Title: Alied debts : supplementary rebuttal notes
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Title: Alied debts : supplementary rebuttal notes
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Publication Date: January 1933
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SUPPLEMENTARY REBUTTAL NOTES


RESOLVED: THAT THE UNITED STATES SHOULD AGREE TO THE CANCELLATION
OF INTER-ALLIED WAR DEBTS.

#1. BABSON'S REPORTS, November 21, 1932. Ewart Edmund Turner
(quoted)
History revealed Germany as only one among many culprits,
and among the least malicious and scheming. Russia sought an
ice-free port and made repeated statements it could only be won
by a general European war. France openly stated her ambition
toward Alsace-Lorraine. Germany, in fear, developed an army.
Every German believed, and believes, that this army was perfect-
ed for but one purpose; to secure protection for her people
that they might trade and till the soil in peace. They had no
desire for war. They had everything to lose and nothing to gain
by the eruption of a Eurorean conflict. Then came Sarajevo and
the swift events of July, 1914, which were masterfully turned
by the French publicity wizards to make Germany appear as the
bad boy of the Western world. That Poincare, Foch Ixvolski,
Sazonoff, and others of the Entente, deliberately wanted war
was never told America, That hntgland, for economic reasons,
sold herself to the Franco-Russian war lords was not divulged
to.America, nay, not even to the ,British-Parliament and a
portion of the Cabinet. Germany w:as adroitly blazoned as the
Agressor.

#2. BABSON'S .REPCRTS, November 21, 1932. Ewart Edmund Turner
(quoted)
In 1917 the allies were nearly whipped. The war at least was
to be a tie, possibly a defeat for the allies. There was every
chance that America's heavy loans to the allies would be total
tosses. Ameri.ca entered. It swung the tide. Trusting Wilson,
the Germans (who had sued for a peace without victory in 1916)
laid down .their 'rms. France and her allies responded by con-
tinuing the inhuman hunger blockade for fifteen months after
the Armistice. Thousands of women and children today bear the
awful scars of this immorality. It was a sin exceeding that of
the invasion of B Lgium. Then came the crushing treaty of re-
venge. Any sane. erson who knew the psychology of people could
have known that it was a peace to end all peace. Bht madness,
not sanity, ruled at Versailles,

#3. THE SATURDAY EVENING POST, November 5, 1932. p.38. Trading
in Our War Debts by H. F.Hollis.. (The question of matching our
money against their men)
A sufficient answer may be made to both these arguments, if
answer be required. For it is certain that neither was mentioned,
even if it was thought of, while we were signing drafts and the
Allies were signing notes, Then was the time to raise the question
or remain forever silent; we had a right to meet it then or not
at all. We might have decided at that timethat we did not care
to-pay a cash equivalent for our lack of preTaredness. We might
have refused to furnish. mohey which the Allies might later decline
t.o ay. Or, possibly, Co -, ress might have done the generous thing
The Debaters Info ureau 3 ho on Place, Portland, Ma
The Debaters InfbrmaU....' .ireau, 3 iorton Place, Portland, Maine


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SUPPLEMENTARY REBUTTAL NOTES


and voted our advances as a fair exchange for Allied troops
and service, and the people might have subscribed their money
following the action of Congress to hat effect. We do not know.
But the point is that wae were not given the chance to make our
decision before our money had passed and decision was foreclosed.
Now it is too late.

#4. THE SATURDAY EVENING POST, November 5, 1932. p.38. Trading
in Our War Debts by H. F. Hollis.
This delay on our part in entering the war is a fact which
tends to make us uncomfortable, but it has doubtless been con-
sidered in connection with reductions already made and it will
doubtless be considered in future negotiations. At this point
it might..not be impertinent to inquire how much toe more import-
ant Allies have allowed to lesser Allies for the use of their
man power at the front, and how much for holding the line single-
handed while troops were preparing. W e hazard the opinion that
no such alliances have been granted.

#5, NEW YORK TIMES, November 20, 1932.Section 8.p.l. Charles
SMerz.
Opponents of any change in the present structure of the
debts point out that more than 3,,000,000,d00 was lent to
Europe after Nov.11, 1918. This 3,,000,000,000 was not used
to help win the war. It was used for purposesof domestic
reconstruction; Opnonenents of revision therefore argue that
it is inaccurate to describe the loans as a war expenditure made
in -the interest of the American people. Nearly a third of the
loans were made after the war had ended.

