1940-04-08 — Page 26

Monday,

HONGKONG TELEGRAPH

April 8, 1940.

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WE THE

Britain's debt to America has long been a subject of United controversy in the States. Criticism of Britain has been soverc.

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 ignorancë.

FIRST of all, dealing with

the history of the Debt and the Settlement, it is easy for me to give an ac- HONGKONG HOTEL judice existed at the time.

count, although much pre-

GARAGE

Stubbs Road Tel. 27778-9

DEATH

În 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 SUMMERS-At his home, Kat Tak settlement arose other countries Villa, Kowloon City, on April 7, | owed Britain 8,000 million dol- 1040, Capt, Edwin Henry Sum-lors. mers, aged 78 years. Funeral will pass the Monument at 5 pm. to-day.

She

Hongkong Telegraph.

Monday, April 8, 1940, Wyndham St, Hongkong Telephone: 20015 THE prefix "Special to the Telegraph" Is used by the "longkong Telegraph to indicate bowe which is suietly copyright under the provisions of the Telecommuni« cations Ordinance, 1936. Such news, ka

hunskong on the Oris of publication by

the United Pross Associations, who re- servo all rights and farbid repubication. either wholly or in part without previous

Arrangement.

The War Goes On

As we enter upon the eighth month 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 ta marshat our resources. When Goeb- bets 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 little difference it is because little difference was possible. Iller had years ago harnessed the whole activity of the nation to the furtherance of his deliberate design of launching war on Europe at a 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 other hand, it was only after the emergency had actually burst upon us that we seriously took in hand the tusk of keying up our economy to war pltch and effecting the painful transition from peace to war condi- tions. We have made immense strides during this invaluable seven with months of "quiet war," and

come every day that passes we nearer to overhauling the enemy. From now onwards the Biltzkrieg, It comes, will find us both i in a relative and in an absolute sense immeasurably better prepared than

Sepember 3, 1939.

whenever

on

Another gain to be registered is the strangulation, none the less sure for being slow, which the British and French navies are infileting on the enemy, despite his every frantic effort wriggle

to

of the toils. We, on our part, are in a position to trade freely with every one of those 10 neutrals and with the whole of the rest of the world besides.

out

by

HIRED MONEY

Lord Beaverbrook

Hore is the second in a series of articles by Lord Beaverbrook, exclusive to the "Hong- kong Telegraph” in Hongkong, revealing tho truth about the American debt settlement.

It has been sent to newspapers of the -United States of America, Canada, Australia, Now Zealand, South Africa, and other parts of the world.

It appears in the principal newspapers of the capitals of the Dominions and the United States.

The article has also been circulated in pamphlet form to senators and legislators in all parts of the Empire and overy State of the American Union.

Copies of this pamphlet will be obtain- able free of all charge on written application to the Daily Express Office, Fleet-Street, E.C.4.

Now this

war gold stock, held at that time by the public as well as the Bank,

Any depletion of it was quite im possible in a country where the gold still prevailed, where the note issue. was based on gold values.

Baldwin was forbidden by his in- structions from making a settlement. He was permitted only to discuss

terms.

But he went further than his in- structions. Ile recommended a set- tlement.

He did not wait to consult his Cabinet colleagues in Britain. When

พล

he came home he made a statement on 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 state- ment there was no way out. Is resignation meant the break-up of the Government.

That was the position that con- fronted Bonar Law. It he main- tained his opposition to tho Baldwin rettlement his Cabinet would split And there would be another general election, with his Conservative Party divided and shattered at the polls.

upon

Most of Bonor 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 Clearly there is a great contrast

was a mis-statement. were handicapped by the fact that Bonar Law was in bad health. They between Pershings view and that Britain had been in the position not could not subject him to the stresses. expressed by President Coolidge. of an intermediary, but of a banker co Now, when peace came to the For, while Coolidge said: "They who received deposits and made and strains of a political struggle.

So Bonar Law was prevailed world the bellet wan general in hired the money," Pershing says, in loans,

But the mistake was Balfour's mis- to accept the Baldwin position under Britain that the United States did effect, "We hired the soldiers."

protest. not the error of the not expect or exact a settlement. Pershing and the American legis-take. It was

It has often been represented that British nation, lators in 1917 envisaged the war as

was the only opponent of the settle- The Note was written at a time 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 when Balfour was growing very old, ment at that time. This is not so.

