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The War Goes On
As we enter upon the eighth month
April 8, 1940.
WE THE
Britain's debt to Amerien has long been a subject of controversy in the United States. Criticism of Britain has been severe.
Yet that criticism arises entirely out of misconception and misunderstanding. It is only necessary to give au- thoritative explanation of the difficulties in order to dis- sipate the violent attacks on the British Exchequer that spring from ignorance.
FIRST of all, dealing with
the history of the Debt and the Settlement, it is easy for me to give an ac- count, although much pre- judice existed at the time.
In 1922 the Debt amounted more or less to 4,000 million dollars.
The money Was borrowed from the United States after America entered the war, and at the time when questions of settlement aroso other countries owed Britain 8,000 million dol- lars.
Now, when peace came
to the world the belief was general in Britain that the United States did not expect or exact a settlement,
HIRED MONEY
by Lord Beaverbrook
Here is the second in a serios of articles by Lord Beaverbrook, exclusive to the "Hong- kong Telegraph" in Hongkong, revealing the truth about the American debt settlement.
It has been sent to newspapers of the United States of America, Canada, Australia, New Zealand, South Africa; and other parts of the world.
It appears in the principal newspapers of the capitals of the Dominions and the United Statos.
The article has also been circulated in pamphlet form to senators and legislators in all parts of the Empire and every State of the American Union.
Copics of this pamphlet will be obtain- able free of all charge on written application to the Daily Express Office, Fleet-Street, E.C.4.
expressed by
Now this Wad A
Clearly there is a great contrast
min-statement, between Pershing's view and that Britain had been in the position not President Coolidge. of an intermediary, but of a banker For, while Coolidge said: "They who received deposits and made hired the money," Pershing says, in loans.
But the mistake was Balfour's 'mis- effect, "We hired the soldiers."
take. It was not the error of the British nation.
The Note was written at a time when Bulfour was growing very old. And usefulness had passed. Britain should not be held responsi ble for his statement. It should not be held against the British people.
Yet Britain has never had à fair
Balfour Note because of the mis- statement.
Pershing and the American leg lators in 1917 envisaged the war us This conviction was due to the
a Joint undertaking. If that is how utterance of President Wilson, who we must regard it, then the burden had said that there was to be no was unequally distributed. profit from the war, and in April
Houses 1917, addressing both Congress, declared that "we seek no material compensation for the sacri- fices we shall freely make."
Figures drawn from an American source of illustrate this:
THE declaration was in har-
mony with other statements by American public men,
Speakers in Congress had strength- ened the conception in Britain that, in America's oyes, the Debt was a contribution made by the United States to a common cause. Here are some typical utterances made at the time the Debt was incurred.-
His
war gold stock, held at that time by the public as well as the Bank.
Any depletion of it was quite im- prassible in a country where the gold still prevalled, where the note Issue was based on gold valuce.
Baldwin was forbidden by his in- atructions from making a settlement. He was permitted only to discuss
terma.
But he went further than his in- structions. He recommended a set- tlement.
He did not wait to consult his Cabinet colleagues in Britain. When he came home he made a statement on his arrival at Southampton that. the terms he brought back were the best that could be got and ought to be accepted.
By doing so he committed his col- leagues to the settlement. A political crisis followed at once. Baldwin had. either to get his settlement through or resign. Having made his slate- ment there was no way out. His resignation meant the break-up of the Government.
That fronted
was the position that con
Bonar Law. If he main- tained his opposition to the Baldwin. settlement his Cabinet would split. And there would be another general. election, with his Conservative
Party divided and shattered at the polls.
Most of Bonar Law's colleagues: were in favour of the settlement. The weight of Cabinet opinion was on that side. And those of his political friends who opposed the settlement were handicapped by the fact that Bonor Law was in bad health. They could not subject him to the stresses. and strains of a political struggle.
So Bonar Law was prevailed upon to accept the Baldwin position under protest.
It has often been represented that. ment at that time. This is not so. I was the only opponent of the settle-
were others, including Mr. There Winston Churchill, Mr. Reginald Me- Kenna, and Mr. J. M. Keynes.
*
The gross cost of the war in per- centage of the national wealth consideration of the argument in the WITHIN the short space of
was-
Great Britain America
34.49 8.07
eight years, after the Bald. win settlement, when some 2,000
American opinion was concerned The annual cost of the war in with the mis-statement and not with million gold dollars had been transferred by Britain to the percentage of national inconic was the argument.
Great Britain
United States, a financial crisis broke out in Britain, ns, it was bound to do sooner or later.
America
30.02 15:50
The battle death's in pereniage of population were:---
Great Britain America
1.44 .05
power.
THERE now came a change of Premiership in Britain and a general election. Lloyd George With such utterances and such went out. Bunar. Law came to facts in their minds the British delegates at the Peace Conference formed high hopes of the American Senator MeCumber: "We ought attitude towards the Debts. to be mighty liberal in the ex- penditure of money when we can take no part in the real battle,
American people,"
Senator Kenyon: "I hope that one of these loans will never be pald, and that we will never ask that it be paid. I never want to
A great run took place. Foreigners removed their balances. The Trea
sury continued to pay. It borrowed fifty milion pounds from France and the United States. But the run con- tinued, And in the end Britain was compelled to abandon the gold stan- dard.
