ABSTRACT
After 15 years of almost continual wrangling and diplomatic tensions, none of the great powers involved in the war debt controversy had moved an inch in their attitude towards the economic and moral issues involved. In practice, this was scarcely surprising. After all, this was the classic zero-sum calculation for which there existed no equitable or wholly satisfactory compromise solution.1 While war raged, everything had been subordinated to the need to secure military victory – whatever the financial cost. Without the defeat of Germany and its allies there was nothing. But once the hostilities came to their dramatic end, the problems of liquidating these vast obligations rapidly took the centre of the stage and informal discussions on the subject soon exposed fundamental and intractable differences between the United States and its European debtors. The future implications of these vast and inter-related obligations fully vindicated the wartime concerns of some American policy-makers. As Senator Cummings of Iowa declared shortly after America’s entry to the war: ‘I am perfectly willing to give to any of the Allied Nations the money they need to carry on our war, for it is now our war . . . [but] I do not want the United States to become the bond creditor of Great Britain or of France or of Russia or of Italy: I do not want to enter the entangling alliance which the possession of these evidences of indebtedness will inevitably create’.2 Such fears were well-founded. The resulting controversy over these war debts produced much hypocrisy and even more self-interested special pleading on both sides of the Atlantic. In retrospect, as H.G. Nicholas observes, ‘it is impossible to follow the course of the so-called war debts controversy without a feeling of disgust and irritation at the stupidity, insensitivity, small-mindedness, and demagoguery displayed by almost all of the participants’.3
