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Rome and they did not want too much of it to get to Madrid. They invested fabulous sums not counting the labor, which the Indians were allowed to give free-in nine thousand superb colonial churches, most of which stand to-day. In addition, immense sums were invested in church lands, or loaned out at rates of interest as low as five per cent a year; Charles II of Spain tried to call in forty-four million pesos of these funds.

The Church opposed the early revolutionaries when they sought to take over the rights of the King of Spain to the church revenues as they took over other royal prerogatives. The battle has waged from that day to this. The churches and their property were confiscated in 1859; the reiteration and reënforcement of those old laws in 1917 and in 1926 had no great significance, except that they aroused the Catholics of the United States. The church problem in Mexico, so far as the Government is concerned, is chiefly economic; at its worst it is a denial of religious property rights in order to make the Church legitimate loot for the armies, and at its best it is an effort to place religion - the Roman Catholic religion - back in the spiritual field instead of the material.

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the mere tool of Wall Street than Mexico is the tool of Moscow.

Yet, our policy and Mexico's policy have, between them, gotten us nowhere. Is there another policy that we both could follow, a policy that would really turn us toward a solution? Not dreams, now, but a practical plan that will carry us forward, that will solve the oil mess, and the land mess, and the mining mess, and all the others, and that will solve Mexico's difficulties and leave her a chance at that new Constitution she has never yet had an opportunity to enjoy to the full and complete extent of all its extravagances. Is there such a policy?

I think there is. I have had a growing conviction that the policy of to-day is an incomplete one and that the correction of that incompleteness does not mean an overthrow or necessarily a great change from what has been, but an addition to it, a relationship that would bring our own aims, and Mexico's, clearly into the light of the searching, yet friendly, scrutiny of the wisest and most potent minds in both countries.

Essentially the situation is that the policy of the United States toward Mexico (and of Mexico toward the United States) has, and must ever have, two phases. One is immediate, the other cumulative. The problem of the moment, on our side, is always the protection of American lives and property-that, as Secretary Evarts said, is a 'paramount obligation,' the obligation for which governments are created. That policy of protection we have followed, and follow to-day, over a rough and uncertain road, with no goal in sight, only an endless duty. The other policy overlaps, but does not touch, the immediate crises and their trends. Yet it builds, whether we wish it or not, the foundation upor. which we shall stand in the future, when in that future we meet again the immediate

issue again the protection of American lives and property. That overlapping, cumulative policy can be controlled, however, as the immediate policy cannot. It can be made to produce for us a fountain of precreated good will, as well as, if not so easily as, a groundwork of ill will and distrust such as both we and Mexico inherit to-day.

The Mexican question will probably never even approach a solution until there sits in the great Secretaryship of State a man schooling himself, not only to meet the problems of the moment with firmness and understanding, but to build, in the very midst of the succeeding Mexican crises, the friendly foundations for the solutions of the problems of twenty-five years hence.

Could it be done? Could we do it without getting hurt? Ah, that is another question. We might get badly 'hurt' oil wells might even be confiscated, or destroyed, land and mining titles wiped out. But it would be worth trying. My Latin American friend suggested leaving Mexico alone. That is not the solution. We must make Mexico our friend, or we gain nothing by leaving her alone, save a return to the days of border raids, battles, and then conquests, as in 1840-48 some of the saddest pages of them all for Mexico.

Suaviter in modo — and, if need be, fortiter in re. It is that 'gently in manner' that will build for the future; 'firmly in fact' may be needed, I freely admit, in the problems of the present. Yet, however firm, no note we send to Mexico should be couched in any but words of sympathy. Heaven knows there is basis enough for sympathy, even if we take only the bitterness of Mexican pronouncements, or the innuendoes she buries for us in her notes if we are big enough to see, and to pity. The American ambassador to Mexico should, for such an end, always be an

ambassador of good will, whatever his difficulties or exasperations. He must be ready, despite Shakespearian injunction, to dull his palm with entertainment of a dozen hundreds of men he may not like, or understand, at first. An ambassador opening schools in dingy, stupid, pitiful Indian villages, an ambassador entertaining and working and living close to the Mexicans, learning, changing his point of view each day, if he will and if new light comes to him. There is, to-day, no job on earth harder than being American ambassador to Mexico. This job just outlined is harder than any ambassador to Mexico has yet conceived it to be.

