INTERNATIONAL DEBTS

Manawatu Standard, Volume LIII, Issue 7, 6 December 1932, Page 7

INTERNATIONAL DEBTS

METHOD OF PAYMENT. MUST BE BY TRANSFER OF GOODS, . RESTRICTION OF BRITISH PURCHASES. (United Press Association—By Electric / Telegraph.—Copyright.) (British Official Wireless.) Received December 6, 11.38 a.m. RUGBY Dec. 5. As some misunderstanding has occurred regarding the reference in the British Note to the consequences of the resumption of payments, the exact words of the Note on this subject are creating particular interest. After making the point that the discharge of all international debts must finally take tho form of the transfer of goods and services, the Note said:—

If, therefore, tho war debt payments had to be resumed, it is apparent that the exchange position of this country would need to be strengthened by a reduction of the very •heavy adverso balanco of visible trade between the United Kingdom and the United States which amounted to £78,000,000 in 1931. In the present circumstances this could only bo done by adopting measures which would further restrict British purchases of American goods.

“Tho United Kingdom has, lip to the present, generally been the best customer of tho United States, and the result of such restrictions would inevitably be to reduce specially the market in the United Kingdom for American farm products to the extent, therefore, that payments were resumed to the United States Treasury, A definite and unfavourable reaction must follow to the United States producer. Moreover, His Majesty’s Government also have to guard against the efforts which would follow if the facilities offered by the British market were used by other debtors of America to obtain sterling which they would then sell across the exchange to meet their obligations to the United States Government. After the war the United Kingdom attempted to maintain the traditional system of free imports with tlie result that debtor countries throughout the world sold goods on the British market and took the proceeds away over tho exchange or in gold to meet their obligations elsewhere.

Under the stress of the present crisis His Majesty’s Government have had to modify their system and adopt tariffs, but the United Kingdom 'still imports from abroad goods to the value of several hundreds of million pounds in excess of what it exports. It will be necessary to consider what action could bo taken to secure that the sterling proceeds of these.* imports were used more largely for the benefit of the British market.

Mr Baldwin, tho Acting-Prime Minister, had a conversation with Mr A. W. Mellon and discussed various points of the British note.

POSSIBLE COMPROMISE. NEW YORK, Dec. 5. The Herald-Tribune says it understands that President Hoover, in an anxious effort to eliminate any possibility of a general European debt default, lias “sounded out London” regarding the possibility of easing the payments duo on December 15, without absolute suspension. The nature of the compromise is not known. PRICE OF GOLD. Received December 6. 8.45 a.m. LONDON, Dec. 5. The price of gold is £6 10s per ounce. A ' cablegram received yesterday from London gave the price then as £6 9s 4sd per ounce. NEW ZEALAND’S SHARE. NO OFFICIAL COMMUNICATION. (By Telegraph.—Special to Standard.) WELLINGTON, Dec. 6. Although the -British Note to the United States relating to war debts gave a hint that if America insisted on payment of the instalment duo on December 15 it might be necessary for Britain to call on the Dominions to pay' their share, Rt. Hon. G. W. Forbes has not yet had any official communication on the subject. Britain agreed to postpone payment of New Zealand’s interest on the funded war debt this year, resulting in a saving of £872,000 to New Zealand's taxpayers for this financial year and enabling the Government to budget for a much smaller deficit than was at first considered possible. If the Dominion was suddenly called upon to find this additional amount at a few days’ notice the position would be very difficult and would seriously embarrass the Government in its endeavours to straighten out the financial position.