Volume 418, July 3 – July 7, 1941

DIARY Book 418 July 3 - 7, 1941 Regraded Unclassified - À - Book Page Aliens Escape from country now "too big a problem for Justice and State"; ask for Treasury help; HMr will wait until FDR asks - 7/3/41 418 22 - B - Bank for International Settlements See War Conditions Blind Persons Guide Dogo: Admission to elevators of Federal buildings discussed in Treasury-White House correspondence - 7/7/41 343 a) HMJr reports on progress of legislation to Mrs. FDR - 8/5/41: See Book 428, page 132 Business Conditions Hase memorandum on situation for week ending July 7, 1941 352 - C - Chase National Bank See War Conditions: Foreign Funde Control China See War Conditions Commodity Credit Corporation See Financing, Government Correspondence Mrs. Forbush's resume' - 7/7/41 346 Coughlin, Father See Hurley, Joseph P. (Catholic Bishop of St. Augustine) - D - Defense Savings Bonds See Financing, Government Dogs, Guide See Blind Persons - 7 - Financing, Government Commodity Credit Corporation: Ownership of 5/8% notes maturing on August 1, 1941, reported - 7/5/41 143,236,267 Conference: present: HMJr. Bell, and Hass - 7/7/41 297 FDR consulted about financing - 7/7/41 341 Agriculture: Letter from Treasury to Agriculture agreeing to suggested offer - 7/9/41: Book 419, page 239 Announcement - 7/10/41: Book 419, page 336 Subscription figures and basis of allotment - 7/18/431 Book 421, page 2 Regraded Unclassified - 1- - (Continued) Book Page Financing, Government (Continued) Defense Savings Bonds: Stamp to be Treasury's own and not Postal Savings Stamp at nov - 7/3/41 418 6 Reproduction of Savings Stamp legal - 7/3/41 141 Monthly sales of June compared with May 142,235 Field Organization Neve Letter, No. 7 - 7/4/41 217 LaGuardia suggests buying $20 million worth of War Savings Bonds from New York City Retirement Fund - 7/7/41 273 a) Foley memorandum on legality 276 b) Discussed at 9:30 meeting - 7/8/41: See Book 419, page 19 McAdoo, Eleanor Wilson: HMJr and McReynolds discuss putting her on War Savings Staff - 7/7/41 287 a) Correspondence - - Treasury-Helen Gahagan - 7/11/41: Book 420, pages 141 and 142 b) Mrs. FDR's endorsement - 7/25/41: Book 426, page 255 c) HMJr tells Mrs. FDR he will take care of - 8/12/41: Book 432, page 160 Motion Picture Industry: HMJr writes Diets of assistance in program - 7/7/41 335 United States Government Securities: HMJr asks Foley about amendment permitting him and Mrs. HMJr to buy - 7/7/41 340 a) Discussion at 9:30 meeting - 7/8/41: Book 419, page 23 b) Proposed bill - 7/8/41: Book 419, page 168 c) McCormack (Congressman) frowne on plan - 7/18/41: Book 422, pages 106 and 123 - G - Germany See War Conditions: Foreign Funds Control: Germany Gold See Latin America: Haiti Guide Dogs See Blind Persons - H - Haiti See Latin America Hurley, Joseph P. (Catholic Bishop of St. Augustine) Address on war, supporting FDR - 7/6/41 253 - I - Iceland See War Conditions Italy See War Conditions: Foreign Funds Control Regraded Unclassified - J - Book Page Japan See War Conditions: Foreign Funds Control - L - LaGuardia, Fiorello See Financing, Government: Defense Savings Bonds Latin America Haiti: Treasury reply to request of National Bank to purchase $750,000 worth of gold for reserve against circulation of Haitian currency, such gold to remain on deposit with Federal Reserve Bank of New York - 7/3/41 418 169,171 Mexico: Hochschild transmits report - 7/3/41 182 - M - McAdoo, Eleanor Wilson See Financing, Government: Defense Savings Bonds Mexico See Latin America Motion Picture Industry See Financing, Government: Defense Savings Bonds # War Conditions: Foreign Funds Control - N - New York City Retirement Fund See Financing, Government: Defense Savings Bonds - P - Price Control See War Conditions - R - Research and Statistics, Division of Report on projects during May 1941 362 - S - Securities, United States Government For HMJr's inquiry concerning amendment permitting him and Mrs. HMJr to buy, see Financing, Government Social Security Board New legislation discussed with HMJr by Bell, Haas, and Blough - 7/7/41 290 a) Resume' 295 Stalin, J. V. For radio address in Moscow, see War Conditions: U.S.S.R. Regraded Unclassified - U - Book Page Unemployment Relief Work Projects Administration report for week ending June 25, 1941 418 395 U.S.S.R. See War Conditions United Kingdom See War Conditions: Military Planning United States Government Securities For HMJr's inquiry concerning amendment permitting him and Mrs. HMJr to buy, see Financing, Government - W - War Conditions Airplanes: Shipments to United Kingdom and overseas commande - British Air Commission report - 7/7/41 329 Bank for International Settlements: Rooth reporte on meeting to Cochran 172,176 China: White instructed by HMJr to settle issues raised by Fox as they occur - 7/7/41 309 Exchange market resume' - 7/3/41, etc. 188,237,349 Export Control: Exports of petroleum products, scrap iron, and scrap steel from United States to Japan, Ruesia. Spain, and Great Britain, week ending July 5, 1941 - 7/7/41 351 Foreign Funds Control: Banking facilities in connection with German, Italian, and Japanese firms discussed in correspondence with Chase National Bank from Treasury and State - 7/3/41 158 Auditing of returns of foreign property discussed at 9:30 meeting - 7/7/41 259 Motion picture producers and distributors ask for earnings of American motion picture companies now tied up in Great Britain "to be unblocked" - 7/7/41 333 a) Payment in dollars for films rented to Great Britain discussed in Cochran memorandum - 7/12/41: See Book 420, page 185 b) Warner Brothers nogotiations for purchase of Associated British Picture Corporation stock - press comment (June 26, 1941): See Book 425, page 74 British Embassy inquires concerning restriction on payment of United States dollars to German shipping companies for German refugees - 7/7/41 404 Germany: German-Swise economic agreement and German obstruction of Swiss watch jewel exports to United States reported on in American Embassy, Bern, memorandum - 7/7/41 407 Regraded Unclassified - W - (Continued) Book Page WAT Conditions (Continued) Iceland: FIR's message to Congress with respect to protection of - 7/7/41 418 300 a) United States Navy to secort American and British flag ships as far as Iceland; British will then secort British flag ships rest of way - 7/10/41: See Book 419, page 367 Micher (Securities and Exchange Commission) asked to check on stock market in San Francisco - 7/7/41 305,307 Lend-Lease: Conference in Bell's office: present: Field, Keynes, Archer, Boddie, Phillips, Keyes, Childs, Thompson, Brown, White, Kades, Cochran, and Bell - 7/3/41 51 a) British needs to be broken down by significant categories for HMJr 1) Rav material contracts outstanding on July 3, 1941 321 2) Phillips' memorandum (revised) on certain types of cash expenditures 322 Lend-Lease Purchases - weekly report - 7/5/41 205 Military Planning: Reports from London transmitted by Halifax - 7/3/41, 7/7/41 190,413 War Department bulletin: German Army - notes on - 7/7/41 410 Price Control: Minutes of July 1 meeting - 7/3/41 108 8) Price schedules of 1) Aluminum scrap and secondary aluminum ingot 113 2) Cotton grey goods 120,124 Purchasing Mission: See also War Conditions: Lend-Lease Vesting order sales - 7/7/43 313,314 Federal Reserve Bank of New York statement showing dollar disbursements, week ending June 25, 1941 - 7/7/41 315 American Viscose Corporation: British prese comments concerning sale - 7/7/41 399 Switserland: German-Svise economic agreement and German obstruction of Swies watch jewel exports to United States reported on in American Embassy, Bern, memorandum - 7/7/41 407 U.S.S.R.: Aid in connection with purchases on five-year credit basie discussed by Acheson and HMJr; conversation reported to Foley, Cochran, White, and Bell - 7/3/41 15 a) HMJr's conversation with Welles 19 Stalin's radio address in Moscow - 7/3/41 27 Yugoslavia: Liquidation of Yugoslav National Bank reported on in American Embassy, Berlin, memorandum - 7/7/41 410 Regraded Unclassified - W - (Continued) Warner Brothers See War Conditions: Foreign Funds Control Work Projects Administration See Unemployment Relief - Y - Yugoslavia See WarConditions Regraded Unclassified July 3, 1941 9:30 a.m. GROUP MEETING Present: Admiral Waesche Mr. Cochran Mr. Thompson Mr. Haas Mr. Schwarz Mr. White Mr. Graves Mr. Blough Mr. Kuhn Mr. Bell Mr. Foley Mr. Odegard Mr. Johnson Mrs. Klotz H.M.Jr: Dan, are you going to be ready for my press conference with this tax thing? Bell: I have a statement now being mimeographed. H.M.Jr: You will be here at my press conference? Bell: Yes, sir. H.M.Jr: And I would like you here, too, Ferdie. Bell: You might want to see some statements that Ferdie would like to have you make at that time, not as a part of the press release but just make them. Regraded Unclassified - 2 - H.M.Jr: Well, will you come in five minutes ahead of time^ Bell: Yes, I think that would be a good idea. H.M.Jr: Will you? Ed? Foley: Here is that piece of paper you gave me last night. H.M.Jr: Oh yes. I have made up my mind what I am going to do about that. Bell, Foley and Waesche were to have an answer to the President's letter of June 24. Bell: Yes. H.M.Jr: Have you got it? Bell: No. We will try to do it today. H.M.Jr: Well, I really think it should be answered today. Bell: All right. H.M.Jr: Could I get it right after lunch? I mean, just give me something to answer him. Bell: Yes. We might go into my office right after this meeting and see if we can't answer it. H.M.Jr: Thank you. Bell: Everybody has been tied up. H.M.Jr: I know. But I really think we ought to get it over to him. Regraded Unclassified 3 - 3 - Bell: All right. Cochran: Mr. Gifford is still selling a few of those marketable securities. They haven't stopped entirely. H.M.Jr: All right. Johnson: Nothing, sir. Waesche: Nothing. Blough: Would you care to talk some time again about that speech on inflation and taxes? H.M.Jr: Very much, beginning with Monday, and I wish you would have 8. talk with that outside tax commission. I mean, suddenly they tell me they wanted to see me yesterday. I told them Monday I couldn't. But somebody ought to show them there is a little interest In the Treasury. Blough: I have been in very close contact with them almost daily. H.M.Jr: All right. Bell: You know that there was a bill introduced in Congress providing for 8. commission on taxation? H.M.Jr: No, I did not. Bell: It was introduced by Mr. Angell. John asked me to return it to him 80 that he could send it down to Mr. Blough. He said he thought it was a very good bill. Odegard: Might I see you just a second? H.M.Jr: I want to see you more than a second, right Regraded Unclassified - 4 - afterward, please. George? Haas: Here are the Savings Bonds sales. The table is 8. little more complicated than the other. H.M.Jr: Is this weekly? Haas: This is monthly. H.M.Jr: The month of June? Haas: June and May. I put it on a daily average basis. H.M.Jr: They sold two million nine hundred ninety- eight thousand stamps? June? Haas: That is right. H.M.Jr: Against three million four hundred seventy- five in May? Haas: That is right. H.M.Jr: Daily average -- Haas: Daily average on stamps, a hundred and twenty thousand. H.M.Jr: What-is-his-name says that they are selling a hundred dollars an hour outside there. Haas: That will help out for July. Graves: Of course, those May figures include the sales to the banks for their stock, so it is 8. little misleading unless you have that in mind. Regraded Unclassified - 5 - Haas: The month of May - now, here is an interesting thing. The Post Office has a decrease of one percent in "E" and the banks sixteen. I suspect - Harold probably can check this - I suspect that the banks went down because the initial pur- chases, all these people bought "F" and "G", many of them bought the full amount, the limit on the "E". And then you asked for a comparison of the "D" bond of & year ago. The "E" is going over 8. hundred percent more than the same months a. year ago. H.M.Jr: Have you talked about these with Harold? Graves: I talked about them with his assistant, Mr. Reagh. H.M.Jr: Anything else, George? Haas: That is all. Bell: Vice-President Wallace telephoned yesterday and said he thought it would be 8. good idea if we would some way get these large companies to buy these stamps and give them to their employees as a bonus so they could start a book and encourage them to continue to buy them. H.M.Jr: I see. Bell: Mr. Sloan tells me that one or two companies have done that. Graves: Yes, that is right. H.M.Jr: Well, Harold and I had a meeting with B. couple of people. I am ashamed to say who we met with here. He was B. hundred percent Regraded Unclassified - 6 - lobbyist, but he is B. nice one. Graves: He is all right, I like that fellow. H.M.Jr: He doesn't pretend to be anything else. With his help, we ought to have certainly within thirty days, these stamps on sale in fifty thousand stores. Graves: I would think so. H.M.Jr: Ever since yesterday morning there has been a little acceleration. Graves: Yes. By the way, if this is of any special interest, I spent a good deal of time yesterday at the Post Office Department, and the Post Office Department are going to - or they did raise the question whether we oughtn't to have our own stamps instead of depending on theirs. That is, they get a certain reaction from the public that these stamps are not, after all, what we are advertising them to be, Defense Savings Stamps. They look at the stamp and it is Postal Savings Stamp. There is nothing on the stamp to indicate that it is -- H.M.Jr: I think we ought to have our own stamps. Graves: Well, there are certain accounting compli- cations there. H.M.Jr: Well, Harold, don't let's do it now. I have got to move. Graves: Yes. I think they have got 8. good point. Regraded Unclassified ? - 7 - H.M.Jr: I think they have, and I think they ought to do it, but if you don't mind, I am stuck this morning. Bell: We can do it by January 1, I guess. H.M.Jr: Oh, nuts! They tell me yesterday they can do the chain stores in sixty days, and we did it in twenty-four hours. They told me it would be sixty days before we could decide whether we could do it, and with Harold's help we have done it in twenty-four hours. As long as you are raising it, I would say do it. Get our own stamps, start printing them now. Graves: I have to get Odegard's permission. (Laughter) H.M.Jr: He will give you a symbol. Graves: I think we ought to use his symbol, it is just a matter of new words. H.M.Jr: Why not let's say we will do it, as long as you raised it. Graves: As I said, there are accounting difficulties. H.M.Jr: Well, what have we got eighty thousand accountants for in the Treasury? Graves: The Post Office. H.M.Jr: And one economist. Eighty thousand accountants and one economist. Bell: It is the other way around. H.M.Jr: I am glad you brought it up. We will do it. Graves: Yes. (Laughter) H.M.Jr: We will do it. Bell: Are you sorry you spoke Regraded Unclassified 8 - 8 - H.M.Jr: All right. Now, did Mr. Kuhn take up with Mr. Sloan and Mr. Bell that these newspaper quiz columns should clear through regular channels? Kuhn: Yes, sir, they are coming here to be cleared and the allotment for July 7 to July 20 is here now, and-- H.M.Jr: And the answer is yes? Kuhn: Yes, sir. H.M.Jr: All right. What else? Kuhn: That is all. Bell: There are many of them out, Mr. Secretary, so you may see them in the next few days. Schwarz: Here is another cartoon. H.M.Jr: Oh, thank you. Anything else, Chick? Schwarz: No. White: I will try to be very brief. H.M.Jr: Just & moment. (Laughter) White: The-- H.M.Jr: Wait a minute. Well, I am seeing Coe before he leaves? White: He has been postponed for several days. They can't get room on the Clipper, so it will be satisfactory if you see him next week. Regraded Unclassified 9 - 9 - H.M.Jr: That is all you have today? White: No. The Canadian-United States Commission which was organized a few weeks ago is much to my surprise taking its job much more seriously than I thought they would and have much more com- prehensive and effective programs planned than I thought was going to take place. They are asking me to prepare a report on the Canadian dollar position. Now, that involves giving them information which was given to us. It is supposed to be a confidential com- mission; and, unless I use all the information I have, the report isn't going to be very much use. Is there any objection to-- H.M.Jr: Yes, ask somebody from the Canadian Treasury for permission. White: All right, I will do that. H.M.Jr: Get their permission. Mr. Clark. White: Or his representative, Mr. Coyne? H.M.Jr: Or his representative. Is that all, Harry? White: There was a meeting yesterday of the National Resources Board. They had a large group of economists in which they discussed in some detail a very comprehensive plan for post- war adjustment. Apparently it was at the request of the President. They are apparently going to do a very good job. I was wondering whether you would want to consider organizing or having organized a similar group to do planning for the current situation and merge it in with theirs. Nobody is doing anything Regraded Unclassified 10 - 10 - comparable for the present situation, and I think a splendid job could be done and have very excellent results. H.M.Jr: Put down on a piece of paper what you have in mind and I will read it. Put it on a piece of paper. Will you do that, Harry? White: I will do that. H.M.Jr: Is everything all right today? White: That is all. H.M.Jr: Anything else? White: That is all. H.M.Jr: Dan? Did I skip Graves? Are you (Graves) going to have Helen Dallas' booklet today? Odegard: We have it now, sir, if you want to see it. H.M.Jr: Was that the minimmthat you wanted? Odegard: That was one thing. H.M.Jr: I will take it up to the country with me and, if it is ready, I will get it to Mrs. Roosevelt this week-end and ask her to look at it. Odegard: There are certain things that have to be changed in the layout that ought to be explained. It is all right to take it. H.M.Jr: Well, I mean, could you show it to me right after this meeting? Odegard: Sure. Regraded Unclassified 11 - 11 - H.M.Jr: Do you want to phone for it? Go ahead, Dan. Bell: Sometime ago we discussed the question of getting statements from the Lend-Lease organi- zation showing obligations incurred and the allocations by the various categories under the act. I have just gotten the first state- ment as of June 15. That is on a two-weeks' basis. Hereafter we will get them on a weekly basis, but it will take anywhere from a week to ten days to make them up because they have to come from all over the country. I don't know whether you wanted this copy or not. It shows one billion three hundred and ninety- two million actually obligated, that is, con- tracts entered into. H.M.Jr: How much? Bell: Up to June 15. H.M.Jr: One billion? Bell: One billion three hundred ninety-two million. This doesn't include the one billion three, but they are working on B. similar statement fr that. H.M.Jr: I would be particularly interested in the one billion three. Do you want to leave it with me? Bell: It is a copy for your file, if you want it. H.M.Jr: I do. Bell: I sent a telegram to the Federal Reserve banks along the lines that you indicated in your memorandum of foreign born people. I have & reply from eight, and they have no indication Regraded Unclassified - 12 - at all that there is any of that, and they have very few foreign born people that come into their banks and not so many that ask for custody. There is no indication of that at all in the eight banks from which I have heard. H.M.Jr: O.K. Bell: I have not heard from New York and Chicago. H.M.Jr: All right. Bell: That is all I have. The first of the week I think you ought to see Roy Blough and John Sullivan and me on that Social Security mat- ter. H.M.Jr: Well, John Sullivan is gone for a week, isn't he? Bell: He will be back, won't he? Foley: He won't be back until a week from Monday. Bell: Then you had better see Roy and me. H.M.Jr: I will. Are you pushing me on it? Bell: Again. H.M.Jr: That is a wonderful letter, Norman. Haas: May I ask you one question? On these "thank you" letters to the planes and engine companies, would you like to sign those things? H.M.Jr: Yes. OPM - I mean, they have written now, and it is the end of the fiscal year, and we get the best we can. Regraded Unclassified - 13 - liaas: I am glad you are going to sign them. H.M.Jr: I would just as lief not see any airplane statistics for the rest of the summer anyway, they look so sick. Just a minute. I would like to see Bell and White and Cochran and Foley for a minute with the steno, and would you mind waiting one minute, Peter? It will only take two minutes. By the way, anybody and everybody that can get away tonight until Monday morning, as long as you arrange with Norman that somebody be on watch on Saturday, will you please? Somebody has got to be here Saturday. Bell: I will be here. H.M.Jr: But with that exception. And then, Norman, please work out with people like Admiral Waesche and Johnson, anybody that has got anything to do with anybody leaving or coming, that they have to - Coast Guard, I imagine, is all right. That somebody has got to be available twenty-four hours. Thompson: Yes. H.M.Jr: Now, I imagine that they know where Admiral Waesche is or his secretary twenty-four hours a day, so when I pick up the receiver - but that is not true of Brother Johnson. Johnson: It will be. H.M.Jr: What? Johnson: It will be. H.M.Jr: Yes. But Norman, make sure, will you? Regraded Unclassified 14 - 14 - Thompson: Yes. H.M.Jr: Work out with Brother Johnson that he is on tap. . Regraded Unclassified July 3, 1941 10:00 a.m. RE AID TO RUSSIA Present: Mr. Foley Mr. Cochran Mr. White Mr. Bell Mrs. Klotz H.M.Jr: This thing that I want to ask you, yesterday Dean Acheson came over here very, very hush hush and very, very confidential, and he brought me a list of what the Russians said they wanted, and he couldn't leave it, it was so confidential. He was here at Mr. Welles' request. He wanted to know if anybody knew what they needed to show how badly off they were. It was childish. I didn't want to say anything. If they want this stuff, all you have got to do is pick up the papers and see what is being done. But that was part of the thing. The main thing was that they want to let the Russians now have thirty or forty or fifty million dollars' worth of material, and the Russians want to buy it on five-year credit. Would I please tell Mr. Welles how the Russians could borrow the money, and unless you people tell me - you are going to have to argue awfully hard - I am going to call up Mr. Acheson and tell him that the United States Treasury is not in the lending business, I am not interested, and they should please see Mr. Jones. White: They should have plenty of money, Mr. Sec- retary. They have plenty of gold. H.M.Jr: That isn't the point. It is a question of policy. Regraded Unclassified -2- White: Oh. H.W.Jr: It is a question of policy. For two years now, three, different times I have tried to buy manganese. Three different times Mr. Welles out me in the throat, and now suddenly I should tell him how to do this thing. White: Well, the Treasury couldn't do it anyway unless, again, it is a stabilization fund, which isn't appropriate, you have decided. We haven't done it with England, 50 I don't see that it is within the Treasury's pro- vince in any case. Cochran: The only thing, they have the gold, as Harry said, but how they could get it out now would only be by airplane. H.K.Jr: But that isn't the point. My point is this: Mr. Jones has all the authority for lending and I think if Mr. Welles wants to find out how the Russians can borrow some money he should go to Mr. Jones. Bell: Yes. I don't think I would say it just like you made the first statement, but I would say that we just don't feel over here that we can loan the money under our -- H.M.Jrt No, they haven't asked me that. They asked me to advise them how they should go - the State Department should proceed. White: How do they proceed when they want to give 8. loan to any one of the Latin-American coun- tries? They are giving loans to more than half the Latin-American countries. They gave 8 loan - they are arranging a loan to Spain. They arranged 8. loan to Finland. I don't think they came here to ask us. Regraded Unclassified 17 -3- Foley: Why don't we simply say that we have canvassed the situation and it seems to us properly a matter for the Import-Export Bank and the Loan Administrator to consider. Bell: It is the RFC. hite: Or we can say it doesn't seem to be a matter which falls within the purview of the Treasury. Bell: And you think the contacts with Jones ought to be made by the State Department. Foley: Directly. Cochrant I would just add that one point, if you feel like it, because the State Department asked us several times if we would buy Russian gold, and we have consistently bought every- thing they have offered. White: I think Merle is right, to say that of course you stand ready to buy any gold that they want to use as payments. H.M.Jr: This is a loan. They want a five-year loan. Bell: I take it the psychological thing, too, is what they are after. H.M.Jr: I think you are all missing the point. Maybe you are not. Cochran: I get the point, but they don't need it. Until a few weeks ago they had thirty million dollars in New York of ready cash. mhite: They have got plenty of cash. Except for political reasons, I don't see any reason for doing it. Regraded Unclassified 18 -4- Bell: Buying the gold isn't helping them like making the loan. It doesn't have the psychological effect, and I take it that is what the State Department wants. White: I think I get the point, Mr. Secretary, and that is why I would like to have you add that of course if they want you to buy gold, you are always ready to do that. Foley: He doesn't have to do that, Harry. He can put it on 8. loan basis. We have gone over this situation and it seems to us that it is & matter for the Loan Administrator. We think they ought to take it up directly with him. H.M.Jr: But they have set the precedent. Foley: Sure. Well, I don't know as you have to add that. H.M.Jr: Yes. The State Department suddenly coming over and asking my advice, it is just too much. Foley: I think you are right. I think they would be surprised if you were willing to do it, especially after what we went through before we froze - before we issued the general license. H.M.Jr: Oh, the other thing that I didn't tell you, yesterday Acheson comes over, can't I help them out on this question of export control. The situation is terrible. Foley: I think he is sincere about that. (Telephone conversation with Mr. Sumner Welles follows). Regraded Unclassified 19 July 3, 1941 10:02 a.m. HMJr: Hello. Operator: Mr. Welles. Go ahead, HMJr: Hello. Sumner Welles: Hello. HMJr: Hello, Sumner? W: Good morning, Henry. HMJr: How are you? V: Fine, thanks. HMJr: Dean came over in regard to the message that you sent him about making a loan to a certain country. W: Yes, he spoke with me after he'd talked with you and I'm grateful to you for the trouble you're taking in the matter. HMJr: Well, I don't know whether you will be when you hear my answer. W: Not a bit, either way. HMJr: But I think that the State Department has set the precedent on this, that there were 60 many loans that you worked out with South America, it seems to me the thing to do 18 to take it up with the loan administrator direct as you have in the past. W: Well, it wasn't exactly that, Henry, that I wanted. I didn't want to indicate that I necessarily wanted it done or thought it should be done, what I wanted was your own judgment as to the desirability of proceeding along this line. HMJr: Well, I think that this is so much foreign affairs that - that it better be handled by the State Department. Regraded Unclassified 20 - 2 - W: Well, I'll tell you what I'll do then. I'll wait until the President gets back and ask him to let me have his views as to whether he thinks it should be done or not. HMJr: Well, that's something - well, that of course W: Then if he decides that we should explore it, then I'll, as you suggest, take it up with the Federal Loan Agency. HMJr: Right. W: All right, Henry. HMJr: Thank you. W: Many thanks. HMJr: Goodbye. W: Goodbye. Regraded Unclassified 21 -5- H.M.Jr: I have for two years wanted to do business with them. The President of the United States wanted me to do business with them and buy the stuff, and as Lubin says, one of the most critical shortages we have today is manganese and three different times I was up to the point of - and this fellow Welles wouldn't let me do it. And now, when it is not very good, you know, and these fellows are losing, I should come along and say he should make a loan to Russia. He must think I am dumber than an OX. He must think I am unbelievably. dumb. Foley: I don't think he thought you would do it. He just hoped you might. H.M.Jr: And then, so you know everything, Dean Acheson comes over yesterday on this - it is terrible, this fellow makes, well - Foley: That is right. H.M.Jr: Well, I said, "Dean, I know it is," and I said, "I am just going to tell you" - he said, "Won't you help me?" and I said, "No, Dean, I won't. I just want you to know I will not." Cochren: You saw Pearson and Allen's remarks on him yesterday? H.M.Jr: I said, "I have been all through this thing and every one of the things now is coming to a head." The State Department comes over here. I burnt my heart out and Hull and Welles have gone there consistently and told the President, "Morgenthau wants to run the State Department and wants to run foreign affairs." Hull told me that himself. And now they want my help. Regraded Unclassified -6- And Dan, on this question of aliens escaping the country, see, I don't think I will do it, even on a written request from - unless the President of the United States directs me to. Now, last night Johnson told me at the house that they can't handle it. It is too big for them. Bell: Too big for Customs? H.M.Jr: No, it is too big for Justice and State. It is beyond them and they are going to get together and ask us to do it. I think I am going to make the President of the United States ask me to do it. I mean, that is the way I feel. It is too big for them and we will let bygones be bygones, and will we jump in and help them. Everybody that is connected with this runs day and night and we have got 8. beautifully run department and they are all copying it. By God, they are going to have - well, I am just human. But after what they put me through for eight years - they have got to get down on their knees to ask me. I mean I will never forget the tongue lashings that I have had from Mr. Hull about how I want to run his department and the sarcasm and everything else. Bell: They have got to take it to the President or after you get it would you want to talk to him about it and say you have got this request? H.M.Jr: What happened on the Italian ships? Did we take them? That whole question. What happened on them? Foley: We sent those two letters over and we haven't heard anything. H.M.Jr: From the President or who from? Regraded Unclassified 23 -7- Bell: No, a direct request, not a wishy-washy request is what we want. We haven't heard from them at all. H.M.Jr: It is the same thing on this. If the United States Treasury is going to get in and guard the boys, that is important enough. I went all through it with Frances Perkins. We had a beautiful plan that the whole border should be Treasury. Frances Perkins came over here and said, "You know, Henry, I have got 80 little to do. Please as a personal matter, don't take that away from ne." It all comes back to me now. That is a song. (Laughter) White: That is a gyp. Foley: He is 8. radio impresario. He can't keep himself in his roles, Harry. H.M.Jr: So I said, "All right, Acheson, I won't." Now, if the President of the United States wants us to look after aliens, he can ask us. The only reason I am letting my personal bias influence me, it keeps me out of hot water. Klotz: That is & good enough reason. (Laughter) H.M.Jr: Well, you can't both freeze and be in hot water at the same time. How did you like our program? Foley: Fine, except Mickey Rooney and Judy Garland. I thought they almost ruined it. Klotz: The kids all were mad about it. H.M.Jr: Did Eleanor listen? Klotz: She listened and she said the only thing Regraded Unclassified 24 -8- she liked was Mickey Rooney and Judy Garland. Foley: I thought he was terrible. The rest of them I thought were very good. H.M.Jr: Will they buy stamps, though. Klotz: They certainly will if Judy Garland and Mickey Rooney do. Foley: Judy was better than Mickey, but I thought Mickey was awful. Bell: Looked as though they hadn't had time to think up a good -- Klotz: That is what the kids liked. H.M.Jr: The thing is, to be perfectly fair, that isn't their fault. That is done by pro- fessional writers. Bell: Oh, yes, sure. H.M.Jr: They just act what they are told. They are directed and taught the thing. Be fair to them. Klotz: That is what they loved. They just thought it was marvelous. This getting mixed up, that was simply wonderful. I am giving you the child's point of view. H.M.Jr: Well, that is important. Well, Henry was enthusiastic about the whole thing at the various times I talked to him last night. Klotz: We talked to some other children and they loved it. Regraded Unclassified 25 -9- H.M.Jr: All. right, thank you all. Klotz: That was awful. Bell: Who sent in Home on the Range"? I didn't get that. H.M.Jr: Dan, why are you here Saturday? Bell: Well, I am going to be here anyhow. JULY 4, 1941 LIEUTENANT STEVENS 26 Wiley mentioned this to the Secretary over the telephone. For your info., in case you are no more up on these diplomatic courtesies than am I, the "p.f." in the left-hand lower corner of the Ambassador's card means "pour felicite". The Secretary's card should be returned to the Ambassador with the inked abbreviation "p. r.", meaning "pour remercier". In other words Il with my compliments" and "with thanks". (my translations!) B. Jenkins. done 7/7 FROM: JOHN C. WILEY The Ambassador Ofthe Union of Loviel Locialist Republics 1. a RADIO ADDRESS BY J. V. STALIN, CHAIRMAN OF THE COUNCIL OF PEOPLE'S COMMISSARS OF THE U.S.S.R., CHAIRMAN OF THE NATIONAL DEFENSE COMMITTEE. (Full Text) Moscov, July 3, 1941 Comrades! Citizene! Brothers and Sisters! Men of our Army and Navyl I am addressing you, my friends! The perfidious attack on our fatherland started on June 22 by Hitler Germany 1a continuing. In spite of the heroic resistance of the Red Army, and although the enemy's finest divisions and finest air-force units have already been smashed and have met their doom on the field of battle, the enemy continues to push forward, hurling fresh forces into attack. Hitler's troops have succeeded in capturing Lithuania, 8. considerable part of Latvia, the vestern part of Byelorussia, and part of the Western Ukraine, The Fascist air-force is extending the range of operations of its bombers, and is bombing Murmansk, Orsha, Mogilev, Smolensk, Kiev, Odessa, Sebastopol. Grave danger overhangs our country. How could it have happened that our glorious Red Army surrendered a number of our cities and districts to Fascist armies? Is it really true that German Fascist troops are invincible sa is ceaselessly trumpeted by boastful Pascist propagandists? of course notl History shows that there are no invincible armies and never have been, Napoleon's army was considered invincible but it was beaten successively by Russian, English, and German armies. Kaiser Wilhelm's German army in the period of the first imperialist war was also considered invincible but it was beaten several times by Russian and Anglo- French forces and was finally smashed by Anglo-French forces. The same must be said of Hitler's German Fas- cist army today. This army had not yet met with serious resistence on the continent of Europe. only on our Regraded Unclassified territory 10 met serious resistence. And if DE 1 of this resistance the finest divisions of Hitler's German Fascist army have been defeated by our Red Army, it means that this army too can be smashed and will be smashed as were the armies of Napoleon and Wilhelm. As to the part of our territory having nevertheless been seized by German Fascist troops, this 18 chiefly due to the fact that the war of Fascist Germany on the U.S.S.R. began under conditions favorable for the German forces and unfavorable for Soviet forces. The fact of the matter is that troops of Germany, as a country at war, were already fully mobilized, and the 170 divisions hurled by Germany against the U.S.S.R. and brought up to Soviet frontiers were in B state of complete readiness, only awaiting the signal to movo into action, whereas the Soviet troops had still to effect mobilization and to move up to frontiers. Of no little importance in this respect is the fact that Fascist Germany suddenly and treacherously violated the Non-Aggression Pact she concluded in 1939 with the U.S.S.R., disregording the fact that she would be re- garded as aggressor by the whole world. Naturally our peace-loving country, not wishing to take the initiativo in breaking the Pact, could not resort to perfidy. It may be asked how could the Soviet Government have con- sented to conclude a non-uggression pact with such treacherous fiends B.B. Hitler and Ribbentrop? WCB this not an cΓΓoΓ on the part of the Soviet Govern: ent? of course not! Non-aggression pacts are pacts of peace be- tween two States. It was such a pact that Germany pro- posed to us in 1939. Could the Soviet Government have declined such a proposal? I think not a single peace- loving State could decline a peace treaty with a neigh- bouring State even though the latter were headed by such fiends and cannibals as Hitler and Ribbentrop. But that, of course, only on one indispensable condition, namely, that this treaty does not infrings ither Health Regraded Unclassified or indirectly on territorial integrity, and honor of the peace-loving State, As is well known the Non-Aggression Pact between Germany and the U.S.S.R. is precisely such & pact. What did we gain by concluding