GERMANY is the second largest debtor to the United States; only Canada outranks her. Approximately 38 percent of the outstanding European bonds which have been publicly offered in the United States are German. According to the Institute of International Finance, the amount of German bonds payable in dollars and still outstanding on August 31, 1934, was $1,047,-184,400. According to this same authority, total European dollar issues in default amount to $1,373,464,900, and of these $982,451,400, or 72 percent, are German.

The problem of European defaults is, indeed, mainly German. The non-German European dollar bonds in default amount in round numbers to $391,000,000, but they are divided among ten different countries and, except in one or two instances, the amount for any one country is small. The total of them all is not much more than the amount of the default of any one of three Latin American countries -- Brazil, Chile and Mexico -- each of which is reported to be in default in excess of $300,000,000.

While Germany's long-term debt to the United States of more than a billion dollars is large in an absolute sense, it is less per capita than similar debts owed by several other countries. And if differences in per capita wealth are taken into account, the burden of Germany's debt to the United States appears lighter still. Clearly, it is not the relative size of this debt but the difficulty of finding a practicable method for transferring payments that constitutes the main problem.

Following is a comparison of the total and per capita long-term dollar indebtedness of Germany with that of various other countries:

LONG-TERM DOLLAR LOANS OUTSTANDING IN 1934
Total Amount per
(in millions) capita
Argentina $363 $33  
Brazil 377 9  
Chile 311 72  
Colombia 158 20  
Mexico 302 18  
France 188 5  
Germany 1,047 17  
Great Britain 20 0.5
Italy 241 6  
Canada 2,682 268  
Australia 260 40  
Japan 398 6  

If we consider the debt of the German Government apart from the German commercial long-term debt, its relative lightness compared with that of other governments is similarly apparent. The "World Economic Survey" for 1933-1934, recently published by the Economic Intelligence Service of the League of Nations, presents a tabulation of the total public debt of various countries at the end of the last fiscal year, including the amount which is owed externally. While the figures there given are not strictly comparable internationally, they indicate clearly that the per capita public indebtedness of Germany is less than that of any other important European country. This is shown in the following table:

PUBLIC DEBT OF IMPORTANT COUNTRIES
Converted into dollars at the current rate of exchange
Total Owed Externally
(in millions) Per capita Percent Per capita
France $30,360 $726 38 $276
Germany 4,682 80 19 15
Great Britain 39,300 850 13 110
Italya 8,755 212 2 4
United States 27,053 217 .. ...
a Data for Italy do not include Allied war debts, which are included in the data for France and Great Britain.

The foregoing tables obviously do not give a complete picture of the debt burdens of the various nations listed. In the case of the Latin American countries which have done most of their borrowing in the United States, the first table gives a better indication of the burden of external indebtedness than it does for Germany, which has borrowed extensively from the creditor nations of Europe as well as from the United States. But this does not vitiate the conclusion that the debt burden of Germany is relatively light and that it would not be beyond her capacity to pay if her present policy of Autarkie and her creditors' trade restrictions were modified to conform with economic realities.

W. O. S.

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