THE H.B. TRIBUNE. THURSDAY, AUGUST 18th, 1921. ALLIED DEBTS TO U.S.

Hawke's Bay Tribune, Volume XI, Issue 201, 18 August 1921, Page 4

THE H.B. TRIBUNE. THURSDAY, AUGUST 18th, 1921. ALLIED DEBTS TO U.S.

The question of refunding—as the technical term goes—the war-debts of the European Allied Nations to the Government , of the United States has been mentioned more than once in the cables of the last few weeks, and the Federal Treasury, of which Secretary Mellon is the head, has been asking Congress for authority to carry the process through. According to American papers now to hand the principal Allied debts and , the respective amounts still owing by them may be approximately set out, in millions of dollars and of equivalent pounds sterling as follows :—

In round figures, the total of these is close on 10,000 million dollars, or, adopting the par rate of exchange, as has been done in. the table, about 2,000 millions sterling. At current rates of exchange between New York and London the aggregate amount, expressed in pounds sterling, would be somewhere about £2,600,000,000. The point of current exchange, however, would probably not enter into the funding figures, which would no doubt assume payment as in gold, the matter of exchange coming into operation when payments of principal and interest came to be made, and then at the rates current at the respective dates of payment. Of this immense amount, the American paper now before us says, “only the Russian account appears at the present time to be uncollectable.” Here it may be mentioned that Russia’s “uncollectable.’' war debt to the British Government amounts to 568 millions sterling, or more than fourteen times the amount which America is resigned to writing off as hopelessly “bad.” Of the gross total, too, it is to be noted that, according to our American authority, about ninetenths, or 9,000 million dollars, did not actually change hands. “Our Government,” it says, “simply extended credits for American supplies in that amount, and the other Governments accepted them at war prices.” That is to say, ninetenths of the money now represented by the Allied debt to the United States Government was spent in that country, and “at war prices,” the Government advancing the funds amj paying the suppliers.

But the American Government had; in turn, to borrow all, or nearly all;! of this 2,000 millions sterling from its own citizens, floating loans of varying currencies, but at low rates of interest, in much the same way as the British Government had done in the first years of the war. On these loans the United States Government has, of course, been regularly paying interest to the bond holders, but on the loans to the Allies, which were all nominally for short periods, it has been receiving little, if any, interest. The scheme that is now to be evolved is one under which all overdue interest owing by the Allies will be capitalised, and the whole of the respective debts put upon the footing of permanent loans carrying rates of interest to be arranged. But it is not proposed that the bonds issued by the Allied Governments shall go into the custody of the American Treasury to be collected as they come due. The idea is that they will be endorsed or guaranteed by the American Government and be accepted by American investors in exchange for an equivalent amount of the United States loan bonds held by them. The Allied bonds will doubtless require to have a very considerably longer currency than those for which they are to be offered in exchange, and will therefore probably have to carry some higher rate of interest. Already, it is said, the American “Liberty” Bonds, which, like the British—and our own—War Loan Bonds, have fallen to a considerable discount, have begun to recover value in anticipation of a profitable exchange of them for Allied Liquidation Bonds expected to yield a better rate of interest. This, of course, is a purely speculative movement, as the terms which may be proposed to the various Allied countries have yet to be formulated, though, of course, there may some inkling have, leaked out as to what they are likely to be. There is no reason to think that the American Government will impose terms higher than will be sufficient to sa\e it from actual loss, but the indications are that it does not at present contemplate, as was at one time Suggested, assuming itself any part of the burden of the European Allies' costs of carrying. on alone the first three years of the war.

Millions of Dollars £’s sterling Great Britain .. 4,165 833 France 3,350 670 Italy 1,650 330 Belgium 375 75 Russia 195 39 Poland 135 27 Czecho - Slovakia 00 18