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

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their indebtedness

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800,000 250,000

246, 566, 803 6, 000, 000 252, 566, 803


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:


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.


The necessity for the deferring of the payments of the intergovernmental debts to the United States by the 16 foreign powers affected 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


cember 10, 1931, Mr. Chamberlain, Chancellor of the Exchequer, is reported to have assured the House of Commons that all British foreign obligations could be and would be met.

No evidence was adduced before us that any of the foreign nations affected were financially unable and unwilling to make these payments. On the other hand, the nations affected by this resolution expended approximately $2,000,000,000 for armaments and war preparations within the last fiscal year.

We quote from the New York Times dated Sunday, August 2, 1931:


[Expenditures for the last fiscal year, figured at rounded par or in a few cases at the average of exchange, as compiled by the World Peace Foundation from the forthcoming League of Nations Armaments Year Book]

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It is very interesting to note that when the sums so expended within one year by the British Empire, France, and Italy on arms are segregated from this list the total makes the startling sum of $1,424,637,565. It is peculiarly pertinent when we again remind the House that these three nations would only pay within the present fiscal year the sum of $224,227,125 upon their indebtedness to us.


This is a forerunner and a curtain raiser to debt cancellation or another moratorium. Be not deceived. Read the President's message. 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. Mellon, 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 is no escaping the fact that some of our debtors can not meet in full the payments due us 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

was the bill upon which the hearings were held. It is House Joint Resolution No. 123. We print it in full as follows:

[H. J. Res. 123, Seventy-second Congress, first session]

JOINT RESOLUTION To authorize the postponement of amounts payable to the United States from foreign governments during the fiscal year 1932, and their repayment over a ten-year period beginning July 1, 1933

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That in the case of each of the following countries: Austria, Belgium, Czechoslovakia, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Italy, Latvia, Lithuania, Poland, Rumania, and Yugoslavia, the Secretary of the Treasury, with the approval of the President, is authorized to make, on behalf of the United States, an agreement with the government of such country to postpone the payment of any amount payable during the fiscal year beginning July 1, 1931, by such country to the United States in respect of its bonded indebtedness to the United States, except that in the case of Germany the agreement shall relate only to amounts payable by Germany to the United States during such fiscal year in respect of the costs of the Army of Occupation.

SEC. 2. Each such agreement on behalf of the United States shall provide for the payment of the postponed amounts, with interest at the rate of 4 per centum per annum beginning July 1, 1933, in ten equal annuities, the first to be paid during the fiscal year beginning July 1, 1933, and one during each of the nine fiscal years following, each annuity to be payable in one or more installments.

SEC. 3. No such agreement shall be made with the government of any country unless it appears to the satisfaction of the President that such government has made, or has given satisfactory assurances of willingness and readiness to make, with the government of each of the other countries indebted to such country in respect of war, relief, or reparation debts, an agreement in respect of such debt substantially similar to the agreement authorized by this joint resolution to be made with the government of such creditor country on behalf of the United States.

SEC. 4. Each agreement authorized by this joint resolution shall be made so that payments of annuities under such agreement shall, unless otherwise provided in the agreement (1) be in accordance with the provisions contained in the agreement made with the government of such country under which the payment to be postponed is payable, and (2) be subject to the same terms and conditions as payments under such original agreement.

It will be noted that what appears as section 5 in the resolution under discussion (probably) was not included in the administration


This section reads as follows:

SEC. 5. It is hereby expressly declared to be against the policy of Congress that any of the indebtedness of foreign countries to the United States should be in any manner canceled or reduced and nothing in this joint resolution shall be construed as indicating a contrary policy, or as implying favorable consideration at any time to a change in the policy hereby declared.

It may be that, with the knowledge of the sentiment in Congress and throughout the country against favoring foreign nations over our own country, the administration at this late date decides that moratoriums, debt reductions, and debt cancellations, at the expense of the American taxpayer are not particularly popular. In any event, Congress is given the opportunity to give expression to its policy in this regard. We heartily concur in this amendment to the administration bill.


It was stated to us that the President reached his conclusion to initiate the moratorium on the 17th or 18th of June, 1931. His statement relative thereto was given publication on June 20, 1931. The wires to the Members receiving them were dated June 23, 1931.

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