Henry A. Wallace, The Hard Choice

Selected Works of Henry A. Wallace

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The Hard Choice

Henry A. Wallace

Excerpted for Wallace's The American Choice (1940)
From Henry A. Wallace, Democracy Reborn (New York, 1944), edited by Russell Lord, p. 163.

There has continually flamed in the hearts of Americans the belief that this continent is different. On this new soil, we have thought, mankind would escape from the compulsions, the suspicions and the greeds of the Old World.
This simple faith may seem rather childlike in this time of anguish, with so much of the civilized world at war again, sick at heart and weary. Even so, our belief remains. We believe that in this New World we will build an even newer world, in which there shall be comfort and security, and freedom and dignity for all. We believe that we are destined to create on this newer soil a higher standard of human freedom and a wider distribution of wealth and happiness.
It is a real faith, wherever you find it. Here in our states, among the twenty republics of America, and in the Dominion of Canada, the American faith is real. If our faith can be made to work here, and probably then more widely, it will remain a real hope in the world's future.
But we are not going to be able to dream our way into that future, or to go on taking our freedom in the easy ways. We are going to have to make hard choices and to stick to them. If we are to stand free and grow in the ways of freedom we must with open eyes make immediate sacrifices to a far end.
The immediate test is this: We shall probably have to turn down some business, already temptingly proffered. We must decide whether or not to do business, on their terms and in their way, with the totalitarian tyrant states, notably with Germany. My own view is that we must refuse to do this. We must at any sacrifice build up not only an armed defense, but an economic defense, both internal and in some part hemispheric, until we are strong enough, both economically and militarily, to do business with Germany and its subject states, and to do that business in a way that will be safe for us.
My first purpose is to examine and to oppose the blindly trustful ands opportunistic view which Old Guard businessmen, economists and statesmen begin to advance, somewhat guardedly, as "practical" and "reasonable." The Germans, they say, seem to be the top dogs in Europe at present; and maybe they aren't such bad fellows after all. They want to do business. We have the goods. Why not?
From the standpoint of genetics the Germans are naturally neither better fellows nor worse fellows than other peoples. They are by nature neither fiends nor supermen. But the Germans are now under the all but complete command of a cunning fanatic who at once enslaves and exalts them by appearing to transform "racial" defeat and humiliation into demoniac exhibitions of superior blood-shedding, power and might.
Hitler and his Nazis have definite designs against this hemisphere, North and South. Their tactics, here as in Europe, are to divide and conquer. By propaganda, by bartering agreements—above all, by a completely centralized and arbitrary, bargaining power—Hitler hopes, here as in Europe, to divide and conquer. The Nazis hope to set us against each other, here in the New World, nation against nation, race against race, special interest against special interest, class against class. And out of the confusion thus created they hope rather quickly to build economic, political and military power that will overwhelm and rule us, here in the New World.
The New York Herald Tribune recently did a magnificent job of reporting in some detail the commercial spying and dickering of one Dr. Gerhardt A. Westrick, a Nazi agent, working out from New York. The exposure has led this agent to leave the country. But there are many others.
I want in the plainest words to say that freedom is over in this country if we let these commercial travelers who are here to sell us Nazism get their foot in our door. They want to trade with us after the war. But they mean to have things their way. At a press conference last August Walther Funk, Hitler's Minister of Economic Affairs, talked to United States foreign correspondents and stated rather bluntly Germany's terms of trade.
"The United States," said Funk, "must give up the idea of forcing its economic conditions on Germany and Europe . . . . To what extent we conduct trade with the United States depends entirely upon Americans themselves . . . .
"When you play marbles and one fellow wins all the marbles, the game ends. You must then think of some new game. When all the gold is in the United States and it doesn't come out again, the world must think of some other medium of exchange."
