Evening Star Newspaper, July 26, 1925, Page 33

EDITORIAL PAGE NATIONAL PROBLEMS SPE CIAL FEATURES Part 2—12 Pages WHY THE FRENCH THINK DEBT TO Deluded by Politi Argued Themselves Out of Obliga- tion to Pay BY SHELDON S. CLINI ARIS: Writing from London, T Britain where it was | that the interpretation he gave of the to inquire into | French view is sound and fairly rep- mentioned that was one countr not mnecessary ireat the question of American debt | British has funded and is | into the fewest possible words. making payments on its debt to the Payments, inasmuch as ®government already the émerican Government In Paris, the American finds the question of debt demanding primary other questions in between the United States and France are subordinate what is to be done about the approxi- ately $4,000,000,000 debt which th rench government owes the Go ®rnment of the United States. This is Just as. true from the French point of view as it is from the American Yoint of view. The Frenchman is just as anxious to know that the Gi ernment at Washington intends to do Rbout the debt as the American is to know what the government at Paris ¥ntends to do about it Phases of Debt Question. To an American, the question of the debt owed the United States by France divides itself naturally into three parts First—Are pay? + Second—Do intend to pay Third—Are the French able to pay? The answer to the first question Tmust be a negative one, at the pres- ent writing. The time may come—I think it will—when the French will yay willingly, both because they will see it is to their advantage to pay and because they will come to a better understanding of the principles in- volved; but that time is not now in sight The second question calls for an afirmative answer, with qualifications. There are many shades of public opinfon in France, supported by vary- ing degrees of intellizence. It is the intention of well-informed Frenchmen, of the big financlal and business lead- ers, that the American debt shall be adjusted on a basis satisfactory to the American Government; not because they are willing to pay, but because they know they must to save the credit of France. It is this well informed section of French public opinion which eventually will cause France to undertake payment. Payments in the Future. - Qualifications are necessary also in answering the third question. France capnot begin payments tomorrow. But if present prospects hold, she can be- gin payments a few years hence and, stretched over a period of 6Q_years or more, payment of the debt to rica. will not be an insuperable burden. In discussing these three phases of the debt question T want to be as fair * the French people and to French opin- fon as I know how. I know that any evidence of unfairness would be con- demned at home. For, say what you will, however aggravating and seem- 1ngly contradictery some of the things France hds done since the armistice, the American people still admire and still have a warm affection for the people of France. They have not for- fotten Lafayette and they have not forgotten Verdun. They know the te: rific and the heroic sacrifices made by France, and they are sympathetic. But they are perplexed. They cannot understand how a people can at one time be so sublimely great and at an- other so seemingly lacking in the at- tributes of greatness. Unbiased View Not Easy. I have tried hard to get an unbiased Jook at a fair cross section of French public opinfon. But it has not been easy. Whatever other faults the Eng- lishman may have, a lack of frankness 1s not a fault with him. He says what he thinks, and if you don't like it you can lump it. The Frenchman is not frank, at least not upon short ac- quaintance. He adheres to the ancient diplomatic maxim that words were invented to conceal thoughts. He is instinctively polite. Unless he has a purpose to make you think something he particu- larly wants you to think, his impulse is to tell you what he thinks you want tq be told. Naturally, it is not easy to get at the back of the mind of a man whose mind works like that. But, fortunately for the traveling inquirer, there are Americans in France who have been here a long time, and whose business it is to get ‘beneath the surface and know what s going on. Some of them are in ‘banking and other businesses. Some are representatives of the American jovernment. It is largely upon con- versations with these men that I have based what I am going to write—con- versations in which they talked freely because they felt assured that they would not be quoted to their business or official embarrassment. Must Get French Viewpoint. If there is to be in America an un- derstanding of this debt question, and of the Frenchman’s unwillingness to pay the debt, there first must be an understanding of the Frenchman's point of view. Let it be admitted in advance that no people in the world have & higher standard of commercial integrity, than the people of France. This is attested to by the representa- tives here of large American financial and commercial interests. They say their losses in France due to a lack of commercial integrity are negligible; lower actually and proportionately, in fact, than they are at home. The Frenchman's unwillingness to pay the American debt is not due to any lack of honesty. It is due to the fact that he has been made to believe that the debt, in its entirety, is not a proper-one. He has no very clear idea as to just how much of it should be regarded as improper, but he thinks it ought to be cut in half, at least. For this reason I think it is a seri- ous mistake for Americans to discuss the debt question as if the French were a dishonest people, trying to squirm out of a just obligation. It is no more true that the French are dis- honest as a people than it is true that ‘Americans are grasping Shylocks. Both think they are right. , Under such’ circumstances the only sensible thing to do is for each to hear the other's story and to try and get the other's point of view. How the Frenchman Sees It. T had lunch-the other day with an American who has lived in Paris nearly 20 years and whose business brings him fnto contact with French men in all walks of life, from the high- est government officials and financial leaders down to the cafe waiter who greeted him as an old friend., We sat at the table and talked until lunch time had become almost dinner time, and T got from him a better insight inquirer payments attention. All the French Willing to the French +4BL0 jhe FTench yviewapink. thad-ile _ ASSRUDUEC-QD the relationship to the question of U. S. INVALID cians, People Hav War Loans. would have been possible for me to have obtained in months of personal research. 