Essentials of American Policy in Event of German …..."r" '"' H)£NT1AI V...M,-; CF a^a ucan pci jc...
Transcript of Essentials of American Policy in Event of German …..."r" '"' H)£NT1AI V...M,-; CF a^a ucan pci jc...
" r " '"' H)£NT1AI
V...M,-; CF
a^a u c a n pc i j c f i n ..;•/. GhiuaK vicr-^i^r
1 . General
The ^resent note presents ce r t a i n observations on, ra ther than a
comprehensive analysis o f , what American p o l i c y should be i n the evert of a
to ta l . German v i c t o r y i n the near f u t u r e , '3y t o t a l v i c t o r y i s neant the
des t ruc t ion or e l im ina t i on o f l l l i e d res is tance on the estero f r o n t i n the
ner t few week© or months* The cont inuat ion o f resistance i n the per iphery
of '.vestern Europe >r i n the f a r f l u n g t e r r i t o r i e s of the French and B r i t i s h
Empire* w i l l probably have l i t t l e in f luence on the f i n a l outcome. The e l i m i -
nat ion or the conquest o f the nerve centers o f t>ese empires w i l l ser ious ly
h inder e f f e c t i v e res is tance] f u r t h e r , the w i l l t o res is tance w i l l be more
than weakened by the absence o f a strong r a l l y i n g fo rce or neneleua. ?he
l a t t e r cannot or w i l l not be found i n t h i s count ry , and w i l l c e r t a i n l y not
be provided by t he A l l i e d navies, even i f they should remain i n t a c t *
2* Tobable •.•erman i-'eace
American p o l i c y w i l l depend i n the l a s t analys is on the d e t a i l s o f
the peace t o be l o o s e d by Germany* Though these d e t a i l s renain a • y s t e r y ,
the bread terms o f a Clemen peace s*y be sursdeed on the basis o f the paut
dec lara t ions ml ac t ions o f GerMn leaders* I f the Treaty o f 'uenster of
1940 i s t o reverse the course of th ings determined i n the sane c i t y by the
Treaty o f ea tpha l ia of 1648, then the Holy Hasan 'Empire w i l l be resusc i -
ta ted w i t h Adolf H i t l e r donning the robes o f the Holy Roman Emperor* In
consonance w i t h the speed brought about by the l a s t three centur ies , the
successor t o the Holy Empire w i l l a lso have under h i s sway a t leaet the
B r i t i s h I s l e s , the Near an 1 Mi l l i e a s t , and A f r i c a .
The l e ^ a l f o r r o f tl-se Oernan c rea t ion w i l l be, a t most, of secondary
importance. hether the French are granted a large lei^ree o f autonon^, o r Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
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w* ether Joachim von Ribbantrop w i l l be able to resist the t e s t a t i o n of s i t t i n g
i n Buckingham Palace, w i l l not a l t e r the essential objectives of the 3en»an
leaders* The susceptibi l i t ies and aims or the ti*3*S*U* ma;, be ree lected f o r
a while, an! the services of the f a i t h f u l partner, Signer Mussol in i , w i l l be
exceedingly valuable* His airforce can be used to bott le up the All ied f l e e t
in he Mediterranean, h i s colonies can rerve as an excel lent springboard f o r
"morning up* resistance in the Mediterranean, the >15 Idlo 3 a s t , and A f r i c a ,
and ' l is navy, to gether w i t h that of o ther European powers, w i l l constitute
ar. important element for such "pacification" or domination as iai?ht be con-
sidered i r -e i i a te ly worthwhile or digestible* In the Immediate f u t u r e , there -
fore , the Jeraano-Italian creation w i l l probably comprise, a : t e r making
allowances f o r Soviet demands an- suscept ib i l i t ies , p r a c t i c a l l y the whole
o f Europe amd A f r i c a , and such par ts of the Middle East as the U*3*S*ft* i e
not w i l l i n g t o f i g h t f o r * I t i s un l i ke l y that the combination w i l l venture
further u n t i l the reorganisation of the above-mentioned areas has bean
achieved*
Judging by the speed of tlx? movement of the Gensan forces and the