the Non-Aggression Pact with Germany? We secured our country's peace for a year and a half and the opportunity of preparing its forces to repulse Fascist Germany should she risk attack on our country despite the pact, This was a definite advantage for us and B. disadvantage for Fascist Germany, What has Fescist Germany gained and what has she lost by treacherously tearing up the pact and attacking the U.S.S.R.? She has gained certain ad- vantageous positions for her troops for a short period but she has lost politically by exposing herself in the eyes of the entire world as B. bloodthiraty aggressor. There can be no doubt that this shortlived military gain for Germany is only an episode while the tremendous political gain of the U.S.S.R. 1a a serious and lasting factor that 1a bound to form a basis for development of decisive military successes of the Red Army in the war with Fascist Germany. That is why our whole valiant Red Army, our whole valiant Navy, all our falcons of the sir, all the peoples of our country, all the finest men and women in Europe, America and Asia, finally all the finest men and women of Germany - condemn the treacherous acts of the German Fascists and sympathise with the Soviet Government, approve the conduct of the Soviet Government and see that ours is a just cause, that the enemy will be defeated, that we are bound to win. By virtue of this war which has been forced upon us our country has come to death grips with its most malicious and most perfidious enemy - German Pasciam. Our troops are fighting heroically against an enemy armed to the teeth with tanks and aircraft. Overcoming insumbrable difficulties the Red Army and Red Navy are onl/-nacrifiningly disputing every inch of Soviet noil. Regraded Unclassified armed with thousands of tanks and airplanes, Man of the Red Army are displaying unexampled valor. Our resistance to the enemy is growing in strength and power, Side by side with the Red Army the entire Soviet people are rising in defence of our native land, What is required to put an end to the danger hovering over our country, and what measures must be taken to smash the enemy? Above all it 1a essential that our people, Soviet people, should understand the full immensity of the danger that threatens our country and abandon all complacency, all heedlessness, all those moods of peaceful constructive work which were natural before the war but which are fatal today when var has fundamentally changed everything. The enemy is cruel and implacable. He is out to seize our lands watered with our aweat, to seize our grain and oil secured by our labor. He is out to restore the rule of the land- Cords, to restor Tearism, to destroy the national culture and national state existence of Russians, Ukrainians, Byelorussians, Lithuanians, Letts, Eathonians, Tartars, Uzbeks, Moldavians, Georgians, Armenians, Azerbaidjanians, and the other free peoples of the Soviet Union, to Germanize them, to convert them into slaves of German Princes and Barone. Thus the issue is one of life or death of the Soviet State, for peoples of the U.S.S.R. the issue is whether peoples of the Soviet Union shall remain free or fall into slavery. Soviet people must realize this and abandon all heedlessness, they must mobilize themselves and reorganize all their work on new, wartime lines, when there can be no mercy to the enemy, Further, there must be no room in our ranks for whimperers and cowards, panicmongers and deserters, our people must know no fear in fight and must selflessly join our patriotic war of liberation, our war against Peacist enslavers, Lenin, the great founder of our State used to say that the chief virtue of the Soviet people must be courage, valor, rearlessness Regraded Unclassified in struggle, readiness to fight together with the people against enemies of our country. This splendid virtue of a Bolshevik must become the virtue of millions and millions of Red Army, of Red Nevy, of all peoples of the Soviet Union, All our work must be immediately reconstructed on & war footing, everything must be subordinated to in- terests of the front and the task of organizing demo- lition of the enemy. Peoples of the Soviet Union now see that there is no taming of German Fascism in its savage fury and hatred of our country which has ensured all working people labor, freedom and prosperity. Peoples of the Soviet Union must rise against the enemy and defend their rights and their land. The Red Army, Red Navy and all citizens of the Soviet Union must defend every inch of Soviet soil, must fight to the last drop of blood for our towns and villages, must display the daring initiative and intelligence that are inherent in our people, We must organize all-round assistance to the Red Army, ensure powerful reinforcements for its ranks and supply of everything it requires, we must organize rapid transport of troops and military freight and ex- tensive aid to the wounded. We must strengthen the Red Army's rear, subordina- ting all our work to this cause, all our industries muet be cut to work with greater intensity to produce more rifles, machine guns, artillery, bullets, shells, airplanes, we must organize guarding of factories, power stations, telephonic and telegraphic communications, and arrange effective air-raid protection in all locali- ties. We must wage B ruthless fight against all dis- organizers of the rear, deserters, panicmongers, rumor- mongers, exterminate spies, diversionists, enemy para- chutists, rendering rapid aid in all this to our de- stroyer battalions. We must bear in mind that the enemy 13 crafty, un- scrupulous and experienced in doception and disamination Regraded Unclassified of false rumors. We must reckon with all this and not fall victim to provocation. All who by their panic- mongering and cowardice hinder work of defense, no matter who they are must be immediately hailed before military tribunal. In case of forced retreat of the Red Army units, all rolling stock must be evacuated, the enemy must not be left a single engine, single railway car, not a single pound of grain or gallon of fuel, Collective farmers must drive off all their cattle and turn over their grain to the safekeeping of state authorities for transportation to the rear. All valuable property including nonferrous metals, grain and fuel which cannot be withdrawn must without fail be destroyed. In areas occupied by the enemy, guerilla units, mounted and foot, must be formed, diversionist groups must be organized to combat enemy troops, to foment guerilla warfare everywhere, blow up bridges, roads, damage telephone and telegraph lines, set fire to forests, stores, and transports. In occupied regions conditions must be made un- bearable for the enemy and all his accomplices. They must be hounded and annihilated at every step, and all their measures frustrated. This war with Fascist Ger- many cannot be considered an ordinary war. It 18 not only 8 war between tvo armies, it is also B great var of the entire Soviet people against German Fascist forces. The aim of this people's var in defense of our country against Fascist oppressors is not only elimina- tion of the danger hanging over our country but also aid to all European peoples groaning under the yoke of German Fascism. In this war of liberation we shall not be alone, In this great war ve shall have loyal allies in peoples of Europe and America, including German people who are enalaved by Hitlerite despote. Our war for freedom of our country will merge with the struggle of peoples of Regraded Unclassified liberties. It will be a united Pront il peoples standing for freedom and against enalavement and threats of enslavement by Hitler's Fascist armies. In this connection the historic utterance of British Prime Minister Churchill regarding aid to the Soviet Union and the declaration of the United States Government signifying readiness to render aid to our country, which can only evoke a feeling of gratitude in the hearts of the peoples of the Soviet Union, are fully comprehensible and symptomatic. Comrades, our forces are numberless. The overweening enemy will soon learn this to his cost. Side by side with the Red Army thousands of workers, collective farmera, and intellectuals are rising to fight the enemy aggressor, Masses of our people will rise up in their millions, Working people of Moscow and Leningrad have already com- menced to form vest popular levies in support of the Red Army. Such popular levies must be raised in every city which 18 in danger of enemy invasion, all working people must be roused to defend our freedom, our honor, our country - in our patriotic var against German Fascism. In order to ensure rapid mobilization of all forces of peoples of the U.S.S.R. and to repulse the enemy who treacherously attacked our country, a State Committee of Defense has been formed in whose hands the entire power of the state has been vested, The State Com- mittee of Defense has entered in its functions and calls upon all our people to rally around the Party of Lenin- Stalin and around the Soviet Government 80 AB to self- denyingly support the Red Army and Navy, demolish the enemy and secure victory, All our forces for support of our heroic Red Army and our glorious Red Navy! All forces of people - for demolition of the enemy! Forward, to our victory! Regraded Unclassified TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 3, 1941 TO Ferdinand Kuhn, Jr. FROM Alan Barth REACTIONS TO THE "CRUSADE" Hitler's Holy War has picked up no more than a handful of crusaders in the United States. Save for the extreme right, already camp-followers of his caravan, the American public has given only boos and jeers to the Nazi pretense that it is saving the world from Communism. The rightists who fell for, and into, the Nazi line are offset by the leftists who have suddenly enlisted in the war to save the world from Fascism. The overwhelming majority of the American press continues to insist staunchly that the problems raised by the Russo-German war are military, not ideological. This attitude, it should be noted, is conditioned upon the expectation of disaster for the Red armies. While there are few illusions about the purposes of the Nazi drive to the east, there is a latent uneasiness over the possible spread of Communism after the war. Americans hope for B. German defeat without a Russian victory. Center Secretary Knox, speaking before the Governors' Conference at Boston, said precisely what the more strongly interventionist Regraded Unclassified - 2 - newspapers have been urging feverishly since the outbreak of war on the new front. This segment of the press is dissatisfied with the pace at which the Administration has moved. Commenting on the tenth day of the Nazi-Soviet conflict, The New York Herald Tribune remarks: "The British, with their crescendo of bombing, are making every use they can of the fleeting opportunity. The United States has done nothing. This inaction means ten days already wasted when every hour counts. This is no 'breathing spell'; it is the supreme moment for action." A similar impatience is expressed by The New York Post, by P.M. and, with slightly more restraint, by The New York Times. A number of important newspapers in the south also feel that now is the time to shoot the works. Other influential dailies, such as The Christian Science Monitor, The Philadelphia Record, The Baltimore Sun, The Chicago Daily News, The San Francisco Chronicle desire vigorous ac- tion. The Nation and The New Republic add their liberal voices to these pleas. A desperate feeling of urgency marks the comment of all of them on the passing of time. Most of these papers naturally applauded Mr. Knox. But they did 80 somewhat despondently, recalling that the President ignored his commendation of convoys some weeks ago. Mr. Roosevelt's refusal to comment on this latest proposal of his Secretary of the Navy brought most commentators to the conclusion that it W&B just another trial belloon. Regraded Unclassified N6 - 3 - The majority of newspapers merely urge accelerated activity against the Axis without specifying the form which it should take. In general, there has been approval of the decision against invoking the Neutrality Act in the Russo-German war and of the offer of material assistance to the Russians. But there is 8. manifest preference for helping the Russians via Britain. Numerous commentators express the fear that the Soviet Union is destined for 8. quick collapse and that aid sent to it from America may fall into German hands. The off-the- record appraisal of Soviet chances made by United States Army experts did nothing to allay this pessimism, although it did serve, perhaps, to quash the notion that the extension of the war could be counted upon to keep the Reichswehr occupied for 8. long time. Russian retreat and the triumphant German communiques from the eastern front have added to the disheartenment. Some observers are uneasy lest the "now or never" feeling give way to an attitude of resignation toward German domination of Europe. Right Isolationists and the anti-democratic groups allied with them have been making what capital they can out of the fiction that the Nazis are saving the world from Communism. Through Father Coughlin's Social Justice and The Tablet, organ of the Rev. Edward Lodge Curran, they have made their influence felt in some degree among Catholics. Regraded Unclassified 37 - 4 - Despite strong Catholic antipathy toward the Soviet Union, certain of the more liberal groups within the church have aligned themselves with Bishop Hurley who said recently: "Today the first enemy of our humanity, killer of our priests, despoiler of our temples and foe of all we love both as Americans and Catholics is the Nazi." Last Sunday's radio broadcast by Pope Pius XII discussing Catholic attitudes toward the war no doubt did a great deal, by its studied failure to endorse the Nazi "crusade", to check any drift of Catholics into the fascist column. A moderate Catholic publication, The Universe Bulletin, condones British policy toward the Soviet Union by compar- ing it with that of a drowning man who "grasps at the first life preserver that is tossed from a providentially nearby boat." But it finds satisfaction in the fact that Prime Minister Churchill did not call Russia a formal ally. "This war," it observes, "may well mean the overthrow of the brutal anti-God government in Russia. If that day comes then God-fearing nations will be free to seek an alliance with 8 liberated Russia. But until then what nation that treasures honor and respect can call the Soviets an ally?" Catholics of Irish and Italian extraction are, of course, subject to diverse emotional influences in their sentiments toward the war. It seems unlikely that the weight of the church will be cast fully upon either side. Left The sudden turnabout of American Communists represents no Regraded Unclassified 38 - 5 - conversion to British or American partisanship in the war. They are interested exclusively in the preservation of the Soviet Union. This is the basis of Communist consistency. In singularly arrogant statements of the party line respecting the war, The Daily Worker and The New Masses continue to insist that Britain is battling only for imperialist interests, while the workers' fatherland is defending "the new civilization." There is bitter resentment that the calculations of the late Neville Chamberlain have at last born fruit. Prime Minister Churchill, who is held to be of the same stripe as his predecessor, is deeply distrusted by the Communists; they fear that Hitler's "demonstration of 'works' against socialism will regain him 'faith' of the inter- national bourgeoisie." While the domestic Communists clamor for effective American assistance to the Soviet Union, they have launched as yet no demand for this country's participation in the war. "The people of this country want to remain at peace," remarks The New Masses, "and that is possible and necessary." So far, at least, the Communists have displayed a cocky confidence that they can lick the Nazi invaders singlehanded. Regraded Unclassified 39 THE WHITE HOUSE WASHINGTON Hyde Park, N.Y. July 3, 1941. MEMORANDUM FOR THE SECRETARY OF THE TREASURY FOR YOUR INFORMATION AND PLEASE RETURN FOR MY FILES. F. D. R. Regraded Unclassified HARVARD UNIVERSITY CAMBRIDGE, MASSACHUSETTS OFFICE OF THE FRESIDENT June 30, 1941 President Franklin D. Roosevelt The White House Washington, D. C. Dear President Roosevelt: In these days of national emergency, no college president can refuse a call for assistance from The White House. I am very glad, therefore, to recommend to the Corporation that Dean James M. Landis of the Harverd Law School be given B leave of absence BO that he may accept the appoint- ment 68 Under Secretary of the Treesury. I have no doubt that the Corporation will agree end feel that, however great the loss to Harvard may be, we are glad to know that one of our outstanding men can be of special assistance to you in this importent position. We are all hoping that the duration of the national emergency may be short end that it will not be long before Dean Landis is back with us. Ris absence will mean a severe loss to the Law School in these critical times, when we have a serious financial problem arising from the dim- unition in our student body. We shall try to work out our problems, however, 88 best we can. Very sincerely yours, Jame B. Current Regraded Unclassified Lan of Limbersity Cambridge, Mass. a July 1941 OFFICE OF-THE DEAN Dear Mr. Secretary: One matter of which I want to assure you is that you need have no worry whatsoever about my personal feelings in this business. Of course I am sorry not to be able to serve under you but you will remember that purely personal inclinations would have dictated v rew maining here at the Law School rather than going to Washington. Do in one sense Senator Walsh has unwittingly done me a favor rather than a hurt. Naturally I regret not being able to try my hand at doing 4 job of the significance of which I because more conscious as I because closer acquainted with 1t. But I know that there are other ways in which I can serve the country during these fearful times and that 1 am always ready to do. After your call I racked my brain to discover some other 10- cident upon which Senator Walsh's attitude might be based, I think it very likely derives from the following which I have hardly thought of since its occurrence, At the beginning of the last presidential cash paign there was a. general belief among Democrate and Republicans alike in this State that the State would go Republican, Because of that nei- ther Senator Walsh nor Paul Dever, the Democratic candidate for Governor, and their controlled State headquarters did much about promoting the cause of the President. On the contrary there were some Dever-Willkie clubs organized in this State with, I feel sure, the blessing of Dever. It was because of this attitude of the State Democratic party that a number of us formed the Massachusetts Independent Voters League for Receivelt and Wallace. We then pitched in for Roosevelt and got & great deal of support. About two or three weeks before the election Dever's forces began to realise that the President was not a liability but an asset to their campaign. It was only then that Dever made a public announcement in behalf of the President. Shortly prior to this time I ass approached by some of Dever's friends to speak for Dever insearuch as I had spoken on several occasions in behalf of the President. I replied rather curtly at that time that I had no interest in promoting Dever, if Dever did not exhibit an interest in promoting the cause of the President. Dever's friends continued to pursue me more strongly in the days that followed. Finally Ed Flyan, on the Thursday night before election, reached Be by telephone and asked ne to see Dever, which I promised to do. I a14 so Friday evening and when Dever asked me to speak for him I told his, which was true, that I had made up my wind to take no part in the State election, I further told him that Henry Parkman, Jr., who was Walsh's opponent for the Senate and a personal friend of mine for whom I hold considerable respect, had ssked me to speak in his behalf. Parkman did 80 upon the ground that he W&B a hundred per cent. behind the Pree- ident's foreign policy and that Walsh's support of that same foreign policy was wholly negligible. Though I agreed with Parkman that be deserved support for his clear underwriting of the President's policy, I did not like this business of publicly becoming & partial political Regraded Unclassified 42 HM/JML/7-3-41 turncoat and thereby possibly doing some hurt to the President by taking B. position in behalf of the Republican candidate for Senator. I consequently told Parkman that I was not taking any part in State politics. I told Dever of this incident and then said to him that if I spoke for him, I would be morally obliged to speak in behalf of Parkman. Dever replied very rightly that he did not wish me to take that course and with that the interview was over. Dever was defeated in his race by a very narrow margin. A switch of some ten thousand votes would have put him in as Gove ernor. I have heard that he blamed his defeat on my refusal to support him which might have brought him quite a few of the 80⑉ called Liberal Democratic votes in this community. I have no doubt that this incident was called to the Senator' 5 attention and that it is a part of the reason for the bitterness of his attitude. I am sorry that these seemingly petty things should have come back to plague you. But let me say once more that I appre- ciate very much your confidence in no and the privilege of your friendship. Sincerely yours, John Hon. Henry Morgenthau, Jr. Treasury Department Washington, D.C. Regraded Unclassified 43 July 3, 1941 10:20 a.m. HMJr: Hello. Operator: Operator. HMJr: Go ahead. Operator: All right. Go ahead. HMJr: Hello. Dean Landis: Hello, Mr. Secretary. This is Jim Landis talking. HMJr: Yes, go ahead, Jim. L: What I just wanted to bother you about was this. You know, I had accepted this appointment from La Guardia. HMJr: Yes. L: And La Guardia told me that he would appoint a successor just as soon as the other thing was announced. HMJr: Yes. L: And what I wanted to ask you about W&B whether you saw any reason as to why I shouldn't go ahead with the La Guardia thing. HMJr: Why you should or should not? L: Why I should not go ahead with it. HMJr: Well, you don't have to be confirmed do you? L: No, no. No, the appointment 18 already made, you see. HMJr: Oh, I'd go ahead with it. Regraded Unclassified 1: Yeah. Well, I June vant so put Mim in A attontion where it 165 embarrass him At All, enJr: Well, then - I - - 1f - 8.8 long BE you raise that, I think you out to tell Fiorello. 3 Yes, of course. HMr: And then if he's satisfied, that's all right, but I mean this man, Walsh, juet has me under the Senate customs and rules where I can't even squirm, he's not me L: Sure, I understand. 9MJr: Re's not me nailed to the mast. L: Yeah. HMJr: But, if La Guardia, knowing the whole story, is satisfied and you don't go up to the Senate for confirmation, I mean, I should think that he'd want you. L: Yeah. Well, he was going to appoint 8. successor Just as soon 88 this other thing was out and I thought that MMJr: But that would be my advice. L: Yeah. HMJr: Tell him the story and if he's satisfied, why certainly I'd go ahead with it. L: Yeah. HMJr: Now, what else, Jim? L: Well, that was all. HMJr: That's all? L: That's all. Regraded Unclassified 45 - 3 - MJr: I'm still very very low, 1: Well, don't worry about it. You'll get a better man easily. HMJr: No, I - I - that's - if you don't mind, I disagree with you 101 percent. I don't know, I'm really - I mean - it's pretty bad - black mark on American political life when a man like Walsh can do a thing like that to you and me. L: Well, he's that kind of a person, I .... HMJr: I know. I know, but I haven't recovered and I won't for some time. Well, any other time remember I'm expecting you for lunch or supper when you come down. L: All right, thank you. very much. HMJr: Goodbye. L: Goodbye. Regraded Unclassified 46 July 3, 1941 10:50 a.m. HMJr: Hello. Operator: Mr. Welles. HMJr: Hello. Sumner Welles: Hello. HMJr: Hello, Sumner. W: Henry, I'm sorry to distürb you again. HMJr: You haven't disturbed me. W: Dean Acheson told me yesterday the information he'd received either from you or someone else when he was in your Department yesterday evening.. HMJr: Well, that was from me. W: From you? HMJr: About 8 - Far East? V: Yeah, that's right. HMJr: Yes. W: Now, I wanted to know very much if you could have your people check further on that today and see if we can get a little more detailed information. HMJr: Well, now, I spoke to the President last night about it - I thought it was important enough and he was intensely interested and he said, have you told Sumner and I said that I had by Acheson. W: Yeah. HMJr: Now, we are going to great lengths to go into the thing wherever their offices are. W: Well, that's fine. Regraded Unclassified 47 - 2 - HMJr: And we started last night. W: Grand. : HMJr I told Captain Kirk what we're doing. V: Yeah. HMJr: And - I mean we're really spreading ourselves on this thing. W: That's very helpful. HMJr: Now, if you'd like to know what I know, I - - we picked up in Seattle this, that during the last six weeks, this particular country has been sending their families back. W: Yes. HMJr: Just as rapidly 8.8 they can. W: Yeah. HMJr: And also for the last 30 days, that same city, same residents have been cashing in their life insurance policies. W: I see. HMJr: Now, I told them with that lead to check it in Los Angeles and San Francisco whether the same thing was happening. W: Yeah. HMJr: And we were last night into the offices of every one of these companies. W: I see. HMJr: All over the country and we're going to continue to do that every night. We're also watching the families and the managers. W: Yeah. Regraded Unclassified 48 - 3 - HMJr: So, I'm doing a very careful Job and.... W: Well, that's tremendously helpful. HMJr' And if anybody else does it, let me know because I don't want to get crossed up. W: If what? HMJr: If any other department - if you hear any other department 16 doing it - we're letting O.N.I. know what we're doing. W: Yes, yes. No, that's all that I know. HMJr: Yeah. W: The other part of the report was that orders have been given for no further ships to be within our ports. HMJr: Well, that - they were - that - the ships were to be back - out of the Atlantic by July 30 to return home. W: Out of the Atlantic. This did not apply to the Pacific, then? HMJr: No, the first statement - the first statement said they should be at home by July 30. W: I see. HMJr: That was - that was - that was this rumor. W: Yeah. HMJr: And I understand this morning that O.N.I. picked up exactly the same thing. ": I see. HMJr: And I brought into it - I think our information now - I think it's pretty good. Dem 49 - 4 - W: It does not, then - the final report on that, that you get does not apply to the Pacific ports, merely to the Atlantic. HMJr: Well, the report last night - I - they're coming in again at quarter of three. W: I see, HMJr: And if I get any more - the report said, ships to return to port by July 30. W: I see. HMJr; If that's particularly important, I'll ask them again. W: That's very important indeed. There was a report from one of our Consular officers this morning that one of their ships had left today one of their ports in order to transit to Panama Canal to go to South America, the east coast. HMJr: Yeah. W: Which - which seem to be out of line with that report HMJr: I Bee, V: And I'm very anxious, of course, to check on this as best we can. HMJr: If I might - are you getting - have you got this from anybody else. W: No, I've had it from no one at all except from yourself. HMJr: Well, I labeled it last night as "Water Front Gossip". W: Yes, BO Dean told me. HMJr: And I'm not yet saying that it's going beyond that. V: Yes. Regraded Unclassified 50 - 5 - mar: But I really extended ourselves on this to try to get beyond the Water Front Gossip. W: Fine. And you'll have further word this afternoon. HMJr: They're coming in at quarter of three and after they leave, I'll call you and we're going. W: Great. What time are you leaving for 8... HMJr: Between 3 and 4. between 3 and 4, why? W: I have to attend the meeting of the Inter-American Committee at 3 at the Pan American Union MMJr: Yeah. V: If I could get a call from you just before three HMJr: I'll do that. W: It'd be helpful. HMJr: I'll do that. W: Thank you.again, Henry. HMJr: Don't - let's leave it this way - don't leave your office without calling me. W: All right, I'll do that. I'll call you just before three. HMJr: Right. W: Thank you, Henry. Goodbye. Regraded Unclassified 51 July 3, 1941 11:00 a.m. RE AID TO BRITAIN (Conference held in Mr. Bell's Office) Present: Mr. Field Mr. Keynes W Mr. Archer- Mr. Boddis. Sir Frederick Phillips. Mr. Keyes Mr. Childs- Mr. Thompson- Mr. Brown' Mr. White Mr. Kades Mr. Cochran Bell: Harry, do you want to explain what the conference is about? I haven't been in on the last two. White: Well, it is possible that Mr. Childs may have some of the information that the Secretary asked him with respect to the over-all purchases and also some of the other material that he thought he might have for this time. Then there may be other things that they want to bring up. Childs: Shall I mention two things we do have? Unfortunately, I don't have the over-all material. It will take a long time. I was surprised myself to find it would, Regraded Unclassified - 2 - but they are in the course of compiling that. Mr. Boddis can speak for the Air Mission and Mr. Archer for the BPC. They are compiling it. We would like a little advice as to speci- fically what you would want here to be sure that what we are getting would be what you would like in answer to the Secretary's request. White: Well, it was my understanding, and you can check me up if it wasn't yours, that the Secretary wanted something comparable to what he had from Mr. Purvis several months ago which was the total British needs broken down by significant categories. (Mr. Brown entered the conference.) White: The portion of those needs which they were producing at home, the portion which they were buying in the United States, and the portion that they were buying in Canada or planned to buy in the United States and planned to buy in Canada. That was my understanding of that particular request. Phillips: What do you mean by needs? What do you mean by needs, exactly? You are talking about weapons? White: I think he had reference only to armaments. I thought he had reference only to armaments. Phillips: That was my feeling, but some of our people felt differently. Regraded Unclassified 53 - 3 - White: What was your impression, Merle? Cochran: He mentioned, I think, planes, tanks -- White: Yes, I think that was -- Bell: This is a little beyond the dollar require- ments. White: Yes. Bell: It is the over-all picture. White: Well, he wanted the total picture. Keynes: He wasn't really concerned with the dollar requirements. He wanted arms so that our estimate could be added to yours, and he could see the two together. That only makes sense in terms of arms. Cochran: It was your military effort. White: And I think that is what he got from Mr. Purvis, though I am not certain. Childs: Well, he asked for one other specific thing, a breakdown of what is coming from the U. S. under Lend-Lease and under cash, as I recall, 80 that that would have to be a -- Keynes: All commitments. Childs: Yes. Keynes: It wasn't all dollars, it was all commitments. He wanted three things. What we are producing at home, what we hope to get under Lease-Lend, and under our own commi tments. Then he was going to aggregate that information he would get from your sources about the Regraded Unclassified 54 - 4 - American effort and then he would have a picture of it. White: Yes. Now, see if I -- Bell: Tie that in, I take it, with the capacity of the two countries to produce, and whether or not we should expand. White: Yes. There were some of those problems, and I think that he was interested in them and there may have been some others. He didn't expand on it, so I don't know. But I am not certain from your description, Mr. Keynes, whether we are at one in our understanding of what he wanted. I think he also wanted the purchases of these arma- ments that you are making from Canada. Keynes: He did, yes, that is quite right. Childs: Yes, we have that. White: So that he would have a complete picture of it. Bell: Well, you are working on that, I take it, and that will take time? Phillips: What he is getting on that he is working on, but there was that little difficulty about dollars. I expect most of our figures on the number of tanks and planes and 80 forth - we should have to have some rough estimate. Childs: That is particularly true of anything coming under Lend-Lease, and that comes to the second thing, which was the point raised before; namely, all requisitions which we have put in today. Regraded Unclassified SS - 5 - You see, we are compiling that in each mission on & quantitative basis, because under Lend-Lease requisitions we have no dollars, 80 we would have no way of esti- mating values. As & matter of fact, we have got such things 85 spare parts for aircraft, but no indication of what the spare parts are but by quantities with reference to the allocation of funds under the Appropriation Bill; and then in other cases, there are just general quantities. White: There may be numerous questions, Mr. Childs, that would occur to him after seeing the first list. Childs: We will put in -- White: Not knowing specifically what he has in mind, I don't know whether your presentation would answer it, but if it doesn't, I take it that he could suggest where he would like supple- mentary information or where the particular information isn't essential. Childs: I took it that these were separate and dis- tinct requests, weren't they? We will just make them up then on the basis we are and see what they will do. White: That was my understanding, yes. Childs: The next thing we had was the matter of - did you have any specific things? I report that unfortunately - we don't have any Dominion sheets in here yet, do we? Keyes: No. Childs: The Dominions are struggling with their inadequate forces to get these things up. Regraded Unclassified 56 - 6 - I talked with two of them again yesterday and today, and they are getting them done but they aren't in, and Thursday we will have the stuff. They are just at the point of putting them in, you see. Australia is the furthest advanced on it, because they had & bigger start. White: The only two items that we have to report are one, the nature of the progress dealing with the question of handling the numerous small purchases from private individuals to others. We had a meeting just before we came here of Treasury men and the Procurement, and though they don't like to commit themselves at all, they think there may be some way of working it out. There was some doubt in their mind as to whether that could be done as a review of payments already made, and they raise the question of the possibility of being in- formed of an order at the same time that it was placed. In other words, they - 8. duplicate order, one going to the Procurement, one going to the concern as customary. And that while the concern was filling the order, they would examine the order, see whether it met with their criteria, which they would normally apply, and they may then be in a position to pay for it before the shipment without in any way holding up the shipment. That was merely one suggestion which they had, and it is not definitive at all. They are merely exploring the possibilities and they promised to be ready early next week. Regraded Unclassified 57 - 7 - Bell: They thought there was a possibility of doing that? White: They thought there might be a possibility, but they weren't sure. Bell: That is taking a lot of Government procedure, if they can be able to do that. White: They may stick it right back. Childs: This small purchase memorandum we put in before. White: The large problem of the large amounts, no. This was the problem merely of the hundred and fifty million dollars -- Childs: I see. White: Of annual purchases. The other problem of the larger amounts is something that is going forward with Mr. - with General Burns. The second point which we have a tentative conclusion on relates to your question as to whether or not the British Government could be relieved of the necessity of paying taxes on contracts to the States. The lawyers have made some study of that, and they will explain what conclusions they have come to. Bell: You have studied it, Chuck? Kades: Yes, I have. In general, any tax which is imposed upon the Federal Government or upon the property of the Federal Government, we claim immunity for. But we do not claim an immunity for any tax imposed upon sales of products to us or upon us or upon any 58 - 8 - other type of excise tax. Consequently, it doesn't seem to me that the State authorities would be willing to - and I doubt if they would have the authority under their statutes - to immunize the British vernment from a tax for which we, as the natural sovereign, do not claim immunity. There are no - there are statutory exemptions in some of the state statutes relating to sales to the United States in a few cases, but as far as I know there are no exemptions in so far as the - as any foreign Government is concerned or specifically the British Government. Bell: Which type of tax is involved here? Kades: There are three types of taxes. Bell: Are they all involved? Kades: Well, the personal property tax, which we would normally contest, that is, the Federal Government would. Sales taxes, which we would not contest but which we do pay. Bell: As part of the purchase price? Kades: As part of the purchase price, and where the contractor succeeds in passing it on to us, of course, and use taxes which we also pay when the tax is imposed upon the contractor for the use of materials in which he has the