§ A more agreeable feature of the Debt figures is the fact that we have made a beginning of reducing our external indebtedness. Our debt to the United States Government will be approximately unchanged at the end of the year. Our debt to the Canadian Government shows a momentary increase, but will, I think, also be approximately unchanged when we have made a set-off of mutual obligations of the same kind as was done last year. The debt due by us to the Governments of certain of our European Allies is in the same way a set off as against their debt to us. There remains the external debt now in the hands of the public. This amounted in all, on 31st March, 1919, to 2306,000,000. On 25th October it had been reduced by £33,000,000 to £273,000,000. We have considerable currency balances available in most of the countries in which we have currency debts outstanding, and by 31st March, 1920, the figures should show further satisfactory reduction.
§ 5.0. P.M.
§ The position will be improved in a few days, when the proceeds of the new British Government Refunding Loan which has just been floated in the United States of America are available. The total amount of the issue is 250,000,000 dollars in the form of 5½ per cent. dollar bonds, partly for a three-year and partly for a ten-year period. The special feature of the issue is that the 5½per cent. dollar bonds of both maturities are convertible at the option of the holder into 5 per cent. National War Bonds of the Fourth Series at an exchange 753 rate of 4.30 dollars. This means that as exchange rises above that figure the holders will gradually convert their dollar bonds into sterling bonds, and in the case of the three-year bonds the maturity date will be postponed from 1922 to 1929. In so far as the conversion right is exercised, the upshot of the whole matter will be that the British Government will have secured the conversion of external debt into internal debt and will have obtained much the same result as it they had placed National War Bonds with American investors at a rate of exchange rather more favourable to the Government than could be obtained in the market at the present moment. The funding of the dollar obligations which mature on 1st November this year will enable us to use our available balances in the United States more freely than was possible while this liability was hanging over us, and we shall accordingly be in a position to repay a total amount of short-term debt in America very considerably in excess of the total of 250,000,000 dollars which is the amount of the new Loan.
§ Finally, before leaving the subject of external debt, the House will be glad to know that we have completed arrangements for the repayment, without re-borrowing abroad, of the £10,000,000 (100,000,000 yen) Exchequer Bonds issued in Japan in 1916 and maturing on 15th December of this year. The final result will be that by the end of the financial year we shall be practically free of debt in the hands of the public outside the two Americas, or if 'the debt has not matured we shall have in hand funds to meet it.