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you have any comment on that point?

Mr. JOHNSON. I would like to inquire what you are reading from. The CHAIRMAN. What paper are you reading from?

Mrs. BOLTON. I am reading from the quotation of the Economist in London which is an outstanding financial opinion in London.

Mr. JOHNSON. It is not a Government publication.

Mr. KNOX. I am perfectly willing to answer, Mr. Chairman. If I were a Britisher I would okay every word in that paragraph you have read. But the decision of whether we shall go in or not is not going to be made in London. It will be made here.

Mrs. BOLTON. And that is entirely up to the President.

Mr. KNOX. Up to the Congress. Nobody can declare war but the Congress.

Mrs. BOLTON. But we can perhaps convoy ships while we are neutral?

Mr. Knox. No, no. In my judgment that would be an act of war. Mrs. BOLTON. Your judgment is that the power is not granted ununder this bill, the power to convoy is not then granted?

Mr. KNOX. That is my understanding.

Mr. JOHNSON. Mr. Secretary, I simply desire to express in contradistinction to the gentleman on the other side who said you were an artful dodger, that you have been candid and frank and have shot straight from the shoulder and I think you have been a great witness and I am glad to know of your wholehearted endorsement of the bill. The CHAIRMAN. Mr. Fish.

Mr. FISH. I should like to add to that that the witness has been most cooperative and helpful and most convincing and honest.

Mr. KNOX. Thank you.

Mr. TINKHAM. May I be allowed to share that attitude.

The CHAIRMAN. On behalf of the committee we all share that. Mr. SHANLEY. I have only one purpose, and that is, that out of these hearings will come a bill so that the world and the country will know exactly what we intend to do. Now, you have contributed to that because you have said it was to help England win this war. I think also you have said that it is the attack that wins modern war and that is the greatest lesson we have learned.

Mr. KNOX. Yes.

Mr. SHANLEY. Those countries which are at all successful today must have the jump on the others?

Mr. KNOX. Yes; most emphatically.

Mr. SHANLEY. I have a substantial number of questions which I would like to ask but which I would ask in executive session, as any questions which I might ask might be embarrassing. I want to thank you for your contribution and confine myself to generalities.

Mr. KNOX. Thank you.

Mr. SHANLEY. As you understand this bill, in helping England to win the war the only way it can win the war is to give the Executive power, whether he be a Democratic or Republican person and whether he be surrounded by Republicans or another party. You have got to give him power.

Mr. KNOX. Yes.

Mr. SHANLEY. Then this thought alone I will leave with you. The legislature cannot put powers of limitation around the Executive especially in the Army and Navy.

Mr. KNOX. And especially in a business-like war where you never can tell what is going to transpire. The most surprising situation might arise. If you tie his hands in advance, you cripple the Executive in the functions you want him to perform.

Mr. SHANLEY. Further, if those things are to be obtained quickly and immediately, it has got to be done this way?

Mr. KNOX. That is right.

Mr. SHANLEY. May I also say that the protection of the Western Hemisphere is not dependent on the Monroe Doctrine, but is dependent on self-defense, and by this very act we wipe out all prior beliefs and ideologies on neutrality. I think the American people and the public ought to understand that.

Mr. KNOX. I am afraid I do not go along with you to that broad extent, Mr. Congressman.

Mr. SHANLEY. Whenever the Executive exercises the power here, he will by that very act annihilate or just abrogate some law we have had on the statute books since 1935.

Mr. KNOX. I think this act modifies very definitely our present posture, but I would not say, as I understood you to say, in the immediate present, don't you see?

Mr. SHANLEY. Step by step. We would be giving him the executory power to do this.

Mr. KNOX. To help England.

Mr. SHANLEY. To help England.

Mr. KNOX. Yes.

Mr. SHANLEY. That is it, exactly. Further, I am glad you brought out the fact that foreign exchange had been practically eliminated. We can get land from England, but the United States cannot go into the real-estate business. In your opinion, is there enough quid pro quo scattered throughout the Empire to satisfy the Chief Executive, in his opinion-and he is a pretty good Yankee David Harum-to be able to get us something for what we may be able to give?

