The Evening Star TUESDAY, DECEMBER 13, 1932. WAR DEBTS.

Evening Star, Issue 21284, 13 December 1932, Page 6

The Evening Star TUESDAY, DECEMBER 13, 1932. WAR DEBTS.

Further Notes exchanged between Great Britain and America have resulted in a considerable clearing of the war debts situation. As regards the instalment due in two days from now Great Britain will pay, since America will not consent to a suspension, but the payment will be made in special circumstances. Britain will regard it not as a resumption of payments (after the year’s moratorium) under the existing agreement, but as a “ capital payment of which account should be taken in any future settlement.” She adopts this course, it is explained, because time does not allow of further discussion before the amount now at issue falls due, and because America has intimated that present payment will be a favourable influence with her in any final settlement. As the method threatening least ill effects, though its bad effects have been sufficiently emphasised, payment will be made in gold. It is not necessary that the gold should be shipped immediately. It will be earmarked in the vaults of the Bank of England, to serve such American purposes as may arise. In effect, Britain has indicated in the strongest way that she regards the whole system of war debts as something that cannot go on in the previous manner. Circumstances that could not be foreseen when its obligations were entered into have made it impossible of continuance. What will be paid in the future must be a matter for mutual adjustment. America replies that she can only accept the payment in terms of the funding agreement, but she suggests that the conditions mentioned in the British Note may be construed as a declaration of Britain’s future policy, neither binding on the United States nor affecting the legality of the existing agreement. That comes as near as possible to the British case. The French Government, which has acted all through the piece in close concert with Great Britain, has decided also to pay its instalment, subject to what will probably prove to be the same conditions, though the decision is being bitterly resented by a great many of the French public. The British decision, for that matter, inspires more misgivings than approval in some quarters which would normally be the first to commend it. The case for it, despite all the ills which war debts have wrought and the disadvantages which this payment must have not alone for the debtor countries, is the case made by Mr Mottram in his impressive novel, 1 Our Mr Dormer,’ which deals with successive generations of a British banking family. ■ In 1820 (ho recalls) John Doughty had gone for a tour on the Continent, carrying with him some gold coin and a letter of introduction to the French correspondents of Messrs T. and E. Hoppner [an allied banking firm]. With some difficulty he succeeded, by virtue of this letter, in obtaining such money as he needed from time to time for his expenses. In 1869 Doughty Dormer, going for a tour —a honeymoon tour with Ids young wife—took Bank of England notes and a letter of credit on certain bankers. He was treated everywhere with great civility, welcomed rather, and obtained what he required with ease. In 1894 Doughty Dormer’s elder daughter, a music teacher . . • went for a six weeks’ summer holiday through Belgium, the Rhine, Switzerland, Italy, and France, and took some bank notes and her cheque hook. She had to use the notes only once. Everywhere the hotels were only too glad to take her cheques. Such was a result of a century of Doughtys and Dormers! It was not that the English were liked. It was not that they were sought or admired. But their word was trusted. When they wrote on a piece of stamped paper “ Pay to the order of Mr ” so many “ pounds ” they meant it. In ninety-nine cases out of a hundred the money was forthcoming. Perhaps the only x-eally remarkable and lasting thing of the English civilisation, . . . Neither Confucius nor even the great Trajan nor Plato [who anticipated other of our achievements) could conjure up his daily necessities by virtue of a promise written on a piece of paper.

“ It is fantastic to suggest,” says tlie ‘ Economist ’ in advising default. “ that if Britain cut the war debt tangle she would precipitate wholesale repudiation of commercial obligations, because those stand in quite a different category.” The difference may be demonstrable, but the real case for cutting the tangle is that the whole world, including America, is being throttled by it. The earlier British Note had reason to point out: “ It is not to the profit or credit of a country to collect a few million pounds or dollars if it thereby perpetuates world disorder. A war debt settlement, however generous it might seem, would bo repaid again and again by the contribution it would make to a world revival.” A suspension of the December payment, which America refused to grant, would not have carried,, the implications for the future which Britain has been forced to make. Mr Hoover has maintained till recently that discussions of the debt question must be conducted by America separately with the debtor nations. Now there is some evidence that he may be disposed to welcome the earliest possible calling of the World Economic Conference, to be attended by an American delegation, to thresh out the whole matter. It can most naturally be dealt with in that manner, since all of them are involved together in the tangle.