Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt (75 page)

T
HE
L
EAGUE OF
N
ATIONS
organizing committee for the London economic conference invited sixty-seven nations—essentially every independent country it could think of, as well as India and a few other important dependencies. Sixty-six arrived in mid-June 1933 (Panama pleaded poverty and declined to attend). The delegates met in the London Geological Museum and were seated alphabetically by their countries’ names in French. The conference was the first of its kind, and one of the most august meetings in world history to that date. Switzerland sent its head of state (President Edmund Schulthess), while eight countries were represented by their heads of government, twenty by their foreign ministers, and the rest by their finance ministers, central bankers, or other officials. Roosevelt dispatched his foreign minister, Secretary of State Cordell Hull. James Cox, Roosevelt’s partner in defeat from 1920, would be Hull’s deputy.

The centrality of the Americans to the conference was indicated by the fact that its commencement had been delayed to let Roosevelt clear the most pressing part of his domestic agenda before turning to international economic matters. (The conference might have been pushed back even further if not for the British grouse season. Ramsay MacDonald informed Roosevelt on his visit to Washington that if the conference was still meeting in the fall when the bird shooting started, the British delegates would absent themselves en masse.) Having waited for the Americans—while the world economy remained in chaos—the conference naturally expected much of them.

Cordell Hull expected much of the Americans, too. “If we are to succeed,” the secretary of state told the delegates, “narrow and self-defeating selfishness must be banished from every human heart within this council chamber.” The gathered nations must put the welfare of the world before the welfare of single countries. “If, which God forbid, any nation should obstruct and wreck this great conference with the short-sighted notion that some of its favored interests might temporarily profit while thus indefinitely delaying aid for the distressed in every country, that nation will merit the execration of mankind.” Woe to the isolationist, who failed to appreciate the interconnectedness of the calamities visiting the peoples of the world. “For him no panic has an international character, cause, or cure,” Hull said sarcastically. “He credulously believes that the present depression just happened to come upon all the countries at the same time, and that despite demonstrated failure to do so since 1929, each by its own local program can at will restore full prosperity.”

“I felt almost physically ill,” Ray Moley wrote in response to Hull’s address. The secretary of state was describing the position Roosevelt had staked out in the campaign and had never relinquished. Strangely, Roosevelt appeared willing for Hull to speak as he did. The president had read Hull’s speech in advance and had suggested that certain passages be toned down. But otherwise he let Hull excoriate the very attitude he—Roosevelt—had made a central part of his approach to foreign policy.

The heart of the matter was whether the American government would cooperate with the governments of the other major powers to restore the international economic order the depression had thrown into disarray. A comprehensive solution would have involved debts and reparations, tariffs, and exchange rates. As poorly as the American economy was performing, the United States remained the strongest country in the world in terms of its overall production and balance of payments. What the conference almost unanimously wanted was for the United States to employ its strength to lift some of the burden of the depression off the rest of the world.

Roosevelt was willing to take certain steps in that direction. With other Democrats he had long decried the high-tariff policy of the Republicans, and he believed that the tariff wars of the last few years had done much to make the current situation worse. In his talks with France’s Herriot and the other foreign visitors he proposed a tariff truce—participating countries would agree not to raise their tariffs further—as a first step toward tariff reduction and a restoration of trade. But, on his own account and because he knew members of Congress were watching, he refused to engage in anything like unilateral tariff disarmament. As president, he had to protect American producers.

Political considerations figured even more importantly in his refusal to write down the debts. Roosevelt was enough the realist to recognize that if the governments that owed America money weren’t given relief, they might simply default. The United States would have little recourse in that event. In the past, unrequited creditors had occasionally seized customhouses or removable assets, but the days of gunboat diplomacy were over. In any event France was hardly Egypt or Nicaragua. Yet though the financial outcome would be the same, default would have fewer political repercussions for Roosevelt than forgiveness. The former would be blamed on ungrateful foreigners, the latter on the president himself.

The tariff and debt questions loomed over the London conference, but monetary exchange rates were the rub of the meeting (which was formally called the International Monetary and Economic Conference). As long as the governments of the major trading powers had stuck to the gold standard, it prevented them from manipulating their currencies to gain an edge over one another. But with gold falling by the wayside, the governments could avert a currency war only by some kind of international agreement—which was precisely the objective of the London conference. Everyone expected the United States to insist on a devaluation of the dollar, to make American goods cheaper in foreign markets; most believed a moderate degree of devaluation to be justifiable, inevitable, or both. But the important thing was to write the devaluation into some kind of international agreement that other countries could bank on—literally and figuratively—in charting their own courses.

Hull’s statement to the conference suggested that the American administration was willing to participate in such an agreement. Yet simultaneous noises from Washington cast into question Hull’s ability to speak for the administration. Early reports from London that an agreement on currency stabilization was near prompted the administration to issue a denial. “Such reports cannot be founded in fact,” Treasury Secretary Woodin declared. “Any agreement on this subject will be reached in Washington, not elsewhere.”

The striking thing about this statement was not its content but its tone. Of course the president would make the final decision about any accord negotiated in London. But for the administration to belabor this fact in language so stark suggested that its delegates in London were negotiating either blindly or in bad faith.

