Evening star., 1922-03-06
i. s. THINKS EUROPE
MUST SPEND LOANS
0NLYPR0DUCT|VE[Y
Administration to Try to
Keep American Money
From Being Squandered.
BY DAVID LAWRENCE.


The United States government is
taking steps to prevent American
money from being used wastefuIly in
Europe and to compel foreign peoples
who seek loans here to promise to use
capital for reproductive purposes
only.
The full significance of what the
American government insists is not a
political but an economic defensive
measure is just becoming apparent.
With the failure of European coun-
tries to balance their budgets because
they are spending too much money
for the maintenance of armies, there
has developed tendency on the part
OF municipalities as well as central
governments abroad to finance them
selves loosely on the expectation that
they can always make UP their deficits
by borrowing through American
banking concerns.
This process, however, will be
abruptly halted by the United States
government through the use of its
moral influence and it's power of pub
licity. The views of the administra-
tfon are summed up by Herbert Hoov-
ef as follows:
America is today the remaining
great reservoir of surplus capital,
and we must remain strong and con-
serve the rightful use of this capital
II the world is to recover. We will
need much of it for the upbuildine
of our homes and our public utili-
ties, stagnated today through in
equalities in readjustment between
Industries. But our surplus even then
Is greater than our needs. but it
fcv z Il
ed in wasteful expenditures abroad.
Destruction of Capital
"All loans to foreign nations which
are not employed in reproductive
work are a destruction of the capi-
tai. 1t is vital that our bankers and
Investors should scrutinize the loans
to which they are asked to subscribe
that they may make sure that they
are to be employed for reproductive
purposes or the refunding of out
standing obligations.
The furnishing of raw materials. the
construction Of transportation facili-
ties, public utilities, factories and
work throughout the world is a use
for American capital that blesses
both the borrower and the lender.
world and its consuming power
adds primarily to world wellbeing,
but it also adds to the demand for our
own labor. the products of our own
farmers and the services of our own
merchants.
But loans that are dissipated in
military expenditure or in Unbalanced
budgets in the bolstering up of in
flated currencieS are a double loss to
the world. They are not only loss
in that they add nothing to the in
creased productivity to the consum-
ing power of the world, but they are
a loss in that they entail the post
ponement of those measures which
are vital for the economic rehabilita-
tion of the world"
Failure to Curb Armies.
This viewpoint, on which President
Harding and his cabinet are in unani-
nous agreement, is in reality sequel
to the failure of the Washington arms
conference to do anything on land
armament. 1t is protested that the
move is made in defense of Americas
economic situation. That is true. but
the whole economic problem in Eu-
rope is so interrelated to the ques-
ton of expenditures for large stand
ing armies that the United States is
taking it's own protective measures
and precautions, so that American
money will not assist imitation, but
will tend to reduce its scope.
The Department of State is the
agency through which the admins
tration hopes from time to time to
function on this question. Just the
fContinued on Page 2 CoIunnn 2l