The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-05-13

otherwise American investors will
not feel safe. in lending their
money. That means some definite
understanding between France
and Germany so that the repara-
lions questions will not be- con-
slant source of worry and irrita-
ton. And when once arrange
ments are made for Germany to
borrow the money wherewith to
pay her indemnity, the allied coun-
tires will be benefited because the
money they receive will help to re-
duce their burdens of International
taxation and business and COM
merce will be stimulated.
Curiously enough, the danger in
the future doesn't lie inside of the
defeated country = Germany. It
works Just the other way. The vic
torious countries are in danger of
over-speculation as result of the
flow of indemnity money in their
direction. History Of the period
Immediately following the Franco
German war of 1870 shows that
Germany, the victor, suffered seri-
Gus financial and economic crisis
because her industries promptly
began to expand on an extravagant
basis and the incoming funds slim
ulated unwise speculation. The
government itself spent it's money
for public enterprises which were
paid for at high rates of wages and
at absurdIy high contract figures.
France, on the other hand. came
through the crisis splendidly and
financed herself by borrowings Of
foreign capital which she gradual
ly paid back by increasing her do
nestle and foreign trade.
Quotes BOnnet's Essay.
In this connection, it is pertinent
to quote from an essay written by
Victor Bonnet in 1873, who says:
Two loans were made in 1871
and 1872. equalling together the
full amunt of the indemnity be-
sides a sum of 600,000,000 francs
for supplementary expenses. If we
had been able to raise these loans
by recourse to French capital only,
that capital, abundant as it was,
would not have relieved US from
embarrassment It would still have
been necessary to take 1000, 900 900
francs from our metallic stock, as
we could not pay the Prussians in
any other way than in specie or its
equivalent Now the sudden with
drawaI of these 1000, 000, 900 francs
in the situation in which we were
and in which we are today, July,
1878, could not have been affected
-fcfe
Those who suggested the POSSIBLE
ity of paying the indemnity by a
public subscription OF even by a
tax on capital, had not reflected on
this result, which would have been
disastrous. 1t was only by the help
of foreign capital that we could
provide the 100000 900 francs
which were still wanting. To for
eign capitalists, therefore, we ap
pealed and they have taken a large
interest in our loan. In this way,
by means of the payments effected
by them we have had large sums
at our disposal in foreign countries.
Thus have we in late years COM
posed the payment of our entire in
demnity without having created an
adverse exchange, without having
deprecated our paper money and
without having had to export much
specie"
Parallel for Today.
The foregoing is in line with
what is happening today. If Ger
many could have secured a loan
Immediately upon the close of the
war she would not have been so
adversely affected in the exchange
market and she would have been
able to purchase from American
manufacturers much of their sur
plus stocks of necessities. Ger
many would have gotten much of
what she was deprived of through
four years of a blockade and Amer
lea woud have captured an import
ant market. But instead Germany
was treated as an isolated factor
without thought of the effect of her
economic condition on the rest of
the world. Germany in despera-
ton has made the mistake which
the French writer in 1873 said
would have been disastrous for his
country if attempted-it was the
imposition of tax on capital and
the over-issuance of paper money.
-Four years have gone by but at
last the bankers of the world are
taking the situation in hand and
the possibility Of borrowing money
from American investors will have
more effect on SOLDERING Europe and
tranquilizing her political situation
than all the debates at Genoa con-
ference and the like put together.