1 have since been assured | by other informed Americans here | resentative, so I am going to take it as the basis of this inquiry, condensed Here, according to my American in- | formant, is the situation as the Frenchman sees it: France did not fight the war for French preservation alone, but to save the entire world, America included, from German domination. America should have come into the war when Belgian neutrality was violated and | German purposes thereby disclosed. Certainly America should have come in when the Lusitania was sunk. But America not only failed to come in, but deliberately, as a considered na- tional policy, refused to prepare for the conflict, which, to the French | mind, was inevitable. He lays great | stress upon this refusal of America to prepare for war, because, as will be seen, it is the keystone of his argu- ment. Advance Commercial Motive. ‘When America finally did come into the war she came, as the Frenchman sees it, not through any wish to help France and the other allies, but be- cause German interference with Amer- ica's profitable trade in war supplies for the allies had grown intolerable. Therefore, in the French view, Amer- ica went to war for purely commercial and selfish purposes. And she went to war wholly ‘unprepared to wage war effectively. Now comes the kernel of the French contention. Once America had de- clared war on Germany it was vital to America that Germany should be! defeated. To defeat Germany became to America a supreme national neces- |sity. But Germany could not be de- feated unless France and her allies could hold out until America could prepare to wage effective warfare. And the allles were at the point of financlal exhaustion. Unless they could get financial assistance they would have to surrender and make peace on Germany's terms. And if they had to surrender and make peace on Germany's, terms America would have to do the same, for America could not hope to wage alone a suc- cessful warfare against a victorious Germany. - Price of Unpreparedness. Therefore, when America lent the allies money in order to enable them to hold out until an American army could be raised and trained and put in the field, she was merely con- tributipg dollars instead of soldiers to save herself from defeat at the hatids of Germany. In other words, the French think the dollars America loaned the allies to enable them to hold back the Germans was nothing more than a legitimate and perfectly proper price America had to pay for the mistake she made in not prepar- ing herself to wage effective warfare before declaring war on Germany. It was, in the French view, a plain and simple case of fighting with dollars instead of with men to save America from the necessity of making peace {on whatever terms Germany might see fit to impose. These dollars which were used in- stead of men on the battlefront the | Frenchman' thinks he ought not to be called upon to repay. He says, in effect: If you could give us back the! men we lost to save yvou from de- | feat, then you could in reason ask us to give you back your dollars. As you cannot give us back the men we sacrificed in your behalf, you ought not to demand your dollars back. That is the situation as the French- Editor's note.—This is the third in a series of four articles in which Mr. Pearson asks four of the world’s great- est police authorities “Why America Leads the World in Crime?” Next week Chief Magistrate McAdoo of New York City, former police com- missioner of the metropolis, will sum up the views of the foreign criticisms of America in reply to them. BY DREW PEARSON. HE United States leads the world in crime because it per- mits the free sale of pistols, because its courts are too lax, because it preaches personal liberty to the detriment of personal safety and because the home has lost control of the younger generation. This is the diagnosis of Maj, Tsung-yu Sze, police inspector of Canton, China, and of Abdullah Bah- rami, police chief of Teheran, Persia. T had been given the assignment est criminal experts why the United Stites led the world in crime and, since these two men rank among the highest in the international police world, T went to them and explained my mission. Maj. Sze I found quite willing to talk. He is a graduate of Johns Hop- kins University, has taken graduate work at Columbia and knows the United States almost as a native. I had selected him partly because of his expert knowledge of American crime conditions. “I believe that your biggest cause of crime,” Maj. Sze said, in his easy and polished English, “is your doc- trine of personal liberty. It is a fine principle, but, like all principles, should be practiced with a modicum of good sense and temperance. You practice personal liberty to such an extent that it interferes seriously with personal safety. Now, I ask you, seriously, what is the use of being free if you are in constant danger of being killed? Personally, I think I should rather be a little less free. “In China we belleve in peace and order. You Americans belleve in lib- erty and disorder. ““To {llustrate what I mean,” Maj. Sze continued, earnestly, “take the number of revolvers being carried around by the people of this country. Yours is the only country in the world that I know of that allows its people to buy revolvers. Also vours is the only country in the world that is so lenient with its citizens found carrying revolvers. “Every person entering China is searched for firearms. If China had firearms today I hate to think of the consequences. They would be far worse than they have been these past few weeks. As it is, our worst prob- lem is with the soldiers, who are the nly people possessing firearms. They | sometimes desert from the army and become bandits, or else they hire their guns out to the civilian popula- tion at so much per night.” “In° what other respects do we allow teo much personal Hberty?” I asked. 