A Great Repudiation.

Press, Volume LIV, Issue 16119, 25 January 1918, Page 6

A Great Repudiation.

Russia, if she has not already taken tho step, seems to bo on the verge of committing the greatest repudiation in history. The Executive of the Soviets, which now represents such Government as tho country may be claimed to possess, has. before it a decree annulling unconditionally all foreign loans. This policy is so much in accordance with the threat uttered not long ago by Trotzkv, and with the general abandonment by Russia of all the principles that ordinarily guide nations in their relations with each other, that it will surprise no one if it is carried into effect. A nation that will throw over its Allies in tho midst of a great struggle for freedom is not likely to be prevented by any qualms of conscience from refusing to pay the debts it owes them. ! If the threatened repudiation takes place, it will, as we have said, bo without parallel as regards the amount involved. Russia's foreign debt at the beginning of the war is not known with absoluto accuracy, but it has been estimated that her annual payments of interest on foreign capital amounted to £55,000,000, representing a debt of about £1,100,000,000. A London financial writer estimates that of the national expenditure from the outset of the war to tho end of last year, totalling nearly £5,000,000,000, not more than £1,100,000,000 can have been derived from revenue, so that tho debt must have been increased by some £4,000,000,000, without making any allowance for the discount at which tho loans wero raised. The total debt is therefore somewhero between £5,000000,000 and £6,000,000,000. Against the foreign debt may bo put somo £230,000,000 in gold 2 which is said to bo held abroad as a backing for tho enormously increased note issue by tho State Bank, but, -unfortunately, according to the authority quoted above, there is vory great scepticism as to the existence of this reserve in metallic form.

Repudiation of so vast a debt will be a serious matter for the lending nations, of whom Britain, Franco, and the United States are the greatest. It is balievod, we are told, that French investments in Russia amount to over £1,000,000,000, Great Britain has lent £675,000,000 to Russia since the war began, while a very large amount ' of British capital has been invested in Russian industrial enterprises. The oxtent of Russia's obligations to the United States are not mentioned, but it was stated some time ago that it amounted to some hundreds of millions. Indeed, the readiness with which America granted loans to the Provisional Government that was set up after tho revolution was regarded in many quarters as the best possible assurance of that Government's capacity to tveather the storms that beset it. America's trust, and the confidence that was founded on it, have, however, been botrayed as grossly as the trust displayed by England and France. Our own view is that, bad as is the outlook, it is by no means hopeless. The repudiation policy is a passing phase like the other absurdities and malpractices of "the Bolsheviks. Russia is undergoing a fearful crisis in her history, and may yet have to suffer much before she emerges into something approaching calm and peace. Her people must learn by experience what they evidently have not yet understood, namely, that no nation can endure and prosper without settled government, and there can be no settled government which is not based on good faith. An undeveloped country like Russia will relapse into barbarism unless its resources are utilised. This can only bo done with the aid of foreign capital. It is needless to say that before Russia can obtain such assistance in future it is absolutely necessary that she should reestablish her credit, and this can only bo done by .rcassuming full liability for tho debts 6he has incurred in the past. If she wishes to continue as ail independent Power, and make progress, sho cannot repudiate.