Evening star., 1925-09-06


tive debt agreement, following
closely upon the more defini-
Il tive American Belgian adjust
ment, has once more turned
world attention toward the question of
interallied debts. The double certainty
that the French are now to seek an
American hearing, and that the recent
Anglo-French adjustment will stand
or disappear as the Franco-American
discussions turn out, serves also to
give present and future Importance to
these negotiations themselves.
OF course, in their discussions with
the French the British have again
done an immensely clever thing. They
| had come to a deadlock, France would
consent only to pay so much, the
British only to take so much, and the
gap between was more than 0,000,-
900. CaillauX was going home, having
| obviously made his last proposal.
Then Churchill came forward with an
offer which only bound the British to
be as generous as the United States,
| If the United States were at all gen
erous. and Insured for Britain just as
good terms as America could get.
Stood to Lose Little.
The British gesture was the nat
ural extension of the famous Balfour
note of three years ago. Then the
| British said that they were prepared
to cancel all that was owed them. pro-
vided the United Staes would forgive
all they were owed by Britain. 1t was
a handsome gesture, but not expen-
| Sive, because, had the offer been taken
up, they would have escaped payment
on nearly $4,000. .000, 900 which they
have since had to begin payments on.
while they would have forgiven some
$4,000, 100000 on which no one is yet
paying and for a part of which at
least no one ever will pay.
Had the United States agreed to the
Balfour note principle. it would have
abandoned it's $4,000 zoo. 900 claim
upon Bfitain and got absolutely moth
ing in return, save problematical good
will. But. as we refused, we have had
to bear the responsibility for all un-
pleasant debt affairs since. And spe-
cifically we have had to stand respon-
sible because the British, having be-
gun to pay us, have also begun to ask
, their allies for payment. Moreover.
since we inconveniently insist upon
being paid by Britain's debtors our
selves, we are doubly unpopular.
In the London negotiations Win
ston Churchill led NJ CaiIlaux to the
extreme limit of French concession
Then he said, with an eye upon his
own countrymen, Very well, we will
take what you offer provided you can
persuade the United States TO accept
settlement on similar terms. But if
you pay the United States any larger
percentage than this agreement would
call for. you must increase your pay
ment to us pari paSSu." Thus pari
passu remains the fundamental prin-
ciple and the United States remains
the villain in the piece
Treat All Alike.
We have taken the very definite
stand, embodied in both the British
and the Belgian settlements, that pay
ment to us shall be for the full amount
| borrowed and on the basis of annual
installments amounting to 312 per cent
and II per cent for debt extinction
| Britain and Belgium. after certain
temporary allowances, are going to
pay US per cent on their borrowings
for 81 years. We have said that we
expect just the same scale to prevail
in the case of France and Italy.
Now the British come along and
agree with the French that they will
accept from France not 4 per cent but
, per cent a year for 81 years pro-
vided France can persuade us to be
I equally obliging- France is to pay
Britain around 60,000,0 900 annually on
debt slightly smaller than she owes
us But if France dares to consent to
pay US at higher rate. then the whole
Anglo-French agreement is off, and
France suffers accordingly.
Nj. CaillauX now has his thesis for
American discussion Assuming that
his cabinet will accept the British pro-
posal, which is likely, he will come to
Washington and offer to pay per
cent on the French debt, or just half
what we expect. In round figures
he will offer $4,000. 900 a year where
we demand $40, ,000. 900. But this has
to be his maximum, for if he offers
more he unsettles the whole prior
adjustment.
Want Germany to Pay.
If France pays $40 900 900 to us and
to Britain s6O,000,O00 year, her ag-
gregate payments will be $130, 900 900
against $184 900 900 for Britain, dimin-
ished by the $50. 900, 900 Paris will pay
London. The sums will be then in
reality about equal, although both
France and Britain will benefit by
payments which may be made to them
by other creditors, as well as by Ger
man reparation payments.
Now, the chief objective of both
France and British financial states
manship is to avoid any payment of
foreign debt out of domestic funds
The British have definitely adopted
the principle that the sum of all
amounts paid to Britain on account of
German reparations and interallied
debts must be equal to the sum of the
payments which they make annually
to America. France, with much
smaller claims upon her allies and
! much larger claims upon Germany,
hos fel- ha T..
her payments abroad must not exceed
her receipts from Germany. Thus, If
France should contract to pay $780,
! 000,000 annually to Britain and the
! United States, she would stipulate that
such payment should be reduced if
Germany failed to pay reparations.
On the other hand. the British have
successfully established the principle
that France shall pay in sterling, not
in gold marks, and that there shall be
an entire separation between repara-
| tions and debt paying. What remains
problematical is whether Britain will
consent to any reduction in French
payments If Germany fails to come
up to scratch. AS the French share
of reparations is 50 per cent, however,
and the French payments to Britain
and the Unitel States would not ex-
ceed $3.50, 100000 annually, this is not
a burning issue at the moment; for
Germany, If she pays anything, may
be expected to pay $3.50 ,0OO, 900 for
period of years at least.
Impasse Is Likely.
Now consider the American situa-
ton with respect to France, which,
through M. Caillaux, must come to
Washington shortly. We shall pro-
duce our British settlement, the Bald
,r-tw Nall
Britain to pay us. with certain tenn
pOrarY mitigationS 4 ner cent on their