WAR DEBTS PROBLEM

Poverty Bay Herald, Volume LIX, Issue 17958, 9 December 1932, Page 6

WAR DEBTS PROBLEM

THE AMERICAN REPLY ATTITUDE UNCHANGED CONFLICT. O L ORION lONS (British Oilicial Wireless.* Roe. 2 p.m. RUG BY, Dec. 8. Mr 11. L. .Stimson’s reply to tho British war debt note says that whatever part the debt payments may have played in the economic history of the ’post-war years, it is clear that in the present conditions of world-wide depression, accompanied by a sweepingfall of prices, their weight is greatly increased, and that they have a very definite relationship to the problem of recovery, in which the British and American people have such a vital interest. The President of the United States was prepared, in eo-o’peration with the British Government, to survey the entire situation and consider what means might be taken to bring about a restoration and stability of currencies and exchange, or revival of trade and a recovery of prices. "I welcome the suggestion of a close examination between the United States and Britain of the whole subject in preparation for tho International Economic Conference,” he said, "for I believe that there are. important avenues of mutual advantage which should be thoroughly explored. Such an examination should not imply a cancellation of the debt. In such an examination there necessarily will be consideration of other forms of tangible compensation available, for the expansion of markets for the products of American agriculture and labor, and you will understand that tho problem of foreign debts, in American mind, lias a very definite relationship with the problem of disarmament, and the continuous burden which competitive armament imposes on the entire world. ” CAUSES OF DEPRESSION The United States Government cannot accept the implications of the British note that loans by the United States present, in their entirety, expenditure oil destruction, that- the payments heretofore made to the United States have been largely responsible for the existing world depression and the concentration of a large amount of gold in the United States, and that a complete cancellation of war debts is essential to world recovery. It says that many of the loans wen- not made before the Armistice, but substantially nutdo since, were not for destruction, and less than one-third of the amounts expended, in the United States by her debtors after she entered the war was spent for munitions. In reaching a settlement with her debtors, the United States Government combined loans made during the war and after the Armistice, including com-, mercial credits, and funded all in debt

•agreements. As a different practice prevailed in Europe, the figures cited in the British note were not strictly comparable. The British note seemed to over-empliasise the influence which war debt payments may have had in the past on world economics. With various observations and figures presented by the British Government in that regard, the American Government was not in accord, lint it did not desire to enter a detailed discussion in view of the larger immediate issues. In general, their view was that the causes of the depression lay in. much

more potent, forces than these of debt transactions, and in the total of receipts and outgoings arising from the international transactions of debtor countries and tho United States. Debt payments had been a relatively minor item. PROBLEM OF EXCHANGE The argument that- the’payment of these debts had drained the gold reserve of other countries to the United States did not seem to be borne out by actual experience. The main fault in the distribution of gold supplies seemed to have occurred between different countries in Europe, and could not he attributed to forces originating ia the United States.

Replying to the statement that the initiative in devising the Lausanne settlement of reparation was taken with the cognisance and approval of tho United States Government, it says the facts were more accurately set out by the Chancellor of the Exchequer in his statement in July: “The proceedings there were throughout on a basis that the right course was to seek a European solution without involving the United States in the discussion.” After reviewing the circumstances under which the British debt was funded, the reply concluded: “As to the payments due on December 15, 1 appreciate tho cogency of the difficulties which you present as to the transfer of these moneys in the present state of foreign exchanges. In an endeavor to meet; this situation, it has been suggested that the President might he willing to recommend to Congress the acceptance of deposits in sterling in England to be guaranteed as to dollar value and transferred at such time as not to interfere with the stability of exchange. This, l under* stand, "your Government declined in the belief that the existence of a large sum of sterling awaiting transfer would affect the exchange markets almost as seriously as the actual purchase of exchange. Accordingly, further. informal suggestions have been made to your Government of methods of meeting these difficulties. Recognising the difficulties of effecting the transfer, I am confident that Congress will willingly consider any reaso.nal.ilo 'suggestion which will lacilitate payment on December 15.”