option of absorbing or passing on, if he can make a contract whereby we assume the tax. If he can, that is no concern of the state. That doesn't oust the state from jurisdiction, because we have made 8 contract whereby we are willing to reimburse the contractor. Regraded Unclassified 59 - 9 - Now, therefore, it seems to me that the range is limited to personal property taxes. Now, most of the personal property taxes as I understand it are taxes upon jigs, tools, dies, and items of equipment that are in a plane factory awaiting in- clusion in the plane or in the tank or the ultimate article. Bell: Is that material the property of the British Government? Kades: That material is the property of the British Government. Now, however, all that the British Government has in so far as the jigs, tools, and dies, pattern and that type of thing are concerned, is the legal title. The beneficial interest and the beneficial use of that is in the contractor. Therefore, if the Government - if the British Government litigates the personal property tax in California, for example, and succeeds in establishing as a sovereign the immunity of that personal property from taxation be- cause the title is vested in the British Government, it would be 8. comparatively simple matter for the California Legislature to amend the statute to impose the tax upon the owner or the beneficial user, and that is probably what they would do. Consequently, I think that the only practical solution we - we can have 8 lot of litigation and try and draw up some fine spun theories that might be successful, although I doubt it very much - the only practical solution is a tax convention which would be binding upon the states and which would have some Regraded Unclassified 60 - 10 - type of reciprocal character. Now, as to whether or not that is a practical matter from the standpoint of the British Government, I don't know; but I mean from our standpoint it doesn't seem to me that anything that we can do is going to deter the states from the imposition of these taxes because they - the representations have already been made by the State Department that the taxes are a violation of international accomodation and have been rejected by the the state administrative officers and state legislatures, so that the only recourse is in the courts, and that is going to take a long time with dubious possible results. Childs: We thought of this tax convention thing at the time, and as a matter of fact dis- cussed it amongst ourselves and with, I believe, someone from the State Department, I am not sure. The only question about that W&S the possible retroactive effect of it, 8.8 to existing - where the tax is already accrued. It would cost 8. lot of money. But I understood that it didn't have very much chance at the moment of there being something very similar, be- cause something had been attempted like this recently. But certainly it would be & superb solution. Keynes: How about that particular tax as compared with all taxes? Childs: I can't say about that particular tax, but the total is valued at ten to thirty million dollars. Boddis: Five million dollars. Regraded Unclassified 61 - 11 - Keynes: For the single tax? Boddis: Yes. Kades: The personal property tax, sir? Boddis: Yes. Childs: I would like to take issue on one point about the sales tax. I think we could - there is about ten millions estimated sales taxes which we think are entirely improper because of this peculiar theory of the State of California Tax Administration. In effect we have taken title in the state and we have taken possession and 30 on on the old Japanese oil tanker case, and we do think that is worth contesting. Now, whether the personal property tax could be levied is another question, be- cause it could be contested. On the use tax, of course we have less defense. But still there is an area in which some hope of success, if the contest is made, exists, and we would like to do something about it. Now, of course, if you don't think you could help us yourselves by any particular move you could make, we feel that we are about at the point where we ought to do something ourselves. Kades: Well, as I understand it the State Depart- ment has done all it thinks it can do. Childs: It has been going along fine. Kades: The only other department - we are rather 8 liaison in this. The only other depart- ment that could actually do anything would Regraded Unclassified 62 - 12 - be the Department of Justice when it would intervene in litigation, and we could, of course, take that up with the Department of Justice although I assume that the State Department must have done that. Childs: I don't know. Kades: I should think it would have. As I say, I don't know either. We can take this matter up with the Department of Justice and secure their reaction to it, but in the past we have worked pretty closely on the question of these state sales taxes and their position is - as a matter of fact, it was an opinion of the Attorney General within less than & month - reiterating the position that the Federal Government should not contest state sales taxes imposed upon 8. contractor on sales to the Federal Govern- ment. Childs: Oh yes. Kades: Because, of course, that -- Childs: Of course, we have -- Kades: It is a question of delicate balance of revenue. The states secure their revenue in that fashion, and these taxes are, of course, non-discriminatory. If there is any tax imposed on sales to the British Government or the United States, I am not speaking of that type of tax, I wouldn't hesitate to contest that; but these are general non-discriminatory taxes on private individuals which are passed on to the Federal Government or the British Government simply by reason of the type of contract that is entered into by that Government. Regraded Unclassified - 13 - Bell: They are passed on to the ultimate pur- chaser. Kades: That is right. Bell: They are passed on to the final purchaser, whoever he may be. Kades: There are taxes that are imposed upon the purchaser. That is not the type of tax I am talking about, because that is analogous to the property tax which we feel the Govern- ment is immune from. White: Well, you spoke of a convention as being one possible way out of the position on taxes. Would & convention, even if consumma- ted, apply retroactively? Kades: Probably not. But there are a good many - well, as far as I know, the - as far as personal property taxes are concerned, that five million dollar estimate doesn't cover property taxes already asserted, does it? Boddis: No. Kades: Because I have only heard of a hundred and sixty-two thousand out in the Lockheed plant and some other several hundred thousand dol- lars in the Douglas plant. Boddis: No, that is the total figure. Childs: Of course, a convention even if not retro- active would have definite value. Kades: And it would indicate a national Congressional policy, too. Bell: Would it have to be ratified by each state in order to be effective? Regraded Unclassified 64 - 14 - Kades: No, it would require a two thirds vote of the Senate. White: well, is that something that you would want to explore and if so, what channels would be the appropriate -- Kades: Well, the Bureau of Internal Revenue for years has been anxious to enter into a tax convention on various points with the British. I don't think it need be a general convention. It could be limited to substantially this type of situation. As far as the Bureau is concerned, I know it would be willing to cooperate. I think it is a matter probably to be taken up with the State Department. Bell: You mean & convention between the two Govern- ments, not & convention of the states. Kades: Oh no, I mean a convention between Great Britain and the United States, which would be binding by the Constitution upon the states. Phillips: What would be the scope of this convention? White: I imagine you could delimit the scope before you began. Phillips: My theory has been that in cases where the Federal Government itself would settle the value. But that still leaves our two big cases. One is the personal property tax, and the other is this peculiar little category I can not understand. As I understand, the effect of it is that if we take delivery Regraded Unclassified 65 - 15 - of material in California, we pay the tax whereas if we handed over to a common carrier to take out of California, there would be no tax. Childs: That is right, sir. White: Is it possible for you to arrange that latter arrangement? Childs: Mr. Boddis has spent many sleepless nights because even if the Army sends out a pilot to take possession of a plane out there, they say that that is properly taxable in California because we have through the Army pilot acquired possession, a right to control, which is taxable. That is the position they take. White: Well, is that something which you could be of any assistance on? Kades: Well, that particular - Mr. Roseveare gave me a number of memoranda, copies of which he had written from time to time. Childs: You see, they have taken & very stiff position with the Japanese. If they help us they help the Japanese, too. Bell: You mean with a general ruling? Childs: Yes. Bell: Is there any way you could take delivery of these planes across the state border? Kades: everybody approached not only by the State Department on this point, but by your counsel and by counsel for aircraft Regraded Unclassified - 16 - companies out there, and according to the tenor of memoranda, copies of which Mr. Roseveare gave me yesterday - you sent them to me. Childs: That is right. Mades: I gathered that he wasn't very hopeful about convincing the California authorities on that point, that it was a question of liti- gation. Childs: That is right. Kades: And litigation is going to take a long time, especially as it is starting now when the courts are about to recess for the summer. Ultimately the British may establish their position successfully in the courts, but I just don't feel that that is a practical solution. White: Well, do you feel that the Treasury has any special position by virtue of its prestige or special position which could help to convince California of the - the State of California that they may be unreasonable in this? Kades: No. White: Then there is nothing further that you could suggest that the Treasury could do to help them in this problem? Kades: Except to take the matter up with the Department of Justice in the event that litigation starts for the filing of 8 brief by the Government. Childs: Of course, there is a question about whether we want to go out and put ourselves before Regraded Unclassified 67 - 17 - the public as trying to evade American taxes when the Lend-Lease and such things are helping us. Phillips: Well, we have got to explore this idea of 8 convention, haven't we? White: That may present interesting possibilities because you can - I understand you can delimit the - you can arrange the terms of reference, consider those items which you want and Mr. Kades says they have been rather eager to have some such arrangement for 8. long time. Kades: We were - may I just - to illustrate that point, we were about to enter into & con- vention with Great Britain in connection with airplane companies - I mean air trans- portation companies - when the war broke out, under which British corporations flying planes to the United States would be exempt from all income taxes, Federal and State, and American corporations flying planes to Great Britain would be exempt from all British income taxes. This - and the convention was limited to that particular subject matter. On the other hand, we have discussed from time to time general tax convention with Great Britain over a period of many years, which seems to be impossible to achieve, but I think that some more limited tax convention might solve this problem. Phillips: Surely there must be a convention on shipping, isn't there? Kades: By reciprocal legislation on shipping, sir. Cochran: That would take care of that California si tuation, wouldn't it? Regraded Unclassified 18 - Tades: A convention would, yes. Childre In the future. Of course, it would not be retroactive. I would just like to suggest one, 8.8 to the future, the convention is the best thing. If that could be examined on both sides. Two, as to the past, you feel that there is no affirmative action you could take outside the possible approach to the Department of Justice with respect to a possible contest on personal property taxes only and sales taxes too, for that matter, because that is a very large item in California. As to the past, I would like to be able to frame some sort of a specific action with which we could join because we have certain things such as a large amount of taxes due on July 21. We have got EL time element there, and we would like to take some steps if there are any. of course, we don't want to take any steps without your approval and the approval of the State Department, since they have been in it, and as I say, the extent to which our people would be willing to go in view of the publicity and everything, that is another question too, but I would like to be able to examine that, you see. Kades: Well, I can only speak from the standpoint of the Legal Division, but I wouldn't see any objection to your taking any steps you care to take from the standpoint of our - from that standpoint. I mean, there may be policy considerations but there isn't any way in which our position would be embarrassed, Dur position vis-a-vis the States, by any action you might take. I will be glad to discuss this matter with the Department of Justice Tex Division. Regraded Unclassified G9 - 19 - Childs: With a view to some specific action vis-a-vis the Tax Divisions and possibly courts later on Kades: It would be with relation to the courts. Childat Yes. Yedes: But all sources of approach to the State of California tax authorities have already been exhausted, as I understand it, by the State Department. They have written letters and tried to get legislation and have done everything that is possible. Childs: I should say, rather, they have been opened rather than exhausted, because we could still go out there and with the representations of Secretary Hull, say we would - we now want to push this thing specifically. We are coming out there because we are personally interested. We are coming out as personal representatives to see what we can do with this representation of the State Department in our pocket, you see, We have never done that yet. Bellz Who has been the contact with the State of California? Childs: Mr. Hackworth. Dell; Somebody in the State Department and not a representative of the British Government? Childs: on no. To my knowledge, we haven't been in direct touch with them, have we? Roddisi No. Bell: Chuck, obviously there isn't anything that can be done between now and the twenty-first Regraded Unclassified 70 - 20 - of July, if that is when a large amount of taxes are due, that could be effective. Would it be possible for them to pay the taxes under protest? Kades: Oh yes. Well, 88 a matter of fact, what happens is that willy-nilly the contractor pays the taxes and then bills the British Government. Childs: Our contracts provide that he will pay under protest. Bell: They protect their rights and then they could do whatever they wanted to after that. It might take months to work out. Kades: That is right. Childs: Then, could we have any sort of a decision here as to whether it would be policy wise, proper to go ahead with any specific action of this nature? White: I don't know -- Bell: I see no objection on our part for them to contact the tax authorities of the State of California or, for that matter, taking any such legal steps as they might want to take. You have got the question to decide, it seems to me, for yourselves, as to whether you want publicity in America of bringing action against some state for taxes since you are under the Lend-Lease. That, I think, you will have to decide. Childs: The stakes are high. Bell: It wouldn't be worth very much on that. Regraded Unclassified 71 - 21 - Childs: But you would have no objection from your side? Bell: I can't see any objection from our stand- point, can you? Kades: No, not at all. Childs: Well, the stakes are high. Kades: The French - not in connection with the present war, but twice the French have contested state taxes. One in Kentucky on a personal property tax levied upon tobacco which was stored by the French Republic in Kentucky, and the Supreme Court of Kentucky upheld the French Government and abated the tax; and they also contested real estate tax in New York City where the court held the other way, but neither of those decisions would be controlling, of course, upon the California courts and they might very well establish the point that as a matter of international law, this tax is invalid. White: That may distinguish this kind of an action from other types and remove it possibly somewhat from the realm of trying to avoid paying taxes, even though it is a legal avoidance. In other words, what the issue might be is a matter of international law or the sanctity of some principle which you are fighting for rather than the ten million dollars. There may be some possibilities of that character which you might want to explore. Bell: But these are on commitments that you have already entered into. Regraded Unclassified 72 - 22 - Childs: That is right, we and the French. Kades: Of course, it seems to me that the state authorities are unreasonable in some respects. As I understand it, in the case of Lockheed there were some propellers that the British purchased from the Hamilton Propeller Company's Division of United Aircraft but were in the Lockheed plant on the date on which the assessment was made, and if they hadn't been there on that particular day, they wouldn't have been assessed; but I suppose the assessing official felt that he was merely a minister- ial officer and he saw it and said, "Who does it belong to, the British Air Ministry," and consequently included it in his return. But the administrative discretion should have indicated to him that that might have been included. White: I am wondering whether in pursuance of the thought Vr. Childs had, whether there might be any use - whether it might be appropriate if the appropriate authorities in California were approached, possibly by the Treasury, with a view to relieving them of that tax burden on the grounds of the essential problem of building up their foreign exchange, et cetera. That is, is there any use in introducing that consideration with them which would put it on a somewhat different basis than probably what the State Department or your- selves could put it on? Something of that character may have been in your mind. Is there any -- Childs: It would be most interesting. Regraded Unclassified 73 - 23 - Boddis: There is one of particular difficulty with which that might be done, I think, and that is in connection with the flying of air- planes away from California. There is 8 question as to whether we must take title until these airplanes have been flown over the border. Now, the Army have set up 8 ferrying corps and they are going to take over the ferrying work. This business has been set up nicely and works smoothly, but not unless we take title to the airplanes in California before the Army starts flying, so that merely because the Army are doing something to assist us, the State of California suddenly gets in the case of a Lockheed machine three thousand dollars that they didn't get before. Brown: Well, Mr. Boddis, we are trying to work out some scheme whereby we will get 8. directive or something under Lend-Lease machinery which would take care of that question of title and see if we couldn't get the title - have something from you transferring the title to the Army. Boddis: So much the better, but we have been trying for the last month. Bell: We did have an arrangement, didn't we, where the title passed as it went across the line? Couldn't that be worked out so that the title under the Lend-Lease in the first instance, as it went across the state line, would pass to the British? White: Except as I gather these planes are not under Lend-Lease. Bell: They said they were trying to work out some arrangement. Regraded Unclassified 74 - 24 - Brown: We have been trying to see if we couldn't work out something whereby the British could direct the company to deliver title and possession to the United States Govern- ment representative and whereby we could secure a directive for the Army to take title and possession of the Lockheeds from the company so that we could get the title right into the United States immediately after it came from the plant; and when the plane got up to Montreal, which I believe is the place it goes to -- White: I remember Mr. Cox spoke about it. Brown: We would turn it over to the British. Bell: That would have possibilities, wouldn't it? Regraded Unclassified 75 - 25 - Kades: Yes, something along that line. White: Do you think that it might be explored & little more between themselves, Dan, as to these various suggestions of possible assistance, et cetera? Bell: Yes, with the Lend-Lease organization, because that seems to me to have some promise. Brown: We think S0. Of course the company counsel is very cautious, inherently. Bell: It is terrible when the United States Govern- ment has to work out arrangements where it beats the states out of taxes. (Laughter) White: Or I think probably the United States Govern- ment has a vested interest in seeing that appropriate principles of international law are adhered to in principle as well as in-- Bell: Like stealing candy from children. White: Talking about international law, "God Save America.' Kades: I think that in so far as existing cases are concerned, it would be advisable for us to discuss the matter with the Department of Justice to determine whether or not they would be willing to intervene and for discussions with Lend-Lease to continue to determine whether or not some devise may be worked out in so far as the sales tax is concerned, the title passes outside of the State of California, but on the problem as a whole and on the - as to future taxes and as to taxes that are being asserted, as I under- stand it, in Michigan, Connecticut, Ohio, Illinois, as well as California, I think that some way of approach should be made Regraded Unclassified 76 - 26 - to the State Department about the desirability of a tax convention. White: Well, I take it that the initiative for that convention might well come from you (Phillips) if you feel like it. Phillips: We should like to discuss it with them. White: And with respect to the other matter, will you (Kades) take it up with Childs and Mr. Brown? Kades: Yes. White: Will you make it your business? Kades: Yes. Bell: And you will also discuss with the Department of Justice such possibilities? Kades: Yes. I just want to be clear that the particu- lar case you have in mind to go to bat on immediately in California is the personal property tax case, is that it? Childs: And sales. Kades: Do you have a sales tax case also? Childs: We have got lots of sales tax cases. We will try them both, if you agree that we have a case that is worth talking about. Bell: All right? White: That is all that we have, Dan. Childs: Well, how about the small purchases memorandum that you wanted to discuss? - 27 - Thompson: All small purchases? Childs: Yes, that one there. Phillips: Well, we put in that memorandum, you remember, as to the commitments on the basis that an urgent case that fell below five thousand dollars as in the case of the British Air Commission or fifty thousand dollars 8. week should be placed under dollars. Well, now, do I understand that the first part of that, the British Air Commission part, covers the points in the memorandum? White: Well, we are going to circulate the memo- randa. You will probably get it. The dis- cussion of that point will be ready at the next Secretary's meeting. Phillips: Monday afternoon? White: Yes, at the next meeting. The men have not had an opportunity to examine that. Phillips: Well, there is a-- Bell: Is that the next meeting, Monday afternoon? White: Tuesday, I thought. Phillips: There was a second part of that memorandum. You remember the memorandum dealt with the Air Commission and the other, and I think we would like to make some slight amend- ments in that second part. White: If you want to submit it, we will send it around. Bell: What else? Regraded Unclassified 78 - 28 - Phillips: I have got one urgent case this morning perhaps I ought to mention here. It relates to the Virgin Islands which I understand are the United States' territory. White: If they are virgin, they are our territory. (Laughter) Keynes: By looking at the stamps, I should think they were English. Phillips: Weren't they Danish at one time? Bell: Yes. But they are American territory now. Phillips: This British Consul went down to the dock and planned a shipment for Liverpool; and, being of an inquiring disposition, he dis- covered there was some empty space on that ship, whereupon he went and bought some local sugar and filled up this empty space, and he spent eighteen thousand dollars on buying sugar in the Virgin Islands to send to the United Kingdom, and the British Food Mission is trying to put that under Lease-Lend and want a ruling. Can this be put up under Lease-Lend? White: Let me see if I-- Brown: It is already paid for? Phillips: It isn't paid for yet. It can be got under Lease-Lend. The only point is whether, under those circumstances, you think we ought to do it. Brown: When was this done? Phillips: A day or two ago, I think. Childs: Is it on its way? Regraded Unclassified 79 - 29 - Phillips: Yes. Eighteen thousand dollars. If it had been under five thousand, of course we would have put it under this memorandum. White: Yes. Mr. Brown? Brown: If you want to, I think that is a question of whether you want to use the dollars or not. Mhite: Well, I say that is the question that he is putting to your organization, I take it. Brown: I didn't understand it that that was our responsibility. Whether you wanted to use your dollars or not - our responsibility is to see if we can save you dollars when you want to do it. Phillips: Well, we will say offhand now that We won't have this under Lease-Lend. White: The question is whether they could put this under Lend-Lease or whether they have to use dollars. Cochran: But you prefer to conserve your dollars. Phillips: We want it under Lease-Lend; but, if you think in the circumstances I described we oughtn't to do it, I wouldn't. Keynes: He is a little shy and wants some encourage- ment. White: Do you understand-- Bell: You don't care about the circumstances, par- ticularly, do you Brown? Brown: Not at all. Regraded Unclassified 80 - 30 - Bell: They will have to put in B. requisition and state the circumstances and what happened and request that it be brought under Lend- Lease. Brown: That might - when does your ship want to go? Phillips: I am not-- Brown: When does the supplier want payment? It might involve a delay which would hinder you considerably, but I see no objection. Phillips: All right, I will tell them to put the requi- sition in and fully explain the circumstances. Brown: Procurement might not agree with the price. Phillips: The Ministry of Agriculture? White: You might not agree with the price? Brown: The chances are Procurement might not. White: The chances are they bought the sugar at the right price. Bell: Well, let's put it in, and then get a decision on it. What else? White: Well, Dan, what we have been doing, if there is time, is to go over these requisitions. Now, there are some decisions that have been made, I take it, on certain ones already, and we will quickly indicate whether they have been approved or disapproved, whether they have been approved for Lend-Lease or disapproved. (To the Reporter) Get these figures, because 81 - 31 - I will have to copy them. Bell: The first one is recruitment of technicians for Civilian Training Corps. One million five hundred thousand and the approximate maximum, twenty-three million. They have got that on an annual basis. I take it that is what that means. Is there any explanation that goes with this? Cochran: It is the next page. Brown: Our office feels that that could not be Lend- Leased because we can't see any defense article or any defense information to which the expenditure would be related. Inasmuch as it involves entirely recruiting of people to go to England and to deal with English articles. White: This item came up before, didn't it, some- thing equivalent to it, and wasn't there some suggestion on the part of Mr. Cox? Brown: That it might possibly be worked out in con- nection with some radio locator or something which we were either building or procuring for the British under Lend-Lease funds and if that were so we might be able to work out a good deal of this, but apparently that is not the case, and we can't see how we can relate it to any defense article or informa- tion. White: In other words, you have already examined it but with this particular problem in mind and you don't find any relationship. Keynes: If these men were being trained to use some instrument which would be useful to you here- after when they had their training, then it would be possible, wouldn't it? Regraded Unclassified 82 - 32 - Brown: No, sir, let us assume that these men would operate radio locators which were being bought here in this country for you with Lend-Lease funds. We felt that then we could take in the additional expense of train- ing and maintaining the operators as being an incidental to the procurement of the defense article or being considered to be 8 disclosure of defense information to you, but-- Childs: You can't give information except with a Lend-Lease article supplied under the act, 80 unless the article is supplied under the act, you can't tie it up with this. Bell: Well, you can't consider this as part of our training program. Keynes: I was thinking of something like that. Put it not under Lend-Lease, but under your Army program. This is the cost of training the American civilian in a very important new technical device. Bell: For national defense. Brown: Well, if the Army wants to use some of its appropriations for that, that is - my only ruling is that we can't use the Lend-Lease Appropriation to do that. White: Well, supposing that the suggestion which has been raised here, in pursuing that, that the Army might regard this as part of its own potential trainees and would wish to pay out of their funds - would that in any way involve the Lend-Lease? Brown: No, sir. White: Then that is a problem to be taken up directly Regraded Unclassified 83 - 33 - with the Army. Brown: Yes. White: What is the channel through which that might be done? Do you have any regular channel or-- Keynes: Mr. Boddis has a criticism on it. He says the training ought to be technical and that these people are already experts. Brown: The "Civilian Technical Corps" is 8. misprint in there. White: That is "Civilian Technical Corps" instead of "Training Corps." Bell: They are already trained. Now, aren't they going abroad? White: And getting more training. Phillips: They are experts who are going to be put on to a special job of handling 8 particular new machine, and it will take them two months to get used to handling that machine. Bell: Is this expense training them in this country? Boddis: They are being trained in England. Bell: I see. Childs: This is really an expense of getting them and getting them over there. Cochran: These are American citizens being taken over there. White: Then the only way in which the Army might Regraded Unclassified - 34 - regard that as falling within the purview of its expenditures is that they might say that these men are going over there and they are going to get 8. lot more experience under actual war conditions, and that will be useful to us in the future if they survive. Keynes: I think SO, White: Well, that might be worth exploring, in any case. What would be the appropriate liason? Do you have one or do you want Treasury to attempt it? Boddis: It would be very useful if you would, Dr. White. White: Supposing we raise that question with the Secretary, then? Keynes: The matter goes to the Secretary on Tuesday, doesn't it? White: Yes. Keynes: The major matters of policy. White: Is the twenty-three million dollars involved? Cochran: That is the biggest item on the sheet. Phillips: If they get thirty thousand men, that is the estimated cost in dollars. Keynes: Is this the families' allowances, including that? Phillips: Yes. White: I take it if the Army felt it was a necessary part of the training, the entire expense would be one which they-- Regraded Unclassified - 35 - Brown: It is the expense of recruiting them export- ing them to Canada, the expense of the dollar payments they would be permitted to send their families in this country. Keynes: It is only eight hundred dollars each for thirty thousand. Bell: Supposing you had a - you are going up for another Lend-Lease Appropriation. Would its language be different than the one we now have so that this thing could be done? Brown: The difficulty here, Mr. Bell, is with the language of the Act itself. Bell: The basic law? Brown: Which differs from the appropriation bill. Bell: But you can do & lot in-- Drown: Oh, yes. Bell: Getting around the basic language by writing the appropriation language. I should think this would be just as important as furnishing a machine gun. White: It will have the advantage, at least, of being of use to us in the future. Bell: Yes. Well, the answer is, from Lend-Lease quarters, "No," for the moment. White: Then it is disapproved for Lend-Lease, but will be taken up with the Secretary with a view to seeing whether he would wish to approach the Army. Childs: It is out of this in any event. Regraded Unclassified 86 - 36 - Bell: Thirty mechanics to assemble aircraft at Takoradi. Brown: That is O.K. from the point of view of the Lend-Lease. Bell: And you pick out the little ones, don't you? This is very small. White: That is item thirty-four, approved. Bell: Yes. Twenty DC-3 aircraft, annual cost, eleven million three hundred fifty. Brown: That one involves certain policy questions as well as the Lend-Lease questions. Mr. Cox's feeling about that is that the best thing to do was to put in a requisition for the whole amount. There is a very large part of it that we are quite sure can probably be Lend-Leased, and we have some thoughts as to how we should do the whole thing, but we haven't been able to crystallize that yet. Bell: The answer is then, it has tentative approval and a requisition should be put in. White: Well, wouldn't you want to then handle that merely as approved for requisition, except that you are suggesting that the requisition that is submitted be increased by the total expenses involved? Brown: No, I was suggesting that a requisition be put in for the full amount, but I just wanted to tell Sir Frederick that we weren't entirely sure yet that we could take care of the whole amount. Phillips: You did think you could take care of a large Regraded Unclassified 82 - 37 - part of it? Brown: Oh, yes. Phillips: Twenty aircraft is a tiny part of the cost. Brown: For example, the la, lb, 2a, 2b, 2d, all of those we could certainly take care of, and we think we have found a way in which we can take care of a lot. Bell: Good. White: Supposing we just put down "approved" here, because that is merely approved for submis- sion. Bell: Aren't they all approved that way? White: No, they don't submit-- Bell: No, I mean when you say, "Approved," aren't they all submitted in & requisition? White: That is right. Bell: Repairs to a Hudson "V" aircraft, thirty-six thousand dollars. White: Number thirty-six. Brown: That is O.K. Bell: Approved. White: Thirty-seven? Bell: Modifications to Lockheed aircraft, twenty- six thousand. Brown: I take it that is a recent-- Regraded Unclassified 88 - 38 - Keyes: Mr. Thompson put this up. We are not sure that Lend-Lease can meet our requirements. Thompson: On grounds of urgency. Brown: Legally it would be perfectly all right for Lend-Lease. White: Have they made their decision yet with respect to the urgency of it? Phillips: Yes. White: And your decision is to pay dollars? Bell: It is approved, but they won't submit it, is that right? Thompson: Then we shall have to decide whether the time limit of the urgency-- White: And that decision you haven't made yet? Thompson: Yes, until we have heard from the aircraft people. White: Lease-Lend? Thompson: Yes. White: Approved. Bell: Machining of Bristol crank-shafts, sixteen thousand. Interest, sixty-six dollars fifty cents. Keyes: That one, I believe, you threw out, Mr. Brown. Brown: Well, we felt considerable doubt about that. It is a question of finally fixing the price of a pre-existing contract. It is a very Regraded Unclassified 89 - 39 - small amount, and since there is reasonable haste about it, we think-- Phillips: It is all capital, isn't it? Keyes: No, it is machinery. Boddis: It would be 8. very difficult case to handle under Lease-Lend. Brown: We have some doubt as to its legality. If you want us to, we could probably work it, but we prefer to have you use dollars for it. Bell: You will look at it, if they will submit the requisition-- Brown: We think it - it is practically a very dif- ficult one, and it is legally rather doubtful. Childs: Shall we submit a requisition on this? Thompson: Mr. Boddis thinks it is so messy that we ought to spend dollars. Bell: It doesn't involve a lot of money. Brown: We will say dollars. White: I think maybe it would save them a little trouble on some of these small ones, and we can be a little more urgent in our requests that they go to more trouble on some of the larger ones. White: Thirty-nine-- Bell: Flight testing of Baltimore aircraft. No amount. Brown: Well, it is a certain amount per plane. It would depend entirely on the number of hours Regraded Unclassified 90 - 40 - that the testing took, I gather, but that is all right. Bell: You can pay for that? Brown: Yes. Bell: O.K. Brown: There is no contract yet, is there? Keyes: On that one, Mr. Boddis, I think there is an awful lot of urgency. Bell: Approved, Harry? Seven hundred thousand fuses, number two thirty-one-- White: Number forty. Bell: One million three hundred thirty-two thousand. Initial payment, thirty-six. Brown: That is a case where the contract was entered into before March 11, but the contractor has fallen down very badly and is completely in default and the British wanted to make a contract with somebody else to do the same job. We don't feel that that would be a - that would be a new contract with a new con- tractor, and we don't feel that would be running counter to Mr. Smith's testimony because, although it amounts to taking over the British contracts, it is only because the other fellow fell down on the job. Bell: That is relief under the three hundred mil- lion. White: There would be more defaults and more relief? Regraded Unclassified 91 - 41 - Field: In that memorandum, submitted for decision whether BPC should place the contract, whether funds would be made available under Lease-Lend. With that decided upon, further it is wondered whether the Lease-Lend would be at the higher or lower prices and whether pending issue of the Lend-Lease contracts the BPC can instruct the contractor to begin work. Brown: That Lend-Lease machinery will involve some delay. Naturally, it would have to in 8. number of cases undertaken with the contractor. If Lend-Lease machinery results in 8. lower price, he will make up the difference. Childs: That is the case with all contracts We had to take over. You are proposing simply to guarantee them against loss if they will get on the ball in anticipation of U. S. contracts. Field: Yes. It has certain possibilities. We would rather the second contractor would take over. Thompson: The higher price arises from the fact that he will be taking over slightly higher priced sub-contracts instead of placing new sub- contracts at a lower price. That higher price would represent speed. Field: Yes. Childs: Then all you are questioning is the difference between the U. S. price and our price. That is all we lose. Field: Tell the contractor to go ahead and take over what he can and guarantee to him we would make good to him anything that the Lease-Lend contract can't reimburse him for. Bell: How would you look on that? Regraded Unclassified 92 - 42 - Brown: There would be no objection from our end. Field: Then he can get on with the job. Bell: In other words, the British Government might have to pay out twenty-nine thousand dollars under that arrangement? Field: Yes. That is the difference between the higher and lower prices. Bell: At the maximum? Field: Yes. Bell: All right. White: Forty-one. Bell: Boxes for ammunition and labor cost of packing, thirty-six hundred dollars. Brown: That is extremely urgent in order to get a ship. White: I didn't know we were producing that much. Bell: Thirty-six hundred and twenty-eight dollars. White: We are doing well. Phillips: It is urgent and-- Bell: Comes under your five thousand limit. Thompson: It is represented as being urgent. Bell: It is all right for Lend-Lease, if you want to take the time. Childs: Is that clear, that it is definitely urgent? Regraded Unclassified 93 - 43 - Cochran: Well, there is a note here. Thompson: It is represented to us as being urgent, and therefore will pass for dollars. Childs: Where do we get that, the War Department? Maybe we had better put down dollars. Bell: Stationery, printed forms, et cetera, already ordered, it says. The balance - oh, no, you have ordered five hundred and sixty dollars, and the balance due is fourteen forty. That is another small one. Thompson: That was in the case of a ship which was leav- ing. Keynes: Dollars. Bell: Crude sulphur, twenty-two hundred and sixty- six dollars. Thompson: That is shifting the crude sulphur from an Italian ship. It is not the crude sulphur itself. Bell: Oh, that is just handling between ships? Brown: Dollars. Bell: Dollars? Brown: Yes. Bell: No more? White: Yes. Childs: Here are two on the next page. Bell: Covered copper wire, thirty-two hundred and fifty dollars. 