Evening Star Newspaper, July 2, 1933, Page 15

Editorial Page o Sl Part 2—6 Pages PARLEY HOPE BUT ANXIETY PERSISTS| Qur Allies—15 Years After S BRIGHTEN, Crisis Is at Height; However, More Prom- ising Atmosphere for Achievement Is Being Manifest. BY SIR ARTHUR SALTER, Member British Economic Advisory Council. ONDON.—With the end of its| third week the Economic Con- ference has reached its most critical stage. The which marked the second week, Rfter the encouragement given during the opening week by the war debts ar- rAngement, has deepened. The whole work of the conference is now domi- nated by the position of exchange. During the week the dollar exchange has fluctuated widely. The Dutch guilder has been threatened and there has been much speculation as to whether all gold currencies would not be forced off their standard one by one. This ‘would, of course, introduce a new ele- ment of confusion into the whole world | situation commensurate with the re-| sults of the fall of sterling in Septem- | ber, 1931, and the fall of the dollar in April last. And the efforts of the prin- cipal delegates this week have been concentrated on dealing with this im- | imediate danger. 20 realize the significance of the pro- Posals In which these efforts have cul- minated it is essential to understand the main differences in the points of | view and the causes on which they originate. They degtnd partly on the internal Telation - wle:n costs — including among these particular debts and fixed obligations—and prices in each country, and partly upon a differing ;);]::rienoe as regards inflation in the America has not gone through the | dangers of inflation, and it has an in- | tolerable burden of internal debts and fixed obligations. Therefore, the pri- mary object of American policy, to ‘which everything else is subordinated, is to effect an upward movement of prices which will relieve the burden of fixed charges on industry and agricul- ture. All public psychology which at- tends and assists recovery, centers around this upward movement of prices; it cares little for the value of the dol- lar in terms of gold or foreign cur- Tencies. Different Standard. ‘The experience and psychology of the continental gold countries are abso- lutely the opposite. Countries like Ger- many which have seen their currency lose all its value, or as in France, four-fifths of its value, have come to regard a currency fixed on gold as the only barrier against complete chaos | and confusion. They are completely skeptical of the possibility of raxsmg‘ prices by mone- tary means, except by currency depre- ciation, which would threaten them with the disorganization they remem- | ber from the years of the war. Public confidence and all that de- pends on it, investment, lending, the stopping of hoarding and so on, turns on the security of gold currency. Sim- ilarly, everything that promotes the stability of world trade or the reduc- tion of exchanges depends, for these countries, on the stabilization of ex- change. They would like to see some rise in world prices as a result of, but not as a means of, bringing about a recovery of trade. But they do not desire the rise of internal prices to remove the internal disparity between costs and prices. ! The position of Great Britain is in. termediate. Britain desires some in-| crease of internal prices to help mm-‘ prise support its fixed-charge burden | and bring prices above costs, feeling that further reduction of costs is politi- cally and socially impossible. Moderate Increase. At the same time Great Britain does | not want more than a moderate in-| crease; it hesitates to pursue vigorous. ly the means required to achieve even that increase; it is keenly conscious of the dangers of any form of inflation that is not strictly controlled; it would regret to see a new element of con- fusion introduced by driving present gold currencies off their stand, and it realizes acutely the dangers of the new, competitive currency depreciation. The dominions and sterling area countries are more or less in the same position as Great Britain, with perhaps & rather more positive desire to take the measures required to help prices up by monetary action. Britain, there- fore. with the countries that follow her, is hesitant between the pull of two op- posite forces and influences—America and the countries of Central and South- ern Europe. These European countries, led by France, are trying to get her to Deg on to the franc, whatever the dol- lar is. She can do this under present conditions, for if the dollar continues to fall it might hold down or even fur. anxiety | 29 Amid these differences, however, there is some common ground. This has been found and defined in a communication sent to President Roosevelt Friday. There is agreement as to the desir- ebility under certain conditions of the timate . return to the gold standard by those who have left it. This al- ready has been expressed in a report of & subcommission of the conference and was therefore already available as an element in a common statement of policy. Countries which have left gold were also in agreement in hopin, t those who were still on the gold standard should not be forced off it. ‘While stabilization at definite rates is impracticable until the position as to monetary policy and a rising of prices has been classified further. this need not prevent effective collaboration in eliminating unnecessary fluctuations by counteracting the impact on market rates of temporary movements of short- term capital because of fright and spec- ulation. ‘These constitute the essence of the present proposals. As I suggested in my last message, it is regrettable that proposals of bankers a fortnight ago did not follow these lines. It is to be hoped that the attempt to mitigate speculation until a time of commit- ment to a specified rate will secure America’s sympathy and co-operation. There have been signs of realization in America in the last few days