Evening star., 1933-01-22
DEBT DISPUTE CLEARED
! BY BORAH,.JOHNSON ROW
Fall of Laval and Tardieu Opened Door
to MacDonald's Victory in Repara.
tions Fig Int at Lausanne.

Now, however, instead of asking
Washington for an extension of the
Hoover moratorium in conformity with
the Hoover-Laval agreement, the French
were forced to ask a practical cancella-
ton of the war debts to balance repara-
tions cuts. In this situation the British
were bound to act first under MacDon-
AIDS undertakings with Herriot.
But both the American President and
the American Congress were opposed to
cancellation and Congress was adamant
ish approached Washington and asked
for discussion frankly designed to
abolish debts by new Lausanne agree
ment, both Hoover and Congress re-
fused. This occasioned the President,
mindful of the Laval agreement, mani
fest embarrassment because what
Britain first and France subsequently
asked for was an extension of the mora
torium as lead to the larger opera
tions.
When Mr.. Stimson, in a hurried note,
refused to grant the final British de-
mand for a discussion preceded by =
postponement of the December Is pay
ment, the British, who had not any such
understanding as the Hoover-Laval
agreement, paid. But the French de-
clined to pay, alleging that they had OBJ
tanned in return for agreement to the
Hoover moratorium promise of an ex-
tension of that suspension If they ac-
ceded to a similar postponement of rep
arations. Immediately the American
public, hazy as to the Hoover-Laval
agreement, condemned the French
course.
Public Opinion Confused.
American opinion was confused. too,
because there never had been any clear
cut understanding of what lay behind
the original moratorium. Actually this
was proposed by Hoover to save an
American investment of $2,500,000, 900
in long and short term German paper
And it was supported by Britain which
had a similar investment of upwards of
81 100000, 900. On the other hand it
was opposed by France, which had no
considerable investment in Germany but
was vitally interested in reparations
France naturally resisted the Hoover
proposal until the permanence of her
insurance under the Young Plan was
settled.
But Hoover having demanded of the
French that they consent to suspen-
sion of German payments to themselves
ish banking interests, the French in
their turn felt warranted in demanding
an American suspension of French pay
ments 18 months later. And when this
was refused they became and remain
sincerely indignant
If Laval had continued in power in
France or If Tardieu and Laval had not
been thrown out, Macdonald would not
have imposed his program of cancella-
ton at Lausanne. On the contrary,
there would have been only an extension
of the moratorium in reparations. as
foreseen by Hoover and Laval in Wash
ington. Then the French would have
approached Washington and recalled
the Hoover-Laval agreement and asked
an extension of the suspension of debt
payments. Congress would have had to
agree to this extension or openly repudi-
ate the word of the President.
Wished to Preserve Bargain.
Herriot, in urging French payment,
was actuated chiefly by the wish to pre-
serve his bargain with the British, who
had agreed to stand with France and,
in fact. to assume the burden of per-
suading the United States to cancel the
war debts, thus insuring the application
of the Lausanne agreement. A reading
Of the text of his speech shows all the
emphasis laid on the British detail But
the Tardieu-Laval group, solidly op-
posed to Lausanne, defeated him with
the aid of the Socialists.
Now the situation is quite clear The
British remain bound by the Herriot-
Macdonald agreement not to make any
separate settlement with the United
States. They also must bear the brunt
nf thn nff - k.r1y,
States to practical cancellation of debts
on the lines of the Lausanne agreement.
If Macdonald cannot do this-and it Is
obviously impossible-then he will have
to follow the French example and
Britain will default in June What he
cannot DO Is to accept some settlement
more advantageous to Britain than any
offered France, because that would be
to dishonor his agreement with Herriot.
One sees that the root of popular irri-
tation in this country lies in failure to
grasp that the Hoover-Laval under
standing established a French claim to
an extension of the Hoover moratorium
in their own case If they granted 1t in
the German, as they contingently did
at Lausanne. And the further un-
known circumstances was the course of
Macdonald in Lausanne in offering
British unity of action with France in
the debt question if France accepted the
British thesis in the matter of repara-
tions. This circumstance explains why
Britain has and must continue to reject
any private bargain with the United
States in the matter of debts and must
stand fast with the French. And it
shows with what craftsmanship the
United States must proceed within the
coming months in untangling its debt
relations with these key powers Of Eu-
rope.
Copyright, 1933)