And not merely the ambassador, but American foundations, endowed institutions, colleges, universities, federations of art and labor, trade-unions they must be brought into the picture, understandingly, loyally, having the facts and knowing the needs and the difficulties, and yet going in. Some of the greatest, indeed, are in Mexico today, seeking for common ground and common problems with Mexico, and in common labor finding friendship and coöperation and understanding. It is all fantastic, mad - even what has been done already. Yet what have we gained from all our worldly wisdom that has kept, and still keeps, our official world so far aloof and apart from the new Mexico of to-day?

As for the Secretary of State - why can he not do, why does he not do, what Mr. Baldwin and M. Briand and Herr Stresemann do in Europe to-day, and what their predecessors have done for centuries? Why could he not visit back and forth, informally and so frequently that the significance dies away, with the Mexican Minister of Foreign Affairs in Mexico City as well as in Washington?

What would Europe be to-day without that very exchange? Were not such

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Yet it all might fail - I will admit it more readily than will he who reads. But it would be a great failure!

Before this article is printed the next issue that I would mention may be a practical reality - arbitration may at last be trying its hand at a resolution of the oil-law tangle. To be sure, the controversy had reached a stage of bitterness rather beyond the possibility of easy arbitration before President Calles and Senator Borah put out their respective feelers, in January, on this matter of arbitration. Surely such issues, if talked out frankly and with less of the vast formality of the diplomatic exchanges, might much earlier have reached such a tribunal as the Permanent Court at The Hague. There is, we must realize in criticizing Washington's caution, that deep distrust of Mexican sincerity in all such questions, but are we gaining anything by avoiding arbitration until it is forced upon us? We could take, I think, another chance on arbitration!

There is yet another point. The friendly way that Jesus Christ advocated to the disciples was to go quietly to an erring brother, and in quietness talk it over. There seems to be rather too much limelight on the remarks to and from Mexico. Mexico will always find a way, when she knows what is wanted, and if she is convinced

that it is fair and not aimed at her dignity and sovereignty; and even if it is, if it can be done without the glare of the grim demand. She has always found a way; she has done it a few times, even, in the limelight, but I have always believed that the Evarts Doctrine, for instance, succeeded, not because it was rough, but because it was firm and fair and did not tell Mexico how to comply. I sometimes wonder if we do not talk too much about the modification of laws and judicial decisions and such methods when we carry on the oil and land and mining correspondence. We do not know our power; we think we must insist and arrange.' We seem no longer to negotiate; we demand and seek arrangements of myriad detailed issues. We might so easily be a little more medieval, so to speak, in our diplomacy. Suaviter in modo, fortiter in re- and Mexico would find the way to meet us.

Before these words are printed the Mexican situation may have flamed into fire; American lives, even, may have been taken, and diplomatic relations broken. As I write, the situation is electric with possibilities and dangers. Yet the problem remains unchanged, and the solution stated here is as true as it was when those who genuinely wished the best for Mexico first hailed Madero as a friend and savior for us all. A revolution or American soldiers might sweep President Calles out of office, and might even set up a profoundly 'pro-American' régime, but the 'Mexican situation' would remain; the problem of protection of American lives and property would remain; and there would remain, no nearer solved than it is to-day, the problem of making friends with Mexico. Yet it is simple, is the Mexican problem-simple if both we and Mexico face it with simplicity and wisdom and good will. And the greatest of these is good will.

THE INTERALLIED DEBTS

BY F. W. TAUSSIG

THE sums involved in the settlements with our former allies are very great. The total owed to the United States comes in round numbers to ten billions of dollars ten thousand millions. Almost the whole of this sum is due for advances made during the war and for the conduct of the war. Something is owed for American supplies left over in Europe after the war and sold there, and something more for relief extended after the war. Over nine-tenths, however, represents war expenditure, and it is this nine billions alone to which I shall give attention. The three chief debtors are Great Britain with four billions, France with three and onethird billions, Italy with one and twothirds billions. I state the sums in round numbers, as I shall throughout this paper.