of the dangers of violent fluctuations of the dollar, which in a single day moved as much as 17 points. If the atmosphere can be temporarily calmed, the way is open to discuss more closely the poli- cies of different countries regarding the raising of prices. The fundamental cause of the recent depreciation of the dollar is that when President Roosevelt and Neville Cham- berlain, chancellor of the British ex- chequer, say in almost the same terms they want to raise prices, the world be- lieves Mr. Roosevelt will do more than he says and that Mr. Chamberlain will do less. Clearer Understanding. If Mr. Roosevelt could make it clear he is determmed not to let inflation ex- ceed the point which most helps equilib- rium, and Mr. Chamberlain could con- vince the world that he is determined to take measures which the declared ob- ject of his policy requires, the market exchange rates of the dollar and the pound would come closer to their real economic values. The way would then be clear for provisional stabilization, and gradually conditions of return to gold at new parities would be attained. Parities would of course be changed in some and possibly all cases; that is, there would be “devaluation.” It would, I think, be better to use the term revaluation. We are all familiar now with the term reflation to indicate that limited form of inflation intended only to correct the fall in prices which already has taken place. Frightened Unnecessarily. In the same way, if America devalues when she returns to gold—that is, re- turns at a lower parity of the dollar) in relation to gold—she will only be stabilizing a depreciation which has already come about. Revaluation ex- actly expresses this. The term devalu- ation often frightens gold countries un- necessarily by suggesting that it im- plies new and greater reduction in the gold value of the dollar. Meantime intense preoccupation with the exchange situation has paralyzed the other work of the conference. Every one feels that commercial policy and credit cannot be effectively dealt with except on the basis of an agreed and known currency and monetary policy. If this monetary policy can be estab- lished, discussion of tariffs will at once become more practical. The first trade impediments to be dealt with will doubtless be those directly related to currency position. such as exchange restrictions and new mhlbltlom and tariffs imposed in the t two years to help a country’s bal- ance of payments. French Policy Key. Next comes the question of quotas, in respect to which the French policy is the key. ‘The crisis is at its height. It is a moment of greatest danger. But it also is a moment at which this danger itself evokes all the recuperative forces available. The menace of obvious and immi- nent disaster is a new stimulus to avert it, and the last few days have seen such efforts. After the extreme anx- ther depress her level of prices. Great Britain cannot follow the| Americzan policy and dollar completely, | for that would mean new currency dis- | organization in relation to Europe. I jeties of the middle of the week the conference finds itself in a rather bet- ter atmosphere and with rather better hopes. (Copyright. 1933.) Chinese Empire Crumbles, Losing 2,400,000 Square Miles Since 1883 PEPING.—The recent drive by Japanese forces involves some 5,000 square miles of the Province of Hopei, | south of the Great Wall, historically climaxes a period of 50 years in the decline of the Chinese Empire. Since 1883 China has lost her con- trol over 2,400,000 square miles of ter- ritory in Eastern Asia, a disintegration more swift and fatal than that which overtook the Roman, Greek, Byzantine and Egyptian empires of Europe. Seventeen years before the turn of this century China suffered her first serious incision at the hands of the| pen French. In 1883, without the formality of & declaration of war, French troops com- menced hostilities which shortly termi- nated in French annexation of the for- mer Kingdom of Annam, a Chinese dependency. Next came the loss of Burma. British troops in 1862 had conquered lower Burma. In 1886 they conquered upper; Burma also, but by a curious face-sa ing arrangement certain Burmese reve- nues continued to be remitted to Peking till 1895, when the British ceased the practice. The loss of Burma took a chunk of 236,238 square miles out of the Celestial Empire. In 1890 the British completed their expulsion of Chinese rulers from tne Tibeto-Chinese-Indian principalities of Nepal, Bhutan and Sikkin. They haa been part of the empire since their conquest, in the thirteenth century, oy Kubilai Khan. The British forced China to recognize their annexation of these rich kingdoms, thereby further reducing the empire's southern ex- tremity by 74,000 square miles. There followed the war of 1898. As a result of this, China lost her ancient ascendancy over Korea—85,223 square miles of Asia subsequently annexed by Japan. She also lost Formosa's 13,944 square miles and the valuable little thority weakened in Tibet; it was first definitely challenged when the British | sent an_expedition into the country 1a 1903. A British protectorate was es- tablished during the next decade, and by 1912 the (Chinese found themselves conceding British paramouncy in “Quter Tibet,” about 700,000 square miles, to the British Indian govern- ment. Within the last three years Chinese sovereignty in ‘“Inner Tibet” has been seriously threatened. A few months ago Tibetan troops were actu- ally in occupation of part of the Chi- nese provinces of Yunnan and Szechuen. Outer Mongolia declared its inde- dence from Chinese rule in In 1923, with the assistance of Soviet Russian_troops, it successfully estab- lished this independence. Today it is virtually an autonomous state within the U. S. 8. R. and is unquestionably free of rule south of the Great Wall. The exact area of this vast land of desert and steppes is not known, but it is believed to exceed 900,000 square miles. Events