Evening star., 1933-03-12
MISCONCEPTION OF DEBTS
DRAWBACK TO ADJUSTMENT
Idea That Europe Got Money From Us
and Should Return 1t Held to Require
Study Showing Account Dead

paid In goods, and the goods 1t gets in
this way will not furnish the debtors
with American money to buy American
goods. We shall take as many goods
as before, but part OF what Europe
sends us will be for debts and part only
In regular trade. Thus European ma
tions will have to reduce their Amer
ican purchases by the amount of money
value represented in the goods they
send for debt payments.
The whole thing Is very complicated
to the ordinary citizen, but 1t amounts
TO simple statement that America
can only consume certain amount of
foreign goods and Europe can only take
from America as much as it can pay for
in its own goods. If Europe starts to
pay its debts in goods-the only method
possible-America won't take more
goods, but Europe will get paid for less.
and as a consequence will buy less.
Thus we shall get debt payment, but
only at the cost of our ordinary trade.
The taxpayer will benefit, but the manu-
facturer and farmer will suffer because
theil foreign sales will go down
Reduction of tariffs will not help the
matter because If the debtor nations
lower their own tariffs and thus open
the way for a greater influx of Ameri-
can goods, they will have no new way
of paying for these goods. They will
not as consequence sell more abroad,
and they will not get possession Of
more American money. All the trade
finance by loans to the purchasers thus
again increasing the obligations Of
Europe to us.
For Europe to scrap armaments to
balance our debt reductions would not
be economically advantageous to the
United States because 1t would en-
able the nations which reduced their
armaments to lower their costs of
production and thus to compete to
better advantage with us on the world
market. This would be the case be-
cause to reduce ornaments would be
to cut military expenses, and this in
thus lessen the burden of domestic
taxation. But American tax burdens
would not be affected by French mill
tary reductions because we should not
have any reason for making a similar
reduction in our military costs, which
are now at about the lowest possible
limit.
Limitations Of Buy American"
As for Buying American" the trou-
BILE with this Is that Europe can only
Ouy Oul 6OO4o W t4AC CAsCAS VIC b6y
hers and every time we substitute a
domestic for a foreign article. we re-
duce the amount of European purchas-
ing power in the United States. Buy
American" Is not one-sided in its
effect, for automatically as our pur-
chases from Europe decline, Europe's
buying from us goes down. Since
Europe buys more Of us than we do of
her, she has bigger chance to reduce
her debt. Since the debtor nations
which we denounce as dishonest are
also our best customers, every time we
denounce a defaulter We insult pay
more necessary to domestic employ
ment.
Last of all I come to the question
of European propaganda. But how
can the European aspect Of the ques-
ton make any difference so long as
the United States won't consent to take
debt payments as they can be made9
It doesn't make much difference
whether Europe is eager to pay or
busily conspiring to get out OF paying
so long as the United States won't
consent to adjust its own affairs so
we can be paid.
But ever since the World War our
aim has not been to take more Euro
pean goods, but to sell Europe more Of
ours and take less Of theirs. As con-
sequence, to pay the debts, after the
settlements were made, Europe had TO
borrow privately in America to pay
publicly to the Treasury. When Amer1-
can investors stopped lending, Europe
stopped paying. But In the meantime,
whereas 1t owed the United States
Government upwards of $4,000, ,000, 900
war debts at the start, today 1t still
owes something like $4,000 100000 IN
war debts and half as much more IN
private debts into the bargain.
Believe Debts Are Dead"
The debts are dead, then. because the
United States has always been unw1ll-
ing to limit its exports or reduce It's
tariffs in such fashion as to permit debt
payments in European goods and serv-
ices, and today it is far more inter-
ested in keeping up its foreign trade,
which would maintain current employ
ment. than it is in collecting old debts
at the cost of lowering exports and
employment.
Calvin Coolidge gave definitive ex-
preston to one of the two great de-
iusions about the war debts when he
said: "They hired the money. didn't
they?" Senator Reed Of Pennsylvania
voiced the other with equal adequacy
when he used the words my corre-
spondent quoted: "They could pay II
thew wanted to-" But in fact Europe
didn't get our money. but our goods.
Their ability to pay us back in those
or other goods cannot be questioned.
But the matter of whether they are
willing to pay or not cannot come up
until the fact has been established that
we have opened the way for their goods
and they have refused to furnish them.
fc,onxrisi,t Mcclure Newspaper Syndicate)