Manawatu Evening Standard. FRIDAY, DECEMBER 16, 1932. FRANCE AND WAR DEBTS.

Manawatu Standard, Volume LIII, Issue 16, 16 December 1932, Page 8

Manawatu Evening Standard. FRIDAY, DECEMBER 16, 1932. FRANCE AND WAR DEBTS.

Notwithstanding an lieroic effort by M. Herriot to convince the Chamber of Deputies that France should honour her signature and pay the instalment of war debt' due to the United States yesterday, the proposal was decisively rejected. A great nation like France, therefore, commits default in this vexed problem, which the creditor country has deliberately chosen to make more difficult for the debtor countries by refusing an extension of the moratorium. The implications in the French decision are so grave that the matter must be given the earliest and wisest consideration having regard to world prosperity. Belgium, Poland and Hungary too have defaulted, and Italy, though she has paid, would prefer to take the same course as France. The writing really was on the wall for the United States in September, when Esthonia, Latvia and Poland notified White House that a postponement of the December payments would be inevitable. The sums due from each were so small that, it appears, little consideration was given by the United States Cabinet to the matter. These States will now be fortified by France’s action. Great Britain, true to tradition, though the effort be well nigh insurmountable, has made her payment, but it is to be noted that a reservation of the utmost importance accompanied the decision. “The payment is not to be regarded as a resumption of the annual payment contemplated by the existing agreement. It is made because the United States has expressed the opinion that such payment would greatly increase the prospects of a satisfactory approach to the whole question,” Britain stated. It was further intimated that the sum paid yesterday would be treated as a capital payment of which account should be taken in any final settlement. These are sentences pregnant with a meaning which the United States cannot ignore. There must be revision of the debts. The statement made in the House of Commons the other day by the Chancellor of the Exchequer (Mr Neville Chamberlain) shows the remarkable sacrifices made by Britain to honour her bond. Her payments to the United States for war debts exceed her own receipts from war debts and reparations by 133.8 million pounds. In sharp relief appears the generous settlement made by the United States with other of her debtors. The survey of the whole question in which the United States has promised co-operation is the pressing need of the day.

With regard to France’s default, it is generally agreed that she is best able to pay among the chief debtor countries. M. Herriot desired to do so with re-, servations, but he failed to rally support to carry the proposal through the Chamber. France’s financial position, however, is far from stable. At the end of the first six months of the fiscal year the deficit on the Budget estimates was 2,000,000,000 francs, and compared with the corresponding period in 1931 the revenue was less by 3,537,000,000 francs, about £28,300,000 at par. First the moratorium of 1931, then the repai-ations settlement have deprived France of receipts from Germany which she has used to pay her own debts, and this has been largely adopted as an argument in favour of default. It is questionable, however, if the Deputies have seriously considered the implications of their action throughout the world. They possibly have set in motion a movement which may lead to others of equally serious consequences. Britain has been left to pay, and she is not receiving sum’s due to her by her Euro-

pean debtors and the Dominions. She has steadfastly set her face against default, which even a sober journal, the Economist, has advised, holding that there is ao shame in breaking a contract which the force of circumstances have shown to be impossible of fulfilment. The consequence is that in the United States to-day Britain ranks high in estimation. It is, however, unfortunate that American official opinion did not realise the force of circumstances and make a bold movement to cut the knot that entangles the world. Now, if never before, must America realise that only by wiping the slate clean, as the late Lord Balfour proposed years ago, can the octopus of war debts be crushed.