94 - 44 - White: Number forty-four. Thompson: That is represented as most urgent. Bell: Dollars then, is it? Thompson: Yes. Bell: O.K. Small cutting tools, twelve hundred and sixty dollars. Thompson: All those are urgent. Bell: Urgent? Thompson: Yes. Bell: These are all right, I take it, Brown, for Lend-Lease, if they want to-- Brown: Yes. Bell: Go through the machinery. Childs: This is dollars here. Bell: Yes. Phillips: What is the last one? Bell: Three hundred forty-five small camp stoves and forty-five generators for those stoves, nine hundred ninety-two dollars. Thompson: It is the first part of that that is urgent, nine hundred ninety-one, isn't it, or nine hundred ninety-two? Bell: Nine hundred ninety-two. Regraded Unclassified - 45 - Thompson: That is urgent and recommended for dollars. There is 8 further part of that contract which we hope to have Lend-Leased. This is the urgent portion of it. White: That additional part is not indicated here. Brown: As I understand, the whole thing was previ- ously approved for Lend-Lease, but you were in such a hurry that you wanted to use some dollars on it. White: Merely as a matter of interest, when they specify a thing being urgent, and you - therefore taking it out of Lend-Lease, is that urgency a matter of days, and when they have it under Lend-Lease, it is a mat- ter of what? Likely to be? Thompson: That is a point we should like to get sharper in our own minds. The time limit which makes it really urgent. Things are put to us as being urgent, possibly. White: You have some idea of that. I wondered if Mr. Brown could give us some idea what happens when it goes to Lend-Lease? Bell: The question raised in our minds, I take it, is why we can't do it as quickly under Lend- Lease? Brown: Because in & number of these cases the con- tractors have almost completely negotiated by the time it comes up here. Therefore, the work would have to be done over again. At least a check would have to be made which would certainly involve more time. Bell: That is the only delay? Keynes: What is the delay, a matter of one week or Regraded Unclassified 96 - 46 - three weeks or six weeks? Archer: It varies 8 great lot with the commodity. Kades: That is exactly what we are working on. Field: That is why we asked for up to a thousand - to stop there. Childs: There is a great deal - as a matter of fact, we have already arranged in terms of time to examine that situation, because a successful operation of this depends upon the speed with which they can handle it, and General Burns has already taken up that question. White: Because I should assume that many of your purchases you would make, the bulk of them could legitimately be classed as urgent. Childs: The whole war. White: And if something could be done to speed up-- Brown: When it comes to catching a ship or something like that-- White: Yes, and where the amount is large. Keynes: It might be useful at 8 later date to have of return of what the time lag is or if we should have to put up to this committee at intervals any requisitions where the lapse was more than a certain amount so that we could inquire why. Brown: That would be very helpful, and we would see what We can do to speed it up. Thompson: In your machinery is a revolving fund which we should like to get working absolutely smoothly in some cases, and it will save quite 8. lot of time. Mr. Archer knows Regraded Unclassified 97 - 47 - something of the operation of that. Archer: That has been used in several cases. Thompson: But we will try and get clear in our minds where the operation of that may enable us to have more speed. Bell: Many of these items have been disapproved because of the urgency of the case. I should think you ought to be a little careful that you don't use them for precedents in the future and say we have already passed on that category, and there is no use of going into it again. Brown: Well, in considering these various items before a meeting, we have examined each one pretty much de novo with the general idea that you mentioned. Bell: Is that all? White: I will fix this up with Sir Frederick's signature. Bell: Yes. Childs: That is the signed copy. White: Yes, this is the signed copy. Do you have another copy which has been made for this-- Bell: That is the Secretary's signed copy? White: Yes. Childs: How many copies can we leave? Keyes: We can leave three. Regraded Unclassified 98 - 48 - Cochran: Here is a copy. White: All right, this will be enough. Foley 01 Adop DE 99 July 3, 1941 1:54 D.M. HWr: Hello. Cherator: Senator Herring. EWr: Hello. Menator Herring: Hello, Clyde Herring. HMJr: Yes, Senator. H: Say, I have 8 wire from Dee Moines and I took it up with your office this morning ... ENr: Yes, B: It's in connection with a request of the Register & Tribune to be permitted to publish a mimeograph line drawing 41 X 6 in connection with a campaign they are putting on for Postal Savings Stamps. HWr: Yes. H: Your Legal Department states that they would have to advise us partly; it 1s en adminis- tration question that would have to be de- termined by the administration of the office rather than the legal department. MMr: Yes. 3: They are very anxious. They are putting on a campaign in July and are anxious to get 8 reply. So I have to bother you. HMJr: Well ... H: Miss B or someone in the legal section has the file. HMJr: What paper wents it? H: The Des Moinee Register & Tribune. Regraded Unclassified -00 - 2 - HKJr: They want to out on a reproduction of the stamps? H: That's it. They want to put that on in connection with e. campaign for sub- scription to - they went 1400 salesmen to get out and sell Postal Savings Stamps. HMJr: Wonderful. B: Yes, it seems to me, it's a fine thing if we could find some way to do it. She SAVE that probably it might be construed 8.8 violating 264 and 18, but AS an administration cuestion she thinks it could be handled all right. ENJr: You went me to give you the answer within the hour? E: I wish you could. HMJr: Between now end three, I'll give you en answer. H: Thanks, Henry. HMJr: You're welcome. H: Thank you. 101 July 3, 1941 2:15 p.m. HMJr: Hello. Operator: Go ahead. HMJr: Hello. Suldz: Hello. HMJr: Hello. S: Yes, Mr. Secretary. HMJr: You know I read this thing of yours and I don't understand it - what 18 it you wanted, an Advisory Committee? S: I - you mean for the region. HMJr: Yes. I just don't know what that whole list 18. Is that a..... S: No, it is not an Advisory Committee, Mr. Secretary. It's Just outstanding people of the literary world who will appear Briefly on the program for a second to congratulate Mr. Van Patton on the opening of this type of program. HMJr: All of those people? S: Well, they are getting busy now and they have about five or six of them lined up. HMJr: Well, you can go as far as you want, but don't ask Mrs. Roosevelt. s: Well, who would you suggest? I'd like to have an official opening if possible. HMJr: Well, I really don't know, I'm - you people kinda squeeze me dry - I don't know who. S: I - do you agree with me that we should have some official opening. Regraded Unclassified DE - 2 102 HMJr: Well, we got enough people in the Treasury, let some Treasury person do it. gi All right. Well, suppose I talk it over with Mr. Kuhn, he might have someone to suggest. HMJr: That's right. Well, I thought this was to be a committee. I think it's B... S: No, it won't be a committee. It'll - they'll appear on the program just briefly. HMJr: Well, that's all right, but I don't want to ask Mrs. Roosevelt. S: All right, fine. HMJr: Okay. S: Do you like the opening program? HMJr: Yes, it's fine. S: That's that and I'll have Novakner's selection for you very shortly. HMJr: Good. S: And I'm going to have her sing some Czechoslovakian numbers. HMJr: Thank you. S: All right, thank you, sir. HMJr: Right. S: Goodbye. Regraded Unclassified 103 July 3, 1941 2:57 p.m. HMJr: Hello. Summer Welles: Hello, Henry. HWr: Sumner? V: Yeah. HMJr: In order not to have to use the telephone, hello? W: Yes. HMJr: On this thing that we were talking about.. W: Yes. HIJr: John Wiley has got all the information... W: Good. HMJr: And he's been over with O.N.I. for hours today, 80 he's got theirs and ours. V: Fine. HMJr: Now, what time this afternoon would you want to see him when you come back? V: Could he drop around to see Dr. Hornbeck now? HMJr: Yes. W: All right, I'll ask him to Bee him because I have to Bee Halifax. HMJr: That's all right. Will you tell Hornbeck? V: I'll tell him immediately. HMJr: He'll be over there in 10 or 15 minutes. W: Fine and thank you so much, Henry. Regraded Unclassified L 104 - 2 - HMJr: And 18 it Hornbeck that you want to keep - have him be posted. V: Yes. HMJr: What? W: Yes, that's right. HMJr: You want Hornbeck. y: Yes, that's fine, exactly right. HMJr: All right, he'll do that. W: All right, Henry. HMJr: Thank you. I'm afraid to use the phone. W: Right. I hope you have a nice holiday. HMJr: Thank you. V: Will you be coming back with the President or later? HMJri A little bit depends upon when he comes. V: He's coming Saturday morning. HMJr: No, then, I won't. V: All right. HMJr: I'll come back Sunday night. W: All right. Goodbye. HMJr: Goodbye. 105 July 3, 1941 3:19 p.m. HMJr: Hello. Operator: Senator Herring. HMJr: Hello. Clyde Herring: Hello. HMJr: Hello, Clyde? H: Yes. HMJr: Henry. H: Yes sir. HMJr: Tell your people out there to go ahead and more power to them. H: Good, fine. That's fine of you. HMJr: They - I'm delighted. F: They have 1800 out there - they'll do some business with that. HMJr: Wonderful. H: Yeah. Well, thanks ever 80 much. HMJr: Thank you for bringing it to my attention. H: Thank you, Henry. HMJr: Goodbye. 106 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE Secretary Morgenthau July 3, 1941. 10 FROM J. J. O'Connell, Jr. For your information I attended & meeting on oil in Secretary Iokes' office this morning at 10:00 o'clock. The meeting was 6. large one, there being in the neighborhood of 40 people present representing nearly that many agencies. Among those present were Secretary Perkins, Secretary Knox, Judge Patterson, Admiral Land, Leon Henderson, Nelson Rockefeller, Joseph B. Eastman, Oscar B. Ryder (Vice- Chairman of the Tariff Commission), Wayne Taylor, Charles March (Chairman, Federal Trade Commission), Sumner T. Pike, Thurman Arnold, and a number of others. The group devoted itself to a general discussion of the existing and probable future situation as regards oil and gasoline, particularly along the Atlantic Seaboard. Secretary Ickes led the discussion and reported in some detail on the situation as he sees it. The fact that 8. real shortage will exist by Fall is beyond dispute, some informed people believing that the deficiency in available gasoline will run as high as 50% of demand. Unless this situation is relieved, and there does not seem to be any hope of relieving it entirely, it will mean rationing of both gasoline and fuel oil by Fall. The problem is largely one of transportation, since there is nothing like a shortage in crude oil and no apparent shortage in refinery capacity. The present situation was caused by the transfer to the British of 50 tankers which had been plying between the Gulf Coast and the Atlantic Seaboard. The situation will probably become worse in that respect because Admiral Land advised the meeting that the British have already requested addi- tional tankers, and while he did not feel free to state the number they have asked for he said that their request was "appalling". This would seem to indicate that they probably need a very substantial number and to the extent Regraded Unclassified 2. that we comply with their request it will make our own oil and gasoline situation 80 much the tighter. Moves are being made in several directions which will tend to alleviate the situation. One is the construction of A pipeline from the Illinois field to Philadelphia and New York. Practically all of the details have been ironed out and it is expected that by the end of this year such a pipeline will be completed and will be carrying oil at the rate of 115,000 barrels a day. This will help substantially. Another pipeline from the Gulf Coast to Norfolk would be completed now but for opposition of the railroads, which manifested itself by unfavorable action of the Georgia Legislature. The effect of this opposition has been to prevent the completion of the pipeline across Georgia. Secretary Ickes stated that 8. bill which his office has sponsored and which will authorize the taking of the needed property by eminent domain has already passed the House and will probably pass the Senate next week. If this works out, that pipeline will be in operation in six or seven weeks. This too will help the situation somewhat. Other projects under way involve conservation of both oil and gasoline by urging and educating people to operate their cars, oil burners, and other fuel-consuming engines more efficiently. It was stated that efficient operation of automobiles would save 20% of their fuel consumption and that an examination of individual oil burners by compe- tent technicians would show householders how to save 15% on their fuel consumption. Secretary Ickes advised that they are working on these angles of the problem, as well as a number of others, and would welcome additional suggestions. He stated (and I am sure he was not being facetious) that he has instructed his Park Police that on and after July 5 they are to arrest people in the parks who do not operate their automobiles efficiently. No definite time was set for the next meeting but it was stated that such meetings would be held periodically, ordinarily by the Deputy Coordinator, Mr. Davies. The meet- ing adjourned at 11:15. Regraded Unclassified 103 83-A MEMORANDUM July 3. 1941 To: PRICE ADMINISTRATION COMMITTEE From: R. K. Thompson, Secretary Attached hereto are the following: 1. Minutes of the meeting of July 1. 2. Revised copy of price schedule No. 2. 3. Amendment to price schedule No. 8. 4. Price schedule No. 11. 5. Civilian allocation program for materials and equipment used in maintenance and repair work. 6. Civilian allocation program for material and equipment for the construction and repair of canning machinery. Regraded Unclassified CONFIDENTIAL SUMMARY OF STENOGRAPHIC TRANSCRIPT OF MEETING OF PRICE ADMINISTRATION COMMITTEE July 1, 1941 11 a.m. Chairman: Kr. Henderson Present: Miss Elliott, Messrs. Stevens, March, Pike, Lubin, Esekiel, MacKeatchie, Ballif, Goodloe, Barnes, Shields, Hamm, Gal- braith, Weiner, Ginsburg, Hoover, Cox, Plummer, Thompson. 1. Press conference Mr. Handerson announced that he would hold a press conference this afternoon since the time has come for frank public discussion of certain problems. Es added that the price level has been increasing about a percent a. week and is now about a point above the 1937 rice. Since production is still going up and is keeping pace with the increase in the supplies of money, the situation is not yet inflationary. but ser- eral markets have gotten out of hand and required OPACS to take action. 2, Cotton textile schedule Probably the most important action taken, Mr. Henderson said, was that in fixing 39 cents as the price of standard print cloth, allowing a margin of around 21 to 22 cents, which includes a cent and a half per pound for adjustments to the minimum wage of 37% cente set by the Vage and Hour Committee for the cotton textile industry and also for the current market price for cotton. On the assumption that the mill was buying cotton at the current market price, the 39-cent price allowe for the cost of the cotton, an adjustment due to increasing labor costs, and for 8. astisfactory mill margin. Three main causes of complaint under the schedule are (1) the general dialocation, (2) the fact that margine recently have been as high as 27 and 28 cents. and (3) its retroactive application to all contracts in force. Mr. Exckiel raised 8. question concerning what steps would be taken to secure compliance with price schedules since he has had reports that cotton yarn vas being sold above the prices set, and in much amaller volume than before the schedule was issued. Mr. Galbraith explained that part of the decreased volume is due to the decreased number of forward commitments now being made in the textile market since there is до longer an incentive for a great deal of forward buying in antici- pation of even higher prices. Regraded Unclassified - 2 - 110 Mr. Backiel also spoke of the alleged difficulty in getting cotton yarn for defense contracte but Mr. MacKestchie replied that only & few contracts had been difficult to place pending the latest price schedule OD cotton textiles, but that the difficulty had not been serious enough to bring to the attention of OPACS. Mr. Henderson stated that if the problem becomes serious it can be handled through priorities or compul- sory orders and Mr. MacKeatchie added that in the Southern mills the power priority will be effective. 3. Evasion of price schedules Mr. Ginsburg reported that Mr. Renard had brought to the attention of OPACS the rumor that contracts are being entered into at prices above. the coiling and that the difference is being placed in escrow pending the validation of OPACS' actions. Mr. Ginsburg added that he advised Mr. Renard that the position of OPACS is that this is a clear lack of compliance with the price ceiling and that we were willing to issue a statement to that effect to clarify the position of this office. 4. General economic over-all policy statement Mr. Henderson announced that Dr. Hoover and Dr. Clark are in charge of a general economic over-all policy statement for OPACS and are look- ing into the effect of defense spending, the amount that is likely to be pre-empted by taxation and by savings, and the amount of the spread which would not be absorbed by ordinary diversions or by increase in supply. He added that the estimating of the possible increases in civilian goods which will be available for increased purchasing power and of the prospective increase in retail prices based upon what 10 happening in wholesale or raw materials prices presents difficult prob- lens. He asked that any thoughts on the various problems confronting OPACS in an estimate of the nature of the threat of inflation be passed on to Dr. Hoover. 5. Furniture and commodity markets surveys Mr. Benderson expressed his gratification at the rapid start which the Federal Trade Commission has made in undertaking a survey as to whether or not costs have substantially increased in the furniture in- dustry and also as to their relation to existing profite in the industry. He also commended the Securities and Exchange Commission for its timely information concerning what is happening in various comodity markets. 6. Civilian allocation conferences and programs Mr. Henderson announced that the series of conferences which the Civilian Allocation Division will hold with various industries concerning the impact of the withdrawal of raw materials, etc., will begin July 8 with the refrigerator industry and will include most of the durable con- sumere' goods in the first group. Messrs. Henderson and Weiner reported that two civilian allocation programs had just been issued-one covering Regraded Unclassified - 3 - civilian preferences for repair and maintenance materials and equipment required for uninterrupted operation of 26 industries and services whose continued operation is essential to the public welfare and main- tenance of civilian supplies. The other provides for the emergency allocation of material and equipment necessary for construction and repair of machinery needed by the canning industry to handle this year's crop of perishable vegetables and fruits. 7- Rubber Mr. Galbraith reported that a series of meetings 1s being held with rubber producers and distributore and that probably by the end of the week policy concerning a rubber price order will be crystallised. The meetings have tended to show that, though most units of the trade would like & price increase, none of them sees any particular prospect of one. Moreover, since the mass distributors have catalogued existing prices for B long period in advance and since that sets the level for the market as a whole, a price schedule may be avoided in that field. Mr. Henderson added that if there is any way to avoid the fixing of tire prices, no schedule vill be issued. Mr. Lubin referred to the recent "scardo" advertising urging the public to buy tires now and added that it should be stopped.. The United States Rubber Company, on the other hand, 10 advising the public not to buy tires unless they are needed. 5,Cotton seed oil Mr. Galbraith reported that in the last few months cotton seed oil has almost tripled in price, that spot holdings are not in considerable volume, and that the increase in price has reacted to the benefit of those holdings and of the mille rather than to the benefit of the pro- ducers. OPACS has announced that the holdings will be inventoried with E view to applying a. ceiling for the balance of this crop year to force the sale of the holdings at & more reasonable price. 9. Farm machinery prices Col. March reported that prices of farm machinery have gone up re- cently but Mr. Galbraith explained that that report 18 probably due to the fact that OPACS has approved A 10 percent increase in price for a Canadian line of machinery sold by John Deere, for example, on the ground that they are dealers. Be added that so far " the major unite in the industry are concerned no serious advances have come to the at- tention of OPACS. 10, Regulation of consumer credit Mr. Henderson reported that the problem of the regulation of con- Numer credit has been discussed quietly with the Federal Reserve Board, with Mr. Fugent as OPACS' representative. A general agreement has been Regraded Unclassified - 4 - 83-A 112 reached as to the nature of the regulation and how it might be instituted when necessary. The whole matter will be discussed with the Treasury Department this week. 11, Relation of insured mortgages to inflation Mr. Lubin brought to the attention of the committee the fact that the Federal Housing Administration has been circulating a memorandum on the relationship of guaranteed or insured mortgages to inflation. The problem is of particular importance because the housing being constructed under those mortgages 18 the speculative type for sale. Mr. Lubin raised the question whether the Government would want to be a party to specula- tive housing which will be sold to persons in the lower income brackets whose incomes will be insecure after the present emergency 1e over and suggested that the proportion of the mortgages insured should be reduced to 85 or 70 percent for housing built for sale. Mr. Kenderson stated that OPACS 1a preparing to make a statement to the Budget on the matter and on the nature of the Defense Housing Coordina- tor's proposale as to defense housing on a. rental basis. The committee adjourned at 11:50 a,m, to meet Tuesday, July 8 at 11 a.m. Regraded Unclassified PRICE SCHEDULE No. 2 113 (AS AMENDED) Aluminum Scrap and Secondary Aluminum Ingot OFFICE FOR EMERGENCY MANAGEMENT OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY WASHINGTON, D.C. Regraded Unclassified Table of Contents Page Price Schedule No. 2, Aluminum Scrap and Secondary Aluminum Ingot I 1302.1 Maximum prices on sales of aluminum scrap by the maker of the scrap 2 1302.2 Maximum prices on sales of aluminum scrap by dealers 2 1302.3 Maximum prices on sales of secondary aluminum ingot 3 Order Ratifying Action Taken Prior to Establish- 1302.4 Application for eale of secondary aluminum ingot at prices higher than prices in section 1302.15, Appendis B 3 ment of Office of Price Administration and 1302.5 Conversion of scrap on behalf of a maker of the scrap 4 Civilian Supply¹ 1302.0 Evasion 4 1802,7 Identification and record-keeping requirements 4 OFFICE FOB EMERGENCY MANAGEMENT 1302.8 Reports of dealer's sales of aluminum serap to persons not smelters a OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY 1302.9 Enforcement 5 1302.10 Supplemental schedules and reporting requirements 5 1. All price schedules, instructions, announcements, forms, and 1302.11 Modification of the Price Schedule 5 notices heretofore issued, promulgated, or adopted, and all commit. 1302.12 Definitions 6 lees formed, by the Advisers on Price Stabilization and Consumer (a) Person 6 Protection, members of the Advisory Commission to the Council of (b) Maker of aluminum scrap 6 (e) Aluminum scrap 6 National Defense, or by the Price Stabilization and Consumer Divi- (d) Secondary aluminum ingot 6 sions of the Advisory Commission to the Council of National Defense 1302.13 Effective date 6 are hereby ratified, adopted, and continued in effect, until modified, 1302.14 Appendix A, Maximum prices for aluminum scrap 7 terminated, or superseded, as price schedules, instructions, announce- 1302.15 Appendix B. Maximum prices for secondary aluminum ingot. 7 ments, forms, notices, and committees, of the Office of Price Adminis- Explanatory Statement 8 tration and Civilian Supply and the Administrator thereof. Clean and dry scrap 8 The dealer's margin 8 2. This ruling is issued under, and in execution of the purposes of, Sales in less than carload lota-scrap 8 Executive Order No. 8734, issued by the President on April 11, 1941. Sales in less than carload lota-ingot 9 Issued this 15th day of April 1941. Special secondary aluminum alloys 9 LEON HENDERSON, Special processing 9 Return of scrap by maker to original producer of the material 10 Administrator. Permission to carry out firm commitments at prices in excess of the established maximum prices 11 Poderal Registre, ADHI 14. 1911, Vol. 6, No. 74. Sale of scrap by smelter 12 Transportation to purchaser's plant 12 Added charge for delayed payment 12 Lots of mixed aluminum scrap 13 Aluminum foil 13 Application Forms 14 Application for permimion to sell secondary aluminum ingot at prices higher than the maximum prices established by Price Schedule No. 2 14 Application for permission to sell aluminum scrap at prices higher than the maximum prices established by Price Schedule No. 2 17 Press Releases 19 March 24, 1941, Immance of Price Schedule No. 2 19 May 3, 1941, Amendment of Price Schedule No. 2 21 June 3, 1941, Amendment of Price Schedule No. 2 II 22 TII TITLE 32-NATIONAL DEFENSE Chapter XI-Office of Price Administration and Civilian Supply Part 1302-Aluminum Serap and Secondary Aluminum Ingot PRICE SCHEDULE NO. 2 1 WHEREAS, the Office of Price Administration and Civilian Supply is charged with functions related to the maintenance of price stability and the prevention of undue price rises and price dislocations; and WHEREAS, producers of virgin aluminum have been directed by the Office of Production Management, Division of Priorities, to give priority to defense orders, thus diminishing the supply of virgin sluminum available to satisfy civilian needs and thereby necessitating increasing resort to aluminum scrap and secondary aluminum ingot; and WHEREAS, the increased demand for aluminum scrap and second- ary aluminum ingot has exerted inflationary pressure upon the prices thereof, and has in some cases already caused, and threatens to & greater extent to cause, speculative activity, and the withholding of sluminum scrap and secondary aluminum ingot from the market; and WHEREAS, prices of aluminum scrap and secondary aluminum ingot, while normally less than prices of virgin aluminum, have risen to exceed the prices of virgin aluminum, so as to result in price insta- bility and dislocations injurious to the national defense; and WHEREAS, in the light of the aforesaid factors the absence of any maximum price standards for aluminum scrap and secondary alum- inum ingot makes it difficult and in some cases impossible for the trade voluntarily to cooperate with the Government in maintaining price stability and in preventing excessive and speculative price increases; and WHEREAS, the establishment of such standards by the Govern- ment is necessary to facilitate such cooperation, and to prevent the 'Feteral Register : March 25, 1941. Vol. 6, Ne n8: amended May 3. 1041, Vol. 6, No. 67: amended June a, 1041, VeL 6, No. 107. 1 Mot of provide port judicy Which Trade to IN workerung of the delaire addost Through inflation, undue Inviden- upon the Goven In accordance with the terms of such firm commitment. Lower ment, distocations, price spirating, and profiteering, and pricess claim those set forth in Column II of section 1302.14, Appendix of such standards is otherwise necessary in the public J. may. however, be charged, demanded, paid, or offered. morest and in the interest of national defense; and Marimum pricen on sales of secondary aluminum ingot- On and nfter March 25, 1941, prices for secondary aluminum ingot WILDEAR, on the basis of information secured by independent shall not exceed the prices set. forth in section 1302.15, Appendix B, investigation by this Office and by the Office of Production Manage and the maximum price limitations for secondary aluminum ingot ment and information furnished through the cooperation of the trude, sel forth in section 1302.15, Appendix B, shall not, on and after 1 find that the maximum prices set forth in section 1302.14, Appendix March 25, 1911, be exceeded by any person in any purchase, sale, or A, and wrttion 1302.15, Appendix B, attached hereto, constitute reason wher transfer at a price, of secondary aluminum ingot whether ingot, able limitations on prices for alumimum scrap and secondary aluminum of not (a) made pursuant to a contract of sale or purchase, OF other Now THEREFORE, in order to fanilitate cooperation with the Gurern. firm commitment, entered into prior to such date; or meal in mointaining prior stability and in proventing expecise ow (b) made in the disposition of inventories of aluminum scrap speculative price increases injurious to the defense program and to the of accondary aluminum ingot held on March 24, 1941; public interest and welfare, IT Is DIRECTED THAT: creept time to avoid loss to any person who had acquired such 1302.1. Maximum prices on sales of aluminum scrap by the maker Inventory in order to meet firm commitments made prior to March of the and after March 25, 1941, except as provided in 21, 1941, for the sale of secondary aluminum ingot, the Office of section 1302.5 below, regardless of the terms of any commitment Price Administration and Civilian Supply will, in appropriate cases theretofore entered into, no maker of aluminum scrap shall soll, offer to be determined on applications made under section 1302.4 hereof, to sell, deliver, or transfer at a price, aluminum scrup made by him permit the sale and delivery of such secondary aluminum ingot. in at prices higher than the prices set forth in Column I of section accordance with the terms of such firm commitments. Lower prices 1302.14, Appendix A. and no person shall buy, or offer to buy, alu- than the prices set forth in section 1302.15, Appendix B, may, minam scrap from the maker of such aluminum scrap at higher however, be charged, demanded, paid or offered. prices. Lower prices than those sot forth in Column I of section 1302.4. Application for sale of secondary aluminum ingot at prices offered. 1802.14, Appendix A, may, however, be charged, demanded, paid or higher than prices in section 1302.15, Appendie B-Any person desiring permission to sell or deliver secondary aluminum ingot 1802.2. Marimum prices on sales of aluminum scrap by dealers- at prices higher than the prices set. forth in section 1302.15, Appendix On and after March 27, 1941, regardless of the terms of any commit- B, may apply therefor in writing, upon forms available upon request ment theretofore entered into, any person who is not the maker of made to the Office of Price Administration and Civilian Supply, the stuminum ecrap sold, offered for sale, delivered, or transferred Washington, D, C. However, no permission shall be granted for the al IL price, shall not. sell, offer to sell, deliver, or transfer at il price, sale or delivery of quantities of secondary aluminum ingot in excess chaminum sump nt prices higher than the prices set forth in Column of the lesser of the following two amounts: II of section 1302.14, Appendix A, and no person shall buy, or offer (a) total undelivered firm commitments, made prior to March to buy. alumimm scrap from any person who is not the maker of 24, 1941, for sale of secondary aluminum ingot at prices higher with aluminum scrap at higher prices; except that any person not the than those set. forth in section 1302.15, Appendix B; or maker of the aluminum scrap who had purchased aliminum scrap (b) total inventories of aluminum scrap and secondary alumi- prior to March 24, 1041, to meet a previously made firm commitment num ingot which were acquired at prices higher than the price of sale or delivery of such scrap to another person may, upon limitations contained in this Schedule and which were held on application he to the Office of Price Administration and Civilian Supply, March 24, 1941, by the applicant and, in case any dealer or permitted to sell, or deliver, and accept payment for, such scrap other person had acquired any such inventory to meet a pre- 1602,1 to 1902.18, Instructive, Insued pursoant to the authority undalled to viously made firm commitment with the applicant for Bale or Onler BTM. delivery of aluminum scrap to the applicant, by such dealer or other person. 2 a Regraded Unclassified 1302.5. Conversion of scrap on behalf of a maker of the A maker of aluminum scrap may sell, deliver, or transfer aluminum paid or received, and the quantity in pounds and quality by grades of aluminum scrap or secondary aluminum ingot, or both, scrap to the producer of the material from which the scrap is made: involved; and and the producer may purchase and receive such scrap, without (b) As of the close of each month the amount in pounds of regard to the maximum prices set forth in section 1302.14, Appendis aluminum scrap and secondary aluminum ingot (i) on hand and A hereof, provided that either (ii) on order. (a) The aluminum scrap 80 sold. delivered, or transferred CEII)- 1202,8. Reports of dealer's náles of aluminum scrap to persons not siste of extrustion butts or ends, redraw tube ende, OF rod turnings smelters.