Volume 521, April 27 – April 28, 1942

DIARY Book 521 April 27 and 28, 1942 - A - Book Page Airplanes Shipments to British Forces - Kamarck report - 4/27/42 521 158 American Federation of Labor See Financing, Government: War Savings Bonds Argentina See Latin America - B - Board of Economic Warfare Meetings to be held every other Thursday in Wallace's office at the Capitol - 4/28/42 325 Boettiger, John See Financing, Government: War Savings Bonds Business Conditions Haas memorandum on situation, week ending April 25, 1942 - 4/27/42 120 - C - Canada See Silver Carter, Amos H. - Brigadier General See Financing, Government: War Savings Bonds China Loan: Kung invites Treasury suggestions - 4/27/42 171 Economic Conditions: Adler reports deterioration - 4/28/42 378 Comptroller General See Financing, Government: War Savings Bonds Congress of Industrial Organizations See Financing, Government: War Savings Bonds Copper See Silver - D - - Deferment, Military Discussion at 9:30 meeting - 4/27/42 38 - È - Economic Warfare, Board of See Board of Economic Warfare Egypt Budget: Report on speech of Finance Minister in Chember of Deputies presenting largest budget - 4/28/42 381 - 1 - (Continued) Book Page Exchange Market Resumes - 4/27-28/42 521 195,398 Exports To Russia, Free China, Burma, and other blocked countries, during 10-day period ending April 10, 1942 - 4/27/42 132 Freight Situation - Haas memorandum - 4/28/42 362 - F - Financing, Government (For discussion of tap issue, see Book 519) Financing conference of Open Market Committee - 4/28/42. 224 a) Agenda 8 b) "Member Bank Reserve Position and the Coming Financing" - Haas memorandum - 4/27/42 9 War Savings Bonds: Appropriation: HMJr suggests that a few of the State Administrators (particularly Iseby, from Michigan) testify before Budget - 4/27/42 4,33 Newspaper Advertising: Payment for discussed by HMJr, Knox, and William Allen White - 4/27/42 43 Payment recommended by Boettiger (John) 93 (See also Book 522, page 114) Women's Round Table, with Mrs. HMJr presiding, discussed - 4/27/42 73,75 "New York State Reporting": New York Times advertisement paid for by International Ladies' Garment Workers' Union - 4/27/42 76 a) HMJr's appreciation expressed to Patterson and Dubinsky 77,79.80 b) Mr. and Mrs. HMJr decide to send copies to 47 State chairmen - 4/28/42: See Book 522, page 99 American Federation of Labor letters to stimulate further purchases 81,84 a) Copies to FDR, Wallace, etc 299 b) Green thanked: Book 522, page 103 McKellar (Senator, Tennessee) congratulates HMJr on success of program to date - 4/27/42 87 Hummert's (Frank) letter to HMJr upon conclusion of program "For America We Sing" - 4/27/42 88 Payroll Savings Plan: Comptroller General thanked for amending regulations - 4/27/42 91 Brigadier General Carter (War Department) thanked for assistance - 4/27/42 92 a) Patterson thanked for Carter's help 313 1) Carter's letter of thanks to HMJr: Book 524, page 49 American Federation of Labor-Congress of Industrial Organizations participation - Houghteling report - 4/28/42 297 Agents - report on - 4/28/42 318 Daily sales for April 1942 - 4/28/42 321 Regraded Unclassified - 1- (Continued) Book Page Foreign Funds Control Swiss Government: Payment of expenses incurred in handling German and Italian interests in United States - Foley memorandum - 4/27/42 521 110 - Freight, Export See Exports - G - Gold See India - H - Hummert, Frank See Financing, Government: War Savings Bonds - I - India Silver and gold situation following Baruch's talk with FDR discussed at 9:30 meeting - 4/27/42 27 Inflation Excess Profits: 350 companies doing 85% of war. business: Income tax returns to be investigated - 1/27/42 24 a) Jack and Heints: Reported $150,000; total tax now appears to be $1.4 million 1) Preliminary reports as presented by Bureau of Interhal Revenue - 5/8/42: See Book 526, page 24 b) Procedure for investigation set up by Helvering and Sullivan - 4/28/42 324 International Ladies' Garment Workers' Union See Financing, Government: War Savings Bonds - J - Jack and Heints See Inflation: Excess Profits - K - Krock, Arthur Japanese article indicating that Hull kept Japanese from attacking as long as possible discussed by 9:30 group - 4/27/42 28 Regraded Unclassified - L- Book Page Ladies' Garment Workers' Union, International See Financing, Government: War Savings Bonds Latin America Dollar currency - traffic in: Cable from American Embassy, Buenos Aires - 4/27/42, 521 164 Mexico: See Silver Lend-Lease Shipping: Report on ports of Boston, Philadelphia, etc. - 4/27/42 138 U.S.S.R.: Bottom cargo for Russians sent from mille to ports - 4/27/42 148 a) Immediate study of tonnage in transit to be made by War Department - 4/27/42 153 (See also Book 522, page 145 - 4/29/42) United Kingdom: Vesting order sales - 4/28/42 365 British dollar position: Draft of message to FDR from HMJr, Acheson, McCloy, and McCabe - 4/28/42.. 370 - M - Martin, John See South Africa, Union of McKellar, Kenneth (Senator, Tennessee) See Financing, Government: War Savings Bonds Mexico See Silver Military Reports British operations - 4/27-28/42 196,399 Coordinator of Information reports: British Political Warfare Executive Weekly French Directive - 4/28/42, 400 British Political Warfare Executive Weekly German Directive - 4/28/42 403 Kamarck summary - 4/28/42 406 - 0 - Open Market Committee See Financing, Government - R - Revenue Revision See Inflation: Excess Profits . Roosevelt, Franklin D.: Message to Congress Exemption from income tax of salaries of officials of Philippines and other insular possessions resident in United States - discussion at 9:30 meeting - 4/27/42.. 20 - R - (Continued) Book Page Roosevelt, Franklin D. Message to Congress: Discussion by 9:30 group of that part affecting Treasury - 4/27/42 521 18,22,204 a) $25,000 income after payment of taxes to be recommended 1) Rosenman-HMJr conversation 268,272 Paul memorandum on taxation for message to Congress or later speech - 4/27/42 59 Draft of Message - 4/27/42 104 Draft 5 of Message - 4/28/42 327 Message - - 4/28/42 342 a) British press reaction: Book 522, page 273 - S - Shipping See Lend-Lease Silver See also India Free silver stocks to be used in lieu of copper: Nelson's letter to Jones urging that there be no loss resulting to Treasury - 4/28/42 283 a) Discussion at 9:30 meeting - 4/27/42 19 b) HMJr's letter to FDR concerning - 5/1/42: See Book 523, page 96 Mexico: Purchase of newly mined silver - letter to Federal Reserve Bank of New York concerning - 4/28/42.. 286 Canada: Purchase of newly mined silver - letter to Federal Reserve Bank of New York concerning - 4/28/42 287 South Africa, Union of Martin, John: Sent to United States in connection with purchasing by Smute - 4/27/42 154 Switzerland See Foreign Funds Control - T - Taxation See Revenue Revision - U - U.S.S.R. See Lend-Lease: Shipping United Kingdom See Lend-Lease - W - War Savings Bonds See Financing, Government White, William Allen See Financing, Government: War Savings Bonds 1 April 27, 1942 9:25 a.m. FINANCING Present: Mr. Haas Mr. Buffington Mr. Murphy Mr. Bell H.M.JR: Dan, I read Buffington's report and I have - I realize it is only a small piece - I have grave doubts that the money is there in the tap issues, and what I would like to suggest, if you think we will have it when we have this meeting tomorrow, I would like you to arrange that Buffington goes over to see the Fed today and tell them the story and tell them for me that I have so much grave doubts that it is up to them to prove that the money is there, that I can't find it. MR. BELL: I think they are going to have a meeting this afternoon of the Executive Committee. They will all be in town today. He might go over to that meeting for the first half hour or SO. H.M.JR: What do you think? MR. BELL: I think it might be well to do that. H.M.JR: I would like to put the burden of proof on them because I can't find it. There are two other things I wanted to let you know Regraded Unclassified 2 - 2 - that bother me. One is, we are putting out more demand issues. That is what you call them, isn't it? MR. BELL: You mean of this type? H.M.JR: Demands on us, yes. MR. BELL: Oh yes, they are demand obligations, yes, sir, in effect. H.M.JR: And then the other thing is, after reading Haas' enthusiastic, optimistic report, possibly we can get through one. more financing. MR. HAAS: We worked yesterday on a - we have taken that back. I don't think we can. We have a sequel. I am sorry, but developments have happened since. H.M.JR: We have got to depend upon the banks more than ever. MR. BELL: This fourteen million that they have added to the budget-- MR. HAAS: Yes, that changes the whole picture. H.M.JR: The way I feel is this. Can you hear me? I have got a bad throat. The net result to me of George's memo, I don't know whether it was to you, is that the banks are where we have got to look. Now, they are our best cus- tomers. You can say, "Of course the banks will have to take seventy-five percent of the issues, but the juicy ones you can't have, but why do that? MR. BELL: You are thinking now that they can't take the tap issues? H.M.JR: Yes. MR. BELL: That is what they are going to say, and they are going to say, "You are le aving the market to us, and we have got to take all the risks of a fluctuating market, whereas you give all these other investors the Regraded Unclassified 3 - 3 - cream and the ability to put them on their books at par and keep them there and always be able to get them out." That is the argument that the banks will put up to you. H.M.JR: Now, you have been after me for some time. You have been talking to me about a banker's advisory committee, see. The one I would like to do, if you think we will have it, is to invite in people, not necessarily friends of mine, but people whom I consider able, and if you would make a list, these are the people I would sug- gest, and I thought we would have them here at nine- fifteen Wednesday morning. I want Tom K. Smith. I want the man from Boston. MR. BELL: Oh, Spencer? H.M.JR: Charlie Spencer. I want the man from the First National of Chicago. MR. BELL: Brown? H.M.JR: Yes. And B. M. Edward and Randolph Burgess. That is Boston, New York, Chicago, and St. Louis. MR. BELL: And the South, Edward. Why don't you add somebody from the Coast. H.M.JR: You can't get them. MR. BELL: They could fly. If you are going to have a second meeting, you might think of that. H.M.JR: Well, you can ask them. There is an awfully smart fellow in Los Angeles. What is his name? MR. BELL: I don't know. Giannini? H.M.JR: No. MR., MURPHY: Sartori? H.M.JR: Is that the one? Regraded Unclassified - 4 - MR. BELL: Is he the First Security? MR. MURPHY: Yes. MR. BELL: He is that other bank. H.M.JR: And then there is a fellow down there also in a trust company. Is it Mills? MR. MURPHY: No. MR. BELL: I don't know the West Coast bankers very well. We can find one. We may not have him here for Wednesday. H.M.JR: There is a trust company fellow in Los Angeles who is very able. MR. BELL: That is the second largest bank out there. Cy Upham ought to know him. H.M.JR: I don't know him, but he is from Los Angeles. Everybody says he is very able. You might ask him. I think his name is Mills, and I think he is running our War Bond thing for Los Angeles. There is supposed to be in Los Angeles - there is a man in Los Angeles and every- body says some trust company. In San Francisco I wouldn't know who to ask. Would you? MR. BELL: No, I wouldn't. H.M.JR: I will tell you what you might do. Look over your list who is the biggest buyers of our Government bonds by banks on the West Coast. MR. BELL: That would be the Bank of America, there is no doubt about that. H.M.JR: Well, you might find out. MR. BELL: Well, if you can get a good man from the Bank of America, it might not be a bad thing, if they have got a good bond man, and I think maybe they have. They have Unclassified 5 - 5 - got a fellow there that isn't an Italian. H.M.JR: This fellow - one amazed me at Sioux Falls, South Dakota. There is a bank in either North or South Dakota that is a big buyer. I don't want too many in this crowd. I can't work with such a big committee, but these ones you might get telegrams off to them, you see. Most of the trains are in by nine-fifteen, aren't they? MR. BELL: I think SO. Burgess would be able to sug- gest somebody on the West Coast. H.M.JR: Good. MR. BELL: He is on this Banking Committee. H.M.JR: Don't you think Burgess from New York? MR. BELL: Yes. H.M.JR: I will tell you who we might invite in, too, unless you think we would get exactly the same advice, is George Harrison. Burgess and George Harrison. They are in different fields. MR. BELL: No, I think Burgess has become more banker- minded since he left the Federal than Harrison. I don't think Harrison has changed so much. H.M.JR: I am trying to think of people I feel com- fortable with and I know. I hesitate to ask any people I don't know. I would add George Harrison. Whatever George's advice is going to be-- MR. BELL: One thing about George, he is loyal. H.M.JR: I would put George on that list. MR. BELL: And Burgess? H.M.JR: Yes. MR. BELL: How about somebody like Walter Stewart? H.M.JR: Well, I have already sent for him. MR. BELL: Is he going to be here Wednesday? H.M.JR: Did you get my telegram, George? MR. HAAS: Just got it. I recall it said, "Please speak to me Monday about sending for Walter Stewart on next financing. 6 - 6 - He will be down Wednesday." H.M.JR: Yes, I want Walter. Now, there is a con- servative group, but they are all friends of mine and in the telegram, as I told Walter Stewart, I will tell them to be prepared to stay over Thursday if necessary. MR. BELL: All right. H.M.JR: In the telegram, I will tell them to be pre- pared to stay-over Thursday. And if you don't mind, I would get it off before the staff meeting at a quarter of ten. MR. BELL: All right. It won't take very long. H.M.JR: But that makes a good group. MR. BELL: Very good. H.M.JR: Those are very intelligent fellows. MR. BELL: I don't know that they will all know the Government bond market, but-- H.M.JR: Well, I would say that we want them down here to consider our next financing. I would put it in, "to discuss the next financing." MR. BELL: They can familiarize themselves some. H.M.JR: "With the regular financing," so they will know it isn't War Bonds. What? There is a group who is certainly solid. They are people I have worked with. I don't know Ned Brown terribly well, but he is a frank fel- low. MR. BELL: Yes. H.M.JR: I never can remember whether your (Buffing- ton's) associates were the First or the Continental. MR. BUFFINGTON: Continental. Regraded Unclassified 8 - 7 - H.M.JR: But there is a group that will call a spade a spade. MR. BELL: Yes, that is a good group. H.M.JR: And then ask them for the thing that you have been suggesting. MR. BELL: Very good. H.M.JR: Now, get Buffington over to see the Fed this morning. Now, one other thing, did you hear from Mills? MR. BELL: Hear from him? H.M.JR: Yes. Did he call you? MR. BELL: No, he only left here Saturday, you know. You see, what we did, we called up Iseby at Detroit, and he said he felt that it would be better for Mills to come Wednesday rather than Monday. H.M.JR: Well, is that-- MR. BELL: It is gone. It went out Friday night. It will be there today. H.M.JR: Is it going to our state administrators? MR. BELL: It will do that, and it will go to the Federal Reserve Banks. But it won't be in Detroit until this morning, and Iseby thought it would be better for all of the Government people to have discussed it before Mills gets there. H.M.JR: O.K. Regraded Unclassified 4/27/42 8 FINANCING CONFERENCE TO BE HELD TUESDAY, APRIL 28, 1942 1. Estimate of cash position, including the estimated balance as of May 15. 2. Advise banks of approximate amount of withdrawals from War Loan Accounts before payment date of new securities. 3. Any changes in rules governing subscriptions. 4. Excess reserves available in banking system and what steps are being taken to increase them, particularly New York and Chicago. 5. Call of HOLC 2-1/4% bonds on May 1 for payment on July 1. 6. Refunding of HOLC bonds $875 M 1% RFC notes due July 1 276 2% September 15 Treasury notes 342 $1,493 M 7. Market operations - question of whether the Federal Reserve Bank of New York should be furnished with some market range within which to operate. 8. F and G Savings Bonds - whether we should amend the regulations BO as to allow - (a) all banks to buy up to the limit, or (b) all banks which are issuing agents to buy up to the limit, or (c) commercial banks with savings departments to buy up to the limit provided the bonds so purchased are to be registered in the name of the savings departments, or (d) commercial banks with savings departments to buy up to the limit upon some percentage basis. For example, where the deposits of the bank are predominantly savings, or where the savings accounts exceed the demand accounts by, say, as much as fifty per cent. 9 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO FROM Mr. Haad Secretary M Morgenthau Subject: Member Bank Reserve Position and the Coming Financing In our memorandum of April 22 on the forthooming finano- ing, it was said: "The reserve position of the banks must probably be accepted as a datum for this f1- nancing. It 18 highly desirable, however, that action be taken with respect to it shortly after this financing and well in advance of the next cash financing." The developments of the past several days, however, seem to throw the balance in favor of taking such action before, rather than after, the forthooming financing. (1) The Bureau of the Budget release issued on Friday estimates necessary borrowing during the fiscal year 1943 at $53.6 billions. This is $13.8 billions in excess of the estimate made in January. (2) The Friday Federal Reserve statement showed excess reserves of $2,752 millions, of which $641 millions was in New York City. This 1s a decline for the week of $134 millions in total excess reserves and of $81 millions in excess reserves of New York City. This is the lowest level of total excess reserves since June 15, 1938, and of excess reserves in New York City since April 6, 1938. (3) The statement of weekly reporting member banks in New York City, also available on Friday, showed borrowings of $5 millions. This is the first time that this item has appeared on the weekly report of New York City member banks since November 30, 1938. Regraded Unclassified 10 Secretary Morgenthau - 2 (4) It has come to my attention that the 0.32 per- cent bill rate this week was made possible only by private advance assurances to the dealers by the Federal Reserve Bank of New York that if they entered bids ranging from 0.30 percent to 0.35 percent, the bills would be taken off their hands. Otherwise, I am informed, the bill rate would have been 0.35 to 0.40 percent, a rise of about 10 points from the previous week. As it was, the rate was the highest since October 20, 1937. The coming financing will be $2 billions. This is the largest cash financing undertaken since 1919. It is impor- tant that it go over well. The member bank reserve position 1s badly in need of strengthening. While under normal conditions it would be neater to do this after the financing than before, it seems to me that present conditions are 80 far from normal that action before the financing is called for in this oase. It is, of course, the prerogative of the Board of Governors to determine how the reserve position should be strengthened. It should be noted, however, that buying Government securities in the ordinary manner will not do it quickly enough. The decline of $134 millions in excess re- serves last week occurred in spite of an increase of $42 mil- lions (mostly in bills) in the Federal Reserve portfolio. A reclassification of New York and Chicago would be quick enough and would increase excess reserves in New York City by nearly $1 billion and excess reserves in Chicago by about $200 millions. A general reduction in reserve require- ments would also be quick enough. The posting by the Federal Reserve Banks of a buying rate of 0.25 percent for Treasury bills would likewise be quick enough. This method would also have the advantage that it would constitute a quasi-fixation of interest rates and so would tie in with the President's message on price freezing. Regraded Unclassified 11 Secretary Morgenthau - 3 With a posted buying rate for bills in effect, increases in the volume of bills would tend to ease money rates, rather than to tighten them as they do at present. It is interesting to note that, according to Mr. Piser, a posted bill rate has been discussed by the Board of Governors from time to time since 1938. Mr. Piser said that he believed that the majority of the sentiment on the Board was favorable to it, but that it was strongly opposed by the New York Bank. It should be noted, of course, that the prevailing idea at the Board of Governors with respect to a buying rate is probably 0.375 per- cent, rather than 0.25 percent. In our opinion, however, any rate higher than 0.30 percent would probably make further sales of 6-month 1/2 percent certificates impossible. Regraded Unclassified 12 April 27, 1942 9:26 a.m. HMJr: Hello. Operator: Mr. McCloy. HMJr: Hello. Operator: Go ahead. John J. McCloy: I've got that check. HMJr: That-a-boy. Me: Now, when do you want me to give it to you? HMJr: When would you like to? Me: Any time you - convenient to you - except that I've got a nine-thirty war council, that will probably last for an hour. HMJr: This morning. Mo: This morning. HMJr: How's three o'clock? Me: Three o'clock this afternoon. HMJr: Yeah. Mc: Okay. Will you HMJr: I'll have Phillips here. Me: And at your office, I'll be there at three. HMJr: Yeah. Do you want photographers. Mc: No, we do not want photographers. (Laughs) HMJr: (Laughs) Mc: I'll bring that old letter over, though, and read and stow it. Regraded Unclassified 13 - 2 - HMJr: But you don't want photographers. Mc: I don't want ohotographers, no. HMJr: Do you want me to do a speech for the movies. Mo: Yes, you can - you're very good at that..... HMJr: Yeah. Mc: I hear. HMJr: Yeah. Mo: I may ask McCabe to come over. HMJr: McCabe? Mc: He's the Lend-Lease man. I don't know..... HMJr: Yeah, that would be nice. Mc: It might be nice for him, because he was working on this. HMJr: Will you do that? Mo: I'll get ahold of him, yes. HMJr: And I'll produce the English. Mc: Okay, fine. HMJr: That's fine. Thank you. Mo: Thank you. Good-bye, sir. n e 14 See discussion at Group Meeting 4/27 - Mr. Graves said that Budget would not out down the appn and would not be necessary to have any one appear before them. 15 April 27, 1942. Harold Graves Secretary Morgenthau Ed Heller made a very good suggestion. He suggested that some of the State Administrators come down and testify at the Bureau of the Budget. If Heller was here next week, and he and Dick Patterson and Frank Isbey, particularly Isbey, coming from Michigan where the Director of the Budget comes from, and all three of them would testify before the Budget I think it would help. Heller told me he tossed them a thousand dollars a month out of his own pocket to keep his office going, I think that that's terrible. Please talk to me about it today about what you are going to do before the Budget. I want to rush this appropriation through and get it on to Congress 80 we can get on a billion-dollar-a-month basis immediately. 4/27/42 16 See discussion at Group - Sullivan will get the information. 4/28/42 Sullivan reported at Group Army and Navy will furnish this information Foll of 5/5/8/40- ngmes. Smillian reported he has some of the testimony 1/5/28/42 17 April 27, 1942. John Sullivan Secretary Morgenthau Please get a list from Bob Patterson of contractors who built the principal Army cantonments during 1941. I'd like to check the income taxes of these construction companies. I would like this done just as quickly as possible. The same for the companies that are building the bases for the Navy. Get that from Forrestal. 18 April 27, 1942 9:45 a.m. GROUP MEETING Present: Mr. Thompson Mr. Foley Mr. Gaston Mr. Buffington Mr. Sullivan Mr. Blough Mr. White Mr. Graves Mr. Kuhn Mr. Haas Miss Chauncey Mr. Bell Mr. Paul H.M.JR: I thought we might get reacquainted again. We have been through three weeks of particular hell, two weeks trying to convince all the - I don't know what you call them. I won't name them. Two weeks fighting the boys who wanted compulsory savings, and the last week to be sure that the President's message to Congress didn't make a liar out of me. It doesn't unless they changed it after we saw it yesterday at noon. It is particularly good on the War Bonds. Did they tell you, Harold? MR. GRAVES: Yes, they did. H.M.JR: It is particularly good on War Bonds, so I have got nothing to kick about. The message is extrem- ely mediocre, and I think it is going to be a great dis- appointment to everybody, but at least we are in the clear, and I am a little weak. I have got a cold. Mr. Gaston? MR. GASTON: I haven't anything except that political matter. I will send those papers in to you on that Lewis matter. Regraded Unclassified 19 - 2 - H.M.JR: That is right. Edward? MR. FOLEY: I have the memorandum here discussing the APC's functions and ours. H.M.JR: What is that, the APC? MR. FOLEY: Alien Property Custodian. H.M.JR: You hold on to it. MR. FOLEY: All right. I thought maybe you might want to study it. H.M.JR: I have got a lot of things to study, but you have got to see me, and we will study it together. MR. FOLEY: O.K. H.M.JR: And remind Stephens that I want to see the man I have been putting off seeing for so long. He will know. MR. FOLEY: Yes. H.M.JR: Tell him to keep after me until I do some- thing about it. MR. FOLEY: All right. On the silver, the RFC boys called up Saturday morning and said they were ready to go ahead. H.M.JR: I showed Jones' letter - Jones a letter from Nelson which he said he hadn't seen. I wonder if they got the President to approve it. MR. FOLEY: Well, I saw Nelson Saturday afternoon, and he said that Jesse had made the President approve the thing, and the President said he had done it for the third time and hoped the last time. MR. WHITE: Did you see this letter you (H.M.JR.) got from Nelson on this, Saturday? 20 - 3 - H.M.JR: On silver? I took it to Cabinet and showed it to Jones. MR. WHITE: Oh, is that why you got action? H.M.JR: I took it to Cabinet. MR. WHITE: Well, Saturday Ed told me they called up. H.M.JR: Jones seemed quite surprised at the letter. He said he hadn't seen it, although Nelson said he sent him a copy. I took it to Cabinet. I think it was Nelson's letter that did the job. Nelson wrote a very stiff letter. MR. FOLEY: He said he told the President that it had to be done, and that we were entirely correct. H.M.JR: Nelson told the President? MR. FOLEY: That is what he said. He said our position was reasonable, and Jones had to absorb the loss, if any. H.M.JR: Anything else? MR. FOLEY: Bishop Shiel wanted to come down tomorrow. H.M.JR: I gave him an appointment. MR. FOLEY: Oh, I didn't know. H.M.JR: Yes, I gave him an appointment. MR. SULLIVAN: The Secretary of the Interior is suggesting an amendment to the Internal Revenue Code to exempt from income tax the salariès of Philippine officials resident in the United States. We feel that that should be granted, but the same immunity should be extended to the employees of other of our insular possessions. Is that agreeable to you? We have been talking about abolishing 21 - 4 - the Processing Tax Board of Review. There are now pend- ing over there forty-three cases. It is likely there will be fifty more to litigate. I have talked with - Randolph and I talked with the chairman of the Board of Tax Appeals, and they feel that they can do that work just as well. H.M.JR: Do you mind waiting until I am out of town for three days before you do it? MR. SULLIVAN: I thought it would be nice to do it just before we both left town. H.M.JR: Well, I will let you do the timing. MR. SULLIVAN: I will try to bear that other condi- tion in mind. H.M.JR: No, I am just being silly. Go ahead and do it. You take the calls from Senator Wagner. MR. SULLIVAN: How is he feeling now? H.M.JR: He will call you. He is feeling well enough to get on the telephone. MR. SULLIVAN: The-- H.M.JR: Harold Graves can always put on a few more War Bonds. MR. SULLIVAN: The Vinson Committee is introducing a bill which limits profits and also affects the labor situation. There is one feature in it that might inter- est you. That is the freezing of executive salaries as of July 1, 1940. It is a very brief statement about just what the bill does, if you care to see it. H.M.JR: Yes. As a matter of fact, about everything that I stood for in the message, the President's message - Harry White, can you hear me? MR. WHITE: No, I am sorry, I didn't. Regraded Unclassified 22 - 5 - H.M.JR: Sit up here. I can't talk so loud today. I say, we have got about everything that we stood for, including no freezing of wages. MR. WHITE: Very good. H.M.JR: I don't think there is a thing in there the Treasury has been opposed to. MR. SULLIVAN: What happened to the freezing of incomes? H.M.JR: You tell him, Herbert. MR. GASTON: Well, there is a statement that he thinks that in this time of war no man ought to enjoy an income of more than twenty-five thousand dollars a year after he has paid his taxes. It isn't a statement asking Congress to enact legislation to establish a ceiling, but it is the thought that no man ought to enjoy any more than that. MR. SULLIVAN: Western Cartridge - you remember, they are the concern we investigated and didn't give us any information on the '41 salaries and we went back the second time. They have now made a request that if they are going to be able to keep up their production schedules to have the Internal Revenue Bureau come in and get any figures that the Army and Navy or any investigating com- mittees want. They are terribly bothered with everybody coming in all the time for figures. H.M.JR: Well, I would send the whole Internal Revenue out there if necessary. 