WAR DEBTS

Nelson Evening Mail, Volume LXVI, 13 December 1932, Page 5

WAR DEBTS

BRITISH PAYMENT BUT NOT UNDER AGREEMENT AMERICA REJECTS CONDITION (United Press Association— By Electric Telegraph—Copyright) WASHINGTON, 11th December. Mr Stimson on Sunday received the British Note stating that tho December war debt instalment would be paid, and went into conference with Mr Mills. A few hours after Sir Ronald Lindsay had delivered Mr Stimson the British Nolo, saying that tho payment ot 95.000,000 dollars, with qualifications, would ho made in gold on the 1511 1 December, Mr Stimson handed Sir Ronald Lindsay America’s answer, declaring that the intention to pay had been noted with satisfaction, but payment could not be. accepted with conditions “extending outside tire debt funding agreement.” The British Note specified that the payment would not be regarded as the resumption of payments under tire existing agreement, but as a “capital payment, of which account should be taken in any final settlement.”

As tire nature of tire Note was generally what was expected, Mr Stimson’s quick response is interpreted as,a move to leave the matter entirely up to tire British, with the full understanding that their conditions are rejected, and if payment is made it will only be accepted as coming under the existing agreement. Congressional reaction was immediate and favourable to Mr Stimson’s policy. While the first press reports from England indicated that it might fortify those favouring default, observers here admitted that it might create an impasse, but believed that the gap between tire, two Governments was not so wide as might appear; also that the British Note is merely laying, the groundwork for future negotiations. The British Note stated that payment would he made in gold, but was not to be regarded as the resumption of payment on the scale used before the Hoover moratorium. After several hours’ conference with Mr Mills, Mr Stimson handed the United States’ reply to the British Ambassador, which said that the Secretary to the Treasury has no authority to accept war debts payments except as provided by the funding agreement. Congress holds the final decision in respect of changes in inter-governmental obligations, and acceptance of the December instalment cannot constitute approval of or agreement to any condition or declaration of policy inconsistent with the terms of the agreement. Tire, Note added : “It would seem undesirable that any steps be taken which by .causing misunderstandings would increase the difficulty that must be overcome in finding an ultimate solution satisfactory to both nations.” It is officially slated that in the Note Mr Stimson took up the position that accepting payments with conditions was illegal. He explained that Congress must act in changing the funding agreement in any respect. The speed with-which the Note was prepared is a direct indication to France what she must expect if she attempts to supplement the payment with similar conditions, which is considered exceedingly timely, as the Chamber of Deputies has scheduled the debate of payment for Monday. Mr Stimson was considerably surprised that the Note was delivered to-day, as it was not expected until to-morrow. Ho immediately summoned Mr Mills and several aides, a : nd drafted the Note. The contents were then communicated to President Hoover, who approved of them, and the reply was then delivered to Sir Ronald Lindsay. LEGAL POSITION CLARIFIED WASHINGTON, 12th December. The American Note apparently wishes to clarify the legal status of the British Note, and suggests that the conditions mentioned be construed as a simple declaration of Britain’s future policy, which is in no way binding on the United States, nor injures tire legality of the existing agreement. “Therefore, it is assumed that in the conditions of payment you are not proposing to make this payment otherwise than in accordance with the terms of the funding agreement, but you are stating your views as to the steps your Government may desire to propose subsequently after a re-examination of the whole problem.” Representative Rainey, a prominent member of the Ways and Means Committee, declared that Mr Stimson’s answer is “eminently proper.” Senator Borah said: “The Secretary of State could not reply in any other way than to say that payment could be received only under the terms of the debt funding agreement.” During and after the conference whore the Note was drafted Mr Stimson, MiMills, and others appeared anything but gloomy. They apparently feel that Britain lias now admitted that she had tire money to pay, and whatever conditions she sought to attach, could not stand against this Administration. It is noted that she did not request a waiver of 30,000,000 dollars principal.. GOLD FOR~PAYMENT EARMARKED IN BANK OF ENGLAND LONDON, 11th December. Britain’s decision to pay in gold means that the gold will be earmarked in the vaults of the Bank of England awaiting America’s instructions. In lire case of two friendly nations no actual transfer Lakes place. A rumour that France is lending Britain the gold to make the payment on tire 15th December is officially uenio.l, ami a suggestion that payment invA.vos a second Budget is similarly groundi.-.,.; The “Daily Telegraph’s” diplomatic correspondent says that tire decision not to demand payments shortly duo from France, Italy and other allied debtors raises the question whether the dominions, which are also liable for early payments, will be granted the same further respite. LONDON. 12ih December Early editions of the London newspapers give prominence (o Britain’s decision to pay, but with resorvnti ms Latest editions, however, emphasise that the “United States rejects tho British offer.” Details of this Note arrived too late for real criticism and the text has not yet been circulated by the British Foreign Office. “The Times” says the very prompt American reply naturally pointed out t-lial the United States Treasury had no authority to accept payment except according to the cxislimr agreement, but. adds “The Times,” the British Government has done right in refusing to make default. It is equally cldar it has done right iu coupling the annoimcement with a plain intimation to regard the payment as a step to final settlement.''

