WELLINGTON NEWS

Hokitika Guardian, 26 August 1931, Page 7

WELLINGTON NEWS

WAR, DEBT OBLIGATIONS

(Special Correspondent)

WELLINGTON, August 24. When President Hoover launched his moratorium scheme, which has since been accepted by the Powers interested, it was a foregone conclusion that the whole problem of reparations and war debts would be forced to the front. A debt contracted must be discharged in some way unless the creditor decides to forego payment. The war or inter-Governmental debts are on a different plane to commercial debts, the latter do not come into the picture, for no nation or Government would tolerate repudiation of purely commercial obligations. The war debts were funded at a time when the price level was high, it is now from 30 to 50 per cent lower,' which means that the debt is increased for the debtor has to sell more goods or render greater services by 30 to 50 per cent, to discharge his obligation and on that ground alone the debts are entitled to revision and to scaling down. The economics of the United States make the position of the debtor intolerable. Tile European debtor must pay his American creditor in dollars, he ' must buy dollars with his goods in some way or other and if lie cannot obtain all the dollars lie needs by the sale of his goods, he must find gold, the common currency of th e goldstandard countries, for whatever balance is necessary. The position was aptly described by

Sir Allen Anderson at the conference* in Washington of the International Chamber of Commerce. He said that nations had excited each other to more and more competition until now there was scarcely a trade or commodity in which rival nations were not compet-

ing to secure business for their own producers by restraining the sales oi other nationals. In the race to get rich did they not forget that to make

business someone must buy and be able to pay; that trade was barter; that civilised life was only possible because each nation was willing not alone to he employed, hut to’employ, not only to pay debts, but to receive payments. Contrary to pre-war conditions the

"Capacity to pay” that was demanded of debtor nations no longer its international economic counterpart in a capacity to he paid by "Creditor Countries.” The United States has insisted upon the payment of the war debts, and as Mr A. H. Wiggins, of the Chase National Bank of New York, has pointed out, the most serious ot the adverse factors affecting business in tile United States is the inability of foreign countries to obtain dollars in amount sufficient both to make interest and amortisation payments on their debts aiicl to buy AlliericiUi exports iri adequate volume. I'll confirmation, of this it may tie stated that the foreign trade of the United States has been falling precipitated!,y this year, As compared with the first three months of 1029, the peak period, total exports during the first quarter of this declined by 50 per cent in value, and about 36 per cent in quantity. "The prospect of an immediate revival in our genera] export trade (writes the Standard Statistics Company of New York) is exceedingly remote.

The tendency towards circumventing effect of the most favoured nation clause of the post-war treaties portends the probable removal of a stimulate which aided in the post-war export boom. It is an unescapahle conclusion that a sharp and sustained improve ment in exports will be contingent upon an admixture of increased Pans, a mitigation of the war debt, a lowering of tariff and for further reductions in selling prices. The problem of scaling down on fb< war debts or conceding them altogether is receiving support in influential ouarters in the United States, and that President Hoover is silent on the natter can he understood. His iob as President of the Republic will come up for review next year, and he is not enrolls to make a false movement which easily may he the case at the present juncture.

Tn any case we can be morally certain that now [he campaign of rano°llntion of war debts has been ■start 0 '- 1 it will gain in momentum and the Americans, who are as easily swaved bv the big drum.as h v the hie advertisement. will push the campaign to snr°°s.s. The cancellation, or even reduction of war cl°bts will he the fi rK t major movement making for the return of ytmcn'—Hv.