1
BRITISH EMBASSY,
WASHINGTON, D. C.
July 27th, 1939.
No, 824 E
My Lord,
Congress is now reaching its last lap before
adjournment and will probably go home next week.
There is a general disinclination to tackle any more
important legislation although it is assumed that
some action will be taken on the Works Financing Bill
which will be referred to later in this despatch*
What is interesting politicians much more than legis-
lation is the question of the 1940 presidential
election.   It is widely stated that Mr* Roosevelt would
hare had much less difficulty with Congress, particular^
over the neutrality bill, if he had boon prepared to
renounce all ambitions for a third term*   There are
however many reasons why he cannot commit himself on
this paint*   In the first place the President is more
aware than most Americans of the possibility of a
European war and more convinced that such a war would
eventually involve this country*   His feeling appears
to bo that if there is a war he himself is the best
man to be at the helm*   If by the spring of 1940 the
danger of war seems less he may more easily be persuaded
to give up the idea of attempting to break a sacred
precedent.   Even then he will certainly be determined
to get a "liberal" Democrat nominated at the convention,
and any present renunciation on his part would weaken
his authority with his party and play into the hands of
The Right Honourable
The Viscount Halifax, K. G
Mr*/
It
•to*,
etc
etc*
i
3
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Mr# Garner and the conservative wing*  Last week
Mr. Roosevelt appointed Mr, Paul HcHutt to the
Important post of Federal Sedurity Administrator,
one of the new offices set ap under the government
reorganization plan referred to in paragraph 7 of ay
despatch Ho* 507 E of Hay 8th*   How Mr* McNutt has
been for the last two years Governor General of the
Philippines and quite successful there, but before
that he was a highly politioal Governor of Indiana
with a party machine based upon a 2 per eent levy
from State employees*   He now becomes responsible for
the Social Security Board* the Civilian Conservation
Corps, the National Youth Administration, the Public
Health Service and the Office of Education, and this
will jive him a good national position from which to
project his personality as a potential candidate and
as one of the issues at the elections is likely to
be bigger old-age pensions and health and unemploy-
ment insurance he may be just the man to make political
oapital out of his new office*   Mr. Farley is said to
dislike him bat apparently Mr* Harry Hopkins admires
him*   The President when asked at a press conference
whether he w§s training up Mr* McNutt to succeed him
replied that there were perhaps fifteen charming young
men who might be considered for that post, but the
newspapers have had some difficulty in finding anywhere
near that number to whom there is not some apparently
fatal objection*   Mr* Murphy and Mr. Parley are Catholics*
Mr* Hopkins has lost ground and is rather a sick man;
Mr* Robert Jackson has not made the headway that was
expected/
expected of him; Mr, William Douglas has disappeared
Into tbe Supreme Court; Senator Wagner la Ineligible
because he was not born In this country;   Mr. Garner
la too old, and Mr. Hall has almost certainly made up
his mind not to be a candidate*   There is always the)
possibility of the President throwing his weight
behind sons progressive who is not nominally a
Democrats^ and the names of Mr. La Guardia and Mr.
Robert La Kollette and Mr* Ideas suggest themselves,
bat that would presumably split the Democratic party
completely.   So Mr. Roosevelt himself appears once
more as the logical candidate fio succeed himself in
1940.   This idea is utterly distasteful to the) con-
servative Democrats and during the present Congress
they have been voting in the Republican lobby more
or less consistently with the idea of showing the
President that if ho runs for a third term there will
bo a coalition in the country against him as there is
already in Congress.
2. The effect of "third term politics" has
been seen In its most disastrous form in the final
shelving of the Neutrality Act by the Foreign Relations
Committee of the Senate.   Looking back, it now seems
that both the Administration and Senator Pittman made
a mistake in not placing the revision of the Neutrality
Act in the forefront at the beginning of this Congress
and pushing it through before -party feeling became so
exacerbated.   There probably is now and always has been
a majority in both Houses in favour of repealing the
embargo on the export of anas and ammunition bat the
temptation/
temptation to have ana more alap at the President
was too great, and in the Senate Committee there
were two Senators, George and Gillette, who had been
the objects of the President's party purge last
summer.   They could not resist the temptation of
taking their revenge*
3* The Presidents new spending-lending scheme,
particulars of which were given in my despatch Mo.
