Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-12-26
Sees Advantage in
Partial Cancellation
u. S. of FOfeign Debts

Partial Cancellation
U. S. Of Foreign Debts
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 a plan
whereby he believes America can
consistently aid toward relieving the
European situation and at the same
time meet the sentiment of the coun-
try which seems opposed to the can
collation. Of the allied indebtedness
to the United States.
Mr.. Kahn expressed himself as be-
ing strongly in favor Of the policy of
cancelling at least portion of the
indebtedness of the Allied nations
Il am convinced that it would be
to our ultimate advantage to do So"
he wrote. II feel sure that such ac-
ton would turn out a good invest
ment."
But II public opinion and Con-
gress will not at present consent to
the REIMBURSEMENT on our part Of a
portion of the Allied debt" the let
ter continued, which REIMBURSEMENT,
be it understood, is suggested only
in return for and simultaneously
with, measures on the part of the
European nations to bring about
that change Of mental and moral at
titude and actual conditions which is
indispensable if the world again is to
be on an, even keel-then my sug-
gestion would be the following:
"Of the two and three quarter bill
lion dollars. or Whereabouts, which
our government loaned to the Allied
nations after the armistice, that por-
ton at least was not applied to the
settlement Of war conracts here, or is
offset by valid counter claim, is in
trinsically distinguishable from the
balance of the Allied debt to us. 1t
should be promptly put in the way of
repayment with a reasonable rate Of
interest. For instance, America
might stipulate interest at the rate
of per cent. or IL per cent. and
an annual sinking fund Of one per
cent. beginning after, say, five years.
The refunding commission ought to
be empowered, according to its judg-
| ment, to postpone the beginning of
interest payment likewise for five
years.
LAS to the remaining IA billion
| dollars, or Whereabouts. there should
be no attempt to apply the same for
mula to every country. The refund
ing commission should go thoroughly
into the economic and financial and
general situation of all countries con-
cerned and make fair and final set
Element. subject to the approval of
Congress.
Even upon Americas financially
| most potent debtor, Gr>.. Britain. she
should not impose the exceedingly
heavy burden of paying IA per cent.
interest from the start and redeeming
the principal within s5 years. l would
suggest in the case of that country,
as an illustration, that there be paid
an annual sinking fund of three-quar-
ters of l per cent. Such a sinking fund,
if invested at the rate of per cent,
would extinguish the debt in AZ years
In addition 70 the sinking fund of
three quarters of one per cent, inter-
est should be charged on the debt at
the rate, of, say, ? per cent for the
first period eight years, q per cent
for the second, per cent for the
third, 81 per cent for the fourth. 4
per cent for the fifth, and Al per
cent for the final seven years period.
"A similar formula might be applied
in the case Of France, making the
sinking fund Of half Of one per cent
only, which, if invested at the rate
Iof per cent, would extinguish the
debt in fifty-siS years, and charge a
purely nominal rate of interest, or
perhaps no interest at all, for the first
eight years period The rate of in
terest for further periods must be
made even more moderate than those
suggested in the case of England.
The question of the feasibility.
acceptibility and extent of payment
in kind in lieu of cash, should also
be within the pueview of the com
MISSIONS investigations and recon-
mendations'
Mr.. Kahn wrote he believed the
United States should be officially rep
resented on the reparations commits
sion.
our government. he added, "should
also take official part in the work of
other commissions of similar charac-
ter, destined to settle controversial
questions and aid the recuperation Of
Europe
He declared that 1T has now hecor,o
fairly encumbent upon the United
states to indicate precisely and Off
cially what are the terms. conditions
and limitations under which Americ,
would be prepared to take part in an
organized and permanently established
international effort to all the mainto-
nance Of peace and promote under.
standing. fair dealing and good will
among the nations"
German Girl Wadc