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WORLD DIAR : W29 1934'

WORLD DIARY:
1929-1934

BY QUINCY HOWE

Le temfys du monde fim commence.

PAUL VAL&RY

ILLUSTRATED WITH MAPS
AND FOREIGN CARTOONS

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J929-J934

iy 1934

BY QUINCY HOWE

IN THE UNITED STATES
OF AMERICA

FIRST EDITION

To
M. A. DEW. H.

O N T E N

FOREWORD ix

PROLOGUE 1

1930 15

1931 77

1932 151

1933 213

1934 285
CHRONOLOGY 355
INDEX 383

VII

O R E W O R D

As EDITOR of The Living Age since 1929, it has been my
job to present a monthly selection of translations and re-
prints from the foreign press, together with comments of
my own on foreign politics, foreign literature, and world
affairs in general. The purpose of World Diary: 1929-
1934 is to do in book form for the past five years what
The Living Age does in magazine form for each passing
month.

By devoting about half this book to quotations from
foreign sources, I have tried to give American readers the
foreign view of foreign affairs, and the other half I have
devoted to exposition and interpretation. Even a book
wholly given over to the opinions of others reflects some
prejudices on the part of the editor, and when it comes
to interpretation, impartiality flies out the window. Com-
mon honesty therefore compels me to disclaim any pre-
tensions on this score. The book itself will reveal what
prejudices I may possess; here I shall merely indicate one
or two points that deserve special emphasis.

First of all, the book Is written in the conviction per-
haps the most commonplace conviction of our time that
applied science has created a world-wide revolution in
agriculture, industry, and society. Second, it is written in
the almost equally wide-spread conviction that this revo-
lution has made Germany, Japan, and the colonial na-

FOREWORD

tions the most important countries to watch just now.

This, however, is not the only reason why I have de-
voted more attention to foreign sources and to foreign
countries than to American sources and to American
problems. In The United States in World Affairs the
Council on Foreign Relations provides an annual survey
of events abroad from the American point of view. Nor
is there any dearth of material on the New Deal and on
the possibilities of revolution and reaction. What I have
tried to provide is information about developments out-
side the United States, developments that may smash
Roosevelt's New Deal as effectively as the World War
smashed Wilson's New Freedom.

Just a word about the material covered here. I have
kept as far as possible to a strictly chronological account
not day by day, but month by month with the single
exception of the closing three months of 1933, which I
have telescoped into one section. Every episode has fig-
ured so prominently in the newspapers that it requires
nothing more than an acquaintance with the headlines of
the past five years to follow the story. I have not, how-
ever, attempted to include all the chief news items of
these five years. Many of them fell outside the scope of
the narrative; others did not give rise to significant in-
terpretation. In. so far as the purpose of the book can be
expressed in a single sentence, it is to tell the' story of the
past five years in the only way it can be told on a world
scale. In addition to the sources of material mentioned in
the course of the narrative I have also drawn extensively
for factual background on the New York Times, the
World Almanac, and the reports of the Foreign Policy
Association.

R O L O G U E

IN THE Wall Street crash of 1929 the United States lost
what it had fought for in the World War. Beginning in
1914, Allied orders for food and munitions created a
boom in American agriculture and industry that continued
until March, 1917, when the British Treasury, the last
source of Allied credit, exhausted its borrowing power.
At that point the United States had to decide between
calling a sudden halt to the boom or supporting the Allies.
President Wilson chose the second course, and the Amer-
ican Treasury with its Liberty and Victory Loans took
up the burden that the British Treasury had dropped.
The country thus avoided a sharp depression by bowing
to events beyond its own frontiers. American isolation
had come to an end.

The slump that the War had postponed again threat-
ened to creep over the land in 1920- This time, however,
the automobile industry, installment buying, and foreign
loans based on war-time profits turned the tide. The fac-
tories built since 1914 shifted from war-time to peace-
time production, and for the next ten years the world
marveled at American prosperity. Then, during the sum-
mer of 1929, consumption began to lag, stock prices
wavered, and on October 24 came the worst crash in the
history of the New York Stock Exchange, when nearly

PROLOGUE

-<><><><>-<><<><><>-C-<><^<>-

thirteen million shares went overboard in a panic of
selling,

Less than a year had passed since Herbert Hoover in-
formed his fellow countrymen that poverty had been for-
ever abolished in the United States, promised them a
chicken in every pot, and received the largest popular
vote ever recorded by a candidate for the American Pres-
idency. The events on Wall Street disturbed him not at
alL "The fundamental business of the country is on a
sound and prosperous basis," he declared on October 25.
After two more sharp breaks in the market he announced
on November 15 that "any lack of confidence in the basic
strength of the United States is foolish." On November
21 the leaders of industry, banking, and commerce met
at the White House and promised to cooperate with the
Government and not to reduce wages. Among those pres-
ent was Henry Ford, who announced that wages in his
factories would be raised. On December 3 the President
declared, "I am convinced that we have reestablished con-
fidence." And the best opinion in England agreed with
him. The Manchester Guardian regarded the Wall Street
crash as "a pure gambling crisis," and the London Times
went so far as to declare that "in the main speculation
rested on a sound basis." The fact that brokers' loans had
reached the record figure of eight billion dollars one
tenth the national income for the year shows how far
this speculation had gone. What had happened was that
thousands of gamblers had purchased stock on margin
that is to say, they had put up a fraction of the purchase
price and the broker had supplied the rest* If the gam-
blers could sell the stock at a higher price than had been
paid for it, they pocketed the entire profit, but if the stock

Moscow

The music of triumphant capitalism.

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<><><><><*<><><><><><><><>^><><><.

fell by as much as they had invested, it reverted to the
broker, who either demanded more money from the gam-
bler or sold the stock himself.

Now the crash of 1929 not only wiped out the entire
proceeds of thousands of gamblers; it even left many
brokers holding stock that was worth less than what they
had put into it. And since the brokers in their turn had
borrowed from the banks, using the stocks as securities
for their loans, the entire financial system of the nation
suffered. Nor were brokers the only people who had bor-
rowed from the banks on securities that had suddenly
fallen from twenty to fifty per cent in value.

Shortly before American finance suffered this blow, the
leading bankers of the world had prepared a scheme to
rescue the finances of Germany. Because the Versailles
Treaty had declared Germany solely responsible for the
War, the Allied Powers had presented that country with
a reparations bill of a hundred and thirty-two billion
marks the estimated cost of the War in May 1921.
Three years later the Germans agreed to begin making
payments through the medium of the Dawes Plan, which
had no date of expiration and which put German finances
under the supervision of a foreign Agent General for
Reparations with headquarters in Berlin. The payments,
however, came out of foreign, not German, pockets, and
a handful of international bankers instantly collected
handsome profits. In. the United States, for instance, a
banking syndicate sold Dawes Plan bonds to the Ameri-
can public and turned over the proceeds, minus the usual
commission, to the German Government. In that way
Germany raised enough money to pay reparations for a
few years and to stabilize the mark.

PROLOGUE

-><><><><><><><=-<>-C*<><><>

During 1929, however, a new scheme came into being.
From February to June the leading bankers of Belgium,
France, Germany, Great Britain, Italy, Japan, and the
United States worked out the so-called "Young Plan,"
which reduced the total reparation claims of the Allies to
thirty-two billion gold marks, removed German finances
from foreign control, and provided for payment in full
by the year 1988. But most important of all, the Young
Plan called for still another bond issue, similar to the
Dawes bonds and carrying still another rake-off for the
bankers. And as luck would have it, two American mem-
bers of the Young Plan committee J. P. Morgan and
Thomas W. Lamont belonged to the very banking firm
that had helped to float the Dawes bonds and that was
preparing to float the new issue.

In August the statesmen of sixteen nations and three
British Dominions therefore met at The Hague to discuss
the settlement drawn up by the bankers. Not only did they
agree to hold a second Hague Conference during January
1930 for final ratification with a few minor changes; two
of them collaborated further.

Aristide Briand, Premier and foreign minister of
France, and Gustav Stresemann, foreign minister of Ger-
many, came to an understanding whereby the French
army occupying the Rhineland was to be withdrawn by
June 30, 1930, five years in advance of the date set by
the Versailles Treaty. They also began negotiating for
the return of the Saar Valley to Germany before 1935,
when, again according to the Treaty, a plebiscite was to
occur. But these two conciliatory moves by Briand and
his constant public mutterings about a United States of
Europe landed him in trouble. For the powerful conf edera-

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^><><><^<><><><><><><><><><><>^><>

tion of the French iron, coal, steel, and armaments indus-
tries known as the Comite des Forges opposed both the
evacuation of the Rhineland and the return of the Saar.
It feared that better relations with Germany might lead
to a reduction of French military expenditures, and that
the return of the Saar would deprive France of valuable
coal fields. As for the United States of Europe, such a
project threatened to impair the dominance that French
heavy industry had won from German heavy industry as
a result of the War.

The newspapers that the Comite des Forges controlled
therefore launched a systematic campaign against
Briand's alleged treachery, and on October 21 his gov-
ernment fell, just two weeks after the death of his friend,
Stresemann. On November 2, Andre Tardieu formed a
more conservative Cabinet, retaining Briand, however,
as foreign minister.

Whereas the fall of the Briand Cabinet marked the end
of further French concessions to Germany, the meeting
between President Hoover of the United States and
Prime Minister MacDonald of Great Britain during the
same month augured well for Anglo-American relations.
Both men had war records that aroused the hopes of
pacifists. Hoover had fed the Belgians, MacDonald had
remained a conscientious objector from start to finish,
risking physical violence for the sake of his convictions.
But Hoover's previous record in China and MacDonald's
subsequent record in office indicated that neither man
would let his principles stand in the way of his real am-
bition. Hoover, the trained engineer, had spent twenty-
five years abroad, most of them in the Far East, peddling
mining stock and on one occasion falling foul of the law

Garveas In Kladderadatsch, Berlin

CONTRIBUTION TO FRANCO-GERMAN RAPPROCHEMENT

Above How the French
look tp the Germans.

Below How the Germans
look to the French

How they really are*
How, they really are.

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<><><><>-<><><><><><>-<><^^

in China, where the foreign courts are notoriously lenient
toward foreign prospectors. And England's Socialist
Prime Minister had twice reveled in the sweets of office
as leader of minority governments that could not possibly
adopt a single piece of Socialist legislation. Love of
money and love of power had dominated the lives of
these two men.

The purpose of their meeting was to prepare the
ground for a five-power naval conference between their
countries and Japan, France, and Italy. At the Washing-
ton Conference of 1922 these same five powers had estab-
lished ratios of 5:5:3:1.75:1.75 for British, Ameri-
can, Japanese, French, and Italian capital ships, respec-
tively, but they had not set any limits on ships of less
than 10,000 tons. The Geneva Conference of 1927 not
only failed to reach any agreement on smaller vessels ; it
made bad blood between America and England, largely
because the two countries had failed to confer in advance.

On October 4 England's newly installed pacifist Prime
Minister therefore arrived in the United States to confer
with America's newly installed Quaker President, and on
October 7 invitations went out to the five countries that
had attended the Washington Conference to attend an-
other conference in London the following January. Two
days later Hoover and MacDonald issued a joint state-
ment accepting the Kellogg-Briand Anti-War Pact "as a
positive declaration to direct national policy in accord-
ance with its pledge" and agreed to assume that "war be-
tween us is banished."

Nor was the Hoover-MacDonald statement the only
bright spot on the world horizon. During 1929 the eighty-
billion-dollar national income of the United States consti-

PROLOGUE

<><><><><>^><><><><><><><>

tuted an even more remarkable record than the eight
billion dollars in brokers' loans. Never before had the
country produced, or what is more important con*
sumed, such a vast quantity of wealth. And the internal
affairs of several other nations looked almost as promis-
ing. In spite of more than two million unemployed, Eng-
land was using over two million passenger cars, producing
more crude steel than it had before the War, and devel-
oping such new industries as chemicals and artificial silk.
American money had built a new industrial plant for Ger-
many, which had almost regained its pre-war share of
world trade, and S. Parker Gilbert, Agent General for
Reparations under the Dawes Plan, declared: "Funda-
mentally confidence has been restored and Germany has
been established as a going concern on a relatively high
level of economic activity."

In France, Tardieu had inherited a budget surplus of
nineteen billion francs, and French export trade had
never been better. In Russia, the first Five-Year Plan was
mechanizing agriculture and building the largest indus-
trial plant in the world outside the United States. Of the
major powers, only Japan had failed to experience any
revival since the War, but a new liberal government as-
sumed office on July 2 and announced on November 21
that the currency would be brought back to par on a gold
basis early in January. Furthermore, Baron Tanaka, head
of the fallen conservative government, who had urged
the military conquest of Asia, died on September 29.

How had so many nations revived so quickly from the
War, written ofi their losses, and attained the highest
level of well-being they had ever known ? The answer is
to be found in the accelerating advance of applied science.

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<><<><<><><><*<><><P<>><><><><>

In spite of war debts, reparation payments, and the phys-
ical destruction of the War itself, world trade and world
production had increased between 1914 and 1924 and
again between 1924 and 1929. The familiar story of
America's rising prosperity was being duplicated in many
other parts of the world.

But not in all, for during 1929 disturbing symptoms
had begun to appear in India, China, and South America,
three areas that specialized in farm products, the prices
of which had begun to decline. This decline arose from
two causes: the increased efficiency of mechanized agri-
culture, and the revival of the Danube Valley. Between
1913 and 1928 the United States, Canada, Australia, and
Argentina had increased their acreage under wheat by
forty-five per cent, an amount equal to half the wheat
acreage of Europe in 1928, and had nearly tripled their
yield. Now they had found a market for this wheat only
because during and after the War Southeastern Europe
and Russia ceased exporting wheat to the industrial na-
tions of Western Europe. But in 1929 the Danubian
countries suddenly appeared on the West European mar-
ket at a time when the rest of the world was increasing
both its acreage and its production per acre. And it was
the same story with many raw materials as well.

Even in China, where agriculture remained completely
primitive, the increasing efficiency of other lands pro-
duced revolutionary effects. Because world prices had
fallen, the landlords, who wanted a fixed cash income,
were compelling the tenant farmers to surrender as much
as eighty per cent of their crops. This marked a sudden
departure from a practice that has prevailed in every
primitive agricultural community since the time of the

PROLOGUE

-<><><><><><><><><><><><><>

Pharaohs, whereby the tiller of the soil receives half the
produce of his labor. The results were revolutionary.
China had nearly gone Communist in 1927, and by 1929
some fifty million peasants had established Communist
rule in precisely those agrarian districts that had suffered
most acutely from the fall in the price of their products.

India, the next most populous territory in the world
and also a primarily agrarian country, had begun to move
in the same direction. On December 28 the Congress
Party, the largest political organization in the land, voted
to launch a campaign of civil disobedience in behalf of
independence from British rule.

No revolution had yet occurred in South America, but
subsidized inefficiency had ruined both the coffee growers
and the finances of Brazil, and, since 1928, Argentina's
favorable trade balance had been dropping to the accom-
paniment of a strike wave. The declining prices of copper
and tin were also reducing the incomes of Bolivia and
Peru, a matter of vital concern to British and American
investors who had purchased bonds issued by those
countries.

At least half the world's population therefore faced
the probability of continued uncertainty during 1930 a
circumstance that was already affecting more prosperous
lands. The Western powers, for instance, had aided the
Chinese Nationalist Government in its losing fight against
Communism, and the Indian independence movement
struck a blow at England's most valuable colonial posses-
sion. Nor could the United States and Great Britain, with
about six billion dollars apiece invested in Latin America,
remain indifferent to the growing unrest in that quarter.
Furthermore, the decline in the price of foodstuffs that

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<;-<><>-OC><><><><><^<><><>-S><>0^

was encouraging revolution in primitive China and India
had, since 1920, halved the cash income of America's
farm population. And the modernized industrial plants of
Germany, Japan, and the United States were taking busi-
ness away from the more antiquated plants of Great Brit-
ain and adding to the ranks of the British unemployed.

Although the world partnership that had spread and
grown stronger during the 1920 J s included more than one
weak member, the problems that confronted the men in
positions of power at the close of 1929 differed from the
problems of the past in degree rather than in kind. The
revolution in agriculture had a precedent in the industrial
revolution of the nineteenth century. The social revolu-
tions in China and India had precedents in Russia,
France, and the United States. And national rivalry was
no new thing under the sun. But never before had events
in one part of the world produced such swift, such pro-
found repercussions everywhere. The world had become
one, and if historic precedents mean anything at all
it faced on a world scale the same problems that individ-
ual countries in the past had faced on a national scale.
What the results might be, only the next few years could
tell.

WORLD DIARY:

1930

January

NINETEEN THIRTY opened hopefully with an international
conference that bound the world still more tightly to-
gether. The statesmen of the same sixteen nations and
three Dominions that had met at The Hague during
August, 1929, assembled in the same city on January 3,
1930. By January 20 they had agreed to ratify with a few
minor changes the Young Plan that the bankers had
drawn up in an effort to settle German reparations once
and for all. The political leaders had faced economic
facts and .heeded the warnings of international high
finance, as delivered by the London Statist: "It seems
inconceivable that the politicians will dare to question the
conclusions that have been born of such painstaking and
prolonged labor or to impede their early realization."

Lord Beaverbrook's more popular Evening Standard
enlightened a larger public as to the function of the
banker in the modern world: "Bankers are the economic
statesmen of the country, but, unlike their counterparts in
the political sphere, they do not allow themselves to be
tied by party habit to any political doctrine. Their busi-
ness is to know all the facts and to deduce their meaning.
They have at their disposal all there is to be known about

WORLD DIARY

<><><><><><>K><><><><><><><^><><>

world economics. Their long experience enables them to
interpret with exactitude this accumulation of knowl-
edge."

To which the New Leader, organ of the Independent
Labor Party, replied: 'There is little doubt about the
banks' detachment from politics. They have that fine
aloofness which marks the man who has got all he wants.
They have that complete indifference toward the political
problems of the day which a good pickpocket has toward
the pocket he has just emptied. 1 '

Mr. Wickham Steed, a former editor of the London
Times, however, put the case with greater moderation:
"Broadly regarded, the Young Plan is a complicated piece
of make-believe. It solemnly enumerates the annuities
which Germany shall pay during the next fifty-nine years,
and divides them into first and second periods of thirty-
seven and twenty-two years respectively. Nobody in his
senses imagines that, fifty-eight years hence, Germany will
still be paying those annuities; nor does anybody think
that the European war-debt settlements to the United
States will smoothly run their concurrent course. As Mr.
J. M. Keynes has observed, the most interesting features
of the Plan are the suggested creation of an international
bank, and the Special Memorandum drawn up by the
European experts at the instance of Mr. Owen D. Young,
though not signed by him."

The two features of the Young Plan that had caught
Mr, Keynes's trained economic eye demand a word of
explanation. The proposed international bank referred
to the Bank for International Settlements, which was to
serve as the financial link between the Germans and their
creditors. It immediately aroused the most intense alarm

1930

-ooooo-

among London bankers, who feared that an international
clearing house for reparation payments might become a
dangerous rival of their own institutions or, worse yet,
fall into the hands of those upstart Americans, four of
whom had played leading parts in framing the Young
Plan. But the Special Memorandum showed London how
little it had to fear the wizardry of Wall Street, for this
document amounted to nothing more or less than an invi-
tation to the United States to cancel the Allied war debts
if the Allies would cancel German reparations.

When Lord Balf our had made the identical suggestion
in his famous note of 1921, many of his own countrymen
expressed the belief that he had asked too much, but this
time the suggestion had come from an American, not a
British, citizen. Whereas the Christian asks to be for-
given his debts as he forgives his debtors, Mr. Young
proposed that his country, which owed Europe nothing,
forgive a European debt of some ten billion dollars if the
European debtors forgave each other their own debts.
The London press discreetly refrained from commenting
on the quality of Mr. Young's statesmanship and the
Times merely expressed the mild fear that London might
not be selected as the seat of the new bank:

"It is clear that the future usefulness of the bank will
largely depend on the facilities which it enjoys of close
cooperation with the financial organs of international fi-
nance, and London is still the most important money
market of Europe, if not of the world. Meanwhile those
who are alarmed at the prospect of an international bank
armed with such extensive powers may perhaps derive
some comfort from the reflection that the formidable list
of operations specified in the Young Report is perhaps

WORLD DIARY

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best interpreted, like the articles of association of a newly
formed company, largely as pious aspirations."

No sooner had the Young Plan been ratified than Paul
Moldenhauer, Germany's finance minister, made an an-
nouncement that added little to the prestige of the men
who had just estimated his country's ability to pay repara-
tions. On January 24 he declared that Germany would
face a cash deficit of two hundred and thirty-seven million
marks unless the Reichstag granted Ivar Kreuger of
Sweden a monopoly of the German match market in ex-
change for a loan of one hundred and twenty-five million
dollars. Awed by similar deals that Kreuger had made
with other financially embarrassed countries, the Reich-
stag on January 28 eagerly voted to accept the offer, and
the prudent London Economist was presently praising
Kreuger "as the originator of a system (fairly compar-
able with the League idea of international loans) whereby
security for international borrowing in the disturbed
aftermath of the War could be wedded with commercial
advantage for the lender." It also gave Kreuger credit
"for a real idee geniale springing from a mind deter-
mined to overcome difficulties, and fruitful of notions
when lesser men are inclined to shrug shoulders over the
insurmountable."

One reason why Germany turned to Kreuger for cash
was that Dr. Schacht, the President of the Reichsbank,
had forced the resignation of Dr. Hilferding, Molden-
hauer's predecessor in the German Finance Ministry, who
had tried to raise a short-term loan through Dillon, Read
and Company of New York. Dr, Schacht had worked
closely with J. P. Morgan and Thomas W. Lamont dur-
ing the Young Plan negotiations and had also dealt with

1930

S. Parker Gilbert, the former Agent General for repara-
tion payments, who was presently taken into the Morgan
firm. According to Georg Bernhard, editor of the liberal
Fossische T,eitung> Dr. Schacht had come to see eye to eye
with the Morgan group on certain problems of world
finance and had therefore protested against Hilferding's
plan to deal with Dillon, Read. Here is the way Bernhard

described the transaction at the time :

"Dillon, Read and Company is being bitterly opposed
in America by the firm of J. P. Morgan, of which Mr.
Parker Gilbert, the present Agent General for Repara-
tions, is to become a partner, and it now seems that
Dillon, Read will not be given the option it had hoped for
on all foreign loans. Indeed, Morgan opposed the pro-
ject. He alarmed French public opinion by announcing
that such loans would make it difficult for him, as the
representative of French interests, to turn the first Ger-
man loans to the advantage of France. Against such pow-
erful and unexpected opposition the German Ministry of
Finance could not put through its plans. It had to bow to
the will of Schacht in order to raise money for use at
home and it had to provide a sinking fund out of ordinary
national income. This victory of Morgan's for that is
what it amounts to will cost a pretty penny in the form
of the increased interest rates which the Reich must pay.
Dillon, Read's loan would have been raised at 7% per
cent, but the Reich must pay the German banks 8.8 per

cent"

The failure of the German banks to provide all the
money that was needed explains why Ivar Kreuger had
to be rushed into the breach.

And now for a plunge from the sublime names of

WORLD DIARY

^^^^^^^^^f^C^^^^

Morgan, Kreuger, Dillon, Gilbert, and Schacht, to the
ridiculous anonymity of an unemployed German who set
down in the liberal Berliner Tagelolatt this monologue
that he and two million others like him were repeating to

themselves after a vain search for work:

"You have two legs, two arms, two very long arms in
fact, two large hands, two clear eyes without glasses, a
sound, healthy skull, and yet you cannot manage to scrape
together food for three people. You are not succeeding in
your efforts. The field is barren. You are working power-
fully but you miss your aim every time. You are accom-
plishing nothing. You might just as well grub up the soil
with your ten fingers, or tear up the pavement of the
streets with your teeth and your feet and hands, hoping
by magic to cause it to bring forth bread and fruit and
life itself. You feeble, impoverished rat ! You are getting
nowhere. The sparrows have their refuse, the bees have
their pollen, and the earth-worms have their crumbs of
black mould, while you sit in their midst vainly wracking
your brains. Man is great He is able to send his spirit
on journeys far beyond the stars, where the day of his life
is merged with the night of God. He can dispatch his
spirit to Hell, fight with the Devil and overcome him.
Man is mighty. He can do everything. Yet he cannot
compress his stomach and command it not to growl. This
most insignificant miracle is denied him. Let him lie flat
upon the road, wringing his hands and peering with his
eyes until they start from their sockets; if he is condemned
to poverty, there is no God and no power of any kind to
send him twenty pfennigs for a bit of bread or a piece of
sausage. You are a helpless rat Go home where your

1930

o-oo-^o-

wife stands gazing into the great, worn pocketbook. Go
home. You are achieving nothing!".

Similar complaints could be heard in other parts of the
world. British unemployment had never fallen below one
million since the War and had gradually risen under
MacDonald's rule to more than twice that figure. Here
is the way an "Industrial Correspondent" of the New
Leader, organ of the Independent Labor Party, de-
scribed the condition of Lancashire, the center of the
British textile industry, in 1930:

"The average wage of a Lancashire textile weaver at
the present time is not more than 25 shillings [a week].
And it is estimated that in Burnley alone over one and a
half million pounds have been paid out in unemployment
benefits enough to have provided modern machinery for
almost all of the mills. The manufacturers are now flatly
despondent. There is no hope of a return to prosperity . . .

"In all the Lancashire towns shopkeepers are doing
little or no trade. Bankruptcy and liquidation are the
order of the day. Building societies are feeling the pinch
because people can no longer afford to buy, and will not
buy, houses if it is at all possible to rent them. Rates are
high, as is also the percentage of those unable to pay . . .

"It is the moral effect of all this, however, that will
prove most disastrous in the long run. Before the decline
children left school and went to the mill as a matter of
course. Now that avenue is largely closed, and in any
case parents are loath to send children into a trade that
is badly paid and irregular. Many children wander about
the streets for years though now and then a job is se-
cured for a few weeks. These children, with such a train-

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ing, will never really settle down to work during the
whole course of their lives."

But it was Spain, not England or Germany, in which
the discontent of the people took the most concrete form.
On January 28 General Primo de Rivera resigned the
position of dictator that he had held for the past six and
a half years, although his death from diabetes a few
weeks later suggests that ill health may have had some-
thing to do with his departure. His rule had failed to
improve economic conditions, it had steadily undermined
the prestige of the monarchy, and it had led to a growing
demand for more democratic government. According to
William Martin, foreign editor of the Journal de Geneve,
Primo's dictatorship was "conquered hy democracy, and
it can also be fairly said that this struggle has been going
on unceasingly ever since the first six weeks of his regime.
But only during 1929 did it become inexorable." Another
general, D'Amaso Berenguer, at once formed a provis-
ional cabinet, and on February IS King Alfonso signed a
decree dissolving the National Assembly, a collection of
trained seals that Primo had set up in place of the regular
Parliament

February

DURING the month of February two more political up-
sets occurred, one in France, the other in Japan. On
February 17 the French Socialists and Radicals, who had
refused to unite and uphold the Briand Cabinet against
Tardieu the preceding October, joined forces and voted

1930

0-0-CxX-

the Tardieu Cabinet out of office. But their triumph
lasted barely a week. Camille Chautemps, who had held
subordinate Cabinet posts in the past, formed a Cabinet
drawn almost entirely from his own Radical Party, but
retaining Briand as foreign minister. On February 25 the
new Premier asked the Chamber for a vote of confidence
only to be immediately overthrown by the Socialists,
whereupon Tardieu formed a second Cabinet, more re-
actionary than his first one, with Briand still in the For-
eign Office but reduced to a cipher.

Few statesmen of eminence had more unsavory records
than Andre Tardieu, a former protege of Clemenceau's.
"I do not dispute M. Tardieu's ability to give me lessons
in politics and morality," the ironic Poincare had written,
and a fellow deputy once told the Chamber, "There are
certain individuals whose dishonesty is universally recog-
nized but who remain unpunished. You, M. Tardieu, are
the last man in the world who has the right to accuse an-
other man of being a thief."

This charge had more than one foundation. Before the
War Tardieu not only received money from secret Rus-
sian funds for writing favorable articles for the Temps;
he had figured in two major scandals one in Africa,
the other in Turkey. Suffice it to say that in the first af-
fair he published false dispatches in the Temps about
German activities in the Congo, and that in the second
he supported an Anglo-Franco-Turkish company that was
planning to build a railway across Syria. When he failed
to win German support for the scheme which the
French Government opposed he published secret docu-
ments containing the French railway plans. His secretary
and two other men were then imprisoned for two years

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^f,,^^^^^^^^

because they stole the documents from the French For-
eign Office. It was not only because he had the sharp

Cebrol in Humaniti, Paris
M. ARISTIDE BRIAND

features of a scavenger that Tardieu had long been nick-
named "Le Requin" the shark.

1930

<>o<xx>

Nor was Aristide Briand, Tardieu's chief opponent in
the Chamber, an injured innocent. The Socialists had dis-
trusted him ever since he quit their ranks twenty years
before to accept a Cabinet post and break a railway
strike. As for the Radicals, his record between 1914 and
1918 did not commend him to the more sincere pacifists
in their ranks. During the war years he had not followed
the example of Caillaux and risked imprisonment and
even execution by advocating peace ; as head of one of the
war-time governments he won the title of the "Man of
Saloniki" by urging an attack on the Central Powers from
the south and by helping Sir Basil Zaharoff to draw the
unfortunate Greeks into the war.

After the French voters swung sharply to the left in
the 1924 elections, the ex-Socialist Briand took command
of the Foreign Office and spent the next six years trying
to fasten the Versailles system on Europe for all eternity.
He did much to strengthen the French domination of the
Continent by making a few concessions to Germany so
trifling that only the German Social Democrats expressed
the slightest gratitude. But his voice like a violincello and
his studied slovenliness won him a European reputation.
No international conference could be considered complete
without the "Man of Saloniki," now transformed into
the "Man of Peace," invariably looking as if he needed
a scrubbing behind the ears, a hair cut, and a shave.

The scene now shifts to Japan. On February 20 the
voters of that country elected a new Parliament giving
Premier Hamaguchi's Minseito Party an overwhelming
majority. This supposedly liberal party had always en-
joyed the financial support of the leading bankers in
Japan, whereas its more conservative rival, the Seiyukai,

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drew most of its funds from the Japanese industrialists.
Specifically, the Minseito Party was the political arm of
the great Mitsubishi trust, and the Seiyukai the political
arm of the still more powerful Mitsui interests.

In a book entitled Survey of Crimes Committed by Po-
litical Parties, the Japanese economist, T. Tachibana, has
drawn this distinction between the Mitsubishi and Mitsui
trusts and hence between the Minseito and Seiyukai par-
ties: "Mitsubishi is more engaged in financial operations
and heavy industry than in commercial deals. It controls
only a few commercial firms, whereas it directs a de-
cidedly larger number of banking institutions and insur-
ance companies. Consequently, Mitsubishi always covets
a financial policy that affords more protection to the finan-
cial capitalist than to the industrial capitalist. But this
partiality to the financial capitalist is unwelcome or even
detrimental to the interest of Mitsui, which has its pre-
dominant concern in commercial enterprise and controls
a very large number of major and minor industries of
various kinds. It is for this reason that Mitsui has re-
course to more intense protection of home industry and
that the Seiyukai Party proceeds with such protectionist
policies as directly or indirectly benefit domestic produc-

tion."

In foreign affairs Mitsubishi and the Minseito Party
favored the peaceful penetration of Asia and had sought
the aid of foreign capital to develop Manchuria. Mitsui
and the Seiyukai Party, on the other hand, preferred the
so-called "positive policy" of the late Baron Tanaka,
whose last government had fallen in July 1929. Conse-
quently, the Minseito election victory augured well for
the cause of naval limitation and indicated besides that

1930

OOOOO"

the international bankers who had devised the Young
Plan for Germany could count on the aid of Japan's new
rulers.

But the Tokyo earthquake of 1923 and the decade of
unbroken depression that followed the War had left their
marks. While magnates and politicians struggled for
power, popular discontent ran high. Unemployment stood
at one million, the national debt had doubled since 1920,
and forty per cent of the people lived off the land, which
was more densely crowded than that of any farming coun-
try in Europe. Henry Hellssen, a German visitor to
Japan in the spring of 1930, reported in the liberal Welt-
biihne of Berlin :

"The fear of dangerous ideas hangs over Japan like a
surplice. Out of politeness to Russia nothing is ever said
against Bolshevism, just as one never mentions the mur-
der of Chang Tso-lin, which is merely referred to as as 'a
certain serious episode in Manchuria.' The Japanese love
this kind of circumlocution, yet they have reason to fear
Bolshevism, for Karl Marx has more readers in Japan
than in any other country except Russia. Up to a few
years ago about sixty per cent of the university graduates
were able to get safe positions immediately after grad-
uation, but now barely twenty per cent can be assured of
employment. The result is a steadily growing academic
proletariat, and as hunger and undigested learning form
a chemical mixture in certain hot-heads, explosions inevi-
tably follow.

"Dangerous ideas find their most fruitful soil among
the unemployed, disillusioned students. Formerly the
Government used to urge professors and learned people
to visit Europe, but this advice is no longer given because

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all these men came back confirmed radicals. Secret-service
organizations have been installed in nearly all the Japan-
ese universities, for espionage is in the Japanese blood.
Nobody feels sure of himself. Perhaps his neighbor or
even his best friend is a spy." The report concluded with
these words : "The country seems to have no soul Every-
thing is nervous, forced, exaggerated. Harmony is lack-
ing. Neither Marxian theories nor exaggerated selfishness
and hysterical patriotism indicate a steady pulse, Japan
has a fever. Its temperature is running high/'

March

THROUGHOUT March Germany attracted wide attention.
On the seventh of the month Dr. Schacht showed his con-
tempt for the reparations settlement that he had helped to
prepare by resigning from the presidency of the Reichs*
bank, and five days later the Reichstag voted its approval
of the Young Plan. But on March 26 Hermann Miiller's
coalition Cabinet resigned, having held office since June
1928 under the chancellorship of a Socialist and a signer
of the Versailles Treaty. The next day Heinrich Briining,
leader of the Catholic Center Party, formed a more con-
servative coalition Cabinet from which the Socialists were
excluded but which retained Dr. Curtius, Stresemann's
successor, as foreign minister. "The performance of The
Rhinegold has ended," moaned the liberal Fossische 2*ei~
tung of Berlin, "and The Twilight of the Gods is about
to begin."

The new Chancellor, a bachelor of forty-five, and an

1930

^X>OOO

ascetic and devout Catholic, had risen to the rank of in-
fantry captain during the War, having taken his Ph.D. at
the age of thirty with a thesis on railways. He had lived
in both France and England and held the statesmanship of
the latter country in especially high regard. "The experi-
ences of the War," he wrote in an article for young people
shortly after the Armistice, "generally strengthened the
realization of those who participated in those great and
terrible events unless they were spiritually unsettled by
them that the great tasks in the world are accomplished
only by sacrifice, unselfishness, and voluntary discipline."
In 1920 he told the students of Gottingen: "Our time
needs a hard, determined, and, above all, an uncom-
plicated kind of man. I trust that the generation that took
part in the War possesses all the qualifications for becom-
ing this strong and hard race of men." He thereupon
threw himself into politics, and when he became tempo-
rary editor of the Deutsche, the organ of the Catholic
trade unions, his friends nicknamed him "Reich Chan-
cellor." But it took half a dozen years for their prophecy
to come true.

While Germany was replacing a Socialist with a Catho-
lic as Chancellor, the London Naval Conference came to
an end. It had opened on January 21, the day after the
Young Plan had been signed, and lasted until March 22.
Because the Italians had insisted on being allowed to build
as many ships as the French, although they could not pos-
sibly afford them, these two nations did not sign the final
agreement, but the more important issue at stake between
the United States and England had been settled. An ar-
ticle in the Conservative Empire Review written by an in-
fluential Tory journalist, W. A. Hirst, showed how

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~&-<>-<><>-<&~<$^^

strongly many Englishmen felt at the time the Conference
opened :

"Intimately connected with our trade are our other im-
perial interests. It is more necessary that we should show
our flag as much as possible in South American waters,
and, above all, that we should not allow ourself to take
second rank as a naval power. In this matter publicists are
engaged on an almost hopeless task. There is a strict
censorship exercised over all the newspapers published in
London. Every reference to the United States that is not
laudatory or conducive to its interests is ruthlessly struck
out. But weakness as compared with that nation is quite
as dangerous as weakness in relation to Germany. The na-
tions of South America are friendly to us and hostile to the
United States or, at least, suspicious. But they cannot af-
ford to be friendly with a weak power, and if we show or
profess weakness, they will look to the United States as
the paramount power in South America. "

The final settlement did not, however, leave England in
the weak position against which Mr. Hirst had warned.
The American, British, and Japanese delegations agreed
to halt all capital-ship construction until 1936 and to ex-
tend the 10: 10: 7 ratio that the Washington Conference
had fixed for their larger vessels to aircraft carriers,
cruisers, and destroyers. England also succeeded in hav-
ing an "escalator clause" included, permitting the three
parties to the treaty to increase their tonnage in the event
of additional building by France or Italy. Furthermore,
both the total cruiser tonnage and the total capital-ship
tonnage of Great Britain exceeded the corresponding ton-
nages permitted to the United States. Less than ten years
had passed since Secretary Hughes had made Great Brit-

1930

<XXXX>-

ain a present of naval equality at the Washington Naval
Conference, and the British Navy remained, as ever, the
most powerful in the world.

But British finance had not fared quite so well. On the
same day that England gained naval supremacy In small
as well as large vessels, Mr. Gates W. McGarrah, former
chairman of the Federal Reserve Bank of New York, took
command of the new Bank for International Settlements
with headquarters at Basel not, as the English had
hoped, in London.

April

OUR ATTENTION during the first quarter of 1930 has
focused on five of the so-called great powers England,
France, Germany, Japan, and the United States. No men-
tion has yet been made of another great power Russia
or of the two most populous areas on the earth's surface
China and India. Yet Russia, China, and India all of
them predominantly agrarian countries had been pre-
paring to make a splash that would soak other parts of
the world. The All-India Congress Party, for instance,
had been laying plans for a campaign of nonviolent non-
cooperation directed against the British Government un-
der the leadership of one of the ablest agitators the world
has ever seen.

Since 1919 Mahatma Gandhi, born a high-caste Hindu,
had been developing tactics of passive resistance, as well
as advocating Moslem and Hindu unity and equal rights
for the sixty million "Untouchables" whom the Hindus

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<><><><><>-<><><>-^<><><><^<>^><><>

strongly many Englishmen felt at the time the Conference
opened :

The final settlement did not, however, leave England in
the weak position against which Mr. Hirst had warned.
The American, British, and Japanese delegations agreed
to halt all capital-ship construction until 1936 and to ex-
tend the 10:10:7 ratio that the Washington Conference
had fixed for their larger vessels to aircraft carriers,
cruisers, and destroyers. England also succeeded in hav-
ing an "escalator clause' 1 included, permitting the three
parties to the treaty to increase their tonnage in the event
of additional building by France or Italy. Furthermore,
both the total cruiser tonnage and the total capital-ship
tonnage of Great Britain exceeded the corresponding ton-
nages permitted to the United States. Less than ten years
had passed since Secretary Hughes had made Great Brit-

1930

<><><<><>

am a present of naval equality at the Washington Naval
Conference, and the British Navy remained, as ever, the
most powerful in the world.

But British finance had not fared quite so well. On the
same day that England gained naval supremacy in small
as well as large vessels, Mr. Gates W. McGarrah, former
chairman of the Federal Reserve Bank of New York, took
command of the new Bank for International Settlements
with headquarters at Basel not, as the English had
hoped, in London.

April

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shunned. But just as Briand posed as the "Man of Peace"
in order to give France control of Europe, so Gandhi
preached nonresistance in order to give the Hindus control
of the Indian independence movement. In like manner he
made propaganda for home spinning and hand industries,
not with a view to setting the hands of the clock back a
hundred years hut in order to aid Indian industries at the
expense of the British. In 1920 the Calcutta session of his
party went on record as advocating hand spinning only be-
cause "the existing mills of India with native capital and
control do not produce enough yarn or material to satisfy
the needs of the nation."

Early in April Gandhi launched his campaign of civil
disobedience. On March 2 he had written to Lord Irwin,
the British Viceroy, threatening to make salt from sea
water in violation of the law that laid a tax on this most
necessary of all commodities, a tax that fell like the rain
on rich and poor alike. What he demanded was that either
the Viceroy or the British Cabinet immediately pledge full
Dominion status to India in advance of the Round Table
Conference to be held in London that autumn. Gandhi's
letter to the Viceroy defined his methods :

"I cannot intentionally hurt anything that lives, much
less fellow human beings, even though they may do the
greatest wrong to me and mine. While, therefore, I hold
the British rule to be a curse, I do not intend harm to a
single Englishman or to any legitimate interest he may
have in India."

Here is the way he described his doctrine of nonvio-
lence : "Many think that nonviolence is not an active force.
My experience, limited though it undoubtedly is, shows
that nonviolence can be an intensely active force. It is my

1930

->O^Xx>

purpose to set that force in motion against the organ-
ized violent force of the British rule as well as against the
unorganized violent force of the growing party of vio-
lence."

The Conservative Week-end Review of London ex-
pressed alarm: "The illicit manufacture of salt may be
on a very small scale, the salt so produced may be in-
edible, the inability of Mr. Gandhi to achieve martyrdom
may have comedy in Western eyes. The East is seeing all
that very differently. How far and in what way it will
respond to his symbolical defiance of the Government re-
mains to be seen."

Here is the acknowledgment that Gandhi's lengthy let-
ter brought him :

DEAR MR. GANDHI:

His Excellency the Viceroy desires me to acknowl-
edge your letter of the second of March. He regrets to
learn that you contemplate a course of action which is clearly
bound to involve violation of the law and danger to the public
peace.

Yours very truly,

G. CUNNINGHAM,

Private Secretary

On April 5 Gandhi carried out his threat. After march-
ing two hundred miles to the Arabian Sea, he and a small
group of companions began making salt in defiance of the
law. Within a week British soldiers throughout India were
using their swagger sticks to flick the white cotton caps off
the heads of Gandhi's supporters, who were obstructing
traffic by lying down on railway tracks and public thor-
oughfares, boycotting British goods, and refusing to obey

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British laws. On the twenty-third of the month troops at
Peshawar, in Northern India, shot down twenty National-
ists, and on April 30 Gandhi's son was sentenced to a year
in prison, charged with sedition. On May 3 Gandhi him-
self was seized and imprisoned near Bombay, and troops
began raiding several provincial headquarters of the Con-
gress Party,

Shortly afterward the Laborite journalist, H. N. Brails-
ford, wrote this description of the condition of Bombay:
U A week ago when I landed in India I saw what no one is
likely to see again Bombay obeying two governments.
To the British Government with all its apparatus of legal-
ity and power there still were loyal the European popula-
tion, the Indian sepoys who wear its uniform, a few of the
merchant princes, and the older generation of the Moslem
minority. The rest of Bombay had transferred its al-
legiance to one of the British Government's too numerous
prisoners, Mahatma Gandhi. ... In his name Congress
ruled this city. Its lightest word was obeyed." Thanks to
the Congress Party's passive-resistance policy, little vio-
lence occurred, and this strange dual regime lasted
throughout 1930.

During the same month that the British Government
was suppressing one revolution in India, the Soviet Gov-
ernment was suppressing another revolution in Russia.
On January 6 the Central Executive Committee of the
Russian Communist Party had issued a decree calling for
more rapid collectivization of the farms than the Five-
Year Plan required and embodying "a policy of the liquida-
tion of the kulaks (well-to-do peasants) as a class." These
words had been written by Joseph Stalin, Secretary of the
Party, who had finally adopted the same farm policy that

1930

-OxXxX-

his rival, Trotzki, had been exiled for advocating in 1927.
The next year three other Communist leaders Rykov,
Tomski, and Bukharin attacked Stalin from the other
flank, criticizing him for moving too rapidly. But when
they too were threatened with expulsion, they saw the
error of their ways and recanted in November 1929.
Stalin then continued along the middle of the road.

Although Stalin held no position in the Russian state,
he occupied the most important post in the party that ruled
the state, and his previous history showed that he pos-
sessed the necessary qualifications for the job. Not only
had the Tsarist government imprisoned him in Siberia as
a revolutionist; he had always shown a flair for violence,
his exploits having included a bold bank robbery to ac-
quire funds for his revolutionary comrades. Lenin once
expressed misgivings about Stalin's ruthlessness, but this
trait had proved more valuable than Trotzki's greater in-
tellectual attainments when a period of reconstruction fol-
lowed a period of revolution.

During January and February the Communist author-
ities, set about confiscating the property of the kulaks,
whose equipment was actually worth only seven hundred
dollars per capita on the average a significant indication
of the sheer poverty of the Russian farming class. The
kulaks retaliated by murdering Soviet officials, setting fire
to granaries, and finally slaughtering and devouring their
live stock rather than letting it fall into the hands of the
collectives.

On March 2 Stalin therefore warned the "comrade col-
lectivists" to go slow, and on April 3 he told the Central
Executive Committee that the "middle peasants" had suf-
fered along with the kulaks. "Repression," he declared,

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"necessary and useful as it may be in the struggle with our
class enemies, is not permissible with respect to the middle
peasant, who is our ally." He did not yet know that the
rapid collectivization, and the "class war in the villages"
that went with it, not only had antagonized millions of
peasants but had caused the destruction of half the live
stock in the country a loss that it would take years to
repair.

The repression of the kulaks also led to reports that
antireligious propaganda had been resumed, and in Jan-
uary Pope Pius was denouncing "the horrible, sacrilegious
wickedness perpetrated in Russia against God and the
souls of men." "His soul, it is evident," remarked the Con-
servative Morning Post of London, "burns within him,
as he describes not the persecution only but the perversion
of youth against religion and morals which is the delib-
erate policy of the Terrible Sect." The Archbishop of
Canterbury followed the Pope's lead and asked his flock
to pray for Russia's deliverance, whereupon the Laborite
Daily Herald began attacking the motives of the Tories
in their sudden zeal against persecution : "During the reign
of the Tsar, when pogroms were the order of the day,
the voices of Toryism were as silent as the graves to which
the victims were hurried,"

The course of events justified this criticism. In April the
British ambassador at Moscow reported : "No trace could
be found of the punishment of a priest, or any other per-
son, for the practice of the Christian or any other re-
ligion, or for the performance or observation of religious
rites and services. Priests have been shot for counter-
revolutionary crimes. Other foreign diplomatists have
made similar inquiries with the same results." But the

Crocodile, Moscow

"Mother, isn't he an arithmetic teacher?'*

"Who told you that?"

"He's wearing the c plus s sign on his chest."

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Tories of every country who tried to make political cap-
ital out of religious persecution in Russia did not anticipate
a collapse of the Five-Year Plan ; what they feared was
that it might succeed and make Russia a more important
factor in world affairs.

And their misgivings had cause. On April 28 the Soviet
Government completed the eleven-hundred-mile "Turk-
sib" railway six months ahead of schedule and at less than
estimated cost. This line not only joined the rice and cot-
ton regions of Turkestan to the meat, grain, and timber
regions of Siberia ; it brought the, enormous Chinese prov-
ince of Sinkiang within the Soviet sphere of influence.
Since Sinkiang also touches British India, where Gandhi
was launching his civil disobedience movement at that
time, it was not surprising that British troops closed the
Khyber Pass leading from India to Afghanistan the day
after the Turksib railway had been opened.

A British correspondent of the New Statesman who vis-
ited Moscow in the spring of 1930 reported that the state
of mind of the people reminded him of his own country
during the War. "There now, as in England during the
later years of the War, there is a national fervor express-
ing itself in similar ways but for a different purpose. The
Great War, we were told at that time, was a war to end
war. Consequently, we gladly suffered ourselves to be
rationed and submitted to other privations. In Russia the
industrial development envisaged by the Five-Year Plan
will make further industrial development unnecessary. The
millennium will as surely dawn on its completion as it
dawned over Europe on the conclusion of the Treaty of
Versailles."

He then quoted a Russian radio announcer who said :

1930

-o-xxx>-

"When you miss your eggs and butter, you have the satis-
faction of knowing that they are being sold abroad to
France, Germany, or Great Britain and are returning to
our country in the form of nuts and bolts." He also quoted
this legend which he saw underneath a girl's photograph
on the bulletin board of an office : "All hail Olga Stephan-
ova, who gave up her month's holiday to make her depart-
ment more efficient! She has been awarded a month's
bonus of fifty rubles by the Board. Sixty thousand rubles
have been paid out in such bonuses by this department."

May

WHILE India and Russia each had one civil war going on,
China had two. During May heavy fighting began be-
tween 50,000 Nationalist troops, representing the Nank-
ing Government, and the combined forces of two inde-
pendent war lords to the north Yen Hsi-shan and Feng
Yu-hsiang, who opposed Nanking's attempt to unify
China and crush their own provincial governments. Simul-
taneously the Communists launched an attack on the
provinces of Kiangsi and Hunan in the south. At this
point it becomes necessary to jump ahead of our story
and report that on June 25 the northern coalition seized
the capital of Shantung Province from the Nationalists,
and that the Communists seized the capital of Hunan a
month later. Here, however, American, Japanese, and
British gunboats intervened and drove out the Commu-
nists, thus enabling the Nationalists to concentrate all
their forces on the northern coalition, which they finally

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defeated on August 15. According to Nationalist estimates
these and other battles cost their own forces 30,000 killed
and 90,000 wounded and the two opposing forces 150,-
000 killed.

Chiang Kai-shek, generalissimo of the Nationalist
forces, over-shadowed all other individuals in China at
that time. In a wartorn country his military genius made
him the number-one man. After attending Tokyo Military
College he married the sister of Dr. Sun Yat-sen's wife,
thus establishing a family connection with the revered
founder of the Kuomintang (Nationalist Party). From
1923 to 1927 the Kuomintang had worked in close asso-
ciation with both the Russian and Chinese Communists,
Chiang Kai-shek had visited Moscow for six months to
study military affairs but when the Kuomintang troops
were sweeping northward during the summer of 1927
Chiang broke loose and occupied Shanghai against the
orders of his party. Here he established connections with
some of the richest native bankers, smashed the local
labor unions, and transformed what had begun as a revo-
lutionary uprising of workers and peasants into a middle-
class movement for a strong central government.

Sun Yat-sen's widow denounced her brother-in-law as
a traitor, but her own brother, T. V. Soong, followed
Chiang, as did Dr. H. H. Kung, who had married an-
other of the Soong sisters. With these and other influen-
tial recruits, with a well-trained army, and with the sup-
port of the Shanghai bankers, Chiang Kai-shek gained,
finally, complete control of the Kuomintang and estab-
lished the Nationalist Government with headquarters at
Nanking in 1928. Many radical members of the old
Kuomintang then joined the Communists, who built up a

1930

ooooo-

strong mass party and gained control of several impor-
tant districts in the southern provinces notably Kiangsi
with a total population of some fifty million inhabitants.
Here they established local Soviets on the Russian model
and collective farms.

Dr. L. von Ungern-Sternberg, a Far Eastern corre-
spondent of the Berliner Tageblatt, described the condi-
tion of the Chinese people at this time as follows : "Mil-
lions have died of hunger in recent years. Thousands of
little girls have been sold for prices ranging between one
and fifteen dollars in American money. Cannibalism pre-
sents a temptation that these famished people are not
always able to resist. . . . Even in Shanghai, the most
expensive city in China, a workman can feed himself on
the equivalent of two and a half or three dollars a month,
and a family needs much less than that per head. The
Shanghai laborer spends about a dollar a month for
clothes, whereas the peasant needs but a dollar a year.
The coolies maintain life at the lowest possible level, a
level that has sunk still lower in recent years, for, al-
though wages have risen, prices have gone up even
higher."

New ideas, new customs, new commodities, all im-
ported from the Western nations, had made the Chinese
increasingly dissatisfied with their wretched lot. "The
people want all kinds of novelties that a few dollars can
buy and, in consequence, the traditional Chinese attitude
of resignation no longer remains possible. For poverty
and privation are no longer endured as they used to be.
China's increasing consciousness of her misery has
brought about unexpected results, and all the social struc-
ture of the country has changed. The big family is break-

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ing up, for the father or son of the family can no longer
support a great number of relatives, and hence they must
depart to places where employment can be found. This
change is not due to a new philosophy of life ; it is the
result of rising prices and the desire for new goods and
new experiences, and particularly an eagerness for nov-
elty, which has become the outstanding phenomenon of
modern China. And with the disappearance of the big
family has come the end of the support it could lend to
its members; there is nobody to help the unemployed dur-
ing hard times." Western products had already trans-
formed the life of China; what effects would the new
China have on the West?

June

WHILE THAT question awaited an answer, things began
happening in other parts of the world. On June 6 Prince
Carol of Rumania, who had renounced his throne in 1926
rather than separate from Magda Lupescu, the plump,
red-haired, green-eyed daughter of a Jewish garage pro-
prietor, arrived In Bucharest by airplane from Paris,
while his mother, Queen Marie, was attending the Ober-
ammergau Passion Play. Two days later Parliament
voted to nullify his renunciation of the throne and made
him King. On June 12 he signed a decree giving Helen,
his former Queen, the title of "Her Majesty," and on the
same day the Rumanian Holy Synod annulled the divorce
it had given her in 1928.

The return of this chinless Hohenzollern displeased the

1930

-<x>o<x>-

French, who had been lending money to Rumania since
the War without improving the country's economic situa-
tion. Germany and Italy, on the other hand, welcomed
the new development and began subsidizing Fascist
groups to pry Rumania loose from French influence. The
Balkan correspondent of the London Times summed up
Rumania's troubles by quoting the French proverb, "Trop
d* intelligence a la ville, pas assez au village" "The Uni-
versity of Bucharest/' he wrote shortly before Carol's
coup d'etat, "alone has twenty-five thousand students, and
there are three other universities in the country and this
in a country where agriculture is the principal occupa-

tion."

While Asia was reverting to imperialist intrigue and
the Balkans to opera bouffe, the United States set the
hands of the clock back to the early Middle Ages, when
each walled town was sufficient to itself. On June 13 the
Senate passed the Hawley-Smoot Tariff Act, which Presi-
dent Hoover promptly signed, ignoring the objections of
1028 American economists, scientists, and financiers, and
of forty foreign countries. This measure increased tariffs
on cattle, hogs, bacon, lard, corn, wheat, sugar, and other
farm products, as well as on a few manufactured goods,
notably shoes, gloves, matches, and china. It also con-
tained a "flexible tariff provision" giving the President
the right to alter rates of duty.

President Alfred P. Sloan, Jr., of General Motors
warned: "You cannot ship out of the country a terrific
amount of goods without getting goods back to pay for
them," and foreigners sang the same refrain. The Man-
chester Guardian said: "The Tariff Bill has probably
done more to discredit Mr. Hoover's Administration than

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anything else." The London Dally Telegraph warned that
"fiscal reprisals are a certainty." The Temps of Paris
bitterly remarked: "Under all circumstances the United
States endeavors to expand its ideas and products
throughout Europe but does not wish to receive anything
in return." But it remained for the Neue 'Lurcher 2,eitung
to catch the real point: "The bulk of American farm
products are now sold on the domestic market rather than
on the world market, and the American farmer has in
consequence been transformed from a fanatical free
trader into a fanatical protectionist. Those whose pros-
perity depends on high prices for pigs, corn, and wheat,
want to maintain these high prices by means of high
tariffs."

How large a stake had Mr. Hoover risked both at
home and abroad by choosing this device to raise Ameri-
can farm prices? In 1930 the United States exported
more goods than any country and imported more than any
country except Great Britain. It took more than two-
thirds of all the exports of Mexico, Cuba, and Colom-
bia, and between one-quarter and one-half of the total
exports of Brazil, Japan, Canada, Chile, Peru, and Vene-
zuela. The United States also depended on foreign coun-
tries for all its rubber, silk, tin, coffee, and cocoa, and
had to buy from abroad a large amount of copper, wood
pulp, wool, sugar, furs, and hides. Even before the
Hawley-Smoot Act had been passed, only Spain had
higher tariffs than the United States, and the new rates
meant an average increase of forty-one per cent on all
dutiable articles. Mr. Hoover's statesmanship led to an
immediate retaliation on the part of Canada and gave
fresh impetus to the Empire free trade campaign that

1930

-o-oo<x>-

Rothermere and Beaverbrook, the two big press barons
of Great Britain, had been promoting to make the British
Empire economically self-sufficient by imposing prohibi-
tive tariffs against all other lands.

China, India, and Russia had already experienced do-
mestic strife during the first half of 1930, and in the clos-
ing weeks of June, South America began to follow suit.
On June 22 a revolution in Bolivia forced the resignations
of President Hernando Siles and General Hans Kundt,
German commander of the army. Since 1920 Siles, aided
by Dillon, Read and Company and a one-man brain trust
in the form of Professor Kemmerer of Princeton, had
increased the indebtedness of the country from less than
four million to over sixty million dollars. By 1930 nearly
sixty per cent of the budget went into military expendi-
tures or interest payments to foreign bondholders. Fi-
nally, Siles had attempted to prolong his term as Presi-
dent in defiance of the Constitution.

Another factor in his overthrow was the rumor that
he had been negotiating with North American oil inter-
ests, which were said to have offered money both to
Bolivia and Paraguay if they would settle their boundary
dispute in the Chaco district and enable petroleum to be
shipped out of that area. The Sol of Madrid reported:
"The revolutionary movement in Bolivia, according to
one of its leaders, is directed against imperialist despot-
ism, and one of its purposes is to nationalize the oil wells
and mines. In fact, the United States has hastened to as-
sure the Government of its support in crushing the up-
rising." But neither the military junta that governed Bo-
livia after the overthrow of Siles nor the new President,
Daniel Salamanca, who was elected on January 1, 1931

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and reestablished constitutional government two months
later, took this step.

July

THE SECOND half of 1930 began with the French troops
completing their evacuation of the Rhineland in accord-
ance with the Briand-Stresemann agreement of the pre-
vious year. Great Britain also kept its promise to sur-
render its mandate over Irak by signing a treaty whereby
one of the richest oil lands in the world would enter the
League of Nations in 1932 as an independent state.

But on July 1 8 more signs of trouble appeared in Ger-
many. The Reichstag rejected Chancellor Briining's econ-
omy decrees, made necessary by foreign borrowings,
Young Plan interest payments, ^ and social-insurance
charges. An ex-Socialist Minister of Labor put through a
seven and one-half per cent wage cut affecting two hun-
dred thousand workers, but the Socialist deputies refused
to support him. President Hindenburg therefore issued
an edict dissolving the Reichstag and called for new elec-
tions on September 14, Until that time, Briining governed
by decree.

August

DURING AUGUST Peru underwent the same kind of revo-
lution that had struck Bolivia in June. President Leguia,

1930

oo-cxx-

like his neighbor, Siles, had borrowed heavily from the
United States and between 1919 and 1929 had increased
his country's foreign debt from ten million to over one
hundred and eleven million dollars. Whereas Siles had
raised funds through Dillon, Read, Leguia had made use
of the good offices of the Guaranty Trust Company and
of Dr. W. W. Cumberland, former foreign trade "ex-
pert" for the American Department of State. The Ameri-
can ambassador, Alexander P. Moore, had once declared
that "Leguia has the courage of Caesar, the power of
Napoleon, and the diplomacy of Richelieu" and "would
go down in history as one of the world's greatest men."
These qualities, however, failed to keep him in office or
even out of jail when a military junta seized power in a
bloodless coup d'etat on August 25. Three days later its
leader, Lieut. Col. Sanchez Cerro, set himself up as Pro-
visional President and governed the country the rest of
the year.

The same week a different kind of revolution broke out
in Argentina, which had lived since 1916 under the vir-
tual dictatorship of Dr. Hipolito Irigoyen. This quixotic
figure had led the Radical Party to victory in 1916 and
acquired enormous popularity by refusing to declare war
on Germany. His autocratic methods, however, split his
party in two, his own followers calling themselves Per-
sonalistas. Because the Argentine Constitution does not
allow the same man to occupy the presidency for two
terms in succession, Irigoyen went into partial retirement
in 1922 but returned to office in 1928. He then refused
to send any ambassador to Washington but put through
an important trade agreement with Great Britain and

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arranged for the Prince of Wales to visit Buenos Aires
in 1931 to open a British trade exposition.

