The Waikato Times With which is Incorporated The Waikato Argus. WEDNESDAY, AUGUST 22, 1923. U.S.A. AND EUROPE.

Waikato Times, Volume 98, Issue 15320, 22 August 1923, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. WEDNESDAY, AUGUST 22, 1923. U.S.A. AND EUROPE.

A recently received issue of the New York Times contains an article of some interest, since it deals with the question of the United States’ obligation to assist in a settlement of European difficulties as seen from an American viewpoint. The New York writer quoted has some pertinent remarks to make about international debts and their repayment, and he addresses himself to Britain and France in particular. Regarding the delay in repaying the American debt—Britain is doing this, while France is not—he refers to what he terms the “curious idea” of European nations that such repayment will upset international trade, finance, and commerce. Answering this, he points out that there was a time, and that not so verylong ago, when the boot was on the other foot, and America proved the falsity of such an idea. For fifty years after the close of the American Civil War, the U.S.A. was a debtor to Europe, and it paid -its debts without upsetting either itself Or the world. The U.S.A. in that war suffered a great loss of life and property, and yet it never heard from its European creditors any suggestion that international financial interests or motives of humanity required the cancelling of its debt. To this lie adds the opinion that, when one considers the amount of annual interest now owing from Europe lo the U.S.A., and realises the smallness of that amount in comparison with the total in recent years of actual imports and exports, and of the invisible items in Ihc financial rela-

tions of nations, it is' absurd to say that the payment of such interest would cause disaster in world trade or finance. This critic then proceeds to quote another “curious idea” which is: That the individuals' comprising a nation are to be deemed quite distinct from the nation itself in regard to the m-oral obligation to pay debts, and that, while such individuals may bo very rich, the nation may be very poor and entitled to plead poverty as an excuse for not paying up. The idea appears to prevail very largely in Europe. But, while Britain owes a very large internal debt, the bonds evidencing such debt are owned chiefly by the British themselves, and the big amount of interest paid on that debt goes into British pockets and does not leave that nation. In like manner, the enormous debt of France is owned chiefly by the French themselves', and the interest on it goes to the French themselves and does not leave France. Thus, a very largo part both of the British and the French taxes to-day go to the British and the French holders of British and French bonds' (for internal debts), and their so-called tax burdens are thus in large part returned to themselves. Obviously, ho continues, such debts due by the British to themselves' or by the French to themselves, do not make these nations as a whole either richer or poorer. It is clear also that such debts are not a valid reason, either legal or moral, for cither country not paying its debt to the United States. A nation's true wealth consists in its productive powers (including, among other things, its' productive investments in foreign countries), and its wealth is not greater or smaller because of debts it owes to its own individuals', on luxuries as well as on necessities. And, finally, leaving aside the matter of international debts, and applying the acid test as regards world trade, commerce, and financial relations, Britain, so far from being a debtor nation is to-day a creditor nation for a large amount, while France is' now also among the list of creditor nations. With regard to the gold of the world, he says, many people blame the United States for having so much gold, as if it involved some moral or international offence. The fact is that the nations of Europe have themselves put into action forces that compelled ithe gold to come to the U.S.A., under well-known laws as inexorable as the law of gravitation. They themselves sent the gold there because America is one of the few countries where gold may be used by its European owners' at its full value. It cannot be so used in most European countries, but only hoarded there. Moreover, only Europeans themselves can set in operation the economic forces needed to send gold back to Eur-ope, and the financiers and economists well know this fact, whatever politicians may say to the people.' And there is a considerable amount of gold in hoarding now in Europe, and such gold will not come out and into use until European statesmen make such coming out a possibility by allowing European owners to use it there at its full value. Further, many of the European nations do not really want a gold currency—not just yet, they say, and really not for a long time to come. They prefer inflated paper money in large amounts rather than gold in smaller amounts. They are enjoying the fever of inflation, and will continue to do so until it burns itself out in regular course. The United States thus has no power to impose a gold currency upon European nations and should not be blamed if those nations use or prefer inflated paper money. Whatever amount of truth there may or may not be in this American writer’s conclusions, the article will at all events prove a new point of view from which to regard European affairs.