Britain's Enormous Burden

Sun (Auckland), Volume II, Issue 413, 23 July 1928, Page 12

Britain's Enormous Burden

WAR-DEBT PAYMENTS TO U.S.A

What Could be Done With Money

EVERY year for 60 years Britain will pay to the United States a sum equivalent to two-thirds the cost of the whole British Navy, a sum nearly equal to the total State expenditure on education, and one which exceeds the total of the pre-war deht. This'annual sum represents a total of more than the profits of Britain’s coal mines and mercantile marine put together.

“With these amounts,” writes Mr. J. M Keynes, the well-known economist, in the American “New Republic,” “we could endow and splendidly house every month for 60 years one new university, one new hospital, one institute of research, etc., etc. With an equal sacrifice over an equal period, we could abolish slums and rehouse in comfort the half of our population now inadequately sheltered. “It fell to my lot during the war to be the official draftsman in the British Treasury of all the financial agreements with the Allies and with the United States out of which this situation has arisen,” he continues. “I was intimately familiar day by day with the reasons' and motives which governed the character of the financial arrangements which were made. “In the light of the memories of those days I continue to hope in due course, and in her own time, America will tell us that she has not spoken her last word.”

Empire) will be about £22,000,000. Mr. Churchill has estimated that in the current financial year 1928-29 our payments out will be £32,800,000 and our total receipts nearly £32,000,000. “It is not probable that these receipts will be realised in full. But it will enable us to summarise the situation, if we assume for the moment that they are so realised. In this case each Ally would be able to pay the United States out of its receipts from Germany. When the Allied debt payments to the United States will have reached their maximum amount under the existing settlements, they will total £83,000,000 per annum (the average amount payable annually over the whole period works out at a total of £61,000,000). “If we add to this the direct American share in German reparations the United States will be receiving £78,000,000 annually out of the £117,000,000 receivable by the Allies from Germany, or 67 percent., plus £10,000,000 from Italy not covered by reparations; or, if we take the average payments, in lieu of the maximum, the United States will be receiving £66,000,000 out of £117,000,000. or 57 per cent. In either case, Great Britain would receive. on balance, nothing. U.S.A. Getting All “It follows from the above that, if the maximum Dawes annuities were to be reduced by one-third—which, in the opinion of many of us, is highly probable—the United States will, by the time that the Allied payments to her have reached their full figure, be the sole beneficiary. “In this event, the net result of all the war-debt settlements would be to leave the United States—on balance, and off-set-ting receipts against payments—receiving from Germany £74,000,000 per annum, and no one else getting anything.

It is this personal knowledge of the international debts problem on the part of Mr. Keynes which makes his contribution to the “New Republic” on the British indebtedness so interesting to readers across the Atlantic and to the people of America. “We are now receiving from our Allies and from Germany an important contribution as an offset to what we ourselves pay to the United States,” he goes on. “It will be interesting to establish a rough bal-ance-sheet. Would Be “All Square” “In 1928 we shall receive from our Allies £12,500,000 and pay the United States £33,200,000, and by 1933 these figures will have risen to £17,700,000 and £37,800,000. “Thus, apart from our share of German reparations, -we shall be paying annually in respect of war debts about £20,000,000 more than we receive. Now, if'the Dawes annuities are paid by Germany in full we shall come out just about ‘all square.’ “For the normal Dawes annuity, when it has reached its full figure (less the service of German loans, etc.), will amount to £117,000,000, of which Great Britain’s share (excluding the receipts of other parts of the

“I have put the calculation in this form because it renders it very clear why, in the minds of the Allies, the question of further relief to Germany is intimately bound up with the question of their own obligations to the United States. The official American

attitude that there is no connection between the two is a very hollow pretence. The resettlement of the Dawes scheme is one to which the United States must be, in one way or another, a party. But —let me add — any concession she may make will go entirely to the relief of Germany and the European Allies, Great Britain adhering to her principle of receiving nothing on balance. “If all, or nearly all, of what Germany pays for reparations has to be used, not to repair the damage done, but to repay the United States for the financial part which she played in the common struggle, many will feel that this is not an outcome tolerable to the sentiments of mankind or in reasonable accord with the spoken professions of Americans when they entered the war or afterwards. Yet it is a delicate matter, however keenly the public may feel for any Englishman in authority to take the initiative in saying such things in an official way.

“Obviously, Great Britain must pay what she has covenanted to pay, and any proposal, if there is to be one, must come from the United States.”