Mr. HACKWORTH. That is correct.

Mr. CRAWFORD. Did I understand you to say that American interests and American nationals, and the interest of American nationals and finances had not been threatened by the activities which are being carried on by Japan?

Mr. HACKWORTH. No; I did not say that.

Mr. CRAWFORD. Well, I think you stated we have not taken any formal action with respect to the affair that is going on in Asia because the interest of our nationals, or of our nationals' interest and our interest have not been threatened by Japan's activities. Did you not say something to that effect?

Mr. HACKWORTH. I do not think so. If I did, I was not cognizant of the fact.

Mr. CRAWFORD. I think it would be well for you to clear the record on that because I think I can take your statement in the record as support for my position entirely.

Mr. HACKWORTH. Well, if I made any such statement it was certainly unintentional.

The fact is that this Government has not recognized a state of war or invoked the Neutrality Act in the Far East for the reason that it has definitely come to the conclusion that to do so would be prejudicial to American interests and American nationals.

There are thousands of nationals in China at the present time and it was thought in the light of all the circumstances that their interests would be definitely prejudiced by a proclamation under the Neutrality Act. That is the reason no proclamation has been issued.

Mr. CRAWFORD. I raised that phase in my question because of the enormous publicity that has been given to the situation that now exists between the United States and Japan with reference to trade treaties. And the result which the publicity given out to the people would lead them to believe might develop.

And I wanted to get my own ideas clear as to whether or not the Japanese participation in China had in anyway interfered with our interests, or was about to interfere with the interest of our nationals.

Now if it developed, as I understood you to say, that our recognizing a state of war over there in Asia, carried on by Japan against China, would embarrass or hurt the interest of our people much more than the war which Japan is carrying on in China will hurt them, why, that is a new light on it which had not been put to me before. Mr. HACKWORTH. Well, I would not want you to be misled by anything that I may say and I do not want you to get the impression that American interests in China are not now being prejudiced. They are and have been right along and we have been complaining about it but it has been the feeling of the State Department that the issuance of a proclamation under the Neutrality Act would prejudice those interests to even a greater extent than they are now prejudiced.

Mr. CRAWFORD. Well, would you say that our interests in Europe are greater, and that our interests in Europe are being interfered with by the war between Germany, France, and Great Britain to a greater degree than they are being interferred with in China and that is the reason why the Neutrality Act was invoked?

Mr. HACKWORTH. I would not put it on that basis. In the case of Europe there has been a formal declaration of war of great

magnitude; it is well known that if American ships were to go into belligerent ports where belligerent rights are being asserted, they would be subjected to all the hazards of war, the very thing that Congress was intent upon avoiding. Therefore it was necessary and desirable to issue a proclamation with respect to the war between Germany on the one hand and Great Britain and France on the other. Mr. CRAWFORD. Now, another question in connection with the Hague Convention and the Habana Convention. Insofar as the United States and the other countries in the Western Hemisphere are concerned, and to the degree that the Habana Convention differs with The Hague Convention, would you say that the Habana Convention supersedes that of The Hague Convention?

Mr. HACKWORTH. Well, first, I think I should like to say that the Habana Convention does not differ with or from The Hague Convention. The Hague Convention is silent on the question of loans. The Havana Convention treats on that subject. The Habana Convention goes a step further than The Hague Convention does. Mr. CRAWFORD. Mr. Chairman, I have another question I would like to put to Mr. Jones but I do not want to interject it here. Mr. WILLIAMS. Miss Sumner.

Miss SUMNER. Mr. Hackworth, I would like to ask this question but you may not care to answer it. If this bill which we are considering is reported out of the committee with an amendment specifically making it mandatory for the Export-Import Bank to lend Finland $10,000,000 or $20,000,000, or whatever the sum may be, would that be a violation of the Neutrality Act in any way, in the opinion of the Department of State?

Mr. HACKWORTH. No. Nor would the passage of a bill constitute a violation of neutrality. The only way that question would arise would be in connection with carrying it out.

Miss SUMNER. In what respect?

Mr. HACKWORTH. The mere passage of an act would not constitute a violation.

Miss SUMNER. Where we specifically name a country?

