Evening star., 1925-11-17
Common Sense Triumphant
In Italian Debt Settlement

nent to pay US, il is plain that these
payments, like all others, including
the British, and, for that matter, the
German, must depend in the long run
on very great change in the Euro
pean situation and upon a very great
rise in European prosperity. No mat
ter what the face value Of our debt
claims as now fixed by treaty, they
can in the nature Of things represent
no more than claims to share in fu-
ture prosperity. If Europe improves
our payments will certainly be as
sured, but if present conditions con-
tinue, which is fortunately unlikely,
not even Britain will be able to con-
tinue payments to US indefinitely.
In this circumstance lies the single
great danger incident to the debts.
We are put in the position Of the
creditor, and precisely as Europe's
situation is good or bad our popularity
and our position in Europe will be
comfortable or disag greeable. For it
goes without saying that if the hard
ships Of the war and postwar years
continue the tribute to America will
seem intolerable, the more 80 because
American prosperity already contrasts
sharply with European hardship and
in cases even misery.
Will Blame L. 8.
Europe is bound to keep in mind
the facts that the European nations
are paying Britain on account of debts
incurred during the war, because
Britain is paying US, and only to the
amount Britain pays us. In the same
fashion German reparation. while paid
to all her cOnquerors, will not, IN all
probability, even amount to enough to
meet the aggregate obligations Of ths
nations to the United States.
Thus precisely as the British gov
ernment in the Balfour note informed
France and Italy that they would have
10 pay Britain because America in-
sisted upon British payments, France
Italy and Britain will tell Germany
that reparations represent not Ger.
man payments to them, but German
contributions to their American pay.
ments. Interallied debts and repara.
tions could be automatically wiped
out if 1t were not for the American
debts, and as a consequence we shall
be held responsible for both.
This situation might easily prove
the basis for common action of an
the European situation made the pay
ments difficult: thus the existence OF
the debts must have very real po-
litical significance in our relations
with Europe for many years, as they
are bound to diminish our rather
slight remaining popularity for sim-
liar period.
French Crisis Menace.
Meantime the settlement of the Ital.
ian debt must lead to a renewal OF
speculation as to whether the French
will make a new offer. Nothing in
French comment suggests that France
is yet ready to go beyond the offer
which was rejected in Washington.
Moreover, there is a growing feeling
in France that the additional loans
which might be secured here after
settlement might prove curse rather
than a blessing. since they might
postpone the obvious necessity of a
complete liquidation.
Fundamentally, of course, the diff
culties of France are different from
those of Italy, for France is to all in
tents and purposes a Self-suffictng
country, capable of feeding herself and
of producing a surplus in excess Of
her needs for foreign purchases. II
France went through bankruptcy. as
Germany did two years ago, while
there would be much incidental suf-
fering, France would emerge speedily
and the basis of her prosperity would
not be disturbed.
But If France is compelled to go
through bankruptcy, the advantages
incident TO fund1ng foreign deDtS VIII
disappear, for it is only to get loans
to avoid bankruptcy that France has
proposed British and American set
Elements Moreover, il bankruptcy
comes. reputation of foreign govern
mental debts will be just as inevitable
as reputation of domestic govern
mental obligations. Thus a crash in
France almost inevitably means the
elimination of the French debt as an
American asset. That is why rejoic-
ing over French difficulties in certain
quarters now is as shortsighted as it is
illtempered. France may suffer, but
If the suffering goes beyond a certain
point we shall lose our claims.
(CopNriEht. Ig2ll