EUROPEAN AGREEMENTS
The Lausanne Settlement.—The debt agreement finally reached at Lausanne on July 9, though hailed as a triumph of diplomacy, was as it soon turned out, largely negatived by the so-called “gentlemen’s agreement” signed the same day by Great Britain, France, Italy, and Belgium, which made ratification of the Lausanne Treaty entirely contingent upon a satisfactory arrangement—i.e., reduction or cancellation—of the debts due to the United States. By the Lausanne Treaty, if ever ratified, Germany would three years hence deliver over to the Bank of International Settlements bonds to the amount of 3,000,000,000 gold marks to be issued at 90, and hence amounting to only about $642,000,000, little over one-tenth of the amount to be paid under the Young Plan, and hardly more than the amount due this year if the moratorium were not in effect. While there is little prospect that these bonds will ever be issued, the arrangements at Lausanne at least give some hope of settlement of Germany’s private obligations abroad.
The gentlemen’s agreement—insisted upon by France before the almost complete release of Germany from reparations—aroused unfavorable reactions in the United States as evidence of a policy of concerted action on the part of European debtors, and also because of apparently unwarranted suspicions that it had been in some way sanctioned by the United States government. This feeling was heightened by the Anglo-French accord announced a few days later, which the French declared to be a pledge of united action on the matter of American debts. The gentlemen’s agreement read as follows:
The Lausanne agreement will not definitely go into force until after the ratifications foreseen in those accords.
Concerning the creditor governments in whose name this procès-verbal is initialed, ratification will not be effected before a satisfactory settlement is obtained between them and their own creditors.
They will have every liberty to explain their position to their respective parliaments, but no precise reference to the present arrangement will appear in the text of the accord with Germany.
If it follows that a satisfactory settlement of their own debts is obtained, the governments of the above-named creditor countries will proceed to ratification, and the accord with Germany will take its full effect.
But in case the settlement in question cannot be obtained, the accord with Germany will not be ratified. A new situation will thus be created and the interested governments will have to agree on what they should do. In this eventuality the legal position of all the interested governments would become what it was before the Hoover moratorium.
Notification of this accord will be made to the German government.
Regarding the American attitude toward the agreements at Lausanne, President Hoover on July 14 wrote to Senator Borah:
My dear Mr. Senator:
I have your inquiry this morning, through Secretary Stimson, as to the effect on the United States of recent agreements in Europe.
Our people are, of course, gratified at the settlement of the strictly European problem of reparations or any of the other political or economic questions that have impeded European recovery. Such action, together with the real progress in disarmament, will contribute greatly to world stability.
I wish to make it adequately clear, however, that the United States has not been consulted regarding any of the agreements reported by the press to have been concluded recently at Lausanne and that of course it is not a party to, nor in any way committed to, any such agreements.
While I do not assume it to be the purpose of any of these agreements to effect combined action of our debtors, if it shall be so interpreted, then I do not propose that the American people shall be pressed into any line of action or that our policies shall be in any way influenced by such a combination, either open or implied.
Minor Agreements.—In addition to the disposal of German reparations by the proposed bond issue, the Lausanne Treaty also provided: (a) that the moratorium on debts due the European powers should be extended until ratification of the treaty; (b) that a commission be created to consider non-German reparations and cognate questions; (c) that another commission should be organized to recommend measures for the relief of the countries of central and southeastern Europe; (d) and that a third commission prepare plans for a world economic conference.
World Economic Conference.—On July 15 the League Council carried forward plans for a world economic conference by establishing an organizing committee with representatives of Great Britain, France, Germany, Italy, Japan, and Norway, to which other representatives might be added later. In a hot fight in the council, led by Señor Mandariaga of Spain, the small nations won their contention that the conference should be brought clearly under the auspices of the league, that the organizing committee should work in close liaison with the council, and that it should include delegates from the International Labor Office.
In the invitation to the conference delivered to the United States on July 29, German reparations, debts owed to the United States, and tariff rates were specifically excluded from the conference agenda. The time and place of the conference were not settled, but it was expected to meet in London in October.
Anglo-French Accord.—What seemed at first a re-establishment of the Anglo-French entente and a definite pledge of concerted action on “any questions . . . which may affect the European régime” was reached in an agreement between England and France announced on July 13, the essential clauses of which read as follows:
First, in accordance with the spirit of the Covenant of the League of Nations they intend to exchange views with one another with complete candor concerning, and to keep each other mutually informed of, any questions coming to their notice similar in origin to that now so happily settled at Lausanne which may affect the European regime. It is their hope that other governments will join them in adopting their procedure.
