Evening star., 1932-11-27
Britain Shocked by
u. S. Debts Attitude
BY A. G.. GARDINER.

LONDON, November 26.-Publication
of President Hoover's announcement OF
Americas refusal to extend the inter-
national debt moratorium has created
something like a feeling of despair IN
England in regard to the future.
Up to month ago a confident i'm
preston prevailed that a way would be
found to save Europe from the alterna-
tive Of paying or defaulting on war
debts to the United States, and though
the attitude of Congress was relent-
less it was believed that the larger con-
siderations involved would operate. That
hope received some support even on
Wednesday, when Neville Chamberlain,
chancellor of the Exchequer, speaking
in London, seemed to suggest that a
favorable solution of the debt ques-
ton was not impossible.
I should not be fulfilling my duty 70
my readers If did not represent clearly
the severity of the shock to public
feeling here, caused not merely by
Washington's refusal to extend the
moratorium, but by the equivocal pros
pect of Americas consideration even OF
revision of the war debts.
"This Is the most ominous thing that
has happened since the war" said one
of the most responsible men in the
country to me, and his comment re-
fleets the universal feeling.
There Is a deep undercurrent of
emotion on this question" says the
London News Chronicle, which, If not
handled wisely, may prove more i'm
portant that its economic aspects and
may be the source Of lasting schism
between Europe and the United States. y
In regard to the December is pay
ment there is no question here that
this obligation will be met, though no
provision has been made to meet 1t in
the budget. After the Lausanne Con-
ference, which stopped reparations pay
ments, some support was given the
view that this country should default
If the December payment were de-
manded by the United States, eSpeci-
ally as the Balfour note provided that
England would pay in the measure that
she was recouped by her own debtors.
This idea has disappeared before the
urgent necessity of maintaining the
credit of the country, and the French
proposal of a collective default by
Europe has received no support here.
y X
Whether France defaults or not-and
the expectation is that she will-that
course will not be taken by England
while payment Is possible. But no
authority contemplates the practicability
of future payments on the present
basis, and If Great Britain is compelled
to default, she, as the London Times
says, would set an example which would
be eagerly followed by every debtor
country throughout the world, and pos
sibly also by private debtors, with in
calculable results to international
finance and trade.
The disquiet is intensified by this
weeks downward movement of sterling,
which cannot fail to be increased by
the present action on the debts. Ex-
pert opinion is that America stands to
lose more than the debt payments by
the consequent depreciation Of sterling
securities, while an inevitable result Of
that depreciation must be the restric-
tion of British purchases from the
United States. The only means of avoid
ing a grave dislocation of the exchanges
is in reduction of those purchases by
an equivalent of the sum remitted in
December.
"If we In this country" says the
Manchester Guardian, now become the
only ultimate payers, we, like Germany,
shall probably have to borrow the
wherewithal from the United States
until we have adjusted ourselves to the
necessary abstention from imports and
the expansion of exports. This vicious
circle would be fatal to hopes of q re-
covery In world trade"
1t is generally agreed that the Hoo
yer decision knocks the bottom out Of
the Lausanne settlement, which was
conditional on the ability Of Germany's
creditors to reach satisfactory agree
ment in regard to their debts to the
United States. The fact that America
does not admit the dependence of debts
on reparations does not affect their in
innate relation.
Not only is the Lausanne agreement
Cancelled, but the world economic con-
ference Is doomed before its start. The
London Daily Telegraph, which among
the important newspapers approaches
nearest to advocacy Of default, points out
that delay of the conference IS largely
due to urgings from America that Brit
ain return. to the gold standard, while