Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-06
NEW DEBT FORMULA
is SENT TO MELLON
BY u. S. GOVERNMENT

Continued From First Page)
no doubt, to misunderstanding of our
governmental relations to the financial
| machinery of the country.
The French government insists that
separations in kind, which involve
about $20,000.000 so far as France is
concerned, should be distinguished from
| other reparations. 1t is not so much
! the $20,000000 which is involved as
the fact that we have already been
notified from four or five other govern
ments that they must make exceptions
to the Presidents plan if exceptions
are made to any one. And thus the
plan would become very seriously whit
tied away.
Very Technical Question.
"The reparations in kind, however,
are very technical question, as are
the other questions raised by the
French government. They all arise
from the difficulties lying in the COM
pick character of individual rights to
reparationS from Germany under the
Young plan.
MI Mellon has not felt that we
| could accept the French note as basis
for settlement as 1t raised such new
and serious difficulties and did not
accept the Presidents plan in principle,
which has been done by all the other
| important governments. We have. how
ever, communicated to Mr.. Mellon a
new and Simplif1ed formula which we
believe meets the entire situation, as
| it simply provides that we agree in
| principle on certain major questions
and that all technical questions and
| reparations in kind and every other
| question should be referred to COM
| mittee of treasury experts OF the differ
ent powers who should arrive at q
[, solution of them within the broad spirit
of the Presidents proposal. We feel
| that it will offer a constructive solution
| to the various difficulties"
President Hoover was in conference
at the White House today with both
| Acting Secretary OF State Castle and
| Ogden Mills. the Acting Secretary Of
the Treasury. They talked with Sec
rotary Mellon on the telephone.
Others May Ask Change.
Secretary Castle in his statement to
the press referred to the fact that four
or five other governments have noti-
| fed the United States that If excep-
tons are made for the French in the
matter of German reparations in kind.
they will also have to seek exceptions"
| to the plan, too.
Some of the other European coun-
tries, particularly those which manu-
| facture large quantities Of goods, do
not look with entire equinimity on the
| payment of reparations in kind made
| by Germany to France. They feel that
| II the market were open 10 their own
manufacturers. it would help to ease
their own unemployment situations
| This may be at the bottom of some of
the objections to exceptions being made
| in the Hoover plan so that France shall
continue TO receive these reparation
| payments in kind during the coming
year.
President Hurries Back.
President Hoover hurried back to the
White House Yesterday afternoon from
his camp on the Rapidan and rejected
the plan of the French for dealing with
German payments of reparations in
kind. which had been cabled to the
United States Saturday night, follow
ing a long conference between Secre-
tary Mellon, Ambassador Edge and the
French representatives.
The French in their proposal, which
was not satisfactory to President
Hoover, maintained that the committee
Of experts suggested by this Govern
ment to work out details of the inter-
national debt suspension. should not be
bound beforehand to consider claims for
the continuation Of the payment Of in
kind where they are connected with
running contracts.
A fresh memorandum was transmit
ted last night to Secretary Mellon for
presentation to the French setting forth
the position of the American Govern
ment in this connection. This memo
randum held that in settling contro-
versial points referred to the commits
sion must resolve every issue in accord
with the spirit Of the Presidents plan.
Little Money Involved.
There is comparatively small
amount of money actually involved in
the settlement Of this question relating
to payments in kind where contracts
have already been made it is said. ap-
proximating $2300000o 1t has been
suggested here that the difficulty might
be ironed out by providing that the
money paid for these payments in kind
be promptly reloaned to Germany.
The manner in which payments of
German separations are made lin kind"
is in reality an intergovernmental trans
action. A business man in France or
derS material from q German firm. for
example, and the delivery is made The
Frenchman pays his own government
for the material, while the German
firm is paid by the German govern
ment
The situation in Paris was believed
to have been materially aided by
formal statement made to the Amer
lean Government by DR.. Heinrich
Bruening, German chancellor, giving
one of the political guarantees which
the French have been seeking indirect
ly from the Germans ever since the ne
gotiations over the Presidents debt
suspension plan opened.
Won't Increase Arms.
In its note to the State Department
the German government said that Ger
many would not take advantage of
President Hoover's moratorium proposal
by increasing ornaments. The German
note follows:
I'm view of the fears which have
sprung up in some circles that the
amounts released in the German bud
get by the relief from reparations pay
ments might be used to increase arma-
ments, I declare that an increase in
the appropriation for the Army and
Navy during the holiday year has never
been contemplated nor will it take
place.
The aggregate alterations accruing
to Germany from the Hoover plan are
required and will be used in their en-
tirety to cover the deficits in revenue
which are to, be expected, to consolidate
financial conditions, and to save Ger
man economic life"
France, in its original reply to Presi-
dent Hoover's moratorium proposal,
urged that precautions be taken to re-
quire Germany to use money saved
through the proposal for economic pur-
poses.