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THE S OREGON . SUNDAY- JOURNAL, PORTLAND, SUNDAY ;iORNINg OCTOBER 22. 1522,
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French ready to fight to.
last ditch any proposition which
looked to reesiablishment of
Gertnany's economic and
commercial power although
she livas, paradoxically
dermnmng. huge-irepafatiom
CHAPTER XUi
By Ray Sttnnard W . "
Prpbltmt of Letting Cooperation
- financial decvnttivcUzn
Prilongtttin of tn Suprsth
. : . ." i- .. - r ;- f ! t " : ":-
- Tfe ittnflir Jaarncl bcrtwitli prtMflt Jrtjr-
"Th fel.' icli 1 a uth9rtUr BrrUt 1
Wlfseii mh Mr. ee ( lt hi, (Mniiil, u-
iBcotiBr,rtl,l, rtpsrt t. itk le, att4 Ucfe fcart
Mfra ft Hw km tntda jrabHc Tea tcl
fftur tt) M pnaliUMd. ta fb Jimraal Mtiailjr .
tkreataaai tba tt- -
CaffrUbt. ills, XXnaMar. r'4 Ca., Pub,
.IlfMtr pMit Artat)Mt with tKt
lloOara tfaaapar Bra4ica4t. -
VHK ttompliiifliietiu f th uprmt
tconomic tauncil in fcttot (064 ?rd
trtmft ttn4r wy obvfoualy did ttt tm
titut folution ot Burep' fund
mui conomc jr6fcjmr Thy only
t tv ft brt&thtPt pn-which th cudcH
o fMr wUUMd tntiAif far puttQing the
iUtci diccuMitn arialnff at of th '
euimt ( Frtnei td Ituy. Sut m
itttr of lct. ftn th reilif watk wt
not on re)K oHd bi, 4n nud
prd from th fint is th contravtr
mi vir fintncjii t)i tmepty Of food to
armnir. Jf w r f U. that' th
ureni food quMttAft w tl4 UP With th :
wbl prsbiim ( th tatakrvet coamf
ltf.9f Eurap. Th 0mBg etiid pt
to n utdefiniul prit: or food out t ,
thiir liquid t tif mp ihetr Ttry
cpUkivtn if th Jctnch wui prmii
Ott April S9 tMd AAirtcn la tn
iphwi econOBjla coufttlt t14y n4
niiibt Mrtd t6t thy Hd" h14
from th vry tointiitt tht th aty
hta f fOd Mpplt hotId l h t
?h.ni et product.' i -
Her t birock onomId , food
ente. But low eould Ottminf iy for '
food with-other product whU ho w
ittronriod wHh thr: blockftdo, wh
wm ilpwd nd Jtftw mttertiiu for ffom
forward wJtH W iMttptrMtitf I
But th French, infctantiy ny utt
tioit u md tht tho b3ookdo bf r
laed, rr in . hot oppotlHo Th
fNtich wrp, padood. wiuinf thtt 0r
minr snould oxport raw mkterlltJf aueh
it coal, which would favor til tndtfttrlM '
of othar eotintrits and trvf hr own?
but thy wtr ready to ficht to th Ut
any pripoltlon iooklna- to tha raaatab
ltahment of Oormany'a ' ocononil ; a ad
commarclal powtr. j :.
But at th aamo timo. paradaicatiy,
tha Frahch war demanding hue rPra -Una;
aad when tha diacusaioaa tttraad
tnt that channel it was but tv jo
tb ratatad ajueatton of th whot Uaa.
trout fittaaeial atat of Europ. ita throat
nd bankruptcy ita huto debts, cblefjy
.t.-Amtrta.?-,i',:'f " r 4 .
it lmdltly developed that aH thre ;
treat nation Amartca. Groats Britain
aad rrasea -iad poiieiea of renatrue
tion bated upon varying derreea of e
oparatlon, t .
Th French policy ..had loaf been clear.
