THE CABINET: Great Day; Grey Dusk

It was a great and exciting moment. President Roosevelt’s office was jammed with newshawks. He held up a mimeographed sheet and owlishly informed them that the State Department insisted that “Commissar” be spelled with one “s.” Then he ceased jesting, and blurted out the blunt fact: the United States of America had entered diplomatic relations with the Union of Soviet Socialist Republics at ten minutes before midnight the previous day. The historic date was Nov. 16, 1933.

Headlines splashed front pages. Businessmen rejoiced at the big Russian trade that would soon be theirs. Ex-Senator Smith Wildman Brookhart, Russian-trade adviser of AAA, declared that as soon as adequate credits could be arranged, Russia would be in a position to buy $520,000,000 worth of U. S. goods every year. Said Commissar for Foreign Affairs Maxim Litvinoff who traveled from Moscow to Washington to conduct the negotiations that led up to recognition: “Enjoying the lowest foreign indebtedness in the world, the Soviet Union has the greatest capacity for absorbing the raw materials and products of other countries. . . . The U. S. could make use of this capacity to the extent of at least 60 or 70%.” Prices advanced cheerfully in U. S. stock-markets. Hope was high. Commented Newsman Walter Duranty: “If one wants to estimate the ‘horse trade,’ I should say M. Litvinoff has got perhaps a shade the worst of it. . . .”

President Roosevelt, it was generally agreed, had made something of a masterstroke. He had negotiated Soviet recognition exactly in time to blanket with its headlines news of the then ugly farm strike. He had exacted some sort of religious guarantees from the Soviet Union, which on paper made pious U. S. citizens rejoice. And he had picked as his Ambassador to Moscow, keen, dynamic, ambitious William Christian Bullitt of Philadelphia.

If any U. S. citizen could wangle trade and cash out of hard-boiled Bolsheviks, the President thought, Bill Bullitt could. When Ambassador Builitt arrived in Moscow, he was acclaimed as no other envoy from a capitalist land has ever been acclaimed by Reds. From Joseph Stalin down the Bolshevik hierarchy hobnobbed with “Bill.” His bright-eyed little daughter was patted on the head, called “Russia’s Delight.” Soon the Ambassador was on horseback, teaching Bolsheviks to play polo. With experienced, hard-driving Counselor of Embassy John Wiley plugging at his side. Ambassador Bullitt stormed the Kremlin again & again on the issues of credits and debts. Some four months ago Ambassador Bullitt left Moscow by way of the Trans-Siberian Railway, flew extensively up & down China and arrived late last year in Washington where last week he was advising the President.

Following the great day of Nov. 16, 1933, Russia continued to ask of President Roosevelt what she asked of his predecessors, loans so enormous that mere interest payments would more than suffice to pay off the $800,000,000 of outstanding claims of the U. S. Government and citizens against Tsarist, Kerensky and Bolshevik Russia.

In an effort to coerce the U. S. into making such stupendous loans J. Stalin & Co. have continued to order their purchasing agents to cut down Russia’s buying from the U. S. Russia bought $114,000,000 worth of U. S. goods in 1930; $104,000,000 in 1931; $13,000,000 in 1932; $9,000,000 in 1933; and last year not the $520,000,000 predicted by ex-Senator Brookhart but a paltry $14,000,000. U. S. businessmen were beginning to realize that Russian recognition, by itself, did not mean fat returns from Russian trade. Within a year the Great Day had faded into grey dusk.

While Ambassador Bullitt was storming the Kremlin, the State Department was dickering in Washington with new Red Ambassador Alexander Troyanovsky. Hopefully President Roosevelt, under NIRA, set up the Export-Import Bank to finance U. S. exports to Russia. That move served to convince J. Stalin & Co. that they had F. D. Roosevelt & Co. where they wanted them. Russia’s morale in the negotiations stiffened. Ambassador Troyanovsky talked loudly of Soviet counterclaims. What about the damage done to Bolsheviks by the U. S. soldiers President Woodrow Wilson sent intervening into Russia after the War?

By last October the U. S. State Department got down to the point of making Ambassador Troyanovsky an offer of practically what Russia had been refused by Presidents Harding, Coolidge and Hoover. The offer: the U. S., while not ready to make an outright Government loan, would set up a revolving fund to finance Soviet purchases. Russia would pay for the use of this fund an interest rate of some 9%, the entire transaction being for an amount so large that interest payments by Russia would more than suffice to wipe (jut the principal of all U. S. claims. Had President Roosevelt made acceptance of this offer the condition of U. S. recognition of the U. S. S. R. in 1933, Russia might have been expected to sign on the dotted line with joy. Last week, recognition being now in the Bolshevik bag, things were vastly different.

Ambassador Troyanovsky, having carried the State Department’s offer to Moscow, returned to Washington fortnight ago with Russia’s answer locked in his briefcase. He left it at the State Department for consideration. Cocky, the Moscow answer declined Washington’s proffered revolving credit, insisted on an outright loan. Last week Comrade Troyanovsky called at the State Department for the answer to Moscow’s answer. Secretary of State Cordell Hull received him flanked by Assistant Secretary Moore, Ambassador Bullitt and Robert Kelley, eastern European expert of the State Department.

The interview was brief. Just four-and-one-half minutes after Ambassador Troyanovsky went in to hear the results of 14 months of negotiating, the Bolshevik marched out looking as if he had bitten into a very sour apple. Mr. Hull had said “No” to the proposition that the U. S. should give its shirt to Russia. Officially the Secretary of State announced:

“In view of the present attitude of the Soviet Government, I feel that we cannot encourage the hope that any agreement is now possible. I say this regretfully because I am in sympathy with the desire of American manufacturers and agricultural producers to find a market for their goods in the Soviet Union, and with the American claimants whose property has been confiscated. There seems to be scarcely any reason to doubt that the negotiations which seemed so promising at the start must now be regarded as having come to an end.”

Next day it was indicated that the ExportImport Bank, created in a day of hope, would be disbanded, with nothing done. Hamstrung since its formation by the Johnson resolution passed last year by Congress prohibiting the extension of credits to defaulting nations, the Bank has never lent 10¢.

Scouting rumors that he would resign, friends of Ambassador Bullitt saw him safely to a Philadelphia hospital where he was to have treatment for an infection of the jaw.