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Volume 13, December 1 – December 12, 1935
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28275771
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Volume 13, December 1 – December 12, 1935
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 13
December 1 - December 12, 1935
< * I
Book Page
Automobiles, Government
HMJr thinks Fords and Chevrolets adequate for all
officials except Cabinet officers and heads of
Departments - 12/3/35
XIII
11
- B - -
Baruch, Bernard
See Taxation (Capital Gains)
220
Bombay, India
See Silver
Budget
FDR, HMJr, Bell, and Buchanan discuss, at Warm Springs
11/25/35
1
a) HMJr and FDR decide not to mention leaving relief
out of budget
b) Exclusive of Agricultural Adjustment Administration
and debt retirement, total of 1936-37 budget will
be $5 billion
c) Buchanan suggests not appropriating any new money
for good roads: $125 million saving
d) FDR for first time says he intends to cut Civilian
Conservation Corps in half: $300 million saving
e) This may make possible balancing budget
FDR, HMJr, and Bell again discuss - - 11/26/35
2
a) FDR wants to leave 1,900 employees in National
Recovery Administration; Bell thinks 700 sufficient;
HMJr suggests to FDR that job of reduction be left
to him and FDR agrees
b) HMJr suggests $150 million cut in Public Works
Administration; FDR concerned
Coolidge greatly upset: FDR stated in Atlanta speech,
country can look forward to constantly decreasing
deficit; bond issue sold on that - - now FDR and HMJr
must live up to it; he has figures dividing year into
6-month periods, and second period will show increase
in deficit - 12/3/35
4
a) HMJr says he cannot be 80 upset; called Bell and
Haas, who said United States was living within
estimates
b) HMJr suggests that Coolidge talk to FDR
National Recovery Administration budget discussed by HMJr,
Bell, Coolidge, McReynolds, and Hill (assistant to Martin
of National Recovery Administration) 12/4/35
21
a) Copy of memorandum sent to FDR by Bell on 11/15/35..
23,24
b) HMJr asks Hill for report on all present employees
(2,235)
c) Resume' of conversation: HMJr and Martin (in Kentucky)
27+
d) Hill's report, as requested
32+
Regraded Unclassifie
- B - (Continued)
Book Page
Budget (Continued)
Revenue estimates discussed - 12/6/35
XIII
40+
a) McLeod estimates higher than Self-Weeks-Wetherton ones
b) Charts and tables attached
National Recovery Administration discussed by HMJr, Bell,
McReynolds, Martin, Hill, and Director - - 12/12/35
261
a) Martin proposes reduction of force to 1,300 by
January 15; HMJr and McReynolds suggest December 31
b) HMJr says he will suggest to FDR that all activities
except Consumers' work (to Labor) be transferred to
Commerce
c) Proposed active personnel and proposed dismissals
1/15/36
265,269-288
d) Proposed Executive Order
268
- C -
Capital Gains Tax
See Taxation
220
Carter, Boake
Gaston reports having asked Carter to call him but Carter
never called back - - 12/3/35 (criticism of Coast Guard
investigation)
12
Copy of HMJr letter to Carter
60
China
See Silver
Civilian Conservation Corps
See Budget
1
Coast Guard
See Carter, Boake
12,60
Congress, Statements before, by HMJr
On Treasury Appropriation Bill for 1937, before Subcommittee
of House - - 12/11/35
190+
Coolidge, Thomas Jefferson
Greatly upset; see Budget - 12/3/35
4
Cooperatives
FDR asks HMJr to see Filene about his "scheme" and turn him
down gently, since he is going to make two or three radio
talks - 12/11/35
220
Cotton
See also Silver
HMJr phones to Wallace, Chester Davis, and finally Porter -
authorizes "no sale for couple of days until they see
about silver market" 12/10/35
218
- E -
Excess Reserves
Parker Gilbert phones HMJr he contemplates writing letter
to New York Times giving "the other side"; HMJr pleased
12/12/35
295
Regraded Unclassified
- F -
Book Page
Filene, Edward
See Cooperatives
XIII
220
Financing, Government
12/2/35 - Offering of approximately $450 million
2% Treasury bonds of 1945-47 and approximately
$450 million of 5-year 12% Treasury notes of
Series c, 1940; also exchange privilege on
22% Treasury notes of Series D, 1935, maturing
12/15/35
2 A-J
a) HMJr sends congratulatory telegram to each of
12 Federal Reserve Banks - 12/3/35
5
b) HMJr telegraphs FDR about satisfactory results of
Treasury cash offering
7
c) Press releases 12/3/35, 12/4/35, 12/5/35
8
Bonds oversubscribed 42 times; notes, 52 times;
proportion of bonds is surprising
d) Final subscription and allotment figures - 12/10/35
188 A
- G -
Gilbert, S. Parker
See Excess Reserves 12/12/35
295
- H - -
Hogate, Kenneth C. (Wall Street Journal)
See Silver 12/12/35
221
- I -
Income Tax Returns
Depreciation: HMJr thinks he has worked out method to
encourage manufacturers to replace old machinery - 12/5/35
35
Income Tax Suits
Joe Tumulty offers to settle ex-Senator Watson case for
$10,000; HMJr orders that suit proceed - 12/12/35
295
India
See Silver
Investigations, Treasury Personnel
Moore, Carl E. (Collector of Internal Revenue - Cleveland, Ohio)
HMJr and Bulkley again confer by phone 12/3/35
15
a) HMJr irked at Mocre request that regulations be
promulgated before he will refund money
b) Reads copy of letter addressed to Moore, to Bulkley
HMJr phones to ask Moore if he received letter and if he will
either write to HMJr complying with request or come to
Washington the following Monday - 12/5/35
38,39
Bulkley telegraphs displeasure at "Treasury pressure" 12/5/35
39 B
Bulkley writes of "long talk with Moore" 12/6/35
88
Bulkley telephones 12/6/35
88 B-D
Regraded Unclassified
- I - (Continued)
Book Page
Italy
Haas memorandum setting forth effects of sanctions on
Italy's African campaign - 12/6/35
XIII 63
- J -
Japan
See Silver
Jones, Jesse (Chairman, Reconstruction Finance Corporation)
HMJr tells O'Connor he and Jones should "stop washing
dirty linen in public" - 12/3/35
3
- M -
Mexico
See Silver
199
Moore, Carl E. (Collector of Internal Revenue - Cleveland, Ohio)
See Investigations, Treasury Personnel
- N - -
National Recovery Administration
See Budget
2
- 0 -
O'Connor, J. F. T. (Comptroller of Currency)
HMJr tells him he and Jones should "stop washing dirty linen
in public" - 12/3/35
3
- P -
Public Health Service
Miss Roche reports on difficulties in securing money for
states to meet urgent health needs - 12/3/35 and 12/5/35
13,36
- S - -
Sanctions
Haas memorandum setting forth effects of sanctions on
Italy's African campaign - 12/6/35
63
Unclassifie
- S - (Continued)
Book Page
Silver (arranged chronologically)
HMJr thinks purchasing policy 1s more and more stupid
12/8/35
XIII
89
a) Exclusive of newly mined, we are simply siphoning
silver out of China through (1) Japan, (2) England
b) Going back three or four years, normal exports
from Japan equal 6 to 9 million ounces yearly;
in past nine months, Japan exported 60 million
ounces
c) Someone is profiting on difference between 40¢
(price in China) and world price of 65$
d) Announcement of nationalization in Hong Kong
12/5/35
92,93,94
e) Lochhead has felt for a week the extra silver
pushed on the London market was Hong Kong
monetary reserve silver
f) HMJr fears at rate United States is now progressing,
we will buy up all floating silver and drive all
silver-using countries off silver
g) Ethiopia now about only country left on silver
standard
h) HMJr wants to make change on Monday when Japan and
England will be sitting down together at Naval
Conference
1) HMJr phones FDR, who agrees: FDR suggests informing
London, Treasury is ready to buy 2 million ounces
and ask for price; Treasury will let them know later
about accepting offer
j) HMJr tells FDR price may fall 10$; FDR says OK
k) FDR says drop New York price to same relation to
London price that it now has
1) Lochhead summoned to Morgenthau home at 7 P.M.
Saturday (For Lochhead memorandum, see page 121)
1. Lochhead says he permitted spread between
New York and London to go from $4 to 7/8¢;
HMJr suggests spread of full cent on Monday
m) HMJr informs Coolidge, Haas, and Oliphant (but
not Pittman)
Lochhead estimates of amount to be offered in London today
12/10/35
95+
Lochhead-HMJr telephone conversation 12/9/35
97+
a) Federal Reserve Bank and Chase National Bank never let
market break
b) Each morning for last six months or year, they have
cabled over amount of silver in the market
c) Now they want some sort of indication that, starting
tomorrow, Treasury will not make any bids but will
probably work only on offers
d) They want something to clean up business already
accumulated today; HMJr suggests 2 million ounces
at 29 pence (down about 3/8 of a cent)
Regraded Unclassified
- S - (Continued)
Book Page
Silver (Continued)
Lochhead-HMJr telephone conversation 12/9/35 (Continued) XIII 97+
e) Coolidge suggests another 2 million at 282;
HMJr thinks another 2 million at 24 under
(28) pence); agreed
f) Coolidge anticipates heavy selling "tomorrow"
g) Price in New York will be fixed depending on
what happens in London
HMJr (in Richmond) talks to FDR (in Chicago); FDR perfectly
willing to have price drop another cent; wants to buy
only 2 million ounces again tomorrow
120
Lochhead-HMJr telephone conversation 12/10/35
105+
a) Bombay market has bad break - sold down to equivalent
of 60$; recovered to about 60 &
b) HMJr wants to start tomorrow buying silver in New York
exactly 8.6 we did gold; by buying only spot silver
there will be 10-day lull during which world market
can seek its own level
c) Coolidge thinks if price were fixed in New York, there
would be world-wide stable market
d) FDR's train gets in at 11 o'clock (one hour late);
HMJr wants to consult him on next move; all agree to
wait
e) HMJr dictates note to FDR to be given to Chief Moran
for immediate delivery
f) Lochhead reports commodities about same as yesterday
Dow-Jones and United Press ticker reports 12/9/35 to 12/11/35
124-188
Lochhead memorandum 12/11/35
189
Lockett phones HMJr from Mexico City 12/11/35 in the morning.
199
HMJr, Coolidge, and Lochhead hear Lockett (United States
Commercial Attache, Mexico) talk over phone 12/11/35
199
a) More financial difficulties: drop in silver; they
have sold too much silver; afraid to publish
statement showing note issue is 12 million pesos
in excess of monetary reserve
b) About 200 million pesos worth of old demonetized
coins in reserve; Secretary of Mexican Treasury
asks if United States will take these 60 million
ounces of silver and give him gold
c) HMJr calls White House to confer: FDR says we can
make the exchange at 62#
d) HMJr tells Lockett he thinks there's something in
the London Agreement on this - will ask for ruling -
it may apply only to brokers; will phone & little
later
e) HMJr wants gold and silver actually exchanged
f) HMJr goes to Hill to appear before Appropriations
Committee; on return, confers with Coolidge,
Oliphant, and Lochhead; Oliphant saya London Agreement
which Mexico signed prevents her from selling to
United States; HMJr insists on further study
g) HMJr reports entire matter to Hull
Regraded Unclassified
- S - (Continued)
Book
Page
Silver (Continued)
HMJr, Coolidge, and Lochhead hear Lockett (United States
Commercial Attache', Mexico) talk over phone 12/11/35
(Continued)
XIII
199
h) At 4 o'clock, Oliphant reports that Mexicans had
misrepresented situation:
1. Silver reserve: 197 million pesos) 346 million
2. Gold reserve: 149 million pesos) pesos
3. About same amount in notes outstanding -
and under their law they have to have only
50%
4. They really want United States to buy entire
silver reserve
i) HMJr reports all this to Lockett and asks whether
Mexico wants to keep 100% reserves or is afraid
of silver price falling; HMJr asks if London
Agreement is understood down there; Lockett says
Secretary of Treasury wants provision "waived"
(Laughter)
J) HMJr again phones FDR; says situation is not at
all as Lockett reported it; also reports again to
Hull
k) Again talks to Lockett - Mexican Treasury official
not present now; HMJr explains he thinks Mexico
is trying to sell entire silver reserve - United
States is not interested
Pittman tells HMJr if domestic price is not changed he
cares nothing about world price - 12/11/35
218
HMJr says he won't mind seeing silver go down to price
where there's no profit to anyone on silver smuggled
from China - 40¢ - 12/11/35
218
HMJr contacts Hogate (Wall Street Journal) concerning
good story on whole situation - 12/12/35
221
HMJr thinks, in eyes of public, silver policy is only part
of monetary fiscal policy he can neither justify nor
explain; if it can be exposed to world now, much grief
in coming campaign will be saved - 12/12/35
225
Dow-Jones and United Press ticker reports 12/12/35
226-260
Japanese exports for 1932, 1933, 1934, and 1935
292+
HMJr phones FDR at 9.15 12/12/35
293
a) London has sent word they might make definite orders
b) Bombay will call at 10 A.M. to make more offers
c) Treasury experts think Treasury should vary daily
purchases
Lochhead reports
293
a) London brokers have offered 5 million ounces of spot
silver at 26-7/8 pence (59.604); offer good until
12 o'clock
b) Bombay offered 2 million ounces at 26-7/8 pence
c) Probably 2 million of total 7 million will be taken
Lochhead memorandum 12/12/35
294
Regraded Unclassified
- T -
Book Page
Taxation
HMJr discusses with Helvering idea presented by group
to help heavy industry: reduce number of years in which
depreciation of machinery can be completed - - 12/4/35
XIII
36
A-D
HMJr asks FDR if he wishes to change capital gains tax;
indicates he does not; HMJr so informs Baruch, who
shows annoyance - - 12/11/35
220
Tumulty, Joseph
See Income Tax Suits
295
Tugwell, Rexford G.
McIntyre tells HMJr "President should either disown or
back 100%"; HMJr agrees
3
- W -
Watson, James (ex-Senator, Indiana)
See Income Tax Suits
295
Weiss, Seymour
Peter Grimm tells HMJr manager of Willard Hotel asked him
to intercede in Weiss income tax case; Grimm advised
seeing Gibbons; HMJr tells Gibbons to "keep out of this"
12/5/35
37
Regraded Unclassifi
1
Dictated in the train on Monday, December 2d at 9:40
Saw the President Monday morning at Warm Springs. He
told me he wanted to rehearse what he was going to say to
Buchanan. F. D. R. told me he thought he would not discuss
anything but the regular budget with Buchanan and would not
mention the fact to Buchanan that he intended to leave relief
out of the budget. I told F. D. R. I had given this question
a lot of thought and agreed with him that, considering everything
involved and our shortness for time, it would be best to leave
out the item of relief until sometime in March when we knew more
definitely how many people were out of work.
Bell and I had lunch with the President. 2 o'clock
Buchanan joined us. We then discussed the whole budget for
about two hours. It locked as though the total expenditures,
exclusive of AAA and Debt Retirement, would come to about 5
billion for the fiscal year beginning July 1. In the earliest
stages of our discussion it looked as though it would be im-
possible to balance even the regular budget. Buchanan then made
the suggestion that we do not appropriate any new money for good
roads as the money that we have appropriated now has not yet been
used, the practice having always been to appropriate one year in
advance. Buchanan then suggested that we cut this out for one
year and thereby save 125 million dollars. The President told
us for the first time that he expected to cut CCC in half, thereby
saving another 300 million. With these two items it looked as
though it would be possible to balance the budget. On leaving,
Buchanan warned the President that he expected to scrutinize every
Item closely and cut them to the bone. We had 8 general discussion
on the bonus but it led no where.
That afternoon the President and I went for a ride all by
ourselves. I took the opportunity to tell him that I thought he
ought to get a great personal satisfaction due to the fact that
he had brought the Nation out of the greatest depths of the de-
pression and again gave people hope. He said he did get satis-
faction out of it but the constant harping of critics took away
a lot of the satisfaction from him. He then turned to me and
said, "you ought to get a lot of satisfaction yourself in that
you have been instrumental in making the dollar the strongest
unit of currency in all the World". He said, "a man who is sitting
in far off Tibet and is trying to decide where he should put his
money to-day he would choose the United States of all places in
the World". He gave me the feeling for the first time that he
was really pleased with what I was doing as Secretary of the
Treasury. He said to me, "after election we both must take
regular vacations, irrespective of what is going on and never
permit ourselves to get so tired again". He reminded me how I
almost cried when he talked to me about paying the bonus before
2
- 2 -
he left on his western trip. I reminded him that he was pretty
tired himself and that he had these bad headaches about the same
time. He said, "yes I was so tired that I would have enjoyed
seeing you cry or would have gotten pleasure out of sticking pins
into people and hurting them.
The next day he, Bell and I discussed the Navy Budget.
Nothing important was changed in any of the items. The only
important thing that came up was about NRA. He seemed sold on
leaving NRA with a total of 1900 employees, 200 of which have
been loaned to other agencies. Bell had talked to me about this
coming down on the train and told me that he thought there only
ought to be a total of 700 employees; that he had been unsuccessful
with the President because somebody had sold the President the idea
that they needed all of these employees to write up a history of
the regular codes. Bell said, "after they are written who will
read them nobody". Bell had asked me to help him on this item
as he could make no headway, so when this came up with the President
I told him that I thought he was making a great mistake because
immediately on the convening of Congress he will be attacked by the
Democratic members for not having reduced the personnel more than
he had. I said, "if you want me to do a job for you I will and
will try to reduce the personnel to 700 and see if some of this
work that is being done now cannot be taken over by Harry Hopkins
as a white collar project". He said, "O.K. go ahead". I said,
"I will have to be pretty rough" and he said, "that is all right".
It will be interesting to see if he will back me up. I think it
is important because I know that he is going to be very much
criticized unless he does cut down the personnel of NRA.
I suggested that if we needed another 150 million we
could get it from the PWA as I greatly doubted that they would
need all the money that they have. To my surprise, the President
concurred so altogether at Warm Springs we picked up 125 million
from good roads, 300 million CCC and 100 million from Ickes.
After concurring with the President the best that we could hope
for is the possible balancing of the budget with a couple of
hundred million dollars to the good, exclusive of aaa, the Bonus
and Debt Retirement.
Regraded Unclassit
2A
TREASURY DEPARTMENT
Washington
FOR RELEASE, MURNING NEWSPAPERS,
Press Service
Monday, December 2, 1935.
No. 6-31
11-30-35.
Secretary of the Treasury Morgenthau is today offering for subscription, at
par and accrued interest, through the Federal Reserve banks, $450,000,000, or
thereabouts, of 2-3/4 percent Treasury bonds of 1945-47, and $450,000,000, or
thoreabouts, of 5-year 1-1/2 percent Treasury notes of Series C-1940. At the same
time holders of 2-1/2 percent Treasury notes of Series D-1935 maturing December 15,
1935, are offered the privilege of exchanging their maturing notes either for the
Treasury bonds or the Treasury notes, and to the extent such exchange privilege is
availed of, the offering of bunds or of notes may be increased.
The Treasury bonds, now offered for cash, and in exchange for Treasury notos
maturing December 15, 1935, will be an addition to and will form a part of the
series of 2-3/4 percent Treasury bonds of 1945-47 issued pursuant to Department
Circular No. 550, dated September 3, 1935. They are identical in all respects with
such bonds, with which they will be freely interchangeable. The bonds are dated
September 16, 1935, and bear interest from that date at the rate of 2-3/4 percent
per annum payable semiannually. They will mature September 15, 1947, but may be
redeemed at the option of the United States on and after September 15, 1945.
The Treasury notes of Series C-1940, also offered for cash, and in exchango
for Treasury notes maturing December 15, 1935, will be dated December 16, 1935,
and will bear interest from that date at the rate of 1-1/2 percent per annum
payable semiannually. They will mature December 15, 1940, and will not be subject
to call for redemption before that date.
Unclassifie
2B
-2-
The Treasury bonds, being an additional issue, will be accorded the same
exemptions from taxation as are accorded the original issue, and the Treasury notes
will be accorded the same exemptions as are accorded other issues of Treasury notes
now outstanding. These provisions are specifically set forth in the official
circulars issued today.
The Treasury bonds will be issued in two forms, bearer bonds with interest
coupons attached, and bonds registered as to both principal and interest; both forms
will be issued in the denominations of $50, $100, 3500, 31,000, 35,000, $10,000 and
and $100,000. The Treasury notes will be issued only in bearer form with coupons
attached, in the denominations of $100, $500, $1,000, $5,000, $10,000 and $100,000.
Applications will be received at the Federal Reserve banks and branches, and
at the Treasury Department, Washington. Banking institutions generally will handle
applications for subscribers, but only the Federal Reserve banks and the Treasury
Department are authorized to act as official agencies. With respect to cash sub-
scriptions for oither the Treasury bonds or the Treasury notes, applications from
incorporated banks and trust companies for either issue for their own account will
be received without deposit but will be restricted in each case and for each offering
to an amount not exceeding one-half of the combined capital and surplus of the sub-
scribing bank or trust company. Applications from all others must be accompanied,
if for more than 35,000, by payment of $5,000 or 5 percent of the amount applied for,
whichever is the greater; and, if for $5,000 or less, by payment in full. With
respect to exchange subscriptions for either bonds or notes, applications should be
accompanied by a like face amount of 2-1/2 percent Treasury notes of Series D-1935
tendered in payment.
Regraded Unclass
26
-3-
Subject to the reservations set forth in the official circulars, cash
subscriptions for amounts up to and including 35,000 will be given preferred
allotment, cash subscriptions for amounts over $5,000 will be allotted on an
equal percentage basis, but not less than the maximum preferred allotment, and
exchange subscriptions will be allotted in full.
Payment for any bonds or notes allotted must be made or completed on or
before December 16, 1935, and with respect to the Treasury bonds, whether on cash
or exchange subscription, must include accrued interest from September 16 to
December 16, 1935.
The right is reserved to close the books as to any or all subscriptions or
classes of subscriptions at any time without notice, either for the Treasury bonds
or the Treasury notes and with respect to the cash offering or with respect to the
exchange offering of either.
The amount of Treasury notes of Series D-1935 maturing December 15, 1935, is
$418,291,900.
The texts of the official circulars follows:
Regraded Unclass fied
20
UNITED STATES OF AMERICA
2-3/4 PERCENT TREASURY BONDS OF 1045-47
Dated and bearing interest from September 16, 1935
Due September 15, 1047
REDEEMABLE AT THE OPTION OF THE UNITED STATES AT PAR AND ACCRUED INTEREST ON AND
AFTER SEPTEMBER 15, 1945
Interest payable March 15 and September 15
ADDITIONAL ISSUE
1935
TREASURY DEPARTMENT.
Department Circular No. 555
Office of the Secretary,
Washington, December 2, 1935.
Public Debt Service
I. OFFERING OF BONDS
1. The Secretary of the Treasury, purcuant to the authority of the Second
Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions,
at par and accrued interest from September 16, 1935, from the people of the United
States for 2-3/4 percent bonds of the United States, designated Treasury Bonds of
1045-47. The Amount of the offering is $450,000,000, or thereabouts, with the
right reserved to the Secretary of the Treasury to increase the offoring by an
amount sufficient to accept all subscriptions for which Treasury Notes of Series
D-1935, maturing December 15, 1935, are tendered in payment and accepted.
II. DESCRIPTION OF BONDS
1. The bonds now offered will be an addition to and will form & part of the
series of 2-3/4 percent Treasury Bonds of 1945-47 issued pursuant to Department
Circular No. 550, dated September 3, 1935, will be freely interchangeable there-
with, are identical in all respects therewith, and are described in the following
quotation from Department Circular No. 550:
"The bonds will be dated September 16, 1935, and will bear interest
from that date at the rate of 2-3/4 percent per annum, payable on a semi-
annual basic on March 15 and September 15 in each year until the principal
amount becomes payable, They will mature September 15, 1947, but may be
redeemed at the option of the United States on and after September 15, 1945,
in whole or in part, at par and accrued interest, on any interest day or days,
Regraded Unclass
2 E
- 2
on 4 months' notice of redemption given in such manner BD the Secretary
of the Treasury shall prescribe. In case of partial redemption the bonds
to be redeemed will be determined by such method as may be prescribed by
the Secretary of the Treasury. From the date of redemption decignated
in any such notice, interest on the bonds called for redemption shall
cease.
"The bonda shall be exempt, both as to principal and interest, from
all taxation now or hereafter imposed by the United States, any State,
or any of the possessions of the United States, or by any local taxing
authority, except (R) estate or inheritance taxes, or gift taxes, end
(b) graduated additional income taxes, commonly known as surtaxes, and
excess-profits and war-profits taxes, now or hereafter imposed by the
United States, upon the income or profits of individuals, partnerships,
associations, or corporations, The interest on an amount of bonds author-
ized by the Second Liberty Bond Act, approved September 24, 1917, AS
amended, the principal of which does not exceed in the aggregate $5,000,
owned by any individual, partnership, association, or corporation, chall
be exempt from the taxes provided for in clause (b) above.
"The bonds will be acceptable to secure deposits of public moneys,
but will not bear the circulation privilege and will not be entitled to
any privilege of conversion.
"Bearer bonds with interest coupons attached, and bonds registered
as to principal and interest, will be issued in denominations of $50,
$100, $500, $1,000, $5,000, $10,000 and $100,000. Provision will be
mede for the interchange of bonds of different denominations and of
coupon and registered bonds, and for the transfer of registered bonds,
under rules and regulations prescribed by the Secretary of the Treasury.
"The bonds will be subject to the general regulations of the
bonds." Treasury Department, now or hereafter prescribed, governing United States
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve banko and branches
and at the Treasury Department, Washington. Banking institutions generally will
handle applications for subscribers, but only the Federal Reserve banks and the
Treasury Department are authorised to act as official agencies, Cash subscriptions
from incorporated banks and trust companies for their own account will be received
without deposit but will be restricted in each case to en amount not exceeding one-
half of the combined capital and surplus of the subscribing bank or trust company.
Crah subscriptions from all others must be accompanied, if for more than $5,000.
by payment of $5,000 or 5 percent of the amount of bonds applied for, whichever
Regraded Unclassifi
- 3 -
28
is the greater: and, if for $5,000 or less, by payment in full including accrued
interest from September 16 to December 16, 1935, on the bonds applied for. The
Secretary of the Treasury reserves the right to close the books as to any or all
subscriptions or classes of subscriptions at any time without notice.
2. The Secretary of the Treasury reserves the right to reject any subscrip-
tion, in whole or in part, to allot less than the amount of bonds applied for, to
make allotments in full upon applications for smaller amounts and to make reduced
allotments upon, or to reject, applications for larger amounts, or to adopt any or
all of said methodo or such other methods of allotment end classification of
allotments as chall be deemed by him to be in the public interest; and his action
in any or all of these respects chall be final. Subject to these reservations,
cash subscriptions for amounts up to and including $5,000 will be given preferred
allotment, and cash subscriptions for amounts over $5,000 will be allotted on an
equal percentage basic, but not less than the maximum preferred allotment; and
subscriptions in payment of which Treasury Notes of Series D-1935 are tendered
will be allotted in full. Allotment notices will be sent out promptly upon allot-
ment, and the basis of the allotment will be publicly announced.
IV. PAYMENT
1. Payment at par and accrued interest from September 16, 1935, for bonds
allotted on cash subscriptions must be made or completed on or before December 16,
1935 or on later allotment. In every case where payment is not no completed, the
payment with application up to 5 percent of the amount of bonds applied for shall,
upon declaration made by the Secretary of the Treasury in his discretion, be for-
feited to the United States, Any qualified depositary will be permitted to make
payment by credit for bonds allotted to it for itself and its customers up to any
Amount for which it shall be qualified in excess of existing deposits, when BO
notified by the Federal Reserve bank of its district, If payment is to be made
Regraded Unclass
26
- 4 -
in Treasury Notes of Series D-1935, maturing December 15, 1935, the notes will be
accepted at par and should accompany the subscription, end accrued interest from
September 16 to December 16, 1.935, on the bonds allotted should be paid in cash
on or before December 16, 1935. Accrued interest at 2-3/4 percent from September 16,
1935, to December 16, 1935, on $1,000 face amount is $6.875.
V. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal Reserve banks
of the respective districts, to issue allotment notices, to receive payment for
bonds allotted, to make delivery of bonds on full-paid subscriptions allotted, and
they may issue interim receipts pending delivery of the definitive bonds,
2. The Secretary of the Treasury may at any time, or from time to time, pre-
scribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
Regraded Unclassifie
2 H
UNITED STATES OF AMERICA
1-1/2 PERCENT TREASURY NOTES OF SERIES C-1940
Dated and bearing interest from December 16, 1935
Due December 15, 1940
Interest payable June 15 and December 15
1935
TREASURY DEPARTMENT,
Department Circular No. 556
Office of the Secretary,
Washington, December 2, 1935.
Public Debt Service.
I. OFFERING OF NOTES
1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions,
at par and accrued interest, from the people of the United States for 1-1/2 percent
notes of the United States, designated Treasury Notes of Series C-1940. The amount
of the offering is $450,000,000, or thereabouts, with the right reserved to the
Secretary of the Treasury to increase the offering by an amount sufficient to accept
all subscriptions for which Treasury Notes of Series D-1935, maturing December 15,
1935, are tendered in payment and accepted.
II. DESCRIPTION OF NOTES
1. The notes will be dated December 16, 1935, and will bear interost from that
date at the rate of 1-1/2 percent per annum, payable on a semia.nual basis on June 15
and December 15 in each year. They will mature December 15, 1940, and will not be
subject to call for redemption prior to maturity.
2. The notes shall be exempt, both as to principal and interst, from all taxa-
tion (except estate or inheritance taxes, or gift taxes) now or hereafter imposed by
the United States, any State, or any of the possessions of the United States, or by
any local taxing authority.
3. The notes will be accepted at par during such time and under such rules and
regulations as shall be prescribed or approved by the Secretary of the Troasury in
2d
-2-
payment of income and profits taxes payable at the maturity of the notes.
4. The notes will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege.
5. Bearer notes with interest coupons attached will be issued in denominations
of $100, $500, $1,000, $5,000, $10,000 and $100,000. The notes will not be issued in
registered form.
III. SUBSCRIPTION AND ALLOTMENT
la Subscriptions will be received at the Federal Reserve banks and branches and
at the Treasury Department, Washington, Banking institutions generally will handle
applications for subscribers, but only the Federal Reserve banks and the Treasury
Department are authorized to act as official agencies. Cash subscriptions from
incorporated banks and trust companies for their own account will be received with-
out deposit but will be restricted in each mase to an amount not exceeding one-half
of the combined capital and surplus of the subscribing bank or trust company. Cash
subscriptions from all others must be accompanied, if for more than $5,000, by pay-
ment of $5,000 or 5 percent of the amount of notes applied for, whichever is the
greater; and, if for $5,000 or less, by payment in full. The Secretary of the
Treasury reserves the right to close the books as to any or all subscriptions or
classes of subscriptions at any time without notice.
2. The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, to allot less than the amount of notes applied for, to make
allotments in full upon applications for smaller amounts and to make reduced allot-
ments upon, or to reject, applications for larger amounts, or to adopt any or all of
said methods or such other methods of all otment and classification of allotmente as
shall be deemed by him to bo in the public interest; and his action in any or all of
these respect shall be final. Subject to these reservations, cash subscriptions for
amounts up to and including 85.000 will be given preferred allotment, and cash
Regraded Unclass
25
-3-
subscriptions for amounts over $5,000 will be allotted on an equal percentage basis,
but not less than the maximum preferred allotment; and subscriptions in yment of
which Treasury Notes of Series D-1935 are tendered will be allotted in full.
Allotment notices will be sent ut promptly upon allotment, and the basis of the
allotment will be publicly announced,
IV. PAYMENT
l. Payment at par and accrued interest, if any, for notes allotted on cash
subscriptions must be made or completed on or before December 16, 1935, or on later
allotment. In every case where payment is not so completed, the payment with appli-
cation up to 5 percent of the amount of notes applied for shall, upon declaration
made by the Secretary of the Treasury in his discretion, be forfeited to the Unit od
States. Any qualified depositary will be permitted to make payment by credit for
notes allotted to it for itself and its customers up to any amount for which it
shall be qualified in excess of existing deposits, when so notified by the Federal
Reserve bank- of its district. Treasury Notes of Series D-1935, maturing December
15, 1935, will be accepted at par in payment for any notes subscribed for end
allotted and such payment should be made when the subscription is tendered.
V. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve banks are authorized
and requested to receive subscriptions, to make allotments on the basis and up to the
amounts indicated by the Secretary of the Treasury to the Foderal Reserve banks of
the respective districts, to issue allotment notices, to receive payment for notes
allotted, to make delivery of notes on full-paid subscriptions allotted, and they
may issue interim receipts pending delivery of the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time, pres-
cribe supplemental or amendatory rules and regulations governing the offering, which
will be communicated promptly to the Federal Reserve banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
Regraded Unclass
3
December 3d
McIntyre called me and said that he told the President
that he should either disown Tugwell or back him up 100%; that
he could not continue to do neither. He asked whether I con-
curred with his opinion and I told him that I agreed entirely
with him.
The next person that he should also do the same
thing for is Hopkins but the first thing he ought to do is to
make up his mind about Tugwell.
H. M. Jr. sent for O'Connor and told him that he
and Jesse Jones ought to get together and stop washing their
dirty linen in public.
Regraded Unclassifier
4
December 3d
Coolidge came in so excited that his hands were trembling.
I have not seen him this way since he talked to me about silver.
He showed me an extract from the President's Atlanta speech in
which the President said that we could look forward to a constantly
decreasing deficit. Coolidge said, "we sold the bond issue on the
strength of the President's statement and now you and the President
have got to live up to it".
Coolidge had some figures from Bell dividing the fiscal
year into six month periods and it showed that the second half of
this year we will have an increase of expenditures over the first
six months. I said, "of course we will - what about 1t?" He said,
"well, in view of the President's speech and politically, we just
can't do it. We can't have any bonus". I got quite angry and
said to Coolidge, "what is the use of putting this pressure on me.
I can't do anything about it". He said, "you are the important
fiscal person here and you have to do something about it". I
again said, "it is no use talking to me that way Jeff - go over
and tell it to the President". He said he would like to and I
said, "O.K.". I then told him that I thought he had his base
for his figures wrong, that we were living within the estimates
made by the President on September 30th and I could not see
anything to get excited about.
I called in Bell and Haas and they confirmed my opinion
that we were living within our estimates and Coolidge again started
up about the bonus and I was quite disagreeable with him.
I asked him to stay after the others left and I talked
to him very quietly and said, "Jeff, there is no reason for your
getting 30 excited" and so he replied, "well I have been brooding
about this". I then said, "that is all right but why take it out
on me? Nobody can do any more than I am doing" and he said, "that
is true enough but I have got to talk to somebody". I said, "well
Jeff when you get so excited it reacts badly on me and you are
throwing sand into the gears of our relationship. There is no
sense in bringing such pressure on me. I only react unfavorably
to it". He said he understood and I hope he did.
He again asked me whether he could see the President
and I said, "absolutely but if you take the same attitude towards
the President as you did towards me I am quite sure that he will
get angry and react just the way I did".
5
DECEMBER 3, 1935
ONE TELEGRAM TO EACH OF LIST OF NAMES ATTACHED (GOVERNORS OF
TWELVE FEDERAL RESERVE BANKS)
TREASURY FINANCING GREAT SUCCESS PERIOD WISH TO THANK YOU
FOR YOUR COOPERATION AND ASSISTANCE IN MAKING THIS POSSIBLE
HENRY MORGENTHAU JR
SECRETARY OF THE TREASURY
Regraded Unclassified
6
ATTACHED TELEGRAM TO BE SENT TO EACH OF FOLLOWING NAMES:
R. A. YOUNG,
GOVERNOR FEDERAL RESERVE BANK OF BOSTON
BOSTON MASS
G. L. HARRISON
GOVERNOR FEDERAL RESERVE BANK OF NEW YORK
NEW YORK NEW YORK
G. W. NORRIS
GOVERNOR FEDERAL RESERVE BANK OF PHILADELPHIA
PHILADELPHIA PENNA
M. J. FLEMING
GOVERNOR FEDERAL RESERVE BANK OF CLEVELAND
CLEVELAND OHIO
G. J. SEAY
GOVERNOR FEDERAL RESERVE BANK OF RICHMOND
RICHMOND VIRGINIA
OSCAR NEWTON
GOVERNOR FEDERAL RESERVE BANK OF ATLANTA
ATLANTA GEORGIA
G. J. SCHALLER
GOVERNOR FEDERAL RESERVE BANK OF CHICAGO
CHICAGO ILLINOIS
W. McC. MARTIN
GOVERNOR FEDERAL RESERVE BANK OF ST. LOUIS
ST. LOUIS MISSOURI
W. B. GEERY
GOVERNOR FEDERAL RESERVE BANK OF MINNEAPOLIS
MINNEAPOLIS MINN
G. H. HAMILTON
GOVERNOR FEDERAL RESERVE BANK OF KANSAS CITY
KANSAS CITY KANSAS
B. A. McKINNEY
GOVERNOR FEDERAL RESERVE BANK OF DALLAS
DALLAS TEXAS
J. U. CALKINS
GOVERNOR FEDERAL RESERVE BANK OF SAN FRANCISCO
SAN FRANCISCO CALIF
Regraded Unclassified
7
(C O P Y)
TELEGRAM
December 2, 1935
THE PRESIDENT
WARM SPRINGS GEORGIA
TODAYS TREASURY CASH OFFERING WENT OVER WITH A BANG PERIOD
WE CLOSED THE ISSUE TONIGHT LEAVING CONVERSION OFFER STILL
OPEN PERIOD I SHOULD WORRY IF THE FRENCH CABINET FALLS
TOMORROW PERIOD BEST REGARDS
HENRY
Regraded Unclassifier
TREASURY DEPARTMENT
8
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Press Service
Tuesday, December 3, 1935.
No. 6-33
12-2-35.
Secretary of the Treasury Morgenthau announced last night that the
subscription books for the current offering of 2-3/4 percent Treasury Bonds
of 1945-47 and of 1-1/2 percent Treasury Notes of Series C-1940 closed at
the close of business Monday, December 2, 1935, for the receipt of cash
subscriptions.
Cash subscriptions for either issue placed in the mail before 12 o'clock
midnight, Monday, December 2, will be considered as having been entered
before the close of the subscription books.
The subscription books for both issues will remain open until further
notice for the receipt of subscriptions in payment of which Treasury Notes
of Series D-1935, maturing December 15, 1935, are tendered.
Announcement of the amount of cash subscriptions and the bases of
allotment will probably be made on Thursday, December 5.
00000
Regraded Unclassified
9
TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Press Service
Wednesday, December 4, 1935.
No. 6-36
12-3-35.
Secretary of the Treasury Morgenthau announced last night that the
subscription books for the current offering of 2-3/4 percent Treasury Bonds
of 1945-47 and of 1-1/2 percent Treasury Notes of Series C-1940 will close
at the close of business Thursday, December 5, 1935, for the receipt of
subscriptions in payment of which Treasury Notes of Series D-1935, maturing
December 15, 1035, are tendered. The subscription books for both issues
closed on Monday, December 2, for the receipt of cash subscriptions.
Exchange subscriptions for either issue, in payment of which the
maturing notes are tendered, if placed in the mail before 12 o'clock midnight,
Thursday, December 5, will be considered as heving been entered before the
close of the subscription books.
00000
Regraded Unclassified
TREASURY DEPARTMENT
10
Washington
FOR IMMEDIATE RELEASE,
Press Service
Thursday, December 5, 1935.
No. 6-38
Secretary of the Treasury Morgenthau today announced the subscription
figures and the bases of allotment for the cash offering of 2-3/4 percent
Treesury Bonds of 1945-47 and of 1-1/2 percent Treasury Notes of Series C-1940.
Reports received from the Federal Reserve banks show that subscriptions for
the cash of fering of Treasury bonds aggregate over $2,034,000,000. Subscriptions
in amounts up to and including $5,000 were allotted in full and those in amounts
over $5,000 were allotted 23 percent, but not less than $5,000 on any one sub-
scription.
For the cash offering of Treesury notes, subscriptions aggregate over
$2,486,000,000. Cash subscriptions in amounts up to and including $5,000 were
allotted in full end those in amounts over $5,000 were allotted 19 percent, but
not less than $5,000 on any one subscription.
The amount of each offering was $450,000,000, or thereabouts, for cash,
with R reservation to increase each offering to the extent that Treasury Notes
of Series D-1935, maturing December 15, 1935, are exchanged for the new
securities. The subscription books for both issues were closed on Monday, Decem-
ber 2, for the receipt of cash subscriptions, and will close tonight, December
5, for the receipt of exchange subscriptions.
Further details 88 to subscriptions and ellatments will be announced whon
finel reports are received from the Federal Reserve benks.
00000
Regraded Unclassified
11
December 3, 1935
HM, Jr. called McIntyre and told him that the bonds
were over-subscribed 4½ times and the notes 5½ times, and
the surprising thing, he said, is the proportion of the
bonds. He said, "We are going to close the conversion
Thursday night.
He also said, "Here is a little matter which might
be important. When I was down there, I made the sug-
gestion that with the exception of the Cabinet and the
heads of departments, a four-door Ford or a "Chevy" was
good enough for anybody. Peoples purchases all cars.
An order came through for a Buick for Mrs. Dorothy Beck,
who is the Director of the Maryland Resettlement and the
wife of Tom Beck. Normally I would tell Peoples to buy
a Ford or a 'Chevy', but in view of the fact that it is
Mrs. Beck I raised a question." McIntyre replied, "Why
bring it up? Just do what you ordinarily would."
Regraded Unclassifie
12
December 3, 1935
At the group meeting, this morning, Gaston said he
had tried to reach Boake Carter by telephone. Carter is
the radio commentator who has been severely criticising
the administrative reorganization of Coast Guard by
Ballinger. Gaston said he knows Boake Carter got the
message and is purposely evading us. He has not called
back although Gaston left a message with Boake Carter's
secretary that when it is convenient for Mr. Carter, Gaston
would like to have him call or get in touch with him.
Sometime ago the Secretary asked "Chip" Robert if we
were charging enough for the minting of foreign coins by
the United States Mints. Mr. Robert reported that the
charge is made on a careful estimate of actual cost plus
a margin to cover any possible contingency which might
arise and this contingency charge is also carefully e8-
timated so as to insure no loss to the Government.
Mr. Gibbons brought up the Buffalo customs personnel
situation. Mr. Morgenthau said that from now on he wants
the Assistant Secretaries to carry some of these political
things for him. He said that he will personally see the
Cleveland matter through, but hereafter the Assistant Sec-
retaries must "carry the ball" on these political matters.
He assured them that if they got into any difficulty, he
would then take up the strings. McReynolds said that on
the Buffalo matter he thought everybody except Smith ought
to be fired and that there is no need for the Secretary to
talk with Congressman Mead. Gibbons said he would see
Mead and give him advance information on the decision.
Bell said he had received several requests for a
supply of the 1935 silver dollars to be used for the Christ-
mas Holidays. There is some little expense incurred by
the Treasury in sending out the silver dollars, but Mr.
Morgenthau said to overlook that and approved sending them
out.
Mr. Morgenthau had asked Bell to get in touch with
Mr. Martin, of NRA, so the three of them could discuss
the NRA budget together. This is the matter which Mr.
Morgenthau promised the President, while at Warm Springs,
to look into. Bell reported that Martin is out of town,
out is trying to reach him today.
Regraded Unclassified
13
-2-
Miss Roche brought up for discussion the allotment
of $500,000 which FERA had promised to give to supplement
the $1,000,000 of last year which was used for grants to
State health departments for health work, particularly in
rural communities. It had been expected that additional
funds for this work would be forthcoming when the Social
Security Bill was passed, but the Deficiency Bill which
provided the funds failed of enactment at the last session
of Congress. Gill has been working with Bell and decided
the best way to handle the matter would be for FERA, instead
of making a direct grant to the Public Health Service, to
make the money available to State health officers, but
Hopkins refused to sign the warrant when it was presented
to him on the basis that he did not wish to make grants to
State health officers. Miss Roche pointed out that the
work is important and they are seriously handicapped since
the money was supposed to have been made available Nov. 15.
Mr. Morgenthau instructed Bell and McReynolds to get together
and have an answer by 9:30 tomorrow.
Regraded Unclassified
14
December 3, 1935
I had Jesse Jones and Coolidge for luncheon today.
Among the things we discussed was the question of
interest rates, a dispute having arisen over this between
Jesse and Jefty O'Connor.
We also talked about the possibility of Jones being
made President of the Export-Import Bank and the useful-
ness of this Bank. I feel it is important to have Jesse
as President as he would then put the bank out of business
before too much time had elapsed.
The suggestion was made that Jesse make some exten-
sion to the Chinese on their loan, but make them keep paying
a reasonable amount every quarter.
We had quite a discussion as to the possibility of
retiring preferred stock held by RFC. Jesse made the sug-
gestion of letting the banks sell convertible preferred,
but said O'Connor objected to this. He did not give
O'Connor's reasons. Coolidge thought, at first glance,
it seems a good way of financing the better banks.
I asked Jesse to check over very carefully his income
and outgo figures and see what he could do to turn some
cash into the Treasury.
Regraded Unclassifie
15
December 3, 1935.
Tuesday.
H.M.Jr:
Senator, I don't know whether you saw Mr. Moore's
letter to me before he sent it -
Senator
Bulkley:
Yes, I did.
H.M.Jr:
Well, it - frankly, it wasn't what I expected, and -
I'd like to read to you the draft of an answer that I
have written to him, see?
B:
I appreciate that.
H.M.Jr:
And get you -
B:
I thought - I thought he answered it just about in
line with what you were going to do.
H.M.Jr:
No - this point that he wants us to - he's telling
me to get out regulations, you see? - He -
B:
Well, he said that he had complied but didn't think
that he ought to be singled out, see?
H.M.Jr:
Well, of course -
B:
- because of the general regulations.
H.M.Jr:
He isn't singled out, but I can't move on the other
people until I take up the Presidential Appointment
first, and every - Well, let me read you the letter -
B:
All right.
H.M.Jr:
See? It's very short.
B:
O.K.
H.M.Jr:
I acknowledge receipt of his letter, then I say,
"I believe that you are by this time sufficiently
aware of my views in the matters of this kind to
realize that it is entirely impossible there should
be any singling out of your case for unusual and
harsh action. You may be quite sure that in all
cases which come to my attention in which a similar
situation is presented I shall make the same ruling
that I have in your case, unless in the special
circumstance of a particular case more drastic action
is called for. As I have stated before it is not
necessary to insist that you have violated a letter
Regraded Unclassified
16
- 2 -
of any regulation in order to support my decision
in this matter. The question as to the desirability
of issuing a general order more specifically to cover
this subject will be considered in due course on its
merits and apart from your case.
'Please let me know at your earliest convenience that
you are prepared to comply with the request in my
letter of November 20th, 1935.
Yours very truly, 1
B:
Well (Laughter) I haven't any specific benefit from
it. I - - I just don't - don't - I didn't suppose that
other would embarrass you at all -
H.M.Jr:
Yes.
B:
Except it does make a general a rgument.
H.M.Jr:
Well, it does embarrass me. Yousee, he's - he
isn't in a position - I mean - to tell me that, you
see? Now, - just - you see it would be very easy
for me - the easy way for me to be would be to fire
these other fellows and then sit back and wait for
the Presidential Appointment - so forth and so on.
Because these other fellows are Civil Service. But
I want to take care of the Civil Service - I mean
the Presidential Appointment first and then do the
others immediately following, you see? In other
words, I'm making it as difficult as possible for
myself, but I think it's only fair.
B:
Well -
H.M.Jr:
If you have no objection to that letter I'll read it
to you again if you'd like me to?
B:
Well, now, let me be quite frank about it.
H.M.Jr:
Please.
B:
I - I regret that you feel that there's any necessity
to do that -
H.M.Jr:
Yes.
B:
I don't feel that there's anything in the letter that
I'm prepared to argue against very much, but
I'm just darn sorry you have to do it that way.
Regraded Unclassified
17
- 3 -
H.M.Jr:
Well, I'm - I'm sorry that he brought up this
question of these rules and regulations, you see?
I'm sorry he raised that, - as a condition.
B:
Well - it is such an awful small matter - why
don't you let it go?
H.M.Jr:
No, I couldn't do that. The Department's too big.
B:
I don't know - I get so damned sick of the whole
thing (Laughter)
H.M.Jr:
Pardon me -
B:
I get so damned sick of the whole thing -
H.M.Jr:
Me too
B:
It looks to me as if -
H.M.Jr:
I know, we've both got a lot of things to do, but -
but we've got a big Department and - while I don't
stand on dignity the Department has a certain dignity
and the fellow is making a condition to us - he won't
do something unless he makes me get out a regulation.
Well, I can't let the Department be put in that posi-
tion.
B:
Well, I - - I - in a way that's true. I didn't think
it was worded - in a way that would be offensive.
H.M.Jr:
Now, if you'd rather send - have me send the letter
back to Moore and let him withdraw that condition,
then I don't have to write him this letter.
B:
I couldn't answer that without talking to him, but -
I - I doubt whether it would be desirable to do
that. I think - - if you'd
H.M.Jr:
Well -
B:
- just decide it would be just as well if you want
to do anything at all to write the letter that you
have in mind.
H.M.Jr:
All right, well then - let -
B:
if you'd get very much
H.M.Jr:
Well, we've gone over it and over it. The people
that say it - it's a question - - you notice I
Regraded Unclassifi
18
- 4 is
make this
dignity in the Department, not
Henry Morgenthau, Junior. I could - I don't have
to have dignity, I mean. But it's a Department
and we've all been over it -
B;
les, I think you're quite right in maintaining the
dignity of the Department -
H.M.Jr:
Yes.
B:
But I - I don't think that there's anything to do but
H.M.Jr:
No, but he - as I say, he's making a condition, you see -
B:
Well, I - I see what you mean, that it can be inter-
preted into a condition,
H.M.Jr:
Oh, it will be.
B:
because it is a condition, but at the same time
I'd rather he'd word it in a very respectful and
decent way.
H.M.Jr:
Well, it's perfectly respectful but he just simply
says he isn't going to do something unless I do
something else.
B:
Well, he implies that he wasn't going to do something
H.M.Jr:
Well -
B:
What he said was that he'd gladly do it in such and
such a way.
H.M.Jr:
But if you don't have any objections - I mean - I'd
like to send this letter.
B:
(Laughter) let me put it to you that I just object
on the ground that you can
no question about it at all -
H.M.Jr:
Yes.
B:
I don't - I don't think there's any particular except
to what you're saying.
H.M.Jr:
Yes - and, but will you help me clean the thing up?
B:
I want to help get this thing cleaned up
H.M.Jr:
Yes
Regraded Unclas
19
- 5 -
B:
any way it can be
H.M.Jr:
Fine
B:
I certainly will do what I can.
H.M.Jr:
Fine
B:
And I wish to the devil you didn't have to do -
H.M.Jr:
Well, I don't either, but - and I wish he hadn't
written it that way.
B:
Well - Gosh! I thought we had it pretty well fixed.
H.M.Jr:
No, no
B:
Well, I don't know. I'll do what I can
H.M.Jr:
Let's get
- I take it from what you
say that he had intended paying me the money back.
B:
Yes, he said - but of course he hasn't got it
available right off -
H.M.Jr:
No, but he'll give me a note or something.
B:
So, he has the obligation to do it.
H.M.Jr:
Well, let's -
B:
And maybe he intended to waive all quibble about
which is right and what's his.
H.M.Jr:
Yes, well, I'll send this -
B:
I thought it was a darned good way to do.
