Evening star., 1932-12-11
BY WILLIAM HARD.

The most impressive part Va HAe'i
dent Hoover's message to the Congress
was that In which he said that the
welfare Of the United States depended
upon the progress made in the develop
ment of worldwide measures Tor the
restoration Of worldwide prosperity
This remark of his, which was coucneo
| in the most emphatic language opserv-
able anywhere in his speech. was uni
yersally in Washington interpreted 70
mean, among other things, that the
President was determined to take what
ever steps might be possible before
March 4 to arrive at progress In the
solution of the problems of the inter-
governmental debts.
In some quarters in Washington 1t Is
beginning to be suspected that inter-
governmental debts are related to eco
nomic philosophy and in economic oes-
tiny to all the other sorts OF DEBTS Win
which the world is today burdened. II
is beginning to be suspected that FRANK
lin Delano Roosevelt will go down into
history as the American President under
whom a colossal process of debt liqui-
dation was definitely accomplished.
On this point Washington now re-
members lWO VI LllC lllOoN oA 6SaAN ~N-S-
cisms leyeled against President Hoover
by Gov. Roosevelt during the campaign
! One Of these criticisms had to do with
railroads.
The Governor said that he approved
in general. of the loans made by the
United States Reconstruction Finance
CORPORATION to the railroads OF the
country. He added, however, that he
did not think that these loans should
have been made Internationally. They
should have been made, he thought, with
| the proviso that the railroads, as class,
| whenever and wherever possible. should
endeavor to reduce the volume OF tnelr
| funded debt.
In other words, in Mr.. Roosevelt's
view, the interest bearing bonds which
now lie upon our railroad system are
in volume excessive. The interest which
the railroads must annually pay upon
those bonds is, In Mr.. Roosevelts opin-
ion, an intolerable burden upon them
The yearly fixed charges" of our rail-
road transportation industry, in the be-
lief of our next administration, are un-
duly swollen. They must be shrunk. It
will be the policy Of our next admins
tration to shrink them. Or, to put 1t
in other words, 1t will be the policy OF
our next administration that the hold
ers of American railroad bonds, as q
| class, shall take a loss and shall forfeit
certain percentage of the present
value of their investment in order to
salvage the residue Of 1t.
| + 4 X
Similarly Mr.. Roosevelt, during the
last campaign, spoke frequently Of the
desirability. and, indeed, Of the neces-
sity of shrinking the volume Of the
mortgage debt now resting upon the
| agricultural industry of the country. In
practice there Is no conceivable expedl-
| ent whereby this shrinkage can be
done without the suffering Of a loss
somewhere Part Of the loss may be
endured by the present holders Of farm
mortgages. Part Of it may be absorbed
by the Federal Government. In any
| case a loss somewhere by somebody is
| inevitable II the present face value OF
| the returns from the farm mortgages
Of the United States is to be reduced.
Thus, Mr.. Roosevelt in respect Of two
great categories of debt, Is already a
| prophet and preacher OF liquidation
| process. President Hoover has en-
deavored, on the whole, to keep the
debt structure intact He has even
added to it. President-elect Roosevelt
Is committed in important particulars
| W Cdll yiLk NNbb oSA dksAAS oAo&@
a shrinking process to lower altitude
and to q lighter weight.
Meanwhile that process goes forward
remorselessly and irresistibly in debt
categories not conspicuously mentioned
by Mr.. Roosevelt during the campaign.
Holders of urban mortgages on resi-
Dental property and on industrial and
commercial property have already suf-
! fered losses running into hundreds of
millions, If not ultimately billions, of
! dollars 1t is unthinkable that the
liquidation process should involve only
certain elements in economic society
and not others. Once started, the liqui-
dation process is a universal one. 1t
has been in part obstructed and de-
layed 1t is now beginning to overlap
the distractions and to flow forward
This is especially noticeable In the in
ternational field.
ously gone into default or semi-default
The reason Is the very same reason
that is urged by President-elect Roose-
welt for readiustment Of the mortgage
Indebtedness OF our farmers. Our farm
ers, he says. cannot pay interest at the
/ 1929 level out Of income from prices at
the 1882 level. Prices have gone down
Therefore the volume of debt must GO
down. II that is so in the United
States it is equally so in South Amer
lea. The bonded debt Of South Amer
lea must be and is being readjusted
precisely because the level of prices
has fallen throughout the whole world
| 4 II +
A help to such readjustments inter-
nationally everywhere is furnished by
the devaluation of the British pound
sterling A South American country
seeking to pay fixed debt in London
can pay it now in fewer pounds than
was possible 18 months ago. 1t then
had to pay it in pounds worth S48f
apiece 1t can pay 1t now in pounds
worth something as little as $3.2l
i apiece The devaluation Of the pounc
has represented an enormous shrink