1932-02-10 — Page 7

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REPARATIONS AND WAR DEBTS,

INTERESTING ADDRESS TO LOCAL ROTARIANS

BY PROFESSOR ROBERTSON,, ·

4.

· READJUSTMENT NECESSARY IN INTERESTS OF

CREDITORS AND DEBTORS:

Professor K. S. Robertson, 'Professor of Economics at the Hong Kong University, in 'an address at the Rotary Club. yester „day gave bis audience a clear wid concise account of the relations" between the various countries, engaged in the recent World War, from sa economic and Anancial point of view. The address em- Bodied, in simple yet lacid terms, a brief summary of the posi tiun to-day and the efforts made by the different nations to most. the situation. The cancellation of the War Debta, according to." Profomor Robertson, scenus improbable' at the moment, but the con- tinuation of the Hoover moratorium is a little short of imperative, The Hon. Mr. W. E. L. Shenton presided; The (y)) text of "Professor Robertson's address will be found below

AMERICA'S VIEWPOINT-AND EUROPE'S.

Professur Robertson said: The concequence that any scaling down prossent world depression is with or cancellation also fails most out parallel in inodern-history. At heavily upon these two states, whose its commencement people spoke of national budgets would in the cir the trade cycle, and the rhythm, cumstances suffer a considerable not the rise and fall, of industrin ng loss of revenue. tivity. But the renomic sickness which has befallen us has passed beyond the point at which theories It may be further noted here that of the trade cycle are appropriate.the annuities which Germany has Wa are forced to ask whether the to pay under the Young- scheme- disquse is not a wasting sickness, are divided into conditional and

The Basle Raport,

HONG KONG DAILY PRESS, WEDNESDAY FEBRUARY 10, 1932,

Germany's budgetary position. Great Britain's position is alcar;.

It is, then, the world depressioni was, in common with that of practi-cancellation is the remedy shu fav which has produced the failure of enlly every other state, insecure,ours; she has already adopted a

the Reparation scheme, rather that and deficit threatened on that sido policy under which this measure

the Reparations and war debts alu; there is, of course, a close would be in her industrial and which have produced the world de connection between her budgetary economic interest, and would pro prostion. But, although we cannot instability" and the wasting sickness dues no adverse effect on her bud- ascribe to the burden of interna which had netuoked her industrial got. life To make a long story short, boen issued at an

The Bulfour Nota may have tional indebteducm tho blame of our

unfortunate present world conditions, it remain funds wors flowing outward from juncture, and the manner of its true that oson in normal times ach Germany, the Reichsbank's gold appearance may barro had untoward debts are a hindrance to the smooth was being drained, the mark, ex-results; but i did mean, on Great working of the international scor chango was wobbly, and default was Britain's part,, cancellation of, all miso system; und when they are ac practically certain. The Hoover she stood to gain by enforcing hercompanied by a re-distribution for moratorium, which followed on Dr. legal claims on her formar allica.

the worso" of the world's laudingi Bruening's striking pubho, avował

France's position is different; she power, by woonomie nationalisa of Germany's position, was an at-bolds grim at present to the infinding expression in higher and tempt to prevent collapso I lifted violability of the Young Plan; the higher tariff walls, by consequent from Germany and all the other devastation she suffered calls for re

dissquilibrium of trade, by Inek:of countries which were linked up inparation payments over and, above balance between the price-levels or the nexus of inter-governmental what she requires to pay Great Primary products and of manufac debt, a burden thai could not have Britain and Amerion; cahoulations tures, then these douts accentuate been mot; this was to be for a year, or sealing down would mean for her the effect of oxisting factors in en- It did not by itself solve all Gera sacrifice, and a considerable item stability. And onco a depression may's problems. The short-term on the credit side of her budget has started, they make it all the of Germany was "still thoroughly(some £17m. at present) would dis more difficult to emerge from it. unsound; her exchange stability appear or be reduced, drawals; the London Conference WAA still threatened by with-

which mot in July added to the Hoover moratórium of inter. veramental debts, the so-called Standstill agrement, whereby com mercial short term balances to the amount of some £300 m. were to romain in Germany for six months.

