The New York herald., 1922-10-05
Britains Debt Covered.


Notwithstanding her immense sale of
securities to the United States in the Sec
ond and third years OF the war, a sale
which largely furnished the means OF
paying for the goods of all kinds bought
by the Allies, England still owns sum-
cient foreign securities to cover her debt
to the United States two or three times
over. But neither France nor italy has
similar reserves of wealth and / doubt
whether either of them has sufficient to
meet more than a trifing part Of their
foreign debt.
'Therfe remains to be considered their
exportable surplus in the ordinary way
of trade. shall speak later of the cir
cumstances In which an exportable sur
plus from production usually arises and
shall give my reasons for thinking
that nothing more tnan comparatively
small annual payments can ever be
made in this way. But 1t will be more
convenient now to deal with an irlivid-
usl debt and I will ask you to consider
the particular case of the debt from
France to England, which 1 can speak
about with more freedom as IL is q debt
IN regard to which my own country Is
the creditor. We shall get O clearer
vi.w o. IL IL W. examine tho cireum-
stances In which 1t was incurred.
During the war France developed an
immense demand for goods OF foreign
production. AS an increasing proportion
OF her man-power became engaged in
her army, her capacity to supply her
self was progressively reduced She had
no abundance OF foreign securities with
which to pay for her requirements and
she could obtain the war materials in
dispensable for the maintenance OF the
Akxt,t t,t
ing the money to pay for them. Before
the United States came into the war
France had borrowed $1,000, ,000, 900 from
the British Government, and this amount
was subsequently increased to more than
50, 0,000.0 900. The price OF the goods
bought by France was naturally high.
Commodities produscd to meet an urgent
war need can never be cheap. But
France was obliged to have the goods,
whatever the price, and n great stimulus
was given to American and British
trade.
1T is impossible to give any precise
estimate OF the total value Of these as
sets. but i believe IL would be safe to
put them at not less than a billion dol
lars. Whatever the amount may be-
however. Germany could pay II, provided
the fall In the mark was arrested. More
than that INjo not think sho has the
ability to find. at any rate for some
years. and It would be condition of
this payment that no more should be
demandeA OF her for a long time TO
come. believe that. looking merely
at the amount to be received. the cred
itors would gain by abandoning the at
tempt to obtain other money payments
for period of at least three years, and
| am quite sure the world as a whole
would be- an immense gamer In the
general stabiization of exchanges which
would ensue upon an arrest OF tho fall
In the mark.
imagine Frdnce paving off this debt /
She could only do so by producing
goods and exporting them In very large |
quantities. far In excess of normal trade
demands. II the general trade organ
ization OF the world permitted OF the I
absorption Of this addition French out
put have no doubt that her industry /
would be capable of the effort ncces-
sary to enable her to pay interest and /
sinking fund on her debt. But would .
ehere, be any willingness to receive the
goodsY Neither England nor any other
country is prepared to-day TO pay for
and consume goods on an exceptional
scale. The immense demand created by /
the war has no parallel IN peace
"And yet how Is France 10 pay unless
an exceptional demand exists7 The truth
is that her debt is far too great in re-
lation to ordinary international trade
possibilities. IL was incurred by the
purchase of goods required In war AMI
bought at war prices. II could only be
discharged by the transmission OF goods
not wanted In peace. and sold az no less
high prices. We became accustomed IN
war TO talk In billions. Our language
was suited TO the circumstances or the
time, but. II we carry our minds BACK
to 1914 and return to the ideas appro-