Evening star., 1925-10-11
FRENCH DEBT MPASSE
HELD TO CLEAR SITUATION
Showed That Allies Capacity to Pay, Like
Cermany's, Is Limited by What
They Are Willing to Pay.

dHy tHlUS Out d "OfiQ ulSdSleT Is OIL
course untrue. If Frence went
with that OF Germany the whole con-
tinental political as we'll as economic
situation would be upset. Italy and
probably Belgium would be dragged
through something like the same ca
tastrophe. while the effect upon all the
succession and outlying states to the
east can hardly be calculated. We
should suffer materially, both directly
through loss OF our own trade and in
directly through a shrinkage OF
British trade. which would lead to
demand for a debt revision.
Broadly speaking. our own people
have been just as much mistaken In
the matter Of debt as the French in
the matter Of reparations. Nor must
one fail to note that the French on
their side have been quite as stupidity
wrong In the matter Of debts as our
own general public. The two ex-
tremes, our own last red-centers" and
the French advocates of cancellation
have been talking without any regard
to realities from the outset and have
served to excite each other to the gen
eral dislocation OF all sober minds.
Coercion Futile.
The French had to occupy the Ruhr
before they discovered that it is not
possible to coerce a nation into exces-
sive payments. We have had to go
through the recent Washington f1asco
to discover that moral pressure ls
Just as futile as military in enforcing
claims which strike the payee as ex-
ceSsive or beyond his resources. Ihe
value Of reparations and OF debts, the
real value, Is the amount which the
debtor is willing to pay to get the
thing out Of the way. 1t bears no re-
lation to the amounts fixed as due,
either financially or morally.
The British paid us a relatively
high price-many Britons think an
altogether excessive price-to get rio
of a situation which was completely
impossible if they were to get back
to their old position. What they pald
had no relation in reality to what they
borrowed from US, but solely to what
a present settlement was worth 10
them.
The Germans undertook the Dawes
plan, not because they recognized
any moral or material obligation, but
because at a price the liberation OF
the Ruhr and the Rhineland and the
guarantee against new invaSionS was
The most desirable thing for them In
their present state which could De
imagined. They are paying, not
reparations, but what to their m1nd
is form of blackmail to get free
from foreign interference.
Price Of Good Will.
The French put a price upon their
release from American servttude.
There was a sum which they were
willing to pay to recover their eco
nomic, financial and political freedom,
all of which were compromised while
the debt question remained unliqui-
dated. And they did exactly the
same in the case Of Britain. In
neither the American nor the British
case was their first offer final. al
though in both cases they really
made little ultimate advance. But in
all cases Of all debtors the underlying
element has been the value to the
debtor of an escape from the situation
IN which the unliquidated obligation
placed him. Britain wanted the
pound sterling restored to par, Ger
many wanted the Ruhr evacuated.
France wanted access to the Ameri-
in all cases the advantage was only
worth a certain price.
Germans Best Lloyd George.
Seven years ago. on the morrow of
the victory, Lloyd George was telling
the British electorate that he pur-
posed to go to Paris and make the
Germans pay the last penny of the
| costs of the war to Britain. This
| year the British debt is in round
| figures $37. 200, 100000. the annual
| charge $1.750, 900. and the sum Of
| German payments to all her con-
querors was 100000, 900, almost every
| cent of which came from money
| loaned to Germany by her conquerors
| Britain included. Out of this $780,
| 100000 Britain gets less than $50,o00.-
| 900, and she paid us more than $3.50.
| 100000 on account of her debt. More
her allies $4,000 100000. on which she
| United States Fares Better.
| BY contrast. we loaned 10000, 900,
| 900, and next year If the French pay
| mentS are made as provided in the
| final compromise we shall receive
something more than $200,000,0 900.
with Italy still to be heard from. AS
her. we shall receive enough to take
| care of the interest and sinking fund
| requirements of half of what we lent.
| We shall get more than everybody
collects from Germany in reparations.
| and we shall, in all probability. be the
| only nation which collects anything
on war time lendings. Viewed in the
| light of an investment, this is a poor
return. Regarded in the light of a
refund Of moneys ventured in a war
it is surprisingly good. Looking to
the future. my guess IS that we shall
receive less rather than more.
Meantime our people have to learn
the fundamental truths that in inter
national debt settlements the collector
country can get only what the debtor
country is willing to pay. and that the
debtor country is only willing to pay
not the past amount Of borrowing. but
the present value of an escape from
the obligation.
| Copyright. 1881