Commonwealth and Foreign
AMERICA CONSOLIDATES
By ERWIN
A NEW vigour has come into American diplomacy these last few weeks. It is hard to appraise the permanence of psychological factors, but certainly the various forces which make American foreign policy are better co-ordinated than for some months, and seem to be showing results.
The agreement with Brazil just concluded here is regarded as a substantial achievement. Senhor Aranha, the Brazilian Foreign Minister who has been visiting and negotiating in Washington, is also pleased. He says, in jocular conversation, that statues to Herr Hitler should be set up in the public squares of Brazil, for the Nazis have at last made the United States conscious of South America, and prepared to do some- thing about it.
The Brazilian agreement is an early illustration of the working of our new style of dollar diplomacy. It is indeed incongruous that the progressive New Deal Administration should return to the methods of the Harding-Coolidge era, but certain it is that dollar diplomacy is with us again. Private loans have not yet begun once more, of course, but through the government-operated Export-Import Bank and other devices, the U.S.A. is making its financial power felt. For some time, the only democratic-axis implement which included the United States has been the tripartite monetary agreement. The Treasury has been an unofficial, unnoticed Foreign Office. Indeed, there is more practical co-operation between the U.S. Treasury and the Banks of England and France than there has been for many years between any political organisations of these countries. Now American financial policy turns to South America. The extension of credits to Brazil is a traditional device. But the loan of fifty million dollars from the American gold-hoard, stored on an army reservation at Fort Knox, Kentucky, is more sug- gestive. Any steps to facilitate better distribution of gold will be as welcome to the United States as to the other demo- cracies. They constitute not only an important step toward more normal world-economic relationships, but a challenge to the artificial-money methods of the dictatorships.
Our new financial arrangements with Brazil coincided with the announcement in London of the extension of credits to China. The United States had previously made twenty- five million dollars available to the Chinese national govern- ment. That the action should be matched by London at the very moment when dollars were potently exerting them- selves in Brazil helped to produce a new sense of democratic power. Simultaneously, too, came encouraging reports of the progress of British rearmament; the Franco-Italian tension had lessened; and altogether Washington—which had been lugubrious in inverse ratio to its geography—began to look up and take cheer.* Meantime, Congress prepared to do something about the Neutrality Act, which now closes the American market as a supplier of arms and munitions in the event of war—a theoretical closure which was only a threat but nevertheless disturbing. The strongest probability is that the first section of the Act—which provides for the mandatory embargo on arms and munitions—will be repealed, and that only the cash-and-carry provisions will remain. This means that nations with ships and money can count on getting any munitions they wish from the United States at the outset of a war, and after a little while everybody must realise that even this deterrent would disappear.
An odd situation respecting the United States as a war supplier is gradually coming to light. Following the recent British and French missions to buy aircraft here, have come many others. A Dutch mission is now here. A Russian delegation of naval " technicians " is prowling about New York, the Brazilians and other Latin Americans are here try- *Written before the seizure of Czecho-Slovakia. ing to buy various war-supplies. But they are discovering that the United States is no longer a manufacturer-for-export of any war weapons except aircraft. The Dutch, for example, want desperately to buy anti-aircraft guns. They cannot get them here, simply because ordnance manufacture in the United States has dwindled to the Government's own fac- tories, which make only for American consumption.
Time was when the United States had quite a respectable munitions business. But the peace-times of the 'twenties reduced the trade to a low ebb, and the Nye Munitions In- vestigating Committee literally frightened the rest of the trade to death. Bethlehem Steel Corporation once offered a neat line of artillery and other weapons of war to all-comers. But it shut down its gun factory some years ago. The much- advertised Du Ponts used to make explosives for sale to any- body ; now they sell only to the United States Government. Very similar declines have taken place all along the line, and so only in aircraft are the missions able to meet their war-weapons needs.
The results conflict with American policy. The Nether- lands, for instance, intended to use their anti-aircraft guns to protect their neutrality, mainly, of course, against the Nazis. They cannot get the guns they want in Europe because factories are years behind their orders, and they cannot get them in the United States. Yet nothing would please the United States more than to help arm this plucky neutral. On the other hand, Germany, Japan, Italy or any other aggressor can get all he wants in petrol, oil, cotton, copper, steel, scrap- iron, and scores of other essential war commodities. They are buying these commodities daily and in considerable volume. Our new friend, Brazil, wants warships for its navy, which would be a useful implementation for the Monroe Doctrine. But even if Brazil could buy hulls and machinery here, it would have to get its guns and turrets elsewhere. The Soviet delegation also wants ships, but cannot get quite what is needed. Meantime, the totalitarians—and all- corners—are stocking up with American war-commodities.
This anomaly is entirely typical of American foreign policy. And so is the resurgence of dollar dipIomacy in the hands of liberals who attacked it bitterly 15 and 20 years ago. But despite such contradictions, American diplomacy is more cheerful. A factor in producing the new attitude was the election of Cardinal Pacelli as Pope. Pius XII made a rather triumphal tour here in 1936, visited at some length President Roosevelt and other eminent Americans, and is the first Pontiff, as we whimsically say here, ever to address the National Press Club. President Roosevelt has been keenly aware for some time of the potentialities of the Vatican in the present balance of power, and has been en- couraging a firmer line through various methods. The election of Cardinal Pacelli was eminently satisfactory to him, therefore, and increases the chances of further co- operation.
Likewise, the gradual conclusion of the Spanish drama removes much internal tension here, for the American Roman Catholics were for the most part battling strenuously with liberally-inclined Americans over the Spanish issue, and the conflict was getting more serious daily. The election of Cardinal Pacelli has helped in this regard, too.
Contributing further to returning confidence here were the naval manoeuvres in the Caribbean. Though the President's flagship was theoretically sunk, approaching St. Thomas, with all hands aboard, the defending fleet was able to prevent the invaders from breaking all the way through their lines and getting to the Panama Canal. The Administration now is starting plans for the construction of a third set of locks in the canal, probably to permit passage of 4o,00o-ton ships. The mobility of American defence is further increased thereby.
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