Evening star., 1932-08-14
Retirement of Present 0bli-
cations Would Impress
Rest of World.
PROGRAM Is SUGGESTED
FOR PAYING OFF DEBTS
Conference of Creditors Might Ad-
just Claims Repudiated by Soviet
13 Years Ago.
BY DIR. MAX WINKLER.

NEW YORK, august lo.-AH1OnB Lne
numerous plans submitted to the ad-
ministration designed to solve the pres
ent economic crisis, the suggestion to
adjust the Russian question figures
rather prominently.
tion lies in the immediate recognition
of present-day Russia. Here, they
maintain. is a market of enormous
potentialities, comprising 160,OO0.0O0
consumers of American products. Grant
Russia recognition and the process OF
rehabilitation of the economic and n
nancial structure of the United states
Is complete. Failure to recognize II
will, employing the same process OF
reasoning, postpone recovery nden-
nitely.
1t may be doubted seriously whether
recognition of Russia by the united
| States, or the failure to recognize the
Soviet Republic. has anything to do
| with the prevailing crisis. The Russian
| market Is not closed to the United
States. and recognition, therefore will
| not Immediately open the gates OF the
| foreign Muscovite Empire to permit the
| incessant flow of American goods.
At the outset, the writer should like
to make it clear that he has been. and
continues to be, in complete disagree
ment with the doctrines OF SoVietism.
Regardless of the sincerity and honest
intentions of its leaders, SovietiSm has
not evolved an economic philosophy
which could be emulated to advantage
by the rest of the world, least of all by
the United States.
Debt Reputation Recalled.
Russia can today do all the business
with the United States which even the
| most confirmed optimists expect as
result of recognition. There is only one
| fly in the ointment. Russia lacks the
| wherewithal to do such business.
If America is prepared to do busi-
ness on q credit basis, solution to
| the problem will be found. But. will
America do business on such basis
| with a government which, by virtue
of a decree promulgated some l3 years
ago completely repudiated outstand-
| ing obligations?
To be sure, the majority OF default
| ing governments suspend payments, Dut
| announce at the same time their re-
| gard for the sanctity of obligations.
| Russia, on the other hand, suspends
payments and announces at the same
| time its refusal to recognize them.
! From the standpoint Of the holder OF
these various securities the result Is
| the same. He receives nothing In
| either case.
Is it not possible to effect rehabili-
| tation of Russia in manner similar
| to that which was employed. with a
considerable degree of success, in re-
gard to many European countries after
| the cataclysm? In order to bring this
| about, it seems necessary that Russia
acknowledge in some form, her obl1-
| cations toward the rest of the world.
! In other words, Russia must be pre-
pared to submit her debt problem to
| tribunal, composed of her various
creditor countries, with view to ef-
! fecting an adjustment.
Assume that Russia and her credt-
| tors are prepared to discuss the possl-
| bility of an adjustment of Russia's debt.
| If the problem were to be solved In
! manner somewhat similar to that en-
| ployed by Germany, we should have
| the following picture:
The holders of pre-war debt would
be divided into two categor1es, VIZ,
| old holders and new holders. The old
holders would comprise those who pur-
chased Russian bonds prior to July l.,
1917. and who have continuously re-
tanned them up to the time an agree
| ment would 90 into effect. All others
would constitute new holders.
The total pre-war debt, including
| principal and interest, aggregating
about s6, ,981 ,949, 300, should be revalued
on the basis of 1912 per cent Of their
nominal value. This would give total
| of S872,743 $50. New bonds should be
created to that amount. On these no
interest should be paid during the first
year. During the second year 212 per
cent should be paid, rising by q per
cent for each year until per cent Is
reached, at which rate payments should
! be continued A l per cent cumulative
| sinking fund should begin in the third
year, to be applied to semi-annual
drawings at par :,
These provisions should apply to old
holders. New holders also would re-
| ceive new bonds on the basis OF l212
per cent of their nominal value. How
ever, no interest would be paid and
per cent cumulative sinking fund
would retire the bonds by semi-annual
| drawings at so per cent.
All external war loans have been
| placed in the United States. The total
amount is S12l 000,0 900. OF which S75,-
600 600 represents principal and the
remainder interest. These bonds are
! quoted around 3 per cent. 1t Is not
4
acquired considerable amount oil
these bonds, and there Is no reason
why she should not continue to do so
Through careful handling 1t mil ght be
possible to reduce the amount out
standing in the hands Of the public to
nominal figure.
Could Redeem Bonds.
In that case Russia could, and should
make a grand geste and announce that
she is prepared to redeem the out
standing bonds at 100 cents on the dol
lar. The effects would be most far
reaching, especially since the bonds are
almost entirely in the hands OF Amer
leans, and their response would be IN.
stantaneous. Moreover, satisneo
America, the leading lending country
is the only source for Russian financial
accommodations and would be more
valuable to Russia than the old con-
tinent. 49,.
AS to the advances by the Allies
aggregating about $5,983, ,644,750, II
might be necessary to reduce the
amount bv certain Russian counter
claims. The resultant sum might ther
be settled on the basis on which certain