The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-02
LOANS FORCED
u. 5. IN WAR,
PROBERS BARE
State Department Files
Reveal Course Leading
to Conflict.
BY RODNEY BUTCHER
Times Special Writer


WASHINGTON, May 2.-The
long, devious road to war at last has
been mapped and charted
1t is the road America travelled in
the years of her neutrality from Au-
gust, 1914, to April, 1917. 1t is the
same road America will travel again,
according to Senate Munitions Com
mittee investigators, if another Eu-
ropean war breaks out this summer
unless drastic new neutrality legis-
lation is passed in the meantime.
A confidential report now before
the committee shows for the first
time the sequence of events and
overwhelming pressures which swept
the Wilson administration from its
initial strict neutrality position
and its He Kept Us Out of War"
campaign slogan in 1916 to a point
where American statesmen faced
choice between war and a domestic
panic accompanied by European
financial chaos.
Quoting from scores of secret
documents in State Department files,
which are considered too sensational
for publication. the report traces
step by step the memorable conse-
quences which began to pile up
when the first boatloads of NUM-
tons and foodstuffs left these shores
for ports of belligerent nations.
Shift to Allies Side
There were two parallel ruts In
this road. In brief:
l. American industrial, commercial
and financial interests piled up
huge structure Of production, export
and debt. They became inextricably
bound by gold and steel to the war
fortunes of the allies.
The government, whether inf1u-
enced by pressure or the threat of
a collapse of that structure in eco
nonliC chaos, shifted it's neutrality
policies to the advantage of the allies
and the disadvantage of Germany.
By countenancing loans to the
allies which it had at first called
''unneutral," it in time reached a
crisis where the Morgans and other
private bankers could no longer Sus-
tain the structure, and direct f1nan-
cial aid from this government was
essential to save it,
2. By arriving at a neutrality poll
icy which permitted Americans TO
sell billions of dollars worth of mu-
nitionS, foodstuffS and other mate
rails to Britain and France-and to
lend them the money to pay for it
and at the same time permitting
England to violate our neutral rights
to the extent of blocking our COM
merce with neutrals bordering on
Germany, we became in effect part
ners to the starvation blockade" of
| Germany.
Protests Grow Feebler
Our protests to England grew
feebler as our war profits mounted.
The report shows how the Germans,
as they grew hungrier, became in
creasingly enraged at America.
Eventually, in bitterness and des-
peration, they resumed submarine
warfare. And the emotional reac-
ton of the American people coincid-
ed with the feverish back-stage lit
tiers of our statesmen over the eco
nomic crisis.
Securities to the extent of $2,000,-
000 900 as we'll as American prosper
ity would have been jeopardized by
a German victory, it is pointed out.
The war cost us 100000 killed,
10000 wounded and $22,625,0o0, 900
directly. The postwar cost to us
has been estimated as high as $780,
900, 100000
Opposed by Bryan
When the Morgan firm in August,
1914, first asked the State Depart
ment its attitude as to loans to bel
ligerentS, Secretary William Jen-
nings Bryan at once took the posi-
ton that such loans would be likely
to get 'us into war eventually as
financial interests here championed
the cause of the debtor nations.
| So the State Department declared
war loans would be inconsistent
with the true spirit of neutrality"
But our huge munitions sales had
to be financed and soon there was
an informal agreement between Act
ing Secretary Robert Lansing and
Mr.. Morgan that commercial cred
it's were another matter.
The bankers were around again in
a few months, seeking permission to
float big sums. A year after the
wars outbreak, Secretary Lansing
had succeeded Mr.. Bryan and was
agreeing with Secretary of the
Treasury William G. McAdoo that
conditions had changed.
Morgan Floats Loan
The war supplies interests had
built up a s2,6OO,O000O0 favorable
balance of trade. Withdrawal of
allied gold to pay for it would have
bankrupted England and France. If
they couldn't find means of paying
US, it was argued. they would have
to stop buying from us and there'd
be economic hell to pay here at
home.
CTly big allied bond issues could
save our national interests N the
face of an economic crisis. SO the
first big war loan. the S500.000,000
Anglo French issue, was f1oated by
a Morgan headed syndicate. while
the State Department, secretly en-
barrassed by Mr.. Bryan's previous
interpretations of the true spirit of
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