Volume 462, November 14 – November 17, 1941

DIARY Book 462 November 14 - 17, 1941 Regraded Unclassified - A - Book Page Argentina See War Conditions: France ARIZONA See War Conditions: Shipping - B - Barth, Alan Resume' of editorial opinion on foreign affaire - 11/14/41 462 97 Brazil See War Conditions: Shipping Buffington, George Reviews work with HMJr who telle him "there's B. place for him in the Treasury" - 11/14/41 13 Business Conditions Hass memorandum on situation for week ending November 15, 1941 345 - C - CALIFORNIA See War Conditions: Shipping Canada See War Conditions Censorship See War Conditions China See War Conditions Consolidated Aircraft Corporation Flight delivery service discussed in letter to Foley - 11/14/41 84 a) Rear Admiral Towers comment 90 Customs, Bureau of HMJr aroused at carelessness in handling travel by A bomber - 11/17/41 185,228 a) Harriman calls HMJr's attention to this b) HMJr's letter to Harriman - 11/18/41: See Book 463, page 97 "Carrying of Passengers' Baggage": Federal Bureau of Investigation report - 11/17/41 186 Hull to be consulted about customs declaration even for those who have free entry - 11/27/41: Book 466, page 205 a) Letter to Hull - 12/5/41: Book 469, page 133 - D - D - Defense, National Defense Activities, State Taxation of: Foley memorandum in answer to FDR's request - 11/17/41.. 209,215 Defense Savings Bonds See Financing, Government Regraded Unclassified - F - Book Page Financing, Government Schedule of fixed maturities and first call dates, December 17, 1941--December 30, 1942 - Morrie memorandum - 11/17/41 462 331 Defense Savings Bonds: Progress report - - 11/14/41 70 Field Organization News Letter, No. 26 - - 11/15/41 172 Comparative statement of sales during first eleven business days, September, October, and November, 1941 175 France See War Conditions - G - General Aniline and Dye Corporation Huts, Rudolph (Dr.): Federal Bureau of Investigation report - 11/14/41 111,115 Germany See War Conditions Gold See War Conditions: U.S.S.R. - H - Harriman, W. Averill See Customs, Bureau of Hungary See War Conditions Hutz, Rudolph (Dr.) See General Aniline and Dye Corporation - J - Japan See War Conditions - L - Latin America Messages from German agents as decoded by Coast Guard - 11/14/41 109 "Leaks" See Newspapers LeHand, Marguerite Letter to greet her in Warm Springs, Georgia - 11/14/41 96 Regraded Unclassified - M - Book Page Morgenthau, Mrs. Henry, Jr. HMJr suggests to Morris Wilson that she be one of the ten women from United States selected to go to England - 11/14/41 462 3,11 - N - NEVADA See War Conditions: Shipping Newspapers Possible leak in Treasury discussed at 9:30 meeting - 11/17/41 220 - R - - Revenue Revision "Know Your Taxes": Distribution of discussed by HMJr and Buffington - - 11/14/41 13 Merillat resume' of editorial opinion - 11/14/41 16 Defense activities - state taxation of: Foley memorandum on answer to FDR's request - 11/17/41 209,215 Conference at HMJr's home; present: HMJr, Kuhn, Barnard, Foley, Buffington, Viner, Tarleau, Morris, Sullivan, Kades, Gaston, Bell, White, and Blough - - 11/17/41 264 a) Letters and Treasury answers discussed 291 b) "Elements of a Tax Program" 318 c) "Burden distribution of a 15% supplementary withholding tax" - Blough memorandum - 11/17/41 324 1) Charte and tables 327-330 - S - Shipping See War Conditions State Taxation See Defense, National: Revenue Revision Statements by HMJr See also Financing, Government - Book 458 On economy suggestions, before Joint Committee on Reduction of Non-defense Expenditures - 11/14/41 37 a) HMJr's own notes as basis for prepared statement 22 - T - Taxation See Revenue Revision Regraded Unclassified - U - Book Page U.S.S.R. See War Conditions - W - War Conditions Airplanes: Shipments by area and types - Kamarck memorandum - 11/17/41 462 341 Canada: Liberalization of travel between Canada and United States - Alvin H. Hansen proposal - 11/17/41 381 Gold mining industry - Hansen memorandum: See Book 463, page 162 Foreign exchange position - forecast of - 11/17/41 396 Censorship: Discussion by Post Office, Treasury. War, Navy, and Justice - 11/14/41 91 Three possible plans - Foley memorandum - 11/17/41 338 Legislation discussed at conference - 11/25/41: Book 465, page 104 China: Stabilization Board: Fox aske Treasury's assistance concerning applications from (1) "S,K.F." for allotment of United States dollar exchange for $65,000 for cover shipment from Hangchow; (2) Shanghai, covering imports from Indo-China such as coal and rice; (3) Shanghai, covering bituminous coal shipped in by Kailan Mining Administration: (4) banks, for exchange to cover financing of imports from Switzerland and Thailand - 11/14/41 125 Exchange market resume' - 11/14/41, etc 134,181,429 Export Control: Error in reports discussed at 9:30 meeting - 11/17/41 221 a) Gaston memorandum 251 (See also Book 463, page 136) b) White memorandum 254 France: Report from Banco Central de la Republican Argentine, Buenos Aires, Argentina, showing credits of cold storage firms against French Government - Federal Bureau of Investigation report - 11/14/41 111,118 Germany: Messages from agents in Latin America as decoded by Coast Guard - 11/14/41 109 Bungary: Comprehensive plan to meet debt service in United States reported by American Legation Budapest - 11/14/41 122 Regraded Unclassified - W - (Continued) Book Page War Conditions (Continued) Japan: "Suggested Approach for Elimination of United States-Japanese Tension" - White memorandum - 11/17/41 462 360 (See also Book 463, pages 137 and 139) Lend-Lease: HMJr and Morris Wilson discuss Stettinius figure of $1 billion; of this only $107 million to all countries covers munitions; figure actually includes ship repairs, food, etc. - 11/14/41 5 Military Reports: Report from London transmitted by Halifax - 11/14/41 136 Purchasing Mission: Vesting order sales - 11/17/41 374 Federal Reserve Bank of New York statement showing dollar disbursements, week ending November 5, 1941 - 11/17/41 376 Shipping: Brazil denies negotiations contemplating transfer of CALIFORNIA, ARIZONA, and NEVADA to Panamanian registry - 11/17/41 418 U.S.S.R.: Gold: Bewley discusses with White terms under which gold is to be sent from U.S.S.R. to United States - 11/14/41 108 Regraded Unclassified 1 TREASURY DEPARTMENT FOR RELEASE, MORNING NEWSPAPERS, Washington Friday, November 14, 1941. The Secretary of the Treasury, by this public notice, in- vites tenders for $200,000,000, or thereabouts, of 91-day Treasury bills, to be leeued on a discount basis under competitive bidding. The bills of this series will be dated November 19, 1941, and will mature February 18, 1942, when the face amount will be payable without interest, They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,020,000 (maturity value), Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, two o'clock p. m., Eastern Standard time, Monday, November 17, 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 than three decimals, A. B., 99.925. Fractions may not be used, It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on applica- tion therefor. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities, Tenders from others must be accompanied by payment of 10 percent of the face amount of Treasury bille applied for, unless the tenders are accompanied by an express guaranty or payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened et the Federal Reserve Banks and Branches, following which public announcement will be made by the Secretary of the Treasury of the amount and price range of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. 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 offered must be mado or completed at the Federal Reserve Bank in eash or other immediately available funds on November 19, 1941, provided, however, any qualified depositary will be permitted to make payment by credit for Treasury bills Allotted to it for itself and its customers up to any amount for which it shall be qualified in *XCess of existing deposite when 80 notified by the Federal Reserve Bank of its district. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, shall not have any exemption, BE such, and loss from the sale or other dis- position of Treasury bills shall not have any special treatment, 98 such, under Federal tax Acts now or hereafter enacted. The bills shall be subject to estate, inheritence, gift, or other exclee taxes, whether Federal or State, but shall be exempt from All taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United 28-44 Regraded Unclassified 2 -2- States, or by any local taxing Authority. For purposes of taxa- tion the amount of discount At which Treasury bills are originally sold by the United States shall be considered to be interest, Under Sections 42 and 117 (a) (1) of the Internal Revenue Code, RS emended by Section 115 of the Revenue Act of 1941, the amount of discount at which bills issued hereunder are sold shall not be considered to accrue until such bills shall be sold, redeemed or otherwise disposed of, and such bills are excluded from considera- tion R8 capital assets. Accordingly, the owner of Treasury bille (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or subse- quent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return 1s made, as ordinary gain or loss. 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 3 November 14, 1941 9:35 a.m. Morris Wilson: How are you, sir? HMJr: Fine. We Lovely day. HMJr: Mr. Wilson, are you EO that you can talk a minute alone? W: Yes, I BIG glone. HMJr: Good. I'm calling you un on e sort of e personal matter. %: Go shead, sir. HMJr: There's P Misa Hazelett over here W: A what? RMJr: A women by the name of Hazelett. W: Oh, I've heard of her, yes. HMJr: And her mission 18 to pick ten women from United States W: Yes, yes, I've read that, yes. HMJr: to 6° over to England. W: And your Mrs. Biddle on the other side le sort of sponsorin the thing, isn't she? HEJr: I believe SO. a: Yes. HMJr: Now, you know, Mrs. Morgentuau is assistant to Mrs. Roosevelt. : Yes. Hidr: On this Civilien Defense. Regraded Unclassified 4 - 2 - W: Yes. HMJr: And if, when they got around, and they thought that they might like Mrs. Morgenthau to go..... W: Oh. HMJr: as assistant to Mrs. Roosevelt, not 88 my wife W: I know, I know. HMJr: I wanted to say it would be very pleasing to me. W: oh, well, now. That's B. real suggestion. HMJr; See? W: Will you leave it to me? HMJr: I'd like to. W: HA, leave it to me and I'll tell you what happens. HMJr: I'd like to. W: Sure, and you can trust my discretion. HMJr: Yes, because it needs discretion and %: Ab, well no - you know me well enough for that. HMJr: Well, that's why I've called you. W: Nobody will know your name and I'll just tell you where the thing stands. HMJr: If you would. W: I will, and I'll do it right away. HMJr: Now, on another subject which 18 cuite different. W: Yes. Regraded Unclassified 5 M I I HMJr: Some weeks ago, I think you told me that you were yet to receive your first plane under Lend-Lease, and I wondered if that was still true. W1 Well, I will check that un. It certainly was true a few weeks ago. HMJr: And I tell you what I - if you could CO this, not only planes - under Lend-Lease, what have you received up to whatever the most recent date is that you operate - let's say November 1. A: Sure. HMJr: What? %: Sure. HMJr: I mean as of November 1, what have you got under the first Lend-Lease. %: oh, sure, sure. Well, I can get that for you. HMJr: What? V: I can get that for you. HMJr: If you could. W: Sure, sure. Leave then both with me. HMJr: Because I'm - ay interest 19 - I'm outting all the pressure I can that they should speed uo production so that you'll get more. %: Sure, I know that. HMJr: Now #: Well, I always feel you're working for us behind the scenes. HMJr: Well, I'm doing all I can. %: I know it. Regraded Unclassified 6 - 4 - HMJr: I tell people how little you've gotten, and they're shocked. W: Yes, I know. Ed Stettinius, who apparently was speaking from the book, mentioned to me yesterday that they were very close to a billion dollars under Lend-Lease now. HMJr: on, that's W: of course, mina you, that includes food. HMJr: Well W: Food would probably be at least a third of it anyway. HMJr: Look, for your ears only W: Yes. HMJr: as of the fifteenth of October W: Yes. HMJr: the total amount of munitions W: For munitions, yes. HMJr: was a hundred and seven million dollars to all countries. X: All. HMJr: It was B. hundred and seven million. W: I see. HMJr: And that includes everybody. W: Sure, sure. Chinese and Russia HMJr: Russia and W: and what have you. HMJr: and what have you. Regraded Unclassified 7 - 5 - W: Sure, sure. HMJr: I mean, that's deliveries. W: Yes. HMJr: Now, we're - the other thing, and that's just camouflage and that's what I'm trying to take. They talk about a billion; well, but when you get down, ship repairs 1s a big item. W: Sure. HMJr: Food 1e a b1g item. W: Oh, yes, cuite. HMJr: And when I got down to food as of the fifteenth of October, a hundred and seven million W: Yee. HMJr: with munitions. %: Yes, yes. HMJr: See? W: And that looked pretty small to you, didn't it? HMJr: It looked too damned small. W: Yeah, I know. MJr: I mean, it's ridiculous. W: I know. I know. HMJr: So N: Now, I'll get that figure for you. HMJr: Thank you. w: Fine. You'll hear from me. And the other matter - I'll get busy right away. Regraded Unclassified - 6 - 8 HMJr: Thank you. W: And it will be a bright idea of mine. HMJr: Right. W: Yes. HMJr: Wonderful. W: All right, fine, sir. HMJr: Thank you. W: Good-bye Regraded Unclassified 9 November 14, 1941 12:56 p.m. Lieut. Sinton: I checked the weather again, end that con- dition prevaile from Washington north over the entire New England States, and the stmosphere 18 apparently saturated with smoke; and the best they can predict is two to four miles visibility at Laquardia after dark. H.Jr: Well, what's the answer, Sinton? Cer you or can you not fly. B: No, sir, I don't believe 80. Under the instructions I have, no instrument landings end the changes are it might be instrument. It's right on the borderline. Three milee is necessary for contact, and they predict between two and four. It might be four and it might be two. HMJr; Well, I'll have to try to 6° commercial, thet's all. S: YEE, sir. Well, there!s no doubt that com- mercial clanes will be running. HMJr: Yeah. Well, the next thing ie to get a seat on one. 8: Yee, sir. Westover field is the same situation up there. HMJr: But there's no chance of it getting better? S: No, sir. It will be between two and four miles, sir. PMJr: Those are your instructions, huh? S; Yes, sir. I can't @O in if it's instrument weather. What we could do, we could take off And - or wait until later, until I see how it's msking out - we could take off, and If it was turned to instrument on account of the smoke at LaGuardia, we could possibly go into Regraded Unclassified a I 1 10 Floyd Bennett where it might be still contact. HMJr: Oh, no. S: Or Newark, but I HMJr: No, no. All right. You keep watching the weather and let my office know. I'm going to hang up now. S: Yes, sir. I'll notify them. Regraded Unclassified 11 November 14, 1941 4:20 p.m. Morris Wilson: Did you get my message? HMJr: I got your message and I wanted to call you and tell you how kind I thought you'd been. is Oh, no, I haven't. It was one of the easiest things I ever had to do down here. HMJr: Tell me what happened. I was curious. N: Well, I put it forward, of course, 88 a bright suggestion of mine. HMJr: As what? W: As 8 bright suggestion of mine. HMJr: I see. W: You see? HMJr: Yeah. W: And they jumped at it. Why, they said, "Wonderful. We just didn't have the nerve to aek." You know. HMJr: oh, really. W: A woman in that - you know. HMJr: Yesh. W: class. "But if you think there's any chance." I seid, "Well, you never know, but why don't you try." "Wonderful." "You mustn't stop asking just because you're 8 little timid. You mustn't be timid." So, 88 I ERY, I'm getting the credit for having a really worthwhile idea. HMJr: Oh, you did? (Laughs) W: Yes. (Laughs) No, no. Seriously, they just jumped at it. Regraded Unclassified 12 - 2 - HMJr: That's grand. W: Why, they say it was an eclipse. HMJr: That's fine. W: And they furthermore argued back and said, "Why, the lady in cuestion is on the inner councils now, sitting around and trying to help us work the whole thing up. HMJr: Well, isn't that fine? W: Yes. HMJr: You mean my wife? W: Yes, surely. HMJr: That's right. W: Yes. HMJr: That's right. W: Yes. So I hope that everything you ask me will be as pleasant and as easy to do as that. HMJr: That's terribly kind of you. W: (Laughs) HMJr: Thank you. W: I hope you have 8 good week-end. HMJr: Thank you. W: Good-bye. NEMORANDUM FOR THE SECRETARY'S DIARY 13 Conversation Between Secretary Morgenthau and George Buffington November 14, 1941 In A conversation this morning we discussed the progress of distribution of the folder "Know Your Taxes". I stated we had distributed direct or sent to Federal agencies for redistribution approximately 30,000,000 folders "Know Your Taxes". The Secretary stated he believed this was the largest distribution of literature made by the Government. I told the Secretary I was concerned by the fact that the public did not seem to be buying Series A notes. I consider the Tax Savings Plan in its present form cumbersome and believe more emphasis should be put upon educating the public to accept taxes with the belief that they will find their own adequate means for saving when they are alive to the fundamental problem. Tne Secretary agreed that the education campaign should be considerably broadened. He gave me clearance to proceed on this basis. The Secretary stated that he was pleased with what already had been done and wanted to tell me that there was a place for me in the Treasury and suggested I make my plans accordingly when I go home next week. ne asked if it had been necessary for me to forego income by being in Washington. I told him I had been deprived of 8 substantial commission from a business transaction by coming to Washington at this time. I told the Secretary about recent conferences with the President of the American Association of Advertising Agencies with respect to publicity on taxes. The Secretary seemed to think possibilities had been overlooked in the past by not working closer with commercial agencies in the effort to secure their cooperation. I told him I might remain in Chicago next Monday in order to see the head of the Financial Advertising Association there, to which ne agreed. I told the Secretary it might be helpful to have the President say something publicly on the question of the Tax Savings Plan. This apparently would be difficult beyond what has already been made public regarding his Regraded Unclassified -2- 14 letter to Congressman Doughton on the broad subject of texes. The Secretary stated that this whole question of educating the public 1e a selling Job and he would like to have me undertake it. The Secretary said he would like to have me feel free to discuss the possibility of changes in the broad aspects of the tax program which may now be causing public irritation. These questions can be discussed in his office with Mr. Blough If it should develop that any suggestions of mine have merit. The Secretary pointed out that newspapers continually emphasize reduction in corporate earnings due to higher taxes. Little or no emphasis has been placed upon the fact that certain corporations have increased their earnings in spite of taxes. He would like to have me analyze conditions and see if publications like the New York Times will aid us in pointing out the optimistic as well as the pessimistic side of this whole tax program's effect upon corporations. He has asked me to talk the matter with Mr. Eugene Duffield, Chief of the Washington Bureau of the Wall Street Journal. He also suggested that I work with Mr. Merillat who was formerly in Tax Research. The Secretery suggests that I have someone read editorials and other newspaper publicity on taxes with the idea of familiarizing myself with public opinion. He also said that his personal correspondence on tex matters is available to me upon request. G.TS Regraded Unclassified 15 November 14, 1941. Secretary Morgenthau Mr. George Buffington Mr. John S. Fleek, the president eleot of the Investment Bankers Association, takes office shortly after December 6. He happens to be & personal friend of mine and I should like to talk with him to 800 if we might advantageously use the association in connection with Tax Anticipation Notes. In Chicago, you expressed some doubt about using this organization. If you have no objection, I should like to talk with Mr. Fleek. May I have your approval. shell GB:amo 11/14/41 Regraded Unclassified TREASURY DEPARTMENT 16 INTER OFFICE COMMUNICATION DATE November 14, 1941 TO Ferdinand Kuhn, Jr. FROM Herbert Merillat PRESS COMMENT ON TAXES AND PRICES: GROUP AGAINST GROUP There is a growing editorial demand for vigorous Presidential leadership on the home front. The rising cost of living, labor unrest, and the imminence of heavy new taxes give urgency to appeals for immediate enactment of an effective price-control law. As labor, farmers, and industrialists compete with one another in 8 scramble for a larger respective share of the national income, the press urges that the time for political bargaining is past, and that the time for determined action to stabilize the domestic situation is here. Few papers have quarreled with the President's appeal for new anti-inflationary taxes. The need of more revenue and of siphoning off purchasing power has long been recognized. But the President's appeal would come with better grace, it is said, if in the past he had pressed vigorously for effective price control and for substantial cuts in non-defense spending. Regraded Unclassified - 2 - 17 It is being said that the call for new taxes fails to meet the issue squarely. The time has come .for a coordinated attack on inflation on all fronts. The rumored new tax program is an inadequate parry. There is general agreement in the press that the first job of the Administration and Congress is to enact 8. really effective price-control law. The President also should actively support 8. program of government economy. Only then should new taxes be considered, as a complementary anti-inflation measure. This is the gist of typical editorials on the President's letter to Mr. Doughton. Treasury Tax Plan The editorial "line" on the Treasury's most recent tax proposals has not yet become clear. Usually, in the past, the press has lined up quite solidly for or against any pending proposal before the debate was over, but editorial reaction to the rumored proposal of a 15 percent income tax withheld at source 80 far has been mixed. 1. Many papers, both conservative and liberal, find the 15 percent withholding tax 80 shocking that it should not be taken too seriously. Such comment classes the proposal with Secretary Morgenthau's suggestion of a 6 percent profit limit, as a "shocker" intended to soften up taxpayers for acceptance of taxes less drastic than those proposed. - 3 - 18 2. Some papers, again both conservative and liberal, see in the 15 percent tax a wholly unjust blow at wage earners, many of whom have not received the increased income which the Treasury proposes to "mop up." "Labor", the paper of the railroad brotherhoods, bitterly assails the plan as a "heartless, senseless proposal. It is joined by so dissimilar 8 paper as the Nansas City Star, which asks -- If some wage earners and contractors now have more income, what of the masses who face higher living costs? 3. On the other hand, there are hints in 8 number of conservative papers that a tax aimed so directly at wage earners is not unwelcome. 4. There is general approval of the principle of withholding income taxes at the source, at least in the case of small taxpayers. The check-off system is considered as a simpler, surer, and less costly method of collection. 5. l/any papers have protested against the size of the proposed tax burden. )oes the Treasury seriously intend, it is asked, to cemand payment next year of A 15 percent Regraded Unclassified - 4 - 19 income tax in addition to the heavy new taxes recently imposed? Although the need for revenue is recognized, time must be allowed for taxpayers to make necessary adjustments in their scale of living before they can be expected to pay drastically heavier taxes. 6. Much editorial criticism now, as when the 6 percent profit limit was proposed, is directed at the alleged lack of a Treasury over-all tax program. Secretary Morgenthau -- these critics say -- should stop bringing up startling tax proposals from time to time. His department should prepare an over-all, well-considered tax program and present it frankly to Congress. Conspicuously absent, however, is any suggestion that a tighter excess profits tax should be a part of any such program. Only the "Nation", of papers so far seen, has said that a tax on low-income groups cannot be justified until an iron-clad excess profits tax is on the books. 7. The Keynes "deferred savings" plan has a growing number of adherents who favor it as an alternative to the proposed withholding tax. Regraded Unclassified - 5 - 20 The press continues to oppose any increase in social security taxes which is not required by increased social security benefits. Editorial writers are almost unanimous in condemning use of the social security system as a method of emergency financing. Price Control Bill The House Banking Committee's bill is almost unanimously condemned in the press as a caricature of a real price control m measure. The triple-option "ceiling" on farm prices is the feature most bitterly criticized. The omission of wage-controls ranks next as & favorite target. The House Committee, it is said, has failed dismally to do its duty, and the Administration must share the blame because of its failure to support an effective price control bill. Even papers in farming regions denounce the farm bloc for pushing through amendments which will allow farm prices to rise above parity. Some such papers, however, minimize the inflationary effect of higher farm prices and retort to farm critics that wage increases, not farm prices, are the chief threat. The C.I.O. News calls for the speedy adoption of a really effective price control bill, meaning one which will hold food costs down. It points out that "working people spend from 35 - 6 - 21 to 45 percent of their income on food, and if food prices are not kept within reasonable limits, the worst and most immediate dangers of inflation will remain uncurbed." At the same time, the paper exhorts labor to oppose vigorously any attempts to control wages. In general, the tone of the press is angry that no effective action has been taken to halt price advances, and almost despairing that such action will be taken. / This Keolz 11-14-41 22 Disc notes are etc has for my Eyes 4/1 - the nj 1. capression Expenditures Pump huning 23 Price Raising. Jun Program nii to training herjan fu national refense Federal worlso Have shent 5 billing in werds Sugger Time 1, Caucel since road 1932 matching this Ropan will have-ffect of $139. millin outhin dnm in States. beninistration thearses ? Regraded Unclassified Rivirs X Harbors 24 mr 7. shent 76. muttin out 200 multion could same $100 millin Reclamation projects un7.th spent 36mittim out of 95. e.c.c. stend 200 million " stinated they would have short 78. Humin. cost Regraded Unclassified N.Y. F. 25 O stand office of Edc. spend 119. have stent 50. o Take n. - + Prid Ede. consolidate into one bureau for traing for mat. Lifense Have one office Go trane train 26 men 0 women for harte cular skills for not . Defence. W.P.H. - Federal $ worls Istimated spind 875. have spent 327 left. 348 Discuntine WP.H. competering with plefense program give all Federal and hiok uh dishess nemey for training cases there social security O agr. 27 Set up Bureau to have host was projects o Regraded Unclas 28 SOIL CONSERVATION AND DOMESTIC ALLOTMENT ACT All payments under this classification are included in the general group. Expenditures (checks paid) (In millions): Fiscal year 1938 - $303.9 1939 477.9 1940 - 605.1 1941 465.1 Estimates for 1942: January Budget - 475.0 October 5. 