New-York tribune., 1922-10-05
England Alone
Is Able to PAY.
Says Mckenlna
Tells Convention Germany
Has No Resources to
Meet Preparations With.
out Surplus From Exports
Must Limit Demands
Frank Conference Between
Creditors and Debtors Is
Suggested as His View

Germany. without present capacity TO
obtain Surplus from the export of
goods, has no resources from which
to meet reparation payments beyond
foreign balances and other foreign
assets, valued roughly at about 81 .Ooo.-
100000, which would only be available
ior this purpose provided the fall in
the mark should be arrested. This
is the opinion of the Right Honorable
Reginald McKenna, chairman of the
London Joint City and Midland Bank,
Ltd, and former Chancellor of the
British Exchequer, expressed yester-
day IN discussion of reparations and
international debts at the American
Bankers Association Convention.
Such payment, Mr.. McKenna was
convinced, would exhaust Germany's
capacity to pay for approximately three
years at least, and subsequent paw
ments should be collected only in rela-
ton to the eXportable surplus which
she was able to build up. England, with
large resources of foreign securities
ana otaer assets, could meet it's in
deotedness to the United States; but in
all other instances the limitation of
possible eXportable surpluses in time
OF peace In competition with other
countries made the aggregate indebted
ness OF various nations to other gov
ernments beyond their capacity for set
tlement, in the opinion of the London
banker. In summarizing his views, Mr.
Mckenna presented the following for
consideration of the convention as
| representing strictly his personal
analysis of the problem:
| Ihe conclusion to which I am
driven is that Germany can only pay
| now Whatever she may have in foreign
| balances, together with such amount as
| she can realize by the sale of her
remaining foreign securities; that this
payment Is only possible if all other
demands are postponed for definite
period long enough to insure the sta
nlllzation OF the mark; and that future
demands at the expiration of this pc
ROO must be limited to the annual
amount OF Germany's exportable sur
plus at that time.
Postponement Desirable
further, that England has the ca
pacity to pay to the United States in
terest and sinking fund on her debt, bat
that the other debtors are none of them
IN position to meet more than a small
part OF their external liabilities, and
IN the existing condition of Europe a
ueilhlte postponement OF any payment
by them is desirable in the interests
OF all parties. The actual amount
which the other debtors could ulti.
mately pay. should, as in the case Of
Germany, be ascertained by inquiry
/ into their exportable surplus at a fujl
I and frank conference between credi-
tors.
Mr.. McKenna said that an attemnt
TO 1orce payment beyond the ability
OF the debtor would be injurious to the
nteinatlonal trade OF the whole world
"ould lower wages, reduce profits and
prove a direct cause of UNEMPLOYMENT
lie recognized that the situation was
complicated by the existence of other
interests besides those of trade and
hnance, and pointed out that the debt
might become the subject of ncpotia
tion and bargain by which the debt or
obtained relief, while at the same time
!, the creditor might still recover some
advantage to which he was entitled,
frances payment of the indemnity
after the Franco-Prussianw war was cited
{ by Mr.. McKenna as the only precede MT
for the settlement of a great interna-
tional debt This, he pointed out had
been accomplished largely through
drafts upon Frances accumulated re-
serve of wealth, the foreign securities
owned by her nationals. Germany. he
noted. had no corresponding resources
left to her after the war He criti-
clzed the estimate by experts of Ger
many's capacity for payment, as ex-
pressed IN the Versailles Treaty, as
based upon calculation of Germany's
capacity to produce.
Germany Must Have Market
Nobody has ever doubted Germany's
immense power to produce" the speak