The Price of Neutrality


ONE of my students came forward at the conclusion of a lecture on the War of 1812 with a somewhat puzzled expression. ‘You state that the causes of our entry into the Napoleonic Wars are very similar to the causes of our entry into the World War,’ he said. ‘Why, then, did we not use our first experience to keep out in 1917?’

‘I wonder how many of our leaders in 1917 understood what caused the War of 1812?’ I was about to reply, when I recalled that Woodrow Wilson was a student of American history. So I contented myself with a rather tame, ‘Why, indeed?’ Then I added, ‘Perhaps the next time we shall be guided by the experiences of the past. Perhaps two lessons will suffice when one lesson did not sink in.’

The student was not satisfied with the reply and neither was I. After all, have we learned our lesson? In the past have we capitalized enough on our experiences to give assurance that we shall do so again? When so many are declaring that we must remake the world without reference to history, — are advocating, as it were, national amnesia, — what guarantee have we that the repetition of old blunders will not involve us in future crises?

It is a disturbing thought that we have been drawn into both of the only two general European wars which have occurred during our national existence. In both cases we were led by peaceloving Presidents, were wedded to the policy of avoiding entangling alliances, were sincerely anxious to avoid trouble, were quite unprepared to fight. Yet in both cases, although we put the blame on Europe, it was chiefly our own policy which involved us in hostilities.

Our fault lay in drawing too sharp a distinction between economic war on the one hand and military and naval war on the other. Trade is such a peaceful thing, so necessary, so seemingly legitimate, that one hesitates to call it war at all. War is associated with bursting shells, ruined cities, devastated fields, maimed men, military cemeteries. Yet there have been few wars in which economic pressure has not been a vital or even deciding factor. It was Lincoln’s blockade which sapped the strength of the Confederacy; Great Britain’s grip on the sea was all-important in bringing Germany to her knees in 1918. So, both in 1793 and in 1914, when we solemnly proclaimed our military and naval neutrality, but without hesitation rushed into the thick of the economic struggle, we placed ourselves in an embarrassing, if not impossible, position.

It fell to the lot of Thomas Jefferson more than to any other man to shape our foreign policy during the French Revolutionary and Napoleonic Wars. First as Secretary of State under Washington, then for eight years as President, and finally as advisor to Madison, his opinions carried the greatest weight, when indeed they were not final. And Jefferson desired passionately to keep us out of the war. The insults of Great Britain and France, the impressment of our sailors, the capture and confiscation of our merchant vessels, even the outrageous attack upon the Chesapeake, did not suffice to shake his resolution. ‘The affair of the Chesapeake put war into my hand,’ he wrote; ‘I had only to open it and let havoc loose.’

At first Jefferson seems not to have realized the consequences of permitting Americans to interfere with the economic phase of the European war, and consequently made no attempt to curtail their activities. So when British frigates began to play havoc with the French colonial commerce, and sugar piled up on the wharves of Haiti or Martinique, the American shippers were quick to seize the opportunity for a rich transatlantic trade. That they were neutralizing Great Britain’s policy of economic strangulation meant nothing to them, so long as they could avoid the British frigates and keep out of the hands of the British prize courts.

But it meant much to Great Britain. She could measure the assistance rendered her foes by the unprecedented growth of tonnage of American-owned vessels engaged in foreign traffic, a growth from 127,000 in 1787 to 1,087,000 in 1807. Her alarm was increased when the Americans began manning their newly built ships with deserters from her navy and merchant marine. Life on the English vessels was desperately hard, whereas the Americans gave high wages and fair treatment. Albert Gallatin estimated that, of the 4000 sailors necessary to man the 70,000 tons of shipping turned out annually by the American yards, one half were British subjects. This explains why the English frigates stopped our vessels on the high seas, lined the men up on deck, and made off with every British tar on board, with perhaps an American or two thrown in. No wonder Jefferson, as he looked back upon the events of the period, decried our folly in carrying on the business of one half the world at the expense of eternal war with the other half. ‘No one can doubt that this alone produced the Orders in Council,’ he declared, ‘the depredations which preceded, and the war which followed them. Had we carried but our own produce, and brought back our own wants, no nation would have troubled us.’

Had Jefferson, when he became President in 1801, based his foreign policy on the principle here enunciated, it is barely possible that there would have been no War of 1812, but it was probably even then too late. An attempt to contract the inflated carrying trade to a peacetime basis would have incited bitter opposition, and probably ended in failure. Once a merchant vessel was permitted to head out into the Atlantic, even though ostensibly to carry ‘our own produce’ or to ‘bring back our wants,’ it would have been difficult to keep it from entangling itself in the network of European blockades. Perhaps this was why Jefferson, when the situation became so desperate that he was forced to act, chose to lay down an embargo, rather than to prohibit Americans from acting as international carriers.

