MR. SNOWDEN AND WAR DEBTS

Hawera Star, Volume XLIX, 19 August 1929, Page 9

MR. SNOWDEN AND WAR DEBTS

THE BALFOUR, NOTE

‘CANCELLATION THE RIGHT POLICY.”

Tiio. deliberations of the Reparation, Cunterence in Paris show once more me inherent difficulties of settling tins problem on terms which will be mutually satisfactory to all parties, and wlncli at the same time will prove in operations to be a workable scheme, Air Philip Snowdon said in an article in tlie 1 •Aianehester Guardian.” All the subsequent trouble about reparations and inter-allied debts has been due to the failure of the Peace Conference of 1919 to face this question in the spirit of reconciliation and with an understanding of the serious economic consequences which would result from any attempt to transfer huge sums across economic and financial frontiers.

If the statesmanlike policy of wiping off all debts and all claims to reparations had been adopted in 1919 Europe would have been saved from the economic chaos in which she was involved for years after the end of the war. But that policy was not adopted, and this problem of reparations and debts has ever since poisoned the economic life of Europe and embittered the relations between all the countries, both debtor and creditor alike. The two questions —German reparations and inter-allied debts are inseparably connected. Though it was announced when the present- Expert Committee was set up that it was not to consider the two questions, but to confine itself to assessing Germany’s capacity to pay reparations, it was soon found that the two problems could not lie separated. The European countries who are large debtors to America and Great Britain look to German reparations to get the money to nay their creditors It is true that thev have not expressed any willingness to limit their claims on German reparations to the sums they owe their British and American creditors under the debt agreements which have been made, but it is reasonable to suppose that they might agree to a pari-pas.su reduction of their claims on German reparations in the event of a further reduction of the claims of their creditors.. It would indeed he an indefensible attitude for France, Italy and Belgium to share in German reparations if Britain, and America had forgiven ’them their debts and bad themselves abandoned 1 all claims, of German reoarations. America declined to do so. "She has secured from Great Britain a funding of the British debt to her which will exact a total payment spread over 62 years of £2.200,000.000" on the original debt of £900.000,009. America lias agreements with France and Italy, the former not having been ratified, which will ultimutely reemire about- £24,00,000 of annuities. America has claims on her allies in the war for which she is demanding annuities which will ultimately rise to about £04.000.000 a voar.

AMERICA'S SHARE OF B ERA RATIONS. It follows, therefore, that if German reparations continue to he paid the great bulk of the proceeds will go to America. It is a strange outcome of the professions with which America entered the war—“No indemnities and no reparations”—that she should now be maintaining a position which gives her the first and largest claim on German reparations. The Balfour Note suggested an all-round cancellation of debts, but, failing a general acceptance of that proposal, it declared that in no circumstances would Britain accept from her debtors more than was needed to pay her debt to America. Acting <m" the latter declaration, Britain has made debt agreements with France, Italy, Rumania, Portugal, and one or two other of her debtors by which she has agreed to s ale down their debts to a comparatively small amount. Great Britain is to receive from her debtors under these agreements—on the original loans of £1.300,000.000 —a total sum spread over 62 years which is far less than half of the- amount of the debt. Contrast 1 this with the terms of the Anglo-American Debt Agreement, which, as has been mentioned already, exacts from Britain the whole' of the sum originally borrowed and £1,300,009.000 of interest in addition. There is an understood’ hut not explicit condition in the debt settlements which Britain has made with her debtors —that if they conclude agreements with their other creditors •on terms more generous than with Britain, then their payments to us mav he proportionated raised. There is not. however, anv likelihood of this understanding coming into effect, although the French and Italian agreements with America require larger reuavments of the original debt when spread over the whole neriod.

THE BRITISH BURDEN. The. settlements which Great Britain lias made are very unfavourable to her. In making 'these settlements Britain has been hampered by the obligation of the Balfour Note. _ This Note was a. beau geste offered in the hope that its generosity would appeal to the magnanimity of the American Government. It failed; but the obligation remained, and Britain has had to make the sacrifices and her debtors have reaped the benefit. The British debt to America was incurred solely for her allies. In addition to the sum she borrowed from America to hand over to these- allies she borrowed from British nationals a further £I.OOO-000.000 and this is part of her internal war debt on which she is paying £50.000,000 a year in interest. The amount which Britain has to pay to America reaches £38.000,000 a year. Under Britain’s agreements with her debtors they have to pay about £20.000,000 a year, so that if all the debt agreements stand Britain will be burdened for GO years with an excess payment on her internal debt of £30,000.000 a vear.

But flic first proposal of the Balfour Not e—iiamelv, all-round cancellation of debts-—still stands, and Britain will am opt il when all the other ■ debtor and creditor countries are ready to do tl’- n same.