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DIARY Book 80 August 1 - August 31, 1937 Regraded Unclassified - B - Book Page Budget Copy of memorandum to FDR from Taylor giving comparison of deficit for the months of July 1937 and July 1936 - 8/10/37 LXXX 21 Business Conditions Haas memorandum sent to HWr in Hawaii - 8/19/37 81 - C - China See chronology of important events: Book LXXXVII, page 264 American Embassy, London, reports on confidential letter received through foreign office: Chinese authorities have been in communication with Hong Kong and Shanghai Banking Corporation with regard to E20 million currency loan - 8/12/37 42 Cochren reports French banking credit to the Central Bank of China is immediately available and runs for one year- 8/12/37 48 9:30 group reports to HMJr in Hawaii that British Ambassador to China has been shot by Japanese airplane- 8/26/37 144 - F - Financing, Government Bell memorandum sent to HMr in Hawaii on financial situation "so far this fiscal year" - 8/23/37 113 a) Charts and tables Eccles memorandum on September financing (prepared because of contemplated assets in September) - 8/23/37 133 France See Stabilization - G - Gold See U.S.S.R. - R - Russia See U.S.S.R. - S - Stabilization France: Cochren reports that French Stabilization Fund has acquired on balance, since July lat, 3,400,000,000 france of foreign exchange: assets now total 9,961,000,000 france - 8/11/37 26 Regraded Unclassified - U - Book Page U.S.S.R. State Bank instructs Chase National Bank, London, to deliver to Federal Reserve Bank of New York, for its account, 358 bars of gold, total weight approximately 5001 kilograms, being forwarded from Leningrad within next few days - 8/5/37 LXXX 12 a) Taylor memorandum on this first shipment of gold giving value as approximately $5,600,000 - 8/7/37 15 Regraded Unclassified Copy for Secretary 1 RB GRAY Paris Dated August 2, 1937 Rec'd 3:45 p. m. Secretary of State Washington. 1101, August 2, 6 p. m. FROM COCHRAN. With London market closed today, Paris exchange trading is very light. French control obtained some sterling at 132,78. Evidently still official support for forward franc. While National Bank of Belgium was obliged to intervene Friday to protect belga versus Swiss franc pressure on Belgian currency has today lightened. Some French circles expect lowering of official discount rate this week but this would seem difficult considering scarcity of funds and degree to which borrowers are already resorting to Bank of France. Rentes practically unchanged with no evidence yet of support through the new fund. Latest economy decrees have not aroused much comment or much hope. With many people on vacation there is a tendency to refrain from market commitments and to let things drift. BULLITT Regraded Unclassified 2 JR CODAT Paris Dated August 3, 1937 Rec'd 3 p.m. Secretary of State, Washington. 1105. August 3, 4 p.m. FROM COCHRAN. Bank of France this noon lowered rate for discount from five to four per cent, advances on securities from six to five and thirty day advances from five to four. This had cheErful reaction on market. French control profferedsome sterling but more active trading was in dollars, one Paris American Bank purchasing one and three quarter million dollars for the control today. Dollars appeared to be coming principally from London as a result of ten million dollar stock Exchange deal over week-end. Brussels also selling dollars, while Bank of England was a buyer at 498.15. French rentes up fifty to seventy centimes and better feeling all around. Societe Generale operated for French control in forward franc market. Bankers holding treasury bonds opted for repayment in October are endeavoring to obtain ninety day treasury bills therefor instead of Eighteen month notes which government has been suggesting. French Regraded Unclassified 3 -2- JR #1105, August 3, 4 p.m., from Paris. French Ministry of Finance today announced that Appert, Financial Attache in United States, will succeed Boisanger in charge of indirect taxation in the Ministry. Appert's successor in the United States is Paul Leroy- Beaulieu. Latter has been serving in same capacity in Rome; is a career inspector of finance; specks English, is not outstanding. BULLITT CSB Regraded Unclassified Copy for Secretary 4 NL CODAT Paris Dated August 4,1937 Rec'd 2:30 P. m. Secretary of State Washington 1111, August 4, 5 p. m. FROM COCHRAN: Journal Officiel today announced issue, from August 4 to 19, 1937 inclusive of one year treasury bonds bearing four percent interest from August 5 for which those holders of 1954 Treasury four and one half bonds who opted repayment on October 5th 1937 may exchange these latter securities. There will be no cash subscription. Labor leader Jouhaux spoke yesterday against deflation as an impossible solution of French financial difficulties. He is against liberal circulation of capital and in favor of control, alleging that capitalists are planning another crisis for October or November. European Financial Press gives in considerable detail but 30 far without editorial comment letters from President Roosevelt and Chairman Eccles to Senator Thomas on stabili- zation of dollar. Loney continues very tight in spite of lowering of discount rate yesterday and of rumor that a further de- crease is to be expected. French Regraded Inclassifie 5 ML -2- August 4,1937 2:30 p.m. Paris #1111 French franc both spot and forward offered today, with Jouhaux! speech evidently having more influence than Bonnet tochnique. Control wielded sterling at around 132.81 and also intervened in forwards through both Comptoir and Crodit Lyonnaise. Commercial demand for dollars from Amstordam and Havre. Bolga under pressure and being pro- tected through salos of Swiss francs. Fronch rontos up fow contimos. BULLITT DDM: HBS Regraded Unclassified 6 COPY FOR THE SECRETARY JR GRAY London Dated August 5, 1937 Rec'd 12:45 p.m. Secretary of State, Washington. 523. August 5, 4 p.m. FOR THE TREASURY. All of the papers reported the President's letter to Senator Thomas yesterday. There is however very little comment in today's press though the FINANCIAL TIMES devoted a leader to the letter and to the problem of hot money, Excerpts from which are quoted below, "The letter reveals an attitude which in some respecss is closely parallel to that of the British Treasury. Stabilization is seen as desirable but it is recognized that much has yet to bE done before it can become an accomplished fact (***) Monetary means and devices by themselves are recognized by the President and also by Mr. Eccles as is minimum utility without assistance of broader measures of cooperation (***) The outstanding fact in relation to the dollar is that the currency is being subjected at present to a number of External influences. Stubilization must be preceded therefore by a balancing of these influences. Mr. Roosevelt is clearly aware of this fact and WE may EXPECT some practical move from Regraded Unclassific 7 -2- JR #523, August 3, 4 p.m., from London. him in the near future. For some time past the most important factor controlling the dollar rate has been the movement of hot money. This is one of the most difficult problems with which Mr. Roosevelt is confronted (***) The proposed tax on foreign investments in Wall Street would be of doubtful Efficacy (***) The greater part of this hot money is flight capital seeking safety (***) A tax would bE regarded merely as an extra price to bE paid for the safe keeping of funds and as such negligible in comparison. President Roosevelt will probably go ahead with a scheme and it will not bE entirely ineffective but the real crux of his problem 11ES in the European tongle". BINGHAM HPD 8 RB CODAT Paris DatedAugust 5, 1937 Rec'd 8 p. m. Secretary of State Washington. 1122, August 5, 5 p. m. FROM COCHRAN. French Control again lost sterling protecting the spot franc and was obliged to intervene strongly in future market since forward franc is again definitely offered. Belga still under pressure with Belgian nationals buying their own industrial shares (?) on Paris market and with National Bank yielding some dollars last evening. French rentes slightly better but market suspects artificial character of improvoment. Bank of France statement as of July 29 showed re- valuation of gold stocks on basis of forty-three milligr of gold to the franc, with resultant increase from forty- eight million eight hundred fifty-nine thousand five hundred fifty-seven thousand to fifty-five million six hundred seventy-seven thousand one hundred seventy-one thousand francs. Deposits were up over six billion francs representing bulk of revaluation profit which is consti- tuting fund for supporting rentes. No new advances to the state. Regraded Unclassified 3 RB -2-#1122, August 5, 5 p. m. from Paris state. Treasury deposit account declined one billion. Coverage fifty-one point seventy versus forty-eight point seventy-eight. (END OF FIRST SECTION) BULLITT NPL EMB Regraded Unclassified 10 RB CODAT Paris Dated August 5, 1937 Rec'd 5:22 p. m. Secretary of State Washington. 1122, August 5, 5 p. m. (SECTION TWO) FINANCIAL TIMES LONDON today carries editorial on "Er. Roosevelt And The Dollar". It begins: "President Roosevelt's statement concerning stabilization of the dollar, in his letter to the redoubtable Senator Thomas, reveals an attitude which in some respects is closely parallel to that of the British Treasury. Stabilization is seen as desirable but it is recognized that much has yet to be done before it can become an accomplished fact. As the President points out 'the rabidly shifting inter- national scene' precludes any attempt to fix the dollar-- and the same applies to other currencies--at any particular value". It ends "The present rate of around four dollars ninety-seven cents seems to require little official support except when the dollar tends downwards under the proviously mentioned inferences, Actually the situation is not so simple, for there is a mutual feeling of under-valuation. At present the position is one of stalemate, for the British authorities Regraded Unclassified 11 RB -2-#1122, August 5, 5 p. m. SECTION TWO from Paris authorities are opposed to any serious appreciation of sterling which would sacrifice export advantages and the United States Treasury is oqually adamant. In practice the present rate has come to be generally accepted as being not very far removed from the natural level, and without further definito dovelopments it is unlikely to undergo anything more than the inevitable small variations." (END MESSAGE). BULLITT EMB NPL Regraded Unclassifie 0 12 P Y INCOMING CABLEGRAM Moscow, August 5, 1937. Federal Reserve Bank of New York New York No. 4 Refer to your wire of last month 7th and refer to our wire of last month 7th we have today instructed Chase National Bank London England to deliver to you for our account 358 bars of gold total weight approximately 5001 kilograms being forwarded from Leningrad U. S. S. R. within the next few days. Upon arrival this gold please place it our depot with you under advice by cable acknowledging Please acknowledge receipt of this message by wire. State Bank of the U.S.S.R. Regraded Unclassifie COPY FOR THE SECRETARY 13 LMS CODAT Paris Dated August 6, 1937 Rec'd 5:52 P. m. Secretary of State, Washington. 1125, August 6, 5 P. m. FROM COCHRAN. Control today yielded some sterling through Bank of France and also intervened through Credit Lyonnais and Lazard in forward franc market where discount has never- theless widened. Difficulty is being Experienced in find- ing satisfactory "names" for forward operations. Belga under heavy pressure. Belgian officials selling Swiss francs but not yielding dollars or sterling with result that belga is out of line with these two currencies. Paris Bourse rather good. Slight rise in rentes but not very impressive. Several banks which feel obliged to accept one some of the Treasury's new/year bonds as reimbursement of their maturing Germain Martin bonds are already offering the new securities at a discount. FINANCIAL NEWS London today carried an article from its Paris correspondent on Bonnet and the French budget which concluded: "That Monsigur Bonnet is doing his utmost -- through the time-honored expedient of cheap money Regraded Unclassified 14 LMS 2-No. 1125, August 6, 5 P. m., from Paris. money -- to get the wheels of industry revolving faster is illustrated by this WEEK'S reduction in the bank rate. And hE is thus -- aided by the seasonal influx of tourist money and income tax collections -- also preparing for a revival of confidence in the currency and national credit which would of course greatly simplify his task. Whether that revival of confidence will mature rests largely with the Socialists. If that party should succeed in staging a "come back" at the End of the summer then undoubtedly a there will be/renewed capital Efflux and all Monsieur Bonnet's efforts will bE nullified." BULLITT SMS:EMB Regraded Unclassifie 15 Ang. 7, 1937 Mr. Taylor Mr. Dietrich The following is a. cable received August 5, 1937 by the Federal Reserve Bank of for York from the State Bank of the U.S.S.R., Moncew: "Refer to your wire of last menth 7th and refer to our wire of last menth 7th we have today instructed Chase National Bank Londen England to deliver to you for our account 358 hars of gold total weight approximately 5001 kilograme being forwarded from Leningrad U.S.S.R. within the next few days. Upon arrival this gold please place it our depot with you under advice by cable acknowledging Please acknowledge receipt of this mercare by wire." The above-mentioned gold has a. value of speroximately $5,600,000, and you will observe from the cable that it is not to be sold but merely held under earmark for the State Bank at the Federal Reverve Bank of for York. 10 this is the first shipment of gold directly from Russia since the institution of direct relations between the State Bank and the Federal Reserve Bank of Sex York, no doubt you will wish to bring this natter to the attention of the Secretary upon his return. Regraded Unclassified COPY FOR THE SECRETARY 16 CA Gray PARIS Dated Aug. 9, 1937 Roed 6:15 p.m. Secretary of State, Washington. 1134, August 9, 5 p.m. FROM COCHRAN Iaris exchange markot slow. French control bought c. little storling at 132.82 and sold some at 87. One Paris American bank bought $400,000 for control and Lazard exe- cuted somowhat similar order. Belga still under pressure and florin wonkor. Offer of dollars comos principally from Now York and Japanese. Fronch press carrios report of criticism by Houso of Representativos Banking and Currency Committoe of administration's gold purchase policy. Havro cotton people who are anxiously awaiting American crop ro- port have. rumor today that nogotiations for American loan to Fronch railways are progrossing satisfactorily. Their Paris American bankers have tried to discourage such optimism. French rentes are up 1 to 1.50 francs with Caisse selling some to prevent too rapid rise. General market atmosphere better. These improvements due principally to week-end political speeches by President Lebrun, Chautemps and Bonnet, who quoted President Roosevelt as recommending to him Regraded Unclassified 17 CA --2--1134 from Paris Aug 95 p.m... to him as he left the United States that he balance the French budget, emphasized in a conservative and effective address the steps which he is taking toward this end. He urged the need for economies, patience and calm. BULLITT SMS TPL 03/13/10 Regraded Unclassifie 18 RB GRAY Paris Dated August 10, 1937 Rec'd 4:14 p. m. Secretary of State Washington. 1136, August 10, 5 p. m. (SECTION ONE) FROM COCHRAN. French control acquired quite a few pounds and dollars today. Dollar became more bid from New York in trading. Belgian still yielding Swiss francs and dollars to support the belga. Forward franc bid without any official inter- vention in Paris. French rentes again gaining and Caisse selling to prevent too much rise in B. market where the turnover is not heavy. Latest statements of Swiss National Bank show decline in gold and gain foreign exchange holdings According to press reports Chinese Minister of Finance Kung yesterday signed a financial agreement with a group of French banks in Paris for the grant of a special credit with the object of increasing Chinese reserves of foreign currencies. Press report from Rome on the occasion of the return of Suvich donies the rumor of forthcoming loans to Italy to be launched in the United States. BULLITT SMS NPL Regraded Unclassified 19 RB GRAY Paris Dated August 10, 1937 Rec'd 4:30 P. r. Secretary of State Washington. 1136, August 10, 5 P. m. (SECTION TWO) Although Paris market and most European financial press have reacted favorably to Bonnet's week-end speech, a suggestion of caution is contained in an editorial in the LONDON FINANCIAL TIMES today which concludes: "Clearly, financial regularization on paper is not enough. Until taxes are collected, loans raised, and exponditure cut made effective the situation is the same as before M. Bonnet bogan his addition and subtraction This fact has not escaped the shrewdly realistic French capitalist with his hoards over the water as is proved by the small return of capital that has so far materialized. It is all a matter of confidence which unfortunately the Popular Front Government through all its pormutations and combinations has not boon signally successful so far in inspiring. Excessive social roforms may have Regraded Unclassified 20 RB -2-#1136, August 10, 5 p.m. SECTION TWO from Paris may have been ended and the popularity even among the workers, of the forty hour week may be in question but trade union irresponsibility remains. The return to financial orthodoxy is a declaration of faith and welcome as stated but we have still to wait for its effective application". END OF MISSAGE. BULLITT SIS NPL Regraded Unclassified 21 the sury Department Amount 10, 1937 TO THE PRESIDENT'S This is in reforence to your inquiry concerning the com ments recently appearing in the public press with respect to the deficit for the month of July, 1937, as compared with the deficit for July, 1936, on the basis of daily Treasury statements, There supere to be some misunderstending about the - tar and, therefore, I all Blad to have the opportunity of submitting this memorandun, As you know, it has always been the practice of the Government to regard the difference between its receipts and di oursements, including sinking fund and debt retirements from ⑈ marked receipts, but excluding other debt transactions, ne the Government's deficit. Whether collections deposited in revolving funds (such as the R.F.C.) ATV deducted from expenditures or cred- ited au receipts, the effect on the deficit is precisely the same, The transactions of the Government are of such a complex and varied nature that it would be virtually impossible to reduce the reports of receipts and expenditures to such simple form AS would cause them to be readily understood by all, without, at least, meing some mental analysis of the various factors involved. It would, perhaps, be even more difficult to device a form of state- sent which would meet the individual views of all. Erena if all the factors and problems involved in compiling the daily statement of the United States Treasury were thoroughly understood by the public, it is doubtful whether two persons would be in total agreement as to form, substance. and the particular trestment to be accorded certain items. For instance, while some would contend time the sma dollar should be charged nd an expenditure ten times if it rolled over that many times in n. revolving fund for loans. repayments. and now loans. there ATS others who would just as vigorously sain- tain that such practice would tend only to pad the total receipts and ampenditures of the Government. of course. when & lending organisation commanoes to liquidate and has no authority to make further loans, the viewpoint changes. That is the situation to which we will eventually dome with rement to the Reconstruction Finance Corporation as wall all all other revolving funds, and if the Congress should anst legislation turning the collections for account of such funds into the general fund of the Treasury all air cellansous receipts. the Treasury would change the present pro- cedure for handling such collections to conform to the Daw legis- lation and the changed conditions resulting therefrom. For your convenient reference, there follows a repro- Chietion of page two of the daily Treasury statement of July 31, 1937, showing comparative receipts and expenditures for July, 1936 and July. 1937: Regraded Unclassified 2 COMPARATIVE ANALYSIS OF RECEIPTS AND EXPENDITURES JULY 31, 1937 Corresponding This month period last year GENERAL AND SPECIAL ACCOUNTS Hanelyle: Internal revenue: Income laz $57,140,977.82 82 $39, 120. 852 56 Missellaneous internal revenue 221,071,974.33 200,809,819.29 Unjust enrichment las 361, 345 24 Taxes under Social Security Act 55, 001, 738 so Taxes upon curriers and their employees 32,139.10 Customs 40,645,901.22 31, 680, 452 27 Miscellaneous receipts Proceeds of Government-owned securities obligations Interest-foreigo obligations All other 16,585,641.09 TO, 586, pen 56 Panama Canal tolls, de 2,165,736.69 2,199,231.73 Seigniorape 3,486,208.08 4,816,632.80 Other miscellanenus 14,588,070.23 4,772,831.42 Total receipts 409,160,636.55 293,886,769.63 Expenditures: I. General: Departmental 60,168,737.13 39,217,701.03 Public buildings 0,621,094.75 1,517,963.00 Public highways 19,158,280,91 5,954,210.39 River and harbor work 12,742,897.36 8,550,995.21 Reclamation projects 8,470,463.36 Pacama Canal 1,870,750.54 902,611.73 Postal definiency '634,266.02 2,527,757.52 Bailroad Retirement Act 630, 410, 01 84,710.09 Bocial Security Ael 29,466,584.53 11,891,503.11 District of Columbia IU. 8 share) 4,495,201.76 3,810,062.58 National defense: Army $2,958,084.00 33, III, 43A 48 Navy 46, 230,050 80 36 614, 934 76 Veterans Administration 48,083,019.46 48, 634, 860 79 Agricultural Adjustment Program 23,000,640.14 87,627,565.30 Civillan Conservation Corps 31,853,403.60 1,889,157.53 Farm Credit Administration *902,535.17 116,373.81 Tennessee Valley Authority 3,702,793.24 59,061.95 Interest on the public debt 12,296,234.65 9,882,833.68 Refunds: Customs 1, 305, 280 64 2,107,196.65 Internal revenue 1,714,523.11 9,982,609.53 53 Promming tax on farm products 500,255.36 1,749.93 Subtotal 037,380,132.05 240,385,878.99 11. Recovery and rolief: Agricultural aid: Federal land banks 785,032.80 1, 656, 946. 44 Relief 654,613.00 as, 022, 999 24 Public works (including work relief): Reclamation projects* 2,506,628.52 1,828,098.63 Public highways 8,642,097.33 30, 031, 82L 13 River and harbor work 3, 659, 211. TM 13, 476, 816 15 Runal Electrification Administration 2,289,779.75 316,321.82 Works Progress Administration 127, 350, 140 37 162, 051, 064. 04 All other 22,838,301.57 36,922,263.55 Ald to home OWDETAL Home Loan system 1,516,471.13 2, 501, 075. 81 Emergency housing 6,292,099.42 2, N83, 387. 70 Federal Housing Administration 1,048,007.95 1,015,188.73 Resettlement Administration 19,170,004.02 12,330,248.27 Miscellaneous: Administration for Industrial Recovery $5,816.32 2,030.76 Subtotal 198, 009, 494 20 001,686,256.22 III. Revolving funds (net):* Agricultural aid: Commodity Credit Corporation 1, 202, MAL 74 67. 213, our 00 Farm Credit Administration *1,215,246.78 42,853,717.37 Public works: Loans and grante to States, municipal- Itim, etc. 19,154,916.02 99. 837, 015. IS Loans Le railroads *76,679.88 88 739,344.54 Missellaneous: Export-Import Bank of Washington 48,731.97 443,244.37 Reconstruction Finance Corporation- direct loans and expenditure 15, 771, sua Me 4174,572,570.02 Rubtotal *2,100,133,78 215, 806, 272 41 IV. Transfers to trust accounts, etc: Old-age reserve account 42,000,000.00 Reilroad retirement account 10,000,000.00 Adjusted service sertificate fund 20,116,060.51 Government employees' retirement funde (United States share) 72,255,000.00 46,785,200.00 Subtotal 123,254,000.00 76. 551, 350, 51 V. Debt retirements (sinking fund, etc.) 20 550.00 £ 039,400.00 Total expenditures 658,545,042.47 417. 108, 648. $1 Excess of receipte Excess of expenditures 249,384,405.93 123. 251, 873 as 23 3 - It will be noted from the nbove statement that the deficit he No. 1957. - $249,000,000. as compared with $123,000,000 for 20% 19%, LA Incroase of $125,000,000. Total ampenditures 170 cranged from 9437,000,000 in July, 1936, to $358,000,000 in July, 1/17. This Increase of $241,00,000 Includes $43,000,000 for the ordenge Teserve recount, and $20,000,000 for the milroud retirement account, deltier of which were in the platom 1-25 TVP, It nico includes n $27,000.00 increased in the United Mates share of the communent employees' retirement funds, expenditures unles Sixe World Lot, representing principally prints to States, +20m $11,091,000 to $29,495,000. There item Account for 206,000,000 of the $341,000.00 increase in expenditures and 120 plainly net out in the daily ristement. The principal Items offenting the however, we - baconstruction Anonea Corporation and the Commodity Credit - in May, 19:5, these to empolou comedned bed come revenue of ,00 19 company -1th en arcess of reportents as mix $20,000,000 in hay of this more This is . decline of in not revoments. and, of course, the companitive Classes with request to total expenditures end the leftelt for Ady. 199, and July, 1976. enro efforted Ena the as - permite in movelving funds hom the simi this your 18 List, the - politires for July, 1977. world have been only $27,000.000 2020 time La sury, 1975, and the deficit the July, 1977. must have boos $4,000,000, instand of $340,000,000. Othersch there appairs to be considerable 4d concerning the significance of the deflait for July in relation a the activated Coffeit for the year. I to not understand that way uno contante that the Government's deficit for July is actually different from that in the daily Treasury statements, 48 a loter alsos to this memorredom I will misser to der up this misunderstar.ding. The excess reportente in July, 1935, in the of the indonstruction 71amos Corporation, on the beals of daily transury vistements, emmanted to while the registere nonte for July, 1937 were 818,771,523.56. = decline of $195,901,053.07. this difference is tracsable to two CERTIFICATE First, repayments in July, 1930, of $83,000,000 fre retirment of preferred stodic will notes of ml trust companies] and second, quartity $24,000.000 from revents of milrond loans, sales of Public writen Additionation mounties, and other regular Lottony three Accounting for about $152,00,000 of the 2156,800,000. In the questity Tredit Corporation the of receipts in July 1935, imported to 207.213.203. cus compared with (1,302,884, in July of this year, a dedline in receipts of 66,021,139. This difference 10 accounted for by the ande of 270,000,000 of colleteral trust notes, limites 4, in July, 1955, and and offert iv the payment of much notes later in the fiscal year, this transation yourd not spece in the statement of receipts of expenditures on prem two of the daily Treasury state= only but the deposits ware not no marked 18 to anable the Ireup known of the United States to identify the disimates of the trus- actions. Stope have been taken to have all chadics and all for posite Goving through the beare's addounts of 1. million dollars or mro, to delivered to the Commissioner of Accounts and Deposits for amerination md instructions concerning the accounting treate nent of unsual Items. the daily Treasury statement shows expende bures of $00,168,737. in July, 1937, 08 compared with 19.27.702. in July. 1935, more increase of $20,951,095. $9,300,00 of this Law arease is in the Department of vericulture, arising principally from Regraded classified 4 24 the fnot that a more empeditions wethod for reking payments to States under cooperative agreements will been worked out between the Treasury and the Department of Apriculture, Stadler payments for Inst year vere not unde until August, U. S. ligitime Cominsion $3,400,000. due principally to the fact that payments under DOBAN mill contracts wire más to the Haritine Commission in July, 1937, similar payments were mêe by the Post Office Department in July, 1935 from its own account with the Treasure of the United States and reflected in the postal deficiency. The remainder Is accounted for by the for thet. LD compared with last year, D considerably larger resource of chedks lamind top the Division of Disbursement in June - paid In July, 1937. The "Coneral" emmilitures (including "Departmental") for July, 1937. ROG'S $337,000,000. MM compared with $249,000,000 in 1935, an increase of $88,000,000. or this anount 139,000,000*1* at-Inined above, $30,000,000 of the remaining $49,000,000. is due to the transfer of the Civilian Conservation Погри from the sn/ Calinf" classification to the "General" classification. You 120 fedlier with this change of classification in the budget. Das. Liare was an increase of $8,000.000 in Servy expenditures: mm0 above $2,000,000 in interest; the bulance is principally on nocount of and river and herbor are larguly to N change in classification from *Secovery and Relief" to "Deneral". with reference to the emarel question of publishing the receipts and expenditures of the Covernment, envoral changes were mis in the daily Treasury statement, effective July 1, 1937. You probably have road come invorable coments appearing in the public press concerning these disages, One of the duages had to in with the handling of cortain non-crub transactions, represent= inc mounts net anido in the 010-0/20 reserve account, the rail- road retirement account, nad the sureral Government employee' retirement fair, It is felt that sound budgetrary proctice re- quires that such Items be included in governmental expenditures, trat they are lapt in a coporate (TOUD) for ready identification. Another important change relates to the handling of - volving funds. These funds have boen secrepted from all other fundo end placed in e separate croup. with a separate net substotal. In conformity with the - - 6. grootlee which I believe to be in accordance with the 10(ml status of the funds - - the figures are on a net bala. 1. Day (russ prymite lova represents but it is imortant to note that the (TOSO 1'0" cainta and reproments reported 1a detail on PP four of the daily Treasury statement 9 that it is simly a matter of aritimatic to put the figures on a (TOSS besis, then Shore le still another discription, namely, to publish the figures on the present not basis by supporting schedules of payments and repoy- ments ne at present) but to "ginttle" the figures back and forth between receipts and expenditures. depending upon desting the Regra assified 5 25 net result is - excess of empenditures or in EXCESS of repayments, United much a procedure, the net figures for Reconstruction Pinance Corporation in - mosth would be reported under "Tependitures", sharens in another month the not figures would appear under Regraded Unclassifie But hare again 11 is staply a matter of aritimatic to old the net repayments to the totals of both receipts mil expenditures if such in the basis upon which cas wishes to work. In the last analysis, whether the items are treated one my or mother. the effect on the deficit is the - While there is see morit in the treatment which I have Just outlined, it presents - protional difficulties: md, in my opinion the present procedure conforms more nearly to 1mm and the legal status of the funds, then any other plan time for devised or the daily Treasury statement now presenta & genuldate formed picture of the receipts and expenditures of the Government in the zost simplified from consistent with proper presentation of A complex subject. with reference to the significance. if any, which the deficit for July any have with respect to the full fiscal year. I would like to call attention to the followings is you know, the receipts of the Dovemont do not flow into the Treasury evenly throughout the year. It is very probable that the eight months of this Modal your in which a compuratively mill amount of income taxes will be received, my show no accrease deficit of $1,400,000,000, thereas the four income tax payment nonths my show a surplus of as much as $1,000,000,000, leaving a not deficit for the year of about $400,000,000. as indicated in your meaningo to the Congress of April 30, 1937. The deficit of $249,000.000 during July, 1937. as above in the daily Trensury statement of July a. 1937, does mt, therefore, indicate the necessity of revising the estimates for the figal year 1933, as contained in that letter. (Signed) Wayne C. Taylor Assistant Secretary of the Treasury. MFB:HW 9/10/27 26 RB CODAT Paris Dated August 11, 1937 Rec'd 3:02 D. m. Secretary of State Washington. 