Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-02


tied with the eternal problem o.
IL reparation have served to con
fuse still more completely
that main issue-whether Germany
can pay any considerable part of thu
bill her enemies hold against her. Ter
years ago these enemies hopefully out.
lined their claims, which were pres
$4,000, 100000. Today the claim has
been cut to about $4,000, 100000. AS
Germany has, in the meantime, paid
upwards of $4,000. 100000, this means
that nearly two-thirds of the original
claim has already been abandoned.
Nevertheless, 1t remains matter OF
profoundest doubt whether any consid-
cradle part of the reduced claim can
be paid. All the Paris debates over
technical details and respective quotas
! represent in the stricteSt sense of the
word excursions into pure speculation
1t is true, of course, that the ability of
Germany to pay, within her own from
tiers, the principal and interest on a
debt OF $8,000,000,000 is beyond ques-
ton. Britain is paying on a national
/ debt of $38 5000 900 000 France on a
debt of upward of $15,000,000, 1000. To
raise the money within the national
boundaries Is only question of taxa
ton.
I But how is the money raised by
domestic taxation to be transferred to
the creditors beyond the frontiers with
out bringing about the swift and COM
plete collapse of German exchange? A
/ nation can only pay its foreign debts
by its exports, by its services and by
its gold, If, as in the case of Germany,
it has no foreign investments. To pay
this foreign debt, then, Germany must
have an annual surplus of exports over
imports of some $500, 900, 900, the an
: nual charge Of the revised debt, less
whatever sums it may borrow abroad.
We Have Been Paying.
So far, under the Dawes plan, Ger
many has had not a surplus of exports
but of imports, generally in excess of
$500,000,000 annually In this situa-
ton she has been obliged to meet her
reparationS payments and her excess
OF imports by foreign borrowings And
she has chiefly borrowed in the United
States. We have actually lent Ger
many most of the money with which
she has paid her enemy creditors, who
nave In turn paid us on account of
their war debts.
1t is true that substantial payments
have been made by Germany in kind
Coal, dyeStuffs and other manufactured
articles have been sent abroad, and this
process can be continued, although it is
plain that these payments in kind &C
tually reduce the sum of German ex-
ports and increase the unfavorable
trade balance. If Germany exports
10000, 900 tons of coal a year to meet
part of the reparations claims of France
Belgium and Italy her coal exports will
not furnish money to balance her neces-
sary purchases Of raw materials and
Ifoodstuffs.
When the experts have finished their
work and gone home, therefore, while
they will have at last fixed a definite
sum for reparationS and set up an intri-
cate machinery for regulating payments.
they will have done nothing to solve
the larger problem-the problem of
whether Germany can actually pay any
considerable portion of her obligations.
Moreover, along with the question of
the capacity to pay goes that of the
will to pay.
1t is manifest that this question of
the will to pay is of utmost Importance.
for IN the main 1t will hereafter rest
with Germany whether she pays or
evadeS. But If Germany is to pay, the
first prerequisite is that she shall so
order her national budget that her i'm
ports will be rigidly reduced and her
exports feverishly increased. If Ger
many Is to meet her obligations she
must submit to long period Of self
denial, she must consent to a very con-
siderable reduction in the standard of
living. Her workingmen must work
longer hours, accept lower wages. The
whole people must live as does an in
d1v1dual who has a huge debt to pay
oh-wholly out Of his earnings.
Means Wartime Hardships.
But how can Germany be compelled
70 subject itself to such a regimen?
How can any government, dependent
upon the votes Of the masses for exist
ence, be expected to impose real and
1ong-continued hardships upon its con-
stituents? If Germany Is to pay her
foreign debt it is almost inevitable
that the whole population subject it
self TO the same sort Of discipline all
belligerent countries endured voluntari-
ly during the war. But what a people
viii do as detail in national self de-
tense it Is hardly likely to do merely to
insure the payment of a debt that 1t
regards as unjust.
Again, the allied countries have
no future means of coercion. The
German government will raise the
necessary sums in German money to
meet separations by domestic taxation.
This money will be paid into the bank
established for the purpose of handling
the separations payments. But for in
ternational usage this money will be
without value save as Germany is
able to pile up a balance of foreign
credits and currencies, either by a
surplus Of exports or by more foreign
borrowing.
And obviously in the matter of
foreign borrowing the limits are fairly
fixed We have lent Germany up
ward of $4,000, 900, 900, but our loans
are drying up. The condition of our
own market has been such that there
has been no temptation to send money
abroad. And the direct consequence of
this cessation of loans at the moment
when the Dawes plan payments have
reached the normal maximum has
been to drain down the gold reserve
in the Reichsbank to the danger point.
Gold has flowed out to meet repara-
tons dues and excess imports costs
and none has flowed in to replace the
losses.
Question Remains Gamble.
Frankly, then, the reparations ques-
ton. after Paris as before, remains a
supreme gamble. Certain experts are
accustomed to point to the fashion in
which the United States following the
Civil War borrowed huge sums abroad
and by reason of the vast development
of the West was able to repay prin-
Scipal and interest; For years Europe
lent us money and invested the inter-
est we paid within our frontiers. OBJ
v:ously 1t is conceivable that in the
next four decades Germany will I'M
dergo the same sort of economic de-
velopment. Actually she did enjoy
such q boom between the Franco
Prussian War and the World War.
But the difference between the
United States of 1865 and Germany
of 1929 is patiently colossal. The peace
treaties stripped Germany of much of
her most valuable agricultural and