WORLD PROBLEMS

Timaru Herald, Volume CXXXVI, Issue 19155, 11 April 1932, Page 5

WORLD PROBLEMS

COMMENT BY AMERICAN AMBASSADOR. MR MELLON IN LONDON. British Official Wireless RUGBY, April 8. The new United States Ambassador to England, Mr Andrew Mellon, arrived in London to-day. In an interview with the Press, he said the relations between the United States and Britain were never better. Both faced problems of the most serious nature arising largely out of the war and the economic and industrial readjustments that followed. These problems were not insoluble; they must disappear in time if approached frankly, with a desire to understand each other’s difficulties, and a firm determination to be of assistance where possible. AMERICAN DEBT CLAIMS. WHAT U.K. SHOULD SAY TO U.S. BOUND TO BE A SHOCK! Much has been heard about the difficulties which Britain has met in paying her American debts. That may not daunt America. “But the time may come,” says Sir Arthur Balfour, “when it may be as difficult for them to receive as it is for us to pay.” And that would concern America very deeply. In a speech at Sheffield in February, Sir Arthur said that at the end of the war Great Britain owed £900,000,000 to the United States of America, the whole of which had been borrowed to re-lend Italy and France a’t ; a time when the United States refused to lend money to those countries directly. It was no secret to-day that Britain had extreme difficulty in keeping both countries going in the war from the point of view of money, morale and material. After the war America gave a definite instruction that no settlement was to be made with anybodj' at a less interest than 4£ per cent, and for longer terms than 25 years. Mr Baldwin and his Commission succeeded in getting those figures to 3.3 and 62 respectively. France eventually succeeded in getting a total remission of debt amounting to 52.8 per cent., as compared with our 19.7. Italy held on a little longer and got a total remission of 75.4 per cent. Rout of America’s Exports. The great difficulty was that while these debts were being paid, the exchange for trading purposes became more and more difficult. American exports were now falling off at the rate of from five to eight millions a month, and she herself was beginning to realise that this could not go on. There was also the moral side of the question. There was no doubt that during the war we held the line until the United States were ready, and that if America cancelled the whole of the debt it would not give us back the lives of our men who fell in holding that line until she came: and it certainly would not give us back the material loss, about which we cared less.

“What have the Americans done to help us in regard to these payments? Nothing. They have done everything they possibly could to hinder us. They have twice raised their tariffs, and have gone in for Prohibition, thus preventing us sending them a lot of liquid refreshment they very badly need. (Laughter. Last, but not least—and most serious, for the moment—they have not only hoarded gold, but they have sterilised gold.” The United States claimed very definitely there was no connection at all between reparations and Governmental debts. That was not a fair view.

What were they to do? Were they to try to educate the public opinion of America to a sane economic view of the situation? That would be one way of doing it, but they would probably be bled white by the time they had accomplished it. A united front, demanding redress, was impossible. He thought the only course was for Great Britain to go to the United States without waiting for anyone else and say, “You can see our economic situation. We want a ten years’ moratorium, or, if you prefer it, a substantial revision. One or the other must take place.” “I believe,” said Sir Arthur, “that they would find it very difficult, in view of public opinion of the world to-day and the straits they are themselves in, to refuse our request. No doubt it will shock them at first, but it always does shock one to know one is not going to get one’s money as quickly as one thought.” No Politician Has the Nerve. After describing conditions in America, which he said were alarming, Sir Arthur said that trade at present was running in the wrong -channels. Everything was going adrift because they could not be sure of the exchange; and until the debts question was settled there would be no change. Everyone knew exactly what the problem was, and was fully aware of its effect, but no politician had the nerve to tackle it and tell the world exactly what had to be done. We were paying to the United States £35,000,000, rising gradually to £39,000,000 for 62 years. We should receive, but never had received, £48,000,000 from the people who owed us money. How could those transfers be made? By goods, by services, and by geld. How had Germany managed to pay? Since June, 1919, Germany had paid £2,000,000,000 —very largely by borrowing £900,000,000 from the United States, but also by a drastic reduction in the cost of living and an astounding reduction in the cost of production. She became the greatest exporting nation —of manufactured goods —in the world.

Economists told him that this big surplus of exports by Germany would dwindle, but he was afraid that the low costs which we, by our folly, had forced upon them, would take a long time to dwindle, and we were going to have a hard road indeed to compete with those low costs.

It would not be wise to at once cancel all German reparation payments. If we were to say to Germany: “You pay, say, £20,000,000 for the next ten years and in the ninth year we will re-examine the whole position,” that would be long enough and easy enough for us to get on with the business. Another possible method would be for Germany to pay 20 per cent, of her export surplus every year.