Evening star., 1934-06-05
.BR|TA|N'S DEFAULT.
DEBT DEATH kNELL
All Other Debtor Nations
Except Finland Will
Follow Lead.
BY CONSTANTINE BROWN.


ington. informed the State Depart
ment that His Majesty's government
are reluctantly compelled" to suspend
"all interim payments pending a final
revision Of the settlement which has
been delayed by events beyond the
control of the two governments"
The British default will be followed,
it was learned authoritatively today,
by that Of all other debtor nations,
with the exception Of Finland. AL
though there has been a move among
prominent members of the French
government in favor Of a partial pay
ment 'on account" it is stated now,
that France will continue to default
with the other countries.
Some Of the minor debtors had in
dicated last week their desire to con-
tinue with the token payments, be-
cause they did not want to have the
American money market shut off
forever to them. In view of the Brit
ish decision. they feel compelled to
follow London because Of the i'm
portant sums they owe that govern
ment. The Washington representa-
tives of these nations said yesterday
that the payment Of even an unim-
portant sum would draw the ire Of
the British government and they may
be forced, in such case. to pay
Britain installments which had been
postponed for the last three years.
Officials Not Surprised.
The British note did not surprise
State Department officials.
In spite of the optimistic press re-
ports which came from London dur
ing the last few days. State Depart
ment officials were pessimistic. They
knew that despite the great reluc-
tance of the Macdonald Baldwin
cabinet to default-for the first time
in the history of Great Britain-the
popular pressure was such that even
small token" payment would have
brought political disaster to the pres
ent British administration.
The long note which Sir Ronald
Lindsay communicated to the State
Department shows the anxiety of the
British government to maintain its
record clean while it refuses to con-
tinue to pay its debts.
The note which the British cabinet
sent in December 1882, harped on the
Lausanne agreement which reduced
the German reparationS by 80 per
cent, and implied that that reduction
was made with the knowledge OF
President Hoover and at his urging.
The British took it upon themselves
then to speak in the name of all the
debtor nations.
Tax Burden Is Cited.
The note presented yesterday dwelled
exclusively on the unreasonable and
inequitable burden which the actual
settlement imposes upon the people
Of the United Kingdom in relation to
the treatment accorded to other coun-
tries" And to support this the British
government produced long statistics
to prove how overburdened the British
taxpayer is, and how in order to avoid
economic and financial disaster to
Britain'S debtor nations, the British
government has suspended its claims
on them. The result of the payment
of its obligations to the United States
and the relief accorded to her own
| debtors has produced a situation al
most unbearable on the British tax
payer, who during considerable part
Of the last Is years had to pay twice
s much as the taxpayer in the United
States, including all Federal, State
and local taxation"
The British note explained how 1t
came to have this year a budgetary
| surplus. out Of which pay cuts have
been restored to officials and dole
/ beneficiaries.
The government felt that the pub
licity given to this surplus might be
interpreted in this country as indi-
eating that Great Britain was out
Of the woods and on the road to re-
covery, while people in this country
were still struggling to get out of the
depression. but that the budget would
again have shown a deficit last year
had it not been possible to secure by
the conversion operation of 1892 a re-
duction in the rate of interest paid
on large proportion of the public
debt"
Accepts Johnson Act.
After explaining the technical diff
f1culties Of international money trans
fers IN the present chaotic financial
situation of the world the British
government accepts the Johnson act
in its full meaning, that is to say,
that unless every cent due on June
Is is paid, there is no point of pay
ing anything less. His majestys gov
ernment is faced with a choice of
only two alternatives, viz, to pay in
full the sum of $262 900 900 or
to suspend all interim payments. I"
The British government adopted this
last course out Of kindness for the
Britain debtor nations: "* The
resumption of full payments to the
United States would neceSsitate a cor
responding demand by his majestys
government from their own war
debtors Such procedure would
throw bonhbshell into the European
arena, which would have financial and
economic repercussions over all five
continents and would postpone in
definitely the chances of world re-
covery."
The only surprise which the note
contained was included in the last
paragraph, where the British gov
ernment announced Solemnly that it
did not intend to repudiate its obliga-
ton, and will be prepared to "enter
upon further discussion of the sub
ject at any time when in the opinion
of the President such discussion
would be likely to produce results of
value"
In this way the British turned the
table on the President
Heretofore. Mr. Roosevelt stated
repeatedly that the United States as
q creditor Nation owes to the debtors
to listen to them and discuss with
them any change in the existing set
Elements, when they require such
changes. All they have to do Is to
send properly accredited persons to
Washington to put before the United
States their individual case.
The British did this last November
and failed to reach even the basis for
an agreement. Now, they inform the
Government of the United States,
thew ore fhrO,lph trvipp and IL lie I'm