Evening star., 1932-12-02

discharge Of all international debts
must in the long run take the form of
transfer of goods or services. The
average wholesale price index in the
United States during the period when
the debt was incurred with 189 and IS
now under "a (taking 1918 as basis
in each case). The debt, therefore,
represents today in terms of goods not
less than twice the amount which was
borrowed.
In this connection His Majesty's Gov
ernment would point out that the effect
of the American tariff has been to re-
strict rather than to facilitate the i'm
port of manufactured goods which the
United Kingdom produces. and the
difficulties in this respect have not de-
creased in recent years In 1923, when
the British war debt was funded, the
war debt annuity amounted to f33,-
000 900, or approximately half the value
of British domestic exports to the
United States (E60,000, ,000).
From 1888 onward the annuity which
we should have to pay in respect of the
war debt would amount at the present
rate of exchange to approximately f60-
00o,00Q. whereas British domestic ex-
ports to America amounted to only
Els, 100000 in 1881. and are not likely
to exceed 100000 for 1882.
Imports into the United Kingdom
from the United States show an equally
remarkablN fall from f211 900, 900 in 1923
to fl04.G 900 in 1881 and f59.0O0 900
in the first rine months of 1882. The
total trade between the two countries
from the time of the funding agreement
has fallen from about f300,OO0,000 a
yesr to f100,000,CO0.
Would Cut U. S. Trade.
20. If. therefore, war debt payments
had to be resumed, it is apparent that
the exchange position of this country
would need to be strengthened by a
reduction of the very heavy adverse
balance of the visible trade Of the
United Kingdom and the United States,
which amounted to f78,000, GOO in 1881
In present circumstances this could
only be done by adopting measures
which would further restrict British
purchases of American goods. The
United Kingdom has up to the present
generally been the best customer of the
United States. and the result of such
restrictions would inevitably be to re-
duce specially the market in the United
Kingdom for American farm products
To the extent therefore that payments
were resumed to the United States
Treasury definite and unfavorable re-
action must follow to the United States
producer.
Moreover, His MajeSty's Government
would also have to guard against the
effects which would follow If the facili-
ties offered by the British market were
used by other debtors of America to
clat oi,, ctnr1i3U rtrhjph fhay uOt1ld then
sell across the exchange In order to
meet their obligations to the United
States Government. After the war the
United Kingdom attempted to maintain
Its traditional trading system of free
imports, with the result that debtor
countries throughout the world sold
their goods on the British market and
took the proceeds away over the ex-
change or in gold to meet their obliga-
tionS elsewhere. Under the stress of
the present crisis His Majesty's Gov
ernment have had to modify their sys-
TEN and to adopt tariffs, but the United
Kingdom still imports from abroad
goods to the value of several hundreds
of million pounds in excess Of what 1t
exports, and it would be necessary to
consider what action could be taken
to secure that the sterling proceeds OF
these imports were used more largely
for the benefit of the British market.
81. President Hoover in explaining
his proposal for suspension of inter-
governmental payments for year, be-
ginning July l, 1881. stated that its OBJ
ject was Ito relieve the pressure of the
difficulties resulting from the fall in
prices and the lack of confidence in
economic and political stability and to
assist in the re-establishment of conf
dence, thus forwarding political peace
and economic stability in the world"
The action then taken gave much
needed respite, but it was not sufficient
to restore confidence. Depression still
continues. and resumption of war
debt payments today would for the
reasons outlined above involve economic
reactions which must intensity the in
stability of the world If President
Hoover's hopes are to be realized, def
mite remedial action requires to be
taken to deal not merely with the Brit
ish war debt to America bat with the
whole system of intergovernmental OBJ
legations with which 1t is related.
German Burden Relieved.
%. The initiative in deviSing a set
tlement of reparations was taken by
the creditor governments of Germany
at Lausanne, with the .cognizance and
approval of the United States Govern
ment. An arrangement was there signed
under which Germany would be sub
stantially relieved of burden which
had become intolerable. and the par
ticipating creditors agreed Professionally
among themselves to waiver OF their
inter- governmental debts. 1t was in
the nature of things inevitable that that
settlement was provisional and that its
completion was dependent upon a sat-
isfactory settlement in respect of the
debts for which the creditor powers
themselves were liable to the United
States Government.
%. The United States Government
have frequently reiterated that they do
not admit any connection between rep
arations and war debts; but this differ
entiation in the matter Of intergovern-
mental obligations arising out of the
war is not accepted by other countries
which have creditor claims on the Ger
man government and whose ability to
meet their own debt payments to the
United States and to the United King
dom is undoubtedly affected by the
extent to which they themselves are
paid by Germany. Whichever view is
accidentally correct, there is de facto
connection between these two sets OF
intergovernmental obligations, and this
was by implication admitted by the
United States Government when they
proposed a moratorium on all inter-
governmental obligations last year.
Moreover, His Majesty's Government
take it for granted that preferential
treatment would never be claimed for
war debts due to the United States as
compared with those due to this coun-
tru nd cit,IofiOy, N uJhich tl1ic
country was required to continue war
debt payments while foregoing war debt
payments due to it would be admitted
at once to be unthinkable. Thus, if
payment of the sums due in respect of
the British war debt to the United
States Government were to be resumed,
His MajeSty's Government would be
obliged to reopen the question of pay
ments from their own debtors-France,
Italy, Portugal, Yugoslavia, Rumania,
Greece and also the British dominions.