Evening star., 1925-08-28
TERMS TO FRANCE
ON BRITISH DEBT
NOT oVERLY"SO
Analysis of the London
Agreement Makes "Gene-
rosity" Hard to Find.
DIVIDED THREE WAYS
TO GAIN OF BRITAIN
Compromising of High Arrearase
Interest Rate Increased Total
Sum by 40 Per Cent.
BY SHELDON S. CLINE.

BY SHELDON S. CLINE.
A good deal OF the confusion arising
from the tentative agreement reached
In London for settlement Of the French
debt to Great Britain Is removed when
the terms of the proposed settlement
are analyzed. What was heralded
as a generous gesture by Winston
Churchill, chancellor Of the British
exchequer, is disclosed as a financial
bargain lacking a lot Of being sacri-
f1cial of British interests. The conclu-
sion is forced that even If France
gets no better terms than Great
Britain did when it comes to a set
tlement of the debt owed the Amer
lean Treasury. generosity would lie
rather with the United States than
with the British government.
The plan agreed upon at London
for settling the French debt to Great
Britain is in a very different form
from the plan upon which the British
debt to America was settled and
which, with possible notifications, is
available to the French in the settle
ment of their debt to this country.
Where British Plan Differs.
In the first instance, the London
agreement divides the payments into
simple stated yearly sums. which en-
brace both principal and interest
whereas the United States plan of set.
tlement separates the items of prin-
cipal and interest. In the long run
1t amounts TO the same thing. The
British propose to collect from France
annual payments over a period OF 60
years, calling it all interest" and as
suming that at the end of that time
the principal will be forgiven. The
American plan proposes payments for
81 years, part as interest and part as
principal, so that at the end of that
period the principal will have been
paid off and thus the sanctity of inter
national obligations maintained.
In the second instance, the British
have divided the debt from France
into three parts-the war debt direct
to the British treasury, the debt for
war supplies sold after the armistice
and the debt to the Bank OF England
for advances during the war. The debt
to the Bank of England is apparently
to be paid within five years, with full
current interest rates. The debt for
post-armiStice war supplies also is to
be paid in a short time, at full rates
of interest. The supposititious flve-year
moratorium granted France, therefore,
is IIl6Tely 10 cover the peTIOQ WllifC
these full-interest-r payments are
being made, calling for heavier annual
payments probably than will be the
case after the f1ve-year period.
Loans for Like Purpose.
Wartime advances from the Bank
of England to the Bank of France, for
which priority in payments Is arrang-
ed, were made largely for the purpose
of supporting French exchange. The
United States Treasury made similar
advances directly to the French gov
ernment for an identical purpose, but
these sums were not differentiated
from other loans made for the pur-
chase of war supplies. No priority is
asked in their payment and no higher
rate of interest will be eXacted. More
over, we also have a debt from France
for war supplies sold after the armi-
stice, amounting to about $400 900 900.
1t is apparent the effect would be
quite different If the French debt to
this Government were to be set up in
the same fashion.
Another significant fact is found in
the statement that the original sum
of the French debt direct to the Brit
ish treasury was f445, 200, 900, or ST.
163, ZOO, 900 at present exchange. The
amount now being discussed in Lon
don as the principal of the French
debt to the British treasury Is $685.
00,000, or S3,027 800 900. The differ
ence between these two sums amounts
to 1864 ,0S0,0 900, being apparently the
net arrears of interest The original
amount of the French debt to the
United States was S3,340 500, 900, in
cluding all items. If the United States
was to charge the same rate of inter-
est on arrears as the British are ap-
parently doing. the interest on our
Treasury debt from France would be
S1,336, 100000. Therefore. the British
are demanding a higher rate for ar
rears of interest than the United
States. as our Treasury calculation is
sS70, $50 900 on the American Treas
ury" debt. There are no arrears of in
terest on the debt for post-armistice
supplies.
Interest at Per Cent.
1t is apparent that in arriving at a
settlement the British have charged
the French for arrearage interest at
The rate of per cent, compounded
annually. In settling the debt owed
this Government by the British gov
ernment arrearage was charged at
only AZ per cent, simple interest, and
in the Belgian settlement the rate was
made 8 per cent from the date of the
British fundlng- Ihe BRUSH, there
fore, have increased the principal sum
of the French debt by about 40 per
cent through interest charges, and the
gesture of generosity is made by a
process of later scaling down this in
crease. Besides, immediate settlement
is required Of the Bank of England
advances and post-armistice loans for
war supplies at current rates of bank.
ing interest.
The settlement in London proposes
that the French shall pay to the Brit
ish government f12,500,000, or $50,
75O, 900, per annum for q period of 81
years upon that part of their debt to
the British treasury resulting from
direct war loans. This sum is in ad
dition to the amounts to be paid to the
Bank of England. If we were to ap
ply the same ratio to our debt tc
France it would imply the payment OF
about $94,200,0 900 a year for a period
of 62 years. But some part of ouI
advances to France were for identica
purposes as those from the Bank OF
England, and if these were separated
and the British plan applied 1t would
increase payments to the United
States above this amount. Likewise
II we treated the war supplies in the
same fashion S they are treated in the
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