But a sustained embargo for a country so dependent economically upon the Old World was even more unpractical. The planters of tobacco and rice in the South and the wheat growers in the North could not dispense with their foreign market, the merchants with their foreign trade, the people as a whole with British manufactured goods. Founded and developed as a part of the British colonial system, the nation had by no means broken the economic bonds with the old country by establishing political independence. To reverse the commercial history of two centuries, to make the nation self-contained by a stroke of the pen, was more than could be accomplished even by the all-powerful Jefferson.

Historians have usually interpreted the embargo as an attempt to force Great Britain to rescind her Orders in Council, as an experiment in peaceful coercion, but Jefferson himself emphasized its importance as a deterrent to war. ‘The immediate danger of war with England is postponed for this year,’ he wrote to Charles Pinckney on March 30, 1808. ‘This is effected by the embargo, as the question was simply between that and war.’ ‘It is true, the time will come when we must abandon it,’ he confessed on June 23, ‘but if this is before the repeal of the Orders in Council, we must abandon it only for a state of war.’

To many of Jefferson’s contemporaries the embargo seemed an unexampled bit of folly, richly meriting the failure which overtook it. Bringing ruin to our ports, keeping our vessels idle, throwing thousands of men out of work, dislocating capital, it did not suffice to coerce Great Britain or France or to keep us out of the war. Yet it will always incite interest as a bold attempt to solve the perplexing problem of neutral commerce in a war-maddened world. We may well wonder whether the great Virginian, in this, as in so many other things, was not a century in advance of his day.


The United States was rounding out its one-hundredth year since the Treaty of Ghent when the Austrian archduke was murdered and Europe plunged into another general war. Once more the government had to decide upon its relations with the belligerents, and once more it declared its strict neutrality. President Wilson even went so far as to warn his fellow countrymen ‘ against that deepest, most subtle, most essential breach of neutrality which may spring out of passionately taking sides.’ ‘The United States must be neutral in thought as well as in name,’ he added.

Yet the government took no steps to warn the people against the even more dangerous breach of neutrality which comes of participating actively in the economic phase of a war. Ignoring our past experiences, ignoring the fact that our trade might turn the tide of victory one way or the other, that it could not fail to arouse passionate resentment, the President and Congress permitted American manufacturers and merchants to convert this country into a veritable commissary department for the warring nations.

The government looked no deeper than international usage and international law. ‘It should be understood that, generally speaking, a citizen of the United States can sell to a belligerent government or its agent any article of commerce which he pleases,’declared Robert Lansing on October 15, 1914, in a formal state paper. ‘He is not prohibited from doing this by any rule of international law, by any treaty provisions, or by any statute of the United States. It makes no difference whether the articles sold are exclusively for war purposes, such as firearms, explosives, etc., or are foodstuffs, clothing, horses, etc., for the use of the army or navy of a belligerent. . . . Such sales by American citizens do not in the least affect the neutrality of the United States.’

This statement, so far as it concerned noncontraband of war, was accepted by the public as a matter of course. The express permission to sell munitions, however, brought forth some violent protests, most of them from sympathizers with the Central Powers, and several bills were introduced into Congress to put an embargo on this class of goods. Secretary Bryan explained the government’s position in a formal state paper. ‘Those in the country who sympathize with Germany and Austria-Hungary appear to assume that some obligation rests upon this government ... to prevent all trade in contraband. No such obligation exists; it would be an unneutral act, an act of partiality on the part of the government, to adopt such a policy.’

So the floodgates were opened. One after another the great steel, copper, and brass plants diverted their equipment and labor into the production of shells, rifles, and ammunition. As urgent orders poured in from Europe, there was an unprecedented quickening in the production of grain, shoes, clothing, leather goods, motor trucks, railroad material, wire, copper, zinc, and so forth. So many workmen were added to the payrolls that in many factories three eight-hour shifts supplanted the former one nine-hour shift. Wages jumped. Enormous new factory buildings and long rows of workmen’s houses sprang up as though by magic. Europe’s tragedy was causing an American boom.

