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Volume 591, November 28 – November 30, 1942
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Volume 591, November 28 – November 30, 1942
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 591
November 28 - 30, 1942
- A -
Book Page
American Bankers' Association
See Financing, Government: War Savings Bonds
- B - -
Bailey, J. Lawrence
See Deferments, Military
Business Conditions
Haas memorandum on situation, week ending November 28,
1942 - 11/30/42
591 125
- C -
Curtes, Morris
See Deferments, Military
- D - -
Deferments, Military
Bailey, J. Lawrence
Curtes, Morris
Fischer, John A.
Heffelfinger, William
Kaplan, Louis
Lazarus, Louis J.
Nelson, Emil J.
Nickell, Richard
Perry, Walter D.
Porcelli, Attilio F.
Potthoff, Herbert
Romig, George W., Jr.
Deferment requests granted - 11/30/42
53
- I -
Editors of Industrial Publications
See Financing, Government: War Savings Bonds
"Everybody Every Payday"
See Financing, Government: War Savings Bonds
Exports
To Russia, Free China, and selected blocked countries,
during 10-day period ending November 20, 1942 -
11/30/42
140
- F -
Financing, Government
Government securities - Federal Reserve operations in -
11/28/42
11
- 1- (Continued)
Book Page
Financing, Government
War Savings Bonds:
Kansas City meeting of Victory Fund Committee: HMJr
invited to attend - 11/28/42
591
1
a) HMJr describes visit to Kansas City and to
St. Louis: See Book 592, page 1
1) 1, F, and G Bonde called Eleanor,
Franklin, and God - 12/1/42: Book 592,
page 12
Industrial publications editors thanked for cooperation -
11/28/42.
4
Governors asked to promote sales - 11/28/42
5
American Bankers' Association publicity on financing
the war -(11/20/42)
31,34
"Everybody Every Payday": Records sent to FDR, Cabinet
officers, etc. - 11/30/42
45
Fischer, John A.
See Deferments, Military
Food
See Foreign Funds Control
Foreign Funds Control
Food parcels from Portugal to Poland and from United
States to Norway in Swedish ships discussed in Paul
memorandum - 11/28/42
16
Switzerland: Swiss Bank Corporation and Credit Suisse
accused of falsifying reports of holdings - Paul
memorandum - 11/28/42
13
Vatican: Incorrect use of accounts, etc., brought to the
attention of the Apostolic Delegate - 11/28/42
14
- G.-
General Counsel, Office of
Report for November 1942 - 11/30/42.
59
Governors
See Financing, Government: War Savings Bonds
- H -
Heffelfinger, William
See Deferments
- I -
Industrial Publications, Editors of
See Financing, Government: War Savings Bonds
Regraded Unclassified
- X -
Book Page
Kansas City, Missouri
See Financing, Government: War Savings Bonds
Kaplan, Louis
See Deferments, Military
- L -
Lazarus, Louis J.
See Deferments, Military
Lend-Lease
United Kingdom: Federal Reserve Bank of New York
statement showing dollar disbursements, week ending
November 18, 1942 - 11/28/42
591
19
- M -
Military Reports
British operations - 11/28/42, etc.
24,26,28,147
Missouri - Kansas City
See Financing, Government: War Savings Bonds
- N -
Nelson, Emil J.
See Deferments, Military
Nickell, Richard
See Deferments, Military
Norway
See Foreign Funds Control: Food
- P -
Perry, Walter J.
See Deferments, Military
Poland
See Foreign Funds Control: Food
Portugal
See Foreign Funds Control: Food
Potthoff, Herbert
See Deferments, Military
- R -
Revenue Revision
Corporate profits after taxes only 5% lower in first
9 months of 1942 than in first 9 months of 1941 -
11/30/42
49
Regraded Unclassified
- 8 - -
Sweden
See Foreign Funds Control: Food
Switzerland
See Foreign Funds Control
- T -
Taxation
See Revenue Revision
- V - -
Vatican
See Foreign Funds Control
- W -
War Savings Bonds
See Financing, Government
Private Wire
1
142
TELEGRAM
ED. RES. BANK OF K.O.
G33KC H16 STL 28-1046
1942 NOV MM 11 02
HON HENRY MORGENTHAU JR
CARE FRB
PRIVATE WIRE DEPT.
I VERY MUCH HOPE YOU CAN ARRANGE TO BE WITH US MONDAY THROUGH THE
LUNCHEON HOUR. OUR EIGHTH DISTRICT VICTORY FUND COMMITTEE MEETS
HERE AT TEN OCLOCK. AT NOON WE ARE GIVING LUNCHEON TO SIX HUNDRED
VICTORY FUND WORKERS IN METROPOLITAN STL WALTER HEAD PRESIDING
W L HEMINGWAY PRESIDENT AMERICAN BANKERS ASSN ED HILLIARD
OF LSVL AND OTHERS MAKING BRIEF TALKS. FOLLOWING LUNCHEON
MEETING I AM HOLDING CONFERENCE AT BANK WITH PRESIDENTS AND SECRETARIES
OF STATE BANKERS ASSNS THIS DISTRICT, ALSO WITH STATE BANK
SUPERINTENDENTS. THIS IS OUR BIG DAY AND YOUR PRESENCE WILL GUARANTEE
ITS SUCCESS. AT BUFFINGTONS SUGGESTION HAVE ARRANGED HOTEL
ACCOMODATIONS HERE SUNDAY EVENING. PLEASE CALL ME FROM KC
ways MON
IF POSSIBLE
CHESTER c DAVIS.
EED BEST BVNK OE K*0*
Regraded Unclassified
2
APPOINTMENTS FOR THE SECRETARY
SATURDAY, NOVEMBER 28, 1942
11:00 A.M. - Meet with the Victory Fund Committee
in the office of H. G. Leedy, President
of the Kansas City Federal Reserve Bank.
12:00 NOON - Meet with Evan Griffith, State Adminis-
trator for Kansas, and Dan Nee, State
Administrator for Missouri, in the
Kansas City, Missouri, War Savings
Office.
Lt ,C minder Sinton
Kansas city
Harrison 6040
Hotel Continental
Regraded Unclassified
11/28/42
For:
1130AM.
From: Secretary morgenthan (en route
Uto City VISE)
In manhattan Kansas, cercular
received one were ago by
from Victory Fund Committee
national Banks only
- Circular from Federal Receive
describing 3 issue received Friday
by national Banks only
Joint statements of 3 Banks
Examining agencies received by
State Banks only
-
Circular dated november
and signeh by Engene Seran
material received by Home
describing 40g Bonds only
Building and Loan ass.
- nobody has received
anything The whole from ABA. matter deserves
I
serious checking up
Copy to mrs. Kestz
4
November 28, 1942
To the Editors of Industrial Publications:
The Treasury Department is deeply grateful
to the industrial editors of the nation for their
splendid cooperation on our War Savings Bond
program.
Through your publications you have given
valuable help to the Payroll Savings Plan and
generally promoted War Savings Bonds. You have
performed an outstanding service and we wish to
extend to you our sincere thanks.
Your publications are an important line of
communication between the Treasury Department
and the workers of your organizations. Your
assistance in acquainting your readers with our
program and the necessity of purchasing War
Savings Bonds will accelerate the War financing
effort.
Às our nation's war activity rises to an
ever increasing tempo, we look forward to your
continued cooperation.
Sincerely,
H. MORGENTHAU JR
5
NOV 2 8 1942
Ky dear Governor Jefferies:
In announcing the terms of the various securities
to be offered by the Treasury to raise $9,000,000,000
during the month of December to help pay the enormous
costs of our war effort, I AM counting on the whole-
hearted support of every public official, business man
and private citizen. The new issues which go on sale
November 30 are designed to meet the needs of investors
with accumulated savings and idle funds.
I, therefore, earnestly request that you bring
this to the attention of your State treasurer and
trustees of pension, sinking and other public funds,
and also lend your fullest support to the Victory Fund
Consittee in your Federal Reserve District, which is
directing the sales campaign for the Treasury.
Ve have undertaken a tremendous task, and ve must
not fail.
Sincerely,
(Signed) H. Morgenthau, Jr.
Honorable a. M. Jefferies,
Governor of South Carolina,
Columbia, South Carolina.
SWP:ewieh
Copy (and list) in Diary
Copies to Thompson 17 CC to Mrs.
Brown in Buffington B of fice)
(Sent "Air Mail" to B.F.STa.
12/3/42)
Regraded Unclassified
6
(Attached letter sent to following governors of the 48 States:
Hon. R. M. Jefferies,
Hon. Julius P. Heil,
Governor of South Carolina,
Governor of Wisconsin,
Columbia, South Carolina
Madison, Wisconsin.
Hon. John W. Bricker,
Hon. Harlan J. Bushfield,
Governor of Ohio,
Governor of South Dakota,
Columbus, Ohio.
Pierre, South Dakota.
Hon. Charles A. Sprague,
Hon. Robert O. Blood,
Governor of Oregon,
Governor of New Hampshire,
Salem, Oregon.
Concord, N. H.
Hon. Sam C. Ford,
Hon. Arthur B. Langlie,
Governor of Montana,
Governor of Washington,
Helena, Mont.
Olympia, Wash.
Hon. George A. Wilson,
Hon. Henry F. Schricker,
Governor of Iowa,
Governor of Indiana,
Des Moines, Ia.
Indianapolis, Ind.
Hon. Coke R. Stevenson,
Hon. Chase A. Clark,
Governor of Texas,
Governor of Idaho,
Austin, Texas.
Boise, Idaho.
Hon. Sam H. Jones,
Hon. Dwight H. Green,
Governor of Louisiana,
Governor of Illinois,
Baton Rouge, La.
Springfield, Ill.
Hon. Eugene Talmadge,
Hon. Prentice Cooper,
Governor of Georgia,
Governor of Tennessee,
Atlanta, Ga.
Nashville, Tenn.
Hon. Paul B. Johnson,
Hon. Murray D. Van Wagoner,
Governor of Mississippi,
Governor of Michigan,
Jackson, Miss.
Lansing, Mich.
Hon. Colgate W. Darden, Jr.,
Hon. John Moses,
Governor of Virginia,
Governor of North Dakota,
Richmond, Va.
Bismarck, N. Dak.
Hon. J. Melville Broughton,
Hon. Frank M. Dixon,
Governor of North Carolina,
Governor of Alabama,
Raleigh, N.C.
Montgomery, Ala.
Hon. Charles Edison,
Hon. William H. Wills,
Governor of New Jersey,
Governor of Vermont,
Trenton, N.J.
Montpelier, Vermont.
Hon. Herbert B. Maw,
Hon. Forrest C. Donnell,
Governor of Utah,
Governor of Missouri,
Salt Lake City, Utah.
Jefferson City, Missouri.
Regraded Unclassified
- 2 -
7
(Letters sent to Governors continued:)
Hon. Spessard L. Holland,
Hon. Arthur H. James,
Governor of Florida,
Governor of Pennsylvania,
Tallahassee, Fla.
Harrisburg, Pa.
Hon. Matthew M. Neely,
Hon. Payne Ratner,
Governor of West Virginia,
Governor of Kansas,
Charleston, W. Va.
Topeka, Kansas.
Hon. Nels H. Smith,
Hon. Keen Johnson,
Governor of Wyoming,
Governor of Kentucky,
Cheyenne, Wyoming.
Frankfort, Kentucky.
Hon. Walter W. Bacon,
Hon. Sumner Sewall,
Governor of Delaware,
Governor of Maine,
Dover, Delaware.
Augusta, Maine.
Hon. Harold E. Stassen,
Hon. Robert A. Hurley,
Governor of Minnesota,
Governor of Connecticut,
St. Paul, Minn.
Hartford, Conn.
Hon. Herbert R. O'Conor,
Hon. E. P. Carville,
Governor of Maryland,
Governor of Nevada,
Annapolis, Md.
Carson City, Nevada.
Hon. J. Howard McGrath,
Hon. Leon C. Phillips,
Governor of Rhode Island,
Governor of Oklahoma,
Providence, Rhode Island.
Oklahoma City, Okla.
Hon. Herbert H. Lehman,
Hon. Culbert L. Olson,
Governor of New York,
Governor of California,
Albany, New York.
Sacramento, Calif.
Hon. Ralph L. Carr,
Hon. Homer M. Adkins,
Governor of Colorado,
Governor of Arkansas,
Denver, Colorado.
Little Rock, Ark.
Hon. Sidney P. Osborn,
Hon. Dwight Griswold,
Governor of Arizona,
Governor of Nebraska,
Phoenix, Ariz.
Lincoln, Nebr.
Hon. Leverett Saltonstall,
Hon. John E. Miles,
Governor of Massachusetts,
Governor of New Mexico,
Boston, Mass.
Santa Fe, N.M.
UNITED STATES OF AMERICA
8
2½ PERCENT TREASURY BONDS OF 1963-68
Dated and bearing interest from December 1, 1942
Due December 15, 1968
REDEEMABLE AT THE OPTION OF THE UNITED STATES AT PAR AND ACCRUED INTEREST ON AND
AFTER DECEMBER 15, 1963
Interest payable June 15 and December 15
1942
TREASURY DEPARTMENT,
Department Circular No. TOI
Fiscal Service
OFFICE OF THE SECRETARY,
Bureau of the Public Debt
Washington, November 30, 1942.
I. OFFERING OF BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act,
as amended, invites subscriptions, at par and accrued interest, from the people of the United States
for bonds of the United States, designated 21/2 percent Treasury Bonds of 1963-68. These bonds
will not be available for subscription, for their own account, by commercial banks, which are defined
for this purpose as banks accepting demand deposits. The amount of the offering is not specifically
limited.
IL DESCRIPTION OF BONDS
1. The bonds will be dated December 1, 1942, and will bear interest from that date at the rate
of 2½ percent per annum, payable on a semiannual basis on June 15 and December 15, 1943, and
thereafter on June 15 and December 15 in each year until the principal amount becomes payable.
They will mature December 15, 1968, but may be redeemed at the option of the United States on and
after December 15, 1963, in whole or in part, at par and accrued interest, on any interest day or days,
on 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall pre-
scribe. In case of partial redemption the bonds to be redeemed will be determined by such method
as may be prescribed by the Secretary of the Treasury. From the date of redemption designated in
any such notice, interest on the bonds called for redemption shall cease.
2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter
imposed. The bonds shall be subject to estate, inheritance, gift or other excise taxes, whether Fed-
eral or State, but shall be exempt from all taxation now or hereafter imposed on the principal or
interest thereof by any State, or any of the possessions of the United States, or by any local taxing
authority.
3. The bonds will not be acceptable to secure deposits of public moneys before December 1,
1952; they will not bear the circulation privilege, and they will not be entitled to any privilege of
conversion.
4. Bearer bonds with interest coupons attached will be issued in denominations of $500, $1,000,
$5,000, $10,000 and $100,000. Bonds registered as to principal and interest will be issued in denom-
inations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for
the interchange of bonds of different denominations and of coupon and registered bonds, and for the
transfer of registered bonds, under rules and regulations prescribed by the Secretary of the Treas+
ury, except that they may not, before December 1, 1952, be transferred to or be held by commercial
banks, which are defined, for this purpose, as banks accepting demand deposits. However, the bonds
may be pledged as collateral for loans, including loans by commercial banks, but any such bank
acquiring such bonds before December 1, 1952, because of the failure of such loans to be paid at
maturity will be required to dispose of them in the same manner as they dispose of other assets not
eligible to be owned by banks.
5. Any bonds issued hereunder which upon the death of the owner constitute part of his estate,
will be redeemed at the option of the duly constituted representatives of the deceased owner's estate,
at par and accrued interest to date of payment,¹ Provided:
1 An exact half-year's interest in computed for each full half-year period irrespective of the actual number of days
in the half year. For a fractional part of any half year, computation in on the basis of the actual number of days in
such half year.
(a) that the bonds were actually owned by the decedent at the time of his death; and
(b) that the Secretary of the Treasury be authorized to apply the entire proceeds of redemption
to the payment of Federal estate taxes.
Registered bonds submitted for redemption hereunder must be duly assigned to "The Secretary of
the Treasury for redemption, the proceeds to be paid to the Collector of Internal Revenue at
for credit on Federal estate taxes due from estate of
" Owing to the periodic closing of the transfer
books and the impossibility of stopping payment of interest to the registered owner during the closed
period, registered bonds received after the closing of the books for payment during such closed
period will be paid only at par with a deduction of interest from the date of payment to the next
interest payment date;* bonds received during the closed period for payment at a date after the books
reopen will be paid at par plus accrued interest from the reopening of the books to the date of pay-
ment. In either case checks for the full six months interest due on the last day of the closed period
will be forwarded to the owner in due course. All bonds submitted must be accompanied by Form
PD 1782,' properly completed, signed and sworn to, and by a certificate of the appointment of the
personal representatives, under seal of the court, dated not more than 6 months prior to the submis-
sion of the bonds, which shall show that at the date thereof the appointment was still in force and
effect. Upon payment of the bonds appropriate memorandum receipt will be forwarded to the repre-
sentatives, which will be followed in due course by formal receipt from the Collector of Internal
Revenue.
6. Except as provided in the preceding paragraphs, the bonds will be subject to the general reg.
ulations of the Treasury Department, now or hereafter prescribed, governing United States bonds.
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and Branchès and at the Treas-
ury Department, Washington. Banking institutions and securities dealers generally may submit
subscriptions for account of customers, but only the Federal Reserve Banks and the Treasury De-
partment are authorized to act as official agencies. Subscriptions must be accompanied by payment
in full for the amount of bonds applied for.
2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in
part, to allot less than the amount of bonds applied for, and to close the books as to any or all
subscriptions at any time without notice; and any action he may take in these respects shall be final.
Subject to these reservations, all subscriptions will be allotted in full. Allotment notices will be sent
out promptly upon allotment.
IV. PAYMENT
1. Payment at par and accrued interest, if any, for bonds allotted hereunder must be made on
or before December 1, 1942, or on later allotment. One day's accrued interest is $0.068 per $1,000.
Any qualified depositary will be permitted to make payment by credit for bonds allotted to its eus-
tomers up to any amount for which it shall be qualified in excess of existing deposits, when 50
notified by the Federal Reserve Bank of its District.
V. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested
to receive subscriptions, to make allotments up to the amounts indicated by the Secretary of the
Treasury to the Federal Reserve Banks of the respective Districts, to issue allotment notices, to
receive payment for bonds allotted, to make delivery of bonds on full-paid subscriptions allotted, and
they may issue interim receipts pending delivery of the definitive bonds.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental
or amendatory rules and regulations governing the offering, which will be communicated promptly
to the Federal Reserve Banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
(Filed with the Division of the Federal Register, Nov. 30, 1942)
sive) each year.
3 in The transfer books are closed from May 16 to June 15, and from November 16 to December 15 (both dates inclu-
Washington, D. C.
8 Copies of Form PD 1782 may be obtained from any Federal Reserve Bank or from the Treasury Department,
U.S. GOVERNMENT PRINTING OFFICE 496819
Regraded Unclassified
9
UNITED STATES OF AMERICA
1% PERCENT TREASURY BONDS OF 1948
Dated and bearing interest from December 1, 1942
Due June 15, 1948
Interest payable June 15 and December 15
1942
TREASURY DEPARTMENT,
Department Circular No. 703
Fiscal Service
OFFICE OF THE SECRETARY,
Bureau of the Public Debt
Washington, November 30, 1942.
I. OFFERING OF BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act,
as amended, invites subscriptions, at par and accrued interest, from the people of the United States
for bonds of the United States, designated 18/4 percent Treasury Bonds of 1948. The amount of
the offering is not specifically limited, although allotments to commercial banks, which are defined
for this purpose as banks accepting demand deposits, for their own account will be limited to
$2,000,000,000, or thereabouts. The books will be open today and until further notice for the receipt
of subscriptions from others than commercial banks for their own account, and today, December 1
and December 2 for the receipt of subscriptions from commercial banks for their own account.
IL DESCRIPTION OF BONDS
1. The bonds will be dated December 1, 1942, and will bear interest from that date at the rate
of 1ª/4 percent per annum, payable on a semiannual basis on June 15 and December 15, 1943, and
thereafter on June 15 and December 15 in each year until the principal amount becomes payable.
They will mature June 15, 1948, and will not be subject to call for redemption prior to maturity.
2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter im-
posed. The bonds shall be subject to estate, inheritance, gift or other excise taxes, whether Federal
or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest
thereof by any State, or any of the possessions of the United States, or by any local taxing authority.
3. The bonds will be acceptable to secure deposits of public moneys, but will not bear the circu-
lation privilege and will not be entitled to any privilege of conversion.
4. Bearer bonds with interest coupons attached will be issued in denominations of $500, $1,000,
$5,000, $10,000 and $100,000. Bonds registered as to principal and interest will be issued in denomi-
nations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for the
interchange of bonds of different denominations and of coupon and registered bonds, and for the
transfer of registered bonds, under rules and regulations prescribed by the Secretary of the Treasury.
5. The bonds will be subject to the general regulations of the Treasury Department, now or here-
after prescribed, governing United States bonds.
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Treas-
ury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their sub-
scriptions, or of the securities which may be allotted thereon, prior to December 3, 1942. Banking
institutions and securities dealers generally may submit subscriptions for account of customers, but
only the Federal Reserve Banks and the Treasury Department are authorized to act as official agen-
cies. Others than banking institutions and securities dealers will not be permitted to enter subscrip-
tions except for their own account. Subscriptions from commercial banks for their own account will
be received without deposit. All other subscriptions must be accompanied by payment in full for
the amount of bonds applied for.
2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in
part, to allot less than the amount of bonds applied for, and to close the books as to any or all subscrip-
tions at any time without notice; and any action he may take in these respects shall be final. Subject
to these reservations, subscriptions for amounts up to and including $100,000 from commercial
Regraded Unclassified
banks, and subscriptions in any amount from all other subscribers, will be allotted in full; subscrip.
tions for amounts over $100,000 from commercial banks will be allotted on an equal percentage
basis, to be publicly announced. Allotment notices will be sent out promptly upon allotment.
IV. PAYMENT
1. Payment at par and accrued interest, if any, for bonds allotted hereunder to or for the
account of others than commercial banks must be made on or before December 1, 1942, or on later
allotment. Payment at par and accrued interest to December 11, 1942, for bonds allotted here-
under to commercial banks must be made on that date. One day's accrued interest is $0.048 per
$1,000. Any qualified depositary will be permitted to make payment by credit for bonds allotted to
it for itself and its customers up to any amount for which it shall be qualified in excess of existing de-
posits, when so notified by the Federal Reserve Bank of its District.
V. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to
receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secre-
tary of the Treasury to the Federal Reserve Banks of the respective Districts, to issue allotment
notices, to receive payment for bonds allotted, to make delivery of bonds on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive bonds.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental
or amendatory rules and regulations governing the offering, which will be communicated promptly
to the Federal Reserve Banks.
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
(Filed with the Division of the Federal Register, Nov. 30, 1942)
s.
PRINTING
OFFICE
496820
Regraded Unclassified
10
UNITED STATES OF AMERICA
⁷/₈ PERCENT TREASURY CERTIFICATES OF INDEBTEDNESS OF SERIES E-1943
Dated and bearing interest from December 1, 1942
Due December 1, 1943
1943
TREASURY DEPARTMENT,
Department Circular No. 708
OFFICE OF THE SECRETARY,
Fiscal Service
Bureau of the Public Debt
Washington, November 30, 1942.
I. OFFERING OF CERTIFICATES
1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as
amended, invites subscriptions, at par and accrued interest, from the people of the United States for
certificates of indebtedness of the United States, designated ½ percent Treasury Certificates of In-
debtedness of Series E-1943. The amount of the offering is not specifically limited, although allot-
ments to commercial banks, which are defined for this purpose as banks accepting demand deposits,
for their own account will be limited to $2,000,000,000, or thereabouts. The books will be open today
and until further notice for the receipt of subscriptions from others than commercial banks for their
own account, and on December 16, December 17 and December 18 for the receipt of subscriptions
from commercial banks for their own account.
II. DESCRIPTION OF CERTIFICATES
1. The certificates will be dated December 1, 1942, and will bear interest from that date at the
rate of ½ percent per annum, payable semiannually on June 1 and December 1, 1943. They will
mature December 1, 1943, and will not be subject to call for redemption prior to maturity.
2. The income derived from the certificates shall be subject to all Federal taxes, now or here-
after imposed. The certificates shall be subject to estate, inheritance, gift or other excise taxes,
whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the
principal or interest thereof by any State, or any of the possessions of the United States, or by any
local taxing authority.
3. The certificates will be acceptable to secure deposits of public moneys. They will not be ac-
ceptable in payment of taxes and will not bear the circulation privilege.
4. Bearer certificates with two interest coupons attached will be issued in denominations of
$1,000, $5,000, $10,000 and $100,000. The certificates will not be issued in registered form.
5. The certificates will be subject to the gener regulations of the Treasury Department, now or
hereafter prescribed, governing United States certificates.
III. SUBSCRIPTION AND ALLOTMENT
1. Subscriptions will be received at the Federal Reserve Banks and Branches and at the Treas-
ury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their sub-
scriptions, or of the securities which may be allotted thereon, prior to December 19, 1942. Banking
institutions and securities dealers generally may submit subscriptions for account of customers, but
only the Federal Reserve Banks and the Treasury Department are authorized to act as official agen-
cies. Others than banking institutions and securities dealers will not be permitted to enter sub-
scriptions except for their own account. Subscriptions from commercial banks for their own ac-
count will be received without deposit. All other subscriptions must be accompanied by payment in
full for the amount of certificates applied for.
2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in
part, to allot less than the amount of certificates a pplied for, and to close the books as to any or all
subscriptions at any time without notice; and any action he may take in these respects shall be final.
Subject to these reservations, subscriptions for amounts up to and including $100,000 from commercial
banks, and subscriptions in any amount from all other subscribers, will be allotted in full; subscrip-
tions for amounts over $100,000 from commercial banks will be allotted on an equal percentage basis,
to be publicly announced. Allotment notices will be sent out promptly upon allotment.
Regraded Unclassified
DI
ЛОТЯЗМА
IV. PAYMENT
1. Payment at par and accrued interest, if any, for certificates allotted hereunder to or for the
account of others than commercial banks must be made on or before December 1, 1942, or on later
allotment. Payment at par and accrued interest to December 28, 1942, for certificates allotted
hereunder to commercial banks must be made on that date. One day's accrued interest is $0.024
per $1,000. Any qualified depositary will be permitted to make payment by credit for certificates
allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of
existing deposits, when so notified by the Federal Reserve Bank of its District.
