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war purposes only. Since then Britain has made similar funding agreements with France and other nations. In her agreement with Italy she wiped off all claims for interest, and materially reduced the principal of the debt. In both the French and Italian agreements, she reannounced her policy of collecting from the other allied nations no more than the amount necessary to pay her indebtedness to the United States and agreed to credit each allied nation with any excess of payment over the amount paid by her to the United States. Under these agreements, it will be seen that Great Britain occupies merely the position of our collecting agent, just as she acted as our disbursing agent in making the loans to other allied nations and in placing credits for them.

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Even assuming and I hope it is not a fact that the people of this country and the administration in charge of its affairs are unwilling to consider the moral features of the situation in determining what shall be done about it, still it is necessary to look at the problem in the light of future possibilities.

Suppose to-morrow the City of New York were destroyed by fire and earthquake, with a consequent loss of billions of dollars, resulting in the insolvency of all insurance companies. Would it not be an utter absurdity to insist that every man must ultimately pay every dollar he owes, and if he fails to do so, the burden should descend on the shoulders of his children, his grandchildren and great-grandchildren? The only sane plan would be to abandon all such talk and reorganize

the community on a basis that would make future commerce and future municipal development possible. Every bankruptcy and insolvency law, state and national, recognizes this principle. Every enlightened business man recognizes it. When one who has been a valuable factor in the commercial world fails, his former business associates do not trample him under, extort the last farthing from him and make his further achievement impossible.

They settle with him on a very small basis, taking their chances of making greater profit out of his future success than could be extorted from his present calamity. It is so with the nations of Europe. Even were their debts of a wholly commercial character, it would be a wise economic policy to settle them for a relatively small amount and to restore the debtors to a position where they might be useful members of the community of nations. Such a course would ultimately bring to us larger benefits than would the collection, through a long series of years, of the entire amount with interest, even were such collection possible. As a matter of fact these so-called debts are not collectible in a large sense. The effort is not unlike an attempt to convert stage-money into cash. They are of little value in comparison with the rehabilitation of Europe industrially and commercially. Secretary Mellon in addressing the Ways and Means Committee of the House of Representatives said: “The entire foreign debt is not worth as much to the American people in dollars and cents as prosperous Europe as a customer." What then are we going to do about it? On this point

we have been deluged with utterances by members of the House and the Senate, appealing to principles of international honor and commercial integrity. Such utterances have been made by representatives of some states which have in the past repudiated their obligations by reason of insolvency; by men who have themselves taken advantage of the beneficent provisions of our insolvency laws; and by bankers who have failed to learn consideration for others through their own experience in panics, where they would have been unable to meet their obligations but for the helping hand held out by others threatened with like disaster. And during all this controversy there has been an utter disregard of the fact that this prosperous nation refused for more than a century to make an appropriation for the payment of an acknowledged debt to citizens of France, the only ground offered for such refusal being that the claims had been bought up by speculators. Every government at one time or another has failed to perform its solemn treaty obligations either of necessity or as a matter of deliberate policy, and has acquired territory in violation of every principle of justice. Even our own little transactions with the native Indians in this country and with Central America, will not stand impartial investigation.

The fact is, and we might as well face it now intelligently, no one of the nations is going to pay in full the principle of its so-called foreign war debts, to say nothing of the interest. Germany will not pay. Her statesmen have very clearly demonstrated that she cannot and will not pay in

full the reparation claims as originally fixed by the allies. Even at Versailles her delegates, while accepting the terms of the armistice because no alternative was before them, said frankly that it would be impossible for Germany to comply therewith. She at least was commendably frank. After nine years no substantial part of any of the war debts has been paid. They will never be paid for the reason that each of the allied governments is to-day facing an indebtedness approximately five times as great as the greatest of its past indebtedness. Governments can only pay debts by moneys collected from their people through taxation, direct or indirect. As pointed out by a recent author, for any nation to pay war debts, it must have a budgetary balance in its treasury over and above the cost of running its government. To produce this budgetary balance under conditions prevailing in Europe, would mean such a staggering burden on the industry of its people that no government undertaking to do so could possibly endure, not even that of Great Britain. It is difficult to find, even among our millionaires, many men who would gladly pay the debts of their own fathers. No one is so gullible as to expect he could find any considerable number of men who would undertake for themselves and their posterity, through three or more generations, to pay off the debts of their grandfathers and great-grandfathers. It is a practical absurdity. The French government, after being permitted to wait for five years, has finally expressed its willingness, pending further adjustment, to pay ten million dollars this year, to

be credited on account of her debts when adjusted. Italy, which has received terms of settlement far more favorable than those granted to Great Britain or offered to France, is making annual payments of a very moderate amount, based, theoretically, largely on her ability to pay.

The law of self-preservation is the supreme law of nations as well as the supreme law of nature. When nature pronounces an emphatic no, the customary rules of private conduct and international intercourse are suspended. We have to-day a half dozen of the leading nations of the world facing an impossible situation, with the accumulated wealth of centuries destroyed or wasted by war, with earning capacity greatly reduced, staggering under oppressive taxes and assailed by propagandists who denounce capital and individual property rights and encourage everywhere the spirit of unrest and discontent. In such circumstances the effort of any of these governments to compel its people to undergo further oppressive taxation, depriving them of the fruits of their labor, placing them in a state of peonage to this country for several generations in order to pay us, their ally, the costs of a world-wide calamity for which they were in no wise individually responsible, is something that human nature will not endure. Governments may enter into solemn agreements to pay definite amounts; but governments are merely agents of the people they represent. They are merely the medium through which the people make payments, if payments are made. The people of the various nations must produce by

their toil, the budgetary surplus with which their governments may make such payments. But governments may be overthrown and succeeding governments may not have the same point of view or may not be able to perform such agreements because of the unwillingness of their people to submit to the necessary tax. And an attempt to enforce such payments if continued through many years, may well result in the overthrow of every stable government in Europe. What then will become of all our wealth, and of our uncollectable debts? Even if we have accumulated all the gold in the world, it will avail nothing, for the demonetization of gold is at least a possibility. There is no sanctity about the yellow metal; it is merely a commodity which by common consent of certain nations has been adopted as a medium of exchange because it is more satisfactory in many respects than other commodities for such purposes.

