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SIXTY-EIGH TH CONGRESS, FIRST SESSION The Indebtedness of France to the United States. S P E E C H OF HON. R O B E R T L. OWE N, O F . In the S enate O K L A H O M A , of t h e U n it e d S tates, January 11. 192.',. Mr. OWEN. Mr. President, on yesterday the Senator from Idaho l Mr. B o r a h ] commented upon the apparent European propaganda looking to the possible repudiation by the Euro pean countries of the indebtedness due to the United States. It is very difficult indeed to believe that the Governments of France or Great Britain really contemplate anything of that sort, although certain unofficial individuals have been heard in the public press to make the comments quoted by the Senator from Idaho. France has been having a difficult time since the G overn m en t [In 1913 m illio n s war, and I called on the Federal Reserve Board for some figures with regard to the conditions there. I think it worth while to present them to the Senate. The French budget for 1913 showed receipts of 4,907,000,000 francs and expenditures of 5,072.000,000 francs, making a de ficit of 165,000,000 francs. When they got into the war in 1914 this deficit ran up to 6.000. 000 000 francs; in 1915, to 17.000,000,000 francs: in 1916, to 31.000.000,000 francs; in 1917, to 38,000,000,000 francs: in 1918, to 49,000,000,000 francs. Since the war they have not avoided this annual deficit, which ran to 42,000,000,000 in 1919, 38.000. 000.000 in 1920. 30,000,000,000 in 1921, and 24,000.000,000 in 1922. So that the total deficit in all these years amounts to 279,000,000,000 francs. In addition their excess of imports over exports has been very large. Without reading the whole of that, I ask to have printed in the C o n g r e s s i o n a l R e c o r d this table prepared b y the officers of the statistical division of the Federal Reserve Board. The PRESIDING OFFICER. Is there Objection? There being no objection, the table was ordered to be printed in the R e c o r d , as follow s: fin a n c e s. o f fr a n c s ; 0 0 0 ,0 0 0 o m i t t e d .] 1914 1915 1916 1917 1918 1919 1920 1921 1922 T ota l, 1914-1922. 1923 1924 BUDGET. R e c e ip t s .................................................. E x p e n d itu r e s ........................................ 4.907 5,072 4.196 10.371 4,130 22.120 4,930 36.848 6,186 44,661 6.791 56,649 11. 586 54,213 19,821 58,143 21,543 52,023 24,691 48.720 103,876 383,748 D e fic it .......................................... -1 6 5 -6 .1 7 5 -1 7 ,9 9 0 -3 1 ,9 1 6 - 3 8 , 475 -4 9 ,8 5 8 -4 2 ,6 2 7 -3 8 ,3 2 2 -3 0 ,4 8 0 -2 4 ,0 2 9 -2 7 9 ,8 7 2 5,066 9,891 372 19,009 1,914 29,997 2,947 37,597 4,081 48,584 5,952 35,345 15,481 30,772 22,279 27,886 21,423 25,136 23,084 264,217 97,533 8,421 6,880 6,402 4,869 11,036 3,937 20,640 6,214 27,554 6,013 22,306 4,722 35,799 11,879 49,905 26,895 22,068 19,772 23,901 20,642 1,541 1,533 7,099 14,426 21,541 17,584 23,920 23,010 1,296 2,259 0) E X P E N D IT U R E . O r iin a ry b u d g e t.................................. Special (recoverable b u d g e t ) .......... 23,438 25,970 23,438 21,665 FOREIGN T R A D E IN MERCHANDISE. E xcess of im p o rts.................... 1 1 Final figures for 1923 w ill show expenditures of about 23,000,000,000 francs and a sm all surplus a b o v e estim ates. Th e 1923 ordinary bu d get is carried over for 1924 w ith sm all changes. Ten m ouths, 1924: Im p o r ts ............................................................................................................................................................................................................................................................................................................. 25,621 E x p o r t s ...................................................................................................................................................................... ..................................................................................................................................... 24,376 Mr. OWEN. 1923, was: The total indebtedness of France on April 30, F ran cs. I n t e r n a l d e b t : f u n d e d ________________________________________________ F l o a t i n g ________ ______________________________'_______________________________ 1 7 1 ,0 0 0 .0 0 0 ,0 0 0 82, 000. 