Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-07-08
EUROPE'S DEBT BURDENS
SEEN APPROACHING CRISIS
Fixing Value of Franc Gives Chance to
Survey Situation in Which U. S.
Has Great Stake.

FRANCE, on Ine OtfeT nand h0ldS 10
the principle that the Dawes plan pay
ments cannot be reduced save as her
debt payments to Britain and the
United States are cut down pari passu.
And to emphasize this purpose. she has
so far refused to ratify either the Brit
ish or American debt settlement, while
she IS meeting the payments on both
regularly, as If they were actually rati-
fed
There are. then, two possibilities
either to maintain the German pay
ments at the existing maximum-that
is. the maximum for next year-or to
reduce the American debt payments
along with the German. But it is a
matter of general European knowledge
that the debt payments of Germany,
the rcparstion sums, must be reduced
soon, while American policy has so far
held rigidly to the principle that the
debt settlements cannot be reduced.
Here Is the deadlock which bids fair
to paralyze final adjustments in Europe.
Going back to the question Of the
national debts. it is manifest that the
British is the greatest. Out of budget
CT rather less than $4,000, 100000 the
British have to pay almost half. around
81 300. 900 000 for debts The French
must pay 100000 900 of a total tax
levy of sl,600.000,000 The German, on
the other hand. gets off for $685. 900 900
annually. Thus the actual burden OF
the defeated German is hardly more
than third that OF the Briton and only
three-quarters that of the Frcnchman,
his two immediate conquerors.
Germans Pay Most Abroad.
But the situation is complicated BY
he fol hot al, -F 81
/ payment is foreign, while only relatively
small fractions of the British and
French go abroad. Thus for Britain
and for France the great question l.
whether the domestic taxpayer bear the
| burden, whether domestic industry car
stand the strain of the excessive taxa
| ton and compete abroad On the other
| hand, both countries have a real bal
| ance in foreign commerce much create:
than their debt payments. so that there
is no problem of transfer.
| Germany, on the other hand, what
with reparations and the excess of i'm
ports over exports. is at least million
| dollars in the red annually, and so far
| has been able to meet the required pay
| ments only by extensive foreign bor-
rowing. And obviously this borrowing
cannot go on Indefinitely.
At the moment Great Britain Is suf-
fering most. because the burden of tax
alton has crippled her industry and she
has not only million unemployed but
acute crises in her great coal. steel and
textile branches. France is suffering
least, because she is not in the same
sense as Britain or Germany concerned
with foreign trade. and. unlike both
countries, is neither overpopulated nor
overinduStrialized. Her problem lies In
the direction of the ultimate ability of
| her people to bear the burden of the
domestic tax load. which Is imposed
upon people in the main agricultural
and without the great fortunes which go
with industrial development
Question Germany Faces.
In the case Of Germany. the burden
of domestic taxation is heavy. but. as
S. Parker Gilbert lately reported. not
beyond German capacity. Here the
question is simply, Can Germany ex-
port enough to meet her requirements
ordinarily and in addition carry the
annual burden OF the reparations pay
ments? And so far all the experience
OF the Dawes plan would seem to indi-
cate that this is impossible If it proves
to be impossible. then automatically the
Dawes plan payments will shrink-and
they may shrink to nothing without
leaving the creditors any remedy. for
Germany Is protected against all pay
ments which might depreSS her own
currency by virtue of the transfer clause
In the Dawes plan provisions.
1t is. then, a profound mistake to be-
lieve that the Sterilization of the French
franc represents the final step in the
restoration of Europe to financial nor
malcy. The whole situation remains
pyramided upon PREPARATIONS. Before
there can be final readjustment Ger
man capacity to pay up to the maxi
mum must be established. the Dawes
plan payments must be re-Scaled to that
sum which 1t is proved Germany can
pay. II any such sum exists. or the
United States must change its debt
policy.
Getting Down TO Facts.
Ten years after the close of the war
Europe Is, then. only Just beginning
10 get down to brass tackS of the finan-
cial situation. Moreover. the years that
lie Immediately ahead are likely to
prove almost as difficult as the stormy
period of the immediate past. This Is
true because lin all countries the ulti-
mate problem Is to provide for the great
mass of the people tolerahle conditions
Of existence. reasonably high standard
OF lving-and this is inextricably tan
gled with the problem of taxation.
And while the dangers of bolshevism
have largely passed in the recent years,
communism remains in all continental
countries real and patent menace and
any return 10 domestic misery would
prove an immediate and incalculable
advantage for those who look to Moscow
and still cherish the dream of . world
revolution TO abolish capitalism.
tCopyright. 1921