ALLIES’ DEBTS AND REPARATION.

Taranaki Daily News, 5 April 1921, Page 4

ALLIES’ DEBTS AND REPARATION.

The second point upon which Mr. Goodenough laid emphasis was the need for taking a broad business View in the matter of the debts owing by our Allies, which amounted on March 31st, 1920, to £1,731,100,000. Apart from such payments as might be effected in gold, foreign securities, etc., this huge sum can only be repaid from the surplus of exportable production remaining, after providing for the proper subsistence of the population concerned and the adequate maintenance of their productive machinery. Any attempt to exact payment, in excess of this surplus, would, by reducing the efficiency of the working population and of their productive machinery, reduce the capacity of the debtor country to pay. It would also prevent that country from returning to full productivity and prosperity, and so greatly prejudice our own trading position and our hopes for the futur 1 Quite apart from questions of equity and friendship, therefore, Mr. Goodenough suggests that “as a matter of business only, it might pay us to make concessions in respect of debts owing to us by the Allied Governments provided we do not thereby prejudice our own ability to pay.” In the matter of reparation payments, there is the same need for a broad outlook. Just as the Allies can only repay their foreign debts out of surplus' production, so is this the only method 'by which Germany can meet the jssst demands made upon her. Any attempt to force payments such as would involve a lowering of the vitality of the German population, or retard the reinstatement of Germany’s full productive capacity, will reduce her ability to pay'. As the productive capacity of Germany increases,.her ability to pay without drawing on capital requirements or degrading labor will also increase, and it follows, in Mr. Goodenough’s words, that “much will depend upon the terms and conditions of the final settlement of the Peace Treaty, the amount of the indemnity, and the method and time of payment..” Upon a broad outlook being adopted. with regard to these three topics—assistance to distressed countries, war debts and indemnity payments —will, as Mr. Goodenough stated in the passage already quoted, largely depend the rapidity of Britain’s recovery, because her prosperity depends to a I very considerable extent upon the

prosperity of Europe, states the Review. There are, however, other factors of primary importanceFor example, the falling away in the value of British exports, results not only from a lack of foreign purchasing power, but also from th-- fact that overseas customers are not willing to purchase at present high prices. In this connection, Mr. Goodenough said: “Our ability to compete depends upon the vital question of the relation of wages and efficiency to production. My feeling upon this matter is one of confidence, and there . seems good ground for considering that • the atmosphere is hopeful. 1 gather that in a .number of factories the output per worker per hour has increased during the last three or four months, resulting in higher wages for the operator, and lower cost of production for the manufacturer. There is also evidence that a number of trade ■unions are beginning to realise that high wages and low efficiency, in the long run re-act on the worked’, as the resulting high level of prices restricts available markets and leads to unemployment, besides absorbing an undue proportion of capital. If prices are to be on a lower level, and conditions of living are to be cheaper, wages will also have to come down but any step towards reduction in wages should come from labor; should the suggestion come from the employer it would be misunderstood. There is evidence that certain unions agree with this view, for an application was received from one union in the Midlands, whose members during the war ihad earned abnormal wages, that more men should be employed under modified conditions, and an agreement was reached with results favorable to employer and employed. The employer would be wise to take labor into his confidence and explain the economic conditions existing throughout the world.”