NOTE TO AMERICA

Wanganui Chronicle, Volume 77, Issue 133, 7 June 1934, Page 5

NOTE TO AMERICA

WAR DEBT SITUATION GREAT BRITAIN’S ATTITUDE STATEMENT BY CHANCELLOR I British Official Wireless. ] LONDON, June 5. RUGBY, June 5. The Chancellor of the Exchequer today made his promised statement on war debts, which was followed by the issue of a White Paper containing recent correspondence on the subject between the British and United States Governments. Mr. Chamberlain said: “The British Government would have been prepared to make a further payment on the 15th inst. in acknowledgment of the debt, and without prejudice to their right again to present a case for its readjustment on the assumption that they would again receive the President’s declaration that he would not consider them in default, but they understand that in consequence of recent legislation passed in the United States such a declaration is no longer possible, so that the procedure adopted by the common agreement in 1933 cannot be followed on the present occasion. The Government were, therefore, faced with the alternative either of paying 50 million pounds in full t and of paying a further sum of over 20 million pounds on December 15. That is to say, over 70 million pounds for the current year, or of suspending all payments pending a final revision by an agreement of the existing war debts settlement. The first of these alternatives would, said Mr. Chamberlain, necessitate a corresponding demand by the British Government from its own debtors, for it would not be possible to contemplate a situation in which Britain would be called upon to resume the payment of war obligations to others in full while continuing to suspend all demands for payment due to them. The resumption of full pay meats to the United States would, therefore, revive the whole system of inter-Governinental war debt payments and would postpone indefinitely the chances of world recovery. After full deliberation the British Government came to the conclusion that they could not assume the responsibility of adopting a course attended by such disastrous consequences. ’ Accordingly, they addressed to the United States Government a Note in which they state that, while deeply regretting circumstances which imposed on them the necessity for such a decision. they have concluded that they must suspend further payments until it becomes pos sible to discuss an ultimate settlement of inter-Governmcntal war debts with a reasonable prospect of agreement. The British Government have again made it clear that they have no intention of repudiating their obligations, and will be prepared to enter upon a further discussion at any time when in the opinion of the President, of.the United States such discussion would be likely to produce results of value. System Broken Down. The British Note, which contains several striking passages, says nothing has since occurred tu cause the British Government to change the views expressed in the Note of December, 1932, when reasons were given for the belief that the existing system of inter-Governmcntal war debt obligations had broken down. The Note continues:—Tn respect to war advances totalling 4,277,000 dollars, payments totalling 2,025,000 dollars had been made to date by the British Government to the United States. Yet the nominal amount of the debt still outstanding amounts to 4.713.785,000 dollars. Meanwhile, in respect to war advances totalling 5,773,300.000 do'lars made by the United States to other European Governments the aggregate payments made to date amount to only 678,500,000 dollars. Thus, though the war advances to these other Governments exceeded by one quarter the advances made to the United Kingdom the payments made by the United Kingdom amount to three times what the United States received from these other Powers. On the other hand, while Britain borrowed 4,277,000,000 dollars from the United States, they themselves made war advances to the Allied Governments totalling 1.600,000,000 dollarst at par. But whereas the United States received very substantial payments against the domestic charges involved, the British Government has had to meet the domestic charges of their war loans to the Allied Governments in full, as they have paid over to the United States all they have received both from war debts and war preparations, and have, in addition, paid nearly as much again out of their own resources. A Pertinent Question. If the United States feel the burden of their war advances of 10,050,000,000 dollars, against which they have received 2,7003,000,000 dollars, how much heavier is the burden of the United Kingdom, which, with one-third of America’s population, has had to meet the full charges of its war advances of 7,800,000,000 dollars without any net receipts against these charges, and had. in addition, made large payments out of its own resources in war debts to the United States. The Note points out that Britain suspended the claims on her debtors in the hope of a general decision, but cannot contemplate the situation in which they would meet their war obligations to others while continuing to suspend payments due to them. As to Britain’s improved Budgetary situation, this is due to the unprece--dented sacrifices made by the British ■ nation. Since the war the taxation has been higher in Britain, and, for a considerable period, twice as high, as in the United States, including all Federal State and local taxation. In order to restore national credit in 1931 the British people accepted further heavy increases in taxation accompanied by a rigorous control of expenditure and cuts in salaries and allowances of all kinds, and despite all these measures the Budget would again have showed a deficit last year had it not been possible to secure by a conversion operation a reduction in the rate of interest paid on a large proportion of the public debt. This enabled ,the Government to remit part of the emergency sacrifices imposed in 1931,. and restore part of the cuts on salaries and the whole of the cut in unemployment allowances, the continuance of which was imposing a severe strain on national conscience. It wjDftld have been a gross act of social injustice to have denied this relief to the British people in order te pay war dab Uta tha Unital.

States, while suspending war debt payments due to the United Kingdom. “These inter-Governmcntal debts,” says the Note, “are radically different from commercial loans raised by foreign Governments on markets for productive purposes. War debts are neither productive nor self-liquidating, and unnatural transfers required for their payments would involve the general collapse of normal international exchange and credit operations.”