The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, FEBRUARY 17, 1927.

Hokitika Guardian, 17 February 1927, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, FEBRUARY 17, 1927.

AMERICA AND THE WAR DEiBTS. A document which deserves more than passing notice htfc been issued by the Faculty of Political Science of Columbia University calling for a reconsideration by America on the whole question of war debt agreements and reparations. The President of the University says that the Faculty represents men in actual touch with every phase of practical life, including finance, industry, commerce and legislation. It can be admitted that the statement shows a complete understanding of the position, and might he regarded as written from the standpoint of the debtors rather than the creditors, while it shows a clear appreciation of the peculiar position of Great- Britain in these matters. Briefly, it constitutes a strong criticism of the war debt agreements. and the signatories are particularly severe in their condemnation of the “capacity to pay” principle upon which the settlements are based. A picture is drawn of the position, in which America might- have been ha 4

not she lent money to tile European Allies, not wholly for the prosecution of the war. but in part also for the purpose of feeding and clothing civilian populations, and sometimes to provide permanent improvements, for some of the loans were made alter the conclusion of the armistice. It is recalled that the United States soon abandoned the attempt to collect the full amount called for by I lie original debt contracts. According to the Act of Congress of February, 1922, I lie Allies were to pay all debts in full, bill, the rate of interest uns reduced to

per cent. The verv first deld neguf intions showed that a still further reduction was necessary, and “capacity to pay” became the basis of subsequent negotiations. According to the Secretary of the Treasury, the cash values camelled in the settlements with Great Britain, Italy, Belgium and in that offered to France, amounted to L‘l 097,800,000, meaning that the United States is now cancelling about one-half the aggregate sums represented by the principal and interest of the original debts. According to the document issued by the Faculty of Political Science of Columbia University, this partial eancellaton was regarded by the debtor nations as not touching the hear! <> the issue. They contend that they should not in fairness be required to pay advances that were expended for America’s Benefit as well as their own at a- time when money was the only thing that tlm United States could contribute. For over a year after America declared war European troops almost alone hold the enemy in check. That was tlie critical period in which Germany, freed on the East, brought the whole weight of her power to break the Western front. Tf during this supreme crisis the Allies bad spar-

ed lives, or if America had stinted supplies, the war would have been lost for America as well as for her Continental associates. This is the opinion expressed by a body of professors, who, it would seem, tend to exaggerate the extent to which American debtors have protested against the payment of war debts. Such a protest has cortainlv not lieen put forward officially by Great Britain. Reference is made in this important document to the special reason for moderation in America’s claims for repayment from Great Britain, arising out of the loans the latter was making to her Continental Allies, also mainly to permit of a more vigorous prosecution of the war and to her declared willingness to forego repayment from them in exact proportion to the extent that America relaxed her demand for repayment from Groat Britain. The “capacity to pay” principle is criticised mainly oir the ground that, while a judgment can be formed of the past resources of debtor countries, there can be no

certainty as to what the capacity of the same nations will be during the next sixty-two years, the period fixed for the repayment of Ibis country’s debts. In this connection attention is drawn to the enormous strides made by industrial Germany in the last half century. Nations to-day are changing their relative positions even more rapidly than in the past. How, then, it is asked, can there be any degree of certainty in the estimates of fntiue capacity to pay? It is surely unjust t ) fix the burden of future generations on the basis of guesswork. This injustice, it is contended, is all the more evident when comparison is made of the various

settlements, and the wide discrepancies in liberality are noted. These professors of Columbia contend that, in tbe case of nations hound so closely and for so long to carry out the agreements which seem to them unjust, this dissatisfaction may easily wreck the plans for world order and peace according to which Europe is rebuilding its shattered economic fabric. As tbe American settlements are part and parcel of a whole network of settlements between the other Powers, it is clear that the whole matter should be re-examined on a basis not of immediate expediency, but of justice and of generous intention that would give no reasonable ground for misunderstanding. These views are put forward not by Great Britain or France or Italy, but by Columbia University. Our attitude is represented by the famous Balfopr Note, and from this we have not

varied in any material degree since that document was published. Britain will not take from her Allies or from Germany a penny more than Britain has so pay America. If America chooses to reduce Britain's debt—Britain has not asked her to—then if will he all the better for certain C mtinontal .nations. AVhcn the settlement of war debts was first discussed in earnest, Britain owed America roughly £1.000,000,000 and Europe owed Britain iust about double that sum. while, but for the- necessity of lending to France. Belgium, Ttaly and others, it would not have been necessary for Britain, to have borrowed from America. One aspect of the question, according to this American document, cannot he ignored. It is asked if any thoughtful American can view with indifference the growing odium with which his country is coming to be regarded by Europe. Evidence is accumulating. it is said, that American insistence upon debt payment will cause the hatreds which European countries are able to allay among themselves to be concentrated squarely against the United States. Already international trusts are being organised to compote witli American industries, and already it is being pointed out that the reparation payments which threaten to hold Germany in financial bondage for two or three generations are necessary to permit the Allies to pay their war debts. As to this, it would he interesting to learn if the fear of adverse effects to America through debt payments. especially in regard to her foreign trade, is the real cause of this attempt to re-open the question. At

present the point is immaterial, for while Congress is elected by people far removed from the cent res of thought, who are not representative of American opinion upon social, liimneinl ami political questions, there F little prospect of anything Icing done in the direction indicated. If ii became a political question in the Elates ii. would he different, hut it is unlikely that the matter will he seriously taken up in the near future bv the supposed repre. sonfatives of the people in the Legislnt ure.