Evening star., 1934-02-03
Defaulting Debtors.

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any doubt Of the mood of Congress
regarding the unpaid billions due to
the United States Treasury, their un-
certainty will be removed by the
action of the Senate on Friday. That
body, without debate or a record vote.
passed the bill proposed by Senator
Hiram w. johnson. Republican pro-
gressive, of California, penalizing for
the indefinite future all foreign coun-
tries which are in arrears to us on
account of past borrowings. Hence
forward. these nations will be denied
access to the American money market.
Eighteen different countries are af-
fected, representing total arrears of
1852, ,l03,e37 Neither they nor any
of their political subdivisions will be
permitted to float bonds or borrow
money in the United States in any
other way until obligations already
due and unpaid are squared War
time borrowers are those mainly, but
not exclusively. involved.
The House, in which anti-default
sentiment is even more pronounced
than in the Senate. is expected
speedily to concur in the latter's &C.
ton. which is the most drastic move
of its kind ever undertaken by the
United States Government Even
countries like Great Britain and Italy.
which have made so-called token"
payments as symbol of their ac-
knowledgment of the validity of the
debts, are penalized. The bill classifies
the token countries as remaining in
default on part of their obligations
Presumably the Senate acted after
acquainting itself with the views of
the administration and learning the
possible effect of the johnson bill on
impending debt discussions as well as
negotiations for reciprocal trade
agreements 1t is conceivable that
such legislation might also play a role
in connection with President Roose-
velt's plans for international currency
stabilization, now supposed to be i'm
minent.
There is little room for doubt that
in taking a stern attitude toward our
debtors Congress reflects a preponder-
ant public sentiment. The American
people consider that on the whole the
European governments in question
have adopted a studied policy of
cynical indifference toward the debts.
In practically every case the debts
have been refunded under agreements
which represent substantial conces-
sions in both principal and interest.
the British funding arrangement being
possibly the sole exception. Uncle
Sam has conspicuously refrained from
exercising undue pressure on his debt
ors. He has done SO even in the face
OF their demonstrated ability in many
cases. to finance gigantic expenditure
on armaments, while on one pretext
or another declining to enter into
arrangements to curtail
this major drain on their respective
exchequers
After all, these delinquent dollars
in default are owing to the American
people and Europe should not be sur
prised that Congress, speaking for the
people, has at length decided upon
heroic measures to remind our debtors
that American patience with system
tantamount to reputation has reached
the point of exhaustion.
1t will continue to be the country's
hope that the proposed embargo on
further foreign borrowings may soon
be lifted by required action of the
debtors themselves. 1t is within their
power to reopen the American money
market for their legitimate needs
under conditions which will once again
make them welcome borrowers and
willing lenders.
Seeming analogies are misleading,
or, as MIS-. Malaprop remarked, Ca
parsons are odorous." A merchant
who finds the profit on cloth will
hardly feel warranted in cutting a
few inches of the yard stick.