FUNDING OF DEBT.

Waikato Times, Volume 109, Issue 18339, 27 May 1931, Page 2

FUNDING OF DEBT.

. PAYMENTS TO AMERICA. POSITION EXPLAINED. In view of • the misunderstandings ■which apparently exist in some quarters about the part played by Mr Stanley Baldwin in the settlement of the American Debt on the occasion of Ills visit to the United States 'with the' Governor of the Bank of England in 1923, the following statement has been circulated by the Conservative 'Central Office to British Conservative members of Parliament: — The position-in January, 1923, when Mr Baldwin reached America was as follows:—The British 'Debt to the U.S. Government amounted to £850,000,000. Interest had been paid in cash till May, 1919; the U.S. Government had agreed, as part of the negotiations for funding the Debt, to postpone interest for three years. The postponed interest increased the total amount due to £957,000,000. The U.S. Government held, in respect of the Debt, formal obligations of the British Government signed by Lord ■Reading, payable on demand in U.S. gold dollars and bearing interest at 5 per cent per annum. The British Government were formally bound to -convert these demand obligations Into long-term bonds, if requested by the U.S. Treasury. On February 9, 1922, the U.S. Congress had passed/a law creating the World War Foreign Debt Commission -with authority to fund the War, .Debts,' provided that repayment must be not later than June 15, 1947, and the rate of interest not less than ■4} per cent. On April 25, 1922, the U.S. Government had officially invited the British Government to send a (Mission to Washington to open negotiations with the Debt Commission. ■On April 30, 1922, the Budget speech contained an announcement that payment 1 of; interest on the British War Debt to' the U.S. Government at the rate of £50,000,000 a year would be begun by a payment of £25,000,000 in Ootober, 1922, and this payment had been duly made. British Obligations. > Thus Britain was actually paying Interest at the rate of £50,000,000 a year, without any reduction in the capital debt, and was under a formal obligation to convert the demand obligations into long-term bonds at the request of the U.S. Treasury. We • (had been formally invited to negotiate with the Debt Commission, which was •debarred by statute from accepting any terms more favourable than repayment with interest at not less than 4| per cent within not more than years; involving an annual payment of £65,000,000. Assuming that the British Government did not desire to repudiate its formal obligations by an open default, the only apparent alternatives were: —: (1) To postpone making a settlement and to continue to pay £50,000,000 a year; and (ii) to agree to pay not less than £65,000,000 a year for 25 years. The Debt Funding Commission took Its stand on the minimum terms laid v down by Congress. Eventually it agreed to recommend 3£ per cent interest and repayment over 62 years, and finally was induced to. accept a reduction to 3 per cent for the first iO years. Thtis the result of Mr (Baldwin’s negotiations was that, instead of an annuity of £65,000,000, ■our annuity is £33,000,000 till 1932 and £38,000,000 thereafter. The Balfour Noto. The following note is appended to the statement: — ‘ On August 1, 1922, the late Lord Balfour, who was then Secretary of State for Foreign Affairs, in what is *now known as the “Balfour Note,” stated, that Great Britain was pre-' pared to cancel all inter-Allied debts and all claims on-German reparations provided that the United 'States would do likewise. As, however, the 'United States had made it clear that it was not prepared to do that; Lord Balfour proposed that oUr total receipts for Allied debts and reparations should be such sums as would equal our payments to the United States. The principle laid down In this Note has governed all subsequent debt settlements. The position to-day is that in accordance with the principle of the Balfour Note we ■are receiving from Germany and from our Allies each year sums which slightly exceed our payments to the United States. In the current year the receipts from the Allies and reparations amount to £34,500,000 while our payments to the United States Government amount to £33,038,000. This position will continue until the year beginning April 1, 1966, and thereafter the receipts and payments each year will balance. LOWERED VITALITY. When your vitality is low, your nerves begin to suffer; you worry (wffiich makes matters worse), you v cannot sleep at night, your head aches, and so does your back. You are depressed, you do not eat, and your digestion revolts with pains and.flatulence. And so you got “run-down” ■ and verge on tho border of a breakdown. Don’t let yourself go any further; It’s unwise. You can feed your starved nerves and build up your Vitality by renewing your blood with •Dr. Williams’ Pink Pills. Quickly and richly these pills help to revitalise the blood stream, and, as this flows to every part of the body, it nourishes the system throughout. Energy is restored and robust health returns. 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