War Debts.

Press, Volume LXIX, Issue 20862, 23 May 1933, Page 8

War Debts.

It is becoming increasingly clear that the war debts issue will be the main obstacle to the success of the World Economic Conference. After the Washington conversations at Easter Mr Mac Donald announced that Mr Roosevelt had accepted the British view that it was essential to settle the war debts question before the conference began. The high hopes aroused by this statement are now beginning to fade. In less than a month America's debtors will be asked to pay a further instalment under the various funding agreements, yet revision is not in sight and there is no suggestion „of a moratorium. On the contrary, it seems from this morning's cable news that Congress is as stubbornly opposed as ever to either cancellation or substantial reduction. Its attitude towards the creditor nations is summed up in I the phrase: "Pay or default"; though there is some suggestion that honest creditors will be rewarded. If this attitude is not modified France will default, since there is a substantial majority in the Chamber of Deputies opposed to further payments on the present scale. The British Government will then be left in a very awkward position. In 1933 it is due to pay more than £60,000,000 at the present rate of exchange, a figure which includes an additional instalment in respect of the moratorium year. Though no provision is made for such a payment in the current estimates, the money could probably be found. The question is whether any useful purpose would be served by meeting an obligation which, in the eyes of the greater part of the world, has ceased to be a moral obligation. The immediate consequence of heavy gold shipments to America—and payment by any other means is impossible—would be violent exchange fluctuations, involving a further contraction of world trade. But the political consequences of a decision by the British Government to pay in full would be even worse. France v/ould feel that she had been isolated; and the international goodwill created by the Easter discussions would be destroyed. If the World Economic Conference is to be fully successful, there must be a general agreement on war debts analogous to the general agreement on reparations. Any benefits obtained from bilateral revisions will be heavily outweighed by the political antagonisms aroused.