On all other aspects of the Hoover New Deal, the President blossomed rather than

faltered. The most important plank in his program - the RFC - was passed hurriedly

in January by the Congress. The RFC was provided with government capital

totalling $500 million, and was empowered to issue further debentures up to $1.5

billion. Hoover asked none other than Bernard Baruch to head the RFC, but

Baruch declined. At that point, Hoover turned to name as Chairman one of his

most socialistic advisers, the one who originally suggested the RFC to Hoover,

Eugene Meyer, Jr., and old friend of Baruchís. For the first five months of its life,

the lending activities of the RFC lay shrouded in secrecy, and only determined

action by the Democratic Congress finally forced the agency to make periodic public

reports, beginning at the end of August. The bureaucratic excuse was that FRC loans

should, like bank loans or prvious NCC loans, remain confidential, lest public confidence

in the aided bank or business firm be weakened. But the point is that, since the RFC was

designed to lend money to unsound organizations about to fail, they were weak and the

public deserved t lose confidence, and the sooner the better. Furthermore, since the

taxpayers pay for government and are supposed to be its ìowners,î there is not excuse for

governmental representatives to keep secrets from their own principals. In a democracy,

secrecy is particularly culpable for how can the people possibly make intelligent

decisions if the facts are withheld from them by the government.?

P. 245-247 ...In September [1931], Gerard Swope, head of General Electric, far

surpassed the radicalism of his old public-works proposal by presenting the Swope

Plan to a convention of the National Electrical Manufacturers Association. The

Plan, which garnered a great deal of publicity, amounted to a imitation of fascism

and an anticipation of the NRA. Every industry was to be forcibly mobilized into

trade associations, under Federal control, to regulate and stabilize prices and

production, and to prescribe trade practices. Overall, the Federal Government,

aided by a joint administration of management and employees representing the

nationís industry, would ìcoordinate production and consumption.î ...the U.S.

Chamber of Commerce endorsed this socialistic plan in December by a large majority, as

a means of employing Federal coercion to restrict production and raise prices. Leading

the march for approval was the new President of the U.S. Chamber, Henry I. Harriman,

of the New England Power Company. Harriman wrote, in his report of the Chamberís

Committee on the Continuity of Business and Employment, that ìWe have left the period

of extreme individualism. ... Business prosperity and employment will be best maintained

by an intelligently planned business structure.î With business organized through trade

associations and headed by a National Economic Council, any dissenting businessmen

would be ìtreated like a maverick. ... Theyíll be roped, and branded, and made to run

with the herd.î The president of the National Association of Manufacturers wanted to go

beyond the Swope Plan to forcibly include firms employing less than fifty workers.

...

Furthermore, former Secretary of the Treasury William G. McAdoo proposed a

Federal ìPeace and Industries Boardî to adjust national production to consumption

..... The historian Charles A. Beard denounced laissez-faire and called for a Five Year

Plan of industrial cartels headed by a National Economic Council. And the popular

philosopher Will Durant called for naitonal planning by a national economic board,

ruling over boards for each industry. Supreme Court Justice Louis Brandeis suggested

complete state control of industry on the legal ground of public convenience and

necessity.

.....

One of the most important supporters of the cartelization idea was Bernard M.

Baruch, Wall Street financier. Baruch was influential not only in the Democratic

Party, but in the Republican as well, as witness the high posts the Hoover

Administration accorded to Baruchís proteges, Alexander Legge and Eugene

Meyer, Jr. As early as 1925, Baruch, inspired by his stint as chief economic

mobilizer in World War I, conceived of an economy of trusts, regulated and run by

a Federal Commission, and in the spring of 1930, Baruch proposed to the Boston

Chamber of Commerce a ìSupreme Court of Industry.î McAdoo was Baruchís

oldest friend in government; and Swopeís younger brother, Herbert Bayard Swope,

was Baruchís closest confidant.

P.338n Henry I. Harriman, another contributor to the drafting of the NRA, also

turned up as a leader in the agricultural Brain Trust of the New Deal. Another

Baruch disciple, and a friend of Swopeís, General Hugh S. Johnson, was chosen

head of the NRA (with old colleague George Peek as head of the AAA). When

Johnson was relieved, Baruch himself was offered the post. See Margaret Coit, Mr.

