Evening star., 1934-01-14
TARIFF REPRISALS BY u. S.
CALLED ECONOMIC FOLLY
Boycotts Proposed Against War Debt
Defaulters Would Destroy Best Amer
lean Markets Abroad, Observer Says.

ABROAD ana GHuS Cne 1cIuldIl SuI plus o4
exports over imports.
But as this process goes on the Ger
man government deliberately reduces
the payments abroad of Germans who
have borrowed in London or New York.
The ultimate effect Of the boycott Is,
therefore, that the American and
British holders of German loans pay
for the boycott by losing their interest
payments on their securities or paper
And obviously the thing would work the
same way II the American Government
undertook to boycott France or Bel
gium, although it would be the Amer
lean exporters, not the American Sc
curity holders, who would bear the
burden
Again. one hears from time to time
of the famous fashion in which An
drew Jackson forced the French to pay
ings in this country. But times have
changed and the American property
holders in Paris. on the Riviera and
elsewhere in France, collectively, have
an investment many times larger than
any French holdings here. So If Roose-
welt undertook to emulate Jackson 1t
would be American property holders In
France who held the baby"
uuAsuiuS DCos dyCAs
In reality, Congress has exactly one
possible weapon. 1t can refuse to can
eel the war debts. which are quite be-
however, this course will not disturb the
nations which have actually defaulted,
namely, France and Belgium, but only
Britain and to minor degree Italy.
Both of these nations have continued
to make token" payments and Britain
has already paid upward of $4,000, ,000.-
900. In effect, therefore. this would be
to punish our best payer.
As a practical matter we have come
to the point where the future Of the
debt question is clear. For certain
time Britain will continue to pay us
steadily diminishing semi-annual in
stallments which will not exceed q
value of $5,0oo,o0o in gold. Italy will
100000 semi-annually. Some Of the
other debtor nations will follow the
British example-more than will imi-
most a prospective payment Of some
$4,000, 900 annually on a debt Of sl2,-
600 600, 600
In addition the private investors of
the United States are seeing the rapid
collapse Of their holdings abroad, which
in the aggregate amount to similar
sum. This is notably true in the case
of American investments in Germany,
which exceed $4,000 900, 900. Yet it is
impossible to make the average Con-
gresham recognize that what is taking
place is not the result Of some wicked
conspiracy of dishonest foreign debtors,
but the inexorable operation of eco
nomic laws.
A nation can in the long run only
sell abroad to the amount it busy, save
as 1t is willing to make good a deficit
in purchases by loans. It can only col
lect debts whether governmental :, or
private as 1t buys. more goods abroad
than it sells. Thus nation which ex-
ports more than 1t imports can only
collect debts abroad as it lends the
amounts due on those debts. As long
as we did lend the money We collected
the debts, but when we stopped lending
the debt payments ceased automatically.
"Get Paid or Get Square,"
When the great depression came we
were the most vulnerable of all nations
because, on the one hand, our exports
vastly exceeded our imports and, on
the other. the world owed us upwards
of $4,000, 900 00n in public and private
debts. But so far present-day states
manship has not undertaken to make
clear to the American people that it was
the failure of previous craftsmanship
to recognize the fact that q creditor
nation could not have an export sur
plus which was responsible for our dis
aster. On the contrary, it has so far
confined itself to the consideration Of
two impossibilities- es-namely, to get paid
or to get square.
What one must hope will ultimately
emerge from the whole mess is a public
appreciation Of the simple truths under
lying the entire problem. AS world trade
continues to diminish we are coming
daily nearer to the point where 1t be-
comes matte. of direct barter. Up to
the limit Of the possible all countries
are striving to become self-contained by
reducing their imports. To the extent
they succeed in this they are seeing
their exports decline proportionately.
Presently the time must come when
governments begin to talk with each
other exactly as the American Govern
ment talked with the French. when 1t
suggested France buy apples to balance
our wine purchases But nothing is
likely to happen in our case so long as
the American people continue to believe
they have the power to regulate the
sales to us Of foreign countries and
still continue to sell abroad more than
they buy. The nations which owe us
most are our best customers. They buy
far more Of us than we of them. As q
consequence. not only can we not COL
lect the debts but we are certain to
lose the trade If we go into tariff re-
prisals and embargoes in the hope Of
enforcing debt payments. This may be
unjust, as it certainly is unpalatable,
but 1t is the fact.
Copyright Mcclure Newspaper Syndicate.