23 - 6 - (Secretary on White House telephone.) Hello, George How is the Lieutenant? How are you? I have got a bad throat. Does the Admiral stoop so low as to fix the throat of the Secretary of the Treasury, or is that below him? Well, get me & priority And will you give me a ring? Tell him I am very low Get me a priority O.K. Thank you. H.M.JR: Listen, John, let me just tell you some- thing. This is in the room. (Mr. Paul entered the conference.) H.M.JR: Good morning, Randolph Regraded Unclassified 24 - 7 - MR. PAUL: Good morning. H.M.JR: I have got John Sullivan going after the three hundred fifty companies who do eighty-five percent of the war business, going into every one of their con- tracts. I have to force him, but reluctantly he is doing it. He seems to be enjoying it, but reluctantly. On one company where they filed a return of approximately a hundred and fifty thousand dollars, this famous Jack and Heintz, we have now slapped on them a total tax of 8. million four. MR. SULLIVAN: It is an additional nine hundred and three thousand. H.M.JR: And that is just the opening gun. MR. SULLIVAN: That is on our preliminary survey without hearing their story at all. H.M.JR: I know. Just go. on. MR. SULLIVAN: You recall, you had a letter from Alec Budge about Hawaii, and I answered him and told him we were awaiting the figures and we would let him know later on. H.M.JR: And none of these boys get an extension. MR. SULLIVAN: None of the three hundred fifty? H.M.JR: No, sir. MR. SULLIVAN: The figures from Hawaii indicate that up to the first of April-- H.M.JR: Now, 1 wish you would see what they did. They gave every employee - what was it, a watch or some- thing? MR. SULLIVAN: They gave them a lot of things. The biggest item in that nine hundred and three thousand is a fund of five hundred and twenty-one thousand and they say they have set that aside as & pension fund, but they Regraded Unclassified 25 - 8 - are not in any way legally obligated to pay that. That is going to be the difficult one to unravel. We don't want to be put in the position of taking that pension fund away from them. MR. PAUL: That may be helpful to us, John. That may help us get the pension trust through. H.M.JR: The other thing we found, we have found one company that I am confident couldn't take a dollar's worth of business if you gave it to them, they are loaded up, and they are paying three men two hundred fifty thousand dollars to be their Washington representatives. MR. WHITE: Two hundred fifty thousand? H.M.JR: To the three of them. MR. SULLIVAN: Two hundred sixty-five. MR. WHITE: Did you hit them by accident? H.M.JR: I have got a nose. I smell it. No, it was no accident. I mean, all of these committees are doing something so I told John, "Why not let's us do something." Is that right? MR. SULLIVAN: That is right. H.M.JR: I have got a nose. As John says, my nose smelled something bad. It is no accident. MR. SULLIVAN: On Hawaii where they were complaining that they needed to have this moratorium on taxes-- H.M.JR: What do you mean, accident? This was brilliant perspicacity. MR. SULLIVAN: Does anybody want to hear about Hawaii? (Laughter) H.M.JR: Accident! All right. Regraded Unclassified 26 - 9 - MR. SULLIVAN: Well, the increase in collections for the entire country was a hundred and fifteen and a half percent. The increase in Hawaii was two hundred and seven percent. H.M.JR: The moral of that is, "Let's get bombed." MR. SULLIVAN: I guess we don't need to worry about any special treatment for Hawaii. H.M.JR: No. George? MR. BUFFINGTON: I have nothing. H.M.JR: Now we will come back to Professor White. MR. WHITE: The OPA telephoned and would like to know what our reaction would be to their contemplated move to freeze the price of silver, the ceiling. The Legal Division is considering it to see what reaction they have and we will pass it around after they get through with it. It is a matter of no importance. I think they just want to do something. MR. HAAS: Shouldn't there be a floor, Harry, rather than a ceiling? MR. WHITE: No, they want a ceiling. H.M.JR: What else, Harry? MR. WHITE: I have got a letter from Henderson saying that they are ready to go ahead - everything is ready just as soon as the President gives them the green light. H.M.JR: It isn't Henderson's fault if there is any news on the President's message, because believe me, he spilled about everything there is in it. MR. WHITE: He indicates that. He said, "You have doubtless been reading the newspapers and hearing on the radio of the extensive changes contemplated. Barney Regraded Unclassified 27 - 10 - Baruch has talked to the President about silver and gold in India, and desires to have us lend silver and gold in order to keep down inflation. We answered him once. It came back with a memorandum to our answer. We are answering him again, but we told him in the earlier answer that we were investigating the details. I spoke to the British. They promised to give us some information. That was almost a month ago. They haven't. We have cabled to the Indian Government, and we haven't any reply yet. I think the general situation there is probably important enough for us to send somebody to India for about a month. H.M.JR: Is that so? (Laughter) MR. GRAVES: Can I go? MR. SULLIVAN: Right after we abolish the Board of Review. MR. WHITE: We have got to be able to answer these fellows, and we have got to know more about the situation. H.M.JR: Are you worrying about the coolie labor in India producing cotton and keeping the price of cotton down? MR. WHITE: No, he says they would sell us more material if we would give them gold and silver, and we would be able to stop inflation and BO on. He is wrong, but we ought to have more information about India. H.M.JR: Use the Consular Service, Harry. I can't have everybody gone. Use the Consular Service. Give the Consular Service a questionnaire. MR. WHITE: We did send them one. H.M.JR: Well, send him over to see the people. Incidentally, in the room, I think of all the filthy articles that I have ever read, almost, since I have ever been in Washington, Arthur Krock yesterday in the New York Times had the tops. If anybody hasn't read it, they ought to read it. Regraded Unclassified 28 - 11 - MR. PAUL: I couldn't hear. H.M.JR: Arthur Krock. MR. PAUL: Yesterday? H.M.JR: Yesterday in the New York Times. I mean, the gist of it is that Mr. Hull is responsible for keep- ing off the Japanese as long as possible and 80 forth, and so on. Of course, the President agreed with him. But Mr. Hull advised both the Army and Navy to be on the alert. They didn't listen to him; and, therefore, what happened, of course, was Pearl Harbor, al though the Army and Navy had been warned. It doesn't even disguise the fact - then he said, of course, Mr. Hull had some information which was so vitally important in January, '41, that he, Krock, can't get to disclose it, but I, as Secretary of the Treasury, don't know what he is talking about. I really think it is about as filthy an article as I have read; and for Hull to give him that stuff, I think it is outrageous. Knowing Stimson, I don't think he is going to take it lying down. He isn't that kind of & fellow. Did you read it? MR. KUHN: Yes. It is terrible. H.M.JR: Am I overstating it? MR. KUHN: Not at all. There was more in it to the effect that if Mr. Hull had had his way and had not been interfered with by other people, Pearl Harbor would never have happened, because we would have continued holding off the Japanese until we were ready. H.M.JR: Have you ever seen a more filthy article? Regraded Unclassified 29 - 12 - MR. KUHN: It was full of poison. H.M.JR: And no disguise that he was representing Hull. MR. KUHN: Well, I don't know how much Hull was in on that. MR. WHITE: Well, when you want to find out what horse is losing, see who Krock is backing. Just run back over history, and I think you will find that true. H.M.JR: All right. MR. WHITE: I have a peculiar bit of information that is of interest, but of no importance. H.M.JR: Can Miss Chauncey hear it? MR. WHITE: Yes, I think SO. (Laughter) There was a letter received from someone who is rather an important official in Alaska who said that on the morn- ing of December 7 there was a Japanese fleet outside of Dutch Harbor ready to take it over. It couldn't get in for a couple of days because of a very heavy fog. Then it just disappeared. I had never heard that before. H.M.JR: Anything else? Are you going to go through that whole list? MR. WHITE: I will pick out the only things that are important. The Mexican Embassy called the Under Secretary of the Treasury - we haven't had a meeting for a long time. Regraded Unclassified 30 - 13 - H.M.JR: I know, I know, but you don't have to-- MR. WHITE: I won't. Mr. Betata, who is Undersecre- tary of Finance is here and would like an appointment to pay his respects to you and Mr. Bell. He said he had a personal message for you. H.M.JR: Isn't he the fellow that you and Foley know? MR. WHITE: That is right. H.M.JR: Do you think we ought to see him? MR. BELL: I don't know him. H.M.JR: I don't know him. (Laughter) MR. WHITE: He is a good man to know. H.M.JR: Are you thinking of going to Mexico? MR. BELL: Not at all. H.M.JR: Neither am I. Why should we bother? MR. BELL: I can't get out of Washington, let alone Mexico. H.M.JR: All right, tell Fitzgerald we will see him. Is he white or sweet? MR. WHITE: Oh, he speaks excellent English. (Laughter) H.M.JR: Potato? MR. WHITE: Oh, I think he would be characterized as sweet. Phillips was in. The amount which they may take over on that ordnance has been decreasing because they have been paying it off. It may amount to only fifty million dollars. I was wondering whether you would want to call a meeting here at which there would be present, Mr. Jones Regraded Unclassified 31 - 14 - and Phillips and McCloy and the Lend-Lease people and yourself to see whether any progress can be made in tak- ing over the plant facilities. Probably no progress will be made unless you do something of that kind because they tell different stories. H.M.JR: McCloy and Bell and you and Phillips will be here at three. I just gave Phillips hell over the telephone. He made me mad. He writes me a letter and says, The Secretary of War has informed me that the seventy million dollar check - I hope you will pay it before the end of the month. I called him up and I said, "How do yousuppose you are getting that?" I said, "Mr. Stimson wouldn't even take it over to get the President to sign it. I had to take it over and get him to authorize it." I said, "Mr. Churchill refused to have anything to do with it. Lord Halifax refused. Mr. Stimson wouldn't even take it over to the President. I had to take it over and you call me up and say, 'Now, be sure and get the check out before the end of the month.' I said, "I resent that." MR. WHITE: I don't see what their hurry is. Their cash balance is higher than it has been since the war. H.M.JR: That is enough, Harry. You are seeing me at lunch. MR. WHITE: All right. There is nothing here that can't wait. MR. KUHN: The President of the Newspaper Guild, Milton Murray, has offered to put all his Newspaper Guild at our disposal for the War Bonds, and he is in town, and I wondered if you would be willing to see him tomorrow morning. H.M.JR: Very much SO. MR. KUHN: This afternoon or tomorrow morning. He comes from Detroit. H.M.JR: I can see him this afternoon at three-thirty. What is his name? Regraded Unclassified 32 - 15 - MR. KUHN: Milton Murray. H.M.JR: The President of the Newspaper Guild? MR. KUHN: That is right. H.M.JR: Another one of these CIO's from Ohio? MR. KUHN: Michigan. H.M.JR: All right. MR. KUHN: That is all. H.M.JR: What paper? MR. KUHN: Detroit Times. H.M.JR: I would like to see him. Roy? MR. KUHN: Callahan has been dealing with him. Would you like Callahan here at that time? H.M.JR: Sure. MR. BLOUGH: I pass. H.M.JR: George? MR. HAAS: I have nothing. MR. PAUL: I pass, too. H.M.JR: George, you are going to service Walter Stewart today? MR. HAAS: Yes, sir, in about an hour. There is another memorandum I thought we would wait for. H.M.JR: And send it down to the railroad station, because if you don't, the mail doesn't get out for twenty- four hours, out of Washington. Regraded Unclassified 33 - 16 - Are you all right, Randolph? You have no hearing today? MR. PAUL: No, not today. H.M.JR: A day off? MR. PAUL: No. We have the day off the hearings, but there will be plenty of things here, I think. H.M.JR: Harold? Do you want to stay behind a minute and tell me about Chicago? MR. GRAVES: Yes, if you like. H.M.JR: I would like you to very much. MR. GRAVES: Yes, sir. H.M.JR: Did you get that suggestion I made about taking those fellows over to the Bureau of the Budget? Did that get to you? MR. GRAVES: No, I didn't get it. H.M.JR: It was only on the record this morning. When are you going to have your Budget hearings? MR. GRAVES: We had the Budget hearings on Thursday. It was all right. I asked for twelve million as you said. H.M.JR: Was it all right? When is it going to go up on the Hill? MR. GRAVES: I fancy it will be two or three weeks. H.M.JR: No, I want it up immediately. MR. GRAVES: This is next year's appropriation, you know. It is an appropriation that we don't use until the first of July. MR. BELL: It will go in the next deficiency bill. Regraded Unclassified 34 - 17 - H.M.JR: How much money have you got for the rest of this year? How am I going to get steam up? MR. GRAVES: We have got enough; and we can, at any time you think we don't have enough, go up for a deficiency for this year. MR. BELL: It would be separate and distinct from this estimate. H.M.JR: All right. The suggestion I made was that you have Heller and Iseby and Patterson come down because if you listen to Heller - I mean, he says his county people just haven't got anybody to help them, they are sunk; and he says that he is digging into his own pocket a thousand dollars a month, and I don't think that that is right, and he says that he wants every county to do something, and they just have no help and he can't do it. I don't know how many - I only occasionally see these fellows, but I mean he wasn't - I had to pull it out of him because he is most enthusiastic. MR. GRAVES: Well, I had a talk with Mr. Heller, too. H.M.JR: I don't want to give you the impression he is complaining. MR. GRAVES: Oh, no. I suggested to him that he should talk freely with you about that. H.M.JR: But I think with May and June ahead of us, I would like to be able to get the money so that we can meet our - you asked for roughly eight hundred personnel and got three hundred. I would like to step it up so that - he says wherever he goes they are so short of help. MR. GRAVES: We asked in our estimate for next year for a total of twelve hundred and sixty-five for the field. H.M.JR: Yes, but you see with May and June, if we could get those people, because I am going to put terrific pressure on these people. Regraded Unclassified 35 - 18 - MR. GRAVES: Well, what I would like to do, as I told you the other day, is to spend ten days or so going to the big states-- H.M.JR: But you know now who is short. of help. I mean, I don't know whether every county chairman should have one paid clerk or not. MR. GRAVES: There is a great difference of opinion among our people about the question of paying help. Some are very much opposed to paid help for the reason that-- H.M.JR: Well, Heller tells me this. He has got to wrap some packages and get them out. The first day - my figures may not be right - he has three hundred people. The secondday he has a hundred and fifty, and the last day he is down to twenty volunteers. As I say, I can't master the details, but if we are going to step this thing up, I think we ought to have them - I don't want to fall by the wayside because we haven't got enough clerical help. MR. GRAVES: I think we have enough money to do any- thing that we want to do for the balance of this year. If we don't at the proper time, we can go up with a sup- plemental for this year, but that has no relation to the estimate which we just discussed with the Bureau of the Budget. H.M.JR: Well, we are all on this, so don't let's fail for lack of clerical help, Harold. MR. GRAVES: Right. H.M.JR: O.K.? MR. GRAVES: O.K.? H.M.JR: All right. And my suggestion was if you needed to let some of these chairmen come down who say they are shorthanded like Iseby and Heller and Patterson, and let them tell it to the Director of the Budget. Regraded Unclassified 36 - 19 - MR. GRAVES: I don't think we will have any trouble with the Bureau of the Budget. We didn't have before. H.M.JR: Well, somebody cut you down. MR. GRAVES: Yes, it was the House Committee on Appropriations, and I have since talked with Ludlow, the Chairman of our regular subcommittee, and Ludlow told me that that reduction made by the House Committee on Appro- priations was made due to a misunderstanding by the Com- mittee, and that he wants us to ask for enough to enable us to employ an adequate staff. He says that he and other members of the Committee will see that we get an adequate staff. H.M.JR: Well, Harold, all I can say, and I can only say it once, for heaven's sake have enough clerical help where you need it. Will you please? MR. GRAVES: Yes. H.M.JR: Don't let's fail for lack of help. One of your men - I saw a letter - wrote a letter - I can get the copy if you want it - somebody wanted a job and he wrote back, "The staff in Washington of War Savings Bonds is frozen by orders of the Secretary of the Treasury. We are very sorry we can't take on any more people.' Is that true? MR. GRAVES: Well, yes, I think it is true. We had decided that we would stop where we are so far as Washing- ton is concerned. I still think we ought to stop where we are - I don't mean to say we can't put on here and there an additional person but we have got three hundred people in Washington and in my judgment that is an ade- quate staff. Our need is for additional people in the field. H.M.JR: Yes. MR. GRAVES: And not here. H.M.JR: But things like when I suggest for teletypes, Regraded Unclassified 37 - 20 - can we use a telegraph, have we got enough money for that? MR. GRAVES: Oh, yes. H.M.JR: Well, it is your responsibility. MR. GRAVES: Yes. H.M.JR: All right. MR. BELL: Here are two letters you wanted to Warren and General Carter. H.M.JR: Oh, yes. That is nice, and particularly the War Savings Staff, Kuhn and you fellows, when I make sug- gestions, for God's sake let me know whether they are carried out or not, will you? I never know. I mean, both of you. Both of you are guilty. I make suggestions, and I never have the slighest idea of whether they are done or not. MR. KUHN: There is always attached to the memorandum which you send us when we send it back-- H.M.JR: No, when I call you up at eight-fifteen in the morning. MR. KUHN: Those are already done. H.M.JR: Would you write a letter to the Undersecretary of War, Dan, saying General Carter was most cooperative? MR. BELL: Sure. H.M.JR: Will you do that? MR. BELL: Sure. H.M.JR: We might have to go back again. Anything else? MR. BELL: No. MR. THOMPSON: I have two requests for deferments for Regraded Unclassified 38 - 21 - Mr. Haas' office. I can stay back. H.M.JR: Yes, you can stay back and find out. MR. GRAVES: May I ask on this matter of deferment, we have some of our most able people in the War Savings Staff who are on the verge of going to the War Department or Navy Department, fellows that are pretty nearly irreplace- able so far as we are concerned, and I have gone on the assumption 80 far that we were not permitted to ask for any deferment for those people. H.M.JR: Well, I can just give you an example. A man in charge of the White House detail on the President, they have lost five - this man guarding the President. I told Mike Reilly, "I am sorry, Mike, I can't do anything about it." So unless these people are - oh, if you want three months until you can get somebody to take their place, Harold, three months to break somebody in, O.K. MR. GRAVES: Yes. MR. WHITE: Is this matter of deferment open for discussion or is it just passing, because when you say you can't do anything for them, you mean you don't want to do anything for them or you can't? H.M.JR: I don't want to. MR. GRAVES: That is what I had understood. MR. WHITE: I should like at some time or another to raise a discussion and register my reasons for opposition to that position. In the first place, I don't think it is being followed - I know it isn't being followed by other Departments. H.M.JR: My dear Harry, there are lots of things that the Treasury do that aren't followed by the Departments. MR. WHITE: True, and I wouldn't want to base very much on that. Unless I had better reason, I wouldn't raise it, but sometime-- Regraded Unclassified 39 - 22 - H.M.JR: I can't help what other Departments are doing. I have got my own standards on these things, and if I was ever right, a year from now some of the other Departments will wish they did the same thing as the Treasury. MR. WHITE: I will come around when I have my case and make a fight for it. If they want to give up with- out fighting, that is their decision. H.M.JR: That is all right. George can stay. Every fellow gets his day in court. It goes to Thompson, and Thompson says, "This is the case, and George stays and listens, and I listen. Who else is on that with me? Who else listens. MR. THOMPSON: On deferments? H.M.JR: Yes. MR. THOMPSON: Mr. Gaston. Harold Graves was on it to start with. H.M.JR: Well, he is staying for something else so he can stay now. 40 April 27, 1942 10:45 a.m. HMJr: Hello. Operator: Sir Frederick Phillips. HMJr: Hello. Sir Frederick Phillips: Hello. HMJr: Sir Frederick Phillips. P: Yes. HMJr: Morgenthau. P: Speaking. Good morning. HMJr: I got your letter of April 24, and to be frank, it definitely rubbed me the wrong way. P: Which letter 1s that? HMJr: About getting the seventy million dollars right away. I mean, no one has worked harder on this thing than I have, and the Secretary of the War would not take it to the President. I had to take it to the President P: Oh, did you? HMJr: to get it cleared. P: Hmm. HMJr: I mean, he refused to do it, and I had to take it to Cabinet and bring it up, and get the thing cleared, which I did. P: Yeah. HMJr: And - I mean, it's - I've never worked harder. Mr. Churchill wouldn't bother with it. Lord Halifax wouldn't bother with it, but I had Regraded Unclassified 41 - 2 - to do it; and I don't think it really was necessary to write me a letter to hurry up about it. P: Well, sir, I'm sorry; but I had no intimation of anything of the kind happening, you see. HMJr: Well P: The message simply reached me from the War Department. HMJr: Yeah. Well, I mean, where Mr. Churchill wouldn't touch it, Lord Halifax wouldn't; and then Mr. Stimson himself wouldn't ask the President because he made me go over there and make the speech that this was necessary, which I did on Friday P: Yes. HMJr: and got the thing cleared by the President. P: Yes. HMJr: And then to get this letter on top of it, was just a little bit too much. P: I am 80 sorry. I didn't know what happened. HMJr: Yes. Well, I just thought I'd tell you. And then I arranged for the meeting at three o'clock for Mr. McCloy to come over here and give you the check. P: I see. But - oh, you've been very good to us, always, of course. HMJr: Well, I had to fight 80 hard, and then to sort of get a letter - "Now, don't delay," and to put pressure on me when I've worked 80 hard, it just was a little bit P: Well, I know, sir; but really, the only news I got came from the War Department HMJr: Well 42 - 3 - P: and I HMJr: Well, I didn't know that they were going to rush with it to you. P: No. I thought I ought to write this to - just to let you know that it had gone through. HMJr: Well, you could have inquired. P: I'm sorry. HMJr: If the War Department had dme it - I mean, and gone over - but the final thing Mr. Stimson said, "You'll have to take it to the President, you'll have to get the clearance," which I did. P: Well, I am 80 sorry, sir, really, but it was a HMJr: I mean, the whole thing from start to finish has been simply - for one year now - and this 1s just part of it. P: Yes. HMJr: And I hope to have other things for you. P: Yes. HMJr: And if it wasn't for me, I don't think you'd get one single dime. P: Yes. Well, I am 80 very sorry, really; but if I'd had the slightest suspicion, and, of course, I would have called on you, and. HMJr: All right. Well, I'll see you at three. P: Right. HMJr: What is the time - three, yes. P: Three o'clock, is it? HMJr: Yes. P: Thank you. HMJr: Thank you. 43 April 27, 1942 11:52 a.m. Operator: There you are, sir. HMJr: Hello. Secretary Knox: Hello, Henry. HMJr: Yes. K: Frank talking. HMJr: Yes. K: Will White's in my office, and we're both of us old, hard-boiled newspaper men, you know. HMJr: Who's in your office? K: Will White - William Allen White. HMJr: Oh, yes. K: And we were just discussing a subject which was under discussion at the Newspaper Publishers Association. HMJr: Yes. K: That 1s, the Government spending a lot of money to advertise for Savings Stamps and Bonds in newspapers. HMJr: Yes. K: And we're both violently against it, and I told Bill I was going to call you up and see how you felt about it. We don't think the newspapers ought to be given any advertising - they ought to do it for nothing. HMJr: Well, God bless you, that's the way ninety- nine out of a hundred newspapers feel. K: Yeah. Well, there was some kind of an action taken by the Publishers Association, which is Regraded Unclassified 44 - 2 - dominated by the business office and not by the editors, in favor of doing it. HMJr: Well, ninety K: Well, I just wanted you to know that most of the fellows in the business who really have their hearts in it, don't want any such money at all and would be under a sense of morti- fication if it were accepted by the papers. HMJr: Well, Frank - oh, five or six months ago, I wrote a letter to every publisher asking him whether he'd cooperate and run this little sort of "trade mark" we have, of the Minute Man K: Yeah, uh huh. HMJr: and I think - I don't know whether I told you the story I got an answer practically from every publisher. Well, every publisher that answered said "yes", except a man by the name of McCormick. K: Yeah. HMJr: And he wrote me, "If you want to sell Baby Bonds, I don't see why it's any different than baby carriages K: (Laughs) HMJr: and for that you should pay for." K: Yeah. Yeah. Well, that sounds just like him. HMJr: That was his attitude. And he was the only one out of eight or nine hundred answers that I got. K: Yeah. Well, that's very gratifying. HMJr: And I want to tell K: Well, you haven't any plan to do that, have you, Henry? You haven't any authority Regraded Unclassified 45 - 3 - HMJr: No, quite the contrary, we haven't got the money K: Uh huh. HMJr: .....and in the second place, the only person in the Government who came out - there 1s a bulletin under the Department of Commerce - recommending paid advertising. And then MacLeish got after it and killed it. K: I see. HMJr: Now, what we are doing - and the newspapers are getting a lot of revenue - if you would send for today's New York Times - hello. K: Yeah. HMJr: I think it's worth your while - there's a full page ad in there addressed to the Secretary of the Treasury K: Yeah. HMJr: congratulating me on my fight for the volunteer plan. It's 8. paid advertisement. K: I see. HMJr: But paid for by a local union. K: I see, uh huh. HMJr: Now, we've got a lot of that. K: Yeah, well, that's different. That's entirely different. HMJr: Yeah. But I think you'd be interested in seeing it. K: I'll look that up. In today's Trib - today's Times. HMJr: Today's Times, a full page ad, paid for by the local union. 46 - 4 - K: That's good. HMJr: Now, there's a lot of that stuff that the newspapers get. K: Uh huh. HMJr: But the other kind of stuff, well, if we started to do it, it might cost us a hundred million dollars. K: Uh huh. HMJr: And anyway, the newspaper publishers have been just grand. K: Yeah, well HMJr: Look what they're doing with their newsboys on the delivery set-up. K: Yeah, yeah. HMJr: What? K: Uh huh. All right, Henry. I just wanted to be reassured, and I'll reassure Bill. HMJr: Well, we have nothing, because - as I say, the spirit is 80 fine, I'd hate to kill it. K: Yeah. Right. Uh huh. HMJr: Thank you. K: And everybody that saw a paid ad in the daily news would say, "Well, subsidizing you, aren't they?" HMJr: That's right. K: That's the net of it. HMJr: Well, give White my best regards. K: I will, Henry. HMJr: Thank you. K: Good-bye. April 27, 1942 47 12:00 noon HMJr: Hello. Operator: Mr. Houghteling. HMJr: Hello. James L. Houghteling: Hello. HMJr: Morgenthau speaking. H: Yes, Lawrence Houghteling. HMJr: I got your message that Green can come but Murray not. H: Yeah. Murray is at a convention in Pitte- burgh. HMJr: When will he be back? H: Oh, not for a week. HMJr: Well, then, don't you think we'd better go ahead? H: With Green? HMJr: Yes. H: Well, I think that's all right, yeah. HMJr: Because I'd like to - I can't wait a week. I say, I cannot wait a week H: No, no. HMJr: for Mr. Murray. H: Yes. HMJr: There's nobody that could talk for Murray, like Carey or somebody. H: Yes, I could get Jim Carey over. HMJr: Why don't you get Carey? 48 - 2 - H: All right, I'll get - that's for - what will it be, one o'clock tomorrow? HMJr: One o'clock. That would be you, and Carey, and Green H: Yeah. HMJr: and I'll ask Graves and what's-his-name - Gamble. H: Yes. HMJr: See? H: Yeah. HMJr: Graves and Gamble. H: All right. That's fine. I'll get..... HMJr: If we don't hear from you again, we'll expect Carey, and Green, and you. H: Yes. All right, fine. HMJr: Let Carey know what it's about. H: Well, it's about these organizers, isn't it? HMJr: Yeah. Going into the plants and H: Yeah, I talked to him today about it. We have a meeting this afternoon with Fenton of the A. F. of L. We'll have quite a plan for the A. F. of L., and I talked to Carey about it today, and he's very much interested in it and said it could be done. HMJr: Okay. H: Fine. HMJr: The Railroad Brotherhood - should they be represented? H: No, I don't believe 80, because they're 49 - 3 - already doing their job in joint com- mittees with the railroad management. HMJr: Okay. Then we'll leave it that way. If I don't hear from you, it'll be on for tomorrow. H: Yeah, all right. Fine. 50 April 27, 1942. Meeting in Secretary Morgenthau's Office April 27, 1942 3:00 P. M. Present: Secretary Morgenthau Mr. McCloy, War Department General Meyers Mr. D. W. Bell H. D. White Sir Frederick Phillips The conference was called by the Secretary. Mr. McCloy handed Sir Frederick a check for $70 million in payment for the planes which the United States Army had taken from the British and for which the British had paid dollars. The statement was made by Mr. McCloy that that check was on account and that there might be some adjustments made after final evalua- tion was complete. Mr. McCloy stated that Sir Frederick could depend upon re- ceiving an equivalent amount from the take-over of the ordnance contracts. It might be more than that, Mr. McCloy said, but they did not know as yet. General Meyers added that they could also take over the air- plane facilities which he thought might amount to as much as $50 million. He was not certain from what funds payments could be made, but he thought if he had a few days to work on it he could straighten the matter out. Mr. Phillips thought the total of facilities would amount to about $93 million but General Meyers said his recollection was that the proportion of the facilities that they could take over would be in the neighborhood of $50 million. Mr. Phillips stated that he had been having discussions with Mr. Husbands of Mr. Jones' office with reference to taking over the facilities. General Meyers replied that he thought maybe the Army could do business directly with the British on the airplane facilities. The Secretary thanked Mr. McCloy and Mr. McCabe for their assistance in helping getting the matter of payments of airplanes completed. Regraded Unclassified 51 - 2 - Mr. Phillips stayed behind to chat with the Secretary and the Secretary explained to him that it had been necessary for Secretary Morgenthau to get the President's approval of the transaction and described to him some of the steps leading up to the consummation of the deal. HDW Document given to m. maclog by Sir Frederick Paillips in exchang for #70 million creek. April 25, 1942 The Honorable Henry L. Stimson Secretary of War Dear Mr. Secretary, In accordance with the provisions of the Act of October 10, 1940 (54 Stat. 1090), the President of the United States requisitioned and took over, for use and operation by the United States, or in its interest, the material listed on Schedule "A", attached ereto and hereby made a part hereof. The United Singdom has represented to the United States that the United Kingdom was the owner of said material at the time of the requisitioning thereof and has requested payment " compensation therefor in accordance with the provisions of Section 2 of the said Act of October 10, 1940. It 1s contemolated the amount of such compensation will not be finally determined 111 the immediate future and 1t has been agreed that pending such final determination a payment should be made on account by United States to the United Kingdome This will confirm our agreement as follows: 1. Compensation for Requisitioning--United States shall pay for the requisitioning of said material and the United Kingdom agrees to accept in full and complete payment therefor such 51.00 as the President of the United States shall determine to he & fair and just compensation, (hereinafter sometimes referred to ys the "Com ensation Amount"). 