The Washington times., 1934-06-20
MAY WITHHOLD
S20,000,000
IN CLAIMS
UnfavorabIe Trade Balance
Cited; Debt DefauIters
Present a Problem
BY GEORGE r. HOLMES
International News Service staff
Correspondent

(COpyriGht, 1884, BY international
News Service.)
Despite all the brave talk and
the bristling demeanor Of the
state Department over Gern1any'S
decision to declare a moratorium
on her foreign debt payments
moratorium being a polite word
for default-it Is extremely un-
likely that the Am erican Govern
ment is going to do anything
about 1t.
A protest has been made-tor
the record-and further protest
will be made. But the action Will
end there, according to all indl-
cations today. American holders
of approximately billion dollars
in German bonds can, IN erect,
whistle for their interest money.
An Odd Position
The State Department, in fact,
is in an embarrassing position. It
thoroughly and sincerely con.
demns the German default. But 1t
also thoroughly and sincerely con-
demned a default ten times as
Great-the default Of Great Brit
ain, France, Italy, Belgium ana
other of our late allies, On the
debt installmentS to the United
States Treasury which were due
June is, and which were not paid.
The State Department has
noted with interest the retalla-
tory steps taken by Britain and
France to protect their holders OF
German bonds.
Britain and France propose to
establish clearing houses for the
impounding of Germany's COM
mercial funds, and applying
these to the satisfaction Of their
nationals.
Course Is Banned
No such course is open to the
United States. In the first place,
Germany has an unfavorable
trade balance with the United
states; that is, we sell Germany
about twice as much as We buy
from her. So in that respect
there are no such funds to at
tach.
In the second place, such re
taliatory action on the part Oh
the United States against Ger
many would inevitably raise the
question of why similar action
was not taken against other
foreign powers that are in de-
fault of their obligations in this
country, to wit: Britain, France
Italy, Belgium, ct cetera.
In a legal sense. Germany
Britain, France, and the other
European nations, are all IN the
same boat so far as the American
government is concerned.
If anything, Germany is in the
better diplomatic position. She
has simply declared a six months
moratorium on foreign debt pay
mentS.
OF course, that six months may
be-and probably will be-ex-
tended interminably, but for the
moment it is q moratorium.
Britain, France, ct al, have
frankly defaulted. They have
said, in effect, that it isn't a
question Of six months, but for
all time, unless and until the
American Government agrees to
knock off 80 per cent Of the
principal.
Hence the State Departments
embarrassment, official faces be-
come slightly red when they at
tempt to explain it all. If the
United States endeavors to fol-
low the F'ranco-British lead and
institute "reprisals" against hap
less Germany, then they will be
put to it to explain why similar
reprisals are not instituted
against Britain, France and the
other defaulters.
Can Hold Up Cash
All are debtors to the United
States. And a default is . de-
fault in any language-British,
ETSNCn OF 1eTWdu.
About 20 million dollars will be
withheld from Germany by ex-
ecutive action. This amount was
due German nationals under the
mixed claims agreement, and the
resolution sponsored by Senator
Harrison CD of Mississippi, per-
mits the President, in his discre-
ton, to hold up the payment u1-
til Germany satisfies her Ameri-
can creditors.
The theory underlying this
resolution was that it would be
silly for the United States Gov
ernment to pay German nationals
20 millions at a time when the
German government is officially
regulating its obligations to
American nationals.
What To Do Next?
There is scant sympathy for
Germany in Congress and through
out the Administration generally.
But there is equally scant sym,
pathy for our late allies, who have
defaulted on obligations 10 times
as great as Germany'S.
If German funds in this country
we're to be impounded. it is ad
mitted there is no logical reason
why British and French funds
should not be similarly impoundec
The State Department is in a
automatically embarrassing hole
in the situation. It may and viii
protest volubly, but If it does
Hnonnnh ~ ara hncidAr lanlAi,an. aa,A IA 4