Evening star., 1922-02-19

In a recent article in the Journal
Of the American Bankers Association,
DR.. John II. Williams, an economist
OF Harvard University, declares In
effect that Europe can not pay the
United States, and that if she could
it is doubtful whether or not 1t
would be best for US to accept il.
There is unanimity of opinion
among economists and financiers.
he says, that the bill on the allied
debt payment in the form originally
announced by the Senate finance com
mittee last December is economically
indefensible.
After providing for the refunding
Of the principal and deferred in
32s,000,000. into bonds of less thar
5 per cent interest maturing not
later than 1s47. the bill provided that
the interest, S550.000,00g year, be
payable Immediately in semi-annual
installments Nothing could indicate
more strikingly the failure of large
numbers of our people to under
stand the delicacy of this problem.
Payments Suspended in 1919.
1T was in TIL spring of 1919 that
the payment of principal and in
terest on the allied debts were sus-
pended. The suspension was liter
ally forced by the increasing gravity
Of the international situation. Europe
had been purchasing American goods,
for which she had been unable to
pay except with funds from our
own pocket.
by private loans, the repurchase
aS coN1,rifiAs hAld abroad and direct
credits by our government we had
advanced some S13,000,00e.000 TO
finance these necessary purchases OF
our goods by Europe. When. in the
spring of 1919, the foreign exchanges
were unpegged and our government
eign exchanges fell heavily. Despite
the violent dislocation Of the eX-
change machinery, the extraordinary
flow of goods to Europe continued,
our exports in 1919 and 1920 being
the largest in ayr history.
Nothing could indicate more
clearly the continued need of Europe
for American help.
/, $50 great hs. Neen Europe's need
that her impQeS Sers have had to be
carried on short time by our export
ers and bankers, the extent OF TINS
floating Indebtedness being probabiS
less than a billion and half dol
lars at the present time.
I'm other words, far from Europe
being able to make interest payments
on debts incurred during the wal
period, we have had conclusive proof
of Europe's inability to pay even Tor
her current purchases.
idle to suppose that Europe can un-
dertake an annual payment of $500
600, 900 in addition to her payments
for her current imports, interest on
private loans and other obligations
Not Like Other Debts.
Even if Europe could pay at this
time, it is doubtful whether the
American people would be prepared
to accept the payment. Despite the
economists in recent years, there ap-
parently still fingers in the public
mind the fallacy that payment
from nation to nation Is not ma
terially different, in form and conse'
quences from a payment by one indi-
vidual to another.
"It is a commonplace of economies
that any large international payment
must ultimately be made in goods
Our studies of the balance Of pay
ments of the United States have in
dicated conclusively that the re-
sumption of interest payments on the
allied debts would cause our export
balance to disappear.
Trade Balances Discussed.
THAT the overturn of our trade
balance is not in itself undesirable
is amply proved by the experiences
of Great Britain and Germany in the
two or three generations preceding
the war. Though they had a large
unfavorable balance Of trade repre-
sentinr the earnings Of their foreign
Investments, of the merchant marine
ana other sources of income, thu
large imports did not prevent theil
building up the largest export trade
nossessed by any nations of the
world. This is a sufficient answer tt
the fears SO commonly expressed II
this country that European pay
ments OF interest, even at some