Evening star., 1925-01-11


of reparations and the second must
be her claim upon her own allies for
what she lent them, for she was a
lender as we'll as a borrower in the
war period.
But we frankly don't know how
much France is going to get from the
Dawes plan, because we don't know
how much Germany Is going to pay;
we only know that she won't pay,
namely, anything in excess of the
figure fixed as a maximum by the
that figure, s600,00o,o00 annually,
France will get more than half and
then she would be able to discharge
her bill to America and to Great Brit
ain, to repay both her borrowings on
the basis Of the Anglo-American debt
settlement If her debtors pay her
she will also get back not all, but
more than two-thirds of what her
own reconstruction of ruins cost her.
Yet we are not going to know for
five years, at least, whether the
Dawes plan viii work-that is, whether
Germany can and will live up to it.
Thus, France Is not going to know
for the same time how much she is
to get from Germany, although this
will be her best asset to meet her for
eign debts. And in the same sense
France is not going to know, for a
time at least as long, how much, If
she will get upon her loans
to her allies.
French View Presented.
Thus the Frenchman, in effect, says:
Il agree that there can be no ques-
tion of reputation. I agree that
there can be no question even of can
collation.. You agree that l can't pay
anything now, in my present situa-
ton, when, in fact, 1 have to borrow
money abroad to fortify my own ex-
change, which is vulnerable and suf-
fered one severe raid less than a year
agoi Now, beyond this agreement,
what can we profitably do at this
time Just as soon as I know what
my assets are I can consider the
of my liabilities. But If
am made to wait on Germany, by
reason of the Dawes plan, which has
an American name, surely America
must be willing to wait on me-
Well in general terms the Amer
lean sees reason in this, but he also
feels that in some way the debate
Is getting away from him, for he is
not arriving at any settlement of the
issue of payment. He is willing to
give the Frenchman a breathing
spell. since he sees 1t is reasonable
and even inevitable. but at the end
Of that time he wants to know what
to expect.
But it Is just here that the Dawes
plan bedevils the whole situation.
The Dawes plan never fixed the sum
that Germany must pay in any event.
1t never settled upon a minimum
and allowed that if Germany did not
pay that much she would be in
dubitably in willful default and,
liable to coercion. No, it
only said that If at any time any
German payment, big or little, dis
turbed German exchange, it should
cease. How, then, can one now fix
a minimum for France?
Payments in German Coin.
Then the Dawes plan did some
thing else. 1t undertook to have the
creditors of Germany paid in German
money inside of Germany, to have
Germany deposit to the account of
her debtors 50 much money each
year in her own banks. These
creditors had to get that money out
Of Germany without disturbing Ger
man credit or German exchange.
None of the creditors Of Germany is
going to have money delivered in
It's own currency and within its
frontiers, as the British deliver their
payments in New York.
Now, then, what would be the sit
uation if this phase of the Dawes
plan were applied to the American
claims against France and France
were bound to deposit certain num-
ber Of million or billion francs to
our credit in Paris and we were in
vited to get them out without dis
French exchange2 We could
then only be paid in goods, in
French goods, or in French services,
but just how could we get paid? AS
to gold, that would be out of the
question practically, for France has
today less gold than she needs for
her reserve.
Finally, in persuading the German
to accept the Dawes plan, we led him
up to the point gently by offering
him a loan of $200,000,000 to begin
with, enough to pay more than one
year of his obligations, one of the
years of approximate moratorium.
France, then, invoking the principle
Of the Dawes plan might ask for a
loan. p.
May Never Get Maximum.
So, it must be evident that the
Dawes plan does not offer very def
mite way to get our money now or
even later. Indeed, no one can say
that the Dawes plan will ever work
at it's maximum estimate. The Ger
mans say 1t will not. Certain British
economists and bankers are equally
sure. Other economists assert that
the creditor nations will never find
any way profltably to take up the
70 hoir ir
lin, because to take German goods
therefor would be to cripple their
home consumption of home manufac-
lures.
So far the only debt settlement that
has worked has been the Anglo
American, and that has worked for
the simple reason that Great Britain
has still, despite the war, very large
foreign investments, her income from
abroad exceeds her expenditures by
q large amount, perhaps $500, 100000.
mally added to her capital, she is
paying US roughly 90 per cent. No
other nation has anything like that
resource.
In the end one comes to the conclu-
sion that something will be paid US
on our debts by France, and similarly
by Italy and Belgium, who stand in
precisely the same position. But what
is paid may or may not bear any. def
mite relation to what was borrowed.
The underlying basis of payment will
be capacity to pay without disturb
ance to national economy. Whether
France owes a billion or ten Billion,
she will pay only what she can pay,
what she can pay not in theory, but
in practice.
Should BE Friendly Parley.
But how is one to determine this
capacity? That, after all, is the real
step which remains to be taken. All
the fulminations between parliaments
over the debt question do not affect
the main situation. Sometime or
other experts of both nations will
have to sit down to the examination