One of the most popular native journalists, Raul Scala-
brini Ortiz, has given this description of Irigoyen's char-
acter :

"Until the moment he assumed power Irigoyen had
never spoken in public. Neither were any of the writings
known in which he had outlined his programme or defined
the central ideas that he would follow. His opinions were
surrounded by the same mystery that surrounded his life.
Nobody knew anything about the way he lived or even
what he looked like, for until he was elected Irigoyen did
not permit himself to be photographed. He had the same
reluctance that Mohammed did toward having his person
represented in pictorial form, and the fact is that in re-
spect to his life, his conduct in office, his whole person-
ality, and his role as a leader of the masses he bore much
more resemblance to the prophet of Arabia than to any
politician of a European type. Like Mohammed he had
spent thirty years in voluntary exile; like Mohammed he
represented himself to the public as an uneducated man
yet one who understood everything; like Mohammed he
practised a confused, bombastic literary style full of sibyl-
line images and had no hesitation in referring to himself
as a high point in human history if not as an emissary of
God. Finally, like Mohammed, he understood how to
win the affection and loyalty of his people."

But Irigoyen's popularity failed to survive the decline
of foreign trade and the combined opposition of the labor
unions and the big landowners. For the drop in foreign
trade compelled Argentina to ship gold abroad and thus
contract its currency and raise prices, Awhile Irigoyen's use

1930

-<><><x>-c>-

of the army against railway strikers and his proposal to
confiscate the big estates cut into his mass support and
antagonized the well-to-do classes. When the Personal-
istas showed a loss of two hundred thousand votes in the
congressional elections of March 1930, Irigoyen' s op-
ponents prepared for action.

September

GENERAL JOSE F. URIBURTT, son of a former Conserva-
tive President and an influential figure in the Argentine
Army, took charge of operations. After conflicts between
students and police in Buenos Aires had resulted in the
death of one student, martial law was declared, and Uri-
buru entered the capital on September 6 at the head of the
rebellious army. Twenty people were killed in street fights,
and Irigoyen resigned. Two days later a provisional gov-
ernment headed by General Uriburu took the oath of office
while twenty more people were killed in riots. The London
Times at once attributed the revolt to an unholy alliance
between American capital and the Argentine landowners.
As Irigoyen had refused to lease any of the nation's pe-
troleum fields to the Standard Oil Company, this charge
probably had some validity. Furthermore, the government
that succeeded him promptly granted concessions to North
American oil interests.

In a book that sold enormously throughout Argentina
-El Hombre que estd solo y espera Raul Scalabrini
Ortiz, whom we have already quoted, gave some pic-
turesque interpretations of the citizens of his native coun-

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try. Here is the way he described the effect of the pampa
on the immigrant from Europe :

"The European farm laborer enters the pampa with
fascination. The reality of its fertile expanses far exceeds
his wildest dreams. He works the soil, divides it up, plows
it, delighted with the prospect of the rich harvest that
will reward his pains. For a time the pampa flourished,
brought to life by the passionate strength of the Euro-
pean. Tireless activity seemed to be transforming its
surly appearance. On every rancho there was a bottle of
wine, a man who sang, and an accordion. But gradually
the earth came into its own. It lulled the unexpected noises.
It leveled the excrescences of physical well-being. Again
it enforced its despotic rule of silence and peace; it re-
verted to its original condition of perplexity and even
ecstasy. Man who had worked the soil finally found that
the roles were reversed."

He then gave an account of the middle-class inhabitant
of Buenos Aires the Porteno that throws light on the
overthrow of Irigoyen:

"The Argentine man does not bargain for the fame that
representing the public brings with it. Although he be-
lieves that no personal profit or privilege should be de-
rived from public office, the politician can enrich himself
as much as he pleases without suffering for it, provided he
does not violate the spirit of the earth. Subconsciously, the
crowd knows that the earth is the essential element in the
Argentine and that man merely crawls on its surface* That
is why the citizen of Buenos Aires, who puts up with all
kinds of betrayals, judges political treason relentlessly.

"His eyes are so wide open that, no matter how fond he
is of his representatives in office, he will punish them ruth-

1930

-Xx><X>-

lessly if they show any tendency to treat foreign capital
on a level of equality. The Porteno remains indifferent to
the enthusiasm of intellectuals and journalists, he does not
feel in the least exasperated by their arrogance, but he
never forgives the arrogant politician. He will be mistrust-
ful of anyone who talks a great deal in the first person.
He hates the words T and 'mine.' The infinite pompous-
ness into which members of the government occasionally
slip robs them of all conception of responsibility."

But South America had no monopoly on revolutionary
sentiment that summer. On September 14 Germany elected
a new Reichstag, and the Socialists, the National Social-
ists, and the Communists attracted more than half the
votes by demanding various forms of socialism. Both the
National Socialists and Communists had gained ground in
the past two years, the Communist vote having increased
forty percent since 1928 and the National Socialist vote
having multiplied many times over in the same period-
Adolf Hitler, the Austrian house painter who had made
himself a national laughing-stock when he attempted a
coup d'etat from a Munich beer hall in 1923, had become
overnight an international figure. Under his leadership the
National Socialists. or "Nazis" had increased their
followers from six to six millions within seven years.

A contributor to the New Statesmen and Nation who
came to know Hitler in Munich shortly after the War
threw some light on his early career. During the War, ac-
cording to a companion in arms, Hitler "was neither pop-
ular nor the reverse with his fellows ; they just smiled at
him and his vague, rambling speeches on everything in
the world and out of it. He acquired very swiftly the repu-
tation of being what in the British Army is called an 'old

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try. Here is the way he described the effect of the pampa
on the immigrant from Europe :

He then gave an account of the middle-class inhabitant
of Buenos Aires the Porteno that throws light on the
overthrow of Irigoyen:

"The Argentine man does not bargain for the fame that
representing the public brings with it Although he be-
lieves that no personal profit or privilege should be de-
rived from public office, the politician can enrich himself
as much as he pleases without suffering for it, provided he
does not violate the spirit of the earth. Subconsciously, the
crowd knows that the earth is the essential element in the
Argentine and that man merely crawls on its surface. That
is why the citizen of Buenos Aires, who puts up with all
kinds of betrayals, judges political treason relentlessly.

"His eyes are so wide open that, no matter how fond he
is of his representatives in office, he will punish them ruth-

i V 60
ooooo

lessly if they show any tendency to treat foreign capital
on a level of equality. The Porteno remains indifferent to
the enthusiasm of intellectuals and journalists, he does not
feel in the least exasperated by their arrogance, but he
never forgives the arrogant politician. He will be mistrust-
ful of anyone who talks a great deal in the first person.
He hates the words T and 'mine.' The Infinite pompous-
ness into which members of the government occasionally
slip robs them of all conception of responsibility."

But South America had no monopoly on revolutionary
sentiment that summer. On September 14 Germany elected
a new Reichstag, and the Socialists, the National Social-
ists, and the Communists attracted more than half the
votes by demanding various forms of socialism. Both the
National Socialists and Communists had gained ground in
the past two years, the Communist vote having increased
forty percent since 1928 and the National Socialist vote
having multiplied many times over in the same period.
Adolf Hitler, the Austrian house painter who had made
himself a national laughing-stock when he attempted a
coup d'etat from a Munich beer hall in 1923, had become
overnight an international figure. Under his leadership the
National Socialists or "Nazis" had increased their
followers from six to six millions within seven years.

A contributor to the New Statesmen and Nation who
came to know Hitler in Munich shortly after the War
threw some light on his early career. During the War, ac-
cording to a companion in arms, Hitler "was neither pop-
ular nor the reverse with his fellows ; they just smiled at
him and his vague, rambling speeches on everything In
the world and out of it. He acquired very swiftly the repu-
tation of being what in the British Army is called an 'old

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soldier.' That is, he showed distinct talent in avoiding
disagreeable tasks, but he knew on which side his bread
was buttered. . . . Though he got the Iron Cross of the
second class, no one in the regiment ever looked upon
Hitler as any sort of a hero ; indeed, they rather admired
him for the skill with which he avoided hot corners.

"In Munich," continued this British observer, "I fre-
quently noticed in the street a man who vaguely reminded
me of a militant edition of Charlie Chaplin, owing to his
characteristic moustache and his bouncing way of walking.
He never wore a hat, but always carried a riding whip in
his hand which he used incessantly to chop off imaginary
heads as he walked. . . . My grocer informed me that
it was a Herr Adolf Hitler from Braunau in Austria and
that he was leader of a tiny political group which called
itself the German National Socialist Workers' Party. He
lived quietly enough as a boarder in the apartment of a
small artisan, wrote articles for an obscure paper called
the Volkische Beobachter, and orated in hole-in-the corner
meetings before audiences of a dozen or two,"

Hitler never drank or smoked, he ate no meat, he had
no liking for women, and his closest friend was Captain
Ernst Rohm, a notorious and self-confessed homosexual.
He had a passion for occultism, and in spite of his anti-
Semitism constantly consulted a Jewish hypnotist who had
changed his name from Steinschneider to Hanussen. Hit-
ler then adopted as the emblem of his party and of the
new Germany he planned to create a reversed swastika
which, unlike the true swastika, does not indicate endless
life but violent destruction. His English acquaintance also
reported : "I never met a German who was so entirely un-
German. His speech, his outlook upon men and things

1930

oo-oo-o-

were far more Slavic than Teutonic." But Hitler always
gave the impression of being "passionately, almost fero-

TODDER LuGE

Stcifit

itii ftretfteltt

NAZI CAMPAIGN POSTER

"Death to lies," the poster reads at the top, "For Justice and

Freedom," it reads below. "Marxism" is inscribed on the

snake's belly, "High Finance" on its back,

ciously sincere in all he says and does, even when it ap-
pears hypocritical and insincere."

Gregor Strasser, a Munich chemist and one of Hitler's
earliest followers, gave the new Reichstag a much clearer

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definition of National Socialist policy than his leader could
have offered. He said :

"We don't want reaction, and we don't want a revolu-
tion, but we want a new order of things. We don't want
civil war but the maintenance and development of the
healthy forces of the nation. We don't want persecution of
the Jews but only elimination of the Jews from German
life. We don't want a fresh war, for Europe and the world
can be restored to health only if the mutual relationships
of the old leading civilized nations become healthy. But
we shall not shrink from war if the mobilization of Ger-
man force should prove the only means to restore German
freedom."

Because the man who had been paying most of Hitler's
bills wanted action, many definitions of Nazi policy con-
tained more dynamite than this one. Since 1927, Fritz
Thyssen, head of the German Steel Trust (the Feremlgte
Stahlwerke} had belonged to, financed, and inspired the
Nazi Party, thus making possible its phenomenal growth.
As the successor to Hugo Stinnes, Thyssen was competing
against another group of German industrialists, most of
them Catholics, Jews, or Liberals, who had joined a Con-
tinental steel cartel under French auspices to fix the pro-
duction of steel, iron, and coal, and to divide the markets
of Europe.

Curiously enough, Thyssen himself was the son of a
member of the Catholic Center Party August Thyssen
who died in 1926 after building up within his own life-
time the largest vertical trust of rolling mills, blast fur-
naces, coal mines, and iron foundries in Germany. His son
Fritz, however, abandoned the Center Party for Hugen-
berg's Nationalists and then went over to the Nazis in

1930

-o-o-ooo

advance of any other big industrialist. The year his father
died he established and gained control of the Vereimgte
Stahlwerke.

In spite of Thyssen's industrial power he never gained
the support of Stresemann or Briining. They preferred to
work with his smaller, better organized, and better
financed rivals in the hope, among other things, of con-
cluding a marketing and production agreement with
French heavy industry. By 1926 the year of August
Thyssen's death such an agreement had already come
into existence, but within the next two years its three chief
instigators Prince Radziwill of Monte Carlo; Alfred
Loewenstein, the Belgian banker; and Mayrish, a leading
industrialist of Luxembourg all met violent and mys-
terious deaths. Writing in the nonpartisan Crapouillot of
Paris, Xavier de Hauteclocque, a specialist in international
exposes, accused the British Secret Service and Sir Basil
Zaharoff of murdering these three men and destroying
their Continental steel cartel, which lapsed shortly after
their deaths. He had no difficulty in discovering the mo-
tive that would have led Great Britain to oppose the car-
tel, but the rest of his case depended almost entirely on
circumstantial evidence. In any event, his charges have
never been answered.

While British industrialists were fighting against the
same group of German industrialists whom Thyssen also
opposed, the foremost British oil magnate gave funds to
Hitler. His eyes, however, were on Russia rather than
Europe. Sir Henri Deterding, director general of the
Royal Dutch-Shell Oil Company, had married a White
Russian wife and had lost valuable oil properties in Rus-
sia at the hands of the Bolsheviks, According to Antoine

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<><><<><><><-<><x><><><><><^><>

Zischka, author of The Secret War for Oil, a book that
carries the endorsement of Francis Delaisi, Deterding
maintained a special agent in Hitler's camp Dr. George

Groene Amsterdammer
Hitler, or the baby who grew too fast.

Bell, a naturalized German of Scotch birth. "Through the
hands of Bell," wrote Zischka, "enormous sums of money
flowed from Deterding and others as gifts to the National
Socialist Party." M. Zischka talked to Dr. Bell in Berlin

1930

<XXXX>

in 1932 after Deterding had withdrawn his support be-
cause he had become "a little worried about Hitler's So-
cialist tendencies." Up to that time, however, Deterding
u gave money to the Hitlerites, all that his agent Bell asked
for."

What did the Nazis have to offer Deterding? Hitler's
autobiography contains a passage that advocates attack-
ing the Soviet Union, prying the Ukraine loose from
Communist rule, and setting it up as a republic, financed
and exploited by Germany. Alfred Rosenberg, Hitler's
chief adviser on foreign policy, had worked out the same
scheme in greater detail in the plan that bears his name,
and Deterding' s persistent hostility to Russia made the
Nazis his natural allies. But it was Thyssen who supplied
most of Hitler's funds and determined his policy.

Since Americans held nearly half of Germany's five
billion dollars' worth of foreign debts, the rise of Hitler
caused almost as much interest in the United States as a
domestic election. But other events abroad also attracted
attention. Thanks to the Hawley-Smoot Act, Canada
raised one hundred and thirty emergency tariffs on Sep-
tember 16, and on September 17 President Hoover recog-
nized the new governments in Argentina, Bolivia, and
Peru. On September 30 the Japanese Parliament ratified
the London Naval Treaty, which had already passed the
British House of Commons and the American Senate.

October

ON OCTOBER 1 the combined statesmanship of Messrs.
Hawley, Smoot, and Hoover came into its own when

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England's Socialist Prime Minister found himself playing
host to an Imperial Conference at London attended by
the Prime Ministers of all the British Dominions* For
months past Lord Beaverbrook's popular press, fired by
the example of America's protectionist policy, had been
beating the drum for "Empire free trade," and just be-
fore the Conference assembled, a group of the most
powerful bankers in the country issued a statement en-
dorsing the Beaverbrook proposals. "While we retain the
hope," their statement read in part, "of an ultimate ex-
tension of the area of free trade throughout the world,
we believe that the immediate step for securing and ex-
tending the market for British goods lies in reciprocal
trade agreements between the nations constituting the
British Empire." In conclusion they recommended that
Britain be "prepared to impose duties on imports from
other countries."

"So that's that," commented the New Leader, speak-
ing for the left wing of the Labor movement. "Nobody
questions the right of the banks to say whether we are to
have Empire free trade or not. The only discussion that
has arisen is as to whether or not the banks are unani-
mous." But most of the trade unions were also endorsing
Empire free trade because, as Norman Angell said at the
time, "the solution of the unemployment problem in Great
Britain has so far missed fire." He then made this proph-
ecy: "If it was rain that rained away the corn laws, it
may be a state of unemployment that is destined to sweep
away a free-trade policy of nearly a century, and turn
Britain from being, as she has been during a whole cen-
tury, an internationalist influence, to being a highly nation-
alist one."

1930

<XX>OO-

Andre Siegfried, writing on "Dark Hours in England"
for the Petit Havre, said that British industry had fallen
fifty years behind that of the rest of the world, that "mass
production is necessary and for this America is better sit-
uated than the British Isles,*' and that, "unable to main-

Strube in the Daily Express, London
AT THE POLITICAL MAGICIANS' DINNER

The Man Above: "They're all very funny tricks, but where's the
magician who can produce some work?"

tain her position in the world, England is sliding slowly
but undeniably toward protection as a solution." But it
was the Conservative Premier Bennett of Canada, not the
Socialist Premier MacDonald of Great Britain, whose
persistent demands for Empire free trade started the
mother country sliding. Unwilling to raise the price of

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food, MacDonald refused to levy any more tariffs, but
he did agree to summon the economic section of the con-
ference at a later date in Ottawa.

The Imperial Conference had been in session four days
when the British dirigible, R-101, the largest in the
world, crashed and exploded in France on its way to India.
The forty-seven victims included Lord Thomson, Secre-
tary of State for Air, and only seven of the passengers
and crew survived. More than one newspaper commented
on the analogy between this ill-fated trip and the career of
the Labor Government, on which such high hopes had
been placed only a year before. But the trouble lay deeper.
Major H. L. Nathan, a Liberal Member of Parliament,
pointed out that "Great Britain is only now beginning to
realize" the losses it suffered from the War, when "nearly
a whole generation perished." The average age of the
men of Ramsay MacDonald's Cabinet was fifty-seven
when it assumed office, the average age of those of Stan-
ley Baldwin's fifty-eight when it quit, and "every profes-
sion tells the same tale. In literature our prophets are the
same as in the Edwardian days. There are no rivals to
Shaw, Galsworthy, Wells, and Bennett. ... As Cassius
said of Rome, 'We have lost the breed of noble men.' "

One keen observer of British life, however, took an-
other view. Paul Cohen-Portheim, an Austrian artist who
had spent the war in a British concentration camp and had
written a widely praised book, England, the Unknown
Isle, contributed an essay on "England's Unseen Change"
to the Literarische Welt of Berlin. "This is not a political
article nor am I a politician," he wrote. "Nevertheless, it
is stupid to consider the literature of a country as some-
thing apart from the other material and spiritual phe-

1930

ooooo

nomena that determine an epoch." He then argued that
Norman Douglas, Aldous Huxley, David Garnett, and
William Gerhardi, had moved beyond such social reform-
ers as Shaw, Wells, and Chesterton. "They are all con-
vinced of the utter meaninglessness of everything that
happens and the attitude they take is one of grim humor.
But, remote as they are from the social reformers, they
have continued in a certain sense the same struggle against
conventionality. The difference is that they are fighting
different conventions with different weapons," He con-
cluded that "nothing is left of Victorian England" but
that "a new order of society will never be definitely pro-
claimed."

While the Imperial Conference went forward in Eng-
land, the fourth South American revolution of the year
occurred this time in Brazil. It had its origins in the
presidential election of March 1, in which the Conserva-
tive candidate, Julio Prestes, with the support of the Con-
servative incumbent, Washington Luis, defeated the Lib-
eral candidate, Getulio Vargas. Because it took the Gov-
ernment almost three months to announce the result, the
Liberals raised the charge of fraud, but not until their
candidate for vice president was murdered by Conserva-
tives on July 26 did they raise the cry of revolution. From
then on the revolt spread, and by October 4 Liberal gov-
ernments and troops had gained control of several of the
Brazilian states, forcing the federal Government to de-
clare martial law and mobilize four hundred and twenty
thousand men.

Behind this struggle for political power lay an economic
crisis brought about by overproduction of Brazil's chief
article of export coffee. The Luis Government, aided by

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the international bankers, had subsidized the coffee grow-
ers with the result that in 1929 Brazilian crops exceeded
the total world consumption, and by November 1930 the
state of Sao Paulo had more coffee in storage than the
whole world had consumed the year before. To meet this
problem the Conservative presidential candidate took ad-
vantage of an old Brazilian custom whereby the party in
power offers no platform whatever. The Liberals retal-
iated by urging domestic reforms and lower tariffs. Since
both parties looked for aid from foreign bankers, they
both advocated a stable currency, a balanced budget, and
a favorable trade balance in other words, precisely what
they could not deliver.

On October 15, while the rebel troops were moving
from victory to victory, Secretary of State Stimson an-
nounced that the Brazilian Government had a right to buy
munitions from the United States. On October 22, at the
request of the Brazilian ambassador to Washington,
President Hoover declared an arms embargo on ship-
ments to the Brazilian revolutionists. Two days later a
group of rebel generals seized President Luis and set up
a provisional military and naval government which re-
mained in office until November 3, when the defeated can-
didate, Dr. Vargas, became provisional president.

November

BUT THE Hoover Administration had blundered even
more seriously at home than abroad. Despite a solid year
of assurances from the White House that prosperity lay

1930

-c*-oooo

just around the corner, all the production indexes and all
indexes of business activity continued to decline. On No-
vember 7, after a break in the stock market had carried
prices to new low levels, seven prominent members of the
Democratic Party, which had won control of Congress,
pledged themselves to drop partisanship and to "steer the
legislation of the nation in a straight line toward the goal
of prosperity." Ten days later banks in the states of Ar-
kansas, Kentucky, Illinois, Missouri, and Iowa, with as-
sets totaling ninety million dollars, closed their doors.
The same fall in agricultural prices that had helped to
bring about revolutions in South America had hit the
farm belt of the United States.

What had been depressing prices all over the world?
Professor Gustav Cassel, Sweden's great monetary au-
thority, blamed the central banks of every nation. "Recent
times have been characterized by a relentless struggle for
gold," he wrote in the autumn of 1930, "rather than by
that conscious collaboration, aiming at a limitation of de-
mands, which would have been necessary to stabilize the
purchasing power of gold." For ten years experts had been
issuing "warnings of the danger of too greatly restricting
the gold supply of the world," and it seemed to him "espe-
cially remarkable that the Bank of France has consistently
and unnecessarily acquired enormous amounts of gold
without troubling in the least about the consequences that
such a procedure is bound to have on the rest of the world,
and therefore on the world's economic position."

Sir Henry Strakosch, a British bank director and a
member of the Financial Committee of the League of
Nations, said : "The gold standard has bound together the
civilized world in the greatest international partnership

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known to history. . . . and that transgressions by any one
partner inflict hardships on the rest is hardly realized."
He showed that from December 1925 to May 1930 the
value of gold increased 32.1 per cent and that 9.6 per cent
of that increase occurred during the first five months of
1930.

Sir Josiah Stamp, a director of the Bank of England
who had helped to frame the Young Plan, concluded that
"the process of exchange was in some way impeded. . . .
The theory of overproduction fails and we are driven for
an adequate explanation to the only remaining factor af-
fecting the process of exchange, namely, the adequacy of
the amount of money that is available to effect these
exchanges." Great Britain at the time had fifteen and a
half dollars in gold per capita, the United States thirty-
two dollars, France forty dollars, and Argentina forty-six
dollars.

Lord D'Abernon, England's first post-war ambassador
to Germany, who had recently headed a trade mission to
the Argentine, declared: "When on the one side you have
a vast volume of production and on the other side you
have millions of men insufficiently supplied with the re-
quirements of life, the obvious conclusion is that failure
proceeds, from inadequate facilities of circulation and ex-
change rather than from excessive ability to produce." He
too concluded that "the gold standard of the world has be-
come unstable," and urged "a more intelligent utilization
of the reserves that exist."

Neither the politicians nor the people, however, paid
the slightest attention to this advice. In Fascist Italy one
million industrial workers had their wages cut between
eight and ten per cent with the approval of Mussolini.

1930

-<XxXX>

And it was the same story in Communist Russia. "The
programme of reorganization laid out from October to

Vecherniaia Moskoa, Moscow

The "eyes" of Fascism and Social Democracy levelled
at the Five Year Plan.

January in the second year of the FIve-Year Plan," wrote
Wilm Stein, Moscow correspondent of the Fossische Zei-
tung, "is being devoted to the special task of setting the

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country's currency to rights." It seems that "the second
year of the Five-Year Plan ended with a big deficit" and
that Russia faced the "danger of a period of inflation."
The Soviet Government therefore "decided to try to stop
inflation in the same way the capitalists do and to induce
deflation by a strong, regulated, solid financial policy."

Finally, the Briining Cabinet in Germany had obtained
the consent of the new Reichstag to govern by decree.
Emergencies arose so suddenly and party politics made so
much bitterness that parliamentary government had be-
come impossible. Whereas Russia was selling wheat abroad
in order to buy foreign machinery with the proceeds, Ger-
many had to export manufactured goods in order to meet
the interest payments on the Dawes and Young Plan
bonds. By October 1930 the country had a favorable trade
balance of three hundred and seven million dollars, as
compared with an unfavorable balance of three hundred
million dollars in 1928, and it was Briining's business to
keep this balance as large as possible by cutting wages and
reducing government expenditures.

December

THE FINANCIAL embarrassments that had been assailing
Italy, Germany, and Russia, did not touch France until
the end of 1930, when the powerful group of Oustric
banks failed. Since several members of the government
had been identified with the Oustric interests, the Tardieu
Cabinet fell on December 4, whereupon Theodore Steeg
formed a new Cabinet of Radical Socialists which drew

1930

<x><x>o

its support from the left. Here is the way the Manchester
Guardian's Paris correspondent described the reception
that the new government received : "Not for thirty years
has any government been attacked with such virulence by
the conservative and reactionary press. One has to go back
to the days of the Dreyfus affair to find a parallel to the
campaign of personal abuse to which M. Steeg and his
colleagues have been subjected. Yet their victory was,
above all, a victory for clean politics."

The same craze for speculation that had led first to the
Wall Street crash of 1929 and a year later to the failure
of the Bank of United States in New York brought about
the Oustric bank crash in France, with its resultant politi-
cal disturbances. And just as American monetary policy
had been the real object of the criticisms launched by
Stamp, Strakosch, and D'Abernon, so French monetary
policy likewise became unpopular in England. "The specu-
lative excesses that have led to the recent difficulties in
France," wrote the London Statist in December 1930,
"can readily be understood. They are in large measure
one of the results of that monetary policy which hitherto
has saved France from the worst reaction of the world
depression. . , . By stabilizing the exchange value of the
franc (at one hundred and twenty-four francs to the
pound) France has not been called upon to adjust her cost
of living, her wages, and her costs of production to the
slump that has taken place in wholesale commodity prices
throughout the world. In fact, the cost-of-living figure in
France has been steadily going up, while it has been
steadily falling in other gold-standard nations."

Meanwhile, the English delegates to the All-India
Round Table Conference that King George had opened

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in London on November 12 were practicing some of the
moderation that their countrymen had been preaching to
the world at large. Gandhi's Congress Party had refused
to attend the Conference, and its leader and Jawaharlal
Nehru, his most important aid, were in jail. But even the
more conservative Indians who consented to deal with the
English demanded independence as vigorously as if they
were supporters of Gandhi. Muhammad AH, the leading
Moslem delegate, warned the Conference, "If you had
listened to Burke you would not have lost America and
you would not be talking of naval parity to-day." And
when a Hindu speaker, Dr. Moonje, said, "Our people
say, c Do your worst; we are ready to be shot down/ "
Muhammad Ali exclaimed, "But you can't shoot us all
down; you haven't the morale to kill three hundred and
twenty million people."

Statements from India while the Conference was in
session confirmed these warnings. Jawaharlal Nehru
wrote from jail : "The flag of England in India is an insult
to every Indian. The British Government to-day is an
enemy to us, a foreign usurping power holding on to India
with the help of its army." Even the Indian princes shared
these views. They agreed to enter a federated India,
similar to the Dominions of Canada and Australia, uniting
their own states and the provinces hitherto under British
rule. Only the connection with the British Crown would
remain unimpaired. In short, India would attain virtual
Dominion status. On this basis an outline of a federal
constitution for India was prepared, and the Conference
adjourned on January 19, 1931, to consult Indian opinion
on what it had accomplished. Shortly afterward Gandhi
and all his associates were released from jail.

1930

ooooo-

While moderate statesmen were gaining the upper hand
in India, the extremists were carrying the day in China.
After Chiang Kai-shek's Nationalist troops had subdued
the rebel armies of the Yen-Feng coalition in August,
their leader allied himself with Chang Hsueh-liang, who
had inherited the control of Manchuria from his father,
Chang Tso-lin, the most powerful war lord in China up to
the time of his death in 1928. The sheer military power of
this new alliance raised momentary hopes that the civil
wars had at last ended, but on November 18 the Central
Executive Committee of the Kuomintang passed a resolu-
tion calling for the complete extirpation of Communism
within three months.

The campaign began early in December, but the Com-
munist troops, after beating a strategic retreat, routed
the Nationalists and seized large quantities of arms and
ammunition. Chiang Kai-shek's persistent and futile at-
tacks on the Communists also bred dissension in his own
ranks from top to bottom. His soldiers frequently de-
serted, and his associates opposed spending so much money
on military conquest at a time when millions of people
were starving.

George Bronson Rea, American editor of the pro-
Japanese Far Eastern Review, went so far as to demand
foreign intervention in China, perhaps forgetting that
during August foreign gunboats had repulsed the Com-
munists of Kiangsi and saved the day for Chiang Kai-shek.
Here is the way he put the case : "Sentiment in Wall Street
is now strongly and openly in favor of joint international
pressure upon China to put a stop to these exhausting
civil wars. ... No nation covets her territory. Japan's
policy toward China is in full accord with that of the

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United States. China has no real enemy in the world to-
day. . . . She has nothing but friends and well-wishers.
She has appealed for a square deal and has received it.
In return she has assumed responsibilities that cannot be
shirked. The inability of China to discharge her obliga-
tions to the rest of the world, the wrecking and ruin of her
country, and the plunging of millions into a state of civil
war, make her as much an instrument of Moscow as
though she were an integral part of the Soviet system of
Socialist republics. The prolongation of conditions that
close the markets of China to the manufacturing nations
of the world and intensify the present unemployment
problem abroad serves only to advance the cause of world
revolution."

On December 27, 1930, thirty thousand people were
killed in a Mohammedan uprising against the Nanking
Nationalist Government in Kansu Province. Two weeks
later the War Zone Committee in Hankow, representing
the same Nationalist Government, stated that one hundred
thousand people had been killed by Communists in Ki-
angsi Province during the previous six weeks. The first of
these two events epitomizes the year 1930; the second
suggests a portent for 1931.

Reviewing the Record 1930

THE YEAR 1930 had seen more fears than hopes fulfilled.
The most eminent group of bankers ever to sit down at a
single conference table had created the Young Plan to
save Germany for the Germans and Germany's debts for

1930

<>oooo-

themselves. The latter purpose they achieved, but not even
a Kreuger loan could balance the German budget. Chan-
cellor Miiller's Socialist Cabinet therefore gave place to
a conservative one headed by Heinrich Briining, who cut
wages and government expenditures to a point that en-
abled Germany to export enough goods to pay its debts.
But as exports increased, so did the votes of the National
Socialists and the Communists, and by the end of 1930
more than half the German people supported parties that
advocated Socialism. Bruning was governing by decree,
and unemployment had increased more than a million
since 1929.

The London Naval Conference led to happier results.
In February the voters of Japan elected a new legislature
that favored a peaceful foreign policy, and that followed
the example of the American Senate and the British House
of Commons in ratifying the treaty concluded at London,
But the Hawley-Smoot tariff created as much friction
abroad as the Naval Conference removed. The British
Empire followed the example of the United States and
decided to hold a special imperial conference to consider
raising tariffs against all comers. Other nations boosted
their rates immediately. And not only did the American
tariffs create bad feeling everywhere ; they led to an im-
mediate decline in world trade and world production.

But President Hoover had a method in his tariff mad-
ness. American farm income had dropped more than fifty
per cent since 1919, partly because of the decline in
agricultural prices. Tariffs on cheap farm products from
abroad therefore seemed likely to benefit the American
farmer by raising both his prices and his income. What
cannot be emphasized too strongly in this connection,

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however, is that agricultural production during the twen-
tieth century had undergone a revolution comparable to
the industrial revolution of the nineteenth century. Aided
by machinery, artificial fertilizers, and special grains, the
average American farmer, who is not the most efficient
in the world, was raising enough food to maintain his
own family and eighteen city folks. Furthermore, during
1929 the countries of the Danube basin began exporting
wheat in large quantities for the first time since the World
War.

The same agricultural revolution that helped to bring
the Hawley-Smoot tariff into existence also played an
important part in two political revolutions in South
America and in various disturbances throughout Asia.
In Brazil a relatively conservative government had bor-
rowed money abroad as eagerly as the bankers lent it,
whereas in Argentina an ostensibly radical government
had relied less on foreign aid. In both countries, however,
the declining prices of grain and coffee had increased the
discontent of the people and prepared the ground for
political overturns. And in Peru and Bolivia the declining
prices of copper, tin, and nitrates, produced identical
results.

India and China, the two most populous and backward
countries in the world, fell victim to civil wars. In both
cases the discontent of the people arose in part from the
fall in commodity prices, which, in turn, had arisen from
new methods of production in more advanced nations.
In Russia the Soviet authorities had taken the bull by the
horns and "liquidated" the small farms of the kulaks in
order to develop huge mechanized areas provided with

74'

1930

<XXXX>

the same equipment that Argentina, Australia, Canada,
and the United States were using.

The South American revolutions, having expressed
little more than popular discontent with the fall in prices,
led to little more than a mere shift of power from the
"ins" to the "outs." In China and India, on the other
hand, popular discontent arose from many sources. Nei-
ther country had achieved real independence or even
national unity, hut in both countries native industries
owned by a native middle class had expanded many times
over since 1914. Before the War, for instance, India had
bought three-quarters of its textiles from Great Britain,
and by 1930 it was producing exactly that proportion at
home. The same Indian middle class that owned the new
textile mills also supported Gandhi, just as the Shanghai
bankers who had grown rich developing the Chinese tex-
tile industry financed the campaigns of Chiang Kai-shek.

During 1930 these middle-class elements in India and
China asserted themselves in different ways. The Indian
middle class formed a solid front when the moderate
delegation to the Round Table Conference demanded
independence just as vigorously as Gandhi's outlawed
Congress Party had in India. The British delegation there-
fore suggested Dominion status, and the British Govern-
ment prepared to release Gandhi and his followers from
jail. The Chinese middle classes, on the other hand, not
only fell out among themselves but also had to deal with
serious Communist outbreaks. Chiang Kai-shek finally
succeeded in subduing his two most powerful middle-class
rivals and concluded an alliance with the Manchurian war
lord, Chang Hsueh-liang. But his campaign against the

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Communists ended disastrously and lost him many sup-
porters from among his own ranks.

All these disturbances in colonial countries made them-
selves felt in the centers of industry and finance. As Hans
Zehrer, political editor of the Fossische Zeitung, pointed
out, "It is hard to prophesy what will happen to foreign
investments as a result of this agricultural distress. Once
the tillers of the soil mobilize, whether they be Indian or
Chinese peasants, South American Indians, or East Euro-
pean farmers, all values at once become fictitious, and the
form of value that is chiefly threatened to-day is capital.
If the soil of Asia 1 , South America, and agricultural
Europe opens up and swallows this capital, the whole
axis of the earth will be shifted."

But the industrial and financial centers had troubles of
their own, A Labor Government had not reversed the tide
of unemployment in England, nor had France and
America been able to prevent bank failures and declining
business activity by accumulating more than half the gold
in the world. The signs of decay, already visible at the
close of 1929 in the agricultural nations, had led to revolu-
tion and civil war over half the earth's surface. At the
close of 1930, similar evidences of decay were cropping
out in Germany, England, France, and the United States.
Would 1931 continue the unhappy history of the year
before?

WORLD DIARY:

1931

January

THE YEAR 1930 had begun to the echo of Mr. Hoover's
cheers for himself and to the murmur of conferences at
The Hague and London. The year 1931, on the other
hand, began with cries of distress from the people of
America and rumors of war in Europe. On January 3 the
news that five hundred farmers had stormed the business
section of the town of England, Arkansas, demanding
food, attracted national attention. Congress voted an
appropriation of twenty-five million dollars to be handed
to the Red Cross for feeding the unemployed, but John
Barton Payne, head of that organization, refused to
handle the money on the ground that it was not the func-
tion of the Red Cross to care for the jobless. Meanwhile,
the Presidents Emergency Committee for Unemploy-
ment guessed that perhaps the number of unemployed
might be somewhere between four and five million, and
Mr. Hoover still insisted that private charity should
carry the entire burden of relief. He could not, however,
fail to know that the number of bank failures had nearly
quadrupled in a single year.

Then, on January 22, rumors of approaching war in
Europe became so disturbing that the foreign ministers of

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England, Germany, France, and Italy, issued a statement
from Geneva that "we are resolutely determined to use
the machinery of the League to prevent any resort to
violence." Twenty-four hours after Briand had committed
his country to this declaration, the Steeg Cabinet, which
supported his peaceful foreign policy, fell and was re-
placed by the so-called "Oustric Cabinet," headed by his
political opponents. Steeg had been voted out of office
when his proposal to peg the price of wheat at the equiva-
lent of $1.93 a bushel turned the Socialists against him on
the ground that he was raising the price of bread. The
conservative parties then took advantage of the split to
reestablish almost the identical Cabinet that had held
office under Tardieu. This time, however, Pierre Laval
occupied the Prime Ministry with Tardieu as minister of
agriculture and Briand as minister of foreign affairs.

The new forty-six-year-old Prime Minister of France
had followed the same course that Clemenceau and Mil-
lerand had taken before him. He began life as a Socialist
and almost turned Communist in 1919, but his radical
views lost him his seat in the victory election of that year.
By 1924 he had acquired not only an interest in various
provincial newspapers but also more moderate opinions
that enabled him to return to the Chamber. From then on
he rose rapidly, finally serving as minister of labor under
Tardieu. Like that other ex-Socialist, Briand, he had
proved useful in breaking strikes and had also avoided
identifying himself with any party. The Catholic Echo de
Paris prophesied that Laval could remain in power
indefinitely.

1931

February

A YEAR after General Berenguer had replaced Primo de
Rivera as dictator of Spain, King Alfonso restored the

A. B. C., Madrid

GENERAL D'AMASO BERENGUER

Constitution, which had been suspended for seven years,
and ordered parliamentary elections in March. Within a
week, however, the same popular discontent that had
caused Prime's overthrow threatened the monarchy it-
self. On February 14 the King called off the elections and
asked for the resignation of Berenguer, who promptly
joined a Cabinet of "strong men" headed by Admiral

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Aznar, who ordered municipal elections in April.

Jose Ortega y Gasset, editor of the highbrow Revista
de Occidente and contributor to the popular press, fore-
saw trouble. After ten months of Berenguer's rule he had
written: "Public opinion is less disposed than ever to
forget the great outrage of the dictatorship. The regime
proceeds alone, segregated like a leper. ... If it is true
that the dictatorship of Primo de Rivera was necessarily
irresponsible, that is all the more reason why the Govern-
ment, when it ended, should have said loyally to the
people, c We have suffered an incalculable misfortune. The
normal political life of Spain has been interrupted. The
Spanish Government does not exist. Spaniards, recon-
struct your state.' Instead, they merely sought someone
who could carry on the policy of 'All quiet in Spain' and
gave the job to a pardoned general. As a result, the plain
people, who are not revolutionaries, should now say to
one another, 'Spaniards, you have no government. Recon-
struct your state.' Delenda est monarchia"

Ramon Perez de Ayala, another highbrow contributor
to the lowbrow press, was demanding outright socialism:
"The noble economic motive is. simply the will to create
new social goods; it does not pursue pennies but a pro-
gressive multiplicity of production. It is a sacred frenzy.
Obviously a socialist economic system would provide
abundant opportunities to give this healthful passion free
play. Only the greedy urge to accumulate would be forci-
bly removed and none of us would lose by such a change."
Thus, while Europe was talking war, Spain was talking
revolution. As Trotzki remarked at the time, "Europe
is turning red at both ends."

1931

March

WHILE THE Spanish Government was crushing revolution
the Russian Government continued to crush counter-revo-
lution. On December 5 it had sentenced Leonid Ramsin
and four other prominent engineers to death on charges
of having conspired with Poincare and Briand to launch
an airplane attack on the Soviet Union from Poland and
Rumania. Then again on March 9 it sentenced fourteen
former Mensheviks to five and ten years in prison for
anti-Bolshevist activities. Both trials received wide-spread
publicity through radio broadcasts, and although Briand
denied the charges against him the fact remains that the
Russian regime was in hot water at home and abroad,
The domestic troubles arose from the Government's farm
policy; the foreign troubles from its drive for export
trade.

Because the rush to join the collective farms had cost
Russia more than half its live stock, the Government
began extending a few favors to peasants with live stock
of their own, who flocked to the collectives as soon as
they were assured that they need surrender only their
land, tools, and horses. Also, the proceeds of the collective
farms were divided in proportion to the amount of prop-
erty each peasant contributed. This, however, led the
poorer peasants to abandon the collectives and threatened
the Government with the danger of a labor shortage.
Nikolaus Basseches, who had represented the Neue Freie
Presse of Vienna in Moscow for ten years, wrote at the
end of 1930: "The labor problem will become increas-
ingly serious as far as the Five- Year Plan is concerned.

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The country will inevitably be compelled to resort more
and more to conscript labor, as was done during the
period of war-Communism. . . . The shortage of agri-
cultural labor is especially great."

In spite of the labor shortage, Russia had nevertheless
managed to export wheat and other goods during
1930 to the fury of the outer world. "Russia is dumping
abroad/ 3 remarked the New Statesman of London, "in
order to get the money with which to buy imports, and
there is no reason to believe that she is not getting the
best price she can under existing circumstances. When the
world is prepared to make arrangements to stop this sort
of thing, it will have the right to ask Russia to join and
censure her if she refuses."

But Mr. A. A. Baumann, political editor of Lord
Beaverbrook's Evening Standardj saw no reason to deal
with the Russians in the first place. u To me it seems that
morally we might just as well conclude a trading agree-
ment with the Chicago crowd of gangsters as with the
Russian Soviets." The Hoover Administration saw eye
to eye with this British Tory and had at once taken
advantage of the Hawley-Smoot tariff to forbid any
imports of Soviet lumber or wood pulp. On March 12
the All-Union Soviet Congress voted to retaliate, and
Russia began buying from Germany and other European
nations the machinery that America had supplied under
Harding and Coolidge.

Nor was American export trade gaining in South
America what it had lost in Russia. In spite of Mr.
Hoover's good-will tour of the Latin-American nations
during the winter of 1928-29, British exporters were
winning back the markets they had lost to the United

1931

<XXXX>

States since the War. Sir Eric Drummond, British Secre-
tary General of the League of Nations, visited Latin
America during the opening months of 1931 to explain

Will Dyson, Daily Herall, London
Philip, now Lard Snowden, Chancellor of the Exchequer.

the superiority of the League of Nations to the Pan-
American Union. He frankly urged the Latin Americans
to establish closer connections with the manufacturing
centers of Europe and not to organize among themselves.
And the statement of the four European foreign ministers

WORLD DIARY

that they would resort to the League before going to war
came in handy when he was informed that Latin America
feared a new conflict in Europe.

The British drive for Latin-American trade reached
its climax when the Prince of Wales opened the British
Empire Trade Fair at Buenos Aires on March 14. He
had already visited Chile and later stopped in Brazil on
his way home. Presently the Buenos Aires correspondent
of the London Times reported a swing from American
to British goods in Argentina, and the Conservative
Morning Post pointed out that England was gaining
ground in other parts of the world too : "For example,
in 1928 American car sales were seventy-five per cent
greater than British in Ceylon; in 1929 they were down
to thirty-three and one-third per cent larger, but in 1930
American sales in this market exceeded British sales by
only seven per cent. This general falling down of business
is found in most of the Dominion markets, America sold
twelve thousand cars to England in 1927, and again in
1928. It is doubtful whether she will sell two thousand
in this country in 193L. . . . That is America's tale of

woe."

The London Statist attributed all of America's diffi-
culties to the Hawley-Smoot tariff : " A relaxation in Amer-
ican tariff policy," it argued, "would not only prove a
potent restorative for the whole world, and thus react
favorably on American export industries, but would ren-
der unnecessary the great drift from country to town
which faces the United States to-day. The primary agri-
cultural industries are the principal sufferers under the
American protective system."

The Statist did not, however, mention the fact that

Moscow

Tariff Walls the only things that capitalist Europe can find to
rival the giant factories of "Socialist Construction*"

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other countries notably Great Britain had been raising
their tariffs against American imports long before the
Hawley-Smoot Act had gone into effect, nor did it indicate
how American exports could increase except at the expense
of British exports. And the nations of Europe soon showed
themselves just as short-sighted as the United States.
On March 18 the League of Nations Conference sum-
moned by Foreign Minister Henderson of Great Britain
to arrange a tariff truce adjourned with nothing accom-
plished.

But, on March 21, just three days after Europe had
admitted that it could not stop raising tariffs, Austria and
Germany announced that they had agreed to enter a
customs union that would do away with tariffs entirely.
This move called Briand's bluff, exposing his past friend-
liness to Germany as merely a trick to fasten French rule
on Europe for all time. "It is evident," the French foreign
minister told the Senate, "that we have come to a halt in
our relations with Germany."

Frangois Coty's patriotic Figaro commented more bit-
terly: "The Reich was so gracious as to present the
Austro-German. Zollverein as a regional agreement des-
tined to form the core of a nebulous Pan-Europe. Ger-
many wants to play in Europe the role that Prussia played
in Germany between 1 866 and 1 870. Germany, the Prussia
of Europe 'that is the logical conclusion of the policy
M. Briand has started." The Conservative Morning Post
of London shared this view: "It is impossible any longer
to disguise that Germany is again pursuing her old policy,
founded on the realities of race and commerce. Germany
and Austria will work together, not for a United States
of Europe but for Pan-German ends,"

1931

<>-o-ooo

The Nationalist Deutsche Allgemeine Zeitung wel-
comed the step but without pretending that Germany
had any illusions about saving the world. "Together with
the whole of German public opinion on both sides of the
frontier, we here salute the grand decision that the two
Governments have made. It is perhaps the first auton-
omous act that German foreign policy has undertaken
since 1918." Several months later Prince Karl Anton
Rohan contributed an historical study entitled "Austria,
Keystone of Versailles" to the Europaische Revue, of
which he was the editor, that clarified what was at stake.
"If before 1919," he wrote, "it was correct to say that
Europe's destiny lay in the Balkans, to-day the same thing
can be said of the Danube problem, especially of Austria,
which is the kernel of this problem." He then explained
that the Treaty of Versailles had left unsolved two funda-
mental problems, "the relationship between Germany and
the smaller nations struggling for independence, and the
problem of minorities," and that both these problems
affected Austria, "the weakest link of the 1919 system."
The treaty had also left Austria with a capital of two
million inhabitants and several industrial centers, but with-
out the means of feeding itself or exporting enough goods
over the surrounding tariff barriers to pay for the raw
materials it needed from abroad.

According to Prince Rohan, only two alternatives ex-
isted -"to orient Austria either toward both Germany
and Central Europe or toward Central Europe alone."
The pre-war Austro-Hungarian monarchy had oriented
Austria toward both Germany and Central Europe under
the leadership of the Hungarian and German minority

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and over the heads of the Slavic majority. But the defeat
of the Central Powers enabled the Slavic majority to
break away from German and Hungarian rule and to
form the new state of Czechoslovakia, a Greater
Rumania, and a Greater Serbia known as Yugoslavia,
thus fulfilling Masaryk's project of a chain of states ex-
tending from the Baltic to the Black Sea and protecting
the victorious Allies from Germany and Russia.

Several difficulties, however, remained. The new chain
of states specialized in farm products, whereas Germany
and Austria were primarily industrial, and, as Prince
Rohan pointed out, "no amount of diplomatic hostility or
national ambition can escape the fundamental fact that
Austro-German industry is the natural purchaser of the
agricultural produce of Central Europe. The Austro-
German unemployment problem can be solved only by
building up a big consuming market in Eastern Europe,
and only France can finance this project." But France had
already poured money into Poland, the Little Entente,
and Austria, and it was unlikely that more still would be
forthcoming to finance Central Europe for the benefit of
Germany. Furthermore, if such a policy were pushed to
its logical conclusion it would have meant the division
of Europe between France and Germany over the dead
body of England.

Although the Austro-German customs union had been
negotiated by the foreign ministers of the two countries
Schober for Austria and Curtius for Germany two pow-
erful organizations had virtually forced their hands. As
a Roman Catholic, Chancellor Bruning had even more
desire than most of his countrymen for closer relations
with the predominantly Roman Catholic state of Austria,

1931

ooooo

and by the same token the Catholics in Austria jumped
at the chance to deal with a German Government headed
by a member of their church. Furthermore, the German
Nazis kept attacking Briining's defeatism and calling for
an immediate merger with Austria. It had therefore be-
come almost imperative for him to take some step to
show that he was as good a German as the Austrian-born
Adolf Hitler.

April

IF AUSTRIA was the weakest link in the Versailles system,
Spain was the weakest link in what remained of the feudal
system. Here, as in eighteenth-century France, the Roman
Catholic Church, the King, and the landed aristocracy
ruled supreme. But their rule had proved such an anach-
ronism that it collapsed when republican candidates
won three out of four votes cast during a series of trivial
municipal elections on April 12. No national issue was
at stake, but the threat of a general strike forced King
Alfonso to abdicate and flee the country within, forty-
eight hours. A republic was at once proclaimed at Madrid
under the presidency of Niceto Alcala Zamora.

Spain's new first citizen came from a family of small
Andalusian landowners. He had entered the crowded pro-
fession of law and advanced to the even more crowded
profession of politics. Until the dictatorship of Primo de
Rivera he had supported the monarchy and had never
ceased to be a devout Catholic. But he could not stomach
the corruption and futility of the dictatorship and became
a fiery republican instead of a windy liberal. In December

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1930 he had been jailed as the brains of a premature rev-
olution. "I organized everything," he exclaimed at the
time. "I must pay the penalty." His associates in office
included an odd assortment of fools and knaves Largo
Caballero, the Socialist Minister of Labor, being the out-
standing exception.

Emile Vandervelde, Belgian leader of the Second (So-
cialist) International, at once hailed the Spanish Revolu-
tion as "the most important event in Europe since the
War," and the Socialist trade unions, which had been
responsible for the threat of the general strike, demanded
universal suffrage, the eight-hour day, social insurance,
confiscation of large estates that had not been used for
agriculture during the past four years, and state-con-
trolled schools.

The official Socialist proclamation began with these
words: "The Spanish proletariat, which became revolu-
tionary during eight years of political ignominy, is to-day
on holiday. The last Bourbon has crossed the frontier,
never to return, and with him goes a contemptible regime
in which systematic robbery and despotism, incarnated in
the person of the fugitive ex-King, were raised to the
category of a system of government. The Spanish Re-
public, of which we should be the vigilant guardians, es-
sentially belongs to us, because it was created with our
support and must be perfected with our support."

Even the liberal intellectuals of the middle class, who
had been, demanding a republic ever since 1898, issued a
manifesto proclaiming: "It is quite safe to say that Spain,
will not be a bourgeois republic All signs point, rather,
to a nation, of workers." But they warned against Com-
munism: "Let students and intellectuals avoid false Jmi-

1931

<~X*X>

tations of what a semi-Asiatic people had to do in a
terrible hour of their history. Let them insist on fulfilling
the strict destiny of Spain and not a false or borrowed

one.

Bagaria in Luz^ Madrid

"Listen, Mr. Morgan, come to Spain. You can

make morganatic marriages there." (Newspapers

had just announced that a Morgan loan had been

offered to Sfain.)

The Anarcho-Syndicalists, who had supported the rev-
olution but who demanded more radical and violent meas-
ures than the Socialists did, spoke as follows through
the mouth of Angel Pestana of Barcelona : "Spain has
had her political revolution. Now she must undergo her

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<><><><><<><^><X><><>K><><><><>

social revolution. Russia has initiated a cycle of social
revolutions, but in my opinion she has failed because her
social forms are derived excessively from political ones.
The syndicates are the forces that should make a social
revolution, and they have sufficient doctrine and organ-
ization to do so."

When Catholic newspapers were suppressed and mobs
attacked Catholic churches and institutions, Spain seemed
to be headed for bloodshed on a large scale and possibly
for the proletarian revolution that Trotzki had proph-
esied. Fearing trouble, a group of American and French
banks including Morgan; Chase; National City; Dillon,
Read; Lee, Higginson; Kuhn, Loeb; and the Banque de
Paris et des Pays Bas, had offered the monarchy a sixty-
million-dollar loan shortly before its overthrow. Never-
theless, all the great powers, including the United States,
had recognized the Republic by April 22, possibly because
it had promised to pay the foreign debts incurred under
the Monarchy.

Presently, however, the Conservative press of Great
Britain began hinting that the Spanish Revolution was
more a French plot than an uprising against oppression.
Sir Charles Petrie wrote as follows in the Tory Saturday
Review of London: 'There can be no question but that
the chief bulwark of the Spanish Republic is France, for
the recovery of Spain under Primo de Rivera gave her
northern neighbor a very nasty shock indeed, and so long
as the Republican regime does not actually become Bol-
shevist, it can rely on the support of the ,Quay d'Orsay.
The repeated French appeals to the sanctity of treaties
and M. Briand's fantastic schemes for a European feder-
ation cannot disguise the fact that France is a revolution-

1931

ary power and that Paris is the headquarters of every
conspirator in Europe. For years before the Spanish
Revolution, the French Government sheltered any and
every sort of enemy of the monarchy. France will leave
no stone unturned to maintain the existing order at Ma-
drid, partly at the insistence of the Grand Orient and
partly for fear that the restored monarchy would come
within the orbit of Italy."

The * 'Grand Orient" refers to the Grand Orient Lodge
of Freemasons, to which most of the Spanish republicans
and nearly all the republican statesmen of France belong.
For more than a century this organization had worked
hand in glove with the Sephardim, or exiled Spanish
Jews, struggling with them against the Jesuits to gain
political power in many countries on both sides of the
Atlantic. To be known in Italy, Spain, France, or South
America as a Freemason is to be identified with the anti-
Catholic political parties of the left

What more natural, then, than to find the Grand Ori-
ent Lodge of Spain issuing this bulletin immediately after
the Revolution? tf Salute to the Republic, The honor of
saluting a new regime, born of the will of the people, has
been left by a Supreme Providence for this number of the
bulletin. As Spaniards and Freemasons contemplating as
an accomplished fact the structure of a new state, the
fruit of those immortal principles that shine from the
Orient, we cannot but feel keen satisfaction. To the Free-
masons who form the Provisional Government and also
to the high officials, who are mostly brothers, we promise
our support."

On May 6 this Government extended an invitation, to
the exiled Sephardim to return to Spain for the first time

The Tr oca, Valencia

Christian Charity: "Let them die of hunger. They are enemies of

religion."

1931

0000-0

since 1492, thus fulfilling the hope expressed in the 1927
report of the Grand Masonic Lodge of Spain, which
read: "We are working to form public opinion to obtain
the reform of Article II of the Constitution so as to
obtain complete religious freedom and to obtain later the
separation of Church and State. When we have religious
freedom we will set to work to bring to the country many
of the descendants of those who in days long past, were
victims of religious intolerance."

Just one month after Alfonso's flight, Pope Pius XI
delivered his famous Quadragessimo Anno encyclical
promising the Catholic world a new charter of labor, en-
dorsing profit-sharing, declaring that no Catholic could
be a "true" Socialist, and denouncing Communism. Now
it so happened that the year 1931 not only marked the
fortieth anniversary of Pope Leo XIIFs pro-labor en-
cyclical Rerum Novarum, but that it also witnessed a re-
volt by the working-class in one of the citadels of Roman
Catholicism. The Pope's latest outburst therefore sug-
gested that the Vatican had its eye on the present as well
as on the past.

While one revolution was beginning in Spain another
was ending in India. Soon after Gandhi and his followers
had been released from jail in January, the British Vice-
roy, Lord Irwin, began a series of personal conversations
with the Mahatma. By March 4 he had persuaded
Gandhi that the Round Table Conference offered India
a practical method of achieving independence and pre-
vailed upon him to sign a truce calling off the civil-diso-
bedience movement. It then took Gandhi until March 30
to win his Congress Party over to the agreement that he
and Lord Irwin had reached to hold a second Round

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<>^><><><><><><><X><><><><><><^>

Table Conference. But he carried the day and his party
elected him its sole delegate.

The Conservative British press then discovered that
the British Empire in India had come to an end. It pointed

Bag-aria in Luz } Madrid
ALFONSO IN EXILE
Alfonso: "Who will restore me?"

out that since 1920 the number of Anglo-Indians in the
Indian Civil Service had declined from thirty-four thou-
sand to twenty thousand, that all the judges, in India
were natives, and that the percentage of Anglo-Indians
connected with the administration in the province of

1931

<XXXx>

Bengal had fallen from ninety per cent to ten per cent
in a decade. Professor Maurice Gerothwohl, diplomatic
correspondent of the London Daily Telegraphy com-
plained : "The Hindu Nationalist has now succeeded by
Indianization in getting rid of the Englishman. His de-
sire now is to get rid of that offspring of the Englishman
the Anglo-Indian. Will Great Britian view with equa-
nimity the extinction of a loyal community with such a
splendid record of service to the Empire ?" But the Labor
Government gave this question a surprisingly reassuring
answer: on April 18 it appointed Viscount Willingdon,
former Governor of Bengal and former Governor Gen-
eral of Canada, to Lord Irwin's place as Viceroy of
India. Before that, he had chiefly distinguished himself as
captain of the Eton and Cambridge cricket teams.

Harold Laski, writing in the Laborite Daily Herald,
described Lord Irwin as u the one viceroy in the last gen-
eration who will leave India with the affection of the
whole people." He then continued: "He has the best
qualities of the Englishman. Duty is a religion to him.
He will do the right as he sees the right without being
deflected from it He is not interested in power or glory
or ambition. He is not thinking of how best to manipulate
to his own best advantage. He is not one whit influenced
by what his Indian achievement will do for his own
political future. He thinks first and last of returning from
India with a record of which his conscience will not be
ashamed." His successor, Lord Willingdon, meant to do
well by the Indians, but he lacked Lord Irwin's candor,
conscience, and warmth. In giving the most important
post in the Empire to a Liberal nonentity instead of to a
member of the Labor Party, Mr. MacDonald showed

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^><><><>^><><>-<>-C><><><><>^

himself an even more efficient imperialist than his prede-
cessor, Stanley Baldwin, who had appointed Lord Irwin.

May

THE MONTH of May opened with more trouble in China.
During February the Nanking Government had launched
a force of one hundred and fifty thousand men against
the Communists in Kiangsi Province, but by May this
expedition had completely collapsed. The Communists
captured large quantities of fighting equipment and killed
or wounded thousands of Nationalist troops. Chiang Kai-
shek, however, had too many troubles at home to take
the field in person. He summoned a National People's
Convention at Nanking on May 5 to extend his own
constitutional powers, but he had packed it with so many
yes-men that the more radical wing of the Kuornintang
that controlled the city of Canton and the surrounding
province of Kwangtung in South China seceded in disgust.

Several of Chiang Kai-shek's close associates also quit
their posts and joined the new "Provisional Revolution-
ary Government of South China*' set up at Canton early
in May. With most of his opponents out of the way,
Chiang Kai-shek then proceeded to establish his personal
dictatorship in Northern and Central China more firmly
than ever.

On May 13, the day after the National People's Con-
vention had given Chiang the added powers he wanted,
the French Senate and Chamber of Deputies elected Paul
Doumer President of the Republic to succeed Gaston

100

1931

<XXXX>

Doumergue. The new President, a white-bearded machine
politician well over seventy, had served as Governor Gen-
eral of French Indo-China from 1897 to 1902 and since
then had worked at intervals for the Comite des Forges
and twice held the post of finance minister, both times in

Hermann-Paul in Je Suls Partout 9 Paris
AFTER DOXJMER'S ELECTION
France: "Alone at last!"

Cabinets headed by his leading rival for the presidency
Aristide Briand. Some people attributed Briand's defeat
to the Comite des Forges, others regarded it as the result
of the Austro-German customs union, which had created
a wave of anti-German sentiment in France. As the father
of five sons, four of whom had been killed in the War,
Doumer symbolized the patriotism of the war-time period.

101

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The loss of the presidency crushed Briand's spirit and
health forever. He retained his post as foreign minister,
but his function became that of a phonograph record for
the exclusive benefit of international conferences. The
Manchester Guardian called Doumer's election "a serious
matter for Europe," but the conservative Journal des
Debats of Paris regarded the new president as a suitable
figurehead for "a middle-class country with a liking for
propriety, hard work, and conventionality." And figure-
head he was, for the French presidency is largely a deco-
rative post a republican equivalent to the King of Eng-
land.