V. GENERAL PROVISIONS
1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to
receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secre-
tary of the Treasury to the Federal Reserve Banks of the respective Districts, to issue allotment
notices, to receive payment for certificates allotted, to make delivery of certificates on full-paid sub-
scriptions allotted, and they may issue interim receipts pending delivery of the definitive certificates.
2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental
or amendatory rules and regulations governing the offering, which will be communicated promptly
to the Federal Reserve Banks.
IIIW
be
or
to
bad
Information
HENRY MORGENTHAU, JR.,
Secretary of the Treasury.
In
2015
...
(Filed with the Division of the Federal Register, Nov. 30, 1942) Insured at you was
and
10
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of
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30 WENT will TM Brown How
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at Insurance the 116 think both becomes of Illw Invoice
04 CND This of moligise
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10 Iddition 10%
death 10 The M 100% - the billege 30 And milt not will fille of
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Regraded Unclassifie
11
Page 1
FEDERAL RESERVE OPERATIONS IN GOVERNMENT SECURITIES
STRICTLY CONFIDENTIAL
Column A shows Federal Reserve sperations
Market purchases 1/
*
Column 1 above price changes is 32ada for
is millions of dollars - follows:
Market sales
all securities except certificates.
Direct purchases free Treasury
+d
For certificates, Column , above yield
Maturities
,
changes is decimale.
Last Vesit
This Vanit
Monday
Tunning
Velanday
Tearsday
Priday #
Returday
Full York
Index
Description
Monday
Tuesday
Velnesday
Thursday
Friday
Saturday
Full Vesitz
Nov. 16
17
18
19
20
21
Nov. 23
24
a
26
27
26
A
1
&
3
&
3
A
3
&
3
&
3
&
3
A
3
A
3
A
B
I
A
B
&
B
A
3
I. Numary
A
+15.2
+53-3
+13.6
+18.1
+45.8
+12.3
+199.3
Market purchases
+38.8
**7.7
+49.6
Nol
day
+67.2
+98.6
+321.9
-27.0
-4.0
-8.0
-,5
-8.1
-2.0
-53.6
Market sales
-50.0
-4,3
-2.0
-11.4
-67.7
Direct purchases from Treasury
+d139.0
+d139.0
-a31.7
-431.7
Maturities
-a16.2
-a16.2
-11.8
+45.3
-26.1
+17.6
+78.7
+10.3
+114.0
Total net decrease (-)
-11.2
+47.7
+29.1
+$5,2
+226.2
+377.0
4695.0
Wednesday report of total portfolio
4843.0
II. famile Securities
Bills - all issues combined
+2.2
+.5
+3.2
+2.6
+54.2
+1.7
+64.4
Market purchases
3.
+4.3
+17.6
+84.5
+114.9
-27.0
-8.0
-8.0
-.5
all
-2.0
-53.6
Market sales
-50.0
-4.)
-2.0
-11.4
-67.7
-a31.7
-031.7
Naturities
-a16.2
-m16.25
-24.6
-7.5
-36.5
+2.1
+46.1
?
-20.9
Total net increase or decrease (-)
-41.5
+4.3
-20.5
+15.6
+73.1
+31.0
Certificates
+6.2
.015
+5.0
+11.2
.015
5/0% 1. 2-1 43
+5.5
+10.0
+.4
+15.9
-,015
+3.8
+.1
-015
+3.9
.015
65 0 - 5-1 43
.01%
+.1
+,4
-015
-015
4,015
+.5
-035
7/8 1. 8-1 43
-.01%
-015
+20.0
+3.5
+23.5-.02%
+23.3
-015
+23.3
,01$
7/6 D - 11-1 43
-,015
+5.4
+5.4-01$
Special one-day certificates 2/
+4139.0
+4139.0
frequery soles
12
3/45 D - 3-15 43
-1
-1
" 9
D - 9-15 M
-2
-2
+2
3/4
1
-1
+2.7
+2.7
# 11
1-1/4 C - 3-15 is
+2.3
+1.3
+3.0
+6.6
2
+1
+3
N 12
3/4
) 12-15 as
A - 3-15 46
+1.3
-1
+1.3
-1
-
+1.0
+1.0
+2.0
+2.0
+6.0
13
2
+3.8
+1.0
+4.0
+1.6
+10.4
# 14
1-1/2 I 12-15 46
+,1
+3.1
+.1
+3.3
Treasury bonds
+1
+1.0
+.7
-1
+3.1
-1
+.1
+5.4
-1
32
of
-
3-15
48-50
+,2
+2.1
+,5
+3.3
+2.1
+6.2
+.5
+2
+.5
+.7
-1
+.2
+1.5
+1
3 16
2
- 6-15 49-51
+.6
+3.4
+2.0
+.5
+1.0
+7.5
+.1
+1,8
+1.9
+5.4
7
+9.4
+1.0
+1.0
+.4
+2.6
+1
B 17
2
- 9-15 49-51
+1
+.2
+1.6
v.1
+.2
+1.9
+1
316
2
- 12-15 49-51
+4.0
+3.9
+2.2
+3.0
+1.6
+14.7
+1
+.1
+.1
+2
3 21
2
- 3-15 50-52
+3.2
+2.3
+6.0
+6.0
+3.5
+23.0
+2
+1
+1
-1
+1
$ 26
2
- 12-15 51-55
-2
+2.7
-5
327
2-1/2
- 3-15 52-54
-1
&
-1
+1,0
-1
-1
+1.0
-6
+.5
+.5
+.5
+1.2
-3
+4.7
+6.6
-1
-2
-3
1
328
2-1/4
- 6-15 52-55
+.8
+1.0
+2.1
+1
+1
-6
32
2-1/2
- 3-15 56-58
-1
-3
+1
-2
&
&
+1
-1
-3
-3
-1
1
5
-9
-5
36
2-1/2
- 6-15 62-67
1
+1
-1
-1
-1
-10
7
-14
37
2-1/2
- 9-15 67-72
-1
-1
-1
-1
1
Quaranteed securities
-1
-1
07
EFC 1-1/85 7-15 43
+1
+1
:
EPC 1 1 - 4-15 -
+1
02
000 1-1/8 0 - 2-15 is
+1
All tamble securities
+5.6
+136.6
Market purchases
+26.2
+29.0
+34.5
+55.0
+96.6
+243.3
+6.6
+36.5
+6.9
+9.3
+71.7
-53.6
7
-2.0
-11.4
-67.7
-27.0
-6.0
-8.0
-f.1
-2.0
Markets sales
-50.0
-.5
+d135.0
+4139.0
Direct purchases from Treasury
Maturities
-m16.2
-a16.2
-031.7
-831.7
-20.4
463.6
+3.6
+51.3
Total not increase or decrease(-)
-21.8
+29.0
+14.0
+53.0
+224.2
+298.4
+28.5
-32.8
+8.8
Office of the Secretary of the Treasury, Division of Research and Matierics.
F Original figures revised.
. less this $50,000.
Purchases and sales reserded as of day of transaction and not day of delivery. Transactions after " s'olock are included is the next day.
2/
The income and redemption of special une-day certificates are treated miss 1.0., only the change from the day before is considered as as issue or redemption. Transactions are
entered as of the day fallowing that to which they apply. class date are ant available until the following norning.
Regraded Unclassified
12
12
Page 2
FEDERAL RESERVE OPERATIONS IN GOVERMENT SECURITIES
Column A above Federal Reserve operations
STRICTLY CONFIDENTIAL
La millions of dollars as follows:
Market purchases 1/
Market sales
Column B shows price shanges La 32nds.
Direct purchases from Treasury
+d
Maturities
,
last Wesk
Monday,
Tuesday
Wednesday
Thursday
This Vesit
Friday
Saturday
Nov. 16
17
18
19
20
Full Yesk
Index
Description
Monday
Tuesday
Metnesday
21
Thursday
Friday
A
3
A
3
&
3
A
3
Nev. 23
24
A
3
C
26
Full Wesk
A
3
27
28
A
3
&
3
A
3
A
3
III. Tax-exempt securities
A
B
&
»
A
.
A
3
Treasury notes
-1
-1
1
1-3/45 C 12-15 42
-1
13
1-1/8 A - 6-15 43
Hollday
7
---
2 5
1
0 - 9-15 43
+1
-1
+1
#5
1-1/8
-1
+1
+1
: own
12-15 43
-1
+1
-1
-1
1
3- 3-15 %
-1
+1
"
3/4
+1
1- 6-15 *
+1
"
1
C - 9-15 -
+1
+1
# 10
3/4
1 - 3-15 45
+1
+1
Treasury bonds
+.1
+.2
+1.3
&
+1.6
-2
11
3-3/8%
-
6-15
43-47
+.1
+1.1
+,6
+1.1
+2.4
+2.3
+3.9
4
-2
+4.2
+7.3
7
-2
12
+3.0
+4.2
3-1/4
- 10-15 43-45
+.9
-2
?
+12.1
+.1
+.3
+12.4
-2
-2
+8.5
-2
33
3-1/4
- 4-15 44.46
+,1
+2.6
+3.8
-2
+2.7
3 E
+.2
+6.7
7
-1
+2.7
-1
- 12-15 4-54
-1
-1
+2.1
+3.0
+1.0
7
+.7
+3.6
-1
+.2
+10.6
-3
-1
3 5
2-3/4
- 9-15 45-47
+,2
1'+
+1.6
+1.9
-1
-1
16
2-1/2
- 12-15 45
+5.0
+3.6
+3.1
+1.1
3 7
3-3/4
. 3-15 46-56
LL
-1
+11.7
-1
11
-1
+.6
?
-1
-2
-1
+.2
+4.9
-1
1
+.6
+1.8
-1
+.3
+7.8
-1
3 I
,
- 6-15 46-48
+,1
-1
+,1
+.2
+,4
-1
+.3
+1.7
-1
+,1
+2.1
-1
"
3-1/8
- 6-15 46-49
+1.1
-1
+3.4
+.1
+1.2
-1
+,1
05.9
-1
-1
3 10
L1/4
- 10-15 47-52
-2
-1
-1
71
-1
-2
-)
11
2
- 12-15 47
-2
4
-1
&
+.3
+,2
-2
+.5
-2
B 13
2-3/4
- 3-15 48-51
-1
-1
-1
&
77
-5
+.2
7
+,2
-2
3 14
2-1/2
. 9-15 45
-3
-2
-1
&
7
?
-1
-2
+3
-3
15
2
- 12-15 48-50
-1
-2
:
.
4
19
&
-1
&
-1
-8
3-1/8
-12-15 49-52
+,2
-1
+.1
+.3
&
+.1
+,4
+1,1
3
+.3
+.1
-1
+.2
-2
+.6
-3
3 20
2-1/2
- 12-15 49-53
+.5
+3.0
-1
+2.3
-1
+1.2
+7.0
-2
+1.0
+.2
+.9
+3.0
-1
+.9
-2
+6.0
-3
B 22
2-1/2
- 9-15 50-52
+2.2
-1
+5.3
+1.3
-1
+3.2
+.3
+12.3
-2
+2.0
+,2
+1.2
-1
+2.0
-1
+5.4
to
3.23
2-3/4
- 6-15 51-54
+6.2
-1
+,6
-1
-3
124
3
WA
-1
+,6
-1
+.3
+.3
+6.0
-3
-2
- 9-15 51-55
-1
&
-2
-3
35
2-1/4
- 12-15 51-53
-1
+.7
A
+.5
-2
-2
1
18
2
. 6-15 53-55
W & & & WILLIAM & 11
+.5
+1.7
7
&
-1
-9
+1
-3
-2
&
30
2-1/4
- 6-15 54-56
&
&
-3
-12
+.6
+1.3
+2.2
-2
-2
+4.1
1
D-31
2-7/8
- 3-15 55-60
-2
+.1
-2
-2
+.1
333
. 9-15 56-59
his
-3
4,8
-3
+1.2
+,2
7
42.2
-18
&
2-3/4
-2
A
-1
-15
7
-2
-2
+.)
4
134
2-3/4
- 6-15 58-63
-2
&
-2
-3
-16
+.5
+1.5
+2.6
+2.0
-2
-2
+6.6
1
335
2-3/4
- 12-15 60-65
A
-3
-3
-3
-15
Quaranteed securities
+1
-1
#1
CCC 3/45 1- 5-1 43
6
USMA 1-3/6 - 2-1 "
+1
+1
0
TTMC
3
-
3-15
44-4g
1
-1
-3
03
me 3-1/4 - 3-15 44-64
-1
-1
&
+1
+1
05
BOLC 3 A- 5-1 M-52
-2
---
-1
-3
+1
-1
-1
-1
0 6
BOLG 1-1/2 x 6-1 45-47
-1
-1
de
E securities
+6.6
+16.8
+6.7
+6.8
+15.1
+6.7
+62.7
Market purchases
+10.6
+18.7
+15.1
+32.2
+2.0
+78.6
Market sales
Direct purchases from Treasury
Maturities
+8.6
+16.8
+6.7
+6.5
+15.1
+6.7
+62.7
Total net increase or decrease
+10.6
+18.7
+15.1
+32.2
+2.0
+78.6
Office of the Secretary of the Treasury, Division of Research and Diatistics.
F Original figures revised.
. loss than $50,000.
y Purchases and sales recorded as of day of transaction and not day of-delivery. Transactions after la e'clock are included in the sext day.
Regraded Unclassified
13
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
8 1942
TO
Secretary Morgenthau
FROM Randolph Paul
In the course of the recent Foreign Funds
Control investigations of the New York agencies of the
Swiss Bank Corporation and the Credit Suisse, evidence
was uncovered indicating that both agencies wilfully
filed false TFR-300 reports with respect to securities
held by them in accounts in the names of their home
offices. Apparently both agencies were parties to almost
identical plans to conceal the real ownership of such
securities. Although it would appear that in many cases
the agencies themselves were ignorant of the real owners,
nevertheless in numerous instances where they were fully
informed, they failed to report the true ownership of the
securities.
In view of the gravity of the charges it seems
desirable to institute administrative proceedings at which
the officials of the agencies may be confronted with the
evidence and given every opportunity to explain their con-
duct. The institution of such proceedings will, further-
more, have the salutary effect of serving notice on the
financial community that the Department Is inquiring into
the truth of reports filed with it under Executive Order
No. 8389, and intends to take appropriate action when such
reports have been wilfully falsified. Consequently, it is
intended to notify the New York Agency of the Swiss Bank
Corporation the early part of next week that hearings will
be commenced on December 16, 1942, with respect to speci-
fied TFR-300 reports filed by it, and certain miscellaneous
matters which also seem to call for explanation. When this
proceeding is completed, hearings will be commenced with
respect to the New York Agency of the Credit Suisse, and
its subsidiary, the Swiss-American Corporation.
Mr. Sam Bass Warner, of my office, will preside
at the hearings. A graduate of Harvard College, class of
1912, and of the Harvard Law School, class of 1915, Mr.
Werner has been for the past number of years a member of
the Harvard Law School faculty.
her
Regraded Unclassified
14
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE NOV 8 1942
TO Secretary Morgenthau
FROM Randolph Paul
Information coming to our attention during
the past several months indicated that the accounts of
the Vatican and other facilities of the Roman Catholic
Church were being used to effect certain transactions
of a type which did not fall within the intended scope
of General License No. 44.
The following remedial action has been taken:
(1) The problem was discussed with Monsignor
McShea, acting for the Apostolic Delegate, who was
furnished with a number of examples of such transactions.
Monsignor McShea readily agreed that the Apostolic
Delegate would take the necessary steps to prevent
the church facilities from being used for such purposes.
(2) With the approval of the Apostolic
Delegate, the banks holding the principal Vatican
accounts were instructed that no funds may, except
under specific license, be credited to such accounts
by any person other than the Apostolic Delegate or
persons designated by him unless the bank has received
specific notice from the Apostolic Delegate of his
approval of such transaction.
(3) An arrangement has been made with the
Apostolic Delegate and the Office of Censorship in
accordance with which instructions being sent to
blocked countries requesting the saying of masses or
remitting of funds in payment therefor will be returned
by the Office of Censorship to the sender, together
with an advice that, in view of the financial
transaction necessarily involved, a special Treasury
license is required and that applications for such
licenses must be filed through the Apostolic Delegate,
Washington, D. C. This step will increase the
effectiveness of our control over funds which were
Regraded Unclassified
TREASURY DEPARTMENT
14
INTER OFFICE COMMUNICATION
DATE NOV 8 1942
TO
Secretary Morgenthau
FROM Randolph Paul
Information coming to our attention during
the past several months indicated that the accounts of
the Vatican and other facilities of the Roman Catholic
Church were being used to effect certain transactions
of a type which did not fall within the intended scope
of General License No. 44.
The following remedial action has been taken:
(1) The problem was discussed with Monsignor
McShea, acting for the Apostolic Delegate, who was
furnished with a number of examples of such transactions.
Monsignor McShea readily agreed that the Apostolic
Delegate would take the necessary steps to prevent
the church facilities from being used for such purposes.
(2) With the approval of the Apostolic
Delegate, the banks holding the principal Vatican
accounts were instructed that no funds may, except
under specific license, be credited to such accounts
by any person other than the Apostolic Delegate or
persons designated by him unless the bank has received
specific notice from the Apostolic Delegate of his
approval of such transaction.
(3) An arrangement has been made with the
Apostolic Delegate and the Office of Censorship in
accordance with which instructions being sent to
blocked countries requesting the saying of masses or
remitting of funds in payment therefor will be returned
by the Office of Censorship to the sender, together
with an advice that, in view of the financial
transaction necessarily involved, a special Treasury
license is required and that applications for such
licenses must be filed through the Apostolic Delegate,
Washington, D. C. This step will increase the
effectiveness of our control over funds which were
Regraded Unclassified
15
- 2 -
hitherto being held by clerics throughout the country
for account of persons in Europe and which were being
used to effect unlicensed offset transactions.
Last Tuesday the Apostolic Delegate invited
Pehle and me to luncheon. He was very friendly and
was grateful for the frank and cooperative way in which
the Treasury is handling these problems.
It is believed that these steps will go far
toward remedying the situation about which several
governmental agencies were concerned.
KA
Regraded Unclassified
16
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
NOV
8
1942
TO Secretary Morgenthau
FROM Randolph Paul
There is transmitted herewith for your
information a copy of a letter which has been sent
to Breckinridge Long with respect to the shipment
of food parcels from Portugal to Poland. This letter
was sent after Pehle had discussed the matter with
Breckinridge Long. Upon receipt of the State
Department's view with respect to the matters
indicated therein, it is contemplated that we will
be in a position to issue a license to the
organization selected by the Department of State.
You may be interested to know that
Breckinridge Long told Pehle informally that the
President has instructed State to arrange for the
shipment of 750,000 food packages to Norway. These
packages will be of a value of approximately $20
each; will be purchased by the American Red Cross
out of the President's special fund; and will be
sent in Swedish ships through Sweden to Norway.
German consent to send such shipments through the
blockade will have to be obtained, as well as
German permission for the Swedish ships which are
now in the Baltic to come to this country to pick
up the food packages. If the trial shipment of
750,000 food packages is successful, it is
anticipated there will be further shipments. The
sending of food packages to Norway in this amount
would appear to indicate that a definite shift in
the Government's relief policy is under way.
bet
Regraded Unclassified
17
COPY
30168
November 28, 1942
Dear Mr. Long:
Reference is made to Mr. John Pehle's conversation
with you with regard to the proposed sending of food
parcels from Portugal to the Jewish communities in Poland.
There is now pending with the Foreign Funds Control
the following applications with respect to this matter:
NY 479110 - filed on behalf of the World Jewish
Congress; and
NY 479663 - filed by the American Jewish Joint
Distribution Committee, Inc.
Photostatic copies of such applications are transmitted
herewith.
This Department would appreciate being advised as to
the decision of the Department of State with respect to the
organization which should be licensed to engage in these
activities.
We should also like to have the views of the Department
of State with respect to the following:
1. It is assumed that food parcels aggregating four
tons per month are to be purchased in Portugal for
shipment to Poland. This Department would like
to be formally advised as to the products which
may be included in such food parcels. It is
assumed that parcels may not contain products
which are not produced in Portugal.
2. Are the food packages to be sent to communities
in Poland for distribution by trusted persons in
the communities or are the parcels to be addressed
to individuals in such communities for consumption
by such individuals.
Regraded Unclassified
18
- 2 -
3. Does the Department of State desire the
American mission in Portugal to supervise
the purchases of products in Portugal.
It is proposed by this Department that licenses be
issued for a period of two months; that monthly reports
be required as to the activities under the license; and
that every effort be made to ascertain whether the
parcels are actually received in the communities for
which they are intended.
Very truly yours,
(Signed) Randolph Paul
Acting Secretary of the Treasury.
Honorable Breckinridge Long,
Assistant Secretary of State.
Enclosures
Regraded Unclassified
19
TREASURY DEPARTMENT
OFFICE OF SEE SECRETARY
November 25, 1942
COMPIEMENTAL
Received this date from the Federal Reserve
Bank of New York, for the confidential informa-
tion of the Secretary of the Treasury, compile-
tion for the week ended November 18, 1942, showing
dollar disbursements out of the British Impire and
French accounts at the Federal Reserve Bank of
New York and the means by which these expenditures
vere financed.
(Init.) E.M.B.
1mc:12/7/42
20
C
o
P
Y
FEDERAL RESERVE BANK
OF NEW YORK
November 27, 1942
CONFIDENTIAL
Dear Mr. Secretary: Attention: Mr. H. D. White
I am enclosing our compilation for the week ended
November 18, 1942, showing dollar disbursements out of the
British Empire and French accounts at this bank and the
means by which these expenditures were financed.
Faithfully yours,
(Signed) L. W. Knoke,
L. W. Knoke,
Vice President.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Enclosure
Regraded Unclassified
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
Week Ended
November 18, 1942
Strictly
(In Millions of Dollars)
Confidential
BANK OF ENGLAND (BRITISH GOVERNMENT)
BANK
OF
FRANCE
DEBITS
CREDITS
DEBITS
CREDITS
Proceeds of
Net Incr.
Net Incr.
Gov't
(+) or
Gov't
Proceeds
Sales of
(+) or
Total
Expendi-
Other
Total
Securities
Other
Decr. (-)
Total
Expendi-
Other
Total
of Gold
Other
Decr. (-)
PERIOD
Debits
tures(a)
Debits
Credits
Gold
(filcial)
Credits(c)
to & Punde(d)
Debits
tures (e)
Debits
Credits
Sales
Credits
in $ Funds (d)
First year of ware
1,793.2
605.6
1,187.6
1,828.2
1,356.1
52.0
420.1
+ 35.0
866.3(D)
416.6(f)
449.7
1,095.31)
900.2
195.1(f)
+229.0
Mar period through
December, 1940
2,792.3
1,425.6
1,356.7
2,793.1
2,109.5
108.0
575.6
+ 10.8
878.3
421.4
456.9
1,098.4
900.2
198.2
+220.1
Second year of ware
2,203.0
1,792.2
410.8
2,189,8
1,193.7
274.0
722,1
- 13,2
38.9
4,8
36.1
8,8
-
8.8
- 30.1
Third year of ware
11,235.6
904.8
330.8
1,361,5
21,8
5.5
1,334.2
+125.9
18.5
-
18.5
4.4
I
4.4
- 14.1
1942
Sept. 3- Sept. 30
56.1
37.1
19.0
81.6
-
0.5
81.1
+ 25,5
10.1
-
10.1
0.4
-
0.4
- 9.7
Oct, 1- Oct. 28
46.7
27.4
19.3
57.5
-
-
57.5
+ 10.8
-
-
-
0.3
-
0.3
+ 0.3
Oct. 29 - Dec. 2
Dec. 3- Dec. 30
-
AEEK ENDED:
Oct. 33
7.3
4.1
3.2
10.3
-
-
10.3
+ 3.0
-
-
-
0.1
-
0.1
+ 0.1
Nov. 4
55.9
12,3
44.5
6.4
-
-
6.4
- 50.5
0.1
-
0.1
-
- 0.1
10
10.1
5.5
4.6
12.6
-
-
12.5
+ 2.5
-
#
.
0.3
-
0.3
+ 0.3
18
12.8
0.5
13.2
21.0
-
-
21.0(c)
+ 8.2
0.1
-
0.1
-
-
.
- 0.1
Average Weekly Expenditures Since Outbreak of War
Transfers from British Purchasing Commission to
France (through June 19, 1940) $19.6 million
Bank of Canada for French Account
England (through June 19, 1940) 27.6 million
Week ended November 13, 1942
England (since June 19, 1940) 33.7 million
Cumulation from July 6, 1940
-
-
million
162.7
million
*For monthly breakdown sec tabulations prior to April 23, 1941
**For monthly breakdown see tabulations prior to October 8, 1941.
***For monthly breakdown see tabulations prior to October 14, 1942.
(See attached sheet for other footnotes)
Regraded Unclassified
(a) Includes payments for account of British Purchasing Commission, British Air Maintry, British Supply Board, Ministry of
Supply Timber Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montrail, which apparently represent the
proceeds of official British sales of American securi ties, including those effected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during ,the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Liorgenthau, total official and private British liquidation
of our securities through December, 1940 amounted to 0334 million.
(c) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with New York banks,
1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accruing
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, dollar
receipts.
(d) Reflects changes in all dollar holdings payable QD demand or maturing in one year.
(e) Includes payments for account of French Air Commission and French Purchasing Commission,
(f) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(g) Includes $10.6 million to be held for credit of U. S. armed forces abroad
4.8 million deposited by dritish Ministry of Supply.
Regraded Unclassified
ANALISTS OF CANADIAN AND AUSTRALIAN ACCOUNTS
Strictly
(In Millions of Dollars)
Week Ended november 13, 1942
Confidential
BANK
OF
CANADA (and Canadian Government)
COMMONWEALTH BANK OF AUSTRALIA (and Australian Government)
DEBITS
CREDITS
DEBITS
CREDITS
Transfers
to
Proceeds
Transfers from Official
Transfers
of
British A/C
Net Incr.
to
Official
Proceeds
Net Incr.