since September 18, 1931, have continued the partitioning of China to a disastrous degree. March, 1932, the Japanese-inspi state of Manchukuo was establishea: , by giving it official recognition, Japan indirectly announced her protectorate over what was for- merly Chinese Manchuria. By the end of 1932 all Chinese government au- thority had been driven from this re- ow!hlr_h, with the Sino-Mongol about 380,000 square mites. Japanese conquest of Jehol in Feb- ruary and March, 1933, brought tne Rising Sun over another 60, square miles of territory ruled by ina for centuries. In March and April Japa- nese and Manchuokuo troops scrambled | /o) down south of the Great Wall and be- flwhntlppemdwbe-dnnmrd fi":’imflrmm , how- | than the creditor. associal In Nothing happened to turn the tide Pescadore Islands, in size ml{mm square m!l,’uh.’ but of vital strategic importance in the Pacific. It is not clear just when Chinese au- ever, over 2,000,000 square miles of the erstwhile Flowery o be carved up. _(Copyrisbt, 1083 L WASHINGTON, D. C, Attitude of Other Nations Is Slowly Drivmg Us Back Upon Ourselves to Solve Distressing Conditions. BY WILLIAM R. CASTLE, Jr., United States Undersecretary of State from 1927 to 1933. HEN we decide what we want to do, we Americans go into our adventures with unlim- ited enthusiasm. We see only evil traits in our en- emies, only virtue in our friends. It was thus that we entered the war in 1917. We had been fed on propa- ’lnda for nearly three years and there- fore looked on the Germans as a brutal race whose purpose was to destroy civil- ization as we knew it. Equally we saw in the allies the defenders of civiliza- tion, fighting with their backs to the wall, fighting our battles. Suspicion of the English, laboriously fostered for years by the Irish in America, collapsed in face cf our acclaim of the superb bravery of the British expeditionary army. In the defense of Paris, in the dogged resistance of the French, in the modern heroes, Jofire and Foch and Petain, we learned to retell the story of French assistance to us in the Revo- lution; Lafayette became once more a living re, epitomizing our duty to help in this modern invasion of Prance. Italian entrance into the war seemed us wholly noble and unselfish; we not speak of the Italians as “Wops™ any more. The sufferings of Poland, as explained to us by Paderewski, became & matter of immediate and vital con- cern, and mnr_vk’ih mg o{“ tl;;oAu;; trian oppression of the Czecl ug) us shouting to our feet, although we bad little idea where Bohemia was sit- uated. One page was wholly black, the other wholly white. We entered the War as cl ers, to save the world for democracy. This, at least, was the at- titude of the crowd, and mob psychol- ogy was in the ascendant. The Gov- ernment gave free rein to these popular emctions, fed them when there was any sign of flagging, because we all wanted to help win the war in short order. | This hysteria was necessary, also, to enable us to raise the stupendous funds | necessary to carry on, both in our own effort and to help our nearly exhausted allies. Money was poured out like wa- | ter. It was true that we had plenty | of it, but people who had little invested | that little in the cause. Any holding | back was branded as treason. Any | criticism of the allles, any expressed | query as to how the money could all be paid back was frowned upon or | derided. But in the very nature of things this enthusiasm could not last. The pendu- lum began to swing back, and it did | not stop at neutral. It tended rather to go to the other extreme. Ugly tales began to drift home from our trcops | in Europe, some of them true, most of them false. Then came the armistice. American troops which marched into | Germany were well received, and mey‘ began to compare German friendliness with French tolerance. Then came the | Peace Conference, with all its disillu- | sionments and its absurdities, its ex- | travagant punishments and its exhibi- | tions of national selfishness. People recognized that the treaties were bad, that they would only perpetuate hatreds. | American sympathy began to swing | toward the defeated powers, but in our disillusionment the general feeling was that, after all, we had made a bad mis- | take in ever getting mixed up in the gunrrele of those selfish European na- ions. Blocked by Senate. It was this general feeling. more than any specific dislike of President Wilso: or of the details of the treaties, which | made the Senate reject them and, along | with them, the League of Naticns. For | years Americans had been groping to- ward some scheme to insure world peace. | It wculd have seemed that the League, avowedly created for this purpose, would | have been received with enthusiasm, | especially coming, as it did, immediately after a great war. But the desire for the peaceful settlement of disputes did not compare in its intensity with the fear that America might once more become involved in European quarrels. And there was much in the covenant of the League which made this pcssi- bility seem very real. Senator Lodge never missed the opportunity to make this clear, and his insistence on the dangers of article X, with its guaranty of frontlers which the American people already had begun to think inequitable, carried more weight than the pleadings of the President that America should not desert the wcrld in its need. The | American people in their hearts had | already deserted their former associates in the war. ‘Then there arose the question of the debts. Great Britain was the first to come forward and make an offer of settlement, which was accepted. The | rest seemed indisposed to do anything, | but finally, after much haggling over terms, arrangements based cn “capacity to pay” were secured. Theoretically, the | standard of capacity to pay was both equitable and generous, but European | nations resented Americas prying into | their affairs and denied that America could