What Price Greatness?

A Consideration of Secretary Mellon's Management of the French Debt Problem

WALTER LIPPMANN

IT is often a puzzle to know just how a popular idea goes into circulation. There is, for example, the idea that Andrew W. Mellon is a very great Secretary of the Treasury. Where did that idea come from? Not, I venture to suggest, from any close popular appreciation of the conduct of the Treasury, for the work of the Treasury is for the most part too technical to be appreciated by more than a few members of Congress and a small circle of financial experts. The man in the smoking car who says Mr. Mellon is the greatest Secretary since Alexander Hamilton would find it hard to describe cither the greatness of Alexander Hamilton or the greatness of Andrew W. Mellon. The idea of greatness has been put into such extensive circulation, however, that it has now become one of the sacred cows of American public thinking.

Once you have seen Mr. Mellon it is easy to think of him as a great man. He has a kind of lean elegance which distinguishes him at once in any large gathering of officials. There is none of that bleary and pudgy look which public men get by eating too much and smoking too much and listening too much and talking too much. He has the air of quiet command; a dignity and reserve which make him seem remote, like the portrait of an ancestor, from the contemporary scene. But since he is the maker and owner of one of the largest private fortunes ever known, his competence in this world does not have to be proved by the usual sonorous cajolery.

IDO not claim to know very much about all the men who have been Secretary of the Treasury, or even to know anything about most of them. Perhaps there are a few others who are equally ignorant. But I have read a good many books about Hamilton, and I can sec why Mr. Mellon can justly be compared with Hamilton, although the comparison is very unflattering to Mr. Mellon. Both men believed that the salvation of the country was in government by the rich, especially by rich manufacturers and creditors. Between the times of Hamilton and oi Mr. Mellon this philosophy was often practised, but it was rarely avowed. For the century and more which separates the two Secretaries public discussion in this country was Jeffersonian in tone. It was the farmer, the debtor, the consumer who was appealed to and flattered. But with the advent of Andrew W. Mellon the premises of Hamilton were revived. The Republican Party ceased to hide its rich men under a bushel; it frankly asserted its belief in them once more as the rulers ol the country.

Here to my mind the similarity between Hamilton and Mr. Mellon ends, and the radical difference begins. 1'hc difference is that Hamilton believed in plutocracy as the means to an end; Mr. Mellon believes in plutocracy as an end in itself. Hamilton turned towards the plutocracy because he knew it was then the strongest possible foundation on which to construct an independent and stable government. He used the rich for a purpose that was greater than their riches. But Mr. Mellon, so far as one can ascertain his ideas, is not building up the plutocracy for any purpose that transcends the accumulation of wealth.

IT may be said that prosperity is a good purpose, and that Mr. Mellon believes that by encouraging the rich he is helping to maintain prosperity. I am not denying that prosperitv is pleasant and desirable. But if Hamilton were alive today, facing the problems that come to Mr. Mellon for solution, I am inclined to think that with his constructive imagination, he would not rest content with prosperity as an end in itself, but would be using it for a long future to assure a deeper prosperity.

Both Hamilton and Mr. Mellon have had to deal with the funding of great debts. In Hamilton's time the debt was owed by the poorer Americans to the richer Americans. In Mr. Mellon's time the debt is owed by foreign countries which are comparatively poor to this country which is comparatively rich. Both Secretaries insisted that the debt be paid. Hamilton insisted because the way to establish the credit of the Federal government was to unite the fortunes of the moneyed classes with the fortunes of the young Republic. What purpose has Mr. Mellon had in mind in his debt funding operations? What is he trying to do that is comparable with the purposes of Hamilton? In the answer to that question lies, I think, the test of whether Mr. Mellon is even remotely a great Secretary of the Treasury.

I say this because the funding of the international debts is by every consideration the most critical affair with which Mr. Mellon has had to deal. Nothing else in his Administration of the Treasury is of more than passing importance. I am told that he has dealt skilfully with the domestic floating debt of the United States and has taken good advantage of the money market. That is excellent, but any first rate banker could have done it. Mr. Mellon advocated a reduction of taxes. That is popular and most welcome to those of us who pay income tax. But nobody, 1 suppose, would argue that it is greatness in a Secretary of the Treasury to reduce taxes when there is a surplus of money in the bank. Mr. Mellon's plan was worked out by his two Democratic predecessors at the Treasury. Mr. Mellon has also had some odd jobs like Prohibition Enforcement. If he had handled that job well it would not make him a great Secretary of the Treasury, although it would make him a very great man. As a matter of fact Prohibition Enforcement under Mr. Mellon's titular leadership has been just what everybody knows it is: a dismal failure surrounded by foolish promises that nobody any longer believes.