Mr. HACKWORTH. No; I do not think that the mere passage of an act saying that money is appropriated for a definite purpose would be a violation of neutrality.

That question would only arise when you came to pay over the money appropriated under the act. I do not know that I make myself clear.

Miss SUMNER. You make yourself clear, but the question I had in mind was whether the bill now before us would be violation of the Neutrality Act if we specifically named in this bill a country to which the Export-Import Bank is to make a loan and then provides the money for that purpose.

There is a little difference in that we name the country and specifically authorize money to be paid to a country that is actually in a de facto war, whether or not it is construed as a war, legally, and whether that might be a violation of neutrality.

Mr. HACKWORTH. No; I do not think the mere passage of an act would constitute a breach of neutrality.

Mr. SIMPSON. So long as the Nation is at peace with both nations.

Mr. HACKWORTH. I do not think that it would.

Mr. SIMPSON. Would there be any difference between Congress passing an act directing the bank to loan $20,000,000 to Finland or providing that they may obtain the loan in this manner, so far as violation of the Neutrality Act is concerned?

Mr. HACKWORTH. Technically I do not think that there would be any difference.

Miss SUMNER. It would be about $80,000,000 cheaper.

war.

Mr. MILLER. We have heard the assertions that Finland is a peaceful nation and no state of war exists; we have recognized no state of That being true, would there be any violation of neutrality or of international law to permit the shipment of munitions? I think the President's proclamation under the Neutrality Act is based upon the recognition of a state of war. Therefore, since there is no state of war in Finland is there any reason why Congress could not authorize a loan of money to permit Finland to buy munitions?

Well, let me put it in this manner: So far as the State Department is concerned, on international law, is there any difference between dealing with a nation which has formally declared war and a peaceful nation at war.

Mr. HACKWORTH. I do not know how far you want to carry the idea of war or no war. But I think that I should confine myself to the President's own statement, namely, that he did not want to obtain appropriations for the purpose of selling war materials. Mr. MILLER. I did not quite get that.

Mr. HACKWORTH. The President, in asking that the stock of the Export-Import Bank be increased, spoke about the desirability of selling certain commodities but specifically excluded implements of war. Mr. MILLER. Still there would not be any greater violation of neutrality if Congress decides to strike this section out, so far as neutrality and international law is concerned. We have the same rights, have we not?

Mr. HACKWORTH. I should suppose that even if that were stricken out as far as the Department of State is concerned, it would still follow the idea expressed by the President, i. e., that he is not favorable to the sale of implements of war.

Mr. MILLER. Are we not somewhat in the same position we found ourselves upon the repeal of prohibition, for beer because because it was intoxicating when after repeal the same beer was not intoxicating?

In other words, a country is at war but not declared to be at war and we can sell them supplies, but the next day war is declared and

we cannot.

Mr. GIFFORD. It is perfectly obvious that the President may now make the loans. Is there any necessity, if he desires to do so, for us to say that he may do it?

Mr. HACKWORTH. Well, I merely say that if the provision were not there we would still, insofar as the Department has any voice in the matter, undertake to observe the President's views.

Mr. GIFFORD. But, as a matter of fact, you reach the conclusion that Finland is not at war and is not a belligerent, and, therefore, there is no neutrality law in effect, and we can do as we like about

lending money for any purpose, but the only reason it is in there is the President has desired that it be there?

Mr. HACKWORTH. I should like to phrase that differently.
Mr. GIFFORD. No doubt.

Mr. HACKWORTH. We have not reached the conclusion that Finland is not at war, and we have not reached the conclusion that Finland is at war.

Mr. MONRONEY. Is it not a fact that a country in declaring war obtains for itself certain benefits, particularly restraining its opponents' trade with other countries or invoking international law as respecting restrictions on neutrals sending to the opponents supplies of war?

Mr. HACKWORTH. That is right.

Mr. MONRONEY. Should a nation choose to deny itself the advantage occurring under the declaration of war, restrictions on trade, and so forth, wouldn't we be aiding aggressors in undeclared warfare by our granting to aggressors the advantages of declared war by restricting our trade with the victim?

Mr. HACKWORTH. There is no doubt that once we recognize a state of belligerency we circumscribe the rights of our nationals because they are immediately subjected to the laws of war.

