Evening star., 1933-05-21
END OF DEBTS QUESTION
HELD UP TO PRESIDENT
American Public Regarded as Ready
to Accept Cancellation Despite
Pledges of congressman.

rigid supervision. but If the United
states had not IN recent years made
bad loans, it would not have collected
anything upon either public or private
debts and when it stopped making these
bad loans it ceased to collect on its
theoretically good debts.
But nothing is going to happen AZ
the London Economic Conference II ths
debt problem remains a bone of con-
tention. 1t is possible to dodge the
issue temporarily by a new moratorium,
but it is not possible to reach any per-
manent decision about currencies or
tariffs-that is on the questions which
must be settled If results are to be
achieved-until final disposition is
reached over the debts
1t is of course conceivable that a
compromise might be reached by which
the debts were first scaled down and
then transformed into private accounts
by the issuance of huge lot Of bonds
by the debtor nations. Those bonds
would be sold on the American market
and thereafter the United States Gov
eminent would vanish from the case
and what would remain would be the
problem Of the private American in
vestor of collecting interest and princi-
pal on his new securities.
AuhhUfisy ENc<ucus
But while the United States Treasury
might profit, the individual investor
would still be in trouble unless Con-
gress chose to reduce tariffs and en-
courage the sale of foreign goods on
the American market. Only then could
the foreign governments get American
exchange to pay the American bond
holders. Once more, as in the case of
the making of the debts originally, Eu-
rope would get no money with which to
pay. And once more-unlesS all signs
fail-the United States would decline to
accept European goods at the cost Of
immediate domestic unemployment.
Thus if the President limits his re-
quest to Congress to an appeal for
moratorium to endure while the Lon
don Conference is in session and con-
tinueS to adhere to his plan to carry
together with discussions of currency
and tariff, he will still at the end have
to "sell' the people what amounts to
complete cancellation along with such
tariff and monetary agreements as he
may make. And if he lacks authority
to deal definitively with debts he is un-
likely to make progress on other lines
unless the European debtors decide to
end the matter decisively by direct de-
fault.
Actually that seems to me the sim
plest and the most reasonable method.
The British cabinet. Parliament and
that further debt payments are me-
chanically impossible unless there Is
change in American tariff policy. They
are aware such change Is improbable.
They have gambled in the recent past,
as in the case Of the December pay
ment. that American public opinion
would become economically minded.
That gamble has proven thus far q
miscalculation.
The only question that remains open
in the British mind does not concern
continued payments, but only whether
one more payment might keep the
American people were educated TO debt
realities. They have no intention of
paying more, they have no idea that
such payments could be continued
physically for any length Of time. But
today the present British Government
could default without costing any mem.
Der of Parliament his job, since publ
sentiment Is against payment.
Cancellation Unlikely.
In the American Congress, however
a majority of members still seem to be-
lieve the country would hold them re-
sponsible for cancellation, in the light
of their platform promises. Thus legis-
lation agreeing to cancellation Is un-
likely in any present time and mora
torium would be of only limited value
even if attainable. I think Congress
underestimates the present strength Of
the President with the people and his
power. If he chose to bring the majority
to cancellation But If the President
will not appeal to the country and will
not or does not view war debts as
dead and needing to be buried, the
London conference is hardly likely
to end in a shorter time or have
more prosperous existence than the
Disarmament Conference now deep in
its second year.
1t may be that debts will have to be
disposed of by degree as reparations
had to pass through the stages of the
Dawes plan and the Young plan before
the sponge and the clean slate of the
Lausanne phase was reached. But in
that case economic and financial re-
adjustment will be postponed and the
moment seems at hand when further
postponement can work almost ir-
reparable damage. Vaguely the country
senses something Of this fact. Mani
festly it is ready to trust the President.
Practically the problem remains this:
What is he going to do to convince q
public manifestly ready and even eager
to listen TO him?
tCopyright, 1933)