New History & Old
(See front cover and pictures, pp. 14 & 15)
Inquisitive young men, professional peace lovers, retired businessmen, pretty maidens, frumpy matrons, distinguished-looking Negroes, seedy individuals who frequent places of political excitement, occupied half the spacious floor of the barnlike Senate Caucus Room one morning last week. As representatives of the People, on neat rows of chairs, they sat silent and well-behaved, staring at the hurly-burly in the other half of the room.
There newshawks chattered at the extended press tables. Capitol policemen in uniform circulated through the moving throng, trying to maintain order. A little knot of elderly financiers from Manhattan stood by themselves like new arrivals to be introduced at a large reception. And everywhere cameramen swarmed, climbed over one another, mounted chairs & tables, formed a living pyramid above half a dozen Senators who sat, all but lost from sight, at a long table at the end of the room.
From camouflaged amplifiers high over-head a hollow voice suddenly began to croak: Senator Gerald P. Nye was saying that as soon as the witnesses had been sworn, cameramen would please retire. Three white-thatched witnesses stood up. The amplifiers carried the clunk-clunk-clunk of cameras along with the words of the oath. Flashlamps flickered like heat lightning.
"Mr. Morgan," began Senator Nye, "will you kindly state for the record what is your connection with J. P. Morgan & Co.?"
Thus the Senate Committee on Investigation of the Munitions Industry set out last week to prove, if possible, that the U. S. had gone to war in 1917 because Wall Street's international bankers needed U. S. troops in the field to secure repayment of their Allied loans.
New Thesis-- One April afternoon in 1917 George W. Norris of Nebraska stood before the U. S. Senate and cried out: "We are going into war upon the command of gold. ... I would like to say to this war god, 'You shall not coin into gold the lifeblood of my brethren.' ... I feel that we are about to put the dollar sign upon the American flag." Senator Norris' words were not history. They were the judgment of a man upon contemporary events.
When the history of 1914-18 was written, it said plainly that the U. S. went to war because German submarines sank U. S. ships without warning, killing U. S. citizens. Over two years this reason was built up to such a point that President Wilson had only to mention it before Congress to procure a vote of 373-to-50 in the House of Representatives on the declaration of a State of War.
Lately, however, this version of why the U. S. joined the Allies has been challenged. Last spring Walter Millis, able young editorial writer of the New York Herald Tribune, published Road to War, a book which went far to provide the country with a new interpretation of its history. The U. S., according to Mr. Millis, had been sucked into war; Woodrow Wilson had been a victim of mistaken policies and a puppet of circumstance; the toils of propaganda, insidious stirrings of befuddled popular sympathy, the operation of businessmen and financiers, had dragged the U. S. into a foreign mess that took the lives of 126,000 citizen-soldiers. There were well-known facts: In the autumn of 1914 J. P. Morgan & Co. became agents for the purchase of war supplies by Great Britain; before the U. S. entered the War the House of Morgan bought three billion dollars' worth of goods for Allies on a commission of 1%; these purchases had made prosperity for U. S. farmers and manufacturers; to finance these huge purchases the Allies borrowed, first, privately from U. S. bankers, later publicly from U. S. investors. On these facts Author Millis constructed a new interpretation: "The mighty stream of supplies flowed out and the corresponding stream of prosperity flowed in. and the U. S. was enmeshed more deeply than ever in the cause of Allied victory."
In 1917 Senator Norris was almost alone in his interpretation of why the U. S. went to war. By 1936 a vast army of people and politicians, still sick and sore with the memory of what their country had gone through, were ready to agree with him. In a time of national enthusiasm for peace and neutrality, any stumpster could cry that the U. S. went to war "to save the skins of its bankers." The opportunity to accuse munitions makers and international bankers of having shoved the U. S. into a foreign war for their own selfish interests was too good to be missed by the U. S. Senate. Perhaps it might even succeed in making the new version of U. S. War history the authoritative one.
