Nelson Evening Mail FRIDAY, MARCH 10, 1933 AN INDICTMENT OF AMERICA

Nelson Evening Mail, Volume LXVI, 10 March 1933, Page 4

Nelson Evening Mail FRIDAY, MARCH 10, 1933 AN INDICTMENT OF AMERICA

AT tile general meeting of Barclays Bank, London, at the end of January, Mr Frederick Goodenough, the chairman of tin: bank, delivered an address which contained much that was wise and helpful in these trying times. In reference to tlie payment of Britain’s debt to America, Mr Goodenough pointed out that it could be paid only in two ways : with gold or with goods (including services), and that if the Americans persist in keeping so great part of the world s gold out of circulation, and if they refuse to open their ports to a freer system of trade with foreign countries, the time must come when the payment to them of war debts will be impossible, and he

added, "That a creditor must not make payment impossible must be regarded as a. fundamental principle at all times between every creditor and every debtor.” After showing that in the existing circumstances payments of gold by Great Britain are impossible beyond a limited amount (about 120 million pounds in the aggregate), Mr Goodenough went on to say that “If America wishes to receive payment she must accept it in the only way in which payment can be made — i.e., in goods—and, notwithstanding all the difficulties, make payment possible by a readjustment of tariffs.” That was said while yet Mr Hoover was President. Will President Roosevelt and the new Congress, which is composed principally of Democrats, accept the principles enunciated by the London banker as fundamental and unalterable, and therefore necessarily binding upon them ; or will they persist in treading the cast-iron path trodden so fruitlessly by President Hoover and his Republican supporters? The principles governing international debts are in the main the same as those which govern indebtedness between individuals, but, because of the restricted number of international debtors, those principles are in some degree liable to be relaxed between nations. Thus it is that Mr Goodenough says: “The fundamental principle that a 1 creditor nation must permit its debtors reasonable facilities to discharge their liabilities remains unchanged,” and he goes on to point out that if a great creditor nation, such as America, refuses to recognise and accept that principle, the result will be detrimental both to itself and to the rest of the world; it will lead, he says, to the aggregation of gold in one or two countries, to a depreciation of the price of gold, to deficits in national budgets, find to other evil effects which are necessarily the result of world disequilibrium in the holding of gold.” Tt will have been noticed that the Americans have been insistent in their demand that Britain shall return to the gold standard, though they themselves have “cornered” and “frozen the great bulk of the world’s supplies of gold. Mr Goodenough declares that it is impossible for Great Britain to return to the gold standard, “unless and until she can feel sure that conditions are such that she and other countries returning to the gold standard will not again be forced to suspend it.” His address was, in fact, a strong indictment of the Americans financial policy, in relation to war debts and the maladministration of gold, and bis summing up is, “If they (the Americans) require their debtors to honour their engagements, they must refrain from placing insurmountable obstacles in their path and thus causing them to default.”

To-day of course the world’s financial outlook has materially changed through the weakness of the Americans’ banking system. The question is whether the Americans’ experience has taught them anything coincident with the lesson taught by tbe chairman of Barclays Bank. Ilis lessons are based on fundamental and unalterable principles, through the ignoring of which, it would seem, the financial debacle in America has resulted. But is it to be imagined that those who have so mismanaged their a (fairs (as have the financiers and bankers of the United States) will be capable of appreciating the broad principles of international finance laid down by Mr Goodenough? Such a thing is hardly to be expected. What, then, can be done to improve the situation? Nothing, except to hope that the new and enlightened President of tlio United States may be able to lead his fellow-countrymen into the paths of wisdom. So now, as in the years of the Great War, the world waits for the Americans to adjust themselves to the realities of life as they exist, both on the American Continent and elsewhere. In their self-confidence they have undertaken the guidance of world affairs, ever since President Wilson went to the Versailles Conference. Heretofore they have hardly exhibited qualifications for the task.