SUPPLEMENTARY -EBUTTAL NOTES
RESOLVED: THAT THE UNITED STATES SHOULD AGREE TO THE CANCELLATION
OF INTER-ALLIED WAR DEBTS.
#1. THE NEW YORK TIMES, December 13, 1932, p.17. Premier Herriot's
Speech on the War Debts Issue.
No one will ever forget that intervention, which at a diffi-
cult moment raised the American Army from 182,000 men to 5,000,000
of which 2,000,000 came-to France. We do not forget that the United
States sent us 2,000,000 tons of steel, 5,000,000 tons of foodstuffs,
and that it increased its fleet from 2,000,000 to 6,000,000 tons.
If ever we should forget that magnificent page in history the
silent testimony of those 75;,000 graves in Balyleau Wood and St.
Mihiel will always serve to remind us.
#2. THE SATURDAY EVENING POST, -December 24, 1932, p.9. Gentlemen
Agree, by Isaac F. 1arcosson.
After the Armistice we,sold to France for some '400,000,000
a lot of war supplies, including many articles useful for peace
as well. At the price it- was a genuine bargain. Being a bargain,
it should have been a cash transaction. Instead, it was funded
with the rest of the French debt. France then sold upward of
;300,000,000 worth of these supplies to the Little Entente and po-
land. She has only paid us O200.,000,000 in principal and interest
since the debt funding. She is, therefore, $100,000,O00 to the
good in cash on the war-supnlies transaction alone,- and the
whole sum remains unpaid to us.
#3. LIBERTY, January 7, 1933. p.24. Jay Franklin. A New Deal in
These wild-eyed Americans who worry more about the'fate of
the gold standard in'Finland than about the starving baby in the
next block have been acting for the last ten years as though this
were the only time in history when one government had owed money
to another government at the end of .a great war. The heart-rending
cries about Uncle Shylock, the lamentations of the Nicholas Murray
Butlers who see cancellation as a moral duty, the bleats of the
Borahs who blindly demand that the European nations shall anandon
their means of self-defense in return for remission of a debt in-
curred in self-defense, seem to forget that for the first two
generations of our national existence the United States was on the
short and dirty end of a war .debt to our. friend and ally France,
and that We paid it back, painfully, every cent of it.
#4. LIBERTY, January 7, 1.933. p.24. Jay Franklin. A New Deal in
Immediately after the American Revolution we could not pay.
We had disorder, disorganization, paper money, and no strong.govern-
ment. We convinced the French that we could not pay them, but we
acknowledged the debt. When Alexander Hamilton-funded our obli-
gations under the new Constitution, we began repaying France, years
after the war. :Then in %798.we fought the French; but when that
was over we again acknowledged the debt and went on paying.
Not until long after Napoleon had been defeated at Waterloo
did we complete repayment of an obligation which had originated
nearly fifty years before; and there is no record of the American
Government having sought to evade, deny, or cancel this debt.
SUPPLEMENTARY REBUTTAL NOTES
#5. LIBERTY, January 7, 1933. p.25.Jay Franklin. A New Deal in
The suggestion is here made that we should not charge a cent
of interest on the war loans made before the Armistice and that
any interest on these loans which has already been paid, should
be applied to reducethe principal of these pre-Armistice loans-.
The balance on these loans should be madeavailable in'small annual
installments, and might be used, as in the case of the Chinese Boxer
Rebellion money, to send foreign students through American univer-
sities and American students through European universities. The
post-Armistithe loans should-be treated on a commercial basis and
paid with interest over a practical period in relation to capacity
to pay.' '"e should deal with individual 'debtors, not a'united fropit.
#6. CONGRESSIONAL RECORD, December 6, 1932. p.'63. by Walter F.
George, U.S.Senator from Georgia, and member of the Senate Finance
Who can say that if the debtors are compelled to pass payments
now due or hereaft'er'm turning that the ill effect upon their credit
standing so far as it relates to military expenditures may not in
:the long run become a grea'ter'factor for good than any temporary
holiday in the construction-of military armaments purchased with
the cash 'of the American taxpayer- thlough'cancel.lation of the war
#7 'THE UNITED STATES-DAILY, November 29, 1932. p.3. Senator
Harrison, ranking minority 'member' of the senate Finance Committee,
in a radio address Nov. 28.
It is said that complete loss of these loans will follow any
default. That is a dogma withno'sufficient support in precedent
or logic. It is like the assertion that any act of repudiation
would impair international confidence. That argument is that
these nations can iot pay, and therefore the world will lose con-
fidence because they do not pay. That is putting the cart before
the horse, If any confidence is lost it will be because they can
not pay and not because they do not pay. It is quite true that
it they can pay, repudiation will impair-the world's belief in the
sacredness of contract, but that is no reason why'we should attempt
by forgiveness, to persuade a nation which'is able to pay that it
ought not to default.
