ALLIES' WAR DEBTS.

Waipa Post, Volume XIX, Issue 1103, 9 June 1921, Page 7

ALLIES' WAR DEBTS.

SCHEMES TO SCRAP THEM. A LIVELY CONTROVERSY. I observe (writes Harold Spender in the London Daily Telegraph, of March 2) that the United States is still very much excited over the suggestion that she should join in a clearance of war de'hts. Mr Lamont has been reassuring Mr Harding and the American Press generally is acting rather like a set of family physicians round the bedside of a .sick man. This (is a rather strange spectacle, and not yery edifying to those who remember the heroic attitude of the United States during the last year of war. This nation, which is now appalled at the idea of performing one generous act, is the same nation which so freely poured forth its treasure and its blood in order to ensure victory for the Allies during the eai.y months of 1918. What can have happened to the United States? General Effect of the Proposed. Before visiting America last November I became acquainted with the fact that our Government had made this proposal to the Americans, and I had the advantage, therefore, of being able to discuss it with a good many prominent leaders in the United ■ States. The proposal was first made in Mr Keynes’s book, “The Economic Consequences of the Peace.” “I believe,” he said, “this to be a n act of generosity which Europe can fairly ask.” The proposal was therefore already before the American public, and was being discussed pretty freely. .'U the American Press. The objection most generally made to the suggestion ran on very simple lines. It was pointed out that while Great Britain would lose over £1,000,000,000 as a creditor, she would gain £842,000,000 as a debtor to the United States and therefore her net loss would be little more than £200,000,000 (leaving Russia out of all these calculations). The United States, on the other hand, would made a dead loss of nearly £2,000,000,000, including the following sums: — United Kingdom £842,000,000 France £550,000,000 Italy ..I! £325,000,000 These are the main sums, as the Russian debt' to the United States was only £38,000,000, owing to the fact that the United States for the most part refused to deal direct with Russia and carried on her transactions with Russia mainly through us. Such are the general lins of the American case. , America Already Prepared. “Ah!” says the European, “but America gained so much by the war. She only came in in the third year, and in the first two years, she was making money all the time, hand over fist.” It is perfectly true that, according to Mr Edgar Cramond, America increased her wealth by 30 per cent, during the war, while the wealth of Great Britain'has gone down 12| per cent. France has lost one-fourth of her wealth and (Italy one u fifth. If Germany ever pays the indemnity, she will have lost nearly one-half of her wealth. Thus 'Europe has incurred losses immensely greater than those of the New World. Basing herself on these general faclts, France now makes the demand that the United States should actually pre-date her war obligations and regard herself as having been concerned in the war from the moment of invasion.of Belgium. That is the view urgently put forward in the French Press. A Step For Peace. In the end, I think that the United States will have to take this great step, if only for the peace of the world. When she has recovered she I will remember that a great deal of t this money was simply lent to Great Britain as a broker for .the Allies, and that it was really in its essence war expenditure. She will perceive that the bulk of this debt is all the time making it more difficult for Europe to settle down. Mr Keynes goes to the extent of arguing that its net. result will be that the Allies will pay -an indemnity to America, without receiving any indemnity from Grmany. Without going so far as Mr Keynes, who takes a very black view of the possibilities of a German indemnity, we can, at any rate, perceive that the indebtedness of Europe to America for the next twenty years will be an obstacle in the way of friendly relationships. Debt Breaks Friendships. Debt always has a 1 way of breaking up friendships. The United Kingdom is apt to be proud in its finance, and will undoubtedly pay this debt. But it will mean that we shall get very little relaxation in our taxes for the next ten years. During the war we disposed of about £1,000,000,000 of our foreign securities, and the Amercans, North and South, bought them. In addition, we have incurred a foreign debt of about £1,200,000,000. The United States had incurred no foreign debt. Our war expenditure was about three times that of the United States, Similarly, France has to recoup all sufferers in her devastated areas. Yet, at the same time, she owes £550,000, - 000 to the United States and £508,000,000 to us. Those sums, taken together, amount, a s Mr Keynes points out, to four times the indemnity which France paid to Germany in 1870. It would be difficult to exaggerate the prolonged ill-feeling that would b« produced »by the gradual paying off of these debts. It would not be easy to overstate the immense relief and good feeling that would be produced by a general clearance. When America once realises that, I still believe that she,, with her characteristic generosity and largeness of vision, will take a new view of Mr Chamberlain’s offer