French Debt

A French debt mission, composed of MM. Barnaud, Roussel, Thion (TIME, Aug 3), arrived in London, began to negotiate a settlement of the French War debt to Britain, long outstanding.

Britain, with an original War debt to the U. S. of $4,604,128,085 (now several millions greater because of interest), said in 1922 through Lord Balfour that she would collect from her Continental debtors (including Germany) a sum equal to her own War debt to the U. S. This was another way of telling

Europe that Britain "is willing to cancel all War debts, but, since the U. S. will not join us, we are obliged to collect enough to meet our American obligations."

With this in their minds, the French went to London. Said they in effect: "The British are great believers in the Germans and they will surely be willing to rely upon the amounts due to them under the operation of the Experts' Plan. We, therefore, will have to pay with all of Britain's other debtors* something like one third of the residue, which payment must be spread over a long term of years."

No details were given out at the British Treasury concerning the negotiations, but a "leak" of information established the fact that the French had received a rude jolt. The British view evidently was that payments from Germany could not be considered until they had been received, as it was not known whether or not the Experts' Plan could be operated successfully in the exceedingly difficult years ahead./- A second point was that Russia, who owes Britain more on paper than any other country, could not be considered at all. It was therefore apparent that France would virtually have to pay something like half of Britain's debt to the U. S., say $2,000,000,000, instead of her full debt of over $3,000,000,000. Moreover, instead of paying it from the French share of the Experts' Plan annuities, Britain required her to pay independently of such receipts, but offered later reductions in ratio to her own receipts from Germany. This did not suit the French and they left for.Paris to lay the situation before the Cabinet.

In London the French delegation was expected to return, headed by Finance Minister Joseph Caillaux. At Paris, it seemed likely that France would try to reach an agreement with the U. S. before re-tackling the British debt.

*Other debtors: Russia, Italy, Yugo-Slavia, Poland, Rumania, Portugal, Greece, Belgian Congo. Total debts: about $10,000,000,000.

/-in another four years Germany is expected to pay at least $625,000,000 annually to the Allies.