ARE WE PAYING OUR WAY ? [To the Editor of
THE SPECTATOR.] SIR,—Mr. Geoffrey Crowther warns us that it is probable that when the Board of Trade returns are published we shall fwd that this country has an adverse balance of pay- ments (after making full allowance for invisible exports) of perhaps up to ten million pounds, and he rightly advises
us not to give way to panic on this account. --
He himself, however, appeats to consider that a continuance of such a state of affairs, " the 'danger that it may be repeated year after year," would- indeed-be a matter of the gravest national concern.
But would this of necessity be the case ?
Let us assume that the whole world became steadily more prosperous and that in particular the " new " countries,
Canada; 'Australia, New 'Zealand; the' Argentine, recovered at least to the peak of their War-time prosperity. Mr. Crowther would I feel sure .agree that such a peaceful progress of the world to higher standards of living would not be detrimental either to this country or to the world in general.
But is it not a fact that the result of increasing prosperity either for individuals or for nations is a reduction' of the debts owed by the individualS or nations ? (The United States was a debtor nation in 1914, but as a result of its War- prosperity it paid off its foreign debts and became itself a creditor nation.)
Now, the reduction of debts by the debtor nations must mean net adverse balance of payments for the creditor nations,partieularly for the United States and Great Britain. Our loans fot instance can only be reduced by the debtor nations sending us an excess of goods over and above their payments of interest due, and payment for our goods and 8erviCes.
To put the matter in an extreme form, for the sake of illustration—we are owed at least £4,000,000,000 by other nations. If these debtor countries were to reduce their debts to us by £40,000,000 a year it would means that we would have an adverse • balance of payments of 140,000,000 for 100 years before the debts were extinguished.
Genuine world prosperity means a reduction of international debt, and this would mean a continuous adverse balance of payments for the creditor countries.—Your obedient servant,
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