Evening star., 1938-08-01

. -. David Lawrence.
America, stands as barrier to the
purchases OF American supplies-a
vital factor in future trade relation
ships.
From the American viewpoint the
subject comes up because Joseph P.
Kennedy, American Ambassador to
Great Britain, is trying to solve the
question and get it on some sort of
practical basis, so as to remove it as
a source OF perennial friction between
the two countries and give an out
standing example of cooperation be-
tween the two leading democracies of
the world.
The suggestion made by Baron
Cato. leading British banker, in the
London Times to the effect that the
interest should not be charged be-
tween allies in the World War is an
interesting and significant one, be-
cause the latest available figures show
that on the funded debt OF S4.368,-
100000. formally agreed upon by Eng
land and America after the war and
ratified by Congress, the British have
S2,024, ,6488l7. But of these pay
ments almost three-fourths were for
interest, so that if the question is re-
studied and a readjustment made. it
would appear that the principal OF the
debt has been repaid by almost 50 per
cent already, even though the period
Tor payment arranged was So years.
Question Part Of Policy.
To put it another way if the British
now could spread the remainder over
50-year period and agree to pay
every year specified sum on prin-
cipal. it could we'll be taken care of
by the British budget annually Up
to now British taxpayers have felt
that the debt was a colossal burden
and that "deferment''-no "repudia-
tion'-was fully justified. AS the
British people begin to see the dark
clouds OF new war they realize also
that munitions and supplies must be
bought from America and that even
more sacrifices must be made to in
sure steady flow Of such materials.
The debt question with America,
therefore, becomes Importantly a part
Of British policy of national defense.
Looked at from the American view
point. there will be objections ex-
pressed to the elimination of interest,
on the ground that this money which
was loaned to Britain by the Amer
lean Government was borrowed on
an interest basis from the American
people. What is perhaps overlooked,
on the other hand, is that the United
States Government has already re-
tired virtually all the Liberty Loan
bonds, that these bonds were payable
in gold and that they now have been
replaced with bonds not redeemabl
in gold and carrying a lower interest
rate than ever before. Similarly the
United States has had the benefit in
her budgets Of substantial payments
on the principal OF the allied war debts
which, il they had been invested in
Government securities since then,
would have yielded the United States
substantial income 1t should not
be forgotten, also, that after the fund
ing agreement was made with Britain
more favorable terms were granted
to France and Italy and other coun-
tries by the United States than were
originally given to England.
The whole problem needs to be re-
studied on a basis of what is fair and
equitable. The ordinary creditor and
debtor relationship need not be upset,
because it is customary for creditors
and debtors to readjust debt if they
expect to continue to do business with
each other.
Would Set Good Example
There are many advantages to the
United States in a new debt settlement.
First Of all. any payments will come in
handy every year in helping to pay
for the big national defense fund which
America finds it necessary these days
to maintain. Secondly. if England
pays, then France will undoubtedly
follow suit This will place upon
italy and other countries q responsible
ity to realize that payment of debt is
essential to world peace. Certainly,
II the democracies get together by re-
esta ablishing better credit conditions as
hetwAen themselves IT, NAV onen the