Whose Mercy?

When the British were dickering for the American loan, U.S. officials pointed to the war-born debt (in pounds sterling) that the British already owed in other foreign lands. One U.S. official suggested that Britain simply tell those creditors that the debts must be scaled down. Said Henry Wallace in a masterpiece of kibitzing: "Send them here if you don't want to tell them. Just send them here. We will tell them!"

It wasn't going to be as easy as that. Last week, two Britons were making the rounds of countries to which the bulk of Britain's -L-3,750,000,000 sterling debt is due. And the Britons--as becomes debtors --were asking, not telling, the creditors.

Sir Wilfrid Eady, who succeeded Lord Keynes as traveling ambassador for the British Treasury, and Cameron Cobbold, Deputy Governor of the Bank of England, had got as far as India. They had come to ask how much of a -L-1,250,000,000 debt could be written off, and what the terms for the rest would be. On the way home they will stop at Bagdad, where more than -L-100,000,000 is due Iraq; then on to Cairo to talk about the -L-450,000,000 owing to Egyptians. The two may also visit Palestine, where the debt already tops -L-130,000,000 and keeps increasing as long as British troops remain.

Sweating out" the American loan had been bad enough for Britain. Now Sir Wilfrid and Cobbold, on behalf of the nation that only yesterday was the world's banker, had to ask financial peoples whom many Britons still regard as of the "subject races" to show Britain financial mercy.

To the Last Rupee. India is the best example of the postwar turnabout. Here, over a century, Britain had poured in some -L-550,000,000 of investments. Now most of the investments are gone, and brown-skinned men hold valid claims to millions Britain cannot pay.

India, moreover, slightly inebriated by the scent of independence in the air, wants payment to the last rupee. They ask that a large chunk of the debt be paid off at once, another chunk by 1950, and the rest in the '60s.

If Britain could not get much better terms on this and its other sterling debts, its chance of payment was thinner than Lord Keynes's ghost.

Eady and Cobbold could remind the creditors that: "It was your war as well as ours." But the best argument was simply that if everybody demanded his full pound of flesh, there would not be enough to go around. Before his death, Lord Keynes had spoken his mind about those sterling debts: "If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy."

The British position was desperate, even impossible--on paper; but in practical terms it was far from hopeless.

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