They nvr conaiderad tha "reatartina of
EuropaT t a aeneral problem la which
all war to there: but only a entalUnr
etronf aconomtc lllanc of the allied
aattotia, inoludins, above all,: Amtrlct,
bbt axcludina; Oormany. : They war thut
favor of tha euprem aconoimtc council
aa an organ , of cooperation among th
alHes. but It was to be used just as was
the League of Nations in the political
field tor building up and r supporting
' Franco as against Germany.
tTHB American jpolicy ,waaopDosd t
almost all points to; that : of the
French. The Americana ware alo strong.
iy for the supreme econtfmtc council, but
" for the strictly temporary, purpos of
feeding Germany and other starving na
tions, preventing revolutionary disorders,
and getting alt the nations of Europ
quickly upon their economic legs so that
they could begin to work again. America
th.ua wished y:0 do iway 'with all rettrlo
. tiona such : as the blockade, leave Gar
many enough property to start business
- and get her as soon as possible into -the
Leagu of Nations. , ' 'f 'f
.. But the conflict of : pinion was not
confined to the Americans and French.
The British lhad ' ideas different from
. thosa,of both and were aa far in advance.
Of the Americans 1b thehriview regard
ing permanent international economic co-.
operation as th Americans wer in' ad
"vaac of the French I Whn the Ameri
cans believed trade end industry would
eottie ibacK to normal tt wartime restric
tions were removed and Violent displace- -ments
of capital were retrained from, th
I British held that a far more positive pol
' icy wai called for. They agreed with tha
' French against the Americans that coo--
tinued active economic cooperation was
necessary; they agreed with, th Ameri
- eana against the French that Gernysny
. was an essential element in the economic
r Ufa of Europe and must contribute nd
receive her ahare ii tha process of; r-
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WJtll tha supram economic cauntH
t rapaled vlintfy with th4 blockade
problem it aould reach no dacjsiatt ia ad-'
vauea of tha aettleratnt vt iha: greater
problem of . finano ' which iware now
pMnt out la th council of j four. Tha
aUprem economic council had aaan this
clearly, ant lfd jtobart Cecil, ita chair
man, had proposed, early la Avrit. an-investigation
of th whol vast problem of
renatructloa withvA view to formuiai
ing a dttiaua program. .
Wha this plan raachat hd Amort- '
cthaj Cotoatli Houa proposed th op
pointmant of a Opaolal eammittee. Cecil
replied at oaea, naming th British .mom'
brs ottef whom was th treasury dele -gat,
J. M Keyaes. On tha American
aida, boavr, Bermard M. Baruch, in ,
what hAd thi; matter trtai placed by
Colonel House, la tb begin alnf opposed
tha whole idea. He wrote: ,
'ThO ' iiuad fovtramsnta have it in
thiir power to eorract hlo tltuatioa by
romevtnV restriction that oro hampcr
ingt trade; but ail havo refused to do it.
Th raising of athese -restrictions includes
. the removal of tha blacklist aad tha cen
sorship, and th freedom of the use of
iha mail and the cables. ! : fntil
this la dona th economic oititotioa will
continually grow worse, ant may roach .
a position whero financial aaslttaaca may ;
ba of no avail. Unless the gOvrnn)nts
do thia, at once, it is usesiessj to discuss
any ether phase of the problem-
. fiPBAKINO, for the - whole American
group at Parls, va his whole nstfon.
Baruch condemned the . enttra principle
of govarnmentsHntsrference in economic
: matters, whether applied in a positiv or ,
. a iff tift- atosa;- , r - ij , ,
Tliai thl position was somewh&t ex- i
trema WO admitted by Baruchhimself
within a month, .la a letter tq the presi
doatf May-T he put forwird -m plan
? or his own fr American aid In recon
ttr action JnvolTinf a largo tdegre f
governmental activity ia consultation, If
not complet eoperatlon.1 with jother gov-
ernments. Thia. however, waa only after
matters had been brought to ja head by
tha proposal -and rejection Of Kajnet'
; scheme..' "" . j .