1139, August 11, 4 p. m. (SECTION ONE) FROM COCHRAN: At Bank of France this forenoon I was informed that French stabilization fund yesterday gained one hundred twenty-four million francs of foreign exchange. Since July lst the fund has acquired on balance three billion four hundred million francs of forcign exchange. Total of assets in fund as of yestorday wasnine billion nine hundred sixty-one million francs including the above amount of foreign exchange and revaluing on a forty-three milli- gram to the franc basis the some four billion francs of gold which was acquired from the Bank of Franco when the recent changes on the monetary system took place and which the fund has been able to hold. Higher officials of Bank of France are working well with Governor Fournier but organized personnel just dedi= cated a special number of thoir publication to ex-Governor Laboyrie. Latter is reported recently to have told the unionized Regraded Unclassified 27 RB -2-#1139, August 11, 4 p. m. from Paris SECTION ONE unionizod employees as well as outsiders that ho had boen forcod out only temporarily and that the "will of the people" would in the not distant future return him to the bank where he could complete the reforms which he had started, institute exchange control, et cetera. (laughed?) Vhile the responsible officials of the bank laydh at this, their relations with the personnel are not helped by Labeyrie's remarks BULLITT HPD Regraded Unclassified 28 RB CODAT Paris Dated August 11, 1937 Rec'd 5:20 P. m. Secretary of State Washington. 1139, August 11, 4 p. m. SECTION TWO. The Bank officials find Bonnet a very alert and understanding Minister of Finance with whom they can cooperate. They feel that he has shown real courage in the steps which he has so far taken. They realize, however, that he has chosen the propitious time with Parliament adjourned, with so many Parisians, including labor agitators out of town, with France enjoying a really good tourist season, and with the entire effects of the latest currency depreciation not yet fully felt on the cost of living. While the gains by the French stabilization fund have been encouraging, there has not yet been any big repatriation of French capital from abroad and the Bank of France officials do not look for the heavy holders to act quickly. The really significant sums were sent to New York to be away from Europe as well as from France and my Regraded Unclassified 29 RB -2-#1139, August 11, 4 p.m. from Paris and my contacts do not take too seriously the press stories that important amounts of this French capital are moving from New York to London. Operators of French stabilization fund have recently beon more aggressive in their dollar purchases and hope to continue to acquire more thereof so long as their sit- uation pormits. They are surprised that the British have not made more effort to check the dollar's decline expecial- ly since London will shortly be needing dollars for seasonal purchases of American grain and cotton. BULLITT SMS NPL Regraded Unclassified 30 RB CODAT PARIS Dated August 11, 1937 Rec'd 8:20 D. m. Secretary of State Washington. 1139, August 11, 4 D. m. SECTION THREE. At the bank I mentioned the story in this morning's AGENCE ECONOMIQUE that a group of banks headed by Paris and Pays Bas and including Lazard, Bank of Indo China and Franco Chinese Bank for Commerce and Industry, has opened a credit of 100,000,000 francs to the Central Bank of China at Shanghai which may be raised aventually to 200,000,000 (Reuter's report of this credit was mentioned in my 1136, August 10, 5 D. m.). My contact at Bank of France thought this was more of a friendly gesture to Kung than anything else. That is, he expects the sum to be entered into a special account for the Chinese so that the latter can credit a corresponding amount in their holdings of foreign exchange but he looks for no actual disbursements to be made from this account. AGENCE ECONOMIQUE gives ample space to President Roosovolt's denial of any contemplated change in gold policy Regraded Unclassified 31 RB -2-#1139, Au ust 11, 4p. m. from Paris SECTION THREE policy and FINANCIAL NEWS today ridicules the views of the Republican mombers of the House Banking and Curroncy Committee. BULLITT SMS NPL Regraded Unclassifie 32 RB CODAT PARIS Dated August 11, 1937 Rec'd 8:35 p. m. Secretary of State Washington. 1139, August 11, 4 P. m. SECTION FOUR Paris exchange market quiet. French control yielded some sterling at 132.87 and apparently has acquired no foreign exchange during the day. Bank of England reported to have sold some dollars. Belga offered against dollars and continental currencies other than French franc. Cassel of Brussels reported shipping gold to New York. French rentos uneven. Understand that recent purchases thereof have been almost entirely by professional operators who figure that the new rente fund can not afford to let the securities decline and will eventually push them up so these spoculators will have a chance to unload at a profit. Commorcial interests hope for anothor reduction in official discount rate. On this point Bank of France contact told me this morning that much of the foreign exchango which they Regraded Unclassified 33 RB -2-#1139, August 11, 4 p. m. SECTION FOUR From Paris they had recontly acquired had boon brought back by French business poople who, with the local monoy markot tight, had to sell foreign exchango to got the francs which thoy needod. To case the interest situation vory far would thorofore likoly work against capital ropatria- tion. In the samo way, boosting rentos too activoly before general financial confidence is restored would give investors cash for transfer abroad. END OF MESSAGE. BULLITT SMS NPL Regraded Unclassified 34 FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE DATE August 18, 1937. CONFIDENTIAL FILES SUBJECT: TELEPHONE CONVERSATION WITH D. J. Comeron BANK OF ENGLAND M I phoned Mr. Bolton at about 11 a.m. and inquired about the darket in general and asked if he could throw any light on two gold shipments totalling about $5,000,000 consigned by Samuel Montagu and Company, London, to the bank of the Manhattan Company, New York per steamers Westernland and Rotterdam. I mentioned to Mr. Bolton that this was quite a large amount in view of the recent smallness of the gold market and it seemed strange that slow hoats were selected while faster boats could have been used, He said that he had heard that £1,000,000 in Russian gold had been transshipped at Antworp for New York, but I told him confidentially that I did not believe there vas any connection because we had advice from the State Bank of such a shipment to us, He said that be would see what information he could get and let me know. He said the French market was getting a little money but not much, however, they were getting & badly needed rest. He said the only feature in the market, If it could be called one, was the weakness of the belga. He said the Belgians were losing gold at the rate of about £100,000 per day and that the trouble was largely political. Be said the Japanese were now enforcing & very rigid control of the yen, holding the rate at 1sh 2d and that no forward transactions were allowed. He said the Japanese continue to accumulate balances in London which in his opinion is purely a war measure. I asked if he had had any dealings with Argentina on account of the refunding of the City of Buenos Aires bonds as we had sold a small amount of storling here. He replied they had done nothing. Regraded Unclassified 35 11 40M 6.17 FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE DATE August 18, 1937 CONFIDENTIAL FILES SUBJECT: TELEPHONE CONVERSATION WITH M D, J, Cameron BANK OF ENGLAND + I phoned Mr. Bolton again at about 12.45 p.m. I told him that we had received a cable from the Central Bank of China asking us if we could provide them with 2 £1,000,000 sterling spot, as there was a continued demand on them for spot sterling and they did not wish to disturb the New York - London rate. I told Mr. Bolton that we would have to release gold to him from our account (under tripartite agreement) to obtain the sterling, and as we would not be able to tell him definitely until tomorrow at our opening, we wondered how he falt about taking $ £1,000,000 of gold from us tomorrow at his today's price. He said it would be perfectly all right but he could offer us £300,000 spot at 4.9845 for delivery tomorrow which would only leave £700,000 to be realized from the sale of gold. I accepted his offer and it was understood between us that if the Central Bank of China accepted our offer for the additional £700,000 we would cable him at our opening tomorrow to take over the equivalent amount in gold at today's price of 139 sh 4d. Regraded Unclassified 36 JR GRAY London Dated August 12, 1937 Rec'd 2:06 p.m. Secretary of State, Washington. 536. August 12, 5 p.m. FOR TREASURY FROM BUTTERWORTH. CONFIDENTIAL. One. Sir Frederick Philipps plans to sail for Canada on September 4 on the EMPRESS OF BRITAIN. HE will adhere to the itinerary reported in the final paragraph of my 475, July 15, 3 p.m., coming from Lake Louise GO Chicago on September 16 or 17th and arriving in Washington the WEEK End before September 20, the date of his meeting with the Secretary of the Treasury. Two. As regards the French situation, Philipps said that it moving along the lines hE indicated in his previous conversations; that the French were now "messing about with the forward rates" but they had done little harm and not very much good. As regards spot operations, they were holding their own but not receiving any worthwhile amounts of gold. Three. Philipps referred to today's press reports quoting the Federal Reserve Board's monthly bulletin on gold Regraded Unclassified 37 -2- JR #536, August 12, 5 p.m., from London. gold hoardings, in particular the statement that hoarded gold in London "must bE less than five hundred million dollars". In this connection, he mentioned his Estimate of not more than 95 and not less than 75 million pounds, reported in my 354, June 7, 6 p.m., and said that he thought the time had now come to check up on the figure again but that certainly it must bE somewhat lower than that of two months ago. Phillips added that a perhaps more interesting figure was that of a billion dollars for hoarded gold throughout the world and that he intended to write Jacobsen at the B I S for confirmation. BINGHAM PEG:RR Regraded Unclassified 38 RB GRAY Paris Dated August 12, 1937 Rec'd 3:02 P. m. Secretary of State Washington. 1149, August 12, 5 p. m. FROM COCHRAN. Paris exchange market extremely quiet. French con- trol lost a little sterling at 132,87 and 86. Belga offered but Cassel said still to be operating against dollars with view to shipping gold from Belgium to New York. Market report it that French Caisse had to buy heavily yesterday to hold Government securities about level. Today rentes and other Treasury issues are all offered. Latest rise in cost of living index and this week's increase in local transportation rates cause worry. American bankers in Paris tell me that French banks share their opinion that no significant amounts of capital are returning to France. Bank of France statement as of August 5 was satis - factory. There were no new advances to the state but a few slight adjustments in two of the items constituting such entries 39 RB -2-#1149, August 12, 5 p. m. from Paris entries. With a small gold gain and deposits down one and one-half billions coverage rose from 51.70 to 52.29. BULLITT PEG GW - Regraded Unclassified 40 JR GRAY London Dated August 12, 1937 Rec'd 2:06 p.m. Secretary of State, COPY, Washington. FILE LOCHHEAD 536. August 12, 5 p.m. FOR TREASURY FROM BUTTERWORTH. CONFIDENTIAL. One. Sir Frederick Philipps plans to sail for Canada on September 4 on the EMPRESS OF BRITAIN. HE will adhere to the itinerary reported in the final paragraph of my 475, July 15, 3 p.m., coming from Lake Louise 00 Chicago on September 16 or 17th and arriving in Washington the WEEK end before September 20, the date of his meeting with the Secretary of the Treasury. Two, As regards the French situation, Philipps said that it who moving along the lines he indicated in his previous conversations; that the French were now "messing about with the forward rates" but they had done little harm and not very much good. As regards spot operations, they were holding their own but not receiving any worthwhile amounts of gold. Three. Philipps referred to today's press reports quoting the Federal Reserve Board's monthly bulletin on gold FILE COPY 2 Regraded Unclassifie 41 -2- JR #536, August 12, 5 p.m., from London. gold hoardings, in particular the statement that hoarded gold in London "must bE less than five hundred million dollars". In this connection, hE mentioned his Estimate of not more than 95 and not less than 75 million pounds, reported in my 354, June 7, 6 p.m., and said that he thought the time had now come to check up on the figure again but that certainly it must bE somewhat lower than that of two months ago. Phillips added that a perhaps more interesting figure was that of a billion dollars for hoarded gold throughout the world and that he intended to write Jacobsen at the B I S for confirmation. BINGHAM PEG:RR Regraded Unclassified 42 RB GRAY London Dated August 12, 1937 Rec'd 3:30 p. m. Secretary of State Washington. 535, August 12, 4 p. m. Confidential. 3 With reference to your 242, August 9, 7 P. m., I have received from the Foreign Office a confidential letter which supplements the memorandum quoted in my 394, June 24, 2 p. m. The pertinent points of the letter are as follows: One. That the Chinese authorities have been in communication with the Hong Kong and Shanghai Banking Corporation with a view to settling the terms of the twenty million pound currency loan and that the Foreign Office understands that the Chinese are likely to accept the conditions mentioned in its previous memorandum, Two. However, the negotiations have not progressed nearly as for as press reports imply and "it is obviously impossible that a loan should be issued during the con- tinuance of the present state of tension in North China". Three. Reference is made to the resolution adopted at the 43 RB -2-#535, August 12, 4 p.m. from London at the May 6 meeting of the Consortium Council, to the letter of July 23 addressed by the British group to the other groups regarding the proposals for the Pukow-Siangyang Railway, to which no replies have been received, and in this connection it is stated that "on the 30th July an agreement was roached botwoon the Chinoso Government on the one hand and the British and Chinoso and China Develop- mont Finance Corporation on the other for tho issuo of a pounds sterling three million loan for the Canton-Meihsien Railway, and on the 4th August a second agreement between the Chinese Government on the one hand and Chinese Central Railways and the China Development Finance Corporation on the other for the issue of a pounds sterling four million loan for the Pukow-Siangyang Railway. The latter agreement contains the following proviso: Notwithstanding any of the provisions hereinbefore contained, none of the clauses in this agreement shall become effective until the present consortium obligations, which are now the subject of discussion between the governments concerned, cease to be binding on the British group". I have also been given in confidence copy of a letter addressed by Padfield of the Hong Kong and Shanghai Banking Corporation Regraded Unclassified 44 RB -3-#535, August 12, 4 p.m. from London Corporation to Kung under date of July 30 together with the latter's reply of August 3 which are quoted verbatim: "I write again you this letter for the purpose of placing on record what I understand to be the conclusions to be drawn from the recent discussions with Mr. T. K. Tseng. I should be grateful if you could confirm that the following accurately represent your wishes and inten- tions: (one) The Chinese Government contemplate. approaching the London market through the Hong Kong and Shenghai Bank for the issue of a sterling loan for an amount or amounts up to pounds sterling twenty million in all, such loan to be known as the Chinese Government refunding loan of (#*). (two) The proceeds of the loan would be paid to the Central Reserve Bank of China and held by it in sterling in London and used solely for foreign exchange transactions to maintain the stability of the Chinese currency as at present established. (three) The Chinese dollar counterpart would be used gradually over B period for the redemption of existing domestic Regraded Unclassified 45 RB -4-#535, August 12, 4 p.m. from Londor domestic bonds. (four) An adviser to the Central Reserve Bank of China would be appointed in consultation with whom the foregoing disposition of the loan proceeds would be effected. (five) The security in respect of principal and interest would be the entire revenue of the Chinese Maritime Customs Service after provision for all exist- ing charges. (six) The administration of the Chinese Marltime Customs Service shall continue as at present constituted during the currency of loan. With reference to the foregoing I have to say that the Hong Kong and Shanghai Bank would be prepared, subject to the security referred to under paragraph five above proving adequate and to there being no objection on the part of His Majesty's Government, to give favorable con- sideration to the issue of such a loan provided that the current negotiations in regard to the consortium have removed any obstacles on that account to such a sterling issue, It is understood of course that the actual timo of issue and the terms on which the loan could be placed would Regraded Unclassified 46 RB -5-#535, August 12, 4p.m. from London would have to be governed by the London market conditions. I am sending a copy of this letter to His Majesty's Treasury and to the Foreign Office." Kung's reply is as follows: "I wish to acknowledge the receipt of your letter of 30th July and to thank you for the interest you have taken in the proposed loan in London. From time to time, Mr. T. K. Tseng and Doctor P. W. Tuo have reported to me the conversations they have had with the officials of the Treasury and of your bank regarding the matter. In general their reports correspond with your observations with the exception of Article five which they understand to be that the proposed loan would be charged on the customs revenue, ranking immediately after the internal consolidated and recovery loans of 1936. I assure you that I am to receive your understanding of these conversations and that the matter will receive my careful attention". In the course of a convorsation Sir Frederick Phillips reiterated that irrespective of future developments Chinese credit in London had been unfavorably affected by recent events in North China and that neither the proposed currency loan nor the two proposed railway loans can be effected Regraded Unclassified 47 RB -6-#535, August 12, 4 p.m. from London effected unless market conditions prove favorable and that the present situation in China is likely to have an adverse effect on them for some time to come. Phillips also said that the Chinese had been losing "a fair amount" of sterling; that in his opinion they could hold their currency under present conditions for several months if they wished to do so but that if a real war came "there is no telling". I gather that similar communications have been given by the Foreign Office to the French and Japanese ripre- sentatives. BINGHAM HPD 03V13038 40% - -- - Regraded Unclassified 48 MM CODAT Paris Dated August 12, 1937 Rec'd. 7:45pm. Secretary of State Washington, D.C. 1152, August 12, 8pm. Department's 423, August 11, noon. Cochran obtained following information at Ministry of Finance this evening to supplement my 1148, August 12, 4pm. The French banking credit to the Central Bank of China is immediately available and runs for one year. The charges therefore are explained as follows: the interest will be at one percent above the current dis- count rate of the Bank of France with a minimum charge of four percent and the bankers will receive a commission of approximiately two thirds percent. The officials consulted at the Ministry of Finance gave the same impression as that obtained at the Bank of France and set forth in our 1139, August 11, 4pm, in regard to the purpose and real significance of the operation. That 1s, the credit is solely to bolster the backing of the note issue to the Central Bank of China. It 1s stipulated that to the extent to which the credit is drawn upon the borrowers must deposit a pledge Regraded Unclassified 49 1152, August 12, 8pm from Paris. -2- pledge of silver in London. Furthermore there is a secret gontlemen's agreement to the effect that the funds available under the credit shall not be takon out of France. BULLITT SMS NPL <801 BIPUA TRUZAJRT to - 3 as $ - Regraded Unclassified 50 August 16, 1937. 12:35 p.m. Hawaii Magill: After by play back and forth with me they finally quit and H.M.Jr: It'll pay you not to try and handle the hot money. Magill: Ah - yes, that's right - yeah, yes it did look as if it was a time we could do it very well. Did you get my letter? H.M.Jr: Yes (laughs) M: ( (Laughs) H.M.Jr: But listen - M: Yes. H.M.Jr: Next time you send me a letter don't warn me three days in advance and have me all tizzy-wizzy worrying what it is. M: I didn't know that they were going to. H.M.Jr: Yes - Coast Guard - Lieutenant Pollio sent word over that you were sending me a very very personal letter. M: (Hearty laughter) H.M.Jr: And for three days I wondered what it was all about. M: You stayed in your room and didn't go swimming at all I suppose. H.M.Jr: Right. M: Well that's too bad; I don't know what they did that for. H.M.Jr: Well anyway your letter was very satisfactory. Regraded Unclassified 51 - 2 - M: Well I'm glad it was. I - I think we really got out of a tough situation there quite happily. E.M.Jr: Were you able to get upathe to camp? M: I - I finally got away for a couple of days there at one point; got away Friday and came back Monday evening H.M.Jr: Yes. M: but I've been here the rest of the time except week-ends. H.M.Jr: I see. M : I hope - I hope they'll get through this week-end and if they do I want to get away for a week or so then. H.M.Jr: How are you feeling? M: Very well except it's been hot down here and a good deal of a strain but I think we came out awfully well considering everything. H.M.Jr: I think so. You must have handled it very well. M: Well I don't know about that but it's - ah - it's taken a lot of diplomacy at various times to get through alive. Now would you like to talk to Wayne? H.M.Jr: Yes, and would you just send a message to the operator when I'm through I'd like to talk to Bob McHugh in his room. M: Yes. H.M.Jr: When I get through. M; Yes,I'll do that. Here's Wayne. Taylor: Hello H.M.Jr: Hello Wayne. T: Hello Henry. Regraded Unclassified 52 - - 3 - - H.M.Jr: How are you? T: Oh I'm fine. H.M.Jr: Ah - Wayne - one of the principal things I wanted was - I have no idea, for instance, what what is our daily balance right now - our working balance. T: I've got the figures for you - 855 million. H.M.Jr: How much? T: 855. H.M.Jr: I see. Well now has it been - has it each week or are we eating into it. (Pause and squeal) T: Wait a minute - I've got to get around to the other side. H.M.Jr: Hello hello T: Hello H.M.Jr: Hello. T: Ah - we'll eat into it a little bit to-day but - on account of special transactions but it will act all right from now on. H.M.Jr: Ah-ha, well what I'd wish you'd do with Bell would be to send me a cable to-day, giving me the picture to September 15th and then from September 15th to Nov- ember 15th, do you see? T: Yes. H.M.Jr: And the idea the main thing I want is what is the minimum of new money that we need to carry us to December 15th. T: O.K. H.M.Jr: I mean I'd like to get it to get the feel of the thing. Regraded Unclassified - 4 - 53 T: Right. H.M.Jr: For the first time in my life I'm completely out of touch. T: Well that's what we hoped you'd be. H.M.Jr: Frankly, I haven't been worrying about anything. But I want to begin to get the feel of the thing, you see? T: Ah - we'll start with to-day's stuff and then we'll keep you generally in touch. H.M.Jr: Well I don't - I don't want cables every day but I - but I would like a cable memo - how the thing looks to you and Bell. T: Right. R.M.Jr: And - ah - what you think the minimum money is and then - you haven't begun to find out in New York yet. T: No, we haven It done that yet. Burgess has been away you see and we thought we'd start fussing around with that this week. H.M.Jr: Ah-ha. Well what are those - the last March 42's - what are they selling at now? T: Ah - par 18 to 20. H.M.Jr: How much? T: Par 18 to 20. H.M.Jr: Ah-ha. The market has sold off the last week, hasn't it? T: Yes - ah - mostly in the long bonds. H.M.Jr: Ah-ha. T: But they turned on Saturday and they're acting all right to-day too. H.M.Jr: I see. Regraded Unclassified 54 5 1 I T: It was mostly the dealers switching their position a little bit. H.M.Jr: I see. T: There was no real liquidation. H.M.Jr: No, I don't want daily cables but I would like to have one now. T: Ah - we'll get it to you this afternoon. H.M.Jr: Yes and then - ah - so I can get some idea how much new money - how she was running. Now on the Japanese thing - ah - did they send us all the gold they said they were going to? T: Ah - yes - they've - it's slowed up a little bit lately. H.M.Jr: Ah-ha. T: Ah - there's only 13 million - ah - that we know about on the water at the present time. H.M.Jr: How much? T: 13. H.M.Jr: That makes a total of how much? T: It will be 143 which they sent here. H.M.Jr: 143. T: Yes. H.M.Jr: Ah-ha. Any more coming? T: Ah - 13 on the way and nothing new reported. H.M.Jr: I wish also in the cable that you'd give me an idea how the people there feel about this Chinese-Japanese show. T: Ah - - perfectly dreadful. Regraded Unclassified 55 - 6 - H.M.Jr: Is that the way they feel? T: What? H.M.Jr: I say how do they feel there? T: They think it's perfectly dreadful. H.M.Jr: What are they doing about it? T: Ah - main thing up to date is making arrangements to get the women and children out of Shanghai and the rest of China. H.M.Jr: Besides that? T: Ah - besides that they put - they're having - ah - whatever transportation can be made available - ah - then it's up to people whether they want to go or not. H.M.Jr: Then the situation itself. T: The situation itself looks very bad. H.M.Jr: They're not doing anything about it. T: Not yet; they're having a meeting this morning with Secretary Hull and Secretary Woodring at the White House. H.M.Jr: I see. T: But nothing has come out about that yet. H.M.Jr: Well if you get anything on that let me have that, T: Right. H.M.Jr: And - ah T: Well it couldn't be worse. H.M.Jr: Ah - how was the New York Times index for Sunday; was it up or down? 56 - 7 - T: (Has a conversation with George Haas) (Pause) H.M.Jr: Hello T: Ah - not much change this last week - ah - practically none but it's a little down from June when you were here - July rather. H.M.Jr: Tell George he can get me off a letter airmail giving me a little review of the business situation. T: Right. H.M.Jr: Suppose he gets me off a letter airmail - George Haas. T: Yes. H.M.Jr: See. T: O.K. H.M.Jr: Have you any feelings yet on financing? T: Ah - no bonds. H.M.Jr: Ah-ha. T: And then whatever happens to fit on the notes . H.M.Jr : You what? T: Whatever happens to fit on notes I think either - any note would go all right. H.M.Jr: All right. Anything else? T: Ah - H.M.Jr: How is your health? T: My health is excellent. H.M.Jr: Good. T: Ah - the foreign exchanges outside of this Far Eastern stuff has been acting all right. Regraded Unclassified 57 - 8 - H.M.Jr: What? T: Foreign exchanges outside of the Far East have been acting all right. H.M.Jr: Ah-ha. T: Ah - generally quiet; France has been gaining foreign exchange - not much but doing a little better to hold its own and their bond market is better. H.M.Jr: Well let me talk a minute to Bell and then to Archie. T: All right. Bell: Hello H.M.Jr: Hello Dan. B: Good morning. H.M.Jr: Good morning. Ah - how is the spending going - is it ahead or behind our estimates? B: Ah - well it's a little behind and balances have picked up over our estimates for the month of July and up to date but that has largely been due to Jesse Jones of obligations. H.M.Jr: I see. B: Ah - the emergency was off about 40 million dollars from our estimate; the others are about the same. The gold was off about 40 million - 38 million. H.M.Jr: Would you mind getting me off by airmail a little review? B: All right. H.M.Jr: I mean a little review of the spending outlook? B: All right. We sent quite a report last week on the July expenditures as compared with last year's July expenditures to the President. I mean last week. Regraded Unclassified 58 - 9 - H.M.Jr: Well send me a copy of that. B: Ah - yes. He brought it up at Cabinet Meeting and asked Wayne to give him an explanation of it so he could make it public H.M.Jr: Yes. B: but when we took it over we talked him out of it. H.M.Jr: Ah-ha. B: We thought it better to keep still. H.M.Jr: Let me have a copy of it and bring it up to date. B: All right. H.M.Jr: How are you feeling? B: I'm feeling pretty good; kind of anxious for Congress to get away. H.M.Jr: Yes, well take care of yourself. B: All right. Do you want Archie now? H.M.Jr: Anything else you want to tell me? B: No, there isn't much change in the situation so far as the Budget is concerned. Department hung on to the Interior Bill for quite a while with a view to vetoing it but he finally decided not to because he had word that they'd pass it over his veto immediately. Everybody's in a pretty bad temper; they want to go home so badly that they don't want to reconsider anything. H.M.Jr: Yes. B: So he decided to sign it. H.M.Jr: Well up to date I mean on the legislation he didn't pass anything that would cost us any great money to it,did he? B: No. Regraded Unclassified 59 10 I I H.M.Jr: What? B: No, there isn't anything that we need worry about so far as '38 is concerned. H.M.Jr: I see. Do you think they'll pass the Housing Bill? B: I really don't know. (Aside: "Did you hear anything of the Housing Bill"?) Mac says that he can't find anybody that's got any idea from it. The House has it and hasn't reported yet. H.M.Jr: I didn't hear what you said - the phone wasn't working. B: I say Mac says that he hasn't seen anybody that knows anything about the status of the Housing Bill. H.M.Jr: Who says that? a Mac. H.M.Jr: I see. B: The House has it and the Committee hasn't reported it. H.M.Jr: I see. B: We're all hoping that it will hang over. H.M.Jr: Well if - ah - we'll see what happens. B: Yes. H.M.Jr: Well if you'll get me off a letter airmail I'll appreciate it. B: All right, Goodbye. H.M.Jr: Thank you. B: Here's Archie. Lochhead: Hello H.M.Jr: Hello Archie Regraded Unclassified 60 - 11 - L: Well the exchanges have been absolutely inactive; H.M.Jr: Yes. L: sterling is holding strong and the francs, as Mr. Taylor said, are holding quiet; they're not gain- ing anything real but they're holding their own. H.M.Jr: Ah-ha. L: Ah - the other exchanges are not doing much; Belgium is inclined to be a little weak but there - there's been no questions brought up at all. The Chinese have managed to hold that exchange so far; of course, it has cost them money; it hasn't come out yet but it's costing them money. H.M.Jr: How much of the one billion two is inactive. L: Just a minute. (Aside: "What is the inactive fund right now"?) One billion 277. H.M.Jr: I see, L: Now that seems to have quieted down again. There's little dribs and drabs come over from England and Belgium just now but there's no heavy shipments and very little coming in from the market over in London. H.M.Jr: How are you feeling? 