A FORMULA FOR CONGRESS

Nelson Evening Mail, Volume LXVI, 11 February 1933, Page 2

A FORMULA FOR CONGRESS

FRANK AMERICAN COMMENT “The ecomonic problem is already decided—simply because there is no possible way, in the visible future, to take from our debtors anywhere near the quantity of real wealth which the ocbts are supposed to represent, says tlib “News Republic,” a leading American weekly. “Great Britain has not the export balance which alone would permit her to continue payment. . . France lm.s nowhere near enough gold to pay both England and the United (States. No refusal to reconsider, no ardent assertion of rights, can change these facts. We could even go to war in order to collect, and still find it impossible to take away enough booty to meet the obligations.” The writer says that Mr Roosevelt has resorted to negotiations with the debtors, which requires no action by Congress, “unwilling even to talk about any change in the payments.’ By this procedure, “Congress will be called upon only to ratify any result of the negotiations. This formula provides a breathing spell for the essential change of atmosphere. It allows time for the invention of new symbols which Congress may be induced to accept. There ar e numerous possibilities in this direction. Congress can, in the end, we are confident, be persuaded to ratify a satisfactory settlement which its members can say is not a cancellation. THE LAUSANNE MODEL The “New Republic” expresses the opinion that the final settlement may be based on the Lausanne formula, which was designed, while satisfying popular sentiment, especially the French view, to fit the hard facts. Reparations were not in words, cancelled. They were merely reduced and put in the form of a lump sum. Payment of this sum was postponed. In the end it was to be paid only if a bond issue of the requisite size could he floated on the international market, at a minimum price. Even then, the proceeds were to be used, not to pay France or other Governments, but to finance economic reconstruction in Europe. They might, for instance, be spent in Germany itself. Thus, real cancellation was provided for. The writer suggests a parallel settlement of the debts to America that would help world-wide recovery is entirely possible. “We provide for the lump payment of the capital ‘ sums, reduced in accordance with the deflation of prices and the difficulties of transfer created by the shrinkage of trade, (which we could be persuaded, is not real reduction). We further provide that this payment be made only if the bonds necessary to finance it can be sold. (Of course, those who think France and Great Britain can pay at present cannot logically contend that such bonds could not be sold). We specify, again, that the proceeds of the bonds' be used, not to pay us directly, but for investment wherever they would most lielp revival of trade. It would be easy to find ways of so using them that the foreign markets for American manufactures and farm products would be correspondingly increased.”