#8. NATIONAL CITY BANK OF NEW YORK. Monthly Letter for December
The war-did not seriously'affect-the-amofunt of British foreign
capital holdings, although they were not increased as otherwise
doubtless would have been the ease. An important part of the Amer-
ican holdings were sold in this market, but by no means all, Other
British investments abroad were'generally of a class not readily
realizable outside of the British market. 'Since the war an import-
ant Body-of new foreign investments has been made, including those
in the Dominions, and it may be- that the total of such holdings is
now as large, nominally, as before the war,
#9. SATURDAY EVENING POST, December 31, 1932. p 22.Editorial.
Even if after a full examination of Britain s present condi-
tion it appears that for :the present full payment would be an un-
warranted hardship, we'can see no reason for a permanent scaling
SUPPLEMENTARY REBUTTAL NOTES
down of the debt. The debts could be scaled down for 1933 to
capacity to pay, and then from time to time there could be adjust-
ments down or up as England's situation was worse or showed improve-
ment. Such a proposal is both fair and generous, though if we
made it we should hear the old cry about uncertainty holding down
recuperation. But the truth as the bottom of that well is that
European nations want to take the fullest advantage of the present
depression without giving us benefit of recovery.
#10. TIME AND TIDE (English) November 26, 1932.p.1237. Editorial.
There is the provocative spectacle of France sitting on about
1700,000,000 of gold, L200,000,000 of which she withdrew from
America at an inconvenient time, and pleading that she is not in
a position to pay the mere 20 million dollars,L4,000,000 at par
due next month.
#11. NATION, December 7, 1932. p.557. Paul Y. Anderson.
As for the French, they might as well bay the moon as petition
Congress for further concessions. Too many francs have been ex-
pended in equipping the armies of Poland and Rumania.
#12. THE SATURDAY EVENING POST, December 24, 1032, p.36. Gentlemen
Agree, by Isaac F. Marcosson.
In 1931, we sold goods to France amounting to $149,093,000.
The principal items were cotton, mineral oils, machinery, cooper
and tobacco. French exports to us totaled $60,542,000, the main
products being cotton and wool fabrics, silks, paper and cardboard,
hide, skins and furs, clothing, lingerie and leather manufactures.
For practical purposes, the entire export trade of France to
the United States, and for that matter to the rest of the world,
consists of manufactures articles. Contrast this with the leading
commodities that we send to her and you find that the bulk of
them consists of raw materials and machinery representing the tools
essential to industrial production. Finally, by two items of invis-
ible exnort--namely, American tourist and resident expenditures--
30,000 Americans live in France--the deficit on commodity exchange
is more than wiped out. It really leaves France a surplus. The
French contention that Franco-American trade is one-way traffic
is not justified by the facts.
#13. THE REVIEW OF ECONOMIC STATISTICS, Harvard Economic Society
november 15, 1932, p.180. C. J. BUllock.
From 1922 to 1931 there was no year in which expenditures by
American tourists in foreign countries did not greatly exceed all
expenditures by foreign tourists in the United States and all re-
ceipts by our government on account of both interest and princi-
pal on the so-called "war debts."
#14. NATION 135:637 December 28, 1932. Harry Scherman. What England
Could Have Said.
You ask us to suggest in what form payment can be made with
least injury to our own citizens, to yours, and to the rest of the
world. You suggest that sterling deposits guaranteed as to dollar
value be held in London to your credit until such time as they can
more opportunely be transferred. We still feel, however, that this
SUPPLEMENTARY REBUTTAL NOTES
would not solve the immediate difficulty, because that amount of
sterling awaiting transfer might easily keep the 'value of the
pound unsettled, with disturbing effects upon the world prices of'
commodities, even more than if it were transferred at once.
#15. NATION 135:637. December 28, 1932. Harry Scherman.What England
Could Have Said.
It appears to us that by far the least injurious method of
making this payment, to everybody concerned, would be in the form
of British-made goods, which you as.a government should accept di-'
rectly from us as a government; and we believe you will agree,
uDon close examination of this proposal, that this is the simplest,
most equitable, and least detrimental way out of the present diffi-
#16. NATION 135:638, .December 28, 1932. Harry Scherman. What England
Could Have Said.
The two lists of goods aprended differ in this respect: one
represents goods that ,are in fairly common demand for the conduct
of the various departments of your. government; and which you would
thus have to purchase in any case in the open market.. The. other
l8st represents goods (chiefly food and clothing) that might be
consigned by.us, if you so direct, to the'American Red Cross. to be
distributed'in-its present relief activities. Whichever list of
goods you accepted, your expenses would obviously be reduced by so
much and.'yoYr citizens relieved. to that extent of the. burden of,
taxation during the coming year.
#.17. NATION 135:637,. December 28, 1032. Harrt Scherman. What England
Could Have Said.
Possibly two further points should be made to insure .a still
clearer understanding of the .reasonableness of this, proposal.
