Evening star., 1933-11-05
WISE POLICY MUST GOVERN
LOANS TO LATIN AMERICA
Danger Seen if Federal Government Is
Given Direct Power to Deny or Sane .
ton Funds From Wall Street.

appear thus supervised In this country
by the Washington authorities? On the
other hand, would the statesmen At
the White House and the State De-
partment be able to convince the world
that they were completely immune TO-
the influence Of the Wall Street mag
mates, whose financial operations abroad
they had to pass upon?
Two Examples.
Who could deny the perils Of such
finance? Let US only mention two typ
ical and opposite examples.
Let us suppose that there Is Latin
American government which the United
States does not recognize, In view OF
existing treaty provisions. Let us sup
pose that such a government applies to
Wall Street for funds Even II the
question Of recognition did not come up,
II that government for any other po-
litical reason did not have the SYM
pathy of the State Department, could
not this lack of understanding between
the two influence the decision Of the
state Department-controlled foreign
loan board? Would not the refusal OF
such loan, upon advice OF the State
Department, be the thing to be ex-
pected? In that case. would not the
Wall Street bankers be carrying out the
political designs of the White House,
whatever its policy toward the particu-
lar Latin country might be at the time?
That exemplifies the influence Of
politics on finance. Now let us see the
opposite influence. that of finance on
politics.
Let us suppose that a certain finan-
cial obligation contracted by Latin
American government with the ap-
proval Of the board controlled by the
State Department were not properly
met. That Is, let us suppose that
Latin American loan which the State
Department had officially indorse de-
faulted.
Marines Would Collect.
The United States Government,
which had guaranteed the loan 10 the
American investors, would have TO take
the necessary steps" to insure its col
lection. Such steps we all know. The
United States Marines would be con-
verted once again into debt-collectors
for the American bankers.
This prospect, alone, would suffice 70
jeopardize the good name of Uncle Sam
in continent where the Calvo clause.
the Drago doctrine and all the modern
theories condemning the forcible COL
lection Of public debts are almost gospel.
The truth is that the State Depart
men-Controlled Loan Board would place
, the Latin American governments at tire
| mercy of the Washington authorities.
| II this is not Intervention. it comes
dangerously near 10 being 1t.
! 1t is clear that, if the solution ad-
vised by Senator Johnson is going to
ALLEVIATE the good VIII OF the Latin
nate experiences Of past years. all the
! benefits which American investors may
derive from it should be passed up un-
wf1en the State Department is precisely
endeavorlng 10 ObllteTate the memory
Of those past experiences, and to create
in the minds ind Of La Latin Americans
/ interestedness and respect of the United
States toward them
| Private Group Alternative.
| On the other hand, the uselessness Of
a foreign-loan board, controlled by the
bankers themselves, instead of by the
| Government, is too obvious to need an
explanation
The only way left then. is the third
one: The establishment of private,
independent associations in harmony
with Senator Johnson's views, but with
out Government control.
/ These associations. made up OF prom
inent economic experts college pro-
fessors and leading citizens-and. above
all. Independent of any political or
/ financial control-would engage in the
dissemination Of information regard
ing economic and political conditions
in foreign countries where American
capital has been loaned or is about TO
be loaned s-.
This alone. and full publicity regard
ing the loan negotiation-even if direct
and absolute control of loans is not
possible-would safeguard the interests
OF American investors and avoid the
repetition in the future of financial and
political entanglements born of reckless
borrowing and reckless lending For
tunately as the latest steps taken by
President Roosevelt and Secretary Hull
reveal, 1.-THE administration seems to
have recognized the right track.
! (CopyriKht, 1891