1941 Revision - 475.0 Actual expenditures: July, 1941 25.3 Aug. " 9.0 Sept. # - 6.4 Oct. " 19.2 w Total, first 4 months - 60.0 Total - July-Oct. 1940 - - 70.3 Includes $15.0 repaid to Commodity Credit Corporation in fiscal year 1942 which was borrowed from that Cor- poration and spent in 1941. C.C.C. The Act of July 2, 1940 provides that the Secretary of Agriculture may borrow up to $50,000,000 in each fiscal year beginning with 1941 from the Commodity Credit Corporation, to make crop insurance premium advances and to make advances for conservation materials (grants of aid), etc., such loans to be repaid from subsequent appropriations or unobligated balances of appropriations. Activities covered by program The objectives of the Agriculture Conservation and related programs are (1) Preservation and improvement of soil fertility. (2) Promotion of the economic use and conservation of land. (3) Diminution of explortation and wasteful and unscientific use of national soil resources. (4) Protection of rivers and harbors against the results of soil erogion to aid in maintaining the navigability of waters and water courses and in flood control. (5) Reestablishment ... of the ratio between the purchasing. power of the net income per person on farms and that of the income per person not on farms that provailed during 5-year period August, 1909 - July, 1914. etc. Regraded Unclassified 29 - 2 - (6) Assist in marketing of agricultural commodities for domestic consumption and for export. (7) Regulate interstate and foreign commerce in cotton, wheat, corn, tobacco and rice through storage of reserve supplies, loans and marketing quotas. (8) Assist consumers to obtain adequate and steady supply of such commodities. The Soil Conservation and Domestic Allotment Act authorizes payments or grants of other aid to producers measured by (1) their treatment or use of their land, or a part thereof, for soil restoration, soil conservation, or the prevention of erosion; (2) changes in the use of their land; (3) their equitable share of the normal national production of any commodity or commodities required for domestic consumption and exports, etc. Regraded Unclassified 30 PRICE ADJUSTMENT ACT OF 1938 AND PARITY PAYMENTS All payments under this classification are included in the general group. Expenditures (checks paid) (In millions) Fiscal year 1938 $19.5 1939 215.0 1940 198.3 1941 205.0 Estimates for 1942 January Budget 205.0 Oct. 5, 1941 Revision 205.0 Actual expenditures July, 1941 11.1 August 12.5 September 18.1 October 28.7 Total first 4 months 70.4 Total July-October, 1941 142.1 During 1942 the total funds available for expenditure are as follows: Unexpended balance July 1, 1941 202.0 Appropriated July 1, 1941 in 1942 Appropriation Act 212.0 414.0 Parity payments may be made on cotton, corn, wheat, rice and tobacco. It appears from the hearings before the House Appropriation Committee that the prce of the 1941 crop during the period through March, 1942, determines whether there will be any parity payments for 1942 crops. Producers of the five basic commodities will plant them for the crop year 1942 during the fiscal year 1942, the earliest planting being that of winter wheat in the fall of 1941. About the only parity payments to be made before June 30, 1942, from the 1942 appropriation will be for wheat, the other parity payments, while being obligated and appropriated in the fiscal year 1942, will be paid in the fiscal year 1943. Thus, payments currently being made in the fiscal year 1942, are, for the most part, in connection with 1941 crops and obligations for such pay- ments arose in the spring of 1941. 31 SURPLUS MARKETING ADMINISTRATION AND AGRICULTURAL ADJUSTMENT AIMINISTRATION (ACT OF AUGUST 24, 1935) All expenditures under this classification are included in the general group. Expenditures (checks paid) (In millions) A.A.A. S.M.A. Fiscal year 1938 $15.0 $23.1 1939 133.3 77.2 1940 51.5 91.1 1941 187.0 53.9 Estimates for 1942: January Budget 200.0 Oct. 5. 1941, Revision 240.2 Actual expenditures July, 1941 21.1 August 1941- 18.9 September 1941 11.1 October 1941 19.6 Total, first 4 months 70.7 Total, July-Oct, 1940 58.2 Program authorised Sec. 32 of the act of Aug. 24, 1935 (70.S.C. 612c), appropriates for each fiscal year an amount equal to 30 per centum of the gross receipts from duties collected under the customs lawe during the period Jan. 1 to Dec. 31, both inclusive, preceding the beginning of each such fiscal year, to be used by the Secretary of Agriculture to (1) encourage the exportation of agricul- tural commodities and products thereof by the payment of benefits in connect tion with the exportation thereof or of indemnities for losses incurred in connection with such exportation or by payments to producers in connection with the production of that part of any agricultural commodity required for domestic consumption; (2) encourage the domestic consumption of such com- modities or products by diverting them, by the payment of benefits or indemnities or by other means, from the normal channels of trade and commerce; and (3) reestablish farmers' purchasing power by making payments in connection with the normal production of any agricultural commodity for domestic con- sumption. In addition to the permanent appropriation authorized under Sec. 32, the Congress has appropriated additional amounts for expenditure pursuant to Sec. 32. The additional amount appropriated for 1942 is $100,150,000. Activities The activities under this expenditure caption, as indicated in the estimates of expenditures for 1942, contained in the 1942 Budget, are as follows: Regraded Unclassified 32 Amounts (In millions) Food stamp plan, redemption payments $125.0 Cotton stamp plan, IS Il 8.0 Purchase of surplus commodities and distribution to State relief agencies 40.6 Encouragement of export of agricultural commodities, program payments 10.0 Diversion of agricultural commodities to by-products and new uses, program payments 10.0 Administrative expenses for surplus removal program 5.7 Other .3 Total $199.6 Regraded I Inclassified 33 FARM TENANT ACT Part of the 1942 expenditures are classified in the general group, and part are reflected under transactions in checking accounts of govern- mental agencies. General R.P.C. Budget Funds Expenditures (checks paid) (In millions) Fiscal year 1938 - $ 3.1 1939 - 26.6 1940 - - 41.8 1941 - 27.3 29.4 Estimates for 1942 January Budget - 5.3 50.0 Oct. 5, 1941, Revision - 7.0 50.0 Actual expenditures July, 1941 - - -7 ) August, 1941 - -7 ) 14.9 September, 1941 .6 ) October, 1941 .6 ) Total first 4 months 2.5 14.9 Total - July-October, 1940 - - 16.8 1.0 RECONSTRUCTION FINANCE CORPORATION In addition to expenditures from regular appropriations included in the budget for the fiscal years 1941 and 1942, the Reconstruction Finance Corporation was authorized to make advances to the Secretary of Agriculture up to $50,000,000 for 1941 and $50,000,000 for 1942 for loans in accordance with Title I of the Bankhead-Jones Farm Tenant Act. Activities included under the caption "Farm Tenant Act" from appro- priated funds and advances from the Reconstruction Finance Corporation, as indicated by estimates of expenditures included in the 1942 budget, are as follows: (In millions) Farm tenancy loans - $50.0 Technical services, including county committees 1.6 Administrative Expenses is Liquidation and management of resettlement projects .7 Land utilization and retirement of submarginal land Acquisition of land .9 Management, operation, etc. of land acquired 1.3 Total - 55.4 34 FARM SECURITY ADMINISTRATION Part of the 1942 expenditures are classified in the general group. and part are reflected under transactions in checking accounts of govern- mental agencies. Expenditures (checks paid) (In millions) General HFC Budget Funds Fiscal year 1938 $180.1 - # # 1939 183.6 - II # 1940 158.5 - # # 1941 62.2 $111.3 Estimates for 1942: January Budget 65.0 100 October 5. 1941 Revision 60.0 1201/ Actual expenditures: July, 1941 $5.2 ) Aug. If 4.2 5 Sept. # 4.8 ) 13.2 Oct. # 4.5 ) Total, first 4 months $18.8 $13.2 Total, July-Oct. 1940 23.1 20.0 1/ Approved authorization in Act of July 1, 1941. Reconstruction Finance Corporation: In addition to expenditures from regular appropriations included in the budget for the fiscal years 1941 and 1942 the Reconstruction Finance Corporation was authorized to make advances to the Secretary of Agriculture up to $125,000,000 for 1941 and $120,000,000 for 1942. Activities of the Farm Security Administration from appropriated funds and advances from the Reconstruction Finance Corporation, as indi- cated by estimates of expenditures included in the 1942 Budget, are as follows: (In millions) Rural rehabilitation loans $98.5 Rural rehabilitation grants 20.9 Rural rehabilitation services: Farm and home management assistance 17.8 Investigation of applications, and making, collecting, and servicing loans and grants 11.7 Farm debt adjustment 2.0 Migratory Labor camps 4.4 Other activities 2.9 Administrative expenses 7.7 Total $166.0 35 RURAL ELECTRIFICATION ADMINISTRATION Part of the 1942 expenditures are included under general budget, and part are reflected under transactions in checking accounts of governmental agencies, etc. General R.F.C. Budget Funds Expenditures (checks paid) (In millions) Fiscal year 1938 15.2 46.5 1939 37.7 100.0 1940 38.0 - 1941 24.2 36.0 Estimates for 1942 January Budget 4.2 40.0 Oct. 5. 1941 Revision - 8.0 139.0- Actual expenditures July, 1941 1.5 ) August 1.2 ) September 1.4 ) 25.0 October .7 ) Total, first 4 months 4.7 25.0 Total, July-October, 1940 11.3 - Balance available - no estimate of expenditures submitted. R. 7. C. In addition to loans and expenditures authorized from appropriated funds under the budget, the R. F. C. has been authorized from time to time to advance moneys for making rural electrification loans, as follows: Fiscal year 1942 $100,000,000 Fiscal year 1941 100,000,000 Prior years 146,500,000 346,500,000 Practically all expenditures of the Rural Electrification Administration are for loans and the purchase of property in accordance with the Rural Electrification Act of May 20, 1936. 36 FARM CREDIT ADMINISTRATION - OTHER Fiscal year 1941 (In millions) Banks for Cooperatives, reduction in capital stock $60.0 Production Credit Corp. reduction in capital stock - 15.0 Other - .3 - 75.3 Fiscal year 1942 Administrative Expenses 5.0 Banks for Cooperatives, increase in capital stock 59.0 Production Credit Corps., increase in capital stock 15.0 Other - 2.6 76.4 37 Economy Suggestions Submitted by Secretary Morgenthau to the Joint Committee on Reduction of Non-Defense Expenditures Friday, November 14, 1941 (Reading copy used by the Secretary) Regraded Unclassified 38 There are certain classes of non-defense expenditures which consist in large part of construction projects, such as reclamation work, river and harbor work, road building, etc. Reductions in activities for these perposes will have multiple advantages, as follows: (1) Reducing non-defense expenditures. (2) Releasing man power needed for defense plants. (3) Increasing the supplies of materials and equipment which can be devoted to defense efforts. (4) Building up a back-log of projects for continued employment in the postwar period. Regraded Unclassified 39 -2- There are other instances where there appear to be overlapping and duplication, both in effort and in expenditure of funds. In other cases, the Government undertook programs aimed at correcting or adjusting certain inequities which had grown up in our economic system. Some of these inequities have been eliminated and circumstances which made the initial program urgent have altered. Nevertheless, large sums continue to be appropriated and spent under such programs despite the greatly reduced justification for such expenditures during the period of defense expansion. 40 -3- I shall refer briefly to certain specific non-defense expenditures which I recommend to the Committee for its consideration. RECLAMATION PROJECTS (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to about $880.0 This includes expenditures for irrigation and water conservation under the Emergency Relief Appropriation Acts. -4- 41 Fiscal year 1941 - expended (checks issued) - 86.0 Fiscal year 1942 - estimated to be spent - - 95.0 Economy Suggestion: It 1s suggested that all reclamation work be re-examined in the light of our present defense program and its anticipated acceleration. Wherever it is possible to delay existing or postpone proposed projects which are not necessary in connection with the generation of power for defense purposes, this should be done. Regraded Unclassified -5- 42 RIVER AND HARBOR WORK AND FLOOD CONTROL (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to - $1,870.0 Fiscal year 1941 - expended (checks paid)- 219.0 Fiscal year 1942 - estimated to be spent - 200.0 Economy Suggestion: It is recognized that certain river and harbor, flood control and soil erosion work must continue in the interest of the lives and safety of our people. But all projects which are not vital from this standpoint or necessary for definite defense purposes should be re-examined. Regraded Unclassified -6- 43 Work on all projects of this character which can be delayed or postponed should be prohibited and funds heretofore appropriated should be cancelled. Regraded Unclassified -7- 44 PUBLIC ROADS (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to about - $5,800.0 This includes expenditures for highways, roads, streets, etc., under the Emergency Relief Appropriation Acts and the Public Works Administration Act of 1938. Fiscal year 1941 - expended (checks paid): Regular - - $174.1 W. P. A., etc. ---- 485.0 659.1 -8- 45 Fiscal year 1942 - estimated to be spent: Regular - - 175.0 W. P. A. - - Not available Fiscal year 1943 - expenditures in this year were obligated on or before January 1, 1941. Fiscal year 1944 - expenditures in this year will be obligated on or before January 1, 1942. -9- 46 Fiscal year 1942: The amount appropriated and being spent in the current fiscal year covers the Federal-aid highway, grade crossing, etc., authorization of $162,000,000 for the fiscal year 1941 and balances of prior years' authorizations. These expenditures were obligated on or before January 1, 1940. Fiscal year 1943: The Act of September 5, 1940, contained an authorization of $139,000,000 for Federal-aid highways, etc., for 1942. This authorization was obligated on or before January 1, 1941, and there is an obligation on the Congress to appropriate sufficient amounts in the next fiscal year to pay these obligations. This cannot be avoided. Regraded Unclassified -10- 47 Fiscal year 1944: The act of September 5, 1940, contained an authorization of $139,000,000 for the fiscal year 1943. Under existing law this amount must be apportioned among the States not later than January 1, 1942. After such apportionment specific projects are approved. The approval of projects constitutes a contractual obligation of the Federal Government for the payment of its pro rata share of the cost of the projects approved. This can be postponed. Regraded Unclassified -11- 48 Economy Suggestion: It 1s suggested that the Congress, by appropriate enactment, rescind the 1943 highway authorization. This would result in a reduction of expenditures for public roads in the fiscal year 1944 (July 1, 1943 to June 30, 1944). Inasmuch as money spent by the Government is matched by the States, a reduction in the Federal road expenditures will most likely bring a desired reduction in highway expenditures by the States. State and local authorities should be requested to defer undertaking new projects, even though allotments have already been made for them. Regraded Unclassified -12- 49 Other major projects already under way which can be appropriately discontinued or curtailed should be suspended. Any new roads or enlargement of existing road facilities required by national defense activities could be specifically authorized as defense projects. Regraded Unclassified 50 -13- AGENCIES ENGAGED IN VOCATIONAL ACTIVITIES Amounts appropriated for 1942 Esti- mated Adminis- Expen- trative Other ditures Expenses Activities Total 1942 (In Millions) Civilian Conservation Corps - - - $19.2 $227.8 $247.0 $200.0 National Youth Administration: Regular 5.8 86.0 91.8 90.0 National Defense - 1 3.0 57.0 60,0 60.0 Office of Education: Regular :- 28.4 29.3 30.1 National Defense 1,2 106.9 108.1 118.8 TOTAL $30.1 $506.1 $536.2 $498.9 Regraded Unclassified -14- 51 Economy Suggestion: Each of the above agencies is under the Federal Security Agency, and its primary function 1s the vocational training of youth, with present emphasis on employment in defense occupations. It would seem that the regular activities of the Civilian Conservation Corps and National Youth Administration must conflict with the more important defense program, and should be eliminated or drastically reduced. Regraded Unclassified -15- 52 It is suggested that all vocational training activities be consolidated in a new Bureau of Defense Training. Any overlapping functions or duplication of work could be eliminated and one comprehensive training program, integrated with the defense program, could be formulated and administered more economically than appears possible under the present organizations. Particularly, it is suggested that grants by the Office of Education to States and educational institutions be reviewed. In making this recommendation I should like to point out that I have always been a strong advocate of measures designed to protect and further the interests and welfare of young people. Regraded Unclassified -16- 53 However, at this time the number of young people needing assistance 1s being greatly reduced by the exceptional employment opportunities offered by the expansion of the Defense Program, together with the demands of our armed forces. Such young people as have not entered employment through normal channels or are not in the Army should receive vocational training designed to fit them for employment in defense. -17- 54 FARM PROGRAM Reflected in Budget Expenditures included in the Budget under the Farm program which was initiated in 1933, after the catastrophic fall in prices in 1932, were designed mainly to meet conditions involving low prices for farm products, surplus production and loss of export markets. Present conditions are radically different from those which the Farm program was designed to meet. Major expenditures under the Farm program are included under the following captions: -18- 55 Expenditures (In Millions) Estimated Actual Actual 1942 1941 1940 Surplus Marketing Administration, and Agricultural Adjustment Administration (Act of August 24, 1935) $240.0 $240.9 $142.6 Soil Conservation and Domestic Allotment Act 475.0 465.1 605.1 Administration of Sugar Act of 1937 48.0 50.4 48.8 Price Adjustment Act of 1938 and Parity Payments 205.0 198.3 215.0 TOTAL $968.0 $954.7 $1,011.5 Regraded Unclassified -19- 56 Economy Suggestion: I believe that the Administration has done a wonderful job for the farmer in nearly tripling his income in ten years. It is estimated that in 1941 the farmer's share of the total national income will be 20 percent greater than in 1932, notwithstanding a reduction of almost 10 percent in the proportion of the farm population to the total population of the country. Regraded Unclassified 57 -20- Estimated farm income and population, in relation to national totals, 1932-1942 (in millions) Farm popu- lation as a percentage Gross cash farm income Net income from agriculture of total From farm Government Total Percent of population marketings payments Amount national income Year 1932 $ 4,682 $ 0 $ 4,682 $3,232 8.1 24.9 1941 10,550 650 11,200 8,600 9.7 22.8 1942 12,350 650 13,000 -21- 58 Although governmental aid was necessary in order to bring the farmer's net income from three and one-quarter billion dollars in 1932 up to eight and one-half billion dollars or more in 1941, certainly after having reached this goal there does not appear to be any reason to continue spending at the same rate. This is especially important when the money we are using for this purpose is so badly needed for armaments and lend-lease aid. The farmer is getting his share of the total expenditures made by the Government, as the increase in his net income indicates. In addition, there are substantial benefits that will accrue to the farmer from the lend-lease program. Regraded Unclassified -22- 59 About five hundred million dollars have been allocated under the lend-lease program for the purchase of agricultural commodities. In view of all these circumstances I feel at this time that we could well afford to make drastic cuts in our agricultural expenditures. Exception should, of course, be made for those expenditures which are for the purpose of helping the lowest income group, which suffers from wholly inadequate nutrition. -23- 60 FARM PROGRAM Not Reflected in Budget There are other phases of the Farm program involving loans for rural rehabilitation, farm tenancy and rural electrification. In 1941 and 1942 expenditures for these purposes have been shifted from the Budget and transferred to the R.F.C., which has been authorized to advance funds to the Secretary of Agriculture to enable him to make loans. Activities of this character are as follows: Regraded Unclassified 61 -24- General R.F.C. Budget Funds Expenditures: Farm Security Administration: Fiscal year 1940 - $158.5 - Fiscal year 1941 - 62.2 $111.3 Farm Tenant Act: Fiscal year 1940 - 41.8 - Fiscal year 1941 - 27.3 29.4 Rural Electrification Administration: Fiscal year 1940 - 38.0 - Fiscal year 1941 - 24.2 36.0 Estimates for 1942: Farm Security Administration 60.0 134.01/ Farm Tenant Act 7.0 71.01/ Rural Electrification Administration - - 8.0 139.01/ Unused balances of authorizations. Regraded Unclassified -25- 62 Commodity Credit Corporation Inter-related with the Farm program are the activities of the Commodity Credit Corporation. Expenditures have been made by this Corporation with funds received from the following sources: From the Treasury Included in the Budget Capital and surplus: Fiscal year 1934 - - - $ 3,000,000 If 1936 - - 97,000,000 If 1938 - - 94,000,000 If If 1940 (net) ... 76,000,000 # If 1942 - - 1,600,000 $271,600,000 Not included in the Budget Purchase of notes (net to Nov. 10) - 120,000,000 From Public Borrowing (net to Nov. 10) - 701,000,000 TOTAL -$1,092,600,0001/ 1/ In addition, receipts from repayments of loans and sale of commodities are available for expenditure. Regraded Unclassified -26- 63 Recent estimates furnished to the Treasury by the Commodity Credit Corporation show for the current fiscal year, the following: Estimated disbursements --- - $1,100,000,0001/ Estimated receipts ------ -- 913,000,0001/ Excess of disbursements, to be covered by borrowing funds from the Treasury --- $ 187,000,000 1/ Include transactions under the lend-lease program. -27- 64 Economy Suggestion: It 18 suggested that we reexamine the need for continuing that part of the Farm program which is not reflected in the annual budget and which is financed from funds obtained through corporations or borrowed from the Treasury. The Congress is apt to overlook the substantial expenditures which are 2.8.billim 2. not reflected in the annual budget. Eventually 1932 any losses which may be incurred through these programs will become budget charges. Each of these items should be reexamined in the same manner that has been suggested for the Farm program expenditures which are reflected in the budget proper. whe We have game then the experience started in 1132 of now that live brrow for R. 7. C. no charging The 28 billin 1R70 advances rema to have R 76, finance independent are agricies and has lowe all these budgetary undencies. entires Regraded Unclassified -28- 65 I should like it understood that in making the suggestion that this class of farm expenditure should be reexamined, I do not refer to the bulk of activities undertaken by the Farm Security Administration, inasmuch as the need for much of their expenditures is, in my opinion, still urgent. Just as I suggested earlier that there should be no reduction of expenditures for the help of the undernourished, 80 I believe that there should be no reduction in our help of the share-croppers and farm tenants who are in urgent and continuing need of economic rehabilitation. -000- 66 November 14, 1941. MEMORANDUM TO: Secretary Morgenthau (for the files) PROM: Mr. Schwarz Secretary Morgenthau appeared this morning at an executive session of the Joint Committee on Federal Expenditures, of which he is a member, as the first witness following the organization of the Committee. Chairman Byrd and Vice-Chair- man Doughton, with Senator McKellar and Representatives Cullen, Treadway and Taber and Budget Director Smith were present. The Secretary was accompanied by Messrs. Barnard, Morris, White, Kuhn, Heffelfinger and Schwarz. The meeting, scheduled for 10:30 a.m., got under way at 10:45 a.m. It was decided that the Secretary should read his prepared statement (copy attached) by the sections into which it was divided, and that questioning should follow each section. Throughout the testimony and cross-examination, Secretary Morgenthau provided the stimulus for action at many points when it became apparent that the other Committee members were leaning toward postponement. On Reclamation Projects, Rep. Treadway suggested a break-down be obtained, and the Secretary agreed. On River and Harbor work, Senator McKellar asked whether the Secretary had any recommendations on the St. Lawrence, lorida Ship Canal and the Tennessee River projects. The Secretary replied that they ought to be postponed at least, that he thought the Congress, in its rush to get the defense program under way, had not had time to re-examine some of the projects, that in times of national emergency We cannot burn the candle at both ends. Senator Byrd raised the first point in the section on Public Roads by asking 11 the $485,000,000 shown in the table under WPA, etc., was all for highways. Mr. Heffelfinger replied by saying that the figure represented highways, roadways, streets, etc. Rep. Taber observed that the $171,000,000 spent on the regular roads program, with trained help and contractors, was probably more effective than the much larger amount Regraded Unclassified - 2 - 67 expended under WPA. Then Senator McKellar made the first of a series of defenses of the public roads projects. He conceded that the regular program was more effective, but pointed out that some of the WPA allotment 18 intended to keep men employed. Reverting to the regular roads program, Senator McKellar said that some reductions have been made and argued that authorizations are necessary -- otherwise the States could not use their planning facilities. Budget Director Smith inquired how the authorization for fiscal 1943 could be postponed and Secretary Morgenthau replied that the method he was going to suggest would show how an appropriation could be avoided. Senator McKellar suggested that strategic defense highways might be built more cheaply than under existing methods and asked if it could not be required that all raods money be appropriated for such highways. The Secretary said the chances are that the authorizations for fiscal 1944 have nothing to do with national defense. In response to 8 question by the Secretary, Senator MoKellar said he was not shocked by the suggestion that Federal aid be postponed but added, "We can't do that" when Senator Byrd broke in to say, "To postpone is one thing; to abolish, another." Senator Byrd inquired about parliamentary procedure necessary to effect a saving in this item by January 1 and asked whether the authorization would have to be cancelled by the Public Roads Committee. Senator McKellar thought it was up to the Appropria- tions Committee. Senator Byrd then said a decision would probably have to be asked of the Rules Committee and Director Smith advised that a positive act rather than 8 negative one would be necessary. Rep. Taber thought it would be possible to bring the matter to the attention of the House in connection with the Deficiency Bill scheduled to come up the week of November 24 and promised to look into it. Senator Byrd said he thought the success of such a move would depend on what other economy recommendations were made -- on WPA, for instance. Senator McKellar said such an effort would be attacking one of the most popular programs in the country and a minute later suggested that possibly a fifty percent saving could be recommended. Secretary Morgenthau asked that the Committee members be frank with each other. He said he was taking this assignment very seriously, that he thinks the country has, and he knows the Committee 1s serious about its Job. "If we fumble this one,' he said, "the country will think we don't mean business." He said he knew it was like asking B. child to throw away a piece of candy, but that anything short of suspension of the appropriation as a test would be unsatisfectory. The Secretary said all the projects subject to economies are popular and have adherents but the road program sticks out like a sore thumb because action will have to be taken in six weeks. He said he would be very much discouraged if the Committee failed in this respect. Regraded Unclassified - 3 - 68 Budget Director Smith said that his Bureau considered its hands tied, that nothing can be done without changing the law itself but pointed out, entirely apart from the money that can be saved, most road building requires a considerable amount of steel and that priorities might be invoked. Senator McKellar made a final stand by asserting that a real problem would be created if road building organizations were to be put out of business, but Senator Byrd pointed out that the Federal Government had nothing to do with the letting of contracts. Rep. Taber wound up the discussion on roads by saying, "If we are going to succeed in this, we will have to put an amendment on the bill itself." On Vocational Activities, Vice-Chairman Doughton stressed his belief that the States should come forward at this time and take over much of the work of assistance to youth. He pointed out that the normal need for assistance is being greetly reduced and that the States are now in a better position to take care of the young people who do need help. Senator McKellar was sharp in his criticism of the CCC, which he said he had voted for originally, argued that the agency was spending too much on each boy enrolled, that many first-class colleges would be glad to provide educational facilities at much lower costs, that he had had the time of his life to get the current appropriation reduced from $247,000,000 to $200,000,000. He told of Senator Lodge's testimony that CCC trucks in the streets of Boston were carrying large signs urging enrollment in the Corps as a means of avoiding service in the Army. He called this "monstrous" and said he believed we would have to cut out this activity at this time. Secretary Morgenthau expressed his opinion that the CCC had been a magnificent conception at the time of its founding, that we had to take care of our youth and that the CCC did its share very well. However, he said, we have been so busy passing appropriations for National Defense -- and we shall have to pass more -- that we haven't had time to re-examine thoroughly some of our other activities. Rep. Taber was critical of the young people who have been receiving CCC and NYA training and Rep. Doughton said there would be "a wholesome effect" if we can out out these expenditures, which he said were irritating taxpayers. After Secretary Morgenthau had completed his discussion of the Farm Program, Chairman Byrd observed that there had been no reference to the WPA. The Secretary explained that he had seen in the papers that the President is planning 8 new defense program, that the Secretary was eager to see what transition effect this might have on employment throughout the country, and pointed out that the President will have to make up his mind within the next six weeks, when the 1943 Budget Message is due. Regraded Unclassified 4 - 69 Rep. Doughton said WPA expenditures would have to be cut if approval of the farmers is desired, that farmers in his district tell him they have trouble getting help, because of nearby WPA projects. Rep. Taber suggested that the WPA was the natural place to start on any economy program, and Chairman Byrd said a balanced program would be necessary if the Committee hoped to get its recommendations through Congress. Budget Director Smith broke in to argue that, though unemployment has fallen to B. new low, there may well be a problem of temporary character due to dislocations while the nation is pulling away from non-defense industries. He said there may be "pretty serious trouble" in the next few months. Mr. Taber asked whether that would relate to the 1943 budget and Smith said, "It may." Rep. Doughton wound up the session with B long statement in which he said that all of us are called upon to make sacrifices, that we must all think of what we can put into the Government rather than what we can get out of it. He made B. veiled appeal for White House aid by saying that unless the Committee was given the full cooperation of the nation's leaders, it was not going to accomplish what it is trying to do. The meeting was concluded at 12:10 p.m. after the members agreed to convene again at 10 a.m., Tuesday, November 18. Secretary Morgenthau thereafter read portions of his prepared statement to the press and answered a few questions put by the reporters. Asked if a large tax bill would still be necessary in the face of proposed economies, the Secretary replied, "And how!". He said that he still felt that a billion dollars could be saved out of non-defense appropriations. -000- HDW J.K. wrt November 14, 1941. 