On Monday August 3 after the President had spent the first part of his day quieting the panicky financiers in New York, he shut himself up in his office with Secretary Bryan to decide what to do to help the frightened tourists. They decided to allow embassies to countersign travellers’ checks and letters of credit and to urge representatives abroad to use their own judgment in affording what relief they could. Within a couple of days Congress responded by appropriating several million dollars. Before the end of the week the warships Tennessee and North Carolina were steaming for Europe laden with currency for the relief of stranded citizens.
Casting about for shipping to bring Americans home from the zones of war the President and Secretary Bryan came up against the fact that the United States had no merchant marine. Of around five and a half million tons under American registry the great bulk operated on inland waterways or in the coastwise trade. Only fifteen ships flew the American flag on transatlantic or transpacific routes and of those all but six were passenger liners with little cargo capacity.
The United States was one of the great exporting nations, though still mostly of raw materials, but her exports were customarily carried on foreign bottoms.
Right away grain from recordbreaking harvests of wheat and barley and oats began to pile up at the railheads and in the warehouses. Wharves became glutted with products that could find no outlet. Democratic congressmen began to prophesy immediate ruin for the South, which was still in the straightjacket of a onecrop economy, if some way couldn’t be found to market the cotton crop which promised to be enormous.
The economic structure of the southeastern states was based on credit. When a man planted an acre of cotton he borrowed the money for the seed and fertilizer and often for food for himself and his mule, and cash to pay the pickers, from his broker; in the fall the broker took the cotton and sold it and paid the farmer the balance. The broker financed the operation by borrowing from the bank and so on up into the financial hierarchy. The sudden extinction of a market for cotton meant that the whole house of cards would come tumbling down.
A man didn’t have to be a financial genius to see that something had to be done. The President and his advisers were southerners. They felt tenderness for the cottongrower. Immediately Secretary McAdoo began to make currency available to southern banks and to cast around for some way of inducing private financiers to form a syndicate to advance loans on the freshly harvested crop. His aim was to establish a floor under cotton prices.
Republicans in Congress bristled, particularly the New Englanders. The textile manufacturers felt they were being cheated of an opportunity to buy cotton cheap. The opposition, which in the first daze of the European calamity had been tamely accepting Wilson’s leadership, began to harden.
The Shipping Bill
Both sides agreed that, if the American economy were not to strangle in its own productiveness, vessels had to be found to replace the German and Austrian shipping immobilized in neutral ports and the Allied shipping deflected to military uses. But how? The problem kept McAdoo awake nights. “One morning at dawn,” he wrote, “I was lying in bed thinking about the matter when it occurred to me I might as well write out a tentative draft of the shipping bill which would embody the idea of a government owned corporation.” He was thinking of Theodore Roosevelt’s purchase of the Panama Steamship Company which was still being managed by the War Department. Wilson and McAdoo had privately agreed to buy the idle German ships and operate them under the American flag.
At the thought of the government in the shipping business the New York financiers raised a storm. Shipowners’ lobbyists arrived in Washington on every train. Rank socialism was the cry.
At the same time another of McAdoo’s bills was having smooth sailing. Nobody cried “socialism” when he suggested the formation of a Bureau of War Risk Insurance in the Treasury. The professional underwriters were scared to death of war risk insurance. Let the government take the loss. McAdoo’s war risk insurance agency surprised everybody when its affairs were wound up at the end of the war, by showing seventeen million dollars of profit.
The First Republican Filibuster
McAdoo’s shipping bill furnished the first battleground between Wilson’s progressive Democrats and the Republican opposition which the Schoolmaster in Politics was soon to be excoriating as the forces of darkness.
Investors were in a fever over the profits to be made owning ships. Tramp steamers were clearing their cost in a single voyage. Oceangoing freighters were bringing in clear profits of from three to five times the money invested in them. As soon as the measure was introduced in the House, Republican papers described the government’s entrance into the shipping field as a menace to private enterprise. One of the Morgans called at the Treasury and lectured the Secretary on the hazards and difficulties of transatlantic shipping in wartime. He wanted no government interference. “As for being a menace,” wrote McAdoo, “I could not see that the government’s ships would menace anything but the absurdly high rates of private shipping concerns.”
The bill passed the House against vigorous opposition. In the Senate it was stalled by the Republican minority led by two of T.R.’s old associates from the imperial era of the “tennis cabinet,” Elihu Root, the learned New York corporation lawyer, who had been Roosevelt’s Secretary of State after John Hay’s death, and Henry Cabot Lodge.
Senator Lodge of Massachusetts held the powerful position of chairman of the Senate Committee on Foreign Affairs. Since the very considerable Republican gains in the House and Senate in the fall elections in 1914 he had become a leader of conservative Republican opposition to the Democratic administration’s legislative program.
