Evening star., 1925-10-01
Still in the Balance.

~N~~S~~~SS'
The fate of the present attempt to
fund the French war debt to the
United States hangs in the balance
today. A new proposal. essentially a
compromise, to which the French debt
commission was last night represent
ed as being willing to agree, has
proved unacceptable to the American
commissioners. who have been in con.
sultation with President Coolidge.
A counter-proposal has been sub
mitted by the United States. With
the head of the French commits
sion, NJ. Caillaux. bent upon leav.
Ing Washington tomorrow morning,
a settlement must be made within
the next eighteen hours, or the nego-
tfations will prove a failure.
The seriousness OF such a failure
should not be underestimated. 1t will
mean much to France which has still
to put it's financial house In order.
and. indeed, it will mean much to the
world. which Is hoping for more stable
economic conditions through the set
tlement of the huge international war
debts
The French commission came to
the United States to settle the French
debt. The debt exists. The United
States holds demand notes against
he French government with interest
at per cent. The American debt
commission has put forward the prin-
ciple of the settlement made with
Great Britain by the United States
"a settlement which was held lenient
in the extreme. But the French have
asked still greater leniency in the
matter of interest and the period Of
payment, together with clause
which would permit France to cease
payments when it was found impos-
sible to pay, and ask for another re-
view of the debt situation
The latest proposal, declared unac-
ceptable to the American commission,
contemplates a total payment by
France of s6,220. 100000 over a period
of sixty-two years, with payments
arranged as follows: $40 200, 900 a year
for five years. $50 ,O0O, ,OOG for seven
years and 800, zoo, 900 for fifty years.
The French debt today is fig.
ured at s4,210, 900. OF which about
$500, 100000 Is interest at the rate of
6 per cent.
Consideration of the British debt
settlement with the United States, put
forward by the American commits
sion as the basis OF a settlement
with France, reveals the large pref
erential favors asked for France. The
latest proposal contemplates pay
ment of the principal with interest at
something slightly less than per
cent, whereas the interest rate
charged in the British settlement is
per cent for the first ten years and
3k per cent thereafter. The annual
payments made by Great Britain
range from $4,000 900 the first year
to SITS, 100000.
The Congress of the United States,
which finally must pass upon any
debt settlement that Is negotiated. 1t
is declared by some of it's members
now in Washington, would not assent
to such a proposal. Particularly is
there opposition to the so-called "se-
curity clause" advanced by the
French. which is:
This agreement is based on the
capacity of France to meet the an
nual payments set out as viewed by
the present negotiations. 1t is there
fore agreed that II 1t shall be proved
that these payments are beyond the
capacity of France, taking into ac-
count all it's essential elements, then
the payments are to be jointly re-
viewed by the two governments"
In such Il clause the Americans see
an attempt to link with the American
settlement the German reparations to
France, and to this they are strongly
opposed.
A settlement of the French debt
which differed radically from that en-
tered into with Great Britain would
put the United States into the posi-
tion of stablishing a favored debtor
class. 1t is in recognition of the dan
gers incident to such a position that
the final answer to the French debt
problem must be found.