THE test of Mr. Mellon's greatness as a Secretary of the Treasury must certainly lie in his policy on the international debts. The consequences of that policy touch every great power in the western world. Theoretically that policy will remain for sixty-two years a considerable factor in the domestic budget and taxation of every great power in Europe, and a considerable, if not a dominating factor in the relations between the Old World and the New. Whatever anyone may think about the wisdom of the present arrangements, no one can question their importance.

Mr. Mellon has at times suggested that he was acting as the "trustee" for the American creditors of Europe. If this means that he considered himself a collecting agent, and that the international consequences were no concern of his then all one can say is: What price greatness? What price statesmanship!' It it is true that Mr. Mellon is not the author of the debt policy, if he was only carrying out what Congress and the country in its present state of mind wanted, if he does not regard this policy as the wisest policy for the long future, then there is no use of talking about him in the same breath with Alexander Hamilton. If the policy of debt collection is not Mr. Mellon's policy by conviction, if he is not responsible for it, then he is not even associated vitally with the one decisive event of his administration. Imagine Hamilton explaining away responsibility for his debt policy! Imagine Hamilton evading the unpopularity which his own conception of a sound policy involved!

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Mr. Mellon has never yet made it clear whether he is convinced that the debt policy is wise. Whoever writes about Mr. Mellon must therefore choose one of two theories. Either he must say that Mr. Mellon had to bow to the will of Congress, and then he must dismiss all claims to statesmanship; or he must say that in essentials at least the debt policy is Mr. Mellon's, and in that case the political sagacity of Mr. Mellon can be measured by the quality of the debt settlements. I shall choose the second alternative as the more flattering of the two, and assume that the debt policy represents Mr. Mellon's honest conviction.

Let us look at this policy. Mr. Mellon has obtained agreements that the United States government shall collect 22 billion dollars. He has proposed that the United States collect it from the four strongest nations in Europe, as well as from several smaller ones. He has proposed that the business of collecting this sum shall go on year after year, and shall end only fifteen years before the beginning of the Twenty-first Century.

About fifteen Presidents of the United States one after the other are to take part in this collection of money. Sixty-two British Parliaments, sixtytwo French Chambers of Deputies, sixty-two Italian Parliaments, sixtytwo Reichstags are to vote taxes to raise this money. Before it is all paid boys who were twenty years old when the war started will be over ninety years old. Their children, if they were born say a year after the armistice, will be men seventy years of age. Their grandchildren will be nearly forty-five years old. Their great grandchildren will be about ready to vote. The last payment will be made in part by the great great grandchildren of the men who ruled Europe and America when the war began. They will be paying for a war as far away from them as the Civil War is from us today.

The sum Mr. Mellon is proposing to collect during the remainder of the century is no insignificant burden on the debtor countries. Mr. Snowden, a former Chancellor of the Exchequer, has stated that the sum paid by Britain to America costs "1,500,000 hours of labour by British workmen every day."

It is well understood that great payments from one nation to another can be made ultimately only in goods. The policy of Mr. Mellon is therefore a demand that ultimately the European debtors shall import into the United States goods valued at 22 billion dollars. Having made this demand, one would suppose that Mr. Mellon would try to find a way of getting those billions of dollars of goods out of Europe and into the United States. Nothing is further from his mind. He is a Pittsburgh manufacturer. He is a Pennsylvania Republican. He is a high protectionist by birth, by principle, and for business. He stands valiantly by his party in demanding all this wealth from Europe, and valiantly by his party's tariff in his determination to keep out all the foreign goods he can.

Now when one sits down and coldly looks at this policy, at the sums involved, at the time it is to take to collect them, at the desire both to be paid and not to be paid, it seems perfectly fantastic. So far as I know no government has ever in modern times attempted to collect money from another government for over sixty years. There have been some harsh indemnities imposed by conquerors on the conquered, but none so interminable as this one. Never I think has one nation attempted to collect from all the great powers of a continent. And never has one nation charged its associates a sum comparable with this one for goods furnished in a common war. Mr. MelIon's policy is unique in history. It is something brand new. It is something nobody ever attempted before.