Exports advanced in proportion, not only to the Allies, but to Germany’s neutral neighbors. Shipments to Denmark rose from $18,647,000 in 1913 to $70,500,000 in the first ten months of the fiscal year 1915; to Sweden from $12,000,000 to $72,000,000. Our exports to the United Kingdom doubled by 1916, to France and to Italy tripled, to Russia increased ninefold. American horses were soon drawing Allied guns over the battlefields of France, American munitions were piling up at the various military bases, Allied soldiers were eating American beef and bread, wearing American shoes, advancing to the front in American trucks. When our merchant marine proved inadequate to the strain, Congress came to the rescue by permitting vessels built in neutral countries to immediate registry. Later the government itself went into the business of shipbuilding, by setting up the Shipping Board.

Without questioning the legality of all this, perhaps without questioning its justice, one may well doubt its wisdom. In a war of attrition, American goods might prove the margin between defeat and victory. The Allies would undoubtedly resent the passage of contraband to Germany through neutral countries, while the Central Powers would protest bitterly when Americanmade shells began cutting down their soldiers. The decision of our government to champion so-called neutral rights, including the right to unlimited trade with belligerent nations, led directly to war.

There was the less excuse for this inasmuch as the European struggle stimulated enormously our trade with Latin America and Asia. Since German exports were almost entirely cut off, and the industrial output of Great Britain and France diverted to war purposes, neutral customers turned to the United States. In 1913 we supplied 15 per cent of the imports of South America, in 1917 no less than 45 per cent; while our share of the imports to Asia jumped from 6 per cent to 15 per cent. Even had we restricted our feverish, war-born trade with Europe to something like normal proportions, American industry and commerce would not have suffered. But we grabbed at everything in sight.

Aside from the perils involved in our policy, it was obviously unwise to tune our industrial system up to the needs of a temporary situation, needs born of war and which would cease with war. So early as 1916, farsighted business men were asking what would be done with the factories when the ending of war orders forced them to close, were wondering how to scale down the abnormal wages, how to provide for the men thrown out of work. We were repeating the old blunders of Jefferson’s days by welcoming a feverish, unhealthful prosperity, with the prospect of collapse upon the return of normal conditions.

But attention was diverted from this phase of the matter by the diplomatic controversies in which we became involved. Great Britain at once sought to make use of her naval supremacy to strangle the economic life of the Central Powers. Ignoring the recommendations of the London Conference, she extended the list of contraband to include cotton, foodstuffs, copper, and so forth, and began stopping American vessels on the high seas to search for these goods. Reviving the old doctrine of the ‘continuous voyage,’ which we ourselves had invoked during the Civil War, she attempted to break up all overseas trade to Germany through Holland, Denmark, and Sweden.

This controversy with the United Kingdom would undoubtedly have assumed grave proportions had it not been overshadowed by our quarrel with the Central Powers. Germany, realizing that the exports of American munitions and other commodities might bring victory to the Allies, exerted herself to impede the flow of goods across the Atlantic. When her protests against supplying ‘only Germany’s enemies’ with munitions went unheeded, she tried first to bring pressure to bear on Congress through German-American opinion, and then entered upon a campaign of violence to cripple American munition plants. Failing in this, she committed herself to the submarine campaign which aroused such bitter resentment in the United States, and eventually drew us into the war.

So early as September 30, 1914, President Wilson was aware of the danger. Colonel House states that ‘when we were discussing the seizure of vessels by Great Britain, he [Wilson] read a passage 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: “The circumstances of the War of 1812 and now run parallel. I sincerely hope they will not go further.” ’ It seems not to have occurred to him that he might prevent the circumstances from running parallel by adopting towards the belligerents an economic policy different from that of Madison. So he permitted the nation to drift into the same dangerous currents as in 1812, and to founder upon the same rocks.


How many Americans to-day will contend that the war was worth while? With the expenditure of many thousands of lives and of billions of dollars we applied the pressure which finally overcame the Central Powers. But the victory did not make the world safe for democracy, it did not assure peace for the future, it did not put an end to international injustice, it did not earn the lasting friendship of our allies, it was largely responsible for the economic depression through which we are passing. In case another European war should break out to-morrow, the people of the United States would be overwhelmingly in favor of staying out. When we think of Washington’s Farewell Address we feel like bad children who disobey their father but beg forgiveness and promise to be good in the future.

But repentance will be of little service unless we recognize clearly the rocks upon which our peace hopes foundered in the two previous European wars and steer clear of them from the beginning. We must not forget that the country was so opposed to joining the Napoleonic Wars that it endured for nearly two decades a series of insults so humiliating as to threaten our own self-respect; that in 1915, when 114 Americans lost their lives on the Lusitania, we contented ourselves with a protest, that Wilson was reelected in 1916 in part at least ‘ because he kept us out of the war.5 We are pretty sure to be drawn into the European war of the future, however strong our resolution to remain neutral, if we once more plunge into the vital economic phase of the struggle.