* #6.. KANSAS CITY STAR, November 23,. 1932. p.18, Editorial.
The request of Cxecho-Slovakia for a revision of its
debt to theUnited States illustrates one importantmisconception
that is prevalent with respect to the inter-governmental obliga-
tions growing out of the World War. It is that most of the
debts owed to this country, as they.now stand, are properly
"war debts". In the case of Cxecho-Slovakia, of course, the
fact is obvious, since the country..was established only at the
end of the war.

#7. KANSAS CITY STAR, November 23, 1932. p.18, Editorial.
Aside 'from Great Britain, we lent European nations about
3,300 million dollars.after the war and the total "present
value" of the various debt settlements. (exclusive of the British)
was about 3 billion dollars. But most of our debtors do not
talk about reconstruction and relief loans: "war debts" sounds
better.

#8. REPUBLICAN SENATORIAL COMMITTEE, 1932. Questions Frequently
Asked; Answers Correctly given, p.31, -
Millions of dollars of Liberty Loan.money were loaned to
Great Britain after all hostilities had ceased. for the purpose
of enabling her to build up her export trade and enter again into
active competition with United States commerce.
The'Debaters Information Bureau, 3 Horton Place, Portland, Maine


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SUPPLEMF'.TARY REBUT*'AL NOTES


#9. REPUBLICAN SENATORIAL COvMMITTEE, 1932. Questions Frequently
Asked; Answers Correctly Given, page 31.
millions were loaned to foreign governments in order that
they could use it to pay interest on loans they had already made
from this country. In other words, we took our people's money
to pay interest due our people by foreign governments.

#10. REPUBLICAN SENATORIAL COI ; ITTEE, 1932. Questions Frequently
Asked: Answers Correctly Given, p.31.
Millions of dollars were loaned in order to set up govern-
ments and finance them in their early days,--governments which
were not in the war and which were not created until after the
war by the terms of the Treaty of Peace. Cxechoslovakia was one
example; Jugo-Slavia was another.

#11. SPRINGCFIELD(Massachusetts.)DAILY REPUBLICAN, November 26,1932.
p.14. Secretary Seimson's rely to Moratorium plea of Great
Britain, November 23, 1932.
Not only' this government received no territorial compensa-
tion, no economic privilege and no governmental indemnities at
the end of the war,, but since it had noaobligations. toward others,
to treat debts an'dL reparations as if they were linked could only
be to t.he disadvantage of the United States.

#12. REPUBLICAN SENATORIAL COMMITTEE. 1932. Questions Frequently
Asked; Answers Correctly Given *p.33.
Q. Is it not an injustice to ask foreign governments to
continue paying; us for sixty-two years?
SA. Quite the 'contrary. The United States would have much
preferred an agreement for the repayment of foreign loans in a
much shorter peridd, 'but it was at the especial request of
foreign governments that they be allowed sixty-two years in which
to pay these loans. Moreover, a great many of them asked leniency
to the extent of not being required to pay anything during the
first five'to ten-yen s of the funding agreement, and then grad-
ually increase the amount paid until it is liquidated.

#13. NEW YORK TIMES, November 20, 1932.Section 8,p.l.Charles
Merz.
Assuming that for sixty-tw-o years we .could properly have
charged our debtors interest at 5 per cent, the rate which their
notes-originally bore, than 51.3 per cent of their obligations
were canceled by our debt agreements. On the. assumption that
we could have charged interest at 41 per cent, the average cost
of money to the Federal Government at the time the loans were
made, the percentage of cancellation becomes 43.1, per cent.

#14. THE SATURDAY EVENING POST, November 5, 1932. p.40. Trading
In Our War 1)ebts by H. F. HOllis.
We should frankly confess that we are no longer able to
play the role of fairy godmother, even if we so d.esired. We have
been forced to adopt a "system of -unaccustomed economy in our goern-
mental housekeeping. We are striving to meet our government ex-
penses by drastic taxes. Since we are collecting every cent that

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SUPPLEMENTARY REBUTTAL NOTES


is due our Treasure at home, no reason appears why we should not
extend this policy abroad.

#15. THE NEW YORK TIMES, November 27, 1932. p.28. Report of
Committee of Chamber of Commerce of the United States on War
Debts.
The expenditures of all the principal debtor governments-- a
and indeed of the world-as-a whole--for military and naval pur-
poses have increased substantially since 1913. In that year
world expenditure for armaments was $2,531,000,000. The amount
expended in 1930 on armaments was $4,128,000,000, the combined *
figures for the six great powers, Great Britain, France, Italy,
Japan, Russia and the United States showing an increase of 65
per cent in thisdirection.