3 I'm feeling fine and things have been so quiet I've been away most of the time that you've been away. H.M.Jr: Good for you. L; Yes. H.M.Jr: All right. L: All right, now do you want to speak to Mr. McReynolds? H.M.Jr: Yes. That's about everybody, isn't it? L: Ah - Mr. McReynolds and Mr. Haas here. Regraded Unclassified 61 - 12 - H.M.Jr: All right, I'll say "Hello" to both of them. L: Right. McReynolds: Hello Secretary. H.M.Jr: Hello Mac. How are things going? McR: Right fast. H.M.Jr: No troubles? McR: No troubles. H.M.Jr: Good, I'll have to think up some. McR: Well I've no doubt you will. H.M.Jr: Yes. McR: We had - the only trouble we had was Wayne and Dan and I got in a golf game the other day and had a little difficulty. H.M.Jr: You did. McR: Not bad, you understand, but Dan won our money. H.M.Jr: I see. McR: (Laughs) H.M.Jr: Well that's good. McR: The devil it is - I lost it. H.M.Jr: That's all right. McR: (Laughs) H.M.Jr: Everything's quiet, eh? McR: Yes, everything's quiet. H.M.Jr: Good. Regraded Unclassified 62 - 13 - McR: And nothing to worry about at all. H.M.Jr: O.K. McR: O.K. Here's George. Haas: Hello Mr. Secretary. H.M.Jr: Hello George. How are things with you? H: Oh everything moving along fine and think we'll make the schedule on the several jobs we had when you left. H.M.Jr: Good. E: And the other thing - I'll get off that letter on the general business situation. In general, it's just about as it was when you left. H.M.Jr: Ah-ha. H: Ah - the index - the weekly one is down a little bit but nothing disturbing. H.M.Jr: You're going to have something for me on the little business man. H: Yes sir. H.M.Jr: Good. H: I'll have that. H.M.Jr: May I talk to Magill once more? H: Yes sir. Magill: Hello H.M.Jr: Ros, have you seen the President recently? M: No I have not, no sir, I've - well the last time I saw him was at Cabinet two or three weeks ago. H.M.Jr: Has Taylor seen him? Regraded Unclassified 63 - 14 - M: Yes, he's - well he's seen him at Cabinet too. I don't know whether he's seen him in between or not. H.M.Jr: I mean I want to know how he feels. M: Well - ah - ah - very well I should say. He - there's been a lot of discussion about the Congressional situ- ation, etc. H.M.Jr: Do you think there's any chance of their getting away before Labor Day? M: Oh yes, my own guess would be, from the way they talk to me, that they're, pretty sure to be away by the 25th and there's a possibility they'll be away by the end of this week. H.M.Jr: I see. M: That's the way it looks to me; I don't think there's any change. H.M.Jr: Now Ros - M: Yes sir. H.M.Jr: I want to tell you. There's no need of your being there over Labor Day week-end. M: Well that's very good of you. I thought I would - I would try to get away and come back the day after Labor Day probably, if that was agreeable to you. H.M.Jr: I just want the people to be there that help me on my financing. M: Well I - I imagined that you'd be busy on that and that you wouldn't want me to be reporting to you till a little later. H.M.Jr: Well I mean I'd like to see you but I mean that would be a good chance for you to get away. M: Well I'd'like to do it; I've been - it's just been impossible to get away here with this bill in the state that it's been H.M.Jr: Yes. Regraded Unclassified 64 - 16 - H.M.Jr: I - I really haven't been working at all and I've had a complete rest. M: Well that's - I'm glad you have because that's fine. H.M.Jr: And I'm really in good shape. M: Well now have you got anything you want to-day? H.M.Jr: No. M: I've spoken to Mac - Bob McHugh - I guess he'll take you up - the operator will take you up on that. H.M.Jr: All right. M: Thank you. Goodbye. H.M.Jr: Goodbye to all of you. M: Good luck. Unclassifie 65 15 1 I M: except the week-ends but I - I'm feeling perfectly good but I would be glad to get a week or so down to camp. H.M.Jr: Well that would be a good time to get it. M: Yes - yes, that would be fine. How - how are you feeling, Henry? H.M.Jr: Ah - you see because I want on my financing - ah - I need Wayne, I need Bell - I need George and his people M: Yes. H.M.Jr: and I'd like Archie to be around. M: I think they're all planning to be here. H.M.Jr: All right. M: When would you plan to get here? H.M.Jr: Well I hope to get in there Friday night or Saturday morning. M: I see. Well I probably won't be here then and I'll check in after Labor Day. H.M.Jr: All right. M: Well how are you? H.M.Jr: I've had a grand vacation M: And have Mrs. Morgenthau and the children been well all the while? H.M.Jr: Well they've had colds; I had a little cold but it's been a perfect rest. M: Well that's fine. I'm - I'm glad you can get a rest out of it without taking things here too hard. Regraded Unclassified 66 JR GRY Paris Dated August 17, 1937 Rec'd 3:34 p.m. Secretary of State, Washington. 1168. August 17, 4 p.m. FROM COCHR.N. Paris Exchange market very quiet. French control acquired small amount starling 132.83. Forward franc more offered and intervention through British control to hold three months rate at 3 and one-sighth apparently withdrawn this afternoon. Rentes slightly lower. International shares hard hit by Shonghai trouble. Further increase in foreign Exchange holdings of Swiss National Bank as of .ugust 14 presumed to have resulted from tourist influx. Press report from Prague says Chinese Minister of Finance Kung has concluded arrongements with Skoda works for 10,000,000 pound credit to China for purchase of "industrial Boods" in Czechoslovakin. Press report from Basel states Dutch Swiss banking credit which I mentioned yesterday was placed through Luescher and Company, Basel, amounting to 100,000,000 Swiss francs is secured by Chinese silver deposits. BULLITT MC:DDM Regraded Unclassified 67 RB CODAT PARIS Dated August 18, 1937 Rec'd 7:05 D. m. Secretary of State Washington. 1173, August 18, 5 D. m. FROM COCHRAN. French control yielded sterling throughout the day at from 132.87 to 94. While turnover was not heavy the pressure was steady. Three months rate weakened to four francs against sterling. French rentes definitely lower. No special cause for unsatisfactory feeling but contributing factors are: rising cost of living, labor troubles which caused cancellation of ILE DE FRANCE cruise, realization of deficient French industrial production and Far East situation German Reich announces issue at 98.75 of 700,000,000 reichsmarks of four and one-half treasury bonds reimbursable within fifteen years. Press reports visit by Kung, Minister of Finance of China, to Austrian munition works Hirtenberg before pro- ceeding to Genoa to embark for China. In commenting upon Kung's Regraded Unclassified 68 RB -2-#1173, August 18, 5 p. M. from Paris Kung's reported arrangements in Europe Financial News today concludes: "While the sympathies of financial circles in London and other western European centres are with China there is a great difference between sympathy and the granting of credits while the risk is so exceptionally high as it is at present, There can of course be no question of any issue of a public loan either in London or in other centres unless it is under the guarantee of the governments of the lending countries which does not seem to be forthcoming. The schemes for Chinese financial transactions under the Trade Facilities Act or the export credits guarantee scheme will have to await the advent of quieter times". Referring to British customs figures showing arrival in London past week of one million two hundred fifteen thousand pounds sterling of Chinese gold, Financial News says in part: "China has sold a considerable proportion of her precious silver stock to the American Treasury in recent months to fulfil her plan to adopt a gold -- CYM-- foreign exchange base for the currency. Some of the gold acquired has been converted into dollars and some into sterling. The accuisition of sterling assets explains the arrival of Chinese gold in London". BULLITT Regraded Unclassified 69 August 19, 1937. Thursday. From Hawaii 12:35 p.m. H.M.Jr: Well what are you going to do - get away now? Magill: Well I think I will. I think as soon as we get this bill situation wound up - I want to talk to Doughton a little about the work of the Joint Committee H.M.Jr: Yes. M: in connection with the tax program in the fall. H.M.Jr: I see. M: But I can do that I think tomorrow morning and then if everything is quiet I think I'll get away. H.M.Jr: Good. Well can you stay away until after Labor Day? M: If it's agreeable to you, I'll plan to come back the day after Labor Day. H.M.Jr: Why don't you do that. M: Yes. Well I'd like to do it. If I get that two weeks it would be fine. H.M.Jr: I'd do that. M: Yes. H.M.Jr: Ah - Ross. M: Yes sir. H.M.Jr: Ah - just tell somebody when I'm through with this I want to talk to McHugh in his office. M: Well he wants to talk to you so he's got that in mind. I'll see that the operator gets the message. E.M.Jr: Yes, I want to - have you got - have you got - is Taylor and Bell there? M: Taylor and Bell are here. Do you want Taylor? Which do you want? Hello Regraded Unclassified 70 - 2 - H.M.Jr: Yes. M: Ah - do you want Taylor? H.M'dr: If you please. M: All right. Just a minute; he's coming on. H.M.Jr: Ross. M: Yes sir. H.M.Jr: I think that you ought to feel awfully happy that you're able to get this thing through because there's so few things have been gotten through. M: Well I - I do feel rather good about it because - ah - we had a lot of fights in the Committee about it and it took a lot of strategy and figuring around and so forth and - and I - I am really quite happy that we got it through without any more trouble. H.M.Jr: Well you get away now and then when we come back - as soon as my financing is over I expect to spend most of my time on this tax business. M: Good. Good - well I'll try to be all freshened up for you. H.M.Jr: Good. M: All right, I'll put Wayne on. H.M.Jr: Right. Taylor: Hello Henry. H.M.Jr: Hello Wayne - I - in studying your cable I don't think there is any question but what paragraph 1 - the first one is the thing to do. T: Ah - it looks more that way all the time, Henry. H.M.Jr: Yes. Now what I want to ask you is this. I've got a column in front of me. Ah - if we offered an issue of Friday before Labor Day at percentage T: Yes. Regraded Unclassified 71 - 3 - H.M.Jr: payment on the 8th, is that right. You do it on percentage for payment on the 8th? They pay on Wednesday, don't they? T: No this is - this is - ah - payment on the - you talk- ing about bills? H.M.Jr: Yes - I mean you couldn't offer it on Monday, the 6th, you see? that T: No Bell) that wouldn't quite figure/way. (Talks aside to H.M.Jr: Hello - hello. T: That would go out on Wednesday which is the first, you see? H.M.Jr: The first - now would that - does that make 400 million? T: That would make four (talks aside again with Bell) H.M.Jr: If we sold one on Wednesday the 1st? (Taylor is still talking aside to Bell) T: The payment would be on September one. H.M.Jr: What's that? T: The payment would be on September one. H.M.Jr: Yes, well does that make 400 million? T: Yes that makes 400. H.M.Jr: Well is there any reason why we can't sell two more? T: No. H.M.Jr: What? T: No. H.M.Jr: Because I don't like - ah - I'd like to do that and then, as I get it, I want to see if I was figuring right - there'd be one on the 8th and one on the 15th? Regraded Unclassified 72 - 4 - T: That's right. E.M.Jr: And then on the 22d we could start a new series. T: Well we could either do that or we could skip the rest of September and start right with the first of October. H.M.Jr: Hello T: Yes it would be the 6th of October. H.M.Jr: I don't think I'd want to - well it - T: But that's up to you. We're all right by doing the two on the 8th and the 15th. H.M.Jr: You are all right? T: Yes and that would give us a total of 500. H.M.Jr: On the 8th and the 15th. T: What? H.M.Jr: I say let's count definitely on doing it. T: Well that checks completely with the way we feel. H.M.Jr: On the 8th and the 15th. T: Yes, and that will give us time to look around. If we want to keep on with them - fine - otherwise we could - what? H.M.Jr: We up to the new series after I come back. T: That's right. you see, H.M.Jr: (Sag I don't know what price your bills have sold for the last two issues because I haven't had any news- papers. T: Well we've been all right on them. The short bills - ah - have been going - ah - around 22. Regraded Unclassified 73 - 5 - H.M.Jr: Have they got any - has it been going better or T: They went better than the long ones up to the last time H.M.Jr: Yes. T: and the last time it switched a little bit. H.M.Jr: I see. I see. Ah - what rate did you get the last time on the long ones? T: About forty (aside to Bell: 46, wasn't it?) 46. H.M.Jr: I see. Well that's a good rate. T: Yes. H.M.Jr: That's a good rate. T: Ah - we've helped by an account of - we've allowed payment by credit, you see? H.M.Jr: I see. T: And that helped a little bit on the short ones particularly. H.M.Jr: Well you'd want to tell - ah - ah - on Monday the 30th I think we ought to say something, don't you think so? T: Ah - yes, at least then. H.M.Jr: What? T: I think at least then. H.M.Jr: At least then. T: Yes. In other words, not later than that? H.M.Jr: What? T: Not later than that. In other words, if we could - if we could say that we weren't going to ask for any cash Regraded Unclassified 74 - 6 - H.M.Jr: Yes. T: fairly soon, I think it would help the market because the boys are guessing - ah - they're figuring that we're going to refund those 350 bills, you see? H.M.Jr: I see. T: And they're talking about an issue which will be anywhere from a billion one up to a billion three. H.M.Jr: Well I'll talk to you again next Tuesday or Wednesday. T: Right, but we - we check completely on the two more bills in Septem - ah - two more issues in September into December. H.M.Jr: Ah - we check on that? T: Absolutely. H.M.Jr: Good. T: And that gives you - that puts us in nice shape so that the maximum amount at any one time H.M.Jr: Yes. T: would be two billion eight. H.M.Jr: Ah-ha. T: And then that one could work down at periods, you see? H.M.Jr: Yes. Well that sounds all right. Now - ah - what are my March 142 - what are they selling at? T: Ah - on a 163 basis but the feeling isn't terribly good at the minute. H.M.Jr: You say the what? T: They're selling on a 163 basis. H.M.Jr: What does that make them - ah - par what - par 20? Regraded Unclassified 75 - 7 - T: Par 16. H.M.Jr: Par what? T: It's about par and a half. H.M.Jr: Oh they're off a little bit, aren't they? T: Yes, they're off since you last - ah - since we last talked to you and we had another speech that didn't help the market too much but it had it's (laughs) H.M.Jr: Well hello. T: Yes. H.M.Jr: Ah T: It wasn't a Green Bay one but it was H.M.Jr: With Congress gone and out of the way I think the market ought to improve. T: What? H.M.Jr: The market ought to improve as soon as Congress goes ho home. T: It won't hurt it any. H.M.Jr: All right. Now what about gold? T: Ah - gold's about the same; we've got a little bit more coming from Japan now - I think its six million. H.M.Jr: Ah-ha. T; Ah - and pounds act awfully strong. H.M.Jr: They do. T: Yes. They're - they might hit $5.00 to-day. H.M.Jr: Really? Regraded Unclassified 76 - 8 - T: Yes. H.M.Jr: Any more gold coming from T: From where? H.M.Jr: T: Ah - - six. H.M.Jr: New? T: Yes. H.M.Jr: Ah-ha. Ah-ha. T: It isn't much any one place but it's - ah - ....... H.M.Jr: It trickles in. T: Yes and particularly with the strong pound, you see? It - ah - ah - it - if the pound were a little lower and the gold rate had been about as it is why the - ah - the gold would go there instead of here. H.M.Jr: I see. All right, can I say hello to Dan? T: He's right here. Bell: Hello H:M.Jr: Hello Dan. B: How are you? H.M.Jr: Fine. Aren't you perfectly happy about that sug- gestion? B: Yes, it's O.K. I agree with it entirely. H.M.Jr: You - you feel all right? B: Yes. I apologize for not getting off a report on Monday but I missed the plane. Regraded Unclassified 17 - 9 - H.M.Jr: Well - B: So I'll have one next Monday and you can read it on the boat. H.M.Jr: Good. B: Ah - let's see you're leaving there when - Saturday? H.M.Jr: I leave here on the 28th? B: That's - ah - H.M.Jr: There's one more plane will catch me. B: Yes, well I'll get the next plane sure. H.M.Jr: Right. B: All right. H.M.Jr: Are you going to get any vacation now? B: Well (laughs) I haven't given much thought to it. But there may be a possibility after this financing is over. H.M.Jr: I see. B: I'll have to skip some of the Budget Hearings and just let the boys go ahead with it in order to get any. H.M.Jr: You ought to figure on it right after the financing. B: Well I will a little but our Budget Hearings will start about the 20th. But I guess I can arrange the schedule and then go off and let the boys do the trick. H.M.Jr: I think you'll have to. B: Yes. H.M.JrL Ah-ha. B: Well I'll have to think about it anyhow. Regraded Unclassified - 10 - 78 H.M.Jr: I forgot to ask Wayne how is he standing it physically? B: (Laughs) Fine,he says. H.M.Jr: He is. B: Yes. It doesn't look as though he lost any weight. H.M.Jr Anything you want to say to me? B: How's that? H.M.Jr: Anything you want to say to me? B: No I think everything is running along bretty good. Ah - if we get Congress out of here why some of our worries are over and H.M.Jr: That Bill the way I read it in the New York Times I don't think they're going to build many houses. B: No - no they won't. H.M.Jr: What? B: No, that's right. H.M.Jr: That's what I thought. B: Yes. There's one thing up there that's bothering me a little and that's this cotton business. H.M.Jr: Yes. That's one of those things who told what last, eh? B: Yes, I got some stuff that Senator Byrnes is trying to use some of the Customs money to - ah - make a gift of about 3¢. H.M.Jr: I see, B: That means that the Budget is sunk to the extent of about 65 million,I understand. Regraded Unclassified 79 - 11 - H.M.Jr: Well is there anything you can do about it? B: Ah - I don't think SO. I understand that it's had the approval of higher-ups. H.M.Jr: Ah-ha. Well it's a lot of money. B: Well I'm just hoping that it will get caught in the cog and they'll go home before anything's done. H.M.Jr: Ah-ha. I hope so too. B: Yes. Well we'll talk to you next week, eh? H.M.Jr: Next week. B: All right, good-bye. H.M.Jr: Wait a minute. B: Yes. (Pause) B: Yes. H.M.Jr: Wayne? B: Oh just a minute. Taylor: Hello. H.M.Jr: Are you standing it all right physically? T: I certainly am. H.M.Jr: And it hasn't been too hot? T: No it's - ah - the last couple of days it's been pretty rough - I mean as far as the weather goes - but it's really been all right. H.M.Jr: O.K. T: In case of need I have an extra guilder and that seems to work out. Regraded Unclassified - 12 - 80 H.M.Jr: All right. (Laughs) T: (Laughs) H.M.Jr: Goodbye. T: Goodbye. Regraded Unclassified 81 TREASURY DEPARTMENT WASHINGTON August 19, 1937 My dear Mr. Secretary: In accordance with your telephone request, there is attached & current business situation memorandum and some accompanying charts. I was glad to hear that you are having a good rest and enjoying your vacation. My best wishes for a pleasant return voyage, Sincerely, George C. Haas, Director of Research and Statistics. Honorable Henry Morgenthau, Jr., Royal Hawaiian Hotel, Honolulu, Territory of Hawaii. Enclosure Regraded Unclassified TREASURY DEPARTMENT 82 CONFIDENTIAL INTER OFFICE COMMUNICATION DATE August 18, 1937 TO Secretary Morgenthau FROM Mr. Hass JOH Subject: The Business Situation Business activity during July and early August has on the whole been well maintained. In large measure, however, it has been maintained on backlogs of unfilled orders built uo in earlier months, while the volume of new buying has con- tinued small relative to the current level of production. It seems evident that unless increased buying appears, to replace backlogs as they become exhausted, a slackening in business activity and possibly a temporary decline is to be expected. In our revenue estimates we have made allowence for a tem- porary decline of this nature, since we believed it likely that a period of adjustment would follow the high production levels of last spring, which were apparently excessive as compared with the movement of goods into consumption. The longer term outlook, however, continues to favor a general unwerd trend in business, encouraged by low interest rates, improved capital markets, a deficiency in building, and in- creasing purchasing power of farm and factory workers. The effect of these may be offset to some extent, however, by a decrease in the net volume of Federal spending. Some tendency toward a lull in business was seen during July. The Federal Reserve Board preliminary estimate of in- dustrial production for that month shows a gain in the index of only 2 points from the strike-depressed June level of 114 (revised), despite 8. recovery in steel production to the highest level (seasonally adjusted) since Jenuary. A sharp decline in textile activity was the most important adverse factor. In comparison, the index stood at 118 during the months of March, April, and May. The New York Times index (Chart 1) showed some tendency of business to weaken during the latter part of July and early August, despite well- maintained steel activity. Factors in the Business Outlook The relatively light volume of new buying appears to us of outstanding importance in the near-term business out- look. The volume of new orders in most industries, judging Regraded Unclassified 83 - 2 - from our confidential figures from reporting companies and from various trade reports, has been insufficient to maintain industrial production at its present level. In terms of physical volume, new orders appear to be running at about the same level as last year at this time, or somewhat lower. The level of industrial production during the fall months of last year, A.B. measured by the FRB index, was about 12 per- cont below the present level. Industrial production has been maintained this summer largely on backlogs of orders built up during earlier months. The volume of such orders must have been unusually large. In cotton textiles, for example, new orders have been running at B. lower level than production almost con- tinually since March, yet it was not until July that back- logs were reduced sufficiently to drop production to B sharoly lower level. Cotton consumption by mills during July was 15 percent below that in June, and lower than the consumption in July of last year. A similer situation appears to exist in the steel indus- try. Production has been maintained at recent levels largely because of an unusually heavy volume of old orders. New buy- ins has been light since the latter part of April. Although expressions of confidence in the fall outlook for steel have been quite numerous recently, no definite signs of an upturn in steel buying have so far appeared. The Iron Age says that only at Chicago has there been a reversal of the downward trend of new orders, and that even there the change has been moderate. A marked increase in payrolls in recent months is con- sidered by business observers as one of the outstanding fevorable factors in the business outlook. This may already be having an influence on retail buying, since department store sales and variety store sales during July (both sessonally adjusted) showed an increase over earlier months. During August so far, retail sales are reported to be some- what disappointing, though definite data are not available. Dollar sales of merchandise in small towns and rural areas during July, according to the Department of Commerce index figures, following B. previous slight decline from the peak (seasonally adjusted), declined 4 percent from the June established in May. The July sales were 4 percent higher than during the corresponding month of last year. Regraded Unclassified - 3 84 Purchases of automobiles in recent months have shown a tendency to lag, new car registrations during April, May, and June being lower than last year. Some upturn appears likely during July 8,8 a result of prospective price increases for 1938 models, but the increased prices may later have an adverse effect on new car buying. A continued rise in rents during the summer is a factor favoring increased building activity. The sharpest upturns in residential rents during July occurred in large indus- trial cities, according to reports from the Department of Lebor. The advance in rents 16 expected to be accelerated after October 1, the date when, leases on dwellings are generally renewed. More stable building costs will also fevor an upturn in construction. Five of twenty-six cities reporting to the Federal Home Loan Banks report that resi- dential building costs declined in July for the first time in many months. Total construction in 37 Eastern States during July, according to the F. W. Dodge figures, reached a new high for any month since April 1931, making a gain of 9 percent over the corresponding month of last year. The most pronounced gain, 44 percent, was in non-residential construction awards (largely commercial), which reached the highest level since July 1930. Residential construe- tion awards during July were 12.5 percent higher than in July of last year, while public works and utility awards showed B 19 percent decline. A continued upward movement in commercial loans sopears a favorable factor in the business picture. The volume of commercial paper outstanding at the end of July 7/MB the highest since January 1931, and made the best July showing since 1930. Commercial borrowing this year has not shown the usual summer slackening, but instead has continued to increase. It 1s reported that a sub- stantial part of the borrowing 18 for the financing of plant expension. New capital flotations during July did not hold the sharp gain registered in June, but for the first half year they made B. very favorable comparison with the cor- responding period of 1936, although total security flota- tions have declined. Estimated gross proceeds from securities registered with the SEC during the first half of 1937 were about 15 percent less than during the cor- responding period of 1936. The estimated net proceeds Regraded Unclassifie 85 4 to be used for plant expansion and working capital, however, both in percentage of the total and in aggregate amount, was the highest for any first half year since registration began under the Securities Act of 1933. New corporate security