Fortunately the Department of State, realizing that the unstable conditions in Europe might bring on a general war, some months ago entered upon a study of the whole field of neutral rights. Apparently Secretary of State Hull and his advisors became convinced that real neutrality would involve first of all an embargo on arms and munitions to any warring nation, or to any neutral country for transshipment to a warring nation. This would divert attention from the United States as a factor in the outcome of the struggle, and so make it easier for us to keep out. Although the withholding of shipments of munitions might favor one side and so bring protests from the other, it was rightly reasoned that the danger to ourselves would be infinitely less. In the World War it was comparatively easy for Germany to attack our farflung traffic in munitions; had we forbidden the trade, the Allies would have made violent protests, but they would not have crossed the Atlantic to molest us.

An embargo on arms and munitions in no sense violates international law. ‘Should the United States desire to prohibit the furnishing of implements of war to those who are engaged in armed strife,’ wrote John Bassett Moore in an article in Foreign Affairs, ‘this may readily be done by providing for a comprehensive, nonpartisan embargo on the shipment of arms to all countries engaged in armed strife, whether international or civil. Such an embargo would naturally be announced and imposed by public proclamation. Of this no foreign power could complain. There are already various countries which, in accordance with their laws, impose such a ban.’

This is a very different thing from joining in an international arms embargo against an aggressor state. However desirable such action may be as a preventive of war, the participating nations clearly abandon their neutrality. In a general European war, the side so discriminated against would probably answer with a declaration of war. But an embargo against both is quite as neutral in a legal sense, and is certainly more neutral in a moral sense, than an unlimited traffic with both sides in death-dealing implements. Whatever stand the special interest of belligerent nations would cause them to take, should we declare economic neutrality, the sentiment of the world as a whole would be with us.

But the State Department realized that economic neutrality involves more than an arms embargo, that modern warfare is so complex that it spreads its tentacles out over a nation and draws nourishment from its every activity. If we prevented the shipment of cannon and at the same time sent steel out of which to manufacture them, or wheat and meat to feed the men who fire them, or the tractors or horses to draw them, we should still become a vital factor in the struggle. Is it wise for neutrals to supply a belligerent with cotton, knowing that it may be used in the manufacture of explosives, or copper needed for shells, or tires for army trucks?

It was apparent that any attempt to make a distinction between exports which may aid indirectly in waging war and those which do not was impossible. During the World War, Great Britain extended her list of contraband until it embraced almost every kind of goods. To declare an embargo on the shipment to belligerent countries of everything on her list would cause an almost complete stoppage of trade. Unless we were prepared to repeat Jefferson’s disastrous experiment of 1808, we could not commit ourselves to such a policy.

Apparently the State Department came to the conclusion that this problem might be solved in part by a prohibition of loans and credits to belligerent countries. This policy has much in its favor. The outbreak of the World War found the United States deeply in Europe’s debt, so that the warring powers had a reserve to fall back on to pay for their vast purchases. Secretary Lansing estimated that a balance of a billion and three-quarters dollars was taken care of by the sale of American securities held in Europe. When this resource came to an end the belligerent powers were forced to borrow, so that before we entered the conflict their bonds to the extent of hundreds of millions of dollars were held by American investors. At present Europe has no extensive investments here, and in case of war would have to borrow at the very outset to pay for any excess purchases. Thus, as Senator Nye, Chairman of the Munitions Investigating Committee, pointed out, the prohibition of public or private loans and credits to the belligerent nations would put an effective check to inflated war commerce.

It was also suggested that the United States abandon its time-honored support of the ‘freedom of the seas’ by withholding the protection of the government from American citizens upon ships of a belligerent nation, or perhaps from American ships which venture into the zone of conflict. This is of more questionable wisdom. In a sense it takes us back to the situation in the years from 1795 to the War of 1812, when the kind of protect ion offered our shipping was a standing joke in Europe. The serious risk of seizure and confiscation did not prevent American merchants, tempted by huge profit, from rushing their ships into the war zone, and no risk would prevent their doing so in future struggles. Nor would the American people be content to sit quietly by while vessel after vessel was seized or sent to the bottom, American lives sacrificed, and American cargoes confiscated. The pressure brought to bear on the government for a reversal of its policy would soon be too strong for resistance.


