THE WAR DEBT MORATORIUM.

Press, Volume LXVII, Issue 20274, 27 June 1931, Page 17

THE WAR DEBT MORATORIUM.

MR HOOVER YIELDING TO FRENCH WISHES. AMERICAN STOCKS WEAKEN. ,UHITM» I-KFSB ASSOCIATION*—BT gLICTBVO TELEOBAPH—COPTBIGHT.) (Received June 26th, 8.40 p.m.) WASHINGTON, June 26. The possibility of President Hoover's moratorium becoming effective on July Ist is appreciably nearer. To-night a high official authority stated that Mr Hoover is yielding to French wishes and is propared to assent, to an arrangement satisfying the French Government that in accepting the moratorium prdposal the resumption of payment of the unconditional German reparation annuities will not be Jeopardised. An earlier ljessage said that a feeling of considerable optimism regarding the discontinuance of French opposition to the Hoover programme prevailed in administrative circles to-day, but the United States stock markets, following the reports of French counter-proposals, roa«ted sharply, shifting from a strong opening to the weakest closing they have experienced for several days. The Federal Reserve Bank at New York announced that ill had, in company with the Banks of Franco and England, extended 100,000,000 dollars' credit to Germany. Reports have also developed in authoritative circles that Mr Hoover will soon offer a plan to aid tho bad financial situation in South America.

ATTITUDE IN SOUTH AFRICA. REFUSAL WITH THANKS URGED. (Received June 26th, 7.45 p.m.) CAPE TOWN, June 20. General Smuts referred to Mr Hoover's, offer as the most outstanding event in recent years. All the world looked to America for help and she had not failed. Referring to the British offer to the Dominions, General Smuts said it would help Australia to re-establish herself, but as far as South Africa was concerned they were in a position to pay their debts and must do so. "We have never had to accept a moratorium," he said, "and it would be a 'climb-down' if we did so now. I hope our Government, which has talked so much of 'South Africa first,' will- put South Africa still first and continue to pay its debts. The Government should thank the British Government for its generous offer, but should refuse it." LONDON EXCHANGE OPTIMISTIC. MR MELLON TO VISIT PARIS. (britisb ornciAX wireless.) RUGBY, Juno 25. Mr Aridi'ew' Mollon left for Paris 10-ddy, but declined to discuss ifye purpose of his .mission, but the newspapers anticipate that he. will discuss with the authorities details in. connexion with -the French reservation to Jlr Hoover's proposals, which are due to take effect on "Wednesday. He may visit Berlin after Paris. The general acceptance in principle of Mr Hobver'e proposals had a tonic effect on the business community and there was an optimistic tone on the Loudon Stock Exchange to-day. Active trading in British funds increased and the public enquiry for industrial shares was one of the features of the market. MR H. L. STIMSON LEAVING FOR EUROPE. ENCOURAGING CONVERSATIONS. WASHINGTON, June 25. The Secretary for State, Mr H. L. Stimson, will sail on Saturday on the Conte Grand for Naples. He had previously planned, to spend a vacation in Europe, but- he may now participate in the negotiations to suspend war debt payments. Mr Stimson said to-day that lie was encouraged in negotiations for the "reparations and war debt moratorium as a result of two conversations ho" had with the French Ambassador, M. Claudel. GOLD STOCKS IN GERMANY AND , FRANCE. LONDON, June 25. The weekly bank returns, afford an interesting comparison of "gold holdings.. The Carman Reichsbank has £186.250,000, the bare, legal 40 per "enti, while the Bank of France has £452,000,000, which is equivalent to 46£ per cent., the greatest in her history.

BRITAIN'S OFFER. PLEA AGAINST ACCEPTANCE IN FULL. MR DOWN.IE STEWART'S VIEWS. (PEESS ASSOCIATION TZLIGXIAir.) WELLINGTON, June 26. Speaking on the motion to commit the Imprest Supply Bill in the House of Representatives this afternoon, the Hon. W. Downie Stewart (R., Dunedin West) said he wished to Tefer to Great Britain's offer to the Dominions in connexion with debt payments. The .offer meant that Great Britain was prepared to sacrifice approximately £11,000,000 in order to give the Dominions tlie benefit of the movement originated President Hoover. When one considered the tremendous burden under which Great Britain was labouring, and the efforts which she was making to restore peace and prospertiy, it would be apparent that this -offer must have aroused the keenest admiration of all who were watching the position. ' Britain's Difficulties. While New Zealand's difficulties were great, those . of Great Britain wero so overwhelming that it was surprising she was able to. make this offer. Great Britain was bearing a debt which some European statesmen considered she could not carry. She was determined to repay her debts at 20s in. the £,

