In the field of commerce we have undertaken to encourage a more reasonable interchange of the world's goods. In the field of international finance we have, so far as we are concerned, put an end to "dollar diplomacy", money grabbing, and speculation for the benefit of the powerful and rich, at the expense of the small and the poor. As a consistent part of a clear policy, the United States is following a twofold neutrality toward any and all nations which engage in wars not of immediate concern to the Americas: First, we decline to encourage the prosecution of war by permitting belligerents to obtain arms, ammunition, or implements of war from the United States; second, we seek to discourage the use by belligerent nations of any and all American products calculated to facilitate the prosecution of a war in quantities over and above our normal exports to them in time of peace.26

I trust that these objectives, thus clearly and unequivocally stated, will be carried forward by cooperation between this Congress and the President.

I realize that I have emphasized to you the gravity of the situation which confronts the people of the world. This emphasis is justified because of its importance to civilization and therefore to the United States. Peace is jeopardized by the few and not by the many. Peace is threatened by those who seek selfish power. The world has witnessed similar eras-as in the days when petty kings and feudal barons were changing the map of Europe every fortnight, or when great emperors and great kings were engaged in a mad scramble for colonial empire.

We hope that we are not again at the threshold of such an era. But if face it we must, then the United States and the rest of the Americas can play but one role: through a well-ordered neutrality, to do naught to encourage the contest; through adequate defense, to save ourselves from embroilment and attack; and through example and all legitimate encouragement and assistance, to persuade other nations to return to the ways of peace and good will.

20 In line with the policy enunciated in this sentence a "neutrality" bill containing such a provision was introduced in Congress in January 1936. This proposal was supported by Secretary Hull in testimony before the Senate Committee on Foreign Relations. (Neutrality, Hearings before the Committee on Foreign Relations, United States Senate, 74th Cong., 2d sess., on S. 3474, January 19 to February 5, 1936.)

611.41131/140

65

Memorandum by the Secretary of State Regarding a Conversation With the British Ambassador (Lindsay)

[Extract]

[WASHINGTON,] January 22, 1936.

I emphasized the view that . . . the most incomprehensible circumstance in the whole modern world is the ability of dictators, overnight almost, to stand 35 million Italians and 65 million Germans on their heads and so dominate their mental processes that they arise the next morning and insist on being sent to the first-line trenches without delay.

C[ORDELL] H[ULL]

66

740.00/41

The Minister in Switzerland (Wilson) to the Secretary of State

DEAR MR. SECRETARY:

[Extracts]

BERN, January 27, 1936.

The Council session has reached a satisfactory termination with creditable work done in certain items of the agenda. However, the most interesting feature of the session was the revelation of an evolution in the concern with which different questions are regarded. Three months ago the thoughts of the statesmen of Europe were concentrated on Africa; the Abyssinian question was paramount. A month ago a phase of that question, namely the military situation in the Eastern Mediterranean, was the focus of all thought. Today a further evolution has fixed the minds of these men on the intensity of the rearmament of Germany, leading to the realization of the implications throughout the whole of Europe of the return of Germany as a first class military power.

Representations of Great Britain have brought about undertakings in respect to assistance from the Mediterranean Powers which, together with Britain's vigorous military effort, have taken the edge off the apprehension with which a number of Britishers regarded the threat to their strategic position in Egypt and the possibility of an assault by Mussolini. They believe now that time is working for

them. They believe that however stout an effort the Italians are making from a military point of view, nevertheless this effort is exceedingly costly, and that the sanctions already in effect are rapidly curtailing Italy's resources and ability to maintain the present effort. Hence they can turn their minds to the question of German rearmament, a question which causes them more profound concern-if not more immediate concern-than a threat by Mussolini.

I cannot conceal from myself the belief that the actual application of an embargo on petroleum by the League States will be dependent largely upon the decision of the United States Congress in respect to the Neutrality legislation. I hope that no step will be taken here which will make the League's action appear to be openly dependent upon ours. A number of the men influential in this matter are convinced that it would be a mistake to do so. Nevertheless, I doubt whether the embargo will be applied by the League States unless they feel that in some way the supply from the United States will not replace that which they cut off. The reverse also appears true. If the United States curtails its shipments, the States of the League will feel it not only expedient, but morally imperative to put on the embargo. Since sending you my cables Nos. 363 and 364, Vasconcellos, the President of the Committee of Eighteen, has come to see me. He believes that while Eden's methods may seem less aggressive, his determination in respect to sanctions has not diminished. I need not recapitulate the arguments for the necessity of the establishment of the oil sanction. Suffice it to say that in the minds of most of the Delegates, it is the test of strength between the League of Nations and Mussolini and must be established as a precedent for use against Germany, if necessity arises.

