Evening star., 1925-01-04
War Debt Equities.

Srist of news there has been revival
OF the propaganda for cancellation, in
whole or in part, of the principal sums
owed us as result Of the loans we
made our associates in the late war.
Propa ganda, Is used here, Is not meant
as term Of reproach or as indicative
OF unworthy motives. Little, If any, of
1t is intended to serve Europe at the
expense of America. The propa.
gandists are chiefly we'll meaning per.
sons whose intentions are better than
their information.
One of their most appealing argu.
ments, and one of the most insidious
because of its appeal. is that the debt
should be scaled down because the
money we loaned our European friends
was used in this country for the pur-
chase of goods at inflated prices. To
paraphrase old Omar, they want to
know If we are going to demand pure
gold for what we lent them dross-
allay d." and they sigh with Omar.
'Oh, the sorry trade
1t is true that the money we loaned
our European friends was largely ex.
pended in this country for goods they
required, and that we sold them these
goods at artificially inflated prices,
the artificial imitation being due to the
war they were waging in Europe, and
in no small measure to the fact that
they bid against each other in their
eagerness to get the goods. They
bought at a level probably 100 per
cent above the prewar level of prices.
Now, if there was not another side
to the picture, this might be a valid
argument for reduction of the debts.
1t would not, of course. call for cut.
ting the debt in two, for no one ex.
poets prices to return to pre.war
levels. 1t might, based on present
price indexes, call for reduction Of
% per cent in the principal sums
Would France, for instance, agree
that with such a reduction il would
be practical for her to fund and even
tually pay her debt, whereas the total
as it now stands. is beyond her ca.
pacity to pay? We will examine the
soundness of that premise after we
have had look at the other side Of
the picture.
Phe other side of the picture has to
do with the money we spent in France
and the other countries with which
We were associated in the war as an
Offset to the money they spent here,
and the prices they charged us as
against the prices we charged them.
1t is said we profiteered at the ex-
Dense Of our friends with whom we
were arrayed in battle. If we did, our
friends not only coppered our game
but went US several better. The case
Of France will serve to illustrate. The
French government borrowed of this
Government about three and a half
billion dollars. and spent the money
largely in this country for goods at
about 100 per cent above pre-war
prices. Our Government did not bor-
row money from the French govern.
ment, but it sent about a billion and
a. half Of American dollars to France
to buy supplies needed by the army
we sent over to help France win the
war, and France sold US these supplies
ar about 800 per cent above pre-war
prices.
Our case against Great Britain is
not so strong, because we had less oc-
casion to purchase supplies from our
chief borrower. But whatever the
British lacked in opportunity they
made up in willingness to sting US.
One of the things we needed in large
quantities, and Of which Britain con-
trolled the supply, was jute. We
bought our jute from the British at
about 500 per cent above pre.war
prices. Another British resource we
had need Of was shipping-to carry
our soldiers overseas and the supplies
and munitions required to make them
effective on the battle front. The Brit.
ish charged us all the traffic would
bear-and 1t bore lot. We paid and in
cash, on a scale about 1 ,0O6 per cent
above the pre.war cost Of such service.
After much negotiation the British
finally agreed to a rate of s125 per
head for our soldiers, and the Olympic,
lOr instance, carried 1U,UUU men eaCh
trip, besides cargo-a mere tri1e OF
$1,250,000, plus freight revenues, for
a one~ay passage.
so, in the matter Of war prof1teer-
ing that is that.
Which enables us to get back to our
mutton, the same being the contention
that II we would scale down the debts
to a basis OF equity our now delin.
quent debtors would be able to under.
take their payment. How much help
would it be to France IL we scaled
down her debt 25 per cent to bring the
price she paid for goods in war time
into Relationship with present com.
modify prices? The British debt was
funded on a basis of II per cent
per annum to apply on principal. One.
half per cent per annum on the
French debt would be about $4,000.
900 per annum. Were the principal
reduced by 25 per cent the annual
charge of Il per cent per annum to
apply on principal would be $13,500,
900. Does the difference between 3d..
SOC, 900 and s1S 1000, 600 a year stand in
the way of funding the French debt?
OF course not, you will say; it is the