Memorandum by the Secretary of State to President Roosevelt 12
I. The Prohibition of the Export Trade in Arms and Implements of War
It has been suggested that you propose to Congress legislation
“to prohibit the manufacture in time of peace, by any private interest, of any guns, gas, propellant, explosive, or chemical not commonly used and necessary in the liberal arts of peace”
“to prohibit the exportation or sale abroad of any such articles except under a special license to be issued by the State Department in a case in which the Secretary of State shall find that such exportation is required by some duly created international obligation or is advisable under some foreign policy of the United States.”
Most of the arguments against the establishment of a Government monopoly in the manufacture of arms and implements of war are equally valid as arguments against this proposal. In addition, it would create an unjustifiable distinction between the manufacturers of some types of implements of war and the manufacturers of other types. Manufacturers of military airplanes, tanks, et cetera, would continue to manufacture their products and export them entirely free from Governmental control. The further proposal that after having secured the suggested legislation, you propose an international convention binding all other nations to adopt a similar program may be discarded as manifestly impracticable in the present state of the world. The difficulties which we are experiencing in Geneva in negotiating a Convention to control the manufacture of and traffic in arms along much less drastic lines is ample proof of this statement. In existing circumstances, the adoption of this proposal would do nothing toward eradicating the evils inherent in the international traffic in arms and would serve merely to deflect that trade from American manufacturers to their competitors abroad.
II. The Proposal to “Take the Profits Out of War”
A suggested method for taking the profits out of war, at least in some degree, was proposed by the War Policies Commission, the final report of which was transmitted to Congress by President Hoover with his message of March 7, 1932.13 There is attached a copy of the [Page 323] report. The War Policies Commission was a joint commission of the Cabinet, Senate and House, under the Chairmanship of the former Secretary of War. Its recommendations have never been enacted into law. The Senate, in setting up the Nye Committee, charged it, among other things, “to review the findings of the War Policies Commission and to recommend … specific legislation”.14 I am not convinced that the legislation referred to in the preceding paragraph, plus certain measures of war time taxation which have been suggested, would eliminate the profit motive for war. This is a difficult thing to accomplish as past experience has demonstrated. It may be doubted whether any means can be found to accomplish it to the extent which proponents of the idea appear to believe possible. Certainly a great deal of further careful study will be necessary before the Administration can formulate any definite program for dealing with such a complicated matter. The proper method of dealing with this matter will probably be found to lie in a carefully worked out law taxing war time profits almost to the point of confiscation. No study on which such a law could be based has as yet been made. I suggest that the question be left in abeyance until the Nye Committee has reported on that phase of its studies and until its findings can be evaluated.