Evening Star Newspaper, January 6, 1935, Page 27

Editorial Page Part 2—8 Pages SUPREME COURT’S RULING ON GOLD CASES AWAITED Sanctity of Contract Clause at Stake in Suits to Compel Payment of Obligations in Metal Value. BY MARK SULLIVAN. N THE calendar of the Su- preme Court for argument the coming week is the first of the so-called “gold cases.” The suits arising under the steps taken by President Roosevelt about gold, are of several kinds, For clarity I dismiss, in this article, all except the kind of case that comes up the coming week. Likewise in the in- terest of clarity I shall describe the case in terms which do not pretend to conform to legal terminology, but which will enable the reader to un- derstand the application of this case to his personal situation, the principle involved, and the consequences of a decision, one way or the other: In the year 1930 a man who had saved $1,000 loaned it to the Balti- more & Ohio Railroad. The railroad, as evidence that it had borrowed the , money, as evidence of its obligation, gave the lender a bond, a promissory note, of the kind familiar to every one. The bond given by the railroad promised to repay the principal, and promised to pay the interest at the rate of 4!, per cent semi-annually. ‘That is, the railroad promised to pay $22.50 on the first of each February and August. Those are the elementary facts in the particular case now coming before the Supreme Couht (one of two, the other being a case in which the bor- rower is the Missouri Pacific Rail- road). There are literally millions of such situations, with variations in the dates and the rates of interest. All will be affected by the precedent which the court will make in its decision in the present case. It should be especi- ally noted that the date of the lend- ing in the present case is immaterial; it could have been any date preceding 1933; in the other situations which will be decided by the present case, the lending transactions took place, some in every year since soon after ® the Civil War. Promised Pay in Gold. The Baltimore & Ohio Railroad in the present case, and practically all other borrowers in all the like cases, promised to repay in gold. All the promises contained what is known as the “gold clause.” The “gold clauses” in all bonds are substantially identical. 1 quote one from a bond I happen to have access to: It reads “* * * Prom- ise to pay $1,000 in gold coin of the United States of America of or equal to the present standard of weight and fineness and to pay interest thereon * * * in like gold coin.” Few persons have ever read that “gold clause.” Yet it or one substan- tially identical, appears in scores of millions of bonds, mortgages and other contracts. The precise wording does not matter. Many of them read “gold coin of the present standard,” mean- ing the standard existing at the time the contract was made, any time from 1933 back as far as 1865. The habit of writing the gold clause into contracts arose soon after the Civil War. At that time, for a period of about 35 years, there was, as now, much talk and controversy about cur- rency, inflation, “greenbacks,” silver coinage, “paper money.” In conse- quence of fear, the same sort of fear that exists now, lawyers began to write the gold clause into contracts. I should say off-hand that fully three-fourths, perhaps more, of all the bonds, mortgages and similar con- tracts in the United States con- tain the gold clause. Some do not. Apparently some lawyers came to feel so confident, during the long years when we seemed as securely wedded to the gold standard as to the Eng- lish language, that they did not in- sert the gold clause. But nearly all lawyers continued to insert it. Any reader of this article who happens either to own a bond or owe a mort- gage is apt to find if he reads it carefully, that the gold clause is there, Many insurance policies con- tain it. Practically every reader, though few may be aware of it, is either under an obligation to pay gold in satisfaction of his mortgage and the interest on it, or is entitled to receive gold. Change Occurs Suddenly. For as long as younger readers can remember, as far back as 35 years at least, this gold clause did not matter— until June 5, 1933. Neither the debtor nor the creditor paid any attention to it. They did got, in the legal phrase, insist on “specific perform- ance” by payment in gold. The cred- itor was willing to receive, and for the debtor it was more convenient to pay, ordinary paper dollars or bank checks. Hundreds of thousands of persons have freely accepted billions of dollars in paper money or bank checks, without ever even knowing they were entitled to demand gold. ‘The reason was that paper money had the same value as gold money. At all times (until 1933) a man having a paper dollar could take it to the Treasury, or to a Federal Re- serve bank, or as a practical matter to any bank, and exchange it for a gold dollar. The Government always stood ready to make the exchange. ‘That is what was meant by the cur- rency of the United States being on 2 “gold basis.” And just because any- body could make the exchange nobody cared to make it. We were for nearly half a century—as far back as the currency controversies, similar