Secondly, they intend to work together and with the other delegations at Geneva to find a solution for the disarmament question which will be beneficial and equitable for all the powers concerned.
Thirdly, they will co-operate with each other and other interested governments in careful and practical preparation of the world economic conference.
Fourthly, pending negotiation at a later date of a new commercial treaty between their two countries, they will avoid any action in the nature of discrimination by one country against the interests of the other.
Much of the edge was taken off this pact by England’s quick assurance that it did not mean concerted action on American debts; and it was soon turned into another empty formula by the adhesion of Germany, Spain, and other European states.
BRITISH COMMONWEALTH
Anglo-Irish Strife.—Retaliatory tariffs on the part of both England and the Irish Free State followed the action of the Irish government in witholding £l,500,000 of land annuities due July 1. England put a 20 per cent duty on almost all agricultural imports from Ireland, and the Free State government rushed through the Dail and Senate an emergency measure which gave the council full power to increase duties on imports. A final conference in London on July 15 over the annuities dispute and resultant tariff war proved completely futile, no agreement being reached as to the composition of the proposed tribunal of arbitration. Senator Sean Milroy, an old friend of De Valera, condemned Ireland’s present policy as “a hideous, nation-destroying thing,” destined to bring conditions “back to 1921 and another round with England.”
Relations between Ireland and England have been further strained by a quarrel between Premier de Valera and Governor General James McNeill, who in July, contrary to De Valera’s wishes, published correspondence relating to discourtesies and alleged insults suffered by the Governor General at the hands of council members and the Irish nationalist press.
Ottawa Trade Conference.—The imperial economic conference at Ottawa, opening on July 21 with delegates from nine governments of the British commonwealth of nations, attracted world-wide attention not only because of its possible effect on the commerce of other nations, but as a culminating effort of the peoples of the empire to unite in trade relations which, if successful, will bring them into an even more vital union than one based on political ties. As with most trade conferences, however, the list of projected accomplishments on the agenda probably looks far more imposing than will the final results. Premier Bennett of Canada in his opening speech came out frankly in favor of increased preferential tariffs toward England and other commonwealths, and both South Africa and Australia made a bid for an increased share in the supply of British meat imports, now obtained chiefly from Argentina.
American exports to Canada have already suffered a considerable decline, decreasing from $948,000,000 in 1929 to $395,000,000 in 1931, with a corresponding decrease in imports from Canada. If present conference arrangements between Canada and the United Kingdom are effected, it is figured that American exports may suffer further to the extent of some $50,000,000, chiefly in steel products and coal.
NORTHERN EUROPE
Reich Control in Prussia.—On July 20 the von Papen government in Germany carried out its threatened policy of ousting the Socialist Ministry in Prussia under Otto Braun and putting the government into the hands of the Reich. Chancellor von Papen, himself, assumed the office of federal commissioner for Prussia, with Dr. Franz Bracht, former mayor of Essen, as his deputy. By an emergency decree Berlin and the province of Brandenburg were placed under military control. The action of the Reich was based on the ground that the Braun government, being without a majority in the Prussian Diet, lacked constitutional authority, and furthermore that it was covertly encouraging communist attacks on the Hitlerites and unable to maintain order or security. Despite this defense, Bavaria and Baden, as well as the dismissed Prussian ministry made an appeal to the German Supreme Court against the action of the Reich as an invasion of state rights; but in a preliminary decision on July 25 the court refrained from interference. The decrees putting Berlin and Brandenburg under military rule were soon afterward rescinded and the city and province were returned to police control.
German Elections.—As anticipated, the parliamentary elections held in Germany on July 31 resulted in further heavy gains for the nationalist parties, the total vote of the parties of the Right being about 17,000,000, to 14,000,000 for the moderates, and over 5,000,000 for the Communists. One effect of the frequent elections of late in Germany has been to effect some reduction in the multitude of parties that have sprung up under the republic. In the elections of September, 1930, there were 31 parties, but in the recent election the number was reduced to 26, and in reality only 5 really counted— the Nationalists, National Socialists (Hitlerites), Centrists, Socialists, and Communists, in order from Right to Left.
While reactionary elements dominating the von Papen Ministry are not in sympathy with all the professed aims of the Hitlerites, its conciliatory policy toward the Nazis is likely to insure its continuance in power. Herr Hitler perhaps, also, is in no great haste to attempt putting promises into practice as chief of state.
