Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-03-17
MELLON REVEALS
NEW DEBT VIEWS
Treasury Head, for First
Time, Says Preparations Are
Funding Bases.
BY DAVID LAWRENCE.

Secretary Melons letter TO the
Princeton faculty marks a turning
point in the discussion of war debts.
Up to the time the settlements were
made, the United States refused abso-
lutely to admit that the payments
made by Germany to the allies had
anything to do with the latter's obli'
cations to the United States. This
point was maintained stoutly in every
negotiation between the United States
and Europe carried on by the Depart
ment of State.
The Secretary of the Treasury,
however. IN answer to the criticism
that America was forcing the Euro
pean people to heavier burdens of
taxation. has switched the argument
back to the point where the European
statesmen originally tried to carry 1t.
Dawes Plan Now Effective.
Whether this is due to the fact that
the United States before the settle
ments were made did not care to be-
come involved in a discussion of what
Germany should pay or whether 1t
is due TO realization now that the
financing of Germany is the corner
stone of the whole debt controversy
will probably never be known. For
the change of front comes at time
when the Germans are beginning to
get on their feet and when it is ad-
mitted that the Dawes plan is effec-
tive.
Some observers see another reason
for the Secretary's new tactics. 1t is
that the people of the United States
have never been educated up to the
point of believing that the interallied
debt problem is affected by what Ger
| many is likely to do. and if some plan
of pooling all war debts is some day
to be approved the groundwork will
have to be laid with American public
opinion.
Among many bankers the impress
sion prevails, for example, that while
cancellation is not likely. plan for
the taking of the war debt securities
out of the hands of governments and
floating them to the public may be
volve each country's selling for cash
their present debt settlements on
basis of present values instead of e.
year values.
Would Cut Interest.
In other words, the United States
would be asked to take a certain sum
now which If compounded in interest
over period of years would be many
times that sum, but the advantage to
present-day taxpayers would be cut
ting down of interest charges on the
public debt.
There is another point, too, in Mr.
Melons first use of the argument that
Germany is really paying the war
debts of the allies to the United States.
1t is that cancellation talk fails to take
into account a relief for Germany and
there are many persons in the United
States who feel that if the idea of
cancellation prevails it should be an
all around cancellation in the interest
of peace and good feeling. Some Eu-
ropean statesmen have gone so far as
to indicate that they would be willing
to forgive Germany as much of her
war debts as Europe owes to the
United States, but this concentrates
on the other hand a continuance of
other parts of the reparation program
which would leave the United States
to bear most of the cost involved.
The Secretary's letter is a sign that
cancellation talk is not going to be
allowed to gain Roadway without n re-
tort from the Treasury and that the
movement, which started at Column
bia University and spread to Prince
ton, is not going to be permitted to
envelope all the universities of the
country without a bit of plain speak.
ing from Secretary Mellon.
Copyright. 1877