further assistance from the United States Government, provided they were not to become liable for any large measure of assistance to others; the British Treasury was not in a position to give any further assistance to France or Italy.

The financial position, therefore, of these three countries as well as that of Belgium, is full of anxiety.

The American Representatives pointed out to the Committee that the Secretary of the United States Treasury is not empowered to establish credits after peace except for the purchase of wheat in the United States, and only for that purpose in so far as any balance may be left over out of the appropriation of $10,000,000,000 for advances to the Associated Governments; and also that, according to advices received from Washington, it will be very difficult, and probably impossible, to obtain legislation empowering the Secretary of the Treasury to establish credits for further advances to these countries. They also pointed out, however, that Congress had, at the request of the Secretary of the Treasury, extended the powers of the War Finance Corporation by authorising it to extend aid to American exporters up to a maximum of $1,000,000,000, upon acceptable obligations maturing within a limit of five years; and that in their opinion the facilities thus provided (if supplemented by private credit and initiative) should be sufficient to meet the necessary purchases in the United States.

Some members of the Committee were doubtful if private credits and enterprise would be adequate to meet the situation.

Before concluding, the Committee considers it advisable to point out that, in spite of a well-organized currency and credit system, and of the private credits and resources available to England, France, and Italy, it will nevertheless be difficult, if not impossible, for them (within the next two or three years) to pay for all the raw materials which they may require and to overcome their unfavourable trade balance to such an extent as to be able also to cover the interest on their obligations held abroad. Although it has been anticipated that funds to

meet these needs would be received from Germany on account of reparation, the Committee now feels convinced that it is impossible to count on any substantial financial assistance from this source in the near future. The final solution may, therefore, require a more comprehensive plan than for the other portions of Europe, and it is most advisable that immediate consideration should be given by all concerned to meet the situations not already provided for. The Committee also feels that until France and Italy obtain the raw materials required, and until England, France and Italy can cover their adverse trade balances and meet the foreign interest payments due by them for the next two or three years, the improvement or stability in exchange and the confidence necessary to stimulate private enterprise may be perhaps fatally retarded.

DOCUMENT 53.

Cablegram from R. C. Leffingwell, Assistant Secretary of the Treasury to Norman H. Davis, May 7, 1919, giving views of Treasury regarding further financial assistance to Europe. Transmitted to President Wilson May 9.

Dated, May 7, 1919. For Davis from Leffingwell. Treasury 1030. Referring to your D-259 and 266, there was never any doubt here that your position was as outlined in D-266, but we thought that it might help with Lloyd George for you to have our views vigorously stated. It is perhaps unfortunate, but nevertheless true, that public sentiment in this country is in no mood to tolerate the assumption by government of further financial burdens in aid of Europe. One of the gravest difficulties in the way of the success of the Victory Liberty Loan has been the inability of our people to understand why we go on lending such huge sums to the Allies. Since the armistice these have been in the neighborhood of a billion and three quarters dollars. Such loans in the month of April alone exceeded $400,000,000. We are looking forward to making further loans up to the statutory limit of $10,000,000,000. This means that we shall have loaned to Europe in the neighborhood of $3,000,000,000 since the cessation of hostilities, our total loans to the time of the armistice having been in the neighborhood of $7,000,000,000. You can imagine that, having successfully carried on the fight for permission to continue our foreign loans to the Allies after the armistice, and having failed originally to obtain general extension of authority for government loans to the Allies, and believing that the very fact that we are making these loans is a great obstacle to the success of the

Victory Liberty Loan, I am strongly apprehensive of the popular and political effect of any suggestion of government loans or guaranties in aid of former enemies. The American people have lived an existence of provincial isolation for one hundred years; foreign trade has never been an important factor in our commercial or industrial life; we think of ourselves as having performed heroic deeds and borne great sacrifices to save France and Italy and hence England from annihilation by the Hun; and now we are inclined to feel that there is a disposition on Europe's part to exploit our generosity and to take advantage of us in financial matters. Unfortunate though it be, these are partly views of the average American. On the other hand the War Finance Corporation was recently authorized by Congress to extend aid to American exporters up to a maximum of $1,000,000,000. To this extent the Treasury has been successful in obtaining authority to meet the situation to which your D-259 refers and in which you say the President is interested, namely devising some practicable plan for affording assistance to Europe with especial reference to the Governments which have been newly constituted. The committees and members of both houses of Congress, though unanimously opposed without distinction of party to further government loans, were induced by the Treasury to accept amendment to the War Finance Corporation Act for this purpose. These amendments were incorporated in Victory Liberty Loan bill signed by the President March 3rd, last. The passing of this bill during the closing days of Congress, in the midst of a bitter partisan fight to force a special session, was thought here to be an important achievement of the Treasury. It would be very disappointing, not to say humiliating, to the Treasury to have the means thus devised for meeting the situation to which the President calls attention ignored, and no serious effort made to take advantage of them. You have already been fully advised as to the nature of this War Finance Corporation legislation; it in effect provides adequate machinery for reasonably long time credit for the movement of goods out of America. The

problem is, therefore, to get American exporters and the business men in the territories which the President has in mind in contact with each other for the purpose of doing business. I think you can be helpful in suggesting to the governments concerned that America is ready to supply the goods and to finance their movement in the way indicated and that the thing to do is to bring their intelligent and substantial business men in contact with American exporters for the purpose of developing some real business. You can, I think, be helpful in bringing the matter to the attention of such men now in Europe as Alexander Legge, whom you know very well, and whom we here regard very highly. If the Harvester Company, the Steel Company, and Ryan Copper interest would start something on these lines I believe we should have taken a very important step towards the solution of the problem during the period of war. Government

aid has furnished an easy and prompt cure for everybody's troubles. It is hard for business men, even in this country, to realize that the time has come for reliance upon individual initiative. I realize how hard it must be, therefore, for business men in the countries which have been devastated by war to begin again. That is, however, what must be done if sound and permanent relief is to be given. We are doing all in our power to bring the importance of this situation to the attention of American business men and to make them realize that the War Finance Corporation is prepared to finance their operations for a substantial period. The question is not, therefore, whether America will help, but whether Europe has adaptability enough and vigor enough to work out some business transactions and interest American business men in their financial and economic restoration. There are signs of increasing interest among our people such as Farrell for steel, Ryan for copper, and among the cotton people. I hope the War Finance Corporation will immediately send two or three men to Europe with a view to looking over the field and possibly making some helpful suggestion for the purpose of expediting these operations. POLK, Acting.