PROBLEM OF WAR DEBTS.

New Zealand Herald, Volume LXII, Issue 18939, 10 February 1925, Page 9

PROBLEM OF WAR DEBTS.

BRITISH NOTE TO FRANCE. BASIS OF SETTLEMENT. DEBT MAY BE "REDUCED. PROPOSAL FOR REPAYMENT RESOURCES AND TAXATION. J3y Telecrcph—Press Association— Copyright. (Received 5.5 p.m.) TietHer. LONDON. Feb. 8. The British Note fo France in regard So the war debt states that the Government adheres to the principle of the Balfour Note, but Lord Cuizon's Note of August 11, 1923, referring to the lata iMr. Bonar Law's proposals of January, .1923, is clearly no longer applicable to the existing facts of the situation. It was written before the framing of the .Dawes plan, and on the assumption that the German liability would be fixed at a figure less than that adopted in the Dawes plan, and that bonds of the kind contemplated in Mr. Bonar Law's plan were to be issued. These assumptions pre no longer tenable. The principle- of the Balfour Note is that Britain shall receive from Europe payments equivalent to those she is under an obligation to mako to the United States. The Government cannot accept a position in which this principle is only achievable upon tb.o basis of the full normal yield of the Dawes annuities, or by taking at face value debts which cannot at present be treated as good assets. The Government has already consented not merely to reduce Britain's claims against the Allies to an amount necessary to cover her own payments in respect of the British war debt to the United States, but actually to apply the whole share of the United Kingdom in German reparations to that purpose. Tin's means that Britain not only takes to her own charge the whole of her own war damages, but also the £300.000,000 of foreign securities devoted by her to the general effort before the United States entered the war. In the application of the Balfour Note to the existing situation, the Government, remembering that the inter-Allied debts were incurred in a common cause, has been prepared to consider proposals under which the existing French debt to Britain will be reduced, provided the principle of a definite payment by trance from her own national resources is fixed, with due regard to her relative wealth and tax-paying capacity, and is assured without reference to reparation. The Government, therefore, expresses the opinion that it might be found convenient for French payments to be divided into, firstly, fixed annual amounts to be paid by France, irrespective of actual receipts from, the Dawes annuities in any particular year; secondly, a further annual charge on the French share of the Dawes annuities. It is, of course, to be understood, firstlv, that counter-claims by France against Britain must be superseded; and secondlv. if and when payments derived by Britain from European, war debt,? and reparations are sufficient to provide for the full discharge of British obligations to the United States, over the full period of such obligations, including payments already made, any surplus is to he used to diminish the burden on Britain's allies. The Government hopes that if the French Government is prepared to work on the lines here suggested, ' a settlement satisfactory to both countries might be reached.