Manawatu Evening Standard. SATURDAY, APRIL 7, 1934. THE WAR DEBTS.

Manawatu Standard, Volume LIV, Issue 109, 7 April 1934, Page 6

Manawatu Evening Standard. SATURDAY, APRIL 7, 1934. THE WAR DEBTS.

An unfavourable reaction in the matter of tbe war debts appears to have been created in tbe United States against Great Britain. The reason is none other than that she has emerged from the past financial year with a surplus, while the United States is burdened with a deficit of colossal size. While Britain’s achievehas been hailed as a triumph of sound finance, sober minded writers have pointed to certain windfalls which cannot be of a recurrent nature, and warn the country against “rollicking optimism” about the future. If the authorities in the United States were to analyse the Budget returns on these lines they would discover that the soundness of the arguments in favour of debt revision has in no Avay been prejudiced by Britain’s favourable financial position at March 31. There are, however, a considerable body of opinion in the country who have set their minds definitely against favourable treatment for the debtor nations. They typify the spirit that wrote into the Republican and Democratic Party platforms opposition to the cancellation of debts due by foreign nations. Unfortunately, they outnumber the wiser section who know that revision would be of the greatest gain to their own country and to the world. Not very long ago a leading American journal invited 135 newspapers to express their views on the debt issue, and 96 supported reduction and 39 full payment. Very few were in favour of complete cancellation. While a verdict so clearly in favour of revision is to be welcomed, unfortunately there is not sufficient strength to influence Congress in its support. Though his Party platform was against cancellation of the debts, Mr Roosevelt at one time was desirous of bargaining on the question to promote world disarmament. Cancellation, not revision, was opposed, and though the opportunity was presented it was lost through the delays and cross-currents that impeded progress at Geneva. Congress has the final word on the debt question, and it is obviously not in a mood to encourage thoughts of success. The House of Representatives recently added to the Reciprocal Tariff Bill a clause prohibiting the President from reducing the war debts of any country as a concession for trade preferences. This is intended to be another barrier against favourable consideration, and is not likely to be rejected by the Senate. It is indeed a reminder to the President not only of Congress’s temperament and power in the matter, but of its interpretation of the country’s wish to have the debts paid in full. As Mr . Stimson, Secretary of State for Mr Hoover, said on Various occasions, “there is reserved to Congress the ultimate decision in respect of the funding, refunding, or amendment of these inter-governmental obligations; the Executive has no power to amend or alter them, either directly or by implied commitment.” The House, it will be noted, has also approved of a Bill forbidding financial transactions between United States citizens and foreigp governments in default, thereby implementing a decision made by several Congressmen some time ago when France and other nations made default. The Bill also undoubtedly applies to those countries in default on other than war debt loans. However much foremost economists

and other leaders may challenge the Congressional view of the war debts, the nation’s Parliamentary representatives maintain the view that a debt is a debt. Britain has several times stated the case clearly and precisely against payment under American conditions. To transfer money across the Atlantic, she has emphasised, means the loss of prosperity, bringing suffering in its train. The debt can only be paid from profits arising from favourable trade balances during the years over which the payments are spread. If the United States will not accept goods as payment, then there must be reduction. This, however, does not appear likely until public opinion has been educated to the advantages to be derived from generous revision of debts that unquestionably produced nothing with which they can be repaid.