-Except as herein provided, any person who sells aluminum of not more than one alloy and such male, delivery, or transfer scráp to any user or further processor of aluminum scrap other than is made pursonal to a written contract whereby the purchaser a smelter producing secondary aluminum ingot for sale, shall file a of the scrap agrees to convert the scrap to the type of material report with the Office of Price Administration and Civilian Supply, from which the scrup was made and to deliver to the maker of Washington, D. C,, not later than the tenth day of the month the scrap an equivalent amount of the same type of material. following the month in which such sale is made, stating with respect and such sale, delivery, or transfer is made in accordance with to any and each such sale: an established practice existing between the parties prior to March 24, 1941, and at prices which have not been increased (a) The name and address of the person to whom the sule since said date, or was made. (b) The sluminum scrap so sold, delivered, OF (ransferred (b) The number of pounds and the grade of aluminum seraji, consists of unpainted and unlacquered strong alloy scrap in the sold, and form of sheet clippings or mutilated sheets, tube ends or muti- (e) The price at which sold, lated tubing, or extrusion ends or mutilated extrusions, and in 1302.9, Enforcement-In the event of refusal or failure to abide made by the aircraft industry and segregated as to alloy and by the price limitations, record requirements, and other provisions sold, delivered, or transferred to the producer of the material contained in this Schedule, or in the event of any evasion or attempt for conversion in accordance with the terms of the letter of the to evado the price limitations or other provisions contained in this Director of Priorities to members of the aircraft industry under Schedule, this Office will make every effort to assure (a) that the date of March 6, 1941. Congress and the public are fully informed of any failure to abide 1802.6. L'unsion.-The price limitations set forth in this Schedule by the provisions of this Schedule; and (b) that the powers of the shall not be evaded whether by direct or indirect methods in connec- Government are fully exerted in order to protect the public interest tion with a purchase, sale, or transfer at a price, of aluminum scrap and the interests of those persons who conform with this Schedule or secondary aluminum ingot, or of any other materials, or by way in the maintenance of the ceiling prices herein set forth. Persons of any service or other charge or discount, premium or other privi- who have evidence of the demand or receipt of prices above the otherwise. lege, or by tying-agreement or other trade understanding, or limitations set forth, or of any evasion of or effort to evade such requirements, or of speculation, or manipulation of prices of alumi- 1802.7. Identification and record-keeping requirements-Every num scrap or secondary aluminum ingot, or of the hoarding or dealer in, and every maker, smelter, processor, or consumer of, and accumulating of unnecessary inventories thereof, are urged to every other person purchasing or selling aluminum scrap or see communicate with the Office of Price Administration and Civiliau ondary aluminum ingot shall, until such time as further information Supply. is deemed necessary or appropriate hereunder, keep for inspection 1302.10. Supplemental schedules and reporting requirements.-In by the Office of Price Administration and Civilian Supply, and pro- order to insure compliance with this Schedule, supplements further serve for a period of not less than one year, complete and accurate stating its scope and, if necessary, requiring further reports to the records of: Government, will be issued from time to time when found appropriate. 1302.11. Modification of the Price Schedule.-Persons complaining (a) All purchases and sales of aluminum scrap and secondary aluminum ingot, recording therein the person from or to whom of hardship or inequity in the operation of this Schedule may apply each smoh purchase or sale was made, the date thereof, the price to the Office of Price Administration and Civilian Supply for ap- proval of any modification thereof or exception therefrom. 5 1302.12. Definitions.-When used in this Schedule: 1302.14. Appendix A association, partnership, or other business entity; (a) The term "person" includes an individual, corporation, MAXIMUM PRICES FOR ALUMINUM SCRAP (b) The term "maker of aluminum scrap" means any (F. 0. B. POINT OF SHIPMENT) (i) Manufacturer, fabricator, or other industrial user of Marimum price (per pound) aluminum who as an incident to his manufacturing process, Column I Column 11 Grade of cluminum acrop* sale by moler fabricating, or other industrial use, produces aluminum sale by dealer Pare Clips and Cable 13d 24% scrap; or (ii) Automobile cemetery operator, wrecker, or other Segregated Alloy Sheet Clipa 12é 13½F 04 Sheet and Utensila lie 12% person who, in his business or as an incident to his business, Mixed Bbert Clips 11é 12% collects and sorts scrap materials and removes or segregates Cast Scrup and Forged Scrap, old and new, clean aluminum scrap therefrom. and dry 11e 124 Dorings and Turnings other than No. 12, clean and dry. 10€ 11½0 Aluminum scrap shall be deemed to be "made" when first sold, or No. 12 type Borlugs and Turnings, clean and dry 0% 11d offered for sale, or delivered, as aluminum scrap by & maker of alumi- Putions free of struts, clean and dry 11% 12½ num scrap: Platons with struts, cléan and dry 9% 10% (c) The term "aluminum scrap" means the kinds and grades *Each grade shall Include all types and qualities of scrap failing within the trond category named. However, the maximum prices are applicable to scrap of aluminum scrap referred to in section 1302.14, Appendix A. which meets generally accepted maximum standards to the trade-as, for In- (d) The term "secondary aluminum ingot" means the kinds seace, the classifications of the National Association of Waste Materials Dealers, and grades of secondary aluminum ingot referred to in section Inc., contained In its Circular O, effective June 1, 1940. Scrap which falls to 1302.15, Appendix B. meet such standards should be sold at prices less than the maximum. EMILIAL Nore-Aluminum foll and light gauge sluminum sheet which does 1302.13. This Schedule shall become effective immediately, except set exceed 0,006 of an Inch in thickness shall not be subject to this Price as otherwise specifically provided herein. Schedule, Issued this 24th day of March 1941.' LEON HENDERSON, 1802.15. Administrator. Appendix B For dates of amendments, SN footnote 1, supra. MAXIMUM PRICES FOR SECONDARY ALUMINUM INGOT (F. 0. B. POINT OF SHIPMENT) Macimum price (per pound) on quantities of Grade of secondary clumines Ingot 10,000 pounds or more 25 Percent Pure Aluminum Ingot 17d Silleon Alloys 17th Deoridising Aluminum 16½e notch bar or granulated Ingot or shot (2# extra allowed for special shapes) Platon Alloys 18½ No. 12 Aluminum 10d May be added the the mazimum price 10,000 to 30,000 pounds 34 cent per pound 7,000 to 10,000 pounds ½ cent per pound Less than 1,000 pounds 1 cent per pound 6 - Unclassified No. The amendment effective June 3, 1041, eliminated the former requirement that aluminum scrap sold in less than carload lots be sold at least is half-cent under the maximum prices established for EXPLANATORY STATEMENT encload lots. The maximum prices set. forth in section 1302.14, Ap- Price Schedule No. 2 pendix A, of the Price Schedule now apply to all Rucles of aluminum <crop regardless of quantity. The Office of Price Administration and Civilian Supply has estab. 4. Males in Less Than Carload Lots-Ingot. lished maximum prices for aluminum scrap and secondary aluminum Are price differentials provided for sales of secondary aluminium ingut. which are set forth in Price Schedule No. 2.¹ ingot in quantities less than 30,000 pounds! This statement answers inquiries which have been made about the Yes. The prices set forth in section 1802.15, Appendix B, of the Price Schedule. The answers represent the position which this Office Price Schedule apply to sales of secondary aluminum ingot in Tota will take in determining compliance with the Schedule, Any person of 30,000 pounds or more. On sales of secondary aluminum ingot having any further question should promptly present it in writing involving quantities of 10,000 to 30,000 pounds, one-fourth cent per to this Office. This statement may from time to time be supplemented pound may be added to the established maximum prices; on sales of to deal with new questions that may arise so that all persons will 1,000 to 10,000 pounds, one-half cent per pound; and, on sales of have a complete understanding of the Price Schedule, les than 1,000 pounds, one cent per pound. Any charge in excess 1, Clean and Dry Scrap. of these allowances is not permitted. Are the maximum prices for the designated grades of aluminum 5. Special Secondary Alaminum Alloys. scrap, prices for clean and dry scrap? What price should be charged for special secondary aluminum Yes. The established prices are тахітыт prices applicable to alloys for which maximum pricen are not established by section grades of serap which meet generally accepted mazimum standards 1302,15, Appendix B, of the Price Schedule! established in the trade. For instance, the classifications of the A price not in excesse of the 17¢ per pound maximum price estab- National Association of Waste Materials Dealers, Inc., effective June lished for 08% pure aluminum ingot unless an additional charge is 1, 1940, describe grades of aluminum scrap which should secure the necessary in order to provide reimbursement for the cost of ingredi- established maximum prices. Scrap castings, forgings, borings and ents and special processes required to produce the alloy. Any such turnings should be sold both clean and dry in order to secure maxi- additional charge should be computed on the basis of the aluminum mm prices. If not clean and dry, they should be sold at & price content taken at not more than 17c per pound and other ingredients reduced below the maximum in proportion to the percentage of dirt taken nt not more than current market prices and with consideration and moisture, for the customary differentials which have existed, prior tó the estab. 1 The Dealer's Margin, lishment of celling prices, between the special alloy and those alloys What price should a dealer charge another dealer for slominum for which maximum prices have been established. If these standards scrap? are not observed and if the prices of special alloys are permitted J price less than the established maximum price. The spread be to increase in undue proportion to the prices established for other twen the established maximum prices on makers' and dealers' sales alloys, this Office will be required to extend Price Schedule No. 2 of serap. is designed to allow ample profit for handling scrap through to as to establish maximum prices for such special alloys. is anries of dealers. In order that this practice should continue, dealers 6, Special Processing. mar cooperate with this Office by observing in their regular trade May additional charges be made for special processing or special channels suitable prices within the range between makers' and dealers' services performed in preparation or manufacture of those grades of maximum prices. Any other course may force this Office to adopt aluminum scrap or secondary aluminum ingot for which maximum more rigid regulations. prices have been established? B. Sales in Less Than Carload Lota-Scrap. No, unless permission is first obtained from the Office of Price Are price differentials provided for sules of aluminum scrap in Administration and Civilian Supply. It is intended that the estab- quantities less than il carload lot? lished maximum prices shall include all such services or processing 1 Sepri, pp. LT. no are normally necessary in order to market the product. However, 8 section 1302.11 of the Schedule provides that any person complaining of hardship or inequity in the operation of the Schedule may apply Permission to Carry Out Firm Commitments at Prices in Excess of the Established Maximum Prices to this Office for approval of any modification thereof or exception therefrom. This provision is especially designed to allow in appro- (0) May the maker of aluminum acrup sull the scrap he makes at priate cases exceptional prices for exceptional processes. Application priors higher than the established maximum prices to carry out a firm nommitment entered into prior to Murch 24, 19411 under this provision should be made in writing and under oath No, unless permission is first obtained from the Office of Price Ad- and must contain a full and accurate statement of the facts and the need for an exception from the Schedule. ministration and Civilian Supply. Permission to carry out contracts at prices higher than the established maximum prices may be granted T. Return of Scrap by Maker to Original Producer of the Material. if the maker can show that unless such permission is granted he will May the maker of aluminum scrap return such scrap directly to suffer a loss because, prior to the effective date of the Schedule, he had the original producer of the material from which the scrap was made, purchased the scrap at prices higher than those established by the for reconversion into similar material, at prices higher than the Schedule. A maker of scrap may be either a manufacturer, fabricator, prices set forth in Column I of section 1302.14, Appendix A, of the or other industrial user of aluminum, or an automobile cemetery Price Schedule? operator, wrecker, or other person who, in his business, collects and Sorts No, unless the transaction falls within the terms of section 1302,0 alumintint scrap. The manufacturer, fabricator, or other industrial of the Price Schedule. Section 1302.1 of the Price Schedule, as user does not ordinarily purchase any aluminum scrap and consequently originally issued, provided that permission might be obtained in 4p. will not ordinarily be able to secure permission to carry out a firm com- propriate cases for continuation of B. pre-existing practice wherehy mitment for the sale of scrap at prices higher than the established maxi- makers of scrap sold directly to smelters at prices not in excess of the am prices. On the other hand, the automobile cemetery operator, established maximum dealers' prices, This provision was stricken out wrecker, or other collector of aluminum scrap may be able to show that by the amendment effective May 5th. It is, consequently, no longer la purchased aluminum scrap prior to the effective date of the Sched- permissible to make sales at such prices merely on the basis of & past ule at prices in excess of the established maximum prices, and that he relationship or course of dealing. consequently occupies the position of dealer as to such scrap and so Section 1302.5, as amended, does make provision, however, for TO- may be entitled to permission to carry out firm commitments for sale turn by the maker of designated types of scrup to the producer of the of alumimum scrap at prices higher than the established maximum material from which the scrap was made, without regard to established prices. maximum prices, for reconversion into and redelivery of an equivalent (b) May a dealer, smelter, or other person, who is not. the maker quantity of material of the same type as that from which the scrap was of aluminim scrap, sell either aluminum scrap or secondary alumi- made. This exception from the Price Schedule is restricted to cases num ingot at prices in excess of the established maximum prices to falling within either one or the other of the two following categories: carry out a firm commitment made prior to March 24, 19417 (a) Muminum scrap consisting of extrusion butts or ends, redraw Pes, if permission is granted by the Office of Price Administration tube ends, or rod turnings of not more than one alloy may be 60 M. and Civilian Supply. In order to secure such permission an appli- Curned by any maker thereof to his supplier for reconversion and cation should be prepared and filed in duplicate with this Office on redolivery, provided that similar contracts existed between the parties forma which may be secured from this Office. However, the ship- prior to March 24, 1941, and that the prices of neither the scrap nor ment of the aluminum scrap or secondary aluminum ingot should the material have been increased since that date. not be delayed until a permit has been issued. Any person who has (8) Aluminum scrap produced by the aircraft industry which con- 1 firm commitment for the sale of aluminum scrap or secondary sists of unpainted and unlacquered strong alloy scrap in the form of sluminum ingot at prices in excess of the maximum prices and expects sheet clippings or mutilated sheets, tube ends or mutilated tubing, or that he will quality under the terms of the Price Schedule for permis- extrusion ends or mutilated extrusions, may be so returned by the maker thereof to his supplier for reconversion and redelivery provided 'The Attontion to which this explanatory paragraph and the corresponding provistone of such scrap is segregated as to alloy and otherwise handled in accordance Price Nehedule Xn 2 were Intended to apply lisa Inegely consed to extet. The purpose was la employer desires, melters, and other persons to avoid loss to the disposition of Invegiory with the terms of the letter of the Director of Priorities to members Required AI blue Prive prior to the effective date of the Price Relindule. None such Inven- of the aircraft industry under date of March 6, 1941. Tess line been almost OF entiress disquesd of there will be little OF au PORSON to resurt to Name previsions in the future 10 11 sion procedure: to carry out the commitment should adopt the following Yes, provided the added charge represents B. reasonable per INTERNATE interest charge and not an increase in price above the maximum. No (1) Prepare and file in duplicate an application for a permit charge for delayed payment is allowed, therefore, which exceeds a with this Office. reasonable per annum interest rate upon the selling price commencing (9) Notify the purchaser that such application has been pro- on the date of delivery. Any interest rate higher than current per pared and filed with this Office. annum nies would place the contract price under suspicion. (3) Make the shipment on the delivery dates provided in the 12 total of Mixed Aluminum Scrap. commitment. What is the maximum price at which a maker may sell aluminum (4) Hold up settlement until a permit is either issued or borings if the borings include both No. 13 type and other types in denied, or, if the parties 50 desire, temporarily settle at a price not in excess of the established maximum price but subject to unknown amounts? Nine and one-half cents per pound. The Price Schedule establishes agreement that when and if this Office issues a permit, the pur- Dig-ount maximum price for the sale by a maker of No. 12 type bor- chaser will pay to the seller the remaining amounts due in accordance with the terms of the permit. ings 1. 10-cent maximum for the sale by 16. maker of borings other than No. 12. Consequently, in case the No. 12 type borings are mixed 9. Sale of Scrap by Smelter. in unknown quantities with other types of borings, no price higher May a smelter sell scrap at prices in excess of the established than the 91/2 cents per pound maximum may be paid for the mixed lot. maximum! A price higher than 91/2 cents per pound is only permitted in payment No. Insofur as the smélter resells aluminum scrap which it has for borings other than No. 12 type borings. In order to sell at such purchased in the course of its business, it will be subject to the higher price, the number of pounds of such borings must be known. maximum prices established for dealers' sales of aluminum scrap. The same rule will apply to any mixture of different grades of 10. Transportation to Purchaser's Plant. aluminum scrap if the quantities of the different grades are not known. May n person solling aluminum scrap or secondary aluminum ingrot The established maximum price for that grade in the mixture which at the established maximum price add to the price a charge for de- has the [owest maximum price will be the maximum price for the livery of the scrap or ingot to the purchaser's plant? entire mixed lot. Yes, The established maximum prices are prices f. o. b. the point 12. Aluminum Foil. of shipment. Any charge made for a transportation service rendered Is aluminum foil and light gauge aluminum sheet subject to the after the McTap or ingot has left the point of shipment is not included established maximum prices! in the established maximum prices. However, if such a charge je Yes, unless such material does not exceed 0.00G of an inch in think greater Uma customary tariffs for similar transportation service, this ness. It has been provided by an amendment in the form of B special Office will assume that the charge results in a price in excess of the note to section 1302.14, Appendix A, of the Price Schedule that established maximum price, Any instance of such a charge, there alumimum foil and light gauge sheet which does not exceed 0.006 of an fore, should be reported to this Office. inch in thickness is not subject to the maximum prices established In this connection it. should be noted that section 1302.7 of the by the Price Schedule. Schedule requires the seller and the purchaser of secondary aluminum ingot to keep records of the prices received or paid for scrap and ingot. These records are intended to protect the seller and purchaser in the event of an inspection by the Office of Price Administration and Civilian Supply. Consequently, they should show separately both the f... b. price at the point of shipment and the transportation charge. 11, Added Charge for Delayed Payment. May any person who sells aluminum scrup or secondary alumnnon ingot at the established maximum price add Il further charge for delayed payment by the purchaser? 12 18 Regraded Unclassified n. That, ID order to meet the firm commitments described In Appendix &, (M) applicants bad outstanding on March 24, 1941, firm orders for the purchase Application Forms Pursuant to Sections 1302.2, di aluminum scrap as described to Appendix C, attached hereto, and That the 1302.3, and 1302.4 of Price Schedule No. 2 applicant has now been advised that, as of March 24. 1941, the selling parties such firm orders had neted in reliance upon such firm orders by acquiring aluminum 40 scrup in the amounts Indicated la Appendix C at prices higher than (be prires set forth In Price Schedule No. 2: and OFFICE FOR EMERGENCY MANAGEMENT F. That. of of March 24, 1941, the applicant had either on band, as Indicated OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY lo Appendix B. or nil partially fulfilled firm onlers, 09 Indicated in Appendix C, alaminim scrap and secondary aluminum Ingot in amounts sufficient to WASHINGTON, D. o. marplete delivery on the commitments not forth in Appendix A; and G That the information contained in this application and in the Appendices 102 APPLICATION OF strached hereió la complete and accurate to the best knowledge of the (Name of applicant) applicant. The applient understands and agrees that any permission granted pursuant To chis Application to sell at prices In excess of those established by Price (Address) shrdule No. 2 may be revoked at any time, In whole or in part, upon It appearing that the facts are not as set forth In this Application and the Appendices at- For PERMISSION To SELL SECONDARY ALUMINUM Ixoor AT Pueza Bloner THAN THE MAXIMUM PAICES ESTABLISHED BY PRICE Scrimule No. 2 rashed hereto or that, for any reason, applicant is not entitled under the terms of said Price Schedule No. 2, to make such sales. INTRODUCTORY Applicant The applicant should Ble a sworn original and one copy of ench application By form and duplicates of each Appendix with the Office for Emergency Manage- ment, Office of Price Administration and Civilian Supply, Washington, D. C. Title of office Sections 1902.8 and 1302.4 of Price Schedule No, 2 set forth the conditions Dated this day of 1041 under which permission will be granted for the sale and delivery of security STATE OF stuminum fugot at prices higher than the established maximum prices. The sections should be read carefully by the applicant. County of sat The applicant should furnish information In the Appendices to the application On this day of 1941, before me personally appeared form relevant in determining whether the conditions net forth In sections 19022 who being first duly sworn, did depose and say and 13024 of Price Schedule No. 2 have been met. The Appendices should be Unt be la the of the : that lie prepared only after rending the Instruction and Explanation herein. required the foregoing Application on behalf of said and was duly authorized so to do: and that he has knowledge of the facts and state- Application is hereby made pursuant to sections 13023 and 13024 of Price mints at forth in said Application and in the Appendices thereto and that they Rchedule No. 2 for permission to seit and deliver secondary aluminum logal in are accurate and complete to the best of his knowledge, Information, and belief. accordance with the terms of the firm commitments described in Appendir A, THEAL] attached hereto: and to that end the applicant affirms: Nolary Public In and for the County of State of A., That this application is filed for the purpose of enabling the applicant, My Commission expires by completing sales of secondary aluminam Ingot according to the terms of the firm commitments described in Appendix A, to avoid loss in the disposition of INSTRUCTIONS AND EXPLANATION inventories of aluminum scrap and secondary sluminum Ingot on hand and on order on March 24, 1041: and L Appendia 4 should contain n description of all the firm commitments which II. That the firm commitments described In Appendix A were made prior to the applicant la seeking permission to complete. This description must be anm- March 24, 1041. and that deliveries thereon have not been made, to the extent Bently complete to permit absolute Identification of each such firm commitment Indicated in Appendis À: and and every term thereuf with respect to which permission in sought. The permis- e, That the applicant did not enter Into any of the tirm commitionis de Her printed pursuant to this application will cover only sale or delivery to actibed In Appendix A in order to dispose of Inventory of nlumimm wrap or recordance with the terms of the firm commitments as such terms are described secondary niuminum Inght on band or on order before such firm commititival (4) Apporatix A. was Degetinted by the applicant; and The applicant, therefore, should Include In Appendix A at least the following D, That in onler to meet The firm commitments described In Appendix À. information with respect to each such firm commitment: the applicant has, to the manner and to the extent indicated in Appendix D, (a) Name and address of the purchaser. nequired alumimim armp and secondary aluminum Ingot at prices higher than (A) Date on which the firm commitment WILS unde the maximum prices set forth In Price Schedule No. 2; and (e) The form of the commitment, L O., oral, exchange of letters, order form, algned agreement, etc. 14 15 Regraded Unclassified (d) Grades and the number of pounds of each grade of recordary (b) with respect to each seller's constitutions of stuminum enrop made to atuminum Ingot committed giving (1) grades and number of Devida of most such purchase orders: On advice of the seller, information to establish each grade already delivered; (2) grades and number of pounds of no that the seller acquired aluminum scrap prior to March 25, 1941, to neet or dates: and (4) selling price per pound of ench grade. grade remaining to be delivered after March 24, 1041; (3) delivery date sueb purchase order at prices higher than the Scheduled price limitations and the approximate quantities 80 acquired and not delivered prior to If the commitment Is in the form of is written agreement, a copy of the Agrie March 27, 1041. event be sufficient to supply the required Information. ment should be made part of Appendix A and submission thereof may In MMS 4. Definitions.-In this application form the following terms shall mean; The applicant should not include in Appendix A firm commitments which (a) "Firm commitment" means any contract for sale, for delivery, or in the aggregate call for deliveries of secondary aluminum ingot in tun amount for transfer at a price, which Imposes fl. blading obligation on 8 party prohibited under section 1302.4 of the Schedule. Under section 13024 fail thereto to will, deliver, or transfer at a price. permission will be granted for sales or deliveries of secondary aluminum (b) "Secondary aluminum Ingot" means the kinds and grades of secondary In quantities greater than the quantity represented by Inventories of clumines aleminum Ingot referred to in section 1302,15, Appendix B, of Price Sched- scrap and securdary alumfoum Ingut acquired at prices higher than the ale No. 2. Scheduled price limitations and held on March 24, 1941, by (a) the applicant (e) "Aluminum scrap" means the kinds and grades of aluminum scrap and (4) any dealer or other person who had acquired such Inventory la referred to In section 1302.14, Appendis A, of Price Schedule No. 2. meet a previously made firm commitment for sale or delivery of such mm (4) "Grades" of secondary aluminum logot and aluminum scrap menns lo the applicant. the grades of secondary aluminum Ingot and aluminum scrap referred to 2. Appendie B should contain any evidence the applicant can offer to establis) In sections 1302.14, Appendix A. and 1302.15, Appendix B, of Price Schedule that: No. 2 (g) The applicant secured the firm commitments described in Appendis A. in advance of acquiring the aluminum scrap or secondary aluminam logos OFFICE FOR EMERGENCY MANAGEMENT anjuired to carry ont such commitments, and OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY (b) The prices paid by the applicant for Inventories later acquired to num the exemitments described in Appendis A were higher than (br WASHINGTON, D. C. Scheduled prior limitations. 102:3 3. Appendiz 0 should contain information with respect to Inventories in APPLICATION OF quired and held by dealers for the applicant, and need only be prepared if 1M applicant la resting Its application, in part. upon deliveries of such Inventories (Name of applicant) Under Price Schedule No. 2 a denler who has acquired, prior to March 24 1041, simminum scrap at prices higher than the Scheduled price limitations and (Address) for the purpose of meeting firm commitments mode prior to March 24, 1041. for the sale of aluminum scrip to n further processor may secure permission Pos PERMISSION TO SELL ALUMINUM SCRAP AT PRICES Home THAN THE to sell If deliver wuch scrap to the processor at the committed prices. Column MAXIMUM PATCES ESTABLISHED BY Price SCHEDULE No. 2 quently if the applicant had prior to March 24, 1941, placed II firm order to INTRODUCTORY purchase atuminum scrup from a dealer for the purposes of meeting committ- ments described In Appendix A, and If the denler upon getting such firm order The applicant should Ble Il sworn original and one copy of each application, bad thereafter purchased aluminum scrap at prices higher than the Sebeduled and duplicates of each Appendix thereto, with the Office for Emergency Manage- price Umitations, the denler may be permitted to complete delivery of such ment, Office of Price Administration and Civilian Supply. eleminum scrap to the applicant in accordance with the terms of the applicat's Bection 13022 of Price Schedule No. 2 acte forth the conditions under which firm under and the applicant to devote such Inventory to meeting its committed permission will be granted for the sale and delivery of aluminum scrap at prices of will of secondary alumimum Ingot at the committed prices. higher than the established maximum prices. This section should be read enre- In much n. case, Appendix C should set forth the following Information and fully by the applicant. any further Information deemed appropriate by the applicant or Its desier: The applicant should furnish In the Appendices to the application such Infor- 101 With respont to each such firm purchase order of the applicant mation an may be relevant in determining whether the enditions set forth Lo The name and oddress of the seller, the date on which the commitment action 13022 of Price Schedule No. 2 have been met. The Appendices should was made, the Diem of the commitment, the total aluminum scrap - le prepared only after reading the Instructions and Explanation herein. mitted for be wild to the applicant, showing the grade or grades, the selling price of each grade, and the delivery date or dates and the quantities to Application La hereby made pursuant to section 1302.2 of Price Schedule No. Im delivered after March 27. 1141. 2 for permission to well and deliver aluminum scrap In accordance with the line of the firm commitments described In Appendix A, attached bereto, and Bee action 18022 of Price Richerlule No. 2 wissein the dealer's miling price le that end the applicant affirms: on siminism acrept an made effective March 21. DMI. A. That this application to filed for the purpose of enabling the applicant, by completing Bales of aluminum scrap according to the terms of the Arm commit- 16 17 service described in Appendix A, to avoid Income in the Aleponiting of inventores (v) The form of the commitment, 1. e, oral, exchange of letters, order of stuminum works on hand on March 24, 1041, and form. signat agreement, etc. II. That the Drm commitments described in Appendix A Were name Drior to (d) Grades and the number of pounds of each grade of aluminum scrap March 24. 1041, and that deliveries thereon have not leen made, except to the remmitted giving (1) grades and number of pounds of each grade already extent indicated to Appendix A; and delivered: (2) grades and number of pounds of each grade remaining to C, That the applicant did not enter Into any of the firm commitments described be dolivered after March 24, 1041; (3) delivery date or dates; and (4) la Appendis A In order to dispose of Inventory of aluminum scrap on hand or selling price per pound of each grade. on order before such firm commitments was negotiated by the applicant: and D. That, in order to meet the Brin commitments described In Appendix A, the If the commitment la in the form of n. written agreement, & copy of the applicant has, in the manner and to the extent Indicated in Appendix B, acquired agreement ghould be made part of Appendix A and submission thereof may be aluminium scrap at prices higher than the maximum prices net forth in Price sufficient to supply the required information. The applicant should not include In Appendix A firm commitments which to Schedule No. 2; nod E. That, as of March 24, 1941, the applicant bad on hand, as Indicated le abe aggregate call for deliveries of atuminum scrap in quantities greater than Appendix B. aluminum BcTap In amounta sufficient to complete delivery on the the quantity represented by Inventories of cluminum scrap acquired by the commitments set forth In Appendix A; and applicant at prices higher than the Beheduled price limitations and held by II on March 24, 1941. Permission will not be granted under section 1302.2 F. That the information contained to this application and in the Appendices attached hereto la complete and accurate to the best knowledge of the applicant of de Schedule in excess of this amount. 