The New York herald., 1922-06-26
ny HARTLEY wITHEns.

Copyright in all countries reserved
: LONDON, June 14.-An enormous
tangle of international indebtedness
is one of the worst financial results
of the late war and until this tangle
has been Strengthened out there is no
hope of real forward movement to-
ward economic recovery. The totals
involved are so appalling that they
cannot be grasped by an ordinary
mind even in these days of gargan-
t,lan figures. and as their amount is
expressed in currencies foreign either
to the debtor or the creditor, their
actual burden constantly shifts with
the variation in rates of exchange, or
would do so if any general attempt
We're being made to meet them.
So far. however, no such attempt
has been made except by Germany in
the matter of reparations-and in this
case the attempts have been so far
Unsuccessful that payments hitherto
made do not appear to have covered
the cost of the armies of occupation
land by Great Britain which, has
faccording to official figures which ig-
more accrued interest due TO America)
reduced the amount of her external
debt by about 1900. 100000 is going to
begin during the current financial year
to pay interest on her debt to the
American Government.
~ Most Never VIII BE "aid.
national Indebtedness left by the war is
at once nightmare, a tragedy and a
farce 1t is not being paid and every
body knows that most of it never will
be paid, but the existence on paper OF
this disastrous row of figures makes it
Impossible to see ahead clearly concern
Ing the financial position of many OF
the countries involved.
X Mr.. Goodenough, chairman OF Bar
clay's Bank. in an address delivered last
April 70 the American Chamber Of Com
merce in London. brought out a total
fgure of over 10000. 900, 900 oi
which $4,000 100000 represented interal
debt and $500. 900. 900 was the amount
Of German reparations as stated in the
allied ultimatum of May. 1921. This
figure, however, omitted the debt of our
Dominions to Great Britain and the
debts of smaller allied countries. such as
Serbia, Rumania and Portugal so that
the real total must be nearly ELL 000,-
100000 If the whole is set out in full.
But having sufficiently made our
flesh creep by the contemplation of this
dismal total let us proceed to recognize
that it contains In itself great ex-
aggeration because so many of the
NJ f,at.o
and debtors. For instance. Germany
owes money to all the European Allies
all of whom owe money to America
Germany owes to us and our Allies, they
owe to us and to America and we owe
20 America. Any practical business man
looking at such tangle or credit and
debt would at once suggest that the
amounts involved could be greatly re-
duced and the process of payment
greatly simplfied If some system could
be adopted Of reading through" as the
Stock Exchange calls IT, from the ulti-
mate debtor to the ultimate creditor.
If l owe you II 900 and you owe
Jones $1,000 and Jones owes Smith
$1,000. here are debts of $4,000 owing
among US. But If Smith will accept
my promise to pay as good. then the
Total Is reduced to fi 900 by the read
tog through process and $4,000 has
been simplified out of existence by the
Use OF the clearing house principle.
Surely the same system could bc ap-
piled to the International war debt.
~ If the world could produce n really
great statesman with gift for inter-
National finance. and IL its peoples were
more ready to seek q solution for eco
nbn1ic difficulties then to cherish mutual
spspicion and mistrust. this way out OF
the indebtedness deadlock would very
quickly be taken. IL is not an easy way
because of the great differences I'm the
solvency of the parties involved and Il
can only be taken IL those responsible
are inspired by wise forbearance and a
business like power to recognize the
facts Of the position. chief among which
Is the fs... ;istt whatever happens a
IargO part Of the debts in any case
VIII have 10 be written off.
Americas Opportunity.
Since Germany owes money to all
the Allies except America. and all the
Allies owe money to America. the
simplest way Of applying the clearing
house principle would be for America TO
take reparations bonds from the Allies
dor the payment of their debts and for
,us 10 do the same with regard to our
1ebts from our European brothers in
"a
reduce The total indebtedness by the
~, 900. 600 900 owed to America by us
and the other Allies and by the f1. .000.-
700, 900 owed to US by France. Italy and
inor Allies.
M. Goodenough's address above re-
fefred to suggested that reparations
honds should thus be used for debt
payment but seriously weakened the
proposal by the condition that the
auntry thus paying her debt should
"indofae' the PREPARATIONS bonds handed
ever thus still being liable in the event
OF default by Germany. k11f.s process
would thus fail to clean the slate; we
want n scheme that shall be final RI
America could be induced to take
separations bonds in outright payment
OF the Allies debts she would then be
in position TO insist. being Germany 9
,creditor in order to obllge the Allies,
that the total reparations claim should
brought down 90 n sum which would
seriously embarrass her debtor.