Tha. latter to Cecil was pretty 4early a
r rebuff to the natural prepoeat i that - .a
scheme should be worked nx by the chief
powers tn common. 4Cecir answered
mildly. 1 I , ,
i Although t concerted iniiuiry into
common measures was thus blocked by ;
the Americans, one of the British nomi
nees Of the lroposedcmm;ittee - went
ahead and drew up the detailed scheme
" of financial cooperation known as . the
Keynes plan. It was forwarded y "Wil
son on April S 8 with a long covering. let
ter signed by Uoyd George explaining '
the necessity for such proposals.
The' Immediate measures or the relief
of distress with which the supreme eco
nomic council was largely -oni pied were,
jt alleged, "inadequate, as Mrf Hoover is
th first to reeognixe, to the jBolutipn of
tb whole economic problem.', - '
For many reasons' V thS Americahf ex
vOperts . found the Keynes plan ; unac-
eeptable not th least of which was the
fea tare (the use Of reparation bonds . to
repay war, loans'! by which, according ;to
Lloyd George teter;kth" acute prob
lem Of th ; liquidation of Internal In
debtedness, while not wdispcjsed of, ' Is
sensibly ameliorated," " For thsy-at onca "
saw clearly that all the reparation bonds
provided for must inevitably; drift around
to the i United States. whethei in settle
ment of past debts or as the basis of fur
: ther credits. W would be left ''holding
. the bag," with nataingr muchj in it aav
Germany's promise .to pay guaranteed,
to be sure, but guaranteed to the extent
of i ?0 4 per; cent by- ourselves; whU( the
ether indorsement would be of no more
value than the, bonds of the guarantors
themselves ' which we had previously
' held! To expect us,-who sought nothing
IfCta Germany, to become th collectors
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T-'i'"T v-ft""' wari
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"of reparations, and. on 'top of that, to"
guarantee, debts du to, ourselves, did',
seam a bit extreme on the' face of it
: although, a a matter of-fact, the mere, .
recent -proposals 1 11X31 for a loan to tier-;: -many
are practically the sanio in" effect,
ALTHOUGH the Keynes -plan was thus
rejected, Lloyd George continued to
insist on the necessity of "some scheme .
of finance to tu-ppitmtnt tha lifting of
the blockade. rTwo question cam tip
' together in a Joint conference Of jhe four
- with their chief delegate on the supreme -
economie council on May .. U ;..". ,,-i?-
j "trd. Bobert Cecil, epeaklnt Oh : b-1-half
of the supreme economic council,
stated the general eeoabmio prob
lem eonfrontint the atmciated tovern
ments. Ho atd that the meet important
part of the problem was to tt Eutop to f
work again." , - : ! A -;...'" A 1
, On President Wilson' potion, it w -t
i resolved, that" ''4 committee compotet of
itwo economio adviser from each of the
; principal t Ollied ; aad aasoelated " power j ,
; be reuest4 to submit a Wstematl eug- -I
geatlon with regard to the mean :f as
sisting the natjon which are in" imme- ,
diate Jieed of btjthrtood, , rawv material
and credit" -5S . .
It was also resorved at tasti 'something
definite - hat the blockade should J
lifted entirely as; soon aa v peace - was
signed.; This was little enough to grant,
especially as the relief program Wa. al
ready going on.th rocks. Cecil stated
that the scheme of fihanJe was inadequate
an.d that "the attempts to netp. tn situ
ation by allowing German exports lhadi"
broken down."' : t course ittwouldi emd
speedily, as the Americans had argued, if :
there was no manufacturlngf activity ito"
keep up a flow of good or expont; -And.r
in turn, imported raw materials were Ire
quired for that activity. A elngth, 'in
the teeth of Freneh,- Obstructionism a
resolution was approved by the supreme .
economic council on May tt o th effect
that ""Germany should be permitted .to
import specified quantities of certain, art
tides urgently required for the coal min
ing and other essential industries, and
which can ' be supplied from Germ. ;
stocks in neutral, countries .bought and
Paid for prior to May 7
The Americans, thus brought face, to
face with the question, of measures of
' permanent reconstruction, endeavored to,
put into shape their ideas of a scheme to
tak the place of the rejected Keynes
"'plan. - Wilson asked Davis' and Lamont
to draw up a report of recommendations -acceptable
to the United States, ' which
they did, . submitting it under " date of .