H.M.Jr:
Well - well, I think if - if I'd had a chance to
talk to you and point this out before, you, as a
man of affairs, would have seen the point that I
am making.
B:
Well, of course, frankly, he and his lawyer got
together and made that up. I didn't have anything
to do with that.
H.M.Jr:
No, but I mean, it's just the way -
B:
I did read it over, before it was mailed and I
thought it was pretty good.
Regraded Unclassif
20
- 6 -
H.M.Jr:
Yes. Well, just the way I'm showing you - but you as
a man of affairs, you can see that, I mean, the
Treasury Department - it's an important Department
and the fellow is laying down a condition. He can't
do it.
B:
Well -
H.M.Jr:
Well now, you help me get this cleaned up, will you
please?
B:
Of course I want to get it cleaned up and of course
I'll do what I can.
H.M.Jr:
Fine - all right. Thank you.
B:
All right.
H.M.Jr:
Thank you.
Regraded Unclassified
21
December 4, 1935
HM,Jr., met today with Bell, Coolidge, and McReynolds
to discuss the NRA budget.
On November 15, Bell sent the attached memorandum on
the NRA budget to the President. (Exhibit I.) There
are at present 2,235 employees, including 250 detailed to
various agencies. Bell proposes to reduce the personnel
by January 1 to 700 people in all, Bell also reported
that NRA expires on April 1 and there is no authority for
NRA to employ any personnel after that date.
At this point, Mr. Hill, who is Executive Officer of
NRA and an assistant to Mr. Martin, came in. Mr. Morgen-
thau told him that when HM, Jr. and Bell were in Warm
Springs, the President had brought up this question of
the NRA payroll and asked Bell and the Secretary to see
if they could not have Bell's proposal to reduce the per-
sonnel to 700 people by January 1 put into effect. HM,Jr.
then asked Mr. Hill to state his pros and cons, with respect
to Bell's proposal.
Hill said the principal objection at this time would
be a loss of the investment that has already been made on
the studies program. He said, "We are aware of the size
of the organization and consulted the President on several
occasions and each time he gave us his approval to go ahead."
He left the attached photostat copy of the schedule which
they brought to the President's attention on November 16
with notations in the President's own handwriting. (See
Exhibit II.)
Mr. Morgenthau then asked Hill whether he had all the
employees classified into groups, showing their activities.
Hill replied that they were classified; for instance,
250 people were working on code history program; 200 were
on various trade practices -- open price association; a
group of about 60 were working on labor studies; there
were about 60 making a study of code authorities; in the
Administrative Section there were 600 employees; in the
Division of Review, 1000 people, and about 600 in the field.
The Secretary listened and then said, "Then you are going
at full blast," Mr. Hill replied, "Oh, No! After the
force was cut to a minimum, following the Schechter decision,
Regraded Unclassified
22
-2-
we then again out it about half. H
HM,Jr,, asked Mr. Hill to prepare a report listing
each group with a description of what they are doing, the
number of people employed and their monthly salaries. He
also asked for a statement showing the salaries and des-
cription of duties of the employees detailed to various
agencies.
Mr. Morgenthau told Mr. Hill that he understood and
realized the political difficulties NRA was having in
trying to cut the force down, but said that if this was
not done between now and the first of January the Presi-
dent would have to take all the blame. Mr. Hill again
called Mr. Morgenthau's attention to the fact that the
President 1s very familiar with the present set-up and
Mr. Morgenthau said, "I know that the President definitely
has changed his mind and wants your force reduced to a
minimum of 700 employees by January 1." He also said,
"I want you to BO back to your office and come back here
this afternoon at about 4:30 with your recommendations as
to just how we can accomplish this.
Mr. Hill then brought up the question of the files.
He said they had about 30,000,000 pieces of paper and that
the files had to be put in shape for future reference.
NRA has been in touch with the National Archives and a
great deal of work had to be done on the files, He
stated that he felt that two-thirds of the work on the
study of the codes had been completed and inasmuch as
so much money had been expended he felt they should go
ahead and complete the study. He also felt that Mr.
Marshall, who is responsible for the study, should be
consulted before any definite cut in personnel was made.
He told the Secretary he thought the Department of Com-
merce would be the logical place to transfer the study
of codes for completion and he felt certain that they
would be entirely willing to carry it through.
At this point, Mr. Martin telephoned to the Secretary
from Georgia and attached is a copy of the conversation
which they had together. (See Exhibit III.)
Regraded Unclassifi
23
BUREAU OF THE BUDGET
Exhibit I
Washington
November 15, 1935
MEMORANDUM FOR THE PRESIDENT:
RE: NATIONAL RECOVERY ADMINISTRATION.
On November 2, 1935, the National Recovery Administration
reported actual expenses for the months of July, August and Sep-
tember of $2,596,614, and submitted estimates which show an an-
ticipated expenditure of $4,184,111 for the period October 1,
1935, through March 31, 1936. By months the figures are as
follows:
Month
Personnel
Other Costs
Total
No.
Amount
July 1935
4,193
$844,597
$172,530
$1,017,127
August 1935
3,256
729,439
76,203
805,642
September 1935
2,968
631,675
142,170
773,845
October 1935
2,883
618,350
179,549
797,899
November 1935
2,892
585,483
107,323
692,806
December 1935
2,362
584,792
107,623
692,415
January 1936
2,080
525,777
99,023
624,800
February 1936
2,080
495,384
151,923
647,307
March 1936
2,080
495,384
233,500
728,884
Total
$5,510,881
$1,269,844
$6,780,725
After presenting the above figures, it was stated that it
might be necessary to request additional monthly allotments to
provide for any employees who might be detailed to the Bituminous
Coal Commission. In the estimate submitted, allowance was made
for 130 employees who were then on detail. On November 14, 1935,
representatives of the Administration advised that additional de-
tails were being made to the Federal Trade Commission and other
agencies. They stated that these details were depleting the force
required for the regular work of the Administration and as a result
it might be necessary to cancel termination notices given to a num-
ber of employees in order that they be retained to replace those
detailed to other agencies. It is my opinion that the estimates
already submitted are excessive and that approval of any additional
amounts can not be justified.
Regraded Unclassified
24
My interpretation of the terms of Executive Order No. 7075
by no means coincides with that of those administering N. R. A.
Instead of the great amount of research and investigation
that has been and is now being carried on, I believe that the
objective should have beensccomplished by 8 comprehensive analy-
sis of the material on hand compiled in report form, with special
studies of B. few major, medium and minor industries.
If the above plan had been followed, I feel that the work
of the review division could have been performed with two or three
hundred people and that an equal number would have been sufficient
to perform the other duties imposed by the Executive Orders.
With the above in mind the present personnel requirements
for the administration should be substantially as follows:
Washington Office
375
Field
125
Details to other Agencies 200
Total
700
Assuming an average salary of $275 per month for employees
and an allowance of $50,000 for operating expenses, the monthly
requirement would be approximately $250,000.
I am of the opinion that every effort should be made to
reduce the cost of the National Recovery Administration to a rea-
sonable figure. Due to notice of termination and to the accumu-
lated leave due employees, which they should receive, it is obvi-
ously impossible to make the adjustment immediately.
I have therefore made an a llotment of $325,000 for adminis-
trative expenses for the period November 16-30, 1935. If you ap-
prove, I propose to make the following allotments for the remaining
four months:
December
......
$450,000
January
......
400,000
February
350,000
March
300,000
Total Allotment 1,500,000
The amount proposed is, I believe, sufficient to complete
the work on hand, pay for employees detailed to other agencies,
and allow payment for accumulated leave to those employees who
are terminated.
-2-
Regraded Unclassifie
25
It is my opinion that unless positive action is taken
immediately, the cost of this agency for the period December 1,
1935 to March 31, 1936 will be approximately twice as much as the
amount proposed.
(Signed)
D. W. BELL
-3-
Regraded Unclassif
2000
101 RECOVERY ADMINISTRATION
20
/
Active ersonnel Forecast
buddaysd to NKM.
1935
1936
1936
DIVISION
Nov.16
Jan.16
Mar.16
Coordinator
24
24
24
Administrative
343- - 20 343
225
Division of Business Cooperation
51
40
30
Robert Committee
24
o
o
Consumers' Division
26
26
26
Government Contracts Division
53 Loan 15
0
50
Loaned Employees
176
225
0
Unassigned
168 - 42
0
0
Field Headquarters
64 - at
40
5
Field
614
-
250
125
Review, Code Histories
250
250
40
Review, Studies
725
350
350
J
,
2518
1563
825
176
2342
Employed by Other Inc Lyndi
- / will
H. / NRA. apprap.
250
Exhibit III
27
December 4, 1935.
Wednesday
The following 1s a transcript of my conversation today
with Laurence J. Martin, Acting Administrator, National Re-
covery Administration:
Laurence J.
Martin:
Good morning, this is L. J. Martin.
H.M.Jr:
Good morning, Mr. Martin.
L.J.M:
I came in to Covington this morning so as to talk
with you and I was wondering just what the problem
was and hoping that I might be able to solve it
without coming back to Washington because I'm try-
ing to cure up a bad attack of sinus.
H.M.Jr:
Well, I - you've got my sympathy - although I've
never had it. Now, Mr. Hill has been here for a
half an hour, - we've got along fine -
L.J.M:
Yes
H.M.Jr:
And he's coming back at four o'clock. I've asked
him for a lot of information -
L.J.M:
Yes
H.M.Jr:
- And we'll spend an hour - another hour and I
would say, with the cooperation we're getting from
Mr. Hill, it would not be necessary for you to
come.
L.J.M:
Well, I - I would certainly like that and I'd be
only too glad to arrange to get in to a telephone,
but I'm out here in the sunshine in the mountains
and it just made all the difference in the world
to me.
H.M.Jr:
Well, that's fine. Now, Mr. Hill's giving us
everything that we want.
L.J.M:
And Hill is Just as sound as he can be, Mr. Secre-
tary.
H.M.Jr:
Well, he -
I'm getting what I want and I'm -
I mean I'm getting cooperation - I can't ask for
anything more.
L.J.M:
And I'll be back in Washington at the latest -
Monday morning, early.
Regraded Unclassified
28
-2-
H.M.Jr:
Monday morning early.
L.J.M:
And I understand that the Secre - that the Presi-
dent is going to be in Chicago on Monday -
H.M.Jr:
Yes
L.J.M:
- I -
I had a talk with a newspaper man last night
I came into Covington last night.
H.M.Jr:
Yes
L.J.M:
And I'll be there Monday morning early and if you
should want me sooner, why on six hours' notice
they can get word to me -
H.M.Jr:
No
L.J.M:
through the Georgia office.
H.M.Jr:
No - it's all - what we're doing is, when Mr.
Bell and I were down there the President asked us
to - to see if we couldn't get Mr. Bell's memoran-
dum into effect.
L.J.M:
Yes
H.M.Jr.:
Now, that's what I'm working on and I'm going to
put it all down in black and white -
L.J.M:
Yes
H.M.Jr:
And we'll put down our recommendations and it's up
to the President whether he wants to sign them or
not.
L.J.M:
Well, when I talked with the President - I had about
forty-five minutes with him two Saturdays ago - and
I told him that there were two things to do; either
cut down to the dead bone with just the sparest nucleus -
H.M.Jr:
Yes
L.J.M:
to carry on in case of new legislation -
H.M.Jr:
Yes
L.J.M:
or to approve a mid way program which Dr. Marshall
had planned. And he went over the program with Dr.
Marshall. You see, the Review Division is the one
that's really got the great bunch of people.
Regraded Unclassified
29
-3-
H.M.Jr:
Yes
L.J.M:
And he looked over the a, B and C programs and
approved the one of the B program which reads,
'under two thousand by January the first'.
H.M.Jr:
Well, evidently the President must have changed
his mind because I'm not looking for more troubles.
And he asked us to see if we could work it out so
we could have it down to a total of seven hundred
by the first of January.
L.J.M:
All right, well, we've already cut the field down
to less than two fifty -
H.M.Jr:
No, I mean, the whole business.
L.J.M:
I mean - but I say we've gone that far already,
you see?
H.M.Jr:
Cut the field down to what?
L.J.M:
The field will be less than two fifty before Janu-
ary the first and notices have already gone out to
them.
H.M.Jr.:
The field will be two fifty?
L.J.M.:
Will be less than two fifty, - I think about two
forty.
H.M.Jr.:
Yes
L.J.M:
Well, that will leave us an average of about three
people in each state and just a nucleus in the
regional office.
H.M.Jr.:
Well, do you think it can be cut down to seven
hundred?
L.J.M:
That will leave you five hundred in Washington.
H.M.Jr:
That's right.
L.J.M:
Why -
H.M.Jr:
No - five hundred all together, exclusive of the
people that you loan.
L.J.M:
I - oh, I see.
Well, it can be done
if you
with the Review Division.
H.M.Jr:
With the Review Division?
Regraded Unclassified
«4»
30
L.J.M:
Yes - I think it's absolutely essential, Mr.
Secretary, that we keep, at least, three men
in each state or an average of three men in each
state and about, say fifteen, in the regional
offices.
H.M.Jr:
Well - what I've asked Mr. Hill is to suggest
where some of these bureaus in N R A could be
transferred to - what other departments.
L.J.M:
Yes
H.M.Jr:
See?
L.J.M:
Yes
H.M.Jr:
And he's coming back at four o'clock andwe're
going to go over it again.
L.J.M:
Well, the one thought that I'd like to leave with
you is that I - I honestly believe that it's
essential, if there's the barest possibility of
any type of Government contracts or new legislation,
that we should keep our key men - two or three men
in each state -
H.M.Jr:
I see.
L.J.M:
- and say, four to six men in each regional office -
H.M.Jr:
Yes
L.J.M:
- because - 80 that we could have the line staff
ready to pick up the load in case any new legisla-
tion did come through in the field.
H.M.Jr:
I see.
L.J.M:
You can get all the people in God's World you want
in Washington, but you lose these key field people
and you're going to be sunk.
H.M.Jr:
I see.
L.J.M:
I think -
H.M.Jr:
Well -
L.J.M:
I think the 'over the horizon' proposition is the
Regraded Unclassified
-5-
31
one we've got to think about more carefully in re-
ington. taining some sound personnel as we have in Wash-
H.M.Jr:
I see. Well, I'll keep that in mind.
L.J.M:
Thank you very much, then.
H.M.Jr:
Thank you for calling.
L.J.M:
Goodbye.
32
December 4, 1935
MEMORANDUM TO: Mr. Henry Norgenthaut
The following recommendations are made pursuant to
information from you to the effect that the President may direct
NRA to reduce active personnel, including employees loaned to
other governmental establishments, to 700 by December 31, 1935.
(1)
The following groups appear to be irreducible at the
present time:
Coordinator
25
Voluntary Agreements
4
Consumers' Division
26
Loaned Employees
225
Office Services
50
330 330
(2)
The following alternatives are suggested as the most
effective for using the remaining personnel. "A" eliminates
field activities; "B" provides on the average & nucleus of too
persons in each state office, and of four persons in each regional
office.
"A"
Code Histories
100
70
350
Studies
200
100
Missographing
30
30
File Service
40
40
Field
0
130
370
700
(3)
While Administrative officials have been strongly in
favor of reducing RBA personnel to a low figure, it is suggested
Regraded Unclassified
33
Memorandum 10 Mr. Morgenthau
2
December 4, 1935
that the investment which has been made in Code Histories and
Studies (undertaken pursuant to Executive Order 7075) should be
protected by allowing the Division of Review at least 350 persons
in January and February whether or not field offices are continued.
(8) The Director of the Division of Review serves under
the direction of the President (Executive Order 7075, paragraph 5).
Since any such drestic reduction of personnel as is suggested
must seriously curb the activities of the Director of the Division
of Review, it is suggested that he should be consulted by you as
to his work.
(5) In reducing personnel it is essentialtthet the Adminis-
tration be freed of political obligations to the utmost practicable
point. Efficiency and special knowledge, with some small allowance
for length of service and need, should be the only criteria to
determine those to be retained. If any appreciable number of less
effective employees must, for political reasons, be substituted
for more effective employees, we recommend scrapping the organization.
Attached are charts, presented in accordance with your
request, showing the general setup of the National Recovery Admin-
istration and of each Division, Section and Unit, together with a
statement of the work of each, the number of employees therein, the
monthly payroll, and tentative recommendation as to possible disposal.
Also attached are (a) copy of memorandum to the President
from L. c. Marshall, dated November 15, which me approved by the
President, alternative B having been accepted under paragraph II (b)
"Active Personnel Forecest* with the President's notes thereon, and
Regraded Unclassified
34
Memorandum to Mr. Morgenthau
3
December 4, 1935
(c) letter from the President, dated September 25, instructing
the Acting Administrator to reduce BRA personnel to 2000 by
January 1, 1936.
A. c. C. Hill, Jr.
Executive Officer
National Recovery Administration
ACCH/ee
Regraded Unclassified
35
December 5, 1935
At the group meeting this morning, Mr. Morgenthau handed
Mr. McReynolds a memorandum on & young woman, Miss Miriam
Rosenblum, who is anxious to become an Internal Revenue agent
and who has qualified for the position with the Civil Service
Commission, but who is being discriminated against in Internal
Revenue, 80 she claims, because she is a woman. He instructed
liss Roche, Mrs. Klotz and Mr. McReynolds to have a report for
him by Monday morning showing whether Miss Rosenblum is being
discriminated against and the reasons for discrimination.
Mr. Morgenthau reported that he thinks he has a method
which will encourage manufacturers to replace their old ma-
chinery. He said various plans have been submitted, but he
believes this one offers the best solution. His idea is this:
he would like to say, for example, that for the year 1936 any
manufacturer can write off in that year ten percent over and
above what the Bureau allows for depreciation on machinery
and deduct it from his income tax, provided he spends that
amount of money within the calendar year of 1936 for replace-
ment of machinery and equipment. In this way a man could
write off, say, a million dollars of his income tax for in-
creased depreciation and spend the million dollars for new
machinery. He suggested, for example, the public utilities.
This industry, he said, is going as well as it did in 1929,
yet their machinery 18 antiquated, and while they are making
a good profit they are not spending a dollar on new machinery.
The Secretary said he had telephoned to Helvering last night
to ask him whether we could write off this depreciation without
new legislation and Helvering said we could.
Mr. Morgenthau brought out the fact that this idea refers
particularly to companies that are making money because they
are the companies that pay income taxes and can afford to buy
new machinery and at the same time it will do them some good,
The 1dea 1s based on the hope that it will result in & heavy
increase in employment for industry.
The Secretary asked the group to give the suggestion very
serious thought and said he would like any of the group who
had any new ideas on the subject to contact Mr. Haas. The
Secretary also asked Mr. Haas to give the study of this plan
No. 1 preference in his shop.
Bell reported that he had secured the $500,000 for the
State health work. This was discussed by Miss Roche at the
group meeting yesterday. Attached 18 a memorandum from Miss
Roche explaining the difficulties which had been encountered
in securing the necessary funds.
Regraded Unclassifie
TREASURY DEPARTMENT
36
INTER OFFICE COMMUNICATION
DATE December 5, 1935.
TO
Secretary Morgenthau
FROM Josephine Roche
Early in November, Mr. Hopkins agreed to allot $500,000 to the Public
Health Service for payment to the States to meet urgent health needs. The
million dollars which had been granted last year from Federal Emergency
Relief Administration funds was exhausted, State Health Departments kept
skeleton organizations together, sometimes without salary, while there was
a hope of getting Security Act money. It was when we realized that we would
not get this money that we went after an additional grant from Mr. Hopkins,
since the urgency of the need became more acute each day.
At the suggestion of Mr. Corrington Gill, and with the cooperation of
the Bureau of the Budget, a method of allotment was worked out to effect
payment of this money directly to State Health Officers, It was thought
this method would be faster than waiting for a lump Bum transfer to clear
through the Comptroller General. Mr. Gill outlined the procedure which
the Public Health Service was to follow with the State Health Officers,
going as far as to request that a. depositary bank be named in each locality
to handle the transfer of funds. This procedure was followed, and the
necessary papers forwarded for Mr. Hopkins' signature. He refused to sign
them because he said he would not make payments directly to State Health
Officers.
The alternative of allotting the $500,000 in a lump sum directly to
the Public Health Service under Section 601 of the Relief Act is now being
worked out,
Josephine Roche
Assistant Secretary of the Regraded Unclassified
36A 36
December 4, 1935.
Wednesday
H.M.Jr.:
Henry Morgenthau -
Guy T.
Helvering:
Yes
H.M.Jr.:
-
Some people came in today with a very interesting
idea and I wish you'd give it serious consideration.
And that is, in order to help out heavy industry the
thought of reducing the number of years that people
can write off their machinery, you see? I mean -
let's say - I don't know, let's say that the ruling
of the Department is the life of a locomotive is say
twenty years.
G.T.H.:
Yes
H.M.Jr.:
Well, let's say we'd say to the railroad, 'You can
write it off in fifteen years'.
G.T.H.:
Yes
H.M.Jr.:
See?
G.T.H.:
Yes
H.M.Jr.:
Now, of course the best example is the power companies,
the Public Utilities have got a good business now;
they're at their high. And they tell me that their
stuff is all obsolete and if they could take a quicker
write-off on some of this stuff there's millions and
millions of dollars of machinery to be bought, see?
G.T.H.:
Yes
H.M.Jr.:
Now, aren't the number of years on this - all this
stuff - the write-off on heavy machinery - isn't that -
aren't those all rulings with you?
G.T.H.:
Yes
H.M.Jr.:
What?
G.T.H.:
Yes, we've got all - over all of those, you know
on this depreciation -
H.M.Jr.:
I know.
G.T.H.:
-
Forty-four twenty-two
Regraded Unclassified
36B
-2-
H.M.Jr.:
I know, but, could you take a fresh look at it to-
morrow?
G.T.H.:
Well, (Laughter) - I'm in bed up at my apartment
right now.
H.M.Jr.:
Oh, I didn't
- Well, could you have - are you
111?
G.T.H.:
Oh, no, I'm not 111, I just got a flare-up in my
knee again -
H.M.Jr.: Well, I -
G.T.H.:
and I can't walk.
H.M.Jr.:
Well, I'm terribly sorry. - Whoever has that down
there - somebody who has that under him, could he
take a look at it?
G.T.H.:
Yes, I'll get that to Hatchet, who is he head of
that valuation section and figure it out
that Division have a talk with him
and see what he's got
H.M.Jr.:
Well, would you do that in the morning?
G.T.H.:
Yes
H.M.Jr.:
And then - tell him to consider the thing, whether
we can do it without legislation.
G.T.H.:
Yes
H.M.Jr.:
See?
G.T.H.:
of course, we can - we can do that on rates, I think.
H.M.Jr.:
On what?
G.T.H.:
On the rates we allow.
H.M.Jr.:
How would that be?
G.T.H.:
Well, instead of allowing what we had, you know, ten
per cent or twelve per cent, we'd just have to increase
that to thir - twelve and fifteen or fifteen and
twenty.
H.M.Jr.:
Yes
Regraded Unclassified
366
-3-
G.T.H.:
And that way we could work it out, I think.
H.M.Jr.:
See?
G.T.H.:
Yes
H.M.Jr.:
Well, I'm very serious about this - it's - I get
an awful lot of ideas and it's one of the best that's
walked in here in a long time.
G.T.H.:
Yes
H.M.Jr.:
Now, the same day -
a fellow came
in from the Lima Locomotive but his suggestion I
don't think was nearly as good. That was that we
do what they do abroad - tell them if they spend
a million dollars on new machinery they can deduct
that from their income tax.
G.T.H.:
(Laughter)
H.M.Jr.:
Well, they're doing that abroad.
G.T.H.:
Yes, but -
H.M.Jr.:
But, I can't see that at all.
G.T.H.:
We wouldn't g et any money from any of those heavy
industries then.
H.M.Jr.:
No, but if we told them they could speed up the write-
off, I think we could get - I think we'd get - that
they'd begin to buy.
G.T.H.:
Yes
H.M.Jr.:
And I could very quickly find out.
G.T.H.:
Yes
H.M.Jr.:
You see?
G.T.H.:
Yes
H.M.Jr.:
But I don't want to make a move until I first find
out whether we have the power to do it.
G.T.H.:
Well, you see, Mr. Secretary -
H.M.Jr.:
Yes
G.T.H.:
Well, you remember when we had that terrible fight
up in Congress about their wanting to - to talk
a seventy-five per cent depreciation?
Regraded Unclassified
36D
-4-
H.M.Jr.- No, I don't remember that at all.
G.T.H.:
Well, this is right in contravention
of that when
we passed this fifty-four twenty-two.
H.M.Jr.:
Yes
G.T.H.:
But I'd be glad to work on that -
H.M.Jr.:
Go into the whole thing and tell the fellow, whoever
has got charge of it, that as soon as he's got some-
thing, if you're still laid up, to call me and I
want to see him.
G.T.H.:
Yes
H.M.Jr.:
Will you?
G.T.H.:
All right.
H.M.Jr.:
But I - you're not in pain are you? or does it -
is it painful?
G.T.H.:
Yes, very painful, but then I - as long as I stay
in this position I think I'm all right. (Laughter)
H.M.Jr.:
Well, I'm sorry.
G.T.H.:
Yes
H.M.Jr.:
But you tell this fellow, whoever it is, to get it
just as soon as he's got it. What's his name?
G.T.H.:
Well, Mr. Hatchet is the fellow in charge of
on that and places all these valuation
H.M.Jr.:
Hatchet?
G.T.H.:
Hatchet, yes.
H.M.Jr.:
0. K. Thank you.
G.T.H.:
I'll talk to him first and then to the Unit.
H.M.Jr.:
Right - Thank you.
G.T.H.:
Goodbye.
Regraded Unclassified
37
December 5th
Last night Peter Grimm told me that the Manager of the
Willard Hotel came to see him in behalf of Seymour Weiss. He
said he knew Seymour Weiss as a hotel man and a home loving person
and that he was very much misunderstood.
He tried to find out from Grimm what we were going to do.
He said Seymour Weiss is terribly worried. Grimm told him that
there was no use talking to the Secretary as he would not lean
over forwards or backwards in this case. The Willard man told
Grimm that they knew that. Then Grimm did what I thought was
very stupid - he took him in and introduced him to Steve Gibbons.
I spoke to Steve Gibbons this morning and, in a very
nice way, told him to keep out of this; that if Seymour Weiss
wanted to talk over his income tax case that he could either tell
it to the Judge or the Department of Justice. Gibbons asked whether
he could not arrange for him to see Irey or somebody and I said,
"no, Steve, please keep out of this".
Regraded Unclassified
1
Dec. 5,1925
CARL E. MOORE
38
Russell called
12/5/35
moore on phone
Return to Room 285
+ more paid he
did not receive luter
until today.
Men asked whethe
he was Joing to
mushes - he would
comply mith your
but Roud he would
Ziot commet himself
unte you
when he was and
to applar he said
he was puck. should
Russell send him appecial
For mail receipt for letter sent to Moore see Mail Receipts
12/3/35
Regraded Unclassified
39
December 5, 1935.
Thursday
H.M.Jr.:
Hollo, Mr. Moore?
C.E.
Moore:
Yes
H.M.Jr.:
Henry Morgenthau, Junior.
C.E.M.:
Yes, sir.
H.M.Jr.:
Did you get my letter?
C.E.M.:
I got your letter this morning, Mr. Morgenthau.
I don't know why the delay. I've been sick for the
last couple of days with a terrible cold.
H.M.Jr.:
Well, I'm sorry.
C.E.M.:
And I just got down this morning to take care of
this matter and I am going to take care of that
thing the first chance I get. I talked to Mr.
Russell this afternnon.
H.M.Jr.:
Yes, I asked him to -
C.E.M.:
H.M.Jr.:
Yes, but what does that mean? - I mean.
C.E.M.:
(Coughs) Pardon me, I had to cough.
H.M.Jr.:
Yes, but what does that mean? - you're going to take
care of it - I mean, does it mean twenty-four hours
or what?
C.E.M.:
I - I hope to be able to do it tomorrow.
H.M.Jr.:
Oh, you do?
C.E.M.:
If I can get out of bed tomorrow I'll be down and
take care of it.
H.M.Jr.:
I see, and -
C.E.M.:
H.M.Jr.:
Well now, when you say you are going to take care it,
I mean, are you going to write me another letter, or
are you going to come through with it now?
Regraded Unclassifie
to
39A
-2-
C.E.M.:
Well, I - frankly, I wanted totalk the matter over
with Senator Bulkley if I can. I tried to
H.M.Jr.:
Yes
C.E.M.:
H.M.Jr.:
Well, I've been awfully patient, Mr. Moore, on this
thing, you know.
C.E.M.:
Yes
H.M.Jr.:
And, I - I'm not - I don't -
C.E.M.:
I still think, though, Mr. Secretary,
that that treatment is unfair -
H.M.Jr.:
Well, I don't agree with you at all.
C.E.M.:
Well, that of course doesn't matter.
H.M.Jr.:
Yes, and - I mean I can't wait much longer, so -
what is tomorrow? - Friday? Well, I'd like a
definite answer from you on my desk at the latest
Monday morning.
C.E.M.:
Well I'll tell you, I'll either -
H.M.Jr.:
And let's leave it this way - if you're not going
to comply with my request I wish then you'd come
down to Washington, if you're well.
C.E.M.:
Yes, I'll be very glad to do -
H.M.Jr.:
I mean, if you don't comply with my request please
be here Monday.
C.E.M.:
I'll try to be there Monday - if -
H.M.Jr.:
Let me have either a letter complying with my request
or else come down in person.
C.E.M.:
I see.
H.M.Jr.:
Yes
C.E.M.:
All right.
H.M.Jr.:
Thank you very much.
Regraded Unclassified
39B
B
Return to Room 285
Treasury Department
55WCR 57 DL
TELEGRAPH OFFICE
COLUMBUS OHIO 401P 5
1935 DEC 5 PM 4 39
HON HENRY MORGENTHAU, JR.
FALSE DATE ON YOUR LETTER GIVES IMPRESSION YOU ARE TRYING TO
PUT RECIPIENT IN POSITION OF TAKING UNREASONABLE TIME TO ANSWER
STOP THIS COUPLED WITH PRESSURE THROUGH RUSSELL DURING MY ABSENCE
FROM CLEVELAND MAKES IT DIFFICULT TO CONTEND YOU ARE NOT INTENDING
ERSONAL PERSECUTION STOP SORRY YOU ARE PUSHING SITUATION INTO
UNAVODIABLE CONFLICT BETWEEN YOU AND ME.
ROBERT J.BULKLEY. 440P
Regraded Unclassified
December 6, 1935.
40
A group met in the office of the Secretary of the Treasury at
9:30 A.M. to discuss estimates of revenue for the fiscal years 1936
and 1937.
Those present were:
Mr. Henry Morgenthau, Jr. Secretary of the Treasury
Mr. T.J. Coolidge, Under Secretary of the Treasury,
Mrs. H.S. Klotz, Special Assistant to the Secretary,
Mr. D.W. Bell, Acting Director, Bureau of the Budget,
Mr. Herbert E. Gaston, Assistant to the Secretary,
Mr. Geo. C. Haas, Bureau of Research & Statistics,
Mr. A.S. McLeod, Actuary, Bureau of Research & Statistics,
Mr. Frank Dow, Assistant Commissi oner of Customs,
Mr. C.A. Freeman, Chief, Division of Research & Statistics, Customs,
Mr. V.H. Self, Assistant Deputy Commissioner, Internal Revenue,
Mr. V.L. Weeks, Chief, Statistical Section Internal Revenue,
Mrs. B. Wetherton, Special Assistant to the Commissioner,
Mr. C.B. Upham.
Mr. McLeod read a summary of the estimated receipts for the
fiscal year 1937 by classes of receipts. The summary is attached.
A number of tables and charts accompanied the summary.
Mr. McLeod explained that he had not covered the items of
miscellaneous receipts because those are within the purview of the
Bureau of the Budget.
In connection with that discussion, Mr. Bell and Mr. Morgenthau
discussed the sale of securities by the PWA through the RFC and the
resultant use of the proceeds by the PWA as a revolving fund.
They were agreed that it would be desirable to arrange for the
Regraded Unclassified
-2-
41
proceeds to be paid back to the Treasury rather than being made
available to the PWA for additional expenditures.
They agreed to take the matter up with the President.
At the suggestion of Mr. Haas, Mr. McLeod also referred to
a discrepancy between his estimates of receipts from back taxes
and the estimates of the Bureau of Internal Revenue.
It was agreed that those figures should be reviewed again and
perhaps 8 new estimate presented. The estimates submitted by
Mr. McLeod, based upon conversations which he had had with persons
in the Bureau, were somewhat higher than those submitted by Mr. Self,
Mr. Weeks and Mrs. Wetherton.
Mr. Morgenthau felt that it might be well to be conservative
in the estimates on back taxes, because, as he said, they do not
come from a bottomless well -- the collections each year bringing
the Bureau closer down to current taxes.
It was stated that the estimates submitted for all classifica-
tions of receipts were on a conservative basis, the figures being
for the most part minimum expectations.
Regraded Unclassified
42
Estimate of Federal Revenue in the Fiscal Year 1937
Total receipts for the fiscal year 1937 are estimated in the
amount of $5,680 million, or an increase of $1,285 million over es-
timated receipts for the fiscal year 1936. of this increase, $509
million are estimated to come from the railroad retirement tax, the
bituminous coal tax, and the social security taxes, sources which
are estimated to provide only small amounts of revenue in the fiscal
year 1936. Total receipts exclusive of these items are estimated at
$5,133 million, or an increase of $776 million over the estimate for
the fiscal year 1936. A summary of actual receipts in the fiscal
year 1935 and estimates of receipts for the fiscal years 1936 and
1937 is presented in Table 1.
Internal Revenue
Income Taxes -
Total income taxes are estimated at $1,963 million in the fiscal
year 1937. or an increase of $529 million over the estimate for 1936.
Of this increase, current corporate income taxes account for $212 mil-
lion and individual income taxes account for $307 million. The Revenue
Act of 1935, which first applies to incomes received in the calendar
year 1936, is estimated to provide $42 million of the increase in cor-
porate income taxes, and $62 million of the increase in individual in-
come taxes in the fiscal year 1937. The remainder of the increases
reflects improved earnings and incomes in the calendar year 1935, and
estimated further improvement in the calendar year 1936. For the cal-
endar year 1935, corporate taxable net income is estimated to increase
25 percent over that for 1934, and in the calendar year 1936 to increase
28 percent over the amount for 1935. Taxable net income of all indi-
viduals in the income classes of $5,000 and over is estimated to in-
crease 28 percent in the calender year 1935 over that for 1934, and
to increase 29 percent in the calendar year 1936 over incomes for 1935.
The above estimated increases in corporate and individual incomes
are based chiefly upon estimated increases in the Federal Reserve Board
Index of Industrial Production, the Bureau of Labor Statistics, All
Commodity Index of Wholesele Prices, the Bureau of Labor Statistics,
Index of Factory Payrolls, and the Standard Statistics Average Price
of 421 Stocks. The indexes and taxable incomes for the years since
1929 are shown on Table 2.
From Table 2 it will be observed that estimated corporate net in-
come for 1936 approximates that of 1930, when the Federal Reserve Board
Index of Industrial Production was about the same as that estimated
for 1936. In the case of individual incomes, the total taxable income
above $5,000 is less than that of 1930. The relatively smaller volume
of individual income reflects a change since 1930 in the composition
of incomes, which is not accurately measured by changes in the Federal
Reserve Board Index of Industrial Production.
Regraded Unclassi
- 2 -
43
As shown in Tables 3 and 4, the various sources of income in
1936 vary considerably from the amounts in 1930. Wages and salaries
and other income are considerably less then in 1930, because business
activity in general has not increased in proportion to the recovery in
manufactures. Dividends are also less than in 1930, for in that year
dividend payments were still at a high rate in consequence of several
preceding years of high earnings, whereas present low dividend pay-
ments reflect several years of severe deficits. Profits from sale of
assets are in larger amount than in 1930, chiefly because stock prices
have shown à rising trend during the past year, and are forecast to
increase further in 1936, whereas, in 1930, stock prices were in &
downward trend and substantial losses were taken. It should be noted
that the estimated increase from this source in 1936 is due mainly to
sale of assets held less than 2 years. A relatively small amount of
profits is estimated from assets held more than 2 years, because such
profits are now taxable at the bracket rates, instead of at 12½ per-
cent. Chiefly because of this factor and the low level of dividend
payments, incomes over $1 million are estimated in relatively small
amount as compared with incomes in the lower brackets.
Miscelleneous Internal Revenue -
Miscellaneous internal revenue is estimated to yield $2,106 mil-
lion, an increase of $251 million over the 1936 estimate. Practically
all sources of miscellaneous internal revenue are estimated to increase
in the fiscal year 1937.
Capital Stock Tax -
The capital stock tax is estimated to increase $75 million over
the 1936 estimate, because of the 1935 Revenue Act which increased the
rate of tax from $1 to $1.40 per thousand dollars of adjusted declared
value of capital stock, and imposed an excess profits tax of 6 percent
on earnings in excess of 10 percent, but not over 15 percent of adjusted
declared value, and 12 percent on earnings in excess of 15 percent of
adjusted declared value.
Estate and Gift Taxes -
Receipts from the estate tax are estimated to increase $77 mil-
lion over the 1936 estimate. The increase reflects higher value of ee-
tates during the fiscal year 1936. which is the basis of collections in
the fiscal year 1937, and the Revenue Act of 1935 which will be reflected
in revenue in December 1936. The Revenue Act of 1935 provides for larger
revenue from estates by lowering the exemption from $50,000 to $40,000.
and by increasing the rates of tax.
Regraded Unclassified
44
- -
Revenue from the gift tax is expected to decline $35 million
from the 1936 estimate. The large revenue from this source in 1935
reflected a large volume of gifts made in the calender year 1934 in
anticipation of higher income tax rates and estate tax rates, and
because of consideration given to an inheritance tax. For the same
reasons a large volume of gifts was probably made in the calendar year
1935, and therefore, revenue from this source is expected to continue
in large amount in the fiscal year 1936. However, no such incentive
for Making of gifts is expected to occur in the calendar year 1936,
end revenue in the fiscal year 1937 is estimated to decline to a nor-
mal amount.
Distilled Spirits, Wines, and Fermented Liquors -
Revenue from these sources is estimated at $558 million, an in-
crease of $63 million over the 1936 estimate. The increase is chiefly
accounted for by estimated increases in the consumption of distilled
spirits and beer, in consequence of improving quality of the products,
lower prices, broadening of the drinking habit, and increasing incomes.
Tobacco Manufactures -
This source of revenue is estimated to provide $504 million, an
increase of $26 million over the 1936 estimate. The increase is due
almost entirely to an increase in the consumption of small cigarettes.
The consumption of this product has increased steadily during the past
several years, while the consumption of other tobacco products has
declined or has shown little change.
Documentary Stamp Taxes -
Revenue from this source is estimated at $90 million, an increase
of $29 million over the 1936 estimate. The increase is chiefly in con-
sequence of the expected increase in the volume of refunding, of
probable new financing, end probable higher trading activity on the
stock exchanges. Stock trading has increased during the past few months,
end because of probable higher corporate earnings and security prices,
an increased volume of trading should be witnessed in the fiscal year
1937.
Nanufacturers' Excise Taxes -
Manufacturers' excise taxes are estimated in the amount of $393
million, an increase of $29 million over the 1936 estimate. The taxes
on gasoline and passenger automobiles provide the major part of the in-
crease in revenue in this group. Revenue from the former is estimated
at $178 million, an increase of $10 million over the 1936 estimate.
Revenue from the latter is estimated in the amount of $54 million, an
Regraded Unclassifie
45
- 4 -
increase of $7 million over the 1936 estimate. The latter estimate
is based upon a probable increase in the domestic consumption of pas-
senger cars from 3 million in the fiscal year 1936 to 3.5 million in
the fiscal year 1937.
Other sources of revenue under manufacturers' excise taxes are
estimated to show only slight change for the reason that they are
chiefly consumption goods which fluctuate moderately from year to
year.
Miscellaneous Taxes -
Revenue from sources under this classification is estimated at
$99 million, an increase of $9 million over the 1936 estimate. About
$6 million of this increase is estimated to come from the tax on vege-
table oils, chiefly in consequence of a shortage of domestic cotton-
seed oil, lard, and tallow. Other sources of revenue under this group
are not expected to change significantly, as they consist of consumo-
tion goods or services which show small annual fluctuations.
Processing Taxes on Farm Products
Processing taxes are estimated at $547 million, an increase of
$18 million over the revised estimate of $529 million for the fiscal
year 1936. The estimate contained in the Budget Summary of September
1935 is lowered from $536 million to $529 million, because of a change
in the rates of tax applied to tobacco products which was effective on
October 1st of this year. The increase in the estimate for 1937 is
due to estimated increases in the consumption of cotton, wheat, and
hog products.
Regraded Unclassif
- 5 -
46
Railroad Emoloyees' Retirement Tax
Revenue from this source is derived from an income tax of 38
percent of the compensation (not in excess of $300 per month) of each
employee, as defined by the Act, and an excise tax on carriers equal
to 3½ percent of the compensation (not in excess of $300 per month)
paid by it to its mployees. Practically all the revenue is derived
from taxes on pay rolls of railroads. The taxes become effective
March 1, 1936 and terminate February 28, 1937.
In the fiscal year 1936 only one quarterly payment will be re-
ceived in the amount of $33 million. In the fiscal year 1937, three
quarterly payments will be received, amounting to $102 million.
Bituminous Coal Tax
Revenue under this tax is estimated at $5.6 million in the fis-
cal year 1936, and $12.3 million in the fiscal year 1937. The esti-
mate is smaller in the fiscal year 1936 because revenue is not ex-
pected to commence until February 1936.
The Act imposes a tax of 15 percent on the sale price of bitu-
minous coal at the mine, with the provision that coal producers who
accept the "Bituminous Coal Code" shall be entitled to a credit of
90 percent of the amount of the tax. In the above estimate it is
assumed that all producers will comply with the code, and the rate
of tax used is 1.5 percent of the price at the mine.
Kistomathic
Social Security Taxes
Employment Tax (Title VIII) -
Revenue from this source is estimated at $305 million in the fis-
cal year 1937. There will be no revenue from this tax in the fiscal
year 1936 inasmuch as the tax commences January 1, 1937.
Title VIII of the Social Security Act imposes an income tax of
1 percent on the wages (not in excess of $3,000 per year) of every
individual (excluding certain occupational groups and persons 65 years
of age and over) and an excise tax on each employer equal to 1 percent
of wages (not in excess of $3,000) paid by him.
The total pay roll in the calendar year 1937 subject to these
taxes is estimated at $30,800 million. Approximately one half of
this amount will be taxable at 2 percent in the fiscal year 1937 and
it is assumed that the tax will be collected currently.
Regraded Unclassified
- 6 -
47
Tax on Employees of Eight or More (Title IX) -
It is estimated that receipts from this tax will amount to
$129 million in the fiscal year 1937. The tax becomes effective
January 1, 1936, but it is not collected until January 1937. There-
fore, there will be no revenue from this source during the fiscal
year 1936.
Title IX of the Social Security Act imposes an excise tax on
every employer equal to certain percentages of the wages paid by
him (with certain occupational and size of firm exclusions). The
rates of tax are 1 percent during the calendar year 1936 and 2 per-
cent during the calendar year 1937. The taxpayer is allowed a credit
for all contributions paid into State unemployment funds not in excess
of 90 percent of the tax.
If all States had approved eystems by the beginning of 1936, the
Federal Government would receive in January 1937 an amount equal to
one tenth of 1 percent of the total taxable pay roll. Inasmuch as the
Social Security Board does not expect all States to adopt approved sys-
tems before July 1, 1937, and since the law requires that the entire
tax of 1 percent of pay rolls shall be paid to the Federal Government
in cases where States have not adopted approved systems, the estimated
revenue in the fiscal year 1937 is larger than it would be with com-
plete State coverage.
Receipts for Trust Accounts -
Under Title IX, Section 904(a) of the Social Security Act, en
"Unemployment Trust Fund" is established in the Treasury to receive
all moneys deposited by a State agency from 2. State unemployment fund.
For the fiscal year 1936 it is estimated that $49 million will be
received into the Fund and in the fiscal year 1937, it is estimated
that receipts will increase to $283 million.
Ten States have submitted unemployment tax plans which provide
for taxes averaging higher than the rates provided by the Federal law.
The higher rates account for larger trust account receipts than would
be received under the Federal rates.
Customs
Total receipts from customs are estimated at $354 million, an
increase of $1 million over the 1936 estimate. Revenue from duties
on distilled spirits and wines is estimated to decline $5 million
from the revised estimate for 1936 because of the Canadian Trade
Agreement.
Regraded Unclassified
48
- 7 -
The Canadian Trade Agreement lowered the tariff duty on whiskies
having an age of four years or more from $5.00 to $2.50 per proof
gallon. It is estimated that imports of whiskey will be about 970,000
gallons more than under the $5.00 duty. However, the rate has been
halved and the net result is an estimated loss in revenue of $12.9 mil-
lion.
Revenue from dutiable imports other than alcoholic beverages is
estimated to increase $9 million over the 1936 estimate. The increase
reflects chiefly an expected high level of agricultural imports and im-
ports of certain vegetable oils and facts in consequence of domestic
shortages of these products. Imports of dutiable commodities during
the past three years have been smaller in relation to internal business
than in previous years. This factor and the various trade agreements
account for the relatively low estimate of customs receipts.
Regraded Unclassified
TABLE I
Actual receipts for the fiscal year 1935 and
estimated receipts for the fiscal years 1936 and 1937
(In millions of dollars)
:
:
:
:
Actual
:
Percentage
:
1935
:
1936
:
1937
:
increase
:
increase
:
actual
:
estimate
:
estimate
:
1937 over
:
1937 over
:
:
:
:
1936
:
1936
General and special accounts
Internal revenue:
Income taxes:
Current corporation
465
615
827
212
34.5
Current individual
448
629
936
307
48.8
Back taxes
186
190
200
10
5.3
Total
1099
1434
1963
529
36.9
Miscellaneous internal revenue:
Capital stock, excess profits,
estates, gifts
310
349
461
112
32.1
Distilled spirits, wines, beer
411
495
558
63
12.7
Tobacco manufactures
459
478
504
26
5.4
Documentary stamp taxes
43
61
90
29
47.5
Manufacturers'excise taxes
342
365
393
28
7.7
Miscellaneous taxes
109
90
100
10
11.1
Total (collection basis)
1674
1838
2106
268
14.6
Total (Treasury statement
basis)
1657
1855
2106
251
13.5
49
Regraded Unclassified
TABLE (Continued)
(In millions of dollars)
:
:
:
:
Actual
:
Percentage
:
1935
:
1936
:
1937
:
increase
:
increase
:
actual
:
estimate
:
estimate
:
1937 over
:
1937 over
:
:
:
:
1936
:
1936
General and special accounts (continued)
Agricultural adjustment taxes
521
1/ 529
547
18
3.4
Railroad employees' retirement tax
-
33
102
69
209.1
Bituminous coal tax
-
6
12
6
100.0
Social security taxes
-
-
433
433
100.0
Total internal revenue
(Treasury statement basis)
3278
3857
5163
1306
33.9
Customs:
Distilled spirits, wines, fermented
liquors
41
33
27
(-)
6
(-) 18.2
All other
305
317
327
10
3.2
Total (collection basis)
346
350
354
4
1.1
Total (Treasury statement basis)
343
353
354
1
.3
Miscellaneous receipts
179
185
163
(-) 22
(-) 11.9
Total receipts, general and
special accounts (Treasury
statement basis)
3800
4395
5680
1285
29.2
Trust accounts
Deposits by States under
Social Security Act
-
49
283
234
477.6
Treasury Department, Division of Research and Statistics
December 2, 1935
50
Revised. Decrease of $7,000,000 from September 30 estimate due to lowering of rates on processing of
tobacco.
2
Not included in September 30 budget summary.
Revised. Decrease of $74,000,000 from September 30 estimate.
Regraded Unclassified
Corporation and Individual incomes and taxes and economic factors
affecting these incomes
: F.B.R. index :
B.L.S. all-commodity
:
B.L.S. index :
:
Corporations
:
Individual incomes
: of industrial
:
wholesale price
: of payrolls
: Standard statistics
: Taxable :
: Taxable net :
: production
:
index
:
:
average price of
:
net
:
Tax
:
incomes
: Total tax
:
:
:
:
421 stocks
: income,
:
collections,
:
$5,000 and
:collections,
:
Annual
:
Annual
: December
:
Annual
:
:calendar
: fiscal years: over, calen- :fiscal years
:
average
:
average
:
average
:
average
:
December average
: years
:
: dar years
:
:
:
:
:
:
:
(In millions of dollars)
1929
119
95
93
109
154
11,654
1,075
16,359
1,019
1930
96
86
80
89
109
6,429
1,118
10,130
1,061
1931
81
73
73
68
58
3,683
892
6,585
730
1932
64
65
63
46
47
2,153
517
4,182
351
1933
76
66
71
49
70
2,986
319
4,108
295
1934
79
75
77
62
69
2/
3,961
321
2/
4,962
355
1935
87
2/
8o
2/
8o
2/
70
2/
85
2/
4,970
465
2/
6.377
448
1936
2/
95
2/
82
2/
84
2/
79
2/ 110
2/
6,380
2/
615
2/
8,230
2/
629
1937
2/
827
2/
936
Present level,
October 1935
94
81
75
86
Index mmbers; 1923-25 average = 100
Estimated
51
Regraded Unclassified
52
Table 3
Sources of Individual Income, Returns showing Net Income
of $5,000 and over, Actual 1929 to 1933, Estimated 1934 to 1936
(In millions of dollars)
: Business
:
:
Calendar
Profits from
: Wages and sal-: Taxable
: and part-
:
sale of assets
:
Dividends : aries and all : net
years
: nerships
:
:
: other income
:
income
Actual
1929
3,335
4,390
4,247
7,734
16,359
1930
2,002
1,084
3,709
6,412
10,130
1931
1,258
367
2,584
4,803
6,585
1932
639
122
1,541
3,068
4,182
1933
795
442
1,200
2,670
4,108
Estimated
1934
1,028
163
1,608
3,319
4,962
1935
1,420
510
1,770
3,865
6,377
1936
1,912
1,312
1,900
4,545
8,230
Treasury Department, Division of Research and Statistics.
December 3, 1935
1/ Preliminary, returns filed to August 31, 1935 adjusted to final.
Regraded Unclassified
Table 4
Sources of individual income,
actual 1929 to 1933, estimated 1934 to 1936
53
(In millions of dollars)
:
:
:
:
Wages and
:
Business
Profits
Calendar :
:
:
:
salaries and
Taxable
:
and
from sale of
Dividends
years
:
:
:
all other
net
:
partnerships
assets
:
:
:
:
:
income
income
:
Income class: $5,000 - $100,000
Actual
1929
2,815
1,940
2,819
7,049
11,991
1930
1,893
588
2,683
6,032
8,558
1931
1,206
209
1,953
4,596
5,805
1932
615
87
1,211
2,957
3,798
1933
739
304
926
2,566
3,641
Estimated
1934
1
996
140
1,262
3,211
4,544
1935
1,340
390
1,360
3,700
5,730
1936
1,800
898
1,440
4,350
7,228
Income class: $100,000 - $1,000,000
Actual
1929
423
1,591
1,097
584
3,156
1930
107
349
796
332
1,212
1931
52
116
488
189
613
1932
24
35
279
107
348
1933
55
96
220
97
380
Estimated
1934
1
32
20
280
102
358
1935
80
86
335
155
548
1936
110
292
380
180
817
Income class: $1,000,000 and over
Actual
1929
97
859
331
101
1,212
1930
2.2
147
230
48
360
1931
.1
42
143
18
166
1932
.1
-
51
4
35
1933
1.4
42
54
7
87
Estimated
1934
1
-
3
66
6
60
1935
-
34
75
10
99
1936
2
122
80
15
185
1
Preliminary returns filed to August 31, 1935, adjusted to final.
