Evening star., 1922-05-30
But Both Security Offered
and Use of Money Would
Be Studied With Care.
SENTIMENT is AGAINST
ANY USELESS FINANCING
Americans Likely to Insist on Con.
cessions Opening Way to Recon-
struction in Europe,

i
| developments in Europe are watch
| Ing with interest, not unmixed with
| anxiety, the negotiations at Paris
looking to an International loan to
| Germany. They realize that such a
loan, properly safeguarded as to Sc
| curity and expenditure, might open
| the way to a solution of Europe's
! almost hopeless economic problem.
But they realize also that unless
proper safeguards are thrown about
the loan 1t may become the duty of
! the government to warn American in
vestors against participation in it.
AS these men view 1t. the idea OF
\ an American loan to Germany or any
other country In Europe at this time.
viewed solely as an investment, has
| absolutely no attractions. The United
| States Treasury faces the early ne
| cessity of entering upon refunding
| operations amounting to billions of
| dollars. and American industries.
| especially the railroads, need capital
| in enormous amounts.
Better Investments at Home,
| Secretary Hoover clarified this view
when he told the Interstate Com
! merce Commission that a billion dol
| lars loaned to the American railroads
| would do intellectually more for
| American prosperity than a billion
| dollars loaned to Europe. II the
American people have a billion dol
lars to lend 1t would be greatly to
their advantage to lend it in this
country, and the security would be
much more ample.
|
government would look with disfavor
on a loan to Germany under proper
conditions. Europe must be helped
| if a complete collapse is to be avert
| ing for basis, in realism" upon
| which help can be extended. There
is willingness that the loan shall be
made. provided 1t can be made safely
and In manner which will help.
There Is very great unwilhngness
that a billion dollars or SO of Ameri-
can money shall be poured down a
European rathole.
Inquiry Into Purpose.
The purposes of such loan as is
proposed and the security to be ofrer-
ed are of almost equal Importance.
but it is not unlikely that the pur-
poses would be first examined A
reparations to France and Belgium
| would be considered a satisfactory
purpose. A loan to Germany In order
that value might be given the Ger
man mark through the operation OF
"pegging" German exchange would
not be considered a satisfactory pur-
pose. When the German minister OF
finance asked for loan of two and
bot ALL I1t
"pegging" of exchange as one of the
| requirements. During the war. solely
as war expediency. British, French
and Italian exchange was "pegged"
in New York with money borrowed
from the United States Treasury.
following the armistice. sterling,
franc and lire exchange dropped to
new low-water marks. If 1t was not
good policy to sustain the value of
British, French and Italian currencies
by such artificial means, Americans
certainly are not foolish enough now
to lend their money to try to inject
value into the almost valueIess Ger
man currency.
1t is possible. but perhaps not prob
able. that in passing Judgment on a
loan this government would inquire
as to the use France and Belgium
purposed making of money thus de-
rived. The people Of the United
States, as the lenders. would be fully
justified in making such inquiry, even
national relations the government
might hesitate to do so. If assur-
ances were given that the money was
to be used for the restoration of dew
astated regions the American people
would be much more sympathetic
toward the loan than If it was to be
used for maintaining armaments.
But even with the purposes of the
loan set forth in a satisfactory man
ner. the American investor is going
TO look with care into the security
offered before parting with his money.
He feels that his Investment in
Europe upon which payment of
neither principal nor interest is as
sured is already sufficiently large
When the American investor starts
the investigation. which in justice to
himself he will be forced to make,
the first discouraging fact he Will
encounter will be that the entire
assets Of Germany. her customs and
other revenues, are mortgaged to the
payment of reparations. and that un-
der the terms of the London ultt-
, matum of May s, 1921. which was
accepted by the German government,
| these reparations reach the enormous
total of $4,000, 200, 900. Germany has
acknowledged this indebtedness by
delivering to the reparations commis s.
sion a series Of bonds. Bonds of the
A class are for $4,000, ,000, 900 and con-
stitute first lien 'on German assets
and revenues. Bonds of the B class
are for $9,500.000,000 and constitute a
second lien. Bonds Of the G class are
for $20. 500, 100000 and constitute a
third lien. Bonds of the A and Is
classes carry s per cent interest and
provide for per cent sinking fund.
| making q total annual service on
their account of $3.50. .000, 900. Bonds
OF the G class are to be held by the
reparations commission and not
issued until the commission decides
Germany Is able to carry them.
When they are issued. Ii they ever
are issued. the annual charge Ger,
many would be called upon to nav
would be raised to 1880, ,000, 900. 70
meet even the lower charge on the
A and b bonds II today entirely be-
yond the possibilities Of the German
people.
Payment IN Goods Only.
Payments of s75o.ooo. 900 year
could be made only in gold or goods.
Germany has no gold. except 4 few