flotations 8,6 reported by the Commercial and Financial Chronicle, amounted to only $139 millions in July 1937, as concered with $294 millions in July 1936, but the amount of ruch flotations for new capital as contrasted with refunding nurnoses amounted to $82 millions in July 1937, 86 compared with only 170 millions in July 1936. During the last several weeks the new issue market has been quiet. Commodity and Security Prices Commodity orices (Chart 2) have recently tended down- mrd. Commodity futures, BB represented by the Dow-Jones future. index, have reached new low levels on the general decline which began in March, while the BLS index of 30 sensitive commodities has held above its earlier lows. Declining prices for cotton and grains Aue to large croo prospects have recently been an important factor in the futures index. The total wheat crop is now estimated at 890 million bushels, 8.8 compared with 626 millions last year. Despite the increased production, however, prices have been sustained at 8. higher level than last year by heavy crop deterioration in Canada, where conditions are reported to be the worst in 30 years, and by Door crops in other wheat countries. Farm prices for whest on July 15 everaged about 31.13, AS compered with a crop- yoar average of $1.00 for the 1936 crop. The Government's August cotton crop estimate of 15.6 million bales, as compared with 12.4 millions last year, made the average yield per acre the highest on record. In- creased foreign crop prospects, together with the large estimate of the domestic crop, have reduced futures prices to hear the 10-cent level. Present prospects indicate that the larger crop may bring farmers little, if any, more in- come than the smaller crop of last year. It appears likely, however, that a crop loan, or more probably a loan and aljustment payment plan, will be applied to this year's crop. which would add to the incomes of cotton farmers. The President has consented to a crop loan, provided Congress would out crop control legislation first on the celendar next session. The Senate has adopted a resolu- tion to this effect, which the House Agriculture Committee has accepted. Regraded Unclassifi 86 - 5 - Security prices have shown divergent trends. Government bonds and notes (Chart 3) showed & general upward movement during July, most groups exceeding their May-June highs. A moderate recession has taken place during August. Corporate bond prices, 88 measured by the Dow-Jones combined average, have held steady, with a slightly sagging tendency, since the sharp recovery early in July. Industrial and utility bonds have shown greater strength than railroad issues. In the stock market, price trends have been mixed. Industrial stocks (Chart 4) have shown a steady rise since the middle of June, reaching nearly to the high levels of early March. Utilities have shown a moderate gain, but have sagged some- what during the past three weeks. Railroad stocks have shown very little improvement, and are now but slightly above their June lows. Foreign transactions (shown on Chart 4) continued moderately on the buying side during July, but more recently the buying and selling has been practically equal. STOCK PRICES AND FORBIGN TRADING IN DOMESTIC STOCKS Daily Movement, Dow-Jones Industrials and Foreign Net Purchases and Sales DOLLARS in 196 192 192 THE Prices 182 188 Pth 184 184 180 180 176 176 172 172 168 168 DOLLARS DOLLARS VILLIONS WILLIONS Het Purchases 4 4 o o 4 + Net Sales I a 24 3 10 17 24 31 7 14 21 25 in 12 19 2 9 : 16 23 30 7 14 21 28 4 11 18 25 MARCH APRIL MAY JUNE JULY AUGUST 1937 Total Weekly Poreign Trading, Weeks Ending Wednesday DOLLARS COLLARS MILLIGHS WILLIONS 40 40 Net Purchases 20 20 o D Regraded Unclassified Net Sales 87 20 20 Thant CB F 40 7 24 3 is 17 24 31 7 14 21 20 5 12 19 26 N 9 16 23 a 7 14 21 28 4 It 18 25 MARCH APRIL MAY JUNE JULY AUGUST 1937 - el the Sairmary el the - P - 149 - A. - of - - - Chart 3 Price Fluctuations U.S. SECURITIES BY MATURITY CLASSES Yield Fluctuations 1936 1937 MAR MAY JULY SEPT NOV JAN MAR 1936 1937 MAY JULY SEPT DOLLARS NOV. Inverted Seale MAR MAY JULY SEPT NOV. JAN. MAR DOLLARS MAY JULY SEPT. impried Boals Notes PER CENT FER CENT Notes 102 Under / Year 102 4 4 Limiter y Year 100 100 a a 154 104 /ta2 Peare o o ICE 102 100 106 4 . (to2 Years 104 Zin3 Years 104 a 8. (or 102 (2 1,2 108 ID# 4 + 108 106 3105 Years e a 184 104 102 JAN MAR MAY 102 1.2 2103 Years 1.2 JULY SEPT NOV JAN MAR MAY JULY SEPT NOV. 114 114 Bonds 1.6 1.6 114 112 110 a a 110 10% Stal0 Years (08 12 ( 2 3eo5 Years 124 106 16 1.0 104 104 2.0 2.0 TN 112 24 2.4 110 110 JAN MAR MAY JULY SEPT NOV JAN, MAR MAY ALY SEPT NOV. 12 12 Bonds 104 108 1.6 16 13A 10ta20 Years IDÉ to 10 Years 2.0 2.0 104 104 102 102 2.4 1.4 100 100 20 3.0 118 110 24 14 198 108 IO se 20 Years 2.8 28 188 10% 15a 24 2.4 104 20 Years and Over 102 102 28 2.8 20 Years and Over 160 / --- 100 12 JULY NEFT NOV JAN MAR MAY JULY NOV JAN MAR MAY JULY SEPT NOV JAN MAR MAY AAY SEPT 3.2 MAY SEPT HOV 1936 1937 1936 1937 - - is computed - followe:- the yiside of all Tesels of failing - within the specified autority period ACT first Date APREADA is the - MAN the dollar price of . these 10 a security at the afd-getal of the are - aptority date. Tisles ses invial is all - - class, - by dates. Tisida AFR required is will willing - Mr. - in Flast - Illnes selling tale sur. date - ammilies willing starre Mr. and - Fisst minity - - with below per. / Motor is the I tome IN traning - - at liams is # state PASA Regraded Unclassified di I 5 / 1. , 1. I - - 2061 AVIP LESI 9161 7 % 61 21 in 5Z zz SI $ E1 11 *1435 Arne AVT: *avn "NWP 'ACM von $ are 19 55 = 99 00 8 V.S., U.K., FRANCE CURRENCY AGREEMENT PRESCH DEVALUATION, a V 69 89 & stening B. 02 02 V a & " " ALIGORICO % N se la s (******) 1045 a 92 76 DE à (*s - (ii) 1045 361115435 DE 82 BL as 18 OR OR 06 del 2 ze 1830 1830 1430 17d 02 61 zu 5 62 D or " - 52 ni = to 17d *WM or ATTE AVN 'IVE 'NYF *AOM *Lass #38831435 2361 9661 2561 (wrive to 30VH3AV) Daily 1924 I PRICES COMMUTITY 40 a Chint 68 Chart 1 90 PER STEEL INGOT PRODUCTION CENT "Per Cent of Capacity" (Dow Jones) 100 37 80 60 36 40 JAN. APR. JULY OCT. BUSINESS ACTIVITY - N.Y. TIMES PER CENT Seasonally Adjusted Est. Normal=100 110 37, 100 '36 90 80 JAN APR. JULY OCT. Office of the Secretary of the Treasury C-142 C Origina of 1 and Statestics Regraded Unclassified 91 RB CODAT Paris Dated August 19, 1937 REC'd 3:41 P. m. Secretary of State Washington. 1178, August 19, 5 P. M. FROM cochran. Vrench control had rather heavy day supporting through purchases by Comptoir spot franc against sterling at one thirty two point nine fifty five to ninety-two. Interven- tion in three months franc was made at London through Societe Generale to reduce discount from four and seven eighths to four and five eighths. All currencies weak against sterling. Bank of France statement as of August twelve showed no important changes. French rentes lower, Market Estimates that French fund has averaged purchases of ONE hundred million francs each of past three days to prevent more serious slump in French Government securities. Tarket pessimism today is due in part to rumor of differences between Chautemps and Blum on railway reorganization which may split Cabinet. Sentiment Regraded Inclassified 92 RB -2-#1178, August 19, 5 p.m. from Paris Sentiment is also influenced by financial writers who are beginning to think that French breathing spell may bE nearing an end. FINANCIAL NEWS London for instance says today in part: "As a matter of fact the prospects of the franc have not become worse during the last few days simply because they have never really become better. Taking a long view, the outlook is the same as it was a month or two 830. M. Bonnet's measures have failed to bring about a fundamental restoration of confidence. The volume of repatriations has been negligible even though the outflow of capital has come to a hault. If the best the franc can do during the holiday season is to remain 'neutral' it is likely to become worse after the holiday season when the seasonal influx of revenue has subsided and when the politicians have once more DECOME restive". Period for subscription to four percent nineteen thirty SEVEN Treasury bonds to convert four and one half percent nineteen thirty-four expired today, is Extended to twenty third. BULLITT KLP X Regraded Unclassified 93 RB CODAT PARIS Dated August 20, 1937 Rec'd 2:25 p. m. Secretary of State Washington. 1182, August 20, 5 P. m. FROM COCHRAN. Better sentiment prevails on Paris market today. French control has acquired some sterling at OAF thirty- two point Eighty-six and a fEW dollars at twenty-six point sixty-four. Forward rate has been held at four and one half. .ith only slight assistance from the fund rentes have remained practically unchanged. French adverse trade balance for first SEVEN months 1937 amounted to ten and one half billion francs as com- pared with five and one half billion same period last year. While tourist trade is supporting franc at present the heavy deficit in the trade balance if continued will surely have repercussions on the currency. Liscussing dollar's weakness FINANCIAL NEWS LONDON today said in part: "Whatever may happen to the dollar in the Regraded Unclassified 94 RB -2-#1182, August 20, 5 p. m. from Paris in the short run, in the somewhat longer run the factor that will have most influence in deciding its tendency will be the measures taken against the influx of 'hot money'. Any drastic steps whether in the form of dis- criminatory taxation or in the form of disclosing informa- tion on foreign dollar assets would inevitably lead to a lasting weakening of thE dollar especially as similar steps are not EXPECTED to bE taken in this country. Since, however, President Roosevelt has been threatening with anti- 'hot money' measures EVEr since November 1935 and nothing has so far been done about it the market is naturally inclined to minimize the probable importance of this factor". BULLITT GW KLP 03413323 st Regraded 95 RB CODAT Paris Dated August 23, 1937 Rec'd 3:45 p. m. Secretary of State Washington. 1193, August 23, 6 p. m. ROll COCHEAN. Little business and no importart changes on Paris Exchange market. Slightly better sentiment and small improvement in forward franc and French rentes attributed to week-End speech by Bonnet who said at least three billion francs (out of five point four billion outstanding) of the four and one half Germain Martin bonds had been e inverted into the new four percent issue and pointed out other developments which WERE likewise making the Treasury situation Easier. LONDON TIMES today contrasts latest French and German fortign trade returns. In spite of depreciated currency French fortign trade deficit increasing because of higher costs of production and prices. FINANCIAL NEWS today stresses seriousness of the French price situation and recommends peaceful negotiation toward releasing industry Regraded Unclassified 96 RB -2-#1193, August 23, 6 p. m. from Paris industry from rigid forty hour WEEK. French Cabinet will meet tomorrow to begin study of final SET of decrees under authority Expiring August 31. Press reports Chinese l'inister of Finance Kung has cancelled sailing from Genoa and returned to Bad Nauhtim for cure. BULLITT KLP / / / / Regraded Unclassified 97 August 23, 1937. 12:32 p.m. From Hawaii Taylor: Hello Henry. H.M.Jr: Good morning. T: Good morning to you. H.M.Jr: Ah - Wayne - ah - the main thing that I'm calling up about is - 1 - I'd like to talk to Bell first, if I could. T: He's right here. H.M.Jr: Thank you. Bell: Hello H.M.Jr: Hello - Dan? B; Yes. H.M.Jr: Good morning. In the first place, I never got your summary - hello B: Yes. H.M.Jr: You know you were going to send me a summary up to the 15th of July or something like that? B: Yes but as I told you, when I talked to you last week, I missed the plane. H.M.Jr: Oh did you miss last week's plane? B: I missed the plane, yes, and it's going out of here to-day and will catch Wednesday's plane. H.M.Jr: Oh you're going to send it this week? B: Yes, and you'll get it, I take it, Friday H.M.Jr: I didn't get George Haas' either. B: How's that? Regraded Unclassified 98 - 2 - H.M.Jr: George Haas was going to mail me a review of the business situation. B: Well I don't know - well he sent that. Wayne says that he sent it. H.M.Jr: What's that? B: Wayne says that he has sent that. H.M.Jr: Well I never got it. B: I see. Well it probably missed the plane also. H.M.Jr: Now Dan. B: Yes. H.M.Jr: Ah - I see that they got through that 60 million dollars for the cotton. B: They sure did. H.M.Jr: And they dropped out this other money. B: They dropped out what? H.M.Jr: The money for the sugar. B: Ah - yes, except 250 thousand dollars for administrative expenses. H.M.Jr: Yes. B: They'll drop that H.M.Jr: I'm really calling up for this. What would happen if the President vetoed the Third Deficiency Bill? B: Well in one or two places it would probably do some harm, in a small way. H.M.Jr: Well you remember last year we didn't get our last Deficiency Bill through. 99 - 3 - B: No, it was a couple of years ago - Huey Long's filibuster the H.M.Jr: Yes, and we went along all right. B: Yes. H.M.Jr: I wish you'd think about seriously whether we could recommend to the President that he veto that. B: Ah - you mean - ah - merely because of the 60 million? H.M.Jr: Yes. B: For cotton loan? H.M.Jr: Yes. B: Well - ah (laughs) I think that - ah - he's agreed to it. H.M.Jr: Well that's what I was afraid of. B: Oh yes, he's agreed to it - ah - really had agreed to it before I ever got in on it; knew anything about it. H.M.Jr: Ah-ha. B: And they had quite a time over the facts; had three-way conversations between Billy Byrnes and McIntyre and myself and Cliff Woodruff - ah - McIntyre and myself and apparently the President had committed himself on it and there wasn't anything we could do about it. H.M.Jr: Ah-ha. B: I tried to get it out. H.M.Jr: Well now is that a straight grant? B: It's a straight grant, yes. H.M.Jr: A straight grant. 100 - 4 - B: It would be a benefit payment - ah H.M.Jr: What's that? B: It would be a benefit payment of not to exceed 3¢ a pound. H.M.Jr: An - 3¢. B: Yes, you see they're figuring on 12# a pound. The loan will be either 96 or 10¢. H.M.Jr: Oh it's going to be a loan? B: Well the loan will be from the Commodity Credit of either 90 or 10¢ and then the differential will be the benefit payment. If you get a loan at 10c then the differential is only 24 but if you get a loan of 9¢ then the benefit payment will be 3¢. H.M.Jr: 11¢ - if cotton sells at 11 they get 3¢. B: So I understand, yes. They get a benefit payment. B.M.Jr: You mean the higher the price the more they get? B: Ah - the other way Wayne says. H.M.Jr: Yes that's what I should think but I mean - but I won't go into details but from the standpoint of getting the veto it's water over the dam. B: Oh I think SO. I think the President had a con- ference on it - ah - ah - a week ago Friday. H.M.Jr: I see, B: And I didn't know anything about it until - ah - Friday morning H.M.Jr: Ah-ha. B: when I was trying to get Cliff Woodruff to get it out in Conference and I was told by the Secretary of Agriculture that it was all agreed to and - at a previous week's conference. 101 - 5 - H.M.Jr: Well - B: It's all set in everything apparently. H.M.Jr: Well it's just as well I'm in Honolulu. B: Well easier. I think (laughs) you probably are resting much H.M.Jr: Yes. B: This has been a terrible place in the last week H.M.Jr: Ah-ha. B: and our budget's been hurt materially - both '38 and '39. H.M.Jr: Has it? B: Yes. 365 million, I think, in each year on that account alone. H.M.Jr: Yes. B: And - ah - if this sugar bill goes through - ah - it won't quite pay for itself and - ah - the way the thing is working out now - if it's vetoed now why it will reenact at the next session and, it will cost us money because we'll lose a half year's revenue, whereas the benefit payments will go in for the whole year. H.M.Jr: I see. B: See? H.M.Jr: Well that's that. B: Do you want me to give you the picture here from the last of Saturday night, based on what we talked about last week - 150 million dollars in Treasury bills up to the 15th of September on maturity in December? H.M.Jr: Yes. 102 - 6 - B: 100 million extra in September for maturity in March. H.M.Jr: Yes. B: And 200 million from the period in March to be issued in October. H.M.Jr: Yes. B: On that basis we'd go out in August with a balance of about 804. H.M.Jr: Yes. B: Out of September with 819. H.M.Jr: Yes. B: And out of October 784 million. H.M.Jr: Yes. B: And out of November 644 million. HuM.Jr: Yes. B: And then we have a 600 million dollar third issue in December. H.M.Jr: Yes. B: We would go out of there with about 859 million. H.M.Jr: If we sold how many bills? B: Ah - B:M.Jr: Just do that again. B: Well you see we've got our program all the way through to September 15th - the present program - - did you get that? H.M.Jr: That would be five hundred 103 - 7 - B: That would be 500 million in - ah - December. H.M.Jr: Yes. B: Then we would issue another 100 million in September H.M.Jr: Yes. B: on the 22d and the 29th H.M.Jr: Yes. BE for maturity in March H.M.Jr: Yes. B: and continue that series through to the end of October HhM.Jr: I see. B: giving you 300 for the period in March. H.M.Jr: On that basis we 'd have the following figures. B: Yes. H.M.Jr: Well that sounds very good. B: Very good and that's allowing 110 million dollars for gold in August and 75 million in each of the other three months. H.M.Jr: I see, well that gives us plenty of leeway. B: Plenty unless this gold starts back. H.M.Jr: That will increase our bills. B: Yes. H.M.Jr: I think that sounds all right. B: Well I think Wayne agrees to that. H.M.Jr: Yes. 104 - 8 - B: I think Wayne agrees to that program too. H.M.Jr: Who? B; Wayne. H.M.Jr: All right. How - how is our - those last five year notes - what - what are they selling at? B, They closed Saturday with a slant to 12 and I under- stand they're off a little this morning for about a 7 to 10. H.M.Jr: Ah-ha. B: They had an AP story this morning that we were going to buy about a billion and a quarter and that didn't help the market any. I think the sooner we announce that we're not going to have any new cash in Septem- ber the better our market will be. H.M.Jr: I - have you got anything else? B: But Wayne will talk to you about that. H.M.Jr: All right. B: No, that's all I have. H.M.Jr: What? B: That's all I have. H.M.Jr: Thank you. B: All right. Taylor: I think this - what Dan was telling you at the end is quite important; that the one good thing that we can do as far as the market is to indicate that we're just going to turn over that 817. H.M.Jr: Yes. Baylor: I'd like to do that as soon as possible. 105 - 9 - H.M.Jr: Well do it tonight for tomorrow morning's papers. T: O.K. H.M.Jr: And, if you don't mind, I'd just as leave have you say, when you did it, that you consulted with me by telephone. T: Right. H.M.Jr: See? T: Right. H.M.Jr: And I'd do it tonight, for tomorrow morning papers and I think, while you're doing it, you might as well tell them that this - that present bill issue is going to be 500 million. T: Ah - into December the debt will be 500. H.M.Jr: Yes, then they have the whole picture. T: Yes. H.M.Jr: I'd do the whole thing. T: Do it right that way. H.M.Jr: Yes. T: Because they'll ask the question about the bills immediately. H.M.Jr: Well I'd tell them the whole thing. T: Yes. H.M.Jr: And you can tell them that you were talking it over with me. T: Right. H.M.Jr: I think the quicker we do it now the better. T: I'll do it this evening for tomorrow's papers. H.M.Jr: Now what else? Regraded Unclassified 106 - 10 - T: Ah - gold - ah - every - all the exchanges and so on have been very quiet. We've got about ten million more, however, coming from the Japs. H.M.Jr: How much more? T: Ten - two lots of five. H.M.Jr: Ah-ha. What do they do with all that money anyway? T: Using most of it to buy sterling to pay debts with. H.M.Jr: Pay who? T: Pay debts. H.M.Jr: I see. T: They got a lot - still got a lot of paper out in that London market. H.M.Jr: Ah-ha. Now what else? T: Ah - that's about all. There's one - by the way - there's one thing on this damn sugar bill. H.M.Jr: Yes. T: Ah - we've been brought in as part of a committee H.M.Jr: Yes. T: ....ah - to prepare a veto message. B.M.Jr: Yes. T: Ah - I have taken the position that we will not comment on the merits of the legislation. H.M.Jr: On the what? T: On the merits of the legislation. H.M.Jr: Yes. T: Ah - consistent with what you did before. Regraded Unclassified 107 - 11 - H.M.Jr: That's right. T: Ah - but the only thing that we will do is call attention to this question of the figures. H.M.Jr: That's right. You mean on the - on the taxes? T: Yes. H.M.Jr: That - that's right - that's good sense. T: Ah - I wanted to check that with you because I said that very hard this morning. I told Dan that and our own people. Now that isn't going to suit the other people. They're trying to drag us back in again but I think we're out and we ought to stay out. H.M.Jr: Yes, well the President told me to stay out. T: Right. H.M.Jr: He was very emphatic that I should keep out of it. T: Well that suits me fine. H.M.Jr: He said, "Henry, the only interest is whether we gain or loses money". T: Yes. E.M.Jr: And that's our only interest. T: Well that's what we're - that's what we're saying in our comment. H.M.Jr: Attaboy. Ah - now Wayne - would you have again tonight and they needn't bother coding it - send me a message - because I don't get the quotations on those notes, you see - hello T: Yes. H.M.Jr: Ah - send me - I think I'd select two notes - whichever ones you think are the most significant, you see? T: Yes. Regraded Unclassified 108 - 12 - H.M.Jr: I'd certainly use the last one as one of them. T: Yes. H.M.Jr: And I'd like every night that the notes - I don't want basis. it on a yield basis. I want it on a price T: Price basis. H.M.Jr: Selling at 101 or 101 and so many thirty-seconds, see? T: Yes. H.M.Jr: And then always say up or down so much, you see? Hello T: We'll send you - there are about six of them, I think. That won't be too many, will it? H.M.Jr: Six what? T: Six notes. Six maturities. H.M.Jr: I don't care. T: Well we'll picksome out and. H.M.Jr: Send me a - send me a - the only bond they quote here is the 2-7/8's. T: Yes. H.M.Jr: So send me a short bond. T: Well we'll send that to you every evening from now until you - ah - till you get back. H.M.Jr: Yes and - and tell Schwartz - Gaston isn't there, is he? T: No. H.M.Jr: Ah - very significant news - financial news, you see? T: Yes. Regraded Unclassified 109 - 13 - H.M.Jr: Put that in because we get very little here. T: Right. H.M.Jr: And also any - I mean any significant political news, you see? T: Ah - it's all bad. H.M.Jr: Well I mean he can put it in, you see? T: All right. H.M.Jr: What? T: All right. H.M.Jr: I mean it comes government radio - it doesn't cost anything. You say it's all bad? T: Yes. H.M.Jr: Really? T: Yes. H.M.Jr: Well I'm - I'm wearing pink-colored glasses. T: (Laughs) Ah - it'll look better by the time you get back but it's lousy. H.M.Jr: What's the matter? T: A cat and dog fight. H.M.Jr: You mean on between the Hill and T: Yes. H.M.Jr: Ah-ha. Well tell Schwartz to pick out anything very significant and - ah - political news and then give me something on the financial. I get the stocks and the other bonds but I don't get those bills and these government bonds, you see? T: Right. Regraded Unclassified 110 - 14 - H.M.Jr: Hello T: All right. H.M.Jr: And also I'd like the price of gold - I mean like if it's 34.77 or 34.76, you see? T: Right. H.M.Jr: I'd like that price; I don't get that price. T: Ah - you get the sterling rates, don't you? H.M.Jr: What's that? T: You get the quotations that are on exchange. H.M.Jr: No, I don't get anything here. T: Yes. H.M.Jr: I mean I'd like whatever the price of gold is in terms of sterling, you see in London? T: Right. H.M.Jr: See? T: Right. H.M.Jr: And - ah - that's about all. Ah - T: Want to talk to Archie? H.M.Jr: Yes I'd like to. T: All right. Lochhead: Hello H.M.Jr: Hello Archie. L: Yes sir, things have been very quiet on the European front. H.M.Jr: Yes. 111 15 I I L: So I think the French will wait off until about the first week in September and then we'll be starting in to hear a new story. H.M.Jr: Well that will give me something to do - otherwise I won't have anything to do when I come back. L: You'll be surprised - they'll find something. H.M.Jr: Who will? I: Oh just anybody. (Laughs) Mr. Taylor says you've got a tax reorganization program on. F.M.Jr: Archie, I wish you'd make a study and get it to me if you can by mail - if there's still time - I don't know whether there is or not but at least have it when I come back - how much foreign government money is on deposit outside of the Federal Reserve Banks. L: Outside the Federal Reserve Banks. H.M.Jr: I mean really money - in the Russian case I mean money that they control, see? L: I see. H.M.Jr: I mean money that we might get out of the banks and put into the Federal Reserve because it's government own - government money. L: Well now I'll tell you - in order to get that the Federal Reserve will have to issue new regulations and have them split up their whole account - it's going to cause quite a lot of comment. H.H.Jr: Well then don't do it until after our financing. L: I - I think not. It would - it would stir up a lot of - a lot of conjecture, I think. H.M.Jr: Well we can do it when we get back. L: Incidentally, Russia sent over five million dollars worth of gold and put it on earmark with the Federal. H.M.Jr: They did do that. Regraded Unclassified 112 - 16 - L: They did do that. They sent over five million. H.M.Jr: Yes, well keep it in mind when I come back. L: Yes, well now that other story - there's not an awful lot as far as - we - we checked around privately now and again. H.M.Jr: Yes. L: But you see to get the two figures we'd have to ask every bank alike. H.M.Jr: Well we can wait. L: Yes, but we'll keep that in mind and anything we can get on that we'll follow through on. H.M.Jr: All right. L: O.K. then. Goodbye. H.M.Jr: Yes. L: Do you want to speak to McHugh? H.M.Jr: Yes please. L: Just a second. 0: Hello. L: The Secretary wants to speak to Mr. McHugh. 0: All right, just a minute. Regraded Unclassified 113 TREASURY DEPARTMENT WASHINGTON August 23, 1937 Honorable Henry Morgenthau, Jr., The Royal Hewaiian Hotel, Honolulu, Territory of Hawali. My dear Mr. Secretary: In accordance with your telephone request I am submitting herewith comments on the financial situation as it has developed 80 far this fiscal year. Total expenditures of the Government for the first month of the fiscal year were $658,000,000 as compared with $417,000,000 for the same period last year. showing a deficit of $249,000,000 for the first month this year as compared with $123,000,000 for the same period last year. There was a great deal of comment in the press regarding these totals and most of the comments failed to explain the reasons for the difference. One 0r two papers, however, did point out the main cause of the increases in this year over last year. At the cabinet meeting of the week ended August 7th, the President asked Mr. Taylor to give him an explanation of these increases 80 that he could explain the matter at his press conference on Tuesday, August 10. We prepared 8. memorandum for him on the matter and I took it over and explained the whole situation to him. I told him, however, that in my opinion he should make no comments whatever on the July figures, that the Daily Statement was now set up so that it showed clearly where the difference was and any financial writer who wanted to ascertain the facts could very easily get them from that statement. I told him that any statement made by him would necessarily call for further comment by the press, which in turn would lead to further comment from the Administration. It is my view that you cannot compare July, 1937. with July, 1936, without commenting on the special situation with respect to revenues coming in under the Social Security Act, expenditures going out under that Act. and the net expenditures in the revolving fund which in July of this year only showed a $2,000,000 net credit, wheress in July of last year it showed & net credit of $216,000,000 due to large repayments coming in last year for the account of the Reconstruction Finance Corporation and a financial transaction of the Commodity Credit Corporation. An explanation of these items Regraded Unclassified 114 - 2 - is set out in the memorendum submitted to the President, & copy of which I enclose herewith. I an also enclosing & copy of the Daily Statement of the United States Treasury for July 31, 1937, on page 2 of which you will notice the various items of receipts and expenditures, together with the increases and decreases, as compared with the same period last year. In this connection I am enclosing a copy of the Daily Statement for August 19, on page 2 of which you can 888 the current budget picture. For your convenient reference the totals are net out below in millions of dollars: August 19, 1937 This Same Total Same period month period fiscal fiscal year last year year 1938 1937 Revenue 330 256 739 550 Expenditures: General 224 222 561 471 Recovery and Relief 111 163 309 465 Revolving funds 3 - 16 1 - 232 Trust accounts (inv.) 61 3 186 80 Debt retirement - 16 - 21 Total 399 388 1,057 805 Deficit 69 132 318 255 The significant feature of this picture is that the Works Progress Administration expenditures for the current fiscal year to date show & drop of about $56,000,000 over last year, and the first 19 days of the month of August show & drop of $21,000,000 over the same period last year. You will notice on the statement of the 19th that the public debt for that day was $36,952,000,000. This is an increase of $527,000,000 since June 30th. It will be over the $37,000,000,000 mark by the first of September due to two more issues of bills coming in, United States Savings bonds and Unemployment Trust funds. Regraded Unclassified 115 - 3 - I 80 also enclosing the ten-day statements usually furnished you and the President, showing comparative expenditures and obliga- tions of the major organizations on a checks-issued basis. Ton will note that the expenditures on this basis by the Works Progress Adminis- tration were $30,000,000 for the first ten days of August and that the total expenditures for all agencies using emergency funds was $45,000,000. Some of the agencies, such as the Civilian Conservation Corps, and the river and harbor and public highway work should fall off pretty fast during this fiscal year as expenditures for account of these items have now been shifted to the regular expenditures of the Government. #1th reference to the proposed financing in September, there is enclosed a revised estimate of the cash position for the months of August to December, both inclusive. You will note that this con- templates continuing the present Treasury bill program through to December 15 with total maturities between December 16th and 20th of $500,000,000. It also includes Treasury bill issues of $100,000,000 between September 16 and 30, and $200,000,000 in October, & total of $300,000,000, to mature in March, 1938. On the basis of these estimates and program, our balance will be about $644,000,000 going into December. We can borrow $600,000,000 on notes in December, leaving our balance $959,000,000 going into January. This is 8. very flexible program and can be changed at any time to meet the situation. It may be that you will decide in November to issue an additional $100,000,000 of bills for maturity in March. On the basis of our present budget estimates there will be approxi- mately $500,000,000 in excess revenue over expenditures in March and it -ould do no hare to have at least $400,000,000 of Treasury bills maturing at that time. I en making this statement on the assumption that $455,000,000 Treasury notes maturing on March 15th will be re- funded into other notes. There is also & maturity of $277,000,000 Treasury notes on February 1. 