THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JUNE 15, 1933 THE DEBTS CRISIS

New Zealand Herald, Volume LXX, Issue 21518, 15 June 1933, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JUNE 15, 1933 THE DEBTS CRISIS

British action has made the war debts a matter for urgent decision. On the American response hangs the fate of much more than the future of the British debt. If that response be definitely in favour of a readjustment of the terms of its payment, the whole field of such international obligations will be flooded with a kindly light, the Economic Conference will proceed on its way with I less difficulty, and the entire world | be blessed with a new confidence. If j the response be unfavourable, the ! outlook will be grey with clouds of j old doubt grown more menacing. A crisis was bound to come this week, { as the half-yearly debt instalments ! are due to-day. Even had the con- { ference not been in its initial sesj sions there would have been an i international state of tension. In : December it was clear that the time ! of the June payments would raise, ! more acutely than ever, the whole j vexed question. Later, both Mr. i Roosevelt and Mr. Mac Donald were | fully aware that it would now have | to be faced afresh, and when they j chose June 12 as the opening date i for the conference they knew that, i as a crucial item of world business, it would be inescapably in mind alj though not on the conference 1 agenda. Only a comparative few of the representatives are nationally ! concerned, yet none of them can reasonably have expected the ques- : tion to be wholly shut out. Mr. Mac Donald sensibly said at the conference opening that, while this assembly was not constituted in such a way as to enable it to consider or settle the matter, the question would have to be dealt with before every obstacle to general recovery was removed, and the nations concerned would have to take it up without delay. It is significant that a spokesman for Italy—another debtor nation to America prepared to make a further payment conditionally on an immediate review of the obligation—has not hesitated to emphasise in the conference "the transcendence of a settlement of war debts." This question refuses to be excluded, however strong the American wish to keep it out. As a matter of sober fact, it has come in with a vengeance, and the conference has had to cede it a central place—not formally but in practical effect. There will be nothing except preliminary and non-commit-tal speeches until the British Note to Washington has direct answer, an answer that all the world will judge. In the lobbies, the conference is waiting for it. The body of European debtors, in particular, await it. Their agreement at Lausanne to make an end of German reparations was tentative only, contingent on America's sympathetic clemency in relation to the war debts. If America fails to do the right thing, the German announcement of a moratorium in reparation payments will have to be considered in accordance with specified procedure, and should the due payments be deemed impossible, as the Lausanne agreement presumes they must be, means to meet the demands of Washington will be beyond the resources of most debtors. This outcome of America's refusal to review the debts cannot, in any event, be averted, and the British action at this juncture has merely anticipated an inevitable crisis should that obduracy persist. What Mr. Roosevelt's answer was to be, until his apparent change of mind, is a matter of conjecture equally with the nature of the reply npw expected. There may have been no change of mind, but merely a delay due to the President's difficulties with Congress. Whatever be pending, the conference can do no more than mark time until the answer to Britain is made known. Meanwhile, the anxiety in the conference lobbies cannot be other intense. So long as there is room to fear that a leading nation, one of. the chief and avowedly most interested participants in the discussion of worldwide economic ills, is moved by nothing better than callous selfish-1 ness, the rest may well wonder j whether its profession of concern is 1 only a pose, and whether they are j not all wasting their time in trying! to find together a way out of trouble. '

Political considerations in tho United States, it is suggested, are delaying Mr. Boosevelt's answer and consequently keeping his Secretary of State tongue-tied at the conference. For this speculation there is warrant. President and Congress have seldom run well in the double harness provided by the American Constitution, and even partnership in political creeds gives no assurance of amicable union. Mr. Roosevelt has been accorded a fairly free hand in many things, but recently Congressmen have manifested a disposition to assert their wills against his. In foreign affairs he is theoretically entitled to initiative, even to a large measure of independence. However, war debts closely touch domestic finance, and the customary jealousy of the presidential prerogative has little difficulty in urging a case against concessions to foreign debtors. This has been done, and Mr. Roosevelt has been made to feel a restricting influence on his desire to lead away from the traditional policy of disregard of political Europe. In this explanation of the delay in his v reply, however, is ground for hope that he contem- i plates action favourable to / the debtors. Were he to swing back to the "no cancellation and 110 scaling down" policy, he would be free to make announcement of that at once, assured of congressional approval. His hesitation suggests a preference for another course, the direction of which runs counter to the mind of a majority in Congress. Will lie make the courageous venture 1 Can he look to the American people to vindicate so splendid a step? It will shortly be known whether he will risk a political crisis at home for the sake of averting an international tragedy abroad..