Evening star., 1933-03-12
BY FRANK H. SIMONDS.
FEW days ago I received let
\ ter from which I quote the fol-
] lowing extracts:

4 FEW days ago I received let
~ ter from which quote the fol-
~ lowing extracts:
1 \ Recently read in the news
papers that you had testified
before the Senate Finance Committee
that the war debts were dead that we
should never be paid what was owed
us and in addition there was no hope
of getting anything in the way Of tariff
or arms reduction even If we did cancel
or reduce the bill. cannot believe
any such thing can be true and am
writing to ask you to answer the fol-
lowing questions:
Il. Isn't 1t true that Europe got cur
money and ought to pay2
20. Doesn't cancellation or reduction
mean shifting the burden to the Amer
ican taxpayer?
"3. Can't Europe pay If 1t wants to?
=. Aren't the debtor nations spend
ing hundreds of millions for armaments
which they could employ to pay Of
their debts?
IS. If they won't pay, can't they at
at least lower their tariffs on American
goods In return for debt revision?
g. In the same way can't they re-
duce their ornaments If we reduce their
debts?
az. II they won't pay their debts,
lower their tariffs or reduce their
ornaments, why isn't the answer Buy
American and refuse to take their
goods?
"s. Isn't the real trouble that you and
those who talk as you do are the vic
Tins of clever European propaganda,
and isn't 1t about time you stopped talk
ing Europe and began to talk American
Misconceiving the Realities.
In the present article am going TO
try to answer these questions because
they seem to me a very fair statement
Of the way the debt question strikes the
minds of large fraction Of the Amer
ican people. All Of the questions seem
to me to rest upon complete misconcep-
tions Of the realities of the debt prob
lem. And until these misconceptions
are removed it is plain no progress can
be made toward debt settlement, for
political action in this case will hardly
outrun popular opinion.
As to the question of whether Europe
got our money and therefore ought to
pay. it is plain that Europe ought to
pay for what 1t got, but that it never
received any considerable amount Of our
money. The origin Of the war debts
was the dispatch to Europe In the war
and immediate postwar period OF vast
amounts Of wheat and cotton, copper
and steel, munitions and supplies.
without these things our European as
sociates could not have continued to
carry on the war. The debt Is thus a
good debt representing value actually
received and desperately needed.
As far as money Is concerned, however,
that only entered into the question SIS
the United States raised it from the
American taxpayers and investors by
drastic tax laws and by Liberty loan
drives" But having thus raised It,
they at once turned it over to the manu-
facturers, farmers and miners, WHO
were furnishing the allied countries
with the materials which they asked
for so urgently. In other words, the
United States took money from one
group of its citizens and distributed It
among another At the same time, 1t
sent goods to the European countries
and took their notes for these commodi-
ties measured in money values. But
from first to last American money, with
slight exceptions, stayed home.
Shift Of the Burden.
As to the second question, 1t Is ex-
actly true that what Europe does not
pay, America will have to, because II
the debts were all Cancelled, the Liberty
bonds which the United States sold to
raise money to pay its citizens for the
supplies they furnished European ma
tions would still remain to be hqui-
dated.
When, however, one comes to the ir1-
quiry as to whether Europe could pay
II it wanted to. one touches the very
heart Of the debt question. In fact, so
long as the United States Is not willing
to be paid. 1t doesn't make the smallest
difference whether Europe Is willing or
not. And so far the United States,
while demanding payment, has been
unwilling to accept that payment In the
only way it can be made.
The catch in the matter Of payments
Is that they can only be made In goods
and services. Europe did not in the
first instance get our money, but our
goods. 1t cannot therefore pay us back
save by its goods or by carrying our
goods and citizens on its ships. Money
does not count, for national money is
not good beyond national frontiers,
since it is only promise to pay In
gold. And gold cannot be transferred
In large amounts because 1t Is needed
to sustain domestic currencies.
But II OeDt payments nave W We
taken in foreign goods, then the effect
Is either to reduce the volume OF goods
the United States sells abroad or in
crease the foreign commodities it buys.
For in international trade no country
can sell abroad more than 1t Is willing
to buy and lend. Conversely. no cour-
try can pay abroad more than 1t can
sell or borrow. The reason is that In
ternational trade Is no more than a
vast swapping operation. We exchange
copper. wheat, machinery and goods for
tin, rubber, coffee, spices and certain
goods which other nations make bet-
ter. But at the end of the operation
each country must sell as much as 1t
buys. Otherwise the nation buying more
than 1t sold would have to exhaust its
gold supply, and in the end have To
abandon the gold standard. On the
other hand, the country selling more
than it bought would have to 60 Oh
lending to bridge the difference where
gold was not Forthcoming, and that
would amount to making a new debt
for an old. /
But if a country can only sell as
much abroad as it buys in normal trade
relations, when it undertakes to collect
q foreign debt 1t will still have to be