Evening star., 1932-10-30
WORLD DEBT REPAYMENT
IS NEARING TERMINATION
German Chancellor ForeshadOws Impos.
sibility of Honoring Obligations of
All Nations, Owing to Tariffs.

collect their debts in the Empire. The
dominions like German can only pay
by goods, which in their case are raw
materials and foodstuffs. Britain can
only collect as she permits these do
minion exports to enter her frontiers
under favorable circumstances. The
dominions are not only going to buy
British" but they are going TO pay
Britain.
Certainly the United States and
France cannot follow the British ex-
ample. Neither the French colonial
empire nor the American offers an ade-
quate market and in the case Of both
France and the United States, their
debtors are in the main foreign. But
before we get to the unpleasant busi-
ness which Papen has foreshadoWed,
we shall have to face the question OF
war debts, which has simply been
obligingly postponed to spare American
feelings during the presidential elec-
ton.
When that is over our debtors on
account of war loans are going to put
the question to us quite simply. They
will say in plain terms, we took your
goods to the value of sll 900 900 600.
We now offer you our goods to similar
amount. We shall be glad to lay them
down at your ports. thus performing the
service of transporting them ana count
ing that also as part OF our pay
ment. Unhappily we have no otner
means Of payment.
In operation this means what Papen
indicated that the creditor nations.
America and Britain in the German
case. America in the matter OF war
debts. must reduce their tariffs to per-
nit foreign goods to come IN. But
those foreign goods will compete with
American. at least at the outset and
until readiustment has taken place.
That means more domestic unemploy-
ment at once.
OF course. our debtors might say.
"If YOU don't take our goods in pay
ment all that is left to US to do is TO
take fewer of yours and thus build up
a balance Of trade which will supply
the necessary exchange" That. IN
theory. would also mean reduction OF
American business. fewer exports ana
greater unemployment. But In prac-
tice the world has so reduced It's for-
eign purchases already that little more
could be accomplished in that dlrec-
ton.
Problem Up to Congress.
When. however. Congress. if its mood
remains unmo6ified since last year. re-
fuses either to cancel the debts or 10
reduce the tariff. then Britain. France
and italy will take the line Papen has
already foreshadcwed They will in
dicate that they have only goods TO Of
fer. Then it will be for Congress 10
devise ways and means to collect the
war debts as the European vlctors tired
for 12 wears to devise ways and means
to collect reparations.
What Congress will in the end have
to do. if it is to follow its own line and
collect war debts is to discover a meth
cd of being paid. That means a way
to get foreign goods into the United
States without affecting the domestic
consumption of national goods. Ana
1t will have to do precisely the same
thing ii it means to help the private
| investors who have loaned their money
abroad. Moreover. it has with unfali-
ing consistency proclaimed the purpose
to do neither of these things.
The simple truth already long appar-
ent to economists and in recent times
| increasingly clear to financiers is that
no one is going to be paid. Preparations.
war debts and private debts are In
practice equally uncollectable because
collection involves domestic unemploy.
ment resulting from Importation OF
I ROOQS. vi O4IAtC0 Oeo0SS
decided to go to war with Japan II
could be paid. Britain and France and
Germany could provide ships, muni-
tons, chemicals, everything but food
| stuffs. which we should not need. And
/ they could accept in payment the notes
which they gave us, under similar cir
! cumstances. Even now. when We are at
peace, We could have payment thus,
| but how could we take it? After such
a war. if We were in financial trouble.
! out debtors could continue to lend us
in the form Of goods as we did them
after the armistice.
But we shall not get to the question
of private debts for quite time yet.
| At the Economic Conference in Lon
/ don, which will be postponed until aft
er March 4 if Hoover is defeated. that
! issue will be raised Meantime, the war
| debt question will also be in suspense,
| in case of a Democratic victory. But
1 it will have to be settled before an eco
nomic conference can get under way.
And Papen has indicated the unpalat-
able truth that in war debts and pri-
vate debts alike the creditor must de-
eide whether to take goods in payment
/ or go without any payment.
(Copyright, 1922