fairly estimate capacity. In the last contention they were right. Ca- pacity varies with prosperity, a fact which at the time was not recognized and has since caused dangerous mis- understandings. But the United States, believing the debts to be as sacred as any other obli- gations, deeply resented the European attitude that, after all, the money ad- vanced was merely the American con- tribution to the war, little enough compared to the European sacrifice of | men: resented bitterly the appellation of “Uncle Shylock” and insisted on payment of the greatly reduced sums. The dislike resulting from the debts| was more acute on the European than on the American side of the water. It is sald in private life that a loan de- stroys friendship, and it is human nature that when a loan is not paid the debtor is inclined to be more bitter He has to find excuses for himself, and he therefore builds up a case against his creditor, which finally makes him out a monster. After all, nations are merely collections of individuals, and mass psychology is only the exaggeraticn of individual psychology. Tllusions Torn Away. ‘Thus began the reaction in sentiment against our tes in the war. again. Americans were disillusioned. It was not that for the first time they saw clearly the truth about the nations of Europe, but that a veil of illusions had been torn away. Because the face be- hind the veil was not as wholly beautiful as they had believed during the intoxi- cation of war wrong, but the growing tide ment against Europe in general, and our allies in particular, made much more difficult the task of the Department of State in rebuilding cur trace relations and in securing co-operation in dis- armament and other matters of general Normally, American relations with Great Britain are . ‘There are comparatively few tangible causes t, and if it there would be | be friendly but even close. ere | tically extinguished in EDITORIAL SECTION he Sundwy Star. British propagandists of Irish birth or| extraction in the United States. There | were still some, of course, who de- manded complete separation from Great Britain, an independent republic, but with the granting of dominion status the question became Irish, not British, and the average American lost inter- est—even began to feel that the Irish were professional agitators, that they would never be satisfied. There were few trade disputes with Great Britain except that the principle | of imperial preference, always lurking in the background but never really ac- tively pressing for solution, obviously held the seeds of serious disagreement. ‘There was always the feeling that Great Britain wanted the empire to be con- sidered as a whole when this was useful to British poliey; as a grcup of inde- pendent units when this seemed more advantageous. One argument against joining the League of Nations had been the threat of a British bloc, since the dominions each had a vote. Always, as for example, in the Radio Confer-| ence of 1928, it is insisted that the do- minions have separate votes. They did, but the result was not the dreaded Brit- | ish bioc. The dominioms voted as they | pleased. There have been times since the war | when American opinion was deeply stirred against the British, notably in | connection with disarmament, and espe- cially in Geneva during the Coolidge administration, when Great Britain was | | adamant in demanding enormous num- | | bers of cruisers, and agreement became Painted for The Sunday Star by Lynn Bogue Hunt. impossible. But the memory of this| was wiped out when Hoover and Mac- | Donald sat on a log at the Rapidan camp and agreed on absolute naval parity. This agreement was as great a disappointment to the Anglophobes of | America as it was to the big-navy party in Great Britain, but there can be no shadow of doubt that it created in- | stantly a feeling of confidence which | still persists. France’s Status Differs. | On the whole, therefore, it is fair to say that on March 4, 1933, our rela- tions with Great Britain were as cordial, or more cordial, than they had been' before the war. Great Britain had paid the December debt installment and had paid gold in spite of being forced off the gold standard itself. Whether this happy relationship can continue is now partly, at least, dependent on America. We do not owe the British government, but we owe many British citizens, and the British government has a habit of fighting for what it considers to be the rights of its citizens. The cordiality of | our future relations depends greatly, also, on the outcome of the London Conference. i With Prance the situation is radically different. Much of the hatred of Ger- many during the war has been trans- | ferred to Prance. The rzasons are both | technical and psychological, although only the psychological causes affect the general public. So far as the American | Government is concerned, the period since the war has been a time of re- HITLER’S DEMANDS UNITE EUROPEANS BY FRANK H. SIMONDS. LTHOUGH in itself so naive as| to awaken amusement rather | than anger, the demand for 8| return of its former African | colonies, presented by Germany | at the London Economic Conference, | nevertheless constitutes one more ex-| ample of the fashion in which the| Hitler regime is provoking resentment all over the world. It is, too, a further illustration of the entire absence in Berlin of any statesmanlike apprecia- tion of realities. For if there is one thing that even Hitler in his own book accepts as an axiom of German policy it is that Anglo-German relations must not only Yet in de- manding a return of the African col- onies Hugenberg in London struck | straight at British susceptibilities, since it was to the British Empire that the largest and best parts of the former German spheres in Africa passed as a result of the war. Thus German Southwest was ceded to the Union of South Africa and German East —the most promising | single domain—to the British, along with