Yet the United States is not the first nation that loaned a great deal of money to its allies during a war. Other nations have contributed money. Other nations must, like ourselves, have wished they had the money back. But nobody until the era of Mr. Mellon has set himself grimly to such a task of debt collecting. This may be greatness. It may be originality. And then again it may be ignorance of historic experience, and a certain failure to appreciate the ways of the world,

One thing certainly Mr. Mellon has utterly failed to appreciate. That is the nature of these debts, and the necessity of convincing the debtors not only that they must be paid but that they ought to be paid. Mr. Coolidge is said to have summed up his wisdom on the subject by stating that "they hired the money, didn't they?" Mr. Mellon, or somebody speaking for him, has said repeatedly that the debts: must be paid to vindicate the sanctity of contracts. Well, how much of a contract were they? The European Allies signed the notes. There is no; doubt about that. But what did we give them for the notes? Did we give them money? We did not. We gave them the right to buy guns, shells, uniforms, food, tobacco, and other necessities of war from American manufacturers and American farmers at war prices. A part of the money paid for these munitions the United States Treasury has long since recovered through excess profit and income taxes. The goods themselves were shipped to Europe. They were used to keep the civilian population alive while the American army was being prepared to fight. They were used to clothe and arm and feed French and British soldiers while the Americans were training behind the lines. They were used immediately after the Armistice to keep our victory from degenerating into chaos, despair, and riot.

The theory on which Mr. Mellon has proceeded means this: if a gun was made in the United States and carried by a Frenchman, that gun must be paid for with interest. But if the same land of gun was carried by a doughboy, we pay for it ourselves. If we armed Frenchmen to hold the line while the Americans were drilling in camp, the grandsons of the Frenchmen must pay in addition to the lives lost and the wounds suffered the price plus interest on their guns. But when the Americans were ready to carry the guns themselves, and to be shot themselves, it was not necessary to pay us. Now it seems to me evident that it cost us less in every way to have a Frenchman carry the gun through 1917. I cannot see, and I am sure no Frenchman will ever see, why he should pay for that gun with interest.

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This practice adopted during the war of charging Frenchmen for guns they used and Americans for guns they used was a bookkeeping device. It is only lately that the distinction has become so important that it is made the foundation of an international policy which has brought us the ill will of most of the civilized world. In 1918 when people were rejoicing that at last unity of command had been achieved, Mr. Mellon would probably have been arrested as a proGerman if he had suggested to Marshal Foch that shells shot off by Frenchmen would cost France more than shells shot off by Americans. It would have been a pretty scene: Mr. Mellon arriving at G. H. Q. looking very elegant, and saying: "My dear Marshal, please remember . . . if you get those uniforms all torn and muddy you'll have nothing to show for the money you borrowed." And Marshal Foch replying: "Thank you, my dear Mr. Mellon, for reminding me. I'll send an extra division of Americans into the line. It will be cheaper for France." _

When I consider that this is the kind of policy Mr. Mellon has made his own on the biggest question of his administration, I do not detect any trace of greatness. A great secretary, with Mr. Mellon's philosophy that the rightful rulers of this country are its big business men, would, I think, have acted quite differently. He would have seen that in the long run American business must expand all over the world or burst, and he would have used these debts, as Hamilton used the debts he funded, as bonds of tranquillity instead of as wedges of disunion throughout the world. Handled skilfully and imaginatively these debts could have been used to liquidate rapidly all the reparations and occupations and other inheritances from the war, and to set business going hopefully in Europe; handled with foresight they could have been used to further that policy of the Open Door for which Mr. Mellon's predecessors had always contended; handled with tact and sympathy they could have been used to create a fund of good will for America, worth more in cash and more in human happiness than these billions of phantom dollars.

Let no one say it could not have been done. Great Britain too is a creditor of the continent, and Great Britain with a finesse and a diplomatic insight that puts our blunderers to shame has shown how it might have been done. But only a Secretary of the Treasury with a touch of greatness could have done it, and Mr. Mellon is only a Pittsburgh millionaire.