New-York tribune., 1922-06-12
The German Loan Fiasco

The German Loan Flasco
Mr.. J. P. Morgan's statement
clears up some confusion caused by
earlier reports from Paris as to the
deadlock on the German loan. II
says that there was a difference be-
tween the French and English texts
Of the original note sent by the Rep
aration Commission 20 the bankers
committee. The French text pro-
hibited the committee from consider
irg revision Of the schedule Of Ger
man payments, as now determined.
The English text was susceptible Of
a broader Interpretation. But IT did
not contemplate any alteration by
the bankers, even by way Of sugges-
ton, Of the principal due from Ger
many.
The commission alone may reduce
the capital amount, and then only By
a unanimous vote. France objected
to discussion by the bankers Of even
changes in the matter Of annual pay
ments. So when a majority Of the
commission requested the bankers TO
take the possibility Of such changes
into account in reporting upon the
feasibility Of a loan the latter saw
that they were being drawn away
from the field of finance into the
field Of politics, and thought it best
to suspend their inquiry.
The bankers report takes notice
Of the obvious difficulties in the way
Of an advance TO Germany. France
is Germsny's chief creditor She is
the major creditor, although she has
but one vote on the Reparation Com
mission. As the report says, an
any reparations problems her inter
ests are the most important factor
France must bear the brunt Of
scaling down Of German obligations.
Yet she has been ingenuously asked
by her Allied associates to consent 10
such a scaling down at her expense
for Germany's benefit and for what
they consider their own benefit.
Frances position is logical and
honorable. She is willing to reduce
Germany's debt TO her if the other
Allies will respond by proportion
ately reducing her debt 70 them.
But nearly all the maneuvering at
recent Allied conferences has had
the aim Of forcing France to make
concessions without receiving any
compensation.
II will be time TO ask France TO
cancel some Of Germanys debt when
Great Britain and the United States
offer to cancel some Of the French
debt to them. The one-sidedness Of
the cancellation suggestions made so
far is the main obstacle to the issue
Of a private international loan 10
Germany, on the assumption that
Germany is to be relieved Of a part
Of her present reparation obliga-
tions.
The bankers found that there was
another obstacle. That is Germany's
low standing as a debtor. The Ger
mans have shown little willingness
to pay what they owe. Good faith
has been conspicuously lacking in
the Reich's recent financing and
diplomacy, The Germans now say,
in effect: eve shall be'glad to &C
cept a loan TO help US pay our war
debts on the condition that our war
debts are scaled" Having received
the loan it would be natural for
them to say later: eve shall be glad
TO pay the principal Of this loan on
condition that it is scaled and that
you give US a new loan"
Who will trust debtor without
character? It is clear that Ger
many will have TO acquire character
and a reputation for integrity before
the average foreign investor will
lend her money on the somewhat
violent assumption that there is any
virtue either in her word or her
bond.