War debts, repayment terms, and diplomatic leverage

Harding wanted room to reduce war debts through negotiation, but Congress restricted that discretion. The account describes a British agreement with a 62-year repayment term and low interest, chosen partly because an agreement with Britain was expected to pass more readily. It could then provide a model for settlements with other countries. A later explanation considers how repayment extending into the 1980s could reduce the real burden through changes in the value of money. The creditor also had an interest in avoiding a default large enough to damage its own finances. These considerations distinguish the face value of a debt from the negotiating leverage it provides.