Perfect Crisis

Washington is a 9 o'clock town. Lights that burn late mean not hilarity, but grim business. Last week significant night lights glowed in the two huge, forbidding grey piles that flank the trim beauty of the White House--the Treasury on the East, the State Department on the West.

In the Treasury sat ruddy John Wesley Hanes, Under Secretary, brooding over the dropping British pound, the effect of a war on U. S. money, the certain crashing raid by foreign security holders on the "thin" market of the New York Stock Exchange. Hanes, a positive, bluff, solid man, oddly inconsistent with the cold background of his Treasury office--icy-eyed portraits of former Secretaries, ancient shiny red-plush drapes, a cool white-marble mantel--arrived every morning last week at 7 a.m. (noon in London) to telephone his boss, Secretary Henry Morgenthau Jr. in Finland, Sweden, Norway; to telephone the men in London who watch the English end of the tripartite monetary agreement. Mr. Hanes had $2,000,000,000 worth of stabilization funds to repulse panicky raids on the franc, pound, dollar.

In the State Department sat dry, rigid Sumner Welles, Under Secretary, unbending, unhurried, whose iron purpose is always swathed in the precise delicacies of diplomatic chitchat, perfectly at home in the chill gloom of the State Department, its black waxed furniture, heavy blue drapes.

With Secretary Morgenthau hunting a homeward boat from Oslo, Secretary of State Hull vacationing in White Sulphur Springs, Postmaster General Farley in Paris, Attorney General Murphy in Narragansett, Secretary of Labor Frances Perkins motoring in New England--and with Franklin Roosevelt in fog at sea (see p. 9)--these two politically young men (Hanes, 47; Welles, 46) last week met a war crisis full face.

At their hands were a score of new tools they had helped invent and perfect for just this purpose and moment. For at Munich-time (September 1938) Franklin Roosevelt told his administrators that never again must the U. S. be caught short, that plans must be drawn up to meet every predictable impact on the U. S. of a war abroad--measures to cushion the shock to the money-markets, to bring home U. S. nationals, to lay a firm foundation for the uncertainties of the future. Even proclamations were ready for the President's bold pen-stroke.

Until their bosses began stepping off trains and planes later in the week, Messrs. Welles, Hanes and their Council of Preparedness met every day: Acting Navy Secretary Charles Edison, Acting War Secretary Louis Johnson, Acting Attorney General Thurman Arnold, Naval Chief of Operations Harold Raynsford Stark, Army Chief of Staff George Catlett Marshall, technicians, advisers, legal men, planners.

On the Atlantic were 22 luxury-liners jampacked with homing American tourists (see p. 40); in Europe every American consulate, ministry, embassy swarmed with visa-waving U. S. citizens keen for a sight of Staten Island; at Villefranche, France, floated the U. S. Navy's Squadron 40-T, (the light cruiser Trenton, old destroyers Badger and Paul Jones) their steam up to haul U. S. nationals to embarkation points.

In the files of the Federal Reserve System, Treasury and SEC lay plans providing a parachute for U. S. money markets in case foreign interests began hurried liquidation of their $9,500,000,000 U. S. holdings--of which $4,000,000,000 is in volatile stocks & bonds. But beyond their cushioning powers under the SEC, Messrs. Hanes & Co. had a spade ace up their sleeve that the unprepared 1914 U. S. Government didn't dream of--power to slap shut all U. S. stock exchange doors for 90 days in an emergency.

At week's end, as harried, sweltering Washingtonians abandoned cocktail bars to cluster about news tickers, the clicking machinery of the U. S. Government moved efficiently out of the acting chiefs' hands into the decisive powers of their policy-making chieftains. But the tension of an almost-wartime Washington was crisply summed up by the State Department's Berle:

"Whoever organized this crisis did a bang-up, first-rate, intelligent job. The Munich crisis had some rough edges, but this one is perfect."

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