The Daily News. FRIDAY, OCTOBER 13, 1922. WAR DEBTS TO AMERICA.

Taranaki Daily News, 13 October 1922, Page 4

The Daily News. FRIDAY, OCTOBER 13, 1922. WAR DEBTS TO AMERICA.

Although the recent cabled statement from Washington relative to the action which “it is understood” President Harding has decided to take in the direction of bringing about an adjustment of war debts to the United States, appears to be unofficial, yet there is. a reasonable probability that it represents the President’s intentions. It has been recognised that until this question of war debts has been adjusted on sane and sympathetic lines, there is little hope of stabilising foreign exchanges or of satisfactorily reinstating the world’s financial equilibrium. Practically America holds the key to the solution of the problem, but hitherto has evinced no desire to put that key into operation, apparently for the reason that she k is unwilling to adopt a policy that might entail renunciation of any part of her claims. The .position of affairs concerning these war debts was recently the subject of a full and explicit pronouncement by the British Premier (Mr. Lloyd George), whose magnanimity as to what Britain was prepared to do in the matter of war debts owing to her has evidently made an impression on President Harding, and has probably been the chief factor in impelling the President to make a move designed to form the basis of negotiations for adjustments. It will be noticed that the first step in the President’s scheme is to discuss with Britain how far she is able to settle her debts. It is rather late in the day to evolve such a proposal, inasmuch as the United States authorities have already called upon Britain to pay up the arrears of interest as well as instalments of the gross debt owing by Britain and her Allies or guaranteed by her. Then, if these negotiations fail, owing to the limitations imposed by the Debt Funding Commission, the President proposes to ask Congress to extend the powers of that Commission. It by no means follows that Congress will comply with the request, as it was only recently that body viewed the decisions of the conference of bankers on this debt question vrftlj disfavor, vet it is possible

that with a view to having the whole question discussed in a practical manner, that Congress may agree to a compromise “with reservations.” If so the way will be prepared for the last move in the scheme —a conference to consider the financial and industrial affairs of the world, at which America will be represented, and most likely take a leading part. Considering that America has far more to gain than any other country by adjusting and stabilising the present inequalities in foreign exchanges, it is greatly in her interests that a solution should be obtained. The financial aspect of the question, great as it is, is only a circumstance when compared with the industrial aspect, and it is in the latter that America is finding herself severely penalised. America is in the peculiar position of having more money than can profitably be utilised, because the market for her industrial products is so adversely affected by the inequality of her exchange rate that other countries cannot buy what she has to sell. That is why the proposed world conference is to consider industrial affairs as well as financial. The United States has a perfect legal right to demand payment of what is owing, but by so doing the position of affairs would be made worse for her instead of better, for she would obtain more of the i commodity she does not require, I and lose more of the business that is urgently needed. Britain has already intimated to America that she is prepared to liquidate her war debts to that country, but there is no other nation that can follow his lead. American bankers have practically denounced the policy of their Government in relation to war debts, and they have good reasons for iso doing. If a full and frank discussion takes place between commissions of experts appointed by both countries it must have a clear and definite aim. A nv/re exchange of views on academical lines will lead to nowhere. Accordingly it would seem desirable in the first place for President. Harding to lay all his cards on the table so that the discussions may proceed on practical lines, and the President should be assured of the backing of Congress. Then there might be reasonable hopes of the problem being solved.