WAR DEBTS

Waipa Post, Volume 48, Issue 3468, 19 May 1934, Page 3

WAR DEBTS

AMERICA AND EUROPEAN NATIONS. A CONTRIBUTOR’S CATECHISM. 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:— Q.: How was the money sent to Europe ? A.: 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.

Q.: W'hat for ? A.: Munitions of war, food, cotton, and other supplies sent to our Allies: transportation, shipping, interest.

Q.: How much (in dollars) was lent after the Armistice ?

A.: 2,500,000,000 dollars plus 740,000,000 dollars in relief supplies. Q.: How was this post-Armistice money sent to Europe ? A.: It 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.

Q.: Why were these loans made to the Allied Powers after the Armistice ?

A.: The principal reason given by the (American) Secretary of the Treasury was that these loans would enable American business men ‘to complete their war-time contracts with the Allied Powers. If these contracts were suddenly curtailed, he said, it would have an injurious effect upon American business. The question of the rate of interest is thus discussed: — Q.: Why should England pay 3.3 per cent while France pays only 1.6 per cent? A.: Because England was looked upon as a wealthy, powerful nation, while France was poor and struggling. Q.: How much does England owe ? A.: 4,300,060,000 dollars. Q.: How much gold has England ? A.: 800,000,000 dollars. Q.: How much does Edrupe owe ? A.: 3,800,000,000 dollars. Q.: How much gold has France ? A.: 3,400,000,000 dollars. Q.: Then is France really a poorer and more struggling nation than England ? A.: Not poorer, but more struggling. France struggles much harder to keep her gold. The French, it is explained, expected to paiy their - uebt with money obtained from Germany. Q.: Why should the French have such an expectation 1 ? A.: It 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. Q.: Had Germany been doing so ? A.: Yes. All French payments on the war debt were made with reparation money from Germany. Q.: Where diid Germany get the ntoney ? A.: Germany borrowed it from the United States. Q.: So the United States loaned money to Germany with which to pay France so that France could use it to pay the United States ? A.: Yes. Q.: What about England ? A.: It was the same way there, only more round about. The United States loaned money to Germany. Germany paid it to France. France uised part of it to pay off her war debt to England. England sent it to the United States. Q.: 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 ? A.: All of it. Q,: Then the United States really hasn’t collected a cent ? A.: Not a cent. We have merely loaned the money with which we have been repaid. Q.: Why did Germany quit paying reparations ? A.: Because the United States quit loaning money to her. Q.: Then the Avar debt payments have stopped in reality because Ave have stopped loaning our debtors the money Avith Avhich to repay us ? A.: Exactly. Q.: Hoav did Ave ever let them put over a trick like that ? A.: It AA'asn’t a trick. It Avas the result of economic I&AV. Q.: What economic law ? What is the real reason avc can’t collect our Avar debts ? A.: The fundamental reason is that avc made the loans in the form ol goods, and we insist on being repa d in gold. Q.: Is there any Avay in which avc can collect the Avar debts ? A.: Yes. Q.: How ? A.: By taking payment in goods and services. By importing more goods than avc export. By accepting an “ unfavourable ” balance of trade. Q.: Ts this generally understood ? A.: It has been said a thousand

times in the past ten years, and still 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: Q.: When we refuse to accept goods in payment of the ciebt, aren’t we ourselves proposing to cancel it ? A.: Exactly. In theory we say “Pay.” Buit in practice we say “ Cancel.” Q.: How r will it end ? A.: In cancellation. The economic forces opposing payment are too powerful.