Regraded Unclassified
NO. 338. 40 DIVISIONS HER TECH POTA WAYS. to BE 200 DIVISIONS:
CODES foor COMPATIT, K NOTHORS, MARA
54
Corporation Returns Statutory Nel Income, Actual 1925-33 Estimated 1934-36
Dollars
Billion
12
n
10
9
8
7
6
5
4
3
2
1925 26 27 28 29 30 3 '32 '33 '34 35 '36 -
NO. $29. so DIVISIONS FER INCH BOTH WATE: 150 BY FOO DIVISIONS.
CODES SCOE COMPANY, INC. -
5
INDIVIDUAL RETURNS TAXABLE NET INCOMB OF
E 5,000 AND OVER
o
5
Actual 1925 to 1933 Estimated 1934 to 1936
Dollars
Billions
17
16
15
14
13
12
n
10
9
8
7
6
5
V
Regraded Unclassified
1935
EE61
1861
6261
1927
1925
1923
1221
1999
1997
will
MAR
MAR
INDO
MAP.
NAPT
MAR
SEPT.
NAB
LEFT
JUNE
NEPT
MAIL
WV
SAFT
SEFT.
JUNE
NEPT
AME
MAT
AND
BEFT
34/M
MAR
SEPT.
JUNE
JAB
ANS
MAR
OE
DE
or
OF
[
05
05
09
09
02
04
08
08
06
06
001
001
L,
oil
011
120
120
DEL
DEL
1400
091
150
051
091
091
021
021
081
081
061
061
200
202
210
212
220
220
230
230
IN30
IN3
83d
83d
STANDARD STATISTICS 421 STOCKS
95
57
FEDERAL RESERVE BOARD iNDEX OF INDUSTRIAL PRODUCTION
ACTUAL THROUGH OCTOBER 1935, AND ESTIMATED 1936 AND 1937 YEARLY AVERAGES
1923 * 100
ADJUSTED FOR SEASONAL VARIATION
PER
PER
CENT
CENT
160
160
150
150
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
man.
BEFT
MAR.
JUNE
SEPT.
DEC.
NEATL
JUNE
SEPT.
DEC
MAIL
SINE
SEPT.
DEC
MAC
INTER
SEPT
wer
you
JUNE
18/FT.
-
am
MAR.
JUNE
SEFT
MAR
JUNE
NET
MAR,
AND
MAIL
ALINE
SEPT.
MAC
JUNE
are
NEC
MAR
FORM
MAR
DEC
MAR
AND
HPT
MAR
AND
NEFT
DEC
MAR
AINE
POR
MAR
NAME
REPT
MAR
JUNE
SEPT.
MAR
JUNE
SEPT
1919
1921
1923
1925
1927
1929
1931
1933
1935
1937
Regraded Unclassified
BUREAU OF LABOR STATISTICS INDEX OF COMMODITY PRICES
ACTUAL THROUGH OCTOBER 1935 AND ESTIMATED 1935 AND 1936 AND YEARLY AVERAGE AND 1936 DECEMBER AVERAGE
1926 a 100
PER
PER
CENT
CENT
170
170
160
160
150
150
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
3
am
SEPT
MAR
MAR.
SEPT
MAR
E
MPS
i
SAZ
JUNE
MAIL
are
SEPT
MAR.
1
SEPT
MAR
AND
MAN
MEPT.
MAR
/
SEPT.
seet
MAR
SEPT
:
/
SEPT
we
une
SEPT
STO
I
JUNE
LEFT
DUNE
1919
1921
1923
1925
1927
1929
1931
1933
1935
1937
Regraded Unclassified
59
actual receipts for the fiscal year 1935 and edimated receipts for the fiscal years
1936 and 1937
Receipts
actual 1935
1936
021937
Increase
actimated 1977
BUAN retermated
General and Special accounts
1936
taxes:
current
HES
368133
615
000000
826
600,000
1
211,
600,000
Current endividual
448,
221113
NI
100,000°
936600000
,
307,
000,000
bark take
185
641137
190
000/00
200
-
000,000
10
000,000
Detal income dases (collects lavi)
1099
230383
1434
000,000
942
600,000
528
600,000
to dark treasury state (unamined)
(-)
111745
H)
111,000
-
Total income tables (treasing statement)
1099
118638
1434
111,000
1,962
600,000
508
500,000
internal
Capital slock Lax
91,
508121
38
000,000.
163,
000,000
75
000,000
Excess profits the
10
000 000
5.
000,000
in I
000,000
Estate thx
140
440683
191.
000.00
268
-
77
000,000
9.67 tax
671277
60
000,000
25
000,000
- (-) 35
000 000
Distilled spirit and Joine ted
hostilled spride tax PN
150
525647
215
800,000
240
24
200,000
Distilled (excide tax pn. dongo,
15,
107726
13
300000
16,500,000
1
a
700,000
Wines (eflise tax ON domestic and tol)
6
777.816
7
041.000
10,700,000
-
660,000
mall liquore
211
21505%
224
100,000
256,
500,000°
3ª
500,000
Recification Retail and dealer and
manufacture of wills
13,
281046
18
600,100
18,
300,000
(-)
300,000
Container stamps
6%
614474
in
5,700,000
9,
701.000
28am lass disticled spirite and winew
3021546
I
-
Brewers Retail and wholedale dealers
4348822
3
900,000]
4,300,000-
400,000
all other
597138
500 000
200,000
900,000
Total distilled spints and lique
411 021 772
494
840.00
557
730,000
62
860,000
Tobacco magnfactures:
Cigars labe)
11
692859
12
100.000
13
200,000
1,
100,000
Cigarettes (smale)
385,459571
405
100,000
429,
000,000
24,
000,000
Jobacco Dauff and smoking)
54
372414
53
300000
53,
600,000
300,000
E
511662
n
6,800,000
6,
900,000
100,000
Cigarette papera and tubes
776068
1,000,000
I,
200,000
200,000
are other
16605/-
170,000
144,000
(-)
26,000
Total tobacco manufactures
459
5698611
478370000
504
044,000
26
674,000
Documentary stamp taxes:
of bond and deeds of
17
1934977
21
500,000°
35,
400,000
19,
900,000
Dtack transfers
15,7473631
31.
700,500
46
800,000
15
100,000
sales of protecte for future delivery
3950544
2
300,000
$500.000
Playing Cards
4,351,549
decreption
Dilver bullion transfer
1149390
1,000,000
000,000
Dotal documentary plamp taxes
43,153.373
EL
200,000
90
400,000
29
200,000
manufactures expense taxes:
Lubricating are
29.
800249
25
000,000
29.
800,000
1,
$00,000
1426859
1400,000°
/
000,000
(-1
matchy Brower wont. malt, grap concentintes, etc
400,000
6,000 101*
6
100,000
7.
1000,000
/
000,000
161.
532292
168
200 000
$ 000,000
9,
800,000
Gavoline Electrical energy
32.
597256
33
000,000
35,200,000
2
200,000
Tires and ennhl tubow
26
637796
27,
800.000
28
700,000
900,000
Toulet preparations, MC
12
643519
13
500,000
17,000,000
3'
500,000
articles hade of fun
2675731
is
160,000
1700,000
600,000
Jewelry etc
2g
010123
2
000.000
2,930,000
900,000
Autombbile trucks
6
158,070
1
400,000
6,
300,000
(-)
900,000
other automptiles and motorcycles
38,
003.335
47.
100,000
54,
200,000
,7
100,000
Parts and accident 200 dutomobles
6,455,854
6
700,000
7,
7,000,000
300,000
Radio saty phanograph records. etc
3624904
H
100,000
5,600,000
1
500,000
Mechanical not cigerators
6663679
7
500,000
7,
7,600,000
100,000
HH85815
3
500,000
5,000,000
--
and Cartridge
2.203.2116
30
400,000
2
500,000
100,000
Caminae and Render
343,388
360,000
420,000
60,000
Chowing Imm
71521831
730,000
750,000
20,200
Dotal manufactures excise laws
364
190.000
393
1370000
25
560,000
actual receipts for the fiscal year 1935 and estimated receipts you the fiscal years
1986 and 1987 (Continued)
Imeriance
Receipts (continued)
actual
1935
Extimated 1936
Extenated
AM
etemated 1987
Several and special accounts (continued)
- estimated
1936
Tumal neveral (continued):
misrellaneous internal revent (Continued
mussell more ten
Telephone telegraph radio- and cable facilities itc.
19,741,434
21
Sen,ore
21,800,000
300,000
Transportation of air by people line
9,479,722
10,500,000
10,500,000
Leases Checkes of safe delposit form
2,317,619
2,400,000
1,800,00 $
I
600,000
25,645,139
I
-
15,379,397
Club admissions dues and initiation yes
17,000,000
19,500,000
2,500,000
5,784,495
6,500,000
7,000,000
500,000
Oleomargarine, process butter, itc
2,063,427
2,000,000
2,500,000
500,000
Processing Taxes on coconuts de.
24,457,091
29,000,000
35,000,000
6,000,000
Processing Gar and crude petroleum
1,759,790
800,000
900,000
I
all ather
1, 244,987
600,000
600,200
Total miscillaneous taxes
108,469,101
90,300,000
99,500,000
9.200,000
Total miscellaneus. internal revenue (collection basis
1,673,982,821
1,838,500,000
2,106,014,000
267,514,000
adjustment to daily Treasury statement (unressised)
(-) 16 781 312
(+) 16,791,000
Total miscellaneous internal revenues/Treasing statement basine
1,657,191,519
1,855
291,000
2,106,014,001
250,723.000
agricultural wheat adjustment Taxes:
123,860,932
124,500,000
130,200.00
5,700,000
catton
95,906,302
116,800,000
126,000,000
9,200,000
Tobacco
32,725,501
25,400,000
23,800,000
(-)
1,600,000
Carn
6 849,630
7,700,000
4,000,000
000'00L E (-)
184,601,009
156,900,000
173,000,000
16,
100,000
Certain Sugar Hoge payer, jute fabries and pate yorn
3,221,709
2,600,000
3,000,000
400,000
71, 093,971
64,400,000
62,000,000
I
2,
400,000
Peanuts
3,571,936
7,400,000
7,100,000
I
300,000
Rice
29,120
12,600,000
11,700,000
(-)
900,000
1,900,000
2,500,000
600,000
Catton Rege- givning
1,110,875
1,000,040
1,000,000
I
3,000,000
-
Tobacco sabstor
3,231,375
3,000,000
Total agricultural adjustment Tases (collections basing
526,222,358
524,200,000
547,300,000
23,100,000
adjustment 20 daily Treasury statement (undrised)
0
(-) 4 842,4871
(+) 4,842,000
Total agricultural adjustment Theosury Islemint lasies)
521-379,871
529,042,0M
547,300,000
18,258,000
Ractroad employees' retirement Tax
-
33,000,000
3101,600,000
68,
600,000
-
Bituminous loal tax
I
5,600,000
12,300,000
6,700,000
Social security taxes
Tax (Ticle YIII)
I #
304,700,000
304,700,000
Tax on Employers of eight are more (Title I)
-
- -
128,500,000
128,500,000
- -
- -
Total social Security taxes
433,200,000
433,200.000
Total internal revenue (collection basis)
3,299,435572
3,835,
300,000
5,163,014,000
1.327
000'HIL
adjustment to daily Treasury statement (uncussed)
(-) 21, 745,5412
1
(+)
745,000
-
Total internal revenue (Treasury statement basis)
3,277,690,028
3,857
045,000
5,163,014,000
1,305
969,000
Customs
Distilled spirite and wines
41,036,321
32
800,000
27,400,000
(a) 5,400,000
all other
305,478.129
317
200,000
326,600,000
9,400,000
Total customs (Colliction basin)
346,514,550
350,
000,000
354,000,000
4,000,000
-
-
adjustment to daily Treasury (unrevised)
(-) 3,161.516
162,000
Total customse( Treasury statement basis)
343,353.024
353
163,000
$54,000,000
838,000
Miscellaneous receipts (Tressury statement bases)
179,424.141
947,000
162
700,000
(-1 22
247,000
Total receipts, general and special accounts collection him
3,825
374,263
4,375
247,000
5,679
714,000
1,309,
467,000
to daily Treasury statement (simerised)
907,061
(+1 24
907,000
- -
Total receipts, general and (Treasury extensed 3,800,
467,202
4,395,
154,000
5,679,714,000
1,284
560,000
Trust accounts
Depositsby States under Social security act, Title IX, See. 904
48,500,000
282,
800,000
234,
300,000
12 Taxes imposed be Railroad Rathement act do not annly 10 any tion received w paid after
F Revised. Decrease of $7,000.00 o Pam Sent. 30 estimate due to lowering of rates ow processing of tobacco-
3 included = sept. 30 budget summer
2 Revised, Decrease of $74,000.00 from sent. 30 Antimate
Regraded Unclass
60
December 6, 1935.
Mr. Boake Carter,
c/o The Columbia Broadcasting System,
Washington, D.C.
Dear Sir:
Through the courtesy of the Columbia Broadcasting System I
have received transcripts of portions of your radio broadcasts of
November 19th and 26th in which reference is made to the Treasury
Department and the Coast Guard. I regret that you did not come to
the Treasury Department or to any of the responsible officers of
the Coast Guard for information, for I feel sure that if you had
done 80 you would not have given currency to unfounded rumors that
might seriously disturb without reason the morale of & very fine
are of the Government service.
The substance of your charges was that efforts were being
made under my direction to transform the Coast Guard into &
civilian outfit and that it 182 (I quote your words) "gradually
being filtrated by civiliens and political jobholders."
It 10 very easy to deal in 4. few words with these state-
ments. They are simply not true. Rhoever gave you this in-
formation informed you cadly. I shall be glad to make all the
Coast Guard personnel records available to you if you wish to
see them. They will reveal to you that not one civilian has
been placed in 6. position of authority in the Coast Guard since
I have been Secretary of the Treasury and that there have been
no additions whatever to the small force of civilian employees
on the Coast Guard rolls. There has not been any political
appointment to the Coust Guard nor any political appointment of
a cadet to the Coast Guard Academy in my term of service and
there will not be any while I hold my present position.
I was pussled by your reference to the pay clerks, who you
said have been dropped down & peg and are now serving civilian
jobholders, until it was explained to ne that you had probably
been given a distorted version of the arrangement by which Coast
Guard officers and sen are now receiving their checks through the
Regraded Unclassified
61
- 2 -
regional field disbursing offices of the Treasury Department.
But the fact 10 that these disbursing offices were set up by
executive order and that they disburse payrolls not nerely for the
Treasury Department but for other departments of the Government.
Their officers are not in any way in authority over the Coast Guard
warrent officer pay clerks and they have not replaced them. The
importance of the duties of the warrant pay clerks and their value
to the Coast Guard have not been diminished.
But you said also that while the Coast Guard was officially
a part of the Treasury Department the Guard in the past had been
allowed to build itself up and that the Department had kept hands
off in policy matters. That, I hope you will agree, 10 a rather
ludicrous statement which reflecte on undeserved discredit on my
predecessors. You accuse no in effect of taking an interest in the
Coast Guard, and I fear I shall have to plead guilty.
The Coast Guard 10 en essential part of the law-enforcing
agencies of the Treasury, engaged in protecting the Nation's reve-
nues, and it has other important duties, including the great humani-
tarian work of suving life at sea. It sust ccoperate with other
revenue enforcing agencies of the Treasury Department and I have
sought to make that cooperation even more effective with results
that I think I can say in all modesty have been gratifying. I have
devoted & great deal of time and attention to getting the officers
and men of the Coast Guard better equipment with which to work -
better ships, better airplanes, improved shore stations. I know
they have appreciated it and I would have considered myself false to
my responsibility if I hadn't done it, A landlubber can be of some
service.
Now lot ne deal with the case of Mr. Edwin R. Ballinger, who
you said was given the task of reorganizing the Coast Guard end was
placed in the position of head DED over the head of the Commendent.
Mr. Ballinger 1s as you stated 8 technical expert on the administra-
tive staff of the Treasury Department and he did investigate the
Coast Guard and propose some changes in organization and procedure
which have been put into effect. He did not promote himself into
a position as head of the Const Guard. He holds no position in it
whatover, but has moved on to perform similarly valuable work in
another branch of the Treasury. You chose to honor him by speak-
ing of him as an eye doctor. If he was that then that profession
lost & very valuable man when be chose to enter the Government
Regraded Unclassified
62
- 5 -
service nearly twenty years ago. He was 4. member of the staff
of the Bureau of Internal Revenue, before I attached him to the
staff of the Treasury proper because I had learned something about
his work. He is an expert in organization and particularly the
organisation and procedure of Government offices. He is not a
politician but a civil service merit system employee of the Govern-
ment, & conspicuously able member of that fine body of career sen
who are the backbone of the Federal service, whether they go by the
title of Admiral, or General, or Captain, or Colonel, or plain
Mister. He has been of splendid assistance to the Commendent and
other officers of the Count Guard in improving their organization
and they recognize it.
I shall not go into detail GO to the administrative changes
he recommended, but there is no reason why you should not know all
about them if you are interested. It is enough to say here that
the changes have not been in the direction of diminishing the
authority of the commissioned officers of the headquarters staff,
but that on the contrary their authority has been strengthened,
May I suggest that you come to headquarters and learn more
about the Coast Guard. It 1s 4a. fine organization. I am proud of
it and of my connection with it and I want its merits to be known.
Sincerely yours,
Secretary of the Treasury.
HEG/mah
Regraded Unclassified
CONTID DEPARTMENTL
63
INTER OFFICE COMMUNICATION
PLEASE DESTROY
December 6, 1935.
STRICTLY CONFIDENTIAL
TO
Secretary Morgenthau
FROM
Mr. Hans north
Subject: The effect of senctions on Italy's African campaign.
On November 18th, through action by the League of Nations, fifty
nations imposed, in addition to financial sanctions previously estab-
lished, a prohibition of all imports (except money, books, music, news-
papers, and some other minor items) from Italy. These countries normally
purchase 60% of Italy's exports. Fifty-two countries have also placed an
embargo on various raw materials presumably needed for war, with the
important exceptions of coal, oil, cotton, copper and iron. These items
were amitted because they are produced in countries not members of the
League, and it was felt that an embargo on the export of these items would
not be sufficiently effective to justify the resultant loss of export busi-
ness the League countries would suffer.
Since then the League, particularly Great Britain and Russia, have
been pressing to add more items, particularly oil, to the list of pro-
hibited exports to Italy. They fear that without such action their other
sanctions will prove inadequate, and at the same time the attitude of the
United States Government toward exports of raw material to Italy has en-
couraged them to believe that an embargo imposed by the League could be
effective. The reaction of Italy to the threat of such an embargo has
been so belligerent as to give pause to plans for immediate application of
the embargoes. France (i.e., Laval, who is really pro-Italian) has suc-
coeded in obtaining a postponement to League consideration of an extended
embargo list, first to December 5, and now to December 12.
Can Italy continue her military campaign in Ethiopia in the face of
sanctions already applied and likely to be applied at the next meeting of
the League committee?
Can the Italian campaign survive another rainy season in Ethiopia,
which begins in April or May and ends in September or October?
To continue her military conquest of Ethiopia, Italy must have ade-
quate supplies of (1) food, (2) raw materials, (3) money, (4) men,
(5) transportation facilities to Africa; she must (6) avoid war with the
major powers, and (7) Mussolini must maintain effective control of the
political situation at home.
CONFIDENTIAL
PLEASE DESTROY
Regraded Unclassified
64
Secretary Morgenthau - 2
Should Italy fail in any one of these seven requisites, the Ethiopian
venture must be abandoned, or so greatly curtailed as to mean virtual
cessation.
(1) Has Italy an adequate supply of foodstuffs for her
populace and her army?
Yes. Italy can continue indefinitely in the face of sanctions to ob-
tain adequate supply of food, though her diet will have to include less
meat and fish, and more cheese, nuts, fruits, and vegetables.
(2) Can she continue to purchase from abroad enough of the
essential raw materials she lacks at home?
With the doubtful exception of oil - yes. Italy will have funds
enough to purchase abroad all she needs for her African campaign, with
same left over for increasing her military and naval equipment. She has
already accumulated large stores of necessary metals and can continue to
purchase them from the several countries who have not imposed entargoes.
Italy is now importing abnormal quantities of coal, copper, iron, tin, and
cotton, and will continue to import them even should the League place those
items on the export embargo list.
The one very important commodity that Italy may lack is petroleum
products. Our unexpected attitude toward unrestricted exports of oil to
Italy has created a serious problem for her. She is no longer certain
she can buy all the oil she can pay for. It is reported that she has
accumulated a sufficient supply in Africa to take care of her motor
truck needs in the Ethiopian campaign for at least a year. But her re-
serve in Italy appears to be smaller. It has been variously estimated
that she has between four to six months' supply. The limiting factor has
been storage tanks, which require 8. minimum of several months to build. By
January 1st she will have had at least three months warning of B. possible
partial embargo, but that is hardly enough time to construct facilities
for additional three months' supply. A month or two more of grace will
make e. considerable difference in her reserves. In any case, Italy will
not stop her African campaign this season because of oil, but it will
make an important change in her European plans.
(3) Can she raise enough money to finance the campaign
and her domestic expenditures?
(a) She will have available for expenditure abroad during the next
year 11 to 14 billion gold lire, in gold and foreign exchange, the equiva-
lent or almost three times the value of all her imports of 1934.
(b) With reasonably intelligent financing, she can operate with a
Regraded Unclassified
65
Secretary Morgenthau - 8
budget deficit of 15 to 20 billion lire B. year for two years at least,
assuming all other of the seven requisites are met. That sum would be
enough to meet the expenses of the African campaign, and domestic deficits,
including same expansion of military and naval equipment.
(4) Will Italy lack man power to continue an aggressive campaign?
No. Ber supply of man power for the Ethiopian struggle is quite
sufficient for a long drawn out campaign. The casualties in combat are
mostly Colonial troops, while the casualties of the campaign, though
likely to increase considerably within the next two months, are not great
enough to constitute a serious drain on her man power.
(5) Does Italy have ample facilities to transport
fresh troops and supplies to Africa?
So long as her troop and supply ships can travel freely, Italy will
experience no difficulty in keeping her African armies adequately supplied
with replacements, food and material. She has already released a score
of ships no longer needed for the African trip.
(6) Will Italy avoid war with B. major power?
The prospects of an attack by Italy on the British fleet -- which
appeared so probable in the last few weeks -- have been greatly dimmed by
Laval's announcement that the French fleet will support Great Britain should
Italy attack the latter's ships.
Hitherto Italian naval authorities felt they had an outside chance at
least for a quick victory. But it would take a very desperate and fool-
hardy group to attack single-handed a combined British, French, and possibly
other naval and air fleets.
While France's pronouncement makes prospects of an Italian attack on
Great Britain in the near future very slim, the position taken by our ad-
ministration toward increased exports of oil to Italy may prove to be the
means of postponing a European war. Should we sell Italy all the raw
materials she could pay for, Italy would suffer no lack of raw materials so
long as her funds held out - at least two years - and the League's sanctions
would be much less effective. Faced with failure of economic sanctions,
the League might be forced to military sanctions - e.g., 8. blockade of
Italian ports - which would mean war. The probability that the United
States may restrict exports of oil will make Italy more amenable to the
kind of peaceful settlement the League and Ethiopia will accept.
Regraded Unclassified
66
Secretary Morgenthau - 4
(7) Will Mussolini maintain effective control of the
domestic political situation?
There lies the weakest link, notwithstanding the great wave of
popular support to Mussolini arising from hatred of England. So long as
Italian armies keep making at least moderate progress in Ethiopia, Mussolini's
position is secure. But should they suffer serious setbacks, or should
little more progress be made by the outbreak of the rainy season, discon-
tent, financial troubles, and political opposition will seriously jeopardize
Mussolini's position at home and pave the way for some coup d' etat at
Mussolini's expense.
The League's imposition of the import embargo against Italian goods,
though it has for the moment strengthened popular support of Mussolini, is
already creating unemployment, reduced incomes, rising cost of living, and
petty annoyances - a quartet which will undermine that support more and
more as the acute excitement of the event recedes.
To complicate Mussolini's dilemma is the spectre of growing unemploy-
ment should he demobilize any large part of the million men under arms at
home; or curtail greatly production of war material. Italy cannot easily
afford to continue throughout the year the expense of one and one-quarter
million men under arms, and the war preparations of the present intensity;
yet Mussolini can less afford the additional unemployment consequent upon
any considerable reduction of those expenses.
Can the Italian campaign survive another rainy season?
Not unless the major part of the objective is attained before the
dry season ends. There must be the feeling at home that the task is almost
completed, and only some minor consolidations and conquests remain. Other-
wise, it is unlikely that the Italian people will accept, without e. strong
attempt to alter Mussolini's plans, the lowered standard of living result-
ing from the League sanctions, and the expense of keeping a large army in
Africa.
Without 6. conclusive victory, and released from the emotional spree
of an active campaign, the people will weigh more objectively the cost
and benefits; and they are certain to feel much less enthusiastic about
renewing the campaign than they were of starting it.
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67
Secretary Morgenthau - 5
1.
Can Italy feed her populace with sanctions now in force?
Yes, but on a modified diet. Italians will have to add more fruit,
cheese, nuts and vegetables to their menus, and out down on meat and fish.
Italy normally (i.e., 1933-1934) imports about 1.5 billion lire of
foodstuffs, consisting chiefly of wheat, corn, oil seeds, meat, fish,
coffee, vegetable oils, and cheese.
Italy can out these food imports in half by:
(a) Increasing her output of grains and vegetables next
year.
(b) Replacing some of the imports with foods until now
exported to countries which have imposed embargoes on
imports from Italy.
(c) Restricting imports of foodstuffs to cheapest and most
essential foods, and outting down in the Italian diet
as much as possible for imported items.
(a) She cannot increase her output of grains much, 8.8 she has already
been trying to maximize output of wheat for several years. As a conse-
quence of a campaign for growing more wheat started ten years ago, with
the aid of subsidies and import restrictions the production has been
stepped up from 58 million quintals (average 1927-1928) to 72 million
(average 1933-1934). The harvest WBB very good in 1933 (81 million
quintals) and very poor in 1934 (63 million quintals), owing to blight
and rain. This year's crop is estimated at 76 million, which is almost
exactly Italy's estimated cereal consumption.
There is reported to be more than 6 months supply of food in
Africa for her troops there, and the warehouses in Italy contained on
September 1st. almost double the rice, and vegetables, about 10% more
cheese and dairy products, but about 15% less wheat than the preceding
year.
Favorable crop conditions noxt year can yield EL substantial sur-
plus for carry-over; but unfavorable crop conditions will necessitate
imports. Doubtless vegetable crops can be increased some 5 or 10 per cent
by stimulating more kitchen gardens, through appeals to patriotism and
through the incentive of rising food prices.
With reasonably good weather conditions, Italy ought to be able
to cut her food importe 10 to 15 per cent by becoming almost self-suf-
ficient in cereals and vegetables.
Regraded Unclas
68
Secretary Morgenthau - 6
(b) Italy exports slightly more foodstuffs than she imports, though
the bulk of her exports are not close substitutes for her imports. She
exports about 100 million lire of rice, 50 million of potatoes, 70 million
of wheat flour, about 200 million of fresh and preserved vegetables,
150 million of cheese, 50 million of prepared meats, 60 million of olive
oil, and 135 million of almonds. Altogether, she can probably consume at
home from 300 to 400 million lire of foodstuffs until now sent each year to
sanction countries.
The remaining half billion or so lire of foodstuffs going to
sanction countries would not add a. great deal to her domestic diet. It
consists of wines, citrus fruits, liquers, etc. A portion of it will
doubtless find its way at reduced prices to foreign markets.
(c) Fish, meat, and coffee imports alone account for one-third of
her imports. Since Italy normally produces four-fifths of the meat con-
sumed, it ought not be difficult to eliminate most of the meat imports.
Already two meatless days 8. week are in effect. More game and fish will
for a time be produced in response to the higher prices, and because all
private and government game and fish preserves have been ordered open to
the public. Probably another 200 to 300 million lire slice could be out
from her imports through that channel.
Altogether, it seems that Italy will be able to cut her food imports
in half without introducing any serious strain at home. There will be
annoyances, of course -- 0.6., meatless days, weaker coffee, more nuts and
fruit, less cereals, oils, and fish -- but not enough to constitute a
menace either to the spirit or health of the people.
If necessary, Italy probably could out out imports of foodstuffs al-
together without bringing about any marked malnutrition, but the authori-
ties will doubtless continue to permit some imports of food to avoid the
spread of discontent and grumbling that may arise as 8. consequence of
unpopular diet restrictions. Every additional strain on the temper and
the comfort of the people makes Mussolini's position less secure and,
therefore, to be avoided wherever possible. It will require nice calcu-
lating to know in what direction available foreign exchange and gold were
best spent - on material needed to prosecute the African war and in pre-
paration for a possible European war, or on imports necessary to keep the
populace from growing too restive under the strain.
The need to feed an army of 250,000 soldiers and workers in the
field, end almost 6. million under arms at home, makes Italy's problem
more difficult. Men under arms eat more, the food waste per person is
greater, and there are fewer men at home to tend the farms. The latter
obstacle will be largely removed by the time planting season arrives.
It is extremely unlikely that a million men will be kept at home under
Regraded Unclassifie
Secretary Morgenthau - 7
69
arms through the spring. Even should the European situation remain acute,
leaves of absence, particularly to workers on farms, will be granted
generously during the planting season. The fact that there are, according
to official records, some 600,000 unemployed, many of whom would be ab-
sorbed in agriculture if the need erose, indicates that there will be no
lack of labor available for food raising.
In any case, the food problem will not be a serious one for at least
a year, because Italy has (as we shall see) so much gold and exchange
available, independent of sums obtained by exports, that she can easily
use one billion, or even more, of it for good supplies if Italians grumble
too much at further tightening of their belts, or at the high cost of food.
2.
How much raw material must Italy purchase abroad?
Italy must import almost all her coal, oil, copper, cotton, nickel,
rubber, tin, tungsten; and most of her wool, lumber, and numerous chemicals.
In 1934 the value of her imports of raw wool, coal, r&w cotton, copper,
nickel, rubber, tin, iron and steel scrap, petroleum products, etc.,
amounted to 3.3 billion lire, of which probably one-fifth went into exports.
These items are indispensable both for normal manufacture and for produc-
tion of military equipment.
Will she need to buy more or less raw material in 1936 than she did
in 1934?
If, as estimated below, Italy is to export 2 to 3 billions of goods,
the imported raw material necessary for the production of manufactured
goods included in that sum may be as high as one-half to three-fourths
billion lire.
Then there are the materials necessary for the maintenance of domes-
tic equipment and industry to supply home needs. The sum necessary for
such purposes will be less than in normal years. Non-military uses of
imported raw materials will be curtailed. A tax has been imposed on
gasoline, for example, increasing its price to $1.00 per gallon and thereby
greatly restricting use of cars. Likewise, various measures have been
taken to reduce the consumption of coal, paper, heat and electricity, to
save fuel.
In addition to these reasons for reduced civil consumption of raw
materials, is the important one that the higher prices of imported goods,
caused by the recent depreciation of lire exchange and by the greater
Regraded Unclassifie
70
Secretary Morgenthau - 8
expense of obtaining imports -- increase in insurance rates, reduction in
credit facilities, and shifting of sources of supply -- will reduce the
demand even more than ordinarily because of the curtailed income of the
Italian people. They will have less to spend on imported items other than
essential foods and clothing, and the imported items will cost more. Also,
certain industries normally heavy users of metals - e.g., automobile manu-
factures, public utilities, and home construction - will be curtailed.
Finally, the government, through its complete control over imports, can
enforce reduction in the consumption of any commodity it feels the country
can for the present get along without.
liot only will the consumption for non-military purposes be reduced,
but the domestic supply will be increased. The government has taken steps
to increase the production of fuel, minerals, and the salvage of used
metals (Mussolini has spectacularly donated numerous busts to be melted
down, and the heroes of the world war voted to hand in their medals;
children are turning in their metals toys, and householders are selling
their silver plate to the government).
Non-military consumption of imported raw materials can thus without
difficulty be reduced to 2 billion lire during the next year. To that
sum must be added 2 billion for imported materials consumed in making
exports, bringing the total purchases of raw materials for non-military
purposes to 28 billions. Together with the to 1 billion to pay for
imported foodstuffs, a total of 3 to 3/2/2020 billion old gold lire is the
maximum amount needed to be spent for imports other than those imported
materials needed for war purposes.
That leaves 7 to 10 billions free (see next section) to be spent, if
necessary, for raw materials for the African campaign, and preparation for
& possible conflict in Europe.
Activity in Italian factories making all the varied paraphernalia
used by armies and navies, has been intense during the past year. An
enormous quantity of tanks, planes, army trucks, submarines, equipment,
ordinance, and ammunition have already been produced, and a large reserve
supply of raw material has, moreover, been built up. Mussolini knew at
least as early as August that his Ethiopian plans might create trouble
with England. Talk of sanotions was rife early in September. That gave
him three months to pile up reserve supplies, and it would be strange
indeed if he did not make the most of the opportunity.
Our own export data shows a marked increase in exports to Italy of
several important raw materials in the past month, and consular despatches
supply further evidence of large stores of needed materials being ao-
cumulated. Italy has the funds to pay cash for large quantities of
essential raw materials. She is fully cognisant of the danger that it
may be difficult for her to obtain them later, and numerous countries will
Regraded Unclassified
71
Secretary Morgenthau - 9
now sell her all the coal, iron, steel, copper, oil, and gasoline she can
pay for. Under those circumstances, it is safe to assume that she has
accumulated many months' supply at least.
The amount of raw materials needed by Italy during the next twelve
months for the conduct of the African campaign itself is not great. It
is a small colonial war, with no major offensives, and no prolonged or ex-
tensive engagements. Aerial bambs and small arms and ammunition are almost
exclusively resorted to, and even these are used on a scale incomparably
swaller than would be necessitated by similar operations in Europe.
Most of the equipment necessary to transport and equip the troops
during the next year has already been made available and the depreciation
and loss of this material will not be great, owing to the nature of the
campaign.
If the African campaign were the sole consideration, the raw mate-
rials needed, aside from oil and gasoline, would be small. The greatest
expenditure of material has already been made during the past year in the
preparation for this campaign. A very large supply is held in reserve,
both in Africa and Italy, and additional amounts needed would not be much
more than could be saved out of normal civilian consumption.
Will Italy have enough oil and gasoline?
The commodity which gives the most concern to Italy is oil. Without
oil she is, of course, impotent, and accumulations of quantities sufficient
to conduct a lengthy campaign, in addition to domestic uses, present dif-
ficulties. It is bulky, susceptible of easy destruction by an enemy, and
requires much preparation to provide storage space for very large amounts.
It is claimed that a minimum of three to four months under the most favor-
able conditions is required to construct a storage tank for gasoline.
Loreover, unless reat care is exercised in the type of storage of gas-
oline, there can be constant wastage through evaporation of as much as
10% a year.
It is impossible to know from the Italian figures available how large
B. supply of oil thoy have on hand. During the year 1934, the import
statistics record a total of 320 million lire of oil products, and in the
first nine months of 1935 the sums recorded total 285 million. Other data
purporting to be official records show for the first nine months of 1935
an increase in oil tonnage imports into Italy from five leading sources
of supply of 15% over comparable period of 1934. The figures do not in-
clude some of the oil sent directly to Africa, but even so, if the official
data are correct, Italy cannot be said to have accumulated a great deal in
terms of months' supply by October lst.
Unless Italy has oil enough to last her a period long enough in which
to achieve & minimum of satisfactory conquests in Ethiopia, she will not -
Regraded Unclassifie
72
Secretary Morgenthau - 10
she cannot - brook any offective stoppage of oil supplies. Through numer-
ous secret sources of information England will be certain to learn the
extent of Italy's oil supply, and Italy would be in a sad predicement if
England knew that Italy was being forced to seek & settlement because of
depleted oil reserves.
It is reported from a supposedly reliable source that Italy has al-
ready accumulated B. supply of oil and gasoline sufficient to satisfy her
motor truck needs in Ethiopia for at least a year. But Italy needs oil and
gasoline for her commercial fleet, her navy and submarines, air service,
and commercial and army trucks. Her large air corps must have constant
practice and pilots must be trained for the 1000 planes she is building;
her army has large motorized units which require occasional use; and she
had planned, in order to sustain the morale, to ship home all the troops
from Africa during the next year for replacement or a period of home
service. Even with B. minimum of naval movements and with non-military
uses ruthlessly out, Italy will consume large quantities of petroleum
products during the next year.
The strenuous objections Italy is raising against the imposition of
oil sanctions would seem to suggest that she hasn't enough oil stored to
last her until she expects a conclusive victory in Ethiopia. Apparently
our attitude toward increased oil exports to Italy came as B. complete sur-
prise to her and upset her calculations as to how much she needed to store
up. It may well be, therefore, that Italy will fight rather than suffer an
embargo on 011, so in the knowledge of that fact, England may prefer to
postpone action until Italy is given time enough to accumulate much more
oil, In fact, it is reported from confidential sources that Mussolini gave
the British Ambassador to understand that an embargo on oil would be re-
garded as & military sanction and Italy could not be responsible for the
consequences, It was stated that this position taken by Italy with regard
to oil was responsible for the French postponement of committee considera-
tion of an oil embargo until December 12th.
Every week counts, and it ought not take many months more before
enough oil is imported and stored to take care of Italy's home and African
needs for 8. year at least.
It is the European situation, however, that calls forth an unlimited
demend in Italy for nickel, copper, iron, rubber, coal, chemicals, and
oil. Italy is making every effort to increase her military and naval
power prepareiness, She is at present building about one thousand planes
(950 of them war planes), tanks, army trucks of all types, ships and sub-
marines, field pieces and heavy artillery, and is piling up stores of
ammunition, and building more oil refineries - all in preparation for a
possible conflict with a major power.
The significance of the difference in the items demanded for the
conduct of the African campaign, and for preparedness against 8 European
Unclas
73
Secretary Morgenthau - 11
war, lies in the important fact that she can out down, and even out out
completely, materials needed for the larger purpose, while she must have
materials for the African campaign. The irreducible minima are her
African needs, and these, except for oil, are small. So far, therefore,
as it is solely a question of maintaining en aggressive African campaign,
Italy can go on at least until the Ethiopian rainy season, employing any
surplus foreign assets to purchase materials she feels she must have to
still further increase her preparedness for EL European conflict.
It should be clear, therefore, that, aside from oil, her need for
TAW materials is not a factor which will bring about the abandonment of
Italy's African campaign, so long as the prosecution of that campaign does
not definitely promise to involve her in a war with Europe. It is oil and
the European political situation, not the sanctions directly, or the cost of
the Africen campaign, which is the limiting factor in the Italian plans for
the next year.
The attitude of the United States toward oil exports to Italy assumes
great importance in Italy's eyes, and doubtless accounts for their intense
disappointment and resentment at the position taken here with regard to
increased shipments. With other materials, it hardly matters whether the
United States cooperates with the League of Nations to the extent of pre-
venting any "undue" expansion of exports or not. So long as Italy has
gold and foreign exchange she will find some country willing to sell her
raw materials, though she will doubtless have to pay higher prices should
she be forced to employ unusual channels through which to obtain her ma-
terial. Germany cannot afford to sell Italy commodities she herself is
having difficulty obtaining because of her lack of foreign exchange. But
if Italy is to pay for those commodities in gold, or dollar balances,
Germany will, at a profit, be willing to sell her iron, coal, nitrates,
and some oil and copper, since Germany can in turn use gold and foreign
exchange for raw materials and foods that she herself lacks.
Termany's interest, moreover, lies in keeping Italy involved in
Africa, not in & settlemtn of the problem which would make it more diffi-
cult for her to pursue her own plans. She is making much hay, both in her
political relations and in her domestic affairs, under the present con-
fused political situation. Also, Germany is eager to see sanctions 8.6 a
reapon fail, because she fears it may be next turned against her. Conse-
quently, she will do all she can, without antagonizing England, to supply
Italy with needed materials until the international political situation
crystallizes into more definite alignments.
These considerations support the conclusion that Italy will not be
stopped in her African campaign by reason of a shortage of food or raw
materials, other than oil. If no European war breaks out, and if the
League does not impose oil sanctions at once, or makes no attempt to
blockade Italian ports, and, if, further, the non-sanction countries re-
main in that category, Italy can keep prosecuring her African campaign,
Regraded Unclassifie
74
Secretary Morgenthau - 12
so far 0.5 raw materials are concerned, easily until the next rainy season,
and probably for another dry season as well.
If, however, an effective embargo on oil is imposed before Italy can
import enough to furnish at least EL year's supply, the situation will
change radically. One of two things will then happen: Either a settle-
ment will be made after a few more months of advance into Ethiopian terri-
tory - or war in Europe. According to all commentators, Mussolini will
not submit to an ignominious defeat at the hands of English diplomacy.
Rather, If his colleagues are unable to stop him first, he will involve
Italy in B. real war. Should Italy find herself checkmated by dwindling
oil reserves, a peaceful settlement seens, with the present political align-
ments, to be the more likely way out for Italy, since the alternative path
would doubtless bring the downfall of Mussolini - and possibly of the
Fascist party domination.
3.
How much foreign exchange can Italy obtain?
Italy's foreign assets are:
(a) Gold and foreign exchange held by the Bank of Italy.
(b) Foreign securities, foreign bank balances, and other
foreign claims held by Italians.
(o) Foreign credits.
(d) Foreign exchange currently available from Italian
exports, tourist expenditures, emigrant remittances.
The reported holdings of the Bank of Italy on October 10th were
4 billion lire gold and .4 billion foreign exchange. Some of that has
unquestionably been disposed of because Italy's purchases have been very
heavy during October and November, and her foreign revenue from shipping
has declined, while payments to foreign shippers have increased. In
September her excess of imports recorded was 227 million lire; October
and November would probably show greater surpluses, and her import figures,
moreover, do not include shipments of goods and material purchased abroad
and sent directly to Africa.
On the other hand, her net revenue from tourist expenditures and
shipping was very small during those months. Her chief source of foreign
income is emigrant remittances. In 1932 these amounted to 900 million
lire. A generous estimate would be 200 million lire received during the
past two months from emigrant remittances. To offset in part that source
of foreign exchange, Italy has had to make payment in foreign exchange for
8. portion of the expense of transporting her army and equipment to Africa
Regraded Unclassified
75
Secretary Morgenthau - 13
and purchasing some of her supplies locally. The Bank of Italy statement
records & reduction of 500 million lire in gold and foreign assets from
September 10 to October 10. It is reasonable to expect a decline of at
least that much in the following month, when every effort was made to build
up B. reserve of material that may be impossible to get later.
Italy now probably has not more than 4 billion lire in gold and foreign
exchange reserves.
It is estimated that same two to three billion lire of gold can be ob-
tained from the people's jewelry and hoards, through patriotic appeal, and
offer of interest. The government has offered B. 25% premium in paper lire
for gold (thereby, incidentally, officially depreciating lire 20% from its
gold par, though by virtue of its complete exchange control the official
rate of exchange quoted may for a time be different), and 5% interest for
cold turned in. Further, it has promised that the same amount of gold (in
weight) will be returned to the lender at the end of a year. At the same
time, it has prohibited the sale of raw gold to anybody except the govern-
ment.
To these assets, totalling 6 to 7 billion lire, must be added the
Italian owned foreign investments which can be sold abroad by the Italian
Government, the owners receiving in exchange lire or domestic bonds. The
amount available from that source has not been published, but it is esti-
mated that the securities in the hands of the government have a marketable
value of from 2 to 3 billion gold lire.
Foreign credits can be ruled out. Italy cannot borrow in any of the
fifty countries which have imposed sanctions, and of the non-sanction
countries her chances of any considerable loan are very slim. In the
United States, the Johnson Act stands in the way of B. public loan, and in
any case there are few investors who would risk 8. loan to Italy now except
at preposterously high rates, Germany might extend Italy some credit, but
not to purchase food or raw material that Germany needs to supplement her-
self through imports. Whether Japan will sell goods to Italy on credit
depends on political realigments being secretly made in preparation for
the probable European and Asiatic war. Right now the prospects of Italy
and Japan joining forces seem distant, though doubtless Japan will secretly
do what she can, without jeopardizing the reputation she is trying to
build up in the East as champion of the brown, yellow, and black races,
to enable Italy to flout the League. Unfortunately for Italy, Japan re-
members Mussolini's strictures of E few years past on the great yellow
menace. Japan (i.e., the military clique who appear to be having so
much influence in Japanese foreign policy) might overlook Italy's slur on
the Japanese race and ignore her role of champion of black peoples, if
there could be arranged an Italian-Cerman-Polish-Roumanian-Japanese combi-
nation against Russia. But barring that possibility, Italy's capacity to
borrow abroad is too small to be E factor in her present dilemmn.
Regraded Unclassifie
76
Secretary Morgenthau - 14
Altogether, then, the Italian Government can now obtain some 8 to 10
billion gold lire with which to meet foreign claims. Almost all of that
sun is available for the purchase of imports, since the sume Italy must
pay in foreign currencies on Italian investments held abroad is negligible.
Normally Italy has a net payment in interest and dividends due residents
of foreign countries of about 500 million lire. She will not hesitate
long before making all of it payable in lire, as most of it is already.
To her foreign assets available now, must be added exchange that will
be placed at her disposal during the coming year.
In the next year Italy will be able to add to her foreign assete
mums due her from emigrant remittances and exports. The first of these
may reach B billion gold lire, as Italy is already making strong appeals
to the millions of her emigrants in North and South America for funds.
Recovery abroad and increased need in Italy, added to patriotic appeals
for support, may easily call forth 8. billion lire. Receipts from tourist
expenditures, normally a large item, will be greatly reduced because of
the trouble English speaking people are having in Italy, and because of
the generally disturbed conditions there. As for foreign income from her
shipping, that will completely disappear.
Her exports of merchandise will probably be between 2 and 3 billions.
In 1934, Italy's exports to the United States and Germany alone amounted to
1.2 billion lire. To this sum must be added her exports to Albania, Brazil,
Hungary, Japan, and Austria, which in 1934 equalled about 300 million. If
these countries buy no less from Italy than they did in 1934, the total
will be 1.6 billion. All of them, except the United States and Brazil,
have purchased considerably more in the first eight months of 1935 than in
n. comparable period of 1934.
It is not unlikely that Italian exports to these countries can be in-
creased by 10% next year, because of lower prices of Italian goods, lower
lire rates, and indirect demands (e.g., England will buy more lemons from
the United States, instead of Italy; and more Italian lemons will go to
the United States, etc.). The Italian Government will, without doubt,
resort to export subsidies and surreptitious exchange depreciation in her
effort to increase exports, just as Germany has. It is not improbable that
her exports to non-sanction countries will increase 15 to 20 per cent.
Another half billion lire can be added for Italian exports smuggled out to
those sanction countries which are luke-warm about enforcing the embargo on
imports. The conservative element in Spain is not in favor of sanctions;
there is a large group in France and Switzerland who will not cooperate,
and Yugoslavia (one-fifth of whose exports normally go to Italy) will find
it difficult to enforce sanctions without effective military policing of
the border; while numerous Central and South American countries are not at
all sympathetic with League measures.
Regraded Unclassified
77
Secretary Morgenthau - 15
It is not unlikely that, notwithstanding the continuance of sanotions
now in force, the value of Italian exports during the next year will be
from 2 to 3 billion lire. Together with the other sources of income in
foreign exchange, added to the amounts she could obtain now, Italy will
have during the next twelve months 8. fund of from 11 to 14 billion lire
with which to pay for necessary imports.
As we have seen, she will need to expend from 4 to 5 billions of that
sum on food and raw materials, since she must continue her African campaign,
prevent business activity from declining too sharply at home, and people
from growing discontented over food shortage. Italy will then be left with
6 tol0 billions that can be used to improve her war machine or kept as a
reserve. Once that sum is spent, Italy would be very vulnerable. Not
that she needs the gold as B. reserve for her monetary system, but she does
need the gold to pay for an adverse balance of trade so long as the sanc-
tions are in force. She will, therefore, spend her reserves sparingly
until she sees the end of the embargo against her exports, or until the
sanctions break down. But she will spend it freely for the purchase of
raw materials needed to further expand her war machine once Mussolini
decides war in Europe is inevitable and imminent.
The problem of B. shortage of foreign funds will not exist for Italy
during the coming year -- if no European wer is contemplated. If Mussolini
begins to spend that reserve freely, it would be fairly strong evidence
that he expects to fight soon thereafter outside of Africa.
4.
Can Italy finance the African campaign and her domestic expenses?
Yes. If skilfully handled, and if no major military defeats are
suffered, the Italian Government can continue its budgetary deficit for 8.
couple of years at least.
The present outstanding debt of the Italian Government is 110 bil-
lion lire. (Not counting some 30 billion lire which is the estimated
"present value of deferred payments of annuities" the State has promised
to pay.) An additional 10 billions is now being raised without increas-
ing the outstanding debt, by the simple device of converting some 60 bil-
lions of 3/2" per cent bonds into 5$ per cent bonds upon payment of 15 lire
per hundred. Inasmuch as half the bonds are held by quasi-public insti-
tutions and various forms of pressure can be brought against the remain-
ing holders, there is little doubt that the operation will prove success-
ful. The interest cost to the government of the additional 10 billion
obtained is exorbitant. It works out to 10%, but the government prefers
to pay that high rate than increase the debt. The important consideration
now, they feel, is to preserve confidence of the Italian people in the
soundness of government finance.
Regraded Unclassified
78
Secretary Morgenthau - 16
The official budget figures show et deficit in the fiscal year ending
1934 of 5 billion lire, and for the first six months of 1935 fiscal
year an increase of 2% billions. Figures for more recent months show the
deficit to be running about 1 billion a month until September. It Was
1.7 in September, and was doubtless greater in October and November because
of the larger number of men balled to colors. How much Italy will need de-
pends upon the European situation. The expense of the African campaign
alone from now on will probably necessitate less than EL billion lire a
month, but if Italy is going to continue to keep a million men under arms
at home, and continue to increase her military equipment as fast as she
has been doing, her deficit may reach 3 billions 8. month. She will soon
obtain about 9 billions through the refunding arrangement (she already
has received 4 billions), and so will probably have to borrow not more
than 2 billions a month during the winter and spring.
Issues of an unlimited amount of Treasury bills at 4% interest are
authorized for the ourrent fiscal year. So long as the war continues,
the government can borrow without much difficulty an additional 2 or 3
billion lire a month,
In fact, the deficit could be greater than that should a major war
break out. The danger of continued deficits during 8. war lies not in the
reduced confidence of the value of government bonds -- a government can
always pay interest in paper money -- but in B. complete loss of confidence
in the maintenance of the purchasing power of the currency. So long as
there is no near prospect of sharp inflation, the government can, through
several channels, obtain enough funds to carry on. Marked inflation --
only Its marked stages are effective in creating serious obstacles to
financing in wer time; a rise of 2 or 3 per cent a month in the cost of
living in time of war will not divert B. government from its program -- can
be prevented so long as domestic political stability seems reasonably
assured, and so long as there are no important defeats suffered in Europe.
Events in Africa will cause marked inflation in Italy only if it brings
about serious civil disturbance at home, or leads to a disastrous conflict
in Europe.
