Debts

All the world's a stage. Last week the U. S., France and Britain occupied a prominent position before the footlights and sang lustily an opera called "Debts" from the great composer, the World War.

Taking the U. S., Britain, France, Italy, Russia as representing the principal debtor and creditor nations, the debt situation, complex at the best, resolves itself into the following:

The U. S. owes nothing.

Britain owes the U. S. about $4,500,000,000.

France owes the U. S. about $4,000,000,000, Britain about $3,000,000,000.

Italy owes the U. S. about $2,100,000,000, France about $175,000,000, Britain about $2,750,000,000.

Russia owes the U. S. about $250,000,000, Britain about $4,500,000,000, France about $1,250,000,000, Italy about $7,500,000.

Out of this list of debts (aggregating the colossal sum of $22,532,500,000--or a little more than a quarter of the total cost of the War) only $4,600,000,000 has been funded, namely, the debt owed the U. S, by Britain, which now stands at approximately $4,500,000,000.

Following Finance Minister Clementel's presentation to the French Chamber of Deputies of a national balance sheet (TIME, Jan. 5) and his remark made at that time, there arose a great noise from the U. S. Congress. Senators and Representatives took the Finance Minister's declarations as plainly indicating a policy of repudiation, although M. Clementel had made clear in another part of his speech that "France does not intend to repudiate any contracts. ..." But the U. S. interpretation of the general trend of the French statesman's speech was comprehensible enough. M. Clementel expected a debt cut, suggested a pooling of resources, compensation--a circuitous way of putting forward repudiation.

In Paris, last week, efforts were made by Premier Herriot and Finance Minister Clementel to allay aroused suspicions. The Premier received U.S. Ambassador Myron T. Herrick and M. Clementel received inquisitive U.S. journalists. It became current that the Minister of Finance had merely "mirrored the opinion of the French" in making his now famous statement to the Chamber. Positively there was no intention on the part of France to repudiate her obligations. As M. Clementel remarked : "The French position is clear then--France thinks she is entitled to a reduction. If she cannot get it, she wishes a moratorium and recognition of 'the necessity of subordinating payments to collections from Germany.' " It was impossible, he continued, for France to include debt payments in her budget until she had some definite knowledge of the precise terms on which her debts must be funded.

Later, a note left the Quai d'Orsay for the U. S. Embassy and Ambassador Herrick cabled the essence of it to the U. S. State Department in Washington. This note was to have been kept secret; but a leakage occurred and it was bruited about that the French Government had made unofficial suggestions looking toward a debt settlement on the following lines:

1) Ten-year moratorium.

2) Repayment over 80 years; this period to be divided into four separate parts, with progressive increases from one period to another.

3) Interest at the rate of one-half of

1%.

Washington is understood to have received these unofficial suggestions--which are allegedly to pave the way for a full conference at a later date--sympathetically, but pending the deciphering of the full text of the French note, an attitude of reserve was maintained.

Acceptance of such a plan would seemingly incur the hostility of the British who have funded their debt over a period of 62 years with interest at 3 1/2% and 4%. In equity, it would appear that the U. S. would have to modify the British terms; but there would seem to be a good chance that Britain, recognizing the exceptional position of France, would agree to raise no objection to France repaying her debt to the U. S. on more favorable terms, providing, as Chancellor of the Exchequer Winston Churchill has put it, such repayments were accompanied pari passu (with equal pace) by payments on account of the French debt to Britain.

As far as Britain is concerned, she is anxious only to recover ultimately from her debtors, including Germany, a sum of money equivalent to the amount of her debt to the U. S., originally, with accrued interest, $4,661,000,000. If the Experts' Plan provides the 40,000,000,000 gold marks that is hoped for, Britain's share will be about 9,000,000,000 gold marks or $2,250,000,000. This will leave a sum of about another 9,000,000,000 gold marks, to be met by France, Italy and the smaller debtor nations. France would thus in all probability have to pay to Britain only about $1,000,000,000 of the $3,000,000,000 she owes.