'Your courts are entirely too lax. In the first place, they differ from DRY AGENT Fourth and Fifth BY BEN McKELWAY. is a curious paradox which makes of the Constitution a refuge for those who willfully : -3 man sees it, and the more he gazes on this picture of his own painting the more firmly convinced he becomes that he is being badly used in thel matter of war debts. So let's dismiss | the theory that he is unwilling to pay | the debt because he is a dishonest| debtor.. He is unwilling to pay the| debt because he has argued himself, and been argued by his politicians, into believing that he doesn't owe it. French Premise Unsound. Of course, the premise from which he argues is unsound, his arguments | frequently confound themselves and | the conclusions he reaches are illog- | ical. But the Frenchman cannot see | this. He never has had an oppor- tunity to examine a clear exposition of the American point of view. It is amazing to an American how little the average Frenchman, even if of more than average intelligence, knows of America. His newspapers glve him practically nothing of | American news. His political lead- ers, in all too many cases, give him | only such perverted views of things American as will serve particular political purposes. The French are not a traveling people. Only a few of them ever visit the United States | and return to spread enlightenment. | The Frenchman is compelled to get | his idea of #merica chiefly from American tourists, and the principal idea he gets is that they have a lot of money to spend, and that a great many of them spend it with irritating | ostentation. It is not surprising, therefore, that he is unable to see the lack of logic in the arguments he advances | with respect to the American debt. | T am deeply impressed with the need that some one in America, some one in a position to give welght and au- thority to his words, should make a full and clear exposition of the American viewpoint as to the French | debt, and should make it in a way that it would of necessity reach the people of France. I can concefve of no greater opportunity for statesman- ship to contribute to the cause of better understanding. Folly to Abuse France. Certainly no useful purpose is seryed by abuse of the French, in Congress and in the public press, be- cause of their views on this question of the debt. I think- they are in error in their views, but I think they (err through lack of understanding and not through any motives of dis- honesty. To see how much they lack in understanding it is necessary to ex- amine only a few of the items in the above outline of the French view- point. To an American it seems in- credible that any one could believe that allied. defeat while America was preparing for war would have com- pelled- America also to surrender and accept German terms of peace. The Frenchman seems unable to grasp the fact that with allled defeat the violate one of its latest provi- sions, vet the fourth and fifth amendments to that instrument con- stitute for the modern bootlegger his surest escape from those who seek to enforce the law.’ Thus the Constitu- tion takes its place among the natural barriers to_effective enforcement of the Volstead act, and, through an in- teresting case of history repeating itself, the fourth and fifth amend- ments have returned as active pro- tectors of the liquor dealers. Back in 1733 William Pitt attempted to enforce the famous sugar act, which imposed prohibitive duties on molasses brought to the colonies. Mo- lasses was necessary in the manufac- ture of rum, and the Ney Englanders used rum as currency in their African and fur trading. ‘Wails of Discontent. It followed that long, loud and piti- ful wails of discontent arose from the colonists, and they adopted the sim- ple expedient of bootlegging their mo- lasses. Bootlegging, or smuggling, became a reputable profession. The town fathers were wont to point with pride to their leading bootleggers of molasses—to say, with no small emo- tion, “There stands the most succes: ful molasses runner in New England The British sought to end this prac- tice, but their common, ordinary search warrants, which required too many data. to be collected hastily, were not sufficlent. So they brought into use writs of assistance, which allowed their officers to enter homes, break down doors, break open any- thing that happened to be closed—all on the mere suspicion that bootleg molasses might be found. In 1761 a Boston court declared the hated writs illegal, and two provisions later found their way into the Massachusetts State Constitution, which were em- bodied in the fourth and fifth amend- ments to the United States Constitu- tion. > ‘Way It Works. And today the fourth amendment may be invoked with success as fol- lows: Patrick X. Cohen, a prohibition en- forcement agent, is standing by the door of a downtown office building. An automobile draws up to the curb and into Patrick’s eyes there comes a light of joyous anticlpation. The automobile is large and shiny. There are only three of the same make in town. One is owned by the town's leading lawyer, another by the town’s leading banker and the other