Evening star., 1932-08-07
UNWELCOME TO EUROPE
Nations Unwilling to Accept Liquidation
at Cost of Disarmament for Fear
of German Uncertainty.

invested In Europe sum in excess Of
European payments, and in Europe and
South America combined sums in ex-
cess of the capital value of the debt
itself. And a large portion Of the
| lendings to South America have found
their way to Europe, since the borrowers
are, in turn, debtors to Europe. On
balance we are, therefore, not even
where we started and probably far worse
off. Since the close of the war we have
, taken in something less than $3,000,-
900, 900 on account of debts to the
Government and lent upward of
$4,000, 100000 abroad, very consider
able portion of which must now be
reckoned as lost
The original debt settlements were
made on the totally mistaken aSsump-
ton that it would be possible to collect
the sums involved maintain the exist
ing volume of our foreign trade and at
the same time protect our home market
from any increase in European imports.
And the three things were totally
irreconcilable. At all times our receipts
from Europe on account OF debts were
contingent either upon our absorption
of European goods in amounts equiv
alent in value to the debt payments or
our lending to European countries of
the sums necessary to make debt pay
mentS
Wholly without perception of the fact,
the United States chose the latter horn
of the dilemma and proceeded to lend,
chiefly to Germany, huge sums which
in practice Germany employed to meet
her reparations payments, and the
| beneficiaries Of these payments used in
part to pay their war debts to America
In pursuit, therefore, of what were in
| fact bad debts we have continued up
to 1929 to send good money after poor;
| and in the moratorium crisis. the costs
| to the country were fully disclosed. Now
our European debtors, faced with the
fact that Germany, unable to borrow
more money in America, cannot pay
reparations, have, in effect, liquidated
! their claim.
In due course of time the United
States will be compelled to do the same
thing. We may, as did the European
allies, obtain some promise to pay a
small sum on account and In return
for b quit claim But the sum will be
relatively insignificant and the chances
of actual payment slight. And when
this liquidation takes place we shall not
be able, as Borah hopes, to induce
| European disarmament, as we shall not
be able, as the Senator from Idaho
| thASAAb oloO lAORC, w pCAouadC 1suAOPC
to adopt American ideas about prohibi-
tion. When war debts collapse, as in
reality they already have collapsed, the
cause will be economic and financial
1t will be for reasons of economic and
financial interest to the United States
that recognition of this collapse will
| take place
A New Misfortune.
But In the existing situation In Europe
as well as IN the light Of the present
political campaign in the United States,
another conference could easily prove
a new misfortune. Lausanne turned
out a limited success because public
opinion in France had reached a point
where all hope either Of collecting repa-
rations or selling them for political
payments had become extinct. By con-
trast American public opinion does not
yet seem to have arrived at the point
of regarding the debts as equally dead,
while Borah's own speech discloses his
hope of getting some political COM
pensation-that is, in the shape Of dis
armament.
AS a practical matter Europe must
approach America on the subject of
debts shortly after election and well
i Continued on Fourth Page.)