The Dollar Follows the Flag

The world was not for sale. The U.S. could never, by gifts or loans or food shipments, win the nations to democracy. Yet Washington and the world last week moved measurably closer to another truth: dollars could have a natural and necessary relation to democracy. The wealth produced by U.S. enterprise could be used to foster democratic enterprise in other lands.

More depended on how loans were made than on how big they were. It was not a simple issue between a generous and a sharp loan policy. Three U.S. loans were in the news last week, and each of them showed the more or less painful growth of U.S. experience in using dollars to further U.S. political ends.

Tough Enough. The simplest case was Poland's. A government under Russian influence, speaking on behalf of a people not under Russian influence, last April obtained from the U.S. a promise of $90 million for desperately needed reconstruction. Washington attached conditions intended to insure that the Polish people would soon have a voice in picking the government that spent the $90 millions. Among the conditions were: 1) that Poland would hold elections this year; 2) that the foreign press would be free to report the circumstances under which the elections were held; 3) that these conditions would be published in Poland.

Last week, when reports from Warsaw made it plain that the Polish Government did not feel bound by these conditions, Washington was not naively bewildered, as it would have been six months ago. "Byrnes is primed for that one," said a State Department official. "The Poles won't get a penny." As Warsaw denied the charges, the U.S. suspended the loan, pending further investigation. Warsaw papers the next day failed to publish news of the suspension.

Too Slow? The most dramatic case was that of France, whose Communist Party had been vastly aided by France's hunger, discouragement and national humiliation. The U.S. had deepened all three of these factors by keeping the French waiting, hat in hand, for a loan. Last week, after the French voters had rejected the Communist-sponsored Constitution, special emissary Leon Blum, who had been cajoling U.S. officials for eight weeks, found his path easier. Washington woke up to the fact that, France might be saved for the world the U.S. hoped to build. At week's end the Export-Import Bank was on the point of giving France new.credits of about $650,000,000. Washington was well aware that France will elect a new Assembly June 2. Said a U.S. Treasury official: "We'll see if loans have a favorable effect on politics."

Too Tough. The most important--and perhaps the sorriest case--was the loan to Britain. The Senate's grudging approval (see NATIONAL AFFAIRS) had sharpened British fears that in the pinch of revived competition in future years Congress would go back to high tariffs and trade warfare. Said London's Economist: "If the Senate has proved anything quite decisively, it is that Congress cannot be relied upon to pursue with any consistency the policy of moderation and liberality without which the whole structure of the loan, Bretton Woods and nondiscriminatory trade policy is built on sand."

Economist Sir Arthur Salter and other free-trade advocates pointed out that after Beaverbrook & Co., who shouted loudest for a tight, imperial trade system, were repudiated in the last elections, the new Government might have worked for a free trade world. But when the U.S. insisted on condemning imperial preference in 'the loan agreements, preference suddenly seemed dear to Britons.

So the new "dollar diplomacy" (dollars for diplomatic ends, rather than diplomacy for dollars) meant that different nations would need different treatment. The world (which could not be bought) could be convinced that democracy was still a vital force, able to tackle the galling problems of the world's plain people. Dollars were not a bribe or a club. But they were an argument.

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