Baruch (Boston: Houghton Mifflin Co., 1957), pp. 220-221, 440-442; Loth, op.cit.,

pp. 223ff.

<><><><><><><><><><><><><><><><><><>

p. 103 Others plastered a red label on Rooseveltíís agricultural experts, or denounced

them as professors who had no knowledge of farm realities. They ignored the fact that

while M.L. Wilson, who had developed the domestic allotment idea, did indeed teach at

Montana State, he was also running a Montana wheat ranch. Both Secretary of

Agriculture Wallace and Assistant Secretary Tugwell, incessantly derided as dreamers,

had earlier roots in agricultural business. .. He placated conservatives by announcing in

advance that he would appoint Bernard Baruchíís lieutenant George Peek to be

head of the new Agricultural Administration (AAA).

<><><><><><><><><><><>

p. 118 - 121

If Roosevelt had a plan in early 1933 to effect economic recovery, it was difficult to

distinguish from many of the measures that Hoover, even if sometimes grudgingly, had

already adopted: aid for agriculture, promotion of industrial cooperation, support for the

banks, and a balanced budget. Only the last item was dubious. Roosevelt had pledged

himself in the electoral campaign to fiscal orthodoxy and had denounced Hooverís

budget deficits, but doubts about the strength of Rooseveltís own commitment to fiscal

discipline persisted. Hoover worried that FDR would unleash the hounds of

inflation, inflicting on the United States the kind of monetary calamity that had

befallen defeated Germany scarcely a decade earlier. The German hyperinflation of

1923, as well as the more moderate but still unsettling doubling of American prices

between 1914 and 1920, was still fresh in his memory. Those examples put soundmoney

men on their guard. Moreover, Roosevelt was a Democrat, and the Democratic

Party, since at least the time of William Jennings Bryan in the late nineteenth century,

had been home to a large proinflaitonary constituency. Based mostly in the chronically

indebted agricultural regions of the South and West, the inflationary element in the

Democratic Party was a never-dormant dog roused to noisy life by the Depression crisis.

.....

From all sides pressure played upon FDR to commit himself to this or that Depression

remedy or structural reform. His passive non-committal posture in these preinaugural

days, along with the ever deepening crisis, guaranteed the wild plurality of policies that

would be pressed upon him and the sometimes desperate fervor with which they would

be urged.

Pressure came first of all from his won political staff, the body of economic and legal

experts assembled during the campaign and known colloquially as the Brain Trust

(originally styled as the Brains Trust). .....

Over the course of several weeks, Roosevelt appeared to find the counsel of three of

these academic visitors particularly congenial. In addition to Moley, they were Rexfod

Guy Tugwell, a Columbia University economist, and Adolf A. Berle Jr., a professor at

Columbia Law School. Together with longtime Roosevelt political confidante Samuel I.

Rosenman, cousel to the governor, Basil ìDocî OíConnor, Rooseveltís law partner, and

the financier Bernard Baruchís colorful protege, Hugh Johnson, they constituted what

Roosevelt called his ìprivy councilî until a New York Times reporter coined the name

ìBrains Trustî in September.

....First, the Brain Trusters agreed that the causes as well as the cures of the

Depression lay in the domestic arena. It was futile and pernicious to seek remedies, as

Hoover had done, in the international realm.

Second they all considered themselves inheritors of that tradition of progressive

thought best expressed in Charles Van Hiseís classic work of 1912, Concentration and

Control: A Solution of the Trust Problem in the United States. Both Berle and Tugwell

in 1932 were in the process of making important contributions to that intellectual

tradition with works of their own. Berel, together with Gardiner C. Means, published

The Modern Corporation and Private Property in 1932, a book that argued for a

redefinition of property rights and more vigorous government regulation of the economy.

