THE AMERICAN DEBT.

Auckland Star, Volume LIV, Issue 72, 24 March 1923, Page 5

THE AMERICAN DEBT.

WHAT IT MEANS. IXH.CENTCE OF EKCHA x<; K. t (from Our Special rv,.-re-<t«.nUerit.l LO.VDO.V, February fj. Detail. O f the terms of tlle American debt are , low available, and «c subjoin a financial expert's summary of what it rea ly entail, on the population of Great in the sterling of both principal and interest instalments. Ignoring the 4,000.000d01 5 . odd which wcarTpayiL i* cash, the dollar amount of the principal M 4.«00 million dola. which, at 4.60d'1 8 to the pound—an exchange rate which we may hope is the lowest that need be taken into consideration—is eiiuul of course, to exactly £1,000,000.00(1 'and inyolvw an annual sinking fund and interest charge for the next ten vein of £33,000,000. Each rW of one" cent in the exchange above this level implies a reduction of about £2,000.000 in the sterling value of the principal and of about £75.000 in the annual charge. Thus at the exchange rates 4.fitj, 4.70, and 4.563, w e have the following values for principal and annual payment respectively:—

Exchange. Priiu-lpal. Annimi Payment. 4-« i 987.124.«« 34.548.M.-0 i -t-TU !i;i).:w:.:.-i;; :::-:^2:;.'2:>

, The ampliS.-a details ~f d,n tnrma i indicate that some small bin iml unim- . portant i-om-esaiuns of whinh we l.ad i hitherto uo knu«ledj;e have 1,,-en . t granted us. 'Hi,. ri.L'ht (fiveii v- for the : first five years »f di-fi'rriiiir nm-Imlf tlie interest and addinff it tn tl,.- pritn-ipal j means tlial in any imp of tliowe years »'c : need, if «-iri a uni.->tainv.-i dii-tute. pay ■■nly .2 per cent, instead of :;\ |~- r rent; that is. at tlie par i.f eu-hariLV, ~n l y jClS,<)lk>.(«)(>. iiiMi-iu] i.f e::s.<N)o.t>ii<>. Tie ; right n> pay in Ulhtl\ Ih.hiU at their face value may al-u seeurn for u< a ' small saviiifr. -uicr one nr two of thrse ! issues are currently quoted at OP{. or a discount of H point's. This ri-ht will also enable us to earn full interest on such funds as we may remit before tlie time when the instalments actually heroine payable, while, incidpiuly. it 13 not improbable that ii a new trade boom develops in the I nitPil Mates the price of Liberty bonds may weaken. Tn Lhat way we should secure a doip>].. iuh.-uit.ige from a perioil ~f sharply ri-inu' ; ri.-es.