Evening star., 1933-06-11
DEBTS TO Be FELT
AT LONDON PARLEY
Although Barred From Con-
sideration, War Obligations
to Be in Background.
BY the Associated Press.


War debts, officially excluded from
consideration at the London Economic
Conference. are, none the less, expected
to stalk somberly behind the backdrop
OF that far-f1ung stage.
No matter what the disposition of
the debt payments of S144, 180, 900 due
June is, or Of the approximately $685.
100000 which was defaulted on Deem
Der 81 by France, Belgium and Poland,
few observers have little hope of con-
elusive settlement at present
u. S. View Apparently Unchanged.
There has been no announced change
in the official position of the Govern
ment that payments are expected June
Is, despite considerable opinion that
France, owing $40, ,738, 900 aside from
the $19000,0 900 she defaulted December
81; Belgium, owing S6,325 900 June Is
as well as her default of SIPS, 900 on
December 81. and other nations will
refuse to pay the amounts now falling
due.
The Economic Conference will Just
have gotten under way when June Is
comes around, and few observers believe
the war debt discussion that will de-
velop then can help but affect the con-
ference considerably.
Europe's Argument.
Europe says she cannot pay the war
debts because falling exports to the
United States have prevented her from
getting sufficient American dollars for
the purpose.
There are two principal ways of OBJ
tanning American dollars-by selling
goods, or by borrowing. America lent
upwards of $4,000 100000 aftsf the war
and up to the depression. America re-
ceived on war debts from Is main
debtors, S2,606, 100000. Some econo-
mists hold that, in effect, America lent
money to Europe with which she paid
on her war debt account.
Now lending has ceased, and foreign
trade has declined SO far as almost to
eliminate foreign dollar balances in this
country.
The debtors problem is further ac-
centuated by the fact that they are no
longer collecting reparations from Ger
many. Germany, in turn, has done
most Of the borrowing after the war
from the United States, and it was via
Preparations and American lending, ac-
cording to common explanation, that
Americas debtors got most of their dol
liars.
Americans who insist on payment
point to the fact that English and
French gold holdings are the largest in
history.
Why, they ask, cannot this gold be
drawn to meet the relatively small pay
ments now due? The answers, in out
line as given by the opponents, are
generally that even such small payments
would tend to derange European cur
rencies.
e u. S. Interest Rate Cut.
The question as to the business of the
debt also enters in, Europeans arguing
that some of the money lent should be
: considered a contribution to the war
cause, The United States never has
reduced the principal, they say.
:. Those demanding payment, admitting
that the principal has not been reduced,
emphasize that the interest charged is
. much smaller. than affixed at the time
of lending.
: Most OF the money was lent at per-
centages running from A to 5, while the
average rate now Is under 3. This, they
argue, represents sizable contribution,
especially since America received the
money to lend Europe from her own
citizens and is still paying it back at
interest rates averaging about per
HCent.
Those insisting on payment further
argue that with the decline in value of
sthe dollar in relation to gold, it would
take even smaller amounts of foreign
gold or goods to get dollars.
Some have argued that Europe could
easily pay the debts If she would reduce
armament. The answer given Is a
double one: First, such savings could
not necessarily be turned into dollars,
since basically dollars only 60 abroad
in payment for goods, or through lend
: ing, or in exchange for gold, and the
armament savings would fall in none of
these classifications; second, armament
reduction depends on political consid-
erations. and can be reduced only If
every one agrees to reduction.
Entirely aside from the technical
aspects, the argument is enveloped with
political and emotional discussion.
Total Funded s22 zoo, 900, 200.
The total OF the debt, interest and
principal as funded, was about S22,-
000,000,000, of which $l1,565, ,00o, 600
was principal and the balance interest.
The principal now owed by Is main
debtors is approximately S1l, 400, ,000,-
o0o About SITS, 5,000,000 has been paid
by these debtors in principal and
$1.69l 100000 in interest. Some of
these payments were made before the
debts were funded at Si1 ,565 ,000, 600,
accounting for the still large principal.