Volume 713, March 22 – March 24, 1944

Diary Book 713 March 22-24, 1944 Regraded Unclassified - A - Book Page Agudas Israel World Organization See War Refugee Board Appointments and Resignations Schoeneman, George J.: Assistant Commissionership of Internal Revenue discussed by 9:30 group - 3/24/44 713 269 Army: Navy See Banking Facilities - B - Banking Facilities Army and Navy Posts: Bell reports 235 facilities now established; private plant facilities also discussed by Treasury group - 3/24/44 260 Byrd, Harry F. See Financing, Government: Non-essential Expenditures, Committee on Reduction of - C - China See also War Refugee Board Economic report transmitted by Adler - 3/23/44 236 Correspondence Mrs. Forbush's mail report - 3/24/44 311 - D - Dexter, Robert C. (Unitarian Service Committee) See War Refugee Board - F - Financing, Government Non-essential Expenditures, Committee on Reduction of Report on unexpended balances: Treasury comment thereon - 3/22/44 21 a) Discussion of meeting called by Byrd - 3/28/44 See Book 715, page 20 b) HMJr-Byrd conversation: Book 715, page 22 c) Heffelfinger describes meeting of - 3/29/44: Book 716, page 125 Economy stand by FDR discussed by HMJr, Bell, Heffelfinger, Smith: Harold Smith and Appleby (Bureau of Budget) - 3/24/44 300 Bell memorandum on possibilities of reduced expenditures - 3/29/44: Book 716, page 127 Regraded Unclassified - 1- (Continued) Book Page Financing, Government (Continued) War Savings Bonds Lottery statute quoted by O'Connell - 3/22/44 713 19 a) Discussion by 9:30 group . - 3/23/44 248 1) U.S.S.R. experience reported by Haas 251 5th War Loan Drive Quota for drive (after leak on amount from bankers) discussed by HMJr and Ransom - 3/23/44 93 Quota discussed by Treasury group and state chairmen - 3/23/44 102 a) Memorandum to HMJr from state chairmen 109 Foreign Funds Control Yugoslavia: Funds in United States and United Kingdom Cable from National Committee of Liberation - 3/23/44 137,232 Article in PM - 3/23/44 138 - G - - Goldmann, Nahum See War Refugee Board Guaranty Trust Company of New York See Procurement Division - H - Carlton J.H. Hayes, Ambassador See War Refugee Board: Spain - I - India See War Refugee Board - L - Latin America See War Refugee Board Lend-Lease "Recording and reporting of Lend-Lease transactions and Government expenditures abroad": Interdepartmental Committee report (Bartelt) - 3/24/44 279 Lottery See Financing, Government: War Savings Bonds - N - Nansen Passport See War Refugee Board Navy: Army See Banking Facilities Regraded Unclassified - N - (Continued) Book Page Non-essential Expenditures, Committee on Reduction of See Financing, Government - o - 011 See United Kingdom Olrich, Ernest L. (Munsingwear Company. Minneapolis) See Procurement Division: Merchandising Men - P - Passports For history of Nansen Passport see War Refugee Board Petroleum See United Kingdom Poland See War Refugee Board Portugal See War Refugee Board Procurement Division Necessity for Reorganization Fred Smith memorandum on lack of action from Public Relations point of view - 3/24/44 713 289 HMJr-Sullivan conversation - 3/24/44 292 Merchandising Men Stetson (Guaranty Trust Company of New York)-HMJr conversation concerning outstanding ones - 3/24/44 294 (See also Book 714, pages 136,148,150 - 3/27/44) Edward Brown-HMJr conversation - 3/29/44: See Book 716, pages 11,20 Sullivan suggestions: Book 716, page 31 McBain, HMJr, Sullivan, and Gaston conference: Book 716, page 311 a) Olrich, 3. L. discussed Congressman Patman and Crawford criticism at Banking and Currency Committee hearings on surplus property - O'Connell resumé - 3/25/44: Book 714, page 1 5, a) Sullivan supporting memorandum: Book 714. page, Conference: present: Treasury group together with Mack, Widmann, Loeb, and Frey (Procurement) - 3/27/44: Book 714, page 82 a) Sullivan's answers to criticism not found satisfactory by HMJr b) Centralized records - improvement described by Sullivan: Book 714, page 90 c) Mapes transfer discussed by Mack: Book 714. page 94 d) May 27, 1943, date Sullivan was placed in charge of Procurement: Book 714, page 112 e) Transfer of Procurement to some other agency by authority of the President or through bill now under consideration setting up an Administration under War Mobilization discussed: Book 714. page 115 f) See next page Regraded Unclassified - P - (Continued) Book 713 Procurement Division (Continued) Conference (Continued) f) Mack's qualifications discussed: See Book 714. page 118 g) New personnel already hired listed: Book 714, page 120 h) Hancock-HMJr conversation - 3/28/44: Book 715, page 50 1) HMJr suggests conference to discuss surplus property disposal Conference; present: HMJr, Gaston, Smith, O'Connell, McConnell, and Lynch - 3/28/44: Book 715, page 55 a) Sullivan's adequacy for job discussed b) Clayton-HMJr conversation: Book 715, page 56 c) Patman bill taking Procurement out of picture and making Reconstruction Finance Corporation agency to dispose of all surplus discussed: Book 715. page 58 d) HMJr will tell Sullivan he has decided "it's better to have disposal all in one place": Book 715, pages 60,62 1) Sullivan-HMJr conversation: Book 715, pages 64.71 2) Sullivan's attitude reported by HMJr to Gaston: Book 716, page 69 3) Sullivan's plan for an organization within Procurement Division reviewed: Book 715, pages 91.99 4) Sullivan's speech at Manchester, New Hampshire, on surplus property disposal: Book 715, page 103 e) Bill creating Office of War Mobilization and Demobilization: Book 715, page 112 Status of surplus property reported tr Procurement Division by War Department during Ansember 1913 Haas memorandum: Book 715, page 114 Conference; present: HMJr, Gaston, Smith, O'Connell, McConnell, and Lynch - 3/28/44: Book 715. page 138 a) Smith drafts of letters to FDR and Senator George discussed Conference: present: HMJr, Hancock, Clayton, Sullivan, McConnell, O'Connell, Lynch, Gaston, and Smith - 3/29/44: Book 716, page 1 a) HMJr: George's bill provided good time to reconsider whole situation; advocates "one Department and one head" b) Hancock originally held this view - has now changed his mind c) Clayton agrees with Hancock; his organization is simply a policy-making one Treasury group discussion after Clayton and Hancock leave - 3/29/44: Book 716, page 5 a) McConnell worried at Clayton-Hancock reactions to Treasury attitude - 3/30/44: Book 716. page 232 Transactions by volume, July 1943 to date - 3/29/44: Book 716, page 32 Regraded Unclassified - 8 - Book Page Schoeneman, George J. See Appointments and Resignations Spain See War Refugee Board State Department Hull's speech on foreign policy comments on finance: not cleared with Treasury: decision is to ignore - 3/23/44 713 145 Surplus Property See Procurement Division - T - Turkey See War Refugee Board - U - U.S.S.R. See Financing, Government: Lottery If War Refugee Board Unitarian Service Committee See War Refugee Board United Kingdom See also War Refugee Board Petroleum: Cox memorandum on inventories - 3/23/44 171 - V - - War Refugee Board Nansen Passport - history of - 3/22/44 44 China: American Embassy, Chungking, reports on "protection of victims of enemy oppression" - 3/22/44 51 Portugal: Unitarian Service Committee European representative, Robert C. Dexter, to represent Board in Lisbon - 3/22/44 65 Spain: Hayes cable vigorously criticises Sequerra: all Embassy business to be transmitted through Blickenstaff - 3/22/44 69,71 Turkey: Board cable to Steinhardt and Hirschmann concerning shipping for evacuation of refugees from Balkans - 3/22/44 78 Zionist Party membership: Rumor that paid-up members receive priority in getting exit visas from Balkans and entry certificates into Palestine reported by Hirschmann - 3/23/44 227 Latin American passports for internees in French-German camps discussed in memorandum from Agudas Israel World Organization - 3/23/44 175 Regraded Unclassified - V - - (Continued) Book Page War Refugee Board (Continued) United Kingdom: Ministry of Economic Warfare meeting to discuss Swise reception of children from German-occupied countries - - 3/23/44 713 182 India: Payment of quota for Intergovernmental Relief Committee approved - - 3/23/44 189 Poland: Jewish National Committee memoranda forwarded by Nahum Goldmann - - 3/23/44 196 U.S.S.R.: Ambassador Harriman reports on progress of negotiations for cooperation - 3/24/44 354 War Savings Bonds See Financing, Government White House Defense of: Realignment of troops - Major General Lewis (Headquarters, Military District of Washington, D.C.) memorandum - 3/24/44 320 - Y - Yugoslavia See Foreign Funds Control - z - Zionist Party See War Refugee Board Regraded 1 March 22, 1944 10:29 a.m. HMJr: Hello. Operator: She's coming on. Other Operator: Here's Mrs. Brady. Dorothy Brady: Hello, Mr. Secretary. HMJr: How are you all? B: All right. How are you? HMJr: Fine. Look, Dorothy, have you got a pencil? B: Yes, sir. HMJr: The President has with him a declaration about the refugees and -- uh -- directing it at the Germans and so forth -- that they should treat them better. You see? B: Uh huh. HMJr: He's had that for a week or ten days and when I saw him Saturday -- then Saturday afternoon Sam saw him -- and they sent it over to the State Department and they gave the English two days to say that they'd join them. You see? B: Uh huh. HMJr: Now, when I saw the President, he said he needed something to hang it onto. You see? B: Uh huh. HMJr: Well, now that the Germans have marched into Hungary, it's an ideal time to issue such a statement. B: Uh huh. HMJr: You see? B: Uh huh. HMJr: And I just would like to bring that to his attention. Regraded Unclassified 2 - 2 - B: Uh huh. HMJr: That this would be perfect timing. B: Uh huh. HMJr: And, of course B: You mean, to release it to the Press? HMJr: That's right. B: Uh huh. HMJr: And he -- Mr. Hull told us yesterday that -- that his instructions were only to give the English two days. B: Uh huh. HMJr: But this is a late afterthought -- of course, if it could come -- if this statement could not only come from Roosevelt and Churchill, but also from Stalin, it would be pretty strong notice that they -- the Germans can't murder all these people in Hungary and Rumania. You see? B: Uh huh. Uh huh. HMJr: And if somebody doesn't say something, there's going to be a million or more people most likely murdered in Hungary and Rumania. B: Uh huh. All right, well, I'll get -- make a memorandum of this and get it to the President. HMJr: Would you? And B: Yes, sir. HMJr: And then one other thing -- I spoke to the President about making John Pehle full Director. He's only Acting Director. B: Uh huh. HMJr: And the President also said that he wanted some occasion. Well, you can tell the President I've brought it up at the War Refugee Board meeting yesterday and -- making Mr. Pehle permanent is both agreeable to Mr. Hull and to Mr. Stimson. Regraded Unclassified 3 - 3 - B: Uh huh. HMJr: See? B: Uh huh. HMJr: And I think if he tied the whole thing up in one package B: Uh huh. HMJr: You see? B: Uh huh. HMJr: would be B: All right. HMJr: This would be -- and he -- would be -- and he said he wanted to do the Pehle thing when there was some occasion to do it. You see? B: Yes. HMJr: So B: All right. Well, I'll get word to him. HMJr: I thank you. B: You're welcome. HMJr: Hello. Regraded Unclassified 4 March 22, 1944 2:36 p.m. HMJr: Hello. Operator: Miss Tully is with the President. Mrs. Brady 1s there. HMJr: Okay. Operator: All right. HMJr: Hello. Dorothy Brady: Hello. HMJr: Hello, Dorothy. B: Yes, sir. HMJr: Have you a pencil handy? B: I have. HMJr: Last Saturday when I saw the President, I discussed with him at great length the fact that Mr. Randolph Paul wanted to resign as General Counsel. B: Uh huh. HMJr: And the President told me to accept his resignation promptly. As he is a Presidential appointee B: Uh huh. HMJr: he resigns to the President. B: Uh huh. HMJr: I have his resignation here B: Uh huh. HMJr: and a suggest -- a draft of a letter. B: Yes. HMJr: for the President to sign. B: Uh huh. Regraded Unclassified 5 - 2 - HMJr: I would like to send that over to you. B: I would be happy to receive it. HMJr: And get the President to sign it. B: Uh huh. All right. HMJr: Now, when they want to give it out, if Mr. Early would collaborate with Mr. Gaston over here B: Uh huh. HMJr: .... they can decide how they want to give it out. B: All right. HMJr: Now, do you think -- if Grace is with the President, does that mean that you won't get to him today to sign anything more? B: No, sir, it does not mean that. HMJr: I see. B: I will -- as soon as you send it over to me, I will send it over to her and, I'll put a little note -- I think it will probably be a good idea if I took your draft and wrote it up so that if he likes, it, he can sign it. HMJr: Well, it's on White House stationery already. B: Oh, it's already -- uh huh -- but it doesn't say "draft"? HMJr: No. B: Uh huh. So thay in case he wants to sign it, he can. HMJr: He can. B: All right. Well, that will be fine. Then I'll just put a little note on it for -- if it's to be released, for Mr. Early to get in touch with Mr. Gaston and we'll let you know. Regraded Unclassified 6 - 3 - HMJr: It will be there within fifteen minutes. B: All right, sir. Thank you. HMJr: Thank you. 7 THE GENERAL COUNSEL OF THE TREASURY WASHINGTON March 22, 1944 My dear Mr. Secretary: I transmit herewith the original of my letter to the President, resigning as General Counsel. I assume that you will see that the letter is forwarded to the President. I should like to accept your kind offer to make a temporary appointment as Assistant to the Secretary. In doing so, I would like to be free to resign from this appointment on short notice. So far as I know, I shall be around town for a period, and I shall be very glad to do what- over is necessary to help my successor in the assumption of his new duties. Sincerely, The General Counsel Hon. Henry Morgenthau, Jr., Secretary of the Treasury. Enclosure FORVICTORY BUY UNITED STATES WAR BONDS AND STAMPS Regraded Unclassified 8 Paul's draft- MAR 22 mat 1944 used My dear Mr. Secretary: I transmit herewith the original of my letter to the President, resigning as General Counsel. I assume that you will see that the letter is forwarded to the President. I should like to accept your kind offer to make a temporary appointment as Assistant to the Secretary in order that I may for the present draw leave pay. In doing so, I would like to be free to resign from this appointment on short notice. So far as I know, I shall be around town for a period, and I shall be very glad to do whatever is necessary to help my successor in the assumption of his new duties. Sincerely, (Signed) Bandolph Paul, General Counsel Hon. Henry Morgenthau, Jr., Secretary of the Treasury. Enclosure REP/kfa Regraded Unclassified 9 March 22, 1944 My dear Mr. President: I came to Washington in 1941 with & commitment to devote myself to the then forthcoming Revenue Bill. Since that time I have represented the Administration and the Treasury before Congress on three tax bills. The fourth one, a technical measure to simplify the individual income tax, is, I am glad to say, well on its way to enactment. I believe I can contribute little more at present in this special field and I should, therefore, like to submit my resignation as General Counsel of the Treasury. I take this occasion to express again my warm admiration for your steadfast courage in advocating the realistic tax program which the times demand. It has been 8. great pleasure and satisfaction to work under your leadership and that of Secretary Morgenthau. Please believe me always at your service for any further contribution I can make to the war effort. Sincerely yours, (Bigned) Randolph Pam3 General Counsel. The President, The White House REP/kfa Regraded Unclassified 10 Acceptance letter prepared for President's signature 11 March 22, 1944. Dear Randolph: In view of your decision as expressed in your letter of March 22, I accept with great regret your resignation as General Counsel of the Treasury