Washington

on the World Today

THE American people are actionists, and the present prospect of indefinitely holding the line against Russia does not appeal to the American temperament. As one official put it, “vigilant containment’ is not our meat. But, like it or not, the people must get used to it. The breakup of the Conference of Foreign Ministers marks the American adoption of a balance-of-power policy.

Legislators are throwing hill after hill into the hopper, aimed at cutting ties with Russia and declaring economic war. A type of the present thinking is that of Representative Alvin Weichel of Ohio. His proposal is to “prohibit any ship from leaving United States ports with supplies for Russia or Russian-dominated nations. Another measure would seek to accomplish the same purpose by compelling the Administration to publish the names of Americans engaged in the Russian trade.

In addition, export controls, which were renewed at the extra session, give the Secretary of Commerce power to allocate consignments to those places where they will best serve foreign policy. These controls will be rigorously exercised in the event that the Marshall Plan is adopted.

Another section of Congressional opinion insists on reviewing the order to dismantle surplus plants in Western Germany. The object is to stop anything going to the Soviet Union, though this would mean a similar stoppage of reparations, set forth in Allied agreements, to other nations.

Will there be the same outcry against the clause in the Marshall Plan providing for the maintenance of Western European trade with Eastern Europe? The sixteen nations are allowed to export goods processed with American materials to Eastern Europe. Restrictions are imposed, but there is no ban. This is likely to irritate legislators who think that the two worlds should be separated completely.

Congress grows ‘and’

Another difficulty in operating the new system of world polity is that Congress habitually acts against, not for. When Secretary Marshall asked Congressional leaders for aid for Greece and Turkey, they told him that the program could be put through only as an anti-Russian measure. He did not like the approach. He thinks of the aid program as the responsibility which the United States has, as a great world power, to fill vacuums in strategic areas before Russia tills them.

Instead of debating the Marshall Plan as a course of action against the Soviet Union, and oidy in these terms, Congress would do better, in the Secretary’s opinion, to maintain discussion on the higher level of our duty, and to bring into being a working economy for Europe. He deprecates too much stress on our anti-Communism.

There is ceaseless wonder about Russia’s motives. Before the new Soviet Ambassador left Moscow, he called on Ambassador Bedell Smith, and in the conversation asked about Presidential prospects. Bedell Smith enumerated and discussed the contenders.

At the end of the talk the Soviet. Ambassador said, “But you have missed the main challenger.” “Who is that?” asked Bedell Smith, puzzled. “Why, Mr. Wallace, of course,” said the Ambassador. It then dawned on Bedell Smith that this was the way the Kremlin had prepared the Ambassador for his mission to America. Undoubtedly his observations while in America will come from his original instructions.

Republicans and the Marshall Plan

In spite of the anti-Russian feeling in Congress, the Marshall Plan is slated for a tough passage. Coolness toward it was noted at the end of the extra session. The Republicans, with an eye on the Presidency, insist on writing legislation. They did over the interim aid bill and the anti-inflation program of the Administration. They are reputed to have up their sleeves their own version of a Marshall Plan. This latter will probably be worded in such a way as to reduce the cost and therefore the “self-denial” that the President said would be entailed by the Marshall Plan.

There will also be provisions for supervision that might threaten its workability as well as its acceptability. It is the tone that makes the music, and the tone of some Republican leaders on aid to Europe is harsh and grating, and might be expressed in demands for rigorous control abroad as at home. Intervention there must be, but it must be exercised as an art, not as a weapon.

How to stop inflation

Republican action on inflation is more prayerful than purposeful. The inflation now raging is a monetary phenomenon. That is to say, there is too much money competing for our goods and services. But nothing in the Taft bill (which the President in the absence of agreement on his ten-point, program was forced to accept) will limit the money supply. The Taft bill deals with effects and not causes.

The only suggestion that would curb the plethora of outstanding money is the Eccles plan for the setting up of now reserves back of bank lending. This would be a brake — perhaps so effective a brake that inflation might turn into deflation. Indeed, this is the warning that all the witnesses, from Secretary Snyder to the heads of commercial banks, have uttered in committee testimony.

Perhaps the inflation scare is overplayed. Money supply means private deposits in the banks and cash in circulation — check and pocket money. In six months the increase, mainly through loans to business, has been over 5 billion dollars. Yet the index of industrial output is relatively stable. Perhaps bank loans, especially in view of government appeals to bankers, will taper off.

