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University Microfilms, a XERO\Company , Ann Arbor, Michigan 72-3450 WEINRICH, William Arthur, 1932- BUSINESS AND FOREIGN AFFAIRS: THE ROOSEVELT DEFENSE PROGRAM, 1937-1941. The University of Oklahoma, Ph.D., 1971 History, modern University Microfilms, A XERO\Company , Ann Arbor, Michigan 0 1971 V.TLLIAM ARTHUR WEINRICH ALL RIGHTS RESERVED THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED THE UNIVERSITY OF OKLAHOMA GRADUATE COLLEGE BUSINESS AND FOREIGN AFFAIRS: THE ROOSEVELT DEFENSE PROGRAM, 1937-1941 A DISSERTATION SUBMITTED TO THE GRADUATE FACULTY in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY BY WILLIAM ARTHUR WEINRICH Norman, Oklahoma 1971 BUSINESS AND FOREIGN AFFAIRS: THE ROOSEVELT DEFENSE PROGRAM, 1937-1941 a p p r O ^ d b y DISSERTATION COMMITTEE PLEASE NOTE: Some Pages have Indistinct print. Filmed as received. UNIVERSITY MICROFILMS PREFACE War preparations stir the deepest of human emotions, and inevitably in a free society public debate occurs over the exigency of preparedness, a complex process which in­ cludes the conduct of foreign affairs as well as programs of domestic defense. In the United States such a great debate began in the 1930's concerning the relationship be­ tween America and a Europe on the verge of war. Many Ameri­ cans maintained in the name of defense that the United States should build high the walls on the western side of the Atlantic Ocean and isolate itself from the evils of decadent Europe. Others insisted that America must support Britain, France, and the other European democracies if Adolph Hitler continued to threaten them. Such division of opinion over foreign policy be­ came an American tradition in the early years of the Republic. Engendered by geographical separation from Europe and propa­ gated by Washington's Farewell Address, isolationism de­ veloped as a basic theme in American foreign policy. The doctrine flourished after World War I owing to the new vogue for the old Marxian accusation that the perpetrators of economic determinism— international bankers and munitions iii makers— were the cause of all wars, past and present. Senator Gerald P. Nye and other national leaders gave this hypothesis its greatest hearing in the 1930's when they investigated the role of munitions makers in World War I . Nye's report was an endorsement of the overly simple revisionist arguments of the 1920's, that business­ men had pushed America into war. Convinced that Nye and his supporters were right, Americans buttressed their small world against the dangers of the larger one by the only way they knew, the legislative process. The neutrality laws were the result, isolationists reasoned that if the government prohibited American citizens from traveling on belligerent merchant ships no Lusitania incidents would occur again. They also reasoned that if loans were denied to belligerents and traffic in arms and ammunition banned, the "merchants of death" would be kept in their place. Unfortunately isolationism did not deal realisti­ cally with the growing threat of the totalitarian powers. Interventionists who recognized this potential danger would have their day later, when the Nazi war machine began to move. In the meantime President Roosevelt attempted to prepare the nation for war by initiating a defense program at home and lending support abroad to the British and French iv in their efforts to counter German advances. This move to­ ward involvement in a European problem precipitated the great foreign policy debate at the close of the 1930's. The business community, including industrial, fi­ nancial, and commercial interests, has left a record of its reactions to Roosevelt's preparedness program. Resolu­ tions passed by trade associations, speeches and letters of individual business leaders, editorial opinion in busi­ ness publications, as well as the records of the pre-war isolationist and interventionist organisations, all reveal the conflicting views of business before Pearl Harbor. Examination of these sources indicates that even though the opprobrium cast upon industry and finance by the Nye Commit­ tee and the Great Depression caused business leaders to be considered warmongers, both isolationist and interventionist segments of business were concerned with the wider ramifi­ cations of foreign policy. This study will attempt to de­ termine the role business played in foreign policy during the five years prior to the Pearl Harbor attack and to dis­ cover whether business succeeded in influencing Roosevelt in the formulation of his preparedness program. The writer wishes to express his appreciation to Research Professor Gilbert C. Fite, Regents Professor V William E. Livezey, Professor Rufus G. Hall, Associate Pro­ fessor Russell D. Buhite, and Associate Professor Norman L. Crockett for