Pact and Proposal

While Congress was having its busiest days of the year last week, the U. S. State Department was doing almost as well. By week's end, Secretary of State Cordell Hull had: 1) announced an important trade pact with Soviet Russia. 2) proposed a U-Sail-It warship renting service for South American republics.

P: By the new trade agreement, Russia will increase guaranteed purchases from the U. S. from $30,000,000 to $40,000,000 in the next twelve months. In return, the U. S. will grant the Soviet Union most-favored-nation commercial treatment for the first time. Unfavorable reaction to the new pact last week came from the Pennsylvania Coal industry whose United Mine Workers and mine operators let out a howl in unison. Both were alarmed because, in carrying out Secretary Hull's policy of building up foreign trade, the agreement was expected to exempt Soviet coal and coke from a special $2-a-ton tax, assessed under the Revenue Act of 1932. The coal industry's alarm diminished promptly when the Soviet Government saluted the agreement by announcing that coal exports to the U. S. next year will not exceed 400,000 tons, slightly less than Russia shipped to the U. S. in 1936.

P: Plan to rent old warships to South America was launched in the form of a Senate resolution by Chairman David I. Walsh of the Naval Affairs Committee who read the Senate a letter from Secretary Hull explaining it as an extension of the Roosevelt "good neighbor" policy. The proposal was prompted specifically by the request of Brazil to rent six destroyers with which to train a navy to operate ships of its own now being built. The Hull letter explained that Brazil's interest in a navy was caused by "the desire on the part of some nations for access to raw materials and the forceful actions taken . . . to consummate their desires," stressed the point that if Brazil rented the ships, any other South American nation could do likewise, advanced two weighty reasons why the resolution deserved immediate consideration: 1) rather than have South American nations "turn to foreign governments for assistance in a matter of this character," it would obviously be preferable for the assistance to come from the U. S.; 2) old destroyers so leased would be kept in running order and "available" for use in an emergency at home.

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