Inflation, should it come, will not be the cause of Italy's political
break-up -- It will be the consequence (and aggravating accompaniment) of
civil war, or the result of B. military defeat important enough to spell
doon for the government in power.
It is E. popular fallacy that Italy (or Germany) could not finance
8. war. Any government with modern banking system can finance a war, so
long as people will bear the reduced standard of living accompanying the
diversion of B. large part of the nation's productive forces to war needs.
It is not the increased interest payments on a growing national debt that
create the burden - it only seems to heighten the burden. What does
create the burden is utilizing men to carry arms and to parade instead of
producing shoes and food; it is the use of steel for guns rather than for
tractors, or machinery to make shoes, etc., etc., and this burden is just
Regraded Unclassified
79
Secretary Mergenthau - 17
5.5 onerous if financed wholly with increased taxes instead of with loans,
only by borrowing it seems as though a large part of the burden is being
postponed. It is true that the higher taxes necessary in order to meet
the interest payments usually fall more heavily on certain income groups
than on others, yet the inequality of burden is not sufficiently apparent
to the class that really bears the heavier load.
In any case, the burden caused by increased interest payments will
play no role in checking the Ethiopian campaign during the next year. It
may, indeed, become a factor should the campaign be prolonged en additional
year, but other forces are at work which will be more important in shaping
the course of events in the next year or two than the increase in Italy's
debt from 110 to 135 billion lire.
5.
Does Italy lack man power?
No; there is no problem at all with regard to the necessary soldiers
and laborers. She already has over 270,000 workers and soldiers (besides
Colonial troops) in Africa and a million men in arms at home. The mil-
lion men at home are needed only so long as the European situation re-
mains acute. If it becomes more so, then clearly the question shifts from
Africa to Europe. It will no longer be one of Italy's capacity to with-
stand 6. long strain; it will, instead, become B. question of alliances, and
of military and naval prowess.
The expense of maintaining that large army has been discussed above;
we are at this point concerned with the problem whether there is any con-
siderable attrition of her man power. There is none at home and so far
there is very little abroad. Most of the troops that Italy is using in
combat are Colonial troops officered by Italians. Her policy is to use
Colonial troops as much as possible and thus far she has been successful
in having the Colonial troops take the brunt of the battles. The casual-
ties to Italians consist chiefly of illness. Up to date, it is reported
that about 20,000 troops and workers have returned to Italy. Most of them
are returning because they are ill. There are many who have not returned
and who are being kept in hospitals or elsewhere outside of Italy, yet
casualties of that magnitude are not nearly enough to create B. scarcity of
men. Such importance 6.8 the losses do have lies in the attitude of the
people at home toward the campaign and Mussolini.
From all reports, the morale of the Italian troops in Africa remains
good. It will take an extended and inconclusive campaign, or some serious
set-back, to break down that morale. Should Italy continue to make progress
in Abyesinian territory, there is no danger that trouble will arise from
Regraded Unclassified
80
Secretary Morgenthau - 18
that quarter. However, some reports suggest that the native troops are
becoming disturbed at the realization that they are being used as the
spearhead to take the brunt of the casualties, while the Italian troops
to the less dangerous work - excepting, of course, the air and tank ser-
vice, and officers. Once that feeling becomes widespread the Italians
will find it necessary to rely more and more on their own troops.
The fighting in the near future, then, may yield many more casualties
amongst the Italians for two reasons: more Italian regiments will have to
be used in the advance contingents to allay growing resentment among the
Colonial troops; and it has become necessary to prosecute the campaign more
aggressively. Already it is reported that different methods of offensive
are being planned which will involve more liberal use of Italian troops.
Mussolini is reported to be pressing for a more aggressive advance. He
fully realizes the danger of a long drawn indecisive campaign. If Great
Britain had not taken so definite 8. stand against Italy's invasion, the
campaign could have proceeded as Mussolini originally intended - consoli-
dating slowly but safely, and building up his communications, service of
supply, and native political allegiance as he went more deeply into
Ethiopia. It is reported that Mussolini expected to take three years to
complete the task. Such tactics are now out of the question. It must be
a short and spectacular campaign. Enough territory must be won and at
least one large defeat administered to enemy forces before the rainy season
sets in again. In fact, he cannot now even wait that long. Great Britain
and the League are pressing Mussolini too closely. He must penetrate
further into Ethiopia, and then pave the way for some bargain to be struck
with Ethiopia and the League before either he loses control at home, or is
driven in desperation to fight the British and perhaps French and Russian
fleets and air forces.
A more rapid advance, using more Italian troops, means greater
casualties, yet it will not be the extent of the casualties from battle
that will bring an end to the campaign - they can hardly be heavy enough
for that. It will be the effect defeats and heavy casualties will have
on the morale and political support of the people at home.
No matter how carefully the news is consored, information of any
series of defeats, or heavy casualties, or widespread disease among
Italian (not native) troops will quickly seep home and will, moreover,
be exaggerated in the transmission.
Without marked success in Ethiopia, with the standard of living
declining at home, and with most of the world hostile, Mussolini's posi-
tion can survive only with difficulty, or only while the European situm-
tion remains at its dramatically acute stage.
The real crux of the matter -- aside from the important problem of
oil -- is the domestic-polibical one. The crucial question is not how
long can Italy last, but how long can Mussolini last? His downfall
would, it is generally held, bring sbout A radical change in the situation.
Regraded Unclassified
81
Secretary Morgenthau - 19
So long as he is in the saddle, Italy will not withdraw from the African
compaign until he has secured military control over a large slice of Ethiopia,
or until he is granted such control by the League of Nations. Even con-
servative quarters affirm that he stands or falls by his success in the
African venture. By success is meant enough of Ethiopia to make it possible
for Mussolini to convince the Italian people the campaign was worth the
undertaking,
Can Hussolini last?
All reports indicate that at the moment the bulk of the Itelian people
are solidly behind Mussolini. They were less so before the application of
sanctions, but, as is so often the case, hate for a common enemy has
solidified the people far more than loyalty to any program. Hatred of
England and Englishmen dominates Italy now. All reports stress that fact.
If there were any doubts that Mussolini had popular support, such doubts
have been completely dissipated by events of the past month. The Italian
people are now not only more adament in their desire to push the African
campaign, but they are completely reconciled to accepting without complaint
the sacrifices that they will be called upon to make with the sanctions in
force.
How much of B. sacrifice are they being called upon to make? And how
long will they be induced or forced to make it?
(a) Their standard of living is being lowered.
(b) Their freedam of action is being still further curtailed.
(c) Casualties among near relatives are being experienced.
(m) Their standard of living is being reduced from three sources:
(1') There are a million and a quarter men under arms who are pro-
duoing very little that adds to the real income of the people. Likewise
the people working in factories turning out war material, and workers
engaged in transporting soldiers and materials are not adding to the na-
tional real income. These may all be necessary expenditures from the
national point of view, but they reduce the volume of goods Italians enjoy.
(2') Taxes and the interest payments on the public debt are increas-
ing. The burden of taxation is bound to fall on some groups more heavily
than on others. Though the greater interest payment does not deprive the
nation of goods or services (whatever is produced is utilized), certain
classes suffer and all groups think the burden is increased by heavier
public debt. The psychological reaction is in this case more important
than the physical one. It is what the people think they are suffering that
constitutes a threat to Mussolini and his imperialistic program, not what
an economist can show by statistics how much they are being deprived of.
82
Secretary Morgenthau - 20
(31) The imposition of sanotions strikes at the standard of living
from two directions: it makes imported goods more expensive, both because
of the depreciation of the lire, and the shift to more expensive sources
of supply -- it makes necessary the production of goods or substitutes at
home that could more cheaply be purchased abroad; and it creates idle
equipment and unemployment in export and auxiliary industries. Even some
domestic industries suffer because of the restriction on use of raw materials.
For example, the automobile manufacturers have been hard hit by the very
high tax imposed on gasoline. Then, too, persons engaged in the production
of citrus fruits, wines, etc., will be faced with curtailed incomes, and
will be able to purchase less.
Those reductions in the standard of living are felt through increased
taxes that are spent on the army and war needs; and rising prices ac-
companied by incomes (chiefly wages) not rising as much B.S prices. Whole-
sale prices have been rising steadily throughout this year. According to
their own published data, the wholesale price index increased 26% from
January to October! Salaries paid out (not wage rates - we cannot get
satisfactory wage rate figures), which do not allow for increased employment
in preparation of the African campaign, increased only 6% by September.
Cost of living figures show a small increase by August, but these always
lag, and are, moreover, to be accepted with much skepticism. Mussolini has
ordered B cessation of published statistics in October, except for abbre-
viated and selected data. Official statistics that have any important
bearing on the Italian situation must, therefore, be treated in the same
sategory as war news in official communiqués,
Higher taxes, higher cost of living, same or smaller money incomes,
curtailment of some luxuries, annoying consumution restrictions, and,
particularly for peasants, harder work to make up for those called to
service in the army, all together spell a marked reduction in the standard
of living.
The further curtailment of personal freedom characteristic of war
times, and the casualties experienced among family, relatives and friends,
are the aggravating circumstances added to the lowered standard of living
which, under propitious circumstances, can easily change popular support
to widespread rebellion.
The extent to which any people can suffer a reduction in the stand-
ard of living and other annoyances without rebellion is directly propor-
tional to the extent to which they morally support the party in power.
The physical limits of a low standard of living of a whole people is very
low indeed, much lower even than the present Italian standard. It is
not, however, the physical limit which is significant - it is the political
limit, and the political (or psychological) limit among peoples not yet
broken in spirit, nor yet confronted with chaos, is much higher than the
physical limit. Such a people will rebel long before the limit of physical
endurance 10 reached -- providing the enemy is not banging at their gates,
Regraded Unclassified
83
Secretary Morgenthau - 21
At what point will large groups of Italian people cease to acquiesce
in the sacrifices demanded of them?
The Italian people had been experiencing a drop in their standard of
living before the Ethiopian campaign opened. It is believed in many
quarters conversant with Italian conditions that the increasing economio
troubles were no small factor in Mussolini's determination to embark on
t. Colonial war. War or a strong threst of war always has served to rally
people around the man or group in power - for a time at least.
The recent months have, however, brought additional burdens: effect
of sanctions, increase in the number of men under arms, and casualties.
These additional burdens are not great enough yet, nor are they likely
to be great enough to bring about the ousting of Missolini, so long as
Italian forces are successful in Africa, or so long as the Italy-League
of Nations dispute remains very acute.
But should the African campaign show distinct signs of slowing down
to n. long drawn out struggle, and should the League show so united a front
as to convince Italian people that an attack on the British fleet would be
extremely foolhardy, the additional burdens will loom very large. The dis-
content engendered by casualties, by the annoyances, by increased taxes,
increasing government debt, heightened cost of living, will then grow
apace and the spirit of submission to Mussolini will begin to crack.
There are three possibilities fraught with grave danger to Mussolini:
1. He may break under the terrific strain he is undergoing. It
is generally agreed that he has aged considerably during the
past six months. It is persistently rumored that he has been
and is 111.
2. A severe defeat in Ethiopia. At the present moment such E.
defeat seems very unlikely and would probably not cause
Mussolini's downfall because the European situation has the
Italian people keyed up, but should the senction problem quiet
down, the defeat will give rise to discontent, questioning,
and increasing complaint.
3. The growing realization among the Italian people that Mussolini's
recent tactics are carrying them rapidly toward destruction.
The League opposition, the loss of French support, the indica-
tions that the United States is not in sympathy with Italy's
venture, and the recognition that Ethiopia is not being con-
quered with as much ease as was popularly anticipated, are
together giving much food for disturbing thoughts among the
people. Already there 16 grave concern for the future in
those areas and industries that depend largely on foreign
markets for disposal of their products.
A coup d' etat engineered by the King with the support of Anti-
ascista would probably provide the means of Mussolini's egrees. There
Regraded Unclassifie
84
Secretary Morgenthau - 22
Ls no love lost between the reigning house and Mussolini, and if the King
could be convinced that he could successfully get rid of Mussolini, he
would not hesitate to do SO. The Anti-Fascists include some very influential
and wealthy persons, and though they could get few to support them in an
attack on Mussolini now, they would find hundreds of thousands who would
rally to their support at the first obvious sign of & weakening of
Missolini's position.
The turn of events has placed Mussolini in a tight place. llow that
France has stated definitely she will back England should her fleet be
attacked, he will probably strive for some spectacular victory in Ethiopia,
and then make the best compromise he can. There is always the possibility,
albeit e very slim one, that he will be able to make an alliance with
Cermany and Japan and thereby radioally alter the complexion of the situa-
tion.
The Ethiopian campaign is not proceeding 8.5 well as had been hoped by
the leaders and expected by the public. Almost all neutral authorities
predicted Italy would have a hard nut to crack in Ethiopia if the latter
adopted waiting and retreating tactics. Italy is reaching the more dif-
ficult terrain; her tanks have not proved very effective; and her air
force, though extremely valuable, has not been able to wreak much destruc-
tion; Colonial troops are becoming less eager to bear the brunt of attack;
and all the time Ethiopian forces are becoming more skilled in meeting the
kind of campaign Italy is pursuing, and are acquiring more erms.
On the other hand, the Ethiopions are having their troubles, 8.8 well.
They cannot maneuver any important surprise attack because of the care
with which Italian planes trace their movements; they have no service of
supply worthy of the name, and cannot remain away from their home base
of food long. Selassie, no more than Mussolini, can stand e. severe
military defeat. He is by no means a well intrenched monarch, as was
King Menelik, leading a carefully assembled force to battle. His is not
B. well knit force, nor is his power over the numerous chieftains absolute.
The Ethiopian army is essentially a very loose collection of tribes, whose
allegiance in most instances is to their chiefs, many of whom do not re-
gard King Selassie as a. real leader a.c their fathers did King Menelik;
and many of whom will, once they are convinced their chances of victory
over the Italians appear small, not prove unsusceptible to the kind of
bribery the Italians can and are offering Ethiopian chieftains.
After the first big defeat, large roups will fall away from Selassie,
and the morale of the remainder will be badly shaken. It will then be
easy for Missolini to obtain satisfactory enough terms to permit him to
terminate the African Jampaign. But should the victory be Ethiopia's,
the role will be reversed - Selassie's power will be greatly enhanced
among his chieftains; the Ethiopian forces will be puffed with confidence
Regraded Unclassified
85
Secretary Morgenthau - 23
that B. repetition of 1876 is in store for them. And Mussolini's stock
will drop sharply at home, and more sharply on the European market.
Hence the reason why Italians up to now have proceeded cautiously
using steam-roller tactics -- at an average rate of little more than
e,
mile a day; and hence the reason why the Ethiopians have avoided any
more dangerous than skirmishes and guerilla attacks.
Our attitude with regard to oil exports to Italy has played in re
cent weeks end is playing no small role in the whole drama. If Italy
could get all the raw material she could pay for, she could imore Lengue
senctions, and afford to pursue B. less dangerously aggressive campaign
in Ethiopia. The morale of her people would be less vulnerable, and
France might have been less willing to support Great Britain.
The League, without effective economic sanctions, would be faced
CONFIDENTIAL
an obdurate Mussolini, slowly but surely conquering Ethiopian territory
and being able to carry on indefinitely in the face of only partially
effective sanctions. The leaders of the present government in Great
Britain, whose real desire is not so much to strengthen the League,- OF
to
administer a disruptive defeat to Italy which might subsequently replace
Fasciam with something worse - as it is to get rid of Mussolini, may
their hands foroed by the British popular demand that the League sanctions
be made effective. Great Britain, through the League, may in that case
have to resort to military sanctions - 1.0., blockade of the Suez Canal and
Straits of Gibraltar. (France's support could be won over to such a pro-
ram by giving her what she has been long wanting: assurance of aid in
case of a German attack.
That would mean war. Mussolini has already committed himself to
retaliate to military sanctions or blockade with resort to arms. Placed
in n. position of fighting a much superior force, Mussolini may offer
Germany everything the latter wants (i.e., Austria, alliance against
Russia, etc.) and anything may then happen. Moreover, the Italian people
will be much less apt to desert Mussolini in face of a blockade, which
will truly "get their blood up" to a completely irrational national state
of mind, than would be the case were they confronted with the slow and
unspectacular, but seemingly unending pressure of an effective stoppage
of necessary raw materials.
History may prove our attitude in the matter of selling oil, cotton,
copper, coal, and iron to Italy during the next few months to be of crucial
significance.
The fear that we may take the step of restricting exports of those
items to Italy 1a no small factor in Mussolini's eagerness to seek e. face-
saving peaceful way out of his present dilemma.
CONFIDENTIAL
PLEASE DESTROY
86
December 6, 1935.
Friday
H.M.Jr:
Hello
Senator
Bulkley:
Yes, hello, Mr. Secretary.
H.M.Jr:
This is Morgenthau.
B:
Yes, why in the devil do you get in such a rush
before I have time to talk to you a minute?
H.M.Jr:
Well, - before - I just want to tell you - gosh,
you certainly knocked me below this morning. I
never felt the way I have after getting your tele-
gram. I - I was - I sent him the letter Tuesday
by r egistered mail -
B:
Yes
H.M.Jr:
And I simply called him up and gave him -
B:
Well, he has been sick. He's been spending a couple
of days in bed and I've been out of town and I just
haven't had a chance to even speak to him about it -
H.M.Jr:
Well -
B:
I'm sorry about it and
H.M.Jr:
Well, of course I didn't -
B:
H.M.Jr:
I had no way of knowing -
B:
He told me that he had it and he was a little dis-
turbed about the letter and I told him, 'Well now,
you think it over, that letter is all right'.
H.M.Jr:
Yes
B:
And the agreement was that I was to talk to him about
it as soon as I could. As a matter of fact I am
seeing him this morning.
H.M.Jr:
Yes. Well -
B:
I - I just got upset by your putting that pressure
on b ecause I thought you were going to rely on me to
Regraded Unclassified
87
- 2 -
try to work it out, it only makes it harder to do.
H.M.Jr:
Well, I didn't - I just felt that the man by Monday
ought to let me know one way or the other what he
was going to do.
B:
Well, I think that very likely may be worked out. I
haven't seen him yet at all since he got the letter.
H.M.Jr:
Yes
B:
And I have been trying to, but I had to be in
Columbus -
H.M.Jr:
But - but you realize that - you most likely sent
that telegram when you were mad.
B:
Yes, I was mad - sure
H.M.Jr:
And you know that -
B:
I - I confess that.
H.M.Jr:
- that the idea that you suggest there, that I don't
operate like that -
B:
All right - let's try to work it out.
H.M.Jr:
O.K.
B:
All right.
H.M.Jr:
Now, look, will you do this for me? - and it'll save
me - I've got to go a way Monday and Tuesday.
B:
Yes
H.M.Jr:
So I won't be back here until Wednesday
B:
Yes
H.M.Jr:
So if he is coming down, tell him not to come until
Wednesday.
B:
O.K.
H.M.Jr:
But I hope he won't come.
Regraded
Unclassifie
- 3 -
B:
Well, I - - I'm sure going to try to work it out.
H.M.Jr:
O.K.
B:
H.M.Jr:
All right.
B:
All right, thank you.
88
UNITED STATES SENATE
0
P
Cleveland
December 6, 1935.
Hon. Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D.C.
Dear Mr. Secretary:-
I have today had B long talk with Collector Moore. I must
repeat that I am particularly sorry that you could not see your
way to conclude the matter on the basis of Moore's last letter
as I think you could, with propriety and dignity, entirely over-
look the question of whether the phrasing of his letter implied
any question of forcing action upon you, because the action sug-
gested was nothing but embodying in a general regulation your
own pronounced and justifiable views, and I am sure that you
intend to promulgate such a clarifying regulation in any event.
Your latest letter, which insists upon postponing the ques-
tion of a general order and making it entirely independent of
the case in hand, unfortunately reopens the question of the
profits of the transaction being turned into the Treasury.
Though I would not care to stress the question of where the
profits should be turned in, I am sure that both Moore and his
legal advisor are sincere in the view that they tenaciously hold
that to turn the profits into the Treasury in the absence of a
general regulation is not compatible with Moore's insistence on
his innocence, and that it somehow implies a confession of guilt.
However, after some difficulty I have secured the consent of
all concerned to the following set-up: Without further insistence
upon a general r egulation, Moore will divest himself of all profits
by returning them to the Company, and the Company will accept them
only with the condition that they be turned over to public charity
as fast as received.
In view of the fact that I still think it is unfair and 9p-
pressive to demand an accounting of profits realized before any
official objection was made to the relationship in question, and
in view of the further fact that no good reason has as yet been
advanced why you could not have covered the situation by a general
regulation, which I honestly think you ought to have made promptly
last August, it 1s apparent that I have continued to try to help
you in sustaining your view point as to matters that do not commend
themselves to my own view of the fitness of things. I therefore feel
88 A
December 6, 1935.
Hon. Henry Morgenthau
2
well justified in asking you to yield enough of your position to
approve the principle of the final adjustment on the terms above
outlined. I am so tired of the whole matter that I do not want
to be forced to argue the necessity for the slight variance
between the terms of your request and the above settlement, which
will close the whole matter.
While I regret that you felt it necessary to write your last
letter at all, I am glad to note that the tone of it was courteous
and considerate, and I can assure you that if you will give me
your approval of the settlement herein suggested the letters from
Moore and the Company, which would be necessary to consummate it,
will be worded in a friendly and respectful manner.
Your telephone call this morning smoothed out the feeling of
anger which I had yesterday, but in all frankness the severe pres-
sure for action before opportunity to think the matter over did
make it more difficult for me to maintain that you are pursuing
the problem wholly without reference to any personal feeling.
Sincerely yours,
/s/ Robert J. Bulkley
Regrade Unclassified
88B
December 6, 1935.
Friday
H.M.Jr:
Hello
Senator
Bulkley:
Yes, hello, Mr. Secretary.
H.M.Jr:
This is Morgenthau.
B:
Yes, why in the devil do you get in such a rush
before I have time to talk to you a minute?
H.M.Jr:
Well, - before - I just want to tell you - gosh,
you certainly knocked me below this morning. I
never felt the way I have after getting your tele-
grame I - I was - I sent him the letter Tuesday
by registered mail -
B:
Yes
H.M.Jr:
And I simply called him up and gave him -
B:
Well, he has been sick. He's been spending a couple
of days in bed and I've been out of town and I just
haven't had a chance to even speak to him about it -
H.M.Jr:
Well -
B:
I'm sorry about it and
H.M.Jr:
Well, of course I didn't -
B:
H.M.Jr:
I had no way of knowing -
B:
He told me that he had it and he was a little dis-
turbed about the letter and I told him, 'Well now,
you think it over, that letter is all right'.
H.M.Jr:
Yes
B:
And the agreement was that I was to talk to him about
it as soon as I could. As a matter offact I am
seeing him this morning.
H.M.Jr:
Yes. Well -
B:
I - I just got upset by your putting that pressure
on because I thought you were going to rely on me to
88L
- 2 -
try to work it out, it only makes it harder to do.
H.M.Jr:
Well, I didn't - I just felt that the man by
Monday ought to let me know one way or the other
what he was going to do.
B:
Well, I think that very likely may be worked out.
I haven't seen him yet at all since he got the letter.
H.M.Jr:
Yes
B:
And I have been trying to, but I had to be in
Columbus -
H.M.Jr:
But - but you realize that - you most likely sent
that telegram when you were mad.
B:
Yes, I was mad - sure
H.M.Jr:
And you know that -
B:
I - I confess that.
H.M.Jr:
- that the idea that you suggest there, that I don't
operate like that -
B:
All right - let's try to work it out.
H.M.Jr.
O.K.
B:
All right.
H.M.Jr:
Now, look, will you do this for me? - and it'll save
me - I've got to go away Monday and Tuesday.
B:
Yes
H.M.Jr:
So I won't be back here until Wednesday
B:
Yes
H.M.Jr:
So if he is coming down, tell him not to come until
Wednesday.
B:
O.K.
H.M.Jr:
But I hope he won't come.
B:
Well, I - - I'm sure going to try to work it out.
H.M.Jr:
O.K.
- 3 -
B:
H.M.Jr:
All right.
B:
All right, thank you.
Regraded Unclassified
89
Sunday
December 8th
During the past week our silver purchasing policy
has seemed to me more and more stupid. It is now clear that
exclusive of the newly mined silver we are simply siphoning the
silver out of China through two channels - one, Japan and the
other England. Going back three or four years I find that the
normal exports of silver from Japan are between six and nine
million ounces per year. For the first nine months of 1935 they
exported sixty million ounces. This silver can only be gotten
into Japan by smuggling it out of China and somebody is making
the difference between 40/, approximately what you can buy silver
for in China, and 65 the world price.
In England's case they sent Bewley around to see me
to try and sell me the Hong Kong government silver reserve which
amounts to some hundred million ounces. I refused to buy it.
Evidently their program was to sell me their silver reserve and
then have Hong Kong go off silver. My being unwilling to buy,
except through the London and New York markets, they went ahead
with their program anyway. Attached is the announcement of their
nationalization of silver in Hong Kong.
All week Lochhead has been telling me that he has felt
that there has been an extra amount of silver pushed on the London
market and his hunch was that it must be the Hong Kong monetary
reserve silver. Saturday we got Cable No. 617, copy of which is
attached herewith, which confirms Lochhead's hunch.
For us to continue to take all of the Japanese silver
that they smuggle out of China plus the Hong Kong silver at a fixed
price when we can unquestionably get it for much less than 65$ so
goes against my better judgment that I decided it was time to act
and consult the President because at the rate we are going we will
buy up all the floating silver in the world, drive all the silver
using countries off silver and for the use of paper money - and
then what have we. The best joke is that to-day, as far as I know
with one possible exception, Ethiopia is the only country on the
silver standard. It is 3. joke that we should continue our silver
purchasing program to maintain the silver standard of Ethiopia.
Furthermore, if we could make a change on Monday it might be a nice
dish to set down before the opening of the Naval Conference at
London where Japan and England, I believe, will gang together against
us and through our silver purchasing program we are giving Japan
the necessary money with which to stabilize her currency and build
up her fleet.
Regraded
w I 1
90
I telephoned the President a little after five o'clock
Saturday afternoon and told him what I had in mind and that I wanted
to drop the price of silver and told him the reasons why. To my
surprise, he readily acquiesed and made the following suggestion.
He said, "why don't you send over word to London that you are ready
to buy two million ounces and that they should quote you a price
and after you have received the price you will let them know whether
or not you will accept the offer". I told him that the price of
silver might drop 10$ and he said, "that is all right". I then
asked, "what should I do Tuesday - go back to the 65$ price?" and
he said, "no only pay them on Tuesday what you were able to buy it
for on Monday". I said, "what about the price in New York - shall
we keep it where it is?" and he said, "no drop the New York price
so it will have the same relation to the London price that it has
now". He said, "let's see what happens and we can decide after this
experiment on Monday what we can do Tuesday". I asked where I could
reach him on Monday and he said, "you can phone me at the LaSalle
Street station Chicago just before my train pulls out".
I was dumbfounded that he jumped at the 1dea SO quickly
because heretofore he definitely wanted to keep up the price of
silver. Perhaps he is getting a little tired of it too. I also
think that the idea of doing it on the day of the Naval Conference
opening in London appealed to him. He is in a grand humor and said,
"I had not had an opportunity of congratulating you on the success
of your last issue," and Iadmitted that it had gone well.
I sent for Lochhead who came to the house at 7 o'clock
Saturday night and we discussed what we would do on Monday. He
was not at all sure what the London market would do as as result of
our new plan but he thought it was worthwhile trying. He felt that
the British in Cable No. 617 were"very fresh" - their attitude
being well we will sell you the silver whether you like it or not.
Archie felt that we ought to watch the Bombay market as well. I
agreed.
He explained to me that he permitted the spread between
New York and London to go from 1/20 to 7/8s of a cent; that no one
was able to arbitrage between New York and London as we only bought
spot silver. I suggested that beginning Monday we increase the
spread to 4 full cent which means that we will pay one cent in New
York above the London price.
I then called up Chief Moran and told him to arrange
for a telephone in the President's private car at the Chicago
station.
This morning I called George Haas and told him to get
ready Monday morning all of our silver statistics so that I could
have them 1f necessary. I then called up Oliphant and told him
what we were going to do and, to my surprise, he heartily approved.
91
- 3 -
He asked me if I was going to inform Key Pittman in advance and
I said, no because this was a matter of stabilization - that after
we acted, if the silver Senators wanted to know what we were doing
I would ask Key Pittman to call a meeting of his silver committee
to meet with me.
I called up Coolidge and told him all about my idea.
COPY
92
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, London, England
Date: December 6, 1935, 2 p.m.
No: 617
FOR TREASURY FROM BUTTERWORTH.
Re instruction No. 399 of December 3, 5 p.m.; the
information was conveyed to the British Treasury, which
stated that the Hong Kong authorities had now taken over
the stocks of silver. The British Treasury indicated that
since the United States Secretary of Treasury had told
Bewley that the markets of London and New York were open,
it would proceed with the operations it had planned.
The British Treasury intimated that it could only assume
that the Secretary of the Treasury did not desire the inquiry
to be pursued further - reference, telegram No. 590 of
November 25, 8 p.m. They requested, however, that "1t be
tactfully conveyed that if at any time during the course
of the projected operations the Secretary of the Treasury
felt it desirable to make any suggestions the British authorities
would not be unreceptive." END MESSAGE.
BINGHAM.
EA:LWW
Regraded Unclassified
93
JR
PLAIN
HongdKong via N.R.
Dated December 6, 1935
Rec'd. 8:30 a.m., 7th.
Secretary of State,
Washington.
December 6, noon.
With further reference to my telegram of November 12,
4 p.m., the Hong Kong Government yesterday, December five,
passed bill for establishment of exchange fund with power
to buy or sell foreign exchange at rates fixed by Colonial
Treasury. Fund will take over silver now held against note
issues of three banks of issue in exchange for certificates
of indebtedness of Hong Kong Government. Funds will also
take over in exchange for Hong Kong currency all British
dollars, Mexican dollars and Hong Kong subsidiary silver
coin and silver bullion in Colony whether in private hands
or otherwise, chopped silver coins being treated as bullion.
Silver so nationalized may not be exported by present :::
holders. For time being exchange fund will be held in form
of foreign exchange or gold or silver. All banknotes
now bocome legal tender.
HOOVER
HPD
Regraded Unclassified
94
COPY CABLE FROM HONGKONG, CHINA:
dated 12/5/35
"Government passed ordinance establishing Exchange Fund and amendment
of law regarding legal tender. Object is Government control of exchange
All existing banknotes legal tender. All silver coins and buklion
in excess of 10HK $ must be surrendered to Government within a month
against Treasury Certificates. No exchange rate fixed. .
COPY CABLE FROM HONGKONG, CHINA:
dated 12/5/35
"Government will pay face value of coins and Hongkong $1.28 per
ounce fine on refined silver embargoes still in force."
WITH THE COMPLIMENTS OF
S. STERN
VICE PRESIDENT OF
THE CHASE NATIONAL BANK
OF THE CITY OF NEW YORK
95
December 10, 1935
Early this morning preliminary estimates of the amount of silver to
be offered on the London market today indicated that at least 5,000,000
ounces of spot silver were for sale and about 18,000,000 ounces of forward
silver. At the same time a Cable was received from the London bullion
dealers stating that they were unable to meet our suggestion which would
require them to make firm offers of silver at fixed prices. The Secretary
was notified of these developments at 8:30 AM and at his request a summary
of these developments was written and delivered to the President upon his
arrival in Washington at 10:30 AM. In the meantime the fixing in London
was delayed awaiting our decision. At 11 AM the Secretary telephoned to
Messrs. Coolidge, Oliphant, Haas and Lochhead and stated that after dis-
cussing this question with the President it was decided that a bid for
2,000,000 ounces of silver be made in the London market today at a limit
of 63# or lower if the price of silver in London was fixed under our
limit. This bid was immediately transmitted to London. The London brokers,
after a conference, informed us that they were considering fixing the price
at the equivalent of 63# in order to take advantage of our bid but that
this would not be a real fixing as the remaining 3,000,000 ounces which
were for sale would not be executed. As this procedure was clearly contrary
to their established procedure and would only be a means of taking advantage
of our bid without a true fixing, we notified them that if they established
a fix it would have to be a bone fide transaction. They then informed us
that if we did not agree to their suggestion or declined to buy all the
silver offered at the fixing that it would precipitate e crisis in London.
-2-
96
However, without hearing from us further they advised that they were going
to fix an entirely nominal price at the equivalent of 63# without any
transactions taking place. They later decided to omit the fixing in London
entirely for today and as a result no transactions took place in that
market. After this news had been received the Secretary gave instructions
to fix a price of 64# for our purchases of silver in the New York market.
afther
97
December 9, 1935.
Monday
Archie
Lochhead:
The Federal Reserve and the Chase, New York are
trying to figure out their message.
H.M.Jr.:
Well, read the telegram to me again.
A.L.:
Right.
'At your client's request we have always
kept them fully informed of amount of our selling -
H.M.Jr.:
Yes
A.L.:
and waited for their order and not fixed under their
buying price.'
H.M.Jr.:
Yes - under their buying?
A.L.:
They're not - they've been - in other words, they
always used to tell us how much they had to sell and
waited for our price before they fixed it. In other
words they never let the market break, they meant.
H.M.Jr.:
Well, if they told - I don't know who they told it
to. They never told it to me.
A.L.:
Well, every morning, you see, we found out how much
silver was in the market.
H.M.Jr.:
Oh -
A.L.:
You see, they tele - cable over early morning how
much silver there's in the market.
H.M.Jr.:
Have they done that?
A.L.:
Oh, they've always - they've done that for the last
six months or a year.
H.M.Jr.:
- I see.
A.L.:
And they generally say there's about a million or a
million and a quarter probably going to be sold today.
H.M.Jr.:
I see.
A.L.:
They are more or less rough figures, that's all.
- It says, 'Request them to inform us today of their
requirements so that we can cooperate. Four million
five hundred thousand ounces forfiet had unchanged -
Regraded Unclassified
98
-2-
- unchanged at twenty nine and three sixteenths - -
Fixing held up meantime.' Now, in figuring this out
we've come to the conclusion that what they - what
they indicate here 1s that they - they've had no
advance notice and they have - their clients are
used to having the fixing done in the regular way and
there's no way probably they could reach them today.
H.M.Jr.:
No
A.L.:
And we figured that what they want 1s- some kind of
an order today which might be accompanied by a notice
to them that we're not - that starting tomorrow we're
not going to make any bids but probably will only work
on offers, but that they feel that they have to have
something in order to clean up today's business which
is already accumulated.
H.M.Jr.:
I see. Well, this would be my thought. - Why not
talk to them and take, say two million ounces at
twenty nine tenths. pince
A.L.:
Twenty nine what?
H.M.Jr.:
Tenths
A.L.:
Twenty nine tenths? Panca
H.M.Jr.:
Yes
A.L.:
Yes
H.M.Jr.:
Well - that would be what - about a half a cent an
ounce?
A.L.:
Twenty nine ton pance - no, wouldn't be quite a half a
it would be about three eighths of a cent down.
cent. If you brought it down to twenty nine tenths paner
Every sixteenth would be - every sixteenth is about
twelve points in the rate.
H.M.Jr.:
-That's all right. If they don't want to 8 ell it
that's all right. Now is Jeff Coolidge
there?
A.L.:
Yes, he 1s.
Jeff
Coolidge:
Right here, Henry.
H.M.Jr.:
What do you think of that?
J.C.:
How large an offer would you make at that price?
H.M.Jr.:
Two
Regraded
99
-3-
J.C.:
Two million?
H.M.Jr.:
Yes
J.C.:
How would you feel like putting another two million
at twenty eight and a half?
H.M.Jr.:
Well --
a half a pence is what?
A.L.:
Well, a half a pence will be - 8. half a pence, that's
- well that will be a full cent.
H.M.Jr.:
Well, why not say a full cent?
A.L.:
Yes, that's pretty wide if we work it down that far.
J.C.:
Well, what I was thinking, Henry, was that you might
get your order for two million and then have it sell
a good deal lower, - if that was your full order.
H.M.Jr.:
Well, let's - let's agree for the moment on two
million ounces at twenty nine tenths, shall we?
A.L.:
Right
pance
J.C.:
Yes, right.
H.M.Jr.:
What?
J.C.:
That's right, I think we should do that.
H.M.Jr.:
And then say that e'll take another two million at
a half a cent under.
A.L.:
A half a cent, that's not a half a pence. Yes, that
would be twenty eight and three quarter pence.
H.M.Jr.:
Half a cent.
A.L.:
Right, That sounds more like it, Henry.
H.M.Jr.:
What?
C.:
Yes, I'd rather have that twenty-eight and three
quarter than twenty-eight and a half.
H.M.Jr.:
Yes, but that would be all that we'd take today.
A.L.:
I don't think there will be any more of that come up
because as you lower the scale you'll dry up the
offerings.
Regraded Unclassified
-4-
100
H.M.Jr.:
I - say, say two million ounces at twenty-nine
tenths?
bence
A.L.:
Right
at
H.M.Jr.:
And then another two million and a half a cent under
that?
A.L.:
A half a cent under it, that's right.
H.M.Jr.:
What do you think of that, Jeff?
J.C.:
I think that's O. K.
H.M.Jr.:
What?
J.C.:
That suits me.
H.M.Jr.:
Yes - now, - the only thing is which way we're
headed. - Well, we're headed for a little lower
silver, that's all.
J.C.:
Yes, yes, - and I think you'll find that there'll be
another heavy selling tomorrow.
H.M.Jr.:
A rather heavy selling?
J.C.:
That's my guess.
H.M.Jr.:
Yes
A.L:
Well, in other words, Mr. Coolidge means there -
certainly there was smaller - some spec
still left in the market, maybe not very many.
H.M.Jr.:
Well, that -
A.L.:
But -
H.M.Jr.:
Well, after we get that then we can fix the price in
New York.
A.L.:
Yes, oh yes.
Yes, we'll fix -
H.M.Jr.:
Depending on what they fix it in London.
A.L.:
That's right.
Regraded Inclassified
101
-5-
H.M.Jr.:
Is that right?
A.L.:
Yes, we could wait because they'll get it over very
quickly.
H.M.Jr.:
Yes - Mrs. Klotz -
A.L.:
Just one moment -
H.M.Jr.:
I want to tell her that the third button from the top -
the third button down, if she'll press that three
times, Miss Reynolds will bring in the paper and then
you can see what the market is doing.
A.L.:
All right. They're waiting because the cotton report
was due out today also.
H.M.Jr.:
Well - she rang -
A.L.:
I just - I just put
H.M.Jr.:
marked in your name?
A.L.:
What is that, Mr.
?
H.M.Jr.:
Are my buzzers marked in your name.
A.L.:
Yes it's marked 'Miss Reynolds' - I've rung it.
H.M.Jr.:
Three times?
A.L.:
I've rung it, so she -
H.M.Jr.:
Three times?
A.L.:
Here she comes now.
H.M.Jr.:
All right
A.L.:
Now, wheat is ninety-six against a close of ninety-
five and three quarters.
H.M.Jr.:
Yes
A.L.:
Cotton is eleven forty-eight against a Saturday's price
of eleven fifty-eight.
H.M.Jr.:
Yes
A.L.:
On the other hand, I think they're waiting for the
cotton report to come out today and that might have
102
-6-
some effect.
H.M.Jr.:
Yes.
What about the stock market?
A.L.:
Mr. Morgenthau, McIntyre is on the line and wishes
to speak to you right away.
H.M.Jr.:
McIntyre?
A.L.:
Yes. Mrs. Klotz told us, at the White House.
H.M.Jr.:
All right.
A.L.:
And we'll follow through on this other thing.
H.M.Jr.:
All right.
A.L.:
O. K.
H.M.Jr.:
Thank you.
Just hold it.
H.M.Jr.:
Hello
A.L.:
Yes, I'm holding this wire to make sure you get
transferred.
H.M.Jr.:
Hello
J.C.:
Hello, Henry
H.M.Jr.:
Yes
Operator:
Just a minute please.
H.M.Jr.:
Hello - hello
J.C.:
Hello, Henry
H.M.Jr.:
Yes
J.C.:
Do you thinkwe'd better put in this order before we
hear of your conversation?
Operator:
Hello
103
-7-
H.M.Jr.:
suggest that what I wanted -
J.C.:
Yes
H.M.Jr.:
is sort of easing it off.
J.C.:
That's right - I think it's fine, Henry.
H.M.Jr.:
And you might be thinking at what pointwe'll lower
it, you see?
J.C.:
Yes - yes
H.M.Jr.:
So -
J.C.:
And by lowering it gradually we've got time to think
about what point
H.M.Jr.:
Right - and if - as soon as you hear from London
tell Archie to call me back again.
J.C.:
I'll do that.
H.M.Jr.:
Will you?
J.C.:
You bet.
H.M.Jr.:
Anything else?
J.C.:
Not a thing.
H.M.Jr.:
And tell Archie to watch those commodities very
closely.
J.C.:
I will.
H.M.Jr.:
Right
J.C.:
All right, Henry.
H.M.Jr.:
What time does the cotton report come out?
JC.:
I think about - I think about noon, but I'm not
certain.
H.M.Jr.:
All right. Let Archie find out.
J.C.:
Yes
H.M.Jr.:
Anything else?
Regraded
104
-8-
J.C.:
Not a thing - there isn't a thing, Henry, quiet as
can be.
H.M.Jr.:
Mrs. Klotz want anything?
Mrs.
Klotz:
I'm here, yes, - have you got a second?
H.M.Jr.:
Yes
H.S.K.:
Mr. Baruch sent you a telegram - wants to come in
on Wednesday. Will you see him?
H.M.Jr.:
Yes
H.S.K.:
And give him the time.
I'll give him the time.
H.M.Jr.:
In the morning.
H.S.K.:
All right.
H.M.Jr.:
About eleven, I should say.
H.S.K.:
All right.
H.M.Jr.:
All right.
H.S.K.:
Fine, thanks.
H.M.Jr.:
Anything else?
H.S.K.:
No, how are you feeling?
H.M.Jr.:
- still got a couple of fingers left.
H.S.K.:
-
That's a shame.
H.M.Jr.:
All right.
H.S.K.:
All right.
H.M.Jr.:
All right.
H.S.K.:
Goodbye.
H.M.Jr.:
Goodbye.
Regraded
105
December 10, 1935.
Tuesday
H.M.Jr.:
Archie -
Archie
Lochhead:
Yes, Mr. Morgenthau.
H.M.Jr.:
Mrs. Klotz tells me the President is an hour late.
A.L.:
Yes
H.M.Jr.:
Have you any more information?
A.L.:
Yes, the latest information is that the Bombay market
had a bad break this morning -
H.M.Jr.:
Yes
A.L.:
and they sold down to an equivalent of about sixty
cents -
H.M.Jr.:
Yes
A.L.:
and recovered to about sixty and a half cents.
H.M.Jr.:
Yes
A.L.:
But they'll be turning around and offering in
the London market as hedges.
H.M.Jr.:
Yes
A.L.:
And 80 that they - the latest indication of four and
one half million ounces will be offered for spot
at any price.
H.M.Jr.:
Now, here's the point - the President very distinctly
told us not to take more than two million ounces -
A.L.:
Right
H.M.Jr.:
But I can't get it, see?
A.L.:
Yes
H.M.Jr.:
But let me give you an idea which I have been thinking
about. I don't know whether it can be - not being
able to check with him - I wouldn't - I don't like
to do it today but I could do it tomorrow, see?
A.L.:
Yes
Regraded Unclassified.
106
-2-
H.M.Jr.:
If we simply would say, 'Now, look here, gentlemen,
this is all the bunk, you may have done this for
fifty years, it's all right in London but we're
going to do it here.' Now, we're criticized very
much for closing our own silver market and doing
business in London. And it's one of the things that
Father Coughlin criticized us for because it was
Sunday. Now supposing we said, 'We'll buy silver
in New York through any - through the Federal Re-
serve,' just the way we did gold.
using
the National Banks, 'and we'll quote the price'.
What would happen is, only buying spot silver, there'd
be a catch there of ten days -
A.L.:
Yes
H.M.Jr.:
During those ten days that would let the world market
seek its own level. We'd simply say, 'Well, we said
we'll buy any amount of silver at sixty, sixty-three,
sixty-five cents F. O. B. New York'. We can't help
it if Bombay drops five cents, that isn't our worry.
A.L.:
Well, let's see, but you'd - you'd pay - you'd post
the price in New York and pay for an unlimited amount
at that - at those
H.M.Jr.:
No, I'd say - I'd do it like gold , I'd say that,
'until further notice we'll pay sixty cents', - 'at the
Federal Reserve in New York'.
A.L.:
Well, now let's see, the one point of course about that
is that the - you run up against the tax, but there's
no reason, I mean it would mean that they would have
to permit tax affidavits.
H.M.Jr.:
Well, I don't expect a decision right now.
A.L.:
Yes
H.M.Jr.:
I'm just thinking about it, I think - What's the
next move we -
?
A.L.:
Well, that is the ultimate move at any time. I think
that 1s the question - the way you do it when you've
finally cleared up on silver.
H.M.JR.:
But we can't - we can't
A.L.:
Yes
- Well, you - you -
Regraded Unclassified
107
-3-
H.M.Jr.:
Hello -
Jeff
Coolidge:
If you fixed the price in New York for any amount
offered -
H.M.Jr.:
Yes
J.C.:
You would have a perfectly stable market all around
the world.
H.M.Jr.:
You'd have a what?
J.C.:
A perfectly stable market.
H.M.Jr.:
Yes
J.C.:
You wouldn't -
H.M.Jr.:
Well, I'm just thawing this out. I can't do it until
I've talked to the President but I mean it seems to
me that we've got to get
-
we can't keep, say
bluffing them in England and not do anything.
J.C.:
No, I think, I think that you have to put in bids
if you want any stability in the price of silver.
H.M.Jr.:
Well now, supposing -
A.L.:
Where that bid is doesn't matter - you can make it
in New York or London.
H.M.Jr.:
Well I wouldn't make it in London -
Hello -
A.L.:
Yes
H.M.Jr.:
Well, let's just say that's maybe a possibility for
tomorrow, see?
A.L.:
Yes
H.M.Jr.:
Now for today, do you think I ought to wait until the
President's train gets in - supposing we don't let
them know until eleven o'clock, what of it?
A.L.:
Well, if we don't know until eleven o'clock, they
simply have to hold up the fixing -
H.M.Jr.:
Well -
A.L.:
They just simply will increase the suspense and they
probably would be that much more on the market by the
time - by the time the fixing is accomplished.
Regraded Unclassified
108
-4-
H.M.Jr.:
Well, the only other thing I can do would be to tell
them that I'll take two million ounces today and
that's all.
A.L.:
They wouldn't be able to fix on that.
H.M.Jr.:
Well that's - those are the President's orders.
A.L.:
Yes, but I mean, frankly you see, it's not only &
question of us having to put in a bid but we'd have
to put in a bid that - to take what was offered
because that's the only way it can be done.
H.M.Jr.:
Well, I can't do that without consulting him.
A.L.:
Well, I think -
Jeff
Coolidge:
Say, under those circumstances I would prefer to
wait rather than to put in a bid and say that was
all.
H.M.Jr.:
Pardon me - ?
J.C.:
I would prefer to wait until after you have consulted
him.
H.M.Jr.:
Well then, let's wait until he comes in.
J.C.:
I think it would be too bad, Henry, if you were going
to have a price tomorrow, of whatever it is, to let it
break below that today, you see, unnecessary?
H.M.Jr.:
Yes, but in the meantime - well, of course, it won't
break in London until
let it break.
A.L.:
But 1t has broken in Bombay.
H.M.Jr.:
Sixty cents.
A.L.:
around about sixty cents in Bombay.
J.C.:
And of course Bombay will work tomorrow on what news
they get today.
H.M.Jr.:
Well I mean, should we try to buy any silver today
in Bombay?
A.L.:
Well, it would seem to me - I was waiting until after
you decided what we were going to do on silver in London
- it would seem to me that if we - if we bought
anything in London that we might also buy in Bombay.
But I mean I don't think we - we could consider them
separately.
Regraded Unclassified
109
-5-
H.M.Jr.: Well, I think that - I - I'm quite a fatalist.
The President's train is an hour late. Let's see
what happens in the next hour, see? Hello
-
A.L.:
Well, I don't think we can really do - I'd much
rather do that, as Mr. Coolidge says, than just put
in & bid for two million because it won't be enough, -
it would just simply start some discussions. Whereas
we can just simply tell them just now, 'Well, we're
sorry we can't give you an answer for another hour
or two'.
H.M.Jr.:
Yes, well supposing - all right, that's - then
the time comes when we take all the offers at the fix
again.
A.L.:
Well, that would be - that would be what you want,
you can
- you could put the price way down and
take all that they offered us to fix or make a price
low enough that they - they wouldn't offer at all.
J.C.:
I think perhaps we could do the same as yesterday -
have a scale down.
H.M.Jr.:
Scale down
J.C.:
And see how far they got down.
H.M.Jr.:
Yes - Well yesterday we said we'd take two
million at a price and two million what? - & half
a cent - ?
J.C.:
A half a cent below - yes, I think the way things are
today you'd need a good deal more than four million at
some price.
H.M.Jr.:
Well - we only got what - we only got what we
asked for yesterday.
J.C.:
Yes, I think you'll get far more today.
H.M.Jr.:
Well, I - you people all think that we should wait
until the President g ets in.
J.C.:
Yes, I'd much rather do that than - than just say that
we'll only buy two million.
Regraded Unclassified
110
-6-
H.M.Jr.:
I agree. Now, Mrs. Klotz, hello -
Mrs.
Klotz:
Yes
H.M.Jr.:
Let Lochhead answer his letter. I'd say something
like this, you got a pencil?
H.S.K.:
Yes
H.M.Jr.:
You can write this for my signature, you see?
H.S.K.:
Yes
H.M.Jr.:
You should say, 'My dear Mr. President -
H.S.K.:
Yes
H.M.Jr.:
'We've taken no action in London -
H.S.K.:
Yes
H.M.Jr.:
'pending your arrival -
H.S.K.:
Yes
H.M.Jr.:
'We are holding up - we are holding up - we are
holding open the London silver market until I can
talk to you. Naturally our delaying- several hours
longer than usual, is causing anxiety in the silver
market all over the world. I'd greatly appreciate
your calling me immediately on your arrival at the
White House 80 that we can decide what is the best deal
to make in silver today.' -
see?
H.S.K.:
Yes, shall I sign your name?
H.M.Jr.:
And sign my -
H.S.K.:
- per mine?
H.M.Jr.:
Sign my name and put underneath, 'per -
H.S.K.:
Yes
H.M.Jr.:
- 'H.S.K.'
- hello -
H.S.K.:
Yes
H.M.Jr.:
Now, arrange with Chief Moran -
H.S.K.:
Yes
Regraded Unclassified
111
-7-
H.M.Jr.:
- immediately the President arrives that it be put
in his hand, you see?
H.S.K.:
Shall I give it to him - make him take it - ?
H.M.Jr.:
I'd give it to Chief Moran and tell him that I want -
I'm going to - I want him to put that thing in the
President's hands.
H.S.K.:
Yes
H.M.Jr.:
Now, let - let Archie add
H.S.K.:
All right, he is writing.
H.M.Jr.:
See?
H.S.K.:
He has it already.
H.M.Jr.:
What?
H.S.K.:
He has it added.
H.M.Jr.:
All right then, give it to the Chief and see that he
gives it to the President.
H.S.K.:
All right.
H.M.Jr.:
As soon as he arrives.
H.S.K.:
Fine
H.M.Jr.:
And then tell the White House operator -
H.S.K.:
Yes
H.M.Jr.;
- that he can get me at one of these numbers.
H.S.K.:
Right.
