Evening star., 1925-02-09
Regard Question as Facing
Many Obstacles Before Final
Settlement Is Made.
FIRMLY FIXED PRINCIPLE
OF FRANCE THREATENED
U. S. Officials, Pleased With Open
ing of Issue, Maintain
Silence on Views.
By the Associated Press.

ny the hssOciate0 Press.
PARIS, February 9.-The debt note
OF Winston Churchill British chancel-
Tor of the exchequer. is regarded in
French official circles as only the
beginning of negotiations for set
tlement that will require considerable
time and a great amount of study.
Although the tone of the British note
strikes a responsive chord here, 1T is
pointed out that it establishes a basis
of settlement which involves the
total separation of the payment of
debts from the payment of repara-
tions. This does violence to the
principle which has been firmly fixed
in French minds since the difficulties
of collecting reparations arose.
Consequently. the most difficult
task for Premier Herriot in a deb,
settlement, it is anticipated in po-
litical circles, will be to get parlia-
ment and the people to accept this
new principle, that France must pay
whether she gets paid or not.
May Ask Explanation.
For the moment the entire matter
is in the hands OF the ministry of
finance. Finance Minister Clementel
Will conduct the negotiations with
London as well as Washington, until
the moment when basis seems to
have been reached for an accord. The
Churchill note is regarded here as
only a preface to discussion. NJ.
Clementel will. according to best in
formed official sources, send a reply
to Mr.. Churchill in which the British
government will be asked for an ex-
planation of certain details of the
note.
The French desire to know what
will happen in case sof an eventual
German default in payments under
the Dawes plan and whether por-
tion of the French debt TO Great
Britain, which would be covered by
the French share of the Dawes an
nuities, would remain due from
France and payable out of her ma
tional resources.
..z Note Is Explicit.
The reply%r-of Mr.. Churchill to
NJ. Clementel starts by saying ex-
plicitly that his majesty's govern
ment adhere to the principle OF the
Baifour note" Then. explaining that
certain of former Premier Bonar
Laws suggestions in connection there
with no longer are applicable because
they were made prior to the Dawes
plan. the note proceeds:
The principle of the Balfour note
Is that Great Britain should receive
from Europe payments equivalent to
those she is under obligation to make
to the United States. His majesty's
government cannot accept the posi-
tions in which this principle could
only be achieved upon the basis of a
full normal yield of the Dawes an
nuities or by taking at their face
value debts which cannot be at
present treated as good assets
His majesty's government already
have consented not merely to reduce
their claims against our allies to an
amount necessary to cover their own
payments in respect to the British
war debt to the United States. but
actually to apply the whole of the
British share of German reparations
to that purpose.
Other Losses Citea
This means that Great Britain not
only takes to her own charge the
whole of her own war damages, but
also the fS00,00O,0OU of foreign Sc
cur1ties devoted by her to the general
effort before the United States en-
tered the war.
I'm the application of the Balfour
note to the existing situation, his
maJesty's government, remembering
that war debts between the allies had
been incurred in common cause,
nave been prepared to consider pro-
posals under which the French debt
to Great Britain would be reduced,
provided that the principle of definite
payment by France from her own ma
tional resources, fixed with due re-
gard to her relative wealth and tax
paying capacity, is assured without
reference to reparations"
The note then suggests that 1t
might be found convenient that
French payments should be divide
into, first, fixed annual amounts, pay
able by France, irrespective of actual
receipts from the Dawes annuities In
a particular year, and second, further
annual charge on the French share in
the Dawes annuities.
Surplus Use Provided For.
1T would, of course, be understood, I"
says the note in conclusion, first,
that all counterclaims by France
against Great Britain would be super
seded, and, secondly, that If and when
payments derived by Great Britai in
from European war debts and repa-
rations were sufficient to provide for
(CODtjnnad on roluu,n