The extension of the idea of collectivity into a series of military guarantees against the risk involved in the application of sanctions is the most recent step in increasing pressure against the aggressor. It is of the highest importance and cannot fail profoundly to affect the future relationships and political development of Europe. You will remember that Aloisi termed such action a military alliance against Italy in the Mediterranean, and deplored the fact that the League of Nations could be led by England to assume this shape. Germans who have talked to me during this session take an analogous position. They point out that nobody hides the fact that the present action against Italy is in the nature of a rehearsal for action against Germany. They feel convinced that once it has been proved that the League can take the form of a military alliance, the threat of that alliance will be used as a means of coercion against Germany, after this Italian ques

tion is liquidated. They recognize that though the phrases used are against Italy, the instrument itself is being forged for eventual use against their own country. Hence the Italians and the Germans are inspired by like apprehension and by like mistrust of what they both deem to be a form of coercion. This in contrast to the League conception, namely, that the military agreements are precautionary only against possible Italian retaliation.

As to whether this manifestation of force in regard to Italy, together with the possibility of such a manifestation in respect to Germany will be effective in bringing Germany to a mood of negotiation is a question of psychological appreciation. Certainly Paul Scheffer of the BERLINER TAGEBLATT, a believer in international co-operative action, makes no secret of his conviction that what he calls a threat of force will have results on Germany completely the opposite of what it is designed to effect. The overwhelming opinion of the representatives of other States here is, however, to the contrary and we can only hope that the future will show that they are right.

There is indisputable evidence of the magnitude and intensity of the German effort in military preparation. There may be question as to the exact stage of the development of this preparation but there is no doubt that it is on a scale to cause alarm and that it proceeds with a rapidity which none of the democratic States can equal. The ability of a dictator to devote practically the entire resources of his country to armament cannot be matched by democratic countries in times of peace. Rightly or wrongly, the idea is becoming prevalent that German rearmament on this scale and in this tempo can be designed only for the purposes of aggression. I believe that in making this statement I am reflecting the profound conviction of most of the statesmen on this Continent.

It seems to be generally believed that there will be no German aggression towards the west. Germany will presumably make every effort not to give Great Britain apprehension as to the Low Countries. Her present policy is predicated on not giving offense to Great Britain. Many French themselves appear to believe that they need fear no attack on their eastern frontier or through Belgium and Holland. If Germany does contemplate aggression, it is generally expected that it will be to the east or down the Danube.

I have gone into this speculation, Mr. Secretary, with no desire to be alarming but because it is a reflection of the type of thought that

is occupying the minds of those on the Council. It is the type of thought that has led to a feeling of apprehension which has brought about the conviction that only by an agreement with Germany, both of a political nature and for the limitation of armaments, can a cataclysm be avoided. It is a time in which wisdom and statesmanship are needed on this Continent as never since the end of the War. I am, my dear Mr. Secretary,

The agreement by the Governments of Bolivia and Paraguay upon the peace protocols recently negotiated at Buenos Aires has afforded the Government and people of the United States the deepest gratification, since it has led them to hope that there is now every prospect of a permanent and equitable solution of this tragic controversy, which has continued for so long a period; which has caused the sacrifice of so many lives; and which has placed so crushing a burden of expenditure upon the citizens of the two belligerent nations. I know well with what intimate concern the Government and people of Argentina have followed the course of these hostilities, and their happiness at the termination of the conflict is fully shared by the Government and people of the United States.

I cherish the sincere conviction that the moment has now arrived when the American Republics, through their designated representatives seated at a common council table, should seize this altogether favorable opportunity to consider their joint responsibility and their common need of rendering less likely in the future the outbreak or the continuation of hostilities between them, and by so doing, serve in an eminently practical manner the cause of permanent peace on this Western Continent. If the tragedy of the Chaco can be consid

"Practically identical letters were sent at the same time to the Presidents of the other American republics.