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Otago Daily Times, Issue 19903, 24 September 1926, Page 12

THE FRENCH AGREEMENT. SPIRIT OF AMERICA. AN IMPOSSIBLE POSITION. (Fsoa Oob Own Correspondent.) LONDON, July 30. America’s attitude to war debts received its full share of attention in the debate on the French Debt Agreement in the House of Commons. The discussion fell into two parts, the one a debate on the merits and meaning of this particular agreement, the other a conference dictated by a sense of grave dangers threatening the financial, economic, and political fabric of Europe. Captain Benn began with an orthodox attack on the Chancellor of the Exchequer, who reserved for the British taxpayer the maxim of paying debts quickly. He said that the ordinary individual observed that this country was creditor to our European Allies to the tune of about £12,(XX),000,000, or £13,000,000,000; was debtor to the United States for about £800,000,000 or £900,000,000, and so far the only thing that had been done, had been that wo had paid our debts, but had not yet received any similar favours from our own debtors. He complained that the Government had done nothing whatever to use the power which this country possessed as a creditor to reduce foreign tariffs and improve the markets for British goods in other parts of the world, nor to induce other nations to reduce armaments. No pressure had been brought to bear to reduce the serious menace to the peace of Europe which lay in Italian Imperialism. The French were building-up a great air force. It apneared 'as If we must leave onr money in France for the French to build a great air force, and we must then find fresh money ourselves, because - we could not possibly allow them to have a bigger air force than our own. SAVE THE FRANC. Though*hardly_ more enamoured of the arithmetical details of the Agreement, Mr Hilton Young approved, the policy of underpinning Europe which it embodied. It was plain ousiness commonsense to save the franc, so far as we could, because it was the keystone of European commerce, whose uneasy shudderings and slippinga did not invite the cement of American credit. He realised that the Agreement could not fully restore French credit, because it was a payment of only 6s 8d in the pound, made not on French security alone, and he. strongly advised France herself to erase the safeguard clause. It was absurd to attempt to interfere - in her domestic affairs, but generous treatment did put her under a moral obligation to set her own financial house in order. For it was a grim situation for the British taxpayer who had backed bills for his war friends on which ho would collect £33.500,000 and pay out £38,000,000 every year. AMERICA’S MISTAKEN ATTITUDE. “I certainly do not think it is useful or helpful in these debates,” said Mr Hilton Young, ‘‘to exacerbate feeling by, dwelling upon inequalities of sacrifice, but still the lact remains, and it ought to be mentioned atpj it cannot be mentioned in ,n better or more vivid manner than it was by the Chancellor of the Exchequer in the last debate on this suoject, when he said that within a. short:time all the money that has been received and paid lor reparation will be drawn away to the United States, and go into the pockets of the (United States, very largely at our own expenses. That is the situation. What is amiss is this, that throughout we have looked upon these debts as implying something more than merely commercial debts, but in the United States they have been looked upon as implying nothing more than a strictly commercial basis. It may be said and it is said as part of the United States case, and since great remissions of debt have been made by the United States it cannot be justly charged against their policy that throughout they have regarded the debts upon a strictly commercial, bass. I do not think, that the answer is a good one. Whatever remissions of debt have been made have been made on the basis which is as commercial as the actual extraction of the debt —the basis of ability to pay. No commercial creditor extracts from his debtor more than he can pay, for that would mean the debtor’s bankruptcy, aqd there would be nothing for the creditor. The remissions made on that basis have been made in as commercial a spirit as the actual enforcement of the debt. That treating of the debts has ite implications. We really have to present the citizen of the United States with an alternative, and it appears to me to be this. Either in coming into the war tho United States had with us a common cause, a common motive, and a common ideal. If they had, then it was right and necessary that there should be some community of interest, a pool of interest, and if there was such a community and pool right and necessary, then it is impossible to deal with such debts contracted under'those conditions on a strictly commercial basis.

is the converse? It is this, that if you deal with war debts upon a strictly commercial basis, that implies that there was no community of resources, right or necessary, and if that be so then the implication must be that the motive of the United States in coming into the war was not a. motive of a common cause and common interest but a mere mercenary motive of selling her services to the Allies. Which was the truth? Well, we know that the truth is that the United States came into the war because she had common cause with us and common ideals. GRAVE HISTORICAL WRONG.

