Effect of Loans & Trade on US Entry in War 1917

To What Extent Did Investment in the Allied Cause Determine Action?

Nov 29, 2008 Michael Streich

By 1915 American bankers and merchants kept the Allied cause viable through loans and war material, leading to speculation entry in the war was motivated by investment.

On April 6, 1917, the United States formally entered World War One. Although immediate causes include the Zimmermann Telegram as well as Germany’s decision to resume unrestricted submarine warfare, post war criticism included the aspect of Allied debt. Although no evidence exists that President Woodrow Wilson was under pressure from bankers or merchants to intervene in the war in order to protect American financial investments, by the end of the war British debt alone stood at over nine billion dollars.

Recession, War Loans, and Prosperity

The outbreak of war in 1914 coincided with a recession in the United States. By 1915, American neutrality was being criticized as bankers and merchants began to loan money and offer credits to the warring parties, although the Central Powers received far less. Between 1915 and April 1917, the Allies received 85 times the amount loaned to Germany. This was good business for American enterprises, notably munitions and foodstuffs.

According to Harold Faulkner, [1] the total dollars loaned to all Allied borrowers during this period was 2,581,300,000. The scope of the loans was not unnoticed in early 1915 as Secretary of State William Jennings Bryan sent a letter to J. P. Morgan & Co., reminding that the policy of neutrality and private bank loans were “inconsistent with the true spirit of neutrality.” [2] Bryan also quipped that “money is the worst of all contrabands because it commands everything else.”

After the United States entered the war, the government itself kept the Allies afloat with loans, financed partially through the sale of war bonds. Barbara Tuchman, in The Guns of August, writes that, “Eventually, the United States became the larder, arsenal, and bank of the Allies and acquired a direct interest in Allied victory that was to bemuse the postwar apostles of economic determinism for a long time.” [3]

The Nye Report of 1936

It was precisely this postwar view that influenced Senator Gerald Nye’s report on US neutrality in World War I and the role of war debt as a factor in declaring war. Speaking in the Senate in July 1939, Nye reiterated that: “No member of the Munitions Committee…has ever contended that it was munitions makers that took us to war. But that committee and its members have said again and again, that it was war trade and the war boom…that played the primary part in moving the United States into war.: [4]

The June 5, 1936 fifth committee report exonerated Wilson in terms of allegations that he had taken America to war to protect financial interests. However, the report also mentioned that Wilson was, “caught up in a situation created largely by the profit-making interests in the United States…” [5]

Summary

Despite American neutrality, loans and trade with Britain and France during the war accelerated the need to see the Central Powers defeated. Even the Lusitania carried contraband munitions, a fact downplayed by Wilson but mentioned in Senator Robert LaFollette’s anti-war speech of April 1917. American investment between 1915 and 1917 was one factor in entering the war. The 1936 Nye Report’s investigation and analysis sought to avoid a similar financial entrapment as another continental war loomed in the 1930s.

[1] Harold Underwood Faulkner, The Decline of Laissez Faire 1897-1917 (New York, Rinehart & Co., 1951.

[2] Quoted in same source.

[3] Barbara Tuchman, The Guns of August (New York: MacMillan Company, 1962), p. 337.

[4] Congressional Record, 76 Congress, 1 Session (1939) pp. 10,405-6

[5] United States Special Committee, Senate Report 944, Part 5, 74 Congress, 2 Session, pp. 1-9.

 

Espionage and Sedition Acts in World War One

Presidential War Powers in the Woodrow Wilson Administration

Aug 29, 2009 Michael Streich

Woodrow Wilson Had Wide-Reaching War Powers - Public Domain Image Produced by U.S. Government

Following the declaration of war, Congress passed numerous acts designed to increase the president's war powers over virtually every aspect of American society.

Following the declaration of war against the Central Powers in 1917, the United States Congress passed several bills that gave President Wilson and the executive branch wide latitude to ensure the successful prosecution of the war effort. This delegation of legislative authority, often compared to Abraham Lincoln’s actions in 1861, made President Wilson a virtual “dictator,” according to some Constitutional scholars. The Espionage Act of 1917 and the Sedition Law of 1918 are two examples of specific laws that infringed on First Amendment guarantees.

