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At Havana on March 27, 1941, Attorney General Jackson delivered an address designed to prove that as a matter of law the United States was now obliged to render to England (and presumably others) all aid " short of war," while " at the same time it is the declared determination of the government to avoid entry into the war as a belligerent." Apparently convinced that United States military aid to one belligerent alone cannot be justified by the traditional international law, the Attorney General feels obliged first to explode as obsolete the international law conceptions of war and neutrality of the past two centuries, culminating in The Hague Conventions, and to maintain that a new international law has now been revealed in the Covenant of the League of Nations, the Kellogg Pact, the Budapest " Articles of Interpretation" of 1934, and the Argentine Anti-War Treaty of 1933, all of which are alleged to make discrimination the new way of life for neutrals. The legislation of Congress requiring impartiality is not accorded even honorable mention. The " new international law" is thus found in the vague and illusory monuments to the myth called " collective security," which crumbled under the impact of the first European crisis. It should be no surprise to the Attorney General that many international lawyers do not share his views on international law or how international law is created, or follow his unique construction of documents.

Abstract. This paper modifies the simple classical model by introducing capacity utilization that varies across the course of the business cycle. By making the capacity usage a choice variable that turns out to be sensitive to changes in the price level, we show that the classical model loses its fundamental feature, namely the neutrality of money. In our generalized framework, a rise in money supply improves upon all the real variables if the economy suffers from excess capacity, as in recessions and depressions. We demonstrate that our model describes the various economic cross‐currents during the Great Depression extremely well. Thus, monetary policy emerges with an activist role even in a generally classical setting.

We analyze the effects on inflation and output of unconventional open-market operations due to the possible income losses on the central bank's balance sheet. We first state a general Neutrality Property, and characterize the theoretical conditions supporting it. We then discuss three non-neutrality cases. First, with no treasury's support, sizeable (current or expected) balance sheet losses can undermine the central bank's solvency and should be resolved through an increase in inflation. Second, a central bank might also engineer higher inflation in the case it wants to limit or reduce losses because of political constraints or to seek more financial independence. Third, if the treasury is unable or unwilling to tax households to cover the central bank's losses, the wealth transfer to the private sector also leads to higher inflation.