Tuesday, December 10, 1940

U.S. TO LOAN BRITAIN $2,000,000,000? Arthur Sears Henning claims in a Monday Chicago Tribune story that the Roosevelt Administration and British officials are "setting the stage" for the biggest gesture yet of American support for the British war effort -- a loan of "2 billion dollars and more, if necessary" to keep the fight going. Supposedly Treasury Secretary Morgenthau met Monday with Sir Phillips, the British treasury undersecretary, setting forth the details. These talks come only days after a three-hour meeting of Britain’s ambassador to the U.S., Lord Lothian, with President Roosevelt and Secretary Morgenthau to discuss American financial help.

It’s unclear from reading the press whether one of the stumbling blocks to this mammoth credit will be the Johnson Act, which forbids at least some loans to World War debt defaulters (of which Britain is one). Time magazine seemed to say last week that the President would have to ask Congress to repeal the Act (which they handily would) before any kind of loan could be arranged. The President has decided not to ask for repeal until January, adds Time. But the Tribune story claims the Act only applies to private lenders, and that Congress could appropriate the funds under existing law.

The Tribune story doesn’t portray isolationists as reacting with alarm to this, presumably because it provides an opening for something isolationists have long been enamored of -- grabbing up British territories in the Americas, such as the Bahamas, Bermuda, Barbados, and Jamaica. Their idea is something along the lines of, we’ll loan Britain the money if she’ll turn over the islands. But the Tribune hurts its case with a supreme act of poor salesmanship, taking the opportunity to run its ninety-ninth editorial telling Britons how much better off they’d be if they simply negotiate peace with that nice old gent Hitler -- "America would like to help Britain to a peace which would leave it, its dominions, and its empire intact and safe. That this peace should impose other conditions upon Europe is not within our sphere. Europe has been in many forms and in many convulsions. This is only another. We cannot assume that the United States is its guardian."

THE EMPIRE’S CASH TROUBLES. The New York Times’ James B. Reston offers some background in Sunday’s paper on why Lord Lothian’s talk with the President means so much to the British Empire right now --

"The British say they will spend their last penny to win this war, and it looks as if they may have a chance to prove it. In the first year of the war they spent £5,300,000 a day, but that was just a beginning. Right now it is nearer £10,000,000. People who know something about this high finance are beginning to think the total expenditure for the next twelve months may work out at even £12,500,000 a day....[Britain’s] national debt is above £10,000,000,000. In the World War, when United States finance saved the day, her national debt was only £1,000,000,000. That is an important difference.....Even at the most conservative estimates, Britain is now spending about £3,500,000,000 a year. This figure can be understood only in relation to the United States budget. When President Roosevelt estimated the United States’ expenditure for 1940 he put it at $9,492,359,000, more than $4,500,000,000 less than Britain’s valuing the pound at $4. The United States is a country of 131,000,000 population, while this is a country of only 48,000,000. To get so much money out of so few people must be the hardest job in tax history."

But Mr. Reston goes on to say that Britain’s tax-men are not getting nearly enough revenue out of the population -- the government only reaps about £1,500,000,000 annually of the needed £3,500,000,000, even at skyrocketing tax rates. They’ve raised additional funds money through means such as sales of gold securities. For all that, Britain is still short of cash, and that magnifies the need for American help -- "Every bomb that falls on this country and every torpedo that whirls out of a German U-boat increase the importance of American aid....[Britons] know that £500,000,000 of the £800,000,000 they are estimated to have in United States securities has already been spent for American war materiel, and they know that the war for them is just beginning."

TODAY’S ITALIAN DEFEATS (FIRST IN A SERIES). The Associated Press reports that Greek troops have marched into the mountain-ringed city of Argirocastro, the Albanian frontier city that Italy attempted to use as a springboard for her aborted invasion of Greece. The victory removes the last Italian airdrome from southern Albania, and Greeks are celebrating the achievment like no other -- Athens has ordered a three-day holiday, the A.P. says. And Barnet Nover writes in his Washington Post column Monday that Mussolini’s wave of setbacks in Greece is more than a mere sideshow --

"The situation for Italy is not irredeemable, although there is nothing that Mussolini is likely to gain by an ultimate victory as important as what he has already lost. The Greeks have smashed the legend of totalitarian invincibility. It may be that they have done even more. These six weeks since October 28 may prove to be a great and decisive turning point in the war. That will certainly be the case if, as a long range consequence of the struggle in Greece and Albania, Italy is knocked out of the war. Italy is Germany’s Achilles heel. The point cannot be emphasized too strongly. If Italy is knocked out Germany’s chances of victory will go plummeting regardless of all the damage that Goering’s Luftwaffe can continue to inflict on British cities and all the destruction which German U-boats can inflict on British shipping in the intervening period. The moral effect throughout Europe of a decisive Italian defeat can easily be imagined....The material consequences of an Italian debacle would also be considerable."