by the town’s leading bootlegger. By the li- cense plate Patrick identifies it as the one belonging to the last, and he ‘watches its occupant step to the pave- ment, take a bundle from the seat and enter the building. The bundle is not smooth in its outward appearance. To Patrick's keen eyes the bundle could contain only two things—both of them bottles. Mr. Cohen follows the bottle-bearer into the building, as- charadter of the war between the United States and Germany would have -changed and its scene shifted; that Germany would have been close to exhaustion while America was still Py . cends with him in the elevator and watches him start toward the office of the town’s leading lawyer. Then he steps up and shows his badge, opens the package and smells. e i Sid o of asking four of the world’s great- | CONSTITUTION HAMPERS Havens of Safe Refuge for Violators of the Eighteenth. EDITORIAL SECTION he Sunday Stad WASHINGTON, D. C, SUNDAY MORNING, JULY 26, ABDULLAH BAHRAMI MAJ. TSUN ‘U SZE the Chinese courts in this one very important respect. We require the criminal to prove his innocence. You require the court to prove his gullt. It is, therefore, much easier for us to punish crime. However, your system may be better than ours. This is a matter of principle, which we won't argue. But entirely aside from this, your courts are too lenient. You let your criminals off with light sen- tences. or you release them on tech- nicalities. “One of your worst faults is releas- ing criminals on bail. I have heard of cases where a criminal is released lon bail and then commits another crime.” He gets released again on bail and since your courts are alwa: crowded, it takes a long time for his case to come up, and he goes free for several years. I have heard of cases where a man committed as many as six crimes while he was out on bail, each time securing fresh bail for the new crime. Your jails are so over- crowded, I understand, that you pre- fer to grant bail rather than jail a man. Also, the jail cases take prece- dence over the bail cases, which helps to postpone the trial of a man who Is temporarily free. . “If China was as lax as this we should be overrun with crime, also.” “What is China's most effcient method of preventing crime?”’ I asked | Maj. Sze. “Probably our cénsus bureau, which is attached to our police department, and through which we keep in con tact with every citizen of Canton. Practically every movement of every cltizem 4s_known by the police. For instance, & man cannot take his trunk IN HIS WORK Amendments Are “Ha, ha!” sneers the bootlegger and goes with Mr. Cohen. Later, after hearing the town's lead- ing lawyer, the court turns severely on Mr. Cohen and lectures him. He had no search warrant. He could have made an arrest without a warrant for reasonable cause, but in this case he could act only upon evidence. “If"—| and now we quote from the decision— “instead of arresting the plaintiff in error the officer had presented all the facts within his knowledge and- all the information at hand to a magis- trate, no magistrate would issue a warrant of arrest for the plaintiff in error; no magistrate would hold the plaintiff in error to answer for a crime before another tribunal; no grand jury would indict; no court would submit the case to a jury; and if the officer be sued for false imprisonment, no court would instruct that the arrest was justified, assuming all'the foregoing testimony were true. If we are cor- rect in these conclusions, and we see no escape from them, the arrest was without authority of law, and the property wrongfully seized was not admissible, in evidence.” Thereupon the bootlegger winked slyly at Mr. Cohen, shook hands with his lawyer and added, as an after- thought: “But what about my liquor?” And while it is not known what was done in the foregoing case, the United States Supreme Court recently de- clared that liquor unlawfully seized as evidence may be returned. | Bottle in Coat Pocket. | Another recent case in a Federal | court established the right "of an American citizen to walk down the | street with the neck of a bottle con- taining whisky showing from his coat pocket. An officer noticed such a citizen and, having neglected to read the fourth amendment to the Consti- tution that morning, arrested the sentleman, pulled the cork, sniffed the contents of said bottle and took the case into court. Whereupon the court ruled, in the case of Snyder vs. U. 8., 285 Fed. 1 (reversing 278 Fed. 650), “If, therefore, the arresting of- ficer in this case had no other justifi- cation for the arrest than the mere suspicion that a bottle, only the neck of which he could see protruding from the pocket of defendant's coat, com- | tained intoxicating liquor, then it would seem to follow without much question that the arrest and search, without first having secured a war- rant, were illegal. And that his only justification was his suspielon is ad- mitted by the evidence of the arrest- ing officer himself. If the bottle had been empty or if it had contained any one of a dozen innocuous liquids, the act of the officer would, admitted- ly, have been an unlawful invasion of the pérsonal liberty of the defendant. That it happened in this instance to contain whisky, we think, neither justifies the assault nor -condemns the principle which makes such an act unlawful. 