Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-12
The Debt Problem
By Frank II. Simonds.

aCtua1 SITUATION, lnVOiVliiS lhe ioS'
chance Of French financial safety this
side of the crash. the point at which
the debt problem has finally stuck
would seem ridiculous. France has,
through her representatives, made
definite promise to pay a sum whlcn
averages S10O,000,000 a year, ana we
have accepted the proposal with al
its modalitieS.
The basis Of our action, however,
was affirmed to be the examination
and estimate of the French capacity
to paw. But the French capacity TO
pay patiently depends upon the actuai
and prospective French income from
all sources. Among these sources the
returns from German reparatlons are
certainly a considerable item. France
is entitled TO half, which in theory at
least will amount to $500, 100000 an
nually and in practice has ALREADY
passed $500 100000.
France is bound under the settle
ments with Britain and America. Wherl
these are ratified, to pay annually an
average sum of S162. 100000 for o.
years. II German PREPARATIONS con-
tinue for the same period at an aggre-
gate of around $500, 100000, France
with a So per cent share. Will just
about receive from Germany what she
pays the British and ourselves. mus
a considerable shrinkage from the tne-
oretical maximums would still leave
France with no real case for reduction
of her payments.
The British, approaching the stu,
alton. have agreed. in an exchange OF
letters between Churchill and Call
aux, that in case the German repara'
lions fall off sensibly then the Frencn
may ask for a new review OF the STU
alton, which, Of course, means Iresh
examination of their capacity to pay
This is precisely what the French gov
eminent now seeks to have our o"i
concede. There is no agreement .ia ~
because the German payments fa4l OH
France shall have better terms ufAesss
at that time the French condluon Is
such that without German payments
il is temonstrably less able to pay;
The French position is simple. we
have" they say, borne the larges1
tax in blood Of any allied nation. we
have reconstructed our devastated re-
gion with no help from Germany. we
will not now consent to bear the pui'
den of the debts we contracted VIII
our allies to fight the common enemy
| if the common enemy is aple u
wrangle out of paying US proportloh
ately." , -,
The position has been accepted py
the public, it has captured the pom
ticians. and it appears by common
! cnnsant that the position Of Poincare
| himself would perhaps be fatally com
| promised if he undertook to jam
| through the Mellon Berenger treaty
| without some reservation such as was
| had from the British.
X X X X
Of course. in fact, if Germany de-
| faulted France would ask a reopenlns
| of the debt settlement, and she Woulu
pending this concession, refuse 10 ~
| on paving unless in the meantime hel
| recovery had been so complete tnat
| she obviously could not plead poverty.
No real money is involved, because
what we are asked to grant would pe
| taken in any case. But the French
are unwilling to sign a contract they
do not believe they could fulfill. we
on our part, for similarly strong pc
| litical reasons, are unwilling to gram
| something which in practice we
| should have to grant.
| The British, whose government is
not so completely dominated by tenn
porary political emotions of an unln
| formed and prejudiced public, nave
quite wisely concluded to take that
money they can get while they can
get it and make a show Of concession
in giving away what they would nave
| to give away in any case.
| The evil and danger of the Ameri
can attitude lie in the fact that Poin
care without American financial aid
NAV be unable to save the French
situation and that there may come
| the collapse the whole world or pusl
ness and trade fearS-a collapse Whlch
would have repercussions all over
Europe and would greatly diminish
our sales in many foreign markets
Both our Government and the french
| Poincare and President Cooldge anke
are the captives of aroused puDHC
passion in their respective countries
| We may thus lose money whlch we
might get and the French may escape
having what they have agreed to pay
| or are willing to agree to pay, De
cause of the popular feeling.
One of the determining factors IN
our nosition is the reluctance to JOIN
the question of debts and German
] rena rations. But for the Germans these
are already Joined, since most or Wna'
thew pay will in any event be trans
ferred to the United States ana tnelf
chances of getting any REDUCTION
diminish as we refuse to concede any
reduction of French payments to keep
pace with German.
Thus we are coming again to have
the attitude, so far as Europe sees us
OF permitting the collapse of the Whoie
European financial and economic stu
alton merely because we will not agree
to our own principle, namely, pay
lments based upon the capacity OF the
debtor, once 1t is logically applied &c
the future capacity OF that DEBTOR
And we suffer the more because the
British, who have given the French
substantially the same money terms
and thus can claim equal generosity
have in addition made this concession
At the moment, too, the French feel
ing is accentuated by the fact that we
have steadily insisted that on certain
conditions we were ready to help the
French. The governments which pre-
coded Poincare'S have fulfilled ont
Icondition by reducing military ant
naval expenses and by cutting dowr
the army by a third. Poincare has
followed and increased taxation ant
balanced the budget. Yet our only
possible contribution is withheld be
cause the French refuse to promise tt
pay without regard to their capacity
and irrespective of German payments
AS it stands, if France escapes col
lapse it will be in spite Of us; if sh'
falls, we shall be blamed by all Flu
rope, and in either case our chances
of debt payments will be worse thar
if we now followed Britain's example
and agreed not to try to collect NOR
than we can collect; If, in other words
we stuck to the principle Of capacity
which must include all possible re
sources. reparations as much as any
thing else.
(Copyright. 1920