Congress Delegates to Woodrow Wilson During World War I

Congressional legislative delegation began August 10, 1917 with the Lever Food Control Bill, although the Espionage Act had been passed a month earlier. Both measures rested on the Constitutional principles regarding presidential wartime prerogatives. The Lever Bill gave the executive branch broad control over food and fuels. According to Alfred Kelly, “Its terms were so broad as to subject virtually the entire economic life of the nation to whatever regulation the president thought necessary for victory.”

The earlier Espionage Act made it a felony to promote insubordination within the military or to obstruct the armed forces. This included inflammatory criticism aimed at the draft and included provisions permitting censorship of the mails. Congressional delegation also included giving the president control over foreign language newspapers as well as federal control over radio communication.

Clear and Present Danger During Times of War

Although there were several court challenges, the 1919 case Schneck v United States, which upheld presidential authority over First Amendment rights in times of emergency and war, enunciated the doctrine of “clear and present danger.” Penned by Justice Oliver Wendell Holmes Jr., the doctrine was based on the notion of “the rule of proximate causation” and took into account the intent of the accused.

If the intent of the words used was to incite riot or hinder the war effort, there can be no First Amendment protection; freedom of speech is not unlimited. No person has the right to yell “fire” in a crowded theater. In subsequent cases that did not involve intent, Holmes and fellow Justice Louis Brandeis vigorously dissented.

The Sedition Law of 1918

The Sedition Law specifically targeted pacifists, union leaders, and a host of radicals such as the Socialists whose criticism of the war effort was designed to hinder. The law made it a felony to “incite mutiny or insubordination” within the military as well as criticism of the government’s war policies with the aim of interdicting those decisions and actions. Socialist leader Eugene V. Debs was imprisoned after criticizing the military draft.

Other Congressional Actions Restricting Civil Liberties During World War I

On July 16, 1918, a Congressional Resolution allowed the president to take over and to operate telephone and telegraph lines. The May 1917 Trading with the Enemy Act allowed the president to censor communication between Americans and other countries.

It should be noted that not since the Civil War had the entire nation been involved in a major conflict that everyone sensed would decide the future of the country and perhaps the world. Wilson had set the groundwork prior to the war declaration with the Adamson Eight Hour Act. As Commander in Chief, Wilson, along with the Congress, interpreted presidential war time prerogatives within the broad spectrum of presidential war powers.

Later presidents, like Franklin Roosevelt in the year preceding the Pearl Harbor attack, acted similarly with the blessing and often open support of Congress. Finally, in most court challenges, the Supreme Court supported these actions as war time emergencies and interpreted legislative delegation as it related to the conduct of the war as Constitutional.

Sources:

• Leon H. Canfield, The Presidency of Woodrow Wilson: Prelude to a World in Crisis Fairleigh Dickinson University Press, 1966)
• Henrick A. Clements, The Presidency of Woodrow Wilson (University Press of Kansas, 1992)
• Alfred H. Kelly and Winfred A. Harbison, The American Constitution: Its Origins and Developments Fifth Edition (W. W. Norton & Company, 1976)

Copyright Michael Streich. Contact the author to obtain permission for republication.

 

The Adamson Eight-Hour Act of 1916

Congressional Action Designed to Avert a National Railroad Strike

Jan 30, 2009 Michael Streich

Woodrow Wilson - Library of Congress

When nearly half a million railroad workers threatened to strike and disrupt interstate commerce, Woodrow Wilson went before Congress requesting emergency legislation.

In August 1916 union officials representing 400,000 railroad workers threatened a nationwide strike unless their demands for an eight-hour work day and wage parity with their existing ten-hour work day were met. Such a strike had the potential to the cripple the nation. Additionally, President Woodrow Wilson saw the possible strike as a catastrophic event hindering the preparedness policies. The United States had remained neutral in the global world war, but that could change in the future, despite Wilson’s pending election pledge to keep “us out of war.” The solution was the Adamson Eight-Hour Act of 1916.

