WAR DEBTS ISSUE

New Zealand Herald, Volume LXIX, Issue 21359, 7 December 1932, Page 11

WAR DEBTS ISSUE

MB. HOOVER'S DECISION MESSAGE TO CONGRESS BURDEN ON BRITAIN NO WAY OF EASING By Telegraph—Press Association—Copyright (Received December it, 9.15 p.m.) WASHINGTON, Doc. f, 'lho President, Mr. Hoover, lias decided to transmit a special foreign affairs Note to Congress late this week. It will incorporate debt recommendations and perhaps discuss the Disarmament and Economic Conferences. Mr. Hoover abandoned the idea of waiting until December 15 when lie became satisfied that practically all methods designed to ease the cxch.-inge burden on Britain through making payment of her debt instalment oil that date had been explored without a remedy being found. It is understood that this information has been transmitted to the debtor Governments through diplomatic channels. A message from Rome states that the Fascist Grand Council has decided that Italy shall pay her war debt to America. RESUMED PAYMENT CONSEQUENCES OUTLINED DISADVANTAGES TO AMERICA British Wireless RUGBY, Dec. 5 As some misunderstanding has arisen about the reference in the British war debt Note to America to the consequences of the resumption of payments, (he exact words of the Note on this subject are creating particular interest. After making tho point that the discharge of all international debts must finally take the form of fhe transfer of goods and services, the Note said: " If, therefore, war debt payments had to be resumed it is apparent that the exchange position of this country would need to be strengthened by a reduction of the very heavy adverse balance of visible trade between the United Kingdom and the United States, which amounted to £78.000,000 in 1931.

"In tho present circumstances this could only be clone by adopting measures which would further restrict British purchases of American goods. The United Kingdom, up to the present, has generally been the best customer of the United States, and (he result of such restrictions would inevitably be to reduce specially the market in the United Kingdom for American farm products. "To the extent, therefore, that payments are resumed to the Un:ted States Treasury, definite and unfavourable reaction must follow to the United States producer. Moreover, the British Government also has to guard against the effects which would follow if the facilities offered bv the British market were used by other debtors to America to obtain sterling, which they would then sell across exchange to meet their obligations to the United States Government.

" After the war Britain attempted to maintain the traditional system of free imports, with the result (hat debtor countries throughout the world sold goods on the British market, and took the proceeds awav over exchange or in gold to meet their obligations elsewhere. Under the stress of the present crisis,' the British Government has had to modify its system and to adopt tariffs, but the United Kingdom still imports from abroad foods to the value of several hundred millions of pounds in excess of what it exports.

" It, would be necessary to consider what action could be t;iken to secure that the sterling proceeds of these imports weic used more largely for the benefit of the British market." Mr. Stanley Baldwin, as acting-Prime Minister, had a conversation to-day with Mr. Andrew Mellon, United States Ambassador, and discussed various points in the Brit sh Note. DOMINION'S POSITION AMOUNT DUE TO BRITAIN NO OFFICIAL NOTIFICATION [by TELEGRAPH —OWN correspondent] WELLINGTON, Tuesday

Although the British Note to America relating to war debts gave a hint that if America insisted on the payment of the instalment due by Britain on December 15 it might be necessary for Britain to call upon the Dominions to pay their share, the Prime Minister, Mr. Forbes, has not yet had a,l y official communication on the subject. Britain agreed to postpone the payment of New Zealand's interest on the funded war debt this year. r lhis means a saving of £872,000 to New Zealand taxpayers for this financial year, and lias enabled the Government to Budget for a much smaller deficit than was at first considered possible. If the Dominion were suddenly called upon to find this additional amount at a few days' notice the position would be very difficult, and would seriously embarrass the Government iu its endeavours to straighten out the financial position.