Evening star., 1934-05-09
The War Debts.

Although authoritative statements
are still lacking. many indications OF
official origin point to imminent ac-
ton looking to some sort Of new deal
in connection with the war debts
President Roosevelt will send a mes
sage to Congress on the subject dur
ing the course of the next few days.
Presumably it will suggest a course
of procedure to be followed when the
approaching June Is installments are
due from our various European debt
ors. Whether or not debtors are to
be considered in default in case they
come forward, as five Of them In the
past have done. with merely token
payments on account of installments,
is a question that will call for imme-
diate decision. Attorney General
CUMMINGS has just ruled that past
token payments relieved the debtors
in question from the stigma OF de-
fault, but reports now are current
that tokens are not to confer that
immunity henceforth.
Speculation concerns itself with an
other phase of the debt controversy.
The Presidents message is expected
to report the conclusion Of revised
debt arrangements with Finland. the
one country thus far to pay all its
installments in full and on time. These
arrangements. it is understood. would
cancel all but a fraction Of the in
terest charges, leaving only the prin-
cipal amount still due. The principle
of the tentative Finnish settlement,
if applied to all war obligations,
would reduce the total European debt
to the United States from about S21,-
00000,000 under the present 62-year
refunding agreement to sll,000 000,-
600. Great Britain, for example, now
obligated for s1l los, ,s65 900, would be-
come responsible for only $4,628. $780,
600; France, now owing us S6.847, ,674,-
900, would be down in our books for
only s4O50.5l5 900, and SO on down
the list of lesser debtors.
The Finnish settlement basis would
BE- made applicable to other debtors,
according to plans attributed to the
administration, only if. like Finland,
they squared all accounts at Washing
quire to pay s85,OOO OOO-odd here
next month, and the French, a total
of SAL 100000, made up Of the June
installment and payments on which
France has defaulted during the past
two years.
1t is the recent enactment of the
johnson law, debarring defaulting ma
tions from further access to the
American money market, that has
brought the debt issue to the point
of crisis. The Attorney Generals
ruling that token payments hitherto
spared debtor nations from the igno-
miny of default referred to payments
before the johnson act. That law S
language seems plainly to indicate
that henceforward default automatic
ally ensues if any portion Of an in
stallment is left unpaid.
Congressional sentiment remains
strongly opposed to further debt con-
cessions in any form, and doubt is
freely expressed at the Capitol
whether wholesale extension of the
Finnish plan would command the
necessary approval of House and Sen
ate. Meantime it seems more likely
that a general default on war debts
is in sight on June Is, though the
European governments concerned may
think twice and thrice before inviting
the inevitable consequences-the clos
ing of the American market to all
further financing on their behalf and
the acceptance of the odium attach
ing to reputation.
1t needs to be realized in cold sober
sense by the American people that the
debts issue, in its present position, is
prejudicial to international friendship
and is capable of breeding serious
economic and political conditions. The
sooner American European statesman
ship can come to final grips with the
debts the better for the world