Tugwellís Industrial Discipline and the Governmental Arts appeared in 1933. The thread

that bound these several treatises together in a common intellectual lineage was the

argument summarized in Van Hiseís title: that concentration of economic power in huge

industrial enterprises was a natural and beneficial feature of modern, advanced societies;

and that these enormous concentrations of private power necessitated the creation of

commensurately powerful public controls, or governmental regulatory bodies. Berle and

Tugwell carried Van Hiseís thinking a step further when they argued that it was

governmentís right and responsibility not merely to regulate discrete economic sectors

but to orchestrate the economyís various parts according to an overall plan.

Third, these ideological commitments implied hostility to what the Brain Trusters

identified as ìthe Wilson-Brandeis philosophyî of trust-busting, or what Moley mocked

as the quaint belief ìthat if America could once more become a nation of small

proprietors, of corner grocers and smithies under spreading chestnut trees, we should

have solved the problems of American life.î

The Brian Trusters regarded Louis Brandeis as Woodrow Wilsonís ìdark angel,î the

man whose trust-busting advice, Tugwell thought, had mischievously derailed the early

twentieth-century reform movement and stalled the development of appropriate industrial

policies for nearly two decades. ...

P. 126 Conspicuous among the conservative voices heard in these weeks was that

of Bernard Baruch, head of the War Industries Board in Woodrow Wilsonís

government and the consumate Democratic Party insider. A fabulously wealthy

Wall Street speculator, Baruch lavished money on Democrats whom he deemed

sympathetic to his own big-business outlook. He was said to have contributed some

$200,000 to the 1932 campaign; Roosevelt thought that he ìownedî at least sixty

congressmen. His advice to FDR was Spartan in its stark simplicity: ìBalance the

budgets. Stop spending money we havenít got. Sacrifice for frugality and revenue.

Cut governmetn spending - cut it as rations are cut in a siege. Tax - tax everybody

for everything.î

Pp. 177 - 180 Recovery remained maddeningly elusive. ìBalanceî still seemed the

key. Following the Hundred Days, Roosevelt counted primarily on two measures to

effect the equilibrium between industry and agriculture thought to be essentail to

economic health. One was an unorthodox and controversial gold-confiscation scheme,

aimed at depreciating the dillar and thus easing debt burdens, particularly for farmers.

The other was an elaborate scheme to micromanage the farm sector through the newly

created Agriculture Adjustment Administration.

For much of 1933 and 1934, however, both monetary and agricultural policy were

overshadowed by the aggressively publicized endeavors of another agency: The National

Recovery Administration. Though it was created virtually as an afterthought on the one

hundredth day of the special congressional session that ended on June 16, 1933, the NRA

almost instantly emerged as the signature New Deal creation. ìIn some peopleís minds,î

Frances Perkins later observed, ìthe New Deal and the NRA were almost the same

thing.î

The NRA owed much of its towering profile in the public mind to the extravagfantly

colorful personality of its chief, Hugh S. Johnson. Raised in frontier Oaklahoma,

Johnson was fifty-one years old in 1933, a West Point graduate who rose to the rank of

brigadier general before resigning in 1919 to pursue a business career. His seamed and

jowly face floridly testified to the rigors of the professional soldiersís life as well as the

ravages of drink. Melodramatic in his termperament, mercurial in his moods, ingeniously

profane in his speech, Johnson coujld weep at the opera, vilify his enemies, chew out his

underlings, and rhapsodize about the virtues of NRA with equal flamboyance. On

accepting his appointment in June 1933 he declared: ìIt will be red fire at first and dead

cats afterwardî - one of the printable specimens of his sometimes mystifyingly inventive

prose.

