Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-01
Continued From Third Page)

| siderable latitude is possible. While IN
sisting upon recognition OF the full
principal amounts of the debts, the
United States could and should adjust
interest rates and terms of payment in
accordance with the ability of each ma
ton to pay. This principle was OBJ
| served in the negotiation of all the
| debt-funding agreements. with the re-
| suit that in each case the schedule of
payments to be made by the debtor gov
eminent, when capitalized into present
value on the basis of current interest
rates for that type of security, was ma
terially smaller than the nominal
amount of the Indebtedness. In many
instances, such present values repre-
sented only small fractions of the NOM
inal amounts.
S10.62I, 1875, 993.1O Interest Received.
| The total amount of interest to be re-
ceived under the debt agreements was
| $lO,621, 185, 993.l0. If the debt had all
been settled on the basis of an interest
rate OF per cent per annum the
amount would have been about $780,
| 1000, or nearly 80 per cent more than
the actual sum. If there had been a
uniform rate of IA per cent. the total
amount of interest would have been
more than twice the actual sum. The
| total amount to be received under the
|
value at the dates of funding on the
basis of an annual interest rate of
per cent, was only 1852 per cent of the
total amount of the debts prior to fund
| ing; on the basis of a 4H per cent rate
1t was only 81 per cent, and on the basis
OF per cent rate it was only 488
per cent. In no case did the schedule
of payments to be made by any govern
ment represent an annual interest rate
If more than ga per cent on the amount
| OF the debt as funded. Among the
largest debtors were Great Britain, pay
ing at the rate of 1906 per cent:
France, 1.64 per cent; Italy, .405 per
cent, and Belgium, 1.79 per cent.
In determining these schedules of
| payments the prospective amounts to
be received by the foreign governments,
whether from PREPARATIONS or from other
| sources, entered into the determination
OF capacity to pay. To that extent. and
only to that extent, were reparations
and the internally debts recognized by
the United States Government as ele-
ments in the question at issue.
War Debts Summarized.
The status Of the indebtedness of for
eign governments to the United States
as of July l, 1880, the date of the latest
report may be summarized as follows:
l.
636, 773 .639.87 consisting of funded In
debtedness of $11,280, 20O,878.5O, with
accrued interest thereon of $34,206,-
294.13. and unfunded indebtedness of
S204, ISL 1926, with accrued interest
thereon of $117,519, 624.39 Total pay
mentS received on account of the debts
amounted to $2,391, 548, 141.97, consist
ing of payments on account of funded
Indebtedness OF 1891 ,752. 610.5O for prin-
cipal and $1,O46, Ash SO for interest,
and on account of unfunded indebted
ness of 1921 ,989,667.78 for principal
and $671 1853, 93411 for interest.
In recent months there has been
some speculation as to whether the
German government would request a
moratorium on reparation payments. as
provided for in the Young plan. and
whether the allied governments would
meet the situation by asking for a sim
liar moratorium on their payments to
the United States. If such situation
should arise the adherence of the
United States to its declared policy
would require all discussion to be based
on the premise that the debts of the
| allied governments to this country
are obligations of those governments.
not OF Germany, and that any request
| Tor a modification of the terms of
! payment imposes upon the govern
ment requesting it the burden of prov
ing that the request is justified by
| changes in its capacity to paw. TO
| recognize payments to this country as
contingent on the payment of repara-
| lions by Germany would be, in effect
to become Germanys guarantor and to
| agree that the taxpayers of the United
States would make up to the debtors
any amounts of separations that Ger
many might refuse or neglect to pan
u. s. Bore Share Of War Cost.
| The United States bore its share of
| the cost OF the war, both in wealth and
III human lives. The debt-funding
agreements are based upon the prin-
! ciple OF leniency and were formulated
and accepted in the belief that thew
represent fair and reasonable settle.
ments. and no reason as yet appears
to alter that view.
IN defining its policy the Govern
| ment OF the United States has fire.
! quently emphasized the fact that the
recognition Of capacity to pay is based
not only on belief in the Justice of
| TINS principle, but also on the view
! tnat 10 ignore 1t would be to neglect
the welfare of this country. Tine
United States has not purposed to hold
Europe in a state of industrial paraI-
yss or OF economic subsection. IF if
ever appears that the fulfillment of the
! present debt schedules would have that
effect the situation can be dealt with
as the situation develops.
IL Is frequently argued that the
money loaned to the allied nations
was our contribution to the winning
| OF the war and that though adrrltted9
ly a debt legally inviolable. it is NOT
SO in conscience. This is the So
called moral issue.
Even II the argument were conceded
mat we should, without question remit
ana cancel every dollar that provided
powder and shot, or that went directly
10 contrlbute to the defeat of the Ger
man Army, it would be difficult to con-
vince the American people that moneys
Wnlch provided the means for begging
allied exchange, with which commercia1
debts all over the world were paid, and
our own exporters frequently under
Dld, or that was used to construct shins
Whlcn are commercial asset, or that
was used to substitute the prices of
commodities sold to civilian non com
Datants by the allied governments at
| the very time when we were controlling
our prices by voluntary agreements. or
that went into the permanent improve
ment OF the economic equipment of the
allied nations, should not be repaid to
our Government.
Debt Incurred After War.
1t should also be borne in mind that
a large additional amount of the al
| lied indebtedness to the United States
amounting to 1920, 943, 602 20 was in
| CURED to aid in economic recovery and
adjustments after the war. Our Gov
eminent has felt that the moral obli-
cation resting upon the borrowing ma
lions to fulfill such engagements is still
less subject to controversy. The net
effect Of the adjustments now made is
that the United States has Cancelled