THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, DECEMBER 22, 1926. THE WAR DEBTS PROBLEM.

New Zealand Herald, Volume LXIII, Issue 19517, 22 December 1926, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, DECEMBER 22, 1926. THE WAR DEBTS PROBLEM.

■ ■■ The debts owed by nations involved in the war to other nations in alliance with them constitute a problem which refuses to be ignored for any length of time. A period of silence may be experienced, but sooner or later it is broken by someone, official or unofficial, demanding all-round cancellation, defending the theory that, repayment up to the full capacity of the debtor should be required, or otherwise renewing a controversy that has been carried on to the verge of exhaustion. There has been another excursion into this debated territory. A body of Americans, of academic distinction, has suggested an international conference on debts and reparations, charged to revise debt settlements "on a bas:.s of justice and generosity." The President and the Treasury Department are described as viewing the suggestion with disfavour. All that the members of Columbia University say about the effects of the existing settlements may be true, but similar arguments used before have not weighed with the Government of the United States, and nothing has occurred lately promising to produce any substantial change in the official outlook. A new Washington Conference to discuss financial obligations and. their cancellation sounds attractive. It is not feasible ? for whatever may be done about lightening the obligations of debtor nations it is not likely to be arranged at a round table conference where all parties meet as equals, and the opinion of each has equal weight. The debtors outnumber the creditors too heavily. Britain long ago undertook to cancel up to the limit that cancellation is granted her. With that offer still open, the initiative lies with the United States, which could do all that was necessary by the ntroke of a pen, without any conference. In view of the new suggestion from American citizens, conveying the idea that present settlements will not be for the ultimate good of the world, it is interesting to traverse recent indications of the official attitude.. As a preliminary it may be conjectured that any variation must come as the result of a movement inside the United States. After all that has been said and done about war debts, it is not probable that any Government in America would dare yield to outside pressure. There have often been indications of a feeling among individuals antagonistic to the policy pursued since demands for repayment were first made. Before any sentiment of the kind can be effective in action it must have behind it far more weight than has yet, been found attached to this feeling. As a famous American told a British audience some time ago, the area of the United States is so vast, the population so huge and diversified, that it takes years for a new idea to percolate from coast to coast. When, in addition, the idea is diametrically opposed to others sedulously spread for years, its general adoption must necessarily be most gradual. Therefore the conversion of American opinion to the merits of debt cancellation cannot be expected soon. Wanting it, the official policy of exacting payment up to the full capacity of the debtor is likely to rule. Not long ago, indeed, the Secretary to the Treasury was emphatic in repudiating the suggestion ci cancellation. He went further than the usual argument that America must pay interest on, and repay, the loans she raised ' internally to advance to Europe. He said that Britain borrowed largely during the war for commercial, as distinguished from purely war purposes. Such a contention, if true,

would dispose finally of the ethical grounds for forgiveness of debts. Mr. Winston Churchill controverted the statement with success, but his victory in argument means little. So long as such a suggestion can be made officially, it is quite evident that White Houso and Congress are not likely to do anything concrete in lightening further the burdens of those who have debts to repay. The position then is that the United States, holding the key oi the position, has decided that the debts owing her must be repaid according to the capacity of the debtor. This basis taken for the various funding agreements is claimed to bo the limit of concession, and in so far as it does involve a substantial, if varying, degree of writing off is claimed to be generous. The debts being regarded as ordinary commercial obligations. it is. If the debtors do not regard them in exactly the same way, they have no remedy, at least at the present time. On the face of it, there should be no cause for complaint or ill-feeling. The uncertain factor is the possibility of future changes. The payments just fixed must continue, in terms of the agreements for 66 years. Who can say whether the capacity to pay, estimated on present conditions, will continue for that period without variation, or even be maintained for a decade? If the need for variation once arises, what will be its limits, to whom shall it be allowed 1 ? The. power the United States has acquired leaves one nation very much tine judge, and, financially, the ruler over many others. Such a situation has never been conducive to peace or accord. Whether it can in the future, especially when there are, bearing the burden, new generations without any personal knowledge of the circumstances creating them, re mains for that future to prove. It is this possibility which moves far seeing Americans to question the essential wisdom of the debt settle ments, and to urge their modifica tion. The voices are isolated, the official attitude against which they speak is unyielding. These are the outstanding facts in the American attitude to a problem in which the United States is a dominant factor.