Evening star., 1922-12-18


see a way out, the proposal Is
advanced for general cancel
lation of interallied indebtedness
growing out of the war. 1t has be-
come a fetish with European states
men and economists; panacea foi
all the ills which bese, them. an ap-
solution from all their sins OF omls'
sion and commission. Europe Is In a
snarl today, sorely tried by its Ills
and oppressed by the burden OF lts
sins. So debt cancellation Is trotted
out. busted off and furbished up. ano
offered again as the sole solution OF
the worlds difficulties. the only road
to peace and PROSPERITY and righteous
living.
AS all cancellation proposals, nc
matter in what artful gulse they may
be dressed. are aimed at the Onlteo
States. and as in any general cieah-
ing of the slate the United states
would have to do the lions share OF
the canceling, il is worth while to
take a look beneath the surface OF
elittering generalities and see What
sort Of stuffing 10 inside the package
Europe Is trying so persistentiy 70
hand US.
At one end Of the debt-reparations
complication Is the United states
which Is owed in the neiehborhood OF
s11 600 .oOO,O and owes nothing as
an offset. At the other end Is Ger
many. which owes whatever part OF
about 100000, 100000 the allies can
l,ar n nd
as an offset. In between stand Great
Britain, France, Italy and Belgium
which both owe money and are oWed
A number of other European coun-
tries owe relatively minor sums
without offsetting credits. but clrcum
stances with respect to them vary SO
widely that they may. without i'm
pairment of reasoning. be left out OF
the general reckoning.
With this groundwork OF under
standing. let us see how ali-round
cancellation of debts. with corre-
sponding reduction in the reparattons
demanded of Germany. would work
out, The United States would sacri-
fee s11 900. 100000 and get nothing in
return. Great Britain would be for
given s. 900 900. 200 of debts and would
forgive debts and forago r"parations TO-
falling probably $1,000. 100000. so that
Great Britain would be out perhaps
" TdItt iii'ii'
both to the United States and Great
Britain. and has comparatively small
sums owed her by Italy and some of
the other allies. 1t is to be assumed
that she would deduct the debts she
forgave from the debts forgiven her
and would reduce reparations de-
mands to an amount representing the
difference. France, therefore. would
break even, theoretically. AS Italy
and Belgium owe larger sums than
they can hope to recover from repa-
rations claims. they would be out
right gamers by a cancellation pro-
gram.
This brings the equation UP to Ger
many. If reparations demands were
reduced only to the extent of debts
Cancelled. it would bring the bill
against Germany somewhat nearer an
amount which it is possible for her
to pay, but the amount remaining due
under the treaty and subsequent fix
ations still would be in the neiGhbor-
hood of 5000. 100000. and if the
allies were to continue to demand
payments from Germany on Il s2n.-
OO0, ,O0O, 900 basis the whole procedure
enabling Germany to recover her eco
nomic health.
The best informed opinion today is
that a reparations bill of $4,000
600. 900 would represent the maximum
capacity of Germany to pay. If
S12. .000, 100000 represents the maxi
mum sum which Germany can pay,
any claims above that are merely pa
per assets without real value.
Now, world opinion. which includes
American opinion. supports the allies
in their contention that Germany
ought to pay up to the limit of her
capacity. If she has capacity to pay
$4,000. 100000 she ought to pay that
sum. There is not. outside of former
enemy countries. any considers b lie
sentiment in favor of allowing Ger
many to escape the just consequences
Of her wicked folly. 1t is a fair as
sumption, then. that even if all inter
allied debts and the debts owed the
United States were Cancelled, the al
lies would continue to insist that Ger
many pay up to the limit of her
capacity.
II this is to be the procedure the
debt-canceling program resolves it
self into proposal that in return for
cancellation of debts which they
could not evade without national dis
honor and ruin to their credit the
allies are willing to write off their
books an equivalent amount of the
utterly worthless part of their claims
against Germany, leaving them free
to collect all they can and still to
claim more than they can collect. If,
on the other hand, 1t is proposed
(Which 1t is noO. first. to fix repara-
tions at a sum which is possible for
Germany to pay and then to reduce
that sum by whatever debts are can
celed. the result would be that Ger
many would escape almost entirely
from financial penalties for her
wrongdoing and punishment for Ger
payers Of the United States.
It is a rather remarkable coinci-
dence that the amount which 1t is
estimated Germany can pay in the
way Of reparations approximates very
closely the amounts which the allied
governments owe the government of
the United States. Twelve billion dol
lars is the estimate of Germany's
paid interest on allied debts to this
country are in excess of $11,000,-
100000.
It also is a fact worth remarking,
though 1t hardly is coincidence, that
the total of the Indebtedness which
1t Is proposed European nations shall
cancel approximates very closely the
proposed shall be Cancelled by the
United States. France and Italy and
other countries owe England money,
but the money England loaned them
was part of or was Offset by money
which England borrowed from this