2. Payment on Account of Compensation--The United "ingdom hereby acknowledges receipt from the United "tates of the SUT of Seventy Million Dollars ($70,000,000). on account of such compensation amount. 3. Finsl Adjustment--Uon the determination of the compen- sation amount in the manner referred to above, an appro riste adjustment payment shall be made. 4. Indemnity--The United Kingdom agrees to and hereby does indomnify the United States, its instrumentalities, authorities, officers, representatives and employees ony 1d all loss, tosts and expenses incurred in connection with or arisin out of desands, actions, claims, suits or juleme its of "ird parties claiming title to, a lien on or en interest in pay or 111 of the r1/1 Regraded Unclassified Nonorable Henry L. Stimson April 25, 1942 Page Two described on Schedule "A". Very truly yours, His Majesty's Government in the United Kingdom By Director General of the British Purchasing Commission Regraded Unclassified SCHEDULE "A" Quantity Estimated Cost Liberator (B-24 4 engine lidated Bomber) complete 50 & 14,221,336 2 engine bomber) Complete 213 31,035,246 Aircraft Corporation 132 19,209,432 las Aircraft, Inc. 6 918,864 des Aircraft, Inc. 75 10,906,950 hthing (P-38 Lockheed reeptor 2 engine pursuit) lete 20 2,222,400 Airacobra (P-39 1 engine suit) 196 12,703,040 ircraft Corp.-complete 156 10,273,440 reraft Corp.-complete spt for propellers supplied or lend-lease 40 2,429,600 airplanes 479 60,182,022 engines 798 11,165,511 ONL estimated cost..... 71,347,533 Regraded Unclassified 55 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942. TO Mrs. Klotz and Miss Chauncey FROM Secretary Morgenthau I think on January 26 at my Press Conference, I made a statement on how I stood on taxing Federal securities, either by direction or indirection. I would like to send the actual quotation to the President today. I consider this very important, and I want to do it today. Please bring it to my attention this morning. Sent 9/27/12 Regraded Unclassified 56 April 27, 1942 My dear Mr. President: I thought, for future reference, you would like to have a transcript of what I said at a press conference on January 26: Ques. Could you say, Mr. Secretary, whether you are definitely not going to ask for the taxation of outstanding Federal Gov- ernment securities? Ans. This is my position, gentlemen, and I would like to get It over through the press, if possible. I feel that there is a contract which stands between the Federal Gov- ernment and the holder of these Federal tax- exempt securities, and I don't intend to directly or indirectly break that contract or circumvent it. Is that flat enough? # # # Ques. Does that apply, Mr. Secretary, to the old Glass scheme of using tax-exempt in- come as & - some sort of a base 80 as to put taxable income of those people in a higher bracket? Ans. I think we have gone around the thing pretty much. I said I am opposed - let me go over it once more. I recognize a contract exists between the Federal Government and the men or women who have bought our securities, and we Regraded Unclassified 57 & "don't propose by direction or indirection to tax them on this income, as long as these issues are outstanding. Doesn't that cover the waterfront?" Yours sincerely, (Signed) 1. Morgenthan. in The President, The White House. 55 agr 3:25 File n.m.c. cc- Regraded Unclassified 58 April 27, 1942 Dear Sam: For your information, I am sending you herewith copy of a letter I wrote to the President today. Yours sincerely, (Signed) Heary Judge Samuel I. Rosenman, The White House. Filen.m.c. SS. cigs. 3:25 Regraded Unclassified R Pane's Taxes 59 April 27, 1942 MEMORANDUM FOR THE SECRETARY In the light of the fact that the President may make a radio speech supplementing his Message to Congress of today, ve wish to indicate the respects in which supplementation of that Message in the field of taxation would be helpful. 1. From the language of the Message it is not clear what changes are desired in the excess profits tax. The following sentences appear to support the previous Administration proposals: "Profits must be taxed to the utmost limit consistent with continued production. This means all business profits--not only in making munitions, but in making or sell- ing anything else. Under the proposed new tax law we seek to take by taxation all undue or excess profits. It 1s incumbent upon the Congress to define undue or excess profits; However, the quotation continues as follows: and anything in excess of that specific figure should go to the Government." Aside from the fact that the language of the last-quoted sentence, If read precisely, would call for a. kind of super-profit above excess profits-- undoubtedly an oversight in grammatical construction-- the sentence seens to indicate that for every business there should be a specific amount of profit above which a tax at 100 percent would be applied. Unless a flox- ible or sliding scale definition of excess profits were adopted, the 100 percent rate would probably be in conflict with the principle laid down that the taxation of profits should be "consistent with continued produe- tion." Regraded Unclassified 60 - 2 - The next paragraph on eliminating excess profits tax loopholes ..... to be relatively meaningless since loopholes would normally occur in the "definition of the legal profit figure" and not in the tax itself. In the light of these ambiguities of language, it would be helpful, as we suggested to you orally yesterday, to have the desired policy with respect to excess profits more precisely defined. 2. It is regrettable that the Message does not stress taxation as a means of withdrawing purchasing power. As the Message stands, it appears that an objective is to hold the incomes of farmers and laborers at their present levels relative to the cost of living, while the necessary reduction in expendi- ture 18 to be primarily in the form of voluntary self-denial for the purchase of war bonds. The situation in which the country finds itself is 80 very serious with respect to excess purchasing power that the greatest stress should be placed on taxation as one of the most important means of reducing pur- chasing power and thus eliminating the pressure which leads to the rising spiral in the cost of living. The fact that heavy taxation is necessary if inflation is to be prevented should be made much stronger than it is in the Message. 3. It is to be feared that the absence of reference to the amount of taxation to be raised will be interpreted by Congress as a lack of interest in the size of the tax program, which may add to the difficulties of getting a program as large as that asked for in March. It would be helpful if stress were placed on the importance from the anti-inflationary point of view of a tax program at least as large as that previously recommended. 4. Failure to say anything about preferred kinds of taxes may strengthen the movement for the sales tax. While the sales tax may eventually be necessary, it should not come until after measures proposed in the Administration tax program have become law. If passed now the sales tax would almost certainly be substituted for more desirable revenue sources, Regraded Unclassified 61 - 3 - 5. In view of the expression of policy in the Message in favor of restricting the maxisus income to $25,000, it is perhaps of interest only for the record to present the view that rigidly restricting the maximum income is less desirable than the British method of very high rates in the upper brackets which, in effect, places a elightly flexible upper limit on incomes. The British method was followed, although not at such high rates, in the Administration tax proposals. 6. Attached is a copy of our suggestions of last Saturday for the President's Meseage. It is hoped that the ideas expressed in this draft may be used by the President in his radio address. R Pane figned Tarlean Blough Attachment RB:dsd 4/27/42 Regraded Unclassified I 62 Note: These pages contain the same language 0s the memo presented on 4/25, but material has been re-arranged with first page which was presented on 4/25 discarded. 63 April 25, 1942 To Take the Place of No. 1, Page 4 1. To keep the cost of living from spiraling upward, W must tax heavily and - must keep personal and corporate profits at a reasonable rate, the word "reasomable" being defined at a lew level. To be substituted at appropriate point Legislation is now needed in the field of taxation. Fortunately an Administration program dealing with the whole tax field is now under consideration in the Congress. It is Ry belief that this tax program provides an essential wasen to keep the cost of living from spiraling, and I earnestly hope that the Cengress will enset the entire program into law at the earliest moment possible. such action is urgently needed in the comprehensive all-out effert to keep the cost of living dom. The Administration's tax program not only provides for vast new amounts of revenue needed for the war, it also will have a direct effect in checking the rising cost of living, by reducing the demand for goods. It calls for heavy increases in individual tax rates. It makes possible the collection of a part of the tax revenue at the source. It cable for an increase of $2 billion in social security contributions, and finally, it calls for taxes on a list of non- essential commodities. Such & program will have a more direct effect in checking the cest of living than, for example, a sales tax which would lift the east of every commedity and would fall most heavily on the very poor. Marcever, the Administration's tax program will have indirect effects of great importance in keeping the cost of living down. The mess of individual income tax payers, including millions of workers, will be willing and glad to accept heavy new taxes, and will net demand wage increases, if they know that excess profits are being resaptured by the Governments Accordingly, the Administration's program calls for a tax of almost 90 cents out of every dollar of excess corporate profits over half a million dellars. The 10 cents remining are, in turn, taxed heavily when the individual stockholder receives them as in- come. It may be that these proposed 020000 profits taxes should be increased still further, but in any case the enactment of the present program would, in my opinion, give our workers the assurance they must have if they are to refrain from wage demands at this time. What is true of excess profits is also true of high individual salaries. Under the present tax proposals as individual would have Regraded Unclassified 64 - 2 - to carn $289,000 in order to keep $50,000 of it after paying his taxes. In addition, the Government has powers, and intends to make full use of its powers, to serutinize payments for salaries, per- sonal expense accounts, and other forms of business expenditures which may be employed to avoid excess prefits tame. A company will not be allowed to deduct as business expense extravagant payments which are in effect distributions of earnings rather than legitimate payments for necessary services rendered, but these who receive such payments will be required to include them in current taxable income. At the same time, while the number of individuals affected is very small, it may be wise to leason still further the dis- crepancy between very lew and very high personal incumes. I sometimes wonder whether, in time of great national danger such as this, any American citisen ought to have a net income, after he has paid his taxes, of more than $25,000 a year. Increasing income tax rates on a scale as heavy as that pro- posed makes it a noral duty to remove all leopheles in the tax law and all special privilege. It is indefensible that those who enjoy large incomes from State and leeal securities should be 1mmune from taxation while w are at ware As a minimum program we should immediately provide for taxing these securities on the same basis as United States long-term bends issued prier to the enactment of the Public Debt Ast of 19403 that is, interest on them should at least be subject to surtames. There is no question about the censtitutionality of such a proposal. Regraded Unclassified 65 Legislative and administrative notion to control the cost of living met be supplemented w the voluntary action of the American people. I refer new particularly to Item No. 5 in the program I - here suggesting, which calls for a very substantial increase in the buying of ver Savings Bends and Stamps. If these purchases are to have a material effect in restruining price increases they must be made out of current income. In almost every individual case they should be big enough to nean right self-demial, a substantial reduction for mest of - in the sdale of expenditure that is confortable and easy for we We can't fight this war, - can't exert our mains effort, on a spend-as-usuel basic. We cannot have all we want if our soldiere and sailers are to have all they mood. The buying of War Bonds the has a deuble value. If we not for ourselves high quotas, quotes that - giving up may things we want, and if we stick to them, we - help substantially to provent disastrous increases in the cost of living. at the - time, the money we use to buy the bonds will buy the materials we need to fight the var. Regraded Unclassified 66 Legislation is now needed in the field of taxa- tion. Fortunately an Administration program dealing with the whole tax field is now under consideration in the Congress . It is my belief that this tax program provides an essential weapon to keep the cost of living from spiraling, and I earnestly hope that the Congress will enact the entire program into law at the earliest moment possible. Such action is urgently needed in the comprehensive all-out effort to keep the cost of living down. The Administration's tax program not only provides for vast new amounts of revenue needed for the war; it also will have a direct effect in checking the rising cost of living, by reducing the demand for goods. It calls for heavy increases in individual tax rates. It makes possible the collection of a part of the tax revenue at Regraded Unclassified 67 - 2 - the source. It calls for an increase of # billion in social security contributions, and finally, It calls for taxes on a list of non-essential commodities. Such a program will have a more direct effect in checking the cost of living than, for example, a sales tax which would lift the cost of every commedity and would fall most heavily on the very poor. Mereover, the Administration's tax program will have indirect effects of great importance in keeping the cost of living down. The mass of individual income tax payers, including millions of workers, will be will- ing and glad to accept heavy new taxes, and will not de- mand wage increases, if they know that excess profits are being recaptured by the Government. Accordingly, the Administration's program calls for a tax of almost 90 cents out of every dollar of excess Regraded Unclassified 68 - 8 - corporate profits over half a million dollars. The 10 cents remaining are, in turn, taxed heavily when the individual stockholder receives them as income. It may be that these proposed excess profits taxes should be increased still further, but in any case the enactment of the present program would, in my opinion, give our workers the assurance they must have if they are to re- frain from wage demands at this time. What is true of excess profits is also true of high individual salaries. Under the present tax proposals an individual would have to earn $289,000 in order to keep $50,000 of it after paying his taxes. In addition, the Government has powers, and intends to make full use of its powers, to serutinise payments for salaries, personal expense accounts, and other forms of business expenditures Regraded Unclassified 69 - 4 - which my be employed to avoid excess prefits taxes. A company will not be allowed to deduct as business ex- pense extravagant payments which are in effect distribu- tions of earnings rather than legitimate payments for necessary services rendered, but those who receive such payments will be required to include them in current taxable income. At the same time, while the number of individuals affected is very small, it may be wise to lessen still further the discrepancy between very lew and very high personal incomes. I sometimes wonder whether, in time of great mational danger such as this, any American citizen sught to have a not income, after be has paid his taxes, of more than $25,000 a year. Increasing income tax rates on a scale as heavy as that proposed makes it a moral duty to remove all Regraded Unclassified 70 - 5 - loopheles in the tax law and all special privilege. It is indenfensible that those who enjoy large incomes from State and local securities should be immune from taxation while we are at war. As a minimum program we should immediately provide for taxing these securities on the same basis as United States long-term bonds issued prior to the enactment of the Public Debt Act of 1940; that is, interest on them should at least be subject to surtaxes. There is no question about the con- stitutionality of such a proposal. Regraded Unclassified 71 To Take the Place of No. 1, Page 4 L. To keep the cost of living from spiraling f' upward, we must tax heavily and we must keep per- sonal and corporate profits at a reasonable rate, the word "reasonable" being defined at a low level. Regraded Unclassified TREASURY DEPARTMENT 72 INTER OFFICE COMMUNICATION DATE Apr. 27 TO MRS. KLOTZ FROM TED R. GAMBLE The Secretary has asked me to get a report for him on the re- action to the Newsreel Broadoast, wherein he asked all Ameri- cans to declare a personal war on the Nasis and Japs. I should have this report from all sections of the country by Wednesday. The Secretary has also requested me to ascertain the length of time it takes to deliver our pamphlets in the field after the orders have been received. I an investigating this matter. Follow up 4/30- completed pp: Regraded Unclassified 4/27/42 73 Mrs. Morgenthau says this is in the process and they are considering various women for this round-table discussion. 74 April 27, 1942. Ted Gamble and Ferdinand Kuhn Secretary Morgenthau will the two of you talk over the following suggestion and please act on it this morning. I would like Mrs. Morgenthau to organize me a round table of women to go on the air for War Bonds very promptly. One or the other of you, or may be better yet, turn it over to Vincent Callahan. I'd like action. I think she could do this, and hit it up and do it very well. I want action this morning. Regraded Unclassified Mrs 75 TREASURY department INTER OFFICE COMMUNICATION DATE April 27, 1942. TO THE SECRETARY FROM TED R. GAMBLE With reference to your suggestion for the organization of a round table of women to go on the air for war bonds, please be advised that this is being worked out. The date has been set for the week of May 18 so as not to conflict with several other broadcasts. The plan is to have women representing the woman in business, the farm woman, the defense worker's wife, the school teacher, an actress, and representatives of women's organizations discussing the woman's part in our new drive to get at least ten per cent of the nation's income directed to the War Savings Program. Mrs. Morgenthau was present at the meeting and the above tentative program meets with her approval. I will give you a progress report on this. ( d m V L 1 ( T ( - 3 1 o well serve as general mrs margethor head of The 76 THE NEW YORK TIMES, IONDAY, APRIL 27, 1942 C A Message to the Secretary of the Treasury. DEAR MR. SECRETARY: The State of New York is reporting- Many, many thousands of Minute Men and Women in this great State are signed up for the duration in the patriotic This is 8 splendid start but we certainly are not boasting and common-sense job of supplying part of the money that is about present accomplishments. We and you cannot be satisfied needed to win this war. With the cooperation of their employers with this showing. While there are hundreds and hundreds of and labor unions, they are regularly investing part of their records of ninety to one hundred per cent participation among current income in War Bonds, through the Treasury Depart- the employees of large and small business firms in New York ment's Payroll Savings Plan. State, there are other companies and workers who haven't yet swing into the action which is necessary and of which they You, Mr. Secretary, said in . recent speech "The are capable. amount to be borrowed is so vast that some people think we should raise a part of it by compulsory asvings. As you know You have provided and published a "Yardstick" for the I have always preferred the voluntary method. I still prefer average income earner, which, for example, shows that with it because it is the democratic method and because I am certain weekly earnings of $40.00 to $50.00 there should be invested for it will work." Victory, the sum of at least $4.00 a week. An average of one- tenth of income is little enough to invest in retaining our Free- We are all in agreement that Victory should be financed dom for the Future. Everyone should and probably will in the voluntary way. The least anyone can do to help retain understand that you would not give us this "Yardstick" if it our freedom and liberty is to BUY WAR BONDS. were not the minimum needs of our country at this critical time. This action supplies the money to provide our fighting The State of New York will endeavor to exceed the forces with the tools to win. It also provides every American family with resources for a better life when that victory over quota you have set for us, Mr. Secretary, for May, for June, aggression is won. for July and for every additional month it may be necessary. To those citizens who now lend part of their earnings to the United States Govenment through the purchase of War Signed THE NEW YORK WAR SAVINGS STAFF Savings Bonds, the Government will in ten years return their OF THE TREASURY DEPARTMENT money with interest at 2.9 percent. This is as fair and square RICHARD C. PATTERSON, JR. an offer - was ever made to the citizens of a free country who State Chairman wish to protect their own rights and the rights of their children. MRS. LYTLE HULL, At the present time more than 9,000 business firms and Vice-Chairman other organizations in New York State employing about 4,600,000 men and women are carrying out your plans to help NEVIL FORD, make America strong through systematic savings. State Administrator This Space is Contributed - - Endorsement of the War Savings Proprim of the Transury Department by the INTERNATIONAL LADIES' GARMENT WORKERS' UNION-David Dubinsky, President Regraded Unclass TREASURY INTER OFFICE DEPARTMENT COMMUNICATION M 77 DATE April 27, 1942 TO Secretary's files FROM Mr. Kuhn Mrs. Morgenthau, Mr. Gaston, Mr. Gamble and I felt that it would be unwise and in bad taste for us to put out any such ad or to inspire the State Administrators to do so. If they want to copy what New York has done -- and many of them undoubtedly will - we'll be delighted. F.K. TREASURY DEPARTMENT 78 INTER OFFICE COMMUNICATION DATE April 27, 1942. TO Ferdie Kuhn FROM Secretary Morgenthau Please answer for me today that swell ad in the New York Times addressed to me. I want to thank Mr. Dubinsky and the members of his Union, and also a done letter to Dick Patterson. I'd like to have these letters not later than 2 o'clock, so that I can sign them. If you will give them to Miss Chauncey, I will do them with the rest of my mail. Incidentally, I'liked the ad tremendously, and I'd like to suggest for your consideration, that copy of the ad you send to the 47 State Chairmen, if you are going to do it, I'd do it today. 79 April 27, 1942 Dear Dick: That was a perfectly wonderful advertisement in the How York Times this morning. I an especially pleased to see that the International Ladies' Garment Workers' Union sponsored it, and I feel that the combination of your message and their spensorship will do us a great deal of good all over the country. I an writing just to tell you and your colleagues how much I approciate this message of encouragement to me and to the War Savings program generally. Sincerely, (Signed) Heary Col. Richard c. Patterson, Jr., R.K.O. Corporation, 1270 Sixth Avenue, New York City. FK/cgk cc-n.me. Thompson Regraded Unclassified 80 April 27, 1942 Dear Mr. Dubinsky: This is just to tell you how much I appreciate the wonderful advertisement in the New York Times this morning. The fact that your Union bought the space for this message is just snother example of the perfectly magnificent cooperation which you and all your members have been giving to the war effort, and particularly to the War Savings program. The spirit of this full-page advertise- ment is so fine that I think it will do a great deal of good, not only in New York but in every part of the country. Sincerely, (Signed) If Morgenthan, and Mr. David Dubinsky, President, International Ladies' Garment Workers' Union, 3 West 16th Street, New York, No Y. FK/cgk cc-nm.c. Thompson Regraded Unclassified si April 27, 1942. To the officers of National and International Unions. Dear Sir and Brother: I enclose a copy of an official communication which I have sent to the officers of City Central Bodies, State Federations of Labor and directly affiliated local trade and federal labor unions. This communication was prepared and sent to the organizations named in response to an urgent request made by Secretary of the Treasury Morgenthau for additional funds to be used in the prosecution of the war effort. I can assure you that the need is very great and most urgent. I advised Secretary Morgenthau that in ay opinion an appeal for voluntary contributions such as I have made in the letter which I am bringing to your attention will bring better results than would the enactment of compulsory saving and investment legislation. Labor has always favored voluntary action and has been uncompromisingly opposed to compulsion. Will you please supplement the communication I have sent to these directly affiliated organizations by addressing a similar communication to the membership of the local unions chartered by your international organization? I feel sure that because this voluntary plan providing for the systematic payroll deduction of ten per cent of earnings for investment in War Savings Stamps and War Bonds, 1s reasonable and can be accepted by the workers, that we can all join in recommending it. I will be grateful to you if you will join with ne in this patriotic endeavor for the purpose of meeting the urgent financial needs of our government in the prosecution of the war effort. Very truly yours, President, Y.Enclosure. American Federation of Labor. Regraded Unclassified 82 April 27, 1942. To Officers of State Federations of Labor, City Central Labor Unions and Directly affiliated Local Unions. Dear Sirs and Brothers: Secretary Morgenthau of the United States Treasury Department is calling upon labor to purchase War Bonds and War Savings Stamps to the extent of its financial ability. I an supplementing this call of the Secretary of the Treasury by appealing to the membership of the American Federation of Labor to agree to a voluntary payroll deduction amounting to ten per cent of earnings for investment in War Bonds and War Savings Stamps. Such action would mean a steady and systematic investment in War Savings Stamps and Bonds, and that in turn would mean a systematic and steady income to the government for the purpose of meeting the heavy war expenses which the government is forced to inour. A systematic investment in War Savings Stamps and War Bonds, as herein suggested, will help to prevent inflation. Furthermore, it would provide an investment which the workers will need and can use when the post-war period arrives. A steady investment of ten per cent of the earnings of working men and women in War Savings Stamps and War Bonds would be reasonable and in no way burdensome. It would represent a savings investment and could not be considered as a gift. It would be accepted as labor's voluntary contribution to the war effort. If all the workers of the nation will voluntarily agree to a payroll deduction of ten per cent of their earnings to be invested in War Savings Stamps and War Bonds, the pro- ceeds will provide an enormous sum of money which the govern- ment can use in the prosecution of its war effort. I an influenced to make this appeal and this recom- mendation because there are those connected with our government and within the Congress of the United States who favor and are recommending the enactment of legislation providing for compul- sory savings and compulsory payroll deductions in order to Regraded Unclassified 83 provide sufficient funds for the government to meet its pressing war needs. Labor favors voluntary action and is against compulsory action. I feel sure that if labor will respond and will voluntarily agree to a payroll deduction of ten per cent of earnings, to be invested in War Savings Stamps and War Bonds, that compulsory savings legislation will be defeated. I appeal to the workers to respond favorably to the recommendations I have herein made for a voluntary ten per cent payroll deduction for investment in War Bonds and War Savings Stamps. The need is urgent. The war effort calls for service and sacrifice of the highest order. Labor is respond- ing and has responded in a noble way. I an sure labor will respond to this appeal as it has responded to other appeals for support of the government in its war effort, made by the representatives of the American Federation of Labor. Very truly yours, President, American Federation of Labor. Y -2- Regraded Unclassified 84 April 24, 1942 TO ORGANIZERS OF AMERICAN FEDERATION OF LABOR Dear Bim and Brother: Be of the Tr appealed to me to render -11 assistano. Morgenthau, Jr., has of Savings Stamps and Bonds. Aa you well Raible in the sale the war is very great. In order to meet this coshe cost of and steady income from the sale of Savings Stamps and walar must flow into the Treasury of the United States. This mone, is needed in order to win the war. In order to accelerate the purchase of Savings Stamps and Bonds among the membership of organized labor, I an requesting that you assist in this work to the extent of your ability. Please call upon the membership of organized labor