comparatively amall material laaage i n f l i c t e d on Industr ia l plant and ccrasun-
i c a t i o n e , i t wo I d appear that the reorganization of the war - torn areas aid
oi the re3 t of the t e r r i t o r i e s acquired w i l l be r e la t i ve ly easy and quick*
I n other words, pract ica l ly the whole oi the industr ia l , cotnsercial, and ran/
material wealth of the r e g i e s from Narvik i n the Arctic Circle to the Cape
of Good Hope w i l l remain intact and w i l l serve? such rarposes as the new mas-
t e r s may agree upon* I t i s u n l i k e l y tha t the Jerraano-Ital ian combination w i l l
wish t o lead t h a t easy and peaceful l i f e wiich they have so scorned* Besides,
i f the new order i s t o aci i ievc, as iroisised, the mastery o f the governing
"races" f o r f ,at l eas t a thousand years " , i t w i l l be necessary tc prevent i n
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any and ever for® the possible revo l t of the conquered an1 t o s t r i ke devious-
l y or d i r e c t l y at enemies outside tiie newly formed " imper ia" . For t l d s i t
i s essent ia l to un i f y the whole area economically. This un i f i ca t i on would
have a th ree fo ld objectives (1) g iv ing the conquerors comic te cont ro l of the
essent ia l means ef production! (2) assuring an armed strength which w i l l keep
the conquered under perpetual subject ion, render the car ters impervious to
attack fro?, the outs ide, an] provide them w i th the means t o extern t h e i r sway,
d i r e c t l y or i n d i r e c t l y , to other areasj and (3) y i e l d i ng the highest standard
o f l i v i n g f o r the "masters1. The h igh ly centra l ized systems i n force i n
Germany and I t a l y are i dea l l y sui ted fo r these purposes* ?*iey are l i k e l y t o
be applied wi t h the greatest v igor and immediately f o r a monster armament
pro rami such a >rogram together w i t h pub l ic works w i l l have the advantage
of reabsorbing the demobilised men of the conquered nat ions. Further, these
systems permit many forms of pressure on r eca l c i t r an t s or opponents outside
the p o l i t i c a l j u r i s d i c t i o n of the systems* and narrj subtle ways of i n f i l t r a -
t i o n i n the a f f a i r s of others, Tie economic bargaining powers of a un i f i ed
and cent ra l ised Europe and I f r i c a are enormous, and the temptation to use
their wcr l 2 be toe great even f o r those not inc l ined to ambition or adventure,
rhe dangers confront ing the United states are, therefore, not d i r e c t .
Few, Colonel I indberg1s pronouncements notwithstanding, have a t t r i bu ted to the
Nazis the -wild scheme of an immediate invasion of th i s country by f l y i n g or
sa i l i r . r armadas. The subjugation of t h i s country to the aims and desires of
the Kasi—Fascist combination w i l l f i r s t be attempted by the isethods o f pres-
sure and d is in te gration appl ied to Aust r ia and Czecho-Slovalda. I t i s only
i f these do not succeed, an! a t a much l a t e r stage that actual invas'on may-
be t r i e d . Further, i f t h i s country does net p r o f i t by the lessons of recent
years, there i s l i t t l e reason to suppose tha t these devious an l less expensive
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r.etbods v r i l l not be successful*
Arericsn pol icy should ;>ave a twofold ob jec t ive , the prevention
of i n f i l t r a t i o n and d is in teg ra t ion t'.rough economic p resen ts and propaganda,
an-! the bu i ld ing up of an armed strength s u f f i c i e n t at least to disccura c
opes of a successful invasion. Heedless to sav, the act ion ca l led fo r w i l l
be stupendous but ce r ta in l y not outside the capaci t ies of t h i s country, ac-
t i o n w i l l also have to be imatdisfaej i t would have to assure the f i r s t objec-
t i v e almost at once and achieve the second w i t h i n eighteen months or two years.
