The New York herald., 1922-06-11
The German Loan Dilemma.

The German Loan Dilemma.
The international bankers who had
been invited and urged by the Re-
parations Commission to raise a
great foreign loan for Germany with
which to meet the reparations bills
due to France and other nations
have not washed their hands of the
business finally. But they have
marked definitely the only road that
can be travelled now or later. Their
adjournment for three months sim
ply means that after that period has
elapsed there can be no loan, so far
as these great bankers are concerned,
unless meanwhile those who need
and are trying to get the reparations
from Germany come to see the situ-
alton as the international bankers
see it.
This impasse is very easily under
stood, as THE New YORK HERALD has
before explained. In the view of the
international bankers it is not a
question of whether the Allies de-
serve to get all the reparations origi-
nally agreed upon. 1t is not a ques-
tion of whether their legal claim to
part or full payment by treaty rights
goes ahead of any other claim upon
!. German resources that may come
J. later. 1t is not question Of what
majority of the Reparations Com
mission thinks.
The question, as the bankers ana
Iyze it, the very practical and over
shadowing question from the point
of view of getting the loan for Ger
many. is that nobody having the
money to lend will lend it without
satisfactory security And there can
be no satisfactory security for the
loan if enough of the resources of
Germany cannot be guaranteed to
meet the interest and principal OF
the loan. There can be nothing but
wild gamble for those who are
many for the benefit of the Allies
under conditions where virtually all
the surplus resources of Germany
are irrevocably earmarked for repa-
rations in preference TO the interna-
tional loan.
1t should be emphasized again that
the international bankers themselves
have not the~colossal funds needed
by Germany to make the reparations
payments. They have no way of OBJ
tanning those funds for the repara-
tions paying Germany and for the
reparations collecting Allies except
from the people of America, Great
Britain and other countries where
there are reserve funds available for
investment.
AS business proposition pure and
simple a loan to Germany for the
benefit of Germany and the Allies to-
gether is not comparable with many
other investments into which lenders
can put their funds at high returns
and with reasonable safety. So Oh
the one hand the international bank
ers could not recommend the German
loan to investors of the world with
out such notifications of the repara
tions agreement as would permit the
lenders to receive their interest and
get back their principal, and on the
other hand investors would not con-
slider the loan without the recon-
mendation Of the bankers.
The international bankers do not
question the right of any of the AL
lies to stand uncompromisingly on
the rigid terms of the reparations
agreement, though no cash come out
of such a situation. But the inter-
national bankers do not blink the
truth that, under these circum-
stances, there also will be no cash
coming through Germany from the
rest of the world as loan.
4 Three months from now the horns
OF this dilemma as it confronts the
Allies will be no different from what
they are to-day. Perhaps by or be-
fore then the attitude of the Allies
will be different and all Of them will
be as one; then, again, perhaps not.
Put the decision az the bankers made