FINANCING EUROPE

Dominion, Volume 13, Issue 34, 4 November 1919, Page 2

FINANCING EUROPE

AMERICA'S BIG PROBLEM

AND BRITAIN'S TASK

(Melbourne "Ago" Correspondent.) ™ ~' ' London, August 21. ine statesmen, bankers, and financial exuerts of tho old world and the new are faced with the gravest problem that has ever been presented in tlio financial historv of tho world. The problem is that of placing Europe- finely on its feet, bo that it may get to work, ana' earn enough to keep itself and pay off its debts. At the present time Europe, which owes America many millions of nounds in money lent, in war stores manufactured for tho Allies, and in food supplies, is not able to feed itself, and is increasing its debt to America by continuing, to receive from that country food supplies, cotton, coal, and manufactured goods of various kinds. It cannot pay (fit its debt except in the form of exports to America, and it cannot manufacture Roods for export until its industries havo been revived. Europe is in the position of a manufacturer whose factory has been destroyed. Ho cannot pav his debts unless'someone •finances him to enable him to rebuild his factory, equip it with machinery, and obtain raw materials to convert into manufacturcd coods.

It is impossible to arrive at an accurato estimate.of Europe's debt to America, but it is probably not far short or JC3.000.000.000. Tho debt is made un of loans raised in America by the Allies before America entered the war, of loans in the' form of credits granted.' to tho Allies by tho American Government after •America entered the war, and the everincreasing debt for imports of food and goods from America. Tho following fig. . ures have been published as rough summaries of the debts of European coun. tries to America in tho form of loan* and credits:— ' ' » ' £' Great Britain 1,125,000,000 France. ..' 730,000,000 Italv ' ...'. 320,000,000 ltussia ' 70,000,000 Belgium 08,000,000 Czecho-Slovakia 10,000,000 ■ Greece ' ....;'.. 9,000,000 - Serbia '. 6,000,000 lvumania 5,000,000 Total A3«,000,000 To these figures hoe to be added tho value of the excess of American exports to -Europe over-imports during the "sent vear. No estimate throwing any light on this form of Europe's debt to. America has been made, but it is known that Great' Britain is now importing goods from America at thorato of .£25.000,000 a month, whereas British exports to America , are' under .£5.000,000 a'month, It is expected that the position of Great Britain as America's debtor will ; rapidly improve, but until her exports to ' Amorioa exceed her imports her debt to that country will increase. 'Although Franco and Italy jointly owe America less than Great Britain does, tliey are in a much less satisfactory position, than Groat Britain with respect to payment. Although Britain's trado is slow in reviving, it is generally expected that it will reach its pre-war scale before that of ■tiny other nation of Europe., It has also to bo remembered that Great Britain's debt to America in the form of loans and credits is moro thun counterbalanced by Britain's loans to her Allies and over-, seas Dominions, which total nearly J>l,. 700,000,000. About .£568,000,000 of this total was lent.to Kussia, and at present it looks as if nono of this will bo repaid. Allowing for Russia's default, and tho probability that the British loans to Serbia and Belgium will not bo repaid in full, thero is enough money owing to Great Briuain in tho form of var loans to go a long way towards wiping out her loans from America. It is. probable that it ov<iry one of the belligerent nations of Europo were left tio their own resources,' Great Britain is tlie only one which would be able to pay off its debts. But is.ope'ib" icknow. ledged by tho American Go it and American bankers and fin..u .j, that America, must, help to finauce tho im-poverished-countries of Europe •': it is to get its mouoy back. In what way this financial help shall be given is the prob. lein which has to be solved. Tho position of America.is entirely different from that of a private creditor. When a private individual engaged in business becomes bankrupt, his creditors do not lend him money in order to start him in business again. As a rule they take what they can get from the sale of the assets, though somelnr.es it pays tlieiir better to accept terms which will allow him to resume But. tlie extension of America's national prosperity is dependent on tho restoration of Eiiropes prosperity. It would not. pay X to continue to export millions of pounds worth of- goods to fcnrope and to. get little or nothing m whin, for thern But it is equally true that it wS not pay Amer/ca to cease ta. send goods to Europe, for the .abolition of fk trade with Europo would be a severe check to the extension of American indSrie*. America cannot grow .prospermis by taking in its own washing, i.e.,. T only for its home mark The greater-its exporttrade Ivitli Ku'ropo and other parte of tlio perity. _ __