Evening star. [volume] (Washington, D.C.) 1854-1972, 1924-12-29
FRANCE IS WARNED
BY j. s. DEBT MUST
NOT Be REPUD|ATED
All Other Nations Obligated
to America Included in Of
ficiaI Pronouncement.
ECONOMIC UPSET SEEN
IN CANCELLATION POLICY
Taxes Here Would Rise If War
Loans Are Lost, or Fall If
They Are Paid Off.
ny DAVID LAWRENCE.

III
The United States Government,
Through official spokesmen, today let
o. he known that reputation or can
relation of debts by any country
would be a serious disturbance to the
Economic condition of the world.
Specifically. the comment of the
american Government officials was
directed at France, because of the
5mT-essions given in Paris dispatches
snd in the speeches of the French
minister of finance that payments of
she debts to the United States was
mot being arranged for.
officially France has never said to
ihc American Government that she
would not pay and officially the
Washington Government has never
said or intimated that a reduction or
mcellation of war debts would be
permitted But there has been a
good deal said by France to cause un-
GaSiness in Washington. and today's
discussion of the situation with
newspaper men is the first step open
j. taken to assure the American peo-
pe that the Coolidge administration
does not mean to permit the state
ments of the French to pass by with
out polite and diplomatic dissent.
Take Note of Paris Budget.
Officials took notice of the fact that
the French budget just presented
makes no reference to the war debt
owned to America. Nor did any pre-
vious years budget since the war.
The French have consistently refer
red to the debt to America as a
''politicaI' debt and have raised the
argument that France furnished the
battle-ground and made the greatest
sacrifices of all the allies and hence
should be given special treatment.
Also the French have revived a
contention which they made in vain
TO the Wilson administration, namely
that the war debts should be re-
Earded as war expenses and pooled.
Under such an arrangement the
United States would be asked to pay
a proportionate share of the cost of
the war before April, 1917. This sug-
Festion has in the past been en-
phatiCally rejected and will be dis
approved again whether officially or
unofficially proposed.
The French are also saying that
much of the money they borrowed
was spent In the United States to
which high officials today replied that
about a billion dollars was loaned
to France after the armistice of
November, 1918, and that half billion
was written off because of the fact
that the France furnished the Ameri-
can Army with certain materials and
supplies.
Reaction In Congress-.
Congress being in session, the
French may expect to hear some
pointed remarks from the members
Of the Senate and the House because
the whole subject is definitely related
10 taxation. The money which the
French borrowed amounting to about
three and a half billion dollars came
from the American people who
bought Liberty bonds and now it is
UP TO the Treasury Department in
Washington to raise money to pay
off those bonds if the French do not.
The interest, moreover, must be paid
to Liberty bondholders. APPROX
mately S140.000.000 a year must be
raised to pay that interest. Such an
item is big enough, together with the
$IS,000, 900 estimated surplus, to give
the American people another 25 per
cent reduction in taxes. Apart from
the interest some payments on the
principal are essential. The whole
question affects the taxpayer vitally,
because if France doesn't pay, the
Treasury Department here must pay,
which is only another way of saying
the American people must be taxed
to pay the French debt.
officials are careful to say they eX-
peCt France to pay her debts. that
officially she has never repudiated
them, but they cannot conceal their
anxiety lest American public opinion
become irritated over the turn of
events. And what will happen if 1t
does? What can the American Govern
ment do? Very little of an affirma-
tive character because debts nova
days are neither collected by force
nor by economic reprisals
Credit Effect Cited.
The worst possible effect that can
ISSUE from the international debate
on the French attitude is a harmful
one to the credit of France. The
French are floating loans in the
United States and their securities are
held by many Americans. If credit
IS adversely affected the French franc
wi ] be hurt and the French will see
the error of their way ultima tely,
just as they did when they refused
10 adopt conciliatory attitude
toward the German repara ton prob
icm. Another Dawes plan may have
TO be devised to cure the French sit
nation, but before the acuteness of
It is realized there will be some plain
speaking from the Washington Gov
eminent and perhaps the American
1,anker& interested in French securi-
ties will advise their French friends
of the painful effect the French policy
ae having on American opinion
Slowly but surely the problem of
intcrallied debts as well as allied
debts to America Is becoming the
paramount issue, and until it is dis
posed of even the Dawes plan may
have hard shedding, for France is
treating England much the same as
Fhe is treating the United States
namely, ignoring her war debts.
Copyright, 1921