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British papers seized the occasion of Mussolini's African trip to publish the substance of an accord between the Foreign Offices of London and Rome for the economic development of Abyssinia. This agreement has created profound suspicion even in Mr. Chamberlain's own Party. The Saturday Review, which champions the Conservatives among British weeklies, says the way in which it was made 'will please nobody but the Italians themselves'; that it 'may be quite harmless, but the manner in which it has been announced is decidedly unfortunate. The atmosphere of secrecy, the reference in the Italian press to a mandate over Abyssinia, and the silence of the Government in AddisAbeba, all encourage the suspicion that Italy, despite her crushing defeat on the last occasion, dreams of military conquests in Abyssinia.' Turning to the Italian press, the Catholic Corriere d'Italia argues temperately that Italy's contemplated activities in Abyssinia will not compromise the latter country's sovereignty; indeed, they will strengthen its political prestige, since 'every increase in production means increase in economic power, and consequently in political independence.' Giornale d'Italia also asserts that the treaty in question contemplates exclusively economic objects. Abyssinia is a member of the League, where she is likely to find France her champion; for, all other rivalries aside, Italy's designs include building new railways in that country which will divert her trade from the French port of Jibuti.

It is impossible to say how much actuality there is behind the report that Italy contemplates aggressive action against Turkey this summer. Mussolini would have to pick a gratuitous quarrel with Mustapha Kemal to

Turks are probably sincere in their alarm, for they have not forgotten the trivial provocation which led to the Tripoli War, nor the extreme cordiality with which the Greek Foreign Minister was recently received in Rome.

'ON ADMIRING AMERICA'

THIS is the title under which Mr. F. C. C. Yeats-Brown draws unfavorable comparisons between his own country and the United States in a late issue of the Spectator. Prefacing his remarks with the statement, 'I have no particular cause to love Americans,' who, it seems, have parted the writer from a good many dollars, and quite ready to admit that we have conspicuous and irritating defects, he nevertheless finds several things among us to use as a foil to set off the deficiencies of his own country, and declares that an Englishman's first impression upon returning home from America is that his native land is sunk in lethargy.

'Going out to luncheon I pass a theatre queue daily, listless men and women on camp stools, street singers, cadgers. Outside a teashop in Covent Garden are four hefty men, three singing, one collecting pennies.' He attributes these conditions to the idea, which he says prevails in England, that a man must be helped in spite of himself, and protests: 'This is not Christianity far from it; it is merely feudalism. Above all, and in spite of all that has been said about our being a nation of shopkeepers, we still persist in thinking business less honorable as a career than letters, medicine, law, or even war.'

After an amusing account of his experience in trying to call up a man on a London telephone to make a business engagement, which leads him to make the elastic estimate that 'thousands of pounds a day are lost over missed con

nections' in that city, he protests that in Great Britain 'doing business is made into a bore, instead of being a delight, as it should be.'

He then turns his attention to another class of nonproducers, who we assume are superficially different but fundamentally identical with the street singers, cadgers, and penny-collectors. 'I sometimes think that those half-dead persons whom one may see from the top of a bus, sitting in their clubs reading the newspapers, are partly responsible, with their die-hardisms and inhibitions, for keeping up a spirit of pessimism in Young England. No doubt they tell their families that the world is going to the dogs. No doubt also they read too much and do too little; they batten like slugs on the fodder of Fleet Street, absorbing paragraphs of print

about other men's activities and absurdities, and remain immobile. Such people must be a drag on prosperity.'

Declaring that he admires America but loves England, this typically selfcritical Britisher deplores the fact that the young people of his country either stay in ruts or else get out of them 'only to pursue the hare of Communism.' Speaking apparently from his own experience, he says: "There is far more fun to be had out of Capitalism and individual enterprise. I should like to see English boys paying their way through a university by being waiters in their spare time, as two American friends of mine did, and more men determined to be millionaires before they die. "But money is n't everything!" It is so easy to say that—and so cheap, so like a faded grandee.'

[THE author is Professor of Commercial Politics and Customs Legislation in the Business University at Milan.]

Not long ago the British Chancellor of the Exchequer pointed out in an address to the House of Commons that fully sixty per cent of the Reparations payments received from Germany was crossing the Atlantic. Thus the United States, already glutted with gold and a huge trade-balance, witnesses this new river of wealth flowing steadily to its shores from the impoverished continent of Europe.

America's leading publicists, industrialists, and financiers wish to see the Interallied debts canceled, or at least scaled down to the lowest possible amount. But the average American taxpayer, who would have to go down into his own pocket to pay the interest and principal of the eleven billion dollars more or less that his Government has lent to the Governments of Europe, will not listen to the suggestion that he present that enormous sum to what he considers a parcel of turbulent, acrimonious, trouble-hunting foreign Powers.

Of course, the Washington Government might put this poser to its great industrialists and bankers: Why don't you yourselves reimburse the people of the United States for the eleven billion dollars they have advanced to Europe through the Federal Treasury, and then cancel the debts of those 1 From La Stampa (Turin Independent daily), April 4

Powers, so as to escape the dangers with which these obligations in their present form threaten you?

Put in that way, the question covers both aspects of the problem, for these debt payments are a matter to be adjusted, not only between nations, but also between different groups of people within each nation.

