Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-09-05
LETTER Of BORAH
MAY FORCE PARIS
Senator Seen Trying to
Compel France to Take
Stand on Debts.
BY DAVID LAWRENCE.

With characteristic indifference to
the niceties Of diplomacy. Senator
Borah of Idaho, chairman of the Sen
ate foreign relations committee. has
stirred up the slumbering situation
which has developed over the pay
ment by France of her war debt to
the United States.
BY demanding that the State De-
partment tell private bankers that
the United States Government does not
favor the flotation of even a "conver-
sion" loan, Mr.. Borah not only has
produced q new international situation
which will provoke much discussion
in the capitals of Europe, but he has
also revived the question of congress
sional influence in controlling foreign
credits.
Iniects New Angle.
For several months Premier Poin-
care has been silent about his inten-
tons with respect to the Mellon
Berenger agreement, and it has been
assumed recently that France intended
to pay such sums as she pleased from
year to year without feeling committed
to the specific schedules negotiated
last year. Whether this is wise policy
grows apparent to the American peo-
pie that the French capacity to pay is
being improved yearly. is a matter
that is not quite clear to officials here.
For while the Mellon erenger agree
ment was negotiated at time when
France was hard pressed, it was not
ratified either by the French Parlia-
ment or the American Congress, and
there is nothing to prevent the
United States from revising the agree
ment upward instead Of downward as
the French hope.
But Senator Borah has injected
new angle into the situation. He Is
asking the Department of State in
effect to ascertain the intentions OF
France with respect to her war debts,
and he is limiting at congressional ac-
ton if the State Department does not
object to the forthcoming loan. For
some time New York bankers have
been FESTIVE under the annoying proc
ess whereby the State Department has
asked that every foreign loan to be
floated in the United States should
first be submitted to the Federal Gov
eminent to determine whether here
is any objection in international policy
which would warrant the Withholding
officials have always said that such
supervision of the loan problem as
has been exercised was merely nee
essary step to prevent even more dras-
tic action by Congress itself.
Commission May Rule.
If the State Department, for in
stance, should ignore Mr.. Borahs de-
mand, it would not be surprising to
see him ask for legislation at the next
session of Congress prohibiting prl-
vate bankers from lending money to
foreign countries except with the ap"
prevail of commission set up by Con-
gress and not responsible to the Exec
utive. This plan has been discussed
from time to time on the theory that
Congress alone can regulate commerce
between nations and that credits are
an essential part of such foreign COM
merce. There has been some discus
sion as to the constitutionalitY OF
law prohibiting foreign loans, but the
imposition of a tax or the application
of the tariff principle has been sug-
gested as one means OF overcoming
constitutional barriers.
American bankers, on the other
hand. have resented interference by
the Government in the normal proc
6SSeS VI eAlcHuiilS SACuAt0 anu -. -.
that loans not fioated here will be
fioated elsewhere, so that the net eff
feet of American policy would be to
deprive American investors of their
opportunity to buy good securities and
American bankers of their chance to
earn legitimate commissions.
Reopening OF Question.
1t so happens. however, that the
Department of State, while anxious
to approve the proposed conversion
loan of France, cannot publicly, at
least, appear to disregard Senator
Borah's warning, and it would not
be surprising if the Borah letter fur
nished the vehicle for the reopening
| of the French debt question, so that
| the American people would have a