Evening star., 1940-05-19
Sentiment Seen for
Foreign Loans
By Frederic J. Hasktn.

tdA1iB PlhCc dIllOEB American DLe1HeSS.
men In the last few weeks in their atti-
tude toward the lending Of American
capital to Europeans or other foreigners.
Indeed, 1t is beginning to be noticeable
that this change has extended In some
degree to the general public But a
brief while ago, the very mention of in
Vestlng American capital abroad would
have been heartily jeered. Today the
belief is growing that loans, immense
loans, should be made abroad.
Nor is it felt that loans should be re-
stricted to private capital The idea
that the Federal Government itself
should again lend public funds to for
eign nations is growing.
This change of front seems extraordi-
nary because of the sad experience Of
Americans with previous lendings out
side the country. First there was the
matter Of the loans to the allies in the
first World War, initially the private
loans made through the House of Nor
gan and other bankers to Great Britain
and France and even some to Germany
and then the Treasury loans made to
our allies after the war was entered. 1t
still is a favorite topic of some news.
paper editors and politicians who inquire
why the debts amounting to more than
$4,000 ,000,0 900 have not been paid. The
answer to that now is, as it always has
been, that about the worst thing which
could have happened to the United
States since the first World War would
have been payment of these loans.
Americans have suffered enough from
unemployment and depression, and pay
ment of the war debts would have closed
more factories and thrown more per-
sons out of work. Also it would seriously
have curtailed foreign markets for
American exports, further injuring the
farmer as well as the industrial worker.
Then came another phase. In the
decade following the armistice, billions
were lent abroad. The Federal Govern
ment loaned hugely to former enemies,
such as Austria and extended loans to
such succession states, newly arisen out
OF the treaty of Versailles, as Poland and
the Baltic countries. These debtors
have not repaid and, save for Finland,
scarcely anything has been paid on ac-
count. Indeed of all the Government
loans which have been repaid in part, 80
per cent of the sums received have come
from Great Britain.
In one sense, of deeper economic i'm.
portance were the private postwar loans
made to foreign governments and to
foreign business enterprises. 1t sounds
utterly strange today, but the fact is
that American bankers and, through
wide distribution of bonds, scores of
thousands of American citizens, made
loans to the Republic of Germany. the
successor of the former enemy. More.
over loans were made to German mu.
inequalities, notably Berlin and Dresden.
Other loans were made to municipality
owned and operated German, Austrian,
French and other public utilities, and,
lastly, millions more were lent to wholly
private corporations In former enemy
countries.
- **
While most of the American loans
went to European borrowers, public or
private, the entire world was assisted,
The Far East and South American en-.
terprises were the recipients of huge
sums, all furnished by the American in.
vestlng public. There followed the
worldwide economic crash and bonds
began to fall into default. OF the total
which had been loaned, not including
the Government loans to the allies dur
ing the first World War, considerable
sums had been repaid but the debts re-
main huge.
And yet American businessmen are
coming around to the theory that, when
the present war is over, even greater
sums should be loaned and, in many
cases, to the same borrowers or their
successors. The postwar financing of
foreigners looks to many observers as
the only conceivable assurance against
so complete an economic debacle that the
last depression would by contrast, look
like piping good times.
1t is obvious that no one can buy
without either cash or credit. That ap-
plies to nations as we'll as to individuals
or companies. Moreover, it is generally
recognized that one country, even such a
country as the United States, cannot
survive prosperously in the midst Of
want elsewhere.
The newly forming attitude is not
prompted by humanitarian impulses, all
though there is some of that element in
volved. The real prompting comes from
self-interest. The factors in the situa-
ton bear close analysis.
Exports since the beginning of the
present war have been the highest in
10 years and while there has been some
increase in imports into the United
States, it is out of all proportion to the
gain in exports not only to belligerents
but to neutrals. The American export
surplus is at its record figure. That
means that, on balance of trade, for
eigners owe Americans big excess over
what Americans owe foreigners.
A large amount of the exports has
been made up of supplies of direct or
indirect use in war. The exports Of
airplanes and automotive products have
been fabulous Machinery and semi
manufactured goods play large part.
These are all goods which are largely
destroyed with their use. Now highly
important fact to consider is that, at the