The New York herald., 1922-06-11

.eih Whlcn wa TO be solved by the
Preparations ca omission and by the
tiiied Governments alone. AS soon as
they met the bankers on the COM
E,ittee were unanimous In their opinion
tnat for various reasons they could
not within the limits of their terms
~ reference. understood in their more
restrictive sense. offer any prospect OF
an external loan.
Certain members, however. were OF
he opinion that IL the commission or
ne governments made a more definite
satement than at present exists regard
ng annual payments which they intend
% exact from Germany. such loan
:ouid be favorably considered. Had they
received unanimous invitation to state
what limitations Of these payments were
n their opinion a necessary condition OF
external credit these members would
have been glad to do 30.
The Government TO Decide.
Such limitations would, however.
have been recommended only as con5j-
lions of loan. If a loan were desired.
They would have implied no view as to
Lhe amounts which the commission could
o. SHOULD enforce IL the governments
were content to walt for the annual pay
ments, without mobilizing them before
aand by loan.
THE commission or governments. even
n they had considered the opinion OF the
committee to be q sound one, would
nevertheless have been perfectly free TO
decide that they preferred to continue
to consider from year to year the
capacity of Germany and TO deter
mine the payments accordingly.
I'm other words any figures men,
toned would necessarily have repre-
sented an opinion not as to the probable
maximum capacity OF Germany. but as
to sums which the lending public of the
world, forming it's judgment amid all
the perplexities of the present situation,
would Confidently believe would be well
within Germany's capacity.
Payments even SO cautiously esti-
mated would still be very considerable.
The committee recognizes that the allied
Governments might nevertheless desire.
even at the cost Of foregoing the loan. to
retain full liberty to exact larger annual
sums, which Germanys developing ca
pacity might later render possible. The
Governments would not only have been
at full liberty to take such decision.
but. If taken. it would have been in no
way inconsistent with the technical ao-
vice of the committee.
IF this advice had been given. how
ever. a decision could have been taken
in the light of clearly presented al
ternatives In these circumstances the
committee were left to consider whether
they could usefully continue their
studies in response to the majority In
vitation of the commission.
Thy decided that for the time being
they could not do so, for the follow
ing reasons:
''Q) France is Germany's chief credi-
tor. In any reparations problems her
interests are the most important factor.
The members Of the committee had
hoped that the chief benefit Of any
advice they could have given would
have been derived by France. They
are all extremely anxious that no action
of theirs should injure her interests.
II. therefore, France does not now de-
sire any inquiry into the more general
Conditions necessary for the reestablish-
ment Of Gerrnany's external credit, the
committee do not feel justified in un-
dertaking such inquiry. They are con-
firined In this View by the considera-
ton that in the existing circumstances
they could not have profited by the
assistance of their French colleague.
"(D AS explained below, the commit
tee considers that favorable atmos-
phere Is essential to successful flo-
tations Of a loan. The known diff
ferences of view among the men,
bers OF the commission as to the
limit Of the committees mandate have
for the time being created an atmos-
pnere unfavorable to such an issue. The
bankers on the committee cannot fail
to take into account this fact. being
aware that II they advise as to the
conditions of a loan they incur moral
responsibility to do all In their power
to make the loan successful. u II
Decided to emit Task.
For the above reasons the committee
decided that they must suspend their
work for the present, feeling that they
were thus unable to take advantage of
the majority invitation Of the commits
sion TO extend the scope OF their delib-
erations. The committee considered the
problem presented under the original
mandate as 1t was understood in It's
more restricted sense.
"On the assumption that the present
provisions of the Treaty of Versailles
and the schedule Of payments remain
unchanged Is an external loan possible.
and. II so, under what conditions? The
committee were confronted with the fol-
Loving difficulties:
"(a) 1t was understood that the re-
establishment of the general credit of
Germany is impossible so long As the
lending public feel no assurance that
are at present defined and as they may
be enforced, are within her capacity
or that her will and intention to meet
them will be maintained. SO long as
this Is the position an investor Ia bound
&c be influenced by the possibility that
a collapse of German finance resulting
from present uncertainty may produce
q social upheaval. 1t II, however. DIFF
hruIt TO find securities which under
such conditions would be regarded as a
satisfactory guaranty for lohn. or at
least for any lqSn OF such dimensions
and for such terms as 10 give substan-
tial relief TO the situation.
Even first class security like the
customs. which under stable conditions
would provide a sound guaranty for
8 considerable loan, might fail to retain
sufficient gold value II the economic
rosition OF Germany or her social con-
tiitions were seriously disorganized. Such
possibilities may be remote. but the in
vestor In a long dated note naturally
,ends to envisage the worst. rather than
the probable.
"(B) II was stated that investors In
some of the most important countries,
notably the United States and Great
Britain. would find no real attraction
in loan TO Germany which was not
calculated to promote the permanent
settlement OF me reparations problem.
And 10 ID obvious that oven X loan
could be raised on the basis OF assigned
%s. "a ~. ia -