#16..THE NEW YORK TIMES, November 27, 1932. p.28. Reuort of
Committee of Chamber of Commerce of the United States: on War
Debts.
The total amounts budgeted for national defense for the
current fiscal year in the fifteen debtor 'countries amounted to
$1,336,000,000, nearly five times their debt service to the
United States Government for the current fiscal year.

#17. NEW REPUBLIC, November 23, 1932. p.32. Editorial..
Any promise about arms reduction which might be exacted in
return for debt reduction would be worthless. Pronouncements of
individual statesmen on the question of armament reduction mean
nothing; only ratified treaties specifying in detail how arma-
ments are to be reduced will accomplish the result. Nations
will not negotiate and ratify treaties of this sort unless they
are.convinced that their interests and safety.are compatible
with so doing. We cannot force any nation'.into an arms agreement
by pressure for debt collection.

#18. NEW YORK'TIMES, November 16, 1932. p.3. Representative Rainey
of Illinois.
The.-uropeans have given us $11,000,000,000 in their bonds
of small denomination. They agreed to pay us over a period of
sixty-two years. If the bonds can eventually be.sold in the market
of the country of issue, why should we not hold them? They are
supposed to be negotiable.
"If the European nations do not want to pay us it is just
too bad. *If they want to default and stand as defaulters it is
their own responsibility.

#19. CHRISTIAN CENTURY, November 23, 1932. p.1429. Editorial.
Rather than cancel the debts outright, or substantially
reduce them by negotiations dealing with debts alone, it would
seem better for the debtors to default, if not to repudiate.

#20. THE SATURDAY EVENING POST, November 5, 1932.p.40.Trading In
Our War Debts, by H. F.Hollis.

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SUPPLEMENTARY REBUTTAL NOTES


But so far as payments are not forthcoming, in cash or
alternative compensation, let us lock the notes away in our nation-
al chest, where the principal will remain intact and the interest
will run on. Thus may we sit tight and leave worry to our friends
in Europe, awaiting the day when the turning tide may afford a
chance to trade in the balance to our lasting good.

#21. NEW YORK TIMES, November 27, 1932..pages 1 and 27.
Studies made by official experts show that four of America's
principal debtors either are faced with smaller deficits this
year thah the United States, or have,a surplus of receipts over
expenditures.
France'and Britain have been operatingon .deficits during
their current fiscal years, although,much.under that of the
United States, which on Novt 23 stood:at.7734,045,410, or more
than 100 per cent of the receipts, which.totalpd. 664,062,700
in the period from July 1.
The British deficit, according to latest information was
34 per cent of total receipts,.while the F'rench deficit was
estimated at about. 24 per cent of the receipts.
These two countries, with Germany and.Italy, both of Which
have excesses of receipts over expenditures, are due to pay the
Unived States $254,700,000 this fiscal year, or 91 per cent of
the total receivable. Germany already has postponedan $8,000,000
payment.

#22. NEW YORK TIMES, November 16, 1932. p.l. Charles A.Selden.
The British realize that any official announcements that
they can pay would merely be us,ed.as ammunition by the opponents
of postponement in 'the United States Congress during t"e debate
that is considered inevitable. .It is already taken for granted
that many bitter attacks on Britain and other debtor States will
be made in that debate. It is also realized that admission of
the ability to pay would .swamp all arguments that the British
negotiators hope to bring forth to show'that payment now would
be as detrimental economically to the United States as to Britain.

#23. THE NEW YORK TIMES, November 11, 1932. p.l.Charles A.Selden.
As caIbed to THE NEW YORK TI'ES last night, the British
Government is not asking for cancellation and certainly is
not intimating default nor repudiation.. .If the negotiations
just begun fail the British will pay the $95,500,000 promptly
< on Dec. 15. '- .

#24. THE NEW YORK TIMES, November 11, 1932. p.l.Charles A.Selden.
It was asserted on excellent authority in the lobby of the
House of Commons tonight that the British Government already has
S on deposit in New York funds sufficient to make the December pay-
ment in full.

#25. NEW YORK TIMES, November 20, 1932. p.16.
Paris, Nov.19.--Reports from official circles today said
Premier Herriot was ready to pay the $20,000,000 interest instal-
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SUPPLEMENTAkY REBUTTAL NIES


ment due next month on the American debt if necessary.
The Premier's friends said he believed he could get the
money from the treasury without previously obtaining the consent
of Parliament. He is described es wishing to respect. internation-
al engagements, but hopeful that the debt negotiations.eventually
will produce a satisfactory solution.

