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Mr. GRAY. There is just one question I want to ask. Does your statement, that you have filed with the committee, include a specific provision in regard to the freedom of the seas?

Mr. KOPPLEMANN. I did not hear that.

Mr. GRAY. Does your statement that you have filed here include. a specific provision regarding the freedom of the seas?

Mr. KOPPLEMANN. Yes; it does.

Mr. ALLEN. I would like to ask this question. It was asked once before, but I did not understand your position. I am sending a telegram to the agricultural and manufacturing interests in Illinois. Illinois is an agricultural State. What effect do you think it would have, if the foreign powers become aware that we have passed this neutrality bill which will stop the shipment of goods to them in the event of war? Are they going to stop trade with us immediately, and will we lose a large percentage of our foreign trade now?

Mr. KOPPLEMANN. I am very definitely of the opinion that when they know of the neutrality measure passed by this country, before going into war, they will study very carefully our legislation on neutrality; and it is my opinion that our neutrality legislation ought to be and will be along the lines that will deter foreign nations from expecting any aid from the United States, if they go to war.

Mr. ALLEN. If you were the head of the Government of France, and you knew that in time of war we were not going to ship you any goods, would you not start trading with Brazil or some other countries, feeling that when you needed the goods most, which would be during a war, the United States would not be able to supply your needs?

My State is against this bill, there is no question about it.

Mr. KOPPLEMANN. That is, they are against it because they are afraid it will lose them some business.

Mr. ALLEN. That is right.

Mr. KOPPLEMANN. I differ there, of course.

Mr. RICHARDSON. But the gentleman is talking about peace-time business now.

Mr. ALLEN. Do you think we would lose peace-time business? Mr. KOPPLEMANN. No.

Mr. ALLEN. You do not think we would?

Mr. KOPPLEMANN. I am not prepared sufficiently on the question of trade to answer your question very definitely.

Mr. ALLEN. If you were in charge of the government of some foreign country, you would say, probably, "If we get into a war, the United States says that they are going to stop trading with us; we would better start negotiations with nations who will agree to send us goods in time of war, when we will need them most.'

Mr. KOPPLEMANN. I suppose the best answer to the question is this: We have got to pay something to protect this country against war. We may have to pay something, we may have to sacrifice something.

Mr. CALDWELL. And to restate your position, you are willing to relinquish and announce to the world your relinquishment of your rights, under international law; and relinquish whatever may be necessary of our international commerce, to accomplish neutrality. The CHAIRMAN. I think you have gone a little far in that.

Mr. RICHARDSON. Let the witness answer the question.
It is a very logical conclusion, in my opinion.

Mr. KOPPLEMANN. It may be a logical conclusion to draw from certain questions and answers that have been coming back and forth here. These answers necessarily are made hastily and the questions are not always thoroughly understood. But I want to say this, that it was proven in the past that these rights under international law are completely forgotten when war comes.

I should dislike very much to see a provision contained in a bill passed by the Congress of the United States and signed by the President, which demands certain rights which we know in advance will not be respected, and if we attempt to enforce those rights we may be drawn into a war.

I think much study must be given to the answer to your question, as you put it. But that is the purpose of my remarks, and that is my thought, and that is the best way I know how to answer it.

Mr. SHANLEY. Mr. Chairman, I want to ask the gentleman a question, because he is a member of the Banking and Currency Committee, and as such knows the banking situation.

The representative of the State Department here I think will bear me out on this, that we have a multilateral treaty with South American countries, signed by Mr. Hoover's administration in 1932, as I understand it. One of the provisions is that none of those signatory States will loan money; that is, what that multilateral treaty with those South American States is a recodification of the laws of neutrality. Is that so?

Mr. GREEN. It is true that we have signed such a treaty and it has been ratified, but whether it contains such a provision as you have just referred to, I could not say.

Mr. SHANLEY. I looked it up the other night. The question comes to mind because of this fact. One of the provisions here is that we shall not export arms or ammunition, and we will not loan money to belligerents. Now, one of the provisions, as I said the other day, of international law, is that a nation as a nation cannot loan. During the summer people came to me and said, "Here is your multilateral treaty which prevents the United States from loaning money." There is your precedent.

