New Deal: World Phase

(See front cover)

The dark, drafty corridors of the gingerbread building that houses the Department of State were thronged last week by foreign ambassadors and ministers marching & countermarching at a tempo set by the White House. The moose-tall figure of Britain's Sir Ronald Lindsay came & went repeatedly at the spacious office of Secretary of State Cordell Hull. France's plump, smiling Paul Claudel, soon going home, clicked his heels up & down the stone floors. In the Secretary's anteroom with its stiff jet-black furniture and portraits of Hughes. Lansing, Colby and Kellogg, Italy's Augusto Rosso, proud of his "Americanism." waited his turn. So did Belgium's May, gazing wistfully out the window at the Victory monument of the A. E. F.'s First Division.* Other callers included Spain's de Cardenas, Sweden's Bostrom, Czechoslovakia's Veverka, Denmark's Wadsted.

Cause of all the diplomatic commotion was the fact that President Roosevelt, after a month's concentration on domestic depression, was working up steam for an international attack on the world depression. Last week's hustle & bustle about Secretary Hull's office marked the Government's first active preparation to take the lead in the forthcoming League of Nations' Monetary & Economic Conference.

President Roosevelt had thought long and hard about this World Conference, which grew out of last year's Reparations meeting at Lausanne. President Hoover, accepting the League's invitation to attend, had despatched to Geneva Edmund Ezra Day of the Rockefeller Foundation and John Henry Williams, Harvard professor of economics, as U. S. delegates to help draft agenda. London was picked as the meeting place and Ramsay MacDonald, Britain's Prime Minister, consented to serve as chairman. Still unsettled was the opening date.

Though in his campaign be disputed the Hoover theme-song that the Depression was "world-wide," Franklin Roosevelt, as President, knows as well as any man that there can be no general economic recovery without the concerted action of all nations. He also knows that the World Conference at London would fail dismally if "opened cold" without preliminary negotiations. He believes in the efficacy of personal contact. He likes to be his own negotiator. And he has been saying for months: "If only MacDonald and I could sit down together--."

"Bring Your Family.' Last week a sitting-down-together by the President and the Prime Minister was suddenly and expertly arranged. In London was Norman Hezekiah Davis. President Hoover's Man-about-Europe and now President Roosevelt's Ambassador-at-Large. He called on Prime Minister MacDonald. In Washington two days later Ambassador Lindsay was summoned to the State Department, handed a personal message from President Roosevelt to be transmitted to Prime Minister MacDonald. Excerpt:

"I have been hopeful that you might find it possible to visit Washington. I should particularly welcome such a visit in the near future as the preparations for the World Economic Conference are entering a more intensive stage and because of the need for making further progress toward practical disarmament. In my judgment, the world situation calls for realistic action. ... If you can come, I trust that you will stay with us at the White House and bring with you any of your family you may desire."

Before nightfall Sir Ronald was back at the State Department with his chief's reply to the President: "I am most touched by your friendly invitation to come to Washington. ... It is with the greatest possible pleasure that I accept. I will leave England by the Berengaria on April 15, returning by the same boat. I shall be very happy indeed to stay with you at the White House."

End of June? In October 1929, Prime Minister MacDonald visited the White House, was President Hoover's guest at the Rapidan camp. Sitting on a log in the woods these two heads-of-state began the bargaining that finally resulted in the London Treaty of 1930 limiting auxiliary naval strength. But this second visit to a U. S. President would not be like the first. The economic sun then shining is now eclipsed. Then only a few cruisers and destroyers were at stake; now the trade of every ship on every sea is involved. Then military peace was sought; now an economic world war is to be ended. If during Mr. MacDonald's three days at the White House with his daughter Ishbel and his private secretary Jan Barlow, the U. S. and Britain can come to a general economic understanding, the World Conference has a better-than-even chance of success. One sure sign of such an understand ing would be the selection at the White House of a conference date. Because Japan has requested two months notice, the London meeting cannot be held earlier than the end of June.

No Broker. That President Roosevelt had no intention of using the British Prime Minister as a broker through whom to conduct negotiations with the rest of Europe became evident when Ambassador Claudel called at the White House last week to say goodbye. To him President Roosevelt suggested that France send Edouard Herriot, onetime premier, to Washington for economic discussions. M. Claudel sped to his embassy to cable this oral invitation to Paris. M. Herriot, though not a member of the Daladier Government, started for Lyons to pack his trunks. Said he: "I will do my best to serve my country."

