Evening star., 1925-10-11
BY FRANK II. SIMONDS.
7 IEWED in retrospect it is pos
sible to say OF the failure of
the French debt conference
that, granted no immediate

| Side TO say OF tne 1alluFe OF
| " the French debt conference
| that, granted no immediate
financial crash in France fol-
| lows and assuming that no political
upheaval in Paris results, failure was
| the best possible success, for 1t leaves
| all hands free to deal with the situa-
ton in the future In which one may
| fairly well estimate. many unknown
| factors will be cleared.
| The truth of the matter is that two
| enormous experiments are at the mo-
ment being tried out in the matter Of
! international payments. The first is
! the Mellon Baldwin debt settlement,
! the second Is the Dawes plan. The
| easy assumption that either or both
| of those experiments has already
/ proven the viability of the two adjust
| ments is totally unfounded. Despite
| all that has been said and written
about the British adjustment, all in
| formed observers know that unless
economic conditions in Britain greatly
| improve within the next five years
| the payments envisaged on account Of
! the American debt will not continue
at their present scale.
German Payments Overestimated.
In precisely the same fashion 1t is
| assumed on all sides that, although
| the Dawes plan calls for a minimum
of $600.000,000 annually within the
same five-year period, not only will
| this sum never be reached, but before
the five years are up there will be
, very material reduction in the re-
quirements. Today the sober British
estimates Of the ultimate scale of Ger
man annual payments does not exceed
| $3.50, ,000,0 900 or much less than half of
the sum foreseen in the present agree
| ment.
The British settlement with US was
| made on the assumption that within
a brief span of years, and in part be-
cause of the debt adjustment and
the consequent restoration of the
| pound sterling to par. the British
economic situation would be restored
to prewar prosperity. Given this
prosperity it was reasonable gamble
that Britain could pay US $181 ,O00, 900
annually without serious difficulty.
We have seen, however, that al
though the pound sterling has been
| restored to par, British economic
! health has not been correspondtngly
| restored. On the contrary it is be-
| coming more and more obvious that
the problem of restoration remains
acute, and 1t is at least possible that
full restoration may never take place
| by reason Of the fundamental changes
| without and within Britain which af
feet British trade and industry. In
a word the British debt settlement
| may well turn out to have been made
on false premises and IL this proves
to be the case, 1t will have to be re-
made.
Frances Outlook Dubious.
In the case of France, there is no
human being who has any clear no.
ton of the present or future financial
situation of the country. The un-
derlying difference between France
! and Britain today is that If you
wiped out all the domestic and for
etgn debts of both, the French stu
alton would be very good indeed and
the British would still be exceedingly
bad. This is due to the fact that
France is a going concern. with busi-
| ness to employ all of its labor and
a market for all OF its production.
| while Britain is a country which at
the moment can not sell enough
| abroad and at home to keep its la
Dor employed or meet its current
costs of living.
BY contrast. France has very little
available capital, the war and the
restoration Of the devastated area
have wiped out most of her savings
and foreign investments, while the
British have still relatively large for
eign investments and accumulated
capital. Thus for certain number
of years the British can carry on by
Lying on their capital. while the
French can not continue as they are
without foreign borrowings to sup
ply liquid capital.
During this period the main souce
for France of funds for meeting for
eign obligations must be German repa
rationS, but outside of foreign debts
France has no necessities, for. unlike
Britain, her exports exceed her i'm.
ports, while she draws a relatively
vast sum from tourist trade. But If
German reparations are not forthcom.
ing then the French position is obvi
ously compromised.
French Payments Possible.
The basis of all recent French pol.
icy, then, has been to stipulate that on
) foreign debts France shall not pay
| more than she receives in reparations
from Germany. We and the British
, have refused to concede this principle
J and there has resulted deadlock Yet
, in practice the British have placed
: their estimate of French payments SC
low that there Is reason to believe rep
arations payments will suffice, while
J the flve-year arrangement Mr. Mellon
!. has offered NJ. Caillaux would have
| the same character.
Had France agreed to general set
! tlement, even on the terms NJ. Call
: laux proposed, which represented ar
| average of $91 100000 annually for 6t
4 years, and had the British arrange
$ ment with France, which meant $61
8 100000 annually, also stood, France
r would have been committed to more
than SO years Of foreign payments or
e the basis Of 1852, ,Ooo,o 900. But If in the
D meantime German reparations were
a scaled down either by agreement or III
z operation to a sum below the $500, 900,
n 600 year required to provide $3.50,
/. 100000 for France, then the French
s demand for a revision would hav,
s been inescapable.
I Politics Hampers Issue.
n The value of the Mellon Baldwin set
8 tlement and the Dawes plan lay pre-
n cisely in the fact that it took the Brit
8 ish debt and the German reparation.
d issues out of politics. The great evi
n OF the Washington failure lies in tn,
r certain accentuation Of political agi
tation In a field where tranquility il
most essential.
Five years from now we sha]
doubtless know a great deal NOR
about the transfers Of great sums be
tween nations than we know at tn
moment, and almost as much abou
IS the willingness Of nations to fuIf]
. obligations growing out Of war.tim
l. borrowings or resulting from the los
l. Of q war. Meantime France will, /
J. the compromise offered be accepted
n pay us no more and no less than tn
r sum which her experts and our agree
n was the maximum Of possibility with
Is in that period. The single problem
It recently has been whether the mora
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