(+) or
Official
Total
British
Other
Total
Gold
of
For Own
For French
Other
Decr. (-)
(+) or
PERIOD
Total
Brttish
Other
Debits
A/C
Credits
Total
Debits
Sales
A/C
A/C
Credits
es Si I
A/C
Gold Other
Decr. (-)
Debita
Debita
Credits
Sales
Credits
in
First year of ware
323,0
16,6
306.4
504.7
412,7
20,9
38.7
32.4
+ 181,7
31.2
3,9
27.3
36,1
30,0
6.1
. 4.9
War period through
December, 1940
477.2
16.6
460.6
707.4
534.8
20.9
110,7
41.0
. 230.2
57.9
14.5
43.4
62,4
50.1
12.3
+ 4.5
Second year of wares
460.4
-
460.4
462.0
246,2
3.4
123,9
88.5
+ 1.6
72.2
16,7
55.5
81.2
62,9
18.3
. 9.0
Third year of waress
525,8
0.3
525.5
566.3
198,6
7.2
-
360.0
+ 40.5
107.2
57.4
49.8
112.2
17,2
95.0
- 5.0
1942
Sept. 3- Sept. 30
46.3
-
46.3
53.6
13,2
-
-
40.4
+ 7.3
28,0
20.5
7.5
18,1
-
18,1
- 9.9
Oct. 1 - Oct. 28
44.9
-
44.9
51.5
15.6
,
-
34.9
+ 6.6
14.3
12.0
2.3
14.6
.
14.5
* 0-3
Oct. 29 - Dec. 2
Dec. 3- Dec. 30
WEEK ENDED:
Oct. 28
7.7
-
7.7
12.0
3.7
-
-
8.3
* 4.3
0.9
-
0.2
2.0
-
2.0
1.1
Nov. 4
12.5
-
12.8
15.6
3.4
-
12.2
+ 2.8
2.8
0.5
2.3
0.1
-
C.1
- 2.7
10
12.5
-
12.5
19.8
2.8
-
-
17.0
+ 7.3
1.1
-
1.1
1.3
-
1.3
= 0.2
18
3.5(N)
-
3.5
14.7(b
2.8
-
-
11.9(c)
+ 11.1
0.5
-
0.5
0.1
-
0.4
- 0.1
Weekly Average of Total Debits Since Outbreak of War
Through November 13, 1947 $ 8.4 million
*For monthly breakdown see tabulations prior to April 23, 1941.
**For monthly breakdown see tabulations prior to October 8, 1941.
***For monthly breakdown see tabulations prior to October 14, 1942.
(a) Reflects changes in all dollar holdings payable on demand or maturing in one year.
(b)Does not reflect transactions in U. 3. Treasury bills and certificates.
(c) Incluies $4.0 Billion deposited by hr Supplies, Ltd.
Regraded Unclassified
24
NOT TO BE RE-TRANSMITTED
13
COPY NO.
BRITISH MOST SECRET
U.S. SECRET
OPTIL No. 373
Information received up to 7 A.M., 28th October, 1942.
1. MILITARY
EGYPT. In the Northern sector during the night 26th/27th, movement
by enemy infantry against 9th Austrulian Division's foremost defonded localities
was checked by defensive fire. Further south infantry of First Armoured Division
carried out a successful attack, capturing KIDNEY RIDGE 5 miles west of TEL EL MAKH
KHAD and boat off a counter attack by tanks with considerable enemy loss. At 8 a.m.
27th, the attack was supported by armour which, however, WELD unable to exploit fur-
ther westwards owing to heavy anti-tank fire. Another small advance was made by New
Zealand and South african troops in the DEIR EL DHIB area where our troops moved
forward to the edge of an enemy minefield and eventually occupied 4 platoon posi-
tions 1000 yards further west. In the EL HEMEIMAT area 44th Division cleared all
gaps but one in the second minefield despite enemy interference.
MADAGASCAR. Owing to extensive obstructions on the direct road to
ALAKAMISY, our forces have been compelled to advance on 3 roads. At 8 p.m. 26th,
our leading troops were 12 miles north of ALAKAMISY. Weather in good, but road
blocks continue to delay our advance.
R. AIR OPERATIONS
WESTERN FRONT. 27th. Submarine slipways at FLENSBURG were bombed by
Mosquitos and a 2500 ton ship was set on fire in the port. Other Mosquitos attacked
objectives in HOLLAND. During sweeps off the French coast, 2 enemy fighters were
damaged, 2 Spitfires are missing. A Beaufighter damaged a JU 88 off the SHETLANDS.
27th/28th. 36 aircraft were sent mino-laying and 4 to drop leaflets. All returned
safely.
EGYPT. 26th. 602 bomber and fighter norties were flown over the
hattle area. 15 enemy aircraft were destroyed, 8 probably destroyed and 14 damaged
M our aircraft and anti-aircraft fire destroyed another. 4 of our fighters are
:lusing. 7 attacks were made by medium bombers on enemy M.T. in the northern sector
to provent onemy counter attacks which did not develop. Light bombers made 4 raids
CO enemy landing grounds, 2 aircraft were damaged on the ground. Fighters disabled
4 tanks, 2 armoured cars and 3 petrol lorries. Several attacks on an escorted tanker
and 2 ships resulted in the destruction of one ship, the tanker being sot on fire
and 2 anomy aircraft being' shot down and 3 damaged from an ascort of 5. 6 of our
aircraft were lost. 26th/27th. A threatened counter attack was prevented by
Regraded Unclassified
- 2 -
25
accurato bombing. Scattered bombing by the enemy had little effect. 27th.
Throughout the morning enemy concentrations in the northern sector were bombed
successfully.
MALTA. 27th. Betweon 6 A.M. and 2 P.M., 124 bomb-carrying
fighters with escort operated against the Island. Only a fow crossed the
coast, bombs round TAKALI aerodrome caused no serious damage, but at LUQA &
Hellington was destroyed and a Spitfire damaged. One enemy aircraft was probably.
destroyed by antiaircraft fire and 3 were damaged by fighters.
BURMA. One Blenhoim was destroyed at CHITTAGONG Aerodrome by
Japanese aircraft on the 25th. During 25th and 26th about 95 onemy aircraft
attacked aerodromes in north east ASSAM, some U.S. aircraft were destroyed on
the ground (details unknown) and at loast 4 enemy aircraft were shot down.
26
NOT TO BE RE-TRANSMITTED
U.S. SECRET
BRITISH MOST SECRET
COPY NO. 13
OPTEL NO. 414.
Information received up to ? A.M. 28th November,
1942.
1.
NAVAL
Two Norwegian-manned motor torpedo boats returned
from Norwegian waters yesterday. They report having
torpedoed and left sinking two fully laden 5,000 ton ships
in Askevold Bay, North of Bergen. The Russian Ice-breaker
"MIKOYAN" was damaged by explosion at the entrance to the
White Soa on 26th but could proceed. The only official
report so far received confirms that at least part of the
French Fleet at Toulon has been scuttled. Early on 27th
one of H.M. submarines torpedoed a ship in Southbound convoy
North of Tunis.
2.
MILITARY
Libya - 26th.
Air reconnaissance showed continued digging on the
El Agheila defences.
French North Africa
The first Army has continued to advance in three
columns. One moving along the Constal road from Tabarka
has reported fighting West of Mateur. On the 25th a
strong armoured column penetrated the enemy outpost line and
by evening was half-way between Mateur and Tebourba. On
26th this centre column co-operating with aircraft destroyed
40 enemy aircraft on an advanced landing ground. The
third column drove the enemy from Medjes El Bab. French
Forces have taken up covering positions on our right flank.
Russia
The Germans announce that the Russians have
launched the 'Expected' offensive on the Central sector
West of Moscow and that the attacks have everywhere been
repulsed with heavy Russian losses. There is no mention
in the Soviet Communiques of the scale of the operation.
The Russian attacks North-West and South of Stalingrad have
made further progress and their forces are now established
for some distance on both banks of the Don Bond. The German
forces East of the Don Bend are thus surrounded and the
Russians are making every effort to exterminate them.
3.
AIR OPERATIONS
Western Front - 27th,
Mustangs and Spitfires attacked transport
objectives in Northern France and the Low Countries. Several
locomotives were disabled, one Mustang is missing. Three
Bostons successfully bombed Ijmuiden Steel Works and a
factory in Holland. A Hurtson bombed and hit a 2,500 ton
ship off Texel. Two F.W. 190's attacked with cannon-fire
Railway property in Kent, one of them was destroyed.
Regraded Unclassified
- 1
27
27th-28th
Ten of our aircraft carried out sea-mining.
French North Africa - 23rd/24th.
15 Bisley's bombed Bizerta docks. Enemy aircraft
bombed Bone airfield setting fire to petrol and ammunition
dumps.
25th
Heavy air fighting developed in Tunisia. Enemy
casualties 12-13-22. Ours 7-0-0. Three pilots safe.
Libya - 26th
Liberators bombed the harbours of Tripoli (L) and
Homs (L) hitting two ships.
SICILY - 26th/27th
9 Wellingtons bombed Gerbini Airfield hitting runways
and hangars.
25th/26th
9 Liberators bombed an oil refinery at Bangkok.
Regraded Unclassified
28
NOT TO BE RE-TRANSMITTED
COPY NO.
in
BRITISH MOST SECRET
U.S. SECRET
OPTO No. 415
Information received up to 7 A.M., 29th November, 1942.
1. NAVAL
BONE. 28th. One of H.M. Destroyers was damaged during continuous
bombing from midnight to 6.30 a.m. The German S.S. RAMSES (8,000 tona) bound from
KORE to GERMANY via BATAVIA was intercepted yesterday south of COCOS ISLANDS by one
of H.D. Australian Cruisers and 8 Dutch Cruiser. The ship was scuttled and 78
Germins captured and 10 Norwegians rescued.
TOULON. Air reconnaissance 28th showed following French warships
igarently undamaged. Two old battleships, one eight inch cruiser, two six inch
cruisers, five contre-torpilleurs and two destroyers, also four submarines under
construction. All the remaining Naval units located were either sunk or damaged.
lo submarines afloat were seen. No fires were seen burning on land and no major
destruction was apparent. Magazines at MILHAUD and oil cisterns at MONDRIER were
intact. Merchant shipping, including five tankers, all appeared undamaged except
for one ship partly sunk. A small Norwegian Petrol Carrier in an castbound convoy
M.S sunk off BOUGIE by air attack yesterday.
R. MILITARY
LIBYA. 27th. Our advanced armoured elements made contact with the
enemy 25 miles east of AGHEILA and to the South. Considerable enemy activity was
seen south of MARSA EL BREGA, and air reconnaissance reported movement in both
directions between & AGREILA and SIRTS.
FRENCH NORTH AFRICA. 27th. The advance of the First Army continues
stendily, although the enemy has attempted to slow it down by blowing bridges and
tratering roads. The enemy's attitudo is mainly defensive. Our armoured units are
tow operating west of DJEDEIDA, fifteen miles west of TUNIS and have destroyed 15
memy tanks. 7 of our tanks were knocked out but were recovered. Our infantry
tolumno are advancing steadily and have thrown off onomy counter attacks. TEBOUBA
La now in our hands and the enemy is believed to have evacuated MATEUR. Our Commandos
oro active east of DJEBEL ABIOD on 23/24 and 24th.
RUSSIA. DON SECTOR. The Russians appear to have formed & defensive
ront facing West and are actively mopping up the area of the DON Bond, having now
aptured KLETSKAYA. They are pressing from all sides against the Gorman forces
noircled east of the DON Bond but their progress is not yet known. The Germans
lain to have hold these attacks.
AIR OPERATIONS
WESTERN FRONT. 23th. Fighters attacked locomotives and transport
bjoctives in Occupied territory. Enemy casualties one, nil, nil. Ours 4, nil, 3.
28th/29th. 277 aircraft were sont out - TURIN 228, Intrudors 25,
mining 19, leaflets 5. 3 aircraft are missing and one crashed. TURIN - pre-
liminary report weather good, many large fires started, including some in the Fint
Works and an exceptionally big one in the Royal Arsenal.
FRENCH NORTH AFRICA. 27th. United States aircraft hombed MATEUR
and at night Wellingtons dropped 31 tons of bombe on BIZERTA docks.
MEDITERRANEAN. 27th. Fortresses dropped 10 tons of bombe on docks
at LEHOS ISLAND. 28th. Spitfires attacked COMISO Airfiold, SICILY.
Regraded Unclassified
29
Mr. Bell recommended that this not
be done.
Regraded Unclassit
"py for
Treasury Department
mrs Klotz
TELEGRAPH OFFICE
we20 54 GOVT NL COLLECT
KANSASCITY MO NOV 29 1942
1942 NOV 30 AM 8 01
DAN BELL
OFFICE OF THE SECY TREASURY
WISH YOU WOULD DISCUSS WITH KUHN G BUFFINGTON AND HAROLD THOMAS
HAVING ADVERTISING AGENCY MAKE A STUDY PROMPTLY OF ALL LITERATURE
THAT WE SEND TO BANKS AND SEE IF THEY CANNOT PUT SOME SALES APPEAL
INTO IT. PERIOD PLEASE LET ME KNOW TUESDAY WHAT CAN BE DONE PERIOD
COPY TO MRS KLOTZ
HENRY MORGENTHAU JR
746A NOV 30.
Regraded Unclassified
30
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 30, 1942.
TO
Secretary Morgenthau
FROM
George Buffington G.B.
Subject: Your message of November 28, 11:30 A.M., to Mr. D. W. Bell.
1. The Victory Fund Committee and the Federal Reserve Bank mailed circulars
to all banks prior to last Friday.
2. The joint statement of three bank examining agencies was sent out by the
Comptroller of the Currency to all national banks, the Federal Deposit
Insurance Corporation issued the statement to all insured nonmember banks,
and the Federal Reserve Bank sent the statement to all insured State
banks. A copy of the statement is attached.
3. The F and G circulars are being mailed today by the Kansas City Victory
Fund Committee, in line with the instructions in your wire of November 15,
stating that the Victory Fund Committee would be responsible for their
sale as of December 1. Home building and loan associations are on this
list.
4. Mr. Hemingway's letter dated November 20 was mailed to all banks who are
members of the American Bankers Association on or about November 20.
The attached booklet was mailed first class on the 25th, to arrive at
the most distant points at the latest on November 30.
Attachments.
31
THE AMERICAN BANKERS ASSOCIATION
OFFICE OF THE PRESIDENT
MERCANTILE-COMMERCE BANK AND TRUST Co.
ST. LOUIS, MISSOURI
W. L.HEMINGWAY
PRESIDENT
November 20, 1942
To Members of the American Bankers Association:
This, my first message to you as President of
your Association, deals with what is the greatest single problem
before us-that of financing the war.
As we all know, the money required to win the
war must and will be raised, but it should be raised in a way which
will put the least strain on the nation's economic structure and
have the least inflationary effect. This means that as much as
possible of the necessary revenue should be secured through taxa-
tion and through the sale of government securities outside of the
banking system. If such a program is to be successful it must have
the active support of the banks.
We have received many compliments on our splen-
did job in the selling of War Savings Bonds to the public. But it
is not expected that War Savings Bonds alone will finance this war.
A still larger volume of these and other government obligations
must be taken by non-bank investors.
This has seemed so important to the officers of
the Association that we offered our services to the Secretary of
the Treasury and appointed a special committee to consider what we
might do as an Association to cooperate with him to bring about the
necessary distribution of government securities. This committee met
in Washington last week at the invitation of the Secretary and held
a series of conferences. Upon the recommendation of this committee,
the officers of your Association have stated to the Secretary that
we will undertake to give all-out aid and we urge our members to go
the limit in supporting the work of the Victory Fund Committees in
the sale of government securities to the public.
But after all when the public has taken all the
bonds that it will take, then the Treasury must look to the banks.
Therefore, we strongly recommend that you employ your surplus funds
by investing in government securities and that you take your full
share of future issues in some general relationship to your size.
Regraded Unclassified
32
- 2 -
In order to discuss with you in more detail the
ways and means of accomplishing these objectives and to answer the
numerous questions that will undoubtedly occur to many of you re-
garding this program, a booklet is being prepared on the subject.
A copy will be mailed to every member of the Association shortly.
When you receive it, I earnestly urge you to read it carefully and
give the subject the consideration that it deserves. If you have
any doubts, questions, or suggestions regarding any part of it, I
will be glad to have you write me.
Of all the added responsibilities that our banks
have assumed and have had placed upon them in recent months, I know
of none of more far-reaching importance to our country and to our
banks themselves than this job of seeing to it that the financing
of the war is accomplished in the best possible manner.
Please give us your full cooperation.
Sincerely yours,
Regraded Unclassified
33
I am pleased to announce that the following men have
consented to serve with me on this special committee:
Edward E. Brown, President
The First National Bank of Chicago
Chicago, Illinois
W. Randolph Burgess, Vice Chairman of the Board
The National City Bank of New York
New York, N. Y.
Robert V. Fleming, President
Riggs National Bank
Washington, D. C.
William C. Potter, Chairman of the Executive Committee
Guaranty Trust Company of New York
New York, N. Y.
Thomas M. Steele, President
First National Bank & Trust Company of New Haven
New Haven, Connecticut
Robert Strickland, President
Trust Company of Georgia
Atlanta, Georgia
W. H. Wood, President
American Trust Company
Charlotte, North Carolina
A. L. M. Wiggins, President
Bank of Hartsville
Hartsville, South Carolina
Vice President, American Bankers Association
W. L. Hemingway, President
Mercantile-Commerce Bank and Trust Company
St. Louis, Missouri
President, American Bankers Association
Harold Stonier, Executive Manager
American Bankers Association, Secretary
Regraded Unclassified
34
FINANCING
TOTAL WAR
OUR JOB IN DECEMBER
AMERICAN BANKERS ASSOCIATION
22 East 40th Street
ABA ORGANIZED 1875
New York City, N.Y.
A. B. A. COMMITTEE ON TREASURY WAR BORROWING
Edward E. Brown, President
The First National Bank of Chicago
Chicago, Illinois
W. Randolph Burgess, Vice Chairman of the Board
The National City Bank of New York
New York, N. Y.
Robert V. Fleming, President
Riggs National Bank
Washington, D. C.
William C. Potter, Chairman of the Executive Committee
Guaranty Trust Company of New York
New York, N.Y.
Thomas M. Steele, President
First National Bank & Trust Company of New Haven
New Haven, Connecticut
Robert Strickland, President
Trust Company of Georgia
Atlanta, Georgia
W.H. Wood, President
American Trust Company
Charlotte, North Carolina
A.L.M. Wiggins, President
Bank of Hartsville
Hartsville, South Carolina
Vice President, American Bankers Association
W. L. Hemingway, President
Mercantile-Commerce Bank and Trust Company
St. Louis, Missouri
President, American Bankers Association, Chairman
Harold Stonier, Executive Manager
American Bankers Association, Secretary
Regraded Unclassified
THE TREASURY has just announced the greatest drive for funds in
history. It is asking every one of us to take part in a gigantic war financing
campaign to sell $9,000,000,000 of government securities during December.
Securities that will appeal to every type of investor from the individual
who buys a $25 U. S. Savings Bond to corporations and other organizations
that invest millions are to be offered.
The December campaign with its $9,000,000,000 goal includes a wide
variety of government securities, many of them already well known, and
others new in their appeal. Included are Treasury Bills, Certificates of In-
debtedness, and Tax Savings Notes A and C which are rapidly growing in
importance. There are included, too, the familiar United States Savings
Bond of Series F and G (formerly called War Savings Bonds, Series F and G)
and Treasury Bonds.
The three new offerings are - the Twenty-Six Year 21/2% Bonds, the
Six and One-Half Year 13/4% Bonds, and the Seven-Eighths of 1% Certifi-
cates of Indebtedness.
The distinctive characteristics of these securities are clearly outlined in
the inside pages of this booklet. In addition, you will receive complete
information regarding them from the sales organization that has been
established in your Federal Reserve District.
THE VICTORY FUND ORGANIZATION
The challenging job of selling $9,000,000,000 worth of securities in
December has been placed in the hands of a group called the Victory Fund
Committee. It operates in every Federal Reserve District, every state, most
counties, and many cities. It is a nationwide organization of bankers, security
dealers and other business leaders. Its operations extend from the headquar-
ters in each reserve district to your community.
Perhaps you have been named to membership in a formal committee or
perhaps you are one of the 45,000 volunteer workers from the banks of the
country who will patriotically contribute their experience and skill in
finance, their knowledge of the investment habits of their communities and
their time and effort. Officially or otherwise, we are all a part - and a vital
part - of this great sales organization.
You undoubtedly will be given specific tasks to perform in order to
assure the quick and complete success of this $9,000,000,000 drive. These
tasks will be made known to you by those in charge of the campaign in your
district. But don't wait for formal instructions. You are now acquainted
with the securities that are included in the December offering. You know
the people of your community and they know you. Start now to take part
in the nation's drive for the money that must be raised to win the war.
1
(Continued on page 4)
Regraded
Distinctive Characteristics of
MATURITY
OFFERED
TREASURY BILLS
Usually 91 days.
bidder. Weekly on discount basis to high
Time to time at par, plus accrued
terest on subscription. There are
CERTIFICATES OF
Series E-1943.
rently three issues outstanding mate
INDEBTEDNESS
ing quarterly as follows:
5/8% due 2-1-43
0.65% due 5-1-43
7/8% due 8-1-43
TREASURY TAX
SAVINGS NOTES
Sept. 1, 1945.
Available at all times during 1942
Tax Series A-1945
par, plus accrued interest.
TREASURY TAX
SAVINGS NOTES
Three years from first day
chased. of month in which pur-
Available at all times at par in
Tax Series C
amount in multiples of $1,000.
Available at all times at 74% of
UNITED STATES
SAVINGS BONDS
turity value to all buyers, other that
12 years from first day of
commercial banks.
SERIES F
month in which purchased.
Not more than $100,000 cost price an
nually of Series "F" and/or Serior
"G" Bonds.
UNITED STATES
Available at all times at par to all buys
SAVINGS BONDS
12 years from first day of
ers other than commercial banks.
SERIES G
month in which purchased.
Not more than $100,000 cost price #
nually of Series "G" and/or Serior
"F" Bonds.
TREASURY
BONDS
1948
Par, plus accrued interest.
TREASURY
BONDS
1963-68
Par, plus accrued interest.
Regraded Unclassified
States Government Securities
RETURN
COMMENT
count bid.
rage rate accepted for
Traded in open market.
due 12-16-42 was
Federal Reserve Purchase and Resale rate 3/8% per annum.
9%.
Traded in open market.
5%.
Available as collateral for bank loans.
Principal plus interest may be applied in payment of Federal income,
estate and gift taxes.
proximately 1.92% per
Not more than $5,000 plus interest may be applied in payment of any
um when applied in
one class of tax in any one year.
ment of taxes.
Redeemable for cash at purchase price, on demand.
Issued in denominations of $25, $50, $100, $500, $1,000 and $5,000.
Not salable or available for hypothecation.
Principal plus interest may be applied in payment of Federal income,
-est accrues each month
estate and gift taxes.
.aduated scale. Aver-
Redeemable at option of holder, for cash at par and accrued interest,
interest return about
after 6 months from issue date, on 30 days' notice, or at maturity.
7% a year if held to ma-
Issued in denominations of $1,000, $5,000, $10,000, $100,000,
ty.
$500,000 and $1,000,000.
May be pledged as collateral for loans from banking institutions.
Payable at face amount if held to maturity.
3% per annum (if held
Not salable or available for hypothecation.
naturity).
Redeemable after 6 months from issue date, on one month's notice, at
cost plus interest at reduced rate.
Interest paid semi-annually.
0% per annum (if held
Not salable or available for hypothecation.
maturity).
Redeemable after 6 months from issue date, on one month's notice,
at various discounts over life of bond.
Traded in open market.
Available as collateral for bank loans.
5% per annum.
Issued in denominations of $500, $1,000, $5,000, $10,000, $100,000
($1,000,000 registered only).
Traded in open market but not eligible for transfer to commercial
banks until 12-1-52.
per annum.
Available as collateral for bank loans.
Issued in denominations of $500, $1,000, $5,000, $10,000, $100,000
($1,000,000 registered only).
Regraded Unclassified
BUILDING A PROSPECT LIST
Whether you are cooperating with other members of the regularly
organized Victory Fund Committee in your area, or whether in the absence
of such a committee you are acting alone, one of your first contributions to
the success of the campaign will be the preparation of a prospect list of
investors who can and should purchase some of the securities offered by the
Treasury. Your list should include such investors as:
1. Individual investors capable of making substantial purchases, say in
excess of $5,000. Whether or not they have bought their quotas of
United States Savings Bonds, they may be prospects for other issues;
2. Counties, various school funds, pension funds, and other sinking
funds; cities, towns and villages; school districts; and other political
subdivisions;
3. Savings banks;
4. Endowed institutions; universities, colleges, hospitals, orphanages,
religious institutions;
5. Insurance companies: life, casualty, fire;
6. Labor organizations, service groups, fraternal organizations;
7. Corporations which may have idle cash available (due perhaps to
priorities) which cannot be used for the present in the normal course
of business.
8. Small corporations having war contracts which may have produced
new money for investment.
YOUR VICTORY FUND COMMITTEE WILL COOPERATE
If you cannot call on all these prospects yourself, you can obtain com-
petent and effective help by appealing to the chairman or manager of the
Victory Fund Committee in your district. He will provide trained salesmen
who will help you cover the field. Make use of these men when you yourself
cannot personally visit all your prospects to tell them the merits of the
various offerings, to recommend the securities that best serve their invest-
ment needs, and to urge their unlimited support of the war fund drive.
You should receive from your Victory Fund Committee in your area
complete information regarding the offerings, including order forms, adver-
tising and publicity material, posters, booklets and folders. If this material
has not reached you, get in touch immediately with your area chairman or
write directly to the executive manager of the Victory Fund Committee
located at the Federal Reserve Bank of your district.
You have already established a splendid record in selling War Savings
Bonds to the public and it is important that you continue to give whole-
4
Regraded Unclassified
hearted support to the Series E War Savings Bond Program.
The importance of your activity in selling as many Government securities
as possible to investors other than commercial banks is obvious. The greater
the amount of Government securities purchased by these investors, the more
effective will the control of inflation become. In carrying out this assignment
you will be doing much more than raising urgently needed money for war
finance. You will be strengthening the controls on inflation, protecting the
banking system, and performing a service to the people of America who
look to you for guidance and leadership in maintaining a sound economy.
BANKS SHOULD BUY THEIR SHARE
All of the Treasury's securities will not be bought by non-bank investors.
As President W. L. Hemingway pointed out in his recent letter to the mem-
bers of the American Bankers Association, "When the public has taken all
the bonds it will take, the Treasury must look to the banks.
"Therefore," Mr. Hemingway continued, "we strongly recommend that
you employ your surplus funds by investing in Government securities and
that you take your full share of future issues in some general relationship
to your size.
