DEBT TO AMERICA.

Taranaki Daily News, 5 February 1923, Page 5

DEBT TO AMERICA.

TERMS OF AGREEMENT. VARYING INTEREST FIXED. LONG PERIOD ARRANGED. By Telegraph.—Press Assn.—Copyright. Received Feb. 4, 5.5 p.m. Washington, Feb. 2. The American commission has reached a complete agreement with Sir Auckland Gedde* (British Ambassador) regarding the debt funding plan. The Treasury Department has issued a statement giving details of the/debt funding agreement. The payment of principal is to be made by annual graduated instalments, ranging from 23 million dollars for the current year to 175 million in the sixty-second year, when the total sum will be repaid. Interest will be at 3 per cent, for ten years, and 31 per cent, for the succeeding. period, calculated on the unpaid balance. The local principal indebtedness is placed at four billion six hundred million dollars, for which British Government bonds will be issued to the United States Government at par. Britain has the option'of repaying the principal in three-year periods. The principal of notes to be refunded is 4,074,818,358 dollars; the interest accrued and unpaid to December 15, 1922, at the rate of 41 per cent., is 629,836,106 dollars; the total is approximately 4,704,054,465 dollars; deductions of payments made in October and November last, with 4) per cent, interest, total 100,526,379 dollars; leaving a balance of 4,604,138,085 dollars, of which 4,128,085 dollars is payable in cash. The princ pal of the bond sisue of four billion six hundred million dollars is payable by annual instalments on a fixed schedule, subject to the right of the British Government to make payments in three-year periods and pay off additional amounts of the principal on any' interest date upon 90 days' notice. For the first five years one-half per cent, interest may be deferred and added to the principal, bonds being issued s : milar to those of the original issue. Any payment of interest and principal may be made in any United States Government bonds issued since April 6, 1917, such bonds to be taken at par and will accrue interest. It is stated President Harding opposes a rider to the settlement providing that the money should be used to pay a soldiers’ bonus, believing the debt leg’slation should stand on its own merits. The President does not object to an amendment giving the Democrats representation on the debt commission.—Aus.-N.Z. Cable Assn. FEELING IN AMERICA. OPPOSITION WEAKENS. (EARLY LEGISLATION. Received Feb. 4. 11.5 p.m. New York, Feb. 3. According to the Washington correspondent of the Nev.’ York Times, opposition to the Administration’* plan for funding the British debt appears to Im) weakening in both branches of Congress and the prediction was made to-day that the necessary law would be passed during the present session before the adjournment on March 4. The American commission held a session lasting several hours preparing their report, containing recommendations *a* to the form legislation should take, and it is expected President Harding will send a message to Congress early next week. The Administration is gratified that the terms appear to meet with popular approval and'are favorable to a great number of Senators, both parties having expressed their readiness to pass the necessary debt, law. The feature ot the funding, which provided that Britain could use American bonds to pay its debt, has been considerably commented upon. It was pointed out that Britain could buy bonds, selling below par. thus benefitting, and at the same time such purchases would bring up the prices of these bonds, thus benefitting American holders. MR. LLOYD GEORGE’S VIEW. IMPORTANCE OF PAYMENT. INFLUENCE ON EUROPE. LONDON, Fob. 1. Mr. Lloyd George continues the discussion of Britain’s debt to America.

“At the present stage I can only embarrass the negotiators. I express no opinion as to the merits of the proposals or counter-proposals submitted at Washington, but I have no doubt an agreement will be reached. It is eminently desirable that an arrangement should be effected. The American Government has displayed a spirit of accommodation and concession which is highly gratifying to those anxious to maintain the spirit of friendship and confidence between the two greatest free communities on earth. The British Government had also made a genuine effort to arrive at an arrangement in the decision to take all necessary steps to repay the debt. “We could have paid for all supplies required for our own use without resort to a loan from America. Nevertheless, the money was advanced on our credit and signature. Our credit as a nation therefore demands that we should pay. Whether we can collect enough from our own debtors to meet this charge becomes increasingly doubtful, as it is becoming increasingly needful. Britain is alone in thinking she is under any moral obligation to pay the external liabilities incurred for the effective prosecution of the war.

“Why have the British taken a different view from that adopted by the other Allies? I have no desire to offer censure or criticism upon their decision. They have no doubt reasons for the course they are adopting. A man hates reminding his friend at the end of a business in which both have been engaged in warm amity that there is a little balance to be paid up. He has been expecting his friend to mention the matter to him. but the friend disappoints his expectations and not a hint comes from that quarter of any realisation that there is anything due. The friend is most insistent in collecting business accounts due to himself. He is angry at delays in the payment of his own bills, but his conscience is blind on the side of the debts he owes himself. It is not an uncommon experience, and we are suffering through it to-day. . “The war left us a creditor nation to the extent of two thousand millions and a debtor nation for half that amount. We readily accepted the invitation from our creditor to discuss repayment, while our debtors have displayed invincible

reluctance to enter into a similar discussion with us. That ought not to influence our action. Britain is the greatest of all international traders. Her credit rests on the reputation she has well earned. Her bond is a sacred trust which her people always honour and redeem without counting the cost in toil and treasure. “As soon as the war was over the people of Britain, with nn instinctive impulse, set about restoring their warbattered credit. The Government, bankers, merchants, manufacturers and workers were of one mind. Borrowing must end, Britain must pay her way, whatever the sacrifices. Expenditure was cut down and heavy taxation imposed, taxation such as no other country bears. Britain means to pay the last of her debts without a murmur. Already we are reaping some of the reward. The purchasing value of our currency, has risen and the cost of living fallen steadily, while other countries, which pursued a different policy, find the cost of living ascending month by month. “A short time ago we were taunted in the French Chamber by the Presi dent of the Council that our unsound financial policy was responsible for unemployment. It is true that, had we defied our foreign creditors, instead of paying them, wo might have fostered artificial prosperity, but British credit would have disappeared beyond recov-

“I hazard no opinion as to the percentage at which the terms of repayment to America will be ultimately fixed but, whatever the figure, the burden will be infinitely less than that of the indirect burden involved in large purchases with discredited currency. Why the debt was incurred, the circumstances under which it was entered into, and the purposes for whirih the money was advanced, are all matters which the American Government might well consider in arranging the terms of repayment. That is, however, their privilege; ours is to honour our signature.”