There was no gold left.
Under pressure from Washington, be sent Mr. Baldwin to negotiate in the United States. But he gave him directions to return after making a pudiated. But there was a failure to The Debt, of course, was not re- examination of the position. He
made his own views perfectly plain:
pay. due simply to the bankruptcy which to-day is the battle of the IT must be said that the Ameri-
A settlement must depend on of the British Treasury and the dis- can official spokesmen did
some other method of satisfying the appearance of the gold. It was United States than the transfer of bankruptcy, not repudiation. It was Senator Smoot: "Every dollar nothing then to encourage this
money.
a misfortune to go bankrupt. It was expended under the provisions of British opinion. this Bill will be for the benefit of
Debt could not be paid in not a crime. At the same time, the American
The gold. Britain had no gold to send,
The situation had arisen of which the United States."
attitude towards reparations gave It could not be paid in an increased Boner Law had clearly and empha by Inference, a measure of support to British optimism.
Bale of British Foods The United Ucally warned the United States at Britain asked that "war costar States would not take more goods. the time the settlement was made.
Britain and the United States had should be included in the bill for And it could not be settled by means
British Treasury. From the making balance was against Britain. see this Covernment ask France reparations to be presented to Ger- of the trade balance. For the trade a joint responsibility for depicting the
many. The American representa to return, the loan we may make tives said that only compensation for
Bonar Law's position was that of a of the settlement to the failure to debtor willing to pay but requiring pay, 2,000 million dollars of money "war damage" could be asked from that payment must be adjusted, both had been transferred from Britain Senator Cummins: "I am perfect- the Germans.
The American point in farin and amount, to the debtor's to the United States in Debt instal- ly willing to give to any of the of view, pressed with vigour, pre- capacity to pay.
ments.
The United This principic has
Stotes knew the Allied nations the money which valled.
Now the debts to the United States adopted by the they need to carry on our war.
debtor's condition, and yet exacted I would were plainly one of the "war costs" 1926, the United States War Debt Payment of the Debt. In the end, for is now our five it just us treely as I would of the Allied Powers. The United Commission sinted that the capacity debior and creditor shared the res- to equip our army or to maintain Senter, therefore pairing it to pay should be taken into account posibility for emptying the British
debtor's power to pay. And, by in considering the funding of foreign our navy."
British claim on debts. for those "war costs," the
her."
since been
United States. In
of the war we have plenty of reason for satisfaction with the balance of advantage during the seven un- dramatic months that are behind us. Nothing could have served us better than this long respite in which to marshal'our resources. When Goeb- bels boasts that a neutral traveller in Germany would scarcely observe any difference from peace conditions. he is apparently all unconscious that this is precisely Germany's weakness. If there is ittle difference it is because little difference was possible. Hitler had years ago harnessed the whole activity of the nation to the furtherance of his deliberate design of launching war on Europe atu moment chosen by himself, Thus, long before the war began the country was already working almost at the maximum pitch of which it was capable. With ourselves, on The uther hand, it was only after the emergency had actually burst upon us thut we seriously took in hand the task of keying up our economy to war pitch and effecting the painful fransition from peace to war condi- tions, We have mode immense strides during this invaluable seven months of "qulet war." and with every day that passes we nearer to overhauling the
(by the advances) effectively, and Americans allowed the inference to for. enemy.
the immediate future, arm, be drawn that the Debt might be It has sometimes been said The United States had plenty of strengthen, and support those who regarded as a dead letter.
though Banar Law did not deal with goods on her own shelves. The trou- are, since our declaration of war, There was surprise, then, when, a this possibility that Britain should ble was she could not get buyers for fighting our battles."
years later, the Americans be- part with other assets in settlement or
Nor would the United States take Kan to press for settlement of the of the debt. For instance, Bermuda American securities in the hands of Congressman Mann: "I think It Debt.
and the British possession in the is our highest duty in the making In fact, in 1910, when President Car
Caribbean.
British Investors. The last thing in of war to give aid to those who Wilson's Administration was still in W
Without
discussing the, merits of the world she wanted was to have are fighting the enemy against office, Americans in New York, es- this proposal from the British stand- those securities liquidated at a time whom we have declared war."
pecially American business men, point, let it be said at once that no when the American market was fall- made it plain in their representations United States Government has ever
ing heavily. Congressman Fordney: "Their over and over again that the pay- been willing to open up negotiations friendly act it foreigners ofered to Indeed, it was looked on as an un- (the advances) only purpose is to ment of private debts by Britain to on such basis. Every succeeding. ald them in the best way possible the United States would discharge President has opposed any such sc- sell American accurities on the New to fight our battles across the sea, Britain's obligations.
quisition. The American Adminis York market. without calling upon our men to Nothing was expected from the tration do not want any more island strongly pressed upon Britain by the And this was a view which was: go there,"
necumulated wor debig
many populations.
