611.4131/157
Memorandum by the Secretary of State
The British Ambassador called at his own request. After some general preliminary exchanges of remarks, I inquired of the Ambassador what was ahead politically in Europe. He said that, speaking solely for himself as an individual, Hitler and his associates were very much like the Kaiser, that is, without tact or deliberation; that the Kaiser did not really intend war, but he jockeyed himself by his blustering and bantering straight into war; and that Hitler had driven the British straight into the arms of the French—at least to the extent of opening staff discussions, and that that was going a considerable distance.
Presently, the Ambassador remarked that that was a very interesting memorandum I sent him some days ago on the international trade situation, that it lifted all the problems relating to international economic affairs to a higher and clearer level and that he was much interested and impressed with it. I promptly reminded him that it was not a note or really a memorandum, but was a part of our oral conversations of January and February on the subject of an international trade program and British interest therein; that the so-called memorandum only more clearly defined my position from the beginning of our conversations in January and February. The Ambassador indicated repeatedly that he was very much impressed with the idea, but before unequivocally approving it, except by implication, he said that, just giving expression to his own individual views and surmise, it might seem to the British Government more or less difficult to reverse its present definite course and attitude and merely announce that it proposed gradually in the future to move in the [Page 651] opposite direction of liberal commercial policy as proposed by this government and as supported by this government under the Trade Agreement Act of Congress. The Ambassador said that British officials were adverse to mere empty declarations, which might or might not be carried out or mean as much as they purported to mean when uttered by many others in most parts of the world, and that British statesmen were more or less averse to making such empty declarations; that, in addition, the British Government might be expected to take some definite step or steps before it would be ready or be prepared to do so; and that, in brief, their country was moving forward fairly well in the present situation and the disposition might be to so continue; but these, the Ambassador said, were his own individual utterances as to a possible course and outcome of the matter at London.
I replied that scarcely nothing conceivable would be more disappointing to this Government, and to the friends of almost any kind of international cooperation, than an announcement by the British Government that it is content for the indefinite future with the status quo. I said that during recent years all nations have been sitting back behind economic fortresses, each making such progress in its domestic economy as has been made either by the production of war implements and supplies or by renewals, repairs, replacements and needed new building construction; that nothing whatever has been done or seriously thought out or proposed in any concrete form to revitalize and rehabilitate the international financial, exchange, credit and trade situation; that the whole structure of international finance and commerce is lying virtually prostrate, as it has been for several years, with no concern as to its restoration save by the espousal of the economic program for the restoration of international trade and finance which the United States Government has been strenuously supporting during the past two years; that matters have reached a stage where it is all-important that Great Britain should join in this movement, not in the form, however, of an alliance, but moving forward in concert; that, in my judgment, Great Britain is far more interested, from the standpoint of business prosperity and the preservation of peace, in the restoration of normal international economic relationships than any other nation, including the United States, which I agreed is tremendously interested. I said that this Government, in order to pursue a course the main objective of which is liberal commercial policy, was obliged to challenge almost a solid wall of narrow isolationist embargo tariff sentiment and that this is in great contrast with the far easier position the British Government is in to move in the direction this government has been going in the past two years; that the alternative of sitting still, utterly inert, with no objective [Page 652] except purely nationalistic economy, has been tried out for several years by all nations, and inevitably means extreme, high political tension in many places at all times and that this is almost universally brought about by high economic tension or distress; that if ourselves and other important nations had been functioning behind a suitable economic program during the past two or three years there is little doubt that Italy would not be on the rampage today under economic pressure, that Japan within twenty-four hours after Italy began to march would not have extended the area of her proposed military domination of China, that Germany later would not have reached into the Rhineland, and Turkey would not be threatening to fortify the Dardanelles,—all of which is a chain of circumstances and developments put into operation by the Italian outbreak.
I said that I cannot conceive of a more discouraging or hopeless world outlook if the present and absolutely chaotic economic situation as it pertains to international relations is to remain undisturbed while the forces of extreme nationalism, as hitherto, endeavor to dominate the domestic affairs of each nation, including Great Britain.
The Ambassador remarked at one time that the Manchester Guardian had recently come out in favor of the clearing agreement policy, which Great Britain is practicing under shelter of its unfavorable trade balances, and added that his countrymen were very strongly behind the present tariff and bilateral, clearing arrangement policies Great Britain is pursuing, and that it might be difficult for his government officials to resist the appeals of businessmen in its support. I replied that this government has had many similar experiences, including that with regard to the Brazilian trade agreement, when large numbers of our most powerful businessmen and bankers came here and insisted that we compel Brazil to pay off all blocked exchange indebtedness instead of applying the favored-nation policy and rule of equality of treatment, and that I had promptly replied to them that the broad economic program we were pursuing to restore the normal volume of world trade would yield dollars to them, while their proposed, short-sighted policy would yield nickels, and that therefore we felt absolutely constrained without hesitation to pursue the long view and more liberal commercial policy. I added that the British statesmen in charge of that government undoubtedly realize the vast difference in benefits to Great Britain from a healthy, normal international trade, including the triangular and multilateral methods with equality as the basis, when compared with the narrow, limited and short-sighted policy of bilateral, clearing arrangement trading based on discriminations; and that it would seem to me to be almost inconceivable that the British Government would make a deliberate decision in support of the purely nationalistic policy for and during the indefinite future. I finally remarked that at one time the Italians [Page 653] imagined they could get along in a purely nationalistic way, whereas they now have Mussolini with Fascism; that Germany started off with a great blare of trumpets announcing the policy of self-containment, whereas their armies are now on the march under economic pressure. I repeatedly emphasized the beneficial effects on peace conditions of the liberalized commercial policy, such as we stand for, and expressed the opinion each time that economic peace more than ever before must underlie political and military peace.