000, 000 T o t a l _______________________________________________________________ 2 5 3 ,0 0 0 ,0 0 0 ,0 0 0 The external debt, which of course is measured in gold, fluc tuates as the French franc goes down, so that the external debt in terms of gold would be multiplied so that on the basis of the present French franc the outstanding indebtedness would amount to something over 450,000,000,000 French francs as of this date, or a total of about $20,000,000,000. If the French bring the franc back to par, it would cost the taxpayers the dif ference between 4j cents gold on 253,000,000,000 francs internal debts and 19.3 cents gold, or about $39,484,000,000 of additional gold payments. It seems to me Europe should valorize its cur rency at an equitable arbitrary figure and redeem all old cur rency on that basis and issue a new currency on American principles that would assure its future stable value in gold and at an agreed per capita basis by European conference, so as to facilitate commodity exchanges. Of course the going down of the French franc is due to both the internal and external indebtedness, because the people who 8 0 9 4 0 — 58 speak in terms of francs naturally think in terms of the sol vency of the government which is issuing the franc, imposing and collecting taxes, and either living within its income or not living within its income. That is a perfectly natural thing. It is not due to anything except financial mathematics. It is just a question of the fiscal law of gravity. The French statesmen apparently have been leading the. French people to feel that they would soon be getting very many billions from the German reparations, and therefore big armies, great expenditures, loans to others, and extravagance was justified. Those billions are not materializing in a satis factory manner apparently, and now it has come to a point where, in order to keep the franc from tobogganing downward, as the German mark has done, the French leaders are com pelled to raise the rate of taxation. The papers announced that they did this a day or two since by raising the average of taxation 20 per cent. I think it is pretty well understood that the wealth of France has not paid the heavy taxation which the wealth of Great Britain lias paid or that of the United States has paid ; but the time lias come when, in order to save the franc from further depreciation, it is absolutely necessary for the French people to recognize the actual verities relating to their fiscal condition ; and I have no doubt that thev have the wisdom to do that, because the French are really very able and their fiscal management is conducted with greuo intel CONGRESSIONAL RECORD. 2 ligence in normal times. The emotion of war has upset the ishing the currency, and rigidly maintaining its credit, but whole world and led the French Government into error which the other nations have suffered very severely from the deprecia is now being reflected on the French franc unavoidably. I will tion of their currency and neglect of their credit Some of put this statement o f the French indebtedness into the R kcord the neutral countries have not suffered very severely. Sweden, for instance, has done very well. The franc, going from a without reading all o f the details. The PRESIDING OFFICER. Is there objection to the inser value of 18.3 cents in 1919 to less than 4.5 cents in January. 1924. has a vast significance. That is a matter of grave in tion of the table in the R ecord? There being no objection, the matter was ordered to be ternational consequence and tells the story of the world’s impaired confidence in the management of the policies of the printed in the R ecord, as follows: French Government. Public debt of France. What Europe needs is restoration of “ production.” A res toration of production is impossible without a restoration of [ I n m il l io n s o f f r a n c s .] “ confidence.” Some measure of confidence is required in order to have a “ stable currency.” They are talking about M ar. 31, A p r. 30, Dec. 31, Sept. 30, M ay 31, J u ly 31, 1922. giving Germany a stable currency. If people have not any 1920. 1921. 1923. 1914. 1918. confidence in the stability of the German Government or its continuity, statesmen can not give a stable currency to Ger Internal debt: many through German sources, because, after all, the stability 136,072 155,058 171,681 121,300 32,579 G7, 739 F u n d e d ................. 82,821 87,050 86,132 81, 267 1,609 49,135 of that currency will depend upon the confidence in the sta bility of government. It must have stability. The French states 242,108 254,502 202,563 222, 204 34,188 110,374 men have not realized this truth, but have done much to break E x tern a l debt: down the government of Germany. 