Of course some payments are now being made. England and Italy have accepted our terms, at least temporarily. England is paying us some $200,000,000 a year under the refunding agreement, not because she deems it a just debt, but as a temporary yielding to the press of circumstances. She is making annual payments and is borrowing from our bankers huge sums of money, far in excess of the payments. Italy is pursuing the same course. Probably every nation in Europe if able to borrow millions from us annually, would be willing to pay us part of such borrowings on account of even an imaginary debt. But eventually, when borrowing becomes difficult, we shall have to consider

the practical means by which such annual payments may be enforced.


There are people for whom I have great respect, who are unwilling that we should make any compromise of the war debts for the reason that they object to the nations of Europe using "our money for military expenditures in preparation for another war," they being absolutely opposed to war under any circumstances. Their purpose is noble even if their reasoning is unsound. Doubtless war is a great insanity. It is horrible to think that the highest scientific achievements, the highest results of inventive genius are being used for the massacre of mankind; for that is what war means in the outer semblance. But war, like the kingdom of heaven, is within us, it does not come from without. It is not a visitation of nature, it is a wrong development, a maladjustment of human nature and the cure must be internal rather than external. As long as the spirit of war dwells in the human heart, as long as hatred and greed and lust and rivalry-the inherited spirit of the jungle exist, so long will they find expression in some form of war. And as long as men and nations fear war or violence or aggression and believe that they have just cause for fear, so long will they continue to prepare measures of defense-adequate or perhaps inadequate against such real or imagined menace. No agreement in the world would prevent them from so doing. Any government that believes its people threatened would abandon all promises to other nations and use its every energy and resource in prep

aration for war, and would be wholly justified. When the question "to be, or not to be" confronts a nation, the only possible answer is to devote every effort to the continuation of its existence. But has it occurred to our friends what a sad spectacle we as a nation present in advancing this debt-collecting proposal? We, the wealthiest, most prosperous nation in the world, having passed through a great war virtually unscathed as compared with the sufferings of other nations, having reserved to ourselves every political right, having refused to enter the League of Nations or to become a party to the creation of the World Court, having declined to attend conferences looking to the prevention of future wars, maintaining our right to make war or not as our interests require, arrogantly asserting the right to dictate to our former war allies the line of conduct they must adopt in order to get the benefit of our clemency in canceling or greatly reducing debts which they in all honesty believe they do not Is it conceivable that any self-respecting nation would willingly enter into such a state of servitude and bondage to another power? Consider for an instant the possible position of France under such an arrangement, should she be convinced, as many of her statesmen now are, that Germany, with the secret aid of Russia, is preparing for another war. This may be an illusion. sion. I am convinced that the developed intelligence of the German people would make it impossible. But assuming that the Government of France believed that its national existence was existence was so menaced, under

Owe us.

such an arrangement as is here proposed, France could do nothing in self-defense without our permission. Her only recourse would be to ask our leave to prepare for war. Surely our pride of piety and our spiritual arrogance could go no further! Even if such an agreement were within the bounds of possibility, the only practical effect would be to produce a situation-such as our well-meaning pacifists attempted to bring about during the war-which would render all nations except an aggressive nation incapable of making war.

There is another body of our citizens which opposes debt reductions or cancellations on the ground that the people of Europe do not like us. Of course they do not like us. Who does like a braggart? Who likes one who is forever boasting of his own achievements and forever endeavoring to make others acknowledge that they owe their very existence to his benevolence? Unhappily the people of no distinct nation genuinely like the people of other nations. Even we are not free from this attitude of mind. The average American of Anglo-Saxon stock regards the Frenchman as the most irrelevant thing in nature, having no real relation to the serious problems of life. The only reason he tolerates immigration from other countries is because it increases the number of possible workers that he may employ. The basis of all such dislikes is fear and distrust. The way to abolish such fear and distrust is by coöperative effort, by mutual understanding. Let us learn to live together, to work together, to hope

together, to help one another, to look forward together toward sane conditions of peace and prosperity—and these fears and antagonisms will disappear.

But assuming that the American people, through their representative government, refuse to give consideration to all arguments for debt cancellation or for reduction based upon principles of justice, intelligence and common-sense, what are we going to do about it? When the time comes that we cease to receive the annual payments provided for in these agreements—which time most assuredly will come-what remedy are we going to apply? The answer is there can be no remedy if such a situation arises. There is no way that payment by a sovereign state can be enforced save through war or economic boycott. We abhor war. That we should endeavor to enforce collection by declaration of war is beyond the bounds of possibility. The other remedy-the economic boycott-would be ruinous for a nation that produces many times over what it can consume, and the value of whose surplus product, which largely determines the value of its entire product, depends on the foreign market. Any administration that proposed such a course would be quickly voted out of office. Our future prosperity depends on a prospering Europe. What shall we do to restore her to prosperity and avoid the disaster, greater than that of the war, that would result from the disintegration of existing stable governments, and the rule of anarchy that would inevitably follow?

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