:

**

International debts which are not American Public Opinion.

the normal accompanyment of pro- duction and interchange of goods American public opinion, if it is] and services are an incubus on truly reflected in Congress, is the world's industry. All would be against reduction of the claims she better off without them, even those has against Europe. Why should countries which, on their budgets, her taxpayers assume the whole burden of paying for the wart Les accustomed for yours to play, its appear to gain. A great nation. Europe find a way out of her own normal part in the expanding trade diloulties; she can, if she likes to try really hard; then she can on which forces, it to strain, and of the world, is given a burden Since these arrangements waretinue to pay hor just debts to the wrench its industrial system in or

Britain's Position.

due to deep-rooted cause which, unconditional," or postponable and entered into; there has been little U.S.;, she can effort to spend huge der to provide a large annual sur-]

The un-2

If not removed, will render recovery non-postponable parts.

sign of improvement in the worldsume on armaments; why cannot impossible.

"conditional part of each minuity sound short-term position, and with tural, nititude of a creditor to a situation. England, with un un she pay what she owes A very na

plus product for which it receives Are there any factors in the pre-19 an absolute and irrecoverable much of her normally realisable debtor.

no return. It is no longer aaor sent day world which preclude the obligation.. under the terms of the

mal competitor in the world's mar hope that an upward movement Hague agreement. The other part forced off the gold standard. Would France by this attitude on the part tions, not as a partner in the give assets tied up in Germany, was

The initiative has been passed to

kets; it is compelled by this burden from the trough of depression can may be postponed, in each case for prices have continued to fall there of America

to enter the ranks of industrial na

inke place? Is there some one not more than two years, if it cam

If France could hope and take of international trade. element, or group of elementa, pre bo show that Germany's exchange the wholesale price level in the direction of reduction, if she could brium of that trade. It is forced

has been a fall of 30 per cent in for a move from America in the seat in the modern world, but un- "and economic stability will be en-

Cut as a disturber of the equili known of ur case! Is it due to, dangered by the payments. In pace if two years, a fall unproeven be certain that America woyiḍto place burdens on its own people, the maldistribution of gold, to this event, the initiative lies with recovering, German's industry, like European readjustment, her path tivity without reaping the normal codented in history. Instead of renet sympathetically to any purely who have to expand their produc tariff barriers of an unprecedented | Germany itself, who may apply for that of her neighbours, remains in would be clearer. An it is, she is height, to the disproportion between the convention of a Special Ad- the prices of primary goods and visory Committee appointed by the kept in order only by the most rigid general election is adverse to deel-in order to produce a large export

a depressed state; her finances are doubtful, and the proximity of a

harvest of a secure and improving thao o manufactures, to the Bank for International Settler

standard of living. This it dossi "stickness" of production, corts ments, itself an offspring of the contral to heavy taxation; it has sive action on the part of her lead-

pecially in the matter of money Young plan.

become ovident that it is quite imers. It was this Special

That she is unwilling to surplus which cannot but be at the wages, to the re-distribution of the Advisory Committee which met, on

posafble for her to resume payments assume the initiative is clear from expense of the nations which are world's "Jending power into. un-Germany's official application, in lieves that her chances of over to governmental conference which it

of Reparations next July. She be the postponement of the interito creditors, whose markets, both domestic and foreign, it must in "nccustomed hands, to the burden of December last, and issued" the recovering are bound up with a had been hoped to convoke at Lau. rade. This reacts on the prosperity inter-governmental indebtedness? port which is called the Baslo Re-

My purpose to day is to isolate port.

removal of the burden of indebted-Banho in January, and which is of those nations, and they in their the last-named of those in an en- Some months before this; howe, but the times were not propi-urgently called for by the implicaturn and their standards of living deavour to as its place among ever, the Hoover Moratorium hadious for an international confer- tions of the Basis Report. the factors of economic disturbance..suspended for one year the whole, Dnes with the readjustment of America's altitudo íš under-

burden as its aim.

standable; she also has an election What has been done, therefore, is looming in the future. But it is

P

*

In isolating war-indebtedness in series of inter-governmental pay-

imply that the removed of this and War Debts; with the exception.

threatened.