"Of all the added responsibilities that our banks have assumed and have
had placed upon them in recent months, I know of none of more far-reaching
importance to our country and to our banks themselves than this job of seeing
to it that the financing of the war is accomplished in the best possible
manner."
The sale of $9,000,000,000 of Government securities in December is vital
to the prosecution of the war. Banking knows the needs of the nation and
stands ready to do its part. The banks will help America - swiftly, eagerly,
effectively, and with all the skill, experience, and facilities at their command.
AMERICAN BANKERS ASSOCIATION
You will receive directly from the Treasury Department a news-
paper advertisement in mal form announcing the $9,000,000,000
campaign, which the Treasury suggests be used on November 30
or as soon thereafter as possible. This advertisement may be pub-
lisbed by banks individually or cooperatively in groups.
5
Regraded Unclassified
35
November 30, 1942
Dear George:
I am glad that you sent me a copy of your
circular letter to life insurance companies
regarding the use of insurance agents in the
sale of E, F and G Bonds and other Treasury
issues. It is a tremendous help to us to have
the services of life insurance agents in the
sale of our securities, and I feel sure that
they will do just as well under the Victory
Fund Committees as they would have done under
the original War Savings Staff plan.
As I read your letter, it should make clear
to every insurance agent the distinction between
Series X Bonds and those in the "basket" of
securities to be sold in December through the
Victory Fund Comittees.
Please don't worry about giving = a middle
initial to which I as not entitled. It isn't
important, but I appreciate your letter of
explanation all the same.
Sincerely,
(Signed) H. Morgenthau, Jr.
Mr. George L. Harrison,
Life Insurance Coordinating Committee,
51 Madison Avenue,
New York, N. Y.
FK/cgk
File in Diay
Regraded Unclassified
36
Life Insurance Coordinating Committee
51 Madison Avenue, New York, N.Y.
Chairman:
November 24, 1942
Executive Committee:
GEORGE L. HARRISON
FRANKLIN D'OLIER
GEORGE L. HARRISON
CLARIS ADAMS
LEROY A. LINCOLN
WILLIAM H. ANDREWS, JR.
GERARD S. NOLLEN
PATRICK A. COLLINS
Hon. Henry Morgenthau,
JOHN A. WITHERSPOON
FRANKLIN D'OLIER
Secretary of the Treasury,
W.T. GRANT
Treasury Department,
LEROY A. LINCOLN
Washington, D.C.
JAMES Lee LOOMIS
A.J. McANDLESS
Dear Mr. Secretary:
GERARD S. NOLLEN
R. B. RICHARDSON
For your information and files I em enclosing a.
GRANT TAOGART
copy of a letter which I have today sent to all American
STABORN T. WHATLEY
legal reserve Life Insurance companies concerning the use
JOHN A. WITHERSPOON
of insurance agents to facilitate the sele of "E", "p" and
"G" bonds as well 8.8 other Treasury market issues. I am
also sending B. copy to Mr. Buffington and to Mr. Graves
for their information.
May I assure you that the Life Insurance
Coordinating Committee, the various Life companies and their
agents are enthusiastically responding to this opportunity
to aid in the sale of Treasury issues.
I hope you will observe that as you requested in
your letter of November 17th we have endeavored to make
sure that the selection of agents to aid the Victory Fund
Committees in the sale of "P" and "G" bonds and other
Treasury market issues will not interfere with the fine
work that Life Underwriters have been doing in the matter
of Payroll Savings and "E" bonds under the jurisdiction
of the War Savings Staffs.
Faithfully yours,
George L. Harrison
Chairman
GLH=RB
Encs.
Regraded Unclassified
37
Life Insurance Coordinating Committee
51 Madison Avenue
Chairmane
Executive Committee
Charge L Harrison
New York, N.Y.
Franklin D'Oller
Claris Adams
George L Harrison
William H. Andrews, Jr.
Parrick A. Collins
November 23, 1942
Leroy A. Lincoin
Gerard S. Nollen
Franklin D'Olies
John A. Witherspoo
W. T. Grant
Lenoy A. Lincoln
just Lee Loomis
LETTER TO ALL AMERICAN LEGAL RESERVE LIFE INSURANCE COMPANIES
A.J. McAndless
Gerard S. Nollen
R.B. Richardson
Grant Taggart
Seshorm T. Whatley
John A. Wichempoon
On September 11, 1942, I wrote to you and all other
life insurance companies outlining the program which had been
worked out with the Treasury to make available a selected group
of life insurance agents to assist the Treasury Department in
the salo of F and G Bonds.
The response to that letter was excellent and many
companies have since then sent to the Coordinating Committee or
to the local state chairman of the Life Underwriters Committee
lists of agents who might be considered available. for this work
or the names of general agents and managers who could provide
such lists. Over 5,000 names have come directly to the Coordin-
ating Committee and many others have been sent directly to the
local state chairmen of the Life Underwriters Committees. On
the whole, therefore, we have fairly well prepared our part of
the program agreed upon with the Treasury. I have to inform you,
however, that while a Treasury drive for the sale of F and G
Bonds under the auspices of the various State War Savings Staffs
had been arranged to begin on December 1, it has now been decided
by the Treasury not to pursue that particular program for the
reasons indicated in the enclosed letter from the Secretary of the
Treasury.
The Executive Committee of the Coordinating Committee
has authorized mo to inform the Secretary, in reply to his communi-
cation, that the groups of agents selected to aid the War Savings
Committees in the sale of F and G Bonds may be made available to
the Victory Fund Committees on substantially the same basis as was
planned for use through the War Savings Committees. In either
case the aid is to the Treasury which has now simply selected a
different set of committees to assume responsibility for the sale
of F and G Bonds. In working for the Victory Fund Committees it
is contemplated that agents may be asked to facilitato the sale
not only of F and G Bonds but also other available Treasury market
issues as woll. It is assumed that this will meet with your ap-
proval since it should afford selected agents an even more impor-
tant and interesting opportunity for patriotic and useful service.
Regraded Unclassified
38
LETTER TO ALL AMERICAN LEGAL RESERVE LIFE INSURANCE COMPANIES
- 2 -
November 23, 1942
You will notice that the Secretary of the Treasury has
asked that this program be adopted without interfering with the
work that many life underwriters are already doing in the estab-
lishment of Payroll Savings Plans and the sale of E Bonds which
will continue to be pressed through the War Savings Committees.
The Coordinating Committee recognizes, as does the Treasury, what
a fine job the life underwriters have done and are still doing in
those fields and it is hoped that the various companies will give
their blessings to those efforts as well as the work other agents
may now be asked to perform in connection with the drive planned
to begin November 30, 1942, under the jurisdiction of the Victory
Fund Committees. Both the Treasury and the Coordinating Committee
will appreciate the continued cooperation of the companies in those
all-important efforts.
For your information I am enclosing a copy of a letter
which I em today sending to the chairmen of each of the local State
Underwriters Committees.
Sincerely yours,
Gury & Marrison
Chairman
Enos. (2)
Regraded Unclassified
39
Life Insurance Coordinating Committee
51 Madison Avenue
Charman
Executive Committee
Gerre L Harrison
New York, N.Y.
Franklin D'Olier
George L Harrison
Clars Adams
William H. Andrews, Jr.
Leroy A. Lincoln
Parrick A. Collims
November 23, 1942
Gerard &. Nollen
Franklin D'Olier
John A. Witherspoon
V.T. Crant
Leroy A. Lincoln
lumo Lee Loomis
A.J. MiAndies
Gerand 5. Nollen
LETTER TO CHAIRMEN OF LOCAL STATE UNDERWRITERS' COMMITTEES
R.B. Richanfam
Geant Tagen
Sestion T. Whatley
Julin A. Waherspoon
You are, of course, acquainted with the plans
which this Committee has worked out with the Treasury
Department relative to the utilization of life insurance
agents in the sale of "F" and "G" bonds. Those plans
have been somewhat changed as a result of the fact that
the responsibility for the sale of "F" and "G" bonds has
been shifted from the War Savings Staffs to the Victory
Fund Committees and their subordinate committees. It
is hoped that this change will make no difference in the
effective use of life underwriters in the sale of these
securities and that you will be prepared to cooporate
with the Treasury through working with the Victory Fund
Committee just as you were prepared to do with the War
Savings Staff.
The War Savings Staffs will maintain complete
jurisdiction over the development of the Payroll Savings
Plan and the sale of "8" bonds as in the past. In this
connection, the Coordinating Committee hopes that you
will realize how much it and the company managements ap-
preciate the excellent work which the life underwriters
have done in the Payroll Savings Plan. It has been a
most important contribution to its success and 1s, I
know, much approciated by the Treasury authorities.
This Committee has requested all United States
companies and Canadian companies doing business in this
country to cooperato with the Treasury in the "p" and
"G" campaign. Their support has been most heartening.
Each company was requested to forward either to you or
to this Committee the names of such agents as would in
their opinion be desirable for this campaign. It is
possible that some such lists have already come to you,
but in addition we are now sending to you cards contain-
ing the names and addresses of all those agents which
have been sent directly to this Committee.
40
LETTER TO CHAIRMEN OF LOCAL STATE UNDERWRITERS' COMMITTEES
- 8 -
November 23, 1942
The responsibility for the use of these men must,
of course, in the last analysis rest upon you as State
Chairman for the Life Underwriters Committee and it is
hoped that you will be willing to cooperate with the Victory
Fund Committee in whatever way will best facilitate their
most effective utilization.
In some cases the Victory Fund Committee may apply
to you for help in areas not covered by any of the names
which you now have on hand. In such cases it is suggested
that you will make the necessary appeal to the companies
which you know are doing business in those areas. This
appeal, of course, you may make through the local Managers
or General Agents of the companies themselves, as you deem
best. In short, while the responsibility is perhaps a large
one, the Coordinating Committee hopes you will be willing to
assume it in the interests of doing the job well. The time
is short in view of the faot that the proposed drive is to
begin the end of November, and under the new set-up it may be
that the Victory Fund Committee will ask to have available
agents work not only on the " and "G" bonds but on other
available Treasury market issues as well. Any agents who
volunteer to do this work will, of course, have to do 80 sub-
jeot to the supervision and direction of the Victory Fund
Committee or their local sub-committees in cooperation with
yourself.
I am enclosing for your information a copy of a
letter which was addressed to me by the Secretary of the
Treasury. It may explain some of the background of this
matter to you.
Sincerely yours,
Chairman
GLH;RB
Enos.
Regraded Unclassified
41
COPY
THE SECRETARY OF THE TREASURY
WASHINGTON
November 17, 1948
Dear Mr. Harrisoni
As the Chairman of the Life Insurance Coordinating Com-
mittee, you recently made available to the Treasury a. carefully
selected group of agents to assist the War Savings Staff in the
sale of B and G Bonds. This very generous offer of cooperation
was accepted and we had completed plans for & program whereby
we would be able to take full advantage of this talent.
As you know now, however, it has been decided in the light
of our overall task not to pursue this particular activity.
I wish to express my appreciation to you and to the mem-
bers of your committee, as well as to the Insurance Agents who
had volunteered their services for this undertaking.
I would like to suggest further that their services not
be lost to us as a result of this decision affecting In and G
Bond promotion. You are somewhat familiar with our whole pro-
gram, and if you feel that this new group of Insurance Men
could give assistance to the program of the Viotory Fund
Committees, I would approciate your 80 advising me.
I am informed by Mr. Graves that a few of these men who
have recently been made available to us have already taken
up new duties in the promotion of the sale of B Bonds. This
request should in no way involve the men who are working
under the Life Underwriters Association on Payroll Savings
nor any others who are currently engaged in various "3" Bond
activities.
In closing, may I thank you and the members of your
committee for your continuing support.
Sincerely yours,
(Signed) H. M. Morgenthau, Jr.
Mr. George L. Harrison
Chairman, Life Insurance Coordinating Committee
o/o New York Life Insurance Company
New York, New York
Regraded Unclassified
42
FIFTY ONE MADISON AVENUE
NEW YORK
Personal
November 25, 1942.
Dear Henry:
I am deeply chagrined to discover that in
the rush incident to forwarding to all life insur-
ance companies as well as to the Chairmen of the
State Underwriters' Committees, the copy of your
letter to me dated November 17 the signature was
quite erroneously typewritten as "H. M. Morgenthau,
Jr." The copy was corrected as soon as the error
was discovered but not in time to avoid sending to
you the copy which quite gratuitously contributed a
middle initial to your name.
I hope you will excuse this unpardonable
error and attribute it only to the rush incident
to our desire to communicate, as promptly as possible,
with all of the life insurance companies about our
program to make insurance agents available to you in
the drive which begins next week.
Perhaps you did not notice the error your-
self but somebody else will and I want to make my
confession in advance!
I am enclosing a photostat of your letter
to me and a corrected copy of that letter which you
may care to substitute for the one previously sent
to you.
Faithfully yours,
Hon. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Treasury Department,
Washington, D. C.
Enc.
Regraded Unclassified
RECEIVED
43G. L H.
THE SECRETARY OF THE TREASURY
WASHINGTON
NGV 18 1942
ANSWERED
November
Dear Mr. Harrison:
As the Chairman of the Life Insurance Coordinating Com-
mittee, you recently made available to the Treasury a carefully
selected group of agents to assist the War Savings Staff in the
sale of F and G Bonds. This very generous offer of cooperation
was accepted and we had completed plans for a program whereby
we woul be able to take full advantage of this talent.
As you know now, however, it has been decided in the light
of our overall task not to pursue this particular activity.
I wish to express my appreciation to you and to the mem-
bers of your committee, as well as to the Insurance Agents who
had volunteered their services for this undertaking.
I would like to suggest further that their services not
be lost to us as a result of this decision affecting F and G
Bond promotion. You are somewhat familiar with our whole pro-
gram, and if you feel that this new roup of Insurance Men
could give assistance to the program of the Victory Fund
Committees, I would appreciate your 80 advising me.
I am informed by Mr. Graves that a few of these men who
have recently been made available to us have already taken
up new duties in the promotion of the sale of E Bonds. This
request should in no way involve the men who are working
under the Life Underwriters Association on Payroll Savings
nor any others who are currently engaged in various "E" Bond
activities.
In closing, may I thank you and the members of your
committee for your continuing support.
Sincerely yours,
FORDEFENSE
BUY
UNITED
STATES
Mr. George L. Harrison
SIVINGS
BONDS
Chairman, Life Insurance Coordinating Committee
c/o New York Life Insurance Company
New York, New York
Regraded Unclassified
44
UNITED STATES SAVINGS BONDS - SERIES F AND G
1942
Department Circular No. 654, Revised
TREASURY DEPARTMENT,
First Amendment
Office of the Secretary,
Washington, November 30, 1942,
Fiscal Service
Bureau of the Public Debt
1. The inclusion of United States Savings Bonds of Series If end G
in the designation United States War Savings Bonds, pursuant to Depart-
ment Circular No. 654, Revised, dated June 1, 1942, having been revoked,
said circular is emended, effective December 1, 1942, by striking out any
reference to or designation of such bonds AS War Savings Bonds.
2, The sale of United States Savings Bonds of Series F and G will
continue until further notice under the provisions of Department Circular
No. 654, Revised, dated June 1, 1942, and this emendment, The issue of
bonds of these series bearing the designation "United States War Savings
Bond" will be continued until existing stocks are exhausted, after which
bonds without that designation will be issued.
Henry Morgenthau, Jr.,
Secretary of the Treasury.
(Filed with the Division of the Federal Register, Dec. 3, 1942)
Regraded Unclassified
45
same letter sent to following: (/s/ Henry)
Mrs. Franklin D. Roosevelt
The Honorable, The Vice President
Hon. Cordell Hull, Secretary of State,
Hon. Stephen Early
Hon. Francis Biddle, Attorney General
Miss Grace Tully
Hon. Frank C. Walker, Postmaster General
Hon. Frank Knox, Secretary of Navy
Hon. Harold L. Ickes, Secretary of Int.
Hon. Claude R. Wickard, Secy of Agric.
Hon. Jesse H. Jones, Secretary of Com.
Hon. Frances Perkins, Secretary of Labor
(Copies to Thompson)
The President, Mrs. Roosevelt, Miss Tully,
Early, Hull, Ickes, Knox - delivered by
Manus 9:35 12/2/42.
Jones, Walker, Vice President, Biddle,
Perkins, Wickard, (Stimson) - delivered
by Dixon 9:35 12/2/42.
46
November 30, 1942.
My dear Mr. President:
I think you will enjoy hearing
this record of a song that was written
for us by two Army boys who were de-
tailed to the Treasury for a time in
connection with the War Bond campaign.
The authors, Sergeant Richard usi and
Corporal Tom Adair, have now gene back
to military duty.
I feel that their seng will be &
great help to us in our drive to get
thirty million Americans to set aside
at least ten percent of their pay in
War Bonds every pay day.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
The President,
The White House.
Del. by Manus 9:35 12/2/42
Copy in Diary
Copies to Thompson
47
November 30, 1942.
Dear Henry:
I think you will enjoy hearing this record
of a song that was written for us by two Army
boys who were detailed to the Treasury for a
time in connection with the War Bond campaign.
The authors, Sergeant Richard Uhl and Corporal
Tom Adair, have now gone back to military duty.
In sending this to you, I should like to
express to you and the War Department my own
thanks and those of the Treasury Department for
having let us use these two talented soldiers.
I feel that their song will be a great help to
us in our drive to get thirty million Americans
to set aside at least ten percent of their pay
in War Bonds every pay day.
It will be appreciated here if you would
send a copy of this letter to their respective
Commending Officers. Sergeant Uhl is with the
80th Division at Camp Forrest, Tennessee, and
Corporal Adair is with the Post Public Relations
Office at Fort Jackson, South Carolina.
Sincerely yours,
(Signed) H. Morgenthan. Jr.
Del. by Dixon 9:35 12/2/42
Hon. Henry L. Stimson,
Secretary of War,
Copy in Diary
Washington, D. c.
Copies to Thompson
FK:eg
Regraded Unclassified
Treasury Department
4
Division of Monetary Research
Date Dec. 1, 194219
To:
Miss Chauncey
I think the Secretary should
glance at the appended memorandum.
Copies have been distributed to
Mr. Bell, Mr. Paul and Mr. Gaston.
H.D.W.
MR. WHITE
Branch 2058 - Room 2141
TREASURY DEPARTMENT
49
INTER OFFICE COMMUNICATION
DATE November 30, 1942
TO
Mr. White
FROM Mr. Gass
Subject: Corporate Profits and Tax Policy
1. The Department of Commerce has released a study showing that
acknowledged corporate profits after taxes were only 5 percent lower in the
first nine months of 1942 than in the first nine months of 1941. The actual
figures are $4,903 million in 1942 against $5,150 million in 1941.
2. There is every reason to believe that these figures understate actual
corporate profits after taxes. It is quite likely that corporate profits,
even after the new and increased taxes, will be larger in 1942 than they were
in 1941.
I have discussed this issue with the author of the Commerce study.
He agrees that corporations have made greater efforts to conceal their profits
this year than ever before. Excessive depreciation and depletion have been
claimed. Capital improvements have been charged to current expense. High
levels of operation have furnished opportunities for concealment, and high
taxes have provided the incentive.
3. Corporate profits, after taxes, have increased over 60 percent since
the outbreak of war. On a base of 1939 - 100, profits in the third quarter
of 1942 were equal to 161.
4. Unless corporate tax rates are increased, corporate profits after taxes
will probably be larger in the calendar year 1943 than they are in 1942. The
total of corporate profits is lower in 1942 than it would have been otherwise
because of a temporary reduction in the profits of such industries as auto-
mobiles due to the curtailment in activity incident to their conversion to
war production. Such "growing pains" will be much less in 1943. We started
the calendar year 1942 with war expenditures at an annual rate of $26 billion;
we will start the calendar year 1943 with war expenditures at an annual rate
of about $76 billion.
5. In the light of these high corporate profits, it may be desirable to
review the suggestion made by the Secretary on March 3, 1942 that the normal
corporate tax rate be fixed at 55 percent. If a 55 percent rate was justified
then, when we were contemplating a war expenditure program at an annual rate
of $56 billion, it is doubly justified now when war expenditures are substan-
tially above an annual rate of $70 billion and are reaching towards a rate of
$100 billion.
November 28, 1941
Mr. Tynan Smith
Regraded Unclassified
)
50
November 30, 1942
Dear General Fleming:
I an returning herewith the amended contracts
covering the construction of the East Wing of
The White House, which you forwarded to me under
date of November 20, 1942 in compliance with the
President's request.
The contracts have been reviewed and the
proposed modifications are satisfactory to the
Treasury Department.
Sincerely yours,
(Signed) D, W.BELL
Astin
Secretary of the Treasury.
Philip B. Fleming
Major General, U. S. A.
Administrator
Federal Works Agency
Washington, D. C.
NOT:AS
11/28/42
To:
The Telpers
the Buran
in unt regard
tis as taxath
gpt
11/28/47
MR. WENCHEL
Regraded Unclassified
may
1942
The Honorable
The Secretary of the Treasury
Attention: Mr. Daniel K. Bell
My dear Mr. Secretary:
I have been directed by the President to work out with
Mr. Charles H. Tompkins whatever details may be necessary to give
effect to the desire of Mr. Tompkins to have the work done by his
organization at The White House since last December performed
without fee or profit.
In accordance with General Watson's suggestion that it
night be well to clear the proposed changes in Mr. Tompkins'
contracts with you before they are finally made, I enclose herewith
copies of two proposed agreements which appear necessary to
effectuate such changes.
I will appreciate your returning the proposed agreements
with whatever comments you may have.
Respectfully yours,
Philip Tienting
Major General, U. S. A.
Administrator
RECEIVED
Coordinating Practice
24 1942
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
November 30, 1942
My dear Mr. Secretary:
I have by reference from the President
your letters of November 19 and November 25 requesting
authority to ask for deferment from induction into
military service on the following cases:
William Heffelfinger
Louis Kaplan
Herbert Potthoff
Morris Ourtes
George W. Romig, Jr.
John A. Fischer
Emil J. Nelson
Walter D. Perry
Louis J. Lazarus
Richard Nickell
J. Lawrence Bailey
Attilio F. Porcelli
These cases were referred to me along with
other such requests with instruction "to take care of."
Pursuant to this instruction I have examined these
cases and unhesitatingly approve your requests.
Very sincerely yours,
For the President:
Vm. H. McReynolds
Administrative Assistant
The Honorable
The Secretary of Treasury
Regraded Unclassified
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
November 30, 1942.
To the Secretary:
The proposals recently presented to you regarding
the negro employees of the Chicago Office of the Bureau
of the Public Debt were discussed with Mr. Houghteling
and, at his suggestion, -ith Mr. Thomas, 8 leading negro
on Mr. Houghteling's staff, As you will r-call, two
proposals were made: (1) that the separate units of negro
employees shall be discontinued, and that all employees
shall be assigned to duty without r-gard to their race;
and (2) that a properly qualified negro be appointed on
the staff of the Denuty Commissioner in charge, as
personnel assistant.
Mr. Houghteling and Mr. Thomas expressed their approval
of these proposals, and also agreed that any question about
negro supervisors would have to be worked out and would take
time. Both counseled that precipitated action not be taken
but that the change be made at our early convenience and
after talking with two inentnegro leaders in Chicago,
which Mr. Thomas undertook to arrange, Mr. Spencer Thompson
adding the suggestion that Miss Carr be invited.
DWB
Approved: December 1, 1942
Secretary of the Treasury.
GEORY
the
BUY
STATES
WAR
Regraded Unclassified
55
TREASURY department
FISCAL SERVICE
WASHINGTON
BUREAU OF THE PUBLIC DEBT
OFFICE OF THE COMMISSIONER
November 21, 1942
MEMORANDUM FOR THE FILES:
Recently, on visiting the Chicago Office, on Monday,
November 9, on instructions from the Secretary through
Mr. Bell, I telephoned Miss Charlotte Carr, Director of
Hull House, and extended to her an invitation to visit our
Chicago Office. Miss Carr accepted and spent about two
hours with Mr. Spencer Thompson and myself on Tuesday after-
noon, November 10. During that time the colored situation
was exhaustively discussed and we made a complete tour of
the office. It was explained to Miss Carr that colored
employees constituted about 17 percent of the entire force
of about 4,000 employees and about 13 percent of the clerical
employees; that there were two small colored units in the
Division of Loans and Currency and one in the Register's
office, and that more than 80 percent of the colored en-
ployees were not segregated but were employed with white
employees. Colored employees, on appointment, were designated
where needed, and if assigned either to colored units or to
other units, requests for re-assignment would receive con-
sideration. It was further explained that there was under
consideration breaking up the colored units, as such, and
the appointing on the staff of the Deputy Commissioner a
personnel assistant, if a properly qualified coloredperson
could be found. A complete tour of the office followed,
including the Chicago branches of the Division of Loans and
Currency, the Office of the Register of the Treasury, the
Division of Public Debt Accounts and Audit, and the Office
of the Treasurer of the United States.
After the tour of the office, I conveyed to Miss Carr
the Secretary's request that she write him personally if she
approved what we were doing, or had other suggestions to offer.
Miss Carr then expressed the opinion that any semblance of
segregation should be done away with, and that it probably would
be wise to appoint a proper colored person on the staff as
Personnel Assistant. As regards colored employees as supervisors,
which was brought up, she agreed this would have to be worked out
and would take time. In particular, Miss Carr expressed the
POPVICTORY
BUY
WAR
BONDS
are
STAMPS
Regraded Unclassified
56
-2-
opinion that the picket line was a reproach, and that it was her
belief that with some slight concession it probably would be aban-
doned. She further stated it was believed in Chicago the policy
regarding colored employees was imposed by Washington and did not
originate in Chicago.
On returning to Washington, I reported to Mr. Bell, and later,
calling Mr. Spencer Thompson to Washington, Mr. Bell arranged a con-
ference in his office on Wednesday, November 18, at which, in addi-
tion to Mr. Bell, there were present Mr. Kilby, Mr. Spencer Thompson,
Mr. Ross Heffelfinger, Mr. Bush, Mr. Wesley, Dr. Dolan and myself
from the Bureau of the Public Debt, and Mr. Norman Thompson and
kr. Ted Wilson. The colored situation at the Chicago Office was
exhaustively discussed, and conclusions generally reached that the
so-called segregated units should be broken up, a personnel assistant
appointed, and the matter of supervisory colored employees worked
out in due course.