a part of Togo. No one—unless in a mental state appropriate for a mad_house—could even imagine either the British cr the South Africans would consent to return territory valuable in itself, and during the war the base for dangerous German operations. Nor is it less evident that even to demand such retrocession must awaken irrita- tion and suspicion. Abolishes British Support. Coming on top of the recent Jewish episode, which has produced an almost unexampled explosion of indignation in Britain, this new German gesture must further abolish all possibility of Brit- ish support for any German lon. Again, injecting that issue into an eco- nomic conference held in London, thus necessarily adding a new complication to a situation already complicated be- yond exaggeration, was certain to pro- duce resentment. Consider for a moment the record of the Hitler government to date in the outside world: The attack ?xun the Jews has not only insured the hos- tility and active reprisals of the great over the world, but by its nature and spirit awakened the keenest disap: both in the United States and Britain. Sympathy with German and claims proval Great suffe both countries and in Britain, at least, comment has taken on something of the wartime At the same time the Nazis, by gg:nly demanding the retrocession of Polish Corridor and Upper Silesia by the Poles and Slesvig by the Danes, along with the union of Austria with the Reich, have successfully alarmed Poland and the Little Entente and stirred doubts and suspicions among Ttalians, despite the desire of Mussolini to promote German-Italian tion. nnnu{imthe more extreme Nazi circles, the claim for Alsace-Lor- has been publicly voiced, bring: establishment of the from cut the ground Taine 5 o .m(l}uewdinenclmmh- n Germany Pictured as Being Surrounded by Ring of Hostile Nations, Due to Belligerent Stand. and powerful Jewish communities all| Nazi has been prac-|Posed to AGAINST HIM mediate danger in the face of the Nazi program. To add to the extent of the disturb- ance which they have created in Eu- rope, the Nazi government in its Lon- don proposal asked for additional ter- ritory in Europe. But where? Obvi- ously Poland or Russia or both would be called upon to cede lands or the Baltic States to abandon their recently- acquired independence. But in the case of Poland, the lands adjoining Germany not only are inhabited by an overwhelming Slav majority, but also are densely populated by a race which is growing faster than the German. In the so-called “Ethnic Poland,” which borders the Reich, there on a 100,000 square miles of terrif up- ward of 25,000,000 of people, 20,000,000 of whom are Poles and at least 2,000,000 of whom are Jews. In the same area the Germans number less than 750,000. There are, then, more people to the square mile than in France. What is to become of them, if the German de- mand is to be honored? The Nazi program is clear on this point. ‘These 22,000,000 Poles and Jews are to be moved out forcibly into Rus- sia and their lands taken by German settlers. But the Russian lands also are settled and the population must in turn be expelled to make room for the Poles or the latter sent to Siberia. But naturally the attempt to remove twenty-odd millions of people into a wilderness would mean the practical ex- termination of the greater part. ‘With equal dexterity, the Nazis have m to arouse even in Austria a bitter resentment, which in turn mili- against the union of the Austrian tates Republic with the Reich. By quarrel- 1 ing not only with the domestic Jews but with the Catholics as well, the Nazis have consolidated two powerful groups in Austria against themselves, namely, the Hebrews and the Catholics. Added to these are the Socialists. who see in the fate of their German breth- ren the promise of their own future under Nazi domination. Surrounded by Hostility. And so the Germany of Hitler finds itself surrounded by a circle of hostile and apprehensive neighbors. _France, Poland, Czechoslovakia and Denmark a|iron hand, his rule was incomparably Europe, is now put on notice that the Nazis claim British lands in _Africa as well as Polish, Danish and Prench in Europe. Finally, the Itallans, who would like | disarmament. | every kind of evasion to avoid meeting | like that of France behind it, would SUNDAY MORNING, JULY 2, 1933. peated skirmishes, repeated disputes of & more or less fundamental nature. France was loath to fund its debt and the Department of State in consequence had to discourage loans. When the ex- | tremely generous debt-funding agree- | ment was finally made it was greeted in Prance with a storm of abuse and in America was characterized as a weak surrender of American rights. French policy on the restriction of imports Las appeared more and more to be aimed directly at the United States as the years have passed. There have been protracted discussions in- wolving double taxation, which amounted to practical confiscation of American property in Prance, and concerning the French import quota system, which touched many phases of American in- dustry and, therefore, became burning issues in different parts of the country. The apple growers of Virginia and On Were as angry as were the producers of motion pictures. It has often seemed as though France went out of its way to irritate, through re- strictions of varlous kinds which in many cases were obvious discrimination l‘&lxut the United States. ‘e Americans have a way of deciding quickly. We like to say “yes” or “no” and have done with the matter. This is not a Prench trait. Discussions on all subjects are prolonged indefinitely, and the interminable delay in reaching & decision is often as serious, or more serious than a flat negative would have been at the beginning. 