whenever opportunity presents itself for you to do 80 to purchase Savings Stamps and Bonds regularly in order to help our Government win the war. Urge the workers to agree to payroll deductions with their employers of at least 10% of their earnings each pay, said amount to be used to purchase Savings Stamps and Bonds. This action will serve as a guarantee against inflation and at the same time will enable the workers to save money which they will, no doubt, badly need when the post-war period arrives. The Congress of the United States is threatening the enactment of legislation which would provide for compulsory payroll deductions. We are opposing this form of compulsion. Instead we are recommending that a payroll deduction plan of 10% of the earnings of the workers be put into effect as & voluntary plan. I an confident if this plan is universally applied and is put into effect that we can head off and prevent the enactment of compulsory payroll legislation. Regraded Unclassified 83- Please specialize in this work. Do it in addition to your regular organizing work. Appeal to our workers to agree upon and put into effect the 10% payroll deduction plan for the purchase of Savings Stamps and Bonds. I count upon you to render special valuable service in this particular matter which I am bringing to your attention in this communication. I will be grateful to you if you will do 80. Fraternally yours, President, American Federation of Labor April 24, 1942 de Regraded Unclassified 86 THE SECRETARY OF THE NAVY WASHINGTON April 27, 1942 My dear Henry: Unfortunately, as I told you at Cabinet on Friday, I will not be here on May 4 and cannot participate on your broadcast. I hope you are successful in selling the idea to Admiral King. It would be very satisfactory to me to have him represent the Navy in that broadcast. Sincerely yours, The Honorable Henry Morgenthau Secretary of the Treasury Washington, D. C. Regraded Unclassified EDWITH MC KELLAR, TENN., CHAMMAN 87 CARL MAYDEN, ART. JAMES & DAVID, Ma - W. SAILEY, N.C. c. CLYDE M. RESD, KANG BULOW, s. DAK. JOHN THOMAS. IDAHO - c. O'MANONEY, WYO. WILLIAM LANGER, N. DAIL as CHAVEL N. MEX. HUGH A. BUTLER, HER. ALLEN de ELLENDER, LA. RAYMOND c. WILLIS, IND. United States Senate WILLIAM H. SMATHERS, N.J. SUGANE D. MILLIKIN, COLO. JAMES M. MEAD, N. Y. COMMITTEE ON PAT MC CARRAN, NEV. BERIDAN DOWNEY, CALIF. POST OFFICES AND POST ROADS LLEYD - April 27, 1942 Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Department, Washington, D. C. My dear Mr. Secretary: Your letter of the 25th with enclosures has been received. I was certainly interested in the copies of the letter and the leaflets which you sent me. As you may recall, some years ago I criticised you concerning the performance of some of your official duties. This time I want very earnestly to commend you for the splendid work you are doing in handling our finances. The sale of $4,860,000,000 of defense bonds during the past eleven month period has indeed been wonderful and if you continue in your present stride I see no reason why you cannot reach your goal of $12,000,000,000 for the twelve month period beginning July 1. I think your advertisements and letter are fine. Às an American and as a Senator, I am proud of what you are doing. In the year ending July 1, 1942, you will probably sell $6,000,000,000 worth of bonds and this in itself is a perfectly grand achievement because nearly six months of that period was before war was declared. I have no suggestions to make. I think your plans are excellent and I stand ready to help you in any way possible in the splendid work you are doing. Very sincerely yours, 88 TELEPHONE 247 PARK AVENUE WICKERSHAM 2-2700 NEW YORK, N.Y. April 27, 1942. The Honourable Henry L. Morgenthau, Jr. Secretary of the Treasury Washington, D.C. My dear Mr. Secretary:- It is difficult for me to express adequately how much your letter about the "For America We Sing" program meant to my wife and myself. Naturally, we were both quite unhappy to learn that it had been decided to take this show off the air; for we hoped that our association with you would continue at least for the duration. Every moment of it has been a pleasure and an inspiration. It is so seldom one finds an employer for whom one really likes to work - and you more than fulfilled that position in our hearts. In any event - you may be sure that not only will we give our cooperation in War Bond work to you; but will insist that you accept it. In other words, you couldn't lose us even though you wanted to - for we propose working along the same as always. And - the greatest favor you could do for us would be to call upon us, 8.8 quickly as possible, for something. Remember - that all the shows we have on the air are always yours to use. I shall thank all those who worked with me on "For America We Sing" in your name as you requested. Lost sincerely, E.F. Hummert laws visa 20 TREASURY DEPARTMENT 89 INTER OFFICE COMMUNICATION DATE April 27, 1942 Morgenthau TO FROM Mr. Secretary Hass MR The Bureau of Public Debt has transmitted to my office approximately 4,000 postal cards received in reply to your request for information on the number of days it took a selected group of people to obtain delivery of savings bonds purchased by mail or under the payroll savings plan. A review of the postal cards by the Bureau of Public Debt and by ourselves leads to the conclusion that they contain no useful information on the number of days required for delivery of savings bonds. There appears to be a general satisfaction with the service received, but many of the persons contacted did not understand what the Department wanted, or if they did understand, they did not have the information available. In view of the fact that a large proportion of the persons buying bonds under the payroll savings plan are not likely to know the date on which they become entitled to a savings bond, it is suggested that you consider dropping the postal card inquiry and substitute in its place an inquiry designed to provide the same type of information through a few of the issuing agents. This inquiry would be handled as follows: (1) Each Federal Reserve Bank would be asked to make a weekly report on the first 500 savings bonds mailed out every Friday morning. This report would classify the bonds by the number of days their appli- cations had been on hand. A sample report might run as follows: OK. ahvad and thy this J/m/h Regraded Unclassified 90 Secretary Morgenthau - 2 First 500 bonds mailed out on May 1 by Federal Reserve Bank of New York Applications for If 10 of these bonds received April 30. If 20 = II II If April 29. If If 250 If If Il If April 28. If If 130 If n If If April 27. " If 90 If II = If April 26. Total 500 on hand on average of 3 days. (2) Each Federal Reserve Bank would ask three agents in its District who are issuing bonds on the payroll savings plan to make up a similar report showing the number of days between the date payment was completed and the bond was issued. This report would need to cover only 50 bonds issued by the selected corporation on the selected day. A series of weekly reports similar to the foregoing will permit us to make a rough estimate of the rapidity with which savings bonds are delivered. It would be a sample study, it is true, but with the cooperation of the Federal Reserve Banks it could provide much more reliable information than we can hope to obtain from a postal card survey. Regraded Unclassified 91 APR 27 1942 Dear Mr. Warrent I have just been handed a copy of the amended directive of the Var Department covering the ascounts- Milty for pay rell deductions nale w corporations under cost-plus-s-fixed-fee contracts with the Govern- into I want you to know that I appreciate your coopera- tion in getting this directive changed and the prosptness with which 1t was dane. Your representatives did a grand job and I wish you would thank then personally for m. Sincerely yours, (Signed) H. Morgenthan, Jr. Secretary of the Treasury The Nonorable, The Comptroller General of the United States. By Messenger Surgis 4:25 cc-n.m.c. DWB:ce Thompson Regraded Unclassified 92 APR 27 1942 Dear General Carters I have just been handed a copy of the amended directive of your Department covering the accounts- bility for pay roll deductions nade by corporations under cost-plus-a-fized-fee contracts with the Govern- ment. I want you to know that I appreciate your coopera- tion in getting this directive changed and the promptness with which it was done. Your representatives did a grand job and I wish you would thank them personally for no. Sincerely yours, (Signed) H. Morgenthau, Inc Secretary of the Treasury Brig. General A H. Carter, Department of War, Washington, D. c. DWB:ce By Messenger Strings 4:25 cc- n.m.c. Thompson Regraded Unclassified 93 April 27, 1942 Dear John: Thanks very much for your letter of April 20th. I'm glad to get your views on these subjects, although I am afraid I cannot agree with you on the matter of paid advertising. We at the Treasury have not spent a penny on paid advertising and do not believe in it except as a last resort -- for example, in some corner of the country where we might be encountering particular sales resistance. It may interest you to know that other Government depart- ments feel as we do about the potential evils of paid advertising. The cost of such 8. venture would be staggering, and neither Congress nor the taxpayers would stand for it. We do, however, encourage sponsored advertising by business houses, and, as you know, the newspapers and radio have been getting a substantial amount of revenue in this way. Now that we have started our drive for a billion dollars a month, we hope that sponsored advertising will grow in volume. Best regards to you all. Sincerely, (Signed) Heary Mr. John Boettiger, Seattle Post-Intelligencer, an mail an mail Seattle, Washington. n.m.c File FK/egk capies in Thompoon P.S. Enclosed find a very interesting page ad from The New York Times. Regraded Unclassified 94 THE SECRETARY OF THE TREASURY WASHINGTON April 27, 1942 Dear John: Thanks very much for your letter of April 20th. I'm glad to get your views on these subjects, although I am afraid I cannot agree with you on the matter of paid advertising. We at the Treasury have not spent a penny on paid advertising and do not believe in it except as a last resort -- for example, in some corner of the country where we might be encountering particular sales resistance. It may interest you to know that other Government depart- ments feel as we do about the potential evils of paid advertising. The cost of such 8 venture would be staggering, and neither Congress nor the taxpayers would stand for it. We do, however, encourage sponsored advertising by business houses, and, as you know, the newspapers and radio have been getting 8. substantial amount of revenue in this way. Now that we have started our drive for a billion dollars 8. month, we hope that sponsored advertising will grow in volume. Best regards to you all. Sincerely, M Mr. John Boettiger, FORDEFENSE Seattle Post-Intelligencer, Seattle, Washington. BUY UNITED STATES SAVINGS BONDS P.S. Enclosed find very Times. interesting hage add from M.Y. Regraded Unclassified 95 SEATTLE TELLIGENCER 1863 year 1941 OFFICE OF THE PUBLISHER April 20, 1942 (PERSONAL) Dear Henry: Some of my colleagues in the newspaper business have urged me over past months to seek to influence you and other federal officials to spend federal funds for advertising, especially in connection with the sale of War Bonds. I have been unwilling to do 80 for what I think are obvious reasons. This letter is not intended in any sense to be B. "selling" argument. I thought you might be interested, however, to know from what is at least a friendly source what is being said, and that you also might be interested in my views of the matter. In the first place, there is no doubt that the great major- ity of the newspapers of the country are still strongly anti- Roosevelt, but most of them do not dare to exhibit their hatred, because of the war. I don't think any of them could be won over through the expenditure of federal advertising funds in their papers, but at the same time I am bound to think that such action would be help- ful in the long run, and would put a more direct obligation upon the unfriendly publishers. Then, on another basis, there are the examples given by the British and the Canadians. Both have made direct expenditures in British and Canadian newspapers, and further have provided effective advertisements which the newspapers themselves could sell to patriotic institutions. I am aware of the Treasury De- partment having adopted a few ads of a similar character, .70m notably the one published by the New York Times. But there PRINTING has been no really concerted drive along this line. The newspapers have been asked to devote columns and columns and pages of free space to the sale of War Bonds, and I think on the whole they have responded with pretty fair willingness. Our paper, of course, has constantly overbent itself in that direction. Finally, I think such advertising would really produce results. After all, you have spent many many thou- sands of dollars in direct mail campaigns, and thus it Established 1863 Regraded Unclassified 96 Honorable Henry Morgenthaler, Jr., - 2. April 20, 1942 appears that you do believe in advertising. Therefore, why shouldn't you adopt another form of advertising, which many financial and other institutions have found exceedingly profitable? There is one other point that I think is most important. We hear constant rumors that the Treasury Department is about to elimi- nate expenditures for advertising as proper deductions for income tax purposes. God knows things are tough enough now in the selling of advertising, and if you should determine that advertising is a "non- essential" of business activity, it would have the most terrific results. Newspapers just wouldn't be able to function, because I think it has been pretty well established that any effort to run a newspaper without advertising is pretty lame. P. M. for an example. Possibly you feel newspapers are non-essential, but I don't believe you could! I have also been advised that the War and Navy Departments do not wish to permit industries having war contracts to receive credit for expenditures for advertising. We live in a city which has a tremendous amount of war produc- tion work. Our biggest endeavors are in building Flying Fortresses, ships and tanks. In practically all of these industries there is truly a lack of the kind of fervent patriotic feeling that I believe was prevalent in the last war. There is an amount of loafing, and certainly a terrific lot of misunderstanding concerning the operations of these plants. I believe it would serve the country to the greatest purpose if these companies were not only permitted, but actively encouraged and requested by the government to engage in sensible and constructive and useful institutional advertising in their local newspapers to the end that their employees would have their stature raised in the eyes of the public, and in their own eyes. We are trying to do this, but we are constantly beset with the argument that the government doegn't want it, and imposes penalties upon it! After dictating this letter it seems to me that maybe I have made a sales argument after all! I really didn't intend to, but if that is what it is, why just put me down as another dirty old publisher! Anyway, we all send our very best to you and to the family. Sincerely, John John Boettiger. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Regraded Unclassified CONFIDENTIAL UNITED STATES SAVINGS BONDS Comparative Statement of Sales During First Twenty-two Business Days of April, March and February 1942 (April 1-25, March 1-26, February 1-26) On Basis of Issue Price (Amounts in thousands of dollars) : : Amount of Increase Sales : Percentage of Increase : : or Decrease (-) : or Decrease (-) Item : : : : April : March : April : March : April : March : February : over : over : over : over : : : : March : February : March : February Series 1- Post Offices $ 68,340 $ 74,221 $ 80,985 -$ 5,881 -$ 6,764 - 7.9% - 8.4% Series 1- Banks 199,056 218,123 287,297 - 19,067 - 69,174 - 8.7 - 24.1 Series 1- Total 267,396 292,344 368,282 - 24,948 - 75,938 - 8.5 - 20.6 Series 1. Banks 32,512 35,839 48,723 - 3,327 - 12,884 - 9.3 - 26.4 Series G - Banks 133,765 156,998 235,462 - 23,233 - 78,464 - 14.8 - 33.3 Total $433,674 $485,181 $652,466 -$ 51,507 -$167,285 - 10.6% - 25.6% Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942. 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 UNITED STATES SAVINGS BONDS CONFIDEN Daily Sales - April, 1942 On Basis of Issue Price (In thousands of dollars) Post Office Bank Bond Sales All Bond Sales Date Bond Sales Series E Series E Series I Series G Total Series z Series ? Series G Total April 1942 1 $ 2,476 $ 10,517 $ 2,380 $ 9,608 $ 22,504 $ 12,993 $ 2,380 $ 9,608 $ 24,980 2 2,999 8,264 2,119 7,570 17,953 11,263 2,119 7,570 20,953 3 3,222 7,572 1,185 6,235 14,992 10,794 1,185 6,235 18,214 4 2,778 9,292 1,387 5,334 16,013 12,070 1,387 5,334 18,790 6 4,961 13,035 2,329 8,027 23,391 17,996 2,329 8,027 28,352 7 2,958 5,722 834 8,983 15,539 8,680 834 8,983 18,497 8 2,309 9,610 1,142 6,562 17,314 11,919 1,142 6,562 19,623 9 2,906 9,304 955 5,715 15,974 12,210 955 5,715 18,880 10 2,730 8,052 1,573 5,261 14,885 10,782 1,573 5,261 17,615 11 2,150 5,224 668 2,720 8,613 7,374 668 2,720 10,762 13 4,619 17,572 2,432 8,604 28,609 22,192 2,432 8,604 33,228 14 2,513 6,152 1,076 3.333 10,561 8,665 1,076 3.333 13,074 15 2,584 5,102 1,251 5.374 11,728 7,686 1,251 5,374 14,312 16 3,472 10,008 1,400 7,773 19,180 13,480 1,400 7.773 22,652 17 2,090 8,076 850 3,695 12,621 10,766 850 3,695 15,311 18 3,111 7,175 948 3.303 11,426 10,286 948 3.303 14,537 20 5,252 13,334 2,227 9,001 24,562 18,586 2,227 9,001 29,814 21 2,517 6,845 977 3,703 11,525 9,362 977 3,703 14,042 22 2,925 9,112 1,925 6,793 17,830 12,037 1,925 6,793 20,755 23 3,101 9,403 1,805 5,928 17,136 12,504 1,805 5,928 20,237 24 3,451 10,981 1,721 5,694 18,396 14,431 1,721 5,694 21,846 25 2,616 8,704 1,327 4,552 14,583 11,321 1,327 4,552 17,200 Total $ 68,340 $199,056 $ 32,512 $133,765 $365,334 $267,396 $ 32,512 $133,765 $433,674 Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942. 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 Unclassi 99 Co / JUSTE Office of the Attorney General 1 Washington, B.C. 1 April 27, 1942 Dear Henry: Thank you for sending me your very interesting letter and leaflet sent out to large companies. Sincerely yours, transisions Honorable Henry Morgenthau Secretary of the Treasury Washington, D. C. VS 19 W N TREASURY department 100 INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. Thompson Mr. Spingarn came to Washington last Friday and Mr. Hall and I had a long talk with him in the morning, after which Mr. Hall took him to the Bureau of Engraving and Printing. Later he and Mr. Hall returned to my office for further discussions. Mr. Spingarn was optimistic over what he had seen in the cafeteria because he said he noticed a natural tendency on the part of the colored people to group themselves together and it is his feeling that the situation will work itself out. Later in the day he contacted a number of the colored leaders here in Washington to talk the situation over with them and to enlist their aid in eliminating what he terms "guerrilla warfare" carried on by the colored people. Saturday morning Mr. Spingarn advised me that he had been successful in his efforts along these lines and he was confident that the "guerrilla warfare" would cease. As a part of the program, however, he suggested that it would be well for positive word to get around the Bureau that there would be no change in the administration policy of non-segregation. Mr. Spingarn feels that once it is definitely indicated that there is to be no segregation in the cafeteria the employees, both white and colored, will accept this as a fact and settle down with increasing patronage of the cafeteria. Although the fact that this is the policy is known to the Bureau employees, nevertheless Mr. Spingarn's suggestion of putting a further note of finality to it will be carried out. Regraded Unclassified 101 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. Thompson With respect to the use of automobiles, a questionnaire which I sent out to the employees of the Department, bringing replies from more than 17,000 employees, indicated that nearly 12,000 were using bus, street-car and train transportation and 1,618 were walking. Of 2,671 who were driving their own automobiles, 1,652 drivers were bringing 2,686 others with them. Recently a card, sample of which I attach, was given to each employee of the Department. The cars at your private entrance have been hardly adequate to meet the demands upon them. There is constant daily travel on the part of staff officers, including officers from Foreign Funds, General Coun- sel, Research and Statistics, and Monetary Research, in attending con- ferences in other agencies of the Government throughout the city and on many occasions the call for cars exceeds the availability of cars so that these staff men have to use taxicabs or walk. If we cut down on the number of these cars, it will cause more inconvenience to these staff officers. The chauffeurs, however, have been instructe to use the shortest possible routes and to conserve the use of tires and gasoline wherever possible. Field officers using cars also are instructed to reduce their use to the minimum. Many of the employees use their own cars for official business and whether or not they will be able to get replacements for their tires when they are worn out is questionable although Cliff Mack tells me that his office is working on the matter Regraded Unclassified 102 - 2 - Secretary Morgenthau. with O.P.A. Apparently there will be no difficulty in getting new tires or retreaded tires for field officers employed on so-called, police activities. \ 7Pm 10, Share Your Car Save Your Tires Reduce Traffic Congestion! GAS To Motorists in the Metropolitan Area of Washington: To save your tires, conserve fuel and relieve downtown traffic congestion. the District Commissioners earnestly solicit your coop- eration in sharing your car with others to and from work., These objectives have a vital bearing on our war efforts. As Coordinator of Civilian Defense for the Washington Metropoli. tan Area. I appeal to all car owners to join this movement. There must be a "home front" to back up our boys on the battle fronts of the world. Your chance to help is no farther away than your own community. Voluntary "Share Your Car" programs already are under way in THE many Federal and District agencies. Remember, the average citi- jen cannot replace his tires when the present ones wear out. Invite your neighbors to ride downtown. Ask them to return the favor. Pool your cars and save. JOHN RUSSELL YOUNG, President Board of Commissioners, D. C. 104 HOLD FOR RELEASE HOLD FOR RELEASE HOLD FOR RELEASE April 27, 1942. CONFIDENTIAL: To be held in STRICT CONFIDENCE and no portion, synopsis or intimation to be published or given out until the READING of the President's Message has begun in the Senate or the House of Representatives. Extreme care must therefore be exercised to avoid pre- mature publication. STEPHEN EARLY Secretary to the President TO THE CONGRESS OF THE UNITED STATES: In certain ways the present world encircling war presents problems which were unimaginable during the First World War. The theatres of combat today cover vastly greater areas. Many more millions of human beings are involved. The new factors of mechanical power, in the air and on the land and on the sea, have produced radical changes in busic strategy and tactics. In this new war the nations resisting the Axis Powers face an even greater challenge to their very existence. They fight more powerful, more sinister foos; but their understanding of the magnitude of the task and the very firmness of their determination make victory certain in the long days to come. in other ways, circumstances of In some other ways, however, the circumstances of today parallel those parellel those of 1917-1918. Now, as in the last war, the 17-1918. Now, as common themy has had all the advantage at the outset. Now, be last war, the as then, bitter defects and heavy losses must be endured by in enemy has allthose who are defending civilization, before we it: dvantages at the/ill be able to ostablish the vital superiority in men and now 88 then, 8 and will costmunitions which will turn the tide. r defeats and losses 7mmlly The United States was for better prepared for actual war on December 7, 1941, than it was on April 6, 1917. For over two years, by a succession of Congressional Acts, we had carried out or initiated safety measures for our own defense in growing volume und importance. There were the revisions of the Neutrality laws, the adoption of the Soluctive Service law and the Lond-Lease law, and the great increases of our army und Navy and the instruments of war which they needod. After Pearl Harbor, the American people adopted a nutional progrem of war production which would have been colled fontastic by most people two yours before. It has required the shifting of the major part of American industry from the products of peace to the weapons of war. Inovitably -- but with the rull approval of the notion -- this enormous program is dislocating industry, lubor, agriculture and finnnce. It is disrupting, end will continue to disrupt, the normal manner of life of every American and every American family. In this, we repeat fallow the pettern of the first World War, although on D vestly gronter scale. Regraded Unclassified - 2 105 During that earlier war there were certain economic factors which produced unnecessary hardships; and these hardships continued long after the signing of the Armistice. I use the word "unnecessary" because it is my belief that a very great deal of the suffering which was caused then can be avoided now. These economic factors relate primarily to an easily understood phrase which affects the lives of all of us - the cost of living. Because rises in the cost of living which came with the last war were not checked in the beginning, ctry in same things in 1920 as they did in 1914. eople in 1918 this people in this country paid more than twice as much for the 1919 paid nearly DE as such for the saze are AS at they the did end at of the the The rise in the cost of living during this war has rt. begun to parallel the last. The time has definitely come to stop the spiral. And we can face the fact that there must be a drastic reduction in our standard of living. added based on the 11e the cost of liv- While the cost of living, based on the average prices tage prices ofof necessaries, has gone up about 15% so far since the selties,has Autumn of 1939, we must now act to keep it from soaring up since about the 207another 80% or 90% during the next year or two - to hold it to of 1939, somewhere near the present level. det to now hold act it to somewhere keep it near from the rising present another level. 60% or 60% during the next year or There are obvious reasons for taking every step necessary to provent this rise, I emphasize the words "every step" because no single stop would be adequato by itself. Action in one direction alone would be offset by inaction in other dircctions. Only an all-umbracing program will suffice. When the cost of living spirals upward week after week and month after month, people as a whole are bound to become poorer, because the pay envelope will then lag bohind rising hope Itst retail prices. The price paid for carrying on the war by the Government and, therefore, by the people, will increase by ad if that bene we and many billions if prices go up Furthernore, there is an old children Filland true saving that that which goes up must always como down - burdened with and you and I know the hardships and heartaches we all went higher debte rears to come through in the bad years after the last war, when Americans were losing their homes and their farms and thoir savings and were looking in vain for Jobs. We do not intend after this war to present the same disastrous situation to those brave men who today are fighting our battles in all parts of the world. Safeguarding our as ded economy at home is the v.ry least that our soldiers, sailors and marines have a right to expect of us civilians in govern- nent, in industry, on the farm, And in all other walks of life. Wo must therefore adopt AS on: of our principal domastic objectives the stabilization of the cost of living, for this is essential to the fortification of our whole economic structure. Relying on past and present experience, and leaving out masses of details which relate more to questions of method than to the objective itself, I list for the Congress the following points, which, taken together, av well be called our present national economic policy. 1. To keep the cost of living from spiraling upward, We must tax heavily, and in that process metted keep personal and corporate profits at a reason- able rate, the word "reasonable" being defined at a low lovel, 2. To keep the cost of living from spiraling upward, we must fix collings on the prices which consumers, retailers, wholesnlers and added manufacturars pay for the things they buy; and ceilings on rents for dwellings in all areas affected by war industries. added Regraded Unclassified 106 3 - 3. To keep the cost of living from spiraling apward, we must stabilize the remuneration received by individuals for their work. 4. To keep the cost of living from spiraling upward, we must stablize the prices received by growers for the products of their lands, 5. To keep the cost of living from spiraling upward, we must encourage all citizens to contribute to the cost of winning this war premiument by purchasing War Bonds with their earnings instead of using those earnings to buy articles which are not essential. 