70 TO: HAROLD N. GRAVES SUBJECT: PROGRESS REPORT FROM DEFENSE SAVINGS STAFF SALE OF BONDS Actual cash receipts from the sale of Series E, F, and G Bonds from November 1st through November 12th were $103,041,000, a decrease of 1.2 per cent over the similar period in October. Sales from October 1st through October 10th were $104,317,000. Sales from September 1st through September 11th were $91,954,000. The comparison is based on the first nine working days for each of the three months. CIVILIAN DEFENSE WEEK Stamp booths were set up in the Dunbar and Woodrow Wilson High Schools in Washington in cooperation with the Committee for Civilian Defense. The film, "America Preferred," was shown during school assemblies. MOTION PICTURES The following films are in varying phases of production: (1) A short subject at Metro-Goldwyn-Mayer Studios featuring the talent of George Burns and Gracie Allen. (2) Three cartoon subjects being drafted by Walt Disney (3) A short subject with "Bugs Bunny" singing "Any Bonds Today"; Leon Schlesinger, Producer. - 2 - 71 (4) A Gene Autry "short", being prepared for showings in Oklahoma, may later be distributed nationally. Mills Novelty Company plans production of short films-- at no cost to Treasury Department--of famous persons stating their views on the Defense Savings Program. These will be used in the continuity of the reels in Panarom machines which are set up in hotel lobbies, stations, etc. The Mills Co. has 4,000 of these machines which show to an estimated 400,000 people weekly. RADIO Network time devoted to the Defense Savings Program during October totaled 204 hours and four minutes, representing the cooperation of 43 separate companies on 73 programs. Beginning December 1st, Proctor and Gamble Company will put into effect a new schedule on their various programs to include 29 especially dramatized appeals every four weeks urging the purchase of Defense Bonds and Stamps. Evening programs arranging new, highly dramatic spots for the Defense Savings Program include "What Price Glory", (Mennen); "Sherlock Holmes, (Grove Labratories); "Fibber McGee and Molly", (s. C. Johnson and Son); Shirley Temple program, (Elgin Watch Co.); Jack Benny, (General Foods); "Big Town, (Lever Bros. and the Gene Autry, Ben Bernie, "Scattergood Baines", and "Dear Mom" programs (William Wrigley Jr., Co.). Elaine Sterne Carrington, writer of commercial daytime programa has volunteered to serve the Defense Savings Staff, Radio Section, as script consultant. Outstanding authors of commercial radio met Regraded Unclassified - 3 - 72 with Miss Carrington in New York November 14th to formulate plans for production of five-minute Bond and Stamp drematiza- tions. A new Treasury Department program, under auspices of Thomas B. Hassett, Massachusetts Collector of Internal Revenue, was inaugurated November 9th over the Colonial (New England Regional) Network. The "WE, THE PEOPLE" broadcast from the Wardman Park Hotel, Washington, on November 11th, featured two Treasury Department representatives: John F. Moran, Chairman of the Public Debt Destruction Committee and William Burch, printer from the Bureau of Engraving. PRESS A special holiday edition -- for Thanksgiving, Christmas, and New Year's -- of the Retailers-For-Defense "clip sheet" was distributed to 25,000 outlets, including daily and weekly newspapers, chambers of commerce and Defense Savings state committees. This double-spreed clip sheet suggests editorial and advertising tie-ins for newspapers and merchants during the holiday season. (Samples of clip sheet attached). Stamp sale figures for October, which established the highest monthly record, 8 total of $5,935,934.50, were released to daily newspapers and editorial writers on November 14th. Photographs of Margaret Mitchell, author of "Gone with the Wind", buying a Defense Savings Bond in Atlanta, Ga., were Regraded Unclassified - 4 - 73 released through the Associated Press, International News Photos, Acme Newspictures, Inc., and Western Newspaper Union. Exclusive poses went to each photo service along with a statement from Miss Mitchell endorsing the Defense Savings Program. A series of matted Minute Man emblems with copy reminding readers of the number of shopping days to Christmas, and als 0 to "Give Defense Bonds and Stamps", went to 1550 daily news- papers. (See sample sheet attached) "Editor and Publisher", weekly newspaper trade magazine, devoted its lead article to the proposal of newspaper publish- ers to adopt the Philadelphia Evening Bulletin newsboy Defense Stamp sale plan. Cartoons, especially drawn for the Defense Savings Staff, were received from Charles G. Werner, Bernard Seaman and Dr. Seuss, and are being matted for distribution to the Labor Press. BUSINESS PUBLICATIONS The National Defense Committee of the Associated Business Papers, representing 132 publications, passed a resolution in New York on November 10th, which states: "It is the patriotic duty of every business paper enthu- siastically to extend its fullest cooperation to the Treasury Department to aid in the sale of Defense Bonds and Stamps". Services of Schuyler Hopper, promotional expert of the Associated Business Papers, were loaned to the Treasury Depart= ment. Mr. Hopper will begin immediate preparation of 8. series Regraded Unclassified - 5 - 74 of advertisements on Bonds and Stamps to be distributed to business publications. HOUSE ORGANS Twenty-five editors of leading house organs throughout the nation have been invited to serve on 8 House Magazine Editors Committee for Defense Savings, chairmaned by Robert Newcomb, Editor, of "Stet". Fourteen acceptances have been received already. Replies from the October 11th mailing to a. selected list of 300 house magazines suggesting the use of the Minute Man symbol, indicate that virtually all are now publishing this Defense Savings emblem or will do so beginning with their next issue. FIELD OFFICE Status of the field organizations throughout the country as follows: Changes since States November 7 State end local committees organized 28 1 State committees organized 11 3 Administrators and/or chairmen 12 - 3 appointed -1 Not started 1 Total 52 (including D.C, Alaska, Hawaii, and two field divisions in California) (See Map attached) Twelve field representatives are at work in the field assisting state organizations in various promotional activities. TREASURY BOOTHS Defense Savings Stamps and Bonds and Tax Anticipation Notes Regraded Unclassified - 6 - 75 were sold in the following amounts at the booths listed: Hechts: (Opened 11/3/41) Lansburgh's: (Cpened 10/10/41 Bonds $975.00 Bonds $1743.75 Tax Notes --- Tax Notes 25.12 Stamps 805.85 Stamps 1092.85 1,780.85 2,861.72 From October 3rd to November 1st, Garfinkle's sold $1,252.80 in Stamps, Bonds and Tex Notes. The Villard Hotel, from October 15th to November 1st, sold $222.45 in Stamps, Bonds and Tax Notes, while Woodward & Lothrop's booth, from October 6th to November 8th, sold $10,831.80 in Stamps, Bonds, and Notes. Total Treasury ooth sales to date: $16,949.62. FAIRS AND EXPOSITIONS A orint of "America Preferred", is being shown along with other films by the traveling display unit of the Anheuser Busch Co., of St. Louis, No. This unit, which has complete motion picture projection equipment, is set up at various fairs and expositions. The General Motors "Parade of Progress", carrying a decorated Defense Savings Booth, was in Tulsa, Oklahoma, From Saturday, November 8th through Tuesday, November 11th, and will be in Muskogee, Oklahoma, Saturday and Sunday, November 15th and 16th. DIRECT MAIL Orders from the industrial mailing to date show sales of V2,856,338; the customer mailing 12,862,726; total $5,719,726. Initial results from the Series IV tests -- 13 tests to approximately 10,050 names each, mailed November 8th -- are being Regraded Unclassified - 7 - 76 shown. First two days of pulling produced $5,681. The second industrial mailing to a list of approximately 400,000, offering F and G Bonds, and also, on a special Chistmas order form, E Bonds for employee bonuses and gift buying, will be completed November 15th. A second industrial mailing to approximately 600,000 names newly available since the September-October mailing, delayed by non-delivery of certain material on schedule, is now expected to be completed by the end of the month. ******* Regraded Unclassified As of November 16. 1941 % 20ym Alaska RAND McNALLY BORTH DAKOTA SOUTH DABOTA MAIL WYOMING / IDWA PENNSYLVANIA grio MD. KENTUCKY GOVOINS ATTENSM CNYR AS LOOSE LEAF OUTLINE MAP LOUISIARA 8 State and Local Committees Organized. Z State Committees Organized. Administrators and/or Chairmen Appointed. Hawaii Not Started. OB 10 o so son ann 300 Regraded Unc UNITED STATES sssified 400 500 MILES 78 CHRISTMAS SHOPPING REMINDERS Dear Editor: means of cooperating in the Treasury Use of these stereos in your news col- Department's Defense Savings Pro- unins during the Christmas shopping gram for the sale of Defense Savings season is suggested as an important Bonds and Stamps. Thank you. 38 SHOPPING DAYS 37 SHOPPING DAYS 36 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE 118 U.S. DefenseNarings US DefenseSarings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS BANK* por STURES FRANKS HANKA - POST OFFICE 35 SHOPPING DAYS 34 SHOPPING DAYS 33 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. DefenseSavings U.S. BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS BANKE DASES POST OFFHOW 32 SHOPPING DAYS 32 SHOPPING DAYS 31 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. DefenseSaximes U.S. DefenseSaging BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS HANRS ai STRIPES BANK BASHS NGT NOT DEFILLE 30 SHOPPING DAYS 29 SHOPPING DAYS 29 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S.DefenseSuvings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS 44 stemist BANKS WATTING MANKS POS OFFICER POST (IFFICES From I'm Section Defense Services Staff, Tron-ury Department Washington, D.P. Regraded Unclassified 79 CHRISTMAS SHOPPING REMINDERS Dear Editor: means of cooperating in the Treasury Use of these stercos in your news col- Department's Defense Savings Pro- units doring the Christmas shopping gram for the sale of Defense Savings season is suggested as an important Bonds and Stamps. Thank you. 28 SHOPPING DAYS 27 SHOPPING DAYS 27 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE DefenseSavings US DefenseSavings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS TORES HANNS " BANKS (1) OFFICER PART 26 SHOPPING DAYS 25 SHOPPING DAYS 24 SHOPPING DAYS* to Christmas to Christmas to Christmas Also GIVE Also GIVE 47so GIVE U.S. DefenseSavings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS REVIEWES HANDS M STORES BANKS BANKS POYY post OFFICES EXAM OPFICES 23 SHOPPING DAYS 22 SHOPPING DAYS 21 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. Defense/Savings U.S.De/ense Savings U.S. BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS BANKS STORES BANES at STORES BANKS 1161 IFFICES POST OFFICES POST OFFICES 21 SHOPPING DAYS 20 SHOPPING DAYS 19 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. Defense &reigs U.S. DefermeSavings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS PORES BANKS at STORES BANKS STORES MANIED Met OFFICES post OFFICES INST-OFFICES I'm Section Relense Revings staff, Treasury Department Wishington II 11 Regraded Unclassified 80 CHRISTMAS SHOPPING REMINDERS Dear Editor: means of cooperating in the Treasury Use of these stereos in your news col- Department's Defense Savings Pro- umns doring the Christmas shopping fram for the sale of Defense Savings season is suggested as an important Bonds and Stamps. Thank you. 18 SHOPPING DAYS 17 SHOPPING DAYS 16 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE P.S. Defense Sustimes U.S. Defense Streings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS BANKS of TOKE BANNIS EXTORE- HLANKE DOVT ITWT OFFICER YORK 15 SHOPPING DAYS 15 SHOPPING DAYS 14 SHOPPING DAYS' to Christmas to Christmas to Christmas Also GIVE Also GIVE Alko GIVE U.S. DefenseSavings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS HANKS (1) BANKS per EFFICES OFFICES 13 SHOPPING DAYS 12 SHOPPING DAYS 11 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. DefenseSat/Ings U.S.Defense &irvings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS RESTORES. BANKS MOTORES HANKS DISTRIBERT BANKS ore OFFICES just OFFICES PUST OTHERS yell 10 SHOPPING DAYS 9 SHOPPING DAYS 9 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S. Defense/Suvings U.S. Defense Savings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS ALSITURES BANKS at STORES MANKS AUSTORIA BANKS POST OFFICER POST OFFICES NOST OFFICES 4% From Phone Section Delegar - Stall, Travelly Reportment D. Regraded Unclassified 8 CHRISTMAS SHOPPING REMINDERS Dear Editor: means of cooperating in the Treasury Use of these stereos in your news col- Department's Defense Savings Pro- umns during the Christmas shopping gram for the sale of Defense Savings season is suggested as an important Bonds and Stamps, Thank you. 8 SHOPPING DAYS 7 SHOPPING DAYS 6 SHOPPING DAYS to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S.Defense Savings U.S. Defense/Sirvings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS (STORES BANKS BANKS at mores HANES (VST OFFICES POST OFFICES POST OFFICES 0-18 S 5 SHOPPING DAYS 4 SHOPPING DAYS 3 SHOPPING DAYS* to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S.DefenseSovings U.S. DefenseSavings U.S. Defense-Savints BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS BANKS STOREX BANKS en STORES UANNH PAY OFFICES KAT OFFICES POST OFFICES 3 SHOPPING DAYS 2 SHOPPING DAYS 1 SHOPPING DAY to Christmas to Christmas to Christmas Also GIVE Also GIVE Also GIVE U.S.Defense Surings D.S. Defense Sarvings US. DefenseSuvings BONDS and BONDS and BONDS and STAMPS STAMPS STAMPS as BANKS as STREETS BANKO at STORES BANKS 19999 UNICES POST OFFICINE FOST OFFICES into From: Pive - Sevings staff, Transury Department, Washington D Regraded Unclassified 82 THE SOUTH CAROLINA NATIONAL BANK COLUMBIA. S.C. B. M. EDWARDS PRESIDENT November 14, 1941 Dear Mr. Morgenthau: After seeing you in Washington yesterday and hearing your commendation of the work thatI have done for you during the past eight months, I came home feeling mighty good. I talked with Harold Graves again over the 'phone and it is understood that for the present, at least, I will retain the official title as Assistant to the Secretary of the Treasury and try to hold my- melf in readiness to respond to any calls which may be made upon me if my services are needed from time to time. I think you bestowed & very high honor on me In giving me this title when I went to Washington, and of course I an pleased to have it continued at your pleasure. I understand that there LTS very few of these official positions and if at any time you need this particular title to give to someone who may be called in to assist in the matters of the Treasury Department, you will have my resignation on a moment's notice. Then if you care to call 20 by some other designation, regardless of the rank, it will be entirely setisfactory. Again thanking you and with All good wishes, I on Sincerely yours, Honoraile Henry Morgenthau, Jr. Secretary of the Treasury Mashington, L. C. Regraded Unclassified 83 BENDIX AVIATION CORPORATION AVIATION, AUTOMOTIVE, MARINE AND INDUSTRIAL PRODUCTS 30 ROCKEFELLER PLAZA NEW YORK, N.Y. CABLE ADDRESS November 14, 1941 The Honorable Henry Morgenthau, Jr. The Secretary of the Treasury Washington, D. C. My dear Mr. Morgenthau: I am delighted to acknowledge your letter of November 10th, and note your expressions of appreciation and confidence. I can assure you that it is the unanimous desire of our Directors and my fellow executives to continue to cooperate with you in our common task until we have achieved fulfillment of the aims in behalf of our country to which this task was dedicated. Vincens Bendif Very sincerely, TREASURY DEPARTMENT 84 INTER OFFICE COMMUNICATION DATE November 14, 1941 TO Secretary Morgenthau FROM E. H. Foley, Jr. Although it is quite lengthy, I think the attached letter from Frank Watson, now with Consolidated Aircraft, in regard to their flight delivery service will make interesting reading. I have already sent it to Jim Forrestal and Bob Lovett. I am also attaching 8 copy of Admiral Tower's reply. i.H.7h Attachments Regraded Unclassified 85 CONSOLIDATED AIRCRAFT CORPORATION LINDBERGH FIELD SAN DIEGO, CALIFORNIA LA "CONBOLAIRCO" JACKSON ⑉ Fowers IN REPLY TELEPHONE REFER TO adm 8 October 1941 Mr. E. H. Foley, Jr. General Counsel Treasury Department Washington, D. C. Dear Ed: There is a. suggestion which I feel should be presented in the very near future to the proper people. It does not concern Consolidated particularly nor possibly does it concern the Navy directly. It seems to no, however, to be worth- while for National Defense consideration. This suggestion relates again to the matter of flight deliveries but this time it covers delivery of approximately 150 of our Catalina type flying boats under lend-lease contract with the Navy and to be ready for the British some time before the middle of next year. At the present time Consolidated has received no request or intimation in connection with the flight delivery of these airplanes. It is presumed that they will go from our factory to Bermuda and thence on to England as in the case of the flying boats delivered thus far. Perhaps the Navy Department has or is planning a flight delivery pro- gram of its own for these airplanes. It may be that in addition to the large number of similar type flying boats which we are producing for the Navy, they will need the extra training which conducting this flight delivery program will give or will have the crews available to carry on the program. If this is so, my suggestion need not be given consideration. However, if the Navy Department can be assisted by having these British airplanes flight delivered without taxing their own facilities, definite advance planning will very shortly be necessary. Consolidated now has an asset of considerable value from the standpoint of National Defense in the form of a well-coordinated and efficient flight delivery organization. This organization is apparently scheduled for dissolution in the very near future. If need for it should again appear, it would appear advisable to take steps to keep it intaot. A CRAFT Regraded-Unclassified 86 CONSOLIDATED AIRCRAFT CORPORATION LINDBERGH FIELD. SAN DIEGO, CALIF. Mr. E. H. Foley, Jr. - 2 - 8 October 1941 This organization was created nearly a year ago to accomplish flight delivery of flying boats and land bombers being built by Consolidated under contracts with Britain, Canada, Australia, and Netherlands. Because of the number of deliveries scheduled and because of the size and range of the aircraft to be delivered, careful steps were taken to build up an efficient organization. This flight delivery organization is not a miscellaneous pilots pool such as has Doen sufficient for the other aircraft manufacturers producing smaller airplanes and making their deliveries in B. series of short daylight hops. Steps were taken to secure the services of the best available pilot personnel and well-planned additional training programs were carried through in order that all crews would be qualified to fly day or night, contact or instrument, to practically any point, This organization today is the only one in the country having such an unlimited rating. Results, of course, are what count and the record of the Consolidated rlight delivery department is worth mentioning. Thus far nearly 100 flying boats have been delivered from San Diego to Bermuda, involving in a majority of cases a 2400 mile non-stop transcontinental flight at night. Thirty-six flying boats are now being delivered to the Philippine Islands, B. total trip from San Diego of approximately 7400 miles. Nearly 20 more have been taken over the 2300 mile jump to Hawali where these have been turned over to Australian crews. Eighteen more flying boats have been taken non-stop from San Diego to Ottawa, Canada, a distance of 2350 miles. Approximately 26 four-motor bombers have been taken through to Montreal. The sum total of these adds up to several years of normal airline operations. The Philippine Island delivery, for instance, is equal to a year of Pan American operation over the seme route and is being accomplished in at period of approximately three months. It might be said that this organisation is capable of taking these long range flying boats to practically any point on the globe. To all of this must be added the very important fact that there is involved the handling of new airoraft setting out on long flights over land or water after only four hours of shakedown flying at the factory. The record of accomplishment without a crash of any kind is considerably in excess of the law of probability and can only indicate & highly capable organization. It is difficult for those not familiar with the business to realize that such a success is based almost entirely upon organization. It is true that the crews are good but they are good partly because of the organization which included their training and which functions with them. They would not and could not accomplish the same results 8.8 individuals or as crews in any other less efficient organization. Successful ferry flying involves many of the aspects of airline operation but includes additional factors 6.5 well. The element of group confidence is very important. In all cases very new airplanes are involved and 8. background of knowledge of factory operations must be present to enable the crows to set out on their two and three thousand mile hope with full confidence. Naturally, there must also be confidence in weather predictions and the personnel who analyze and make them. It goes without saying that all members of the Regraded Unclassified 87 CONSOLIDATED AIRCRAFT CORPORATION LINDBERGH FIELD. SAN DIEGO, CALIF. Mr. E. H. Foley, Jr. - 3 8 October 1941 organization must each have the fullest confidence in the ability of the others in the group to perform their assigned task for in a well-knit flight delivery organization no crew 10 ever fully on its own. With this all established and operating with smoothness, it would soon worthwhile to preserve the organization under some status if, for the interests of National Defense, there were any indications of future use for the department. Consolidated's program of flight deliveries will proceed at a decreasing tempo around the first of the coming year and should be entirely terminated by the middle of next year. Westward deliveries to the Philippines will be over in December. There will remain thereafter but a single group of Canadian flying boats being reworked at Elizabeth City, North Carolina, for diversion to the British and which will be flight delivered to Bermuda. It may well be that the undertaking of flight delivery of the 150 lend- lease flying boats to Bermuda by Consolidated crews will constitute doing only half the job and, therefore, not present an entirely worthwhile solution for getting the airplanes to England. The assignment from Bermuda on is in the nature of an extra ohore for the Atlantic ferry organization of the R.A.F. since these Consolidated boats are the only airplanes going to England which have the range to move through Bermuda. While the Consolidated crews consist mostly of older pilote, navigators, and other members, since these are the best and most experienced men in the game, it is possible that the group would be willing to consider flying boats clear through from San Diego to England if they could do the job under the present organization. All have refused to undertake any connection under any circumstance with the existing Atlantic ferry organization. To state their reaction very frankly, these men are careful, skilled and safe fliers of thousands of hours experience and they do not consider the present trans-Atlantic operations 0.6 being correctly organized or correctly handled. While they recognize the risks of flight into the war zone, these rioks are not considered as deterring. The risks of flying with an organization in which they do not have confidence, with ground crews whose abilities are doubtful and under other conditions not conducive to safety, absolutely remove for them all consideration of joining the Atlantic ferry service under the present setup under any circumstances of compensation. The group feels the same way about the Pan American South Atlantic venture, many of them having previously worked for this organization. They would, however, make the trip on to England as part of their own group if return trips and all details were to be handled by them. This is no put up or shut up proposition, for the matter of ferry operations to England has not been seriously suggested and all of these men are to a certain extent worried about possible employment when our own operations close down. They know that there 1a a good market for experienced pilots now and all have received offers both from the R.A.F. ferry service and from the Pan American organization at salaries ranging from double to three or four times what they are now being paid. Regraded