5 “Common as the thing may be, it is a serifous thing to arrest a citizen and it is a more serious thing to search his person, and he who accom- plishes it must do so in conformity with the law of the land. * * *" The principle which has become fundamental is that the legality of arrest, search or seizure, is to be de- termined by the facts which precede out on the street or move his fur- niture without getting a permit. This is no small task, especially when you consider that more than one million pecple live in Canton and about 200, 000 of them live in boats on the river. They are too poor to pay taxes, so they move up and down the river, do- ing such odd jobs as towing, ferrying and fishing. In some places the river is s0_jammed with them that you can practically walk from boat to boat.” “If you have so little crime in China, why is it that the Chinese who come to the United States are some of the worst murderers we have and are so active in their tong wars “‘Because,” replied Maj. Sze, quick- “most of the Chinese who migrate | to the United States are adventurers who have no very good jobs at home. When they come over here your per- sonal liberty goes to their heads. They are not accustomed to it at home and they think it gives them license to kill each’ other off. however, that there have been very few instances of Chinese killing white men. Most of the crimes have been between the Chinese themselves. “One of our greatest problems is opium smuggling. I am sorry to say that the foreigners do not give us the best co-operation in preventing this. Any one, for instance, can go down to Macao, which is Portuguese, and get all the opium he wants. Some foreigners make a practice of smug- gling opium for the Chinese, since their baggage is not so . carefully searched as that of the Chinese traveler. “However, under the direction of Fo vho is the son of Sun Yet You will notice, | Society News | 1925. Sen, and the mayor of Canton, we are doing a great deal to prevent opium use and smuggling. We hav set up hospitals for the compulso treatment of oplum addicts, and last year we arrested 688 addicts who fail- ed to apply for treatment. Our belief is that the only, way to stop opium smuggling is to cut off the demand for it. Hence the hospitals.” After my interview with Maj. Sze I talked with another Oriental crime expert, Abdullah Bahrami of Persia. Mr. Bahrami also knows the United States, and ~also speaks English, though not as fluently as the Chinese police chief. At times his quaint phraseology was distinctly amusing. lomatic and “impolite” to discuss the crime promlem of the United States, I finally wormed out of him this diagnosis “I have heard,” he said slowly, “that most of your crime is committed by voung men. In fact, I read the figure that 75 per cent of your money crimes —how say you?—crimes where money men. “This, T believe, is your worst evil. Your crime is growing and it comes from young people. “Therefore I deduct one chief cause of your crime. Something is wrong with your American home. It must be that you do not give your children the proper education. They do not have the right respect for your laws, for authority, for their parents. They may lack religlous training. Perhap: they respect no God. “In Persia our boys, especially in the tribes, are disciplined. Their fathers. Every father realizes his re- sponsibility. He must lead a devout and straightforward life. He must be an example to his son. If a son goes astray, his punishment is sometimes severe. In many parts of Persia we believe -in strict and rigorous tribal law, a law which shows no mercy for the weakling or the dishonest. “Also the religious training of our boys is very strict. medan will steal. It is more despic- able than to touch a pig. And if a man swears on the name of Allah that he tells the truth, you may be as sure that this is the truth as you may be sure the sun will rise tomor- ro ““Perhaps also our boys are not sub- Jject to your temptations. We live on very little in Persia. Some goat's milk, a little bread, a place to sleep— what more does a man want? There is nothing much to make a boy dis honest. We have not cabarets, few theaters, little chance to spend money. I sometimes think that the great temptations and the fast living that goes on in America does much to cause crime. When you see others spending money. when you see others enjoying pleasure, you wish for those things yourself. in order to get them. Abdullah Bahrami eoncluded. “Al I know is that the Persian police have the most easiest job in the world.” (Cop: 1925.) HOW A BILLION-DOLLAR TRADE BALANCE SHRUNK | That World Is Not! Examination Shows Sending All Its Money to Pay for American Goods. BY WILL P. KENNEDY. HEN Secretary Hoover an- nounced the other day that in the fiscal year we bad a trade balance with the world of more than $1,000,000,000, the question promptly | arose in the minds of many thinking men: “Is that an _economically sound situation?’ And then came the further thought: “Will it now be necessary for Uncle Sam to throw into reverse and back away from the foreign trade that he has been to so great expense in developing?” Well, the answer is, after careful study, that after all factors are con- sidered our real balance was really only a relatively few millions, that all the money of the world isn’t being drained into the United States and that we must keep plugging away with the well known American spirit to continue getting our share of the world’s business. Members of Congress in drafting the appropriation bill knew the real situation—that this balance was not what it appeared on the, surface— and so they gave Secretafy Hoover an increase of $180,000 to be spent in buflding up our overseas trade-pro- moting organization. This will go largely to strengthening existing of- fices and establishing a few new ones, probably in Sydney, Australia; Bogota, Milan; Singapore, in the Far East: | Caracas, Venezuela; Barcelona, Spain, and Lisbon, Portugal. A Billion-Dollar Surprise. That billlori-dollar balance was an utter surprise to every one, even to Secretary Hoover's bright young men in the Department of Commerce. It is only an audit balance on a partial record of accounts, and is based large- 1y on port records of goods brought in ‘or shipped out, which by no means tells the full story. In any analysis of our foreign trade balance sheet it is essential to take into account many items not appear- ing in the customs returns. Those items are styled “invisible exchange” by