OUR WAR LOANS

One of the most perplexing of the problems which confront the incoming administration is that of the European war loans, now amounting to some ten billions of dollars. Not only is the interest on these loans unlikely to be paid, but the principal is being continually augmented by new borrowing. A recent Senate resolution has temporarily halted further advancement of credit, but the permanent solution is being left to the new regime which begins on the 4th of March.

Fortunately, the Republicans will be able to approach the question without constraint since it is now definitely known that President Wilson made no promises at the Peace Conference concerning cancellation of war debts. Nevertheless the air today is full of just such proposals for straightening out the economic situation. Great Britain is considering the cancellation of her loans, amounting to some nine billions, in the event that we take a similar step. As she owes us approximately four billions, her not loss will be about five billions, against our ten; but when it is remembered that our population and wealth is double hers, the sacrifices involved are not at all unequal. Italy has added her voice to the discussion and appeals to the United States to cancel her debt. As for France, she, of all the Allied nations is the one to whom such cancellation means the most; it is perhaps her only hope of salvation.

From our own point of view, the cancellation of all war debts may be the easiest if not the only, means of preserving our present status as an exporting nation. The European countries can scarcely pay their debts to us in anything but goods, and such an eventuality would very likely result in our own mills and factories being forced into idleness while we live on the articles that are sent from abroad. Those goods must be brought in, if the debt is to be paid--there is no alternative. Thus, commercial payment of these war debts may well result in a long period of profound business depression here in America. Under these circumstances the administration will do well to think long and wisely before it makes a decision on which the fate of the country for the next two decades probably depends.