Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1920-08-13
Rcsclling tho Allied Debt

ONCE the end of the war statesmen, bank
~ ers and economists have sought means OF
dealing with the $40 900, 000,0 900 debt which
the allied powers owe this country. This
vast sum OF money was loaned during the
heat OF war in the form of promissory de-
mand notes, and used almost cxclu-
sively for the purchase by our war associates
OF munitions and supplies in this country.
In order to provide this sum for the uso OF
Great Britain, France and Italy, the Amer
lean government sold Liberty bonds to its
own people.
Furtiyc suggestions have been made from
time to time that this debt be cancelled in
so far as the foreign governments were con-
ccrncd; that is that the United States make
a gift of $4,000. 00O, 900 to the allies out
OF hand. But when it is recalled that this
money must be paid eventually to American
bondholdcrs, such proposals are swiftly dis
missed. Moreover, no foreign government
has asked that its debt to America be can
cclcd.
~ plan has just been proposed by Amer
lean bankers. headed by J. w. Hartman.
LOT caro- OF the obligation, and at the same
time reducing the debt which the govern
mcnt owes the holders of it's bonds This
scheme provides in brief. for Il conference
of officials OF the United States, Great Brit
ain, France and Italy with the view to con-
Vcrt,ng the promissOry notes into obliGa-
ions OF the governments concerned fixing
the terms and rates OF interest on n basis
that the European powers could meet.
These now obligations are then to he placed
on the market. presumably in the United
States, and sold. The proceeds from these
sales would be applied by the United States
10 retiring Liberty bonds, with Il consequent
increase in the market price OF those Liberty
ana victory bonds still outstanding
This is Il rather appealing scheme, up to
a certain point If it worked. the allied
debt would he transferred from the Amer
lean government TO tho American people.
Our national debt would he cut almost i'm
ha!f, and the bondhoders. whose investment
renamed III the balance OF the debt, would
profit by natural increase in the value of
their holdings The American banks, which
have n great deal of money loaned out on
Liberty bonds, would find much of their
credit released for trade purposes
But would IL work? What American in
vcstor would be willing to buy British or
french bonds ut par. after his experience I'm
purchasing the bonds of his own govern
ment' which, since their purchase, have been
sadly reduced in value? How could a
SlV'ooo,00o,o0O foreign loan be loated sue
cessiully? Who would be willing to place
ms savings in the obligations of govern
ments whose future could not be forescen?
Obviously no such loan could be Aoatod in
America unless tho United States govern
ment insured the value of the bonds offered
and gave some sort of guarantee that they
would remain nj par. Nor would such an
investment appeal to the American unless
the rate OF interest were 6 per cent or bet
ter, and the allied powers which AFRO now
paying this government considerably less
interest. could scarcely be induced to nav a
higher rate. much higher rate, moreover.
,fc
people on bonds purchased by tho latter
The new plan has attractive possibilitios
but it does not seem practicable in its present
shape