Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-30
PAY DEBT SLOWER,
SAYS VANDENBERG
Michigan Senator Would Ex.
tend Time for Meeting Ma
tons Public Obligations.
BY FREDERIC WILLIAM VILE.

American bankers in annual conven-
ton at Cleveland this week will nave
before them novel project in connec-
ton with the national debt. The prof.
ect originates with Senator Arthur H.
Vandenberg, Republican, of Michigan
Its basic purpose is to slow up the re-
duction of the debt, which now stands
at roundly $4,000 900, 900, so as to re-
duce the annual sinking-fund drain
upon taxpayers. incidentally, Senator
Vandenberg contends, the plan would
automatically serve notice upon our
World War debtors in Europe that Uncle
Sam expects repayment on agreed terms
of the 1000 100000 or $4,000. 000, 900
which they owe us on account of prin-
cipal and interest. The Vandenberg
scheme contemplates cutting practically
in two the annual appropriation of
some S400 1000, which Congress now
votes annually for reduction of the ma
tional debt.
81 find that the bankers of the coun-
try are very keenly interested in bring
ing about some less rapid system for
paying of the public debt" said Sena-
tor Vandenberg to this writer. 1T is a
magnificent fiscal achievement that the
United States in IL years should have
reduced its national debt from the peak
of S26, 000. 900 900 in 1919 to S16,0o0,-
100000 in 1880. It was distinctly
appropriate that this burden should
have fallen upon the recent postwar
decade. when excess profits produced by
the war were within the reach of the
tax gatherer.
Problem Different
But the problem of the next decade
Is different Federal expenditures in
evitably will increase, yet Federal taxes
should continue to diminish. The only
safe basis upon which to work out such
a paradox is to slow down. the speed
at which we are paying off the national
debt. I submit that it is sound eco
nomics to do precisely this thing.
I'm the first place, this present debt
off $4,000, 100000 includes the vast
loans we made to our war allies. These
foreign debts have been funded over
long maturities at a present value to
US, when capitalized at Az per cent, of
approximately 81 900 600, 600 This sum
is represented by foreign bonds in our
Treasury I submit that in reality this
$7,000.000,000 is not owed by us, but to
us. Therefore, ask why it would not
be appropriate to refund $1,000, 5000
of our own national debt in a new
loan collateraled by these foreign bonds
and running to concurrent maturity.
"One will wash out the other. This
ti1CA may NC OC0QCOcO
from the $4,000 900 900, leaving only
SO 900, 900 900 which the American tax
payer must meet. Then our own an
nual sinking fund appropriations. now
approaching $500, 900, 900, could be
proportionately almost cut in two. This
relief in the annual tax burden would
be of incalculable value in present and
prospective times.
Would End Propaganda.
Furthermore, it would make it plain
that we expect the foreign war debts to
be paid It would end the propaganda
for cancellation. Otherwise, our own
national debt will be paid in full by
1949 while these foreign n1aturities will
run on to 1889 and those intervening 40
years win be ripe for cancellation prop
uganda.
I'm the second place, there is no fur
ther need for prodigal speed in paying
of the national debt. Some people even
argue that reasonable national debt is
good for a country-aS an antidote to
both waste and war. At any rate, our
per capita debt today is only S113, as
compared with $3.50 in France and 5000
In the United Kingdom. We are in SUI
perb relative position. There is nothing
serious in a $4,000, 900, 900 mortgage
II you want to count it all-upon a ma
tional wealth estimated at $3.50, O00,-
100000. 1t is a debt of less than one
half of l per cent. Taking proper
credit for offsetting assets in the shape
of foreign bonds, it is debt of less than.
one-quarter of per cent.
Il submit that a candid analysis of
our national position justifies less haste
from now on in the liquidation OF our
debts and a greater emphasis upon the
proposition that we expect our foreign
debtors to pay as they honorably have
agreed to pay"
Copyright. 1901