DEBTS AND REPARATIONS were a major concern in Coolidge's day. The erstwhile Allies of the World War owed large debts to the United States; raising the money through the Liberty and Victory Loan drives, the American Government had extended credits, both during and after the war. According to the peace settlement of 1919, reparations were to be paid by the defeated nations, in effect Germany, to the Allies.
Negotiating these accounts after the war took an inordinate amount of time. If Europeans and Americans had spent an equal effort in seeking political solutions to their major national rivalries and in supporting the League of Nations, the international anarchy of the 1930's might not have occurred. In retrospect nothing would have been lost had the interested nations forgotten debts and reparation; in the 1930's they forgot them anyway.
Admittedly, transferring the funds between the Germans and the Allies and the Allies and the United States involved complicated arrangements. In view of the inadequate economic knowledge of the time it may have been too much to have expected payment of debts and reparations. Unquestionably the nations could have paid them. But part of the difficulty was that the Germans did not want to pay reparations. Somehow or other in the next decade they found money for rearmament, spending a sum greater than their reparations account. Allied payments to the United States also were possible theoretically, but the Allies had too many other uses for their money. Gold covers of their currencies were thin, and national income hovered perilously close to outgo. It