Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-03-17
MELONS LETTER
MARKS NEW TURN
IN DEBT ATTITUDE

tContinued from First Page)
letter to President Hibben of Prince
ton University. Made public with
out comment at his Treasury office
late Yesterday, the communication
was in reply to a recent suggestion
from members of the Princeton and
Columbia University faculties for
revision of the settlements.
Would Be Step Backward.
"Reopening all of the settlements
would, in my judgment, the Secre.
tary wrote. be a step backward and
not forward, and one calculated to
produce discord and confusion rather
than to contribute to the economic
stability and orderly betterment of
world prosperity"
Mr.. Mellon served as chairman OF
the American Debt Funding Com
mission and his announcement was
regarded at the Treasury as definitely
expressing the administrations atti-
tude toward any revision of the debt
funding policy.
Declaring that capacity to pay
policy of the debt commission had
been criticized AS a formula dlrm-
cult. if not impossible, of just appli-
cation" the Secretary said that
frankly. know of no fairer
formula"
Doubts Change i'm Attitude.
Contending a nation is unlikely TO
deserve or maintain respect OF otners
by sacrificing it's own just claims.
he EXPRESSED doubt that cancellation
of the debts would change the dislike
which the educators said had sprung
up in Europe against the United
States.
"Now. the fact is" he declared.
! chat ali of our principal debtors are
already receiving from Germany more
than enough to pay their debts to the
United States"
The Secretary said that if the debt
settlements were scaled downward
and German PREPARATIONS correspond
ingly reduced, the effect would be a
transfer of the burden OF reparation
payments from German taxpayers to
American taxpayers.
Cites Vote i'm House.
He referred to the overwhelming
vote of approval of the French settle
ment by the American House or
REPRESENTATIVE as indicating oppo-
sition to more lenient terms. and said
the suggestion of the educators would
strengthen opposition to the settle
ment. which has not been rat1ned Dy
the French Parliament.
Declaring that the advances TO
foreign countries were beyond dis
mute loans and not contributions to
allies. Mr.. Mellon said that what
the United States Government had
done in effect during the war was
70 enable it's associates to borrow
money in the American investment
market with Government 1ndorse-
ment. Liberty bonds being sold to
provide money for the loans: The
situation, he commended, would nave
been no different had the foreign
countries sold their own bonds in the
American market.
"I recognize that there is merit in
the contention that the associated
governments might well have joined
in pooling their resources in COM
mon cause" the Secretary told DR..
Hibben. land that even now an ar
pument can be made in favor of
writing off debts incurred after our
entry into the war to the extent that
thew were incurred for contributions
TO a common cause, but, and this Is
an all-important reservation. there is
merit to such an argument only III
the proposed adjustment is to be a
mutual one and is to be applied to
all on a strictly equal basis. This
factor. however, is one that seems to
have been completely overlooked by
the faculties of Columbia and Prince
ton Universities and by other advo-
Gates of debt cancellation urging the
common cause contribution argu-
ment.
Holds u. s. Paid Cash.
Peferrine to the origin of the debt.
Mr.. Mellon pointed out that while the
allies bought supplies in this country
on credit, the United States bought
supplies and services from France
and the British Empire "by hundreds
of millions" and paid cash.
Here is the fundamental reason
which explains why we ended the war
with every one owing us and our ow-
ing no one" continued Mr.. Mellon.
debts because it is alleged that they
were incurred in a common cause. but
neither abroad nor in this country
has it been suggested that IL this is
to be done we are to be reimbursed
the dollars actually expended by us
in France and Great Britain so that
the goods and services they sold us
might constitute their contribution to
the common cause"
secretary Mellon cnalienSeu tne ac-
curacy of statements that the terms
of the debt settlements impose ire
mendous tax burden on the next two
generations of friendly countries. The
sums paid to the United States. he
'eclared, will not come from taxation,
ut will be more than met by the
payments to be exacted from Ger.
many ~ n powers