their counsel and contributions as his Read­ ing Committee. An expression of deep indebtedness is ex­ tended to Research Professor Fite for his advice and diligent direction of the dissertation. The writer also greatfully acknowledges the assis­ tance provided by the staffs of the following libraries and institutions of research; The Franklin D. Roosevelt Library; The National Archives; The Manuscript Division, The Library of Congress; The Reference Department, The Hoover Institu­ tion of War, Revolution, and Peace; The Division of Manu­ scripts, The University of Oklahoma Library; The Historical Office, united States Department of State; The Chamber of Commerce of the United States Archives; and The Education Division, National Association of Manufacturers. VI TABLE OF CONTENTS Page PREFACE ............................................... iii Chapter I. BUSINESS AND THE EARLY EFFORTS FOR REARMAMENT, 1937-1939 1 II. THE DIVISION OF BUSINESS OVER SHAM NEUTRALITY, 1939-1940 ................... 41 III. BUSINESS REACTION TO THE FALL OF FRANCE ......................................... 73 IV. BUSINESSMEN JOIN THE GREAT D E B A T E .......... 105 V. BUSINESS AND THE POLICY OF NONBELLIGERENCY .............................. 141 VI. GUNS, BUTTER, AND MOBILIZATION............... 167 VII. WAR PROFITEERING AND T A X E S ................... 195 VIII. LEND-LEASE GAINS BUSINESS SUPPORT .......... 222 IX. BUSINESS AND UNLIMITED NATIONAL EMERGENCY .................................... 264 X. CONCLUSION.................................... 305 BIBLIOGRAPHY........................................... 318 Vll BUSINESS AND FOREIGN AFFAIRS: THE ROOSEVELT DEFENSE PROGRAM, 1937-1941 CHAPTER I BUSINESS AND THE EARLY EFFORTS FOR REARMAMENT, 1937-1939 The peace treaties of 1919, ending World War I, failed in their design to establish permanent international amity. The Versailles combination of idealism and Realpoli- tik did not deter the "have-not" nations from demanding more prominent positions in the world community. After the Nazis ravaged the Weimar Republic in 1933, the Fuehrer soon instituted a reign of terror throughout Europe to regain German territories lost in 1919. Subsequent to authorizing universal military service and rearmament— both forbidden by the Versailles Treaty— Hitler reoccupied the Rhineland and attempted to unite Austria with the Third Reich. South of the Alps Benito Mussolini implemented his own expansionist policy, but wasted his resources trying to recapture the glories of ancient Rome in Ethiopia and other African lands. The European crisis alarmed Americans, although Japanese expansion in the Orient seemed a greater threat 1 to American interests. Acquisition of Korea in 1910 and Manchuria in 1931 and 1932 did not fulfill the goals of Japan's Greater East Asia Co-Prosperity Sphere, which re­ served the natural resources of China and Southeast Asia for Japanese industrial use. The thought of a threat to China was revolting to the American public, instilled with the "missionary myth" and the eternal though unsatisfied hope for increased foreign trade with the Chinese, japan ignored these old, emotional ties between the United States and China, and attacked Shanghai and other Nationalist strongholds in late summer, 1937. American reaction to these aggressions varied, although national opinion was united in its insistence upon nonintervention in foreign wars. This reservation resulted from American disillusionment over participation in World War I, which had not made the world safe for democracy, as President Wilson promised. instead, the establishment of a Communist government in Russia and the outbreak of minor wars elsewhere convinced the public in the 1920's that as far as the creation of a Wilsonian utopia was concerned. World War I had been a wasted effort. Adding to American disillusion over entry into the war was the belief that greedy bankers and munitions makers had forced the nation into the conflict for the purpose of reaping huge profits from the sale of materiel and supplies to the Allies. Marxists, socialists, and progressives who had been preach­ ing this doctrine now found Americans receptive to the thesis that business was the major cause of war. Anti-business elements buttressed their arguments with support from singular sources. The Anglophile Thomas W. Lament, senior partner of J. P. Morgan and Company, gave credence to the warmongering charge when in 1920 he admitted that his firm had never been neutral between 1914 and 1917 because "we didn't know how to be."^ During the Great De­ pression further impetus was given to anti-business accusa­ tions. Publication of Helmuth C. Engelbrecht's Merchants of Death in 1934, and the Munitions Investigation Committee report in 1935, helped convince Americans that businessmen
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