The catch in that, as I explained, is that that treaty only prevents the United States as a sovereignty, as a nation, from loaning money. But it does not prevent individuals here from loaning money. So in substance it is nothing. It is no precedent at all, but just a reaffirmation of the previous law.

Now, would you say from your experience on the Banking and Currency Committee, particularly with the recent legislation in mind, that private finance and credit is so interwoven with the Government that there is no difference; that we cannot justify the action of individuals loaning money to nations, and say that it is not the Government in reality that is doing it?

Mr. KOPPLEMANN. If you read my bill, Congressman, you will find that I refer to individuals in this matter of credits and loans. Mr. SHANLEY. I know, I have read the bill. But would you say that the structure of our financial system is so interwoven or interlocked with the Government itself through the Federal Reserve System that we cannot disassociate individuals from the Nation;

that when individuals loan, in such a case as I have referred to, it is really the government that loans, because of the existence of our Federal Reserve System? I ask that question because of your knowledge of the banking situation.

Mr. KOPPLEMANN. I am not up on finance and credits sufficiently to answer the question whether or not, when an individual loans, is it in effect the Nation, except to say to you that my bill calls attention to individuals loaning money.

Mr. SHANLEY. Will you be kind enough to confer with your Banking and Currency Committee and give us a statement on that at some future time?

Mr. KOPPLEMANN. I shall be very glad to. It is an interesting question, to me.

Mr. SHANLEY. Thank you.

The CHAIRMAN. If there are no further questions, we thank you for the statement you have given us, Mr. Kopplemann.

The CHAIRMAN. Congressman Ludlow has requested an opportunity to make a statement before the committee. We will hear him at this time.

STATEMENT OF HON. LOUIS LUDLOW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA

Mr. LUDLOW. Mr. Chairman, and gentlemen of the committee: When your chairman very kindly told me the other day that there would be a place for me on today's program I pecked out some notes on my trusty old newspaper typewriter with my 2-finger system. With your indulgence I shall present them now for whatever they may be worth. I think I may make a request similar to that which was made by my predecessor, Mr. Kopplemann, which is, that if it is just the same to you I should like to present a consecutive statement and then, of course, I shall be very glad to yield for any questions, or if any of the members of the committee desire to interrupt me, that will be all right.

I think that no one appreciates any more than I do the intensity and the complexity of the problem this committee has before it, nor is there any one who has more good wishes for it than I have in the discharge of its very great responsibility.

I appreciate your kindness in inviting me to express my views to your committee on neutrality legislation, which is all the more gracious on your part because I am not, nor do I pretend to be, in any sense or degree an expert on this subject. I am just one of many millions of plain Americans who have a deep and abiding hatred of war and who are just now vitally concerned to see that everything possible is done to keep America out of future foreign wars. I have thought a lot about it and have tried, perhaps ineffectually, to apply some common sense to the situation. I have a heavy burden on my heart in connection with past wars and the prospect of future wars, as I am sure every member of this distinguished committee has also, and I think that the committee is to be commended for its hospitable open-house invitation to all who are interested to come and express their thoughts, so that out of the numerous and varied counsels may come something that will be really efficacious and the closest possible approximation of a real solution.

I come to you today in a sort of Irishman's role. I come in the role of the Irishman with whom his entire regiment was out of step. In respect to one vital provision of proposed neutrality legislation I do not agree with any of the many neutrality bills that have been introduced. I believe that all of them-the bill of Judge McReynolds, the Nye-Clark-Maverick bill, the bill of my friend Representative Kopplemann, and all others, allow normal quotas of essential materials of war, not strictly munitions and implements of war, to be shipped to warring nations. The only difference between the bills is as to the formula for determining normal quotas, whether it shail be a 10-year yardstick, as provided in the Kopplemann bill, a 5-year yardstick as provided in the Nye-Clark-Maverick bill, or a yardstick to be devised by the President, as proposed in the McReynolds bill.

I am dead against the normal quota principle. If we are determined to keep this country neutral and protect it from foreign wars, we had better throw the normal quota idea overboard at the outset and cut off all trade and financial relations absolutely with a foreign country when it goes to war.

