The sun., 1919-09-26
.. S. TO FUND ALLIED
INTEREST CHARGES
Treasury Plans to Give Debtor
Nations a Breathing
Space on Loans.
CANNOT PAY CASH NOW
Three Year Period Is Expected
to Give Them an Oppor-
tunity to Recover.
sp.cinl pe,patch TO TIE sur.

WASHINGTON, Sept. %. - Plans are
being made by the Treasury Department
for the funding of interest payments due
on loans to the Allies This funding Is
TO cover period of three years, to give
debtor nations an opportunity to create
A sufficient sinking fund to take care of
the interest payments in cash.
The funding programme will add
something like a billion and half dol
lars to the aggregate OF nearly ten bill
Hon already advanced to various allied
countries These countries, practically
without exception, are unable to meet
the interest demands in cash.
1t was because of this situation, and
following many informal conversations
on the subject between diplomatic and
Treasury officers of the United States
and representatives OF the Allies, that
funding programme has been deter
mined upon. Secretary Glass made it
known to-day that such course was
contemplated, and he frankly stated it
was undertaken because Of the inability
Of the Allies to put up the necessary
cash, aggregating nearly half billion
dollars a year. for interest payments
No Cash Received.
This country has received no cash pay
ments of interest on loans to the Allies
since extensions of credit were first au-
thorized. When interest payments fell
due, the amount was taken care of by a
cut into the credit allocated. Conse-
quently portion of the total of loans
outstanding represents interest accruals
and not money actually turned over.
The Treasury action is expected to
have a strengthening effect upon the for
eign exchange situation and upon allied
credit. Many of the allied countries,
notably France, have been deeply con-
cerned over interest payments falling
due The total OF credits authorized by
Congress for the Allies, $4,000, 900 900,
is very nearly exhausted. Consequently
interest payments could not be made
through the expedient of charging it to
the credits authorized making It a
purely bookkeeping transaction, and
adding the interest accrued to the prin-
cpal outstanding. The nations obligated
to us urged strongly some temporary
assistance that would avoid embarrass-
ment through their inability to pay in
cash. Congress refused to advance fur
ther credits. which could have been used
10 meet interest charges.
Notes May He Taken.
Just what evidence of debt will be &C
copied for the payments falling due in
the future has not been finally de-
TRIMMED. 1t is possible that either short
term notes OF the nations owing interest.
crcollaterali securities, OF possibly both.
may be accepted.
What reception the plan will meet
m Congress Is probematical. In both
the Senate and the House there has been
determined opposition to further loans.
While the funding of interest charges is
rot In the strict sense extending addi-
tonai credits or making loans, it in
effect works out the same way. Admin
lstration officials are convinced, how
ever, that such a course Is necessary to
protect the whole allied credit situation.
In addition to interest funding by the
Government the financial interests of
the country. 1t is known. are extending
considerable private credit on CONNER
cial transactions with several of the
Allies and to some extent with Ger
many.