POST-WAR TROUBLES.

Waikato Times, Volume 111, Issue 18618, 22 April 1932, Page 5

POST-WAR TROUBLES.

ECONOMIC NATIONALISM. THE WAR DEBTS QUESTION. AN ABSORBING LECTURE. The influence of economic nationalism and its dire effects since the war were dealt with by Mr F. B. Stephens, M.A., B. Comm., of Auckland, at the second lecture of the Workers’ Educational Association course on "Financial Policy and the Crisis ” last evening. There was a large attendance. Mr Stephens suggested that this important factor in our present troubles was one that could not be dealt with directly by economic legislation or even financial policy. The economic disclooations and adjustments of the war, and the realisation of several nationalist movements In new nations recognised by the Treaty of Versailles had strengthened the movement towards economic self-suf-ficiency. Tills idea, originally a wartime expedient') had been carried over into civilian life. The result was the erection of a multiplicity of trade barriers and of high tariff walls which severed age-long trade connections. The idea behind this whole movement was one of national self-aggrandise-ment and the lecturer suggested that the same idea was influential in the movement towards Imperial preference.

Policy of France. One of the major causes of economic disturbance since the war, was the position and policy of France, for her aim seemed to be not so much economic co-operation as the domination of Europe, and the political and economic subservience of Germany, continued Mr Stephens, trance today was virtually in a position of financial control of Europe. The developments during the war had brought about a reversal of previous conditions, the United States for instance becoming a great creditor nation, and trade had to be re-aligned to these changed relations. The decline in profits from overseas investments had markedly affected the balance of payments of Britain. This was emphasised by the slump in shipping. The burden of fixed charges in terms of interest payments had become crushing in the case of many countries; Brazil and Chile had defaulted, Australia was in serious difficulties, and New Zealand possibly in more serious difficulties. The world was faced with the prospect of general default in fixed interest payments. Germany In Impossible Position. The Treaty of Versailles had placed Germany in an impossible position. Despite successive reductions and arrangements in regard to reparations, payments. It was impossible for Germany to meet the burden. The only way to make payment was by increasing exports and this was hampered by the imposition of tarriffs against her goods. Hence on the one hand, the creditor nations said that Germany must pay and on the other that she could not pay in, the only way open to her. To meet her problem of selling exports over tariff barriers, Germany had been forced to nationalise her industry, and to reduce wages and the standard of living. Unemployment had followed on this course. The United States and Britain had lent Germany money which was used partly to pay reparations, thus creating a vicious financial circle. With the onset of the crisis, shortterm loans were recalled to the United Stales and to counteract French policy Great Britain stepped into the breach as a source of credit to sustain Germany. The strength of the British banks was, however, based on money from the Unitdd States and France held in the London market on shortterm loan. With the recall of funds to the United Slates and a shortage of external credit resources Britain had either to ship gold or to mobilise and sell securities. She chose to ship gold, but endeavoured to check this by borrowing from the United States and France. In the latter case assistance was extended only on condition that gold in the vaults of the Bank of England was earmarked to cover it. The conditions of the lenders in regard lo economy in public expenditure had forced on a political crisis and a change of Government but It was still impossible for Britain to continue to maintain the gold standard. The Dilemma. So far the United States had refused to recognise the question of war debts as being tied up with that of reparations. For the nations ot Europe, however, these questions were tied together and Britain had endeavour! I to have them recognised as such ever since the Balfour declaration. Reparations payments could not be met without a continuance of lending to Germany. This, however, would imply the buying up of Germany and ultimately of Europe by the United States. On the’ other hand, to cancel reparations would leave Germany the most lightly taxed country in the world, would add to the tax burden of her creditors, and would leave her in a position to undersell the world. This was tiie dilemma that confronted us. An able and illuminating address was followed by a vigorous discussion.