1938 which could be refunded in connection with the December 15 financing or we could have four Treasury bill issues at $50,000,000 each in January and pay the Treasury note maturity off in cash, using $77,000,000 of our balance. Such Treasury bills would mature in June. It would probably be necessary to put another $100,000,000 on top of this for maturity in June because our present estimates show that we my have as much BE $400,000,000 excess revenue in that month. There 1s, however, a Treasury note maturity in June of $618,000,000, but again I an assuming that this will be refunded. Regraded Unclassified 116 4 For your information I AM enclosing the following statements: I. Estimate of cash position for the period August to December. both months inclusive. II. Statement showing the present Treasury bill program through September 15 and dates on which they will mature in December. III Statement showing total amount of Treasury bills which will be outstanding on various dates on the basis of the program set out in the cash position estimate. IV Statement showing the public debt maturing between September, 1937, and the end of June, 1938, 03- clusive of the regular weekly Treasury bills. V Statement showing public debt maturities on quarterly tax-payment dates (with intermediate dates noted) including the present Treasury bill program of $500,000,000 but excluding the regular Treasury bill program and the special issues to trust funds, etc. VI Statement showing the prices and yields by days from July 28 to August 21, 1937, of certain issues of Treasury bonds. VII Statement showing the prices and yields by days from July 28 to August 21, 1937, of certain issues of Treasury notes. VIII Prices and discount rates of Treasury bill issues since July 14. In connection with statement No. V. you will notice that September 15, 1940, 1941 and 1942, and June 15, 1942, are all open dates. Present indications seem to point to a note issue of between three and five years. The March, 1942, 1-3/4% notes selling Saturday at 100-10/32 to 100-12/32 on & basis to yield 1.67%, indicates the difficulty of issuing a five-year note on the basis of these prices unless we go above 1-3/4%. but in view of the probability of only an exchange issue we will not have to allow as much leeway as if we were raising a substantial amount of eash in addition to the refunding The market has declined substantially during the past week, regained Regraded Unclassified 117 - 5 - some on Saturday, but unless it comes back on the announcement next week that no new cash will be required in connection with the September 15 financing, it looks more like a three or four year note at 1-3/4% For your further information there are enclosed the usual statement given to you at the close of business each day, showing the gold in the general fund, the debt increase since December 22, 1936 and the working balance, and the daily sheet showing the prices and yields of Government securities at the close of business August 21. Faithfully yours, DWB Regraded Unclassified considential 118 OFFICE OF THE SECRETARY OF THE TREASURY COMMISSIONER OF ACCOUNTS AND DEPOSITS August 21. 1937 TO THE SECRETARY: GOLD ESTIMATED GOLD IN GENERAL FUND BALANCE: Free gold $ 157,900,000 Held to retire Nat. Bank Notes. ... 47,844,000 Increment resulting from reduction of gold dollar. ..... 141,000,000 Inactive (Policy ennounced 12/22/36) 1,306,500,000 1,653,244,000 FUNDS SCRROWED SINCE DEC. 22, 1936: Treasury Bills. $1,100,000,000 do (retired). 600,000,000 500,000,000 Other borrowings: Try. notes dated ( 6/15/37 ..... 853,000,000 ..S.Savings Bonds. 411,000,000 Special Issues .. 1,268,000,000 2,532,000,000 Less debt retired. 370,000,000 2,162,000,000 Increase in gross debt since Dec. 22, 1936 2,662,000,000 WORKING BALANCE - CLOSE 8 BUSINESS AUGUST 20, 1937: Federal Reserve Banks ........ $ 150,157,000 Special Depositaries ........ 650,283,000 Total Working Balance August 20, 1937. $ 800,440,000 DWB Regraded Unclassified ESTIMATE OF CASH POSITION August - December 1937 (In millions of dollars) 1937 Aug. Sept. Oct. Nov. Dec. Total Balances at beginning of periods 734 804 819 784 644 734 ... Receipts: General revenue 430 800 365 425 775 2,795 Unemployment trust fund 55 40 40 40 40 215 U. S, Savings bonds 35 30 30 30 35 160 Treasury bills (special) 150 Dec. 200 Dec. 100 Mar. 200 Mar. - - 650 - - - 600 600 Treasury bonds and notes - Sale - R.F.C., C.C.C., H.L.B., notes 75 - - - 75 - Total available 1,529 1,924 1,454 1,279 2,094 5,229 1. Expenditures: General 305 310 325 325 310 1,575 180 180 180 180 910 Emergency 190 Interest on public debt 20 160 70 10 155 415 65 - - 25 - 90 Special transactions Debt redemptions 20 380 20 20 515 955 110 75 75 75 75 410 Gold purchases - - - 15 Investment 15 - 1,105 670 635 1,235 4,370 Total expenditures 725 Balances end of period 804 819 784 644 859 859 Refunding operations: Treasury bills: Regular 200 250 200 200 250 1,100 500 850 Special 350 - - - - 817 - 817 - Treasury notes - 200 1,417 200 200 750 2,767 Treasury Accounts and Deposits August 21, 1937 120 II Special bills for December Issued and which mature December 16 $100 M If If If If If 17 100 If If II If If 18 $50 M - If If If # If 18 50 - To be issued on 8/25 and mature Dec. 18 50 150 II If II If 9/1 If If If 20 50 Il II If If 9/8 If If If 20 50 If If If " 9/15 II If If 20 50 150 Total special bills for December 500 Regraded Unclassified 121 III Treasury Bills Outstanding on basis of program set out in Cash Position Estimate August 18 $2,603 M September 1 2,703 September 15 (8th and 15th) 2,803 September 18 ($350M maturing 9/16, 17 & 18) 2,453 September 30 (22nd and 29th) 2,553 October 31 (6th, 13th, 20th and 27th) 2,753 December 20 ($500M maturing Dec. 16,17,18 & 20) 2,253 Treasury bill payment dates: Sept. 1 - - 8 - 15 - 22 - 29 = $ 250*M Oct. 6 - 13 - 20 - 27 If 200* Nov. 3-- 10 - 17 - 24 = 200' Dec. 1 - 8 - 15 - 22 - 29 II 200' e In proposed program. - Not in program. August 20, 1937 Regraded Unclassified 122 IV Maturing Debt September, 1937 - June,-1938 (Exclusive of regular weekly bills) Treasury Special Total Notes Treasury Refunding Bills September 15, 1937 $817 M $350 M $1,117 H December 15, 1937 - 500 500 February 1, 1938 277 - 277 March 15, 1938 455 300 755 June 15, 1938 618 - 618 August 20, 1937 Regraded Unclassified 123 V TREASURY FINANCING (Exclusive of regular Treasury Bills and special obligations issued directly to trust funds) (In millions of dollars) March 15 June 15 Sept. 15 Dec. 15 Total 1937 Bills - - 351 Notes 500 1,668 - - 817 - 1938 All notes 277 (2/1) 618 596 - 455 1,945 1939 All notes 942 1,294 427 526 3,189 1940 Notes 1,378 N 738 - N 737 3,206 B 353 1941 Notes 677 N 504 - N 204 Bonds 2,764 545 B 834 (8/1) 1942 Notes 426 - - - 426 1943 All bonds - 454 1,401 (10/15) - 1,855 1944 - - 1,519 (4/15) - - 1,037 2,556 1945 # # - - 1,214 - 1,214 1946 - . 489 1,855 - - 2,344 1947 . If - - 759 (10/15) - 759 - 1948 - - 1,223 - - - 1,223 1949 e - . - - - 2,278 2,278 1950 - - - - - 1951 . . - 1,627 755 - 2,582 1952 - - - - - 1953 - - - - - 1954 - - - - - 1955 # # 2,611 - - 2,611 - 1956 - # - - 982 - 982 10,542 8,277 7,302 5,282 51,403 ACCOUNTS AND DEPOSITS August 20, 1937 Regraded Unclassified 124 TABLE Va 23 COMPARATIVE OBLIGATIONS or MAJOR ORGANIZATIONS THE EMERGY RELIEF BY PERIODS APPROPRIATED ASTS a 986, - EXPRESSED (# MILLIONS CONSOLIDATED THA - DISTRIRUTION ST MAJOR DOGARIZATIONS FORM INCREMENT PRINC M. ENTEREST MAIS PUBLIC REASO excessive of ---- INCLUDING SEXETTLEMENT - . - - - 4d - HELAIP MAIL - (Ben - PM) TAXIM - - un ISM MI - ELEMINATION - TRATION Net M.S. TRATISH COMBINED H2 - 1834 18.00 1926 -- - HER 1131 et na 1596 IMM et - - - 1923 - TRUE - : - ress TEM - - act 1 - AND NM éste an Act an at - - MI 1800 - - arta art ARE ISM MIS - MTA Ast atf deta Destate N.NES - MIA 1974 191.1 1110.1 1111-1 - IMI-9 1173-6 - UR! - als " " 48 . 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N.T +4 N,4 -1 4.8 - all L4 17,9 ... -, - - 43 4.8 -1 " H.F au 4.2 7,7 LE 27.1 194.0 1.7 , : - M 4.2 --- 4,1 1.4 14 D.I HIA -- 165.1 s.f 12.1 1,870.2 11.4 NO.? 20,1 451,2 1.7 751 2 207,8 11.7 19.5 179.1 1.1 103.1 III.I 187,1 411.1 LON.3 264.1 219.0 43.8 i I - Hill 4d and 12 4.8 J.R M AT -- : 41 7.7 2.1 3,1 03 17,3 M 14 1.2 - M.P -13.8 M.J T.I 7. # 7.4 1.1 1.5 1.1 -17J 37.1 HA H.P 14 .. 7.1 anen = H.I -FL." .. in 11.0 un N.E - - 11.7 14 7,4 7.º 140.1 173.9 M 7.4 M 12 NJ 1.7 N.I 1.1 -174 10.1 4,8 (41) 11.4 (2 " ne - #1 143 (-1 LI 3.4 - 61 17.7 - 67.8 1.5 1.7 1.1 * n.s (.) 61.2 1.1 7.0 F.# 3.8 a 13.1 L/ " 1.8 18 M.F 1,1 17,8 1.1 7.1 M.I. M.7 7.8 la 100% 142.7 t.o 139.7 1.1 1.3 7,2 1.1 DU 14,1 IMI - ou IM M 1.8 is N.3 LI 1.7 1,2 N7 No 4.8 N.I N.I of 1.8 - 20 87,7 P.A 6.2 1.7 T.7 V.A 1,8 NO 7,4 na RI Ad 1.8 4.5 = 11,7 -1 81,4 1.1 vie ... SI - 10,9 M , 1.1 - MA 200.7 1.6 1.4 4,0 (1) All 71.1 use un? IM M 2.1 MII 16 NJ P.O 42.1 14 1.1 74 P.A. 1.5 8.1 -1.0 48.0 34 41.1 1.3 la 4,2 tell 20 18.7 1.4 INT -8 1,5 " 1.0 1.1 13 0,1 did 47,1 4,1 I.I NA will (6) as 1.1 80.2 1.4 1.5 1.1 #.7 H.I a. M J.P. IS.# 175.4 1.4 NJ 4.4 14 31.1 - 11.9 due LI 18.7 10.1 IM M 14,7 10 16.1 P.P. 48,4 - 18 1.4 " #:2 1.8 M.F. 9.1 (.) LI 1.1 - 20 : 7.F 28.0 1.8 1.0 lit 1.1 4.1 . R.O -1 di 0,1 47,1 1,1 , 1.0 - a i R. M.P 4.1 48.1 - r.e " 13 - 1.9 - ᵃ 42.1 ed 47,7 M 1.7 11 10.8 156.4 1.0 T.O 4,3 18.8 1-2 13.7 1.0 14 = di INJ 118.5 ll.1 1.5 M - 10 6 1.4 H.? D.# the 4,* - 1.1 4.2 11 - 14.4 H.1 1.1 LI L7 I Ll - a M.S. F.S 4d-f , - 7.7 - " 1.5 3.1 - U.P #A 4.1 J H - a - M MET 19.4 19.3 1.1 1.€ Fed 7.1 7.1 12.0 1.5 D.S 4 - - .3 U.S. ILI U.A 9.1 2.1 (AP.) W./ 157.4 0.7 1.1 L. 10.0 17.1 1.1 78.4 F.S 71.8 4.1 1.1 # une - au 19,8 11.7 1.2 1932 9,771.7 4,307.1 2,714,8 JIME 717 42.5 1.4 817 222.0 181.7 149.7 19.5 18.2 SN.4 111.9 (11) NO 397.3 NE,F IN.D IVW, ISM -- - -- - - - - - - 1995. - INTEF 1937 - - isar NM 1987 I I I - - -- ITM - 1937 os H&F ISSI - - - NE - 1577 - HERP - TEM 1834 - Bris date AUT data Anto - ARTS E - date Art 5 - - data alle - all - - M enta x 1997 #,721.7 1,721.7 I - 111.0 - 501.8 NI,4 MI.7 M1.7 149,7 148.7 94,4 FILE 411,1 FILE - NEW 1 della MY sit 47.2 4.0 41,7 ,7 - 7.8 NP 1.2 1.7 I if añ.5 -7,7 117 Al 7.1 - - 20 41.3 -11 " 1.4 7 1.5 -12.8 -10.0 i N.J. - 1.1 7 - -1 I NP H.? -1.8 M.1 LA " (.1 della a AN = 4.1 ,, n., J.P. -, 1-1 41 I 1.1 - 11 12 of : - - 11.1 -1.1 42.9 lit 4 if 197.1 - IN.1 M H NA -1.1 +1 - 7,0 1.0 " ,5 - -5 - for 194 -1,7 IN.1 7.1 1.2 X - I 18 N.J A7 N.I 1.7 - dil . 4 .. - 2.4 -* 2.2 of - J - - of e.) -- 11.1 % 1." 1.7 times 5,297.0 8,774.8 173.0 no. 111.4 1.3 495,4 ano - 101.1 RS.0 4.1 NI.1 140.7 .a BLI HILF una 1441.7 IN.1 - 4.2 477.8 174.1 M4.0 11.7 1.6 : 14.0 14.0 1 76.1 17.4 V.I 57.9 - 57.1 .. 1.1 #.7 no 38.4 are 88,0 N.I 9.3 - - 7,370.3 9,201.1 47.0 178.8 THE 17.0 10.4 59.4 - the 474,8 43.4 (99.7 17.7 191.1 115.0 49.1 MM 134.8 NO.: CMT 436.8 U.S - 0..1 0.3 -1 7,1N.0 1.401,3 47.3 1.257.1 N.I 1,217.1 - FINAL 1,500.0 0 0 Regraded Unclassified vI PRICES AND YIELDS ON VARIOUS THEASURY BONDS 125 July 28 to August n, 1937 Coupon rate: 2-3/45 3% 3-1/8% 2-3/65 3-1/9% 2-1/25 fall = maturity date: 1945-49 2-3/45 1946-48 3% 1946-49 2-7/05 1948-51 2-3/45 1949-52 1949-53 1951-54 1951-55 1955-60 1956-59 Frices: 1937 July 28 103.06 104.25 105,18 101.18 105.16 98.31 100.16 103.18 101.09 100.18 29 103.11 105.02 106.20* 101.19* 105.18* 99.02 100.18 103.16 101.16 100.15 30 103.12 104.30* 105.21 101.17 105,20 99.01 100.17 105.18* 101.16 100.14 31 103.09" 106.30 105,21 101.18 105.16* 99.02 100.18 103.20 101.16 100.14 Aug. 2 103.10 104.30 105.21 101.15 105.14 99.00 100.15 103.19 101.14 100.14 3 103.15 104.27* 105,25 101.17 105.13* 99.00 100.18 103,19 101.14 100.13* 4 103.00 104.28 105.24 101.19 105,19 99.01 100.15 103.19 101.14 100.18 5 103.11 104,28* 105.21 101.19 105.20 99.00 100.17 103.80 101.16 100,16 6 103.10 104.29* 105.22 101.17 105.19* 99.04 100.18 103.21 101.14 100.16 7 103.09' 104.26* 105.24* 101.20 105,18* 99.04 100.20 103.20* 101.17 100.17 9 103.11 104.31 105.26 101.21 105.19* 99.04 100.21 103.20* 101,15 100,16 10 103,11 104.31 105.20* 101.20 105,21 99.01 100.19 103.21 101.15 100.14 11 103.08* 104.25 105.16 101.14 105.14* 98.51 100.14 105.16 101.09 100.10 12 103,06 104.16 105.17 101.06 105.08 96.25 100.08 103.08 101.04 100.01 13 103.00 104.11 105.09 101.00 105.05 98,28 100.00 103.09 101.01 100.00 14 102.28 104.12° 105.13 101.03* 105.01* 98.25 100.04 103.08 100.31 100.00* 16 103.00 104.14 105.11* 101.05 105.07 98,26 100.04 103.10 101,03 100.06 17 102.29 104.14 105.14 101.02 105,04 98.24 100.05 103.07 101.04 100.05 18 102.29* 104.12 105.11 101.03 105.00 98.54 100.02 103.05 101.00 100.02 19 102.22 104.06 105.07 100.28 104.87 98.19 99.28 103.00 100.86 99.28 20 102.09 104.05 104.29* 100.10 104.14 98,08 99.15 102.16 100.10 99.12 21 102.14 104.02* 105.00 100.15 104.10* 98.06 99.24 102.18 100.18 99.17 - B14 price - no sale. Tielda [to call date): 1937 July 28 2.317 8.399 2,436 2,581 2,502 2,598 8,706 2.695 2.782 8,720 29 0.296 2.364 2.419 2.579 2.596 2.589 2.701 2,700 2.769 2.718 30 2.298 8,379 8,413 2,584 8.590 2.592 2.704 2.695 2.769 2.720 31 2.305 2,379 2.413 2.580 2.602 2,589 2.701 2.689 2,767 8,750 log. 2 2.300 2.379 2.412 2.591 2,607 2.595 2.709 2,692 2,771 8,720 3 8.287 2,390 2,397 2,564 1,610 2.595 2.701 2.698 2.771 2,725 4 2,304 2.306 2.401 2.579 2,593 2,592 2.709 2.691 2.791 2.785 5 2,295 2.386 2.412 2.577 2,590 2.595 2.703 2.689 8.767 2.716 6 2.300 2,382 2,408 8,584 2.598 2.583 2.701 2,687 2.771 5,716 7 2.304 2.393 2,400 2,574 1,595 2,583 2.695 2.689 2.765 2.714 9 2,296 2,374 2.398 2,570 2,592 2.583 2.693 2,689 2,769 8.716 10 2.296 2.374 2,415 2.574 2.587 2.592 2.698 2,687 2.769 2.720 11 2.307 2,396 2,450 2.594 3,607 8,598 2.711 2.700 2,782 2.729 12 2.315 8.431 2.485 2.620 2,684 2.616 2.726 8.720 2,793 8,748 13 2,340 2.450 2.456 2.641 2,633 2.625 2,750 2,723 2,800 2.750 14 2.357 2.446 2.440 2.630 2.644 2.616 2.739 2.720 2,805 5.750 16 2.340 2.438 2,448 8,624 2,626 E,713 2,739 2.715 2,796 2.737 17 2,353 8,438 2,435 3.634 2,635 2,619 2,736 2.723 2.793 2.759 18 2.355 2.445 2,448 2.631 2.647 2.619 2.744 2.728 2.802 8.746 19 2.302 2,468 2.463 2,654 2,661 2,634 8,761 2,742 2,016 8.789 to 3.436 2.480 2.501 2.715 2,699 3,667 8,795 2.764 2,652 3.798 21 2,418 1,404 2,469 2.699 2,710 2.673 2,772 2.779 2.654 2.782 Regraded Unclassified 126 TABLE VIA 26 COMPARATIVE EXPENDITURES of MAJOR DREAMIZATIONS THE EMERGENCY RELIEF or PERIODS APPROPRUTION ACTS of 41937 EXPRESSED IN MILLIONS CONSOLIDATED DISTRIBUTION " TETAL EXPENDITIMES WAJOR CNGARIZATION5 AGRICULTORY FEMER il issue - PERIC HATE - DATE OF - - - - - ALL - INSTRUM RILHER ---- PUBLIC MADE resurts BANK CREEMER -- - - (Nome - - Baj NEW MD RESETTLOMENT - comme - 4213 - del ADMINISTRATION - Act - COMBIRES - - TOMA TRAN 1839 - un I - - - - - - - IRN TEM - - - -- And AMT 1636 art. - - 48 ISM 10.00 - as - date Acts Not effe - Act - BIT - - : - an - - 467 AMT ARTA 11,424.8 - 147.5 140.5 - 1 114.3 RIN-3 I 179.5 - 1529.7 un., - (ell sin - 1123.7 - N°F 10 PI.E 71.8 MI-7 AT - 1.8 4.4 - 4.6 4.8 - 1.f 1.8 | 13.7 -3 F.2 M.P n.j 111.1 1,3 4,8 - or 40.00 M.P 1,7 1.7 1 10.0 10,F 1 1.1 7,4 M M - 1.7 - , 4.2 a.f " 60,8 4.0 1.3 - e M.? NET SALA J.B did LI a.a 1.1 I 1.4 1.0 1.4 fal N 1 1.8 -- 1.3 11.1 M 13.7 ded 4,8 a 138.0 117.7 5.8 3.7 -4 14.2 N.7 11:4 - - U.P - F./ 17,7 1.0 12.3 147.1 48.1 114.1 11.# 12.4 .. - - vor are 29.3 - 1.2 -, -1 0,7 1.1 - MI M if 1.7 1.7 E 2.7 1.4 M.I M 10,3 M 7,4 I - : 10.0 54.1 1.8 M - 10.0 10.0 I 1.1 14 14 DE - 1.0 - -1.1 HJ M M.I 4,0 1.5 1.1 - 11. 07.8 0,1 37.3 - 1.1 112 11/0 - 1.1 NJ 1.4 1.0 - 1.0 ,, 4.5 M.I 4.0 1.8 1.1 L.E - 19.1 21.2 4.8 2.4 1.1 28.1 N.1 I f.1 die M M 0.4 .7 #. is 1.4 157.4 U.P. 143,8 (LI (0,1 T.f AD NÃ 241 SC-# 1.8 ... 1.2 5,4 1.1 - LI J.B 1,4 1.2 1-8 of - - 4 1.1 50.3 1.1 47,7 W M del AB 11.7 76,8 3F.7 yes 1.0 1.1 ... " 1 1-1 for 14 1.1 P.S : 1.1 of 4.4 94 2,1 31.2 6.4 1.2 M 3 314 2014 #1.0 2.2 - 1.7 11.1 43,1 - 1.2 1.7 7.4 a.e 1,7 2.8 -1 1.8 8.4 14 M.S 1.1 4.8 M not 231.# 78.4 IN.) 1.8 1.2 14 77.1 ILI = 1.1 8.2 5.2 - LI +1 17.1 148.4 8,7 110.0 18.0 M.O 4.2 is N.7 21.6 44.1 7.1 - 1.4 4.0 4.0 - M 1.1 1.4 1.1 7.4 H -/ 4.4 87.1 1.7 80,1 4.1 3.8 Al 10 N.P 12.9 IL# J.N di 1.0 did f,f - F.P li 7.P 1.1 1.6 & of 1.1 48.1 7,1 17.2 1.7 12 M 18 1061 11.1 N.4 P.M - 1:1 was 34.2 1.1 2.8 E L.E J.P , ,, di ALL B.I 1.1 and 3.4 Al 1.1 crea N.I (M.) 1.8 1.8 1.7 NO.# 0,1 I 18,6 : 1.1 f.f. 4.4 1,4 1.7 is T1# 3,7 19.2 114 M : je No 29,1 31,0 1.1 - 1.1 1,4 F.# I 1.1 7.1 NO 1.4 1.1 : -, A.P 49,0 1.8 47.4 1,6 1.1 f.) s a P.I 24.4 N.I 1.5 1 (-) N " - 14 24 M et 14 - - A.7 84.0 N M/ Ad " " E 19:4 19.4 M.P 1.8 .. 1.1 AT and - 12 1.8 7.7 1,2 1.0 - 1.9 a 1.1 N A f.f 11.1 4.3 - M - 244,7 44.1 IN.1 4.8 IP (2) N.I N.I 14.0 1.2 P.O. 4.0 Na - 2.8 7 did 197.0 1.8 101.1 14,7 ed : is 21,1 11/7 2.8 - 67 1,3 6.5 - ET 1.9 1,4 V.S. 1.4 - / - 5.8 85.3 1.1 944 Ed o f.a - e na 12.1 R.P 1.8 di 1.7 8,a F.* - 4,7 14 2,7 1.4 1.1 4 -1 a 1.8 JF J 4.8 11.1 1.1 LF 4-1 - #. N - 67.4 4.A - : 1,7 #.7 1.1 1.1 12 2.2 - = - 4.1 N.I 1.4 ## fil #.5 M 47.7 205.7 3.2 1.1 4,f NO NA - IM 4.1 1.1 4.1 1.8 , -1 14.3 100.4 : ID-I as IM 10.0 4,341.7 come N.A 11.7 N.P NEX 261,6 - HM./ 14.8 114.1 BA " MIJ 19.4 INJ Med HI./ 10.1 MNI VJ e va na 45.9 J-1 6.4 P.P. " 1.1 i M 1.1 2.4 (.) 1.8 0,1 41 2.1 12 42.0 v.s 8,4 1.8 1,1 14 & 11.1 ALO left - 14 4,8 4.5 1.1 id 4.1 fil 1,4 -1 H 1.0 0,1 (.8 N.A M 14 1.1 u N.? n.a - 1.5 .1 1.1 I-I (.) M 14 A.1 J if ,, 1,7 10,4 lal 11.1 1.1 2.0 1.1 10.1 17,0 111.1 4.4 14 1.1 DI 14.8 114 M no 1,1 del 4 - - ILI 141 lil 149.1 a 1.4 1.1 1/4 10.0 ID,# 1.1 47 1.4 " 12 1.1 12 12 11 (d J L 4.1 - U.S. M 1.7 M MI NI di B.I 13 ,, 1.1 4.3 13 M 1.1 a L : ,7 el I 34,7 - IM (.) M 1.4 it 11,1 - di is M 1,7 in 4.0 12 M -1 4 4J D.F. " M M 1.0 id INI.F 8.7 19.8 " +7 LI IM 12,0 il IN 1.1 14.9 7á M if - 1. -1.4 H 18.1 11.4 : = is n. N.7 1.1 ,7 1.1 1.1 N M L-d M , - 4,0 00.1 -1 9.1 u LI is R. IM NJ (-) if fit I.F LE - F.7 13 CA - - + ,7 #.7 0.5 - 11.1 1.7 7,1 1,1 MIT " R.I 04 (1) Id -1 -1 "." W 5 us 1,7 M in 4.7 n.o - HJ 4.1 M 1-2 NJ./ (13 201.1 1.6 is 1,1 10.5 10.1 J IM " 21.5 f.) LA - - di (2,1 IN.1 (44.) 14.1 4.1 M - a 11.0 II-I BJ la -1 IJ 1,1 K/ in 14 1,1 4.1 , J 45 of J 37 M.I At 47,7 M (.f Al MO 4011 0.7 IM N.I , +7 1.1 2-1 - F.A 1.7 7,) di il -f +1 4 : N.A - una 14 1.1 M - % 0.0 1.1 16/ 1/ ,7 1.0 11 U -1 1.1 14 1.0 -8 , 1.1 " & 11.1 4.7 1.1 M N/ INJ IN / 1.8 ... N.T 27.0 = 71.2 1.1 1,1 / - it U.A IM.1 1.5 PM 11,00 AT N.) W.º 1,8 M Ы in 18 M.I 17.3 IN U , , AR M 1.2 1.9 3,4 of - 1.0 n.) - or 18.4 12,1 1.7 - - 4/2 4.1 4 1,1 I.F 1,1 1.0 4 , 1.1 ST.# - N.I f.4 1,4 M - = 43.7 11 NJ or di . 1.1 1,4 eu LA M ,, if a , el 1.4 47,00 -1 18.7 4.2 1,1 1,1 F 0.1 " - 1,1 a 10.1 , 21.1 D 14.1 M LI it - -7 12.7 198.7 (a) 197,1 14.3 5.7 M - - a n.) IN H./ 1.0 - L7 1.8 8.7 il 1.1 1,7 1.1 1.1 J J of #.7 49,8 - - 48.4 4.8 LA 1.1 - F - NJ BJ Mit M a - M ... , 1.1 1.2 4.7 1.4 - 4 -1 - (,7 42.8 if 17,7 1,1 1.0 1.1 54.0 - # 30,0 1.7 1.9 1.1 5 - 1 97.4 H.T 71.1 LA di M 11.1 N.P a 14.4 1.1 U.! al a -1 I (.) N.O 17.0 au f.1 ,, : 21.1 M.1 - 77.8 f.# 22.0 J.A LA Le , I 13.7 148,3 L4 148.4 DU 8.1 1.1 15.7 au 301.8 No.: BL.# - 195.1 as LA MJ 1.1 149.9 202.1 147.5 123,1 1.0 MLI NR. - et na - 4F IN - - - - et 1957 - - - - - - - - 1857 - - - - 1887 1847 - - - - - : - ean - - art - - - - - - - il ant - 1331 an - 1887 I - MIT Ad Acts MOTH anto Min ado - - date Artie date action i arta adto behined - al LIMIT 4,147,1 4,141.1 N.I INA - NI.F 342.2 10.9 111.8 01.5 no au - 51.0 ELI - - .7 1.1 17.1 25.3 7.8 17 12 - ID 41,1 411 M 1.1 f.1 1,5 4.2 2.P AS ... L IN 47.2 71.8 ne 1.1 - if 24 -?- - 1.0 2.2 - : 13 at -- S.# 9.4 163 11.1 sur 4.3 .. 2.1 7,8 / # 16 - 5,1 M.7 LA the M -4 N.: 23.1 et 2.1 1.3 , 1.8 1.9 - auf - JRAY N.I 77.1 AT 1.1 14 .12 7:7 I 10.3 1.8 L/ " 1.8 is of - 14.8 113.4 u.s M.F 11.7 INS 1.7 T.I. T.# 1.7 -# el of - 1,8 pla " N.I M 1.1 .. j - all 14.9 : M ,,7 -/ 18 : - 100.3 111.7 59.8 1,7 174.1 376,1 - V.P 114.7 173.9 - BLA HL? una your 1257.0 VII 171.4 W.I 7.1 17,6 7.1 R.1 19.7 I 200.1 40.0 45.9 7.4 $7.4 14 1.1 117.1 111.4 87.8 m.s ar.a 38.4 111.2 @4.2 use - 4m.7 IN. 48.4 186.7 111.0 $7,7 185.0 14.0 475 BULF INJ 12F-F 40.7 404.1 MJ ! 4,201.1 128.1 & -- à 4,001.3 187,3 3 1,087,1 24.6 8,427.3 W.W.T.T 1,800.0 Regraded Unclassified VII PRICES AND YIELDS OR VARIOUS TREASURY NOTES 127 July 28 to August 21, 1937 Coupon rate: 1-5/8% 1-1/2% 1-1/2% 1-1/2% 1-3/8% 1-1/4% 1-3/4% Maturity date: Mar, 15, 1940 June 15, 1940 Dec. 15, 1940 Mar. 15, 1941 June 15, 1941 Dec. 15, 1941 Mar. 15, 1942 12 Prices (everage between bid and offer): 1937 July 28 101.01 100.21 100.19 100.16 100.01 99.24 100.26 29 101.02 100.22 100.19 100.17 100.02 99.25 100.27 30 101.02 100.22 100.19 100.17 100.02 99.25 100,27 100.26 31 101.01 100.21 100.19 100.19 100.01 99.24 Aug. 2 101.01 100.20 100.18 100.17 100.01 99.25 100.25 3 101.00 100.20 100.18 100.16 100.01 99.25 100.25 4 100.30 100.19 100,18 100.16 100.01 99.84 100.84 5 100.31 100.20 100.18 100.16 100.01 99.25 100.24 6 101.01 100.21 100.19 100.17 100.02 99.26 100.24 100.24 7 101.01 100,21 100.19 100.17 100.02 99.27 9 101.01 100.21 100.19 100.17 100.02 99.26 100.24 10 101.02 100.21 100.19 100.17 100.02 99.26 100.24 11 101.01 100.20 100.18 100,16 100.01 99.25 100.22 12 101.00 100.19 100.17 100.15 100.00 99.23 100.20 13 100.30 100.19 100.16 100.14 99.31 99.22 100,19 100.19 14 100.50 100.19 100.16 100.14 99.31 99.22 16 100.20 100.17 100.15 100.00 99.25 100.20 100.31 17 100.31 100.20 100,17 100.15 100.00 99.25 100.80 18 100.19 100.16 100,13 99.31 99.21 100.19 100.30 19 100.26 100.14 100.11 100.09 99.27 99,14 100.14 20 100.22 100.09 100.07$ 100.01 99.24 99.08 100.00 100.11 21 100.25 100.12 100.09 100.03 99.27 99.11 Tielda: 1937 1.320 1,358 1,367 1,509 1.567 July 28 1,226 1.267 1.213 1,256 1.349 1.358 1,302 1,550 29 1,380 30 1.320 1,349 1,358 1,302 1,560 1.213 1.256 51 1,224 1.267 1.319 1.349 1.367 1,305 1.569 1,224 1.277 1.349 1,367 1,302 1,574 Aug. 2 1.329 1,328 1.358 1.367 1,302 1,574 3 1.235 1.277 4 1,328 1,358 1,366 1,309 1,581 1,259 1,288 1.277 1,358 1.346 1,508 1,681 5 1.247 1.588 1,349 1.358 1.294 1.581 1.222 1.265 1.319 6 1,281 1.265 1.318 1,548 1,358 1.287 1,581 7 1,221 1.265 1,348 1,358 1.291 1.580 1.318 9 1,318 1,348 1,358 1,291 1.580 10 1.208 1.264 1.326 1,357 1,366 1,302 1.594 11 1,220 1,275 1,232 1.886 1.366 1.375 1.317 1,608 1,337 12 1,346 1,375 1.383 1.324 1,615 13 1.256 1.286 1.346 1,383 1,321 1.615 14 1,255 1.286 1,374 1.274 1.365 1,375 1,313 1,608 16 1,242 1.336 1.608 17 1.242 1.274 1.336 1.365 1.375 1.313 18 1.346 1,383 1.583 1.352 1.615 1.854 1.285 1,417 1.382 1.650 19 1,341 1.393 1,419 1.303 1.429 1,690 1,392 1,486 1,438 1.346 1,427 20 1.412 1.417 1.407 1.672 1,315 1,364 1.472 21 Regraded Unclassified 128 VIII TREASURY BILL ISSUES July 14 - August 18, 1937 Date No. of days Average Price Average Rate SHORT TERM July 14 155 99.819 .419 21 148 99.837 .397 28 142 99.853 .372 Aug. 4 135 99.915 .228* 11 129 99.924 .211* 18 122 99.927 .216* * Payment by credit in war loan account. LONG TERM July 14 273 99.610 .514 21 273 99.620 .502 28 273 99.632 .485 Aug. 4 273 99,646 .467 11 273 99,638 .478 18 273 99.652 .459 Accounts and Deposits August 23, 1937. Regraded Unclassified RISDS APPROPRIATED AND ALLOCATED FOR RECOVERY AND BELIEF, EXPENDITURES THEREFROM. AND UNEXPENDED BALANCES AUGUST IS, 1997 OFFICE OF THE SECRETARY OF THE TREASURY - - Appropriation - of - Daily Statement of the United States Treasury - - Two Fines/ the - - - Fisher Remember - mile E IFMI I COMPILED FROM LATEST PRIPED REPORTS FROM TREASURY OFFICES AND DEPOSITANCY I I I - - AM NUMBER provides Avia A i - - Test. HM. - 4ND - AUGUST 19, 1937 129 ---- - ------------------------- ------------------------- CURRENT ASSETS AND LIABILITIES ---- --- GOLD 10.02.20 ----- ---- - -- ----- ---- - ASSETS LIABILITIES ---- --- Bold $12,807,784,142.53 fiuld certificates: - Outstanding (semile of Treasury) $2,902,142,889.00 129 ---- Dald perilicate of non- el 2020 NEWER Federal Excerve Eyalem 0,010,442,436.78 Bedamytion Banarvé M 10,121,001.75 summer --- Gold PRODUCTS 150,009,430.95 I - ! I I . - --- ---- - I of - $ I - M ---- Enchanger vishOlastion final 1,600,000,000.00 smen Mail NEO I 10,854,746,418.46 Quit la created fandi - Issure a--- Balance of EMIGO resulting trais - I - EMB - is weight of the cold dellar 140,001,462.07 ---- is working balance. 5 1,642,047,724.07 ---- --- ...... first - --- MADH Total: 13,837,394,142.63 Total 12,327,394,142.53 de --- - (*) - SILVER --- : - Fruis ASSETS LEABILITIES - confirm --- ---- - Diver $860,456,818.00 contificates unternanding $1,300,728,994.00 Bluer dellars COMMUNITA 501,112,807.00 Treasury services of 1890 1,171,722.00 Billower to grand food, 42,670,608.09 IMMES UNITED - communits . Total Total 1,374,571,325,09 BY la - for the [ pour la - you very - of the - Finance M - - - Extend lamit habi una - - ast - Inc. a. las the - - - in point mir Insury - of - - - - - - - - - - - signature at - - - The the under privalled - anvided M M - Feirnd Mit - and - Alip 26. NM. - Der GENERAL FUND I 1 Peleral Baylar $ Name the Line - - is the - al Fee IL - - - as - - - Company will etce in the 1 E 1 Massismed M the to is the AMETS Additional - for new 1 - - 1 L, - A/T - fundel their et expensive - - * - I Suid (M abrie) $1,642,047,734.07 Treasurer's checks $11,406,014.08 - - - tax. - - - the I - I - I E - the Place Birer (na slowe) 42,470,000.00 Degistration of Deverstant efficers: - a - - the - Appropriation Art. Emil - parti, MÁ - of - - The of - 187. - via Bermute - - Finance Corporation is Total States 3,000,000.00 Fort Offive Department 2,294,334.04 - - de Factoral name Federal Belorve siles 13,947,770.00 Board of truntees, Fortal Buvings Systems - Instruction - at units - - = us - ------------------------- a Putite Warks ON 18 1 - to la - 14. Federal Reserve health tates 166,750.50 - and Pare - - - 5-parents reserve lawful many 59,300,000.00 1 relined 3 in - IL et I Material bank series. 210,261.50 Other Reposita 7,367,000.77 de Transary. 1 I - - of 1 = - 1 - name - - if - - companied M. The Order airer neta. of diaburating celle I - - - the A problems Art - all u - ADDRESS BE And business) R use, - a the (H) he M the - comm M - nist - - - - siel preferent to - provided Fail is is Mine visits. Envirory Misor enla etc. 66,816,928.74 Rev believe That value) $02,800,234.46 Depatis Der an USA I I a la - If - I - instituted - to - 7 - - - - line below value) 000,410.20 Redemption at - mank 15- vis. DETAILS OF REVOLVING FUNDS INCLUDED IN EXPENDITURES ON PAGE 2 2,792,384.40 personal not lawful manager) 405,460.00 in: Presidented anchange, etc. 19,200,007.70 2 Pederal Basarva banks. 105,502,938.97 TM - Timal pear - depositarios account of salse at Belance whey 100,084,208.02 assoridas 658,283,000.00 IDACTIVA gold 1A8 - a - - Payment I No and the bank depositation: alown) I To end of Descrer Culted States 12,048,209.48 Increment se gold (&si To of other Government afters. 29,873,708.26 29, above) 144,001,482.97 482. - Dependen and - - Foreign (aliver), I - etc. TEMIS ILBLINE CALNED et y To of Tressurer United States 1,320,332.37 --- Lease - s.g.e -ana from ------------------------- To credit of eiber Instaal altors, 1,009,098.42 Working belazire 1_082_204_418_44 Form - - - Fullippine treasury. To and di Trassurer Italma 1,082,496.75 2,842,001,040.02 tom - et - I E Dear Total 2,002,145,215.04 Total OUTSTANDING FEDERAL RESERVE NOTES, FEDERAL RESERVE BANK NOTES, AND NATIONAL BANK NOTES RECEIPTS AND EXPENDITURES THIS DAY - The result a ASSIST - - - taxt - Tower fai - - - - - creative I 1 I (nies - - - - - taxis Internal revenue General Patient - - been w. Departmental $2,801,211.70 Feland - web - I internal 1,782,338.11 Insurest - public date 283,519.90 I soame Valuel ecrickment iss 4,665.87 AU wiber. 6,800,606.70 2 - within - - . Int - the yas - Rate . Principal - - - - la - - - - en Theye - Doe - Taxas sale Bontal Security All Reservery and patied MM. - IN I - - - € 1 Customs Bevelving hade. 1,404,055.22 - I of I - - 1 by I - - I - the I 1 I I - Line Citized - - - 1 - I 242,199.27 17,604,539.49 TRANSACTIONS AFFECTING THE CIRCULATION OF FEDERAL RESERVE NOTES, 11,503,674.43 FEDERAL RESERVE BANK NOTES, AND NATIONAL BANK NOTES Truel apprecia, es está. etc. 946,710.74 Truel increment or quid, 200,025.49 Fuldis debt. 1,144,522.40 Fulitie dist. 759,037.25 - I ( 1 - - - - form Balances previous dat. Bulance unler lass above) The - 1 - - THAL 2,600,894,871.26 I I - - - i I - [ Res - har - I I 1 va. I I I I I --- intere Ber Blue Furchase Art. of 1994 AND the same) medibe manal he the the - the President's predamation daint sig. . 