The same fall in the price of raw materials that had
caused half a dozen revolutions during 1930 continued to
make trouble during 193 L On May 23 the eleven largest
wheat-exporting nations adjourned a futile conference in
London, declaring that there was. more wheat in the
world than could be sold at a profit. The United States
had opposed fixing an export quota for each country but
favored reduction of acreage; the Russians favored an
export quota provided they could sell as much abroad as
they did before the War, when they exported half again
as much wheat as the United States. They refused, how-
ever, to consider a reduction of acreage. On May 29 the
American Farm Board announced that it would continue
buying wheat until June 30 at higher and higher prices,
and then stop. Within a week grain prices in Chicago
dropped below the world level and wheat to be delivered
in July fell to 57 cents a bushel, the lowest price since
1896.

102

1931

June

THIS SLUMP in farm prices played an important part in
the events of June. In 1929 the Credit-Anstalt, the larg-
est bank in Austria, had taken over a smaller bank that
specialized in farm mortgages. But the declining value of
farm properties and the slump in world trade caused the
losses of the Credit-Anstalt to rise to twenty million
dollars during 1930 an amount larger than its whole
capital stock.

This news was announced on May 11, and the Aus-
trian Government at once agreed to place sixteen million
dollars at the disposal of the Credit-Anstalt if it could
raise a loan of twenty-one million dollars abroad. The
Bank for International Settlements was approached, but
the French directors on its board insisted that Austria
first renounce the customs union with Germany and then
submit to international financial control. On June 16 the
financial crisis forced the Austrian Cabinet to resign, but
the foreign bankers chiefly British and German
agreed to extend their short-term loans to Austria for
two years. The next day the Bank of England gave Aus-
tria a temporary credit of twenty-one million dollars
without any guarantees attached and subject to extension.

On June 26 a new Austrian Cabinet guaranteed all the
liabilities of the Credit-Anstalt, domestic as well as for-
eign, to the tune of four hundred and fifty million dollars.
Thus a private bank that had been established thirteen
years before the Austro - Hungarian monarchy was
founded passed into the hands of the state thirteen years
after the monarchy had vanished*

103

WORLD DIARY

In coming to the aid of Austria, the Bank of England
virtually declared war on France in behalf of Germany.
Chancellor Briining and his foreign minister, Dr. Curtius,
had spent the week-end of June 6 with Ramsay Mac-
Donald telling him of their country's desperate plight.
German citizens were selling their marks and their Ger-
man securities and depositing the proceeds in foreign cur-
rency abroad. During the first three weeks of June the
Reichsbank lost the equivalent of two hundred and
twenty-seven million dollars in gold, or forty-one per cent
of its total reserves. The German Government, unable to
help Austria and save the customs union which it had
counted on to stem the tide of National Socialism, there-
fore turned to England, which had been lending so much
money to Germany that it had a large stake in keeping
both that country and Austria solvent.

Because the United States had almost three times as
much money as England invested in Germany, President
Hoover suddenly proposed a one-year postponement "of
all intergovernmental debts, reparations, and relief debts,
both principal and interest" to take effect July L His faith
in the power of undiluted ballyhoo remained unimpaired :
he had not consulted a single foreign government in ad-
vance. On June 29, the White House announced that all
governments except the French had agreed in principle
to the proposal, but in the meantime the Federal Reserve
Bank of New York had contributed twenty-five million
dollars to a short-term loan of one hundred million
dollars to the Reichsbank the Banks of England and
France and the Bank for International Settlements hav-
ing provided the rest. Andrew Mellon, Hoover's Secre-
tary of the Treasury, was in Europe at the time and

104

1931

<>oooo

finally persuaded France to sign the moratorium pact on
July 6.

July

STOCK MARKETS at once rose all over the world and the
London Spectator commented: "Hope so long deferred
has returned like Astrasa to earth. We may well rejoice
and thank Heaven that Mr. Hoover has been inspired
to his action, for we are escaped, like Job, with the skin
of our teeth." The Germans, however, soon discovered
that the moratorium saved them only a billion and a half
marks, or about as much money as had poured out of the
country during the first three weeks of June and about as
much as Briining's emergency taxes had yielded. "In spite
of Hoover," remarked the liberal Vossische Zeltung of
Berlin, "we remain poor as church mice."

In Paris, the Journal des Debats, organ of the French
heavy industries, made no bones about its disapproval:
"The more one reflects, the more one is stupefied by the
initiative of Mr. Hoover," Pierre Gaxotte, a member of
the French Academy, wrote in the Nationalist Je Stiis
Partout: "In the name of the Young Plan M. Briand
made us abandon Mainz and the Rhine ... In the name
of the Young Plan we renounced the Dawes Plan ... In
the name of the Young Plan we made enormous advances
to the Reich . . . For more than a year we have walked,
danced, and run, and now a Mr. Hoover appears and
says to us, 'All over. Play has stopped, 5 "

Arbeiterpolitik, organ of the Communist opposition

105

WORLD DIARY

<*<>-<^<><>"<>^><^<><><><^<*<^<>->

group in Germany, offered this interpretation of the
French hostility to Hoover: "America's offer represents
an attack on the French imperialist system in Europe and
on the system of alliances that serves as a basis for the
whole French hegemony. It is an attempt on the part of
America to free the way for American capital exports to
Europe and to overcome the barriers erected by French
imperialism by coming to the aid of German imperialism
and furthering England's political ambitions. France,
therefore, is defending its victory in the World War
against America and Germany."

Writing from London, a correspondent of the Munch-
ner Neueste Nachrichten pointed out the significance of
the moratorium to the United States: "The epoch of
America's isolation from Europe has clearly ended. The
farmer of the Middle West will learn to recognize that
the price of his products is directly lowered by the poverty
of sixty-five million Germans, and the unnumbered unem-
ployed in American industry will understand that the
billions of dollars that Europe has to pay each year to
Wall Street have cost the United States just that much
in exports. The common destiny that affects us all during
this world catastrophe has forced America to act as she
has."

The British press also saw the end of American isola-
tion coinciding with the end of reparations and war debts.
The Conservative Saturday Review declared: 'The
whole financial settlement effected at the end of the War
is now in the melting pot" ; and the Liberal Manchester
Guardian expressed the same view: "There is not the
slightest doubt that the majority of interested people in
most countries regarded the Hoover proposals as the

106

Louis Raemaekers in the Telegraaf^ The Hague

THE HOOVER MORATORIUM

Uncle Sam: "Don't let them think that I'm doing
it because I like it. 3 '

trumpet call that announced the long-expected collapse of
a building that had already been condemned by all intelli-
gent observers."

According to the London Times, however, Hoover
destroyed the post-war debt structure only in order to

107

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<>^><><><><K><^<X><><><><>-<><><-

preserve the world-wide credit system based on the gold
standard: "There is at stake the very basis and mainte-
nance of the international system known as the gold
standard, in a world whose members are to-day so linked
one with another, so unitedly caught in the vast web of
cosmopolitan dealing, that the effect of a collapse of credit
at any one of a number of important points can no longer
be localized." Events at once confirmed this judgment:
the Danat Bank of Berlin, one of the four largest in the
country, closed its doors on July 13 following a six-week
run. All the other big German banks at once refused to
pay more than ten per cent on their deposits, and the
Berlin Stock Exchange closed for two days. On July 14
all the banks in Hungary closed for three days and one
bank failed in Vienna and another in Latvia.

What had happened was that after the Wall Street
crash Frenchmen withdrew the money they had been lend-
ing to New York and deposited seventeen billion francs
in the banks of Great Britain, payable in pounds sterling.
The British then used these deposits, on which they paid
two and three per cent interest, to extend credit to German
banks at five and six per cent. The German banks in turn
extended credit to Vienna at eight and nine per cent, and
Vienna extended credit to the banks of Bucharest and
Budapest at twelve per cent. But the Hungarian and Ru-
manian farmers who had borrowed from the banks in
their national capitals saw the price of wheat suddenly
decline fifty per cent in the autumn of 1930 and therefore
could not repay their loans. Which explains why the
Credit-Anstalt in Vienna collapsed before the Danat Bank
in Berlin, and why the Bank of England, quite apart from

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ooooo

political considerations, cared more about saving Austria
than the Bank of France did.

The breakdown of the German banking system reflected
the breakdown of German society and these facts prove
it There had been sixteen thousand suicides during 1930
and an average of forty-four a day for the past three
years. When the Reichswehr needed six thousand new
recruits eighty thousand men applied, half of whom had
been rendered unfit for service by undernourishment. Half
the Berlin school children were getting nothing to eat or
drink for breakfast, and in northern Germany one child
in five had no bed to sleep in. About sixty million of the
sixty-five million people in the country received an average
annual income of only two hundred dollars per capita,
and the number of bankruptcies during the first six months
of 1931 had doubled since the year before. This was
the country of which Mr. S. Parker Gilbert, former Agent
General for Reparations and now a Morgan partner, had
said only eighteen months before : "Fundamentally, con-
fidence has been restored and Germany has been reestab-
lished as a going concern on a relatively high level of
economic activity."

July 13, 1931, marked the end of the gold standard
in Germany. By that time the country's gold reserves had
fallen below the legal minimum of forty per cent of the
paper currency, and the Reichsbank took control of all
dealings in foreign exchange. Unlike the dollar, the franc,
and the pound, the mark could not be freely exchanged
for gold. Direct inflation did not, however, follow the
experiences of 1923 remained too fresh in the minds of
all. Domestic prices continued to decline, but the inter-

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national gold standard had definitely broken down in the
most powerful nation in Europe.

August

AUSTRIA had its banking crisis in June, Germany in July.
On August 1 the Federal Reserve Bank of New York
and the Bank of France each gave a credit of twenty-five
million pounds to the Bank of England to enable it to
issue more bank-notes and withstand the run on the pound
that had immediately followed the run on the mark.
Major Walter Elliott, a rising young Conservative mem-
ber of Parliament, described the atmosphere in London
during July with the restraint typical of a British gentle-
man, on the verge of hysteria: "Last Wednesday men
came back from the City to the House of Commons like
soldiers coming out of the line. There is no mistaking that
atmosphere. Men say little, they sit quiet, they are glad
to be at peace. They are not able to accept things around
them as real. Reality is out there where they left it, where
they will have to go to meet it again,"

But the good Major's judgment did not measure up to
his literary gifts. A week before France and America
were rescuing the pound he wrote: "Montagu Norman
and the City in general have fought all week in the grand
manner. Last week for the first time since 1918 England
recovered that captaincy of her soul and of events which
is her hall-mark in a really dangerous situation."

Montagu Collet Norman, Major Elliott's knight in
shining armor, had occupied the post of Governor of the

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Bank of England since 1920. Unlike the elder Morgan,
Mr. Norman had not played the slacker's part in time of
war but had served with distinction against the Boers. His
paternal grandfather had held the governorship of the
Bank for fifty years and his maternal grandfather had
been a director for twenty-three years. Mr. Norman's
ancestry did not, however, mean that his family had for
generations devoted themselves to the welfare of the
state; it meant that they had served a private bank to
which the British Crown grants a special charter giving
it the sole right to issue currency and fix the interest rate.
And Mr. Norman had maintained the Bank's reputation
for putting its own profit ahead of the common good :
more than any other man he had been responsible for
bringing the pound back to par in 1925. This meant that
bondholders who had lent money when prices were high
during the War received interest in pounds that would
buy about twice as many goods as the war-time pounds
had purchased. It also meant that British industry was
saddled with a burden of debt that reduced its competitive
power on world markets. Yet in the spring of 1931 the
very conditions that Mr. Norman himself had helped to
create became so bad that he wrote to Governor Moret
of the Bank of France : "Unless drastic measures are taken
to save it, the capitalist system throughout the civilized
world will be wrecked within a year. I should like this
prediction to be filed for future reference."

To Dr. Paul Einzig, Mr. Norman's biographer, the
Governor of the Bank of England was "the greatest
statesman in Great Britain since the War" a judgment
which MacDonald's Chancellor of the Exchequer u fully
endorsed." Mr. now Lord Snowden also saw a lofty

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purpose at work when the Bank of England lent money
to Germany at six per cent that it had borrowed from
France at three per cent: "Mr. Norman's action in using
the resources of the Bank of England to restore the finan-
cial stability of the European countries has been criti-
cized," he wrote in 1932, "on the ground that he cared
more for foreign countries than for the interests of British
industry. Such criticism is ignorant or short-sighted. This
country has everything to lose by the economic collapse
of these foreign countries and everything to gain by their
restoration to prosperity."

French high finance, however, took a different view,
and Major Elliott said so: "It is true that the French,
but for the City, would have ruined Austria and Germany,
and that they struck a blow, partly deliberate and partly
automatic, for the ruin of London." But the French did
not want to "ruin" London utterly, for "ruin" would mean
that the francs they had deposited there would be paid
back in depreciated pounds. The French game was to
exact political concessions from Germany, Austria, and
even England, without, however, destroying the pound
sterling in the process : hence the loan from the Bank of
France to the Bank of England at a time of intense polit-
ical rivalry. "France," according to J. L. Garvin, editor
of the London Observer, "expects to receive Germany's
surrender in three months. The Paris press asserts and
believes that Britain and America can do nothing without
France. The immense withdrawals of French money from
the City of London were undoubtedly connected with the
idea of making Britain feel that unless she conforms to
French policy it will be the worse for her. Britain will
never conform to that policy."

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oo<xx>

Because the Bank of England a private institution
had jeopardized the safety of the pound sterling by unwise
loans to Germany, the British Government had to reduce
the dole to the unemployed and cut the salaries of all
government officials. The Labor Cabinet dutifully set
about this task, but the dole cuts it proposed did not go
far enough to satisfy the bankers, and the Cabinet split
on the issue of meeting the bankers' terms, MacDonald,
Snowden, Thomas, and Lord Sankey, favoring accept-
ance. The Liberal Party took the same line, and since the
Labor Government needed Liberal support to exist at all,
the entire MacDonald Cabinet resigned on August 24.

At this point the slickest politician that England has
produced since the War emerged from obscurity. Aided
by King George, Stanley Baldwin, MacDonald' s prede-
cessor as Prime Minister and leader of the Conservatives,
persuaded his vain and woolly-minded successor to save
the country by heading a "National Government." Snow-
den and Thomas swallowed the bait too and cut them-
selves loose from their lifelong associates in the Labor
movement by accepting posts in the new Cabinet. Mr.
Baldwin thus created the necessary illusion of national
unity, even going so far as to take a Cabinet job himself
in furtherance of the good cause.

Eighteen months before, Harold Laski had described
England's new power behind the scenes to perfection.
"The pose of simplicity which Mr. Baldwin afiects ought
to deceive no one; a simple man has never been Prime
Minister of England. His pigs and his pipe are simply
the technique of propaganda. Like the orchid of Mr.
Chamberlain or the ringlets of Disraeli, they create an
image which the multitude can remember, and they give

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a satisfaction to innumerable followers who believe that
a common interest in pigs and pipes is a permanent basis
of political adequacy.

"But the real Mr. Baldwin behind that fagade has real
shrewdness in strategy and real skill in execution. He
knows how to utilize his leadership for the ends he wants.
He can measure to a nicety the strength of his rivals.
Their underestimation of his talents he enjoys cultivat-
ing that error is one of the reasons for his success. He
is the ordinary man in an extraordinary way,"

On August 27 Arthur Henderson, foreign minister in
the Labor Cabinet and MacDonald's successor as leader
of the party, denounced the National Government, and
the Labor press had already charged that a "bankers'
ramp" had been responsible for the cuts in the unemployed
benefits. And, sure enough, on August 28 a group of
American bankers headed by J. P. Morgan gave the dole-
cutting National Government what they had withheld
from the Labor Government namely, credits of two
hundred million dollars to which the bankers of France
and England added two hundred million dollars besides.

H. N. Brailsford, writing in the New Statesman and
Nation on "The Bankers' Government," estimated the
short-term loans that the British banks had advanced to
Germany at half a billion dollars and then cautioned his
readers as follows : "Don't imagine that 'the City' saved
this money or that bankers painfully scraped it together
through a lifetime of self-denial and thrift. If anyone did
that it was the French peasant. Nor need anyone ascribe
philanthropy to the City. What the City did in fact was
to borrow from the French at three per cent in order to
lend to the Germans at six per cent or eight per cent. Then

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<xxxx>

came the crash in Vienna; the Bank lent money. Next the
crash in Berlin; and again the Bank lent money. The
French thereupon had a vision: they saw the various
banks, Austrian, German, and English, tied together like
Alpine climbers above the abyss. Two of them had tum-
bled over; might they not drag the third with them? Act-
ing on this vision, they started a run on the Bank [of Eng-
land] ; in plain words, they called in their deposits. To
save its gold reserves and maintain the exchange value of
the pound sterling, the Bank had to borrow. That, then,
is the course of events that exposed us to this humiliation.
The 'dole' has nothing to do with it. What is at stake is
the prestige of the City, and its profits as the international
usurer. If the dole has anything indirectly to do with it, it
can only be this : that if the Government stopped borrow-
ing for this purpose, more of the nation's credit would be
available for the City's purposes."

September

ONE RESULT of the overthrow of the Labor Cabinet was
that when Gandhi arrived in London to demand complete
independence for India at the Second Round Table Con-
ference, he found himself facing a government of im-
perialists. Another result was that on September 15 the
annual maneuvers of the Grand Fleet in the North Sea
had to be postponed because the pay reductions ordered
by the new Government gave rise to a mutiny which was
subsequently laid at the door of the British Secret Service*
Writing on "British Secret Service Secrets" in Cra*

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pouillot t an independent monthly published in Paris,
Xavier de Hauteclocque, whom we have quoted before,
made this statement: "The 'unforeseen' events that re-
cently occurred in the British Navy and that went unpun-
ished were not perhaps absolutely 'unforeseen' by the Con-
servative Party and its secret assistants. In any case, it
seems that 'accidents' like this and the Zinoviev letter will
be able to shipwreck any Cabinet that is not oriented in a
purely imperialistic direction, in other words, Conserva-
tively." What M. de Hauteclocque meant was that the dis-
content in the British fleet received encouragement from
agents of the Conservative Party, which had controlled
the British Intelligence Service ever since 1926 and which
was systematically creating a panic before the October
elections. In 1924 Conservative agents had staged a sim-
ilar panic when they made public a forged letter of Zino-
viev's in order to spread the idea that the Labor Party
was taking money and orders from Moscow.

The Japanese put another interpretation on the mutiny
and began acting as if the British Navy no longer stood in
the way of their ambitions in Asia. On September 19 their
troops marched into Manchuria and seized the city of
Mukden on the complaint that one group of Chinese ban-
dits had torn up a short stretch of railway track and that
others had shot a Japanese army captain and a military
companion who were traveling in civilian clothes on pass-
ports that made no mention of their army connections.
This episode marked the triumph of the conservative
Seiyukai Party's "positive" policy over the liberal Min-
seito Party's "negative" policy. Although Premier Shid-
ehara of the Minseito Party had the majority of Parlia-
ment and the country behind him, he could not control the

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army, which, in Japan, is responsible to the Emperor
alone. Furthermore, the army had always supported the
policy outlined in the famous Tanaka Memorial, a con-
fidential document said to have been submitted to the
Emperor by Baron Tanaka, the late Seiyukai leader.
When the text was made public that summer by a Chinese
delegate to the Institute of Pacific Relations, its genuine-
ness was questioned, but subsequent events corresponded
closely to its contents.

The following passage, for instance, reads like a proph-
ecy: "The way to gain actual rights in Manchuria and
Mongolia is to use this region as a base, and under the
pretense of trade and commerce, penetrate the rest of
China. Armed by the rights already secured, we shall seize
the resources all over the country. Having China's entire
resources at our disposal, we shall proceed to conquer
India, the Archipelago, Asia Minor, Central Asia, and
even Europe,"

Furthermore, there is no question as to the source of a
similar plan submitted by General Honjo, commander of
the Japanese forces in Manchuria, to the Japanese war
minister in the fall of 1931 : "In order to be able to pre-
vent the advance of American influence in the Orient, we
must first consolidate our national defenses on land and
attain a position of independence as far as material sup-
plies are concerned. Therefore, before declaring war on
America we must strive to gain a superior position for
our military strength both in China and in Russia. We
must aim to cripple China and Russia once and for all.
. . . We could then be the sole master of the Pacific and
nobody would be in a position to compete with us or to
make a protest."

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Baron Shidehara, however, described his own Govern-
ment's policy, which the army had just flouted, quite dif-
ferently: "It is ... of the utmost importance for us to
concentrate our attention and energy on the promotion of
foreign trade, without unjust infringement upon the in-
terests of any other nation. It is not territory but markets
we have in view. It is not alliances, but economic soli-
darity, that we seek in our foreign relations."

Why, then, did the army suddenly contravene the gov-
ernment's policy? Events in Europe during the summer
of 1931 had not escaped the attention of Japan's jingoes,
nor could they have failed to perceive the difficult position
of their own country, which had suffered more than any
other from the world-wide depression. During 1930 Japa-
nese foreign trade had declined thirty-one per cent as
compared with nine per cent for Germany and sixteen per
cent for Great Britain, and it was on foreign trade that
Baron Shidehara was counting. In May 1931 the Ameri-
can-owned Japan Advertiser, published daily in Tokyo,
remarked: "While no good can be done by exaggerating
the degree to which radical thought has penetrated Japan
in recent years, it is impossible to overlook the fact that
social unrest is developing to an extent that calls for
serious consideration and requires the most expert han-
dling."

The native press also expressed misgivings. Immedi-
ately after the invasion of Manchuria the Tokyo Asahi
commented: "The financiers and business men are losing
confidence* This is unfortunate. In large measure it de-
pends upon them whether Japan will be spared. It is said
that Japan is threatened externally. We are afraid that
Japan's internal financial difficulties are more formidable

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<XXxX>

than its external difficulties." Finally, at the same time
that unemployment was increasing, the Japanese birth rate
continued to soar. The rate of increase of the population
was higher in 1930 than in 1920, and only in 1926 had
the excess of births over deaths been greater than it was
in 1931.

What were the distinguishing features of this Oriental
race that was preparing to conquer the world? A sympa-
thetic French visitor, A. Feral, gave this description of
Japanese patriotism in the columns of the Roman Catholic
Correspondant of Paris six months before the invasion of
Manchuria :

"Mystic patriotism is one of the most exalted charac-
teristics of the Japanese soul. It unites the dead and the
living in an unbroken chain, each link of which is closely
and indissolubly knit with the preceding and following
link. The Japanese carries his patriotism within him like
an impenetrable shield that we see him raise against every
enemy of his country's grandeur, and in its shelter he
often accepts the strangest traditional survivals in rela-
tion to his individual life as a citizen. Wherever he may
be, he carries with him his family altar. He reserves for
himself an hour and a certain corner in which he can
always become himself again and remain in communion
with the customs and ideals of his country."

The same observer summed up the Japanese character
as follows: "A religious patriotism based on a cult of
heroes and ancestors who protect the family and the
nation; a sentiment of honor carried to the extreme. To-
gether with these primordial virtues, a profound compre-
hension of nature, joined to a keen artistic sense that ma-
nipulates even the laws of nature to create ah imaginary

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countryside; a highly refined politeness in dealing with
other nations; a spirit of adaptation unique in all the
world ; a marvelous diplomatic suppleness that never for-
gets the end in view."

But the younger generation especially the women
had begun to turn away from the old customs and ideals.
During 1931 a girls' high school in Tokyo put these ques-
tions to the one hundred fifty members of its graduating
class: "Have you anything against your family? Do you
wish that your mother behaved differently? Can you make
any suggestions as to how your family life could be made
happier?"

"I feel alone," wrote one growing daughter, "because
father is so much bound up in business that he has no time
to give me and no interest in what I am doing." Another
said : "Mother obeys father too much. She does not under-
stand me, and all that she knows about my life is what she
sees before her eyes. She does not know the new ideas and
purposes that our school has awakened and established
within us, or else she refuses to accept them because they
do not coincide with her inherited ideas. What good does
it do me to keep hearing, *When I was young, people did
so and so' ? She forgets that times are different now and
that our future is going to be more different still." Another
said: "Parents should give us more freedom in our rela-
tions with young people." Perhaps this conflict between old
ideas and new gave extra impetus to the surge of military
expansion that carried the Japanese flag far into northern
China during the closing months of 193 1.

And now for a word about the so-called "bandits" of
China, whose depredations provided the excuse for Japan's
attack. O. D. Rusmussen, a journalist with long experience

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<>0X>

In the Far East, gave this description of them to the British
public over the radio and in the columns of the Listener,
organ of the British Broadcasting Corporation:

"As for bandits, I am afraid the term is used rather
loosely. A so-called 'bandit 1 might have been a farmer yes-
terday and a soldier the day before. The world has too
many fixed ideas. It pays too much attention to war lords
and bandits and not enough to the pluck and decency of
the millions. One can marvel not at what the Chinese
have not done, but that they have carried on despite
drawbacks and done so much. ... If they could get work
and a decent income I believe most bandits and soldiers
would put down their arms. Banditry and kidnaping
are a mixture of political, economic, and just plain crimi-
nal influences."

As a matter of fact, it was the Chinese soldier rather
than the Chinese bandit with whom the Japanese had to
reckon, and the same reporter gave this picture of
him:

"One cannot generalize, of course, but he is usually a
youngster. He looks sixteen but is probably nineteen. His
uniform, faded blue homespun, sometimes khaki, is rag-
ged and patchy. He has a peaked cap on. In Manchuria
he would wear a fur-lined hat, the big earflaps sticking
out like horns. His trousers are tucked inside his socks,
garters, if he has any, being on the outside. He may have
puttees or cloth leggings* His cartridge belt is also made
of cloth, for leather costs too much. He is holding a long
Chinese-made Mauser rifle with a long, thin bayonet
affixed. The outside of the barrel is often brightly pol-
ished. If he is lucky his shoes are of leather; if not, they
are made of cloth, or, in wet weather, of stiff rawhide

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-<>^><><<><><>K><<><><><>^<><^

with big hobnails. On his breast pocket is a dirty white
tag covered with Chinese writing giving his name, regi-
ment, and so forth. If he smiles, as he usually does, he
reveals clean white teeth just as brightly polished as his
rifle barrel"

This soldier had not, however, been trained in a school
of adversity : "The soldier feels it is his prime duty to
scare his enemies away and fight them only in the last
resort He likes big guns for their big noise. Even the
war lords used to brag and threaten one another by tele-
gram and sometimes announce great victories that never
happened." Pitted against Japan's highly disciplined
troops, these ill-equipped men stood little chance of
victory.

The day after Japanese troops had occupied Mukden,
England's National Government, which had been formed
to uphold the gold standard, announced that the Bank of
England would stop redeeming paper pounds in gold.
And with that sublime assurance which later led the
British press to refer to the United States as a "default-
ing creditor," John Maynard Keynes announced that the
pound had not gone off the gold standard but that the
gold standard had deserted the pound.

The French economist, Francis Delaisi, took another
view and wrote as follows on "Pound and Empire":
"The fall of the pound marks the end of a magnificent
epoch. The nineteenth century was veritably Great Brit-
ain's century. When European civilization entered the
new machine age, England led all other nations. Forty
million English maintained their control over three or
four hundred million continental Europeans by the supe-
riority of their industry, their fleet, and their banks. The

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1931

<^0<X>0

Victorian era will remain one of the most successful in
all history. Unfortunately, the Englishmen who were
born in Victoria's later years were not able to resign
themselves to seeing their neighbors on the Continent

mo^ Milan

The course of foreign exchange.

adopt modern technique. They wanted to defend their
supremacy by force of arms. And in this way they lost
their maritime and banking supremacy. By destroying one
rival they created another, and their efforts to reestablish
themselves over the past ten years have definitely failed.
The three pillars of their power have collapsed one by

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<><><><>^><><><*<K><><><>^><><><>

one, and the keystone of the arch has fallen. The empire
has been destroyed."

It was on Sunday the twentieth that the pound went off
gold, and the next day the stock exchanges closed in
every European capital. The pound dropped from $4.85
to $4 but rose to $4.22 by the end of the day and com-
modity prices advanced. On September 22 the United
States Steel Corporation, one of the many organizations
that had pledged themselves to maintain wages in No-
vember, 1929, announced a ten-per-cent wage cut, and
most of the other big American industries followed suit.
On September 23 stock prices in New York rose from
one to fourteen points, and Tokyo announced that all
troops had been withdrawn from the parts' of China just
seized and that it was awaiting a peaceful settlement. On
September 27, Sweden, Norway, and Egypt abandoned
the gold standard, and the next day Denmark followed
suit.

The same London papers which had declared that the
pound could not possibly go off the gold standard and
which prophesied disaster if it did changed their tone
overnight, whereupon the Laborite New Statesman and
Nation commented as follows: "The Times solemnly
assures us that everything it has said in the past on the
subject is just so much nonsense, that there is not the least
danger of the pound's following the franc or the mark.
The National Government pats itself on the back because
it has now done exactly what it was formed in order not
to do. The moral seems to be that patriotism is not
enough. When the cry of patriotism is raised one can be
sure that the object is to persuade us to do something
so silly that we should never do it except in a passion of

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<xX><>>

fine sentiment/' That "something," as it turned out, was
to vote for the National Government and protective
tariffs in the forthcoming general election.

But most of the British press gave itself over to abus-
ing France. "The question behind the crisis remains un-
answered," commented the Conservative Week-end Re-
view. "How long will the world accept French military
and financial dictation?" And the New Statesman and
Nation replied: "France is like Gibbon's weak emperor,
strong through fear. Her system is founded on fear and
calculated to perpetuate itself by fear. The system has
won a temporary stranglehold on Europe, like the earlier
Bismarckian system. But, if the Germans are ruthless in
victory, the French are short-sighted; to them modera-
tion in victory is abhorrent."

It was at this time that Dr. Paul Einzig, a British
financial writer who later became Montagu Norman's
biographer, wrote a book entitled Behind the Scenes of
International Finance. Here, too, France came in for
rough treatment: "On the ruins of the wealth, pros-
perity, and stability of other nations, France has suc-
ceeded in establishing her much-desired politico-financial
hegemony over Europe. She has attained this end by
means of a skillfully devised and carefully executed
scheme of financial warfare which has inflicted misery
and suffering on five continents." Dr. Einzig then gave
this interpretation of England's abandonment of the gold
standard: "There is an old-fashioned game called ombre
in which the player who holds no trumps is in a stronger
position than the player who holds them all. It some-
times happens that the man who holds all the trumps and
triumphantly declares 'grandissimo' is defeated by an op-

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ponent who unassumingly declares 'nullissimo/ It was in
just such a way that the cards of international finance
were called in September of 1931. ... On September 20
it was announced that it had become necessary for Great
Britain to suspend the gold standard. That was Great
Britain's nullissimo in answer to France's grandissimo."

Strange as it may seem, few French commentators
shared these views. "At the bottom of everything," pro-
claim'ed the Journal des Debats, "lies the jealousy that
our country now excites because of its immense colonial
domain, its relatively prosperous finances, its consider-
able stock of gold, and its faculty for saving money.
Thus France, as the reservoir of the capital which greedy
hands desire, has become in large measure the victim of
its own virtues and courage,"

Professor Johannes Haller of the University of
Tubingen gave the conservative German point of view on
the events of September 1931 in the Berliner Borsen-
zeitung: "No one has denied that the fall of the Spanish
monarchy was the work of French influences. It was
brought about by an attack on the Spanish currency that
led to a serious economic crisis. King Alfonso was de-
prived of financial support, fell, and had to abdicate, and
Spain, that might have been able to block French ambi-
tions in the Mediterranean, has now become an obedient
servant of French policy and, in any case, offers no
danger* The same recipe that was being applied to Spain
is now being applied to Germany, and the next few weeks
will show how successful it may be. The plan is trans-
parent : the ruin of our finances is to lead to a domestic
political upheaval. The middle-class government we have
enjoyed for more than a year is to be overthrown, and a

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><XX>0-4>

Social-Democratic government is to be put in its place that
will dance to the tune of French piping."

October

THE MONTH of October found France and the United
States the joint financial arbiters of the world. The
American Treasury controlled over four billion dollars
in gold, the Bank of France nearly two billions and a
half; between them these two countries had cornered
three-quarters of the world's supply of monetary gold.
But France not only had approximately twice as much
gold per capita as the United States; it had escaped most
of the effects of the world crisis. On October 6 Lord
Reading, the new British foreign minister, visited Paris
and proposed a redistribution of gold that would have
restored Britain's financial supremacy overnight, Laval
turned him down. Then President Hoover invited Laval
to Washington to urge the French Government to give
German private debts priority over reparations so that
American creditors could get their money out of Ger-
many. And, above all, Mr. Hoover urged the French
Premier not to listen to the suggestions of Great Britain.
Laval arrived in the United States on October 20, and
again I quote Francis Delaisi : "The development of the
world crisis, by suddenly paralyzing the other two powers
(England and America) had placed the French Govern-
ment with its reserves intact at the stragetic point that
dominated the field. It could, if it chose, give back mone-
tary supremacy to England or hand it over to America.

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It could also, since Paris could not technically become the
clearing house of the world, force the two others to

s, Munich

Grandi, MacDonald, Laval, Briining, and Hoover: "We are
fully agreed on one point: we differ on every subject."

accept the institution of an international market of ex-
change by making the Bank for International Settlements
the controller and independent regulator of the exchange
market. Unfortunately, the only point on which the three

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1931

ooooo

central banks agreed was precisely not to create above
themselves a superbank that would limit their superiority.
M. Laval therefore did nothing. As he had said no'
to Lord Reading, he also said 'no' to President Hoover.
He returned having given nothing and obtained nothing.
He had let the opportunity of France slip by."

Certain things, however, were accomplished. The
French agreed to stop converting dollars into gold and
shipping it out of the country, and Mr. Hoover promised
to reconsider the war debts provided Europe made a new
reparations settlement before July 1, 1932. Finally, the
United States and France agreed to continue the gold
standard.

Why had President Hoover failed to win for the
United States the financial leadership that England had
just lost and that France could not exercise? The answer
to that question lay at home. Between October 4, 1929,
and June 30, 1931, production had declined one-third,
and the price level in the United States had dropped
twenty-eight per cent. The farm belt had suffered most
because wheat had fallen from $1.24 a bushel during the
1929-30 season to 64% cents in 1930-31, and cotton
had dropped from 19 cents a pound in 1929 to 5 cents
in 1931. Thus the loans made by country banks on agri-
cultural produce that was supposed to yield a certain
price went bad when only half or even less than half that
price was received. Land values, on which the, banks had
based their mortgages, had also collapsed.

The farm crisis, plus the stock-market crash, which
had virtually wiped out many of the securities held by
the banks, caused 1430 banks with total deposits of a
billion and a quarter dollars to suspend payments between

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November 1930 and August 1931. In the two years that
had passed since the Wall Street crash, dividend pay-
ments had declined by two and a half billion dollars, and
the securities listed on the New York Stock Exchange
had lost more than half their value. It was also estimated
that since November 1930 about one billion dollars in
currency had been withdrawn from circulation and
hoarded. When, therefore, the Comptroller of the Cur-
rency announced that banks need not list their assets at
market value, European observers who had first-hand ex-
perience with inflation proclaimed that the dollar was
doomed.

Jean Decrais, a contributor to the conservative Je Suls
Partout of Paris, defined the alternatives that Mr.
Hoover faced in the autumn of 1931: 'Two solutions
presented themselves. One was to create credit artificially
and to provoke, no less artificially, a rise in values, to
stimulate the Stock Exchange by stimulating purchases
and thus to save, artificially again, the whole banking sys-
tem of the country. The other alternative would have
been to abandon more banks to their fate. In other words,
it was a choice between inflation and deflation."

When Mr. Hoover formed the National Credit Cor-
poration, on October 6 and announced the formation of
a national institution with half a billion dollars to redis-
count frozen bank assets in other words, to purchase
worthless securities from the banks he chose inflation.
According to M. Decrais, Mr. Hoover "preferred once
again to spread the demagogical illusion that life is easy"
and thus "prepared America and the dollar for difficult
days to come." Although Mr. Hoover had already com-
mitted the country to inflation by the time M. Laval ar-

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1931

OO-o<X.

rived in Washington, he nevertheless promised to keep
the dollar on the gold standard.

The international financial crisis thus ended in a stale-
mate that was broken on October 27 when the new Brit-
ish National Government won five hundred and fifty three
seats in Parliament to Labor's fifty-nine. It had been one
of the shortest and most hectic elections in British his-
tory, but a few weeks after it was over millions of former
Liberals and Laborites woke up to what the Tories had
done to them. The Liberal Manchester Guardian called
the whole election a hoax: "The trick has worked* The
Conservatives have put on as many votes in the slums as
in suburbia. The panic ran through all sections of so-
ciety. The country will wake up shuddering from its hot
fit of patriotism, in which, searching for security, it has
saddled itself with the worst House of Commons in thirty
years."

As a matter of fact, the panic did not extend quite so
far as all that Labor polled six million votes and the
Week-end Review did not hit the nail on the head when
it called Ramsay MacDonald "the virtual dictator of
Great Britain."

More orthodox organs of Conservatism paid less at-
tention to Mr. MacDonald and celebrated the election
as a vindication of British nationalism. "The Socialists
are still rubbing themselves," remarked the Morning
Post, "and asking what hit them; many and laborious
explanations are offered by their intelligentzia. We may
leave them to their plodding materialism, and look for
a true reason in the spiritual sphere. These elections were
a miracle, an uprising, a renaissance of the national
spirit Since the War a sickly sort of politician has been

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harping on the word 'internationalism' and got no sort of
response, save from a regiment of eunuchs; but, when the
realization came of the country in danger, then the spirit
of British nationalism showed its ancient and mighty
strength, sweeping everything before it."

In following the financial crisis of 1931 as it ran its
course, we have passed over what happened after the
Japanese seized Mukden. Nor have we mentioned what
was done by the foreign ministers of France, Germany,
Italy, and England, who had pledged themselves in Janu-
ary "to use the machinery of the League to prevent any
resort to violence."

Although the Japanese had announced on September
23 that all troops were being withdrawn from the seized
areas in Manchuria, operations against the Chinese con-
tinued. On October 8 Japanese naval airplanes bom-
barded Chinchow, the temporary Manchurian capital, and
when the League of Nations began to debate the Jap-
anese invasion, more Japanese planes bombarded train-
loads of Chinese troops. Meanwhile, on October 9 Sec-
retary Stimson informed the League that the American
Government, acting independently through its diplomatic
representatives, would try to reinforce whatever the
League decided to do in the Chinese-Japanese contro-
versy. The press of Europe pointed out that this move,
like the Hoover moratorium before it, showed that
American isolation had ended, but the Japanese press and
the Japanese Government criticized the United States for
collaborating with a League of Nations to which it did
not belong.

On October 18 Japan rejected the League's offer of
arbitration, and on October 20 the American Govern-

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1931

<>-0<><>-<>

merit sent notes to both Japan and China reminding them
of their obligations under the Kellogg-Briand Pact to
outlaw war as an instrument of national policy. On Octo-
ber 24 the League called on Japan to evacuate the oc-
cupied areas of Manchuria by November 16, but Jap-
anese troops continued pushing northward. By November
5 the area they occupied covered all the territory in which
they either had built railways themselves or had loaned
the Chinese money to build railroads of their own.

Then, on November 10 the scene of action shifted
southward to the port of Tientsin near Nanking, the
Chinese capital. Here shells from a Japanese trench
mortar fell near the American Methodist Mission, and
when the American ambassador at Tokyo made "repre-
sentations," the Japanese foreign minister told him that
Japan still insisted on establishing "security" in Man-
churia. Finally, on November 16, the day fixed by the
League for Japanese evacuation, Japanese troops in
northern Manchuria beat off Chinese cavalry attacks.

How had Japan's conquest overridden the combined
opposition of the League of Nations and the United
States ? The answer is that many interests at Geneva and
some at Washington either supported the Japanese or
did not actively oppose them. The same Conservative
British newspapers that endorsed the new National Gov-
ernment also urged it not to interfere with Japan's efforts
to bring law and order to China. As for the Liberals and
Laborites, although they opposed Japan, they could
scarcely urge British intervention just after their navy
had mutinied and the collapse of the pound had created
a domestic crisis.

The French Government, now firmly in the hands of

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Laval, Tardieu, and the Comite des Forges, overrode
Foreign Minister Briand's efforts to commit the League
to military intervention and served notice on him that he
no longer counted in determining the country's foreign
policy. Incidentally, it was on October 21 that the Comite
des Forges bought a controlling interest in the Temps, the
mouthpiece of the French Foreign Office. Indeed, the
evidence suggests that a group of French industrialists
and bankers, working through the French Foreign Office,
were actively supporting the Japanese offensive.

For instance, on September 1, the Revue Militaire
Frangaise, the official organ of the French Ministry of
War, published a sensational article on Japan's interven-
tion in China as if it had already occurred. In other
words, the French War Ministry knew in advance that
Japan would soon attack China and released the informa-
tion three weeks ahead of schedule. Furthermore, the
Banque Franco-Japonaise had been financing Japanese
purchases of armaments from the Schneider-Creusot
works, while Charles Dumont, president of that bank,
was being named to represent France at the forthcoming
Disarmament Conference. The directors of the Banque
Franco-Japonaise also included the Count de Saint-
Saveur, brother-in-law of Eugene Schneider, who, in turn,
headed the armament factory that bears his name.

The fact was that France and Japan had agreed since
1907 to respect each other's zones of influence in China.
In that year they signed a convention which stated that,
"having a special interest in having order and a pacific
state of things guaranteed, especially in the regions" of
China, "where they have the rights of sovereignty, protec-
tion, and occupation," they "engage to support each other

134

1931

00000

for assuring peace and security in those regions." Nor
was it the fault of the Morgan bank that the United
States did not also support Japan: under Coolidge the
Department of State had frowned on a proposed Morgan
loan to the Japanese-controlled South Manchuria Rail-
way. Also, American exporters of cotton and importers
of silk did a large enough business with Japan to welcome
any extension of Japanese power. With the nations of
the West divided against and even within themselves, the
Japanese had little difficulty in subduing Manchuria, es-
pecially in a year when floods in China had drowned
forty-one thousand people, destroyed one million seven
hundred thousand homes, and ruined the crops of ten
million acres of land.

The month of October also proved an eventful one for
Spain. On September 30 Cardinal Segura y Saenz, who
had been arrested and expelled on June 15, resigned his
post as Primate of Spain. Two weeks later the first pro-
visional president of the Republic, Alcala Zamora a
Roman Catholic also resigned after the National As-
sembly had voted overwhelmingly that "no state religion
exists" and had ordered complete separation of Church
and State, regulation of all religious orders, and expulsion
of the Jesuits and the confiscation of their property.

Jose Ortega y Gasset accounted for the sudden rout of
the Spanish Catholics on the ground that "there is not
and never has been an opposition in Spain. This is the
deepest mystery of Spanish history. We are a nation that
is loyal to its government, and this explains a great deal
of our past. Take our Catholicism, for instance. Spain was
anti-Protestant because Protestantism was the opposition
and Rome was the government, not because the nation

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was any more Catholic or un-Catholic than any other. As
the world ceased to be Catholic, so Spain to-day is no
longer Catholic. Contrary to what most foreigners be-
lieve, there is probably no European country that has
fewer Catholics than Spain."

On December 11, however, the Cortes chose Aicala

Crssol, Madrid

MANUEL AZANA.

Zamora as first constitutional President of Spain to suc-
ceed Azana, who had been serving as provisional presi-
dent during the interim. And Ortega's serene assurances
that no opposition ever exists in Spain proved just as
empty in respect to politics and economics as in respect to
religion. The Republic gave so few concessions to the
working class that martial law was repeatedly declared
during the summer of 1931 to stamp out Anarchist and

136

1931

Communist uprisings, and in October the new Law for the
Defense of the Republic led to thousands of arbitrary
arrests.

November

JUST AS the Republican regime in Spain antagonized
many of its supporters by suppressing labor even more
violently than the Monarchy had, so the National Gov-
ernment in England abandoned all pretense of non-parti-
sanship and proceeded to carry out purely Conservative
policies. On November 4 Lloyd George resigned as
leader of the Liberal Party, one of whose most distin-
guished members, Sir John Simon, had become foreign
secretary in the new Government. This elderly lawyer
had the makings of a great judge, but in middle life he
abandoned the bar for politics. His Report on India ex-
plains why a Government dominated by Stanley Baldwin
installed him in the Foreign Office, for Gandhi had just
arrived in London to attend the Second Round Table
Conference, and Sir John had already proved himself an
efficient opponent of everything that the Mahatma stood
for.

When the Simon Report appeared during July, 1930,
Harold Laski wrote: "As a piece of analysis, its finely
meshed structure could hardly be bettered. Its argument
is closely knit, its logical power superb. Everything is
there save an understanding of the Indian mind. Nation-
alism gets a polite paragraph at the end, written a typ-
ical lawyer's device as a half-dubious peroration.

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^^^^(^^^^^^^

Gandhi, who has set half India aflame with new dreams,
Is dismissed as an administrative incident of which the
significance is never seen.'*

On November 5 Gandhi enjoyed the bleak triumph of
arriving at Buckingham Palace clad in a loin cloth and
shawl to meet the King, but by the end of the month he

Strube in the Daily Ex^ress^ London
When Gandhi comes to town.

was lucky to have even the loin cloth left, for his hosts
stripped him of everything else. He returned to India on
November 30 with nothing to show for his visit, Mac-
Donald having promised to sponsor a federated India
only after the natives had settled their minority ques-
tions. And even before Gandhi's departure, this same
MacDonald's pet Viceroy, Lord Willingdon, had an-
nounced the so-called "Bengal Ordinances," which set

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1931

up special courts with power to pass death sentences on
terrorists. Immediately upon landing, Gandhi therefore
ordered the civil-disobedience campaign to be resumed,
only to find himself heaved into jail and his Congress
Party outlawed. Meanwhile, the new National Govern-

John Reynolds in the Morning Post, London

EXCHANGE OF COMPLIMENTS

The mutual politeness shown by Gandhi and Winston Churchill
suggests that the two statesmen might change costumes.

ment was acting with equal effectiveness at home. The
House of Commons rushed through the protective tariff
that the Conservatives had been clamoring for ever since
the passage of the Hawley-Smoot Act and on November
19 slapped a duty of fifty per cent on twenty-three classes
of manufactured goods,

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Something more than a coincidence led to the fall of
the Australian Government immediately after the British
elections and the invasion of Manchuria. In October 1929
the Labor Party had gained control of the House of
Representatives and proceeded to rule the country under
the premiership of James H. Scullin. But by 1931 differ-
ences over financial policy split Scullin's supporters wide
open. A radical group led by Premier Lang of New South
Wales demanded repudiation of Australia's foreign
debts, whereupon a conservative group under the leader-
ship of Joseph Lyons, former acting treasurer for the
Commonwealth, broke away from Mr. Scullin in terror
and formed a United Australia Party with the National-
ists. On November 25 the Government's majority in the
House of Representatives evaporated, and it was voted
out of office. In the general election that followed on De-
cember 12 the United Australia Party repeated the suc-
cess of the British Nationalists.

Australia had followed the lead of the mother country
for two reasons. In the first place, the prospect of a more
united British Empire looked good to a country that had
almost gone into bankruptcy trying, to become economic-
ally self-sufficient In 1908 Australia levied a forty per
cent tariff on eight items of import. Twenty years later
the list included two hundred fifty-nine items, and a tariff
of sixty per cent was charged on forty of these. When
the Scullin Cabinet assumed office, it raised the tariffs still
higher and forbade the importation of seventy-eight
items, many of them necessities. Import quotas cut down
the quantity of other necessities that were permitted to
enter the country by sixty-five per cent This led to a
rapid rise in the Australian price level at the very time

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1931

oooo*>

when the prices that the world paid for Australian prod-
ucts were falling. Between 1929 and 1930 the value of
Australian exports had been more than cut in two. The
country faced bankruptcy. Here, then, was one reason
why the voters supported candidates who promised to
work hand in glove with Great Britain's National Gov-
ernment in cultivating Empire trade.

The second and more important reason was that
Japan's invasion of Manchuria struck terror into a
"White Man's Country" capable of supporting sixty
million inhabitants, but occupied solely by six and a half
million Anglo-Saxons, whose numbers were certain to de-
cline by 1960 because of the falling birth rate. And not
only did the Australians forbid the immigration of the
yellow race ; they even refused to admit Latins, although
only a race habituated to a warm climate can support life
in many parts of the continent In short, "White Aus-
tralia" owed its existence to the British Navy and there-
fore turned out at the polls to vote for the men whose
patriotism made them blood brothers of the patriots in
England.

December

THE EVENTS of the closing month of 1931 must have
caused the Australians to feel well satisfied with their
choice. On December 1 1 the liberal Minseito Cabinet in
Japan resigned, having opposed the invasion of Man-
churia and kept the country on the gold standard. On De-
cember 13 a conservative Seiyukai Ministry headed by

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Premier Inukai took office. General Sadao Araki, an out-
spoken advocate of Fascism, assumed the key post of
War Minister, and the gold standard was at once sus-
pended. In returning to office the Seiyukai scored a dou-
ble victory. The Minseito Party had tried to localize the
Manchurian conflict, and now it was replaced by a party
that supported the "positive" policy that the army had
adopted in Manchuria. The Minseito had also tried to
keep the yen on the gold standard and had followed a
policy of ruthless deflation more advantageous to Japan's
foreign creditors than to her industrialists. When the
Inukai Ministry forbade the export of gold and set about
systematically reducing the value of the yen sixty per
cent, the three largest industrial concerns in Japan netted
a profit of between thirty and sixty million dollars by
speculating on the fall of the currency. Export trade was
in the saddle.

Technical superiority alone did not account for the vic-
tories that the Japanese had been scoring almost at will,
for the Chinese troops had little enthusiasm for battle.
When Japan attacked Manchuria, Chiang Kai-shek had
two wars on his hands in other parts of the country. In
June he had assumed personal charge of an army of three
hundred thousand troops to rout the Communists from
Kiangsi Province his previous expedition of one hundred
fifty thousand had been repulsed and the campaign
ended in a draw on September 9, both sides having suf-
fered heavily. At the same time the Canton Government
had dispatched a ''northern expedition" against Nanking,
but called ofi operations when the Japanese attack began.

Chiang Kai-shek spent the rest of the year negotiating
with the Canton rebels and took no part himself in fight-

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1931

00000

ing the Japanese indeed, war between China and Japan
had never been declared. His inertia in the Manchurian
affair then served as a lever to force his resignation and
that of T. V. Soong, his finance minister. Knowing the
treasury to be empty, they quit willingly enough on De-
cember 22, for they also knew that their banking friends
in Shanghai would never give any money to the "pro-
gressive government" that the Canton faction established
on December 28. Sun Yat-sen's widow denounced the new
governing clique, but the presence of Eugene Chen as for-
eign minister made it the most radical group to gain
control of the central government since Chiang Kai-shek
had cut loose from the Communists in 1927. It began the
New Year promising to fight Japan to the death on hot
air.

Reviewing the Record 1931

THREE occurrences made 1931 the most eventful year
since the World War. The Spanish Revolution marked
not only the first collapse of a Fascist dictatorship; it
marked also the first successful European revolution in
more than ten years. Primo de Rivera and General Be-
renguer, the Spanish equivalents of Mussolini, gave way
to Zamora and Azana, the Spanish equivalents of Ke-
renski, and they promptly turned, in Kerenski fashion,
against the workers and peasants who had made the Re-
public possible. Not much more than a year after the
Wall Street crash had announced the arrival of a world
depression, social revolution appeared in Europe.

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The financial collapse that lasted from June through
October had more far-reaching effects. Successive crises
in Austria, Germany, and England broke three of the
weakest links in the chain of international capitalism and
showed how far the agricultural crisis of the year before
had spread. It became clear that the centers of finance and
industry depended for their well-being on the sources
from which they got their food supplies and raw ma-
terials.

England's abandonment of the gold standard indi-
cated, for instance, that the value of all commodities in
terms of gold had declined so rapidly that gold had be-
come more desirable than anything else under the sun.
But the supply was limited. Although every nation on the
gold standard had to redeem its paper currency in gold
on demand, few nations had even half as much gold as
paper. When, therefore, people began, turning their
stocks, bonds, and property into currency and presenting
this currency for payment in gold, no national gold re-
serve could stand the strain, and the nations with the
smallest gold reserves fell by the wayside first.

The collapse of the International gold standard during
1931 did not, however, arise solely from the farm crisis
of 1930. Orthodox finance had also failed most com-
pletely in precisely those countries which were able to
produce the largest volume of industrial goods per capita
Germany, England, Japan, and the United States.
True, America remained on the gold standard, but for-
eign observers were pointing out that the dollar was
doomed, while the native inhabitants were suffering from
more wide-spread unemployment and more bank failures
than any other people. Whatever the other consequences

144

Garvens, Kladderadatsch, Berlin
Above Briand: "Nations of Europe unite!'*

Below The Same Briand: "Those damn Bodies disturbing the
peace again!"

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<><><><>^><>-<><>^><><><><><><><>< s -

of 1931 might be, it was pretty clear that the countries
with the most advanced technology had experienced the
most trouble. Not only had they felt the effects of the
farm crisis, they were undergoing a domestic crisis of their
own.

The collapse of the gold standard also led to a sharp-
ening of national rivalries. France and Germany had
never been at peace since 1914: the French industrialists
had worked unceasingly to establish their superiority in
Europe. In 1923 France invaded the Ruhr; in 1926 the
Continental Steel Cartel, dominated by French influences,
came into being; in 1931 French high finance refused to
lift a finger to check the financial crash in Central Europe
unless German industry would make an unconditional sur-
render* On each occasion the English came to the aid of
Germany, but never more openly than in 1931, when
they abandoned the gold standard rather than leave Ger-
many to the mercy of France. The French then announced
that the British Empire had come to an end, but the
British bankers had their own ideas and made Mac-
Donald walk the plank in their behalf.

The American bankers lacked both the courage and
the brains to take a similar course and bluff the pitiful
Hoover into doing their bidding. Instead they sat by help-
lessly while he blundered from one contradiction to an-
other. At first he played into the hands of the British and
infuriated the French with his moratorium. But having
pulled England's chestnuts out of the German fire, Mr.
Hoover did not follow that somewhat quixotic policy to
its conclusion. When England went off the gold standard,
he dashed in a panic across the No Man's Land of inter-
national finance into the arms of the distrustful French.

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1931

Obsessed with keeping the United States on the gold
standard, he followed up his moratorium with a formal
undertaking to scale down the war debts as soon as Eu-
rope scaled down reparations, whereupon the French
agreed to stop draining gold out of the United States.
A year afterward he revealed that if gold had continued
to leave the country at the rate it was going when Laval
arrived in October, America would have been driven off
the gold standard in another two weeks.

But Mr. Hoover had a second obsession that canceled
Kis obsession about gold. He could not make up his mind
to adopt a thoroughgoing policy of domestic deflation.
Prices must go up at all costs, and with that end in view
he placed the government credit behind insolvent banks
and hurried the country toward inflation at home as rap-
idly as he was hurrying it in the opposite direction abroad.
The stock market responded by continuing its nose dive.

The third great event of 1931, Japan's invasion of
Manchuria, marked the beginning of the Second World
War. The Spanish Revolution had been a purely domestic
affair, a simple struggle between classes within a single
country. Even the collapse of the international gold
standard, which overthrew more than one government,
left the European balance of power almost unchanged.
But when Japan invaded Manchuria a new power
emerged, challenging the existing division of the world
by force of arms just as Germany had challenged it in
1914. And, more important still, this new power was
Oriental, not Occidental The scene of action had shifted
from Europe to Asia.

During the summer of 1931 a Dutch naval officer
named F. H. Donner prophesied what was to occur a

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few months later in a remarkable article entitled "East
against West' 1 that appeared in the Zeitschrift filr Geo
politik, a scientific monthly published in Berlin.

"The centers of culture in past history," he wrote,
"have included Egypt, Greece, and Rome on the Mediter-
ranean, and Persia, India, and China in Asia. What hap-
pened before these civilizations existed only the immortal
gods know. We can but conjecture as to the culture of At-
lantis, the Aryans, the Aztecs, and so forth. But the im-
portant thing is that all these centers of culture lie within
the same parallels of latitude, not longitude. What, then,
is more natural than that every century should have dis-
cussed the opposition between East and West? Whether
Alexander of Macedon was waging war on Persia or
whether Attila was waging war on Europe, the ground
swell always runs from east to west or vice versa."

And then, during the nineteenth century, "the East
awakened. The knocking at the windows of Asia by the
Portuguese, Spanish, English, and finally the Americans
succeeded in arousing Japan from its lethargy. The
peace of Shimonoseki awoke Japan's self-consciousness.
The peace of Portsmouth in 1905 gave Japan a sense of
her own unique value, and after the peace of Versailles in
1919 Japan began dreaming of herself as an arbiter of
world destiny. Something more than contempt for death
and fanatical conviction of a reward in the hereafter gave
the Orientals such power. A keen, all-seeing diplomacy, a
skill at intrigue such as the world has never seen before,
represent the reverse side of the same movement that is
being supported by greedy, ignorant Jewish high finance
and other international groups which do not understand
the aims of their opponents and which believe that a

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1931

ooooo

brother Asiatic can be as truly steeped in Western cul-
ture as a European."

Herr Donner then warned the Western nations to re-
member these three theses: "First, peace in the East
means war in the West, and vice versa. Second, the Eu-
ropean will always get the worst of it with the Asiatic,
and the more the European is animated by a highly de-
veloped feeling for humanity (although stupidity is a
much better word) , the worse is his defeat Thirdly, all
colonial powers, England included, must unite against the
danger that is now threatening, and Singapore, not Sa-
bang, must be our base."

If the English appeared to ignore this warning it was
because America rushed forward to defend their inter-
ests. With Australia, New Zealand, Hongkong, Ma-
laysia, and the East Indies to protect, with large invest-
ments in China, and with the lion's share of Far Eastern
trade, the British had every reason to oppose any power
that threatened their predominance in the Pacific.
Whereas England controlled thirty-seven per cent of the
foreign-owned wealth in China, and Japan thirty- four
per cent, America's share came to only five per cent. Yet
Secretary Stimson, a former Governor General of the
Philippines, carried on as if the United States not only
had a larger stake than England in the Far East but had
more reason to antagonize Japan. He therefore took the
initiative away from the League of Nations and vainly
attempted to form a united front of Western powers
against Japanese aggrandizement It needed only this to
complete the Hoover Administration's record of dis-
aster.

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January

THROUGHOUT January Secretary Stimson continued to
antagonize Japan single-handed. On the seventh of the
month he sent identical notes to Tokyo and Nanking call-
ing attention to the Nine-Power Pact that guaranteed
China's territorial integrity. The British Government
held aloof. If the American move bore fruit, well and
good England would profit, too; if it failed, America
would take the blame. And fail it did. On January 16 the
Japanese Government informed the United States that
the Open Door policy of equal opportunity to all foreign
powers in China would continue. The United States re-
plied by concentrating its entire fleet in the Pacific Ocean.
Not all the British press approved of the National
Government's course. The editor of the London Specta-
tor, who was also head of the English-Speaking Union in
Great Britain, complained: "There is every reason why
this country should cooperate with the United States
wherever possible. There is every reason why steps
should be taken to impress on Japan the concern her con-
tinued advance in Manchuria is causing throughout Eu-
rope. * * . Why Sir John Simon could not range himself
with Mr. Stimson is incomprehensible."

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The editor of the Conservative Saturday Review, how-
ever, had less difficulty in discovering a method in Sir
John's madness". "Sir John Simon is to be warmly con-
gratulated," he wrote, "upon his refusal to associate this
country with the American note to Japan. His attitude
throughout the whole Manchurian crisis has been marked
by a common sense and a regard for the true interests of
Great Britain that have not been displayed by any of his
predecessors since the time of Lord Grey of Fallodon.
Japan, not the United States, represents stability in the
Far East, and it is natural to British interests to support
the stable factor. Whatever may be the pros and cons of
the rupture of the old Anglo-Japanese alliance, I hope
that in the future Great Britain and Japan are going to
work more harmoniously together than has been the case
since the War. Japan was deliberately sacrificed on the
altar of Anglo-American friendship, but the policy of
playing second fiddle to the United States has not done
this country much good anywhere."

The National Government shared this antipathy to-
ward the United States, but it had doubts about Japan's
stability and the identity of Japanese and British inter-
ests in the Far East. As the realistic London Economist
pointed out: "Japan is in a desperate position and her
ultimate debacle is really as certain in 1932 as Germany's
was in 1914. The parallel suggests, however, that the
tragedy may take three or four years to work itself out,
and may finish off the monstrous process, which began in
1914, of sabotaging our civilization."

