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parties. Subject to confirmation by Congress, the American Government will postpone all payments upon the debts of foreign governments to the American Government payable during the fiscal year beginning July 1, next, conditional on a like postponement for one year of all payments on intergovernmental debts owing the important creditor powers.

This course of action has been approved by the following Senators: Henry F. Ashurst, Hiram Bingham, William E. Borah, James F. Byrnes, Arthur Capper, Simeon D. Fees, Duncan U. Fletcher, Carter Glass, William J. Harris, Pat Harrison, Cordell Hull, William H. King, Dwight W. Morrow, George H. Moses, David A. Reed, Claude A. Swanson, Arthur Vandenberg, Robert F. Wagner, David I. Walsh, Thomas J. Walsh, James E. Watson; and by the following Representatives: Isaac Bacharach, Joseph W. Byrns, Carl R. Chindbloom, Frank Crowther, James W. Collier, Charles R. Crisp, Thomas H. Cullen, George P. Darrow, Harry A. Estep, Willis C. Hawley, Carl E. Mapes, J. C. McLaughlin, Earl C. Michener, C. William Ramseyer, Bertrand H. Snell, John Q. Tilson, It has been approved by Ambassador Allen T. Treadway and Will R. Wood.

Charles G. Dawes and by Mr. Owen D. Young.

The purpose of this action is to give the forthcoming year to the economic recovery of the world and to help free the recuperative forces already in motion in the United States from retarding influences from abroad.

The world-wide depression has affected the countries of Europe more severely than our own. Some of these countries are feeling to a serious extent the drain of this depression on national economy. The fabric of intergovernmental debts, supportable in normal times, weighs heavily in the midst of this depression.

From a variety of causes arising out of the depression such as the fall in the price of foreign commodities and the lack of confidence in economic and political stability abroad there is an abnormal movement of gold into the United States which is lowering the credit stability of many foreign countries. These and the other difficulties abroad diminish buying power for our exports and in a measure are the cause of our continued unemployment and continued lower prices to our farmers.

Wise and timely action should contribute to relieve the pressure of these adverse forces in foreign countries and should assist in the reestablishment of confidence, thus forwarding political peace and economic stability in the world. Authority of the President to deal with this problem is limited as this action must be supported by the Congress. It has been assured the cordial support of leading members of both parties in the Senate and the House. The essence of this proposition is to give time to permit debtor governments to recover their national prosperity. I am suggesting to the American people that they be wise creditors in their own interest and be good neighbors.

I wish to take this occasion also to frankly state my views upon our relations to German reparations and the debts owed to us by the allied governments of Europe. Our Government has not been a party to, or exerted any voice in determination of reparation obligations. We purposely did not participate in either general reparations or the division of colonies or property. The repayment of debts due to us from the Allies for the advance for war and reconstruction were settled upon a basis not contingent upon German reparations or related thereto. Therefore, reparations is necessarily wholly a European problem with which we have no relation.

I do not approve in any remote sense of the cancellation of the debts to us. World confidence would not be enhanced by such action. None of our debtor But as the basis of the settlement of these debts nations has ever suggested it. was the capacity under normal conditions of the debtor to pay, we should be consistent with our own policies and principles if we take into account the abnormal situation now existing in the world. I am sure the American people have no desire to attempt to extract any sum beyond the capacity of any debtor to pay and it is our view that broad vision requires that our Government should Jecognize the situation as it exists.

This course of action is entirely consistent with the policy which we have It represents hitherto pursued. We are not involved in the discussion of strictly European problems, of which the payment of German reparations is one. our willingness to make a contribution to the early restoration of world prosperity in which our own people have so deep an interest.

I wish further to add that while this action has no bearing on the conference for limitation of land armaments to be held next February, inasmuch as the burden of competitive armaments has contributed to bring about this depression, we trust that by this evidence of our desire to assist we shall have contributed to the good will which is so necessary in the solution of this major question.

Amounts payable during the fiscal year 1932 by foreign governments on account of

VIEWS OF THE MINORITY

We, a minority of the Ways and Means Committee, to whom was referred House Joint Resolution No. 147, "To authorize the postponement of the amounts to the United States from foreign governments during the fiscal year 1932, and their repayment over a10-year period beginning July 1, 1933," respectfully dissent from the views of the majority for the following reasons, to wit:

CONSTITUTION IGNORED

The President of the United States did not have the constitutional right to take the action which he did in June of this year with respect to the moratorium. Under the Constitution of the United States, this was a matter to be determined by Congress in session, with proper communication thereon by the President of the United States, together with full facts of existent circumstances. The President did not regard this matter of sufficient moment to call Congress into special session to consider same.

The conclusion of the President was reached after several weeks of investigation and consideration. No reason has been shown to excuse the usual constitutional procedure for the consideration of a matter of this importance.

NO NECESSITY FOR MORATORIUM

The necessity for the deferring of the payments of the intergovernmental debts to the United States by the 16 foreign powers affect l by this resolution was not proven to the satisfaction of those subscribing to this minority report.

The selfsame arguments heard upon the consideration of the debt settlements advocated by the administration were heard anew. Generalities in respect of the financial structure of Germany was given voice. Germany was said to be unable to pay her reparations to seven or eight of these foreign countries affected by this measure. The other seven or eight countries affected by this resolution do not receive any sum from Germany in reparations (the names of these nations are not set forth herein because of the fact that the hearings in which they were to be inserted are not available to us at this time).

