Evening star., 1925-03-04
THE STORY OF THE FRENCH DEBT
BY WILLIAM p. HELM. JR.

year, instead of its present $2T5.-
900, ,o0e.
Under our present arrangement the
Treasury puts into the sinking fund
debt less the amount of the principal
loaned the allies. The payment
which was begun in, 1920, will auto
matfcally retire the total in 25 years it
is estimated. If France and Italy were
to make a funding arrangement, as
Great Britain has done, the retire
ment of the great bulk of the OUT
standing debt at present unfunded
would be taken care Of
If France-and, of course, Italy
don't pay, then we shall have to paw
the principal And, automatically, the.
sinking fund payments must rise.
Also, as the situation stands today,
the records disclose American tax
payers have been carrying a burden
of s127. 900. 900 a year In interest pay.
ments on money that went, to. the last
dollar. to the French government. For
France h>s paid no interest on the
princt2s3 of her debt since May Is.
1919, eaf ives the United States at
the pres,..> <ime more than 100000
600 In interest
Meantime, somebody has been pay
ing the interest on the $4,000, ooo,oo0
lent France. That somebody is the
American taxpayer. Assuming that
the interest rate is Az per cent, or
| the Liberty bond rate. American tax
payers have been paying s127,0o0. 600
| year, or more than s10,5o0,o 900
| month. And II II becomes necessary
for American taxpayers to arrange to
| retire the principal of the French
debt, as we'll as pay interest on it,
the burden will be increased by
5000, 600 annually for sinking fund
charges and rise to 1902, 900, 900 a year.
On the other hand a funding ar
rangement with France would relieve
American taxpayers, from the day 1t
becomes effective, of most Of their
present burden of $127, ,000, 900 a. year
in interest on this, loan. Even If
| France paid only 8 per cent interest
| the American taxpayer would be re-
| lieved almost in full of the burden,
for any funding arrangement with
France necessarily would include
funding the accumulated and unpaid
| interest, on her loan as well as the
| principal
Interest and principal exclusive OF
| obligations for the purchase of war
| materials, run to about SO, 800. 900, 900.
Three per cent interest on that sum
| equals $114.0o0,o00. That deducted
from s127, 100000 leaves $13,000,00
year as the sum. which the American
/ taxpayers would have to pay under
such an arrangement. ~
Payments by Great Britain.
That procedure, the record shows,
was followed in the case of Great
| Britain. Interest and pripcipal to-
| tailed about 81. COZ. .0o0, 900 and Britain
| funded the whole. She is now paying
interest on this sum at per cent
and gradually retiring the principal
Last year she paid S23.oeo,ooo on the
\ 1T d. -
about s161, 200, 900 q year under this
arrangement. Under a similar ar
rangement, France would pay less
! than s1s5,o00,00 a year.
During the years that have elapsed
since the French government stopped
paying interest on Its, debt, the Ameri-
| can taxpayers have, paid the interest
| to the extent of almost $3.50. 600. 4
Obviously, the American government
could not go to holders of $4,000, ,000,-
900 in Liberty bonds and tell them
that 1t wouldn't pay interest on their
bonds because France wasn't paying.
in turn, her interest to the American
government on the $4,000, 100000 lent
her.
Such a. course would not only have
been utterly fdiotic--it would have
spelled financial disaster to the Ma
tion. So the interest orfthe $4,000. 900
600 Liberty bonds covering the money
lent to France was naid-by Ameri-.
can taxpayers. III
What would it mean to tighten the
taxpayers burden ;by that sum? Lift
the tax burden to the extent of S114,-
0oo,o a year and what benefits fol-
low? i
The answer can be found in past
performances Take the 1924 income
tax reduction, for instance. The
Treasury's figures show that it
amounted to about s142, SOC, 900 last,
year, 1t was a material reduction,
too. -
When France funds her debt, Ameri-l
can taxes can be cut 81 II, 100000 more.
And that olid nseRn ap parsntly, \
pars sceat of staia red actio1 s1asf year.
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