Suppose there is a friendly foreign country, which we will designate as Nation A, to which we have been sending copious quantities of oil, coal, copper, wheat and other foodstuffs, wool, and so forth, and suppose there is another equally friendly foreign country, Nation B, to which we have sent no exports, whatever, and with which we have had no trade or financial relations. Suppose furthermore, that war should break out between Nation A and Nation B. Under any of the pending neutrality bills we would continue to supply Nation A with essential war materials and if we pass this legislation we will be doing Nation A the kindness to put it on notice in advance that if it goes to war with Nation B it can depend on these exports from the United States as part of its capital war assets.

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If that would not be a lop-sided brand of neutrality, what would be? What, pray tell me, could be said in defense of it? To be consistent in our pretense of neutrality we ought then to send to the combatants notes something like the following:

TO NATION A.

DEAR FRIENDS: We want you to know that we are absolutely neutral, but we will be sending to you a million barrels of oil per annum, so many bushels of wheat, so many tons of coal, so many bales of cotton, so many pounds of copper, steel, wool, etc., and the delivery of these peacetime supplies, which are useful at all times, is guaranteed by the United States Neutrality Act of 1936. Very sincerely,

UNCLE SAM.

TO NATION B.

DEAR FRIENDS: We want you to know that we are absolutely neutral, but we will be sending to Nation A, the country you are fighting, a million barrels of oil per annum, so many million bushels of wheat, so many tons of coal, so many bales of cotton, so many pounds of copper, steel, wool, etc., and the delivery of these supplies to your enemy is guaranteed by the United States Neutrality Act of 1936. We hope you appreciate the fairness of our position.

Very sincerely,

UNCLE SAM.

Mr. CALDWELL. Mr. Chairman, if I may, I would like to ask one question.

The CHAIRMAN. Yes.

Mr. LUDLOW. I shall be very happy to answer it if I can.

Mr. CALDWELL. Would you reverse the position now and say that two nations, Nation A and Nation B are going to war. One of them has all of the oil and the steel and the wool and the cotton that they need. They do not now and have not been purchasing from the United States. They are independent, self-sufficient. Nation B, on the other hand, has been entirely dependent in the past, to a large extent, upon its imports from the United States. Now, for us to say that we will ship none of the commodities mentioned to either country would be just as unneutral as it would be in the cases you have mentioned, would it not?

Mr. LUDLOW. I do not think that we ought to evaluate the natural resources that God grants to any of the different countries in the determination of our neutrality policies. We are not responsible in any way for the natural advantages one country may have over another. I think we ought to accept the situation as it is and try to be absolutely neutral, to keep out of all of these entanglements.

We are all friends together, striving for a common objective that should inspire our noblest efforts-protection from war-and let us consider seriously the probable effect of the normal quota principle and the unfathomable dangers that are indissolubly associated with it. Nation B, with its back to the wall, naturally will do everything it can, by submarine activities, airplane bombs, and other means, to prevent delivery of our exports to Nation A and Nation A, meanwhile, will be doing everything it can to drag the United States into war on its side to protect our trade.

There is but one way to be neutral, and that is to be neutral. We cannot be neutral and accessory to war at the same time. The two must be completely divorced. We cannot serve both the God of creation, who desires peace among His children, and the god of greed who would not hesitate to plunge a nation into war for the sake of filthy dollars. The way to be neutral-the only way to be neutral— is to stop all trade and commerce, loans, and credits with foreign nations when those nations break the sanctity of world peace by going to war.

Another evil of the quota system is that nations that contemplate going to war will stock up on war supplies from the United States, knowing that the more war supplies they stock up on in advance the more supplies they will get from the United States when war is on. That is the way the quota system would operate. History shows that dictators usually plan for wars long in advance and under some of these neutrality proposals dictators, deliberately arranging for a war, could almost dictate their quotas of American supplies in advance. This might be conducive to an expansion of American trade, but it would not be conducive to an expansion of morals.

Those who fear the effect on our foreign trade if we do not allow normal quotas, should be thinking of the immeasurably greater destruction of our trade and dislocation of our industries that would result if we should again become involved in war, with all of the destruction that modern war connotes. The records of the Department of Commerce and the Treasury Department are very illuminating on this point. Our trade with all the world amounts to

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