Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-26
BACKGROUND OF EVENTS
BY PAUL Y. COLLINS.

Of the country out of employment and
bringing ruin upon its own manufac-
lures and all kinds of business, the
problem before the Young committee is
to do the miracle Of avoiding both ca
tastrophes, yet Of carrying on the COL
lection of Germany's international rep
! arations debt
1t was recognized that out Of Ger
many could not be extracted any
greater sum annually than the balance
OF her exports over her imports with
out. encroaching on her capital to a de-
moralizinE degree. It is the same case
as that which is faced by a man in his
| own budget-he cannot spend more
than his current income without en-
croaching on his capital. So the
amount to require of Germany is the
net balance of exports over imports
Besides. it is a great problem how to
purchase foreign currency sufficient to
make the transfer of reichsmarks to
the various creditors.
1t is impossible to enhance German
exports for two reasons: First, protec-
| tive tariffs Of foreign countries in the
interest of their own laborers and en-
/ terprises and second. most of the Ger
man export goods are highly specialized
and no adjustment of prices in compe-
tition would greatly augment demand.
| Hence the solution of the crisis comes
! only through the creation in the re-
spective creditor nations of new enter
| prises which will be created out of the
German reparations payments. without
running into competition with any eX-
! iSting native interests.
! Several such assisted schemes" have
been devised and recommended in re-
! port of subcommittee of the Young
committee. This subcommittee is head
| ed by Sir Josiah Stamp of England.
! who was member of the Dawes COM
mittee as we'll as of the present Young
committee of experts
| The financing of these assisted
schemes" will be considered and con-
! trolled by the B. I. S.. much as prl-
vate firm is financed by loans from the
bank carrying its account.
x *
! Already certain assisted schemes
| have been set going under the Dawes
plan. Hence the stamp report Is not
too radically new in its recommended
| lions. But the Dawes agent general,
| with his Dawes plan committee of ed
visers, is too restricted for adequate
functioning in a variety of enterprises
involving millions Of dollars in world
wide projects.
For example, the agent generals re-
port of July /, 1929, cites canalization
work at MoSelle, l1arbor work at st.
NaZa1re and Marseille and boring and
equipping coal mine in, Lorraine, with
German payments totaling 20o0000 900
reichmarks to the credit of the &C
count of France alone.
There are other projects which re-
uuire private investments, and to in
duce such France must agree to make
government claims of interest second
ary to the profits of private capital: in
short, the government assistance must
be subsidy in fact and the govern
n1ent must wait q long period before
hoping to recover its own investment.
Hence, counting the present worth" of
the reparationS credit which the gov
eminent invests. the more it takes Of
that the more the creditor government
will lose.
One very important enterprise in the
projects of assisted schemes" is that
of building railroad for France across
the Sahara Desert by means of German
labor and reparations finance. This
would be of incalculable benefit in
opening up vast regions in Central
Africa for the growing of fruits and
vegetables, assured of an accessible
European market by direct railroad con-
rections with the Mediterranean coast.
All these assisted schemes" must be
given expert consideration by the Bank
of International Settlements.
In aOultlOn. the Is. j. >. experts Will
be given authority to grant rertain
postponements of payments by Ger
many, absolutely independent of rolit-
ical control and based wholly upon a
study of economic conditions. and will
otherwise exercise functions similar to
those of ordinary banks in relation to
their depositors.
What is said to be the key to the
whole policy Is in the following para
graph of the Young reparation plan to
be finally passed on next week and, as
hoped. to be ratified by the nations be-
fore November:
Moreover, in so far as the task of
transferring the payments into foreign
currencies involved. besides a restric-
ton of imports, an extension of the
German export trade. we envisaged
the possibility of a financial institu-
ton that should be prepared to prof.
mote, particularly In undeveloped coun-
tries. projects which might otherwise
not be attempted through the ordinary
existing channels
(copyrisht ls20, by Paul v. Collins.)