BRITISH DEBT TO AMERICA.

Otago Daily Times, Issue 18952, 28 August 1923, Page 10

BRITISH DEBT TO AMERICA.

BONDS FOE COMPLETE SUM HANDED Om RECORD .FINANCIAL TRANSACTION. Writing on July 6, 'Sir Maurice Low, Washington correspondent of the Morning Post, said:—Late yesterday afternoon Mr Chilton, Charge d’Affaires of our Embassy, delivered to the Treasury Department 1000 bonds for four million six hundred thousand dollars each, which he had previously signed, making a total of 4,600,000,000 dollars, the amount which our Government borrowed from the United States during the war, on which interest will be paid and the principal reduced during the next 62 years. The American Treasury officials told Mr Chilton that this was, they believed, the largest single financial transaction in tho history of tho world. In return for these bonds Mr Chilton received obligations given by the Embassy for a like amount. '* hen Mr Baldwin came to Washington to arrange a settlement with the American Debt Funding Commission 1 stated that the American Government held our demand obligations, and they had it in their power at any time to demand full payment of tho amount then owing, with interest at ft per cent, per annum to date. This statement was challenged, as it seemed incredible that we should have put ourselves so completely at tho mercy of tho American Government, who, had they seen_ fit, could have made the demand at their pleasure, and in case of non-payment declared the British Government a, defaulter. I now confirm, without change of_ a single word, the accuracy of my origina. statement. With tho exception of tho first Joan of 200,000,000 dollars, which was required to meet certain pressing obligations incurred in American money, the money was borrowed. in sums of one million dollars, for -which the Embassy gave a ecru..oate of indebtedness. These certificates are all identical, and read: “Certificate of Indebtedness. The Government of the United Kingdom of Great Britain and Ireland for value received promises to pay to the United States of America or their assigns, a sum of one million dollars on demand, with interest from date hereof lit the rate of 5 per centum per annum.” These certificates are made payable at the Sub-Treasury in New York or Treasury in Washington or at the option of the United States at Bank of England in pounds sterling at fixed rate of 4.Y6 7-16 to pound sterling. This certificate further provides: “Tnis certificate will be converted by the Government of tho United Kingdom of Great Britain and Ireland if requested by the Secretary of the Treasury of the United States of America at par, with adjustment of accrued interest into an equal par amount of 5 per cent. Convertible Gold Bonds of the Government of the United Kingdom of Great Britain and Ireland, conforming to provisions of the Acts of Congress of the United States known respectively as the Second Liberty Bond Act. ...” Thus there was no escape, and Mr Baldwin's achievement in bringing about a settlement is all the more striking in view of the power possessed by the United States to exact payment according to the strict terms of the contract.