The a s i - ascist conquerors w i l l continue t h e i r fever ish a c t i v i t y ; there i s
nothing i n t h e i r past act ions or pronouncements t o j u s t i f y the hope that they
w i l l not t r y to b r ing down the l as t stronghold oi (,pluto~democracyH whi ch
has been t h e i r avowed opponent and eneray f o r years an-i which, by i t s continued
exi stence, shews up the shortcomings of t h e i r can reglaes* The re; percussions
of the acts of the Chamberlains, Simons, iloares, Txmnets and ra lad ie rs
should be a suprens warning against baljf measures and against being lu l led.
1 nto a fa lse sense of secur i ty by the f a i r wor Is and promises, i n f a c t , by
the whole ba-; of t r i c k s of the Nazi- as c i s t conjurors.
S. -1 an American Vslfay
A fev? of the broad measures f o r achieving the twofold object ive
of American po l i cy are noted b r i e f l y below, i'hey cor ; r ise d ip lomat ic , f i nan -
c i a l , and economic measures*
A. diplomatic
1 , The purchase, lease, or acqu is i t ion by other means of the
Anglo- rench Islands do t t ing the A t l a n t i c and Pac i f i c Oceans
from Cape Verdi Islands to Hawaii. The importance o f these
is lands f o r the naval and a i r defense o f t h i s hemisphere and the
necessity fo r t h e i r immediate f o r t i f i c a t i o n i s ev ident . To Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
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avcid t h e i r f a l l i n g under the j u r i s d i c t i o n of other hands, these
is lands should be acquired p r io r to Use d i c t a t i on of pimce. rheir
acqu is i t ion might become w r y urgent i n the event o f the A l l i ed
f l e e t beine handed ever tc the Conquerors i n re tu rn Tor peace cr
Tor the salvat ion from a i r borabardrsent of the open c i t i e s of England
and France. The deta i led means o f acquir ing them are outside the
scope o f t h i s notej claims of the United States on trie A l l i e d coun-
t r i e s and nat ionals might serve a t leas t as p a r t i a l sett lement. I f
d i f f i c u l t i e s ever pr ices should a r i se , f o r c i b l e seizure of those
is lands nearest the hemisphere might be j u s t i f i e d . Fhe leasing
o f s t ra teg ic points i n l a t i n Am* oica, both fo r reasons of lofense
an ! as a r oans of rendering f i n a n c i a l and economic assistance to
the s i s t e r repub l ics , also ieserves serious a t ten t ion .
2. rne conclusion of a fa r reaching agreement w i th the Japanese
concerning Pac i f ic possessions, economic and m i l i t a r y ras te rs .
This ahovld be ione even i f i t meant the cession o f the East Indies
anl Phi l ipp ines to the Japanese. I f necessary, such a t ransact ion
s igh t not be too great a pr ice t o pay f o r covering the Pac i f i c
f lank of th is hemisphere, m i releasing the American f l e e t fo r
service i n the A t l an t i c * I'he c o n f l i c t of ierroan, I t a l i a n and
Soviet i n te res ts -with those of the- Japanejse i n t h i s area, probably
assures a more or less natura l a l l i ance between the tpro countr ies at
t h i s t u r n o f wor ld events* Though the Japanese might become inde-
pendent i n oetrolcum supplies by acquir ing the Fast Indies* they
w i l l s t i l l requi re the raw mater ials and I n d u s t r i a l products i i t ^ r t e d
from t h i e beni sphere. M i f ac to r , together w i t h a Japanese desire
t o steer away Tram dependence cm supplies found i n areas under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
* asi-Fasci at con t ro l and the fac t that th":s hemisphere o f f e r s an
easier an more l u c r a t i v e mar ret f o r Japanese s i l k and panufactured
products, wo; I d assure to the United s ta tes the regular de l i very of
such essent ia l raw mater ia ls of the Pac i f i c as t i n and rubber.
(Kequirements .in the former would be considerably reduced by the
purchase e i the e n t i r e Bo l i v ian output which normally roes to Tngland.)
I t r i g h t also be reca l l ed that the Japanese economic and soc ia l regime,
despite the inroads ade by the m i l i t a r y , i s e s s e n t i a l l y p lu toc ra t i c
atH, hence, n a t u r a l l y h o s t i l e ;o Nasl-Fascist conceptions.
