Evening star., 1939-09-30
Senate Report
Says Embargo
Bars Neutrality
Bitter Criticism of
90-Doy Credit
Provision Crops Up
BY J. A. OLEARY.

The United States cannot main
tain its neutrality as long as the
existing arms embargo remains on
the statute books, the Senate
Foreign Relations Committee de-
clared in the report it filed with
the Senate today in support of the
administrations take title and
carry" substitute.
With history making Senate de-
bate due to begin Monday, bitter and
deep differences Of opinion over the
90-day credit provision, specifically
whether it subverts the johnson Act
forbidding American loans to de-
faulting nations, were turning the
spotlight from the single issue of
whether American shipments Of
arms to belligerents should be per.
mitted.
Johns0n's Criticism.
Attention was first focused on
the provision yesterday when Sen.
ator johnson, Republican, of Cali
fornia, made the claim that allow.
ance of 90-day credit to foreign
purchasers would be contrary to the
intent of the johnson Act. He said
he would introduce an amendment
to safeguard his original measure.
Chairman Pittman at first agreed
that the pending measure would
modify the johnson Act, but he
later revised his opinion with the
explanation:
ut is possible that a construc-
ton could be given to the word loan
that would not include ordinary
international credits with relation
to export goods. These matters are
generally transacted through 80 to
120-day drafts, or other similar evi.
dences Of payment, and they are
generally considered cash trans
actions"
Supporters of the later Pittman
viewpoint were reported relying on
views said to have been expressed to
the State Department by Senator
johnson himself at the time his
measure was passed in 1884.
At that time, it was said, Senator
johnson took the position that ordi-
nary commercial credits would not
infringe on the johnson Act.
Senator johnson said today he
had no recollection of having COM
municated his views to the State De-
partment in 1884. either by letter
or in person. He added, however, it
was possible he had done so.
Situation Is Different"
Even if I did" he told reporters,
"this is q different situation. At
that time, there was no intent to
evade the terms of the act in han
ding ordinary commercial credits.
Now, in time of stress. We are faced
with a proposition where there is an
intentional design to abrogate the
johnson Act"
Senator johnson said he did not
believe 90-day credit to belligerents
could be regarded as an ordinary
commercial transaction approximate
ing a cash payment.
up till now" he asserted, I'VE
have been led to believe by the spon-
sors of the bill that it would require
cash on the barrel-head. Where is
the cash in this?"
In the case of airplanes ordered
in this country by England and
France before this war began. it was
said in official circles today that the
terms were Is per cent when an
order was placed. another Is per
cent later and the remaining so
per cent on delivery. Officials said
they did not know of any transac-
tions on any other basis.
Senator Nye, Republican, of North
Dakota, another opponent of the
Pittman bill, supported the john
son contention, adding:
LAS soon as modification Of the
johnson Act is accomplished, the
next step will be repeal of the CASH
and-carry clauses"
Borah's Halfway Position.
Senator Borah, Republican, of
Idaho, leader in the opposition
bloc. took a halfway position on
this particular controversy, explain
ing that he would consider 9O-day
| credit transactions tantamount to
cash, but predicting that these Short
term aids would soon be found in
adequate by belligerent purchasers.
In that event, he added, pressure
will be eXerted for outright repeal
of the johnson Act and for wide
open credit to belligerents.
The essential portion Of the john
son law reads as follows:
That hereafter it shall be unlaw-
full within the United States or any
(See NEUTRALITY, Page A-33