The Waikato Times ‘With whloh Is Incorporated The Waikato Argus. THURSDAY, NOVEMBER 17, 1922, AMERICAN WAR DEBTS.

Waikato Times, Volume 112, Issue 18795, 17 November 1932, Page 6

The Waikato Times ‘With whloh Is Incorporated The Waikato Argus. THURSDAY, NOVEMBER 17, 1922, AMERICAN WAR DEBTS.

The question of payment of war debts to the United States has been brought to the fore again. On December 15 the next payment Is due, and a moratorium has been requested by Britain until a discussion oan take place. The election is now over, so that there Is no longer the fear of throwing the question into the arena of election campaigning. Under the American Constitution Mr Roosevelt does not take office until March 4, but Mr Hoover has, very properly, called him into oonsultation. The situation is difficult. Tho President, of to-day and the President that is to be can combine to refuse any allowance or concession, and this would lead automatically to the reopening of German reparations. Germany will certainly not pay reparations, and in view of her refusal European countries, with the possible exception of Britain, will not pay war debts. Thus America will not obtain payment, while default on the part of leading nations will have delivered a staggering blow to credit and confidence, which are already shaken to an extent that makes recovery from depression difficult. But If the Presidents agree to some more enlightened action the difficulties remain. Mr Roosevelt, in his campaign, declared against any revision or cancellation of debt, and can scarcely go back on his declaration at once. Mr Hoover, who has had longer experience, knows that there must be revision, but any recommendation he might make to a Democratic Congress would receive little attention. The Senate lias already passed a resolution that no change is to be made in war debts, and the new Democratic senators who have been elected are not likely to alter this resolution, for they will follow Mr Roosevelt's line. Meanwhile a committee of industrial, financial and law experts have made an exhaustive research on the war debts situation, and recommend that a revision should be made in such a manner as would best help American trade. Tho committee Is one which should carry weight, but it is doubtful if it will. There is a request by Britain that America should permit war debts to lie placed on the agenda of the World Economic Congress to be held early next year, and indeed its exclusion seems ridiculous, but it is by no means certain whether the subject, which is in tiie minds of all, will be allowed to be mentioned. The one good tiling to lie said for the depression is Dial it, is teaching some people common sense. Unfortunately they are 100 few lo count at election times. Some people, too few in number, are. learning that I hey can only get payment for war debts in Urn shape of goods. To receive these goods would interfere with the vested interests of protected industries to supply the American markets, and if they can make their opposition good the war debts will not be paid. But what is true of war debts is equally true of exports, which are, in point nf money, a much larger matter. There is an indication that America will use the reduction of war debts

as a bargaining counter to secure lower tariffs against her exports. That would he all right for a time, but America would eventually want to be paid for her exports, and it would be found impossible to do it. She will not take goods, and there is not enough gold in the world to-day, and as trade and population increase the gold will be still further from being adequate. Prior to the war America was a debtor country, with a balance of payments to make abroad. A protective tariff may have injured her total trade, but it at least gave her a trade balance with which to meet her commitments. Now she has become a creditor country, with war debts and interest on loans to receive from abroad, and a new procedure is necessary of which she has to learn the technique. It will be difficult, for the vested interests behind protection are very strong. The only method by which America could hope to do a temporary export trade would be by foreign loans, but there is no disposition in this direction, as some countries have already defaulted and others are likely to do so.

War debts are an aggravated form of an international problem—the exchange of goods and the method of payment for same. War debts represent no wealth of any kind in existence to-day; they are a dead weight, which must be repaid, when prices have fallen 50 per cent. For every £i borrowed £2 must be repaid. The money was borrowed when both borrower and lender were engaged in a joint war effort. It is only fair to say that America has remitted 70 per cent, of the indebtedness of France and Italy. To Britain she has remitted 18 per cent. She insisted that each of the nations should make their application separately, and though this was done for American reasons it is possible that Britain may be the ultimate gainer by the method. It is possible, too, that when all better reasons for disarmament have failed the fact that war brings the chief nations of Europe to sue humbly for remission of debts may prove to be effective.