MR SNOWDEN AND WAR DEBTS

Hokitika Guardian, 20 August 1929, Page 7

MR SNOWDEN AND WAR DEBTS

THE BALJOUR NOTE. The deliberations of the Reparation Conference in Paris show once ' ioiv (he inherent difficulties of settling this problem on . terms which will be mutually satisfactory to all parties, and which at the same time will rove in operation to he a workable scheme, Mr Philip Snowden said in an article in the Manchester Guard ian. All the subsequent trouble aibout reparations and interallied debts has been due to the failure of the Peace Conference of 1919 to face this question in the spirit of reconciliation and with an understanding of the serious.' economic consequences which would result from any attempt 1o transfer huge sums across 'economic and financial frontiers.

If the. statesmanlike policy of \yiping off all debts, and all claims to reparations had been adopted in 1919 Europe would lpivc been saved from the economic chaos in which she was involved for years after the end .>f the war. But that policy was not adopted, and this problem of reparations and debts has ever since poisoned the economic life of Europe and embittered the relations between all the countries, both debtor and creditor alike. .

\ # ' The two questions—German reparations and interallied .debts are inseparably connected. Though it was announced when the present Expert Committee was set up that it was not to consider The two questions but to confine itself to assessing Germany’s capacity to pay reparations, it was soon found that the two problems could not be separated. The European countries who are large debtors to America and Great Britain look to German reparations to get the money to pay their creditors. Ift is true that they have not expressed any willingness to limit their claims on German leparations to the sums they owe their British and American creditors under, the debt agreements which have 'been made, but it is reasonable to suppose that they might 'agree to a pari-passu reduction tof their claims on German Reparations in the event of a further reduction of the claims of their creditors, It would indeed be an indefensible attitude for France, Italy, and Belgium to'share in German rennrntions if Britain and America had forgiven them their debts and had themselves abandoned all claims of German reparations. America declined to do so. She has secured from Great Britain a. funding of the British debt to her which will exact a total payment spread over 62 years of £2,200,000,000 on the original debt of £900,000,000. America has agreements with France and Italy, the former not having been- ratified, which will ultimately require about £21,000,003 of annuities. America has claims on her allies in the war for which she is demanding annuities which will ultimately rise to about £64,000,000 a year.

AMERICA'S SHARE OF REPARATIONS.

It follows, therefore, that if Ger man reparations continue to be paid the great hulk of the proceeds will go to America. It is a strange outcome of the professions with which America entered the war— ( 'No indemnities aiul no reparatoins” —that she should now he maintaining a position which gives her the first and largest claim on German reparations. The Balfour Note suggested an all round cancellation of defats, bui.-, failing a general acceptance of time proposal, it declared that in no circumstances would Britain accept from her debtors more than was need ed to pay her debt to America. Acting on the latter declaration, Britain has made debt agreements with France, Italy, Rumania. Portugal, and one or two other, of her debtors bv which she has agreed to scale down their debts to a comparatively sum l ! amount. Great Britain is to receive from her debtors under these agreements—on the original loans of £1 330.090,003—a total sum spread over 62 years which is far less than half of the amount of the debt. Contrast this with the terras of the AnotloAmerican Debt Agreement, which, as has been mentioned already, exacts from Britain the whole of the sum' originally borrowed and £1,300..000.000 of interest in addition. There is an understood but not explicit condition in the debt settle rpents which Britain has made with her debtors—that if they conclude agreements with '|their other civjlitors on terms more generous than with Britain, then their payments to us may be proportionately raised. Ther° is not, however, any likelihood of this understanding coming info effect, although the French and Ital ian agreements with America require larger repayments of the original debt when spread over the whole period.

THE BRITI&Ii BURDEN. Tlio settlements wliicli Great Britain has made are very unfavourable to her. In ma|(ing these settlements Britain lias been Hampered by the obligation of. the Balfour Note. This Note was a. heap g"fite cffered in the hope that its generosity would appeal to the magnanimity of the American Government. It failed; hut Ul9 obligation remained, and Britain has had to make the sacrifices and her debtors liiive reaped the benefit. The British debt to America was incurred solely for her allies. In addition 1.0

the sum she borrowed from America to hand over to these allies she borrowed from British nationals a further £1,030,000,000, and this is part of her internal war debt on which she is paying £50,000,000 a year in interest. The amount which Britain has to pay to America reaches £38,000,000 a/ year. Under Britain's agreements with hop debtors they have to pay abort £20,000,000 a year so that- il all the debt agreements stand Britain will be burdened for 60 years with an excess joavincnt 01 her internal debt of £80,000,000 a year.

But the first proposal of the BO four Note—namely, all-round cancellation of debts—still stands, and Britain will accept it when all the other debtor and creditor countries arc ready to do the same.