Agreements on the terms of repayment have been made with all the debtors, big and little. With the exception of France, each of them has come to a definitive settlement with the United States; and a settlement with France will doubtless come ere long. In every case the agreement is for annual payments spread over a period of sixty-two years - the period beginning with the year 1922 for Great Britain, with 1925 for Belgium, 1926 for Italy, and so on, according to the dates when the several agreements were reached. The annual payments are moderate, in some cases even small, for the first five years, and then rise to a

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figure which is maintained practically to the end. Great Britain is the only country that pays heavy sums at the start roughly 160 millions a year for the first ten years, thereafter about 180 millions. Italy's payment begins with only five millions, rises to twenty-three millions by 1936, and finally attains a maximum of fifty millions a year. Belgium's begins with five millions and in ten years becomes about thirteen millions. The proposed arrangement with France calls for thirty millions annually during the earlier years (beginning with 1926?) and for a maximum of 125 millions by 1943; some such figures, it is probable, will be found in the eventual settlement. Taking all the countries concerned, and including the sums proposed for France, we find that the total remittances to the United States on debt account will be, in round numbers, 210 millions a year during the first fiveyear period, and 250 millions for the second quinquennium; then about 350 millions for forty-five years thereafter; and finally something more than 400 millions for the last decade of the longdrawn-out process. The end is to be reached in 1984 for Great Britain, and in the years immediately following for the other countries.

I remarked at the outset that the sums involved are huge totaling no less than nine billions. But this total stands only for the book amount of the loans as made by us during the two short years of the war period. What it

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stands for in other terms than book account - what was really handed over by us to our allies when the loans were made and recorded will be indicated presently. While it behooves us to understand and remember just how things then took their course, this aspect of the case does not bear on the point to which I would at present direct the reader's attention. What is now to be noted is the obvious contrast between the huge lump sum and the comparatively small annual payments, and the perhaps less obvious fact that this series of moderate annual payments is the one real thing coming back to the United States.

The annual payments alone have concrete importance. True, an actuary can calculate how much they represent, from his point of view, as an equivalent capital sum. According as he figures on a 3 per cent interest basis, or on one of 3 per cent or 4 per cent, he will tell you that so many billions more or less as the assumed percentage rate is lower or higher- may be reckoned as the 'present value' of what is coming back; and he will tell you, too, how much may be regarded as repayment of principal, how much as interest on deferred payments. But such figuring has no significance for the realities of the case. It may serve to allay hostility or criticism and make a good 'talking point' before Congressional committees and chambers of commerce. But it is hardly more than a pretty mathematical game -attractive to the mathematicallyminded, impressive and puzzling to those not so minded. What is really to happen, what signifies for us and for the other peoples, is the series of annual payments.

What, now, about the amount of those annual payments and their importance to us?

Consider them in their proportion to other items, to other related things.

Two, three, four hundred millions make impressive sums. But what do they signify in comparison, for example, with the total income of the people of the United States? Our total national income for 1925 is supposed to amount to 90,000 millions. This is a stupendous sum. I will not vouch for its precise accuracy. The total of our income may be something more, something less. My statistical friends believe the figure to be within 10 per cent of the truth; and for the present purpose that degree of accuracy is all that is needed. Compare with this total the 200 millions odd which we are to receive from the Europeans in the next year or two. They come to about one quarter of one per cent of our national income. It is as if, having one hundred dollars to receive, we were to get twenty-five cents in addition a negligible supplement. No doubt the payments are to increase, and in a few years will be doubled. But our national income will also increase; and, at anything like the rate of advance we have had in the last five years, that too will be doubled in ten years or so. As elements in our total annual resources, the payments will always be trivial. On the other hand, they will be no small items for the repaying countries, their national incomes being so much below ours in money values only half as much per head for the more prosperous of them, hardly one quarter as much for the less prosperous. And this discrepancy will become greater as time goes on. The growing remittances will become more and more onerous for them, since their national incomes, even though they may not stand still, cannot grow at the phenomenal rate which is ours and seems likely to remain ours.

Look at it in another way. These sums will go into the Federal treasury, and will be entered in the Government's budget. They may be directed either to lowering taxes or to reducing

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