Arbitration and Legislation of the Adamson Act

A ‘hands-on” president who, like Theodore Roosevelt, exercised fully the inherent prerogative power of the chief executive, Wilson called the leaders of both sides of the labor dispute to the White House. Acting as arbitrator, Wilson proposed the eight-hour work day, but without wage guarantees. Although acceptable to the railroads, the workers rejected the deal, insisting on guarantees not to lower existing wages and calling for overtime compensation of one and a half times the rate of regular wages.

Realizing the importance of an unhindered flow of interstate commerce, President Wilson appeared before the Congress on August 29th, pressing the chamber for emergency legislation to halt the impending strike, set for September 4th. The result was the Adamson Eight-Hour Act, granting workers in the railroad industry an eight-hour workday if the affected rail lines were operating in interstate commerce. Workers wages would not be cut by the reduction in hours.

Additionally, the Act allowed the President to set up a three-man commission to “observe the operation and effects” of the Act. According to the Act, eight hours would be “deemed a day’s work.” Further, the Interstate Commerce Commission was tasked with granting an increase in freight rates for railroad companies in order to meet the increase in wage expenses.

Court Challenges to the Constitutionality of the Act

Woodrow Wilson, who more than once rejected progressive acts of Congress on the basis that such acts might be challenged on constitutional grounds, must have been aware that the Adamson Act carried with it the threat of a court challenge. These were still the days in legislative history when presidents vetoed bills they felt could not stand the test of constitutionality.

The Act was challenged in the courts and struck down as unconstitutional by the United States District Court for Western Missouri. The case was appealed to the Supreme Court. In Wilson v. New (1917) the high court voted 5-4 to reverse the lower court decision, citing the emergency nature of the Act and it’s conformity to the “public character” of interstate rail transportation.

The conservative dissenters, however, argued that the Adamson Act violated the Due Process clause of the Fifth Amendment. Technically, the law took from one party and gave to another without compensating the first party. Additionally, the Act stretched the notion of interstate commerce since it was not a law of regulation.

The Adamson Act not only averted a potentially damaging strike involving 250,000 miles of railroad that directly impacted the entire economy, but it helped better prepare the United States for the impending war commitment in 1917. Also, President Wilson was quite aware that the reality of such a strike might negatively affect his presidential reelection campaign, although some Wilson historians discount this as a motive and highlight his moral sense of justice, pointing to similar legislation Wilson supported earlier.

Sources:

Leon H. Canfield, The Presidency of Woodrow Wilson: Prelude to a World in Crisis (Rutherford, NJ: Fairleigh Dickinson University Press, 1966).

Henrick A. Clements, The Presidency of Woodrow Wilson University of Kansas Press, 1992).

Alfred H. Kelly and Winfred A. Harbison, The American Constitution: It’s Origins & Development 5th Edition (New York: W. W. Norton & Company, 1976).

Copyright Michael Streich. Contact the author to obtain permission for republication.

 

United States Intervention in Russia 1918-1919

Military Considerations Support Woodrow Wilson's Troop Deployment

Nov 22, 2008 Michael Streich

Woodrow Wilson - Library of Congress, Washington DC

Evidence and historical analysis concludes that Wilson's decisions were motivated by factors not related to the internal Russian political conflicts face by Bolsheviks.

By early 1918 Russia had signed the Treaty of Brest-Litovsk with the Central Powers and withdrew from the world war. Russia’s new Bolshevik leaders were confronted by Civil War as they sought to consolidate power. Russian withdrawal would allow Germany to redeploy vast numbers of soldiers to the western front. At stake were thousands of tons of Allied war material in Russia at Archangel and Murmansk as well as Vladivostok in Asiatic Russia. Given these considerations, an agonizing President Woodrow Wilson reluctantly agreed to join an Allied expedition into Russia.

Was The Intervention Political?

