Evening Post. MONDAY, NOVEMBER 21,1932. READJUSTMENT OF WAR DEBTS

Evening Post, Volume CXIV, Issue 123, 21 November 1932, Page 8

Evening Post. MONDAY, NOVEMBER 21,1932. READJUSTMENT OF WAR DEBTS

Commenting on Professor Nicholas Murray Butler's description of America's delays in the readjustment of, the war debts as "appalling," the "New York Evening Post" of the 23rd July said:— -

- We_ do not consider it appalling. America is doing precisely what Prance did, and Germany did, and England did; that is, she is delaying debt action until after her national elections.

The article admitted that the public opinion of the country as a whole was not yet ready for the debt readjustment which its Eastern seaboard regarded as inevitable, but quoted with approval the opinion expressed by a New York banker before Britain had signed up at Washington.

"There are," he said, "three courses eventually open to us: Collection, Cancellation, Compromise." As we see it now it will probably be Compromise, pretty_ close to Cancellation. . The country might.as well caH off its Garners and its Hurleys and make up its mind to that.. .-'■■ / ' . .. ,

But the Garners and the Hurleys were not called off. Their respective parties were committed with equal emphasis by their National Conventions to exact full payment of the war debts, and if Mr. F. D. Roosevelt, the incoming President, were in the least inclined to relent, Vice-President John Garner will be at his elbow to ask the reason why. ' - It was -in strict accordance with the. slow pace of the United States in international affairs that the great lea&.-which President Hoover- ; had given to the world last year by' his war-debt moratorium, proposal, and which had been followed by all the other nations concerned, did not come before Congress for the necessary ratification till nearly a half of the period covered by the proposal had expired.. The, proposal had been issued on the 20th : June, 1931, and when, on the 10th December* in a Message to Congress he urged the prompt ratification of the moratorium there was a suggestion of irony to foreign ears in the request for the prompt treatment of a. matter so long -delayed. - But it is certain that nothing of the kind was intended, for the -President himself could have summoned"a special session at an earlier date if/hehad['so* desired./By the 10th December, at any rate, the matter had become urgent, since the 15th was the due date of the British and several otlier half-yearly instalments. President' Hoover's neryousness lest his statesmanlike 'action should be misunderstood or misrepresented was prbved by the care with which -he explained that his proposal implied no derogation from the hundfed-per-cent. Americapism of his attitude to the war debts:

I do not approve, even in any remote sense, ho said, Of the cancellation of debts to the- United States.^ World'confidence would not be enhanced by any such action. Reparations are a wholly European problem with which ivo have no relations.- ' " ■' '"■ /

Nothing could have been more emphatic, or, not to put -too' fine a point upon it, more absurd. The United States, as the-creditor nation, of the; world, has "no relations" at all* and therefore, we may say, none "even in any remote sense" with a problem probably .involving for its European debtors the alternatives of peace and solvency on the one side and, war and bankruptcy on the other! Yet the President was wise to put himself as fully "on side" as he possibly could with the patriotism of Congress, for even on the ratification of/the moratorium, which by that time had almost ratified itself, no fewer than 100 inembersof trie House of Representatives- voted against him. The' opposition of some of hundred was probably inspired by the common sense and good feeling with which, in the same. Message; he qualified the sweeping' negative that we have quoted; "

I am suggesting- to the American people,.he_ said, that they bo -wise creditors in their own interest and bo good neighbours. . . . As the basis of the settlement of debts to the "United States was the capacity of the debtor to pay, we ' should be consistent with our own policies if- we take % into account the abnormal situation now existing .in the world.

It was with the same logic arid in the" same spirit that the Special Advisory Committee, a week or two later, framed its report, in which the American, representative concurred, on the revision oif the Young Plan.: That report described the troubles of Germany as."largely responsible for. the- growing 'financial paralysis of the. world," and; declared that "the economic interdependence" of the various countries of the world to-day needs, no further. proof." But Mr. Hoover'; was not prepared to carry his common-sense as far as that. The German problem was no affair of his, and so far from the elections haying produced the sobering effect expected by our. namesake of New York, they seem at. present to have narrowed the outlook alike of President, politicians, and people. Yet the plea" which President Ploover was urging in-December for the moratorium' that he had proposed in June applies with far greater force to the present request of Britain and France for an extension of the moratorium until the whole matter has been reviewed. If an uneon-

ditional moratorium was justified last year, by "the abnormal situation existing in the world," how can the refusal.of a moratorium pending negotiations be justified when the situation has become far more abnormal than it was then? And if "the capacity of the debtor to pay" on which the settlements were based was. a relevant consideration' a year ago, with what show of reason or'justice can it be peremptorily excluded now? The point was candidly and forcibly stated by Mr. Andrew Mellon, "then Secretary to the Treasury, in' a statement published on the 11th December, the clay after the President's Message. '.'■-.

Take the case of Great Britain, our best customer, which even in the depression year of 1930 took 678,000,000 dollars worth of American agricultural and industrial products. The economic and financial changes of the past year have immensely increased the 'burden of her payments to us. ... All debts to Great Britain from foreign Governments, he said, except reparations payments—which are not being collected at all this year, and are not likely to be collected in full next year—are payable in sterling, but her debt to us is payable in gold dollars . .' . . with, the pound at par the British Treasury needs £32,800,000 in order to pay us 159,500,0X10 > dollars. "With sterling at the rate at which it was sold on 10th December it would take £48,100,000, or an increase of £15,300,000, or 47 per cent. In other words, the burden on the British taxpayers would be increased by almost half.

How the position has since changed is explained by another of Britain's powerful American friends in a message which appears in another column. ••■'.-•■

Measured by wiat they could buy with the money in their own. countries/says the' "New York Times," the real cost of war,.debts paymentsi has increased by 87 per cent, in the case of the British taxpayer and decreased by 30 per cent, in the case of the French taxpayer ' since the funding agreements were made, while- the real value of the payments to our Government has risen, by 5i per cent. ,

Britain is thus asked to pay nearly twice what she expected, to pay while America will receive over 50 per cent, more than she expected to get! It is impossible to.suppose that'either the President or, the President-elect would care to insist upon holding' Britain to such a, bargain, but the division of power during the interregnum and' the hostility of Congress seem certain to' make- redress impossible before the next payments fall due.