League of Nations Loans
Some strange misconceptions regarding the -position of various European loans sponsored by the League of Nations appear to be prevalent, to judge from- various recent criticisms, most notably one, since withdrawn, by Sir A. M. Samuel, M.P., who observed in the House of Commons that Sir Arthur Salter (the architect of nearly all the loans in question) had declared that most of them ought never to have been granted. What Sir Arthur Salter did say, .of course, is that perhaps the only loans of recent years which could be fully justified were those issued under the League's auspices. As to the temporary default of the borrowing countries, that is not due to any lack of money to meet the interest payments,- but to the inability to transfer, i.e., to convert the local currency into dollars, sterling, or francs. That conies, not of any fault on the part of the debtors, but of world' conditions generally, which had, as a matter of fact, made transfer of German reparation payments impossible before they 'affected any one of the League loans. In regard to the loans themselves the provision made by the League '(which, of course, never guaranteed any loan) has worked as it was meant to work, and in no case is the-Money available for payment less than 50 per cent. in excess -of the amount required, but till the difficulties Of-transfer" can be surmounted bondholders must wait' for their payments in sterling. Those difficulties haVe been created outside the debtor countries, not by them.
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