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OFFICIAL STAFF OF THE AMERICAN BANKERS' ASSOCIATION (1), First Vice-President, John H. Puelicher, of Milwaukee; (2), Second Vice-President, Walter W. Head, of Omaha; (3), Executive Manager, Fred N. Shepherd; (4), President, Thomas B. McAdams, of Richmond; (5), Treasurer, F. A. Irish, of Fargo, N. D.; (6), General Counsel, Thomas B. Paton; (7), Secretary and Assistant Treasurer, William G. Fitzwilson.

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Endorsed by the Executive Committee of the Trust Company Division, American Bankers' Association

Bol. XXXV

September, 1922

Number Three

EUROPE'S APPEAL TO AMERICAN NATION

T

THE VACANT SEAT AT THE COUNCIL TABLE

HE United States Government must abandon its deliberate and complacent attitude of unconcern toward the increasingly critical conditions prevailing in Europe which are pregnant with the germs of calamity and renewed warfare. As the outstanding creditor nation we are particularly exposed to the far-reaching consequences of economic collapse, national bankruptcy and the dread prospect of revolutionary reactions, toward which Central and Eastern European countries are inevitably heading. For moral as well as for very practical reasons the United States is urgently needed at the conference tables in Europe, especially at discussions dealing with reparations and adjustment of external debts. That is the conviction shared by the writer with many other Americans who have recently visited the continent of Europe and who have not confined their observations to hotel lobbies and cabarets.

To judge not merely from hearsay, but to see with one's own eyes the naked, tragic evidences of hopeless economic, social and political confusion and to witness the desperate straits to which great masses of people and apparently aimless governments in continental Europe are drifting, is to be convinced that the United States must step in, not only for humanitarian reasons, but

because our own national self-interest and economic future demand a more enlightened foreign policy.

We cannot continue to sit in comfortable. armchairs at home or in legislative chambers at Washington, stultifying or solacing ourselves with liberal potions of the denatured old doctrine that this country is self-contained, or in the words of George Washington, that "Europe has a set of primary interests which to us have none or a very remote relation." That was doubtless sound political logic in the early days of the struggle for independence, but it does not hold water in this modern era of swift communication, of closely knit trade and economic interdependence.

The poignant cry to us from despairing populations in Central and Eastern Europe is not for huge credits, capital loans or consignments of gold from our idle store to revive their rotten currency structures. More than all else, it is our moral support, our presence as the Big Brother, that Europe craves. They long for a voice that will rise, vibrant in its accents of unselfishness and detached judgment, above the Babylonian jargon of conflicting tongues and emotions. They want us over there in Europe not as "unofficial observers," standing idly on the side lines. They want us as counselors and guide. Even Lloyd George,

Poincare and other leaders who face each other at futile political, reparations and economic parleys, confess their weariness of the game and their eagerness to accept a new deck and a new deal from America as the only nation they are willing to trust by common consent. That applies not only to reparations and economic questions, but to the League of Nations as well.

The people as well as the statesmen in Europe know that the United States has no military or territorial aspirations; that it has disinterested ideals for which it will fight, and a heart generously responsive to appeals of humanity. These qualities were sufficiently revealed during and since the war. They are today displayed in Smyrna where our naval units were the first to give protection to refugee Christians. What is needed here in the United States is an awakened public opinion as to the real gravity of the situation in Central and Eastern Europe in order to bring about a revision of the verdict given at the last Presidential election and which the Harding Administration interprets with more fidelity than wisdom.

The most powerful and health-reviving stimulant that could be administered to Europe would be an early announcement from the United States Government that it will send official representatives to reparations and economic discussions. Such participation does not mean that we must yield our political autonomy; enter into entangling alliances or commit ourselves to cancellation of either the whole or part of the war debts due from former allies. We can make our own terms as to participation.

Far more important than any material or financial contribution that we could

possibly make to restore economic or political poise in Europe would be the weight of our impartial judgment. That factor cannot be emphasized too strongly as the one essential element to help Europe to help itself, by substituting good will for mistrust and comprehending that most of the present suffering is due to failure to see that selfish political claims must be subordinated to everlasting economic truths -truths that cannot be twisted to please any one nation, but which apply with equal force to all nations.

HELPING EUROPE TO HELP
ITSELF

IT is foolish to subscribe to the suspicion that Europe only desires the United States to "come across" with abundant capital, credits and to wipe out debts. The underlying fact is that European nations, large and small, possess the resources and capacity to set their houses in order. Debased currencies, progressive paper inflation, staggering government deficits and industrial stagnation are not due to the destruction of property and loss of manpower wrought by the war. They are due to stupid political and administrative blundering. Lacking the courage of their inner convictions and fearful of each other, the European statesmen are chasing rainbows, follow the lines of least political resistance and rely upon reparation payments that cannot be paid.

American representation is needed to restore common, practical business sense in European deliberations. Aside from neutrals, England is the only European nation among the former belligerents that has succeeded in balancing its budget and tackling the problem of reducing debt and. inflated currency. A deficit of 14,000,000,000 francs appears in the 1923 budget of France, with 4,500,000,000 allotted for maintenance of its army, with outstanding debt of 315,000,000,000 and actual reparation payments from Germany barely sufficient to cover expense of occupation forces. Belgium is piling up deficits predicated upon expectation of German payments. From the standpoint of government finance and currency inflation, Germany, Austria and Russia are hopelessly insolvent, their printing presses grinding out increasing billions of worthless paper money. Poland, Jugoslavia, Czechoslovakia and all other newly created "self-determination" countries are infected with the same fatal poison of fiatism. Government heads are in a state of helpless stupor, apparently unable to stem the tide toward national

bankruptcy.