Mr. WOLCOTT. What is the effect of this restriction anyway? Is this a bill to help Finland? Does the State Department view this as a bill to help Finland and to carry on this, whatever you may call it, this trouble they are having over there?

Mr. HACKWORTH. As I understand this, this is a measure designed to afford relief to the civilian population in Finland.

Mr. WOLCOTT. All right. Now, it appears that Finland needs money, does it not, or we would not be asked to pass this bill predicating it upon the fact that we are aiding Finland? It is self-evident that Finland needs money because she has already made application for these loans. I think Mr. Jones testified that they had made application, or that they wanted twice as much money as we could give them, so, it is very evident that they need money. Well, if they need money and we grant them this loan, we will say, of $20,000,000, in effect, that releases $20,000,000 of their money for the purchase of war materials, does it not?

Mr. HACKWORTH. I suppose that it might have that effect.

Mr. WOLCOTT. About the only thing that this proviso in this bill does is to prevent Finland from buying war materials in this country, and forces her to buy her war materials in other countries to the prejudice of our munitions makers?

Mr. HACK WORTH. I do not think that necessarily follows. Finland cannot buy war materials with this particular money.

Mr. WOLCOTT. I grant you that, but she can buy bread with this money, we will say, and the money she would ordinarily buy munitions with this is a substitute for. So she uses this money to buy bread and she uses the money which she would ordinarily use to buy bread with to buy munitions. That follows, does it not?

Mr. HACKWORTH. I assume that Finland has other money.

Mr. WOLCOTT. She is going to have $20,000,000 more if we grant her this loan than she would have otherwise, and if she has any money to carry on this unpleasantness that money can be used for the purchase of war materials.

Mr. HACKWORTH. I suppose that that would follow.

Mr. WOLCOTT. And in the final analysis all we do is to prevent our munition manufacturers from furnishing munitions of war and forcing that trade to other countries.

Mr. WILLIAMS. After all, do we not finance the operations that would furnish a stimulus to the exportation of farm products rather than munitions?

Mr. HACKWORTH. Exactly.

Mr. WILLIAMS. If that is the effect of this bill, that is all the more reason we should be for it.

Mr. WOLCOTT. But there are farm products which come in the category of munitions of war, and if this is a farm-relief bill, we had better call it a farm-relief bill. The point behind what I am getting at is this: If the reason for not furnishing munitions of war is to protect our neutrality this year, this bill is in the same category as the neutrality bill, is it not?

Mr. HACKWORTH. I do not think that the reason for not desiring to sell munitions of war was necessarily based on the neutrality question.

Mr. WOLCOTT. The whole thing seems to be so weak, and shows a lack of courage on the part of a nation as big and wealthy as we appear to be. I saw a cartoon in one of the papers the other day, on Valentine Day, which depicted Finland down on the ground and Soviet Russia had her by the neck, and the United States Government was handing her a valentine. It seems to me that this $20,000,000 is a sort of valentine being handed to a man who is being strangled.

Miss SUMNER. Mr. Chairman.

Mr. WILLIAMs. Yes, Miss Sumner.

Miss SUMNER. Referring to Mr. Gifford's question about not having a policy reminded me that at the time the neutrality debate was going on we all had the idea that the policy of the Department of State and America in regard to the war between Germany, Great Britain, and France, was to use all methods short of force to help our friends, Great Britain and France; that is right, is it not?

Mr. HACKWORTH. I do not think I should answer that question. Miss SUMNER. They are going to use in this altercation between Finland and Russia

Mr. BROWN (interposing). Altercation?

Miss SUMNER. Well, it is except in name only. Have we a policy of that sort between these friendly neighbors?

Mr. HACKWORTH. I think that there have been pronouncements by the President and others regarding this matter, but I am not now prepared to comment on that subject.

Miss SUMNER. What I am trying to get at is: Is this $100,000,000 going, $20,000,000 perhaps, to Sweden to help France and England in working toward their aim, and more to Norway and, for the same purpose, possibly more to Finland to fight the battle between Germany and England, perhaps? In other words, that is the suspicion in the back of my mind, and I think perhaps that others have the same apprehension on that.

Mr. HACKWORTH. I am not prepared to comment on that.