The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-06-23
HOOVER PLAN
ADHERES TO
U. S. POLICY
Year Moratorium Stretches
LenienCy Which First
Appeared in 1922.
DEBTS WERE REVISED
Interest Rate Reductions,
Extensions Met With
Favor in u. S.
BY WILLIAM PHILIP SIdNfS
scripps-Howard Foreign Editor


WASHINGTON, June 23.-Here
is the A-B-C of the war debts. pay
ments on which President Herbert
Hoover proposes to suspend for one
year to save Germany, Europe and
the world from probable disaster
The obligations of the various
Allied powers held by the treasury
at the end of 1922, aggregated SILL
6,932, 73745.
OF this amount $40, 1O2, 14o, S29 .o9
represented principal and Sl,554,-
791 ,908.36 was on account of interest.
In round numbers Britain owed
the United States S4.747, 900 900;
France, $4,000, 100000; Italy $1,000
100000; Belgium, S437 900 900; Rus
STA, 1922, 100000; Poland, $153,o0o
900; Czecho- Slovakia, S106,0OC GOO:
Serbia. $6o,ooO,0O0; Rumania, s42.-
100000, and half a dozen others
amounts ranging from $50, 100000
down.
Capacity to Pay"
It was plain, even then, that some,
if not all, of these countries never
would be able to pay in full, so the
debt commission, created by con-
gress early in 1892, proceeded to
negotiate settlements on a basis of
capacity to pay"
Mr.. Hoover, then secretary Of
commerce, was a member of that
commission, along with Charles
Evans Hughes. then secretary Of
state, new chief justice; the late
Theodore Burton. congressman from
Ohio, and Senator Reed Smoot Of
Utah. It's chairman was Treasury
Secretary Andrew Mellon.
The British debt was the first one
settled. After certain cash paw
ments, she owed. in February, 1928.
S4,600,000,000 Instead of the orig
inal Al per cent interest. it was
agreed to let Britain off with 8 1ar
cent for the first ten years, ard
with 81 per cent thereafter until
1884, by which time the entire debt
was to be paid.
This represented a 25 per cent
reduction, or the equivalent of ST.
100000.
Let Off Easily
The second important settlement
was with Italy, in 1925. By this
time her debt amounted to $2.042.-
100000: Applying the same rule of
capacity to pay" she was allowed
to go with no interest payments at
all for the first five years, then "A Of
per cent for the next ten: 4 of
per cent for the next, and SO on
until the last seven years of a sixty
tWo-year period. when she will paw
2 per cent.
Contracted at AZ per cent the
debt revision meant that Italv was
let off with Is cents on the dollar
or the equivalent of a cash payment
of only $50O,O00,Oo0.
The third big deal was in 1925
with France. After much haggling
she agreed to pay no interest at all
until 1880; l per cent until 1910; 2
per cent until 1850, then by frac-
lions until just before I987-at
which time she is to be fully paid
up-when she will pay 31z per cent.
No Interest to Belgium
1t is calculated that France has
been let. off with so cents on the
dollar, a reduction Of $1,000. 900 on.
Belgium is charged no interest
whatever. Only the principal is
asked Of her and payments of that
are stretched out nearly sixty wears
To all intents she has been let off
with 20 cents On the dollar. or less
than s1O0,000,0OO out of a total of
more than 10000 900.
1t IS true that in no case has the
principal Of the debt actually been
reduced. By stretching out paw
ments and cutting interest rates
however, the effect has been the
same
Yet the debt commission has been
criticised extremely little. The
American public has refused to
sanction Uncle Sam in the role Of
Shylock. Mostly the harsh words
have been because the commission
did not show even greater leniency.
Except for Russia, which went
Bolshevik, the other countries set
tied on the British basis, namely
3 per cent interest per annum for
the first ten years of a fifty-five or
sixty-year period, and 31k per cent
thereafter.
Which means, Of course, that
they, too, are paying only about 75
cents On the dollar.