On January 28 the Japanese tried to break the Chi-
nese boycott of their goods, which had cut their exports
to that country sixty-eight per cent, by bombarding the

154

mplicttsmof) Munich
"Geneva's fine words give us work."

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native quarter of Shanghai. The British scented danger
and at once joined the United States in a protest. France,
however, held aloof for the simpe reason that its Govern-
ment had by this time fallen into the complete control of
the Comite des Forges. The death of Andre Maginot,
Minister of War, gave Laval his opening. He reorgan-
ized the Cabinet on January 12, ousted Briand, took the
foreign ministry for himself, and gave Maginot's job to
Tardieu. Two months later Briand was dead, and Tar-
dieu, of all people, spoke in behalf of the Government at
the state funeral held in his honor.

February

ON FEBRUARY 2 the Disarmament Conference opened at
Geneva. Arthur Henderson, British foreign minister un-
der the Labor Government, presided, although he had
lost his seat in Parliament during the general election. On
the same day the United States, England, France, and
Italy, at last proposed settling the dispute between China
and Japan in the spirit of the Kellogg-Briand Peace Pact
and of the December 9 resolution of the League of Na-
tions. However, the Japanese War Office had already de-
clared on January 30 that no action by the League could
alter its policy and warned that intervention by the
League might provoke "a world conflagration." The
League Council instantly endorsed the protest of the
four Great Powers, whereupon Japan again refused to
halt her military preparations or to allow neutrals to take
part in any negotiations. Simultaneously, Russia protested

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1932

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against Japan's use of the Chinese Eastern Railway,
which was controlled jointly by China and the Soviet
Union. The Japanese retorted by entering the city of
Harbin in Manchuria and bringing heavier guns into
action at Shanghai.

Neither the invasion of Manchuria nor the bombard-
ment of Shanghai could persuade the Nanking Govern-
ment to declare war against Japan. The League of Na-
tions thus had no legal basis for protesting that Japan
had resorted to war as an instrument of national policy
in violation of the Kellogg Pact The fact was that the
Chinese Government would have liked nothing better
than to make Japan a present of Manchuria and Jehol
Province in return for support of its own campaign
against the Communists in Kiangsi Province. And from
Nanking's point of view the most provoking aspect of the
Shanghai bombardment was the unexpected resistance
its Nineteenth Route Army offered the Japanese invad-
ers. Because this crack Chinese corps had refused to at-
tack the Communists, the latter took advantage of the
fighting at Shanghai to seize Nanchang, the capital of
Kiangsi, on February 15.

Three days later Manchuria and Inner Mongolia de-
clared their independence at Mukden. The announcement
came from two Manchu princes, various provincial gov-
ernors, and Henry Pu-yi, heir to the Manchu throne, who
was chosen head of the new "Northeastern Administra-
tive Committee." On February 20 the voters of Japan sig-
nified their approval of what had happened since the pre-
vious September by giving the conservative Seiyukai
Party a majority of one hundred and forty-two seats in
the new Parliament. On the last day of February repre-

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sentatives of Japan and China began preliminary peace
negotiations on board the British flagship at Shanghai.
Two days later Japanese troops finally drove the Chinese
thirty miles south of Chapei. The thirty-five days of fight-
ing had cost twenty-three thousand lives, twenty thousand
of them Chinese.

Osaka Pakkov, Osaka Asahi Shimbvn^ Tokyo

SADAO ARAKI, KOKI HIROTA,

Japanese War Minister. Japanese Foreign Minister.

A Chinese machine-gunner, nicknamed "Charlie Chan"
by the American war correspondents, gave the China
Weekly Review of Shanghai a vivid description of the
battle that the Nineteenth Route Army put up against
the Japanese. "I watched as my comrades fell," he wrote,
"wounded or dead, and were carried away. Such was life I
My hatred for the Japanese overcame all my soft feel-

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1932

<XXXX>.

ings of sympathy or fear. The dying did not shriek, the
wounded did not cry. The men, or rather the boys, met
their fate in silence, a silence so noble that it was in itself
a glorious feat. I say the boys because the majority of
the Nineteenth Route Army as well as of other Chinese
armies are youngsters still in their teens."

Yet to this warrior "life in the war front was quite en-
joyable," and he thought "Herr Remarque was quite
wrong when he wrote All Quiet on the Western Front"
Here is the way he described the episode that gave him
the biggest kick :

"Our Big Sword Corps came. They were detailed to
the front by headquarters on hearing that a hand-to-hand
fight was in progress* I must explain about our Big Sword
Corps, because it is not found in the modern army. It is
a mediaeval force employing primitive swords such as you
find in Roman history. Stripped to the waist, barefooted,
these naked envoys of death swear never to return when-
ever they are sent forth. Armed with a huge sword, a
pistol, and many hand grenades that hang around his
waist, the Big Sword is a combination of the modern and
the primitive soldier. His face is smeared with black
grease, his hair is in disorder, and whenever he kills an
enemy he puts his blood on his own face and body. His
very sight is frightful even to his own men.

"These Big Swords came. To avoid gun-fire they
rolled on the ground. They distinguished their enemies
by the white leg covers and by the simple method of feel-
ing. They stretched their left hands to feeL When they
felt tin caps, woolen uniforms, leather outfits, down went
their swords. Sometimes they rolled on the ground to cut
the white legs. The Japanese are infinitely weU dothed

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and well protected compared with the Chinese soldiers,
whose only armor is their love of fatherland."

In point of fact, the most reckless exhibitions of pa-
triotism came from the side of the Japanese. Literally
dozens of women attempted suicide when their men went
to the front, and one of them wrote before casting her-
self under the wheels of a troop train: "Though I cannot
be a soldier, I can encourage them by dying." Such ex-
amples had the intended effect. During the Shanghai bom-
bardment all Japan was singing the "Song of the Human
Bombs" which told of three Japanese soldiers who
blasted away a stretch of barbed wire by hurling them-
selves into it with exploding bombs fastened to their
bodies. No wonder a correspondent of the New States-
man and Nation writing from the Far East found the
suicide cult the most striking and characteristic expression
of the Japanese mentality.

"The press loves to explain," he wrote, "that no 'for-
eigner' can ever understand the devotion of the Japanese
soldier to the colors, still less the devotion of the bushi
(warrior) to his sword. The excessive popularity of the
'sword plays,' which consist of little but slow manslaugh-
ter, is the other side of a complex that seems incredible
in the mind of a modern world power. Yet when a re-
servist private in command of a number of Chinese-Man-
churian police at Fenghwangcheng 'became impatient'
with some bandits who were shooting at the place and,
'drawing a sharp glinting sword . . . made a sortie, hear-
ing behind him the yells of his Chinese comrades, "Look
out 1" ' his death was 'acclaimed as a unique case of hero-
ism.' 'The struggle reminiscent of a warrior in mediaeval
Nippon did not last long,' says the egregious Mainichi.

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1932

<XXxX>.

'The attackers raised their rifles and fired. The private
fell to the ground, his fingers firmly gripping his sword
hilt.' This hero rather failed to come off, but Japanese
two-handed swords were widely used by the ronin (plain-
clothes soldiers dare one say 'bandits'?) in Shanghai,
as well as by dare-devil naval men, and their mention
rarely fails of its effect on the mob."

It was because the Japanese thrust at Shanghai threat-
ened the French zone of influence in Southern China that
the Comite des Forges Government finally took exception
to what had been happening in the Orient But even then
the real beneficiaries of the pro-Japanese line that France
had chosen continued to profit. During February a Japa-
nese military mission visited Czechoslovakia, and shortly
afterward large shipments- of bombs began leaving the
Skoda munitions plant, a Comite des Forges subsidiary,
for Japan. The great Schneider-Creusot armament works
in France received a contract for twenty heavy tanks, and
a French automobile factory in Dijon turned out four
thousand heavy airplane bombs for Japan. Other French
factories were sending semifinished armaments to Ger-
many, where they were completed and then shipped to
Japan. But the British arms-makers were doing an even
bigger business, and Sir John Simon in particular profited
handsomely from his shares in Imperial Chemical Indus-
tries, which was selling supplies to both China and Japan.

March

DURING MARCH America's troubles shifted from Shang-
hai to other parts of the world. After the half-billion-

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dollar National Credit Corporation had failed to keep
the banks solvent. President Hoover created the two-
billion-dollar Reconstruction Finance Corporation during
January. This, however, added such an unexpected bur-
den to the public debt that a second flight from the dollar
began, accompanied by a corresponding rush to the
pound, which rose fourteen per cent in value during the
first three months of 1932. Yet the Reconstruction Fi-
nance Corporation, like the National Credit Corporation
before it, confined its gifts to ruined banks and railways.
Although the United States had a larger proportion
of its population unemployed than any other major
power, the Federal Government took no steps to provide
direct relief. Even poverty-stricken Germany had a dole,
which perhaps helped to account for the country's in-
ability to pay its short-term foreign creditors. In any case,
on January 23 these creditors, who had extended their
loans an extra six months in July 1931, granted a second
extension of a full year. What this amounted to was that
the American banks, as the most important group of
creditors, pledged about one billion dollars of their dwin-
dling assets to insure Germany against revolution.

The records of the American Telephone and Tele-
graph Company gave a good idea of what was happening
in the United States at this time. Twice as many people
had removed their telephones in 1931 as in 1930, and
the company therefore had to dismiss 49,600 employees.
Yet in the same year the number of its stockholders had
increased by 77,209. "These figures," commented the
Week-end Review of London, "are significant of what,
it may be feared, is happening throughout the world,
namely, that while the number of persons employed is

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1932

<xxxxx

decreasing, the number of those holding paper claims on
the products of their labor is increasing."

But the holders of "paper claims" to the International
Telephone and Telegraph Corporation suffered a rude
shock when Ivar Kreuger, who organized this and other
financial and industrial projects, committed suicide in
Paris on March 12 just after returning from New York
City, where he had vainly sought a loan. The Stockholm
Stock Exchange at once closed, and two days later the
manager of Kreuger's Esthonian branch committed sui-
cide. Sir Arthur Salter, the League of Nations' star econ-
omist, whose new book, Recovery, was throwing Walter
Lippmann into daily fits of ecstasy, at once rushed to the
microphone of the British Broadcasting Corporation and
told the world of the loss it had just suffered in the death
of a great internationalist. Isaac Marcosson, writing in
the Saturday Evening Post, had called Kreuger "more
than an industrial Titan."

He spoke no less than the truth. Within a few weeks
after Kreuger's death police discovered forty-two forged
Italian bonds of half a million pounds sterling each in the
Kreuger and Toll safe-deposit vaults, whereupon Kreu-
ger's internationalism came home to roost thirty-five hun-
dred miles away in the Boston offices of Lee, Higginson
and Company, which had marketed millions of dollars'
worth of his valueless securities among the prudent
Yankees.

The day after Kreuger committed suicide Germany
went to the polls and gave Hindenburg over eighteen and
a half million votes for president, Hitler over eleven mil-
lion, Thalmann, the Communist candidate, five million,
and Du&terberg, the Nationalist candidate, two and a half

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million. Since Hindenburg had not received more votes
than all the other candidates combined, a second election
was held on April 10, when he got two and a half million
more votes than Hitler and Thalmann put together, Diis-

Hermanm-Paul in Je Sms Partout, Paris

AFTER THE KREUGER CRASH

"Did the war reduce you to this condition, children?"
"No sir, the peace. Papa played with matches."

terberg having withdrawn. The outcome revealed nothing
short of a revolutionary change in German public opinion
since 1930. It will be recalled that in February of that
year Chancellor Miiller of the Socialist Party, the largest
In the Reichstag, gave way to Chancellor Briining of the
Catholic Center Party, and that Briining had continued in

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1932

>-x>o-o-

office ever since. The Socialists, however, still ruled the
state of Prussia, comprising two-thirds of the Reich, so
that in effect Germany was being governed by a Catholic
and Socialist coalition.

The Reichstag elections of September 1930 then
showed that this coalition was losing its popular support.
The Communists were picking up thousands of votes
from the Socialists, and the Nazis were picking up mil-
lions of votes from everybody. A year later, in August
1931, came the Prussian Referendum, in which the voters
of Prussia expressed their approval of Otto Braun's
Socialist regime by a majority of three and a half million.
The Nazis had proposed this referendum but presently
lost interest and would never have pushed it through if it
had not been for the Communists, who were concentrat-
ing their efforts on attacking the Socialist leadership in
the hope of discrediting it and winning the rank-and-file
Socialist membership over into their own camp. Until the
time of the referendum they had some success, but when
they made common cause with the Nazis, that was too
much; unpopular as the Socialist leaders had become,
their followers could not bring themselves to vote with
the Nazis on any issue.

Trotzki, a bitter critic of Communist policy in all parts
of the world, indignantly protested: "It is pure folly to
rush out in the streets shouting, 'Down with the Briining-
Braun regime!' when the overthrow of this regime can
mean only the establishment of a Hugenberg-Hitler
government." In a pamphlet entitled Shall Fascism Really
Conquer? he argued that Germany more than any other
country held the key to the international situation:
"Economic and political contradictions have developed

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unprecedented sharpness here. The chances for peaceful
compromise grow more and more remote. The moment
is approaching when the revolutionary situation must
break either in a revolutionary or a counter-revolutionary
direction." He attributed the revolutionary weakness of
the German proletariat to two causes "to the historic
role that the Social Democrats play as capitalist agents
in the ranks of the proletariat, and to the inability of the
Communist Party to unite the workers under a banner of
revolution." He prophesied that the victory of Fascism
in Germany would mean war against the Soviet Union
and prophesied a German-Polish alliance "Hitler will
need Pilsudski just as Pilsudski will need Hitler." j

Because the terrified Socialist leaders feared that more
of their support would trickle away to the Communists
while the other parties were hopping aboard Hitler's
band wagon, they endorsed Hindenburg for the presidency
on the theory of the lesser evil the greater one being
Hitler and it was to them that he owed nearly half of
his votes. Although the Socialists believed they were per-
petuating the Republic, Hindenburg himself made no
promises whatever and frankly stated that he would not
consider himself bound by any of the political parties
that were supporting him the two most important being
the Socialist and the Catholic Center Parties.

Two alternatives to the Republic presented themselves
Fascism and Communism. On the eve of the election
Hitler had announced : "If the National Socialist move-
ment that we have created as a counterweight to
Marxism were to collapse to-day, Germany would go
Bolshevist to-morrow. Destiny will draw a clear line of
battle. We are seeing fulfilled among our own people

166

Simflicissmus, Munich

Above The Socialist (Yesterday): "Down with Capital,
Royalty, and the Church."

Socialist (Today): "Help! Capital and the Church
are in danger/*

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the Biblical text that recognizes hot or cold but that
damns lukewarrnness to destruction. The middle group
Is being hewn and hacked to pieces. The period of com-
promise is approaching its end. To-day the German nation
confronts international Bolshevism with National Social-

Ism."

The Communist analysis agreed with Hitler's but pro-
posed the opposite solution. Rote Fahne, official organ of
the Communist Party, declared: "In this tremendous
transformation of the alignment of classes, the position,
of the reformists collapsed rapidly. It kept becoming
more clear that the decisive battle would be fought on
the gradually crystallizing issue of Fascism against Com-
munism. In this conflict the reformists are still trying to
steer a middle course and are concealing from the masses
their real role as misleaders. But they are meeting with
less and less success. The truth that Stalin proclaimed is
constantly growing more evident that *Social Democ-
racy is a wing of Fascism. 1 Millions of Social Democrats
are coming to realize that these words of Stalin's are
proved by experience to be true." According to the same
organ, "the greatest danger is that the leaders will lag
behind the revolutionary impulses of their followers and
ignore the objective revolutionary policies."

But Hindenburg's victory did not mean that the Re-
public was saved. The Socialist organ, Forwiirts, esti-
mated that about four and a half million people supported
Hindenburg for purely personal reasons, and that their
political sympathies were Fascist. In other words, only
fourteen million people favored the Republic and twenty-
three million preferred some other form of government.

The country's economic plight more than accounted

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1932

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for the political unrest Up to October 1931 Germany
had exported more goods than the United States, but by
December German exports had sunk twenty-three per
cent below what they had been during December 1930,
and American exports for the year exceeded those of
Germany. During 1931 German stocks and shares had
declined fifty per cent, and production had declined thirty-
five per cent since 1929. On January 1 more than six
million workers had no jobs, and wages had fallen faster
than the cost of living. In spite of the Hoover mora-
torium, the budget had to be revised three times during
1931, revenues had dropped, and expenditures had in-
creased.

Nor had the German farmer been spared. Farm income
had dropped thirty per cent since 1929, although rising
tariffs on foodstuffs had brought the price of wheat in
Germany to three times the world level. A fund of two
and a half billion marks, known as the Qsthilfe, had been
laid aside to help the farmers of East Prussia, but three-
quarters of it had gone to a thousand big landowners,
enabling them to pay off their debts to the banks, and
the remaining quarter went to only one peasant in fifty
of those entitled to receive aid. What the Reconstruction
Finance Corporation was doing for big business in the
United States, the Osthilfe was doing for the big land-
owner in Germany.

April

ON APRIL 24 the Nazis won a plurality of seats in the
state parliament of Prussia, thus confirming the conten-

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tion of Forw'drts that most Germans did not want republi-
can rule. The result also vindicated the Communist Rote
Fahne, which had criticized most political leaders for
lagging behind the radicalism of their voters. For it can-
not be emphasized too strongly that the Nazis were
making a more radical appeal than any group except the
Communists and that they were the only group that
openly advocted violence.

"Yes, we call ourselves a labor party," proclaimed Dr.
Goebbels, Hitler's propaganda chief. "Yes, we call our-
selves socialists," although he did admit that "production,
in so far as it concerns human strength, skill, inventive-
ness, and originality, is to remain in the hands of the
individual." In one of his typical pamphlets, Der Nazi"
$ozi } Dr, Goebbels proclaimed : "We are to-day a labor
party in the best sense of the word. Once we have gained
control of the state, Germany will become a labor state,
a state of workers .... The future of Germany will be
rebuilt from the ground up. It is a mistake to believe that
the middle class, as a class, can create this new productive
labor when it is likewise the guardian of the state against
which all these new efforts will be directed. Of course
that doesn't mean that the middle class cannot cooperate
in building the new Germany, but the middle class, as
such, has played its historic role and will have to give
way before the creative spirit of a younger, more healthy
class."

No wonder Sir Henri Deterding could not reconcile
these sentiments with the interests of the Royal Dutch-
Shell Oil Company and withdrew his financial support
from Hitler at this time. And when Dr. Goebbels told
the German worker that "he must free himself from

170

1932

oooo-o*

those fat, presumptuous Jewish liars and eject them from
the labor movement" and at the same time "declare null
and void all German securities held in Jewish banks," he
had given this worker somebody specific to hate.

May

THE SAME economic depression that was driving the
people of Germany to vote for revolution drove the
people of France to vote for Radical Socialist deputies
to replace the conservative coalition that had kept Laval
and Tardieu in power almost without interruption since
October 1929.

On May 1 and May 8 for France requires a second
vote between the two leading candidates in those districts
where no one candidate receives an outright majority on
the first ballot the conservative coalition lost forty-
seven seats in the Chamber of Deputies to Edouard
Herriot's Radical Socialists. Tardieu's party dropped
from one hundred and one to seventy-two, and the Social-
ists gained seventeen seats.

The Radical Socialists, who correspond to the Liberals
in England and to the New Deal Democrats in the United
States, do not really deserve either of their two names.
Their leader, Edouard Herriot, was chiefly distinguished
by his consuming desire to hold office. The last time he
had headed a Cabinet, he remained Premier for two
years and then, in 1926, accepted a subordinate post in
Poincare's conservative coalition Cabinet which had come
into existence to save the franc that Herriot had almost

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ruined. It was freely prophesied in 1932 that in another
two years a similar crisis would again compel him to
accept office at the hands of the conservatives.

By the beginning of 1932, unemployment had arrived
in France in a big way, some unofficial estimates running
as high as one million an enormous figure for a nation
of forty million people, seventy per cent of whom live
off their own farms. The unfavorable trade balance had
risen from eight billion francs in 1929 to eleven and
three-fourths billions in 1931, and receipts from tourists
were dropping. In order to avoid acknowledging a budget
deficit of more than two billion francs In 1931, the Laval
Cabinet had knocked three months off the fiscal year,
thus bringing the estimated deficit for 1932 to seven
billion francs. Finance Minister Flandin had blamed this
on education, social services, salaries, and pensions; he
did not mention that France was spending twenty billion
francs a year on military defense, in other words, three
times as much as Germany, and almost twice the French
pre-war figure. Yet even Herriot declared that he was
"anxious to improve and modernize our military equip-
ment"

Two years of Tardieu and Laval had also wiped out
the nineteen billion francs that Poincare had accumulated
after devaluating and stabilizing the currency. The Bank
of France had lost two and a half billion francs when the
pound went off the gold standard, and it charged this
loss to the French Treasury. Two French banks that had
failed during the same year had to be saved, and further
billions had gone into railways, road construction, steam-
ship lines, tax rebates, and loans to the Little Entente,
Hungary, and Poland. For Tardieu and Laval agreed

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1932

OO<x>O

with President Hoover that the way to assure prosperity
was to pour government funds in at the top rather than
resort to a dole.

But nothing Hoover had yet done in the United States
compared with the brazen behavior of Tardieu on May 6,
two days before the second balloting for the Chamber,

420) Florence
France: "They're trying to attack me."

when an insane White Russian, Gorgulov, shot President
Doumer of France. According to the Paris correspondent
of the Manchester Guardian, "M. Tardieu received the
representatives of the French press and urged them to
insist that Gorgulov was a Bolshevik, rebuking them for
not having done so already." Havas, the chief news
agency in France, which was in the pay of the heavy

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Industries, did its best to manufacture a red scare by
stating that "an order had been given by the Cheka to the
Soviet press to maintain a strict silence about Gorgulov's
crime," although In point of fact the Russian papers were
filled with accounts of the assassination soon after it oc-
curred. Later Havas apologized for having circulated a
false story, but "later" meant after the election, by which

Izvestia, Moscow
Andre Tardieu, after the assassination of President Douxner

time Tardieu had hoped that Gorgulov would have done
for his party what the forged Zinoviev letter did for the
British Conservatives in 1924. The most the Comite des
Forges could accomplish was to get another of their
alumni into the presidency of France, when Albert Lebrun
was chosen to succeed Doumer.

Emmanuel Berl, novelist and critic, gave a good de-
scription of the state of mind of the French middle classes

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1932

<*OOOK>-

at this time. Writing on "Fashions of 1932" for the
Nouvelles Litteraires, he detected, behind the reversion
to liberal republicanism in politics, a reversion to con-
servatism and provincialism in taste and morals. Of music
he said: "Melody is coming back. The tom-tom is disap-
pearing. People want tender airs, pretty dreams, flower-
ing lilacs. The kind of song that jazz defeated is now
engaged in a victorious counter-offensive." On the dance
floor he discovered a revival of the waltz: "The dance
halls play six waltzes for every tune of every other kind.
The Charleston is dead." The movies had started a
Viennese vogue Congress Dances, The Smiling Lieuten-
ant, and The Merry Widow became international suc-
cesses in 1932, and Paul Valery declared that the post-
war period had ended. Paul Morand's latest success was
entitled 1900, and Morand's own hopes for an interna-
tional society had gone glimmering.

"He hoped," wrote M. Berl, "for a more brotherly
world linked together by travel, cured of romantic dis-
eases of the heart by a more lucid spirit and a better
trained will." But "all this is over. Morand himself
doesn't believe in it any more, and even the Americans
are talking about the simple life. Nobody knows what
destiny humanity is approaching, but we certainly do not
seem to be drawing near to a condition of greater
happiness."

At the end of May two sudden changes of government
occurred in the two countries that were causing more
concern than any others. On May 15 several members
of the Blood Brotherhood League, a secret society of
Japanese militarists who had murdered a number of
prominent citizens, assassinated Premier Inukai and

175

Munich

Divine power no longer has the last word. Today that lies with

the state.

bombed the house of a close adviser to the Emperor, The
army and navy thereupon announced that they would not
support any Japanese Cabinet based on any of the exist-
ing political parties, for a split had developed in the
conservative Seiyukai Party, one group having opposed
the Shanghai bombardment. On May 22, therefore, a
new coalition cabinet was formed headed by the relatively

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1932

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moderate Admiral Salto and included representatives of
the army and navy as well as two members of the
Minseito party. The result was that domestic affairs re-
mained in the hands of the politicians, but the army and
navy acquired control of Japanese foreign policy. Since
September the army maneuvers in Manchuria had cost
the equivalent of sixty-two million dollars, and two
Japanese banks had lent Henry Pu-yi's government ten
million dollars more.

Eight days later an even more unexpected overturn
occurred in Germany when Chancellor Briining informed
President Hindenburg that it would be necessary to break
up the big Junker estates in East Prussia. The old field
marshal had possessed no estate of his own until after
the War, when a group of Junkers bought him one in
East Prussia to make him feel like a landed aristocrat
Nevertheless, he dismissed Briining on the ground that
the proposal smacked of Bolshevism and invited Franz
von Papen to form a government of national concentra-
tion. Von Papen had married a French wife, came from
the Rhineland, and had been expelled from his post as
military attache in Washington during the War because
of his espionage activities. He owned the newspaper,
Germania, and belonged to the Catholic Center Party,
which promptly expelled him for having knifed Briining.
On June 4, the President dissolved the Reichstag and
ordered new elections for July.

General von Schleicher, commander of the Reichswehr,
new defense minister, and real "strong man'* of the von
Papen. Cabinet, expressed the hope that the new Govern-
ment might come to an understanding with France. u The
nationalist parties are the very ones that sincerely desire

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cooperation with France,'* he told a French reporter on
June 16. u We are ready to conclude every economic
agreement that France may desire. In our opinion an
economic agreement is indispensable. We have enthusi-

S) Berlin
GENERAL KURT VON SCHLEICHER

astically greeted the establishment of the Franco-German
Economic Committee, the work of the French Ambassa-
dor in Berlin, M. Albert Frangois-Poncet, who is per-
forming a tremendous task."

Von Schleicher spoke well of Frangois-Poncet because

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1932

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both men wished to form a continental steel cartel under
Franco-German auspices. The French Ambassador used
to work for the Comite des Forges, and the German De-
fense Minister was speaking for the Deutsche Bank-Otto
Wolff group of German industrialists, who had always
been willing to collaborate with the French, even on terms
of inferiority. The Thyssen interests, on the other hand,
which supported Hitler, wanted to dominate European
heavy industry single-handed.

Lionel Robbins, an impartial British visitor, gave a
good description of the condition of Germany at this time
in the columns of the London Spectator:

"One does not need to be in Berlin many hours to
realize that something is wrong, very wrong. These wide,
handsome streets are built to take more traffic than this.
The shops, surely, should be doing more custom. . . .
Many have their shutters up. In some streets it would be
no exaggeration to say that twenty per cent are to let.
Dining at night in one of the best hotels, a party of three
of us had the main hall to ourselves. Five waiters hovered
round three men. It is difficult to walk without being
asked for the price of bread by men who quite obviously
have no practice in the asking. Life goes on, but at a
diminished tempo. There is an inner paralysis at work in
the city."

June

WHILE reaction gained ground in Japan and Germany,
revolution suddenly came to the surface in South America.

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On June 5 Chile proclaimed a Socialist Republic under
the leadership of Carlos Davila, former Ambassador to
the United States. Whereas the overturns of 1930 in
Argentina, Brazil, Bolivia, and Peru had not threatened
the property rights of any well-to-do natives or foreigners,
the issues in Chile ran deeper. The first indications of
trouble came in July 1931 when a military junta took the
place of President Ibanez. In September the navy
mutinied when its pay was cut thirty per cent; in Decem-
ber, Communists engaged in street fighting; in January
came a general strike; in February a conspiracy was
discovered in the air service; in April a new Cabinet
assumed office.

Artificial fertilizers had ruined Chile's nitrate business,
Germany's output of synthetic nitrogen having risen from
twelve thousand tons in 1913 to eight hundred thousand
in 1928, entirely at Chile's expense; and the collapse in
the copper market made further trouble in the second-
largest copper-producing country in the world. Lacking
enough farm land to grow its own food, Chile could not
draw into its shell as the agricultural states of Latin
America did when the drop in commodity prices ruined
their export trade; it had no alternative to revolution.
But within five days Davila required further violence to
keep him in office because the country swung toward
Communism.

During the same month President Hoover became
convinced that the United States also faced a revolution.
On June 15 the House of Representatives passed the
Patman Bill to issue two billion four hundred million
dollars in additional currency to pay off the remaining
half of the bonus due to the soldiers who had served

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1932

ooooo-

in the World War. A week before, seven thousand of
these men had come to Washington to demand passage
of the Patman Bill. They paraded on Pennsylvania
Avenue, and by the time the bill had passed the House
twenty thousand of them had encamped in a tent city
near the Capitol, which they picketed from time to time,
on one occasion throwing Vice-President Curtis into such
a panic that he called out the Marines.

On June 1 6 the Republican National Convention unan-
imously renominated the Hoover-Curtis ticket that had
swept the country in 1928. The President thereupon
wracked his brains for the 1932 equivalent of the "chicken
in every pot" that had won him the last election and pres-
ently perceived that revolution was brewing at the very
seat of the nation's Government. For the bonus marchers
not only refused to disband when the Senate voted down
the Patman Bill on June 17 ; they insisted on picketing the
White House, making of its occupant a terrified if volun-
tary prisoner. A whole month passed, however, before Mr.
Hoover swung into action.

July

ON JULY 28, after the Washington police had killed one
bonus seeker in a skirmish, the President called out the
United States Army. Infantry with fixed bayonets, cav-
alry, machine gunners, and tanks, then swept the veterans
down Pennsylvania Avenue and slowly drove them across
the Potomac to their camp at Anacostia flats, which the
troops burned to the ground. Forty men suffered injuries,

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but no loss of life occurred on either side. The photo-
graphs, news stones, and motion pictures of this exploit
contradicted in several important details the official re-
ports handed out from the White House, and it is doubt-
ful whether any single act committed by any President
of the United States ever aroused such immediate, in-
tense, and wide-spread indignation.

Unpopular as Mr. Hoover was making himself with
the people of his own country, his reputation skyrocketed
at Geneva when Ambassador Hugh Gibson, chief Ameri-
can delegate to the Disarmament Conference, presented
the so-called "Hoover Plan," proposing immediate reduc-
tion of armies and navies by one-third and abolition of
all tanks, bombing planes, chemical warfare, and mobile
heavy artillery. The press of every country except France
greeted the suggestion enthusiastically, but on July 23,
when Maxim Litvinov, the Soviet delegate, prepared a
resolution embodying the Hoover proposals and insisted
on a record vote between these proposals and the pro-
posals of France, Mr. Gibson voted against his own
President's plan.

The "principle" on which he acted was that "unanimity
in international gatherings was the bulwark of national
independence and, therefore, when an agreement was
reached, as in the present case, It represented not the
point to which daring leaders had attained nor even the
position occupied by perhaps the great majority of states,
but rather that point which the last straggler seeking
the same goal had passed."

Meanwhile the French, German, Belgian, British,
Italian, and Japanese Governments had called a repara-
tions conference on June 16 at the neighboring Swiss

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1932

ooooo*

city of Lausanne. This meeting grew directly out of the
Hoover moratorium of the year before and out of the
Laval-Hoover conversations of October, 1931, when the
American President agreed that if Europe would scale
down reparations, his country would reconsider the war
debts.

The United States Congress, however, expressly de-
clared against cancelation or reduction of war debts
when it ratified the Hoover moratorium. The Depart-
ment of State also announced on June 8 that the question
of reparations must be settled between Germany and
her creditors. Nevertheless, the European powers at
Lausanne gave precedence to Mr. Hoover's earlier prom-
ise of further war-debt concessions and proceeded to
reduce German reparations from thirty-two billion
marks, under the Young Plan, to three billion marks,
which the German Government was to raise by deposit-
ing five per cent bonds with the Bank for International
Settlements.

The signing of this agreement on July 9 aroused
enthusiasm until July 14, when the British Foreign Office
revealed a secret gentlemen's agreement whereby the
whole Lausanne settlement would fall through unless
the United States reduced the war debts. As the London
Economist remarked, "The simple fact is that certain of
the European creditor countries were not willing finally
to seal, sign, and deliver an agreement affecting one
side of their budgets until they knew where they stood in
regard to the tangled skein of the international debts, of
which the debts to America are a very important part"

Less excuse, however, could be found for another
secret arrangement negotiated at Lausanne. On July 13,

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England and France announced that they had signed a
pact "for promoting future European cooperation."
They stated their intention "to exchange views with one
another with complete candor concerning, and to keep
each other mutually informed of, any questions coming
to their notice, similar in origin to that now so happily
concluded at Lausanne, which may affect the European
regime." They also agreed to work together in prepara-
tion for the coming World Economic Conference, plans
for which, had been laid at Lausanne, and to "avoid any
action of the nature of [economic] discrimination by the
one country against the interests of the other."

The Conservative Week-end Review of London at once
pointed out: "If the fullest hopes of the understandings
are realized and other powers join in, it will mean in
effect our old friend, the Concert of Europe not a very
original or progressive idea for 1932. If, on the other
hand, the other powers stay out, it will mean our other
old friend, the Entente Cordiale as M. Herriot and
the French press seem well to understand. In the one
event, the League is superseded; in the other, Germany
and the United States are antagonized, with all the
attendant risks to British interests, in order to satisfy
the French Right, which is already a discredited body.
Sir John Simon seems to have repeated, with far less
excuse, Sir Austen Chamberlain's blunder of 1928 in
concluding the Anglo-French naval agreement that
caused such anger in Washington. Sir John seems in-
capable of understanding the collective system of inter-
national negotiation or of responding in any way to the
contemporary spirit in international affairs. He is, if
possible, a worse foreign secretary than Sir Austen

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1932

<XX><X~

Chamberlain was, because he stands where Sir Austen
did, but in the interval the world has moved forward."

Lausanne therefore yielded nothing but bad blood and
the decision to hold a World Economic Conference as
soon as possible. Germany paid no more reparations, and
first France and then England stopped paying their war
debts.

Events in Germany soon showed which way the world
was moving that summer. On July 20, Chancellor von
Papen issued an emergency decree naming himself Reich
Commissioner for Prussia and Prussian Minister of the
Interior. At the same moment his Government ousted
Otto Braun, the Prussian Prime Minister, Karl Sever-
ing, the Prussian Minister of the Interior, and Grzesin-
ski, the Berlin chief of police, all of them Socialists.
When Severing and Grzesinski refused to quit their posts,
a few members of the regular army arrested them, but
the Socialist Party as a whole offered no resistance.

Von Papen justified his action on the ground that the
Prussian authorities had failed to cope with the Commu-
nist menace. He therefore proceeded to wipe out the
last stronghold of Socialist rule and brought the largest
state in Germany under the direct control of the central
government Although the Nazis had won more seats
than any other party in the Prussian elections of April,
no party had gained a majority, and no combination of
parties could agree on forming a coalition government.
For that reason the Braun regime had been permitted
to continue in office.

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August

ON JULY 31 Germany went to the polls for the second
time that year and elected a new Reichstag to replace
the one that Hindenburg had dissolved early in June,
just after von Papen's appointment. The National Social-
ists got seventeen million votes five and a half million
more than Hitler had polled for the Presidency in March
and the Communists got five million, two hundred and
seventy-eight thousand, an increase of three hundred
thousand, entirely at the expense of the Socialists. Al-
though the Socialist voters had refused to vote with the
Communists and Nazis against the Braun regime in
Prussia the summer before, they were now voting for
Communist candidates because this same regime had re-
fused to call a general strike on July 20 as a protest
against von Papen's coup d'etat.

Again, however, no one party had gained a majority,
and even the combined votes of Hitler's Nazis and
Hugenberg's Nationalists did not give them control of
the Reichstag. The Nazis and Centrists failed to form
a coalition, and when Hindenburg offered Hitler the
vice-chancellorship on August 13, Hitler demanded full
power for the National Socialists. He also withdrew the
support he had promised the von Papen Government be-
fore the election, because five Nazis were sentenced to
death for murdering a Communist in Upper Silesia on
August 10. Bombings, street fights, and assassinations
had become daily occurrences, and Hindenburg therefore
appealed to Hitler to conduct his opposition to the
Government in a chivalrous manner.

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1932

-000<X-

The day after von Papen's coup ffelat in Berlin pre-
pared the way for a more centralized German Reich,
the Imperial Economic Conference at Ottawa began pre-
paring the way for a more centralized British Empire.
Attended by delegations from Australia, Canada, New
Zealand, Newfoundland, South Africa, Southern Rho-
desia, India, and the mother country, it succeeded on
August 20 in drawing up twelve bilateral agreements to
run for a period of five years. The upshot, briefly, was
that Great Britain granted tariff preferences to certain
raw materials and foodstuffs from the Dominions, and
in return the Dominions allowed British manufactured
goods to compete on a footing of equality with most of
their own industrial products. Both parties agreed to
resort to tariffs to keep out any foreign products that
would compete against imperial products.

The London Economist proclaimed that the end of
the world was at hand. "Where the real failure of
Ottawa lies is in the total absence of any vindication of
the truth that economic progress is to be found in the
general lowering of tariff barriers/ 1 But even the Econo-
mist admitted that "the relatively restricted scope of
the agreements may comfort those who feared that
Ottawa might seek to create an Empire ringed univer-
sally by an impenetrable tariff wall against the outer
world." For not only did the agreements leave three-
quarters of Britain's imports untouched; they also ex-
empted most of the dairy products imported from Hol-
land and Denmark.

But the comparatively barren material results did not
prevent an outstanding prophet of the "continental
epoch" from insisting that "Ottawa is a milestone in

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world history. It is a gravestone of free trade. It is a
foundation stone of continental economic development."
The author of these words, Count Richard Nicolaus
Coudenhove-Kalergi, whose Austrian father and Japa-
nese mother both belonged to the nobilities of their
respective countries, had been agitating for a "United
States of Europe" or a "Pan-Europe," as he called it
ever since the War. He had proclaimed year in and year
out that the world was grouping itself into a few great
self-sufficient continental areas Pan-America, Russia,
the British Empire, and Pan-Europe. Russia and Pan-
America had already come into being, and a united
British Empire now seemed to be on its way.

tf lf England succeeds in her grandiose attempt to knit
her Empire together into an economic alliance, this
British bloc, with its reserves of raw materials extending
from the two poles to the Equator, will become the
mightiest economic power in the world. If the attempt
fails, Russia and America will dominate the world. Eng-
land will have played out her historic role." He also
maintained that the Ottawa Conference would determine
European as well as British history: "If Ottawa suc-
ceeds, the European boundary question will be clearly
raised, not in a hostile spirit but in a neighborly spirit
that will lead to a close British-European alliance. If
Ottawa fails, England will then find herself forced to
enter into a union with the continent of Europe. While
Canada is turning to Pan-America, England will be turn-
ing to Pan-Europe."

The free-trade members of the National Government
who had been warned a year before that they were com-
mitting England to high tariffs evidently foresaw failure ;

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1932

-o-xoo-

in any case, they acknowledged the error of their ways,
and on September 28 Viscount Snowden of the Labor
Party and Sir Herbert Samuel and Sir Archibald Sinclair,
free-trade Liberals, resigned from the Cabinet and joined
the opposition.

How had the people of Great Britain been faring
under the National Government in which the Liberals
were beginning to lose confidence? The Conservative
Morning Post of London gave a description of the an-
nual horse race at Ascot during the month of June repre-
senting the England of 1932 as a paradise on earth:

"Only one thing everywhere light-hearted gayety.
Pounds, bank-notes, half crowns were thrown to the
winds in a spirit that bespoke confidence in the future
as much as revelry in the present. All the estates of the
realm mingled together in a happy unity. Red-coated
bandsmen placed their bets cheek by jowl with owners.

"Above them all a smiling King inspired in his people
a smiling spirit. Laughs, cheers, songs rose from end to
end of the course and contested the obstreperous im-
portunity of the layers. And the latter were for once
satisfied. One after another was heard loudly protesting
that he had never had a better day. "Favorites lost and
the concourse cheered. Hundreds of pounds left bag and
purse, and they cheered anew. And the sun shone with a
hotter brightness than ever before ; the flowers bloomed
with a new freshness. Over all there was an atmosphere
of elegance, reflected in the dresses, which savored al-
most of the Ascot of pre-war days, its glory, its ease, its
perfection."

During the same summer, however, the ffew Leader,
organ of the Independent Labor Party, gave a descrip-

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tion of Bilston in the Black Country, the center of the
British steel industry. u lt is like a district devastated by
war, 1 ' wrote a special correspondent. u There are huge
waste stretches pocked with holes and ridges just as
though they had suffered a heavy bombardment. The
grass grows thickly over black cinders. There are large
patches of cinders with no grass at all. There are houses
in ruins, with bricks scattered in confusion."

Here is the way the occupants of one of these houses
lived: "Husband and wife and baby sleep In one bed.
Two boys sleep in the second room. It is in a terrible condi-
tion. Rain has come in through the walls on to the bed.
Wall paper has been refused by the landlord. The woman
has tried to make the place as decent as possible. The
only water supply is a tap in the back yard. The lava-
tories are also in the yard, primitive and filthy, shared by
a row of houses." The description concluded with these
words: "Bilston is capitalism In decay. Its industries have
collapsed; its population is unemployed and destitute. It
is characteristic of a great part of Britain.' 1

September

THE MONTH of September began with a bewildering
session of the newly elected German Reichstag, which
met on August 30 and elected Captain Hermann Wilhelm
Goring as its president. This Nazi leader had brought
down more Allied planes than any other German aviator
who survived the War, but grief over the death of his
Swedish wife and the nerve-wracking effects of his war-

190

1932

<~<>COO

time experiences had made him a morphine addict.
Whereas Dr. Paul Joseph Goebbels, propaganda chief
of the Nazi movement, advocated socialism, Goring up-
held strictly conservative policies and therefore became

nia, Berlin

DR. PAUL JOSEPH GOEBBELS

chief contact man between Hitler and the clique of land-
owners and industrialists who were governing Germany
during the latter half of 1932.

In spite of the hostility of the Nazis to parliamentary
government, the Reichstag functioned smoothly. Because
most of its members opposed von Papen they feared that

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Hindenburg would take that as an excuse to issue a
decree of dissolution, ordering another election in two
months' time and thus enabling von Papen to remain in
office until then. On September 12 the Reichstag therefore
adjourned for a few hours in the hope of persuading
Hindenburg to let well enough alone, but when it re-
assembled von Papen stepped forward, read the un-
welcome decree of dissolution, and ordered new elec-
tions in November. During the excitement that followed,
a Communist motion of nonconfidence in the von Papen
Cabinet came to a vote and received the overwhelming
majority of five hundred and twelve to forty-two. Von
Papen had presented no programme, he had less than
one-tenth of the country behind him, but he declared the
nonconfidence vote null and void on the ground that the
Reichstag had ceased to exist. His Government therefore
remained in office, but had little to offer beyond an intri-
cate system of inflation whereby tax certificates could
be used as currency.

Meanwhile the increasing misery of the people cried
out for more radical remedies witness an interview
printed in the Communist Rote Fahne of Berlin which
described a former carpenter who had lost his health
serving in German Southwest Africa in 1904. During
the World War he had worked in a munitions factory,
and when Briining came into office he was listed as an in-
valid. Then the relief cuts began. Von Papen's Emergency
Decree of July 1 had left him with only fifty marks
(twelve and a half dollars) a month, fifteen of which he
had to give to his son- u And since the Papen Decree,"
he added, "I have weighed eighty-nine pounds."

He concluded the interview with these words: "Are

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1932

-oo-oo-o-

these the arms of a carpenter? I made the folding doors
of the employees 1 entrance at Karstadt's. Now if I tried
to lift one wing of those doors, I should fall down and
could never get up again. They give me nothing to stay
my hunger but a few pennies, no warm clothes, no fat,
no food. The Central Relief Station does not look out
for tuberculosis sufferers. I get only cough tablets and
some kind of medicine for which I have to pay fifty
pfennigs* They even make me pay twenty-five pfennigs
for a doctor's prescription. A tonic made out of beech
tar would be very good for me, but I cannot afford to
buy it any more. I do not know how I shall be able to live.

"I wanted a pass to use on the street cars, such as
severely crippled people are given. Due to my weakness I
walk very slowly and with a stick. Do you know what
they replied to me? *Man, you can still walk; you must
first have a wooden leg.' "

While the politicians of Germany were jockeying for
position, the politicians of Japan or, rather, the soldiers
who had stepped into their shoes were taking more
resolute action. During February a "Northeastern Ad-
ministrative Committee" had been formed in Mukden
under the nominal leadership of Henry Pu-yi, the last
Manchu Emperor of China. On September 15 the
Japanese Government recognized this Committee as the
legal government of the new independent state of Man-
chukuo and entered into an alliance and a secret military
agreement with it. On September 20 the Chinese Govern-
ment protested to the League of Nations that Japan had
violated international law, the Kellogg-Briand Peace Pact,
the League Covenant, and the Nine-Power Treaty signed
at the Washington Naval Conference in 192L In an

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address to the Council on Foreign Relations on August 8
Secretary Stimson had already stated that the United
States would recognize no situation created in violation
of the Kellogg-Briand Pact, and Japan's recognition of
Manchukuo was generally regarded as the answer to
Stimson's declaration.

October

OFFICIALLY, Japan had harped on the banditry in Man-
churia as the original reason for the intervention, but
a fortnight after the independence of Manchukuo had
been proclaimed, bandit troops seized a hundred miles of
the Chinese Eastern Railway from the Japanese. Three
days later the publication of the Lytton Report damaged
Japanese prestige still further* This document had been
prepared by an international commission, sponsored by
the League and headed by a former British Viceroy of
India, It included representatives of Italy, France, Ger-
many, and the United States, who had arrived at
Shanghai in time to participate in the truce negotiations
in early March and had spent the next few months on a
tour of investigation. Their report criticized Japan's
activities from start to finish and recommended the found-
ing of an autonomous Manchuria, subject to Chinese
sovereignty and established by direct negotiation between
China and Japan.

George Bronson Rea, American editor of the Far
Eastern Review, whom the Japanese appointed adviser
to the Manchukuo Government, took up the cudgels

194

1932

against the "oligarchy of rapacious bandit overlords" in
China and urged that "the well-being and contentment of
four hundred million peaceful people . . . become a sacred
trust for civilization." He then proceeded to attack the
League of Nations and defend Japan: "If the League
Covenant is interpreted as conceding to this group of
irreconcilable, warring factions the dignity of a self-
governing state with the right to a seat on the League
Council and a vote in its deliberations; if the Nine-Power
Treaty is to continue to recognize this saturnalia of law-
lessness and ineptitude as something sacred that must not
be interfered with; if, in other words, the war lords of
China are to be permitted all the time necessary to fight
out their differences and unify their rule by the sword
(a policy that the American Government declares it is
prepared to uphold) while Japan is dragged down to
economic ruin and exposed to certain attack through the
inability of China to discharge her rudimentary obliga-
tions as a sovereign state, then the issue cannot be side-
stepped. Treaties or no treaties, Japan will have to fight
for her right to exist"

Concerning the "economic ruin" that confronted Japan
in 1932, there can be no two opinions. During that
summer the Tokyo correspondent of the North China
Daily News, organ of the British die-hards of Shanghai,
made a motor tour of the villages of Japan and asked
a native nurse why the people looked so underfed. "They
are starving," she replied. "They have been starving for
a long time, and they have now grown so apathetic that
they do not care what happens. All their ambition is gone
and, worst of all, there is no money with which they can
be assisted to regain at least their self-respect," Not only

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had the rice harvest in 1931 been the worst since 1869;
the American depression had reduced Japan's silk exports,
and the anti-Japanese boycott had cut her exports to
China in two.

The Japanese Ministry of Commerce reported: "A
considerable decline in foreign trade has been under way,
accompanied by industrial stagnation and increased un-
employment. . . . The anti-Japanese movement in China
and England's abandonment of the gold standard cannot
be treated with disdain. England's action hurt Japanese
business with European countries, India, East Africa,
South Africa, and Australia, all of which were accus-
tomed to dealing in pounds sterling. It dealt a terrible
blow to Japanese business wherever Japan was competing
with England."

By devaluating the yen just twice as much as England
devaluated the pound, Japan won back some trade dur-
ing 1932, but the destitution in the villages continued.
A report of the Ministry of Agriculture read: "The
peasants, having nothing else to sell, are selling their
daughters." But their indebtedness continued to grow. Be-
tween January 1, 1930, and January 1, 1932, the debts
of the peasants had increased from four and a half bil-
lion yen to five and a half billion yen, and interest rates
varied between twenty and thirty per cent.

The Russians could see no outcome but an attack on
the Soviet Union, L. Magyar, one of their leading
pamphleteers, having declared in the Anti-Imperialist Re-
view: "The second World War is here ! Japanese imperi-
alism has begun It." He then explained: "The Franco-
Japanese alliance is an accomplished fact The meaning
of this alliance lies in the effort to grip the Soviet Union

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1932

<c~cxxx>-

in a pair of pincers from the East and from the West and
to force on it a war on two fronts. From the East,
Japanese troops are to be set in motion against the Soviet
Union; from the West, Polish, Rumanian, Finnish,
Lettish, and, not least, French troops. This, however, is
not enough. . . . The National Government of Mac-
Donald, Baldwin, and Simon is endeavoring to make an
alliance with Japanese imperialism."

The comments of the London Times lent substance to
these suspicions. After mildly chiding Japan for the
Shanghai bombardment, the Times pointed out: "Her
position in Manchuria is very different. Her economic
interests there are vital to the prosperity of a rapidly in-
creasing population; she saved the country from Russia
at the beginning of the century; and she has since pro-
tected it from the chaos and anarchy that have beset
other parts of China. She legitimately acquired economic
rights that were illegitimately obstructed by the Chinese ;
and she failed through long, patient years to obtain
redress by diplomatic means."

These views accorded with Foreign Minister Simon's
foreign policy. He had done nothing to back up the
American protests about Manchuria, where Britain had
no interests at stake, but he had protested the bombard-
ment of Shanghai along with Secretary Stimson because
Japanese expansion in that quarter threatened British
trade and property in the Yangtze Valley. At every turn,
however, Sir John had taken care not to antagonize the
Japanese, in the hope that they might attack Britain's
supreme rival in Asia the Soviet Union. Hence Comrade
Magyar's suspicions of British diplomacy.

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November

THE MOXTH of November opened with national elec-
tions in Germany and the United States. Having elected
a President in March and a Reichstag in July, the Ger-
man voters elected another Reichstag on November 6.
The Nationalists the only group supporting the von
Papen Cabinet gained thirteen seats, the Communists
eleven, and the liberal People's Party four. The Nazis
lost two million votes, and the Communists gained seven
hundred thousand, chiefly from the Socialists, having
gained three hundred thousand in the previous election.

The German people had voted three times in one year
on national issues. On November 8 the American people
elected a new Congress for the first time in two years
and a new President for the first time in four. The
Democratic presidential ticket of Roosevelt and Garner
carried all but six states, and the Democratic Party gained
overwhelming control of both houses of Congress.

The President-elect had little in common with the
popular leaders of the European nations. MacDonald in
England, Hitler in Germany, Mussolini In Italy, Zamora
in Spain, Stalin in Russia, and Herriot in France, all came
from the lower social orders, whereas Franklin Delano
Roosevelt belonged to one of the oldest American families
and one of the very few with even the shadow of a claim
to aristocracy. For nearly three centuries his ancestors
had owned and farmed large tracts of land in the Hudson
River Valley and had enjoyed wealth and leisure on an
almost feudal scale generations before such upstarts as
the Vanderbilts, Morgans, and Mellons had made their

198

1932

O~XXX>-!

fortunes. Indeed, it was Roosevelt's connection with the
landowning aristocracy rather than with the financial
plutocracy that helped to account for his attacks on the
money lenders. The magic of his name, his heroic con-
quest of an agonizing affliction, but, above ail, the con-
trast between his gay and gallant temperament and the
dreary, craven Hoover swept him to office. Only one
Premier in Europe had a comparable background Franz
von Papen, Germany's ultrareactionary Chancellor.

And now for a few representative comments that the
election of Roosevelt aroused abroad. Harold Laski, who
knew America at first hand, wrote :

"As a campaigner he [Roosevelt] showed an ability
to evade issues rather than meet them. It would be true
to say that he less won the campaign for himself than
allowed Mr. Hoover and the economic distress to win it
for him. . . . Someone has got to convince him that the
day of the old platitudes is gone. Neither of the old
parties means anything real in the life of the American
people. There has got to be born a sense of the state, an
understanding that liberty begins only where equality
begins, a conviction that the nation, and not a little group
of millionaires, has henceforth to be the master of the
nation's destinies."

While Mr. Laski parroted from Roosevelt's campaign
speeches the very platitudes he was attacking, an anony-
mous editorial in the conservative Neues Wiener Tagblatt
made a more specific point : "It remains to be seen whether
the Democrats will take as much interest in Europe as
Wilson did, and as Hoover was finally forced to do ; the
fact remains that the time has ended when America could
remain remote from Europe, in accordance with recent

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O- !><>-&-<>~i>-O-<>-&<^^

interpretations of the Monroe Doctrine. America cannot
separate its destiny from that of Europe. In this sense,
too, a process of Europeanization must be continued to a
certain degree. The deeper meaning and historical signifi-
cance of the election should be seen in relation to this
process. The period of youth and growth in the United
States has closed. Tendencies that can best be compared
with conservative socialism in Europe have long domi-
nated certain circles of the Democratic Party."

Georges Lechartier, Washington correspondent of the
Journal des Debats of Paris, welcomed above all the
defeat of Hoover: "Mr. Hoover will stand in history as
the most unpopular American president of all time, and
that is not the worst that might be said of him. At home
he leaves a difficult heritage, abroad an overpowering
task." The liberal Frankfurter Zeitung also declared that
"the result of the American election must be regarded
as purely a defeat for Hoover" and ventured but one
prophecy: "Prompt recognition of the Soviet Union
stands in the forefront of Roosevelt's programme."

But a Russian commentator, N. Kornev, writing in the
Moskauer Rundschau , did not express any elation at what
had happened; "Nobody in the wide world believes that
Roosevelt was elected because he stood on a better plat-
form than Hoover or because, unlike Hoover, he is a
leader of recognized quality. His platform, composed of
noisy commonplaces and banal sophistries, has clearly re*
vealed what the new President will be able to offer
during his tenure of office." He concluded his diatribe
with these words: u The eighth of November not only
marks Roosevelt's election; it also marks the defeat of
the American big bourgeoisie, who have changed political

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1932

OOO-JX*.

leaders because wide masses of people have shifted their
political allegiance. The end of this shift is not yet in
sight. Hoover, in retirement, can reflect with grim humor,
*I was elected in the midst of prosperity and the crisis
was my personal disaster. But you have promised to
master the crisis, though you have not divulged how you
are going to do it Now millions of Americans see in you
the last chance of bourgeois America/ What will this
last chance be?"

Finally, the Japanese saw in the election a repudiation
of Stimson's Far Eastern policies. "The Republican
Party, " commented the Nippon Shimbun of Tokyo, "may
have several reasons for its miserable defeat, but there is
no doubt that its diplomatic failure constitutes one of the
most important causes. Colonel Stimson's adherence to
his strong Far Eastern policy must have invited the
nation's antipathy." A certain Mr. Ryukichi Takagi who
once represented the Mitsui interests in New York
prophesied that the Democrats could not be more anti-
Japanese than the Republicans and gave his fellow
countrymen this counsel: "The national traits of the
Americans, unlike those of old countries such as Britain
and France, are simple and lovable, though not without a
tinge of nouveau rlche and haughtiness to match. Japan's
American policy should in futyre be to sell as much as
possible under the cover of condescension, taking advan-
tage of this very lovable haughtiness of the people of
America."

The defeat of Tardieu by Herriot in the French elec-
tions of May bore fruit on November 29, when France
and Russia signed a nonaggression pact Its five articles
included the following points : "refusal to resort to war

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<><><><><><><><><>OK><>K><>-C-<><>

or any form of aggression" or to "support directly or
indirectly" the aggression of any third power or group
of powers; refusal to "take part in any international

Kladderadatsch,. Berlin
The new Franco-Russian Alliance.

agreement tending to prevent the buying or selling of the
other's goods or the granting of credits"; and refusal to
participate in hostile propaganda against each other's
political system. The Temps, organ of the French

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1932

<xx>o~c~

Foreign Office and property of the Comite des Forges,
welcomed the "spirit" of the signatory powers, but
expressed doubt that the Russians would keep their end
of the bargain. The Journal dcs Debats, another property
of the Comite, announced: "The policy which we have
followed for a year and a half and of which the Franco-
Soviet Pact is one of the consequences is bad. We can
see no excuse for it.'* Other papers expressed more en-
thusiasm and foresaw new business opportunities for
France.

Developments in Germany and Japan as well as the
rise of Herriot brought France and Russia together.
Until 1932 the French had always feared a Russo-Ger-
man alliance in Europe; the Russians, a Franco-Japanese
combination in Asia. But von Papers demand for Ger-
man rearmament alarmed the Russians as much as the
Japanese bombardment of Shanghai alarmed the French,
Furthermore, Russia had been undergoing changes far
more fundamental than the shift of opinion that had
brought Herriot into office in France. The Five-Year
Plan was to be completed at the end of the year four
years and three months after it had begun and its
achievements and shortcomings had transformed Russian
foreign policy.

Since 1913 productivity of labor had increased by
one-third and railway freight traffic by one-half, while
passenger traffic had more than tripled. In 1928 the
Soviet Union produced only five point five per cent of
the world's industrial goods; by 1931 this proportion had
risen to eleven point four per cent; and by 1932 Russia
had exceeded the industrial production of England, Ger-
many, and France and stood second only to the United

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<><*<><><<><<><><><><><><><><><^

States. Urban population had grown thirty per cent
since the War, and the population of the whole country
was rising at the rate of three million a year. Within
four years Russia had become a world power of the first
magnitude.

Those years had also taught the Russians themselves
certain lessons, notably that, whether or not they tried
to build socialism in their own country, they could not
escape foreign influences. For instance, the Russians had
estimated that their exports would increase forty per
cent in volume during 1930, which they very nearly did,
but their cash income increased only fourteen per cent,
due to the universal drop in prices; and in 1931 the
world-wide price slump hit them even harden Not only
did the value of Russian exports decline; the Russian
trade balance turned unfavorable, seriously handicapping
the Five-Year Plan, which required that large supplies
of industrial equipment be purchased abroad out of the
proceeds of exported raw materials.

The liberal Wehbiihne of Berlin maintained that the
effect of the world crisis on Russia's domestic situation
had been "to prevent real wages from rising so that the
difference between the standard of living of the Russian
worker and the West European worker is not decreasing.
Communist officials understand the source of these diffi-
culties and recognize that they cannot be charged against
the socialist system itself, but for millions of West
European workers one simple fact is all-important: that
the Russian worker is still living more wretchedly than
they are."

204

1932

December

THE AMERICAN Constitution required four months to
elapse before the victorious Democrats could assume
office. Germany, on the other hand, took less than a
month to reorganize its government on the basis of the
November elections. Von Papen bowed before the storm
of popular disapproval and resigned, whereupon Hinden-
burg invited Hitler to form a Cabinet under conditions
that the Nazis would not accept, since they demanded
full power. The President therefore turned to General
von Schleicher, who formed a Cabinet on December 2<
The new Chancellor also took the posts of defense min-
ister and Reich Commissioner of Prussia, but retained
von Neurath and von Krosigk in the key positions of
foreign minister and finance minister. When he promised
a slightly more conciliatory policy toward labor, political
passion began to subside, business picked up considerably,
and von Schleicher restored the rights of free speech and
free assembly that von Papen had scrapped.

Although the year ended in an atmosphere of com-
parative good feeling, dissension had appeared among
the National Socialists. Gregor Strasser, leader of the
Nazi trade unions, which had conducted a street-car
strike with the Communists in November, broke away
because of his disgust with Hitler's conservatism and
caution. Black Front, the organ of the Strasser wing,
published a description of the scene at Hitler's head-
quarters when Strasser resigned. Choked with emotion,
Hitler exclaimed, "To think that he could have done this
to me 1 And now of all times ! I could never have believed

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WORLD DIARY

$~!5>*&*$**!>4$~^^

it possible." At the end of this speech Hitler fell back
into his chair "completely broken" and "burst into sobs."