On Thursday, November 19, the Secretary saw Mr. Bell, Mr. Norman
Thompson, Mr. Spencer Thompson and myself. The foregoing conclusions
were presented, and the Secretary directed that Mr. Houghteling be
consulted, and if he approved, such would be the policy.
Meanwhile, Ex-Congressman DePriest telephoned and asked for an
appointment to see me, which was made for 3 p.m., Friday, November 20.
When Mr. DePriest appeared, he was accompanied by Mr. Edgar G. Brown,
previously unknown to me, but whom I later learned ie rather well
known as a promoter of colored interests. When the object of the call
was made known, as it concerned the Chicago Office, I called in
Mr. Spencer Thompson, and Mr. Norman Thompson also joined us. Mr. DePriest
spoke of the Chicago situation and made a plea for doing away with segre-
gation in that office. We explained what we were doing, and told him
we were working on the situation, with every confidence of a proper
solution. And then Mr. Brown began, and in a loud voice expressed
his opinions and made several charges and accusations which either were
not true, or were beside the question. At several points Mr. Norman
Thompson and I stopped him and he would start on another track.
By arrangement previously made by Mr. Norman Thompson, later in
the same afternoon, Mr. Houghteling called at my office and we die-
cussed with him the Chicago situation. He expressed general approval
of the proposals under consideration, but as regards certain aspects,
however, he stated he would like to take counsel with Mr. Thomas, of
his staff, who would be available on Saturday morning. The DePriest-
Brown call, and the conference with Mr. Houghteling on Friday were
reported to Mr. Bell that evening.
Regraded Unclassified
57
-3-
On the following morning, Saturday, November 21, Mr. Houghteling
and Mr. Thomas called, and with Mr. Kilby, Mr. Spencer Thompson and ay-
self, the colored situation in the Chicago Office was again gone over.
ar. Houghteling and Mr. Thomas approved of discontinuing the separate
colored units, and the appointment of a colored personnel assistant on
kr, Spencer Thompson's staff. Both said not to worry about the call by
Kr. DePriest and Mr. Edgar Brown, that the changes should be made without
precipitation. Mr. Thomas suggested the advisability of talking with
two substantial colored leaders in Chicago when we were ready to act,
Kr. Barnett, influential with the colored press, and Mr. Foster, Executive
Manager of the Urban League (Mr. Thompson had already talked with Mr.
Gould, Industrial Manager of the Urban League). The question was raised
as to publicity and Mr. Thomas counseled against it, stating that the
object of talking to Mr. Barnett was to prevent publicity. He thought
it would be wise to make the change in regular course and let results
speak for themselves. Mr. Houghteling expressed agreement. Mr. Spencer
Thompson asked Mr. Thomas if he knew the colored woman under consideration
for personnel assistant. Mr. Thomas stated that he did, and that he en-
dorsed her.
Mr. Thomas attempted to get in touch with Mr. Barnett by telephone,
but was unable to do so, and stated he would get in touch with him later.
He offered to make arrangements for a meeting in Chicago with Mr. Barnett,
Mr. Foster, Mr. Spencer Thompson and himself, which, subject to Mr. Bell's
approval, was agreed to. Mr. Thompson suggested that Miss Carr also be
invited to the meeting.
November 24, 1942.
On Konday morning, November 23, Mr. Thomas' office called, requesting
the full name, title, and address of Mr. Spencer Thompson, stating that
Mr. Thomas had been in touch with Mr. Barnett and found that Mr. Barnett
would not be in Chicago until December 10 or 11, and that he wished to write
Kr. Thompson to this effect and ask if one of those days would be convenient.
On Tuesday, November 24, I reported to Mr. Bell the Saturday meeting,
and Mr. Thomas' call on Monday. Mr. Bell expressed approval of the plans and
instructed me to prepare a memorandum for the approval of the Secretary
making effective the Chicago policy.
Mr. Thompson having returned to Chicago on Saturday, I thereupon tele-
phoned advising him of Mr. Bell's approval of the program, of Mr. Thomas'
suggestion for & meeting on December 10 or 11, and of the memorandum to be
prepared for the Secretary's approval. He expressed approval on all counts.
Naty
Regraded Unclassified
FOM CONNALLY, TEX., CHAIRMAN
58
WALTER F. GEORGE, GA.
HISAM W. JOHNSON, CALIF.
ROBERT F. WAGNER. M. Y,
ARTHUR CAPPER. KANS.
INDERT D. THOMAS. UTAH
é I Firm, i 5 ROMERT
EDERICK VAN NUYS, IND.
ARTHUR H. VANDENBERG, MICH.
MER E. MURRAY, MONT.
WALLACE H. WHITE, a MAINE
CLAUDE PEPPER. FLA.
HENRIK SHIPSTEAD, MINN,
United States Senate
THEODORE FRANCIS GREEN, M.I.
BERALD P. NTE, N. BAK,
ALBEN w. BARKLEY, KY.
ROBERT R. REYNOLDS, N. c.
COMMITTEE ON FOREIGN RELATIONS
JOSEPH en GUPPLY. PA.
BUT M. GILLETTE, IOWA
BEINETT CHAMP CLARK. MO.
CARTER BLASS. VA.
JOBN LEE, OKLA.
November 30, 1942,
JAMES M. TUNNELL, DEL
BOLAND YOUNG. CLERK
Honorable Henry Morgenthau,
Secretary of the Treasury,
Washington, D. C.
Dear Henry:
Thank you very much for your fine interest
and splendid cooperation in having the film sent
to Sergeant Donald Huntley's mother.
I am advising Mr. Lafe Pfeifer of your
fine spirit of cooperation.
Sincerely,
TC/3s
Regraded Unclassified
59
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO Secretary Morgenthau
FROM 1r. Paul
In accordance with the existing instructions, there
is submitted herewith a summary report of activities and
accomplishments carried on by the Legal Staff for the
month of November, 1942.
Per
Attachment.
Regraded Unclassified
60
SUMMARY REPORT ON ACTIVITIES AND ACCOMPLISHMENTS
IN THE OFFICE OF THE GENERAL COUNSEL
NOVEMBER, 1942.
The following matters received attention in the Office
of the Chief Counsel for the Bureau of Internal Revenue:
1. Court Decides in Favor of Ford Motor Company in
Refund Case. On November 2, 1942, the Court of Claims ren-
dered 8. decision in favor of the Ford Motor Company in its
suit for refund of income taxes for 1921 to 1926, inclusive.
The principal sum of the judgment to be entered, exclusive
of interest, is approximately $2,002,000. The company had
brought a prior suit for a larger sum for 1920, which was
defeated when the Government pleaded an offset on account
of barred deficiency for the same year attributable to
liquidation of a subsidiary corporation. This operated to
give the company 8. stepped-up basis for depreciation in
the later years. Counsel now proposes to relinquish
$100,000 of the interest on the judgment if paid by Dec-
ember 21, 1942. Justice has been informed that certiorari
is not recommended. The judgment may not be paid prior to
the expiration of time for certiorari, unless the parties
stipulate a waiver of right to petition. Justice has
agreed to follow that course to expedite payment of the
judgme nt.
Regraded Unclassified
61
- 2 -
2. Important Case involving Incentive Compensation
paid Corporation Officers. A suit was brought in the Court
of Claims by the American Tobacco Company to recover, in
round figures $2,817,000, plus interest, for 1929, 1930, and
1931. The principal issue is the reasonableness of compensa-
tion paid to the president and four vice-presidents of the
corporation, characterized as incentive compensation. The
Commissioner disallowed deductions for all incentive com-
pensation; doubled the regular salaries paid to these
individuals, andallowed for 1930, $640,000, in the aggregate,
and for 1931, $581,600. By amended petition, the company re-
duced the amount of its original claim to approximately
$426,300 based upon a formula prescribed by a State court
decision, in which stockholders were litigating the same
question from their standpoint. The litigation between the
company and its stockholders is discussed in "Corporate
Executive's Compensation" by Washington, pages 270 to 279,
where it is stated that Judge Manton's conviction was based
in part upon the receipt by him of payments aggregating $250,000
(loans which were never repaid) from a firm which handled the
advertising for the company. An informal inquiry was received
recently from the Department of Justice to know the attitude
Regraded Unclassified
62
- 3 -
of the Chief Counsel's Office concerning a possible proposal
of the company to accept $300,000 to settle the pending suit.
Justice has been informed the Commissioner prefers that the
case be tried. Special preparations are being made by the
Department of Justice to defend the suit.
3. Tax Court Passes upon Status of Oklahoma Community
Property Law for Income Tax Purposes. Upon advice of the
Chief Counsel's Office, the Commissioner declined to give
effect to the Oklahoma community property law (effective
August 12, 1939) for Federal income tax purposes. The
question was made 8. special study in the case of C. C.
Harmon, 1 T.C. #8, which was decided November 18, 1942,
adversely to the Government. The Government contended the
law was not self operating, came into operation only when
invoked by voluntary agreements between the spouses, and such
agreements contravened the rule of Lucas V. Earl requiring
.
income be reported by the spouse who earns it. The Tax
Court held this contention unsound, saying they could see
but little practical difference between 8. community property
law "which is operative only when expressly invoked and one
which operates unless expressly revoked," citing contracts
between husbands and wives changing or modifying operation
Regraded Unclassified
63
- 4 -
of community property laws of other states which have been
given effect. It is the purpose of the Chief Counsel's
Office to request authority to file & petition for review.
4. Recommendation to Joint Committee based on Litigation
Hazard. In 1934 and 1935 Mr. Josiah K. Lilly, Jr., of
Indianapolis, Indiana, one of the principal stockholders of
Rli Lilly Company, transferred to himself as trustee two
large blocks of the stock of the Eli Lilly Company, making
his wife, Mrs. Ruth B. Lilly, and two children the beneficiaries
but reserving to himself as trustee complete control of the
corpus with large discretion as to the income. For the years
1938, 1939, and 1940 the beneficiaries reported the income
from the trusts and paid an income tax on it. The revenue
agent thought the income was taxable to Mr. Lilly and
recommended deficiencies amounting to $405,235.07 against
him and overassessments amounting to $240,085.30 in favor
of his wife and children. The Technical Staff has settled
the tax liability on the basis of deficiencies in the amount
of $315,085.30 against him and overassessments of $240,085.30
to the wife and children, a net increase of $75,000 in tax
liability, as against a net increase of $165,149.77 proposed
by the revenue agent. The Chief Counsel's Office recommended
Regraded Unclassified
64
- 5 -
that the settlement be approved and reported to the Joint
Committee on November 20. Obviously, the settlement cannot
be supported on legal grounds or on any other basis than an
attempt to appraise the litigation hazard. On this basis
the settlement appears to be favorable to the Government;
but it is the type that the Staff of the Joint Committee
has repeatedly criticised. If the cases are tried the
Government will win net additional taxes of $165,149.77
or nothing.
5. Treatment of Patents as Emergency Facilities for
Amortization Purposes. The cases of the Todd-California
Shipbuilding Corp. and Goodyear Aircraft Corporation involve
deductions for amortization of alleged emergency facilities
consisting of patents, applications and licenses for mag-
nesium processes, etc., for which the War and Navy Depart-
ments have issued necessity certificates for purposes of
amortization deductions. The Chief Counsel's Office has ad-
vised the Income Tax Unit that the patents, etc., as such,
are not emergency facilities within the revenue statute,
section 124 (e)(1), but the bases thereof may be otherwise
deductible. However, if the patents, etc., constitute a
proper part of the adjusted basis of any emergency facility
Regraded Unclassified
65
- 6 -
under the statute, with proper certification, deduction with
respect to amortization of the entire adjusted basis of the
emergency facility may be allowed under the statute, but ex-
cluding the part of the basis attributable to the patent
monopoly.
6. Alimony and Income Tax Difficulties of Joseph Briggs
Wells. Information has been received that Wells has been
indicted for willful failure to file an income tax return for
the years 1939 and 1941. This is a peculiar case in that the
defense is based on Wells' contention that he should be allowed
a deduction for alimony payments to two former wives. Every
opportunity was afforded him to file a return for 1939, but
he refused, stating that he believed the quickest way to get
his case before the Tax Court was refusing to file a return.
The procedure for placing his case before the Tax Court was
explainedto him in detail on several occasions, Thus, the
case was referred to the Department of Justice with a recom-
mendation for prosecution.
7. Regulations - Revenue Act of 1942. Considerable
headway has been made. All of the excise tax regulations
made necessary by Title VI have been prepared and reviewed
except one. Other excise tax regulations made necessary by
Regraded Unclassified
66
- 7 -
the 1942 Act have been prepared and are under review. Of the
173 subjects covered by the act, 122 involve income and excess
profits taxes. Approximately 40 Treasury decisions are made
necessary by these income and excess profits tax sections.
For these sections several miscellaneous Treasury decisions
are being prepared (grouping the less involved subjects dealing
with the same kind of taxes), and separate Treasury decisions
are being prepared for a number of important and involved sub-
jects including non-trade or non-business deductions, pension
trusts, victory tax, post-war refunds of excess profits tax,
alimony and separate maintenance payments, last-in first-out
inventory, withholding, etc. Many of these subjects have
been considered and drafts of regulations prepared. It is
expected that a number of Treasury decisions will be forwarded
to the Commissioner in the near future, including the regula-
tions to be issued under the Canadian Treaty, recently ratified
by the Senate.
8. War Bond Advertising by Newspapers and Broadcasters
as Business Expense. With respect to questions presented by
the Marshall Evening Chronicle and National Association of
broadcasters, the Chief Counsel's Office has ruled that 8.
newspaper which devotes part of its space to the promotion
Regraded Unclassified
67
- 8 -
of the sale of war bonds and stamps and the furthering of
Red Cross drives may deduct the cost thereof as a business
expense. Since such cost is included in the regular expenses
of publishing the paper, which are deductible, no segregation
of the cost of space devoted to the sale of war bonds, etc.
is necessary. A similar ruling has been made with respect to
expenses incurred by radio stations which broadcast informa-
tion as to war bonds. It will be noted that these rulings
differ somewhat from the published ruling which sanctions
deduction of reasonable expenses for institutional or good-
will advertising which promotes the sale of war bonds and
stamps. In the cases first discussed it is the newspaper
or the broadcasting company itself which is doing the pro-
motion.
The following work was done under the supervision of
Assistant General Counsel Cairns:
9. The Direct Sales Company, Inc. Case. The Direct
Sales Company, Inc., was a registered manufacturer of narcotic
drugs in the form of hypodermic tablets, which it sold directly
to medical practitioners throughout the United States. The
company encouraged sales by reducing prices. Many of its
Regraded Unclassified
68
- 9 -
customer-physicians were diverting narcotic drugs 80 purchased
to improper purposes. Notwithstanding warnings, the company
continued to sell narcotics to such customers. After & care-
ful Investigation, the Direct Sales Company and one of its
physician-customers, with two other persons, were indicted
for conspiracy to violate the Federal narcotic law, on the
basis of improper sales by the physician of quantities of
narcotics purchased from the company. The physician and the
company were convicted, the company appealing to the Circuit
Court of Appeals for the Fourth Circuit, On November 12,
1942, that Court affirmed the judgment of conviction. The
case is unique in that it is the first case in which &
wholesale dealer and a physician have been joined in an
indictment for conspiracy to violate the narcotic law.
10. Participation of 8. Naval Reserve Officer in Profits
of a Firm Engaged in Federal Tax Practice. An opinion,
addressed to Mr. Hanna, which was prepared by Mr. Meyer and
signed on November 3, 1942, stated that a Naval Reserve officer
on active duty may accept his share of the firm's profits
from its tax practice before the Treasury Department, by
virtue of special statutory authorization applicable to
Naval Reserve officers (U.S.C., 1940 ed., title 34, sec. 853b).
Regraded Unclassified
69
- 10 -
11. Admission Free of Duty of Emergency Acquisitions of
War Materials Abroad. An opinion, addressed to Secretary
Morgenthau, pertaining to the bringing into the United States
by armed forces of (1) captured materials, (2) materials
requisitioned by United States forces abroad, (3) rebuilt
materials, and (4) material received from abroad for study
and testing, was prepared by Mr. Meyer and Mr. Feidler and
signed on November 6, 1942. The opinion concluded that the
Tariff Act should not be construed to require that war
materials brought into the United States by the armed forces
in the conduct of war be subject to customs procedures and
duties. However, should there be any doubt on the point, the
acquisition of those materials could probably be certified
by officers of the War Department as an "emergency purchase
of war material abroad" entitled to be admitted free of duty
under the Act of June 30, 1914, 38 Stat., 399 (U.S.C., title 34,
sec. 568) and Executive Order No. 9177 dated May 30, 1942.
12. Membership on a Regional Board of the Board of Legal
Examiners as Affecting Eligibility to Practice Before Treasury
Department. An opinion, in the form of a letter to Professor
Roswell Magill, was prepared by Mr. Meyer and signed on
November 23, 1942. It concluded that the appointment of
Regraded Unclassified
70
- 11 -
Vr. Magill as a member of the New York Regional Board of the
Board of Legal Examiners, a part time and uncompensated posi-
tion under the Civil Service Commission, will not prevent him
from practicing before the Treasury Department. Since section
190 of Rev. Stat. (U.S.C., title 5, sec. 99) is limited to
officers and employees of "departments", it has no application
to one serving under the Civil Service Commission. Sections
109 and 113 of the Criminal Code (U.S.C., title 18, secs. 198
and 203) are probably inapplicable to an uncompensated position
not under any executive department. of the United States.
The following work was done under the supervision of
Assistant General Counsel Tietjens:
13. Public Debt. (a) Financing. On November 20
Mr. Tietjens and Mr. Cunningham examined the papers in con-
nection with the following offerings for their legal sufficiency:
1-3/4 Percent Treasury Bonds of 1948, dated December 1, 1942;
2-1/2 Percent Treasury Bonds of 1963-68, dated December 1,
1942; and 7/8 Percent Treasury Certificates of Indebtedness
of Series E-1943, dated December 1, 1942.
(b) Proof of death of Army and Navy Personnel. A recom-
mendation was prepared, addressed to the Secretary of the
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71
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Treasury, providing for the acceptance of original letters
from the War or Navy Department, or photostatic copies thereof,
8.8 proof of death.
(c) Tax Notes. The first case involving payment of Tax
Savings Notes as 8. result of judicial proceedings has come
to our attention. No [rovision was made in the circular for
transfer of such notes through judicial proceedings, although
in the applicable FRB Memorandum it might be considered that
there was an implication to that effect in that the banks
were advised to refer such cases, among others, to the Treasury.
A letter was prepared for the Under Secretary's signature sug-
gesting that payment to a creditor who has reduced his claim
to judgment and purchased the notes at execution sale would
be considered. The evidence called for is similar to that
in other judicial transfer cases.
(a) Corporate succession by Operation of Law. In the
past voluminous evidence has been required where bonds registered
in the name of a corporation were presented for reissue
(re-registration) in the name of another corporation alleged
to have succeeded it as the result of a merger, consolidation
or similar succession. This, of course, necessitated com-
plicated correspondence and subsequent lengthy examination of
Regraded Unclassified
72
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evidence submitted. Where it is possible to presumethat the
issuance of a certificate by the proper state authority evi-
dencing such transactions is predicated upon examination and
approval of evidence showing due compliance with applicable
statutes, requirements of stockholders' and directors' reso-
lutions and other similar documents as original evidence of
statutory compliance is being eliminated.
(e) Commodity Credit Corporation. Mr. Tietjens and
Mr. Cunningham attended, with Mr. Heffelfinger, a meeting
with representatives of the Commodity Credit Corporation
and Mr. Awalt, counsel for a New York bank, with reference to
short term letters of credit applications in use by the
Commodity Credit Corporation and which the New York banks
were of the opinion should be approved by the Secretary of
the Treasury. The Commodity Credit Corporation is to prepare
and submit forms for specific approval in order to satisfy the
bank's request that the Treasury approval be couched in
specific rather than general terms.
(f) Claims Cases. For the purpose of simplifying pro-
cedure, a memorandum for the signature of the Secretary,
addressed to the Commissioner of the Public Debt, supplementing
and amending to some extent the instructions on Form PD 1048,
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73
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Application for Relief on Account of the Loss, Theft, or
Destruction, of United States Savings Bonds, was drafted in
collaboration with Mr. DeMik, Manager of Claims and Ruling
Section, by Mr. Fuller. Provision was made for certain
cases in which the owner or coowner should not be required
to execute the form, for acceptance of statements certified
by officers authorized to certify requests for payment of
savings bonds in lieu of affidavits, for requiring that
applications in coownership cases be sworn to or affirmed
by one coowner and merely signed by the other, for the de-
livery of substitute bonds to recognized agents, for the
application of redemption provisions to Claims cases, and
for correction of errors in approved schedules and cancella-
tion of items therefrom without resubmission to the Secretary.
(g) Department Circular. Mr. Tietjens and Mr. Cunningham
assisted in the drafting of a Department Circular pursuant to
which the Secretary will designate United States Savings Bonds
Series E, F and G as the bonds, the purchase of which will be
allowed as 8. credit against the Victory Tax as provided in
Subchapter D, Part I, Sec. 453(a)(3) of the Internal Revenue
Code.
(h) Savings Bonds. Extended conferences were held with
the administrative people concerning proposed changes in the
Regraded Unclassified
74
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regulations governing Savings Bonds. One of the most trouble-
some problems has been the policing of excess holdings, and
administrative procedure has been suggested whereby the
problem of handling these cases will be lightened to a very
substantial degree. It has also been recommended that the
regulations be changed in order to permit the elimination or
change of designated beneficiary upon the request of the
registered owner alone. This change would, of course, apply
only to bonds issued after the regulations had been amended.
(i) Litigation. A hearing was held in the Deyo V. Adams
case in New York on November 4, and a hearing in the Andrew S.
Levy Estate case in Camden, New Jersey, on November 5, both
of which were attended by Mr. Norr of the Department of Justice.
Mr. Sloan of the War Savings Staff and Mr. Wesley, Chief of
the Division of Loans and Currency, went às witnesses in the
_>vy case. Mr. Norr has told us that there is 8. very real
possibility that the Deyo case will be settled although he
strongly urged counsel not to take such action. Mrs. Adams,
the defendant, is very old and in a nervous condition. This
has been given as the reason for considering settlement.
Mr. Norr further reports that he was encouraged by the attitude
of the presiding Justice in this case.
Regraded Unclassified
75
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The Levy case has developed in such a manner that it is
doubtful whether it will be of value to us. It has developed
into a dispute between a second wife and children by the first
wife with 8. very strong likelihood that the Court may find that
the funds with which Mrs. Levy purchased the bonds were not
her funds but were funds earned by the husband and his first
wife. This kind of a case does not involve a direct attack
upon the validity of our regulations.
14. Subpoena Served on Guy F. Allen, Chief Disbursing
Officer, to Appear as a Witness in Case of Thompson V. Deal.
Mr. Guy F. Allen, Chief Disbursing Officer, conferred with
yr. Tietjens about a subpoena ordering him to appear as a
witness in the case of Thompson V. Deal. This case, now being
tried before the United States District Court for the District
of Columbia, in which Mr. Julian, Treasurer of the United States,
is one of the defendants, involves 8 class suit brought by
certain cotton producers against the manager of the National
Surplus Cotton Tax Exemption Certificate Pool, 1935, and other
Federal officers to recover amounts paid for tax exemption
certificates and enjoin payment to producers who had deposited
such certificates in the Pool. After it was determined from
the attorneys in the Department of Justice representing the
Regraded Unclassified
76
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defendants in the case that there would be no objection to
Mr. Allen testifying, there was prepared, in compliance with
Departmental regulations governing the disclosure of official
information, a letter for signature by the Under Secretary
authorizing Mr. Allen to testify in court with respect to
matters relating to the Division of Disbursement which are
not of a confidential nature.
15. Authorization of Foreign Exchange Transactions in
Connection with Military Activities. Mr. Tietjens and Mr. Reeves,
along with representatives of the War and Navy Departments,
attended a conference in Mr. Heffelfinger's office concerning
proposed legislation to be sponsored by the War Department
which would authorize disbursing officers of the United States
to make exchange transactions of certain types. Such legisla-
tion would authorize the exchange of United States currency
and coin and foreign currency and coin for checks of dis-
bursing officers drawn in their official capacities, United
States Postal Money Orders, or for such foreign currency,
coin, or checks of such classes as the Secretary of the Treasury
may from time to time approve.
16. Recovery of Excess Profits in Connection with Re-
negotiation of War Contracts. At the request of Colonel
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77
- 18 -
Kenneth C. Royall, Chief of the Legal Section of the Fiscal
Division, Service of Supply, and with the approval of Under
Secretary Bell, Mr. Reeves and Mr. Bartelt attended a conference
in Colonel Royall's office which had been called to discuss
certain problems relating to the recovery of excess profits
in connection with the renegotiation of war contracts. The
discussion at the conference was confined largely to problems
arising in connection with the use of the credit memoranda
procedure whereby the War and Navy Departments and the Maritime
Commission accept in lieu of a cash refund of excessive profits
8. credit memorandum which may be applied to future payments
on the same or another contract. Mr. Bartelt and Mr. Reeves
made it clear that they were attending the conference solely
in an advisory capacity with respect to appropriation procedure
and that the manner in which repayments resulting from the
renegotiation of war contracts are handled is one for deter-
mination by the agencies concerned and by the General Accounting
Office.
17. Release of Gold Bullion to the Chartered Bank of
India, Australia and China (See September 1942 report, item
19(b)). A request of the above bank for the release and
purchase by the United States of three bars of gold bullion
Regraded Unclassified
- 19 -
78
produced by the Tambis Gold Dredging Company, Inc., which
were delivered to High Commissioner Sayre during the emergency
in the Philippines and are now held in custody by the United
States Mint at San Francisco, was considered. There were
prepared an agreement of indemnity for execution by the New
York agent of the Bank, and a letter of transmittal advising
him that upon receipt of the executed agreement of indemnity,
the Treasury Department will direct the Superintendent of the
United States Mint at San Francisco to receive the gold in
question for purchase by the United States in accordance with
the provisions of the Gold Reserve Act of 1934 and the regu-
lations issued thereunder. Payment therefor will be made by
credit to a special blocked account in the name of the Cebu
branch of the Bank and the Tambis Gold Dredging Company, Inc.
18, Material for Inclusion in 1941 Supplement to the Code
of Federal Regulations. At the request of Miss Chatfield,
Treasury Archivist, galley proofs of regulations issued by the
Fiscal Service of the Treasury Department during the calendar
year 1941 which will be included in the 1941 Supplement to
the Code of Federal Regulations were reviewed for accuracy
and completeness. Various corrections and suggested changes
were made on the page proof.