to the present, that followed the Civil War— in the happy condition of a nation whose citizens knew that every paper dollar was the equivalent of a gold dollar. And so, the gold clause came to have no practical effect. But the lawyers who drew mortgages /and wrote bond contracts continued to write the gold clause in. Then, in 1933, President Roosevelt took the country “off gold.” That is, he decreed that the Government would no longer stand ready to give gold in exchange for paper dollars. As incidents of that action he took, among others, two steps. On June 5, 1933, he had Congress enact that the pre-existing gold clauses are wggainst public policy,” and that every obligation payable in gold “shall be discharged upon payment * * * inany currency which at the time of pay- ment is legal tender.” That is, Con- gress enacted that the lender in the t case, and all others in the present same situstion, must accept ordinary paper dollars. Later, on January 31 last year, Pres- jdent Roosevelt proclaimed that from t day forward the weight of the gold dollar, the new one, shall be 15.23 grains, nine-tenths fine. The old gold dollar had been 25.8 grains. Whereas the old gold dollar had been 100 cents, the new gold dollar was de- creed to be 59.06 cents. This made the “gold clause” in old contracts vital. For the old con- tracts were payable in old gold dol- lars, gold dollars weighing 25.8 grains. The lender of $1,000 to the Balti- more & Ohio Railroad who, in the present case, asks the Supreme Court to require the railroad to repay him in gold dollars of the present (former) standard, is Mr. Norman C. Norman of New York City. Mr. Norman in effect admits that the railroad can- not pay him literally in old gold dollars, because the Government has seized all the gold—the railroad can- not get its hands on any. But Mr. Norman asks that the railroad pay him the paper equivalent of the old gold dollars. This would mean that the railroad would pay $38.10 for each $22.50 fixed in the contract. About the consequences of each of the two decisions the court may con- ceivably make, there is much discus- sion. On one side it is argued that if all debtors are required to pay $1.69 for each $1 named in the con- tract, the addition to the debts owed by all of us would be intolerable. As it is put in the decision of a judge of the lower Federal Court in one of the present cases, Judge Faris of the eastern district of Missouri, the total amount of debt involved in contracts having the gold clause is between 90 and 125 billion dollars. If the gold clause be enforced, this amount of debt would be increased to something like 200 billion dollars. And the total wealth of the country is only about 280 billion dollars. If the gold clause is enforced, the country, says Judge Faris, “may well be bankrupt.” This is an extreme statement. But it is true that many a man who today can readily pay $1,000 might be bank- rupt if required to pay $1,690. On the other side, it is claimed that this simplifies the situation too much. Speaking roughly, there are as many creditors as debtors: as many would benefit as would suffer. The situation would soon smooth itseM out, there need be no great commotion. In England, where the House of Lords sustained a gold clause similar to the American one, no widespread bank- ruptcy followed. (It is doubtful, how- ever, if the “gold clause” is as com- mon in England as in America.) Moral Effect Feared. From the standpoint of public in- terest, perhaps the best argument in favor of the Supreme Court sustaining the gold clause has to do with the moral effect. It would be a dramatic assertion of the sanctity of contracts. A country, and a world, that has been ‘made “jittery” by widespread ignoring of contracts, might be restored to sta=- bility by the tonic of a decision by the Supreme Court of the United States saying that a contract ‘is a contract, and must be fulfilled. ‘The sanctity of contracts has been seriously marred during the past few years. That is perhaps the gravest moral consequence of the depression. Great nations, including Great Britain and Prance, have defaulted in their contracts to pay the United States (with respect to war debts). Ger- many and many other nations have violated contracts to pay private in- vestors. Our own Government has defaulted on its promise to pay gold to_holders of Liberty Bonds. If, now, as conditions here become more stable, and there is less excuse for defaults on contracts—if, now, the Supreme Court of the United States should take a stand in support of the validity of contracts, such an action might be a stimulant to the whole world. Civilization depends on regard for contract, for what the Germans called a “scrap of paper,” more than upon any other one con- dition. To speak in detail, or with exact- ness of precedents for the case that will be presented to the Supreme Court the coming week would carry this discussion too far into legal refinement. There were some ocases called the “legal tender cases” after the Civil War, but lawyers differ as to whether those old “legal tender” deci- sions are binding as precedents. As recently as 1933 there was a similar, though not identical, case in Great Britain. The holder of a bond