Unclassified 88 CONSOLIDATED AIRCRAFT CORPORATION LINDBERGH FIELD, SAN DIEGO, CALIF. - 4 - 8 October 1941 Mr. 8. H. Foloy, Jr. Nor can it be honestly said that it is a matter of interest to Con- solidated. It is my personal feeling that the company would hositate to conduct operations from San Diego to England even if requested to do 80 and on an apperently profitable basis. Consolidated 18 6. manufacturing organization and flight operations have never been more than a minor service necessity. Doubtless any detail which would be worked out would be under lend-lease and on B. cost-plus fixed-fee basis with little OF no profit involved in comparison to the detail work which would result. There is, of course, considerable value to the manufacturer in every 08.00 in being able to see its own aircraft carried through to final delivery to the point of service use. All airoraft manufacturers are also begin- ning to recognize to B. greater extent that they are no longer individual and private businesses but are distinotly 8. part of a single National Defense program. Under the Neutrality Act as it now stands it appears that an American organization could not make direct deliveries of aircraft to England. This, of course, may be subject to change in the near future. There is also the possibility that the present flight delivery department of Consolidated could be created G.D a corporate entity, either wholly owned by the government under RFC powers or under some other sort of arrangement if it is felt desirable to assign to it the task of complete delivery to England. If the operation could be more efficiently handled by termination of flight deliveries by this group at Bermuda as in the case of previous deliveries of British flying boats, the problem would of course be greatly simplified and could doubtless be handled by direct contract with Consolidated. The principal point to be made, and one which must be made in the very near future, is that an experienced and efficient organization does exist but will not exist at the time of possible future need if steps are not taken for Its preservation. It is realized that in the mass of present problems now con- fronting those in responsible positions, the issue of delivery of lend-lease Consolidated flying boats approximately eight months from now may find difficulty la commanding present attention. However, giving that problem attention now would produce a simple solution and one which will result in assured satisfaction at e. later date. It will be much more difficult to re-oreate an organization equal to that which now exists. And even with the extra effort, the new organi- sation will probably result in a loss satisfactory performance and B. more expensive program than advanced decision can now provide. Within the next sixty days, a tag-end delivery of nine Catalinas is to be made to Bermuda. Thereafter, as previously mentioned, converted Canadian Catalinas will be moved on to Bermuda for the next fow months. The total of these will not require a largo portion of the present Consolidated flight delivery organization and retrenchment ia now on schedule. The British have a very limited Atlantic ferry organization for functioning out of Bormuda with these aircraft and it may well be that, assuming Neutrality Aot problems can be overcome, these groups of airplanes could be taken on to England by the Consolidated organization as a prelude to the extensive deliveries under lend-lease which are to come, Regraded Unclassified 89 CONSOLIDATED AIRCRAFT CORPORATION LINDBERGH FIELD, SAN DIEGO. CALIF. - 5 - 8 October 1941 Mr. 8. H. Foley, Jr. Such B. program would preserve the organisation intact and give it the necessary advance experience for the larger operation which will break at the maximum intensity of R.A.F. flight deliveries of land bombers through 1 Halifax and will in itself involve an operation considerably larger than any previous flying boat deliveries through Bermuda. I am sending you this letter entirely unofficially and because I sincerely feel that the suggestions made are worthy of consideration. It has been my personal privilege to work very closely with Consolidated's flight delivery program. I am frankly impressed with the organisation, even in excess of the impression which their record to date fully justifies. You know that in addressing this to you I am fully aware that the problem involved may already have been given direct consideration and a more appropriate solution resolved. To say nothing, on the basis of such an assumption, would not be an appropriate discharge of duties on my part, however. Production angles out here are ironing themselves out with great speed and the record to date as well as substantial promises for the future appear much better than could have been reported six months ago. There is naturally much to be done yet and no slackening of effort. My own hours seem to get longer rather than shorter but the important thing is that the results are satisfying. Sincerely yours, Frank Watson FW;hnc Regraded.Unclassified 90 (COPY) NAVY DEPARTMENT Bureau of Aeronautics JHT-GB Washington 12 November 1941 Dear lar. Foley, The letter of Mr. Frank Watson dated 8 October una addressed to you and which you passed on to Mr. Forrestal, eventually came down to me. I - returning herewith the letter, which ceals with the subject of flight feriy crews organized by Consoligated Aircraft. Probably you are ware of the fact that in so fer as CATALINA types are concerned, the ferry crews have delivered them to Bermuda in accordance with tad terms of too contract, and R.A.F. crews have taxen them from Bermuis to the Inited Kingdom. At one time we suggested to the British = change in this under which deliveries would be mede all the way across by American cre s, but they preferred to achere to their UWA scheme. After we received 1. nation's letter we again took the matter up with the British Air Com- Alsolon and were informed that it WHE one which concerned the Royal Air Force Ferry Consulting Air Chief Marshal Bowhill, R.A.F., whose headquarters are at Montreal. Knowing that Consolidated ferry crews are reluctent to establish connection with that organization, I felt that little would be accom- lisned by endeavoring to pursue the subject further in that cirection. However, - have written to Bowhill, whom I know very well, suggesting that he come to Washington for a consultation, and will /resent the mattur to nim upon the coasion of his visit. I - sure tast you realize we have great difficulty at times in our en- newvers tu help the British, en it has been my experience that best results can De accom, lished by airect conversations rather than by correspondence. Sincerely, /6/ J. Я. Towers J. H. Towers near Ausdras, U.S.N. ANGED A. Forey, Jr., Esquire Genoral Counsel for the Treasury Treasury Department Rushington, L. C. Regraded Unclassified TREASURY DEPARTMENT 91 INTER-OFFICE COMMUNICATION DATE November 14, 1941 TO Secretary Morgenthau FROM Mr. Foley M Fred Ironside of the Post Office Department telephoned me Thursday afternoon and requested that 8. Treasury representative attend 8. meeting on censorship in the Post Office Department at 10:45 a.m. today. Herbert Gaston and Huntington Cairns attended the meeting, at which representatives of War, Navy, Justice and Post Office were present. At the meeting, Mr, Ironside explained that at the last Cabinet meeting, the President had appointed a committee, with the Postmaster General as chairman, and consisting of Treasury, War, Navy, Post Office, Justice and the Library of Congress, to consider legislation authorizing the imposition of a system of censorship. At today's meeting, Justice presented B. draft of bill for consideration which we are now studying. The bill is so drafted that under its provisions the President will have plenary power to adopt any system of censorship he chooses and to make such subsequent modifications Regraded Unclassified 92 - 2 - thereof as he may desire without further authorization from Congress. It is not believed that any objection will be raised to the principle of the bill. We are now studying the bill from the technical legal point of view and will furnish final drafts to the Post Office by 10:00 a.m. Saturday. A meeting of the Cabinet officers appointed to the committee by the President will be called the first part of next week to consider the draft submitted by the subcommittee. Section 1 of the bill will be submitted in three forms: (1) To authorize a system of censorship in time of war. (2) To authorize a system of censorship during a national emergency. (3) 8. To authorize a system of censorship during a war. b. To authorize during a period of national emergency examination and inspection of communications. Thus, during 8. period of national emergency, you would not have full power of censorship but merely examination and Regraded Unclassified - 3 - 93 inspection. This, for example, would exclude the power to delete parts of messages. The general view of the meeting was that the President should be given full power of censorship now, but Justice felt that Congress would not grant such 8. power at this time and that the third form of the bill was the one which would be most likely to pass. The Navy stated that there was an urgent present need for full censorship. The Army and Navy have been working on 8. plan of censorship for some time, and it is expected that they will urge their plan upon the President, which he would be free to put into effect if the proposed bill becomes law. Treasury and Justice have been opposed to the Army and Navy plan, which envisages a military, rather than a civilian, set-up. The Army and Navy do not want to run the censorship but they want it staffed with Army and Navy personnel, and with the employees in an Army or Navy reserve status. The chief argument for this proposal is that it will prevent resignations from the Service. We have been advised by Regraded Unclassified 94 - 4 - the British on the basis of their experience that such a set-up is undesirable. However, the Navy stated that they have heen in consultation with the British and that their plan is in accord with the British experience. 9.10.7L. Regraded Unclassified TREASURY department 95 INTER OFFICE COMMUNICATION DATE November 14, 1941 TO Secretary Morgenthau FROM Mr. Thompson The complete mailing of copies of your address to be delivered tomorrow in Worcester was completed last night. Approximately 13,000 copies were mailed out. Am Regraded Unclassified 96 November 14, 1941 Dear Missy: Elinor and I were delighted to learn that you had arrived safely nt Warm Springs and also that you are feeling much better. I cannot begin to tell you how much we have missed you here in Wash- ington. It doesn't seem like the same place. We have often asked about you, and only recently we inquired of your brother as to how you were getting along. If there is anything that you would care for, Elinor and I would love to send it to you. Please let us hear from you. With kind regards, Sincerely yours, (Signed) Henry Miss Marguerite LeHand, arm Springs, Georgia. n.m.c Regraded Unclassified 97 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE November 14, 1941 TO Ferdinand Kuhn, Jr. FROM Alan Barth EDITORIAL OPINION ON FOREIGN AFFAIRS: ANOTHER TURNING POINT The press of the country presents an unhappy contrast: heightened resolution and morale toward events abroad; confusion and cross-purposes respecting the domestic scene. The climax of the fight for neutrality repeal found editorial thinking dis- tracted between continued support for the Administration on foreign policy and bitter hostility to labor leadership at home. For the moment, John L. Lewis loomed as & more immediate enemy than Adolf Vitler. Labor Newspapers, this past week, have demonstrated anew that they are business enterprises and that their publishers are employers. Despite an unremitting insistence on passage of the Neutrality Act amendments, they all but unanimously rejoiced over the Mediation Board's unexpected decision on the captive mine issue. They take it for granted that the Mine Workers' strike will be renewed; and almost obviously they rejoice over this, too, for they desire to Regraded Unclassified - 2 - 98 see the strike broken by the power of the national Government. As the Scripps-Howard papers put it somewhat exultantly: "Now, at last, this Government must take a stand against 'strikes as usual' ... The alternative is unthinkable. It would be to admit that America must buy the permission of dictators here at home before it can arm itself and others against dictators abroad." This point of view -- that unionism and Nazism are comparable manifestations of dictatorship -- appears to have produced the nearly disastrous revolt against the Administration in Congress. It seems unlikely that the press as 8. whole wished to foment such a revolt. Last-minute editorials in influential conservative papers, such as The New York Herald-Tribune, implored the legis- lators to separate the issues which their own news pages and editorials had helped to confuse. With the Neutrality Act amend- ments passed, there is no doubt that editorial tom-toms will beat unrestrainedly for anti-strike legislation. Encouragement The past week has produced a marked uplift in editorial spirits about the progress of the war. The following factors seem to be chiefly responsible for the current wave of optimism: 1. Moscow, Leningrad, Rostov and Sevastopol are still in Russian hands. It was widely feared that some, if not all, of these cities would be taken by the Nazis. That the Red Army con- tinues its stubborn resistance and even, in some areas, is launching Regraded Unclassified - 3 - 99 counter-attacks, is now taken as sure evidence that an eastern front will be maintained throughout the winter. Editorial writers have found a good deal of pleasure in requoting the Hitler boast of October 3 that "The enemy is already broken and will never rise again." 2. Stalin's speech made a profound impression, despite an editorial tendency to scoff at his estimate of German casualties. The American press seems at last to be persuaded that he is genuinely determined to fight Hitler to the end. Accordingly, there is increased editorial support for the shipment of war materiel to Russia, together with increased confidence in the utility of this measure. Application of Lease-Lend assistance to the Soviet Union was generally accepted as logical and desirable. 3. Even more impressive to commentators over here was the publication of extracts from Goebbels' article in Das Reich. It was interpreted as reflecting a marked change in the Nazi out- look -- a shift, in the psychological sense, from the offensive to the defensive. The Kansas City Times remarked of it that, "The exuberant boastfulness that has characterized so many pro- nouncements by leading Nazis in the past, Herr Goebbels included, was gone, sunk apparently without a trace ... It almost sounds as if Adolf Hitler's chief pepper-upper has begun to whine." Once more the press is speculating hopefully about a breakdown in German morale. Regraded Unclassified - 4 - 100 4. Prime Minister Churchill's unequivocal pledge of support in the Pacific, coming on the heels of & minor British naval victory in the Mediterranean, was taken as an especially heartening evidence of growing anti-Axis strength and collabora- tion. The editorial response to it takes the form of 8. toughened insistence on firmness in this country's dealings with Japan. Refreshed hopefulness has brought with it an increased zest for making American intervention effective. There is widespread, almost universal, dissatisfaction with the pace and scope of the production program; along with this goes an ashamed consciousness that Lease-Lend deliveries have by no means measured up to Lease- Lend promises. The insistence that America produce and deliver for the fighting fronts is now urgent and impatient. Anniversary Editorials on the occasion of Armistice Day were much more than the customary stylized and stiltedly ironic tributes to the World War dead. Taken together, they support the thesis that isolationism, in the sense in which this term was employed during the 1920's, has largely disappeared from the American approach to world affairs. In many of the editorials there is now a candid acknowledg- ment that American failure to participate in collective security Regraded Unclassified - 5 - 101 efforts after the last war was & tragic error. In most of them there is a firm insistence that the United States assume a leading role in the reconstruction of the world when the present war is ended. "Although the enlightened world pays just honor to the glory of the valiant heroes of the world war," says The Indianapolis News in a representative editorial, "it is forced to give a long thought to what it did with the peace that these men won. It failed to preserve the peace, hence it failed the men who won it. Today the same forces -- of democracy against tyranny -- are locked in an even greater struggle ... The errors of the council table are being corrected on the battle- field ... The proper memorial to the heroes of 1914-1918 is thus prescribed by events as a solemn VOW to win back their gains and more. To win, this time, not only the war, but also the peace." There has grown, and there is growing, in the United States a mature sense of responsibility about the problems of the world. The press is preaching and events are demonstrating that the earth cannot be segmented. All portents indicate that this is a view which has grown from the grass roots up, that in this the press reflects the public. It is more than an editorial opinion; it has become a basic popular attitude. Regraded Unclassified TREASURY DEPARTMENT 102 INTER-OFFICE COMMUNICATION DATE TO Secretary Morgenthau Nrv.14.1941 FROM E. H. Foley, Jr. In response to the suggestion contained in your memo- randum of November 12, 1941, the question of food shipments to Unoccupied France was discussed at a meeting held in the office of Assistant Secretary of State Acheson at 10:30 A.M. on November 13, 1941. Messrs. Acheson, Dunn, Atherton and Reber were in attendance for the Department of State, and Messrs. Foley, Pehle, B. Bernstein, Coe, E. M. Bernstein and Timmons for the Treasury Department. I suggested further consideration of the recent applica- tion made by the French Government to release $200,000 of its blocked funds to the American Friends Service Committee for the purchase of milk in Switzerland. The previous release of $50,000 to the American Friends Service Committee was discussed. Although there was some delay in exporting and distributing the milk purchased, it was ultimately distributed by the Friends Committee through its centers in Unoccupied France. It was generally agreed that this application was part of the broader problem of food shipments to Unoccupied France. Mr. Acheson stated that the American Red Cross is purchasing milk and medical supplies with funds allocated by the President, and 8. vessel, the SS "Capulin", is scheduled to sail for France at the end of November. British navicerts covering the cargo have been assured. The cargo will consist of the following items: 2,523,000 lbs. Powdered Milk 135,000 cases Evaporated Milk 20,000 Layettes Miscellaneous medical supplies The total value of the cargo is $1,500,000, of which $1,250,000 is milk. 103 - 2 - The distribution of the food and medical supplies will be entirely in the hands of the American Red Cross, under the supervision of American personnel, and these supplies will bear the insignia of the American Red Cross. Distribu- tion through the American Red Cross, a semi-governmental agency, provides the necessary safeguard to assure the use of these supplies for the purpose intended and without political benefit to the Vichy Government. At the same time it is felt that this token shipment will be of some propaganda value to the United States. The application of the French Government for the release of $200,000 of blocked French funds to be used by the American Friends Service Committee in the purchase of milk in Switzerland for distribution in Unoccupied France is believed objectionable by the Foreign Funds Control Committee for the following reasons: 1. It is undesirable to have competing agencies distribut- ing relief in France. A unified program under American super- vision and semi-governmental control is assured when the American Red Cross is the distributing agency. 2. The application of the French Government would release blocked French funds in this C ountry for the purpose of purchas- ing food supplies in Switzerland, and may be the prelude to stronger efforts by the French Government to obtain the release of much larger amounts out of the substantial blocked French funds here for food shipments from this hemisphere, shipments which would constitute B. serious breach of the British blockade. Representatives of the French Embassy now approach the State Department almost weekly with requests for the release of blocked funds for the purchase of food for France. 3. Any food purchased with French Government funds and distributed in France will provide invaluable propaganda for the Vichy Government. In the case of the wheat shipments by the Red Cross, the Vichy Government made vigorous but unsuccessful efforts to gain control of the distribution of the grain for the purpose of making political capital. Regraded Unclassified - 3 - 104 4. It is clear that the Friends Service Committee could not purchase enough milk in Switzerland to meet any real part of the French needs. The Swiss export surplus of milk is very small. Consequently, the Friends purchases of milk in Switzerland are really nothing but token purchases, the only real effect of which will be to keep the Friends organization in the field in Unoccupied France, where it is supplied with funds by the French Government 80 long as it is able to import foodstuffs. In view of the above, I shall not approach the American Friends Service Committee to obtain a detailed report with respect to its existing facilities in France as you suggested unless I hear from you further. E.11.7h. Treasury Department 10 Division of Monetary Research Date Nov. 14, 1941 19 To: Secretary Morgenthau Although the ticker made Churchill's statements read in the present tense, the speech as reported in the New York Times (paragraph marked in red) is in the past tense on the question of resources. We have not yet received an official copy. MR. WHITE Branch 2058 - Room 214} molite 106 W.C.N.S. November 10, 1941 10:47 A.M. ADD CHURCHILL, LONDON Regarding Britain's buying power, Churchill recalled that last year at this time Britain did not know where to turn for dollars for American exchange. "By very severe measures", he added, "we have been able to gather and sent to America about 500,000,000 pounds (2,000,000,000) out the end of our financial resources in in sight-- nay it has been actually reached." reer or VON lo gotatviCI donsesse violegoM Regraded Unclassified 107 THE NEW YORK TIMES, TUESDAY, NOVEMBER 11, ext of Prime Minister Churchill's Speech on Wo Press. La Singapore Prepared for Any Japanese Move; should the United States become founi involved la war with Japan aid Nov. British declaration will follow We the speech Prime AID- British Naval Base Gets Own Striking Force within the hour, nano Western Charchill delivered Viewing such a enmbre scens nursi .. dispassionately as possible, 11 Mr House IR would seem & viry hazardous ed- State By F. TILLMAN DURDIN venture for the Japanese people that to plungs quite needleasly into read limes of passe and war Wireless to the New YORK Times world struggle in which they mez be annual Drush featival we SINGAPORE, Tuesday. Nov. 11 tinued Japanese reinforcing in will find themselves opposed in migh may (the Land Prime Minister Winston Church- Indo-Chine in recent weeks and the Pacific to States whose popu- não been by lity announcement at London yes- evidences in Japan of political and lations comprise nearly three- postom the ocrastim for psychological preparations for e quarters of the human TACO at the by the terday that strong British navel new major move of aggression If wine) is the basic foundation degit units had beed spared from the of modern war le would he valbri nut MAMMER signa foceign of have produced here a state of dangerous for a power like Japan Aim Atlantic and Moditerronenn for readiness for anything whose stee) production is only dono your accient lies service la the Indian and Pacifin British land forces in Malays about 7,000,000 tons a year, Lit 5 our timeum affous have Organs caused great astisfaction have been prepared for any Jap- provoke, quite gratuitously, a may struggle with the United States. all and ginnest the whole here Inday. anese action. Special precautions Dinatrate under the Interest in the news was height- are being taken against possible while e(will production le not ened by the feeling that relations fifth-column botage about 60,000,000 tons-and this avianny. takes no account N° the powerful with Japan were at last approach- Many observers here feel the war which Nifter hagan by contribution which the British ing a showdown. Observers noted crisis may come with the meeting Printit s/ul which now Empire can make in various the Buropean Continent that Britain had taken the initia- of the Japanese Diet at the end of ways by into the north- tive tenm the Japanese and ex- the week and plans are being car- I hope devoutly that the peace last of Afrira may will engulf pressed the optnion that Premier ried out with Nov. 15 especially In of the Pación will be preserved of Asia-ney, R Bidelhki Tojo'a problem is framing mind. in accordance with the known apread do the remain- his speech for the Diet at Tokyo A notable aspect of the British wishes of the wisest statements of fourth of the glans. Saturday would be whether to put military position in the Far East Japan. But every preparation to un the same spleit defend British interests in the up or shut up. has been the strengthening of in- the which you the Lord Mayor) Far East and to defend the ein deleurated your assumption Singapore's reliance on the po- land outposta. Points that had for- min cause now at sinke has been por will THE time-hon- tential aid of the United States merly been only strong enough to and is being made, agrans of the Lord Mayor's Fivet Was ended, It was remarked. fight delaying actions have now Meanwhile how can We watch 90.1. " your guest will en- and the great naval bawe here had been reinforced until they are Dul- without emotion the wonderful warks of the central British post- defense of theft native still and VII 1x play, though very ICA striking force, (ly-for in warlime speeches Mr. Churchill's revelations co- tion at Singapore. Major sevirions of their freedom and independ no be amort-the traditional ence which has been maintaine incide with preparations for any of British strategy are being assigned LD Chowe who gold single handed for five long year office emergency and A. atendity mount- brought almot by this new vitua- by the Chinese people under the log state of tension here. The con- tion. Inadership of that great Assistic Butcheries ber Nasia hero and commander General of Rurope to ter- Ching Kai-shek" in The last Regree In a upon which the New Order of at the Inigest nise, as well as to 11. world be a disasine of the firsi 1) countries Norwagiens Rel- Europe " to be Immugurated. the courage of the Italian Navy magniture in world divilization If 8, Premimien Dutch, Poles. Here, then, M the house-warming already mentioned, : am able in the nable resistence to investion Merha Create Klavenns, festival of the Herrenvolk Have gen further and announce to you and explaitation which has been and above all in scate, then, la the system of Incrustam here that we now feel ourselves made by the whole Chinese THIS Go prané are being butobered by by which the Next criminals and strong enough to provide A pow- were not LO requir le the libere immile und imms of thousands orful navel force of heavy ships tion of their nearths and homes their Quisling accomplies week to they have surrement. rule a driven annient Ristes of with Its necountry ancillary Vell- That 1 feel in the sentiment deep 40 now régistrans in all Шигоре and If possible all the free nale for services If needed in the in will of our hearte. more have hecome part of the natings of the world Indian and Parific Oceans, 101 Derman reutine In no more effective manner Thus we stretch out the am of America's Financial Ald world has been intensely could they have the ac- brotherhood, at motherbood, to To return for a moment before in de massarge of French complishment of their own de- the Australian and New Zealand I alt. down un the contrast be SEPL The whnia of France, The future and its Natory peoples and to the Indian people, tween our position now ano the etexption of That small are inscrutable. One thing is whose troops already have been year REO. 1. must comind you-1 in The public PAYMENT de- plain-never to these bloodstained fighting with so nuch distinction dem't need to ramind you here in upen a Govman