As I roll homeward along the coast of Spain a wireless message announces that the British government have accepted the American debt terms.

The details which I have received are not sufficient to enable me to form an opinion regarding the character of those terms, or their bearing on Allied indebtedness to Britain as to the terms of payment. I know nothing of the steps taken by Mr. Baldwin and the government of which he is a member to make this the first step in an all-round settlement of inter-Allied debts. That is a matter of infinite moment to us, and I assume that this is somewhere—and effectively—in the arrangement.

As to the payment of our own debt, the government represent the real sentiment of the nation as a whole. The British taxpayer is no doubt fully alive to the fact that this heavy debt was incurred by him during the war in the main in order to finance American supplies to our Allies. We could have paid for all the supplies we required for our own use without resort to any loan from the American government. Nevertheless, the money was advanced by the lender on our credit and our signature.

Our credit as a nation, therefore, demands that we should pay. Whether we can collect enough money from our own debtors to meet this charge becomes increasingly doubtful, as it is becoming increasingly needful.

Britain is alone in thinking she is under any moral obligation to pay the external liabilities incurred for the effective prosecution of the war. The attitude of the late and of the present government is identical in this respect.

Why have the British public taken a different view of their national obligations towards external war debts from that adopted by other Allies? In giving the answer I do not wish to dwell on obvious ethical considerations which must weigh whenever you consider whether you will carry out an engagement which you have entered into with another who has already performed his part of the engagement on the strength of your promise.

These ought to be conclusive; but to urge them might be deemed to be an unworthy reflection on the honour of those who take a different view of their national duty.

I have no desire to offer censure or criticism upon their decision. They, no doubt, have their reasons for the course they are adopting. We have certainly overwhelming reasons for showing an honest readiness to pay our debts.

The settling up of accounts is always an unpleasant business, especially amongst friends. Strangers expect it and prepare for it—and there is no resentment when the bill arrives. But a man hates reminding his friend at the end of a business in which both have been engaged in warm amity that there is "a little balance" to be paid up. He has been expecting the friend to mention the matter to him. So he puts off introducing the unpleasant topic from year to year. But the friend disappoints his expectations. Not a hint comes from that quarter of any realisation that there is anything due. It soon looks as if it had been forgotten altogether.

The friend is most insistent on collecting the business accounts due to himself. He is angry at all delays in payment of his own bills. But his conscience is blind on the side of the debts he himself owes. It is not an uncommon experience, and we are suffering from it to-day. The war left us a creditor nation to the extent of over 2,000 million pounds, and a debtor nation to the extent of about half that amount. We readily accepted an invitation from our creditor to discuss the repayment of the debt we owe. Our debtors have displayed an invincible reluctance to enter into a similar discussion with us.

That ought not to influence our final decision. Britain is the greatest of all international traders, and her credit rests on the reputation she has well earned—that her bond is a sacred trust which her people always honour and redeem without counting the cost in toil and treasure. I remember when war broke out the panic which seized bankers and brokers as they contemplated the obligations incurred by British firms with their support to finance world trade. These liabilities ran into hundreds of millions sterling, and the only security for repayment was represented by a bundle of flimsy paper, criss-crossed with the signatures of men most of whom no British banker had ever seen, many of them dwelling in countries with whom we were actually at war.

There was one signature, however, on each paper which was known to bankers and carried with it the good name of Britain throughout the world; and it was that of some well-known British firm. Traders in far-distant lands parted with their produce on the credit of that signature and of the country with which it was associated.

It is true that the government had no responsibility for any of these transactions; but the honour of Britain was involved in seeing that the foreign merchants should not suffer ruin because they put their trust in British commercial integrity. For that reason the British government of the day shouldered the burden, took all the risk, and although it meant a liability of between four hundred and five hundred millions sterling, not a voice was raised in protest.

The action then taken, though quite unprecedented, was not only honourable; it was wise. It saved British pride from a reproach; it also saved British credit from a blow from which it would not have recovered for a generation. During that generation this lucrative business would have passed into other hands.

As soon as the war was over the people of Britain, with an instinctive impulse that required no persuasion to stimulate its activity, set about the task of restoring their war-battered credit. Government, bankers, merchants, brokers, manufacturers, and workers of all kinds were of one mind; borrowing must come to an end; Britain must pay her way—whatever the sacrifice. Expenditure was ruthlessly cut down. The army and navy were reduced below pre-war dimensions. Other services were curtailed. Heavy taxation was imposed—taxation such as no other country bears. The budget at home must balance. Debts to other countries must be paid off. Already large sums have been paid abroad. It required courage and constancy to pursue such a policy; but the endurance of the nation was beyond praise. It is now calmly facing the liquidation of this heavy debt to the United States of America; but no party has yet arisen, or is likely to arise, to demand that the hand of the negotiators should be arrested. Britain means to pay the last of her debts without a murmur.

We are already reaping some of the reward. The purchasing value of our currency has already risen under its burdens, and, as a consequence, the cost of living has fallen steadily, while other countries who have pursued a different policy find the cost of living for their people ascending month by month.

A short time ago we were taunted in the French Chamber of Deputies by the president of the council that our unsound financial policy had been responsible for our unemployment. It is true that if we had gone on borrowing instead of paying our way—if we had defied our foreign creditors instead of paying them—we also, like many other European countries, might have fostered an artificial prosperity by means of a discredited currency. But British credit would have rapidly disappeared beyond recovery and British trade would soon have followed. Meanwhile, the cost of living in Great Britain would have been double what it is to-day. We all therefore dismissed that policy from our minds without paying it the tribute of a discussion.

Trust is the only soil in which credit flourishes. Had that trust been forfeited British buyers and consequently British consumers would to-day have been paying more for their wheat, their meat, their cotton, and their wool. The burden of repayment to the United States will be infinitely less than that of the indirect burden involved in large purchases with a discredited currency.

The government are therefore right in arranging with the American treasury without loss of time for the liquidation of a debt incurred by this country. I am taking for granted that they have made every effort to see that the agreement shall form a part of an all-round settlement of inter-Allied debts. But as to our own debt the moral obligation must remain whatever our Allies do or fail to do. Why it was incurred, the circumstances in which it was entered into, the purposes for which the money was advanced, were open to the consideration of the American government in arranging terms. That, however, was their privilege; ours is to honour our signature.