Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-02
WAR DEBT ISSUE RESTS
WITH GERMAN WORKMEN
Years of Self-Denial and Overwork
~ Would Be Necessary to Pay
@~5 Obligations in Goods.

must depend on the outside world for
| its foodstuffS and most of its raw ma
terials. 1t has a magnificent industrial
plant and its people have genius for
organization and production. But 1t
faces severe competition from Britain,
the United States and, to lesser de-
gree, France and Belgium.
Great Britain in similar circumstances
is able to meet the vast surplus Of i'm
ports over exports by the proceeds of its
foreign investments and services, which
leave 1t favorable balance of upward
of $1,000,000,000 annually. France,
which exports almost as much as 1t i'm
ports, has a net surplus annually OF
over $3.50, 100000, drawn chiefly from
the vast tourist expenditures within
French frontiers. But Germany has no
foreign investments and small tourist
trade. If you look at Germany as a
business, it has been lin the red" every
year since the war, not merely because
of reparationS payments, but even more
because 1t has had to buy more than it
could SELL
All of this was foreseen in the Dawes
plan, which provided that all repara-
tons payments should be suspended au-
tomatically whenever they threatened
to bring German exchange below par.
This famous transfer clause DR.. Schacht
has preserved for all future payments,
save about one quarter. Actually Ger
many undertakes to pay uncondition-
ally, judging by preliminary figures, no
more than $120,000,000 annually. But
this represents the capital value o. lit
tie more than $4,000 100000. For the
rest, she agrees to pay only as she can;
that is. only as payments can be made
without bringing her money below par.
Must Pay in Kind.
But this $120,000,00 which with GER
tain additions may reach almost $780,
100000, is actually no more than what
Germany can safely calculate to pay in
kind, largely in COAL potash and dye
stuffs. Thus, in fact, the new settle
ment of reparationS amounts to no more
than a fixation of the total German OBJ
legation at $4,000, 600, 000-instead of
$33, 900 ,000, 000-one- quarter guaranteed
Internationally, quarters no more
than pure gamble. If Germany comes
back" strong and promptly, her pay
mentS are assured, but If it takes gen.
Grafton for her to get back to point
where her income largely exceeds her
expenditure, it is clear that she will not
pay, because she cannot.
Moreover, for the people of the
United States it is at least worth noting
that precisely the amount that repre-
SentS the great gamble in the German
case is the amount that Germany's
creditors have marked down to meet
their own debts to the United States.
The Paris meeting of experts has pro-
vided the machinery and the method
by which Germany shall pay the allied
debts to the United States, but no one
knows or can know for a long time
whether Germany can pay or not. If
she can, all the old bitterness between
the United States and our wartime as
sociates will tend to disappear. But If
she cannot pay, her failure will newt
ably lead to pressure by all these war
time associates for new adjustment Of
debts.
The experts have fixed the method
by which Germany will pay If she can
pay, the politicians are naturally at
tempting to give this settlement the APP
pearance of a general liquidation, but,
in fact, while the reparations problem
has been solved again, the latest politi-
cal solution waits upon the disclosure
Of the economic realities. Germany's
creditors have agreed that she shall
not pay three-quarters of what they
once set the bill at, but as to the re-
naming quarter the old riddle remains
(Copyright, ls2s)