Evening star., 1948-05-22
Churchill Seen Unfair
In His Statements on
British War Debts
Disservice Done to U. S.
By Inaccurate Words in
Published Memoirs
By Frank r. Kent

I1dIl llllClISdlE NY Dl
country has no firmer friend than
Winston Churchill. 1t would be
absurd, indeed, to attribute to anti
Americanism any misleading and
inaccurate words about the United
States contained in his remarkably
interesting and historically valu-
able memoirs now being published
here and abroad.
Nevertheless, If some of the state
mentS concerning our attitude to-
ward the British debt after World
War had been made by any other
foreign writer, that charge GER
tainly would be made For dealing
with this subject, Mr.. Churchill not
only does this country real injus-
tice but in failing fully to state the
facts he misrepresents us before
the world. In one of his first in
stallments, while he does mention
that the interest rate was reduced,
he totally ignores what that reduc-
tion meant, quotes the stupid Cool
idge phrase. They hired the money.
didn't they?" and then asserts that
''the United States continued to
insist upon the payment of their
full allotments."
Distinctly Not So.
In brief, Mr.. Churchill conveys
the impression that, although the
terms of the debt were harsh and
almost impossible of fulfillment,
this country insisted upon full pay
ment, sternly exacting its pound OF
flesh. This distinctly is not so and
it is too bad that Mr.. Churchill did
not submit this part of his manu-
script to some one who had bet
ter memory and a better under
standing of this debt situation. The
truth is that at the 1922 British
American debt conference in Wash
ington the terms of the debt were
so modified that a considerable
portion of it was, in effect, Cancelled
and that settlement was made upon
an agreed capacity to pay without
embarrassment to the debtors.
Originally about five billion and
Will dll ldlC az PNA
cent, the British debt was settled
In 1922 at $4,000 000, 900. Under the
original contract it was payable by
an issue of British bonds to the
United States, extending over a
short term Of years with Al per
cent interest-that being the aver
age rate the American Government
was paying on American bonds is
sued to our own citizens to raise
the money loaned the British. The
1922 settlement consisted of two
parts-frst, the annual INSTALL
ments were spread over 62 years;
second, the interest rate was re-
duced to per cent for the first
10 years and 317 per cent there
after.
If the compound discount table at
AZ per cent is applied to an in
stallment payable 81 years hence, it
will amount to. only about 80 per
cent of the present value. Worked
out on this basis. the installments
and interest amounted to about 60
per cent of the original 81, 800, 900 900.
This represents an approximate 40
per cent sacrifice by the American
Government over what it was pay
ing on our own bonds to furnish the
British the money. The INSTALL
ments, as worked out on this basis
in 1922, were only paid by the British
I'D to 1881, when the moratorium
was declared. Their actual pay
ments in that period were roughly
s270 0OO, 900 on principal and S1,45O.- :
900. 10000 interest. against an Amer
ican Government outlay OF s2,4O0,-
900 900 of interest to its own bond
holders.
40 Per Cent Cancellation.
AS a matter of fact, out of the
original $4,60O.OOO,ooG over $4,000
100000 was postwar advances for
rehabilitation and reconstruction
purposes to Britain. At the time
President Hoover proposed that we
cancel the war portion OF the debt
and settle the postwar amount by
issue of British bonds to our cit
izens, guaranteed by the United
States. The 1922 settlement above
outlined amounted to about the
same thing. In effect, it was a
cancellation of approximately 40
per cent of the whole debt.
After the moratorium expired in
December, 1882, though there was
a sentiment for re-establishment
of the Debt Commission for further
revision of the British debt, nothing
was done and the whole business
was abandoned. In view of these
indisputable facts, Mr.. Churchill's
quotation of Mr.. Coolidge and his
own personal assertion that we
continued to insist upon full pay
ment," appear wholly unfounded
and unfair.
UnqueStionably, his memoirs are
great contribution to history;
but his discourse on the British
debt is not a part of that contri-
button. Reading that part Of his
memoirs one of Mr.. Churchills
closest friends in this country had
this to say: Winston Churchill is
a great orator, writer, statesman
and soldier. He is also painter, a
politician and in some ways a /
genius. His courage and character
are superb. The whole civilized
world is deeply indebted to him
and he is very great man. But
he knows very little concerning
money and practically nothing about
economics-and never has"