The Republican. [volume] (Oakland, Md.) 1877-current, 1948-05-27
THE GREAT
GAME OF
POLITICS
Copyright by The Baltimore Sun and
reprinted in The Republican by per
miss IN.
Mr.. ChurchiIl's Mistake
By FRANK r. KEN

Americanism any misleading and in
accurate words about the United
States contained in his remarkably
interesting and historical valuable
memoirs now being published here
and abroad.
Nevertheless, if some of the state
ments concerning our attitude toward
the British debt after World War l
had been made by any other foreign
writers that charge certainly would
be made For, dealing with this sub
iect Mr.. Churchill not only does this
country real injustice but in failing
fully to state the facts he misrepre-
SCENTS Us before the world. In one of
his first installments, while he does
mention that the interest rate was
reduced. he totally ignores what that
reduction meant, quotes the stupid
Coolidge phrase, "They hired the
money. didn't thcy?" and then as
scrts that the United States con-
tinued to insist upon the payment of
their full allotments."
In brief, Mr.. Churchill conveys the
impression that, although the terms
of the debt we've harsh and almost
impossible Of fulfillment. this coun-
try insisted upon full payment, stern
~ 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 manuscript to someone
who had a better memory and a bet
ter understanding Of this debt stu
alton The truth is that at the 1922
British-American debt conference in
Washington the terms of debt were
SO modified that considerable por-
tion Of it was, in effect, Cancelled and
that settlement was made upon an
agreed capacity to pay without en-
barrassment to the debtors
Originally about five billion and
with an interest rate at az per cent,
the British debt was settled in 1922
at 00,O0O,O00 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 ~ per cent interest-that be
ing the average rate the American
Government was paying on American
bonds issued to our own citizens 10
raise he money loaned the British
The 1922 settlement consisted of two
parts-fiIst, the annual installments
were spread over 81 years; second,
the interest rate was reduced to 3 per
cent for the first ten years and 312
per cent thereafter.
If the compound discount table at
AZ per cent is applied to an install
ment payable 50 years hence, it will
amount to only about 30 per cent of
the present value. Worked out on
this basis, the installments and inter-
est amounted to about GO per cent of
the original 81, 500 900, eco. This rep
resents an approximate 40 per cent
sacrifice by the American Govern
ment over what it was paying on our
bonds to furnish the British the mon
ey. The installments, as worked out
ON this basis in 1929, were only paid
by the British up to 1881, when the
moratorium was declared. Their actu-
al payments in that period were
roughly $27O,0OO,OOO on principal and
$1,450, 100000 interest, against an
American Government outlay of 81
400000,000 of interest to its own
bondhplders.
AS a matter of fact, out Of the
original $4,600OOO,0O0 over $1,000
100000 was postwar advances for re-
Mobilization and reconstruction pur-
poses to Britain. At the time Presi-
dent Hoover proposed that we cancel
the war portion of the debt and settle
the postwar amount by issue of
British bonds to our citizens, guaran-
teed 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 aban-
doned. In view of these indisputable
facts, Mr. ChurchilI's quotation of
Mr. Coolidge and his own personal
assertion that we continued to in
sist upon full payment" appear who'll
ly unfounded and unfair.
Unquestionably, his memoirs are a
great contribution to history; but his
discourse on the British debt is not .
part Of that contribution. Reading
that part Of his memoirs one of Mr.
Churchill's closest friends in this
country had this to say: Winston
Churchill is a great orator, writer
statesman and soldier. He is also 8
painter, politician and in some ways
a orepi11c His cOuTape and character