the initiated. They are of increas- ing importance in any sound con- clusion as to the movement of our foreign trade, as to the condition of our eredit structure, as to the ability of foreign countries to purchase our commodities or pay their debts, as to the probable trend of exchange rates and as to the probable movement of gold and the ultimate trend of price levels. All persons whose interests Ye in such subjects must gife careful and comprehensive study to the “in- visible exchange.” Measured in Goods Only. On the face of preliminary return: then, without reference to these visible exchange” items, the United Statés has a favorable balance of trade in excess of a billion dollars for the fiscal year ended June 30, 1925— when exports of merchandise amount- ed' to $4,867,654,344, compared with imports valued at $3,824,972,847, the excess of exports amounting to $1,- 042,681,497: + During the 12-month period exports of gold - amounted to $248,729,698, against imports totaling $134,145,136, an excess of exports amounting to $114,584,562. Exports of silver during the same period amounted to $108,. o | 606,388—an excess of exports amount- ing to $37,216,956. When the value of “invisible ex- | chahge” is taken into consideration, the balance of trade as indicated by export and import returns takes on | new significance. . Forelgn securities publicly offered in the United States during the last fiscal year amounted to approximately a number of loans privately placed, and, in addition, a number of direct industrial and commercial investments have not been included in that total. An item of considerable importance that must be taken into consideration in any analysis of our trade is that of tourists’ expenditures abroad. Dur- ing the calendar year 1924, which is the latest period for which figures are avalilable, American tourists in Eu rope, Canada and elsewhere spent ap- proximately $570,000,000. Other “Invisible” Items. Again must be added other “invisi- cipal kinds of which are included in- terest on foreign capital in the United | States, freight paid to foreign ves- i sels, immigrants’ remittances abroad, United States Government expendi- tures abroad, foreign securities issued abroad but sold to Americans, Amer- ican securities formerly held abroad resold to Americans, other foreign in- vestments, such as establishment of branches, purchases of real estate, all of which materially reduce the “fa- vorable” balance of trade. ‘The importance of these “invisible’ items in explaining our international trade is shown by the fact that in 1924, when our “favorable” balance on the movement of recorded merchan- dise amounted to $980,000,000, the in- vigible items were equivalent to rough- ly 22 per cent of our total exports and 34 per cent of our total imports. Now, just to show by a few broad strokes how the “favorable trade bal- ance” of .a billion dollars is absorbed: Besides that we have coming to us nearly a half-billion - dollars interest on foreign investments, and $8,000,000 due us on ocean (r!lf must deduct half a billion dollars spent by our tourists abroad, some $300,- to their home countries, some §$55, 000,000 for our charitable and mission- ary expenditures abroad. It seems that the billion-dollar balance really did take into consideration some $40,- 000,000 paid for liquor illicitly brought into this country—which is not a frac- tion of the amount really pald to the international rum runners. Lose in Capital Movements. Then, again, we have certain *‘capi- tal items.” These include foreign loans that we have made and which must be treated as an offset to the favorable balance on merchandise ac- count, since it furnished our com- glmon #0 much more cash to spend. ir new foreign loans (exclusive of refunding) in the last calendar year amounted to $800,000,000. Europe sent back $50,000,000 in American currency that had been sent abroad, so that makes $850,000,000. Then we must credit-the foreigners with $200,000,000 of American secur- ities they hought last year, with $45,- 000,000 off on joan obligations nd with $23,000,000 paid off on the of the allied debls » Although at first he called it undip-| is taken, were done by boys and young | greatest ambition is to be ltke their, No good Moham- | { ment with Ameri Sometimes you steal| than' $180,000.000. “But T know little about America,” | BY FRANK H. SIMONDS. | Y an odd coincidence America | and Britain have been in re- cent days taking accourt of stock in foreign trade and the contrast has served to provoke | many comments on both sides of the Atlantic. With us, for example, the figures for last year show a favorable balance of materially more than a bil- lion dollars, representing the excess of exports over imports. With the Brit- ish, on the other hand, the official fig- ures show that an adverse balance of almost two billion dollars is to be ex- pected in the current vear. On the British side of the table, too, certain statements, which give rise to very grave discussions. Thus it is stated by credible experts that while last year, in the face of a very large udverse trade balance, the surplus of British exports over imports, when the ‘invisible sources are reckoned, such as investments in foreign coun tries, returns on shipping, insurance, etc., was just short of $150,000,000, this year the estimates forecast a sur- plus” of imports everything iIncluded of little less than the same amount. Nation Lives on Capital. time in upward of a century, war peridds excepted, British expenditure has been greater than British income the figures have been accompanied by | over exports with | Assuming the accuracy of these es- | timates, then, the British people are | facing a situation where for the first | BRITAIN FACES COLLAPSE WITHNO RELIEF APPARENT Overpopulation Scourge Brings Once Most Powerful Nation to Life-and-Decath Grapple for Economic Recovery. It could be supported only as Great