The Waterbury Democrat., 1932-01-07
BY PAUL R. MALLON

Limited Press stan COrrespOhoeht| r Washington, Jan 7-(UP)-Fur- lther inquiry was promised to-day into the charge made by former secretary of the treasury that the state department was morally re- .sponsible for about $5,000,000,0O0 Of American money sunk in South American bonds, now defaulted or depreciated in value.
 The charge was made before the senate finance committee by Senator Carter Glass of Virginia. a powerful member of that com mittee. It followed by some days Secretary of State Stimson's ex- splanation that it would be "un- wise" to divulge departmental &C., tion in the floating of the bond is- sues in this country.
 The sensation created by the senator's charge submerged the impeachment charges brought against Andrew Mellon. secretary of treasury by Congressman Wright Patman of Texas. He cited . law of 17S9 prohibiting the se- cretary of the treasury from en- gazing in business and commerce..
 The impeachment charges were not in any way involved in the bond selling inquiry, although a corporation in which Mellon is financially interested was named duying the inquiry as having re- ceivod South American govern mental favors after approval of the bond issue Notation In this country.
 Gulf oil company was one of the corporations cited as so favored, although no connection between the actions by the two govern rnents was shown. The Mellon in- terests have been among the heavy stockholders In Gulf oil.
 James C. Corliss, q commerce < department expert on Latin Amer ican financial affairs, was called to tell of efforts made by his depart snent to get the state department to turn down these loans in 1927.
 The committee also is calling state department officials, prob ably Assistant Secretary of State Francis White and Whitla Stinson, south American financial expert,
 The whole matter is due for a thorough airing on the senate floor during the next few days. Glass will speak as well as Senator Johnson, republican, Calif, who is conducting the investigation into the Notation of upwards of $l0,- O00,000,0OO of foreign bonds in this country. Meanwhile, President Hoover's name may be brought into the in- uuiry. He was head of the com- merce department at the time it was trying to stop the state de- partment from approving loans now in default. His policy regard ing the loans has not vet been de- yeloped by the committee.
 As the evidence stands now, the committee has a different picture than that offered by the interna' tional bankers when they were tes' tifying. Based largely on the tes' timony of Grosvenor Jones of tho finance division of the commerc' tepartment the bond story may bt summarized as follows:
 Wall Street bankers with few executions competed vigorously 1T 1925, 26 and 27 for fiotations O loans in South American coun tries. They sold these loans In thu United States at prices now dras tIcally depreciated. The extent O the South American Rotations wal several billions of dollars.
 At the time they were floating fhe loans. Jones' department hat evidence that the South American countries were in many instances already over- borrowed. In one in stance, commerce officials urged