Second Installment

The payment of $69,000,000 interest and $23,000,000 principal by the British Government to the Government of the U. S. as the second payment on Great Britain's debt to the U. S., brings out the intricacies of modern international finance.

Under the debt funding arrangement, Britain has the privilege of buying Liberty bonds and turning them over at their par value to the U. S. in payment of the debt.

Thus, with $92,000,00 to pay, Great Britain bought Liberty Bonds at approximately 98, or two points below par, from U. S. banks and other institutions over a period of several months, valued at about $90,099,800. When these bonds were turned over to the U. S. their value became roughly $91,499,800. Interest on the bonds was, however, due; this swelled the total 'by about another $500,000, or to approximately $91,999,800. The total gold handed over by the British Government was $200, making the grand total of $92,000,000.

The British debt to the U. S. now stands at $4,577,000,000. In all the British Government paid during the present year $161,000,000.

The entire transaction was handled by J. P. Morgan & Co., 23 Wall St., Manhattan.