WAR DEBTS CATECHISM

Taranaki Daily News, 4 June 1934, Page 3

WAR DEBTS CATECHISM

QUERY AND ANSWER.

A WITTY DIALOGUE.

Mr. Irving Brant contributes to International Conciliation, a monthly pamphlet issued by the Carnegie Endowment for International Peace, an article in the form of a witty dialogue. It begins with a definition of war debts and proceeds: “How was the money.sent to Europe?— i The money was not sent to Europe. It was paid to American manufacturers, farmers, and other business men by a committee of the American War Industries Board. “What for?—Munitions of war, food, cotton and other supplies sent ,to our Allies; transportation, shipping, interest. _ “How much (in dollars) was loaned after the Armistice?—2,soo,ooo,ooo dollars plus 740,000,000 dollars in relief supplies. “How was this post-Armistice money sent to Europe?—lt was not .sent to Europe. It was practically all spent in the United States for the purchase of war supplies, cereals and cotton sent to our Allies. , “Why. were these loans made to the Allied Powers after the Armistice?—The principal reason given by the (American) Secretary of the Treasury was that these loans would enable American busi- ' men to complete their contracts with the Allied Powers. If these contracts were suddenly cancelled, he said, it would have an injurious effect upon American business. THE RATE OF INTEREST. “Why should England pay 3.3 per cent; while France pays only 1.6 per .cent?— Because England was looked upon as a wealthy, powerful nation, while Franc® was poor and struggling. . “How much does England owe?— 4.300,000,000 dollars. “How much gold has England?— 800,000,000 dollars. “How much does France 0we?—3,800,000,000 dollars. * “How much gold has" France?—3,4oo,000,000 dollars. “Then is France really a poorer and more struggling nation than England?— Not poorer, but more struggling. France struggles much, harder to keep her gold. “The French, it is explained, expected to pay their debt with money obtained from Germany. “Why should the French have such an expectation?—lt seemed a natural line of reasoning to them. Germany was to pay the cost of the war. The debt to the United States was part of the cost of the war. Therefore Germany should pay the French debt. That was the way they figured it. “Had Germany been doing so?—Yes. AU French payments on the war -debt - were made with reparations money from Germany. “Where did Germany get the money? —Germany borrowed it from the United States. . “So the United States loaned money to Germany with which to pay France so that France could use it to pay the United States?—Yes. “What about England?—lt was the game way there, only more round about. The United States loaned money to Germany. Germany paid it to France. France used part of it to pay off her war debt to England. England sent it to the United States. AMERICAN LOANS TO EUROPE. “Of the entire three billion dollars paid by European nations on their war debts to the United States since the Armistice, how much was paid out of American money loaned to Europe?—All of it.. “Then the United States really hasnt coUected a cent?—Not a cent. We have merely loaned the money with which we have been repaid. “Then the war debt payments have stopped in reality because we have stopped loaning our debtors the money with which to repay us?—Exactly. “How did we ever let them put over a trick like that?—lt wasn’t a trick. It was the result of economic law. “What economic law? What is the real reason we can’t collect our war debts? —The fundamental reason is tK”.t we made the loans in the form of goods, and we insist on being repaid in gold. “Is there any way we can coUect the war debts? —Yes. “How?—By taking payment in goods and services. By importing more goods than we export. By accepting an. ‘unfavourable’ balance of trade. “Is this generaUy understood—lt has been said a thousand times in the past ten years, and stiU the country won’t believe it. “The discussion then turns to the alternative means of accepting payment and their social and economic consequences, leading to this dramatic passage:— ; / “When we refuse to accept goods in payment of the debt, aren’t we ourselves proposing to cancel it?—Exactly. In theory we say ‘Pay.’ But in practice we say ‘Cancel.’ “How will it end? —In cancellation. The economic forces opposing payment ara too powerful.” ‘