MIDDLE WEST AND WAR DEBTS.

Manawatu Standard, Volume LIII, Issue 61, 8 February 1933, Page 5

MIDDLE WEST AND WAR DEBTS.

Sir Arthur Salter, siieaking at the National Reace Council Conference at Livingstone Hail, Westminster, in December, asked, liis audience to appreciate the American point of view on War debts.

Let them try to understand, he said, the psychology ot a farmer in the Middle West, with his farm mortgaged and a fall in the prices of what he sold, which had more than doubled the burden of what he had to pay. The farmer' saw a deficit in the national Budget of unprecedented size and a great volume oi unemployment for which some provision must be made. When he heard people talk of cancellation or drastic reduction of War debts, he said: “You do not mean that the bondholder who subscribed the money should lose his interest, you mean that I, the Ameriman taxpayer, who after all did not consume the goods, should pay liis interest, instead of the European taxpayer, who did.” It was true that, at last, after 13 years, we had faced and dealt with a situation involving similar considerations in Europe—in the reparation settlement at Lausanne. In tins, as in the other case; the burden of payment was increased by tlie fall in prices; the difficulty was further increased by the restriction in the volume as well as the value of external trade; the liability to payment was impeding recovery. All these three factors applying to War debts received recognition in Mr Hoover’s Note. We, the European creditors of reparations at Lausanne, had given them recognition in action. We commuted Germany’s remaining liability for a final fixed capital sum, and we proviaed that this should be discharged in a way which would never involve a.n annual payment by Germany of more than about one-tenth of what was required by the Young Plan of three years ago. ENLIGHTENED SELF-INTEREST

That was not altruism but enlightened self-interest. He was sure that if America acted similarly it would also, in balance, prove immensely to the a.dvantage of the whole world and of herself. But if we would look at the situation coolly and symjvathetically we should at least understand, though we might regret, her reluctance. It was vit-n.l that we should do so. If passions were allowed to develop, they would he fatal to everything upon which recovery depended. Peace and economic progress depended m every sphere upon co-operation between America and Europe; and that in turn depended upon the public temper and psychology of the peoples of the two continents. War debts, continued Sir Arthur Salter, are one, but, as Mr Hoover has pointed out, one only of many pressing problems. Others are now focussed m. the preparations for the World Economic Conference. If . we enter without a plan we shall end without a remedy. What then should we aim at? First at a “world policy of controlled reflation.” It is vital that the general level of prices should rise; monetary policy can do much though not everything—if it is coordinated. Secondly, w r e must restore and reform the world’s credit system; this means dealing with existing indebtedness; encouraging new lending; securing that in. future it is better directed than in the past. Thirdly, we must reduce trade harriers. Let us here use our bargaining poiver. We have lost some of it, but much remains. We should, in my view, welcome such proposals as those put forward by Belgium and Holland. We should try to encourage and join low-tariff groups. . Sir Herbert Samuel, who presided, said fundamental to the whole of the peace movement ivas the observation of international obligations. In regard to financial obligations, it might be that a country might be compelled by force majeure to default. It might be that an executive might have gone beyond its proper functions and pledged a Government in a manner which the Legislature and the constitutional authorities would not enforce. But in ordinary cases for any coun-

try to default upon its given signature would involve repercussions of the gravest character in many spheres of international action and commerce. 11l the present issue, which was exercising the minds of our public and other countries, it was right that we should urge upon America in the strongest manner that payment of these great War debts from whoever due and to whoever due was one of the causes which was leading the world to destruction, and in the general interest that it would be better they should be wiped out or _ reduced to the very smallest proportion.