King Country Chronicle. Saturday, January 31, 1931. THE WAR DEBTS.

King Country Chronicle, Volume XXV, Issue 3261, 31 January 1931, Page 4

King Country Chronicle. Saturday, January 31, 1931. THE WAR DEBTS.

The bankers and financial magnates of the United States are beginning to realise that the holding of huge quantities of gold does not necessarily mean prosperity. A recent statement made by the British Chancellor of the Exchequer shows that the United States controls more gold than the combined countries of France, the United Kingdom, Germany and Spain, while France holds just on £100,000,000 more than the United Kingdom, Germany and Spain. With all this wealth the United States has over 6,000,000 unemployed, and France’s figures in this connection are mounting up every week. Various opinions have been advanced for the present stagnation in the commerce of the world, but there is little room for doubt that the unequal distribution of the world’s gold is mainly responsible for the conditions now prevailing. For several years following the close of the war the United States enjoyed a period of unprecedented prosperity, but this led to the country being over-industrialised. Huge factories were built and equipped, and there was no difficulty in disposing of the output to those countries which had had become disorganised through the war. Of late, however, these countries have been in a position to reestablish their industries, and no longer required the manufactured goods from the United States. In addition, the United States has not endeared itself to the rest of the world by her treatment of other countries over the war debts and the erection of high tariff walls. She had been warned by her own economists of the danger of making such heavy exactions from her debtor countries, but the politicians took no heed of these warnings. The prophecies of the economists have now been realised. The United States finds that she has financial indigestion in a very bad form. She has the gold lying stagnant and huge factories which cannot dispose of their outputs. Many of these factories have been closed, while others are only working part time. It has taken the United States a long time to realise that healthy trade must be of a reciprocal nature, and that trade activity is more desirable than gold, but now there is a change taking place in the minds of the industrialists and politicians of the country. A message received yesterday announces that bankers and publicists have been considering the advisability of a reduction in war debts owing by European countries to the United States, and this opinion has been supported by the Minister of War, Mr. P. J. Hurley, who was a member of the Foreign Debts Commission. The Minister advocates a reduction of these debts by 50 per cent., provided the debtor countries agree to a proportionate reduction in their war budgets. The scheme is one that should naturally help to stabilise world conditions, and at the same time achieve much in removing the shadow of another European conflict. If the scheme is put into operation it will do much to restore faith in the United States by the other world Powers, and should also assist in bringing about a better international feeling throughout Europe. A far better plan would be a cancellation of the whole of the war liabilities, and while Great Britain, who would be the biggest loser by wiping off these debts, is quite willing to take such a course, the United States does not favour it. So long as these war debts are in existence they are a constant source of discord; they mean heavy taxation for the debtor countries; they are hampering the world’s commerce and are nothing less than "a burden to the recipient country. While a cancellation of half the war debts will not remove all the evils they are responsible for, they will at least minimise these

and bring about a greater measure of international harmony. The proposed condition of a general reduction in European armaments will also help to improve the unsatisfactory and even dangerous position that now exists throughout the world. In a recent speech the Governor-General stated that the present world troubles were not due to over-production, but to a lack of means for distribution of the world’s goods. Now the United States has a proposal to minimise this difficulty, and it will be interesting to know how far this proposal will develop.