WASHINGTON, D. C. ,
No, 772 September 3rd, 19W)
My Lord,
I have the honour with reference to Your
Lordship's circular despatch L 685l/8U3^i05 of
November J+th, 1939, to transmit to you herewith a
review of the chief political events of 1939 in the
United States.    This report has "been mainly compiled
by Mr. Bramwell.
2. I regret that pressure of work has made it
impossible to forward this report earlier.
I have the honour to "be,
with the highest respect,
My Lord,
Your Lordship's most obedient,
humble servant,
(3GU) LOTHIAN
The Right Honourable
The Viscount Halifax, K.G.,
etc.. etc., etc.
L:PRHM:ACEM:CB:DH
i
1.    Internal Affairs*
The legislative achievement of the first
session of the 76th Congress was as meagre as its
proceedings were undistinguished.   The preoccupation
of both Houses with the war threat overseas aggravated
instead of curbing the usual tendency of a pre-election
year to play politics.   The Opposition, considerably
strengthened by the 1938 elections, and reinforced
with Democrats disgruntled by the President's attempted
"purges" of the previous autumn, remained obstinately
suspicious of the President.   Added to a strong desire
for economy in public spending, was the fear lest
"that man in the white House" should exploit, the
international situation in order to perpetuate the more
objectionable features of the New Deal and himself in
office for a third term.    In the Democratic Party,
the split between New Dealers and anti-New Dealers
refused to heal, the latter being just as strongly
opposed to a third term and suspecting the President
to boot of political flirtation with the radical
elements in the country.
The President for his part tried to avoid
controversial legislation so that Congress could
concentrate on defence and amendment of the Neutrality
Act, but he got off on the wrong foot with two trivial
incidents, one concerning the "secret" 3ale of aircraft
to the French and the other the Senate's rights of
patronage.   He failed to obtain amendment of the Labour
Relations and the Wages and Hours Acts, while two
"pump-priming" measures, the Works Financing and the
Slum Clearance Bills were shelved.    The Relief
Appropriations Bill was passed but only with substantial
cuts from the amounts asked and in the teeth of strong
Administration pressure to restore then.   Worst of all
the President's failure to secure amendment of the
Neutrality Act to lift the embargo on the sale of arms
to belligerents, (a subject which is dealt with
separately in Section 2 below) showed how seriously
he had lost control of Congress.
On the credit side, however, Mr. Roosevelt
could reckon the passage, with virtual unanimity, of
the next most important desideratum, a record peace-time
appropriation for national defence.    He also secured
passage of a Government Reorganisation Bill aimed at
"streamlining" the civil service and of the Revenue
Bill, whilst the Hatch Bill to exclude Federal employees
from political activities and certain amendments to the
Social Security Act were more or less in accordance
with his wishes.   Presidential appointments of Mr.
Harry Hopkins, formerly V/orks Programme Administrator,
to be Secretary of Commerce, of Mr. Frank f'urphy,
formerly Governor of Michigan, to be Attorney General,
of Mr. Felix Frankfurter and Mr. W. 0. Douglas to the
Supreme Court were duly confirmed by the Senate though
not without criticism, particularly of the first two.
No/
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No question of importance other than
neutrality was debated during the «traordi»ary „1w
session called after the outbreak of war and,^ignoring
the President's invitation to remain on hand in
Washington for consultation, the Congressional J*™"
preferred to disperse afterwards to . 00X1S5™ *
the lull in the European hostilities predisposing them
to concentrate on party politics.
Labour c ontinued divided and repeated
admonitions from the President to the American Federation
of Labor and the Congress of Industrial Organisations
to compromise their rivalry had no apparent effect.
Labour unrest remained endemic on the West Coast and
the activities of the Australian agitator Harry Bridges
provoked the usual insistent though abortive demands
for his deportation extending even to a threat to
impeach the Secretary of Labor for failure to intervene.
There were several more or less serious strikes
notably in the coal mining and autmobile industries.
2.   Neutrality Legislation.
It was clear as soon as Congress met in
January that one of the main questions with which it
would have to deal was the amendment of the existing
Neutrality Act.    The principal provisions of this
legislation were that on the outbreak of a declared war
the President must issue a proclamation naming the
belligerents and thereafter the supply of any arms,
ammunition or implements of war to such belligerents
from the United States was forbidden. Furthermore
the President had the power to declare that certain
other materials could only be supplied to belligerents
on the "cash and carry" system - i.e. in non-American
ships and after all American interest in the title
had been transferred;    this last provision was due to
expire on May 1st, and did so.