6. To keep the cost of living from spiraling upward, we must ration all essential commodi- added ties of which there is a scarcity, DO that they may be distributed fairly anong con- sumers and not murely in accordance with financial ability to pay high prices for them. 7. To keep the cost of living from spiraling upward, 170 must discourage credit and in- stalment buying, and encourage the paying off of debts, mortgages, und other obligations; for this promotes savings, retards excessive buying and adds to the amount available to added. the creditors for the purchase of war Bonds. I know that you will appreciate that these seven etpal points, each and every one of thom, will contribute in substantial foshion to the great objective of keoping the cost of living down. It is my best judgment that only two of these points changed from require logislation at the present time, for the very good reason that the Congress has alroady passed laws with respect to the others which Boom adoquate to meet the national policy enuncisted. I assure the Congress that if the required objectives nro not attained, and if the cost of living should continue changed to rise substantially, I shall BO advise the Congress, and dolo shall ask for any additional legislation which may be nocessary. be one item where In the first item, logislation is necessary, and ation 10the subject is now under consideration in the House of necessary subject #Reprosontatives. Its purpose is to keep excess profits ST consi erdown and, at the stite time, raiso further largo sums for on in the se of of the war profits down the war. and, at the the 781 the On this subject, I bolieve that the objective can be attained through tex processes. We are now spending, soluly for war purposes, the sum of about one hundred million dollars every day of the wook, But before this year 10 over that rate of expenditure will bc doubled. This means that a sun equal to more than half of the entire national income will be spont in the war effort. Almost the whole of those billions is being and will be spont within the United States itself. Profits must be taxed to the utmont limit consistent with continued production. This muans all business profits -- not only in making munitions, but in making or selling any- thing elso. Under the pro: sed now tax law WC seok to tako by taxation all unduo or excess profits. It is incumbent upon the Congross to define unduo or excuss profits; and anything in excess of that specific figure should go, to the Government. (ometted Regraded Unclassified 107 One of our difficulties is to write a law in which some clever people will not find loopholes or in which some businesses will not be equitably included. I have suggested to the Chairman of the Committee on Ways and Means in the House of Representatives that some blanket clause could well cover, by a special tax, all profits of any kind of Business which exceed the expressed definition of the legal profit figure. At the same time, while the number of individual Americans affected is small, discrepancies between low personal incomes and very high personal incomes should be lessened; and I therefore believe that in time of this grave national danger, when all excess income should go to win the war, no American citizen ought to have a net income, after he has paid hix taxes, of more than $25,000 a year. It is indefensible that those who enjoy large incomes from State and local securities should be immune from taxation while we are at war. Interest on such securities should be subject at least to surtaxes. I earnestly hope that the Congress will pass a new tax bill at the earliest moment possible. Such action is imperacive in the comprehensive all-out effort to keep the cost of living down - and time is of the essence. added. e second item, relating The second item, relating to price control is, with the price control exception of form orices, adequately covered by existing law, red. adequately by existing COV- and I have issued instructions to put this into effect immodiately. and is being It is our effort to bu fair in all phases of price control; it ipidly into as effect possible. etand if our future experience reveals inequality or unfairness, corrections will, of course, be made. third item, seeking tan respect to the third item, seeking to stabilize re- on for work, is abilize reginera mineration for work, legislation is not required under present NO covered at the ircumstarres. I believe that stabilizing the cost of living esent time by erwill mean that wages in general can and should be kept at ting laws and *Texisting scales rt. Most workers utive orders. If the cost of Tiving remains relatively stable, no one is going to the see last Organized labor has voluntarily given up its right to reased regraph on this strike during the war. Therefore all stabilization or adjust- É mont of wages will be settled by the Mar Labor Board machinery OMITTED: which has been generally accepted by industry and labor for the neerning the question of all disputes. double time for Sunday: it strary to sound All strikes are at a minumum. Existing contracts between y to make rk more than and employees must, in all fairness, be carried out reversed Ye says. But if to the expiration date of those contracts. The existing are going to keapchinory for labor disputes will, of course, continue to give ys it plants a week, going that 7 due consideration to inequalities and the elimination of sub- new. 21 have to be venth day of restandards of living. I repeat that all of these processes, now taggered and it in existence, will work equitably for the overwhelming proportion 211 diffeerent therefore fains all our workers if we can keep the cost of living down and IT. No rever, when workstabilize some rare este their rgency remuneration. circumstances in a plant make it necessary for a labe to work on his day of rest -whether it be Sunday or not -be should be paid double wage. for hat 7th day. Most workers in munition industries are working far more OMITTED: The than forty hours a week, and should continue to be paid at time Var Labor Boardnd E half for overtime. Otherwise, their weekly pay envelopes machinery has beenwould be reduced, get ally accepted by labor and industry for the settlement of all disputes: and organized 19 has given up its right to strike during the war. All strikes are at & minimum. Rx- the 1ng Apiration contracts date between of those employers contracts. and employees The existing must, machinery in all fairuess for labor be disputes carriedout Will $0 of course continue to give due consideration to inequalities and the keep the cost of living down. existence, will work equitably for the overwhelming proportion of ours workers if we can of sub-standards or living. I repeat that all of these processes, now in Regraded Unclassified 108 this policy All those policies will guide All government agencies. In regard to item four, prices of farm products: for nearly nine years it has been the policy of the Government to yoek an objective known as "parity" -- or, in other words, farm prices that give the farmer an assurance of equality in in- dividual purchasing power with his follow Americans who work in industry. Some of the products of the farms have not yet reached the stage of parity. Others have exceeded parity. Under existing logislation & coiling cannot be placed on certain is confident. however, that with price ceilings imposed in accordance with law, (OMITTED: the products until they rench A level somewhat above parity irage of all farm products can be substantially kept at & parity level.) This calls for the second logisIative action which I have mentioned. Under a complicated formula in the oxisting lew prices for farm products - prices which housewives have to pay added for many articles of food - may riso to 110% of parity or even higher. It is the fault of the formula. In the case of many articles this can mean a dangerous increase in the cost of living for the averago family over present prices. In fairness to the American people as a whole, and adhering added to the purpose of keeping the cost of living from going up, I ask that this formula be corrected, and that the original and ex- cellent objective of obtaining parity for the farmers of the United States be restored. It would be equally harmful to the process of keeping down the cost of living if any law were passed proventing the Govern- added gent from selling any of its own surplus farm commodities at the market price. As a national policy, the ceiling on farm products -- in other words, the maximum prices to be received by the producers of these products -- should be set at parity. added With respect to itom five - the purchase of War Bonds the American people know that if we would raise the billions which we now nued to pay for the war and at the same time prevent a disastrous rise in the cost of living, we shall have to double and more than double the scalo of our savings. Every dime and dollar not vitally needed for absolute necessities should go into Bonds and Stamps to add to the striking power of our armed forces. suring If these purchases are to have & matorial effect in restrain- ing price increases thuy must be made out of current income. In almost ov ry individual case they should be big enough to moan rigid self-deninl, a substantial reduction for most of us in the scale of expenditure that is comfortable and easy for us. We cannot fight this war, wo cannot exort our maximum effort, on a spend-as-usual besis. We cannot have All WG want, if our soldiers and sailors are to have all they nued. I have been urged by many persons and groups to recommend the adoption of a compulsory plan of savings by deducting a certain percentage of everyone's income. I prefor, however, to keep the voluntary plan in effect as long as possible, and I hope for a magnificent response, With respect to item six -- rationing -- it is obviously fair that where there is not enough of any essential commodity added to meet all civilian domands, those who can afford to pay more for the commodity should not be privileged over others who cannot. I an confident that as to Many basic necessities of life rationing will not be necessary, because we shall strive to the utmost to have an adequate supply. But where any important article becomes added scarce, rationing is the democratic, equitable solution. Item Bovan -- paying off debts and curtailing instalment buying -- should be made effective as soon as possible now that money is becoming more plentiful. Those who comply with it will be grateful that they have done so, when this war is over. Elimination of ,rivate debts and an accumulation of savings will provide a form of insurance against post-wer dupression. added The Federal agency responsible for the control of credit for instalment buying is taking appropriate action. Regraded Unclassified 109 - 6 - added Indeed, as to all the items which do not require legis- lation, the executive departments and agencies whose functions and duties are involved, are at work as expeditiously as possible in carrying out this whole broad policy. hire y of eyeryhave to give up many things to which we are accustomed. We shall result will be to The result will mean that each and every one of us will of us some have to live our lives with less in the way of creature comforts revised the of Americans sacri- than we have in time of peace. Our standard of living will have will welcometo to copie down. opportunity to share in the common effort of civilized mankind to preserve . eacy and dignity in modern life. Some have called this an "economy of sacrifice". Some 23 am askingnterpret it in terms that are more accurate - the "equality broad road erican of sacrifice". I have never been able, to bring myself, however, to travel to full acceptance of the word "sacrifice", because free men revised many ways of sac- and women, bred in the concepts of democracy and wedded to the 100, for we principles of democracy, deem it a privilege rather than a 11 have to sacrifice to work and to fight for the perpetuation of the B our lives democratic idoal. It is, therefore, more truo to call this P less in the total effort of the American people an "equality of privilege". of creature forts than we have time of peace. Some I firmly believe that Americans all will welcomo this called it opportunity to share in the fight of civilized mankind to revised e economy of preserve decency and dignity in modern life. For this is rifice" but fundamentally a people's war - and it must be followed by a must interpre%eople's peace. The achievement of victory in war and security in terms of in peace requires the participation of all the people in the to nobler - the con- common offort for our common cause. of sacrifice and the vilege of sacrifice. this is fundamentally eople's war - and it be followed by a FRANKLIN D. RDOSEVELT ple's peace. The de waent of victory war and security in ce requires the partici- don of all the people in the fightfor our non cause. THE WHITE HOUSE, April 27, 1942. Regraded Unclassified 110 APR 2 7 1942 Secretary Morgenthau Mr. Foley When war was declared between the United States and Germany and Italy the German Government turned over to the Svise Government approximately $300,000 in United States currency. The Italian Government turned over to the Swiss Government approximately $180,000 in United States currency. The Svise Government is representing the interests of the German and Italian Governments in the United States. The Treasury Department has taken the position that the expenses incurred by the Swiss Government in handling German and Italian interests in the United States must be paid out of free funds to be remitted from abroad since it is necessary for this Government to remit free funds for its expenses in enemy territory. The State Depart- ment is in accord with this view and has so advised the Swiss Government. The Sviss Government now reports that the German and Italian Governments are not willing to accept this posi- tion and insist that the free use of the currency turned over to the Swiss Government be allowed. The German Government has even declared that it would take appro- priate counter measures against the Legation of Switzer- land at Berlin if the United States Government did not allow the free use of these funds. White and I, as well as Bernstein and Pehle, feel strongly that it is a mistake to continue to give in to the German Government on demands of this character and have so advised State. However, the State Department takes the position that the amount involved is not too significant and that it cannot afford to take the risk that Germany and Italy will refuse to allow us to be Regraded Unclassified 111 - 2 - represented in their countries. Moreover, State points out that it is trying to arrange a wholesale exchange of Americans in the occupied areas for citizens of Germany and Italy who are in the United States and desire to return to Germany and Italy and that it would be very unfortunate if such negotiations were terminated by the Axis Governments. If you concur, we will advise State that we strongly disagree with the action of allowing Germany and Italy to use the funds in question; and that any decision to allow the use of such funds must be made by the State Department on the basis of foreign policy considerations. (Initialed) R. E. F., Jes I concur (pgd) Hmorgenthers JwPehle:mgt 4/24/42 Regraded Unclassified Treasury Department Division of Monetary Research 112 Date April 27, 1942 19 To: Secretary Morgenthau In response to your inquiry of April 25th "How about silver legislation?" - The appended memorandum, prepared in this Division on March 9th, was initialed by the Legal Division and Mr. Viner, and was sent for initial to Mr. Bell on March 24th. H.D.W. MR. WHITE Branch 2058 - 214} 113 3/24/42 - Originals of two at- teched memos to Mr. Bell. 3/24 - Original of draft bill to Mr. Bell with copy as in- itialed by Messrs. White, Viner, B. Bernstein and others. 114 March 9. 1942 Secretary Morgenthan Mr. White Subject: Silver Legisiation we are submitting a draft of the silver bill which, during the period of emergency, directs the cessation of silver purchases and authorizes the sale of Treasury silver at not loss than thirty-five cents an ounce. We believe that it would be preferable to suspend silver purchases during the emergency rather than to seek permanent elimination of such purchases because: 1. It will call forth less opposition on the part of silver interests. 2. It will justify your raising the problem at this time purely as 8 measure for diverting labor and equipment to war uses. 3. It will not directly raise the question of the desir- ability of our silver policy in the past. 4. It will not prevent Congress from going farther and eliminating entirely all silver purchases, but the responsibility will be theirs and not yours. If you agree with the foregoing, the following stops are sug- gested: 1. Have the President indicate whether he wants the silver question raised at this time. He may prefer not to stir up oppo- sition in Congress on a matter of relatively small importance. 2. Get a statement from the war Production Board that (a) more silver on the market at current prices would help the war effort and (b) that silver mining 10 absorbing labor and equipment which could be more profitably used in the war effort. 3. Secure the support and acquiessence of Jesse Jones to the purchase by the Metals Reserve Corporation of high-cost copper, lead, and zine from mines thatdepend on high silver prices to maintain production of these escential materials. When these three stops are satisfactorily completed, you will robably want to discuss the problem with leaders in the Senate and the House before having the bill presented. You may wish to read the appended memorandum setting forth in more detail the emergency silver program. HDW: EMB/jm 3/9/42 Regraded Unclassified 115 March 9. 1942 Secretary Morgenthau Mr. shite Subject: Silver Legislation le are ready to submit for your approvel a draft of a bill providing for suspension of silver purchases and authorizing the Treasury to sell silver at not less than 35 cents an ounce during the period of emergency. The bill does not affect the Treasury's pover to purchase silver for coinage or to issue silver certifi- cates. Ye feel 11 would be a mistake to include in the bill authority to sell Treasury silver except with a stipulated minimum price. The threat of the enormous Treasury supply of silver hanging over the market without & sinimum price at which it could be sold -ould arouse such greater opposition to the bill by the silver interests, and might make passage of the bill uncertain. Moreover, we do not believe that the authority to sell silver is of immediate is- portance because with the entire domestic output offered in the market it 10 very doubtful whether there would be any substantial demand for Treasury silver at anything like current prices. The addition to the market of domestic output of possibly 50 to 60 willion ounces (output for 1942 at 71 cents will be about 70 million ounces) should prevent the price of silver from rising above 35 cents for some time, and might well drive the price down to 30 cents. If, in addition, an attempt were mde to sell substantial quantities of Treasury silver in competition with domestic and imported silver, the price would be still further depressed-- how auch, of course, would depend on the quantity of silver the Treasury tried to sell. Furthermore, the amount of silver offered on the market would very likely be further increased by the fact that such legislation would encourage countries to sell some of the silver they now hold as monetary reserves. Should the expension in the industrial uses of silver prove to be 80 great that a shortage appears notwithstanding the added supply from domestic output, the Treasury could, under the terms of the bill drafted, sell some of its silver. The drafted bill also contains a provision for the con- tinued purchase of domestic silver at the 71-cent price for #: period of three months after the enactment of the bill. Regraded Unclassified 116 - 2 - AS the silver producers will have a period of at least the hearings and discussions on the bill will certainly last four many to rooks, sonths in which to sake whatever adjustments my be be necessary. five mined during the period of suspension would not eligible Silver for purchase by the Treasury as netly-mined domestic silver when the emergency 18 terminated. 10 the supply of silver available for industry will be increased be able to sell silver at 35 cents an ounce or more, it 1s not re- by the full amount of the domestic output, and as the Treasury will garded If necessary to provide for lending Treasury silver for re- coverable industrial uses. The adventages of suspending silver purchases at this time are clear. They are at follows: 1. The labor, equipment, and materials released from mines which produce predominantly silver can be utilized in the war effort. The increased supply of silver in the domestic sarket *111 probably drive down somewhat the price of silver but with a lower price of silver sore -111 be used in industry and more of the 00m- peting metals will be free for defense use. 2. The South American countries producing silver are Accuse- lating gold and dollar balances now. Therefore, a slightly reduced price of silver will not significantly impair their exchange position particularly 15 the principal effect of the lower price -111 be to reduce profits withdrawn in dollar exchange by American aine owners. Though it is true that our silver purchases are inflationary and though such can be made of that in public discussion, actually the extent to which the coinage of silver adds to the money supply of & country is so negligible as to warrant little emphasis on this aspect of the problem. The chief objection to suspending the purchase of silver is that it will reduce the receipts and hence the output of mines producing copper, lead, end zine along with silver. This is a serious objection in view of the need for these materials for defense, but it can be met very simply by the Metale Reserve Corporation =hich already has the authority and pursues the policy of paying higher prices for higher-cost output. The application of this policy to the silver problem needs no new legislation but serely requires & prior understanding *1th Secretary Jones that he will take care of such contingencies, so that when appearing before the Congressional Committees you 111 be able successfully to meet any objection that cessation of domestic silver purchased by the Treasury will reduce the Regraded Unclassified 117 - 3 - supply of domestically-mined copper, lead, and zine. with regard to foreign copper. lead, and zine, produced along with silver, the detals Reserve Corporation can, in exeeptional cases, also pay slightly sore for such metals. In any case, the decrease in price to foreign silver producers will probably not be large enough to seriously ourtail production abroad during var time. tro disadvantages in suspending the silver purchase program are: 1. It *111 be interpreted as A confession by the Adminis- tration that its silver purchase program was a mistake. I think it might be justly said, however, that the silver purchase program while not suited to a country at war vas well suited to & country in depression. Monetheless, the step will be heralded by the press and commentators AS the "deserved end of & ridiculous policy instituted by the present administration.' 2. If the suspension of silver purchases were to reduce the market price of silver belox 35 cents an ounce, it would show an even greater disparity between the market price of silver and the value of silver bullion on the books of the Treasury. However, aleas very considerable quantities of silver are sold at 35 cente AD ounee, there will be no bookkeeping loss. NO :EMB/ja 3/9/42 Regraded Unclassified 118 BILL To suspend certain provisions of the Silver Purchase lot of 1934 and of the 4st of July 6, 1939, to provide for the sale of silver, and for other purposes. Ba it enacted by the Senute and Bouse of Nonresentatives of the United States of America in Congrass assembled, That Section 3 of the Silver Purchase Act of 1934, 48 Stat. 1178 (U.S.C., title 32, 800. 734a), 10 hereby suspended: Provided. That nothing in this Act shell bo construed to limit the authority of the Sucretary of the Treasury to carry out the provisions of my contract or agreement usde pursunat to said section prior to the encotment of this Act, or to acquire AND make payment for silver pursuant to any such вод- truct or agreement. See. 2. Section 4 of the Act of July 6, 1939, 53 Stat. 998 (U.B.C., title 31, see, 3160), is hereby suspended, such suspension to broome effective on the ninetieth day following the date of enect- sent of this Act, and no silver sined during the period of suspension shell be eligible for deposit pursuant to the provisions of caid section 41 Provided, That within such ressonable time after the effective date of much suspension as the Secretary of the Treasury shall dotormine, the coinage eints shall, in accordance with the we visions of said mection 4 of the Act of July 6, 1939, and the Regu- 1stimas of the Secretary of the Treasury issued thereumder, receive and ****** for deposits of silver sined prior to the effective date of such susponsion. Regraded Unclassified 119 - 2 - See. 3. The Secretary of the Treasury, without regard to any other provision of 1aw, is hereby authorized to sell at home w streed, in rech anounts, at such rates in excess of thiry-five omts per troy omes .999 fine, at cuch times, and upon much terms and - ditions as he my does reasonable and mest advantageous to the public interest, my silver bullion in the monetery stocks of the United States not them held for relemption of my owhstanding silver certifi- actos. See. 4. Sections 1 to 3, inclusive, shall romain in force only watil December n, 1944, and after such sections conse to be is foree, my previsions of law envaded or suspended thereby shall be is full force and offect as though this not had not boon emected. Regraded Unclassified 120 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION CONFIDENTIAL DATE April 27, 1942 TO FROM Mr. Haas Secretary the Morgenthau Subject: The Business Situation, Week ending April 25, 1942. Summary (1) Industrial production last month did not quite measure up to the preliminary estimates of the Federal Reserve Board, consequently the adjusted index of production for March now stands at 172, unchanged from the previous month. The machinery, aviation, and shipbuilding industries continued to pace the rise in armament activity, but these gains were offset by decreases in various other industries after allowance for seasonal factors. (2) With shipment of war goods being handicapped by lack of ships, with railroad traffic rising and gasoline rationing imminent, transportation problems are receiving increasing attention. The Iron Age claims that 40,000 military trucks are standing at one East Coast port waiting for ships, while in another instance 30,000 combat vehicles have accumulated at an inland plant awaiting shipment. (3) The general price level continues to move gradually higher. As the result of a further 0.2 point rise, the BLS all-commodity index in the week ended April 18 stood at 98.3, or 31.1 percent above the pre-war level of August 1939. (4) Living costs continued to move higher in March, with the BLS cost-of-living index rising 1.2 percent above the previous month. Clothing costs continued to rise sharply, showing an advance of 3.9 percent from February. (5) Rural sales of general merchandise in March rose more than seasonally and exceeded by 42 percent the sales in the corresponding month of 1941. Unusually heavy buying of items subject to impending restrictions is believed to have contributed importantly to the strong sales showing. On the other hand, department store sales recently have shown signs of slackening. Regraded Unclassified 121 - 2 - March rise in industrial output entirely seasonal The Federal Reserve Board's preliminary estimate of indus- trial production for March proved to be 2 points too high, and as a consequence the FRB adjusted index for that month has been reduced to 172, unchanged from the revised figure for February. (See Chart 1.) Actual industrial output rose moderately dur- ing the month, but, as indicated by the unchanged level of the index, the rise was entirely seasonal. The machinery and transportation equipment industries (including aviation and shipbuilding) continued to pace the rise in industrial output. (Refer to Chart 1, lower section.) However, the gains in these and other war industries, such as iron and steel, and chemicals, were to a considerable extent offset by less-than-seasonal increases in the production of cement and lumber, as well as actual declines in the output of crude petroleum and various other products. Due to transporta- tion difficulties, further decreases in petroleum production appear likely, thus tending somewhat to offset anticipated gains in the near future in various other components of the index. Transportation problems in limelight In addition to the critical ocean shipping situation and the mounting traffic burdens of the railroads, the prospective rationing of gasoline in the Eastern States announced during the past week served to focus further attention on the country's imposing transportation problems. Although the amount of gasoline to be available to motorists after mid-May 1s still undetermined, a heavy out 1s certain to have far-reaching effects. In addition to foreshadowing further traffic burdens for local transit companies and railroad passenger divisions, drastic rationing of gasoline would make a heavy out in State revenues and would severely affect the fortunes of many business enterprises. Railroad traffic rising The East Coast oil shortage has greatly increased pressure on railroad tank car facilities, and promises to add consider- ably to the passenger traffic burden. Moreover, the Director of Defense Transportation has recently expressed special concern over the heavy additional freight traffic that the railroads would have to absorb in the event that truck operators should be unable to get sufficient tires. In the face of these and other problems, freight traffic 18 in & seasonal upswing. In the week ended April 18, carloadings rose to a new high for the Regraded Unclassified 122 - 3 - year at 847,000 cars. Although ore loadings showed an increase, they were still 16,000 cars below the corresponding period of 1941, despite the earlier start in Great Lakes navigation this year. This lag in ore loadings appears to have been due to the hampering effects of ice in Lake Superior at the entrance to the Soo Locks, where 80 ships were reported to have been tied up at one time. In connection with the ocean shipping situation, the Iron Age asserts that war goods are piling up on the docks on both coasts and at some inland war plants. It cites one instance where 40,000 military trucks were standing at an East Coast port waiting for ships, and another where 30,000 combat vehicles had accumulated at an inland plant ready to be shipped. Steel shortage contributes to lag in shipbuilding A shortage of steel plates continues to be blamed 8.8 a primary factor in the lag in shipbuilding. During the past week, Admiral Land indicated that despite some improvement in March, steel plate deliveries to shipbuilders were still 169,000 tons behind schedule. Although steel operations have slipped off moderately from the peak reached in the last week in March, total steel ingot production in April should approximate the record figure set last month. During the current week, steel operations are scheduled at 98.9 percent of capacity, 88 compared with 97.6 last week. Shipments of finished steel by the U. S. Steel Corporation have levelled out during the past year, and in recent months have about equalled the volume of incoming orders. (See Chart 2, upper section.) Shipments in March were slightly be- low the peak reached late in 1941, and were less than 4 per- cent above the corresponding month of 1941. It will be noted that new orders received by the Corporation rose noticeably in March, but were well below the abnormal levels prevailing at this time last year. The changed situation brought about by priorities and WPB regulations, however, has reduced the significance of new orders. The Carnegie-Illinois Steel Corporation (largest U. B. Steel subsidiary) revealed recently that 99.6 percent of the company's shipments in March carried priority ratings. As a result of the controls put into effect in the industry, estimated unfilled orders of the U. 8. Steel Corporation have shown little change in recent