757 £ of the 3rd July, 1939* has been brought before
Congress In the form of ft Works Financing Bill* It
has however already suffered considerable mutilation.
The opposition which rapidly developed to the item
for loans to foreign governments led to the abandonment
of this item and to the substitution of a provision
for the Increase of the capital of the Export-Import
Bank from 100 million dollars to 200 Billion dollars,
the increase to be used for export eredita and not
for loans to governments*   This change, combined with
further cuts effected during the passage of the bill
through the Senate Banking and Currency Committee,
have reduced its scope from a total of 3060 million
dollars to a total of 2110 million dollars, and the
proposal that the monies provided should represent a
revolving fund, so that they ttbuld be re-lent as
soon as old loans wore repaid, has been abandoned*
Even after these mutilations there is a strong oppo-
sition developing in the Senate and it is far from
clear whether the Government will succeed in driving
the bill through in any form before Congress adjourns*
The/
The proposed increase by $800 million of the
borrowing powers of the United States Housing
Authority has passed the Senate but has not yet
been actively taken up in the House*
4. A geod deal of excitement baa bean shown
In the press regarding the passage by both Houses of
the Hatch "clean politics" bill which is now up
for the President's signature*   The House strengthened
and put teeth into the measure which originated In
the Senate and it is now considered likely to hinder
the President's third term ambitions by preventing
office holders from attending the Democratic Convention
next year.   Job-holders have in the past formed a
large part of the delegations to party conventions
and have naturally been amenable to the politicians
who got them their jobs*   The number of postmasters so
amenable have, for instance, made the office of post-
master-general one of great importance In the party*
Under the present bill any person In a government
administrative position with the exception of heads
and assistants of heads of executive departments and
a fen others, is forbidden to use his official
authority for the purpose of interfering with or
effecting an election for Federal office and is for-
bidden to promise employment, position, work, compensation
or other benefit provided for or mads possible by the
Act of Congress to anyone as a reward for political
activity*   It is also unlawful for any person to
intimidate, threaten or coerce any other person to
vote, and equally unlawful to deprive, threaten or
attempt to deprive any person of employment of work
•r other benefits on account of his political activities,
race/
race, creed or colour.   The bill also makes It unlawful
to solicit contributions for any political purpose
from persons receiving compensation or employment
under relief appropriations and bars the use of any
appropriations made for relief for the purpose of
interfering with or restricting or coercing any
individual in the exercise of his right to vote at any
election*   Violation of the Aet is made a felony with
the penalty of a fine of §1000 and one year's imprison-
ment.   This bill was pat through by a coalition of
Republicans and Democrats and was sponsored by a
Democrat in each House*   It is understood to be
Intensely disliked by Mr. Farley, bat it was very
difficult for open opposition to be made to it as.
ostensibly its provisions are non-partisan and designed
to clean op politics*   There are rumours that the
President may veto it on the grounds that it invades
the citizen's right of free speech under the
Constitution*   Even if he signs it much will depend
on how the law Is observed, but it seems elear that
even if relief workers cannot be coerced into voting
for the Democrats, they will nevertheless still be
inclined to do so from the mere fact that their jobs
on Works Progress Administration and other relief
undertakings have boon created by the Democrats.
