The Grey River Argus. MONDAY, December 5th, 1932. GOODS OR GOLD?

Grey River Argus, 5 December 1932, Page 4

The Grey River Argus. MONDAY, December 5th, 1932. GOODS OR GOLD?

On the face of it, the burileii of Britain's five thousand word Note to America, on the war debt appears to be Ihe anxiety to avert the necessity of paying - this month an instalment of about thirty millions sterling. AVith the pound now worth not much more than three dollars, it makes the account looke quite, half as big again. The effect of payment on Thursday week is expected, moreover, to depreciate the pound . yet further. Incidentally the inflationist industrialists at Home have thus had to vary their tune, and cry for a halt in the slump of the pound. The deflation lias certainly upset all calculations as to war debt, and this is the rock on which America, whose Federal Reserve Baid;: fathered deflation, is going to split. Britain says she spent £24.00 millions in U.S.A. on the war, two-thirds being financed outside that country, including £6OO millions in gold and securities. She. also has paid back £275 millions out, of £304 millions of her U.S.A, commercial loans, making £62!) millions paid altogether including funded debt payments of £354 millions. ’While U.S.A, loans were £2,500 millions, on which £434 millions has been repaid, Britain’s war loans were £1,600 millions or more, while she has got. nothing therefrom, but has had to find £2OO millions by taxation for America. Then it is pointed out that £1 to-day buys more in America, ‘despite its slump, than in war time, so that creditor can get for the. money repaid twice as much as formerly. Leaving out the, moral aspect, the practical question is how is America. to be paid. She, has in her tariff cut down, the chance to pay in goods by nearly three-quarters. Apart from debt receipts, this has also cut down U.S.A, exports to Britain also by about Ihree-quar-lers, so that Britain bids fair no longer Io be the best U.S.A, customer. If America wants gold, the plain fact is that she simply cannot get it. If she got all Britain now has, it would be only a drop in the bucket. The hoarders’ chickens are. home to roost I There is now talk of accepting silver, or trade concessions. It is a pity Samoa eould not be pitched into the scale I Another practical question is American feeling. Mr Hoover, the symbol of concession, is in the American wastepaper basket. As hard-headed people, it might appear a mystery that the Americans do not realise Ihe futility of seeking hard cash. But there is doubtless another side to the picture. Nobody really imagines America is going to be paid the war debt as now funded, least of all Americans. With them the, idea is probably that a bird in the hand is worth a whole aviary in the bush. Possibly Americans reckon the only milk left, in the war debt cocoanut is this month’s instalment. If they can’t get that they might, as well whistle, for the rest. They will have to whistle for it anyhow. Their standpoint is thus understandable in these hard limes. Congress is said to be adamant

against another Hoover moratorium. Britain, on the other hand, is in a bigger hole financially than at any time since the money-changers began to boss the realm. Nobody knows where to turn for the needful. Britain is manifestly right in giving the Americans to understand they “cannot have it both ways.” They will lose the British market altogether if they insist on their full pound of flesh. Yet the extent of possible future concessions to them in that direction is gradually being lessened by the lack of | British purchasing power and the need to substitute home production for importation in view of I unemployment. There is, however. one governing factor deliberately left out of the picture. It may be symbolised by Wall Street. It. is not Congress that will finally decide. It is quite possible the British Government I have a shrewd idea already of the way the wind blows there. Aineri. can popular sentiment, obviously is for payment. Sections of the press are apparently of an open mind. They have one eye on Wall Street. It may seem heresy, but the City of London is to-day financially subsidiary to Wall St reel. It is said the Note is expected gradually to impress the American public. Il doesn’t mailer if it does or not, so long as it impresses the Wall Street magnates, who know how Io cut their losses. They may decide to cut them after llecember 151 b. instead of before. It is a matter they may still he calculating, or one they may have already decided. Britain has expressed willingness io pay—but this time only. She does not say definitely if payment on Thursday week would be the last under the present arrangement, but has made it no less clear than if she had said if. What side issues are under consideration behind the scenes are only- to be guessed. There is talk of European armaments being a. eoiitiiigiient question. but America does not imagine she can really dictate any very substantial cut on the Continent. She has certainly an eye to the market. She knows that to aggravate depression abroad is going to perpetuate it at home. That is a vital point, and one the British Note elaborates. It is probably the strongest of the lot. Whether the capitalists of the United Stales fully appreciate it makes all the difference. They have been so preoccupied with supply for the foreign market that they have neglected the matter of purchasing power. So has every capitalistic government for that matter. But this, the world’s greatest economic problem for perhaps a century, if it causes any amount of anxiety, is going to bring home the importance of purchasing power more forciblythan it has ever been brought Lome previously. Whatever the immediate aspect therefore, the cloud has doubtless its sliver lining.