Regraded Unclassified
79
- 20 -
19. Elimination of F.D.I.C. Assessment of and Maintenance
of Reserves for War Loan Account Deposits. Considerable time
was devoted to a proposal that, in the interest of facilitating
the war financing program, the existing requirement that banks
pay the Federal Deposit Insurance Corporation assessment upon
War Loan Account deposits and maintain the usual reserves
against such deposits be eliminated. These deposits arise solely
as a result of subscriptions made by or through banks for United
States Government securities and are fully secured by collateral
security. In this connection, Mr. Reeves, along with Mr.
Batchelder of the Under Secretary's office, conferred with
Francis Brown, General Counsel of the Federal Deposit Insurance
Corporation.
20. Rai lroad Reorganization. (a) Claim of the Prince
George and Chesterfield Railroad V. Seaboard Air Line Railway
for Payment of Rental (See September 1942 report, item 23(b)).
On November 12, 1942, Mr. Proctor and Mr. Zarky traveled to
Norfolk, Va., for a conference on the petition of the Govern-
ment in the 8. bove matter, with the special master, attorneys
for the receivers of the Seaboard, and attorneys for other
interested parties. After some perfunctory discussions of the
merits of the Government's petition and of the Receiver's
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80
- 21 -
answer, Mr. W. R. S. Cocke, one of the attorneys for the
Receivers, proposed that the Government and the Receivers
endeavor to enter into a stipulation of certain correspondence
respecting this action. Messrs. Proctor and Zarky agreed to
the proposal.
(b) Washington, Brandywine and Point Lookout Railroad
(See October 1942 report, item 22). Mr. Tietjens and
Fr. Proctor attended a conference with Mr. Heffelfinger and
officials of the above Railway on the subject of the Treasury's
interest in the condemnation proceedings now pending against
the railroad in the United States District Court in Baltimore.
As the Navy Department's appraisal of the railroad property
was not known, it was impossible to enter into any real dis-
cussion of the approximate value of the Treasury's claim
against this railroad. The officials of the railroad were
advised to confer with the Navy Department, and were invited
to return again for further discussions.
21. Mexican Claims Act, 1942. Mr. Proctor attended the
committee conference of the House and the Senate on the dis-
agreeing votes of the two bodies on the amendment of S. 2528,
to provide for the settlement of claims of American nationals
against the Government of Mexico, and, after conference agreement,
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81
- 22 -
assisted Mr. Wood, Legislative Counsel of the Senate, and
Mr. English, attorney. for the State Department, in redrafting
the bill in accordance with the views of the conference.
22. Chicago Office - (Division of Loans and Currency).
During the week of November 30 Mr. Tietjens spent several
days in the Chicago office for the purpose of familiarizing
himself with the organization and getting at first hand some
of the problems with which the legal unit there is faced.
Fr. Cunningham, who accompanied him, remained in Chicago
for another week to permit Mr. Fuller to take a well-earned
rest.
The following work was done under the supervision of
Assistant General Counsel O'Connell:
23. Interpretation of Exemption Clause in Renegotiation
Law. Representatives of the Chief Counsel's Office of the
Procurement Division held two meetings with representatives
of the War and Navy Departments and the Maritime Commission
relative to the interpretation of the clause of the renegotiation
law exempting products of mines, oil and gas wells, other mineral
or natural deposits, and timber from renegotiation. It was
agreed that each department would write the regulations which
it believes will best define and interpret this exemption, and
Regraded Unclassified
82
- 23 -
that the representatives would meet again to agree upon a
uniform regulation. It was further proposed that a meeting
be held with Senator Vandenberg, who was responsible for
the inclusion of this exemption in the amended renegotiation
law, to determine whether the proposed regulation exempts
the products he had in mind.
24. Standards of Profit Control Used in Negotiation and
Renegotiation Contracts. In response to the letter of
November 23, 1942, from James F. Byrnes, Economic Stabiliza-
tion Director, requesting to be advised as to the standards
of profit control used by the Treasury Department in the
negotiation and renegotiation of contracts, a reply was pre-
pared for the signature of the Secretary by Mr. Stephens and
rewritten by Mr. O'Connell.
25. Russian Oil Refinery Program. As a result of two
conferences held with E. B. Badger & Sons Company relative
to the Russian Oil Refinery program, Badger agreed to accept
a fixed fee of $1,079,000, based on an estimated f.a.s.
material cost of $26,975,000, provided that the contract
would provide for the reimbursement of all direct costs
and of certain items of cost which would ordinarily be in-
cluded in overhead, but which it may be possible to allocate
Regraded Unclassified
83
- 24 -
directly to the work. He is to submit a list of such items
to the Procurement Division, and the Chief Counsel's Office will
draft a contract on the aforesaid basis.
Also, a conference was held with Mr. C. D. McCoy, of the
Foster Wheeler Corporation, representing the Petroleum
Rectifying Corporation of California, owner of the Petreco
desalting and dehydrating processes, who agreed to proceed
with the ordering of materials for the Petreco units upon
the settlement of certain specifications by the Russians and
E. B. Badger & Sons Company. Letters containing offers for
the use of the process involved in the refinery program were
prepared and sent to the owners of such processes, Foster
Wheeler Corporation, Houdry Process Corporation, International
Catalytic Oil Processes Corporation, Max B. Miller Company,
Texaco Development Corporation and Universal Oil Products.
The letters stated a fixed amount which is to be paid as
compensation for the use of the process during the war.
26. War Communications Board (for description see
November 1940 report, item 23). Mr. Shea attended a meeting
of the Law Committee of the War Communications Board on
November 5.
27. Board of Legal Examiners (for description see
Regraded Unclassified
84
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July 1941 report, item 15). On November 21, 1942, Mr. Shea
sat on the Examining Committee of the Board of Legal Examiners,
and on the 27th attended the examination of an attorney con-
sidered for appointment in the Treasury Department.
28. Coordination Conference of Treasury Law Enforcement
Agencies. Mr. Shea attended a meeting of the enforcement
agencies on November 24.
29. Opium Poppy Control Bill (See October 1942 report,
item 27). Mr. Shea and Miss McDuff prepared a letter to the
Secretary of State, in answer to his letter relative to our
proposed legislation, the Opium Poppy Bill(H.R. 7568). On
November 3, Mr. Shea and Mr. Tennyson, Chief Counsel of the
Bureau of Narcotics, conferred at length with Mr. Oscar R.
Ewing, a representative of the three large manufacturers of
opium products, who had suggested several changes to this
bill. No commitments were made on behalf of this Department.
On November 13, these proposed amendments were discussed at
8. conference in Assistant Secretary Gaston's office.
Mr. Shea accompanied Mr. Gaston to the hearing on
November 19 before the Senate Finance Committee on the Opium
Poppy Control Bill, and on November 25, he attended, with
Commissioner Anslinger, another hearing before that committee
Regraded Unclassified
85
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and testified in favor of the proposed legislation. The
committee voted that the bill be favorably reported with
three amendments. At the request of Chairman George a com-
mittee report was prepared by Mr. Shea and Miss McDuff. On
November 30 the bill was reported in the Senate (Rept. No.
1764) and passed.
30. Proposed Legislation Relating to Suspension of
Customs Barriers. (see October 1942 report, item 28).
Mr. Speck attended a conference in the War Department on
November 6 to consider the anticipated hearings on the
President's message of November 2 to the Congress on proposed
war legislation to provide for the free movement of persons,
property and information into and out of the United States.
The bill was subsequently introduced as H.R. 7762 and on
November 18 the House Ways and Means Committee met in execu-
tive session to consider it. Assistant Secretary Gaston
represented the Treasury Department and read a prepared
statement. The bill was referred to a subcommittee of the
Ways and Means Committee and was considered by the subcommittee
in executive session on November 20 and November 30. Mr. Speck
was in attendance at the executive session and handled the
matter for the Legislative Section.
Regraded Unclassified
86
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31. Minor Coinage Bill. A memorandum pertaining to
S. 2889, our proposed legislation to further the war effort
by authorizing the substitution of other materials for stra-
tegic metals used in minor coinage, to authorize the forming
of worn and uncurrent standard silver dollars into bars, and
for other purposes, was given to Senator Wagner and Congress-
men Somers. This memorandum, which was prepared by Mr. Shea
and Mr. Brenner, was printed in the Congressional Record for
November 9. In response to a request from the Senate Committee
on Banking and Currency, a report was prepared on this bill.
On November 17 and 18, Vr. Shea attended, with the Director
of the Lint, the hearings before the Senate Banking and Currency
Committee and testified in favor of the bill. It was reported
with minor amendments on November 19, 1942. On November 23,
Mr. Shea conferred with Congressman Somers about this proposed
legislation.
32. Proposed Bill to Authorize Acceptance of Permanent
Loan Made By Board of Trustees of the National Gallery of Art.
A certain charitable organization has proposed to give to the
National Gallery of Art $5,000,000 in cash to be held and
administered by the Board of Trustees in the establishment
of an endowment fund for the benefit of the Gallery, the
Regraded Unclassified
- 28 -
87
income from which, it will be specified, shall be used and
applied for stated purposes of the Gallery other than those
for which public funds are made available. In response to an
informal request of Mr. Donald Shepard, Secretary-Treasurer
and general counsel of the National Gallery of Art, a proposed
bill was drafted (1) to authorize the Secretary of the Treasury
to receive the funds as a permanent loan and to pay 4 percent
interest thereon and (2) to permanently appropriate such
interest for payment to the Board of Trustees of the National
Gallery of Art. Nr. Shea and Miss McDuff prepared drafts of
the letters of transmittal to the Congress.
33. Free Importation of Soldiers' Gifts. The Ways and
Yeans Committee met in executive session on November 19 to con-
sider H.R. 7792, to permit the free entry of gi fts from members
of the armed forces serving abroad. Mr. Speck and representa-
tives of the Bureau of Customs were in attendance. This bill
was prepared in the Treasury Department.
34. Proposed Legislation to Aid in the War Production
of Hemp. It is understood that a large part of the supply of
imported hard fiber on which the manufacturers of rope and other
hard fiber products have depended has been cut off by the war
conditions, and that an adequate supply of domestic fiber
from American hemp (marihuana) is an absolute necessity to
Regraded Unclassified
88
- 29 -
supply rope and fiber products essential for war needs of the
Navy, Army, and Merchant Marine. This Department has been in-
formally requested by the Commodity Credit Corporation and the
War Production Board to present legislation to the Congress to
amend the Internal Revenue Code so as to provide for a reason-
able method of taxation of persons who manufacture or produce
hemp, twine, or fiber products from marihuana, and for other
purposes. In connection with the consideration d such le gis-
lation, Miss McDuff attended a conference on November 23, at
which Mr. Tennyson and Mr. Mitchell of the Bureau of Narcotics,
Mr. McIntire of the Commodity Credit Corporation, and Mr. Gilmore
were present.
35. Proposed Legislation Authorizing Department of Agri-
culture to Compromise Certain Indebtedness Due United States.
Mr. Shea attended a conference on November 19 in Mr. Bartelt's
office to consider S. 1339, which would authorize the Governor
of the Farm Credit Administration and the Secretary of Agri-
culture to compromise, adjust, or cancel certain indebtedness
due the United States. There was discussed 8. redraft of the
bill, which was submitted by the Department of Agriculture to
remedy the objections advanced against the original bill by
this Department in a letter to the Bureauof the Budget dated
Regraded Unclassified
89
- 30 -
April 6, 1942.
36. Proposed Executive Order Authorizing the Treasury
Department to Acquire and Dispose of Property. A proposed
executive order, to authorize the Secretary of the Treasury
to exercise, through such officials of the Department of the
Treasury and its bureaus aná divisions as he may designate,
the power contained in Title II of the Second War Powers
Act, 1942, pertaining to the acquisition, use and disposition
of real property, and a letter of transmittal to the President,
were prepared by Miss McDuff.
37. Proposed Executive Order Authorizing the Treasury
Department to Contract for Architectural Engineering Services.
On November 2, Mr. Shea, with Mr. Davis of the Procurement Divi-
sion, conferred with the Director of the Bureau of the Budget
on our proposed executive order authorizing the Treasury Depart-
ment to contract for architectural and engineering services and
limiting the fees to be paid for such services. The order had
been, in accordance with Budget's suggestion, redrafted to only
apply to Lease-Lend projects. Several changes in form were
agreed to at this conference. The order was signed by the
President on November 11, 1942, and is Executive Order No. 9269.
38. Proposed Executive Order Consolidating Certain
Regraded Unclassified
90
- 31 -
Agricultural Lending Agencies. Mr. Shea conferred with
Mr. Droste and Mr. McConnaughey, of the Farm Credit Adminis-
tration, on November 9, 1942. An executive order proposed
by that agency was discussed. The order would consolidate
certain agricultural lending agencies and functions into an
agricultural loan agency to be administered under the direction
and supervision of the Governor of the Farm Credit Administra-
tion, subject to the general direction and supervision of the
Secretary of Agriculture.
39. Proposed Executive Order Establishing Interdepart-
mental Board to Consider Subversive Activities. Mr. Shea
conferred with members of the Bureau of the Budget on an
executive order proposed by the Department of Justice. The
order would establish an interdepartmental board to consider
cases of subversive activity on the part of Federal employees.
Mr. Ranta prepared a letter to the Bureau of the Budget stating
that this Department had no objection to the approval of the
order.
40. Memoranda Re Salary of Treasury Employee Presently
Interned by the Enemy. A memorandum discussing whether or
not salary and per diem allowance checks of a Treasury em-
ployee at present interned by the enemy (Maxwell Anderson)
might be issued and transferred to his account in a bank in
Regraded Unclassified
91
- 32 -
the United States, pursuant to 8. power of attorney, was pre-
pared by Mr. Filachek.
41. Reproduction of War Savings Stamps. Mr. Ranta pre-
pared a letter for Mr. Gaston's signature advising Senator
Connally that the Department had no objection to the use of
an illustration of a War Savings stamp in the A W V S News
of Houston, Texas, inasmuch as the illustration was to be in
black and white and about one-half the size of an actual stamp.
A letter addressed to Mr. Fred Knoop, which was prepared
by Mr. Filachek, denied a request to use a reproduction of
War Savings stamps for the December cover of Minicam
Photography.
42. Threats Against the President. In response to 8.
request from Assistant Attorney General Berge for our views on
United States V. Metzdorf, 252 Fed. 933, relating to an alleged
threat against the President, Mr. Filachek prepared a letter ad-
vising that this Department was of the opinion that the con-
clusion reached in the decision was unsound.
43. Dismissal of Indictment. Mr. Filachek prepared a
letter to Assistant Attorney General Berge advising that in-
dictments against Mr. and Mrs. Creed J. Short should not be
removed from the court docket at this time to permit further
Regraded Unclassified
92
- 33 -
search for counterfeiting plates believed to be in Short's
possession. Mr. Ranta prepared a letter advising that this
Department had no objection to the dismissal of three counts
of an indictment charging William Butynski with possessing
and passing countefeit Federal Reserve notes.
44. Compromise Offers. The offers made by John Preuss,
Grants Pass, Oregon, and the United States Hoffman Machinery
Corporation, in settlement of claims in favor of the United
States were duly accepted by the Acting Secretary of the
Treasury. A letter recommending acceptance of the offer made
by Clark L. Corey in settlement of a debt due the United States
was prepared. Miss McDuff handled these cases.
45. Congressional Action on Treasury-sponsored Legislation.
(a) Minor Coinage Bill. On November 9, 1942, Senator Wagner
Introduced S. 2889, "To further the war effort by authorizing
the substitution of other materials for strategic metals used
in minor coinage, to authorize the forming of worn and un-
current standard silver dollars into bars, and for other pur-
poses", which bill was referred to the Senate Committee on
Banking and Currency. The bill was introduced by Representa-
tive Somers as H.R. 7767 on November 10, 1942, and referred to
the Committee on Coinage, Weights and Measures. S. 2889 was
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93
- 34 -
reported with amendments (s. Rept. No. 1699) on November 19.
It was passed by the Senate on November 23 and referred to
the Committee on Coinage, Weights and Measures on November 24.
(b) Huntsville, Texas, First National Bank. On November 16,
1942, S. 2761, for the relief of the First National Bank of
Huntsville, Texas, was reported from the Senate Committee on
Claims without amendment (s. Rept. No. 1676). It was passed
by the Senate on November 23 and on the next day referred to
the House Committee on Claims.
(c) G. F. Allen Relief Bill. On November 16, 1942,
H.R. 6990, for the relief of G. F. Allen, Chief Disbursing
Officer, Treasury Department, and for other purposes, was
reported from the Senate Committee on Claims, without amend-
ment (s. Rept. No. 1694), and was passed by the Senate on
November 23, 1942. This bill was presented to the President
for his approval on November 25.
(a) Free Importation of Soldiers' Gifts. On November 19,
1942, Representative Doughton introduced H.R. 7792, "To accord
free entry to bona fide gifts frommembers of the armed forces
of the United States on duty abroad", which was referred to
the Committee on Ways and Means. On November 23 it was
reported (H. Rept. No. 2643), and passed by the House. It
Regraded Unclassified
94
- 35 -
was reported from the Committee on Finance (s. Rept. 1706)
and passed by the Senate on November 25.
(e) Opium Poppy Bill. H.R. 7568, "To discharge more
effectively the obligations of the United States under certain
treaties relating to the manufacture and distribution of nar-
cotic drugs, by providing for domestic control of the produc-
tion and distribution of the opium poppy and its products,
and for other purposes", was reported from the Committee on
Finance (s. Rept. No. 1764) and passed by the Senate on
November 30, 1942.
The following work was done under the supervision of
Assistant General Counsel O'Connell and Mr. Luxford, Chief
Counsel of Foreign Funds Control:
46. Staff Reorganization. On November 20, 1942, a
General Counsel's staff letter was issued, designating Yr.
Ansel F. Luxford as Chief Counsel of Foreign Funds Control and
Messrs. Josiah E. DuBois, Jr. and Lehman C. Aarons as Assistants
Chief Counsel of Foreign Funds Control, under the general super-
vision of Mr. Joseph J. O'Connell, Jr., Assistant General
Counsel. The following assignment of duties was made:
Division A, headed by Mr. DuBois, is concerned with the
issuance of public documents; Latin American and neutral
country problems; stabilization operations and matters relating
Regraded Unclassified
95
- 36 -
to silver; liaison with the Army regarding fiscal operations
and problems connected with allied occupation of enemy terri-
tory; foreign decrees, and certifications under the Federal
Reserve Act.
Division B, under the supervision of Mr. Aarons, is
responsible for the preparation of briefs, legal research,
and study of litigation affecting Foreign Funds Control, and
handles censorship problems and matters relating to control
of currency, securities, and negotiable instruments. It also
deals with territorial problems, questions arising under
scorched earth regulations, the China program, questions re-
lating to gold, coinage, and the Mint Bureau, and provides
general assistance to Foreign Funds Control on licensing and
administrative problems.
Division C, headed by Mr. Lesser, does legal work con-
nected with enforcement, selecting and developing cases for
criminal prosecution, initiating grand jury proceedings, cooper-
ating with Department of Justice and United States attorneys
on criminal matters and on foreign agent registration problems,
and participating in the work of the Committee on Enforcement
and Investigations. It is responsible for holding hearings
and conducting investigations relating to enforcement, including
the Swiss Banks investigation.
Regraded Unclassified
96
- 37 -
Division D, headed by Mr. Lawler, deals with ad hoc blocking,
participating in the ad hoc committee, and conducts hearings
under General Ruling No. 13 on applications for unblocking. It
handles business enterprise problems, including investigations,
investigations of blocked insurance companies doing business
in the United States and of I. G. Farben connections in the
Western Hemisphere, and participates in the work of the Com-
mittee on Enforcement and Investigations. It deals with vesting
problems, does liaison work with the Alien Property Custodian,
and handles questions involving conflicting allied Alien
Property Custodian claims, patents, trademarks, and copy-
rights, repatriation cases, and internees.
Division E, under the supervision of Mr. W. H. Reeves,
handles all matters relating to TFR-300 and TFR-400 and any
other census reports, including drafting work and studies of
how census reports may most effectively be utilized. It ad-
vises Foreign Funds Control on applications involving attach-
ments or other types of litigation, including attorneys fees
cases, and deals with problems arising under General Ruling
No. 12. It is responsible for matters involving trusts and
decedents estates, insurance and reinsurance.
47. Continental France as Enemy Territory. On
Regraded Unclassified
97
- 38 -
November 8, 1941, as a result of the Nazi invasion of unoccupied
France, General Ruling No. 11 was amended so as to include all
continental France in the definition of enemy territory. Prior
to this, occupied France was enemy territory, but unoccupied
France was not so designated. On November 27, 1942, by Public
Interpretation No. 9, attention was called to the fact that
Monaco was also considered enemy territory. In order to
assuage the fears of resident French nationals who were not
enemy nationals, Messrs. DuBois and Murphy participated in the
preparation of a press release pointing out that their status
was not affected by the amendment to General Ruling No. 11.
48. Conflicting APC Claims. A conference was held at the
State Department at the request of the Canadian Alien Property
Custodian. Representatives of our Alien Property Custodian,
of the British Ministry of Economic Warfare, and of the Foreign
Funds Control were present. It was proposed by the Canadians
and the British that the conference arrive at general principles
governing the handling of assets with respect to which the
allied governments had conflicting claims. The Treasury re-
presentatives agreed to assist in working out the solution to
specific problems of an urgent character but were not hopeful
of being able to work out overall solutions to conflicting
custodian claims until after the war. A number of pressing
Regraded Unclassified
99
- 40 -
published. This request was made because of certain language
used by the Comptroller General with respect to the relation-
ship between the Geneva Convention of 1929 and section 5(b) of
the Trading with the Enemy Act.
Every civilian who has been interned for the duration of
the war is being notified that his assets held outside of the
camp are frozen. Withdrawals not to exceed $150 per month will
be permitted to defray the support of his dependents, and to
meet his current obligations, and the sum of $30 & month may
be withdrawn to pay his personal expenses in the camp. Messrs.
Aarons and Alk worked on this matter in conjunction with members
of the administrative staff.
51. Estates (See October 1942 report, item 43). Prior
to the issuance of General License No. 30A, the consuls of
various neutral and enemy occupied countries appeared in estate
proceedings to represent the interest of their nationals. The
various neutral general licenses were also frequently used to
receive payment of distributive shares. Under General License
No. 30A, however, unless a special license is obtained, 8
blocked national cannot act as personal representative or
represent any person in estate proceedings. The neutral general
licenses have thus been amended SO as to be inapplicable to
Regraded Unclassified
100
- 41 -
administration of decedents' estates.
Blanket licenses were, therefore, prepared and issued to
the Legation of Switzerland, the Legation of Portugal, the
inister of Sweden, and the Spanish Embassy, authorizing the
consuls of the respective countries to represent their nationals,
and to receive payment of distributive shares, provided the pay-
ments are made in the manner specified by General License No. 30A,
or by deposit in a blocked account in a domestic bank in the name
of the appropriate consul in trust for the beneficiary. In
addition, blanket licenses were issued to the Norwegian Embassy
end the Netherlands Embassy, which authorized the respective
consuls to act as personal representative of a decedent's estate
and provided for payment of distributive shares by deposits in
Special Custodian Accounts established by the embassies. Con-
ferences were held with representatives of the various embassies
explaining the various documents. Messrs. Aarons and Alk worked
on this in conjunction with members of the administrative staff.
52. Changes in Patents Procedure (See October 1942 report,
item 54). General Licenses No. 72, as amended, and No. 72A,
and Public Circular No. 5, as amended, relating to patent,
trademark, and copyright transactions were issued on November 17,
1942. General License No. 72 was amended so as to relinquish
Regraded Unclassified
101
- 42 -
to the Alien Property Custodian authority over United States
patents, trademarks, and copyrights in which there is a blocked
interest. The Alien Property Custodian has now assumed the
jurisdiction given to him under section 2(d) of Executive Order
No. 9193 with respect to the filing and prosecution of appli-
cations for United States patents, trademarks, and copyrights,
and transfers or other dealings with respect thereto, if any
blocked interest is involved. The Treasury Department retains
jurisdiction over payments and financial transfers incident to
these transactions. General License No. 72A authorizes per-
sons not nationals of any blocked country to file and prosecute
applications for patents, trademarks, and copyrights in any
foreign country in which 8. blocked national, other than an
enemy national, has an interest. This general license also
authorizes the receipt of documents issued in connection with
such applications, the payment of fees currently due to foreign
governments, and, within limitations, the payment of attorneys'
fees. Public Circular No. 5 explains the general licenses and
advises of the relinquishment of jurisdiction by the Treasury
Department in the domestic patent field, and the taking over
of that field by the Alien Property Custodian. Messrs. Aarons,
Murphy and Kehl worked on these matters.
Regraded Unclassified
102
- 43 -
53. Securities Control (See October 1942 report, item 56).
(a) General License No. 84 -- Importation of War Savings Bonds.
General License No. 84 was issued on November 25, 1942, exempting
United States War Savings Bonds or Stamps and tax notes from
the importation restrictions of General Ruling No. 5. The li-
cense was issued so that servicemen buying such securities
abroad might send them to the United States. Messrs. DuBois
and Daum handled this matter.
(b) General License No. 29 -- Confidential Circular No. 8A.
General License No. 29 was amended on November 6, 1942, to pro-
vide that no coupons might be removed for collection from &
General Ruling No. 6 account unless the bonds to which the cou-
pons relate are in such General Ruling No. 6 account. Con-
fidential Circular No. 8A, which was prepared by Mr. Daum,
instructed the Federal Reserve Banks to deny applications to
collect detached coupons held in General Ruling No. 6 accounts
where such coupons were imported from any country which has
not broken off diplomatic relations with the Axis.
(c) Study of Applications Involving Securities Trans-
actions. An analysis was made by Mr. Kehl of an application
by General Safety, Inc., to purchase 10,800 shares of stock
of Houston Milling Company, a Texas corporation, from
Regraded Unclassified
103
- 44 -
Comptoir Generale, a Swiss corporation. The application was
denied because of its repatriation aspects and possible pre-
judice to unrepresented persons in France. Because of the
complicated nature of the transactions, and prior actions
taken by Foreign Funds Control, a letter was sent to the
attorneys for the applicant giving the reasons for denial of
the pending application.