5. the s e t t i n g up o f a juperconfederat ion of the nat ions of t h i s
hemisphere f o r -urpoaes of f o r e i g n p o l i c y sad defence, This cannot
be successfu l ly achieved unless acec . . anied by f i n a n c i a l and economic
aeasures which w i l l prevent the i n f i l t r a t i o n o f non-American d i s -
rup t i ng forces \ these are mentioned below. The means of f i n a n c i a l ,
economic, and other pressure at the d isposal of the United s tates
are vary subs tan t i a l , and should not be spared I n achieving t h i s
ob jec t . I f no t , the device of "d iv ide and rule11 which was so success-
f u l l y appl ied t o Europe might a lso become a r e a l i t y i n t h i s hemisphere.
•. ina- .c la l and .gonosd? i..easureg
1 . I n order t o l&plemsnt the p o l i t i c a l ob ject ives ou t l ined above
i t i s necessary to reor *aniae the system o f the fo re ign tra^Je o f t h i s
hemisphere* This reorganisat ion should be e f fec ted w i t h three aims
i n viisrw: (a) the prevent ion of economic pressure and i n f i l t r a t i o n
i n t h i s hemisphere by the fas i -Faaeist combination! (b) the "•reserva-
t i o n of a s u b s t a n t i a l par t o f United States f o re ign t rade ! and (c)
the geographic r e d i s t r i b u t i o n or the a l t e r a t i o n i n the composition
of the fo re ign trade of t h i s hemisphere when t h i s i s ca l l ed f o r by
reason of f o re ign p o l i c y or m i l i t a r y and defence s t ra tegy . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
These aims cars be at ta ined e f f e c t i v e l y only by tho creat ion of
trad-: corporations fo r cen t ra l i s ing and con t ro l l i ng the fo re ign trade
of th i s hemisphere. Exports and imports cc I d be handled stef l tanecmsly
or separately* As regards exports, one ?nay envisage two corporations*
The f i r s t , which won I d be a l l -Assr i can , would deal exc lus ive ly w i t h those
products i n which the component >arts o f th is hemisphere are competi t ive,
e . ? . | wheat, cot ton, copper, sugar, petroleum products. Exp r t quotas
cculd be determined on the basis o f oast export surpluses! the cor poration
wc Id dispose of the combined export surplus as i t sm f i t and would
remunerate the various aersibc i on the basis of an average, or some other
agreed form o f , or ice obtained >n the en t i r e export* fbe ©rporat l on
would have to be a close c a r t e l , an " not a loo ie club o f t racers*
The second corporat ion might- be- so le ly a United States organisat ion*
Phis weul- deal i n such products of t h i s heiaisphere as the United States
imports, e*$* , n i c k e l , t i n , cof fee, cocoa, copra, and o i l seeds, hen
U* S* t o t a l iimports are equal to or i n excess of the export surplus of
the hemisphere, then the corporat ion could bay the en t i r e annual p rodue-
t i e n ar.i s e l l i t to manufacturers i n the United States. Such would be
the ease, f o r example, w i t h Bol iv ian t i n and 3ras i l ian and Ecuadoran cocoa.
I f , the coher hand, the output of the hemisphere i s i n excess of U* S#
requirements, e . g . , cof ee, a problem ar ises w i t h respect the disposal
of the excess* fhe coroora i i c n could, i n exchange f o r an opt ion on the
en t i re output , l i m i t production on som agreed basis* The disposal of
the excess might involve loss , but such loss would be very small compared
w i t h expenditure on a f l e e t s u f f i c i e n t t o protect every nook and corner
of the South American A t l an t i c seaboard, and the advantages obtained i n
preserving antJ extending ! * S. exports t c var ious ar t3 of the American
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herd sphere3.
The con t ro l of lm;>orts coul also be t t ted w i t h these corporat ions.
