Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-02-17
BARUCH DEBTPLAN
AROUSES INTEREST
Officials Discuss Suggestion
of Financier to Settle
Reparations.
EY DAVID LAWRENCE.

The United States Government Is an
interested but not primarily an active
participant in the movement which has
for its object the fixing of definite
sum for German reparations and the
fiotation to the investors OF the world
of a loan which would enable the allies
to pay each other and the United States
OF a cash basis
This fact docs not in any way dimin-
ish the hope OF the American Govern
ment that some time in the next few
months a formula may be developed
which. without committing the United
States in any way either to the coiiec-
ton of reparations or the acceptance
of a revised debt program Will, never
,heless. lift from European peoples the
indefinitencsS which surrounds me
whole question of allied debts and Ger
man reparations.
Gilbert Memorandum.
To understand the present situation.
il is necessary TO so back to the memo
randum issued in December by S. Parker
Gilbert. agent-general of reDarations,
who pointed out that the sooner allied
control was removed from German
finances the better for Germany ana
the world. and he indicated the lmpor-
lance of fixing the German repafatlons
once and tor all. so that the German
people would have the incentive to cut
down their Indebtedness. Shortly after
this statement was made, Mr.. Glioert
visited the United States and talked at
lencth with Secretary of the Treasury
Andrew w. Mellon and with prominent
officials of the banking world. Then ne
went to France and talked with Premier
Poincare. who admittedly holos the key
to the situation.
No definite step is expected until aft
err the French elections in May. put.
meanwhile opinion is beginning 10 crSS-
tallize on a program. Inc SUBJECT Is
not a new one and is not by any means
a partisan matter on this side OF tne
Atlantic. For instance. the whole SUB
ject was reviewed at length In memo
randum presented by Bernard M. ba-
ruch to officials Of the American Gov
ernment.
MFR. Baruch. as chairman OF the war
Industries Board and later head OF the
section of the American peace mission.
which helped to frame the economic
clauses of the Versailles treaty, acquired
an intimate knowledge of the German
repara.ions question.
The Baruch memorandum mas b@en
discussed in official quarters here as
possib.e basis for a general re-arranse-
rnent of the whole war debt proo.em..
but Secretary Mellon has been careiui
10 reiterate that the Government OF Inc
United States cannot make any COM
mitments as to acceptance OF any low
or amount from European debtors.
though it recognizes that when Ger
man reparatiors have been nXed ana an
international ban is actually possible Oh
fiotation, the matter Will De one Ioi
Congress to take up anew II II desires.
as there at present IS no authorlty 10
negotiate anv change in the debt agree
ments. the World War Debt Commission
having formally expired.
The Baruch Pan.
Mfr. Baruch, as an exponent OF
world economic settlement and yet rs
an unofficial person, IS liable to discuss
the question without in any way COM
hitting the American Government 10.
il is believed that the first steps ~li'
require an interested and Favorable
viewpoint from those engaged in invest
ment banking rather than. from the
washington Government itself.
The plan. in brief, takes the German
reparations bonds. which at their pres
cnt amount are doubtful assets In the
minds of most people: the French Gen.
to the United States and the debts OF
the allies to ea~h other. which are also
somewhat doubtful. and endeavors TO
make a LIQUID asset OF them all ''oxy-
renizing" their various countries, as Mr.
Baruch calls it,
II. for example. German obligations
are fixed. she can sell S2.000.000 600
and perhaps $4,000 900 900 of bonds
on a per cent interest basis
with an amortization or sinking fund
requirement Of at least ! per cent a
year The next issue OF bonds would
OCCUR sfter the first was absorbed and
probably would come out at lower
rate OF interest and thus by succeeding
.iotations ultimately a tof@l Of some
where between $4,000, 00o.O00 and si0.-
000. 900 900 OF bonds would be fioatcd
and the average rate with amortization
might not be more than 5ig per cent,
This would represent a fixed charge Of
$3.50 900. 900 per year on Germany,
which, Of course. each year would b.
lessencd by the per cent amortization.
By gradual Yefinancing the Germans
would get the benefit Of lower interest
rates
Out of the total issue. France would
receive in cash So per cent OF German
reparations. Out Of the proceeds OF
the first loan. depending on whittier
IL vas for two or four billions. France
would get enough 70 pay her d@b, 10 the
United States In cach RI she obtained
two billions and offered the same In
payment for her debt to America. Con-
gress would haze 10 figure the actual
cash value OF he present Mellon Ber-
cnger agreement rs comI;rcd with the
receipt o! a definite amount. which
would cut down the public debt ard
lnteres. charges OF The American peo-
pie II accepted
Effect on French.
Theory is that the present cash value
OF debt owed by Germany would be
In excess nj what the French could
probably ever collect from the Germans.
France could use the oalsnre ~ her
share Of PREPARATION money 10 do num-
her ri things She could wipe out her
debt. for instance, 10 Great Britain.
Credit on her extcrna! i3an" would be
obtainable II Is calculated. ut a.. to
As per cent basis In a short time. In
deed the effect of the plan on liked
charges In the French budget In be
lieyed Ia be fully appreciated by the
French government. wEer" Tie decision
10 accept changed reoatatjnn program
must, In any event. come befor" any"
thing can BIZ done 10 float the big In
trfnatiOnhl loan.
Untsti.ht 1879