Manawatu Evening Standard. FRIDAY, AUGUST 21, 1931. THE WAR DEBTS.

Manawatu Standard, Volume IV, Issue 223, 21 August 1931, Page 6

Manawatu Evening Standard. FRIDAY, AUGUST 21, 1931. THE WAR DEBTS.

To the many important statements on the subject of war debts and reparations is to be added that of Hon. Alexander Shaw, a director of the Bank of England, and a prominent figure in the public life of Britain. Hr Shaw is emphatic that there can be no permanent improvement in the world situation until there is a drastic scaling down, or the cancellation of the war debts and reparations. No amount of' business energy or financial skill, he says, will cure the disease which is keeping British factories and shipyards idle; no jockejung of money values will cure it. Hr Shaw’s speech was made at a function in Glasgow to commemorate the launching of a new P. and 0. liner. He is deputy-chair-man of this company, and in 1927 was president of the Chamber of Shipping. He is, therefore, vitally interested in a revival of Britain’s shipping prosperity, which is conditional on the recovery of trade in other industries whose goods are sent to all parts of the world. But whenever trade and employment seem to revive, he pertinently remarked, the “eternal question of reparations occurs, and down everything rolls to the bottom.” The mechanism of foreign exchanges, Hr Shaw added, is incapable of carrying such a burden,- which has been saved only in recent years by the creditor lending the debtor countries the bulk of the. funds with which to pay reparations and war debts. The recent crisis in Germany brought the United States to sharp recognition of the danger facing Europe. It was, bluntly, either a sane Government under its present moderate leaders, or civil strife with the Hitler Nazis and the Communists striving for the dictatorship. If any untoward event had brought either of these two extreme parties to the front, Germany’s creditor nations would have been met with repudiation.

The conference of experts who were ajjpointed to.draft a formal agreement to implement the proposal of President Hoover for a year’s moratorium of war, reparations and inter-governmental debts has completed its task. The payment of these debts will cease tor one year, but the suspended amounts will be repaid by ten equal annuities commencing from July 1, 1933, each yearly sum including principal and interest at the rate of three per cent. These are to be absolute obligations, with no option of future postponement. Germany’s unconditional annuities are to be paid, but immediately lent again to the Reich railways', while with regard to deliveries in kind the contracts, which are not postponed, are not to be allowed to do injury to Germany’s economic system. In accepting the proposal Germany’s

delegates refused to express any opinion as to their country’s capacity to meet her liabilities in the future. Since then Dr. Bruening, the Chancellor, has issued a statement in which he fears the coming winter, when there will be seven million unemployed in Germany and the peril of Communism will be greatly increased. The Hoover proposal has given relief to Germany at a time of grave crisis, but the year will soon pass, and unless there is a pronounced improvement in world trade it seems difficult to believe that its continuance will not be necessary. The moratorium will be a tonic, but not a cure for Europe's ills. The cure, it is held by leading authorities, will be the drastic scaling down or cancellation of reparations and the war debts. In this matter, however, the United States maintains its stated policy. Hr Hoover has emphatically declared that he does not approve in any remote sense of the cancellation of the debts due to the United States, but as the “basis of the settlement of the debts was the capacity, under normal conditions, of the debtor to pay, we should be consistent with our own policies and principles if we take into account the abnormal situation now existing in the world.” It is this abnormal situation which more than ever calls for enlightened opinion on the question in the United States, so that the world will be hastened towawl recovery-. As Hr J. L. Garvin said recently in the London Observer: Does not a new attitude toward war debts and reparations become the major interest of America herself? A revival of business would be worth far more to American citizens and the whole of American life than the receipt of European payments on the present scale.