The sun., 1919-06-01

charge OF the debt. But on the whole,
debts for long time will continue ex-
panding.
Two Ways OF Facing Problem.
There are just two methods by which
the world can meet the condition II
faces" said Senator Smoot. EITHER
the nations must look the facts squarely
In the face, recognize that they cannot
carry the burden. and repudiate their
domestic debts, or else they must Inn
pose a special levy on wealth that will
nearly reach tho point of confiscation.
The world cannot live on its present
plane always. and It will not.
I'm speaking of reputation confne
II to domestic holdings of their obligat
tons. for believe that no nation would
be willing to repudiate debts owing to
the nationals of other States that would
break down the whole fabric of national
credit. The levy on wealth, OF which
speak as an alternative, Is under Sc
rious discussion in the countries OF Eu-
rope.
ITO meet the situation IN this country
and make our process of denation keep
step with that Of countries which may
be forced to adopt one or other OF
these expedients 1 am working out
plan of amortising our debt through a
sinking fund. A few evenings ago I met
with group Of important business and
financial men to discuss different plans
for administering such fund.
"a sinking fund designed on n basis
Of 21a per cent. annually would produce
$3.50, 100000 each year, and return ia,
amount of the debt. That is. It Is pro-
posed to keep up the interest, and In ad-
diuon raise from revenues enough to
return each year IN per cent. of the
present face value of the debt. I as
sumo for the purposes OF this calcula-
tion that the aggregate debt is $780,
000. 100000. 1t will be found to reach
just about that figure when all the items
are before US.
Legislation to BE Mandatory.
"A az per cent annual sinking fund
payment would pay Off the debt In a
little under "a years: just about 20
years nine months. 1t would be made
absolutely mandatory to invest this fund
In retiring the governments securities I;
| 1t would not be permitted to be invested
in any other way.
ION the same basis, a sinking fund of
l per cent. annually would raise $780,
100000 a year with which to return the
debt. and would extinguish the whole
IN - years
"A fund at / u per cent would raise
$3.50, 100000 annually. and in little less
| than 80 years would wipe out the debt
This of course, all assumes that there
would be no Increases in our obligations
meanwhile.
I'm discussing such a programme, my
conferences have developed that opin-
ion falls into two general classes. one
believes that 2 u per cent. is too high
a rate to be borne without serious inter-
ference with business. The other thinks
that per cent. annually Is too low !;
and the two seem disposed to meet on
the compromise at l II per cent, which
seems likely to be the feasible basis"
Turning to the measures under which
such a sinking fund would be admins
tered. the Senator said he would propose
to appropriate by permanent law, for
the period Of Amortization decided upon,
the amount required under the plan.
Thus Congress In the beginning would
discuss and weigh all the factors and
decide whether the policy should be TO
amortize on the / per cent. ~ year
basis; on the "a per cent. SO year
basis, or on the 21s per cent, "a year
basis. Having decided which plan 1t
preferred. 1t would adopt that plan In
its legislation, and pass a continuing
appropriation act setting aside the