Actually, this was a bid for some of our twenty and one-half-billion-dollar store of gold—around three-quarters of all the gold in the world. They will want that gold, or enough at least to settle international balances, Dr. Funk admitted, when pressed. A shrewd horse trader always depreciates the worth of the horse he has in mind. "Blood above gold" is a Nazi slogan; and Funk went on to say that world economy would henceforth be dominated by the Reichsmark, the value of which is "assigned by the State." This was a bid for us to devalue the dollar price of gold. It was a threat to press upon us from Berlin dictation of currency values in this country.
The news magazine, Time, of August 5, 1940, reporting this, observes; "If Dr. Funk could really peg all European currencies to a Reichsmark 'work dollar,' he could fix the value of labor in all countries that had to trade with him, [and] would have perfected a streamlined form of international slavery." That is true; and I regard the immediate probability of such tactics (unless we understand what is going on and unitedly rise against it) as more threatening to our freedom than the concrete threat of cruder sabotage in our factories, or the blowing up of munitions dumps. A certain amount of such crude blasting-from-within went on during the First World War. A subtler and far more serious disruption is now proposed, and we must not let them get away with it.
A number of people in this country have business investments in Germany, or entertain prospects of making themselves a lot of money by trading there after the war. I do not suppose that if you add them all up, these Americans would amount to more than one in a million of our total population. But many of them are powerful people, financially speaking, and they are both anxious and determined to do business with German Europe at any cost.
We grew up during the First World War from a struggling debtor nation and took our place as a great creditor in world affairs. We became in a few swift years the greatest creditor nation on earth. But we kept on acting like a headstrong child in the family of nations. In the course of his admonishments to our press correspondents in August, 1940, Reich Minister Funk threw that fact up to us, and I am bound to say that this part of his statement was true:
"The United States . . . must abandon the wrong method of wanting to be at the same time the greatest creditor nation and the greatest export country."
That was true in 1919. It is true today. But most of our Old Guard business and political leaders went right on, and go right on, thinking, talking and acting as if nothing in this world has changed. In 1922 and again in 1930 we reared around our borders the highest, stiffest tariff wall ever erected or even seriously considered in our history. When other nations quite naturally retaliated by raising barriers of their own, by turning their trade elsewhere, and by hastening programs of economic self-containment, our Old Guard leaders were only for a little while dismayed. Panting after "normalcy" and business at any price, yet sharply up against the fact that you have to have an open safety valve of random exports in order to keep on going under an almost entirely unplanned and ungoverned economy, the Old Guard dodged the dilemma by continuing to think or pretend that nothing had changed. We then set out an a program of make-believe sales of our export surpluses. We would not consent to accept anything like an equivalent return of goods from our foreign customers. Our sales abroad became, of necessity, mainly paper sales. We took their notes and piled them up and kept piling goods and credits abroad. We went right on expanding production in industry and in agriculture. It was a curious sort of commercial appeasement, madly optimistic, entirely unrealistic; and it almost wrecked this country when the paper went bad.
Today, many among the Old Guardsmen stand ready to appease Hitler. They are eager to stir up a fateful new show of booming business at any price again. In the United States as well as in the other Americas we find many businessmen who for temporary personal gain want an early peace between England and Germany and who are strong for economic appeasement between the Americas and a German-controlled Europe.
I want to make plain here my complete belief that if such businessmen are permitted to pursue their old game, seeking short-term advantage by means, of compromise after compromise, they will lay us open to enslavement, and will themselves inevitably disappear in the process.
Against Hitler's total warfare we must quickly oppose a total defense. This will involve sacrifices, not only in terms of higher taxes and conscription, but in the exactions and restraints of an economy that almost certainly must, for a while at least, become more nearly self-contained and more closely subject to self-imposed controls. The pain will be actual if we give up the easy business, if we pass up the poisoned olive branch which German Europe is going to offer us. But if we really believe all we have said and done about the rights of man, and freedom and personal honor in this New World, I can see no other safe or decent course.
