and Russia, to settle the situation of
the exchange of goods with Italy and the Balkan countries is much more
important for the United States and the prosperity of its people than
to demand payment or not demand payment of those debts made for the
common cause.

I will speak of the absurd situation which has come about.
Czeko-Slovakia and Poland unwillingly indeed fought against the
Entente, which has raised them to free and autonomous States; and
not only have they no debts to pay, being now in the position of
conquerors, or at least allies of the conquerors, but they have, in
fact, scarcely any foreign debts.

The existence of enormous War debts is, then, everywhere a menace to
financial stability. No one is anxious to repudiate his debts in order
not to suffer in loss of dignity, but almost all know that they cannot
pay. The end of the War, as Keynes has justly written, has brought
about that all owe immense sums of money to one another. The holders
of loan stock in every country are creditors for vast sums towards
the State, and the State, in its turn, is creditor for enormous sums
towards the taxpayers. The whole situation is highly artificial and
irritating. We shall be unable to move unless we succeed in freeing
ourselves from this chain of paper.

The work of reconstruction can begin by annulling the inter-allied
debts.

If it is not thought desirable to proceed at once to annulment, there
remains only the solution of including them in the indemnity which
Germany must pay in the measure of 20 per cent., allocating a certain
proportion to each country which has made loans to allied and
associated governments on account of the War. In round figures the
inter-allied loans come to 100 milliards. They can be reduced to 20,
and then each creditor can renounce his respective credit towards
allies or associates and participate proportionately in the new credit
towards Germany. Such a credit, bearing no interest, could only be
demanded after the payment of all the other indemnities, and would be
considered in the complete total of the indemnities.

All the illusions concerning the indemnities are now fated to
disappear. They have already vanished for the other countries; they
are about to vanish in the case of Germany.

Nevertheless it is right that Germany should pay an indemnity. Yet, if
the conquerors cannot meet their foreign debts, how can the vanquished
clear the vast indemnity asked? Each passing day demo