THE OTAGO DAILY TIMES. THURSDAY, JUNE 18, 1933. WAR DEBTS

Otago Daily Times, Issue 21980, 15 June 1933, Page 6

THE OTAGO DAILY TIMES. THURSDAY, JUNE 18, 1933. WAR DEBTS

It is highly probable that, as has been suggested, the American delegates did not altogether relish the raising of the war debts question by Mr Ramsay MacDonald at the opening of the World Economic Conference. A question of such pressing importance simply cannot, however, be left in the background, and it was open to the United States to adopt a course that would have prevented its otherwise inevitable emergence at this juncture in view of the circumstance that no moratorium was conceded. The fact remains that in drawing up a draft agenda for the Economic Conference the Preparatory Commission, consisting of 25 experts representative of seven countries, including the United States, placed as an essential preliminary to a comprehensive programme of work the settlement, or the definite prospect of a settlement, of the problem of intergovernmental indebtedness, without which, it affirmed, these debts would remain “ an intolerable barrier to economic and financial reconstruction.”. The war debts question has come irresistibly into the forefront at this particular moment because payment of Great Britain’s next debt instalment to the United States falls due on this day, June 15. The cost to Great Britain of providing the 1933 annuity, with the addition of the first instalment in respect of the Hoover moratorium year, has been estimated at £60,000,000. The probability of an offer of what has been styled a “ token payment ” in respect of the June' instalment has been indicated, and the point to which uncertainty attaches is whether, in the event of this proposal being rejected, she will, default. The token payment—in this case an amount of two millions has been suggested—may be regarded as an advance against the debt expressive of acknowledgment of the existing obligation but of unwillingness or inability to liquidate the whole amount due. Concerning the attitude of the United States towards such a proposal no official statement has yet been published. It seems probable that President Roosevelt would be agreeable to the acceptance of such partial payment, but there has been no reason to suppose that Congress would bring itself to entertain the idea. It becomes a question, therefore, of immediate moment whether or not, faced with a rejection of this overture, Great Britain will fall back upon the alternative of default. In discussing this matter last week Viscount Snowden took the view that, whatever the pressure, Great Britain should avoid default, and especially in this instance as the payment involved would probably be the last required under the existing debt arrangement. His general argument was that it would be dangerous and against her best interests for Britain to repudiate her bond. It was also suggested by him that default on the part of Great Britain might drive the United States from the World Ecouomic Conference. Whether the position as regards that point will actually be put to the test remains as yet to bo seen. In the meantime there is room for hope that the extreme course of default in respect of this June debt payment - may be staved off. The messages from Washington leave room fox expectation that President Roosevelt’s reply to the British Note will at least be calculated to relieve the tension of the immediate situation. None the less it has been for some time apparent that any further attempt on the part of Great Britain to carry out the existing debt agreement could only end in failure. Only after strenuous and protracted efforts to meet her liability has Great Britain been driven to the conclusion that, in the world as it is, performance of the debt contract is impossible. The whole arrangement as regards the war debts imposes upon her an intolerable injustice from which she should be freed at the earliest possible moment. It is not from the lack of any endeavour on the part of the British Government that the position to-day corresponds with what it was six months ago, when the arguments for suspension of the December debt (

payment were so forcibly and logically expressed in its memorable Note to the United States Government. The case for a radical revision of the war debt agreements is too strong for the United States to ignore. But the American contribution to the emergence of the present delicate position is obvious. Mr Neville Chamberlain’s impending statement in the House of Commons relative to the whole situation will he awaited with unusual interest.