AMERICA’S ANSWER

Manawatu Standard, Volume LIII, Issue 13, 13 December 1932, Page 7

AMERICA’S ANSWER

BRITISH WAR DEBT PAYMENT. CONDITIONS REJECTED. PROMPT ISSUE OF REPLY. (United Press Association—By Electric Telegraph.—Copyright.) WASHINGTON, Dec. 11.

A few hours after the British Ambassador, Sir Ronald Lindsay, bad delivered to tho Secretary of State, Mr H. L. Stimson, the British Note saying that payment of 95 million dollars with qualifications' would be made in gold on December 15, Mr Stimson handed to Sir Ronald Lindsay America’s ans(wer, which declared that the intention to pay had been noted with satisfaction, but payment could not be accepted with conditions “extending outside the debt funding agreement.” The British Note specified that the payment would not be regarded as a resumption of payments under the existing agreement but as “a capital payment of which account should be taken in any final settlement.” As tho nature of the Note was generally what had been expected, Mr Stimson’s quick response is interpreted as a move to leave the onus entirely on the British with a full understanding that their conditions are rejected and that if payment is made it will only be accepted as coming under the existing agreement. FINAL DECISION WITH CONGRESS The American reply stated that the Secretary to tho Treasury has no authority to accept war debt payments except as provided in the funding agreement. “Congress bolds the final decision in respect to changes in intergovernmental obligations and acceptance of the December instalment cannot constitute approval of or agreement to any condition or declaration of policy inconsistent with tlie terms of the agreement.” The Note added that it would seem undesirable for any steps to be taken which by causing misunderstandings would increase the difficulty that must bo overcome in finding an ultimate solution satisfactory to both nations. Mr Stimson took up the position that accepting payments with conditions was illegal. Flo explained that Congress must act in changing the funding agreement in any respect. The American Note apparently wishes to clarify the legal status of the British Note and suggests that tho conditions mentioned bo construed as a simple 'declaration of Britain’s future policy which is in no way binding on tlie United States or injures the legality of tho existing agreement. “It is thereforo assumed that in the conditions of payment you are not proposing to make this payment otherwise than in accordance with tho terms of the funding agreement, but that you are stating your views as to the steps your Government may desire to propose subsequently after re-examination of the whole problem.” Tho speed with which the Note was prepared is a direct indication to Franco what she must expect if she attempts to supplement payment with similar conditions. This is considered exceedingly timely as the Chamber of Deputies has scheduled a debate on payment for Monday. Mr Stimson was considerably surprised that tlie British Note was delivered to-day, as it was not expected until to-morrow. Mr Stimson immediately summoned tho Secretary to the Treasury, Mr Mills, and several aides and drafted the American Note. The contents were then communicated to President Hoover, who approved them and tlie reply was delivered to Sir Ronald Lindsay.

CONGRESSIONAL REACTION. The Congressional reaction was immediate and favourable to Mr Stimson’s policy. While the first Press reports from England indicated that it might fortify those favouring default, observers here admitted that it might create an impasse, but believed that the gap between the two Governments was not so wide as might appear; also that the British Note was merely laying the groundwork for future negotiations. Representative Rainey, a prominent member of the Ways and Means Committee of the House, declared that Mr Stimson’s answer is “eminently proper.” Senator Borah said: “The Secretary of State could not reply in any other way than to say that payment could bo received only under tho terms of the Debt Funding Agreement.” During and after the conference where the Note was drafted Messrs Stimson, Mills and others appeared anything but gloomy. They apparently feel that Britain has now admitted that she had the money to pay and that whatever conditions she sought to attach could not stand against this administration. It is noted that she did not request a waiver of the £30,000,000 principal. TEXT OF BRITISH NOTE. CLEAR STATEMENT OF POSITION. A fuller British Official Wireless message from Rugby gives the text of the British Note in the following terms:— “His Majesty’s Government, having received the Note addressed to it by the United States Government on December 7, observes with satisfaction that the United States Government welcomes the suggestion for a close examination between the two countries of the whole subject dealt with in the British Note of December 1. His Majesty’s Government feels that it will bo appropriate to reserve for this joint examination its comments on certain of tho views expressed in the United States Note of December 7, but it thinks it right to state that, after furlier careful consideration, it sees no reason to modify the general conclusions set forth in its Note of December 1. His Majesty’s Government will therefore in the present communication deal only with the last portion of the United States Government Note which relates to the immediate question of payment on December 15. DIFFICULTIES OF TRANSFER.

“His Majesty’s Government observes that the United States Government recognises the difficulties of effecting a transfer. It remains convinced that no solution other than suspension would obviate these difficulties. It notes therefore with profound regret that, notwithstanding the arguments contained in the British Note, the United States Government has decided not to recommend this solution to Congress. “In view of this decision His Majesty’s Government has determined to make payment of the amount due on December 15 under the Funding Agreement on Juno 18, 1923, but it thinks it desirable to take the opportunity of stating clearly its position in regard to this payment and of explaining the circumstances in which it has arrived at that conclusion. “For reasons which have already been placed on record His Majesty’s Government is convinced that the system of inter-governmental payments in respect of war debts, as it existed prior

to President Hoover’s initiative on January 20, 1931, cannot be revived without disaster. Since it is agreed that the whole subject should be reexamined between the United States of America and the United Kingdom, this fundamental point need not be further stressed here.