56,037 41.438 44,604 49,796 15,127 The Senate will recall that in 1918 I presented a plan 50,517 30,560 33.438 33,477 15,471 which would have given a stable gold—secured and commodity74,876 i 10.1,584 75,164 83,273 30,598 secured currency for all of Europe, to the extent of their re quirements and desires-—a plan still entirely available— simply 361,086 316,984 297,367 34,188 j 147,472 | 2S5.836 Grand to ta l___ by extending the Federal reserve system to Europe by a Federal reserve foreign bank, issuing Federal reserve bank i The external debt varies with every fluctuation of the exchange. For this table, Its value in gold francs has been multiplied by 3 to represent the approximate notes of that particular bank against commercial bills secured situation on April 30, 1923. At the present time, with the franc at about S0.01J. it by merchantable nonperishable commodities, and backed by would be nearly 50 per cent higher. the usual personal and banker's credit, as we require for On July 31, 1923, the total debt was 430,000,000,000 francs, ac the Federal reserve notes o f this country. So that behind cording to the Department of Commerce, United States. every such note would be 100 per cent of commodity values, 100 per cent private credit, 100 per cent bankers’ credit, and RECENT LOANS. in addition there should be set apart a gold fund equal to In June and October, 1923, the French Government issued bonds to the sums of 9 ,7 7 8,000,000 francs and 6,040,000,000 francs, re approximately 20 per cent, which would be sufficient, in my In that spectively. To a considerable extent these were funding issues rep judgment, to assure daily redemption of such notes. way all the European countries could be supplied.with a stable resenting the conv a of maturing notes and treasury bills. The currency within a very short time. costs to the government were, respectively, about 7 per cent for the We have idle gold laying in our vaults amounting to many former and 8 per cent for the latter. The total special budget for times more than would be required and which could be used 1923 was 25,970,000,000 francs, to be entirely covered by receipts without any injury to our own system at all to provide this, from Germany or by loans. Practically nothing was received from redemption fund, and such a redemption fund would earn a Germany during the year, and the deficits in this budget were cov sufficient amount to replace itself within a few years. So there ered by the receipts from the loans mentioned above and by loans issued by private groups and guaranteed and assumed by the gov is no insuperable difficulty about giving them a gold-secured currency if they have the wit to take it and really want it. I ernment. The special budget (recoverable) for 1914 is 21,665,000,000 think America would be fully justified if it helped Europe. francs. Anticipated treasury borrowing for 1924 amounts to 13,000,But Europe must make it safe for America by making Europe 000,000 francs. safe for peace instead of moving it toward war. Production Mr. OWEN. A later memorandum up to January 1. 1924, must be based on a balancing of the Budget on a stable currency puts the French internal debt at 269,000,000,000 francs (worth by which men can measure contracts. They can not measure at 5 cents about $13,050,000,000 gold owned by the French peo contracts and can not go into large production without contracts, ple) and 126,000,000,000 francs in external debt, or about and they require for the making o f contracts a currency which $6,000,000,000 gold due foreigners. will be a stable measure of value. If the French Government will demobilize and be economical, The French and German press and the leaders should open it can in due time pay its debts. up a propaganda of good will and understanding. There is no just reason to ask the cancellation o f the debts The French should get out of Germany. The war myth of due the United States by France—and the people of the United Germany’s exclusive guilt should be frankly abandoned and an States will never permit it. I thought it worth while to call the era of good will and mutual cooperation and helpfulness started. attention of the Senate to this matter, because the franc has The foreign office of France should be put under control of gone down from January, 1919, after the war, when it was worth the French Chamber of Deputies. 18.3 cents, to about 4£ cents. Under the reparation management, The foreign office of the British Empire should be put under and under the wonderful treaty of Versailles, which was going the House of Commons, as Ramsey McDonold, the new British “ to save the world,” we see all of the currency of Europe Premier to be, is quoted as demanding. The unhappy old secret going down, more or less. Great Britain did retrieve its cur diplomacy under which a dozen men led the world to war rency by cutting down the John Bradbury notes and dirniu- should be ended for all time. , 80940— 58 d W A S H I N G T O N : G O V E R N M E N T P R IN T IN G O F E H E : 1924 \ '
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