Department. The difficult labors you have performed during the last three years, particularly in the field of tax policy and in the formation and presentation to the Congress of a wartime revenue program, have been of the highest value to your country. You have my personal gratitude and good wishes. Sincerely, Mr. Randolph Paul General Counsel, Treasury Department Washington, D.C. Wr Regraded Unclassified 12 March 22, 1944. Dear Randolph: I am forwarding your letter of resignation as General Counsel to the President as you re- quested. This I do with a great deal of reluctance, as I have already indicated to you. You have done invaluable work in your career in the Treasury and I am personally grateful for it. I appreciate also your offer to help your successor when he is chosen. We shall naturally want to take advantage of it. Sincerely, (Signed) Henry Morgenthau, Jr. Secretary of the Treasury. Mr. Randolph Paul General Counsel, Treasury Department Washington, D.C. HEG/mah Regraded Unclassified 13 March 22, 1944 MEMORANDUM FOR THE SECRETARY'S DIARY: Secretary Morgenthau called me at 5:42 p.m. today and said that Miss Tully had called him at 5:40 p.m. and indicated that the President was going to give out his statement at his Friday press conference, and that he was not going to wait for the British or anyone else to join in the statement. Secretary Morgenthau asked Miss Tully whether the President would, at the same time, announce the "Acting" had been dropped from my title. Miss Tully said that she had not heard of this and the Secretary told her of his previous conversation with Mrs. Brady. Miss Tully had not heard of this conversation but said that she would pass along to the President the thought that the issuance of his statement would be a good time for him to make the announcement concerning the change in title. Justrule Regraded Unclassified 14 March 22, 1944 Dear Mr. Jones: In accordance with your request, I am enclosing herewith, for your confidential information, a copy of the stenographic minutes of the meeting held in Secretary Morgenthau's office Friday, March 17, 1944. Very truly yours, (Signed) Joseph J. O'Connell, Jr. Joseph J. O'Connell, Jr. Assistant General Counsel Mr. Howard T. Jones Executive Secretary Distilled Spirits Institute Room 1137 National Press Building Washington, D. C. Attachment JJO'C.Jr/1sw sent by moon Today Regraded Unclassified 15 March 22, 1944 Dear Mr. Baldridge: In accordance with your request, I an enclosing herewith, for your confidential information, a copy of the stenographic minutes of the meeting held in Secretary Morgenthau's office Friday, March 17, 1944. Very truly yours, (Signed) Joseph J. O'Connell, Jr. Joseph J. O'Connell, Jr. Assistant General Counsel Mr. Holmes Baldridge Special Assistant to the Attorney General Department of Justice Washington, D. C. Attachment JJO'C.Jr/lsw Regraded Unclassified 16 March 22, 1944 Dear Mr. Emerson: In accordance with your request, I am enclosing herewith, for your confidential information, a copy of the stenographic minutes of the meeting held in Secretary Morgenthau's office Friday, March 17, 1944. Very truly yours, (Signed) Joseph J. O'Connell, Jr. Joseph J. O'Connell, Jr. 2 Assistant General Counsel Mr. Thomas I. Emerson, Deputy Administrator Office of Price Administration Washington, D. C. Attachment JJO'C.Jr/lsw Regraded Unclassified 17 March 22, 1944 Dear Mr. Sourwine: In accordance with your request, I an enclosing herewith, for your confidential information, a copy of the stenographic minutes of the meeting held in Secretary Morgenthau's office Friday, March 17, 1944. Very truly yours, (Signed) Joseph Γ. O'Connell, in Joseph J. O'Connell, Jr. Assistant General Counsel Mr. J. G. Sourwine Counsel Liquor Investigating Subcommittee Senate Judiciary Committee United States Senate Washington, D. C. Attachment JJO'C.Jr/lsw Regraded Unclassified 18 March 2, 1944 Dear Dr. Morgan: In accordance with your request, I an enclosing herewith, for your confidential information, a copy of the stenographic minutes of the meeting held in Secretary Morgenthau's office Friday, March 17, 1944. Very truly yours, (Signed) Joseph J. O'Connell," Joseph J. O'Connell, Jr. Assistant General Counsel Dr. D. P. Morgan War Production Board Room 1007 Temporary S Sixth and Jefferson Drive 8. W. Washington, D. C. Attachment JJO'C.Jr/lsw Regraded Unclassified 19 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Secretary Morgenthau March 22, 1944 FROM Joseph J. O'Connell, Jr. Mr. Haas has asked me to advise you whether there is authority under existing law to distribute prizes to holders of outstanding savings bonds as an induce- ment for the continued holding of such bonds; and also as to whether there is authority under existing law to make a similar arrangement with respect to bonds still to be issued. Unfortunately, we are confronted at the very out- set with the Federal anti-lottery statute (section 213 of the Criminal Code). The statute is quite un- compromising in its terms and, in my judgment, operates as an effective bar to any plan involving a lottery feature. The statute provides that "no letter, package, postcard, or circular concerning any lottery, gift, enterprise, or similar scheme offering prizes dependent in whole or in part upon lot or chance *** shall be deposited in or carried by the mails of the United States, or be delivered by any postmaster or letter carrier. A similar provision exists with respect to the use of the radio. In this connection, you might be interested in a bill introduced several months ago by Congressman Gale, a Republican Congressman from Minnesota, which was referred to the Committee on Ways and Means (where it has remained inactive up to the present time), a copy of which is attached. This bill would, if enacted into law, authorize the practice of distributing prizes as an incentive to individuals to purchase and to hold Series E bonds. Attachment Regraded Unclassified 20 78TH CONGRESS 1st SESSION H. R. 3784 IN THE HOUSE OF REPRESENTATIVES DECEMBER 6, 1943 Mr. GALE introduced the following bill; which was referred to the Com- mittee on Ways and Means A BILL To promote the sale of United States savings bonds by means of a premium plan. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 That the Secretary of the Treasury is hereby authorized and 4 directed to pay premiums to individuals who are registered 5 owners of United States savings bonds, series E, which may 6 have been heretofore issued or which may be issued in the 7 future. 8 SEC. 2. From among all the bonds of the issue or issues 9 heretofore described in section 1, the Secretary of the 10 Treasury shall select by number or symbol, and by lot, in 11 an impartial manner, those bonds which shall be entitled to Regraded Unclassified 2 1 premiums, except that no bond which has been selected for 2 any premium shall be eligible for participation in any sub- 3 sequent selection. 4 SEC. 3. In making selections by lot, every United States 5 savings bond, series E, as described in section 1 and bear- 6 ing a maturity value of $25, shall have an equal chance of 7 selection. Bonds of the issue described in this section, but 8 of greater maturity value than $25, shall have as many 9 chances of being selected by lot as the number twenty-five 10 is contained in the maturity value of the bond. 11 SEC. 4. Beginning within ninety days after the enact- 12 ment of this Act, selections shall be made from time to time 13 at stated intervals by the Secretary of the Treasury, but shall 14 not be made more than ninety days apart. 15 SEC. 5. The Secretary shall, by regulations, prescribe a 16 schedule of premiums for the bonds 80 selected except that 17 the first premium shall not be less than $25,000, and no 18 premium shall be less than $100. 19 SEC. 6. The premiums provided for in section 1 shall be 20 paid in the form of bonds of the United States issued under 21 the Second Liberty Bond Act, as amended, and the purposes 22 for which bonds may be issued under that Act are hereby 23 extended to include the purposes for which bonds may be 24 issued pursuant to this section. The bonds issued pursuant to 25 this section shall have maturities and bear interest at such Regraded Unclassified 3 1 rate (in no event less than 21 per centum per annum) as 2 the Secretary of the Treasury may prescribe. 3 SEC. 7. Premiums paid under this Act, and the proceeds 4 of any bond issued pursuant to this Act upon redemption or 5 sale by the person to whom issued shall not be includible in 6 gross income for the purpose of chapter 1 of the Internal 7 Revenue Code. 8 SEC. 8. There are authorized to be appropriated such 9 sums as may be necessary to carry out the provisions of this 10 Act. 21 MAR 22 1944 & My dear Mr. Chairmant Receipt is acknowledged of your letter of March 15, 1944, enclosing copy of a proposed additional report of the Joint Committee on Reduction of Nemessential Federal Expenditures entitled "Report on the Budget and Unexpended Balances of the Federal Government" and requesting by comments and suggestions. with respect to the propesed report, it seems to se that its general temor is one of criticiem, either directly or by implication, of the Apprepriations Connittees of the Congress. I refer, for example, to page 3 where attention is called to the fact that appropriations are outrunning expenditures to an incrdinate degree, resulting in large and unvarrented uner- pended balances being available to the agencies of the Govern- ment engaged in VAP activities, and to page It where the state- ment is made that such large continuing excesses can result only in unjustifiable extravagence and waste. I - sure you appreciate that as Secretary of the Treasury I would not want to join is any direct or implied criticiem of the Appropriations Committees, even if such criticies should be varranted, and I do not believe say criticism of these Committees 18 varranted. The nature and sise of our for-flung war activities make 18 imperative that the arned forces be given ample appropriations with which to plan their programs. The Var and Nevy Departments must formulate leng-range plans for the complete mobilisation of our conhat ferees and for the provision and equipment of our Army and Navy, and before they can make contracts w incur obligations under our laws, Congress must first sake the Recessary appropria- tions for such purposes. the sise of our arned ferees and the extent of our participation is the VaP require that huge appro- printiens be placed under their centrol. The Appropriations Committees of the Congress have recognised this situation and have granted to the services appropriations of sume that are needed for a successful presecution of the var. There may be CASOS where emberquent events shew that too any funds have been granted for particular purposse, but on the whole 1 believe the Committees have performed & venderful job is support of our armed forces. These matters are under constant scrutiny by the Budget Bureau and the Committees from time to time and adjustments in appropriations are made as the situations varrant. It I to no that this is as 18 should be. Regraded Unclassified 22 - 2 - There are other phases of the Committee report n which I should like to comment. On page 1 the estimated public debt is projected far beyond the President's budget for the fiscal year ending June 30, 1945, which is prodicated upon a continuance of the var, and & figure of a potential debt of over 400 billion dollars is arrived at. I do not think that it is practical at this time for any agency to endervor to project the public debt or the state of the Federal finances beyond June 30. 1945 is view of the may mear- tainties which such projections involve. The paremount factor in these projections depends on the termination of the Valle On page 5 the statement 10 nade that "ve are rapidly reaching a situation whereby the magnitude of our public dobt is a great peril to our future security." I do not believe that any committee, especially one which has enjoyed such prestige at the Joint Committee on Reduction of Nonessential Federal Expenditures, should make my statements which might raise questions in the minds of the general public as to the integrity of the public debt without a searching inquiry and a precise statement of the resulting conclusions. The securities representing our debt are owned by the American people and their institutions. The individual citizen of this country now holds a greater proportion of our debt than ever before in its history. We are constantly being advised of rumors with which enemies at home are undoubtedly trying to influence our people to lessen their support of the var effort by not purchasing var bonds. I as sure you appreciate that the continuence of confidence in the public credit is of the highest necessity for our security. On page 5 of the proposed report, a recommendation is made that the Appropriations Committees analyse the unobligated balances submitted W all agencies to determine wherein their requests for appropriations were excessive. This seens to me to be unnecessary at this time because it has been my experience that the Appropriations Committees " thoroughly into all requests for appropriations, and in this operation they have access to all data with respect to appropriations and expenditures of the oxecu- tive agencise. It is my opinion that the second recommendation that unebli- gated balances of ensual appropriations be lapsed and returned to the Treasury at the end of each fissal year is not practicable. Experience has shown that 18 10 not possible to arrive at a definite amount of unliquidated obligations on the last day of a fiscal year. and the procent law recognises this situation by providing a two-year puried during which the emount of such Regraded Unclassified 23 - 3 - obligations can be determined and liquidated. Even If such unobligated balances could be accurately assertained I de net see that say money would be saved because no further obliga- tions can be insurred after the elose of the year. It 10 not clear as to what is contemplated by the third recommendation that the practice of granting deficiency and supplemental appropriations during the fiscal year be reorgan- ised and a more practical procedure be put into effect imedi- ately. By virtue of the fact that new situations and changed conditions are constantly developing, and during the var more so than in ordinary times, it is impossible to foresse all requirements for appropriations in advance of their actual need. Very truly yours, (Signed) I Morgenthan, Ii Sepretary of the Treasury Honorable_Harry F. Byrd Chairman, Committee Va Reduction of Nonessential Federal Expenditures Congress of the United States Washington, D. 0. WTH:mlb 3-21-44 Regraded Unclassified Congress of the United COMMITTEE - OF CREATED PURQUANT TO - 601. OF THE REVENUE AGT of teat March 15, 1944 Monorable Henry Morgenthau, Jr. The Treasury Department Washington, D. C. Ky dear Mr. Secretary: I - enclosing a copy of the Committee's report on Unexpended Balances. I should appre- ciete your comments, suggestions end approval. It is our hope that it can be presented to Congress within the next few days. With kindest regards, I a Faithfully yours, Hany 7 Pura on on R 40 EC&E USA Trian Regraded Unclassified 25 March 22, 1944 FROM: SECRETARY MORGENTHAU TO: DR. WHITE All matters between the Treasury and the Bureau of the Budget must be cleared through the office of the Under-Secretary. I have, therefore, sent your letter giving the Treasury's views on the proposed Executive Order "establishing the Executive Committee on Economic Foreign Policy" to Mr. Bell for clearance. 