New-York tribune., 1922-08-03
Austrian Ex-Minisier of
Finance Asserts Pact Must
BE Rewritten; Kerr Says
History Will Justify II
Warburg Leads Debate
Banker Makes 4 Proposals
for Europe's Recovery at
the Institute of Politics
By Arthur S. Draper

lndemnities and the reimbursement Of
international debts incurred during the
long period of hostilities the members
of the Institute of Politics are hearing
the views of men who are peculiarly
qualified to express opinions on these
subjects, and consequently there was
an unusually large gathering this
morning at the round table which is
considering the rehabilitation of Eu-
rope under the leadership OF Paul M.
Warburg, the New York banker
Mr.. Warburg presented these funda-
mental suggestions:
First-That the rehabilitation of Eu-
rope involves the return to state of
things where countries once more func-
tion fairly normally as economic units,
individually in their relation to one
another and collectively in their rela-
tion to the United States.
Second-That reasonable stability Of
exchanges and prices is prerequisite
for the restoration of orderly COM
merce and trade and that such stability
cannot be attained until country re-
turns to some definite relation to gold
VI Solu eHCHduScS.
Calls Gold Loans "Senseless"
Third-That it would be madness and
senseless to make gold loans to coun-
tries that are menaced by uncertain
credit, heavy adverse trade balances
and large foreign debts. The gold
loaned would travel with an "excur-
sion ticket" because the debtor coun-
try in such cases would not be able to
hold it,
Fourth-That the important prelim-
mary steps to the restoration of Eu-
ropes credit are the granting of a
moratorium to Germany liberal and
thorough enough to make it effective
and the reduction of the ultimate repa-
rations charges in cash or kind to a
reasonable and practicable scope-then
Americas and England's constructive
tasks can begin.
In developing the fourth suggestion
| Mr.. Warburg said that the tasks of
America and England would consist
primarily in the cancellation of some
of the debts owed them by the
Allies and with the assistance Of some
of the neutrals" the granting of a
Substantial loan to Germany for the
benefit of herself and of some of her
creditors. Finally banking syndicates
in countries enjoying free gold stand
ard could grant credits to foreign
banks acting for the benefit of the CEN
tral banks in countries returning to
the gold standard Our Federal Re
serve banks could assist in such moves
by gold loans or exchange purchases.
In addition our market would have to
continue to absorb large amounts of
foreign securities in order to assist
other countries to settle their debt bal
ances with us and in order to enable
Europe to buy our goods and live dur
ing the period Of recuperation."
Redlich Would Rechart Treaty
DR.. Joseph Redlich, former Minister
of Finance in Austria, who is here as
a lecturer, made his first contribution
to the discussion at this meeting, agree
ing with Mr.. Warburg's thesis in prin-
ciple, but stressing the Importance of
the reconsideration of the basic prin-
ciples of the Treaty of Versailles.
"The Brussels and Genoa confer
enccs were sterile" he said. every
body knows that it is good thing to
have gold. 1t is quite useless to tell
this to Germans, Austrians and
Hungarans. Please keep in mind that
the peace treaties leave a situation
which cannot guarantee the stability Of
the world The political issue must be
considered first. l do not want to give
of the treaties should oe rewritten.
What I have in mind is that the
treaties have mutlated the economic
and commercial fabrics of central
Europe"
He explained in detail the impor-
tance Of the democratic movement in
central Europe, the work done by Herr
Wirth and the late Dr.. Rathenau and the
effort of this group to fulfill the obli-
cations placed on Germany by the
Treaty of Versailles, and he lamented
the fact that they had received little
or no assistance or encouragement
from the Allied countries, though he
said Mr.. Lloyd George had taken a
sympathetic attitude toward Austria
"Who can wonder at the monarchis-
stances" ?" DR.. Redlich asked. "These
people feel that the treaty was not
based OH armistice terms, and conse-
quently they place little faith in the
republicans. Through the armies of
occupation Germany has been con-
tinuously drained Of it's gold But if
she had all the gold there is in the
world she would not be able to pay
even small part Of the indemnities
she has been asked to pay. Instead of
treating Germany fas has been done
she should be made prosperous and
put in position where it would be
possible for her to pay. Credit makes
for peace. 1t is a fundamental case"
Credits First, Says Rediich
After DR.. Redlich had described the
position of Austria to-day he said that
"gold transactions cannot take place
unless there is first readjustment of
credits"
Mr.. Warburg explained what he
meant when he said that Englands
position was not quite the same as that
of the other debtor countries. He said
ne wished that there could be
closer Anglo-American cooperation
but that he felt that Britain would
have to take for political reasons the
initiative in most steps and that we
should have to follow along. In his
opinion the majority of English bank
ers were in favor of paying Britain S
debt to America.
Philip Kerr, who emphasized the
fact that he is no longer connected
with the British government in any
capacity and that his views must not
be taken as rejecting official opinion
in England, said that the present po-
litical confguration of Europe was not
the work of the statesmen at Paris,
but of the way the new states were
functionng at the time the Paris con-
ference assembled. The conference
only adjusted boundaries. He con-
tended that history would show that