The American Debt Problem The decision of the Cabinet with
regard to payment of the American Debt instalment due . on June 15th is apparently to be postponed pending. further discussion. It is a new thing for America to send a demand note in • advance, totting up the various unpaid items. of the bill. This country, it is clear, can neither liquidate the arrears nor make anything like payment in full on the current instalment. America's fiscal policy precludes :that .completely. There is, however, one point that - deserves consideration. In 1931 Mr. Hoover proposed, a moratorium of one year on the understanding that the amount theoretically due in that year should be paid off . in instalments of a • little under $20,000,000 (say 0,000,000),. We are now being. asked for, a half-yearly payment under this head. That request cannot be lightly dismissed. The agreement was made no more than three years ago. It was perfectly explicit, and the undertaking to make the annual payments was definite. It cannot, moreover, be argued that the general financial situation of this country has deteriorated since then ; on the contrary, it has distinctly improved. To decline to carry out the heavy obligations entered into in very different circumstances during the War is one thing; to repudiate an agreement for the payment of very moderate annuities entered into only three years ago is quite another, and it is hard to see what possible justification there could be for the refusal. If these annuities are paid there would be good ground for declining anything in the way of further token payments pending a final settlement.