164. Nine 1-Tale new represente ina the of sincer event se the eat of Lie Che valor and LOCARD - case 5 Nome 1-Th amount far the mill of distrurging Sim and certain agrodits wise - --- - - Regraded ed 3 COMPARATIVE ANALYSIS OF RECEIPTS AND EXPENDITURES COMPARATIVE ANALYSIS OF RECEIPTS AND EXPENDITURES-Cominued AUGUST 19, 1937 ARGUST 19, 1987 Corresponding This - period last Fiscal 7087 1935 pariod Recal Corresponding This month PM FROT petel last Paral 7 missing - 1831 GENERAL AND SPECIAL ACCOUNTS racer ACCOUNTS, INCREMENT 0% GOLD, ETC. Remiste listernal PAYMENT Trust amota les PLTANKK Insurent reville trea in the weight of Internal 406,700,437.01 the gold dellar Unjust resident tax 148,000.12 100,004.36 Respiration 37,384.01 ARE Taire under Social Becurity Art. Unstiployment fund 4,694,670.41 Every Taxe - and Unly employees 19,01%,50 31,157.85 Customs Total Missing Primode a severities: Truel chiligaticas 0,511,102 W Transactions in shecking of All other 1,20,100.00 17,000,202.00 11,014,467.33 agreedes (net), etc. Parama Used inlls, etc $15,000.00 1,026,082.07 $17,341,256.76 2,201,197.28 Chargeable against in gold, 1,787,501.34 7,735,800.41 Melting - etc. Other - 17,378,416.00 Paramets to Voloral Receive lants 20.140.74 VILIMY Federal Act, as THE remine 720,197,518.84 Far of reflocal has soles 571,000.00 Comployment trust fred: 1,030,546.90 6,000,000.00 0,000,000.00 Date Other 4,400,000.00 69,247,000.00 39,400,201.74 78,087,001.71 hair milings Old-ego maine amount 200,000.00 has highways Investments end tranders (net) 11,477,716.23 Bas and harber and find Seont payments, *1,000,001.00 DONO 23,172,097.15 14,857,254.89 Refired retiresant - Invistion projects 2,134,120.83 l'erante - 426,640.01 $17,001.00 and (and) 1,716,638.13 10,000,001.00 Nated detrimes 19,003,000.00 Benndit payments. 1,942,107.1) Balinad Internal del. 199,020.02 EMP Redal Seally Art. 10,770,738.17 Total Daind of Columbia (II, 2,000,000.00 National 5,600,000.00 Extre of resiple or credita Artir 23,071,477.01 Exeme of expenditures 22,477,146.56 T0,107,224.90 $2,764,237.27 Nary 20,05,000.00 74,204,001.54 Administration PUBLIC DEBT ACCOUNTS 01,200,200.00 Agrimilural Program 32,100,111.00 Civilian Commission Carge 06.011.167.00 27,172,661.40 Market operational fare Crét Administration 17,594,224.04 I $1,472,496.00 72,367.61 Turner Vality LUCH Treasury bübe 501,256,000.00 limit M the date 18,650,516.00 Treasury ming securition. 030,122,000.00 42.20 fature United Braine missings bonds (Including un- 42.28 - 1,906,116.00 classified REVENUE 26,754,711.30 las os fere 4,713,775.49 700,190.47 Bubiniai 11,008.05 110,009,711.20 Bulliotal Adjusted aervices beüde $40,530.00 X.470,500.00 H. Bannary not wast Exchange: Agricultural and Treasury arter Formal land backs, 9,748,428.00 Transury India Box *77,964.97 Putitle (including work millef): 43,736,001.80 projects." Public highware 3,203,774.02 Juner and harfer - and fund 14,476,214.78 formal meriow: REVIEWE'T Comployment truet foid Hirst United Administration 30,181,000.00 Ild-up name smoot (nther) 29,247,000.00 Works Program Administration MT.136.73 Railmed - address 41,000,000.00 10,215,000.00 REMIT 12,000,000.00 AM wither AM - lusse - 13,499,016.77 17,10,000.00 Civil service intirest Fund (motes) 19,000,000.00 10,000,000.00 loan ayesem Fursign Service minimist foid (paire) 71,300,000.00 169.42 Canal & had 367,000.00 30,000.00 Energency bousing Alasks Railmad beforment ford (sutes) 489,000.00 kmin Federal Houng Administration 740,811.00 185,000.00 Administrative Misestance JEMES Subtotal 01,181,000.00 4,467,600.00 254,872,000.00 some Administration bis Indovidual Belovery. 30.00 NOT 17,220.10 Total pulle delai 401,676,230.00 Expenditions Reveiving Ficendar Markst spreations Agricultural NAME: Cashi Commadity Credit Corporation Treasury $ Pare Credit Administration Certificate of 41,200,601.83 264,200.00 363,772,099.00 Treasury petas 76,200.00 Private works 431,120.00 Treasury bonds 178,250.00 and grants to States, eximinal- 1,132,400.00 V. etc. United States writings lands Adjusted arrie tands 2,544,211.75 10,000.00 Lotor - 744,173.17 First Liberty biods 5,040,600.00 37,645,600.00 Fourth Liberts hunda 142,050.00 308,134.00 Export- Import Bank of Weshington 179,376.36 Postal Barlogs tends $47,630.00 1,125,500.00 Finance Corporation 680 00 1,27,000.00 direct Indian and expenditures 46,220,541.01 Other dibs Hage 2,030.00 - National lank and Federal 26,476.25 20,764.72 CARD Subtotal 2,012,417.53 back - 7,448,000.00 IV. Transfers to truel - MAI 143,048,832.00 name - 47,000,000.00 Ballmad retirement 20,000,000.00 £3,000,000.00 Entange Adjusted error certificate Fund 30,000,000.00 Trimury total Conversment employees' Ender Treasury Incode (United Finance starr) 72,216,106.00 44,735,200.00 Subtotal Exhibital $1,000,000.00 eirlas: V. Dels relimants (sinking hind, atc.) Adjusted service certificate had 1,100,000.00 39,540.00 Unemployment true tund 13,000,000,00 2,000,000,00 50,000,000.00 Tital expenditions. Dril services - famil (avise) 7,900,000.00 Foreign Berries - first 1,700,000.00 1,900,000.00 1,700,000.00 - uf Canal returned find 18,000.00 14,000.00 24,000.00 46,000.00 lane of rependities 15,000.00 46,000.00 258,018,942.40 2,412,160.00 16,766,000.00 4,192,700.00 SUMMARY 11,818,000.00 Came of Total poblic dalis expenditions Lase público delta minimols 205,016,862.00 Exem of 20,000.00 Name of Kama of expenditions (estuding pulide dabi 272,190,200.10 Tran amounts Increased - ets, of (-) if expecitions (4) Market spendime. (+) - decrease (-16 debb +74,402,958.00 Mills. +384,750,603.00 Certificate of -254,000.00 -70,000.00 - 481,150.00 -231,766.00 Law estimal lack colé 2,015,645.00 Tennery Biller -1,150,400.00 Bonds. +94,677,840.01 Tvtal - of expendions Other Nebt -24,832.05 -42,444.50 -67,000.50 Imme (+) or detram (-) a pin ad National Seni - and Total Namerro taxis DANA -7,266,000.00 Internal (+) er dama (-) in the deld Public dela si beginning of - - yes Púle delà Mile date AMERICA Special - -22,200,001.00 +2,60,000.00 ------------------------- THE a Total the de Additional 1946 of of - which work. vit las dues M - is the - Releced for the al est the SMAL et years expenditions Instituted appearing today - "Regrary P. of On MM daily valid Treasury medium Mas "Pate outer The Water-Ad apelitions rige." - this year UST miy Boulder Caugue project, alter refamation for that your relat being 1 Indisded la . Owned this siglio to the vide as dipling ha the year 1987 are instaded is "Departmental" "Berrury and Halmunt Income of adount be the hole Part via Office expended Impartant by the la 0. Us D. il, the Marition few you Commission 1949 farm permal - redised M the Ny net of Issue - 7a, and 1930 (40 of the transfer of that the of la # milk - E. Mariliana 5. Marythe Complete APR classified - die I M "Department", and BILL to & ($89). 7 - the Time ING lase of (dident). Details MY sim in expelmentary material - 4. Regraded Unclassit OFFICE OF THE SECRETARY OF THE TREASURY 130 Daily Statement of the United States Treasury COMPULED FROM LATEST PROVED REPORTS FROM TREASURY EFFICES AND DEPOSITANIES JULY 31, 1937 CURRENT ASSETS AND LIABILITIES GOLD ASSETS - - $12,444,662,870.14 Seld certificates (stable if Treasury) Buid certificate of time- resure Federal tystem 6,018,442,436.78 Redemption find-Pateral dates 0,251,011.75 Onld resurre 156,030,430.95 his - Code - ! 1 = I I V 1 I Town: - - ONE - - - " - - . - Enclange fand 1,800,000,000.00 Unit b general bad: Balance of Increment resulting from no ductime in weight of de avid dollar b working balance 1,368,146,711.68 Tital 12,444,002,520.14 Total 12,444,062,670.14 SILVER ASSETS MARILITIES Biver $802,058,621.73 Süver internating $1,321,487,722.00 Street dellars 805,271,314.00 Treasury sitos of 1890 extetanding 1,171,922.00 Siner is tax 44,600,491.73 Total 1,207,300,135.73 Total 1,387,360,135.73 GENERAL FUND ASSETS LIABILITIES Gald las shore) $1,528,146,711.05 Therefore's shecks $10,681,005.08 (as above) $4,000,493.73 Depisita of client Ratied Diates 2,032,708.00 Frat Office Department 2,743,079.38 Faderal Baserve suive 14,286,830.00 Board of Partal Garings Rystem Pederal bank 200M. 257,047.20 d-parted FRESTYA, lawful BUSINY AD,300,000.00 Mational bask soles $41,67L.50 other deposite 0,008,575.64 Subsidiary sur via $,623,004.05 deta of disbursing allows als. 70,702,708.37 Minar esta Since bullies (mail value) 369,655,076.43 Depante to: tradies nin Redemption d' national bank sales (&- de 3,472,520.04 personal net lawfel 408,460.09 also 22,041,420.53 Deposite for Federal Bearric 247,092,164.65 Balance tobacco 179,620,240.03 Special departacies Amtil at nales of Gerernment securities 200,015,000.00 Instite [M] National and other Sank above) To nelli of Transine Extrad 12,397,045.42 Increment se enter (sa To credit of siber International 10,693,986.27 above) Events degistration To crudit of Treseure Biain 200,673.58 ser sole 1 T= outh of older 2,230,347.40 Value balance Pullippine treasury 74 credit et Treasurer United States 1,064,787.89 2,636,004,384.86 Total Total 2,818,724,625.08 RECEIPTS AND EXPENDITURES THIS DAY Reseipts: Internal revenue General: $066,272.12 Departmental $5,410,251.21 Insure tax insural 10,007,400,36 External as public debt 1,456,025.87 1,943.00 AG other. 0,402,878.22 TAX Texas under fedal A/L. 1,849,403.01 and relief. 9,354,947.36 Tun - corries and their - Revelving bade Name 100.02 Transfers - trast ate 1,008,279.85 remigis 273,461.77 56,962,940.12 15,432,001.12 Trul - auf - 1,018,786.06 Trust securita, increment en sis. 39,302,836.31 Palis 6,899,102.30 Febilis desit 1,101,084.25 Balance perform day of Belance swing Date above) 2,634,004,284.83 Total 2,070,603,544.07 Total. 2,070,005,548.07 - of oncia the She Parkam Ans M Himale May and the - released for Man aliver reselved souler Lie dated Are . Num 1-Th - - resulting That OF - of PAY equal to the mit of the also sequired under NM. Name 1-The - to the credit of delevrance - - seriale - today - - Regraded Unclassified 2 COMPARATIVE ANALYSIS OF RECEIPTS AND EXPENDITURES COMPARATIVE ANALYSIS OF RECEIPTS AND EXPEND!TURES-Contiaued JULY as, HMP Compressive Corresponding Corresponding This - period last Rest year ryan parted Seral This growthind - Items year 1258 period Recal your year 1887 FANT year 1917 GENERAL AND OFECIAL ACCOUNTS TRUST ACCOUNTS. INCREMENT ON COLD, ETC. Trust - $11,790,971.53 818,411,000.26 $20,131,632.14 lesse lat. - reding (he relation la the Hipia name lie and dislier 31,324.00 201,079.03 21,124.60 United tax 361,348 34 201,316.28 Texas - Aventy An Disciployment trud fand 29,121,200.04 the Tune - - and - ---- $1,360,452.27 Total 54,696,229.33 United - Expensivement a obligation Trust Airmints, 21,055,12 0 difference Transactions is sheeking - of provided All nie 1635,00 10,100,046.50 (NM) $1,410,201.20 FALIERS Canal solls, etc. 1,109,201.73 Chargester apaint - - 4,416,632.00 Minima I - 111,180.07 10,140.74 111,180 97 Other Payments to - 13b, Friend Am. - Total maiple the effirment of national back color 0,073,200.00 0,072,294.00 Uteuplaiment out 25,000,000.00 4,232,000.00 I L United Other 200,000.00 50,000.00 255,000.00 Departmentsi* 29,217,701.00 Disp mane amount: 1,317,953.10 Investante soil transfers (red) +1,501,001.00 Pylice payments 48,327.05 Hive - - 12.742.487.36 Balload missed +10,000,000.00 - - transfirm (pat) Canal 1,500,780.00 insults payments Postal 4634,200.00 Hairond Airt 04,710 00 Total - Am. District of Columbia (LL darti - of melyu emile 37,580,078.11 National deference I i 4. 11.707,741.00 11.787,741.48 Army 20,000,000.00 ------------------------- Sany PUBLIC UKUT ACCOUNTS Transis ------------------------- Beselplac Agrinature Program Mariel qualime Orites Commissione Corpe Cash Fun Cavisa Administration Treasury bills. 250,154,000.00 Value Authority 10,06€ 95 40,001.00 Transury soles - Ge public debit 0,502,000.00 hands Return Claims Ristes hunda - Code 2,107,106.00 - - 2,18,000.00 fotal 1,00,000.00 Promoting lact - feha jacture 1,748.94 146,214.30 1,741.99 Subtotal Adjusted IMPTION 1,384,020.00 62,453,000.00 1,184,050.90 (22,452,001.00 11. Add relief Agricultural ant: Times seie Videral backs 746,082.40 Transury tools Mirf. 654,413.00 654,011.08 Public vicia out - projects? Police highways Special him and Imphe with Unimployment trail non 23,010,201.00 Here/ 316,251.02 Disap marrie airect furiel 41,000,000.00 43,680,002.00 Works Pingre Administration Civil siffile Missil had - 71,300,000.00 43,790,000.00 71,200,001.00 42,700,000.00 All yür Things funt 347,000.00 243,000.00 367,000.00 262,006.00 Ald in lice insure Canal Any has (MM) 660,000.00 489 000 00 $01,000.00 live Less and Alassa Ballmad nument Tusdi 162,000.00 189,504.00 Complo being € 243,070.42 2,883,367.70 FIRMAL ( Indial Command THE assoce find - Administration - Administration for Reserver. 3,030.70 15,356.32 2,039,76 162.391.000.00 50,815,000.00 142,241,000.00 50,012,000.00 198,000,424.25 201,638,248.25 Total politic delai memple. $48,601,000.50 no. Divisivise Experititure: No.: Marin Community Credit Cargoration Case Earge Credit Administrative Tressury bills. 212,834,090.00 254,003,000.00 254,555,000.00 Public - Certificate of 115,200.00 and grade la - Travility pulva 1,140,100.00 V76,180.00 - - Transury bonds 18,000.00 10,000.00 Lesse to milinede 16,570.00 $76,670.00 130,246.04 w/op bands 1.776.248.72 4.406.177,00 Authorized service Soods ------------------------- Back d' Washington 440,344.27 First Limity bunde 630,200.00 640,000.00 1,484,200.00 Fraum Corporation Found Unity Invoice $64,050.00 2,024,450.00 dives - and supenditures Portal Maringo Insula 712,646.76 199,526.00 712,460.00 880,520.00 Other delli Manua 18,612.00 48,208.75 18,612.30 46,200.78 Extressal National back orten and Federal Beserve back - 11,624,271.08 7,212,645.00 11,424,275.00 IV. Transfere - truel etac: Childen sosiol 42,090,000.00 42,000,000.00 Resided Bailned entirvement samunt 48,000,000.00 32,002,020.00 Adjusted ente curtificate End Covernment employees' estiment have Transury (United Bluden share). 73,254,000.00 71,211,000.00 46,734,800.00 Transury tribute 125,252,000.00 76,851,200.01 76,853,200.01 V. Dulta - (sinking had wird 30,130.00 5,031,400.00 20,450.00 6,020,408.00 Spenial - Adjustment hand 1,500,000.00 25,000,000.00 1,500,000.00 35,000,000.00 Tinal rependitions 417,108,443.21 417,108,863.31 trail (und 50,000.00 20,000.00 entie fust Error of - Pingo Service minnel found 18,000.00 20,501.00 18,000.00 30,000.00 of Canal Dine food (seles) Postal Hurings Review (minked) SUMMARY Pedrod Deposit Income Organization Date of experitions Subtotal 1,115,100.00 35,070,001.06 Less puide debt 5,049,196.00 3,000,400.00 Tital patita 6/4 expenditions Des at registrations (resting debt Types - - give withing HIM - musts Ins if (-) if informations Time N. apentitions 234,748,254.00 334,748,214.00 Increase (+) M time (-) in public Add Low national Imme - - 4,072,204.00 Mariet Traino - +137,423,603.00 4,451,000.00 Total - of vonditions of -100,500.00 -133,200.00 -105,980.00 Increase (4) - derrease (-) in - fund Transity - -1,141,000.00 - 874,150.00 -1.141,100.00 1 Increase (+) - demoses (-) - (In public - Clim della Dema -44,891.73 -18,012.00 -19,400.75 Police a of or past National tack - and Fisheral Ram back I -7,112,848.00 Public Vide date Infilited - Additional - - he the months and the final your un Individad under "Bininery and - - Epesial and +18,715,606.00 disabilization of which ell la done a Be deleved of - and expenditions appearug - pid Like daily Trainery for the LAS of - smills Total General parte Via aption for Die - your 1997 are - - "Departmental" and relief medical this repline fill 9a Ani year THAT into any Buider Cadynix - schelf release projects for that poir talog - "Pville Walk- AB what Extess of (division). TM unter this stamilization be the month and kins - your IVAN lave - ha - - a the transfer of that - by Our Part Offer Department 18 INF U. a. Marritive Consumer promant - Not APL of June or, jess can State no, The united Timile - expensived by Mas D. 8. Commission will be - This - as "Degartmental", Mill - & - 19th of On - M Marrium Commission." - of Details - does be - 4. Regraded Unclassified & FUNDS APPROPRIATED AND ALLOCATED FOR RECOVERY AND KELIEF, EXPENDITURES THEREFROM, AND UNEXPRNDED BALANCES PRELIMINARY STATEMENT OF THE PUBLIC DEBT JULY 31, 1937 10n the last el dalla Transury JULY as, 1987 ban: $5, Pressure Out loss of 1001 - - - is Correvies bands of 1946-47 $48, 800.000.00 IN% Batings leods (14th le seu eder 24,684,500.00 TRAVELY 14% of 1047-12 have - Exemptive - - mi Companiel INS home di - 1% Issue of 1944-54 Please En Total Fines 1 en IS - of - I - INS imb al (945-50 1,000,374,400.00 1 - Energent I 1 ! as hunds of 1000-02 - - as Intás al - - sind - 454,180,200.00 24% Made of 1645-60, km express - - [ - as tends el ING-O 2,611,107,850.00 - - - at THE - - NS twice if 1945-47. - 14, - - - INS hicly of as - M 1948-51 14% holds of as humb uf 1001-94 - alt. 15 beits d FAST-85 - 25 landy of 1956-59 THE ---- man - 145 leads if 1041 434,453,200.00 21/6 hands of 1919-12 Organization - ---- ----- ---- ass humb uf 1242-45 leok - United Rater form Sender Cayinal - 10,000,000.00 - ---- - AND NAME E CARD Birth A to - - - - ---- ---- - --- II. ---- - bire c. $45,913,218.00 - - ---- - - --- - - INSU Contracted sales. THE - / ---- --- ---- ---- LALOR - Conservation Missid Any lends d 1945 - - ---- --- asse --- ---- - Adjusted Service Life Insurance Fund write - - ------------------------- --- - and - - - ---- Love ---- OF i ---- Tital lends 21,646,503,056.02 --- - - - need ---- --- DEDO ---- Tenumi Name - 46 --- Memo come INS A-19CT, instruring Agl 15, 1997 Works - I - as estima Pm. $74,670,600.00 ---- - - - --- 29% - exturing Just is, 100% 614,014,800.00 - - - as enter C-MM, extiring Mar 16. TOM - - ytars. --- --- --- immo 455,178,600.00 - timer - 25 are D-UB, maistag N/A IN --- ---- - Professional will as aria beliving too 1A, 1981 1,298,714,200.00 - - ------- AUTO ave INS eris D-WA, naturing Das n. 1984 Electrons - ---- --- AREA $26,233,000.00 - - INS eris C-199, No. is 1000 941.013.780.00 - 1,000,000.00 IMAX exus - - as eries D-198, celoring Hapi, IA. 1999 426,554,508.00 - ---- MONT ---- INTERES ISS aria 5-194, baluring Mar. 15, 1940 - Twomit - ISS are natiring 3000 IL THE - - ---- - - INS miss C-IMI, cavering Die 18. isto - - T37,141,600.00 - - i asse the INS mine A-191, estaring Mar 13, 1041 Telephone TADAY Author I ---- ---- - as series 0-001, submitting June 14. 1941 513,677,500.00 - - and iss eria assima Drs. is. Bit 294,421,400.00 we A-192 matiring Mar. 12, 1912. Funds - 455,349,200.10 4d Credit De 11,017,241,250.00 - - --- name 1% Didap more - Jun at, tou and 1912 Fee Credit - ---- ---- - sime ---- GASH i is Die enjor fund, ente to 1942. 201,700,000.00 is Fersign hat. series - to UNI - $ 400,000.00 the ---- ---- par ---- ---- ---- is Canal & ntiment fond. aria - M me $ 773,000.00 Losse - - 4% Alasks Reined fund caloring las a 1941 and net 241,900.00 Insurt - - ---- --- TAME 2% Postal withs, restoring Area 30. PHO 20,000,000.00 - [ 15, Federal Deposit Corporation entre, maining Dar 1, HOS. 08,000,000.00 Corporative trans ---- ---- Commitates - - - 11,438,515,250.00 - --- 1% Aujusted Anie Certificate Fust wris, insturing Jam 1, - 24,100,201.00 73% Unimployment Trust Fund with naturag June 20, 1038 241,541,000.00 - - ISMEN THE $77,461,000.00 Oried EMA = 43 Visant ( Bertas maturing ARE 1. not 30,113,000.00 maturing Das. 12. 1077 The - - - - - to City - - a Timel - on - - - - di the - - Bertin assigng Ave 107. 10,143,000.00 term Dra. 1% IVT? 100.107.000.00 - moital - a unive society Am al has a. 190 la the - - - the police - - Beries maining AVE IN 1637, de Relief end of - - date --- - - MY - - - - - mini of - Horter untering Des IT, 1007 50.012,000.00 - - E 1 . Transpy CHARGES Beries mailing Aug. % 1997. 50,158,000.00 Serie resuluring be 12, 1897 50.177,000.00 no of - - - by - - et May = - May - MM a - - be wind Result - Misi provided in the Federal - Service maturing Aspt. 1,1007 Seria Realizing Das. 29, 1997 Fla in of NAME - provided - live - of Pats is. - - In Ille - - Felins . man al - I - - a the - - - CHE - eu - - - --- - ean se - - - . ase - Berten matering Bryt. A. 1017 40,027,000.00 Service matifing In 1028 60.048,000.00 - - - - a - Employer maketing Rept. 15. 10.17 50,008,001.00 forta instructions Jan 1008 50,022,000.00 -- to - NOS - provide - - - " - El e the - Any. - I alient - - - all - Beries maliring dept. JB, LEFT matering Jan. 19. 00.000,000.00 - salet - - - . - - - - - - - - - --- - - - - - - Smile maturing 17. Siris disturise Iv. zn FORM N. aller del - - - - Floward Email - - if Suits matering 3 14, 1017 Arvie claiming Per 2,15% 56,014,600.00 - Pake the - la - THE - end Up Insurer - km - (mL the - Name - - - - parties - anyward " Lie - - - y FINE Form - - - - or Our - Organization Berine mailuring Sept. p. 1987 Beine Pain 1018 26,037,060.00 M - of the - per - trade - - - - M . media - Members the Failing Element - - Police -- Beries maturing Sept. D, 1997 Being maisring Pets. 10, 195% 58,546,000.00 al - = - BENUILE instructions) - - - - a - - - - has Credit - DAS - - Rerita maturing Onl 1007 00,126,000.00 beria maintig Fab. 23, the 16,612,000.00 unple Transity questi approvation - - as - apr. . an n.c.m.m.m. - - - de - of - e - - 40.00 - unde - Berie matiring Ock 13, 1487 belies matering Me. USA - TM feb . HE, cell - - - A 1 = HAT 1 I > I - M - The - - December, Herite mataring Oct. - 1497. Aria destring Mar. Issue 20,000,000.00 pour X Number all Bar - la - provided M las Claims of hist, Name . - - UM - - - - and - primised - - Employer) Age: forms maturing on 1997 $6,008,000.00 Pevise majoring Mar. 18, 1948 50,048,000.00 provider M al ind, like - - - the - - - - Refund - - ----- - - One at - his - IDL - -- has - - Name - in - - - Not II, MIT - - is - M N/V M Use Agrinal and Additioness Beriew maturing Non. 3, 1437 Series maturing Mar. 28, 1988 56,128,000.00 Beries maluring Nos is, 1972 Sorial maturing Mar. 1028 30,018,000.00 DETAILS OF REVOLVING FUNDS INCLUDED IN EXPENDITURES ON PAGE 2. Berma estime Nov. 17. NOT 60.027.000.00 Rociam caluring Apr. 4,1034 30,010,000.00 - matering Not 14, 1007 50,034,000.00 Surve mathering Apr. 18, 1938 66,002,000.00 - - Final post 18 Borrise maturies Des. 1, 1807 56,004,000.00 Service naturing Apr: DI, 1988 28,913,000.00 Serve maturing Des. By NOT Service maturing Age. 27, 1944 50,942,000.00 2,412,863,000.00 Pagments - - Payment - - - - - - Total Internal-bearing - Intelanding MATHERS Duer - Warre the - Date Orposito - sawa - - - one --- --- OM delive prior in Apr. 1, 1917 Inscluding Postal Parap (endi) - MM pours - - - - and --- --- 2N% Posted Savings Units - D I - THE ---- - --- - hand of Waiter --- ! same 24% 1% and 145 First Liberty Loan heade of 1602-47 29,004,850.00 - Date Department - and admitions - ---- - ----- 1% and 15% benet Liberty Less Sunda 1007-42 1,431,656.00 - - - - - nos Third lämrte Loss friends of 1938 - - 4H% Yourth Less twode of 190-88 27,674,000.00 2N% and as Virtory name if 1922-23 691,500.00 OUTSTANDING FEDERAL RESERVE NOTES, FEDERAL RESERVE BANK NOTES, Treasury name, as varture listed FAMILY AND NATIONAL BANK NOTES Certificate of et verbine Internet native Transacy - $60,400.00 - - the - - Date Amount Treasury Allan certificates I I Transfer in - - - - Transport - - - - Dem Beserm No INTERNET - ni - to - of - - line - Coment Flator - - - las and - Failured - - AGES - - Reserve back - cmme ---- I - - ---- some ---- Departe the of national hank will lame tank notes OM demind total and nimes 2,682,510.59 - were E - = name E. . - - - - - - - - - - of she Failed - Tinh and Transity sevings - - payable is - - beld Ang - be The - M - - - - - - by the United Main - - - for Not - has of - - - M - new - bei a the Transurer will pen - ky De Sales - of - - - - - Tital - delid TRANSACTIONS AFFECTING THE CIRCULATION or FEDERAL RESERVE NOTES, FEDERAL RESERVE BANK NOTES, AND NATIONAL BANK NOTES COMPARATIVE PUBLIC DEBT STATEMENT 112a du - of daily Train I Designative TM - - - Piel - - 1 [ No #1. (917, Ave al. INK Des, 41. IMA, his n. les 30. NOT, E - - yes doint - posiver I will July 1837 vse ad TM - I . you MIY Patient - - - - - ------ - ----- ---- Recent - entir ------------------------- 1200 ---- - Circum debt. - be - by Transure United Rater use --- Patient - hall - - IMME Net belazone to gromal LISTED 1000 I I 1 I IDSP date EMA ---- find 1,110,109,534.78 2,339,867,707.00 Grom delik - and belave in - fund. Cruse delate - 12.80 234.18 120.00 2022 +28471 Comment of inter- - - AVENUE - - twairing standing 2.36 3.7M iii 1145 Regraded Unclassified #ubject 6 COMBINED STATEMENT OF ASSETS AND LiABILITIES OF GOVERNMENTAL CORPORATIONS AND CREDIT SCENCIES OF THE UNITED STATES COMPLEO FROM LATEST REPORTS RECEIVED BY THE TREASURE JUNE M, 1517 SUMMARY i - - - Prepary Internet - el Entail - Total - Il - et Date Na - - - - - - - und - Timel to 4d. mindin - - - Total - Dated tiste United Printing Ownet in - to # de promity [ I Time Code - forção - United Sale I - - - - ище --- 18.00 - Emill - N.Y. CIN as --- - ---- Form cruss Issue LIABI Call - HEAR - COM 4 Pine and -- 18.00.00 cas INCIME 17,085.50 2,000 HOMEN Civil - LIMITED 11,42 0,00 445 - Cein Dependent ALF BLAW SALON LIMIT 7M - CARD and - - 6. THE IMM 10,000 MCMP ame 26,111 ase are I I see USA --- New - and Approved LIMITA ! -- on B.M. 10,9% --- --- ema 25 / 0,40 ser ante 3WM 8,20 ---- DALOR - - Two - - 01.05.20 - 14,000.00 - --- 28.10.58 sure same are --- ------------------------- ==== --- --- - - - - AMP - que LM - use number - - TATER LAP - - MILHI nas Failure Fax - - - - 10,000.00 ------------------------- ann FLAILYM a 0,05% see 01.412.00 THE 3.6 -M LIMITS ---- - - - cuer -- LONG --- e.m. - UNIT i I I ! i --- ------------------------- --- - Peteral EN Bird - - - SEM -- --- --- - 24,40,00 1.000,00 Pelma - - - THE PRIMER INCIAL -- - - - - - --- - CHICK : --- we - E ALIB RICHI and ------------------------- 4@ ----- - : -- : -- Trial, - - --- maz STATE MEME IN una - --- - - --- --- --- --- - ane UNDOR 1000 --- 1 DETAILS Thank utility - Gresses - Financed para - - Two - benty - privers - - Commentry Table relative Yes - Within forsi Credit Inc. Dates - - - In- Fullend - - Credit Or Insuel I Endical Last Primi Firm Issits for Benefits Total - - - - Inco - Prive Nir - - Departic - Bunk I - hants Unite - I 9 I Country And I Toma - - use AM - Type this - - CIP - - - Corporation - - - banks - HERLAN --- - M,MI BILAN - - 0.10.19 - - LEW - - - - - milk --- - - - - END 05,00 / - - 0.00 -- WALST - - - - being LOVE ALEXAN INCIME - I I I I i Mines - one - - NONE : Dr. - - - - POLUCIO ---- - 6,348 - - PLAN ------------------------- ---- ----- ITEMS 1,775 - Time - GLRUM - ! n.m.s: LTTH Invoice) mail - --- - 1.M - - - - - - - m.me livineda Other IN.4M Call: -- ---- - - LIMITS 0.79 1.00.79 1,000 se MARIA - 11.78.00 - - - in state - -- REM DATE MTH --- we --- 3a - I WL712 - 41,300 AW.M: --- ! 04.00 ! 2a - 19076 AM - INLINE 13.M - - - LOW RR Chilizations - - - - REGIO MILLET - - 1,130.00 serse - - Form Montangs Corperation NOV - Corpeter Federal Load Flash - ---- - Credit Bunk - RELOW - - - . - - 1.300,100 - - - ----- - : New - - 11.14.76 ILWATE - - - - - - - 2019 LE * AIR no - LIMITS - know n.m. 11,000.00 - - 0.00 ALM i 4.1% - ALAS 4,187 DAM TOTAL --- - - - properto -- BLUANS LIMITH 76,012 name ME.TS LIMITS - - - --- 3.90 3,876 ne 2MI - - - - 1 76.40 USA - - NNO - - - ADD I I | I 1 I una 8,80 - -- - I I 41,79 --- ou B-6AI 145 - - value 1,00,00 - - E --- 1- - - Line - RRM - - 3,000 --- - --- Unite - - - - 4,204,600 . i use Capital - - - - 4d - e - I 4 - le - - - - - - ------------------------- - - - - - - 2 THAT air - --- une USSLID 0.00,00 unan 41,50 ---- - - - - - - 4a - : WESS and Due LCAS 10.00.00 LNNE - --- una -- INSUR - End Fraha - Ast at.m ame Office 3,20,00 Miller - 118,472 - ne IN - Lisa :- 14,417,281 M.V.IM LIMIT SALAT Lise 4,20,50 - : E THE CARD Tin - - case a 0,00 Q.M.HI AND MARIS RAD Utile - - LOUIS NEW 100,00 BEVERE M.O. 2,16 10.00 --- Total --- -- - IR.W - --- --- ana --- HOUR LOUR 78,10 are nm Line to - - - - - email 510 and Lm ALB ALTALES The - - - - - I I I - ase ML40 10,000.40 101/20,00 asso CAP CALTM IRAM MIRMI NA United - ------------------------- - 11,000,000 --- 1.00,00 - ---- LIMITED ann - - ISSUE mm - sai 15.80 have has - Purplax - for end - mas 70,201 FILAM sum 48.51 1 I 1 5,00.00 - - - - - - see H.C. ---- --- -- --- CONTR ILEM ISCM LIBLE --- That - - - - ---- - COLOR LEMIUM new 12,70.00 LEAVE --- - - - - - - programes Name: & - - - . de de - - If IM BY - tuni Drail Ended - - zun la is Faters) w be the Tream a to paid supia - - - - - - - - - - - - - use 1 1 1 I 1 I ] $ I 1 Hare et na - last - in - - a PARIN win - - - - - Date - - e - I È I I I T E e. 5 il 1 I 1 I - à is - . Bing M fairmal EL Aynomi - - named - - ww - Down - Corporations Lane - FMS Farm Credit - ed - the condition - - IMA, all - anne as die - - will 5 - inc lie - check - - a - - - Fereral has Intial - - en Carponation Poste - Nemat - - - bornd I a - & - - - TM NFO as Falled - Company, - - Total Authority - - - AR - im in MI has - M a - - and I für - - - Insury - - - Regraded Unclassified CONFIDENTIAL AUGUST 21, 1937 1. CALL MONEY:- 131 Low Loaned None. Cloaed. None. Loaned Average None, Migh Loaned outside Unloaned Condition of Block Market at closer Compared with previous day's clease Trend of Stock barkets No rates received on Saturdays. Stock Market salest shares. L. TREASURY BONDS, PANAMAS A CONVERSIONS: CLOSING QUOTATIONS Decimals in 3201a I Yield Today 1 Change I Tn call : To masur- I t date I Ity date I 1 I Treasury 3-3/8s 40-43 105.20 +,2 1,333 2,335 Treasury 3-3/8" 41-43 106.04 +.3 1,603 2,200 Treasury 3-1/4s 1941 106.08 +,5 1,609 Treasury 3-3/8= 41-47 107,02 -,4 2,079 2.567 Trensury 4-1- & Sta 43-45 106.10 +,2 2.148 2.392 Treasury 3-1/4s 44-46 *106,02 bid - 2,263 2,467 Treasury 4a 44-54 111.20 +,2 2,266 3,125 Treasury 2-3/40 45-47 102,14 +,5 2,415 2.475 Treasury 3-3/4s 46-56 110.10 +.10 2.410 3,020 Treasury 3s 46-49 *104.02 bid -.1 2.484 2.667 Treasury 4-1/88 46-49 105, +.3 2.489 2,630 Treasury 4-1/48 47-52 *116. bid -,6 2.469 2,933 Treasury 2-3/4g 48-51 100.15 +.5 2,699 2.708 Treasury 3-1/8s 49-52 *104.10 bid -,4 2,710 2.777 Treasury 2-10 43-63 98.06 -,2 2.673 2.637 Treasury 2-3/40 51-54 99.24 +,9 2.772 2,769 Treasury Ds 51-65 102.18 +,2 2.779 2.818 Treasury 2-7/03 55-60 100.18 +,8 2.834 2.841 Treasury 2-3/40 56-59 99.17 +.5 2,782 2,779 Panama S% 1961 113. to 117, 2.188 Conversions of 1946 108. to 111. 1,775 Conversions 3% 1947 109. to 111, 1.835 . No sale. 5. SHOWT-TER-1 OBLIGATIONS: Bid - Offer - - reasory Notest Notes Á . 1/27 - 3-1/4% eaturing Sept.18, 1937 100.13 100.15 negative intes A - 1938 - 2-5/8% Feb. 1, 1928 100.21 101.01 .377 Notes o - 1932 - 11 - MAY. 18, 1938 101.17 101.19 .245 Natual Il - 1938 - 2-7/81 e June 15, 1938 102. 