months, being maintained close to the high level reached last summer. (Refer to Chart 2, lower section.) Regraded Unclassified - 4 - 123 Cost of living up sharply The continued rise in wholesale commodity prices has brought a further sharp advance in living costs. (See Chart 3.) The BLS cost-of-living index for March was 1.2 percent higher than in February, and 15.9 percent above the pre-war level of June 1939. Clothing prices continued their steep advance of the past three months, rising 3.9 percent in March. The clothing index 18 23.2 percent higher than in June 1939. Food costs increased 1.5 percent in March, and are now 26.7 percent above the June 1939 level. Other living costs have increased moderately. Living costs in the United States above Canadian Comparison of the cost-of-living indexes for the United States and Canada show that in March, for the first time since the outbreak of the war, living costs in this country have made a greater overall advance than in Canada. (See Chart 4, upper half.) The Canadian index moved up elightly in March, but 18 still below the level prevailing before the Dominion's control of prices and wages was put into effect on December 1. The Canadian cost-of-living index has declined 0.3 percent since November, while ours has risen 3.7 percent. The slight rise in the Canadian cost-of-living index in March was due entirely to a rise in prices for foods. (Chart 4, lower half.) Food prices in the United States, however, rose more steeply. Since November, Canadian food prices have de- clined 1.4 percent but ours have risen 4.9 percent. Commodity prices little changed last week Basic commodity prices moved in a narrow range last week in anticipation of announcement of details of the Administra- tion's blanket program to curtail the rising cost of living. (See Chart 5.) Cotton and wool prices were off, and flaxseed prices declined on reports of the largest crushings in the first quarter of 1942 for at least as far back as 1919. Con- tributing factors were a Department of Agriculture statement forecasting an unchanged price level for fats and oils in the next few months, and an OPA announcement that ceilings on these products would not be raised. The OPA statement charged that rumors of an impending increase have inspired a withholding movement of substantial amounts of cottonseed oil, soy bean oil, and tallow. Butter prices were up to a new high, and wheat prices regained a little of the ground lost in recent weeks. Prices for hoge last week were close to their 16-year high, although Regraded Unclassified 124 - 5 - the Department of Agriculture's new pork-buying program in the first three weeks of its operation has lagged behind the re- quired schedule. Press reports express doubt that the OPA revision of the wholesale pork ceiling will be wholly effective in remedying the dislocation in the relationship of live hog prices to pork prices. The BLS all-commodity index of prices of nearly 900 com- modities in the week before last (ended April 18) rose 0.2 point to 98.3. This 1s 31.1 percent above the August 1939 pre-war level. Cotton textile prices lowered Maximum prices for various kinds of cotton textiles, at substantially lower levels than those now prevailing, will be made effective May 4 by an OPA order bringing under ceilings all types of unfinished and finished cotton goods not pre- viously covered. The schedule 18 designed to restore more nearly normal price relationships. A WPB order, believed to be the forerunner of others in the cotton textile field, was issued last week requiring diversion of a substantial percentage of loom facilities to the manufacture of heavy cloth for war purposes. An antici- pated result of the order will be a severe curtailment of various cotton goods for civilian uses. Lend-lease purchases by Agriculture up sharply Lend-lease purchases of agricultural commodities are be- coming of rapidly increasing importance as & factor contribut- ing to pressure on supplies and on prices. Table 1, showing details of Lend-lease and other purchases by the Department of Agriculture since the buying program was started in March 1941, indicates strikingly the amount of upward pressure from this source recently on prices of various products. Takings in March 1942 in many instances consisted of very substantial portions of the year's total. of the largest single item, pork products, more than one-seventh of the $200,000,000 totalwas bought in March, even before the current buying program was announced. Almost one-fifth of the total egg purchases occurred in Maroh, three-fifths of the quantity of butter, and one-eighth of milk and cheese purchases. Rural retail sales rise sharply On the basis of preliminary and confidential data, farm income in March ran about 41 percent above the corresponding period of 1941, thus maintaining virtually unchanged the Regraded Unclassified - 6 - 125 year-to-year gain shown in the previous month. (See Chart 6, top section.) In reflection of the sustained high level of farm income and other factors, rural sales of general merchandise in March rose more than seasonally and ran 42 percent above March 1941. Unusually heavy consumer buying of items subject to impending restrictions undoubtedly contributed to the strong sales showing. Thus, Montgomery Ward and Company re- ported last week that heavy buying of durable household goods subject to war curtailment orders, such as refrigerators, washing machines and radios, had contributed importantly to the sales increase shown by the company in recent months. Department store sales gain narrows Department store sales during the current month, however, have shown signs of slowing down. Thus, in contrast to an average year-to-year sales gain of 26 percent from the first of January to the early part of April, the gain in the week ended April 18 was only 15 percent. Since average prices of department store items at the beginning of April were running about 19 percent higher than year-earlier levels, the unit volume of sales in mid-April was actually below the correspond- ing period in 1941. In addition to the evidence of slower sales shown by latest department store figures, Dun and Bradstreet last week reported a marked let-down in advance buying and a slackening in sales. Regraded Unclassified FEDERAL RESERVE BOARD INDEX OF INDUSTRIAL PRODUCTION 1935-39=100 1939 1940 1941 1942 JFMAMJ J A S o N D J F M A M J J A S o N D J F M A M J JASONDJFMAMJ - PERCENT PERCENT Seasonally Adjusted 170 170 165 165 160 160 155 155 150 150 145 145 140 140 135 135 130 130 125 125 120 120 115 115 110 110 105 105 100 100 95 95 J F M A M J J A S o N D J F M A M J J A s o N D J F M A M J J A S o N D J F M A M J 1939 1940 1941 1942 Selected Components Feb. 1942 and Mar. 1942 Compared with 1935-39 Average PER CENT Transportation Equipment 300 275 Machinery 250 225 Iron and Steel 200 Nonferrous Metals (Stone Clay Glass etc. COMBINED INDEX : 175 Chemicals Metal Mining Textiles 150 Manufactured Foods Lumber, etc. Fuels (crude) 125 Leather. etc. 100 1935-39 Feb. Mar. -100 1942 1942 126 - of - Sunday of - Treasury C-383-C-3 - of - - - Regraded Unciassified Chart 2 CONFIDENTIAL REPORTED NEW ORDERS, shipments, AND INDICATED 127 UNFILLED ORDERS OF THE U.S. STEEL CORPORATION NET TONS HOUSANDS NET TONS THOUSANDS 2800 2800 2400 2400 2000 2000 REPORTED NEW ORDERS 1600 1600 1200 1200 800 800 REPORTED SHIPMENTS 400 400 0 0 1938 1939 1940 1941 '4 2 ET TONS NET TONS ILLIONS MILLIONS 10 10 8 8 6 6 4 4 INDICATED UNFILLED ORDERS 2 2 0 0 1938 1939 1940 1941 '42 el the Secretary of the Treasury - of - and Relation I - 133 - B Chart 3 128 COST OF LIVING AND SELECTED ITEMS JUNE 1939 = 100 1939 1940 1941 1942 PER PER CENT CENT 112 112 108 108 COST OF LIVING 104 104 100 100 124 124 120 120 FOOD 116 116 112 112 106 108 CLOTHING 164 104 100 100 RENT, LIGHT HOUSCHOLD FURNISHINGS AND HEAT AND MISCELLANEOUS 56 96 J $ D M J 5 o N D J F M A M J J A $ o N D J F M A M J 1939 1940 1941 1942 SOURCE: B.L.S. Office of The Secretary of the Treasury 1 1 J I 1 C - 413 Regraded Unclassified COST OF LIVING, U.S. AND CANADA AUGUST 1939 - 100 PER CENT PER CENT Cost of Living 120 120 115 115 Canada (Dom. BUR. OF STAT.) 110 110 105 105 U.S. (B.L.S.) 100 100 95 95 J M M 1939 1940 1941 1942 PER PER CENT CENT Foods, Retail 130 130 125 125 120 120 115 115 Canada (BUR. OF STAT.) 110 110 105 105 U.S. (B.L.S.) 100 100 95 95 J M . J $ a . J M M J $ N J M M J $ . J M M 1939 1940 1941 1942 129 Office of the Secretary of the Treasury - of - of - Regraded Unclassified MOVEMENT OF BASIC COMMODITY PRICES AUGUST 1939 = 100 PERCENT PERCENT PERCENT PERCENT Weekly Average Daily 220 220 200 200 200 200 190 12 Foodstuffa 190 12 Foodstuffs 180 180 180 180 160 160 170 170 140 140 160 16 Raw Industrial 160 16 Row Industrial Materials Materials 120 120 150 150 100 100 140 140 a M 29 to & a OCT. DEC. 21 29 7 H 21 28 4 " if I , JUNE AUG. OCT. DEC. FEB. APR. JUNE AUG. FEB. MAR. APR. MAY JUNE 1941 1942 1942 PERCENTAGE CHANGE FOR INDIVIDUAL COMMODITIES Aug. 1939 to Apr.24.1942 Dec. 6. 1941 to Apr. 17. and Apr. 24,1942 PERCENT Cottonseed Oil 152.8% PERCENT 12 Foodstuffs 12 Foodstuffs Hoge 42.0% +40 Hoge 122.8% 120 Tollow 110.7% Lard 110.1% +30 Cocoo N6.7% Barley 87.8% Lard 17.7% Corn 85.2% Steers 153% 80 Coffee 77.2% +20 Com 120% Wheat 67.2% Barley HER Steers 64.5% Butter #.4% Butter 605X +10 Tallow 7.9% Sugar 6.9% 40 Cottonesed Oil ass Sugar 30.8% o Wheat 4x Coffee ex Coooa -.EX o -10 Apr. 24 Dec.6. Apr. 17 Apr. 24 Aug. 1939 1942 1941 1942 1942 PERCENT PERCENT 16 Raw Industrial 16 Raw Industrial Materials Materials Flowered 374X +40 Cotton 119.22 120 She/tos / Burlop MA4X +30 Print Cloth 00.1% Zine 69.5% Cotton 16.12 Floresed 67.9% +20 Lood HIX 80 Wbo/ 47.1% Print Cloth 4.7% Hidee 36.7% Roan .78 St. Screp.dom. seax Zine 2% Rubber 344X +10 0% Change afbain BR7X Shellac. Tin, 40 Lead 290X Copper & Scrapesp. 17.9% o Hoss. Silk, Copper N.OX St. Scrap dom. Silk I&M Rubber: St Scrapexp Tin 6.4% o -10 Apr. 24 Dec.6. Apr. 17 Apr24 -1.9% Aug. 1939 1942 1941 1942 1942 Bunkp 130 "Black lines indicate commodities under price callings or other control Chart 5 of - - Regraded Unclassified Table 1 Lend-lease and other purchases by Department of Agriculture March 15, 1941 to March 31, 1942 Percent Leading Total purchased item F.O.B. in March cost 1942 ivestook and poultry products Lard $ 52,622,000 9.3 Pork meat products pork-canned 200,592,000 14.7 Beef products frozen beef 225,000 2.7 Poultry, canned chicken 7,938,000 0.0 Cheese 64,212,000 12.3 Milk, dry and evaporated evaporated 109,200,000 13.3 Butter 2,946,000 60.3 Eggs, dried, frozen and shell dried 137,747,000 19.3 Other edible tallow 87,000 94.0 Vegetables getables, canned tomatoes 11,388,000 1.3 Beans and peas, dried beans 12,576,000 1.1 White potatoes 1,211,000 1.0 Other fresh vegetables cabbage 741,000 38.0 Dehydrated vegetables onions 694,000 35.6 Fruits Apples, fresh 7,346,000 0.0 Other apple products dried 2,907,000 .04 Grapefruit and products canned juice 3,917,000 12.5 Oranges, lemons, and products concentrated orange juice 3,490,000 25.3 Other fresh fruits peaches 1,315,000 0.0 Canned fruits pears 7,045,000 0.0 Dried prunes (and canned) 11,295,000 0.0 Raisine 4,023,000 0.0 Other dried fruit apricots 3,836,000 0.0 - 2 - Percent Leading Total F.O.B. purchased item in March cost 1942 real food products mite flour 9,089,000 31.9 Graham flour 611,000 0.0 Corn meal and grite meal 1,122,000 75.5 Cornstarch 5,811,000 0.0 Dat cereal 3,495,000 0.0 Rice 1,579,000 0.2 other cereal foods cracked wheat 967,000 12.3 iscellaneous foods Fish canned 23,531,000 0.9 Canned beans 7,941,000 0.0 Sugar granulated cane 3,976,000 51.2 Linseed oil - edible 2,285,000 0.0 Pectin 1,380,000 18.7 ony flour 1,163,000 0.0 tamin concentrates B₁ 4,202,000 6.2 Other foods dehydrated soup 5,510,000 18.7 ther agricultural products Livestock feed and grain corn 1,112,000 15.3 Pine products turpentine 3,329,000 2.8 Cotton and products baled cotton 9,523,000 2.7 Other products grass and clover seed 4,405,000 5.2 Products made available for lend-lease operations by Commodity Credit Corporation Baled cotton 56,480,000 12.8 Corn 10,822,000 0.0 Gum rosin 2,241,000 0.0 Tobacco 68,372,000 0.0 Wheat 1,054,000 5.8 FARM INCOME AND RURAL SALES OF GENERAL MERCHANDISE JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT NOV DEC DOLLARS DOLLARS MILLIONS MILLIONS Form Income Incl. Rental and Benefit Payments 1600 1600 1400 1400 1200 1200 1941 1000 1000 1942 1940 800 800 1939 600 600 400 400 200 200 o o JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT NDV DEC. PERCENT PERCENT Rural Sales of Generol Merchandise* 275 275 1929-31-100 Unedj. 250 250 225 225 200 200 1941 175 175 1942 150 150 1940 125 125 1939 100 100 75 75 JAN. FEB. MAR. APR. MAY JUNE JULY AUG SEPT OCT NOV. DEC 131 your - Commerce - of do - of - marchandise # - Forms and reral - Chart 6 Office of the Employ of the Transy - d - and - Regraded Unclassified 132 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. White now Subject: Exports to Russia, Free China, Burma and other blocked countries, as reported to the Treasury Department during the 10-day period ending April 10, 1942. 1. Exports to Russia Exports to Russia, as reported to the Treasury during the period ending April 10, 1942 amounted to more than $51,000,000. Motor trucks, military tanks and landplanes were the principal items. (See Appendix C.) 2. Exports to Free China and Burma Exports to Free China during the period under review amounted to about $4,800,000. Landplanes were the principal items. (See Appendix D.) Exports to Burma amounted to $447,000. (See Appendix E.) 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Most important were exports to Sweden and Portugal amounting to $1,572,000 and $1,077,000, respectively. 133 STRICTLY CONFIDENTIAL NOT FOR PUBLICATION SUMMARY OF UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED July 28, 1941 to April 10, 1942. (In thousands of dollars) July 28 to Period ended Period ended Total Mar. 20 March 31 April 10 Domestic Exports U. S. S. R. $236,748 $ 42,435 $ 51,698 $ 330,881 Free China 60,693 2 4,836 65,531 Burma 2/ 11,108 2 447 11,557 France 3/ 6 - - 6 Occupied France 2 - - 2 Unoccupied France 28 - - 28 Spain 2,833 5/ 12 2,845 Switzerland 7,406 273 11 7,690 Sweden 13,855 2,045 1,572 17,472 Portugal 6,933 478 1,077 8,488 French North Africa 4/ 6,283 - - 6,283 Treasury Department, Division of Monetary Research April 23, 1942. Many of the export declarations are received with a lag of several days or more. Therefore this compilation does not accurately represent the actual shipment of a particular week. The longer the period covered, the closer will these figures come to Department of Commerce revised figures. From September 11, 1941 to date - it is presumed that a large percentage of material listed here, consigned to Burma, is destined for Free China. 3/ Includes both Occurded and Unoccupied France through week ending October 4, 1941. Occupied and Unoccupied France separated thereafter. Includes Morocco, Algeria and Tunisia. 5/ Less than $500. Regraded Unclassified APPENDIX B 134 Exports from the U. 8. to Free China, Burma and U.S.S.R. as reported to the Treasury Department July 28, 1941 - April 10, 1942 (Thousands of Dollars) Exports to Exports to Exports to Free China Burma 3/ U.S.S.R. July 28 - August 2 395 4,523 Aug. 4 - Aug. 9 - 551 Aug. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,280 Sept. 8 - Sept. 13 2,281 5,217 Sept.15 - Sept. 20 3,822 752 Sept.: - Sept. 27 110 449 2,333 Sept.29 - Oct. 4 1,225 684 323 Oct. 6 - Oct. 11 5,312 1,157 6,845 Oct. 13 - Oct. 18 5 35 1,924 Oct. 20 - Oct. 25 269 403 5,623 Oct. 27 - Nov. 1 4,772 58 4,484 Nov. 3 - Nov. 8 1,672 342 4,552 Nov. 10 - Nov. 15 2,851 88 2,677 Nov. 17 - Nov. 22 1,228 1,021 3,581 Nov. 24 - Nov. 29 3,239 1,364 2,436 Dec. 1 - Dec. 6 791 64 3,609 Dec. 8 - Dec. 13 2,337 18 12,040 Dec. 15 - Dec. 20 111 OR 4,580 Dec. 22 - Dec. 27 1 196 1,829 Dec. 29 - Jan. 3 35 2 3,993 Jan. 5 - Jan. 10 91 1,073 8,247 Jan. 12 - Jan. 17 1,695 447 5,874 Jan. 19 - Jan. 24 - - 3,885 Jan. 26 - Jan. 31 6,938 923 9,608 Feb. 1 - Feb. 10 4,889 1,054 13,315 Feb. 10 - Feb. 20 4,853 583 26,174 Feb. 20 - Feb. 28 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 23 32,509 Mar. 10 - Mar. 20 8,058 3 28,556 Mar. 20 - Mar. 31 6/ 2 2 42,435 Apr. 1 - Apr. 10 4,836 447 51,698 Total 68,134 10,444 331,316 1. These figures are in part taken from copies of shipping manifests. 2. Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free China. 3. It is presumed that & large percentage of exports to Burma are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. " 11-day period. Treasury Department, Division of Monetary Research April 25, 1942 Regraded Unclassified 135 APPENDIX C Principal Exports from U. S. to U. 8. 8. R. as reported to the Treasury Department during the ten-day period ending April 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $51,698 Principal Items: Motor trucks 7,919 Military tanks - medium 4,782 Dried egg products 3,599 Landplanes, pursuit, interceptor and fighter 3,538 Sausage canned 2,732 Pork canned 1,909 Lard 1,446 Insulated copper wire 1,311 Brass and bronze plates and sheets 1,221 Sugar, refined 1,149 Metallic cartridges 1,134 Landplanes, bombardment 1,050 Military tanks - light 1,045 Steel bars 836 Brass and bronze fabrications for munitions 814 Armor plate 768 Tin plate and taggers tin 750 Explosive shells and projectiles 748 Iron and steel strip 710 Mens boots and shoes 699 Sole leather 690 easury Department, Division of Monetary Research April 25, 1942 Regraded Unclassified 136 APPENDIX D Principal Exports from U. S. to Free China as reported to the Treasury Department during the ten-day period ending April 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 4,836 Principal Items: Landplanes, pursuit, interceptors, fighter 1,289 Aircraft parts and accessories, n.e.s. 559 Other ammunition 470 Smokeless powder 442 Motor trucks 254 Metallic cartridges 236 Iron and steel bars 198 Industrial chemicals 192 Printed matter 140 Shot shells 115 Treasury Department, Division of Monetary Research April 25,1942 Regraded Unclassified 137 APPENDIX E Principal Exports from U. S. to Burma as reported to the Treasury Department during the ten-day period ending April 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 447 Principal Items: Motor trucks 445 Alloy steel sheets 2 Treasury Department, Division of Monetary Research April 25, 1942 138 ASSISTANT SECRETARY OF THE TREASURY April 27, 1942. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston The attached table lists the number of vessels, their nationalities and their action status, in the ports of Boston, Philadelphia, Baltimore, Norfolk, Charles- ton, Savannah, New Orleans, Galveston (including Houston and Corpus Christi), Los Angeles, San Francisco, Portland, and Seattle on April 24, 1942. It will be noted that of the 358 vessels at the fourteen ports listed on Friday, April 24, the "action status" was as follows: Total working cargo: Discharging 56 Lading 89 145 Repairing 141 Idle 35 Total in stream: In ballast 19 Laden 12 Coastwise 1 Enroute 5 37 358 Mrr 139 NO. OF PORT NATIONALITY VESSELS ACTION STATUS Boston American 5 Discharging 2 Repairing British 2 Discharging 2 Lading 1 Repairing Panamanian 1 Lading 2 Repairing Norwegian 1 Lading 3 Repairing Greek 1 Repairing Honduran 1 Lading TOTAL 21 Philadelphia American 6 Discharging 4 Lading 9 Repairing 5 Idle 1 In stream...Coastwise British 2 Discharging 3 Lading 3 Repairing Norwegian 1 Lading 1 Idle Swedish 1 Discharging Panamanian 2 Repairing (loaded) 1 In stream....Ballast Belgian 1 Lading Portugese 1 Discharging TOTAL 41 Baltimore American 2 Discharging 2 Lading -2- 140 NO. OF PORT NATIONALITY VESSELS ACTION STATUS 28 Repairing 3 Idle 2 In stream Ballast British 1 Discharging 1 Lading 3 Repairing 1 Idle 1 In stream Laden Panamanian 1 Discharging 1 Lading 3 Repairing Norwegian 1 Repairing Yugoslav 1 Idle Brazilian 1 Idle Greek 1 Lading Cuban 1 Lading Belgian 1 In stream. Ballast TOTAL 55 Norfolk American 2 Discharging 7 Lading 7 Repairing 1 Idle 4 In stream Ballast 4 If If Laden British 1 Lading 2 Repairing Panamanian 1 In stream Laden 1 If = Ballast 1 Repairing Portuguese 1 In stream. Laden Yugoslav 1 Repairing TOTAL 33 -3- 141 NO. OF PORT NATIONALITY VESSELS ACTION STATUS Charleston American 1 Discharging 4 Repairing 2 In stream Ballast British 1 Lading Yugoslav 1 In stream. Laden Honduran 1 # If Ballast Panamanian 1 Repairing 1 In stream. En route TOTAL 12 Savannah American 1 Repairing 3 Idle Panamanian 2 Repairing TOTAL 6 New Orleans American 9 Discharging 5 Lading 2 Repairing 1 Idle 1 In stream. En route British 2 Lading 1 Repairing Norwegian 1 Discharging 1 Lading 6 Repairing 1 In stream Laden 1 If If En route Honduran 3 Discharging 2 Lading 1 Repairing Panamanian 3 Lading 1 Repairing 142 + NO. OF PORT NATIONALITY VESSELS ACTION STATUS Dutch 2 Discharging Mexican 1 Lading Canadian 1 Idle French 1 Idle Italian 1 Repairing (the ADA 0) TOTAL 47 - 5 - 143 NO. OF PORT NATIONALITY VESSELS ACTION STATUS Galveston American 3 Discharging (Including Houston 4 Lading and'Corpus Christi) 7 Repairing 6 In stream .... Ballast 1 In stream Laden British 1 Discharging 1 Lading 1 Repairing Norwegian 1 Lading 1 Repairing 1 In stream .... Ballast Panamanian 1 Repairing Swedish 1 Lading Mexican 1 Repairing TOTAL 30 Los Angeles American 2 Lading 4 Repairing 3 Idle 1 In stream .... Laden British 1 Lading Norwegian 1 Lading 2 Repairing Dutch 1 Lading USSR 2 Repairing Mexican 2 Idle Argentinian 1 Repairing Honduran 1 Discharging TOTAL 21 San Francisco American 5 Discharging 16 Lading 14 Repairing 4 Idle (coastwise schooners under 600 tons) 3 Idle British 1 Idle 144 - 6 - NO. OF PORT NATIONALITY VESSELS ACTION STATUS San Francisco Dutoh 2 Lading (Continued) Norwegian 1 Repairing Panamanian 2 Lading Swedish 1 Lading Phillipine 1 Lading 1 Idle USSR 5 Repairing 2 Idle TOTAL 58 Portland, Ore. American 1 Lading 1 In stream .... Laden 1 In stream Enroute USSR 3 Repairing TOTAL 6 Seattle American 5 Discharging 9 Lading 5 Repairing USSR 4 Repairing 2 Idle 1 In stream Enroute Dutch 1 Idle Norwegian 1 Lading TOTAL 28 Regraded Unclassified 145 RECAPITULATION NO. OF NATIONALITY VESSELS ACTION STATUS American 40 Discharging 52 Lading. 84 Repairing 20 Idle 24 In stream TOTAL 220 British 6 Discharging 12 Lading 11 Repairing 2 Idle 1 In stream TOTAL 32 Canadian 1 Idle U.S.S.R. 14 Repairing 4 Idle 1 In stream TOTAL 19 Panamanian 1 Discharging 7 Lading 12 Repairing 4 In stream TOTAL 24 Regraded Unclassified -2- 146 NO. OF NATIONALITY VESSELS ACTION STATUS Honduran 4 Discharging 3 Lading 1 Repairing 1 In stream TOTAL 9 Norwegian 1 Discharging 6 Lading 14 Repairing 1 Idle 3 In stream TOTAL 25 Dutch 2 Discharging 3 Lading 1 Idle TOTAL 6 Swedish 1 Discharging 2 Lading TOTAL 3 Greek 1 Lading 1 Repairing TOTAL 2 Portuguese 1 Discharging 1 In stream TOTAL 2 Regraded Unclassified - -3- 147 NO. OF NATIONALITY VESSELS ACTION STATUS Yugoslav 1 Repairing 1 Idle 1 In stream TOTAL 3 Brazilian 1 Idle Argentinian 1 Repairing Cuban 1 Lading Philippine 1 Lading 1 Idle TOTAL 2 Mexican 1 Repairing 2 Idle TOTAL 3 Belgian 1 Lading 1 In stream TOTAL 2 French 1 Idle Italian 1 Repairing TOTAL NUMBER OF VESSELS 358 STRICTLY CONFIDENTIAL Bottom cargo for Russians sent from mills to Seattle, weekly, March 30 to April 25, 1942 : Tonnage : Name of 8 company and commodity : Total : Total : Total : Total : March 30 : April 5 : April 12 : April 19 : to : to : to : to : April 4 : April 11 : April 18 : April 25 Steel Bethlehem Steel Co 546 U. S. Steel Export Co 1,059 Weirton Steel Co 288 Total - - - 1,893 Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942 Source: Procurement Division, Treasury Department. Regraded Unclas 149 STRICTLY CONFIDENTIAL Bottom cargo for Russians sent from mill to port (In tons) Philadelphia Baltimore New York Seattle Total 1. Bottom cargo requirements at the port: Week of April 19 to April 25 17,175 6,500 21,300 - 44,975 Week of April 26 to May 2 45,000 11,000 26,500 4,000 86,500 Total April 19 to May 2 62,175 17,500 47,800 4,000 131,475 Less bottom cargo on hand at port on April 19 24,840 7,520 1,240 - 33,600 Net shipments required, two weeks April 19 to May 2 37,335 9,980 46,560 4,000 97,875 2. Record of actual tonnage sent from mill to port April 19 to April 25: Sunday April 19 1,133 1,942 1,498 4,573 Monday April 20 2,893 1,410 2,064 6,367 Tuesday April 21 2,060 2,591 1,494 6,145 Wednesday April 22 2,686 2,846 3,343 288 9,163 Thursday April 23 2,399 2,650 5,594 998 11,641 Friday April 24 1,877 2,470 6,972 381 11,700 Saturday April 25 1,294 1,429 4,201 226 7,150 Total actual shipments, April 19 to April 25 14,342 15,338 25,166 1,893 56,739 3. Amount required to be shipped, week of April 26 to May 2 22,993 0 21,394 2,107 46,494 2/ Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942 1 Preliminary - assumes the arrival about May 1 of 15 ships now enroute. Total excludes surplus of cargo at Baltimore. Source: Procurement Division, Treasury Department. Regraded Unclassified 150 STRICTLY CONFIDENTIAL Bottom cargo for Ruesians sent from mills to Philadelphia, weekly, March 30 to April 25. 1942 : Tonnage Name of company and : Total : Total : Total : Total commodity March 30 April 5 = April 12 : April 19 to : to to to : April 4 : April 11 : April 16 : April 25 Brase American Bress Co 1,156 513 337 513 Chane Brass & Copper Co 96 58 28 96 Revere Copper & Brass Co 84 176 215 80 Scovill Manufacturing Co 105 97 39 117 Wallingford Steel Co 16 Copper American Brace Co 19 1. Ann conda Wire & Cable Co 24 Copper and brass Revere Copper & Brass Co 127 Nickel International Nickel Do 200 Steel Alan Wood Steel Co 152 885 851 Allegheny Ludlum Steel Co 322 440 409 48 American Rolling Villa 484 264 136 American Steel & Wire Co 50 Armoo Internati onal Co 89 1,762 2,291 1,567 Baboock & Wiloox Co 88 Bethlehem Steel Co 1,764 2,331 1,357 442 Blair Strip Steel Co 28 Brainerd Steel Co 50 50 Carpenter Steel Co 5 25 Cold Metal Process Co 50 209 Collyer Insulated Wire Co 15 Colonial Steel Co 20 Coloredo Fuel & Iron Co 1,882 Crucible Steel Co 91 27 26 Elliott Bros 109 126 Firth Sterling Coro 17 Ford Motor Co 2 Great Lakes Steel Corp 1,630 1,420 37 64 Greer Steel Co Inland Steel Co 1,903 547 55 Jessop Steel Co 3 Johnson Steel 4 Wire Co 24 Jones & Laughlin Steel Corp 398 837 796 444 Keleetman Bros. 20 Keystone Steel & Wire Co 30 330 202 Le Salle Steel Oo 79 Madison Wire Co 34 51 99 92 581 622 364 679 NeLouth Steel Co Mid States Steel Co 25 National Standard Co 50 50 National Steel Corp. 185 National Tube Co New England High Carbon Wire Co 9 9 670 Newport Rolling Villa 200 90 204 Otie Steel Co 639 772 616 358 255 P 4 M Co 51 457 Pitteburgh Steel Co Republic Steel Corp 3,242 3,838 3,801 1,138 John A. Roebling & Sone 104 30 84 60 Beneca Steel Co 176 99 308 Sheron Steel Co Superior Steel Co 271 217 25 141 111 Thomas Steel Co 145 234 8 56 200 249 Thompson Steel A Wire Co Union Drawn Steel Co 274 460 136 U. 8. Steel Export Co 3,702 309 4,130 2,323 Universal Cyclops Co 45 9 1 Vulcan Crucible Co 72 138 78 95 Wellingford Steel Co Washington Tinplate do 36 231 276 99 Wairton Steel Co 1,302 325 Wheeling Steel Corp 2,105 1,365 Wyckoff Drawn Steel Co 50 714 221 855 3,425 Youngstown Sheet & Tube Co Undesignated 11 Miscelleneous Electro Refractories & Alloys Corp 130 101 National Look Washer Co 2 104 Southern Alloys Co Vanadium Corp 28 56 Total 24,605 18,952 18,802 14,342 Office of the Secretary of the Treasury, April 27, 1942 Division of Research and Statistics. Source: Procurement Division, Treasury Department. Regraded Unclassified 151 STRICTLY CONFIDENTIAL Bottom cargo for Russians sent from mills to Baltimore, weekly, March 30 to April 25, 1942 Tonnage Total : Total : Total Name of company and : Total March 30 April 5 : April 12 commodity April 19 to to to to April 4 April 11 April 18 : April 25 Brass American Brass Co 96 329 187 141 Chase Brass & Copper Co 58 42 40 67 Copper Wolverine Tube Co 10 Steel Alan Wood Steel Co 45 Allegheny Ludlum Steel Co 11 33 American Rolling Mille 352 Armoo International Co 116 Bethlehem Steel Co 360 334 916 1,010 Blair Strip Steel Co 21 19 95 61 Brainerd Steel Co 50 92 Cold Metal Process Co 53 Colonial Steel do 18 33 Colorado Fuel & Iron Co 1,796 555 Eaton Steel Co 6 Follansbee Steel Corp 58 Great Lakes Steel Co 537 731 697 52 Inland Steel Co 1,010 Johnson Steel & Wire Co 24 44 25 Jones & Laughlin Steel Corp 1,592 3,342 598 2,080 Keystone Steel & Wire Co. 227 Otie Steel Co 111 293 224 255 P & M Co. 51 Republic Steel Co 5,397 3,830 3,699 6,716 John A. Roebling & Sons 33 Rotary Electric Co 106 Rustless Iron & Steel Co 13 206 Seneca Steel Co 54 37 37 Sharon Steel Co 128 194 208 34 Spang Chalfant, Ino 38 Thomas Steel Co 38 35 112 133 Union Drawn Steel Co 55 U. S. Steel Export Co 611 2,736 1,857 924 Universal Cyclops Co 25 Washburn Wire Co 4 Weirton Steel Co 182 644 425 574 Youngstown Sheet & Tube Co 153 1,310 2,420 2,137 Undesignated 187 Miscellaneous Hubbard & Co 115 McKenna Metals Co 353 Undesignated 67 Total 10,379 15,478 13,549 15,338 Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942 Source: Procurement Division, Treasury Department. Regraded Unclassified 152 STRICTLY CONFIDENTIAL Bottom cargo for Russians sent from mills to New York, weekly, March 30 to April 25, 1942 : Tonnage Name of company and Total Total Total Total commodity March 30 April 5 April 12 April 19 to to to to April 4 April 11 April 18 April 25 Brace Bristol Brase Co 73 Phelps Dodge Corp 113 Revere Copper & Brace Co 71 411 Copper Phelps Dodge Copper Products Co 274 United Wire & Supply Co 33 Iron Oliver Iron Co 22 Steel Allegheny Ludlum Steel Co 330 835 American Rolling Mills 1,225 Armco International Co 541 530 1,235 1,197 Bethlehem Steel Co 50 123 921 1,163 Brainerd Steel Co 47 Carnegie Illinois Steel Co 331 Cold Metal Process Co 84 53 52 Collyer Insulated Wire Co 25 Colorado Fuel & Iron Co 1,332 629 1,161 Crucible Steel Co 28 182 579 Great Lakes Steel Co 1,641 501 Halcomb Steel Co 66 34 Heppenstahl Co. 101 59 46 49 Indiana Steel & Wire Co 135 284 465 Inland Steel Co 695 956 3,341 Johnson Steel & Wire Co 24 Jones & Laughlin Steel Corp 135 469 562 1,859 Keystone Steel & Wire Co 252 Madison Wire Co. 25 McLouth Steel Co 54 144 240 National Tube Co 5,861 Newman Crosby Steel Corp 25 Northwestern Steel & Wire Co 30 Otis Steel Co 652 981 1,163 1,461 P & M Co 51 Pittsburgh Steel Co 1,349 1,473 403 1,086 Republic Steel Co 940 391 582 1,230 John A. Roebling & Sone 137 Sheffield Steel Co 65 Spang, Chalfant, Ino 1,784 Thomas Strel Co. 111 59 Thompson Steel & Wire Co 189 Union Drawn Steel Co 361 U. 8. Steel Export Co 1,336 3,103 4,468 9,146 Wallingford Steel Co 25 29 Washburn Wire Co 9 34 Washington Tin Plate Co 34 Weirton Steel Co 117 45 220 Wheeling Steel Corp. 78 Wyckoff Drawn Steel Co 399 348 651 454 Youngstown Sheet & Tube Co 1,829 2,939 702 240 Miscellaneous National Standard Co 54 11,306 13,679 22,280 25,166 Total Office of the Secretary of the Treasury, Division of Research and Statistics. April 27, 1942 Procurement Division, Treasury Department. Regraded Unclassified 153 TREASURY DEPARTMENT PROCUREMENT DIVISION OFFICE OF THE DIRECTOR WASHINGTON April 27, 1942 MEMORANDUM TO THE SECRETARY: Just received word from Colonel R. H. Wylie, Chief, Operations Section, Transportation Division, War Department, that no further releases would be is- sued by the War Department for movement of supplies for Russia to ports of shipment and that an immediate study would be made of tonnage in transit to determine what part would be loaded in available boats and what part should be stored. I asked him the basis and the reason for this order and he advised that there is an accumulation in the Iceland area of ships en route with Russian sup- plies and they are not getting through to destination, also, the instruction was issued from the White House last night. Colonel Wylie explained that this is a very ticklish situation and they hope to have an answer within the next forty-eight hours as to the disposi- tion of boats that have been earmarked for Russian shipments. your Clifton E. Mack Director of Proourement PORVICTORY BUY UNITED STATES prom BONDS ARB STAMPS Regraded Unclassified 154 APR 27 1942 My dear Mr. Prime Minister: Last Thursday I had the pleasure of seeing Mr. John Martin, whom you have sent to this country on a special supply mission. I want to assure you that I and the members of my staff will do all that we can to be of assistance to him and to your Government. Very sincerely yours, (Signed) 1. Morgenthan, in Secretary of the Treasury Monorable J. C. Smute, Prime Vinister of the Union of South Africa, Pretoria, South Africa. Fale Dr. White frompson P fots file - n.m.c. By Messenger Simmons 3:30 Send to State Dept for forwarding via Diplomatic Pouch JEH/gra - 4/24/42 Regraded Unclassified Prime illinoter's Office Pretoria. Das mr. Insparthan, 29.3.42 I am sending Mr John Martin to Washington on a special mission to re- place our South African Purchasing Com- mission and to improve the machinery which provides for our war and civil supplies from the U.S.A. I have asked him to contact you and commend him to your consideration, and I shall very much appreciate any assistance you could kindly give him in his task. lie is a foremost leader in our industrial and mining world and also a director of the Bank of England. Personally you will find him most agreeable as well na well- informed on allSouth African matters. Regraded Unclassified I know of no man better qualified than he to do our supplies work in your great country and to do 80 in a Most friendly and helpful spirit. He has my full confidence and I am sure will prove worthy of yours. So far as I am concerne you may discuss most freely all business and war questions with him. Yours sincerely, Whing. Hon m Impertan TREAS EFARTMENT RECEIVED Treasury Department 1942 APR 21 AM 3 43 APR 23 1942 SECRETARY NEASURY Division at Monetary Research Regraded Unclassified LEGATION OF THE UNION OF SOUTH AFRICA WASHINGTON, D.C. 20 avil 1942. hydiar Sir, I have had the honour of carrr mg will the on an air journey from South Africa the enclosed letter er to you from the Prime Minisloi, Fuld Charshal. the Rt (Hou I.C. Smuts P.C. 9 should esleesing A as a greal favour if you should find it . hossible about some occasion convenient 6 Towrself 6 grant me a short w lerview John Marlin Hou Henry Morgen Mare I. Washington Regraded Unclassified 158 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. Kamarck Subject: Shipment. of Planes to British Forces, week ended April 21, 1942 1. In the week ended April 21, 1942, a total of 158 planes of all types (124 combat planes) were shipped to British forces. 