The Washington herald., 1920-02-07
MONDELL SAYS
U. S. MUST SAVE
TO AVOID PANIC
Sees Menace to Country In
Proposed Bond Issue to
Meet Deficit.
EXPORTS RAPIDLY FALL
Exchange Drop May Cause
) Abatement Of Interest
On European Loans.
EXPORTS RAPIDLY FALL

WI" inc bhlNcu SNatcs DC
forced to issue bonds, bearing
per cent INTEREST," That In the
all important question at the
present time and one that de-
serves a close study by every
Individual I'm the country, for
the answer seems to rest with
the Individual responsibility to-
ward Americas Immediate eco
nomic situation
A reflection of this responsi-
bility was partly brought home
yesterday in the House by Re
publican Leader MondelI. who,
in summing mp the international
financial sItua tfon as Ii Affects
the United States, said:
The shadow of the deplorable
financial conditions of Europe is
thrown across our country with
ever-increasins and ominous por-
tent of danger. Ours Is the only
great commercial nation that re-
mains on a specie basis and the
constantly decreasing values of Eu-
ropean currencies, reflected in the
rate of exchange. curtailing ex-
ports and rendering daily more
doubtful the value Of enormous
volumes of European securities and
credits ed by our people, warns
US to trim sails. to economize, to
save. and it is essential that the
Federal government set a good ex-
ample in this regard.
EndanGer Securities
We have had a solemn warning
from the highest financial sources
that any increase of Indebtedness,
necessitatinG the issue of additional
certificates, will be attended by the
most serious financial consequences
that an attempt to issue bonds to
cover Increased and additional ex-
pendfture would probably necessi-
tate an interest rate of six per
cent, would reduce the market
value Of present Federal securities
at least five to ten per cent, and
endanger the specie oasis of our
currency.
The issuance of bonds Of small de-
nominations. widely s tr bu d
throughout the country, would not
only have the disastrous effect Just
referred to, but, in addition, through
the use OF such bonds in the making
of purchases. would produce an infla-
tion of the circulating medium which
would inevitably enhance the cost of
commodities and tremendously in
crease the present high cost of liv-
ing"
May Abate Interest.
Defernlent for not more than three
years of the interest payments on
American loans to the allied govern
ments and conversion of the demand
obligations held by this government
into long-teTm securities have been
approved. in effect, by the House
Ways and Means Committee, although
there has been no formal agreement
Discussion of the matter at a meet
ing of the committee yesterday de-
veloped that there is no opposition
among the members. and final action
will be taken next week. In view of
the international exchange situation,
it is agreed by the committeeman that
the allied governments cannot pay the
interest in dollars at this time, and
the Treasury plan for deferment will
have to be adopted.
The period over which the interest
will be deferred will vary according
to the ability of the respective coun-
tries to pay. Secretary Glass has
stated. The committee will recommend
that the deferred payments be spread
over fifteen years after the three-year
suspension.
To Divide Payments.
The plan which has been under
consideration by the Treasury and
the foreign governments is under
stood to have provided that the in
tcrest accruing during the period
Of deferment should not bear in
terest, but the committee is under
stood to object to any agreement
TO this effect.
Chairman Fordney. Representa-
tive Green. of Iowa. and Repre-
sentative kitchin. of North Caro-
lima. were named as a subcommit-
tee to consider the whole propo-
sition. and later they conferred
with Treasury officials.
1t is generally believed by MEM
berS Of the Ways and Means Com
mittee that IL the present exchange
conditions continue, there must be
a great drop in prices in this
country. This will come. it is eX-
pected. when the European mar
ket for American goods colIapses.