Evening star., 1932-12-09
Text of u. S. Debt Notes
Stinson Emphasizes Difference in Understanding
Between america and Britam-Does Not Agree
With French argument on Recovery.

gold supplies seems to us to have oc-
Cured as between the different coun-
tries of Europe as the gold supplies of
Europe increased from about S3,018,-
Sc, ,963, 100000 at present; the distribu-
ton of which as between the countries
of Europe cannot be attributed to
forces originating in the United States.
Lausanne Impression Corrected.
I feel I must also call attention ia
the misunderstanding which might arise
from the following statement In your
note:
The initiative in devising settle
ment of reparations was taken by
the creditor governments of Germany
at Lausanne with the cegnizance
and approval of the United States
Government
The facts in this connection were
more accurately set out in a statement
issued by the British treasury on
July II last:
misunderstanding has arisen re-
gerding Mr. Chamberlain's reference
in his speech to the House of
Commons on Monday, referring to
conversations with representatives of
the United States. He did not sug-
gest, and, of course, had no inten-
tion OF suggestions, that representa-
tives of the United States had ap-
proved, either tacitly or. explicitly,
what was done at Lausanne. The
proceedings there were throughout
on the basis that the course was to
Snok EttrOnnaf, crl,ttiny, Df,
without involving the United States
in the discussion.
In 1923, when the British government
sent mission to settle the debt of
Great Britain to the United States, the
United States Treasury held demand
obligations Of Great Britain calling for
interest at the rate Of per cent.
Interest Rate Reduced.
AS result of the negotiations these
obligations were refunded on an inter-
est basis OF 3ss per cent, which was a
lower rate of interest than the credit of
either country at that time commanded.
The policy adopted by the United States
in its settlement was stated by the Debt
Funding Commission.
The commission in its settlement
with Great Britain, made on June
19, 1928, and in subsequent negoti-
ations or settlements has adhered to
the principle that the adjustments
made with each government must be
measured by the ability of the par
ticular government to put aside and
transfer to the United States the
payments called for under the fund
ing agreement.
Nor does the principle of capaci-
ty to pay require the foreign debtor
to pay to the full limit of its present
or future capacity.
1t must be permitted to preserve
and improve its economic position,
to bring its budget into balance, and
to place its finances and cur
rency on a sound basis, and to
maintain, and, If possible, to i'm
prove the standard of living Of its
citizens.
No settlement which is oppressive
and retards the recovery and de-
velopment of the foreign debtor is to
the best interests Of the United
States or of Europe.
The representatives of no country
have set their hands to any agreement
which they believed at the time did
not fulfill this policy.
Question OF Solution.
While 1t seems desirable to state
these facts from the standpoint of
historical accuracy and as necessary to
| explain the point Of view, of the Ameri-
can people towards these obligations
the real question raised by the British
note is how can the problems which
arise from the existence of these obli-
cations best be dealt with under the
y,diffnyNc nf ha xryCr1l
As to the payment, due on December
Is, appreciate the cogency of the diff
f1culties which you present as to the
transfer of these monies in the presen.
state of foreign exchanges.
In an endeavor to meet this situa-
ton, it already has been suggested to
you that the President might be willinp
to recommend to the Congress the &C.
ceptance of deposits in sterling in Eng
land, to be guaranteed as to dollar
value and transferred at such time al
would not interfere with the stability
of exchange.
This, I understand, your government
has declined in the belief that the ex-
istence of large sum of sterling
awaiting transfer would affect the ex-
change markets almost as seriously as
the actual purchase of exchange
Accordingly, further informal sugges-
tions have been made to your govern
ment of methods of minimizing these
difficulties which 1t has not been able
to find acceptable.
Recognizing these difficulties Of ef-
fecting transfer I am confident that
the Congress will be willing to con-
slider any reasonable suggestion made
by your government which will facili-
tate payment of the sum due on De-
cember Is.
Accept, Excellency, the renewed as
surances of my highest consideration
HENRY L. STIMSON.