Senator Nye, brown-haired and youthful-looking, sitting as chairman at the centre of the Committee table with his pointed chin thrust out, looked as if he were oppressed by the knowledge that the eyes of the nation were on him. At his elbow, equally intent, sat the Committee's counsel, bushy-browed Stephen Raushenbush, who had conscientiously sifted thousands & thousands of documents in preparation for the hearing. Senator Vandenburg smoked a cigar, tried to look urbane. Senator Clark, with round pink face and snapping eyes, sat waiting to ask sharp, insinuating questions. One of the founders of the American Legion, the son of the late great Speaker of the House knew War at first hand. Before the Committee for settlement was a scandalous question: Should J. Pierpont Morgan be hated as a warmonger second only to Kaiser Wilhelm? Did U. S. blood on the fields of France save his financial skin?
Research v. Scandal. Like an expeditionary force, the House of Morgan had gone to Washington. In the Shoreham Hotel Morgan partners entrenched themselves in an entire wing of the eighth floor. A special barricade guarded night & day by plain-clothes men protected their redoubt from surprise attack. In the 40 rooms behind the barricade were staff headquarters, mess hall, recreation room, and the individual dugouts of the firm partners. Employes came & went all day long carrying dispatches from Manhattan. Files, records, ledgers filled one entire room, overflowed into the main living room. Thence with their staff of lawyers, headed by John W. Davis, the senior Morgan partners--Mr. Morgan, Thomas W. Lament, George Whitney, Russell Leffingwell, S. Parker Gilbert--sallied forth every day to the field of battle in the Senate Office building. Thither at evening they returned, to rest, confer, consult their records, see the Press, put on their dinner jackets, sit down to a pleasant evening meal together.
If the presence of the House of Morgan in Washington was like that of an expeditionary force, the witnesses before the Senate Committee looked more like survivors of the Grand Army of the Republic. Now a sedate old man with a front like Falstaff and a nose like Cyrano, J. Pierpont Morgan had been head of the House of Morgan for only 16 months when War broke in 1914. Next to him sat his No. 1 partner, slightly shrunken with age but still alert, Thomas W. Lament, who in 1914 was a junior in the firm. Third in line was a bowed, white-haired man whose motions showed the muscular uncertainties of age, who spoke in a quavering oldster's voice. He was Frank A. Vanderlip, who retired 17 years ago as president of New York's National City Bank. Woodrow Wilson, William Jennings Bryan, Robert Lansing, Henry P. Davison, who negotiated the House of Morgan's contract as purchasing agent for Great Britain, and Edward R. Stettinius, who was in charge of carrying out that contract, gave documentary testimony on a closed era from their graves.
Yesterday's scandal, like yesterday's news, is hard to revive. From the first the hearing took on the air of historical research rather than of a scandal hunt. Quickly Messrs. Morgan and Lament verified the list of their present partners, correcting two misspellings and crossing out the names of three who left the partnership four months ago. But when events of 1914 were called in question, answers took a different turn.
"I really don't know whether we discussed it," Mr. Morgan would reply with exasperating frankness. "That was 20 years ago, of course. I can't make up a memory."
"I think I had that impression at the time," quavered Mr. Vanderlip, "but I'm not certain. I don't remember what he said 22 years ago." When Senator Clark tried to pin the witnesses down with a "Don't your records show," Mr. Lamont would interrupt: "If I may say so, Senator, the only records that we have are an old file of cablegrams that have been in a warehouse in Brooklyn. We have no other records of the period."
Diggings. With Morgan & Co.'s cablegrams, and government files, the Committee proceeded to cover the chief facts of Wartime financing:
P: As early as Aug. 3, 1914, Morgan & Co. received a cablegram from Rothschild Freres of Paris suggesting a loan of $100,000,000 to France. Morgan answered that because of exchange conditions, they could not make the loan and would not do so, in any event, without the U. S. Government's consent. In answer to an inquiry from Morgan & Co. Secretary of State Bryan then announced that loans by U. S. bankers to any belligerent nation would be inconsistent with the country's "true spirit of neutrality." Two months later Mr. Vanderlip told French Ambassador Jusserand that National City Bank would head a syndicate to grant "credits" to the French Government provided the U. S. Government did not object. Counselor Robert Lansing of the State Department, after an interview with President Wilson, notified representatives of Morgan & Co. and the National City Bank that while the U. S. would object to the sale of foreign war bonds to the public, it would neither approve nor disapprove "credits" made directly to belligerents to facilitate purchases in the U. S. First intimation of scandal in last week's hearing was that this change of U. S. policy had been concealed from the public. The Morgan partners promptly offered newspaper clippings to show that the news had been printed in the Press at the time.
