Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1922-09-21
BY FRANCIS Fl. SISSON

BY FRANCIS Fl. SISSON
Vice-President, Guaranty Trust Com
pany of New York.
Ever since the conclusion of the
Treaty of Versailles, one of the chief
uncertainties of the European situa-
ton has been the potential burdens
of the nter-governmental debts. The
purposes for which these obligations
were incurred, the approximate totals,
and the means Immediately available
for their repayment are all we'll
known. 1t is well enough understood,
also, that in respect to these debts the
United States and Japan are the only
important countries in the position Of
being creditors solely, that Great
Britain and France are both creditors
and debtors, and that the remaining
notions, especially Russia and Ger
many, are in varying degrees debtors.
Interest is being paid on some Of
the lesser miscellaneous obligations
such as resulted from the sale of sur
| plus materials to France and of sill
yer to England for the account of
India, and is also being paid on part
of the Preparations debt, although the
amount is scarcely enough to cover
the cost of the armies of occupation.
AS yet, only Great Britain has taken
steps to pay any part of the interest
on the large loans, due this fall when
the present moratorium expires.
Reforms Distant.
While the debts exist on paper,
| they are not now an actual burden on
| the debtors, the PREPARATIONS debt ex-
cepted. Nevertheless, these debts
represent heavy potential burden to
European nations; and, until the un-
certainty which this occasions is re-
moved, there is small encouragement
or prospect for governmental finan-
| cial reforms on far-reaching scale
There have been frequent efforts
| in Europe to reach agreements regard
| ing some of the ter-government
| debts, and the reparations debt actual
ly has been funded into long term
| bonds. These negotiations however,
have not sufficiently recognized two es
sentials; namely, the extent co which
the debtors can pay or the creditors
are willing to receive payments in
| goods and services-which is the only
way payments can be transferred
from one country to another, since
| gold is not available in sufficient euan-
ty to be of material usefulness for
| this purpose. AS a consequence, the
| agreements made have not been fruit
full or concrete or beneficial results.
The Congress of the United States,
| now about to enter into similar nego-
tiations with our debtors, has ap-
| pointed a Debt Funding Commission,
but has limited the scope of action
of the Commission by laying down
terms Of settlement in advance of
both investigation of the facts and
negotiation of funding scheme.
''The Bond Burden"
The PREPARATIONS problem has
reached it's present troublesome posi-
ton, largely because of the vast over
hanging burden of the inactive Series
G bonds, amounting to approximately
500, 000,0 100000, which are held by the
Preparations Commission awaiting
time when Germany can pay interest
on them. The burden of the Series
A and bonds, totaling approximately
S12,000,000,000, already issued and
subject to interest and amortization
charges, is quite within reasonable
estimates of Germany's ability to pay,
although, owing to the present finan-
cial Generalization of Germany,
moratorium on cash payments has
been found necessary.
It is the potential burden of the Ser
les c bonds, similar to that of the
other great intergovernmental
debts, which has encouraged the Ger
man Government to let its currency
become debased and its finances dis
organized almost to the point of in
solvency.
The economic difficulty in obtain
ing payment of PREPARATIONS and other
inter-g governmental debts lies in the
fact that transfer of funds from one
country to another can now be made
only through the medium of transfers
of goods and services. So far, how
ever, the foreign trade of most Of the
European countries is only a small |
fraction of their pre-war trade, and
the trade balances most of them be-
ing very unfavorable to the debtors,
are still fuctuating widely.
We can hardly expect, then that
any very serious effort will be made,
except by Great Britain, to meet pay
ments due this fall on the debts owed
to the United States Government. On
the other hand, efforts to devise al