2 Appendiz B should contain the best evidence the applicant can produce The applicant understands and agrees that any permission granted pursuant to this Application to sell at prices In excess of those established by Price Schedule to establish that: No. 2 may be revoked at any time, in whole or in part, upon It appearing that (a) The applicant secured the firm commitments described In Appendix the facts are not us set forth In this Application and the Appendices attached A in advance of nequiring the aluminum scrap required to carry out such hereto or that, for any reason, applicant Is not entitled under the terms of naid commitments, and Price Schedule No. 2. to make such sules. (b) The prices paid by the applicant for Inventories later acquired to fulfill the commitments described la Appendix A were higher than the Applicant Scheduled price limitations. By The applicant should, wherever possible, identify by names of sellera, dates of purchase, grades, quantities, prices, etc., the particular aluminum scrap Title of office purchased to meet each respective firm commitment described la Appendix A. Dated this day of 1961. It may also be possible to Identify such scrap na some particular part or STATE OF lot of present Inventories. Information should be submitted in such form and detail RE le practicable in the Individual case. County of 11. a. Definitions- On this day of 1941, before me personally appeared (d) "Firm commitment" means any binding obligation to sell, deliver, who being first duly sworn, did depose and my that be La the or transfer at a fixed price. of the : that be executed the foregoing Application on behalf of said (b) "Alumlnum scrap" and "grades" of alumloom scrap mean the kinde and was duly authorized so to do: and that he has knowledge of the facts and state- and grades of aluminum scrap referred to In section 1302.14, Appendix A, of Price Schedule No. 2. menta set forth in said Application and in the Appendices thereto and that they are accurate and complete to the best of his knowledge, Information, and bellef. Press Belease [SEAL] Notary Public In and for the County of State of Issuance of Price Schedule No. 2 My Commission expires March 24, 1941-PM 186 INSTRUCTIONS AND REPLANATION 1. Appendiz 4 should contain a description of all the firm commitments which A Price Schedule setting ceiling prices for aluminum scrap and the applicant la seeking permission to complete. This description must be secondary aluminum, pegged to current prices for virgin aluminum, sufficiently complete to permit absolute Identification of each such firm com- was issued today by Leon Henderson, Director of the Price Stabiliza- milment and every relevant term thereof with respect to which permission Is sought. The permission granted pursuant to this application will corer tion Division, National Defense Advisory Commission. only sale or delivery in accordance with the terms of the Brm commitments High price levels attained by aluminum scrap and secondary alu- as such terms are described la Appendix A. minum during the past month made this action necessary, Mr. Hender- The applicant, therefore, should include in Appendix A at least the following son explained. information with respect to each such firm commitment: "The price schedule will be fully enforced," he said. "The powers (a) Name and address of the purchaser. (b) Date en which the firm commitment was made. of the Government to place compulsory orders, to condemn or requisi- 18 19 ion properties, to issue priorities and to use other powers to carry out the defense program will be exarted to the utmost against any person the Period Schedules in order to carry out. these firm commitments whom we find to be disregarding these selling prices" nill the original terms. However, it should be noted that this excep- Prices of aluminum scrap and secondary aluminum have recently (ion will mit be permitted beyond the amount of inventories already been subjected to serious inflationary pressures, Mr. Henderson sopiired either by the smelter or his dealer to carry out the commit- asserted, both because of the failure of the sources of virgin aluminam mmt With this one exception the maximum prices set. forth in the to meet current demand-especially the demand of fabricators mulding DAW Schedule become immediately and absolutely effective regardless items for civilian needs-and because of the recent. issuance of & any contracts. This Schedule is the second to be issued by the Price Stabilization priorities order restricting the use of virgin aluminum to defense Division. The first Schedule, issued February 17. established ceiling purposes. Under normal conditions, he continued, prices for secondary nin- prices for second-hand machine tools, relating the ceiling prices to the minum do not exceed prices for virgin aluminum. Recently, however, prior conivalent new machine tools. "To date," Mr. Henderson the Price Stabilization Division has received reports of sales of da- stated, "reports seem to show 100 percent compliance." Mr. Henderson added that schedules are imminent in iron and steel uniman scrap reaching prices as high as 82 cents a pound-almost double the price of the virgin metal. entap IS well RB zine scrap, and that apparently unwarranted price "Such prices are not required to draw ont aluminum scrap," Mr. increases in various other industries have been reported during the Henderson said. "They are merely the results of a speculative demand past few days. "Should these movements continue, price ceilings will have to be which has built up inflationary prices. There are supplies of scrap, established in these industries," he said. "We hope that this action and these supplies will be tapped at reasonable prices, once it is under- will not be necessary, but if it is, we are ready to enforce reasonable stood that the Government will not tolerate prices above a fair maximum." price limits." The now Price Schedule establishes two ceiling prices for aluminum Press Release scrap. The lower ceiling applies to the first sule of aluminum ястар Amendment of Price Schedule No. 2 from the maker to any other person. The higher ceiling applies to May 3, 1941-PM 359 any sale of aluminum scrap thereafter by any dealer or other person Amendments to Price Schedule No. 2, which established maximum to any smelter, foundryman, fabricator, or other dealer. The two cellings are fixed f.o. b. the point of shipment and will allow the dealer prices for aluminum scrap and secondary aluminum ingot, were an- nounced today by Leon Henderson, Administrator, Office of Price a margin of 1½ cents por pound on clippings, borings and turnings, Administration and Civilian Supply. The amendments become ef- and 1 cent per pound on other types of aluminum scrap. The maximum prices for secondary aluminum ingot are applicable fective May 5, 1941. An explanatory statement, answering the most to any sale or purchase of secondary aluminum ingot by any person. common inquiries as to interpretation of the Schedule, was also released. Like the scrap schedules, these prices are made t. o, b. the point of ship- ment. They leave B. spread of 3 to 4 cents per pound for the processors "These amendments," Mr. Henderson explained, "have been adopted costs and profits. in order to give effect to customary trade practices and to forestal) "These ceiling prices," Mr. Henderson stated, "will give ample allow attempts to use the price schedule as an excuse for charging the maxi- ance for reasonable profit to both dealers and smelters. However, mim prices for aluminum scrap which does not meet maximum stand recent demand for secondary aluminum indicates that there may be ards. We have tried to make it clear that the established prices of some effort on the part of manufacturers and fabricators to purchase emp are on the basis of clean and dry scrap of the highest quality scrap direct from dealers, thus circumventing the smelter. To forestall and are for carload lots. Appropriate differentials must be observed this movement, the Schedule requires dealers to report any sales which where the material does not meet these standards." they make to any person other than a smelter." The following are the principal changes made in the Price Schedule The new Schedule will become immediately effective in a market by the amendments: of already inflated prices. Consequently, a method is provided by (1) The maximum price at which a maker of the scrap may sell which smelters and dealers who have acquired inventories at priors old shuminum sheet and aluminum utensils in lowered from 124 to 11e above the new maximum prices to meet. previously arranged firm com- per pound. No other change is made in the maximum prices of any mitments for sales above ceiling prices may secure an exception from grades of aluminum scrap or secondary aluminum ingot. 20 21 Regraded Unclassified (2) DI is emphasized that all maximum scrap prices are for cheary Press Release and dry STOP and that material not meeting these standards whould Amendment of Price Schedule No. 8 be sold at prices reduced below the maximum prices in proportion le the percentage of dirt and moisture, June 3, 1941-PM 497 (3) There has been eliminated the provision of section 1302.1 of the to Price Schedule No. 2 designed to simplify Schedule which allowed makers of scrap to request permission from administration of maximum prices for aluminum scrap and secondary Office of Price Administration and Civilian Supply to sell directly aduminum ingot were issued today by Leon Henderson, Adminis- to smelters at prices as high as the established dealers' prices where trator, Office of Price Administration and Civilian Supply. such sales were customarily made prior to issuance of the Price Principal changes, effective June 3, include: Schedule. This prevision had caused some makers to expect examp. (1) Special secondary aluminum alloys have been removed from tion in cases in which the smelter performed functions of a dealer. that part of the schedule relating to secondary aluminum ingot, In lieu of this provision, there has been added a new section 1802.5, The types of aluminum alloy ingot now covered by the schedule exempting from the Schedule customary sales of extrusion butts and include all silicon alloys, piston alloys, and No. 12 alloy, However, ends, sheet clippings or rod turnings of not more than one alloy, and the usual differentials based upon market prices of the ingredients pure clips, where such sales are made by the maker of the scrap to and the expenses of manufacturing are to be observed. the producer of the material from which the scrap is made and pur (9) Price regulation has also been removed from aluminum scrap suant to a written contract for the reconversion of the scrap into like of designated grades produced by the aircraft industry, segregated material and for sale of an equivalent amount of like material to the AE to alloy, and returned to the supplier of the original material maker. The contract prices must not, however, have been increased for reconversion into similar material in accordance with since March 24, 1941. instructions of the Director of Priorities. (4) Aluminum scrap which is delivered in less than carload lots (3) Quantity differentials for aluminum scrap have been removed must be sold at prices 1/2 cent under the established maximum prices but such differentials continue on secondary aluminum ingot sold set forth in section 1302.14, Appendix A, of the Price Schedule, in less that 30,000-pound lots. (5) The maximum prices established by section 1302.15, Appendix (4) A special note has been added to section 1302.14, Appendix A, B, of the Price Schedule for secondary aluminum ingot are explicitly removing from the schedule aluminum foil and light-gauge sheet stated to be for quantities of 30,000 pounds or more. An additional which does not exceed 0,006 of an inch in thickness. 34 cent per pound may be charged for quantities of 10,000 to 30,000 Removal of special aluminum alloys from the schedule of maxi- pounds, an additional ½ cent for quantities of 1,000 to 10,000 pounds, mum prices gives the trade wider discretion in establishing fair and on additional 1 cent for quantities under 1,000 pounds. Special attention is called, in the explanatory statement released differentials for such ingots. However, producers and dealers are with the amended Price Schedule, to the procedure set up for con- expected to keep prices of such products in line with the maximum =ideration of applications for exceptions from the schedule. Dealers pricess established for the more standardized grades. It is expected and smelters which have acquired high-priced inventory before March that customary differentials will be maintained. If this is not done 24, 1941, may, upon application to the OPACS, be granted permis- voluntarily, such differentials will have to be established by sion to carry out commitments entered into prior to that date al regulation. prices in excess of the established maximum prices to the extent necessary to avoid loss on such inventory. Exceptions may also be granted so as to permit the charging of prices higher than those scheduled for special alloys and special processing. Requesta for such exceptions should be made by presenting to Office of Price Administration and Civilian Supply a full and verified statement of the need for such exemption and the facts upon which it is to be based. In case of a special alloys this statement would ordinarily include an analysis of the alloy, 22 98 # ********** PRIMIER - OFFICE FOR EMERGENCY MANAGEMENT 114 Office of Price Administration and Civilian Supply Zer Immediate Release June 27, 1941 PM 628 An amendment to Price Schedule No. 8 designed to facilitate and encourage in- porta of scrap and secondary materials containing nickel was issued today by Leon Honderson, Administrator, Office of Price Administration and Civilian Supply. General effect of the amendment will be to permit the sale in this country of imorted scrap and secondary materials containing nickel at prices above the estab- lished naximum prices. Resale prices will be sufficient to cover cost of importing the materials, including duty, freight, insurance, etc. However, permission must be obtained from CPACS to carry through each such transaction at the higher price. Action was taken after consultation with the Office of Production Manag ement and seay persons within the industry because of the importance of nickel to the de- fonse program. The amendment provides: (1) Scrap and secondary materials containing nickel may be purchased abroad at not above the maximum prices established in Schedule No. 8 for sales in this country. The Schedule fixes maximum prices on an f.o.b. shipping point basis. (a) The importer may then apply to OPACS for permission to sell such materials in this country at prices higher than those established aa ceilings in Schedule No. 8, (3) Such sales in this country will not be permitted at prices exceeding the eximing established in the Schedule for domestic sales, plus the duty, freight, insurance, etc., that must be paid to bring the materials to this country, plus the premiums allowed converters on sales of the particular kind or grade of scrap material involved as set forth in Appendix A of the Schedule. Forma on which application may be made for permission to sell imported scrap or secondary materials containing nickel at prices above the fixed ceiling prices are available upon request. A copy of the amendment and of the application form are attached. Regraded Unclassified TITLE 32 - NATIONAL DEFENSE CHAPTER XI - OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY 115 Part 1308 - Scrap and Secondary Materials Containing Nickel Amendment to Price Schedule No. 8 The great need of our defense industries for scrap and secondary materials con- taining nickel makes it necessary to amend Price Schedule No. 8 to facilitate and encourage the importation of such materials. Accordingly. pursuant to and under the authority of Executive Order 8734, Part 1308, Price Schedule No. 8, ie hereby amended by the addition of the following section: I 1308. 3a Imports I 1308.1 and a 1308.2 apply to importe of any of the scrap or secondary mate- rials described in Appendix A or B. However, any person who imports such materials may apply for permission to sell such materials at prices higher than the maximum ariess get forth in the Appendices. Such permission shall be applied for in writing upon forms available upon request made to the Office of Price Administration and Irilian Supply, Washington, D. C. Permission will not be granted unless: (a) the applicant has purchased the imported materials at prices not ex- cending the maximum prices set forth in Appendix A or B; and (b) the prices at which the applicant seeks to sell the imported materials are approved by the Office of Price Administration and Civilian Supply. The Office of Price Administration and Civilian Supply will not approve the sale of imported Herap materials containing nickel at prices which exceed the delivered cost of the materials to the applicant plus the premiums allowed a converter on sales of the particular kind or grade of scrap material involved, as set forth in Appendix 1, and (c) the prospective consumer of the imported materials is disclosed. Issued this 26th day of June, 1941. LEON HENDERSON ADMINISTRATOR CERTIFIED TO BE A TRUE COPY OF THE ORIGINAL. JOHN R. HAMM DEPUTY ADMINISTRATOR Regraded Unclassified OFFICE FOR EMERGENCY MANAGEMENT PM 628 OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY 116 Washington, D. C. APPLICATION OF (Name of Applicant) (Address) FOR PERMISSION TO SELL IMPORTED SCRAP OR SECONDARY MATERIALS CONTAINING NICKEL AT PRICES HIGHER THAN THE MAXIMUM PRICES ESTAHLISHED BY PRICE SCHEDULE NO. 8 The applicant herein requests permission, pursuant to the provisions of 1308.3a of Price Schedule No. 8, to sell the scrap or secondary materials contain- if nickel, described below, at prices higher than the maximum prices established by Price Schedule No. 8, and to that end sets forth the following information: 1. Name and address of person from whom the materials were purchased. 2. Date of shipment. 3, If shipped by boat, name of boat. 4. Prices at which such materials were purchased. Kind or Grade of Material Price Total Cost to (f.o.b.point of Applicant shipment) 5, Name and address of person to whom such materials are to be sold. 6, State whether such purchaser is a dealer, converter or consumer and If not a consumer, give the name of the prospective consumer. 7, Prices at which such materials are to be sold. Kind or Grade of Material Price Applicant by Title of Office - 2 - PM 628 117 Dated this day of . 1941. State of ) )es: County of ) On this day of , 1941, before me personally appeared . who being first duly sworn did depose and say that he is the of the : that he executed the foregoing Application on behalf of said and was duly authorized no to do, and that he has knowledge of the facts and statements set forth in said Application and in the Appendices thereto and that they are accurate and complete to the best of his knowledge, information and belief. Notary Public in and for the County of , State of My commission expires 8. Definitions: (a) The term "person" includes an individual, partnership, associa- tion, corporation or other business entity. (b) "Scrap or secondary materials containing nickel" and "kinde or grades" of such materials mean the kinds and grades of scrap and secondary materials containing nickel referred to in Appendix A and Appendix 3 of Price Schedule No. 8. #+++ Regraded Unclassified 118 OFFICE FOR EMERGENCY MANAGEMENT Office of Price Administration and Civilian Supply for PM Release PM 637 Saturday, June 28, 1941 À schedule establishing ceiling prices for aix leading types of cotton cloth (grey goode) WAS issued today by Leon Henderson, Administrator, Office of Price Administration and Civilian Supply. The price ceilings established are generally about 15% below current levels. It is pointed out, however, that during the past 13 months prices of grey goods have risen sharply, the average increase amounting to 68% In connection with contracts entered into at prices above the ceilings, the schedule provides that sellers who have acquired grey goods at prices higher than the epplicable maximume prior to June 28 and who have contracted to sell at higher than the maximums may make application to OPACS for permission to cerry out such contracts, provided that such deliveries are completed on or before September 2, 1941. The schedule establishes a maximum price of 39 cents per pound for print cloth, carded broad cloth, and tobacco cloth; maximum prices of 30 centa, 33 cents, and 33 1/2 centa per pound for three classes of sheetings: 8 natimum price of 25 cents per pound for part waste osnaburgs: end a maximum price of 54 cents per pound for combed broadcloths. These prices are f.o.b. the seller's voint of shipment. They are gross prices before discounts of any nature and they include all commissions. The price ceilings take into account the current price of raw cotton and et the safe time thake adequate allowance for operating costs of mills. In the case of print cloth, for example, the 39 cent ceiling allows for a mill maryly of 21 cents a pound and a cotton content cost of 18 cents B. pound. The mill margin at the present time is around 28 cents 8 pound, having moved Regraded Unclassified PM 637 - 2 - up. to this level from 21 cents reached in the third week in March. Since 1925 the mill margin has exceeded 21 cents in only four years-1925, 1933, 1937, and the present time-thus indicating the reasonableness of the 21 cent figure. Mill margina of 17, 18, and 19 centa early in the year were highly stimulating to production and the 21 cent figure allows fully for any recent wage and other cost increases which may have occurred, Ceiling prices in the schedule are mandatory only as to the types of grey goods specified. It is expected, however, that ceilings on these six types will establish a basis for prices of other constructions and that normal interplay of market forces will bring the others into line. If this does not happen the ceilings will be extended to cover specifically other types of grey goods. Prices charged by converters are expected to reflect the lower prices established in the ceilings and will be watched closely. OPACS is currently studying the price situation for rayon fabrice and if necessary will also take action in that field. Text of the schedule 18 attached. Regraded Unclassified 120 THE 32 - NATIONAL PM 537 CHAPTER XI - OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY Part 1316 - Cotton Textiles PRICE SCHEDULE NO. 11 - Cotton Grey Goods The Office of Price Administration and Civilian Supply is charged with the maintenance of price stability and the prevention of undue price rises and dia- locations. Cotton Grey Goods are used as the basic fabric for finished cotton textiles. They are also used extensively in an unfinished state. Finished cotton textiles constitute B. major portion of the material used in both military and civilian clothing. Furthermore, Cotton Grey Goods, in both their finished and unfinished states, are indispensable to the manufacture of numerous other items used by both the armed forces and civilians. In the last 12 months the cotton grey goods market has advanced sharply. During that period there has been a 68 per cent increase in the average price of the principal constructions. This has meant a 106 per cent increase in the average mill margin for those types of cloth. This upward price movement has been out of all proportion to any increases in costs of materials and production. Largely responsible for this inflationary trend have been the fear of buyers that prices would continue to rise, and the activity of speculators and hoarders who have taken advantage of this fear and of the heavy demand for textiles arising from defense needs. It is apparent, therefore, that in order to insure stability of the price structure and to forestall widespread speculation, hoarding, and profiteering, the national defense and the public interest require that maximum prices be 08- tablisbed for Cotton Grey Goods. The maximum prices set forth below alloy a. mill margin substantially above the Average which the industry had enjoyed during the past five years. On the basis of information secured by independent investigation by this Office, and upon information furnished by the trade, I find that the maximum prices herein established are necessary and reasonable. Regraded Unclassified -2- PM 637 121 Accordingly, pursuant to the authority vested in ne by Executive Order No. 8734, and after consultation with the Price Administration Committee, it is hereby directed that: 8 1316.1 Definitions (a) The term "Cotton Grey Goods," 88 used herein, means cotton grey goods, in their unchanged mill state, of the types listed in Section 1316.7 hereof; it does not include any cotton grey goods which, in the performance of a recognized commercial service, have been either (1) further processed or (11) out and repackaged. (b) The term "person" includes an individual, corporation tion, association, partnership, or other business entity.* §§ 1316.1 to 1316.8, inclusive, are issued pursuant to the authority contained in Executive Order No. 8734. § 1316.3 Maximum Prices Zetablished for Cotton Grey Goods (a) Or. and after June 30, 1941, regardless of any commitment theretofore entered into, no person shall sell or deliver, or offer to sell or deliver, any Cotton Grey Goods, and no person shall buy or accept delivery of, or offer to buy or accept delivery of, any Cotton Grey Goods at a price exceeding the maximum prices set forth in Section 1316.7. except that: (1) Any person who prior to June 30, 1941, acquired Cotton Grey Goods at a price higher than the appli- cable maximum price set forth in Section 1316.7, and prior to that date entered into a firm commit- ment for the sale of such Cotton Grey Goods to any person, may, upon approval by the Office of Price Administration and Civilian Supply of an applica- Regraded Unclassified PM 637 - 3 - 122 tion filed on or before July 31, 1941 on Form No. 111:1 (copies of which may be obtained on request made to the Office of Price Administration and Civi- lian Supply, Washington, D. C.) be permitted to de- liver and accept payment for Cotton Grey Goode at the price contract for, provided that such deliveries are completed on or before September 2, 1941; (2) The prices established herein are not applicable to sales or deliveries of Cotton Grey Goods to any person or persons outside the United States, its territories and possessions. (b) The prices established by this Schedule are f.o.b. the the seller's point of shipment. They are gross prices before dis- counts of any nature are deducted and they include all commissions. § 1316.3 Records. Every person who, during any calendar month, shall sell 500 pounds or more of Cotton Grey Goods shall keep for inspection by the Office of Price Administration and Civilian Supply. and preserve for B. period of not less than one year, a complete and accurate record of every sale of Cotton Grey Goods made during such month, the person to whom such sale was made, the date thereof, the price paid, and the quantity and specifications of the goods sold.* § 1316.4 Reports. On or before August 7, 1941, and on the 7th day of each calendar month thereafter, every person who, during the preceding celendar month, has made sales or de- liveries, other than those described in Section 1316.2 (a) (2), of Cotton Grey Goods aggregating 500 pounds or more shall submit to the Office of Price Administration and Civilian Suoply a report, on Report Form No. 111:2 (copies of which Regraded Unclassified PM 637 - 4 - may be obtained upon request made to the Office of Price Ad- ministration and Civilian Supply, Washington, D, C.), in which he shall make a sworn statement that during the preceding calendar month all such sales, either for immediate or future delivery, and deliveries, other than those described in Sec- tion 1316.2 (a) (2), were made at prices in conformity with this Schedule or with an exception or modification thereof. B 1316.5 Enforcement. In the event of refusal or failure to abide by the price limitations, report requirements, and other provisions contained in this Schedule, or in the event of any evasion or attempt to evade the price limitations or other provisions contained in this Schedule, the Office of Price Ad- ministration and Civilian Supply will make every effort to 8.8- sura (1) that the Congress and the public are fully informed of any failure to abide by the provisions of this Schedule, and (11) that the powers of the Government are fully exerted in order to protect the public interest and the interests of those persons who conform with this Schedule in the observance of the maximum prices herein set forth. Persons who have evidence of the de- mand or receipt of prices above the limitations set forth, or any evasion of or effort to evade such prices, or of speculation, or of the hoarding or accumulation of unnecessary inventories thereof, are urged to communicate with the Office of Price Administration and Civilian Supply." § 1316,6 Modification of the Price Schedule. Persons complain- ing of hardship or inequity in the operation of this Schedule may apply to the Office of Price Administration and Civilian Supply for approval of any modification thereof or exception thereto.* Regraded Unclassified PM 637 - 5 - 124 E 1316.7 Schedule of Maximum Prices Maximum Prices for Cotton Grey Goods Type of Cloth Price per pound, f.o.b. seller's point of shipment Standard print cloth, 40" and narrower $ .39 Carded broadcloth, 40" and narrower, 100 sley and below .39 Combed broadcloth, 40" and narrower, 136 sley and below .54 Sheetings, 40" and narrower A. Yarn numbers up to 15s, inclusive .30 B. Yarn numbers 16s to 21s, inclusive .32 C. Yarn numbers above 21s .335 Part waste osnaburgs, 40" and narrower .25 Tobacco cloth, 40" and narrower .39* 5 1316.8 Effective Date. This Schedule shall take effect June 28, 1941.* Issued this 27th day of June, 1941. /8/ Leon Henderson Leon Henderson, Administrator Certified to be & true copy of the original John E. Hamm, Deputy Administrator Regraded Unclassified 125 OFFICE FOR EMERGENCY MANAGEMENT OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY For Immediate Release PM 649 July 1, 1941 Priority status for repair and maintenance materials and equipment required for uninterrupted operation of a wide range of industrial processes and public services was assured today when the Civilian Supply Allocation Division of the Office of Price Administration and Civilian Supply promulgated an allocation program covering such items. Action was necessitated by growing demende on raw materials as re- sult of the defense program and the priorities granted in connection therewith which have made it difficult for manufacturers of repair and maintenance materials and equipment to fill their orders. Effect will be to assure continued operation of essential industries and services which otherwise might have to curtail because of inability to secure needed repair or maintenance parts. The program covers 26 industries and services whose continued opera- tion is essential to the public welfare and maintenance of civilian sup- plies. Other industries will be added when their problems have been analyzed. The program provides that such materials and equipment shall be allocated prior to all other civilian requirements and prior to defense requirements to the extent consistent with the defense program as deter- mined by the Office of Production Management. Administration and enforce- ment of the program will be carried out by the OPM. Text of the program including the list of industries and services covered is attached: Regraded Unclassified 125 OFFICE FOR EMERGENCY MANAGEMENT OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY For Imediate Release PM 649 July 1, 1941 Priority status for repair and maintenance materials and equipment required for uninterrupted operation of a wide range of industrial processes and public services was assured today when the Civilian Supply Allocation Division of the Office of Price Administration and Civilian Supply promulgated an allocation program covering such items. Action was necessitated by growing demande on raw materials as re- sult of the defense program and the priorities granted in connection therewith which have made it difficult for manufacturers of repair and mintenance materials end equipment to fill their orders. Effect will be to Assure continued operation of essential industries and services which otherwise might have to curtail because of inability to secure needed repair or maintenance parts. The program covers 26 industries and services whose continued opera- tion is essential to the public welfare and maintenance of civilian sup- plice. Other industries will be added when their problems have been analyzed. The program provides that such materials and equipment shall be allocated prior to all other civilien requirements and prior to defense requirements to the extent consistent with the defense program as deter- mined by the Office of Production Management. Administration and enforce- ment of the program will be carried out by the OPM. Text of the program including the list of industries and services covered is attached: Regraded Unclassified 126 PM 649 TITLE 32 - NATIONAL DEFENSE CHAPTER XI: OFFICE OF PRICE AIMINISTRATION AND CIVILIAN SUPPLY Part 1318 - Materials and Equipment Used in Maintenance and Repair Work Civilian Allocation Program for Materials and Equipment Used in Maintenance and Repair Work Increasing demands from all sources and the priorities granted to defense requirements have made it difficult for other enterprises to obtain materials and equipment needed for purposes of maintenance and repair quickly enough so that essential opera- tions can be maintained without interruption. It is necessary. therefore, to provide priority status for the materials end equip- ment required to maintain such existing facilities in & satisfac- tory operating condition. Furthermore, 18 cases where unforeseeable breakdowns occur and the need for equipment and materials becomes acute, B. very high level of preference is required. Accordingly, pursuant to and under the authority vested in me by Executive Order No. 8734, particularly Section 2(a) there- of, the following program for the allocation of materials and equip- ment for maintenance and repair of facilities employed in non-defense operations 1s announced: one 1318,1 Allocation of Materials and Equipment for Maintenance and Repair. Materials and equipment necessary for the maintenance and repair of facilities employed in operations in the following classifications shall be allocated to such use prior to the satisfaction of other competing civilian demands: Railroads Regraded Unclassified - 2 - PM 649 Street railway, subway, elevated, and interurban lines Commercial airlines maintaining regular scheduled service Commercial operation of motor buses - local, interurban and interstate Shipping - including ocean, lake, river and canal commerce Pipe lines - oil and gas Commercial operation of motor trucks Highway maintenance Telephone communication Telegraph communication Radio commercial communication - including commercial broadcasting Electrical energy production and distribution GAS production and distribution - manufactured and natural Water production and distribution Sewer service Petroleum production and refining Food processing and storing Farm equipment employed in farming operations Mining and quarrying Coke converting Metallurgical plants engaged in the production of raw materials Production of chemicals Protective services - fire and police Research - industrial and academic Hospitals, clinics and sanatoria Public buildings, institutions, schools and parks, B 1318,1 to 1318,5 inclusive, issued pursuant to the authority contained in Executive Order No. 8734, Regraded Unclassified - 3 - PM 649 128 un 1318.2 Riergency Keintenance and Repair. Materials and equipment necessary for emergency maintenance and repair of facilities in the above classifications shall be allocated to such use prior to all other civilian requirements and prior to defente requirements to the extent consistent with the defense program as determined by the Office of Freduction Management. a 1319,3 Avoidance of Excessive Inventories, Allocations made under this program shall not be used to accumulate excessive inventories, or to divort parts still serviceable," 8 1318.4 Definitions. As used herein, the term "mainten- ance" means the upkeep of property and equipment, and the term "repair" nears the restoration of property and equipment to a sound state after wear and tear, damage, destruction of parts, or the like. These terms include replacement of parts which have been worn out, demaged or destroyed, but do not include replace- ment when the new pert or parts represent a changeover in model, the introduction of superior type equipment to replace unable equipment of an older or inferior type or design, or a substitu- tion more extensive than that which is necessary to replace the part or parts that are worn out, damaged or destroyed. E 1318,5 Enforcement. The foregoing program is to be administered and enforced by the Office of Production Management, Issued this 30th day of June, 1941. Leon Henderson, Administrator Certified to be & true copy of the original John E, Hanum Deputy Administrator Regraded Unclassified OFFICE FOR EMERGENCY MANAGEMENT 129 OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY for Immediate Release PM 651 Tuesday, July 1, 1941 Emergency allocation of material and equipment necessary for con- struction and repair of machinery needed by the canning industry to handle this year's crop of perishable vegetables and fruits was order- ed yesterday by the Civilian Supply Allocation Division of the Office of Price Administration and Civilian Supply, Leon Henderson, Adminis- trator, announced. Action was taken through issuance of a civilian allocation program to be administered, enforced, and limited by the Office of Production Management. Effect will be to avoid loss of a part of the year's crop because of shortages of canning equipment, thus aiding in the maintenance of civilian supplies of needed foodstuffs. The program provides that deliveries of equipment and material, now on the Priorities Critical List, necessary for construction and repair of machinery in various parts of the canning industry shall be given emergency preference ratings to the extent found consistent by OPM with the defense program. The program applies to ordera manufacturers have on hand calling for delivery on or before August 1 and to be actually shipped not later than August 15. Copy of the program is attached: Regraded Unclassified PA TITLE 32 - NATIONAL DEFENSE CHAPTER XI - OFFICE OF PRICE ADMINISTRATION AND GIVILIAN SUPPLY Part 1317 - Material and Equipment for the Construction and Repair of Canning Machinery CIVILIAN ALLOCATION PROGRAM At the present time there is an urgont need for material and equip- sent necessary for the construction and repair of machinery for the canning industry. There is insufficient machinery to can this year's perishable vegetable and fruit crop, which will result in the loss of a portion of this year's crops unless prompt measures are taken to remedy the shortage. It is necessary, therefore, to allocate sufficient material and equipment to the construction and repair of canning machinery to meet the present emergency. Accordingly, pursuant to and under the authority vested in me by Ixecutive Order No. 8734, particularly Section 2(a) thereof, the follow- 1ng program for allocation of material and equipment necessary for the construction and repair of canning machinery is announced: 080 1317.1 Emergency Allocation of Material and Equipment for the Construction and Repair of Canning Machinery. Deliveries of equipment and material now on the Priorities Critical List which are necessary for the construction and repair of machinery to be used in the preparation, processing, filling, labeling, closing and packaging of this year's fruit and vegetable crops shall be given an emergency preference rating effec- tive for obtaining such equipment and material to the extent determined by the Office of Production Management to be consistent with the defense program; provided, however, that the manufacturer of the machinery has on hand ordere calling for its delivery on or before August 1, 1941, and Regraded Unclassified 