THE CABINET: Lost, Found

Two months ago the U. S. Treasury Department lost three words. Last week the three lost words were found. They had caused the British Commonwealth of Nations to rebuke the U. S. Secretary of the Treasury; the United States of America to snub the British Commonwealth of Nations; and the U. S. Secretary of State to be interrupted in a round of golf.

Writing last March (TiME, March 28) to John Grier Hibben, President of Princeton, Andrew W. Mellon, U. S. Secretary of the Treasury, said, according to the published, uncontradicted version of his letter: “All our principal debtors are already receiving from Germany more than enough to pay their debts to the United States. . . .” Last week Mr. Mellon said he had written: “All our principal debtors except Great Britain are already, etc.” The words “except Great Britain” had somehow been “inadvertently omitted.”

When the Rt. Hon. Winston Churchill, British Chancellor of the Exchequer, read the mutilated but widespread copy of the Mellon letter he became vexed. In the Balfour note of 1922, Great Britain had stated her policy of collecting from her War allies and Germany only enough of the money they owed her to meet her own debt payments to the U. S. If the Mellon letter was true, Britain was not living up to the Balfour note in collecting money from her War allies when collections from Germany were enough to meet her obligations to the U. S.

So last week the U. S. Department of State received a note in which His Majesty’s Government hoped that the U. S. Government would take steps to remove the false impression created by Mr. Mellon’s “inaccurate and misleading” statements. Curtly replied U. S. Secretaryof State Kellogg: The Government of the U. S. considered the Mellon-Hibben correspondence purely a domestic matter, did not care to exchange notes concerning it. Thus what some observers called an impertinence was answered by what all observers recognized as a snub. Having replied to Britain, Secretary Kellogg sought the Chevy Chase golf course. To him on the 15th hole came Treasury Department emissaries, sought, gained his permission to answer Mr. Churchill. In his reply Mr. Mellon announced the inadvertent omission, maintained that it could readily have been deduced from the context, said “. . . it is rather surprising that the British Government should lay stress upon what the context showed to be a typographical error. . . .” Furthermore, added Mr. Mellon, the British note admitted that after Sept. 1, 1928, payment to Britain from her debtors and Germany would cover British payments to the U. S.; this Mr. Mellon considered the “main point” at issue.— Officially closed by the Mellon reply, the incident inspired the British press to reiterate old charges of U. S. Shylockery, avarice. Jingo newspapers called Mr. Mellon’s letter a ”monumental document of ill faith,” accused the U. S. of fomenting anti-English feeling in China. The New Statesman expressed the hope, though not the conviction, that Mr. Mellon would admit he had been lying. Observers felt that Mr. Churchill had eagerly accepted an opportunity to stand forth as defender of Britain’s fair name, had strengthened his Government’s position at expense of the U. S. Immediately after its publication Mr. Churchill! had questioned the Mellon letter in the House of Commons, was said to have been piqued at the meagre attention he aroused. Last week he had publicity to repletion.

*Main int: Mr. Churchill and Mr. Mellon also went into long technical controversy as to just what constituted British income, each showing that his conclusions were correct if his premises were accepted.