New-York tribune., 1921-02-03
Reed and Smith
Assail Legality
OF War Loans
Missouri Senator Severely
Criticizes Payments Made
to kerensky Government
Through Bakhmeteff
Wants Credits Cancelled
Advances Made TO Foreign
Countries After Arnistice
Was Signed Are Attacked
rrom rhs rrioune,s wasb;uetoa R.r.o.

From Tho Tribuse's Washington Bareau
WASHINGTON, Feb. 2.--In hear
ing before the Senate judiciary Com
limittee to-day the Treasury Depart
ment was taken to task for its policy
on foreign loans. Senators Reed. Of
Missouri, and Hoke Smith. of Georgia,
made 1t plain they believed the Treas
ury Department had disregarded the
laws OF Congress in regard to such
loans. Senator Reed criticized the
Treasury advances to the Kerenskv
government through Boris Bakhmeteff.
who represented the Kerensky govern
ment here.
Assistant Secretary of the Treasury
Nicholas Kelley was before the COM
mittee. He was questioned sharply by
Senator Reed and Senator Smith, and
Senator Kellogg also took a hand in
the operation.
The hearing was on the Reed bill.
which proposes to repeal those parts
OF the bond laws under which wartime
foreign loans were authorized 1t also
directs the Secretary>of the Treasury
to cancel all credits and commitments
under the acts relating to foreign loans
under which the money has not actu-
ally been paid the foreign govern
ments, and it forbids new commitments.
Houston To Re Heard
Secretary of the Treasury Houston
will be heard probably Saturday when
the committee meets again.
senator Reed, in examining the wit
ness, with whom ne clashed at times,
sought to get statement as to the
amounts advanced by this government
to foreign governments after the
armistice. He also wanted to know the
authority therefor. He asked Mr.. Kel-
ley for all documents dealing with the
loans and the authority for such loans.
1t was decided, on suggestion of Sena-
tor King, to send subcommittee to
the Treasury and examine the docu-
merats at the department
That advances had been made to diff
ferent countries after the armistice
for feeding the. civilian population was
developed by Senator Reed in a series
of questions to the witness. 1t wa,
brought out that S25,o00,000 had been
advanced to Rumania after the
armistice.
"By what authority were these pay
ments made to feed the civilian popu-
lation 2" asked Senator Reed.
Under the authority of the Liberty
loan acts which covered the prosecu-
tion of the war;" he was told.
But even If they embodied this au-
thority, the war is over," said Senator
Reed.
1--WE at the Treasury Department do
not consider the war to be over so far
as the United States is concerned"
A $4,000 advance to Liberia next
drew Senator Reeds fire.
What did Liberia do to help win the
war;" asked Senator Reed.
Il don't know" said Mr.. Kelley.
hay I. 4.
Liberia?"
"s5,oo0,Ooo"
The Loan to Liberia
"Then Liberia could still get more
than S4,o00,000 from the United States
Treasury although the war ended near
ly two years ago?" Senator Reed asked.
No, it could. only be done on a
specific request"
What was this $4,000 for?'
''To pay the expenses of their dele
CATION to the peace conference"
"We had to pay the freight Of the
Liberian delegates to the peace confer
ence then?" said Senator Reed.
II did not know shey went by
freight" Mr.. Kelley answered.
"Well we paid their expenses to the
peace conference then, if that suits
your tender sensibilities better" Sena-
tor Reed said.
Questioning the authority of the
Treasury Department to carry on re-
funding negotiations with foreign gov
ernments, Senator Kellogg, Of Mime
sofa, with consent Of the committee,
sought to have Mr.. Kelley produce a
statement of the authority under which
the department is acting in this matter
Mr.. Kelley said he would produce it.
Senator Smith sharply challenged the
witness to show any authority which
permitted the Treasury to accept short
term demand notes of foreign govern
ments for the advances under the first