Some historians maintain that Wilson’s actions were motivated by desires to topple the Bolsheviks. “…Wilson and others hoped to bring down the fledgling Bolshevik government, fearful it would spread revolution around the world.” [1] George Kennan, however, discounts this motive [2], emphasizing that the three American battalions in Northern Russia were under British command, thereby obligated to follow British and French policy which was, at least as openly stated, to protect Allied supplies and possibly reopen the eastern front. Kennan cites the story of Maxim Litvinov’s 1933 visit to Washington, DC, during which he was shown documentation relevant to the US Siberian intervention. Litvinov’s public letter, following his examination of the documents, waived any Russian claims with regard to US intervention.

Page Smith’s analysis [3] concludes that, “Americans would be withdrawn if there were and indication that they were being used against the Bolsheviks.” Russian historian David MacKenzie [4] cites war necessity as one reason for intervention: “President Woodrow Wilson allowed US participation in the Allied expeditions to north Russian ports in the summer of 1918 only after the Allied command insisted it was the sole way to win World War I.”

Other complications included the presence of 40,000 Czech soldiers stranded on the Trans-Siberian railroad as well as a growing Japanese presence in the Vladivostok region. American intervention in Siberian Russia might also deter the possibility of future Japanese aggressions that might have threatened the Open Door Policy in China.

Woodrow Wilson’s Idealism

US involvement in the Russian Civil War with the aim of eliminating the Bolsheviks would not have been consistent with Wilson’s ideology of a new world order based on his Fourteen Points. Page Smith comments that Wilson’s actions in Russia were far more consistent with his earlier intervention in Mexico. It is also possible that Wilson’s acquiescence rested on his conviction that the US needed to be seen as an equal partner, particularly since he was determined to put his post-war peace plan into action but needed Allied support to do so.

Although the later Soviet view equated intervention with western capitalists “enraged by the triumph of the Revolution in Russia…,” [5] there is sparse evidence that this reflects American motivations in 1918-1919. Kenrick A. Clements points out that "Wilson objected to the whole idea" of an intervention aimed at dislodging the Bolsheviks. He quotes Wilson as saying, "to stop a revolutionary movement with ordinary armies is like using a broom to sweep back a great sea..." [6]

Notes:

[1] Robert A. Divine, T.H. Breen, and others, America Past and Present (New York: HarperCollins, 1991) p. 726.

[2] George F. Kennan, Russia and the West Under Lenin and Stalin (New York: New American Library – Mentor Books, 1960) p. 110.

[3] Page Smith, A People’s History of the Progressive Era and World War I (New York: McGraw Hill, 1985), p. 538 and 733.

[4] David MacKenzie and Michael W. Curran, A History of Russia, the Soviet Union, and Beyond (Belmont, California: Wadsworth Pub. Co., 1993) p. 566.

[5] Pravda, September 15, 1957.

[6] Kenrick A. Clements, The Presidency of Woodrow Wilson (Lawrence: University Press of Kansas, 1992) p. 111ff.

Copyright Michael Streich. Contact the author to obtain permission for republication.

 

Woodrow Wilson's Fourteen Points

A Post War Peace Plan Based on Utopian Idealism

Dec 15, 2008 Michael Streich

Woodrow Wilson Drafted the Fourteen Points - Library of Congress, Washington DC

To make the world safe for democracy and bring justice and equality to all nationalities, President Woodrow Wilson drafted Fourteen Points for the Paris Peace Conference.

Responding to Woodrow Wilson’s post-war proposals in 1918, Georges Clemenceau supposedly said, “God Almighty gave mankind the Ten Commandments; and we rejected them. Now comes Wilson with his Fourteen Points…” Thought to be idealistic and Utopian, Wilson’s Fourteen Points were proclaimed January 8, 1918 before a Joint Session of Congress. Wilson’s introductory remarks presaged the tone of his points but also demonstrated his idealism: “The day of conquest and aggrandizement is gone by; so is also the day of secret covenants…”

Wilson's 14 Points Stressed Open Covenants of Peace, Openly Arrived At

Wilson begins his address by noting the recent peace “parlays” between the Russian government and Germany (the Central Powers) at Brest-Litovsk. Wilson’s laudatory comments omit the fact that Russia was under Bolshevik control and that the separate peace being negotiated had little to do with making the world safer for democracy. Leon Trotsky had rolled out all of the pre-war secret agreements for everyone to see in an effort to prove the war had not been fought for noble purposes.

