The European crisis provoked by Germany's extinguishment of the Czechoslovakian state took American public and official opinion completely by surprise. In fact as late as the day before the first German troops were later known to have crossed the frontier, two American officials were sent to the Czechoslovakian Legation to obtain visas from the Minister, Mr. Vladimir Hur-ban, who himself was just as much in the dark about future developments as anybody.
One month previously the President, before embarking on a holiday cruise in the Carribbean, had said that a new crisis appeared to be developing in Europe which might lead to his returning sooner than he expected; but it became known later that the crisis to which he referred was an Ita-lion attempt to secure colonies in the Mediterranean. When the Italian demands were not formulated a more optimistic tone began to creep into official utterances and press comments, In fact the prevailing view before the news from central Europe burst upon the capital had been that hopes were high for a permanent policy of peaceful cooperation.
Much of the credit for this supposed hopeful situation was taken by the United States American determination to we its moral influence against aggression, its new armament plans and its strengthening of Pan-American s were felt to have weighed heavily with the dictator powers. Another factor which was felt to have influenced them, Germany particularly, was a growing economic weakness. This, it was felt, would turn German thoughts to ce-operation with other nations and convince them that self-sufficiency was an impossible dream.
The shock of disappointment led to determination to adopt the strongest possible action which lay within the Administration's power. In the first place the disappearance of the Czechoslovakian nation was declared in a formal statement to the press to be regarded as only "temporary Germany's action was condemned as "wanton aggression" in face of which a nation such as the United States, founded upon principles of liberty and freedom, could not remain silent. This statement was later forwarded to the German Foreign Office with a letter refusing to recognize that the new status of the former Czech provinces, established by German decree on March 16, had "any legal basis.
Arising from this attitude the State Department gave every encouragement to the Czechoslovakian Minister, Mr. Hurban, io withstand the request of the German Embassy officials to hand over the Legation to them and hoist the German flag. It supported his view that since the transfer of territory had not been voted by a three-fifths vote of the National Assembly his legal right to the former Czechoslovakian property was valid This legal justification would become important should the German officials attempt to secure Czech balances held in the United States. The amount of these has not been revealed. There is some ear-marked gold held by the Federal Reserve Board and also deposits in New York banks. Several Czechoslovakian Consuls took the same stand as their Minister Another move made by the United States was to make certain that the German Reich should enjoy as little as possible of the economic fruits of its conquest. All imports from the newly-acquired territory were placed along with German imports on the tariff black list. They thus will pay in some cases as much as 50 per cent. more than imports from other nations who, under the most favoured nation principle, benefit from all reductions made in the various trade agreements negotiated in the past four years.
But this was not all. For some time the Administration have been irritated by the way in which German exchange control was being manipulated to curtail American imports into Germany and force German exports on the United States. As long ago as 1936 these methods were felt to amount to a disguised subsidy which brought them under the penalty clauses of the 1930 tariff act. Under this act countervailing duties equal to the amount addition to the tariff. imports could have levied against them of the subsidy, in For a few months these penalties were imposed but were later abandoned. Their revival had been under contemplation for some time but had been deferred when there seemed to be some chance of the European tension being permanently relieved and a new era of peace being consolidated. When this hope was so rudely dashed to the ground there remained no further reason for withholding the imposition of penalty duties.
American importers and Custom officers were warned that the countervailing duties would be imposed and that as a guarantee of their payment all imports from greater Germany would pay, in addition to the high general tariffs, an amount equal to 25 per cent. ad valorem to cover possible penalty duties. If it could be proved that the subsidy amounted to less than that the difference would be refunded; but since this would involve legal trouble and expense the net effect of the United States action was to lay what almost amounted to an embargo on German goods.
The move was shrewd, for it was one which could arouse little political opposition. The Republicans, who would normally have attacked any Administration policy which bore the appearance of an anti-German "sanction" had so frequently gone on record as being in favour of higher tariff rates that they could scarcely object now on the grounds that the nation which would be damaged was Nazi Germany.
The final Administration move which was brought about by the German aggression was an effort to revise the Neutrality Act as quickly as possible to prevent its application from aiding the aggressor and penalize ing the victim of aggression. Putting the matter in concrete rather than general terms the Administration wished to change the law so that Britain and France could continue to purchase munitions, aeroplanes and essential war materials. Here the Administration faced a harder task for political prejudice against taking sides in any European dispute was strongly entrenched.
Text read from the printed page and cleaned; old type leaves the occasional error.