The New York herald., 1922-07-09
SUNDAY. JULY 9. 1922.
The German Moratorium.

Nobody will be surprised by the
German Government declaration of
necessary moratorium, least Of all
the Allies waiting for their repara-
tions. This was foregone conclu-
sion from the hour the worlds great
bankers, considering in Paris the pos
sibility of huge international loan
for Germany, ended their sessions
with nothing done toward the loan
because in the circumstances moth
Ing adequate or effective could be
done. Anything short of relief that
was adequate and effective would
have been futile. Great bankers no
more deceive borrowers in such mat
ters than they deceive themselves.
So in the way of German loan there
was possible nothing at ALL
The German economic and finan-
cial situation looks black to-day, and
for the time being it is black, for the
precise causes so clearly foreseen
and explicitly stated by those inter-
national bankers generally and par
ticularly by J. P. MORGAN, the Ameri-
can leader of the loan conference,
when they adjourned. These causes
are the impossibility of Germany
paying out gold for reparations or
anything else when Germany cannot
get gold because of the barriers set
up against her getting gold by the
very claimants of reparations pay
ments that must be made in gold.--1
The international bankers, confer
ring in vain over the gold loan pro-
posal for Germany. did not conceal
the fact that as bankers they could
not command the cash or the credit
to give Germany what she needed and
what the Allies, waiting for their
reparations, wanted her to have. The
bankers made it as clear as sunshine
that il the great German loan were
arranged the money must come not
from the banks, which did not hold
1t for their own, but from the in
vestors and lenders in the solvent
countries of the world with reserve
capital to spare abroad.
Furthermore, the international
bankers made 1t clear that voluntary
lenders going into anything as an in
vestment never would come to the
rescue of a bankrupt nation, or a
bankrupt business, or a bankrupt
anybody-come to the rescue of that
bankrupt debtor for the benefit Of
helpless and hopeless creditors of that
bankrupt debtor when those helpless
and hopeless creditors insisted that
their claims should be first lien
on the all and everything of the re-
sources of the bankrupt debtor need
ing to be rescued. by new creditors
for the sake of the old creditors.
That was where the negotiations
for the proposed German loan broke
down. Some of the Allies would not
forego or share their Versailles treaty
and reparations first mortgage on
the all and everything of German
resources. They would not give up
one jot or title of their first mort
gage even to be saved themselves.
The Allies hold their first mort
gage yet, but because the German
loan for their benefit could not be
raised on those terms that first mort
gage is not to-day worth pfennig
to them in the way of getting them
their gold reparations payments.
And it is a singular coincidence
that on last Friday, July T. the very
day before the German announce
ment of inescapable default, NJ.
CArTIER of Belgium challenged the
Russian loan seekers at The Hague
for not realizing that no lender
would give his money to any bor-
rover who denied security for that
loan to the lender. And the British
spokesman at The Hague said to the
Russians, as the American and Brit
ish spokesmen hsI said about the
German loan.
"1t does not rest with Govern
ments to settle conditions of credit.
They are settled by the people hav-
ing money to invest
That is the story OF why the Ger
man loan failed, why the German
xaporafione cannot no maid in gold
tord over again at The Hague to the
Russians. That story ran for any
Ally denying before the international
bankers prime security to the lender
asked to supply gold to Germany to
pay the reparations. The story will
run for.any Ally so long as the Sc
curity IL denied. And so long as 1t
is denied the economic and financial