Evening star., 1932-12-04
BY FRANK H. SIMONDS.
A the dust raised by the now IA
nous Hoover Roosevelt CONVEX

n nous Hoover Roosevelt CONVEX
"A sation settles one thing is clear
1 4 beyond all debate. We are now
going to have trial of the
relative exactitude of the views of the
politicians on the one hand and of the
economists, bankers and business men
on the other. And the barometer Of
that test is going to be American for
eign trade and American unemploy-
ment in the next six months.
1t IS the contention OF the American
politician, without regard to party,
that not only can the European nations
pay reparations but also that such pay
ments will benefit the United States.
For him it Is purely and simply ques-
ton of money and a problem of max
ing the European debtor or the Ameri-
can taxpayer carry the load. Thus the
politician says that America can and
must be paid
The economist. on the other hand.
says that to insist upon British pay
ment will have certain immediate con-
sequences. The pound sterling will fall
and, with the fall of the pound sterling,
Britain's purchasing power will be re-
duced. As q result the British can
and will buy less in the United States
and American exports will shrink. He
also says that the fall IN sterling will
give the British manufacturer a tenn
porary advantage in costs Of produc-
ton over the American competitor in
the world market and therefore the
Briton will undersell the American.
Once more, If this be true, American
ployment mount.
Now 1t Is clear that payment Of the
debt installment will not increase
American employment, 1t will not make
more jobs or new business The gold,
for in practice the payment will
amount to gold transfer, will be added
to a reserve now overadequate, income
taxes in the higher brackets may be
reduced, but by contrast the cost of
carrying new unemployment, as that
resulted. would counterbalance the
benefit thus indicated.
Course Open to Debtors
On the political side the conse-'
quences are not less emphasized by the
economist. He says that once the Eu-
ropean debtors are satisfied that
America will not forego payments, then
they will turn back upon the German
and demand a renewal of reparations
payments. All the Lausanne agree
ments being conditional upon American
adjustments this course Is open. But
Germany at the moment not only can
not pay but Is in such a state Of politi-
cal upheaval that new demand for
payment could produce civil war.
Since the United States has private
loans amounting to several billions In
Germany and in the neighboring Cen
trail European States which are respon-
sive to German conditions, the result
must be 3. Immediately felt and the
chances. Of collecting interest or prin-
cipal upon these American loans will
be reduced. If, as many observers be-
lieve, civil war In Germany or social
strife In other Central European
countries does arrive then our loans
are gone for good.
The economist says that there can
be no start In the recovery of the world
until the deadwood of the war Is cut
away and debts and reparations are
abolished. The economist is not in
terested in the legality or morality Of
war debts, reparations or anything else.
He concerns himself only with Just
those details which the politician and
the. average citizen ignore. He says
Tor the United States will be in excess
Of the receipts possible, and that in the
end the United States, If it tries to COL
lect, will lose the war debts, the pri-
vate debts and the bulk of the remain
fkg foreign trade.
Since the politician has decided to
try to collect, the issue is Joined and
the next six months win show who is
right But in discussing the question
the economist reverts to the record. He
points out that at the Paris Peace
Conference the British and French
politicians, against the advice Of Ameri-
can hnanciers, set out to impose on
Germany huge reparations payments.
And. having decided on the bill, they
tried to collect 1t.
But although the French and Bel
gfans presently occupied the Ruhr and
reduced Germany to utter helplessness,
they did not get from Germany any
substantial payments. In fact, they
only got from her what the United
States loaned to the private borrowers
OF the Reich after 1928. After trying
for 10 years to collect reparations, the
French last Summer at Lausanne
abandoned the Job. Meantime Ger
many had passed through imitation,
the middle classes had been ruined,
the Republican parties had been
smashed and political power was now
lodged in the hands Of two revolution
ary parties, the Communists and the
NaziS