Debts

The question of ratifying or rejecting the six debt-funding pacts recently made by the World War Debt Funding Commission was last week put before the House. The Ways and Means Committee reported agreements with Czechoslovakia, Esthonia, Latvia, Roumania, Belgium and Italy. Two reports were made, both by Democrats.

Representative Crisp made the majority report favoring ratification because he is one of the members of the Debt Funding Commission. Representative Cordell Hull, also a Democrat, made the minority report objecting vigorously to the Italian agreement, which is the most lenient that has been made.

Before the Committee reported, Secretary Mellon appeared before it. He told the Committee: 1) That the agreements with Latvia, Esthonia, Czechoslovakia and Roumania conform with only slight variations to the form of the agreement established when the British debt was funded. 2) That some concessions were made to Belgium on her pre-Armistice debt. 3) That in the case of Italy substantial concessions had to be made because her capacity to pay was small; the full principal of the debt is to be paid, but interest will vary during 62 years from 1/8% to 2%. He called attention to the fact that, if Italy had been compelled to pay her War debts to the U. S. and Great Britain on the same basis as the British are paying the U. S., she would have to pay $160,000,000 while all the taxes she collects are $850,000,000. He declared that if Italy had income tax exemptions of $1,000 for single men, $2,500 for married couples, and $400 additional for each child, Italy would lose 99% of her income tax revenue -- Italians are so poor. He said:

"Suppose that America had to assume a burden comparable to the burden of War debts upon Italy based upon the above indices, the present value of this burden would be over $15,000,000,000, or three-fourths of our present public debt; and if we were to pay this War debt on the same scale as in the Italian agreement, after five years we would be paying an annuity of over $400,000,000, after 30 years to over a billion dollars, and by the end of the period considerably over two billions a year.

"None can do the impossible. If the debtor is to be able to pay and if the creditor is to receive anything, a settlement fair to both countries is essential. It follows that those who insist upon impossible terms are in the final analysis working for an entire repudiation of the debts. The only other alternative which they might urge is that the United States go to war to collect."

The opposition to the Italian agreement will be led on the floor of the House by Democrats Hull and Rainey, who believe that Italy has got off too easily and think some time should elapse to enable Italy to get into a more favorable financial condition before an agreement should be made.