THE British Government at the close of the fiscal year ending March 31, 1934, was able to show the largest surplus which it had had in ten years. Yet in the following June and December, when the semi-annual instalments on the war debts to the United States became due, no payments were forthcoming. This was a new departure in British policy. Great Britain had been the first of the war debtors to negotiate a funding agreement with the United States, and from the time of its ratification in 1923 until the Hoover moratorium in 1931 the British obligations under this agreement were discharged to the letter. After the expiration of the moratorium in June 1932, the next debt instalment, due December 15, 1932, was also paid in full.
But 1933 brought a change in British debt policy. The government paid only about 10 percent of the scheduled instalments for that year, offering small "token" payments solely to avoid being adjudged in default. On the pay dates in 1934, and again in June 1935, it failed to offer even "tokens," since these, under new American legislation, would no longer spare it from being adjudged a defaulter. The Johnson Act of April 13, 1934, had been officially interpreted as meaning that any war debtor thenceforth in arrears was a defaulter and was debarred from further borrowing in the American market until all payments in default since the passage of the law had been liquidated.
To rehearse the details of the war debt controversy may seem to some people like digging up bones in an old churchyard. Yet because of prevalent misunderstandings and the difficulty of obtaining information free from propaganda of some sort concerning the status of Great Britain as a war debtor, the following table may be of some interest. It shows: 1, the British surplus or deficit at the end of each fiscal year (March 31) since the debt payments began; 2, the combined payments due the United States in June and December following; and 3, the amounts actually paid on these debts. (British figures converted into dollars
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