The report continues: "In front of him stood Captain
Goring, Nazi President of the Reichstag, clasping with
both his hands those of his leader and with tears pouring
down his cheeks. Beside him stood Herr Bruckner and
Herr Goebbels, two of Hitler's trusted lieutenants. In
the second row, Herr Bernhard Kuss was shaken by a
paroxysm of weeping and Herr Heines blurted out fierce
threats against Strasser. From the background was heard
Streicher's sonorous voice bellowing, The faithless dog,
Strasser, to cause our leader such grief.' And between
them surged a crowd of astounded, enraged, stupefied,
and bewildered men." Suspecting that the description
might be questioned, the Black Front offered to produce
thirty-five members of the Reichstag to testify to its
accuracy.

Within a fortnight after signing the nonaggression
treaty with Russia, Herriot's Cabinet took another step
that seemed to light squarely on the toes of Tardieu : on
December 11, together with the United States, Great
Britain, Germany, and Italy, it signed a declaration at
Geneva endorsing the principle of simultaneous equality
of status to Germany and security to France. As a matter
of fact, nothing could have delighted the French muni-
tion makers more. Having already persuaded France to
spend twice as much on armaments as before the War,
they now had a chance to help rearm Germany and thus
scotch any effort to reduce armament expenditures in
France.

On December 14, however, Herriot took a less popular
step when he proposed paying the nineteen-million-

206

1932

-<X><xX

dollar installment on the American war debt that was
due the next day. His Government fell and was at once
replaced by a Cabinet headed by Paul-Boncour, who had
belonged to the Socialist Party until just a year before.
The Temps expressed the attitude of most Frenchmen

Strube in the Daily Express, London

Man on Top: ce l can't see why they want me to get off when
we're nearly there.**

toward the war debts as follows : "No one can seriously
deny that the personal initiative of Mr. Hoover effec-
tively linked the two questions of debts and reparations.
Whether Mr. Hoover exceeded the rights that the Con-
stitution confers on him in taking this initiative is an
affair between himself and the American people. But it
remains no less true that his action engaged the respon-

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<*<><><>K><><><><*><~><><><>-<><-

sibility of the United States and created a situation of
fact that angry arguments cannot dislodge." Four other
nations Belgium, Hungary, Poland, and Esthonia
also believed that Hoover's actions had canceled the war
debts and joined France in defaulting. Six, including
Great Britain, Italy, Czechoslovakia, Lithuania, Latvia,
and Finland paid in full.

J. L, Garvin, editor of the London Observer, praised
the "dauntless courage and quietude" with which his
country had met its legal obligation, and many Americans
agreed with him. But the popularity of the United States
in England reached its low point of the year, and the
Conservative Saturday Review published these para-
graphs of warning :

"When we have paid, God help America for no one
else can or will lift a finger. The economic consequence
of our payment is clear enough to all save those who
demand it. It will drive us all further toward perdition,
though sterling may be saved at the expense of the dollar.
That is the price which they and we have to pay, as we
have paid before, for the peculiarities of the American
Constitution and the divorce of American reason and
experience from the control of American affairs.

"There is another price. Do not let them ignore it or
us minimize it. It is purely psychological and it may have
a terrific force. Months and years ago this damned debt
started the fever of resentment on both sides, and the
temperature chart has shown a steady rise above the beds
of the patients. The resentment was felt; then it was
whispered; now it is expressed openly. There is scarcely
a man or woman in England who does not bear in the
inner heart a positive dislike of America and Americans
in the lump.

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1932

K><>-<X><>

"It is not a pretty thought, not a comfortable vision.
But if we do not face it we shall be cowards, and if they
refuse to believe in it they will be fools. It is the complete
loss of the dream of so-called Anglo-Saxon leadership
that was to save a stricken w r orld. That dream might never
have come true. But it kept on coming somewhere near
the edge of truth and it was a dream to keep faith and
courage alive. Now we must wake from it. So God help
America. And God save His world !"

Soendeth 1932.

Reviewing the Record 1932

FOUR EVENTS stood out during 1932 Briining's dis-
missal in Germany, Japan's recognition of Manchukuo,
Roosevelt's election to the American Presidency, and
Russia's completion of the Five-Year Plan. The political
overturns in Germany and the United States came as
direct consequences of the agricultural collapse of 1930
and the financial collapse of 1931 ; if they caused surprise,
that was because few people understood how rapidly the
world was moving or what profound changes were under
way. The Week-end Review of London, however, gave a
clarifying account of the three phases through which

both Germany and the United States had passed:

"In the first phase, lack of confidence in the post-war
structure causes a collapse of its financial structure and of
the unstable prosperity based upon it. In the second phase,
renewed and deepened lack of confidence makes the eco-
nomic structure itself begin to disintegrate. In the third
phase, lack of confidence spreads to the political institu-

209

WORLD DIARY

tions and social balances with which this economic struc-
ture is linked These phases, of course, overlap and fuse,
but they come in logical sequence : first credit and currency,
then trade and industry, then the very core of the state
is attacked by the psychological corrosive. Politicians con-
cerned with surface indications have shown themselves to
be consistently at least one phase behind. They took the
credit collapse in 1929 30 for a manifestation of the
credit cycle, and the economic collapse of 1931 for a
financial crisis calling for merely temporary palliatives.
We now see them, within sight of irretrievable political
breakdown, bracing themselves to face last year's eco-

nomic crisis."

It remained to be seen whether the von Schleicher
Cabinet in Germany or the Roosevelt Administration in
the United States would suffer from the same "time lag"
that had been the undoing of their predecessors.

Japan's recognition of Manchukuo caused less surprise
than any other major happening of the year. Early in
1932 the London Economist saw Japan standing where
Germany did in 1914, but subsequent events did not en-
tirely confirm this analogy: either Japan was stronger
than pre-war Germany or her opponents were weaker
than the Allied Powers. In any event the League of
Nations broke down completely. Not only did it fail to
stop the fighting in China; its European members could
not even agree to reduce their armaments.

If Japan's invasion of Manchuria in 1931 marked the
emergence of a new world power and the beginning of a
struggle between East and West, the completion of Rus-
sia's Five-Year Plan in 1932 marked the emergence of
an even stronger power and gave new impetus to the class

210

1932

XXXxX>

struggle in other countries. Since 1928 more than two
hundred thousand collective farms and five thousand state
farms had been established in the Soviet Union, embracing
sixty per cent of the peasants and seventy per cent of
the arable land, and the annual grain deliveries to the Gov-
ernment had increased from ten million tons to twenty-two
million tons within the space of four years. Industrial pro-
duction had been advancing at the rate of twenty-two per
cent a year, and more than ninety-three per cent of the am-
bitious industrial programme of the Five- Year Plan had
been accomplished*

Nothing comparable to the development of the Soviet
Union had been seen since the development of the United
States. Americans who have been brought up to under-
stand the achievements of Franklin, Washington, and
Adams should therefore be able to recognize with cer-
tain obvious allowances the Russian equivalents of these
men in Lenin, Stalin, and Litvinov, with Trotzki perhaps
In the role of a latter-day Aaron Burr. But it requires
no knowledge of American history to grasp the impor-
tance of a nation that was growing at the rate of three
million inhabitants a year, that possessed the richest wheat
fields in the world as well as unmeasured reserves of coal,
ore, and petroleum, and that had adopted a way of life
so challenging that scarcely an individual can be found
anywhere who does not respond either with the most
violent rage or the most intense hope to the word
"Communism."

Even before 1932 had run its course, the French per-
ceived that a new factor had appeared in world affairs
and proceeded to sign a nonaggressioa pact with Soviet
Russia that altered the balance of power in Europe. And

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<><><><><><<><>-c><><><><><*<><*<>

even before 1932 had begun, the liberal German econ-
omist, Dr. M. J. Bonn no advocate of Communism
foresaw the importance of Russia to other countries.
Writing in 1931 on "Russia and the World Crisis," he
pointed out that "the present crisis differs in two respects
from past crises." For one thing, the last frontier had
vanished he did not consider the possibility of coloniz-
ing the empty spaces of the Soviet Union; and, in the
second place, an entirely new factor had appeared : "Be-
side the world of private capital there stands a world of
social capital, Soviet Russia, which claims that its people
are quite untouched by the world crisis, which, it says,
is entirely due to the system of private capital."

The effect of this new factor on the people of Europe,
Dr. Bonn described as follows: "We cannot make the
unemployed of Europe forget their troubles by pointing
out Russian tribulations. If they believe that the capitalist
system is breaking down, it is entirely natural that they
should turn to the Russian system, which seems to be
free from such defects. The fact that during the present
crisis there exists a Soviet system with which comparisons
can be drawn constitutes the second element peculiar to
our time. If capitalism cannot prove that it has accom-
plished considerably more than the Russian system claims
to have accomplished, its future in Europe is not secure."

The capitalist nations of the New World as well as
the Old faced no more serious challenge in 1933 than the
rise of Soviet Russia during the year that had just come
to an end. How would the two chief victims of the world
depression, Germany and the .United States, meet this
test? And how would Russia measure up to the hopes and
fears it had aroused?

212

WORLD DIARY:

1933

January

THE NEW YEAR began in Germany more turbulently than
the old had ended. Von Schleicher, having failed to per-
suade the Nazis to accept any Cabinet posts, proceeded
to antagonize first the industrialists by seeking the support
of the trade unions and then the landowners by threaten-
ing to expose their grafting in connection with the Qsthilfe
fund. Von Papen and Hitler therefore met secretly in
Cologne on January 4 and laid plans to form a govern-
ment of national concentration. Hindenburg, who had
always preferred von Papen to von Schleicher, demanded
the latter's resignation on January 28, for by that time
the Cabinet had lost the support of every party in the
Reichstag. On the same day Paul-Boncour fell in France
and was succeeded by the slightly more conservative
Edouard Daladier. The new French Premier had been a
Radical all his life, whereas his predecessor was a recent
convert from the more extremist Socialist Party.

The new German Cabinet that succeeded von Schleicher
represented a much sharper turn to reaction. Hitler at
last consented to accept the Chancellorship; two other
Nazis, Goring and Frick, also received important posi-

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WORLD DIARY

<><>><><*<><><>K>C-<*<><><^^

tions; von Papen became Vice Chancellor; von Krosigk
remained at the Treasury and von Neurath at the Foreign
Office; Hugenberg, the Nationalist leader, became min-
ister of agriculture and commerce; and Franz Seldte,
head of the chauvinist Stahlhelm, or veterans' organiza-
tion, became minister of labor. They lacked, however,
a majority of votes in the Reichstag, which Hitler sud-
denly dissolved on February 1, ordering new elections on
March 5.

February

THE NEXT month opened with a renewal of street fighting
between Communists and Nazis throughout the Reich,
while at the same time the banking system of the United
States began succumbing to a nation-wide run. On the
first of November the State of Nevada had declared a
twelve-day "banking holiday" which received little atten-
tion, but when Governor Comstock of Michigan ordered
a similar eight-day holiday in his state, beginning Febru-
ary 14, the panic spread. On February 23 the Michigan
banks reopened with restrictions, but the Detroit banks
refused to pay more than five per cent on deposits. The
next day Maryland announced a three-day banking holi-
day, and on February 27 Pennsylvania, Ohio, and Dela-
ware authorized the banks to restrict their withdrawals.
By March 4, the day of Roosevelt's inauguration, every
bank in the country had closed its doors, Governor Leh-
man having proclaimed a two-day bank holiday in New
York during the small hours of that morning. This procla-

216

1933

mation halted six of the nine million dollars in gold that
were being shipped to Europe on board the French
steamer, Paris.

Immediately after the formation of the Hitler-Papen-
Hugenberg Government the rumor spread in France that
a Fascist triple alliance existed between Italy, Hungary,
and Germany, one deputy having declared that such a
pact had been formed in August 1932. The German Gov-
ernment and Mussolini issued denials, but the fact re-
mained that in November 1932 Dr. Schacht, former Presi-
dent of the Reichsbank; Alfred Rosenberg, Hitler's ad-
viser on foreign affairs; Captain Goring, President of the
Reichstag; and Premier Gombos of Hungary had all at-
tended a European Congress summoned by the Italian
Academy in Rome.

Friedrich Sieburg, Paris correspondent of the liberal
Frankfurter Zeitung and author of the widely praised
Gott in Frankreich, translated as Dieu est-il franqaisf
and Who Are These French?, also reported: "It is un-
deniable that the French Chamber is firmly convinced that
a German-Italian-Hungarian military alliance is practi-
, cally completed." And here was the effect this conviction
had on the French people : "Invisibly France Is falling into
a kind of crusading spirit. We have heard Daladier call
upon the great democracies of the world with all the fire
of a Jacobin, This desire of the French to bring the world
over to their point of view often amounts to a disease, and
this disease is now driving them to form a coalition to
defend against other nations the values to which France
attaches importance, whether these values are moral,
cultural, or political."

The Hitler Government, however, paid little attention

217

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<><><><><>-<><><><><><^

to matters of foreign policy. Its first proclamation con-
tained not a word about Versailles or reparations ; it began
with these two sentences: "Fourteen years of Marxist
rule have ruined Germany, The task we must accomplish
is the hardest that any German statesmen have faced in
human memory." On February 10 Hitler made his first
important public speech since assuming office and an-
nounced : "Of Marxism and the German people only one
can triumph, and it is Germany that will win." The Gov-
ernment appealed to the voters on the eve of the March
elections in the same vein: "If Germany is to experience
this political and economic revival and consciously fulfill
its duties toward other nations, this presupposes a decisive
act : the overcoming of Communist disintegration in Ger-
many." The "Marxist rule" that Hitler attacked referred
to the Social Democrats; the "Communist disintegration"
referred to the growth of the Communist Party, which
had gained one million votes in the two Reichstag elec-
tions of the year before.

The "decisive act" took place on the evening of Feb-
ruary 27 : fire destroyed the Reichstag building in Berlin.
Marinus Van der Lubbe, a Dutch ex-Communist who had
recently worked with the Nazis, was arrested at the scene
of the blaze, and Goring, whose office as President of the
Reichstag was connected by an underground passage to
the part of the building where the fire had occurred, also
appeared and announced that the Communists were re-
sponsible. Although the election campaign was at its
height, neither Goring nor Goebbels had any speaking
engagement that evening and were able to give their
whole time to issuing statements. The next day Hinden-
burg signed an emergency decree suspending freedom of

218

1933

<o M o.

press and assembly. "Parliamentary and democratic
government has disappeared," the official announcement
read.

The Reichstag fire marked a distinct advance on the
electioneering methods of the British Tories, with their
forged Zinoviev letter of 1924, although the same gang
that faked the Zinoviev letter for the Tories in 1924
helped to plan the Reichstag fire for the Nazis in 1933.

March

THE TRICK worked. On March 5, the day after Roosevelt
stepped into the White House over the ruins of the Amer-
ican banking system, Germany went to the polls and gave
the Nazi-Nationalist bloc a bare majority of seats in the
Reichstag. Even with five thousand opposition leaders in
prison and all opposition meetings forbidden, the Nazis
fell short of securing an absolute majority themselves.
The new Government at once seized police power in Ham-
burg, Bremen, Lubeck, Hesse, Saxony, and Bavaria, and
on March 12 the city elections in Prussia gave the Nazis
control of Berlin, where the Communists had piled up
more votes than any other party only a year before.

At first German big business responded favorably to
the counter-revolution that it had financed. On March 14
the London Statist's Berlin correspondent wrote : "Since
the new National Government was confirmed by the elec-
torate, business, and sound business, on the Boerses [stock
exchanges] has poured in with daily expansIon.The Boerse
sees in the National Government a governing body favor-

219

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-^^ >< > < > <> ^ >< >^><X><><><><><>-0-<>

able to capital, the public is investing extensively, and
much standstill money is being applied to the purchase of
shares, mainly of industrial companies." The London
Economist's Berlin representative reported in the same
vein: "The principal explanation of the rise is the en-

, Munich
DR. HJALMAR HORACE GREELEY SCHACHT

thusiasm with which a large number of electors are greet-
ing the election results as the opening of a new and better

era."

On March 16 Dr. Schacht resumed office as President
of the Reichsbank, replacing Dr. Luther, who was
appointed Ambassador to the United States. But in spite

220

1933

ooooo

of Schacht's experience in framing the Young Plan and
his reassurances that he would resist inflation to the
death, his appointment did not promote confidence
abroad. The French, in particular, knew that he opposed
their Continental steel cartel and that he had allied him-
self with Fritz Thyssen, who wanted to make German
industry supreme in Europe. Schacht's first step also
caused dismay: he turned back to the Banks of France
and England, to the New York Federal Reserve, and to the
Bank for International Settlements the credits they had
placed at Germany's disposal during the summer of 193L
Superficially, this gesture indicated honesty and independ-
ence; actually, it augured ill for the future of the
mark and Germany's creditors, since Germany's gold
reserves were falling further and further below the legal
minimum.

The Government's anti-Jewish policies then made
further trouble abroad. Police searched Professor Ein-
stein's house on March 20, and although they found
nothing more lethal than a bread knife, his bank deposits
were seized ten days later. In the interval both the Amer-
ican and British Governments protested in behalf of the
persecuted Jews, whose tribulations filled the newspapers
of London and New York, which, however, had less to
say about the more extensive persecutions of Socialists,
Communists, Liberals, and even Roman Catholics* Only
the Manchester Guardian indicated how far the terror
was spreading, its Berlin correspondent having described
conditions in the latter part of March as follows:

"Germany is now in the period of transition between
the nonlegal Terror (that is to say, the beatings and non-
judicial murders) and the legal Terror (that is to say,

221

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^><><><><><><>^><><><><><><><>-C-<>

imprisonment or death under laws especially enacted so
that the opposition may be kept in a permanent state of
fear and demoralization). The nonlegal and the legal
Terror are both organic parts of one permanent terror-

Moscow

The Bacillus of War,

istic system, the nonlegal kind being a kind of extempor-
ized preliminary to the more ordered legal Terror, which,
although even the more unmerciful of the two, is at least
as effective and does not appear so barbaric in the eyes
of the world."

Although some sixty thousand people had been thrown
into concentration camps by the end of March, the Cen-

222

1933

OKXxO-O-

tral Union of German Citizens of Jewish Faith in Berlin
issued a statement on the twenty-fourth that the atrocity
stones were "pure propaganda, 15 and the former Crown
Prince compared them with the tales of German atrocities
that circulated in Allied countries during the War. On
March 26 Cordell Hull, the new American Secretary of
State, sent telegrams to three leaders of American Jewry
assuring them that the physical mistreatment of German
Jews had "virtually terminated," and the National
Socialist Party announced that it would order a boycott
of Jewish business in Germany unless the Jews in the
United States and England ceased their atrocity and boy-
cott propaganda. The threat was carried out on April 1
without serious disorder.

Count Ernst zu Reventlow, who had sat in the Reichs-
tag as a Nazi deputy since 1928, gave a slightly more
coherent justification for the persecution of the Jews than
Propaganda Minister Goebbels had offered in his classic
remark: "Whenever I see a Jew I vomit" Count zu
Reventlow appealed to Woodrow Wilson's doctrine of
the right of nations to self-determination. u ln its time
this maxim was greeted with enthusiasm in France, Eng-
land, and America. I am surprised that these same powers
do not manifest the same enthusiasm toward us Germans
now that Germany is exercising within her own frontiers
her national right of determining her destiny by elimi-
nating a foreign nation, the Jewish nation, from the
German people."

He even, foresaw improved international relationships
as a result of the liquidation of Jews in Germany. "Two
frankly nationalistic peoples can deal with each other on
a basis of sincerity, each understanding and respecting

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<^<><><><><><^<><<><><<><><><><

the nationalism of the other; but as soon as some 'inter-
national' or other exerts its influence and world organiza-
tions secretly controlled by the Jews play their part, the
atmosphere of sincerity is destroyed. To-day world-wide
Jewish organizations are trying to incite the world
against Germany; a Jewish war is being waged against
us because the German people wishes to make use of its
natural right to self-determination."

Meanwhile Hitler was digging in. By March 21 he
had established himself so securely that the Reichstag
voted to dissolve itself for four years and conferred
dictatorial powers on the Chancellor. Even the Vatican
preferred to make its peace with the Nazis rather than
threaten Hitler, himself a Catholic, with excommunica-
tion, and on March 28 Cardinal Schulte, Archbishop of
Cologne, formally revoked the ban that his Church had
placed on the Nazis two years before. Two weeks later
Pope Pius made a still more important gesture. He re-
ceived Vice Chancellor von Papen and Premier Goring
of Prussia in private audience at Rome.

By this time the Vatican, like the rest of the outer
world, was receiving precise information about the
"Brown Terror" that broke over Germany immediately
after the elections of March 5. The Manchester
Guardian's Berlin correspondent secured three inter-
views with victims who were u not so terrified as to be
unable to make a full, plain statement," and pointed out
that "these three instances could be multiplied a thousand-
fold. The number of those killed by knife or bullet
wounds, or beaten to death, seems to go into hundreds."
Here is what happened to one young Socialist workman
who was arrested by Storm Troopers and taken with

224

1933

eXX-O-O-

twenty other men in a truck to one of the Nazi head-
quarters :

"They were taken to the Hedemannstrasse and beaten
with whips and rubber truncheons. They were then taken
to another room, made to stand facing the wall, and
beaten about the head, face, and eyes, with whips,
truncheons, and chair legs. Some of them fainted and
fell to the ground, but were beaten until they got up
again. . . . They were made to do the double-knee bend
with hands stretched forward, slowly and repeatedly.
With their bruised and bleeding heads and faces they
looked a strange sight. The Socialist victim heard screams
come from a neighboring room. His coat, shirt, collar,
and pull-over were soaked with blood. He and his fellow
prisoners were then told to wash and go home." Others
were less fortunate: "The Brown Shirts often smashed
the faces of their victims by beating them with their
flexible steel wands this is why so many of the victims
have lost their sight."

Events in the United States also moved at a rapid pace
that month. Twenty-four hours after denouncing the
"money changers'* in his inaugural speech of March 4
and calling for "action and action now," President
Roosevelt summoned a special session of the new 73rd
Congress and proclaimed a national banking holiday
from March 6 to 9 which he later extended. He also for-
bade the export of gold and silver, and on March 9
Congress met and voted the President dictatorial powers
over transactions in credit, currency, gold, silver, and
foreign exchange. Two days later it passed a bill saving
half a billion dollars in Federal expenditures, chiefly at
the expense of the veterans and Government employees,

225

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<><><><^<><><>^><><^><><^><>^>^>

the nationalism of the other; but as soon as some 'inter-
national" or other exerts its influence and world organiza-
tions secretly controlled by the Jews play their part, the
atmosphere of sincerity is destroyed. To-day world-wide
Jewish organizations are trying to incite the world
against Germany; a Jewish war is being waged against
us because the German people wishes to make use of its
natural right to self-determination."

By this time the Vatican, like the rest of the outer
world, was receiving precise information about the
"Brown Terror" that broke over Germany immediately
after the elections of March 5. The Manchester
Guardian's Berlin correspondent secured three inter-
views with victims who were "not so terrified as to be
unable to make a full, plain statement," and pointed out
that "these three instances could be multiplied a thousand-
fold. The number of those killed by knife or bullet
wounds, or beaten to death, seems to go into hundreds."
Here is what happened to one young Socialist workman
who was arrested by Storm Troopers and taken with

224

1933

<*OOOO-

twenty other men in a truck to one of the Nazi head-
quarters :

"They were taken to the Hedernannstrasse and beaten
with whips and rubber truncheons. They were then taken
to another room, made to stand facing the wall, and
beaten about the head, face, and eyes, with whips,
truncheons, and chair legs. Some of them fainted and
fell to the ground, but were beaten until they got up
again. . . . They were made to do the double-knee bend
with hands stretched forward, slowly and repeatedly.
With their bruised and bleeding heads and faces they
looked a strange sight. The Socialist victim heard screams
come from a neighboring room. His coat, shirt, collar,
and pull-over were soaked with blood. He and his fellow
prisoners were then told to wash and go home." Others
were less fortunate: "The Brown Shirts often smashed
the faces of their victims by beating them with their
flexible steel wands this is why so many of the victims
have lost their sight."

Events in the United States also moved at a rapid pace
that month. Twenty-four hours after denouncing the
"money changers" in his inaugural speech of March 4
and calling for "action and action now," President
Roosevelt summoned a special session of the new 73rd
Congress and proclaimed a national banking holiday
from March 6 to 9 which he later extended. He also for-
bade the export of gold and silver, and on March 9
Congress met and voted the President dictatorial powers
over transactions in credit, currency, gold, silver, and
foreign exchange. Two days later it passed a bill saving
half a billion dollars in Federal expenditures, chiefly at
the expense of the veterans and Government employees,

225

WORLD DIARY

<>-C><>-C<><><><*<><>-^

and on March 13 most of the banks reopened for busi-
ness, whereupon deposits exceeded withdrawals. On
March 15 the New York Stock Exchange, which had
been closed since March 4, reopened and prices rose
fifteen per cent

The significance of what was happening in the United
States was not lost abroad. The London Statist, which
had approved Hitler nine days after the German elec-
tions, expressed misgivings about America even before it
knew the worst. On February 18 it declared: "The fear
that a new outbreak of bank failures is imminent in the
United States on top of the unbalanced budget and the
large-scale unemployment is a fact which, it must be
frankly faced, may ultimately endanger the existence of
the gold standard in the United States. Should a renewal
of hoarding cause America to suspend gold payments, the
final catastrophe in world trade would be reached a
catastrophe that would at the same time sweep away
whatever advantages we derive from a depreciated
pound." And, as the Statist explained the following week,
what England feared above all else was that the pound
would become worth five dollars again instead of three
dollars and fifty cents : "What gives us our 'independence'
is not so much the fact that we are free of gold as the
fact that the pound is depreciated to about thirty per
cent of its gold value. This would readily be appreciated
if the pound rose to near its old parity without being tied
to the international standard. . . * If we do not wish to
find our position of 'independence' reversed, we must
obviously seek to find an international agreement as to
currency and prices."

When the Statist's worst fears came true and the

226

Strube in the Dally Express > London

Above Adolf Hitler arrives at the Dictators* Club.
Below The Rich Mother: "Goodbye, my poor che-fld your
poor mother can no longer afford to support you
take care of yourself."

WORLD DIARY

<><><><><><>^*<><<>M><K><*-<><><>'

dollar sank fifteen per cent after the gold embargo of
March 5, Je Suis Partout of Paris compared the United
States in 1933 with England and Germany in 1931:
"England is said to have sacrificed its money to save its
banks; Germany sacrificed its banks to save its money.
Isn't there reason to fear that the United States will find
itself forced to sacrifice both its money and its banks and
to make a radical break between the past and the future?
From whatever point of view one examines the problem,
one cannot yet see how the depreciation of the dollar can
be avoided"

The Temps expressed doubt that America could con-
tinue safeguarding its currency and ignoring the outer
world: "Will the depth of the American depression allow
the American authorities to impose on the nation a policy
of isolation, of high tariffs, of self-sufficiency, of pitiless
deflation, a policy that cannot be avoided if the currency
is to be saved, but one that will aggravate the existing
economic paralysis ?"

One break in America's "policy of isolation" had been
prophesied before Roosevelt assumed office. It was that
the new Administration would grant diplomatic recogni-
tion to Soviet Russia. France had already drawn closer
to Russia as a result of Tardieu's fall, and the two
countries were preparing a military alliance to supple-
ment the nonaggression pact they had signed in Novem-
ber. The British, on the other hand, regarded Russia and
above all Communism as hostile to their interests in
Asia. The Russians, fearing an attack by Japan and
needing foreign credits, hoped that American recognition
would yield both military and financial aid; they also
feared that the British Foreign Office would oppose this

228

1933

<><>x><-<><>-><><><><><><^<><><^

or any other move that might add to their strength. All
of which provides the necessary introduction to one of
the liveliest diplomatic comedies of recent years.

On March 14 the Soviet authorities arrested six
British engineers and eleven. Russians, charging them
with espionage and deliberate wreckage of the machinery
they had installed. Three days before the arrests thirty-
five Russians had been executed for opposing the Govern-
ment's farm policy, and Sir Esmond Ovey, British
ambassador to Moscow, reported a "reign of terror" in
the Soviet Union. After visiting the northern Caucasus,
the Ukraine, and the middle and lower Volga districts,
the Manchester Guardian's Moscow correspondent also
reported that the population was starving "I mean
starving in its absolute sense," he declared. "There is not
five per cent of the population whose standard of life is
equal to or nearly equal to that of the unemployed in
England who are on the lowest scale of relief. I make
this statement advisedly, having checked it on a basis of
the family budgets in Mr. Fenner Brockway's recent
book, Hungry England, which certainly does not err on
the side of being too optimistic,"

With their outstanding Liberal newspaper publishing
such reports, many Englishmen denounced the trial of the
engineers as a publicity stunt to distract attention from a
domestic crisis. Sir Esmond Ovey therefore demanded the
immediate and unconditional release of the prisoners.
Foreign Commissar Litvinov replied that his Government
was within its sovereign rights, and on March 20 England
retaliated by suspending negotiations for a trade agree-
ment. On March 28 the British Ambassador presented a
virtual ultimatum, but Litvinov merely reminded him that

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<><><^><><><>-<><><>K>^><><><^<><>

this was Russia, not Mexico, where Sir Esmond had re-
cently served, and two days later the British Government
ordered their envoy to return to London for consultation*
By April 6 the House of Commons rushed through a bill
authorizing an embargo on Soviet goods and on April 12
the trial began.

One of the engineers pleaded guilty, another repudiated
his previous confession, and then the first engineer who
had pleaded guilty tried to do the same. Great Britain
greeted with relief the sentences of two and three years
that the court imposed on these two men the rest were
sent home but the embargo went through none the less
on April 26, shutting out eighty per cent of Russia's ex-
ports to the British Isles. On July 1 the Russians released
the two prisoners, and the British raised the embargo* The
episode not only indicated that strained relations existed
between England and Russia ; it also gave the British Gov-
ernment a welcome opportunity to expose Russia in a light
that Mr. Roosevelt might not regard as favorable to
recognition.

April

DURING MARCH the resentment of France and England
against Germany mounted ; during April their resentment
shifted to the United States. On the seventeenth of the
month the American Senate defeated by forty-three votes
to thirty-three a bill to permit the unlimited coinage of
silver at a sixteen to one ratio to gold in other words, the
same heresy that Bryan had championed in 1896. The

230

1933

<*oooo

closeness of the vote indicated how strong inflationary
sentiment had become, and the Administration felt it had
to choose between yielding to this pressure or returning
to the gold standard. It took the President two days to
make his choice. On April 19 he announced that no further
licenses for the export of gold would be granted, and
Secretary of the Treasury Woodin declared that for the
first time the United States had suspended the gold
standard.

Because the total supply of monetary gold In the United
States amounted to four billion three hundred million dol-
lars by April 5, Mr. Roosevelt was at once attacked
abroad. Frederic Jenny, financial editor of the Paris
Temps, announced: "We are forced to conclude that the
American Government, not having been compelled to en-
force a gold embargo by any necessity to defend its gold
reserves, which were more than sufficient, arrived at its
decision on the eve of international conversations in Wash-
ington of the highest importance, because it was motivated
by the prospect of these very negotiations. In other words,
it felt that instability and decline on the part of the dollar
would provide it with ammunition that would force for-
eign governments into economic or monetary concessions."
What M. Jenny referred to was that when the United
States went off gold both Herriot and MacDonald were
on their way across the Atlantic to talk to Roosevelt about
the forthcoming World Economic Conference.

The London Statist did not attribute such Machiavel-
lian diplomacy to the American President, but it expressed
misgivings. "Whether we are to have cooperation or
chaos now turns upon the World Economic Conference,
and we would do well not to overestimate the possibility

231

WORLD DIARY

that the various nations will be able to agree on the rela-
tive parities to which their currencies are to be devalued."
The same paper also began to take digs at the Roosevelt
dictatorship and likened the American President to Chan-
cellor Hitler of Germany: "Within two short months of
his presidential career, Mr. Roosevelt has broken two of
the pillars of the Constitution, the gold clause and Pro-
hibition, and has been given dictatorial powers over agri-
culture, the banks, and control of credit, with the promise
of more to come in the way of industrial planning. . .
While the citizens of Germany are hailing Hitler, the citi-
zens of the United States are flinging up their right hands
in salute and crying, 'Heil, Roosevelt!' or, perhaps, if
they are classically minded and mistrust inflation, ( Ave 9
Caesar!'"

Unlike the organs of British high finance, the Labor
Party's Daily Herald commended Roosevelt highly : "Mr.
Roosevelt has had the courage that Mr. MacDonald has
lacked. The President's move is a wise one. . . . The need
for inflation is urgent, but it must be inflation within lim-
its. And it is world inflation, not inflation by one or two
countries, that is required. If all the chief countries inflate
roughly to the same extent, the danger of competitive in-
flation disappears, the disturbance of the existing ex-
changes is minimized, and purchasing power is increased
everywhere."

Nothing could have more flatly contradicted the aims
of the British National Government. In January 1932
Parliament had voted a sum of one hundred and fifty mil-
lion pounds, which was presently increased to one hundred
and seventy-five millions, known as the Exchange Equal-
ization Fund. It was operated independently of the Treas-

232

i Munich

The island of hope and disillusionment,

WORLD DIARY

<><><><><^<><><^<x><-<>-<><><><><-

ury and of the Bank of England, but collaborated closely
with both. The Equalization Fund sold British bonds to
American citizens in exchange for dollars and then pre-
sented these dollars to the Federal Reserve Bank and de-
manded payment in gold. But, since the pound could not
be converted into gold, the Americans could not retaliate.
By March 1933 the Bank of England had accumulated so
much gold that the pound could have been stabilized at par
with a fifty per cent coverage in gold ten per cent more
than the law required.

The French economist, Francis Delaisi, wrote at the
time : "We are witnessing this strange phenomenon: Lon-
don, with an unstable money, determining the value of the
gold currencies. It is a strange paradox that people on the
stock market regard with stupefaction, and it makes them
believe in the satanic genius of Montagu Norman. The
fact is that through this clever policy London has suc-
ceeded in making a tour de force without precedent in his-
tory. It has again become the greatest market for bills of
exchange; it has remained the market for gold; and it has
replenished its reserves. In eighteen months it has re-
gained the three conditions that are essential to the cen-
tral clearing house of exchange."

On April 21 Prime Minister MacDonald arrived in the
United States to discuss the World Economic Conference
with Roosevelt and agreed not to mention the war debts.
Former Premier Herriot of France and Premier Bennett
of Canada joined the conversations, the former having
threatened to return to France when he received news of
America's abandonment of the gold standard en route. On
April 22 Secretary of State Hull tried to ease the tension
by informing the Foreign Offices at London, Paris, Berlin,

234

1933

OO-O<0~0-

and Rome that the recent American monetary legislation
was not intended to be used as a club on other countries
but had been dictated by domestic conditions.

May

THE OPENING months of 1933 had witnessed increasing
tension between the world and Germany, between Europe
and the United States, and between England and the So-
viet Union. But, hostile as the Western nations were to-
ward one another, the hostility between East and West
had become still more marked. After endless wrangling
the League of Nations finally accepted the Lytton Report,
and the member states signified their intention on Febru-
ary 24 not to recognize the new state of Manchukuo
"either de jure or de facto" The Japanese delegation then
quit the Assembly, and on March 27 Foreign Minister
Uchida announced that his country had decided to with-
draw from the League because of irreconcilable difficul-
ties over Manchuria.

Meanwhile, the Nanking Government was proving
much more accommodating to the Japanese than the
League had been. Between January 1 and March 4 Japan
conquered Jehol Province, and, when the local Chinese
commander resigned after putting up almost no resist-
ance, nominal control of the territory passed over to
Chiang Kai-shek, who was so busy fighting the Commu-
nists that the Japanese continued their progress and came
within thirteen miles of Peking by May 20. On May 31
the Nanking Government signed a truce agreeing to de-

235

WORLD DIARY

*><>!><>!><>><>*>^^

militarize northern China from Peking to the Great Wall.

Not only had Japan's successful campaign in China
aroused the fears of Western statesmen, who saw a new
major power gaining control of Asia; Japanese exports
were beginning to make headway all over the world.
During 1932 Japan's industrial production and foreign
trade had actually increased, thanks partly to the sixty
per cent depreciation of the yen and partly to the rapid in-
dustrialization of the country Japan had seven million
eight hundred thousand spindles in 1932 compared with
two million five hundred thousand in 1913.

During 1932 Japan's exports had increased as fol-
lows :

EXPORT DESTINATION PERCENTAGE INCREASE

Asia 59.3

Europe 29.3

North America 28.5

Central America 241.3

South America 22L8

Africa 96.2

Oceania 76.9

Whereas England had exported eight times as much
rayon as Japan in 1928, four years later Japan exported
three times as much as England. By 1933, for the first
time in history, Japanese textile exports of all kinds were
running ahead of England's, and on April 12 the British-
controlled Government of India ordered the abrogation
of the Indo-Japanese trade agreement and prepared to
raise the tariffs on Japanese cotton exports to India still
higher.

Stingo Tsuda, president of a large Japanese spinning

236

1933

OOOOO-

company, made this comment: "Eruption may be the
culmination. To force expensive clothing upon a nation of
low purchasing power by closing its market to moderate-
priced Japanese goods means an utter disregard of the
interest and well-being of the consumer. ... Is it not a
moral obligation on the part of a civilized country to sup-
ply backward people with cotton textiles, which are an
absolute necessity of life, at a moderate price? Should
England continue to embarrass her possessions, the soli-
darity of the British Empire will not be maintained. It is
no exaggeration to say that the English textile industry
is now bankrupt of initiative. An industry that cannot
maintain itself unless a handicap of as much as seventy to
eighty-nine per cent is imposed on its rivals is a national
handicap rather than a national asset."

While the Japanese justified their cotton exports on the
ground that they were doing the Indians a favor, the Brit-
ish replied that they were raising tariffs in order to save
the Japanese workers from the low wages and long hours
that had made Japanese competition possible. "Japan is
not playing the game, 1 ' complained the Conservative
Saturday Review. "We have the right to emphasize the
unequal working conditions in Japan, the intentional de-
preciation and constant manipulation of the Japanese cur-
rency, the state subsidies to Japanese shipping, and what
is particularly mean and altogether sinister the fraudu-
lent imitation of designs and trade-marks."

Other Tory commentators urged England to take a
leaf out of Japan's book. "The West has failed to learn
from Japan how to avoid extravagance and luxury," wrote
the Tokyo correspondent of the London Morning Post.
"Capital and labor must be content with profits and

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WORLD DIARY

wages low enough to compete with all comers. . . . When
the Lancashire capitalist has to pay wages five times
higher than the wages paid for the same work in Japan,
how can successful competition be possible?" To which
the caustic "Yaffle," writing in the Independent Labor
Party's New Leader, replied: "So we must brace our-
selves to the struggle to reduce life to the lowest possible
level. The fight will be hard. When two determined
patriotic nations fight with religious fervor to reach the
lowest scale of living, there will be no scale left and very
little living. But that is our aim : it is to prove that the
only way to get the full advantage of an industrial sys-
tem that can produce everything is to do without every-
thing. The crusade is on. Let us prove that a Christian
is a bigger fool than a Shintoist."

Relations between Russia and Japan had become even
worse than relations between Japan and England. The
Russians watched Japan's penetration of North China
with growing alarm, and the Japanese feared that Com-
munism might sweep over all of China and then invade
their own country as well. Shortly before Japan quit the
League, its delegation to the Disarmament Conference
circulated a confidential pamphlet with a foreword by
Yosuke Matsuoka, the leader of the group. It contained
this passage: "With regard to the U. S. S. R. there are
two trends of thought in Japan at the present moment.
One is that that country is a menace to Japan because of
eff orts to spread Sovietism over the Far East and because
of the military development within the Soviet Union.
Those Japanese who are anxious over this combined
development and propaganda think that our country
should strike at the U. S. S. R. before the potential

238

1933

~<X-<^O-<

menace fully materializes. The other opinion is that the
conflicting issues between the two countries can be peace-
fully settled by means of diplomacy."

The Geneva correspondent of the Manchester Guard-
ian then commented: "It is notorious that the trend of
thought in favor of preventive war with Russia to which
Mr. Matsuoka refers is that of the military party, which
is now in absolute control of Japan, whereas the opinion
that the issues between the two countries can be settled
peacefully by means of diplomacy is that held by Mr.
Matsuoka and other relatively moderate Japanese, who
have completely lost influence." Was the Guardian's
desire for a war to save Manchester's textile industry
perhaps the father to this thought?

The same mouthpiece of British Liberalism that was
presenting Japan in an unfavorable light gave impetus
to the demand for a preventive war on Germany by a
similar emphasis of the Hitler Terror. The motives of
the individual correspondents may have been of the
highest, and none of them exaggerated the growing
militarism of Germany and Japan, Nevertheless, the fact
remains that by early May the fear of immediate war in
Europe had reached such proportions that President
Roosevelt sent a message to fifty-four nations including,
significantly enough, Soviet Russia, a country the exist-
ence of which America did not officially recognize
proposing a new nonaggression treaty and an agreement
to begin disarming immediately. The next day Hitler
took the Roosevelt statement as the text for a pledge of
the Third Reich's peaceful intentions. He told the
assembled Reichstag that Germany "is ready at any time
to give up offensive arms if the rest of the world does

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likewise. The Reich is ready to become a party to every
solemn nonaggression pact, for Germany is not thinking
of aggression but of its security."

Kladderadatsch, Berlin

PARADISE LOST

The Emigres; "Germany! What a beautiful garden. But how
can we get back there now?"

Here was the Conservative Saturday Review's re-
sponse to the Roosevelt proposals : "There is no sugges-
tion that the new state of affairs in Germany demands
caution. Possibly the MacDonald Disarmament Plan

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1933

-C-O-CXX-

might be a first step toward Utopia in a world of un-
selfish nations, but even the visionary is startled when the
President declares that if 'any strong nation' refuses to
join 'with genuine sincerity' in the pursuit of peace, the
world will know where the responsibility lies. . . . Have
there not been enough pacts of nonaggression? ... At
least the American President might have had a word of
encouragement for those who fought in a war which the
Americans only fifteen years ago called a 'crusade/ Then
we were all crusaders together : but, when it comes to the
cost of the crusade, there is not a word of comfort from
across the seas. Not a syllable does the President utter
on the problem of war debts. It is not surprising that Mr.
Roosevelt's eloquence should find France icy cold and a
large part of England skeptical."

In contrast to this outburst, Hellmuth Magers, a lead-
ing contributor to the Tat, the organ of the Nazi in-
tellectuals, proclaimed: "A far-reaching correspondence
of interests between the United States and Germany
exists politically. Roosevelt's appeal for peace to the
peoples of the world and Adolf Hitler's Reichstag ad-
dress foreshadowed for the first time the possibilities of
such political collaboration." Within a few days the war
scare had subsided. On the one hand, Germany could not
have undertaken a war of aggression and therefore had
every reason to endorse Roosevelt's message and let the
future take care of itself. On the other hand, as the
London Statist pointed out, "a preventive war under-
taken by France and Poland would be almost as foolish.
Germany could not and probably would not attempt to
defend her frontiers against such a combination, but the
invaders would find that a guerrilla war with about a

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~><>^><><><><>K><><><>-<>-<>^^

million armed Nazis on German soil and the whole Ger-
man nation at the fever point of Nationalist feeling would
be a different proposition from the invasion of the Ruhr
in 1923. Unless the political leaders of the countries con-
cerned succumb to an attack of complete imbecility, we
may dismiss the prospect of war in the immediate future
as absurd."

Hitler had tried to make the Germans forget their
troubles by throwing Jews into concentration camps;
Roosevelt tried to produce the same effect in the United
States by throwing J. P. Morgan into a senatorial in-
vestigation. On May 23 Mr. Morgan and several of his
partners told a Senate committee that they had paid no
income taxes in 1931 or 1932. It then appeared that the
firm also made a practice of allowing certain individuals,
nearly all of them people of commanding influence, to
purchase new issues of stock at a lower price than the
general public paid. Although the Morgan partners had
merely conformed to the law of the land in not making
income-tax payments during the two worst years of the
depression, it was this action that the American press
condemned most bitterly. Neither the newspapers nor
their readers had forgotten that during the spring of
1932, while some four million Americans were making
the first payments on their income taxes, Mr. Morgan
had endorsed the "Block Aid" relief plan whereby each
city block helped to care for its own unemployed and had
spoken as follows over the radio, cheek by jowl with
Norrnan Thomas, the Socialist candidate for President:
"We have reached a point when the aid of government
or the gifts of individuals, no matter how generous, are

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1933

ooooo

insufficient to meet the conditions which are upon us. So
we must all do our bit."

But the London Economist, speaking as the mouth-
piece of British financial morality, found the "preferred
lists" the most shocking aspect of the Morgan investiga-
tion. "In the case of the Alleghany Corporation, for
example, those of the public who were fortunate enough
to get in at the issue price paid twenty-four dollars per
share; Morgan's received their portion of shares at
twenty dollars, and passed them on at this price to the
favored few. These persons do not appear to have been
giving any real assistance in the retail distribution of the
shares, and their action would hardly be interpreted as
underwriting in the usual sense of the term. Neverthe-
less, the 'rake-off' of one dollar in six would have been
a very substantial commission even if it had promoted
the flow of capital performing both these functions."

June

THE WORLD ECONOMIC CONFERENCE, which opened in
London on June 12, did not assemble in the happiest
frame of mind. On June 5 President Roosevelt had
signed a bill canceling the obligation of the United States
Government to make interest payments on its gold bonds
in gold, thus completing the abandonment of the gold
standard that he had begun on April 19. The United
States having broken its pledge to pay its debts in gold,
Ramsay MacDonald proceeded to break his word, too,
and told the Conference in his opening address that "the

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problem of war debts must be dealt with before every
obstacle to general recovery has been removed and . . ,
must be taken up without delay by the parties concerned."
Two days later Roosevelt agreed to accept "token pay-
ments" in silver totaling less than ten per cent of the
amounts due on June 15.

But England and America were not the only two
countries at the Conference with divergent views.
Premier Daladier of France urged that the currency war
be ended and that the gold standard be fully restored
everywhere. Although he advocated "controlled agree-
ments between producers in order that their work might
be closely adjusted to the real possibilities of consump-
tion," he had nothing to say about lower tariffs, the pet
enthusiasm of Secretary Hull, leader of the American
delegation.

Neville Chamberlain, the Chancellor of the Exchequer,
who headed the British delegation Ramsay Mac-
Donald's vanity had been satisfied with the decorative
chairmanship approved returning to the gold standard
and lowering tariffs, but pointed out that little could be
done in the near future. Foreign Commissar Litvinov
then threw the delegates into a frenzy by stating that
Russia was in the market for a billion dollars' worth of
trade and by suggesting that those countries willing to
grant long-term credits would get the business. The Ger-
man delegation kept in the background, since the British
had already turned down the advance proposal made
by Alfred Hugenberg to attack the Soviet Union and set
up an independent Ukraine.

Only the international bankers succeeded in reaching
any agreement. On June 15 it was unofficially reported

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<s~XXx>

that the governors of the Federal Reserve Bank of New
York, the Bank of France, and the Bank of England had
drafted a provisional scheme to setup an equalization fund
to halt currency fluctuations* Two days later President
Roosevelt turned down a proposal for immediate stabil-
ization of the dollar, and on June 22 the American delega-
tion issued a statement that "undue emphasis has been
placed upon consideration of the plan proposed for tem-
porary de facto stabilization of currencies." The mem-
bers of the "gold bloc'* France, Italy, Switzerland, Hol-
land, and Belgium, backed by Germany and Poland-
resented this action, and when the dollar declined during
the last week of June the French suggested adjourning the
Conference. On June 29 a meeting was held attended by
the gold bloc, Mr. MacDonald, and Professor Raymond
Moley, the American Assistant Secretary of State, who
had just arrived to rescue the Conference single-handed.
While his superior, Cordell Hull, had been urging freer
trade, Moley had preached economic nationalism, but his
crowning ineptitude came when he signed the statement
prepared by the gold-bloc group "to bring back an in-
ternational standard based on gold."

July

ON JULY 3 Roosevelt issued a declaration stating that he
"would regard it as a catastrophe amounting to world
tragedy" if the Conference let itself "be diverted by the
proposal of a purely artificial and temporary experiment
affecting the monetary exchange of a few nations only."

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<>-<><><>-<><><><^><><><><><^

Since he attached supreme importance to raising the Amer-
ican price level, he refused to consider any proposal that
would prevent him from tinkering with the dollar.

The abuse heaped on the American President indicated
that he had offended powerful interests. His own refer-
ence to "old fetishes of so-called international hankers"
showed where the shoe pinched, and when that great in-
ternationalist, General Jan Smuts, announced that the
United States had made itself solely responsible for the
continuation of the world depression, it was evident that
British diplomacy had suffered a reverse.

"The present President is more truculent than Presi-
dent Wilson," declared the Saturday Review. "He not
only leaves the Conference in the lurch but kicks it down-
stairs. . , . Anyhow, nobody supposes that the President
has any idea what he means when he declares that 'the
United States seeks the kind of dollar that a generation
hence will have the same purchasing power and debt-pay-
ing power as the dollar value we hope to attain in the
near future/ Abracadabra !"

The Laborite ./Wse; Statesman and Nation, on the other
hand, praised the President : "He will not allow the gold-
standard countries, which refuse to adopt a sane policy
In Europe, to obstruct his attempt to pursue a sane policy
in the United States. He has made up his mind to do what
all the other powers said they wanted to do ; and the only
question Is whether Europe, and ourselves in particular,
are going to follow him or whether we are going to allow
our financiers to keep us in a depressed and deflated world
in order to satisfy their thinly disguised hope that the fail-
ure of his experiment will prove the wisdom of their own
orthodoxy. Cowardice is a bad guide in economics as in

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1933

OO<XX>-

other things." In Paris the Temps argued that Roosevelt's
currency experiments would lead to state socialism if not
to Bolshevism.

The chief delegate of the country that had been accused
of wrecking the Conference thereupon saved it from com-
plete collapse. After explaining that his suggestion to dis-
cuss a ten-per-cent tariff cut did not mean that his Govern-
ment endorsed that proposal, Secretary Hull persuaded a
few subcommittees to continue negotiations that finally led
to an agreement limiting the sale of silver. Twenty-one
wheat-producing nations also agreed to limit their exports
during 1933 34 and to reduce acreage devoted to pro-
duction for export during 1934 35,

Communist Russia emerged as the one real beneficiary
of a conference designed to rescue world capitalism. The
rise of Hitler in Germany and the fall of Tardieu in
France brought Russia and France closer together than
they had ever been since 1914, and Litvinov took advan-
tage of his visit to London to patch up relations with Eng-
land, which had been disturbed by the trial of the British
engineers. He also signed nonaggression pacts with Es-
thonia, Latvia, Persia, Poland, and Turkey, and with all
three members of the Little Entente Rumania, Czecho-
slovakia, and Yugoslavia.

The Moskauer Rundschau pointed out at the time:
"The growing significance of the Soviet Union laid its
stamp on the opening of the World Economic Conference.
It would now be comic to ask whether the U. S. S. R. is
playing an active or a passive role in international affairs.
The present situation is sufficiently characterized by the
fact that the question at the Genoa Conference of 1922
was what concessions Russia could make to foreign coun-

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tries, whereas at the London Conference the question was
what treaties the Soviet Union was prepared to sign with
those countries. . . . And there is another difference be-
tween the world conference in Genoa and the world con-
ference in London. It is that Germany, which proclaimed
its independence at Genoa along with the Soviet Union,
appeared in London of its own volition in the role of poor
relation, eager to find a little chamber for itself in the
tumble-down house of world capitalism."

Nikolaus Basseches, Moscow correspondent of the
Neue Frele Presse of Vienna, gave this definition of the
new foreign policy that Russia had adopted at London :
"The opinion is frequently expressed that Russia will be
forced to adopt a 'Slavic' foreign policy. The Versailles
system is openly supported. For domestic consumption the
Bolshevist slogan reads: 'Better no revision than an "im-
perialist" revision of the peace treaties.' This change in
opinion is encouraging a new foreign policy and making it
much easier for the Soviet Government to overcome do-
mestic opposition to various embarrassing questions. . . .

"We confront to-day the beginning of a new Soviet for-
eign policy. The Bolshevist State has become a conserva-
tive factor in world politics and supports the status quo
to a certain degree. At the same time it has ceased playing
a passive role abroad and is beginning to become active.
The great boundary from the Baltic to the Black Sea is
the most peaceful and least contested boundary in the
world at the present time. In 1924 domestic considera-
tions prevented many countries from granting de jure
recognition. Now, however, in the year 1933 the world
situation has changed so much that Soviet foreign policy
can begin where it left off in 1924."

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1933

00000

While the London Conference was trying to establish
a new order in world affairs, the American and German
Governments were establishing a new domestic order.
Here are some of the steps they took. Roosevelt signed one
bill authorizing a bond issue of three billion three hundred
million dollars for public works and another of two bil-
lion dollars to rescue home owners from mortgage fore-
closures. He put two hundred and fifty thousand unem-
ployed youths to work on a reforestation programme and
appointed General Hugh Johnson administrator of indus-
try. In a national radio broadcast on July 24 he urged the
people to sign up with General Johnson's National Recov-
ery Administration, which was fixing new wage rates and
time scales in different industries. Already the President
had signed the cotton-textile code, abolishing child labor
in the southern mills and fixing minimum weekly wages in
the North and South. As a result of these measures, the
boom in production, which almost reached 1929 levels,
collapsed. Finally, nearly a quarter of a billion dollars
were set aside to bring the American Navy up to full
peace-time strength in the biggest building programme in
the country's history.

Hitler also attempted to centralize Germany's eco-
nomic activities, but he resorted to different methods. He
did not even make the pretense of raising wages, and while
Roosevelt was taking former Socialists into the American
Government, all German Socialists were removed from
public office, their funds and property confiscated, and
their organizations outlawed. Hitler also established a
supreme economic council which included such great in-
dustrialists as Krupp, Siemens, and Thyssen. Hugenberg,
leader of the Nationalist Party, resigned his two Cabinet

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-<><>*><>K>-C><>-<><<>^>-C-<>-^

posts as Minister of Economics and of Agriculture, the
former going to Kurt Schmitt, a conservative industrialist,
and the latter to Walter Darre, one of the windier Nazi
theorists, who was at bottom devoted to the big land-
owners.

During July all the German political parties except the
Nazis disbanded the Socialists and Communists had al-
ready been outlawed and on July 20 Vice Chancellor von
Papen signed a concordat with the Pope promising the
German Catholics freedom of worship and education but
destroying their political organizations- Finally, while
Roosevelt was preparing to rebuild the American Navy,
Hitler was getting the German Army back to its pre-war
strength as rapidly as possible. Throughout the first six
months of 1933 German imports of metals and chemicals
destined for the war industries doubled and tripled, and
Gerrnaa factories switched from peace-time production to
making tanks, guns, ammunition, and poison gas, in vio-
lation of the Versailles Treaty. The Germans justified
their conduct, however, by pointing out that the former
Allied powers had been violating the Treaty for years by
failing to bring their own armaments down to the German
level.

By this time many sections of the foreign press began
taking Hitler seriously. Sir Evelyn Wrench, editor of the
London Spectator and head of the English branch of the
English-Speaking Union, praised Hitler as "a man of
austere habits" who "neither drinks nor smokes," and
quoted "one prominent German, what we should call a
progressive conservative, a landowner," as saying: "I was
skeptical as to whether Hitler had the qualities to make a
national leader. Then I met him three years ago and have

250

1933

ooooo

seen him several times since. He really is a wonderful
man a prophet with no thought of self. He has an un-
failing instinct for what to do at a moment of crisis. The
only part of his policy I do not understand is his treat-
ment of the Jews; but you must remember we have lived
through a revolution. He has accomplished a rebirth of
the German nation. We feel that we live again, that we
hold our heads high once more, that we are not a sub-
ordinate nation in Europe. Hitler is not the fire eater that
you in England seem to think; he does not want war, but
he is determined that Germany shall have a fair deal."

On the strength of a ten days' visit to Berlin Clifford
Sharp, former editor of the Laborite New Statesman,
prophesied that "Hitlerism is definitely established and
unshakable." He based this prophecy on five points. First,
"Hitler's conquest of the minds and hearts of all classes
of Germans, largely since he came into power" ; second,
that "a real revolution, a very great event in the history
of Europe" had occurred; third, that the revolution had
been "in its essence simply the delayed reaction of a great
nation against the injustices and stupidities of the Treaty
of Versailles"; fourth, that Hitler was recognized "by
the whole of the political and official intelligentzia as an
exceedingly able man easily the ablest leader and spokes-
man that Germany has found since the death of Strese-
mann, if not since very much longer than that" ; fifth, that
Hitler's arrival in power had "produced a psychological
effect on the minds of the German nation so rapid and so
great that it must be seen to be believed."

But an anonymous British psychiatrist who had studied
and lived in Germany, wrote in the Daily Herald, another
Laborite organ: "What interests me as a mental special-

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WORLD DIARY

ist is the overwhelming and undoubted fact that the lead-
ers of Hitlerism are mentally unstable in certain cases
to the point of definite insanity." He found them all suf-
fering from paranoia "a disease in which the intellectual
faculties are not impaired, with the exception of a dis-
ordered judgment. The sufferer entertains a delusion that
is completely false ; where the delusion is concerned he is
usually quite logical in his reasoning except that he begins
with a false supposition, with false premises. ... A very
common delusion among paranoiacs is that the Jews, Cath-
olics, or Freemasons are responsible for all their ills. It
is a step from this to the belief that all the ills of the world
are due to these agencies. Hitlerism is, then, to the mental
specialist at any rate, a form of persecution mania with
the Jew as the villain and the scapegoat."

He then proceeded to specify. Hitler he described as
"a paranoiac, and an extremely unstable person, as is in-
dicated clearly in his autobiography. He has found an
outlet for much of his morbid ferocity, hate, and aggres-
siveness in a form of violent oratory, for which he has
developed an unexpected gift." Goring, the Premier of
Prussia, "a paranoiac of the most dangerous type," had
been imprisoned in an asylum in Stockholm after trouble
with the local police and remained "a dangerously violent
lunatic and a drug addict" who would be "reduced to a
pitiable state of slobbering, demented insanity" if de-
prived of morphine for a week. Paul Joseph Goebbels,
"the brains of the movement" and "a disgruntled cripple
of similar temperament" to Hitler's, seemed like a Yale
half-back compared to Rohm, the homosexual commander
of the Storm Troops, or Dr. Rust, the Minister of Edu-
cation for Prussia, who had been forced to retire from

252

1933

-xxxx-

the teaching service in 1930 when he was "certified to be
suffering from general paralysis, a disease of the brain in
which the germ of that dread disease, syphilis, slowly
corrodes the brain and gradually extinguishes its activi-

ties."

How had this gang of neurotics and degenerates ac-
quired power ? The answer is that a large number of mid-
dle-class Germans had been reduced by the War, the 1918
revolution, the inflation, and the depression to a state as
abnormal as that of Hitler himself. Then the political
maneuvers by which they had finally come into office had
been executed by one of the most remarkable men in the
country, Dr. Otto Meissner, the fifty-four-year-old secre-
tary to President Hindenburg, who had held the same post
under President Ebert from the day the Republic began,
He had made himself an expert on the Weimar Constitu-
tion and had kept in the good graces of the Socialists,
Nationalists, and Nazis. Although himself a Monarchist,
what he chiefly wanted was to see the Fatherland re-
habilitated without resorting to Communism. He held his
job throughout the Nazi revolution and became a warm
friend of Hitler's. And behind Meissner stood Fritz
Thyssen and the Rhineland industrialists, whose role has
been fully described in Ernst Henri's Hitler over Europe.
Here the entire Hitler movement is accounted for as the
political arm of certain German steel, coal, and cannon
merchants who wish to establish themselves as absolute
rulers of all Europe.

