WAR DEBTS.

Otago Daily Times, Issue 18758, 11 January 1923, Page 4

WAR DEBTS.

America has no cause for not being impressed by the determination of Great Britain to pay her war debts. In October last a payment of £10,000,000 on account was made to the States. Where the total , liability exceeds £960,000,000, however, even such a large payment as this fails to make an appreciable reduction in the total. Prior to the definite statement made recently on the subject by Mr Reginald M'Kenua there appeared to be some doubt in America whether Great Britain desired to discharge her war indebtedness, but the assurance offered by Mr M'Kenna has npw been supplemented by an un-

equivocal declaration by Mr Stanley Baldwin, Chancellor of the Exchequer, at a meeting of the Debt Funding Commission in Washington, that Great Britain is prepared to pay to the last cent. This makes the British position perfectly clear, but it does not present the final conclusion of the very difficult problem. In the first place the amounts involved have no parallel in history for the British debt to America is merely a portion of the total sum involved. These huge liabilities can be liquidated only through trade channels. America must accept goods in the form of imports. At present the prevailing opinion in

America is that the payment of war debts will confer distinct advantages on her, but when she realises more fully tliat the liquidation of the debts will have a direct and possibly disturbing influence on her industries the problem will probably be considered by her people in quite another light. In accordance with her traditional policy America, or a large section of the American people, expects that payment will be made in a form that is impossible. To demand payment and at the same time to refuse to trade is simply out of the .question. The American high tariff is designed to

discourage trade, but if the war debts are to bo paid a reverse process must be set in motion. “We intend to pay,” said Mr Baldwin, “but how best can international credits be made liquid, when the creditor nation is unwilling to permit liquidation through the direct delivery of goods, and is also unwilling to see the current of her products to the debtor nation interrupted, and when the debtor nations are unwilling to be put in the position of being unable to buy the products of the creditor nation ?” That is the puzzle which the Debt Funding Commission must attempt to solve. It cannot, however, be solved until America fully appreciates the essential elements of the problem. The high tariff is clearly the great obstacle to the liquidation of the British war debts to America, and it is unlikely that a change in national policy will be made even though it would simplify the payment of the war debts. Therefore, however interesting the conclusions of the Debt Funding Commission may be, it is unlikely that they will represent the last word on a supremely important matter.