Evening star., 1933-03-17
Mr.. Simonds Replies to
Comment on War Debts
To the Editor of The Star,

To the Editor Of The Star:
Characterizing as q rare piece Of
sophistry" q recent article Of mine on
the war debts printed in The Sunday
Star. Mr.. Charles E. Kern asserts:
"Mr. Simonds argues that as the
British did not receive cash delivered in
the British Isles, but used 1t In this
country to purchase goods they needed,
they should be allowed to pay In goods
and not In cash."
Mr.. Kern is mistaken In saying that
argue the British should be allowed
to pay in goods and not In cash. What
I did say, was that there was no other
way In which they could pay. There
Is no such thing as international cash.
The British could only pay US In their
own money as they turned it into gold,
but they owe us $4,500, ,000, 900, and
have less than $700, 100000 in gold.
Moreover, as we desire them to go
back on the gold standard to get rid Of
the competition in their deprecated
currency, We do not want to take that
relatively small payment in gold, be-
cause that would prevent their return
to the gold standard.
Outside Of gold, however, there Is no
means for them to pay save as we per-
NIT them to send us their goods or as
We travel on their ships and send our
exports In British bottoms or visit Eng
land as tourists and spend there. But
we want to Buy American" and travel
on American ships. Between 1920 and
1880 We sold the nations of the world
$500 ,000,0 more than we bought Of
them, everything included. We had,
therefore, to lend the $500 100000 In
addition the world should have paid us
$1,000, 100000 in interest charges, but
since We refused their goods and serv-
ices they couldn't pay that. and we
added that to the bill also. Thus where
they owed us $4,000, 100000 in gov
ernmental and private debts in 1920,
the owed us $20,500, ,000, 900 in 1881.
The crlx Of the whole matter Is dis
closed in another statement Of Mr..
kern's, who writes:
II should borrow money in Chicago
and at the same time request the pur-
chase and shipment to me In WASH
ington Of merchandise I need, then
would not owe money, but could pay
my debts with goods sell here"
Whatever Mr.. Kern bought in the
United States could be paid for in
American money, and whatever he bor-
rowed could be paid back in the same
fashion as 1t was taken, because the
same money circulates everywhere. But
when the British borrowed American
money in the United States and spent
1t here for goods which they took home,
they did not get any American money.
and and did not have any to repay the debt
They had then to turn their own
money into gold, but they didn't have
the gold. All they could pay in then
was goods. When we refused to take
those goods. by raising. not lowering,
our tariff, that was the end of it.
Mr.. Kern's comment is an admirable
example Of the underlying fallacy of at
tempting to translate the problem of
international debts into the terms of a
domestic transaction. Let him con-
slider the problem as he stated it with
the limitation that the money he bor-
rowed in Chicago would have to be
repaid in Chicago money, while he only
possessed Washington money, and the
first obstacle becomes evident. Let him
then also assume that payments by
Washingtonians in Chicago money could
only be made as Chicagoans purchased
on the same scale in the Capital as
Washingtonians in the Windy CITY,
and the next obstacle will become ap-
parent.
If there were such a thing as inter-
national cash there would be no war
debt problem. What misleads most debt
commentators is that, like Mr.. Kern,
they start with assumption that such
currency exists, and then think in
terms of a purely national transaction.
In closing. may I remind Mr.. Kern
again that what I did say. was that
there was no way in which America
could be paid save in foreign goods and
services, and that when he grasps that
TACT ne Will see the major difficulty Of
the whole debt question.
FRANK H SIMONDS