Evening star., 1936-03-14
NEUTRAL POLICY
OF U.S.FACES TEST
War Would Find a Way to
Reap Americas Aid,
SAYS Observer.
BY DAVID LAWRENCE.


II evidence we're needed Of the
dangers of a rigid and inhexible
policy of neutrality, the events of this
past week have supplied the grim
reminder that neutrality resolutions
can come and go, but European war
threats apparently go on forever.
America today wants no part in
Europe's quarrels, but when it comes
10 stopping trade or restricting 1t, as
often proposed to normal exports"
the problem becomes concrete-will
the United States convince itself in
1885 as it did in 1914, that trade must
go on?
Germany's threat to European
peace makes specific the question
of what kind of neutrality America
can practice.
The resolution Just passed by Con-
gress makes it mandatory to forbid
loans and credits, and gives the Presi-
dent the right to embargo munitions.
Supposing the United States did both.
The United States has an abundance
of certain raw materials. There are
certain products which must be OBJ
tanned here. What would Great
Britain and France do if the en-
bargoes were applied?
Canadian Alternative.
Discussing the matter with foreign
ers familiar with what happened in
the last war, one finds the opinion
freely expressed that munitions fac
tories would be built in Canada, that
vorkmen. especially skilled mechanics
and chemical experts, would be
brought from American plants and
that a whole munitions industry
would be set up across our Northern
border.
As for the export of raw materials,
It is hardly conceivable that the stop
page of trade with Canada would be
a simple matter to accomplish, be-
cause after all, the resolution refers
to munitions and it would be diff
cult matter to add raw products with
out paralyzing the entire commerce
between Canada and the United
States.
AS for Mexico, with certain products,
the prospects are that the making OF
war materials would be established
there, too. Since the British Navy
would control the seas, the transport
of finished munitions would mean a
boon for foreign ships if the Ameri-
can Merchant Marine is debarred
from carrying such cargoes under a
strict Interpretation of neutrality.
The question of finance would not
bother the British and French very
much. because Montreal and Toronto
on the North and Mexico City on the
South and possibly Buenos Aires would
become the new financial centers
through which would flow the funds
of investors who believed that the at
tractive interest rates were worth the
risks.
1t Is really difficult to keep money
from flowing across international
boundaries if there is a profit at
destination. The formation of invest
ment corporations in Canada and in
Mexico, where incidentally surpluses
would not have to be distributed right
away to avoid tax penalties, would
soon be commonplace. As for boot
4. Logging of securities from Canada, it
. would become as prolific as the snug
Cling of whiskey and wine during
#, prohibition.
May Force Modification.
How long would the American peo-
pie. or at least the segments which
we're being adversely affected by such
developments, stand the pressure be-
fore the Washington administration
would be importuned to make reason
able notifications, such as Secretary
Lansing urged upon President Wilson
in the period before America entered
the war in 1917?
The johnson act forbids loans by
American firms to foreign govern
Inents that have defaulted on their
debts in the last war, but it would
not be necessary for the British gov
ernment to float issues in America.
IT could do so in Canada, and as
for Canadian corporations, they are
at liberty to float loans in the United
States, provided they can conform to
the rules. Should they have the finan-
cial support of the Canadian govern
ment as do. for example, the Canadian
railways and should the Canadian
government in turn, be receiving GER
tain orders for munitions and other
supplies, it would be difficult for the
United States Government to make
restrictions without virtually cutting
OF all commercial and financial in
tercourse with Canada.
Rigid neutrality may seem plausible
when it is simple Italian Ethiopian
affair, though here, too, the Wash
1ngton authorities seemed to have
adopted a more realistic view since
Last December, but neutrality of the
t1f1exible kind is revealed as even
more impracticable from a trade
standpoint, when the belligerents loom
up on the horizon to be nations like
Britain and France in possible con-
dict once more with Germany.
(Copyright. 1850