the 15th. ' L
THIS report was la some respects su-"
t perior to: the Keynes -plan'; in' others.
t feU short.! It was mor business-like
in the immediate sense and made a very--practical
suggestion in regard to the rep-,
aration settlement; but it dodged one
fundamental question, the dragging bur
- den , of war debts, for which . iU offered
only a proposition of delay, i ; -
A discussion of the committee's ape-;
eial recommendations would probably "
have brought the council of four no fur
ther than the various later conferences
hav got in wrestling with these prob
lems. But there was Tood ' for thought, ,
which might' have resulted in a new ap- .
proach to fundamental issues, in the last
paragraph of the .report, which Jf highly
significant considered as a joint atate-
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Col E. M. Houtej, Next to Preildent Wilton, Played the
' Moat ConaDicuoua American Role t Petri
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meat of . American and -European flttan- '
cialt experts: '
. "Before ... concluding. , the committee
considers it advisable to point Out rthat,
in spite of a well organized currency and
credit system, and of the- private erdlj '.
and. resources avallabl to England,
France aad Italy; it will nevertheless be
.dltficiiltOf - not ' impossible, for Jthem
(wtthin the next -two of three years) to
. pay f?r, attl the raw materials which they
may reqfaire andj to overcome; thefr un
i"favrabl" trade balance to such' an ex
tent as" to be able also .to cover the in
terest on; their : obligations held abroad,
j "Although' it had been anticipated that
, funds to meet these, needs-would' be re-.
ceived from Germany on account of repa
ration, the - committee 'now feels con
vinced that U is impossible to count on
any . substantial financial assistance from
this source in the near future. The final
solution may. therefore, require a more
comprehensive plan than for the . other
portions of Europe, and it is most advis
able that' immediate consideration should
'be given '.by all concerned to meeting the
situations not already" provided for. The,
'committee also ; feels that until France
and Italy can; cover their adverse trade
balances 'and meet the foreign : interest
payments due by them for the next two
or three Hearst, j the Improvement or, sta
bility in4 exchange and the confidence
necessary to stimulate private enterprise
may be perhaps fatally retarded.".,
' TsTHEN this remarkable report came to
-the attention of the council on June
they were already under fierce pres-'
sura to meet the objections of the Ger-
man delegation and to get the treaty
ready for signing; tbey were neither in.
: th mood, nor was there time, to consider
itho broader problems of reconstruCtiom
The entire problem of the reparation set
tlement had been reopened by the Ger
man observations, giving the Americans
. chance to attack, its fundamental de
fects. 'What they demanded was. firstly,
the fixing of n definite and reasonable
total, and,- secondly th retention by
Germany of a certain quantity of liquid
capital. -They' believed that given these
conditions, private enterprise would ex
tend rufJJcieat credits to Germany, and
private in res tors would absorb reparation
tr
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Demard Daruch at FirtS
Condemned CoTcrnmenta!
Interference) in Economic
. f Measure .
X
ttvwiiaiil
bonda to an extent sufficlent-to put the
allied countries on their feet. '
But the British and French between
tWm managed to sterilize both proposi-
tfons: and th reparation settlement was
left essentially unchanged.- i After, this
flouting off their best i endeavors, th.
Americans declined io give ny further :
. consideration to measure for helping the
allies out of the financial mess, into which
they ; persisted in; plunging ' themselves. L
The .report of the lnter-aMd' committee' .
was simply. sheH-ed. . J ' - "" 1
'The American idea of leaving every
thing to private initiative misht hav
been practical, given a sound reparation
settlement; But the' allies rould prob- ,
ably have been won over to abate Uheir
. unreasonable demands on this score only
"by an offer to abate the claim of the
,United . States against, them. -' And thi -
abatement "ihe Americans could not
promise. There was no scp, in either
direction. The reparation terms rer
malned on an unsound foundation; and
Europe 'was left without any comprehen- ".