P: In August 1915, prompted by an inquiry from the late James B. Forgan, president of Chicago's First National Bank, about the Government's attitude toward the flotation of a British loan in the U. S. to help pay for Allied purchases, Secretary of the Treasury McAdoo wrote to President Wilson urging that permission be granted. Said he : "The high prices for food products have brought great prosperity to our farmers, while the purchases of war munitions have stimulated industry and have set factories going to full capacity throughout the great manufacturing districts, while the reduction of imports and their actual cessation in some cases, have caused new industries to spring up and others to be enlarged. . . . The balance of trade is so largely in our favor and will grow even larger if trade continues that we cannot demand payments in gold alone, without eventually exhausting the gold reserves of our best customers which would ruin their credit and stop their trade with us."
Five days later President Wilson, reversing his previous policy, agreed that belligerents might float public loans in the U. S.
P: Cause of this action was an exchange crisis precipitated when the British Treasury, under the strain of heavy purchases in the U. S., allowed the pound sterling to fall below par.
Said Senator Clark: "I think that when Morgan & Co. stepped out from under and permitted the sterling exchange to flop, pressure was brought to bear on McAdoo."
Said Banker Morgan: "I want to deny in the most clear manner that I can that such a thing was ever thought of by us or done by us at any time in any way. That is one of the discreditable actions which is foreign to our history and it is foreign to our tradition, and we never did such a thing in our lives." Fortunately for the Morgan partners, a cablegram showed that they had offered the British a credit of up to $100,000,000 to help keep sterling from slipping.
P: When the Anglo-French loan for $500,000,000 was sold in the U. S. in the autumn of 1915, Morgan & Co., worried for fear the bonds would not move as readily as they hoped, cabled Britain asking that British buyers of U. S. goods should urge U. S. firms with whom they did business to put money into the loan."
Said Senator Clark: "In the parlance of the Street you 'put the heat on these people so as to put over the loan."
Said Mr. Lamont : "We don't use that parlance in the Street. Naturally we did everything that was proper to assure the success of the loan. . . . We did not, as you have suggested, threaten anybody. That is not our way of doing business. We asked the munition makers to subscribe, and I think they took something like $88,000,000 of the loan."
P: Prior to 1917, Morgan & Co. bought $3,000,000,000 worth of supplies for the Allies, purchasing from some 900 U. S. firms everything from rifles, shells and steel, to cotton, wheat, clothing and artificial limbs. A crisis arose in 1916 when Britain decided to cancel $55,000,000 worth of rifle orders with U. S. firms which had gone deeply into debt to build new plants. At the same time J. P. Morgan & Co. was about to float a $250,000,000 British loan in the U. S. After a long wrangle, Mr. Morgan finally joined Partner Davison in London, persuaded Prime Minister Asquith not to cancel the order. Counsel Raushenbush last week urged that this amounted to exacting a $55,000,000 pound of flesh from the British. Banker Morgan insisted that it was done in the interest of the British, whose prospective loan might well have been a failure if cancellation of the order had antagonized U. S. munition men and their backers.
Disgusted Press, Newshawks take it for granted that Senate investigations are conducted for their special benefit. In fact, there is a well-recognized technique: one scandal shall be brought out at the close of every morning hearing for afternoon headlines; another scandal shall be brought out at the end of every afternoon hearing for the next morning's papers. From the beginning of the Morgan hearings these scandals did not arrive as scheduled.
