A cold shiver ran down the back of England when it was announced officially that the British government had definitely agreed to pay over £30,000,000 a year for sixty years to the United States in respect of debts incurred by us on behalf of our Allies without seeking a contribution from our debtors to protect the taxpayers of this country. It is not that anyone dreamt the evil dream of repudiation. That was never woven into the texture even of the worst nightmare out of the many that have disturbed our repose since the greatest nightmare of all left the world a quivering nervous wreck.

Nor did we expect remission of our debts. Whenever we were tempted to exaggerate the bounds of human charity paragraphs appeared that reminded us of the attitude of the "Middle West." America was discovered by Europe centuries ago, but the "Middle West," as a political entity, is to untutored Europeans a discovery of the war. We were then told by returning explorers that it was the seat of the American conscience—inexorable, intractable, but irresistible when engaged in any enterprise. How potent this conscience was, as a world force, the war demonstrated. From the heights it hurled an avalanche of force against Germany that overwhelmed the last hope of resistance. Unfortunately for us when it came to debts we struck against the hard side of the Middle West conscience.

Our hope was therefore not in remission. There were, however, many other possibilities. We were not the only debtors of the American government. Other Allies had borrowed not merely indirectly through us, but directly from America. We had every confidence that the United States government would not mete out to Britain severer treatment than it was prepared to accord to our Allies. We had to contend, it is true, with legends of our inexhaustible wealth. Apart from our great coal deposits, and a climate which leaves those who endure it no alternative but activity, we have no treasure except the industry, the resources and the inherited skill of our people. We have nothing like the rich plains and the fertilising and ripening sunshine of France, which maintain sixty per cent. of its population. Our sources of wealth—apart from coal—are precarious, for they depend more largely than any other country on conditions outside our own. We are international providers, merchants and carriers. A sixty-year contract to pay large sums across the seas is in many respects a more serious consideration for us than for countries whose riches are inherent in their soil and are, therefore, more self-contained. The demoralised condition of the world markets has left us with a larger proportion of our industrial population unemployed than any other European country. I hear tales of unemployment in the United States of America, but the reports that reach us here on American unemployment are so contradictory that I can build no argument upon them. But, as to the gigantic dimensions of our unemployed problem there can be no doubt. We have 1,400,000 workmen on the unemployed register drawing unemployment pay in one form or another. The annual cost to the nation of feeding its workless population runs to over £100,000,000—almost the figure of the annuity demanded from Germany as a war indemnity.

Although there are signs of improvement the omens point to a prolonged period of subnormal trade. Continuous depression for years will mean that Britain will suffer more from the devastation to her trade caused by the war than France from the devastation of her provinces. Our country, anxious about its means of livelihood, with a million and a half of its workmen walking the streets in a vain search for work, has to bear the heaviest burden of taxation in the world. Why? Because it has not only to pay interest on its own heavy war debts, but also on £3,000,000,000 which it either advanced to the Allies or incurred on their behalf. That is why we felt hopeful that the United States would not discriminate against a nation so situated.

When I talk of debts the Allies owe to us, I want to emphasise the fact that these debts are not paper myths nor tricks of accountancy. They are onerous facts representing a real burden borne at this hour by the bent and panting taxpayer of Britain. If these loans had never been made the weight on his shoulders to-day would have been lighter by over two shillings in the pound. He is every year paying to the actual lenders—some British, some American—that proportion of his income. It is a weight he undertook to carry for his Allies during the war on the sacred pledge of those Allies that they would take it over after the war. The American government borrowed from their public to make advances to Great Britain, and have called upon the British taxpayer to redeem his pledge. We make no complaint, for the demand is a mitigation of the strict letter of the bond. But that amount is in substance part of the debt owing by the Allies to Britain. And the British taxpayer naturally feels it is hard on him to have to bear not only his own legitimate burdens but that he should in addition have to carry the debts of his less heavily taxed brethren in continental countries. He naturally inferred that if equal pressure had been administered on all debtors alike it would have forced an all-around consultation which would have terminated in an all-round settlement.

That was the real purport of the Balfour note. The true significance of that great document has been entirely misunderstood—sometimes carelessly, sometimes purposely, sometimes insolently. I guarantee that not one per cent. of its critics if confronted suddenly with an examination on its contents would secure one mark out of a hundred. It has suffered the same fate as the treaty of Versailles. Opinion is sharply divided as to both between those who rend without reading and those who read without rending. Most men have received their impressions of the Balfour note from denunciatory phrases penned by writers who received their ideas about it from men who gave instructions to condemn it without ever reading it. The men who really understood both the Versailles treaty and the Balfour note have been too busy to find time to inform, to interpret, and to explain.

But the time has come when the public attention should be once more drawn to the remarkable and far-reaching proposals of the Balfour note. They constitute an offer on the part of Britain to measure the amount of her claims against her Allies by the extent of her obligations to the United States of America. The British government even offered to include the claim of their country against Germany in this generous concession. What does that mean in reference to present conditions? That if the Allies and Germany between them found the £30,000,000 a year which Britain has undertaken to pay America, she would forgo her claim to the £3,300,000,000 due to her under contract and treaty. It was a great offer and if accepted would have produced results beneficent beyond computation. Britain, which would have been the heaviest direct loser, would have profited indirectly through the world recovery that would have ensued.

