New-York tribune., 1922-06-11
No Loan Possible Until Bet.
ter Atmosphere Is Gre
ated TO Assure Subscrib-
ers That Money Is Secure
Debts Must Be Adjusted
Ready to Resume Task When
Conditions Are Changed
to Make Plan Feasible
BY Wilbur Forrest
sp.essI cssIs 10 "a. T~s~~s

Europe 10 N such . muddlsd financial
condition that security cannot be felt
By subscribers. This 10 the primary
rsason given By the international
bankers for their refusal to act at the
present time In pulling Europe out Of
her reparstion tengls. A better at
mosphere must be created In Europe
than was indicated at the meeting Of
the bankers before any great loan can
be sueeessfully 1ostsd in the countries
that have the money TO lend. Germany
also must make rome real effort 10 put
her house In order and the Allies must
help. In . general way this sums up
the ultimstum Of the bankers, includ-
ing J. p. Morgan. to the Reparation
! Commission, which had called them In
for practical suggestions.
without actually naming the precise
figures or being too specific. the bank
ers advised the commission, and thus
indirectly the Allies aud Germany. that
reduction Of Cermsny's reparstion
debt was necessary, and this involves
the Allies. Until this 10 done the
Be ready 10 hand out loans.
Reparation Cut Insisted On
The bankers gave consideration to
the French viewpoint that q reduction
Of the German debt was impossible
unless France was compensated b. .
| reduction OF her own external debt,
but the bankers nevertheless concluded
that the German debt must be re-
duced. This drew from the French
member Of the loan committee, NJ. Ser
gtsnt, a minority report stating that
any modification Of the debt from the
London schedule or the Versailles
Treaty was unjustifed.
The bankers notified the Repsration
Commission that they were ready to
resume their lsbors immediately ~ the
commission was unanimous in granting
. sufficiently broad mandate; In other
words, agreeing to meet the conditions
Of the communication they sent TO-
Mr. Morgan will depart for England
10. ight and sail for America from that
country.
The Communication sent 10 the Rep
sration Commission by the bankers Is
designed, In the opinion Of many. TO
give sound sdviee rather than with the
hope Of hoating . loan now or In the
future. II 10 signed by banking groups
Of Belgium, Italy, Holland. the United
States, Great Britain and Germany.
Poincare Refuses to Bulge
The minority report Of the French
member Of the committee was obliga-
tory because of the attitude OF the
Poincare government which refuses
point blank TO remit one mark Of the
money that Germany owes here and
has agreed 10 pay. The bankers make
il plain that they do not wish to sub
stitute their own views for those Of
than government involved, declaring
thatthey do not know Germany's exact
capacity TO pay, but they say that IL is
their duty to advise the lending public
Of their opinion Of German securities.
The fnanciers emphasize the point
that the position taken by France has
made their task difieult and inti-
mate that II is virtually responsible
for the failure Of the loan. 'FTance is
the first creditor Of Germany In every
roparation problem" the statement
adds. "Her interests constitute the
most important factor. The loan com
mittee aims 70 do nothing to hurt the
interests Of France and is most anx-
ious 70 support it's French colleague"
Tracing the stand taken By France,
however, the statement adds: "The
committee considers this divergence Of
view not only 10 make its task more
difficult, but TO create an unfavorable
atmosphere for any loan. For that rea-
son the committee decided to suspend
Its work"
Eject on Subscribers Bad
The statement continues: loan sub
scribers naturally would be afraid Of n
complete failure Of German finances,
and even first class guarantees like
customs would be valueless II Ger
many's economic situation really be-
came disorganized." The bankers are
Of the opinion that the restoration Of
Germany Ia the most important factor,
because many possess large amounts In
German marks and they will not par
ticipate In any credit operation that
could not have the consequences Of re-
storing German exchange. The bankers
reject the proposal Of a small loan to
Germany because that would be only a
brief stop-gAp and not real solution.
France could get only small part Of
such a loan and IL would encounter
great difheultiss.
'Tt 10 with great regret that the com.
mittes arrives at these conclusions"
the statement ends, but under the
present conditions they cannot advise
that an external loan 10 feasible"
The second section Of the bankers
recommendation concerns the future
and touches on the vital question Of
the reduction Of the German debt and
inter-Allied dsbts. Briefly summed up
II declares that Germany must make a
real effort TO restore her finances and
give proof Of her desire to fulfill her
obligations.
This part Is plain advice to Germany
TO accept the conditions Of the Allies
a. laid down In the ultimatum Of May
81 and which the German answer
seemed 10 leave contingent upon a
loan. For the Allies the bankers ad-
wise that greater clarity be given 10
the amount owed by Germany. al
though the word reduction" which is
so repugnant TO the French. is care
fully avoided.
Action Must BE Unanimous
The bankers add that every inter
estsd nation, VIZ, the Allies, must, IL
the investors are satisfied. Join unsni-
mously in any loan proposal. and such
action could not be better expressed
than by active cooperation with the
bankers In distributing the securities
among their own nationals.
The bankers rather cautiously enter
the realm Of inter-Aliied debts. deelar-
ing that II they recommend ss an es-
sentisl condition Of the loan the
limitation OF the annual payments 20
be made BY Germany, the interested
countries must examine the roper
eussions of such reductions on their
own financial situations and consider
their own external debts. The ques-