The New York herald., 1921-07-16
War Taxes Congress Can Stop.

vi tuc lOul DllllOHS VI uCildIS III
round numbers which the United
States Government will spend out of
the American taxpayers pockets in
the present fiscal year one billion
dollars in round numbers will be for
interest and sinking fund charges on
the national war debt.
Ten billions of dollars in round
numbers are owed to the United
States Treasury as war loans ad-
vanced to the Allies and other for
eign governments. These ten bill
ions of dollars lent to the foreign
governments came out of the Amer
lean taxpayers pockets.
The interest due on the Liberty
bonds and Victory notes to those
persons and institutions that put up
the ten billions OF dollars for the
foreign governments has not been
paid and is not now paid by the for
eign governments which received the
money and owe our Treasury for it.
So far it has been paid for the
most part and it still is paid for
the most part out of the American
taxpayers pockets.
The Secretary of the United States
Treasury is asking Congress for
broad powers to enable him to fund
into regular bonds of the foreign
governments and otherwise dispose
Of the ten billions of dollars which
they owe our Treasury, which origi-
nally came out of the American tax
payers pockets and the domestic
interest on which still comes out of
the American taxpayers pockets.
To certainty it is the idea Of the
Secretary of the Treasury that if he
could make this funding arrange
ment the foreign governments would
regularly pay interest on the great
bulk of the ten billions of dollars
they owe our Treasury. AS about
three-quarters of the ten billions of
dollars is chargeable to Great Brit
ain and France, and as considerable
sums of the remainder are owed by
governments that are not utterly
bankrupt, IL is reasonable to assume
that Mr.. MELLON expects he would
be able to begin to collect interest
on between eight and nine billions
of dollars Of those foreign debts owed
to our Treasury.
An interest rate arranged for the
foreign governments to pay on their
funded obligations to our Treasury
might be thought, under the circum-
stances, to average too high at 6
per cent. year, although foreign
loans are now placed in this country
at an even higher rate Assuredly,
rate of per cent. would be too
low. Perhaps a rate of 51s per cent.
would be more than fair.
Interest paid by foreign govern
ments on eight and half billions of
dollars at 5la per cent. a year would
turn into the United States Treasury
$467 100000 a year. Interest paid
at that rate on nine billions of dol.
lars would turn in approximately
half billion OF dollars a year.
This would just about cut in half
the one billion dollars a year which
must now be taken out of American
taxpayers pockets to provide the in.
terest which our Treasury must pay
out on our own domestic war debt
But in all probability this would
not be the whole story of relief to
American taxpayers II Secretary
MELLON had the broad refunding
powers he asks of Congress. 1t is
very likely that, under these circum-
stances, he could bind the foreign
governments not only to pay the in
terest regularly but to turn into the
United States Government a certain
amount every year to act like a sink
ing fund for the ultimate extinguish-
ment Of the principal of the debt
owed by them to our Treasury.
"a per cent. extinguishment pay
ment annually would take long, long
years to clean up the debt itself.
Nevertheless, even so low figure as
Mat 2% per cent. extinguishment
.-. II. III -