HOW IT STRIKES AN AMERICAN.—Iv. TWO VLEWS OF THE DEBT
PROBLEM.
What American cancellationists and anti-cancellationists have to saYI will show in a moment. Just here I pause to note the mild surprise one feels that British anti-cancel- lationists are so sparing of public expression of their views. British manufacturers, traders, and bankers, so far as I have acquaintance with them, are entirely against the non- payment of any debt that can be paid. Credit, to these men, is a thing inviolable—the most precious of assets. Put to it, the business man rather would give up his money, all of it, and his goods, all of them, if he might keep his credit. Business men and financiers, above everyone else, are authoritative assayers of credit. Of all gold they know credit is the most refined. They know gold and silver coins and legalized paper of every sort are rubbish beside credit. They know all they do and are and hope to be in business depends on credit—the alpha and omega of the commercial creed and of the commercial need.
Sir Ernest Cassel, shortly before he died, speaking with great feeling in high London official circles, declared he would prefer to give up everything he had than to see Britain's debt to the United States cancelled. If creditor nations could afford to cancel debts, Sir Ernest argued, debtor nations could not afford to have them cancelled. Cancelled debts, in all cases where they could be paid, were repudiated debts, and debt-repudiation inevitably led to distrust, confusion, humiliation, and disaster. "What- ever else we give up," declared Six Ernest, "we shall not be really poor if we keep our credit ; and, keeping our credit, though materially poor, we shall be materially rich again." His profound conviction was that Britishers would be really poor only if the report should go round the world that there came a time when, though able, they failed to pay their debts.
Other Britishers of note have urged the same view. If I am not mistaken, Mr. Montagu Norman, Governor of the Bank of England, a few weeks ago in Washington put the case in terms remarkably like those of Sir Ernest Cassel. At a recent private dinner, given to Britons and Americans in London, I personally heard moving speeches by two of the best-known men in British public life, each affirming that Britain's true line, as regards her present debt, is her immemorial line of strict fidelity to her obligations. Both these speakers stated that the very idea of this country refusing to pay its debts, or paying them with bad grace, or even questioning their payment, was repugnant to the whole business community of this historic trading nation. "We are, as Napoleon said, a nation of shopkeepers," remarked one of these orators • "we are proud of it, and. no one need tell a nation of slopkeepers anything about the importance of credit."
Listening to strictures in Great Britain on America's stand up to the present against the cancellation of the British and other Allied debts, anyone with a sense of the certain prejudicial effect of such strictures upon all con- cerned—they can do no good, only harm—hardly can avoid asking the question, "Why do not some of the influential Britishers who share the opinion of many Americans that debt-cancellation, if it can be escaped, means injury, not only to the credit of the debtor nations but to all credit— why do not some of these Britishers place their convictions forcibly before their compatriots ? They may be wrong ; the cancellationists may be right ; but, right or wrong, could they not do something to prevent misconception and hatred from entering into this discussion ? If the American people are misjudging their duty, if they oppose cancel- lation when they ought to favour it, argument, not animad- version, must convince them of the fact."
American anti-cancellationists and American cancel- lationists—let us examine their standpoints in this order. American anti-cancellationists, to begin with, reject the contention that we are morally constrained to cancel the debts. If there were such constraint, as these persons see the question, it would not be a case of Europeans owing Americans ; it would be a case of Americans owing Euro- peans: the debt situation would be reversed. This the position, it would be America's duty to pay, and her failure to pay would infringe the principle of credit. Thinkers of this school reason that the Great War was Europe's war ; that we had no opportunity to prevent it, no connexion with it, no responsibility for it. We entered the War, according to the attitude under discussion, because attacked ; we did the whole of our fighting at our own expense ; we rendered important naval and decisive military aid to others who were dangerously pressed ; and, in addition, supplied prodigious quantities of foodstuffs and raw materials without which the Allies could not have fed their civilian and fighting hosts, and could not have munitioned their machines of war.
Morally, then, in the anti-cancellationist view, the debt is a European debt owing to America, and not an American debt owing to Europe. Since Europe owes the debt Europe must pay, so far as she can pay, or the principle of credit goes by the board. Thus the anti-canoellationists. And, in matters of debt, these people are sincere disciples of Alexander Hamilton, the foremost exponent of sound public finance in the history of the United States. Hamilton believed uncompromisingly in the payment, to the last dollar and cent, of obligations incurred in the public name. Anything savouring of repudiation, or of even unnecessary delayinpayment, struck this eminent lawyer, constitutional- ist, and financier as full of public and private menace to the development of economic interests and of civilization. "Be stringent in public expenditure, borrow only when you must, pay as quickly as you can—so you will be able to borrow again if in actual need "—such was the fiscal philosophy of Hamilton. And the American anti-cancel- lationists, whatever their shortcomings, are devoted Hanailtonians.