pay- able in British pounds, eontaining a “gold clause,” sued for gold or its equivalent. Decisions in the lower British courts were adverse to the holder of the bond, but the House of Lords, which is the highest British court, held that the promisee was entitled to his gold. Two cases—again similar but not identical—were tried within the last few years before the Court of Inter- national Justice at The Hague. (On which court, at that time, the present Chief Justice of the United States, Mr. Hughes, was a member.) In one case the French government sued the Serbian government for payment in gold francs of the standard prior to the devaluation of the franc. In the other case the French government sued the government of Brazil for payment in gold francs of the stand- ard prior to the devaluation of the franc. In both cases the Court in In- ternational Justice found in favor of the holders of the bonds. Those cases, while similar to, were not quite iden- tical with the one about to be heard by our own Supreme Court, (Copyright. 1935.) Home Duties Holding More Italian Women ROME (#).—Italian women are be- coming persuaded that their proper place is in the home. Such is the indication of a survey recently completed by Dr. Maria Castellani, an official of the Fascist National Charities and an expert in social investigation. The trend away from factories and fields back to the family hearth has been in progress since the start of the twentieth century, the survey shows. Since 1900, Dr. Castellani says, the percentage of women employed as compared with men has declined from 32.4 per cent to 19. The figures are ail the more strik- ing, she says, because the female population of Italy has been steadily outdistan¢ing the male, until now are about 1,000,000 more women in the country than there are men. EDITORIAL SECTION Che Sundiy Star WASHINGTON, D. C, SUNDAY MORNING, JANUARY 6, 1935. Can America Be Neutral? Advance Stand Would Jeopardize .Bargaining Power, Observer Says: BY WILLIAM R. CASTLE, JR. Former Undersecretary of State of the United States. T IS difficult to understand the sudden emergence on the Wash- ington scene of ‘the question of neutrality. It is an academic matter, at the moment, and if there should be another war, agree- ments as to trade and travel would have to be made with the belligerents at the time. Let the professors of the Department of State discuss the mat- ter theoretically to their hearts’ con- tent; but let them do it as they dis- cuss other matters which are not im- mediately pertinent—without publicity. Neutrality is a dangerous subject be- cause we ordinary citizens still think that two and two make four and that there is no reason to tell the country that neutrality is being earnestly dis- cussed unless war is expected. The disputants of the department must remember, also, that interna- tional law is not made to order in any foreign office but is the cumulative re- sult of national and international ac- tion over a series of years. If in con- sequence of the studies which ap- parently are going on there should be issued a presidential ukase covering the exact attitude of the United States toward neutrality in the next war, it would give possible belligerents—if any—the opportunity to make their war plans in accord with our an- nounced stand—and in all probability we should ignore the decision, what- ever it was, when the time came. Realistic Adviser. According to the press, Charles ‘Warren is advising the Department of State in this matter. On subjects of this nature he is a logical and realistic thinker. He made his own position clear in an address before the Society of International Law a year and a half ago. At that time he said: “There are no rules or laws of naval warfare affecting neutral trade as to which the great powers are in agree- ment.” Continuing, he said that since this was the case we might as well admit that a belligerent will not ac- knowledge neutral rights and “will only concede such privileges to trade as it believes will be compatible with its own victory.” He then added, quoting Admiral Rogers with evident approval, that the Government should “treat each war as it comes along, on its own basis.” This conclusion Is sound sense be- cause nobody can foretell what condi- tions may be present in any war, nof what the attitude of the United States may be toward the belligerents. I think Mr. Warren would stand by the principle today, but that some one, eager for publicity or wanting to di- vert public attention from the failure of N. R. A. or some other organiza- tion, has unwisely permitted the fact to leak out that discussion of this ticklish problem is proceeding, and— worse than that—the direction in which it is tending. If it is true—and I agree wholly with Mr. Warren that it is—that there is no-generally accepted rule govern- ing belligerent treatment of neutral trade, it is obvious that when a war breaks out the United States must try to strike the best bargain possible with he belligerents. To announce in ad- vance that we claim no rights; to an- nounce in advance that American citi- zens and ships shall go into the danger zones only at their own risk would be fatal to American interests. We should have nothing to