Evening star., 1928-10-20
DRAF TING
FINAL PREPARATIONS
SETTLEMENT PLAN
New European Offer Would
Give U. S. Cash for War
Debt Discount.
NO CONFLICT FORESEEN
WITH AMERICAN VIEWS
Presence of Washington Observers
at November Farley Desired
by Other Nations.
BY PAUL SCOTT MOWRER.

negotiations between Germany, France,
Great Britain and the United States
are much farther advanced already
than the public has been allowed to
suppose, this correspondent has reason
10 believe.
The conversations which are now be-
ing conducted here by S. Parker Gill
bert, agent general for reparations pay
ments; Winston Churchill. chancellor
of the excheouer for Great Britain,
and Premier Poincare of France indi-
cate that vital phase has been
reached.
Some European statesmen consider
these negotiations as important as the
Versailles treaty ITSELF for the treaty
merely outlined the peace terms,
whereas the new general reparations
war debts and Rhineland evacuation
settlement, If successful, will in the
European sense finally liquidate the
war;"
u. S. Considering Plan.
The writer is enabled to reveal that
experts are working on plan, which,
although not yet accepted by the gov
ernments concerned, is being considered
carefully by all, including the United
States. This plan envisages nothing
less than cash settlement of both
reparations and war debts on a basis
OF so per cent discount of their esti-
mated present value.
1t is clear that in any case, when the
new Dawes Commission without Dawes
meets in Paris, Berlin or London, prob
ably the middle of November, the
United States experts. whoever they
may be, will play decisive role.
War debts, it is agreed, will not
actually be discussed in the commission
But after tentative agreement has
been reached, the United States will be
asked what discount it is prepared to
make on war debts for cash payment
instead OF payments extending over So
years.
Conflict With America.
This plan does not involve revision of
the debt settlements. It does not con-
nict with the statements Of Herbert
Hoover and Gov. Smith that no re-
vision of these settlements can be con-
sented to. 1t does not substitute the
United States for the allies as Ger
many's sole creditor. It does not d.
rectly intertangle the question of
reparations with the question of war
debts. 1t simply raises an altogether
new question, What discount are we
willing to offer for cash?
1t is even probable that our Govern
ment already has been sounded on this
subject and has found the principle
OF q discount for cash reasonable and,
tY1rr S%enl R-,
ent, has indicated willingness to
examine any fair and concrete proposal
along these lines.
In order to understand these sensa-
tional developments it Is necessary to
consider a few figures. Under the Yer
Sallles treaty Germany's debt was fixed
at $4,000, ,000,0 900, plus interest at 5 per
cent. This sum has been found impos-
sible. The Dawes plan did not attempt
to fix a new total, but merely fixed the
size of the annuities for an indefinite
number Of years. But the experts nearly
all agree that the capital value Of the
German debt under the Dawes plan
does not exceed $1,000, 100000.
German Capacity To Pay.
The maximum Dawes plan annuity
OF $625, 100000 now for the first time
becomes due. The Germans will be able
to pay this year, but claim they are un-
able to continue such heavy payments
for any length of time. Most experts
tend to agree with them.
What Is now proposed is that the Ger
man payments should be extended over
about the same term of years as the
allied debt settlement with the United
States--that Is to say, go years. It is
believed that the maximum annuity
that Germany will consent to pay for
any such length of time is $375, 900, 900.
Capitalized at per cent over so years.
this annuity represents $5,000,0O 900.
or reduction Of over SO per cent from
the present estimated capital value of
the Dawes plan annuities.
But the allies owe the United States
for war debts $5,600,000,00O They
would therefore be receiving less from
Germany than they must pay the
United States, and there would be Moth
ing left over whatever for reconstruc-
ton OF the devastated regions or for
other war damages. They propose
therefore, to attempt to realize the Ger
man debt Immediately by the sale over
a series Of years of some four and one
nalf billion dollars in German bonds to
the international investing public. Part
Of the cash thus obtained they are
ready to pay promptly to the United
States in full settlement of war debts.
provided the United States consents to
make sufficient discount for cash.
How Plan Might Work.
1t Is estimated that a so per cent
discount by the United States for cash
would work out in the final liquidation
OF reparations and war debts about as
follows: Rumania and Greece would
nave debit balances. Great Britain
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