26 Taken from the Wednesday, March 22, 1944 Congressional Record. o 27 2990 CONGRESSIONAL RECORD-HOUSE MARCH 22 A. A. A. to act as a board or an agency much of anything clas, 1 did, however, TO ADDRESS THE DOOR: to determine who is entitled to farm find that I could not gt the War Food Administrator, my friend, Mr. Marvin Mr. Mr. Speaker, I ME machinery, or has the Congress ever au- unanlmous consent that an thorised the A. A. A. to determine under Jones, to write me that the employee the A. A. A. program which farmers are had exceeded bis legal suthority. One at the conclusion of the legislative pro- entitled to gasoline to be used not in their of Mr. Jones' underemployees wrote mo ETSED of the day and following any lips quoting the provisions of the Executive clal orders heretofore entered, I may be tractors but on the highways? If the permitted so address the House for 15 gentleman can answer those questions order, where this authority was supposed minutes. and say that those of us who have crit- to come from. This is where these small The SPEAKER la There objection to icised the A. A., A. for sending out in- people In big places can harm any pro- the request of the gentleman from formation to farmers now that these gram. They should be replaced by peo- Illinois? things I have just mentioned will be used ple who have the right attitude in regard There was no objection. in considering whether they are going to the public. I imagine that to part of to permit a farmer to have machinery the directive under which these other MONETARY STABILIZATION or whether they are going to permit him things you complain about operate, The SPEAKER. Under - previous or to be deferred, that is another thing en- though I do not want to be too sure on der of the House, the emileman from tirely. I have criticized the A. A. A. for that point.. Olalo (Mr. SMITH] is recognized for 1 that and I still criticize it. I do not Mr. CUNNINGHAM. Will the gen- hour. know where the Congress has ever au- tleman yield? (Mr. SMITH of Ohio asked and Was thortsed them to do anything of that Mr. MURRAY of Wisconsin. I yield given permission to revise and extend hir kind. to the gentleman from Iowa. remarks tax the Racord) Mr. MURRAY of Wisconsin. may say Mr. CUNNINGHAM. What will the A FUNTRES STUDY OF THE name actives TO to the gentleman from Oklahoma that be situation be in 1944 in regard to the secure CONTROL OF CNITED STATES octa DOM- has not asked one question, but several farmers being able to get more ma- MONLY AXPESSED TO as DIE questions. If I were to answer the ques- chinery? THAT PROPORAL FOR SIN INTERNATIONAL the tions from the knowledge I have at this Mr. MURRAY of Wisconsin. It is KO- ILEATION FUND moment, I would say: I presume what Ing to be the same problem as to whether Mr. SMITH of Ohio. MI, Speaker, the the gentleman refers to are the activi- the farmer will get more overalls or not. present study should be considered in ties of the War Food Administration There is plenty of steel for farm ma- connection with & paper I presented on which do not necessarily come under the chinery. It In simply & matter of man- this subject to the House November 1 A. A. A. In most, If not all the States, the power. As far as the overalls are con- 1943. In that paper I established what Chairman of the A. A. A. happens to be cerned, there is plenty of cotton, be- I believe to be conclusive proof that there the head of the War Food Board. I pre- cause we are pretty nearly giving It away are not two plans, a British plan for aff sume that those things that the gentle- to make Insulating material. It to a International clearing union and an man complains of are done under the matter of manpower and getting It Into American plan for & united and associ War Food Boards rather than by the the cheaper garments. Those are prob- sted nations stabilization fund, but that A. A. A. set-up. That would be my un- lems we have to meet. there is in reality only one plan; namely derstanding of the organization at the Mr. TARVER. Mr. Chairman, I ask the British plan. Benjamin M. Anderson present time. In most cases they are the unanimous consent to revise and extend has asserted as much-Anderson, Benja- same individuals, If there is any law it the remarks I made in the Committee of min M., Post-war Stabilization of Por- comes under the powers that have been the Whole. eign Exchange: the Ecynes-Morgenthau delegated to the War Food Administrator The CHAIRMAN, Is there objection Plan Condemned; Outline of a Funds- by Executive order and is not part of any to the request of the gentleman from mental Solution, in the Economic Bulle- law passed. by the Congress. Georgia [Mr. TARVEN)? tin, Capital Research Co., Les Angeles, Mr. RIZLEY. Does the gentleman There was no objection. Calif., May 11, 1943. For many years eco- say that by Executive order the War Mr. TARVER. Mr. Chairman, I move nomic adviser to the Chase National Food Administration has now been given that the Committee do now rise. Bank in New York, Dr. Anderson in now authority to determine who is entitled to The motion was agreed to. professor of economics, University of a draft deferment as an essential Accordingly the Committee rose; and California at Los Angeles. farmer? the Speaker having resumed the chair, Dr. Melchlor Palyl states that the Mr. MURRAY of Wisconsin. I would Mr. WHITTINGTON, chairman of the Com- two plans "deal practically only with say It may have been so construed. mittee of the Whole House on the state the problem of Great Britain-Palyl, There is a rather broader interpretating of the Union, reported that that commit- Dr. Melchior, Some Implications of of many laws and orders. tee, having had under consideration the the Keynes-Morgenthau International Mr. RIZLEY. Does the gentleman say bill H. R. 4443, the Department of Agri- Clearing Pool, an address delivered at culture appropriation bill, 1945, had Union League Club, Chicago, April 28, further that the War Food Administra- come to no resolution thereon. 1943, and reprinted from the Great tion, by Executive decree, has been Lakes Banker. July 1943. authorized to determine who shall be en- EXTENSION OF REMARKS Indeed, I think the proof is clean 1b titled to a quota of farm machinery? Mr. HARE. Mr. Speaker, I ask uari- that paper that the officials of the ad- Mr. MURRAY of Wisconsin. If the mous consent to extend my own remarks ministration who are responsible for gentleman will look up the law under in the RECORD at the conclusion of the having drawn up the draft for a "united which this power has been delegated, 1 debate on the rivers and harbors bill. and associated nations stabilization am sure he will find it is quite broad, The SPEAKER. Is there objection to fund" did practically nothing but copy and he will find that the Interpretation the request of the gentleman from South from and reword and rephrase the text of of it is very, very broad, It will Include Carolina? the British proposal for an interna- most anything. as I found out last sum- There was no objection. tional clearing union M outlined in the mer when a certain employee of the War (Mr. .MURRAY of Wisconsin asked and British white paper. Meat Board was telling all the farmer was given permission to extend his own Several other points contained in the butchers in my particular district that, remarks in the Racoan.) November 1: paper should be kept in If they did not have a new slaughter- Mr. PATMAN. Mr. Speaker, I ank mind in considering the present study. house within 10 days, he would cancel unanimous consent that the gentleman The scheme would Involve the complete their permit to slaughter. That is what from Texas (Mr. LUTHER A. JOHNSON] be abandonment of the International gold I ran into last summer. I later found permitted to revise and extend the re- standard as this term has been used and the writer of the letter did not have per- marks be made today and Include there- understood since gold has been used In mission to write the letter from any su- in a letter from Mr. Leo Crowley. international trade and commerce down perior officeholder. I did find out that The SPEAKER. Is there objection to to the present time-all protests by the he must have been a political appointee, the request of the gentleman from promoters of the scheme to the con- as his service record showed no expe- Texas? trary notwithstanding. It would sub- rience whatsoever in regard to meats, or There was no objection. stitute for the gold standard a fictitious Regraded Unclassified 28 1 CONGRESSIONAL RECORD-HOUSE international monetary unit called mand liabilities. The primary purpose To further explanation of Lhw Arm "unitas" which would not be gold but of the present study is to show which (2) which precedas the Mr. whose value would be fixed by politicians countries have and which countries ao uses EX column 2. IS should De stated that in terms of gold, but not unalterably. not have free gold to meet thefr pro- sold exchange, 48 distried as page su a The currency of each country belonging posed gold quotas, the July 1920 Poderal Americ Individual to the scheme would in turn be arbi- The accompanying table shows the means exchange movertible Into gold. trarily fixed by politicians In terms of pertinent data relating to this problem The percentage fleuro shown in ml- unitas, but also not unalterably. The for 31 of the 43 so-called United and An- umo 2 does and always correspond with main characteristic of this device would sociated Nations which we are told would the figure actually used in computing For be Its high degree of political variability become members of the scheme. strve requirements because of certain which would give 16 the desired political Date relating to the Amount of circu- qualifying factors. This apparent - manipulability aimed at by Lord Keymes lating notes and other demand liabilities crepancy is clartfied in the 26- and his coworkers. Along with the de- and gold holdings were furnished me by lating to the country concerned. struction of the international gold the Federal Reserve. Data relating to Observe that, sithough both the etr- standard. this artifice would, of course, contributions to the scheme were fur- culating notes and other demand liabili- also destroy the supremacy which the nished me by the Treasury. thes are shown for each country $15 sut- United States dollar now holds in Inter- Four sources showing the legal require- umns 4 and 6 that the percentage flure national trade, which is no doubt one ments for gold reserves against demand in column 2 has not always been applied of the objectives of the scheme. liabilities have been made available to to both of the above two figures. Bome The scheme would also Involve the me, namely, the Federal Reserve Bulle- countries require gold reserves resided assumption by the United States of per- un for July 1936; Treasury data for-about circulating notes only and others eggainst haps $5,000,000,000 or more of British 13 Latin-American countries: the Law both circulating notes and other demand debts which Britain owes South Amer- Library of the Library of Congress; and Liabilities. Purthermore, the require- ican countries, Belgium, Scandinavian Moody's Manual of Investments for 1943. ment for notes may be different than the countries, and her colonies and domin- A. footnote will be appended to the ODS for other demand liabilities. The lons. This would be accomplished sub- name of each country on the table show- footnole for each country will clarify stantially with United States gold. Al- Ing the legal reserve requirements as these points. though the United States would furnish furnished me by one or more of the It should be understood that the com- the vast bulk of the capital In the form above-mentioned sources. As will be putations showing the amount of gold- of gold, yet our country would be hope- noted. the data for some countries are reserve requirements against demand lessly in the minority in respect to con- incomplete. uncertain, and apparently liabilities as well as the amount of free trol. The present study will show this conflicting. Where doubt or uncertainty or unpledged gold or lack of same are of picture to be even more unfavorable to exists I have sought to use the data which necessity quite inexact. This is true be- the United States than was shown in provide the least amount of reserves and cause in mom cases up-in-date data and my revious paper, to apply the statute of the most recent to many complete figures are unavail- control of our money, which is date. able. Figures showing gold boldings and vested in Congress by the Constitution, I have quoted the several sources show- circulating notes and other demand lia- would be given over to an international ing legal reserve requirements for the bilities are frequently of different dates. monetary authority which would also purpose of presenting the apparent un- Numerous other qualifying factors are have far-reaching and dictatorial pow- certainties, lack of uniformity and gen- involved. In several cases I could not be ers over our domestic economy. Great erally unsatisfactory conditions in this certain as to the correct percentage fig- Britain would be the dominating power part of the monetary field. However, I ure to be applied for computing the in the scheme. have done this more expressly to indicate amount of required gold reserves and The computations. In the November 1 something of the progressive deteriora- accordingly some errors are likely to be paper relating to contributions were tion of the standard unit of value and found in those computations. The best I based on a total capitalization of $6,- the gravity of the monetary, pathology have been able to do with the material at 000,000,000. Since then, as stated in a that now afficts nearly if not all of the hand is to give a rough approximation letter to me by the Treasury, the admin- countries we are to believe would be- of the true picture. But whatever In- Istration has changed this figure to $8,- come participants in the scheme. exactness and error may be involved in 000,000,000. Accordingly the computa- The 31 countries represented on the the figures which would show conditions tions will in the present study be based to be worse then they really are, this table are divided into 3 categories, name- on the latter figure. would be more thkn onset by the fact It will be noted in referring to column ly, (a) those countries having no free that they are now much werse than the 2 in the table which la to follow that the gold, which number 14; (b) those coun- tries having free gold, which number 16; table shows and are continually grow- aggregate of contributions listed does not Ing worse at an accelerated rate of apeed. come to $8,000,000,000 but only $6,560.