Ths roblems here would &;a in be twofo ld , The f i r s t would consist o f
l i i r . i t i n : im o r t s f r o : the outside to those products w i ch are not a v a i l -
ab le , a t a l l or i n s u f f i c i e n t amount, .in the hemisphere, or which cannot
be 'compensated'1 by i n t o r-heu&sphere t r -.de. The second problem would
cons is t i n ob ta in ing i f f >orts from ssarkets which are economically and
p o l i t i c a l l y the best customers of the hemisphere. For p o l i t i c s reasons,
as w e l l as f o r the pnr ose of obta in ing the best terms of interchange,
import i n an-i expor t ! n ; should be handled f o r the hemisphere: aa a whole*
The above proposal does not preclude the con t i nua i i n o f such trade
as I s )Oss'ble w i t h areas under Nasi-! ase s t dOirlnac on. But i t i s
essen t i a l t o observe a t l eas t f ou r c r i t e r i a i n the conduct of t h i s trade t
(a) the trade of the e n t i r e hemisphere should be handled as a wholej
(b) the m i l i t a r y and econoadc requirements o f t h i s hemisphere w i l l have
to be taken f u l l y i n t o account i n deciding the type and amount o f products
to be exported} (c) i n order t o e f f e c t a s h i f t o f labor and resources
may f r o r c e r t a i n overabundant aroHxcts, a ^ r e p r e s s i v e cur ta i lment o f
t h e i r ex:>ort should be foreseen; an! (d) the import requirements of
f r i e n d l y areas i n the h a d Tic or slsew ere should be attended t o f i r s t .
' t r t h e r , the i n c l u s i o n , f o r example, f A u s t r a l i a and New Zealand i the
sehens envisaged f o r the *®erlean hse^isnherc i s not a t a l l excluded. Such
i n d - s i >n wo , Id deoend <m the tenriS c f the a preeiaent -with the Japanese,
an t the degree t o which i t i s advisable, both econc x i ee l l y snd i r d l i t a r i l y ,
t e spread out tha t f a r .
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t * The working i f th© corporat ions would bee-owe loss d i f f i c u l t i f ac t ion
were taken to render the var ious >arta o f the hemisphere less comet i t i v e
and more eorr-Xiznentary. "-.is coclr? be jest done by • ••* investment
which would encoura^e a s h i f t of labor an; resources away from the produc-
t i on o f abundant staples such as wheat, cot ton, src^ar, and cof fee.
5. Fhe susoension o f gold purchases, Lf . f r i ca f a l l s under the sway of
the Nazi-Fascist combination, there i s no reason l e f t f o r the cont inuat ion
of U. 3« subsidies to South Af r ican and other nines* Fai r words fine!
prosdses about a res to ra t ion of the gold standard would be va in , fhere
i s no p o s s i b i l i t y of the I . 3. being able to dispose of even a f r a c t i o n
of i t s jo ld stock; i t can only add to i t * .'tith U. S» trade under the
con t ro l of the corporations irent onel above, the usual considerations
regarding the e f f e c t s of an appreciated do l la r no Ion ler apply. Hold
under earmark shou l i be consi iered as fo re ign gold 3 i t can e i ther be
returned t o the owners or kept f o r tliam i n s tora -c#
The general nsaintenance of ^o ld wrchaaes i n order to ass is t the
gold producing areas of th i s heed sphere i s not j u s t i f i e d e i t h e r . The
t o t a l gol • output of the hemisphere i n 1933 amounted to 401 m i l l i o n d o l -
l a r s , or about SO per cent oi the wor ld output . Production i n the ? • 3 .
an ) Canada amounted to 14.. and 185 t s l l l i o n d o l l a r s , whi le she value of
the production of the res t of the hemisphere isas only 34 m i l l i o n s . I f i t
i s considered advisable t o acquire t h i s go ld , i t shoul> be done by other
ireans than Treasury purchase. The l a t i n American output probably does
not amount to acre than 100 m i l l i o n d o l l a r s . I t i s doubt fu l whet'scr the
Canadian production should be sn. s id i scd , except as a temporary measure*
~anartian resr -rces and labor co I d be sh i f t ed to other uses w i t ; f a r
greater benef i t t o the hemisphere as a whole. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
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/ . rhe i-rpounding of a l l fo re ign assets other than those belonging to
the countr ies of t h i s hemisphere* This needs to be done w i th a view to
not rendering an help to the eneogr and t o preserving American resources
and e f f o r t f o r the rearmament program an I fo r the reorganisat ion of t he
hemisphere. A l l such assets should be held as cover f o r American claiias
abroad. I f r epa t r i a t i on i s to be allowed i t should be l im i t ed to the
y i e l d of such investments and assets, and should take the forrc of pur-
chases of cer ta in surplus American products, e.g«, cotton and tobacco,
l es t t h i s procedure should be considered raah and uneth ica l , i t rosy be
reca l led that American investors i n Germany and I t a l y fare 1 far1 worse, and
t h a t , from the nat iona l point of view, trie Anarican counterpart to these
fo re i gn-held assets js mostly/ the gold a t Fort Knox.
