New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-07-21
Secret Commitment Nav
Be Binding, Mellon
Tells Senators i'm Plea
for Broad Authority
Terms AstOnish
The Committee
Offer Never Was Finally
Accepted; Inquiry on
Subject Is Unanswered

From The T,ibunc's Washington Bureau
WASHINGTON, July 20.-Testimony
of Secretary of the Treasury Mellon
before the Senate Finance Committee
to-day relating to the funding of the
foreign debt Of about $4,000 100000
developed that the Treasury Depart
ment under the Wilson Administration
negotiated with the British government
for spreading the payment of the Brit
ish share of the Indebtedness over a
period of twenty five years This debt,
exclusive of interest, amounts to 81
100000.
The negotiations went so far that
they may have committed this govern
ment, the Secretary said, and he ad-
vised the committee that he might be
''m orally obligated" to abide by the
understandings which had been reached
in these negotiations.
The testimony of Secretary Mellon
was backed by that of Assistant Sec
retary of the Treasury Eliot Wads-
worth, who also was before the COM
mittee Members of the committee
were astonished by the disclosures that
this government may have got itself
entangled into commitments from
which it will not be easy to extricate
itself. That negotiations took place on
the subject was we'll known, but it was
, generally supposed they had come to
nothing and had not resulted in a com
mitment Nor was it understood that
l,o.,, !
ing to stretch repayment over so long
a period
The negotiations, it was brought out,
were between representative of the
British government and Albert Rath-
bone, former Assistant Secretary of the
Treasury. Both Mr. Mellon and Mr.
Wadsworth advised the committee that
they resulted in an agreement, in May,
1920 whereby payment Of the British
debt to this country, principal and in
terest, was to be extended over period
of twenty-five years.
Agreement on Interest
1t was part of the agreement that the
American government was to make no
demand on the British government for
principal or interest until the negotia-
tions had been completed for funding
the British indebtedness. With respect
to the accrued interest, the negotia-
Ions resulted in an understanding
whereby the amount due from Great
Britain was to be extended over pc
to be paid the first, second and third
years, fifteenth the fourth year and
the balance in eight years.
Mr.. Wadsworth said no payment on
principal or interest was to begin un-
der the arrangement until the begin
ming of the British fiscal year 1922
The period for repayment of the debt,
including interest other than that al
ready accrued, was to be from 1922 to
1947
The negotiations had proceeded to a
point where they had reached definite
form, when they were abruptly termi-
mated at the instance of Great Britain,
Secretary Mellon Indicated
Secretary Mellon told the committee
he had sent letter to the British Am
bassador May II, embodying memo
randum on the present state of the ne
gotiations. He said he had not re-
ceived a response and the commit
ments may become the subject of fur
ther negotiations between the Treas
ury Department and the British gov
ernment.
$407 100000 Now Due
Mr.. Wadsworth presented to the
committee a detailed statement of the
interest thus far accrued and due from
the British and other governments. IT
| showed a total of S943, 1874 900. OF
this, S407 100000 is due from Great
Britain 1884 100000 from France and
smaller sums from other countries.
Senators La Toilette, of Wisconsin,
and Reed, of Missouri, pressed Secre-
tarv Mellon to find out whether the
Treasury Department proposed to de-
fer payments Of principal or interest
Mr.. Mellon said the Treasury Depart
ment was seeking broad authority
| from Congress under the bill now
pending, to be prepared for any con-
tingency which might arise. Negotla-
tions by his predecessor. he said, had
not been concluded, but he admitted
/ they might have an important bearing
( on negotiations hereafter.
''There can be no doubt" said Mr.
Mellon. chat representations were
made by the Treasury Department. in
/ the past by my predecessor, in fact
looking toward deferment of the
/ payment of both principal and inter
est, and might feel morally, or even
legally, obligated by those represen-
tations or negotiations
/ The testimony showed that former
Assistant Secretary Rathbone went to
Europe expressly to make arrange
ments about the British debt Sec,
/ retary Mellon said the negotiations of
| Mr.. Rathbone were at first oral, but
later were reduced to written memo
randa, which are now in possession of
j the Treasury Department
Senator Penrose, chairman OF the
committee, said the secret correspond
ence and memoranda relative to the
foreign debt, which had been sent to
the Judiciary Committee by former
Secretary Houston, had been turned
over to the Finance Committee. He
pointed to a large number of packing
cases in one corner of the committee
room and told members of the COM
mittee they were at liberty to examine
| them.
Senator Penrose said he hoped to
conclude hearings on the bill to give
| the Secretary broad powers in refund
( ing Saturday. and to report it soon
/ and make it the unfinished business.
Aruausiua Refvses tn MaJ;ofa