102.02 .382 Notes Il - 1938 - 23% e Sept.15, 1938 102.02 102.04 .531 Notes o - 1939 - 11% # Mar. 15, 1939 100.24 100,26 .996 Notes A - 1939 - 2% e June 15, 1939 101.25 101.27 1,114 Notes D - 1939 - 18% - Sept.15, 1939 100.12 100.14 1.176 lotes B - 1989 - 18% . Doc. 15, 1939 100.11 100113 1.210 Notes A - 1840 - 18% . Mar. 15, 1940 100.24 100,26 11315 Notes B - 1940 - 14% - June 16, 1940 100.11 100.13 1.364 Notes C - 1940 - 1% - Dec. 15, 1940 100,08 100.10 1,412 Notes A - 1941 - 18% . Mar. 15, 1941 100.02 100.04 1,472 Notes a - 2941 - 11% = June 15, 1941 99.26 99.28 1,417 Nosas o - 1941 - us - Dac, 15, 1941 99,10 99.18 1.407 Notes A - 1942 - 18% Mar. 15, 1942 100.10 100.12* 1,672 Pressury Bills: maturing Ang. 25, 1937 .28% .284 in Sept 1, 1937 .30% .305 " Sept 8, 1937 .30% .305 . Sept 15, 1937 .30% ,305 - Sept 16, 1937 (2) .30% ,305 Sept 17, 1937 (2) .30% .305 e Sept IA, 1937 (3) .30% .305 " Sept 22, 1937 .305 ,305 e Sept 89, 1937 .30% .305 e Oct. 6, 1937 .32% .325 Oct. 13, 1937 .32% .325 - Oct. 20, 1937 325 .325 B Oct. 37, 1937 .32% ,325 - Nov. 3, 1937 .33% 335 - Nov. 10. 1937 .33% .335 . Nov. 17. 1937 .335 Nov. 24, 1937 335 " Dec. 1, 1937 .35 355 - Dec. 8. 1937 .35 355 Dec. 15, 1937 .40% .406 Dec. 16, 1937 (2) ,406 Dec. 17. 1937 (2) .40% .406 Dec. 10, 1937 (2) .40% .406 Dec. 32, 1937 .40% 406 Dec. 29, 1927 .40% .406 August 21, 1937 - S. - Accts, and Derosits. Regraded Unclassified a 132 Continued from paper 1. me I listed 4 Vield I Treasury Bills maturing - Jan, 5, 1938 .40% .406 Jan. 12, 1988 .40% 406 - Jane 19, 1938 .42% .426 e Jan. 26, 1938 .42% .426 - Feb. 2, 1938 ,44% .447 - Feb. 9, 1938 .445 .447 . Feb. 16, 1938 .44% ,447 . Feb, 23, 1938 .47% .478 . Maz. 2, 1938 .475 .479 Mar. 9, 1938 .47% . ,478 Mar. 16, 1938 .476 - .478 Mar. 23, 1938 .47% . ,478 Mar. 30, 1938 .475 # .478 Apr. 6, 1938 .40% ,488 . Apr. 13, 1938 .48% .498 - Apr. 2), 1938 .40% ,488 - Apr. 27, 1938 ,48% .488 - May 4, 1938 .50% ,500 . May 11, 1938 .50% .BOB - May 18, 1938 .50% ,508 . . 4. SECURITIES GUARANTERO BY THE UNITED STATES CLOSING QUOTATIONS Decimale in 32nds I Field Today I Change I To call I To natur- I I date I its date I - , FED.7.M. Its- 1989 100.18 to 100.16 1,273 FED.F.N. 3a - 1948-47 *103. bid +,12 2.379 3.637 FED.F.M. No- 1942-47 *101.24 bid +.4 2,340 2,542 FED.F.M. 3/4- 1944-64 *102,22 bid -,4 2,799 3,101 FED.F.M. la - 1944-49 102.18 +,9 2.682 2.743 HOLO 20 - B-1990 101.07 to 101.11 .691 HOLO 1ts - F-1939 100.13 to 100.16 1.241 HOLO He - 1939-49 190.16 +,8 2,484 2.701 *100.02 b14 *,2 2,236 2,340 HOLO like - 1943-44 HOLC 30 - 1944-52 102.14 +,5 2,600 2.807 R.F.C. 110 (Seriss E) 12/15/22 *100.10 bid .511 1,114 No valor 5. DEPORITS:- In Federal Reserve Benks AREA 30, 1937 150,167,000 In Special Depositariest n/c Balance called issues unpaid 218,000 s/o Treasury issues dated June 15, 1937 500,169,000 s/o Treasury bills dated 8/4-11-18, 1937 149,970,000 Total Ang. 20, 19378800,440,000 Call of AUG. 23, 1937 None, 8. GOLD IMPORTS AND EXPORTS (NET):- Aug. DO, 1937, (N.Y. a 5 12,793,000 Importe ( 5,627,000 Burnerked Suesta ( 231,000 Veriod Aug. 1 to 3), 1937 76,920,000 Set importe, prelin. Jan. 1 to AUG. 31, 1977 .1.196.861,000 Net Imports. ( 3 3,205,000 from Janada € 2,508,000 from Ingland à ( 946,000 fros Todia - 278,000 from Holland t 6,637,000 TNA Ruesia 1 251,000 from Verioo Are. R1. 1937 - Accts. - Deposite. Regraded Unclassified 133 can cos BOARD OF GOVERNORS OF THE IT 3 $500000 123 NATURE THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN August 23, 1937. MEMORANDUM: TO I Mr. Taylor FROM - Chairman Eccles As I will not be here during the final con- sideration of the September financing, I told the Secre- tary that before I left, I would leave a memorandum for him covering broadly and in a general way my views of the situation as they existed at the time I left. I am, therefore, enclosing such a letter, which I will appreciate your bringing to the attention of the Secretary at the proper time. M.S.E. D.E. enclosure Regraded Unclassified 134 BOARD OF GOVERNORS or THE FEDERAL RESERVE system Emp WASHINGTON ( August 21, 1937. OFFICE CPP CE or THE My dear Mr. Secretary: On the basis of present conditions, It is my belief that It would be advisable in the September financing to issue Treasury notes In ex- change for the maturing notes and to raise no additional cash. From the present cash position of the Treasury and budgetary pros- pects it appears that, if no cash 1s ralsed in the September financing, the working balance will decline to 8. minimum of around $550,000,000 at the end of October and will amount to about $600,000,000 at the end of November. This estimate assumes purchases of $400,000,000 of gold be- tween the middle of August and the end of November end the issuance of a similar amount of Treasury bills to mature around the March tax date. Additional cash can be raised at the time of the December financing if necessary. If purchases of gold exceed the $400,000,000 mentioned above, the inactive gold account will approach $2,000,000,000. Under these circumstances, it will likely be not only desirable but necessary to find some other way to deal with the gold import problem. In refunding the September notes it does not seem to me that the market would be receptive to an issue of bonds. Member banks are still liquidating Government securities, end it is understood that some of them are anxious to sell the long bonds in particular on favorable mar- kets, since their holdings are still at E. relatively high level, As to details of the new issues, notes maturing in about five years, either in June or September, 1942, or en issue maturing in December, 1988, might be offered in exchange for the meturing notes. Or the holders of naturing notes might be given the option to exchange for either of these issues. I do not feel that I can at this time express an opinion as to which of these alternatives would be most desirable, since that will de- pend, of course, on market conditions at the time of the announcement. Sincerely M. S, Ecoles, Chairman. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Regraded Unclassified- 135 JR CODAT Paris Dated August 24, 1937 Rec'd 1:35 p.m. Secretary of State, Washington. 1196, August 24, 6 p.m. FROM COCHRAN. Improved sentiment which prevailed yesterday on Paris market continued today. French control gained good amount of sterling at 132.80 to 83 and SOME dollars at 26.63. Forward franc more bid and discount down to 3 3/8 for three months against sterling. Rentes up well on report that Effective August 31 Government will remove 10 per cent coupon tax from Government rentes. BULLITT DDM:KLP SHA - - Regraded Unclassified 136 RB SIECIAL GRAY AND GRAY London Dated August 24, 1937 REC'd 2:40 p. m. Secretary of State Washington. FILE N LOCHHEAD COPY, 554, August 24, 6 p. m. FOR THEASURY FROM BUTTERWORTH. CONPIDENTIAL. OnE. I saw Sir Frederick Philipps today who said that his plans, reported in Yo. 536, August 12, 5 P. Γ. remain unchanged. HE added "How long are you going to keep me in Washington? Will I bE able to get away by September 27th?" In reply I said that naturally I did not know -- that I presumed hE himself was the best judge as to how long hE would have to bE there. I cuote the above verbatim as having a possible bearing in the matter of the initiative and SCOPE of the forthcoming conversations. Two. Philipps also said that in his opinion the only important aspect of the present French situation was that while they are not losing gold they are not gaining any substantial amount at time when they should bE acquiring a large quantity. Three. Philipps made a noncommittal reference to FILE COPY M. LOCHHEAD the actions Regraded 137 RB -2-#554, August 24, 6 P. m. from London the actions of the Federal RESERVE Banks of Atlanta and Chicago in reducing their discount rates from 2 to 12% but in VIEW of the approaching Washington conversation I made no attempt to press him on this or other subjects. HOWEVER, the concluding portion of today's FINANCIAL TIMES aditorial is representative of other press comment on this question. "The majority of member banks have reserves in EXCESS of the minimum requirements which average about 20% of deposits and thus the banks are in need of extra money. But SOME -- and they are almost all in the agricultural districts -- had a certain amoun! of difficulty at the time of the raising of the reserve percentage in finding the necessary funds so that some heavy liquidation of gilt-EdgEd securities ENSUED. Thus to enable them to lend more money to farmers on their now EXCELLENT prospects and to Save them from having to unload their investments the Federal RESERVE Board is offering them rediscounts and advances at a rate considerably nearer market realities than that previously prevailing. In the short run this has obvious advantages both to the banking system and to the 138 RB -3-#554, August 24, 6 p. m. from London to t E country. But in the long run from the banking point of VIEW there are drawbacks. To bEgin with it encourages just those banks which can least afford it to overlend and while repayment following this year's crop seems assured the past records of the agricultural banks qualifies complete confidence in their general loan policy. Moreover, cheap money provides in itself EL strong incentive to grant larger advances as the keen corpetition it entails cuts ternings down to a very low margin. And as was pointed out in a recent article in the ECONOMIST the stagnation of the bond market combined with the disappearance of such non-recurrent items as bad debts recovered has reduced American banking profits to WEll below last year's level. The danger of over lending is EXa gerated in the United States by the loose organiza- tion of the banking system which consists not of a few powerful joint stock banks with many branches as in this country but of a large number of small banks, a high pro- portion of which are private. Consequently while the lowering of the discount rate has immediate advantages it also contains the seeds of a denger which must bE guarded against. On the other hand the advantages of cheap money from Regraded Unclassified 139 RB -6-#554, August 24, 6 p. m. from London from the point of view of the Government and of commerce generally are too WEll known by their Effects in this country to require comment." JOHNSON KLP HPD 03V13030 1891 ring - - K AMT FEDERAL RESERVE BANK OF NEW YORK 140 OFFICE CORRESPONDENCE DATE August 25, 1987. CONFIDENTIAL FILES To SUBJECT: Telephone Conversation with D. J. Cameron From Bank of England. I called Mr. Bolton today and I was connected at 10:27 1.3. I asked Mr. Bolton what was going on and he said there was absolutely no business. The London market was *still on holiday". I asked if any further Bussian gold had come to London and he said that they had received £1,000,000 yesterday which was earmarked for Bussian account but that the last sale of gold in the market took place about a fortnight ago. I told Mr. Bolton that Japanese gold was still coming here and that we had heard that £800,000 in gold had been shipped direct to London. He said he had heard about it from the insurance people but did not understand why they were shipping it to London, except as an experiment, as it was much more expensive, especially now in view of the high rates for war risk insurance on shipments via the Mediterranean. (It appears more like a gesture on the part of the Japanese for our. benefit). Mr. Bolton mentioned the arrangement which they had made with the Yokohama Specie Bank (with which he said I was probably familiar as the payments go through his account on our books) under which the Bank of England takes dollars from the Yokohama Specie Bank. He said there was nothing binding on their part, but they were only doing it to give the Japanese a decent price as the market is so narrow even 8. small offering has 4 depressing affect. I referred to the press report of the Argentina shipment from London of 1,920,000 ounces of gold. He said that this gold would be shipped to Buenos Aires, but they had not as yet received definite instructions, only inquiries as to freight rates, Regraded Unclassified MISC. J.2 a 6-47 FEDERAL RESERVE BANK 141 OF NEW YORK OFFICE CORRESPONDENCE DATE August 25, 1937. TO CONFIDENTIAL FILES SUBJECT: Telephone Conversation with FROM D. J. Cameron Bank of England. insurance, etc. He said Argentinasexports had been very good and that it was only natural for them to bring any surplus gold home. He said we all do that. I asked Mr. Bolton if he had any information on the two shipments of gold by Samuel Montagu & Company to the Manhattan Company amounting to about $5,000,000, about which I inquired during our last telephone conversation, as there were two similar shipments reported as coming forward from London totaling about $5,000,000 on the steamers Volendam and Pennland. Mr. Bolton said that it is very likely that these gold shipments originate in Antwerp and are shipped to London first, thence to New York. The Belgians are still losing gold steadily and he understands Montagu is very close to them. One of the directors of Samuel Montagu & Company 18 a relative of Governor Franck of the National Bank of Belgium and he thought that some special arrangement had been made. He said that Montagu had become more active recently in the London gold market and that practically all of the business was being done by Montagu and Rothschild. Regraded Inclassified 142 RB CODAT Paris Dated August 25, 1937 REC'd 3:13 p. m. Secretary of State Washington. 1198, August 25, 5 p. m. FRO) COCHRAN. Forward franc and French rentes continue to improve. No EVIdence of operations by French control in today's quiet Exchange market. Official fund sold some rentes. Certain details of plans made in today's meeting of Council of Ministers for further financial decrees were received too late to influence market. Swiss National Bank continues to lose gold and gain foreign Exchange. No great significance is attached by European financial press to Argentine decision to withdraw important part of gold holdings from Bank of England. FINANCIAL NEWS London says six hundred seventy-nine million pounds starling of gold received in Great Britain second half of last WEEK from China "doubtless represents metal collected SUA internally or purchased from the United States Soal) Regraded Unclassified 143 RB -2-#1198, August 25, 5 p. m. from Paris States against silver which the Chinese authorities are converting into sterling assets to form part of the new reserve of fortign currency for the note issue". This article adds that some Eight hundred and SEVEN million pounds "of gold also arrived from Germany presumably Russian gold sent to London via Berlin in accordance with the Russian Government's recent practice". BULLITT JLS KLP DECEIVED YESI as DUA YRUSADNT an to - - at without - Regraded Unclassified 144 August 26, 1937. 12:32 p.m. - Thursday. From Hawaii 0: Go ahead. Taylor: Hello H.M.Jr: Hello Wayne. T: Hello Henry. H.M.Jr: Good morning. T: Good morning to you. H.M.Jr: How do things look back home? T: Ah - couldn't look much worse. H.M.Jr: Oh - really? T: Yes. H.M.Jr: What's the matter? T: Well you got the news I suppose about British Ambassador being shot. H.M.Jr: No. T: British Ambassador to China was shot. He..... H.M.Jr: British who? T: British Ambassador to China was shot by a J apanese airplane. H.M.Jr: No. T: Ah - that - there has been an apology which doesn't explain too much. H.M.Jr: I mean how was he - in the street? TE No he was motoring to Shanghai from Nanking H.M.Jr: Yes. Regraded Unclassified 145 - 2 - T: ....and a Jap plane comes along and - ah - machine guns the road and then drops a bomb on him. H.M.Jr: Oh for heaven's sakes. T: And that had - I mean had quite an effect on all the markets. H.M.Jr: Ah-ha T: Ah - stocks - everybody is talk - I mean the market is very nervous anyhow H.M.Jr: Yes. T: and your industrial stocks are off - ah - oh three and three quarters points H.M.Jr: Yes. T: everything else is off. Bonds acted very badly. H.M.Jr: They have. T: Yes. H.M.Jr: How about our 5-year old bills? T: Ah (Has conversation aside) Three to five - par three to five. H.M.Jr: Well they're not off so much. T: No - ah - notes have acted comparatively well but they're off H.M.Jr: Wayne what are they nervous about? I mean - ah - what - what could happen as far as we're concerned? T: Ah - I don't think anything but that - ah - the markets are just nervous. H.M.Jr: I see. The President is at Hyde Park, isn't he? Regraded to I I 146 T: No he's - he's going there tonight, I believe. H.M.Jr: Oh, I see. The radio said he was going up there Thursday. Is he going to be away for a while? T: Yes. H.M.Jr: For how long - do you know? T: Until the 15th. H.M.Jr: The 15th? T: Yes. H.M.Jr: Of September? T: Yes. H.M.Jr: Well is he going to stay at Hyde Park? T: I understand so. H.M.Jr: What? T: I understand SO. H.".Jr: I see. Well - ah - you might, in addition to the information you've been sending me, send me the quotations every day on - on four bonds - the government bonds - whichever are the most signifi- cant. T: Yes. H.M.Jr: Pick out four bonds T: Right. H.M.Jr: and send it to me. Because it's been helpful for me to have that, you see? T: Ah - Burgess is back H.M.Jr: Yes. T: and - ah - he's - ah - - I'm glad he is. H.M.Jr: Yes. Regraded 14 - 4 - T: But it's - ah - he thinks that this is just one of those things that happen H.M.Jr: Ah-ha. T: ....and he's glad that it's happening this week instead of next week. H.M.Jr: I see. T: Ah - they have got some bids in the market. H.M.Jr: Ah-ha. T: Not very heavy because there isn't much volume but it got to be a little bit panicky here this morning. H.M.Jr: Well how does he feel about our financing? T: Well he - ah - doesn't think we 're going to have any trouble. I mean as long as we - ah - get the right maturity and so on. H.M.Jr: I tell you what you do - ask him to send me a little - what - what he thinks we can do and have it coded and send it to me, will you? T: Yes I will. H.M.Jr: To-day. T: Yes. H.M.Jr: Please. T: Right. H.M.Jr: Have him write out a little statement of how it looks to him and what he thinks we could do as the thing looks today and have the thing put in code and send it over to me. T: Yes. Now there's one other thing. H.M.Jr: Yes. I mean just what his opinion is. Regraded Unclassified - 5 - 148 T: That's right. Now to get to another subject. H.M.Jr: Go ahead. T: On this Far Eastern situation. H.M.Jr: On the which? T: On the Far Eastern situation. H.M.Jr: Yes. T: There was a special message that came to you last night - ah - through Buck H.M.Jr: Yes. T: which went to the other interested Department H.M.Jr: Yes. T: and do you want me to - ah - let Buck know that you are not in this country? H.M.Jr: Yes, why not? T: I think it's - I think it's advisable to do it because it was rather an urgent appeal, you see? H.M.Jr: Ah-ha. T: Nothing that you could do anything about. H.M.Jr: Ah-ha. But supposing you send the message over to me anyway. T: Yes I'll do that. H.M.Jr: But don't tell him that but simply I would tell him that ¹¹m not in the country T: Yes. H.M.Jr: .....until Saturday a week. 149 - 6 - T: And that the message was delivered to where it ought to go. H.M.Jr: Well whatever you think. T: Yes. H.M.Jr: What? T: Yes. He's already been told that the message has been received. H.M.Jr: Well there isn't much use of sending it to me, is there? T: I don't think SO. H.M.Jr: What? T: I don't think so. H.M.Jr: No. There's nothing I can do, is there? T: Not a damn thing. H.M.Jr: Well then I would advise him I'm not here. T: Yes. H.M.Jr: (Laughs) I'm here - not there. (Laughs) T: That's right. H.M.Jr: Yes, I would. Ah - an appeal for help? T: Ah - yes. H.M.Jr: Ah-ha. Well there's nothing we can do, is there? T: Nothing. H.M.Jr: Fine. What else? T: That's about all. H.M.Jr: When did Magill get away? 150 - 7 - T: Why he got away - ah - ah - last Friday night. H.M.Jr: What - this last Friday? T: What? H.M.Jr: He just got away last Friday. T: Yes. H.M.Jr: Ah-ha. Well he'll get two weeks in anyway. T: Yes, he'll - he's planning on coming back after Labor Day so he'll get two full weeks there. H.M.Jr: He gets a full two weeks, doesn't he? T: Yes. H.M.Jr: Well that's good. Now what else cheerful have you got? T: Ah (laughs) it's stopped raining. It's been raining for five days and it just stopped. (Laughs) H.M.Jr: Really? T: Yes. H.M.Jr: All up and down the coast? T: Ah - pretty much. H.M.Jr: Ah-ha. T: Ah - there's a slight premium on gold in London. H.M.Jr: What was that? T: There is a slight premium on gold in London. H.M.Jr: Have we lost any? T: Nothing. H.M.Jr: Ah-ha. What - what is our sterilization fund - a million what 151 - 8 - T: A million three - a million three naught nine. H.M.Jr: Ah-ha. Now the only suggestion I have is - in the New York Times on August 16th, which just arrived, they had an article by John Crieder - C-r-i-e-d-e-r on the front page T: Yes. H.M.Jr: entitled, "Roosevelt Insists on Budget Balance". I don't know how they got that story. It quotes a lot of stuff from the Treasury, see? T: Yes. H.M.Jr: It's good. I wondered if you and Bell couldn't work up something else like that T: Ah. H.M.Jr: on this spending showing the decrease in the spending under the Relief Agencies. T: Ah - we'll do what we can. H.M.Jr: But take a look at that article. T: Yes, we - ah - I suspect that we had nothing to do with that one. H.M.Jr: Well take a look at it. I don't know who put it in the paper but it was good. T: Yes. H.M.Jr: But reduced costs of the Relief Agencies, see? T: Yes. H.M.Jr: And - ah - what else? Is that all? T: Ah - that's about all we have. H.M.Jr: All right, gad you're about as cheerful as a mourner at a 152 - 9 - T: (Hearty laughter) Maybe it's the five days' rain. H.M.Jr: All right. Now is Bell there? T: He is - right here. H.M.Jr: Right. Bell: Hello H.M.Jr: Hello Dan. B: Good morning. H.M.Jr: How are you? B: Pretty good. How are you? H.M.Jr: Is Hopkins' living up to his bargain on his spending since the first of July? B: Well he's living pretty well within his own figures as to employment and down to about the mark that he agreed upon. Now something's been done in the last week for these - ah - marchers in town and I haven't been able to get the low-down on it but I understand that Hopkins and the President agreed that there'd be no more lay-offs. E.M.Jr: That's what it had on the radio. B: Yes at the present time. Well apparently they called the leader or something; I don't know just what it was and H.M.Jr: The radio said that they promised this fellow Lassiter B: Yes. H.M.Jr: No more lay-offs. B: That's right. H.M.Jr: Yes. - 10 - 153 Bt Well I understood that there was a letter delivered to him by the President. H.M.Jr: Ah-ha. B: He'd been trying to see the President for two weeks and he wouldn't see him and then I think he held out so long that they had to give him something. H.M.Jr: Well how about - ah - is - is it much over 100 million a month? B: Well expenditures for WPA up to the 24th H.M.Jr: Yes. B: of August H.M.Jr: Yes. B: just for the month 86 million. B.M.Jr: 86. B: Yes, and then 32 - that's 32 million less than the same period last year and total for the year is 213 million as compared with 280 or 67 million less than fiscal year. 137. H.M.Jr: Well are you still spending last year's money or will that all come out of the billion and a half? B: Well it's all made a part of the billion and a half now, you see? It was all thrown together. H.M.Jr: I see. B: Ah - of course, there will be a liquidation in a lot of those old obligations incurred in 1937 - this year H.M.Jr: Yes. B: but - ah - there will be possibly about a hundred - about a billion 650 million dollars un- obligated balances including the billion and a half available for expenditure in 1938. 154 - 11 - H.M.Jr: Well I don't think the story's got across the papers at see? all the big reductions in emergency expenditure, B: Ah-ha. H.M.Jr: And if you and Wayne Taylor could work out something to get that over I think it would be helpful at this time, don't you? B: All right, we'll look at it. Well - ah H.M.Jr: What's my working balance to-day? B: 792 - ah - million. H.M.Jr: How much. B: 792 million Tuesday night. H.M.Jr: Yes. B: And that will go up - ah - tonight - that will go up from yesterday evening about 40 million. H.M.Jr: Ah-ha. B: Ah - the statements I sent you indicate that we might have as much as 804 million going out of August but I think that will increase to about 815 or 20 because we estimated they'd give 55 million to unemployment trusts and I believe it's going to 70. H.M.Jr: Really? B: Ah-ha. On this budget thing, I don't know that I'd talk much about it. H.M.Jr: You don't? B: I'll tell you - the picture is going to look pretty bad when the summation comes out. I'm terribly dis- appointed about it. H.M.Jr: When is the summation coming out? 155 - 12 - B: Well certainly not till after financing. (Laughs) R. M.Jr: All right. B: (Still laughing) That would be physically impossible. H.M.Jr: I wouldn't say anything. B: No I - I tell you - they added a lot of things in the Congress and I'm afraid we're not going to get much below that 418 million deficit that we showed in April. H.M.Jr: You mean for the whole year? B: Yep. H.M.Jr: Oh my heavens that's terrible. B: Well I thought we could probably wipe that out but I'm afraid that there's been enough added - see we had Credit. a 30 million dollar credit in from Commodity H.M.Jr: Yes. B: I'm now told that that's going to be a black figure of 230 - 200 million which makes it a loss in the budget of 230 million. H.M.Jr: Well why? B: Loans to cotton. Those things hurt. H.M.Jr: Yes. B: 200 million over and above what we - ah - figured on in April. E.M.Jr: Well the President agreed to that, didn't he? B: Oh yes, it's agreed to - there isn't any question about it. H.M.Jr: What's that? 156 13 I I B: Yes he agreed to it, I'm sure. E.M.Jr: Well - it is pretty tough. B: Yes but he told me yesterday - I told him that that I thought it was going to be a bad picture in '38 and I didn't think that he could tell the American people in 1939 that there wasn't going to be a balanced budget H.M.Jr: Yes. B: even if he had to say we were going to ask for new taxes. H.M.Jr: Yes. B: Well he agreed and he said I'm going to get you a balanced budget (laughs) in 1939. H.M.Jr: He's going to do what? B: Get me a balanced budget in 1939. H.M.Jr: I still don't hear it. B: I say he told me that he was going to get me a balanced budget in 1939 H.M.Jr: Yes. B: including - ah - 600 million of debt retirement. Well I said, "We'll be satisfied with that". H.M.Jr: Yes. Well I'm terribly disappointed over this. B: Well I am too. Maybe it won't look as bad when I get into it but I'm afraid it's a pretty bad picture. H.M.Jr: Yes. How does the Bresident seem? B: Seems in very good spirits. H.M.Jr: Yes. B: Yes. Going away tonight to Hyde Park and - 14 - 157 H.M.Jr: What's that? B: He's going away tonight to Hyde Park H.M.Jr: Ah-ha. B: .....and be back here probably the 15th and 16th for the antietam celebration and the constitutional H.M.Jr: I see. B: celebration and then - ah - I think he's going away; no one knows where. H.M.Jr: After the 15th? B: Yes. Told me that he'd be away for about a month. H.M.Jr: Really? B: Yes up to about October 15th. H.M.Jr: October 15th. B: Yes. H.M.Jr: Ah-ha. B: Said that would be a good time for me to take a vacation. (Laughs) H.M.Jr: Good. Good. He's going away for a month, eh? B: Yep. H.M.Jr: Ah-ha. B: But he didn't say where. H.M.Jr: Ah-ha. On the 16th. I see. B: Yes. H.M.Jr: All right. Do you want to say anything? 158 - 15 - B: I haven't got a thing other than that. H.M.Jr: Does Archie want to say anything? B: Archie isn't here - ah - he's - ah - (Aside to Taylor: Where is he?) He's in Baltimore. Deitrich's here. (To Deitrich: Got anything?) Deitrich says he hasn't anything other than what Wayne told you. H.M.Jr: Well if you people want to get any mail to me when I land send it to Captain Parker of the Coast Guard at San Francisco. B: Captain - ah - H.M.Jr: Parker. B: (Aside to Taylor: Do you know that?) H.M.Jr: Captain Parker - Coast Guard - San Francisco. B: All right. H.M.Jr: I don't know whether I'll call you again but I may before I go - I'm leaving Saturday you know. B: Ah - Wayne wants to know what day you expect to be in Washington. H.M.Jr: Next week ? B: Yes. H.M.Jr: I expect to be there Saturday and Sunday. B: Ah - you won't get here before what - Saturday morning late? H.M.Jr: I'll either get there late Friday night or very early Saturday morning. B: I see. H.M.Jr: Why? What's Wayne got on his mind? Regraded Unclassified 159 - 16 - B: Well he wanted to know if you wanted to see the Open Market Committee and, if so, when? H.M.Jr: Oh I don't - do we want to see them? B: I don't believe so - ah ( Aside to Taylor: I don't believe it's necessary, do you?) Three of the members are here. H.M.Jr: Well if I see them I'd see them Saturday. B: Well - ah - three of the members are here and - ah Harrison says he'll come down Saturday if you want him. H.M.Jr: George Harrison? B: Yes. H.M.Jr: And - and Burgess? B: Well Burgess - ah - questioned whether you wanted him to stay in New York - he could come down Saturday afternoon after the market closed. H.M.Jr: Well I - I certainly would want to see him after the market closes. B: Wait a minute. H.M.Jr: I'll be in the office about 11 o'clock Saturday. B: Oh - ah - Harris tells me the market will be closed Saturday. H.M.Jr: Oh. B: Chances are it will be. H.M.Jr: Well then have - ah.... B: So Burgess could come down here Saturday. H.M.Jr: I'd have the boys get together - who ever's here, yes. B: 11 o'clock Saturday, H.M.Jr: Yes. Regraded Unclassified 160 - 17 - B: (Aside to Taylor: You - ah - anybody from the West?) All right we'll - we'll call Eccles and leave it to him. H.M.Jr: Is Eccles in town? B: Well it will be Ransom, Wayne tells me. H.M.Jr: I thought Eccles was away. B: Yes he is. H.M.Jr: Ah-ha. B: Well we'll have some of the group here then at 11 o'clock Saturday morning. H.M.Jr: All right. B: Goodbye. H.M.Jr: All right, thank you. B: Goodbye. H.M.Jr: Goodbye. Regraded Unclassified 161 RB CODAT Paris Dated August 26, 1937 REC'd 4:51 p. m. Secretary of State washington. 