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Secretary of State of the United States

It is my purpose to present to you some aspects of the work of the Department of State. In view of the nature and scope of the discussions at this meeting I do not need to emphasize the extraordinary importance of our international relations at this time. But I feel that such discussions, despite their wide range, would be inadequate unless they also served to bring about a better understanding on the part of the business men of the country of the essential instrumentality through which intercourse with foreign governments is conducted.

It is impossible to have a correct appreciation of the most important activities of the Department of State without taking account of its constitutional background. The President, with the advice and consent of the Senate, has the power to make treaties and to appoint ambassadors and other public ministers and consuls. To the President is confided the authority to receive ambassadors and other public ministers. By virtue of this constitutional relation to the conduct of foreign affairs, the correspondence and negotiations with foreign powers are exclusively in the hands of the President. At the outset, Mr. Jefferson, the first Secretary of State, advised President Washington: "The transaction of business with foreign nations is Executive altogether. It belongs then to the Head of that Department, except as to such portions of it as are especially submitted to the Senate.” The power of the President to receive ambassadors and ministers vests in him exclusively the authority to determine what governments are entitled to recognition, and the accredited medium for friendly intercourse. That high prerogative was not for his aggrandizement but because the vital interests of the nation were believed to demand this concentration of power. It was not deemed advisable to entrust it to the Congress and for its exercise the President is accountable "only to his country and his own conscience." The Congress, of course, controls the purse, but in the case of the constitutional authority of the Executive, as in that of the Supreme Court exercising the judicial power, the duty of the Congress to furnish the money needed for the essential equipment to exercise the authority has always been recognized. The Department of State is the instrumentality through which

1 Address before the Chamber of Commerce of the United States at Convention held in Washington, D. C., on Thursday evening, May 18, 1922, at 8.30 o'clock.

the President gives his instructions to public ministers and consuls and conducts his negotiations with representatives of foreign governments, and thus stands in a peculiar relation to the Executive in the performance of his constitutional function.

In considering the relation of our diplomacy to the business interests of the country, it should always be remembered that the Department which deals with our foreign relations is the Department of Peace. The resources of negotiation, of reason and persuasion are within its control. The very foundation of all business security, in an important sense, is within the keeping of the Foreign Offices of Governments, as to them-as the agencies of peoples—must be entrusted the practical processes by which nations may adjust their mutual interests, settle their disputes and prevent the frightful losses and dislocations of war. I have always advocated the judicial settlement of all international disputes which can be regarded as having a justiciable character, and have favored the development of institutions for that purpose. But with due recognition of the importance of this means of settlement, it must be borne in mind that the most serious international controversies, and this is especially true at this time, are not of a legalistic nature and must be settled, if they are settled at all, by negotiations and agreements. They lie outside the application of defined juristic principles and the more unstable we find world conditions to be, the greater the necessity of the efficient operations of diplomacy and of the adequate organization and support of the Peace Department of our Government. The alternative of friendly settlement is resort to coercion, and, if you wish peace, you must pursue the methods of friendly intercourse between Governments and recognize whatever is essentially involved in these methods. There is no

other way

A fundamental question at this time is the preservation of the essential bases of international intercourse through the demand for the recognition of valid titles acquired in accordance with existing law and for the maintenance of the sanctity of contracts and of adequate means of enforcing them. Intercourse, from the standpoint of business, consists in the making of contracts and the acquisition of property rights. Nations may adopt what policies they please for the future conduct of their local affairs, and if these policies are not enlightened, the result will inevitably be that production will languish and trade will shrivel up, and they will look in vain for security and confidence: still they will be within their rights in determining their future policy in local matters. But if they seek international intercourse, they must perform international obligations. When they have invited intercourse with other nations, have established their laws under which contracts have been made and property rights validly acquired, they put themselves outside the pale of international intercourse if they enter upon a policy of confiscation. International relations proceed upon the postulates of international morality, and the most important principle to be maintained at this time with respect to international relations is that no State is entitled to a place within the family of nations if it destroys the foundation of honorable intercourse by resort to confiscation and repudiation, and fails to maintain an adequate system of government through which valid rights and valid engagements are recognized and enforced. This is in the obvious interest of business, and this is merely a way of saying that this course is vital to the prosperity of all peoples for the activities of business are those of production and exchange upon which the welfare of peoples inevitably depend. If profits are anticipated through a departure from this clear path of honorable dealing, they will be found to be illusory.