(d) Philippine Securities (See October 1942 report,
item 59). A plan has been prepared whereby securities and
obligations of the government of the Commonwealth of the
Philippines, its political subdivisions, or corporationsor-
ganized under its laws, and "frozen" in reputable banks in
various countries in the generally licensed trade area, may
be released. The program contemplated calls for the reports
of these securities to be filed by the New York agency of the
Philippine National Bank, the transmission of Form TFEL-2 by
the Federal Reserve Bank of New York to the bank holding the
securities and the release of the securities after attachment
of Form TFEL-2. The basic documents, which were drafted in
the past months and cleared in the Treasury Department, the
Department of State, Interior Department, and informally by
the Philippine Government, have been transmitted to the
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104
- 45 -
Resident Commissioner of the Philippines from the United States.
They are pending before him and President Quezon at the present
time. Mr. Murphy worked on this matter.
54. Sale of Assets to Residents of Blocked Territory.
A general ruling is being prepared by Mr. Daum which will pro-
hibit the sale of assets owned by persons in the United States
to persons residing in blocked territory.
55. Checks and Drafts Sent from Blocked Areas. Study is
being made by Messrs. Rains, Daum and Mrs. Rogan, with members
of the administrative staff, of a proposed general ruling re-
stricting the receiving or holding of checks, drafts and pro-
missory notes sent from blocked areas.
56. Census of American-owned Property Abroad. (See
October 1942 report, item 62). Proposed regulations and
instructions concerning the census of American-owned property
abroad have been redrafted and forms revised by \essrs. Reeves,
Arnold and Warner to incorporate suggestions and ideas which
were made by the administrative and legal staffs of Foreign
Funds Control, by the Monetary Research Division, and by
other agencies of government.
57. Litigation (See October 1942 report, item 57). In
two recent cases, Justice Collins of the New York Supreme Court
Regraded Unclassified
105
- 46 -
permitted actions to be brought by corporations--one French
and the other Dutch--located in enemy territory, and directed
that the proceeds of any judgment be paid to the Alien Property
Custodian. A letter has been prepared by Messrs. Aarons,
Golding, Murphy and Alk calling the Justice's attention to
the fact that two agencies are administering the powers of the
President under section 5(b), and requesting & revision of the
decision so as to direct that the proceeds be subject to the
Trading with the Enemy Act, as amended, the Executive Orders
thereunder, and action pursuant thereto. In this manner,
appropriate action may be taken by the proper agency. It has
been suggested that the Alien Property Custodian send a letter
approving the proposed action, and action is being delayed until
he has had an opportunity to study the matter.
The Department of Justice transmitted for consideration a
proposed state bill submitted by the Alien property Custodian
to provide for service upon him of process or notice. In 8.
conference held with representatives of the Alien Property
Custodian the bill was discussed and objections presented.
A memorandum was sent to the Alien Property Custodian em-
bodying the criticisms of this Department. Messrs. Reeves,
Alk and Warner handled this matter.
Regraded Unclassified
106
- 47 -
A study is being made of the various cases now in litiga-
tion or out of which further litigation may arise. This in-
cludes Littau V. Ore & Chemical, Brown V. Morgan, and
Feuchtwanger V. Central Hanover Bank. Brown V. Morgan involves,
among other things, the obligation which one party to a law
suit has vis-a-vis the other parties with respect to applying
for a Treasury Department License. Inasmuch as the prohibi-
tions in Executive Order No. 8389, as amended, are coming into
play more and more, as legal defenses, the holding in Brown V.
Morgan (that before a person may plead the freezing order as a
defense, he must first show that 8. license was applied for and
denied) are receiving greater consideration. For example, the
Brown V. Morgan problem has been raised in Aickelin V. General
Aniline & Film discussed last month. Messrs. DuBois, Reeves,
Golding, Alk and Murphy are working on these cases.
Two problems in public relations have arisen as the result
of the decision of the New York State Court of Appeals in the
Polish Relief case. An article appeared in the American Banker
which, it was felt, contained an erroneous interpretation of the
decision, as well as the position of the United States as amicus
curiae and that of the Treasury Department in General Ruling
No. 12. A letter was prepared by Messrs. DuBois, Reeves, Alk,
Regraded Unclassified
107
- 48 -
Golding, Arnold and Murphy explaining these matters in detail
and setting forth the feeling of this Department that the
decision of the Court of Appeals was consistent, in all respects,
with our position. Also, Messrs. DuBois and Murphy prepared a
letter pertaining to a note on the Polish Relief case appearing
in the Illinois Law Review.
58. Hawaiian Scorched Earth Program (See October 1942
report, item 58). Efforts have been made to complete the
various phases of this program. Conferences were held with
representatives of the Bureau of the Public Debt, the Treasurer's
office, and the Foreign Funds Control with respect to measures
to handle the Hawaiian Series currency imported into the United
States. Since most of these imports appear to have been acci-
dental and perhaps unavoidable, emphasis has been to facilitate
the ready exchange of any Hawsiian currency which turns up in
the United States.
Confidential Circular No. 173 and instructions to Collectors
of Customs which provided that they should permit persons having
Hawaiian series currency to pass through customs, upon executing
a certification that they will exchange the currency promptly
with a bank in the United States, were issued. Banks were
authorized to effect such exchanges and to deliver the currency
Regraded Unclassified
108
- 49 -
so received to a Federal Reserve Bank. A plan is being worked
out which will authorize any bank in the United States to
receive Hawaiian currency from any person having possession
of it and to turn such currency over to a Federal Reserve
Bank. A letter has been prepared by Mr. Murphy for Mr. D. W.
Bell's signature and is presently awaiting clearance.
59. Strategic Information (See October 1942 report,
items 65 and 55; August 1942 report, item 51). Many depart-
ments of the government have been concerned lest strategic
information with respect to war production, shipping dates,
cargoes, etc., be sent to the enemy through certain insurance
and reinsurance transactions, particularly those involving
foreign countries or their nationals. In that connection, a
study has been made of the Secretary of the Treasury's authority
in World War I to control the transmission of Insurance informa-
tion and the activities of foreign insurance companies within
the United States. Upon the basis of this study a conference
was held and arrangements made for further control over this
field. Messrs. Aarons, Kehl, Golding and Murphy worked on this.
A study is also being made by Messrs. Lawler and Proctor
with respect to freight forwarding concerns for the purpose of
determining whether general government control over such firms
Regraded Unclassified
109
- 50 -
is advisable in view of their access to confidential information
concerning ship movements and the possibility that they might
make such information available to the enemy. Mr. Marcel
Holzer of the American Union Transport Company is lending
assistance in furnishing information concerning the freight
forwarding business as a whole and concerning particular firms
about which he has knowledge. When this study has been completed,
the Treasury will be in a position to propose action which should
be taken by this Department or other Government agencies.
60. Enforcement and Investigations (See October 1942 report,
item 65). (a) Draeger Shipping Company. An investigation has
been made of the possible violation of 8. directive license by
the Draeger Shipping Company, Inc., in conspiracy with
CH.CH.Sztejn and Harry Sztein relative to the sale of certain
horse and cattle hair. Under the directive license, Draeger
was authorized to sell horse and cattle hair at the prevailing
market price, as agent for A. G. Schnyder of Switzerland. Be-
cause of the large profit which Messrs. CH. CH. Sztejn and Harry
Sztein, purchasers of the hair from Draeger, made on the resale,
there is reason to believe that Draeger did not sell at the pre-
vailing market price. A study was made of WPB and OPA regulations
and of practices of reliable firms in the horse hair business
Regraded Unclassified
110
- 51 -
in an effort to determine whether the directive license was
violated. In connection withthis, the Swiss firm has sued
Draeger, the Alien Property Custodian, and CH. CH. Sztejn and
Harry Sztein for fraud. While no decision has been reached,
it is likely that Draeger will be prosecuted for 8. violation
of the directive license. Messrs. Lawler, Proctor and Locker
are working on this case.
(b) Viktor Bator. In cooperation with the Bureau of
Internal Revenue, an investigation is being made of Viktor
Bator, a Hungarian national, who entered the United States on
February 26, 1939. Since his arrival in the United States, it
appears that he has acted on behalf of the Hungarian Government
and other nationals of Germany. There is some indication also
that Bator failed to report certain profits realized in trans-
actions involving nationals of Hungary. Miss Klein is working
on this case.
(c) Swiss Insurance Investigation. The investigation of
the Swiss Insurance Company and the Switzerland General Re-
insurance Company, Ltd., is continuing. Reports of the investi-
gation to date indicate that certain omnibus accounts contained
funds of enemy nationals. Mr. Lawler is handling this matter.
Regraded Unclassified
111
- 52 -
(a) Other Investigations and Studies Connected with Enforce-
ment. Field investigations were concluded and final reports
submitted with respect to Ferd. Muelhens, Inc. and Maxwell C.
Katz by Mr. Quint; Anton Smit & Co., Inc. by Mr. Schwartz;
E. S. Halsted & Company, Scholtz & Co. and Jorge and Juan Caputo
by Mr. King; and Jules and Suzanne Levee by Vr. King.
Investigative studies were concluded and definitive reports
were submitted with respect to William J. Topken by Miss Mayer;
Eurasia Import Co. and Paper Co. Van Reekum by Mr. Cook; Swiss
Bank Corporation and Credit Suisse by Mr. Ewing.
The following matters are presently being studied and in-
vestigated: American Giese Wire Corporation and Horst Albrecht
Wegener, accountant and agent for the corporation; Valentine
Joseph Peter and the law firm acting for him, Peter & Dalton;
Acme Continental Corporation and George Biedermann, president
of the corporation (Mr. Ackermann); Auchincloss, Parker &
Redpath by Miss Mayer; S.K.S. Dyestuff Corporation and its
manager, H.A.P. Rossiger by Mr. King; Auchincloss, Alley &
Duncan, a law firm; Wildenstein, Inc., art dealers, and David
Van Buuren by Messrs. King and Quint; Draeger Shipping Company
by Mr. Ewing; and New York Match Company by Mr. Cook. In several
of these matters, members of the office of the Chief Counsel,
Regraded Unclassified
112
- 53 -
Foreign Funds Control, are working with the Department of Justice,
and are also cooperating with the Securities & Exchange Commission
in one case.
(e) General License No. 58. A study is being made by Mr.
Cook of the operation of General License No. 58 and the use of
the offset device as a means of avoiding the prohibitions of
the Executive Order, particularly in the case of remittances
from China.
(f) Reports on Violations. Letters were written by Mr.
Ackermann to twelve persons who appeared to have violated the
Executive Order, requiring the submission of oral or written
explanations. Eight explanations have been received to date.
In all eight cases it would ap pear that further action is
necessary in view of the nature of the proffered explanations.
(g) Hearings on Violations by Swiss Banks. It is con-
templated that within the near future the Swiss Bank Corporation
end the Credit Suisse will be notified that hearings are to be
held, commencing shortly after the first of the year, with
respect to their numerous violations of the Executive Order.
Mr. Lesser is working on this'case.
61. Public Education (See October 1942 report, item 67).
Messrs. DuBois and Lawler have been working on a revision of.
Regraded Unclassified
- 54 -
113
the handbook prepared for the Inter-American Conference on
Systems of Economic and Financial Controls in order that it
may be published. The proposed revision is presently being
considered by other interested agencies of the Government.
62. Latin American Problems (See October 1942 report,
item 46). (a) Mexican Securities Program (See October 1942 re-
port, item 56). In connection with the program relating to the
registration of certain Mexican securities and the vesting of
those determined to be "enemy owned", the following documents
have been drafted:
(1) A general license permitting the registra-
tion in the United States of securities presently in
blocked or General Ruling No. 6 accounts, pursuant
to the Mexican Registration Decree, with appropriate
provisions for continued control by this Department
of these securities and ultimate return to the blocked
or General Ruling No. 6 accounts from which they came.
(2) A decree to be issued by the President of
Mexico providing for the vesting by the Mexican Govern-
ment of certain "enemy owned" securities.
(3) A letter to be sent by the Secretary of State
to the Secretary of the Treasury recognizing the valid-
ity of the proposed Mexican vesting decree.
(4) A letter from the Secretary of State to the
Attorney General instructing the latter to make speci-
fied representations to indicate that the proposed
Mexican vesting decree was recognized 88 valid by this
Government and that the proposed act involved 8.
"political question", since it arose in connection with
and in furtherance of an international compact to which
our Government and the Mexican Government were parties.
Regraded Unclassified
- 55 -
114
(5) A memorandum of law discussing a number of
problems which may arise in connection with the effect
that will be given to the proposed Mexican decree by
the courts of the United States. The memorandum dealt
with such problems as jurisdiction based upon the con-
trol of the debtor; United States cases involving seizure
of securities and other debts, where the physical evi-
dences of ownership were not within the jurisdiction
of the United States or otherwise unavailable; similar
action in connection with shares of stock in domestic
corporations physically held outside of the jurisdiction
of the United States or otherwise unavailable; and the
effect given State Department representations in con-
nection with (i) the validity of foreign decrees or
acts of a foreign sovereign, (ii) the claim of sovereign
immunity to suit, and (iii) the problem of whether or
not a "political question" is involved.
Further study is being given to these matters by Messrs. DuBois
and Minskoff in collaboration with representatives of the
Mexican Government and agencies of this Government.
(b) Argentina. In cooperation with the Inter-American
Section of Foreign Funds Control, further measures were taken
to implement the program which had been agreed upon with the
State Department. This included the preparation of additional
lists of names to be investigated for the purpose of blocking as
"special blocked nationals" under existing arrangments. Addi-
tional cases are being prepared for submission to the State
Department as candidates for ad hoc freezing. In this con-
nection, it is interesting to note that Shaw Strupp, which
was recommended for ad hoc freezing, attempted to transmit to
Chase Bank for collection some 58 checks, all bearing Jugoslav
Regraded Unclassified
115
- 56 -
names, all endorsed by the same person, and all 2 or 3 years
old. Since all but two of the checks had been collected, the
proceeds were immediately blocked, and a thorough investigation
of the matter begun.
The reports filed on Form TFR-149 under the general li-
censes relating to the neutral European countries as they in-
volve transactionswith Argentina are being studied. This will
provide important background for a proposed general ruling which
will require all blocked accounts in which persons outside the
United States have an interest to be regarded as General Ruling
No. 6 accounts. In that connection, a comprehensive study of
Argentine trade and financial transactions is being made to
establish whether it is necessary for Argentina to draw on its
blocked dollar accounts in order to maintain its trade with the
European neutrals or whether the transactions with European
neutrals are merely necessary to build up foreign exchange
balances. Messrs. DuBois and Moskovitz are working on these
matters.
Mr. DuBois prepared a list of firms, including Banco de la
Nacion, proposed for ad hoc treatment, which was transmitted to
the State Department. He also prepared a letter to the Secretary
of State covering the general aspects of Argentine program.
Regraded Unclassified
116
- 57 -
(c) In General. A number of problems involving the Latin
American Republics were handled in connection with transactions
between this country and the Latin American Republics and also
in connection with the freezing control laws of the various
Latin American Republics. A memorandum was prepared by
Mr. Cassoday discussing the conflicts between Latin American
laws and proposedregulations for the removal from the mails of
certain dollar currency and dollar drafts being sent between
Latin American countries. Mr. DuBois participated in further
study of the reinsurance problems.
(d) Missions. Mr. Froelich, of Foreign Funds Control, and
Mr. Lawrence Moore went to South America to aid in the develop-
ment of the Treasury Department's program with respect to the
activities of certain blocked business enterprises, such as
Sterling Products, in that area. Mr. Rains went to Puerto Rico
to assist in the institution of a Foreign Funds Control office
and further to develop a Foreign Funds Control program in that
area.
63. Currency Control (See October 1942 report, item 52).
(a) "Big Money" Program. A method by which all United States
currency in bills of $500 denominations or over will be called
in has been considered by Messrs. DuBois and Rains. This
Regraded Unclassified
117
- 58 -
program contemplates the deposit of such bills in domestic
banks for exchange into bills of $100 denominations or smaller on
or before a stated deadline. Persons and banks outside the
United States may deposit the currency held by them in local
banking institutions which will take such currency on a col-
lection basis and forward it to a Federal Reserve Bank in the
United States. This would be a further step to prevent the
introduction in the United States of looted currency, much of
which is in bills of large denomination. The "big money" pro-
gram was studied by Mr. Rains with a view toward its possible
utilization in Puerto Rico.
(b) Import Controls. Problems connected with the adminis-
tration and enforcement of currency control measures under
General Rulings No. 5, 6A, and 14 were handled by Messrs. Rains,
Murphy and Mrs. Rogan, in collaboration with members of the
administrative staff. Instructions were issued to all collectors
of customs requiring them to report to this office information
with respect to all persons leaving the United States who are
carrying more than $50 in United States currency. This require-
ment represents a preliminary survey to ascertain the desirability
of imposing export control restrictions on United States currency.
Likewise, on November 19, 1942, collectors of customs were
Regraded Unclassified
118
- 59 -
authorized to exempt from the currency import controls United
States Government funds brought in by members of the armed
forces. There has also been drafted by Messrs. DuBois, Rains
and Murphy a plan by which the importation of currency by the
crews of merchant vessels and shipmasters may be subjected to
control through the Maritime Commission.
(c) North African currency controls. In connection with
the Allied occupation of portions of North Africa, 8. special
issue of currency was printed and made available to the occupy-
ing forces. It is hoped that this will prevent the liquida-
tion of Axis-looted currency in occupied areas, and will aid
the populations of these areas in their financial transactions.
64. Neutral European Countries (See October 1942 report,
item 47). (a) Spain. In conjunction with the recent develop-
ment with respect to Vichy France, 8. program has been prepared
to meet any contingency which may arise should Spain upon its
own initiative or through occupation of Axis forces lose its
status as a neutral country. Documents have been drafted by
Mr. DuBois, and a complete program has been worked out with
respect to any contingencies which may arise in this connection.
Mr. Rains visited Puerto Rico recently in order to institute 8.
Foreign Funds Control office in that area. At that time, he
Regraded Unclassified
119
- 60 -
studied the applicability of the Spanish program in Puerto Rico
should this contingency arise.
(b) Sweden. Mr. DuBois collaborated with the State De-
partment in the preparation of a memorandum discussing recent
problems which have arisen and outlining a program which em-
bodied the results of this study.
65. Certifications under Section 25(b) of the Federal
Reserve Act (See October 1942 report, item 51). A number of
licenses, ratifications and certifications pursuant to
section 25(b) of the Federal Reserve Act, involving the account
of friendly refugee governments, have been reviewed by Messrs.
DuBois, Daun and Sommerfield. Among those studied were
accounts involving Thailand, De Surimnassche Bank, Banque
de Grece, and the Denmarks National bank.
66. Diplomatic Pouches. (See September 1942 report,
item 62). Mr. Minskoff prepared a draft of a telegram to be
sent to all collectors of customs directing them to make weekly
reports containing specific information with respect to all
matters for which diplomatic immunity is claimed. These re-
ports would also provide information with respect to the
carriers of these matters. It is hoped that the intelligence
thus obtained will lay the groundwork for tightening the
control of the diplomatic pouch in order to prevent or minimize
Regraded Unclassified
120
- 61 -
violations of Treasury and Censorship regulations through the
abuse of the diplomatic privilege.
67. Insurance Problems (See October 1942 report, item 55).
An analysis was prepared by Messrs. Aarons, Alk, Murphy and
Kehl of various pending insurance problems with a view to
drafting a general license which will obviate the necessity
of specific licenses in certain insurance transactions in
which a blocked interest exists. Discussions are being held
on the scope of such a general license.
68. Treatment of Attorneys Blocked "Ad Hoc". The study
of the problems involved with respect to the extent to which
"ad hoc" blocked attorneys should be permitted to represent
blocked nationals in legal proceedings is being continued by
Messrs. Aarons and Alk with members of the administrative staff.
Plans are being formulated to amend all business operating
licenses which have been issued so as to require special li-
censes for the representation of blocked nationals. No decision
has been arrived at as yet with respect to the policies to be
followed.
69. Censorship (See October 1942 report, item 53). The
Office of Censorship has established a Philatelic Control Unit
in New York which passes on applications for permits to send
Regraded Unclassified
121
- 62 -
postage stamps and other philatelic material outside the United
States and examines all stamps imported into the United States.
When a report from the Office of Censorship on certain aspects
of this controDis received, appropriate modifications in pre-
sent Foreign Funds Control instructions to Collectors of Customs
may be made. Mrs. Rogan, with members of the administrative
staff, is working on this matter.
70. Proclaimed List and Trading With The Enemy (See
October 1942 report, item 50). A conference was held and
general study made by Mr. DuBois of the manner in which the
introduction to The Proclaimed List of Certain Blocked Nationals
can be revised. As a result of this study, the "General Notes",
which is part of the prefatory material, will be altered.
At the time Vichy France became enemy territory, 8. critical
problem arose with respect to the completion of shipments of
goods, etc. Likewise, a similar problem arose with respect to
the purchase of critical supplies from blacklisted persons.
Instructions were sent to American missions concerning these
matters as well as general instructions in response to the
amendment to General Ruling No. 11, which brought unoccupied
European France within the definition of enemy territory.
Vr. DuBois worked on these problems.
Regraded Unclassified
122
- 63 -
71. Silver (See October 1942 report, item 70). Mr. Brenner
accompanied a representative of the Mint Bureau to New York for
the purpose of studying conditions in the industrial silver
market. Producers, banks, and processors were contacted, and
it was found that there was a surplus of foreign silver which
was probably temporary. Partly as a result of this investiga-
tion, the Metals Reserve Company began to purchase silver in
order to build up 8. stock-pile for future use and to keep up
the price in order to prevent a disturbance of our relations
with Mexico.
Miss Hodel and Mr. Brenner cooperated with another branch
of the Government in making arrangements for the use of a
large quantity of "free silver" in 8. war project. A contract
and accompanying documents for the moving of the Spanish silver
from New York to Philadelphia, where its copper content will
be made use of in the production of subsidiary silver coins,
were prepared.
In response to an inquiry from the Defense Plant Corpora-
tion, Mr. Brenner prepared a memorandum for the Secretary
pointing out that there were no legal obstacles to the use of
free silver in the Canadian Plant of the Aluminum Company of
Canada, pursuant to the terms of an agreement dated May 6,
1942.
Regraded Unclassified
123
- 64 -
72. Gold (See October 1942 report, item 73). As a result
of restrictions on the use of copper, manufacturers of gold
articles may be unable to use stocks of gold which are not
eligible for sale to the United States. In order to prevent
the forced sale of such gold at a price below $35 per ounce, a
memorandum was prepared by Miss Hodel and Mr. Brenner for the
Secretary recommending that it be purchased by the United
States where the owner could show that he wanted to dispose
of it because it could not be used without copper.
73. Mexican Railways (See October 1942 report, item 68).
A supplementary memorandum has been prepared by Mr. Minskoff
providing further information with respect to the proposed
general ruling which would immunize Mexican railway property.
The purpose of this general ruling is to ease the transporta-
tion problem with relation to war materials received from
Mexico. At the present time, there is great delay and loss of
time and labor which r esults from unloading and reloading trains
which reach the American border. This is substantially
attributable to the reluctance on the part of the Mexicans to
bring their equipment within the jurisdiction of the United
States for fear of attachment by creditors of the railway.
74. Exchange Problems (See October 1942 report, item 69).
Regraded Unclassified
124
- 65 -
An investigation was conducted with respect to the exchange
stabilization problem which, according to General Stilwell
has caused considerable inconvenience to the members of the
armed forces stationed in China. A supplementary memorandum
was prepared by Mr. Minskoff outlining the procedure to be
adopted for putting a program into effect by which the mem-
bers of the armed forces would be compensated for losses which
were attributable to exchange fluctuations. It is believed that
this program could be put into effect without attendant pub-
licity either by Executive instruction or an unpublished Execu-
tive order. Further study has been given to the Exchange Re-
lief Act, the Federal Register Act, and attendant regulations.
75. North Africa Program. Messrs. Bernstein, Luxford
and DuBois cooperated in the formulation and drafting of various
monetary and financial measures which might be necessary in
connection with the Allied occupation of North and West Africa.
A "cram course" was given to certain Army officers who were
going to deal with these problems in North Africa.
Regraded Unclassified
125
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE November 30, 1942
TO
FROM
Mr. Haas
Secretary GR. Morgenthau
Subject: The Business Situation,
Week ending November 28, 1942.
Summary
Industrial production: Expansion in armament output raised
industrial production to new high levels in October and the
first half of November. About 41 percent of our total pro-
duction of goods and services in last quarter will be for
war uses, according to Department of Commerce estimates.
Steel supplies: Production outlook for winter months improved
by rise in steel scrap supplies. Seven-months' supply of ore
on hand.
Rationing: OPA and WPB take further measures to make price
control and distribution of civilian supplies more effective.
Ration banking to be inauguerated on nation-wide basis in
January. Department of Agriculture takes steps to expand
food production in 1943.
Wholesale prices: BLS all-commodity index unchanged at 100.1
in week ended November 21. Basic commodity prices steady
during past week.
Retail trade: Department store sales maintained at recent
high levels. Gain over year-earlier levels widened to 30 per-
cent from 13 percent due to earlier observance of Thanksgiving
last year.
Inventories: Seasonally-adjusted department store inventories
in October declined for the third consecutive month. However,
at the end of the month stocks (in dollar value) were still
19 percent above year-earlier levels, while average. prices
were 6 percent higher.
Corporate income: Net income of all corporations in the first
9 months of 1942 (after reserves for estimated tax requirements)
was only 5 percent below the corresponding period in 1941,
according to Department of Commerce.
Regraded Unclassified
126
- 2 -
General situation
Increasing importance 1s being assumed by problems of
rationing and distribution of available supplies, and by the
re-vamping of production schedules to conform to more immed1-
ate war requirements. Meanwhile, the basic production prob-
lems associated with the initial phases of the war effort are
receding somewhat into the background. Thus, coincident with
heightened concern over food and gasoline rationing and East
Coast fuel oil supplies, machine tool output (a former bottle-
neck) has reached such heavy volume that machine tool leaders
are suggesting that some producers convert their facilities to
other products, in view of the possible dearth of orders six
months hence. Likewise the tremendous upsurge in contract
awards for war plant construction has probably passed its
peak, and structural steel orders and shipments showed de-
clines in October.
Armament output pushes industrial production higher
Largely due to further gains in armament output, industrial
production continues to increase rapidly. The FRB adjusted
production index rose 3 points to 188 in October and showed
further expansion in the first half of November. Currently it
is estimated by the Federal Reserve Board that approximately
80 percent of durable goods production consists of products
essential to the war effort.
The October advance carried the FRB index to a new peak
22 points (over 13 percent) above the levels prevailing in
November 1941 just before our entry into the war. (See Chart 1.)
