Case for America.

Star (Christchurch), Volume XLIV, Issue 638, 16 December 1932, Page 6

Case for America.

War Debts Problem.

Taxpayers Must Foot the Bill. (Special to the •‘ Star.”) AUCKLAND, December 16. 'J'HE BELIEF that the new President of the United States, Mr Roosevelt, would probably agree of necessity to a four or five years’ war debt moratorium was expressed by Mr W. H. Cocker in an address at the Auckland Rotary Club's weekly luncheon. The case for a suspension of debt payments to the United States and for the cancellation of the debts had been often stated, said Mr Cocker. Much was made of the fact that America had entered the war later than the other allies, and that her burden of war debt was much less than that of the European nations. This was a strong argument for some suspension, but nothing more. It had to be remembered that the interests of the different nations in the war had not been equal; America had had less at stake than any of the others. She had come late into the war, but what would have happened if she had not come in ? The fall in prices was an argument in favour of concessions, but there was the fact that the American Government had to repay the loans to its own citizens, who were suffering from the fall in prices like everyone else. Effect on Post-War Loans. It was probable that the stern logic of facts would force America to see that it was in her interests to reduce or cancel the debts, but he did not think that would happen yet. She could not afford to see Europe crippled, for exchanges would go heavily in her favour and foreigners would be unable to buy American goods. It was not simply a case of writing off a bad debt, but of deciding which of two sets of taxpayers was to foot the bill—those of America or those of Britain and France. Then, too, Britain and France had had the use of the money. The American public was very suspicious of all who advocated reduction or cancellation. Apart from the economists, these advocates were mainly heads of large banks and financial houses which had made heavy post-war loans to European countries, and which, as things stood, had a poor hope of collecting their money. Politically, the concessions were impossible unless these financial houses met the position in some way, and it would be very difficult for any American Government to conduct negotiations to that end. The huge expenditure on armaments in Europe had often been cited as an argument against debt concessions, and certainly there was something in it. America was quite justified in asking for some guarantee that there would be no increased expenditure on armaments. It would have been much easier for America to have cancelled the debts earlier, when she was paying all the receipts into a sinking fund. In this way she had reduced her own debt by a huge sum. Cancellation would have deferred the complete liquidation from 1950 to about 1955. Now she was abandoning the sinking fund and war debts had become an item in the Budget. Thus to-day it was almost impossible for an American politician to convince the ordinary voter that it was in the country’s interests to cancel the debts. America’s Desperate Straits. There was no doubt that at the present time America was in a serious condition, Mr Cocker said. A writer had aptly stated that there was “ not a depression, but a Grand Canyon.” Statistics of falls in industrial stocks and of the capacity of idle plants were almost staggering. What made it worse, the people had been used to prosperity and felt the shock more than inhabitants of older countries. There were some signs that leaders of industry were losing their morale. There could hardly be a worse time for seeking concessions, and in the transitional period between the terms of two Presidents there was less hope of success than ever.

Mr Cocker said it was feasible, and probably best, for Britain to pay the next instalment in gold, as £19,500,000 worth of gold would suffice, as against £30,000.000 sterling. However, the practice could not be continued without serious results. America must suffer if she collected what was due to her in either gold or goods. Beyond question, some form of moratorium on war debts for four or five years was a condition precedent to recovery, and he thought it probable that the new President would agree to this course.