to be made and might not be met if made, and our requirements for francs would nevertheless have to be supplied, be the consequences what they might. I am therefore most anxious to secure from the French Government an agreement to continue to supply the francs needed by our Army until their return home, against reimbursement in dollars, to be supplied by the French Government only to the repayment of France's debt to the United States or other purposes specified or approved by the United States Treasury.

"If the French Government does continue to so supply the francs for our Army it is to be anticipated that by the time peace is declared the French Government will become entitled to a large amount of dollars in this country in excess of its war expenditures during the same period, and the amount will have been largely augmented by the time our Army reaches home, unless applied to the repayment of the French obligations held by the United States. These dollars France will be most anxious to use to pay for the commodities which it must purchase without its territory to provide for the reconstruction of the invaded portions of France. France must have foreign credits to meet these expenditures, as for some time after the war it is not likely to have either gold or commodities to meet all its foreign balances, and consequently no doubt will object to applying its accumulated dollars toward the payment of the loans heretofore made to it by the United States Government unless assured of the foreign credits needed for reconstruction purposes. In view of the provisions of the First Liberty Bond Act the United States can hardly refuse to exchange the demand obligations of the French Government acquired under the authority of that Act (about $650,

000,000 in amount) for long-time obligations, and without the acquiescence of the French Government a demand for the payment immediately after the war of the indebtedness of France to us incurred before our Army participated in force in the battles upon the western front could not be made with very good grace nor would it appeal to our people as fair treatment.

"It is obvious that, to relieve us of the burden of foreign expenditures to support our Army as well as for other and even more urgent reasons, we must make every effort to have our forces returned home as speedily as practicable. How quickly this can be done depends partly on the progress of our shipbuilding before peace is declared, but in part also on whether we can obtain the use of foreign ships. If British ships are used for commercial purposes while our ships are engaged in bringing home our Army, and if British Empire products are sold for cash while ours are to a large extent sold against dollar credits established in exchange for francs supplied to our Army, the inevitable result will be that Great Britain will secure an undue share of the cash markets of the world. It is most necessary that we arrange to secure such use of British or other foreign ships as may be requisite to bring our soldiers home expeditiously, and that Great Britain should share with us in supplying the credits required to defray the cost of the commodities needed for the reconstruction of France. I have no reason to believe that Great Britain will not be willing, in cooperation with the United States, to provide credits for the reconstruction of France, but in view of the loans made by Great Britain to the Allied Governments before we entered the war-its loans to France since the commencement of the war to the

present time being upward of £400,000,000 or, say, $2,000,000,000-a discussion with Great Britain may involve a general discussion as to the war indebtedness incurred by the various Allied Governments to the British Government, and the indebtedness (now amounting to $3,652,000,000) of the British Government to the United States.

"The dimensions of the British problem of bringing home her Army in France and of obtaining the francs needed for its support until the return are so much less formidable than our problem that I merely refer to it.

"I am sending you this letter for your information so that you may be informed of the questions which are about to be brought up for discussion by M. Tardieu upon his arrival next week. No action upon your part is required at this time, unless, indeed, you have some directions to give me concerning the matter.

"The President,

"The White House."

"Cordially yours,

(Signed) "W. G. McADOO.

It was accompanied by a memorandum outlining the financial situation existing between the Government of the United States and France, and which contained these recommendations:

"The financial problem indicated should be made the subject of full discussion between the British, French and United States Governments in the endeavor to formulate principles to govern the settlement of these questions and to arrange a temporary working arrangement which would be subject to readjustment. The final settlement probably can not be determined until the peace conference. Moreover, dealing with the day-to-day financial questions is becoming increasing

ly difficult as each Government desires to preserve or improve its position in anticipation of the larger questions which inevitably sooner or later must become the subject of discussion and agreement between the three Governments.

"The Treasury should be furnished the most accurate information possible regarding the ordinary expenses of the American Expeditionary Forces in Great Britain and France, and all data available regarding any indeterminate claims which have been made or suggested, and as well full information regarding any arrangements made in respect to the return to America of the American Expeditionary Forces and as to the ultimate disposition of material values established in France. It is clear that in making financial arrangements involving such enormous sums the Treasury will be seriously handicapped if it can not be informed of the dimensions of the problem."

On these questions as in all others bearing upon the financing of America's associates in the war, the Secretary was following the basic policy of lending unstinted aid but at the same time of making sure that the records were kept straight and that no money should be advanced or commitments made until the most pressing need was shown. He realized that under the terrific pressure of the war others were liable to lose their heads, but he made certain at all times that the interests of America were protected; that, as far as he could control the situation, the expenditure of money was properly supervised and controlled, and that the rights of the United States in connection with the foreign war debts should be placed upon such a solid foundation that no doubts would arise in the future.

N°

CHAPTER III

TREASURY TASKS

O one without knowledge of what the Treasury of the United States became in the days of war can have adequate realization of the great part which McAdoo played in the gigantic drama. For four years he had striven to make a tape-bound, custom-hobbled, privately privileged institution into a financial machine for efficiency and democracy. He had no sooner succeeded in that task when the war piled Pelion on Ossa. Under a chief of less administrative ability the Treasury might have disintegrated into chaos beneath the pressure of events. Instead, it functioned like a great motor, supplying the driving power for the war of the rear-line trenches, that struggle of the people at large in support of the armies in the field.

His method of work undoubtedly insured his capacity. He never made a snap decision. Always he seemed to be going, no matter how urgent the immediacy, back to the bases of American standards, then forward to the possibilities of the country's future. The present was his road, not his destination. Always, too, he went over the whole field, never appearing to decide any question merely from the point of view of its presenter, or even from his own personal bias. His long swings around the circle, wearying though they were, and taking him from tasks which seemed vital, kept him in touch with the people of the nation as no other public man of the time was. He met everybody, and listened to all who had anything to tell him. Out of his open-mindedness he was the initiator of various reforma as well as the administrator of established divisions.