HOW AMERICA PAYS HER DEBTS

SENATOR BORAH was recently allowed to contribute to an English newspaper * a couple of articles in which he exhorted all European countries to pay all their foreign debts promptly and in full, in imitation of the noble example of the United States. Did he issue that appeal in ignorance of his country's financial history, or merely in the belief that other people were ignorant of it? That is his secret ; but it is, at any rate, quite certain that America did not establish the precedent which the Senator invites Europe to follow.

America has not, in the past, as Senator Borah implies, been exceptionally scrupulous in her financial dealings with foreigners. She has, on the contrary, been exceptionally unscrupulous-more unscrupulous even than the Republic of Honduras. Those Americans who do know their history and value their national honour are perfectly well aware of the fact, and have, indeed, drawn such pointed attention to it that one does not need to go to any but American sources of information in order to distinguish these three very interesting categories of American foreign obligations:

1. Debts which have been repudiated.

2. Debts which benevolent creditors have remitted.
3. Debts in connection with which America has forced
a compromise by wearing out the creditors'
patience.

The history of the subject begins at the time of the War of Independence.

That war was financed from Europe-mainly from France, but to some extent also from Spain and Holland, France, at a certain stage of the proceedings, guaranteeing the repayment of the Dutch advances. The first operations of the kind were camouflaged, for political reasons, as commercial transactions. The French Government refused open aid to the colonists because it was not yet ready for open war with England, but put forward Beaumarchais as its secret agent in the matter. What is currently called the Beaumarchais Loan was contracted at that time and in those circumstances. Subsequently, after France had joined

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*The Observer.

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Americans of no less eminence than Senator Borah have said about it.

Beaumarchais, it must be remembered, did more than any other Frenchman to bring France into the war on the side of America. He worked to that end as indefatigably as ex-President Roosevelt worked to bring America into the European War on the side of the Allies. For the greater I part of a year, while acting as Vergennes' secret agent in London, he was writing memorandum after memorandum, urging the French Foreign Minister to come to the help of the insurgent colonists. Repeatedly rebuffed, he never failed to return to the charge.

At last he got his way. Money was advanced to him by the French Government for the purpose of founding commercial house of which the purpose was to "provision the Americans with arms and munitions and objects of equipment or whatever is necessary to support the war." Silas Deane, who had come from America to seek help of the kind, was placed in communication with him. It was arranged that he should be paid, not only in cash, but also in tobacco and other merchandise; but the fact that payment was to be made, and that Beaumarchais was the person entitled to receive the payment, is clear from a letter addressed to him by Silas Deane on July 20, 1776 :

In regard (Deane writes) to the credit which we demand and which I hope to obtain from you, I hope that a long one will not be necessary. A year is the most that my compatriots are in the habit of asking. I do not doubt but considerable returns in nature will be made within six months, and the whole be paid for within the year. I hope that whatever comes you will soon receive sufficient returns to be enabled to wait for the rest. In case that any sum whatever remains due after the expiration of the accepted credit, it is, of course, understood that the usual interest will be paid you for the sum.

Clearly there was no question of a specific advance on definite terms. A bill had to be sent in for goods delivered and services rendered. Payments received on account, whether in cash or in kind, had to be set out against it. Various subterfuges had to be employed in order that the cargoes might not be seized by British warships; and it also sometimes happened that payments intended for Beaumarchais were intercepted by American agents in France and used for other purposes; while Congress did not always ratify the agreements which its agents entered into. All that inevitably opened the door to quibbling and haggling; and Congress at once proceeded to haggle and quibble. Silas Deane vainly commended "the indefatigable and spirited exertions of Monsieur de Beaumarchais, to