Britain sold goods abroad and used the proceeds to buy food and raw ma- terlal—just as it used the surplus to buy foreign securities. For more than half a century there had been no real | competition, America had not arrived | Germany was only learning and the [rest of the world did not count. Yet Jjust before the World War there were signs which were already marked, Ger man competition was beginning to | make itself felt and, what was quite as serlous, India and China, two vast | markets, were going into the indus | trial business themselves and had the obvious advantage of cheap labor in unlimited quantities. | In certain fields, too, British e |ciency was falling ‘behind. Germany and the United States were already perfecting great labor-saving devices | particularly in the coal trade, devices { which were successfully opposed by British labor, because they meant the reduction of employment. Thus 10 vears ago the coal production of one American miner equaled that of three | Prritish, while the German advantage | less marked, but growing. War Paralyzing Stroke. It is concelvable that had there been |no World War the British situation would still have grown worse, that it inevitable that the rest of the | world should by degrees develop its own industrial organization and pro. tect itself against Britain by tariff walls. But the war at a single stroke paralyzed British industry so far as d the nation is thrust back into the position of living, not upon its income, but in part upon its capital. And the logical consequence of thig process, if | continued, must be the liquidation of British forelgn investments to meet the costs of British imports and thus the gradual dissipation of British cap ital, Before the war British returns an nually from all sources left the na tion with a very handsome balance to invest abroad, a balance which was not much inferior to that of th | United States at the present hour; namely, a billion dollars a year. But pelled to sell many gilt-edged foreign securities to pay for purchases abroad, {mainly in the United States. Moreover, since the war and particularly after the boom of 1921, which was fear- | fully shortlived, the excess of imports staggering rate, while the process has been accentuated by annual payment of $160,000.000, which will rise presently to something more Concomitantly with the dropping of the trade balance quite logically, the growth of perma jnent unemployment in the British Isles. Moreover, what is most alarm- {Ing is the fact that after having reached the dangerous total of 1,500, 000 several vears ago and then begun te decline until the million point was | reached, the figures are now again mounting steadily at a period of the year when emplovment should be best. Thus they have again nearly reached a million and a_quarter and the fore- $1,381,678,000—which does not include ' ble exchange” items, among the prin- | hts. Then we | 000,000 for what our immigrants sent | casts today are for a million and three- quarters next Winter. 5,000,000 Living on Dole. On the present figures it is esti mated that more than five million | people, upward of an eighth of the whole population, is living on the ex- iguous unemployment dole, or, in other { words, being supported in enforced idleness, while the prospect is that the number will represent at least one- seventh of the population next Win- ter. Moreover, this situation may be terribly complicated if the threatened ! strike of the whole coal industry takes place. | Exactly, then, as the United States {is in a perfod of almost unexampled prosperity. Great Britain is enduring a time of "depression which is hardly paralleled in British history and is the | more serious since its causes are ap- parently fundamental, not temporary | Moreover, one has only to glance briefly at the press of Britain and to | note the comments of public men, to | perceive that the whole country is concentrating its attention upon its present difficulties to the exclusion of all else. and that even minor details, {such as British shipping companies’ { orders for new ships in German yards, while_ unemployment in the Clydeside iand Belfast vards is notorious, and | Australian application for a loan in | New York and not in London provoke | an_incalculable amount of discussion | and even recrimination. When the British situation is stud- | led closely, it becomes clear that, save | for Russfa, no country has suffered so | great a domestic economic disturbance ! as the British as a consequence of the | war, while in practically every other country the situation, which was very serious immediately at the close -of i the World War, is showing greater | proportional improvement than tne i British. Thus the current French | trade statistics show that France, | which in pre-war days rarely balanced i her exports and imports, has so far , this year a favorable balance of $113.- 1000,000 for the first five months, which would mean a total favorable visible balance for the year, if the rate con- tinued, of nearly $300,000,000, together with a sum at least equally large rep- resenting tourist trade, foreign invest- ments and other invisible income, while French unemployment is prac- tically nil. Recovery Not Apparent. Notwithstanding the fact that the world is slowly but surely getting back to normalcy, recovery in Great Brit- ain is not taking place. On the con- trary, in certain vital industries like coal the slump is growing at an ap- palling rate. What does it mean and what is the explanation? Beyond all else in studying such an intricate question it must be perceived that many forces are operating to produce the general result, that the war. while it did violence to economic iife in many countries, worked peculiar harm to the British. In fact, and this is the starting point, Great Britain was the most vulnerable of all great countries when the war broke. "This vulnerability lay in the wholly