WAR DEBTS

Evening Post, Volume CXV, Issue 13, 17 January 1933, Page 7

WAR DEBTS

HAVOC AMONG NATIONS

IDLE SHIPPING

BLAME ON AMERICA

(From "The. Post's" Representative.) LONDON, Bth December. Following the example set by the late Lord Inchcape, the new chairman of the P. and O. Company (the Hon. Alexander Shaw) dealt at some length,with general world conditions in his speech at the annual meeting of the company. He? dia not. spare the United States in speaking on the subject of war debts. The .cancellation of w.r debts, he said, would be a better piece of business, both for the creditors and for the debtors, than any. other step they could take.

"What is the position now?" he said. "Germany is freed not only from internal debt but from external reparations. So far as Europe is concerned the only continuing victims of the war are the victors. Is theirs to be the task, during this and the next generation, of trying to force into America by way of the repayment of war debts (in the only form i i which ultimately they can be paid) goods and services which America do-2S her level best to .shut out?

"There are only four ways in which Europe's war ' debt to America could be paid—(l) in gold, (2) by further loans from America to Europe, (3) in goods, and \i) in services.

"As regards gold, America already has an enormous proportion of the total world's supply in her vaults. While Britain has in the vaults of the Bank of England about £140,000,000 of gold, America has in her vaults over £1,200,000,000. "The transfer to- America of moro gold would merely further undermine the currency systems of Europe without doing anything to revive healthy commercial activity in the Unit?d States. Transfers of bullion are a matter of margins and emergencies, and gold must be ruled out as a continuing method of payment. "Then further loans from America to Europe, although giving a temporary easement, would in the long run merely increase the disease of indebtedness. There might, of course, be loans for specific purposes to clear the havoc caused by the war d6bts situation, but the best way of clearing that havoc is by cancellation of the -war debts which have caused It. GOODS AND SERVICES. "We are therefore thrown back on goodsl and services—an^ these are largely the goods which British ships carry and the services -which British shipping renders. Now, first as regards goods—what is the situation? The position next year, so far aa Great Britain is concerned, is that, unless agreement to the contrary is arrived at, we shall have to remit to the United States as the ordinary instalment of war debt payment no less than about £60,000,000 sterling—at present rates of exchange a sum which is more than three times as much as our present total annual exports to that country* Further, our imports from. America are several times larger than our exports to her, and- on trade account alone we have an ad"■ven.e balance. In view'of such facts can we wonder that, as the 'Economist' in a notable article last month pointed put: 'So long as the influx of goods into Americ. is not free, any attempt to pay the debts duo to her must strain the world's financial system to breaking point. The events of the last two years have demonstrated this beyond all argument. The damage done, however, has unfortunately not ended with the breakdown of the debt settlements, and the collapse of the world's financial machinery has produced a shrii.kage of trade and economic activity out of all proportion to the amount involved in the debt payments.' ->

"No body of people has more cause to realise the truth of these words than those engaged in the shipping industry. From the Amerier - point of view the growing collapse of the economic machine due to war debts means that Europe can buy less and less of her commodities and manufactures, and this is borne out by the dwindling figure of American exports. Even in America itself the shrinkage f trade and economic activity to which the 'Economist' referred is out of all proportion to the sums receivable annually in war debt payments, and this is .clearly brought out in that historic Note sent last week to America by the British Government. AMERICA MUST SUFFER. ~ "Bemote though they may appear from Europe and its problems, the great people of America form part of the world's complex economic system, and it cannot be to their interest to make that system unworkable. In the long run they must inevitably Buffer with the rest, and they cannot look for re- . vival by themselves alone. No human power can make the bitter blast of adversity stop short at Sandy Hook. 'JAs regards payment of war debts by services, the whole position is much aggravated by the unwillingness of America to be paid in such services, among the chief of which are those •rendered by British shipping. In the past certain companies in the P. and O. group have done a good deal by their shipping services to America to help the British Empire to pay for American goods. But the United States has now a policy of high subsidies to American-owned ships. Perhaps we have no right to complain that our allies in the P. and O. group suffer severely, as they do-, from that policy. But elementary political economy prompts the comment that this is indeed a fiscal curiosity, for it means that the American taxpayer is being mulcted in order to close yet another avenue by which war debts can be repaid to him ■ —namely, the avenue of British shipping services. '' .. ' GREAT MORAL ISSUE. ' In every possible way the payment of debts due to America is blocked by American action. When, then, will that enormous sum be paid off? Under any conditions conceivable at present the inevitable answer is short—'Never.' It is not a matter of willingness to pay but of the possibility of paying. The unpayable nature of these war debts arises largely from their origin. They were 'used for r.o ordinary productive work. They were expended for no purpose of increasing the wealth of the recipients. On the contrary, in a great crisis and in a common cause they were burned in the furnace of war. (Hear hear.)

"I have touched upon this subject only because of its serious repercussions upon shipping through the collapse of ■world trade. But it is not merely a shipping question, nor only an economic problem. In face of the misery of the world it presents itself as a great moral issue to the best minds on both sides of the Atlantic. For every instalment paid now must of necessity be transferred in such a way as not only to accentuate the almost unbearable tension of the present but to lay up a heritage of trouble for the future. This "generation has no right to inflict that burden upon the next. In America, as well as in Europe, war debts tend to stop the wheels of industry, interchange, and distribution turning—with all that that means in dislocation and distress. Indeed, in that fact, as I profoundly believe, lies a main reason for this post-

war phenomenon of impoverishment In the midst of plenty. IDLE*SHIPPING. "The world cannot go on like this. Each month augments the economic strain and increases the peril of social stability everywhere. War debts are a mirage, and those who chase them wander further and further into the desert. Surely the day of illusions is past -and the day of realities dawning. "Look at the figures of ships laid up throughout tho world: In 1930, 5,000,000 tons, in 1931 10,500,000 tons, in 1912 over 15,000,000 tons! Twenty per cent, of the whole sea carrying capacity of all the nations idle for Jack of trade! The great shipyards of Britain, many of them renowned through the world for their skill and good workmanship, are either only fractionally employed >r wholly idle and, derelict.''