WELLINGTON TOPICS

Hokitika Guardian, 13 December 1932, Page 3

WELLINGTON TOPICS

STRANGLEHOLD OF; DEBT

THE WORLD’S PREDICAMENT

(Special Correspondent).

WELLINGTON, December 8

Tile bankers and the finan.Lrs and some of the business men and a few of the politicians know wh.it is ti.e ...atier with the world at the present time. The great mass 0 f the people of the nations do not. Last night, speaking across the wireless to many constituencies, without assuming to know more himself than did his neighbours, Dr Scholefield, the Chief Parliamentary Librarian, cast a vast amount of light upon problems -w.hu h had been little more than mentioned by less efficient authorities. The stand taken by Great Britain to-day, he said, was the stand she took ten years ago. She did not want to make a penny out of war debts or out of reparations. On the contrary she was convinced it would be all the better vvere- these obligations cancelled. She would take no more from her debtors than she required to pay to her big creditor, the United States. Unfortunately for the world at large that generous far-reaching proposal was not forthwith adopted. Being a debtor nation herself Britain could riot press her proposal. A FOOL’S PARADISE.

All Britain could do for her debtors in the circumstances was unavailing towards the restoration of the world. The post-war prosperity was purely fictitious. All through the decade between 1919 and 1929 the majority of die .nations lived in a fool’s- paradise. There was no stability at all in the prosperity. Even the people of United States—a countYy which seemc d blessed with unbounded resources md wealth—realise now that they have been floating on a sea of credit which had no economic justification. Thinking men all over the vyorld now see quite clearly what British experienced financiers predicted yearn ago. Today America, without experience of oldworld troubles’ is faced with the old-vv-orid problems that have to he overcome; poverty, dissatisfaction and crime. Meanwhile Britain has renew’d iLi's suggestion to the United States that the whole scale- of inter-govern-mental debts should be revised. A few months ago the conference at Lausanne, realising That the bankruptcy of Europe was imminent, agreed to abandon the reparations payable by Germany. Tlwt, however, was merely a first step requiring further adjustments. BRITAIN’S TRIBUTE.

The British note to Washington, Dr Scholefild went on to say, was an economic document of historic importance. 1 It set forth that during the war Britain, the United States and franco together lent money to the Allied amounting to over four thousand millions. This debt to-day was one of the major causes of the worldwide depression. It was not l.lce an ordinary commercial loan, which gener_ ally, would produce something with which to repay itself. On thei contrary ,as the British Note says, “like the shells on which they were largely spent, war loans were to a large extent blown to pieces and have produced nothing to repay them.” That is stated as. the crux of the question. In the long run ordinary debts.are paid by goods and services. Britain’s war debts .have to be paid in gold and the constant drain on the gold supply has depressed commodity prices so as to. make commercial loans burdensome and to make won- loans intolerable. America- has been. refunded one thousand six hundred millions; Britain has been refunded nothing. HER SERVICE.

During the war Britain .spent two thousand four hundred millions in the United States, one thousand six hundred millions of her own money and eight hundred millions raised in America and all spent there in the purchase of goods. 'J'he efforts of Britain to repay these loans were successful enough while the world at large was pushing .through the last decade towards a collapse. Ay lien that collapse actually came Britain’s debtors were virtually bankrupt 'and Britain’s own debts became a crushing burden. Owing to tariffs and tiro demand for gold payment British exports to America have shrunk from sixty millions in 1923 to sixteen millions in the present year. At the same time American exports to Britain have shrunk from two hundred and eleven millions to eighty millions. Observers on both sides of the Atlantic now realise clearly that Britain and America both are in grave difficulties. “In order to enable the world to go round again,” said Mr Ramsay! MacDonald, “it is in the first place necesasry to free the world from the crushing war debt's.” Towards this end civilisation must strive.