2. The largest movement of heavy bombers in 1942 occurred in this week with the shipment of 11 heavy bombers to England. 3. All of the 55 bombers going to England in this week were delivered by air. Regraded Unclassified 158 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. Kamarck Subject: Shipment. of Planes to British Forces, week ended April 21, 1942 1. In the week ended April 21, 1942, a total of 158 planes of all types (124 combat planes) were shipped to British forces. 2. The largest movement of heavy bombers in 1942 occurred in this week with the shipment of 11 heavy bombers to England. 3. All of the 55 bombers going to England in this week were delivered by air. - 2 - 159 Table A - Shipments by Area Week Total Shipped Total Shipped Ending in 1942 since Apr.21,1942 to date Jan. 1, 1941 To the United Kingdom Light and medium bombers 44 190 1,351 Heavy bombers 11 35 139 Naval patrol bombers 0 8 110 Pursuit 19 561 872 Army Cooperation 15 59 90 Trainers 0 0 24 Total to the United Kingdom 89 853 2,586 To the Middle East Light and medium bombers 6 192 522 heavy bombers 0 0 5 Pursuit 3 166 1,014 Army Cooperation 0 12 12 Trainers 0 8 150 Total to the Middle East 9 378 1,703 To the Canadian Forces Light and medium bombers 5 32 200 Heavy bombers 0 1 1 Naval patrol bombers 0 23 31 Pursuit 0 30 72 Trainers 34 287 1,528 Total to the Canadian Forces 39 373 1,832 To the British Pacific Forces Light and medium bombers o 121 216 Naval patrol bombers O 0 27 Pursuit 14 127 295 Trainers 0 o 105 Total to Pacific Forces 14 248 643 to the British Indian Forces Pursuit 7 40 40 Total to Indian Forces 7 40 40 Total Light and medium bombers 55 535 2,289 Heavy bombers 11 36 145 Naval patrol bombers o 31 168 Pursuit 43 924 2,293 Army Cooperation 15 71 102 Trainers 34 295 1,807 Totals 158 1,892 6,804 Regraded Unclassified - 3 - 160 Table B - Shipments by Types Week Total Shipped Total Shipped Ending in 1942 since Apr.21, 1942 to date Jan. 1, 1941 Bell Airacobra 19 307 461 Boeing B-17 2 9 29 Boston III 0 5 29 Brewster Buffalo 0 0 168 Cessna Crane I-A (AT-17) 5 31 31 T-50 0 86 700 Consolidated Catalina 0 31 168 Liberator 9 27 116 Curtiss Kittyhawk 17 327 709 Tomahawk 0 0 544 Douglas Boston I and II 0 0 82 Boston III 0 0 410 Fairchild 24 R-9 15 61 83 Glenn Martin Baltimore 6 195 263 Maryland 0 0 150 Grumman Martlet II 7 45 86 Lockheed Hudson 25 253 1,223 Lightning 0 3 3 Ventura I 0 12 12 Ventura Bomber 22 66 66 North American B-25B 2 4 4 Harvard II 0 51 948 Mustang 0 242 322 Pitcairn Autogiro o 0 5 Stearman PT-27 29 127 128 Vought Sikorsky Chesapeake 0 o 50 Vultee Stinson-049 0 10 14 Grand Total - All Types 158 1,892 6,804 Regraded Unclassified - Table C - Plane Shipments to the British by Weeks 161 Light and Naval Army Week medium Heavy patrol Coopera- Ended bombers bombers bombers Pursuit tion Trainers Total Weekly Average of shipments in 1941 36 2.2 2.7 28.3 .6 30.2 100 January 6,1942 24 0 5 30 4 9 72 January 13,1942 3 0 2 58 0 42 105 January 20,1942 8 0 0 14 o 60 82 January 27,1942 24 0 1 100 5 13 143 February 3,1942 9 0 3 10 4 4 30 February 10,1942 33 0 3 59 o 4 99 February 17,1942 12 0 2 41 7 0 62 February 24,1942 33 o 2 86 7 1 129 March 3, 1942 26 0 1 80 6 0 113 March 10, 1942 29 2 0 78 1 0 110 March 17, 1942 34 1 0 94 8 0 137 March 24, 1942 94 9 12 79 0 84 278 March 31, 1942 49 1 0 58 4 10 122 April 7, 1942 69 2 0 8 4 5 88 April 14, 1942 55 7 0 86 6 29 183 April 21, 1942 55 11 0 43 15 34 158 Total shipments since January 1, 1941 to date * 2,289 145 168 2,293 102 1,807 6,804 + These tables include a few aircraft shipped prior to March 17, 1942, which are not listed in the weekly figures. Due to a mistake by the source of the data, Lend-Lease aircraft flight deli- veries were not included in the weekly statements. The correction has now been made in the totals. Regraded Unclassified 162 EXECUTIVE OFFICE OF THE PRESIDENT BUREAU OF THE BUDGET WASHINGTON, D.C. APR 2 7 1942 Dear Henry: Many thanks for your note of April 22, forwarding Sir Frederick Phillips's report on the British War Ships Week campaign. I read the report with interest. Sincerely yours, Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. c. THOUSANDS intending es & NA 8S RA SAGI 163 BOARD OF GOVERNORS OF THE ( 8 STATE information FEDERAL RESERVE SYSTEM WASHINGTON M.S. BZYMCZAK MEMBER or THE BOARD April 27, 1942. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Building, Washington, D. C. Dear Mr. Secretary: Mr. Eccles showed me your letter to him in reference to the Japanese evacuation on the coast. It was a pleasure to have been of some assistance. Please accept my thanks for your expression as well as my assurance of a desire to cooperate whole-heartedly in this and any other similar matter. Kind personal regards and best wishes. Respectfully yours, S. Strangak MSS ams 163 BOARD OF GOVERNORS OF THE ( 8 STATE CHARLE THE J FEDERAL RESERVE SYSTEM WASHINGTON M.S. SZYMCZAK MEMBER OF THE BOARD April 27, 1942. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Building, Washington, D. C. Dear Mr. Secretary: Mr. Eccles showed me your letter to him in reference to the Japanese evacuation on the coast. It was a pleasure to have been of some assistance. Please accept my thanks for your expression as well as my assurance of a desire to cooperate whole-heartedly in this and any other similar matter. Kind personal regards and best wishes. Respectfully yours, Standzak MSS ams 163 BOARD OF GOVERNORS OF THE <<<<<<<<<<<<<<<<<<<<<<<<< 8 STATE 2 FEDERAL RESERVE SYSTEM WASHINGTON M.S. SZYMCZAK MEMBER OF THE BOARD April 27, 1942. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Building, Washington, D. C. Dear Mr. Secretary: Mr. Eccles showed me your letter to him in reference to the Japanese evacuation on the coast. It was a pleasure to have been of some assistance. Please accept my thanks for your expression as well as my assurance of a desire to cooperate whole-heartedly in this and any other similar matter. Kind personal regards and best wishes. Respectfully yours, S. Stymesak MSS ams 164 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 27, 1942 TO Secretary Morgenthau FROM Mr. White 13 Subject: South American Traffic in Dollar Currency The attached cable from the American Embassy in Buenos Aires reports large shipments of United States currency from Buenos Aires to New York. American currency seized by Germany in the Occupied Countries has been sold in Switzerland, Spain, and Portugal, and to a lesser extent in Latin America. To prevent Germany from deriving foreign exchange from the sale of American cur- rency, the Treasury Department extended General Ruling 6 procedure to currency imported from any blocked country out- side the generally licensed trade area or from any Proclaimed List national. Because of the Treasury's disapproval, no United States currency was imported from Continental Europe in the first quarter of 1942. However, $1.5 million in United States cur- rency was imported from South America, three-fourths of it from Argentina. If this means of transit could be stopped, we could effectively prevent Germany from profiting from looted dollar currency. General Ruling 6 procedure could be extended to the American Republics with the provision that imports of cur- rency would be permitted only from Central Banks upon their certification that the currency is known to be of local origin and has not been acquired from Axis nationals in this Hemisphere. To assure the good, faith of their certification, cooperating American Republics would find it necessary to impose strict control on the import of dollar currency. In many countries it might be desirable to require the surrender of all holdings of dollar currency, thus obviating future currency shipments. Such 8. program would permit the continued use of dollar currency in Cuba and other American Republics while preventing European countries from disposing of their holdings of dollar currency through Latin America. Monetary Research, the General Counsel's Office, and Foreign Funds Control are working on the details of such & program, and Mr. Bell is following the matter. Regraded Unclassified 165 C 0 ? Y DEPARTMENT OF STATE WASHINGTON In reply refer to If March 25, 1942 840.51 Frozen Credits/5768 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and transmits for his information a copy of an air-mail despatch no. 4396 dated March 12, 1942, from the American Embassy, Buenos Aires, concerning the repatriation of United States currency by way of Buenos Aires. Enclosure: Copy of an air-mail des- patch no. 4396 from the American Embassy at Bue- nos Aires. Copy:ime 3/27/42 Regraded Unclassified 166 C 0 ? I Buenos Aires, Argentina, March 12, 1942 No. 4396 Subject: REPATRIATION OF UNITED STATES CURRENCY BY WAY OF BUENOS AIRES STRICTLY CONFIDENTIAL The Honorable The Secretary of State, Washington. Sir: I have the honor to report that there is becoming increas- ingly conspicuous here the traffic in United States currency, one aspect of which is the large shipments of notes from Buenos Aires to New York. The Treasury Department undoubtedly has complete statistics concerning the importation of such currency from the Banco de la Nacion, Shaw Strupp y Cia., Pascual Hnos., and other institutions here. It may be reported, however, that the Banco de la Nacion alone is understood to have sent to New York 250,000 dollars in United States currency in recent months, and Shaw Strupp y Cia. is believed to have sent $165,000 in this form to the Chase National Bank since last November. The logical inference, of course, 1. that & considerable part of the dollar notes being sent to the United States is loot from the occupied countries, although at least & certain amount represents the repatriation of notes Regraded Unclassified 167 - 2 - notes imported here from the United States after the adoption of the first blocking measures in the United States in 1940 (as was reported in the last paragraph of the Embassy's despatch no. 3958 of January 23, 1942). The local firm of Casal, Manfredi, Perego y Cia., which is probably the principal importer here of dollar notes from Europe, has stated that it brought into Argentina $398,000 in such notes in 1941. The Zurich branch of the Societe Alsacienn de Banque, of Strasburg, is reported to be one of the chief suppliers of dollar currency to Argentina and has supplied Casal, Manfredi, Perego y Cia., but the latter has agreed to discontinue importing through this institution. It is reasonable to assume that a large quantity of dollar notes is also being smuggled into Argentina, particularly by persons on Spanish and Portuguese vessels and by refugees. The suggestion has been made, and it is understood that the British Embassy here has forwarded the suggestion to the British Embassy in Washington, that an effective means of controlling this situation might consist of a requirement by the United States Treasury Department whereby dollar notes could be imported into the United States for free accounts from the other American republics only through branches of American and British banks in those countries, together with a measure whereby these institutions would be given the responsibility of carefully scrutinizing the dollar notes Regraded Unclassified 168 - 3 - notes purchased with a view to ascertaining whether their sources were legitimate. Dollar currency from other institutions, under the suggested plan, could be imported only for deposit in blocked accounts. Respectfully yours, For the Ambassador: Edward L. Reed, File No. 851 Counselor of Embassy JWG:dnb A true copy of the signed orig- inal (s) dnb Copy:ime 3/27/42 C 169 0 P Y DEPARTMENT OF STATE WASHINGTON April 27, 1942 In reply refer to FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 235, dated April 25, 11 a.m., from the American Consulate General at Sydney, which in terms of reference to the Consulate General's telegram 216, dated April 10, 5 p.m., reports the aggregate amount of Treasury checks received from the Commonwealth Bank April 24, as $35,101.37. Enclosure: From Consulate, Sydney, no. 235, April 25, 1942. Copy:vw:4-27-42 Regraded Unclassified C 0 170 P Y REV Sydney This telegram must be paraphrased before being Dated April 25, 1942 communicated to anyone other than a Governmental Rec'd 6:41 a.m. agency. (BR) Secretary of State, Washington. 235, April 25, 11 a.m. Referring to my telegram no. 216, April 10, code group $35101.37. PALMER HPD Copy:vw:4-27-42 Regraded Unclassified 171 APR 27 1942 Dear DF. Curries Reference is sade to your letter of April 22, 1942 onalosing paraphrase of sable from Dr. Kung of Aprill 20. I approciate your suggestions and I would be glod if you would reply infereing Dr. Kung that the Treasury is pleased with Dr. Eung's communica- tiem. Sincerely yours, (Signed) a. Morgenthau. in Secretary of the Treasury. Dr. Lauchlin B. Currie, Administrative Assistant to the President, The White to Home. Photo n.m.c. SS ligh 3:25 file to Dr.White cc-Thompson IFF/efe 4/23/8 Regraded Unclassified THE WHITE HOUSE WASHINGTON April 21, 1947. Honorable Henry Morgenthau, J : ., Secretary of the Treasury, Washington, D. C. Dear Mr. Secretary: I an attaching i. carle I just received from Dr. Kung. I on not sure that it. advances matters very much, but it occurs to me that on the strength of it you coule quite properly instruct Adler to keep himself informed on actual and pencing dev-lopments and to send you his suggestions on. recommendations. I can reply if you wish, saying you are pleased and reassured by Dr. Kung's communica- tion and that you are instructing Aoler to keep you completely informed on current and pending developments. Sincerely yours, Lauchlin Currie Regraded Unclassified COMP IDENTIAL PARAPHRASE CABLE FROM DR. KUNG, APRIL 20, 1942, With reference to keeping the Treasury informed on all developments relating to the loan I have done so and intend to do so in the future. For example, I told Adler on the 18th of March about the plan to put out savings certificates and bonds and he must have cabled this to the Treasury. I welcome any counsel the Treasury is willing to offer and if the Secretary cares to make any suggestions every consideration will be given to them. It vas essential to request the shift of funds to the Central Bank in order to convince the people that use was being made of the loan without delay to prevent inflation. Regraded Unclassified 174 MJL Chungking via N.R. This telegram must bE paraphrased before bEing Dated April 27, 1942 communicated to anyone other than a Governmental Rec'd 5:25 p.m. agency. (BR) Secretary of State, Washington. 467, April 27, 1 p.m. ADLER FOR WHITE CARE OF SECRETARY OF THE TREASURY. RE your 311 of April 22. Board's proposal a compromise which appears least unsatisfactory way out of Embarrassing situation. (1) November 1 agreement between and Minister of Finance gave Board no authority over Chinese Government foreign Exchange Expenditures approved by Exchange Control Commission. In undertaking commitment Board did not receive any power (?) Government applications for foreign ExchangE. NEVERTHELESS at time of its conclusion agreement BEEMED (?) (?), as probability was that current receipts on account of agrEEmEnT - namely, foreign Exchange from remittances and exports -- would EXCEED current out goEs on its account. (2) With outbreak of Pacific War reverse side became the Regraded Unclassified 175 -2- #467, April 27, 1 p.m. from Chungking via N.R. became the CASE. Without SOME modification of agreement Board's sterling would bE Exhausted and whole question of Board's survival (?) as tripartite body would arise unlEss British Treasury were to make A new advance, which apparently it was reluctant to do. Moreover as most of China's present fortign trade is with sterling area, Exhaustion of Board's sterling would deprive it of one of its main raisons d're. VINCENT WSB 176 LSH Chungking This telegram must bE paraphrased before being Dated April 27, 1942 communicated to anyone other than a Governmental Rec'd 9:51 p.m. 28th agency. (BR) Secretary of State, Washington, 467, April 27, 1. P.m. (SECTION TWO) (3) (?) embarrassing for to renege on November 1 agreement entirsly. Proposal Enables Board to withdraw from it gracefully and with minimum loss, DECEMBER 8 being logical date for termination of obligation under agreement. Board might have asked for receipts from November 1 to December 8 but they would have been small as general license 75 became operative only on November 12 and British has made no (?)to (?) (?) remittances from sterling area. Further there was some doubt as to whether November 1 agreement was not intended to bE retroactive to mid-August, and as it was impossible to lay hands on receipts prior to November 1 Board felt it-was getting off lightly and that receipts from November 1 to DECEMBER 8 were not worth making issue of. (4) N. (?) B. (?) involves no in Board's relation to Exchange Control Commission. Board has never had 177 -2- #467, April 27, 1 p.m. (SECTION T.O) Chungking never had any power over Commission's (?) and proposal leaves things as they WERE, Situation in which control over foreign EXCHANGE is vested in two agencies and one admittedly not best possible, but for this neither November 1 agreement nor Board's new proposal is responsible. VINCENT WSB 178 PH Chungling via N.R. This telegram must be paraphrased before being Dated April 27, 1942 communicated to anyone other than a Governmental Rec'd 5:27 p.m. agency. (DR) Secretary of State, Washington. 467, April 27, 1 p.m. (SECTION THREE) (5) Board's undertaking to turn over to Central Bank Exchange accruing from general license 75 and from other current sources "In so far as is necessary to cover applications for foreign exchange approved by Exchange Control Commission" would appear only substantial concession it is making. But even this is a compromise Central Bank originally desiring clause without "insofar as is necessary, Etc." Actually WE do not like paper concession as Boards current receipts "will fall for short of Exchange requirements. (6) Only real alternative to proposal is for Board to abide by November 1 agreement and fight for abolition of Exchange Control Commission that is, 1f British Treasury could bE persunded to make a new starling advance this fight would lead to strious dispute with Chinese Government and with prevailing 179 -2-3/107, April 27, 1 p.m. (SECTION THREE) from Chungking via N.R. pravailing nationalistic mood here it is extramely doubtful whether desired result could bE obtained. (SEE Madame Chiang's reference to foreign control over China's foreign Exchange in NEW YORK TIMES of April 19) For these reasons strongly recommend endorsement of Board's proposal. (END OF MESSAGE) VICENT WSB 180 CORRECTED COPY AS Chungking via N. R. This telegram must be paraph.rased before being Dated April 27, 1942 communicated to anyone other than a Governmental Rec'd 5:25 p.m. agency. (BR) Secretary of State, Washington. 467, April 27, 1 p.m. (SECTION ONE) FOLLOWING FROM ADLER FOR WHITE CARE OF SECRE TARY OF THE TREASURY. Re your 311 of April 22 Board's proposal a compromise which appears lerst unsatisfactory way out of embarrassing si tuation. (1) November 1 agreement between and Minister of Finance gave Board no authority over Chinewe Government foreign Exchange expenditures approved by Exchange Control Commission. In undertaking commitment Board did not receive any power to scrutinize Government applications for foreign exchange. Never- thelees at time of its conclusion agreement seemed a good bargain, as probability was that current re- ceipts on account of agreement -- namely, foreign exchange from remittances and exports -- would exce ed current outgoes on its account. (2) With Regraded Unclassified 181 ⑉2⑉ #467, April 27, 1 p.m. (SECTION ONE), from Chungking via N. R. (2) With outbreak of Pacific Var reverse side became the CASE. Without some modifidation of agree- ment Board's sterling would bE Exhausted and whole question of Board's survival as tripartite body would arise unless British Treasury were to make a new ad- vance, which apparently it was rEluctant to do. More- over as most of China's present foreign trade is with sterling area, Exhaustion of Board's sterling would deprive it of one of its main raisons d're. VINCENT WSB 182 I 1 É By I 198 : i É will you please cand the following cuble to the Anstrican Senious I I Reference - Me. msy. Age82 as. e yes, the to affices dollar 1466, I s Applical i I a I I words I I I use I I i I all I - depenited with tobaccy." Regraded Inclassified 183 TELEGRAM SENT DM April 27, 1942 This telegram must bE paraphrased before bEing midnight communicated to anyone other than a Governmental agency. (BR) AMEMBASSY, LONDON, (ENGLAND). 1830 FROM TREASURY QUOTE Your 2153, April 25, 2 p.m. Time to Effect dollar credits under procedure no. 1468, April 8, midnight is approximately two days after Treasury receives from State Department cable advising amount deposited with Embassy. END QUOTE. HULL (FL) FD:FL:ME Regraded Unclassified 184 MEV GRAY Bombay Dated April 27, 1942 Rec'd 1:06 p.m. SECRETARY of State, Washington. 292, April 27, 4 p.m. Department's 68 to Calcutta. Total amount of United States Treasury checks cashed by National City Bank of NEW York at Bombay and delivered to this Consula te is $680.85. INFORM TREASURY DONOVAN RR 185 TELEGRAM SENT IM April 27, 1942 This telegram must bE paraphrased before being 5 p.m. communicated to anyone other than a Governmental agency. (BR) AMERICAN CONSUL SUVA, FIJI ISLANDS. 20 FROM TREASURY. QUOTE Your despatch No. 60, April 11, 1942. 1. For your information the British Government has agreed to the negotiation of dollar telegraphic transfers, checks drawn on the Treasurer of the United States and the sale of United States currency for official purposes at the rate of $4.03-1/2 per pound net in Great Britain and Northern Ireland and the Treasury understands that the British Government has cabled the Dominion Central Banks respecting similar arrangements on the basis of $4.03-1/2 per pound net in the sterling area. 2. In order to facilitate the negotiation of and improve the rate for the sale of United States currency and checks drawn on the Treasurer of the United States, the following Regraded Unclassified 186 -2- #20, April 27, 5 p.m., to Suva, Fij1 Islands. the following procedure is suggested. 3. In the OBSE of EXCESS United States paper currency, instruct the Bank of NEW South Wales, Suva, to prepare list in quadruplicate showing the amount of Each denomination of Each kind of currency separately, and for Federal RESERVE notes and for Federal RESERVE Bank notes, the list must show separately the amount of each denomination of the issue of Each bank, cut currency in half vertically and stamp or write name of bank on Each half in ink. Then deliver both halves and list in quadruplicate to American Consul, Suva. 4. Consular officer will verify amount of currency delivered to him against list prepared by bank end then hE will telegraph Treasurer of United States through State Department the amount of currency delivered to him. When Treasury receives this advice, payment in corresponding amount will bE made to the NEW York correspondent for the account of the Bank of NEW South Wales, Suva. Please include in your first telegram name of correspondent. Upon receipt and Examination Treasury reserves right to claim reimbursement for any currency which is not genuine. Each set of halves should bE forwarded Regraded Unclassified 187 -3- #20, April 27, 5 p.m., to Suva, Fiji Islands. forwarded by separate carrier accompanied by a copy of the list. The third copy of list should bE for- warded by still another carrier. The American consular officer will retain fourth copy of list. 5. All United States dollar checks drawn on the Treasurer of the United States negotiated by the Bank of NEW South Wales, Suva, are to bE delivered to the American Consul, Suva, accompanied by list in triplicate with complete description of Each check as follows: Name of drawer, symbol number; check number; amount; payee's name; date of check. Consular officer will carefully verify checks against list and advise Treasury by telegram through State Department aggregate amount of checks delivered by bank. Upon receipt of this advice, Treasury will Effect payment in corresponding amount to the NEW York correspondent of the Bank of NEW South Wales. Consular officer should instruct Bank of NEW South Wales to use all possible diligence in identification of payee and determining validity of Endorsements. Bank of NEW South Walse should endorse chacks as follows: Inner Regraded Unclassified 188 -4- #20, April 27, 5 p.m., to Suva, Fiji Islands. Inner Quote. Pay to the order of the Treasurer of the United States for credit of our account with (name of bank). Signed Bank of NEW South Wales, Suva. End Inner Quote. Treasury will look to Bank of NEW South Wales only for usual guarantee under laws applicable in the Fiji Islands. Consular officer should forward checks accompanied by one copy of list to Treasurer of United States, Washington, as promptly as possible by safest means available. Second copy of list should follow by separate carrier at Earliest possible date. Third copy should bE retained by consular officer. 6. Consular officer should make no arrangements for insurance as shipments of both checks and currency will bE covered by Government LOSSES in Shipment Act. 7. The designation of the Bank of NEW South Wales as a depositary of public monies of the United States, as outlined in the Treasury's letter to the Head Office of the Bank at Sydney, dated DECEMBER 31, 1941, is hereby Extended to carry out the procedure outlined in this telegram. 8. Please advise the Bank of NEW South Wales, Suva, the Bank Regraded Unclassified 188 -4- #20, April 27, 5 p.m., to Suva, F1 J1 Islands. Inner Quote. Pay to the order of the Treasurer of the United States for credit of our account with (name of bank). Signed Bank of NEW South Wales, Suva. End Inner Quote. Treasury will look to Bank of NEW South Wales only for usual guarantee under laws applicable in the Fiji Islands. Consular officer should forward checks accompanied by one copy of list to Treasurer of United States, Washington, as promptly as possible by safest means available. Second copy of list should follow by separate carrier at sarliest possible date. Third copy should bE retained by consular officer. 6. Consular officer should make no arrangements for insurance as shipments of both checks and currency will bE covered by Government LOSSES in Shipment Act. 7. The designation of the Bank of NEW South Wales as a depositary of public monies of the United States, as outlined in the Treasury's letter to the Head Office of the Bank at Sydney, dated DECEMBER 3] 1941, is hereby Extended to carry out the procedure outlined in this telegram. 8. Please advise the Bank of NEW South Wales, Suva, the Bank Regraded Unclassified 189 -5- #20, April 27, 5 p.m., to Suva, Fiji Islands. the Bank of NEW Zealand, Suva, and other United States Government officials of appropriate parts hersof. 9. To minimize number of checks drawn on the Treasurer of the United States, suggest that you advise disbursing officers that they should cable through their respective departments their local currency requirements. Arrangements will then bE made to ad- vance dollar credits to the Bank of NEW South Wales, Suva. END QUOTE. The Department approves the foregoing. Any Expense incurred in carrying out the instructions contained in this telegram should bE included in regular accounts as separate item for billing Treasury in accordance with SEC. V - 45, Foreign SERVICE Regulations. HULL (FL) FD:FL:MLB Regraded Unclassified TELEGRAM SENT 190 PH April 27, 1942 This telegram must i/E peraphrased before bEing 5 p.m. communicated to anyone other than e Governmental agency. (BR) MLEGATION WELLINGTON (NEW ZEALAND) 20 FROM TREASURY QUOTE. 1. For your information the British Government has agreed to the negotiation of dollar telegraphic transfers, checks drawn on the Treasurer of the United States and the BOLE of United States currency for official purposts pt the rate of $4.03- 1/2 pEr pound net in Great Britein and Northern Irtland nd the Treasury understands that the British Government has cabled the Dominion Central Banks respecting similar arrangements on the bosis of $4.03-1/2 pEr pound net in the starling ArEA. 2. In order to facilitate the negotiation of the 881E of United tates currency and checks drawn on the Treasurer of the United States, the following procedure 18 suggested. 