At this time we also have occasion to deal with the enlarging of the opportunities for industry and commerce by the recognition and extension of the policy of the “Open-Door". At the recent Conference held in Washington the participating Powers succeeded in taking what has been the subject of general diplomatic phrases in relation to China and putting it with more definite explication in the precise form of a treaty engagement. Thus they have agreed that they will not seek nor support their respective nationals in seeking (a) “any arrangement which might purport to establish in favor of their interests any general superiority of rights with respect to commercial or economic development in any designated region of China”, or (b) “any such monopoly or preference as would deprive the nationals of any other Power of the right of undertaking any legitimate trade or industry in China, or of participating with the Chinese Government, or with any local authority, in any category of public enterprise, or which by reason of its scope, duration or geographical extent is calculated to frustrate the practical application of the principle of equal opportunity."

This Government has been insisting, and I am glad to say with a gratifying measure of success, upon the application of this principle to the territories which recently have become the subject of the novel arrangement of mandates, and we have received important assurances with respect to equality of commercial opportunity in these regions.

In giving appropriate diplomatic support to American enterprise, our Government does not, of course, attempt to secure contracts for its nationals or to institute particular undertakings. I assume that no one could wish the Government to be so involved. Its object is to keep open the course of fair and equal opportunity. Hence, it is a vital principle that it must act with absolute impartiality with respect to American business interests which may happen to be in competition. It does not attempt to favor one at the expense of another, but to maintain such policies with respect to international intercourse as will give all a fair chance.

And, in this connection, permit me to say a word to the effect that the relations between the Department of State and business men involve a certain measure of reciprocity. It is not only important that there should be an alert and efficient organization of this branch of the government, but it is also important that it should always be remembered that good faith and cordial feeling are of the utmost importance in international affairs and that nothing in diplomatic intercourse can atone for the conduct of disreputable business agents and speculators who do not carry into their undertakings abroad those methods of honorable dealing which must always be assumed in giving diplomatic support. This Government is not engaged in endeavoring to promote the opportunities of chicanery, and business interests in their dealings abroad are under a patriotic obligation to maintain the prestige of their country.

Aside from these observations as to fundamental principle, I could easily enumerate a host of special instances in which the activities of the Department are now engaged of vast importance to the business community. such a narration would not aid in the safeguarding of the particular business interests concerned and at best could serve to emphasize by particularization the general observations I am making as to the importance of the adequate organization of the Department.

The organization of the conduct of foreign affairs implies the mechanism (1) for obtaining complete and accurate information, and (2) for constant and direct contact with all those concerned; and the operation of this mechanism must be dominated (3) by an American policy conceived and defined with an accurate appreciation of all American interests involved.

This manifestly requires unification of effort. The function of directing intercourse with foreign governments in the nature of things cannot be divided. There must be unity in the formulation and direction of policy and unity in its execution. Manifestly, you cannot deal with different governments through different instrumentalities; and you cannot deal with the same government through independent agencies, or you will work to cross purposes. However important and helpful it may be, and I agree that it is most important and helpful to have specialized efforts to promote trade, to secure technical assistance, to gather and disseminate in the most expert manner all needed information, to organize the facilities of commerce and provide for the manifold exigencies of our merchants-and I am as anxious as anyone to see this provision generously made-still it remains so clearly true as in my judgment to be beyond controversy that when you come to the point of dealing with governments you must have a single governmental agency of international intercourse or you will have confusion and make definite and consistent policy and effective governmental action impossible. It is especially important to recognize this fact at this time, when our international problems tend to become mainly economic problems. There is the more imperative necessity of adequately organizing international intercourse. The effective intertwining of political and economic problems imposes a heavier strain upon the machinery and requires suitable readjustment, but the exigency requiring a unified system of contact with foreign powers remains exactly the same. In truth, many of our economic problems

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