Albuquerque morning journal., 1922-12-26
KAHN SUGGESTS
CANCELLATION
Of PART OF THE
FOREIGN DEBTS
American Banker Says n
veStment W ou d Be
Worth While if It Changes
Europe'S Attitude
HAD PLAN FOR A
GRADUAL PAYMENT !
Would Create Sinking Fund
of Certain Percentage OF
ObIigationSi Would Cam
eel in AZ Years

New York. Dec. 25.--Otto II.
Kahn, banker, in a letter to SEN
ntor Reed Smoot of Utah, member
OF the debt refunding commission,
made public today by committee
of American business men, has
outlined a plan whereby he be-
lieyes America can consistently aid
toward relieving the European sit
uation and at the same time meet
the sentiment of the country
which seems opposed to the can
collation. Of the allied Indebtedness
to the United States.
Mr.. Kahn expressed himself as
being strongly in favor of the poll
icy of cancelling at least a portion
OF the indebtedness of the allied
nations.
81 am convinced that It would be
to our ultimate advantage to dc
So" he wrote. Il feel sure that
such action would turn out n good
investment.
'But If public opinion and con-
Rress will not ut present consent to
the REIMBURSEMENT on our part of
a portion Of the allied debt" the
letter continued, (which relinquish-
ment, be it understood, is suggest
ed only in return for, and sinful
taneOusly with, measures on the
part Of the European nations to
bring about that change of mental
and moral attitude and actual con-
ditions 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
billion dollars, or thereabouts,
which our government loaned to
the allied nations after the armi-
stice, that portion At least, was not
applied to the settlement OF war
contracts here. or is offset by valid
counter claim. is intrinsically dis
tinguishabla from the balance of
the allied debt TO us. 1t should be
promptly put in the way of re-
payment with a reasonable rate OF
interest. For instance. America
might stipulate interest at the rate
of 8 per cent or 8 Il per cent, and
an annual sinking fund of one per
cent. beginning after. say, five
years. The refunding commission
ought to be uncovered. according
to its judgment, to postpone the be-
ginning of interest payments like
wise for five years.
las to the remaining seven and
q quarter billion dollars or there
abouts, there should be no attempt
to apply the same formula to every
country. The refunding commits
sion should go thoroughly into the
economic and financial and gem
eral situation Of all countries con-
cerned and make a fair and final
settlement, subject to the approval
of congress.
even upon Americas financial
~ most potent debtor, Great Brit
ain, she should not impose the ex-
Ceedingly heavy burden of paying
4 u per cent Interest from the start
and redeeming the principal within
20 years. | would suggest In the
case of that country, as an illus
tration. that there be paid an an
uual sinking fund OF q Of / per
cent. Such a sinking fund IL in
vested at the rate Of 4 per cent
would extinguish the debt in Al
years. In addition TO the sinking
fund of q of / per cent, interest
should be charged on the debt at
the rate of. say. 2 per cent for the
first period of eight years, 2S per
cent for the second. per cent for
the third, Q "a per cent for the
fourth, per cent for the fifth and
A }a per cent for the final seven
years period.
1that q Observation-Disclosures
Mr.. Kahn wrote he believed the
United States should be officially
represented on the reparations
commission.
"Our government" he added,
'should also take official part in
the work of other commissions of
"a similar character destined to set