Thus, this resolution would defer the payment of moneys to this country from seven or eight nations for value received even though nothing is payable to them from Germany.

Germany is the nation to be helped. The sum of $6,000,000 is the only sum due by Germany to this country. No one even suggested that England, France, and Italy were not ready, willing, and able to pay their obligations to us on the due date. These three countries would pay to us during the fiscal year 1932 the sum of $224,227,125. The total amount of the payments deferred, including Germany's $6,000,000, is $252,566,803. Upon Thursday, De

7

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Na quote from the New York Times tatei inday, August 2, 1931:

It je mery interesting to note that when the sums so expended within one mear 37 the British Empire France, and itay on arms are segregated from this awr the total makes the starting sum of $1.424.837 583 It is seminarte pertinent when we again remind the House that frese trap nations would only pay within the present fiscal year the sum of $224 227.125 upon their indebtedness to us.

THE PRESIDENTIAL ACTION WAS A STEP TOWARD FURTHER CONCESSION TO FOREIGN DEBTORS

This is a forerinner and a curtain raiser to dent cancelation or another moratori.m. Be not deceived. Read the President's mes2970 Read this resolution and read the hearings.

The President in his message to the present Congress recommended the re-creation of the World War Debt Commission.

Mr. Melion, Secretary of the Treasury, in what is reported to be a statement clarifying President Hoover's recommendations to Congress, on December 11, gave forth a public statement which is quoted in full as follows:

MR MELLON DEFINES NATION'S POSITION ON DEBT CANCELLATION There should be no misinterpretation as to the administration's recommendations to Congress relating to the debts due us from foreign governments and the re-creation of the World War Foreign Debt Commission. The administration is opposed to cancellation. No recommendation made carries any such implication.

It is, however, the duty of those in authority to deal with realities, and there le no escaping the fact that some of our debtors can not meet in full the payments due or until there has been a substantial measure of economic recovery and that the position of others is so changed as to call for consideration of their present situation in the light of existing circumstances.

Our debt settlements were effected on the basis of the capacity of the debtors to pay. As the President said in his statement of June 20, "As the basis of the

settlement of these debts was the capacity under normal conditions of the debtor to pay, we should be consistent with our own policies and principles if we take into account the abnormal situation now existing in the world."

Take the case of Great Britain, our best customer, which even in the depression year 1930 took $678,000,000 worth of American agricultural and industrial products. The economic and financial changes of the past year have immensely increased the payments of her payments to us. The series of events through which Great Britain was forced off the gold standard are too recent to require enumeration.

To-day the pound sterling is selling at $3.315 to the pound, which is a 32 per cent discount as compared with last year when it stood at tariff parity or $4.866. All debts to Great Britain from foreign governments, except reparation payments, which are not being collected at all this year, and are not likely to be collected in full next year, are payable in sterling. Her debt to us is payable in gold dollars. The combined effect of these unfavorable factors results in an enormously increased burden for the people of Great Britain.

Payments during the present fiscal year will serve to exemplify the magnitude of the additional burden.

With the pound sterling at par, the British Treasury needs 32,800,000 pounds in order to pay us $159,500,000. With the pound sterling at the rate at which it sold on December 10, 1931, it would take 48,100,000 pounds or an increase of 15,300,000 pounds, or 47 per cent. Or in other words, the burden on the British taxpayer is increased by almost one-half.

When the British debt settlement was made it was estimated that its present value at 4 per cent was 80 per cent of the total amount due prior to funding. If the amount to be raised in pound sterling to meet the obligation to us in dollars is increased by 47 per cent, it becomes apparent that from the standpoint of the British taxpayer he is asked to meet not the obligation as established by our debt commission but an amount considerably in excess of such obligation.

Nothing could more forcibly illustrate the changed situation which places on the executive as well as the legislative branch of Government the duty of reexamining the obligations of our debtors and their ability to meet them during a period of world-wide economic depression.

Does anyone believe that Austria or Hungary should be asked to pay the installments due from them in view of the extraordinarily straitened circumstances in which the people of those two countries find themselves and great difficulty which they experience in obtaining foreign exchange for the purpose of carrying on even the minimum of effectual commerce with the rest of the world?

Does anyone believe that Germany should be asked by the United States Government to meet her payments on the costs of the army of occupation when such a demand by us must be inevitably followed by demands of other creditors to pay her reparations in full?

These instances should suffice to demonstrate that to stand on the letter of our bond and to refuse to investigate or to consider the facts, is to fail in our responsibility to the American people whom we represent and to the debtors whose capacity to pay we ourselves undertook to determine.

What intelligent business man or banker would blindly refuse to investigate or to consider the altered circumstances of a debtor whose unsecured obligation he held? The situation of our debtors has been immensely altered during the course of the last two years. New questions in relation to these debts are bound to arise in the course of the next few months. The Congress should be in a position through a commission created by it and composed in part of its own Members to ascertain what the facts actually are and to deal with these new problems as they arise.

It is with such thoughts as these in mind that the President recommended the re-creation of the World War Foreign Debt Commission. I am confident that upon mature consideration this recommendation will commend itself to the Congress.

The administration bill was introduced by Mr. Collier, chairman of the Ways and Means Committee, by request of the Treasury. This is the formal way of presenting the views of the Executive without in any manner binding the gentleman who would introduce it. It