bargain with. It would look, also, like an admission of cowardice. No Bargaining Power. After such an announcement, if war broke out, the American Government would have no cash or credit with which to approach the bargain coun- ter. To announce now that we would not protect our traders would seem to betray them at the very time when the Government is talking most earn- estly of its support of international trade. For, after all, trade is a matter of long-term contracts, not of single shipments. To announce that on the outbreak of war the American Government would withdraw protection from American trade would be looked upon by the business world as another step toward the desertion of foreign trad- ers at all times. It would be taken as & sign of retreat to the idea of Mr. Bryan that an American citizen de- serves the support of his Government only if he stays at home. Further- more, trade continues even in war, and it is obvious that what we should lose to the greater of other nations would be lost forever. To the average man promotion and desertion seem incompatible, 1f the terms of the Covenant of the League of Nations are lived up to, it is clear that in a future war there will be no neutrals, at least among members of the League. (Actually, all except the belligerents will be neutral because the conflict will not be called a war. Witness the fights of the last few years!) - It is clear,"also, that if the United States declares in nce that it renounces what used to L¥ con- sidered neutral rights it will be throw- Special Articles 1935 HOLDS BIG PUZZLE FOR U. S. Brotherly Role BY HERBERT F. L. ALLEN. BANDONMENT of the big A brother role in China, reces- sion from the Stimson prin- ciple of non-recognition in Manchoukuo, and scrapping of the open-door policy with its con- comitant of armed intervention are all borderland possibilities connected with America’'s new year policy in the Far East. ‘The shadow of the unsolved problem of the destiny of nearly 500,000,000 people of Asia still hangs in the sky. To find a solution that will satisfy all interests and at the same time avoid war is a 1935 task confronting the best minds among statesmen of Orient and Occident. ‘The obstacles to be hurdled are: China’s demand for the return of Manchuria and the enforcement of the open-door doctrine with interven- tion, armed or otherwise. ‘The situation arising from the non- § | recognition of Manchoukuo by the A-BORNE COMMERCE WILL SUFFER IF NEUTRAL RIGHTS ARE SACRIFICED. ing itself headlong ifto the League | by their government to trade with scheme, whether it formally joins that organization or not. Up to now trade has been halted only by what has been known as an “effective blockade,” but if we promise not to send our ships into the “danger zone” we agree in advance to observe a mere paper blockade. And it is worth remembering that the danger zone might well be the seas beyond our own three-mile limit. Let us imagine, in this connection, what may seem an impossible situa- tion: That France and Great Britain are at war; that the League has de- clared Great Britain the aggressor and has consequently prohibited all trade with that nation: that the wa- ters around the British Isles have been declared a danger zone. In the United States sympathy is all with Great Britain, which we consider the innocent party, and yet our mer- chants are trading freely with France and her allies and are not permitted | the one most likely to prevent war— | England. difficult as this one, and far more likely to happen. I choose this be- cause, although it is unlikely, it illus- trates how absurd and dangerous it 15 to generalize as to some future American attitude under circum- stances which cannot be foreseen. In response to queries from correspond- ents, in the Department of State we used to say that we could not answer hypothetical questions. On all these hypothetical questions, especially those concerning the possible action of the American Government, it is better to think hard than to talk loudly—and it is almost fatal to whisper. What we as a nation need to con- sider in all this talk about new rules | for neutrals is whether we want to be | drawn fully into the post-war system, which has as its basis that no nation can ever again be neutral. Some | people consider it the better system, RUSSIAN PLOT DESIGNED FOR FOREIGN EFFECTS Discredit, Not Overthrow, of Stalin Thought Chilling Influence on Peace, Causing Western Nations to Hold Off. BY FRANK H. SIMONDS. N THIS side of the Atlantic there has been a natural but nevertheless mistaken ten- dency to identify the recent events in the Soviet Union with those which took place in Ger- many last Summer and to see both “purges” in a similar light. At the very outset, however, it must be re- called that no satisfactory proof has ever yet been presented of the ex- istence of any plot against Hitler, whereas in the Soviet case there was an actual assassination of a man closely associated with Stalin. Outside of Germany the world is fairly unanimous in its conviction that precisely as the Reichstag fire was engineered by Goering and his Nazi associates to insure victory in the election of March, 1933, so the shambles of June, 1934, were the re- sult