Debts

Almost fevered perturbation was evinced in London over the possibility of France's making an agreement with the U. S. without bothering her head about a mere matter of $3,000,000,000 that she owes to Britain.

Hardly had the "faithful Commons" flocked back last week to the House from listening to the King's speech in the Lords, when up bobbed ex-Premier George to reiterate the title of his last book, Where are we going? He wanted to know if Britain was represented in the negotiating between France and the U. S. for the funding of the former's $4,000,000,000 War debt (TIME, Dec. 15). "I should like to know from the Government," he said, "what they propose to do. It is a very practical question for this reason at this moment. There are negotiations going on at this hour between France, and, I am not sure, Italy, and the United States at Washington with regard to the French debt. Where are we? Are we represented there? Are we taking any part in the negotiations?"

The following day the Chancellor of the Exchequer, Winston S. Churchill, treated the new Parliament to its first dose of Churchillian oratory. Mr. Churchill knew perfectly well where he was going. "I have," he said, "to attend a meeting of allied Finance Ministers in Paris in January next, and it will be the wish of everyone that that meeting should be animated by a spirit of comradeship, that it should not be marked by hagglings, bargainings, recriminations or reproaches."

As was natural, before descending upon the French debt to the U. S., Mr. Churchill ventured a few words about the Anglo-American debt settlement. In his opinion, it was settled once and for all. There was positively no inference that Britain would at any time demand a modification of its terms. Indeed, if the contrary obtained, then the Chancellor's conclusions were rendered wholly nugatory. As he saw it, the debt settlement "has placed us in an extraordinarily strong position. We take our seat at the council board of the allied and associated Powers under obligations to no one. We have no need to seek indulgence in any quarter." (Cheers.)

Concerning the settlement of the French War debt, Mr. Churchill stated in plain terms the attitude of His Majesty's Government. '"We consider it essential," he stated, "that any payments made by our debtors in Europe to their creditors in the United States should be accompanied simultaneously and pari passu [with equal pace] by proportionate payments to Britain." (Cheers.)

In France and the U. S., the British attitude was misunderstood. It was not a question of objection to the terms of any future debt agreement between France and America, but a simple declaration that Britain's debts on the Continent must be repaid on the same terms and at the same time. The reason for this is quite clear. Britain intends to collect from Germany and the debtor Allies a sum sufficient to liquidate her debt to the U. S. which she has steadfastly declared she contracted for her Allies. Beyond this she is not interested in reparations. The attitude of France is that, until Britain is enabled to state definitely the sum she expects France to repay, nothing can be done concerning the British debt. With regard to both the U. S. and Britain, France is 'twixt the devil and the deep sea. In order to pay any body, she trust first collect from Germany and her debtor Allies. Thus, if she makes an agreement to repay her War debts, and then Germany pays nothing, France will be left with a huge bill to pay and nothing with which to meet it. To avoid this situation is a cardinal point of her policy. The U. S. preserves the attitude that a debt once contracted must be repaid by the contracting party. Nobody now contradicts that contention; many doubt its wisdom. The New York World said editorially : "... Granting our legal right to do what we choose, the unequal treatment of great Powers in the collection of debts incurred in a common cause is objectionable. It establishes invidious distinctions between the credit of great nations, , , , A great international debt of this kind must rest finally on moral consent. Every attempt should be made to base it on willing moral consent. That can be done only if it is based on a simple rule of justice which all the world accepts. That rule in this case is the principle of equality."

In January, the Finance Ministers of the Allied Powers are to decide how the proceeds from the Experts' Plan are to be divided. When the money starts to trickle in, as it should and doubtless will, the world will be in a better position to conclude debt-paying agreements.