Again

Victor Henry Berenger did what he was sent to do--make a debt funding agreement between his country and the U.S. He did what Caillaux failed to do last year. But it remains to be seen during the next few weeks whether he has pleased in performance.

The French debt agreement was in many ways the most difficult problem ever faced by the American Debt Funding Commission: 1) It was the second largest debt, amounting to $4,025,000,000; 2) The amount to be paid was not simply a matter of financial capacity (as in the case of Italy) but of finding out what could be got out of a nation whose temperamental and political difficulties are such that at the end of eight years since the War its budget does not even balance; 3) France's political and economic importance made it essential that a practical, friendly agreement should be made for the diplomatic and economic comfort of the world.

M. Berenger and the American Commissioners--Secretaries Mellon, Hoover, Kellogg, Senator Smoot, Representative Theodore E. Burton and their colleagues--last week signed an agreement in the following terms:

That France should make payments beginning at $30,000,000 each for the first two years and advancing gradually to $125,000,000 in the 17th year, and continuing at that level to the end of the usual 62-year period for paying War debts. No "safeguard"; clause (exempting France from payments in case Germany fails in reparations payments), such as was demanded by Caillaux, was mentioned. The total payments in 62 years are to amount to $6,847,000,000 in principal and interest. The interest is calculated as none for five years, 1% for the next ten years and so on up to 3 1/2% for the last 22 years--which signifies nothing, since this is a mere juggling of fictitious terms. Calculating interest at 4 1/4%, the present value of the proposed payments is just about 50% of the debt as it stands, or about 15% more than Caillaux's best offer.

The compact was hardly made before it was attacked in the Senate by the same group which attacked the Italian debt settlement. Senator James A. Reed of Missouri was particularly vigorous. He subjected Senator Smoot to a grilling examination on how the agreement was arrived at. He fiercely attacked the conduct of the American commission in making the agreement:

"It was a piece of superlative insolence. It is so devoid of all common decency that similar conduct would bring a blush of shame to the brazen cheek of a first-class orthodox devil."

None the less the debt commission pursued its course. The day after Senator Reed's exclamations it made public a settlement which it had just made of the Jugoslavian debt of $62,850,000. Interest is suspended in the early years, beginning with 1/8 of 1% at the 13th year and advancing to 3 1/2% in the last 27 years of the 62 year period. In all $95,177,635 will be paid in principal and interest, but the proposed payments amount in value to only about 32% of the present face value of the debt.

The following table shows how the agreement just made compares with the other chief debt settlements so far made:

............PRINCIPAL OF DEBT.......PRESENT VALUE

Britain.... $4,600,000,000......... 80.4%

Prance.......4,025,000,000......... 50%

Italy....... 2,042,000,000..........24.6%

Belgium...... 417,780,000...........46.5%

Jugoslavia.....62,850,000...........32%

While the French negotiations were in their final stages, the Senate did its part by the Debt Commission and approved the last four of the debt settlements so far presented to Congress: those with Latvia, Esthonia, Roumania and Czechoslovakia.

Thus twelve debt settlements have been formally ratified by the Senate, and one (the French) is pending. These represent debts of $10,102,000,000. Four unfunded debts remain on the books but their aggregate is only $244,000,000. One of these the Debt Commission may look forward to handling--the $15,000,000 Greek debt. One other of the four, the $24,000,000 Austrian debt, may yet be settled by the Debt Commission, but it is hardly likely that its present members will do so--for Congress has given Austria 20 years before beginning to pay. According to present appearances the other two debts are about as likely to be paid as those of the Confederate States of America. The $193,000,000 Russian debt has been repudiated by the present Russian government, and the $12,000,000 Armenian debt was contracted by a government which no longer exists.

The total payments from foreign countries which the U.S. may expect to receive under debt agreements in the present fiscal year (ending June 30) are as follows:

Britain $160,900,000 France 30,000,000 Poland 6,265,000 Italy 5,000,000 Belgium 3,840,000 Czechoslovakia 3,000,000 Esthonia 483,410 Finland 314,890 Lithuania 210,100 Latvia 201,640 Roumania 200,000 Jugoslavia 200,000 Hungary 67,588 Grand Total ....$210,682,728

French Reaction. Deputies of the Cartel des Gauches (coalition of the Left, which holds whatever balance of power may be said to exist in the French Chamber) immediately showed themselves hostile to the settlement.