In 1900 Melchior was made legal counsel to Hamburg banking concern, M. M. Warburg & Co.. During World War I, he served with a Bavarian regiment of the German Army and was seriously injured at Metz when he fell from a horse.

After his recovery, Mechior went to work for the German government and beginning in 1919 served as an advisor for the financial and economic negotiations that began at the Paris Peace Conference.

[1] By 1921, Melchior deemed it advisable for the country to accept what he saw as an impossible war reparations burden stating: "We can get through the first two or three years with the aid of foreign loans.

""[2] Over the decade, Melchior played an increasingly prominent role in the lengthy negotiations, earning international recognition for his command of both the financial and legal issues involved.

Owing to an intimate personal relationship forged with John Maynard Keynes at the Paris Peace Conference, he served as the conduit through which the latter became an informal adviser to the German government on reparation matters.