Or that the president was playing a deep game. Roosevelt was not attending the London conference, but he bargained as hard as anyone who did attend. By keeping the Europeans off balance, he hoped to preserve his options and enhance the likelihood of achieving what he considered success. He revealed a little of his thinking at a press conference the day after Woodin’s broadside went out. The president, cautioning reporters that he was speaking “absolutely off the record,” ticked off three considerations regarding the reports of discrepancy between the views of the American delegation in London and those of the administration in Washington. “In the first place, our people over there obviously could not conclude any kind of an agreement without submitting it back here to the State Department and to me. That is perfectly clear.” The second point was equally clear. “That is that they”—Hull and the delegation in London—“have not communicated with us in any shape, manner, or form.” The reason this second point required stressing, though Roosevelt naturally didn’t say so, was that it wasn’t true. The president was getting regular reports from Hull via William Phillips at the State Department. But though the reporters might have guessed at this connection, they couldn’t confirm it, and he continued shamelessly: “Therefore, the third point is equally clear, and that is that they have entered into absolutely no agreement on the other side, tentative or otherwise.” How he would have known this if he hadn’t received any communication from London might have puzzled the reporters, but none pressed him on the matter.

Roosevelt brought the reporters into his confidence, or appeared to do so. “The reason I say this has to be strictly off the record,” he said, “is because it looks to me a little bit as if some of our friends belonging to the other nations in London are trying to spread around the idea that we have entered into some kind of an agreement, and then, if it does not go through, try to put the blame for a failure to stabilize on us…. I don’t think it would be above some people to do just that very thing.”

A reporter asked, “Inasmuch as they are using propaganda of this sort, don’t you think there should be some kind of reaction?” Presumably the reporter meant a reaction from the president himself, as opposed to Woodin’s statement.

“No, I am just wising you to it,” Roosevelt replied.

“Can we use this stuff ourselves?”

“No, just keep it in the back of your heads.”

Roosevelt had another reason for speaking off the record, beyond his desire to keep his options open. The money markets were rife with speculation as to what the London conference would produce, and the slightest leak of the president’s intentions could send the dollar spiking upward or plunging down against the pound and other currencies.

Given that he was speaking off the record anyway, the reporters asked what Roosevelt considered an acceptable stabilization agreement.

Rather than respond, even off the record, he obfuscated. “Oh, my Lord, it would take me two hours, and then neither one of us would know,” he said.

A reporter tried another approach. “Is the administration willing to enter into some sort of a stabilization agreement?”

“That sort of question again is too uncertain,” Roosevelt said. “It depends on what kind of a stabilization agreement and where it was and what it was.”

R
OOSEVELT’S REFUSAL
to commit to a stabilization plan provoked consternation in Europe. The French eyed the Americans with the darkest suspicion.
Le Monde
assailed the “permanent lack of accord” among the Americans and said that the United States should suspend its participation in the conference until the administration “decides on a monetary policy.” The Germans were almost as skeptical. “The Americans are getting themselves disliked at the World Economic Conference,” one German paper asserted. “They embarrass the whole work of the conference.” Another German daily declared, “As it appears now, the Rooseveltian policy looks like a soap bubble that ought to burst just as soon as the failure of the London conference raises again the waves of general distrust and carries them toward the shores of the New World.” Even members of the American delegation pleaded for guidance. “If you love us at all,” James Cox cabled Roosevelt in late June, “don’t give us another week like this one.”

To calm the waters Roosevelt sent Ray Moley to London. The same reporters and editorialists who had noted the divergence between Cordell Hull’s views and the opinions previously articulated by the president concluded that Moley was going to London to chastise Hull or at least to impose the president’s views on the American delegation and perhaps the conference.

Moley didn’t want to go. The cloud already over the conference boded ill for its outcome. Nor did the mood in Washington give much hope. Prices had been rising steadily since March, and nearly everyone associated with the administration thought this a promising development that ought to be allowed to continue. An agreement in London to stabilize the dollar (and other currencies) would cut it short. Moley had spoken with Hugh Johnson, who would head the newly established National Recovery Administration, before leaving Washington. Johnson’s job was to establish codes for American industry, codes that would specify wages and prices for hundreds—eventually tens of thousands—of goods and services. “I want to ask you one simple question,” Moley said to Johnson. “As head of the NRA, what is your feeling about a possible agreement to stabilize?” Johnson responded, “All right, here’s my answer: An agreement to stabilize now on the lines your boy friends in London are suggesting would bust to hell and gone the prices we’re sweating to raise.” Johnson allowed that stabilization would make sense at some opportune moment. “But that moment isn’t now.” Comparable conversations with officials of the Agricultural Adjustment Administration, the NRA’s rural counterpart, elicited similar responses.

What did the president think? Roosevelt experienced the international pressure for stabilization more directly than Johnson, but he was scarcely more inclined to short-circuit what looked to be the best hope for America’s swift recovery. He told Moley he could accept an agreement of some sort, provided it allowed sufficient flexibility for prices to rise further. “If nothing else can be worked out, I’d even consider stabilizing at a middle point of $4.15”—the dollar price of the British pound—“with a high and low of $4.25 and $4.05.” The president continued: