"We are Not Defaulters!"

Decorously last week London bankers alluded to the days when Britain was really profligate--days when she had borrowed nothing from undiscovered America; days of glory when her conquering Edward III, founder of the gallant Order of the Garter, proclaimed himself King of France; days of shame when he beggared the Florentine bankers who had financed his victories by brazenly defaulting Britain's war debt in the year 1339 A. D.

It was a fine thing to say in London last week that not since Edward III had a British Government defaulted. His Majesty's Government has considered it worth while to make "token payments ' on its war debt to the U. S. only because President Roosevelt, after receiving each token, has always expressed the personal view that it wiped away the stain of technical default. Last week it was the painful duty of the Chancellor of the Exchequer, hawk-nosed Neville Chamberlain, to explain to the House of Commons that President Roosevelt was no longer able to gild tokens with their oldtime gloss. The Johnson Bill, barring flotation in the U. S. of securities of a defaulting nation, had caught the President up short (TIME, April 16). Since he was not going to say any more nice things about tokens, why pay any more?

Rheumatic Chancellor Chamberlain magnanimously paraphrased last week's British note to the U. S., the text of which had leaked out prematurely in Washington "due to a misunderstanding for which the United States Government is in no way responsible." While announcing that no token payment would be made June 15, the note declared: "The attempt to transfer amounts of this magnitude would as its immediate effect cause a sharp depreciation of sterling against the dollar, which as His Majesty's Government understands would not be consistent with the monetary policy of the United States Government."

In other words Mr. Chamberlain, by announcing the new British policy of paying nothing, was rushing to the rescue of Mr. Roosevelt, making it unnecessary for him to depress the dollar further.

When stopping payment to the U. S. was put to the House of Commons in these chivalrous terms, Chancellor Chamberlain drew from all parties--Conservative, Liberal and Labor--the most rousing and unanimous chorus of "Hear! Hear!" evoked by any Government announcement since the War. Not a single M. P. raised his voice in opposition. Mr. Chamberlain drew fresh cheers by a truly remarkable statement that "W7e are not defaulters!"

He covered this essentially uncoverable statement by declaring the eternal willingness of His Majesty's Government to resume negotiations for eventual payment of something "at any time, when, in the opinion of the President of the United States, such discussions will be likely to produce results of value." Such language was diplomatic paltering, no doubt insisted on by that palterer par excellence, Sir John Simon, Foreign Secretary and in private life Britain's highest feed lawyer. The London Press accepted Mr. Chamberlain's words in their true meaning: default. "There was a time," mused the London Times, "when such an announcement by a British Government would have shocked opinion throughout the world, especially in Great Britain. But these are not normal times." "The Johnson Act made it impossible in any event to escape the stigma of de-fault," breezed Baron Beaverbrook's Daily Express. "The Government, in fact, might just as well be hung for stealing a sheep as a lamb." In the U. S. only Hearstpapers raised any great outcry against the Chamberlain announcement. Many a U. S. editor seemed swayed in Britain's favor by a fact pointed out in her note. The fact: she has paid to the U. S. to date $2.025.000.000 on an original debt of $4,227,000,000, but such is the nature of interest that she now owes $4,713.785.000--or more than she owed before she started paying. In France the entire Press took up a chorus of "France was right!" in defaulting ahead of Britain (TIME, Dec. 26, 1932 et seq.). In Italy the attitude of // Duce, who has hitherto made token payments of one round million dollars each, was called "uncertain" but few expected Italy to pay anything on June 15.

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