The Administration and the President made
no secret of the fact that tiiey wished to see the Act
amended and in particular the mandatory embargo on
the export of war material repealed.   There was a
large body of opinion in the country which shared
these views, feeling that the embargo would prejudice
the non-dictator states and that it was in the
interest of the United States to remove this handicap
as soon as possible in view of the threatening
European situation.    On the other hand, considerable
sections of opinion, more especially in Congress and
particularly in the Senate, were opposed to the repeal
of the embargo, partly from an ingrained spirit of
isolationism, partly from apprehension lest the
President might lead the country into war and partly
from purely political motives and hostility to the
President.   It soon became apparent that any attempt to
secure the amendment of the Act would meet with much
opposition in Congress.
In the mistaken belief that feeling in
Congress would improve as the session wore on and
perhaps in the hopes that the growing tension in
Europe/
Europe would convince Congress of the necessity of
altering the Act, the Administration delayed over long
in starting its campaign for the repeal of the embargo.
It was not until March 20th that Senator Pittman, the
Chairman of the Foreign Relations Committee, tabled a
bill, which was understood to have the support of the
Administration, and the Committee had still reached no
conclusion at the end of June,
In the meantime the House of Representatives
losing patience with the Senate had passed a bill of their
own, "but their uncertain debate and the weakness of
their compromise bill naturally encouraged the
opposition in the Senate.    On July 11th the Senate
Committee decided by 12 votes to 11 to defer
consideration of any proposals for the amendment of
the Neutrality Act until the next session of Congress.
A meeting on July 18th between the President and the
majority and minority leaders in the Senate convinced
Mr. Roosevelt that in the circumstances then
prevailing there was no chance of obtaining a majority
for his proposals in the Senate, and he decided to
take no further action for the time being.
On the outbreak of war the President
issued the prescribed proclamations and embargoes,
and then called congress into special session for
September 21st.    In his opening message Mr. Roosevelt
made it clear that he considered it desirable that the
Neutrality legislation should be amended and the
embargo repealed as soon as possible.   Senator Pittman's
bill embodying the Administration's proposals came
before the Senate on October 2nd.   The debate opened
on a high level but steadily deteriorated and most
speeches were only equalled in their dullness by their
length.   It nas not until October 27th that the Bill,
amended in various directions but still including the
all-important repeal of the arms embargo, passed the
Senate.   Proceedings in the House were much more rapid
and after a short debate the Bill was passed.    It was
officially approved and signed by the President on
November kth.   The debate had showed three things -
a wide sympathy with the Allies, an unanimous
determination that the United States must be kept out
of war, and a readiness to impose appreciable burdens
on American interests in order to minimise the risk
of "Lusitania" incidents.
The new Act repealed the embargo on the
export of arms;   reimposed the "cash and carry"
principle and made it applicable to all materials,
but exempted certain "safe" belligerent areas from
the operat on of this clause;    empowered the President
to define "combat areas" into which American ships and
citizens might not enter;    repeated the earlier
prohibition on Americans travelling on belligerent
ships and on American ships being armed; prohibited,
as before, loans to belligerent governments and the
collection of funds in the United States for such
governments except for relief purposes;    forbade, as
before, the use of American ports as supplyteses by
belligerents;   enabled the President to ban belligerent
submarines and armed merchant vessels from American
ports;    and continued the operations of the National
munitions Control Board.
3./
3. Europe
The impending catastrophe in Europe could
not fail powerfully to preoccupy the minus of most
Americans from the President downwards.   But allied to
an almost unanimous detestation of the policies of the
European dictators was a no less solid determination
that America should not be dragged into any war. The
German annexation of Bohemia and MoraVia in March and
the Italian invasion of Albania on Good Friday met
with a f;;ll measure of condemnation.   But in the
existing state of public opinion and despite the
President's efforts to educate it, the only action
open to the United States Government was in the former
case to withhold recognition from the German protectorate
and to apply certain economic sanctions, while in the
latter case, the Secretary of State could only issue a
statement condeiiaiing the destruction of confidence and
the undermining of economic stability to the detriment
of American welfare.    The President also addressed
messages on the 15th April to Hitler and Mussolini,
inviting them to pledge themselves to keep the peace
for ten years.    Similarly, when war became imminent in
September over the Danzig crisis, the President could
only repeat his performance of twelve months previously
and send messages urging reconciliation to the Polish
President and to Herr Hitler, to the King of Italy
inviting his intercession for peace and to the Kin;.; of
the Belgians, associating himself with the latter*s
peace plea on behalf of the Oslo powers.   Opinion was
unanimous in condemning Germany for the invasion of
Poland and there was stupefaction at the perfidy of
the Hitler-Stalin pact, but with the neutrality debate
in progress the isolationist elements were inclined
to accuse Great Britain and Prance of abandoning the
Poles to their fate and generally to cast doubt on
their motives in waging war at all.    In the same way
there was a tendency to discount the otherwise strong
emotions aroused by events, such as the sinking of the
"Athenia", and the German seizure of the American
freighter "City of Flint" and although the Russian
invasion of Finland provoked an intense emotional
outburst and an imperious demand to go to the little
country's assistance, in the end very little practical
aid was forthcoming except from private sources while
Congress havered and procrastinated.   The President,
however, did intercede at Moscow to restrain the
aggression and the good offices of the United States
were offered for reaching a settlement though
expressly not for mediation or arbitration. The
President also sent a message of support to the
Conference of Nordic States at Stockholm.