Day later the President's plan for a whole series of Washington parleys preliminary to the World Conference fanned out into full view when Secretary Hull issued invitations for Italy's Mussolini, Germany's Hitler. Japan's Saito, China's Chiang Kaishek, Argentina's Justo, Brazil's Vargas, Chile's Alessandri, Canada's Bennett and Mexico's Rodriguez to journey to the U. S. If they could not go personally, they were urged to send personal representatives and. if that were not possible, to authorize their regular diplomatic representatives to speak for them. The only Grade A power not asked to Washington was Soviet Russia, still diplomatically unrecognized by the U. S. President Roosevelt's purpose was not a formal round-table conference in Washington as a prelude to the World Conference but a series of bilateral discussions with the idea of feeling out each power on possible trades to be clinched at London.

Debts Afterward. Such a mass movement on Washington as President Roosevelt invited represented a strategic triumph for his policy of subordinating the question of War Debts and keeping them outside the World Conference as a domestic issue to be settled separately between the U. S. and each debtor nation. When Secretary Hull moved into his office after March 4, the first international problem to be poked under his nose was Debts. Sir Ronald Lindsay began by asking what the U. S. proposed to do. Secretary Hull swung back in his big chair, thoughtfully fingered his corded eyeglasses, nodded his grey head and conceded that the Debts were indeed a question. But what about high tariffs, and gold, and unstable currency, and trade barriers? Diplomatically he steered the conversation around to these larger problems as matters to be solved first. Secretary Hull pointed out that the U. S. people were in no mood to forgive their debtors until their debtors were ready to grant a quid pro quo. Repeated was the familiar Hull view: "However important War Debts may be, they are not a major cause of the panic nor are they a major remedy."

Noteworthy was the fact that Debts went unmentioned in the Roosevelt-Mac-Donald exchange. The Prime Minister, of course, will discuss them with the President, once he reaches the White House, but they will be kept on a secondary level. Likewise President Roosevelt shrewdly diffused the debt issue by calling to Washington eleven powers of which only three owe the U. S. money on the War. Adroit, too, was his suggestion that M. Herriot represent France because that French statesman was the most dogged advocate of paying the U. S. the $19,200,000 owing since Dec. 15.

President Roosevelt also had an excellent political reason for playing down Debts: he wants to keep his control over Congress. Such a controversial issue, if opened to diplomatic discussion now, would split party unity at the Capitol and jeopardize the President's domestic program. Certain is the fact, though, that he must go to Congress for authority to do something about Debts before June 15 when the next payments are due. The Congressional string on executive action, tied to the Hoover moratorium in 1931, still stands. It is generally believed that President Roosevelt will be given a free hand by Congress before it goes out of session, and that thereafter he will suspend the June 15 payments to keep the Debts from derailing the World Economic Conference.

Stability Begins at Home. The nation with the biggest advantage at the London conference will be the one whose internal affairs are in the best order. To that end President Roosevelt has been devoting his first month in the White House. He moved to balance the Budget and thus improve domestic economy by reducing veterans' pensions and Federal salaries, and by legalizing beer to raise new revenue. He brought most of the nation's banks through a paralyzing crisis. Last week he issued an order recalling by May 1 an estimated $1,000,000,000 of gold coin bullion and certificates still in hoarding, under severe penalties, as a means of giving the Government undisputed control over its gold reserve. He despatched Ambassador-at-Large Davis to Europe to pave the way in London, Paris and Berlin for a resumption of the Geneva disarmament conference April 25. Through Secretary Hull, he started Congressional action to prevent the publication of official U. S. secrets which would otherwise have caused an uproar in Japan.* He put experts to work on a new law authorizing him to attack the Republican tariff wall by means of reciprocity agreements with other nations. He tackled unemployment by means of his Civilian Conservation Corps working in the woods (see p. 12). He had reason to expect that within another two months he would have the U. S. sufficiently shipshape at home to justify his stepping into the world field.

The World: 34% Off. The problem he. Secretary Hull and the London conference were up against was how to revive world trade and thereby increase world prices. The attack was against the economic nationalism bound up in slogans like "Buy British" and "Buy American." Last week the Department of Commerce announced that the world's imports and exports in 1932 slumped to $26,160,000,000 from 1929's $68,290,000,000, 1930's $54.921,000.000, 1931's $39,597,000,000. This was a drop of 34% in value, 26% in volume in twelve months.

The present crisis in only slightly milder terms stared the London conference agenda commission in the face last January and the delegates from eight countries did not blink it when they issued their report. They found 30 million jobless throughout the civilized world. Wholesale prices had fallen one-third, raw commodity prices one-half since 1929. World bankruptcy loomed.

The London Conference Agenda includes the following:

Monetary and Credit Policy.

Prices.

