The Belgian Debt to the United States

August 8, 1925

Report Outline
Belgium's Post-War Economic Situation
Belgium's Capacity to Pay
American Attitude Toward Debts
Special Focus

On August 10, the World War Debt Funding Commission, under Secretary Mellon' s chairmanship, will hold its first meeting with the Commission appointed by the Belgian Government to negotiate the refunding of the Belgian debt to the United States. The Belgian Commission which arrived in New York on August 5 is headed by ex-Premier Theunis and Baron de Cartier, Belgian Ambassador to the United. States, and includes prominent Belgian bankers and financial experts. The Belgian debt, which amounts to about $470,000,000, including interest, is fourth in size of the war debts due the United States, although its total is only about a ninth of Great Britain's indebtedness and about a seventh of the sum owed by France.

Importance of Negotiations

The special interest which attaches to the forthcoming negotiations lies not in the sum involved but in the fact that Belgium is the first of America's big debtors with a severely depreciated exchange to attempt a serious refunding of her debt. It is expected that France and Italy will follow suit in September and the question arises whether any decisions which may be reached with regard to Belgium will form a precedent for future settlements. The debts to the United States which have already been refunded have presented different problems to those involved in the settlement with France, Italy and Belgium inasmuch as the strength of Great Britain's exchange made the problem simpler for her and in the case of such countries as Lithuania, Finland and Hungary the amounts involved were comparatively small.

Effect Upon Future Settlements

The close alliance which exists between French and Belgian financial interests makes it probable that the action of Belgium meets not only with the consent but with the approval of the French Government. The motive of French policy in allowing Belgium to make her settlement first is not clear. It is possible that she hopes that the feelings of sympathy aroused in the United States by Belgium's sufferings during the war may lead to a settlement more lenient than that accorded to Great Britain and that this will serve as a model which she, with her equally depreciated exchange, can invoke in her own negotiations. It is also possible that she anticipates a failure of the Belgian negotiations which would justify her in postponing her own. In any casa it is not probable that France could expect any more favor-able treatment than will be accorded to Belgium and moreover if Belgium reaches an agreement with the United States it will make it very difficult for France to refuse to refund her own debt on a like basis. The results of the Belgian negotiations must closely affect the negotiations with France and Italy.

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