#26. REPUBLICAN SENATORIAL COMIIiITTEE, 1932. Questions Frequently
Asked: Answers Correctly Given, p.59.
Statistics Showing "Ability Of Governments To Pay" Their Debt
To The United States. <
(Statistics limited to those governments which, under debt
funding agreements, pay the United States $5,000,000 or over an-
nually. All data as of th= year the respective debt funding
agreements were made, unless otherwise indicated.)


Country Percentage
debt pay-
ments to U.
'6.wpre to
total budge-
tary expendi-
ture.
Great Bri'ain....... 4.1
France............ 1.3
Italy............. 0.6
Belgium ........... 1.3
Poland. ......... ..1. ..
Szechoslovakia......1.0


iPercentage: Percentage
debt-pay- d ebt pay-
ments'to U. ments to
-S. were to 'U.S. were
expenditures to total.
for military exports
preparations.in 1924.
28.8 3.8
11.2 1.4
3.8 0.8
13.2 0.7
5.1 2.5
5.2 0.6:


Percentage
debt pay-
ments to
U.S. bore
to total
national
income.
1.3
0.5
0.1
..6
.0.5
0.2


#27. CHICAGO DAILY TRIBUNE, November 25, 1932. p.l.Arthur Sears
Henning, Chicago Tribune Press Service.
The. Europeans are no less eager to sell to us than we are
to sell to them. But so far from no Eurooean source has emanated
the argument that the war debts should be paid in full less
American taxpayers should be so impoverished that they would be
unable to purchase European products with that liberality which
would assure restoration of European prosperity.

#28; NEW YORK WORLD-TELEGRAM, November 25, 1932. p.27, Sir Walter
Layton, British Economist.
Thereis much in President Hoover's statement regarding debts
that must be very sympathetically considered in Europe," his
article read. "The American farmer has been terribly hit by
depression, and upwards of ten milli on unemployed is a staggerig
burden.for any' country to carry. American opinion has never
admittedthat debts were linked with reparations, but its leaders
held that further concessions should no-t'be made until disarmament
is achieved and peace secured in Europe.

#29. SPRINGFIELD (Massachusetts) DAILY REPUBLICAN, November 26,
1932,p.14. Secretary 'Stimson's. reply to moratorium plea of France,
November 23, 1932.

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SUP ELEMENTARY REBUTTAL NOTES


I am not oblivious to the fact that the world-wide depression
and the concurrent fall of prices has increased the weight of
debts in many parts of the world; nor to the fact that the decrease
in internationall trade has increased the difficulties of obtaining
foreign exchange. I also recognize the relation which these facts
may bear to the process of recovery. On the other hand, it. must
be remembered that these incidents of the depression have also
fallen with great weight upon the American people and the effects
upon them directly as taxpayers or otherwise of any modification
of an agreement with respect to debts due to this country cannot
be disregarded,

#301 CHRISTIAN SCIENCE MONITER, November 19, 1932. p.1. Mr.J.
Anton de Haas, professor of international relationships at the
Harvard Business School.
Let each country, in cooperation with the United States,
form a company with representatives of both parties on the board,
of directors, each company to receive annual installments of
debt payment in the form in which its debtor party can make such
payment--namely, in industrial goods. The company would use this
equipment in undeveloped sections of the world, preferably in the
colonies of the debtor nation, to build railroads, develop
harbors and channels, construct'bridges and roads, and other semi-
public enterprises.
"'Each company would issue bonds to the United States, to be
accepted as payment of the debts. These bonds. wold run for a
long period, carry a fair rate of interest, and include provision
for a small annual amortization. They would be guaranteed by
the debtor nation.
"Then when the bonds were completely amortized, the enter-
prises would become the property of the debtor nation. Thus the
means of debt payment would in many ways.benefit the debtor
national. It would call for goods rather than money from them,
and in addition to thqt would open up new markets for their
products.

#31. NEW YORK TIMES, November 16, 1932. p.3. Bernard M. Baruck.
If the present world-wide business depression makes the
problem of transfer of payments in gold difficult, they could be
managed in part through payments in kind and even in foreign
exchange. The' steady flow of this loaned money back to the
United States Government will appreciably reduce our public yosts
and react favorably on our business' activity; provided, always
that the budget is truly balanced,

#32. THE SATURDAY EVENING POST, November 5, 1952.-p.40. Trading
In Our .Tar Debts, by H. F. Hollis.
Failing cash to meet payments in full, a debtor may ask for
reduction or postponement of ani installment, or may tender some-
thing, by way of alternative compensation, some special advantage
in tariff, quota or exchange, or perhaps some benefit in the way
of security, disarmament, territory,- or the like. Whatever the re-
quest or proposal, we shall not know how to.reply, till we are
fully informed regarding the needs and resources of our debtor
and the value of the compensation offered in lieu of cash. To
The Debaters Information Bureau, $ Horton Place, Portland,Maine


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SUPPLEMENTARY REBUTT-AL NOTES


put it plainly, we shall need to.receive from our debtor the.
same information.which the Allies obtained last spring from their
chief delinquent.