Lodge was partisan to the marrow. He came of the purest codfish aristocracy. His father was a Boston shipowner and his mother was a Cabot. He had been a friend of T.R.’s since, as a rising historian, an associate of Henry Adams on the North American Review, he’d been interested in the young New Yorker’s project for a naval history of the War of 1812. They had shared a romantic navalism and all sorts of literary enthusiasms since Harvard College days, even while they differed politically. Lodge swallowed part of the New Nationalism but he looked on the New Freedom with a bilious eye.
When the Democrats, in spite of the loss of several southern conservatives who voted with the Republicans, were able to marshal enough voices to pass the measure with the help of three Republican progressives from the Middle West, the Republican minority, ably marshalled by Lodge and Root, talked it to death in one of the longest and bitterest filibusters yet recorded. The Sixtythird Congress adjourned March 4, 1915, without the shipping bill’s being brought to a vote in the Senate. The Administration introduced it again in the next Congress.
The chief objection voiced by the two scholarly conservatives was that if the government bought the German ships and Great Britain did not recognize the transfer of registry, there would be immediate danger of war with the Allies. Lodge seems to have convinced himself, furthermore, that the bill would legalize a gigantic deal by which McAdoo, working through Kuhn, Loeb and Co., would buy up idle German shipping at great personal profit. In their speeches they both decried government in business as state socialism and the end of individual liberty.
McAdoo claimed to be merely motivated by the practical consideration of reducing the cost for American shippers. He used to say that the Republican filibuster cost the American people a cool billion dollars. He insisted that he believed in private enterprise “as a theory, but economic theories, I have observed, often fail in practice. Private initiative becomes extremely timid in times of peril and uncertainty … Shipowners were making so much money … that they were satisfied … More ships would mean lower freight rates and less profit … When the bill was first introduced, ships might have been bought or constructed at the cost of about forty dollars a ton. But when the measure was finally enacted, eighteen months later, they were selling at prices that ranged from one hundred and fifty to three hundred doll
ars a ton.”
The President was grimly stimulated by the opposition of the “entrenched interests.” It was the Princeton quads all over again. He never could understand how reasonable men could honestly disagree with him.
In a speech in Indianapolis during the congressional campaign that fall he violently attacked the leaders of the Republican filibuster: “These gentlemen are now seeking to defy the nation and prevent the release of American products to the suffering world which needs them more than it ever needed them before.” His violence shocked his supporters.
Writing to his friend, Mrs. Toy, who had remonstrated with him, he apologized a little ruefully for letting himself be carried away by the “psychology of the stump” but added to his own defense: “I think you cannot know to what lengths men like Root and Lodge are going, who I once thought had consciences and I now know have none … We are fighting as a matter of fact the most formidable (covert) lobby that has stood against us yet in anything we have attempted; and we shall see the fight to a finish.”
The Peacemaker in the State Department
William Jennings Bryan, who sat dreaming of peace in ducktails and crash suits under the high dark ceilings of the old War and State Building, couldn’t for the life of him understand why Wilson and McAdoo wouldn’t allow a clause to be inserted in their shipping bill ruling out the purchase of ships from the belligerents. He assured the President that this would satisfy the southern conservatives who shared the misgivings of Lodge and Root about government operation of Austrian and German ships. Never strong on practical details it did not occur to him that these were the only ships to be had.
For two years he had loyally squandered his personal influence in behalf of every administration measure but his heart wasn’t in the shipping bill. As a practicing Christian he observed the letter of the Ten Commandments. War was murder. He couldn’t quite convince himself that war trade wasn’t complicity with murderers.
He believed passionately in neutrality. His first thought was for a sort of Jeffersonian embargo on any dealings with the warring nations. In the early weeks of the war he almost managed to convince President Wilson that American bankers must not be allowed to make loans to the belligerents. Money was the worst kind of contraband. Personally, as a private man, he was in favor of cutting off the shipping of munitions. Impractical as he was he had to recognize that the economic wellbeing of the country depended on exports.
Though the American people, in spite of widespread indignation at the German violation of Belgian neutrality, were as anxious to keep out of the war as their Secretary of State was, the geography of the conflict early forced them into an undeclared and somewhat unwilling partnership with Great Britain and France. Britannia ruled the waves. While armies fought to a stalemate along the Aisne, the British Navy swept German commerce off the seas and bottled up the German fleet behind the fortified island of Heligoland. An Order in Council of August 20 established a blockade of Germany and Austria modelled on the blockade which a hundred years before had brought Napoleon to his ruin. Neutral ships were intercepted and escorted into British ports to be inspected for contraband of war even if they were bound for neutral countries. Contraband was just about any class of goods the British authorities decided might give aid and comfort to the enemy.
Secretary Bryan, with the President’s fervent backing, at first tried to enforce the old American theory of freedom of the seas. Early in the war he dispatched notes to all the belligerents asking them to conform to the Declaration of London. This was a set of rules affirming the rights of neutral shipping in wartime drawn up by an international conference in the winter of 1908 and 1909. Unfortunately the Declaration of London had not been ratified either by Great Britain or the United States.