victory. has and accursed hands will the No in the Mediterranean theatre the Clig-Hat 01 this time tast united IN and indig- ture of Europe be confided. This movement of que naval year we did not know where 10 Our slaughter of Bince Lord Mayor's Day last forces in conjunction with the turn fur R. doller By very severe Innecent people, year sume great changes have United States main Thest may measures we had been able to Fromot, people have not taken place in our situation. Then give a practical proof to all who spend in America about £500 Inspressed by Admiral Date we were the sole champions of have eyes to one that the forces 000,000 But the end of our 11- 16 German gener- freedom in arms. Then we were of freedom and democracy have nancial remultes WAS in sight- and (the rell Ene loving col- ill-armed and very much outnum- by no means reached the limit of nay, is had been actually reached Marers. WITH conquerors and hered even In the air. their power. All will could do al that time . Now of large part of the United I must admit that having vnted year ago was to place orders in the nimeelf, States Navy, as Colonel Knox has for the Japanese alliance nearly the United States without being 500m OMI* littler, has heen told us, la constantly in selion forty years ago, in 1902, and have able to ann nur way through, but birthed KY the volume of world assinet the common foe, Now the line always done my very best to on a tide of hope and not without when nie speciarular vallant resistance of the Russiss promote good relations with the important encouragement, Then 16 have evented nation has inflicted frightful in- island empire of Japan, end hav- came the majestic pollcy of the not their the Freich people jury upon German military power, Ing always been a sentimental President and Congress of the - Intimidated. Hitler And at the present moment the well-wisher me Japan, an admires United States in passing TOW - dised la gen further with German invading army. after of sheir many gifts and qualities, Louse-Land mist under which in of suitor This is Thair greet leases. lie EU the Date I should view with keen anrinw Two successive enactments about " Theory commended or ren steppies exposed to the 81- the openinx of a conflist butween in non onn Regraded Unclassified TREASURY DEPARTMENT 108 INTER OFFICE COMMUNICATION DATE November 14, 1941 TO Secretary Morgenthau FROM H. D. White Subject: Conference of Mr. Bewley with Mr. White, and with Mr. Hicks present, Wednesday, November 12, 11:30 A.M. Mr. Bewley called upon Mr. White (at Mr. Bewley's re- quest) to ask about the terms under which gold was to be sent from Russia to the United States. He asked: (1) Whether gold would be shipped to the United States in partial payment of materials received by Russia under the Lend-Lease Act, and he asked whether, if that should be so, the United Kingdom would be able to receive pari passu gold payments from Russia; (2) Whether the arrangement with respect to the sale of gold to United Kingdom pari passu with the United States applied to the 330 million of gold sold to the United States Treasury for future delivery. Mr. White said that he would speak to the Secretary about the matter and would get in touch with Mr. Bewley when he had the information. Mr. White asked Mr. Bewley for the following information (in pursuance of the Secretary's request): (1) Because of rumors that had reached the Secretary, the Secretary was interested in learning where the Duke and Duchess of Windsor obtained the foreign exchange for their recent trip to the United States; (2) The Secretary would also like to know the details of the recent exchange clearing agreement between the United Kingdom Government and the American motion picture companies distributing films in England. Mr. Bewley agreed to provide this information. Mr. White also told Mr. Bewley that while Secretary Stimson had not yet replied to the Secretary's letter of October 14, he thought the War Department was making some progress on the problem. Regraded Unclassified 109 NOV 14 [84] as dear Mr. President: The Treasury Cryptanalytical Unit has just decoded the following messages sent by radio from German agents in South America to Germany on the dates indicated. The original coded messages were intercepted by Coast Guard monitors: "5 October 1941 CEL To ALL (South America to Germany) No. 11. Renewed application of strong USA pressure that Brazil Covernment declare Portuguese entitled to equal rights 8.8 Brazilians. Occupy Atlantic possessions of Portugal with simultaneous suggestion that Portugal Government be received here since invasion of Portugal is impending. Oral negotiations between Caffrey, Oswaldo, Cetulio. The latter postponed decision. Embassy advised. (Signed) Alfredo." "6 October 1941 CEL to ALD (South America to Germany) Supplement to our No. 11. According to statement secret agent from presidential chancellery counter- proposal Brazilian Government in case of occupation Portugal from our side provides: First, setting up Portuguese Government here; second, occupation all Portuguese colonial possessions by mixed Pan-American contingents; third, administration colonies by Portuguese Government from here. Supposedly Pan- America Governments agreed. Stand of Salasar still unknown. This (message) No. 16. Alfredo." Regraded Unclassified - 2 - 110 Aside from the information contained in these messages the important thing from our standpoint is that they indicate that someone inside the office of the President of Brasil is in the employ of the Nasis. I am informed that a particularly complicated code was used for the sending of this series of messages. I thought this would be of interest to you. Sincerely, (Signed) 2. Worsonthaw. In: Searer Service 4:35 The President The White House. n.m.c. cc-toley office SK:EHF:mp 11/10/41 Regraded Unclassified 111 November 14, 1941 My dear Mr. hoover: This will acknowledge receipt of your two confidential letters, dated November 10th, which I have read with interest. Yours sincerely, (Signed) 1. Morgenthan, in Mr. J. Edgar Hoover, Federal Bureau of Investigation, Department of Justice, Washington, D. C. Regraded Unclassified 111 November 14, 1941 My dear Mr. Hoover: This will acknowledge receipt of your two confidential letters, dated November 10th, which I have read with interest. Yours sincerely, (Signed) 1. Morgonthan, Mr. J. Edgar Hoover, Federal Bureau of Investigation, Department of Justice, Washington, D. C. Regraded Unclassified 112 11/12/41 Photostatic copy to Mr. Irey JOHN EDGAR HOOVER DIRECTOR 113 Federal Bureau of Imentigation United States Department of Justice lashington, D. C. November 10, 1941 PERSONAL AND CONFIDENTIAL BY SPECIAL MESSENGER The Honorable The Secretary of the Treasury Washington, D. C. ky dear Mr. Secretary: As of possible interest to you, I am trans- mitting herewith a copy of an anonymous communication dated October 17, 1941, which was postmarked New York City, October 11, 1941, at 4:30 p.m. In connection with the Dr. Rudolph Hutz of the General Aniline and Dye Corporation, 230 Park Avenue, New York City, referred to in the enclosed letter, there is submitted herewith a memorandum concerning this indi- vidual. Sincerely yours, J. ie. Enclosures Regraded Unclassified COPY - PES 114 N. Y. City Oct. 17-'41 Federal Bureau of Investigation - May I suggest that you investigate the Income Tax General Reports of Dr. Rudolph Hutz - (American) Aniline and Film Corp. 230 Park Ave. - N. Y. City. Dr. R. Huts was interned during World War I. He keeps & home in Germany. If Dr. Huts has been generous with the Government or anyone but himself it will be surprising. Yours truly A Citizen with sons in the Army and Navy. Regraded Unclassified 115 MEMORANDUM November 10, 1941 Dr. Rudolph Hutz was born in Rousdorf Rheine, Jermany, on Décember 10, 1877. He arrived in the United States at the port of New York on the "Kronprincessin Cecelie" in 1909. He served one year in the German army and had three brothers, Walter, Herman and Sric Hutz, who also served in the army of that country. Or August 20, 1915, Dr. Hutz was arrested at Concord, New Hampshire, upon a complaint sworn on the same day for violation of Section 3 (c) of an Act en- titled "An Act to Define, Regulate, and Punish Trading with the Enemy." Or: August 21, 1918, following a plea of not guilty, he was committed to Jull without bail. Upon a Presidential warrant he was taken from Concord, New Hampshire, to Boston, Massachusetts, where he was incar- corated awaiting an order of internment. On October 31, 1918, the United States Marshal at Boston was ordered to deliver him to the United States Marshal at Hartford, Connecticut, for transfer to Fort Orlethorpe, Georgia, for internment. His release was authorized on June 12, 1919, and he was actually released on June 19, 1919. From a letter dated September 16, 1918, addressed to the Attorney General by the United States Attorney at Booton, Massachu- setts, certain excerpts which appear to be pertinent concerning Autz's internment are hereinafter quoted: "Very soon after Dr. Hutz' arrival in this country he was Bent to Boston as Technical Manager of the Bayer Company, and later to man given charge of the entire business of that concern in Boston. The Business of the Boston office was that of dealing in dyestuffs. Dr. Autz knew that the Bayer Company was German owned and controlled and knew that the nanagement of its affairs rested with Dr. Duisberg, who was and perhaps still is B. sort of director-general of the Faben Fahriken Company in Gerrany, which is the owner of the Bayer Company of New York, "Huts had in his custody here a considerable amount of prop- enty belonging to the Bayer Company. It was somewhat difficult to get from him an estimate of the value of the property of that company which was in his custody and control here in Boston at the time the Trading with the Enemy Act went into effect. There is no doubt in my mind that the stock was much less at that time than in normal times, Regraded Unclassified 116 Memorandum Page two but there seems to be no reasonable doubt that he had at that time property of the Bayer Company to the value of several thousand dollars in his control. He failed to make any report whatever of this property to the Alien Property Custodian. "The business of the Bayer Company being greatly dinin- Ished by reason of the war conditions, it was found that the concern known as the Williams & Crowell Company of Providence, R. I., was able to produce certain dyestuffs, and the Bayer Company became the selling agents for that concern. In January last a. scheme developed for the purchase of the business of this company, and a new company mas organized in New York City under the same name, changing from Providence to New York, that is, the name of the new company was Williams & Crowell Company of New York, This was organized by men who had been in the employ of the Bayer Company, Dr. Hutz among the number. The Doctor states that he did not take his stock in the new company in his own name, but acting under advice of counsel, put it In the name of an American citizen, a Mr. Pierce, in whose name his stock still stands. He invested $10,000 in this company, the capitalization of which was $100,000. "The feature that seems worthy of remark in this organiza- tion is that while the company was making a net profit of from $40,000 to $50,000 a month the stockholders agreed to accept a lividend of 10% per annum and be satisfied with that, and also had an agreement to which, Dr. Hutz states, they all assented, that the Bayor Company should have an option on their stock in this New York Company to take it over at par within six months after the war, which shows very clearly a scheme to hold the dyestuff business of this company for the Faben Fabriken Company of 0ermany and turn it back into its old channel after the war. "I feel that a man who is willing to do injury to American commercial interests would not be likely to hesitate to do other injury to American interests, should opportunity offer, and that the harm he may do to this country is really limited only by his oppor- tunities. I, therefore, regard Dr. Huta as a dangerous person to be st large, and respectfully recommend that he be interned for the period of the war." Regraded Unclassified 11/12/41 117 Photostatic copies sent to: Mr. Foley Mr. Pehle Regraded Unclassified OHN EDGAR MOOVER DIRECTOR 118 Federal Burrau of Investigation United States Department of Justice lashington, B. C. November 10, 1941 PERSONAL AND CONFIDENTIAL BY SPECIAL MESSENGER The Honorable The Secretary of the Treasury Washington, D. C. My dear Mr. Secretary: As of possible interest to you, the attached memorandum showing the credits of cold storage firms against the French Government has been obtained from the Banco Central de la Re- publican Argentine, Buenos Aires, Argentina, and is being transmitted herewith. This information was obtained from a reliable, confidential source. Sincerely yours, @ E. 2400m Regraded Unclassified EN 1019 - de La chligrate -- 41 Puper telerar - is I Importe Named - Term la La to la par al Value 44 Program : in 24P al - is 4: hiprise response +1 ig 4 Total - parts - - Pres. optimate trape Mr- optimization 1 I in - - artginer's I - E D.a. because lamile , 38 - is teslary 703,294.00 3,791,00.00 1,784,44 kn. That 1.€ 7. 24,2 atom hist 9,014,19.01 9.014.19.01 1.689.800,05 1.100.19.00 $4.00 have 8.1.€ 7. modical 2.218.04.10 $11,017,34 201.14.04 1,893,74 Payment 4.4.4Z se -(se N along 5.748.20.00 $15,081.14 5.184.13.61 1.142,76 Grate 13.4.40 y as 10- 3,200,19.00 5.880.19.00 2.148.18.01 1,413,46 HRA 17.6.€ 2 no and 9.260.00.10 Services L.L.C 7. 13 4.348.17.06 9.848.17.08 7,483,15,05 Main: "4 143,985.00 3.082,01:55 360,01.06 Sarin 11.3.40 1. - 1.209.07.0 1,509,09.00 1.018.(10,80 3.759.15.07 Tuise tar 145% 7. 78 4,501,02.00 4.201.02.00 *18,000.74 650,02.00 1,609,40 Furth U.S.C 15 3.231.10.11 1,251,10:11 525,789,69 1.00.00 Line 13.3.40 80,1 5.301.19.00 1.381.19.09 1.143.16.05 serveze 1.60,00 12 11.3.6 2,987,09108 mine = 3.278911.04 531.466,2 M.OH.? Service 7,380,18.01 1.25.30,51 04/07/12 into 11 6.000.17.00 8.038.17.02 1.85.0N.E 7 1.344.773,93 4.2.1,3 11.1.4 $ 1.178.450,94 LOUGH agis 1.787.18.11 -60,1 " Commary 6224 4.199.13.01 42 P.O.S. (24" 1.872.790,84 3,724,15 23 Natring 11.1.40 CBC3 12.000.20.00 11.298.14.02 14 Flater first 11.1.€ 1304 LE.W16.01.00 18.$16,01,00 1.044.009,07 5.20.0 P.S.E E 6.795.18.01 2.105,45 L 4391 6,275,17.04 6.372.37.04 Crass - is. have the 24 1.719.17.11 1.530.00.01 Mile Cale 3.1.60 1.11 1.454,13:00 124.457,11 1.891:14:03 163,41 25 7. 12 1.290.17.00 :01, 18. I == 2018 13.4.40 6.1009 5.509.03.00 8,009,00108 793.709,07 4.508.86.06 at 0.1010 1.539.17.05 DATE Supias 1.1.6 -.1018 2,688,12.60 1.687.18.00 M.IC.X E.834,04:10 $4,02 main 8.4.40 0.1014 10.848.00.03 10.248.00.03 1.476.882,01 9,483,08.00 .086.11.00 1.2E,X fal s F.4.€ 0.1024 LIM.R bein 11.5.40 1.1040 9.009.14.09 1.099.14.09 1.436.499,87 10:22:00 jur 16,8.€ 9.1080/81 7,208,00.00 35 1. Irans 23.1.K 3.100% 648-03-08 39 P.I.E 8.1004 4.609.15.10 8,808,18:10 RESIDENCE 3.754,12 E date 4.1.€ #.1089 643.201,30 3,644,06:00 1.1.1.41 o argentise 1.1.6 8.1003 5,659,00,10 4,689,00.10 Amign U.I.E 8.1099 4.384.11.01 17,064.01 - India B.LE a ges 13.201.04.04 13.201.08104 18.088.01.11 1.330.02.00 6.203,27 42 27,4.80 OF nn $ locate 18.1.10 R DAS 1.346.873,71 8,772,01.00 094.13.00 6 fales P.66 8 2.106.14.00 4.481,78 a brin 11.1.0 OF REPV 13-065-18:08 16.094.18:04 1,754,00,04 1.811,84 M Viring Her 16.8.00 1.10.48.20 se Carguales 17.1.0 - 4.484.14.03 366,10.00 2,181.01 8.907.27.09 369.13.00 1.426,44 P.S.S 9 14.198.00.08 1,000,07.00 7,317,81 falls Into 1.1.4 or DEL 2.807.15.03 08:11:00 1,40.00 states & 4.45 - 1.000.00 4.80.00 - 11.00 2 13.202.07.01 49,999.00 181,690.00 Regraded Unclassified - 4a la (es e) 4a la ** Home Pages Salde a fairess de - - - - Tapet 11de del de la to Le Importe 4a 4a la her di - 4a per el - Prigerities report future requirements 4 time) items I I I In insure 1 E equivale 1 il . originaria I - Mrs. I - Mr. - 4 c. Digribe M 4a E.Grage K.1.0 09307 A la indian- ST 4.148.11.11 06:00:11 is signature 4-189-18:10 Pupers 781.148,14 4.1.80 - 34 M 10.14m jusis - 3.102.04.00 Sub. 24.08.00 3.138.13.00 2,791,01.35 Grate 10.4.00 1.886,18 78 SP THE Averigas 17.4.00 LINE 22 & $ 1 I 3,067,09.00 67,000.00 I 16.4.00 $ E - - - 1.9% $12.00 Designers 4.000,16:00 0.4.0 # M fis la up form 2.016.17.67 18.1.0 140 WELF a 09:11:08 Tiking the 4.209.11.64 - 16.9.42 141 LELF M 4.009.13.08 17.8.80 LOCA 180 43 09.18.11 6.10.16.03 Lines 2.000.17.00 21.16 CSN 080,14 JM a F.LE STATEM 1% 20% 1.480,00 5 3.620.00.00 20.16.06 slates 4.1.€ 3.007,00.60 204 1.8M.N 70:15:07 ] Cla. MAY la 17.4.80 345 - of 8.767(19:00 la Flate 3.6. Cress 13.4.40 6.70 07.130,24 1001 & 16.10.10.10 - 14.18.10.10 Cersons 18.4.40 14.242.07.00 8001 y 609 1.00 LOVE 71 12.146.00.11 Sales P.S.E - 13.169.00.11 2.2164 of 637 1,21,6 "2 0.190.06.07 - farth 9.296.04.07 12.3.40 un "I MP+05:04 09.100.18.00 Tiking Star 16.1.42 723/56 2.736 10.000,00 " 17.000.10.04 17.108.14.01 Complex 17.5.40 766 y 975 175 18.353.11.00 1.769 7.08,90 19 9.813.08-07 Flartin 9.880,18:11 12.3.42 É 1.443.206,64 8.291.16.04 1,500 = 350,07.09 17.3.60 4.325.10.11 200/27 7.211.13.00 1.108 9.180.17.00 LOLE " Inls E.LE BYU $ - 9.180.37.00 ] TE states 1.1.00 , ASI NEW 16 a argentive - 1.1.0 - - K Reside U.I.E . 11.905.00.00 : 7196 11.1 U.M - 17.262.14.01 17,80 ⑆ The and 12.1.60 3457 4.726.13.08 87 - argentise 17.4.80 - 3441 - 13 Best Co.144. 14.4.60 $444 - 11.545 IN larin U.S.K 3850 6,347,02,00 as 168.18.03 - - 4,680,91.10 2,437,72 Filling the 10.0.00 VIII 4.772.17.00 " 0.000.30.04 - (76 Flauding 11,3.40 MM 4.121.09.00 - 486 & 15:07:02 1. Insure 8.1.€ 3256 2,712,09.00 - as 03.13.04 Dericalão 2,000,17.00 F.1.8 3610/2013 - 40% CGCN E A 1.1.6 3075 409,497.35 - TC:07:00 2019 1.100.00 Jumique 11,1.00 3003 3.796,04.00 - $ LOSA - - L.MS 1,940 M new 4a Le Sale U.11.39 I late 3.4. 70-78-93 1.408.731,29 12.067.03.00 - HL and 92 17.4.40 YEN as - Denivers n.a.e Y0000 - 16 - Twier The E.4.0 E 14.043.15.00 - IN F 11.1.0 - PRINT 1.873.199,13 7.86.15.00 W - - D.LE 2334 1.14 - N Estials M. 1.€ 79337 - 19.139,00:00 - - - 10.15 Printer 20.00 (1) 0 Countr - al Paunds advertal a pages Inc - Origen relategende el Maletary of Feed las Issue al propis 4e la - 4a 1/1 4. - 10yrs. (a) - - belien aderize to sepilles 4a 1/14 & - likes. Regraded Unclassified 121 November 14. 1941 Under Secretary Bell Mr. Dictrich Mr. Ther, Managing Director of the National Bank of Isoland stopped is today to see no. Mr. Ther again brought up the question of making bilateral the first sentence of paragraph 11 of the stabilization agreement. I suggested that Mr. four discuss this matter with Mr. Barle and he said that be already had and that be understood that both the Treasury and State Departments vere against shanging this sentence. Mr. Ther said that be would probably leave for Iselend within a week and that he had grave doubte as to whether his Government would accept the stabilisation agreement without a change being made is the first sentence of paragraph 11 se that Iceland would also have the right to terminate the agreement. A FD: 11/14/41 (11) Regraded Unclassified 0 ? 122 Y OF STATE Washington In reply refer to 28 November 14. 1941 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and transmits copies of the paraphrase of telegram No. 637, lated November 12, 1941, from the American Logation, Budapest, Rungary, concerning it comprehensive acheme to meet Hungarian debt service in the United States. Inclosure: From Legation, Budapest, No. 637, November 12, 1941. COPY:hmd:11/15/41 Regraded Unclassified o 2 Y 123 PARAFHRASE OF TELEGRAM RECEIVED FROM: American Legation, Budapest, Hungary. DATE: November 12, 1941, 2 p.m. NO. : 637. THE FOLLOWING IS STRICTLY CONFILENTIAL. I have been informed by the President of the National Bank that the following comprehensive scheme to meet the service in the U.S. of Sungarian debts, is inspired by the desire to utilize Hungarian dollar assets in the American manner which is fairest to the mutuel interests of U.S. creditors and Hungarian debtors, that so long as frozen dollar assets are evailable no time limit whatever in made with a view to servicing debts in the debt service scheme. At the present time it is not possible to foretell this but it is estimated that for nearly two years outstanding resources and present credits will make payment vossible. 1. The plan is to service the League loan in the seme menner as WEB previously done. 2. On the relief loan 1% will be paid. This equala an approximate payment of $20,000 a year. 3. One per cent interest will be received by the Treasury bill-holders. 4. The servicing of long-term private debte will be done according to last cash offer: that is, the servicing will be cone at an interest rate of 1-1/2 to 1-3/46. 5. One per cent and one end one fourth per cent interest respectively, with no emortization, will still be raid by Hungarian standstill debtors. It is requested by my informent that this offer be kent in strictest confidence because if it were known to Germany prior to accord being reached, Hungary would be in a very difficult position. PELL Copy:bj:11-15-41 Regraded Unclassified TREASURY DEPARTMENT 124 INTER OFFICE COMMUNICATION DATE November 14, 1941 To Secretary Morgenthau FROM Mr. Dietrich The State Department has advised us that, in the copies of their cable No. 966 of November 11 to the American Consul, Shanghai, item "Γ" in the list of appointed banks should read: Chekiang Industrial Bank, Ltd. D Regraded Unclassified 125 LET GRAY Hong Kong via N. R. Dated November 14, 1941 Rec'd. 3:44 a.m., 15th. SECRETARY of State, Washington. 491, November 14, 3 p.m. (SECTION ONE) FROM FOX FOR SECRETARY OF THE TREASURY. CONFIDENTIAL "T F --K (?) Stabilization Board has before it a number of applications which involve questions with respect to which they would like to obtain your assistance. Early consideration of these questions will bE greatly appreciated. I have taken Each of them up with Cochran. OnE. The Board has before it an application for Exchange from "S.K.F." calling for an allotment of United States dollar Exchange for about $65,000 to cover a shipment which arrived in Shanghai from Hangchow recently, the bulk of which appears to have been disposed of prior to arrival. DElivEry 18 now being hEld up pending the granting of Exchange. Applicant alleges that 65% of (?) imported into Shanghai EMANATE from S.K.F. works and that this is an Essential 126 -2- 491, November 14, 3 p.m. (SECTION ONE) from Hong Kong. nn Essential import. HE also neks for an Assurance that exchange will bE granted against further imports. It appears that commodities of this character are scarce and difficult to obtain but they are produced by number of manufacturing companies in the United States and Great Britain. Query: may Exchange be granted under any of the general licenses in respect of (a) the shipment now arrived in Shanghai (b) any future shipments, all of which are from the (?). Two. Shanghai 18 vitally interested in certain imports from Indochinn such ne coal and rice. In the Board's recent negotintions with representatives the of/ Shanghai Municipal Council it WAS disclosed that anthracite coal of grade suitable for the Chinese populace could bE obtained from Indochina providing payments cen bE made in United States dollars. In- dividual coal companies are willing to have their United States dollar payments remain frozen "because WE understand that the Indochina Government would UBE these frozen assets ns security for 'pinstre notes' which would bE printed to bE used ns payment to minere SOUTHARD GW Regraded Unclassified 127 MA GRAY Hong Kong via N. R. Dated November 14, 1941 Rec'd. 1:09 a.m., 15th Secretary of State, Washington. 491, November 14, 3 p.m. (SECTION TWO). will include: is the understanding correct that pay- ment in United States dollars for coal and other pro- ducts of Indochina may bE made providing its assets remain frosen in the United States. Three. Shanghai is also almost EntirEly depend- Ent upon bituminous coal shipped in by the "Kailan Mining Administration". Understand that contracts were previously payable in pounds but more recently United States dollar payments arE required to pay for imports of machinery from the United States. This question was raised with rEspEct to Shanghai Power Company in my cable of September 13. Your reply of November 6 was not clear. Question has arisen again in connection with the negotiations with Shanghai Municipal Council representatives and in other applications. I am informed that the British have 128 -2- #491, November 14, 3 O.M. (SECTION TWO) from Hong Kong. have already authorized payment of sterling for ship- ment of coal by KMA into Shanghai from north China. Board is of the opinion that Shanghai will suffer a BEVErE winter unless payment for coal from KMA's north Ohina mints are authorized in United States dol- lars. Query: Will United States Treasury grant special license or give permission for payment in United States Gollare for coal to KMA? Four. Board in some instances has received ap- plications from banks licensed in 59 (*) for Exchange to cover financing of imports from Switzerland and Thailand. Some GOVEr retirements of their matured bills drewn before imports from Switzerland consist mostly of aniline ¿YES, pharmacsuticals and watches and from Thailand rice and pharmacsutical wood and choulmoogra oil used in the treatment of leprosy. Quary: May these banits provide Exchange for financ- ing imports without special license?" END OF MESSAGE. SOUTHARD VWC Regraded Unclassified 129 BAS GRAY Hong Kong via N. R. Dated November 14, 1941 REc'd 5:25 a.m.; 15th Secretary of State, Washington. 492, November 14, 4 p.m. CONFIDENTIAL FROM FOX FOR THE SECRETARY OF THE TREASURY. "TF-L (one) had made arrengements to leave Friday night for Chucking in answer to summons from Kung for board members to discuss Shanghai situation. (Two) Hsi TE -- Mou and I have been designated by board to make trip. In order to Effect distribu- tion of long commercial cable to interested parties am postponing trip until Monday evening. Expect to be in Chungking pending receipt of instructions WEEK or ten days. Hall -- Patch has gone to Shanghai for ten days and Expects soon to go to Singapore for a conference with British authorities. (Three) Am greatly impressed by new provisions and believe that it should go far to improvs situation here and particularly position of Stabilization Board." SOUTHARD GW Regraded Unclassified C 130 o P Y DEPARTMENT OF STATE WASHINGTON In reply refer to 7Y November 14, 1941 The Secretery of State presents his compliments to the Honorable the Secretary of the Treasury and trans- mits herewith parachrases of two telegrams, no. 1696 and no. 1726, dated October 28 and October 31, 1941, respec- tively, from the American Embassy at Tokyo concerning shipments of gold from Jaran to Peru. Enclosure: Faranhreses of telegrams no. 1696 and no. 1726, dated October 31, 1941, from Tokyo. Regraded Unclassified 131 PARAPHRASE OF TELEGRAM RECEIVED FROM: AMEMBASSY, Tokyo TO : Secretary of State, Washington DATED: October 28, 1941, 2 p.m. NUMBER: 1696 My Peruvian colleague informs me that 260 kilos of gold, which were valued at yen one million twelve thousand, were shipped to his country by the Japanese on the NOTO MARU on the 27th of August. There were also shipped on the 16th of September 558 kilos at yen two million five hundred thousand on the TERUKAWA MARU. It is hoped that I will obtain further details, which will be reported in a later telegram, concerning these shipments, such as the disposition of the gold, the consignees, et cetera. GREW Regraded Unclassified C o P Y 132 PARAPHRASE OF TELEGRAM RECEIVED FROM: AMERGRASS, Tokyo TO: Secretary of State, Washington DATED: October 31, 1941, 10 p.m. NUMBER: 1726 The shipment of gold to Peru on the TERUKAWA MARU and NOTO MARU was sent through the Tokohama Specie Bank by the Bank of Japan. This shipment was a consignment made to a Mr. N. Kobayashi in Lima, who was designated there as the Yokohama Specie Bank's agent. The gold, it was stated to the Consulate of Peru in Yokohama was to be used for the payment of salaries to officials of Japan in Peru and for imports in Japan of Peruvian merchandise. At the same time information was also given to the Consulate indicating that at a later date more gold would be shipped. It is the feeling of my Peruvian colleague that the fact that this gold was sent at the same time that a large number of officials of Japan had been sent to Peru was more than purely coincidental. He also feels that ultimately the gold may be used for propaganda purposes or other activities instead of for the specified uses. In further connection with this he said that through arrange- ments made through Japanese banks in Brazil and Argentina and under arrangements which were made by these banks with Regraded Unclassified 133 - 2 - banks in Peru there are available accommodations for the settling of Japanese-Peruvian accounts and for the establishing in Peru of Japanese credits. He further stated that it was, therefore, not necessary to transfer the gold to Peru for these reasons. He stated that in the light of restrictions by Peru on the export of strategic raw materials Japan can no longer obtain there such supplies and other products which could be exported from Peru could be paid from credits resulting from = exports to Peru of Japanese merchandise. He further stated that on the first part of November a ship had been scheduled to sail for the South American west coast although a later report which he has received indicates that it will not touch a Peruvian port as it was originally supposed. It was also stated by my informant that 1800 books which have been listed as school books were shipped to Peru on board the NOTO MARU. Copy:1c:11/17/41 Regraded Unclassified TREASURY DEPARTMENT 134 INTER-OFFICE COMMUNICATION Chauncey DATE November 14, 1941. TO Secretary for Kergenthau FROM Mr. Districh confidential Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns £54,000 Purchased from commercial concerns £13,000 Open market sterling remained at 4.03-1/2. The only reported transaction consisted of £1,000 sold to a commercial concern. The discount on the Canadian dollar widened to 11-5/8% at the close, as com- pared with 11-1/2% last night. For several months, the New York "free" rate for the Brasilian milreis has been quoted at .0505. New York banks have advised the Federal Reserve Bank of New York that milreis are available at this rate only for use in covering living and maintenance expenses, contributions and a few other similar purposes. For all other transactions not governed by the .0505 rate or the official quotation (which is about .0606), milreis are available in IIEV York at .0515; this is called the "free" rate by the banks. Capital transfers, shipping and freight charges, insurance payments, and the like, reportedly go through at the .0515 rate. Continuing its improvement, the Uruguayan free peso advanced another 25 points to a new high of .4750. In New York, closing quotations for the foreign currencies listed below were as follows: Argentine peso (free) .2388 Colombian peso .5775 Mexican peso .2070 Venesuelan bolivar .2540 Cuban peso 1/8% discount There were no purchases or sales of gold effected by us with foreign countries today. No new gold sagagements were reported. In London, spot and forward silver were again fixed at 23-1/2d. equivalent to 42.67#. The Treasury's purchase price for foreign silver was unchanged at 35#. Handy and Harman's settlement price for foreign silver was also unchanged at 34-3/44. We made no silver purchases today. 