Mr. VORYS. Do you not think a bill such as the Coffee bill would be the thing-would be the most effective bill that has much chance of being considered?

Mr. CLOSE. Frankly, knowing the Orient as I do, knowing the west coast, that is my native region, I think that Mr. Coffee and yourself should receive great admiration for supporting something that is against immediate financial interest out there.

I know how much money many firms have made on the Pacific coast out of this war trade. It seems to me like more or less blood money at the expense of helpless Chinese men and women, and as being also at the expense of American interests and policy. But I think the fact that a movement to cut off sales that does militate temporarily against the pocketbooks of people on the Pacific coast, a movement like that coming from the Pacific coast itself should receive great respect and attention of the people of the rest of this country, and I feel that the passage of the Coffee Act, bringing Japan to a stand and to negotiations in China, as it would, might be the turning point of this whole aggressor business in the whole world right now.

Mr. VORYS. It would have a moral effect all over the world even though we named nobody else, and did not say why we passed it.

Mr. CLOSE. Frankly, I feel that our job is in the Pacific and I feel that we go on talking about how Chamberlain let down Czechoslovakia, but we have done the same thing to China, as a matter of fact, exactly, although we are disgusted with England for not taking that picture in hand over there, and we talk about what we should do in Europe.

We cannot do anything directly in Europe. We can only make little executive pin pricks like the 25 percent additional tariff on German goods, but that does not settle the world at all.

We cannot do anything directly in Europe. We can only back up England and France if we want to, after they have risked everything to do something, but we can directly, with almost no risk today, do everything required in the Pacific to bring the Pacific back to a status of negotiation and out of a status of war. That is where the present war picture started, in the Orient; Japan started it, and I think Japan can finish it under pressure from us, and right there I think that we can turn back toward a better world, because with Japan having gone out of the fighting business, and into the negotiating business, Italy and Germany would most likely follow, at least there would be a strong tendency that way.

Mr. BLOOM. Could you tell me who the Chinese civic associations of Shanghai are?

Mr. CLOSE. Well, Mr. Bloom, when I was in Shanghai, the Chinese civic associations were several groups of unofficial committees, that would represent what you would have in this country as the civic betterment associations, chamber of commerce, civic welfare association, the hospital association, and that sort of thing.

Mr. BLOOM. They are all legitimate associations?

Mr. CLOSE. They had their headquarters in the Chinese chamber of commerce. There was one each for the settlement under foreign rule, and one of each for what was the Chinese district, and one for the French district, and so on.

Mr. BLOOM. Any further questions?

Mr. KEE. Mr. Close, in lieu of passing this specific legislation against Japan, do you not think it possible for us to accomplish the same thing by passing a bill something like that proposed by Mr. Thomas, in the Senate, or Mr. Guyer in the House, which would let us apply embargo to Japan, at once, and also we would have it in reserve for application against other nations who transgressed by treaty-breaking?

Mr. CLOSE. I think that my last paragraph of summary will answer that, if I may read it.

I conclude that any general neutrality act is complicated and may be useless and may be troublesome, and that acts to put restraint or compulsion on nations going to war, or nations destroying our interests, are needed, but that these acts should be offered frankly as such, and not as neutrality acts, just as rapidly as public opinion will press Congress for their enactment.

Mr. BLOOM. Any further question?

Mr. Close, the committee is very grateful for your coming here, and giving us all of this information, and we want to thank you very, very much.

Mr. CLOSE. It has been a pleasure, and I apologize for keeping you all afternoon.

Mr. BLOOM. The committee will adjourn until tomorrow morning at 10 o'clock.

(Whereupon, at 4:30 p. m., an adjournment was taken to 10 a. m. tomorrow, Wednesday, April 19, 1939.)

AMERICAN NEUTRALITY POLICY

WEDNESDAY, APRIL 19, 1939

HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, Washington, D. C. The committee met at 10 a. m., Hon. Sol Bloom (acting chairman) presiding.

Mr. BLOOM. The committee will come to order for the further consideration of bills to amend the Neutrality Act.

