Debts Week

"The Governor of New York!" cried Chief Usher Irwin Hood ('Ike") Hoover as President-elect Roosevelt hobbled out of the White House elevator from the basement and turned to the left into the Red Room. President Hoover and Secretary of the Treasury Mills got up.

"Mr. President,'' said Governor Roosevelt extending his hand.

"Governor, I'm glad to see you again," replied the President as they shook hands.

Governor Roosevelt and Secretary Mills, childhood friends, exchanged "Hello, Frank--Hello, Ogden." Professor Raymond Moley, Roosevelt adviser on whose arm the President-elect had been leaning, was introduced. The four men settled themselves in red chairs around a small mahogany table. President Hoover lighted a cigar, Governor Roosevelt a cigaret. Down from their gilt frames gazed Jefferson, Madison, Adams and Grant upon the first White House meeting of a President-reject and a President-elect.

While an ornate mantel clock ticked off the fateful minutes, War Debts, World Economics and Disarmament were soberly discussed behind closed doors. With occasional promptings from Secretary Mills, President Hoover did most of the talking. The situation: Britain, France and Belgium had asked the U. S. to reconsider their War Debts as funded over the past nine years. Pending reconsideration they wanted their Dec. 15 payments suspended.* Only Congress has the power to grant either request but from the President some sort of national leadership was expected. President Hoover favored another commission to negotiate with the debtor powers, hear their arguments for revision. Complicating factors were the proposed World Economic Conference and the moribund Disarmament Conference at Geneva. Governor Roosevelt listened to this long recital in silence, nodded his head in comprehension if not agreement, promised nothing. He repeated what he had said in accepting President Hoover's invitation: that, as he was not yet President, he could not be asked to accept Presidential responsibility.

After two hours the Red Room door swung open and Secretary Mills and Professor Moley walked out. For ten minutes the 31st and 32nd Presidents were left alone in private conversation. Then while the White House secretariat was issuing a curt communique reporting "progress," Governor Roosevelt drove to the Mayflower Hotel. There he ordered and consumed tea & cinnamon toast while dressing to dine with the Washington correspondents at the National Press Club.

Bright & early next morning a dozen House and Senate leaders filed into the White House offices to talk War Debts with the President. At his elbow during the two-hour conference were Secretary of State Stimson and Secretary Mills. Speaker Garner, Majority Leader Rainey, Ways & Means Chairman Collier and Senators Harrison and George represented the Democracy in Congress. Eminent Republicans included Minority Leader Snell, Representatives Hawley. Treadway and Bacharach of Ways & Means and Senators Watson and Reed.

Bluntly these visitors told President Hoover that Congress was dead set against any suspension of the Dec. 15 payments and any reconsideration of existing debt agreements. Europe had presented a solid front against the U. S. Now Congress was determined to present a solid front against Europe. They refused to believe the debtors would default or that payments would unsettle world finances. No facts had yet been offered to warrant reconsideration. If the debts were reopened, the end would be a general scaling down of obligations to the detriment of U. S. taxpayers.

The President agreed that the Dec. 15 payments should be made. He also indicated that he was against any downward revision. Pertly broke in Speaker Garner: "Then why converse about it?" The President replied that he wanted Congress to give him another commission. Senators and Representatives chorused "No!" and advised him to use the regular channels of diplomacy to study revision pleas. The

President's retort was that his hands had been tied by the rider against any further debt tinkering which Congress tacked on its approval of the first moratorium a year ago. President Hoover said that regardless of Congress he would speak his mind, do what he thought was right. His visitors vowed to do likewise, as they marched out of his office to be photographed on the White House steps.

Summoning a stenographer President Hoover proceeded to speak his mind in a 2,500-word debt statement. Main points: 1) The debts are actual loans which must be repaid; 2) each debtor nation must be dealt with individually; 3) "capacity-to-pay" is the only just measure of the debts; 4) debts have no connection with Reparations received by other powers from Germany; 5) every debt concession transfers an added burden to U. S. taxpayers. Declared the President :

"I do not feel that the American people should be called upon to make further sacrifices. ... I must insist that existing agreements be respected until they have been mutually modified. ... As to the suspension of instalments due Dec. 15 no facts have been presented by the debtor governments which would justify such postponement. . . .

"[But] it is unthinkable that within the comity of nations our people should refuse to consider the request of a friendly people to discuss an important question, irrespective of what conclusions might arise from such discussion. . . . Discussion does not involve abandonment on our part of what we believe to be sound and right. On the other hand a refusal to afford others an opportunity to present their views would be a negation of the very principles upon which rests the hope of rebuilding a new and better world. . . .

"I believe therefore that Congress should authorize the creation of an agency to exchange views."

As a sop to the debtor nations the President proposed that they be allowed to meet their Dec. 15 payments in their own depreciated currency rather than in gold dollars as fixed in the bond. Under this arrangement a non-gold nation like Britain would be permitted to set up a temporary credit to the U. S. in pounds sterling, provided it guaranteed to make full payment in dollars later when exchange rates improved.

Before releasing his statement President Hoover gave an advance copy of it to

Secretary Mills who sped to the Mayflower to deliver it to Governor Roosevelt. The President-elect was just leaving for the station to continue his journey to Georgia. Promising an answer later he hurriedly summoned Bernard Mannes Baruch, Democracy's supreme financial adviser, asked him to ride part way South with him to discuss the President's statement. Mr. Baruch consented and as the Roosevelt private car rolled down through Virginia a conference of high state was held in the observation parlor. Besides Mr. Baruch, Governor Roosevelt had the assistance of Professor Moley. William H. Woodin (American Car & Foundry) and Sumner Wells. The sun went down across the brown fields before they were settled upon a reply. At Lynchburg. where Mr. Baruch left the train, the Roosevelt statement was telegraphed back to Washington for release.

Both the international mind of Adviser Baruch and the hinterland mind of Speaker Garner, who had advised Governor Roosevelt to take care not to cross Congress at the outset, could be detected in this first Roosevelt state paper. Unlike the Congress which had shut its ears and mind to all debt talk, the President-elect agreed with the President: "I firmly believe in the principle that an individual debtor should at all times have access to the creditor; that he should have an opportunity to lay facts and representations before the creditor and that the creditor always should give courteous, sympathetic and thoughtful consideration. . . . This rule is a basic obligation of civilization. It applies to nations as well as to individuals."

But Governor Roosevelt and President Hoover parted company over the method of dealing with debtors. Where President Hoover wanted to shift the question to another commission, the President-elect held with Congress that ''the most convenient and effective contacts can be made through the existing agencies and constituted channels of diplomatic intercourse. ... No action by Congress has limited or can limit the Constitutional power of the President to carry on diplomatic contacts and conversation." U. S. Constitutionalists hailed this Roosevelt stand as an important reversion to the historic U. S. method of dealing with foreign governments.

To Britain. France and other debtor powers the State Department dispatched notes to the effect that the U. S. would expect full payment Dec. 15 and that the President would recommend another debt commission to Congress. Nothing was said about the certain rejection by Congress of this recommendation. Secretary Stimson's language to Britain made it plain that the Hoover Administration considered her plight graver than France's or Belgium's, that revision by capacity-to-pay would be likeliest in her case.

Meanwhile the pound sterling hit an all-time low--$3.17!.

* Dec. 15 payments due: Britain $95,550,000; France $19,000,000: Belgium $2,125,000; Poland $3,175,980; Czechoslovakia $1,500,000; Latvia $111,852.

This file is automatically generated by a robot program, so reader's discretion is required.