New-York tribune., 1921-12-06

Frank a. Vuaderlip, fasGncier, ont
lined ISOLATION for the iatsr-A Iied
debt problem at q dinner of the Eco
monic Club, o,s November eS, that at
tracted International attention. IN
the folloscing article Mr.. VcaaderlSp
derelops this plan IN greater detail: !:
By Frank A. Vanderlip
Questions indicate interest. There
are certainly questions enough asked
about the plan for handling the inter
Allied Indebtedness to the United
States which / presented to the Eco
nomic Club to leave no doubt that
people are interested.
That plan, briefly, suggested that the
payment to us by the Allies of the in
terest, and gradually the principal, OF
what they owe would probably be an
impossible drain upon their resources,
but so far as they did pay it would
disorganize our industrial affairs, be-
cause payments would have to be made
in goods. To avoid the danger of ruin
ing our debtors and harnring ourselves,
it was suggested that for time the in
terest payments be devoted to the re-
Mobilization of Europe, expended under
our direction. There would be no re-
lation between the source of the pay
ment and the place of expenditure.
Much of the expenditure would be in
the form of revolving credits, and
would result in replacing Allied obliga-
tions with obligations Of other govern
ments, but with the further specific
house, hydro-electric plant or other
work that had been undertaken.
How They Can Pay
The most frequent question that is
asked is: If the Allies ere unable to
pay us interest on the debt how would
it be possible for them to put cash in
our hands to make such expenditures
as / have suggested for the rehabilita-
tion of European economic life. 1t is
apparently difficult for people to grasp
the economic difference between max
ing q payment to US here in America
and making payments to be expended
under our direction in Europe. If pay
ments cannot be made to US here, many
fail to see how they could be made If
they were not brought here.
There is, think, distinct difference
in the difficulties involved in the two
forms Of payment
Let US take, for example, the situa
tion in Italy Italy is one Of the rich
est countries in Europe in it's effective
labor supply. 1t is one of the poorest
countries in native raw material. There
is at the present time much unemploy-
ment The official figures of unemploy-
ment when | was in italy were 100000,
and unemployment has been steadily
almost any ether European country in
balancing it's budget 1t is not only
laying taxes. but is collecting them. 1t
actually has reduced its circulating
notes, having cut down its note circula-
ton from The nigh point more than
1900, 600 lire. The weakness Of the
Italian situation lies in the necessity
for imports and the inability to export
under present conditions. For the first
five months of this year Italian imports
were in excess of $500 ,00O, 900 lire.
while exports were 2,677 100000 lire.
leaving excess of imports 3,S4S, 900 900
lire
II Italy we're to pay us here in
America the deficit in her foreign trade
balance would be increased by the
amount she paid US. That is obviously
impossible.
Could Raise Domestic Credit
On the ether hand. if we were to
undertake, for example, the develop
ment of hydro electric power in Italy
she could readily furnish all the labor
and considerable amount Of the in
dustrial manufactures connected with
such ar undertaking. She could DO
mestically raise the credit for chat
work. The result of such a program
might we'll be the furnishing of large
amount of employment for the unem-
ployed, Il development of electric power
that would ease the necessity for coal
imports, which would help balance her
foreign trade deficit; and the conver-
sion of the debt which she could not
possibly now pay US directly into an
obligation that would give us all The
security we now have, plus . lien on
the hydro-electric plant which would
be constructed. England could help
with the enterprise, and ct the same
time make some payment OF intere ST
cue US, by constructing turbines and
dynanos for export TO Italy. No ones
domestic industrial situation would be
upset and great contribution would
be made toward setting things going
again industrially.
Let us look at another project in
some detail. The food situation in
Europe could he immensely improved
IL modern systems of grain elevators
were established in the agricultural
districts of eastern Europe. All the
labor necessary could be easily sup
piled in each of the countries where
the elevators we're constructed The
cost Of that labor might be met by
English payments, but the payment
would not have to be made in foreign
exchange. The moment that these nom
manufacturing nations could obtain
any credit in England they would
spend it for English manufactured
goods. England has 100000 idle men
and as many more working on short
time. The English payment would be
made, not in cash or foreign exchange,
but in goods that eastern Europe is
hungry for, while English mills are
standing idle.
The necessary timber for such CON
struction might in part, for example,
come from Poland. Poland owes US a
considerable amount, but has such an
adverse balance Of trade that she can
not pay outside debts in foreign cur
rency values. She has almost unlim-
tied forest products, and plenty of la
Dor to convert those into humber This
program would stimulate her exports,
giving her an outlet for something she 9
can produce, instead Of leaving her
lrraber as it is in its present stagnant