His usefulness had passed.

were others, Including Mr.. had said that there was to be no was unequally distributed. Figures

And Winston Churchill, Mr. Reginald Me- profit from the war, and in April drawn from an American source Britain should not be held responsi- Kenna, and Mr. J. M. Keynes, 1917, addressing both Houses of illustrate this:- Congress, declared that "we seek no material compensation for the sacri- flees we shall freely make."

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 eyes, 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.

Senator McCumber: "We ought to be mighty liberal in the cx- penditure of money when we can take no part in the real battle, which to-day is the battle of the American people,"

The gross cost of the war in per-

ble for his statement. It should not be held against the British people.

Yet Britain has never had a fair

Balfour Note because of the mis- statement.

I

'There

centage of the national wealth consideration of the argument in the WITHIN the short space of

Was

Great Britain Amerion

34.40 8.67

The annual cost of the war in percentage of national Income was:

Great Britain

36.02 Amerien

15.50

1.44 .05

I

American opinion was concerned with the mis-statement and not with the argument.

The battle deaths in neresntage of THERE now came a change of population were:- Great Britain

Premiership in Britain and a America

general election. Lloyd George With such utterances and such went out. Bonar Law came to facts in their minds the British delegates at the Peace Conference power. formed high hopes of the American attitude towards the Debts.

011

eight years, after the Bald- win settlement, when some 2,000 million gold dollars had been. transferred by Britain to the United States, a financial crisis. broke out in Britain, as it was bound to do sooner or later.

A great run took place. Foreigners removed their balances, The Trea- sury continued to pay. It borrowed nifty million pounds from France and the United States. But the run con- Under pressure from Washington, tinued. And in the end Britain was he sent Mr. Baldwin to negotiate in compelled to abandon the gold stan the United States. But he gave him

There was no hold left directions to return after making The Debt, of course, was not re- examination of the position. He pudlated. But there was a failure to made his own views perfectly plain-Bay due simply to the bankruptcy A settlement must depend of the British Treasury, and the dis- some other method of satisfying the Appearance of the gold. It wds" United States than the transfer of bankruptcy, not repudiation. It was

misfortune to go bankrupt. It was money. The Debt could not be paid in At the same time, the American

The situation had arisen of which attitude towards reparations gove, gold. Britain had no gold to send. Senator Kenyon: "I hope that by inference, a measure of support it could not be paid in an increased Bonar Law had clearly and empha

sale of British goods. The United tically warned the United States at to British optimism.

Britain asked that "war costs" States would not take more goods. the time the settlement was matic. And it could not be settled by means ̈

Britain and the United States had that it be paid. I never want to should be included in the bill for of the trade balance. For the trade a joint responsibility for depleting the.

I must be said that the Ameri- can official spokesmen did Senator Smoot: "Every dollar nothing then to encourage this expended under the provisions of British opinion. this Bill will be for the benefit of the United States."

one of these loans will never be paid, and that we will never “ask

to

many.

The

see this Government ask France reparations to return the loan we may make

her."

balance was against Britain.

on

a

not a

a crime,

to Ger- be presented

British Treasury, From the making American representa- tives sold that only compensation for

Bonar Law's position was that of a of the settlement to the failure to "war damage" could be asked from that payment must be adjusted, both had been transferred from Britain debtor willing to pay but requiring pay, 2,000 million dollars of money Senator Cummins, "I am perfect the Germans. The American point in form 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

ments. to pay. Allied nations the money which valled.

This principle has since been The United States knew the they need to carry on our war, Now the debts to the United States adopted by the United States. In debtor's condition, and yet exacted for it is now our war. I would were plainly one of the "war costs" 1026, the United States War Debt Payment of the Debt. In the end, give it just as freely as I would of the Allied Powers. The United Commission stated that the capacity debtor and creditor shared the res to equip our army or maintain States was

therefore impairing its to pay should be taken into account ponsibility for emptying the British debtor's power to pay. And, by in considering the funding of foreign uu. preventing the British claim on debts.

There were left the goods on Bri- Germany for those "war costs," the

This was what Bonar Law asked tain's shelves. The creditor did not

take these. He did not want them..

our navy."

Congressman Mondell: "We can

(by the advances) effectively, and Americans allowed the inference to for has sometimes been saldal. The United States had plenty of

in the immediate future, arm, strengther, and support those who are, since our declaration of war, fighting our battles."

Debt.

those securities liquidated at a time

be drawn that the Debt might be regarded as a dead letter.

though Bonar Law did not deal with goods on her own shelves. The trou- There was surprise, then, when, & this possibility that Britain should blo was she could not get buyers for few years later, the Americans be- part with other assets In settlement them.

