Evening star., 1933-12-10
u. S. DOMESTIC PROBLEMS
OVERSHADOWS WAR DEBTS
Some Nations to Continue 'TOken' Pay.
ments, But Others Refuse Even This.
$3OO,O0O,OOO Due This Month.

in our deprecated currency. II the
dollar Is presently broght down to SO
cents, that will amouns to wiping out
half OF the debt Of every nation.
Imitation Cuts Debts.
If, as the opponents of the Roosevelt
monetary policy assert, the dollar
should crash through the 50-cent level
and collapse under inf1ationary condi-
tions, as did the franc and the mark,
then each fall Of the dollar would CO.
stitute a further reduction of the debts.
And, Of course, in view of such a pos
sibility, no European country Is now
interested in pressing for any final
| liquidation of the account. Instead,
they will wait and see. If the dollar
collapses they can still pay their bills
in American currency and at certain
point that might be worth while, but
only if the dollar should drop to, say,
10 cents in gold value.
Otherwise the present situation will
be permitted to stabilize itself. Britain,
Italy and perhaps one or two of the
smaller debtors will continue to pay
twice a year a nominal per cent of
what they owe. The United States
Government will continue to add the
unpaid balances to the original capital
sum of the debts which will thus ex-
pand by something like 81 ,000, ,000, 900
every three years. Some day two or
three years hence the time may come
when public sentiment in the United
States may be prepared to accept the
truth and Congress can then agree to
some form of final settlement-but that,
too, in its turn. will be only token"
settlement, following series Of token"
payments.
On the other hand, If the thing drags
too long it is entirely possible that when
a Labor government comes to power
in Britain-as Is certain in no long
time-then Britain may repudiate the
whole obligation. For the British public
is plainly irritated by the spectacle of
France and Belgium, as well as Ger
many. escaping from their foreign obn-
cations born of the war, while England,
having alone made considerable pay
ments to the United States-upward
of $4,000, ,000,0 900 in point Of facts still
making payments.
As have written before in these
articles, war debts have now only
nuisance value, and even that Is both
restricted and temporary. For all prac-
tical purposes Mr.. Hoover Cancelled
them when he set up his moratorium
in 1881. The situation was momentarily
confused because the British did re-
sumo their payments year ago and
paid almost $100, 1000, 900 on December
Is. But the British action was due to
misunderstanding, bitterly regretted
since. For London had been informed
from Washington that British pay
ment then would be- the last and that
American public opinion had so COM
pletely changed, that If 1t were not irr1-
tated by default the whole issue could
- fn dtcy,rcod nf nv the in
coming Roosevelt administration before
the next due date. ~
Invented Token" Payment.
When they discovered this was not
the case the British were so angry
there was a very real possibility that
they might refuse all payment last June.
But, in the end, they invented the
rather clever device of the token" pay
ment and obtained from the President
public statement that 1t would not be
regarded by him as repudiation OF
default Now, before every due date
as happened few weeks ago-they will
demand a similar statement in return
, for q similar token" payment. And
their policy is summed up IN the
phrase-"No statement, no token"
Here Is the situation in q nutshell.
The European debtors owe us some
thing more than $11 ,000, 600, 900. The
gold value of what they will pay us
this year will not much exceed $780,
600 in December and about the same
amount next June What they should
pay us then is something above $780,
00O, O,000 What they will pay US Is not
much more than $10,000,000. which
works out to about 8 per cent. And
that 8 per cent about represents the
uresent val11e of war debts In addi-
ton that shadowy value, as have tried
to make plain, is transitory.
When last April in my "A B OF
War Debts" I declared that these were
as dead as Fenian bonds or Confederate
securities I was widely criticised for
having at least woefully exaggerated
the situation. But when the annual
collection on a debt Of above $11 ,000,-
O00, 900 is less than $11 100000. that
payment represents no more than one
tenth of per cent And even Kruger
and Toll still promises better than
that.
(Copyright, 1889