sive scheme for financing her reconstruct -
tlon. ' -'"!".' '"' : ' " "':'.'--
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ALTHOUGH J the supreme economic
council did not succeed In' getting its
work , on , a sound financial , basis, that
work continued, nevertheless, to be of m-
calculable importanc for Europe's ' r-,-
covery from the effects of the war. The
depleted "resources of a nearly ruined
civilization were managed with -an effi
ciency and economy that gave the world
at least a breathing space of a few
months "to recover - its economic equill--.
brium. Europe was saved from, going to ;
smash under the' very feetf the peace
-conference, . 1 : ,- i t
Did the need for such centralised di
rection of th economic machine entirely
v, disappear with: the signature- of peace ?
Most Europeans were quite positive that';
I It did not. The Italians took the broad-
est view of the council's, destiny; ; for
, -I-. Italy's extremely dependent economic po-.'
sition gave her the greatest iaterest In
: cooperation as regards access to raw ma
i. terials, food and markets. The' Brltifh
were doubtless i less interested In perma
ifieht regulation! of, trade, but they cr
; tainly wished It to be nursed back to nor
mal, a process still '.far:, from comple- '
tlOn. The French regarded the supreme
- teonomte council a a mean of carrying ;
out, b a measure,-their-cherl&hed plan !
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Lord Sumner Wn One
Lloyd George'
Reactionariea
of an economic solidarity among the a- .
lied and; associated powers in the interetf
of favorfng the devastated. rgioi s and, U
generl,!of building up their own olrthtU
a against that of Germany, '
The Americans, however eoulfl be
ever to 1 none of these points of vlw
Cool as they were in their attjitude. to
ward proposals of financial reconstruct
tion, unwilling as they showed them-,
selves to enter Into any general
denying; ' agreements inregardj to eco
nomic polley, avers as they proved to
Jnvootlng the lUeotue of Netton with
any definite economic function, it was
k 't0 be xpct4 t.ht they would regArd
"with smaJl favor any proposal for pro
lonsrlna l the supreme eoomlr council-
The impulse to get fhgovernmnt out of
huainsss. and t especially out ; ofrbttslnes.
relation with, other, governments, -which
had aboWn itself after the armjstic and ,
been repressed In Janaary reasserted its
power, j When th question of th coun
cil's futur cam up. f or aisctisslon, on
June 10 'the American delegates pointed
out- the! th "euprem economic council
had ibeen created to.desi witn -matters
arising jduring the armistice, ahd "transi
tory measures; and that most! of thete
problems, such j as those dealing with
blockade, relief knd foodstuffs) until the -r
haaveat. had already beeh solved,".'
' All the! prolongation f ; their Own func
tion they, could consider was jthe wind
ing tip j of , uncompleted' business of the
United btates food admlnlitroiom Th
question Of any further measures was put
"up'to tHe - heads of states... . -i 1
. Fresiaent. wuson was, oi tourw, .un
able toitaiee any different jattijtude from
that off his advisers. : The best he could
do was; to Join in tne retoimmn vi jum
That In some form interaatlonal con
sultatlon In economic matter should be
.continued unttl the council oi'the League
of Nations had hd . aa "opportunity of
considering the present acute aiosititon Of
the- economic situation, and that the su
premo -economic ; council should be re
quested to suggest for the :eonsideratlon
of the several government the methods
of , consultation which wou!d - be ' most
ervjceale for these purposeaj."
The -plans drawn : up:, by - the supreme
-economic council for the continuance of
Its work were, however, brought onoth-
ing by events in the United States. The
Americans went on, with-their original
' plan of winding up : their affairs,- and
dropped out after August 1, leaving what
was left of the council to limp on., a
shadow of its former, self- ItJ till exists
in muchiredueed and altered form, aa an
adjunct ot the supreme courtcil, and In
close touch with the economic organs of
the League of Nations. '
iCoprriSSL l2ff," by Poobleday.' Tttm U Co.
gibta aaaarra."! . j.
(To Be Continued Next Sunday)
as