CANADA’S POSITION

NOT CONCERNED WTIII WAR DEBTS LONDON, 11 tli December. Mr Bennett, on his arrival in London,

was questioned whether he had brought a Canadian offer to help Britain over war debts. lie replied : “Canada is not concerned with war debts. Canada incurred a war debt of 2,000,000,000 dollars, but we have no inter-governmental debls ill this connection either to Britain or to America. We abandoned all claim to reparations at Lausanne. The whole of Canada’s war bill is now part of our funded debt.” FREE DEBATE IN HOUSE OF COMMONS (British Official Wireless) RUGBY, 12th December. In response to a request by the Loader of tire Opposition that a Government statement relative to the; American debt payment Ire made in the House of Commons under conditions enabling the House to discuss it. Mr Baldwin announced that- tire. .Government had arranged to devote Wednesday to a debate on this subject. An appropriate statement would Ire made, probably by the Chancellor of the Exchequer. Tire Government would not put down the motion and the House would have' a perfectly free debate enabling discussion from' every viewpoint. The Prime Minister, reaching London from Geneva this afternoon, consulted his colleagues among other matters on the American reply to the British Note. Tfc is anticipated that Cabinet will meet to-morrow, when the question whether a further communication should be scut to the United States is expected to he .considered. STATEMENT BY CHANCELLOR In written replies to parliamentary questions tire Chancellor of tire Exchequer gives details showing that Britain's receipts in war debts amounted to £71,000,000 and in reparations to £121.300,000. making a total of £192,000,000. Her payments to the United Stales for war debts amounted to £•326.000.000, exceeding, receipts from war debts and reparations bv £133,000,000. Tie says that- if the British war debt to (he United States had been from lire outset settled on the same basis as tho French war debts to the United States the amount which the British Government had already paid would exceed the amount due on such basis by 795,000,000 dollars, and no further payments would be due until 1940. Similarly, if the British war debts had been settled on the basis of the Italian settlement no further payment would be due until 1955. If, however, past payments were ignored and future payments in respect to the actual capital debt now outstanding were made the basis of the' French settltment, the amount payable bv Britain on 151 h December would be 22.000,000 instead of 95.500,000 dollars. Similarly, if fillure payments were made on the basis of tire Italian settlement the amount payable would be 2,750,000 instead of 95.500.000 dollars.

Approximately 29 per cent, of tire British debt to the United States would have been paid off by payments already made by Britain if the settlement had been on the same basis as either the French or Italian settlement. Under the existing settlement only 4 per cent, of the l capital debt had been repaid. CHANCELLOR CHEERFUL BRITAIN'S PROSPECTS (Received 13th December, 1.50 p.m.) LONDON, 12th December. “I don’t think we need quarrel with Mr Stimson’s reply,” said Mr Chamberlain at Birmbiiigham. “We don’t ask acceptance of our proposal for capital payment at this stage, but have reserved the right to advance it when the discussions begin. If the discussions arc treated in tire usual friendly spirit I believe it will he possible to reach a conclusion satisfactory to Britain and the United States.”

Referring to Lausanne, lie said that the question of asking for payment from Britain’s debtors did not arise at present, but if Lausanne were, unratified owing to the impossibility of making a settlement with America, Britain’s claims upon her debtors would take a more cheerful view of Britain’s prospects than for many months.” WILL FRANCE PAY? HOSTILITY IN CHAMBER GOVERNMENT’S POSITION CRITICAL (Received 13th December, 12.45 p.m.) PARIS, 12th December. ‘‘France will pay America with reservations,” summarises M. Herriot’s statement on debts policy, delivered to a thronged, excited Chamber, resembling a fashionable theatre on a first night. M. Herriot refused to specify the reservations, as he wished to act unitedly with Britain, which had shown admirable loyalty, uprightness, and confidence. The Deputies loudly cheered the statement. “Britain on all subjects, but particularly in money matters, is irreproachably upright. She refused to he treated differently from Franco over the payment on the 15th December,” M. Herriot said France had three alternatives. Firstly, payment unreservedly, which was unacceptable. Secondly, refusal to pay, which was also unacceptable. France’s signature must he honoured. All hopes of international peace were based on the sanctity of contracts. The Chamber’s feelings against payment were understandable in view of France’s sacrifices, hut the Government had to rise above temporary passions, and consider France’s permanent interests. Refusal to pay would intensify anti-French propaganda in America, and jeopardise a future settlement. The third alternative was to pay with reservations. This.was the only possible course. “If we don’t honour our signature I don't see how we can resume negotiations,” he declared. The Chamber adjourned till to-morrow. Prior to the speech, a meeting of Socialists, on whom M. Herriot relies for a majority, rejected payment in any form pending the summoning of a general debts conference. As the Right is uncompromisingly opposed to payment, and the Centre is also believed to be hostile, the Government’s position is considered critical, despite the favourable impression created by M. Herriot’s speech. ITAUANVIEW AN INSPIRED ARTICLE (Received 13tli December, 12.25 p.m.) ROME, 12th December. The “Osservatore Romano” in an inspired article says the sacrifices demanded of America must not be disconnected from peace. War debts, reparations, and disarmament are interdependent. If Europe insists on a revision of war debts because they cannot be dissociated from reparations, the United States must insist on the relation between revision and disarmament. NO EMBARGO NEEDED IF WAR DEBT PAYMENTS CONTINUED (Received 13th December, 9.5 a.m.) MONTREAL, 12th December. Sir Norman Ingell, British author and economist, in an interview to day stat-

eel: “Britain will not need to nut a specific: embargo nnginst United States goods if the war debts payments continue, as the pound will depreciate still further, and it will not be posible to buy American goods in the United Kingdom on account of their high price. - ’