- (c) the United States. Neither in this nor my paper of last 000,000. The aggregate of the contribu- With respect to the remaining coun- November has the administration's for- tions of the countries not shown on the tries that would become members of the mula for determining gold quotas for table would apparently not be sufficient scheme, I have been unable to obtain any member countries been strictly adhered to make up this difference. However, data that are of value to this study. to. Section II-S of the administration's Treasury officials Inform me that the per- Those countries are Iceland, the Philip- revised draft of the Keynes scheme pro- centage figures given me for computing pines, Panama, Luxemburg, Iraq, Hon- vides in most cases that the amount of contributions are tentative and subject duras> Halti, Ethiopia, Dominican Re- free foreign exchange held by B country to change. Further, that "before com- public, Paraguay, Nicaragua, and Iran. is to be given a certain amount of weight puting individual quotas there shall be According to Federal Reserve and Treas- in determining the gold quotas. Both reserved an amount equal to 10 percent ury data, though sometimes conflicting the Treasury and Federal Reserve In- of aggregate quotas to be used as a special with each other. Panama, Iraq. Ethiopia, formed me that they had no data re- allotment for equitable adjustment of and Dominican Republic make no re- lating to this Item. This, however, could quotas," B5 provided in II-4 of the ad- ports of their gold holdings, while In the not materially affect the results of the ministration's revised draft. The irrec- case of some of the others no flgures study. oncilability of these figures would seem respecting gold holdings are at present With respect to several countries, be- to of no particular importance to the available. Paraguay and Nicaragus require no gold reserves against their de- cause of incomplete and unsatisfactory of this study. mand liabilities. From such data as are data, principally in Latin America, no In my November 1 paper I raised the available to me It would appear that all attempt has been made to compute the question of the availability of free or un- amount of required gold reserves. pledged gold in the countries that would of these countries together must possess such & very small amount of gold that By referring to columns 4 and 5 on the belong to the scheme for their allegedly leaving them out of consideration could table It will be seen that the grand total assigned contributions to the fund. By not possibly make any material differ- of circulating notes and other demand free or unpledged gold is meant gold in ence to the results of this study. Itallities of the 13 nonfree gold-holding excess of that pledged as cover for de- No. 53-11 Regraded Unclassified 28 2992 CONGRESSIONAL RECORD-HOUSE MARC countries-China not included-is $20,- ible into gold on demand, the United states and conclude agreements with 000,000,000. By referring to column States would actually contribute in gold them." See full test of Mololov Flan No. 6 It will be noted that the amount of $2,255,000,000. Her total gold liability larging Autotions of 16 of Libe Seviell gold reserves required against their total would be the same as her total contribu- Republics, New York Them. Pobruary 2, demand liabilities-omitting gold Té- tion. The nonfree gold-holding coun- 1044. serves required by United Kingdom- tries, number 14, would have no gold Iln- What the purpose et this new acredge- would be $7,300,000,000. By now refor- bility whatever. We stated the total gold ment may be la as yet not clear but 11 ring to column B It will be seon that the that would be available for contribu- could be used to somehow match the oon- total amount of gold holdings of those 12 tions by the 16 free gold holding coun- trol of other nations, particularly that of nonfree gold-holding countries to only tries would be 4420,000,000. Now what Great Britain and the United States, to $2,300,000,000. Thus se will be that would be the total gold liability of the 16 order to secure greater advantage to her- those 13 nonfree gold-holding countries free gold-holding countries? Would it self in any internations) financial ar- have a shortage of $3,500,000,000 for be any more than the aggregate of their rangements that might be created. But meeting their statutory reserve require- gold contributions? Conceivably 11 whatever may be the object of this move. ments. might be more. But here we run into It is safe to my the Soviet Union could Looking now at column 13 we eee that some questions which show this whole not in any event give her consent to any the total amount of gold contributions proposal to be positively preposterous. proposal which would Involve outside in- of the 13 nonfree gold-holding countries Let us consider the case of Russie, terference with the price at which she would come to roundly $894,000,000. Her paper and gold contributions are net might be willing to buy or sell gold out- Since, however, those countries are de- at 4432,000,000 and $164,000,000, respec- side of her borders, or with her domestic ficient in gold to the amount of $3,500,- tively. The Treasury informed me that currency or any part of her Internal 000,000 for their demand liability cover- Russie makes no reports of her gold bold- economy. Since the Keynest-Morgun- age as shown in column 9-taking into Ings. November 22. 1943, the Federal than scheme would definitely involve consideration that no figure for China Reserve gave me the figure of $829,000,000 control by en International body over all is possible for this column-those coun- as the amount of gold Russia held Bep- of those things in Russia, we can safely tries would, of course, have no available tember 1935. conclude that she would not become a gold for international use in the form The Soviet Union is an absolutist state. full-fiedged participant in it. Hence the of such contributions. It is conceivable that she might pool A gold contribution assigned to her be- Let us now look at column 14 and com- portion of her gold on paper, or even by comes more of a fiction than a reality. pare the amount of gold the United delivering it into the physical possession Having eliminated Russia as anything States would be called on to contribute of some other country. That would de- but a possible limited partner in the plan, with that which the other 30 nonfree and pend on the benefits she could non accru- let us look for a moment at the other free gold-holding countries combined Ing to her by doing so. Lend-lease and countries In the free gold holding cate- would have available to meet their gold United Nations Relief and Rehabilitation gory with 6 view of determining the ex- quotas, leaving out of consideration for gifts and "loans" for reconstruction and tent to which they could be expect to the moment the paper portion of the development, which latter might be avail- actually make their gold available be contributions that would be made by the able to her in case the proposed Inter- scheme. The extent to which this would United States as well as that of all the national bank should be created, would be expected would of course, as in the other countries. no doubt be deciding factors. But It is case of Russia, depend upon the amount The United States would contribute in unthinkable that the Soviet Union would of concrete benefits they could see in 18 gold $1,172,000,000. The 30 other coun- consent to giving over to an international for themselves. We may be sure that the tries would have available for interna- body any power whatsoever over her other countries that would join this pro- tional use only approximately 6420,000,- money, or any other part of her economy. posed scheme would be realistic, that they 000 in gold to meet their quotas. On The basis of the whole Sovlet economy would do so understandingly and with this basis the United States would con- is the political ownership and control of their eyes glued to their material inter- tribute 73-plus percent of the gold cap- her gold and paper currency, just as this ests. The United States seems to be the Ital of the scheme while all the other is the basis of all dictatorship. Lewis only country In the world that not only countries combined would contribute Haney, professor of economics, New York has lost much of its mechanism for pro- only 26-plus percent. Yet the United University, in an article in the Washing- tecting its own material interests against States would be given a voting strength ton Times-Herald December 11, 1943, in foreign exploitation, but whose trusted of only 20 percent while the other coun- commenting on B certain press dispatch government officials willfully assist for- tries would have 80 percent. But this by from Moscow relating to "world banks eign Interests to Insinuate themselves In- no means shown the picture to be as bad and such things" gives the impression to our economy and government and In- as it really it. that Russian participation in the Keynes trude themselves upon our rights as a In my paper of last November, before scheme is impossible. "Russis balks" Is sovereign-power. I had completed the present study. I the caption of an article by Ralph Hen- stated: Section V-8 of the administration's dershot In the New York World-Tele- revised draft holds out a promise of con- The gold liability of the United States gram December 7, 1943, of which he is would be nearly four times that of the whole siderable benefit to at least some of the British Empire, yes the United State would financial editor. He then goes 00 to say of Russia: free gold-holding countries. This is par- have only 20 percent of the votes while the Licularly true with respect to those Latin- Empire would have 19 percent. And she wants nothing to do with schemes for an international bank, preferring to do American countries which have large I now find the United States would be business on a gold basts, The chances are sterling balances in London. The M- in a much more unfavorable position this will put a crimp in Britain's plans to sumption by the scheme of the British than was indicated at that time. The stabilize international currencies by placing debta which comprise those sterling bal- Union of South Africa is the only com- various and varied assets Into an Interns- ances would place those Latin-American ponent of the entire British Empire tional bank and issuing a new currency countries in n. position of being able to which possesses any free gold. She is against these Meeta, to be used in the settle- collect them from the United States. given a gold quota of $72,000,000. The ment of trade balances between participating gold quota of the United States would be nations. And It may very well give our Treas- Like Russia, lend-lease, Export-Import $1,172,000,000. Thus It is seen that, on ury officials reason to stop, look, and listen Bank loans, and loans which might be before throwing In with the British Idea. made available to them through the cre- the basis of available free gold the United States would contribute more than 16 Purthermore, It would seem another ation of an International bank for recon- complication may have arisen in connec- struction and development wou times as much gold as the entire British tion with Russian participation in this Latin-American countries to contribute the doubledly be further Inducements 171- Empire, yet the United States would be given only approximately the name per- British scheme. I refer to the announce- ment that recently came from Russia to some of their gold to the scheme. The centage of baste votes as the Empire, 20 and 19 percent, respectively. the effect that the Russian state is to extent to which the United States would Since United States paper dollars from be divided up Into 10 "republics," each indirectly, through these theans, furnish an International standpoint are convert- of which is to have power to separately to the Latin-American countries the very enter Into "direct relations with foreign Maseta they would contribute to the scheme could not help but be substantial Regraded Unclassified 29 1944 CONGRESSIONAL RECORD-HOUSE 2993 If can believe certain news items, the be made available for use in the opera- are lending thair support in the promo- Treasury to even now giving away gold tion of the scheme In the sense in which tion of this address believe we are diber to certain countries which would be used the term "use" is applied to the capital so naive M to simply take it for prented in making up their gold quotas to the of a bank or any other financial Institu- that the member countries would he WIII- scheme. Bee Reader's Digest, February tion? The capital and assets of any ing to ship their gold to some central 1944, pages 12-14. financial institution must either be in Its depository, or so completely uninformed In my November 1, 1943, paper, I also actual physical posiession or In some and unconcerped about the matter as to raised the question of whether the manner subject to physical possession by ask no questions? scheme would actually have physical it. This proposition holds with respect One thing certain, however, does possession of all of the gold assets con- to international financial Institutions as emerge from Mr. Morgenthau's ADDRES. tributed to it, or whether each country well as domestic ones. If the scheme namely, that each one of the lurger coun- would keep its gold quota in its central does not comprehend actual physical pos- tries would retain physical possemion of bank and government vaults, and the session of all its capital assets. if the its gold contribution. Furthermore, the whole operation of the plan, except the shares of some are represented by phrase "with respect to the larger coun- gold contributed by the United States, be paid-in gold and of others by political tries at least," would certainly triply that one of bookkeeping. promissory notes, only then It. becomes the smaller countries might be given the n 1a important to know the answer to a sham and a fraud of the worst sort. choice to do likewise. this question, for unless the International On November 10, 1943, I addressed the It should be interesting to have Mr. body would actually have in its physical following letter to Mr. Morgenthau, Sec- Morgentheu's formula which be used to possession the gold contributions of the retary of the Treasury: classify the United and Associated No- so-called member countries, it is difficult Some days RED Mr. E. M. Bernstein, to tions In two categories, the larger coup- to see how they could serve either as a company with Mr. Brenner (Mr. Edward M. tries on the one hand and the smaller true credit base or be of any value in Bernstein in an assistant director, Division ones on the other, but It would be more maintaining the liquidity of its "hasets. of Monetary Research, Treasury Department; interesting still to know how and why be Mr. Richard B. Branner in an attorney to the The soundness-that is, the liquidity-of arrived at determining that the larger Treasury Department). in my office, gave the the plan would always be dependent upon to understand, in answer to & direct question, nations would keep their gold contribu- the availability to it of Its gold assets. that the operation of the United and Assoct- None nt home in their own vaulla, yet There is no such thing as absentee liquid- ased Nations Stabilisstion Fund would be seem undecided or unwilling to say ity any more than there is liquidity in only a matter of bookkeeping. that the amota whether or not the smaller countries futurity. of the fund would remain in the central would be permitted to keep their gold The paper contributions that would be banks and government Institutions of the contributions at home, too. made to the scheme constitute In reality member countries. We wonder also which countries have nothing but overdrafts, except those Wishing to have this statement con- been selected as the elect. The United made by the United States and other firmed in writing by the Secretary of the States, Great Britain, China, and Rus- countries whose currencies are interna- Treasury, I wrote him in that letter as sia have been officially designated as the tim convertible into gold. Lord follows: "big four" powers so It LS reasonable to Ké 5, in expounding his scheme to the I desire from you, the Secretary of the suppose none of these countries would House of Lords, touched upon this point, Treasury. a direct answer to the following: be called on to let loose of its gold can- but apparently was very careful to re- Does the "Preliminary Draft Outline of 6 tribution to be shipped off to any of the frain from distinguishing between the Proposal for a United and Associated Nations other member countries, though neither paper which would be contributed by Stabilisation Fund, United States Treasury Great Britain nor China has any gold to countries whose position is such as to Department, Revised Draft, July 10, 1943," let loose of. make It fully redeemable in gold at all provide for the physical delivery of the gold If it is proposed that the smaller coun- samia of the fund at some central point times and those countries whose gold tries should hand their gold contributions within the geographic boundary of one of position is not such as to make their the United and Associated Nations? Or, is it over to the scheme, to which of the self- paper fully redeemable in gold at all contemplated that the gold assets of the chosen few would they be expected to times. He said: fund will remain in the physical possession deliver them: to one or more of them; The American plan requires the member of the member countries of the fund within and, If 60, which one or ones? Since the