..... His model was the War Industries Board (WIB) of 1917-1918, chaired by his idol

and business associate Bernard Baruch. Johnson himself had served as director of the

WIBís Purchase and Supply Branch, representing the military purchasing bureaus to the

various commodity sections of the WIB. Frankin Roosevelt had also conjured the World

War experience in announcing the NRAís birth on June 16. ìI had part in the great

cooperation of 1917 and 1918,î the president declared, and he called on the country to

recollect the war crisis and the spirti of national unity it evoked. ìMust we go on in

many groping, disorganized separate units to defeat,î the president asked,. Extending the

military metaphor, ìor shall be move as one great team to victory.?î

But if the NRA was patterned on the War Industries Board, a crucial element was

missing: the war. To be sure, a psychological sense of crisis prevailed in 1933 that was

comparable to the emergency atmosphere of 1917; the difference was not mood but

money. The federal government had borrowed over $21 billion dolalrs in just two years

to fight World War I, a figure that exceeded the sum of New Deal deficits from 1933

down to the eve of World War II. The National Industrial Recovery Act that established

the NRA had also authjorized the Public Works Administration to borrow $3.3 billion for

pump-priming expenditures to infuse new purchasing power into the economy. NRA and

PWA were to be like two lungs, each necessary for breathing life into the moribund

industrial sector. But as Herbert Hoover had discovered, it took time, lots of it, to start

up construction projects of any significant scale - time for site surveys, architectural

designs, and the engineering studies to be completed before actual construction could

start. ....

If Johnson, the would-be maste economic organist, found himself seated at a

magnificent musical instrument that lacked wind-box or bellows, he nevertheless

proceeded to bang away at the keyboard of the NRA with missionary zeal and maniacal

energy. There was no truer believer in the philosophy of industrial coordination that

NRA was charged with implementing. ìI regard NRA as a holy thing,î he said. He

credited his mentor, Bernard Baruch, with the best formulation of the NRAís economic

creed. ìThe government has fostered our over-capacitated industrial combinations, and

even encouraged these combinations to increase production,î Baruch explained to a

Brookings Institution gathering in 1933.

ìBut it seems public lunacy to decree unlimited operation of a system which

periodically disgorges indigestibel masses of unconsummable products. In todayís

desperate struggle for the scant remaining business, cost and price have become such

factors that, in the unstable fringes which surround each industry, a few operations have

taken the last dangerous step in economic retrogression - the attainment of low costs by

the degradation of labor standards .... Lowering wages - lower costs - lower prices - and

the whole vicious cycle goes on.î

The NRA, in Baruchís and Johnsonís view, could arrest thei cycle by governmentsponsored

agreements to curb ruinous overproduction, allocate production quotas, and

stabilize wages. The last item was particularly important. If there was any defensible

economic logic in NRA at all, it consisted in the idea that recovery could not come about

so long as shrinking payrolls continued to leach purchasing power out of the ailing

economy.

The essence of Baruchís and Johnsonís thinking resided in their shared hostility to

competition. ìMurderous doctrine of savage and wolfish competition,î Johnson called it,

ìlooking to dog-eat-dog and devil take the hindmost,î had impelled even humane and

fair-minded employers to slash wages and lay off workers by the millions. In contrast,

Johnson intoned, ìthe very heart of the New Deal is the principle of concerted action in

industry and agriculture under government supervision.î

@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@

John Pearson, The Private Lives of Winston Churchill (New York: Simon &

Schuster, 1991)

p.268 - 270 The letter [daughter] Sarah had written Clementine had been carefully

worded to appeal to her heart. ìPlease donít be worried - please donít be sad. I will keep

you fully informed of my whereabouts and plans. ... My love to you, darling Mummy.î

She even added a P.S. begging Clemintine to use her calming influence upon her

husband. Please make Papa understand.î

However, once the elopement was splashed across the papers, there was no chance

of Churchill understanding. The battle was joined.

.....

Just as Sarah was steaming off aboard the S.S. Bremen with the scandal in the daily

papers, a far greater scandal was bout to burst. King George V had died in January

1936, and had been succeeded by his son Edward, who was King but had not yet been

crowned. That fall the love affair between Edward VIII of England and his married

mistress Mrs. Wallis Simpson of Baltimore, Maryland, was on the point of turning from

an open society secret into the gravest crisis to afflict the monarcy since the far-off days

of George IV. ...

There was in fact some striking similarities between the royal love affair and

Sarahís: both involved unmarried adults bent on union with twice-married foreigners

who themselves were in the throes of divorce; both marriages, in different ways,

appeared unsuitable, and in both Churchill felt impelled to intervene. What is facinating

is the extraordinary differences in his behavior toward his daughter and his King.