while Prance was quite prepared to repay hers with . the franc at approximately 2d. The amount New Zealand was indebted to Great Britain when the debt was funded, in 1922, was £27,532,164, and it was oil that amount, which now had been reduced by the Dominion to approximately £24,000,000, that this concession was proposed to be made. Mr Stewart remarked it had been shown that of the debt funded in 1922 £1,991,919 was for items other than war expenditure. For instance, it included approximately £1,000,000, which was the balance owing on the warship New Zealand. The Prime Minister had stated, Mr Stewart continued, that he had set out to balance the Budget. The position appeared to be that in making his plans Mr Forbes could have had no knowledge of this possible windfall in the form of the offer from Great Britain. It was true also that he would have been counting upon receiving the German reparation payments. New Zealand's payments to Great Britain in connexion with war debts amounted to half-yearly sums of £825,000. It had been pointed out the first half-yearly instalment had already been paid. Great Britain's proposal was to grant a moratorium from July Ist to June 30th next year. If the Prime Minister did not receive from Germany New Zealand's share of the reparations for the year he would go short of £270,000 after July Ist. A, Suggestion. The point he wished the Prime Minister to consider was whether he would be preparedi to ask Great Britain to postpone New Zealand's payments only to the extent which Germany was not paying the Dominion, but so far as the remaining £500,000 was concerned. New Zealand should make payment as usual. Ho emphasised the extent of Great Britain's difficulties compared with those confronting New Zealand, and added that in addition to this aspect it must be realised New Zealand's credit in London would be enhanced if the course ho had suggested were adopted. It had become apparent that our credit had suffered as a result of our association with Australia.

An Effort Worth "While. "Just as America has made a gesture to Europe and Great Britain has made a gesture to the Dominions, it is possible for us to distinguish ourselves by saying wo don't wish to impose greater difficulties on Great Britain at the present time," Mr Stewart said. This would undoubtedly improve our credit, and anything that had such an effect would be of immense advantage. It all depended whether the Prime Minister could see his way to inform the British Government that while ho was grateful for the offer he had no wish to take advantage of it beyond the extent to which the Dominion would suffer as a result of not receiving the German reparation payments. lie considered such a course would clearly dissociate New Zealand from the neighbouring Commonwealth, and he thought the people of the Dominion would realise the effort was worth "making. Mr Stewart remarked he was pleased to see the Prime Minister did not propose to put through any of the proposals embodied in Sir Otto Niomeyer's report this session. Ample time should be allowed for the consideration of matters of this nature, more particularly in yiew of the present very wide discussion of currency reform. Mr Samuel's Opinion. Mr A. M. Samuel (R., Thames) said that while he admired the sentiment expressed by Mr Stewart in respect of war debt payments, he could not agree with the action suggested. "It is all very fine to put out a gesture of independence and self-reliance sa long as wo can' back it' up with finance," lie-said. -"I don't; think our hon-acceptance of Britain's offer would help our credit a bit. To my mind, the present economic position has been brought about by a combination of circumstances, among which improvements as a result of scientific reseatch are important factors, but in my estimation the greatest "factor of all is the question of repayment of debts incurred during war." Mr Samuel said factor had been the means of imposing very heavy burdens on taxpayers and industries,' and was keeping out of employment men in Great Britain as well as the Dominions. Repayment of debts to America was having a strangling effect on the debtor, .nations, and at the same time was strangling American industries as a result of the diminution in the purchasing power of. the , debtor nations. The gold which had been shipped to the United States was not being reutilised. It was about as valuable as when it had been in the mines from which it originally had been taken. The ofl£r of the United States was only a preliminary move in the direction of the modification and the ultimate' 'cancellation of war debts,. America realised there could not be a return _to stable conditions until the purchasing power of the nations became the same as, it had been before the war. Her offer had not been an impulsive one; it had been under consideration for sonic time, and had been made in a hope that it would be accepted.

Reduced Furcliasing Power. Mr 'Samuel added that if stabilisation of silver could be brought about the troubles of Europe as well as our own. would 'be at an end. The purchasing power of India and China had been reduced by over fifty per cent. While .he Tiad been at Home he had had several discussions with members of the British Ministry on the question of the Repayment of war debts. He had realised if New; Zealand were offered a postponement it would be of immense value to the Dominion. lie thought, everybody realised that taxation had grown vastly, and, the sooner it was reduced the sooner the country, would get back to better times. The, postponement of debt payments would .enable this to be done. When he had refid of the British Government's concession in the direction of postponing tho payment, of principal of the Australian war debts he had written, as an individual member of the New Zealand Parliament, to tho Et. Hon. J. H. Thomas, mentioning that he had been wondering if the same generous treatment .would be extended to. New Zealand. ,JMr Thomas had replied, stating the whole 'question of debt payments was under consideration. Offer Should be Accepted. . "Now that the offer has been made," Mr Samuel continued, '' I trust the Government will accept it in the -spirit in which it was 'made. This country can well do with the postponement of that payment." Mr J. S. Fletcher (Did., Grey Lynn): Is it'a fair thing to ask the British taxpayers to bear New Zealand's burden? , Mr Samuel: I won't say that it is a fair thing to ask them to New Zealand's burden, but I will say it is a fair thing for Great Britain to help one of her children who has always helped her. . If the Government turned the .offer down it would be doing a stark injustice to the taxpayers of this coun- . try. He could assure the House New. Zealand's credit was still high in the Old Land. The two main factors which were liable to damage our were pessimistic utterances, which were continually being made" in New' Zfealand, and the exaggerated ircports which had been circulated in Groat Britain concerning the Hawkc's Bay earthquake.