World Depression.

I do not say that this load of

this way I must not be thought to ments included under Reparations in. the first place to call the Special scareely logical to insist on her tur-governmental debt is a pri burden would solve all our prob- of a series (amounting w m3 Advisory Committee referred to rights as a creditor, and at theary cause of "the intense depres leins, or even that its existence was necessary for the service of the Fed, and after a careful examina-loofness from the affairs of homing. Its removal, by itself, would above. This Committee has report same time to assume an attitude of sion from which the world is suffer- Her claims are doubtless not solve our troubles. But when

one of the initial causes of dopres Dawes and Young loans"

The

sion malese the burden is lifted or prompted by the desire to save

tion of Germany's trade position, debtors.

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sion. It seems likely, however, that moratorium, that is, was something her budget, and her pince in the just claims; Europe bought from once other fastors have begun to we cannot emerge from that dopras- Loutside tho, Young' plan, and was Venyrally depressed economy of the her, reecived value, and could not sow the seeds of depression, thin lightened, and it is certain that the Germany from imminent. Enancial.many's inability to transfer the only give this credit by calling in the way of recovery, but a direct Maxwelt

World, has not only stated Ger-pay at the time.

America could indebtedness is not only an obtaria events in Germany last summer collapse accentuated our diffleulties and led

conditional part of the annuity in. What had happened was some-

upon her nationals to invest in cause of financial instability and a straight to our own crisis in Great thing like this Germany had for the year beginning next July, but government bonds, the service of danger to the whole monetary sys- has gone so far as to draw the which involves demands upon the tera. This is especially true if the

Britain were in inextricably linked veral years, since the inuugura attention of the Governments to the taxpayer. But it can scarcely bo nations which are the chief credi-

up with the existence of the Gention of the Dawes plan, been un- man Reparation liability, which in this to meet her payments ander that scheme. She had, however,"

rowing heavily abroad, both on long and on short term, this borrowing. was, of course, not governmental

the magnitude of which undoubted-first instance a heavy burden upon unprecedented gravity of the crisis, maintained that this was in the tore are also unsatisfactory, lenders. Complete cancelation is in exist- ly exceeds the relatively short de-Americans; the war cancelled their ing conditions not likely to be ad Plans."

mined inter-governmental indebted during the same period, been bor-presssion envisaged in the Young foreign indebtedness, and raised hieved. Some continuence for al

its turn was to a great extent deter

ness among the allied countries.

The Young Scheme.

#;

Between these words is the un- mistakable conviction that some-

their productive activity to a high pitek: their standard of living at tained a lovel unequalled by that

period of years of the existing moratorium is the least that is no cesanry. It is possible, however,

There is no, tiine to go into borrowing, but commercial. Much thing maro than mere postponement of any other country. Reduction or that before the nations meet, in

liability rests

מסקנט

detailed account of the various of it, doubtless, had been applied settlements which, taken together, to productive ends which, given we append," they said, “to the

is necessary to prevent disaster. cancellation would not mean after conference, public opilion in all constitute the problem of Repara- normal conditions, would lead at Governments; on whom the respon- share in the real burden of the war, the governments to pursue a policy all the nasumption of an unequal the countries concerned may enable tions and Debts. Briefly, Germany's some future date to greater capacity sibility for nation rests to permit and in the matter of armachents, it of readjustment." This will involve

