Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-01-27
PREPARATIONS EXPERTS
FACE GREAT PROBLEMS
Farley to Shape European History Ma
terially for Next Few Decades,
Observers View.

/
cordingly there has arisen the demand
| that the debt be commercialized: that
| is, taken out of the hands of the
| politicians altogether In practice this
would mean two things The German
railways and forests. owned by the state,
would be bonded, would issue securi-
ties, and these would be sold upon the
world markets. They would actually
amount to something less than $4,000
100000. German government bonds
for the balance of the total, $4,000, 000,-
600 or $6,000,000,000 as the sum fixed
might be, would similarly be sold upon
the world markets. The proceeds
would be turned over to the creditor
governments. Preparations as such
would disappear, and what would re-
main would be transaction between
the holders of German railway and
government bonds and the railways and
government.
But here there arises a grave diff
Guilty The sale of So, 900 000, 900 bonds
upon the markets of the world would
take time, probably at least 10 years,
during which the allied nations will
still be without guarantees. Such flo
tation is practically unthinkable unless
the United States investing public were
prepared to absorb vast share and
provided, also, that the United States
Government were prepared to assent
to such a fiotation. At the present
moment the American bond market is
not favorable and the United States
Government is frankly hostile.
But if the United States will not
absorb the bulk of the German bonds
no immediate liquidation is possible
And the problem of the allied countries
is stated in the fact that all but France
have already pledged themselves to pay
the United States on account of debts
and are eager. for similar definite
pledge. AS for France she must ratify
her debt settlement this year or pay
us $400, 100000 in cash on another ac-
count. And France wants to be sure
of being paid by Germany before she
pledges herself to pay us.
Occupation Political Peril.
These are the bottom facts in the
present problem. The commission
must find some means to insure to
Germany prompt evacuation of her soil
and her finance, for occupation has
become a political peril to European
peace. 1t must also find some way
of guaranteeing to the reparations
creditors of Germany payments which
will enable them all to meet American
obligations and allow France and Bel
GUM to take up the bonds issued to
cover the costs of restoring their
devastated areas.
The key of the situation remains In
French hands. The French will not
retire from German soil save as they
are assured of payments sufficient to
satisfy Great Britain, the United States
~ ft40iT
bonds. As France has restored her
own situation without foreign loans
and needs no foreign money now, no |
financial pressure can be put upon her.
AS she, with her Polish and Czecho-
slovakian allies, holds the military SUI
premacy of the continent, no physical
pressure can be applied to her. More
ever, any attempt by American or
British representatives to persuade
France to make concessions will surely
be countered by a French demand for
a pari passu reduction of her obliga-
tions to us and to the British, con-
sessions totally unattainable in the
American case. Here, after all. is the
chief rock in the channel of the new
commission.
Debts and Reparations.
The United States may have to face
new drive for reduction of allied
debts, if the financial experts hold that
Germany is unable to pay enough to
meet the costs of the ;arious debt set
Elements and of Fren.h reconstruction
as WELL Doubtless we shall hold to the
old assertion that there is no connec-
ton between debts and reparations.
However the negotiations may be de-
scribed officially, in reality they must
amount to finding way to replace a
triangular transaction between Ger
many, the allies and ourselves, by
direct affair between Germany and our
selves, Germany to pay the allied debts
and we to accept the German promises
to pay. And. If the negotiation fails, f,
the responsibility will obviously be put
upon our shoulders, because OF our
debt policy.
In recent years we have made very
considerable commercial loans to Ger
many. The value of these loans Is
obviously conditioned upon the amount
of PREPARATIONS obligations, which con-
stitute a first lien upon all German
resources, while all our claims are thus
no more than second mortgages. Thus,
as the principal foreign creditor of
Germany, we are concerned in having
the reparationS totals as low as possible.
This circumstance is sure to be en-
phasiZed as the discussions proceed.
Thus we may expect on the one hand
to be criticised for refusing to permit
the questions of debts and reparations
to be joined and on the other suspect
ed of seeking to lower reparations to
protect our private loans In Germany.
Copyright, 1920
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