FOREIGN POLICY

Southland Times, Issue 21894, 21 December 1932, Page 7

FOREIGN POLICY

UNITED STATES MR HOOVER’S MESSAGE REFERENCE TO DEBTS THE ECONOMIC SITUATION (United Press Assn.—Telegraph Copyright.) Washington, December 19. Co-operation with the Presidentelect, Mr Franklin D. Roosevelt, to. secure a continuity of the American foreign policy, particularly as to war debts, the World Conference and disarmament, was proposed to-day by President Hoover in a message to Congress. Lacking Congressional approval for the revival of the War Debt Commission, the President declared that it was necessary for him to proceed independently of Congress to set up machinery for further debt discussions with those nations who had not defaulted. He suggested an interlocking of debt, economic and disarmament questions, and indicated that a commission on debts would be appointed by him, some of the members of which would also be delegates to the World Economic Conference set down for next year, while others would have liaison with the present disarmament negotiations.

It is an assumption here that Mr Hoover already has made some overtures towards Mr Roosevelt, and that the personnel of the group which is to handle the debt discussions will be submitted to the President-elect for his approval before appointment. Early Action Necessary.

The only mention of this subject in Mr Hoover’s message to Congress, however, was as follows: “Discussions in respect to both the debt questions and the World Economic Conference cannot be concluded during my administration, yet the economic situation in the world necessitates preliminary work essential to its success. The undertaking of these questions should not be delayed until after March 4. I propose therefore to seek the co-operation of the Presidentelect, Mr Roosevelt, in the organization of machinery for the advancement of consideration of these problems. A year ago I requested that Congress should authorize the creation of a debt commission to deal with the situations which were bound to arise, but Congress did not consider this wise. In the situation as it has developed it appears necessary for extensive co-operation to proceed. Obviously any conclusions will be subject to approval by Congress.” The President reiterated his views against cancellation or reduction without adequate compensations. He said it would “meet with my hearty approval if Congress should decide to reestablish the Debt Commission.” Congressional opposition to any such step is so strong, however, that the chief ex -utive voiced no hope that the previous recommendation of his ever would be fulfilled. The President only negatively excluded from his proposal any discussions with nations which had defaulted. Price Levels. In the opening part of his message, Mr Hoover said: “It is certain that the most urgent economic effort still before the world is the restoration of price levels. The undue and continued fall in prices and trade obviously has many origins. One dangerous sequence, however, is visible enough in the increased difficulties which are arising between many debtors and creditors. Values behind a multitude of securities are lessened, and the income of debtors is insufficient to meet their obligations. Creditors are unable to undertake new commitments for fear of the safety of their present undertakings. It is not enough to say the fall in prices is due to decreased consumption, and thus the sole remedy is an adjustment by reduced production. That is in part true, but decreased consumption is brought about by certain economic forces which, if overcome, would result in a great measure of recovery of consumption and thus a recovery from the depression. Any competent study of the causes of the continued abnormal low levels of prices would at once establish the fact that the general price movement is world-wide in character, and international influences therefore have a part in them. Further exploration in this field brings us at once to the fact that price levels have been seriously affected by the abandonment of the gold standard by many countries and the consequent instability and depreciation of foreign currencies. These fluctuations in themselves, through the uncertainties they create, stifle trade, cause invasions of unnatural marketing territory, and result in arbitrary trade restrictions and an ultimate diminished consumption of goods, followed by a further fall in prices. The origins of currency instability and depreciation reach back again to the economic weaknesses rooted in the World War which have culminated in many countries in anxieties in regard to their financial institutions, the flight of capital, and the denudation of gold reserves, with a consequent jeopardy to the currencies.” Currency Stability Urged. Mr Hoover continued: “These events have been followed by restrictions on the movement of gold and exchange in frantic efforts to protect currencies and credit structures. These steps have again reduced consumption and diminished prices, and are but parts of the vicious cycles which must be broken at some point if we are to assure an economic recovery. We have abundant proof of the effect of these forces within our own borders. The depreciation of foreign currencies lowers the cost of production abroad compared with our costs, thus undermining the effect of our protective tariffs. The prices of agricultural and other commodities in the United States are.being seriously affected. Thousands of our workers are being thrown out of employment through the invasion of such goods. “I concur in the conclusions of many thoughtful persons that one of the first and most fundamental points of attack is to re-establish the stability of currencies in foreign exchange, and thereby release an indefinite number of barriers against the movement of commodities throughout the world. I am well aware of the many factors which bear upon the problem, which is purely domestic in many countries, but the ' time has come when concerted action between the nations should be taken in an endeavour to meet these primary questions. The gold standard is still the only practicable basis for international settlements and monetary stability so far as the more advanced industrial nations are concerned. Use of Silver. “The larger use of silver as a supplementary currency would aid to stability in many quarters of the world. In any event it is certain that trade and prices must be disorganized until ' some method of monetary and exchange stability is attained. It is for the purpose of discussing these and other matters that we have joined in the World Economic Conference; where means and measures for turning the tide of business and price, levels

through a remedy to some of these destructive forces can be fully and effectively considered and if possible undertaken simultaneously between the nations. A reduction of armaments also has a bearing upon these questions. The stupendous increase in military expenditure since before the war is a large factor in the world-wide unbalanced national budgets.” A world conference on armaments and money, as well as on war debts, was proposed by Senator Borah, chairman of the Senate Relations Committee, in approving action for the debt review suggested by Mr Hoover. Republicans and Democrats alike endorsed the tenor of Mr Hoover’s message. Mr Roosevelt declined to comment on Mr Hoover’s message. REVISION OF DEBTS MR HOOVER’S LAST GESTURE. NEED FOR IMMEDIATE ATTENTION. Washington, December 19. In the opinion of competent political observers here, Mr Hoover has made his last war debts revision gesture. The matter is now squarely before Mr Roosevelt either to accept the President’s offer of co-operation in the formation of a bi-partisan semi-Con-grpssional and diplomatic commission or, if he refuses, he must accept the full responsibility himself after March 4. In his Note to Congress to-day, which even democrats admitted was broadvisioned and sound, Mr Hoover took into full consideration the Congressional aversion to sanctioning a debt commission. At the same time he strongly reiterated his contention that the matter was serious and required immediate attention.

The general tenor of statements by Democratic leaders indicate that Mr Roosevelt will decline to co-operate. Reports from Albany indicate that he still favours negotiation through the existing diplomatic agencies, and will take no responsibility before being installed. Thus Mr Hoover must either, on his personal initiative, appoint a commission or withdraw from the matter. Which course he will take is problematical, but it is recognized that it is very doubtful if Britain, for example, would wish to enter into negotiations with the commission whose authority automatically terminates scarcely more than two months hence.

Mr Hoover’s method of linking debts to other phases of the world economic situation is generally approved in Congressional circles, where it is felt that the nation should receive some concessions in disarmament and trade in return for revision; but Democrats felt that Mr Roosevelt should assume no responsibility which might commit the party to a programme which later events might cause to be disapproved. They seemed willing, though, to let Mr Hoover form a commission to "explore” the situation, reserving the right to act on suggestions as they saw fit. Mr Hoover’s mention of an examination of the debt obligations of those nations which “sought to pay” is interpreted as meaning smaller nations such as Greece, Hungary, also France if she soon makes good her default. It is generally agreed that Britain would be the first to benefit from any reexamination.

The Press generally approved of the message, a number of newspapers emphasizing the necessity for dealing with all international economic difficulties as well as debts. Many admit the difficulty of getting complete co-operation between Congress, Mr Hoover and Mr Roosevelt, but view the Note as a step in the right direction.