1If, for example, a perishable crop is held pending a de- cision which is never reached, the pro- ducer of the crop makes no effort to dispose of it elsewhere and the crop is a total loss. The same disastrous con- sequences may and do result when an urgent economic issue is involved. When, in 1931, Mr. Hoover proposed his year’s moratorium on_intergovern- mental debts it was the French delay in reaching a decision, a delay which caused fear to grow leaps and bounds, which very nearly destroyed the beneficient_ effects of this American Ppro In the face of a rapidly dis- integrating situation the endless French discussion of what the world recognized | as unrealities seemed a modern simile | of Nero playing his fiddle while Rome burned. 'The American point of view prevalled—with damaging reserva- tions—but it prevailed too late. There was probably never anything more try- ing, to FPranco-American _{friendship than those terrible days in Paris while Rome was burning and the French calmly discussed the difference between conditional and unconditional repara- tions and whether or not the deferred payments should really be deferred to the end of the period as Mr. Hoover had intended or distributed over the next 5 or 10 or 20 years. Everybody resognized the question as academic, but to the French mentality an aca- demic question seems as important as cne of life or death. The great op- portunty was lost. Arms Issue Irritating. One more question has deeply irri- tated American opinion. The Ameri- can people are really interested in pro- gressive disarmament. Their common sense tells them that two is to four as four is to eight: that it costs more to maintain eight men than four. But again it is always France which blocks There is no doubt that the French are unreasonable, that they resort to the issue. There can be no shadow of doubt, also, that fear, a healthy, hon- | est fear of invasion, is at the bottom of it all. Centuries of warfare, or of living on the brink of war, must have its effect on a people, and the French are human like the rest of the world. | Perhaps America itself, with a history take much the same attitude. But America would attack the ques- tion in the Anglo-Saxon manner; would say frankly, “We do not intend to disarm unless and until we con- sider ourselves safe.” We should not give lip service to a principle which we reject. After all, perhaps our irri- tation arises more largely from the manner than from the purpose be- hind the manner. not only in disar- mament but in other matters as well. But whatever the cause, the sad fact remains that the old enthusiasm for France is gone and in its place re- mains profound distrust and irritation. It is not only the fault of France. To the French we have often seemed overbearing and selfish and mean. There are no differences which are really fundgmental. On ¥ con- | trary, there is every reason to be friendly. Let us hope that the Lon- don Conference will iron out some of the difficulties so that we may regain the old cordiality. It has seemed to the American peo- ple that Belgium was the nation most sinned against, the nation which most heroically met the issue of the war. Largely on this account, there is still a large resicue of sympathy for Belgium. But even this is no longer active. We have grown, and rightly, to con- sider Belgium as too closely related to France to carry on independently. In trade matters, in disarmament, the Belgian voice has too often been an echo of the French, and the result has of the old-time re- ing, the downward trend of our af- fection for France. Americans be- ileved that they saw a close connec- tion between French and Belgian fail- ure to pay the December debt install- ment, and were not satisfled with the Belgian claim of financial inability. ‘This cooling of our friendship with Belglum is sad because the nobility of nature shown by King and people during the war still remains in the brave little nation. Friendlier to Italy. Strangely enough, our relations with are distinctly more cordial than before the war. It is fair to say “strangely enough,” because the sys- tem of Fasclsm was repugnant to American traditions and ideals. To America_ dictatorships, of which we knew only the ugly sides, were distaste- ful, partly because they were generally corrupt, partly because we really be- lieve in democracy as the best pos- sible principle of politics and of life. We thought of Mussolini as a combi- nation of tyrant and play actor. But as time went on, though still speeches, we began to realize was @ patriot, that if he ruled with an better than the politics of earlier re- gimes, that Italy was gaining new vigor, new pride in herself and her great tra- ditions. Very few disputes be- tween the two nations. At first the Italian Fascisti in this country were in- clined to be troublesome, but this was promptly corrected when Washington protested. There are, of course, bit- terly antagonistic groups of Italian- Americans, but the American Govern- ment ’:lnnot any longet complain, ex- GOLD ACTION DEPLORED AS BLOW TO U. S. CREDIT Congress Enacted Some Helpful Laws, But Hurt Nation’s Good Name, Representative Beck Holds. BY JAMES M. BECK, Representative from Pennsylvania. THE first session of the Seventy- third Congress has ended and it years to come for cuasswuctive and destructive legislation. Many of the emergency measures have | P! reached the high-water mark of legis- lative folly. The political Pollyannas nizy attempt to justify these excesses on the theory that they were demanded by an emergency, but America has passed through greater econcmic crises ‘han the present without destroying its form of government, as the Congress has now done. The present depression is not com- parable to that of the critical period between 1781 and 1787, when men de- risively papered the walls of their hcuses with Continental currency and the bonds of the Government were selling at 4 cents on the dollar; and yet ihere was born of that travail the wisest and most conservative form of government in the world. Today a depression of less intensity has, overnight, trans- formed our individualistic form of gov- ernment into a highly