135 - 2 - The report of November 5. received from the Federal Reserve Bank of New York, giving foreign exchange positions of banks and bankers in its district, revealed that the total position of all countries was short the equivalent of $4,065,000, & decrease of $430,000 in the short position since October 29. Net changes were as follows: Short Position Short Position Change in Country October 29 November 5 Short Position* England** $ 641,000 (Long) $ 788,000 (Long) - $ 147,000 Europe 2,605,000 2,632,000 + 27,000 Canada 50,000 (Long) 98,000 (Long) - 48,000 Latin America 154,000 151,000 - 3,000 Japan 201,000 98,000 - 103,000 Other Asia 2,207,000 1,986,000 - 221,000 All Others 19,000 84,000 + 65,000 Total $4,495,000 $4,065,000 - $ 430,000 *Plus sign (+) indicates increase in short position, or decrease in long position. Minus sign (-) indicates decrease in short position, or increase in long position. **Combined position in registered and open market sterling. 4 CONFIDENTIAL 136 BRITISH EMBASSY WASHINGTON, D.C. November 14th, 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, Halifax The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D. C. 137 Telegram from London dated November 13th, 1941. Naval. Morning 12th. Two of His Majesty's trawlers attacked by aircraft off Haisborough Lighthouse. One received direct hit and sank but the aircraft was shot down by combined fire of both ships. 2. Another strong reinforcement of bombers and fighter aircraft has arrived at Malta. 3. Royal Air Force. United Kingdom. Night of 12th/13th and day of 12th. No offensive operations owing to adverse weather. 4. Libya. Night of 10th/11th. Eight Wellingtons bombed Benghasi and Blenheims bombed El Gasala, whilst the enemy made attacks on Tobruk and Mersa Matruh. The following day Berca attacked and number of M.T. vehicles on Jedabaya el Aghaila road destroyed. Regraded Unclassified 138 RESTRICTED G-2/2657-220; No. 544 M.I.D., W.D. 11:00 A.M., November 14, 1941 SITUATION REPORT I. Eastern Theater. Ground: The situation at Leningrad is unchanged. Fighting continues along the entire Moscow front from Tula, along the Nara river to Kalinin. The Russians claim local successes. There is no confirming information available covering the situation in the Donets Basin. The "mopping up" operations in the Crimea continue. Kerch and Sevastopol are being invested. Air: The luftwaffe was said to have put the main Russian naval base at Sevestopol out of commission. II. Western Theater. Air: German planes attacked Falmouth, England last night despite bad weather. There is no indication of the end of the lull in British sir activity caused by recent heavy weather. III. Aiddle Eastern Theater, Naval: The British Admiralty announced the loss of the British aircraft carrier, ARK ROYAL, It was returning in the Lediterranean to Gibraltar when torpedoed yesterday afternoon, and sank this morning while an attempt was being made to tow it to Gibraltar. Ground: The Italian war communique reports heavy fighting in the Gondar region of Ethiopia, the last Fascist stronghold. This in- dicates a final effort by the British to clean up the East African campaign. Air: German dive bombers were said to have bombed British pillboxes near Tobruk. RESTRICTED Regraded Unclassified 139 Reading copy of Secretary Morgenthau's speech before the NATIONAL GRANGE Worcester, Mass., November 15, 1941. Regraded Unclassified 140 Today, as never before, it is an honor to be an American farmer. The future health and happiness of all the world depends, as never before, upon the American farmer's work and skill and enterprise. I am very happy, therefore, to have this opportunity of speaking to a great audience of American farmers, and to accept at your hands, Mr. Taber, this pin that certifies to twenty-five years' membership in the National Grange. Regraded Unclassified - 2 - 141 To anyone who lives and works with the good earth it brings a new pride year after year to SOW the new crop, to tend it carefully, and to harvest it at last. Speaking to you as a fellow farmer rather than as Secretary of the Treasury, I can assure you that one of the great satisfactions of my life is to see the trees that I planted on my own farm twenty-five years ago grow and blossom and bear good fruit. And during these twenty-five years it has meant a great deal to Mrs. Morgenthau and to me to be members of the Wicopee Grange, near our farm in the Hudson Valley. - 3 - 142 The local Grange has given us a place to discuss common problems with our neighbors, and it always has given us the feeling that we are a part of this great national organization which for seventy- five years has been the friend of every farmer in the United States. I shall wear my membership pin as a badge of honor. - 4 - 143 I had intended to remind you at the very start of this talk of the danger of inflation as it might affect the farmers of the United States; but your National Master has already spoken of the danger, and has done it eloquently. May I quote a few sentences of what he said? "Next to the suffering on the battlefield and the anguish of those at home, inflation 18 one of the calamities of war ..... Regraded Unclassified - 5 - 144 How could any farmer forget 1921 and '22, or 1932 and '33? .... Inflation endangers all forms of wealth, every bank deposit, and, in fact, all of the established accumulations of generations." One of the most effective ways to fight inflation 18 to produce more of the goods which do not compete with our defense industries for materials or for labor. That means, above all, to produce more food in the interests of the consumer and the farmer as well. - 6 - 145 I should like to pay my tribute to the work of Secretary Wickard and the Department of Agriculture in encouraging our farmers to grow more of the right kinds of food -- more dairy products, vegetables, fruits and meats, the so-called protective foods on which our national well-being depends. The opportunity ahead of American farmers at this time is so vast that very few of us, I think, can conceive it. We have prided ourselves on being the best fed nation in the world. 146 - 7 - Europeans who have come to our shores have marvelled at the stacks of fruit and vegetables in our shops and at the abundance of the diet available to American families. Yet we are not as well nourished as outward appearances might seem to show. Only the other day the President of the United States expressed his sense of shame at the high percentage of recruits for the army who had to be rejected. - 8 - 147 Nearly 50 percent of two million men examined for selective service were found to be unfit, and of those rejected a large number were suffering from dental defects or other 1lls that probably were due to faulty nutrition. The President was not overstating when he described these conditions as an indictment of America. - 9 - 148 A few years ago I took part in the conception and inception of the food stamp plan, which was an attempt to bring some of our surplus commodities into the hands of the underprivileged. The plan was conceived at a meeting between Vice President Wallace, Mr. Harry Hopkins, Doctor Thomas Parran, and myself; later it was perfected by Mr. Milo Perkins of the Department of Agriculture. - 10 - 149 In line with this effort Doctor Parran, who 1s now Surgeon General of the United States and was then in the Treasury, undertook an investigation into food-buying habits and nutrition in the District of Columbia. Here was a compact area where per capita wealth was higher than that of any State, yet Doctor Parran found widespread under-nourishment, especially in milk, green vegetables and citrus fruits. - 11 - 150 I suspect that similar investigations in other parts of the country might yield a similar result even today, when our public 1s more vitamin-conscious than when Dr. Parran's study was made. This is a challenge that we as a government, and we as farmers, must meet together. The Government can help by encouraging and promoting the production and use of the right kinds of food, as it is beginning to do right now, under the leadership of Miss Harriet Elliott of the Consumers Division of the Office of Price Administration. Regraded Unclassified - 12 - 151 But farmers can do by far the biggest part of the job by producing more -- by diverting land and effort to the production of milk, butter, eggs, pork products, fruits and vegetables. It must no longer be said of this rich country of ours that millions of our people still go without the food that 1s necessary to good health and good morale. Side by side with this challenge that confronts us at home, there has come a still more urgent and insistent call from across the sea. - 13 - 152 The British people, as you know, have had their chief sources of food supply cut off either by invasion, as in the cases of Holland and Denmark, or by shipping shortages, as in the cases of Australia and New Zealand. The British today are living under conditions of siege. Their island home 1s one vast fortress, and every man, woman and child 1s in the garrison, fighting our fight as well as their own. It 18 our responsibility, and our high honor, to see that they are fed, not with a trickle of occasional shipments, but with enough sustaining food to enable them to carry on. - 14 - 153 American farmers are already doing a mighty work in sending food to England in her time of greatest need. Secretary Wickard has already told you of the huge amounts that we are pledged to send during 1942. It will help us, I think, to produce those vast quantities if we always remember that our food shipments are bringing renewed strength and renewed courage to those who are in the front line of freedom. - 15 - 154 That 18 an achievement which must be continued throughout 1942 and as long as the war may last. It is probably the greatest single call ever made upon American farms. If you add it to our own requirements, it is a call that will use all of our ingenuity, all our effort, and all of the experience that we have gained in recent years, if we are to meet it successfully. - 16 - 155 In this effort the American farmer is as vitally important as the aircraft worker who builds a new bomber or the shipyard worker who helps to send a new battleship on its way. Knowing what I do of the great-heartedness of our farmers and of their capacity for hard work in a great cause, I am confident that that call will be answered and that England will be able to win the victory that 1s our own hearts' desire. - 17 - 156 But after the victory -- what then? After the Allies win this war -- and they are going to win it -- the opportunity for American agriculture and the need for colossal production of the right kinds of food will be much greater than it is even today. Where tens of millions in England are depending on us now, hundreds of millions throughout the continents of Europe and Asia will be stretching out their hands to us when the war 18 over. - 18 - 157 I am in favor of seeing that the credit of the United States is used to do the humanitarian thing, the economic thing, the sound thing, in putting the great food production of the United States into the hands of the hungry millions. I am one of those who believe that in the long run, as Vice President Wallace has said, service to humanity 18 economically sound. - 19 - 158 I am thinking not only of the actual hunger and misery that will be sure to exist when the next Armistice comes, but also of the ruined agriculture of many countries that depended upon farming for their very existence. I am thinking of the fine herds that have been slaughtered in Denmark and Holland, which lived on their exports of dairy products. Regraded Unclassified - 20 - 159 I am thinking of the scorched earth in the great farming areas of Russia, where farm houses and farm implements have been destroyed in the past five months on a scale unparalleled in all history. There will be a lack of seed, a lack of feed for livestock, and in many countries a lack of manpower to tend the farms. Again, as in the past, American agriculture can save Europe from hunger and from the anarchy that comes with hunger on such a scale. Regraded Unclassified 160 - 21 - It is true, as the President said recently, that our first job now is to win the war rather than to concentrate on blueprints of what is to follow. I agree with him, yet I think there 1s one great fact about the coming democratic order in Europe which we should do well to remember now. That 1s that great masses of decent hardworking men and women will no longer tolerate the economic insecurity which furnished so much of the fuel for the political turmoil of the past 25 years. They are going to demand certain elementary guarantees for a decent life, and I think they will be right and amply justified in their demand. - 22 - 161 In order to build a better world -- and that goes for our own country as well as for those abroad -- we must recognize the citizen's right to have a minimum standard of food with which he can live the life of a free man. My own feeling is that we should guarantee to every man, woman and child the right to have enough milk and butter, enough fruit and vegetables, enough of the protective foods of all kinds, so that everyone can be fit to do his part in the world of tomorrow. - 23 - 162 After all, we in America decided about 75 years ago, about the time the National Grange was founded, that everyone was entitled to a decent education as a matter of right, and we established the greatest free school system in the world to provide that right. We found that it was not fair, and that it did not pay us as a nation, to permit illiteracy on a vast scale and to enable only those with wealth or other advantages to have a proper schooling. We have provided that schooling with State funds, and nobody would dream of abandoning it now. - 24 - 163 We decided eight years ago that every citizen should have protection against unemployment or old age or disability, and we enacted a whole series of historic measures to help him obtain that protection as a matter of right. We found that it was not fair and that it did not pay us as a nation to leave millions of our people at the mercy of economic cycles over which they had no control. These changes have been accepted, and I doubt whether any except the most uncompromising Tory among us would abandon them now. - 25 - 164 What I am suggesting would merely carry the process a step further. I speak of it today not as a dream but as something which I am convinced must follow, not only in this country but all over the world, if we are not to revert into an endless barbarism of wars and revolutions. It is our best hope of ensuring the survival of the way of life which we treasure in common with other free peoples throughout the world. - 26 - 165 I have suggested it to this particular audience because I want you to consider what a tremendous opportunity it brings to American farmers. If our people and other peoples are to be guaranteed a minimum standard of nutrition, which I believe 1s their right, then we in this country will have to produce the food that will make that standard possible. That minimum for every adult was recently set by the National Nutrition Conference at 41 quarts of milk per week, one egg a day, one serving of meat a day, and two daily servings of vegetables and two of fruits. - 27 - 166 If we were to attain such a minimum goal, if we were to recognize it as a right that belonged to everyone, it would mean a vast increase in our consumption and our farm production. It would mean an increase of at least forty percent in our present consumption of milk and milk products alone. It would mean a doubling of our present consumption of leafy vegetables and of the fruits that are rich in vitamins. It would mean that the farmers would have a greatly increased market here at home -- the best kind of market, for it would not be subject to foreign tariffs, and it would also increase steadily as population increased. 167 - 28 - I have never been one of those who believe that we are heading into a period of misery and darkness. Certainly there need be no agricultural misery in our country after this war. There need be and there must be no repetition of 1920 and 1921, which, as you know from bitter experience, were black years for American farmers. Regraded Unclassified 168 - 29 - If we could provide a minimum food standard for everyone -- and our farm lands have the capacity to provide it -- there would be less illness due to faulty nutrition, more production from our workers, a greater length of life for all our people, and an assured future for all American farmers. Regraded Inclassified COMMISSIONER 1,001 THE NATIONAL GRANGE OF THE PATRONS OF HUSBANDRY In recognition of twenty five years. continuous membership /// the Grange the cortificate is issued to Henry Morgenthan, Jr. whose name NJ curolled in the permanent mends of the New York State Drange (1) ened the Lilvers Aar. Builders of the // rderej Patrons of Husbandry Issued by the authority of the National Grange at Hashington, I 96 this fifteenth day of November 1941 Louis I NATIONAL Taber MASTER Harry a NATIONAL Caton SCCRE DAKE EASTA agus TOPE and AND non 171 1867 19-11 This is to certify that in commemeration of the Diamond Mubilee of the National Grange Hon Henry Morgenthau Jr. has made " nateworthy contribution loward « Grange Headquarters in the City of Washington dany a Eaton Security Louis Taber thester Regraded Unclassified 172 BUY FIELD ORGANIZATION News Letter DEFENSE SAVINGS STAFF TREASURY DEPARTMENT, WASHINGTON, D. C. NOVEMBER 15, 1941 NUMBER 26 Helena, Montans TO THE FIELD STAFF: Entering the seventh month of Defense Savings sales, there is cause for satisfaction over results. Total sales represent an impressive volume, which soon will reach the two billion dollar mark. The number of bonds sold has crossed the seven and one-half million mark. At the same time, more than seventy million individual stamps have been purchased. These to- tals, of course, represent many new owners of U. S. Government securities, and they Indicate that we are on our way towards our goal of millions of Defense Savers in America. The beginning is impressive, but it is only the beginning. Some state and local organizations are just swinging into the great program. Every re- port indicates that the building has been very sound-designed to promote regular buying, continuous saving. The tens of thousands of volunteers who make up our vast field organi- rations, and the countless businesses and associations of all kinds which are contributing so much, deserve great credit for the manner in which the public is being brought into this mosaic of America. The Defense Savings leaders and committee members in Montana, Utah, No- vada, and California, just visited, send enthusiastic Defense Savings greet- ings to other state groups. Sincerely yours, GALE F. JOHNSTON, Field Director, Defense Savings Staff. P. S. A Western trip emphasizes the greatness and the potentialities of our land, America's future is as brilliant as the past. We have just scratched the surface of the frontier. C.P.J. Regraded Unclassified New Letter Nerus Letter NEWSBOYS TO SELL DEFENSE TEAMPS BOSTON'S FIRST NATIONAL BANK MAKES DRAFT PLAN AVAILABLE TO ITS 55,000 COMMERCIAL ACCOUNTS Nawapaper carrier boys all over the nation koon will have the oppor- Nunity of malisting as "Official U. S. Defense Agente for the Sale of De- Tenas SATTURE Stamps" under is plan recently endorsed by newspaper publish- One of the biggest banks in the country to maior it possible for its are and scheduled to go into operation November 24, customers to buy Defense Bonds regularly through the convenient draft plan familiar to membera of the Defense Savings Staff is the First National Bank The direct sale of Defense Starps by newspaper of Boston. Adoption of the draft plan by this bank sugurs well for the suc- carrier boys to the customers on their routes WILD initiated in Philadelphia under the suspices of the land. coss of this phase of our program in Massachusetts and throughout New Eng- hiladelphia Evening Bulletia, about the middle of September. In the following seven weeks, the boye The form included in the announce ent of the purchase plan recently sold more than one million ten-cent etamps - approxi- distributed to the bank's 55,000 commercial socounts 10 shown below: entely one-third of all Defense Stamp# sold In Phila- delphia during this period! AUTHORIZATION FORM ESTURN INVELOPE Philadelphin's success with the plan of carrier (The Ass If gammed for mailing, No - XX boy sale of Defense Stamps brought demande for its Secretary Morgenthau extonsion to other cities. The Philadelphia Even- Mail pines de - - The FIRST PATIONAL BANK or SUSTON, No. Mille - Mem., - - - - - - - plan nonar eni=10 on ing Bulletin volunteared to contribute the ideas CHOICE of SONO) DEDIE FOR REGISTRATION John Cotney, Jr., 13- which it had developed and the consulting services year old Philadelonia Income lass Prive @ 18.75 From By -yes in the space the - - - la whis the - - le regationed of Howard 7. Stodghill, its business manager, Sec- of lenio L B 17.30 Name night boy and retury Morganthau and other Treasury officials were Drinn Inc Yes We - Buy 75.00 nowspaper who enthusinatic. And the American Newspaper Publishe 3aml) Month 175.00 8018 the one million- OTS Association, the International Circulation Charges Balma 750.00 the Defense Shimp in All name - - - - The - - le 1 - - - - Managers Association, and six other regional and ein - à marrini - - name - la - - - the 0118, state associations of newspaper publishers, after a To The FIRST NATIONAL BANK of BOSTON Date seating in New York City on October 31, unanimously Tynan I / hereby werkenes you W. charge 41 - # " ID recommended that daily newspapers adopt the plan day $16.15 - Da - - and 60 informed the Secretary of the Treasury, PAINE E MAR ACE MAY PUBLY AVG. NOV Avgraming n//f Mi month Accordingly, the Defense Govinge Staff 10 arranging to make available Yor the partier and delivery loss e States Definic Red as received. AMI Information concerning the "Philadelphia Plan" to all daily papers and New (Sime et - in indivery of - Father due given - to provide papers which decide to put the plan into operation with all sup- Mina Agenci pline and materials needed. I Carrier boys =f participating newspapers will be asked to enlunteer their nervices. They *(II receive identification badges: special alburs for "WHAT COULD BE A BETTER GIFT THAN . BOND?" their customers who work to nave stamps delivered to then regularly; and. for the anle of the first 187 tan-cent stamps, morit pina, with additional awards in the form of allear and gold bare for additional stamp sales of specified MANY BANKS are amounts. At the close of the program, each boy to to receive a certificate planning to enclose on parchment piper stating that at a Volunteer -U.S. Defense Agent* he anla with the "Christase A specified musber of Defense Strumps. Club" checks which WITH THE CHECK there Contro a Searty with for they will soon dis- The experience of Philadelphia in that corrier boys swil Defense Stamp# tribute, missages A Merry Christmas like the proverbial That cakes." of equal or greater Importance is the fact similar to the one and à manage is which we believe! that their patriotic devosion In This endenvor 18 o. veritable tonic to all reproduced at the The << - - Tele - la - al 145 vill - - ling who have an opportunity to see them in action. Undoubtedly the currier on- right, which will - - de - - is - " - in - of - - el I - # FM 6 - all ah il : - 80 out with the - - - - - M - en al the - la full M. 5. - genizations of which participate in the plan will, in the words 2 I . of Secretary Morgenthau, "render a great and permanent service to the De- Christmas checks of No - - - gift - . (hisse be - - information the Green Point Sev- - - la regil Em @ de - - - - - - Tense Savings Program and to the Kation." Ings Bank in Brook- lyn, New York, Green Point Savings Bank Regraded Unclassified +1. New Letter News Letter MORE BONUSES IN DEFENSE BONDS MORE BONUSES IN DEFENSE THINGS (Continued) PAIT COMPANIES which have paid Donumes in Defense Bonds and Stampe have hand Listed in previous insume of this NEWS LETTER. Recent reports Macon, An entra home of one $25 Defense indicate that this practice 1e becoming more and more widespread. Bond was recently awarded to all of the 140 employees of the Union Dry ADOPTION OF a STRONGLY WORDED RESOLUTION urging the payment of bonuses Goods Company. The firm installed to Defunse Bunds by the Board of Directors of the Chicago Association of an allotment plan a short time ago Conserce will undoubtedly do much to further this movement. This resolution and President 1. J. Juhan announced reade in part as followar that when an employee had accure- lated enough in this way to buy a "The sale of Defense Savings Bonde should be encouraged bond, the firs would present his by every means, and it in therefore suggested that the with another bond ne B bonus. The unitom of distributing periodic bonus payments, in of- Union Dry Goods Company, understand- fect assing any employers, offers a desirable means of ably enough. was one of the first effacting the distribution of & substantial amount of large concerns in Georgia to report Befense Savings Bonds by making periodic bonus payments 100% participation in the allotment in the form of Defense Savings Bonds in Ilou of cash. plan. At the right is & picture of "The Chicago Aveociation of Conserce, therefore recomends. the window display which featured the bonds purchased by the store's employees. aurnomily. to all of its members and to All other employers, that they make bonus payments by giving employees Defense New York, A bonus of some $9,000 in Defense Bonde and Stampe was dia- Drings Bonds rother than by paying such bonuses in oneh. tributed late in September by F. Schumacher & Company, denler In fabrica and ruge, to its 299 employees. PERM MANY PARTS OF THE COUNTRY come reports of bomis payments in $1, Louis. Approximately $27,000 worth of Defense Bonde and Stamps Sefense Bonde: VAN distributed recently among the nore than 1,700 employees of the Scrucee-Vandervoort-Barney Department Store. Suffulo, Employees of the Sattler store will receive Christmas gifts of Defense Bunds and Stamps instead of cash this year. The Christ- Tules, A 325 Defense Bond will be given to each of the 30 employees not gift certificates were distributed October 34 and are to be of the Shannon Purniture Company, 1. W. Shannon, President, redeemed just before Christmas for the Bonds and Stamps. announced recently. "No thought it would etimulate interest In Also in Buffalo, the William Hengerer Company. on its 104th anni- Defense Bonds,* he said, versary. presented bonuses in the form of Defense Bonds and Stamps to Lts 957 employees, Washington. On September 29, the Cadillan-LaSalle Sales and Service Agency shared 118 profits with 108 employees by distributing as Cincinnati, The Post Office here worked overtime recently filling an bonuses 125 Series E Defense Bonds, worth about $13,500 (eaturity order for Defense Bonds, costing more than $24,000, requested by value). employees of the Cincinnati Milling Machine Company. The company gave employees the choice of taking bonuses in cash or to Defanse Hobde, and . large number ordered the Bonde. "I should like to offer as a suggestion, shat every Christmas honue in the United States be paid An De- Denver. A. bonue of $15,000 In Defense Sende and Stamps FOR given to fense Bonds or Stampe this year. There could 1,200 employees of the Denver Dry Goods Company recently. be no more finer example to the public. no more striking reminder of the spirit of these times, Jacksonville. Pursuant to its policy of wharing profite #1th its no better safeguard for the days of economic strain employees in the form of bonuses each year. the Duval Jewelry that are sure to follow the with Chaparge tate year gave more than $10,000 in Defense Bonds to LIP employees. - Henry Morgenthau, Jr. Secretary of the Treasury. Regraded Unclassified News Letter News Letter 10 111 LADIES TO THE LADENE Food for Thought State Короц'я Defense Savings Consitions Homins Since WORRD do sost of the Christmas shopping, 11 1a to then esped- WISCONSIN ANY! In the Badger State, Mrs. George Ritter. who is Their- tally, that appeale to buy Defense Bonds and Hamps for Christmas gifts, - of the Women's Organizations Division of the State Committee, 1* setting should be más. In Idaho, Mrs. John 1 Bayes, who 1* Obsirman of Woman's - as over-all organization assog the women of her State that promises La Activities for that State, has sent the following letter to the County reach down into every grass roote village. She has appointed A "kay" and Chairmen of Defense Divings Committees: is every city and community that has a Post Office, and has written to these RODER asking the for liets of all local women's organizations, and the "SAVINGS STAMPS FOR CHRISTMAS! name and addresses of their Presidents. In order not to also any rural organizations, Mrs. Eitter also appointed & Woman's Organization Chairman Can we saice this slogan a reality this year? Tear after year the in every county and asked them to supply the DATE of the presidente of problem of Christmas gifte 16 B. matter of deep ocnosra for parents associations of fare wines. and relatives and friends of children and youth everywhere. If 19 have little to give, ve fear that the an may seez insignificant; The first miling to these Presidenta of local organisations was e copy If " have . generous Christmas budget, 95 worry for four the of the leaflet "No Gala Have To Stick Togetber". selection = not be entirely appropriate for the taste or needs of the recipient. What to give 1a always a. troublesome question. The Presidents of all state-wide Women's Organizallone have all been urget LD work with the Presidente of their local affiliated clube in the *This year, 11 need not be. Give Defense Savings Stamps. Every setting up of study groups, radio progress, and platfore programs on the boy or girl, from kindergarten age to college, will be happy to subject of Defense Savings. receive them. There Le no chance that stamps will be considered an insppropriate gift. They fit all pocketbooke---- little as And the Press has not been forgotten. 