The consensus in the Capital is that these factors will not dispense with the need for government action in restricting bank credit. But to handle such curbs at this stage of the business cycle is to handle dynamite.

In the absence of either direct action or economic stability, the favored weapon of Congress for keeping the economy from gelling out of hand is by exhortation and intimidation. In the latter category is the pillorying of speculators. It is easy to get kudos, if not results, out of naming persons who are trying to make money (or to keep their fortune) by gambling in inevitably rising prices. The speculators are engaged in what was considered legitimate business, and though their operations may account for the fluctuation of prices, they are not responsible for the rise.

This naming of names is a sort of alibi for not dealing with the cause of rising prices. The devil theory is always popular when courage is at a premium — the courage, that is to say, to buy the whole of the cereals crop and allocate it till conditions become less abnormal. However, the offense of speculation is real rather than phony when committed by public servants.

Secret documents

The flood of memoirs on the latest and perhaps the greatest decade in American history is beginning. It has raised a question concerning the present policy of secrecy about the war documents now in possession of the United States government. A scholar in Congress, Senator Thomas of Utah, has taken up the matter. He asks why American historians are denied access to these and to many other relevant documents.

The secrecy policy, evidently, does not apply to official memoirists — for example, Mr. Byrnes, who, in his book Speaking Frankly, confirms the existence of many documents relating to Russian ambitions. There is no objection to Mr. Byrnes’s use of the information. The objection is that the professional historian does not have the same right.

To be sure, Secretary Marshall has announced that at least one very important set of these documents is soon to be made public. These are the documents from the Nazi archives which were captured by the American and British armies. However, these are not American documents, and they have already been published in Germany, in part without Marshall’s prior consent. The attitude of the professional historian toward this secrecy is summed up by Dr. Charles A. Beard: “Insistence on opening archives and on critical research and writing is among the firmest guarantees that the night of despotism will not fall over the world.”

New year new taxes

When Congress settles down, there will be a battle between the Republicans, anxious to relieve the taxpayers out of the 7-billion-dollar surplus, and the Administration, determined to conserve it.

The Republicans say that reduction of some of the tax burden on enterprise would produce more investment and more goods, and therefore would be a weapon in the light on inflation. The proposal which Mr. Truman made in his State of the Union message to Congress would bring tax relief to those in the lower income brackets but raise taxes on corporation profits.

One thing is certain: the tax discrimination between states with community property laws and stales which do not have such laws will be ended. That is to say, married couples will be able to split income for tax purposes as they do in community property states. Delayed action by Congress has already resulted in a number of states adopting the community property system.

Without a Federal statute a community property law, as Governor Dewey says, would “disrupt the whole foundation of our legal system” and “involve questions of constitutionality which might severely limit the adequacy of such a statute.” To be sure, a federal law is bound to be attacked as favoring the rich. But the need to give relief to middle incomes, which were formerly the source of high investment, is impressive.

The Mood of the Capital

Some grumbling is to be heard that the Europeans who produced the “interim” Paris report have done little to improve the economic unity of Europe which is the great concept of the Marshall Plan. Americans would be cheered by such first steps as that of collecting the immense quantity of scrap steel available in Europe. The Harriman Report turned down the European request for scrap from America because scrap is our tightest item and because scrap is lying around everywhere in Europe. Could there be a practical beginning in this direction while we wait for sufficient authority to follow up the Paris plans for a Continental steel industry, European public works, and customs unions?

The Capital is jittery over the breakup of the Conference of Foreign Ministers. Some say that it did not work because it was too open diplomacy. The fact is that we have tried all kinds of diplomacy, and none of them has worked. It takes months to get any reply from Moscow on even important matters. On Germany it has been found simpler to have matters taken up in the Allied Control Council in Berlin. Even the secret meetings of the Conference of Foreign Ministers were spoiled by Russian leaks. Actually nothing has brought any kind of settlement with Russia.

The feeling is firm that Russia’s non-coöperation is due to the hope that the United States will be overcome by a slump and will then have to get out of Europe. Even anti-Marshall Plan legislators think that. They explain their opposition as due to the certain failure of the Plan, and this because Europe is past saving. Thinking in terms of the old and discredited strategy, they want the United States to devote resources to home defense, though under the Marshall Plan we should get many materials which we now lack for that, purpose.

Perhaps the jitters will subside when the Capital gets used to the new world situation. If a tithe of the time now spent on red-baiting and witchhunting were devoted to strategical planning, the country would be much further advanced, in domestic strength and in foreign relations, tor coping with the great ordeal.