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No. 255 £
My Lord,
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BRITISH EMBASSY*
J WASHINOTOK* D. C. .
March 2nd, 1939
The
Since Mr. Mallet addressed to you his despatch
No* 214 £ of February 16th the President's absence on the
naval manoeuvres has brought about somewhat of a lull in
political controversy.   As definite contributions towards
a "business appeasement" policy there have recently been a
series of Important statements by members of the
Administration*   The recent halt in recovery is causing a
certain amount of anxiety to those who study the electoral
prospeets of the Democratic Party for 1940 and it is
being said that the new policy of the Administration will
he to 11 take business for a petting party" •   The President
himself before embarking declared that business need have
nothing to fear from the Administration's objectives*
With the recent agreement between the Tennessee Valley
Authority and the Commonwealth and Southern Corporation
evidently in mind, he promised the utility companies that
there would be no further expansion of federally
subsidised power projects*   Sven more attractive to the
general public was his assurance that there would be no
higher taxes*   The Secretary of the Treasury a few days
later at his weekly press conference confirmed that he
was not counting on any new taxes this year and
emphasised the need for Congress to examine what taxes if
any/
Right Honourable
The Viscount Halifax. K*G.,
Etc.•        etc.9 etc.
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any were holding businessmen back.    "The "businessman",
he said, "should understand that the Administration wants
him to go ahead, and legislation should be of such a
nature that it will not be a deterrent, so that the
businessman can make a profit"•
2. Even more important was a speech delivered in
leva by the new Secretary of Commerce, Mr, Hopkins, who
for the last two months has been quietly studying the
problems of Ms new office and discussing them with
businessmen of all descriptions.   Mr. Hopkins1 past
reeord did not predispose businessmen to find him as
reasonable as he now would appear to be.   In his Iowa
speech he assured his audience that the emphasis of the
Administration had shifted from reform to recovery and
that they were determined to promote that recovery as
vigorously as they could, but that the confidence of
business was required for this.   His speech may be
summarized under the following headings. Spending.
Business must be properly sustained but there are periods
when only government .spending makes that possible. This
does not entail a permanently unbalanced budget because
when once recovery is achieved higher revenues will make
possible both a balanced budget and debt retirement.
Taxes.   Mr. Hopkins was opposed to any general Increase
of taxation and to any taxes which might restrict the
flow of capital.   Utilities.   Referring to the reeent
Tennessee Valley agreement he claimed that this ended the
period of great litigation.   Cheap electricity should be
of course available in every home, but the rules under
which it should be generated and distributed were
matters which could surely be resolved.   The Government
had given no indication that it wished to own and operate

all utilities in the country.   On the contrary it had
now ghown its good will and made a gener,ous peace with
the companies which, ought to make it possible for private
investment in the industry to he resumed*   Such investment
should bring greater opportunities for employment and
profits.   Labour*   Expressing his "belief in labour unions
Mr* Hopkins asserted that they were necessary to safeguard
the workers from unfair treatment, hut urged upon labour
the need for tolerance and fairness in reaching
agreements with the employers*   The employers should help
to find a way of answering the problems arising out of
industrial relations*   Mr* Hopkins also urged the need
for ending the division among the trade union
organisations*   Agriculture*   Ho simple or final
solution had yet been found but there had been a great
improvement since 1952*    Until the farmer regained his
proper economic position in relation to the rest of the
population there could be no solution of the problem of
unemployment in the cities.   Sunning up Mr* Hopkins
reiterated his belief in the American system of free
enterprise and urged the need for a substantial increase
in private investment*   The Government desired to do
everything it could to create an environment in which
private investment was encouraged, and he indicated
housing and railroads as fields in which such investment
might be made.   He called for an end of conflict between
business and government* for better understanding and
team work in order that the unemployed might be taken
off relief and put into private employment.   The speech
has had a favourable press although the "Hew York Times"
complains that there are not many specific assurances in
it of the kind for which business had been hoping* The
Republican/
12.
-4-
Republican "New York Herald Tribune" admits Mr. Hopkins*
good intentions but calls for deeds to follow Ms words.
3. The day after this speech the press published
the texts of letters which the President had addressed
to Mr. William Green and Mr. John L. Lewis urging then
to enter into peace negotiations between their two trade
union groups.    Mr. Roosevelt declared that there appeared
to he no insurmountable obstacles to peace and that there
was In faet evident a real and honourable desire to unify
the labour movement.   He referred to a recent statement by
the National Manufacturers' Association which showed a
better understanding of the problems of labour relationship
than formerly.   The complicated economic and social
problems of today required the cooperation of responsible
citizens in all walks of life and the effectiveness of
labour could only be realised by Its showing fundamental
unity.   Enumerating the various reasons which made this
unity necessary he stated that the Government of the
United States and the American people believed it would
be a wise and almost necessary step for the further
development of the cooperation between free men In a
democratic society.   He therefore asked the two leaders
to appoint committees to negotiate peace and offered the
assistance of the Government in whatever form it might be
required.   Mr. Green has already accepted the President's
invitation, but Mr. Lewis' answer has not yet been
published.
4. Labour Questions hare also been the subject of
three important decisions by the Supreme Court on
February 37th.   In each case Mr. Frankfurter took no part,
having only recently taken his place on the bench, but the
two other Roosevelt nominees. Justices Black and Reed, la