not of a conspiracy against the Nazi dictatorship to seize power, but of a conspiracy on the part of the dictatorship itself to remove men whose loyalty to party policies had already become embarrassing and might conceivably become dangerous at & later time. The murder of Kirov, however, could only be paralleled in Germany for example by the assassination of Goebbels or Goering. It was a blow struck at a man personally and po- litically close to Stalin and actually aimed at the Bolshevist leader him- self. It was deliberately designed, so far as one can conjecture, to accom- plish the end, which it has at least momentarily achieved, to create new doubts and hesitations abroad as to the stability of the present Bolshe- vist regime, thereby leading foreign countries to draw back from their present policies of co-operation with the Soviets, equally illustrated by the American recognition of the Soviet Union and by the recent admission of Russia to the League of Nations. ‘Two Outside Viewpoints. In viewing the episode, therefore, the outside world necessarily must consider the question from two stand- points. Inevitably there' has been a new outcry against the violence of the methods of punishment.. Demo- cratic countries accustomed to the orderly procedure of courts in dealing with crime—even when it is political— are bound to be shocked by the em- ployment of methods which are pe- culiar to revolutions and calculated to awaken a sense of horror in coun- tries where the existing order is of long standing. By provoking the Soviet leaders to violent reprisal the assassins of Kirov have, therefore, accomplished something of their ob- ject. : For the outside world, however, the thing to consider is all-important question of world peace. And it 's, in fact, worthy of primary note that one of the chief bases of the attack upon Stalin within the Communist party is the policy which he has adopted in respect to foreign countries. That policy has been illustrated by all the events of the last year which have shown the Soviet representatives at Geneva and elsewhere to be in close of world revolution in present time. Had they been able to retain power in the Soviet Union they would have attempted to continue the war with the capitalistic world, which, on the military side, carried Red armies to the very walls of Warsaw, and there- after found fresh expression in under- ground operations among the Com- | munists of various western nations. Stalin, on the contrary, recognized not only that the possibility of mili- tary conquest came to an end with the destruction of the Red armies in the Warsaw campaign of 1920, but also that the attempt to organize the Reds within western nations would not have any other serious consequence than to provoke an ultimate concerted attack upon the Soviet Union by the western nations. Such an attack, too, might easily lead to the collapse of the whole Marxian revolution. Viewpoint of Trotsky. Trotsky believed and continues to believe that the Marxian experiment can succeed only if it is world wide in its application, not eventually, but immediately. His effort was to keep a state of actual war existing Detween the capitalistic world and the Soviet Union. Stalin, by contrast, believed, and obviously still believes, that only when Russia had been itself or- ganized in conformity with the Marxian theories could it pass to the offensive, and that successful or- ganization at home would have far greater effect upon the minds of the working masses abroad than propa- ganda and intrigue. The results of the Stalin policy are disclosed alike in the five-year plan at home and the entrance of the Soviet Unien into the League abroad. Red Russia has reoccupied the place of Romanov in European councils. The relations between Paris and Moscow have come to resemble those between the French capital and Petersburg before the World War. And with this change there has been abolished the double danger that the western na- tions might back either Germany or Japan in an attack upon the Soviet Union. In plain terms the Soviet Union has attained domestic security at the price of postponing—if not completely re- nouncing—the world revolution. Stalin has thus obtained something of a free hand to apply his interpretation of the Marxian program to his own country by refraining from employing the Reds in other countries as agents to con- duct attacks upon their own govern- ments. Had he followed the other course it is at least possible that the Western nations might have resorted to a counter offensive, particularly at & moment when the liquidation of the opponents of the agrarian program of the Soviets was in progress and do- mestic resistance was considerable. On the other hand, it is equally true that during the later and graver phases of ‘the great depression, the Western nations have been spared any domes- tic disorders which might have re- sulted froma operations directed from the Kremlin. On the larger question of the ulti- mate success of commuism there is, and | of course, no difference between Stalin and Trotsky. What the Western World is confronted by is a difference in strategy and not id objective. Trotsky would have made Red the spearhead of a permanerf} assault (Continued on Third Page.), It is easy to imagine situations as aggr —From an etching by Charles W. Cain, and perhaps it would be if there were some infallible method of defining the essor. There is not the slightest doubt that if we make any public statement that our conception of neu- trality includes the surrender of neu- tral privileges we shall thereby become |a part of the new system. Hits International Law. In this surrender, however, we should be dealing a blow at interna- tional law as severe as that when we agreed, at Montevideo, never, at any time or under any circumstances, to |employ force in a Latin American | country. At that time we surrendered the right to protect our citizens abroad in time of peace: now it may be that the administration is preparing to | surrender the right to protecs them |in war time. This seems to me to be chipping away the very corner stone | of international law., which is that the first duty of a State is the pro- | vection of its citizens. A tame acquiescence in whatever ag- gressive measures belligerents might take against neutral trade would sug~ gest that there would be similar ac- quiescence in other aggression. In- terference with trade is for the pur- pose of preventing goods from reach- ing one or the other of the combatants, thus strengthening one at the expense of the other. It is justified on the ground of self-preservation. Exactly the same argument might be advanced for using neutral terri- tory as a base. I take it we should keenly resent that; yet it differs only in kind from the seizure of our ships, and it would be a probable sequence of a weak renunciation of our right to protect our legitimate commerce. If, therefore, we decide that we are not willing to take, lying down, any and all blows which may be aimed at us as neutrals; that we do not want, either directly or indirectly, to be drawn into the European system, which presupposes, theoretically at least, participation in all future wars, is it not conceivable that we could be instrumental in strengthening as well as in radically revising the rules governing neutrality? Is it not thus possible that we might preserve our own safety and at the same time be of more use to the world? Neutrals Hold Power. As fast as neutrality laws have formulated themselves they have been rendered obsolete by mechanical and scientific developments. They are now a queer mixture of what both neu- trals and belligerents may and may not do and are little observed by either. They are based on both moral and material realities. For us to scrap them unilaterally would be arrogant and dangerous. To revise them, in conjunction with other nations, might 50 result in localizing war that it would be almost innocuous, at least to the world at large. It is possible that such a revision might result in an agreement to with- hold supplies altogether from both belligerents; that it might strengthen, instead of destroy, the doctrine of the freedom of the seas. The effective- ness of any rules adopted would, of course, depends on the validity of the promises of the signatories, but it must be remembered that common action along such lines has never been attempted. In any revision we must forget the belligerents and put all em- phasis on the rights and duties of neutrals. Except in a world war, neu- trals would be all powerful if they should act in concert. Granted the dismal fact that many of the laws of neutrality died during the World War, the study-of the sub- Jject now being made in the Depart- ment of State is all to the good. But there are certain things which must be remembered if that study is to be useful. Any publicity as to the dis- :ussions is deplorable because it creates the impression that the Government thinks war is imminent, and this is not true. ‘When and if a plan‘is drawn up it should be filed for future instruction of those in charge, not printed and distributed. Publication would put the rest of the world on notice as to the intentions of the United States, and this would be just as silly as to have the Army furnish the enemy with its plan of attack; if these intentions should appear to be pusillanimous the American plans might actually be an incitement to war. Careful ‘consideration must be given that any plan adopted shall not de- stroy what little is left of our inter- national trade. (Other agencies of the Government make Mr. Hull’s task diffi- cult enough as it is without uninten- tional in his own depart- ment.) It is essential that the Gov- ernment be left free to strike the best bargain possible as to trade when the time comes to discuss that matter with the belligerents. Finally, if any plan regarding Amer- ican neutrality is produced it should, if it is intended to influence policy over a long period of years, be abso- lutely non-partisan politically, and above all, it should hgve the full con- currence of the War, merce its. avy and Com- l sidered. United States and the League of Na- tions, with Japan's insistent claim that while Manchus governed China for several hundred years, China never controlled nor possessed the territory of Manchuria, and that the head of the Manchoukuo government is a lineal descendant of the last Manchu dynasty. Communism Threat