#33. THE SATURDAY EVENING'POST, November 5, 1932. P.40. Trading
In Our War Debts, by H. F. Hollis.
To round out our program, we must establish by act of
Congress, a permanent council of able aid distinguished men,
to hear evidence at home and abroad, and report the facts to
Congress with recommendations. The members of this council
should be men of the caliber of those who served *ith the War
Finance Council, but their powers should be more extensive. Sure-
ly our debtors would not hesitate to informthis council of their
resources and their needs, any more than they hesitated to in-
form our Treasure of the essential facts when they applied for
these very loans, or any more than they hesitated to submit the
facts of'their numberless claims tour Liquidation Commission.
But whether they like it or not, this' should be.their only alter-
native to.national default 'and repudiation.

#34.;THE NEW YORK TIMES, N6vembBr 15, 1932. p.14.
The suggestion advanced by Sir ,Walter Layton, editor of The
Economist, thbt the war debts should be boiled down to a lump sum
of reasonable proportions, nd arrangements made for the flotation
of' bolds in this country representing the amount' the proceeds to
b6 paid over to the United States government, which is similar
to the solution of the reparations problem reached at Lausanne,
was viewed by bankers as a possible line of .action, but one with-
out immediate application.

#35. PORTLAND SUNDAY TELEGRAM, November 27, 1932..Section D.p.8.
'.rank H. Simonds.
The idea that the United States cannot collect for some
other form of advantage is in itself unfortunate because it
obscures the whole issue. If the debts are an obstacle to world
recovery and thus-to American'nrosperity the nroblen is not to
get something for them but to get rid of them. If they are not,
then the obvious necessity is to try to collect them. The whole
question is one of business pure and simple. We ought to collect
the debts because it is wise business or scrap them because the
attempt to collect is poor business.

S#36. CHRISTIAN SCIENCE MONITER November 25, 1932.p.3.
PRINCETON, N.J. Nov.25.--6f nine prominent members of the
Princeton University faculty questioned by the Daily Princetonian,
campus newspaper, on what is the -ost beneficial recommendation
President Hoover and President-Elect Roosevelt can make on the
war debt situation only one {iras for cancellation of the debts.

#37. NEW YORK HERALD TRIBUNE, November 14, 1932.. p.6. Committee
for the Consideration of Intergovernmental Debt's.(See Item #16)
Two courses of action are open to the United States. Either
a demand for payment of the debts as they how stand or a reconsid-
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SUPtPLEMENTARY R 3UTTAL NT ES


e-'ation of their terms. Complete cancellation is neither an
economic necessity nor a practical political possibility.

#38. THE NEW YORK TIMiES, November 27, 1932. p,29. Report of
Committee of Chamber of Commerce of the United States on War
Debts.
The committee has examined the various arguments that have
been made in favor of cancellation of the debts and finds no
good reason either in the interest of world recovery or in the
self-interest of the American taxpayers and business men for
acceding to such proposals. The integrity of intergovernmental
debt agreements entered into voluntarily and in good faith
should be maintained. It is only with the maintenance of
confidence in obligations of governments that the free flow of
credit in international channels, on which world recovery and
world advancement so largely depend, may be expected to continue.

#39. SHOE AND LEATHER REPORTER, November 19, 1932. p.5.Editorial.
With the exception of an occasional professional internation-
alist no one wants cancellation of the foreign war debts.

#40. CHICAGO DAILY TRIBUNE, November 25, 1932.p.l.Arthur Sears
Henning, Chicago Tribune Press Service.
The propaganda for concellation or reduction of the debts
emanates chiefly from the financial interests of the eastern
seabord, which have loaned billions of dollars to Europe and
are fearful that these billions will not be so readily repaid
if full payment of the war debts be axacted.


Published December 1, January 1, and February 1. Price
$1.25 complete. THE DEBATERS INFORMATIhON BUREAU, 3 HORTON
PLACE, PORTLAND, MAINE.


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