And back of all this conglomeration there lurks the monster of Russian Sovietism, stealthily spreading its coils wherever hunger and suffering have become most acute.

MILITARISM AGAIN IN

ASCENDENCY

To rescue Central and Eastern Europe from utter demoralization it is first of all necessary to secure unity and accord among Anglo-Saxons and the leading Allied nations. There is every reason to believe that European governments are ready to join a new "association of nations" such as approved in the Republican platform and by President Harding. Each succeeding development makes more apparent the impotency of the League of Nations, and the growing dissatisfaction among signatories of the Treaty of Versailles as a document impossible of fulfillment and a breeder of future wars with its arbitrary mandates and territorial divisions.

The threatening war clouds growing out of the Turco-Grecian conflict shows how urgent it is for the United States to make common cause with England, France and other powers to enforce guarantees of peace. Without such assurance the competition for military dominance will become even more keen than before the war and the prospect of gradual disarmament will van

ish. There can be no headway against economic disaster until peace and good will are effected between all the nations, the former belligerents as well as neutrals.

The naval armament limitation conference at Washington produced the first gleam, since the armistice, of a chastened international conscience and a desire to profit from the lessons of the last war. The opportunity is at hand for another and greater master stroke by the Harding Administration. Let the word go forth from Washington that this government is ready to send its best official advisers to take part at a conference in Europe, analogous to a creditor's committee, to consider the problems of interallied debts and reparations as a composite proposition. Judging from the assurances received by the writer in interviews with leading statesmen and bankers in England, France, Italy, Belgium and Germany, it is safe to say that such American participation would lead to something definite. Thus far all economic and political' conferences have been barren of results, serving only to alienate and widen the breach between the nations who fought side by side during the war.

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THE ALLIED REPARATIONS COMMISSION AT A RECENT SESSION IN PARIS

T

IMPOSSIBLE REPARATION

DEMANDS

HE best political and financial judgment in Europe wants official representation from the United States because of the direct influence which our

spokesmen could exert to induce France to modify and bring its policies into accord with those of its Allies, particularly in regard to German reparations and interallied debts. The Genoa conference failed because of the refusal of France to subscribe to necessary economic formulas upon which practically all of the experts were agreed. The Bankers Committee, which met in Paris to consider an international loan to Germany, failed because France was unwilling to admit any consideration of guarantees based upon revision of German reparation payments as a prerequisite to the flotation of an issue of German bonds.

Whether due to external or internal force of circumstances the fact remains that the situation as to German reparations is at the heart of political and economic confusion in Europe. There can be no progress toward carrying out the program of economic reconstruction suggested at the

Genoa conference until the question of indemnity is clarified. Adjustment of interallied and floating debts, balancing of national budgets, exchange stabilization, cessation of paper money inflation and restoration of the gold standard in the revaluation of currencies, are matters that must be held in abeyance.

Public opinion in Europe is overwhelmingly in favor of revising reparation claims and payment schedules if for no other reason than to give the German people a definite goal of expiation to work toward and to have no pretext for avoiding obligations. Even well-informed Frenchmen have admitted to the writer that they regard Poincare's policy as suicidal; that it is aimed rather at the political, industrial and economic disintegration of Germany than the collection of full reparations. Common sense must teach that a solvent, industrious Germany is desirable and that a bankrupt Germany would plunge all Europe still deeper into the mire.

France values and ardently wishes to preserve the friendship and good will of the

people of the United States. She will listen and be influenced by America's official where she now turns a deaf ear to her former representative at reparation conferences allies in Europe. At the same time the assurance of this country's moral support will lessen the fear of future military aggressions by a rehabilitated Germany which

dominates the French mind and which is the impelling reason for the large military establishment maintained by France.

The best service that the United States can render to France is to stress the fact, which is obvious to all impartial observers, that in pursuing a policy of ruthless enforcement of impossible reparation demands, she is nourishing among the German people the elements of resentment and the feelings of revenge against which she wishes to guard. By way of parenthesis it may be remarked that France keeps alive needless friction by maintaining colored colonial troops in German occupied territory.

W

SITUATION IN GERMANY HATEVER shortcomings the present government in Germany may be charged with, in permitting the flight of capital and failure to enforce proper fiscal control, it cannot be said that there is any indication of sympathy with monarchistic reactionaries. It is physically impossible, as long as the present system of surveillance by allied agents continues, for Germany to build up another war machine. From the masses of German laboring people and middle class one gains the impression that militarism and Kaiserism are chiefly blamed for the misfortunes that have befallen them.

On the surface Germany seems to be busy and industrially prosperous. As a matter of fact, it is a feverish and fictitious prosperity. With the rapid deterioration of the mark the people are eating up their substance. Unless a moratorium is effected and the mark is stabilized, Germany is doomed to bankruptcy. With no reserves to draw upon when unemployment comes there will be famine, lawlessness and a debauch to radicalism. Not only prostrate Austria but all Middle Europe will be car

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