States to provide so-called security against their territorial boundaries? Sovlet Union would be no more than n their overdrafts, a requirement which could On November 13, 1943, Mr. Morgeh- limited partner in the scheme, it is hardly certainly be met If It to thought useful; but thau replied to the above as follows: likely that country would be selected as the security in question only to a very small the gold depository for the smaller na- extent consists in an outside security in the It to my understanding that the discussions tions. China being so far away from the shape of gold. It consists mainly of an I o U among the technjcal experts of other coun- engraved on superior notepaper, better than tries did not touch on the point of the man- financial and industrial center of the ner in which the gold contributed by a mem- world and for obvious, various, and sun- would be the case, perhaps, under our own scheme. I have sald that, If that ta thought ber country would be physically delivered to dry other reasons would hardly do as a useful and worth while, It does not Involve the fund. I presume, however, it is likely, depository of the gold asseta of the any particular problem (p. 01, Parliamentary with respect to the larger countries at least, smaller countries. That would leave Debates on an International Clearing Union, that their respective gold contributions only England and the United States to British Information de(vices). would be kept available on earmark for the be considered as aultable places for hold- fund at the central banks of those countries. The paper portion that would be con- ing and guarding those gold assets. To This is of course an attempt to evade which of these two would the gold con- tributed by the United States would not consist mainly of an I o U engraved on answering my question. In the first place tributions from the smaller countries be superior notepaper but would be a bond how could there be any question about made to flow, or would they be made to underwritten by the Government of the tHe'manner in which the gold should be gravitate toward both? United States for the delivery of gold on physically delivered to the scheme? Is These would not be idle questions If demand, backed by the actual possession there any other way this could be done the scheme really contemplated that the of said gold. But the paper portion that except by the simple act of, shipping? proposed gold subscriptions of the Surely It would not require the services smaller countries would actually have to would be contributed by the United of any technical experts to figure that be delivered at some central point within Kingdom would not be possessed of this liquid quality. It would be B. political out. the geographic boundary of one of the I OU in the truest sense, with no gold If we are to Infer from Mr. Morgen- so-called member countries. Indeed, bar of it to assure Its redemption, and thau's answer that these technical ex- these questions would then become vital recourse to any other means or perts have not discussed with the other M they would RO to the very root of the source of payment. countries the question of whether they matter. To what extent would the gold con- would be willing to ship their gold quotas These questions, of course, answer tributions made by countries other than to one or possibly even several of the themselves, and they are not nsked so the United States actually be made avail- other member countries, it should be in- much for the purpose of determining able to the scheme? Would any gold teresting to know what they have dis- whether or not the smaller countries except that supplied by the United States cussed. Do administration officials who would actually deliver their gold quotas Regraded Unclassified 29 2994 CONGRESSIONAL RECORD-HOUSE to some central depository within one of the administration's draft of the scheme tm operation in the NOTEL of too ORDER the member countries, but are asked that: Nations Relief and Ad- more particularly to show both the de- It could land and berrow money, and dest ministration. Purther. that bis stabili- ception and bisarreness of this scheme. in securities. The fact that AN could borrow mation schome "might not up en account With respect to the countries having no money and teste Be own obligations might in favor of any supérantional policing free or unpledged gold, the scheme would bring the fund's activities nearer the scope body which may be charged with the have nothing more than A. second mort- of the Keynsa Union. duty of preserving the peace and mate- gage on any gold contributions that Of the Keynes Union he says: taining International order" that "Udi might be promised and with no recourse Under the Keynes plan foreign countries would provide an excellent machinery at that Is It not likely that the free could in theory accumulate debits of nearly for suforcing & financial bidekade" that gold-holding countries, nearly all of $26,000,000,000. That la & theoretical limit It "might set up an account to fever of which come within the category of based on the assumption that the United International bodins charged with the smaller countries, would prefer to keep States would be the mly creditor country management of a commo/Diy control, their gold quotas in their own pockets and all others would be debtor countries, and and might finance stocks of commodities further than none of the enfeguards pro- when the nonfree gold-holding countries vided for worked. That would not occur, held by such bodies, allowing them OVE+ had nothing more to offer than & second of course, but It might be possible after a draft facilities on their accounts up mortgage on their gold quotas without period of years for debit balances to reach an agreed maximum." recourse, and when the so-called larger half that figure, or even more, If creditor Also that it. "might Be Hoked up with - countries preferred to retain their gold countries should continue to supply the funds without making any use of their credit board for International Investment," that contributions at their homes in their own "there are various roethoda by which the vaults? Is It possible to draw any other balances. clearing union could use ta influmnce and conclusion than that the operation of That is, the Keynes-Morgenthau the scheme would be one of bookkeeping, to powers to maintain stability of peloos scheme could in time Involve the United and the allegedly assigned gold contribu- and to control the trade agate." that "If States in B. liability to the extent of up- tions for both the nonfree and free gold= an International economic board is ortain ward of perhaps $15,000,000,000. Many holding countries, except with respect to lished this board and the clearing under conditions must be taken into considera- the United States, would consist almost, might be expected to work in closs del- tion in determining the probable extent If not entirely, of political promises, not to which the scheme would be expanded. laboration to their mutost advantage," to even pay in any part of such gold con- It would be in control of the debtor coun- that "If an International investment of tributions, but simply to agree to ear- tries who would determine its operations development corporation le also nes op. mark them in their own countries for and formulate its lending policies. Key- together with . scheme of commodits the account of the scheme? controls for the control of stocks of the neslan monetary and financial thinking, Up to the present we have considered with its flat credit and currency. Its pyΓa- staple primary products, wo might come only the Initial amount of gold Hability miding of credita, its unlimited govern- to possess in these three bustimitions a the scheme would impose upon the ment deficit financing, Its totalitarian ap- powerful means of combating the evils United States, In the paper heretofore proach, and, in this Instance at least, its of the trade cycle, by exercising or TAC- referred to of last November, I men- lack of integrity, would give direction to tionist or expansionist influence the tioned- that the initial subscription of all of its procedures. system as a whole or on particular - gold by the United States would likely Then We must keep in mind that this tions," and, finally, "the facility of apply- be no more than a starter, that once the proposed plan is only a part of a larger ing the clearing-unfon plan"-that 15. program were put in operation we should and more grandiose scheme that is en- the Keynes-Morgenthau rechame which expect to be called upon to pour addi- visioned by its promoters. Indeed, this in We are nere.considering-"t, these BEV, tional amounts into It. In that paper I said of the scheme: frankly stated by Its prime mover and eral purposes arises out of a fundamental spearhead, Lord Keynes, when he mays: characteristic which la worth pointing We are to believe it la something that could be started and stopped like a watch; It La possible that taken together- out, since It distinguishes the plan from change. 1. The mechanism of currency and EX- those proposals which try to develop the tried out and, If found Ineffective, abandoned same basic principle along bilateral lines to its own fate. But it just would not work that way. Once the scheme were in open- 2: The framework of 4. commercia) polley and is one of the grounds on which the tion It would quickly generate forces that regulating conditions for exchange of goods, plan can claim superior merit," which be would make for self-perpetuation and II- tairiffs, preferences, subsidies, Import regula- tions, and the like. clinches with this sophistry: This might pansion, M is the nature of all political ma- 8. Orderly conduct of production, distri- be described as Its 'anonymous' or "Im- chinery A whole congeries of vested international Interesta would quick- bution, and price of primary products personal' quality." by spring up and concurrently the protective 4. Investment aid, both medium and long What else could it possibly be that is mechanisms for maintaining them. term, for countries whose economic develop- envisioned here but & supernational ment needs assistance from outside. brain trust with authority, M Benjamin In this connection we should read some may help the world to control of the provisions of the administration's the ebb and flow of the tides of economic M. Anderson has designated 117 draft under section V, Powers and Oper- activity which have, in the past, destroyed As Just mentioned, one of the parts of ations, wherein are provided the follow- security of livelihood and endangered in- this all-embracing scheme has alroady ing powers: ternational peace. been perfected, namely, the Valted No- Lord Keynes looks upon his interna- tions Relief and Rehabilitation Admin- To buy, sell, and hold gold, currencies, and government securities of member countries; tional stabilization scheme as the nucleus istration, which, according to resolutions to earmark and transfer gold; to lattle Its for the construction of a universal and adopted at the Allantic City conference, own obligations, and to offer them for dis- count or sale in member countries. all-pervasive centralised international is to undertake everything. from the fur- power to regulate the economies, gov- nishing of soup kitchens to the construc- To buy from the governments of member sountries, blocked foreign balances held In ernments, and individual lives of the tion of railroads to all the war-stricken other member countries. people of the whole earth. To the fore- areas of the world: further, still another by the fund, To sell member country obligations owned going he adds that It "might become the part of this global program, an "Interna- Instrument and the support of Interna- tional bank for reconstruction and devel- To use Its holdings to obtain rediscounts or advances from the central bank of any tional policies In Addition to those which opment" with an Initial capitalization or It is its primary purpose to promote" that $10,000,000,000, is now in the process of country whose currency the fund needs, With the approval or the representative it "might become the pivot of the future concection by the Administration. of the government of the country concerned, economic government of the world" that Then there is a vast assemblage M- sell Its own securities, or sequrities It bolds, "without It, other more desirable devel- Tated forces and conditions WH member countries. directly to the public or to Institutions of opments will find themselves impeded giving impetus or allowing freedum are to and unsupported" that "with It, they will this movement, though perhaps not so With these far-reaching powers the fall Into their place as parts of an or- directly or manifestly connected with It. scheme could be greatly expanded beyond clearing account In favor of internation- dered scheme" that It "might net up a such as the totalitarian planning cult its Initial functions and organization, which in conjunction with the Pederal Bankers Trust Co. in New York, says of J. H. Riddle, economic adviser to the al bodies charged with post-wat relief, bureaneracy all but completely dont- rehabilitation, and reconstruction" bates our economy and the which segment of his scheme la already disordered and corrups currency and the long way our Nation has strendy gone Regraded Unclassified 30 194 CONGRESSIONAL RECORD-HOUSE in substituting a society of status for It is painly seen that the meat of the that of contract. Keynes-Morgenthau scheme, stripped of impossible, namely, the existence simu- There is one more point which is of its pretense and window dressing. 