Evening star., 1932-11-29

merce is being stifed by trade restric-
tions, but it is curious argument that
the action of Great Britain. for example.
in barring imports from France should
be advanced as reason why neither
nation should pay their debts to us.
The existence of trade barriers is an
incentive for us to do all we can to per-
suade them down. 1t is my opinion that
we might even consider some modifica-
tion of debt due from particular ma
ton as a price for definite trade con-
cession. But the mere existence of trade
barriers Is no argument for modif1ca-
| ton of debts in favor of those who
raised them, unless we get relief from
trade restrictions against us in return.
The departure of countries from the
gold standard creates exchange diff
culties which are generally recognized.
But before we consider that as reason
for immediate debt postponement and
eventual modification, would It not be
well to explore all other possibilities Of
payment? None of these intense pro-
ally arguments seeks means for paying;
they all bring up reasons for not paying
anything.
Could Impound Products.
Some Of these countries produce goods
which we cannot produce and some of
these goods are needed By US at all
times and are indispensable in war.
Can we not, against some future war
need, accept from England-and for a
time impound-a quantity of tin, or
rubber, or jute, or silver? Our citizens
are constantly purchasing the curren-
cies of these countries. Would it not be
possible for them to create credits in
favor Of the United States against these
needs? The debtor nations have all
agreed to furnish our Government on
demand and in place of our blanket
evidences of debt definite bonds of mar
ketable denomination. May we not
avoid some of the exchange difficulties
by taking payment in part on such
bonds in lieu of specie payments? We
might even accept part of some install
ments in industrial securities of their
nationals. do not propose any of these
methods, but I do say that such posi-
bilities ought all to be examined before
We decide to postpone payments now
due, and certainly they should be ex-
hausted before we modify or cancel.
Some of these arguments go the
length of saying that it would be unde-
sirable for lis to take any gold from
Europe in payment, and that we cannot
afford to receive payments in goods; or,
in other words. that it is undesirable
for us to be paid at all. While we, of
, course, do not wish unnecessarily to de-
prive Europe of gold, yet if we had a
superf1uity Of the metal we could find
places to use it to restore our trade It
will be hard to convince our people that
We would not be better off with pay
ments in gold than with no payments
at all.
1t is also insisted that these countries
cannot pay because they collect their
revenue with great difficulty; that their
tax rates are at the point of diminish
ing returns, and that business Is SO bad
that increased revenues are impossible
This is an attempt to balance hard
payers ought to take on this burden
because their lot is easier than that Of
Europeans I fear this argument IS not
based on sufficient study Of our own
condition.
U. S. Tax Power Near Limit.
None of these countries have more
unemployment than we. No budget Of
theirs Is as far out of balance as our
own. The business of none is at as
low an ebb. There is none that suffer
a ratio of government costs to the ma
tion's income as high as our current
1873. AS for revenues being obtained
with difficulty and taxes at the point Of
diminishing returns, I recommend a
glance over the current yields of our
own revenue laws. This modification
proposal overlooks the fact that we are
already at the practical limit Of our
own taxing power. It Is a simple fact
that we cannot assume these burdens
without danger to our fiscal stability.
The last session of Congress simply
scraped the bin for new sources of taxes
and every new revenue has proved dis
appointing.
1t is also said that complete loss Of
these loans will follow any default
That is a dogma with no sufficient sup
port in precedent or logic. 1t is like the
! assertion that any act of reputation
would impair international confidence.
That argument is that these nations
cannot pay, and therefore the world
will lose confidence because they do not
pay. That is putting the cart before the
horse. If any confidence is lost, it will
be because they cannot pay, and not be-
cause they do not pay. It Is quite true
that If they can pay reputation will
| impair the worlds belief in the sacred
ness of contract, but that is no reason
why we should attempt by forgiveness