War+Debt+Policies

=**How the USA Dealt with War Debts**=

During and immediately after World War I, America's cobelligerents borrowed some $10.350 billion ($184.334 billion in 2002 dollars) from the U.S. Treasury. the U.S. government borrowed from its own citizens, mostly through Liberty Bonds paying 5 percent interest. In February 1922 Congress created the World War Foreign Debt Commission, on which representatives of the House and Senate flanked the secretaries of state, commerce, and the Treasury. Congress directed the debt commission to seek funding arrangements providing for amortization of principal within twenty-five years and an interest rate of not less than 4.25 percent.

the governments of the four principal debtor nations—Great Britain, France, Italy, and Belgium—believed that the debts should have been canceled altogether as the American contribution to a common struggle. They settled most unwillingly—Great Britain, to avoid losing its own standing as a creditor nation and banking center, and the Continental countries, to avoid being barred from access to American capital markets.

April 1934 by passing the Johnson Debt Default Act, effectively prohibiting defaulting governments from further borrowing in American markets for several crucial year



http://www.answers.com/topic/world-war-i-war-debts