Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-01-06
SOLUTION OF WAR DEBT
PROBLEM is SUGGESTED
Question of Agreement by U. S. to Float
Huge German Loan in America
Is Raised.

I United States Treasury of the actual
funds collected by the sale. If this
process were possible, then the An1eri-
can contention would prove no real bar
rier to adjustment.
But in practice 1t is not possible to
sell. save over long period of time,
any such colossal bond issue as that
amounting to $4,000 900. 900, and, again,
| in the present state of the world mar
| ket, nowhere save in the United States
| would 1t be possible to sell any large
| part of the securities.
Thus one is thrown back upon the
final situation. What is now foreShad-
owed is that Germany should issue
5000 100000 bonds. that S6,O00.0o0 900
should be f1oated upon the American
market. that the proceeds of such a
sale should be turned into the United
States Treasury and the allied debts
thus liQuidated. When the thing was fin
iShed. the Treasury would be relieved of
its debt problem. the American national
debt would be reduced from $4,000 .000,-
900 to $4,000, 100000, and the Ameri-
can people would hold mortgage upon
German industry, represented by their
newly purchased securities, amounting
to $4,000, 100000.
Host of Questions Raised.
Patiently a whole host of questions is
raised. In the first place there is the
question as to whether the American
people would buy this vast amount of
German securities ct any price suffi-
cient to warrant the experiment. Back
of this lies the question as 10 whether
the Government would approve of such
vast transaction. Today in the gov
ernmental debts the official credit of
Britain. France. Italy and Belgium is
involved for the respective parts of the
total represented by their obligation.
But under the proposed plan only Ger
man commercial credit would be in
volved.
There are other phases to be con-
sidered Eight billion dollars is just
about twice the sum most Germans re-
gard as commensurate with German
capacity. Under the Dawes plan Ger
many is now protected by a clause
which prohibits all payments when they
threaten the stability of German cur
rency, and under the treaty of Ver-
sailles 30 years is the maximum time
during which reparations payments can
endure. Germany thus has certain
cards to use in the coming game.
On the other hand, Germany, in re-
turn for an agreement to evacuate the
Rhineland and the Sarre promptly.
might consent to undertake the pay
total. if, in addition, the financial super
vision of her economic life came to an
end.
Whole Dream Debated.
We are seeing the first act in a new
and interesting drama built upon the
old theme of reparations and debts.
After 10 years the whole reparations
dream has been debated to the point
at which the measure of allied eXpec-
tations is the size of the American
debts. Save for French reconStruc-
ton fund, that is all Europe now ex-
poets reparations to amount to.
But it can't amount to that unless
we are willing to advance the money
to Germany to pay her conquerors, who
will in turn transfer that money to
us to pay debts. We have lent the
money to our wartime allies to aid in
the defeat of Germany. We are now
going to lend the money to Germany
to pay the costs of defeat to her Euro
pean conquerors They, In turn, are
going to hand this money back to US.
Surely nothing could be more dron.
AS to whether Germany can finally
liuuidate a mortgage, amounting as to
our share to $4,000, 100000 that is
another question If it cannot, one
must see that in the process of time
the mortgage we may hold upon Ger
many will mount materially each year.
On the other hand, if Germany can
pay. the vast burden will in due course
of time be abolished. In any event,
If the proposed plan of commercializing
the reparations goes through; we shall
become an enormous stakeholder in
Germany, deeply interested in German
prosperity. In fact, a business and
financial, il not q political, alliance
between the United States and the Ger
man republic would be almost ineVlta-
Bile, and might have very important
consequences in European history IN
| the next half century.
| Copyright. 1927