Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-03-20
INTEREST IS CRUX
OF DEBT CUT PLEAS
Rates Given Allies, However,
Are Below Those Charged
to Americans.
BY CONSTANTINE BROWN.

The staggering sum of $22, 143, SOC, 900
is the total amount the former allies
owe the United States for war debts.
This sum represents $4,000, 900, 600
more than the total American invest
ments throughout the world. The
yearly annuity that should be paid
into the Treasury of the United States
amounts for the next IS years to $685.
100000 q year and it represents about
20 per cent of the total deficit Of the
United States Treasury for this year.
It is little surprising, consequently, that
the administration and the Senate are
opposed to cancellation or reduction Of
debts.
The move toward cancellation, how
ever. is stronger in Europe than it was
ever before. The European countries,
especially the most important debtors,
maintain that the continuation of the
payments will result in an economic
disaster for all concerned. Further
more, they argue the burden of in
terest Is such that no nation can con-
slider paying America in full under the
present circumstances when the value
Of the European currencieS is lower
than it was when the debt settlements
were reached.
The situation in Great Britain is
pTOUdDly LIlDlG IIldu VI
any other debtor country.
Interest Exceeds Principal.
The original amount loaned by this
country to Great Britain, including the
rate of interest up to the date of the
debt settlement, was $4,000 600, 900.
The United States agreed to reduce the
rate Of interest on the sums Britain
owed us below the actual rate the
American taxpayer himself was paying.
The British delegates who came to
Washington to reach settlement on
the debt agreed a rate Of per cent
for the first 10 years and a rate Of 31a
per cent thereafter for the next So
years would be fair amount. Conse-
quently, Great Britain accepted an
agreement to pay the United States
within the next 81 years the whole
amount borrowed plus the interest on
the basis Of the agreed rate. The total
she has agreed to pay amounts to S.
5000, 900 interest and 81 ,600, 600, 900
principal. Great Britain IS faced now
with the proposition of paying us on
interest alone approximately $2,000,-
000, 900 more than she has actually
borrowed from this country. Up to the
present time the British government
has paid back in interest and prin-
cipal, both before and after the fund
ing agreement, the sum Of $1,911 ,800,-
600, leaving an unpaid balance of close
to $4,000 100000, which remains to be
paid back at the rate of $1S0,000,0 a
year.
The position Of France IS slightly
better, because when the debt funding
agreement was reached she was in a
precarious financial position and the
rate Of interest agreed upon was much
lower than the British.
France had originally borrowed from
America $3,405 100000. The principal
plus the rate of interest due us up to
the time of the debt settlement brought
that sum up to $4,025, 100000.
Interest on Graduated Scale.
When Senator Berenger came to
Washington to settle the French debt,
the United States Senate, taking into
consideration Frances financial Situa-
ton, agreed on the following rate of
interest:
France would pay no interest that
soever for the first five years sub -iuent
to the debt settlement. She ag- eed to
pay per cent during the next 10 years,
2 per cent during the other next 10
years, 212 per cent during the next
eight years, per cent during the fol-
lowing seven years and 312 per cent
from that time on until the whole debt
was paid off. The total amount of
interest due on the original $3.405, 000,-
900 she borrowed amounts to $2,822,-
10000, and up to the present time she
has paid us back S486, 100 900. leaving
a net balance of $6,321, 100000 to be
paid until 1887 at the average rate OF
about $110,000,000 a year.
The position of Italy is more favor
able than that of France. When the
agreement was reached between the
Italian and the American Governments,
Italy's capacity to pay was fully taken
into consideration in the fixing of the