1 "nows Item on the activities tan cants will buy one. They may be had in books costing $37.50, of che Women's Organizations Division has been released to all the aditors archangeable for a $50 Bond & filled book of stamps, & book of papers in the State, partly filled, or & single stamp in its appropriate folder, what- over your budget paraite-that in the gift to buy. 18 CONNECTICUT the Women on the State Committee are working clossis with the Tranc's Division of the State Defense Council. Mrs. Dorothy 8. "Ton are sure to feel that your soney is wall spent, that you Bowlee who is A member of the former, is also in charge of the Welfare and have added to me country's defense and that you have plansed Community Services of the Inttar. IN OHIO, Mine Grade Smith of Toledo has someone you hoped to please with your gift. The receiver of your been selected as a member of the State Defense Savings Committes. She Le gift will know the satisfaction of holding a share in the governo immediate Past President of the National Restaurant Aesociation. IN NEW ment of the United States and say learn a precious lesson of thrift. JERSEY, the Women's Committee 18 under the chairmanship of Mrs. Patrick Secry Adams of Maplwood, "Late give STAMPS and DEFENSE for Christenal Local Romen's Defense Savings Committees IN MINNEAPOLIS, Mrs. Prederick o. Atkinson of the Hennepin County Commit- THESE CHEIFTMAS CARDS CONTAIN DEFENSE ETAMP ALBUME bee bas organized the women's subcommittee. IN TAXIMA, Washington, twenty- three WOMED were recently added to the division of that city's Yes, Each une representa a different women's group or organisation. IN PULASKI COUNTY. Arkanses, Mrs. Vernon Hall, who 18 Nomen's Chairean for the anunty Defense Savings Staff reported that $486 worth of Stamps had been seld, and 182 new stamp albuse started at A booth at the Arkansas Livestock CHRISTMAS Show which was staffed by volunteers recruited by her division. Is this the only County Defense Savings Committee directed by #ORRAT Is DeSote County, Florida, Mrs. Marion Parker of Arcadia serves 44 the County Steam tive Chairman and the Deputy Chairman and Secretary (Merchante can order three cards from any greeting card publisher.) are also TORN, News Letter News Letter FIELD ORGANIZATION 1113 INDIANA Sintington Boa Defense Bond Day: Women Organize In Indianapolis Leaders Appointed in Alabama und Pennsylvania POUR AIRPLANES dropped 15,000 leaflete over the city of Auntington and In ALABAMA, a. Chairesh and two Vice-chairmen have been appointed for vicinity recently to promote interest in Defanse Bonds and Stampe and call the State Defense Savings Committee being organized there. Ed Leigh attention to the Indoor Circus #ponsored by the Runtington Aero Club at McMilian of Brewton has accepted the Chairmanship. Serving with his on which the Defense Savings Program was prominently featured. In the picture Vice-chairmen will be Thomas N. Beach, president of V. B. Leady & Company at the right, members of the Runt- of Birmingham, and Lucian Burne, Mayor of Selma, ingion Aero Club are about to take off on this flight. At the extreme In PENNSYLVANIA, Dr. John A. Stevenson, president of the Poon Mutual right with the large poster, 1a Life Insurance Company of Philadelphia, will serve As the Chairman of the Delano Trovinger, executive chair- State Compittee and Banjamin Ludlow M State Administrator, can of the Huntington County De- fense Savings Committee. OTHER FEATURES of the Hunting- Signilghts From Other States: ton Defense Bond Day program were: (1) A contest to select the best MASSACHUSETTS, City and sown Defense Savings Committees in Messachy- window display featuring Defense Action NOW represent practically 99% of the state's population. . a Twenty- Savings (won by the Chris Ellie Restaurant, First prize was 5 $25 Bond, and four Meseachusetts American Legion Poste have purchased $35,975 worth of Mr. Ellie announced that he would distribute an equivalent amount of Defense Defense Savings Bonds. Prices totaling $15,000 in Defense Bonds and Stamps to his employees.) (a) 4 colorful parade to the Community Gymnasian Diamps will be awarded to enlisted men serving in the First Corps Area (3) An address by Judge Otto H. Kriez and (4) A choral pageant "The American for the best letters on "What I Like to Do When in Boaton". The contest WAY of Life" In which 250 school children participated. is sponsored by the Boston Soldiers and Sailors Recreation Committee. FIRST MEXTING of the Women's Organization Division of the Marion County MICHIGAN, Ameletant Secretary of State Preckinridge Long was the Committee was held October 18 at the Indianapolis Y.W.C.A. The Presidents of principal speaker at the dinner which Iminched the Italian-American De- more than 20 women's organizations attended and heard their part in the pro- fense Savings Committee in Detroit. Nearly 1,200 men and WORLD represent- gran outlined by Mrs. Henry 3 Octron, Division Chairman; Russell W. McDer- Ling 125 Clube and societies of Americans of Italian descent attended this mott, Executive Chairman; and Homer R. Capabart, Rev. Joseph V. Supers and menting Michigan State Chairman Frank N. Isbay is averaging a doesn Harold B. West, members of the Marion County Commition. Defense Savings speeches a week. IN RED LETTERS thirty inches high, the Tagette Bünk a Trust Company of MINNESOTA, Annuncement that Robert 7. Pack, Chairman of the Minne- Conneraville reminds its cus- spelle Defense Sovings Committee would retire ne president of the Northern tomora to buy Defense Bonds. States Power Company was commented upon editorially by the Minnempolis In this city of 15,000, nearly Latior Review. The editorial referred to the changed and improved labor three-fourths of the 4,000 fac- relations of the Northarn States Power Company and stated that *this was tory employees now have an reflacted in the fine reception Mr. Pack received when, as Chairman of the opportunity to enroll in pay- local committee for the sale of Defense Bonds, be recently addressed the roll allotment plans, according Minnempolie Central Labor Union." to Angus Deaton, executive chairman of the Committee for MONTANA. in cooperation with the Defense Savings Staff, Governor Fayetie County. Montana She C. Ford, proclaimed November a to B Provent Inflation* Week In SOOUTS FORM THRIFT CLUB, In Indianapolis members of Boy TASHINGTON. The first 1saue of Washington's Defense Savings CARE Scout Troop No. 19 - all 43 of letter carries à congratulatory message from Secretary Morgeothau. them - have pledged themselves State Chairman Joel E. Ferria, State Administrator Saul Hase, and Deputy to buy at least one Defense Savings Stamp B month. State Administrator Will Administrator Karl Richards have recently completed a tour of practically H. Smith recently attended a seeting of this troop and congratulated the boys the miline state during which time they addressed many large meetings. on the contribution they were making to the security of themselves and their country. - 10 n Regraded Unclassified News Letter News Letter DELAHOMA Local Committee Organisation Completed: "Victory Day" Programs Begin OKLAHOMA (Continued) THE FINAL PIN, barking the organization of the last LOWE Defense Say- 11/20 Committee planned for Oklahoma, la being placed in the wall map by State Administrator H. C. TULSA COMMITTED ACTIVE. Adoption of the payroll alloiment plan by Jones, in the plature at the concerns employing nearly 10,000 workers: numsrous sales of large blocks left. The large white pine of I and G Bunde to organisations and individuals; and growing popularity stand for the "County Admin- of the depositor traft plan, are sone of the highlights of A recent report intratore" one in each of Louis 1. Grant, Tulsa County Administrator and Falkner C. Broach, county and the mallet black Tulea City Chairman. pine stand for city and town committees. Rate off so the "TO THE LIMIT" PURCHASES by the Wid-Continent Petroleum Corporation Oklahona Defense Savings Starr and its affiliate. the Mid-Continent Pipe Line Company pregeeded announce- for this achievementi sent that employees of these companies which have haadquarters In Tulsa would De able to invest In Defense Bonds through as allotment plan. OKLAHOMA'S "HUT FOR VIC- TORY® program (outlined in "This in an hour of the October 25th NEWS LITTER) great National peril' 918 launched early in November wrote Jacob France. with 6. proclamation by Gov- president of Mid-Con- ernor Leon o. Phillips, tinent, in a to his employees, "The *WHEREAS, the United 10 definitely embarked upon a situation demande 10- program of national defense, in which the sale of Defense numerable sacrifices Sevings Bonds and Stamps is en important and necessary part; - the part of every citizen. I "WRESEAS, victory for our country and for the State of Okla- earnently believe home in this phase of the program depends upon the full po- that 11 Le the patri- operation and participation of all of the cities, towns, rural otte duty of every communities, and individuals. American citizen to lend 4. part of his in- I, Leon C. Phillips, the Governor of the State of come to the government Above. Charles Klein (right) from DElaboma, hereby proclais one day of each month commencing by the purchase of its urer of the Mid-Continent Petroloum with the month of November, 1941, as VICTORY DAY and urge all Defense Bonds." Company, good over with Louis W. cities, towns, and commission of the State of Oklahown to set Grant, Julsa County Administrator acide ace day sach menth де a day in which to focus attention OUTSTANDING RECORDS for par- and President of The Home Federal on que National Defense Savings Program." licipation in the allotment program Sevings é Loan Association of Tules, are being made by other Tulse con- the list of the first 87 employees SEVERAL OF THE LARGEST CITIES OF THE STATE, staged their first "Tictory cerns including the Tide Water Двяс- of the Company so purchase Defense Day* programs on November 3. In Oklahoma City, 260 numbers of the city clated 011 Company (1350 employees, Bonds by the allotment plan. committee end Its various divisions, including the insurance DED who are 78% participation); the First working under the direction of the chairman of the salary allotment division, National Bank & Trust Company (162 employees, 92%; and the Tules Paper attended the breakfast meeting al which State Administrator Jones and various Company (51 employees, 100%). other leadore of the program spoke. A concerted effort to sell the allot- ment plan to business fires; the posting of banners carrying the slogan, TULSA BANKS under the Leadership of Palkner 0. Broach, Vice-Preident "Take your change in Defense Stamps on all store windows; speeches by of the National Bank of Tules and city chairwan, and 1. Osia MoClintock members of the American Legion at #chool assemblies and by high school ato- President of the Mrst Wattonal 3ank & Trust Company of Toles, and that dente at luncheon clube; and 8. parade of high school Dands and silliary - of the banking division of the State Committee, report that the mmber unite were of some of the other evente on the program for this day. of their depositors taking advantage of the convenient draft plan for the regular purchase of Defense Bonds is increasing monthly. ONE OF THE FIRST SAVINGS AND LOAS ASSOCIATIONS to make 4d automatic draft plan for the purchase of Defense Bonds svailable to its members is the Home Federal Savings & Loan Association of Tules. Regraded Unclassified 13 News Letter News Letter OHIO VIST VIRGINIA Defense ind Days in Toledo and Other Ohio Cities Stance on date at Organizations Support PRONTING CASTON'S "S" DAY, described in the KINS LETTER of October 11, inspired similar demonstrations in several other Ohio cities, STATE IMPLOYEES will beneforth find 11 easy to secure their Defense Savings Stamps. At the suggestion of Governor Yeely. Acting Sudget Diract- IN TOLEDO, such . demonstration TM staged on November 4. The program or C. V. Dailey has set up a revolving fund of $1000 to maintain an ample included, more other events; supply of Defense Stamps at the State Capitol, This 50 the first step in putting into operation the 'group agent" systematic savings plan for state L Luncheon seeting sponsored by the Exchange Club at which Field employees. Director Dale F. Johnston was the principal speaker) ADDITIONAL ORGANIZATIONAL SUPPORT for the program has recently cose sombardment of the city by Miss Arlene Davis, WORAD flyer of from the West Virginia Savings and Loan League which at its annual couven- Cleveland, Ohio, with "Dollars from Rearon® - cartificates tion passed a resolution urging all member institutions to qualify as 10au- redeemable by various Tolado business houses for a total Inf agents. of $1600 in Defense Savinga Stampe and 1100 from tickets to the evening's football emo, Addressing this convention and explaining the need for the Defense Savings Program were State Administrator Roy Toke and Ralph a. Richards, A parade of silitary units, bands and floats; and president of the Federal Home Loan Bank of Pittsburgh. Mr. Richards urged every savings and loan association to do ite utmost to succurage Defense & Football Came between the University of Teledo and the leas of Bond Sales and onlled it "an unqualified duty to the Government for every the 27th Division from Camp Shelby, Mississippi. This such institution to qualify as an issuing agent. division includes many Toledo son. Between halves of this - an airplane piloted by a local pilot flew over the WEST VIRGINIA'S 100,000 COAL MINKRS will BOOD have the opportunity of darkened stadium and vas picked out by Army anti-aircraft investing in Defense Bonds through allotment plans, At a seeting hold in **mrchlights. Charleston, October 12, Union representatives and officers of the West Virginia Coal Association considered and endorsed this phase of the Defense IN MASSILLON . sizilar program to arouse interest in Defense Sonds Savings Program and Stampe PAS arranged an October 30, And, HIGHLIGHTS:- IN CLEVELAND during Armistice Wook. a decorated float toured city of alcorts playing "Any Bonds Today and distributing thousands of free copies In Fairmont the American Legton Post purchased two $1000 Bonda and the acuvenir adition of this song. $500 worth of Stamps, In Lewis County the Legion Post and the local Moose Lodge each bought a $1000 Bond. CANTON MAKES DEFENSE STAMP BUTING EAST In Farkersburg, the Theatre Quild ennounced The stamp booth shown at the left Le & rod, that all profits from its next production would white, and blue irtangular building in Canton's go for Defense Bonds to be turned over to the Public Square, which 18 sponscred by the Canton Red Order: the Full Club gave Defense Stamps of Hadio Station WHBO and promisent Canton concerns bridge prizes; all 20 employees of Watlack Motore, including the Timken Roller Bearing Company, Inc., are participating in A payroll allotment Diebold Safe . Look Company. Hoover Company, plan; and the Ilka Club recently hald A well Lunts Iron A Steel Company, the Ohio Power Com- attended "Defense Dance", with guests paying pany and The Canton Repository. admission with Defense Stamps. Each day the radio station broadcasts from from the penitentiary at Moundaville come in front of this 11451a building a "Van On The the story of eight prisoners who together have Street* program in which many of the questions purchased a total of $1,312.50 worth of Bonds Admission Booth at the are about Defense Savings, Every person inter- and have thereby inspired sany others to buy Parkersburg Elke' Club viawed receives a 25 cent Defense Stamp, and Bonds and Stampe regularly. *Defense Dance for correct assure, four Stamps are smarded. Regraded Unclassified News Letter News Letter 021002 OREGON Portland Dosmittee Carryine on Aggressive Educational has (Continued) A BATTERY or THAINED SPEAKERS ready to go out on short notice and suddenly created so not as A cushion in aboorb 2024 of deliver an appropriate address on Defense Savings to any Idné of organism the shock when the impact of post war depression arrives tion or group has been set up to serve Portland and Mulinomah County, No union could perform a acre patriotic Charles Walker, Chairman of the Speakers' Bureau of the County Committee, duty nor make wisar provision for Its members than to 16 giving than their assignments. has recruited these volunteers, given them the necessary instructions and aid in setting up a Defense Savings salary allotment plan." WOMEN'S ACTIVITIES in connection with the Defense Bund and Stamp Pro- A RIF-BOARING FILD WEST SHOW has helped to sell Defense Stamps in gram were off to a flying start October 6, when more than 250 officers of Portland, Then the Tammis Levi Puppet show, one of the lending attrac- Oregon women's organisations not at the call of Mrs. Don McGraw, state tions at the San Francisco Fair, visited Portland recently. it gave two chairman of this division. Advantage vos taken of the presence in Porte outdoor performances at noon land on that date of Secretary of Labor Frances Perkins, and her services is the downtown section at were obtained as a speaker for the occasion. Confining her brief address which members of the Junior to Defense Savings. Secretary Perkins saids Chamber of Commerce and Junior Business and Professional Was- 110 should keep in mind how important 11 18 in days like en's Club, rigged out in COM- these for all of us to practice private thrift. Public boy outfite (see picture at the expenses are bound to be great, and for that reason It 1s laft), wold Defense Stamps to important for the public not to throw too such mato the the bundreds who crowded around market. We should keep our pennies and dollars out of to 100 the intervating spectacle. circulation, if " would avoid inflation. The ways in which Defense Bonds and Streps have been prepared for sale make then DOB of the beet forms of investment were A SCHOOL PROGRAM has been developed by the Portland School offered to women. For, women have the reputation of Defense Savings Committee which pinching out a little here and A little there, and eaon 1a composed of teachere. prin- month they can pinch out 8 little for Defense Bonds, and cipale and a representative of then there will be money saved for 6. time when It say be most needed." the P.T.A. Sale of stamps in each educational activities 60) the writing and acting of plays and skite the schools 1e supplemented by of written and tral reports un the sacurities and the Savings Program. dealing with thrift and savings, the drawing of posters, and the presentation ment plan The the Peerless Pattern forks. FIRST PORTLAND CONCERN to report 100% acceptance of the salary allot- allotment Defense Savings Program and to take the initiative in participate up payroll in UNION MIMBERS throughout Oragon have been urged so the plans by 3, Sugens Allen, aditor of the Labor setting Press. has "The Treasury Department of the United States government ***pons with which to wage war on inflation-the Defense provided the people with one of the most effective Above, G. Goatse, secretary and A1 A group of volunteers furnished so Savings Program." said Mr. Allen in B recent issue of his Hartung, district president of the the Defense Savings Staff by the paper, which is widely read throughout the state, "This C.I.O. Woodworkers Local No. 3, com- "Central Volunteer Bureau" in Port- art weepon, freely used by the people, will be a DOBE Leport= plete the purchase of $6800 worth of land, assemble material for mailing, factor La preventing unreasonable price rises and in Defense Bonds from A. & Lesson, at the office of State Administrator storing up some of the purchasing power that has been so Manager, Fast Portland Branch, Ted S. Gamble. First National Bank, 16 17 Regraded Unclassified News Letter News Letter DEFINSE NAVINGS 08 11) AIR Leading Programs for the Coming Week THREE BIRDS WITH one STONE Monday November 17 "FUR AMERICA WE SING* 9,30-10,00 P. M. (EST) Pupile of the Sheboygan Christian NBC Blue Network school, Sheboygan, Wisconsin, have found GUEST STARS: Robert Feeds and Helen Japson. & way to hit three birds with one stone. A few weeks ago, they started B. Tuesday, November 18 *WILLIONS FOR DEFENSE" 8:00-9:00 P. M. (357) (The Treasury Hour) waste paper drive in an effort to do their MBC Blue Network bit towards relieving the paper shortage, During one work they collected more than two tons of paper, Thursday, November 20 *AMERICA PREFARRED" 9:00-10:00 P, M. (EST) Mutual Network With the soney received from sale of GUIST STAB: Grate Stueckgold, Metropolitan soprano, this paper, they bought a Defense Bond and Defense Stamps to help the Government f1- nance the defense program. Pictured to the right is Postmaster Louis N.- "DEPENSE VARIETIES" NOW à NETWORK SHOW brecht delivering to little Sendra Winkelhorst, a kindergarten pu- pil, The other children in the picture, A delegation of the student body *DEFENSE VARIETIES," & adries of programs devoted entirely to Defense of the school, are, left to right: Mary and Lois Wondergem, Donald Buyse, Savings. which has been un the air for several months over Boston's Station Beatrice Buteyn, and Jacob Dekker. WEX, has been noved to WAAB and the Colonial Network. Henceforth, this program will be heard throughout New England each Sunday afternoon from Objective of the savings program is the purchase of a new lighting 4:30 to 5,00 P. M. system for the school. To this end, each class room in the school has a revings bank where the children deposit the pennies they earn or receive, The broadcaste are under the general supervision of Thomas B. Bassett, to help swell the fund. Ae soon as they have enough money, they plan to Dollector of Internal Revenue in Boston. They include pick-upe of well- buy another bond. Pupila of this school have also made large contributions known bands from Boston's leading hotels, and entertainment by stage and to the Red Cross and to Finnish relief. Henry Euiper 1a principal. madie personalities Who contribute their services. Boston's OWL "Willions for Defense" radio show continues over Station MORE, but Le now heard as e 15% time-4:00 to 4:30 P. M. on Sundays. This BOWLING TOURNAMENTS TO FEATURE AWARDS program, like "Defense Varieties," la produced under the supervision of IN DEFENSE BONDS AND STAMPS Collector Reseats. Keep'em rollin'! The illustration at the left does scant justice to the "Keep 'em rollin'!" tournament DAYTIME BHOADCASTS CONTINUE TO GIVE FROORAM EFFICTIVE SUPPORT poster designed by Gibson Crockett of the Washington Evening Star staff for use in the Representatives of five of the leading daytime radio sponsors-Colgate- bowling tournement which opens in the Capital Poinclive-Pest, General Foods, General Mills, Lever Brothers, and Proctor on December 8. and Gamble-net at the Treasury Department in Washington on October 30 to determine how they could better cooperate with the Defense Bavings Program. However, many of the readers of this NEWS LETTER will soon have a chance to see it These five companies, which sponsor almost fifty prograss on the major NATIONAL DETENSE HOME in full size (28" x 42") and full color, networks during the daytime hours. have been giving the Program magnificant Bowling Tournament Copies have been sent to newspapers which cooperation since It began on May 1. The purpose of the recent meting WAR sponsor bowling tournsments and it is hoped to coordinate plans for giving the Fengram further support, Dr. known Star that this year, in many of these tournaments, Opening Sumber - 1000 Defense Bonda will be awarded as prises and the "Keep 'e rollin'1" poster used, - 18 Regraded Unclassified News Letter LEGION POST PRESENTS FLAG TO ILLINOIS DEFENSE SAVINGS STAFF DEFENSE SAVINGS BONDS AND STAMPS FORDENSE Scene in the office of the Illinois Division when the Advertising Post Num- ber 38 of the American Legion presented a United States flag to the Defense Savings Staff. From left to right: Mr. Clifford S. Young, President, Fed- eral Reserve Bank of Chicago; Commander W. G. Veach, USNR, aide-de-camp; Major General Joseph M. Cummins, Commanding Officer, 6th Corps Area: Major Clyde D. Eddleman, aide-de-camp; Commander Newton Rogers of Advertising Post No. 38, who made the presentation; Lew Tentler, Color Guard; Vice- Commander Don D. McKiernan of Advertising Post No. 38; Evar Holson, Color Guard; Mr. Norman B. Colline, State Administrator: Captain Thomas Shanley, Commanding Officer, Chicago District, United States Coast Guard; Rear Admiral Edward A. Evers, USNR, Commanding Officer, Illinois Area: Mr. John G. Gallaher, First Deputy Administra- tor; Colonel Robert M. Montague, CREDIT UNION INVESTS United States Marine Corps; and Mr. George A. Trapp, President of the Kiwanis Club of Chicago. FORDEFEN WINDOW DISPLAY ON CHICAGO'S STATE STREET Officers of the oldest credit union in Illinois - composed of employees of the Belden Manufacturing Company of Chicago - visit the offices of the Defense Savings Staff and are photographed with President Young Defense Savings Window of The Fair, of the Federal Reserve Bank of big Chicago Department Store. Chicago, as they invested $10,000 of credit union funds in Defense Bonds. ***** artic) 20 Regraded Unclassified NAMEY PLOCO VA., CHAIRMAN KDNFTH MC RELLAR. TEN. ARTHUR H. VANDENBERG, MICH. W, WARREN BARBOUR, N. 4. ALWA s. NAME COLO CHARLES W. TOBEY, M. H. 173 gur M. GELETTE, ICRA 9. ANDREWS, FLA. WALLACE H. WHITE, JR., MAINE - -, LUCAR ILL United States Senate - - SMITHEAD, ALA. was grancer, ARK. COMMITTEE ON RULES M. 4a MEMBER, CLERK November 15, 1941. h Honorable Henry Morgenthau, Jr. The Secretary of the Treasury dear Mr. Secretary: The next meeting of the Committee to Investigate Non-Essenti J Foderal Expenditures will be weld on Tuesday, November 18th, at 10 A.M., in the Senate Finance Committee Room, Room 314 Senate Office Building. I Rd hope very smich that it will be possible for you to attend this meeting. with best wishes, 1 am Faithfully yours, Hame 7 Bunk meeting postponed to mm, 25 Regraded Unclassified 11-15-41 174 MINDERS OF THE JOINT CONNITTED ON REDUCTION OF NON-DEFENSE EXPREDITURES Senate Appropriations Committee: Carter Glass, of Virginia Kenneth NoKellar, of Tennessee Gerald P. Eye, of North Dakota Senate Finance Committee: Valter P. George, of Georgia Robert X. LaFollette, Jr., of Visconsin Harry Floyd Byrd, of Virginia House Ways and Means Committee: Robert L. Doughton, of North Carolina Thomas H. Oullen, of New York Allen 1. Treadway, of Massachusetts House Appropriations Committee: Clarence Cannon, of Missouri Clifton A. Woodrum, of Virginia John Tabor, of New York Secretary of the Treasury: Henry Morgentham, Jr. Director of the Budget: Harold D. Smith Chairman of CommitteeP Harry Floyd Byrd Vice Chairman of Committee: Robert L. Doughton Regraded Unclassified 175 UNITED STATES SAVINGS BONDS Compurative Statement of Sales During First Eleven Business Days of September, October, and November, 1941 (September 1-13, October 1-13, November 1-14) On Basie of Issue Price (Amounts in thousands of dollars) : : Amount of Increase : Percentage of Increase : Sales : or Decrease (-) : or Decrease (-) Item I : : : November : October : November : October : November : October : September : over : over : over : over : : : : October : September : October : September Series B - Post Offices $ 18,683 $ 19,712 $ 17,660 -$ 1,029 $ 2,052 - 5.2% 11.6% Series E - Banks 33,654 35,822 30,277 - 2,168 5,545 - 6.1 18.3 Series E - Total 52,337 55,534 47,937 - 3,197 7.597 - 5.8 15.8 Series F - Banks 9,168 10.355 T,723 - 1,187 2,632 - 11.5 34.1 Series G - Banks 58,013 59,141 50,558 - 1,128 8,583 - 1.9 17.0 Total $119,519 $125,030 $106,218 5,511 $18,812 - 4.4% 17.7% Office of the Secretary of the Treasury, Division of Research and Statistics. November 15, 1941. