Evening star., 1927-05-15


nally by Secretary MELONS s
l. reply to President Hibben of
Princeton, which, in turn,
evoked protest from the British chan
cellor of the exchequer. actually adds
little to the body of facts in the dis
Cussion. On the contrary, it serves
again to emphasize the circumstance
that Americans and Europeans think
differently about the whole subject
and that the differences are those or
feeling rather than of fact.
All the latest discussion, like much
of the past debate, rests upon cir
cumstance which cannot be described
as other than a supreme blunder or
British policy-namely, the Balfour
note. Although it has been very
largely forgotten, for itself in sub
sequent years, this note did effec-
lively poison the whole question. The
damage done to the British thesis, and
more particularly to American SYM
pathy for British claims, was incalcu-
liable and irreparable.
In 1922, following closely upon the
Genoa conference, which excited much
American disgust because of the
obvious effort of Lloyd George to COM
promise with the Bolshevists, the
Harding administration undertook to
make clear to Europe that there must
be a general cancellation of 1nteral
ment of the allied debts which had
been pending ever since the close of
the conflict. Both Hoover and Hughes
made the fact patent.
Britain Showed Hesitation.
In that situation the British gov
ernment momentarily hesitated. The
| no
Genoa conference had failed, the
Anglo. French dispute over the appli'
cation of the treaty Of Versailles was
acute and Germany was sinking fast
into the bog Of imitation. Already the
occupation of the Ruhr seemed IN
escapable, since Germany was asking
a. moratorium on reparatlons pay
ments, and France. nearly bankrupt
because of expenditures upon recon
struction of the devasted area. was
now to be asked to pay war debts.
Lloyd Ge, rye and the coalition
cabinet at the outset permitted a
proposal to issue which envisaged q
European settlement. There was tt
be a general cancellation Of inter-al
| lied debts as between the European
states, with a proportionate reduction
of German reparations. which in TINS
| pre- Dawes plan era were In theory
| fixed at astronomical dimensions. Hat
| this plan been followed Europe, havint
adjusted it's own debt and reparation'
situation, might have met the United
| States collectively.
Found Little Support.
Unhappily this proposal. while ap
plauded by the continental states
| found little support in Britain, be
cause it amounted to forgiving tn
continental debtors of Britain bu
| left the British with the America
| debt to face. Nor did the propose
awaken any sympathetic echo on ou
side of the Atlantic. As conse
| quence it was promptly dropped AM
never again revived. And it was, il
fact. the last attempt to bring abou
| joint European action with respec
! to the whole debt question.
This failure led the coalition cabi
net to make grave blunder. Lore
Balfour had recently been in the
United States. and his success at th'
| Washington conference was unmis
taxable. AS result it was rashly
assumed in London that a propose
| bearing his name would have imme
date support in the United States
| and, in fact, that his word with re
spect to the debt question would go
| in America.
Note Is Concocted.
Hence there was concocted the no
| torious Balfour note. This, in terms
| laid down the principle that Great
| Britain would collect on account Oi
reparations and interallied debts only
| that sum which in the aggregate woulC
balance British payments to the
United States on account of borrow
ings during the war. In word, the
British proposed TO hold their recent
allies to pay on debts which in the
gregate amounted to some $4,000. 900,
900, only enough to cover the differ.
ence between what Germany paid
Britain on account of reparations and
Britain paid the United States on the
debt account.
The vice of this proposal lay in
the fact that it gave the appearance
of great generosity on the British
part and, by inference and inevitable
innuendo, made it appear that the
United States was responsible for the
collection of any debts In fact and
in effect the note declared that the
British were prepared to forgive their
debtors and let the German enemy
off easily, il only the United States
would adopt a policy of similar gen.
erosity.
British View Explained.
Enthusiastically the British official
view was that the effect of this note
would be, first, to shame American
public opinion into concessions, and,
secondly, to turn allied resentment
of British policy in debt collecting
against America. AS to the first pur-
pose the note was n terrible failure.
So far from awakening American
sympathy, it aroused an American
resentment which thoroughly dissi-
pated the not inconsiderable senti-
ment for cancellation or reduction of
the debt claims. Justly or unjustly,
the British proposal struck the Amer
lean public as hypocritical in the ex-
treme.
American resentment was based upon
the obvious fact that, while for all
others cancellation or scaling down
of debts was a balancing affair, since
all were both creditors and debtors
for the United States, which was only
a creditor, the whole transaction was
one of sacrifice. This was not quite
true, for, while the British debt to
the United States was below $4,000
100000. the British We're owed sums
by their allies which Keynes had es-
timated at above $4,000 ,000, 900. On
the other hand, Keynes had confessed
that the probable value of these debts
did not exceed the capital value of
the American debt plus the accrued
and unpaid interest.
Aroused Continental Ire.
On the other hand, the British
note did successfully arouse conti-
mental resentment against the United
States. From that moment on,