Resumption of the Movement of Capital.

Restrictions on International Trade.

Tariff & Treaty Policy.

Organization of Production & Trade.

That list blocks out the chief talking points for the forthcoming face-to-face discussions at the White House. First concrete objective is some new standard of international exchange to stabilize nighty currencies. The Roosevelt Administration, unlike the Hoover Administration, sees no quick return to an all-round gold standard. Yet last week the Bank of England's gold reserve reached $885.000.000, an all-time high, which pointed toward some sort of de facto stabilization of the pound--provided the dollar is not devaluated. The currency situation upsets normal trade channels because of a low-currency country's ability to flood a high-currency country with cheap goods despite towering tariffs. Much will be said at the White House about this unfair method of international competition. The Agenda Commission, rejecting bimetallism, recommends increased subsidiary coinage of silver--a recommendation that started rumors that the U. S., Britain and France were to buy $1,000,000.000 of silver for that purpose.- Speaker Rainey, a silverite. ordered all silver legislation shelved in the House on the ground that the World Conference alone was able to deal with the issue.

Goods and Tariffs. Oil and wheat got into last week's news as commodities the world production of which the London conference might attempt to limit. The U. S. Farm Relief Bill, now before the Senate, looks to a cut in domestic wheat-growing which may set an example at London. Major oil producers met in Washington fortnight ago, recommended action to the White House which would hold the U. S. flow down to 2,000,000 bbl. per day. Many have been the conferences between producers of copper, nitrate and rubber during the last several years in vain attempts to control output, raise prices. At London such attempts may become accomplishments.

Admitting, even charging, that the world was led into economic war by the tariff policies of Presidents Harding, Coolidge and Hoover, President Roosevelt hopes to lead the world to economic peace by his tariff policy. The Agenda Commission in its report flayed attempts at national self-sufficiency ("all seek to sell but not to buy"), manifested in retaliatory tariffs, embargoes, import quotas, export subsidies, and exchange restrictions which "throttle business enterprise." First objective at London is a tariff truce against more rate uppings. After that, attempts will be made to weed out such quota restrictions as Austria puts on tires and shoes, Belgium on sugar and silk knit goods, Germany on lard and butter. Last week France, sensing a turn in the tide, planned to lift quota restrictions on U. S. radios, asparagus, apples and pears--a move strongly backed by the French wine interests with eyes fixed on the U. S. market after Repeal of the 18th Amendment. The London Conference will not discuss specific rates but its prime purpose will be to stabilize tariffs so that exporters will know what they are up against from month to month, year to year.

Most Secretaries of State would have been awed by the size and complexity of the world problems before the Roosevelt Administration--but not Democrat Cordell Hull. His job is thoroughly to the liking of this long lean Tennessean with mournfully drooping shoulders and a slight lisp. It dovetails perfectly with what he has been preaching for more than 20 years. At hand now is the chance of a lifetime to put his economic gospel to the fierce test of world opinion--and action.

A Jeremiah in a Republican wilderness, Secretary Hull long predicted ruin and woe from G.O. Policies on tariff and foreign affairs. Again & again he harped: "The practice of the half-insane policy of economic isolation during the past ten years by America and the world is the largest single underlying cause of the world panic. The mad pursuit of economic nationalism has proved disastrous. . . ."

At last year's Chicago convention Cordell Hull wrote his own Washington orders--the party platform planks on tariff and foreign affairs. The President remains the final executor of these orders and his Secretary of State, a lawyer by trade and training, functions as an obedient attorney of the Stimson type. But planted deep within the silent Hull ego is an attachment to the principles at stake that is older and deeper than President Roosevelt's, and a tenacity which may outlast that of the White House should the latter weaken.

Cordell Hull is a plain man who likes to shed his vest, prop his feet up on his desk. His level brown eyes are more emphatic than his thin, slightly pouting lips. Occasionally he breaks his long, cautiously qualified sentences with salty profanity. A cerebral personality, he takes no exercise, gets his relaxation in solitary study.

Secretary Hughes was the isolation statesman. Secretary Kellogg stood for academic peace. Secretary Stimson was the moral force man. Secretary Hull has a chance to go dowrn in U. S. diplomatic history as the world economist.

*Ambassador May's daughter Francoise will be the Queen of the Winchester (Va.) apple b'ossom festival next month. *Herbert O. Yardley, onetime Government code expert, declared in his American Black Chamber that the U. S. had stolen secret Japanese messages at the Washington Arms Conference. The official secrets bill was aimed at a second volume of "exposures" by him. *France last month issued $58,800,000 worth of new 10-franc and 20-franc silver pieces, first minted since the War.

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