THE OTAGO DAILY TIMES THURSDAY, MAY 10, 1934. WAR DEBTS

Otago Daily Times, Issue 22258, 10 May 1934, Page 8

THE OTAGO DAILY TIMES THURSDAY, MAY 10, 1934. WAR DEBTS

After a welcome interval o£ respite from the discussion of it, the war debts issue is again obtruding itself. Possibly the American people, contrasting the enormous deficit which their own national Treasury is facing with the budgetary position ,of Great Britain, may endorse any suggestion that may come from Congress that it is high time the United States resumed the collection of what is due to her from her debtors. Congress has never yet been able to take a broad view of the war-debt situation, and, coming from Senator Hiram Johnson, a statement expressive of confidence that token payments will not he accepted again by the United States Government is not very surprising. Senator Johnson would appear almost to relish' the prospect, which he himself envisages, of seeing all nations that have not paid their debt commitments in full placed in the category of defaulters after June 15 next. But whether further token payments are or are not to be accepted by the United States is a question for the Administration of that country, and it may think differently from Senator Johnson in the matter." It is difficult to suppose that it can make the discovery that it will be of benefit to the United States to attempt to force the issue as between payment and default. As a matter of fact, by her own attitude the United States has done her best to render wardebt payments impossible, and little good would accrue to her from having all her debtors placarded as defaulters. While another instalment of the British debt to the United States is due in five weeks’ time, there has been no suggestion that it is any more likely to he paid than the previous instalments in respect of which token payments were offered and accepted. No provision for such payment was made in the Budget presented last month, nor any for the receipt of war-debt or reparation payments by Great Britain. In the absence of any further development, observed Mr Neville Chamberlain, he proposed to adhere to the course adopted in the pteccding year.

The negotiations between Great Britain and the United States in October last on the subject of war debts failed to produce any basis for a settlement. If Britain does not make full payment nest month it will not be because of her inability to pay but because of other weighty reasons. There is no moral justice in the claim that war debts should still be paid by her, alone among the nations, on a scale which has become entirely disproportionate. In the exchange of Notes between the British and the American Governments at the end of 3932 Britain’s ability to pay was not an issue. The British Government based its request for a re-examination of the whole . ituation on the fact that the payment of war debts had been proved to be inconsistent with the present economic organisation of the world, and on the contention that any resumption of these payments was bound to accentuate gravely the existing crisis, and to compromise fatally all efforts to counteract it. These inter-Governmenlal debts, the British Note pointed out, were radically different from commercial loans raised by Governments for productive purposes. “ Like the shells on which they were* largely spent, these loans w re blown to pieces, and they have prod: ced nothing to repay them, and have left behind nothing but fresh compilations and perplexities.” The British Note emphasised many considerations, among them being the fact that in the long run international debts can be paid only in the form of goods and services. But these are things, which the United States does not want from other nations, and she would still claim payments that cannot be made. The opinion of the British Government as to the results of a resumption of wardebt payments as they existed before the Hoover moratorium is presumably the same to-day as it was in December, 1932. Nothing that has transpired in the meantime has altered the position from a world aspect. President Roosevelt and his official advisers may appreciate the broad facts of the situation, but Congress is a stumblingblock in its attitude in so far as is reserved to it the ultimate decision in respect of the amendment of these inter-Governmental obligations.