Although with no intention of lending
countenance to a compromise peace on Hitler's terms
yet the President took a step at the end of the year
to keep open a channel of mediation between the Allies
and Germany when he appointed Mr. Llyron C. Taylor as
.his special personal representative at the Holy See.
Great Britain,
His Majesty s Government continued to keep
the President and the State Department informed of
their policies with regard to international
developments and although the United States Ambassador
in London may possibly have maintained an all too
consistently pessimistic attitude in reporting on
them to Washington, mutual confidence remained
unimpaired and of the closest.   In "measures short of
war" Kis Majesty's Government could in fact count on
the fullest sympathy and support from the Administration,
Where public opinion was concerned there persisted
suspicion that so long as Mr. Chamberlain remained Prime
Minister, the discredited policy of appeasement would
prevail.    The a:oiouncement in April of the British
undertaking to Poland was welcomed therefore with
relief and no credence was of course given to German
claims of encirclement.   The same to a great extent
applied to the guarantees to Roumania and Greece and
to the abortive negotiations at .'"oscow.    The Royal
Air Force flights to France, the decision to grant
credits to the guaranteed states, the calling up of
naval reserves, the supplementary advance estimates,
the introduction of conscription and the creation of
the Ministry of Information were all in their several
ways looked upon as proving that His Majesty's
Government's strength and determination were steadily
growing, and that Britain at last meant business with
Hitler,   There was no doubt relief when the outbreak of
war failed to bring the anticipated immediate
bombardment of London but on the other hand, the R,A,F.
raids and the comparative inactivity in the early days
on the Western front provoked impatience and renewed
the feeling that this was a "phoney war" and that
Britain even now wns not in earnest.   However, the
naval victory over the "Graf Spee" served to redress
the balance at the year's close.
Amid so many anxieties the visit of The
King and Queen in June to the United States at the
President's invitation was a tremendous personal
success for Their Majesties and the feeling was that
it would have a solid influence towards a good
understanding on both sides of the Atlantic,    Only a
few taunts of "British propaganda" were levelled at
this first visit of a British King and Queen to
American soil and in truth the impression created was
deep and extended to every stratum of the population.
The British Pavilion at the New York
World's Fair contributed its own modest share to
Anglo-American goodwill and the same could be said,
for example, of the act whereby, after the Fair's
close and to avoid the perils of a wartime ocean
crossing, the original Lincoln Magna Carta exhibited
in the Pavilion on loan, was formally handed over by
Hi8 Majesty's Ambassador for temporary safe-keeping
in the Library of Congress,
The British White Paper on Palestine in
May was bitterly attacked by American tews and
protests poured into the State Department and His
Majesty's Embassy,   But the country as a whole
accepted it with indifference.
The disputed ownership of certain Pacific
islands and the closely related question of trans-
Pacific aviation routes continued to engage the rather
leisurely attention of "both Governments throughout the
year, although the United States Government forged ahea
with its preparations for resuming the Pan-American
Airways service to Australia and New Zealand.
Discussion was mostly inter-depertmental on both sides;
but such few Anglo-American exchanges as took place were
perfectly amicable if a trifle suspicious in undertone.
Each Government was in fact concerned to discover not
merely what the other really wanted but what it really
wanted itself.    Some doubt persisted on both scores at the
end of the year:   but the status of Canton and .^nderbury
Islands had at any rate been adequately defined by the
notes exchanged on April 6th between the Secretary of
State and His Majesty's Ambassador.
5»   Latin America.
Following the paper success of the Lima
Panr-American Conference in December, 1938, the United
State.. Government showed much activity in 1939 directed
towards strengthening by commercial and financial means
its position in Latin America.   A secondary objective
was to stem the inroads of totalitarian economic and
political ideas.   A series of loans and credits to
Latin American countries were successfully negotiated
by the Treasury and the Export-Import Bank and it was
not until the breakdown of the Argentine and Uruguayan
commercial negotiations in January 19U0 that any
visible setback occurred.
