FINANCE-PUBLIC AND PRIVATE
INTERNATIONAL DEBTS
By ARTHUR W. KIDDY.
DURING the past week the question of International Debts has once again excited attention owing to the reminder which Washington has thought fit to send to France, Italy, Belgium, Czechoslovakia, Greece, Jugo- slavia, Rumania, Esthonia and Latvia with regard to their obligations to the United States, the total amount involved being estimated at £1,420,000,000. The reminder has not been taken too seriously by the stock markets or there would have been a sharp fall in securities, but the exchanges of the countries concerned have been just slightly affected and, as I. have said, it has caused attention once again to be turned towards one of the most important of the post-War problems. It is very difficult to say anything concerning these European liabilities to the United States arising out of the recent War _which_ shall be discreet and useful, for it is a problem which can be. approached from so many angles or points of view. That the recent Washington Note is largely inspired by a stimulus arising from local politics, however, there can be little doubt. From the time of the Armistice onwards there have always been two very different views prevailing in the United States with regard to war indebtedness. By a certain section of the American public, embracing many of the New York bankers and those most closely in touch with this country, there has always been a readiness to respond to the original suggestion of Great Britain that having regard to the nature of the War, to the fact that it was entirely provoked by Germany, and that in the course of the conflict it became increasingly clear that we were fighting against a world challenge by Germany, ethics and common sense alike suggested the desirability of a mutual cancellation of • these obligations. Such, however, was very far from being the view held by the majority of the American public or by the majority of American statesmen who from first to last regarded the matter purely from the business standpoint.
SANCTITY OF CONTRACT.
Moreover, while any consideration of this problem of International Debts which ignored the moral or ethical aspect would be incomplete, there is no disputing for one moment the fact that at the time these debts were incurred both as regards obligations to America and obligations to this country there was no question that the borrowers accepted the situation completely and undertook in due course to make repayment. Therefore, it follows that if the sanctity of contract was to be maintained, and, indeed, if the credit of the debtor nations was to be safeguarded, any suggestion of can- cellation or even of modification of the original contract could only come from the Creditor. It was, of course, a recognition of this fact which prompted Great Britain at a certain stage to make a gesture in the direction of cancellation. Unfortunately, however, we were in the position of almost necessarily being misunderstood because of our own specially large indebtedness to the United States. "When, therefore, it became clear that America regarded the matter somewhat differently from ourselves and considered that the bond should be observed, we quickly perceived that if sanctity of contract and our own credit position were to be safeguarded we should lose no time in funding our own obligations to America. This, accordingly, was done some two years ago, and we know that America was not by any means inconsiderate in the terms, while we also know that we gained two important things by the settlement, the first being an immediate improvement in our credit and the other being a fresh stimulus to economy and effort.
" DEBTS " AND " REPARATIONS."
At the same time, it can be admitted that there are certain points in the view of the Debtor countries deserving of consideration. Especially is this the case with regard to the plea put forward by France that her indebtedness should be regarded in relation to the failure of Germany to make reparations. Just as we assert that we spent our wealth and our treasure in fighting a common foe, so France may well feel that her contribu- tion in this same direction was even greater and that', without in any way minimizing the vital assistance rendered by the United States, her contribution in money and in blood and treasure was small compared with that contributed by France and some of the other European countries. The United States, however, has throughout been resolute in separating all question of any relation between war indebtedness on the part of France and the other countries on the one hand and German reparations on the other, and therefore refuses to recognize any kind of link between them. So far as ordinary business logic is concerned, this attitude is intelligible enough, for to adopt the French plea and to make France's repayments to America conditional upon German reparation payments might well tend to confuse or weaken the character of the American claim.
WAR RESPONSIBILITY.
Nevertheless, I would like to suggest, if I may, to your American readers—for I know they are very many-- another view of the case which, while it may be regarded as ethical rather than financial, is nevertheless, I think, distinctly practical. I believe there are many in this country who will agree with me that during the three years of America's neutrality a point which distressed many_ in Great Britain more than an.ything else was the apparent inability of the United States to recognize clearly the manner in which the conflict had been prepared for and was finally provoked by Germany. Ultimately, as we know, America, through direct personal experience, began to see the world-wide character of the German challenge and finally entered with all her heart into the conflict on the side of the Allies., hoping, among other things—as all the Allies' did—that in a sense it was a " war to end war," and that by the manner of its con- clusion Germany was to learn a lesson making it unlikely that there would be a repetition of the horrors of 1914 to 1918. Now, however, that the War is a thing of the past, there seems to be a tendency in the United States once again to regard the European Armageddon as something for which all countries concerned were more or less responsible and, if I make my point clear, by so completely turning her back upon this question of German reparations the United States runs some danger of undoing the very objects for which she entered the War.
To PROMOTE PEACE.
No one desires a policy of mere revenge against Germany. What is desired is that the whole civilized world, and especially the United States, should cause that country to feel that it is in no doubt at all as to where the responsibility for the War rested. This is all the more desirable because the German people, who had been misled by the militarist section, probably fail to realize to this day the criminal act of their repre- sentatives in 1914. When, therefore, France—or, for that matter, the other European nations who have suffered so deeply by the War—maintains that her capacity to meet her external obligations must bear some relation to the volume of reparations by the one responsible for the trouble, she challenges, as it were, the ethical verdict of the whole world. To ignore that challenge is, in the judgment of many who have endeavoured to consider the matter in the most dispassionate manner, to ignore an appeal to those elements of international justice and confidence which constitute the only possible foundations-of international peace.
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