For Wilson, international diplomacy had to be based on openness. His first point referred to the post-war peace process. The covenants of peace coming out of that process must be open as well as the negotiations leading to the final treaty terms. Wilson continues, stating, “after which there shall be no private international understandings of any kind…” This would be the ideal that most nations would never accept.

Wilson's Fourteen Points Insisted on Freedom of Navigation and Equality of Trade

Wilson’s second point reflected strong American notions of freedom on the high seas, an issue dating back to the Quasi War under John Adams. Imperial Germany’s policy of unrestricted submarine warfare had been one reason America entered the war in 1917. Similarly, the peace process should result in the removal of all economic barriers and “the establishment of an equality of trade…” Wilson knew that a global return to prosperity depended upon open and unfettered commerce between nations.

Armaments and Colonial Claims in the Post World War One World

Wilson’s call for arms reductions was noble but vague at the same time. How does a nation equate “domestic safety” with quantitative defense measures? How many guns constitute the “lowest point?’ The victorious Allies knew that, in part, victory was due to a pre-war arms race and that the merchants of death would continue their trade after the war, for there was always another war in European history and no nation wanted to be caught unaware.

The question of colonial claims went to the heart of secret treaties as Britain and France sought to dismember the German Empire. Wilson referred to “sovereignty” and “the interests of the populations concerned.” How could Britain, for example, agree to such a principle and not give home rule to India? Even in America, influential opposition Senators like William Borah of Idaho were calling on the government to grant independence to the Philippines.

Final Points Call for a League of Nations

Most of Wilson’s other points dealt with land settlements relative to war time occupation. The French particularly liked Point 7, giving them back Alsace-Lorraine which had been taken by the Germans in 1871. His final point, the creation of a League of Nations, was adopted, but the United States never joined.

Woodrow Wilson was calling for a new order in the world, in some ways, a millennial utopia: “ It is the principle of justice to all peoples and nationalities, and their right to live on equal terms of liberty and safety with one another, whether they be strong or weak.” Wilson saw the end of this, the greatest and most terrible of all wars, as an opportunity to fashion a new and enlightened world attitude that, in some ways, was influenced by his abiding Calvinism as well as American egalitarianism.

Sources:

Woodrow Wilson’s Address to Congress, January 8, 1918

Harold Nicolson, Peace Making 1919 (New York: Grosset & Dunlap, 1965)

Copyright Michael Streich. Contact the author to obtain permission for republication.

 

The Lusitania Sinklng and Secretary of State Bryan's Resignation

Dec 25, 2010 Michael Streich

Bryan Resigns Over Lusitania Notes - Library of Congress Image

Woodrow Wilson's Lusitania Notes almost resulted in U.S. entry in World War I, prompting the resignation of pacifist William Jennings Bryan in June 1915.

William Jennings Bryan resigned as Secretary of State on June 8, 1915 after refusing to sign a diplomatic note prepared by President Woodrow Wilson to the Imperial German government over the May 7, 1915 sinking of the British passenger liner Lusitania. For Bryan, the resignation represented his final act after a lifetime of public service. Bryan fought to avoid U.S. entry in World War I.

Historian Colin Simpson states that, “He was desperately concerned with justice and he was a genuine committed pacifist.” In the matter of the Lusitania, Bryan wanted the government to review all relevant documentation before making assertions that had no basis in evidence or fact and could lead directly to war.

United States Foreign Policy at the Start of World War One

When World War One broke out in the summer of 1914, few could predict that over the next four years the United States would become the chief lender for the allies and the foremost supplier of war material. Simpson wrote that by late spring 1915, the “United States could not…afford to let Britain lose the war.” One theory cited for U.S. entry in the war in 1917 focuses on the huge debt owed by the Allies to American financial and industrial concerns.