10, tennously of two kinds of international great importance to the consideration of perhane along with other highly impor- units of value and media for settling the Keynes-Morgenthau scheme and tapt objectives, an attempt to Inveigle trade balances, = definable weight of gold which is very pertinent to this study. the United States into handing over to on the one hand and an indefinable paper Seldom if ever are the expectations or Great Britain the control and use of the "unitas" of account on the other. Would promises of legislators in setting up po- United States stock pile of gold; to A- not Gresham's law operate the same in litical agencies fulfilled. It is an almost nance $5,000,000,000 or more of debta the International field as it always has unbroken law that such bodies are, when in domestic economies? Would not the Britain owes to a large number of coun- once established and put in operation, tries: to restore London as the world's bad unitàs money drive out the good never limited to their original size and gold money? What earthly chance would banker and financial center; to finance functions, but tend always to enlarge and her world trade and pay for her Bever- gold have to remain in circulation in- expand the scope of their activities, ternationally and compete with the idge plan. This is so universally true and so self- The scheme seeks to accomplish these cheap money, the politically manipulable evident that it should require no sub- paper unitas? None, of course. objectives by destroying the dollar as the stantiating proof, though a thousand 11- leading International standard unit of It is of the ulmost Importance to a lustrations are ready at hand to support value and settler of accounts and what full comprebension of the Keynes-Mor- this contention, if that should be deemed is left of the orthodox international gold genthau scheme to grasp the fact that necesary. But look at the growth of standard by substituting therefor a fic- It would involve not merely the amount bureaucracy that has taken place in the titious and political paper unit of ac- of gold the United States would con- Federal Government in recent years. count called unitas, in terms of which tribute to it but our entire stock pile of Who in 1887 would have thought that International pecuniary contracts would gold. It envisions the complete detnone- the Interstate Commerce Commission, have to be made. It is sheer nonsense tisation of our total gold reserves for In- which was created at that time, would for Lord Keynes to say: ternational use just as they have been develop to Its present size, complexity, The existence of the clearing union does demonetized for domestic tise within our and power, and that the interstate com- not deprive a member state of any of the own economy and the economies of other merce clause of the Constitution would facilities which It now possesses for receiving countries. It would do exactly what Lord be construed by the Supreme Court 80 as payment for its exports. In the absence of Keynes formally denies It would do when to make the growing of wheat interstate the clearing union. & creditor country can he says: commerce and empower a Federal bu- employ the proceeds of Its exports to buy Nor is it reasonable to sak the United reau to dictate to the farmer how much goods or to buy investments, or to make States to demonetise the stock of gold which wheat he can grow? temporary advances and to hold temporary is the basis of its impregnable liquidity. overseas balances, or to buy gold in the mar- The Congress devotes nine-tenths of ket. All these facilities will remain at Its This would in one single stroke destroy its time trying to restrain the political disposal. (Proposals for an international In large measure if not entirely the su- ma cry which It has created and to clearing union, British Information Services, perb international gold position the com its functions within the bounds April 8, 1943, p. 11.) United States now holds, in International of the laws It has Itself written. Now And for the Secretary of the Treasury, trade and commerce. It would at the especially, ft scolds the O. P. A., C. C. C., Mr. Morgenthau, to chime in with Lord same time yield to the debtor countries A. A. A., and the other political alpha- Keynes by saying: and, of course, to Great Britain in par- betical agencies for using their powers The fund would deal only with treasuries ticular an unearned, precious, and vital to change the economy, for taking on and central banks. It would not compete national resource. functions that were not intended and for with private banks or existing agencies. Its The alleged capital formation of the disobeying the laws which brought them operations would be maintained only to sup- into existence. plement the efforta made by each member Keynes-Morgenthau scheme is a fraud. The Keynes-Morgenthau scheme government to maintain monetary stability. The dishonesty and deception which un- would be no exception to the law of The established channels of international derlie It condemn It utterly. This is not trade and international banking would be endogenous growth of political machin- a proposal for international cooperation retained in full for all international transão- ery. That It would go the way of all tions. (Statement of Secretary Morgenthau If the word "cooperation" still means bureaucracy, take on new functions and before the Senate Committees on Foreign Re- what the dictionary up to now has always expand in directions not now thought of lations and Banking and Currency and the said It meant-"collective action in the or Intended, most likely even by Lord Special Committee on Post-War Boonomic pursult of common well-being." On the Keynes and some of his coworkers, Policy and Planning, April 5, 1943, p. 3.) contrary. this is a proposal by Great should be a foregone conclusion, In- If these gentlemen mean that gold Britain, supported by other countries and deed, the nature of this scheme is such could still be used in the settlement of aided by our present administration, not as to make It particularly liable to anar- International trade balances in the òr- only to bleed the United States white but chie growth. thodox way. That view postulates the to destroy her very blood-making organs. Table showing the countries which would have no free or unpledged gold and the countries which would have free or unpledged gold for gold contributions to the Reynes-Morgenthau scheme, and other pertinent data relating thereto POSITION OF 14 COUNTRIES NAVING NO ne GOLD 1 , 3 * A 7 a P 10 a 12 19 16 Country Percent of guid (1) or gold and gold exchange (2) legally required against circulating soles or circu- lating notes and other demand liabilities in central banks Date of circulating totas and other demand liabilities in central banks a shown in columns Amount of circulating notes (in dollars, 000-omitted) Amount of other demand liabilities in unitted) entral hanks (in dollars, 000 Amount of gold, or gold and gold exchange required against cireu- Inting notes, or efreulating netas and other demand liabilities to coinme (patitue) 000 metral banks Date of gobt Jubling M shown in Amount of gold bokling (in dollars, Amount of free gold (+) or gold de- ficiency (-) for circulating notes, or circulating anter and other de- mand liabilities to central banks dollars, 1 mg 000 Alleged pervind of aggregato contri- butten 800 ($8,000,000,000 gild and paper) assigned by scheme Alleged share of a autriho- the (38,000,000,000 mid soil paper) allotted by scherise (in lars, as onlited) Alleged perout of gold entribu- time of total contribution of each mustry alloted by scheibe Alleged amount of gold contribo- tion allotted by date (in dei- In gold of deliviancy of trie gold contribution to and & inco, 000 outtled) fund (in dollars, 000 emitted) Australia (2) 25 Bept. 454,389 657,206 101,009 April 1940 8,000 -116,000 LS 120,000 1.1 1,500 Belgium (3) AVE. 072,113 856,411 August 1943 TH,000 -181,411 25 190,000 ST. S 72,000 -73,000 Bolivia (20 46) Sept. 24,204 N.2U 12,026 September 1948 12,000 -N K.000 40.00 8,200 Canada a (1) 25) Oct. 30,1943 700,583 400,254) October 1943 4,000 as $8,000 60.00 80,000) Regraded Unclassified 2996 CONGRESSIONAL RECORD-HOUSE MARC 22 Table showing the countries which would have no free or unpledged gold and the\eoustries which would have free or unpledged gold for gold contributions to the Keynes-Morgenthau scheme, and other pertinent data relating thereto-Contmed POSITION OF 14 COUNTRIES HA VINO NO Para sole-continued 2 a # 5 a , I 0 to it a u 14 Gountry Pereent of gold (1) of gild and gift exchange B legally required against circulating note or cirro- lating total and other demand liabilities in entral banks Date of circulating notes and other dettisnd liabilities in rentral banks la I a Amount of circulating notes (In dollars, 000 ebitted) Amount of other demand liabilities is pentral banks On dollars, 000 omitted) Amount of gold, or gold and gold exchange required against eires- lating notes, or cirenting notes and other demand Habitities in Date of gold bolding - shows la solumn Amount of gold belding On dollars, 000 omitted) central banks Amount of free mid (+) or gold de- Sciency (-) for circulating notes, or circulating notes and other mand Habilities in contral batiks para - (in dollars, DOG Alleged procent of suppremble contri- buting ($8,000,000,000 gold and paper) statemed by where Alleged above of RECEIVED contribu- tina ($8,000,000,000 gold and pacier) allotted schedue an dol- Alleged percent of gold estritto- Line of total contribution of each country alloted by Alleged amount of gold entribu- tion allocted by scheme (in del lars, 000 omitied) Prio gold (+) or definiency of Draw gild (-) for gold contribution to 1 BOX fund (in dollars, 000 emitted) China March ne 21,000 Ceechoslovakia 4.0 420,000 as (1) 25 72,000 E Aug. 90,440 142,796 -72,000 251,863 August 1943 61,000) -190,061 Exypt 1.1 96,000 14,0 (1) 80 da 356,294 13,725 454,640 -18,720 178,147 de 62,000 Fracise -126,167 in 45,000 120 (1) 35 Oct. 9,517,853 15,400 1,022,600 2,688,951 April 1940 -15,50) Greece 2,000,000) -1,688,985 AS 440,000 37.8 (2) 60 E Mar. 31,1941 148,000 120,730 140,085 Mar THE -365,000 107,700 26,000 India. -70,700 at 32,000 22.5 CD 60 8 Aug. 37,1943 2,272,964 315,090 7,200 900,185 -7.20) August 1943 274,000 Netherlands -685,165 1.9 250,000 22.0 (1) 400 Aug. 20,1963 1, M2, 053 422,047 52,200 610,621 August 1948 -52,200 New Zestand 522,000 21 (2) 25 Sept. 27,196 166,000 30.00 109,122 20,400 139,241 62,000 July 1942. -NL400 21,000 United Kingdom -30,690 .5 40,000 IT.O (1)100 041. 27,1943 4,028,724 1,008,827 6,000 August na -6,900 1,000 Yugoslavia no (1) 90 July 1,024,000 ane 713,849 91,340) 307,200 201,295 February 1041 -307,200 60,000 -118,295 a 24,000 20,0 7,300 -7,200 Total 23,315,245 5,114,418 7.806,263 IL B01, 000 -1,205,20 2,902,000 198,725 -80,725 POSITION OF 15 COUNTRIES HAVING FREE GOLD Brand Apr. 30,1945 850,643 473,200 September 1043 Chile 223,000 00.50 8 12 Aug. 31,1943 107,229 30,205 10,000 40.0 00,379 Atigust 1943 36,400 Celembia 54,000 46,579 .4 63,748 95,915 22,000 40.0 September 1043. 12,900 Costa Bica 85,000 46,379 .8 July 31,1943 12,005 7,218 24,000 40.0 de 6,000 9,600 +R,000 Cale .04 1,300 July 1943 30.00 31,000 1,000 +1.600 Reundor CO 10 July 20,1943 14,450 4 13,497 32,000 6,757 BE D April 1943. 10,000 9,300 +4,20 ",300 El Balvador (1) 285 12,972 .05 5,819 4,000 40,0 September 1943. 11,000 1,000 no Guatemala May 21,1942 12,436 13,415 .05 4,000 Droember 1942 50.0 Mexico 19,000 2,000 000 Aug. 31,1943 205,620 .07 126,505 5,600 Norway October 1943 no. 0 (1) 100 200,000 2,900 135,088 .8 +2,800 Mar. 30, 1940 25,468 64,000 M.O 38,000 +12,000 Peru 30,628 February 1940 July 21,1942 54,000 49,585 +44,473 21,681 .7 October 1943 50,000 30,0 (1) 40 26,000 16,800 .3 +14,800 Poland August 20,1989 385,705 17,934 65,456 July 1900 16,000 30.0 00 (1) 30 Aug. 37,190 84,000 +18,646 4,800 : +1,800 Houth Atrica 161,902 424,061 202,768 August 1943 68,000 21,0 Union of Service Bocial- 628,000 +426,212 16,900 L8 144,000 +18,044 50.0 72,000 +72,000 list Republics Uniquar Reptember 1985 00 190 June 30,1945 833,000 78,804 102,524 21,410 7.7 616,000 30.0 184,800 +164,800 Venernels June 198 00 60 Oct. 31,1943 75,233 101,000 23,006 +60,500 .2 44,620 October 1943 10,000 50,01 84,000 +39,861 8,000 .a 24,000 +1,000 50,00 Total 12,000 +13,000 1,882,433 1,424,729 2,453,000 1,224,800 427,400 +00,800 GOLD POSITION OF THE UNITED STATES United States 1-40-38 Oct. 15,550,000 14,193,804 11,187,000 October 27, 1943, F19,852,000 +8,514,000 20.3 2,344,000 50.0 1,172,000 +1,172,000 gold, Its . Represents that to., Le the gold extent certificates DO which held gold by may the be Federal exported. Remove binks, They are its Federal truly representative Reserve notas of in gold actual only circulation to the extens to which they aire setually per convertible spalist Into deporita $ The United and reserves States statute in gold certificates provides that: of not Every less than Federal 40 per Reserve centum bank against shall maintain reserves in gold rertificates or lawful money of not less than as AUSTRALIA Ing on the 30th day of June 1935; and not Requires a 25-percent gold and gold less than 25 percent of such notes on issue BOLIVIA exchange reserve against notes. after the 30th day of June 1935." (Library Requires B. 50 percent of gold and gold Exchange Included limited to English of Congress, law library, November 15, 1943.) starling. (Federal Reserve Bulletin, July posits, exchange reserve against notes and de- 1938, p. 542.) Only gold held by Australia can be The bank is obligated by law to maintain considered as reserve against notes since May legally Include silver. Bilver included 6 25-percent gold reserve against notes In English sterling exchange owned by limited to one-firth of required reserve. Ex- circulation. By the Commonwealth Bank exchange. Australia cannot be considered as gold change Included limited to deposits payable Act of 1932 (simented to May 31, 1932), is in gold on demand or on 8 days' notice in was provided that the reserve may be held in BELOTOM New York or London, except that since Sep- gold com or in English sterling or partly in Thirty percent gold or 40 percent of tember 6, 1932, domestic and foreign prime gold and partly in English sterling. (Moody's commercial bills may, with the consent of Manual of Investments, 1943, p. 1652.) gold and gold exchange against demand the superintendent of banks, be Included up The maintenance of reserves in the Com- monwealth of Australia, provided for in July 1936, page 542. liabilities-Federal Reserve Bulletin, to one-tenth of required reserve, Bank In- cludes drafts payable, dividends, and other follows: the Commonwealth Bank Act, 1911-32, la as by the German Army in May 1940, the Na- Prior to the occupation of the country obligations with deposits against which re- serves are required. (Pederal Reserve Bulle- "Sac. 60K. (1) The Board shall hold in tin, July 1936, P. 642.) gold or to English starling or partly in gold tional Bank of Belgium had the sole right to Issue bank notes; Its reserves, in gold or Decree of June 21, 1941, requires 45 percent and partly in English sterling a reserve of gold foreign exchange had to equal 40 per- reserve to gold or foreign exchange an amount not less than 15 percent of the cent or the reserve had to be in gold. cent of Its sight engagements and 75 per- notes Add deposits, all foreign exchan DE amount of Australian notes oa issue during be counted, but gold Staetr must equal so the 2 years ending on the sour day of June 1903, not less than 18 percent of such notes 1682.) (Moody's Manual of Investments, 1948, p. percent of notes and deposita, (Computation or required reserves to chart based on this on lesue during the year ending on the soth day of June 1934; not less than 21% percent Moody's Manual of Investments data 30-percent requirement.) The bank, however, used for computing amount of gold TO- follows Its organic law of July 20, 1926, and of such notes on Issue during the year end- serve required. counts only gold, dollars and sterling (plus & small amount of siver). (Treasury data as pt June so, 1043.) Regraded Unclassified 31 P CONGRESSIONAL RECORD-HOUSE 2007 CANADA D. 100). Section 4 of the stattite grante the Beld-403.000, March 11. 1062, mini Canada requires 25 percent gold reserve National Bank of Type the privilage of a- Kern figure. against notes and deposita. suing bank notes. Section 5 states that the tabe of bank notes is - superate service els- pora Government at bank's request may suspend tinst from the other operations of the bank A gold and gold-rachange reserve of 40 reserve requirement for maximum period of 1 tt states further: percent la required against noim. year. (Federal Reserve Bufletin, July 1030. "The amount of bank antes is circulation I may be permitted 16 fall believe p. (42) payable either to bearer or OG sight must be In cunnection with the Exchange Fund stated requirements subject always represented by (1) at least one-balf order of May 1, 1940. the bank's gold reserves to the payment of a Covernment con- in gold; (2) one-half in such securities owned wat a nacessary in India. Gold were sold to the Foreign Exchange Control by the bank and calculated at a rate not d- must DE be less than 400,000,000 rupese; as Board, and at the same time the bank's mini- ceeding the daily quotations but with maxi- least 55. percent of gold Included must be mum gold reserve requirement was tempo- mum at par, the choice of which is by law held BE home. Exchange included United rurily discontinued (Moody's Manual of In- reserved to the government alone without to deposits at Bank of England, sterling bills, vestments, 1943, p. 1512.) any responsibility whatsoever on the part of or Brittals Government securities resturing Excludes gold held by Foreign Exchange the government. In default, either com- within 6 years. (Pederal Bestre Bulletin, Control Board which OD May 1, 1940, took plete or partial. of such securities the reserve July L956, p. 549.) over all the gold reserves of the Bank of in gold held by the special issue service of the Canada, amounting to $206,000,000. (Federal bank notes, must be increased proportion- India held on August 27. 