.......

When the story broke in the Express, Churchill was still in France, but he promptluy

ordered Randolph, of all people, to Southampton in his place, sent him a first-class ticket

on the Queen Mary, and told him to bring his sister to her senses and safely home.

.......

......As the Queen Mary docked, he was met by his anxious-looking sister and half the

press corps in New York.

ìIím here to take Sarah home. It simply wonít do,î he blustered.

ìBut does she want to go?î somebody asked.

ìThat makes no difference. Sarahís too young to know her own mind.î

But Sarah emphatically did know her mind - and Randolph returned to England

empty-handed. This did little to affect the resolution of his father, who had now returned

to Chartwell from the fortresses of France; the light of battle in his eye, Churchill was set

to fight this homegrown skirmish to its bitter end.

Through his old New York friend the financier Bernard Baruch, who had been

in touch with Sarah, highly paid lawyers were secretly engaged to set legal barriers

against the marriage, and private detectives started dredging up anything

unpleasant they could find in Vic Oliverís past. Sarahís appeals by telephone to

Clementine - and to her fatherís deeply sentimental nature - made no difference.

<><><><><><><><><><><><><><>

Roy Jenkins, Churchill (New York: Farrar, Straus and Giroux, 2001)

p. Neither this nor a potentially highly profitable two-month American lecture tour,

which he was negotiating for the autumn, was sufficient to offset a second series of

devastating New York stock exchange losses wich the recession of 1938 had just cost

Churchill. Stocks which he had bought for over ,18,000 had fallen to a value of barely

,5,700, a loss in modern terms of about ,375,000. In spite of what should have been

expert advice from Bernard Baruch and others, Churchill was a singularly unfortunate

Wall Street speculator.

These losses made him take the grave step of putting Chartwell definitely (as it

appeared) on the market. .....

Happily he was once again spared the trauma. Another ìwhite knightî came over the

horizon. He was Sir Henery Strakosch, like so many of both the good and bad figures of

the first half of the twentieth century, an Anglo_south African financier. He was a near

contemporary of Churchillís who had established himself many years before as a banker

and as a wquiet public figure (member of a Royal Commission in the 1920's , adviser to

several international conferences) and knighted as early as 1921, without any apparent

intervention from Churchill. Later he was the chairman of the Economist .

In 1938, building upon an acquaintanceship with Churchill based mainly on supplying

him by correspondence with detailed and authoritative facts about the effect of

rearmament upon the German economy, and activated, it appears, by no motives beyond

a firm anti-Nazism and personal admiration, he saved Chartwell for Churchill.

Skakosch did this indirectly and in a somewhat complicated way. He arranged

through Brenden Bracken that he would taek over all of Churchillís American stocks at

the price Churchill had originally paid for them (which was nearly three times their

current value) and hold them without risk to Churchill for at least three years, with the

right to make switches and paying Churchill interest at the rate of about ,800 a year.

What happened at the end of three years is not recorded. Skrakosch had recouped some

of the losses which he had voluntarily accepted. By the Spring of 1941 not only was the

main house at Chartwell closed, Churchjill Prime Minister and Britainís position, before

the entry into the war of either the Soviet Union or the United States, still semi-desperate,

but British-owned American assets were (with compensation) requisitioned. IN 1938,

however, Strakoschís intervention was immensely beneficial to Churchill. Chartwell was

again withdrawn from the market.

P. 543 Throughout the late spring and summer of 1939 Churchill was torn by

conflicting desires and thoughts. First he believed that the government had at last

accepted the policy which he had been urgin for several years. Bracken, always the

faithful mouthjpiece, informed Bernard Baruch on 18 April: ìWinston has won his long

fight. Our government are now adopting the policy that he advised three years ago, and

Churchill himself defined this policy (to Lord Lytton) as ëa Grand Alliance on the basis

of the Covenant of the League......