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States Savings Bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified 176 CONFIDENTI UNITED STATES SAVINGS BONDS Daily Sales - November 1941 On Basis of Issue Price (In thousands of dollars) Post Office Bond Sales Bank Bond Sales All Bond Sales Date Series I Series E Series ? Series G Total Series E Series 7 Series G Total November 1941 13 1 $ 1,017 $ 1,750 $ 567 $ 4,201 $ 6,518 $ 2,767 $ 567 $ 4,201 $ 7.535 3 3,377 3,421 1,442 9,092 13,954 6,798 1,442 9,092 17,332 4 1,061 2,818 738 7,205 10,761 3,879 738 7,205 11,822 5 1,175 1,694 744 3,794 6,232 2,869 744 3,794 7,407 6 1,968 3,899 988 6,962 11,850 5,867 988 6,962 13,818 7 2,062 4,278 1,258 9,280 14,816 6,340 1,258 9,280 16,878 8 1,289 3,113 352 1,457 4,922 4,402 352 1,457 6,211 10 2,452 3,383 994 3,459 7,836 5,835 994 3,459 10,288 12 2,181 3,321 936 5,312 9,569 5,502 936 5,312 11,750 13 852 2,115 602 4,145 6,862 2,967 602 4,145 7,714 14 1,249 3,862 547 3,107 7,515 5,110 547 3,107 8,764 Total $ 18,683 $ 33,654 $ 9,168 $ 58,013 $100,836 $ 52,337 $ 9,168 $ 58,013 $119,519 Office of the Secretary of the Treasury, Division of Research and Statistics. November 15, 1941. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States Savings Bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassifie 0 177 P Y DEPARTMENT OF STATE WASHINGTON In reply refor to November 15, 1941 IT The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram No. 1734, dated November 14, 1941, from the American Embassy, Rio de Janeiro, Brazil, con- cerning the Bank of Brazil opening new credits with New York banks for the purchase of equipment for the steel plant. Enclosure: From Embassy, Rio de Janeiro, No. 1734, November 14, 1941. Copy:vw:11-15-41 C 178 0 P Y Rio de Janeiro AF This telegram must be closely paraphrased be- Dated November 14, 1941 fore being communicated to anyone. (br) Rec'd 11:41 a.m. Secretary of State, Washington. 1734, November 14, 1 p.m. The Bank of Brazil is opening new credits with New York banks totaling $4,000,000 for the purchase of equipment for the steel plant. The bank will if necessary draw on the $25,000,000 revolving credit for this purpose. CAFFERY RR COPY:hmd:11/15/41 0 0 P 179 Y DEPARTMENT OF STATE Washington In reply refer to November 15, 1941 FF The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram No. 1734, dated November 14, 1941, from the American Embassy, Rio de Janeiro, Brazil, concerning the Bank of Brazil opening new credits with New York banks for the purchase of equipment for the steel plant. Enclosure: From Embassy, Rio de Janeiro, No. 1734, November 14, 1941. eh:copy 11-19-41 C 0 P PARAPHRASE OF TELEGRAM RECEIVED 180 Y FROM: American Embassy, Rio de Janeiro, Brazil. DATE: November 14, 1941, 1 p.m. NO. : 1734. A total of $4,000,000 in new credits is being opened in New York banks by the Bank of Brazil. These new credits will be used for the steel plant equipment purchases. If necessary, the Bank of Brazil will draw on the $25,000,000 revolving credit for the purpose of purchasing equipment for the steel plant. CAFFERY eh:copy 11-19-41 TREASURY DEPARTMENT 181 INTER OFFICE COMMUNICATION DATE November 15. 1941 To Secretary FROM Mr. Districh CONFIDENTIAL Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns £7,000 Purchased from commercial concerns -0- Open market sterling was quoted at 4.03-1/2, and there were no reported transactions. The Uruguayan free peso again rose 25 points to close at .4800, & new high in several years. According to a recent despatch from Montevideo, banking circles in that center feel that the free peso quotation has improved, and will continue to improve, primarily as a result of Uruguay's trade picture. It was pointed out that, for the first eight months of this year, that country's exports exceeded imports by more than 50,000,000 pesos (about $25,000,000). For the same period. Uruguay had & favorable trade balance of about 36,000,000 pesos ($18,000,000) vis-a-vis the United States. In New York, closing quotations for the foreign currencies listed below were as follows: Canadian dollar 11-5/8% discount Argentine peso (free) .2388 Brazilian milreis (free) .0505 Colombian peso .5775 Mexican peso .2070 Venezuelan bolivar .2540 Cuban peso 1/8% discount The Federal Reserve Bank of New York reported that it purchased 160,000 Swedish kronor in New York yesterday by order and for account of the Central Bank of Uruguayan Republic. The latter stated that these kronor were needed to meet commercial overdrafts. There were no gold transactions consummated by us today. No new gold engagements were reported. A Regraded Unclassified 182 RESTRICTED 3-2/2657-220; No. 545 M.I.D., W.D. 11:00 A.M., November 15, 1941 SITUATION REPORT I. Eastern Theater. Ground: The Russians continue their attempts to break out of Leningrad. Strong isolated Russian counterattacks are report- ed along the Moscow front. German operations in the Crimea continue with strong attacks against Kerch. Italians report heavy Russian counterattacks against their troops on the Donets front. II. Western Theater. Air: A single German raider bombed an area in the north- sast of England, The R.A.F. was apparently still grounded by the weather. III. Middle Eastern Theater. Ground: Fighting on the Gondar front in Ethiopia was said to have been quite heavy. Air: Italian comminique reported British planes attacking Catania and Brindisi, as well as Derna and Barce, in North Africa. Italian torpedo planes were reported to have sunk a a large British freighter. German planes attacked Tobruk and Marsa Ma- truh, the comunique said. RESTRICTED Regraded Unclassified 183 November 17, 1941 11:22 a.m. P. Ar. Mar enthou. S.Jr: Yes. This 18 J. 3. Carswell sweaking. Jr: Yes. I tAlked to Mr. Howe a few minutes ago in Ottews and he mentioned the fact that ne would 11/2 to come down very enon to Ottawa - to Washington Yes. and euggested Friday. AJr: This week? I vointed out that Thursday was & no'lday. not That's right. The resson I was calling you AUDE I mon't be here Friday. Kell, I WAS just a little afraid of that, and I told him SO. would - could Monday - could we working 1n something an Monday? on, surely. He suggested either Friday or Monday. Vell, I'M love to nave him have lunch with de Konday, All right. I taink that con be arranged. Jr: well, vould you extend the invitation to him? I *111, sir. And he told ne to say to you that ne would come down either Friday or Monsay, whichever suited your convenience. Regraded Unclassified 184 - 2 - HMJr: Now, this 1s what I'd like to talk about, Mr. Carswell, he may want to bring some things down. I'd like to get details on the set-up that they have in Canada for purchasing and production, you see? C: Yes. HHJr: Under Mr. Howe. C: Uh huh. HMJr: I'd like to know how they do it. C: Yes. H/Jr: That's what I have in mind. C: Yes. HMJr: So he may want to have somebody prepare some- thing for me. C: Yes. HMJr: Because it's quite different from what we have. C: Un huh. HMJr: And the little I know of it, I think the Canadian thing is much better. C: Well, I think it has less red tape to it. It can go a little cuicker, that's my experience over the last two years. HMJr: Well, that's what I'd like to get from him, 80 C: Well, I'm going to call him back on the phone and I'll tell him that. HMJr: And if I don't hear from him again, I'll expect him Monday for lunch. C: Monday for lunch. Well, we'll call this an appointment HMJr: Thank you. C: Thank you very much. 185 November 17, 1941 11:50 a.m. HMJr: I've been meaning to telk to you about this for some time, and now in comes a letter from Averill Harriman. Herbert Gaston: Yes. HMJr: There are people coming in and out of this country in bombers all of the time, and Customs doesn't do a damn thing about it. Now Harriman tells us about how he brought stuff in. I think it's terrible that I have all the time got to keep after Customs. Now, he said he brought in seven hundred dollars worth of furs and he's honest enough he reported 1t. But there are people coming in at the Army Air Port from England all the time and never declare a thing. G: Is that the Army Air Port here in HMJr: Here in Washington. 3: Here in Washington. HMJr: Sure. And every other place. I mean, Customs just doesn't do anything about it. I think that certainly when the Army brings - or Navy - brings in anybody to the United States, that they should make a report to you and ask for Custome' clear- ance. G: They certainly should, yes. HMJr: Well, I mean it's - all you've got to do 18 pick up the paper and you can see people coming in all the time. Well, anyway, this Harriman's letter is an example. I've been meaning to talk to you about it for a long time, because I know it's going on and I was fairly sure Customs wasn't doing anything. Will you get on it, please? G: You bet I will. I'll get on it right away. 186 November 17, 1941 My dear ar. Hoover: Thank you for your letter of November 14th with which was enclosed & memorandum entitled "Carrying of Passengers' Baggage". Yours sincerely, (Signed) 1. Morgentham, and Mr. J. Edgar Hoover, Federal Bureau of Investigation, Department of Justice, Washington, D. C. n.m.c. Nilitions Regraded Unclassified OHN EDGAR HOOVER DIRECTOR 187 Federal Bureau of Investigation United States Department of Justice ashington, B. C. November 14, 1941 PERSONAL AND CONFIDENTIAL BY SPECIAL MESSENGER The Honorable The Secretary of the Treasury Washington, D. C. By dear Mr. Secretary: As of possible interest to you, there is enclosed herewith a copy of a liemorandum dated September 11, 1941, entitled "Carrying of Passengers' Baggage" which was prepared by the Commander of the British Contraband Control Service of Hamilton, Bermuda. Sincerely yours, Enclosure I Bloover Regraded Unclassified 188 CARRYTHA OF PASSENGERS' BAGGAGE September 12, 1941 1. (a) The Colonial Customs authorities are responsible for the a- amination of Transit passengers, and they also examine any item of 10- companied baggage they consider necessary. (b) In veusels of the Export Line, accompanied beggage 10 cerried in the Baggage Room, but not in alphabatical order so that 11 16 sometimes difficult to locate any particular item. Unaccomponied unnifested beggage is stowed 10 OD# of the holds and usually neil bags are placed on top. This type of baggage 1a being carried in increasing quantities and consists of anything from small packages to lift-vana; it 1e generally described on the manifost es containing "personal effects or thousehold effects". These items are almost invariably covered by Export Passes and therefore controlled at source. 2. If it is considered advisable to check this beggage a full in- ventory of the contents should be attached to the covering document and a definite indication from Lisbon given of any particular item it was ton- sidered necessary to examine. In our opinion, however, is more likely method of evading control would be for unscrupulous passengers to declare items of beggage to be their personal proparty whereas in fuct they belong to persons not on the ship. 3. Customs always ask the Purser to disclose any packages he my have in his care. 4. Most-bound ships always have cargo for Berauda and therefore are borthed alongside at Hemilton. West-bound ships, however, do not come aleag- side but usually anchor in Grassy Bay (off the Dockynrd). It has been re- peatedly impressed on ue that their shipe must not be delayed and their sojourn here 10 therefore chiefly governed by the length of time it takes tohandle the mail-usuelly from 6-8 hours. Bearing in mind such practical difficulties all working at night, bad weather, small working space, otc., only & very limited examination is pessible in the time available. 5. Following suggestions are made with as view to tightening the control in the order of their importance:- (a) Export Line should be instructed to have "Baggage Declaration Form for every passenger completed before arrival at Berwada. After being dealt with here they should be placed in as envelope sealed by the Bermade Customs and handed by the Master to the Customs in New York with seal unbroken. This would insure that no false or duplicate declarations are unde and in chass Regraded Unclassified 189 - 2 - where a passenger has no baggage he should sign a blank or "nil" statement to this effect. (b) Export Line should be informed that it is & breach of the terms of their Navicert to carry any un-manifested items other than passenger's and crew's private effects. (c) Both accompanied and un-accompanied baggage should be stowed in alphabetical order 80 as to be accessible at all times. (d) It would undoubtedly save a great deal of time and money and facilitate the examination of baggage if the West bound ships were also berthed alongside at Hamilton. Regraded Unclassified 190 November 17, 1941 My dear Mr. President: I am sending you enclosed with this letter a copy of my suggestions which I submitted, on Friday, to the Joint Committee on Reduction of Non- Defense Expenditures. Yours sincerely, (Signed) 1. Morganthas. 32. The President, The White House. By they's 4:30 Regraded Unclassified 191 November 17, 1941 Inentition letters mailed to the following: -An. Fronces Perkins ( Signed) Henry on. Front D. Welker ( Signed) Henry form Frencis Bloole ( Signed) Tenry Mon. Jesse Jones ( Signed) Henry Claude R. lekard ( Signed) Henry Hon. Frank Knox ( Signed) Henry Cardell Hull ( Signed) Henry Fanny A. Wellace 1 Signed) Henry for. Venry L. Stimson (Signed) Henry Hon. Paul 1. Hallutt ( Signed) H.Jr. Ine PM91 pit (Stped) 11.Jr. Regraded Unclassified 192 Economy Suggestions Submitted by Secretary Morgenthau to the Joint Committee on Reduction of Non-Defense Expenditures Friday, November 14, 1941. There are certain classes of non-dofense expenditures which consist in large part of construction projects, such as reclamation work, river and harbor work, road building, etc. Reductions in activities for these purposes will have multiple advantages, as follows: (1) Reducing non-defense expenditures. (2) Releasing man power needed for defense plants. (3) Increasing the supplies of materials and equipment which can be devoted to defense efforts. (4) Building up a backlog of projects for continued employment in the postwar period. There are other instances where there appear t.o be overlapping and duplication both in effort and in expenditure of funds. In other cases, the Government undertook programs aimed at correct ing or adjusting certain inequities which had grown up in our economic system. Some of these inequities have been eliminated and circumstances which made the initial program urgent have altered. Nevertheless, large suns continue to be appropriated and spent under such programs despite the greatly reduced justification for such expenditures during the period of defense expansion. I shall refer briefly to certain specific non-defense expend- itures which I recommend to the Committee for its consideration, Regraded Unclassified 193 - 2 - RECLAMATION PROJECTS (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to about ---- $880.0 This includes expenditures for irrigation and water conservation under the Emergency Relief Appropriation Acts. Fiscal year 1941 - expended (checks issued)- - 86.0 Fiscal year 1942 - estimated to be spent --- 95.0 Economy Suggestion: It is suggested that all reclamation work be reexamined in the light of our present defense program and its anticipated accel- cration. Wherever it is possible to delay existing or postpone proposed projects which are not necessary in connection with the generation of power for defense purposes, this should be done. Regraded Unclassified - 3 - 194 RIVER AND HARBOR WORK AND FLOOD CONTROL (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to ------- $1,870.0 Fiscal year 1941 - expended (checks paid) -- - - 219.0 Fiscal year 1942 - estimated to be spent --- 200.0 Economy Suggestion: It is recognized that certain river and harbor, flood control, and soil erosion work must continue in the interest of the lives and safety of our people. But all projects which are not vital from this standpoint or necessary for definite defense purposes should be re- examined. Work on all projects of this character which can be delayed or postponed should be prohibited and funds heretofore appropriated should be cancelled. Regraded Unclassified - 4 - 195 PUBLIC ROADS (In Millions) Fiscal years 1932 to 1941, inclusive Total expenditures during the 10-year period (1932-1941) amounted to about $5,800.0 This includes expenditures for highways, roads, streets, etc., under the Emergency Relief Appropriation Acts and the Public Works Administration Act of 1938. Fiscal year 1941 - expended (checks paid): Regular $174.1 W.P.A., etc.- - 485.0 659.1 Fiscal year 1942 - estimated to be spent: Regular 175.0 W.P.A. Not Available Fiscal year 1943 - expenditures in this year were obligated on or before January 1, 1941. Fiscal year 1944 - expenditures in this year will be obligated on or before January 1, 1942. Fiscal year 1942: The amount appropriated and being spent in the current fiscal year covers the Federal-aid highway, grade crossing, etc., authorization of $162,000,000 for the fiscal year 1941 and balances of prior years' author- izations. These expenditures were obligated on or before January 1, 1940. 196 - 5 - Fiscal year 1943: The Act of September 5, 1940, contained an authori- sation of $139,000,000 for Federal-aid highways, etc., for 1942. This authorization was obligated on or before January 1, 1941, and there is an obligation on the Congress to appropriate sufficient amounts in the next fiscal year to pay these obligations. This cannot be avoided. Fiscal year 1944: The Act of September 5, 1940, contained an authori- zation of $139,000,000 for the fiscal year 1943. Under existing law this amount must be apportioned among the States not later than January 1, 1942. After such apportionment specific projects are approved. The approval of projects constitutes a contractual obligation of the Federal Government for the payment of its pro rata share of the cost of the projects approved. This can be postponed. Economy Suggestion: It is suggested that the Congress, by appropriate enactment rescind the 1943 highway authorization. This would result in a reduction of expend- itures for public roads in the fiscal year 1944 (July 1, 1943, to June 30, 1944). Inasmuch as money spent by the Government is matched by the States, a reduction in the Federal road expenditures will most likely bring a desired reduction in highway expenditures by the States. State and local authorities should be requested to defer undertaking new projects, even though allotments have already been made for them. Other major projects already under way which can be appropriately discon- tinued or curtailed should be suspended. Any new roads or enlargement of existing road facilities required by national defense activities could be specifically authorized as defense projects. - 6 - 197 AGENCIES ENGAGED IN VOCATIONAL ACTIVITIES Amounts appropriated for 1942 Esti- mated Adminis- Expen- trative Other ditures Expenses Activities Total 1942 (In Millions) Civilian Conservation Corps --- $19.2 $227.8 $247.0 $200.0 National Youth Administration: Regular 5.8 86.0 91.8 90.0 National Defense 3.0 57.0 60.0 60.0 Office of Education: Regular .9 28.4 29.3 30.1 National Defense ------ 1,2 106.9 108.1 118.8 TOTAL $30.1 $506.1 $536.2 $498.9 Economy Suggestion: Each of the above agencies is under the Federal Security Agency, and its primary function is the vocational training of youth, with present emphasis on employment in defense occupations. It would seem that the regular activities of the Civilian Conservation Corps and National Youth Administration must conflict with the more important defense program, and should be eliminated or drastically reduced. It is suggested that all vocational training activities be consolidated in a new Bureau of Defense Training. Any overlapping functions or duplication of work could be eliminated and one compre- hensive training program, integrated with the defense program, could be formulated and administered more economically than appears possible under the present organizations. Regraded Unclassified - 7 - 198 Particularly, it is suggested that grants by the Office of Education to States and educational institutions be reviewed. In making this recommendation I should like to point out that I have always been a strong advocate of measures designed to protect and further the interests and welfare of young people. However, at this time the number of young people needing assistance is being greatly reduced by the exceptional employment opportunities offered by the expansion of the Defense Program, together with the demands of our armed forces. Such young people as have not entered employment through normal channels or are not in the Army should receive vocational training designed to fit them for employment in defense. - 8 - 199 FARM PROGRAM Reflected in Budget Expenditures included in the Budget under the farm program which was initiated in 1933, after the catastrophic fall in prices in 1932, were designed mainly to meet conditions involving low prices for farm products, surplus production and loss of export markets. Present conditions are radically different from those which the farm program was designed to meet. Major expenditures under the farm program are included under the following captions: Expenditures (In Millions) Estimated Actual Actual 1942 1941 1940 Surplus Marketing Administration, and Agricultural Adjustment Administration (Act of August 24, 1935) $240.0 $240.9 $142.6 Soil Conservation and Domestic Allotment Act 475.0 465.1 605.1 Administration of Sugar Act of 1937 48.0 50.4 48.8 Price Adjustment Act of 1938 and Parity Payments 205.0 198.3 215.0 TOTAL $968.0 $954.7 $1,011.5 Regraded Unclassified - 9 - 200 Economy Suggestion: I believe that the Administration has done a wonderful job for the farmer in nearly tripling his income in ten years. It is estimated that in 1941 the farmer's share of the total national income will be 20 percent greater than in 1932, notwithstanding a reduction of almost 10 percent in the proportion of the farm population to the total population of the country. Estimated farm income and population, in relation to national totals, 1932-1942 (in millions) Farm popu- lation as a percentage Gross cash farm income Net income from agriculture of total From farm Government Total Percent of population marketings payments Amount national income Year 1932 $ 4,682 $ 0 $ 4,682 $3,232 8.1 24-9 1941 10,550 650 11,200 8,600 9.7 22.8 1942 12,350 650 13,000 Although governmental aid was necessary in order to bring the farmer's net income from three and one-quarter billion dollars in 1932 up to eight and one-half billion dollars or more in 1941, certainly after having reached this goal there does not appear to be any reason to continue spend- ing at the same rate. This is especially important when the money we are using for this purpose is 50 badly needed for armaments and lend-lease aid. The farmer is getting his share of the total expenditures made by the Government, as the increase in his net income indicates. In addition, there are substantial benefits that will accrue to the farmer from the lend-lease program. About five hundred million dollars have been allocated under the lend-lease program for the purchase of agricultural Regraded Unclassified - 10 - 201 commodities. In view of all these circumstances I feel at this time that we could well afford to make drastic cuts in our agricultural expenditures. Exception should, of course, be made for those expenditures which are for the purpose of helping the lowest income group,which suffers from wholly inadequate nutrition. - 11 - 202 EATOS PROGRAM Not Reflected in Budget There are other phases of the farm program involving loans for rural rehnbilitation, farm tenancy and rural electrification. In 1941 and 1942 expenditures for these purposes have been shifted from the Budget and Lrinsferred to the R.F.C., which has been authorized to advance funds to the Secretary of Agriculture to enable him to make loans. Activities of this character are as follows: General R.F.O. Budget Funds Expenditures: Farm Security Administration: Fiscal year 1940 - $158.5 I Fiscal year 1941 - 62.2 $111.3 Farm Tenant Act: Fiscal year 1940 - 41.8 - Fiscal year 1941 - 27.3 29.4 Rural Electrification Administration: Fiscal year 1940 I 38.0 I Fiscal year 1941 - 24.2 36.0 Estimates for 1942: Farm Security Administration 60.0 134.01/ Farm Tenant Act 7.0 71.01/ Rural Electrification Administration - - 8.0 139.01/ 1/ Unused balances of authorizations. Commodity Credit Corporation Inter-related with the farm program are the activities of the Com- modity Credit Corporation. Expenditures have been made by this Corporation with funds received from the following sources: Regraded Unclassified - 12 - 203 From the Treasury Included in the Budget Capital and surplus: Fiscal year 1934 $ 3,000,000 If If 1936 97,000,000 If " 1938 94,000,000 Il If 1940 (net) 76,000,000 If II 1942 - 1,600,000 $271,600,000 Not included in the Budget Purchase of notes (net to Nov. 10)- - 120,000,000 From Public Borrowing (net to Nov. 10)- - 701,000,000 TOTAL $1,092,600,0002 In addition, receipts from repayments of loans and sale of commodities are available for expenditure. Recent estimates furnished to the Treasury by the Commodity Credit Corporation show for the current fiscal year, the following: Estimated disbursements $1,100,000,0001 Estimated receipts 913,000,000= Excess of disbursements, to be covered by borrowing funds from the Treasury $ 187,000,000 Include transactions under the lend-lease program. Economy Suggestion: It is suggested that we reexamine the need for continuing that part of the farm program which is not reflected in the annual budget and which is financed from funds obtained through corporations or borrowed from the Treasury. The Congress is apt to overlook the substantial expenditures which are not reflected in the annual budget. Eventually any losses which may be incurred through these programs will become Regraded Unclassified 204 - 13 - budget charges. Each of these items should be reexamined in the same manner that has been suggested for the farm program expenditures which are reflected in the budget proper. I should like it understood that in making the suggestion that this class of farm expenditures should be reexamined, I do not refer to the bulk of activities undertaken by the Farm Security Administration, inasmuch as the need for much of their expenditures is, in my opinion, still urgent. Just as I suggested earlier that there should be no reduction of expenditures for the help of the under-nourished, so I believe that there should be no reduction in our help of the share-croppers and farm tenants who are in urgent and continuing need of economic rehabilitation. -o0o- Regraded Unclassified