THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, MAY 31, 1933 WASHINGTON AND WAR DEBTS

New Zealand Herald, Volume LXX, Issue 21505, 31 May 1933, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, MAY 31, 1933 WASHINGTON AND WAR DEBTS

It is learned authoritatively that President Roosevelt will use his treaty-making power to effect a wardebt settlement with Britain and France, with a view to a permanent reduction of the debts and probably the suspension of the instalments due on June 15. This news has its own importance; coupled with the promising negotiation of the FourPower Pact uniting Britain, France, Italy and Germany in an agreement to abstain from war and warlike acts for ten years, and the renewed hope of real progress by the Disarmament, Conference, it adds to the international prospect a definite brightness. While, it would be idle to say that all obstacles to harmony have been removed, there is a closer approach to it than has been achieved for a long time, and the manifestation of a widespread determination to treat obstacles as things to be overcome can be reasonably taken as a sign of hope. Helpful action by the .United States can do much to clear the way. It, has been hamperingly deferred. Mr. Roosevelt himself has shown a reluctance to act without assurance that the Disarmament Conference would justify, by positive decisions on reduction as well as limitation of arms, any concession to debtors he might wish to offer. It has become a practically fixed policy of the United States to make contingent on European willingness to reduce armaments, a lenient review of the debts. Now, however, Mr. Roosevelt is understood to be prepared to move without waiting for the conference to implement the American condition. This is a much sounder proceeding. To make the debts abargainingcounter in negotiations for a lightening of the United States' expenditure on armaments —this, and not any worldwide economic advantage, is the cogent argument for the American case—does not touch the situation at all closely. The meeting of external liabilities, indeed, depends on security for economic development, whether that security be given by others' disarming or by improved means of self-defence, and to demand general disarmament as the price of debt-relief for certain nations savours more of heroics than of common sense. To treat the debts solely as economic burdens—even on the creditor —is more in accord with facts. To this view of them Mr. Roosevelt has apparently come, for reasons that are not difficult to divine. Probably the conversations in Washington with some debtors' representatives have convinced him of the wisdom of treating the debts thus,, Foreign financial experts had there an excellent opportunity of showing the weakness of the usual American argument, while admitting the gain to the United States' exchequer through a decreased temptation to spend on armaments. This experience may well have driven a logical wedge between disarmament ..and debt-settlement, and persuaded Mr. Roosevelt to move before Geneva should reach a decision. He may even have become aware that a dropping of the Shylock role woidd make America's voice at Geneva more welcome. But other things have helped to evoke this announcement of readiness to negotiate about war debts. One of them has been the learning of the truth, with experience as a persuasive teacher, that exaction of the uttermost ounce of gold could work only ill to the creditor. Time, too, has been on the side of the debtors, for those among them that paid the December instalment were given an implied pro v ise that this discharge of liability entitled them to consideration, and the next half-yearly instalment is almost due. After all that has happened it is America's turn to move, and with so little time to go the move is due. Further, Washington manifestly prefers to have these debts excluded from the London discussions at the World Economic Conference a fortnight hence, and it has become increasingly clear that, failing concession by America beforehand, the debtors would be constrained by facts to press for their inclusion. Better, therefore, from Washington's point of view, to get them removed from the forum by prior action, at least to the extent of opening negotiations:.

So common sense, effluxion of time and this wish to isolate them from the coming conference have "combined to evoke Washington's reference to the debts. And Mr. Roosevelt has power to open negotiations. The "treaty-making power" resides in the executive, not the legislative, section of the tripartite American system of Government. Congress has shown a disposition to contest the presidential right, and in the instance of the Peace Treaty, with its incorporated scheme of the League of Nations, went to the extreme of refusal to ratify, thereby dishonouring the responsible pledge of the country's spokesman at Versailles. But Mr. Roosevelt, in direct Democrat succession to the President thus defied, has taken care that Congress, in this time of critical emergency, shall not lightly defeat his purpose. It saw the wisdom of being subservient when a domestic financial crisis had to be averted by presidential fiat. This war-debts question is palpably related to such matters, but it is also one of foreign policy. By the express terms of the Constitution, Mr. Eoosevelt is entitled to handle it. If previous Presidents yielded initiative in such business, it was either because they were personally weak or because the particular business in hand was not crucial. He has an advantage they did not possess, particularly in the urgency of action. What he Has in mind is undisclosed as to detail, but official declaration should soon follow the present news. Meanwhile, this encourages confidence in an early removal of at least a portion of vexing .burdens. %