Evening star., 1933-01-08

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IL as is the paralysis in our gov
ernmental machinery. which
4 4 has been disclosed anew by the
debt tanele, there is neyerthe-
less reason to believe that the evil con-
sequences are perhaps exaggerated
Broadly speaking, the American feeling
has been that the problem of the debts
is so complicated and the questions of
capacity to pay and similar technical
details are so numerous that postpone
ment until March must bring har-
vest of disaster
But, in reality, this assumption to-
tally excludes the European facts. 1t
may be and probably is true that the
American Congress, and possibly the
Presldent-elect as well, expects to carry
on negotiations with individual Euro
pean countries and TO engage in a pro-
tracted game of balancing debt cuts
against tariff favors and similar con-
ceSsionS. But the European countries
concerned have no such idea.
On the contrary, Paris, London. Rome
and BrusSels-that is, the capitals of
the chief~cebtor nations-have already
a fairly definite idea of what sort of
proposals they intend to make after
March 4. And, although undoubtedly
the several nations will make their pro-
posals separately. they will be based on
certain common principles and follow
similar lines. Moreover, the key of all
silese proposals can be found in the
Lausanne agreement of last Summer,
(which was deliberately designed to be
'tfhe corner stone of the whole system of
Uebt and reparationS elimination.
Reduced to 10 Per Cent.
Under the Young plan, the final stage
OF Teparations schedules, Germany was
bound to pay an average of $45O,000 900
annually for more than half a century
Under the Lausanne agreement she was
asked to undertake a burden of S7l5.-
O00000 in all, after a three-year mora
torium and only if and when bonds for
this sum could be fioated upon the
world market at 80. Instead of S45O.-
Oo0, ,O00 annually she would pay but
$43,000,000 to cover the interest and
amortization of the debt.
In a word, then, reparations were
reduced by the Lausanne agreement to
approximately 10 per cent OF their value
under the Young plan. And a similar
reduction Of war debts will be asked by
The allied debtors next March. In place
o. O. a present capital value of $4 900 ooo,-
Suo' tne Britlsh will ask that their debt
Z De reduced to S460,000,00O, and similar
cuts VIII bring the French and Italian
70 S4U0O000O0 and 100000 900, re-
SpectlveIy. In round figures, we are to
be offered $1,000, 100000 to louidate a
debt which still stands upon the hooks
Ior about S11 900. 100000, so far as the
Tour considerable countries are con
cerned.
But even then no money is to change
-nands Immediately. On the contrary
tne United States will be paid only if
ana when bonds can be sold upon the
world market, enabling the debtor ma
lions to acquire the funds. And of
course, the hope and expectation is
I1at no small part of the funds will be
supplieo by American investors. More
over, 1t VIII be noted that the conditions
are identical with those of the Lausanne
agreement
General Default Possible.
Erope-that is, our four considerable
oeptors-ls going to offer US about 10
Genus on the dollar, payment to be made
in the proceeds of bond sales upon the
world markets and, obviously, pending |
the arrival Of a demand for such bonds |
all payment will be in suspense If the
american Congress refuses to accent |
TINS form of settlement, then a general |
oe1ault VIII ensue. Provided that the |
United States consents to discuss the |
subject OF debt revision, both France |
and Belgium will doubtless nav the
1nstallment postponed last month. But |
that is the end for all
II the United States is ready next |
March to close out its debt claims for |
~ cents on the dollar settlement can
pe naa without any extended discus |
sion. II It is unwilling. although the |
negotiations may be very long. the re- |
SUIT IS assured. theoretically, the re-
1uSaI OF the United States to accent |
the proposals of its debtors must carry !
2 threat to the Lausanne agreement. |
Practically, however, the European ma
lions are resolved to preserve Lausanne
at all costs.
When one examines the state of mind |
IN the several debtor countries it is |
clear that, although their decisions are
identical, their reasonings vary. The
BRUSH stand on the double fact that
they can pay no longer at the old scale
and that all payment constitutes in
their minds an obstacle to the restora- |
ZION Of normal financial and economic |
relations. In paying last time they |
made their ultimate concession to !
American public opinion and hence :
forth they will be the most obstinate of |
all opponents Of continued debt paw /
nents.
Point to Hoover Moratorium.
The French argument is that the |
Hoover moratorium destroyed their rep
aratlons claims upon Germany, which |
not only sufhced to meet their Aneri- !
can and British war debts, but also to |
pay the interest on the cost Of recon- |
structlng their devastated areas. Since |
PreSldent Hoover set in motion the
chain Of events which deprived them |
OF their reparations income. they hold
themselves absolved from the debt con-
tract. And the Belgians will stand with |
the French in this. /