“In the view of His Majesty’s Government therefore the payment to be made on December 15 is not to be regarded as a resumption of the annual payment cnfemplated by the existing agreement. It is made because there has not been time for discussion with regard to that agreement to take place and because the United States Government has stated that in its opinion such payment would greatly increase the prospects of a satisfactory ap proach to the whole question.

CAPITAL PAYMENT,

“His Majesty’s Government proposes accordingly to treat the payment of December 15 as a capital payment of which account should be taken in any final settlement, and it is making arrangements to effect this payment in gold as being in the circumstances the least prejudicial of the methods open to it. “This procedure must obviously be exceptional an& abnormal, and His Majesty’s Government desires to urge upon the United States Government the importance of an early exchange of views with the object of concluding the proposed discussion before June lo next in order to obviate the risk of a general breakdown of existing intergovernmental agreements.”

OPPORTUNITY FOR DISCUSSION.

DEBATE IN THE COMMONS

(British Official Wireless.) Received December 13, 12.15 p.m. RUGBY, Dei!. 12. In response to a request by the Leader of the Opposition, Mr G. Lansbury, that a Government statement relative to the American debt payment be made in the House of Commons under conditions enabling the House to discuss it, Mr Stanley Baldwin announced that the Government had arranged to devote Wednesday to a debate on this subject. An appropriate statement would be made probably by the Chancellor of the Exchequer. The Government would not”put down a motion and the House would have a perfectly Free debate, enabling a discussion to bo held from every veiwpoint. The Prime Minister, on reaching London from Geneva this afternoon, consulted his colleagues, among other matters, on the American reply to the British Note. It is anticipated that Cabinet will meet to-morrow, when the question of whether a further communication will be sent to the United States is expected to be considered. NO TRANSFER OF GOLD. REMAINS IN BANK OF ENGLAND’S VAULTS. LONDON, Dec. 11. Britain’s decision to pay in gold means that the gold will be ear-marked in the vaults of the Bank of England awaiting America’s instructions. In the cose of two friendly nations no actual transfer takes place. A rumour that France is lending Britain gold with which to make payment on December 15 is officially denied, and a suggestion that the payment involves a second Budget is similarly groundless. COMMENT IN ENGLAND. LONDON, Dec. 12. Early editions of the London newspapers give prominence to the fact that Britain is going to pay but with reservations. The latest editions, however, emphasise the contrary truth: “The United States rejects the British offer.” Details of this Note arrived too late for real criticism, and the text had not yet been circulated by the British Foreign Office. The Times says that the very prompt American reply naturally pointed out that the United States Treasury had no authority to accept payment- except according to the existing agreement, but, adds The Times, “The British Government has done right in refusing to make default. It is equally clear that it has done right in coupling its announcement with a plain intimation in regard to the payment as a step in the final settlement.” ECONOMIC PROGRESS. NECESSITY FOR CO-OPERATION. (British Official Wireless.) RUGBY, Dec. 10. In the course of his address to the National Peace Council Conference, Sir Arthur Salter said that peace and economic progress depended in every sphere upon co-operation between America and Europe and that in turn depended upon the public temper and the psychology of the peoples of the two Continents. The war debt was one, but, as President Hoover had pointed out, only one of many pressing problems. Others were now focussed on preparations for the World Economic Conference. There they should aim at: (1) A world policy of controlled deflation. (2) They must restore and reform the world’s credit system. This meant dealing with existing indebtedness, encouraging new lending and securing that it future it was better directed than in the past. (3) They must reduce trade barriers. CANADA’S POSITION. LONDON, Dec. 11. The Canadian Prime Minister, Mr R. B. Bennett, has arrived in London. Questioned as to whether he had brought a Canadian offer to help Britain over war debts, he replied that Canada was not concerned with war debts. Canada had incurred a war debt of 2000 million dollars, but she had no inter-governmental debts in this connection, either to Britain or to America . “We abandoned all claim to reparations at Lausanne,” he said. “The whole of Canada’s war bid is now part of our funded debt.” PAYMENTS DUE FROM ALLIES. LONDON, Dec. 11. The Daily Telegraph’s diplomatic correspondent says that the British decision not to demand the payments shortly due from France, Italy and other Allied debtors raises the question whether the Dominions, which are also liable for early payments, will be granted the same further respite. CONTINUATION OF PAYMENTS. NOTED ECONOMIST ON EFFECTS.

Received December 13, 9.5 a.m. MONTREAL, Dec. 12. Sir Norman Angell, the British author and economist, in an interview to-dav stated: “Britain will not need to put a specific embargo against United States goods if the war debts payments continue as the pound will depreciate still furher and it will not be possible to buy American goods in the United

Kingdom on account of their high prices.” PRICE OF GOLD. Received December 13. 9.40 a.m. LONDON, Dec. 12. Gold is quoted at £6 6s 2d per fine oz. REDUCTION FAVOURED. AMERICAN VISITOR’S VIEW. AVELLINGTON, Dec. 13. According to Mr L. T. Highleyman, an ex-banker of Miami, Florida, there is a feeling among a great many Americans that the British war debt should be cut down. England, in its settlement with the United States, he said, had agreed to Day a much greater proportion than the other countries, and France, which was in a comparatively prosperous condition, was paying only a small percentage of what was owing. “A\ T e are very strong on disarmament in the States.” said Mr Highleyman, “and one of the strongest arguments in favour of compelling the European countries to meet their obligations is the fact- that most of them can still appearently afford to spend large sums on p.rmaments. Look at Canada and the United States. There is not a battleship on the lakes and not a soldier on the border rexcept for the Customs officers. As long as countries are armed there will be the danger of war.”