Evening star., 1932-12-11
British Debt Payment
May Be Conditional
BY A. G. GARDINER.

LONDON, December 10-President
Hoover's note, published here Friday,
dismissed the last lingering hope that
an accommodation would be reached
in regard to the war debt payment due
the United States next Thursday.
The British government Is now faced
with the simple alternative Of paying
or defaulting, for little significance u
attached to President Hoover's pro-
posed recommendation to Congress Of
methods to overcome the temporary
exchange difdculties. This Is assumed
to mean that Great Britain would pay
in the form of notes maturing at q
later date. Objection is raised to this
expedient on the ground that 1t would
make worse the eventual position OF
Britain unless q drastic change was
made in the balance Of payments be-
tween the two countries.
Although little expectation was en-
tertained that President Hoover's note
would indicate modification Of the
American attitude, his final declaration
has deepened the depression here and
intensified the controversy in regard
to the wisdom Of paying or defaulting.
There Is no reason to question the view
formerly expressed, that the cabinet
has decided to pay. In this connection
it is assumed chat this weeks negotia-
tions in Paris and the announcement
Of common Anglo-FTench action do not
relate to next Thursdays payments. but
imply an agreed policy in regard to
subsequent debt revision.
But, while it is believed the British
installment Of the debt will be remitted,
formidable opposition to that course is
still maintained inside the cabinet from
treasury quarters and is reinforced by q
growing and powerful body Of opinion
outside. This opinion does not take
the position of the treasury, which is
alarmed at the budgetary consequences
Of payment. 1t points out that the
American budget position Is equally bad
and that it Is idle to base the argu-
ment for non-payment on the desperate
X \
The case of these opponents Of pay
ment is that, while 1t is impossible to
pay in goods and service and, while
borrowing from America is out Of the
question, the attempt to pay a foreign
debt by buying foreign currency can
only deepen the depression and produce
q further fall in prices which in the
end will ruin everybody.
The argument Of advocates OF pay
ment that by so doing Great Britain
is buying time, during which change
in the American attitude is anticipated.
is dismissed by the opposition school as
illusory. All the evidence goes to show
the un1ikelihood of radical revision by
agreement when the Roosevelt admins
tration takes office next March, and
that there Is no justification for the
supposition that the attitude of America
then will be more favorable than now.
1t Is claimed that this view, of which
Sir Walter Layton is the most conspic-
uous advocate, Is supported by the fact
that Americas budget estimates for next
year assume the war debts will be paid
in full and by the opinion. openly ex-
pressed in America, that American poll
ticians would be relieved if European
nations would cut the knot which they
themselves are unable to unravel.
x " *
On the view that buying time" would
only result in a worse position next
June, while increasing the process of
disintegration by six months of uncer-
tainty, the government Is urged to per-
form a surgical operation now COM
parable to that performed at Lausanne.
II the operation-which, 1t Is argued,
every instructed mind ON both sides of
the Atlantic knows to be inevitable-is
further delayed, it may be too late to
The question Of payment is further
complicated by the position of France,
which, in the event of Great Britain
paying America, Is liable for q payment
OF f12 ,000, 900 to Britain by the end of
the year. This was one of the subjects
OF the negotiations between Premier
Macdonald and Herriot and Neville
Chamberlain, chancellor Of the British
exchequer, in Paris this week-but
everything waits on the French Cham
bel OF Deputies, which Is expected to be
as decisiyely against paying America rs
Congress is against suspension of pay
ment. And II America is not paid, will
France pay Great Britain in order to
help her pay America?
In spite Of powerful opposition, Great
Britain will pay, but probably with
condition relating the payment to the
general problem Of o debt settlement,
which Is the only alternative to default
next June.
tcopyrieht 1eeaA