Initially, President Wilson refused to allow loans to the belligerent nations, an action heartily approved by Secretary Bryan. Americans were cautioned to be impartial, “in thought as well as in action.” While American neutrality became the central policy, Bryan vigorously attempted to bring an end to the conflict through mediation.

Pro-British Elements within the Wilson Administration

Several members of the Wilson administration had strong sympathies for Britain, including Robert Lansing, who succeeded Bryan as Secretary of State, as well as Colonel Edward House, Joseph Tumulty, and Walter Hines Page, the U.S. ambassador in England. Some historians point to Wilson’s own predilections regarding Britain.

By the time a German U-Boat sank the British liner Falaba on March 28, 1915, Wilson’s ban on loans and munitions sales had been lifted. The Falaba cost the lives of 104 passengers but was carrying contraband. As such, it was a legitimate target for the Germans. Pro-British sentiment, however, wanted to use the sinking as a pretest for U.S. entry in the war.

The Sinking of the Lusitania

The May 7, 1915 sinking of the Lusitania was an entirely different matter. Over one hundred Americans lost their lives in what the U.S. government called an unprovoked attack. Bryan wanted to see proof that the liner was indeed ferrying contraband war material to Britain, as the Germans claimed. According to later records, Wilson had the original manifest detailing the cargo that included munitions, but did not make it public.

In Britain, feelings regarding U.S. entry in the war were mixed. British financiers wanted to see the U.S. enter the war, viewing America as the larder of war supplies, credits, and ultimately, men to fight in the trenches. British liberals, including members of the upper class, wanted to keep the U.S. out of the conflict, believing that entry would maximize U.S. post-war global influence at the expense of the British Empire.

Imperial German Response to the First Lusitania Note and Bryan’s Resignation

Secretary Bryan was correct in advising Wilson that the British were using American passengers as shields to disguise their shipments of contraband. This was also addressed in the response of the German government, delivered by Ambassador, Count Bernstorff on May 28, 1915. Although the Germans apologized for American loss of life and offered compensation, they justified the attack, attaching support documentation.

In the course of formulating a response, Lansing sought the advice of the federal legal department. Their response supported Bryan’s position and included findings that the Lusitania was considered a Royal Navy auxiliary ship, it was armed, it carried munitions considered contraband, and it was used as a troops transport for Canadian troops. Lansing buried the document.

When the Wilson administration decided to answer the Germans with a second Lusitania note, Bryan resigned after several days of agonizing. Bryan believed that the second note was sure to lead to a war declaration. But it would be another two years before Wilson asked for a war declaration, after his 1916 reelection in which the Democratic Party reminded voters, “he kept us out of war.”

Bryan as a Man of Principle and Justice

On June 9, 1915, the Austin Statesman commented that, “Mr. Bryan’s diplomacy has not been of the type that has inspired the confidence of the American people.” The Chicago Herald stated more strongly that, “…for the first time in his public career William Jennings Bryan will find the people of the United States practically unanimous in favor of something he has put forward – his resignation from the Cabinet.” The Chicago Herald editorial pointed to Bryan’s signature on the first Lusitania note. But the details of the German response were never made public.

As has been true frequently in American history, neither the press nor the public is given the full account of why governments take actions, even if those actions result in war and the deaths of Americans sent overseas. It was true in 1898 with the Spanish War and the sinking of the USS Maine and it was true with the resignation of Bryan.

Bryan, the high-minded westerner with Utopian ideals, may not have been prepared for the duplicity of insider Washington politics. But his notions of justice and his insistence on principle earned him a place in American history as an American true to the ideals of democracy.

Sources:

• Daniel Allen Butler, The Lusitania: The Life, Loss, and Legacy of an Ocean Legend (Stackpole, 2000)
• Lawrence W. Levine, Defender of the Faith: William Jennings Bryan, The Last Decade 1915-1925 (Harvard University Press, 1987)
• Diana Preston, Lusitania: An Epic Tragedy (Walker & Company, 2002)
• Colin Simpson, The Lusitania (Little, Brown and Company, 1972)

Copyright Michael Streich. Contact the author to obtain permission for republication