WAR DEBTS

Manawatu Standard, Volume XLV, Issue 57, 6 February 1925, Page 12

WAR DEBTS

BRITAIN'S BIG BURDEN. DILATORY NATIONS. LONDON, Dec. 11. . The announcement that France is negotiating with tho United States for funding tho war debt of £686,000,000 which she owes that country, has taken the British Government by surprise. France also owes Great Britain £623,000,000, but has always evaded British efforts to get her to fund this debt. At the Inter-Allied conference held in London in July last, when, the Dawes scheme of reparations was finally agreed upon by the Allies and Germany, Great Britain wanted the question of the Inter-Allied war debts discussed and settled. But France would not consent to discuss the matter. As most of the other Allies represented at tiio conference also owed Great Britain big debts, they were in hearty agreement with France in excluding tho subject from the agenda. France has always taken tho stand that she won't pay her war debts tmtil she has received reparations from Germany. That has been her attitude hitherto to the United States, as well as to Great Britain. Her change of attitude to the extent of negotiating for the funding of her debt to the United States (after vain efforts to get that country to wipe it off) is due to the fact that she wants to raiso substantial loans in the United States, because money is cheap there, as that country has accumulated since the war ended, over £800,000,000 in monetary gold, which is as much as is held by all the other countries in the world. But the investors in the United States refuse to lend money to France until she arranges for the repayment of her war debt to tMat country. WHAT BRITAIN IS OWED. The original amount of this debt was £570,000,000, but no interest has ever been paid on it, though it was contracted more than six years ago. Tho arrears of interest bring the total up to £686,000,000. President Coolidgo in his message to Congress, delivered last week, hinted that France, Italy, Belgium, Russia, Serbia, Poland and other countries which owe the United States money for debts '.incurred during the war, will receive more favourable terms of settlement than Great Britain did, when she funded her debt of £920,000,000 to the United States two years ago. The point of view of the British Government is that the repayment of war dsbts is a' matter in which Great Britain is as vitally concerned as the United States, because the Allies owe her in the aggregate nearly as much as they owe the United States. Exclusive of unpaid interest for over six years, France owes her £514,000,000. Italy £455,000,000. Russia £568,000,000. Belgium £92,000,000. Serbia £20,000,000 and Other Allies owe over £70,000,000. Although interest has not been paid on any of these debts, the British taxpayer has .to pay interest on them to the British investors who enabled Great Britain to iind tho money. The income tax of 4s 6d in tho pound which the British taxpayer has to meet, could be reduced to 3s in the pound, if Britain's creditors would pay interest on their debts. Three years ago Great Britain expressed her willingness to scale down these dates, and also her share of reparations from Germany, to a sum ■equivalent to her debt to the United States. This is far more generous treatment than any of the Allies will get from the United States, but the Allies have taken no steps to avail themselves of the offer. It suite them l>etter to let the debts stand, and pay no interest on them.

SLOW-PAY FRANCE. The British Government takes the view that Great Britain has as rauch right to be paid as the United States, that thesie Allied debtors cannot treat the United States as a preferential creditor, merely because they want to raise loans in the United States while money is cheap. Great Britain also protests against being penalised for having been the first to enter into an arrangement to pay off her debt to the United States. She does not object to Franco and the other Allies getting generous terms from the United ■States, but she thinks that the terms sho was compelled to accept two years ago, should be modified to harmonise with the terms given to those countries who have shown so much reluctance to meet their obligations. France wants the United States to wipe off the arrears of interest on her debt, to give her a further moratorium of five to ten years, and to charge interest at the low rate of 2 per cent, it is not likely that she will get such low terms, but, on the other hand, President Coolidge's message to Congress indicates that it is hopeless to expect to get from France the terms imposed on Great Britain, who is paying interest at 4 3i per cent, on the whole of her debt, plus arrears of interest which were added to the capital. These payments have to be continued 'by Great Britain for sixty years, before the debt is extinguished. It is of interest to recall that Australia wan the first of the war debtors to fund her war debt. She owed Great Britain £92,000,000 for money lent, and payments made for the maintenance of Australian troops in Europe. | The Commonwealth Government funded this debt in 1921, undertaking to pay £5,550,000 yearly until the debt is extinguished in thirty-five 'and a quarter years. . Interest and sinking fund amount to nearly 6 per cent.

If Britain succeeds in getting the terms of her debt to the United States modified,- Australia would be justified in asking Great Britain for a modification of the terms sho entered into in 1921, when money was dearer than it is to-day.