<><><><><><><><><><><><><><>

p. 192 Roosevelt [in January 1936] faced the prospect of a sharp decline in farm prices,

something that could be fatal to him in the election. Several weeks earlier at Warm

Springs, theinfluential Bernard Baruch had impressed him by remarking that if he could

keep commodity prices up that would do more than anything else to reelect him. The

basic question was what form the new farm program should take. He adapted a relatively

simple device, to modity a little-noticed piece of existing legislation, the Soil

Conservation Act, passed the previous year. Under its authorization, the AAA achieved

the same ends of reducing overproduction by contracting with farmers to take part of

their acreage out of the major crops, ostensibly to improve the fertility of the soil. It was

an effective scheme, and one in keeping with Rooseveltíís fundamental interest in

conservation."

<><><><><><><><><><><><><><>

-------

Nye Committee

Senate Munitions Investigating Committee, chaired by North Dakota Sen. Gerald P. Nye,

1934-1936/ Investigated influence of U.S. munitions makers on U.S. entry into W.W. I

/Major impetus for Neutrality Laws. 1935-37

American isolationism ran at full tide during the mid-1930's as millions of Americans,

remembering the failure of World War I to bring lasting peace in Europe, approved virtually any

legislation that promised to keep the U.S. from being drawn into an overseas conflict. The

findings of the Senate Muntions Investigating Committee (better known as the Nye Committee,

after its chairman, North Dakota Senator Gerald P. Nye) did much to reinforce isolationist views.

Established in April, 1934 to look into rumored abuses by the Munitions Industry during the pre-

World War One period, the Nye Committee held almost two years of headline-producing hearings

that offered dramatic proof that many arms manufacturers had made unconscionably high profits

out of wartime carnage and that some had sought to tilt national policy toward aiding the Allies.

But the Nye hearing produced evidence that was not conclusive in showing that these so-called

merchants of death had unduly influenced President Woodrow Wilson or that the interests of

mysterious "international bankers," lay behind U.S. entry into the war. Nonetheless, the Nye

Committee's findings provided ammunition for those who persuaded Congress to enact the

Neutrality Laws, of 1935, 1936 and 1937 -- designed to preclude any American involvement in a

future global war.

---------

U.S. production of heavy munitions never met demand, and financier Bernard M. Baruch

arranged with Britian's minister of munitions, Winston S. Churchill, that medium and heavy arms

would be supplied by British industry, in an arrangement whereby the British would not take a

profit, but that any and all cost overruns would be paid by the United States.

Long after the fighting ended, the U.S. Senate Munitions Inquiry (the Nye Committee) unearthed

much evidence of war profiteering in the industry. The investigation and its exposes

(add accent mark) strengthened public support of the neutrality laws (1935-39) which prohibited

sales of arms to other nations. But World War II brought the transformation of the U.S. into the

"arsenal of democracy," with virtually every American industry engaged in some way with the war

effort. By the end of the conflict the U.S. had produced some 300,000 airplanes, 86,000 tanks,

71,000 new naval ships and 55 million tons of merchant shipping. Development of nuclear

weapons began with the top-secret Manhattan Project of World War Ii and its awesome

aftermath. Intensive development of nuclear missile systems follow Korean War, beginning in

1953 with the introduction of both the U.S. Army's Nike missile and the Air Force's Matador. Five

years later the first Atlas intercontinental ballistic missile (ICBM) was fired, and the Navy tested its

first Polaris missile, designed to be fired from a submarine. ...

----------

NEUTRALITY LAWS

Acts to keep U.S. out of foreign wars; passed, 1935-39/ Banned commerce with

belligerents, abandoning neutral rights/ Provisions eased the permit U.S. aid to Britain and

France at start of W.W. II.

The series of neutrality laws passed between 1935 and 1939 were designed to keep the U.S. out of any

future foreign wars. In large part a response to national disillusionment with World War I, the legislation

was spurred by the findings of the Nye Committee (1934-36), which suggested that U.S. capitalists --

notably munitions makers -- had profited greatly from the horrors of the First World War. If there were not

profits to be made from war, the proponents of the neutrality laws reasoned, thenthe U.S. would not be

drawn into foreign entanglements. Further, if the defense of Neutral Rights would lead the nations into

war, as was the case in World War I, then neutral rights should be abandoned.

