Evening star., 1934-06-05
Strain Given Relief.

This reduction has enabled his
majesty's government to remit a part
of the emergency sacrifices imposed
in 1881, and to restore part of the
cuts on salaries and the whole cut in
unemployment allowances. the con-
tinuance of which was imposing a
severe strain on the national con-
science.
It would have been a gross act Of
social injustice to have denied this
relief to the people of this country
in order to pay war debts to the
United States while suspending war
debt payments due to the United
Kingdom.
4. But, although it is desirable that
the internal budgetary position Of this
| country should not be misunderstood.
it is really irrelevant to the question
Of intergovernmental debt, the pay
ment of which has to be related to
the balance of trade and not to the
volume of internal revenue.
The revenues Of the United King
dom are sterling revenues, whereas
the debt payments to American have
order to secure the means to pay,
therefore, any sums available in
sterling would have to be transferred
across the exchange.
The attempt to transfer amounts
of this magnitude would as its i'm
mediate effect cause a sharp deprecia-
ton Of sterling against the dollar,
which as his majety's government
understand would not be consistent
with the monetary policy of the United
States Government.
And in the long run such interna-
tional transfers would be impossible
without a radical alteration in the
economic policies of the United States.
Payment Of debts implies the will
ingness of the creditor to accept goods
and services sufficient to cover the
debts due to him over and above the
goods and services required to cover
his exports: And to make it pos
sible for the United States to receive
payment of their claims, it would
be necessary to effect complete re-
ance Of trade between their country
and the rest of the world.
Receipts Held Necessary.
In the case of the United Kingdom
the balance of trade is heavily un-
! favorable, and the balance of &C
counts is not such that his majesty's
government could contemplate the
transfer of any substantial sum across
the exchange, unless it was compen-
sated by equivalent receipts from the
foreign debts of this country.
If this were done sterling would
not be affected by the payments to
America, but the burden would be
thrown on the currencies Of the
European debtor countries, thereby
asgravating the present crisis, which
it Is the object of both the United
States and his majesty's government
to alleviate.
| S. Thus the question of the British
war debt is only part of the wider
question of intergovernmental obli-
| cations resulting from the World War.
AS has already been pointed out, the
United Kingdom, while it was a
debtor to the United States, was
itself a creditor for larger amounts
from France, Italy and other ex-
allied powers in respect of war debts,
and these in turn are co-creditors with
the united kingdom of Germany in
respect of reparations.
These intergovernmental debts, as
stated in the British note of Decem-
ber /, 1881, are radically different
from commercial loans raised by for
eign governments on the markets for
productive purposes.
War debts are neither productive
nor -hquidating, and the unnat-
ural transfers required for their pay
ment would involve a general COL
lapse of normal international ex-
change and credit operations.
| The administration Of the United