5. Works Progress Administration workers,
particularly those in the building trade in New York,
have boon on strike against the 1940 relief bill
referred to in paragraph 4 of my despatch Ho. 691 £
of/
Of Juno 80th*   The elimination of the "prevailing
wag§* clause and provision for a ISO hoar month was
the immediate cause*   Bo provision had been made by
Congress to increase the Monthly pay, whieh had boon
calculated on the basis of how much a man should have
to support his family, rather than on tho value of
his labour*   Bricklayers, carpenters and other skilled
construction workers who in private Industry had
succeeded in obtaining a wage of $1*50 to $2.00 an
hour had also succeeded hitherto in continuing under
tho so prevailing wages in tho Works Progress Adminis-
tration by the device of working only a small number
of hours a month.   Under the now 130 hour month their
wage rate is now reduced to about $*71 an hour*
Thousands of workers in New York, Wisconsin, Minnesota
and other states went on strike but tho Works Progress
Administration officials hold that there was no course
open to them but to obey the Act of Congress, which
had in fact boon heartily supported by Colonel
Harrington, the Works Progress Administrator In Wash-
ington*   First the Attorney-General and then tho
President himself publicly declared that tho men could
not strike against tho Government and as a result any
men absent for five days were promptly dismissed*
Twenty thousand strikers have now suffered this fate
and os they are threatened with not being eligible for
home relief their future seems a tragic one, the
American Federation of Labor was largely responsible
for the strike by the fact that its local units backed
the strikers, but Mr* William Green has declared that
"tho remedy lies with Congress rather than through
strikes/
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strikes on Works Progress Administration projects'*
Congress however shows no Intention of backing down
and In the last few days the strike seems to have
fizzled out*   Another serious difficulty of this Aet
of Congress is that about 650,000 workers who hare
been on the Works Progress Administration rolls for 18
months must now drop out for at least 2 months* It
is hoped rat her optimistically that many of these men
will obtain private employment particularly now that
business is beginning to pick up*
6* Ever since the National Labor Relations
Board was created in 19S5 under the Wagner Act it has
been subject to much criticism for its methods of
protecting the rights of workers and guaranteeing
eollective bargaining.   The American Federation of
Labor leaders have complained that the Board always
favoured the Committee for Industrial Organisation*
Employers have contended that the Beard was unfair,
that it acted as prosecutor, judge and jury in the sane
case*   There has thus been much demand for an amend-
ment of the Act*   Throughout the present Congress
hearings have been taking place in Committee but the
Administration policy is said to be to prolong these
hearings in order to make legislation impossible this
year*   This policy was openly challenged laat week when
a coalition of the Republicans and Democrats in the
House voted to create a special fiveftman committee
to investigate the National Labor Relations Board*
By this action the House administered a rebuff not
only to the Administration but also to its own Labor
Committee which has been holding endless hearings on
the subject without taking any action*   The vote, which
was/
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was 253-153, Is applauded in the conservative press
as another slap at the Hew Deal*
7. In paragraph 3 of my despatch Ho* 586 X of
May 29th X referred to the Department of Agriculture's
cotton subsidy policy.   An export subsidy of 1*5 cents
per pound on lint cotton and commensurate payments on
the export of cotton goods produced in the United
States became effective today*   The Secretary of
Agriculture in announcing this described the subsidy
as part of a program designed to assure the United
States its fair share of the world cotton market but
said that he hoped the subsidy payments would be
temporary and that an effective and equitable inter-
national cotton agreement would remove the necessity
for them,
8* The deadlock between the Senate and the
House under the Tennessee Valley Authority which was
referred to in paragraph 6 of my despatch Ho* 741 E
of the 3rd July has been ended in conference* The
sum of 100 million dollars proposed by the Senate has
been reduced to the 6l£ million dollars voted by the
House and the deal with the Tennessee Electric Power
Company Is to go forward.
9* After being in his dotage for four years as
a result of a series of strokes Mr* Claude A* Swanson,
the Secretary of the Navy died not long age* His
work has been done all these years by his Assistant
Secretary, who is now also ailing, and by Admiral Leahy,
who is off to Puerto Rico as Governor, and nobody
knows yet who is to be given this important Cabinet
office*   Mr* Roosevelt himself will in any event keep
a close eye on naval affairs in which from his wartime
experience/
experience with the Navy Department he considers
himself rather en expert.   An interesting and
admirable appointment just announced is that of Mr.
)H>iy$\ Cc^-^^y^i *****
Francis Sayre to be Governor Oonoral of the
Philippines*   Afl Assistant Secretary of State Mr*
Sayre has been mainly occupied with the trade
agreements policy and with the inter-Departmental
Committee on Philippine Affairs* s
10• I am sending copies of this despatch to
the High Commissioner for toe United Kingdom in
Canada, the Prime Minister of Australia c/e the
/
.1*1
Dominions Office. and the Department of Overseas
Trade* V-/
I have the honour to be,
With the highest respect,
My Lord,
Your Lordship's most obedient*
humble servant,
(SGD) R. C. LINDSAY