Roosevelt's worst enemies never accused him of acting
in behalf of any such sinister plan, but even his best friends
have had difficulty discovering any plan at all in the New
Deal. Sir Arthur Michael Samuel, a Conservative Mem-

253

WORLD DIARY

-<^><><^<^<^><^><>^><^><^>^<><'

ber of Parliament and a former Treasury official, looked
with horror on the American recovery programme. "In-
stead of altering the value of the currency or inflating
credit," he suggested, "let Mr. Roosevelt alter, manipu-
late, or inflate weights and measures. Let him leave the
dollar where It is and call ten hundredweight of wheat a
ton of wheat. Then the dollar price of wheat would be
doubled. * . . Let him call thirty minutes one hour. Then
the United States workmgman's hourly wage would be
doubled/'

Sir Arthur then offered this comparison between the
United States and Germany : "The people of the United
States are unfortunately childish in their handling of eco-
nomics, just as the German people are childish in their
understanding of political science. We have witnessed
enough during the past thirty years to know that neither
of those two great nations understands what it is doing
the one in politics, the other in economics nor realizes
what the results of its actions will be. They are like chil-
dren playing with fire. And therein lies the danger to them-
selves and to others."

August

AT THE END of August a more distinguished Englishman
than Sir Arthur Samuel had some first-hand experience
with the danger that his fellow countryman feared. Mr.
Montagu Norman, Governor of the Bank of England,
called on President Roosevelt at Hyde Park "to insist,"
in the words of the Week-end Review, "that something

254

1933

oooo-o

must be done about stabilization." With him came Gov-
ernor Harrison of the New York Federal Reserve Bank,
but "they got no more out of Mr. Roosevelt than some
polite conversation and the offer of another cup of tea."
The same paper then drew this conclusion : "Here is an

SlrU

Sirio, A. B. C., Madrid

PRESIDENT MACHADO.

astounding reversal of role, more conspicuous than if the
giants of finance had actually resigned their offices. They
remain; but the initiative and the authority have gone
from them to the politicians. A new stage in the struggle
for readjustment has been reached. "

But Mr. Roosevelt's chief concern outside the United

255

WORLD DIARY

<><><>-C><><K><*<< > <><^

States lay in Cuba, not England, at that time. During
the years of President Machado's rule many Cubans had
been jailed, tortured, and murdered, while American in-
terests gained possession of three-quarters of the sugar
plantations. Every year these absentee owners replaced
between twenty and thirty thousand native workers with
cheaper Negro labor, and finally, under the Chadbourne
Plan, the United States was preparing to cut its pur-
chases of Cuban sugar in two. But the Roosevelt Ad-
ministration not only declined to approve Thomas L.
Chadbourne's sugar-allotment project, which had been
drawn up largely by American producers ; it did not come
to the aid of Machado when, following a transportation
strike on August 7, Cuban army leaders took possession
of Havana on August 1 1 and told Machado to resign. He
fled by airplane to the British port of Nassau, and the
next day Carlos M. de Cespedes was designated Pro-
visional President On August 24 the Cuban Congress
dissolved after fixing a new election for February 24.

September

ON SEPTEMBER 5 a bloodless revolution of the enlisted
men in the army and navy displaced the provisional de
Cespedes Government. Roosevelt at once conferred with
the ambassadors from Argentina, Brazil, Chile, and Mex-
ico, and sent several warships to Cuban waters. Two days
later Dr. Ramon Grau San Martin, a forty-nine-year-old
professor of physiology who stood at the head of the
new Government, protested against American interven-

256

1933

<><><><><>

tion as an American cruiser and an American destroyer
entered Havana harbor. The next day Claude Swanson,
American Secretary of the Navy, arrived in Havana on
board the cruiser, Indianapolis, on his way to the Panama
Canal, but he did not land. Unrest was spreading and
laborers had seized some of the sugar mills. Members of
the revolutionary committee to which Grau belonged is-
sued revolvers and rifles to prevent a counter-revolution.
On September 10 Grau was sworn in as provisional
president and on September 14 he proclaimed that he
would maintain Cuban independence and sovereignty and
promised early congressional elections. Within five days
twenty-three American war vessels had arrived in Cuban
waters, but the new Government crushed the first at-
tempted counter-revolution without assistance, while the
Communists were gaining control of more and more
strikes. Since the mFddle of August five hundred and
twenty-five army officers had been imprisoned in the Hotel
Nacional, and after one hundred and nineteen people had
been killed and over two hundred wounded in street fight-
ing, they surrendered on October 2. General Menocal, a
former President, and Colonel Mendieta, who had been
jailed for opposing Machado, left Havana the same day.

October November December-

MEANWHILE, the new regime had become increasingly
suspicious of Sumner Welles, the American Ambassador.
His frequent conferences with de Cespedes convinced the
Grau Government, from which Washington continued to

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-<><^<><><*<^<*<><<><~><><>-<!<>"^

withhold recognition, that the United States was plotting
its overthrow. On October 7 Grau made a radio broadcast
charging that American financiers were scheming against
him and, sure enough, on October 23 the Senate's bank-
ing investigation revealed that the Chase National Bank
had lent thirty thousand dollars to Machado personally
while he had been President, and that it had paid fifty-five
thousand dollars to one of his friends.

Three days later a letter from the Chase Bank, written
in the fall of 1932 and describing Machado's financial
embarrassments, also turned up, but the Senate Commit-
tee refused to make it public on the ground that it might
cause trouble in Cuba. In view of all the grief that Mr.
Morgan and his friends had suffered, this little episode
may have given some of them a little ironic satisfaction
since it marked the New Deal's first major concession to
Wall Street.

The bitterness of the foreign press in the face of Roose-
velt's "good neighbor" policy in Cuba therefore had some
justification. Repertorio Americano, the foremost liberal
weekly in Latin America, remarked : "None of the eco-
nomic victories of the Yankee plutocracy during the
Machado regime will be annulled by Roosevelt. The idea
that Cuba is a factory which is held by the Electric Bond
and Share Company and the Chase National Bank and all
the other pirate institutions that have fallen upon Cuba
will stand firm. Machado has withdrawn only so that a
government may be organized that will still be dominated
by Machado's spirit, a spirit that will surrender soil and
natural wealth and economic resources."

From the seat of the League of Nations, the Journal
de Geneve declared: "The Spanish regime, for all its

258

1933

<X-<xX-

faults, at least strengthened the small property owner.
But the American regime has encroached upon the lati-
fundia and eliminated the white population to enrich for-
eigners. This has meant the annihilation of the Cuban
nationalists who fought for independence from Spain."

During his first six months in office Roosevelt had given
American foreign policy a new impetus in two directions.
At the World Economic Conference he had cut the coun-
try loose from the international gold standard, and in
Cuba he had served the Chase Bank well without letting
the loss of American lives and property provoke him into
open intervention. In October and November, however,
he made two even more important decisions affecting an
even more disturbed area than Europe or Latin America.

On October 10 he invited Mikhail Kalinin, President of
the Union of Socialist Soviet Republics, to send a repre-
sentative to Washington to discuss ending "the present
abnormal relations" between Russia and the United States.
General Araki, Japan's Minister of War, at once sug-
gested that the various powers with territories on the
Pacific Ocean hold a peace conference before the so-called
"critical year" of 1936, when the Washington Naval
Treaty would expire. Roosevelt countered on November 3
by ordering the Atlantic fleet, which Hoover had concen-
trated in the Pacific since January 1932, to return to its
native waters early in 1934.

Dr. Gerolf Coudenhove-Kalergi, a member of the Japa-
nese diplomatic service, welcomed Roosevelt's gesture.
"This step was greeted with great satisfaction in Japan
and is generally recognized as an indication of improved
feeling. Moreover, a Japanese-American war seems un-
likely because the naval bases of the two countries are

259

WORLD DIARY

so remote that neither could attack the other. A naval
blockade would also be technically impossible. 1 '

Having given Japan at least temporary reassurance,
Roosevelt then received Maxim Litvinov, the Soviet Com-
missar for Foreign Affairs, on November 7, and diplomatic

Munich

RUSSIAN-AMERICAN RELATIONS

"No, little mother, commercial relations will not be so close that

we can export Communism itself. Unfortunately we'll

have to keep that for ourselves,"

relations between the two countries were resumed on No-
vember 1 6. The Soviet Government guaranteed civil and
religious freedom to Americans in Russia and pledged
itself not to spread propaganda in the United States
through any agency. The United States made reciprocal
pledges except in the matter of religion, for which no
pledges were asked.

260

1933

o^xxx*.

Although former Senator Brookhart announced that
the United States might sell half a billion dollars' worth
of goods a year to Russia, more experienced observers
suggested that political, not economic, motives had deter-
mined Roosevelt's move. As the Fossische Zeitung of Ber-
lin pointed out, "that Japan will not let herself be hindered
by Europe or the League of Nations in carrying through
plans that seem essential for the preservation of her his-
toric rights is perfectly evident. Only the United States,
as the most powerful nation on the Pacific Ocean, is now
able to control the situation in the Far East by purely
political means. A Russian-American rapprochement must
therefore be regarded not only in Moscow, but through-
out the whole world, as a move in the direction of peace/*

The Russian press concurred. Izvestia, official organ of
the Soviet Government, proclaimed : "The step that the
President of the American Republic has taken will be
welcomed not only by the public in the U. S. S. R. and the
U. S. A. but by all friends of peace as an act to promote
the development and strengthening of normal relations
between two countries whose dealings will henceforth be
based on peaceful collaboration." In Paris, however, the
Temps described America's recognition of Russia as "a
warning to Japan and also a warning to National Social-
istic Germany, whose attitude toward Soviet Russia
is well known," and in England the Liberal Manchester
Guardian remarked that "common hostility to Japanese
policy was bound to bring the Soviet Government nearer
to the United States."

Europe's fear of Japan's growing export trade ac-
counted for these views. Writing on "The Yellow Trade
Menace" in the Neue Weltbuhne, a liberal weekly pub-

261

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<><^><><><><><><<><~C><><~^<>^

so remote that neither could attack the other. A naval
blockade would also be technically impossible."

Having given Japan at least temporary reassurance,
Roosevelt then received Maxim Litvinov, the Soviet Com-
missar for Foreign Affairs, on November 7, and diplomatic

Simflicissimus, Munich

RUSSIAN-AMERICAN RELATIONS

"No, little mother, commercial relations will not be so close that

we can export Communism itself. Unfortunately we'll

have to keep that for ourselves."

relations between.the two countries were resumed on No-
vember 16. The Soviet Government guaranteed civil and
religious freedom to Americans in Russia and pledged
itself not to spread propaganda in the United States
through any agency. The United States made reciprocal
pledges except in the matter of religion, for which no
pledges were asked.

260

1933

ooooo

Although former Senator Brookhart announced that
the United States might sell half a billion dollars' worth
of goods a year to Russia, more experienced observers
suggested that political, not economic, motives had deter-
mined Roosevelt's move. As the Fosslsche Zeitung of Ber-
lin pointed out, "that Japan will not let herself be hindered
by Europe or the League of Nations in carrying through
plans that seem essential for the preservation of her his-
toric rights is perfectly evident. Only the United States,
as the most powerful nation on the Pacific Ocean, is now-
able to control the situation in the Far East by purely
political means. A Russian-American rapprochement must
therefore be regarded not only in Moscow, but through-
out the whole world, as a move in the direction of peace."

The Russian press concurred. Izvestia, official organ of
the Soviet Government, proclaimed: "The step that the
President of the American Republic has taken will be
welcomed not only by the public in the U. S. S. R, and the
U. S. A. but by all friends of peace as an act to promote
the development and strengthening of normal relations
between two countries whose dealings will henceforth be
based on peaceful collaboration," In Paris, however, the
Temps described America's recognition of Russia as "a
warning to Japan and also a warning to National Social-
istic Germany, whose attitude toward Soviet Russia
is well known," and in England the Liberal Manchester
Guardian remarked that "common hostility to Japanese
policy was bound to bring the Soviet Government nearer
to the United States."

Europe's fear of Japan's growing export trade ac-
counted for these views. Writing on "The Yellow Trade
Menace" in the Neue Weltbuhne, a liberal weekly pub-

261

WORLD DIARY

<>^><><*<><><><><><><>^><><>-C><><>

lished by German emigres in Prague, Max Rudert pro-
duced some remarkable information. He showed that for
a working day of between ten and twelve hours, Japanese
women cotton spinners received the equivalent of twenty
cents, male coal miners twenty-six cents, and male workers
in match factories thirty-three cents. Children, who began
work at the age of ten, were receiving about four cents a
day. Japanese electric-light bulbs were being sold in
Europe at two and a half cents apiece, socks at four and a
half cents a pair, bicycles at four dollars and fifty-six
cents; and Japanese trade delegations were appearing in
Abyssinia and all over Latin America. Whereas England
exported thirty per cent of the goods it produced and the
United States ten per cent, Japan was exporting sixty
per cent. Herr Rudert quoted a European manufacturer
as saying: "Even if I stole my raw materials and did not
pay my workers, I could not compete with such prices."

How had Japan succeeded in this formidable effort? A
native economist, named Takahashi, has drawn up calcu-
lations showing that seven or eight trusts control his
country's economic life through their complete or partial
domination of smaller units. Profits as well as control lie
in the hands of the very few, distribution costs have been
reduced far below the American or European level by the
virtual elimination of the middleman, and costs of pro-
duction have been brought down by a combination of
modern machinery and coolie wages.

No wonder many Europeans foresaw the end of their
world ascendancy. Havelock Ellis, for instance, wrote:
"The more we approach to democracy, to the supremacy
of labor, to the directorate of the proletariat, the more
inevitable we are rendering the dictatorship of the

262

1933

OOO<><>

colored man, and his right to settle where he will" And
Prince Karl Anton Rohan, editor of the Europaische
Revue, declared: "The present struggle for the division
of world power takes the form of a struggle for world
markets, and many Europeans are convinced that if the
Orient achieves its purpose of economic and, therefore,
military armament, its ruling classes, which are to-day
demanding heroism and slavish sacrifices from the masses,
must grant more liberal institutions and raise the popular
standard of living. But in the face of this conviction the
fact remains that those countries with the lowest, most
slavish standard of living have attained the highest pro-
duction, and that they are heing guided by statesmen
whose historic perspective reaches beyond the immediate
struggle for power. These men take long-range views
and act in such a way that they become a serious danger
to the economic hegemony of the white race."

Prince Rohan also saw danger to Europe from another
quarter: "A Russo-Arnerican economic alliance not only
would alter the situation in the Far East but would trans-
form the world market within a few years. Only a peace-
ful and economically united Europe could withstand the
impact of dumped Russian exports financed by American
capital and manufactured at the Russian wage level."

While Russia and the United States drew close to-
gether, Germany began to give indications that Japan
might count on her aid. On October 14 three days after
the shortest League of Nations session in history, the
German Government announced its withdrawal from the
Disarmament Conference and the League, thus dupli-
cating the course that Japan had followed in February.

Paul Schefier, who used to represent the Berliner

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WORLD DIARY

<><><><><><><><>->><><><><><><><>

Tageblatt in Moscow, Washington, and London and had
now become its leading political writer, justified Ger-
many's withdrawal from the League in these words:
"Neither France nor England wants Germany to return
to her natural position among the nations of Europe.
That is the fundamental fact France will not abandon a
single detail in her military superiority over Germany,
for this superiority she regards as the basis of her exist*
ence. As for England, her policy has always been directed
against the strongest Continental power. It was Germany
in 1914, and England is now determined to prevent Ger-
many from regaining that position. France dominates
the Continent only by grace of England. The hegemony
of France can be broken at any moment, and we well
understand that England prefers this condition to a
strong Germany. All the demonstrations of good will, all
the maneuvering and declarations in behalf of peace, this
whole gigantic test of our patience all these things
merely serve to conceal the brutal fact that the Allied
Powers in their heart of hearts will not relent"

But William Martin, foreign editor of the Journal de
Geneve, who was making a tour of the Far East at the
time, foresaw more sinister developments : "To-day the
anti-Communist passion of the German National
Socialists makes them the natural allies of all Russia's
enemies. . . . The League of Nations and the powers that
have based their policy and their security on it are reaping
at this moment the fruit of their past weakness. They
imagined the Far East was a long way from Europe.
What a miscalculation! We see to-day where the policy
of laissez faire has led us to a direct alliance between
the two most ambitious powers of Asia and Europe, to

264

1933

-xx*x>-

a double resignation from the League of Nations, to a
formidable threat to the peace of the world, finally, to a
return all along the line to the policy of alliances and the
race of armaments."

Hitler made no secret of the anti-Russian, anti-Com-
munist elements in German policy. "We National Social-
ists," he wrote in his autobiography, "consciously draw a
line through pre-war German foreign policy. We begin
anew at the place where history stopped short six
hundred years ago. We will end the continual migration
of Germans to the south and west of Europe and pass
over to the land policy of the future. And when we speak
of new territory in Europe to-day we can only think first
of all of Russia and of the Russian border states." The
day Germany quit the League he announced over the
radio: "There exists for National Socialist organizations
but one enemy, and that is Communism."

Just as Hitler's aversion to Communism made him the
natural ally of Japan, so Chiang Kai-shek's incessant
campaigns against the Chinese Communists made him
cordially disposed toward the Japanese-controlled state
of Manchukuo. But his campaigns had cost so much and
yielded so little t&at his finance minister, T. V. Soong,
resigned in despair on October 29. Soong had advocated
stronger measures against the Japanese and had visited
the Chinese defenses in Jehol Province just before the
Japanese offensive of late February and early March,
While at the World Economic Conference he had ar-
ranged for credits of fifty million dollars from the Re-
construction Finance Corporation which were supposed
to be applied to the purchase of American wheat and
cotton, but most of which actually were spent on muni-

265

WORLD DIARY

<><><><><><><>-e><<><><>K><^

tions. In any case, the incident caused so much discontent
among the Shanghai bankers that, at the instance of the
Japanese Minister to China, they refused to grant Soong
any more loans. His brother-in-law, Dr. H. H. Kung,
who succeeded him in office, might have proved more
amenable to the Japanese if trouble had not suddenly
started popping in the south.

General Tsai Ting-kai, commander of the famous
Nineteenth Route Army, had established himself in the
province of Fukien, which runs along the coastline be-
side Japan's island possession of Formosa and is
bordered on the west by Kiangsi, the Communist strong-
hold. When, in late October, he asked for funds to deal
a decisive blow at "China's hereditary enemy," Nanking
believed he referred to the Communists and shipped fifty
thousand dollars In silver and enough arms for sixty
thousand men to the port of Foochow, the capital of
Fukien. As the warships carrying these supplies were
entering the harbor, local authorities boarded them with
their own pilots, disarmed the crew, and took possession
of the cargo. Three days later, on November 20, Fukien
Province proclaimed its independence.

Four of the ten members of the Fukien Government
belonged to the left wing of the Kuomintang, the best
known of them being Eugene Chen, former foreign min-
ister of the Nanking regime. Working with the Nine-
teenth Route Army and with a few Communist units, the
new state granted freedom of speech and assembly, the
right to strike and to form unions, and advocated redis-
tribution of land and a vigorous anti-Japanese military
policy. It suspended operations against the Communists
in Kiangsi and shipped supplies through to them.

266

1933

O^>x>00

Faced with the revolt of a province of over fourteen
million inhabitants, Chiang Kai-shek dispatched troops
and warships to the disaffected area. On January 13
Nanking forces had captured Foochow by sea and several
of the interior cities by land. The Nineteenth Route Army
withdrew southward and the rebellious government
collapsed.

The American-owned China- Weekly Review of
Shanghai pointed out that Fukien had been able to revolt
in the first place because its citizens had "big investments
overseas in the South Seas, the Philippines, the United
States from which profit flows into China. In Shanghai
foreign investments draw profit from China. In Fukien
and Kwangtung, profit is drawn in from Chinese invest-
ments abroad." The same paper then went on to explain:
"It is this association with oversea economy and inde-
pendence of foreign capital that have been largely re-
sponsible for the more emphatic nationalism and
'radicalism* of the south, which was the birthplace of
the Chinese Revolution and of revolutionary nationalism
and is to-day the center of the first clear-cut revolt against
Japanese domination of China. It is clear that for there
to be any national policy expressing the aspirations of
China as a whole these independent 'creditor* areas must
be brought together with the dependent 'debtor' areas of
China, which, in turn, must be linked up with the less
developed interior. And air lines are doing this linking
in a way that no other form of communication could
achieve."

The reference to air lines had been prompted by the
announcement of Thomas A. Morgan of the Curtiss-
Wright Corporation early in December that his company

267

WORLD DIARY

*<&*(>4$~<>S,*5~&3*<>&<>^^

had signed a contract with the Chinese National Govern-
ment to build a five-million-dollar airplane factory at
Hangchow, one hundred and ten miles south of Shang-
hai. American flying instructors were coming to China,
and the Pan-American Airways controlled forty-five per
cent of the China National Aviation Corporation, the
remainder of the stock being in the hands of the Chinese
Ministry of Communications. The Japanese at once ex-
pressed alarm, partly through fear of American imperial-
ism and partly through fear of what a strong air force
might be able to do for China. Major General Yahe
Ohba expressed the feelings of the military element in
these words: "The existence of so strong an air force
in southern China close to Formosa means a great menace
to Japan. This is especially true if it shakes hands with the
American planes in the Philippines. It is dear as day
from the past movements of the United States, that in
time the American influence thus implanted will take root
in the soil of the Canton district."

Nikolaus Basseches, Moscow correspondent of the
Neue Frele Presse, also detected increasing tension be-
tween the United States and Japan, and although Soviet
officials kept warning against the danger of a Japanese
attack, this observer believed that the real danger lay in
another quarter: "More and more people are inclined to
regard Japanese activity in China and Manchuria as a
vast strategic preparation for a future Japanese-Ameri-
can conflict. It is assumed that Japan's occupation of
Manchuria and her penetration of China are in the
nature of strategic plans directed not so much against
the Soviet Union as against America. According to this
view, Japan wants to win a firm foothold on the Asiatic

268

1933

continent in preparation for the coming struggle for the
Pacific Ocean. Valdivostok and the Pacific coast of the
Soviet Union are of no great importance strategically.
Japan will be satisfied if these districts remain neutral."

Events in France during the closing months of 1933
indicated an impending collapse of the Radical Party
that had governed the country since June 1932. On
October 24 the Daladier Cabinet fell when it proposed
raising the taxes, and then reconstituted itself on October
27 under the leadership of Albert Sarraut. One month
later to a day the same financial difficulties destroyed the
Sarraut Cabinet, which promptly reorganized, also one
month later to a day, under the leadership of still
another Radical leader, Camille Chautemps.

What manner of men supported the Chautemps
Government? Lucien Romier, a leading French journalist,
reported in the Temps a conversation he had at this time
with a typical French peasant u a convinced Radical and
anti-clerical." Here is the way this supporter of Chau-
temps spoke : "We favor a government with full power.
Except for the priest, the notary, and a few property hold-
ers, you will not find anybody here in favor of national
union. National union means the right-wing parties. You
know that perfectly well. We do not want them. More-
over, they would come in power too long after the dam-
age had been done, and they would be able to accomplish
nothing. They would let sleeping dogs lie and not correct
any abuses. They would bargain with everybody, yield to
everybody, and deceive everybody. We want sweeping re-
forms carried out at once by sound Republicans."

"No doubt you mean radical economic and financial
policies?" M. Romier inquired.

269

WORLD DIARY

K><><H<><^<><N<><><><><><><><><><>.

"Why not? We can do as well as Mussolini, Hitler, or
Roosevelt, but within the Republican framework."

He made a special point of not wanting revolution:
"No, not revolution, but the Republican fist, decision, jus-
tice, sanctions,"

However, the Socialists and Communists in the big
cities especially in Paris had other ideas. Whereas the
Radical peasants who voted for Chautemps owned their
own farms, the Socialist and Communist workers led much
the same kind of life as the industrial workers of Ger-
many, England, or the United States. They opposed the
"National Union" more bitterly than the Radicals did,
and unlike Herriot and Briand, none of their leaders had
participated in Poincare's Government of National Con-
centration. The daily lives of their constituents helped to
account for their policies. Eugene Dabit, a young French
writer who had lived in the Belleville quarter of Paris,
described its people in the Nouvelle Revue Frangaise.

"A curse lies heavy on the northeastern suburbs of
Paris," he wrote, "the names of which are pronounced
with fear. The legend of revolution envelops them. The
color of poverty does not please those who ride in auto-
mobiles on the Champs-filysees. If one has lived in Belle-
ville one does not become intoxicated with symbols, ideas,
and art. One understands that these unfortunates know
nothing about any such mirages. Awaiting the desperate
hour when they will be forced to move elsewhere as if
they were invaders or barbarians, they have built a world
of their own in which they have their own pleasure, love,
and property."

Here is the way M. Dabit described the Communists of
Paris: "Somber men turn their eyes to new gods. They

270

have nailed to the wall a photograph of Jaures or Lenin,
under which they pray during evenings of distress. If they
go out it is to attend a meeting on the rue Mathurin-
Moreau. Often they go even as far as the Maison des Syn-
dicats on the rue de la Grange-aux-Belles, and on the first
of May they try to parade through the grand boulevards.
The comrades occupy a sixth of the world's surface, and
their reign will be established here in time." What a dif-
ference between these men and M. Romier's peasant, who
"has some education, knows how to read his newspaper
between the lines, and even does a little writing himself for
a bulletin published by the group of wounded war veter-
ans of which he is the president. He loves the soil passion-
ately and respects everything that has to do with his con-
dition as a peasant, of which he is proud. n The peasant
supported the Chautemps Cabinet, the industrial worker
did not; yet both opposed the handful of magnates who
had ruled the country under Poincare, Tardieu, and Laval.
Other parts of Europe were witnessing more open
struggles of the same character. On November 18, the
conservative parties in Spain won control of the Cortes,
not by gaining a majority of the popular vote, but by put-
ting up only one candidate Catholic, Monarchist, or
Fascist in each district, whereas the Socialists, Repub-
licans, Radicals, Syndicalists, and Communists all ran
candidates of their own. Disgusted with these tactics, the
editor of the Heraldo de Madrid, a Socialist organ, re-
signed his post during the campaign and issued this state-
ment: "Face to face with the Russian experiment, the
Italians and the Germans have relegated the French
Revolution to the back seat. Only we Spaniards, provin-
cial and parochial, have accepted democracy as a novelty.

271

WORLD DIARY

Government for the people by the people is a fallacy.
The choice to-day is between Moscow and Berlin."

The Anarchists responded to the new situation by
bombing churches and fighting the troops and the police.

Sirio, A. B. C., Madrid

PRESIDENT ZAMORA OF SPAIN

Largo Caballero, the Socialist leader, commonly known
as the "Spanish Lenin," also warned that if the conserva-
tive parties seized control of the Government and tried
to undo the work of the Republic, they would bring about
armed revolution and proletarian dictatorship. And these

272

1933

-O-O^XX>-

threats bore some fruit. A new cabinet was formed by
Alejandro Lerroux, who had opposed the King and the
Church under the Monarchy.

Why had not the Spanish Republicans held the ground
that their revolution had gained? They had failed for
precisely the same reasons that Herriot, Sarraut, Paul-
Boncour, Chautemps, and their other equivalents in
France had failed. They grafted just as busily but even
less efficiently than the Monarchists; they quarreled
among themselves; they ignored the masses who had
swept them into power. Julio Camba, a leading journalist,
contributed an article to the Sol, the foremost Republican
daily in Madrid, describing some of the impressions the
new regime had made on him when he returned from
New York after a few years' absence.

"On landing, it is true, when everyone was asked to
declare the purpose of his journey, I wrote, 'Solicitation
of a high post,' a statement which, for one reason or an-
other, won me the most cordial welcome on the part of
the port authorities. I must confess that up to now I have
solicited nothing; but in those days a returning Spaniard
who had no intention of asking for something would have
been suspect, and I do not like to create complications
for myself when I am traveling.'*

He then gave this account of a conversation he heard
on a station platform after a certain train had arrived
behind schedule. "No sooner had the train arrived than
a man not far from me exclaimed loudly, 'But have you
ever seen such a scandal? How can the authorities tolerate
such an engine?*

" 'You're right, 5 another gentleman replied. 'That en-
gine is good for nothing but roasting peanuts.*

273

WORLD DIARY

-<><><><*<><><><><x><><><><>-^<><>

" 'No, I am not speaking of the engine, exactly,' replied
the gentleman with the loud voice; 'the engine doesn't
matter. What I consider intolerable is that it should have
the name it bears. Don't you see the plate, "Alfonso
XIII"? We've had the Republic for two months, and
they haven't changed its name yet. It's a real outrage.' "

And after Sefior Camba had witnessed a few more
scenes of the same kind he found himself reflecting, "Yes.
It seemed incredible, but I was forced to realize that
hosts of Republicans who during the Monarchy believed
they favored a change of regime never really favored
more than a change of name." The behavior of the Cortes
added to his misgivings. "Votes were traded by a pro-
cedure similar to that used in Vigo to trade bass and
mackerel," he wrote. "A gentleman arrived there with
so many baskets of votes and the buyers began to bid.
'What will you take for the lot? Let's see. Religious
freedom. 5

" 'For goodness sake ! Religious freedom is worth
nothing at all. If we had a religion to free perhaps we
could come to an agreement, but we haven't any. Give me
woman suffrage and we'll call it a deal. 5

" 'No, no. Woman suffrage doesn't suit me because
women hate us. I'll give you secularization of the ceme-
teries. How's that?'

"Little by little the few delegates who came to the
deliberating assembly for the purpose of deliberating be-
came convinced of the futility of all effort, and in two
months' time there was not a gambling den or house of
111 fame where the language used could be compared to
that of the Cortes. Indeed, If anyone used an ugly word
in some place of ill repute somebody would call him to

274

1933

o-xx*o

order by saying, 'Be a little more careful. This isn't the
Cortes.'

"Beginning with foul epithets and violent names, some
deputies in a moment of inspiration passed on to imita-
tions of cats, dogs, or frogs. 'The Spanish tradition, eh ?
Meow,' said a Radical. 'Bowwow,' barked another deputy.
And three or four others would contribute, 'Rrrrrr. . . .' "

By gaining control of the Cortes in the November vot-
ing, the parties of reaction had therefore scored a rather
empty triumph.

In Rumania, too, the year ended with elections followed
by violence. On November 12 a Liberal Ministry headed
by Ion G. Duca and dominated by Foreign Minister
Titulescu, a satellite of Tardieu's, replaced the Ministry of
Vaida-Voevod, a satellite of Herriot's, thus reflecting the
rise of the reactionary element in France. On December
9 the new Cabinet outlawed the Iron Guard, the most
powerful and violent of the five distinct Fascist parties in
Rumania. Elections followed on December 20. The Com-
munists and the Iron Guard were denied civil rights and
the Liberals won a majority by virtue of fraud, corrup-
tion, and violence. On December 29 a group of members
of the Iron Guard assassinated Duca, whereupon Titu-
lescu, fearing the loss of French support, told King Carol
that he would resign unless the Iron Guard were dissolved
in accordance with the requests of the French, who had
complained that it was a pro-German organization.

During the last months of 1933 so many things were
happening in so many different parts of the world that
our story has now got almost completely out of hand.
We bring the year to a close, however, by returning to
the United States. On October 22, and for many weeks

275

WORLD DIARY

afterward, the American dollar again became a center of
world interest as Roosevelt announced still another gold
policy. This time he tried to control the value of the cur-

Curentul) Bucharest
Foreign Minister Nicolas Titulescu.

rency by having the Government purchase gold in the
open market through the Reconstruction Finance Cor-
poration at whatever price it chose to set from day to day.
Alfred E. Smith and the Temps of Paris promptly
found themselves in agreement. Mr. Smith announced
that he was for "gold dollars as against baloney dollars"

276

1933

<>-o-ooo

and expressed dismay that the Democratic party seemed
"fated to be always the party of greenbackers, paper-
money printers, free silverites, currency managers, rub-
ber-dollar manufacturers, and crackpots." The Temps
remarked : "The American experiment has not been slow
to prove itself a failure. None of the hopes have been
realized that it aroused in those who were solely pre-
occupied with their misunderstood immediate interests."

British Tories saw even worse things in store. F.
Britten Austin gave this description of the Brain Trust in
the Nineteenth Century and After: "It is exactly as if
the British Empire should surrender itself into the hands
of Professor Laski, Mr. G. D. H. Cole, and Mr. E. K
Wise. And behind the Brain Trust looms the enigmatic
figure of Mr. Bernard M. Baruch, aforetime autocrat of
the American War Industries Board, possessing (as he
himself modestly admitted to a congressional committee)
'more power than any other man had during the War, 5
and creating some contemporary scandal by the alleged
predominance of Jewish personnel in that organization,
to which the whole of American industry was inquisitori-
ally subject. . . . What was sanguinarily initiated in Russia
by Lenin's band of fanatics and criminals has in America
been unobtrusively achieved by a group of socially minded
professors working through a constitutionally elected
President."

These observations appeared in print months before
Dr. Wirt's charges saw the light of day, and the following
observations by a correspondent of the London Economist
who visited the United States at the close of 1933 also
preceded the findings of the Darrow Board by many
months: "The N. R. A. ultimately tends to favor big

277

WORLD DIARY

business against the small fry, because the small business
is apt to be broken by the additional charge that is placed
upon all business by the shortening of hours and the en-
largement of the labor force, whereas big business can
still adjust itself to making a profit under new conditions.
Is N. R. A., in combination with devaluation of the dollar,
simply going to put down the mighty banker from his seat
in order to exalt the mighty industrialist and merchant in
his place? That is not what the great American public
wants and not what it believes to be happening. But, then,
who can say what strange and unintended consequences
this American voyage of social discovery may bring
about?"

The activities of Secretary of State Hull at the Seventh
Pan-American Conference, which opened at Montevideo
on December 3, bore out this analysis. Hull, a lifelong
advocate of low tariffs, believed in foreign trade as the
remedy for the depression, and the devaluated dollar
made his ambition all the easier to accomplish. On Decem-
ber 12 the Conference adopted Hull's tariff resolution,
which set the stage for bilateral or multilateral trade
agreements, reduction of existing duties, continuation of
most-favored-nation treatment throughout the Pan-
American world, and establishment of a permanent inter-
national agency to promote lower tariffs. On December
19 the Conference even halted the warfare between
Bolivia and Paraguay in the Chaco, when Bolivia accepted
Paraguay's offer of a truce for the rest of the year. The
dispute was then handed over to a League of Nations
Commission, but no plan of arbitration could be agreed
upon and the fighting was resumed on January 7, two
weeks after the Conference had adjourned. Finally, the

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United States gave evidence of adopting a policy of non-
intervention in the internal affairs of any Latin American
country.

The presence in Montevideo of a delegation from Grau
San Martin's Cuban Government, which Washington had
not recognized, caused some embarrassment, and the
best that Mr. Hull could do was to make the impromptu
statement : "I feel safe in undertaking to say that under
our support of the general principle of nonintervention
as has been suggested, no government need fear any inter-
vention on the part of the United States under the Roose-
velt Administration." And on December 28, two days
after the Conference had adjourned, Roosevelt told the
Woodrow Wilson Foundation that "the definite policy of
the United States from now on is one opposed to armed
intervention."

Reviewing the Record 19 S3

DURING 1933 events within Germany and the United
States transformed the world balance of power. The year
began with both countries facing disintegration. Then, at
the end of January, Hitler replaced von Schleicher as
Chancellor, and Germany passed from the joint control
of bankers and industrialists into the hands of Fritz
Thyssen and the heavy industries of the Ruhr. The voting
that followed the Reichstag fire a month later delivered
the state apparatus over to the Nazis and led to the sup-
pression of all other political parties and to the persecu-
tion of Jews, Catholics, Liberals, Socialists, and Commu-

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nists. War preparations went forward at increasing speed,
and in October Germany withdrew from the Disarmament
Conference and the League of Nations. Meanwhile Dr.
Schacht, the new president of the Reichsbank, was promot-
ing inflation as busily as the Government was promoting
war. Immediately upon assuming office he voluntarily sur-
rendered all of Germany's credits at the Bank for Inter-
national Settlements, and by the end of the year the gold
reserves of the Reichsbank had shrunk to less than ten
per cent.

Overnight the European balance of power shifted* In
November 1932 a Radical French Government had gin-
gerly signed a nonaggression pact with Soviet Russia, to
the horror of the conservatives, and within a year military
missions from the two countries were exchanging visits
and viewing Nazi Germany as suspiciously as they had
ever viewed each other. For fifteen years on end every
Soviet spokesman of any consequence had ridiculed and
attacked the League of Nations, yet on December 25
Stalin went so far as to tell Walter Duranty of the New
York Times that under certain circumstances Russia might
now support the League. His explanation bore a curious
resemblance to the c lesser evil" theory, which his own
party had repudiated in Germany when it attacked the
Social Democrats for supporting Hindenburg against
Hitler.

"Is your attitude toward the League of Nations a nega-
tive one always and under all circumstances ?" Mr. Du-
ranty inquired.

"No," Stalin replied. "Not always and not under all
circumstances. I do not think you quite understand our
viewpoint. Despite the German and Japanese exit from

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1933

<>-<>ooo.

the League or, perhaps, because of it the League may
well become a brake to retard or hamper military action.
If that is so, if the League is even the tiniest bump some-
what to slow down the drive toward war and help peace,
then we are not against the League. Yes, if such will be
the course of historical events, it is not excluded that we
shall support the League despite its colossal deficiencies."

At the end of 1932, one year before this interview took
place, the Soviet Union symbolized the hopes of millions
who had suffered from the world crisis in every land. It
had earned this prestige by its unflagging opposition to
every institution that the capitalist states cherished
notably the League of Nations. But during 1932 the rise
of Hitler placed it in a new position, and the same fear of
Nazi Germany that forced the statesmen of capitalistic
France to swallow their anti-Bolshevist prejudices and
turn to the Soviet Union forced the statesmen of Com-
munist Russia to meet the French halfway. This collab-
oration did not mean that Russia had abandoned Com-
munism any more than it meant that France had aban-
doned capitalism. What it did mean was that events within
Germany had created a new balance of power in Europe.

In like manner, events within the United States created
a new balance of power in Asia. Although the statesmen
of Moscow had opposed Japan's invasion of Manchuria
even more vigorously than the statesmen of Washington
had, Hoover's personal antipathy toward the Soviet Union
had prevented him from recognizing even the existence
of the Russian regime. The more liberal Roosevelt would
probably have resumed diplomatic relations with Russia
under any circumstances, but the foreign policy of his pre-
decessor virtually forced his hand. Because Hoover had

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spent most of his active life in the Orient and because
Stimson came to the Department of State from the Gov-
ernor Generalship of the Philippines, these two men at-
tached enormous Importance to America's interests in the
Far East. Even the British, with an infinitely more valu-
able stake in that part of the world, not only lagged far
behind Stimson and Hoover in opposing Japan; they re-
lied on the excessive zeal of the Americans to pull their
chestnuts out of the fire.

Roosevelt's decision to build the American Navy up to
full treaty strength and to bring the Atlantic squadron
back from the Pacific suggested that he did not wish to
defend British interests in the Far East or to fight Japan.
On the one hand, the growing danger of war, not only in
the Far East but in Europe, led him to strengthen Amer-
ica's defenses; on the other hand, he ordered half the
forces that Hoover had concentrated in the most likely
scene of hostilities to be withdrawn as a gesture of good
will to Japan. But his recognition of Russia served notice
on both Japan and Great Britain that the two largest con-
tinental nations in the world had discovered a community
of interests.

Roosevelt's currency policy also served notice on
the world at large that the United States had followed
the same path that Japan took when the Mitsui interests
and the Seiyukai Party ousted the Mitsubishi interests and
the Minseito Party in 1932 and that Germany took when
Thyssen and Hitler ousted the Deutsche Bank and von
Schleicher. Roosevelt owed no allegiance to any specific
group of industrialists, as Hitler did, but his devaluation
of the dollar automatically aided the whole debtor class
including the industrialists at the expense of the whole

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ooooo

creditor class including the bankers. Because Winthrop
W. Aldrich, brother-in-law of John D. Rockefeller, Jr.,
and chairman of the board of the Chase Bank, understood
this, he leaped aboard the Roosevelt band wagon and crit-
icized the practice of combining investment and deposit
banking on the eve of the Morgan investigation. He was
quick to see that Roosevelt's attack on banking might be
turned to the advantage of industry, perhaps even of
Standard Oil, just as Thyssen used Hitler as a stick to
beat the German financiers in behalf of the steel trust. The
Administration repaid him by suppressing the letters his
bank had written to Machado.

In clinging to the gold standard, Hoover had ranged
the United States with the so-called "gold bloc" 'France,
Switzerland, Italy, Belgium, and Holland not with the
"sterling bloc" the British Empire, South America, and
Scandinavia. The leading bankers had hoped that the
World Economic Conference might lead to an agreement
between these two blocs until Roosevelt's desertion of the
gold standard and his message to the Conference in July
shattered their plans. Just as Roosevelt recognized Rus-
sia because he wanted to keep America out of war in the
Far East, so his currency policy took more account of the
United States than of the outer world. Yet if our narrative
has made no other point so far it has surely indicated that
the domestic policy of one nation often has unexpected
effects on the affairs of other nations, and the revival of
American nationalism under Roosevelt seemed likely to
prove no exception to this rule.

The two great nations which began 1933 in the hands
of discredited rulers ended the year with nationalism and
inflation in the saddle* Both Germanv and the United

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States had rejected the international banker for the na-
tional industrialist, and both Germany and Japan had
withdrawn from the League of Nations, which the United
States had never so much as joined. Anglo-American rela-
tions had been bad enough at the close of 1932, when Eng-
land made her first full war-debt payment since the
Hoover moratorium, but they became still worse when
she repudiated the entire payment a year later at a time
when her own budget was accumulating a record surplus
and America's a record deficit. Throughout the year Brit-
ish foreign policy had become increasingly equivocal and
vague. In March and April the British newspapers at-
tacked Hitler with unanimous fury, yet by the end of the
year, in the face of a continuing Brown Terror, only the
Laborite Daily Herald criticized Montagu Norman for
trying to help his old pal, Dr. Schacht And in the Far
East Sir John Simon had been equally shifty, seconding
some of America's protests against Japan and ignoring
others.

The year ended with Europe on the verge of civil war.
The French Governments had begun to fall at accelerating
speed, the Spanish elections had led to an Anarchist up-
rising, and the Rumanian to the murder of Premier Duca.
What went on behind the brown smoke screen that hung
over Germany one could only guess, but news of Nazi
bombings in Austria suggested that the Hitler movement
possessed considerable vitality. Not only was the Conti-
nent falling into two camps, one French, the other Ger-
man; the same issue ha,d divided several nations against
themselves. Where the British Government stood re-
mained the unsolved mystery of the year.

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1934

January

PRESIDENT ROOSEVELT began the New Year by endorsing
his New Deal, which, he assured Congress on January 3,
was "here to stay." The next day he submitted a ten-and-
a-half -billion-dollar budget, showing a seven-billion-dollar
deficit, which, however, came to only half that figure on
June 30, when the fiscal year ended. He also foresaw a
two-billion-dollar deficit for 1935 but promised to balance
expenses by 1936. Wall Street heaved a sigh of relief and
on January 15 went on its biggest spree in months, when
the President asked Congress for power to revaluate the
dollar between fifty and sixty cents. He also asked for a
two-billion-dollar "equalization fund," similar to the one
that England had been using, to stabilize the dollar on the
foreign exchange, whereupon the British increased theirs.
The dollar thereupon dropped 2.4 cents and stocks and
commodities boomed.

On the same day that Roosevelt proposed devaluating
the dollar, Dr. Grau San Martin resigned as Provisional
President of Cuba. A military junta took control and on
January 18 installed a new President, Colonel Mendieta,
who had sufiered imprisonment for opposing the brutality

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of Machado and then quit the country when the Grau
Government presumed to criticize the North American
interests that had financed Machado. The Grau regime
had held office since September but had failed to gain
American recognition during that time. The more conser-
vative Mendieta suffered no such inconvenience; Wash-
ington accorded him recognition on January 23.

The same day witnessed a much more important event
on the other side of the world, when the admirals of the
fleets of England, Australia, and New Zealand attended a
secret conference at Singapore. On January 18 the Brus-
sels correspondent of the Chicago Tribune revealed that
the Dutch had placed their East Indian possessions under
the protection of the British, having cut their own naval
appropriations in two. A year before, Holland had been
thrown into a panic by Japan's efforts to obtain oil con-
cessions and immigration privileges in the East Indies and
therefore turned to England for aid.

Some months after the conference, the China Weekly
Review of Shanghai quoted "a certain influential Chinese
leader" who had just returned from a tour of the East
Indies with the report that the conference of admirals
had decided to take three steps in case of an emer-
gency:

1. To protect the Singapore base and the Crown Col-
ony at Hongkong.

2. To concentrate British naval forces in South China
waters in the event of a Japanese invasion of North China.

3. To establish close connections with the Dutch naval
forces in the East Indies.

The same informant also revealed that the British were
rushing the Singapore base to completion during 1934,

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1934

ooooo

five years ahead of schedule. Two airports, one at sea and
one on land, were being built to accommodate at least a
thousand war planes, and the number of workers on the
job had been stepped up from five thousand to fifteen
thousand. The British Admiralty had already repri-
manded the Daily Telegraph, because its naval corre-
spondent, Hector C. Bywater, made public more informa-
tion of a similar character gleaned from a German military
publication. He stated that Britain had shipped the three
heaviest guns in the world to Singapore in 1928 and had
constructed a fuel depot capable of containing one million
two hundred thousand tons of oil more than half the
annual consumption of the entire Japanese nation.

February

DURING JANUARY the Singapore Conference called at-
tention to the war danger in the Far East; during Feb-
ruary riots in Paris and Vienna called attention to the
danger of revolution in Europe. Twenty months had
passed since Herriot assumed power in France, and six
Radical Cabinets had fallen at an increasingly rapid rate.
Ever since the May elections of 1932 the Radicals had
controlled the largest block of votes in the Chamber of
Deputies but not a majority, and Socialist opposition had
destroyed their first four Cabinets when they attempted
to balance the budget at the expense of the government
employees and veterans. The Radicals had therefore come
to depend on conservative support.

This support, however, entirely gave way when Ray-

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naldy, the Minister of Justice in Chautemps' Radical Cab-
inet, promised to take "energetic measures" against the
individuals responsible for the Lagny railway catastro-
phe, in which two hundred and fifteen people lost their
lives just before Christmas. After all, the state had a cer-
tain interest in the matter, since it had paid out a total of
twelve and a half billion francs during the past four years
to cover the deficits that the French railways had accumu-
lated under the directorship of some half a dozen mem-
bers of the Rothschild family, not to mention a de Wendel
or two.

"All these factors," wrote Roger Mennevee, editor of
the Documents Politiques, one of the few independent
publications in France, "gave strong support to the accusa-
tion of inefficiency raised against the great French rail-
ways by certain deputies of the left and extreme left, so
much so that one could say that in December 1933 the
oligarchic rule of the railways had almost ended. But this
was something that the rulers could not accept, and neces-
sary measures were worked out in various conferences at-
tended by the directors of the Comite des Grands Re*
seaux [Committee of the Big Railways]."

Their opportunity arrived on January 8, when Serge
Alexandre Stavisky committed suicide in Switzerland.
This mysterious character had been arrested for stealing
securities in 1927, but his trial had been postponed nine-
teen times under both Radical and conservative govern-
ments, while he engaged in a constantly widening range
of financial activities. In 1932 he founded a municipal
pawnshop in the city of Bayonne with the endorsement of
the local mayor a Radical Socialist. M. Dalimier, the
Colonial Minister in the Chautemps Cabinet, even went

290

Crocodile, Moscow

The European Financier: "Please, gentlemen, don't end my life
with a suicide/*

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<><-<><><>^><*^<<><^<><><>X><><

so far as to write a letter recommending the bonds in
Stavisky' s pawnshop as an investment. Half a dozen other
Radicals of slightly less prominence had also aided Stav-
isky in one way or another and profited from his crooked
deals.

The newspapers and politicians controlled by the Co-
mite des Grands Reseaux at once launched a sweeping at-
tack on the Republic. "The violent campaign conducted
against M, Raynaldy," wrote M. Mennevee, "by certain
newspapers devoted to specific interests appears in a cu-
rious light when we recall what I have said about his in-
tention to investigate the Lagny catastrophe. There was
also a singular community of political ideas between the
men behind the big French railways and those who used
the Stavisky affair to launch an anti-Republican cam-
paign."

The Stavisky scandal not only exposed corruption and
hypocrisy among the Radicals, it broke at a time when
economic hardship was driving more and more Frenchmen
toward extremist parties and away from democracy. On
January 22 the Paris police arrested seven hundred So-
cialists and Communists for rioting in the streets, while
at the same time half a dozen Fascist organizations were
holding daily demonstrations almost unmolested. On Jan-
uary 27 the Chautemps Cabinet resigned, and Daladier
formed a new government three days later, juggling al-
most the identical personnel into different positions. He
then proceeded to rule with a strong hand, making himself
increasingly unpopular with the extremists of both right
and left. On February 3 he removed the Paris police chief,
Chiappe according to some reports because he thought
Chiappe had threatened to lead an uprising in the streets.

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1934

-o-<xx>.

In any event, Chiappe had completely identified himself
with the Fascist elements and used to provide confidential
information to the topical weekly, Gringoire, in which
both the Rothschilds and the de Wendels owned stock.

On February 6 various Fascist organizations and thou-
sands of ex-service men, infuriated by the corruption in
high places that the Stavisky affair had exposed, attempted
to storm the Chamber of Deputies. Seventeen people
were killed and hundreds wounded in the struggle between
police and rioters that followed, and the next day the
Daladier Cabinet resigned. Ex-President Gaston Dou-
mergue, a nimble youth of seventy-one, then formed a
National Union Cabinet. The history of the 1924 Radical
Government had repeated itself, with Doumergue dou-
bling for Poincare as the savior of France.

The wonder, however, was not that the Radicals again
came to grief, but that their fall did not also destroy
French democracy. Roger Mennevee also contributed an
article to the April issue of Current History entitled
"The Plot to Kill French Democracy" in which he stated :
"I am convinced that the Stavisky affairwas launched under
the auspices of what could be called the Tardieu-Chiappe
group for the purpose of creating in the mind of the
French people a strong mistrust against members of
Parliament and thereby against Parliament itself and
thus to aid the establishment of a more or less personal
dictatorship." But a general strike on February 12 in
which both Communists and Socialists joined served no-
tice on the Tardieu-Chiappe group that any attempt to
set up Fascism would encounter mass resistance.

On the same day that the French Socialists were
demonstrating against Fascism, the Austrian Socialists

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1934

<x~oo-o-

were actually fighting it On February 9 the Austrian
Government raided the Socialist headquarters in Vienna
and occupied the offices of Arbeiter Zeiiung, the Socialist
daily paper. Three days later a similar raid on Socialist
headquarters in Linz precipitated a general strike, called
over the heads of the Socialist leaders. Civil war at once
followed, and for the next four days Socialist workers,
armed and unarmed, struggled against the Austrian
police and the Heimwehr, a private army financed jointly
by Italy and the Catholic landowners and industrialists
of Austria. Some two thousand lives were lost, and the
day the Socialists surrendered, their two chief leaders,
Bauer and Deutsch, fled the country.

The fall of Daladier in France on February 7 removed
the only bulwark that had protected the Austrian
Socialists and gave the Catholic-Fascist regime of Chan-
cellor Dollfuss its signal to attack them. Furthermore,
when Doumergue formed a National Government in
France on February 9, internal difficulties made him un-
able as well as unwilling to intervene. The British also
kept hands off, since they were advocating German re-
armament at the time and did not wish to antagonize
Hitler. Thus Italy could for oace act freely, and Mus-
solini, the ex-Socialist, egged on Dollfuss with the rene-
gade's hatred of his abandoned faith. Hence the active
part that the Italian-subsidized Heimwehr played in the
Austrian civil war.

But the immediate threat to Austrian independence lay
neither in domestic Socialism nor in Italian Fascism; it
came from Nazi Germany. Ever since March 1933 Ger-
man and Austrian Nazis acting under instructions from
National Socialist headquarters in Germany had engaged

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in demonstrations, bombings, assassinations, and riots
against the Dollfuss regime. Because no Austrian national
election had occurred since Hitler's arrival in power, it
was difficult to estimate the strength of the Nazi move-
ment, but it probably had attracted between thirty and
forty per cent of the population. The Socialists always
polled about forty per cent of the total vote, and Doll-
fuss's Christian (Catholic) Socialists had the support
of between twenty and thirty per cent of the populace.
But Dollfuss's opposition to the Nazis, half-hearted as it
was, had gained him the grudging support of the Socialist
leaders on the familiar "lesser evil" theory.

The Nazis held aloof from the civil war in the hope
that the two rival groups would kill themselves off. On
February 19, however, Herr Habicht, the Nazis' "In-
spector General for Austria," informed the Austrian
Government in a radio broadcast from Munich that by
the end of the month it "must come together with the
National Socialist movement in order to prepare for a
happier future." In the event of refusal Habicht warned
that "the fight will be resumed with all vigor on February
28.'* The Dollfuss Government made no reply, and the
last day of February passed without incident.

Giselher Wirsing, editor of the Tat, which had become
the most dignified mouthpiece of Nazi policy, gave this
analysis of what had happened in Austria: "After the
guns had ceased firing in Floridsdorf and Simmering,
in Steyr, Linz, and Graz, the surrounding nations faced
a changed situation. The Franco-Czech base in Austria
had been destroyed. Whereas Italy on the one hand and
Czechoslovakia and France on the other had balanced
each other in Austria, this balance had been destroyed,

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1934

o-oooo

and the Austrian problem was further complicated in
the eyes of all those powers that were eager to intervene.
Domestically the situation of Dollfuss is more precarious
than ever. Before the week of bloodshed the majority
of the people had gone over to the National Socialist
camp ; now, however, a veritable avalanche in that direc-
tion has commenced. . . . The blood guilt of the Dollfuss
Government is clear and cannot be denied."

Herr Wirsing took particular satisfaction in this assur-
ance of British neutrality that appeared in the Conserva-
tive Daily Telegraph of London: "Even if Austria were
to become National Socialist by popular vote and were
to decide to link its destiny with that of National Socialist
Germany, England would have no obligation to inter-
vene. Austrian independence, no matter what govern-
ment is in power, may be of interest to certain European
countries, but it does not possess so great an importance
from the point of view of Great Britian."

Two men had been chiefly responsible for the assault on
the Austrian Socialists Chancellor Engelbert Dollfuss
and Major Emil Fey, Commissioner for Public Safety.
Dollfuss, whose diminutive stature of less than five feet
had earned him the nickname of "Millimetternich," had
studied theology as a young man, but later shifted to the
legal ^profession. He served in the War and in, 1919
became secretary of the Lower Austrian Peasants' As-
sociation, haying come of peasant stock himself. He then
spent a year studying agriculture in Berlin and working
in a bank. On returning to Austria he threw himself into
organizing his country's agriculture and sat in Parliament
as a member of the Christian Socialist Party but never
won the esteem of its leader, Monsignor Ignaz Seipel,

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the ablest politician in post-war Austria. After Seipel's
death in 1930, however, Dollfuss came to the fore, win-
ning a reputation for great slyness and finally rising to
the Chancellorship.

But it was his adjutant, Major Emil Fey, leader of
the Vienna Heimwehr, who organized and led the attack
on the Socialists. Known as the "Austrian Goring," Fey
combined the talents of the soldier and the orator. A
Vienna correspondent of the Paris topical weekly, Fu 9
described Fey at a press interview as follows : "Fey is a
born orator, but a disdainful one. Though he speaks well
clearly, energetically, soberly he seems to be doing
one a favor by speaking at all. He takes no part in the
speech he makes. His mind is obviously on something
else. He thinks intensely. It is rare to see so intelligent a
face above a uniform thin, long, firm lips that scarcely
move. The words 'Communists' and 'Bolshevists' fuse
into a hiss; the hands remain motionless.

"Suddenly the character before us comes to life. Now,
after the expose of cold facts, he must explain the
Heimwehr. Fey, the robot, begins to live, even to smile.
His gestures come back to him. He takes a cigarette,
snaps a silver case and sticks it into his pocket, clenches
his fist, stretches out his arm, opens his- mouth wide,
pauses with delight on certain vibrant words. He is the
leader goading his soldiers. With what, magnificent pride
he exclaims at the end, 'Without the Heimwehr, Austria
was lost.* "

Another contributor to Vu this one a native Austrian
traced the events in Vienna back to Hitler's early days.
As a "frontier Austrian," Hitler "brought to Vienna
the doctrine of Germanism, and it replied by professing

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1934

OOOO^X

its faith in wine and liberty. He harangued it propheti-
cally; Vienna replied with a joke. And since he had seen a
great many Jewish faces and since he heard people talk-
ing Czech every step he took instead of his beloved Ger-
man, he felt that he was being watched maliciously and
that a league was being organized against him and his
serious point of view. He turned his back on the city and
dreamt, like a new Coriolanus, of the day when he would
be able to reduce it to dust."

According to the same observer, "Vienna's tragedy in
this struggle is that it had its adversary in its own palaces
of government. Almost all the chancellors, ministers, and
prefects of police who lived in Vienna were non-Viennese,
Representatives of the provincials and peasants of
Austria, they fought to establish a new Vienna, struggling
to bring the city into a state of dependence on the country-
side, as if to prove that history had abandoned it as a
metropolis and made it into a modern Venice that had
outlived its day." Dollfuss then proceeded to reorganize
the Austria that the Heimwehr had saved for him and to
construct a Roman Catholic Fascism based on the Papal
Encyclical, Quadragessimo Anno, issued in 1931, in which
the Pope attacked Socialism and Communism, but urged
a new charter for labor.

March

DURING FEBRUARY Austria and France monopolized the
news. Civil war had become the order of the day in
Europe. During March the Far East again became the

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center of world attention, and the danger of war in that
quarter became so acute that both England and the
United States decided to build their navies up to full
treaty strength. On March 1, Henry Pu-yi, former
Manchu Emperor of China, ascended the throne of Man-
chukuo and assumed the title of Kang Teh, Almost ex-
actly two years had passed since he had become head of
the "Northeastern Administrative Committee" that
Japan later recognized as the official government of the
new state of Manchukuo. But the trade returns for these
two years revealed the "granary of Asia" and the Japa-
nese "life-line" of raw materials in a curious light. During
1933 Manchukuo imported wheat flour valued at over
thirty-one million yen, but its exports of wheat and wheat
flour during the first nine months of the year amounted
to only twenty-eight thousand yen. Two-thirds of Man-
chukuo's imports came from Japan while the United
States, which refused to recognize the new state, sold
more goods to it than all the nations of Europe. The
liberal, British-owned Japan Chronicle of Kobe com-
mented as follows in its commercial supplement:

"While Japan sold over three hundred and three mil-
lion yen of merchandise to Manchuria during 1933, her
imports thence were only one hundred and sixty-eight
millions, leaving a balance of trade so well on the right
side that Japan has no reason to regret the illusory char-
acter of the life-line/ Indeed, it may be held that this
justifies the term, because, as things go in this queer
world of ours, money is regarded as being far more im-
portant than the goods of which it is a means of facilitat-
ing the barter. And there is no respect in which the new

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1934

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relationship with Manchuria gives more satisfaction than
in this favorable balance of trade."

Englishmen in the mother country also looked askance
at Japan. On March 12 the British House of Commons
passed a bill authorizing the construction of a full treaty-
strength navy, and two days later the Anglo-Japanese
textile parley that had tried to limit Japan's exports of
cotton goods broke down. On March 27 President
Roosevelt followed England's example and signed the
Vinson Naval Bill, authorizing the construction of a navy
of full treaty strength by 1939. Nor did his fellow citizens
take exception to this move indeed, the President's
personal popularity had never stood higher. The follow-
ing letter from the correspondence columns of the New
York World-Telegram written by an anonymous C. W.
A. worker who attended Secretary Woodin's funeral in
the middle of May expressed the feelings of millions of
inarticulate Americans at that time:

"I sat in the church waiting to see him [Roosevelt],
He came in almost precisely at 4 P.M., the hour of the
beginning of services. He was preoccupied with his slight
difficulty in negotiating the steps down to his seat in front
of the pulpit. He looked neither to left nor to right as
he sat down.

"The preacher read his lines. I rose mechanically when
the congregation rose, and sat when the congregation sat.
I respected greatly Mr. Woodin as a superior man, but
I must confess my attention was riveted on that phe-
nomenal person who had made it possible for me to
laugh, to speak up to my friends in full confidence of my
potency as a provider, even to permit me to think of the
possibility of marriage.

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"The services were over. The congregation stood at
attention as Mr. Roosevelt walked slowly up the steps
and out the door. In reality I could see him no longer,
but it appeared to me I could see him through the panels,
walking back to his task, to work new miracles.

