AMERICAN REPLY

Hokitika Guardian, 10 December 1932, Page 5

AMERICAN REPLY

TO BRITISH NOTE

LATER REVIEW PROMISED

(British Official Wireless.)

(RUGBY, December 8.

The United States Secretary, Mr Stimson’s reply to the British note says: “Whatever part debt payments may have played in the economic history of post-war years, it is clear,“in the present conditions of world-wide depression, accompanied by a sweeping fall ix\ prices, that their weight' i s greatly increased, and that they have a very definite relationship to this prjoblem of recovery, in which the British aind American people have such a vital interest. The President of tits United States is prepared, in co-operation with' the British Government, to survey the entire , situation, and to consider what means' may be taken to bring about a restoration of the stability of currencies and Exchange, a revival in trade', and a recovery of prices.

“I welcome the suggestion for - a close examination between the United States attd Britain, of the whole subject,- in preparation for the' Internatonal 'Economic Conference, for I- believe that there are important Avenues of mutual advantage, which' sliduld he thoroughly expired. Such an examination would not imply cancellation, but in -such an examination, there would necessarily b« a consideration of other forms of tangible compensation available for the expansion of markets for the products of AmCr'cau agriculture and labour, and you will understand that- the problem of foreign debts, in the American mind, lias a very definite relationship with the problem of disarmament aind the continuous burden, ; which competitive armament imposes upon this •'Empire and the world.”

The United States Government cannot accept the implications in the British note, that loans by the United States present, in ttyeir entirety, expenditure on destruction ; -that the payments heretofore made to the Unites States have beoin largely responsible for the existing world depression, and the concentration of a large amount of gold in the United .States; and that a complete cancellation of war debts, is essential to world recovery. The' note (pays that many of the loans made befx>r the Armistice, and subtantially those made- since,-'were-not for destruction, and les s than one-third of the a mount g expended in th'e United States; by the debtor, after- she entered the war, was spent fol‘ munitions and remounts. n-.- •

jtli reaching a ifefltti-eirte-iit with debtors, the United State® Government combined the lontts ltiade during the war, and after the Armistice, including commercial credits, and funded all of those in the debt agreements, As a 'different practice prevailed in Europe, -the figures cited in the British riot,* were* not strictly comparable, POINTS OF DISAGREEMENT.

The British note seemed t 0.." overemphasise the influence which the war debt payntent® may have had in the past-on world economy. With various observation and figures presented by the British Government in that regard, the American Government is not in accord but does not desks to enter into detailed 'discussion in view of the ■"larger immediate issues. In general, it is their view that the causes of depression lay in much more potent forces than these debt transactions, and that th© total of receipts and outgoings aris. ing from the international transactions of debtor countries and thg United lState s debt payments, had been relatively minor items. The argument that payment -of these debts' drained the gold deserves of other countries to the United States, did not seem to be borne out by actual experience. Th e main fault ,in the distribution of gold supplies seemed to havie occurred between the different countries in Europe; and could not be attributed to forces originating in the United States. Replying to the statement that the initiative in devising the La'nsainne j settlement of reparation was tab/ n | with cognisance and approval of the j United States Government, it says the facts were more accurately set out by the Chancellor of the Exchepuer’s stateni/ent in July. “The proSeidings there were throughout on a hi’!? that the right course- wf>3" to seek *aT European solution without involving, the United States in the discussion.” ■After .reviewing the circumstances under which the British debt was funded, the repl v concluded ; “As to due on December 15. I appreciate the cogency of the difficulties which you present as to the transfer of these monies in the present state of foreign exchange. In the endeavour to meet this situation, 'it has ; been suggested that the President might be wi’liing to recommend, to the I acceptance, of deposits in sterling in England, to be guaranteed as to dollar value and transferred at such time as would not interfere with the stability of /exchange. This, I understand, your Government has declined in tire belief that th« existence of a large slim of sterling awaiting transfer would effect the {exchange market almost as ser'ously as the actual purchase of exchange. Accordingly, further informal suggestions have been made to your Government of the npthods of meeting these difficulties. Recognising the difficulties affecting the transfer I am confident that will willingly consider "any reasonable suggestion which will facilitate P n .V* pent on December 15.”