3. In the 0885 of EXCESS United States paper currency, Regraded Unclassified 191 -2-#20, April 27, 5 p.m., to Wellington (NEW Zealand) currency, instruct the Benk of NEW Zeelond, WEllington, to prepare list in quadruplicate showing the amount of each denomination of EACH kind of currency separately, and for Federal RESErve note and for Federal RESErvE Bank notes, the list must show sEperately the Amount of Each denomination of the issue of each bank, cut currency in half vertically and stamp or write name of bank on Each half in ink. Then deliver both halves end list in quadruplicate to American Consul, Wellington. 4, Consular officer will verify amount of currency delivered to him against list prepared by bank and then hE will telegraph Treasurer of United States through State Department the amount of currEncy delivered to him. When Treasury receives this Advice, payment in corresponding amount will bE made to the NEW York correspondent for the account of the Bank of NEW Zaaland Wellington. Please include in your first telegrem name of correspondent. Upon receipt and Examination Treasury reserves right to claim reimbursement for any currency which is not genuine. Each BET of halves should bE forwarded by separate carrier accompanied by e copy of the list, The third copy of Regraded Unclassified 192 -3-#20, April 27, 5 p.m., to WELLINGTON (NEW Zeeland) copy of list should bE forwarded by still another carrier. The American consuler officer will retain fourth copy of list. 5. All United Strtes dollar checks drawn on the Treasurer of the United States negotiated by the Bank of NEW Zerland, Wellington, are to bE delivered to the American Consul, Wellington, nccompanied by list in triplicat with complete description of Each check 88 follows: Name of drawer; symbol number; check number; amount; payee's nome; date of check. Consuler officer will carefully verify checks against list and advise Treasury by telegraph through State Department Aggrtgate amount of checks delivered by bank. Upon receipt of this advice, Treasury will Effect payment in corresponding amount to the NEW York correspondent of the Bank of NEW Zealand, Welliington. Consular officer should instruct Bank of NEW Zealand to use all possible diligence in identification of payee and determining validity of Endorsements. Bank of NEW Zealand should Endorse checks 88 follows: INNER QUOTE. Pay to the order of the Trassurer of the United States for credit of our account with (name of Regraded Unclassified 193 -1-#20, April 27, 5 p.m., to WELLINGTON (NEW Zealand) (name of bank). Signed Bank of NEW Zealand WEllington. END INNER QUOTE. Treasury will look to Bank of NEW Zealand only for usual guarantee under laws applicable in NEW Zealand. Consular officer should forward checks accompanied by one copy of list to Treasurer of United States, W-shington, AB promptly AS possible by sefest mEnns available. Second copy of list should follow by separate carrier nt Forliest possible date. Third copy should bE retained by consular officer. 6. Consular officer should make no arrangaments for insurance R8 shipmEnts of both currency and checks will bE covered by Government LOSSES in Ship- mEnt Act. 7. The designation of the Bank of NEW Zealand, Wellington, AS a depositary of public monies of the United States, as outlined in Transury's letter dated April 4, 1942, 18 hereby Extended to carry out the procedure outlined in this telegrem. 8. Please advise the Bank of NEW Zesland, WELLINGTON, and other United Stotes Government officials of appropriate parts hersof. 9. To minimize Regraded Unclassified 194 -5-#20, April 27, 5 p.m., to WELLINGTON (New Zealand) 9. To minimize number of checks drawn on the Treasurer of the United States, suggest that you advise disbursing officers that they should cable through their respective departments their local currency requirements. Arrangements will then bE made to advance dollar credits to the Bank of NEW Zealand. END QUOTE. The Department approves the foregoing, Any EXPENSE incurred in carrying out the instructions contained in this telegram should bE included in regular accounts as separate item for billing Transury in Accordance with SEC. V- 45, Foreign Service Regulations. HULL (FL) FD:FL:BMcB Regraded Unclassified TREASURY DEPARTMENT 195 INTER-OFFICE COMMUNICATION DATE April 27. 1942 TO Secretary Morgenthau FROM Mr. Miss For confidential Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns £68,000 Purchased from commercial concerns £10,000 Open market sterling remained at 4.03-3/4, with no reported transactions. In New York, closing quotations for the foreign currencies listed below were as follows: Canadian dollar 12-1/4% discount Argentine peso (free) .2365 Brazilian milreis (free) .0516 Colombian peso .5775 Mexican peso .2064 Uruguayan peso (free) .5295 Venezuelan bolivar .2870 Cuban peso 1/4% premium We sold $273,000 in gold to the Central Bank of Venezuela, which was earmarked for its account. No new gold engagements were reported. In London, spot and forward silver remained 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 35-1/84. We made no purchases of silver today. Regraded Unclassified 196 13 COPY NO, BRITISH MOST SECRET (U.S. SECRET) OPTEL No. 137 Information received up to 7 A.M., 27th April, 1942. 1. NAVAL 20th, One of H.M. submarines sank a 6,000 ton laden vessel north- bound near TRONDHJEM, A Russian submarine reports having sunk an 8,500 ton ship date and locality not given. 2. MILITARY LIBYA. An enemy column was engaged by one of our forward columns on the 25th 20 miles south-west of SEGNALI and withdrew westwards. 3. AIR OPERATIONS WESTERN FRONT. 25th/26th, Corrections now known that five enemy aircraft were brought down, Five Stirlings reached POZEN but found complete cloud conditions over the objective, one bombed from low altitude, ROSTOCK. Weather was excellent with very good visibility and no cloud, objective was easily identified, Six 4,000 1b., twenty-six 2,000 lb, and over 16,000 incendiaries were dropped on the town and eight 4,000 1b, and many incendiaries, including nearly 200 30-pounders, upon the Heinkel Works, where visibility was also good in spite of smoke haze, Seven R.C.A.F., six R.A.A.F. and eight New Zealand aircraft took part without casualties. 26th. Boston bombers hit the Railway Station and & barrack block at ST, OHER and claimed 12 hits on HAZELBROUCK Railway Yards, During operations by 627 fighters, three enemy aircraft were destroyed, three probably destroyed and five damaged. He lost four fighters, two pilots safe. 26th/27th. 155 aircraft were despatched - ROSTOCK 52, Heinkel Works 55, DUNKIRK 24, Aerodromes 13, Three are missing. One enemy night fighter was destroyed and two damaged, Weather at ROSTOCK was again good and fires from the previous night were still burning. Some aircraft reported defences considerably increased. About 60 enemy aircraft were plotted over the south-western counties, half of which concentrated on BATH, Fighters probably destroyed one and five were damaged, NALTA. Corrections. From 23rd to 25th, 418 bombers, exclusive of fighter escort attacked, Between 3.45 p.m. 25th and 12,30 p.m. 26th, 139 bombers attacked, At LUQA, the airmen's quarters were destroyed and parachute stores damaged. Two of our fighters were lost, four crashed and two were damaged (five Regraded Unclassified 197 - 2 - pilots safe). Enemy casualties were four destroyed by fighters and one by anti- aircraft, one probably destroyed and ten damaged. 4. HOME SECURITY 26th. During the morning, some bombs dropped in KENT damaged a Colliery boiler house, probably stopping production for & week, Damage to an electric cable interrupted work at another Colliary. 26th/27th. BATH. Main damage in the old part of the city. Some serious fires but situation has improved. Water supply has been difficult, Casual- ties 25th/26th now reported 50 killed. Last night's casualties reported to be numerous. 5. JAPAN. Recent reliable information indicates that the Japanese forces in MANCHURIA have been increased from 20 to 23 divisions. Regraded Unclassified 198 April 28, 1942 9:30 a.m. GROUP MEETING Present: Mr. Thompson Mr. Graves Mr. Bell Mr. Blough Mr. Paul Mr. White Mr. Sullivan Mr. Foley Mr. Buffington Mr. Gaston Mr. Haas Mr. Kuhn Mrs. Klotz H.M.JR: Norman? MR. THOMPSON: I have two reports here for you, one on the situation on automobiles. H.M.JR: I haven't read that. MR. THOMPSON: Mr. Spingarn was down, and he talked to the colored leaders here in Washington. H.M.JR: Read both of these out loud. (Mr. Kuhn entered the conference.) MR. THOMPSON. He talked to the colored leaders and-- H.M.JR: Tell them who Spingarn is. Half of these people don't know. MR. THOMPSON: Mr. Spingarn is the President of the Association for the Advancement of Colored People, and he came-- Regraded Unclassified 199 - 2 - H.M.JR: He is & white man. MR. THOMPSON: And he came down to advise us as to what steps might be taken to help us solve the prob- lem of the Bureau of Engraving and Printing cafeteria, where the colored employees are insisting on sitting with the whites, and the white employees are boycotting the cafeteria; and there has been what Mr. Spingarn termed guerrilla warfare going on down there, so he talked to the leaders of the other people here in Washington, and reported to me afterward that they said that guerrilla warfare would cease, so I think that is quite a step forward. H.M.JR: You didn't say who recommended bringing Spingarn down. MR. THOMPSON: The Secretary of the Treasury. H.M.JR: It was me. I was waiting to find out. I wasn't saying-- MR. THOMPSON: I think that will be very helpful. In addition, he suggested that we notify the Bureau employees that the policy of the Administration as set forth by the President was one of non-segregation; and, therefore, there should be no return in the Bureau to the old system where there was segregation. H.M.JR: You feel better then? MR. THOMPSON: That is known to the employees, but he felt if we put a notice out to that effect, it might have some bearing in settling the situation and getting the employees to realizing that is the final decision, and they might as well make up their minds to it. MR. FOLEY: What is the guerrilla warfare that goes on down there? H.M.JR: I will explain it. Can you hear me? Regraded Unclassified 200 - 3 - MR. FOLEY: Yes. H.M.JR: See if I have got it straight. There are four tables where you can get your food down there, two for men and two for women, and the negro women go and get their food. Each one sits at a table where normally men sit, so it gets down to the fact that the white men have to sit down at a table with the negro women. They each take a place, you see, and these men don't want to do it, and the thing that they have been afraid of as a result is that there would be a fight, and somebody would say something insulting. So the white men stayed away. They haven't gone to the restaurant. Am I right? MR. THOMPSON: That is right. H.M.JR: And the negroes said, "We are being boy- cotted, and the men won't come to the restaurant. Well, if they don't want to come to the restaurant, that is their business. It is their own business. But the white men have refused to come to the restaurant. MR. FOLEY: And the negroes were making the complaint? MR. THOMPSON: Well, the negroes asked that we stop the boycott. I asked them how they wanted us to stop it, and they haven't told us. H.M.JR: After all, the white people say, "All right, we won't go there," but each woman, normally - at one end of the restaurant-is the white men and negro men, and at the other end of the restaurant the women, you see. Is that right? MR. THOMPSON: That is right. H.M.JR: But the negro women moved over on the side of the men and sat down, one at each table. Then the white men wouldn't come at all to the restaurant. The negro women said, "We are being boycotted." They want the 201 - 4 - boycott stopped, and the men said they were afraid to come for fear that there would be a riot, a fight. So they said rather than to have a fight, they would stay away, and it isn't only our place, it is going on all over in Washington. So I suggested-- MR. THOMPSON: It is under cover. H.M. JR: So I suggested that Mr. Spingarn, who after all is giving his life to this work, come down. MR. THOMPSON: He was very optimistic when he came back from the Bureau last Friday, because he had noticed a natural segregation. In other words, the colored people were grouping by themselves at one end, and the whites at the other, just as they had formerly. There were just one or two who didn't do it. But he thought in time it would all solve itself that way. H.M.JR: Well, I took an awful chance, because it has been Spingarn through his association who has been urging them to fight for their rights. I didn't know what he would do. This sounds very good. MR. THOMPSON: Yes. He thought, of course, they shouldn't have segregation, because that is against the policy. H.M.JR: Do you mind writing a little progress report for me that I can send to Mrs. Roosevelt? MR. THOMPSON: Yes. H.M.JR: That sounds pretty good, doesn't it? MR. THOMPSON: I think it would be helpful. Mr. Paul isn't so optimistic over it. He feels that the white employees will continue to stay away. H.M.JR: Well, we will see. In all my experience, I have never heard anything like it, of the negroes claim- ing they are being boycotted against because the whites won't come there. And the whites didn't want to go there for fear that there would be a fight. Regraded Unclassified 202 - 5 - MR. BELL: The prices of the restaurant have gone up because of the two or three thousand people staying away. MR. FOLEY: It is just the reverse of the usual situation. H.M.JR: But I mean, these people were very ag- gressive, and each one would take a table, you see, like that. MR. THOMPSON: I suggested to Mr. Hall and Mr. Spingarn that perhaps we might segregate as to sex have the men on one side, and the women on the other. H.M.JR: That is the way we used to have it, isn't it? MR. THOMPSON: There is a further segregation. We had the men and women, and then the colored and white separated. Mr. Spingarn thought that would probably be worth trying out if it didn't work out the other way. H.M.JR: The men on the one hand and the women on the other, irrespective of color? MR. THOMPSON: Yes, that is right, because the men have their soiled clothes on. We may try that out some- time later. H.M.JR: What else? MR. THOMPSON: On the question of automobiles-- H.M.JR: I would like to say that Mr. Ickes brought up in Cabinet whether the various departments wouldn't sort of form automobile clubs so that the people in the neighborhood could get together and ride down together. The President asked us to do it, so I passed it along. You know, if there are a group of Treasury employees in the neighborhood, they might take turns driving. e 203 - 6 - MR. THOMPSON: I think we have pretty well accom- plished that. In a survey that I had made, we had about seventeen thousand answers come in to the questionnaire-- H.M.JR: Just because I talked - it is always so funny when people talk to a foreigner and they can't understand his language, they always shout at him. When I am hoarse, everybody else begins to whisper. Talk loud, because my ears are stopped up. MR. THOMPSON: Of the seventeen thousand employees who replied to the questionnaire, there were about twelve thousand who were using bus, streetcar, and train trans- portation. Of two thousand six hundred seventy-one driv- ing their own automobiles-- H.M.JR: How many? MR. THOMPSON: Twenty-six hundred and seventy-one. Sixteen hundred were bringing twenty-six hundred others with them. H.M.JR: That is nice. MR. THOMPSON: I will take myself as an example. I have six of them. We have been doing that for quite some time. Mr. Bell and I come together, and we bring four others with us. H.M.JR: Is that right? MRS. KLOTZ: Charlie Bell. MR. THOMPSON: The President of the Board of Commissioners of the District of Columbia got out a card urging a share-your-car movement. That is being passed around to all the employees. I can go a step further, if you would like, and urge that they form clubs, but I think we are pretty well along the line on it. H.M.JR: Use your own judgment. You may not have read the paper, but I believe in the volunteer method. 204 - 7 - MR. THOMPSON: I think SO too. (Laughter) I think we have really made some progress there. As to the cars down here, Mr. Secretary, there are not enough to meet the calls most of the time. There are an awful lot of staff members traveling around on Government business. H.M.JR: We don't have enough cars? MR. THOMPSON: No. H.M.JR: Well, let's leave it that way until we see how much gasoline Mr. Krock tells us we are going to have. I again refer you to Mr. Krock today for another dirty, dirty article. What? MR. THOMPSON: In the field, the officers we have traveling all the time may have a little difficulty get- ting tires when the tires wear out. On so-called police operations, I understand they will get new tires or retreads, but they are using their own cars for official business in some cases, and they will have some difficulty. H.M.JR: Well, would you mind making & note to check on this thing once a week until we sort of get this thing straightened out? Will you? MR. THOMPSON: Yes MR. SULLIVAN: All of the deputy collectors use their own cars, Mr. Secretary. They are going to be in plenty of trouble. H.M.JR: Did you get your typewriters? MR. SULLIVAN: Not yet. H.M.JR: O.K.? Now, there are two things I would like to say. If you can't hear me, come closer. One thing, I really am terribly pleased on the President's message, because there is really everything in there that I fought for; one, no ceiling on wages, we fought 205 - 8 - for rationing, and he has come out for rationing; we insisted on a ceiling on prices, and he has got that; he was very fine on the War Bonds; there is nothing about the tax thing that I couldn't endorse, so I would say that the Treasury got about & ninety-five percent compliance from the President, which I think is pretty good. MR. BELL: It read a little better, too, in the press than it did in the rough draft. H.M.JR: According - - somebody told Harry here the other day after I left Cabinet three weeks ago, where the Director of the Budget called a meeting of us together, well, Henderson evidently told one of his cohorts, who told Harry, "We just wiped the Secretary of the Treasury off the map. We just cleaned him up." MR. BELL: That was the first attack? H.M. JR: Yes. So I feel pretty good. I have got a call in here from Senator McCarran at nine twelve. When I was asked the other day about tax silver, some- body told me, maybe erroneously, that Harry White had a silver plan. MRS. KLOTZ: Did you see the letter he wrote you the other day? (The Secretary held a telephone conversation with Senator McCarran.) 206 April 28, 1942 9:47 a.m. HMJr: Hello. Senator McCarran: Hello, Mr. Secretary. HMJr: I don't know whether you can hear me. I've got a very bad cold. Mc: Oh, I'm sorry. HMJr: Can you hear me? Mc: Yes, sir. HMJr: All right. Mo: What I wanted in behalf of those of us who represent the Western states, we had a little preliminary meeting and wanted to know if we could have a conference with you on this silver matter which we see you quoted about. HMJr: Surely. Mc: When would it be convenient, Mr. Secretary? HMJr: Well, I'll try to make it convenient for you gentlemen. Me: Would tomorrow be - or are you feeling that way? HMJr: No, unless I get worse and die, I'll be all right tomorrow. Mc: Well, we hope you won't get worse and we hooe you won't - nothing will happen to you. HMJr: How early in the morning would you like it? Me: I was thinking at eleven o'clock. HMJr: Well, unfortunately I have a meeting with people from out of town at eleven. Me: All right. Now Regraded Unclassified 207 - 2 - HMJr: Could you make it ten? Mc: Yes, sir. HMJr: Ten. Mc: All right. We'll make it at ten o'clock, and HMJr: Where would you like to meet? Mo: I thought if it would be convenient for you to come up here, we can get a meeting room here. HMJr: Oh. Me: Will that be all right? HMJr: Well, as long as I can get back to my own office by eleven. Mo: I think we can do that. HMJr: All right. Well, will you let me know where? Me: Yes, sir, I will. I'll call you or your secretary this afternoon. HMJr: Fine. I'll be there. Me: Thank you. At ten o'clock tomorrow. HMJr: I thank you. Me: Thank you, sir. 208 - 9 - H.M.JR: For God's sake, some of you silver boys get together. MR. WHITE: I thought they had it already settled. H.M.JR: I can't hear you. MR. WHITE: I thought the lawyers had it already fixed up. H.M.JR: I thought the economists had it all fixed. MR. WHITE: No, economists never fix anything. They only unfix things. MR. FOLEY: Well, he isn't talking about the use of silver in the defense plants. MR. WHITE: Oh! MR. FOLEY: I think he is talking about legislation, Harry. MR. WHITE: Oh, yes. Well, that is ready. H.M.JR: Well, anybody who is interested in silver, I will see them at three o'clock. Heigh-ho Silver! MRS. KLOTZ: Three o'clock when? H.M.JR: This afternoon. MRS. KLOTZ: No, you have another appointment. H.M.JR: Well, I can see them at three-fifteen. MR. BELL: You have got a conference tomorrow morning at nine-fifteen. H.M.JR: Well, we can start at nine-fifteen. After all, in half an hour I can tell them what I want and they can adjourn and talk it over and come back. 209 - 10 - MR. BELL: They can go into my office. MRS. KLOTZ: Maybe they can come at nine. H.M.JR: No, I don'twant them to. MR. BELL: They are arriving from out of town. H.M.JR: Well, Bell and White and Foley and anybody else who has any ideas on silver, come in this afternoon at three-fifteen. Ask the cop on the corner what he wants. We will do it that way. Now, one other thing. Harold Graves, they are running another railroad man on me today. MR. GRAVES: Yes, I have heard. Mr. Luhrsen? H.M.JR: Yes. Did you know about it? MR. GRAVES: Mr. Fitzgerald told me about it. H.M.JR: I asked Houghteling yesterday. Oh, no, they didn't need the Railroad Brotherhoods. Now he has run them in on me. We will need two more chops and another lump of sugar. Do you want your Penn Mutual man? MR. GRAVES: I would rather not. H.M.JR: That is all right, two less chops. Let's see, there will be Graves, Gamble, three labor men and one Morgenthau. MR. GRAVES: Mr. Houghteling? H.M.JR: Yes, and Houghteling. How many is that? MRS. KLOTZ: Seven. H.M.JR: And we won't say anything about Henry, and if Henry comes - well, we have two chops for everybody and I will only eat one. 210 - 11 - \ MRS. KLOTZ: Is Odegard here? H.M.JR: Odegard isn't in on this, is he? MR. GRAVES: He is not here. MRS. KLOTZ: Has everybody been invited? H.M.JR: Yes. How many is that? MRS. KLOTZ: With Henry, it would be eight. H.M.JR: I don't know whether Henry is coming. MRS. KLOTZ: Well, we will have to order for eight anyway. MR. GRAVES: And we are coming in at twelve forty- five? MRS. KLOTZ: Yes, that is down. H.M.JR: Yes, you are down. I have got from now until ten o'clock. Mr. Bell? MR. BELL: Here are the names of those people that are coming. H.M.JR: Oh! MR. BELL: That is the letter to Bob Patterson. H.M.JR: They all made it, did they? MR. BELL: They all made it. H.M.JR: That is nice. That is a good crowd. MR. BELL: There are a couple of them out of town, but they said they would be here. Tom Smith is away and Spencer is away. 211 - 12 - H.M.JR: It is a good crowd. Before you leave, Friend Graves, I have got a memo for you. MR. GRAVES: This is for Friend Kuhn. H.M.JR: What else? MR. BELL: Are you going to have any preliminary con- ference to the eleven o'clock meeting? H.M.JR: I will tell you, as soon as this air marshal leaves at ten, I am going to see if I can get a medical treatment and if I can't, I will see you fellows. I want to see if I can get over there to the doctor. I have got nothing - but I also want to see the President's radio speech as soon as the air marshal goes. Did I ask White? MR. WHITE: No, I have nothing, sir. H.M.JR: Wonderful. Thank you. MR. WHITE: I think SO. (Laughter) H.M.JR: Well, that is of the first importance. Harold? MR. GRAVES: You mentioned Senator Downey's statement in opposition to voluntary saving. H.M.JR: You are wrong. Josh Lee. MR. GRAVES: Yes, I have that too, but you asked me if nothing could be done to straighten out Senator Downey. H.M.JR: Well, you have got me and Edward Heller mixed up. You heard that from Heller just the way I did. MR. GRAVES: No, I understood you to say that. H.M.JR: No, sir. Don't bet me, either. Regraded Unclassified 212 - 13 - MR. GRAVES: I won't. H.M.JR: I sopke to you about Josh Lee and Heller mentioned Downey to me, and that was the first I had heard about it. What else? MR. GRAVES: That is all. H.M.JR: Now, I want to put all these labor union fellows to work, you see. Paul? Paul, you have got six minutes. Do you want to explain what the President meant - what are you going to do with what is left over after the excess profits? MR. PAUL: Well, we will just take a hundred percent and be done with it. H.M.JR: Last night I asked - Rosenman was at the house for dinner, and Paul asked me particularly - don't forget to give me a copy of that memo. MR. PAUL: I have done it. H.M.JR: I said, "Sam, Mr. Paul is quite worried with this sentence. He would like to know what the President meant." He chuckled and he said, "Listen, for two hours they asked the President what that meant. The President said, 'That is just a matter of detail, I can't go into it.'" I said, "Well, what does he mean?" Sam says, "I don't know. He says he won't discuss it. It is just a matter of detail." MR. GASTON: As I understand that, the President was just giving whole-hearted, one-hundred-percent support to the Treasury program. I think that is the position we will take, isn't it, Randolph? (Laughter) MR. PAUL: Sure, he is supporting us with 8. little gravy on top. H.M.JR: I told Sam what Lauch Currie said. He had gone in to see the President and asked him if he was for six percent on invested capital or on average earnings, but Regraded Unclassified 213 - 14 - Lauch couldn't remember which one it was. (Laughter) He got that far and then he couldn't remember. Sam Rosenman just howled when he heard that. MR. PAUL: Lauch said "net worth", and then I said, "Is that your word or the President's?" He said, "I guess it is my word, but I know the six percent is right." H.M.JR: Well, Sam said, "For two hours the Presi- dent tried to - they tried to find out from the President, and he said, 'It is just a matter of detail. Congress can work that out!" So you can be just as nonchalant. George? MR. HAAS: I have nothing. H.M.JR: Mr. Kuhn, on those intercepted Japanese mes- sages-- MR. KUHN: We are monitoring all the digests of Japanese broadcasts. They don't want to emphasize the atrocities now until they get all the Japanese moved away from the West Coast. The Army is very afraid of lynchings, and they don't want to put atrocity stuff on the air or in the movies until that operation is completed. They are very worried about it. H.M.JR: But you have got somebody? MR. KUHN: Yes. H.M.JR: Who is that "somebody"? MR. KUHN: Well, I take the FCC which sends every day a digest of Japanese broadcasts. H.M.JR: Yes, but who is the person who does it? MR. KUHN: Just in my office. I am not having anyone else do it. H.M.JR: You mean you, Kuhn, in person? Regraded Unclassified 214 - 15 - MR. KUHN: I get it every day. H.M.JR: Have you got time to do that? MR. KUHN: It doesn't take much. There is not much material. H.M.JR: Well, that one that General Searle told us, I would like to use that, but not now. MR. KUHN: I wouldn't do it now. H.M.JR: They don't want to use it? MR. KUHN: I wouldn't do it now. H.M.JR: You know what the Japanese did? They had a broadcast. This is a little strong. They said to their farmers, "Now in case any parachutist troops drop on your farm, first cut off their legs, then their arms, and then their heads." I mean, that was the instruction the official radio broadcast to the farmers of Japan. I want to let our people know about it, but they don't want to. MR. KUHN: Not yet. MR. BUFFINGTON: I have nothing. H.M.JR: Why don't you have a haircut? MR. BUFFINGTON: I think I need one. H.M.JR: John? MR. SULLIVAN: Mr. Helvering wants to come over-- H.M.JR: I gave him an appointment. MR. SULLIVAN: I hadn't heard about it. I will find out what time it is. Forrestal and Patterson are both sending 215 - 16 - that information on the income. It hasn't yet arrived. H.M.JR: That is going to be juicy. You and I are going to be the most popular fellows outside of Washington. MR. SULLIVAN: I am getting back into the rut. H.M.JR: It is not a rut. I said, "outside of Wash- ington.' We are going after all Government contractors now. My God, when one contractor can reduce his price by a hundred million dollars, that is something. Edward Foley, Jr.? MR. FOLEY: Bishop Shiel says he wants to come Friday instead of today. H.M.JR: Well, then, move the silver boys up to three o'clock. MRS. KLOTZ: Friday at what time, three o'clock? H.M.JR: No, Friday is Cabinet. Give him - gosh, Friday is a bad day. MR. BELL: Are you going to see any dealers Thursday or Friday? MR. FOLEY: Tell him Monday? H.M.JR: Better make it Tuesday at three. MR. FOLEY: All right. H.M.JR: I think we had better save some time for this thing. Tell him I am sorry. MR. FOLEY: I will. H.M.JR: Herbert? MR. GASTON: I think we want to make some use of the President's language on War Bonds. In this message it kind 216 - 17 - of got lost in the shuffle of newspaper stories. There is some good material for an ad and it may be of some other use. MR. KUHN: Herbert, I suggested to Callahan last night that he get out some specials, quick radio announce- ments, using the President's words and substituting those for other announcements already out and also there are some speeches being made in Chicago this week and in various conventions next week where this is going to be used. H.M.JR: Don't you men meet at ten-thirty today? I had hoped you would get me some posters. MR. KUHN: We want to get some O.K.'d today. Could you see any today, Mr. Secretary? H.M.JR: Let's see how I feel. MR. KUHN: I have the John Latouche script about Russia, in line with your idea, about supplies going to Russia. H.M.JR: Yes. MR. KUHN: It is quite good. H.M.JR: Good. What we are doing is this: Next Monday, what is known as the gold room is being taken over by me personally, and in there is going to be a chart for each state on pay-roll allotments, and in the corner will be boards for posters, so if you say, "Well, now, do you want to see some posters?" you stick them up there and when I get five minutes, I can walk across there and look at them, see. I mean, that is going to be my chart room. Or if you want any posters or anything you can say, "Well, if you have got five minutes, step across the hall," and you can put them up there, and I can see them. MR. KUHN: Would you like to see that script, since it is your idea, Mr. Secretary? H.M.JR: I haven't got time. Regraded Unclassified 217 - 18 - MR. GASTON: The Supreme Court made some rather important decisions yesterday on wire tapping and dicta- phones. Ed is having a digest made of it. It may affect our policy. H.M.JR: All right. You stay behind, Ferdie.