"To him I am merely a figure on a sheet of statistics,
but I shall always see him as one who, though a simple
American, is yet more than a man."

April

DEVELOPMENTS in April showed the Roosevelt Ad-
ministration opposing further Japanese expansion in Asia.
On April 17 a spokesman of the Japanese Foreign Office
announced that his country might have to "resort to
force" in maintaining the peace of Asia, and on April 22
the American ambassador told the Japanese that his
country would judge their actions, not their words. The
next day the British Foreign Office dispatched what Sir
John Simon called a "friendly communication" to Tokyo
reminding the Japanese that they had no special rights
in China, and on April 28 the Japanese Foreign Office as-
sured the American and British embassies in Tokyo that
Japan had "no wish to infringe on the independence,
interests, or prosperity of China." Sir John Simon there-
upon announced that he regarded the incident as closed,
but the American Department of State again warned
Japan not to override treaties in the Far East

Meanwhile trouble had been brewing in Spain. After
the conservative parties had won control of parliament

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1934

ooo*x>-

in November 1933, the Socialists, Anarchists, and Op-
position Communists formed a "Labor Alliance" that
organized a series of strikes throughout the country. The
movement gained momentum as the Spanish workers won
back by direct action the confidence they had lost after
two years of parliamentary rule. Writing in Europe, an
independent monthly published in Paris, Joaquin Maurin
gave this description of his native country at this
time :

"The poor peasants who had placed all their hopes
In the agrarian reform that the Cortes had voted were
quickly undeceived. The promised land seemed out of
reach. Hunger spread through the countryside. Almost
half a million peasants, chiefly in Castile and Andalusia,
found themselves without land or bread. When they
foraged in the woods for acorns to allay their hunger,
the Civil Guards chased them away with gun-fire."

On March 1 the Cabinet of Premier Lerroux of the
Radical Party a former opponent of the Monarchy
and supporter of the Republic fell when it tried to force
the Monarchist deputies to take an oath of loyalty to
the Republic. A week later a "state of alarm" was de-
clared a modified form of martial law and the Labor
Alliance threatened to call a general strike. Lerroux
therefore formed another government but continued to
take orders from Gil Robles, a young and ambitious
Catholic deputy who was trying to use the Republican
Parliament to make himself the Dollfuss of Spain. Senor
Maurin gave this 'description -of the Popular Action
Party, which Robles had founded as soon as the Re-
public came into existence :

"The extra-parliamentary activity of the Popular

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Action Party intensified enormously during the latter
half of 1932 and throughout 1933. Its activities were

Bagaria in Luz, Madrid
Gil Robles: "How well I could govern if there were no workers! "

confined chiefly to the center of the peninsula and never
produced great results in the outlying provinces. Gil
Robles was maintained by the landed proprietors, who
were threatened with expropriation by the agrarian re-

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1934

XXxX.

form, and in every village he could count on the uncon-
ditional support of the priest. In the cities the upper
middle class, the fallen nobility, the monasteries, and the
young Catholics, joined their ranks. Azana's Republican
Government, unlike the Popular Action, was hypnotized
by Parliament and abandoned the Spanish villages to the
tenacious, constant influence of counter-revolution."

When the reactionaries gained control of parliament in
1933, the roles became reversed. Gil Robles preserved
a democratic front by supporting Lerroux, but by the
time Lerroux fell in March the threat of a general strike
prevented Gil Robles from openly assuming power. On
April 23 he therefore organized a Fascist demonstration
in the Escorial to consider plans for a march on Madrid
but did not receive enough support to accomplish any-
thing. The Labor Alliance called a general strike in
Madrid, and on April 25 Lerroux again fell and was
replaced by a Radical nonentity named Ricardo Samper.
The Radical Party itself split in two, a left wing group
headed by the former Premier, Martinez Barrios, with-
drawing its support from the Goverment.

May

THE MONTH of May opened with a sudden burst of war-
fare in Arabia. Ibn Saud, who ruled over the larger
and poorer part of that barren peninsula, found that
the pickings in his own territories of Nejd and the Hejaz
had become too thin and therefore seized four Red Sea
ports from his southern neighbor and rival, the Imam

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Yahya of Yemen. Since 1925 Arabia had remained at
peace, and during those years Ibn Saud had established
himself as one of its greatest rulers. After Turkey's de-
feat in the War and the expulsion of the Caliph from
Constantinople, the world of Islam had lacked any per-
sonification of temporal authority except Ibn Saud, who
had come into possession of the holy cities of Mecca and
Medina.

During the War EL St. John Philby, a convert to
Islam and one of the ablest members of the British In-
telligence Service, kept Ibn Saud neutral while the gaudy
T. E. Lawrence was committing the British Government
to support King Feisal, who died in 1933 under circum-
stances that have never been explained. Feisal, a rival of
Ibn Saud's but a weak character with a much smaller
following, played ball alternately with the French and
British, carrying ill fortune wherever he went, Ibn Saud,
on the other hand, brought nearly all of Arabia under
his sway after the War and made use of St. John Philby
as his adviser on foreign policy. Philby also acted as agent
for an automobile company and wrote occasional dis-
patches for the London Times.

Ibn Saud had another adviser on foreign policy
Leopold Weiss, a Viennese Jew, also a convert to Islam,
who wrote articles for the Neue Ziircher Zeitung criticiz-
ing British policy in the Near East And because he, too,
had helped to arrange the treaty that England finally
signed with Ibn Saud in 1928, the British Foreign Office
never placed full confidence in its Arabian ally.

But the Kingdom of Yemen gave even more trouble.
After the War Italy had established a virtual protectorate
there, and more recently Soviet Russia had dispatched

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1934

o-ooo-o-

a trade representative who, although a Communist and
therefore forbidden to belong to any church, put in a
regular and conspicuous appearance at the largest mosque
in the land. Finally, the ruler of Yemen, which dominates
the entrance to the Red Sea and possesses large oil re-
serves, had held aloof from the ring of alliances that
England was forging in that part of the world.

At the same time that Italy and the Soviet Union were
digging themselves in on one side of the Red Sea, Japan
was establishing a base on the other by sending a trade
delegation to Abyssinia where it had captured almost the
entire textile market. According to Henry de Monfreid,
who wrote a series of articles for the Nouvelles Litter-
aires of Paris based on a visit to the Near East and
Africa in the spring of 1934, the Japanese were indus-
trializing Abyssinia and preparing to demand a sea port
inside the bottle neck of England's most important trade
route.

"England," commented M. de Monfreid, "cannot
allow Japan to have a maritime, commercial, and indus-
trial base in Africa and will do everything to prevent it,
but we know that, though John Bull loves to eat chest-
nuts, he hardly ever takes them out of the fire for
himself/'

M. Y. Ben-Gavriel, a correspondent of the Neue Tage-
Buck, wrote from Jerusalem at the time pointing out the
religious aims of the Wahabi sect of Mohammedans to
which Ibn Saud belonged: "The Wahabi regards the
orthodox Moslem with greater hostility than he does the
Christian or the Jew. He is fanatical in his religious
devotion, and in spite of all the materialistic interpreta-
tions of history, this is the fundamental conflict between

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Ibn Saud and the Imam of Yemen. It is all very well to
say that they are fighting for the control of Arabia and
to explain that England and Italy stand behind the scenes,
but Ibn Saud's fight remains first and last the fight of the
Wahabi conception of religion against the orthodoxy of
the Sayidi, the descendants of the prophet who live in
Yemen, and it must never be forgotten that in Arabia
religion gives rise to all kinds of movements that people
in Europe misinterpret.'*

The same commentator then went on to explain the
economic issues: "Of course the political results of this
struggle between two philosophies extend to the field of
world politics and oil. It is the basis of the policies of the
two rival powers in southern Arabia England operating
from Aden, Irak, andTransjordania, and Italy operating
from Eritrea. . . . Moreover, there is petroleum and a
great deal of it in Yemen, so much that it might ruin the
wells of Mosul unless it were exploited under British
control. For a power that has to defend India and that
regards the communication line from Malta, Haifa, the
Persian Gulf, and Singapore, as its most important im-
perial trade route, sufficient grounds existed for waging
an indirect war, a war on foreign territory fought by
foreign soldiers without any great expense to the British
taxpayers. 11

Ibn Saud's victory therefore suited the British Foreign
Office to a T. Not only had it defeated Italy's feeble
effort to develop a sphere of influence in the Red Sea
area ; it had destroyed a base of greater potential danger
that Russia was establishing. Finally, it fitted in per-
fectly with British oil policy, for if Ibn Saud had not
been kept busy fighting Yemen, his wild tribesmen might

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1934

o-oox-

have extended their occasional forays northward into
Mesopotamia.

Four days after England's potential enemies on the
eastern shore of the Red Sea had suffered a military de-
feat, the British House of Commons inflicted an economic

Glasgow Record, Scotland

John Bull: "Since you are so keen on spectacular effects, just take
a look at this."

defeat on Japan England's potential rival on the
western shore by imposing quotas on imports of Japa-
nese textiles. On May 11, however, Foreign Minister
Latham of Australia visited Tokyo as head of a good-
will mission to reassure Japan of his country's friendship.
Because Australia during 1933 exported goods valued at
two hundred and forty million yen to Japan and im-

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ported goods .valued at only fifty-one million yen, the
Japanese were growing fretful. "This unnatural and one-
sided situation must be corrected," commented the Hochi,
a Tokyo daily paper, and the more influential Asahi ex-
pressed still greater dissatisfaction: "To be frank, we
expect more from Australia than Australia expects from
us. In other words, there is more in Australia with which
Japan is dissatisfied than there is in Japan with which
Australia is dissatisfied. We have no mind to reopen the
question of tariffs between Japan and Australia. Neither
do we have any wish to discuss the 'White Australia'
doctrine. What we do wish to point out is the conditions
imposed on the Japanese seeking entry into that country.
It is clear that these conditions have been inspired by
prejudices against Japan and the Japanese."

Mr. Latham entered into no trade agreements with
Japan, nor did he take any steps to alter the White Aus-
tralia policy. He pointed out that Australia's population
had doubled in the past thirty years but did not mention
that it would decline during the next thirty because of the
falling birth rate. He tried to reassure his hosts that they
had nothing to fear from the British base at Singapore,
but he did not carry much conviction, for shortly after he
left the country the Hochi of Tokyo prophesied that the
Japanese delegates at the next naval conference would
demand the destruction or reduction of the Singapore
fortifications, which, it claimed, were "actually a viola-
tion of the spirit of the Washington Conference.' 1

It then added: "In the event that both demands are
rejected, Japan must insist on revision of the naval ratio,
because Japan cannot depend on her defenses under the
existing 5:5:3 ratio, owing to the existence of a threat

310

1934

ooooo-

from two directions the American base at Pearl Har-
bor and the British base at Singapore." Thus Japan
showed equal hostility both to England and the United
States, while Australia tried to pacify one of its best
customers and at the same time promote Anglo-Saxon
domination of the Pacific.

Having declared on April 28 that Japan's claim to
special rights in China was a closed incident, Sir John
Simon denied on May 18 the charge raised in the House
of Commons that England had no obligation to defend
Chinese territory. A week later the Foreign Office made
what looked like another friendly gesture toward the
United States by suggesting preliminary naval discussions
between the two countries prior to the next conference.
Norman Davis accepted the invitation and entered into
discussions with members of the Foreign Office. Accord-
ing to Arthur Sears Henning, special correspondent of
the Chicago Tribune, the British Government then gave
it out that Mr. Davis "had proposed an Anglo-American
combination against the Japanese demands for naval
parity. The effect was to incense the Japanese against the
United States. The truth was that the British Govern-
ment secretly proposed an anti- Japanese combine to Mr.
Davis, and what it made public was part of Mr. Davis's
reply." The result was that the discussions had to be
abandoned.

Shortly after Sir John Simon gave this evidence of con-
tinuing his pro-Japanese policy, he showed that he had
not abandoned Nazi Germany either. On May 30 he and
Foreign Minister Barthou of France disagreed sharply
at Geneva on the subject of German rearmament,
Barthoii opposing it and Simon urging it as the only means

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of bringing Germany back to the League. The fact was
that Hitler not only retained some of the good will that
Republican Germany had built up in England since the
War; he had even made a few converts. For instance,
one of Sir Oswald Mosley's more grotesque supporters,
W. E. D. Allen, a former Conservative Member of
Parliament, wrote a book entitled B. U. F., Oswald Mos-
ley and British Fascism, under the pseudonym of "James
Drennan," in which he celebrated the glories of Fascist
Italy and Nazi Germany in such passages as this : "The
powers of the blood, unbroken bodily forces, resume their
ancient lordship. The airman, type of the modern warrior
of the Faustian world, stalks with cynical laughter over
the ruins of the Reichstag. Out of the night of history,
old shadows are appearing. . . . The figure of the Leader
. . , comes out into the stark day in the grim serenity
of Mussolini, in the harsh force of Hitler. And behind
them stride the eternal condottierl the gallant, vivid
Balbo, the ruthless Goring."

Other British journalists offered more rational com-
ments. The Conservative and vaguely pacifistic Spectator
ran a series of sympathetic articles on the new Germany
by H. Powys Greenwood based on first-hand experiences
in the Third Reich. "It is ridiculous to regard the Nazis
as the hired lackeys of the capitalists," he concluded. "At
any moment a word from Hitler can break any reaction-
ary resistance." He then explained why he disagreed with
Wickham Steed, who had proclaimed that Hitler was
driving toward war :

"Personally, I cannot believe it. Even Hitler could
scarcely falsify this great movement of the people in the
interests of the privileged classes, and the days when war

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1934

0000^-

could be waged to divert attention from social unrest are
long past. But there is one possibility that should be
squarely faced. If the German people are hemmed in and
. surrounded by an iron ring, whether camouflaged as a
collective system or not, if their legitimate aspirations
are thwarted and their tentative moves toward reconcilia-
tion with former enemies rejected, if their attempts to get
into touch with other peoples the British people above
all and evoke sympathetic understanding of at least
some of their aims are met by a persistent barrage of un-
comprehending criticism, the chance of influencing the
still-young plant of National Socialism, will be thrown
away, and Germany may turn to the blatant gospel of
force in her despair."

June

A QUEER assortment of bankers, Fascists, and pacifists
continued to share Mr, Greenwood's views until June 14,
when Germany suddenly declared a moratorium on all
foreign debts. A day later the British Government
threatened to seize the money that British importers had
laid aside to pay for exports from Germany and at the
same moment coolly repudiated its entire war-debt pay-
ment to the United States. The American Government,
however, made no threat of any kind.

The German moratorium opened the eyes of the outer
world to the failure of the Nazi regime to improve the
condition of the German people. At the turn of the year
the Manchester Guardian had quoted "a highly com-

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petent statistician" who had estimated that the average
"real wage" in Germany had declined thirty-one per cent
below the 1 900 level, whereas in England the real wage
had fallen only one per cent in comparison with the same
period. The fact that the well-to-do classes had increased
their profits under Hitler received rather less publicity.
Yet Leopold Schwarzschild, editor of the Neue Tage-
Buchj which was published in Paris by a group of liberal
emigres, said that Germany was following the example of
Russia and lodging a foreign-trade monopoly in the hands
of the state.

"Anyone who has eyes to see and ears to hear perceives
that the German foreign-trade monopoly is growing. In
so far as imports are concerned, all agricultural products
are already subject to a state monopoly, and the same
thing is true of metals and textiles. This means that many
German imports come into the country only in amounts
fixed by the state, and that other imports will be subject
to the same restriction. A practice of this kind necessarily
extends from one form of goods to another. . . .

"Communism? Of course. Here, too, we see the
character that marks all of German economy : the total-
itarian regime, combined with autarky and the war in-
dustries, creates the precise opposite of what those
ungifted, stupid promoters, Thyssen and Company,
imagine. . . . And all this has not happened for the bene-
fit of the proletariat. It has happened for the benefit of
the capitalist. It was set in motion by the capitalist, and
its purpose was to establish the capitalist in a position
of leadership."

By June 15 Germany's position both at home and
abroad had become so desperate that Hitler flew to

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1934

o-o-xx>-

Venice to confer with his Italian prototype, Mussolini.
If any plans had been laid for a Fascist International or
even for a German-Italian alliance, here was the chance
for them to materialize. Neither dictator, however,
possessed either the freedom or the will to act. Italy's
geographic position placed her at the mercy of the
British fleet, which controlled all the strategic Mediter-
ranean ports, and her shattered finances lay at the mercy
of the French, from whom Mussolini had been forced to
borrow in recent years and from whom he might require
more help at any moment. As for Hitler, his position was
so weak that he left Venice promising Mussolini to re-
spect the independence of Austria in return for nothing
whatsoever.

During the course of our narrative we have had fre-
quent occasion to refer to the steady deterioration of
Germany. Italy, on the other hand, has scarcely figured
at all. During these years, Mussolini had been waiting for
precisely the situation that arose in the spring and early
summer of 1934, and if Fascism had really improved the
condition of the Italian people, he might have been able
to achieve his ambition of dominating ' southeastern
Europe.

Since 1927, however, wages in Italy had fallen steadily,
and in 1932 the Secretary of State for Corporations
wrote: "Between June 1927 and December 1928 the
wages of industrial workers had gone down by about
twenty per cent, and a further reduction of about ten per
cent was made in 1929; during 1930 there had been a
general reduction, varying for the different categories of
workers from eighteen to twenty-five per cent Many
other adjustments have been realized in 1931." Between

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January 1928 and February 1932 unemployment in-
creased from four hundred and thirty-nine thousand to
one million two hundred thousand, falling to one million
by the end of 1933. But the public debt continued to grow,
and shortly after the Hitler interview, Mussolini had to
order pay cuts ranging between five per cent and twelve
per cent for all workers to take effect within forty-eight
hours.

The significance of Hitler's trip to Venice was not lost
on the high Nazi officials. On June 17 Vice Chancellor
von Papen delivered an. address advocating the right to
criticize the Nazis and two days later received congratu-
lations from President von Hindenburg. By June 22 the
gold coverage of the currency had sunk to slightly more
than two per cent, and the country had to limit its pur-
chases from abroad to an amount equal to the daily in-
come receipts from foreign trade.

Meanwhile, Foreign Minister Barthou of France was
sweetening up his contacts with the Little Entente. Back
in April he had announced that Poland intended to renew
the French alliance, but he could not persuade the Poles
to sign the East European nonaggression pact originated
by Litvinov. In the latter half of June he therefore
shifted his attentions to Czechoslovakia, Rumania, and
Yugoslavia.

Before the Rumanian Parliament he proclaimed:
"Know that if one square centimeter of your territory is
touched, France will be at your side," and in Belgrade he
declared: "My country knows its duties and will fulfill
them. Yugoslavia is impeccable in the faithfulness it has
shown to our friendship and our alliance." The Temps
pronounced the state of Europe in the summer of 1934

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1934

oooo-o

as wholly satisfactory: "Franco-British collaboration has
withstood every fluctuation, and they were often sharp
ones. Franco-Italian friendship has been reaffirmed.
Never has France sacrificed her agreements and alliances
with the nations of Central and Eastern Europe for new
friendships. She has always reconciled fidelity to her
allies with the desire to spread confident collaboration
throughout all the powers in Europe."

Some of the comments in the British press, however,
indicated that Anglo-French collaboration was not all that
it might be. The London Times remarked: "Barthou is a
frank exponent of the old diplomacy. He admitted the
other day that he was not conversant with the ways of
Geneva, and he is now deliberately engaged in consolidat-
ing the existing alliances of France," The Spectator
spoke even more critically: "Amid much that is obscure
at Geneva it is clear that under France's leadership a
new (or, in reality, a very old) and dangerous European
policy is being elaborated. The pre-war alliance between
France and Tsarist Russia is being revived in the form of
an understanding between France and Soviet Russia,
with which the three Little Entente powers are to be
associated for the purpose of maintaining the status quo
in Europe. Its effect will be once more to give Germany
the impression of deliberate encirclement, even though
Great Britain, Italy, and Poland all hold aloof for differ-
ent reasons from the new grouping. France is shaping
her policy almost openly on the assumption that the Hit-
ler regime in Germany is tottering, and that an economic
crisis in the autumn may bring it down." The British
Foreign Office, however, did not believe that Hitler was
quite through and awaited developments.

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They came during the night of June 29 and the day of
June 30, but the outer world did not learn the complete
story at once. What it first heard was that former Chan-
cellor Kurt von Schleicher and his wife had been executed
for plotting with a foreign power against the Hitler
regime, and that Ernst Rohm, commander of the Storm
Troops, and two other Storm Troop leaders, Karl Ernst
and Edmund Heines, had also been shot. Vice Chancellor
von Papen and Prince August Wilhelm von Hohen-
zollern, fourth son of the ex-Kaiser and a loyal Nazi, had
been arrested, and many other outstanding leaders from
various camps put to death Gregor Strasser, former
Nazi trade-unionist, Dr. Erich Klausener, head of the
Catholic Action Society, and Herbert von Bose, adjutant
to von Papen, All were accused of plotting a revolt, and
the Storm Troop leaders were charged with immoral
practices as well. The day of the killings the victims were
estimated at sixty, the next day at two hundred, and
within a week foreign journalists were reporting that as
many as two thousand had lost their lives.

A foreign diplomat stationed in Berlin wrote one of
the most revealing accounts of what had happened in a
letter that the Neue Tage-Buch published. According to
him, no "plot" existed, but high officials were gossiping
openly of what would happen when the Hitler regime fell
of its own accord within a few months. Von Papen
favored the return of the Hohenzollerns, von Schleicher
wanted to collaborate with labor, especially with Gregor
Strasser, and had discussed the matter with the French
Ambassador, Frangois-Poncet Shortage of funds had
compelled the Storm Troops to be sent on "vacation" for
the month of July, and their leaders knew that the rank

318

,1934

<XKxX>*

and file had come to feel that Hitler had let them down
and had abandoned the socialistic planks of his platform.
But "nobody wanted to raise so much as a finger to hurry
Hitler's fall. There wasn't the shadow of a conspiracy.
There were only ideas as to how Germany could avoid
once again I the chaos that everybody foresaw and still
foresees in the course of the next nine months after the
so-called 'crack-up.' "

This observer, who claimed that his story tallied in
every respect with the reports that the other foreign
diplomats assembled, traced the events of June 29 and
30 to Goring, who is known to have telephoned to Hitler
in Westphalia from Berlin and told him that the Storm
Troops were planning to seize the Government offices the
next day. Hitler was already scheduled to appear at a
meeting of Storm Troop leaders in Munich on June 30,
but he set out on the twenty-ninth by airplane, accom-
panied by Goebbels, whom he had summoned to his side.
He arrested Rohm and Heines that night near Munich
and had them shot by Major Buch, a man with a long
record as a terrorist- At least twenty people heard Hitler
and his homosexual friend of the Munich days screaming
at each other and Rohm shouting, "There is only one
traitor here and that is you, you faker!"

Meanwhile, Goring in Berlin did nothing : he was wait-
ing to see whether Hitler or Rohm would shoot first and
was entirely prepared to back Rohm if Hitler's private
purge did not take effect. But as soon as the Fuhrer had
crushed the nonexistent plot in Munich, Goring released
his own gorillas and would have finished off von Papen
if General von Fritsch of the Reichswehr had not an-

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nounced that he was holding Goring personally respon-
sible for the life of the Vice Chancellor.

July

ON JULY 12 Hitler justified and explained the killings in
a speech to the Reichstag in the Kroll Opera House and
not only contradicted some of the stories that Goebbels
had issued previously but gave such a false report of the
death of Karl Ernst that a subsequent version had to be
released. The anonymous diplomat writing in the Neue
Tage-Buch described the occasion as follows :

"I have often seen governments in other countries in
hot water, but even in the most dangerous period under
the Tsars I never saw anything like this. When Hitler
went from the Reich Chancellor's office to the Kroll
Opera House to make his address, his entire path was
flanked right and left by a solid mass of heavily armed
police and Schutzstaffel troops. There were repeated
searches of the anterooms of the Kroll Opera House,
and battalions of detectives were on hand. Every entrance
to the auditorium was guarded by soldiers in steel helmets
armed with swords. No one present and the American,
English, French, and Russian Ambassadors made a point
of not attending could fail to recognize that a period of
wild, hostile fear had begun among the men who wield
power."

The events of June 30 in Germany produced immediate
repercussions abroad. On July 8 Foreign Minister
Barthou of France arrived in England, where he spent

320

Sennep in Candid^ Paris

The House Painter.

two days conferring with Foreign Secretary Simon and
other members of the Cabinet. The Liberal and Labor
press warned against a renewal of the pre-war Entente
Cordiale, but when Barthou departed, "Pertinax," his
semiofficial spokesman, announced in the Echo de Paris
that he "got what he went to London to seek and a little

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-^<>-^<><><><><><><><>^><><*<X>-O

bit more." This meant that England would give tacit
support to the so-called "eastern Locarno" originated
by Litvinov to keep the peace and the status quo in
Eastern Europe. And on July 13 Italy also approved of
the Franco-Russian scheme, reversing its policy of a few

Kladd&radatsch 3 Berlin
Chancellor Dollfuss on his Governmental Seat.

months before.. Finally, on July 19 Acting Prime Minister
Stanley Baldwin told the House of Commons that Eng-
land would build four hundred and sixty new fighting
planes by 1939, owing to the "many symptoms of unrest
in Europe and elsewhere."

Meanwhile, the German Nazis, driven to despair by
the virtual suppression of their Storm Troops, turned

322

1934

"C-0000*

their attention to Austria. On July 3 they pledged their
aid to their Austrian comrades, who proceeded to throw
more bombs than ever. On the same day that Baldwin an*
nounced England's new aviation building programme,
Alfred Frauenfeld, one of the exiled Austrian Nazis,
warned Chancellor Dollfuss over a Munich radio station
that civil war would result if any of a group of seven
Nazis held prisoner by the Government were executed,
Dollfuss retaliated exactly as he had during February
and instead of taking measures against the Nazis executed
Josef Gerl, a Czechoslovak Socialist worker.

The next day the Nazis swung into action. Four truck-
loads of their supporters dressed in the uniforms of the
regular army seized the Chancellor's office at one o'clock
in the afternoon and imprisoned all its occupants, includ-
ing Chancellor Dollfuss and Major Fey. Dollfuss made
the mistake of reaching for the handle of a secret door
and was shot in the back from a distance of one foot. His
captors refused to admit medical aid and he died within
three hours from loss of blood.

Meanwhile, another group of fourteen armed Nazis
in civilian clothes seized the studio of the Austrian Broad-
casting Company, killing a policeman and a chauffeur and
wounding a member of the Heimwehr. Immediately after
the announcer had said, "It is now one minute and thirty
seconds past one," he had a revolver stuck in his ribs
and was told to announce that the Dollfuss Government
had resigned and that Anton Rintelen, Ambassador to
Italy, had been appointed Chancellor by the President
At this point the programme came to a sudden halt, and
the Nazis devoted themselves to a three-hour battle with
the police ia which two men were killed.

323

Contraband,

Neletls$alter y Zurich

Anton Rintelen had been cast for the same part von
Papen played in Germany, and Fey was preparing to
double for Goring. Their plans, however, fell through,
for Rintelen was arrested by the Austrian police an hour
and a half after his accession to the Chancellorship had
been announced.

The Vienna correspondent of the Manchester Guard-
ian wrote four long dispatches, three of which indicated
that Fey had been aiding the Nazis. The fourth, written
from Styria, where fighting continued for several days
after the attempted coup d'etat in Vienna, implicated the
German steel magnate, Fritz Thyssen, as well Here is
what this reporter had to say about the forces at work in
that part of Austria :

"It had been an open secret for some time that the Al-
pine Montangesellschaft was the focus of the Nazi
movement in Styria and partly so in Carinthia. This, the
most important coal, iron, and steel company of the
Austrian Federal State, has been owned for the past ten
years by the principal German iron and steel combine.
The directors, high officials, clerks, and engineers of the
company were National Socialists. Miners who were
members of the Socialist Party had been gradually dis-
charged and their places taken by Nazis, and the same
thing happened to the furnace and rolling-mill men and
to other workers in the various plants of the company.

"The company owned the bulk of the Austrian coal and
iron ore deposits. The Erzberg, only thirty miles away
from Leoben [a Styrian town] is the greatest single iron-
ore deposit in the German-speaking countries. This moun-
tain, over four thousand five hundred feet high, is one
solid mass of fine-quality iron ore, and has been mined

325

WORLD DIARY

^><^<><><>->< ; -<><x>-0^><><><><><>

ever since Roman days. One of Germany's principal de-
fense problems is her lack of iron ore. Even before the
War she produced only fifty per cent of her own require-
ments of pig iron; the other half had to be imported from
Sweden, Algeria, Spain, and so on. After the War she
lost the -important Lorraine iron mines, which had sup-
plied almost eighty per cent of the iron ore extracted in
Germany. The loss of the Lorraine mines greatly in-
creased the importance of the Erzberg mines to Ger-
many. In 1924 the Vereinigte Stahlwerke, the Diisseldorf
combine, obtained the controlling interests."

On July 30, the day after the Roman Catholic Mon-
archist, Kurt Schuschnigg, had formed a new Cabinet
with Major Fey still on the job as Special Commissioner
for Security, Stanley Baldwin made what was instantly
hailed as an historic definition of British policy before the
House of Commons, Speaking on the twentieth anniver-
sary of the World War, he said: "Since the day of the
air, the old frontiers are gone, and when you think of the
defense of England, you no longer think of the white
cliffs of Dover, but you think of the Rhine. That is where
to-day our frontier lies."

Official France greeted this declaration with delight,
for domestic conditions had taken a serious turn on July
IS, when the Socialist and Communist parties agreed to
form a united front to oppose Fascism. This represented
an unheard-of concession on both sides. The German
Communists had voted with the Nazis to oust the Social
Democratic government of Prussia in August 1931, and
in November 1932 had conducted a street-car strike with
the Nazis. Never before, however, had Communist
leaders in any country consented to deal with the Socialist

326

1934

<XxO

leaders; they had always insisted on the "united front
from below." As the Communist Reichstag deputy, Willy
Miinzenburg, explained in the December 1, 1931, issue
of Rote Aufbau, "there is not and cannot be a united

Kladderadatschy Berlin
HOLLAND IN DISTRESS

Baldwin: "The frontiers of England are on the Rhine because
I am big and you are small."

front with any group of leaders in the Social Democracy.
The anti-Fascist united front can and will come into exist-
ence only without and against the Social Democratic
leadership."

When the French Communist leaders finally did pro-

327

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<><><>-<><><><><^x><><><><><><>->

pose a united front to the French Socialist leaders, a
majority of the latter, including Leon Blum, head of the
Socialist Party in France, turned them down. The rank-
and-file Socialists, however, overrode their leaders in a
popular vote. The Communists then passed this resolu-
tion: "The Fascists fight against bourgeois democracy.
The Communists, on the other hand, fight against all
forms of bourgeois dictatorship, even if this dictator-
ship takes the form of bourgeois democracy. But the
Communists are never disinterested in the form that the
political regime of the bourgeoisie assumes. They have
defended and will defend all democratic liberties." There
seemed to be some discrepancy between this statement
and the following declaration, which appeared in the
official Communist International in 1931 : "Fascism is not
a new system of government that differs from the system
of the bourgeois dictatorship. Anyone who thinks so is a
liberal."

After the united front had been formed the Commu-
nists ridiculed Leon Blum for expressing the fear that the
French proletariat had embarked on a dangerous adven-
ture; they did not, however, readmit to their ranks
Jacques Doriot, one of their own deputies with a long
and honorable record as a militant journalist who had
been expelled from the party for advocating a united
front with the Socialists in February.

But the Communists were not the only people who had
doubled on their tracks during July; the British Foreign
Office had also reversed its post-war policy and supported
France against Germany for a change. Karl Radek, semi-
official spokesman for the Soviet Union, interpreted this
move as follows : "England commits itself verbally to the

328

1934

<X>O<x>-

defense of France, but it undertakes to defend only
French frontiers; in other words, the European territory
of France. Thus, the international position of France
suffers, for a France that has lost its allies and its world
position will be reduced to the rank of a second-class
power with a population of forty million. It will also find
itself face to face with a Germany populated by sixty-
five million people and supported by one hundred million
citizens of other states [Radek had previously argued
that England would not oppose Germany in eastern
Europe and the Balkans]. England offers its protection
to French territory in Europe only because it feels that
Germany will alter the Franco-German frontier, extend
its sphere of influence to Belgium, and finally threaten
the British Isles. England is ready to defend France
against this danger but only on condition that it is not
committed to defend the international position of France
and its allies.

"English imperialism believes that, in spite of its de-
cline during the post-war period, it has just completed a
superb maneuver and that it is now possible for it to play
the same role that the United States of America assumed
during the World War and make a lot of money by
neutrality, later appearing to divide the spoils and de-
mand a large share of the loot for itself, quia lea
britannicus sum"

August

AUGUST began with still another crisis in Germany. Hin-
denburg, whose health had been failing for some weeks,

329

WORLD DIARY

,< > < > <><><>< > <>-0_<><>< > K><><~><~^

died on the second of the month, and Hitler assumed the
functions but not the title of the. Reich President. He
ordered a plebiscite on the nineteenth to confirm this
action and to give him the new title of Reichsfiihrer. He
also appointed Dr. Schacht Minister of Economics to re-
place Kurt Schmitt, who had broken down completely
after one year in office. Three days before the voting Dr.
Goebbels made public Hindenburg's will urging that the
destiny of Germany be placed entirely in the hands of
"my chancellor," Adolf Hitler.

The emigre press denounced the will as a forgery,
pointing out among other things that Hindenburg, a life-
long supporter of the Hohenzollerns, would never have
used the words, "my chancellor," which are the unique
prerogative of royalty. But the appointment of Dr.
Schacht as Minister of Economics caused even greater
concern, for Hitler gave him power to alter any law he
chose without reference to what other laws might be on
the books. Joachim Haniel, writing in the Neue Tage-
Buch of Paris, drew this comparison between Dr.
Schacht and his predecessor :

"Schmitt had the confidence of the small industrialist
and especially of the medium industrialist Schacht, on the
other hand, is trusted only by the industrial barons. This
fact is likely to have fatal results on the country's eco-
nomic development, for industries of moderate size have
always played a much more important part in Germany's
economic structure and they do especially at the present
moment, when Germany's problem might be described as
one of liquidating its supplies of raw materials. For up
to this summer Schacht's policy consisted of artificially
diminishing the Reichsbank's supply of bills of exchange.

330

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WORLD DIARY

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He used some of these bills of exchange to pay back
credits that no one demanded of him. Others he devoted
to purchasing extra imports, in spite of the measures that
were being taken to reduce Germany's purchases abroad.
The result was that Germany became overstocked with
raw materials while the Reichsbank possessed a bare
minimum of bills of exchange, so few, indeed, that if the
supply had sunk any further business would have stopped
altogether."

The same critic referred to Schacht's "dishonorable,
obscure maneuvers with bills of exchange" and called
him a "relentless, wild, hasty man of impulse" and "an
adventurer even a psychopathic case." Schacht, how-
ever, had a method in his madness. Because he laid the
blame for all Germany's difficulties on reparations, or
"political debts," as he called them, he was deliberately
making it impossible for Germany to meet any foreign
obligations whatsoever. Speaking before an international
conference of agrarian economists on August 3 1 , he de-
clared: "Those debts were responsible for the German
crisis of 1931, and for the surrender of sterling's gold
parity. They are responsible for the accelerated aggrava-
tion of the world economic crisis." He then said that the
world faced two alternatives: "Either it will remain
passive in the matter of debts, thereby writing off Ger-
many as a buyer, but also as a debtor, thus forcing world
economy into a state of retrogression, or It must make up
its mind to reverse its credit policies by cooperating in the
solution of the German transfer problem and in a general
liberation of world economy from its present fetters. In
any event," he concluded, "there is no other course left

332

1934

-o-oooo-

but to grant Germany a complete moratorium for a
period of years for her economic recovery."

While Dr. Schacht was trying to ease the debt burden
of German industry by promoting "a complete morato-
rium," Roosevelt was trying to do the same thing for
American industry by declaring on August 9 that the
Government would seize all accumulated stocks of silver
bullion within ninety days, paying for it at the rate of
50.01 c an ounce. For over a year the Committee for the
Nation, headed by James H. Rand, Jr., and including
among its membership several other prominent industrial-
ists, had been urging inflation and the remonetization of
silver. Senator Thomas of Oklahoma, one of the Com-
mittee's most active supporters, instantly praised Roose-
velt's move as "the most important step yet taken in the
revision of our financial system," and declared that it
broke "the stranglehold of the world gold bloc."

Within a fortnight a far more powerful advocate of
inflation on a world-wide scale also commended the Presi-
dent's silver policy. Sir Henri Deterding, chairman of the
board of the Royal Dutch-Shell Oil Company, lunched
at the White House together with James A. Moffett,
Federal Housing Administrator and former vice presi-
dent of the Standard Oil Company of New Jersey. After-
ward, Deterding and Roosevelt engaged in a long private
conversation. The President's cordial treatment of Eng-
land's foremost industrialist and of a prominent Ameri-
can industrialist who had gone into Government service
contrasted sharply with the cool reception that Montagu
Norman, the embodiment of British high finance, had
received just a year before. It was at the end of August
1933 that George Harrison of the New York Federal

333

WORLD DIARY

<><><^><>^><^<>^CK><M<><><><><><>

Reserve Bank and Mr. Norman had called on Mr. Roose-
velt at Hyde Park to discuss stabilization and had re-
ceived nothing more than a cup of tea and some polite
conversation. No official statement followed the Roose-
velt-Deterding interview beyond the oil magnate's general
endorsement of the Administration's monetary policy.

A month later, however, when Deterding returned to
London he commented more specifically. "I don't deny
that Mr. Roosevelt has a tremendous task," he said,
"but he is on the right track." He praised especially
Roosevelt's attitude toward the banking fraternity.
a B ankers must get back to the idea that they exist to
serve industry, not to boss it. ... The Americans now
understand this, and their banking will be all the better
for the divorce between banking and the ownership of
American industry."

Deterding also expressed the opinion that capitalism
would survive the depression unscathed, except for its
banking system. "It won't be gready changed," he said,
"unless the banking system is altered and freed from
banking control. That is the biggest change that I can
foresee. The bankers ought to borrow from Fascism the
idea of being simply a guild to serve industry and trade,
and get rid of the idea that they somehow come first and
labor and industry merely second and third."

The fact that Deterding had contributed to Hitler's
campaign funds accounted for his high opinion of Fascism
as an aid to the industrialist And his approval of Roose-
velt's attacks on the money changers provided still further
evidence that the New Deal merely marked the rise of
the industrial magnate and the fall of the financial
magnate.

334

1934

0-0<X>0-

At the end of July Stanley Baldwin had made it clear
where England stood in relation to Germany by declar-
ing that his country's frontier lay on the banks of the
Rhine. By the middle of August, however, England's
attitude in the Far East became as mysterious as it had
ever been in Europe. Whereas the conference of
admirals at Singapore in January had suggested that
England was preparing to oppose Japan, the visit during
August of a British trade delegation to Manchukuo, led
and organized by Baron F. V. W. Barnby, a director
of the powerful Lloyd's Bank, looked like the first step
toward a renewal of the Anglo-Japanese alliance. The
Daily Telegraph at once followed through with a special
Manchukuo supplement and the Times featured a series
of sympathetic articles on Japan by its Tokyo correspond-
ent. On August 19 Baron Barnby told a correspondent
of the Osaka Mainichi, "It is our desire to connect Great
Britain, Japan, and Manchukuo with the chains of friend-
ship. ... I cannot discuss any political question, for our
mission is purely industrial in its nature, but my personal
feeling is that no gain, will be made by Great Britain
or any other power by delaying the recognition of
Manchukuo."

Within a week the Japanese Foreign Office was deny-
ing that a secret Anglo- Japanese agreement had been con-
cluded, but the Tokyo correspondent of the Morning
Post reported that a treaty of some kind was under dis-
cussion and that it "would turn out to be an ordinary pact
of nonaggression, details of which were still under dis-
cussion." Furthermore, Sir Frederick Whyte, former
political adviser to the Chinese National Government
and peripatetic ambassador of British "good will" to the

335

WORLD DIARY

<><><>^><>K><><>K><><><^<><><><><>

United States, wrote an article for the June Issue of
Pacific A$airs y the organ of the Institute of Pacific Rela-
tions, disclosing that the British National Government
was profoundly disturbed by America's plan to grant the
Philippines their independence. What it feared was that
the removal of American rule would reduce the islands to
a condition similar to that of North China prior to
Japan's occupation of that area and that Japan would
repeat in the Philippines its Manchurian coup de mam of
1931. Sir Frederick then prophesied this state of

affairs :

"England will watch, Holland will grow nervous, Aus-
tralia will rearm, and New Zealand will use all her in-
fluence to persuade Great Britain to take more of an
active share in Pacific affairs. At some point the British
Government must then decide how to meet the situation.
Will England be tempted to intervene in order to protect
her Asiatic interests? Will she fight Japan or come to
terms in a new Anglo-Japanese alliance ? England wants
none of these. But the renewal of the alliance might
appear to a Conservative Government to be the least of
the many evils involved. If England were driven to re-
new the alliance as an assurance of her Eastern interests,
the consequences would be far-reaching. Anglo-American
relations would undoubtedly suffer, and the Dominions of
the British Commonwealth might feel that their interests
demanded closer association with the United States than
with England. A new alliance might seem to offer security
to the British Empire in the East for a time, but the
price would be high and the security weak. Japan would
know that England had made her choice from weakness
and not from strength. Her people would feel contempt

336 *

1934

o-o-ooo*

for America and England alike, and the whole East
would draw the conclusion that the Western powers were
liquidating their responsibilities in Asia, and that the
West had become effete."

The article concluded by urging Anglo-American co-
operation in the Far East and prophesying that "if
America believes she is not concerned there will be as
rude an awakening as in 1917." Sir Frederick could
hardly have written a more direct appeal to the United
States to pull England's chestnuts out of the Far Eastern
fire.

September

ON SEPTEMBER 1 the most dangerous spot in Europe sud-
denly received wide-spread attention when Geoffrey G.
Knox, chairman of the Saar Governing Commission, issued
a report under the auspices of the League of Nations
stating that sixteen thousand inhabitants of the Saar Val-
ley were receiving military training at German expense
in preparation for the plebiscite of January, 1935, when
that district of eight hundred thousand inhabitants was
to vote whether it wished to return to Germany, remain
under the jurisdiction of the League, or join France. As
Harold Laski wrote in the Daily Herald of London,
"until the advent of Hitler to power there would have
been no doubt at all about the result. The inhabitants of
the Saar were profoundly German in spirit. No propa-
ganda to win them from Germany produced the slightest
effect on their minds. Had a vote been taken in 1932 there

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<><><>^><^><><><><><^<><^<^<^<>^>

would have been an overwhelming majority to favor a
return to Germany."

But u the free circulation of the truth about the new
Germany" had changed their minds. Nazi foreign policy
faced its supreme test in the Saar because "no defeat to
Hitler's prestige could be more shattering than a declara-
tion by the few free Germans left in the world that they
do not desire his leadership. Somehow or other he has got
to regain the Saar for Germany. So the whole technique
of Hitlerite propaganda has been in full blast to make
the plebiscite a victory for his ideas. But that technique
knows only one method of persuasion the technique of
the bully. 11

The group in the Saar that Mr. Laski singled out for
special praise was "the Socialist front, stoutly led by Max
Braun," because it had been "brave enough to say frankly
that in a choice between union with Hitlerite Germany
and the present regime no reasonable man could hesitate
to choose the latter." But Jean Galtier-Boissiere, inde-
pendent Parisian editor of the Crapouillot, did not regard
Max Braun as a knight in shining armor, nor did he pre-
sent the Germans as the only villains in the piece. He de-
voted an entire double-sized issue of his magazine to a
first-hand report entitled "The Truth about the Saar"
and discovered a "conspiracy" on the part of the French
industrialists to keep their hands on the valuable coal de-
posits of the Saar even at the risk of war with Germany.
As for Max Braun, he was not a native of Saarlander;
he had settled in the district in 1923 and therefore could
not even vote in the plebiscite. "It is not the least piquant
element in this plot," remarked the Crapouillot, "to find

338

1934

0-000<>-

distinguished representatives of French capitalism sub-
sidizing Marxist parties in the Saar."

What was the "plot" and who were the "distinguished
representatives of French capitalism"? According to the
Crapouillot, "it is no exaggeration to use the word 'con*
spiracy 1 to describe the activities of very diverse people
who are grouped together to defend their own profits
and who, caring nothing for the general interests of
France, have thought only of torpedoing every effort to
conciliate the French and German Governments on the
subject of the Saar, to mislead French opinion by censored
reports and false information, and, finally, to encourage
agitation that could produce only the most disastrous con-
sequences. At the head of these conspirators we find one
of the chief magnates of the Comite des Forges, the chief
rival of Schneider and de Wendel, M. Theodore Laurent
The scandalous role that he played with the aid of M.
Alexandra Millerand in securing certain property in Lor-
raine is already known. Vice President of the Comite des
Forges of the Saar, Theodore, as his friends and enemies
in big industry call him, has properties at Dillingen in the
Societe Redange-Dilling and at Saint-Ingbert in the
'Hadir,' as it is called for short. He is a man with an iron
will and a prodigious capacity for work, and he is the
leader of the conspiracy. His chief lieutenant is M.
Arthur Bommelaer, a director of the Societe Alsacienne
de Constructions Mecaniques, which owns an important
factory at Belfort and employs certain electoral agents
of M. Andre Tardieu's who cannot refuse his friend,
Bommelaer, anything."

Back in November 1929 Tardieu wrecked Briand's
plans for arranging a premature return of the Saar to

339

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^><><><><M<><><><X><><*<><><><><>

Germany, and since that time Laurent had been whipping
up pro-French sentiment in the Saar. "But does not Theo-
dore Laurent," inquired the Crapouillot, "who has tried
to infuse the spirit of France in the Saar and to make a
new Alsace-Lorraine, fear the terrible consequences of
his own private policy, which may degenerate tomorrow
into bloody conflict? Not at all. Isn't M. Theodore
Laurent himself a cannon merchant?"

The same organ had almost as little use for Mr. Knox
as it had for M. Laurent. During the January 1934 ses-
sion of the League Mr. Knox described "the Draconian
regime that he had instituted in the Saar" and, "Sir John
Simon did not conceal his disapproval." But the Crap-
ouillot interpreted the whole episode as a British hoax.
"Is it possible that Mr. Knox, a career diplomat and one
of the best in the Foreign Office, should have com-
promised his career and not acted in complete accord with
the British Government, and is it possible that an English
diplomat should be really disavowed by his Government?
That would be something unprecedented in British diplo-
macy. One can well ask, as some suspicious Frenchmen do,
whether the truth is not something quite different. In the
Saar England has put her finger on an essentially tender
spot in Franco-German relations. It is one of the easiest
places to envenom these relations, and has that not always
been England's Continental policy?"

Mr. Knox's request that the League allow him to
raise more police to curb the Hitlerites confirmed these
suspicions to some extent, although the situation was
hardly of his own making. But the Crapouillot's charges
against M. Laurent rested on firmer ground. On Septem-
ber 4 the French Government announced that even in the

340

1934

<XXX>^~

event of a pro-German plebiscite it would return the Saar
to Germany only in exchange for payment in gold a
commodity that the Germans notoriously lacked thus re-
vealing itself as the unmistakable ally of French heavy
industry.

While the industrial magnates of France and Germany
were preparing for bloodshed in the Saar, the industrial
magnates of America and England were getting the real
thing in the Chaco. On September 3 a Washington dis-
patch to the New York Times not only announced that
"concessions of the Standard Oil Company (N. J.) are
imperiled by the Paraguayan advance into the Chaco" ; it
dropped the broadest hint that any conservative organ
had yet given of the real issues at stake. After inserting
a parenthetical denial by the Standard Oil Company of
Bolivia, a subsidiary of the New Jersey Company, that
any of its concessions lay in the disputed territory, the
dispatch remarked: "The Standard Oil Company holds
its concessions through a lease from Bolivia. According
to information received from the Department of State,
one reason for the failure of peace gestures has been the
determination of Paraguay to obtain possession of the
potentially rich oil fields. If this were to occur, it is felt,
serious international complications could not be avoided.
British companies, including Backus, also have leases in
this territory. Both Britain and the United States have
placed an embargo on arms shipments to the belligerents
in the hope of forcing them to conclude a peace. Bolivia
claims that, despite this embargo, Paraguay is having no
difficulty in obtaining arms from other sources, whereas
Bolivia is crippled by the inability to get such supplies."

When the Argentine Government closed the Standard

341

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Oil Company's wireless station at Tartagal, near the
Bolivian frontier, on the charge of * 'suspicious activities"
in the Chaco war, the "other sources" referred to above
ceased to be a mystery. For not only does the Parana
River run from Paraguay through Argentina to the sea ;
British interests dominate both countries, whereas Amer-
ican interests dominate landlocked Bolivia. If we are to
believe the charges of an Argentine Socialist deputy who
declared that the Standard Oil's wireless station at Tar-
tagal had been installed "not only for the company's pri-
vate use, but for general international communications,
especially for intervention in the Chaco district," we can
hardly escape the conclusion that American and British
interests were at work behind the scenes. In any case, the
Paraguayans suffered so little from the arms embargo
that on September 18 they began a new offensive their
sixth on Fort Ballivian, one of the key Bolivian de-
fenses. Since the middle of December 1933, when a brief
armistice during the Pan-American Conference inter-
rupted the hostilities, the Paraguayans had occupied twen-
ty-seven thousand square miles of territory in the Chaco.
They owed their victories in part to superior equipment
and in part to superior morale, most of their troops
having been small property owners of Spanish descent,
whereas the larger Bolivian army was chiefly composed
of destitute Indians*

The same day that Paraguay announced its new offen-
sive in the Chaco, Soviet Russia was formally inducted
as a member of the League of Nations with a permanent
seat on the all-powerful Council. Not a few fireworks
preceded and followed this momentous event. The Swiss,
Dutch, and Portuguese delegates voted against admitting

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1934

<x><>oo-<

Russia, and several other nations abstained. Also, in or-
der to prevent the U. S. S. R. from occupying the presi-
dency of the League at the next session, as it would have
done automatically since the position rotates in alpha-
betical order, Turkey was given China's temporary seat
on the League Council,

Tories all over the world attacked the admission of
the Communists to polite society while Trotzki's ultra-
left supporters attacked the Communists for turning re-
spectable. Only the liberals the favorite butts of Soviet
ridicule expressed delight. Robert Dell, writing from
Geneva for the New Statesman and Nation, hinted at
skullduggery behind the scenes: "The importance of the
adhesion of Russia can be measured by the desperate
efforts to prevent it that have been made up to the elev-
enth hour by the motley forces of reaction efforts of
which we have had ample evidence in Geneva. The vic-
tory has been won against a coalition of Nazi Germany
and militarist Japan, Catholic Portugal (with the Vati-
can in the background) and Calvinist Switzerland, Rus-
sian Fascists and the Royal-Dutch."

Although France had taken the initiative in getting
Russia into the League, even the organs of moderate
opinion expressed misgivings that Paris-Midi summed up
in a single sentence: "Behind the admission of Russia a
very grave diplomatic game has been played on the in-
ternational chess board." The semi-official Temps con-
soled itself with this reflection, "It is sufficient to note
the bitterness of the comment in the German press to
see that the League of Nations and peace itself have been
consolidated by the entry of Russia."

Comments in the Soviet press indicated that Russia not

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only perceived the imminence of war but had few illu-
sions about the League. "The capitalist world is now
divided into two groups," said Izvestia, organ of the
Russian Government, "the powers that are not anxious
for war at the present juncture because a war would en-
danger their winnings from the World War and the
powers that are dissatisfied with the present state of
affairs and are ready to take a chance to find a way out.
The powers interested in the preservation of peace un-
derstand the futility of their struggle for peace without
the collaboration of the Soviet Union. A League of Na-
tions functioning without the participation of the nation
that is the chief advocate of peace can evoke no confi-
dence. The stronger the Soviet Union, and the more
staunchly its borders and its independence are guarded
by the Red Army, the greater will be the fear of im-
perialist adventurers to carry out an aggressive policy."
Such protestations, however, carried little weight with
Trotzki's group of left-opposition Communists, which
had issued a call for a Fourth International earlier in
the year. They argued that the Comintern the central
organization that coordinates and controls the Commu-
nist Parties of each individual nation had left the world
revolution in the lurch. "Under Stalinism," said the
Militant, a New York Trotzkiite organ, "the Comintern
has degenerated into a border patrol of the Soviet Union.
It is not an instrument for revolution, and its fight
against war degenerates into pacifism. The pacifist illu-
sions that the Stalinists are sowing in the ranks of the
working class, both through the Comintern and the For-
eign Office of the Soviet Union, can be compared to the
role of the Second International on the eve of the World

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War. Now it is the Stalinist Third International that
competes with the Second International for these reform-
ist honors on the eve of a new world war."

But the week after Russia joined the League, Pravda,
the official organ of the Russian Communist Party, vied
with the Militant itself in advocating world revolution :
"Lenin led the proletariat to Socialist revolutionary vic-
tory in one sixth of the world, established the Commu-
nist International, and headed the struggle during the first
period of wars and revolution. In the second period of
wars and revolution, Lenin's Communist International
under Comrade Stalin's leadership will lead the prole-
tariat of all countries to Socialist revolution throughout
the world."

Since 1928, the year when the first Five- Year Plan
went into effect and Russia began building socialism in
one country, the Communist International had not met,
and although it had been summoned to gather during the
summer of 1934, the meeting had been postponed. Not
until the end of September did instructions go out from
Moscow to the Communist Parties in other countries to
prepare for an international convention during 193S, and
even then the announcement did not appear in Izvestia,
the government organ, but only in Pravda, the organ of
the party.

As soon as Russia joined the League, her relations
with Japan took a turn for the better. On September 24
Japanese newspapers announced that negotiations with
the Soviet Union for the sale of the Chinese Eastern
Railway in Manchukuo would be resumed, and one
Japanese official even went so far as to prophesy settle-
ment of that dispute by the middle of October. This reas-

346

1934

<XX><XX

suring statement corresponded to General Araki's sug-
gestion of a Far Eastern Peace Conference just a year

Sapajou in the North Chwa Dally News, Shanghai
Another Delayed FaH.

before, when the United States was preparing the ground
for Soviet recognition.

Our August narrative concluded with a reference to

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England's equivocal foreign policy, especially in relation
to Germany and Japan, Our September narrative brings
our story of the past five years to an end by pointing out
the equally equivocal domestic policy of the United States
under Franklin Roosevelt. On September 1 Lewis Doug-
las resigned as director of the budget. On September 30,
two hours before midnight, the President addressed the
American people over the radio. These two events and
the intervening developments provide a picture in min-
iature of the New Deal in action. The resignation of
Douglas, following as it did the departures of Professor
Sprague and James P. Warburg, removed the last ad-
vocate of orthodox finance from the inner circles of the
Administration. It provided the clearest possible proof
that the President's attacks on the "money lenders" had
not ceased and gave the clearest possible warning that
further inflation in some form or other was in store. The
so-called "Left Wing" of the Administration regarded
his departure as a victory,

On September 3 the United Textile Workers an
American Federation of Labor affiliate that included
virtually all the textile unions in the country called a
nation-wide strike demanding union recognition, higher
wages, shorter hours, and abolition of the "stretch-out."
During the next three weeks National Guardsmen and
deputies killed fourteen workers, and the State of Georgia
threw men and women strikers into barbed-wire concen-
tration camps. The day before Newport witnessed the
most lavish international yacht race in history President
Roosevelt attended on board Vincent Astor's yacht
Governor Green of Rhode Island asked for Federal
troops to crush an alleged uprising of Communists, al

348

1934

C0-<K><>-

though there were not enough Communists in the state
even to distribute copies of their official paper, the Daily
Worker. Not only did the Administration of the "for-
gotten man" make no move to protect the elementary
rights of half a million strikers ; General Hugh Johnson
informed a New York audience on the evening of Sep-
tember 22 that his "heart bled for poor George Sloan,"
president of the Cotton Textile Institute, who had mis-
represented the strike from the start. Finally, the strike
leadership agreed to accept the arbitration of a board
nominated by the President, which promised merely to
consider the workers' grievances.

As soon as the settlement had been announced, Merle
Colby, a young novelist and Harvard graduate, took
down this statement by a Rhode Island mill worker, and
the New Masses printed it: "I am a textile worker and
have worked since I was fourteen in the J. and P. Coates
mills and in other mills. I'm kind of a thin-buddy. Ever
notice what thin-buddies textile workers are? Why did
I strike? Because Friday nights I dragged myself home
exhausted after a week in the mill, with a pay envelope
of fifteen and a half dollars that had to support five be-
sides myself. And I was supposed to be highly paid, . . .
I was in Saylesville last week. I was there when drunken
deputies shot into the crowd of pickets. I happened to
move a few feet to the left when I heard a moan behind
me. An old woman, seventy-two, who had been standing
just beside me, lay on the ground, blood coming from
her legs." Of the settlement he said. "Stretch-out like
before. Wages like before. 'Hours like before."

To this worker and to thousands like him Roosevelt
then offered two crumbs of comfort. On September 25 he

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>^^<><^><><^<>^<><><><><><><><>

accepted General Johnson* s resignation from the N. R. A.
and in a nation-wide radio broadcast on September 30
suggested to both labor and capital "a specific period of
industrial peace." On the same occasion he also informed
the country at large that "the conservative British press
has told us, with perhaps pardonable irony, that much of
our own New Deal is merely an attempt to catch up with
English reforms that go back ten years ago." Our narra-
tive thus ends with a liberal American President justify-
ing his policies on the ground that a British Tory would
endorse them.

Reviewing the Record 1934

DURING THE first nine months of 1934 Europe under-
went more changes than it did in any full year that our
narrative has covered. The French and Austrian civil
wars both ended in Fascist victories that transformed the
European balance of power. The emergence of the Dou-
mergue Government put France in the same pre-Fascist
stage that Germany reached in 1930 under Briining, and
the destruction of Socialism in Vienna saved Austria's
Catholic Fascism from the fate that Spain's Catholic
Fascism suffered when de Rivera, Berenguer, and finally
King Alfonso himself were overthrown,

But the Catholic-Fascist Austrian regime and the pre-
Fascist French regime lost more authority abroad than
they gained at home. Austria became a virtual Franco-
Italian protectorate, to the detriment of all three powers
concerned. When the Italians massed their troops on the

350

1934

o-o-<xx~

Austrian frontier in July, the Yugoslavs followed suit,
thus serving the interests of Germany by preventing open
annexation on the part of Italy. The disturbed condi-
tion of both Austria and France also alarmed Rumania
and forced Foreign Minister Barthou to make extrav-
agant promises in order to hold that country loyal to its
French ally. Similar misgivings led Poland to go a step
further and sign a nonaggression pact with Germany.
Thus it became the virtual ally of a nation with which
it had expected war only two years before and France
lost one more satellite in Eastern Europe.

Increasingly suspicious of Nazi Germany and increas-
ingly alarmed by their crumbling power in Central Eu-
rope, the reactionary leaders of France threw themselves
into the arms of the Russian Communists, with the re-
sult that Foreign Minister Barthou, an outspoken advo-
cate of the old diplomacy, found himself muscling Rus-
sia into the League of Nations. The Russians, for their
part, lent themselves willingly enough to this maneuver
not out of any respect for Barthou or the League but
in order to assure their western frontier against invasion
from Europe before Japan attacked them from the east.
In like manner, France also won the support of England
against Germany. Stanley Baldwin's declaration that his
country's frontier lay on the banks of the Rhine did not
commit England to defend any of the extensive French
possessions outside Europe or even to aid France in
maintaining the East European status quo. It merely in-
dicated that England would support France in Western
Europe because Germany threatened to dominate the en-
tire Continent. During the first nine months of 1934
France had therefore gained the dubious support of So-

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<^<^><><-<><><>-<><><^<><><><><><>-

viet Russia and the limited support of England. It had
turned Austria over to Italy, virtually lost the support of
Poland, antagonized Yugoslavia, and weakened its hold
on Rumania.

Hitler's purge of June 30 saved him by the skin of his
teeth from the destruction on which the French Foreign
Office had been reckoning and enabled his regime to
profit from the losses of France in Central Europe. The
attempted Nazi Putsch in Austria smashed the absurd
illusion that Germany and Italy had substantial common
interests; it also increased German prestige in Rumania
and Yugoslavia. The death of Hindenburg on August 2,
the immediate appointment of Schacht as economic dic-
tator, and the plebiscite of August 19 strengthened the
Nazis at home as much as the losses of France had
strengthened them abroad.