First, the negotiators of the war-debt agreement, in .specifying
gold as the method of payment, undoubtedly did so, not because as
..a commodityit was solely desirable, but because it .is the only
measure of value in general international use. They must have
contemplated that the agreement would be fulfilled by the accept-
ance in world commerce of British-made goods and British services
to.the 'amount states; for, as is well-known, under normal conditions
bf international trade, the exchanges between nations take the ul-
timate form of goods and services for goods and services, and gold
has only been transferred when necessary to settle balances. Second
the sums you lent to us,.represented by the debt agreement, were..
not received by us in gold, but in the form of American -goods and
American services. For these two reasons it is the more equitable
S.that payment be accepted directly in the form. f British-made gods.
#18. THE SATURDAY'EVENING POST, December 24, 1932, p.8., Gentlemen
-Agree, by Isaac F. Marcosson.
The argument that the debts':constitute a .handicap on inter*
national recuperation, so widely employed by cancellation propagan-
dists, is nullified by the fact "that during the twelve months'
respite from intergovernmental payments made possible by the Hoover
moratorium, Europe, instead of setting her house in order, sank
deeper into the morass of..economic confusion.. Britain, for ex-
ample, went off the gold standard, while France, in a far stronger
economic position, began to face the most serious budgetary diffi-
culties--largely born, by the way, of extravagance and not inherent
weakness--that she had known since the flight from the franc in )924.
Negative SUPPLEMENTARY REBUTTAL NOTES Page 5.
#19. WOMANS' PRESS, December, 1932. p.726. -Alice Greenough Townsend.
If we believe that the international debts should be cancelled
let us individually notify our representatives in the Congress that
we would agree to have cancelled any government bonds which were
issued in order that the loans to Europe might be made, and which
are largely held by banks, trust companies, and public institutions
gor our own benefit as well as by private individuals.
#20. SATURDAY EVENING POST, December 31, 1932. p.22. Editorial.
Ours is.an economic, not a political situation. If twelve
million men out of work, plants shut down or on part time,
much of our industry in the red, farmers unable to realize production
costs, hundreds of thousands of city and farm home owners unable to
meet their taxes and mortgage interest--if that is not an economic
situation, we need a new definition of terms.
Naturally and logically, with these facts before them, members
of Congress who represent their constituents in any real sense are
unwilling, by standing for cancellation, to saddle them with Euro-
pean war costs, in addition to the huge bills that our Government
incurred in that dubious foreign adventure.
#21. SATURDAY EVENING'POST, December 31, 1932, p.22.Editorial.
If Greet Britain's capacity to pay us is to be determined,
our capacity to pay her debts should also be examined, because one
or the other of us must pay them. There is no such thing as can-
cellation in the sense of simply wiping out the debts. Either
the British taxpayers or the American taxpayers must pay them.
#22. THE SATURDAY EVENING POST, December 31, 1932. p.40. Alonzo
E. Taylor, The Forthcoming International Economic Conference.
If the war debts were reduced, the burden of American tax-
payers would be increased. Transfer of the tax burden to us is
precisely what the taxpayers in Great Britain, France, Belgium and
Italy desire. There is no use trying to suggest that such added
tax burden is good for us, or that we ha ve deserved it. Europeans
talk as though it were an accepted doctrine that the tax burdens
of different peoples should be equalized, The high taxes of Europe
are the result of the political sins of their governments; and if
the masses in Europe are innocent, that is'no reason for passing
over part of their unfortunate burden to innocent masses in this'
#23. THE SATURDAY EVENING POST, December 31, 1932 p.48. Alonze E.
Taylor. The Forthcoming International Economic Conference.
Five years ago we were told we should forgive the war debts be-
cause we were so prosperous; now we are told we should forgive them
because we are so unprosperous,
#24. THE NEW ENGLAND WEEKLY, December 1, 1932. p.146. Editorial,
The fact that our continued payment of our legitimate debts
may be bad for our creditors is certainly not an argument, though
it has been used as such, for our default,
#24. THE SATURDAY EVENING POST, December 31, 1932. p.22. Editorial,
Right now there is a body of American opinion that has not
reached the cancellation stage, at least openly, which favors
SUPPLEMENTARY REBUTTAL NOTES
scaling down the debts in 'return ,for di-sarmament and trade advantages.
We venture the opinion that there will be no disarmament in Europe
unless from stern necessity--inability to raise the cash or to bor-
row it, or the need to pay old debts before making new ones. Sr
far as trade advantages go, France is not receptive to the idea,
and England cannot: give us any real trade -advantages under present
conditions, For she has just concluded the Ottawa Agreement, which
aims, as far as possible,,to keep America out of Empire markets.
#26. CHASE ECONOMIC BULLETIN,'December 12, 1932,p.3. Benjamin M.
Anderson, Economist, Chase National Bank'of the City of New York.
It is to our interest to collect as much as-we can of these
interallied' debts without doing a disproportionate damage to our
foreign markets and perpetuating the'disorder in our own internal
trade and finance, Our-ownvi government needs money, our taxes are
going to hav. to be increased in any case, and onr taxpayers are
reluctant to assume any more burdens than are absolutely necessary.
Published December 1, January 1, and February. 1. Price
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