Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, DEC. 1, 1932. THE WAR DEBTS

Poverty Bay Herald, Volume LIX, Issue 17951, 1 December 1932, Page 6

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, DEC. 1, 1932. THE WAR DEBTS

The effect of depreeiated exchange is illustrated in the ease of the .war debt payments which Great Britain is obligated to meet on'Dccfcmbcr .15. An interest charge which normally at the old and long established rate of 4.85 dollars to the pound Would have been £1:1,500,000 is swollen t0‘£21,000,000 and for a payment off capital of £(),- 100,000 £9,000,000 has actually to be found. It is quite possible that before the due date the dollar value of the pound may still further have declined, in which case even greater sums will have to be provided. Whatever the amount, it may be taken for granted that the interest, levy will be met. There may bo some arrangement made for postponement of the instalment of capital repayment, but in cither case no suggestion of default will be permitted. And though desperate sacrifice may bo involved it will bo a proud day for British people all the world over when the commitments have been duly met. The sacrifices, as Mr. Ramsay MacDonald, Sir John Simon, and other British Ministers have endeavored to point out, will not bo entirely borne by the British nation. The United States will get the amount to which it is entitled — and there is a possibility that it may get the major portion of it in gold—but the effect of the transfer of these huge sums across the Atlantic, must be a curtailment of America’s inter national trade. Not all the English papers will go to the length of: the Daily Express and proclaim a boycott of American goods, but a sense of national self-preservation will suggest to every loyal Briton the .stern necessity for the curtailment of an altogether one-sided trade, with the object of righting, as far us is possible, the parity of the pound with tlio dollar. It is not necessary to go into the history, of these war debts; suffice to say that when the question of providing money advances to the Allies was being discussed in Congress shortly after America’s entry into the war, many of her leading representatives, evidently realising the derogatory position in 'which sin; was placed bv her unpreparedness, loudly pro-_ claimed that the loans were being made solely for the defence’ of the United States, and as one spokesman put it, America was only “.furnishing money for somebody willing to fight for ourselves.” Whilst the t inted States actually advanced in loans to the Allies some nine billion dollars only she is now under the amortisation scheme atempting to recover from the impoverished Allies over twice the original sum lent, ns : repayment ot capital and interest. She knows that the primary cause of the present industrial ami financial crisis in the world, and particularly'in her own country, ds the heavy burden of wardebts; other attributed causes are no more than a consequence of war debts. She knows that the interest paid on war loans docs not come from assets which the loans produced but forms a distinct drain upon productive capital. The effect of the deadweight of war indebtedness is not confined to the burdening of products and the consumption thereof with taxes and duties. “The creditor half of humanity,” writes Kuno Renatus in “The Twelfth Hour of Capitalism,” “is faced inexorably with the choice between two alternatives —to lose the capital which it has invested in war loans or to lose the capital which it has invested in private productive enterprise, for if production continues to be burdened with taxation liabilities which make it impossible for it to be carried on at a profit restriction of production must continue, and businesses must, continue to go into liquidation.” Realising this the Conference at Lausanne in July last, which the United States refrained from attending, agreed that the Herman reparations which began in 192! with a capital liability of £0,470,000,000, and which by subsequent agreements were whittled down, should be no more than £150,000,000 at the par of exchange; that this sum should not be for reparations but be devoted to the reconstruction of. Europe, and that at the end of 15 years the debt should be wiped out. The fulfilment of the agreement was made dependent upon action by tho United >Stntes, and now since the reparations source ol payment has been permanently removed the former associates oi the United States feel justified in asking for a lightening of their own burdens as an essential step towards the restoration of economic stability throughout the. world. There are many good people in the United States who recognise the justice of the appeal and that the self-interest of the United States demands its acceptance. Dr. Nicholas Murray Butler, president of Columbia University, for instance, in July last urged American statesmen to act on the Lausanne agreement immediately— “To delay pu any pre-

text whatever would be iu do grievous and continuing injury to the Arnorienn people. ’ ’ Therein he points to a consequence greater and more regrettable than any finance or trade dislocation which may result from America’s present attitude of demanding its full pound of flesh—the embiltcrmeut of international relations. Britain will pay up, and France may do so, but it is inevitable that there will be a feeling that the levying of the Allied debt .payments is unjust after the debtors have forgiven Germany her reparation payments. The Sydney Morning Herald puts the matter not too strongly when it says: “That the United States Government, by persisting in its relentless attitude, will bring destruction upon its own trading position, that, it will probably make the name and presence of Americans detested everywhere abroad, will not lessen the damage done to the rest of the world struggling to recover from depression and despair. Nor does it inspire courage to reflect that this senseless injury to 'Western civilisation may be perpetrated in obedience to an ignorant voice of that democracy for which the-,.world was to be made sa to. ’ ’