The Greenland Dispute.—Dispute between Denmark and Norway over control of the east coast of Greenland was renewed in July by the sending of Danish expeditions into the disputed territory, and by consideration of the question in the Court of International Justice, which was expected to render a decision early in August. Norway in July, 1931, issued a decree declaring the East Greenland coast between 70°30' and 75°40' a Norwegian possession, the region having for years been chiefly occupied by Norwegian trappers and fishermen. Denmark then appealed to the World Court. Her sovereignty over West Greenland is well established, but on the east coast has never had full international recognition.
SOUTHERN EUROPE
Turkey Enters League.—Accepting an invitation issued by the League Council earlier in the month, Turkey on July 18 became formally a member of the League of Nations, the Turkish delegate stepping across the assembly floor from the “non-leaguers’ pen” now occupied only by representatives of the United States and Soviet Russia. Replying to the speech of welcome, the Turkish delegate advocated closer relations between the league and the soviet republic. As another step toward her full establishment in the society of nations, Turkey has recently invested part of a $15,000,000 Italian credit in the construction of four torpedo boats and three submarines.
Italian Cabinet Changes.—In accordance with Premier Mussolini’s policy of training his fascist leaders by frequent rotation in office, five cabinet members and eleven under-secretaries were dropped on July 20, including Foreign Minister Dino Grandi and Finance Minister Antonio Mosconi. The change in the foreign office was apparently in no way due to dissatisfaction with its previous conduct, which had at all times been close to the ideas of the chief of state; Dino Grandi himself was at once made ambassador to England. Premier Mussolini, already in control of the office of home affairs, took over also the ministry of foreign affairs and that of corporations, thus further reducing his cabinet from thirteen to eleven members.
Peasant Victory in Rumania.—In the July elections in Rumania the National Peasants party led by former premier Juliu Maniu won a decision victory, securing 45 per cent of the total vote and about 280 of the 380 seats in the lower house of parliament. Former premier Maniu was chiefly instrumental in bringing about the restoration of King Carol, but afterward opposed his efforts at extension of the royal power.
LATIN AMERICA
Warfare over Chaco.—The perennial dispute between Bolivia and Paraguay over the Chaco territory seemed about to seek arbitrament by open warfare at the close of July, when large forces of both nations were mobilized in or near the disputed area and frequent clashes were occurring for possession of fortified outposts. Paraguay withdrew early in July from the conference of neutrals at Washington which was attempting a settlement, alleging that Bolivia had violated their nonaggression agreement by seizure on June 15 of Fort Carlos Lopez. Bolivia also recalled her delegates subsequently, and declined to reopen negotiations. The primary aim of Bolivia in forcing her claims to the Chaco is the desire for an outlet to the Atlantic by the Paraguay River.
Revolt in Brazil.—The long threatened uprising against the regime of President Getulio Vargas in Brazil opened on July 9, with hostilities chiefly centered in the province of Sao Paulo. Up to the close of July federal troops had prevented serious disturbances in other provinces and were apparently closing in on the Sao Paulo forces. The professed aim of the revolt was the re-establishment of constitutional rule.
Chile’s Socialist RÉgime.—Provisional President Dávila of Chile, after quickly frustrating an attempt at his overthrow by former president Carlos Ibañez early in July, reaffirmed his intention of calling a constituent assembly in September to give permanence to Chile’s new socialist structure. The assembly is to be composed of thirty members representative of different classes and occupations.
FAR EAST
Manchurian Report to Blame Japan. —Advance information regarding the league commission’s report on Sino-Japanese relations indicated that it would be adverse to Japan, declaring the disorders in Manchuria insufficient to justify measures on the scale adopted by the Tokyo government. Doubtless the condemnation will be toned down as far as possible by the influence especially of England and France, in an effort to keep Japan in the League of Nations, for Japanese officials have made it clear that in the event of an unfavorable verdict they will be quite ready to consider a complete break with the association at Geneva. Deterrents to such a move would be the loss of prestige and influence in world affairs and possible withdrawal of sanction for Japan’s mandates in the Pacific islands.
In final conferences with the league commission at Tokyo, Japan insisted that the separation of Manchuria from China must be regarded as a fait accompli; and apparently recognition of the new state of Manchoukuo by Japan is only postponed until presentation of the commission’s report. The Japanese Diet has already voted in favor of recognition, and the matter is in the hands of Foreign Minister Uchida.
China’s Warfare on Reds.—Reports of mid-July gave a total of 10,000 casualties in engagements between Nanking government troops and rebel forces in various provinces of China, as a beginning of the six months’ campaign, directed by President Chiang at Hankow, for which funds have recently been advanced by Chinese bankers.