131 - 2 - PM 651 the machinery is to be actually shipped not later than August 15, 1941. USED 1317.1 to 1317.2, inclusive, issued pursuant to the authority contained in Executive Order No. 8734. § 1317.2 Administration, Enforcement and Limitation. This program shall be administered, enforced and limited by the Office of Production Management Issued this day of June, 1941. Leon Henderson, Administrator CERTIFIED TO BE A TRUE AND CORRECT COPY OF THE ORIGINAL. John E. Hamm, Deputy Administrator Regraded Unclassified 132 July 3, 1941 MEMORANDUM FOR THE SECRETARY From: Mr. Blough According to Mr. Perlmeter of the Associated Press you asked him to talk with me about the pro- posed tax on leased wires, which he feared might be applicable to newspaper wire services. In the absence of some affirmative action by the Committee, leased wire services for newspapers and radio broadcasters would not be subject to the proposed excise tax. The existing excise tax on telephone and tele- graph messages would be extended to leased wire ser- vices under the provisions of the proposal adopted tentatively by the Ways and Means Committee. How- ever, there is now a provision (Section 3466 of the Internal Revenue Code) exempting from tax the tele- phone and telegraph services used by newspapers and radio broadcasters. In the absence of action by the Committee, this exemption would presumably apply to the tax on leased wires. Be far as I an aware, no consideration has been given to this specific question. Pay Blongh Regraded Unclassified 133 TREASURY DEPARTMENT Washington FOR IMMEDIATE RELEASE Press Service Thursday, July 3, 1941 No. 26-30 Secretary Morgenthau today announced a plan to make it easier for taxpayers, large and small, to meet the unprecedented tax bills required by the National Defense program. Under this plan, two series of notes would be issued as outlined below, both dated August 1, 1941, and maturing August 1, 1943. On January 1 of each year hereafter, two new series will be provided so that a taxpayer can always purchase notes during the entire year in which he is receiving his income, to be used in pay- ment of his taxes due in the following year. The reason for the two-year note is to permit a taxpayer, if he so desires, to begin saving in January of one year and continue throughout that year to save for his taxes due in March, June, September, and December of the following year. All notes are to be sold at par and accured interest, if any, end will be redeemed at any time after three months from the month of issue, but not before January, 1942, when presented in payment of income taxes at par and accrued interest up to and including the month in which such taxes are paid. Interest will not accrue beyond the maturity of the notes. If not presented in payment of Regraded Unclassified 134 - 2 - income taxes, they will be redeemed for cash under certain specified conditions at the purchase price paid for the notes. In other words, the taxpayer, in this case, gets back just the amount he paid for the notes and no more. The notes will not be registered, but will have the pur- chaser's name and address inscribed thereon so that the Collector of Internal Revenue can compare the purchaser's name with that on his tax return. They will not be transfermble; nor can they be used ES collateral. Applications for purchases of both series of notes can be made through the taxpayer's bank and the bank may credit the proceeds to its War Loan Deposit Account, if it has such an account. Applications can also be made directly to the Federal Reserve Banks or to the Treasurer of the United States. These notes may be used to pay any Federal income taxes (current and back personal and corporation taxes, and excess- profits taxes). Further details regarding those issues will be contained in the official circular to be released about July 20, 1941. TAX SERIES - A-1943 Notes of this series will be issued in denominations of $25, $50, and $100. The amount of this series which can be Regraded Unclassified 135 - 3 - presented in payment of income taxes will be limited to $1200 in any one tax year by any one taxpayer. The notes will provide 5 return of about 1.92 per cent a year, but the rate per cent will not be expressed. For a $25 denomination, it will be ex- pressed at 4 cents a month, $50 denomination at 8 cents a month, and for the $100 denomination at 16 cents a month. By following this method it is made simple to compute the cost when the tax- payer purchases the notes and simple both to the taxpayer and the Collector of Internal Revenue to compute the credit that may be applied to the taxes due. There will be a schedule of values printed on each note. These notes will be redeemed for cash at the Federal Reserve Bank of issue at any time at the price paid by the taxpayer. TAX SERIES B-1943 Notos of this series will be issued in denominations of $100, $500, $1,000, $10,000, and $100,000. The amount of these notes which can be presented in payment of taxes is limited only by the amount of taxes due. The Secretary will, however, reserve the right to reject any and all subscriptions. The notes will provide a return of slightly less than 1/2 of 1 percent (about 0.48%) a year, but here, as in Series A, in order to simplify Regraded Unclassified 136 - 4 - computations, the rate per cent will not be expressed. It will be stated as 4 cents a month for a $100 denomination, 20 cents for a $500 denomination, and so on. There will be a schedule of values printed on each note. These notes will be redeemed for cash at the Federal Reserve Bank of issue, after sixty days and upon thirty days' notice at the price paid by the taxpayer. ooOoo 137 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 3, 1941 Secretary Morgenthau TO FROM Mr. Kuhn In connection with the new tax notes, you might wish to make the following points at your press conference: 1. American taxpayers have shown in a great variety of ways that they are willing to pay the heaviest tax bill in history for the sake of national defense. Congress is now considering a tax bill that will produce three and a half billions in additional revenue, in accordance with the expressed wish of the people. The Treasury's primary purpose in issuing these new notes is to serve the convenience of the men and women who are ready to put their dollars to work for the safety of the country. 2. But we have other purposes which, we think, will be served by these new securities. I hope that the new tax notes will en- courage thrift by enabling men and women to save regularly for meeting their tax bills. I also hope that they will speed up tax collections, reduce the volume of back taxes payable, and thus save the government unnecessary expense. Finally, if these tax notes are to fulfill their purpose, they will help to check the rising cost of living by withdrawing taxes from current earnings. Regraded Unclassified 138 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION M DATE July 3, 1941 Ferdinand Kuhn, Jr. TO FROM Herbert Merillat PRESS OPINION ON TAXES: REACTION TO COMMITTEE BILL Two opinions are found in almost all editorial comment on the Ways and Means Committee's personal income tax proposals: (1) that the failure to broaden the base is a major defect in the bill, and (2) that the proposed taxes are very severe even though smaller in the lower brackets than the Treasury requested. On the subject of & broader base, most editorials take this line: persons below the present exemption levels ought to make direct tax payments in this emergency, in order to have a feeling of sharing in the defense program and to acquire an interest in federal fiscal affairs; too much of the proposed tax burden falls on individuals with "moderate" incomes; the fact that steep surtaxes apply to the first dollar of income above the personal exemption makes more pronounced the discrimination in favor of persons now exempt from the income tax; the Committee is guilty of playing politics with an important issue and only refrains from reducing exemptions out of fear of losing votes. Regraded Unclassified 139 - 2 - Along with remarks on the severity of the new taxes there are frequent admonitions to taxpayers that they should begin to plan now how to meet their tax bills. Careful budgeting will be required of lower-bracket incomes, it is said. Anticipating the Treasury's announcement of details of its tax-prepayment plan, many papers have remarked on the need for such 8. plan and praised the Treasury for preparing it. Excises As OPACS runs into difficulties in its price-control program, interest has mounted in measures to prevent inflation. Price control occupies the center of attention, but the importance of taxes is recognized. Business Week suggested that OPACS and OPM prepare lists of consumer goods, consumption of which should be or will be curtailed, and use such lists as & basis for working out schedules of excises. The New York Times recently outlined a program of excise taxa- tion similar in principle to the Henderson-Eccles excise sugges- tions, and called for (1) minimum taxes on necessary and useful articles of which there is no shortage; (2) maximum taxes (con- sistent with a revenue-raising purpose) on luxuries not competing with defense; and (3) taxes sufficiently heavy to discourage con- sumption of durable consumer goods competing with defense. Regraded Unclassified 140 - 3 - No comment is yet available on the list of excises tentatively agreed upon by the Committee. Labor and Inflation In line with labor's attitude on the danger of inflation, described in last week's report, Philip Murray's article in the June 28 issue of "The Nation" scouts the idea that the nation faces a'serious shortage of consumer goods, with consequent inflation. He sees no need for living standards to be lowered and attacks tax proposals which have promoted as inflation curbs - taxes on low incomes and "deferred pay" plans. 141 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 3, 1941 Secretary Morgenthau TO FROM E.H. Foley, Jr. You have the legal authority to authorize the Des Moines Register and Tribune to publish the reproduction of the savings stamp in a mimeographed line drawing 4 X 6". Secret Service has no objection to your authorizing the reproduction of the stamp. 9.1v 7h Regraded Unclassified 142 UNITED STATES SAVINGS BONDS AND SAVINGS STAMPS CONFIDENTIAL Monthly Sales in June Compared with May, 1941 On Basis of Issue Price (Amounts in thousands of dollars) : : Sales # : Decrease in June compared with May Item : Monthly : Daily Average* : Monthly : Daily Average* # June : May # June : May # Amount : Percent : Amount I Percent Series 1 - Post Offices $ 40,788 $ 42,836 $ 1,632 $ 1,648 $ 2,048 4.8% $ 16 1.0% Series 1- Banks 57,936 72,059 2,317 2.772 14,123 19.6 455 16.4 Series 1- Total 98,725 114,895 3.949 4,419 16,170 14.1 470 10.6 Series 1- Banks 22,965 45,521 919 1,751 22,556 49.6 832 47.5 Series G - Banks 147,275 277,872 5,891 10,687 130,597 47.0 4,796 44.9 Total $268,965 $438,288 $ 10,759 $ 16,857 $169,323 38.6% $ 6,098 36.2% Stamps $ 2,998 $ 3,475 $ 120 $ 134 $ 477 13.7% $ 14 10.4% Office of the Secretary of the Treasury, Division of Research and Statistics. July 3. 1941. Source: Division of Savings Bonds. Figures shown as post office sales of Series 1 bonds are deposits by postmasters with the Treasurer of the United States. The bank figures are taken from Federal Reserve Bank reports (weekly reports for Series B; daily reports for Series 7 and G) and include their own sales. Stamp figures are estimated by the Post Office Department; figures through June 7 have been prorated to agree with complete reports by postmasters which are made quarter-monthly. a Average per business day. There were 25 business days in June and 26 in May. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified STRICTLY CONFIDENTIAL 143 CCC 5/8 Percent Notes Maturing on August 1, 1941 Amount Owned on May 31, 1941 by the Twenty-Five Largest Holders Reporting to the Treasury (In millions of dollars) Metropolitan Life Insurance Co., New York 16.0 First National Bank, New York, N.Y. 14.4 Commerce Trust Co. Kansas City, Mo 8.5 Bank of Manhattan Co., New York. 8.5 French American Banking Corp., New York, N.Y. 8.1 J. P. Morgan & Co., Inc., New York 6.3 National Bank of Detroit, Detroit, Mich 6.1 Benkers Trust Co., New York 6.0 Lumbermen's Mutual Casualty Co., Chicago, Ill 4.2 Brown Brothers Harriman & Co., New York 3.2 Bank of North Dakota, Bismarck, N.D. 3.1 City National Bank & Trust, Chicago 2.7 Manufacturers' Trust Co., New York 2.7 First National Bank, Boston, Mass 2.3 First National Bank of Chicago, Chicago, Ill 2.2 American Trust Co., San Francisco 2.0 First National Bank, Shreveport, La 2.0 The Detroit Bank, Detroit, Mich, 1.9 New York Life Ins. Co., Madison Square, N.Y. 1.8 Anglo-California National Bank, San Francisco 1.8 Bank of America N.T. & S.A., San Francisco 1.6 United States National Bank, Portland, Ore 1.3 First Huntington National Bank, Huntington, W.Va 1.3 Central Missouri Trust Co., Jefferson City, Mo 1.1 Providence Institution for Savings, Providence, R.I. 1.1 Total amount owned by 25 largest holders 110.2 Total amount outstanding 202.6 Percent of total owned by 25 largest holders 54.4% Office of the Secretary of the Treasury, Division of Research and Statistics. July 3, 1941 Regraded Unclassified Secretary largenthau DEFENSE SAVINGS STAFF 144 ADVANCE NOTICE RADIO PROGRAMS THURSDAY - JULY 3, 1941 Time: 9:30 - 9:45 A.M. Program: Stepmother Station: WJSV Time: 9:45 - 10:00 A.M. Program: Woman of Courage Station: WJSV Time: 1:00 - 1:15 P.M. Program: Young Dr. Malone Station: WJSV Time: 9:00 - 9:15 A.M. Program: The Story of Bess Johnson Station: WRC THESE PROGRAMS PROMOTE THE SALE OF DEFENSE BONDS AND STAMPS. 145 July 3, 1941 TO: The Secretary Mr. Adams Mr. Callahan Mr. Dietz Mr. Graves Mr. Houghteling Mr. Kuhn hr. Mahan Prof. Odegard Mr. Olney Mr. Paige Mr. Powel Mr. Sloan FROM: Mr. Duffus Thursday, July 3rd, "Rochester" (of radio fame) appeared on our 4:45 broadcast and we had two band concerts - matinee and evening. For July 4th, we will have the American Legion Boys' Band in the afternoon and, at 7:30 p.m. we will have the Navy Band with Lucy Monroe, the "Star Spangled Banner" soprano, on à CBS hook-up. The Navy Band will also give 6. concert Saturday noon. Presented Lay 146 not preas TREASURY DEPARTMENT WASHINGTON SAVINGS STAFF 7-3-41 "AMERICA PREFIRRED" & half-hour program sponsored by the Treasury Department over the Mutual Broadcasting System, Sunday, 12:00 to 12:30 PM. originating in New York. The present set-up calls for a ten weeks series with Mutual agreeing to contimue indefinitely. This program is designed for the cultural and classical type of listener. Opening program, Sunday, July 13 Pierre van Passson - narrator Guest speakers (two will be selected by Thursday) Louis Adamic - Jugoslavia Martha Ostenso - Norway Angelo Patri - Italy Albert Einstein - Germany Dean Alfange - Greece Guest artist Jarmila Novotna - Csechoslovakie Metropolitan Opera Star - Soprano Mr. van Passsen and the Legion for American Unity want to have the following people appear on the first program for a for seconds to greet the opening of the series. Mrs. Roosevelt could speak for three or four minutes from Washington. The following names (with the exception of Mrs. Roosevelt) are now being contacted by Mr. van Passsen and his manager. We will know by Thursday afternoon whether or not this angle works: if it does, we will have & 45-minute show the first time. Following 1s a list of names suggested by Mr. van Passsent Mrs. Roosevelt Somerset Maugham Henri Bernstein Jules Romain Erich Remarque Sigrid Undset Paul Lukas Jan Struthers Ference Molnar Anna Tolstoy Sinclair Lewis Theodore Dreiser Ernest Hemingway VanWyck Brooks Walter Winchell Pastors - Conference of Jews and Christians Regraded Unclassified 147 TREASURY DEPARTMENT WASHINGTON DEFENSE SAVINGS STAFF GUEST ARTISTS WHO HAVE BEEN ASSIGNED DEFINITE DATES Jarmila Novotna - Metropolitan Opera Soprano - July 13th Jan Peerce - Metropolitan Opera Tenor - July 20th Ania Dorfmann - Pianist - August 3rd Mischa Elman - Violinist - August 24th Artur Schnabel - Pianist - October 5th Efrem Zimbalist - Pianist - July 27th (He may change the date) 148 TREASURY DEPARTMENT WASHINGTON CEFENSE SAVINGS STAFF GUEST ARTISTS TO WHOM WE WILL ASSIGN DATES AS WE SECURE THEM Sergei Rachmaninoff - Pianist Yehudi Menuhin - Violinist Jascha Heifets - Violinist Vladimir Horowits - Pianist Jose Iturbi - Pianist Adolph Busch - Violinist The Legion for American Unity, at my request, has formed a Guest Artists Committee which will serve as the date booking bureau for the artists. The committee is composed of the following outstanding names in the musical world: Ernest Bloch, composer; Samuel Chotzinoff, musical critic; Walter Damrosch, composer and conductor; Ernest Hutcheson, President, Juilliard School of Music; Hermann Irion, Steinway and Sons; Hans Kindler, Conductor, National Symphony Orchestra; Lotte Lehmann, Metropolitan Opera Star; and Frits Reiner, Musical Director, Pittsburgh Symphony Orchestra. Regraded Unclassified 0 149 7 I JUL 3 1941 Dear General Arnold: Thank you for your memorandum of June 23, 1941, enclosing a copy of the Prossedings of the Joint Aircraft Committee. The work of the Committee is of considerable interest to me, and I appreciate your sending the report to me. Sincerely, (Signed) 3. Borgenthan, 892 Major General H.H. Arnold, Chairman, Joint Aircraft Committee, Washington, D. c. VL:vea 7/1/41 FILE TO MR. HAAS. I & Regraded Unclassified 150 JOINT AIRCRAFT COMMITTEE Washington, D. C. June 23, 1941 MEMORANDUM TO: Secretary of the Treasury SUBJECT: Proceedings of the Joint Aircraft Committee 1. At the direction of the members of the Joint Aircraft Committee there is enclosed here- with for your information a copy of the Proceedings of the Joint Aircraft Committee. This booklet has been prepared as a brief history of the work of the Committee from its organization to May 1, 1941. 2. While it is apparent that all of the work of the Committee has been of a constructive and noteworthy nature, your attention is particularly directed to the schedule of cases on the Standardiza- tion of Aircraft in the last part of the booklet. It is the belief of the Committee that outstanding results have been obtained in this direction in a. very short period of time. /s/ E. H. Arnold H. H. Arnold Major General, U. S. Army Chairman, Joint Aircraft Committee Enclosure. Regraded Unclassified C 0 151 P Y JUL 3 1941 My dear Mr. President: I ha 18 your letter of June 24, 1941, requesting advice as to what defense articles the Treasury has available now and will have available to the close of this year for transfer under Section 3 (a)(2) of the Lend-Lease Act of March 11, 1941. The Treasury has been thoroughly canvassed, and I am of the opinion that no articles of substantial significance will be available for transfer this year under the above-quoted section 3 (a) (2). As you know, the Department has transferred ten Coast Guard outters to Great Britian in accordance with the provisions of the Lend-Lease Act. Any further transfer of equipment and material now in the possession of the Coast Guard would probably impair the efficient performance of that service. Faithfully yours, (Signed) 2. 008 The President, The White House. HC/op 7/3/41 File to Mr. Thompson By Memorager Regraded Unclassified MEMORANDON: 152 152 On the afternoon of July 2, 1941, Assistant Collector O'Kesfe at lieu York phoned Comminsioner Johnson that rumore were persistent in shipping sircles in New York, that (1) all Japanese vessels had been ordered to be in home waters by July 31, 1941, and (2) that principal officers of the Mitsui and Witsubishi Companies bad been ordered to be in Japan on July 15, 1941. Inquiry shows that at 3 P.M. en July 2, 1941, Naval Intelligence Agent Peterkin of New York reported to the Navy Department that definite confidential information was received from Japanese lines and executives that all Japanese ships must be in the Pacific Ocean by August 1, 1941. Customs agents at New York do not believe the information to the above two officials case from the - source, but " do not know Naval Intelligence Agent Peterkin's source of information. CIRCUMSTANCES SUPPORTING INFORMATION CIRCUMSTANCES DISPUTING INFORMATION Seattle: Customs agents report that during the past six wooks New York: Customs agents state about one-half of the Japanese residents of that area have cashed no unusual activities of Japansee their life insurance policies, and that many families of native-born steamships. Actual examination of and American-born Japanese have departed for Japan during the past offices of all principal Japanese 30 days. This is also being checked at other points on the Pacific steamship and commercial offices coast. show no signs of packing or other 100 New York: Customs agents report that Mitsui Line is moving its dications of intended departure. quarters from Piar 30, Brooklyn, N. Y., but to what point has not been learned. They do not expect & vessel for two or three months San Francisco: Customs agents and it is rumored they are discontinuing leasing of offices and docks. state no signs of unusual activities or acceleration of movements of Jap- San Francisco: Customs Agents have information from local Naval ansão individuals and that arrange- Intelligence that Mitsui and Mitsubishi Companies, on or about July 1, ments proceeding for shipments of issued instructions to their employees that their families must go cotton to Japan from Los Angeles dur- back to Japan immediately. They report that allowance of $200 per ing August and September, month, per family, has been heretofore paid and that, due to lack of dollar credits, these allowances have become burdensome and could no longer be continued, New Orleans: Customs agents state that Japanese S.S. AMAGISAN MARU, originally scheduled to arrive New Orleans July 9, 1941, for oil cargo and to proceed to San Diego for bunkers, received change of orders today from New York office cancelling call at San Diego and will proceed from New Orleans direct to Karatsu, Japan, hom Customer Regraded Unclassified 153 JUL 3 1941 Ny dear Mr. Attorney General: Receipt is asknowledged of your letter of July 2, 1941, with respect to the recommends- tion of the Chairman of the Maritine Commission that the German and Italian vessels which have been sabotaged should be ferfeited pursuant to the Espionage Act of June 15, 1917. In view of the matters set forth in your letter, the Department of the Treasury will direct the appropriate collectors of customs to seise the above-mentioned vessels pursuant to section 8 of Title II of the Espiemage set of June 15, 1917, 40 Stat. 220 (U.S.C. title 50, sec. 193) immediately upon advice from the Depart- ment of State that such seizure would not contra- vene the foreign policy of the United States. I an transmitting a copy of this letter to the Secretary of State. Sincerely yours, (Signed) H. Secretary of the Treasury. FILE TO MR. FOLEY The Honorable The Atterney General of the United States. Original sent by hand 3:45 p.m. 7/3;4; from G. C. Office. HC:ERF:mjb 7-3-41 Regraded Unclassified 154 July 8p 1941 My dear Mr. Secretary: I - enclosing a copy of & letter dated July s, 1941, to the Atterney General with respect to the recommendation of the Chairman of the Maritine Commission that the German and Italian vessels which have been sabotaged should be forfeited pursuant to the Espienage Act of June 15, 1917. Sincerely years, (Signal) He & of the Treasury. The Honorable Orig. and eon. sent by hand 3:45 pm 7/3/41 from G. C. Office. The Secretary of State. FILE TO MR. FOLEY Enclosure P.S. Please let - hear from you premptly HC:KRF:mjb me way or the other. 7-3-41 (Initialed) H.M.Ir. Regraded Unclassified 155 July 3, 1941 My dear Mr. Secretary: I an enclosing a copy of a letter dated July 3, 1941, to the Atterney General with respect to the recommendation of the Chairman of the Maritime Commission that the German and Italian vessels which have been sabstaged should be forfeited pursuant to the Espiemage set of June 15, 1917. Sincerely yours, (Signed) H. Morgenthau, Jr. Secretary of the Treasury. The Honorable The Secretary of State. FILE TO MR. FOLEY Enclosure P.S. Please let me hear from you promptly one way or the other. HC:ERF:mjb 7-3-41 (Initialed) H.M.Jr. Orig. and enc. sent by hand at 3:45 p.m. 7/3/41, from G.C. Office. Regraded Unclassified 156 0 P July 3, 1941 J My dear Mr. Attorney General: Receipt is acknowledged of your letter of July 2, 1941, with respect to the recommends- tion of the Chairman of the Maritine Commission that the German and Italian vessels which have been sabotaged should be forfeited pursuant to the Espionage Act of June 15, 1917. In view of the matters set forth in your letter, the Department of the Treasury will direct the appropriate collectors of customs to seise the above-mentioned vessels pursuant to section 3 of Title II of the Espionage Act of June 15, 1917, 40 Stat, 220 (U.S.C. title 50, sec. 193) immediately upon advice from the Depart- ment of State that such seisure would not contra- vene the foreign policy of the United States. I in transmitting a copy of this letter to the Secretary of State. Sincerely yours, (Signed) He Morgenthau, Jr. Secretary of the Treasury. The Honorable The Attorney General of the United States. Original sent by hand 3:45 p.m. 7/3;4; from G. C. Office. FILE TO MR. FOLEY. Regraded Unclassified COPY TO: 157 Under Secretary Bell I agree that Mr. Welles' letter of July 3 should close the Aldrich case. Likewise I think we should file unanswered the attached letter of April 30 from the Department of State, since the recent extension of our Freezing Control has clari- fied the policies in question. (initialed) H.M.C. July 14, 1941 COPY Mr. Cochran Seems to me this closes case. (initialed) DWB Regraded Unclassified in Y DEPARTMENT OF STATE Washington July 3, 1941 My dear Mr. Secretary: I refer to your letter of May 16 and Mr. Winthrop 1. Aldrich's of May 12 concern- ing transactions of the Chase National Bank with German, Italian and Japanese firms. This Department appreciates Mr. Aldrich's concern that that the policies of the Chase National Bank, in its relations with foreign countries, be in harmony with the policies of this Government. However, the issuance of the executive order of June 14 establishing control over German and Italian assets in this country makes a specific reply to his inquiries in this letter no longer necessary or pertinent, and the Department does not desire to comment with reference to the Jananese transactions. Sincerely yours, (Signed) Summer Welles Acting Secretary. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury. Regraded Unclassified 159 COPY May 16, 1941 Files TO From Sr. Cochran When we originally received the letter of April 30 from Under Secretary selles in regard to American banks extending credit facilities which assist in the export of strategic and critical was materials to Germany and Japan from Brasil, I discussed it with Under Secretary Bell. We agreed that the Treasury should not take the initiative in calling together a group of New York banks and considering requesting them not to extend the facilities under reference. Me thought the appropriate time to go into this matter would be whonever we establish the contemplated Capital Control Committee, or when the joint committee of the State, Treasury and Justice Departments may be established for passing upon matters of economic and financial interest such as that under reference. Then Mr. Ball sent to ne for initialing last night a letter drafted to the Secretary of State, requesting the latter's suggestions for e reply to an attached inquiry from Mr. Aldrich of the Chase Bank, I pointed out to kr, Bell that Mr. Aldrich's letter raises the question of general Govern- nental policy to be laid down for the guidance of banks in their dealings with such countries as Germany, Italy and Japan. In this connection WE had not yet answered the letter from the Department of State of April 30 which dealt with one phase of this general problem, namely, that of American banks financing exports of strategic and oritical way materials from Brasil to Germany and Japan. At Mr. Bell's suggestion, I took the letter to Secretary Hull and obtained Secretary Morgenthau's signature thereto this afternoon. The Secretary also signed the acknowledgment addressed directly to Mr. Aldrich. I explained the background to Secretary Morgenthau, including the unanswered letter of April 30, and he agreed to the position which we have taken. If the State Department, in answering our letter with respect to Mr. Aldrich's inquiry, raises the point brought up in its letter of April 30, then the two Departments should have a more thorough discussion of the points involved and decide whether a position can be immediately taken, or whether a setting up of one or both of the committees in question should be awaited. (initialed) H.M.C. Regraded Unclassified 160 COPY MAY 16 1941 Dear Mr. Secretary: I am enclosing herewith copy of a letter dated May 12, 1941, together with memorandum referred to therein, from Mr. Winthrop W. Aldrich, Chairman of the Board of Directors of the Chase National Bank of New York, rais- ing certain questions as to the advisability of that Bank's continuing to furnish certain banking facilities to German, Italian and Japanese banks and firms, I would appreciate it if you could advise me as to how the Treasury should reply to this letter. Sincerely yours, (Signed) H. Morgenthau, Jr. The Honorable, The Secretary of State. Regraded Unclassified 161 COVY MAY 16 1941 Dear Mr. Aldrich: I have your letter of May 12, 1941, enclosing a memorandum outlining the nature and scope of certain transactions which your bank is carrying on with German, Italian, and Japanese banks and firms, and advising me that you would be glad to be guided by the wishes of the Treasury either now or at any time in the future, if in my oninion it should be inadvisable for your bank to continue to furnish any of these facilities. I appreciate very much your bringing this matter to my attention. I have it under study and will be glad to advise you in case we want to take advantage of your kind offer. Sincerely yours, (Signed) H. Morgenthau, Jr. Secretary of the Treasury Mr. Winthrop W. Aldrich, Chairman, Board of Directors, The Chase National Bank, New York City. Regraded Unclassified the 0.0 Y THE CHASE NATIONAL HANK of the City of New York NEW YORK any 12, 1941 The Honorable Henry Morgenthau, Jr. Secretary of the Treasury, Washington, D. C. Dear Mr. Secretary: Those of us who are responsible for conducting the policy of this Bank recognize that dur- ing the present period of international tension it is extremely important that American banks should co- operate in every possible way with the Administration. On the other hand, it is difficult, in the absence of action by the United States Govern- ment to control assets owned by German, Italian and Japanese nationals, for us to refuse to continue to handle for the benefit of our American customers and depositors such ordinary business as they may have in Central Europe, Italy and Japan, or to refuse to con- tinue our correspondent relations with German, Italian and Japanese banks and firms. The nature and scope of the trans- actions which I have in mind are outlined in the en- closed memorandum. I have no reason to suppose that any of these transactions 18 in any way contrary to the policy which the Administration would wish to have us follow, but with the thought in mind that it might not have occurred to you that some of these trans- actions were being carried on, I have felt it desirable to call them to your attention. I an sure that it is not necessary for de to tell you that if, in your opinion, it should be inadvisable for us to continue to furnish any of these fecilities, we will be glad to be guided by your wishes either now or at any time in the future. Very sincerely yours, 151 Winthrop 8. Aldrich Chairman Board of Directors. Enclosure. Regraded Unclassified 163 COPY way 12, 1941 I - - GERMANY A) - We continue to carry current accounts in the names of German banks and firms and effect payments and collections on their behalf in- cluding all the routine banking transactions involved in an ordinary correspondent relation- ship. 9) - Ever since the German crisis of 1931, we have been actively engaged in the liquidation of credits extended by this and other American banks in Cermany. Under the Standstill Agree- ments concluded with the German banks, the American banks had the right to acquire debtors to settle their debte in German Marks. These Marks were and are still being sold to buyers in the United States and elsewhere and are generally used for support of families, charitable contributions and travel. C) - Prominent American concerns doing business in Germany are using our services in connec- tion with the transfer to the United States, after conversion, of interest, dividends, royalties collected in Marks in Germany. D) - We have been instrumental in liquidating funds inherited by United States citizens or residents in Germany. E) - We have received from German residents of the United States desirous of returning to Germany to take up permanent residence there, dollars which were credited to the account of the Deutsche Golddiskontbank for the purpose of conversion into Marks to be paid to these emigrante upon their arrival in Germany. The gross volume of all transactions completed during the first four months of 1941 amounted to slightly under $4,300,000. Regraded Unclassified 164 - 2 - II - ITALY A) - We continue to carry current accounts in the names of Italian banks and firms and effect payments and collections on their behalf, including all the routine banking trans- actions Involved in an ordinary correspondent relationship. 3) - rominent American concerns doing business in Italy are using our services In connection with the transfer to the United States, after conversion, of interest, dividends, royalties collected in Lires in Italy. C) - For American investors, holders of Italian shares and dollar bonds in default, we have been instrumental in the sale and disposal thereof in Italy. D) - We have made and are making remittances representing gifts, support of families and charitable contributions, mainly for account of Italian residents in the United States and for the Catholic Church. Considerable payments of this kind have been made to the Vatican, the Society of Jesus and various missionary societies in Italy. Other sales are made mainly to steamship companies, passenger, travel and freight agencies and American and Italian banks. X) - We are transferring funds to subsidiaries and agents of American firms in Italy and to the Italian Offices of the American Press. The gross volume of all transactions completed during the first four months of 1941 amounted to slightly under $1,900,000. III - JAPAN A) - We continue to carry current accounts in the names of Japanese banks and firms, most of whom are established in New York, and effect pay- ments and collections on their behalf includ- ing all the routine transactions involved in an ordinary correspondent relationship, such as opening of commercial credits on a fully Regraded Unclassified 165 - 3 - secured basis to finance the importation of silk and rubber, loans against goods in ware- house (stored in this country), loans against U. S. Government Bonds, discount of trade acceptances and purchase and sale of foreign exchange. The gross volume of such transactions on our books at the present time amounts to about $6,100,000. Regraded Unclassified 165 - 3 - secured basis to finance the importation of silk and rubber, loans against goods in ware- house (stored in this country), loans against U. S. Government Bonds, discount of trade acceptances and purchase and sale of foreign exchange. The gross volume of such transactions on our books at the present time amounts to about $6,100,000. Regraded Unclassified 166 COPY DEPARTMENT OF STATE Washington April 30, 1941 CONFIDENTIAL NY dear Mr. Secretary: As you no doubt know, the Department is busily engaged, along with the buying agencies of this Government, in acquiring to the utmost possible extent strategic and. critical raw materials produced in the American republics. In this connection & talegraphic report was received from our embassy at Rio de Janeiro which brings out the fact that various products on our strategic and critical you nater- ials list are being exported to Germany and Japan from Brazil, use being made of our commercial banking facilities, I enclose a para- phrase of the cable. It is my judgment that we should endeavor to bring to an end this financial output on the part of the American banks. It occurs to - that the simplest way might be if the Treasury or the Federal Reserve Bank of NewYork would informally discuss the matter with the banks engaging in this business and seek to secure agreement that it would be foregone. If the Treasury is willing to arrange such a meeting, I should be very glad to - that & representative of the State Department is present to help in presentation of the matter. You wight also wish to have present a representative selected by the Federal Loan Administrator. Regraded Unclassified 167 -2- I should appreciate your assistance in this matter. Sincerely yours, For the Secretary of State: (Signed) Summer Welles Under Secretary. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury. Enclosure: No. 349 of April 23 from Rio de Janeiro Capy:lg 7/14/41 Regraded Unclassified 168 COPI PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Rio de Janeiro, Brasil DATE: April 23, 1941, 7 P. m. NO.: 349 Industrial diamonds and other strategic materials, as previ- ously reported by the Embassy, are being exported to Germany and Japan from Bragil, using United States commercial banking facili- ties. Certain strategic materials are being exported from the United States only under license, at the same time, and the shipment of such materials from Brasil and other non-American destinations on credits extended by American banks is partially defeating the general objectives of the export control of the United States. I wonder whether the Department would have any suggestions as to possibility of persuading U.S. banks not to open foreign com- sercial credits for strategic materials unless the credits are docu- mentary and concern only shipments to countries in the Western Hemisphere, or unless some other destination has been officially ap- proved. Just this measure in itself I realise might not be sufficient to bring about a substantial lessening of the movement to non- American countries of strategic materials. However, American banks would at least be prevented from facilitating such movement of n- terials, and other efforts of the United States in that direction might be strengthened. CAFFERY. Copy:1g 7/14/20 Regraded Unclassified 169 JUL 3 1941 W dear Mr. Secretary: informate is made to your letter dated Jame 18. 1941, is which you Informed the treasury of the decire of the National Bank of the Republic of Halli to yerchase $790,000 worth of one to the purpose of serving as a reserve against the circulation of surrency. mch gold to remain on deposit with the Federal Receive hall of New Test for the account of the National Suni of the Reyublic of Maits. with year Letter there we contract a transle- time of the Instructions reselved by the Charge d'Affaires od is- teria of the Reyablic of Medti. for appropriate commission to the dovernment of the Reputlic of Maits. the following information to provided. one - be sequired is the Maited States only under fresenty License. the National lask of the Boyablis of Reddi chould address the request for the purchase of gold to the Pederal Recerve back of New fort which would, to term, apply to the treasury Department for the - may liemse. the Treasury Repartment's procent colling price for gaid to 435 (plus 1/45) per fise tway - of one and the procent buying rate for gold is 835 (Less 1/45) per fine trey - of case. the Federal Receive lusk of New York yardiness gold ealy M agest of the United States, at the Treasury Department's buying yetes. M m are mm, the 635 price for gold has been since $0 vos ortablished is demony 1934, the Federal Receive York of In Test will be planced to to its Beard of Directors for approval B request from the National of the Republic w Madel to current goze is its realts for the account of that hash. the Federal Beserve Task of New Test does not nais a charge for holding gold unior earmark bet asks for reintureement of actual labor cost insured is commetion with the receiving. shoot- ing. veighing, delivering. etc., of one for foreign account. the laber cost of receiving gald for carneting to 33.57 seate per for of standard else (spyrentuately hoo greese w its equivalent, and that of releasing gold the excess n.e combo yes - as above, or its equivalent. Regraded Unclassified 170 a 0 e You are assured that as will be a pleasure for the Treasury to be w on possible accistance to the Sational Bank of the Republic of Smith is sequiring gold for its currency receive. I Secretary of the Treasury. the Henerable Number Vellee, Acting Secretary of State. (Jait.) 4. 4. G. I B; VII: MI as: WWT Regraded Unclassified 171 077 Ime 24, 1941. To: Mr. Cookress Dekjects Purchase of gold and its cornecting w Federal Reserve Dank of Bee Terk Premi be 1. Kasin for account of the National Back of the Reyablic of Maiti. As you iss, gold - w sequired is this country easy under Treasury license: therefore, upon receipt of a request free the Patienal for of (b) Reyablic of Maiti to purchase gold here for its assount, the Federal Increase Jack of Nov York would apply to the Preasury Department for the license. As you also - the Treasury Department's procent selling yrice for gold is $30 (plus 1/45) per fine trey - of gaze and its present buring rate for gold to $25 (Less 1/490 per fine trap - of gold. The Federal Recerve Bank of New York purchase gold only as agree of the United States, at the Treasury Department's present buying price. the Federal Receive Bank of Bee Terk will be pleased to be its board of directors for approval a request from the National Thank of the Reyablic of Halti to carnarit were in its vehits for the acceunt of that 1 the Federal Recerve Bask of See Term date not min 6 charge for helding gale under earnark bet other for reintureement of astmal labor asst insured is commetion with the reselving, checking, voightng, delivering, otc., of gold for foreign The later cest of receiving gold for correring is 23.874 per ber of standard sise (approximately 490 gross senses). or its equivalent, and that of releasing gaid from careark 32.00/ per her M above, or 16c equivalent. (a) L.V.E. Regraded Unclassified PYRSONAL AND strictly CONFIDENTIAL C 172 0 Sveriges P Riksbank Y Stockholm, July 3rd, 1941. Mr. E. Merle Cochran, c/o The Treasury, Washington, D. C. My dear Merle, Your letter of May 26th arrived on June 30th. I thank you most heartily for the very valuable help you have rendered Mr. Bo- strom and Magnusson. All your European friends are happy that a man with such a thorough knowledge of European matters is holding such a central position in the Treasury 8.8 you are. We thank you for the licences given us. You can be assured that we will cooperate whole- heartedly with you. I have had a very interesting trip to Basle, the first one during the war. We were B. very small company: McKittrick, Weber and I. At the General Meeting there were with exception of us only the usual members of the management of the bank. We lunched at the "Trois Rois" without any Swise bankers. We are sorry for the delay which the B.I.S. had with regard to the transfer to the Swiss National Bank. I hope that these mat- ters in the meantime have been arranged. We agreed that McKittrick should go to America to tell your American friends something about the B.I.S. and the very correct and neutral way, in which they now handle everything. I understood, however, the other day that it vas doubtful, whether McKittrick should be able to make the trip. Regraded Unclassified ITS - 2 - The work in the B.I.S. in still going on along the same lines as previously. They still have the same good team-work and you can- not find any difference between the different nationalities in their willingness to work for the B.I.S. All central bankers in Europe. with whom I have come into contact, have been interested to keep up the B.I.S. organisation in the hope that it should be able to contribute to the solution of the monetary problems of the world after tae war. Since the dollar no longer can be used as a medium, when a central bank in Europe wants to buy another European currency, the situation is the following: Ye have only 4 possibilities of getting e.g. Swiss france, which 19 the currency mostly demended: They are to buy Swise france 1/ against Swedish kronor, 2/ If gold, 3/ " reichmmarks, 4/ II another currency, dollars escudos or pesos, if B. buyer of such a currency can be found. The Swies National Bank 1a not buyer neither of dollars nor of escudos, end as B. rule not of pesos. We have been informed through Magnusson that we can buy pesos in New York after a special licence. It is difficult to deal in gold as it is from time to time absolutely impossible to send gold from our country to another one. The air-lines from Sweden to Berlin have now been recpened, and this will make our work eacior. Regraded Unclassified 174 - 3 - The Swiss are in principle willing to buy gold in Stockholm but only on the condition that, if they should request it, we send the gold to Switzerland at our expense. This stipulation they have taken over from your tripartite agreement. I have, however, told them that there is at present quite another situation, as the trans- port possibilities are not the same and as the costs are very much higher. We are now negotiating with Switzerland and hope to come to some arrangement. The reason why there is a demand for Swiss france is, that some of the countries in Southern and South-East Europe are uneasy about the Swedish situation. They therefore prefer Swiss francs. Switserland is to them something more concrete than our country far in the North. From the political point of view I think that the situation is practically the same; both of us are now totally surrounded by German armies or armies belonging to German allies. The Swise and the Swedes cannot see any reason why the Germans should try to invade them. I em enclosing a short memorandum on my discussions in Basle. which might be of some interest to the American observer, this time very much missed by those present. Jac was in his old good form. The annual report 1s, however, very much delayed on account of the difficulties to obtain the necessary information. He hoped, however, that the report should be ready during the latter part of July. Regraded Unclassified 175 - 4 - I suppose that you heard of the death of our friend Janssen. Ee has ever since he returned from France been rather depressed. He ared, nowover, from & thrombus after any operation. As you will understand the German war against Russia has brought us in a position, which is rather difficult. I hope that our friends abroad will understand the political necessity of per- mitting the Germans to send the division to Finland by railway through Sweden. You must when considering this decision remember that Finland's fight for freedom is part of our fight. The problem is, however, to some extent now another one than it was during Finland's fight in 1939-1940. The difference from the Finnish point of view is, however, mainly that this time the German army is helping Finland and that the Swedish help to Finland need not be as substantial as during the last war. My boy Lars got bronchitis and is probably now somewhere in the Rocky Mountains to get rid of it. He has got something to do during the summer in Los Angeles. I do not yet know what. From the autumn he has obtained an exchange-scholarehip at the University of Chicago instead of & friend of his, who has been unable to go to the States on account of his military service. With kind regards from family to family. Yours ever, 18/ Ivar Rooth COPY;mew 8/11/41 Regraded Unclassified 176 PERSONAL AND STRICTLY CONFIDENTIAL 3.7.1941. Notes from conversations in Switzerland, June 1941. There has been 8 certain demand for gold coin and bullion in Switzerland, mostly from France. French and American gold coins are not obtainable now. The latter commanded a premium of about 15%. According to Swiss reports the German authorities in France which have 60 - 80 milliard Fr. at their disposal at Banque de France and German soldiers are said to buy gold coins in France, paying B. substantial premium. The Germans are now buying French securities in Holland and probably also such bonds and shares of other countries which have been placed in Holland. The German demand for Swiss securities is not great, probably owing to the lack of German claims in Switzerland. To the two latest Swiss State loans, issued in May, one be- ing a 3½ loan for 12 years and the other of 3% for 6 years, over 600 million Swies Fr. were subscribed. The Government accepted the subscription of 280 million Fr. to each. Of the loan, yielding an interest of 3½. about 200 million Fr. were taken over by private subscribers, 25 millions by insurance companies and 55 millions by industries and banks. Of the 3% loan 200 million Fr. were sub- scribed by banks and approximately 80 millions by industries and insurance companies. It was believed that France would pay the interest of her Government debts in Swiss Fr. as well as her commercial debts to Swiss enterprises. These liabilities were estimated at about 40 million Swice Fr., principally originating from deliveries of raw Regraded Unclassified 172 - 2 - materials and food supplies, effected while France was still at var. The Swiss banks have been told to sell foreign currency only for strictly commercial transactions or for the settlement of fi- nancial liabilities. A French citizen may have 3.000:-- Swiss Fr. 8. month, whereas citizens of other occupied countries only get 1,000:-- Swiss Fr. monthly. Exceptions from this rule are made. only very seldom. In May 1940 a gentlemens' agreement was made with the Swiss banks mainly for the purpose of preventing the flight of capital from Switzerland. Any Swiss person wishing to migrate or any for- eigner having investments in Switzerland may export his money. Foreigners are at liberty to sell bonds or shares - including Swise ones - and to have the money transferred. A Swiae citizen, nos- seasing foreign securities, is now allowed to sell them to other Svies citizens. He also has a right to sell currencies, originating from export transactions, to other Swiss citizens or to change them into other currencies. The Swies National Bank does not open any account in foreign currencies for foreign banks. It is only buying gold and dollars, when the corresponding sum is required for the payment of Swies emorts or for the settlement of financial liabilities towards Switzerland. At the National Bank there was & general feeling of satisfaction 0.8 to the private currency restrictions. For the time being there vas no difficulty in keeping the Swime currency stable. Regraded Unclassified 178 - 3 - Farmers and the heavy industry have availed themselves of the situation to raise prices. Up to now farmers obtained substantially more than compensation for the increased costs, owing to their great influence with the Government. The industry, above all the alumi- nium and textile industries, have made very big profits. The excel- lent profits of the aluminium industry have caused B sharp rise in all industrial shares. The quotations were previously rather low. At present many shares only yield about 3%. Before long the Natio- nel Bank intends to propose a more efficient war profit taxation. During my stay there were certain fears of a continued rise in prices. The cost of living had risen by about 24% since the outbreak of the war, whereas wages rose by 10 - 12% during the same period. Lately there has been some claims from labour quarters for unchanged prices, for the subvention of milk and some other neces- saries. If these claims are not met, higher wages will be demanded. Previously the Government always complied with the demands of the farmers but the other day the Minister of Food Supply spoice decided- ly against higher agricultural prices. The crop prospects were good with the exception of the hay crop, which was late. The fruit harvest did not seem to be very good. COPY:mew 8/11/41 Regraded Unclassified 179 PARAPHRASE OF TELEGRAM SENT TO: American Embassy as Rio de Janeire, Brasil DATE: July 3, 1941, 8 p.m. NO.: 503 You are requested to renew your inquiries into the matter treated in the Department's ses of June 9 and to urge that action now be taken - the specific instructions which have been received by the Bank of Brazil from the President of the National Bank of Yugeslavia. 10 THE LECHNICAT 11 OFFICE ot THE BVI nr a W II S2 EATFLINDOR IBEVENBA DELVKIWEW1 BECEINED Regraded Unclassified 180 paraphrase or TELEHRAN REVERVED FROM: American Embasay, Begetá, Columbia DATE: July 3, 1941, 4 P.M. NO.1 nw This office is being flooded with requests respecting funds being frozen in the United States, and the Embassy asks that the Department forward by sir mail all regulations which have available. Detailed information is requested concerning the policy which lecal banks should adopt with regard to drafts, checks and travelers checks drawn by European nationals en United States banks, the status of such nationals residing in Colombia, and the countries which are severed by Executive Order No. 8785. Business firms in this locality are being advised that they should procure a new finance license, which, it appears, have to be obtained before export licenses are granted. Instructions have boon received w several agents to confire and report as men as possible the nationality of all their customers, and as regards cor- peretions, the nationality of all stockholders who central more than one-quarter of the stock of the corporation. A request has been received by one agent to furnish an afficavit giving information as to date of establishment, his nationality, whether he is a refuges or not, and sing a reference on the basis that if his records are not sub- mitted to the Federal Reserve Bank, me sommissions can be paid. I as Regraded Unclassified 181 I de not wish to make any comment watil I our make a study of these nov regulations, but I wish to inform you that importing design in Colombia are confused about the regulations. Gensiderable 111 will and misunderstanding has been saused in Colembia because of existing regulations in the United states, oven though they are advisable and necessary, and this condition should be remedied. In Bogotá alone, 1848 American manufacturers are represented, and if each agent has to make e survey like that pointed out in paragraph two of this telegram, the result will be A great deal of confusion and duplication. For years this effice has been collesting such information and as there are at the present time in Washington over 4,000 World Trade Directory reports, besides special studies which cover 639 Italian and Gerden individuals and firms, the Embasiy hopes that if at all possible the above data be used before private firms are asked for the same. BRADEN 10 THE ti VBA THA w II YPA of BVI nnr 1 bW 1 10 Regraded Unclassified M/TH THE COMPLIMENTS OF HAROLD K. HOCHSCHILD Copy of Letter from B, exico City, July 1941 During the period under review there has again been some tulk of A nearing definite settlement of 611 pending Questions between the lisited States and Mexico, but no official expressions have been voiced, except that the Secretary of Foreign Relations has tecitly admitted that negotiations are progressing, and that results will be unde snown to due time. It has been stated in press reports that 08 g. conse- quance of such 8 settlement, or A8 part thereof, the United States vill buy ell of Mexico's exportable production. Naturally, hopes in this respect are high strung. It was elso said that until such arrange- 081 be concluded, Mexico will not allow exports of stretegical interial to any country outside this hemisphere. Except for воде not.16 88 lead and quicksilver being shipped to Japan, we do not know of any exports of importance to other countries, But these rumors, 1f nothing else, help to keep the general public in an optimistic mood end distracting attention from other matters. The Réde have behaved pretty discr etly, and there has only been 5020 telk about 8 motion to be presented to Congress by the Communistic Perty, proposing that diplomatic relations with Soviet Russie should be revatablis ed, e rumor which has not been taken very seriously. On the whole, there hes been less agitation in connection with develop- sente abroad then could have been expected. The discovery by the Banco de Mexico of counterfeit 50 posoa billa rea just about to cause Bode alarn. But since the Bank is exchanging =11 50 poso bills in unlimited amounts, calm wea soon reesteh ished. Again are Spanish refugees mentioned in connection with this getter. See our 1sst week's letter. Reins continue to demage railroad traffic, and for the 1mst Cur drys demage on the West Coast, mainly between Guedalejarn and Manzanillo, has been reported. The President is on his tour through the Stutes of Morelos end Suprrero and 1a expected to return to his office early next was, The Technical Commission to study the Social Security Lov ven insugurated by Secretary of Labor, Lic. Ignacio Garcia Tellez, Our Monday lost. There seems to be little doubt/that the proposed 1AW vill be sent to Congress during its next period. Mexico announced the payment of enother million prsos on account of indemnities to expropriated American lond owners. Tourn is nothing to be reported from the lobor ri-1d, and the etchange hive n/10 steadi y at around 4.8575, Regraded Unclassified 183 C 0 P Y DEPARTMENT OF STATE Washington In reply refer to EA 840.51 Frozen Credits/2298 July 3. 1941 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and transmits 8. copy of telegram no. 870 from the American Embassy in Rome, dated June 25, 1941, and a copy of the Department's reply thereto, dated June 28, 1941, concerning Italian funds frozen in the United States. Enclosures: 1. No. 870 from Rome, June 25. 1941. 2. No. 447 to Rome, June 28, 1941. Copy:1g 7/5/41 0 Regraded Unclassified 184 C 0 P Y TELEGRAM SENT MD GRAY June 28, 1941 3 p.m. AMEMBASSY, ROME. 447 Your 870, June 25. 8 p.m. The remittance of funds from the United States to Americans living in Italy will be governed by the terms of General License no. 33 as indicated in your telegram. WELLES Acting (BL) EA:GL:VCL 840.51 Frozen Credits/2298 2 43 Copy:1g 7/5/41 Regraded Unclassified 185 C 0 P Y GMV GRAY Rome Dated June 25, 1941 Rec'd 10:30 a.m., 26th Secretary of State, Washington. 870, June 25, 8 p.m. Department's telegram no. 429, June 21. For use in answering questions received daily, the Embassy would appreciate being informed whether the remittance of funds from the United States to Americans living in Italy will be governed by the terms of General License Number 33. as amended under Executive Order Number 8389 which the Embassy under- stands provides for remittance up to $500 per month plus a single sum of $1,000 in case of repatriation. 10 THE PHILLIPS ETM BILL VII 2 VA iD 43 Copy:1g 7/5/41 Regraded Unclassified 186 C 0 P Y DEPARTMENT or STATE Washington July 3. 1941 In reply refer to EA 893.51/7233 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a paraphrase of telegram no. 254 dated June 24, 10 a.m., from the American Ambassador at Chungking, inquiring whether the Embassy is expected to provide Mr. Fox with confidential clerical assistance. Enclosure: Paraphrase. Copy:1g 7/5/41 Regraded Unclassified 187 C o P Y PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Chungking, China DATE: June 24, 1941, 10 a.m. NO.: 254 I refer to my telegrams 239 of June 15 and 253 of June 24 and to the Department's telegram 120 of June 18. Is it expected that the Embassy shall provide Fox confidential clerical assistance? GAUSS EA:FL:MMMM Copy:1g 7/5/41 Regraded Unclassified for wiom Chauncay TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE July 3. 1941 Secretary Morgenthau TO FROM Mr. Cochran confidential Registered sterling transactions of the reporting banks were BE follows: Sold to commercial concerns £97,000 Purchased from commercial concerne e 6,000 Open market sterling was quoted first at 4.03-1/2. About noon the rate noved down to 4.03-1/4 and remained there for the balance of the day. The reported transactions consisted of the sale of £7,000 to commercial concerns. In New York, closing quotations for the foreign currencies listed below were as follows: Canadian dollar 11-5/8% discount Argentine peso (free) .2375 Brazilian milreis (free) .0505 Uruguayan peso (free) .4425 Mexican peso .2070 Cuban poso 1-1/8% discount Japanese yes .2358 In Shanghai the news that China had severed diplomatic relations with both Germany and Italy depressed the yuan to 5-9/324. off 1/84. Sterling was also lower at 3.90, off 3#. There were no gold transactions consumnated by us today. The Federal Reserve Bank of New York reported the shipment of $1,100,000 in gold from India, consigned to the Chase National Bank of New York, of this amount, $900,000 is for the account of the National Bank of India, and $200,000 is for the account of the Chase National Bank of New York. The gold will be sold to the Lamy Office at New York. In London, spot and forward silver were both again unchanged at 23-3/84, squivalent to 42.446. The Treasury's purchase price for foreign silver was unchanged at 354. Handy and Harman's settlement price for foreign silver we also unchanged at 34-3/40. We made one purchase of silver in New York amounting to 200,000 ounces under the delivery. Silver Purchase Act. This represented new production silver from Peru for forwar Regraded Unclassified 189 -2- To also purchased 275,000 ounces of silver from Canada under our regular monthly agreement. The Federal Reserve Bank's report of June 25. listing deposite of banks in soin with the New York agencies of Japanese banks, showed that such deposite totaled $62,781,000. a decrease of $4,048,000 since June 18. Most of the change in deposits took place on the books of the Yokohama Specie Bank's New York agency. The latter's principal dollar liabilities to and dollar claims on Japanese banks in Asia stood as follows on June 251 Change from June 25 June 18 Liabilities: Deposite for Japan and Manchuria $40,702,000 - $3,323,000 Deposits for China 15,385,000 - 522,000 # : U.S.Treas.Bills, comm. paper, etc 29,040,000 - 1,791,000 . Claims : Loans $12,706,000 - $1,619,000 . : Other - mainly Jap. import bill 5,897.000 - 1,618,000 It will be noted that the decline of $3,323.000 in Japaness and Manchurian deposite use accompanied by reductions of $1,619,000 in loans and $1,618,000 in Japanese import bills. 16.m. CONFIDENTIAL Regraded Unclassified 190 BRITISH EMBASSY, WASHINGTON, D.C. 3rd July, 1941 PERSONAL AND SECRET Dear Mr. Secretary, I enclose herein for your personal and secret information a copy of the latest report received from London on the military situation. Believe me, Dear Mr. Secretary, Very sincerely yours, Hahfax The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D.C. Regraded Unclassified 192 TELEGRAM RECEIVED FROM LONDON JULY 18T, 1941. June 27th and June 30th considerable reinforcements of siroraft arrived safely at kelts. 2. Fighter Command are giving protection to East Coast convoys during darkness houre. 3. Destroyer sunk in bombing attack off Tobruk; no casualties. 4. Attack on convoy by Maryland and Swordfish aircraft on June 25th. One ship hit amidship by bomb fire started. Later Swordfish attacked with torpedoes two shipe hit and probably sunk and third ship believed hit. All four merchant vessele of the convoy estimated at 20,000 tone each escorted by 6 destroyers. 5. Military. Finland. Reliable sources in Finlend report patrol activity and emall arms fire along most of the front and fairly heavy artillery fire some 50 miles north cast of Viborg and that full-scale operations have begun near the Soviet occupied base of Hango. 6. Analysis of Soviet-German Official Communiques suggesta the position is as follows: Baltie States. German claim to have occupied Dvinsk and Vilna apparently well-founded. Russien troops with- drawing from Kaunas area to North east of this line appear to be in considerable difficulties being attacked in the flank and rear. Minek APON: Large numbers of Boviet troops appear to have been out off in the region of Bislystok having been over run by German armoured formations. Bouth of Pripet marshes: Germane probably on line of the last Soviet-Polish frontier and are driving cast towards Kieff. Soviet admission of penetration of the frontier / Regraded Unclassified 192 -2- frontier may be intended to forestall German claims in respect of progress. 7. Syria. Palmyra now completely surrounded. Vichy French are said to be making efforts to enroll volunteere from native elements but the response is meagre. 8. Royal Air Force June 29th/30th. Brewen Hamburg - our attacks very (some words undecipherable). Sixty three tons of H.S. and 13,800 incendiaries (some words un- decipherable) at the former three large fires caused. At the latter 43 tons of H.E. dropped starting two very large fires, one in Blohm end Vosa shipyards. Docks at Bremer-Haven and Kiel attacked. 9. June 30th 17 Blenheims secorted by large force of fighters accred many direct hits on power station south of Lills and on huge factory close by. Fighters shot down 6 M.E. 109 one Spitfire missing, Other Blenhoime sttacking shipping off the Dutch const claimed 5,000 ton and 3,000 ton ship and 500 tone trowler as total losses; 4 Blenheims scored direct hits on crowded reilway centre near Oldenburg and enother successful attack on Bremen docks. Targets at Sylt and Terschelling also bombed. Five Halifax 4 engined bombers attacked targete et giel, From these daylight operations 2 Blenheime and one Halifax missing. 10. June / Regraded Unclassified 193 10. June 30th/July lst. 64 Aircraft sent to attack Cologne, Dussaldorf, Duisburg, 4 missing. 11. Syria. June 29th/30th. 5 heavy bombers scored direct hite on dooks and shipping Beirut. Blenheims made daylight attacks against Palmyra and citadel and military depot at Suweids. Fighters destroyed OF damaged 10 twin engined aircraft on the ground at various landing grounds and shot down 1 olen Wartin. 12. German Air Force June 30th/July lat. About 74 enemy aircraft operating 13 came inland; some bombs dropped in South Walce. 13. Egypt. Alexandrie June 28th/29th. About 15 aircraft attacked and caused some damage. Following day 6 raids made on naval units 8 enemy aircraft claimed as destroyed and 3 damaged. we lost two fighters. Regraded Unclassified 194 RESTRICTED 0-2/2657-220 No. 433 M.I.D., W.D. 12:00 M., July 3, 1941. SITUATION REPORT I. RUSSO-GERMAN FIGHT. Ground: The German-Finnish forces make gains in Murmansk sector. The advance is slower on the southeastern frontier towards the Karelian Isthmus. Some Russian troop units remain in existence in the peninsula of Latvia to the northwest of Riga. German troops are advancing northeastward from Riga and Dwinsk. The Russian com- minique of July 3 reports the repulse of German attacks "in the di- rection of Borisov, Bobruisk and Slusk". In the Bialystock region Germans continue attacks to wipe out the remnants of the Russian armies encircled in that area. South of the Pinsk Marshes German attacks continue in the direction of Shepetovska and Tarnapol. Fighting is proceeding near the latter city. Hungarian forces are advancing across the Car- pathian Mountains into southern Galicia. A. German-Roumanian drive across the Pruth River from northern Moldavia has commenced. The initial objective of this drive appears to be the Dniester River line. Air: No change in the general situation. II. BRITISH-CERMAN FIGHT. Air: German. Exceedingly light activity. British. Normal operations; day sweeps over occu- pied territory and night bombing of Bremen and the Ruhr. III. MEDITERRANEAN FIGHT, Ground: Nothing of importance. Air: Scattered operations over Syria by both sides. RESTRICTED Regraded Unclassified 195 CONFIDENTIAL Paraphrase of Code Cablegrem Received at the Mar Department at 12:17, duly 3, 1941. Leadon, filed 18:30, July 3, 1941. 1. 1. British besters drogged five - of high explesives a Charboarg and a tess on Drest. 2. Five Blenbeins - on out to estado the Lills - station) three to attack Nerville airtrass and five to attack shipping. $16 fighters - sent out a offensive patrols, 130 a interesption patrols, 166 M protoction to chipping all " a special patrols. 2. Benbers vere dispatched as follows: at to Cologns, 39 to Daisborg: w to Dream) 6 w Charlverg and T drogged leaflets orr Lille, Orlesso, and Puris. 2. terms & 15 recommissance and , long renge beabers - reported. Over German territory there - 300 fighters need a defensive patrols. 1. 20 fighters, 20 long rap beabers, and no sine layers vere reported. 1. There - defensive patrols along the Belgian, Nethorlands, and French consts. 1. Raiders entered the Benetal Channel, Cardign by and Theses Betuary. 3. Airporaft Amounted. 1. leases. 2 Blanbeino unreparted, T CONFIDENTIAL Regraded Unclassified CONFIDENTIAL 196 Spitfires and 1 Survicess lest. s benbers unreported. 2. Aria lessee. 16 Mo-109's of which 4 were No-1098's were destroyed; 4 No-1097's and 2 No-109's probably destroyed, 1 No-109W ml , No-109's Gamgos. 4. British Air Activity, Other Theaters. 1. fair 1. British benbers mão attacks upon Beirut, Seveida and Polayre, while fighters attached airtrance or Basalla, Deir Is sor, and Aleyge with good results. - Distribution: Becretary of Mar State Department Secretary of Treasury Chief of the Any Air Turee Assistant Chief of Staff, 6-8 Year Plane Division Office of Naval Intelligence - Assistent Chief of Staff, 0-3 Air Gurps + CONFIDENTIAL INFORMATION COPY Regraded Unclassified 197 CONFIDENTIAL Paraphrase of Code Cablegram Received at the Var Department at 11:39, July 4, 1941 London, filed: 16:30, July 4, 1941. 1. British Air Activity over the Continent. a. Hight of July 3-3. The following are the numbers of tons of high explosive bombs and numbers of incendiaries dropped by Britain upon the targets named: Cologne, 47 and 7000; Bremen, 88 and 7000; Daisburg, 14 and 2000: 5 tons of high explosive bombs upon Dusseldorf and 8 of same upon Charbourg. b. Day of July 3. Operating in defense of shipping were 220 fighters. The number of fighters performing interception patrola was 111, those in offensive operations, 435, and those in special patrols, 40. The railway yards at Hasebreuch were attacked by a squadron of Blenheims. Most of the operations of this day consisted of aveeps over the Channel area, particularly near Calais. 8. Ficht of July 2-4. 90 Bombers were dispatched to Issen and 68 to Brenen. Off Lorient, 4 bombers were engaged in laying mines. 2. German Air Activity ever Britain. a. Day of July 2. Germany operated offensively with 15 reconnaissance aircraft and 5 long range boubers. Over German territory defensive patrols were maintained by 300 fighters. CONFIDENTIAL the Regraded Unclassified 198 CONFIDENTI A T. b. Eight of July 2-3. 15 min-laying aircraft, 5 fighters and 15 long range bombers were dispatched. C. Day of July 3. Offensive patrole were operated along the coasts of France, Belgium and Holland and reconnaissance flights were usdo over the Channel. d. Night of July 3-4. Not a single bomb fell in Britain, nor was any other German air activity in this theater reported. 3. Aircraft Loases Reported. a. Pritish losses. Seven bombers were unreported from the operations of the night of July 3-4. One Blenheim and six Spitfires failed to return from the daylight activity of July 8. b. Aria losses. During the day of July 5, Germany lost 5 No-109's and 6 Me-1097's: 1 Heasehel (H.B.T - a-a) and 6 No-109's were probably shot down: and 2 Me-109's were damaged. 4. British Air Ambirity, Other Thenters. a. North African Thenter. Dernalgasaka, Tripeli and Beughasi vere bombed. LNM Distribution: Secretary of Var State Department Secretary of Treasury Chief of the Any Air Forces Assistant Chief of Steff, 0-2 Var Plans Division Office of Naval Intel:igence G.H.Q. 0-8 A.O. NFIDENTIAL Regraded Unclassified 199 TREASURY DEPARTM ENT FOR RELEASE, MORNING NEWSPAPERS Friday, July 4, 1941. The Secretery of the Treasury, by this public notice, Invitos tenders for $100,000,000, or theresbouts, of 91-day Treasury bills, to he issued on a discount basis under com- potitivo bloding. The bills of this series will be dated July 9, 1941, and will mature October e, 1941, when the face amount will be payable without interest. They will be issued in bearer form only, and in donominations of $1,000, 5,000, $10,000, $100,000, $500,000, and $1,000,000 (returity VElue). Tunders will be received at Foderal Roservo Bank and Branches 19 to the closing hour, two o'clock p.m., Eastern Standard time, Vonday, July 7, 1941. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and the price offered must be expressed on the basis of 100, with not more then throe decimals, O.E., 99.925. Fractions may not be used. It 15 urged that tenders be mado on the printed forms and for- warded in the special envolopes which will be supplied by Foderal Reserve Ban! s or Branches on application therefor. Tenders will be received without doposit from incorpora- ted banks and trust companies and from responsible and recog- nimed doslers in investment socurities. Tonders from others 26-32 Regraded Unclassified 200 - 2 - must be accompanied by payment of 10 percent of the face amount of Treasury bills applied for, unless the tenders are accom- panied by an express guaranty of payment by an incorporated ban} or trust company. Immodiately efter the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Secretary of the Treas- try of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejec- tion thoreof. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Payment of accepted tenders at the prices offored must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on July 9, 1941. The income derived from Treasury bills, whether interest DD gain from the sale or other disposition of the bills, shall not have any exemption, as such, and loss from the salo or other disposition of Treasury bills shall not have any special treatment, 28 such, under Fodoral tax Acts now or hereafter inacted. The bills shall be subject to ostate, inheritance, Mrt, or other exciso taxes, whether Fedoral or State, but shall 201 - 3 - be exempt from all taxation now or horafter imposed on the principal or interest theroof by any State, or any of the possossions of the United States, or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States shall be cons' derad to be interest. Treasury Department Circular No. 418, as amended, and this notice, prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. -000- Regraded Unclassified 202 DEFENSE SAVINGS STAFF ADVANCE NOTICE RADIO PROGRAMS FRIDAY - JULY 4, 1941 Time: 9:15 - 9:30 A.M. Program: Myrt & Marge Station: WJSV Time: 8:00 - 8:30 P.M. Program: Philip Morris' Great Plays Station: WJSV Time: 8:30 - 9:00 P.M. Program: Uncle Walter's Dog House Station: WRC Time: 9:00 - 9:30 P.M. Program: Hollywood Premiere Station: WJSV THESE PROGRAMS PROMOTE THE SALE OF DEFENSE BONDS AND STAMPS. Regraded Unclassified 203 C 0 PARAPHRASE OF TELEGRAM RECEIVED P Y FROM: AMEMBASSY, Rio de Janeiro TO : Secretary of State, Washington DATED: July 4, 1941, 3 p.m. NUMBER: 793 Negotiations are being carried on between the Vichy Government and the Government of Brazil regarding the purchase of Sao Paulo cotton worth one hundred million francs (approximately 60,000 bales) payment to be effected by repatriation of Brazilian franc bonds. The firm of Monteiro, Aranha, Ltda. is handling the deal in Rio de Janeiro. The Embassy states that this firm also figured in the recent cotton deal between the Brazilian and British Governments and obtained a profit of approximately twenty percent according to the British Embassy in Rio de Janeiro. CAFFERY Copy:bj:7-16-41 Regraded Unclassified