H.M.Jr.:
All right?
H.S.K.:
Yes, sir, - all right.
H.M.Jr.:
I'm going to talk to Kieley a minute and then by that
time if you're in the office I'll talk to you.
H.S.K.:
Fine, - all right.
H.S.K.:
Hello -
Regraded Unclassified
-8-
112
H.M.Jr.: Yes - Hello -
H.S.K.:
All of a sudden, I mean - stay off the line.
H.M.Jr.:
Hello -
H.S.K.:
I can't get her.
H.M.Jr.:
Press that white button you -
Operator:
Operator
H.M.Jr.:
Kieley, please.
Operator: All right.
H.M.Jr.:
befuddled on this thing also, see? And
he didn't like - well, to make a long story short,
I finally made this suggestion, that for today we
buy t wo million ounces at sixty-three cents in London,
but not more.
Hello -
J.C.:
Yes
H.M.Jr.:
And that's agreeable to him. He says he doesn't care
what it drops to.
J.C.:
Only one million?
H.M.Jr.:
Two
J.C.:
Two
H.M.Jr.:
At sixty-three cents or the fix, which 13 ever lowest -
whichever is lowest.
J.C.:
Yes, well, I don't think there will be any fix on that,
Henry.
H.M.Jr.:
Well, then there'll be no fix.
J.C.:
And then you'll buy at a high price with silver selling
much under.
H.M.Jr.:
How do you mean, we'll buy at a high price?
J.C.:
Well, you'll find that they'll be offering two million
ounces all right, without a fix.
113
-9-
H.M.Jr.:
I don't believe it. -
I don't think 80.
J.C.:
You don't think so?
H.M.Jr.:
No - I think they'll have a fix all right and I
think you'll find - I'll make a guess that the fix
is sixty-one cents.
J.C.:
Well, that may be. That's quite probable.
H.M.Jr.:
That's my guess, that we'll get the silver at sixty-
one cents.
J.C.:
That's quite probable.
H.M.Jr.:
But it's only a guess, Jeff.
J.C.:
Yes
H.M.Jr.:
Well - is Archie there?
A.L.:
Yes, I'm on the phone now, Mr. Morgenthau.
H.M.Jr.:
What do you think of that, Archie?
A.L.:
Well, I'll tell you, we - they've got about five
million ounces of spot silver there to be sold at the
fix.
H.M.Jr.:
Yes
A.L.:
If we put in a bid for two million that leaves three
million for somebody else to take up -
H.M.Jr.:
Or somebody to withdraw.
A.L.:
Or somebody to withdraw it if it goes down toolow.
H.M.Jr.:
Yes
A.L.:
But the point is that some of them seem to be in at -
at best and we know that they sold silver at sixty
cents in the Bombay market -
H.M.Jr.:
I can't help it, Archie, this 18 what the President
wants done.
A.L.:
Yes
H.M.Jr.:
Now go ahead and put in an order for two million ounces
at sixty-three cents -
Regraded Unclassified
114
-10-
A.L.:
Right
H.M.Jr.:
Or -
the fix, which is ever the lowest -
A.L.:
Oh yes, I mean, we put it on that basis.
H.M.Jr.:
And then let me know.
A.L.:
Right - well, we'll put that right over because
they're waiting now.
H.M.Jr.:
Well, put that right over. And I'm at the hotel
now and I'll be here for the next hour.
A.L.:
Right - well, as soon as we get
H.M.Jr.:
Well, what's happened - think a minute - what's
happened on the market? I mean, any -
A.L.:
On the general market?
H.M.Jr.:
Yes
A.L.:
The commodities are about the same - cotton is
eleven forty-two against eleven forty-one yesterday;
wheat is ninety-five and three eighths against
ninety-four and seven eighths. The stock market
is off slightly about three eighths of a point -
of course some of the silver mining stocks are off.
H.M.Jr.:
Yes
A.L.:
And the Government Bonds are holding up steady, par
twenty-five for the two and three quarters.
H.M.Jr.:
But after we hear what they do in London, then we'll
fix the price in New York.
A.L.:
Right - right.
H.M.Jr.:
-- Have either Mr. Oliphant or Mr. Coolidge -
Oliphant or Haas any suggestions?
A.L.:
Mr. Oliphant says he's not worried if they don't
fix.
H.M.Jr.:
He's not worried if they don't fix.
A.L.:
And Mr. Haas says that he feels the same way about it.
H.M.Jr.:
Well, that's
-
let me talk to Oliphant, a minute.
115
-11-
A.L.:
Right
H.M.Jr.:
Hello, Herman?
Herman
Oliphant: Yes
H.M.Jr.:
You think we're making any mistake?
H.O.:
No, I don't.
H.M.Jr.:
You don't?
H.O.:
I wouldn't worry at all if they don't fix.
H.M.Jr.:
No
H.O.:
Thefact is there's no market there -
H.M.Jr.:
Yes
H.O.:
And it's all to the good to act on that basis.
H.M.Jr.:
Yes - well, the President is perfectly willing
to go through with it and I've got nothing to
worry about.
H.O.:
Yes
H.M.Jr.:
And after all, this is going to demonstrate that
there is no world market.
H.O.:
That's right - and you're square with the facts
80 you're perfectly safe
H.M.Jr.:
Yes - at once that makes it so much better.
H.O.:
Yes
H.M.Jr.:
You think so?
H.O.:
You're square with the facts so you're perfectly
safe, you've got the facts under you.
H.M.Jr.:
Yes - yes, all right
H.O.:
All right
Mrs.
Klotz:
Hello -
H.M.Jr.:
Hello -
H.S.K.:
Do you want to t alk to me?
Regraded Unclassified
-12-
116
H.M.Jr.:
Have you any messages?
H.S.K.:
If you're in a hurry they can wait.
H.M.Jr.:
No
H.S.K.:
I'd like to make some appointments for you for
Thursday -
H.M.Jr.:
Oh no, not the way I feel right now.
H.S.K.:
0. K. (Laughter)
H.M.Jr.:
Maybe, later on.
H.S.K.:
All right
- you're still on the air.
H.M.Jr.:
Well, let's see later on.
H.S.K.:
All right, do you want to talk to Mrs. Morgenthau?
H.M.Jr.:
Please.
H.S.K.:
All right.
117
-13-
Archie
Lochhead:
Hello -
H.M.Jr.:
Hello -
A.L.:
Mr. Morgenthau, Lochhead calling -
H.M.Jr.:
Yes
A.L.:
The London brokers have come back just now -
H.M.Jr.:
Yes
A.L.:
And they - what they want to do 1s this, - they
have our bid for two million ounces and they have
about five million to sell. They want to fix a
nominal fixing at sixty-three and then they would
take and divide our two million order among their
five million. In other words every - every man
would get two fifths of his order e xecuted.
H.M.Jr.:
Yes
A.L.:
But you see, that holds the price up to sixty-three
and there's just a nominal fixing.
H.M.Jr.:
Well
A.L.:
Well, it was two millions ounces at sixty-three.
H.M.Jr.:
And each fellow -
A.L.:
Each fellow over there would probably get two fifths
of his selling order e recuted.
H.M.Jr.:
Well, what would happen to the rest of them?
A.L.:
The rest of them - their orders, there would just be
a nominal fixing. You see, the r est of their orders
would be turned back to them. The only point is,
about that, you see, they're just trying to hold up
on the price.
H.M.Jr.:
Supposing we refuse, then what?
A.L.:
Well, if we refuse it will be up to them to - to
either - to apportion the - well, what they would
have to do would either be, not to have a fixing or
get some other buyers.
H.M.Jr.:
Well, now -
Regraded Unclassified
-14-
118
A.L.:
Or get somebody to withdraw their offers.
H.M.Jr.:
Coolidge
A.L.:
Mr. Coolidge is on the wire.
H.M.Jr.:
Well, this is the way, now if they came and said,
'Now you pay it our way - we always
and we always fix it.
- hello -
A.L.:
Yes -
H.M.Jr.:
Well, we've done it. Now they don't want to have
a fix and they don't want to give us the average.
A.L.:
That's it, they don't want to give us the average.
H.M.Jr.:
I wouldn't do it.
A.L.:
Yes, well, that's the way I feel also on it. I -
H.M.Jr.:
They could give us a bonafide fix or they c ould come
through and make us an offer.
A.L.:
Well, that's what I feel - that they either should
acknowledge that they - that fixing doesn't work -
H.M.Jr.:
Yes
A.L.:
- Or else - or else put it through and let it carry
through to its conclusion.
H.M.Jr.:
Yes - how about that, Coolidge?
J.C.:
Well, I think that's right, Henry. I don't see why
you should be stuck that price.
H.M.Jr.:
No - I mean, we came back and they said 'We've done
it for fifty years and we've always matched orders
and all that, -0. K.'. We give them an order and now
they o ome back and they don't want to do it.
J.C.:
Well of course, they're in a very hard position
there.
H.M.Jr.:
Well, all right, let them sweat a little bit.
J.C.:
But I - I agree, I don't think we ought to ap-
portion orders at that high price.
H.M.Jr.:
No - no, I would turn down the offer and then see
what they do.
119
-15-
A.L.:
0. K. - As I say, there was only one other - there
was only one other thing in that that possibly that
they - we could say, 'Well, we'll pay you sixty-
one cents'.
H.M.Jr.:
No
A.L.:
1 - you'll have to bring it down'. But still
we're just compromising if we do that.
H.M.Jr.:
No - no, I wouldn't do that.
A.L.:
Right
H.M.Jr.:
I'd tell them we simply have a bonafide fix or
anybody that has silver for sale -
& legitimate
holder of silver - he can make us an offer.
A.L.:
Right - that's still open to them. They know that.
H.M.Jr.:
Sure
A.L.:
Well, 0. K., we'll put that -
H.M.Jr.:
Are you gentlemen with me?
A.L.:
Oh, absolutely, - well I - speaking for myself, I
don't feel that we should allow them to put a nominal
fix on.
H.M.Jr.:
You make a note of what - you keep track of what
we're doing, you see?
A.L.:
Yes
H.M.Jr.:
All right - thank you
A.L.:
right, sir.
H.M.Jr.:
Hello
Jeff
Coolidge:
Hello
H.M.Jr.:
Jeff, could I have the operator, please?
Regraded Unclassified
120
December 9th
Mr. Morgenthau told me that he spoke to the President
from Richmond, Virginia, to the LaSalle Street Station in Chicago
at 1:30 and told him what we had done on silver to-day. The Presi-
dent is perfectly willing to have the price dropped off another
cent tomorrow. He did not, however, seem to want to buy more than
two million ounces tomorrow and told Mr. Morgenthau that he would
be back in Washington Tuesday morning and would talk to him at
9:30.
Mr. Lochhead told me that Mr. White, who is Secretary
of the Silver Committee, also Secretary to Senator Pittman, called
him to-day. Lochhead was out at the time. When Lochhead spoke
to the Secretary to-day he told him that White had called once when
he was out and that when he called back again Lochhead would evade
giving him any information as to silver developments. Mr. Morgenthau
told Lochhead to tell White that he would be glad to see Senator
Pittman and the other members of the Silver Committee as early as
they found it convenient.
Regraded
Inclassifie
121
Dec. 9, 1935
On the evening of Saturday, December 7, the Secretary informed me
that he had decided to change our method of procedure in the purchase of
silver in the London market. Instead of putting in a bid in the London
market for an amount equal to the silver offered there we would insist
that the London brokers make us firm offers of definite amounts of silver
at fixed prices, which we would either accept or reject as it suited our
convenience.
Early in the morning of December 9, advice was received from London
that about 2,000,000 ounces of silver were offered at the fix, and follow-
ing the usual procedure the London brokers asked for an order from us in
order that they might establish the fix. The Chase National Bank was in-
structed to advise the brokers through their London office that we did not
care to put an order in their market at the fix but that we would await a
firm offer from them. At 8:30 AM, New York time, we were informed that
there were 2,500,000 ounces of silver for sale, but this information was
not accompanied by a firm offer. At 9:30, New York time, w8 were advised
that the London fixing was being postponed, awaiting advices from the
United States. At 9:45 AM the London brokers advised that the fixing was
still postponed and a request was again made that we place an order in
their market as heretofore. In reply they were referred to our previous
Cable in which we stated that we were only interested in firm offers.
We were informed at that time that the London brokers were conferring to=
gether in order to see if it was possible for them to follow our suggestion.
Around 10:30 AM advice was received from the London brokers that they had a
total of 3,100,000 ounces of silver for sale but owing to the fact that all
these orders had been received from their clients on the basis of their
Regraded Unclassifie
122
Dec. 9, 1935
established rules there was not time that day to notify their clients
of the change of procedure. They requested that we place an order with
them to cover the business that day and so give them time to adjust them-
selves, if possible, to the new method suggested by us. After due con-
sideration, the Secretary agreed to give them an order for 2,000,000
ounces at 29 pence and 2,000,000 ounces at 28 3/4 pence with the under-
standing that this was a special order and they would have to adjust them-
selves by the following day to the new procedure. The London brokers there-
upon fixed the price at 28 3/4 pence, which was equivalent to 63.85 and
sold us 3,100,000 ounces at that price. After the fix other offers were
made from London at the same price, of which 900,000 ounces were accepted
to bring our total purchases in London up to 4,000,000 ounces.
Regraded Unclassified
123
Mrs. Khtz
There was nothing
but watine
figures before
Monday -
of
ER
DOW JONES TICKER - December 9, 1935.
124
ADD LONDON SILVER DELAYEU
05124
LONDON - BULLION BROKERS REPORT THAT FIXING
OF THE SILVER PRICE WAS DELAYED AWAITING A
BUYER AND THAT AT 4 45 PM AMERICAN CAME IN AND
BOUGHT ALL SPOT EASTERN OFFERINGS AT THE LOWER
PRICE - TURNOVER WAS ABOUT 3 000 000 OUNCES -
A CONSIDERABLE VOLUME OF FORWARD SELLING FROM
ALL QUARTERS WAS IN THE MARKET
Regraded Unclassified
UNITED PRESS - December 9, 1935.
125
WCNS61
LONDON--BAR SILVER WAS FIXED AT 28 3/4 PENCE AN OUNCE TODAY AFTER
A DELAY OF MORE THAN 2 HOURS BECAUSE OF REPORTED WITHDRAWAL OF AMERICAN
SUPPORT IN THE FACE OF HEAVY OFFERINGS FROM THE FAR EAST. THE PRICE
AS 7/16 PENNY BELOW SATURDAY'S LEVEL AND THE LOWEST PRICE SINCE EARLY
THIS YEAR./
12/9--W1215P
/
DOW JONES TICKER - - December 9, 1935.
LONDON - - THE PRICE FIXING 10.15 OF SILVER HAS BEEN
LONDON SILVER MARKET
DELAYED AWAITING AMERICAN SUPPORT
UNITED PRESS TICKLR - December 0, 1935.
127
WCNS69
ADD BAR SILVER, LONDON
IT WAS ESTIMATED 3,000,000 OUNCES OF THE METAL HAD BEEN OFFERED,
NOT AN UNUSUALLY LARGE TOTAL
IN A SOMEWHAT SIMILAR SITUATION ON AUGUST 14 THE U. S. TREASURY
PURCHASED MORE THAN 25,000,000 OUNCES OF THE METAL TO BOLSTER THE
PRICE,
IT WAS BELIEVED BECAUSE OF THE SHARP DROP THAT THE 8. S. DID NOT
SUPPORT THE MARKET.
TODAY'S WORLD PRICE WAS 7 1/2 PENCE BELOW THE PEAK OF 36 1/4
PENCE RECORDED APRIL 26 AND 4 7/16 PENCE ABOVE THE LOW OF 24 5/16
PENCE SET JANUARY 8.
BASED ON THE POUND STERLING AT 84.93, THE AMERICAN EQUIVALENT FOR
A FINE OUNCE was 63.84 CENT, OR ABOUT A CENT BELOW SATURDAY'S
EQUIVALENT.
12/9--N1231P
Regraded Unclassified
UNITED PRESS TICKER - December J, 1935.
128
WCNS127
Para York
NEW YORK-STOCKS MOVED IRREGULARLY HIGHER TODAY IN ACTIVE TRADING
SILVERS DECLINED ON WEAKNESS IN THE LONDON SILVER MARKET CAUSED BY
HEAVY FAR EASTERN OFFERINGS. SOME UTILITIES AND STEELS DECLINED AND
PROFIT-TAKING DEVELOPED IN SOME RECENT FAVORITES.
HOWEVER, THE RAILROAD SHARES CONTINUED TO CAIN AND NEW INTEREST
EVELOPED IN COPPERS, WHICH WERE HELPED HIGHER BY A FURTHER RISE IN
THE PRICE OF COPPER ABROAD. NEW HIGHS WERE NOTED IN ANACONDA AND
KENNECOTT. GOLD MINING SHARES WERE BETTER, FEATURED BY THE HIGH
PRICED HOMESTAKE WHICH MADE A NEW HIGH FOR THE YEAR AT 480 UP 30
POINTS.
GAINS IN THE RAILS RANGED TO MORE THAN A POINT.
12/9--N304P
Regraded Unclassified
129
UNITED PRESS TICKER. - December 9, 1935.
montred
WCNS150
MONTREAL--SILVER PRICES BROKE SHARPLY TODAY FOLLOWING THE DROP
IN BAR SILVER PRICES IN LONDON AND NEW YORK, FUTURES CLOSING 245 TO
500 POINTS LOWER. ONLY ONE MONTH WAS TRADED.
12/9--R435P
Regraded Unclassifie
UNITED PRESS TICKER - December 10, 1935.
130
Silver - Londin
WCNS54
LONDON--LONDON'S LONDON- LONDON'S SILVER TRADERS, CONFUSED BY A COLLAPSE IN THE
MARKET WITH MILLIONS OF OUNCES OF THE METAL OFFERED AND NO BIDDERS,
TODAY CIRCULATED REPORTS THAT A BANKING SYNDICATE WAS BEING FORMED TO
IDE OVER THE PRESENT CRISIS.
12/10--R1123A
Regraded Unclassified
UNITED PRESS TICKER - December 10,1985.
WCNS61
131
ADD SILVER, LONDON
THE REPORTS, UNCONFIRMED THUS FAR, TOLD OF ORIENTAL BANKS APPROACH-
ING LARGE BRITISH INSTITUTIONS LAST NIGHT AND THIS MORNING TO JOIN
FORCES TO AID SILVER. PRINCIPAL ARGUMENT IN THE APPROACH WAS TO SAVE
THE PRESTIGE OF THE LONDON SILVER MARKET AND OF THE FAR EAST AS WELL.
BULLION BROKERS, IT WAS UNDERSTOOD, HAD PERSUADED SOME CUSTOMERS
TO AMEND THEIR ORDERS TO "SELL AT THE MARKET". THAT PROCEDURE WOULD
LIGHTEN PRESSURE.
NEVERTHELESS ANXIETY CONTINUED AS CONFUSED TRADERS TRIED TO FIND
REASONS FOR DEMORALIZATION OF THE MARKET. THEY CONCLUDED, AS DID
SILVER EXPERTS IN NEW YORK, THAT THE U.S. TREASURY HAD CHANGED ITS SILVE
POLICY. IT WAS CERTAIN THAT THE TREASURY HAD WITHDRAWN ITS SUPPORT
FROM THE MARKET--SUPPORT THAT HAD SAVED MANY A SIMILAR SITUATION IN
RECENT MONTHS.
THE LONDON METAL EXCHANGE WHICH IS A SECONDARY MARKET FOR SILVER
FAILED TO DO ANY BUSINESS IN THE METAL. IT FIXED THE PRICE FOR SILVER
999 FINE AT 27.29 PENCE PER OUNCE. THAT WOULD BE EQUIVALENT TO 25 1/4
PENCE FOR SILVER 925 FINE TRADED ON THE LONDON MARKET. THE LAST PREV-
IOUS QUOTATION FOR THE LATTER WAS 28 3/4 PENCE. THE PRICE WOULD BE
EQUIVALENT TO AN AMERICAN QUOTE OF 56 1/8 CENTS PER FINE OUNCE OR A
DECLINE OF 7 5/8 CENTS FROM THE PRICE OF 63 3/4 CENTS AN OUNCE FIXED
IN NEW YORK YESTERDAY.
MEANWHILE THE LONDON SILVER MARKET WENT WITHOUT A QUOTATION FOR
SILVER FOR THE SECOND DAY.
AT 4:00 P.M. OFFICIAL SILVER BROKERS WHO GATHER EACH DAY TO SET THE
WORLD PRICE WERE CLOSETED AT THE FIRM 07 SHARPS WILKINS AWAITING WORD
FROM WASHINGTON TO DETERMINE THEIR PROCEDURE. THEY WAITED IN VAIN FOR
SUCH WORD YESTERDAY.
12/10--R1142A
Regraded Unclassified
UNITED PRESS TICKER - - December 10, 1935.
132
Silver - Metico
WCNS45
MEXICO CITY-COLLAPSE OF WORLD SILVER MARKETS HAS BROUGHT FEARS
THAT MEXICO'S PROSPERITY BUILT UP IN 1935 BY SILVER, MIGHT END AS
SUDDENLY AS IT STARTED.
12/10--R1108A
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
133
Dieson Silver
WCNS66
REP. MARTIN DIES, SAID TODAY HE WOULD URGE PRESIDENT ROOSEVELT
TO HAVE THE SILVER-PURCHASING ACT ADMINISTERED IN A MANNER THAT WILL
STIMULATE EXPORTS OF SURPLUS FARM AND MANUFACTURED COMMODITIES.
DIES, WHO INTRODUCED THE ADMINISTRATION'S SILVER BILL IN THE HOUSE,
HOLDS THAT ITS TERMS ARE BROAD ENOUGH TO PERMIT THE EXCHANGE OF
SURPLUS COMMODITIES FOR FOREIGN SILVER, THEREBY AVOIDING THE
NECESSITY FOR OPEN MARKET PURCHASES ABROAD.
12/10--R1149A
Regraded Unclassified
134
December 10th
HMP
(D.J. 3:00 P.M.)
Sen. Thomas Blames Great Britain for Silver Dilemma:
HO
Washn. - Sen. Thomas, Dom., Okla., member of two silver investigating committees
of the Senate, declared today that the silver situation is the result of an
attempt by Gr. Britain to get the world powers including China to tie their
currencies to the pound sterling at the expense of the U.S.
The Sen. said Gr. Britain sent Keith Ross to China and convinced that nation
that it would be a good plan for it to go on a managed currency tied to the
pound, and that it sell silver to buy gold.
"They have made suckers out of us long enough." Sen. Thomas said. "I think
it is a fine thing for both silver and the U.S. to have this show down."
you my words !
135
NO QUOTATION ON LONDON SILVER
12.59
LONDON - THERE WAS NO QUOTATION OR BUSINESS ON
THE LONDON SILVER MARKET TODAY-
DOW JONES TICKER - - December 10, 1935.
136
ADD SILVER
1.30
THIS IS BELIEVED TO BE THE FIRST TIME THAT
LONDON HAS BEEN UNABLE TO FIX A PRICE FOR SILVER
- THERE HAVE BEEN OCCASIONS IN THE PAST PRIOR
TO THE AMERICAN SILVER PROGRAM WHEN LONDON WAS
UNABLE TO FIX A PRICE BASED ON BUSINESS THERE
BUT AT THOSE TIMES LONDON COLLABORATED WITH N Y
AND THE STERLING EQUIVALENT OF THE N Y OPRICE
WAS POSTED AS THE OFFICIAL LONDON PRICE
IT IS UNDERSTOOD THAT THERE WERE ABOUT
20 000 000 OUNCES OF SILVER OFFERED FOR SALEQ
IN THE LONDON MARKET TODAY WITHOUT A SINGLE BUY-
ING ORDER - IN THE PAST FEW MONTHS THE AMERICAN
TREASURY HAS BEEN THE ONLY BUYER OF SILVER OF
ANY IMPORTANCE - TODAY THE TREASURY MADE NO BID
IN LONDON AND WITHOUT A BUYER IT WAS BOTH IM-
POSSIBLE TO FIX A PRICE OR DO ANY BUSINESS
UNITED PRESS TICKER - December 10, 1935.
137
WCNS9
Silver
Lmdon
LONDON-REPORTS SPREAD TODAY THAT SECRETARY MORGENTHAU, JR.,
OF THE U.S. WAS ATTEMPTING TO NEGOTIATE DIRECTLY WITH CHINA FOR THE
PURCHASE OF THE BULK OF THAT NATION'S SILVER,
THE REPORTS GREW AFTER THE TWO HOUR DELAY IN FIXING THE PRICE FOR
BAR SILVER ON THE LONDON MARKET YESTERDAY -- A DELAY WHICH EVENTUALLY
MEANT A DECLINE IN THE PRICE OF SILVER -- AND THE REPORTED DELAY BY
THE U.S. IN AGREEING TO PURCHASE SILVER.
12/10--R9A
Regraded
Inclassif
DOW JONES TICKER - December 10, 1935.
138
London
LONDON BULLION BROKERS REPORT HEAVY SILVER
SELLING ORDERS WERE RECEIVED THIS 930 MORNING MÚAIN-
LY FROM STALE BULLS ALTHO THERE ALSO MAY BE &
SOME BEAR SELLING- UNLESS AMERICAN SUPPORT IS
FORTHCOMING BROKERS DO NOT KNOW WHAT WILL
HAPPEN AT THE TIME OF PRICE FIXING
-n-
Regraded Unclassified
UNITED PRESS TICKER - December 10,1935.
139
WCNS80
LONDON--THE LONDON SILVER MARKET WAS IN A COMPLETE
DEADLOCK TODAY AND TRADERS CONSIDERED SUSPENSION OF DEALINGS FOR THE
FIRST TIME SINCE OUTBREAK OF THE WORLD WAR.
OFFERINGS OF SILVER TOTALED BETWEEN 18,000,000 AND 20,000,000
OUNCES, BUT THERE WERE NO BUYERS.
12/10--ON104P.
Regraded Unclassifie
UNITED PRESS TICKER - December 10, 1935.
140
WCNS96
ADD SILVER, LONDON
AFTER A DELAY OF FOUR HOURS, DURING WHICH BULLION BROKERS MADE
FRANTIC BUT FUTILE EFFORTS TO OBTAIN SUPPORT FOR THE MARKET, IT WAS
DECIDED TO SUSPEND DEALINGS.
MOST OFFERINGS, WHICH WERE 6 TO 7 TIMES THE NORMAL VOLUME, CAME FROM
THE FAR EAST AND WERE INSPIRED BY BELIEF THE U. S. HAD ALTERED ITS
UYING POLICY.
YESTERDAY THE PRICE WAS FIXED AT 28-3/4 PENCE, A DECLINE OF 7/16
PENNY AND THE LOWEST SINCE MARCH 26, AFTER A DELAY OF MORE THAN TWO
HOURS.
12/10--N152P
Regraded Unclassified
DOW JONES TICKER - December 10, 1935.
141
TREASURY OFFICIALS SAY NO CHANGE IN SILVER
POLICY
4.30
WASHN - IN RESPONSE TO INQUIRIES AT TREASE
DEPT HERBERT GASTON ASST TO SECY MORGENTHAU
SAID THAT THE TREASURY HAS MADE NO CHANGE IN
ITS POLICY OF CARRYING OUT THE SILVER CONTRACT
AND THAT IT COULD NOT DISCLOSE DAY-TO-DAY
TRANSACTIONS IN CONNECTION WITH THE CARRYING OUT
OF THE LAW
AT THE TREASURY IT WAS SAID THAT THE SECY
WOULD HAVE NO PRESS CONFERENCE IF ONE WAS
SOUGHT TO INQUIRE WHAT THE TREASURY HAS BEEN
DOING ABOUT SILVER IN THE LAST FEW DAYS
UNITED PRESS TICKER - December 10, 1935.
142
Pittman
WCNS137
RENO--SUSPENSION OF SILVER TRADING ON THE LONDON MARKET WILL
HAVE NO EFFECT WHATEVER ON THE U.S. SILVER POLICY, SENATOR KEY PITTMAN,
AUTHOR OF THE ADMINISTRATION'S SILVER PURCHASING ACT, SAID TODAY.
12/10--R443P
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
143
WCNS122
ADD THOMAS, SILVER
"THIS ADMINISTRATION," THOMAS SAID, "IS ON RECORD AS FAVORING THE
POLICY OF ACQUIRING ADDITIONAL SILVER TO THE END THAT 25 PER CENT OF
OUR TOTAL METALLIC STOCKS SHALL BE HELD IN THE WHITE METAL.
"IF THIS IS NOT THE POLICY OF OUR GOVERNMENT THEN WE SHOULD CEASE
THE PURCHASES OF ADDITIONAL SILVER AND TAKE OUR LOSS,"
HE ATTRIBUTED THE PRESENT DEMORALIZATION OF THE SILVER MARKET TO n
BATTLE BETWEEN AND AMONG THE GOLD BLOC NATIONS, THE SILVER USING
NATIONS AND THE NATIONS WITHOUT EITHER GOLD OR SILVER.
12/10--R349P
Regraded Unclassified
UNITED PRESS TICKER - - December 10, 1935.
144
Thomas
WCNS120
SENATOR ELMER THOMAS TODAY URGED THE ADMINISTRATION EITHER TO
ACQUIRE SUFFICIENT SILVER TO BRING THE SUPPLY UP TO 25 PER CENT OF THE
IATION'S TOTAL METALLIC STOCKS OR "GET OUT OF THE SILVER PURCHASING
BUSINESS.'
12/10--R325P
Regraded Unclass
UNITED PRESS TICKER - December 10, 1935.
145
WCNS138
ADD PITTMAN, RENO
SENATOR PITTMAN INTERPRETED THE STAGNATION OF THE LONDON SILVER
MARKET AS A MOVE TO FIGHT THE AMERICAN SILVER POLICY, WHICH,
PITTMAN SAID, LONG HAS BEEN OPPOSED BY BRITISH INTERESTS.
"BRITAIN WANTS TO ESTABLISH THE POUND STERLING AS THE MONEY OF
INDIA. THAT'S WHY BRITAIN STARTED MELTING UP INDIA'S SILVER COINS
IN 1928, AND THAT'S THE WHY AND WHEREFORE OF MUCH OF THE OPPOSI-
TION TO THE AMERICAN POLICY," THE NEVADA SENATOR ASSERTED,
PITTMAN SAID HE HAD HEARD NOTHING OF REPORTS AMERICA WAS
PLANNING A CHANGE IN ITS SILVER-BUYING POLICY, OR THAT AMERICA WAS
PLANNING TO "BUY UP THE CHINESE STOCK OF SILVER."
12/10--R455P
Regraded Unclassi
148
SENATOR THOMAS BLAMES GREAT BRITAIN FOR SILVER
DILEMMA
3.00
WASHN - SENATOR THOMAS DEM OKLA MEMBER OF
TWO SILVER INVESTIGATING COMMITTEES OF THE
SENATE DECLARED TODAY THAT THE SILVER SITUATION
IS THE RESULT OF AN ATTEMPT BY GREAT BRITAIN TO
GET THE WORLD POWERS INCLUDING CHINA TO TIE
THEIR CURRENCIES TO THE POUND STERLING AT THE
EXPENSE OF THE U S -
THE SENATOR SAID GREAT BRITAIN SENT
KEITH ROSS TO CHINA AND CONVINCED THAT NATION
THAT IT WOULD BE A GOOD PLAN FOR IT TO GO ON A
MANAGED CURRENCY TIED TO THE POUND AND THAT IT
SELL SILVER TO BUY GOLD-
-THEY HAVE MADE SUCKERS OUT OF US LONG
ENOUGH- SENATOR THOMAS SAID- -1 THINK IT IS A
FINE THING FOR BOTH SILVER AND THE UNITED
STATES TO HAVE THIS SHOW DOWN-
DOW JONES TICKER - December 10, 1935.
147
12 52 PM
SILVER
WASHN - BY U R H CONGRESSIONAL SILVER AUTHOR
ITIES TODAY REGARDED THE BREAK IN SILVER PRICES
AT LONDON AND MONTREAL AS A TRANSITORY PHASE OF
THE SILVER PROGRAM AND NOT AS AN INDICATION OF
ANY PERMANENT CHANGE IN THE AMERICAN BUYING PRO-
GRAM-
THE TREASURY DECLINED TO COMMENT ON THE
LONDON SITUATION - IT HAS CONSISTENTLY TAKEN
THAT POSITION ON GROUNDS THAT OWHERWISE IT
WOULD REVEAL ITS HAND TO BROKERS AND SPECULATORS
SENATOR ELMER THOMAS DEM OKLA MOST ACTIVE
PROPONENT OF THE SILVER MOVEMENT SAID HE HAD NO
INFORMATION ON WHAT HAD HAPPENED AFTER THE
BREAK YESTERDAY
UNITED PRESS TICKER - December 10, 1935.
148
WCNS54
Silver See Thomas
CONGRESSIONAL SILVER AUTHORITIES REGARD THE BREAK IN SILVER PRICES
AT LONDON AND MONTREAL AS A TRANSITORY PHASE OF THE SILVER PROGRAM AND
NOT AS AN INDICATION OF ANY PERMANENT CHANGE IN THE AMERICAN BUYING
PROGRAM.
SENATOR ELMER THOMAS, ACTIVE PROPONENT OF THE SILVER MOMENT, SAID
HE HAD NO INFORMATION ON WHAT HAD HAPPENED AFTER THE BREAK YESTERDAY.
€ SAID THERE WERE RUMORS THE U.S. TREASURY WAS GETTING OUT OF THE
MARKET BUT HE DID NOT BELIEVE IT COULD WITHOUT TERRIFIC LOSS ON THE
700,000,000 OUNCES OF SILVER IT NOW HOLDS AT AN AVERAGE PURCHASE PRICE
OF 60 CENTS AN OUNCE.
12/10--R1207P
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
149
WCNS134
ADD SILVER (WCNS131)
THE TREASURY, IT WAS EXPLAINED, HAD BEEN ABLE TO BUY HEAVILY IN THE
FOREIGN SILVER MARKET RECENTLY DUE TO THE HEAVY FLOW OF CAPITAL TO THE
U.S. BECAUSE OF THE EUROPEAN WAR SCARE.
WITH THE CAPITAL FLOW SLOWING, PRESSURE ON THE POUND STERLING EASED,
THUS UPSETTING THE BALANCE WHICH HAD BEEN MAINTAINED BY THE HEAVY
AMERICAN SILVER PURCHASES.
IT WAS SUGGESTED THAT BRITISH AND AMERICAN OFFICIALS WERE IN AGREE-
MENT IN THEIR DESIRE TO KEEP THE DOLLAR POUND RATIO AT THE PRESENT
FIGURE OF $4.93 TO THE POUND. HOWEVER, IF SILVER PURCHASES WERE CONTINUED
IT WOULD REQUIRE PURCHASE BY THE U.S. OF LARGE BLOCKS OF STERLING
EXCHANGE, THUS INCREASING THE TENDENCY OF THE POUND TO RISE,
IN ADDITION TO THE SITUATION AS REGARDS THE POUND, IT WAS
POINTED OUT THAT THE GOVERNMENT WAS DESIROUS THAT ITS SILVER BUYING
SHOULD NOT DISTURB UNDULY THE MONETARY ARRANGEMENTS OF THE
SOLD STANDARD COUNTRIES.
12/10--R438P
Regraded Unclass
DJW JONES TICKER - December 10, 1935.
150
ADD SILVER --WASHN
3.15
INFORMED STUDENTS IN THE GOVT ON SILVER
STATE THAT THE FEDERAL TREASURY USED THE
SILVER PURCHASE PROGRAM TO KEEP THE POUND STERL-
ING AND THE DOLLAR EXCHANGE RATIO INTACT DURING
THE FLIGHT OF CAPITAL TO THE U S RECENTLY AS A
RESULT OF THE WAR SCARE- THE U S BOUGHT SILVER
THROUGH PURCHASES OF STERLING AND BY THIS MEANS
OFFSET THE STRENGTHENING EFFECT ON THE DOLLAR
AS A RESULT OF THE FLIGHT FROM EUROPEAN
CURRENCIE PRINCIPALLY THE POUND
WITH IMPROVEMENT IN THE GOLD BLOC COUNTRIES
FOLLOWING THE VOTE OF CONFIDENCE GIVEN PREMIER
LAVAL BY THE FRENCH CHAMBER OF DEPUTIES THE
TENDENCY FOR THE DOLLAR TO APPRECIATE IN FOREIGN
EXCHANGE IS REDUCED AND HENCE THE NEED FOR
PURCHASES OF SILVER TO KEEP THE POUND FROM
DROPPING IS REMOVED IT IS SAID -
JK-9&PK8&M9
-IN LEHAD MAKE NAME READ LEITH ROSS
INSTEAD OF KEITH ROSS-
UNITED PRESS TICKER - December 10, 1935.
151
WCNS131
TREASURY OFFICIALS SAID THIS AFTERNOON THEY WERE "STILL CARRYING
DUT THE SILVER PURCHASE ACT WHICH CALLED FOR AN EVENTUAL INCREASE
IN GOVERNMENT SILVER HOLDINGS TO A THIRD THE VALUE OF THE GOLD HOLDINGS.
SECRETARY MORGENTHAU SAID HE WOULD NOT DISCUSS THE SILVER SITUATION
ITH NEWSMEN.
HERBERT E, GASTON, ASSISTANT TO MORGENTHAU, SAID THAT THE TREASURY
OULD NOT TALK ABOUT DAY-TO-DAY DEVELOPMENTS OR TACTICS IN ITS SILVER
ROGRAM.
12/10--R428P
Regraded Unclassified
UNITED PRESS TICKER - December 10,1935.
152
WCNS126
ADD SILVER
IT WAS POINTED OUT THAT DUE TO THE LESSENING OF EUROPEAN WAR FEARS
THE TREASURY'S SILVER PURCHASE PROGRAM COULD NOT BE CONTINUED WITHOUT
ESULTING IN AN UNDESIRED SHARP ADVANCE IN THE PRICE OF THE POUND
TERLING.
IT WAS TO PREVENT THIS RISE, IT WAS SUGGESTED, THAT THE TREASURY
DDENLY HALTED PURCHASE OF SILVER IN THE LONDON MARKET.
12/10--R404P
Regraded Unclassif
DOW JONES TICKER - December 10, 1935.
153
MONTREAL SILVER
MONTL- BOTH MAR AND MAY FUTURES ARE BEING OFFER-
ED IN MONTREAL SILVER PIT AT 55 05 WHICH IS AT
MAXIMUM DECLINE OF 500 POINTS ALLOWED FOR ONE D
DAY-
3.25
-0-
MONTREAL - BY UNITED PRESS -
- -THE SILVER SECTION OF THE CANADIAN COMMOD-
ITY EXCHANGE ITSELF IS NOT INTERESTED WHETHER
PRICES GO UP OR DOWN- AN OFFICIAL OF THE EXCHANG
SAID-
-THIS EXCHANGE DOES NOT FIX PRICES- IT MER
LY PROVIDES A MARKET FOR THOSE WHO WISH TO BUY
OR SELL-
-JUST BECAUSE TODAY THERE HAPPENS TO BE A
PREPONDERANCE OF SELLERS THERE IS NO REASON WHY
WE SHOULD DENY THE FACILITIES OF THE MARKET TO
THOSE WHO WISH TO SELL OR OTHERS WHO WOULD LIKE
TO BUY- HE SAID-
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
154
S125
Washington
TEMPORARILY WITHDRAWAL OF THE U.S. GOVERNMENT FROM WORLD
ETS OREIGN WAS ASCRIBED UNOFFICIALLY TODAY TO A DESIRE TO AVOID UNSETTLEMEN, SILVER
MONEY MARKETS.
12/10--R402P
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
155
WCNS130
MONTREAL--COLLAPSE OF THE LONDON SILVER MARKET BROUGHT A BREAK
OF 5 CENTS AN OUNCE, THE MAXIMUM PERMITTED, IN ACTIVELY TRADED MONTHS
ON THE CANADIAN COMMODITY EXCHANGE TODAY.
THE CLOSE WAS 500 POINTS LOWER ON ACTIVE MONTHS AND RANGED TO
NOMINAL BREAK OF 780 POINTS IN MONTHS NOT TRADED.
LIQUIDATION DEVELOPED BUT FOUND ONLY A FEW TAKERS. SALES TOTALED
36 LOTS OR 360,000 OUNCES. DECEMBER, MARCH AND MAY FUTURES WERE THE
ONLY ONES TRADED.
12/10--R424P
Regraded Unclassified
DOW JONES TICKER - December 10, 1935.
156
LONDON SILVER
2.24
LONDON - BULLION BROKERS SAY THAT OFFERS OF
SPOT AND FORWARD SILVER FROM ALL QUARTERS TODAY
EXCEEDED 20 000 000 OUNCEV AND AS AMERICA GAVE
INSUFFICIENT SUPPORT IN RESPONSE TO INQUIRIES
TO WASHINGTON IT WAS IMPOSSIBLE TO FIX A QUOTA-
TION-
IF A QUOTATION HAD BEEN FIXED THE DISCOUNT
ON YORWARD SILVER WOULD HAVE BEEN OUT OF ALL
PROPORTION - COMPLETE CHAOS REIGNS IN THE BULL-
ION MARKET AND BROKERS ARE QUITE UNABLE TO SAY
WHAT WILL HAPPEN TOMORROW IF AMERICA STILL
WITHOLDS SUPPORT- THE SITUATION IS QUITE UN-
PRECEDENTED AND THE FUTURE COURSE OF ACTION
IS UNPREDICTABLE-
UNITED PRESS TICKER - December 10, 1935.
157
WCNS102
NEW YORK-THE NEW YORK MARKET FOR "FOREIGN BAR SILVER" WAS
STALEMATED TODAY, NO BUYERS APPEARING SEVERAL HOURS AFTER THE USUAL
PRICE FIXING TIME.
"NO PRICE WILL BE FIXED UNLESS A BUYER IS FOUND," A SPOKESMAN FOR
HANDY & HARMAN, BULLION DEALERS, SAID.
12/10--R206P
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
158
WCNS114
MONTREAL--MARCH SILVER FUTURES BROKE 500 POINTS OR 5 CENTS AN
OUNCE ON THE COMMODITY EXCHANGE TODAY, THE MAXIMUM LIMIT OF DAILY
FLUCTUATION.
12/10--R259P
Regraded Unclassified
UNITED PRESS TICKER - December 10, 1935.
159
matred
WCNS108
MONTREAL--SILVER TRADING CONTINUED ON THE CANADIAN COMMODITY
EXCHANGE TODAY IN SPITE OF THE COLLAPSE OF THE LONDON MARKET.
EXCHANGE OFFICIALS SAID PLANS TO SUSPEND TRADING "WERE NOT BEING
CONSIDERED AT THIS TIME.'
"THE SILVER SECTION OF THE COMMODITY EXCHANGE ITSELF IS NOT
INTERESTED WHETHER PRICES GO UP OR DOWN," THE OFFICIAL SAID.
THIS EXCHANGE DOES NOT FIX PRICES. IT MERELY PROVIDES A MARKET FOR
THOSE WHO WISH TO BUY OR SELL.
"JUST BECAUSE TODAY THERE HAPPENS TO BE A PREPONDERANCE OF SELLERS
THERE IS NO REASON WHY WE SHOULD DENY THE FACILITIES OF THE MARKET TO
THOSE WHO WISH TO SELL OR OTHERS WHO WOULD LIKE TO BUY," HE SAID.
12/10 ON242P
Regraded Unclassifie
160
DOW JONES TICKER - December 10, 1935.
SILVER
1.20 Dewyork
NY - UNLESS A BUYER IS FOUND IN THE NY
MARKET THERE WILL BE NO PRICE FIXED FOR FOREIGN
SILVER IN N Y TODAY - YESTERDAY-S QUOTATION WAS
64 3-4 CENTS PER OUNCE - AS FAR AS CAN BE
LEARNED NO SILVER HAS BEEN SOLD IN N Y TODAY
DOW JONES TICKER - December 10, 1935.
161
10:28 MONTREAL SILVER
MONTL- MONTREAL SILVER MARKET DISPLAYED A HESIT-
ANT TONE AT OPENING AWAITING LONDON PRICE- DEC-
EMBER THE CURRENT MONTH SOLD OFF 310 POINTS
AT OPENING AND OTHER MONTHS QUOTED SHOWED DEC-
LINES RANGING FROM 110 TO 205 POINTS-
UNITED PRESS TICKER - December 10, 1935.
162
WCNS115
NEW YCRK--DEMORALIZATION OF WORLD SILVER MARKETS UNSETTLED THE
STOCK AND BOND MARKETS TODAY. SILVER SHARES BROKE 2 TO MORE THAN as
POINTS AND MOST OTHER ISSUES FOLLOWED THE DECLINE AT A SLOWER PACE.
12/10--R3P
Regraded Unclassified
UNITED PRESS TICKER - December 10,1935.
163
CNS110
NEW YORK--HANDY & HARMAN, BULLION DEALERS, TODAY FIXED THE PRICE
FOR "FOREIGN BAR SILVER* AT NEW YORK AT 63 3/4 CENTS A FINE OUNCE, A
DECLINE OF 1 CENT AN OUNCE FROM YESTERDAY.
12/10 ON243P
Regraded Unclassifi
UNITED PRESS TICKER - - December 10,1935.
164
WCNS111
ADD SILVER, LONDON
FOR MORE THAN TWO MONTHS, UNTIL YESTERDAY, THE PRICE OF SILVER HAD
BEEN STABILIZED AROUND 29 1/4 PENCE WITH OFFICIAL OR AMERICAN TREASURY
BUYING ABSORBING OFFERINGS. SATURDAY AFTER FIXING THE PRICE, THE U.
S. REFUSED TO MAKE ADDITIONAL PURCHASES AND THIS LED TO RUMORS OF A
CHANGE IN THE U. S. TREASURY'S SILVER BUYING POLICY.
12/10 ON244P
Regraded Unclassified
165
UNITED PRESS TICKER - December 10,1935.
WCNS85
NEW YORK--UNCERTAINTY OVER THE LONDON SILVER SITUATION--WHERE NO
PRICE HAD BEEN FIXED SEVERAL HOURS AFTER THE REGULAR TIME--BROUGHT
SELLING IN METAL SHARES WHICH WEAKENED THE ENTIRE STOCK MARKET TODAY,
THE MARKET TURNED ACTIVE SHORTLY AFTER MID-DAY AND THE ENTIRE LIST
DROPPED. TRADING QUIETED BUT THERE WAS LITTLE PICKUP IN PRICE LEVELS.
12/10 ON115P
Regraded Unclassified
UNITED PRESS TICKER - December 10,1935.
166
new you
WCNS29
NEW YORK--SILVER STOCKS BROKE SHARPLY AT THE OPENING ON THE STOCK
EXCHANGE WHILE SILVER FUTURES CRASHED 300 POINTS AT MONTREAL AND THE
LONDON MARKET AGAIN DELAYED FIXING THE SILVER PRICE BECAUSE OF PRESS
OF OFFERINGS.
THE STOCK LIST WAS UNSETTLED BY THE SILVER INCIDENT WHICH was
INTERPRETED AS REFLECTING A CHANGE IN THE GOVERNMENT'S SILVER BUYING
OLICY. LEADING INDUSTRIAL STOCKS EASED FRACTIONS TO A POINT AND RAILS
WERE LOWER. SOME SPECIAL ISSUES ADVANCED.
12/10--R1039A
Regraded Unclassifie
DOW JONES TICKER - December 10, 1935.
167
2.43
LONDON SILVER
LONDON - BY U P- A SILVER BROKER TOLD THE
UNITED PRESS AFTER DEALINGS HAD BEEN SUSPENDED
THAT HE WAS HOPEFUL THAT THE SITUATION WOULD
BE CORRECTED TOMORROW-
-WE HOPE TO SEE DAYLIGHT TOMORROW- HE SAID
-THERE IS AN OLD ESTABLISHED RULE WHICH PROVID-
ES THAT THE FIXED PRICE MUST BE SET AT THE
LEVEL AT WHICH THE ENTIRE BLOCK OF SILVER IS
SOLD BUT WE WERE UNABLE TO FIND A BUYER WILLING
TO TAKE ALL OFFERED TODAY - RATHER THAN FIX A
NOMINAL PRICE WHICH IS SATISDACTORY TO NOBODY
WE DECIDED TO SUSPEND DEALINGS-
UNITED PRESS TICKER - December 10,1935.
168
WCNS91
LONDON-THE WORLD MARKET FOR SILVER COLLAPSED TODAY WHEN NO
BUYERS APPEARED FOR THE 18,000,000 TO 20,000,000 OUNCES OFFERED, AND
FOR THE FIRST TIME SINCE 1914 NO "OFFICIAL" PRICE WAS FIXED.
12/10--N133P
Regraded Unclassified
UNITED PRESS TICKER - December 11, 1935.
169
WCNS94
LONDON-THE U. S. TREASURY TODAY SAVED THE WORLD SILVER MARKET
FROM FURTHER COLLAPSE WHEN IT BOUGHT A COMPARATIVELY SMALL BLOCK AND
PERMITTED ESTABLISHMENT OF A PRICE AT 27 1/2 PENCE AN OUNCE--EQUIVALENT
ON THE BASIS OF THE LATEST POUND STERLING QUOTE TO 61 CENTS A FINE OUNCE.
12/11--N123P
UNITED PRESS TICKER - December 11,1935.
170
WCNS100
ADD SILVER, LONDON
THE UNITED PRESS LEARNED THE AMERICAN TREASURY BOUGHT SLIGHTLY LESS
THAN A HALF-MILLION OUNCES, OR LESS THAN 7-1/2 PER CENT OF THE TOTAL
OFFERINGS, WHICH RANGED FROM FIVE TO SIX MILLION OUNCES. THE PURCHASE
WAS RATIONED OFF AMONG THE SELLERS ON THE BASIS OF OFFERINGS.
MEANWHILE IT WAS DECIDED TO SUSPEND DEALINGS IN FORWARD OR FUTURE
SILVER UNTIL THE SPOT SITUATION HAD BEEN CLEARED UP.
ATTEMPTS TO FORM A BANKING SYNDICATE TO SAVE THE MARKET WERE FUTILE,
12/11--N132P
Regraded Unclassified
UNITED PRESS TICKER - December 11, 1935.
171
DD SILVER, LONDON
VARIOUS RUMORS WERE CURRENT AFTER THE PRICE FIXING, BUT THE ONE
WHICH WAS VIEWED WITH MOST CREDENCE WAS THAT THE BULLION BROKERS HAD
SUSPENDED THE RULE WHICH REQUIRED THAT ALL OFFERINGS ON THEIR BOOKS
BE ABSORBED BEFORE FIXING A PRICE AND THAT THE LEVEL HAD BEEN SET ON
THE BASIS OF A RELATIVELY SMALL SALE.
NO QUOTATION, HOWEVER, WAS FIXED ON FORWARD OR FUTURE SILVER BECAUSE
OF THE UNCERTAINTY SURROUNDING THE ENTIRE SITUATION.
12/11 ON102P F
Regraded Unclassif
UNITED PRESS TICKER - - December 11, 1935.
172
WCNS86
ADD SILVER, LONDON (WCNS79)
add Silver
IT WAS IMPOSSIBLE TO LEARN IMMEDIATELY WHO ABSORBED THE HUGE OFFER.
INGS OF THE METAL AT TODAY'S PRICE.
HOWEVER, IT APPEARED THAT THE BUYING WAS MOTIVATED BY AN EFFORT TO
PREVENT COLLAPSE OF THE WORLD MARKET AND THAT IT CAME FROM SOME LARGE
INTERESTS--EITHER A BANKING COMBINE, AS RUMORED EARLY OR THE U. S.
TREASURY.