Mr. Gilbert's report on the first year's operation of the Dawes Plan is illuminating in this connection. First of all, why has the United States Government persistently refused to allow Germany's payments to the Allies to be tied up with her claims against the Allied Governments? At first blush we might assume that this was merely a question of definition, because the American Government, in presenting its bill to the Allies, has always acted on the basis of their capacity to pay; and the Reparations they receive from Germany are unquestionably a factor in their capacity to pay. But on closer scrutiny we discover that this refusal is based on something more than a mere quibble over words. Assume that the Allies were to transfer to the United States their claims against Germany, and that Germany thus found herself facing the formidable, and probably impossible, task of transferring to a single nation one billion gold marks annually at first, and then progressively larger sums, until a maximum of two and one-half billion gold marks was reached. The Allies would then be able to adopt any commercial or fiscal measures they saw fit to defend them

selves against a possible invasion of German goods, and would thus escape all the embarrassing liabilities associated with future Reparations transfers. As things are at present, Germany distributes her payments among six or seven States, each of which, under the compulsion of its debt to America, is forced to receive them and to solve for itself the problem of transmitting the proceeds to the United States. By thus subdividing the transfers among several nations, the task of each one is greatly lightened, and each is able to adjust its commercial and industrial machinery to the necessities of its particular situation. The burden of transferring those payments to America, instead of falling upon a single country, is distributed among at least four principal debtors, England, France, Belgium, and Italy, who can employ the proceeds of their own trade, and of the services they render in all parts of the world, to meeting their obligations to America. This not only makes the transaction less impracticable, but permits its accomplishment with less disturbance to world economy and to international exchange.

But there is a second point involved here. The method adopted by the United States leaves each of the debtor countries in full control of its own monetary and customs policies. Germany is now paying almost entirely in goods. This is shown clearly in the report of the officers administering the Dawes Plan for the first five months of the second year. Now the Allied Powers except Italy, where the facts are not fully reported - turn over these German products to groups of industrialists in their own country, usually at much lower prices than those at which they are credited to Germany. For example, if the Reparations Germany pays in the form of coal, chemicals, and machinery are valued in the

world market at one hundred, the Allied Governments credit her with one hundred on her Reparations payments, but they may actually receive only eighty per cent of that sum, because of the discount they allow to the domestic purchasers who buy these goods from them. This difference arises from the fact that gold prices in the domestic market of a country with a depreciated currency are lower than they are in the international market, and that Germany's deliveries are necessarily credited to her at the international market rate.

In this way the added protection that a depreciated currency gives to the domestic industries of a debtor country is counterbalanced in the final accounting by the increment thus added to that country's debts to America.

But take a case where the price of German goods is lower than the price of similar goods produced in the protected domestic market of a State receiving payments from Germany. In that case the Government can sell this German merchandise at its par value

that is, at the price at which it credits it to Germany - without doing serious harm to its own producers. In fact, the Government may be able to dispose of such goods at a profit above the price at which it receives them, thus directly benefiting by its protective policy. But whichever situation may prevail in any of the countries owing money to the United States, the latter collects its obligations at par and is not affected by the tariff and currency policies of those nations.

A third important factor also enters into this relationship. American bankers have advanced huge credits to European Governments and private borrowers, either directly out of their own resources or as underwriters marketing foreign securities to the Amer

ican public. The sum total of these advances is mounting rapidly. American investors are said thus to have lent fully a billion dollars to Germany alone. Operations on so large a scale as this ordinarily result in a great extension of banking credit. European borrowers have begun to resort regularly to the American money market for accommodation. That market is called upon to underwrite Europe's commercial operations, to furnish her liquid capital, to float new companies, to finance trade between Europe and America and between Europe and the Orient, and so on. The United States has thus acquired a strong hold upon European industry, and in connection with this hold new responsibilities and risks.

Now, if American savings continue to be invested upon this extensive scale in European enterprises, an interesting rivalry is sure to develop between the Treasury at Washington and the financiers in Wall Street. When Italy, France, and England are paying the maximum annual installment on their debts, America will receive from us about $360,000,000 gold annually. Europe will never be able to pay this sum unless her factories and fields are operated with the utmost economy and efficiency, and with a minimum profit, after taxes are paid, to the owners. But American citizens will be heavily interested in the earnings of these foreign companies. Whatever the Washington Government collects from European treasuries will thus be taken out of these American investors' profits, in the form of taxes levied by European Governments upon the enterprises in which the latter are interested in order to pay their public obligations to the Treasury of the United States.

A third element in the Interallied debt situation threatens to sow dissension between different interests in

America. Her consumers are likely to favor the importation of cheap merchandise from abroad, while her manufacturers and bankers will bitterly oppose this competition. The only way to reconcile that divergence of interests will be for Americans to reinvest in foreign enterprises the profits they receive from capital placed abroad — a policy that will steadily increase their preponderance in the economic life of Europe.

On the other hand, it is as erroneous as it is ingenuous to jump at the conclusion that the only way to cut this Gordian knot is to cancel Germany's debts to the Allies and the Allies' debts to England and the United States. There are three reasons why this is impracticable. In the first place, France's claims against Germany exceed her debts to England and America. In the second place, such a solution, if adopted now, would make Germany the real winner in the war; for she has a more efficient industrial plant, a better business organization, and a more stable monetary system than any of her rivals. Moreover, she has wiped out her domestic debt, and would enjoy the advantage of lower taxes than her competitors. In the third place, as I pointed out at the beginning, the result of this would be to benefit American financiers who have heavy loans on their private account abroad, at the cost of American taxpayers, who would then have to pay out of their own pockets the interest and principal of the money borrowed by their Government to lend to Europe.

Still another aspect of this broad question, and one that is often overlooked, thrusts itself upon our attention. The history of the rise and fall of nations, and of the successive supremacy of one country or of one continent over its neighbors, shows