The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. MONDAY, SEPTEMBER 21, 1931. THE BURDEN OF DEBT.

Auckland Star, Volume LXII, Issue 223, 21 September 1931, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun.

MONDAY, SEPTEMBER 21, 1931. THE BURDEN OF DEBT.

For the cause that lack* assistance, For the wrong that needs resistance, For the future in the distance, And the good that tee can do.

Ever since the peace treaty there have been observers who have doubted Europe's ability to pay war debts and reparations, and the conclusions now drawn by a Canadian banking review, that it is impossible for them to be paid, will probably find a good deal of backing by responsible authorities. The present depression has made it still more difficult to pay these debts, for it lias affected employment, and by reducing prices has made it necessary to furnish more goods in payment. It would be rash to base policy on the assumption that unborn generations will be prepared to meet the heavy obligations incurred by their fathers and grandfathers. Even to-day Germany has to be lent money so that she can pay what is demanded of her. But the economic trend of the last few years has taught the world to look at another aspect of the problem, to which this review calls attention. In what form are all these debts to be paid—goods or gold ? Both are embarrassing. America has insisteu on being paid in gold, but possession of this gold has not prevented her from being burdened with the largest army of unemployed.

Such in very brief outline is the problem presented by reparations and debts in this period of acute economic depression. Among the Allied Powers England is leading the way towards cancellation or revision. Some months ago the president of the British Bankers' Association said the time had come "when all interested in commerce should bring pressure to bear upon their Governments to deal with war debts. If they were not altogether cancelled, they should be adjusted to a basis varying with the price level of commodities." Xo doubt many American financiers and economists agree with this view, but America ' is compelled by several factors to move slowly. Public opinion is not ready for cancellation, and it must be borne in mind that if the American Government did forgo money she lent abroad it would still have to meet its obligations to its citizens who, in the first 'instance, provided the money. The American I Government will lose £.50,000,000 in interest i by the suspension of debt payments for one year, but it will pay the interest due in that year to the holders of Liberty bonds. Mr. Hoover's action in proposing a limitod moratorium was therefore more courageous than some foreigners may have judged, and it is noteworthy that reports continue to come from America that an extension of this moratorium is contemplated. Indeed, an American delegate to Geneva is reported to have told the German Foreign Minister that the United States would be ready to lose, and ultimately cancel, war debts and reparations if this were made part of a general movement to banish the fear of war and restore confidence. If this is correct, it means that at. least Washington has advanced much further along the road of revision than has been thought possible.