Page 0001


armistice provided that the cost of occupation should form a first claim upon indemnities exacted from Germany, the United

States had never obtained any money to

pay the cost of maintaining troops in the

occupied zone and was out a sum amounting

to $250,000,000. Negotiations with the

Allied governments concerning this matter

proved unsatisfactory and served to bring

out the selfish grasping policy of some of our

former associates in the war.

Almost equally unsatisfactory were negotiations concerning debts owed by Allied

governments to the United States. This

debt, with unpaid interest, amounted by

1922 to about $11,000,000,000. Early in

that year Congress passed an act providing

for a commission to refund or convert this

debt and to extend the time of payment,

provided, however, that the maturity of any

obligation should not extend beyond June

15, 1947. Our debtors brought forward a

great variety of arguments for our canceling

these debts altogether, and some sentiment

in favor of such a step was expressed by

certain Americans, notably by those anxious

to sell goods in Europe. But public sentiment was in the main in favor of collecting

the debt. On October 16, 1922, Great

Britain made an interest payment of $50,000,000, and turned over a like sum on the

15th of the following month. Early in

January, 1923, a British financial mission,

headed by Stanley Baldwin, Chancellor of

the Exchequer, arrived in the United States

and after protracted negotiations an agreement was finally reached between the two

governments regarding payment of the debt.

The total sum, including unpaid interest,

amounted on December 15, 1922, to $4,604,128,0855.74. Of this amount $4,128,085.74 was to be paid in cash. For the

remainder British bonds were to be issued to

the United States at par, bearing interest at

three per cent, payable semi-annually, the

principal to be payable in installments for

sixty-two years, with the privilege of

earlier payment on any interest date upon

ninety days' notice.

Efforts made to reach similar understandings with France and other debtor

nations failed. It seems altogether probable

that a large part of the money advanced by

us to our allies during the war will never be


On February 24, 1923, President Harding transmitted to the Senate a special

message asking its consent to the participation of the United States in the International Court of Justice established under the

auspices of the League of Nations at The

Hague. At the same time he made it clear

that such adhesion should not involve any

legal relation to the League of Nations or

the assumption of any obligations by the

United States under the terms of the

Covenant of the League of Nations. The

proposal was well received by the general

public, but it became apparent that it

would be opposed by a number of Senators,

including certain so-called "irreconcilable"


Meanwhile business conditions had been

rapidly improving. During 1922 stocks and

bonds rose far beyond their lowest levels,

and by 1923, instead of lack of employment,

there was actually a dearth of workers.

Despite many unsolved problems, including

that of high taxes, it was clear that the

United States, despite the direful predictions of pessimistic prophets, was entering

upon a new era of prosperity.

Unfortunately the financial condition of

the farming class did not improve so rapidly

as did that of most other classes. During

the war farmers had upon the whole enjoyed

a period of seeming, and in some cases,

actual prosperity. Prices of their products

soared to unprecedented heights, and many

failed to see that these conditions could not

continue indefinitely. Many farmers raised

their standards of living and neglected to

save any of their profits for the proverbial

rainy day. Prices of farm lands rose far

beyond the amount at which ordinary

farming can be made to pay, and optimistic

individuals bought farms at inflated prices,

often going heavily in debt. It was inevitable that when the war ended, Europe,

burdened with debt and no longer aided by

American loans, would be unable to buy

American farm products to the same extent

as hitherto. This falling off began in 1920,

and the prices of farm products declined