socialistic state, comparable to that of Italy, Germany and even Russia. For our Nation to destroy in a day and in a spirit of un- reasoning hysteria what it required 150 years to build is the greatest folly in the history of the American people. The optimistic philosopher, who, like Dr. Pangloss in Voltaire’s “Candide,” can see good in everything, can, as to many of these emergency measures, have at least the satisfaction that there is no more effective method of educa- tion than the experience of demon- strated folly, but our education has come too late. As our Nation now proceeds to ex- pend many billions of dollars in the vain effort to lift jtself by tugging a its bootstrape—pillaging the industrial | States for the benefit of the wheat and cotton belts in the process—it will soon learn, to its great sorrow, that the American people must save themselves and that the attempts of government to create prosperity by borrowing more money will be as ineffectual in bringing about the return of prosperity as was the eftort of Mr. Wilkins Micawber to restore his personal fortune by paying his debts with promissory notes. Holds Experience Costly. The Union will probably survive the folly of these emergency measures, for, as Pranklin said: “Experience is a dea school, but fools will learn in no other. The Union existed before the Consti: tution and can conceivably survive it. The one folly of the recent session of Congress from which no recovery is pos- sible is the destruction of the honor of the American Nation, when it not only authorized the President to reduce the gold dollar in his discretion and to issue $3,000,000,000 of paper currency, but also proceeded to the final infamy of not only repudiating its own prior con- tracts to pay in gold of a specified quantity and quality, but permitted all debtors to escape their just obligations by a similar method. ‘There is no better evidence of the utter demoralization of the present time than the fact that in 1896, when it was only proposed to liquidate debts in sil- ver at an arbitrary ratio with gold— enabling $1 to be paid by 50 cents— the American people, by an overwhelm- ing majority redupiated this attempt to pull to our masthead the black flag of partial repudiation: but today, withou a murmur of dissent and with only 3 functory discussion in Congress or the press. the authority is given to liquidate all public and private debts conceivably by paper money, which might not one day be worth 10 cents on the dollar, if we continue on the downward path of inflation. I will not discuss the legalistic or con- stitutional phases of this question at any length, for it is the spirit of the times that any legalistic considerations are to be disregarded in this period of emergency. The difficulty with this argument, which sounds well, is that most legalistic considerations are based upon profound considerations of moral- ity, and such is the case in the matter of repudiating the gold clauses in pub- lic and private contracts. Until the decision in the legal tender cases, which were born of the despera- tion of the Civil War, no one believed that Congress had the power to say that a piece of paper was as valuable as gold in the payment of debts. It is true that while the Constitution forbids a State from impairing the obligation of a contract, the Constitution contains no express prohibition as to the Federal Government. But it was never doubted, prior to the legal tender cases, that the fifth amendment to the Constitution, which prohibited the destruction of property “without due process” of law, implied the same prohibition. However, the Supreme Court, while it vindicated in the first of the legal tender cases this construction of the Constitution, yet, when the court was enlarged and two additional judges were -appointed, it did hold that the power of Congress to regulate -the value of money was broad enough to include the repudiation of a contract to pay in money of a certain quality and intrinsic value. Sustained After War. While this was based in part upon the war power, yet in a later case (Jul- liard vs. Greenman) the power was m‘s;alned in times of peace. The court said: “Under the power to borrow money on the credit of the United States and to issue circulating notes for the money borrowed its power to define the quality and force of those notes as currency is as broad as the like power over a me- tallic currency under the power to coin money and to regulate the value there- of. Under the two powers, taken to- gether, Congress is authorized to estab- lish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as re- gards the National Government or pri- vate individuals.” In the second legal tender case Mr. Justice Strong said: “Every contract for the payment of money, simply, is necessarily subject to the constitutional power of the Govern- ment over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with ref- HNE | erence to that power.” Let us consider the policy of - tion concretely. On April 23 last the Secretary of the Treasury invited sub- scriptions for $500,000,000 of bonds, and in the invitation to subscribe he made the following promise ““That the principal and interest of the notes will be payable in United States gold coin of the present standard of value.” A little more than a month ago the President of the United States signed the so-called “Federal securities bill,” designed to promote a greater standard in the business life of &{ ded the signing the President said in substance that all he was trying to do was to transiate the ordinary g‘flnl:lplu of morality into the language W, That was an inspiring statement to make. and it suggested the of all civilized nations to make laws fairly expressive of the eternal truths of morality. But we are now confronted with the fact that two months ago we asked the will hold the record for ~masw +D€ople of this country to subscribe to $500,000,000 of bonds on a solemn prom- ise to