5. Heavy expenditures on reanaaen t . resent appropriat ions are hope-
l ess l y Inadequate fo r purposes of bu i ld ing up an e f f i c i e n t defence w i t h i n
the l i m i t e d t i r e ava i lab le . Two examples may be given i n support of tJi is
statement. Present a i r c r a f t production i n lersiaay, England, ranee, and
I t a l y , despite the imrraense d i f f i c i z l t i e s w i t h r e s e c t to labor , machinery,
and raw mater ia ls , i s probably we l l over the SO,000 planes a year which
President tooaenelt set up as a goal f o r t h i s ecvntry j and, according to
_ r . ickenbaeker, even t h i s l i m i t e d out r.it cannot be achieved, under present
a rep r ia t iens and p lans, before the autusrn of 1 41. Secondly, as f a r back
as August 1^39, termany alone had 500,000 men employed d i r e c t l y i n a i r c r a f t
product ion, and cap i ta l investment i n the indus t ry was at least 603 per
can, or a miniiauzn of 3 b i l l i o n .
These two examples, together w i t h the fo l low ing f igures on the present
armed strength of t h i s country, are adequate i l l u s t r a t i o n s of the need for
heavy appropr iat ions.
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&BZ
2m
Batt leships 15 A i r c r a f t ca r r i e rs 5 Heavy cru isers 18 Light cra isers 17 destroyers 219 SvbEoarines 95 A i r c r a f t 2,163 ' anpos/er—active 145,400 ?iavy reserves 55,035 Marinas 25,000
&BBL
A i r c r a f t 2,700 Manpower—active 241,000 National Guard 251,000 Reserves 144,714 Motor Vehicles 17,791 Tanks, e t c . 700 plus
A n t i - a i r c r a f t guns 400
Ant i - tank guns 744
There are only uwo methods f o r obta in ing the maximise e f f o r t from
pr i va te indus t ry i the temtan and I t a l i a n ir^thods of con t ro l and coercion,
or generous remuneration* E i ther method -w i l l achieve the essent ia l aimst
the lay ing down of ner, p lan t , the conversion or extension of ex is t i ng
p l a n t , and the drawing away of sachins too ls and s k i l l e d labor from peace-
to v-ar-fcirse occupations. i r John Simon* s budgets bear testiiaooy to the
d isasters t ha t accosr>any par simony, and lack of fo res igh t and co\irage.
Germany1 s aggregate budget accounts f o r w e l l over ha l f o f i t s nat iona l i n -
come j even pover ty-s t r icken I t a l y i s ievot ing about ha l f o f i t s nat iona l
income t o sa t i s f y i ng the ordinary and extraordinary needs of the State.
This country1 s a ;re^ate budget i n 1933 accounted f o r about one-seventh of
the t o t a l ineorae payaants to i nd i v i dua l s . And only a sna i l a ^ u n t of t h i a
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-12-
budget represented expenditure on defence as a a inst biie major part l o r
•err,-any and I t a l y . Fur ther , t h i s country has Inasnse resources o f mater-
i a l s , p lenty of excess i ndus t r i a l capacity and i d l e labor , and the in te res t
burden on the nat iona l debt i s r e l a t i v e l y sisal l . There i s no reason,
there fore , f o r hes i ta t ion . At the cost of a r e l a t i v e l y small increase
i n the i n te res t charges on the nat ional debt, the economic patrimony of
ind iv idua ls and of the nat ion m y be kept i n t a c t , and, more i - po r tan t
s t i l l , the s p i r i t u a l and i n t e l l e c t u a l heritage of Western c i v i l i s a t i o n
w i l l be .^reserved*
Hay 22, 1940
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