Evening star., 1932-01-03
CONGRESS- STAND MEANS /.
REPUTATION OF DEBTS
DisilIusioned Europe, Certain to Refuse
Payments, Facing U. S. Resentment
That Will Ban Further Lending.

! war debts and will not lend Germany
more money to pay reparations, then
all our European debtors-and Britain,
France Italy and Belgium in particu-
lar-have to decide whether to repudi-
ate or carry the burden themselves. In
practice France and Italy have already
decided Actually Italy cannot and
France will not pay. And it Is safe to
predict that Belgium will follow France.
Moreover, the French have an admira-
be position, because they can prevent
any collection of private debts in Ger
many while their claims to reparations
are unSatiSfed.
All OF which means in simple terms
that before long the British must face
the issue Of reputation. And nothing
is more significant than the fact that,
following the congressional debates, the
word reputation appeared for the first
time clearly and Enthusiastically in all
shades of British journalism and pub
lie opinion. The recriminations show
cred upon Senator Reed of PennSyl-
vania because Of his tabulation of Brit
ish assets illustrated British feeling.
Reputation would be a humiliation
without precedent in British history
The collapse of the pound sterling was
blow to British prestige, but the ne
NNooAGN W 4OPuN4dbN VIC hltlVilS NSDb
would be blow without parallel to
British pride
The present British view is not die
tated by any desire to eHde a debt
which could be paid. 1t is not because
the British are consciously and delib-
erately trying to get out Of an obliga-
ton that they resent the American
policy. On the contrary, it is necessary
TO perceive that every element in Brit
iSh national life shares the conviction
that payment is beyond British capac-
ity; that Britain is fighting for her eco
nomic life against appalling odds.
The EngliShman sees himself with his
back TO the wall, as Haig told his SOL
diers in the supreme crisis of the World
War in March, 1918, and in that mo-
ment he feels that the United States is
arriving with a bill and demanding
payment when the only alternative is
humiliation beyond words.
But, apart from the particular Brit
ish state of mind there is a general
European point of view. That is that
the whole continent is sinking in ruin
and that the ruin will be Of enormous
consequences to the United States. And
Europe has through the years gotten
itself into the state of mind of believ-
ing that all its troubles would be ended
or at least the first long step to re-
covery would be taken-once America
cancelled debts and the allies similarly
abolished reparations. The second step
is always contingent upon the first.
An Illusion Abolished.
The action of the American Congress
is one of the few really decisive cpl
sodes in postwar history because 1t
has abolished an illusion which has all
along prevented realistic thought IN
Europe.
Refusal to cancel or scale down debts
will not insure the return to the United
States of a single dollar Of these debts.
Europe will not pay another red cent.
But that decision will compel Europe TO
90 ahead and face the fact that 1t IS
not going to get cancellation and that
it must come forward frankly with re-
pudiation. ,
If it does not now come forward
frankly, the situation will be unten-
able, because reparations actually nave
been repudiated and are physically IT.
recoverable. One then may look to see
a gradual drawing together OF our
European debtors, of Britain, France,
italy and Belgium, and the formulation
of some concerted program Of repudia-
ton. They are all in the same boat
now. The British undertook to re-es-
tablish their financial situation In the
world by making the debt settlement
with us. 1t was a step in restoring the
pound sterling to equality with the dol
lar, and thus in the recovery OF the
financial primacy compromised by the
war, But the step failed. TIE ODDS
against the British were too terrific.
Nevertheless the British course en-
tailed debt settlement by all the other
associated powers Instead Of standing
together, they came separately to WASH
ington hoping to make better bargains.
Now there is a common interest to bind
them all AS for Germany, cancella-
ton of debts means formal relief from
the obligation to pay reparations, there
fore her interest is rather with her
European than with her American foes
of the war.
What is crystal clear to all Euro
pean minds is that, if there is any
sort of a reputation of the war debts,
such reputation will create an American
resentment which will constitute bar
rier to any new investing or lending in
Europe for a long time to come. And
Europe is still firmly convinced that the
restoration of its prosperity, particu-
larly the restoration of Germany must
be brought about by American capi-
tai. or at least by American and French
capital working together.
The action of Congress, therefore,
has forced the issue OF reputation.
Next June the allied debtors must either
demand a new moratorium or an
nounce a frank reputation. And in
TIE American mind it is clear that the
demand for further moratorium would
be Judged a disguised reputation. In
the midst Of a national political cam
paign it would be seized upon by all
politicians. In fact, the expiration OF
the Hoover moratorium comedies with
the meeting of national conventions.
With this in mind can one mistake
what the platform declarations Of both
parties will be? once platform pledges
are made-breaking them will not be
easy.