International Debts

Hawke's Bay Tribune, Volume XVII, 1 October 1927, Page 15

International Debts

“The Never Will Be Paid”

Ameiica’s Judge Questions His Countrymen

The fact is, and we might as well face it now intelligentlly, no one of the nations is going to pay in full the principal of its eooalled foreign war debts, to say nothing of the interest, says Judge L. Guy of the United States. The Judge explains why he belieyes that the expectation that they will be paid is a practical absurdity in the following article:—

nine years no substantial part of any of the war debts has been paid. They will giever be paid for the reason that each of the allied governments is to-day facing an indebtedness approximately five times as great as the greatest of its past indebted ness. Governments can only pay debts by moneys collected from their people through taxation, direct or indirect.

“As pointed out by a recent author, for any nation to pay war debts, it must have a budgetary balance in its treasury over and above the cost of running its government. To produce this budgetary balance under conditions prevailing in Europe, would mean such a staggering burden on the industry of its people that no government undertaking to do so could possibly endure, not even that of Great Britain. AN IMPOSSIBLE SITUATION. “It is difficult to find, even among our millionaires, many men who would gladly pay the debts of their own fathers. No one is so gullible as to expect he could find any considerable number of men who would undertake for themselves and their posterity, through three or more generations, to pay off the debts of their grandfathers and great-grandfathers. It is a practical absurdity. . . . “The law of self-preservation is the supreme law of nations as well as the supreme law of nature. When nature pronounces an emphatic no, the customary rules of private conduct and international intercourse are suspended. “We have to-day a half dozen of the leading nations of the world facing an impossible situation, with the accumulated wealth of centuries destroyed or wasted by war, with earning capacity greatly reduced, staggering under oppressive taxes and assailed by propagandists who denounce capital and individual property rights and encourage everywhere the spirit of unrest and discontent. BEYOND HUMAN ENDURANCE “In such circumstances the effort of any of these govern ments to compel its people to undergo further oppressive taxation, depriving them of the fruits of their labour, placing them in a state of peonage to this country for several generations in order to pay us, their ally, the costs of a world-wide calamity for which they were in no wise individually responsible, is something that human nature will not endure. “Governments may enter into solemn agreements to pay definite amounts; but governments are merely agents of the people they represent. They are merely the medium through which the people make payments, if payments are

made. The people of the varfops nations must produce by their toil, the budgetary surplus with which their governments may make such payments.

“But governments may be overthrown and succeeding governments may not have the same point of view or may not be-able to perform such agreements because of the unwillingness of their people to submit to the necessary tax. And an attempt to enforce such payments if continued through many years, may well result in the overthrow of every stable government in

GOLD WILL AVAIL NOTHH<G. “What then will become <jf all our wealth, and of our unordfect able debts! Even if we have accumulated all the gold in the world, it will avail nothing, for the demonetisation of gold is at least a possibility. There is no sanctity about the yellow metal ) it is merely a commodity which by common consent of certain nations has been adopted m a medium of exchange because it is more satisfactory in many respects than other commodities for such purposes. . . . “But assuming that th* Jkperican people, through their representative government, refuse to give consideration to all argument* for debt cancellation or for reduction based upon principles of justice, intelligence and common-qepse, what are we going to do about it!

ENFORCEMENT IMPO9MM.E. “When the time comes that we cease to receive the annual payments provided for in these ments — which time most assuredly will come— what resnady are we going to apply! The answer is there oan be no remedy if such a situation arises. There is no way that payment by a sovereign state oan be enforced save through war or economic boycott. “We abhor war. That we should endeavour to enforce collection by declaration of war is beyond the bounds of possibility. The other remedy—the economic boycott—would be ruinous for a nation that produces many more times over what it can consume, and the value of whose product, which largely determines the value of its entire product, depends on the foreign market. “Any administration that proposed such a course would be quickly voted out of office. Our future prosperity depends on a prospering Europe. What shall we do to restore her to prosperity and avoid the disaster, greater than that of the war, that would result from the disintegration of existing stable governments, and the rule of anarchy that wonld inevitably follow!”