FRANCE AND WAR DEBTS

Northland Age, Volume 3, Issue 12, 15 December 1933, Page 8

FRANCE AND WAR DEBTS

Round the World

FOR the third time in succession France has decided to default in the payment of her war debt due to the United States. The French have been exceptionally well treated by America, and when the funding arrangements were made France received a remission ■ of some forty percent in the capital sum due. The interest originally agreed upon was substantially reduced, and much better terms were given France than those given to Great Britain. The French, however, have felt very sore over the Hoover moratorium, which they blame for most of their present economic misfortunes. Under the terms of this moratoi'ium France had to remit large payments due from ‘Germany, and also give up the privileged position she held in regard to German reparations. France had a first claim on certain payments due from Germany, and she had to abandon this claim under the terms of the Hoover agreement, and later at Lausanne she had to give up all claim to reparations of any kind wnatever. She contends L.at had it not been for America she would still be receiving reparations, and that out of these reparations she could have paid ner debt to the States. Having iost them she refuses to pay America anything more. The French are very determined in this matter. They overthrew the Herriot Ministry because M. Herriot proposed some partial payment of the debt. The French have a budget deficit of from £70,000,000 to £90,000,000 and they are not going to add to this deficit by any payment to America. Nor can America collect the money. That is the worst of Government debts. If the Government refuses to pay, the creditor nation can take no steps to enforce payment. France owed Britain 1,000,000,000 francs, contracted when the franc was worth tenpence. She repaid the debt when the franc had fallen to twopence, and the British investor lost £32,000,000. But Britain had no redress. A Government can do as it likes, whereas a private company can be sued for breach of contract. The next war will probably not find people so willing to invest in war loans as they were in the last war, and that may be something to the good. British investors have lost nearly half the capital they have lent to foreign governments. Many of them have repudiated their debts altogether, others have reduced the interest, and some have promised to pay at some future time. Even Americans are beginning to feel that war debts are mostly bad debts.