Evening star., 1933-12-21

said that the United States fails to
perceive the logic in a suggestion in
effect either that the United States
shall pay part of Germany'S reparatlon
obligation or that 1t shall make a gra-
tuity to the allied governments to in
duce them to fix such obligation at an
amount within Germany's capacity to
pay
In spite of the clear statements of
the American Government, We had the
famous Balfour note, in which Mr.. Bal
four announced that Great Britain
would collect from her debtors only
what she must pay. but all that she
must pay to the United States. This
note brought to the fore the impression
that the United States was cruel and
heartless creditor. and produced the
bitter diatribes which have since run
through the European press.
Agreements Differ.
In June, 1921, the Treasury asked
authority to fund the debts with the
individual debtors, but Congress pre-
ferred to have this done by a Debt
Funding Commission, and in establish
ing such a commission included various
proviSos as to interest and the number
of years during which the debts might
be liquidated. In February. 1922. the
Department of State notified the vari-
Gus debtors that the commission was
ready to act and invited them to send
representatives to Washington. There
was some delay because the terms inn
posed by Congress were found impos-
sible to enforce, but the commission ne
gotiated Is debt-funding agreements, all
of which were ratified. Curiously
enough, the first of these agreements
was with the republic of Finland the
only nation of them all which has 10y
ally to the present day made complete
payments as they fell due.
These agreements differed greatly as
to interest rates and as to the amount
of the capital debt which was actually
forgiven. Taking the present value of
the debts as of the beginning Of 1882,
estimated on a 44 per cent interest
basis, the British reduction was about
10 per cent, the French about So per
cent and the Italian about rs per cent.
In the case of Great Britain, this covers
all the advances made after the armi-
stice and 80 per cent of the war loans;
Of France, all the post armistice loans
and about 80 per cent of the actual war
loans; of Italy, slightly less than even
the amount advanced for reconstruction
and relief after the armiStice.
The total debt prior to the funding
reached the staggering sum of S12, ,O90,-
OOO, 600. After the funding it was
$6,879, 100000. The reason for the dis
crepancy between the different countries
as well as for the totsl reduction was
that the Debt Funding Commission
tried more and more as time went on to
fix the debt in accord with the capacity
of the different nations to pay. They
rightly believed it to be to the advan-
tage of the United States to collect
what it could rather than to set figures
so high that there was no capacity of
payment.
The various nations made their pay
mentS regularly until the middle of the
year 1880. 1t is true that a large part
of these payments came out of the
money they had received from Ger
many, but never had the American Gov
ernment admitted that there was any
legal relationship between debts and
reparations, nor had European nations
made any such claim. 1t is true also
that after the beginning of the depres-
sion these nations found it more and
more difficult to make their payments
and that, in informal discussions, they
suggested that a further revision of the
debt settlements might be advisable and
necessary. The answer was always
made that no creditor could afford to
refuse consideration of the condition of
the debtor and to listen to all that he
had to say. At the same time the rep
resentativeS of the debtor nations were
reminded that evidence of a firm inten-
ton on the part of Europe to grapple
fearlesSly with Its own troubles, as well
as evidence that the nations were try
ing earnestly to live within their means
the most important indication of which
would be the drastic reduction of their
enormous military budgets, was neces-
sary prerequisite to friendly hearing
on the part of the United States.
Germany Sinks Deeper.
Conditions went from bad to worse
Europe, and particularly Germany, lived
for a large part on the proceeds of
loans, thus sinking always deeper into
the financial morass. BY the late Spring
of 1880, conditions were becoming criti
cal. The largest bank in Austria failed
and this had its repercuSsions in Ger
many There was a flight of capital
from that country which, if it had not