The first of the series of visitors was
Senhor Oswaldo Aranha, Foreign Minister of Brazil, who
remained two months in Washington and on the 9th Larch
signed agreements whereby Brazil received credits up to
,2!l9,20C,000 in order to liquidate short-term United
States dollur de^ts;    a promise, subject to
Congressional approval, of a loan of ^50 millions gold
to assist in the creation of a Central Reserve Bank;
and the promise of other technical and financial
assistance designed to facilitate the exchange of goods
between the two countries.
The President of Nicaragua visited Washington
from Hay 1st to May 224-th and negotiated an agreement
for United States financial and technical assistance to
Nicaragua*   Likewise, in June, a similar agreement
on a smaller scale was reached with Paraguay.   Loans to
Venezuela, Uruguay and Chile were also canvassed during
the year but Congress opposed further loans with so
many South American Government bonds in default and
arrangements were not concluded by the end of the year.
The President of Haiti was in Washington for
some time in December and although he brought with him
Haitian experts on agriculture, medicine and highway-
construction there was no sign that he had obt: ined the
assistance in these fields which he was believed to
be seeking.
Ho progress was made during the year towards
settlement of the oil controversy with the Mexican
Government.
The/
The outbreak of war gave the United States
Government an opportunity, which they were quick to
seize, of further consolidating inter-Americanrelations.
Under the Buenos Aires ana Lima agreements, the American
Foreign ministers met at Panama from September 23rd to
October 3rd and there adopted a series of measures
designed to "keep war out of the Western Hemisphere"•
The chief of these was the declaration of a "safety
"belt", 300 titles or more in width, round the whole
continent south of Canada, in which belligerent acts
were bailed "as of inherent right".   The idea dated
from the first world war but the sponsor who brought
it into being in 1939 was Mr. Sumner Welles, "Violated"
by the sinking of the "Admiral Graf Spee" off Uruguay
in Lecei.ber it led to a collective protest addressed
to Great Britain, France and Germany.
The meeting at Panama resulted also in the
formation of two further standing Committees designed
to implement its main objective - the Inter-American
Neutrality Committ' e, of Kio de Janeiro, and the
Inter-American Financial and Economic Advisory
Committee, of Washington.   The latter r.tet on Hove; ber
lfjth and set about elaborating plans for an Inter-
American Bank and other financial matters.
Simultaneously at Guatemala City there sat the F rst
Meeting of Finance Ministers of the American Republics
pursuant to resolution LXI7 of the Lima Conference of
1938.
6.   Far Kast
The United States remained determined as
ever not to abandon China to Japan nor to sign away
any American rights in the Far Kast unless forced to
do so.   There were the usual insistence on observance
by Japan of treaties and the "open door" and further
protests against the Japanese bombing of open towns
in China, interference with American trade, damage
to American school and mission property and
molestation of Anerican citizens.   Looking beyond
specific injuries,  the United States Government also
showed signs of alarm at the growing disturbance
of the balance of po.er in the Far Kast, resulting
from British and to a less extent French preoccupation
in Europe.    By way of a warning to Tokyo and taking
the advantage of a Republican resolution to the same
effect before the Senate, the Adninistration took
the fetern course of denouncing on July 26th the
Commercial Treaty with Japan of 1911•   Againin a
speech at Tokyo in October, the United States \
Ambassador strongly admonished the Japanese
Government to cease interference with American rights
and in Ho ember the Acting Secretary of State made a
statement to the press reaffirming the American
position in regard to China.   The reaction of the
State department to the Japanese "friendly suggestion"
in August that British troops be withdrawn from
Shanghai, was both vigorous and public and there is no
doubt that Mr. Hull timed the remarks he then made to
the Japanese Ambassador in such a way as to help His
Majesty's frovernment.   The application in December of
the "moral embargo" to Japan together with Russia was
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a further proof of United States determination to
stand pat on this attitude.   In China itself, the
United States withheld recognition from the puppet
government of Wang Chi ng-Wei while continuing to
bolster up the resistance of Chang Kai-shek with
credits and supplies.   By way of a gesture the
United States fleet was moved back into the Pacific
at the end of the summer with somewhat dramatic
suddenness.   The end of the year found the Japanese
Government apparently nervous and angling to
negotiate a new commercial treaty.   But no
negotiations materialized and the State Department
showed every disposition to let matters drift.
In the Philippines there were no new
developments of importance to report and President
Quezon seemed anxious to retain the American
connection with the Islands.   The United States
Congress, however, was not inclined to encourage
this trend and refused funds for "beginning to
make the Island of Guam an advanced naval base.