La Finance

Many financial rumblings were heard in the land of Liberte, Egalite, Fraternite.

U. S. Debt. Edward N. Hurley, member of the U. S. World War Debt Commission,* returned to Washington from Paris. In his briefcase was a plan for liquidation of France's war debt to the U. S., which Mr. Hurley stated had the approval of French Government officials.

The amount which France now owes to the U. S. is in excess of $4 billion. The present plan proposed to pay off this sum on much the same terms as those granted to Britain at the beginning of 1923--that is, over a period of 67 years. Two important features, not included in the British debt settlement, were suggested:

1. That a moratorium of five years be granted to France during which period interest shall not be cumulative;

2. That the U. S. Government be required to invest annually half the amount paid by France in 25-year sinking fund gold bonds of French industries, railways, waterpower profits, public utilities and electric development concerns.

This scheme is to be considered by the War Debt Commission in Washington. Nothing was known concerning official opinion, but semiofficial circles regarded it as "a valuable supplement" to the Experts' Report in the economic resettlement of Europe.

An outline of the plan is that France is to pay $100 million a year for 67 years in payment of interest and principal. The U. S. will invest $50 million in France. At the end of 67 years, the French Government will have discharged its War liability, but French industries, etc., will continue to refund to the U. S. $50 million per annum for 25 years. In the whole period of 92 years, the U. S. Government will receive about $11 billion.

Morgan Loan. During the past week, the loan made to France at the time of the franc's collapse (TiME, Mar. 17) by John P. Morgan, was renewed for six months.

Budget. Premier Herriot, having been in the forefront of international politics, began to turn his attention to domestic problems.

One of his election promises was to abolish the unpopular 20% tax in- crease imposed by Premier Poincare (TiME, Jan. 28). This he how found himself unable to do. His difficulties:

The budget for the first time since the War is one and indivisible. This means that the French have abandoned the foolish practice of having two budgets, one ordinaire, and one recouvrable. (To the latter was charged the expense of reconstructing the war-devastated areas, the amount being a charge against reparation payments from Germany, which were generally unpaid.) This year the Government has to face a budget deficit of about 2 billion paper francs ($100 million). On top of that, it has constantly to worry with maturing short-term commitments. The panacea suggested is to convert into long-term securities the short-term debt of France; but there is no hint of reduced taxation.

German Loan. Paris bankers decided to underwrite 5%, or $10 million of the loan to Germany as provided in the Experts' Report (TIME, Apr. 21). It was said that this will be the first time since 1870 that France has subscribed to a German loan.

Ruhr Receipts. The Ministere des Finances announced that the occupation of the Ruhr had yielded to France 3,519 million paper francs ($175,950,000) for the 18 months ending in June. The cost of occupation had been deducted.

*The U. S. World War Foreign Debt Commission is composed of: Chairman: Andrew W. Mellon; Charles E. Hughes; Herbert Hoover; Reed Smoot, Senator from Utah; Theodore E. Burton, Representative from Ohio; Charles R. Crisp, Representative from Ga.: Richard Olney, ex-Representative from Mass.; Edward N. Hurley, ex-Chairman of the Shipping Board; Secretary: Eliot Wadsworth, Asst. Secretary of the Treasury.