Britain’s Foresight

Manawatu Times, Volume LV, Issue 7032, 16 December 1932, Page 7

Britain’s Foresight

PRESSURE OF HARD FACTS CHANCELLOR’S RECITAL (British Official Wireless.) RUGBY, Dec. 14. Tho debate on the American wai debt payment in tho House of Commons opened with an impressive statement by tho Chaucellor of tho Exchequer, Mr. Neville Chamberlain. He said that only by examining tho whole history of this affair was it possible to realise how strong was Britain’s title to claim revision, how consistently and persistently successive British Governments had urged the cancellation of reparations and war debts, how reluctantly other countries had accepted that view, but how steadily they had been forced by hard facts and bitter experiences to come closer and closer to the viewpoint originally expressed by the British Government. All Wasted on War ‘-The whole of our war debts to the United States,” ho said, “was incurred after America had entered the war. It amounted to £1,444,000,000, of which we found from our own resources £255,000,000. .Wo were to be reimbursed by our Aliics for our expenditure on their behalf, and tho remainder, namely, £015,000,000, was financed by loans fror, the United States. “The whole of that sum was expended for the purposes of war on goods purchased in tho United States, whether on munitions blown to pieces in Flanders or on food consumod by the people and soldiers, or on uniforms worn to rags in tho -war. Tho whole of the expenditure was just as non-pro-ductive as if spent entirely on tanks, artillery, or ships.” After reviewing the negotiations with America culminating in the recent Notes, the Chancellor declared: — “In diplomatic circles we were given to understand that cash, and cash only would content the members of Congress. It’ wo had declined to pay, it. would have been equivalent to default, and default by the British Government for a sum which wo could not say we were unable to pay, would have resounded around theworld and might have Men taken as justification for other defaults in other circumstances. “As a second alternative we might have asked that the required notice for postponement of the principal be waived, but after a roquest for suspension of tho wholo payment, based on a very wide consideration, has been refused, it would not have been dignified to make the plea in forma pauperis and might have prejudiced the final settlement. "Therefore, we decided on the third alternative to pay in full. “To have paid in full and said nothing would necessarily have taken payment out of the purview of the final revision of debt and would have obliged us at once to inform our Allies we expected them to make a corresponding payment to us in respect of their debts. Tho mischief would not have stopped there, because the Allies would havo necessarily passed on their request to Germany to begin again the payment of reparations. Therefore, it was considered necessary to intimate our intention when discussing the final settlement to put forward our contentions that the old regime interrupted by the Hoover moratorium can never be revived. If in final settlement some reduced capital sum should bo fixed, our debtors must still discuss with us on what terms and to what extent we should be prepared to remit their debts. Our position will remain where it. was at tho time of the Balfour Note. We shall not ask our debtors more than wo are called upon to pay our creditors, but they can hardly expect us to be content with less.”

Continuing tho debate on war debt payment after tho Chancellor had spoken Sir Stafford Cripps (Labour) said that he believed and always had believed in the complete cancellation of war debts and reparations, and ho hoped tho American people would realise that thcro must bo cancellation if civilisation, trade, and industry were to continue.

Mr. Winston Churchill (C.) said that while tho overwhelming., majority of the House approved the decision to pay, it wished tho Government had taken the decision more promptly and unitedly. “Wo havo only to think of Mr. do Yalera in Ireland, Mr. Lang in Australia, and the Shah of Persia,” said the speaker, “in order to realise that we have considerable interest in paying our debts.” Sir Robert Home (C.) agreed that Britain should act alone. “Our American debt agreement is more exacting than any other. With tho best will in tho world toward France wo are entitled to separate consideration. ’ ’ He agreed that we were forced to pay now and should pay in gold, but he was startled that we did not intend to increase the fiduciary issue. We are still the greatest creditor nation in the world, which owes us something like 4000 millions. This at the present valuo is worth 2000 millions. We have a vast interest in preserving the sanctity of contracts.”

How the Payment is to be Made Mr. Chamberlain, replying, explained that gold would be taken from tho Bank of England issue department and paid for at the current price in Treasury Bills. Tho bank would keep £19,500,000 as tho value of the purchase of its gold and the other £10,000,000 would go into the exchange equalisation account where it would remain as an asset until required to buy gold again. It was true that in one sense if the' fiduciary issue were not increased there would he a contraction of credit, hut sufficient credit was available to make it unnecessary to create more unless unforeseen circumstances arose. The Chancellor concluded that the friendly tone of the United States Note was a good augury for the success of the negotiations to be undertaken to finally settle the long-vexed problem. .