“It is not for more favourable treatment that the matter is worth expressing, but for the sake of Anglo-American relations, which cannot be expected healthily to /flourish in the future unless it is recognised on the other side of the Atlantic that there is a case, and a strongly felt case, as to the moral implication in these matters held in this .country, which must not pass entirely in silence, if at this time there is a body of opinion in the United States which insists upon the strict commerciality of war debts, surely they are, doing the gravest historical wrong to the reasons for which the United States came into the war. They _ are misrepresenting the true spirit of their great nation. It will surely be recognised that when wo in this country for once in a way upon rare occasions say this about our post-war financial relations with that great trans-continental country, we are doing it in no spirit of appeal for compassion or pity. We have our difficulties, we have the vast expenditure of wealth, far_ greater than that of any other nation in the war, and the immense consequential difficulties in our million and a-quarter unemployed; but we are prepared, and we shall ever be prepared, to face up to our direct obligations. It will be a very evil _ day when any British Minister goes cap in liaM to the Government of the United States and asks for remission or for the more favourable treatment of these war debts.” SITUATION WHICH COULD NOT CONTINUE. A weighty passu™ on the same lines was the central point of Mr Snowden’s speech. The Anglo-Americaan settlement had removed the possibility of a general debt cancellation. But a situation in which the richest country in the world, which entered the war last, would be paid for the whole war, and mulct 320,000,000 Europeans of a day’s pay every year, could not continue. As for France, she could not, and would not, save herself, and he thought ultimately a Dawes scheme would have to bo found for her. Meanwhile the present agreement had neither earned her gratitude nor bettered her credit.. It violated both the policy of the Balfour Note and Mr Churchill's own asservation that European debtors should pav at least as much to us a? to the United States. MODERATE IMMEDIATE PAYMENTS But Mr Churchill refused to contemplate actively or passively, foreign interference with domestic concerns. All he would say to (he United States'was that Mr Mellon’s alleged declaration of the British use of war borrowings for selfish British ends was utterly misinformed. All loans had been limited by Act of Congress to war purposes, and every cent spent under control of the United States Treasury in the United States. Of four milliards of dollars thus borrowed and spent in 191718, one and a-half had bought munitions and two and a-half food. The loan for supplying silver to India had been quite separate and integrally repaid in 1925. As for the French Agreement, it had been made with the single view of clearing away a debt which otherwise would become so mon-irons as to he unc-laimahle. To settle, it had been wortli while promising in the famous letters a reconsideration inevitable. in the eiroumstanocs envisaged, even if the letters had not been written. The gross total of payments would lie onlv 2 per rent, less proportionately than M. Berenper had promised the United States, and in the first 10 years we should actually receive

£11,000,000. Quit® frankly, it wia deliberate policy to choose moderate im* mediate payments instead of larger future payments, because it was incredible that world public opinion on war debts would not change before three generations had passed, even though Mr Lloyd George had missed a chance in 1919 of settling accounts on the basis of blood spilt as well as cash spent. To-dav Time must be given a chance to do his work in the New World as well as the Old, and meanwhile the balance sheet was nearer to the realisation of the Balfour Note than its authors had ever hoped. COMPARISON OF DEBT PAYMENTS, The Daily Mail is conducting a campaign against America’s cupidity. It is alleged that what is at the bottom of almost all the troubles in Europe is menace of the vast war debts owed to the United States. “Because of this enormous payment to the United States we have been compelled to require payments—though much less crushing ones—on the sums owed us by our European Allies, and among them France. It is not Great Britain that is responsible for this state of affairs, but the United States, which in 1922 refused to look at a general cancelling of war debts, even though we British proposed to cancel £2 of foreign debt for every £1 due from us. “How severe were the United States’ terms imposed on this country can be seen from American expert calculations, setting forth the present value of the payments to-be made by the various countries to America:— “Great Britain pays 82 per cent, of the value of the debt. “France pays 47 per cent, of the value of the debt. “Italy pays 26 per cent, of the value of the debt. “From this it appears that we, who did not borrow for ourselves but for our Allies, are being made to pay from twice to three times as heavily as our Allies.” UNCLE SHYLOCK. “It must be something of a shock to many Americans who cross to this side of the Atlantic to find that the common view of the letters ‘U.S.’ throughout Europe is that they stand for TJncle Shylock.’ There would have been none of this miserable, debt-collecting business, which is causing so much harm in France and Italy, if the United States had listened to the proposals made in Lord Balfour’s Note, and agreed to a general cancellation of war debts. There are many eminent men in the United States who are convinced that Lord Balfour was right, but they have not the courage to speak out.”