Evening star., 1931-12-20
Debt Discussion
Depresses Britain
BY A. G. GARDINER,

I LONDON. December l9-The debates
IL the American Congress- on the sub
Ject OF the moratorium have dcepened
the gloom that hangs over the Christ
mas landscape
The general tenor of comment here
Is mat the aSsailantS of the moratorium
policy fail to appreciate the fact that
the mlSfortunes of the wcrld. including
the United States are mainly due 10
the effects Of war debts and reparations,
winch destroyed the financial euull1b-
rum OF society and Strangicd tho mech
aH1sm OF international trade The con-
NCtlon is gaining strength here in all
schools of political thought trat until
ms deadly incubus IS removed there
Is no possibility OF a recovery of trade
fol anybody.
This view, l have been given to un-
Gerstand is emphaucally pre5aa.ed IN
the British note delivered to the Cuai
dOrsay on Thursday in regard to ths
coming reparatlons negotiations 1t de-
cares reparatlOnS and war debts to be
( the chief cause of the economic paraly-
SIS of the world and expresses the view
that removal of this cause is urgent in
order TO avoid the economic and social
collapse Of the European and world
labrlcs. Emphasis is laid on the fact
that Germany has lived largely on
Brltlsh resources since the war and paid
her reparatlons 10 France out of these
resources
Britain, in an endeavor to maintain
Ter policy of free trade. has borne a
large snare OF the economic burdens of
Europe. until her resources are so
strained that this is no longer possible.
The British note insists on the futilitv
OF halfway measures and the necessity
for firm and final settlement.
Meanwhile the committee of experts
at Basel has completed its preliminary
StudN OF GernanyS ability to paw. 1t
reached the conclusion that Germany is
unable to meet either public or private
obllgatlOnS under present conditions.
except through the medium of fresh
loans. This conclusion is based on evil
oence OF a grave contraction of the
sources OF revenue ear-markcd for the
payment Of the Young plan annuities
ana the existence of a considerably
larger mass OF Short-term debts than
was hitherto realized. 1t is expected
that the experts committee viii limit
itself to the presentation OF the mex
craoie lactS IN the situation leaving the
prooIem OF hnalng solution to the
coming conference of politicians
Inc opinion eXprCs sed here in regard
to the Basel conclusions is that. since
germany is unable to pay ana further
loanS are cut OF the question the only
Two courses possible are either a fur
ther moratorium ana renewal of the
"StandStll' agreement in regard to
! commercial debts. or a drastic sweeping
away OF war debts and rCparatiOnS II
is agreed that the attitude OF the United
States and France is not encouraging
| regard 4 aI
! polcy SO, as the new statesman" re-
marks, probably the utmost to be hoped
| Tor is another moratorium in order to
| give the world more time to come to its
! senses. But 1t must be realized that the
moratorium and "StandStill agreement s
not only are no cure, but will actually
; leave the situation worse when they
| run out.
There is, of course, a third alterna-
tlEe-6lmple default and ropud.ation
/ Since the debates in Congress, / have
, heard this solution discussed in the
most responsible quarters here as an
| inevitable consequence of the present
mood of Congress-
| The Financial News in an article
entitled, Must Europe Default?" saws
| opinion in Congress is wholly divorced
! from the facts: that the suspension of
war debts must go hand in hand with
, the suspension of reparationS, and that
Europe should speak with one voice and
the national government here should
announce boldly and unequivocally a
policy the essence of which is no
! reparations, no war debts
The Spectator, equally emphatic says
| that If Germany ceases to pay repara-
tlons 1t will be impossible for Britain
and France to pay their war debts, es-
|peclally in view of the fact that America
refuses to take payment in goods. The
| debt question must come to a head with
| the reparationS question. The diverse
OF the doctrine stated in the Balfour
note is that, if reparations fail debt
payments fail simultaneously. This rep
resentS practically unanimous comment
IN the British press on the debates in
| Congress.
tCopyright, 1917