The Birmingham age-herald., 1922-12-26
Such Action Would Prove to Be Good Investment For u. S., Kahn Says in Letter to Smoot-Says Sentiment Is Against Entire Cancellation 1rt@ ..@@- -~pss-H
SUGGESTS MORE POWER FOR DEBT COMMISSION
Exceedingly Heavy Interest," Rate Should Not Be Imposed Even Upon Great Britain, theI Strongest of Debtors, New
 York Business Man Asserts
Fly Associated Press

NEW YORK, Dec. 25.-Otto H. Kahn, banker, in letter to Senator Reed Smoot of Utah, member of the debt refunding commission made public today by the committee of American business men, has outlined plan whereby he believes America can consistently aid toward relieving the European situation and at the same time meet the sentiment of the country which seems opposed to the cancellation of the allied indebted ness to the United States.
 Mr. Kahn expressed himself as strongly in favor of the policy of can ceiling at least portion of the i'm debtedness of the allied nations.
 q am convinced that 1t would be to our ultimate advantage to do so,' he wrote. T feel sure that such action would turn out good investment.
 Demand Change In Attitude.
 eBut if public opinion and Con gress will not at present consent to the relinquishmens on our part ef a portion of the allied debt," the letter continued. which rclinquishment, be 1t understood, is suggested only in return for. and simultaneously, with measures on the part of European nations to bring about that change of mental and moral attitude and ac- tual conditions which is indispensable if the world again is to be on an even keel-then my suggestion would be the following:
 'Of the two and three-quarter bil- lion dollars, or whereabouts. which our government loaned to the allied nations after the armistice, that DOT ton at least. as was not applied to the settlement of war conracts here, or is offset by valid claim, Is in- trinsically distinguishable from the balance of the allied debt to us. It should be promptly put in the way of repayment with reasonable rate of interest. For instance, America might stipulate Interest al the rate of 3 per cent or 3lz per cent, and an annual sinking fund of 1 per cent. beginning after, say, five years. The refunding commission ought to be empowered, according to it's judg- ment, to postpone the beginning of interest payment likewise for five years
 Mnkc Final Settlement.
 "As to the remaining seven and one-quarter billion dollars, or there abouts, there should be no attempt to apply the same formula to every country. The refunding commission should go thoroughly into the eco homie and financial and general sit nation of all countries concerned and make fair and final settlement, subject to the approval of Congress.
 Even upon Americas financially most potent debtor. Great Britain, she should not impose the exceeding ly heavy burden of paying 4 If per cent interest from the start and re- deeming the principle within 25 years. 1 would suggest in the case of that country, as an illustration, that there be paid an annual sinking . fund of three quarters of one per cent. Such a sinking fund, if in vested at the rate Of 4 per cent. would extinguish the debt in 47 years.
 Should Charge Interest.
 Tn addition to the sinking fund of three quarters of one per cent in- terest should be charged on the debt at the rate Of. say, 2 per cent for the first period of eight years, 2h per cent for the second, 3 per cent for the third. 31k per cent for the fourth. per cent for the fifth, and A. per cent for the final seven years period.
 "A similar formula might be ap- piled in the case of France. making the sinking fund one-half of one per cent only. which, if invested at the rate of { per cent would extin- guish the debt in 56 years and charge a purely nominal rate of interest, or perhaps no interest at all for the first eight year period. The rates of in- terest for further periods might be made even more moderate than those suggested in the case of England.
 sThe question of the feasibility, ac- ceptahility and extent of payment in kind in lieu of cash. should also be within the purview of the commis-
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