THE UNITED STATES AND DEBT SUSPENSION

Otago Daily Times, Issue 21385, 13 July 1931, Page 8

THE UNITED STATES AND DEBT SUSPENSION

io run editor Sib, —While everyone must recognise the goodwill which prompted the offer from the United States to suspend pay ments of debt reparations for one. year, : I feel sure many of your readers will' agree with me that far too much has been made of this “ splendid gesture ” in our cables within the past 10 days. It must not be overlooked that the United States was not “forgiving her debtors” to the extent of a year’s payment;, her offer was merely a “postponement” of the payment for one year, at the end, of which period the amount would’'still be due plus interest for the whole year. When one considers that the total amount of the reparations originally claimed has been “ scaled down ” under the Dawes ; and Young plans to one-fourteenth of the original amount it must be evident that there is no great virtue in postpoidhg for one year the payment of a year’s proportion of this fourteenth part. To. put the matter in the form of an-ordinary business debt; A certain debtor owed his merchant £I4OO, which he was unable to. pay, and, two arbitrators having been called in, the merchant finally agreed; to' accept one-fourteenth of the -debt, £IOO, equal to about Is 6d in the f, payment to be spread over, say. 25 years at the rate of £4 per year with interest added. The debtor managed with a struggle to pay the annual amounts for a few .years,but his orders for goods from the merchant fell off in proportion so that the latter offered him a year’s grace in order to allow him to draw more goods on which, of course, there would be perhaps more profit than the amount of interest. My point is this, that, having allowed the debtor a compromise of Is 6d in the £ —that is, having written 18s 6d in the £ off the debt and - never having really missed it —why not “go the extra mile and wipe off the lot? This is iVhat the intellectual life of- the United States nas suggested for some years past, and now I believe the commercial men of that country realise its necessity, and this is what really lies behind the present offer. The United States is anxious to write the balance off, but wants the debtor nations to ask for it. To put •the:’matter ,in col-: loquial language, the United States wishes them to say ' at.-the ’end ,’of the; pfefeent, year of moratorium, “ Uncle Sam, ve thank you for the . year’s holiday,.: wlyim has given us a breathing space; you dont seem to have ; missed-. our repayments all; bow about writing off the balance... To which the United States will reply, “My dear nephews and nieces, we won the war, now we are prepared to help you to keep -the peace. We are your fairy godparents. The debt is written 0< The cabled report of /Mr ‘J. , H-‘ Thomas’s speech at Ipswich, in your issue of this morning, amply bears this-out. A far more momentous decision, and one fraught with infinite possibilities for good or evil, and one regarding which there has been only one small reference m the cables was the cable which appeared in your issue of the Ist mst: The Daily Herald states that the Bank of Lnglan is about to change its financial policy, abandoning deflation in favour of slight, inflation.” To my mind this is the most important message that has been tlmned across the cables for thA past two year ß : If this policy of “ inflation can be carried out without the. vicious spiral of higher costs, higher wages, still higher costs, and so on—if it can be shown that “inflation” with increased purchasing power in the hands of the people is possible—then in my opinion there would be justification for “flag wagging, —I am,, e tc James Taylor, July 11.