How was it received? Some criticised it because it asked too little—some because it demanded too much. Many criticised because they were determined to approve nothing that emanated from such a government, but most of its censors condemned it because they never took the trouble to understand it, and the shrillest among the street cries happened to denounce it. The government that propounded it soon after left the seat of authority, and the administration that succeeded put forward a new scheme which attracted even less acceptance. So this great project which would have settled for ever the question which above all others is vexing peace and unsettling minds in Europe was pigeon-holed where it was not already basketed.

But surely this is not the end of all endeavours to reach a settlement of the question of inter-Allied debts. We cannot rest satisfied with an arrangement which effectively binds us to pay without prospect of the slightest contribution from our debtors. What America cannot indulge in we cannot afford. The gold of Europe now lies in its coffers. Who are we—plunged in the mire of debt up to our nostrils—to give ourselves airs of generosity superior to the only golden land left in this war-stripped earth?

If there is to be a general jubilee in which all alike participate in order to give the world a new start, then I feel sure Britain will play her part bravely and nobly. But a jerry-mandered jubilee which frees France, Italy and Belgium from all their debts whilst leaving Britain sweating to pay off debts incurred for her Allies on the strength of their bond—that we cannot bear.

I trust the government will insist on an arrangement with our Allies which, even if it is not a replica of our contract with the American government, will at any rate ensure us a contribution that will safeguard us against loss under that contract. It is I fear hopeless to expect that we should be recouped the 2s. in the pound which interest on Allied debts costs our taxpayers, but at any rate we might be guaranteed against the 6d. in the pound which the American instalments involve. I feel the effort is beset with difficulties and that the outlook is not hopeful. There have of late been a few discouraging symptoms. One is the reception accorded at the recent Paris conference to the British prime minister's liberal offer regarding inter-Allied debts. It was a tactical error to open the conference with such a scheme and the effect was singularly unfortunate.

Had I been disposed to press my criticisms on the conduct of the recent negotiations in Paris it would have been that they were so managed that for the first time since the war Britain has been completely isolated at a European conference. That is a misfortune, for it encouraged the French government to rash action. Up to the last conference Britain and Italy had remained in substantial accord even when France and Belgium took a different view, and Belgium had never before quitted any of the gatherings in complete disagreement with Great Britain. So France, always tempted as she was to occupy the Ruhr, hesitated to do so in the face of so formidable an Allied resistance. What is relevant, however, to the subject of this article is the cause of our unwonted isolation on the occasion of the last conference. The British premier started the negotiations by tabling proposals which promised forgiveness of most of the indebtedness of these countries to Britain, but which implied immediate arrangements for beginning repayment of the rest. This suggestion of repayment instantly consolidated opposition to the whole of the British plan. It became clear that existing governments on the continent had no intention, unless firmly pressed, of paying the smallest percentage of the debt they incurred on the faith of a solemn engagement to repay the loan when that was possible, and to pay interest meanwhile. If we point to the fact as we did in the Balfour note, that we have undertaken to repay the United States of America the heavy debt incurred by us on behalf of the Allies, they simply shrug their shoulders and say in effect: "That is your affair. We repay neither Britain nor America, and there is an end of it."

The other unpleasant incident is a speech delivered by M. PoincarÉ in the French Chamber in the course of which he dealt casually with the subject of inter-Allied indebtedness. The French prime minister then announced categorically that France had no intention of paying her debts until she has first received her share of reparations from Germany. What does that mean in effect? That the France represented by M. PoincarÉ has no intention of ever paying her debts. When the colossal figure of German reparations is taken into account thirty years is a moderate estimate of the period required for its liquidation. Is the French debt to lie dormant carrying no interest meanwhile? If it is, then the debt is practically wiped out, for the present value of £500,000,000 debt payable thirty years hence is insignificant. The present government of France have therefore declared they do not mean to pay what France owes. Surely the time to dictate the conditions of your repayment of a loan—when you propose to pay, how much you propose to pay, or whether you mean to pay at all—is when you are borrowing and not after you have spent the money.

And yet in the same speech in which M. PoincarÉ serves up hot platitudes for senatorial palates about the sanctity of national obligations, he dismisses France's faithful ally with the cold comfort that France is too busy collecting the accounts due to her to attend to the debts she owes. I believe in my heart that there is a France of which he is not the spokesman—a great France which will not treat shabbily a faithful friend who stood by her in the hour of despair and who is now staggering under unparalleled burdens incurred in the discharge of the obligations of friendship.

All this makes it more necessary that the situation should be cleared up without undue delay. Having just completed negotiations for liquidating our own war indebtedness to America we are in a position to insist on a settlement with those on whose behalf we incurred that indebtedness. If nothing is done the conditions will harden against us. We shall be assumed to have accepted the PoincarÉ repudiation. I do not know what conditions the government have made with the United States government as to the marketability of the securities to be created in funding our debt. If they are to be placed on the market the chance of any future deal is destroyed. Ere that be done we must know where we are in reference to our own claims. I trust the government will act promptly. Delay was justifiable so long as we were in the same position in reference to what we owed as what we claimed. The Baldwin settlement has altered all that. If we do not insist on an arrangement now the British taxpayer will have the fate of Issachar—that of the poor beast between two burdens—his own and that of the Allies.