one-sided development of the United Kingdom in the last century. ' The great industrial development began in the British Isles, it proceeded at a more rapid rate than elsewhere and the people of Britain gradually made over their country on the assump- tion that it was to remain the work- shop of the world. The population grew by leaps and bounds, the critics became many and huge, the rural dis- tricts were abandoned, agriculture dis- appeared. By-the end of the century nearly forty millions of people were concentrated in an area hardly twice that of New York State. This vast population was based not upon domestic but upon foreign trads. j during the war the British were com- | over exports has been mounting at a | the debt settle- | which involves an | there has caine, | the world markets were concerned since all British manpower was con centrated either upon fighting or mak ing war matertal for the struggle Moreover, the rest of the world, or a | considerable part of it, engaged in destroying its purchasing power at the greatest possible .speed. Finally | the United States, long neutral, in | evitably expanded its machinery to meet the world demand which Britain | could no longer supply, and when we me into the war we still further | expanded our industrial plant for war purposes. When the war was over the British position in the world had changed greatly. Temporarily, at least, the | wealth of the world was centered in | New York and not in London, and | America, while perhaps not richer by | reason of the war, was incomparably better off with respect of all competi tors, because she had suffered com | paratively little. We had a merchant marine, built to meet the submarine situation, but now avallable to com | pete with the British. We had made | great inroads into the markets of { South America and of the Far East, where we had in part replaced the British In Europe. on the other hand, peace did not bring tranquillity or_Testore purchasing power. Russia,” where Britain had bought cheap food, was out of the situation, and expensive food had to be bought-from us and from Canada. Al the little states which had risen to freedom in the war or had greatly expanded thelr fron tiers were totally unable to purchase | British goods by reason of the state of | their exchange, and they were driven first to restrict thelr own purchases |and secondly to create their own in dustrial plants Reparations Prove Curse. Reparations, which was to be a blessing to the victors, proved an im mediate and continuing curse to tne British. The taking over of the Ger | than shipping. which was divided be. | tween the allies, the British properly | receiving the bulk, since their sub- | marine losses had been greatest, pro- | vided all countries with a surplus of | tonnage at a moment when freights were lacking. Only the German ship- | vards were hereafter to be busy, since | the Germans, deprived of their ship ping, must build new. German coal delivered to France, Belgium and Italy | replaceg British, while the United | States appeared as a competitor in the | coal trade as well as in shipping. Again, the results of the war hit Britain in a new place. France had never been a serious industrial com- petitor, but in reconstructing the dev- astated area France replaced obsolete machinery with new, her coal mines when_restored produced more coal | than before, while her steel, iron and | textiles, thanks to a lower exchange, played havoc with British export trade and also invaded the British domestic market in some departments. While it was always certain that eventually German competition would be most dangerous, in the immediate present French and Belglan competition was unexpectedly annoying in the extreme To add to all these circumstances Britain was facéd with grave disorders in her great Aslatic dominion. India. too, struck at the British by means of a boycott which effectually reduced British exports and brought great un employment to cities itke Manchester. At home, too, an epidemic of strikes culminated in'a disastrous coal strike. which for the moment reduced British coal exports to nothing and gave America a temporary advantage. Coal Episode Significant. The coal episode was, and is, too. significant and illustrative. The sim ple fact of the matter seems to be that British coal cannot compete with German in the European market at the present state of wages. The de- bate between miner and owner is not over the division of profits, since there are practically no profits in the trade. The question is whether the | owners shall close down an unprofit- able extraction, the miners accept wages which are generally recognized to be below the cost of living or the government take over the mines and thus shoulder the deficit. And, of courSe, in the end this resolves itself into the battle between labor and capi- tal, with labor facing conditions which must be accepted as well nigh intol- erable. British finance, too, by its very cour- has imposed terrific burdens. rmany, as a consequence of the | war, repudiated her vast domestic debt. France, through the deprecia- tion of the franc, has already seen hers shrink by three-quarters. Pres- ently the franc will be stabilized at some point which will represent the actual repudiation of three-quarters and possibly more of the amount bor- rowed from Frenchmen to win the war. But the British have restored the pound sterling to par and have now to pay back their enormous bor- rowings not merely at par, but, allow- ing for war-timg {§flation, probably at twice par. As & ult toddy British taxation is somet! aimost beyond endurance, and there is no present hope of any substantial relief. In addition, the British during the war lent vast sums to their allies— sums which can be estimated at any- thing from $8,000,000,000 to $10,000.- 000,000—while at the same time they | borrowed from us to the tune of pras- (Continued on Third Paged |