The first act was passed after Italy attacked Ethiopia in 1935, in 1935, and new laws followed in 1937 and

1939 with the onset of the Spanish Civil War and World War II. The acts prohibited the shipping of arms

or the granting of loans or credits to belligerents; barred U.S. citizens or vessels from entering designated

combat areas; forbade the arming of merchant ships; and empowered the President to require of transfer of

title and cash payment before the export of any goods to a warring nation.

Critics of the legislation, including President Franklin D. Roosevelt, argued that the acts ecouraged

aggression by failing to distinguish between attacker and attacked. As the Nazis swept across Europe, the

provisions of the 1939 act were eased to permit the sale of arms and munitions to England and France, first

on a "cash and carry" basis, then on credit. American vessels were eventually permitted to enter combat

areas and merchant vessels were armed. In early 1941 the Lend-Lease Act was passed, permitting the

transfer of U.S. weapons food and equipment to the Allies with several naval engagements against German

submarines -- a long step toward American entry into the war later in the year.

<><><><><><><><><><><><>

pp. 34-35

The passage of the Spanish arms embargo was the prelude to full scale Congressional

aciton on neutrality legislation in 1937. The original act, extended in 1936, was due to

expire in 1937. The original act, extended in 1936, was due to expire on May 1, 1937.

Congress had only four months to arrive at a final decision on the complex issues it had

dodged in the last session. The basic goal, keeping the nation out of any major European

war that might occur, had not changed, but there were still a bewildering variety of

solutions being advocated inside and outside of Congress. The basic features of

neutrality adopted in 1935 and 1936 - ht impartial arms embargo, the ban on travel, the

prohibition of loans to belligerent governments - were not in question. The debatable

issue was to what extent the nation was willing to sacrifice its export trade in goods other

than arms if war came to Europe. By early 1937 the United States was slowly climbing

out of the depression and was looking forward to complete economic recovery. The task

confronting Congress was to frame a neutrality act that would insure peace without

endangering prosperity.

It was Bernard M. Baruch, the financier and confidant of presidents, who came up with

the cash-and-carry formula to keep the United State neutral without sacrificing the profits

of foreign trade. In magazine articles in 1935 and 1936 Baruch argued that it was the

shipment of goods to belligerents, not the sale, that involved risk to the nation.

Therefore, he suggested the cash-and-carry principle - ìWe sell to any belligerent

anything except lethal weapons, but the terms are ëcash on the barrel-head and come and

get it.íî [Bernard Baruch, ìNeutrality,î Current History, XLIV (June 1936), 43.]

Baruchís ingenious plan was designed to avoid repetition of the incidents that had let to

the war in 1917. When American goods were sold to a belligerent, title to the exports

would pass immediately into the hands of ht epurchaser, who would not be permitted to

transport them in American ships. By keeping American ships, goods, and citizens off

the high seas in time of war, Baruch hoped to guarantee the continuation of American

foreign trade without the risk of war. His formula was technically neutral, but it would

always operate in favor of the belligerent with large cash reserves and control of the sea.

But this limitation did not bother most Americans, who desired a policy where nothing

was ventured and a great deal could be gained.

The cash-and-carry scheme won the favor of both the administration and the advocates

of strict neutrality. Roosevelt liked the plan because it worked out in favor of England

and France, the nations with sea power, and against Germany. When Senator Pittman

introduced a comprehensive neutrality bill in January 1937, based on cash-and-carry

principle, the administration endorsed it and had a similar measure introduced in the

House. Senator Nye had no objections to the Beruch plan. He preferred a total embargo

on all trade with belligerents, but he realized that such a measure could not be passed and

thus he was willing to accept cash-and-carry as a reasonable compromise. However, Nye

and others who shared his views insisted that the Pittman bill contained too many

provisions granting discretionary power to the President. They pressed for amendments

to the administration measure which would compel the President to impose automatic

restrictions on American trade in time of war. The conflict between discretionary and

mandatory features dominated the debate in Congress.

