The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, MAY 2nd, 1923.

Hokitika Guardian, 2 May 1923, Page 2

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, MAY 2nd, 1923.

BRITISH DEBT SETTLEMENT. It was mentioned in Saturday’s cables that Mr Goodenough, the eminent English banker, who is now in New York, had declared that the Anglo-American debt agreement was likely to lead to a settlement of the reparations problem. Reinvestment of securities in America received from England in securities offered by Germany (it was explained) would provide a solution. Apropos of this aspect, a New York banking journal of little more than a month ago, remarked:—“Any of the outstanding obligations of the United States Government will be accepted at their face value in tho British pay-

merits. The effect of this will bo to cause the payments to take that form so long as such obligations can bo purchased in the markets below par, find it will also constitute an influence for bringing them to par. Since all the outstanding obligations of the Government are bearing higher interest rates than the British bonds bear in the first period there is gain to this Government in the arrangement. Moreover, the original legislation by which the foreign loans wore authorized and the money raised clearly contemplated that payments upon the foreign debt should Ijo applied upon our domestic debt.” In commenting on the debt settlement the same paper appreciated the act of Congress in approving the settlement scheme recommended by the Ret muling Commission, and proceeded to discuss the whole arrangement in the following favorable strain:—“We expressed the opinion last month that tho settlement is as favorable as the l nited States could well desire to have it. If we were to raise any (|Ucstion about it at all it would be as to the desirability ol having payments begin while the exchanges are still in an unsettled condition, because the influence ol the payments must he to keep, them unsettled. Tho exchanges between the 1 nited States and most of the other countries are in the position Known as 'devourable” to this country; that is to say. the dollar rates above the other currencies. In valuation. ’lbis is lavorable for buying, or importing purposes, but not for selling, or exporting purposes. Bills tire pending before the Congress with important support in tho West, for largo appropriations out, of the national treasury for the purpose ol making loans to foreign governments to enable them to buy American farm products. The argument is that high exchange rates are making it difficult for foreign countries to buy hero. Lv idently there would be something incongruous in our lending to foreign countries with one hand and collecting from them with the other. An obligation upon Great Britain or any other country to make debt payments at this time means that such country or countries must enter the exchange markets at a time when as yet there is not excha.nge enough to go around and compete with people who are wanting exchange lor other purposes. This undoubtedly is the reason lor the provision in the settlement which gives Great Britain the option of postponing all payments upon the principal for three years, anti one-half of the payments of interest for live years. It gives a degree of flexibility to the arrangement, and presumably 1 " is as far as the Refunding Commission felt warranted in asking tor modifications of the Refunding Act.” Evidently the Biitii.U Commission was as alert as tho American in seeing that the terms of settlement were not onesided and that .there were some favourable clauses on the British side also.