In closing, I want to show that to appease Hitler by trading with him as he wants us to—would prove the hardest choice, the suicidal choice, in the end. But I must also plainly show that not to trade with Hitler and his puppets, not at least until such time as we have developed hemispheric arms of defense, both economic and military, may require of us stricter internal adjustments and a higher degree of centralized governmental control than we have ever contemplated in our past.
We must realize in a perfectly dispassionate way that the German war machine at the present time must be psychologically very strong. The strength is derived only superficially from Hitler. It has its roots in several generations of systematic imperial Prussian military indoctrination. More recently the German strength is derived from a tremendous concentration of industrial power first in huge cartels, and later under Schacht and Hitler. This situation is probably temporary (perhaps one year—perhaps thirty) and the outstanding question is: What will happen to the rest of the world when and if Germany smashes? Also there is the question of how far the other nations will have to go in imposing economic controls during the period while imperialistic Nazi Germany continues to spread the system now in effect.
This is a fight to make sure that the last home of freedom is made safe for our children. Whether we are forced into active military defense or not, it is a fight that is bound to involve sacrifice and pain. There are no easy ways out. But there are ways that may look easy; and already the easiest ways are being persuasively presented and urged. We who reject these ways as ruinous and fatal must ask ourselves both insistently and searchingly the hardest of questions: How much of our freedom must we relinquish to our country's cause in order to save our freedom?
One curious thing about the question is that candid men who deeply believe in democracy, and candid men who really do not care so much for it, may seem at first to be approaching their solutions to the problem from the same ground. We are going to have to stop talking so much about our freedom, many of our people are beginning to say. It is on the cards that we deal with German Europe; it is not on the cards that we greatly increase our trade with South America, some say. Speaking in August, 1940, at San Francisco before the National Foreign Trade Convention, Joseph C. Rovensky, a vice-president of The Chase National Bank, bluntly argued that this country should retreat from the Hull method as useful only under "normal conditions" and he urged resort to Hitler's method of "barter or compensation trade." "It is entirely probable . . . that we shall also adopt trading practices born of expedience," Mr. Rovensky said.
In a message to the same convention President Roosevelt said that such a course would "subject . . . the entire nation to the regimentation of a totalitarian system." At the same meeting Henry Francis Grady, Assistant Secretary of State, said that to barter thus with Hitler would expose us to a "sixth column of special interests," operating both from without and within.
Perhaps what we shall require to preserve our freedom on this hemisphere is not "regimentation" but regulation of traffic: How for our own security can we direct and keep in hand most safely our flow of outland trade? The opposition want to resume old driving habits, jumping red lights; making their own choices at every danger point and intersection, driving in what they consider in the light of only their own interests to be an "expedient" course. We who take the other view say we would rather see world trade traffic sensibly directed; we say we would much rather drive to our goal under our own democratically-posted signs, danger marks and stop-and-go signals than ride to smash under a trading traffic system more or less secretly directed from Berlin.
I want to be guided in all that I say during this perilous year by a spirit of moderation. I have said that "whether it knows it or not, the Republican party is the party of appeasement." I have added that the Republican standard-bearer is not himself of this persuasion; he, indeed, has stated that he is "100 percent" against appeasing Hitler. But during the fall of 1940 it becomes increasingly clear that the gathering drive for appeasing Hitler has gathered principally around that same old hardheaded group, the powers that be of the G.O.P., the party of "business as usual" by unyielding nineteenth-century standards.
We have reason to fear these shortsighted, stubborn and generally honest men. Leadership such as theirs has drawn us into deep trouble before. But the trouble they would get us into this time would be nothing short of chaotic. I say, deliberately, that they are of the breed and temper of those who stood behind Chamberlain in England, and who made possible the easy conquest of Norway, of Holland, of Belgium and of France. I say that if there is a Hitler victory in Europe there will at once be pressure from within as well as from without for loans to the puppet governments which Hitler has set up in the countries he has conquered. The same business interests which unloaded the worthless bonds of Europe on American investors following the First World War will push hard for the same sort of profits they made then.
