Evening star., 1932-12-09
THE following note was deli


to the British Ambassador as
Americas answer to Great
i Britains second request for post
ponement of her December Is
war debts payment and re-examina-
ton of the entire subject:
Excellercy:
NV government has considered with
| the greatest care the note Of December
/, 1882, from the British government
in which il has set forth at length the
reasons which 1t advances Tor recon-
sideration Of the whole question OF
intergoyernmental war debts and for the
postponement of the payment due by
the British government to the Govern
ment of the United States on Decem-
ber Is next.
Whatever part debt payments may
have played in the economic history OF
the postwar years, 1t is clear tnat IN
| the present conditions Of WORLDWIDE de-
preston, accompanied by sweeping
| fall of prices, their weight mas greatly
| increased and that they have very
definite relationship to the problem
of recovery, in which both the British
| and the American people have so vital
an interest.
willing to Negotiate.
The President of the United States
is prepared, through whatever agency
may seem appropriate, in cooperation
with the British government, to survey
the entire situation and to consider
what means may be taken to bring
about the restoration of stable cur
rencies and exchange, the revival OF
trade and the recovery Of prices.
welcome the suggestion contained
in the note of your government Of a
close examination between the United
States and Great Britain OF the whole
subject in preparation for the interna-
tional economic conference, Tor pe-
lieve that there are important avenues
of mutual advantage which should be
thoroughly explored.
Such an examination does not imply
cancellation.
In such an examination there would
necessarily be consideration Of other
forms of tangible compensation avail
| able for the expansion of markets for
products of American agriculture and
labor.
And you will understand that the
| problem of foreign debts has in the
American mind very definite relation
ship with the problem of disarmament
and the continued burden which COM
] petitive armament imposes upon the
entire world.
Different Understanding.
In order that you may understand
more fully the attitude of the American
people. feel that should refer briefly
| to certain implications in your note as
to which the facts are viewed by our
people differently from the understand
ing set forth by you.
Your note seems to carry the thought
that the loans made by the United
| States Government represent In their
/ entirety expenditures on destruction; +;
| that the payments heretofore made to
the United States have been largely
responsible for the existing world de-
preston and the concentration OF a
| large amount of gold in the United
States, and that complete cancellation
| of war debts, as indicated In the Bal
| four note, Is essential to world recov-
ery. We cannot agree with these con-
| clusions.
Many of the loans made before the
armistice and substantially all the
loans made after the armistice were
not for destruction.
OF the amount expended IN the
United States by our debtors after we
entered the war, both before and after
the armistce, most OF which was bor-
roWed from the United States Gov
| eminent on war and relief loans, less
than a third. was spent for munitions
and. reTlounts.
| Very large amounts were spent fol-
food, tobacco, ETC., for cotton and ex-
change, for relief and surplus supphes
sold on credit, for repayments OF COM
mercial loans and for interest.
Much of the food, tobacco cotton,
relief and other supplies sold tl credit
were resold by the governments for use
of their own civilian population.
Benefits Declared Accrued.
In certain cases these supplies were
actually resold and the funds turned
into the treasury of the debtor govern
ments. The amounts used to purchase
exchange were in reality loans by the
United States to the allied countries
which were no doubt expended by them
in part at least in countries other than
the United States; they served to main
tain the value of allied currencies. Some
of the loans made after the armistice
were vital to the recovery, and, indeed
to the very existence Of the borrowing
nations.
It does not seem accurate, therefore
to treat all Of what are termed in the
United States war debts" as represent
ing sums devoted in their entirety to
expenditures on destruction and totally
unproductive in so far as the borrowing
governments are concerned.
The United States Government, in
reaching the settlements with its debt
ors has combined loans made during
the war period and loans made after
the armistice, including commercial
credits. funding all in the debt agree
ments.-
It is our understanding that different
practice has prevailed in Europe. The
figures cited in the note Of the British
government covering advances made by
the United States of America and ad-
vances made by the United Kingdom
as well as receipts to date on these ad.
vances are not, therefore, strictly com
parable.
The note of the British government
also seems to us to overemphasiZe tn,
influence which war debt payments ma!
have had in the past on world economy
Figures Challenged.
With various observations and fig
ures presented by the British govern
ment in that regard the American Gov
ernment is not in accord, but it doe
not desire to enter into detailed dis
: cussion In the face of the larger i'm
mediate issues.
In general, 1t is our view that tn
causes OF this depression lie in mucl
more potent forces than these Deb
transactions. We notice that simlla
conclusions have been indicated In tn
careful study published by the Leagu
of Nations entitled, THE course an
phases Of the world economic depres
: sion.'
Furthermore, In It's inferences as t
, the difficulties of payment, the Britis
government treats merely some OF tn
items of the balance Of payments. leaV
) ing out OF account service items:
, 1t may be pointed out that the ex
!. penditures Of American tourists in for
eign lands during the period, 1924 7
, 1880. have totaled approximately So