Alert Mr. Lamont, always ready to refute insinuations, several times turned the tables on the Senate Committee by offering Press accounts of the period to show that the things which Morgan & Co. was accused of doing in secret had been matters of public knowledge. Even Mr. Morgan, far from articulate and totally unable to answer questions so as to extract the sting of their insinuations, became in his blunt way a good witness for himself. When Partner Lamont, attempting to quote the Bible, referred to money as the root of all evil, Mr. Morgan, grinning an oldster's grin, corrected him: "The Bible doesn't say 'money.' It says 'The love of money is the root of all evil.' " When a Committee counselor suggested that men who were making money out of a foreign war naturally would not be sorry to see the U. S. enter, Mr. Morgan snorted: "Do you suppose that because business was good I wanted my son to go to war? He did, though."*
As long historical documents were read, as the examination rambled over them without startling disclosures, as day by day the evidence showed no visible connection between the House of Morgan and Secretaries McAdoo and Lansing, who alone appeared to have urged President Wilson to let war loans be floated in the U. S., the Press grew disgusted with the whole proceeding. Between sessions newshawks flocked around the old financier, who was the soul of amiability in answering questions and posing for photographs. Finally one morning when, as oldsters will, Mr. Morgan closed his eyes and quietly dozed off during the proceedings, the scandal hunt was rated a complete flop so far as the Press was concerned.
Actually, only Senator Clark made any noticeable effort to stir up scandal. Committee Counsel Raushenbush, far from being a bitter prosecutor like Ferdinand Pecora, was obviously making no effort to send his witnesses to jail, had no belief that the men before him were villains, aimed at no more than to show that war trade and war finance are a danger to peace. Chairman Nye, too, was content with building up a ponderous record which might be used to prove that: 1) In time of foreign war the U. S. should not trade with or finance belligerents; 2) There should be a limitation on war profits; 3) Munitions-making should be under government control. Already, however, neutrality bills introduced in Congress forbid war trade and war financing. And the War Department is strenuously opposed to the Government's making munitions a Government monopoly.
The Devil's Due. By & large Senator Nye's Committee, during its first week's effort, was not very successful in rewriting U. S. War history. Partner Lamont lately declared: "Like most of our contemporaries and friends and neighbors, we wanted the Allies to win from the outset of the War. We were pro-Ally by inheritance, by instinct, by opinion." But no evidence was adduced last week that the House of Morgan, for all its pro-Ally, sympathies, created the Allied demand for U. S. goods. And if J. P. Morgan & Co. indulged in secret skulduggery to steam up the U. S. for war, the Senate Committee had yet to make it a part of its record.
Two months ago Newton D. Baker, Wartime Secretary of War, in a letter to the New York Times undertook to rebut the new interpretation of history: "From the beginning to the end of my official life in Washington, I never heard the President or any member of his Cabinet, either in conference or in private conversation, express any opinion that the United States ought to go into the War or that any commercial or financial interest, either of the United States or of any group of our citizens, would be promoted by our going in. ...
"I feel sure that all of my surviving associates in President Wilson's Cabinet . . . will agree that President Wilson and we, as his associates, did all we knew how to keep our country out of war, and that none of us ever heard the fable, which is now the gospel of the uninformed, that we ever had the slightest concern about the foreign loans of bankers or the industrial ambitions of the few American munition-making companies."
Last week the New York Dally News, vigorous in its support of the New Deal and violent in its castigation of big banking and big business, bluntly advised its 1,500,000 readers to turn thumbs down on the new history:
"What does Senator Nye think he has proved by digging up all these old facts once more and parading them across the witness stand? ... It is not a fact that the big bankers got us into the war--any more than it is a fact that all wars are fought for profits. . . . We were not tricked out of a sweet dream of peace to go over and fight to make Europe safe for the Morgan loans. The newspapers, for instance, did far more to inflame public sentiment to war heat than the bankers did. . . . Let's give the devil his due. Morgan and the rest of the bankers did not get us into that war. And Nye's intimation that they did so is unfair, unhistorical and untrue."
* Junius S. Morgan served as officer aboard a U. S. destroyer patrolling the British Channel for submarines.
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