WAR DEBTS.

Press, Volume LXVIII, Issue 20488, 5 March 1932, Page 17

WAR DEBTS.

OFFICIAL BRITISH NOTE. RELEASE OF GOLD HOARDS. (raoH on* own corebspondent.) LONDON, January 21. A strong and significant hint of British policy concerning reparations and war debts is conveyed in the observations of the British Government on the report submitted by the economic experts to the Commission of Enquiry for European Union last August. The British Note, which was issued by the League of Nations Secretariat, states that apart from the underlying cause of the present ■crisis, it is the conviction of his Majesty's Government that a satisfactory settlement of the question of inter-governmental debts is an essential condition for the revival of confidence which would restore the normal movement of capital, and the achievement of such a settlement is the most important contribution which can be made by the Governments concerned at the present time towards a restoration of normal prosperity throughout the world. The British Government is in entire agreement with the experts'- view that ''a movement of capital from countries having credit balances to markets showing a deficit is an essential preliminary condition of European reconstruction." The drastic reduction in the volume of foreign lending is, in common with other symptoms of the crisis, due to profound disturbance of the economic life of the world caused by the unprecedented fall in the price level, which has made it difficult or impossible for debtors to honour their obligations. This fundamental cause of the crisis can, in the opinion of the British Government, "be remedied only by appropriate action on the part of those countries which have accumulated abnormal supplies of gold." With regard to international trade policy, the Government notes that, according to the experts, "the ultimate goal must be the widest possible collaboration of the nations of Europe in the sense of making Europe a single market for the products of any and every country of it." This statement is taken to envisage Customs unions and all possible forma of rapprochement as means of attaining the ultimate object The British Government hereupon observes that complete Customs union must necessarily constitute an exception from the most favoured nation clause, and in many of the British commercial treaties with foreign countries provision for this exception has already been made. Customs Unions. In so far as other rapprochamenti not amounting to complete Customs union, such as, for example, regional tariff preferences, are contemplated, "his Majesty's (government remains of the view . . . that it would cause conflicts with the whole spirit of the most favoured, nation clause if it were opeh to any countries to conclude arrangements with each other which they trnl not extend to other countries. "Such minor exceptions to this principle as have been recognised in the past . . . do not constitute a justification for any group of countries to set up such arrangements in future." The Government entertains considerable doubt whether the safeguards suggested can -be regarded as overoommg the objections. The German Government, .in its Note, also published to-day, complains that various European countries have taken "measures which constitute a hindrance to trade and which are the exact opposite of thosd recommended by the economic experts' report." Unless a stop is put to this process tha present crisis will, the Note .declares, become much worse.