1203, August 26, 4 P. P1, FROM COCHRAN. Trading still very light on Paris Exchange. Forward franc continues to bE wanted and rentes better. Bank of France statement as of August 19 showed no new advances to Government but Treasury account down to 72,000,000 francs; with circulation lower coverage was 53.14 VErSUS 52.78. Market found nothing particularly disturbing in new series of decrees mentioned below but inclined to con- sider them artificial rather than productive. Under the special authority accorded the Government by the law of June 30, 1937 a further series of financial decrees was promulgated in today's Journal Official providing chiefly for the following: One. An immediate inquiry into production Embracing 13 branches of industry. The Inquiry Committee will include in addition to officials of Government departments, representatives of Employers and of labor. Its task will bE to propose such measures as may bE necessary to improve production Regraded Unclassified 162 RB -2-1203, August 26, 4 P. m. from Paris production and in a general manner the situation of agriculture, industry, and COMMERCE. Two. Improvement of commerical and industrial Equipment of commercial and industrial equipment for the racid increase of production through Government aid. This includes technical assistance from the Credit National by i.:Eana of the allotment proferably to smaller trade and industry of interest rebates for 3. period of four years at most and to a maximum annuel amount of 35,000,000 francs not to EXCEED 4 percent nor bE more than 50 per- cent of t.s interest actually paid on the mortgage. The rebates will bE turned over to a special account opened with the Credit National in the name of the firm concerned and which can only bE debited for the payment of the interest due, Three. Promotion of the building industry through lower money rates, interest rebates as above with assistance of Orsdit Foncier to B. maximum of 40,000,000 francs and certain tax Exemptions; Four. Easier formalities for mobilization of Government securities to permit quicker obtaining of advances from the Bank of Trance on registered state securities. Other decrees 163 RB -3-1203, August 26, 4 p. m. from Paris decrees relate to various branches of state credit price control, reenforcement of supervision over insurance and investment companies, pensions, price of wheat. The decree relating to the suppression of the ten percent levy on rente: coupons though approved is held over perhaps to include other securities such as those of the Credit National and railways. BULLITT SMS NPL aded Unclassified 164 EDA CODAT PARIS Dated August 27, 1937 RECEIVED 5:50 p.m. Secretary of State Washington 1209, August 27, 6 p.m. French control yielding sterling throughout the day at 132.95 to 92, Forward rate also tended to weaken and intervention was apparently Effected at London to hold three months sterling at three and five Eighths. On the fear that latest developments increase likelihood of British intervention in Far East sterling W&S today offered against all leading currencies EXCEPT the French franc. French rentes lower and international shares followed downward trend of London and NEW York. Another series of French financial decrees appeared today. While it is too early for these and the ones I reported yesterday to bE analyzed and understood by the market the impression grew today (and caused the weakness in the franc) that these measures are in opposition to the Economy decrees recently issued indicate the lack of faith of the Government in achieving cheap money rates by repa- triation of capital and other normal means and at same time 165 EDA - 2 - #1209, August 27, 6 p.m. from Paris time (particularly through the lifting of the ten percent levy on rente coupons) increase the improbability of any Effective measure toward reducing carrying charge of Govern- ment debt. Building costs have gone up so steeply in France during past year that Encouragement to construction provided in these decrees is held insufficient, l'uch space given in financial press to lowering of bank rate in New York. Comment in city notes of today's LONDON TIMES was as follows: "Thus NEW York continues to hold the distinction of being the cheapest monetary center. The reason for reducing abnormally low bank rates to still lower levels may not be very clear Especially at a time when borrowing is increasing but the measure has a political rather than an Economic significance. Demand for money in the United States has been growing for some time past with the progress of trade recovery and the banks - which are the principal holders of Government securities - have realized some portion of their holdings in order to provide the necessary means to finance trade. By reducing the reserve banks' rediscount rates it is hoped to induce the banks to discount their bills and advances more freely and to avoid the selling of Government stock. Enormous imports of gold into America have caused the Government to adopt a sterilization 166 EDA - 3 - #1209, August 27, 6 p.m. from Paris a sterilization process with a ViEW to preventing too great an Expansion in the supply of credit. As long as the Government sterilizes gold imports it may bE difficult to justify a rise in money rates but a reduction of Exceptionally low rates seems hard to account for on business grounds". Position of Governor Franck becoming more uncomforta- ble as campaign grows for investigation of and sharp sanc*. tions against alleged action of Governor and Directors of National Bank of Belgium in splitting among themselves the salary of Van Zeeland after latter gave up under governor- ship to Enter Cabinet. BULLITT SMS:MPL 167 London, August 30, 1937. My dear Mr. Secretary: I have reported Sir Frederick Phillips' plans in my No. 536, August 12, 5 p.m. and No. 554, August 12, 6 p.m., confirming the fact that he will arrive in Washington on the week-end before September 20th, the date of his first meeting with you. I plan to sail on the "Normandie" on September 5th, and I will arrive in Washington September 14th. I enclose two articles and an editorial which recently appeared in "The Times" on the French situa- tion; you may be interested in glancing through these inasmuch as the writer's attitude and predi- lections are not dissimilar to Phillips'. I do hope you have had a most restful and en- joyable vacation. With kindest regards, Respectfully yours, Whalter Jultanent The Honorable Henry Morgenthau, Jr., Secretary of Treasury, Washington. EXPERT THE TIMES NUMBER: CITY LONDON DATE: AUG 231937 YOKING THE BANK 11 A. strong provide at the houd of IM Bank of Transe might have prevented soon of (3)) en A REVIVAL IN scrious made by MI Virsent Aund Non in nationalazing the Bank lis Comment took good CITY la and . man who bad a FRANCE experimente of WORK - kryat and derviced services of (M Administrations, and could be relied upon Bill em ont there orders to the beil of his ability 0 is difficult to checus the Convernment low uning that paid Governments 1.-LEGACY OF had sufferent immiterable humiliations at the funds of la Bank of France, and many people, them. agreed that . change was M. CHAUTEMPS necessary and demable, Nince the publication PARTY MI 1937 of the diary of M. Moresu, Governor of the Bank a 1926-28, even umag Commercives admined this lbs wings of the Bank four to be clipped M. Merro besied MISTAKES IN FINANCE of the mander in which he finced M. Herriot from office in 1926 The firm attitude of the Bank, he mule, comtributed largth towands the From Our Paris Currespondent dismissial of the Government His hiller and The expérience Blan collapsed three months consent hostility la M. Herrini and his attempts Inviore the Best Front Populaire Government to rid the country of the disastrous Cand des Gasehes in which be wws ably secueded by were furced from office by the refusal President Deumergue) far excended the bounds of the Senale us graci them full puwer al the permasible in A democratic state 50 to deal with the financial crisin. It was while M. Blum nationalized the Bank and por a dring in Docember when the Chamber devised follower in cueirol il was left to one disclined ⑉ accept the estimases el M. Vincent of his Interest opporimis to provide the junib- gation In il Auriol, the Jonah of French Socialism, of the This step opened the coffers el the Hank to prohable size of the 1937 It finally the Treasury in the past many Governments expired la March, 1937, when the Government Sad been driven from office by the refusal of wers forcal to delegate their financial authority the Bank to pari them lampurary advances, or IM a committee of four expert-twor of whom to short sbort-term Treasury Bonds or Ban were among the most desdly critics et Socialisi which were drug ae the market Bor under the finance-wiib a mandair in operate the EX- new rigime an wich difficulting existed: thart change Equalization Fund term Tunis were mon oth available the Why was the Blum Government able to Opposition could el no support from the survive into the seventh age of second child- Givernor (M the Regente la them in NMS and oblivion Nor many Covernmento an attack upon the Administration lun the day em in the history of the Third Republic have sur which the Bank returnd M eximal the Treasury cuested in staying in office after being overtaken in short the Opposition pould WL by service decay. Why did pert the Opposition as in the just, launch an informative ander the valid exper and dismas them from office 7 burnets of the Bank of Frame why were they allowed to carry on until The But je spire of the disappearance of IM name) trans had lost another 25 per cent. of its value Y Basocial lu (he policy of the Gevern Soundent and Communisi supporters of the mont of the day M. Blue reached the end of Pront Populaire are now 11ying to convince the his when in March. No further funds were electorate that the Bluen Government could have available and II was only the issue of . National consinued in office los the full electoral period, Delense Lown rensiling 6,000,000,000 frances and that is tell only because It was stabbed to the (reatly £80,000,000 at the tate of exchange then back by powerful Anaocial Nothing ruling) that made if multe for him to way in could be farther Trum the thuth affer. " tank rhree must (e extrad these new foods and by the esid of June , political crisit A. BOURGEOIS RALLY will inevirable There H logething dramincally Few French Governments have encountered stow / Socialist Minister of so little destructive criticiaro (rem the responsible Finance who had spent his life in publiping Opposition as ber the of M. Blian igeculature requing - Government loan designal ⑉ make special appeal in the gambling insting And. though the dangers of Vincint April The extrange guarance carried by the National finance were clearly appervid to them (be Defence Unit wherely the widd fluctuates, with varimus opposed to the Government and the frame (all on London sed Name York has net until be bed brought France, which given the Boorse . specifitive smitted allow is and the weilthies country od the Continues em ha compared outr 10 those of face to face with the specifica of A aftered by the law Ivar Krouger 10 (fie gointen planned essimome, foreign eachange puntrol, and days of Sweath Yes the colliage of the Blue Convernment was an authorizario economic system. The advere not due En the fuldnce of financial milling vote IN the Senale was not a etab in the buik. not in the speet of their soinal Their DGF . raily by bourgenis France in defence of Animal policy defend only in list Joeral capitalism. The eactier auitude of the political and crities of the Government's policy eu ent impired by altroidic mouves. There were as lessi good resides why they failed (i) carry their eitima in BY logical conclusion In de liest place the sarimalication of the Bank of Prance had robbeil the French of Be ratiying point: secondly, the foreign polity of M. Blum and M: Dellies was generally approved and there was no doute la Interfere with the work they were doing. thirdly, there - a widespread feeling their many of the secial reforms enacted by the Frast Populaire Govern med were useful and loog fourthly. majority of the eleciorais had suffered ml havily under the policy of M. Lavel that a period of reflaxion. even of inflation. WAX publically essectial, DD matter what were the politions observen (bereinre realized that II possible objections III H. Azwie world le extrancly dangerent to disladge the Blum Government before The electorate as . while became convinced für the Visiums durril policy would end to deam and that shere - 60 alternative M alimine the expire enve by college under in own with What is 15 that M. Bum, with this brillin gifts, allowed to have the of Bis Government. " PM be - pastent only our the that he has adli - consumpt of the AN de for and Connerial And that be that the problem is und for departmental wasers rather that for the Prime Minium Regraded Unclassified PAPER: THE TIMES NUMBER: CITY LONDON DATE: AUG 1937 The nature at the financial problem tas Dear analysed by M. Bonnel When the 100k over the Ministry of Finance be found Insury 11 practically empty: in liarrowing provery were exhausted; yet. it faced with the liability of having to find about 35,000,0,000,000 before A REVIVAL IN the end of the year IN excess of normal hodgetary receipts His Drst slep was to in- crease taxation. As a result lie lurges to reduce FRANCE the estimated deficit ne the ordinary 1937 Budget fram about 6,000,000,000L. lo about 4,500,000,000 Expenditure on public works and advances to local authorities which in win have leen forced to increase their taxes) are auf by That reduces The II.-M. BONNET'S 1937 demands 4915 the Treasury to about 29,000,000,000L. In this faller sum is included 4,400,000,000[, ou account of the British loan ECONOMIES to the French Railways, which has already been covered by A transfer of extrational gold to London. and un account of Treasury Bond maturities which the Gevern ment are now reying to convers. 11 that open- WEAKNESS OF HEART non - successful. and the indications are That it will he, the net obligations of the Treasury From Our Paris Correspondent in 1937 will by about 19.000.000,000/. Twith- out allowing for any increased budgetwer In justice to M. Blum and M. Vincent Auriol, receiply on account w/ a. prissible improvement his Minister of Finance, il must be emphasized in trade), Against them 19,000,000,000E, the that they look office in exiraordinarily difficult Government have abtained a fresh ailvance circumstances. The General Election in 1936 from the Bank of France totalling resulted in the defeat of all (he parties support- There is, therefore, fin reason ing the Laval coonomies. The From Populaire to four that the Treasury will have any great difficully in meeting in obligations this year. marched to Victory on the promise that they would end deflation, und that they would put CUTS FOR 1938 in hand a vast scheme of public works in combut M. Honnel quality realized that the (918) pro- unemployment them was going la he even more troublesoms That meant in effect that the first Front He (herefore decided (o cur loan expenditure Populaire Government were piedged to on account of rearmament and public works unbalance the Budget. Other countries whose by to increase national taxation national finances were generally considered to be sound had done the same thing; so why by to faire railway fares and not France? The difference was that France freight pates by A total of had enjoyed unbulanced Budgets ever since 1931. to reduce the State grant to Paris by R that the basis of the new financial structure 1,300,000,000 (and compelling the City to which the Government of M. Blum proposed Increase local taxation by that amount), to to crect was rickety in the extreme. In 1932 curtail the public works grant to the capital the deficit on the ordinary Budget had been the 700,000,000., and to cut Various octive nearly 5,000,000,0001. In 1933 it was close on smaller appropriations so do to reduce his total 12,000,000,0000 in 1934 il was 9,000,000,0001. lean requirements Gipan Transis such compunity 1935 over 10,000,000,000E, ; and in 1936 nearly advances by the State as are to be refunded 8,000,000,000/0 These recurring deficits had within - reasonable time) by between destroyed confidence in the national finances 11,000,000,000Γ. and 22.000,000,0000 As the and Governments found it increasingly difficult male as miade by M. Reynand of to borrow money by orthodox means, Finally the Government's probable loan requirements recourse was had to the Bank of France, which in 1938 has been officially accepted. these outs meant that the Bank was printing new nutes in and 10% increases mean that the Government order En moet such of the Government's financial will liave to borrow only about 26.000,000,000 needs as the money market refused to cover. nest year. Less than 17,000,000,00000 of files is All this was perfectly clear to M. Blum and required for purcly State purposes, and of that to the members of his Cabinet. They realized wm nearly two-thinds is LIVE account of that it was essential le balance the Budget and rearmament. that taxation would have to be increased in The burden reiling on the French (axpayer order to make enda méet. But they thought is now at least as havy X that devolving upon that the country would not be able to stand any the Jaxpayer of any other country While an new frondena until prosperity bail been restored, EXACT comparison between the incidence of and that their first task ought to be to revise British and French incume-lax is difficult to trade and industry make owing to the difference in the methods BALANCING THE BUDGET al calculation, the following figures give a fairly correct impression of the manner in which is AL recently as August 9 M. Vincent Auriel taxed (he Income of a married man with two uid that in 1936 they peeded 2,000,000,000E. BY children in Grest Britzin and France. A tax- advieve budgetary equilibrium. but (hat they payer in this category with £300 a year pays thought if between le do something inwards the mothing in Great Briten in France Two pays restoration of prosperity twice welcing respayers shout 45 10% to Grest are Income of lo shoulder new hundres. The Government CSOO is Taxed at HOSE over IK, are against about were therefore sumbling on A trade revival. 121 in Frame The figures for the CLINO im Their gamble failed. und two months ago the come level any about 1102 and 195, and for £2,000 almos 1327 and 1440 respectively. And Chauterops Government, with M. Bonnet at the da for DA evasider. M. Bloonet's advisers de not Ministry of Funance, came into office with a excess that if is - prevalege as in generally be- mandain to pay the deliis insured by M. Vincent lieved. Il ** true that large amounts of French Aurint. Time task is terribly complidated savings And hearded abroad, und that the tis unorthudex methods, tried by M. Vincent Aurist will the results described, are closed to them: authoritive have no record of Them. isually they are still raced with the problems of attain- their avings earn no interess 47 all thes are ing husigntary which no Gavern. not invested, but are deposited or suing his mant has time une 1911, of review trade and in the form al bankettes OF gold In any event industry, which have been depressed MIVE 1933. the Ministry extimate that they will not get queh and of suppling the expirt of capital. which has ame on therefore, since has the three end of aspects. 1934. Regraded Unclassified common DATE: 1937 M. BONNETS REFORMS - * doier and M. - insts and dradic blue Englism reques some - that have - insurance - Fines, Park ve cel - e) Bord sinko - - for impressionable - The and University Part laid + - By the reminal - I I 2 2 I I T to . mind of forma - - when of the - - much heck the The ding are alreadly The who of - they have - - la break up - - - fish No. - The silley are HEI anded - hand has - Tway mhand. - by - - - 2 chini Revenues of william of lives have to before ans nail - my missio Aming depo - - Cinima las Rans al - Mani remaining will - the - - prov. importance PM the primare - forward from has fallen very - val. have and chaper INMI facilitàs fill France a MAPS Mgn that " teing entergines them e replements - realized The which have - - - end expend their applicate wided - Towel $ (M) buinning with and and The residency et pan All risc. Same Prime is - included of will pilo, though less de Queen threaday The - of IM leviling - will have E check wanty to for MM liter institles my the reduction in (cal - die take to por public more litul lim inninal up. Who M suw - marks and M INC to . great incire a production exeming pross Númer n° Ifade world All The une um the DE ai pour which la clusing le - dews and company consumploser M was consirns, There has then a - " was inviside Used priors should I up as deul of sale M investing Vita import the hame - resurné M value in cim al paid - a - is increasing thru efficiency and Commign aman, best The - and reducing la to - - Termunately von - - of the of the puble which - w/sh de Director FMIC aftects for is their n. - refunne by the previous spoun IM be und - of name TM andwriry Via pren - la improvement. Inn AM plan has yes - - M - own A THE - the - organ les subjeyment Same members of the Billeria current - over not only le - et dispossional to - N - in only justice in the emban has is - Che Arough the a - - the retways, Offers who OMB - he mmaris study had heen - a buying IM present dism be - passe. These - also - - for the more Chancial and more --- relistered distre recogning uf the rights of - to embank un shall they fai M . - for Mir estable Bui IN gamble, expecisly - they have - of - first status count had - experience - the working of the insured information The - estimated sistem is - mule sel - of our cary well - to full advantage " la is liken be will UNIT beli - present expire of the not Invoice Budgetory in a few man - and the Envorsement employers and employes minit unine Apriller, confire - Virgin wills will to unime- resignize the lacts of the and - orofitable, esch as current company a producing as much es and missing operations results at The Invoice cample - Ghan decisions - this - and an the the term standard of file la which de when programe Ve - worker) love cade good der alaim This may, EXPIRATION IF be tituln vilue N VALUE B/W depo indest certainly will, involve - currentive Whatever missure may be isture they un were - the - for which the was professor two del with de support of - payer acy nisi demond le visa until - upinion informised - - (TVIN the beginning - a . Being income Receivery for - - red. Than - claim suit - with hrs employee conditions en by aming cash of news his by the worker. the riso vi sectional éman. Whatever well be and for de principle which wf Number and of . - tack of fis may and a hard in there in the haire Al - o alget - the review the of applica- - - ano - bue - which. - min perhaps any other single Bail dreaming - united by - two - responsable for the starkering in HIGH cream. The anto need BITW to and of and the rise in - that tab un their business - 1 proved - a - relaciamo with - - - Aimin inversibly Man unione luss interprist disniver that was - any - withing the lurn hand week la - live-day and should have fallered - their which - - - a unaller uses, - be septial and preville reviewing expentiture - referring production, or both Today's non FIVIM Parm stores - much de TM in pied A public expirien. impensally the working caso, who - is denser of loving all. online - than all, the of that Increased man. Possible this will make sum à compromise MMT the sours question, atch bas passed - mid Inc- (ine belsiven the employer and the Both sito a have suffered enough from the long- continuel dermission in recognize de ossessity of eviling ungether. espectally as a Givernment are now in posse in adose impartation Solb should by able la for comfident Before the via 1017 of Be Frant Poeshire - warkmen. the personts, the individual and the super feir that they as the wull neo - she THE LONDON THE Or forgulten cum of lbd - le the M policy and action et Government sm deunnined BY the pressure a will anne of taken and bis information abs. the uncalled "res hundred funding with were is 5 many www.gev and declaration spercher. While M. BAN AUG 36 1937 --- Iving Milinter and M: as the Mindliry of Finess the loct von no the pho leg. E - thes the trade university and (Mell Lientril Confideration wish our camil . dominsts provide, and de and industrialists who - del They - - darce of a. fair dest. And underst & CGT. and - afficied veine - BY two been anyed. poi as must as IM THIS sundred families" had - de and astional mustives in ni the general imprests of the unitity. M. CHAI- INSUPS and M. BEHIGHT late shown describe revolved in person . wildle years, Ing pressure both udes They have provid thair units and - belat in entivities principles, and they Save made plain Oper M - and IM register of gervale - against danger from ANY dell' to the andome of the claims. parer IL (hr) have this established a - while - of the manden of the Gowe - a - purmer that the of other ensim of Lbse pupulation sho an side - Mir varging MARY of their MIN Socialis-M M - ATE a oppins will BY OM a Depart Price (he - Pupulaire M. and M. - propost 18 - TP their - refurns with . sunder of - - deliped is - poter - and - (rule. Even procrizable - have in - taken - permit operators will form of pain in order is FRAD - - , - MM - effect provincing of 1 - card Interes NOM - will I 1 IM a Regraded Unclassified 171 RB CODAT PARIS Dated August 30, 1937 Rec'd 3:50 p. m. Secretary of State Washington. 1220, August 30, 6 p. m. FROM COCHIAN. In conversation yesterday Vincent Avriol told THE that hE had recently said to his successor Minister of Finance Bonnet that the latter was "Eating white bread" in August but that in September or October hE might bE having the same hard fare that hE, Auriol, had last September. In other words Auriol does not EXPECT the present respite for the Treasury to last. HE was as always most apprehensive as to the general outlook for international currency sta- bility if rearmament continues at the present pace. Paris Exchange Market witnessed fairly wide fluctua- tions today. French control gained a little sterling at 132.82 while British control was losing dollars against sterling around 4.963. Pressure on sterling was increased by rumor that Japan would take no cognizance of British note. Report that American ship had been torpedoed by Japanese came 172 RB -2-#1220, August 30, 6 pama from Pari? Japanese came too late to affect the market. Forward frano slightly improved but rentes lower and internationals offered. Bonnet has announced that the ten percent tax imposed by Laval on French rente dividends will bE abolished Effective Wednesday on securities hEld by individuals. This news had already been discounted on the rentr market. Bonnet also announced that the Exact figure of four and one-half percent 1934 bonds refunded was three billion one hundred sixty-one million. Orlgian ! inister of Finance Deeman has according to press issued & report of investigation of recent allegations against Covernor and directors of BElgian National Bank which Exonerates them from any legal misdeeds but recommends measures for avoiding recurrence of situation under investiga tion. Editorial on need for world cooperation with respect to currencies appearing today in LONDON FINANCIAL TIMES conclude: "If EVEry country is going to depreciate its currency in greater or less degree then WE must work to- gether so as to reach the ultimate goal of a world-wide currency relationship in which under and over-valuation are reduced to & minimum. Belgium tried to achieve that End 173 RB -3-#1220, August 30, 6 p.m. from Paris End in 1935 and England, the United States, the sterling area, and Holland, Switzerland and Belgium are in a fair way to achieve it today. France is still in the throes of trial and error and. Germany clings to the first alternative or restriction. The real need is for consultation and coopera- tion instead of Each country waiting to SEE how the other is going to jump. In other words WE need a united Effort made in a spirit of friendship and mutual trust and not in an atmosphere of competitionend suspicion." BULLITT NPL MEDITAED TON naver VIRGINIARY - - Regraded Unclassified 174 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Paris DATE: August 31, 5 p.m. NO.: 1225 FROM COCHRAN Weakness of the belga was & feature of the Paris exchange market today resulting from press reports of a stormy session in yesterday's meeting of shareholders of the National Bank of Belgium Rexist demonstrations and the possibility of Cabinet resignations if no adjustment was made of differences between the Prime Minister and the Minister of Finance. Forward franc appears quiet. Money 18 scarce but there are still hopes for B. lowering of discount rate. A possible strike in the Renault automobile works in the near future is being rumored. Another set of financial decrees was promulgated in today's Journal Officiel. The two most important decrees concern: (1) the suppression, effective on the maturity date subsequent to the first of September, 1937, of the 10% levy on coupons of Treasury securities and rentes belonging to individuals; (3) the conversion, consolida- tion and amortization of foreign loans. To permit the Government to meet the extensive maturities of its foreign loans If Regraded Unclassified 1/5 -2- loans and those contracted in behalf of French publio organizations and in order that no further charges in the latter connection be incumbent upon the state, articles 1 and 2 of the decree provide, in translation, as follows: Article 1. Authorization is given the Minister of Finance to borrow for the account of the Treasury on for- eign markets with the view of the amortization consolida- tion or conversion of loans contracted abroad by the large railways or the state public bodies. Article 2. Authorization is given the Minister of Finance to enter agreements with the large railways or the French National Railway Company and with public bodies for the purpose of settling the terms under which they are to reimburse the Treasury for the charges which it assumes on account of the issues which it undertakes in their behalf in application of Article 1 of this decree". Other financial decrees relate to fiscal modifications mainly in regard to communal finance, current accounts, etc. In a meeting this forenoon the Counoil of Ministers discussed the terms of & decree which will appear tomorrow establishing "the French National Railway Company", already mentioned above. Railway heads and the Minister of Public Works signed the pertinent agreement. BULLITT EA:DJW Regraded Unclassified