1942, $2,155, Reserve data.) ately in such # way that the amount of the 071,000 of English sterling-Pyderal Re- CHINA bank notes in circulation shall always be serve dala. covered completely." According to information supplied me Stoce English sterling exchange cannot This test is quoted from Pace, Repertaire by the Federal Reserve Board, China held Permanent de Legislation Egyptienne, which be considered as gold eschange in the in March 1939, only $21,000,000 in gold. is a loose-leaf service of Egyptian legislation true sense, India's English sterling can- Yet, according to data furnished me by In form brought up. to date to August 1040. not be spplied as reserve against her the Treasury. China's gold contribution is (Library of Congress, Law Library, November notes. set at $72,000,000. 18. 1943.) NETHERLANDS No attempt has been made to show the Required gold reserve computed in no- A 40-percent gold reserve is required gold reserve requirements of China. The cordance with Library of Congress, Law against demand liabilities. Law Library of Congress furnished me Library, November 18, 1943, data. Eng- May legally include allver: Eighty percent with almost seven pages of single-spaced lish exchange being not gold exchange, of required reserve must be held at nome. typewritten data relating to this subject, the result would be the same If Federal (Federal Beserve Bulletin, July 1936. DV 845.) which shows It to be impossible to de- The Netherlands Bank is required to Reserve data had been used. maintain against outstanding notes and termine much of value in respect to her PRANCE other demand liabilities a revenue of 40 per- reserve requirements. China has no gold to contribute to the Requires a 35-percent gold reserve cent in gold and silver eotes and bullion, and scheme. In this connection should be against demand liabilities-Federal Re- other legal tender cotn. The law does not specify & fixed proportion of gold or aftver. he agreement made by the Treasury serve Bulletin, July 1936, page 542. re Foreign exchange is not permitted BE reserve. D. tment with China relating to the This 35-percent gold reserve require- (Mondy's Manual of Investments, 1945, P. $500,000,000 of financial aid extended to ment was suspended under the emer- 1851.) gency decree of September 2. 1939- The Intest comprehensive regulation con- China. Under that agreement the Moody's Manual of Investments, 1943, cerning the bank is contained in the taw of United States has assumed a potential February 2. 1987 (Stantabled, 1007, No. 400), gold liability to the full amount of $500,- page-1777. and the royal decree of March 1, 1987 (Stants- 000,000. It is also necessary here to keep The amount of gold holding shown blad, 1937, No. 401), by which the provision in mind the great inflation which is DOW does not include the gold transferred to for issuing bank notes was prolonged for B raging m China. She needs all the gold the Exchange Stabilization Pund-about years, beginning with March 81. 1987-thst in, she can possibly acquire to meet that $700,000,000. Bee page 1003, September up to March 31, 1943. The last-named law situation, and for that reason alone would 1940 Federal Reserve Bulletin. also contained the following provison: "Basc. 23. The proportion of bank notes, have none to spare for the Keynes CHEECE bank drafts, and balances of accounts current scheme. A 40-percent gold and gold-exchange which must be covered by cotn or builion CEECHOSLOVANIA reserve is required against "demand Ha- shall be established by royal decree and passed on recommendation of the management of A 25-percent gold reserve is required bilities, minus holdings of national aliver the bank. This decree shall be promulgated against coin up to 150,000,000 drachmas." in Stastablad and changed an necessary from Reserve may be permitted to fall below Reserve net, L e., minus gold exchange Ha- time to time." stated reserve requirements subject bilities. Reserve may include certain gold The only royal decree disclosed in this re- to the payment of a tax. (Federal Reserve bonds of the Greek state up to 650,000,000 spect in that of January 4, 1939 (Stantabled, Bulletin, July 1936, p. 543.) drachmas. Reserve requirements suspended 1929, No. 0), which net the minimum propor- When Caechostovida became divided into since April 26, 1932. (Federal Reserve Bui- tion of the gold reserve in bullion and coin at a protectorate of Bobemia and Moravia and letin, July 1936. p. 642,) 40 percent. Binatabled, from 1920 to 1940, in- the state of Slovakis, a separate Blovakian Under section 01 of the Statute of the Bank clusive, doos not contain any laws changing bank-Slovenska Narodna Banka-was estab- of Greece of 1927, the bank had to maintain these provisions. 50 It seems that it was still lished. (Library of Congress, LAW Library. "n reserve of not less than 40 percent of the in force by the end of 1040. (Library of Con- November 10, 1943.) notes in circulation and other demand lis- gross, Law Library, November 17, 1947.) The demand liabilities of Slovakia were bilities." The reserve may have consisted The amount of ailver held in the Neth- not only of gold bullion and coin, but also included with those of Bohemia and erlands Bank in June 1943 was $4,000,- of "net foreign gold exchange." However, Moravia, but they amount to only about section 61, above quoted. was expressly sus- 000-Federal Reserve Bulletin for Octo- 10 percent of those of the latter, and pended by section 1 of the law, No. 5422 of ber 1943, page 1040. would, for the purpose of this study, not April 26, 1932 (Ephemeria, 1932, p. 917). This NEW REALAND materially affect any of the figures shown law seema to be still in force down to 1939 as A 25-percent gold and gold exchange for Crechoslovakia. IS is stated in the monngraph. Taamia, L'Evolution Monstaire en Grece, 1928-08, a reserve is required against demand lia- SUTPT Doctor's dissertation presented at the Uni- bilities. Requires & 50-pereent gold and gold- versity of Nancy on October 10, 1939. The Exchange may include sterling: liabilities exchange reserve against notes. same work gives the following tabulation of in exchange must be deducted from gold di included must be held at home. Ex- the amount of coverage actually held by the exchange. Government at bank's request included limited to British Treasury bank (p. 96). (Library of Congress, Law Id- may suspend reserve requirements-Foderal bills. (Federal Reserve Bulletin, July 1936, brary, November 17, 1043.) Reserve Bulletin, July 1096, page 542. The Reserve Bank of New Zealand la the p. 542.) No consideration was given to the sil- The statutes of the National Bank of Egypt, sole bank-note issuing authority. In Oth ver allowed as reserve by Greece because approved by the decree of June 25, 1990, were sober 1039 it vas announced that the mini- amended several times, the last amendments of the very small amount permitted to be mum receive of as percent of the Reserve being dated May 29, 1920, June 20, 1927, and used, nor to her foreign exchange which bank's note circulation and other demand August 10, 1940. This last decree Was pro- might be used by her as reserve Decause liabilities may be varied or suspended, and mulgated August 12, 1040 (Journal Officiel, of the comparatively small amount authority was given to revalue the gold re- Regraded Unclassified 2998 CONGRESSIONAL RECORD-HOUSE MARC serve up to market value. As of Beptember tribute to the fund. n has been sus- to the payment of 9 BA. Eschange use limited to demand deposite payable in and 1, 1942, no action had been taken to alther gested by one of the leading English in New York or Logiton. pur- respect-Moody's Manual of Investments. financial journals that England might chared under Items of April 15, 1982 am 1943, page 1664. sell goods for gold to meet her gold oun- 5107) and February 13. 1995 (No THE As of February 1943, New Zealand tribution, but that such action would be garding affeted exchange entrol. and so owned English sterling exchange to the objectionable. See London Meonomist, equivalent amount of notes and deposits amount of £31,000,000-Londom Econo- August 26, 1943, pages 261-202. are excluded ID computing Tatio, While bank holds Treasury notes lasued under law mist, April 7, 1943, page 180. But Eng- TUOUSLAYIA of Jan. 7. 1933 (No. BODE) and later bills 11sh sterling exchange cannot be con- sidered as gold exchange, since It is not Requires a 25-percent gold reserve, or solidated in a. long-term Government dem 36 percent of gold and gold-exchange re- reserve requirements are reduced to $5 per- convertible into gold. serve against demand liabilities. cent. Bank Includes celblers' checks and UNITED KINGDOM Gold included must be held at home. Pro- dividends payable with deposita agatost which reserves are required. (Federal Be- A 100-percent gold reserve 16 required visionally since January 51, 1985, reserve N° quirements are reduced from 25 and DO per- serve Bulletin, July 1986, p. 543.) against notes In excess of fiduclary issue cent to 30. and 25 percent, respectively. and Article as: The Central Bank of Chile must of £260,000,000. bank is authorized. in computing these T&- maintein a gold Importe equal to 50 percent At bank's request treasury may decrease don, to value reserves at 20.5 percent above of the total of its notes in circulation and of fluctery tastie or may. for 5 period up to a legal rate. (Pederal Reserve Bulletin, July its deposits. This may be in gold bare or years, increase fiduciary tssue. (Federal Re- 1036, P. 643.) coins deposited in the nates of the bank. serve Bulletin, July 1930, p. 543.) The monetary law or May 11. 1931, provided or gold (bara or colos) deposited in the our The principle of formula controlling the with regard to the reserve at follows: tody of diret-clase foreign banks; or in ce- Bank of England's reserve to to be found in "Bec. 5. The bank must maintain & reserve posits payable on demand, and in gold in the Currency and Bank Note Act, 1928 (III in gold or foreign values legally or actually first-class banka in London and How York, and 10 George V, eh. 13), section 9 (1) convertible into freely exportable gold, The The 50 percent guarantees also Treasury "Sec. 2 (1). Subject to the prévisions of amount of the reserve to be not less than notes and bonds in circulation which the this act the bank shall issue bank notes up 55 percent of the bank's sight obligation, of bank la obliged to exchange, eariod, or will- to the amount representing the gold coin which at least 35 percent must be covered draw in accordance with law. (Libracy of and gold bullion for the time being in the by gold in the vaults of the bank." Cougress, Law Library, Nov. 15, 1945.) issue department. and shall in addition tssue By section os of the financial Inw (Budget) Reserve requiremente are "in suspense." bank notes to the amount of £260,000,000 for 1954-30 (Stushbene Novine, 1934, Item (Treasury data, as of June 30, 1948.) in excess of the amount first mentioned in 168, p. aso) the Council of Ministers was Chile employs & system of multiple as- this section, and the laste of notes which the granted the power to issue decrees with the change raten in Its current trade, but at pree- bank is by or under this act required or force of law for the regulation of economic ent the prevailing rate is P/31-01. F/817.- authorised to make in excess of the asid first- situation in the country. On the basis of 400.357 of the outstanding notes are techni- mentioned amount is in this act referred this authority, the Council of Ministers is cally not subject to reserve requirements. to as the fiduciary note tssue." sued on January 15, 1935, a decree which be (Treasury, data to of June so, 1943.) "(2) The treasury may at any time on IDg printed in No. 15 Siuzhbene Novine of being requested by the bank, direct that the January 21, 1935, took effect on that date. These factors were taken into 4- amount of the fiduclary note tasub shall for The decree reads: eration in' determining the reserv such period as may be determined by the "Degree concerning liquidation of the Te- quired. Chile owned on August 11, 1943, treasury, after consultation with the bank, volving credit of the national bank. $18,331,000 of foreign exchange-Pedersi be reduced by such amount 64 may be so "Section 1. The National Bank of the King- Reserve data-which was added to her determined." dom of Tugoslavia, may provisionally, in de- Section 3-(1) provides for the envering of flance of section 5 of the law on currency of gold holding in computing the amount the fiductary note issue by securities as the Kingdom of Tugoslavia and for the pur- of reserve required against her notes and follows: pose of a complete liquidation of Its revolv- deposits. However, no data are available "Bac. $ (1). In addition to the gold cotn Ing credita abroad, maintain reserve in gold to show the distribution of Chile's for- and bullion for the time being in the Issue and foreign exchange which was accounted eign exchange hóldings according to the department, the bank shall from time to at the legal rate plus a 'prim' of 38.5 percent, currency involved. To the extent Chile's time appropriate to and hold In the tssue so that the total reserve must cover 25 per- department securities of an amount in value foreign exchange holdings may not con- cent of the sight Habilities and at least 20 sufficient to cover the fiductary note issue for sist of gold exchange the amount of free percent of eight liabilities of the bank must the time being. be covered in gold in the vaulta of the bank." kold shown in column 14 would be re- "(2) The securities to be held M afore- No further change of this provision WAS duced. said may Include silver coin to no amount disclosed by peruis) of the Collection of Yugo- COLOMBIA not exceeding five and one-holf million sisvian Laws (Stumbene Novine) down to A gold and gold exchange reserve of pounds. the 2d of April 1941, the date of the Inst "(3) The bank shall from time to time number of Sluzhbene Novine. (Library of 40 percent is required against notes. give to the treasury such information as the Congress, Law Library, November 18, 1943.) Beserve may be permitted to fall below treasury may require with respect to the Computation of required gold reserves made stated reserve requirements subject securities held in the tasue department. but on the baste that at least 20 percent of sight to the payment of a tax. Exchange limited shall not be required to include any of the liabilities of the bank must be covered with said securities in the account to be taken to demand deposits but not to gold exchange. gold in the Taults of the bank. (Library of pursuant to section 5 of the Bank of Eng- During present emergency reserve require- Congress. LAW Library, data used for com- land Act, 1819." (Library of Congram, Law ments are reduced to ao percent or, 50 long puting reserve requirements.). Library, No. 15, 1945.) as gold content of peso is not reduced, to Gold held by England excludés gold held MARTI 25 percent. An additional reserve of 35 per- by exchange aqualization account which on A 36-pefoent reserve of Government funds cent of deposits plus outstanding Treasury September 1, 1041. the last date reported. in gold or foreign exchange to required notes to required in gold or other cash (eliver amounted to $151,000,000. (Federal Reserve against eruseiro notes. No gold or foreign not to exceed one-half), (Federal Reserve data.) exchange reserve Is required against deposits, Bulletin, July 1936, p. 542.) The figure of 100 in column 2 showing (Treasury date, as of June 30, 1943.) In January 1942 the minimum legal gold the percentage of gold reserves required The above being the only data avail- reserve of the Bank of the Republic was tixed by the United Kingdom against her able to me respecting the reserve re- st so percent (reduced from 40 percent) of the bills in circulation. (Moody's Manual of circulating notés was taken from the quirements of Brazil, no effort has been Investments, 1943, p. 1741.) July 1936, Federal Reserve Bulletin, page made to supply all of the figures here. A 25 percent reserve Is required against de- 543. It should be noted, however, that For the purpose of this study we shall postts. No more than one-half may be to this figure was not applied to the circu- assume that Brazil would have enough stlver. A 50 percent reserve in gold or formign lating notes, as will be seen in column 6 free gold to meet her gold contribution to exchange is required against notes. for the reason that the data here are the fund. try data, 4a of June 30, 1943.) too uncertain to be of any value. CHELE No attempt has been made to deter- Unless it could be shown that England A 50-percent gold and gold exchange mine the amount of gold reserve that is considers that she no longer requires any reserve is required against notes and de- required against notes or notes and de- gold In the exchange equalization BC- posits. posits, It is assumed Colombis would count as well as any gold backing for her Reserve may be permitted to fall below notes, she would have no free gold to con- have sublicient free gold to meet her gold stated reserve requirements subject contril ution, Regraded Unclassified 32 1 CONGRESSIONAL RECORD-HOUSE 2999 CONTA RICA to 40 percent of its notes in circulation. Not posits, and gel foreign Items In process No specific gold or exchange requirements. loss than one-third of the 40 percent TEMPTO of collection. (Treasury data, as of June no. 1943.) must be kept in to vaults, but this may include Gustemalan silver colns la an May legally include sliver. Blives CUBA amount not exceeding 5.38 percens of the must not excess ma-dftb. Machange In- Since May 2. 