The Danish Islands were purchased by Americans. Congressman Madden: "We are years to come.
It must not be supposed that it is United States for 25 million dollars the story of misfortune. Financial But now came another chapter in starting out to win a victory as I understand it, to maintain Ameri- urged or alleged that these represen- has long since passed." can rights; and if we can maintain the United States Government's right prefers to leave the responsibility for crisis. The
tations Interfered with or impaired The President of the United States collapse in the United States American rights by furnishing
the Caribbean Islands with the Brit- money to somebody willing to fight to claim repayment of the Debt,
They did, however, create con- Ish Government. our battles for ourselves, we ought adenco in Britain that reconstruction to do it.".
would
go forward without any inter- ference on account of these responsi- bilities.
So Bonar Law, as I have said, cold stocks amounted to 4,000 It was only when the change of never considered the trans When the crisic administration States in the year 1921 that the de- fer of British islands to United United States, although she had gone mand for settlement of the Debt be- States ownership, and he gave off the gold standard, had increased
gan to be pressed upon Britain, no instructions on that point to her holding of gold.
The first American request for a his omissarics.
come
From now onwards the Blitzkrieg, whenever it comes, will find us both in a relative and in an absolute sense Immeasurably better prepared than on Sepember 3, 1030.
Another gain to be registered is the strangulation, none the less sure for being slow, which the British and French navles are inflicting on the enemy, despite his every frontle effort to wriggle out of the tolls. We, on our part, nrg in a position to trade freely with every one of those neutrals and with the whole of the rest of the world besides.
10
in
Congressman Mondell: "We can Gerg the
THERE were other public utter
ances by prominent Ameri- cans in the same vein.
For example, General Perthing has
few
came in
for
the United
By his utter contempt for every rule of law and every prescription of humanity in the conduct of the war, Hitler had made his regime more universally loathed, if that were possible, than I already was in the last phase of the peace. For him it in a disastrous miscalculation that he is fighting at all after seven months, having been confidently assured by Ribbentrop that Britain and France would lay down the sword after a brief campaign and enve him in possession of the field to pull off another of his "miracles." Realising now that victory In beyond
the war, hold them with the support preas for a settlement of the lasue. his grasp, he is behaving like a of the loans we made, the war might have been lost. We scarcely realised what those loans meant to them and to us,
said:---
There were left the goods on Bri- This was what Bonar Law, asked tain's shelves. The creditor did not take these. He did not want them.
ern: when the
the
This was different from the British United States .x- perienced financial disaster at: a time when the country had. plenty of money. She had lots of gold in her vaults. When the crash
million dollars.
was over,
the
"If it had not been that the Allies funding of the Debt was not made But when Baldwin left for the were able to hold the lines for until 2022, and Mr. Andrew Mellon United States Bonar Law made the REMEMBER the distinction. fifteen months after wo had entered was responsible for the decision to position that Britain could pay only between the British crisis,
"It seems to me that there is some.
according to its capacity perfectly when the gold was all gone and clear to the American Ambassador, British credit was ruined, and and also in public statements to the the American crisis, when the American newspapers. He deliber-
ferocious beast at bay, On our side the essential thing is to remember that, though at any, he still han
WHEN the pressure was being ately called in a newspaper reporter gold amounted to 4,000 million put on the British Govern- on the eve of Baldwin's departure to dollars, and had increased in plenty of fight left in him. We must not surrender to any foolish notion middle ground where we should bear ment to take up the question, make his viewa plain to the people 1984, when the crisis was over,
of the United States. that victory can be "chenply won" a certain part of the expense in Lord Balfour, who was Secre
Baldwin went to Washington. He to 8,000 millions. or that it will not demand the last maintaining the Alles' armies on tary for Foreign Affairs in the discussed a settlement involving a But in face of this large stock of ounces of effort and of sacrifice. The the front while we were preparing, Lloyd George Government wrote negotiation of the Debt by means of old, 4,000 millions in gold dollare, unily and power of our Empire as instead of calling all this money
money payments. This was impossi- Brillsh citizens who held American displayed are indeed majesile, and lean and insisting upon its repay-n Note, our great French ally is a tower
ble. It meant a transfer of about bonds pledging payment in gold In It he said, in effect, what we £38 millions of gold a year. And dollars were required to take paper ·
the United States arises from strength, but though the final attainment. We were responsible. We gave the money knowing it would
dollars, after these paper dollars had others have bor Britain had in hand only £125 ment of our goal is certain we must be used to hold the Boche until we the money which
fallen heavily in value. By this". gird our joins for a long and arduous could prepare. Fifteen monthst rowed from us. We have been only millions of gold coin and bullion.
PLEASE Turn To Page 14. Think of it."
journey.
of
owe
the intermediaries.
This
Jess whs
than the
pre-