I reminded the Ambassador that in this country the most outstanding conservative thought among our largest business men and able statesmen of both political parties alike and of the press have greatly modified their original attitude in favor of extreme high tariffs and economic nationalism, and in large numbers have given their support to the reciprocal trade agreement program with the favored nation policy which this Government is carrying forward; that, therefore, it should not occasion the slightest embarrassment to the conservative statesmen of Great Britain to modify their course and attitude; that it is both logical and necessary that two countries like ours should have a combined domestic and international economic program designed to develop both phases of the economic situation with the objective of bringing about full and stable business prosperity and gradually improve international relationships and hence conditions of peace; that there is no alternative to this course, except the practical and permanent destruction of the international trade situation, increasing irritation among the nations and a chronic state of political high tension and threatened wars, with most nations feverishly arming presumably for self-defense; that unless this movement and program for the restoration of normal trade and general economic relations among the nations is carried forward now, but instead is deliberately denied the support of hitherto great trading nations like Great Britain, the statesmen of most countries, including the United States, will give way to utter discouragement, if not despair, as to the future world situation; that this country in particular would feel less concern than ever before about any knd of international relationships.
I suggested the fact that many persons and even high officials today suggest that political and economic conditions, especially in Europe, are too turbulent and too badly dislocated for any step of any importance in the direction of economic rehabilitation, and then I strongly emphasized the view that this is the very time for the outstanding nations to assert leadership and proclaim a program of liberal commercial policy as an ultimate objective, accompanied by a warning that extreme isolationist or nationalistic economic practices and methods are largely responsible for, and will continue to aggravate and make worse, the existing chaotic economic and political situations. I said that a program for the restoration of normal international [Page 654] trade and other economic relations will immediately arouse hope and confidence in the future, especially among business people and statesmen, with the result that from the beginning a gradual improvement in the direction of more stable political and economic conditions can be expected. This, I said, I desire to repeat with the profoundest conviction. Instead of being inopportune, now is precisely the time for a program for gradual return to economic sanity to be proclaimed, and, I added, that if not now,—when? And I answered my question by stating that it would be when these same acute conditions in the way of high political and economic tension had grown even worse.
I again reminded the Ambassador that the outlook ahead could scarcely have been more dark than when the United States Government resolutely announced its economic program and, single-handed, proceeded to carry it forward. I then raised the further question that while, of course, Great Britain and other countries could float along for a time yet, pursuing narrow, nationalistic policies, such as we have discussed, with the inevitable increasingly-bad results, as to which most all persons are in agreement and which has been demonstrated by recent years of experience, Great Britain and other countries thus continuing in these narrow economic policies will find themselves, as they have since Italy and Germany have gone on the rampage largely under economic pressure, constantly arming on an ever-increasing scale for the purpose of dealing with symptoms, instead of the disease. I stated that my appeal is that the nations have dealt with symptoms too long already and the proposed program undertakes to go straight to the seat of the disease.
The Ambassador became more favorable as the conversation went along, in that he would express his acquiescence in most of the foregoing statements, but without extended comment or discussion. He finally said that this line of ideas in the light of the present and prospective situation was unanswerable. Whatever may have been his real state of mind, he appeared towards the end of the conversation to be sympathetic with the views I expressed and indicated his earnest hope that his government might see its way clear to cooperate. He likewise expressed himself as feeling better or somewhat relieved of whatever was on his mind in the way of pessimism as he was about to leave. He made one inquiry at the close as to whether this proposal was being made to any other nations, and I promptly replied that I had no purpose whatever to make this proposal to any other country except Great Britain, until that Government had had full time and opportunity to take action with respect to it and acquaint me with its decision. This seemed also pleasing to the Ambassador.
It is not at all improbable that the Ambassador had received a despatch of some kind from the Foreign Office in London, which [Page 655] possibly offered more or less sketchy comment on the inquiry of this Government as contained in my January and February conversations with the Ambassador, indicated at least the tentative slant of mind of the Foreign Office towards this proposal or inquiry, and requested the Ambassador to call on me and develop the entire matter a little more fully, and in any event to ascertain whether he could gather any new impressions relative to the exact state of mind and purposes of this Government in relation to the entire matter.