Liquidation of Allied Debts By Frank H. H Simonds The request b by the secretary of the tha treasury for tor legislation enabling him subject to the approval of the president to deal with kith the liquidation liquidation liquidation liquida liquida- tion of ot the allied debts raises once more moro this most tangled and thorny of all our international problems On no subject has there been more misunderstanding and less clear apprecIation appreciation appreciation ap ap- in recent years Thus at once there begin t to be heard dot de do- demands t mands wands havi having g political cal explanations that the allies be compelled to pay at once Yet the truth is that not the most prosperous the richest of all of our debtors could pay at once and supposing sup sup- posing that this nation pation namely Great Britain should undertake speedy liquidation the consequences might be disastrous for us in the extreme At the moment the British government govern govern- government ment owes us Conceivably Conceivably Con Con- British private investments In this country still equal this vast sum despIte despite the reductions due to towar towar towar war liquidation Conceivably the British government might commandeer comman commas deer these Investments but what would be the effect upon our stock I markets and upon our Investment I world of having this vast sum in securities se- se se securities dumped upon our hands Must Take Long Time The simple truth is that the whole which Europe owes us WI can oan be paid only onty over a long term of years a generation at the short short- est In this respect it stands squarely square square- square square-I ly Iy with the which Germany has undertaken to pay to her in something more than thirty years year in annual Installments Install Install- Installments ments including interest and sinking fund contribution of something less On this same 5 per percent percent percent cent cent basis the contribution of t the e al allies allies al- al lies Ues to liquidate their debt to us would be around annu annu- ay ally But this this- payment cannot be made in money that is in gold and it would would have little value in the depreciated depreciated depredated de de- de- de predated currency of European nations nations nations na na- na- na which would still further decline decline de- de cline in such circumstances It cannot cannot can- can not Snot be paid in gold because no nation could lay hands upon the gold Once more the familiar fact tact is established establish establish- ed that Europe can pay us only by goods or by services This means in practice only b by articles imported into this country or by American goods carried abroad in British or other other foreign bottoms Enormous Imports Necess Necessary 1 In a word once the allied debt is funded it can be carried only If it the de debtors can sell to us in goods in excess of what they nor nor- nor normally mally send us or can reduce their purchase In this country by that sum D Deduction will ani only be made for tor the sum sura earned In carrying our our GUI goods and raw materials abroad in In r foreign ships aMps But since we need very few raw m materials and only a portion portio of these can In any event come come from Europe payment will have to be made almost exclusively in m manufactured articles f Nor is this by any means the th whole story Private credits advanced advanced ad- ad vented to Europe mainly to the allied allied al- al lied nations have exceeded i and are still necessary not I J Jalone alone for foreign nations but as the the- sole method of preserving even a minor fraction of our shrinking ever export trade Taking the governmental governmental govern govern- mental loans and the private credits It ft is a safe estimate that Europe will have to pay us us for tor a generation at pot t least not much less than 1000 annually And in the main this enormous sum must be paid in goods Exports Must Decrease e We We have seen the rapid shrinkage of our trade in recent months montha This is only one detail and the process process process pro pro- cess must be continued for for fora a lone long time Europe must do two things 1 in order to pay us It must st stop p buying from tram us just as far as It is 11 I I possible it must rapidly increase the I sum total of its exports to us The n. Thenet Thenet net of the change must represent an anI I annual balance in favor of Europe of less the sums sums resulting re- re resulting re re- from rom sea carriage and the tho amounts spent by Americans in Eu- Eu rope But the sea carriage represents represents seats successful competition of European European European Eu Eu- shipping shipping with our own new merchant marine with still further paralysis for tor it As it stands Germany must pay paT y her conquerors conquerors' annually annual- annual ly they ther must pay us on governmental government government- al loans around while private credits- credits involve a further payment payment payment pay pay- ment of tome some Thus Thu it will be seen een that laying aside all aU question of reconstruction of reconstruction reconstruction re re- construction of at rebuilding the ruina ruins hI h- h I of or the war Europe will not alone 1 have to pay paT us us- usa a sum equal to that which Germany pays her conquerors but because because- of private credits the total payment will be nearly a third ti greater than the German reparations German Payments Insufficient I But Germany can only pay paT her i iI conquerors conqueror who were her victims victim I j I I in goods goode and service errice Her main contribution con- con J will be b coal which cannot in turn be shipped to us is since sines we es- es r port coal In the end she sh-e will wUl als also supply labor and material for the re- re reconstruction construction of French ruins ruins and and a athis this too too will only very remotely advantage us to the extent it contributes contributes contributes contrib- contrib utes to the of one of our principal debtors Great Br Britain's taia I f share of ot the German Indemnity C Continued on Local Page