IF THE BUYING DID COME FROM THE UNITED STATES, IT MARKED THE FIFTH
TIME THIS YEAR THAT AMERICA PREVENTED A BREAK IN THE WORLD SILVER
LEVEL AND FOCUSED ATTENTION AGAIN ON THE FACT THAT THE PRICE WAS
DEPENDENT ALMOST ENTIRELY UPON THE SUPPORT OF THE AMERICAN TREASURY.
12/11 ON1251P
Regraded Unclassified
UNITED PRESS TICKER - December 11, 1935.
173
WCNS79
ADD SILVER, LONDON (WCNS74)
THIS WAS 2 3/4 CENTS AN OUNCE BELOW THE PRICE ESTABLISHED AT NEW
YORK YESTERDAY BY HANDY & HARMAN, BULLION DEALERS. IT WAS 16 CENTS
AN OUNCE BELOW THE NET PRICE PAID BY THE U.S. TREASURY FOR NEWLY MINED
NATIVE METAL.
THE LONDON LEVEL WAS 1 1/4 PENCE AN OUNCE BELOW THE PRICE FIXED
MONDAY. YESTERDAY BROKERS WERE FORCED TO SUSPEND DEALINGS WITHOUT
FIXING A PRICE FOR THE FIRST TIME SINCE THE WORLD WAR WHEN NO BUYER
COULD BE FOUND FOR THE 20,000,000 OUNCES OFFERED.
12/11--R1227P
Regraded Unclassified
DOW JONES TICKER - December 11, 1935.
174
2 48 PM
SILVER
LONDON - BROKERS STATE THAT ONLY 7 1-2 PC
OF THE TOTAL CASH SILVER OFFERINGS AMOUNTING TO
6 000 000 OUNCES WAS BOUGHT BY AMERICA TODAY-
FORWARD OFFERINGS AMOUNTED TO 15 000 000 OUNCES
ALTHO THE PROPOSITION OF FORMING A BANKING
SYNDICATE HAS BEEN MOOTED IT IS THOUGHT MOST
UNLIKELY THAT ANY GROUP COULD BE FOUND TO TAKE
OVER SILVER AT A PRICE AND TO AN AMOUNT WHICH
WOULD BE ACCEPTABLE TO SPECULATORS WHO HAVE
BEEN CAUGHT UNLESS THE SILVER MARKET AGAIN
BECOMES FREE FROM AMERICAN DOMINATION AND THE
PRICE DECLINES SO CATASTROPHICALLY THAT SILVER
AGAIN BECOMES AN ATTRACTIVE PURCHASE-
IT ALSO IS UNLIKELY THAT BANKS WOULD COME
TO THE AID OF MORE EASTERN SPECULATORS
THE MARKET IS STILL IN DOUBT HERE WHETHER
WASHINGTON IS GRADUALLY MOVING TOWARDS A POLICY
OF LIMITING ITS PURCMHASES TO DOMESTICALLY
PRODUCED SILVER OR WHETHER IT SIMPLY WISHES TO
ELIMINATE SPECULATORS AND GET ITS FOREIGN
SUPPLIES AT A LOWER PRICE- IN EITHER CASE THE
PROBLEM OF FORWARD SALES WILL TAKE SOME TIME
TO CLEAR UP AND PRESENTS GREAT DIFFICULTIES-
Regraded Unclassifie
175
DOW JONES TICKER - December 11, 1935.
LONDON SILVER
1.32
LONDON -BY U P- THE UNITED PRESS LEARNED THE
AMERICAN TREASURY BOUGHT SLIGHTLY LESS THAN A
HALF-MILLION OUNCES OF THE TOTAL OFFERINGS
WHICH RANGED FROM FIVE TO SIX MILLION OUNCES -
THE PURCHASE WAS RATIONED OFF AMONG THE SELLERS
ON THE BASIS OF OFFERINGS
Regraded Unclassified
UNITED PRESS TICKER - December 11, 1935.
176
WCNS74
LONDON--AID CAME INTO THE WORLD SILVER MARKET TODAY, ENABLING
BULLION BROKERS TO FIX A PRICE OF BAR METAL AT 27 1/2 PENCE
AN OUNCE--EQUIVALENT, AT THE PRESENT VALUE OF THE POUND STERLING,
TO 61 CENTS A FINE OUNCE.
12/11--R1220P
Regraded Unclassified
UNITED PRESS TICKER - - December 11, 1935.
177
WCNS132
MONTREAL--SILVER FUTURES BROKE AS MUCH AS 5 CENTS AN OUNCE--
THE LIMIT OF FLUCTUATIONS--IN ANOTHER SELLING WAVE TODAY WITH CLOSE
2-1/2 TO 5 CENTS LOWER.
TRADING was FAIRLY HEAVY, 39 CONTRACTS OR 390,000 OUNCES BEING
EXCHANGED. SOME LIQUIDATION REPORTEDLY CAME FROM SHANGHAI ACCOUNT
WITH CHINESE TRADERS SWITCHING THEIR BUSINESS TO MONTREAL BECAUSE OF
THEIR INABILITY TO GET EXECUTIONS IN LONDON.
12/11--R430P
Regraded Unclass
DOW JONES TICKER - December 11, 1935.
178
-0-
9150
LONDON BULLION BROKERS ARE PROPOSING TO SUSPED
THE RULE WHEREBY ALL ORDERS WHICH ARE PLACED
AT THE FIXING SILVER PRICE MUST BE EXECUTED -
IN THE EVENT OF THERE BEING INSUFFICIENT BUYERS
TODAY THEY MAY FIX A SP OT PRICE AND RATIO
SELLING ORDERS TO 50 PC OR SOME SUCH FIGURE-
THIS IS THE PRESENT INTENTION BUT WHETHER IT
WILL BE PUT INTO OPERATION DEPENDS UPON AMER-
ICA-S ATTITUDE- IN REGARD TO THE FORWARD
MARKET THE POSITION IS MUCH MORE DIFFICULT AND
IT MAY BE THAT THE FORWARD PRICE WILL HAVE TO BE
MADE NOMINAL- BY THESE PROPOSED MEANS AND BY THE
FACT THAT LIMITS HAVE BEEN PLACED ON MANY SELL-
ING ORDERS THE SITUATION HAS BEEN EASED BUT IS
Still
VERY DIFFICULT-
DOW JONES TICKER - December 11, 1935.
179
LONDON SILVER MARKET
9.10 London
LONDON - UP TO NOON BULLION BROKERS REPORT
FAIRLY LARGE ESTERN AND GENERAL SILVER SELLING
ORDERS RECEIVED - THERE WAS NO INDICATION AS TO
WHETHER AMERICA WILL SUPPORT THE MARKET- MANY
OF THE ORDERS RECEIVED TUESDAY TO SELL UNRESER-
VEDLY HAVE NOW BEEN AMENDED TO NOT TO SELL BE-
LOW A CERTAIN PRICE-
DOW JONES TICKER - December 11, 1935.
2.45
TREASURY WILL TE -- BE CALLED ON BY CONGRESS
TO EXPLAIN SILVER DEVELOPMENT THOMAS BELIEVES
WASHN - THE FEDERAL TREASURY WILL LIKELY
BE CALLED UPON BY EITHER THE SELECT SENATE
SILVER COMMITTEE HEADED BY SENATOR PITTMAN
DEM NEV OR THE SENATE AGRIC SUBCOMMITTEE ON
SILVER TO EXPLAIN CAUSES FOR THE PRESENT SILVER
SITUATION SENATOR THOMAS DEM OKLA A MEMBER
OF BOTH COMMITTEES SAID TODAY- NEITHER cMoMM-
ITTEE IS EXPECTED TO MEET BEFORE CONGRESS
CONVENES SENATOR THOMAS SAID BUT ONE OR BOTH
OF THEM WILL WANT TO MAKE A COMPLETE STUDY OF
THE SILVER SITUATION-
SENATOR THOMAS DECLARES THAT THE SOLUTION
TO THE PROBLEM NOW CONFRONTING THE ADMINISTRA-
TORS OF THE SILVER PURCHASE ACT WOULD BE A CON-
CERTED BUYING PROGRAM UNTIL SILVER IE-- REACHES
I DLR 29 C AN OUNCE WHERE IT SHOULD BE STABILIZ-
ED- -IF WE PUT THE PRICE H WHERE IT OUGHT TO BE
THE NATIONS OF THE WORLD WOULD ADJUST THEMSEL-
VES TO IT- HE SAID-
UNITED PRESS TICKER - December 11, 1935.
181
15109
ADD SILVER
TREASURY OFFICIALS CONTINUED TO CONCEAL THEIR PLANS, BUT A
OKESMAN VENTURED THE COMMENT THAT SILVER REPORTS FROM LONDON "OFTEN
E ILL ADVISED." HIS COMMENT FOLLOWED REPORTS THAT THE U.S. HAD FINALLY
EPPED INTO THE MARKET AND BOUGHT A SMALL AMOUNT OF SILVER PRO-RATED
ONG THE BROKERS AT THE 61 CENT PRICE.
12/11--R216P
Regraded Unclassified
UNITED PRESS TICKER - December 11, 1985.
182
WCNS107
THE U.S. TREASURY HAS "ROBBED ITSELF" OF $28,000,000 IN THE LAST
TWO DAYS BY LETTING THE WORLD PRICE OF SILVER DROP FOUR CENTS AN OUNCE,
SENATOR ELMER THOMAS SAID TODAY.
THOMAS SAID THE LOSS WAS DUE TO THE TREASURY'S FAILURE TO SUPPORT
THE LONDON SILVER MARKET WHICH CAUSED A DROP IN THE SILVER PRICE
FROM ABOUT 65 CENTS AN OUNCE TO 61 CENTS.
"THE TREASURY HOLDS 700,000,000 OUNCES OF SILVER, THE VALUE OF WHICH
DROPPED JUST AS MUCH AS THE WORLD PRICE DID, THEREFORE, THE TREASURY
TOOK A LOSS OF ABOUT $28,000,000 ON THIS MANEUVER," HE SAID.
"IT'S THE BEST THING THAT COULD HAPPEN, HOWEVER, TO MY MIND FOR IT
WILL BRING A SHOW-DOWN ON THE SILVER SITUATION. UNLESS THE TREASURY
GOES AHEAD AND GETS THE PRICE UP TO ITS REAL MONETARY VALUE, IT MIGHT
AS WELL QUIT BUYING SILVER AND TAKE THE FULL LOSS ON WHAT IT ALREADY
HAS."
12/11--R213P
Regraded Unclassified
DOW JONES TICKER - December 11, 1935.
183
SILVER 218
WASHN - BY U P- REP MARTIN DIES D TEX SAID
TODAY HE WOULD URGE PREVIDENT ROOSEVELT TO
ADMINISTER THE SILVER PURCHASING ACT IN A
MANNER TO STIMULATE EXPORTS OF SURPLUS COMMOD-
ITIES-
REP DIES WHO INTRODUCED THE ADMINISTRATION
SILVER BILL IN THE HOUSE HOLDS THAT IT TERMS
ARE BROAD ENFOUGH TO PERMIT THE EXCHANGE OF
SURPLUS COMMODITIES FOR FOREIGN SILVER THERE BY
AVOIDING THE NECESSITY FOR OPEN MARKET PURCHASES
ABROAD SUCH AS NOW ARE CAUSING INTERNATIONAL
REPCERCUSSIONS-
Deeraded Ini
DOW JONES TICKER - December 11, 1935.
184
SILVER
12.50
SHANGHAI- BY U P- CHINA NOW WOULD VIEW A SUDDEN
DRASTIC BREAK IN SILVER PRICES AS EQUALLY HARM-
FUL TO HER INTERESTS AS SHE LOOKED UPON THE
PAST RISE IN THE METAL AS RESULT OF THE U S
BUYING PROGRAM INFORMED QUARTERS SAID TODAY-
ALTHO A NERVOUS UNDERCURRENT WAS EVIDENT
THE SHANGHAI YEN EASED ONLY MODERATELY EFFECT
OF THE SILVER BREAK BEING MINIMIZED BY GOVT
OPERATIONS IN THE CURRENCY MARKET-
Regraded Unclassifie
DOW JONES TICKER - December 11, 1935.
185
DISPARITY IN SILVER PRICE
NY - THERE IS A WIDE DISPARITY THIS MORNING
BETWEEN THE OFFICIAL SILVER PRICES POSTED IN
LONDON AND NEW YORK ON THE BASIS OF 4 92 1-2
FOR STERLING THE 27 1-20 PRICE WAS EQUAL TO
60 94 CENTS WHILE THE HANDY & HARMAN QUOTATION
FOR SPOT SILVER HAS BEEN FIXED HIGHER AT 62 3-4
CENTS - IT IS OBVIOUSLY AN ARTIFICIAL SPREAD
THE UNITED STATES GOVERNMENT IS UNDERSTOOD
TO HAVE PAID 63 CENTS PER OUNCE FOR SILVER IN
N Y THIS MORNING AND IT IS BELIEVED THAT AT
LEAST SOME OF THE PURCHASES IN LONDON THIS
MORNING WERE MADE FOR THE TREASURY-S ACCOUNT AT
60 94 CENTS - THE 63-CENT LEVEL IN N Y IS IN
LINE WITH THE HANDY&HARMAN QUOTATION
UNDER ORDINARY CIRCUMSTANCES THE SPREAD
BETWEEN THE LONDON AND NEW YORK PRICES WOULD
PERMIT PROFITABLE ARBITRAGE BY BUYING LONDON
AND SELLING NEW YORK - THE SPREAD WOULD PAY
SHIPPING AND OTHER CHARGES AND LEAVE A WIDE
MARGIN OF PROFIT
IN THE PRESENT INSTANCE HOWEVER IT IS NOT
Regraded Unclas ified
FEASIBLE GENERALLY TO TAKE ADVANTAGE OF THE
SPREAD BECAUSE THE TREASURY IS BUYING ONLY SP OT
SILVER FOR DELIVERY WITHIN ONE DAY AFTER THE
CONTRACT WAS MADE - A TIME LAG OF ABOUT 10 DAYS
WOULD BE NECESSARY TO ALLOW TIME FOR DELIVERY ON
BOTH ENDS AND SHIPMENTS FROM LONDON TO N Y - IN
THE PRESENT UNSETTLED STATE OF THE SILVER MARKET
THERE IS TOO MUCH RISK IF WIDE PRICE CHANGES DU-
RING THAT TIME TO ALLOW SILVER TO BE BOUGHT IN
LONDON AND THEN SHIPPED FOR SALE HERE
SOME CONFUSION HAS ARISEN IN CERTAIN
QUARTERS OVER THE NEW YORK EQUIVALENT FOR THE
LONDON SILVER PRICE WHICH IS SEVERAL CENTS HIGH-
ER THAN AN INDICATED PRICE BASED MERELY ON THE
EXCHANGE RATE - IN CALCULATING THE N Y EQUIVALER
ALLOWANCE IS MADE FOR THE DIFFERENCE IN FINENESS
- THE LONDON QUOTATION IS BASED ON AN OUNCE OF
SILVER 925 FINE WHILE THE N Y PRICE IS FOR 999
SILVER
I 28 PM-
UNITED PRESS TICKER - December 11, 1935.
187
new york
WCNS82
NEW YORK--THE PRICE OF BAR SILVER IN NEW YORK WAS FIXED BY HANDY
& HARMON, SILVER DEALERS, AT 62 3/4 CENTS, OFF 1 CENT FROM THE PRICE
SET YESTERDAY.
12/11 ON1237P
Regraded Unclassified
DOW JONES TICKER - - December 11, 1935.
188
SILVER FROM ENGLAND
NY - S S PRESIDENT HARDIG 215 HARDING HAS ARRIVED
FROM SOUTHAMPTON WITH 10 716 BARS OF SILVER
CONSIGNED AS FOLLOWS- 4 295 BARS TO THE CHASE
NTL BANK - 3 51-- 3 521 TO GUARANTY TRST CO
AND I 900 TO BANKERS TRST co-
40,704,000
10,400,000
50,065,750
58,000,000
Regraded Unclassifie
ITTA
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Press Service
Tuesday, December 10, 1935.
No. 6-41
Secretary of the Treasury Morgenthau today ennounced the finel subscription
and allotment figures with respect to the current offering of 2-3/4 percent Treasury
Bonds of 1945-47 and 1-1/2 percent Treasury Notes of Series C-1940.
Subscriptions and allotments were divided emong the several Federal Reserve
districts and the Treasury AS follows:
2-3/4 PERCENT TREASURY BONDS OF 1945-47
Federal Reserve
Total Cash
Total Exchange
Total
Total
District
Subscriptions
Subscriptions
Subscriptions
Subscriptions
Received
Received
Received
Allotted
(Allotted in full)
Boston
$ 141,755,900
$ 5,047,600
$ 146,803,500
$ 38,728,000
New York
999,987,850
100,657,300
1,100,645,150
331,901,900
Philadelphia
96,168,300
2,570,500
98,738,800
35,068,450
Cleveland
86,357,650
1,509,000
87,866,650
22,919,350
Richmond
69,342,900
3,062,400
72,405,300
20,296,800
Atlenta
82,728,500
762,500
83,491,000
20,933,000
Chicago
198,787,550
39,950,100
238,737,650
88,254,050
St. Louis
57,280,000
1,962,300
59,242,308
16,270,750
Minnespolis
19,424,900
950,000
20,374,900
6,190,900
Kensas City
43,161,150
3,327,500
46,488,650
14,942,150
Dalles
56,867,900
744,500
57,612,400
16,534,650
San Francisco
182,434,100
656,000
183,090,100
43,410,600
Treasury
683,000
118,000
801,000
285,500
TOTAL
$2,034,979,700
$161,317,700
$2,196,297,400
$645,736,100
1-1/2 PERCENT TREASURY NOTES OF SERIES C-1940
Federal Reserve
Total Cash
Total Exchange
Total
Total
District
Subscriptions
Subscriptions
Subscriptions
Subscriptions
Received
Received
Received
Allotted
(Allotted in full)
Boston
$ 163,185,200
$ 11,207,400
$ 174,392,600
$ 43,784,600
New York
1,308,829,200
138,324,500
1,447,153,700
388,007,400
Philadelphia
128,222,700
3,708,000
131,930,700
28,411,400
Cleveland
155,714,400
5,793,500
161,507,900
36,424,700
Richmond
70,473,800
23,162,000
93,635,800
38,237,800
Atlanta
71,661,300
5,830,000
77,491,300
20,403,500
Chicago
251,243,100
31,107,800
282,350,900
81,530,700
St. Louis
54,440,100
7,512,800
61,952,900
18,866,900
Minnespolis
23,569,500
5,191,000
28,760,500
10,388,000
Kensas City
41,601,400
8,433,400
50,034,800
17,454,100
Dellas
50,323,200
2,262,500
52,585,700
14,582,500
San Francisco
167,491,000
6,677,000
174,168,000
38,822,000
Treasury
510,000
161,000
671,000
261,000
TOTAL
$2,487,364,900
$249,370,900
$2,736,635,800
$737,174,600
Regraded Unclassif
December 11, 1935
189
Early in the morning the London silver brokers advised that they had
on hand offers to sell about 6 million ounces of spot silver and about
25 million ounces for forward delivery. They also advised that they had
changed their procedure of fifty years standing under which all silver
offered for sale must be disposed of at the fixed price. The new arrange-
ment allowed for a price to be fixed on the amount of bids received and
the total bids received to be apportioned against the selling orders on a
percentage basis.
At 11 AM the National City Bank, Bombay, telephoned their New York office
and offered for prompt delivery on board American Steamer sailing on December
14, one lot of one million ounces of silver at 27 7/8 pence, equivalent to
61.80# and a second lot of 550 thousand ounces at 27 1/2 pence, equivalent to
61#. These offers were accepted on the wire and as it had been decided to
purchase a total of 2 million ounces in foreign markets, we accepted an offer
for the difference, namely 450,000 ounces, from London at the price of 27 1/2
pence, which was equivalent to 61#. This allowed for an execution by the
London brokers of about 8 1/2% of all their selling orders received. Later
in the day further offers were made from both Bombay and London, some as low
as the equivalent of 60#, but these further offers were declined. The New York
price was set at 63#, and a total of about 3 million ounces was sold in New
York at these prices. We were offered 2 million ounces of silver by the Banco
de Mexico, but only one million of this was accepted at & price of 63#, delivery
in New York, less all expenses of transportation from Mexico.
Regraded Unclassi
190
X
TREASURY DEPARTMENT APPROPRIATION BILL
NAME 9a Subject
for
- WT libert officer or the
MM of -
1937.
OF main 17 and insure OF
arter
-
del Yes 18
loss, - DID
Statement of
SI before VLSA Deniving 13 4.20
THE prom HON. HENRY MORGENTHAU, JR., * -
Not of (tore we
Secretary of the Treasury
absolutely meetic 55 to
RS1 will - selv 10 savi HIM
the Hrite M the reduct not
la the Decks Before
Subcommittee of House Committee
the med effort on Appropriations.
in
December 11, 1935.
The stand notal N approvitations 500 the mileary (se
1038 La 81,014, with 120 visal missing Tax
19.25 or w/a additionation by yver
20 OCA = 2019 THE 533 -
4F
191
- 1 -
The Treasury's estimates for 1937 have been carefully
reviewed by the Department's budget and improvement com-
mittee, by the Budget Officer of the Department, and by the
Bureau of the Budget.
As a result of such intensive study, the total esti-
mates for annual operating expenses of the Department have
been reduced from $167,052,306, as submitted by Bureau
heads, to $143,511,200, as finally approved in the Budget
now before this Committee, - a decrease of $23,541,106.
This gross decrease is made possible by the elimina-
tion of items which although highly desirable are not
absolutely essential, and it is believed that the Depart-
ment will be able to conduct its many operations within
the limits of the reduced estimates submitted, without
embarrassment to the Service. It demonstrates, however,
the earnest effort which has been made to reduce expendi-
tures in the work of the Department.
The grand total of appropriations for the Treasury for
1936 is $1,614,957,991.92, while the total estimates for
1937 now under consideration by your Committee aggregate
$1,623,298,600, indicating a net increase for all appro-
priations of $8,340,608.08.
Regraded Unclassi ied
192
- 2 -
Appropriations under the Treasury Department, as set
forth in the 1937 Budget, may be classified as follows:
1. Regular annual appropriations for
ordinary operating expenses
of the Department;
2. Indefinite appropriations for
ordinary operating expenses
of the Department;
3. Special items, consisting of internal
revenue, customs and other miscel-
laneous refunds, etc.;
4. Interest on and retirements of the
public debt payable from ordinary
receipts.
ORDINARY OPERATING EXPENSES.
Under the first two classes, which cover the ordinary
operating expenses of the Department and which are largely
subject to administrative control, the estimates for 1937,
when compared with the appropriations for the fiscal year
1936, show an increase of $16,474,091.
This increase is due principally to the following:
Regraded Unclassit
193
- 3 -
Under "Expenses, Emergency Banking, Gold Reserve and
Silver Purchase Acts" an item of $1,662,800 appears in the
1937 estimates. Because of the availability of unexpended
balances from prior years, no appropriation appeared under
this heading in the regular Treasury appropriations for
1936. These unexpended balances, however, provided funds
adequate only for the first half of the fiscal year and,
accordingly, 8. deficiency estimate under this appropriation
will be submitted for the balance of the current fiscal year.
Under "Salaries and Expenses, Division of Disbursement",
an increase of $762,510 is necessary to provide for disburs-
ing work taken over by this Division in the current fiscal
year from other departments and establishments. The Division
of Disbursement has practically completed its organization
of disbursing functions, both in the District of Columbia and
in the field. An increased volume of disbursing work has been
handled without corresponding increase in personnel, and it is
confidently expected that with continued effort in the develop-
ment of improved methods, further economies will be effected.
In order to maintain the necessary number of Customs em-
ployees for minimum requirements, the estimate under "Collect-
ing the Revenue from Customs" is $204,200 larger than the 1936
Regraded Unclassi fied
194
- 4 -
appropriation.
An increase of $1,931,740 is estimated for the Bureau
of Internal Revenue, due to the need for additional person-
nel in the Income Tax and Alcohol Tax units, as well as in
the Field Collection Service. The increase of force in the
Alcohol Tax unit is required for the supervision of new
plants which have come into operation since the discontinuance
of the Distillers' Codes under the N. R. A. The increase in
the Income Tax Unit and the Field Collection Service is re-
quired to expedite the examination and audit of income tax
returns.
Under Coast Guard, an increase of $2,064,755 is due
principally to the need for additional airplanes and to the
requirement of additional personnel to man new vessels and
new aviation stations.
The Bureau of Engraving and Printing will require addi-
tional funds in the amount of $340,183 to meet anticipated
increased demands in 1937 for currency, revenue stamps and
checks.
For the Secret Service an increase of nearly $247,000
is necessary to enable that Service to cope with increased
counterfeiting activities in all parts of the country, to
investigate forgeries and other frauds committed in connec-
tion with the greatly increased volume of Government checks
Regraded Unclassit
195
- 5 -
issued, and to perform the additional investigative work
required of the Service under laws recently enacted.
The Public Health Service estimates are $9,586,748
larger than their 1936 appropriations. or this increase,
over $9,235,000 represents new items under the Social
Security Act, of which $8,000,000 is estimated for pro-
viding grants to the States under Section 601 of that Act,
and about $1,235,000 to provide for new projects of investi-
gation and study under Section 603.
The sum of $250,000 is estimated under the General
Supply Fund of the Procurement Division, in order to pro-
vide adequate funds with which to conduct the increased
volume of commodity purchases. The consolidation of pur-
chasing functions under the Procurement Division has already
resulted in substantial savings, the details of which will
be given to the Committee by the Director of Procurement.
The Federal Alcohol Administration, created as a Divi-
sion of the Treasury under the Act of August 29, 1935, and
not hitherto appropriated for under the Treasury Department,
will require $550,000 for 1937. A deficiency appropriation
for this Division will be requested for the current fiscal
year.
Regraded Unclassi
196
- 6 -
While the estimate contained in the Budget for 1936
under the indefinite appropriation "Expenses of Loans,
Act September 24, 1917, 68 Amended and Extended", was
$1,360,280, it is now estimated that $3,000,000 will be
required for this purpose for 1936. The estimate for
1937 is $1,868,000, indicating a reduction under this
heading for 1937 of $1,132,000. The increase for the fis-
cal year 1936 is necessary in order to handle the estimated
volume of public debt transactions arising out of new issues
in meeting maturities and in acquiring such additional sums
as may be necessary for Governmental costs in excess of
estimated revenues for the year.
NON-OPERATING EXPENSES.
The non-operating expenses of the Department include
such items as Federal Land Bank payments, refunds of collec-
tions, trust funds, recoinage of coins, and public buildings
construction.
The requirements for 1937 to meet non-operating expenses,
as set forth in the estimates now before your Committee, are
$99,235,482 less than the 1936 appropriations under this head-
ing. The 1937 estimates, however, do not include any provision
Regraded Unclassi
le
196
- 6 -
While the estimate contained in the Budget for 1936
under the indefinite appropriation "Expenses of Loans,
Act September 24, 1917, as Amended and Extended", was
$1,360,280, it is now estimated that $3,000,000 will be
required for this purpose for 1936. The estimate for
1937 is $1,868,000, indicating a reduction under this
heading for 1937 of $1,132,000. The increase for the fis-
cal year 1936 is necessary in order to handle the estimated
volume of public debt transactions arising out of new issues
in meeting maturities and in acquiring such additional suma
as may be necessary for Governmental costs in excess of
estimated revenues for the year.
NON-OPERATING EXPENSES.
The non-operating expenses of the Department include
such items as Federal Land Bank payments, refunds of collec-
tions, trust funds, recoinage of coins, and public buildings
construction.
The requirements for 1937 to meet non-operating expenses,
as set forth in the estimates now before your Committee, are
$99,235,482 less than the 1936 appropriations under this head-
ing. The 1937 estimates, howaver, do not include any provision
I
197
- 7 -
for public buildings construction, the estimates for which
will be separately submitted to the Congress. If we exclude,
for purposes of comparison, public buildings construction,
the estimates for 1937 to cover the non-operating expenses
of the Department are less, by $31,235,482, than the 1936
appropriations for similar purposes. This reduction is made
up principally of the following items:
While an increase of $4,000,000 appears for 1937 under
"Subscriptions to Paid-In Surplus, Federal Land Banks", a
reduction of $12,000,000 has been made in the estimate under
"Payments to Federal Land Banks, Reduction in Interest Rate
on Mortgages".
Under the Customs Service, an increase of $5,000,000 is
estimated for "Customs Refunds and Drawbacks", such increase
being based upon an increase in Customs business.
Under Internal Revenue, on the other hand, the estimated
appropriations necessary in 1937 to meet all non-operating
expenses are approximately $27,000,000 less for 1937 than for
1936. This is due entirely to a reduction of $27,000,000 in
the estimate for "Refunding Internal Revenue Collections".
This decrease will be accomplished by utilizing in 1937 the
unexpended balance of the current year's appropriation.
Regraded Unclass
198
- 8 -
An item of $700,000 was appropriated for 1936 under
"Relief of Contractors". While no additional funds for this
purpose will be required for 1937, legislation for the grant-
ing of such relief is included in the 1937 Budget, with pro-
vision for the use, during the latter year, of any funds
remaining unobligated from the 1936 appropriation.
INTEREST ON THE PUBLIC DEBT
and
PUBLIC DEBT RETIREMENTS.
Interest on the public debt shows, for 1937, an increase
of $63,000,000 as compared with the revised estimate for 1936,
the additional amount being necessary because of an increase
in the estimated amount of obligations which will be outstand-
ing.
An increase of $29,000,000 is estimated for the Sinking
Fund, as compared with the revised estimate for the current
fiscal year. This increase represents basic increases and
the accrual of interest required under the law.
Regraded Unclassifie
199
December 11, 1935
Lockett, U. S. Commercial Attache of the United States
at Mexico, telephoned to the Secretary today from Mexico City
at 1:15 o'clock.
The Secretary sent for Coolidge, Oliphant and Lochhead.
Coolidge and Lochhead came in, but Oliphant was out to lunch.
In the course of the conversation, HM, Jr. asked Lockett
to hold the 'phone and Lockett said he would. Their conver-
sation to this point is as follows:
Tom
Lockett:
This is Tom Lockett in Mexico City -
HM,Jr:
Yes
L:
We're about to get into more financial difficulties
down here.
HM,Jr:
Why is that?
L:
- The - just before this last drop - silver -
HM, Jr:
Yes
L:
- the note issue was about three million pesos less
than the monetary reserve.
HM, Jr:
Yes
L:
The quotation from London today was sixty-one, or a
drop of over four points, -
HM,Jr:
Yes
L:
- which made the note issue about twelve million pesos
in excess of the monetary reserve.
HM,Jr:
Well, they've sold - you mean they've sold too much
silver?
L:
Yes. Now they're - they're getting in a devil of 8
mess and they're afraid to publish a statement of the De-
partment of Mexico showing the issue greater than the
metallic reserve.
HM,Jr:
Yes
L:
So they - they are fearing very disastrous results
with probably runs on the banks.
Regraded Unclassity
200
-2-
HM, Jr:
Well, what did - what did they let the reserve go
down so much for?
L:
Well, they're doing the same thing now that they did
before by not watching end preparing.
HM, Jr:
But I mean - what -
L:
The Secretary of the Treasury asked me to call you -
HM, Jr:
Yes
L:
- and give you this information and also this further
information.
HM, Jr:
Yes
L:
In the monetary reserve there are some two hundred
million of these old demonetized coins, -
HM, Jr:
Yes
L:
- which amount to about sixty million fine ounces of
silver.
HM, Jr:
Yes
L:
He wants to know if it would be possible for you to
make an exchange with him - that is give him gold for
those sixty million ounces of silver -
HM,Jr:
Yes
L:
- in order that he can get himself in shape.
HM, Jr:
Yes
L:
And I told him, at his request, that I would immediately
get in touch with you and give you that information.
HM, Jr:
He wants to exchange sixty million ounces of silver - ?
L:
Yes, sir.
HM, Jr:
- for the equivalent amount of gold?
L:
That's right. And those sixty million ounces are the
fine content of the approximately two hundred million
pesos worth of demonetized coins.
HM, Jr:
Well, they don't - they don't figure that - they
don't figure that - that the monetary coin is part
Regraded Unclassit
-3-
201
of their reserve, do they?
L:
Yes, they do, but the Secretary figures that if that -
if that is converted into gold -
HM,Jr:
Yes
L:
- that he will have a better base for his currency and
convince his people that his notes are safe.
HM, Jr:
I see. Well, now, would he want to actually move
that gold and that silver?
L:
That's my understanding.
HM, Jr:
Yes, and how soon does he want an answer?
L:
Just as soon as he can possibly get it. He saw me
last night - again this morning I was with him. And
he was trembling in his boots as to what might happen
here at any time.
HM,Jr:
Well, now, just - Have you reversed the charges on
this?
L:
No, I did not.
HM,Jr:
Well -
L:
But I'll pay them and send you a bill.
HM,Jr:
That's all right.
L:
That's all right?
HM,Jr:
Now wait a minute, you stay on the phone, will you?
L:
I'll do that.
HM,Jr:
You stay on the phone.
L:
Yes, sir.
(Long pause)
Using the direct wire to the White House, HM, Jr. called
the President and told him that Lockett, from Mexico City, was
on another 'phone and that Lockett reports that the price of
Regraded Unclassit
-4-
202
silver is dropping and the Secretary of the Treasury of Mexico
had approached him. HM, Jr. told the President that it seems
their paper currency is 12,000,000 pesos in excess of their
monetary reserves. He said, "The Mexican Secretary of the
Treasury wants to swap 200,000,000 pesos (the equivalent of
which is 60,000,000 ounces of silver) for an equivalent amount
of gold and that if we do that, we will save them." The Pres-
ident said he would be perfectly agreeable to making the exchange.
HM,Jr. then asked the President on what basis he thought
We ought to make this swap and the President said 62 cents.
HM, Jr. said he had in mind 611 cents, but that he was perfectly
agreeable to being a little more generous and to make it 62
cents.
The Secretary also reported to the President that Lochhead
says there is something in the London Agreement to the effect
that we cannot buy demonetized coins, but that he, the Secretary,
would tell the Mexicans that if our legal office passes with
approval on it, we will go through with it at 62 cents.
HM,Jr. then returned to the 'phone which Lockett was hold-
ing and a record of their exact conversation is as follows:
Tom
Lockett:
Hello
HM,Jr:
Hello, Lockett - ?
L:
Yes, sir.
HM, Jr:
Now, here's - there's something in the London Agree-
ment about our not buying demonetized coins, but I
think that's from silver brokers.
L:
Yes
HM,Jr:
Now our General Counsel is out to lunch but he ought
to be back any minute.
L:
Yes
HM,Jr:
And we'll call you back - what's your number?
L:
L - 1665
HM, Jr:
All right - now you just stay there and certainly
within the half en hour -
L:
Yes, sir.
Regraded Unclassifie
-5-
203
HM, Jr:
And I think you'd better have somebody from the
Treasury come over and sit next to you SQ we can ask
them some questions.
L:
All right, I'll - I'll see if I can get the Secretary
here himself.
HM, Jr:
Right - if not that gentleman that came up here -
L:
Yes, well he's - he's not in the Treasury.
HM, Jr:
Oh, isn't he?
L:
No
HM, Jr:
Oh -
L:
And the Secretary mentioned the fact about the London
Agreement -
HM, Jr:
Yes
L:
And he wanted to know - he mentioned too that - as
to whether or not it could be waived in this case in
the case of the emergency.
HM,Jr:
I
see.
Well
-
L:
And you'll call me back, will you?
HM, Jr:
We'll call you back within a half an hour. Now, you
might be telling them this -
L:
Yes
HM, Jr:
The price in London now is sixty cents. We've been
offered silver at sixty cents.
L:
Is what price?
HM, Jr:
Sixty
L:
Sixty cents?
HM,Jr:
Yes
L:
My God!
HM, Jr:
And Bombay at sixty - we've been offered silver. So
we thought we'd split the difference. Our price today
was sixty-three and you - we can buy silver in London
today at sixty - he can check that - so we thought
Regraded Unclassifi
-6-
204
we would split the difference and then give him a
little bit the benefit and call it sixty-two.
L:
Call it sixty-two?
HM,Jr:
Yes
L:
Yes
HM,Jr:
Now, I - I talked to the President -
L:
Yes
HM,Jr:
And he'd like to do it if possible as a friendly
gesture to Mexico.
L:
Yes
HM,Jr:
Now, will you tell him that?
L:
I certainly will, and Mr. Secretary -
HM,Jr:
Yes
L:
If there's -
he didn't discuss this in detail
with me, but if there's any objection on the actual
movement or transfer -
HM,Jr:
Yes
L:
- probably he would be willing to make some arrange-
ment whereby that gold would remain in the States?
HM,Jr:
No, I'd rather get rid of it.
L:
Oh, you'd rather get rid of it?
HM,Jr:
Sure
L:
Good Lord, that would suit him then.
HM,Jr:
No, I would rather, - I'd rather you have the gold
and we have the silver.
L:
That's fine.
HM,Jr:
Now -
L:
Well, I'll tell you, I'll get someone here from the
Treasury here in the meantime and I'll sit right here
and await your call.
Regraded Unclassified
-7-
205
HM, Jr:
And now, - tell him this, that the President of the
United States and the Secretary of the Treasury are
doing this as a gesture of friendship -
L:
Yes
HM, Jr:
- to the Republic of Mexico.
L:
Well, I'll - I'll certainly do it.
HM,Jr:
And then within a half an hour - now, Lochhead -
Archie Lochhead will talk to you, I mean, they'll
have to stand the expenses of - I mean we'll have
to deduct the cost of refining and all that, but
he'll tell you that.
L:
All right. Well, I'll get the Secretary here'so
we'll have him to ask right back
HM,Jr:
All right. Does he talk English?
L:
Yes, he talks it all right, - so that the chances
are he might want to talk to you himself.
HM,Jr:
Well, I - unfortunately I won't be here because I've
got to go up on the Hill to testify on appropriations.
So, it will be Mr. Lochhead or Mr. Oliphant.
L:
I see.
HM,Jr:
But later on, if he's there, I'd be delighted to talk
to him.
L:
All right
HM,Jr:
But -
L:
I'll have him here - and -
HM,Jr:
But he couldn't get any quicker service in a half an
hour anywhere could he, for sixty million ounces of
silver?
L:
Oh, my Lord, I say not!
HM,Jr:
All right.
L:
All right, thank you.
HM,Jr:
Goodbye.
Regraded Unclassifie
-8-
206
The Secretary had to go to the Hill today at 2 o'clock to
appear before the sub-Committee of the House Appropriations
Committee. He asked Lochhead to locate Oliphant immediately
and tell him of the conversation with Lockett and ask Oliphant
to make a decision whether or not we could, under the terms of
the London Silver Agreement, take the silver offered by Mexico.
When HM,Jr. returned from the Hill, he called in Coolidge,
Oliphant and Lochhead. Oliphant stated that according to the
London Agreement, Mexico having signed the Agreement, she could
not, therefore, sell the United States any silver. HM,Jr. then
asked the following question: "If an individual Were to sell
us demonetized silver we could not buy it, but is it not dif-
ferent if the Government sells it?" Lochhead said he thought
that was right. Coolidge said there is danger of criticism
if we buy from Mexico at 62 cents today and then drop the price
tomorrow and buy silver cheaper tomorrow. HM, Jr. said, "If
we do not buy silver from Mexico end the banks of Mexico close,
having our Stabilization Fund and not helping them we certainly
will be severely criticized." He also said, "Considering the
background of Mexico, I certainly think We ought to buy this
silver. The question is, and I would like Mr. Oliphant to put
his mind to it is, have I the legal right to accept their offer?"
Mr. Oliphant said he would look into it.
HM, Jr. then celled Secretary Hull and told him the story of
his conversation with Lockett and said that Oliphant is working
on the legal question and suggested that he would like Mr. Oli-
phant to talk to Mr. Livesey about it. He also said, "The
Mexicans see silver dropping and they want gold instead." He
also told Mr. Hull that he thought it a very good idea to buy
this silver as we were reaching nearer the ratio of our silver
agreement. "I think it is a good thing to do, but it is just
a question of whether we can do it," he gold Mr. Hull.
Shortly after 4 o'clock Oliphant came in and told The Secre-
tary that the Mexicans had misrepresented the situation; that
the Mexican silver reserve is 197 million pesos and their gold
reserve is 149 million, meking a total of 346 million pesos. He
said they have about the same amount of notes outstanding, in-
cluding their sub-coins, and under their law they only have to
have 50 percent. What they really went us to do is to buy their
entire silver reserve or 197 million pesos.
Mr. Morgenthau then called Lockett. Their conversation is
as follows:
HM,Jr:
Hello -
Tom
Lockett:
Mr. Secretary?
Regraded Unclassifie
-9-
207
HM,Jr:
Yes
L:
This is Tom Lockett.
HM,Jr:
Yes - are you alone?
L:
No - the Minister is here.
HM,Jr:
Oh - Well, now, Mr. Lockett, we've been discussing
this thing at great length and we first want to get
our facts straight. Now we've only got your figures
as of October first -
L:
October first?
HM, Jr:
- And on that we figured that you - they had out
about three hundred million dollars worth of notes -
L:
Yes
HM,Jr:
- and about forty-two million dollars worth of sub-
sidiary coins.
L:
Yes
HM, Jr:
Or around three hundred and forty-three million.
L:
Yes
HM,Jr:
Is that right?
L:
Well, now, I have a statement in front of me of
November twenty-third.
HM,Jr:
October twenty-third?
L:
No, November
HM,Jr:
November twenty-third?
L:
Yes, sir.
HM, Jr:
Now, what is that?
L:
For which the note issue is three hundred and two
million -
HM, Jr:
Three hundred and two million?
L:
Two hundred and fifty-seven thousand -
HM,Jr:
Well, never mind that -
L:
All right.
Regraded Unclassif
-10-
208
HM, Jr:
Three hundred and two million?
L:
That's right.
HM, Jr:
Yes and how - what about the subsidiary coins?
L:
The subsidiary coins? - Forty-three million -
HM, Jr:
Yes
L:
- seven hundred thousand.
HM, Jr:
Or a total of three forty-five?
L:
That's right.
HM,Jr:
And their reserves - how much silver reserves?
L:
Just a second - (pause) just 8 second -
Silver - Hello
HM, Jr:
Yes
L:
A hundred and ninety-seven million pesos.
HM, Jr:
One ninety-seven?
L:
Yes
HM, Jr:
Yes - how much gold?
L:
Just a minute - One hundred forty-nine million gold.
HM, Jr:
A hundred and forty-nine million gold?
L:
Yes
HM, Jr:
And how much exchange?
L:
Yes - now wait just a minute and let me give you the
final - I'm giving you the figures later than Novem-
ber the twenty-third. Now wait a minute and let me
give you the note issue.
HM, Jr:
Note issue?
L:
Approximately as I've given you.
HM, Jr:
And that's the note issue?
L:
Yes, sir.
HM, Jr:
And now, what about their reserves?
Regraded Unclassifie
209
-11-
L:
Well, now -
HM, Jr:
How much silver? - as of November twenty-third?
L:
How much silver in the reserves?
HM,Jr:
Yes
L:
Eighty-four million ounces.
HM,Jr:
Ounces?
L:
Yes - or a hundred and ninety-seven million pesos.
HM, Jr:
One ninety-seven pesos?
L:
Yes, sir
HM, Jr:
And how much gold?
L:
A hundred and forty-nine million pesos.
HM, Jr:
A hundred and forty-nine million? - And how much
in exchange?
(Pause)
L:
In dollars?
HM,Jr:
Yes - pesos
L:
Four hundred and thirteen thousand dollars, that's -
that is included in that a hundred and forty-nine
million.
HM, Jr:
Oh, - well then there's a total of how much have they
got in the reserves?
L:
In the reserves? Let's see -
HM, Jr:
Three forty-six -
L:
Three forty-six is right.
HM, Jr:
Now, as I understand it, - we've looked up the law -
all they need is fifty per cent reserves - ?
L:
Well, that - that's correct.
HM, Jr:
Well then, what are they worrying about?
Regraded Unclassifie
210
-12-
L:
Well, they - the difficulty is this, - that with
this new money issue -
HM, Jr:
Yes
L:
- they run a market for such a short time they are
afraid to conduct a note issue
I mean
the actual commercial value of the reserves.
HM, Jr:
Well, in other words, they want to keep a hundred per
cent reserves?
L:
That's correct.
HM, Jr:
Well, is that what they're worrying about or are they
worrying about the price of silver falling?
L:
No, I think it's the - merely a question of those
reserves and the - the note issue.
HM, Jr:
Well now, why should they worry if they - if the
law only requires fifty per cent and they've got over
a hundred?
L:
Well, here's what they are afraid of. - They're
afraid that when they
difficulties with the banks.
HM,Jr:
Well, what happened down there today?
L:
Well, so far it is not known.
HM, Jr:
Yes
L:
and everything at this time seems to be normal.
HM, Jr:
Yes - Well now, has the Secretary down there or
the Minister, looked into the question
under the
London Silver Agreement that he can sell demonetized coins?
L:
I guess he has, in fact he spoke of that to me this
morning.
HM, Jr:
And what does he think?
L:
Well, he wanted - he particularly wanted to know if
there is some way that it could be waived in such
an emergency.
Regraded Unclassifie
-13-
211
HM, Jr:
Well, I mean, who's going to waive it?
L:
(Laughter) - Mr. Morgenthau
HM, Jr:
Yes
L:
He would ask me that question as to whether some
arrangements could be made as to whether it could be
waived.
HM, Jr:
Yes - Well now, let me ask you this -
L:
Yes
HM, Jr:
This two hundred million pesos of demonetized coins -
is that part of their reserves?
L:
Yes, sir.
HM, Jr:
Well, that's their whole reserve then.
L:
That's practically the whole thing plus the gold.
HM, Jr:
Plus the gold? and not - then what they're talking
about is selling us their entire silver reserve?
L:
Practically -
HM, Jr:
It's entirely - you mean, according to your figures,
it is a hundred and ninety-seven million -
L:
That's right
HM, Jr:
Well, now, do they feel they have to sell all of their
silver reserves?
L:
Well now, the Minister has just asked me while he
sitting here - he asked me whether or not if you
would agree to do that. If you would require
of sixty million ounces of silver or whether they
could sell you any portion thereof.
HM,Jr:
Now, say that again, please.
L:
The Minister has just
said to please
ask you if you agree to make this exchange - would
you require him to pay you the full sixty million
ounces or would you take any portion thereof in a
similar exchange.
HM, Jr:
Well now, just hold the wire a minute. -
Regraded Unclassified
212
-14-
(Pause)
HM,Jr:
Hello -
L:
Yes, sir
HM,Jr:
What does the Minister mean when he says would we
take any part - after all, we haven't proposed to take
it all? That isn't our proposal.
L:
No, well, he had this in mind
he said sixty million ounces
HM,Jr:
Yes
L:
And he thought probably that - as to whether or not
you would take the exchange in payment on that amount.
HM,Jr:
Yes
L:
- Whether you would be willing to make an exchange on
a smaller amount depending on which they found it
necessary to sell.
HM,Jr:
Well, - I didn't suggest that we take their entire
silver reserve.
L:
No
HM,Jr:
And - you see, the story that you told me this
morning, that their note issue exceeds their monetary
reserve -
L:
Yes
HM,Jr:
Well, it - it doesn't. I mean, they've got more -
I mean, on a fifty per cent basis they've - that
they've got - they've got plenty of reserve. I
mean, the gold alone is fifty per cent. They've got
fifty per cent reserve alone on the gold - roughly
speaking. Well, they've got a hundred and forty nine
million dollars worth of gold pesos and they've got
three hundred million worth of notes out.
L:
The law is - the trouble is, of course the law
allows them twice as many notes as they
have in the reserve.
HM,Jr:
Yes, well, they'd only get out one for one -
L:
Well, now, the difficulty of the matter is that due
to this new currency and somewhat lack of confidence
that the difficulty is going to arise when the note
Regraded Unclassified
213
-15-
issue loses its actual commercial value they'll have
trouble with the commercial value.
HM,Jr:
Yes, but it isn't what they really want - is they
want to sell some silver - all their silver.
L:
That may be true also, but I know this, that the -
that the anxiety right now is the passing of the note
issue of the metallic reserve.
HM,Jr:
Well, I can't talk to you with him there. Now, I'll
tell you what you do, -
L:
Yes
HM,Jr:
You tell him that I won't have word for him until
seven o'clock our time.
L:
Your time?
HM,Jr:
Yes -
and you let him go and I'll call you back in
about ten minutes.
L:
All right.
HM,Jr:
Seven o'clock Washington
I
what time have you got
there now?
L:
I've got three-thirty.
HM,Jr:
Well - I'll call you back at six o'clock your time.
in
At six o'clock my time?
HM,Jr:
Yes
L:
All right - I'll - I'll be waiting for you.
HM,Jr:
Right
L:
All right.
HM,Jr:
Thank you.
After the conclusion of this conversation, the Secretary
called the President and, said that the Mexican situation is
not at all as Lockett had outlined it. Their note issue,
he said, is about 301 million pesos and the sub-coins, 42
million, making a total of 343,000,000 pesos. The silver
reserves amount to 197 million pesos and the gold reserves,
149 million pesos, or a total of 346,000,000 pesos. He
told the President that we have looked up their law and find
that they only need a 50 percent reserve and that we have come
Regraded Unclassified
-16-
214
to the conclusion that they are offering us their entire sil-
ver reserve. HM,Jr. also said that "They see silver coming
down and want to dump it on us. That is an entirely different
story. I see no difference between this and the Hong Kong
silver reserve. We would be buying their entire silver reserve.
They are just speculating. I do not feel that we should come
to any decision tonight. They are just trying to do what
Hong Kong did, except in the Hong Kong case they told us the
truth." Mr. Morgenthau then asked the President, "Don't you
think we ought to sit still and do nothing tonight?" and the
President agreed. Mr. Morgenthau told the President, "We would
be helping another major country go off silven" The President
said, "They are trying to sell us their silver reserve and when
the price gets low they will buy it back again".
After Mr. Morgenthau gave his whole story to the President,
he called up Secretary Hull and brought him up to date.
HM,Jr. was quite provoked with Lockett and called him on
the telephone again and spoke to him at five o'clock. The
transcript of this conversation is as follows:
Tom
Lockett:
Hello -
HM,Jr:
Hello
L:
Mr. Morgenthau?
HM,Jr:
Yes
L:
This is Tom Lockett.
HM,Jr:
Are you alone?
L:
Yes, sir
HM,Jr:
Now, let me ask you - when you told me this morning
that their note issue exceeded their reserves, did
you know that their reserve requirements are only
fifty per cent?
L:
Yes, sir -
If I didn't explain that, I meant this,
that the -
that the note issue - was -
HM,Jr:
Can you talk a little louder?
L:
Yes - that, the note issue -
HM,Jr:
Yes
Regraded Unclassified
215
-17-
L:
- was between
the amount of the metallic
reserve, that is the commercial value.
HM,Jr:
Yes, well I didn't get that. Well now, we've had time
to think this thing over and what it amounts to when
you boil it down is that they want to sell us their
entire silver reserve.
L:
Well, frankly, it looks to me like practically the whole
thing.
HM,Jr:
And I - then - I think it's simply that they're
afraid silver is going to go down and they'd like to
but - sell it, that's all. And I can't see it.
L:
That may have something to do with it.
HM,Jr:
Now, they've got a hundred and forty-nine million
dollars worth of gold and if they have any difficulty
in maintaining the dollar to peso ratio and they need
any assistance on their stabilization why we'd be
glad to talk that over.
