Evening star., 1932-12-04
British Cabinet Struggle
Preceded Debt Decision
BY A. @. GARDINER.

T. LONDON. December 3.-The struggle
In the British cabinet on the war debt
issue ended Wednesday, and on Friday
the terms Of the reply to the American
Government were made public In both
AS predicted in my cable
last week, the decision of the cabinet is
against default If America insists on
the December is payment, but the con-
fiict within the national government
was much more severe than was antici-
pated.. -
(, The chief opposition within the cabi-
net came from Neville Chamberlain,
chancellor of the exchequer, who repre-
sented the treasury's grave alarms as to
the financial consequences of payment
on the taxation Of the country.
Mr.. Chamberlain suggested that pay
ment was equivalent to the addition OF
a shilling to the income tax, which has
already been strained to the point where
it ceases to be productive.
y II . o.,
Stanley Baldwin, who negotiated the
American debt settlement, has been the
principal advocate of payment at all
costs, If Congress is inf1exible, and as
the argument has proceeded public
opinion has swung around emphati-
cally to his support. This Is especially
the case in financial and commercial
circles, which, though divided at the
beginning of the controversy, became
practically unanimous In favor of full
filling the obligation. The main con-
sideration was that If Great Britain de-
faulted at this stage nations all over
the world would default on Britain,
discrimination between war debts and
other debts would disappear, and the
whole standard of world trade, already
staggering, would be brought to COM
plete collapse. -a
Apart from the Beaverbrook press,
which confidently announced that
Great Britain would not pay, the news
papers came around pretty solidly to the
Baldwin view. and, with the exception OF
Sir Walter Layton, most of the experts
took the same side-their general
ground being that the more they con-
template the consequences OF defaub
the more alarming they appear. Thanks
to Mr.. Baldwin's fairness in presenting
the American side of the case and his
appeal to the public to consider the
subject dispassionately, the controversy
in the press has been conducted with
marked restraint.
But while the decision to pay repre-
sents the overwhelming preponderance
the hope still fingers that Congress may
relent-not to save the British taxpayer,
but in the interest Of world trade,
which was already fatally stricken by
the operation of war debts and Is now
threatened with further disaster. The
purpose of the British note Is to show
that this disaster cannot be localized,
but will spread paralysis everywhere.
Payment Of the December is INSTALL
ment, by whatever means effected, can
only result in q new decline in the
value of sterling, and a further drop
in commodity prices will inevitably fol-
low. The mere prospect Of the next
payment being exacted has already had
future course of sterling is viewed with
deep concern. No instructed opinion
contemplates the possibility Of subse-
quent payments on anything like the
present scale, which, according to Sir
Walter Layton, represents nearly three
times the amount contracted In the
Baldwin agreement, owing to the fall IN
the value Of sterling and the still
greater fall in commodity prices.
It is pointed out In the new British
note that tnsistence on payment must
have disastrous effects on Anglo-Amer-
ican trade. Great Britain's imports
from America are vastly in excess OF
Americas imports from Britain, and In
view Of the fall in sterling that pre-
ponderance has become matter of the
utmost gravity. Imports from America
have diminished enormously and 1.
American import traders here are fnd-
ing their business already almost
stopped. They cannot sail American
goods at the possible price with ex-
change so heavily against them and
tariffs on top of that -
One big importer Of American goods,
says the Manchester Guardian, who has
now TO pay large bill for goods re-
cefvedN under contract three months
ago. is buying dollars at the present
rate to pay for goods on the dollar rate
three months ago. No new businesses
are starting. and many are closing.
This Is only one aspect of the catastro-
phic effect Of the present situation on
international trade. w a.,
toopyrighxs lea3A -