<><><><><><><><><><><><>

P. 419 Chamberlain believed war ministers unnecessary because he remained

convinced that he had brought Englishmen peace in their time, and this became

clear as debate over establishment of a ministry of supply - first proposed by

Churchill three years earlier, on April 23, 1936 - approached its climax. Without

such a minister, an economic czar empowered to mobilize British industry and provide a

national arsenal, future recruits would lack rifles, even uniforms. It was no longer

enough for a nation to spring to arms. Artillery, tanks, and warplanes, decisive in modern

war, must also be there. ...

.....

To Churchill the need for the new ministry was compelling. That same week he had

risen in the House of Commons to propose an amendment calling for its immediate

establishment: .... The rapid production of munitions, he declared, should have begun

long ago, and on a scale immensely greater than anything the War Office now

contemplated. HMGís reply was that a ministry would seriously dislocate British

industry, that it was wiser ìto trust to cooperation than to compulsion.î The House was

still Chamberlainís and Winstonís rebuff was stunning. Not 50 MPs. But just two -

Bracken and Macmillan - joined him. Berlin rejoiced. ëGREAT DEFEAT OF

CHURCHILL!î read one German headline. Another trumpeted: ìCHURCHILLíS

INTRIGUES COLLAPSE / EVEN DUFF COOPER AND EDEN COULD NOT BE

ROPED IN.î

As late as March 2, 1939, the prime ministerís own secretary for war, Leslie

Hore-Belisha, told him that if the government was serious about defending the

country, something had to be done to arm and equip fighting men, and Britainís

industrial titans would listen to no one without a seat at the cabinet table. Wearily

the P.M. cut him off in mid-argument.

Yet the Ministry of Supply had become inevitable , and presently even

Chamberlain knew it. In April 1939, after the German occupation of Prague, his

panel of industrialists - the men he admired most and had sought to shield from

bureaucracy - reported that their chief recommendation, an urgent question to be

met squarely ìat the first possible opportunity,î was ìthe establishment of a

Ministry of Supply.î Brendan Bracken wrote Bernard Baruch: ìWinston has won

his long fight. . . . No public man of our time has shown more foresight, and I believe

that his long, lonely struggle . . . will prove to be the best chapter in his crowded

life.î

<><><><><><><><><><><><>

p. 113 ...Near fatal illness drained him of all personal ambition and converted him into

the selfless individual who rendered such great service to the President during the war

years.

Early in March 1939, Hopkins was still feeling worn out and spent from that ìtouch of

fluî and he was glad to accept an invitation from Bernard Baruch to spend a few days at

Hobcaw Barony near Georgetown, South Carolina. Baruchís huge plantation was near

the coast, at the confluence of the Pee Dee and Waccamaw Rivers, a beautiful and largely

wild place, full of live oaks, Spanish moss, magnolias, camellias, azaleas, many kinds of

game and fish - and the serene wisdom, the overwhelming prestige and unshakable selfconfidence

of its owner. In the cultivation of his own political garden, Hopkins could do

no better than seek out the advice and counsel (and, above all, the support) of Bernard

Baruch, who held title of Elder Statesman Number One longer than any man had since

Thomas Jefferson.

But when Hopkins visited Hobcaw, Baruch was not inclined to give much

attention to political prospects or business conditions at home. His concern was

with the gathering calamity abroad. He scoffed at a statement made on March 10

by Neville Chamberlain that ìthe outlook in international affairs is tranquil.î

Baruch agreed passionately with his friend, Winston Churchill, who had told him,

ìWar is coming very soon. We will be in it and you [the United States] will be in it.

You [Baruch] will be running the show over there , but I will be on the sidelines

over here.î (That last prophecy proved inaccurate.) Baruch talked to Hopkins of the

realities of the situation as he had seen them in Europe and reported them privately to

Roosevelt the previous year; he talked of the amount of misinformation that was being

collected and transmitted by our official representatives in Europe; he talked of the

woeful state of our unpreparedness and of the measures that had been taken to meet

production problems in the First World War. Years later, Baruch said: ìI think it took

Harry a long time to realize how greatly we were involved in Europe and Asia - but once

he did realize it, he was all-out for total effort.î

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