L:
Yes
HM,Jr:
But to buy their entire silver reserve, why, we can't
see that, -
L:
Yes, well, the
here is this, that
note issue was
fractional coin
HM,Jr:
Yes
L:
the actual commercial value of
the reserve is going to start a run on the banks.
HM,Jr:
Well, I think that sounds phony to me.
L:
And as the matter stands right now -
HM,Jr:
Yes
L:
The amount of the reserve figured at the - figured
down at the price of three - figured at the price
of sixty cents an ounce -
HM,Jr:
Yes
L:
- it would be three hundred and thirty-four million
dollars.
HM,Jr:
Yes. But they don't need a hundred per cent reserves.
Regraded Unclassified
-18-
216
L:
No,
is that when the
note is higher than the commercial value of
the reserve, why then they'll probably start a run
on these banks.
HM,Jr:
Well - I - I think he's building walls of fear,
that's what I think.
L:
Yes
HM,Jr:
I don't think they exist. Now, we go around and buy
up all the silver reserves in the world, there won't
be any silver left and all these countries will be
on gold.
L:
(Laughter) That may be the fact.
HM,Jr:
Yes
L:
Well now, on this - by the way -
HM,Jr:
Yes
L:
that silver reserve amounts to sixty-seven
million ounces.
HM,Jr:
What's that?
L:
The silver reserve amounts to sixty-seven million
ounces.
HM,Jr:
I thought you said a hundred and - oh, sixty-seven
million ounces?
L:
Yes, this is ounces.
HM,Jr:
Yes
L:
And of that sixty-seven million, eleven million ounces
is refined.
HM,Jr:
Eleven million ounces is refined?
L:
Yes, and the remainder is in the form of coins.
HM,Jr:
Well then, - well we bought a million ounces from them
today, I think, at least we made them an offer. I
don't know whether they accepted it.
L:
Yes, - how much was that?
Regraded Unclassified
217
-19-
HM,Jr:
A million ounces we offered to buy goday.
L:
One million.
HM,Jr:
In other words they've got eleven million ounces of
refined silver to sell?
L:
Yes
HM,Jr:
Well, you just tell them this for us - that at this
time we don't - we're not interested, but if they do
have any difficulties with - in their exchange -
with their exchange fund -
L:
Yes
HM,Jr:
Why, we'd be glad to talk to them further.
L:
All right, well now, I'll talk to the Minister -
HM,Jr:
Yes
L:
And give him that message.
HM,Jr:
Right
L:
And if things seem to be getting out of hand down
here I'll speak to him and we'll call you up again.
HM,Jr:
That's all right, I wish you would.
L:
All right, thank you very much.
HM,Jr:
Thank you
L:
Goodbye.
(NOTE: See record of telephone conversation between the Secretary
and Mr. Lockett under date of December 17)
Regraded Unclassified
218
December 11, 1935
HM,Jr., talked to Key Pittman last night and the Senator
said, "You are not thinking of changing the domestic price?"
to which Mr. Morgenthau replied, "I had no such intention.
Mr. Pittman said, "I do not care what you do with the world
price as long as you leave the domestic price alone.
The Secretary also spoke to the President last night
and the President made this suggestion, "What do you think
of this idea: that you take 2,000,000 ounces of silver in
New York at such and such a price for 30 days, delivery good
from today on?" HM,Jr., told him he thought it was an in-
teresting idea and that the Treasury people would give it
further thought.
Mr. Coolidge asked Mr. Morgenthau today how low he would
like to see silver go down and the Secretary said, "To the
point where there will be no profit to anyone on the silver
smuggled out of China; that is, down to the price of 40 cents. "
*****
Dictated December 11, 1935
I called Wallace yesterday and he was not in, so I asked
for Chester Davis and I finally got Porter on the 'phone. I
told him not to sell any cotton yesterday. He promised to
call me at ten o'clock this morning to confirm it.
Porter promised he would sell a normal amount of cotton
and only on a rising market. I asked Porter, for today, not
to sell any cotton below last night's close.
I called Wallace today and told him of my conversation
with Porter and that I just wanted to do this for a couple of
days until we know "where we are at" in connection with the
silver market.
*****
When I saw the President at the White House, this morning
at 9:15, he gave me another idea. He said, "Tell the people
at 10 o'clock in the morning that we will accept bids for
2,000,000 ounces of silver from any place in the world. Then
Regraded Unclassified
219
-2-
at 3 o'clock we will open the bids and announce the lowest
bidder and to whom we are going to give our bids. He does
not want to get Mexico and Canada down to the world price if
he can help it.
The President is quite determined that from now on he
does not want to tell London that we will pay 80 much and so
much for silver and then ask them 'Will you accept it?'. He
wants the tables turned. He wants to work it out 80 that
North and South America will get a special price on newly-
mined silver.
*****
Lochhead came in to my office at 11 o'clock and said
that Bombay was on the telephone talking to the Federal Re-
serve in New York. They are offering us 1,000,000 ounces
of silver at 61-8/10 cents and 550,000 ounces at 61 cents
for immediate shipment. I immediately called the President
while Bombay was holding the line and asked for his advice.
I told the President that I felt it was a reasonable offer
and the President approved the purchase.
I then asked the President whether he thought it a good
idea for us to buy a little silver in London at 81 and to
tell New York that we will take all spot silver that they
can offer us at 63 cents and also tell the Mexicans that we
will buy 1,000,000 ounces from them at the same price. The
President approved and I gave Lochhead the following orders:
to take 450,000 ounces in London at 27, pence (or 611 cents);
to set the price in New York at 63 cents, and to bid for
1,000,000 ounces in Mexico at basis of 63 cents New York
less the ordinary expenses.
****
A little while later Lochhead came back and reported
that London took our offer of 450,000 ounces of silver im-
mediately and are now inquiring whether we want any more.
Regraded Unclassifie
220
December 11th
When I saw the President this morning I asked him
whether he wanted to change the Capital Gain Tax and I could
tell the way he answered me that he did not, so when Baruch
came in this morning at 11 o'clock I told him that I had been
advised by my Legal Department not to do anything about it.
He seemed very much annoyed but I cannot help it - better
have him annoyed at me than at the President.
A similar thing happened to-day. Kannee called
me up and said that the President would not see Filene but
asked that I see him and turn him down gently as Filene is
going to make two or three radio talks and they would like
to keep him sweet if possible.
Regraded Unclassified
221
Telephone conversation with
Thursday,
Mr. Hogate of the Wall Street Journal
December 12, 1935.
Mr. Hogate: Mr. Secretary
H.M.Jr:
How are you?
Kenneth C.
Hogate:
All right sir thank you, how are you?
H.M.Jr:
Fine. This is one of them confidential calls.
H:
Yes sir.
H.M.Jr:
Mr. Hoguet - two things - if you could put one of
your bright young men to work down here as your own
idea
H:
Yes
H.M.Jr:
And lethim look up for the last three years, that is,
prior to '34 - '33 - '32 what the world's shipments
of silver was, see?
H:
Yes.
H.M.Jr:
You can get it all from the Department of Commerce.
0
H:
Yes.
H.M.Jr:
And then get what they were the first nine months, see -
this year.
H:
Yes.
H.M.Jr:
The movement - the big movement of silver.
H:
Yes.
H.M.Jr:
And he's going to find that there's practically no
silver came out of Shanghai this year. He's going to
find that great quantities came out of Hong Kong and
that suddenly Japan has become a great mining country
for silver.
H:
(Hearty laughter)
H.M.Jr:
Now that has never been brought out - I mean she's run
along for the previous three years - oh - she's exported
five or six million ounces, see?
H:
Yes.
H.M.Jr:
And she's going this year at the rate of about seventy
five million ounces.
Regraded Unclassified
222
- 2 -
H:
Well that's very interesting.
H.M.Jr:
Now it doesn't take a great international detective
to find out how they are getting it and what - how
they are doing it.
H:
Yes.
H.M.Jr:
You see?
H:
Yes.
H.M.Jr:
But that's never been brought out.
H:
Ah - we'd like to bring it out and --
H.M.Jr:
And if you --
H:
and thanks for your suggestion.
H.M.Jr:
See - and if you people go over to the Department of
Commerce all the statistics are there and if they'd
look - go back of January one three years the movement
of silver was fairly constant the way it flows.
H:
Yes.
H.M.Jr:
You see? But the way its moving this year to London to
us - where London gets it from - they get it differently
than they ever got it before.
H:
Ah ha
H.M.Jr:
And it comes from different places than they ever got
it before.
H:
Yes.
H.M.Jr:
You see?
H:
All right --
H.M.F:
And I just --
H:
That's a darn good story in there and would you say
Mr. Secretary that after we get those facts that you
could reasonably draw conclusions from those facts as
to why there appears to have been some recent change
in our Silver Policy?
223
- 3 -
H.M.Jr: I think so - yes.
H:
Yes.
H.M.Jr:
I mean between us they are just bleeding China white.
H:
Yes.
H.M.Jr:
See? That sounds white silver I mean they are just
bleeding her.
H:
Yes.
H.M.Jr:
And its the big smuggling that's through Japan.
H:
Yes.
H.M.Jr:
See? And - now that's that's one and then the other
thing - this isn't so important but I was told to-day,
and its rather interesting because its just opposite
from what everybody says, that the main buying of cotton
to-day was from Oriental sources - so I said, "what do
you mean Oriental sources?". Well they said, "there are
two places - Shanghai and Bombay" Now we've always been
told down here that when silver drops those places stop
buying silver - stop buying cotton --
H:
Stop buying cotton - yes.
H.M.Jr:
because they get out of their cotton because they have
to protect their silver position.
H:
Yes.
H.M.Jr:
Well you can have whoever covers the New York Cotton
Exchange check that, you see?
H:
Yes we can.
H.M.Jr:
And I think you'll find that both Bombay and Shanghai
were heavy buyers to-day.
H:
Well that's - that's contrary to - to - to the general
impression of what usually happens, isn't it?
H.M.Jr:
Entirely.
H:
.
Yes.
Regraded Unclassified
224
- 4 -
H.M.Jr: And if you've read the New York Times to-day - their
story on cotton - you'll see how cotton went down
because - on account of silver.
H:
Yes.
H.M.Jr:
And, of course, they always tell us that these
particular places are sellers of cotton when silver
goes down - well it seems to be just the opposite.
H:
Yes.
H.M.Jr:
And its news you - - I'm giving you the source to check -
they don't have to - - so you can get the original in-
formation.
H:
Well that's - that's awfully kind of you and - and
they are both darn good stories, particularly that
first one.
H.M.Jr:
Particularly the first one.
H:
Yes.
H.M.Jr:
I mean the other - the first one will take you a little
time on that it will take a fellow a day or two to
get it.
H:
Well I imagine it will but we'll get at it right away.
H.M.Jr: But the other one - you can just go over to the Cotton
Exchange and get that.
H:
Yes we can get that this afternoon.
H.M.Jr:
And we've never talked.
H:
Yes that's right we never have talked.
H.M.Jr:
O.K.
H:
Thank you so much.
H.M.Jr:
All right.
H:
Goodbye Mr. Secretary.
H.M.Jr:
Goodbye.
Regraded Unclassified
221 A
Telephone conversation with
Thursday,
228
Mr. Hogate of the Wall Street Journal
December 12, 1935.
Mr. Hogater Mr. Secretary
H.M.Jr:
How are you?
Kenneth C.
Hogate:
All right sir thank you, how are you?
H.M.Jr:
Fine. This is one of them confidential calls.
H:
Yes sir.
H.M.Jr:
Mr. Hoguet - two things - if you could put one of
your bright young men to work down here as your own
idea
H:
Yes
H.M.Jr:
And let himlook up for the last three years, that is,
prior to 134 - '33 - '32 what the world's shipments
of silver was, see?
R:
Yes.
H.M.Jr:
You can get it all from the Department of Commerce.
H:
Yes.
H.M.Jr:
And then get what they were the first nine months, see .
this year.
H:
Yes.
H.M.Jr:
The movement - the big movement of silver.
Ht
Yes.
H.M.Jr:
And he's going to find that there's practically no
silver came out of Shanghai this year. He's going to
find that great quantities came out of Hong Kong and
that suddenly Japan has become a great mining country
for silver.
R:
(Hearty laughter)
H.M.Jrs
Now that has never been brought out - I mean she's run
along for the previous three years - oh - she's exported
five or six million ounces, see?
HiM.Jr:
Yes.
And she's going this year at the rate of about seventy
five million ounces.
Regraded Unclassified
222 A
229
- 2 -
Ht
Well that's very interesting.
H.M.J.:
Now it doesn't take & great international detective
to find out how they are getting it and what - how
they are doing it.
H:
Yes.
H.M.Jrs
You see?
H:
Yes.
H.M.Jr:
But that's never been brought out.
H:
Ah - we'd like to bring it out and --
H.M.Jrs
And if you --
H:
and thanks for your suggestion.
H.M.Jr:
See - and if you people go over to the Department of
Commerce all the statistics are there and if they'd
look - go back of January one three years the movement
of silver was fairly constant the way it flows.
H:
Yes,
H.M.Jrs
You see? But the way its moving this year to London to
us - where London gets it from - they get it differently
than they ever got it before.
H:
Ah ha
H.M.Jr:
And it comes from different places than they ever got
it before.
Hs
Yes.
H.M.Jr:
You see?
H #
All right --
H.M.P:
And I just --
H:
That's a darn good story in there and would you say
Mr. Secretary that after we get those facts that you
could reasonably draw conclusions from those facts as
to why there appears to have been some recent change
in our Silver Policy?
Regraded Unclassified
223A
230
- 8 -
H.M.Jr: I think 30 - yes.
H:
Yes.
H.M.Jr:
I mean between us they are just bleeding China white.
H:
Yes.
H.M.Jrs
See? That sounds white silver - I mean they are just
bleeding her.
H:
Yes.
H.M.Jr:
And its the big smuggling that's through Japan.
H:
Yes.
H.M.Jrs
See? And - now that's that's one and then the other
thing - this isn't so important but I was told to-day,
and its rather interesting because its just opposite
from what everybody says, that the main buying of cotton
to-day was from Oriental sources - so I said, "what do
you mean Oriental sources?". Well they said, "there are
two places - Shanghai and Bombay" Now we've always been
told down here that when silver drops those places stop
buying silver - stop buying cotton --
H:
Stop buying cotton - yes.
H.M.Jrs
because they get out of their cotton because they have
to protect their silver position.
H:
Yes.
H.M.Jr:
Well you can have whoever covers the New York Cotton
Exchange check that, you see?
H:
Yes we can.
H.M.Jrs
And I think you'll find that both Bombay and Shanghai
were heavy buyers to-day.
Ha
Well that's - that's contrary to - to - to the general
impression of what usually happens, isn't it?
H.M.Jrs
Entirely.
H:
Yes.
Regraded Unclassified
22 224A
231
- 4 -
H.M.Jr: And 1f you've read the New York Times to-day - their
story on cotton - you'll see how cotton went down
because - on account of silver.
H:
Yes.
H.M.Jr:
And, of course, they always tell us that these
particular places are sellers of cotton when silver
goes down - well it seems to be just the opposite.
H:
Yes.
H.M.Jr:
And its news you - I'm giving you the source to check -
they don't have to - so you can get the original in-
formation.
H:
Well that's - that's awfully kind of you and - and
they are both darn good stories, particularly that
first one.
H.M.Jrs
Particularly the first one.
Hi
Yes.
H.M.Jr:
I mean the other - the first one will take you a little
time on that - it will take & fellow a day or two to
get it.
H:
Well I imagine it will but we'll get at it right away.
H.M.Jr:
But the other one - you can just go over to the Cotton
Exchange and get that.
H:
Yes we can get that this afternoon.
H.M.Jr:
And - we've never talked.
H:
Yes that's right we never have talked.
H.M.Jr:
O.K.
H:
Thank you so much.
H.M.Jrs
All right.
H:
Goodbye Mr. Secretary.
H.M.Jr:
Goodbye.
232
225
December 12th
One of the things that I am trying to do on the silver
is to take the artificial support away from the silver market and
try to get it down to a price where the world will support the
price for whatever the intrinsic value of silver is, independent
of the United States buying program. The time to do it is now
before Congress meets.
In the eyes of the public our silver program is the
only monetary fiscal policy that I cannot explain or justify as
Secretary of the Treasury but if I could expose it to the world
now it will save us much grief during the coming campaign.
Regraded Unclassified
DOW JONES TICKER - December 12, 1935.
233
226
ADD TREASURY BOUGHT SILVER
11.10
WASHN - SECY OF TREASURY MORGENTHAU DECLARED
TODAY THAT THE U S IS STILL BUYING SILVER AND
BOUGHT SILVER MONDAY THESDAY AND WEDNESDAY
IN MANY DIFFERENT PLACES WHICH IS A DEPARTURE
FROM THE ORIGINAL POLICY OF BUYING IN LONDON -
NO LON-- COMMENT HOWEVER COULD BE
OBTAINED FROM THE SECY ON THE AMOUNT OF SILVER
BOUGHT- THE SECY SAID THAT THE TREASURY HAS NOTH
ING TO HIDE FROM CONGRESS AND HAS GIVEN THE
PITTMAN SILVER INVESTIGATING COMMITTEE ALL THE
INFORMATION IT HAS REQUESTED AND HAS YET TO
REFUSE TO GIVE INFORMATION-
-1 AM CONTINUING TO CARRY OUT THE MANDATE
OF THE SILVER PURCHASE ACT- SECY MORGENTHAU
SAID-
HE QUOTED FROM THE LAW WHICH SAYS -THE
SECY OF THE TREASURY IS AUTHORIZED AND DIRECTED
TO PURCHASE SILVER AT HOME OR ABROAD FOR PRESENT
OR FUTURE DELIVERY WITH ANY DIRECT OBLIGATIONS
Regraded Unclassifie
234 227
COIN OR CURRENCY OF THE U S AUTHORIZED BY LAW
OR WITH ANY FUNDS IN THE TREASURY NOT OTHERWISE
APPROPRIATED AT SUCH RATES AND AT SUCH TIMES
AND UPON SUCH TERMS AND CONDITIONS AS HE MAY
DEEM REASONABLE AND MOST ADVANTAGEOUS TO THE
PUBLIC INTEREST-
THE TREASURY HEAD CALLS SPECIFIC ATTENTION
TO THE LANGUAGE OF THE LAW WHICH PERMITS HIM TO
BUY AT SUCH TIMEV AND UPON SUCH TERMS AND CON-
DITIONS AS -HE MAY DEEM REASONABLE AND MOST
ADVANTAGEOUS TO THE PUBLIC INTEREST-
IN THE INTEREST OF THE PUBLIC MR
MORGENTHAU SAID HE WANTS TO KEEP DAY-TO-DAY
TRANSACTIONS OF THE TREASURY IN SILVER SECRET
BUT THAT IT WOULD NOT BE DIFFICULT TO ASCERTAIN
THE VOLUME OF SILVER INFLOW FROM DAILY COMMERCE
DEPT RECORDS -
THE SECY DECLINED TO COMMENT ON A QUESTION
WHETHER DEVALUATION OF SILVER WAS BEING CONSID-
ERED-
DOW JONES TICKER - - December 12, 1935.
22
&
236
11.15
ADD MORGENTHAU OPPOSED
WASHN - SECY MORGENTHAU SAID THAT THE
TREASURY STILL STOOD ON ITS OPPOSITION TO
REPEAL OF THE 50 PC TAX ON PROFITS FROM SALE
OF SILVER - THE TREASURY FIRST MADE ITS VIEWS
KNOWN ON THE TAX IN A LETTER TO SENATOR MCCARRAN
DEM NEV IN RESPONSE TO INQUIRIES SUBMITTED
BY THE SENATE SILVER BLOC LAST SESSION - THE
SECY SAID THAT THERE IS NO CHANGE IN THE
TREASURY-S ATTITUDE WHICH WAS OUTLINED IN THAT
LETTER-
DOW JONES TICKER - - December 12, 1935.
279
237
Press Conference TREASURY BOUGHT SILVER MONDAY TUESDAY AND
Silver
10.59
WEDNESDAY SAYS MORGENTHAU - BOUGHT FROM MANY
DIFFERENT PLACES - WHICH IS CHANGE OF POLICY
WASHN
TREASURY STILL OPPOSED TO REPEAL OF 50 PC SILVR
TRADING PROFIT TAX
WASHN -
MORGENTHAU DECLARES STILL CARRYING OUT SILVER
POLICY
WASHN-
230
CNS43
UNITED PRESS TICKER Silver December 12, 1935.
235
THE U.S. TREASURY HAS INSTITUTED A POLICY OF BUYING SILVER AT A
UMBER OF POINTS IN THE WORLD AS CONTRASTED WITH THE PREVIOUS PROGRAM
F BUYING LARGELY IN LONDON, SECRETARY MORGENTHAU REVEALED THIS MORNING
12/12-R1058A
WCNS45
ADD MORGENTHAU
EXPERTS BELIEVED THEY MIGHT HAVE BEEN MADE IN MONTREAL, INDIA
OR CHINA WHICH ARE IMPORTANT SILVER TRADING CENTERS.
MORGENTHAU DECLINED TO ANSWER DIRECT QUESTIONS WHETHER HE HAD BOUGHT
SILVER IN CHINA.
12/12--R11A
WCNS44
ADD MORGENTHAU
THE TREASURY HAS PURCHASED SILVER IN WORLD MARKETS EVERY DAY THIS
WEEK, DESPITE ITS APPARENT FAILURE TO SUPPORT THE LONDON MARKET ON
TUESDAY, IT WAS REVEALED.
THE SECRETARY SAID THERE WAS NO CHANGE IN HIS PLEDGE TO SILVER
SENATORS TO CARRY OUT THE PURCHASE PROGRAM "ENTHUSIASTICALLY."
MORGENTHAU CONCEDED THIS WAS A DEPARTURE IN POLICY BUT INSISTED
THAT BROADLY HE IS CONTINUING TO CARRY OUT THE MANDATES OF THE SILVER
PURCHASE ACT.
HE REFUSED TO ANSWER QUESTIONA AS TO WHERE SILVER PURCHASES HAD BEEN
MADE THIS WEEK BUT SAID THEY WERE BOTH FOREIGN AND DOMESTIC EACH
DAY.
12/12--R1059A
Regraded Unclassified
UNITED PRESS TICKER - December 12, 1935.
231
238
Church Silvy
WCNS75
NANKING--CHINA HAS NOT BEEN SELLING SILVER IN THE WORLD MARKET
AND HER MONETARY REFORM CANNOT BE LINKED TO U.S. SUSPENSION OF BUYING
OF THE METAL, A GOVERNMENT SPOKESMAN TOLD THE UNITED PRESS TODAY.
12/12--R1208P
Regraded Unclassifie
232
UNITED PRESS TICKER - - December 12, 1935.
239
theoms Tax Afromation
WCNS58
SECRETARY MORGENTHAU TODAY DISCLOSED THAT HE WAS IN CONSULTATION
WITH BUREAU OF INTERNAL REVENUE EXPERTS REGARDING THE METHODS BY WHICH
FEDERAL INCOME TAX INFORMATION CAN BE MADE AVAILABLE TO LOCAL GOVERN-
ENTAL AUTHORITIES AS REQUIRED BY THE LAST REVENUE ACT.
THE MAJOR QUESTION INVOLVED IS UNDERSTOOD TO BE WHETHER THE FEDERAL
GOVERNMENT SHALL MAKE DUPLICATE COPIES OF THE TAXPAYER'S RETURN
OR WHETHER THE TAX PAYER HIMSELF SHALL MAKE OUT THE RETURN IN DUPLICATE.
12/12--R1132A
Regraded Unclassified
UNITED PRESS TICKER - December 12, 1935.
233
240
WCNS54
THE PRESIDENT'S APPOINTMENTS:
:
10:30-MAYOR KELLY OF CHICAGO.
10:45--SUMNER WELLES.
11:00--REP. WOODRUM.
11:10--SENATOR FLETCHER.
12:00--PMG FARLEY.
12:15--GEORGE PEEK.
1:00--SECRETARY MORGENTHAU.
2:00--SECRETARY MORGENTHAU AND DANIEL BELL.
2:45--SECRETARY SWANSON.
5:15--ARCHBISHOP OF YORK AT THE WHITE HOUSE.
12/12--R1120A
Regraded Unclassifie
DOW JONES TICKER - Dec. 12, 1935.
LONDON - - BY UNITED PRESS - INDIAN BANKING
7
AUTHORITIES AFTER CONFERENCES WITH LONDON INT-
al
ERESTS LATE WEDNESDAY CAME TO AN AGREEMENT
REGARDING ACTION IN THE CURRENT SILVER CRISIS
AND DECIDED TO FIX A TEMPORARY SETTLEMENT PRICE
FOR THE BOMBAY BAZAAR AT APPROXIMATELY 58 1-8
CENTS AN OUNCE- THE U P LEARNED-
THE PRICE OF SILVER IN BOMBAY HAS FALLEN
7 1-2 RUPEES PER 100 TOLAS DURING THE PAST TWO
DAYS -
THE AGREEMENT IT WAS UNDERSTOOD CALLED FOR
THE INDIAN BANKS TO DO THEIR UTOMOST TO
LOCALIZE EFFECTS OF THE SITUUTION BUT TO WITH-
HOLD SUPPORT FROM SPECULATIVE INTERESTS-
SETTLEMENT OF SILVER-BARGAINS- OR TRANSAC-
TIONS ON THE BOMBAY BAZAAR IS SCHEDULED TO BEGIN
THE 16TH OF THIS MONTH AND TERMINATE THE 20TH-
THE EMERGENCY PRICE WHICH WAS FIXED FOR
THESE SETTLEMENTS WAS 58 1-2 RUPPEES PER 100
TOALS-
REGARDING THE PRESENT SITUATION IT WAS LE#
ED MOST FAR EASTERN FINANCIAL AUTHORITIES BELIE-
VED THE U S SHOULD TIDE OVER THE CRISIS BY
SMALL DAILY PURCHASES-
REFLECTING THE SILVER BREAK SHARES OF THE
HONGKONG SHANGHAI BANK ON THE LOCAL EXCHANGE
DROPPED 2 POINTS TO 96- EARLIER THIS YEAR THE
SSUE SOLD AT 140-
Regraded Uncla
UNITED PRESS TICKER - December 12, 1935.
235
242
WCNS51
ADD MORGENTHAU
ALL THE ESSENTIAL FACTS REGARDING THE MAJOR DEVELOPMENTS, HOWEVER,
ARE AVAILABLE TO THE PUBLIC, THE SECRETARY SAID.
HE CITED AS AN INSTANCE OF THE TREASURY'S WILLINGNESS TO COOPERATE
WITH CONGRESS IN THE SILVER PURCHASES THE FACT THAT IT HAD
FURNISHED ALL FACTS REQUESTED OF IT BY SENATORIAL INVESTIGATION COMMITTEE
HEADED BY SENATOR KEY PITTMAN.
MORGENTHAU SAID THE COMMITTEE HAD BEEN WELL PLEASED WITH THE
TREASURY'S COOPERATION.
THE SECRETARY SAID THERE WAS NO CHANGE IN THE TREASURY'S ATTITUDE
OF OPPOSITION TOWARD REPEAL OF THE TAX ON SILVER TRANSACTIONS WHICH
HAS BEEN ADVOCATED BY SENATOR PAT MCCARRAN.
12/12--R1111A
Regraded Unclassifie
236
UNITED PRESS TICKER - - December 12, 1935.
243
WCNS38
New Silver Certificate
A NEW $1 SILVER CERTIFICATE MAY BE OBTAINED AT MOST BANKS
BEGINNING DEC. 18, SECRETARY MORGENTHAU ANNOUNCED TODAY.
THE 1936 MODEL BILL HAS AN ENTIRELY NEW DESIGN ON THE BACK, WHICH
REPRESENTS BOTH SIDES OF THE GREAT SEAL OF THE U. S. THE REVERSE OF THE
SEAL, APPEARING ON THE NEW BILL FOR THE FIRST TIME, SHOWS AN UNFINISHED
PYRAMID, SURMOUNTED BY AN EYE IN A TRIANGULAR EFFECT AND BEARS
TWO LATIN MOTTOES.
THE MOTTO ABOVE THE DESIGN AS "ANNUIT COEPITIS" MEANING "HE (GOD)
PROSPERED OUR ENDEAVORS." THE LOWER MOTTO IS "NOVUS ORDO SECLORUM"
WHICH TRANSLATED SAYS "A NEW ORDER OF THE AGES."
THE OBVERSE OF THE SEAL IS THE USUAL EAGLE DESIGN WITH THE MOTTO
"E PLURIBUS UNUM"--ONE FOR MANY.
12/12--N1048A
Regraded Unclassi
237
UNITED PRESS TICKER - December 12, 1935.
the
WCNS102
Thersury Dilivery Hoidings
SECRETARY MORGENTHAU ANNOUNCED TODAY THAT THE TREASURY HAD
ACQUIRED 751,774,000 (M) OUNCES OF SILVER SINCE DECEMBER, 1933, WHEN
THE ROOSEVELT ADMINISTRATION LAUNCHED ITS SILVER PROGRAM.
12/12--N133P
Regraded Unclassifie
238
UNITED PRESS TICKER - December 12, 1935.
the
WCNS106
ADD SILVER PURCHASES
IN ITS FIRST COMPILATION OF SILVER PURCHASES, THE TREASURY ANNOUNCEI
ITS ACTIONS THROUGH DECEMBER 6, 1935.
SINCE ENACTMENT OF THE SILVER PURCHASING ACT ON JUNE 19, 1934,
591,800,000 OUNCES OF SILVER HAVE BEEN PURCHASED.
UNDER THE NATIONALIZATION OF SILVER BY EXECUTIVE PROCLAMATION ON
AUGUST 9, 1934, 113,031,000 OUNCES WERE TRANSFERRED TO THE TREASURY.
THE TOTAL SILVER IN GOVERNMENT MINTS ALSO INCLUDES 56,943,000 NEWLY
MINED OUNCES.
12/12--N147P
Regraded Unclassifies
DOW JONES TICKER - December 12, 1935.
TREASURY HAS ACQUIRED TOTAL OF 761 774 000
OUNCES OF SILVER SINCE EXECUTIVE PROCLAMATION
OF DECEMBER 21 1933
1,30
WASHN - THE TREASURY DEPT ANNOUNCED THE
FIRST COMPLETE SUMMARY OF ITS ACQUISITION OF
SILVER SINCE THE EXECUTIVE PROCLAMATION OF
DEC 21 1933 - UNDER THIS PROCLAMATION THE
TREASURY HAS RECEIVED 56 943 000 OUNCES OF NEWLY
MINED DOMESTIC SILVER UP TO DEC 6 1935 -
SILVER PURCHASED UNDER THE SILVER PURCHASE ACT
OF JUNE 19 1934 AMOUNTED TO 591 880 000 OUNCES
FROM JULY 27 1934 WHEN THE PURCHASES BEGAN
UP TO DEC 6 1935
TRANSFERS UNDER THE PROCLAMATION OF AUGUST
9 1934 AMOUNTED TO 113 031 000 OUNCES UP TO
DEC 6 1935 - THE GRAND TOTAL OF ACQUISITIONS
IS 761 774 000 OUNCES
DOW JONES TICKER - December 12, 1935.
240
ADD SILVER PURCHASES - WASHN
THE FIGURES DISCLOSED THAT THE PEAK OF THE
SILVER PURCHASES UNDER THE PURCHASE ACT TOOK
PLACE BETWEEN OCT 25 AND NOV 29 OF THIS YEAR
WHEN 104 200 000 OUNCES WERE PURCHASED - THE
MONTH PREVIOUS TO THAT FROM SEPT 27 TO OCT 25
86 200 000 OUNCES WERE PURCHASED - - PURCHASES
DROPPED OFF THE FIGURES SHOWED DURING THE
LAST FEW DAYS FOR WHICH PURCHASES WERE RECORDED
NOV 29 TO DEC 6 WHEN THE FIGURE WAS 11 400 000
OUNCES WHICH WOULD MEAN ONLY ABOUT 45 250 000
OUNCES FOR A MONTH IF PURCHASES WERE CONTINUED
AT THAT RATE
241
DOW JONES TICKER - December 12, 1935.
WCNS95
Londmin
LONDON--BULLION BROKERS RECEIVED FAVORABLY TODAY THE STATEMENT
BY SECRETARY MORGENTHAU THAT THE U. S. HAD NOT SUSPENDED ITS SILVER
BUYING POLICY.
DEALERS SAID IT WAS LESS IMPORTANT TO KNOW THAT THE U. S. HAD BOUGHT
SILVER ELSEWHERE THAN IN THE LONDON MARKET, THAN TO KNOW THAT THE TERMS
OF THE SILVER PURCHASE ACT WERE BEING CARRIED OUT.
THEY TOLD THE UNITED PRESS THAT LONDON STOCKS OF THE METAL COULD
EASILY BE SHIPPED TO OTHER PARTS OF THE WORLD WHERE THE UNITED STATES
WAS BUYING.
THE REMAINING "BIG QUESTION" NOW THEY SAID WAS WHETHER AMERICA
WOULD RESUME HER PURCHASES ON A LARGE SCALE.
12/12 ON1P
Regraded Unclassified
242
DOW JONES TICKER - December 12, 1935.
$
SILVER
LONDON -BY U P- BULLION BROKERS RECEIVED
FAVORABLY THE STATEMENT BY U S SECRETARY OF THE
TREASURY MORGENTHAU JR THAT THE UNITED STATES
HAD NOT SUSPENDED ITS SILVER BUYING POLICY
DEALERS SAID IT WAS LESS IMJPORTANT TO KNOW
THAT THE UNITED STATES HAD BOUGHT SILVER ELSE-
WHERE THAN IN THE LONDON MARKET THAN TO KNOW
THAT THE TERMS OF THE SILVER PURCHASE ACT WERE
BEING CARRIED OUT
THEY TOLD THE UNITED PRESS THAN LONDON
STOCKS OF THE METAL COULD EASILY BE SHIPPED TO
OTHER PARTS OF THE WORLD WHERE THE U S WAS
BUYING
THE REMAINING -BIG QUESTION- NOW THEY SAID
WAS WHETHER AMERICA WOULD RESUME HER PURCHASES
ON A LARGE SCALE
-0-
243
UNITED PRESS TICKER - December 12, 1935.
Montreel
CNS129
MONTREAL--SILVER FUTURES CLOSED IRREGULAR ON CANADIAN COMMODITY
EXCHANGE TODAY, 400 POINTS HIGHER TO 130 POINTS LOWER.
SELLING WAS WELL ABSORBED IN THE LAST HOUR.
TRADING WAS ACTIVE, 1,040,000 OUNCES CHANGING HANDS. THE
NITED STATES AND THE FAR EAST REPORTEDLY PARTICIPATED IN THE MARKET.
12/12--R406P
DOW JONES TICKER - December 12, 1935.
244
2.05
silver Japan
TOKYO - BY U P - JAPANESE FINANCIAL EXPERTS
BELIEVE THAT THE FUTURE COURSE OF SILVER
DEPENDS UPON WASHINGTON-S POLICY
JAPAN-S BUSINESS IS ONLY INDIRECTLY AFFECTED
BY THE PRESENT SILVER SITUATION BUT THE ASSOC-
IATION OF SILVER DEALERS REFUSED TO FIX A
PRICE FOR THE METAL BECAUSE OF THE DISTURBANCE
IN THE PRIMARY MARKET-
UNITED PRESS TICKER - December 12, 1935.
245
WCNS47
ADD MORGENTHAU
IN A FORMAL STATEMENT, MORGENTHAU SAID:
"I AM CONTINUING TO CARRY OUT THE MANDATE OF THE SILVER PURCHASE
ACT WHICH SAYS:
"THE SECRETARY OF THE TREASURY IS AUTHORIZED AND DIRECTED TO PURCHASE
SILVER AT HOME OR ABROAD, FOR PRESENT OR FUTURE DELIVERY, WITH ANY
DIRECT OBLIGATIONS, COIN, OR CURRENCY OF THE UNITED STATES
AUTHORIZED BY LAW OR WITH ANY FUNDS IN THE TREASURY NOT OTHERWISE
APPROPRIATED AT SUCH RATES, AND AT SUCH TIMES, OR ON SUCH TERMS AND
CONDITIONS AS HE MAY DEEM REASONABLE AND MOST ADVANTAGEOUS TO THE PUBLIC
INTERESTS".
MORGENTHAU, IN READING HIS STATEMENT TO NEWSPAPERMEN, EMPHASIZED
THE LAST PHRASE REGARDING THE PUBLIC INTEREST.
12/12--R1105A
Unclassified
UNITED PRESS TICKER - - December 12, 1935.
246
WCNS48
ADD MORGENTHAU
THE SECRETARY EMPHASIZED THAT HE COULD NOT DISCUSS THE REPORTED
FAILURE OF THE TREASURY TO SUPPORT THE LONDON MARKET THIS WEEK BECAUSE
IT WAS NOT IN THE PUBLIC INTEREST TO REVEAL THE DAY-BY-DAY OPERATIONS
IN SILVER PURCHASES.
12/12--R1106A
Regraded Unclassified
UNITED PRESS TICKER - - December 12, 1935.
247
WCNS81
China
ADD SILVER, NANKING
THE STATEMENT WAS DESIGNED TO PUT TO REST RUMORS THAT CHINA HAD BEEN
NEGOTIATING TO SELL THE U.S. BETWEEN 200,000,000 AND 250,000,000
OUNCES OF SILVER AND HAD THREATENED TO DUMP SUCH METAL ON THE WORLD
MARKET IF THE U.S. REFUSED TO TAKE IT.
12/12--R1219P
Regraded Unclassifie
DOW JONES TICKER. December 12, 1935.
248
CHINA NOT SELLING SILVER 12,30
NANKING - BY U P- CHINA HAS NOT E -- BEEN
SELLING SILVER IN THE WORLD MARKET AND HER MON-
ETARY REFORM CANNOT BE LINKED TO THE PRESENT
SILVER SITUATION A GOVT SPOKESMAN TOLD THE UP
UNITED PRESS TICKER - - December 12, 1935.
249
WCNS110
Delver tondor
LONDON--THE U. S. TREASURY AGAIN SAVED THE WORLD SILVER MARKET
TODAY WHEN IT PURCHASED APPROXIMATELY 18 PER CENT OF THE TOTAL SPOT
OFFERINGS MAKING POSSIBLE FIXING OF THE PRICE AT 26 7/8 PENCE AN OUNCE--
EQUIVALENT TO 59.62 CENTS AN OUNCE AT CURRENT EXCHANGE.
12/12--N200P
Regraded Unclassified
UNITED PRESS TICKER - December 12, 1935.
250
WCNS111
ADD SILVER, LONDON
THE PRICE HERE WAS 5/8 PENNY BELOW THAT ESTABLISHED YESTERDAY.
TOTAL AMOUNT OF THE OFFERINGS IN THE MARKET WAS NOT DISCLOSED.
12/12--N200P
Regraded Unclassified
UNITED PRESS TICKER - December 12, 1935.
251
ADD CHINA NOT SELLING 12335 SILVER --BY U P-
NANKIN G - THE STATEMENT OF THE GOVTS SPOKESMAN
WAS DESIGNED TO PUT TO REST RUMORS THAT CHINA
HAD BEEN NEGOTIATING TO SELL THE U S BETWEEN
200 000 000 OUNCES AND 250 000 000 OUNCES AND HB
THREATENED TO DUMP SUCH METAL ON THE WORLD MAR-
KET IF THE US REFUSED TO TAKE IT-
THE GOVT SPOKESMAN ALSO DENIED THERE WAS ANY
NECESSITY OF TYING THE CHINESE CURRENCY TO THE
POUND
DOW JONES TICKER - December 12, 1935.
252
-0-
D.,T.Morning Summary 9.35
IN LONDON ALTHO SELLING ORDERJS OF SILVER London
FROM THE FAR EAST AND OTHER QUARTERS WERE NOT
so LARGE AS YESTERDAY IT IS EXPECTED BY BULLION
BROKERS TO CAUSE FURTHER DIFFICULTIES AT THE TIM
E OF PRICE FIXING UNLESS AMERICA SUPPORTS THE
MARKETS ON A SUFFICIENTLY LARGE SCALE- BROKERS
HAVE NO INDICATION AS TO WHETHER THIS WILL
HAPPEN BUT ARE PREPARED TO AGAIN RATION OFFER-
INGS - THE PRICE PROBABLY WILL BE LOWER
-0-
DOW JONES TICKER - December 12, 1935.
253
LONDON SILVER MARKET
1.57
LONDON - EIGHTEEN PERCENT OF THE CASH SILVER
ON OFFER WAS SOLD TODAY
LARGE TURNOVER ON THE SILVER MARKET AT THE
TIME OF THE PRICE FIXING AGAIN CAUSED DELAY
OWING TO DIFFICULTY TO COVER HEAVY SELLING
ORDERS - WITH AMERICAN TREASURY ONLY PARTIALLY
SUPPORTING THE MARKET BULLION BROKERS DECIDED
AGAIN TO RATION OFFERING S
Regraded Unclassifie
DOW JONES TICKER - December 12, 1935.
254
(D.J. 11:50 A.M.)
Silver -
London - By UP - Indian banking authorities after conferences with
London interests late Wednesday came to an agreement regarding action
in the current silver crisis and decided to fix a temporary settlement
price for the Bombay bazaar at approx. 58-1/8 an ounce the UP learned
The price of silver in Bombay has fallen 7-1/2 rupees per 100 tolas
during the past two days.
The agroement, it was understood, called for the Indian banks to do
their utmost to localize effects of the situation but to withhold
support from speculative interests.
Settlement of silver-bargeins or transactions on the Bombay bazaar
is scheduled to begin the 16th of this month and terminate the 20th.
The emergency price which was fixed for these settlements was 58-1/2
rupees per 100 tolas.
Regarding the present situation it was learned most Far Eastern
financial authorities believed the U.S. should tide over the crisis by
small daily purchases
Reflecting the silver break shares of the Hongkong, Shanghai Bank on
the local exchange dropped 2 points to 96. Earlier this year the issue
sold at 140.
Regraded Unclassified
DOW JONES TICKER - December 12, 1935.
255
(D.J. 11:15 A.M.)
Add Morgenthau Opposed -
Washn. - Secy. Morgenthau said that the Treasury still stood on its
opposition to repeal of the 50% tax on profits from sale of silver.
The Treas. first made its views known on the tax in a letter to
Sen. McCarran, Dem., Nev., in response to inquiries submitted by the
Sen. silver bloc last session. The Secy. said that there is no change
in the Treasury's attitude which was outlined in that letter.
Regraded Unclassifie
DOW JONES TICKER - December 12, 1935.
256
D.J. 10:55 asmo
Treasury bought silver Monday, Tuesday and Wednesday, says Morgenthau.
Bought from many different places, which is change of policy.
Treasury still opposed to repeal of 50% silver trading profit tax.
Morgenthau declares still carrying out silver policy.
Secy. Morgenthau declared today that the U.S. is still buying silver and
bought silver Monday, Tuesday and Wednesday in many different places, which
is 8 departure from the original policy of buying in London.
No comment, however, could be obtained from the Secretary on the amount
of silver bought. The Secy. said that the Treasury has nothing to hide from
Congress, end has given the Pittman silver investigating committee all the
information it has requested, and has yet to refuse to give information.
"I am continuing to carry out the mandate of the Silver Purchase Act,"
Secy. Morgenthau said.
He quoted from the law which says: "The Secy. of the Treasury is
authorized and directed to purchase silver at home or abroad for present
or future delivery with any direct obligations, coin or currency of the
U.S. authorized by law, or with any funds in the Treasury not otherwise
appropriated, at such rates and at such times, and upon such terms and con-
ditions as he may deem reasonable and most advantageous to the public
interest."
The Treasury head calls specific attention to the language of the law
which permits him to buy at such times and upon such terms and conditions
as he may deem reasonable and most advantageous to the public interest.
In the interest of the public, Mr. Morgenthau said he wants to keep
day-to-day transactions of the Treasury in silver secret, but that it would
not be difficult to ascertain the volume of silver inflow from daily
Commerce Department records.
The Secy. declined to commont on a question whether devaluation of
silver was being considered,
Regraded Unclassifie
Same D.J. on 9.
NI Ka
1
to
127
MAC NOT
SUY INC
ISNONES
SCHOOL
The VNE CUSE TIAL FACTS RECARDING THE BOKE
we 15 TO THE PUPLIC, THE SECRETARY
TU ANF INSTANCE OF THE TRANSURY'S WILL INGNESS TO CBOPEBATE
18233 IN THE BILVER PURCHASES THE RACT THAT IT RAD
R
SUBTOTAL STS & STATE FACTS (EQUESTED of IN or SENATORIAL INVESTIGATION COMMITE
,CNIP SKNATOR KEY RITTMAN:
33
THEM BEEN WELL PLEASED WITH THE
TREAS PERATION.
AFAILY SAID THERE WAS NO ORANGE IN THE TREASURY'S &
100 TOYAKIL REPEAL CE ON BILVER TIONS
MAS ADVICATED PRASMATOR PAT MOCAHWAN.
-
TITLIA
259
Secritary Margen Thau
Pres: Conternice
POLICY
SOHLD AS COMMISTED WITH THE PAYIQUE
IN ENTRAIL EVENTED THIS
BUT CASISTED
SATES STLVER
SILVER PURCHASE
BEEN
MONTREAL,
12010
Regraded Unclassified
260
UNITED PRESS TICKER - December 12, 1935.
WCNS136
Sen. Thrmason Secy Stalement Morgan than
ADD SILVER
MORGENTHAU'S DISCLOSURE OF THE TREASURY'S SILVER POSITION CAUSED
SENATOR ELMER THOMAS TO COMMENT:
"IF THE SECRETARY WOULD GIVE OUT A LITTLE MORE INFORMATION FROM
TIME TO TIME ON PROGRESS MADE UNDER THE SILVER ACT, IT WOULD AVOID A
LOT OF CONFUSION."
THOMAS INDICATED SATISFACTION WITH THE SUBSTANTIAL INCREASE IN SILVER
HOLDINGS, WHICH HAVE RISEN TO 761,774,000 OUNCES FROM 421,497,000 AT
THE TREASURY'S LAST PUBLIC ACCOUNTING TN JUNE,
12/12--R444P
8
261
December 12, 1935
HM, Jr. today met with Bell and McReynolds, and a group
from NRA consisting of Martin, Hill and Director.
Mr. Martin presented a proposal to reduce the force of
NRA to approximately 1300 employees by January 15. He also
presented the draft of an Executive Order under the pro-
visions of which the effective date of termination would
be January 15 and the employees would be permitted to take
accrued annual leave after that date.
The Secretary disagreed with Mr. Martin on the date
of termination and expressed the opinion it should be De-
cember 31.
McReynolds said he thought HM,Jr.'s suggestion was in
the interest of the employees because if that is not done,
"something worse will happen to them." He referred to
Buchanan's attitude toward NRA, he having said if some-
thing was not done about NRA by January 1 he would put
through a resolution to terminate all activities of that
organization and prohibit any appropriation.
HM,Jr. added a pencilled memorandum to Martin's giving
his choice as December 31 and said he would present the two
alternatives to the President and let him make the final
decision.
Martin also presented a list of names of those whose
services it is planned to dispense with and said he would
like to get at clearance on these identical persons to take
care of the political angle.
Mr. Morgenthau asked Martin who would handle the re-
maining work after the employees were terminated and Martin
said he thought the logical place for all except the Con-
sumers' portion would be the Department of Commerce and
stated that Commerce, strictly unofficially, was willing
to take over the work.
The Consumers' work is under Hamilton who thinks an
independent agency should be set up for this unit. HM,Jr.
promptly squelched that idea, saying he knew definitely
the President would not approve the establisment of any
more independent agencies. His opinion was that the De-
partment of Labor was the logical place and Martin said
Unclassifie
262
-2-
Hamilton would agree to this if he could not have his inde-
pendent agency. HM,Jr. said he would recommend to the
President that all activities with the exception of the
Consumers' work be transferred to Commerce and that Con-
sumers be transferred to the Department of Labor.
HM, Jr. told Martin he was going to have lunch with
the President and asked Martin to hold himself in readi-
ness for a call because he, HM,Jr., felt sure the President
would want both Martin and Bell to be present when they
discussed the NRA budget and Martin said he would be in
his office awaiting a call.
A set of the material handed by Mr. Martin to the
Secretary is attached hereto.
263
December 12, 1935
My dear Mr. Martin:
You are hereby directed to notify the following
employees that their services are not required after
January 15, 1936. Such employees will be entitled to
take their annual leave thereafter.
Pursuant to my letter dated August 30, 1935,
you are further directed to submit to the Federal
Emergency Relief Administrator the names of such em-
ployees together with their service records 80 that
they may be placed on the reemployment register.
Very sincerely yours,
Honorable Laurence J. Martin,
Acting Administrator,
National Recovery Administration,
Washington, D. C.
Regraded Unclassifie
263A
December 12, 1935
My dear Mr. Martin:
You are hereby directed to notify the
following employees that their services are
not required after January 15, 1936. Such
employees will be entitled to take their
annual leave thereafter.
Pursuant to my letter dated August 30,
1935, you are further directed to submit to
the Federal Emergency Relief Administrator
the names of such employees together with
their service records 80 that they may be
placed on the reemployment register.
Very sincerely yours,
Honorable Laurence J. Martin,
Acting Administrator,
National Recovery Administration,
Washington, D. C.
263B
December 12, 1935
My dear Mr. Martins
You are hereby directed to notify the following
employees that their services are not required after
January 15, 1936. Such employees will be entitled to
take their anmial leave thereafter.
Parsuant to my letter dated August 30, 1935,
you are further directed to submit to the Federal
Imergency Relief Administrator the names of such -
playees together with their service records BO that
they my be placed on the reemployment register.
Very sincerely yours,
Emerable Laurence J. Martin,
Asting Mainistrator,
National Recovery Administration,
Mushington, D. C.
Regraded
264
December 12, 1935
TO: Mr. Henry Morgenthau, Jr.
Pursuant to our conversations relative to the request of
the President for your recommendations as to the future of the
National Recovery Administration, we suggest
1. That the active personnel of the National Recovery
Administration be reduced to approximately 1300 by January 15,
including loans, and to effect this that the President sign the
attached letter to the Administrator;
2. That on January 1 the National Recovery Administration
be taken over for liquidation by the Department of Commerce, and
to effect this that the President sign the attached Executive
Order; and
3. That an appropriation of $200,000 be placed in the
Pourth Deficiency Bill for the Consumers' Division.
Be also attach a copy of G resolution of the Business
Advisory Council.
Acting Administrator
Regraded Uncl
NATIONAL RECOVERY
265
Proposed Active rersonnel January 15, 1936
DIVISION
SUB-TOTAL
TOTAL
Administrator
6
Coordinator
27
Advisory Council
5
Public Relations
5
Executive Uffice
3
Control Office
4
Administrative
Accounts
17
Personnel
12
Payroll
15
Maintenance
71
Central Record
43
Publication & Duplication
35
193
Review Division
Code Histories
254
Administrative
22
Industry Studies
126
Trade Practice Studies
69
Labor Studies
29
Code Administration
27
NRA Org. Studies
30
Foreign Trade Studies
6
Special Studies
14
Statistics
50
Review Legal Research
8
Review Enforcement
6
641
Business Cooperation
14
Consumers' Division
23
Field
Field Readquarters
46
Field Regions
25
Field States
95
166
TOTAL IN NRA
1087
Loaned Employees
Commerce
14
Social Security
40
Federal Trade Commission
52
State
5
Wheeler Committee
17
Interstate Commerce Commission
3
Prison
2
Coal
98
White House
9
Treasury
3
Labor
4
Black Committee
2
Alcohol
1
250
GRAND TOTAL
1337
NOTES: If the consolidation project is approved add
200
If the Government Contracts loan is approved add
20
If additional stenographers are approved for loan add
30
266
On December 14, 1935, the Business Advisory
Council passed the following resolution:
"RESOLVED, that the Council recommends that the
personnel and functions of the skeleton N.R.A. be trans-
ferred to the Department of Commerce where kindred
activities and surveys connected with business and
industry are conducted by trained career men, conversant
with the background of those problems of business and
industry which were temporarily d@alt with by the N.R.A.
during the emergency.