Still Alive. Russia’s spread of communism throughout Asia and the reputed in- tention of the Soviet government to wrest from Japan the port of Dairen and other territory lost in the Russo- Japanese war. A serious and not unfounded sus- picion that Japan's ambition is not confined to control of Manchoukuo, but is intended to express itself in the formation of a Mongol-Japanese em- pire, fulfilling the destiny of Asia. The American-British belief that Japan intends to corral all commer- cial advantages, not only in Manchou- kuo, but also in the visioned empire. The Japanese Emperor’s traditional duty to protect the land of his people, viewed as a responsibility extending across the sea to Vladivostok and into any region which might appear to threaten the security of Japanese ter- ritory. Unity of Tribes Visioned. Only by visualizing the situation as related to the whole of Central Asia, from the shores of the Pacific on the | east to the Urals on'the west, and not | as the special problem of Japan, Man- | churia or Mongolia in separate units, can one get a true conception of the empire plan. |and scattered tribes of Mongolia, | Tibet and Manchoukuo. = It would push Communists from Russia back into Russia proper and may be expected to terminate their activity in all territory west of the Urals and even southward into China. It would take from Russia the port of Vladivostok, thus removing a | menace to Japan. It would lose to Russia the immense munitions and airplane factory to Irkutsk. It would bring about an uprising in Russia of kulaks and middle-class people now deprived of their property that would destroy the power of the Soviets and give active communism a death blow. What effect a middle Asian empire might have upon American trade in the Far East, and how far the United States might feel justified in using armed intervention to prevent such a set-up by Japan are questions which the new year will be called upon to answer. Trade Is Major Factor. Opponents of Japan paint such a dismal picture of that country's in- tention to exclude other nations from the cream of the empire commerce through special tariffs and trade ad- vantages, in contravention of the policy of the open door, that naturally we are interested in trying to calcu- late the loss we might suffer in dol- lars and cents should we be the vic- tims of exclusion. The buying power of a nation is equal only to the earning power of it's people. At present the buying power of China, Manchoukuo, Mongolia, Tibet and contiguous territory is al- most nil, because the people have no earning power. It is the potential buying power of Asia which America has been aiming at in the principle of the open door, yet we did nothing to develop that power, which, once de- veloped amorg an aggregate of nearly half a bililon people, would be an enormous factor in the world eco- nomic situation. But before a buy- ing power, there must come earning power. It is recognition of this principle that has determined Japan to under- take the task of increasing the earn- ing power of the people of the new empire, through unity and by scien- tific stock raising and farming, with the added factors of mining and in- dustry. For countless generations Central Asia has been the scene of conflict between homesteader and nomadic stock raiser. Three thousand years B.C. the Hiung-Nu, known later as the barbaric Huns, invaded China seeking for new pasture lands. Today the - nomadic people complain that Chinese homesteaders till the rich pasture lands and leave them sterile and barren. Plan Scientific Production. Under an empire Japan would edu- cate the people in scientific produc- tion which would provide food in largely increased quantity, and im- mense stocks of wool, which Japan now imports from Australia. Thus would a British product be affected. Moreover, in the more southerly re- glons of the empire cotton can be grown very extensively, particularly by the aid of irrigation, thus would the cotton export trade of the United States be affected. And by organiza- tion Japan can bring into production mines of coal, iron and manganese to feed & great steel industry and at the same time locate oil deposits that would free her from dependence upon imported oil. ‘Whether the United States would benefit more through the increased buying power of the empire, due to the people’s greater earning power, or by a continuation of present con~ ditions through the policy of the open door and with intervention, armed or otherwise, acting alone or with Great Britain or in concert with the League of Nations is all t*be seriously con- It would appear that at its worst It would unite the Mongolian races | IN FAR EAST America May Be Forced to Abandon Toward China and Scrap “Open Door.” the empire scheme might greatly re- duce America’s export trade by a non- recognition by Japan of the principle of the open door. On the other hand, if we are sufficiently anti-war-minded to refrain from interference with Ja- pan’s ambition, there is still the chance to seek trade facilities from the empire itself, Britain Obtained Contract. ‘The fact that Great Britain was foremost in agreeing to the Stimson policy of non-recognition of Man- choukuo did not deter her from