HC Deb 05 June 1934 vol 290 cc753-6
45. Lieut.-Colonel TODD

asked the Chancellor of the Exchequer upon what terms the British Government borrowed £1,000,000,000 in 1917 from the United States?


$2,500 millions, or about £500,000,000, was borrowed during 1917–18 mostly in the form of 6 per cent. demand obligations: this sum formed part of the $4,600 millions funded in 1923: see Command Paper 1912.

Lieut.-Colonel TODD

Is it a fact that the British Government undertook to pay in gold certain large sums at short-term notice?


Perhaps my hon. and gallant Friend will put that Question down.

Mr. ATTLEE (by Private Notice)

asked the Chancellor of the Exchequer whether he can now make a statement on the subject of the American War Debt?


It had of course been my wish that the first announcement on this subject should be made to the House of Commons, and that there should be simultaneous publication of our Note to the United States Government in London and Washington this afternoon. Owing to a misunderstanding, for which the American Government was in no way responsible, the terms of our Note which was delivered at 8 p.m. yesterday by our time were issued in Washington a few hours later in the evening.

The House will recollect that His Majesty's Government in their Note of 1st December, 1932, gave a full statement of the reasons which convinced them that the system of inter-Governmental War Debt obligations as it existed before the Hoover Moratorium could not be revived, and that a radical revision of the existing settlements was essential. The United States Government, in their Note of 7th December, 1932, welcomed the suggestion for a close examination of the whole subject between the two countries. His Majesty's Government paid the instalment due on the 15th December, 1932, in gold, explaining that this payment was not to be regarded as a resumption of the annual payments under the existing agreement, and that it was made because the United States Government had stated that in their opinion such a payment would greatly increase the prospect of a satisfactory approach to the whole problem. Discussions took place both in the spring and in the autumn of last year, but it was not found possible to arrive at a settlement acceptable to the two Governments. On 15th June and 15th December, 1933, His Majesty's Government made token payments in acknowledgment of their debt and on each occasion the President of the United States expressed the personal view that he would not regard His Majesty's Government as in default.

His Majesty's Government would have been prepared to make a further payment on the 15th instant in acknowledgment of' the debt and without prejudice to their right again to present the case for its readjustment, on the assumption that they would again have received the President's declaration that he would not consider His Majesty's Government in default. But they understand that in consequence of recent legislation passed in the United States such a declaration is no longer possible, so that the procedure adopted by common agreement in 1933 cannot be followed on the present occasion. In fact, our Ambassador was informed by the United States Administration on the 11th May that any Government failing to pay in full the instalment due under the existing Agreement on 15th June would have to be regarded as in default; and on 25th May, 1934, the Treasury of the United States addressed a communication to His Majesty's Government setting out the details of various items including arrears of $196 millions due last year and amounting altogether to the sum of $262 millions (or over £50,000,000) due on the 15th instant.

His Majesty's Government were, therefore, in the circumstances which I have described, faced with the alternative either of paying this sum of £50,000,000 in full and of paying a further sum of over £20,000,000 on the 15th December next (that is to say, over £70,000,000 for the current year), or of suspending all interim payments pending the final revision by agreement of the existing War Debt settlement. The first of these alternatives would necessitate a corresponding demand by His Majesty's Government from their own war debtors, for it would not be possible to contemplate a situation in which this country would be called upon to resume payment of their war obligations to others in full while continuing to suspend all demands for the payment of the War obligations due to the United Kingdom. The resumption of full payments to the United States would therefore revive the whole system of inter-governmental war debt payments, and would postpone indefinitely the chances of world recovery. After full deliberation His Majesty's Government came to the conclusion that they could not assume the responsibility of adopting a course attended by such disastrous consequences.

Accordingly, they have addressed to the United States Government a Note of which copies will be available in the Vote Office immediately after Questions. In this Note His Majesty's Government, after briefly restating their views on the whole question of the War Debt, have informed the United States Government that, while deeply regretting the circumstances which have imposed upon them the necessity for such a decision, they have concluded that they must suspend further payments until it becomes possible to discuss the ultimate settlement of inter-governmental war debts with a reasonable prospect of agreement. His Majesty's Government have again made it clear that they have no intention of repudiating their obligations, and will be prepared to enter upon further discussion on the subject at any time when in the opinion of the President of the United States of America such discussion would be likely to produce results of value.


May I ask the Chancellor of the Exchequer if he will give the House an opportunity of discussing the statement?

The LORD PRESIDENT of the COUNCIL (Mr. Stanley Baldwin)

Perhaps the hon. Gentleman will address the question through the usual channels. I have not considered that.


Can the Chancellor give an assurance that there will not be a repetition of the misunderstanding under which the proposals of His Majesty's Government were given to the Press before they were given to this House?


I cannot possibly give an assurance that there will never again be a misunderstanding.


Can he not prevent a repetition of such misunderstanding?


It arose apparently out of the misunderstanding of a telegram. We cannot prevent misunderstanding arising occasionally in the interchange of messages between one country and another.


Would the Chancellor of the Exchequer be prepared to issue a White Paper showing the total amount of debt owing to America at the first onset, the principal and interest that has to be paid and the debts of other countries owing to this country?


I think if the hon. Member will look at the White Paper he will see some of the information which he requires.

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