WAR DEBTS

Southland Times, Issue 19657, 6 October 1922, Page 5

WAR DEBTS

BRITAIN’S OBLIGATIONS AMERICA TO BE PAID THE REPARATIONS QUESTION. (By Telegraph.—Press Assn.—Copyright.) (Australian and N.Z. Cable Association.) NEW YORK, October 3. Mr Reginald McKenna, formerly Chancellor of the Exchequer, addressing the Bankers’ Convention, pointed out that he spoke as a banker, expressing personal views, and not in any representative charaster. He declared concerning tjie British debt to the United States, that the primary and essential duty of a debtor was to discharge the liability. “Until this is done,” said Mr McKenna, “all observations on debts and their origin, and the economic consequences of international payments are liable to be viewed with suspicion. A creditor may, if he likes, open questions of that kind, but a debtor should admit his obligations without discussion.” “England has the ability to pay,” he declared, “and I cun unhesitatingly assert her determination to honour her bond in full. I believe I am justified in asking you to treat the English debt to the United States as certain to be provided for.” Mr McKenna went fully into the question of German indebtedness, expressing the belief that she would be unable to meet the reparation demands. He pointed out that even if she were able it would only be by increasing her exports. To do so would mean that she would be compelled to reduce her imports, cut profits, and lengthen the working day in order to meet other countries’ competition. The latter would have to do the same, thus lowering the standard of life all round and further upsetting the world’s economic situation. Answering the criticism that Germany was undertaxed compared with Britain, Mr McKenna said he believed Britain was overtaxed, a factor which was depressing national production. In his opinion, the only way in which Germany could approach the Allied demands would be to persuade Germans possessing foreign assets to sell them to the German Government at a small profit, so that the Government could turn them over to its creditors. Mr McKenna added: “No solution of the reparation problem is possible unless political considerations are subordinated to economic facts. This is a general argument, applicable to other international debts. Only England possesses foreign assets, Italy and France being without similar wealth reserves*” Mr McKenna pointed out that France’s debt to England was far too great to ix* settled by trade exchanges, England being utterly unable to absorb the French surplus production. “Thus,” he said, “England is the only nation able to pay the United States interest and sinking fund on her debt. No other nation is able to meet more than a small part of its liabilities. Definite postponement of any payments is desirable in the interests of all parties, and the actual amount they will ultimately be able to pay should be ascertained by an inquiry regarding their exportable surplus, which should be made at a full and frank conference between creditors and debtors.”