If we once embark on this business of selling oil and food and minerals to Hitler's Europe, on his terms, as another return to "normalcy," there will be no turning back. As we drive on toward collapse we shall have to go on yielding more and more to Hitler's demands, tying ourselves more and more tightly to his labor mark, putting ourselves more and more under his heel.
In President Roosevelt's Looking Forward, a book made up of his campaign pronouncements in 1932, he spoke of the postwar Republican trade and credit maneuvers as "romantic adventuring in foreign markets." We must ask ourselves now what would happen to us as a people if those romantic business adventurers, those heedless believers in headlong "economic opportunism," are allowed to run hog-wild again.
This time it would be much more serious than it was the time before. This time, if we let it happen, we shall almost certainly fall victim to highly centralized forces of foreign commercial rule and oppression, the like of which in might and in savagery have never been seen before or even imagined in the time of man. If we go at it this way, headlong, haphazardly, we shall oppose a divided, random and feeble bargaining power on this side of the water to a terrifically concentrated bargaining power on the other side. If we allow ourselves to be drawn unprepared into such blindly opportunistic trading with German Europe, we shall be like a bunch of scurrying boys trying to halt with slingshots a highly concentrated massed attack.
Those who have been or are farmers or working people or men in small businesses know very well that helpless feeling which comes at times when you are up against big combinations of buyers, sellers, promoters, distributors or employers. To counteract the inequalities which arise in trade between individuals standing alone and combined bargaining power on the other side, labor unions, farmer and consumer co-operatives, and associations of smaller businessmen have become the most vital growing points in the development of our democracy.
We have learned what big concerns can do in a cold-blooded, impersonal way to the laboring man who joins a union, to the farmer who joins a farm co-operative, or to the small tradesman who enlists in an association against the march of the chain stores or the big gas chains. But all that we have experienced in the way of monopolistic oppression here in this country will appear to have been as nothing in comparison with the sort of hemispheric monopolistic oppression which German Europe can put upon us, and definitely plans to put upon us, if we seek in a disunited and blindly individual manner to do business with Hitler. If we take the bait and plunge into trade unorganized, then, I want to say most earnestly, our very biggest concerns soon will find themselves to be very little concerns, as compared with the size and might of the opposing bargaining power. Our mightiest private concerns will find, all too soon, how it feels to be a little fellow taking what the big boss will pay when he will pay, it, working when he says you can work, expanding productive capacity when Hitler gives the nod, going to smash when he decides he has had enough of that and nods in another direction.
We want foreign trade. We want all we can get, safely. I am convinced that we can get a good deal of foreign business after this war, safely, if we organize to get it safely, and do not dash out for it disunited. If we make such a dash, I am completely persuaded, Hitler and his concentrated commercial artillery can pick off business by business, region by region, country by country.
There can be no doubt that we face just such danger. If we do not quickly come to think and to act in terms of a unified long-time allegiance to democratic designs, both internally and in concert with our hemispheric neighbors, then the postwar German commercial Putsch upon us, even now developing, can penetrate every seam and point of division and rip us wide open.
We have leaped with a united will and spirit to set up in a hurry a military defense. Difficult problems of engineering and finance confront us in this particular; but far more difficult and intricate is the problem of keeping us united in what we have traditionally been reared to feel is the realm of free and restless enterprise, largely unguided by common concern, outside the realm of democratic government—business. Business in Europe now is surely and mightily a united process. Not only Germany but such countries as still oppose her are buying, in effect, through just one gigantic bargaining agency. We must unite.
We can be very strong here in the Americas if we can unite in this plain and urgent business of presenting as nearly as possible a united front in trading with an avowed enemy. Germany will try to bluff and frighten us into disunited action. She will say that she can get along without the products of this hemisphere. She will hope to develop alternative sources of supply in Africa. It will take her fifteen or twenty years to do the job of developing Africa to take the place of the Americas, in case she wins. But she is going to do everything possible either to dominate the Americas completely or to be independent of them. Germany's immediate postwar trading position in case of victory is strong, but not as overwhelmingly strong as she would have us believe. She will badly need petroleum and copper from the Americas. She will need wool, hides, corn, oil cake and a variety of other products that we have in abundance.
