The Washington times., 1920-12-08
Europe's debt of $4,000. 900. 900 to

the United States must be liquidated
which demand notes" now held by
this Government against allied pow
ers. shall be converted into long-term
obligations. These obligations with
a distant maturity and bearing in
terest rates at least equivalent to
those borne by American bonds
should be coupled with authority for
the time being to defer interest pay
ments.
This solution Of the foreign debt
problem was outlined In detail to
Congress today by Secretary of the
Treasury Houston as the most prac-
teal one open to the United States
Government under existing law. Sec
retary Houston fiayed what he term
ed the "fatuous" attempts OF individ-
uals to have the debt cancelled, on
the score that IL would promote
greater harmony. He likewise ex-
pressed contempt for those who as
sert that II Europe pays America In
commodities 1t will ruin American
trade and disrupt domestic commerce.
Congress Is informed that the Gov
ernment's loans are made on gilt-edge
security. with ample guarantees OF
NhV OoiloWl lib 80 oSsA
cations bearing interest at the rate
Of per cent. and that despite the
fact that this Government 10 now
paying the interest for . three-year
period. this aggregate interest charge
eventually will be added to the prin-
cipal due the United States Govern
ment. Thus II Is figured that at the
end of the three-year deferred in
terest period, the total foreign debt
will have been increased to $11.5 .5O0,-
000,0 900.
RAPs FREE PROPOSALS..
Rapping overtures both at home
and abroad for cancellation of the
debt. Secretary Houston said:
This is favorite plan Of some
Europeans and some Americans. Al
one time 1t Is based upon sentiment
or generosity. BY some it is based
on the contention that 1t will pro-
mote peace.
"It apparently Is assumed that An
tagonsms will be set IL the nations
of Europe are asked to repay the
loans they sought and so gladly re-
ccived.
"Volces are heard that it will ruin
the trade OF America IL Europe is ia
StHu us DtT lOT "ha'
she owes. Apparently these advo.
trade will be profitable, provided
only that we give the world what
we produce. declining to receive any
commodities in return.
II imagine neither Of these sug-
gestions will be received with favor
by American Taxpayers. They will
realize that IL the debts are can
celed they must pay taxes to meet
the interest and to redeem the prin-
cipal of sl0.o00.0O0 900.
CALLS SUGGESTIONS UNwIsE.
Another suggestion Is that the
demand notes now held by this Gov
eminent shall be funded into bonds
bearing a higher rate OF interest
which the debtor nations will con-
sent to exchange for the outstand.
ing bonds, and that a direct relation
he set up between those who consent
to receive such bonds in this country
and the foreign debtors, although II
is proposed that this Government
guarantee the bonds.
mo evidence IL furnished that debt
or nations wiz be willing to assent
to the creation OF a bonded debt with
n n1kneT rate OF iUNtTtst, Win ODilgH'
ton for the immediate payment ot
interest; and there In nothing in exist
ing law which warrants such Q
transaction.
They should not be charged In
terest at n rate exceeding that cost
TO our Government OF the money bor'
rowed from our people to lend q
them. In the circumstances we mus
deal with tho debts OF the allied Roy.
ernments in a spirit OF fairness. Th'
suggestion that we throw the debt,
upon the market appears to me i'm
practicable"
Secretary Houston advised Con
'gress that negotiations begun be
tween representatives OF the United
States and allied governments somC
time ago over new funding ar
rangement for the foreign obligation,
still is In progress, but will be com
pleecd In the near future