THE AMERICAN DEBT.

Press, Volume LXVII, Issue 20176, 3 March 1931, Page 6

THE AMERICAN DEBT.

MR BALDWIN'S \ NEGOTIATES.

AN OFFICIAL, STATEMENT.

(raoii OUR OWN COBBSSPONDINT.) LONDON, January 20. In vietf of the misunderstandings -which are stated to exist in some quarters relative to the part played by Mr Stanley Baldwin in the settlement «f the American debttrn the occasion of his / ~ visit to the United States with the Governor of the Bank of England xa >1923, the following authoritative - statement has been circulated by-the Conservative Central .Office to Conservative members of Parliament:—-

"The position in January, 1923, when Mr Baldwin reached America, was as follows: The British debt to Me United Staties Government amounted to ■ 000,000. Interest had been paid in cash till May, 1919; the'United-States Gov-' eminent had agreed, as part of/ -tho negotiations for funding tho debt, to postpone interest for three years. The' postponed interest' increased the total amount due-to £957-,000,000. The United States Government' held, in' rpspect of the- debt, formal > obligations of tho British Government, signed - by Lord' Beading, payable on demand in United States .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 ihe United States Treasury. .. On February. 9th, 1922, the United Statps Congress' had passed a law creating the' World War Foreign Debt Commission, with authority to fund the war debts, pro-' vided that repayment must be not later than Juno 15th, 1947, and the rate of. interest not less than 4J per cent.' On' April 25th, 1922, the United States Goy*. ernment had officially invited the British Government to send- a mission to Washington to open negotiations -with the Debt Commission. ' "On April 30th, the Budget speech contained an announcement that payment of interest on the British war debt to the United States Government at the rate of £50,000,000 a year would be begun by a payment of £25,000,000 in October, |922, and this payment had. been duly made. Thus we were actu-' ally -paying interest at the rate of £50,000,000 a year without any reduction in the capital debt; we wore under a formal obligation to convert the demand obligations into long-term bonds at the request of the United States Treasury. Wo 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 4J per cent, within, not more than 25 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 ■ * < "(2) 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 laiid down by Congress. Eventually it* agreed to recommend 3J per cent, interest and repayment over 62 years, < and finally was induced to accept a reduction to 3 per cent, for the first .ten years. Thus 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." '