Evening star., 1925-08-08
u. S. NOW INSISTS
LOANS TO NATIONS
IGNORING DEBT END
DiIatory Tactics Bring Re-
quest to Bankers to With
hold Advances.
DRASTIC ACTION TAKEN
WHEN DIPLOMACY FAILS
Administration Forced to Use
Pressure as Obligations Remain
Unacknowledged.
BY DAVID LAWRENCE.

SWAMPSCOTT, Mass, August g.
Americas effort to obtain a settlement
of war debts has reached such an i'm
| portant stage that what has hitherto
been vague appeal to New York
bankers to cease extending credits to
European governments now has be-
come definite and unmistakable re-
| quest.
| The American Government has not
! enjoyed it's role of creditor during the
| last eight years since the armistice
but the tendency In some countries to
postpone even a formal recognition Of
/ the existence of the war debt, together
with other signs of indifference, has
made it necessary to take a decided
stand and exercise a leverage which
would be felt abroad more than the
| polite interchanges of official diplo-
macy
1t was under the Harding Hughes
administration that a circular note was
| sent to all international bankers in
America to refrain from extending
| credits which in any way were TO be
| used for armament or other unproduc-
] tive purposes. Bankers were asked to
keep the Department of State ADVISED.
In almost every instance since, now
| ever, the department has not inter
| posed objection. In most cases the
departments advice and opinion was
| not asked until the negotiations were
| we'll under way, and frequently, it is
said, the Government did not feel that
1t should interfere in business trans
actions that were almost consum-
mated.
! FrOwned on Loan.
! But lately bankers who have con.
| suited the Department of State have
! been told plainly about the wishes of
| the American Government, and in one
| case banking firm was asked not to
make any further loans 10 a small
country with which the United States
was having difficulties in securing
/ settlement.
! The insistence of the Washington
authorities left no doubt in the minds
of bankers concerned that the policy
/ of the United States Government
henceforth is to exercise energetical-
ly the influence 1t can command in
! stopping loans to certain countries
which may not make a debt settle
/ ment.
| President Coolidge and Secretary
! Kellogg have been loath to use this
weapon. but have been forced into IL
| by the dilatory tactics by some of the
| debtors, and even now there is no
! disposition to make any public state
ment about it or to say anything more
| than can be read between the lines
| of the circular letter addressed to
| bankers three years ago by Secretary
! Hughes. The repeated reference in
recent weeks, however, to that letter,
/ coupled with informal comment as to
the Importance Of close cooperation
between bankers and the Department
! of State is significant enough, and 1t
is expected will have the desired ef-
! feet.
Hope for Settlement.
With the Belgian commission now
! in Washington and a French commits
| sion coming in the Autumn, definite
steps will be taken to obtain from
both governments proposals which
can be submitted to Congress in De-
! cember. William Phillips, the Ameri-
| can Ambassador to Belgium, as well
as Myron T. Herrick, the American
Amba ssador to France, are both in
/ this country as advisers to the Ameri-
can Debt Funding Commission. The
| plan is to persuade Belgium and then
France to make an offer that can be
used as basis for a settlement. and
| if France and Belgium reach that
stage in their negotiations with the
United States the hope is held that
Italy and other countries will fall in
line.
1t will be noted that the French
government is discussing at present
settlement with Great Britain, as
the latter has insisted that the
French should begin payment to Lon
don simultaneously with any pay
ment to Washington. There is other
reason to believe that the French gov
ernment is in earnest in it's present
negotiations and out of them will
come a proposal of value and not
another indefinite postponement. The
uusual arguments are expected to be
heard about the necessity for reduc-
ing the debt, but thus far there is
not the slightest indication the Amer
lean Debt Funding Commission will
recede at all on the principal.
Leniency in terms will be confined to
a cancellation of interest charges for
the eight years that have elapsed
since the armistice and possibly for
another two years. Also a lower rate
of interest than was granted Great
Britain is expected to be given. But
the amount actually borrowed will
have to be paid by the allies. That
is the outlook at the moment.
copyright. 1880