exist gold enough
to pay it, and of the sum of gold existing
in the world, we have already acquired the
larger part
How the Debt Could Be Handled
And How Germany Comes In
AccordinpIv the representatives of the