pay them in gold; and now that romise has been repudiated, and the bonds which we thus issued are to be payable in paper or some medium of less value than gold. ‘There is a constitution that is older than the Constitution of 1787. .It has greater sanctity than the Constitution {of 1787. This older constitution was | handed down from Mount Sinai. One 1 of its great limitations upon human ac- tion was the statement in four words: “Thou shalt not steal.” To provide as to pre-existing debts that a man can be | obliged to take paper money, when he | contracted that his obligation should | be paid in gold, is just as much & theft | pro tanto as it would be for the United States to say that when diamonds were |a subject of sale the seller could de- | liver in common pebbles from the sea- | shore, simply because Congress by its | fiat declared pebbles to be the equiva- | lent of diamonds. Points to War Debts. A great ponderable of this question is this: “If there be one question as to which the majority of the House of Representatives would not subservient- Iy follow the President it would be, I | believe, in the matter of the cancel- | lation of the war debts. If the Presi- | dent, before adjournment, had sent a message to the Congress and asked it | to sponge out the obligations that other countries gave to us and which we loaned to them in good faith, it would | have met with defeat. The majority of the House hitherto have followed the White House. ‘When I discussed the matter on the | floor of the House of Representatives | T stated that the moment the Govern- | ment_entered upon this policy of re- | pudiation we made improbable the re- | payment to us by European nations of | their just obligations. Within 24 hours after ‘the passage of our repudiation statute the British chancellor of the exchequer intimated that England would not pay the interest instaliment due June 15. To save its face, Great Britain has now paid about one-tenth of such installment in silver and calls it a “token paymen but the only thing that it betokens is the fact that England will now join the other na- tions—except honest Finland—in re- fusing to pay its obligations to the nited States, which are in a peculiar sense debts of honor. As England has always prided itself upon its respect for an obligation, I believe its unprecedented action is largely influenced by the fact that the United States preceded Great Britain on the path of repudiation when it | decided that its bonds, payable in gold |and held to a substantial extent by English investors, were payable by the United States in any form of depre- | clated currency, which may, a | few years, be of little value. If we thus repudiate our sclemn ob- ligations, can we criticize England or any foreign nation for so doing? To | paraphrase Shylock’s words, “The vil- lainy we teach them, they will execute, | and it will go hard, but they will better | our. instruction.” | There is another consideration far more important. We can survive the failure of these European nations to pay us what they owe us. But there is one thing that we might not conceivably survive, and that is the destruction of our good name. The last solicitation of a bond offering was on April 23 last, and that happened to be the natal | anniversary of the greatest poet the | world has ever known. Shakespeare said something as applicable to nations |as_to individuals, and peculiarly appli- cable to the United States. Quotes Shakespeare. He said: “‘Good name in man and woman, dear my lord, |Is the immediate jewel of their soul: | Who steals my purse steals trash; ‘tis ! something, nothing: 'Twas mine, ’tis his, and has been slave | to thousands; | But he that filches from me my good | name Robs x;e of that which not enriches im | And makes me poor indeed.” | And this nation, when it adopts this |gigantic policy of repudiation—con- | ceding its sovereign power to repudiate |its obligations—will never again occupy |in history the proud position it has hitherto occupied of being one nation | that held its honor too high to repudi- ate its solemn promises, and whose word | was as good as its bond. One of the proponents of this mon- | strous policy in the House of Repre- | sentatives characterized this repudia- |tion of our obligations as a ‘“new |Declaration of Independence.” The |analogy is an unhappy one, for that | which gave lasting value to the great Declaration was Mr. Jefferson’s broad affirmation in the Preamble, that no nation could escape its responsibility at the bar of history and that its every action much be guided by “a decent respect for the opinions of mankind.” Thus he proclaimed in words of im- mortal beauty that there was a great conscience of civilization, which would Judge the acts of every nation. I appreciate that in the matter now under discussion the “decent respect to the opinions of mankind” has at the moment less importance, for if we are repudiating our obligations we are simply following the course that™has been adopted by nearly every nation, some under the pressure of dire neces- sity, and some without any such justi- fication. Civilization is now in a state of moral bankruptcy. It would have been a proud thing if the United States could have been the one great Nation which in a critical period of the world's his- held its head high in the matter of paying its obligations. Such satis- faction has been denied us, and a fu- ture generation of Americans will be ashamed of this and other policies of dishonor. No temporary advantage can outweigh our loss of honor and self- b 3 Sees Lasting Injury. ‘We often speak of our Navy as being cur first line of defense, but I believe paired No nation would lightly chal- lenge us to the tournament of war as long as this credit was unimpaired, for, apart from our boundless natural re- sources, we could make any possible enemy pause long before attacking us, while our ability to borrow was un- diminished. The credit of the United States has