In the nineteen months that had passed since Hitler
came into full power Germany had lost and France had
gained the friendship of England and Russia. Neither
England nor Russia, however, entered into an open al-
liance with either country; as major powers in their own
right they supported France in 1934 with the same res-
ervations with which they had supported Germany in
1932. Germany, on the other hand, was beginning to
make headway with the small nations to the east and
south, which not only provided the natural markets for
her industrial products and the natural sources for her
raw materials but which could be brought into a state
of real economic and therefore political dependence* And
while the Communists and Socialists of France were
forming the first united anti-Fascist front in history,
Hitler had wiped out even the opposition that his own

352

1934

<xxx>-o<

lower-middle-class supporters might have offered. But
how long the German proletariat and petty bourgeoisie
would submit to the dictatorship that German big busi-
ness had established was another story against which the
Nazi press censorship had insulated the outer world.

In contrast to Europe, the Far East witnessed rela-
tively little activity during the first nine months of 1934.
The conference of admirals at Singapore during Janu-
ary suggested that the British Empire was preparing for
trouble and that the several navies at its command were
not likely to support Japan. By August, however, the visit
of a British industrial delegation to Manchukuo gave rise
to the rumor that the Anglo-Japanese alliance would be
resumed. In summing up the events of 1933, we empha-
sized the equivocal position that England had taken to-
ward Nazi Germany during that year. In summing up the
first nine months of 1934, we find the same uncertainty
in regard to England's attitude toward Japan.

Whereas the British National Government concealed
a definite foreign policy under a cloak of uncertainty,
President Roosevelt concealed a vague domestic policy
under a mantle of assurance. But the approval that his
radio address of September 30 received in the British
press indicated clearly enough that he was pursuing an es-
sentially conservative course, especially in the light of his
own assurance that "we count, in the future as in the past,
on the driving power of individual initiative and the in-
centive of fair private profit*"

What did remain uncertain was the effect of Roose-
velt's domestic policies on foreign affairs. Situated half-
way between Europe with its civil wars and Asia with its
foreign wars, the United States had become by the clos-

353

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<^<><^>^>^><^>^<><^>^><>^><><^

ing months of 1934 the keystone of the world. Yet in the
same radio address that outlined a domestic policy
friendly to the industrialist and hostile to the banker
u and let it be recorded, my friends," said Mr. Roosevelt,
"that the British bankers helped their Government"
the President did not have one word to say about the re-
lations of the United States toward other countries. This
failure of the chief executive of the most powerful na-
tion on earth to indicate what part his country might play
in world affairs was not the least disturbing portent in a
disturbing year.

The temptation arises to bring this final summary to an
end with an essay in prophecy. But accurate prophecy re-
quires adequate facts and these are lacking. On October
1, 1934, all that can be said is that revolution has become
the order of the day in Europe, and war in the Far East.
News dispatches from India, China, and South America
also suggest that a wave of revolt, as wide-spread as
that of 1930 but more profound, has begun in the co
lonial lands. The President of the United States enters
the final quarter of the year trying to bluff one of the
greatest strike waves in American history out of exist-
ence. But conditions abroad suggest that the New Deal
will have a foreign crisis on its hands before it faces a
domestic crisis. I can think of no more appropriate con-
clusion to a narrative largely devoted to quotation than
these words of Leon Trotzki's, written in 1933: "It is
clear that the twentieth century is the most disturbed
century within the history of humanity. Any contempo-
rary of ours who wants peace and comfort before every-
thing else has chosen a bad time to be born."

354

CHRONOLOGY

October ,1929

3. Gustav Stresemann, German foreign minister, dies.

4. Prime Minister MacDonald arrives in United States to dis-

cuss naval disarmament with President Hoover.

7. United States, France, Italy, and Japan invited to attend
five-power naval conference at London in January, 1930.
All accept.

9. Hoover and MacDonald issue joint statement endorsing
Kellogg Peace Pact and declaring Anglo-American war
"unthinkable."

21. French Cabinet headed by Aristide Briand overthrown.

24. Record number of 12,894,650 shares sold on New York
Stock Exchange as prices collapse.

November ,1929

2. France forms new Cabinet with Andre Tardieu as Premier
and Aristide Briand as foreign minister.

Dec ember ,1929

22. Soviet Union and Mukden Government sign protocol

restoring status quo on Chinese Eastern Railway.

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WORLD DIARY: 1929-1934

29. All-India Congress opens at Lahore shouting, "Long live
the revolution,"

January ,19 30

3. Second meeting of Hague Reparations Conference opens.

20. Fifteen nations sign revised Young Plan at The Hague.

United States abstains, having signed separate agreement
with Germany two weeks earlier.

21. King George V opens London Naval Conference,

28. General Primo de Rivera resigns as Premier of Spain. General

Berenguer succeeds him,

German Reichstag grants a monopoly to Ivar Kreuger's
match trust in return for a $125,000,000 loan.

February ,1930

12. Church of England follows Pope Pius XI and protests
against anti-religious campaign in Soviet Russia.

15. King Alfonso of Spain dissolves Primo de Rivera's National
Assembly.

20. MZnseito (liberal) Party of Japan wins control of Parlia-
ment from Seiyukai (conservative) Party, 273 seats to
174.

March, 1930

1, Julio Prestes, Conservative, elected President of Brazil.

2. Argentine Congress elections give 100 out of 158 seats to

supporters of President Irigoyen.

7. Dr. Hjalmar Schacht retires as Reichsbank President. Ex-
Chancellor Hans Luther replaces him*

12. German Reichstag approves Young Plan, 265-192.

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CHRONOLOGY

<>^><><><><><^<><C><>-><><><>-0^>

27. German coalition Cabinet headed by Hermann Miiller,

Socialist, resigns.

28. Heinrich Briining, leader of Catholic Center Party, forms

new German coalition Cabinet.

April 1930

5. Mahatma Gandhi breaks the law by making salt out of sea

water. Civil disobedience spreads throughout India.

22. England, United States, and Japan sign London Naval

Treaty.

Gates W. McGarrah of the New York Federal Reserve
Bank becomes president of the new Bank for International
Settlements with headquarters at Basle.

28. Soviet Government opens new 1700-mile Turksib railway.

29. British troops close Khyber Pass to India.

May, 19 30
3. Mahatma Gandhi imprisoned.

June, 1930

6. Prince Carol of Rumania arrives secretly in Bucharest and

is proclaimed King two days later.

13. United States Senate passes Hawley-Smoot Tariff Bill 44-
42, which President Hoover signs four days later.

22. Bolivian rebels overthrow government of President Siles and
establish military junta.

30. French troops complete evacuation of the Rhindand.

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WORLD DIARY: 1929-1934

July, 1930

18. German Reichstag rejects financial decrees of Chancellor
B riming, who reads edict of dissolution announcing new
elections in September.

25. United States places embargo on pulpwood from Soviet
Russia.

August, 19 30

25. President Leguia of Peru resigns and martial law is de-
clared.

September, 1930

1. Lt. Col. Luis M. Sanchez Cerro sworn in as head of new
Peruvian Government.

6. General Uriburu establishes provisional Argentine Govern-

ment.

7. President Irigoyen of Argentina resigns.

8. New Argentine Cabinet headed by Uriburu assumes office.
12. Allied troops withdrawn from Saar Basin*

14. German National Socialists gain 107 seats in Reichstag
elections.

17. President Hoover recognizes new governments in Argentina,
Peru, and Bolivia.

October ,1930

1. British Imperial Conference opens at London.

4* British dirigible, R-101, largest in the world, crashes in
France.

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CHRONOLOGY

<?-<><><>-<X<><><>-<><><>^><><><><><>

24. President Washington Luis of Brazil taken prisoner by rebel

junta.

27. United States, England, and Japan deposit ratifications of

London Naval Treaty in London.

November, 1930

3. Dr. Getulio Vargas becomes Provisional President of Brazil,
12. All-India Round Table Conference opens in London.

28. Mussolini decrees wage cuts of 8 to 10 per cent affecting

1,000,000 industrial workers on December 1st.

December, 1930

4. Andre Tardieu's Cabinet in France resigns. Theodore Steeg

forms left-wing Government.

6. German Reichstag accepts government by decree at hands

of Briining Cabinet.

7. Five civil engineers sentenced to death in Moscow for con-

spiring with foreign interests to overthrow the Soviet
Government.

12, Revolutionary outbreaks in Jaca, Spain.
J anuary ,1931

21. European Premiers and foreign ministers issue joint com-
munication from Geneva pledging to keep the peace*

22* French Cabinet headed by Theodore Steeg resigns.

23* League of Nations Council announces Disarmament Con-
ference to begin February 2, 1932.

25. Mahatma Gandhi and all members of All-India Congress

working committee released from jail.

361

WORLD DIARY: 1929-1934

27. Pierre Laval forms new French Cabinet of right-wing
parties.

February ,1931

14, King of Spain accepts General Berenguer's resignation as
Premier.

27. United States Congress votes immediate 50 per cent cash
bonus to World War veterans over President Hoover's
veto.

March, 1931

3. Mahatma Gandhi and British Government arrive at truce.

12. The Ail-Union Soviet Congress approves retaliatory meas-
ures against United States and other countries that have
imposed embargoes on Russian imports.

14, Prince of Wales opens British Industries Fair in Buenos
Aires.

18. League of Nations Conference at Geneva adjourns after
failing to agree on European tariff truce.

21. Germany and Austria announce projected tariff union.

22. Alcala Zamora and five other Spanish Republicans jailed.

30. All-India National Congress elects Gandhi sole delegate to
London Round Table Conference.

April ,1931

12. Spanish Republicans win municipal elections, and Zamora
calls on King Alfonso to resign.

14. King Alfonso of Spain abdicates, and a Republic is declared
under the presidency of Zamora.

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CHRONOLOGY

<^<><^<>M><><>^><><><><>^><>-C>^-<>

30. Bloodless revolution in Canton makes Kwangtung province
independent of Nanking Government.

May, 1931

9. Secretary of State Stimson announces that United States
will not use army or navy in collecting debts in Latin
America.

13. Paul Doumer defeats Briand for French presidency to suc-
ceed Gaston Doumergue.

15. Pope Pius XI issues labor encyclical.

23. London International Wheat Conference adjourns.

June, 1931

3. Chicago grain prices drop below world level.

6. Chancellor Briining and Foreign Minister Curtius of Ger-
many confer with MacDonald and Henderson in England,

16. Austrian Cabinet resigns after guaranteeing all liabilities of
Credit-Anstalt bank.

20. President Hoover proposes one-year moratorium on war
debts and reparations.

23. Stalin announces abolition of level wage scale and creation of
skilled and -unskilled classes of labor at different rates
of pay.

25. New York Federal Reserve Bank an"d Banks of England,
France, and International Settlements extend $100,000,-
000 short-term credit to German Reichsbatik.

28. Republicans and Socialists win majority in Spanish Par-

liamentary election*

29. White House issues statement that all Governments except

French have accepted Hoover Moratorium proposal.

363

WORLD DIARY: 1929-1934

July ,19 31

6. United States and France sign Hoover Moratorium sus-
pending all intergovernmental debts arising from the War
for one year.

13. Danat Bant of Berlin and German stock exchanges close.

August, 1931

1. Federal Reserve Bank of New York and Bank of France
extend credits of 25,000,000 pounds each to the Bank of
England.

9. Prussia votes by a 3,500,000 majority to uphold Otto Braun's
Socialist-Centrist Government.

18. Germany's foreign creditors agree to extend short-term
credits of $1,200,000,000 for six months.

24. British Labor Cabinet resigns. MacDonald forms National
Government.

28. American bankers, headed by J* P. Morgan and Co., extend
half of a total credit of $400,000,000 to British National
Government.

September ,1931

3. Chilean Congress declares martial law for twenty days as
mutiny breaks out on fleet*

12. Mahatma Gandhi arrives in London for Round Table Con-
ference.

15. Autumn maneuvers of British' Atlantic Fleet in North Sea
postponed when sailors and petty officers mutiny follow-
ing pay reductions.

19. Japanese troops seize strategic points in Manchuria.

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CHRONOLOGY

<>^><><><><>-<><><><>^><>-

20. England abandons gold standard.

21. Stock Exchanges close in London, Paris, Berlin, Vienna,

Amsterdam, and other European cities.

22. United States Steel Corporation announces 10-per-cent wage

cut effective October 1st. General Motors, Bethlehem
Steel, U. S. Rubber, and other large industries also an-
nounce cuts*

23. New York stock prices advance 1 to 14 points.

25. Bolivia abandons gold standard. Troops clash with Para-
guayan forces.

27. Sweden, Norway, and Egypt abandon gold standard.

28. Denmark abandons gold standard. Stock exchanges close

throughout Germany indefinitely.

October, 1931

9. Secretary Stimson informs Geneva that United States will
try to help League of Nations in dispute between China
and Japan.

13. Japanese planes bomb Chinese troops while League of

Nations discusses Manchurian incident.

14. Zamora resigns as President of Spain and is succeeded by

former Premier Manuel Azana.

18* Japanese Government criticizes American cooperation with
League of Nations in Manchurian dispute and rejects
League settlement.

20. United States reminds China and Japan of obligations under
Kdlogg Pact.

24, Council of League of Nations calls on Japan to evacuate

Manchuria by November 16.

25. Laval and Hoover issue joint statement pledging to uphold

gold standard.

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WORLD DIARY: 1929-1934

27. British National Government wins 553 seats in House of

Commons, opposition, 59.

November, 1931

7. Soviet Republic of China establishes Provisional Govern-
ment in Kiangsi Province.

15. German National Socialists triple their votes in Hessian
elections since September 1930.

19. British House of Commons passes 50-per-cent protective
tariff on 23 groups of manufactures.

30. Viceroy Willingdon of India gives magistrates in Bengal
wide powers to deal with terrorism,

December ^1931

1. Second Indian Round Table Conference adjourns as British
announce intention to create a federated Indian state.

9. Spanish Cortes adopts new constitution.

11. Liberal Minseito Cabinet in Japan resigns. New elections

ordered.
Zamora takes oath as rst constitutional President of Spain.

13. Japan abandons gold standard. ,

28. Nanking Government reorganizes.

29. Chinese troops evacuate Chinchow*

January, 1932

3. Gandhi arrested on eve of civil disobedience campaign, All-
India Nationalist Congress outlawed.

7. United States sends identic note to China and Japan in-
voking Nine-Power Pact*

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CHRONOLOGY

<>^><*<>c<><><><x><>-<><>^><^<^^

8. Indian Government empowers judges to pass any sentence

including death on violators of emergency orders.

11. United States Senate approves formation of $2,000,000,000

Reconstruction Finance Corporation*

12. Laval Cabinet in France resigns and reforms, ousting Briand.

23. Moratorium on frozen short-term German credits extended
for a year from February 29, 1932.

25. Nanking Government resigns, Chiang Kai-Shek resumes con-
trol.

28. Japanese forces attack Chapei, the Chinese district of
Shanghai.

30. United States and Great Britain protest Shanghai bombard-
ment.

February, 1932

1. Japanese troops land at Nanking. Shanghai bombardment

continues.

2. Disarmament Conference opens in Geneva.

United States, England, France, and Italy, make joint pro-
posals to settle controversy between China and Japan.

4. Japan replies to Western powers refusing to stop hostilities

or to negotiate with neutrals.
Russia protests Japan's .use of Chinese Eastern Railway.

9. Former Finance Minister Inouye of Japan assassinated in

Tokyo*

18. Independence of Manchuria and Inner Mongolia proclaimed
at Mukden.

20, Seiyukai (conservative) Party of Japan wins control of
Parliament from Minseito (liberal) Party, 304 seats to
147.

28. Peace negotiations held between Japan and China aboard
British battleship at Shanghai.

367

WORLD DIARY: 1929-1934

March, 1932

2. Japanese break Chinese defense at Shanghai and occupy
Chapei.

9, Henry Pu-yi inaugurated as dictator of Manchukuo.
12, Ivar Kreuger commits suicide in Paris.

April, 1932

10. Von Hindenburg re-elected President of Germany by
2,235,000 majority.

15. Kreuger falsifications and forgeries discovered.

21. British Government cancels 50-per-cent anti-dumping tariff
and doubles 10-per-cent general tariff.

24. National Socialists win plurality in Prussian Parliament.

May, 19 32

1. Radical Socialists and Socialists gain in preliminary French
elections.

5. China and Japan sign agreement at Shanghai for with-

drawal of Japanese troops. Chinese drop boycott.

6. Gorgulov, White Russian,, assassinates Paul Doumer, Presi-

dent of France.

8. French Radicals win control of Chamber of Deputies in
final voting.

10. Albert Lebrun, conservative, elected President of France.

15. Premier Inukai of Japan assassinated by army and navy
militarists.

22. Admiral Saito, non-party moderate conservative, succeeds
Inukai as Japanese Premier.

368

CHRONOLOGY

<><>-OK^<><>^><><><>-<^

30. Chancellor B tuning's Cabinet resigns in Germany. A Na-

tionalist Cabinet headed by Franz von Papen succeeds it.

June f 1932

3. Edouard Herriot forms Radical Cabinet in France, replac-

ing Tardieu Government,

4. President von Hindenburg dissolves German Reichstag.
Carlos G. Davila, former Chilean Ambassador to the United

States, heads a socialist revolution in Santiago.

16. Republican National Convention unanimously renominates

President Hoover and Vice-President Curtis.
Reparations Conference opens at Lausanne.

22. President Hoover communicates plan for immediate dis-
armament to Geneva.

July ,1932

1. Democratic National Convention nominates Roosevelt and
Garner.

8. Lausanne Reparations Conference agrees to free Germany
of further reparations in exchange for small lump-sum pay-
ment provided Germany's creditors make another agree-
ment on war debts with United States.

13, French and British Governments pledge to keep each other
informed on all questions similar to Lausanne agreement.

20* President von Hindenburg issues emergency decree placing
Prussia under Federal and military control Socialist
Administration ousted.

21. British Imperial Conference at Ottawa opens.

28. United States troops rout bonus seekers from Washington.

31. National Socialists lead German parliamentary elections. 14

people killed*

369

WORLD DIARY: 1929-1934

August ,1932

20, British Imperial Conference at Ottawa ends, signing 12
bilateral trade agreements for five-year period,

30. New German Reichstag elects Goring, Nazi aviator, presi-
dent.

September, 1932

5. Chancellor von Papen announces programme far reviving

German business.

12. Chancellor von Papen dissolves Reichstag which then votes

non-confidence by 513 to 32,

13. Bloodless military revolution causes resignation of Provisional

President Davila of Chile,

15, Japan and Manchukuo sign defensive agreement in which
Japan recognizes the new state.

28. Viscount Snowden, Laborite, and Sir Herbert Samuel and
Sir Archibald Sinclair, Liberals, resign from British
National Government and join opposition,

October, 1932
2. Lytton Report on China and Japan filed at Geneva.

November,1932

1, Nevada declares 12-day business and banking holiday.

6. National Socialists lose 2,000,000 votes in German Reichstag

elections. Communists, Nationalists, and People's parties
gain.

8. Franklin D. Roosevelt elected President of the United
States. Democrats win control of both houses of Congress,

370

CHRONOLOGY

<>"<><>^><i"<><><><<><>~0^^

17. Von Papen Cabinet resigns in Germany.

20. Japan files reply to Lytton Report at Geneva.

29, France and Soviet Russia sign nonaggression pact,

December, 1932

1. Constitutional guarantees re-established in Cuba. Martial
law lifted for first time in two years.

3, General von Schleicher forms new German Cabinet.

14. French Chamber of Deputies resolves to defer war debt

payments to United States causing overthrow of Herriot
Cabinet.

15. France, Belgium, Hungary, Poland, and Esthonia default

on American war-debt payments.

20* Chancellor von Schleicher of Germany restores freedom of
press and assembly.

January, 1933

1. Russia completes first Five- Year Plan in 4 years and 3
months. Food shortage reported.

11, Japanese troops gain control of all highways into Jehol
province.

17. United States Senate passes Philippine Independence Bill
over President Hoover's veto*

27. Chancellor von Schleicher of Germany resigns.

30. Adolf Hitler appointed German Chancellor, New Reichstag

election set for March 5.

February ,1933

16. United States Senate votes repeal of 18th amendment.

371

WORLD DIARY: 1929-1934

17. League of Nations denounces Japanese occupation of Man-
churia as incompatible with Kellogg Pact, Nine-Power
Treaty, and League Covenant.

23. Banks in State of Michigan operate under restrictions im-
posed by Governor Comstock.

27. Fire destroys German Reichstag building.

28. Emergency decree suspends constitutional guarantees in

Germany,

March, 1933

4. Franklin D. Roosevelt inaugurated President of the United

States.

5. President Roosevelt summons special session of Congress on

March 9 and proclaims national banking holiday.
National Socialists and Nationalists win majority of seats

in new German Reichstag,
Japanese troops enter Jehol City.

9. Seventy-third United States Congress gives President dicta-
torial power over credit, currency, and foreign exchange.

12, Thirty-five Russians sentenced to death for sabotaging
Government's farm plans.

13* Most of large American banks reopen.

14. British engineers employed by Vickers-Armstrong arrested in
Russia on charges of sabotage,

16. Dr. Schacht succeeds Hans Luther as President of German
Reichsbank. Latter appointed Ambassador to the United
States,

20. President Roosevelt signs $500,000,000 economy bill.
23. German Reichstag confers blanket power on Hitler Govern-
ment for four years.

372

CHRONOLOGY

April, 1933

1. One-day boycott of Jews in Germany passes without dis-
order.

12. Pope Pius XI receives Vice Chancellor von Papen of Ger-
many and Premier Goring of Prussia in private audience.

17. Anglo-Soviet trade agreement expires.

19. Two British engineers sentenced, two ord'ered to leave
country, and one acquitted by Moscow court.

King George V. proclaims embargo on Russian goods.

President Roosevelt orders embargo on gold exports. J. P.
Morgan endorses Government's move.

21. Prime Minister MacDonald arrives for conference with
President Roosevelt.

May ,1933

16. President Roosevelt invites 54 nations including Russia to
begin disarming and sign a non-aggression treaty,

17* Chancellor Hitler of Germany accepts Roosevelt's proposal
but demands equality of armament.

23. J. P. Morgan testifies before U. S. Senate Committee that
he paid no income tax in 1931 or 1932.

31* Japan and China sign truce at Tangku establishing neutral
zone south of Great Wall.

June ,1933

4. Reconstruction Finance Corporation extends $50,000,000
credits to Chinese National Government for purchase of
American cotton and wheat.

5* President Roosevelt signs Congressional resolution canceling
gold-payment clause in all Federal obligations*

373

WORLD DIARY: 1929-1934

12. World Economic Conference opens at London.

15. Great Britain and Italy make token payments on war debts
in silver at 50c an ounce*

19. Austrian Government outlaws Nasis.

22. German Socialist Party proscribed and all Socialists removed
from public office.

23* North China area recently neutralized declares independence
through a group of Chinese generals.

27. Wheat crosses dollar mark at Chicago.

German Nationalists vote to dissolve and join Nazis.

July ,1933

1. Two British engineers imprisoned by Russians released.

3. President Roosevelt cables Economic Conference refusing to

return the United States to gold standard,
Russia signs nonaggression pacts with many neighboring
states.

4. Catholic Center, Bavarian Peoples, Populist, and Young

German parties disband.

20. Germany and Church of Rome sign concordat.
27. World Economic Conference adjourns.

August, 1933

2. General Hugh S. Johnson, American Recovery Administra-

tor, sets up N. R. A.

3. United States Navy Department awards contracts on largest

naval building programme in country's history.

7. President Machado of Cuba declares a state of war as 21
are killed and 146 wounded in demonstrations following
Havana street railway strike.

374

CHRONOLOGY

<><><><><><><>^><><><>^><>-<>><>K>

12. President Machado abdicates and flees by airplane to Nassau.

13. Carlos M. de Cespedes designated Provisional President of

Cuba.

24, Cuban Congress dissolved and 1901 Constitution restored.

25. Twenty-one countries including United States sign agreement

to limit wheat production. Argentina signs five days later.

September, 1933

5. Enlisted men of Cuban army and navy set up civilian junta
headed by Dr. Grau San Martin in place of de Cespedes.

10. Cuban revolutionary junta chooses Grau San Martin as
Provisional President of Cuba.

20. Chancellor Dollfuss forms a Catholic Fascist Cabinet in
Austria,

October, 1933

10. President Roosevelt invites President Kalinin to send repre-

sentative to discuss establishment of Russian-American
diplomatic relations.

11. League of Nations ends shortest session on record.

14. German Government announces withdrawal from League of

Nations.

22. President Roosevelt announces gold-buying programme to
control value of the dollar.

24. Daladier Cabinet overthrown in France.

27. Albert Sarraut forms a new French Cabinet*

28. T* V. Soong resigns as Chinese Finance Minister and is

succeeded by his brother-in-law, H* H. Kung.

375

WORLD DIARY: 1929-1934

November, 1933

3. President Roosevelt orders Atlantic Fleet to return from
Pacific to native waters.

12. Ninety-two per cent of German electorate vote to support
Government in quitting Disarmament Conference and
League of Nations.

16. United States recognizes Soviet Russia,

19. Conservative parties win majority in Spanish Cortes elec-

tions.

20. Chinese province of Fukien declares itself an independent

republic.

24. Sarraut Cabinet falls in France.

27. Camille Chautemps forms a new French Cabinet.

December ,1933

3, Seventh Pan-American Conference opens at Montevideo.
8. Anarchist uprisings throughout Spain.

23. Torgler and three Bulgarian Communists found innocent
in Reichstag fire trial. Van der Lubbe found guilty and
sentenced to execution.

January, 1934

5. Truce beween Bolivia and Paraguay ends at midnight, and
fighting is resumed in the Chaco.

8. Alexandra Stavisky, French financier, commits suicide in
Switzerland.

15. Grau San Martin resigns Cuban Presidency, Revolutionary
military junta replaces him.

376

CHRONOLOGY

^<><><><><><><><X><><><>^><><><>

Roosevelt asks Congress to vest title in all monetary gold
in Treasury. Also asks power to revaiuate dollar between
50 and 60 cents.

18. Colonel Mendieta installed as President of Cuba.

22, General Hayashi replaces Araki as Japanese War Minister.
Communists and Socialists riot in Paris. 700 arrested.

23. United States recognizes Mendieta regime in Cuba.
Admirals of the fleets of England, Australia, and New Zea-
land confer at Singapore.

26. Germany and Poland sign a ten-year peace pact

27. Chautemps Cabinet in France falls.

30. Edouard Daladier forms moderate Cabinet in France.

February, 1934

3. Premier Daladier of France dismisses Police Chief Chiappe
of Paris, and two members of his Cabinet resign.

6* Seventeen killed, 500 injured in Paris riots. Daladier wins
vote of confidence in Chamber of Deputies.

7. Daladier Cabinet in France resigns, and ex-President Dou-
mergue begins forming National Government as rioting
spreads to provinces.

12* One hundred and twenty-three Austrians killed in civil war

as Socialists call a nation-wide general strike.
General strike paralyzes France.

15. Austrian Socialists yield, and leaders flee country after four

days of civil war.

Doumergue Cabinet wins heavy vote of confidence in French
Chamber,

21, Chancellor Dollfuss ends martial law in Austria.

French Chamber votes Premier Doumergue dictatorial powers
to reduce the budget*

377

WORLD DIARY: 1929-1934

March, 1934

1. Henry Pu-yi, former Manchu Emperor of China, ascends
throne of Manchukuo, assuming title of Kang Teh.

7. Spain decrees a "state of alarm" in face of threatened gen-
eral strike.

12. British House of Commons passes bill authorizing construc-
tion of full treaty-strength navy.

14, Anglo- Japanese textile parley breaks down.

27. President Roosevelt signs Vinson Naval Bill authorizing

that navy be built up to limit of London Naval Treaty
by 1939.

April, 1934

18. Spokesman of Japanese Foreign Office announces Japan
"may be compelled to resort to force" in maintaining
peace in Asia.

23. British Foreign Office challenges Japan's claim to special
rights in China.

25. Lerroux Cabinet in Spain resigns. Modified martial law
declared.

28. Japanese Foreign Office assures American and British em-

bassies in Tokyo that "Japan has no wish to infringe on
the independence, interests, or prosperity of China. "

30. United States warns Japan not to override treaties in China*
British hold issue with Japan over China a closed incident.

May, 1934

3. Ibn Baud's troops subdue the Kingdom of Yemen in Arabia.
7. British impose quota on Japanese textile imports*

378

CHRONOLOGY

<><><>^><><><>^><><><>-<><>^>-C><><>-

11* Foreign Minister Latham of Australia welcomed in Tokyo
on good-will mission.

30. French and British foreign ministers clash at Geneva over

German armament issue,

31. United States Senate ratifies new treaty with Cuba re-

nouncing Platt Amendment which permits American
intervention.

June, 1934

14. Germany declares moratorium on all foreign debts.

15. Hitler and Mussolini, conferring at Venice, pledge support

of Austrian independence.

All European nations except Finland default war-debt pay-
ments to United States.

Great Britain threatens to impound German trade balances.

30. Ex-Chancellor von Schleicher, his wife, and some hundred
prominent Storm Troop leaders and conservatives exe-
cuted in Germany.

July, 1934

3. German Nazis pledge aid to Austrian Nazis.

8. Foreign Minister Barthou of France arrives in London for

conferences.

9. Nazi Storm Troops ordered disarmed and reduced from

over 2,000,000 to 850,000.

13. Italy approves Eastern European peace pact.

15. French Socialists vote to form united front with Communists.

16. Japanese Ambassador to London halts Anglo-American naval

talb.
General strike paralyzes San Francisco.

379

WORLD DIARY: 1929-1934

19. Acting Prime Minister Stanley Baldwin announces England

will build 460 fighting planes by 1939.
San Francisco general strike ends.

24. Austrian Government executes Josef Gerl, Czechoslovak

Socialist workman.

25. Austrian Nazis assassinate Chancellor Dollfuss.

26. Vice Chancellor von Papen named German envoy to Austria.
Italy sends 48,000 additional troops to Austrian frontier,

with approval of French.

29, Kurt Schuschnigg, Catholic monarchist, heads new Austrian

Cabinet.

30. Acting Prime Minister Stanley Baldwin tells House of

Commons that British frontier now lies on the Rhine.
Yugoslav Legation in Berlin cautions Italy on intervening in
Austria.

August ,19 34.

2, President von Hindenburg of Germany dies. Hitler assumes
his powers, orders plebiscite, and appoints Dr. Schacht
Minister of Economics with unlimited powers.

9. President Roosevelt orders nationalization of all silver bul-
lion at 50*0 Ic an ounce.

19. Hitler wins 9-1 majority of German vote granting him su-
preme power as Reichsfuhr<er.

24. United States and Cuba sign reciprocal trade treaty.

September, 1934

1. League of Nations reports 16,000 Saarlanders receiving

military training subsidized by Germany.
Lewis Douglas, director of United States budget, resigns.

3. Half of textile workers in United States out on nation-wide
strike.

380

CHRONOLOGY

<>*><*<>*><><><*><><*<*<*<><><><>

10. Germany rejects "East European Locarno Pact" guarantee-
ing status quo in Eastern Europe.

13. Argentine Government closes Standard Oil Company's wire-
less station near Bolivian frontier.

17. Turkey replaces China on League of Nations Council.

18. Soviet Russia inducted as member of League of Nations.
Paraguay launches sixth assault on Fort Ballivian, Bolivian

stronghold,

24. American textile strike ends.

Russia and Japan announce plan to resume negotiations for
sale of Chinese Eastern Railway to Manchukuo.

25. General Hugh Johnson resigns as N. R. A. Administrator.

30. President Roosevelt asks labor-capital truce in nation-wide
broadcast.

381

INDEX

Adams, John, 211

Aldrich, Winthrop W., 283

Alfonso, King of Spain, 24, 81, 91,
92, 97, 126, 350

Alleghany Corporation, 243

Allen, W. E. D,, 312

All Quiet on the Western Front,
159

Alpine Montangesellschaft, 325

American Farm Board, 102

American Federation of Labor, 348

American Red Cross, 79

American Telephone and Tele-
graph Company, 162

Balfour, Lord, 19

Bank of England, 66, 103, 104, 108,

110-113, 115, 122, 221, 234, 245,

254
Bank of France, 104, 109, 110, 111,

112, 127, 172, 221, 245
Bank of United States, 69
Bank for International Settlements,

IS, 19, 33, 103, 104, 128, 183,

221, 280

Banque Franco-Japonaise, 134
Banque de Paris et des Pays Bas,

94
Barnby, Baron F. V. W., 335

American War Industries Board, Barthou, Louis, 311, 316, 317, 320,

322, 351

Baruch, Bernard M., 277
Basseches, Nikolaus, 83, 248, 268
Bauer, Otto, 295
Baumann, A. A., 84
Beayerbrook, Lord, 17, 47, 60, 84
Behind the Scenes of International

Finance, 125
Bell, George, 58
Ben-Gavriel, M. Y., 307
Bennett, Arnold, 62
Bennett, Richard B M 61, 234
Berenguer, General D'Amaso, 24,

81, 82, 143, 350

f*&a.Ai<a, r ^Aajuiu^, AJW, *TJ, *w Berl, .Emmanuel, 174, 175

Aasnar y Cabafias, Admiral Juan Berliner &$rsenzeitun0j 126

277

Angell, Sir JNorman, 60
Anti-Imperialist Review, 196
Araki, General Sadao, 142, 347
Arbeiterpolitik, 105
Arbiter Zeitunff, 295
Archbishop of Canterbury, 38
Awki, 118, 310
Astor, Vincent, 348
Austin, F. Britten, 277
Austrian Credit-Anstalt Bank, 103,

108
Austro-German Customs Union, 88,

89, 90, 101, 103, 104

a, Manuel, 136, 143, 305

Batista,

Backus Oil Company, 341
Balbo, Italo, 312

Baldwin, Stanley, 100, 113, 114,
137, 197, 323, 326, 335, 351

385

Berliner TageUatt, 22, 23, 264
Bernhard, Georg, 21
Black Front, 205, 206
Blum, L6on, 328
Boraraelaer, Arthur, 339
Boa, M. J.> 212

WORLD DIARY: 1929-1934

China Weekly Review, 158, 267,

288
Chinese Eastern Railway, 157, 194,

XMO.U.U, v/Ltu, j.uj, AOJ, JLOV 346

Briand, Aristide, 7, 8, 25, 27, 34, Clemenceau, Georges, 25, 80
48, 80, 83, 88, 94, 101, 102, 105, Cohen-Portheim, Paul, 62
'------- Colby, Merle, 349

Bose, Herbert von, 318
Brailsford, H. N., 36, 114
Braun, Max, 338
Braun, Otto, 165, 185, 186

134, 156, 270, 339
British Intelligence Service, 57, 115,

116, 306
British Secret Service (See British

Intelligence Service)
Brockway, Fenner, 229
Brookhart, Smith W., 261
Bruckner, Hellmuth, 206
Bruning, Heinrich, 30, 48, 57, 68,

73, 90, 91, 104, 105, 164, 177, 192,

209, 350

Bryan, William Jennings, 230
Buch, Major, 319
B. U. F. t Oswald Motley and

British Fascism^ 312
Bukharin, Nikolai Ivanovich, 37
Burr, Aaron, 211
Bywater, Hector C., 289

Caballero, Largo, 92, 272

Caillaux, Joseph, 27

Camba, Julio, 273, 274

Carol, King of Rumania, 44, 45,
275

Cassel, Gustav, 65

Cespedes, Carlos M. de, 256, 257

Chaco, 47, 278, 341, 342

Chadbourne, Thomas L, 256

Chamberlain, Sir Austen, 184

Chamberlain, Neville, 244

Chang Hsueh-liang, 71, 75

Chang Tso-lin, 29, 71

Chaplin, Charlie, 54

Chase National Bank, 94, 258, 259,
283

Chautemps, Camille, 25, 269, 270,
273, 290

Chen, Eugene, 143, 266

Chesterton, G. K., 63

Chiang Kai-shek, 42, 71, 75, 100,
142, 143, 235, 265, 267

Chiappe, Jean, 292, 293

Chicago Tribune^ 288, 311

China National Aviation Corpora-
tion, 268

386

Cole, G. D. H., 277
Comintern, 344, 346
Comite des Forges, 8, 101, 134, 156,

161, 174, 179, 203, 339
Comite des Grands Reseaux, 290,

292

Committee for the Nation, 333
Communist International, 328
Comstock, William A., 216
Continental Steel Cartel, 56, 57,

146, 179, 221
Coolidge, Calvin, 84, 135
Correspondant, 119
Cotton Textile Institute, 349
Coty, Francois, 88
Coudenhove-Kalergi, Gerolf, 258
Coudenhove-Kalergi, Count

Richard Nicolaus, 188
Council on Foreign Relations, 194
Crafouillot, 57, 115, 338, 339, 340
Crown Prince of Germany (for-
mer), 223

Cumberland, W. W., 49
Cunningham, G,, 35
Current History, 293
Curtius, Julius, 30, 90, 104
Curtis, Charles R., 181
Curtiss-Wright Corporation, 267

D'Abernon, Lord, 66, 69

Dabit, Eugene, 270

Daily Herald, 38, 99, 232, 251, 284,

337
Daily Telegraph, 46, 99, 288, 297,

335

Dally Worker, 349
Daladier, Edouard, 215, 217, 244,

269, 292, 295
Dalimier, Albert, 290
Danat Bank, 108
Darre", Walter, 250
D arrow Board, 277
Ddvila, Carlos, 180
Davis, Norman H., 311
Dawes Plan, 6, 11, 68, 105

INDEX

Exchange Equalization Fund, 232,
234, 287

Decrais, Jean, 130

Delaisi, Francis, 58, 122, 127, 234

Dell, Robert, 343

Deterding, Sir Henri, 57, 58, 59, Far Eastern Review, 71, 194

170, 333, 334 " -

Deutsch, Julius, 295

Deutsche, 31

Deutsche Allgcmeine Zeitung, 89

Deutsche Bank, 179, 282

Dieu est-il fran^aisf, 217

Dillon, Clarence, 22

Dillon, Read and Company, 20, 21,

47, 49, 94

Disarmament Conference (1932), Ford, Henry, 4

Feisal, King of Irak, 306

Feng Yu-Hsiang, 41, 71

Feral, A., 119

Fey, Major Emil, 297, 298, 323,

325, 326
Figaro, 88
Five-Year Plan, 11, 36, 40, 67, 68,

83, 203, 204, 209, 210, 211, 346
Flandin, Pierre-fitienne, 172

156, 182, 238, 263, 280
Documents Politiques, 290

Frangois-Poncet, Albert, 178, 318
Frankfurter Zeitung, 200, 217

DoIIfuss, Engelbert, 295, 296-299, Franklin, Benjamin, 211

303, 323, 324
Donner, F. H., 147, 149
Doriot, Jacques, 328
Douglas, Lewis, 348
Douglas, Norman, 63
Doumer, Paul, 100, 101, 102, 173,

174

Frauenfeld, Alfred, 323

Free Masons, Grand Orient Lodge

of, 95, 97

Frick, Dr. Wilhelm, 215
Fritsch, General Baron Werner

von, 319

Doumergue, Gaston, 101, 293, 295 Galsworthy, John, 62

"Drennan, James," 312
Drummond, Sir Eric, 85
Duca, Ion G., 275, 284
Dumont, Charles, 134
Duranty, Walter, 280
Dusterberg, Theodor, 163, 164

Ebert, Friederich, 253
Echo de Paris, 80, 322
Economist, 20, 154, 183, 187, 210,

220, 243, 277
Einstein, Albert, 221
Eirmg, Paul, 111, 125
Electric Bond and Share Company,

258
El Hombre QU& estd solo y

Elliott, Major Walter, 110, 112
Ellis, Havelock, 262
Empire Free Trade, 46, 60, rfl
Empire Review^ 31
England, the Unknown Isle, $2
Ernst, Karl, 31$, 320
Evrop&i*che Revue, 89, 263
Europe, 303
Evening Standard, 17, 84

387

Galtier-Boissiere, Jean, 338.
Gandhi, M. K., 33, 34, 35, 36, 70,

75, 97, 115, 137, 138, 139.
Garner, John N., 198
Garnett, David, 63
Garvin, J. L., 112, 208
Gaxotte, Pierre, 105
Genoa Conference (1922), 247, 248
George V., King of England, 69,

113, 138, 189

General Motors Company, 45
Geneva Naval Conference (1927),

Gerhardi, William, 63
Gerl, Josef, 323

Gerothwohl, Maurice, 99

Gibson, Hugh S,, 182

Gilbert, S. Parker, 11, 21, 22, 109

Goebbels, Paul Joseph, 170, 191,
206, 218, 223, 252, 319, 320

Gold Standard, 11, 65, 66, 69, 108-
110, 115, 122-131, 141, 142, 144,
146, 147, 172, 196, 226, 228, 231,
232, 234, 243, 244-246, 283, 332

G6nib5s, Julius, 217

Oorgulov* Paul, .173, 174

WORLD DIARY: 1929-1934

Goring, General Hermann Wil-
helra, 190, 191, 206, 215, 217, 218,
224, 252, 312, 319, 320, 325

Gott in frankreich, 217

Grau San Martin, Ramon, 256, 257,
258, 279, 287 '

Green, Theodore F., 348

Greenwood, H. Powys, 312, 313

Grey, Lord, 154

Gringoire, 293

Grzesinski, Albert, 185

Guaranty Trust Company, 49

Habicht, Theodor, 296

"Hadir," 339

Hague Conference (1929), 7

Hague Conference (1930), 7, 17, 79

Haller, Johannes, 126

Hamaguchi, Yuko, 27

Haniel, Joachim, 330

Hanussen, 54

Harding, Warren Gamaliel, 84

Harrison, George, 255, 333

Hauteclocque, Xavier de, 57, 116

Havas, 173, 174

Hawley, William C., 59

Hawley-Smoot Tariff, 45, 46, 59, 73,
74, 84, 86, 88, 139

Heines, Edmund, 206, 318, 319

Helen, Queen of Rumania, 44

Hellssen, Henry, 29

Henderson, Arthur, 88, 114, 156

Henning, Arthur Sears, 311

Henri, Ernst, 253

Heraldo de Madrid, 271

Herriot, Edouard, 171, 184, 198,
201, 203, 206, 231, 234, 270, 273,
275, 289

Hilferding, Rudolf, 20, 21

Hindenburg, Field Marshal Paul
von, 48, 163, 164, 166, 168, 177,
186, 192, 205, 215, 218, 253, 280,
316, 329, 330, 352

Hirst, W. A., 31, 32

Hitler, Adolf, 53-59, 91, 163-166,
170, 179, 186, 191, 19$, 205, 206,
215-217, 224, 226, 232, 239, 241,
242, 247, 249-253, 265, 270, 279,
281-284, 295, 296, 298, 312, 314,
316, 317, 319, 320, 330, 334, 337,
338, 352

Hitler Over Europe, 253

388

Hochi, 310

Hohenzollern, Prince August Wit-
helm von, 318

Honjo, General, 117

Hoover, Herbert C., 4, 8, 10, 45,
46, 59, 64, 73, 79, 84, 104-107,
127, 129, 130, 146, 147, 149, 162,
173, 180, 181, 182, 183, 199, 200,
201, 207, 208, 259, 281, 282, 283

Hoover moratorium, 104-106, 132,
146, 14-7, 169, 183, 284

Hugenberg, Alfred, 56, 165, 186,
216, 217, 244, 249

Hughes, Charles Evans, 32

Hull, Cordell, 223, 234, 244, 245,
247, 278, 279

Hungry England, 229

Huxley, Aldous, 63

Ibanez, Carlos del Campo, 180
Imperial Chemical Industries, 161
Institute of Pacific Relations, 117,

336

International Telephone and Tele-
graph Company, 163
Inukai, Ki, 142, 175
Irigoyen, Hipolito, 49, 50, 51
Irwin, Lord, 34, 97, 99, 100
Izwstia, 261, 344, 346

Japan Advertiser, 118

Japan Chronicle, 300

Jaures, Jean, 271.

Jenny, Frederic, 231

Je Suis Partout, 105, 130, 228

Johnson, General Hugh $., 249,

349, 350
Journal des Delats, 102, 105, 126,

200, 203
Journal de Gentoe, 24, 258, 264

Kalinin, Mikhail, 259
Kellogg-Briand Pact, 10, 133, 156,

157, 193, 194

Kemmerer, Professor Edwin, 47
Kerensld, Alexander, 143
Keynes, J. M., 18, 122
Klausener, Erich, 318
Knox, Geoffrey G., 337, 340
Kornev, N., 200
Kreuger and Toll, 163
Kreuger, Ivar, 20, 21, 22, 16$

INDEX

Krosigk, Count Lutz Schwerin von, Lyons, Joseph A., 14-0
205, 216 Lytton Report, 194, 235

Krupp von Bohlen und Halbach,
249

Kuhn, Loeb and Company, 94

Kundt, General Hans, 47

Kung, H. H., 42, 266

Kuss, Bernhard, 206

Lamont, Thomas W., 7, 20

Lang, John T., 140

Laski, Harold, 99, 113, 137, 199,
277, 337, 338

Latham, John G., 309, 310

Laurent, Theodore, 339, 340

Lausanne Conference (1932), 183,
184

Laval, Pierre, 80, 127, 129, 130,
134, 147, 156, 171, 172, 183, 271

Lawrence, T. E., 306

League of Nations, 20, 48, 65, 80,
S5, 86, 8S, 132-134, 149, 156, 157,
163, 184, 193, 195, 210, 235, 238,
258, 261, 263-265, 278, 280, 281,
284, 312, 337, 340, 342-344, 346,
351

Lebrun, Albert, 174

Lechartier, Georges, 200

Lee, Higginson and Company, 94,
163

Leguia, Augusto B., 48, 49

Lehman, Herbert H v 216

MacDonald, J. Ramsay, 8, 10, 23,

61, 62, 99, 104, 111, 113, 114,

131, 138, 146, 198, 231, 232, 234,

240, 243, 244, 245
Machado, Gerardo, 256, 257, 258,

283, 288
Magers, Hellmuth, 241
Maginot, Andre, 156
Magyar, L., 196, 197
Manchester Guardian, 4, 45, 69,

102, 106, 131, 173, 221, 224, 229,

239, 261, 313, 325
Marcosson, Isaac, 163
Marie, Queen of Rumania, 44
Martin, William, 24, 264
Martinez Barrios, Diego, 305
Marx, Karl, 29
Masaryk, T. G., 90
Matsuoka, Yosuke, 238, 239
Maurin, Joaquin, 303
Mayrish, 57

McGarrah, Gates W., 33
Meissner, Otta, 253
Mellon, Andrew W., 104
Mendieta, Colonel Carlos, 257, 287,

288

Menneve"e, Roger, 290, 292, 293
Menocal, Mario Garcia, 257
Militant, 344, 346

Lenin, Nikolai, 37, 211, 271, 277, Millerand, Alexandre, 80, 339

346

Leo XIII, Pope, 97
Lerroux, Alejandro, 273, 303, 305
Lippmann, Walter, 163.
Listener, 121
Literarischf Welt, 62
Litvlnov, Maxim, 132, 211, 229, 244,

247, 260, 316, 322
Lloyd George, David, 137
Loewenstein, Alfred, 57
London Imperial Conference

(1930), 60, 62, 63
London Naval Conference (1930),

10, 31, 32, 73, 79
Ixmdon Naval Treaty, 59
Luis, Washington, 63, 64
Lupescu, Magda, 44
Luther, Hans, 220

389

Mitsubishi, 28, 282

Mitsui, 28, 201, 282

Moffett, James A., 333

Moldenhauer, Paul, 20

Moley, Raymond, 245

Monfrcid, Henry de, 307

Moonje, Dr., 70

Moore, Alexander P., 49

Morand, Paul, 175

Moret, J. Edmond, 111

Morgan, J. P., 7, 20, 21, 22, 114,

242, 25$

Morgan, J. P., & Co., 94, 135, 243
Morgan, Thomas A., 267
Morning fost, 38, 86, 88, 131, 189,

237, 335

Moskauer Rundschau, 200, 247
Mosley, Sir Oswald, 312
Muhammad AH, 70

WORLD DIARY: 1929-1934

Miiller, Hermann, 30, 73, 164
Miinchner Neueste Nachrichten,

106

Munzenburg, Willy, 327
Mussolini, Benito, 66, 143, 198, 217,

270, 295, 312, 315, 316

N,R.A., 249, 277, 278, 350

National City Bank, 94

National Credit Corporation, 130,

162

Nathan, Major H. L., 62
Nazi-Sozi, Der> 170
Nehru, Jawaharlal, 70
Neue Freie Presse, 83, 248, 268
Neues Wiener Tagblatt, 199
Neue Taae-buck, 307, 314, 318, 320,

330

Neue Weltluhne, 261
Neue Ziircher Zeitung, 46, 306

Pacific Affairs, 336

Pan-American Airways, 268

Pan-American Conference (1933),
278, 279, 342

Pan- American Union, 85

Papen, Franz von, 177, 185, 186,
191, 192, 198, 199, 203, 205, 215-
217, 224, 250, 316, 318, 320, 325

Paris-Midi, 343

Patman Soldier Bonus Bill, 180, 181

Paul-Boncour, Joseph, 207, 215, 273

Payne, John Barton, 79

Perez de Ayala, Ram6n, 82

"Pertmax," 322

Pestana, Angel, 93

Petit Havre, 61

Petrie, Sir Charles, 94

Phiiby, H, St. John, 306

Pilsudski, Marshal Joseph, 166

Pius XI, Pope, 38, 97, 224, 250, 299

j.ieuc gj 1*11,1 it i ti t wu>it,y f -TW, -t\>\> j. 1U9 .A.JL, or ujf c, -JO, ^/, A*T, ftJv, ***

Neurath, Baron Constantin von, Poincare", Raymond, 25, 83, 171,

205, 216

New Leader, 18, 23, 60, 189, 238
New Masses, 349
Neva Statesman, 40, 84, 251
New Statesmen and Nation, 53,

114, 124, 125, 160, 246, 343

271, 293

Portsmouth, Peace of (1905), 148
Pravda, 346
Prestes, Julio, 63
Primo de Rivera, 24, 81, 82, 91, 94,

143, 350

*XT, AAiT, J.AfJ, J.OU, ATU, JTJ

New York Federal Reserve Bank, Prince of Wales, 50, 86
33, 104, 110, 221, 234, 245, 255, Pu-yi, Henry (Kang Teh), 157,

333

Nev> York Times, 280, 341
New York World-Telegram, 301
Nine-Power Treaty (1922), 153,

193, 195

Nineteenth Century and After, 277
Nippon Shimbun 3 201
Norman Montagu Collet, 110, 111,

112, 125, 234, 253, 284, 333, 334
North China t Daily News, 195
N oweHes Litter air es, 175, 307
Nouvelle Revue Fran false f 270

Observer, 112, 208

Ohba, General Yahe, 268

Ortega y Gasset, Jose, 82, 135, 136.

Ortiz, Raiil Scalabrini, 50, 51

Osaka Mainichi, 160, 335

Osthilfe, 169, 215

Ottawa Conference (1932), 187,

188

Oustric Bank, 68, 69
Ovey, Sir Esmond, 229, 230

390

177, 193, 300
Quadragessimo Anno, 97, 299

-101, 02

Radek, Karl, 328, 329
Radziwill, Prince, 57
Ramsin, Leonid, 83
Rand, James H., Jr., 333
Raynaldy, Eugene, 290, 292
Rea, George Bronson, 71, 194
Reading, Lord, 127, 129
Reconstruction Finance Corporation,

162, 169, 265, 276
Recovery, 163
Reichsbank, 20, 30, 10% 109, 217,

220, 280, 330, 332
Reichstag Fire, 218, 219, 279
Remarque, Erich Maria, 159
Reparations, 6, 7, 12, 17, 19, 30,

104, 106, 127, 129, 147, 183, 185,

207
Repertorio Americano, 258

INDEX

Rerum Novarum, 97

Reventlow, Count Ernst zu, 223

Remsta de Ocadente, 82

Revue Militaire Pran$aise t 134

Rintelen, Anton, 324, 325

Robbins, Lionel, 179

Robles, Gil, 303, 304, 305

Rockefeller, John D., Jr., 283

Rohan, Prince Karl Anton, 89, 90,
263

Rohm, Ernst, 54, 252, 318, 319

Romier, Lucien, 269, 271

Roosevelt, Franklin D., 198-200,
210, 216, 219, 225, 228, 230-232,
234, 239, 241-245, 247, 249, 253-
256, 259-261, 270, 276, 279, 281-
283, 287, 301, 302, 333, 334, 348,
349, 353, 354

Rosenberg, Alfred, 59, 217

Rote Aufbau, 327

Rote Fahne, 168, 170, 192

Rothermere, Lord, 47

Rothschild (family), 290, 293

Scbacht, Hjalmar Horace Greeley,
20, 21, 22, 30, 217, 220, 221, 280,
284, 330, 332, 333, 352
Scheffer, Paul, 263
Schleicher, General Kurt von, 177,
178, 205, 210, 215, 279, 282, 318
Schmitt, Kurt, 250, 330
Schneider, Eugene, 134, 339
Schneider-Creusot, 134, 161
Schober, Johann, 90
Schwa rzschild, Leopold, 314
Schulte, Cardinal, 224
Schuschnigg, Kurt von, 326
SculHn, James H., 140
Second International, 92, 344, 346
Secret War for Oil, The, 58
Segura y Saenz, Cardinal, 135
Seipel, Ignaz, 297, 298
Seldte, Franz, 216
Severing, Karl, 185
Sharp, Clifford, 251
Shaw, Bernard, 62, 63
Shidehara, Baron, 116, 118

JLVUlAABljUAAU ^ A <* 1 AX A * J f , JJ\Jf ti 7 J *" *-"'"* , . *, --. , . , w

Round Table Conference (1930), Shimonoseki, Peace of (1895), 148

34, 69, 70, 71, 75, 97
Round Table Conference (1931),

97, 115, 137
Royal Dutch- Shell Oil Company,

57, 170, 333, 343
Rudert, Max, 262
Rusmussen, O. D,, 120
Rust, Dr. Bernhard, 252
Rykov, Alexei, 37

Saar Valley, 7, 8, 337-341
Saint-Saveur, Count de, 134
Saito, Admiral Viscount Makoto,

177

Salamanca, Daniel, 47
Salter, Sir Arthur, 163
Samper, Ricardo, 305

Sieburg, Friedrich, 217

Siegfried, Andre, 61

Siemens, Carl F. von, 249

Siles, Hernando, 47

Simon, Sir John, 137, 153, 154, 184,

197, 284, 302, 311, 322, 340
Simon Report, 137
Sinclair, Sir Archibald, 189
Singapore Conference (1934), 288,

289, 335, 353
Skoda, 161

Sloan, Alfred P., Jr., 45
Sloan, George, 349
Smith, Alfred E., 276
Smoot, Reed, 59
Smuts, General Jan, 246
Snowden, Lord, 111, 113, 189

Camper, Jtucarao, AUD ouuvyucu, XAU.U, AJIA, *AJ, *o^

Samuel, Sir Arthur Michael, 253, Soci&e Alsacienne de Constructions

254

Samuel, Sir Herbert, 189
Sanchez Cerro, Lt. Col. Luis M,,

Sankey, Lord, 113
Sarraut, Albert, 269, 273
Saturday Evening Post, 163
Saturday Review, 94, 106, 208, 237,

240, 246
Saud, Ibn, 305*308

391

Mecaniques, 339
Societ6 Redange-Dilling, 339
Sol, 47, 273

Soong, T. V., 42, 143, 265, 266
South Manchuria Railway, 135
Spectator, 105, 153, 179, 250, 312
Sprague, O. M. W., 348
Stalin, Joseph, 36, 37, 168, 198, 211,

280, 346
Stamp, Sir Joaiah, 66, 69

WORLD DIARY: 1929-1934

Standard Oil, 51, 283

Standard Oil (New Jersey), 333,

341, 342
Statist, 17, 69, 86, 219, 226, 231,

241
Stavisky, Serge Alexandra, 290,

292, 293

Steed, Wickham, 18, 312
Steeg, Theodore, 68, 69, 80
Stein, Wilm, 67
Steinschneider, 54
Stimson, Henry L., 64, 132, 149,

153, 194, 197, 201, 282
Stinnes, Hugo, 56
Strakosch, Sir Henry, 65, 69
Strasser, Gregor, 55, 205, 318
Streseman, Gustav, 7, 8, 30, 48, 57
Streicher, Julius, 206
Sun Yat-sen, 42, 143

Tsuda, Shingo, 236
Turksib Railway, 40

Uchida, Count Yasuya, 235
Ungern-Sternberg, L. von, 43
United States Steel Corporation,

124

United Textile Workers, 348
Uriburu, General Jose F., 51

Vaida-Voevod, Alexander, 275
Valery, Paul, 175
Van der Lubbe, Marinus, 218
Vandervelde, raile, 92
Vargas, Getulio, 63, 64
Vatican, 97, 224, 343
Vereinigte Stahlwerke, 56, 57, 326
Versailles Treaty, 6, 7, 27, 30, 40,
89, 91, 148, 218, 248, 250, 251

Survey of Crimes Committed by Victoria, Queen of England, 123

n . _ *>__.._ AA TT;_ VT i tiiii <*A<

Political Parties, 28
Swanson, Claude, 257

Tachibana, T,, 28

Takagi, Ryukichi, 201

Takahashi, 262

Tanaka, Baron, 11, 117

Tardieu, Andre", 8, 11, 24-27, 80,

134, 156, 171-174, 201, 206, 228,

271, 275, 293, 339
Tat, 241, 296
Tanaka Memorial, 117
Temps, 25, 46, 134, 202, 207, 228,

231, 247, 261, 269, 276, 277, 316,

343

Thalraann, Ernst, 163, 164
Third International (See Comin-
tern)

Thomas, Senator Elmer, 333
Thomas, J. H., 113
Thomas, Norman, 242
Thomson, Lord, 62
Thyssen, August, 56, 57
Thyssen, Fritz, 56, 57, 59, 179, 221,

249, 253, 279, 282, 283, 314, 325
Times, 4, 18, 19, 45, 51, 86, 107,

124, 197, 306, 317, 335
Titulescu, Nicolas, 275
Toniski, Mikhail, 37
Trotzki, Leon, 37, 82, 94, 165, 211,

343, 344, 354
Xsai Ting-kai, 266

392

Vinson Naval Bill, 301
Volkische Beobachter, 54
Vorwdrts, 168, 170
Vossische Zeitung, 21, 30, 67, 76,

105, 261
PU, 298

Wall Street Crash, 3-6, 69, 108, 129,

130, 143

Warburg, James P., 348
War Debts, 12, 18, 19, 104, 106,

129, 147, 183, 185, 207, 208, 241,

244, 284, 313
Washington Naval Conference

(1921), 10, 32, 33, 193, 310
Washington Naval Treaty (1922),

259

Washington, George, 211
Week-end Review, 35, 125, 131, 162,

184, 209, 254
Weiss, Leopold, 306
Welles, Sumner, 257
Wells, H. G., 62, 63
WeltMhne, 29, 204
Wendel, de (family), 290, 293
Wendel, Fransois de, 339
Whyte, Sir Frederick, 335, 33<5, 337
Who Are These frenchf, 217
Willingdon, Viscount, 99, 138
Wilson, Woodrow, 3, 223, 246
Wirsing, Giselher, 296, 297
Witt, William A., 277

INDEX

Wise, E. F., 277 Young, Owen D., 18, 19

Wolf, Otto, 179 Young Plan, 7, 17, 18, 19, 20, 29,

Woodin, William O., 231, 301 30, 31, 4-8, 66, 68, 72, 105, 183,

Woodrow Wilson Foundation, 279 221

World Economic Conference

(1933), 184, 185, 231, 234, 243, Zaharoff, Sir Basil, 27, 57

245, 247, 248, 249, 259, 265, 283 Zamora, Niceto Alcala, 91, 135, 136,

Wrench, Sir Evelyn, 250 143, 198

Zehrer, Hans, 76

"Yaffle," 238 Zeitschrift fur Geopolitik, 148

Yahya, Imam of Yemen, 306, 308 Zinoviev Letter, 116, 174, 219

Yen Hsi-shan, 41, 71 Zischka, Antoine, 58

393

133811

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