the Young to meet the ingreased burden of scheme as finally adopted at the debt thun created; and Germany of no delay in coming to decisions would be expecting too much to ask sacrifices on the part of some, as Hague early in 1030. According to had also; during the same period, which will bring an anelioration of her European debtors to pay for the Hoover moratorium has already this, she is called upon to pay, been herself applying the savings this grave crisis which weighs so reliof by fooling of political in involved such sacrifices. But it can far series of years ending in of her own people to capital con-heavily on all alike." It seems unsecurity, however, unjustified that not fail to be realised that read- 1096, certain annuities, varying in that her payments under the Dawes likely that action will be taken be feeling may appear to America. amount, but commencing about scheme wore exceeded by boy foreign |fore May; the' British government £85m. and reaching at the maximum borrowing during these years. hs, however, reiterated its belief. 3190m. These annuities in reality": constitute what may be called re- parations proper (compensation for

struction. But the fact remains

ין.

Threat to Germany,

that the problem can only be pro- porly solved by a ennecasion of all Reparations and Government

war-debts.

Alles in War and Peace.

"

justment is in the long run in the

intersate of all, creditors and de blora alike.

Britain's Tariffs.

Fatture of Reperations Bahame. Immediately after the Young' war devastation) thus an amount Further, to the extent to which

plan appeared, Sir Josiah Stamp, ach year sufficient to cover the re-her borrowing waŋ on short term,

speaking in America, stated that i

On the invitation of the Chair' cipionta obligations on their own sho was crenting an unsound posi

fall in world prices of 26 per cent man to members to put questions to

·war'debta, .......

tion for horself, which would be af

would smash the plan to smithere the speaker, Mr. P. 8. Cassidy,| Among European countries, source of danger to her if economie France for 37 years receives a con- condence for any reason beesiac

What will anally emerge from all ens. This prophecy has been just after congratulating Professor Ro- siderable surplus on account of re shaky. Actually, the stream of paration proper, that is, over and foreign lending stopped as a result this wolter, of debt and depression fied, and only the Hoover more-bertson for the clear and concise above what she has to pay out of the American alock market boom: it is impossible at this juncture to filled to the letter. The Young so complicated a problem, asked it torium has kept it from being ful-manner in which he had presented again to Great Britain and the and its subsequent liquidation. BELY. USA Great Britain, on

The great dificulty in the the Her industrial position was thereby

view in regard to Great Britain policy announced in the Balfour weakened, and as the world crisin way of adjustment of cancellation plan omitted one feature which the he could have Professor Robertson's noto, received just what is suffurther developed, and the catas- lies in the divergence of interests Dawes scheme had provided; under having adopted protection. It folent to cover her liabilities to trophie fall in prices rapidly inten America, when her receipts from sided, Germany's economic avatem, among the interested governanta,the latter, adjustments were to seems to me," said Mr. Cassidy. #bad enough already to have these Tranes and other debtors are add. burdened as it was with the lend of It is always the same; allies dur. monde. in Germany's liabilities in high tarif walls which in tau pane ed. Italy, Belgium and other states Reparation indebtedness, was graveling a war are united in endeavour, the event of considerable applica of America have presented the repoive sums which allow of small ly threatened. The nationals, of surplusce That is very rough other countries, themselves weaken for their main and immediate in lion of the value of gold. Ger reparations from being paid in and sketchy account, but it is suf-ed by the world depression, and tereste are the same; after the war, many's liabilitice under the Young goods, as it could normally have been the case. Is the adoption of figiant for our present purpose to nervous about the situation in Gor their interests tend to depart more plan are fixed in gold, so that the protectionist policy in England keep in mind that the bulk of many, began to draw in their short- Gorman, Reparation payments gore term balances in that country, and and more widely from each ather, fall in prices means an increase in likely to compliosto still further ultimately to France. And the it looked us if a now fight from and this rects on the possibility of the real burden of her debt-by-about this interchange of reparations pay.

ment UB.A.; this involved the further the mark whs about to take place. an agrood not lemont.

(Continued on Page 10.)

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