Evening star., 1932-11-29

SENATOR Pl
erations have just discussed there is
nothing but less to US In these 6ebt
settlements as they now stand.
Silent on Burden on U. S.
These arguments are always silent on
the burden of these modification pro-
posals on our people. Germany is to 60
free and pass her burden to the allies
They delay not at all in trying to pass
the burden to our Government, and our
Government necessarily passed them on
to the American citizen-and that is the
end of passing He has no place to pass
except to the sweat of his brow. The
accumulated cost to our people Of the
part of these debts which we have
already forgiven amounts to nearly
$4,000, 100000.
1t Is now running at the rate of $780,
100000 every year. In moratorium
year the cost rises to about $500, 1000, 600.
That is more than the cost of our Army
or our Navy and nearly as much as the
whole pre-war cost of our Government.
1t is frequently said that We have
already been paid substantial amounts
oAA IOtAi ~ hiSipdl dLlN 1ltCICoO. luo 10
very misleading Accumulated interest
Of approximately $1,700,0010 900 was not
paid at all. but was funded, and it is
the literal fact that the total of all pay
ments since incurment of these debts
is not as much as all the interest since
incurment. There is, therefore, real
question whether it is proper to say that
there has been any payment on princi-
pal at all. 1t is also fact that about
two-thirds of these payments were made
not in dollars but in Liberty bonds pur-
chased at very low figures, but now ac-
counted as payments in dollars at par.
It is true that Germany has paid
these countries in reparations consider
ably more than they have paid us on
the debt. In other words, they really
have made no payments whatever out
OF their own domestic economy, but it
is strange that the fact that Germany
no longer pays should be advanced as
an argument for modification. The
debtor countries ought at least to be
willing to make for the future some
sacrifice in return for benefits received.
Records Disprove Assertion.
The assertion is sometimes made that
the reparations were deliberately de-
signed to take care of allied payments
to US, and that, since this reliance has
failed, we should forgive. The records
of the Peace Conference prove this
assertion to be in error. That project
was discussed and emphatically rejected
on Woodrow wilson's statement that it
would be violation of what we had led
our enemies to believe In the armistice
agreement.
There is also much talk of capacity
to pay" but what 1t meant is capacity
to pay the United States" They do
not seem to question their capacity to
pay other creditors. For example, Great
Britain owes us a little more than
$4,000, 900, 900. but her total debt is
$35 ,000, 100000. Why should all her
relief come from the taxpayers of the
United States? How about the bond
holders of England?
When these debts were funded we
had some experience with the doctrine
OF capacity to pay" We tried to dis
criminate between the capacity of Eng
land and France. Within a few years
the object of our especial forbearance,
although our debtor by billions and then
enjoying our moratorium, was busily
engaged in assaulting the American
dollar from the vantage point of tre-
mendous stock of gold and an economic
condition at least equal to our own.
England, on the contrary, was beginning
to feel her present stringency. Yet
France is here again with the capacity
to pay" argument, notwithstanding that
she has more than a quarter of the
worlds gold in her vaults.
Why should we attempt at the very
depth of the worlds greatest depression
to say what the capacity of these ma
tions to pay may be throughout all the
years of the future?
Hits Private Business.
If debtor says, Times are hard and
cannot pay" no private creditor ever
offers to reform the debt. He may be
willing to aid the debtor by temporary
concessions to bridge over hard times,
but he does not cancel the note Be-
fore he is willing to do even that much
he demands that all other creditors do
the same. The allied debt to us is only
fraction of the debt to other creditors,
and 1t Is certainly novel proposal to
ask our taxpayers alone to assume the
burden. Even if this were the eQuiva-
lent Of a receivership and a reorganiza-
ton of the whole debt structure, all
other creditors would be asked to scale
down ratably.
1t Is a curious thing that in none of
these notes asking poStponement and
immediate modification is there any
positive showing of inability to pay
Except for England, no installment now
due from these countries is so large that
there Is any argument that payment
would involve embarrassment. 1t is
really remarkable that none Of these
countries accompany their request with
offers to pay at least what they can
and none makes any reasonable agru-
| ment supporting its request for COM
plete postponement during discussion
1t is urged that on account of the low
price of commodities the burden of the
debts is increased SO per cent, but M
one ever seems to remember that if VIZ
put this burden on American shoulders
| they also will have to work half again
as long or produce half again as many
| goods to pay the same amount.
Fund Sources Shown.
1t is not strictly true that the credits
to support all these payments mus
! come from sales of commodities at cur
rent low prices. Some come from ocear
| freight, insurance rates, fees for va
riety of services, and the whole Ameri-
| can tourist expenditures abroad. 1t i
also enormously said that except fol
gold payments, a debtor nation mus
pay its debts only in goods which tht
creditor must receive If the debt is to bt
discharged. Indeed, exports from debt.
ors to creditors is put forward as tht
ultimate criterion of capacity to pay
That Is simply not a correct statement
of the governing economic law. I
would be true as between two nations
only If there were no other nations or
the earth. France could pay us if shs
did not export to us / cents worth o.
product. If she sold to Brazil, for ex.
ample, enough goods to create credi
there of any amount she owed us, WI
could then take our payment in coffet
from Brazil in a three-cornered trade.
It Is also said that tariffs and othel
trade restrictions and barriers through.