Evening star., 1934-04-01
EUROPEAN DEBTS
PROBLEM AGAIN Up
German offer of Small Token
Payment RevWes
Question.
BY the Associated Press.

BY the Associated Press.
The problem of European debts to
the United States bobbed up again
yesterday, with Germany offering a
small token payment on an install
ment due, and the State Department,
in formal note, calling the Berlin
government attention to the well
known fact that only Congress can
change the conditions of the foreign
debt settlements.
Failing due yesterday was a $50
100000 payment of principal and in
terest on mixed claims and Army of
Occupation costs. Germany offered
to pay only the s1,25O,OOO of interest
due.
Power Limit Cited.
Noting only the payment due and
the payment offered, Secretary Hull,
in the note, said:
Il desire to refer to the well known
fact that it is not within the dis
cretion of the executive branch of
this Government to reduce or cancel
the existing debt owed to the United
States nor to alter the schedule of
debt payments contained in the eX-
listing settlement, such power resting
with the Congress"
The professed inability of European
governments to carry out the terms of
their war debt settlements with the
United States has created a contro-
versy that long has stirred Congress.
Congress, in fact has gone on rec
ord as opposed to any further reduc-
ton or any cancellation of the sums
mlnistration, however, has accepted
partial payment in numerous in
stances with the explicit understand
ing that the validity of America S
claim to the unpaid balance was in no
way impaired.
Approval Necessary.
In several cases the token payments
have been followed by negotiations
looking to new and reduced debt set
Elements. In all cases these must
have the approval of Congress before
they could become effective.
In this connection. it developed yes
terday that legislation to prevent for
eign countries that have defaulted on
their financial obligations to the
United States from floating additional
securities or borrowing money from
Americans is certain to be enacted by
Congress.
Already approved by the Senate. the
johnson bill to bar financial transac-
tions with any foreign government in
default on payments in part or whole
will be brought up in the House to-
morrow.
Speaker Rainev announced yester-
day he would recognize Chairman Nc
Reynolds Of the Foreign Affairs Com
nittee to submit it for House action
under procedure barring amendments.
Although this requires two-thlrds
majority. Rainev said he was conf
dent of its approval.
Not to Seek Loopholes.
Meanwhile. 1t was made known the
new export and import corporation
set I'D bv President Roosevelt to
stimulate foreign trade prepared to
send letter to McReynolds tomorrow
stating it would not take advantage
of any possible loopholes in the meas
ure. This corporation is empowered
to advance money for sales of Amer
ican surpluses abroad.
McReynolds said in his report on
the measure. introduced bv Senator
johnson. Republican, of California,
and which has administration ap-
proval, that billions of dollars OF Sc
curities of certain foreign countries
had been sold to American citizens
with little thought of final pay
ment."
The results of the investigation by
the Senate Finance Committee into
the sale of foreign securities in the
United States, McReynolds said, were
astonishing
1T is sufficient to say that billions
of dollars of securities OF foreign
countries were offered for sale to the
American people" he said with little
thought of final payment. and in
some instances. with sufficient knowl-
edge on the part of the American in
termediary and the borrower also,
that 1t would be well-nigh impossible
for these securities ultimately to be
paid"
Only recently the Treasury Depart
n1ent, in expectation of the passage of
the bill, refused to allow the flotation
of securities of Dutch syndicate loan
to France. which has defaulted her
war debt payments.