The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-12-07
BY WILLIAM PHILIP SIMMS
ScriDps-Howard Foreign Editor

BY WILLIAM PHILIP SIMMS
scriDps-Howard Foreign Editor
WASHINGTON, Dec. Whether
we like it or not, Europe car not
pay us the twenty-five billion dol
lars in war debt principal and in
terest unless we will take it in goods
and services or the equivalent
thereof.
Suppose you are a small store
keeper. You owe the bank $1,000.
But you only have $500 working
capital and you need that for emer-
gencies, to pay current expenses,
and keep things running smoothly.
So you go to the bank and ex-
plain things. You can't pay the
$1,000 all at once, but, you tell them.
If they will break it up into twelve
installments you'll pay them 500 a
month, with interest.
They agree. 1t looks both simple
and easy. And so it is-provided
you can sell enough, on the aver
age, to net you 500 a month over
and above what it takes to keep your
business a going concern.
On Way to Bankruptcy
If you can't-well it will be just
too bad. If you net only $50 a
month. say. on an average, you'll
have to dig into your operating re-
serves and you'll be on the road to
bankruptcy.
At the end of the first month, you
will have only $3.50 working capital
left. At the end of the second, $500.
At the end of the third, $3.50. And
so on.
With each passing month you will
find yourself a little harder pres ed.
1t will be a little more difficult for
you to do the things you must do If
v-our business is to prosper. You
need new stock, new merchandise.
You must keep up your insurance.
You must pay your clerks. The +e-
livery flivver breaks down and 1t
takes money to fix it.
Pretty soon your reserves are
gone. Yon can't meet your bills
promptly. Your credit suffers.
Creditors press you harder and
harder when they get wind that
maybe you are i%nsolvent.
Then You Go Broke
Net profits naturally fall off. They
no longer amount even to $50 a
month, let alone 500, because of
your increasingly cramped position.
You go broke.
You simply can not go on paying
out more money than your bust
ness nets you without ultimate and
certain disaster.
If the bank had been willing to
accept goods and services from you,
in place of cash. your operating
capital would have been left intact
and you could have managed.
1t is fundamentally the same with
Europe. She yves Uncle Sam, the
banker, $11, OO0, OO0, 900 plus. She has
agreed to repay this during the next
60 years. in annual installmentS av-
eraging 1910, 900 900. And we de-
mand gold.
Not that Much Gold
In all the world, however, there
is only S12,0 O0, 900, 900 available gold.
We and France have two-thirds OF
that. Great Britain, Italy, Belgium,
and all the other nations on earth
have less IMAM $4,000,000,O 900 gold
among them.
That, in effect, is all the working
capital they have to go on. TAKE
that, and their currency, already
hard hit. will 60 the way of the rou-
BILE and the mark. World business
will go to smash.
Europe can spare the goods, how
ever. if we will take them. 1t even
would help European business. But
it's effect on us might not be so good.
Unless very carefully worked out, 1t
would throw more of u own wor!--
ers out of jobs.
But, people + saying Europe
'hired" the money, didn't she? we
could lend her money, why can SIZE
pay us back in money?
She Hired Mules
The answer is. Europe did not
hire" money. She hired" mules,
horses, munitions, wheat, cotton,
bacon, wool, corn, oats, steel, and
things like that. The more than
$1,000, O0O.O 900 which Europe owes
us does not represent borrowed gold,
but borrowed goods.
1t represents credits. American
producers supplied Europe with The
commodities she needed and got
their pay from the United States
treasury through the federal reserve
banks. The money never left the
country.
Europe's debts to us are like your
stores debt to the bank. 1t is the
came story all over again, only on a
scale as big as the world itself.
Next-A S22, 600, 10000 o wisecrack.