Nor would the United States take Congressman Mann: "I think it to press for settlement of the of the debt. For instance, Bermuda American securities in the hards of and the British possession in the British Investors. The last thing in is our highest duty in the making In fact, in 1910, when President Caribbean. of war to give aid to those who Wilson's Administration was still in Without discussing the merits of the world she wanted was to have enemy against office, Americans in New York, os this proposal from the British stand when the American market was fall- aro fighting the whom we have declared war." pecially Americaa business men, point, let it be sold at once that no

Congressman Fordney: "Their over and over again that the pay- been willing to open up negotiations friendly act it foreigners offered to-

made it plain in their representations United States Government has ever ing heavily.

Indeed, it was looked on as an un- (the advances) only purpose is to ment of private debts by Britain to on such ald them in the best way possible the United States would

a basis. Every succeeding to Eght our battles across the sea, Britain's obligations.

discharge President has opposed any such ac- Dell American securities on the New

quiallion. The American Adminis- without calling upon our men to Nothing was expected from the tration do not want any more Island strongly pressed upon Britain by the go there."

accumulated war debts for many populations, The сто when the Americans.

Danish Islands were purchased by the 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 reprezen has long since parsed.

tationa interfered with impaired The President of the United States collapso in the United States can rights; and if we can maintain the United States Government's right prefers to leave the responsibility for

This was different from the British Amerionn rights by furnishing

States to claim repayment of the Debt.

the Caribbean Islands with the Brit crisis, The United money to somebody willing to dight

Onancial perienced

disaster They did, however, create con- Ish Government. our battles for ourselves, we ought fidence in Britain that reconstruction

a

time when the country had would go forward without any inter-

plenty of money. She had lots of ference on account of these responal-

gold in her vaults. When the crash bilities.

to do it."

*

HERE were other public utter

ances by prominent Ameri- cans in the same vein,

For example, General Pershing has

said:---

.

York market.

And this was a view which was:

dollars.

SX-

at:

was over, the-

So Bonar Law, as I have said, cum gold stocks amounted to 4,000- It was only when the change of never considered the trans- When the crials administration came in the United fer of British islands to United United States, although she had gone States in the year 1921 that the de- mand for settlement of the Debt be States ownership, and he gave off the gold standard, had increased:

her holding of gold. no instructions on that point to gan to be pressed upon Britain.

The first American request for a his emissaries.

"If it had not been that the Allies funding of the Debt was not made But when Daldwin left for the were able to hold the lines for until 1922, and Mr. Andrew Mellon United States Boner Law made the REMEMBER the distinction. neteen months after we had entered was responsible for the decision to position that Britain could pay only between the British crisis,.

the war, hold them with the support press for a settlement of the issue.

of the loans we made, the war might

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 it already was in the last phase the

of

peace. For lim It is a disastrous miscalculation that he is fighting at all after seven months,

confidently having been mon assured by Ribbentrop that Britain and France would lay down the sword after a brief campaign and leave him in possession of the fuld to pull off another of his "miracles." Realising now that victory is beyond his grasp, he is behaving like ferocious beast ut bay. On our side the essential thing is to remember

WHEN the pressure was being ately called in a newspaper reporter gold amounted to 4,000 million: that, though at bay, be stili

has

put on the British Govern- on the eve of Baldwin's departure to dollars, and had increased in plenty of mut left in him. We must "It seems to me that there is como not surrender to any foolish notion middle ground where we should bear ment to take up, the question, make his views plain to the people 1934, when the crisis was over,. that victory can be "cheaply won" a certain part of the expense in Lord Balfour, who was Secre of the United States.

Baldwin

to 8,000 millions. or that it will not demand the last maintaining the Allies' arinics on tary for Foreign Affairs in the discussed" went to Washington. He

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 gold, 4,000 milions in gold dollars unity and power of our Empire us instead of calling all this money a displayed are indeed majestic, and loan and insisting upon its repay- a Note.

money payments. This was imposal British citizens who held American our great French ally is à tower of ment. We Wero responsible. We In it he said, in effect, what we ble. It meant a transfer of about bonds pledging payment in gold. dollars were required to take paperTM OWC gave the money knowing it would

year. And the United States arises from £38 millions of gold ment of our goal is certain we must be used to hold the Boche until we the money which others have bor- Britain had in hand only £125 dollars, after these paper dolines had: fallen heavity in value. By this gird our loins 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 4 was less than the pres journey.

Think of it.""

strength, but though the anal attain

a

have been lost. We scarcely realised what thoro.Ivars meant to them and to us..

the intermediaries.

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 dellber-

This

0.

5