each ease dissented from the majority decisions. All
three Judgments are a severe "blow to the National labor
Relations Board set up to administer the Wagner Act. Is
the first and most important case the Court denied to
the Board the right te compel the reinstatement of sit-
down strikers in the Fansteel Metallurgical Corporations
factory at North Chicago*   The majority of the Court
denounced the strike and condemned the Board for
exceeding its authority,   The strike "was a high-handed
proceeding without a shadow of legal right*   To justify
such eonduct "because of the existence of a labour
dispute or of an unfair labour practice would be to put a
premium on resort te force instead of legal remedies and
to subvert the principle of law and order which lie at the
foundations of society"?   All the Justices were agreed
that the Wagner Act is constitutional;   they agreed that
the Fansteel company was guilty of certain unfair labour
practices under the terms ef this Aet;   they agreed that
the National Labor Relations Board has power under the
Aet to reinstate employees on strike as a means of
redressing- such unfair labour practices*   Where the
Justices disagreed? was on the question whether this power
of the Board to require reinstatement was affected by the
nature of the strike itself*   The Chief Justice speaking
for the majority of the Court held that since the sit-down
strike was end always had been illegal* when the Fansteel
Company refused to reinstate certain of its employees who
had taken part in a sit-down strike it stood absolved of
any responsibility to do so under the Wagner Act owing
to the conduct of those engaged in the sit-down strike*
The two dissenting Justices on the other hand held that
the law gave the Board power to require reinstatement by

IP
the company of all its employees.
5« The second judgment rejected a ruling by the
National Labor Relations Board that the Columbian
Enamelling Stamping Company of Terra Haute had declined
to bargain collectively with the union the striking
members of which the Board demanded should be reinstated
because of this alleged failure to bargain collectively.
The third decision rejected an order by the National
Labor Relations Board against the Sands Manufacturing
Company of Cleveland, holding that there had been no
discrimination against union members nor refusal to
deal with them*
6* These important decisions go a long way to
substantiate criticism which has frequently been voiced
against the partiality which the National Labor Relations
Board has been showing in its interpretation of the
agner Act.   It is now presumed that the Supreme Court
decisions will force the Board to modify its
administrative policy*   The sit-down strike has been
definitely outlawed by the Court* and even the minority
did not express any. doubt about its illegality*   It has
been ruled by the Court that employers still retain under
the Wagner Act certain fundamental rights* Where
employees themselves have violated a labour agreement
they cannot come into court and charge the employers with
unfair labour practices under the Act because of the
discharge of men who have violated their contract with
the employers*   The "New York Times" in commenting on
these decisions of the Court lays stress upon the need for
legislative revision of the Wagner Act*   Senator Vaguer
himself has declared that the Act can best be clarified
not by Congressional amendment but through interpretative
findings/
findings toy ike Courts.   The *New York Maes*
however feels that such findings may well toe upset
in the course of a year or two if the next twe
vacancies on the bench were to be filled toy men
of the political complexion of Justices Black and
Reed,   It would therefore toe wiser if Congress were
to set to work to amend the Act in the light of the
decisions already given toy the Court. Already
several toills are waiting in their pigeon holes
aiming at such amendment of the Act, tout Congress
may find Itself too tousy to tackle them during the
present session*
7* Congress has "been mainly occupied during
the last fortnight with the Administration's
defence programme* and considerable progress has
been made*   The Hay bill to increase the Army air
corps, referred to In paragraph 4 of Mr. Mallet *s
despatch No. 214 E. reached the Senate with the
aeroplane figures reduced from 6,000 to 5,500.
The Senate Military Affairs Committee has raised
the figure to 6,000 again, tout the debate now taking
place on the floor of the Senate may not confirm
this increase.   The debate is ranging over a wide
field and has not produced any very striking speeches
so far.   The Naval Appropriations Bill was passed toy
the House after the delegation of a small appropriation
of $5 millions for harbour improvements in the
island of Guam.   It is now in committee in the Senate.
It is toeing generally said even in Republican
circles/

circles that not more than a dozen Senators are really
opposed to the defence bills*
?• Mr, Thomas B. Deweyt the District Attorney of
New York who is already popularly considered to bo running
ahead for the Republican nomination in 1940, added a new
feather to his cap last week by securing the conviction
of the Tammany district leader Janes Hines on all thirteen
counts of an indictment branding him as a political ally
of the underworld in the operation of a $20 million a
year policy racket*   Hines will certainly spend several
years in prison*   The circumstances of the earlier trial
and its breakdown are described in my despatch No* 853 £
of September 19th*   It is generally considered difficult
to secure a convietion on a retrial of this kind*' and Mr*
Dewey*s persistenee and skill has earned him very high
praise.   The convietion of Hines is a very severe blow to
the Tamnany organisation which has in recent years been
steadily losing its hold upon New York politics*
9* I 89 sending copies of this despatch to the
High Commissioner for the United Kingdom in Canada* the
Prime Minister of Australia e/o the Dominions Office,
and the Department of Overseas Trade*
I have the honour to be,
with the highest respect*
My Lord,
Tour Lordship's most obedient,
humble servant,
(SOD) B. C. LINDSAY