Our country is peopled by those who left Europe to escape regulation of one kind or another. But now both America and the world are growing up. And freedom in a grown-up world is different from freedom in a pioneer world. As a nation grows and matures, the traffic inevitably gets denser, and you need more traffic lights. Those who urge the removal of trade traffic lights speak in behalf of anarchy.
To prevent unemployment, we must put at least four billion dollars of new capital (new debt, unless replaced by common stock) flowing a year. This debt can be private or governmental or both. The choice back of that, if private capital does not flow, is to withhold public money, to go on having unemployment, not take care of it—and face starvation, bloodshed and revolution.
In normal times, everyone would prefer, of course, the private route. But when you have a Hitler in the world-controlling government exports, government imports, government exchange; a Hitler using propaganda, economic penetration, warlike aggression, it is unlikely that any large amount of private capital will flow into the production of peacetime goods.
I think we ought to face the fact that with a Hitler controlling the exports, imports and exchanges, it is impossible to get an adequate out-flow of exports from the United States, and that an increase of governmental intervention is inevitable.
I am delighted when or if government can be withdrawn from the business field, because I have a friendliness toward government and hate to see it placed in the position where, in the world market place, it is exposed to the criticism of both buyers and sellers simultaneously. Yet government has long entered in, the background of the world market place, through its action on tariffs, monetary policies, taxation, regulation of grades, etc. It will probably have to enter the world market place in the future more than in the past. Indeed, it is certain that as long as totalitarian governments exert a profound effect on world trade, our government will have to enter the world market place more than ever.
This does not mean that we must reconcile ourselves to regimentation. A people may submit to laws and regulations of their own devising and still be joyous and free. We can have a rebirth of individualism without going back to the terms of pioneers fleeing all restraint, or giving way to the ethics of the buccaneer businessman who feels that it is his right and privilege to unload worthless stocks or shoddy goods on a gullible public. We can have a new individualism that directs itself in terms of the general welfare, a new individualism based on the capitalism of Main Street, but not disregarding completely what the capitalism of Wall Street has taught us.
The times demand it. It will be necessary for the government and all of us to co-operate in order to make the multitude of adjustments that must be made to meet the situation during the five or ten years following the peace. The danger is that many big income-tax payers will, even before peace comes, set up shouts of "Give us free enterprise," "Take government out of business," "Cut government expenditure at once," "Down with bureaucracy," and so on. This attitude is perfectly natural, but if it is carried into action it will produce a situation infinitely more dangerous than that of 1921 and 1932.
I am well aware of the sins of bureaucracy, its occasional pettiness and red tape. The bureaucracy of any country cannot be much better than the human beings of that country. But I am convinced that governmental bureaucracy, from the standpoint of honesty, efficiency and fairness compares very favorably with corporation bureaucracy. There is less nepotism, less of arbitrary and unfair action, and a more continuous consideration of the general welfare. This is not because human beings in government bureaus are so much finer as individuals than human beings in corporation bureaucracies, but because continuous public scrutiny requires a higher standard.
Economic emergency is like a war. Under stimulus of trouble and danger millions of persons experience a rebirth of their individual wills and know the joy of moving together to pull the nation out of trouble. We in this nation have been under tension almost continuously since 1916. Whether we have realized it completely or not, we have been in a state of emergency ever since the outbreak of World War I. For nearly a quarter of a century we have experienced the greatest need for unity if we are to adjust ourselves to a world continuously and violently changing. World War II inevitably will make it necessary for us to adjust our ways more completely. The good old days are not coming back. We are going on into a new world with a determined will to make it a better one.

Introduction | Essay | Documents | Resources

Selected Works of Henry A. Wallace

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