send- ing a FPederated British Industries Commission to Manchoukuo, where it obtained, according to British reports, a $40,000,000 contract for railway equipment, steel and other supplies. Questioned in Parliament, Sir John lsXmon said the mission was not po- it} Is it not a fact that the work of the industrial mission has been of distinct advantage to British trade?” a member inquired. “Yes. But it is just as well to keep commerce and policy apart,” replied Sir John. That Great Britain did not kee commerce and policy apart is show: in the development of the so-calle “American open-door policy,” whic was born in London, shipped to th United States, twice deported as anf undesirable alien by President Mc- Kinley and finally brought in by Johr! Hay, who as Secretary of State intro-| duced it to the world as 100 per cent American. It was early in 1898 that Lord Pauncefote called in person upon President McKinley and suggested American intervention in China. The suggestion was promptly rejected by President McKinley through Secre- tary of State Day. Hay's Stand Recalled. v In June, 1898, John Hay, then am- bassador to the Court of St. James, wrote directly to President McKinley urging the United States to join Great Britain in intervention in China. The letter was referred by President Mc- Kinley to Secretary Day, who again repulsed the proposal. At that time W. W. Rockhill, an able authority on Far East matters, was attached to the Department of State. He had a friend in London, Al- fred E. Hippisley, a British subject, who had served in the foreign inspec- torate of China's maritime customs, under Sir Robert Hart. “Hippisley after a conference with Ambassador Hay, wrote to Rockhill in Washington,” reveals Dr, Tyler Den- nett, who was with the State Depart- ment from 1924 to 1931, in a paper read before the American Academy of Political and Social Science, and pub- lished in that society’s annals, “I venture to suggest,” wrote Hip- | pisley, “that the United States lose no time in calling the attention of all the powers to the changes now taking place in China, and while dis- claiming any desire on her part to annex territory express her determina- | tion not to sacrifice her annually in- | creasing trade nor any of the rights and privileges she has secured by treaty with China, and to secure this | end, that she obtain an understand- ing from each European power that all the Chinese treaty tariffs shall without discrimination apply to all merchandise entering its spheres o} influence and that by treaty, ports in them shall not be interfered with.” Adee Detected Trap, The meat in the coconut is the ex- pression “spheres of influence,” which constructively applied might include Manchuria, all of Mongolia, Jehol, Tibet, the Urals and Turkestan. Rockhill laid Hippisley's letter be- fore Assistant Secretary Alvey Adee, 8 canny Scotsman, who detected a Rastus in the woodpile, and, accord- ing to Dr. Dennett, objected “that such a course would expose the ad- ministration to the charge that it was pulling British chestnuts out of the fire.” Again President McKinley and Eecreuw Day rejected the proposi- lon. Hippisley, undaunted, again wrote Rockhill, August 16, 1898, threatening inessure upon the administration, say- ng: “It would be better for the American Government to lead than follow Eng- \Jand. I don’t for a moment believe that the American manufacturers will sit by with folded hands and see these districts closed without making an ef- fort to retain them. Pressure will, therefore, be brought to bear upon the administration, and it may have no option but to take some action I have suggested.” Pressure Apparently Came. Apparently Hippisley's forecasted pressure was applied, for Ambassador Hay was made Secretary of State and within & month America's notes fa- thering the open door were on their way to the powers. Yet only a short time was to elapse when the open door had to be bolstered with the doc- trine of intervention to protect the integrity of China and toward the close of the Boxer outbreak, when President McKinley urged the with- drawal of American troops, Secretary Hay was impelled to write a mem- orandum to Adee, expressing in tones of disgust: “The inherent weakness of our po- sition is this. We do not want to rob China ourselves, and our public opin- ion will not permit us to interfere with an army to prevent others from robbing her, Besides, we have no army. The talk of the papers about our pre-eminent naval position giving authority to dictate to the world is mere flapdoodle.” America’s position today is the same, Without desire to rob any other coun- try and with public opinion against armed intervention, there can be lit- tle chance of a war spirit developing. Coast Dwellers Want Speed Limit for Ships PORTSMOUTH, England (). —Amer- ican liners approaching Southampton may soon have to observe an official speed limit, as the result of complaints lodged by Isle of Wight authorities. The wash of the speedy incoming vessels, they declare, has caused con- siderable damage on the island's shores. It has been arranged for British destroyers to make a series of trial runs at varying, speeds along the liners’ track with¥ a view to drafting new “traffic” regulations.