STRANGLING THE WORLD

Poverty Bay Herald, Volume LIX, Issue 17948, 28 November 1932, Page 6

STRANGLING THE WORLD

WAR DEBT BURDEN MR MACDONALD’S REVIEW RELIEF MUST BE GRANTED (British Official Wireless.) Roc. 2 p.m. RUGBY, Nov. 27. The widespread suffering and loss of trade, affecting the prosperity of the whole world, which 'had resulted from the handling of the debts problem during the last two yearn, was referred to in a speech on the war debts crisis bv the Prime Minister -at Retford. During the war, he said, we shared with America, the task of financing the Allies, and the total loans we had made amounted to almost exactly the same as the loans made by the United States. The taxpayer lmd to bear a •heavy charge for interest on them, Immediately after the war, the Government pointed out that the, burden of these debts threatened to cloud, not only financial, but political conditions of the world, and we offered years ago to enter into any equitable arrangement for a reduction or cancellation of inter-Allied debts provided such tin agreement applied all round. Tho proposal Was not adopted, and we were called upon to fund our debts to America, for the situation had to be regularised. The British Government still decided to carry through its policy insofar as it could. It had declared that in no event did it desire to make a. profit out of reparations and war fields —that was contained in the famous Balfour note —and that we were prepared to take no more from our debtors than was necessary to pay our creditors. EVERY NATION SUFFERING Under this arrangement we had slowly written off 60 per cent, of the debts due to iv.s’, and owing to the fact that we had funded our debt to America some years before we funded the Continental debt due to us, we had, in fact, paid u]> to date approximately £200,000,000 more to America than we bad received from Europe. AVe ’had done lit uncomplainingly. It was all in the day’s work. This wan the situation two years ago. Then a crisis broke out which very nearly wrecked some countries and the whole system of international debt payments broke down in these countries. Every nation, large or small, was suffering to-day on account of the way war debts had been handled. Loss of trade outweighed tenfold or twentyfold. in some respects, the actual amount (If these debt payments. Confidence and credit could not .lie restored until an end had been put to these attempts to force the stream of capital •to run uphill. Ft was in this spirit that we went to the Lausanne Conference, and there, for the first time, we got a general agreement among the European Governments. This vast nexus of inter-governmental debt, which was strangling the prosperity of the peoples, must be cleaned up. That was the great achievement at Lausanne. So far as Europe was concerned, we were in agreement, but; our agreement had to bo concluded by similar action on the part of the United States in order to enable'the world to go round again on its economic axis. ECONOMIC MADNESS In the first place it was necessary to free the world from tho crushing loads and inpcnetrable entanglements of war debts, which, while legal operations, were tantamount to economic, madness, and under the conditions those payments had done as much as the war did to Impoverish nations, both those paving and receiving, to ruin people, and to furn millions of men and women on to the streets with their bodies steadily starving and their mimis- being steadily darkened.

Regarding the British reply to tho American war debt note, Mr Neville Chamberlain said yesterday that Britain would take the occasion to develop in greater detail the reasons which led her to make her original request.

The best-in formed newspapers recognise that the negotiations with America, insofar as they affect next month’s payments, .are not .concerned with Britain’s ability to discharge them, but with the advisability of America receiving them. To-night’s Ministerial conference to discuss the terms of the new note to the United States lasted for three hours. The Treasury and the Foreign Office officials attended, but the note will not be drafted until the Cabinet meets early in the week. The Labor and Liberal loaders may in the meanwhile, be consulted. The Daily Telegraph's financial editor says the City feels that failing an amicable settlement payment should be made on December 15 under vigorous protest, with a clear reservation that neither Britain nor the world monetary system would permit of further transfers under the old scale. Already, perhaps, the weakness of sterling is beginning to teach America a lesson that war debts block the way 1o stability and payment in gold might carry the lesson a stage further. There .is growing support in responsible banking circles of: Sir Robert Horne's advocacy of this method.