Now let us glance at the American c,ancellationiat mind. This mind, quite as sharply as do the anti-cancellationists, I have no doubt, sees the abstract question of credit through Hamilton's eyes. It differs from the anti-cancel- lationists because it feels America entered the War for Democracy tardily, gave in restricted volume of her blood, and—though claiming neither reparations nor territory— should wipe out the billions of dollars she has debited to Europe as her final and just payment for the redemption of freedom. These thinkers realize that America geo- graphically was far from the Prussian danger ; that her diplomacy was blameless for the snarl that led to the War ; that she well might have borne the insults and wrongs inflicted upon her and stood aloof. But they are little impressed by geographical distance as a barrier against public peril. Our diplomatic innocence they regard as irrelevant. All they see is that a ruthless Power was grinding free Europe to powder, that free Europe was the outpost of free America, and that America lagged in coming to the aid of her European supports until the most of their wealth was burnt up, until their national hearts were all but broken, and until the pick of their manhood was blinded or maimed or lay dead in battle.
Such is the vision, such the emotion, such the point of view of the American who hopes and believes Europe's gigantic debt, or• so-called debt, to the United States never will be paid. He objects to its payment, he pleads for its cancellation, on moral grounds, first of all. He believes we ought to cancel, and he has no shadow of doubt our highest interest, as everyone's, in this and every other matter, lies in doing what ought to be done. But he also thinks economics join with morality in. calling for cancellation. He does not think the inter-Allied debts, or the Allied debts to the United States, can be paid on any terms—. unless, indeed, on terms amounting in practice to cancel- lation—without intolerable injury both to debtors and to creditors. In other words, the cance,llationist's judg- ment is that, if we be deaf to the voices of sentiment and morality, eventually, without spiritual gratification and 'without honour, we shall listen to the peremptory voice of economic law.
Long before the birth of the Balfour Note—at least three years before this event—the American cancellationist was in the field. He was making himself felt in the pulpit, in the Press, and on the platform. Instead of doing him god in his campaign the Note did him harm ; it armed hm opponents with awkward weapons, and it created an atmosphere charged with "static electricity" to jam his argument. Parenthetically, not only the American debt- cancellationist, but the American anti-Protectionist and the American adversary of costly subsidies to shipping enterprise, will fare much better in their fight if relieved of assistance from abroad. Sovereign nations, of course, resent other nations trying to influence their policy. Just as America knows she must not interfere in the domestic affairs of her sister nations, so she knows she will adopt what policies she likes, however foolish they may be, in her own sphere. And, left alone, spared the irritation, the provocation, of external tutelage, she is virtually certain, in the end, to adopt policies that will insure amicable and mutually beneficial relations between herself and her world neighbours.
Now, as regards the British and the Continental European debt to America, what is the actual position at the moment ? We have not asked Britain or any other debtor nation for a dollar. At the end of the War these debts were outstanding. America said to Europe : "What shall we do about them ? " Europe replied : "We cannot pay interest or principal now." America then said : "What do you propose ? " "We propose deferring the matter for three years." "Very good," said America ; and the matter was deferred for three years. Meanwhile, the taxpayers of the United States have gone into their pockets for 1300,000,000 interest on these loans—loans by Americans to Europeans. Thus far not a penny, not a centime, of this debt, nor of the interest on it, has been paid, yet some Europeans declare America, as a result of the War, got the world's gold. We have much gold—too much—but let me say that every dollar's worth of gold in the American Treasury cost a dollar's worth of American labour. The Congress has passed a Bill establishing a Debt Funding Commission to deal with foreign obligations, and laying it down that these obligations shall bear interest at the rate of 41 per cent., and shall be liquidated in twenty-five years' time.
Europeans appear to take this Act of Congress as the last word on the subject. One may venture to tell them the Acts of the American Congress are not as were the laws of the Medes and Persians. Washington knows as well as London or any other capital knows the European debts to America cannot be paid in twenty-five years' time. What the Debt Funding Commission means is that the matter of terms is open to discussion in the light of all the facts and of all the British and other European dele- gations have to say on the facts. With everything material to the issue before it, the American Debt Funding Commission, in friendly conference with our British and other European friends, will decide what it can recommend to the Congress as practicable terms of settlement.
Whatever these terms may be, considering the eminence of the American authorities studying the problem, and considering their prestige with the American nation, there is every reason to hope they will win the approval of the necessary number of Representatives and of Senators. If they do, we shall have a substitute for the present Act and a situation deemed at least not unbearable by the debtor nations. Then the ameliorative forces of time and education will start effectively upon their work, and finally we shall get a permanent settlement in accordance with the true interests of all concerned. So what we need, and all we need, for the present and for the future are those sure solvents of difficulties between nations, mutual forbearance and the comradely spirit.
EDWARD PRIOR BEL&
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