Mr. KNOX. The British Empire is not bankrupt. It has no dollar exchange. But the British Empire is the greatest producer of gold in the world. It has control of great supplies of rubber and tin and of various other commodities which we do not have. There is an abundant field in which to procure quid pro quo for all the help we can give.

Mr. SHANLEY. In your opinion there is enough.

The CHAIRMAN. Mr. Jarman?

Mr. JARMAN. I have no questions.

The CHAIRMAN. Mr. Arnold?

Mr. ARNOLD. No questions.

The CHAIRMAN. Mr. Burgin.

Mr. BURGIN. There are not questions that I have checked which the Secretary has not answered.

The CHAIRMAN. Mr. Courtney.

Mr. COURTNEY. I have no questions.
The CHAIRMAN. Mr. Eberharter?

Mr. EBERHARTER. No questions.
Mr. GREGORY. No questions.

Mr. WASIELEWSKI. I feel that the field has been amply covered.
The CHAIRMAN, Mr. Sikes?

Mr. SIKES. Mr. Secretary, I admire your frankness and sincerity. Assuming that it is going to be several years before we have a twoocean Navy and assuming that South American bases, either by boring from within or by other means may be established, can you suggest from your experience any method or bill other than this H. R. 1776 which will provide a quicker and more economical means of ensuring our hemisphere defense and minimizing the danger to this Nation from abroad?

Mr. KNOX. Do you eliminate in your estimate the help which the survival of the British Fleet would be?

Mr. SIKES. I am just asking, Mr. Secretary, if you in your broad experience have encountered any substitute or anything which would be of more value to us than this bill which we have under consideration?

Mr. KNOX. It is a rather radical idea and I am afraid my Republican friends behind that rail will gasp, but I think the best thing for us to do is to treat South America as we treated the great West when it was developed, and that meant a virtually free exchange of goods between the East and the West. If we were to establish a freedom of trade between North and South America and remove every last barrier to that trade, we would tie them to us with economic bands of steel that no one could break.

The CHAIRMAN. Mr. Davis?
Mr. DAVIS. No questions.

The CHAIRMAN. Mr. Secretary, I promised we would let you out at 5:30 and on behalf of the committee we want to thank you very, very much.

The committee will recess until tomorrow morning at 10 a. m., when we will hear Mr. Knudsen.

(Whereupon the committee recessed until January 18, 1940, at 10 a. m.)

LEND-LEASE BILL

SATURDAY, JANUARY 18, 1941

HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, Washington, D. C.

The committee met at 10 a. m., Hon. Sol. Bloom (chairman) presiding.

The CHAIRMAN. The committee will kindly come to order. Appearing before the committee this morning is the Honorable William S. Knudsen, Director General of the Office of Production Management.

Mr. Knudsen states that he has no prepared statement to make and under those circumstances we will start off with questions. STATEMENT OF HON. WILLIAM S. KNUDSEN, DIRECTOR GENERAL, OFFICE OF PRODUCTION MANAGEMENT

Mrs. ROGERS. Mr. Knudson, we are delighted that you are here. Mr. KNUDSEN. Thank you.

Mrs. ROGERS. Mr. Knudsen, you are a great businessman. The first question I am going to ask you is this: What effect do you feel this so-called lease-lending plan, will have upon the business of our country? I saw in the press some time ago where a member of Parliament was jubilant about this bill and stated in the Parliament that after the war was over it would be fine because the British people could be employed making munitions to return to the United States in exchange for the munitions that we would send them under this bill.

Would that not be very bad for the business of this country and keep a great many people out of employment, a great many of our munitions workers?

Mr. KNUDSEN. I do not know. It depends entirely on how the domestic business responds to the adjustments that we have after the war here.

Naturally the so-called munitions that will be returned to us will not be manufactured at the speed that we are manufacturing for England, consequently the return will be possibly spread over a long period. Our problem here would be to get our facilities employed on domestic production after the crisis is over.

Mrs. ROGERS. Would it not seem to be a great pity to not employ our own people, who are employed in making munitions, over here, after the war is over?

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