Evening star., 1923-01-06
LAW OPENSAWA
To MEET BR|TA|N'S
CAPACITY ON DEBT
Does Not Require Any Pay
ments on Principal Until
End of 25-Year Period.

A belief has been growing in
Washington and spreading through
out the country that the visit here
is bound to result in failure because
of the terms laid down by Congress
in the act creating the American
commission to fund the European
debts. That pessimistic view is not
wholly shared by high officials of
the government who have made a
special study of this problem.
Congress provided that bonds given
in the funding operations should bear
rate of interest of not less than Az
per cent and maturity date not later
than June 10, 1947. The view has
prevarcd abroad, and has been widely
shared in this country, that these
terms are too severe, that payment of
so high rate of interest and dis
charge of the debt in twenty-five an
nual payments constituted a burden
too heavy even for Great Britain to
bear, to say nothing of the less
wealthy debtor nations. From au-
thoritative British sources has come
the suggestion that an interest rate
Of 81 per cent, with principal pay
ments spread over a fifty-year Pc
riod, would be acceptable and that
Great Britain would be prepared to
fund the debt on that basis.
Law Wrongly Interpreted.
A mistake which seems to be made
by British officials as well as in most
American discussion of the subject is
that Congress has required that the
principal of the debts shall be liqui-
dated in twenty-five years. Congress
as the law is concerned. there is moth
ing to prevent the American funding
commission from accepting bonds
which will mature in their entirety at
the end of the twenty-f1ve-year pc
riod, leaving the question of principal
payments to be dealt with a quarter
of a century hence.
The suggestion comes, apparently
with a coloring of authority, that
Great Britain regards $250,00 900 a
year as the maximum amount she can
pay on account of her debt to this
country. But 1t is not suggested that
in twenty-five years from now Great
Britain would not be able to pay
larger annual sum. If Great Britain
can meet yearly payment of $780,
100000 there is nothing in the law
which would need to stand in the way
of funding operations. Great Britain
owes this country approximately
$4,000, 100000, which at An per cent
would call for an annual interest
payment of $212,500,000, well below
the estimate of British capacity.
Becomes Matter of Preference.
It may not be regarded as desirable,
either from an American or a British
standpoint, to defer payments on
principal until the end of the twenty
five-year period, but that does not
alter the fact that the way is open
to do so. President Harding and
other administration spokesmen have
let it be known that they would be
glad to see the law amended to give
the funding commission more lati-
tude of judgment. But If Congress
will not do this, there is no reason
to believe the funding commission
which would be to defer all payments
on principal for twenty-five years.
Accepting as true the assertion that
Great Britain can pay $250.000,000 a
year without undue hardship, 1t then
would be the case that refusal to
cent annual interest and no payments
on principal would not be because the
terms were impossible, but because
the British regarded them as unde-
sirable.
First Meeting Monday.
The first formal meeting between the
British and American commissions
will take place at 10 o'clock Monday
morning, it was announced today by
Secretary of the Treasury Mellon.
The meeting will be held at the
Treasury Department, with the Brit
ish represented by Chancellor Bald
win of the exchequer and Gov. Nor
man of the Bank of England, and
with the Americans represented prob
ably by the full membership Of the
world war debt-funding commission
The program today for the British
commission was continuation of
calls of courtesy during the day, with
the first meeting between members
of the two commissions scheduled for.
tonight at a dinner at the British
not listed as a formal meeting OF
the commissions for business, 1t was
expected that considerable progress
might be made in the atmosphere of
informality around the table talk to-
night.
Besides the American and British
commissioners there are to be at
guests.
Call On Secretary Hughes.
The British commission made an
official call of courtesy this morning
on Secretary of State Hughes, remain
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