WAR DEBTS.

Taranaki Daily News, 6 October 1922, Page 5

WAR DEBTS.

BURDEN ON GERMANY. CAN SHE PAY? BRITISH BANKER'S VIEW. By Telegraph.—Press Assn —Copyright. New York, Oct. 3. Mr. Reginald McKenna, the Londor banker, and a former Chancellor of the Exchequer, addressing the bankers’ convention, pointed out that he spoke as a banker, expressing his personal views and not in any representative character, He declared, concerning the British debt to the United States, “the prim ary and essentiax duty of a debtor ito discharge his liability. Until thin is done, all observations on the origii of the debts and the economic consequences of international payments are liable to be viewed with suspicion. A creditor may, if he likes, open questions of that kind, but the debtor should admit his obligations without discussions. England l»as the ability tc pay and I can unhesitatingly assert her determination to honor her bond in full. I believe lam justified in asking you to treat the English debt to the United States as certain to be provided.” Mr. McKenna went fully into the questiop of German indebtedness, expressing the belief that she would, be unable to meet the reparation demands, and pointed out, that even if she were able, it would -be by increasing her exports. To do so would mean that she would be compelled to reduce imports, cut profits and lengthen the working day, in order to meet the competition of other countries. The latter would have to do the same, thus lowering the standard of life all round and further upsetting the world’s economic situation. Answering the criticism that Germany was under-taxed compared with Britain. Mr. McKenna said he believed that Britain was over-taxed, which was depressing the national production. In his opinion the only way Germany coulc approach the Allied demands would b< to persuade Germans possessing for eign assets to sell them to the Germar Government at a small profit, so tha‘ the Government could turn them ove: to its creditors. Mt. McKenna added that no solu tion of reparations was possible unless political considerations were subordinated to economic facts. This general argument was applicable to other international debts. Onh England possessed foreign assets. Italj qnd France were without similar wealth reserves. He pointed out that France's debt to England was too great to be settled by trade exchange, England bein« utterly unable to absorb the French surplus production, thus England is the only nation able to pay the United States interest and sinking fund on her debt. No other nation is able to med more than a small part of its liabili ties and a definite postponement of any payment is desirable in the interests oi all parties. The actual amount they would ultimately be able to pay shook be ascertained by inquiry regarding their exportable surplus at a full am frank conference between creditors anc debtors. President Harding sent a message tc the Bankers’ Convention. He suggest cd that American financial interests might aid in the financial and economic reconstruction of the world. He declared that the increasing appeals tc the world for American co-operation in solving the problems resulting from the war cannot be denied. The appeals call fit an application of the same spirit of co-operation which is the basis of the development of banks. I wish to appeal to your organisation on behalf of my conviction that another and more inclusive, perhaps more difficult, opportunity for service is presented.