These rules would have greatly benefited the neutral nations and would have made impossible the starving out of Germany which was developing as the basic British strategy of the war.
The British showed no interest in giving up any of the advantages which came to them from their mastery of the ocean. There followed a prolonged wrangle between the State Department and the Foreign Office, kept somewhat within bounds by the terms of Bryan’s arbitration treaty. The British pressed for as much blockade as they could get without completely alienating American sympathies, and the United States pressed for as much freedom of the seas as could be had without playing too much into the hands of the Central Powers.
Bryan was often absent from his desk. He had accepted the office with the understanding that he would lecture for part of the year. He must be allowed to make his living. His position in Washington as second fiddle to the President fed his rather innocent vanity and enabled him to entrench himself in the party leadership by finding jobs for deserving Democrats, but his heart was on the Chautauqua circuit. He loved money and he loved applause. When hostile newspapers blamed him for such undignified behavior as lecturing for money he struck back: “Mingling with the multitude is not a cause for reproach … The forum is not below the level of official life. It is not stepping down to go from the desk to the platform.”
Happier stirring the hearts of the plain people than knitting his brows over problems each more insoluble than the last that kept appearing on his desk he left the day to day paper work to his counsellor, Robert Lansing, who acted as Secretary of State when he was away. Lansing was a rather solemn, steelyhaired upstate New Yorker, now in his early fifties. His old associates from Amherst College days and from the Watertown bar still addressed him affectionately as Duke. He had made himself a career in international law and married into diplomacy by his union with the daughter of John W. Foster, the respected Secretary of State under Benjamin Harrison. Lansing reported directly to the President.
Madison’s Dilemma
The President’s chief adviser, private negotiator, and, particularly since Mrs. Wilson’s death, most intimate friend, was Colonel House. House and Lansing were often at cross purposes, and House and Bryan, although outwardly on terms of backslapping friendship, almost always so. Since Bryan’s mind was fixed on the sonorous generalities, decisions, even on small details, were up to the already overtaxed President.
House’s relation to Wilson was that of a star reporter to his city editor. House did the legwork. In Washington and New York he gloried in a modest omnipresence. He was on fair terms with the sceptical Jusserand, the squarebearded professorial diplomat who represented the French. He was cosy with the German ambassador, dressy Count von Bernstorff. He was even more at home with Sir Cecil Spring Rice, the old Washington hand, whom Sir Edward Grey had sent over to take the place of the prodigious Bryce.
War trade with Europe grew from week to week. After the stunning effects of the first blow wore off American businessmen began to discover that the war was a bonanza. The Europeans had to have American products regardless of cost. Meatpacking and coppermining boomed. The price of wheat rose. War was lamentable but what an opportunity to make money!
The British were devising their own rules of contraband. American shippers had no problem with goods destined to England and France. Exports destined for Germany, mostly through neutral ports, were even more profitable, but neutral ships suffered under detentions, delays, seizures and from the arbitrary behavior of British prize courts.
A stream of protests and complaints found its way to the President’s desk. Woodrow Wilson, like most literate Americans, was prejudiced in favor of the British by the whole course of his education, but he had freedom of the seas in his blood. He smarted personally under the indignities suffered by American shipping. In private he made no bones of his exasperation.
“While we were discussing the seizure of vessels by Great Britain,” House jotted in his diary one day in late August 1914, “he read a page from his history of the American people telling how during Madison’s administration the War of 1812 was started in exactly the same way as this controversy is opening up … The President said: ‘Madison and I are the only two Princeton men that have become President.
The circumstances of the War of 1812 now run parallel. I sincerely hope they will not go further.’ ”
House hurried over to the British Embassy with the tale, and added that Lansing was preparing a stiff note of protest.
Spring Rice described the conversation in a somewhat peevish tone to Sir Edward Grey: “I had suspected for some time that something was up among the lawyers in the State Department, but I could extract no hint of what was intended. The only indication was a rather unfriendly atmosphere.” (Spring Rice and Lansing never did get along.) He retailed House’s account of the President’s state of mind. “He then told me he happened to be sitting with the President when a large package was brought in from the State Department. The President was very tired and did not want to look at it; he was told it was to go off by mail the next morning. He read it and to his astonishment it was a sort of ultimatum … which really would have convulsed the world if it had got out … The two men were astonished, the more so as the Secretary of State had been away for some time, tired with his exertions in procuring peace treaties, and was at that moment at a distant watering place with his wife. The President said that the document though signed, could not go at once … The President was very much impressed by the gravity of the question because it touches the pockets and the prejudices of so many of the people. It happens to be just the sort of question which takes the popular fancy and also enlists the monied people as well.”