ONLY BLUFFING.

Star (Christchurch), Volume LXVI, Issue 20365, 24 July 1934, Page 5

ONLY BLUFFING.

American Note About War Debts. PAYMENT IN GOODS. (Bv PAUL MALLON.) WASHINGTON, June IS. Mr Hull was only bluffing recently when he invited Britain to pay the war debts in goods instead of money. It is true that the Secretary of State is a Sunday school man and does not know much about poker, but his deficiency in that respect is more than made up by President Roosevelt. They got their heads together on the latest debt step, basing it on what is known in both diplomatic and poker circles as “ calling the bluff.” As a matter of fact, the only way in which this whole inner war debt situation differs from the average high-class poker game is that, in playing war debts, nobody pays. The honour of winning is the onlv stake. Consequently, no negotiations are imminent for payment in goods, money, or cigar store coupons, and none is likely for a while. Messrs Roosevelt and Hull did not really believe there would be. The truth is, their private economic advisers told them before they wrote the Note that it would be virtually impossible to work out a transfer of goods at this time. There is one simple, insurmountable reason. It is that the British Government has no goods of its own. To pay America in goods, it would have to buy them from private producers. But at what price ? Price Difficulty. If Britain bought tin at the fixed world price and transferred it to us without a profit, she might as well transfer the money. If she tried to make a profit on the transaction, the price at which we would receive the tin would be too high. We might better buy the tin from the private producers ourselves. Either wav, there would be no sense to the transaction.

The only reason why the RooseveltHull poker team invited payment in

goods is that Britain had insisted that she could not transfer money. Roosevelt and Hull did not intend that their bluff should be taken as seriously as it was. The newspapers picked that news idea out of a single sentence in the body of the Hull Note and made headlines out of it. Mr Roosevelt was so perturbed that his spokesmen suggested to newsmen that they were over-playing the suggestion. The White House hinted that it was not by any means an important feature of the Note. There are economists in the State Department who believe that, within a year or two, when world trade relations get somewhere near normal, transfers may be worked out on the basis of paying goods. It is, of course, ridiculous to think that any substantial portion of the debts could be paid that way, or any other. You can, however, readily see where the existing situation leaves the debt issue. It is just where it was—on the poker table.—X.A.X.A. Copyright.