The first witness today will be Mr. Maxwell S. Stewart.

STATEMENT OF MAXWELL S. STEWART, NEW YORK, N. Y.

Mr. STEWART. I am an economist, formerly on the research staff of the Foreign Policy Association, and now associate editor of the Nation, and lecturer on international economic relations at the College of the City of New York. I have also lived for 6 years in the Far East, and am reasonably well informed on far eastern affairs. Mr. BLOOM. Whom do you represent?

Mr. STEWART. I am national chairman of the American Friends of the Chinese People, but my statement is made as an individual. Mr. BLOOM. You just represent yourself; you represent no organization of any kind?

Mr. STEWART. I represent the American Friends of the Chinese People, but my statement is my own, made as an individual. Mr. BLOOM. All of your testimony will be so?!

Mr. STEWART. Yes. I prepared it personally.

I welcome this opportunity to attend this hearing, because I feel that the action taken by this Congress on the Neutrality Act will decide in large measure the question of war and peace in our time.

Our existing Neutrality Act was enacted with a view to protecting the United States against war. With that purpose I have profoundest sympathy, but I feel that in its present form it stands as a definite menace not only to world peace but to our own national security.

The difficulty we face is a fundamental one. The law was framed to meet a hypothetical situation. It was designed to prevent this country from retracing the disastrous steps which led us into the World War of 1917. It was framed with special reference to Europe. But it so happened that the first conflict to break out after the passage of the act of 1937 was in the Far East. And for this situation the law was obviously not designed. This merely illustrates the danger

of establishing a rigid set of principles on the basis of the probable ine-up of forces in the next war. It is impossible thus to chart the future, and we are bound to pay heavily for mistakes. Such a policy is certainly not neutrality, and it can scarcely provide any protection against our being involved in war.

The Neutrality Act has never been invoked in the Far East, because its application would so obviously be unneutral in its effect. China, a relatively poor country, has stood in desperate need of munitions and war equipment in order to defend its very existence. Japan, on the other hand, an advanced industrial country, could produce all of the munitions and implements of war it needed, but it could not carry on its brutal campaign 6 months without essential raw materials which it has obtained principally from the United States.

Mr. BLOOM. Do you mean by that, Japan has reserve materials, munitions and commodities, to last only 6 months, should they not get any more?

Mr. STEWART. This is, of course, an estimate, but I think it is a reasonable one. I think it is conceivable that they might last more than 6 months if they had assurance at the end of that period that they could obtain large supplies elsewhere, but if the supplies were cut off, the needs for maintaining their domestic economy would be so great that they would reach a situation, I think long before 6 months, where they would be faced with the necessity of withdrawing from China.

The flow of these strategic raw materials would not have been appreciably hampered by the application of the cash-and-carry clause, which is discretionary under the act.

To have applied the act in this situation would have denied China the weapons required for its existence, but would have imposed no effective restriction on Japan's military might. It would, in other words, have constituted a clear-cut bounty for aggression, and it would have served to penalize the victim of that aggression. It would have promoted rather than retarded the war spirit which is mounting throughout the world. Fortunately our President was wise enough to seize upon a technicality to prevent our participating thus in the destruction of China.

Mr. BLOOM. What do you mean by that, you agree the President acted wisely in not applying the Neutrality Act with reference to China and Japan?

Mr. STEWART. Yes; I feel that he acted wisely.

Mr. BLOOM. You feel if he did it would react against China as much as Japan, if not more?

Mr. STEWART. It would have reacted very much more against China, there is no question of that.

Mr. BLOOM. Have you read the Coffee resolution? 1

Mr. STEWART. I have.

Mr. BLOOM. What have you to say about that?

Mr. STEWART. I am going to say more about it in my testimony. Mrs. ROGERS. Do you not feel that some wise resolution would never be enforced? Everyone must have known when it was passed that it would be pro-Japanese and pro-British.

Mr. STEWART. It was passed with special reference to the situa tion in Europe, but no one had any thought of the situation in the

1 See p. 631