Evening star., 1921-07-28
BILL GIVING MELLON
RIGHT T0NEGOT|ATE
0NDEBT REPORTED
EavorabIy Returned to Sem
ate After Secretary Ap-
pears With Letter.
U, S. HELD TO PROMISES
TODEFER PAYING, HE SAYS
However, Extra Time Granted to
Debtor Nations to Pay Interest
Has Nearly Expired.

Favorable report by the administra-
ton bill giving the Treasury blanket
authority to conduct negotiations for
the funding of the allied debts was
ordered today by the Senate finance
committee. 1t carries a committee
amendment requiring that the fund
ing be completed within five years.
Secretary Mellon formally advised
the Senate finance committee today
in reply to committee inquiry as to
his views regarding the extent to
which the United States had been
committed under the Wilson admin
istration on deferment of payments
of allied war loans and interest.
The government was committed. he
said. to postponement of interest pay
ments for two or three years and
subsequent spreading out of post
poned payments contingent upon
such foreign governments carrying
out with reasonab Bile promptneSs after
this government is ready to proceed
a satisfactory funding of its existing
short time obligations to this coun-
try
The Secretary. in his letter. said:
Complying with your request in
behalf of the finance committee that
put in writing my understanding as to
the obligations, if any. on the part of
this government in connection with
the funding of foreign loans and the
poStponement of payments of interest
thereon, l beg to advise you as fol-
lows:
In view of the action of my prede-
ceSsors ! am of the opinion that as to
the principal foreign governments
receiving advances from the proceeds
af liberty bonds, this government is
committed to the postponement OF the
interest for two or three years cover
two years of which have already
elapsed). and to the spreading over
subsequent years the payment of the
postponed interest inStallmentS, but
that this obligation is contingent upon
such foreign governments carrying
out with reaSona BILE promptness, after
this government is ready to proceed, a
satisfactory funding of its existing
Short-time obligations to this country.
AS to the compromising of interest.
Secretary Houston. in his annual re-
port to Congress for the year 1920,
2 clearly showed that it was not con-
templated that this interest should he
charged on the postponed interest.
at least during the two or three year
period.
Dates Merely Tentative.
However, 1 regard the dates sug-
gested by Secretary Houston in his
annual report for the payment of this
deferred interest as merely tentative,
and not a binding commitment
"In view of the public announce
ment on this subject. made by Sec
retary Glass, communicated as it was
to the foreign governments. reported
to Congress by both Secretary Glass
and Secretary Houston, acquiesced
for more than two years. | think
good faith and fair dealing obligate
this government to the extent l have
indicated.
Il do not consider that any obliga-
tions exist on the part of this gov
Srnment by reason of anything tax
ing place in the negotiations con-
Quoted by Mr.. Rathbone with the
representatives of the British gov
ernment to which reference has been
made in the hearings before your
committee.
"t2) During the peace conference in
Paris the representatives of Great
Britain. France and the United States
agreed to recommend to their re-
spective governments to take in sat
iSfaction of their advances made to
Belgium prior to November IL. 1918,
German reparation bonds in payment
of loans made by the three countries
out of a special issue of bearer bonds
maturing May, 1926. to be made under
tHt treaty Vi anu tlilS iet-
ommendation was communicated to
the Senate by the President on Feb
ruary %, 1921. No action has been
taken thereon.
Will Take Only Own Bonds.
subsequently the principal Euro
pean powers and Germany in fixing
the amount of the indemnity to be
paid by Germany and the bonds to be
tSSne1 in the % fh
vided for an issue of what are deSig-
mated as series A bonds. which should
include the bearer bonds above men,
toned. Whether what has been done
will make this matter a subject for
further consideration l cannot now
say.
81 would like to avail myself of the
present opportunity to clear up a matter
about which there seems to be some mis-
apprehension. and that is as to the
power given by the act to accept bonds
of some countries other than the debtor
country. So far as concerns the prin-
c:paf debtor powers, which together owe
us without accrued intereSt over nine
billion dollars. there is no intention or
thought of accepting in payment bonds
other than those of the debtor country.
The authority now asked. however,
covers debts owing to us by CZechO-
slovakia. Greece. Rumania, Russia;
Serbia. Poland and a large number
also owe large amounts to the other
countries. Their resources and their
ability to pay differ widely, and the
conditions, which will have to be
!dealt with cannot now be foreseen.
Situation Is Complex.
"The situation which confronts the
Treasury is exceedingly complex. and
to deal properly with it the Treasury
must have ample powers to enable
it, when the condition of each debtor
country has been definitely ascer-
tanned, and the claims of all parties
interested have been presented, 20
deal with the situation broadly in
such a way as will. in its judgment.
best protect the interests of this
country and secure the payment of
the principal and interest of the debts
now owing to ii.
The representatives Of this govern
ment should have equally broad pow
erS as the representatives of any
other country, so as to be, able to
demand and accept our share of
whatever form of payment and Sc
curity may be found to be obtain
able in any case.
ITO accomplish this and to cover
all contingencies it was deemed nee
essary that the act should take the
broad form in which it was presented
to your committee.
I'm the present existing conditions
I would urge the Importance of the
passage of this legislation at the