DEBT PAYMENT

Hokitika Guardian, 13 December 1932, Page 5

DEBT PAYMENT

AMERICAN REPLY CONDITIONAL PAYMENT ILLEGAL

(United Press Association —By Electric

Telegrapn—Copyright. )

WASHINGTON, December 11

The British debt note stated tnat payment would be made in gold, but that this payment was not to be regarded as a resumption or the payments on the scale based before the Hoover moratorium.

After several hours of a conference with Mr Ogden Mills (U.S.A.- Treasurer,' Mr H. Stimson (U.S.A. Secretary of State) handed in the United States’ reply to the Britsih Ambassador.

The reply said: The Secretary to the Treasury has no authority to accept war debt payments excetp as provided in the funding agreement. Congress holds the final decision in respect of changes a s to the inter-governmental obligations, and the acceptance of the December instalment cannot constitute any approval of, or any agreement to, any condition or declaration of policy that would be inconsistent with the terms of the agreement. The American note. added :\ It would seem'to be undesirable that” any steps be taken which by causing misunderstandings, would increase the difficulty that must be overcome in finding an ultimate solution that will be satisfactory to both nations. It is officially stated that in his note Mr Stimson took up the position than the accepting of the payments, with the conditions was illegal. He explained that Congress 'must act in any changing of the funding agreement in any respect. The speed with which the United State note was prepared is a direct indication to France as to what she must exepect if she attempts to supplement her payments with similar conditions, which is here considered to be exceedingly timely, as the French Chamber of Deputies has scheduled a debate of the payment for Monday. Mr Stimson was considerably surprised when the British Note was delivered to-day, as it had not been expected until to-morrow. Mr Stimson immediately summoned Mr Ogden Mills and several aides and they drafted the note- contents. Then they were communicated to President Hoover, who approved of them. The reply was then delivered to Sir H. Lindsay (British Ministry).

/As the nature of the British note is generally what had been expected, Mr Stimson’s quick response is- interpreted as : being a move to leave the matter entirely up to the British, with the full understanding that their conditions have been rejected and that, if payment is made, it will only be accepted as coming under the existing Agreement, ■

The Congressional reaction'- Was irn ~ mediate and favourable to Mr StimBon's policy.

The first press reports from England have indicated that Mr Stimson’s policy might fortify those who favour default, and observers here have admitted that it might create an impasse, but it is believed that the gap between the two Governments is not so wide as might appear.

It is also believed that the British note is merely laying a' groundwork for future negotiations.

During and after the conference where the American note was drafted, Mr Stimson and Mr Mills and others appeared anything but gloomy. They apparently feel that Britain has now admitted that she had the money to pay, and that whatever the conditions which she sought to attach could not stand against this.

The administration, it is noted, did not request a waiver of the 'thirty million principal.

The American note apparently wishes to clarify the legal status of the British note.

The- American note suggests that the conditions that are mentioned in it are to be construed as a simple declaration' of Britain’s future policy, which is in no way. binding on the United States, nor does it injure the legality of the existing debt funding agreement.

The U.S.A. note says: “Therefore, it is assumed that, in the conditions of payment, you are not proposing to make this payment otherwise than in accordance with the terms of the debt funding agreement; but that you are stating your views as 'to the steps which your Government may desire to propose subsequently, after a re-exam-ination of the whole problem.’’ Representative Rainey, a prominent member of the House Ways and Means Committee, declared that Mr Stimson’s answer “is eminently proper.” Senator Borah said: “The Secretary of State could not reply in any other way than to say that' the payment could be received only under the terms of. the debt funding agreement.”