During the intervening 11 months, the rise in the index has
been led by output of ships, planes, tanks, and other items
comprising the transportation equipment component, which has
advanced 79 percent. The second largest gain has occurred in
machinery output, which has increased about one third during
the same period. However, in some lines, such as machine tools,
output in this industry appears to be nearing its peak. After
showing very little gain since last Spring, steel output spurted
noticeably in October and was about 11 percent above pre-Pearl
Harbor levels. (Refer to Chart 1, lower section.)
Of our total national production of goods and services in
the last quarter of the year, about 41 percent will be for war
purposes, according to Department of Commerce estimates.
Regraded Unclassified
127
- 3 -
Rise in steel scrap and iron ore supplies
The steel industry appears to be going into the winter
months with a somewhat better supply of basic materials than
was expected earlier in the year. The steel scrap inventory
is reported to have been built up to about 4,750,000 tons,
which 1e the highest level since January 1, 1942, when stocks
totaled 5 million tons. Moreover, if the present rate of
scrap collections continues, the WPB Conservation Division
expects scrap piles to be built up to the projected goal of
7 million tons by the beginning of 1943.
An even more comfortable position will prevail with respect
to iron ore supplies as a result of this year's record-breaking
shipment of ore down the Great Lakes. On November 1 stocks of
iron ore at furnaces and Lake Erie docks totaled nearly 53 mil-
lion tons, or 20 percent more than a year earlier. This stock
was equivalent to nearly 7 months' supply at the current rate
of use.
Railroad equipment request partially granted
Steps are being taken to improve the carrying capacity of
the railroads. In view of the unprecedented heavy volume of
freight traffic in 1942, and the further gains anticipated next
year, the Association of American Railroads some time ago re-
quested the WPB for authorization to acquire in the next 10 months
at least 80,000 new freight cars, 900 new locomotives and 2 mil-
lion tons of rails. The WPB recently met this request in part by
authorizing the acquisition of 20,000 freight care and 100 switch-
ing engines in the first 6 months of 1943, in addition to 286
road locomotives in the first 8 months of 1943 and 480,000 tons
of rails in the first quarter of the year.
Although the fall peak in freight traffic has been passed,
the President of the Association of American Railroads recently
reiterated the railroads' need for locomotives as well as
special and open top freight cars. It 18 estimated that this
year's total freight traffic in ton-miles will run almost 33 per-
cent above last year, while a further increase of from 10 to
15 percent is anticipated in 1943.
Price control and distribution action
Under growing public criticism of the Government's handling
of rationing and retail price control, the Government took
several steps last week to make price control and distribution
of civilian supplies more effective. Measures taken included
the following:
Regraded Unclassified
128
- 4 -
(1) Retailers were warned by the OPA against price
evasions through changing brand names, whereby resale prices
are determined by replacement costs rather than by March
ceiling prices. In New York, 35 executives of garment trade
associations were charged by an OPA official of violations by
their industry of OPA price regulations. Clinics for "retail
merchants who do not understand Government price and ceiling
regulations" are being held throughout the country.
(2) In accordance with the demand by the Director of
Economic Stabilization for simplification and standardization,
the OPA has authorized retailers to discontinue or curtail many
specified services without requiring reductions in ceiling
prices.
(3) Apparently in an attempt to prevent panic buying, the
WPB has limited deliveries of most canned goods to retailers.
This action was taken by restricting deliveries to specified
monthly quotas.
(4) Ration banking, by which the country's commercial
banks will handle ration coupons in checking accounts similar
to those used in the handling of money, will be put into operation
throughout the country in January, the OPA has announced. The
banks will act as agents for, and will be paid on a cost basis
by, the OPA.
The system will replace the present cumbersome method of
clearing coupons through local price and rationing boards.
Decision to use this method was made after a test of the plan
begun October 28 in the Albany-Schenectady-Troy area of New York.
Thirty-three banking offices have been cooperating in this test,
which will continue until merged with the national program.
1943 food production goals
New record food production goals for 1943 have been announced
by Secretary Wickard, reflecting the Government's concern over
the wartime food supply. As part of the attempt to increase
food production, the program includes specific price supports
for many major commodities. The Secretary said that the require-
ments for our own military forces and for our Allies now rep-
resent about one-fourth of estimated total food production in
1943. Changes from the 1942 pattern of production will throw
emphasis on foods of most value in the wartime diet, including
meat, egge, milk, feed grains, dried beans and peas, poultry,
essential vegetables, and oil crops.
Regraded Unclassified
129
- 5 -
Hog prices to be supported
Previously established hog production goals for 1943 have
been revised upward by Secretary Wickard from 110 to 115 per-
cent of this year's record crop. The revision was accompanied
by announcement of a potential subsidy to ensure maximum pro-
duction, in that hog prices will be supported through Government
purchase operations in such a manner as to maintain a price
level of $13.25 at Chicago for good and choice hogs, 240 to
270 pounds, until the fall of 1944. In order to sustain this
price level, the Agricultural Marketing Administration purchase
policy will include the following provisions:
(1) Ceiling prices will be paid by the AMA for pork
products, unless live hog prices appear to have been reduced
by pork processors unreasonably in view of the ceiling prices,
or margins appear to have been inflated unduly. In such
instances the Agricultural Marketing Administration's price
will be reduced proportionately.
(2) If prices fall below the support level, the Agricultural
Marketing Administration will buy live hogs at the support price
and arrange for their processing on a custom basis.
In announcing the program, Secretary Wickard said in part,
"In view of the constantly increasing demands for pork products
prices should stay above the $13.25 Chicago level during the next
two years without special Government action
However, since we
want no question of prices to exist in the minds of the hog
farmers
the Department of Agriculture 18 making this guarantee".
As the seasonal movement of hogs to market has slowly got
under way, hog prices have declined substantially from their
wartime peak in early October. (See Chart 2.) In the week end-
ed November 20, slaughter at 27 centers was the largest since
January. Although it was more than 16 percent larger than a
year ago, much greater supplies must come on the market before
receipts are in proportion to supplies on farms. It will be
noted that the Department of Agriculture's purchases have con-
tinued relatively emall for several months. Since hog prices
have declined, press reports suggest that it 18 unlikely now
that ceilings will be placed on live hogs.
Wholesale prices unchanged at high wartime levels
Despite our intensified war activity in 1942, the rise in
the wholesale price level has become more gradual. In the week
ended November 21, the BLS all-commodity index was unchanged
Regraded Unclassified
130
- 6 -
from & week earlier at its 16-year high. Compared with its
gain of 33.5 percent since the pre-war month of August 1939,
the general price index in the corresponding period of World
War I rose more than 80 percent. (See Chart 3, upper section.)
It will be noted, however, that the latter part of 1917 also
experienced a levelling-out of prices, which was followed by a
sharp rise in 1918.
In World War I, prices of foods were among the first to
be placed under control, and the control of basic industrial
commodities came nearly a year later. During the present war,
in direct contrast, controls were quickly applied to basic
industrial commodities while foods have been allowed to rise.
(See Chart 3, lower section.) Price controls in World War I
were first authorized by the Food and Fuel Control Act, which
was approved August 10, 1917. Prices of foods "and other
necessaries" were administered by the Food Authority set up
by the President in May 1917 in anticipation of passage of the
Act. Substantial control over prices was excercised through
an elaborate licensing system for processors and distributors
of foodstuffs. It was not until March 1918 that the Government
actually established a comprehensive price control program, but
by that time it was too late to prevent general price inflation.
Since price control in Canada became effective last
December, the Dominion's wholesale price level has continued
to show general stability with a gradual upward trend. (See Chart 4.)
In the period since application of the general maximum price
regulation in the United States last May, however, the rise in
our price level has been at a somewhat slower rate than has the
recent rise in the Canadian index.
Basic price index steady
Last week the BLS price index of 28 basic commodities re-
mained unchanged close to its wartime high. (See Chart 5.) The
index of 9 uncontrolled commodities advanced, following its
recession of the preceding week, reflecting increases in prices
for grains and steers. As cattle receipts passed their seasonal
peak and demand for beef continued heavy, prices of steers again
reached their wartime high. Hog prices declined for the fifth
successive week.
A small decline occurred in the index of controlled commod-
ities owing to a marked decrease in the price of wool tops and a
smaller decrease in the price of cottonseed oil. A falling off
in Government orders and restrictions placed on civilian produc-
tion have effected a decline in activity of wool textile mills
since early October.
Regraded Unclassified
131
- 7 -
Retail sales sustained at high level
After reaching the second highest level on record in
October, retail trade in November has been sustained at high
levels. During the week ended November 21 department store
sales were virtually unchanged from the previous week. How-
ever, the gain over year-earlier levels widened from 13 per-
cent to 30 percent due to the fact that sales in the corres-
ponding week last year slumped because of the earlier Thanks-
giving holiday in most states. (See Chart 6.) It will be
noted that department store sales during November have been
running at the highest levels (with one exception) since last
December.
A combination of heavier sales volume, and more cautious
buying policies engendered by WPB's plans for inventory re-
strictions, kept department store inventories from showing the
usual seasonal expansion during October. As a result, seasonally-
adjusted inventories of department stores during the month showed
the third consecutive decline from the peak reached at the end
of July. (See Chart 7.) Despite this sharp decline, stocks at
the end of the month were still nearly 19 percent above year-
earlier levels. Only a moderate part of this rise can be as-
cribed to price factors, since the price advance in the inter-
vening period amounted to about 6 percent.
Decline in corporate net income
Despite the rise in taxes, net income of all corporations
in the first 9 months of 1942 is reported by the Department of
Commerce to have declined only 5 percent below the relatively
high levels attained in the corresponding period of 1941.
Corporate profits, before deductions for income taxes, rose
nearly 40 percent during the 1942 period. Reserves for Federal
income and excess profits taxes, however, were stepped up to
nearly two-thirds of such profits as compared with about one-
half a year earlier.
The 5 percent decline in corporation net income was largely
due to a 15 percent drop in earnings of manufacturing companies.
Within the manufacturing group, earnings changes ranged from a
42 percent drop for printing and publishing concerns to a 60 per-
cent gain for transportation equipment manufacturers. Companies
engaged in retail trade showed a 14 percent gain in net income,
but wholesale trade registered a 25 percent drop. The most
favorable showing of all major groups occurred in transportation
(mainly the railroad group) which reported net income 35 percent
higher than in the first 9 months of 1941.
Regraded Unclassified
F.R.B. INDEX OF IND STRIAL PRODUCTION
1935-39=100, Seasonally Adjusted
1939
1940
1941
1942
PERCENT
1943
PERCENT
190
190
180
180
170
170
160
160
150
150
140
140
130
130
120
120
110
110
100
100
90
J
F
M
A
M
J
J
ASONDJFMAMJJ
A
90
5
o
N
D
J
F
M
A
M
J
J
A
5
o
N
D
J
F
M
A
M
J
J
A
$
o
N
D
J
F
M
1939
1940
1941
1942
1943
Selected Components
Sept. 1942 and Oct. 1942 Compared with Nov. 1941
PERCENT
Transportation Equipment
170
160
150
140
130
Machinery
120
Chemicals
110
COMBINED INDEX
Steel
Monufactured Foods
Metal Mining
100
Nonferrous Metals
Textiles
Fuels (Crude)
Lumber, etc.
90
Leather, etc.
80
70
Nov.
1941
Sept.
Oct.
1942
1942
132
Office of the Secretary of the Treasury
Division of Research and Statistics
Regraded Unclassified
Chart 1
Chart 2
133
HOG PRICES COMPARED WITH HOG SLAUGHTER
AND U.S.D.A. PURCHASES
1941
1942
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
DOLLARS
DOLLARS
Per 100 Lbs.
Per 100 Lbs.
15
15
14
14
13
13
Price of Live Hogs
12
12
11
II
10
10
THOUSANDS
MILLIONS
OF HOGS
OF LBS.
(Slaughter)
(U.S.D.A.
Purchases)
1000
Slaughter
27 Centers
800
160
600
120
U.S.D.A. Purchases
80
400
40
200
o
o
DEC.
FEB.
APR.
JUNE
AUG.
OCT.
DEC.
1941
1942
. Chicago, good to choice, 180-200 pounds
,
Weekly overages since July 3. based on reports for 2-week periods.
Source: Department of Agriculture
Office of the Secretary of the Treasury
P-248
Division of Ressorch and Statistics
PRICES, 1939 TO DATE COMPARED WITH 1914 TO 1918
July 1914 . 100 World Wor Period; Aug. 1939-100 Present Period
PERCENT
PERCENT
All Commodities
200
200
1918
180
180
1917
160
160
Feet Ended
140
Nov. 21
140
1916
120
First Month
1942
of Wor
120
1915
1940
1941
1939
100
1914
100
80
80
J
2
M
J
$
N
J
M
M
J
$
N
J
M
M
J
SHJMMJSNJMMJSN
PERCENT
PERCENT
Foods
200
200
1918
180
180
1917
Fast Ended
Nov. 21
160
160
140
140
1942
1941
First Month
120
of War
120
1916
1939
1940
100
1915
100
1914
80
J
#
M
J
S
M
J
M
M
J
$
N
J
M
M
J
5
N
J
M
80
M
J
5
N
J
M
M
J
$
N
Source: B.L.S.
134
Office of the Secretary of the Trunary
Division d - Statistics
P-222-A
Regraded Unclassified
WHOLESALE PRICE INDEXES IN U.S. AND CANADA
1926 . 100
1939
1940
1941
1942
PERCENT
PERCENT
100
100
95
95
Canada
567 Commodities,
Bur. of Stat.
90
90
U.S.
889 Commodities,
B.L.S.
85
85
80
80
75
75
-
70
70
A S o N D J F M A M J J A 5 o N D J F M A M J J A S o N D J F M A M J J A $ o N D
1939
1940
1941
1942
Office of the Secretary of the Treasury
135
Chart 4
P-240
Division of Research and Statistics
Regraded Unclass
MOVEMENT OF BASIC COMMODITY PRICES
1941
1942
PERCENT
PERCENT
August 1939-100
190
190
185
185
9 Uncontrolled Commodities
180
IBO
175
175
170
28 Commodities
170
165
165
160
160
19 Controlled Commodities)
155
155
150
150
145
145
140
SEPT.
140
NOV.
JAN.
MAR.
MAY
JULY
SEPT.
NOV.
1941
1942
PERCENTAGE CHANGE DEC. 6, 1941 TO NOV. 20 AND NOV. 27,1942
PERCENT
PERCENT
19 Controlled
9 Uncontrolled
+45
Commodities
+45
Commodities
+40
+40
+35
+35
Hoge 32/X
+30
Lard NBX
+30
Steerencex
+25
+25
+20
+20
+15
Com 158%
Shellec 12.8%
+15
Lood IIIX
Cottonweed Oil 9.0%
+10
Print Cloth 7.8%
+10
Cotton 1962
Sugar 6.9%
Zine an
+5
0% Shange
- Wheet 65%
+ 5
Nides. Salls
Tin, Rubber,
o
Coffee, Copper,
0
St.Scrap.dom,
- 5
Coose #
- 5
Tollow-413
Ankp-4ax
-10
Who/ Tope-8.1x
Nov. 20
-10
Dec. 6
Nov. 27
Dec. 6
1941
1942
1942
1941
New 20
New. 27
1942
1942
. 20 Controlled and # Uncontrolled provious to June 26
-
Other of the Secretary of the Treasiry
Regraded Unclassified 136
- of - and
Chart 6
137
DEPARTMENT STORE SALES
1935-39-100, Unadjusted
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
AUG.
SEPT.
PERCENT
OCT.
NOV.
DEC.
PERCENT
Weekly
260
260
240
240
220
220
200
200
180
180
160
160
1942
1941
140
140
120
120
100
100
1940
80
80
60
60
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
DEC.
Office of the Secretary of the Treasury
C-390-A
Dvide of hord and -
DEPARTMENT STORE SALES AND STOCKS
Dollar Values. 1923-25-100, Adjusted
PERCENT
PERCENT
140
140
130
130
120
120
110
110
100
100
Sales
90
90
80
80
Stocks
70
70
60
60
50
1936
1937
1938
1939
1940
50
1941
1942
138
Source: Federal Reserve Board
Chart 7
the of the Sumbery of the Insury
- e - - -
C-430
139
November 30, 1942.
Telephone Conversation
Mr. White - Hr. Reis, Pan Airways
Mr. White informed Mr. Reis that when Secretary Morgenthau
passed through Fisherman's Lake, Liberia, that the manager of
the airport at Fisherman's Lake had discussed the serious situa-
tion that existed there with respect to the shortage of coins
of small denomination. Mr. White went on to say that Secretary
Morgenthau had stated he would be glad to cooperate with Pan
Airways and provide silver dimes to be sent by air if the Pan
Airways officials requested it.
Mr. White further stated that we had not heard from Pan
Airways and he was calling to make certain the next move was
not the Treasury's. Mr. Reis stated he would investigate the
matter at once and would let Mr. white know. He also said from
now on the responsibility with respect to the matter would be
the Pan Airway's and the Treasury could forget about it unless
he let us know to the contrary.
H. D. White
Regraded Unclassified
140
Treasury Department
Division of Monetary Research
Date November 30 19 42
To:
Secretary Morgenthau
From: Mr. White
Original of this report appended to
prepared letter to President.
SECRET
141
November 30, 1942
Exports to Russia, Free China and selected blooked
countries as reported to the Treasury Department
during the ten-day period ending
November 20, 1942
1. Exports to Russia
Exports to Russia AS reported during the ten-day
period ending November 20, 1942 amounted to $45,867,000
as compared with $53,144,000 during the previous ten-day
period. Military equipment accounted for $24,452,000 of
the total and included 48 light bombers, 87 fighter planes
and 20 tanks. (See Appendix C.)
2. Exports to Free China
Exports to Free China as reported during the period
under review amounted to $2,032,000, of which military
equipment accounted for $773,000. (See Appendix D.)
3. Exports to selected blocked countries
Exporte to selected blocked countries are given in
Appendix A. Most important were exports to Switzerland
and Portugal amounting to $443,000 and $396,000 respectively.
ISF/efs
11/30/42
Regraded Unclassified
SECRET
142
APPENDIX A
Summary of United States Exports to Selected
Countries as Reported to the Treasury Department
from Export Declarations Received
During the Period Indicated
(In thousands of Dollars)
Total
Total
10-day
10-day
Domestic Exports
Domestic Exports
Period ended
Period ended
Aug. 1, 1942 to
July 28, 1941 to
Nov. 20,1942
Nov. 10,1942
Nov. 20, 1942
July 31, 1942
U. S. S. R.
$ 45,867
$ 53,144
$ 464,866
$ 742,941
Free China
2,032
233
9,198
97,720
aim
3
9
769
2,858
Switserland
443
2
4,694
11,537
Swedem
-
1
2,626
18,056
Portugal
396
-
1,192
9,743
French North Africa 3/
-
-
2,088
6,305
Treasury Department, Division of Monetary Research
November 30, 1942
1/ Many of the export declarations are received with e. lag of several days or more.
Therefore this compilation does not accurately represent the actual shipment of
a particular period.
2/ Includes Morocco, Algeria and Tunisia.
EFR/efe 11/30/42
Regraded Unclassified
SECRET
APPENDIX B
143
Exports from the U. 3. to Free China and U.S.S.R.
as reported to the Treasury Department
July 28, 1941 - November 20, 1942 1/
(Thousands of Dollars)
Exports to
Exports to
Free Ohina
U.S.S.R.
July 28, 1941 - Jan. 24, 1942
$ 32.758
$ 98,902
1942
Jan. 26 - Jan. 31
6,938
9,608
Feb. 1 - Feb. 10
4,889
13,315
Feb. 10 - Feb. 20
4,853
26,174
Feb. 20 - Feb. 26 3/
2,921
28,119
Mar. 1 - Mar. 10
2,879
32,509
Mar. 10 - Mar. 20
8,058
28,556
Mar. 20 - Mar. 31 w
?
42,435
Apr. 1 - Apr. 10
4,836
51,698
Apr. 11 - Apr. 20
5,335
66,906
Apr. 21 - Apr. 30
2,827
50,958
May 1 - May 10 5/
296
28,652
May 11 - May 20
1,872
18,000
May 21 - May 31 4/
2,533
26,180
June 1 - June 10
3,399
12,764
June 11 - June 20
2,707
53,799
June 21 - June 30
1,664
49,919
July 1 - July 10
7,900
35,657
July 11 - July 20
590
33,940
July 21 - July 31 4/
3,066
35,669
Aug. 1 - Aug. 10
208
14,970
Aug. 11 - Aug. 20
192
23,325
Aug. 21 - Aug. 31
2,850
112,492
Sept. 1 - Sept.10
855
24,339
Sept.11 - Sept.20
11
44,434
Sept.21 - Sept.
902
30,947
Oct. 1 - Oct. 10
1,885
14,564
Oct. 11 - Oct. 20
30
55,083
Oct. 21 - Oct. 31 4/
:
45,701
Nov. 1 - Nov. 10
233
53,144
Nov. 11 - Nov. 20
2.032
45,867
Total
$ 109,521
$1,208,626
1. These figures are in part taken from copies of shipping manifests.
2. Beginning with February 1, figures are given for 10-day period
instead of week, except where otherwise indicated.
3. 8-day period.
4. 11-day period.
5. Due to changes in reporting procedure by the Department of
Commerce, this report is incomplete for the period indicated.
Treasury Department, Division of Monetary Research November 30,1942
Isf/efs 11/30/42
Regraded Unclassified
SECRET
144
APPENDIX 0
Principal Experts from U. 5. to U. S. s. R.
as reported to the Treasury Department
during the ton-day peried ending
November 20, 1942
Value
Unit of
(Thousands
Quantity
Quantity
of dellers)
TOTAL EXPORTS
8 45,867
Military Equipment ($24,452)
Aireraft
13,645
Light bombers (2 eng. A-20)
No.
46
Fighters (1 eng. P-39)
No.
70
Fighters (1 eng. P-40)
No.
17
Ammunition
-
-
4,206
Aircraft parts and accessories
-
-
2,439
Ordnance combat vehicles
1,200
Secut ears
No.
1,112
Armored ears, medium
No.
15
Ordnance combat vehisles,n.e.s.
No.
11
Explosives
-
-
1,078
Military tanks
1,040
Light tanks (M-3, M-3A-1, M5 or 87)
No.
10
Medium tanks (M-4, A-8)
No.
10
All other
-
-
an
ms-Militery (821,415)
Motor trucks, metercycles and
auto replacement parts
-
-
4,525
Meat products
-
-
3.784
Industrial, electrical, agricultural
machinery and parts
-
-
3,415
Iron and steel manufactures and
somimanufactures
-
-
2,715
Regraded Unclassified
145
Appendix C (Continued)
Page 2
Value
Unit of
(Thousends
Quantity
Quantity
of Dollars)
14
Aluminum, copper, sine and
molytdenum ore
-
-
1,327
Leather and rubber manufactures
-
-
1,085
Brass and bronse and manufactures
-
-
1,009
Petroleum and products
-
-
853
Relief supplies
-
-
605
All other
-
-
1,794
Treasury Department, Division of Memetary Research November 30,1942
EFM/ers 11/30/42
Regraded Unclassified
SECRET
146
APPENDIX D
Principal Exports from U. S. to Free China
as reported to the Treasury Department
during the ten-day period ending
November 20, 1942.
(Thousands of Dollars)
TOTAL EXPORTS
$ 2,032
Principal Items:
Printed matter
873
Military equipment
773
Electrical machinery and apparatus
139
Cameras and photographic supplies
99
Rubber and manufactures
37
writing paper
26
Graphite electrodes
19
Wire rope and eable
18
Wheels, except automobile and car
18
Iron and steel hand tools
10
Industrial machinery and parts
7
Relief supplies
6
Treasury Department, Division of Monetary Research November 30,1942
EFM/efs 11/30/42
Regraded Unclassified
147
NCT TO BE RE-TRANSMITTED
MOST SECRET
COPY NO. 13
OPTEL NO. 416
Information received up to 7 A.M. 30th.
1. NAVAL
An outward bound blockade runner was sighted off the
north coast of Spain yesterday.
On 29th morning a French sub is reported to have
left Valencia for Oran damaged and requiring British protection.
One of H.M. submarines is overdue and must be
presumed lost.
On 17th another of H.M. submarines torpedoed a north-
bound 9,000 ton ship off the Nicober Islands. The ship was last
seen low in the water making for Penang.
A Fighting French destroyer arrived at Reunion on
28th and made successful landings, The northern part of the
island comprising St. Denis, St. Benoit and Point Des Galets is
under control. The Governor has fled to the mountains with
400 military.
A 12,900 ton merchant ship with war stores for Middle
East struck a submerged object off the southwest African coast
yesterday and has been beached.
2, AIR OPERATIONS
WESTERN FRONT. 28th/29th. Turin. About 182 tons
H.E. and 189 tons incendiaries dropped including two 8,000 pound
and 35 4,000 pound bombs. Thick cloud en route but cloudless
and good visibility over objective although haze and smoke inter-
fered with visibility. Attack lasted 75 minutes, was successfu.
and well cencentrated especially near Royal Arsenal. Direct
hits claimed on Lancia Works. Several direct hits and fires
seen in Fiat Works. Town confirmed well alight towards end of
attack. Many fights with enemy aircraft en route. One
FW 190 claimed shot down. A/A defences ineffective although
increased.
Regraded Unclassified
29th. Our fighters again attacked locomotives in
northern France, Days casaulties, enemy nil, nil, 5, ours
six, nil, nil.
29th/30th, 36 heavy bombers were sent to Turin and
5 Intruders to attack railways in Belgium. Owing to late
start reports not repeat not yet available.
FRENCH NORTH AFRICA. 28th. Wellingtons from Malta
dropped 23 tons of bombs on Bizerta Docks.
29th. MALTA. Beaufighters destroyed two Italian
seaplanes at their moorings at Zouara and two J.U. 52's in the
air. Locomotives and road transport on the Tunisian-
Tripolitanian coast routes were successfully attacked.
SICILY. 29th. Spitfire bombers attacked Comise
airfield.
BURMA. 28th, 12 Blenheims bombed Shwebu Airfield,
3. LATE NEWS
BRITISH SOMALILAND. About 60 percent of white and
25 percent of African personnel of total Djibouti Garrison
including one Senegalese battalion almost complete, and most of
artillery, crossed frontier into Seila on 28th.
CORRECTION - TOULON. Ref. Optel 415. For 'Five Contre-
Torpilleurs' read 'Three'.
Regraded Unclassified