267
EXECUTIVE ORDER
Mr. Ernest e. Draper, in addition to
his duties as Assistant Secretary of Commerce,
is hereby appointed Acting Administrator of the
National Recovery Administration effective
January 1, 1936, in place of L. J. Martin,
resigned.
THE WHITE HOUSE
, 1935
268
EXECUTIVE ORDER
Regraded Unclassified
TERMINATING THE EXISTENCE OF THE NATIONAL RECOVERY ADMINISTRATION AND
THE OFFICE OF ADMINISTRATOR THEREOF, AND TRANSFERRING THE ADMINISTRATION
OF TITLE I OF THE NATIONAL INDUSTRIAL RECOVERY ACT, AS AMENDED, TO THE
SECRETARY OF COMMERCE.
By virtue of and pursuant to the authority vested in be by Title I
of the National Industrial Recovery Act (48 Stat. 195), as amended by
Senate Resolution 113, approved June 14, 1935, it is hereby ordered as
follows:
1. The National Recovery Administration and the office of Adminis-
trator thereof shall terminate and cease to exist on and after January 1,
1936. On and after said date the Division of Review, the Division of
Business Cooperation, the Advisory Council as constituted by the Executive
Order 7075 of June 15, 1935, and the authority of the Administrator over
the Consumers' Division as constituted by the Executive Order 7120 of July
30, 1935, shall be transferred to the Department of Commerce, together
with all officers and employees, files, records, equipment and possessions
of any nature wherever situated.
2. The administration of the provisions of Title I of the National
Industrial Recovery Act, as amended by Senate Resolution 113, approved
June 14, 1935, which has been heretofore delegated by Executive Orders
in effect on the date of this order, is, with the exception of such auth-
ority as has been delegated by me under the Executive Order 7192 of
September 26, 1935, hereby transferred to and vested in the Secretary of
Commerce to take effect on January 1, 1936. The Secretary of Commerce
is thereafter authorised end directed, under the general direction of the
President, to appoint, employ, discharge and fix compensation, define the
duties and direct the conduct of all officers and employees as may be
engaged in the said administration of said Title I, and to report to the
President on matters relating thereto, to supervise all the functions and
duties which have been conferred by Executive Orders on the Administrator
with reference to the Division of Review, the Division of Business Coop-
cration, the Advisory Council, and the Consumers' Division, and to bring
said functions and duties to completion by April 1, 1936.
3. All Orders and Regulations heretofore issued concerning the
administration of said Title I of the National Industrial Recovery Act,
as amended, are hereby modified to the extent necessary to make this Order
fully effective.
THE WHITE HOUSE
1935
WASHINGTON EMPLOYEES
269
REVIEW
Aeronson, 4. Palma
Adams, Albert P.
Carraher, Bernard B.
Addington, Carl T.
Carrigan, Charles B.
Ahrens, Thomas P.
Carter, Zenns, N.
Alderson, John D.
Case, Deryl J.
Allen, Durham E.
Caudill, Shirley M.
Allen, Harry G.
Chamberlain, Edna B.
Alsop, P. Clarke
Charshee, Thomas R.
Anderson, John C.
Chavin, Edward
Anderson, Robert L.
Christian, Sylvester P.
Angell, Edwin
Chubb, Wister E.
Arastrong, Florence A.
Chynoweth, Herbert E.
Ashley, Goorge ,
Clark, Cherles P.
Athey, Evelyn
Clark, William R.
Attaya, Aldon N.D.
Cochran, Archer
Bailey, Charles P.
Cochrane, L. J.
Bailey, Lionel H.
Coffman, M. 8,
Barbee, Henry a.
Coffman, Roy M.
Barkin, Leroy N.
Cohen, Jefferson B.
Barr, Elinor 5.
Cole, William C.
Barton, Hubert C.
Coles, Harry C.
Base, John L.
Conley, Ernest S.
Beach, R. 8.
Conner, Thomas B.
Beaver, Burns
Cook, Albert Case
Bahler, Theo F.
Coons, Lester A.
Behney, Thomas P.
Courtright, John G.
Bell, Orville C.
Cowan, Katherine M.
Bevan, Arthur
Crockard, Frank H.
Bishop, 7. Rust
Cronin, Thomas J.
Birekhead, Stella May
Crouse, C. P.
Boland, Daniel, L.
Crowley, Fred V.
Bour, William v. Jr.
Crowley, Myles A.
Bragg, Braxton
Dalton, Roseann
Brand, Betty
Davies, Basel L.
Breeze, William Aubrey
Davis, Jack
Brin, Leonard M.
Davis, James Porter
Brodinsky, Joseph E.
Davis, John D.
Brown, Bichard C.
Decker, Walter P.
Brown, Trovis T.
Dickerman, Nelson
Buchunan, Buth E.
Dickson, George B.
Bunch, Ann Mavis
Dixon, 4. C.
Burton, Mary H
Dodson, Trumen M.
Bush, Morris W.
Doherty, Ralph Edmund
Busick, William S.
Donaldson, Austin S.
Butts, 1. Jennings
Donaldson, Senford G.
Caffery, John M.
Dougherty, J. H.
Campbell, Helen D.
Douglass, Joseph U.
Campbell, Robert N.
Dove, Robert F.
Carlin, Keith
Downs, S. Hartford
Carr, Harry C.
Dresbach, Harold
Drown, Jerone 0.
Carr, George H.
Duna, Howerd C.
Regraded Unclassified
270
Washington Employees
Dunning, Carroll 1.
Hass, Francis J.
Dyer, J. N.
Hadley, Jesse Mowbray
Earley, Eugene J.
Hadley, Joseph M.
Egleston, James 4.
Hager, Willies 1.
Elliott, George
Halpin, Agnes
Elliott, Henry 0.
Hamill, George K.
Elmore, Frank H. Jr.
Hamilton, Anne
Erbeck, William K.
Hancock, walter H.
Escherich, Raymond C.
Hanley, John X.
Estes, Charles T.
Harding, Donald F.
Evans, Wilmoth, D.
Harms, Beatrice M.
Fairley, A. M.
Harrington, Leo N.
Fallon, William P.
Hartnett, Lawrence J.
Farrell, George
Hauck, Karl
Fisher, Arthur A.
Hayden, Mary
Fitzgerald, Kenyon B.
Hays, Dolph
Fitagerald, Raymond A.
Healy, Frank
Fitagerald, Willia B.
Helfgott, Doris
Fitagibbous, David P.
Hennigh, Earl L.
Fitspatrick, Dorothy E.
Herrick, Philip F.
Flaberty, James 1.
Herring, Harry T.
Flood, Aubrey ,Cleveland
Betherington, Fred
Florer, E. J.
Hickey, Margaret B.
Flouracy, Josiah he
Higgins, William F.
Flynn, 4. J.
Hill, Duna E.
Fowler, D. Webster
Hilleary, Borman J.
Fox, Helen B.
Hilton, Reeves, R,
Fox, Richard A.
Hinckley, Gorton C.
Fresher, Helen A.
Hinderliter, Jacob E.
Friedman, Oliver A.
Hobson, Henry B.
Fulton, William L.
Hochauser, Edward
Cellagher, Dean C.
Hodge, Robert Quey
Galleher, Robert Lee
Hogwood, 4. N.
Cardner, "annie Sue
Rollings, James L.
Ceeting, Roy 1,
Holmes, Charles R.
Gernhard, Boyd R.
Honohan, Anna a.
Cerry, Elbridge I,
Houghton, Ernest D.
Giblin, Creston A.
Hughes, Earl 1.
Goding, Evelyn
Sumphrey, John c.
Goshie, John L.
Hunter, John M.
Gould, Robert 6.
Hurley, Harlow
Grandey, Charles E.
Huxley, Edward H.
Grant, Gordon 1.
Immer, Charles A.
Gray, F. Carlin
Irwin, James W.
Grey, William c.
Gray, William 3.
Green, Samuel
Greene, Leonard
Griffin, William R.
Griffith, Lester B.
Guilford, Ernest F.
Regraded
271
Washington Employees
Regraded Unclassified
Jaffee, Howard
McCabe, Ethel G.
Jaffee, Madeline
McCarthy, Richard D.
James, Allison
McCarty, John P.
Jenks, Iron 11.
MeColiby William Randolph
Jennings, Marion The
McCorwick, Villiam H., Jr.
Johns, George P.
Hollvain, Joseph Yes
Johnson, Charles S.
MeEnen, G. H.
Johnson, George V.
McGhee, Zach
Johnson, a, Anhly
McGuire, Thomas F.
Johnston, Winant
Hollwadne, William 1.
Juid, Mauries
NeKissick, Eben 8.
Kets, Charles I.
McLaren, William Augustus
Kausch, Emeat 7., Jr.
Molleaus, Charles J.
Kelly, Lucy L.
MeNichols, Rellington
Zengla, Mary Evelyn
Beadows, Albe G.
Kennedy, Hard
lisadows, K. N.
Kershner, James Donald
Itselt, John P.
Keyser, Clifton
Heily, David R.
Rinball, William B., Jr.
Hellen, Joseph S.
Kinnoar, William E,
Mennet, J. P. S.
Kintsing, Lester
Willer, C. H.
Krans, Victor D.
Miller, Cecil Hope
Kruis, Margaret N.
Mitchell, Loroy B.
Kubm, William Speer, Jr.
Honeure, Dorothy ..
Lallemont, Donald P.
Nonsess,Corl Henry
Lanagen, School J.
Montgomery, Edward 0.
Lannen, tabe V.
Moody, Clark D.
Lanstrun, Trill C.
Moor, James B.
Laux, John 4,
Moore, Dorothy
Lawrenson, Elissbeth E.
Boore, Effie Lee
Lawver, Harry 11.
Morgan, Charles 1,
Lendner, Loslie 8.
Morley, Heary L. C.
L'Engle, Claude
Morris, Fred A.
Lewis, Edith I.
Horris, Willard 4
Lind, Lewis, S.
Morne, Kennoth =
Lisk, Robert C.
Hurkland, P. 4.
Little, Douglas R.
Murphy, Daniel J.
Locks, Oven 4.
Myers, Alfed S.
Loveless, Frank J.
Neughton, Thomas J.
MacIntyre, John 4.
Noal, Margie E.
Machoe, Stephen R.
Novitt, 1. B.
Haddox, John he
Newbold, William 11.
Mag, Edwerd he
Newter, Hobart
Reguire, William J.
Newson, Selma Salus
Hanning, Fred B.
Nicholson, Wilhelmina B.
Marquardt, Charles 4.
Norman, Chester R.
Notthews, L. Lessor
North, Clarence Jackson
Mattingly, L. E.
Hyland, Sarah 5.
272
Washin ton Employees
O'connell, Deamond Henry
O'Donnell, John A.
Ochler, Mildred E.
0'Grady, Johns
O'Hara, Helen M.
O'Hara, Thos. N.
Olsen, Alfred L.
Ore, Leigh E.
Orr, Ralph N.
Ott, Frank X.
Ourbacker, Samuel H.
Owens, Richard N.
Padgett, Esther N.
Page, Denzil L.
Page, Harlan
Paradiso, Douis J
Patchell, F. J.
Pease, Charles H.
Pender, Eleanor
Perkins, Edyth M.
Perling, Joseph
Perlmutter, Bebe Clinton
Phelps, James L.
Pierce, Barl Boyd
Pitts, William B.
Plimpton, R. E.
Polak, David N.
Pope, Lena M.
Potaler, W. E.
Pouder, Francis L.
Powell, Walter R.
Power, John W.
Pratt, Helen
Prentise, Corabel Agnes
Price, Virginia
Priest, Ernest L.
Pryor, George 1.
Purdy, Richard H,
Purver, Eugene M.
Quitman, John A.
Regraded Unclassified
273
Rephael, Charileus 0.
Solemen, William 1.
Routh, Harry B.
Seper, George P.
Day, Willis N.
Spangler, John E.
Roardom, Derothy M.
Spimmato, Joseph P.
Read, Francis K.
Stannsker, Louis
Reed, Am
Stenford, Arthur 0.
Ready, Nichael J.
States, Francis 4.
Ro1d, Wondell D.
Steingardt, Allen 0.
Hoiman, F. 4.
Stevens, R. 3.
Reynolds, Arthur J.
Stone, J. B.
Shine, Honry
Sallivan, Oscar M.
Richards, Karl M.
Taft, Peter J.
Sidings, Lawrence s.
Tate, Frederiek E.
Rigglaman, John R.
Teal, Fred
Rishell, Carl 4.
Thomas, Haddam
Roberts, Reymond B.
Thomson, Alexender
Roberts, Elliott J.
Thomason, James 4.
Rebertaem, Frank ".
Thorne, Ruth
Segare, Walter D.
Thurber, Rorace C.
Regars, Robert c.
Tinsley, John P.
Rogge, Joseph
Townsend, Richard
Rouney, Charles 5.
Tranmel, Charles M., Jr.
Rosembluth, Mamie 0.
Troxell, John P.
Resease, Newry P.
Tucker, Alexander
Ryan, George s.
Tucker, F. He
Salmen, Peter J.
Tufft, 1. Rosa
Sappington, James B.
Ven Dermark, Clarence
Seppington, James 0.
Von Smeliski, Victor s.
Serle, Hareld A.
Voorhees, Donald D.
Seculy, Nex
Vorse, Neaton
Seagmelli, Louis
Wade, Hugh J.
Schedler, Dear
Wade, Charles E.
Schoom, Fred
Wade, Louis N.
Schurs, William Lytle
Waldron, Robert F.
Seatt, Boy c.
Warrener, Henry
Seigel, H.
May, Mirian Grace
Shanson, Ramdelph 5.
Neaver, Rath L.
Sheehas, J. Joseph
Weeh, George
Sheridan, John J.
Noisiger, Cary N., Jr.
Shipp, 3. Steele
Veiss, Richard 8.
Shoban, Abraham
Mills, Harvey L.
Shert, Wilbert No
Mettengel, Charles A.
dianigen, James 0.
Wheles, Reymond M.
Signett, James P.
Whittington, Boulah 4.
Smith, Artiver n.
Wickliffe, John c.
Seith, John 5., Jr.
Williams, Lyle 0.
Smith, Lee We
Williams, Frederic Les
Smell, Jemie M.
Williams, L. 0.
Sayder, Joseph
Williams, Bon N.
Washington Employees
274
Williams, Louis 1.
Wilson, O. F.
Wilson, Nancy Jane
Winston, Clement
wittlin, Samuel
Wood, John Meredith
Woodside, Maurice M.
Foodward, Velse ?.
wright, Lonnie
Wright, H. P., Jr.
Bynkoop, Elda E.
Wynne, Frank
Intera, To 0.
Young, M. E.
Young, A. Stuard
Young, 0. D.
You, John S.
Zuck, Semuel 0.
Zercher, Fred c.
Reh, Aileen J.
Zellars, Edma Mershall
275
STENOGRAPHERS LISTED FOR TERMINATION
Alleup, Elisabeth
McCormick, Rose E.
Ashangi, Isabella R.
McLean, Marie E.
Appletes, Salen 0.
McQuarrie, Ruby E.
Teresa Vivia
Miller, Catherine 8.
Bair, Hellie R.
Milton, Mary 8.
Boston, Thelea
Minsey, Gladys 8.
Bland, Helen 1.
Moody, Velsa J.
Booding, Generieve
Moss, Evelyn I,
Buchtal, Sylvia B.
Mulloy, Alice Marie
Calhoun, Dora F.
O'Brien, Helen C.
Gamphall, Lgn
O'Connor, Jean 1.
Osvanaugh, Garaldine
Payne, Kathryn S.
Cleary, Catherine R.
Pennington, Ruth I,
Comer, Margaret
Reddy, Dorothea
Green, Consviews L.
Richardson, Sally Ann
Dean, Helen
Robinson, Mary Jane
Dall, Blanche
Routt, Sarah H.
Dream, Irens
Russell, Marie Bethany
Drummy, Claire 8.
Scannell, Ruth
Instructed, Oliver P.
Schmavas, Alice B.
Bleards, Kiva c.
Shields, Elnore
Hills, Bath 4.
Smith, Catherine Marie
Forgueen, Della a.
Smithey, E. Marguerite
Flealing, Anna May
Somervell, Geraldine R.
Fester, Lassa
Sutton, Rosalie
Fullarten, William A.
Swan, Olive B.
Collegly, Margaret Mary
Taggart, Virginia M.
Getfrey, Elles 3.
Tamny, Anna Ruth
Hummett, Lucy C.
Taylor, Helen M.
Marter, Doris, L.
Vickery, Grace
Hodge, Luellan L.
Walsh, Elinor
Fuestis, Florence B.
Ward, Katie Prince
Issum, Dorethy F.
White, Louise McLeod
Items, Elisabeth D.
Williams, Mary Elisabeth
Hailey, Eve L.
Eats, lane
Early, Holen L'
Kirkpatrick, Hell
Large, Lillian
Leater, Hary s.
Lund, Clare W.
Lynch, Josephine T.
Madurt, Mary Grace
Strtin, Mary 1.
Mattingly, Anne Dorothy
276
FILE CONSOLIDATION
Control Becord
Central Record
Ackerman, Everett R.
Schaublin, Elisaboth C.
Adams, Meude V.
Seamen, Harry, Jr.
Alexander, Audrey
Sevier, Cora Bales
Bennett, Hugh
Singleton, Martha
Bradley, John 0.
Smith, Dorothy 1.
Bray, James 1.
Sayth, Dorothy B.
Brown, Ida Shipley
Swain, Charlie R., Jr.
Brown, Jackson B.
Swan, Raymond
Browne, Cordelia 11.
Waters, Earl N.
Carden, George he II
Welch, Catherine B.
Carniato, Anthony
Wiley, Cleude L
Cox, Lulu de
Williams, John C.
Dodson, Heary P.
Williamson, A. D.
Dooley, Charles Log Jr.
Winkle, Helen 4.
Ely, Maurine 1.
Taylor, Harold Co
Fischer, Jane
Thornton, Vance L.
Fort, Kathryn S.
Tighe, Cecil C.
Gilliom, Alfred T.
Grady, Robert be
Review
Hanmett, Rowen E.
Hedger, Mary To
Ady, Mary 3.
Heelen, Hugh N.
Androws, John
Hollihan, Thomas J.
Aue, Dorothy E.
Holmen, George So, Jr.
Avery, Ivan F.
Lane, Alice I.
Barradell, Basel Ps
Lash, Geraldine Nalls
Bedel, Myra
Legrande, Etta
Beebe, Carolyn F.
Lightroot, Philip H.
Behrens, Peuline
Magruder, Walter H.
Bonnett, Dorothy B.
Marr, Donald T.
Biddle, Thomas F.
Mayfield, Boss H.
Bishop, Richard 11.
McGarity, Howard G.
Blean, Roberta 1.
McKensie, Richard C.
Borger, Antoinette
McMillan, Margaret C.
Bowles, Zina P.
Milburn, Jessie Birth
Brody, Rose
Mitchell, Verna B.
Brooke, Richard N.
Nichols, Allen B.
Buckner, Mary Carter
O'Leary, Clayton B.
Cain, Elisabeth Iris
Osburn, Jettie S.
Cannella, Eva J.
Patterson, Dorothy 1.
Carpenter, Homer 8.
Rogers, Hargaret N.
Carter, liytle H.
Ruskton, Miriam 4.
Clagett, John Williams
Regraded Unclassified
277
- 2 -
Review
Review
Clinton, Rose
Kirkpatrick, William L.
Commay, Clare
Kirtley, Bess R.
Cook, Roy C.
Lengline, Maguerite
Corbett, Hellie N.
Lesieur, Mary M.
Countss, Nellie May
Lewis, Erminie B.
Coz, Anita T.
Lewis, Thomas B.
Cregg, Buth C.
Linthacum, Matilds
Cramer, R. Frances
Lyddane, Anna
Devison, Ruth B.
Lyle, Horace
Dean, Harry He
McCathran, Mary E.
Deen, Marion B.
McClealan, Dorothy Schiebel
Dempster, Clara Lee
MeCormick, Jessie C.
Districh, Wildred L.
McFarland, Freds
Donaldson, Alton 11.
MdHenry, John H.
Dublin, Anne
NeKinney, Mabel D.
Duval, Elsie
Mack, Nelson
Duvall, Hary 0.
Maddox, Charles
Egan, Jene I.
Merrick, Duff
Ethridge, Alice 7.
Miller, Elisabeth
Evans, Robert H.
Miller, Mary E.
Feldman, Certrude
Willer, Ruth M.
Form, Julia
Moriarty, Elizabeth M.
Flahorty, Patrick N.
Movern, John J.
Floccher, Eleanor J.
Murphy, Frances
Givens, Dorethy E,
Nay, Charles E.
Goldman, Anna H.
Norman, Kathryn Barie
Greenfield, Judith
Orne, Edgar Joseph, Jr.
Gulli, Francis I.
Otto, Sadie Rae
Hamlin, Althea H.
Pantalone, Edward ha
Harris, Frederick N.
Parsons, Caroline W.
Harris, Naomi
Peifer, Lawrence A.
Hartis, Gertrude 1.
Pfaltsgraff, Harry J.
Fastings, Lillion B.
Phelps, Maria
Raynes, Elsie B.
Pike, Traynham G.
Henrie, Homer E.
Pinkard, Daisy E.
Howitt, Margaret Cox
Pogorselski, Josephine
Holbrook, Catherine T.
Portser, Ada E.
Hollinger, Helen Virginia
Pritchett, Duncan N. P.
Humphrey, Atala
Propper, Eva
Hyde, Alice
Pugh, Eva A.
Johnson, Doris L.
Purdy, Grace V.
Kouffurn, Ella
Rau, Edua G.
Kelly, Dorothic No
Reed, Fred G.
Kidwell, Evelyn
Reed, Robert H.
Kingsbury, Margaret 8.
Regan, Robert H.
Regraded Unclassified
278
- 5 -
Review
Riger, Sarah C.
Roberts, Ione G.
Rose, Buily F.
Ruddock, Theodore Banks
Rumsey, Pearle S.
Sample, Lillian
Sanger, P. de Wolfe
Sartwell, Margaret J.
Shawe, Earle K.
Shellington, J. H. Jr.
Sherman, Evelyn
Siferd, Mabel
Simpson, Marthe
Suead, Hassel Lee
Stanford, Edward H.
Stearn, Blanche B.
Stockton, Marion Roberts
Stouborough, John J.
Styers, John A.
Sullivan , John L.
Sutton, Thelma
Taradona, Cecelia P.
Tewksbury, Elisabeth P.
Thomas, Hildred L.
Ury, Bessie S.
Vanderscheaf, Henrietta
Wallace, George A.
Watkins, Addie Rogers
Weir, Grace H.
White, Helen H.
Willis, Anna 1.
Woody, Mae
Wright, Dixie To
Wright, Gertrude J.
Regraded Unclas
279
HEADQUARTERS
REGIONAL - continued
Oulline, Joe s., Jr.
Merry, J. Douglas
Nordin, Ruth
Posser, Stanley I.
Evers, Eldred L.
Mondale, Walter B.
Melliken, Marry S.
Doherty, Matthew T. Jr.
Irein, Alice G.
Gregory, Antoinette Ently
Jennings, Mary Elizabeth
Fisher, Andrew
Heyeas, Herman Sydney
Dow, Joseph W.
Harris, Royal T., Jr.
Deway, Molly
Gaynor, Anne P.
Brown, Beverly Alice
Brunt, Mildred
Smalley, Lucille B.
Pollack, Geselia
Webber, Hasel June
Cautes, Pearl S.
Guster, Norman J.
Less, Alex
Brown, John B.
Arustea, Faul
Jacobson, Pauline
Inneey, Kemper W.
Demorath, Mabel L.
Jackson, Thomas H.
West, Jane E.
sinclair, David
Feidt, Gerald E.
Young, George
Jeffries, L. B.
Frienell, Curry Hugh
Hume, Dinamore W.
Witchell, Benjamin T.
Davidson, Billie Paul
Layd, Lafe 1.
Henson, Anna Belle
Keogh, Margaret
Herring, Garven T.
BEGIONAL
Williams, Ann
James, Hugh c. H.
Gardner, Irone N.
ALABAMA
MoDabe, Nee
@'Commer, Barmadette W.
Fitspatrick, Henry Tompkins
Rigor, As
Griffin, Wilton E.
wild, Helen Louise
NoConnell, Orah
Lightmer, L. S.
Egan, Jennie A.
Trase, France
Griffin, 8. J.
Pressur, John 1.
Looney, John
Payment Elisabeth
Ricks, Frankye Wood
Valuess, Sente a.
Inclu, dross B.
Todd, Anthia
AREANSAS
Hynds, John I.
Gaughey B.
MoLaughlin, Edward D.
Inline, Dasse
Henry, Lorene
Govern, in
Smith, Austin, Jr.
Fellet, Ithm Jennie
Regraded Unclassified
280
ARIZONA
COLORADO
Dilts, Hasel L.
Desserich, George E.
Nolan, Jorome Allen
Tests, Bernard E.
Cale, Lola
Craft, Agnes H.
CALIFORNIA
Reymouth, Frederick
Frisc, Edward L.
Hollen, William J.
CONNECTICUT
Aldige, !larold J.
Deloach, Jack
Finch, William Gilbert
Dunning, Harle B.
Fitsimmons, Deniel B.
Gerich, John Luke
Guiamn, Edward G.
Haggerty, Cornelius J.
Kiely, John P.
Ross, Samuel J.
Miller, Taulman A.
Larson, Marie
Squires, Charles Edgar
Bentley, Nellie
Kelly, Elizabeth M.
Gipson, Mary
Jobe, Mirism
Filkerson, Heomi
DELAWARE
Handin, Sara Mae
Knox, Esther B.
Lefevre, John P.
Buckley, Frances J.
SAN FRANCISCO
DISTRICT OF COLUMBIA
Arsensau, Alfred Onlev
Lasarus, Leland J.
Stafford, Howard J.
Prisin-Zano, J. E.
Evancoe, Lillian D.
Bodle, George Enery
Powers, Albert Collins
Ainsworth, Donald Dillon
Durkin, Edward John
FLORIDA
Elvander, Frank Herbers
Larsen, Louis As
Hawking, Frank W.
Goff, Luelle
Shuffler, Pauline W.
Lawrence, Ins M.
Pulcifer, I. R.
Anderson, Alva 3.
Cosgrave, Otway J.
Koefe, Marjorie N.
GEORGIA
O'Dowd, Mae 7.
Pageno, Henristte
Winkers, Joseph H.
Minoletti, Josephine Marie
Anderson, Richard L.
Vollmer, Holen Martinus
Jones, Downie K.
Cox, Chas. J.
Smith, William 8.
Baker, Roselyn A.
Sellers, Estelle K.
David, Maude E.
Phillips, Ruth
Taylor, Hattis 0.
Regraded Unclassified
281
IDAHO
IOWA
Sullivan, Harold B.
Miller, Marshall
Fogarty, William J.
will, Robert Schrock
ILLINOIS
Kurts, Carl J.
Meek, Covell Honery
Kunning, Chester H.
Chapman, Sara
Disser, Louis J.
Records, Frank 8.
Strawbridge, William Hunt
KANSAS
Brown, Earl Stanley
Lowis, David Q., Jr.
Benson, William Kilgore
Mannion, M. J.
Bell, Everett I.
Nelson, Joseph he
Haasp Kendall M.
0'Connall, Albert E.
Voelker, A. M.
Van Berschot, John E.
Connolly, Kathleen Marie
Alford, Robert P.
Fisher, Margaret S.
Rissman, Robert R.
Alesanskas, Anthony G.
Boudro, William I.
KENTUCKY
Buchar, Anthony J.
Gochemour, Lynn Williams
Seiller, Edward F.
Grubb, Joseph C.
Bringhurst, Ed H.
Stock, Thomas J.
Kirk, Robert Fred
Burr, Julia
Kopcke, Harry C.
Clark, Ima G.
Barker, Ethyl
Dierkes, Harold N.
Bingham, Martha
Flynn, Hary D.
Caffee, Bruce A.
Henning, Hasel B.
Mc8loy, Mary Eleanor
Moon, Gertrude Sonnette
LOUISIANA
Hammond, Arthur R.
INDIANA
Kelly, John W.
Morrison, Delesseps Story
Bridges, Pranklin L.
Ramond, Charles Knight
Hobson, Edwin
Herbert, Rose
McKay, George D.
Haggerty, Bernadette
Gwyn, Clarence D.
Hickman, Thomas S.
Jackson, Dewitt To
Tukey, Walter B.
Diokens, Hasel
MAINE
Helton, H. 1,
Malone, Anite H.
Dubord, Carl A.
Breedlove, Leafy E.
Harding, M. Elisabeth
Ehrmentraut, Mary Bowser
Jackson, Helen N.
Leane, Kathlean
McCarthy, Mary &
Regraded Unclassified
282
MARYLAND
MINNESOTA
Peterson, John W.
Helstein, Relph L.
Waddell, W. Homilton
Scallen, Eugene A.
Bailey, Charles E.
Morton, Marshall Field
O'Connell, Frank
Balser, Jacob Frank
Friedhofer, Albert 7.
Dickie, J. Lewis
McDonald, John Henry
Weise, Emil S.
MASSACHUSETTS
Zack, Stanley S.
Lelacheur, Pearl
Johnson, Cleon R.
Luger, Alvina
Sullizan, Rose
Lerson, Esther
Harrington, James Francis
Walter, William N.
Chase, Arthur L.
MISSISSIPPI
MeDonald, Francis C.
Bubier, Frederick C.
Russell, J. B.
Clancy, Daniel J,
Mansfield, Burdett P.
Prang, Janie B.
MISSOURI
O'Donnell, Helen V.
Divel, Henristta
Landgraf, Alexander B.
Dorion, Catherine B.
Knight, Edwin Lyle
Killion, Alice L.
Bowen, Wilmoth Catesby
Cornell, Paul J.
Ganes, Henry F.
MICHIGAN
Grium, Horace F.
McCoole, Robert F.
Mulholland, 8. D.
McMurray, Arthur J.
Compeau, Henry ha
Stamper, Carlyle M.
Poleski, John J.
Dixon, Gertrude Key
Limont, Stanley
Meyer, Katherine
Sadowski, Vincent B.
Boette, Cecilia R.
Dennis, Frederic W.
Etter, Ruth Thomas
Goodenow, Louis B.
Nahmensen, Mabel
Feingold, Sydney 8.
Hare, Edmund N.
Mass, Albert 4.
MONTANA
Yentsch, Edward
Almagro, Estelle
Twohey, Frank 8.
Wilson, Olive N.
Kirchner, Virginia
McGiverin, May Ida
nebraska
Biourds, Lucine
Rine, John A.
Brewer, Roy M.
Magaret, Ernest Frederick
Borton, William E.
Ryan, Margarete M.
Winkler, Florence M.
Huntirgton, Nell X.
Regraded Unclassified
283
NEVADA
BUFFALO
Ballard, George Albert
Hayes, Lillian
Clark, Herbert H.
Gillig, Alexander Lorens
Barrington, Myra M.
Langhans, Rudolph 3.
Steiger, Chester G.
Marquardt, August W.
NEW HAMPUHIRE
Reichle, Herman C.
Hasty, Alberta D.
Pettengill, Sherrie F.
NEW YORK CITY
NEW JERSEY
Zorn, Burton A.
Jube, Edward Harvey
Carter, Emmett B.
Eddy, Frank Stetson, Jr.
Scanlan, William 4.
Forbush, Walter A.
Cohen, Soul C.
Toole, John E.
Kross, Joseph
Carson, James
Schuld, Joseph C.
Durr, Charles Wilson
Bassett, Leslie
Manville, Keith Rollin, Jr.
Briggs, Walter W.
McClure, Walter c.
Cominsky, Louis Benjamin
Olson, Frank William
Daggett, Edward H.
Keyes, Irans
Day, Albert F.
Brueche, F. Eileen
Doll, Harry William
Jillson, Fred 4.
Duffy, John J.
Wobber, Hilde B.
Gallagher, Timothy P.
Hill, Lillian M.
Heil, Edward
Manfredo, Horm M.
Kopsten, Beatrice
Hays, James L.
Lent, Irving
Lovell, J. Lowis
Rosenthal, Joseph
NEW MEXICO
Weber, L. G.
Burlingame, Florence H.
Davy, Relph E.
Connors, Helen
Whittsker, Carl F.
Smith, Rosetta
Piatt, Gilberts M.
Draycott, Ernest
Feeley, Helen Francis
Mober, Helen
ALBANY
White, Florence 4.
Ahearn, Angela
Allen, Certer V.
Auerbach, Sally Toby
Boyce, Clifford 4.
Bouillon, Kathleen M.
Feley, Edward E.
Eagan, Betty Marie
McCabe
Everston, Anne
Walsh, Tracy 8.
Gagan, Anne
Gregory, Falter V.
Keena, Rose A.
Klein, Ethel L.
Regraded Unclassified
284
NEW YORK CITY - continued
OHIO - continued
Lasicki, Holen
Were, Joseph Todhunter
McInerny, Cerolyn
Champe, Elisabeth
Nadel, Ruth
Garner, Williem H.
O'Brien, Patricia
Stickle, Lillian
Sullivan, Marie
Britt, Frances
Blackman, Donald
Browning, Ruth
Dalton, John Francis
Fitz, Arlie M.
Goldberg, Estelle
Jackson, Gertrude Vivian
Hennessy, James T.
Kaplan, Yetta
Houpt, Lillian F.
Samide, Olga M.
Kahn, Mettie R.
Wallace, Margaret
Caneva, Rolf
Cary, Edward B.
Lynett, Anastasia C.
Mayville, Virginia 4.
NORTH CAROLINA
Pinheiro, Eleanor Mary
Van Natta, Elisabeth N.
Stroud, Charles E.
Fagin, Anna Rose
Brown, Charles Thomas
Halloran, Mary
Carpenter, Jesse Earl
Hutchinson, Georgia Anita
Kircheis, Marguerite
OKLAHOMA
Rux, Lucile Currin
Steed, Sera L.
Rigsby, A. W.
Bryan, Erle Pendleton
Darrow, Willard Albert
NORTH DAKOTA
Woolverton, O. G.
Clark, Mary Belle
Rennie, Margaret L.
Downing, Thelma
Berry, Faye Estelle
Digby, Pearl
OREGON
OHIO
Berg, William Jr.
Twining, Edward B.
Johnson, John &,
Heoking, Lois D.
Stickle, Rollin J.
Wagner, Louise
Clark, James Albort
Leipold, Ursula M.
Fay, Thomas Hayes
Reinhart, R. V.
Blodgett, Frank Hoben
PENNSYLVANIA
Brown, Cremer F.
Burns, Robert 3.
Kats, Albert Lueb
Gray, Leurie
Bates, Honry A.
Gribben, Frank N.
Hofkin, Fred P.
Moyette, Groce 1.
Mitchell, John A.
Regraded Unclassified
285
Regraded Unclassifi
PENNSYLVANIA - continued
SOUTH CAROLINA
Tighe, Joseph J.
Califf, John N.
Cassin, Louis
Smith, Gus McCann
Sheaffer, Joseph Clinton
Rubin, Ruth Ensel
Spencer, Lewis C.
Milnor, Helen Currie
Terry, George H.
Hickey, Stefano J.
Langan, John Desmond
SOUTH DAKOTA
McGovern, John Les
Moran, George 7.
Chapman, Arthur E.
Spaulding, Marshall S.
Keating, Mary Jane
Young, Walter Charles
Brunossi, John R.
Kolly, Gertrude F.
TENNESSEE
Barrett, Mary L.
Battersby, Sarah H.
Fowler, Joseph A.
Doyle, Evelyn C.
Elrod, William Lacy
Kearney, Marie R.
Metcalf, Katherine
Brown, Dorothy G.
Rice, Donald McKey
Mullen, Margaret M.
Tomlinson, Glenn S.
Kuns, Edward
Perry, Flora B.
Keim, Charlotte H.
Marmon, E. L.
PITTSBURGH
Douds, Charles T.
TEXAS
Sander, Clarence N.
Bahmer, William J.
Smith, Tulane S.
Calhoon, Richard P.
Dewberry, Maurice Delmer
Hope, Elser 3. Jr.
Edgecomb, Delbert L.
Hayball, Willis
Boutwell, Frank A.
Kens, Frank Philip
Davis, Elmer P.
Meller, Edward E.
Moore, James Maxey
Anderson, Ruth Ingeborg
Miller, Lee Barker
Creagh, Jean E.
Isaminger, Elisabeth
Kelly, Irone
Martin, Ada Rhea
0'Connell, Mary Alice
HOUSTON
RHOPE ISLAND
Allen, Marvin K.
McCann, Marion B.
Avery, Zola E.
Hughes, James P.
Lebus, Johnny Franklin
Doherty, John Francis
Purcell, Helen Jane
Earner, Ivy
286
EL PASO
WISCONSIN
Onderdonk, Latrobe Henry
Boykin, Basil P.
Caldwell, Chester Clinton
Berkanovic, Zdward T.
Sackett, William Hudson
Halline, Edward P.
Hohensee, Herbert W.
Wolters, Frederick H.
UTAH
Hood, Ruth
Shepherd, Alma C.
Browne, James Keith
Maier, Frances C.
Wootton, Leland Stanford
VERMONT
McGuirk, Arthur R.
Gillespie, Rite 7.
VIRGINIA
Beazley, Richard M.
Corson, John Jay
Hulcher, Thomas B.
Saunders, Thomas N.
Misenheimer, Bessie L.
Rea, Marguerite G.
Reasor, Golden Elisabeth
WASHINGTON
Ketcham, Weaver V.
Scott, Ellis L.
Seguin, Victor 0.
Bard, Betty
Johnston, R. B.
Milroy, Katherine
Bodmer, Richard D.
Buesing, Ethel
Kerr, Ruth
WEST VIRGINIA
Darnell, Frederick W.
Smith, Earl H.
Beaty, Carl E.
King, Hallie 11.
Regraded Unclassified
287
NATIONAL RECOVERY ADMINISTRATION
DIVINION
DEC. 1
PROPOSED CUT
JANUARY 16
Administrator
7
1
6
Coordinator
26
0
26
Detailed to Coordinator
30
30
D
Advinory Council
14
,
5
Public Relations
5
o
5
Executive Office
5
2
,
Control Office
4
0
4
Administrative
Accounts
21
4
17
Personnel
19
7
12
Boansignment
27
27
0
Payroll
22
7
15
Maintenance
106
35
71
Central Record
105
62
43
Publication & Dapl.
39
329
136
35 193
Review Division
Code Histories
290
36
254
Administrative
57
35
22
Industry Studies
216
100
126
Tyde Yes, Studies
113
44
69
Labor Studies
53
26
29
Code Administration
47
20
27
SEA Org. Studies
45
15
30
Foreign Trade St.
14
8
6
Special Studies
26
12
14
Statistics
79
29
50
Legal Research
22
8
14
Miscellaneous
58 1030
58
389
0
6/1
Business Cooperation
73
59
14
Consumers' Division
27
4
23
Government Contracts
52
52
O
Field
Field Meadquarters
61
15
46
Field
590
651
470
485
120
166
TOTAL IN IRA
2253
1167
1086
Lonned Employees
Connerce
14
0
14
Social Security
40
D
40
Federal Trade Commission
52
0
52
State
5
o
5
Wheeler Connittee
17
o
17
Internbate Com, Com
3
0
3
Prison
2
D
2
Coal
98
o
98
ohite Reque
9
o
9
Treasury
3
o
,
Labor
4
0
4
Blook Consittee
2
0
2
Alcohol
1 250
0 00
1 250
GRAND TOTAL
2503
2267
1336
NOTES: If the file consolidation project is approved add
200
If the Diversment centracts leas is approved add
20
If additional are approved for loan and
20
Regraded Unclassified
288
NATIONAL RECOVERY ADMINISTRATION
If no further steps are taken NRA will have in January
Number
Monthly Payroll
Active Employees
1872
$394,000
Loaned Employees
250
58,000
Employees on annual leave
381
76,000
TOTAL
2503
$528,000
If this plan is effected NRA will have on January 15
Active Employees
1050
$210,000
Loaned Employees
250
58,000
Employees on annual leave
850
170,000
TOTAL
2150
$438,000
Regraded Unclassified
289
Detailed to Coordinator
Dixon, 4. C.
Ashley, George F.
McComb, William Rendolph
Schurz, William Lytle
Judd, Maurice
Hamill, George K.
Ourbacker, Samuel H.
MoRae, Kenneth A.
Harrington, Leo 1.
Green, Samuel
Reiman, F. A.
Campbell, Helen D.
McQuarrie, Ruby E.
Guilford, Ernest F.
Jones, Elisabeth D.
Sutton, Rosalie
Appleton, Helen c.
Calhoun, Dora F.
Grown, Genevieve L.
Ferguson, Della R.
Hammett, Lucy ,C.
Harris, "aomi
Martin, Mary R.
O'Connor, Jean A.
Somervell, Ceraldine R.
Dean, Helen
Lewis, Edith I.
Ward, Katie Prince
Fox, Richard A.
Gallogly, Margaret Mary
Lawrenson, Elisabeth 3.
Madert, Mary Grace
Breeze, William Aubrey
Robinson, A. N.
Regraded Unclassified
290
COPY
December 12, 1935
TO:
M. Creditor, Control Officer
FROMS
Sampson H. Bass, Acting Chief, Payroll Section
SUBJECT: Report of Salary Changes effective December 1, 1935,
Attached hereto is copy of Report No. 14 to the National
Emergency Council, containing the names of employees whose salaries
were changed on the pay rolls effective December 1, 1935.
Pages 1 and 2 of the Report contain salaries that have
been decreased. Pages 3 to 5 contain salaries of the regular
Washington employees that have been increased. Page 6 contains
salaries of regular Field employees that have been increased.
There are 117 increases on the Washington and 5 on the
Field payrolls.
The increase in annual salary outlay in so far as the
upward reclassifications are concerned is reflected in the fol-
lowing tabulations
Salary outlay
Salary outlay
as of Dec. 1st
as of Nov. 30th
Increase
Washington pay roll
117 increases eff. 12/1 $240,720.00
$209,280.00
$31,440.00
Field pay rolls
5 increases eff. 12/1
8,040.00
7,160.00
880.00
TOTAL
$248,760.00
$216,440.00
$52,320.00
(Signed)
Sampson H. Bass,
Acting Chief,
Payroll Section.
Regraded Unclassified
291
December 12, 1935
At the 9:30 group meeting, HM, Jr. had before him a state-
ment showing exports of silver by Japan for the years 1932,
1933, 1934 and1935. This statement showed that for the period
of April through December, 1934, Japan exported silver 7.31
millions of yen and for the same period in 1935, expressed in
millions of yen, 144.15.
The Secretary asked the group what they thought of the
following idea: that sometime today or tomorrow someone would
just give this information out without any comment and say to
the newspaper boys, "Look what a big producer Japan has become!"
and let the press know of the silver that Japan has smuggled.
He said, "I want to bring out that China is being bled by two
countries, Japan andEngland."
HM,Jr. also told the group that he had refused to buy
silver from Japan because he knew it was silver smuggled out
of China. He said, "If I were in the English position, I
would make up my mind, sell my silver, get the other countries
to hitch up their currency to Sterling and sell the silver to
America while they are suckers enough to take it and let the
United States hold the bag. He said that Lochhead made the
suggestion today that if Bewley came in and asked on what con-
ditions would we buy their silver, we would say, "If you have
25 percent silver reserve in back of your currency, just as we
have, we will buy your silver."
Regraded Unclassifie
292
0
JAPAN
Monthly exports of silver
(Millions of yea)
$
#
-
-
#
1982
#
1985
-
1984
.
1955
#
Exports
#
Exports
1
Exports
#
Emports
-
I
#
-
Jamuary
not available
.24
.75
1.56
February
not available
.50
.18
3.57
March
.41
.66
.27
7.15
April
.21
.68
.49
15.20
May
.53
.26
1.12
27.46
June
US"
.80
1.84
21.54
July
.28
.52
.97
27.10
August
.40
.69
.95
20.72
September
.95
.99
1.85
70.97
October
2.55
.62
1.56
November
2.06
.70
1.64
December
1.22
1.05
5.44
Total
6.68
7.71
15.95
Total 9
months
8.05
5.34
7.31
144.15
Treasury Department, Division of Research and Statistics. December 9, 1955.
Imports are negligible.
Erc - 154
morezo
Regraded Unclassified
293
December 12, 1935
HM,Jr., called the President at 9:15 and told him that
there was offered in London 4% million ounces to be sold"at
best" and 3 million ounces on which & limit of 27% pence,
equivalent to 61 cents, had been fixed. He also told the
President that London had sent over word that they might do
what we asked; that is, make definite offers. HM,Jr., also
told the President that Bombay is going to call up at ten
o'clock and make some more offers.
He also told the President that the Treasury people feel
that if London follows our suggestion, and makes specific of-
fers, that we will then decide what offers we want to accept,
but that our people think 1t would be a mistake to buy each
day, without change, 2 million ounces in the London market.
They think we should vary our daily purchases for the reason
that 1f London gets the idea that we want 2 million ounces a
day they might r1g the price. HM,Jr., also told the Presi-
dent that the New York papers have news of all of our activi-
ties in the London market.
Hil, Jr., told the President that he was going to have a
press conference at 10:30 and asked the President if he had
any suggestions as to what he ought to say to the boys. The
President then made the following suggestion: that HM,Jr.,
say, "We are continuing to carry out the Act. While we are
not giving out daily purchases of silver, we have continued
to buy silver every day. We are buying silver in a great
many places."
Lochhead came in after the Secretary's press conference
and told him that the London brokers had now made a firm offer
of 5 million ounces of spot silver at 26-7/8 pence, equivalent
to 59.60 cents, and that this offer would hold good until
12 o'clock. Bombay offered 2 million at 26-7/8 pence, or
59.60 cents. Our thought is that we will take 2 million of
the 7 million ounces offered.
The New York market yesterday was 63 cents and today we
will drop the price in New York to 62 cents.
HM,Jr., then called the President and said, "It seems to
be working your way. London offers us 5 million ounces at
59.60 and Bombay offers 2 million at 59.60. They have been
waiting for about an hour and B. half for our answer. We
thought we would take 16 million ounces in London and 500,000
ounces in Bombay." The President said O.K. HM,Jr., then
told the President that while the price dropped 12 cents in
London, he thought he would drop the price 1 cent in New York.
Regraded Unclassified
234
December 12, 1935
The early advices from London brokers were to the effect that about
6,000,000 ounces of silver were offered for spot delivery and that they were
awaiting word from us as to whether or not we would be interested. They
were advised to make & firm offer, which they did at 10 AM, New York time,
offering 5,000,000 ounces at 26 7/8 pence, equivalent to 59.60#.
At 11 AM, New York time, the National City Bank, Bombay, again telephoned
their New York office and offered 2,000,000 ounces for prompt delivery
American steamer at the same price.
At noontime the Secretary decided to purchase 2,000,000 ounces of silver
in foreign markets and accordingly 1,500,000 ounces of the London offer was
accepted and we informed Bombay that we would also accept 500,000 ounces of
their offer. London immediately accepted the bid and set their price accord-
ingly, but after a delay of some time we received advice from Bombay that their
original offer at 26 7/8 pence had been canceled. However, silver in their
market was then being offered at 26 1/2 pence, equivalent to 58.75, and they
accordingly offered us 500,000 ounces at this price which we accepted. In
the New York market the price was fixed at 624 and & moderate turnover took
place at this figure.
News was received today that the Hong Kong Government was shipping
20,000,000 Hong Kong silver dollars to London and arranging further shipments.
The total stock in Hong Kong was estimated at about 85,000,000 Hong Kong
dollars. The Bando de Mexico asked for a bid on 1,000,000 ounces of silver
which was accepted at the New York price of 62#, less the usual expenses.
Regraded Unclassified
295
December 12, 1935 December 18,
Thursday
Mr. Oliphant, Commissioner Helvering and Mr. Kent told
the Secretary that Joe Tumulty had offered to settle the tax
suit against ex-Senator Jim Watson for $10,000 and the Sec-
retary decided to reject the offer. He told our people to
go ahead with the suit.
P.O.S
Tea
Hangry Amior -
Tax, Mr. Investing
Tex, or
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I called you KB to nok you - postion.
Telephone
Flease
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UNITE = the
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P.O.:
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getting A bellared and 51, I shought main
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Regraded Unclassified
235
December 12, 1935.
Thursday
H.M.Jr.:
Hello
Parker
Gilbert:
Hello
H.M.Jr.:
Parker Gilbert?
P.G.:
Yes
H.M.Jr.:
Henry Morgenthau, Junior -
P.G.:
Yes, Mr. Secretary
H.M.Jr.:
Yes, sir
P.G.:
I called you up to ask you a question.
H.M.Jr.:
Please -
P.G.:
I wondered if you - how you would feel about some-
thing that I am considering doing. You remember the
thing that you asked/down to talk about a month or
so ago?
me
H.M.Jr.:
Yes
P.G.:
There's been 80 much discussion of that subject in the
press -
H.M.Jr.:
Yes
P.G.:
And it has seemed to me so one sided and I've been
getting a little irritated about it. I thought maybe
I'd write a letter to the Times.
H.M.Jr.:
You mean on the excess reserves?
P.G.:
Yes, and give the other side.
H.M.Jr.:
Fine
P.G.:
Well, that would be - well, I didn't want to do that -
I'll have - necessarily have to use some of the argu-
ments without -
H.M.Jr.:
No, I think that would be fine.
P.G.:
Well, I - it seems to me 100 rather necessary and I -
I'm glad you - if it's all right with you I'd rather
like to do it.
Regraded Unclassified
236
-2-
H.M.Jr.:
Oh, I think - I'd be delighted.
P.G.:
Good, well I think I'll do it Monday, probably.
H.M.Jr.:
All right
P.G.:
Fine -
H.M.Jr.:
What else do you know, anything else?
P.G.:
No, not very much.
H.M.Jr.:
Yes
P.G.:
I suppose you've been having a lot of fun with your
silver boys aren't - haven't you?
H.M.Jr.:
Yes, does it disturb you?
P.G.:
No, I'm rather -
It doesn't disturb me now at all.
I think that you just can't go on taking all the silver
in the world.
H.M.Jr.:
I think we're going to come out all right. We're going
along very cautiously and we're feeling our way step
by step.
P.G.:
Well, I think you'll come out of it all right.
H.M.Jr.:
I hope so.
P.G.:
And they've - of course you've - this thing has
shaken loose so darn much silver that - that it's
crowding on you pretty bad but I think you'll work
it out.
H.M.Jr.:
Well, we're just doing it very cautiously and -
P.G.:
Yes
H.M.Jr.:
And we'll hope for the best.
P.G.:
Well, I think that - I like it better now than I
did a while ago.
H.M.Jr.:
(Laughter) All right
P.G.:
(Laughter)
H.M.Jr.:
Well I appreciate your speaking to me, but I'd be de-
lighted to have you do what you suggest.
P.G.:
All right, fine, well I'll feel a little better myself
Regraded Unclassified
297
-3-
because I've - this arguments has been so darned
one-sided.
H.M.Jr.:
Yes - All right
P.G.:
All right, good luck to you.
H.M.Jr.: Thank you