Last August when the Italo-Ethiopian situation was becoming serious, a joint resolution based on this programme was brought before Congress, and, despite the jam of business which marked the closing weeks of the session, was forced upon the attention of the wearied legislators. The resolution made it unlawful to export ‘arms, ammunition, or implements of war’ to a belligerent, or to any neutral port for transshipment to a belligerent; authorized the President to warn Americans that, should they travel on the vessels of any belligerent nation, they must do so at their own risk; and prohibited the granting of bank credits and the purchase of the securities of belligerents by American citizens. After a prolonged conference between Secretary Hull, other members of the State Department, and Congressmen and Senators, the last provision was struck out. The resolution was then adopted by both the Senate and the House of Representatives. On October 5, President Roosevelt issued a proclamation stating that in view of the situation in Ethiopia he was declaring an embargo on the exportation to that country and to Italy of arms, ammunition, and implements of war. ’I desire it to be understood,’ he added, ‘that any of our people who voluntarily engage in transactions of any character with either of the belligerents do so at their own risk.’

In a sense this action is epoch-making. It is a distinct recognition on the part of the government that economic neutrality is vital if the country is to avoid being drawn into future European wars; it is the culmination of really scientific research on the part of the Department of State into the deeper causes of war in an effort to capitalize our past experiences; by placing the embargo on the shipment of arms and ammunition to belligerent powers it removes at a stroke one of the most dangerous threats to American neutrality.

On the other hand, the resolution is obviously faulty in that it gives the President no power to limit war-born commerce in commodities other than arms and ammunition. Should Europe become involved to-morrow in another general conflict, American exporters would no doubt at once begin pouring over cotton, wheat, copper, oil, and so forth, in ever-increasing volume, once more upsetting our economic life and making the United States of vital importance in the outcome of the struggle. The President’s warning that they must trade at their own risk would hardly deter them when such huge profits were in sight. It seems unfortunate that the provision prohibiting the floating of loans of a belligerent country in the United States should have been struck out, since it was upon it that the chief reliance was placed to limit trade to a peacetime basis.

Even with the war confined to Italy and Ethiopia, the situation became embarrassing to the United States. The League of Nations imposed certain economic sanctions on Italy, including an embargo on shipments of arms and munitions, and on certain raw materials, and the prohibition of loans or bank credits to the Italian government or people. This brought about a greatly increased demand from Italy for American oil, copper, trucks, tractors, and scrap iron, all of vital importance in the prosecution of the war. Either we must find some way of keeping this trade within peacetime bounds or incur the hostility of the League, whose sacrifices would be nullified by the action of this country. Thus, as Former Secretary of Slate Stimson points out, our present position in regard to trade with belligerents, because of the inadequate powers granted to the President, may lead to war rather than to peace.

When Congress reassembles in January it is sincerely to be hoped that this matter will receive immediate attention and that adequate powers be conferred on the President to keep the nation out of war. The authority to prohibit the exportation of arms and ammunition to a belligerent should be renewed, while some check must be placed on the shipment of other commodities, especially upon goods which can be used directly for war purposes. No doubt the proposal for a financial ban on belligerents will be reconsidered, and in the light of present happenings receive favorable action.

Should Congress balk again at this step, we should have to pin our hopes upon other and more direct methods. Congress might empower the President to prohibit all exports to a belligerent nation over and above the normal peacetime proportions. If we send to a nation in the year preceding the war goods totaling $500,000,000 let us send her no more in time of war. If this should seem a rather crude yardstick, we could take the average exports for the five years preceding the declaration as our standard. To prevent the concentration of orders upon goods especially needed in waging war, there should be a system of quotas. If this direct restriction of trade should prove impractical, we might be compelled to fall back on a sliding duty on exports to belligerent countries, which the President would be empowered to raise or lower as the fluctuations of trade demanded. But this also has its serious drawbacks, for the Constitution prohibits the laying of any duty on exported articles, and the crisis might be upon us before we could complete the tedious process of securing an amendment.

In recent years there has been much said about the evils of war. In addresses, newspaper articles, novels, and histories, stress has been laid upon the enormous loss of human life, upon the waste of economic wealth, upon the endless train of suffering and bitterness, upon the barrenness of results. Predictions have been widespread that modern weapons have become so deadly that the next great conflict will destroy our civilization. The people of the United States are determined that we shall not be involved in future European conflicts in which we have no direct interest. They will demand of the President and Congress precautionary measures which will make the United States neutral in fact as well as in name.

Nothing is to be accomplished by blaming the ‘lust and greed’ of American traders, for it is but human nature to reach out for profits if it can be done under the law. It is the duty of the government to make war-born trade illegal or unprofitable, and if it fails to do so the people will know where to place the blame.