1942. 96 percent gold or dol- reserve. (Mody's Manual of Investments, cluded may COMEME only of depende payable lar reserve has been required against new 1948, p. 1017.) on demand in gold, or the aquivalent, in New note issues. Earlier issued backed 1 to 1 by Forty percent reserve required against York or London, and up to one-hair or - ailver pesos. United States currency etrou- notes; as percent against other eight liabili- serve, bankers' acceptance purpable in gold Intes freely. (Treasury data. as of June 30, ties, Reserves may consist of gold. deposite ourrencies. (Prideral Reserve Sulletin, Jan- 1943.) abroad, United States currency, and allver uary 1936, P sua.) Decree of August 9. 1980-(Norms de re- in a limited amount. (Treasury data, as of The original station of the bank (Banco serva metalica en los Bancos) Article I pro- June 30, 1948.) Geniral de Reserved del Peru) provided for a vides that all banking institutions operating tax on the note circulation whenever the H- within the territory of the Republic shall Amount of required gold reserve not serve ratto fell below 50 percent. but this pro- have in metallic currency of national coinage calculated. Assumed Guatemala would vision was suspended by Low 7780 of June P. a reserve of at least 78 percent of the amount have sufficient gold to meet her gold 1933. (Moody's Manual of Investments, 1045, to which article 180 of the Commercial Code D. 1000.) quota. refers (infra). Article 180 of the Commercial A 50-percent reserve in-gequired against MEXICO Code (as amended through 1941) provides notes and deposits. Reserve may consist of that banks shall conserve in metal at least On Depember 33. 1908, the Chaniber of gold or exchange, bank noosptances or silver one-fourth of the total of their deposits, cur- Deputies approved A new law providing for coins (up to one-2fth). (Treasury data, - rent accounts in currency and of their bills the revaluation of the bank's gold, and for- of June so, 1948.) in circulation. (Library of Congreta, Law eign exchange reserves nt market value. In Library, November 15, 1943.) addition, the law removed the limitation on No attempt has been made from the the amount of paper currency which the above data to determine the amount of ECUADOR bank may issue. Under the original or- gold reserve that La required for cover of Requires E 40-percent gold and gold- ganic law, the bank was required to back demand Habilities. It is assumed Peru exchange reserve against notes and de- its note issue with at least so percent of would have sufficient free gold to meet posits. metallic reserves. Early in 1998, however, that restriction was removed by decree, and her gold quota. Exchange included limited to deposite pay- a bill passed authorizing the treasury to POLAND able in gold. (Federal Reserve Bulletin, July taxts interest-bearing treasury certificates 1936. p. 542.) Requires 30 percent gold reserve A 30-percent reserve is required against which are acceptable for tax payments. against demand liabilities in excess of (Moody's Manual of Investments, 1043, p. notes and sight obligations. This reserve may consist of gold and (up to 20 percent of the 1845.) 100,000,000 riotys. Reserve may be per- Ley organica del Banco de Mexico y Eats- mitted to fall below the stated reserve required reserve) of foreign exchange. (Treas- tutos-as amended February 21, 1939: requirements subject to the payment of a ury data, se of June 30, 1943.) "Article 99: The bank shall maintain at all at Gold net, after deduction of A minimum reserve of 30 percent (reduced times a reserve to uphold the value of the 40 percent effective Jan. 1, 1938) in pledged gold and of liabilities in CX- 8- against notes in circulation and sight peso. The total of this reserve # change-Pederal Reserve Bulletin, July shall not in any instance be lower than deposits to required. (Moody's Manual of 1930, page 543. 100,000 pesos, nor less than 25 percent of the Investments, 1943, p. 1765.) total of notes issued un the bank and Its The law of March 24, 1939, introduced some amendments to the charter of the Bank Treasury data used in computing obligations to pay on. sight in national cur- amount of required gold reserve, rency. Polaki of 1936. In particular, the law "Article 100: The reserve to which the at- changed section 52 of the charter dealing with n. SALVADOR Licle above refere will consist of gold and the gold reserve (Dalennik Ustaw, 1039, Item A gold reserve of 25 percent is required sliver. coined or in bars, of shares of foreign 142, p. 417). Then the charter with all against demand liabilities. exchange, etc." (Labrary of Congress, Law the amendments WM re-promulgated in toto After definitive stabilization of currency, Library, November 15, 1948.) by the proclamation of the Minister of net exchange may count as reserve. Such Twenty-five percent reserve required Finance of May 2, 1989 (Delennik Ustaw, against both notee and deposits, of which at 1999, Item 206), and the amended text to BEC- exchange is not limited to gold exchange, but least BO percent must be in gold or foreign tion 53 in given there as follows:- must be held in central banks. If reserve exchange. As much as 20 percent may be in "Ero. 62. The bank must possess a gold falls below 30 percent on a of the 24 report reserve to the amount equivalent to 40 per- dates a year, no dividend shall be paid to silver. (Treasury data, as of June 30, 1943.) cent of the sum by which the total of the sharebolding banks. (Federal Reserve Bul- No attempt has been made from the banknotes in circulation plus sight liabill- letin. July 1936, p. 542.) above data to calculate the amount of time exceeda the sum of 800,000,000 stotys. Twenty-five percent reserve in gold or for- eign exchange is required against notes and required gold reserves. It is assumed "Depending upon the situation ón the gold other sight liabilities. If, however, the re- Mexico would have sufficient free gold to market, the ecuncil of the bank may, with serve ratio falls below 30 percent, no diri- meet her gold quota. the consent of the Minister of Finance, raise dends can be paid. (Treasury data, as of the limit of 800.000,000 stotys established in NURWAY June 30, 1943.) the first paragraph, of this section to a sum Requires a 100-percent gold reserve not exceeding 1,200,000,000 Blotys however. Amount of reserve not computed. As- against notes in excess of fiduciary issue The liabilities based upon loans secured sumed El Salvador would have sufficient of 250,000,000 kroner. Gold Included by gold of the bank are deducted from the free gold to meet her gold quota. must be held at home. Fiduciary Issue gold reserve" Ustaw, 1959, p. GUATEMALA may be increased, subject to 6 tax, by 585). Thirteen and one-third percent gold Is authority of King and Storting-Federal These are the latest available provisions required against notes. A gold reserve Reserve Bulletin, July 1936, page 543. for the period before the German occupa- tion. (Library of Congress, Law Library, No- of 8½ percent Is required against de- A legal minimum reserve of 100 percent gold vember 19. 1943) posits, due in 30 days or less, including against notes in excess of & fiduciary issue unutilized credits. of 435,000,000 kroner must be maintained. Gold-reserve requirement computed Gold in required reserves must be in bank's This issue may be increased, subject to tax, from data supplied by Law Library of vaulta. Bilver may replace gold up to one- by authority of the King and Storting, Congress, second paragraph, under sec- tenth of requirement shown in gold column. (Moody's Manual of Investments, 1943, p. tion 52. Reserve against deposita payable in a for- 1860.) If the figure 800,000,000 slotys were eign currency may be held entirely in that Gold reserve requirements computed taken as representing the amount of ency. Note Issue may not exceed five from Moody's Manual of Investments, notes and sight liabilities to be exempted 5 bank's paid-up capital and surplus or that is, on the basis of 100 percent against 12,500,000 quetmals, whichever la larger. De- from reserve requirements, as provided in posits due In 30 days or less may not exceed notes in excess of 425,000,000 kroner, the first paragraph of section 52 above, five times bank's capital and surplus. May which qualifies the percentage figure as Instead of the figure 1,200,000,000 legally Include silver in each category. shown In column 2 accordingly. zlotys-the figure used in the chart- (Federal Reserve Bulletin, July 1006, p. 542.) PEBU there would be a deficiericy of gold to The bank must maintain a reserve in gold A gold and gold exchange reserve of the amount of $13,455,000 for note and and silver in Its veults or in sight deposite abroad payable in gold equivalent at least 50 percent is required against notes, de- sight liability coverage. No. 83-12 Regraded Unclassified 3000 CONGRESSIONAL RECORD-HOUSE MARCE UNION OF SOUTH APRICA The SPEAKER, Is there objection to more of British debts. This is complete the request of the gentleman from Texas? nonsense. An early draft of the fund Requires a gold reserve of 30 percent against notes, deposits, and bills pay- There was no objection. proposal provided for the purchase by Mr. PATMAN. Mr. Speaker, the in- the fund of very limited amounts of able. May legally include ailver. ternational stabilization fund project blocked balances on those occasions on Reserve may be permitted to fall below stated reserve requirements subject, except in which we have heard criticized so sharply which the fund finds " destrable to der is not by any stretch of the imagination so, and only under terms and conditions Bouth Africa to the payment of far enough along to warrant such de- which make it actually impossible for the a tax. Government consent in necessary tailed discussion. Moreover, the criti- fund to Ineur a loss. This provision, 1 in Bouth Africa. One-half of gold Included must be held at home. Silver In- cism is based chiefly upon B. preliminary believe, has already been dropped cluded limited to 6. persent of deposits and draft, which, I understand, has been Strangely enough. In view of my cal- bills payable (Federal Reserve Bulletin, July worked over and changed materially by league's inferences, I understand 11. were 1996, p. 543). the technical people of thirty-odd coun- dropped because of the opposition of the U. 8. B. & tries since its publication 4 months ago, British experts. She makes no report of her gold hold- It seems to me, however, there in a The gentleman from Ohio says that ings-Treasury data. There are Indica- far larger issue at stake than whether the control of our money would be given tions that Russia does not intend to bind or not a stabilization plan which might over to an international money author- herself to the United and Associated Na- concelvably be adopted by this or any Ity, Again I wonder whether he has read tions stabilization fund scheme. See New other government looks good or bad at the proposal. There to nothing In IL York World-Telegram, December 7. 1943; Lewis W. Haney in the Washington this highly premature point. which reduces the authority of the The issue is whether or not the Gov- United States over Its monetary system Times-Herald, December 11, 1943; Rus- ernment of this country should attempt or over the dollar. The fund oan make sia's Intentions About Gold, in the Jan- to be forehanded about problems which no change in the value of the dollar and uary 1944 Economic Conditions, Govern- are certain to arise in the future: whether the proposal specifically reserves to each ment Finance, United States Securities, or not Government departments should country the complete control of its money page 6. URUGUAT make preliminary investigations and policies. studies with the full knowledge and My esteemed colleague has placed be- Requires 45% percent of gold reserve consent of Congress, leading to possible fore you a chart which purports to show against major notes of 10 pesos or more solutions for unavoidable difficulties you the figures on the gold holdings and issued in excess of (a) bank's paid-up which lie abead. I think they should, gold contributions of some of the United capital, less fiduciary issue of minor notes, and I believe that we In Congress should Nations. The figures abown are com- and (b) rediscounted bank documents up to 10,000,000 pesos. cooperate, not carp. pletely erroneous. They are based The alternative, of course, is to have largely upon data published years ago, Fiduciary tasue of minor notes is permitted in place of major notes, against paid-up capi- the Government operate as It did in late some going back BG far as 1935, and I tal. Against minor notas in excess of fidu- Republican years, and spend its time am surprised that anyone should assume clary issue minimum reserve requirement is running around locking barn doors after that data of this character can 4 1 40.6 percent in silver. Minor notes are lim- horses are stolen. My Republican col- represent the actual situation. I am Hed to 20,000,000 pesol. Bank must hold league from Ohio may prefer this. told, incidentally, that this table over- notes equivalent to 20 percent of deposits. Now, before we go any farther, let-tus looks half-the gold holdings of the other Gold ento may be held abroad only If 55,000,- set the record straight on some of the United Nations. The true information, 000 pesos of gold coin is hold in Uruguay. more obvious accusations: I might point out, is secret and cannot unless specifically suthorized otherwise. (Federal Reserve Bulletin, July 1936. p. 548.) The gentleman from Ohio says that be given out by any country. The publi- Notes of the Lanue department of the Banco the monetary proposal, drafted by Amer- cation of & completely unfounded table de in Republica in excess of 60,000,000 pesos Ican technicians, is nothing but a re- by the gentleman from Ohio serves no may be backed by silver up to 12,000,000 pesos wording of the text of the British pro- purpose other than to confuse and mis- (actually 9,000,000 pesos are 60 backed): addi- tional notes require a backing of 100 percent posal. Nothing could be further from lead the interested public. in gold. (Treasury data, as of June BO, 1945.) the truth. In the first place the proposal I do not know what the gentleman Ley No. 9496, August 14, 1036. Article 11- of the American technicians was drawn from Ohio means when be says that the The Bank of the Republic of Uruguay shall up in the winter of 1941 fully 15 months Keynes-Morgenthau scheme-and by the always maintain a reserve of bank notes equal before the British plan, and was pre- way, there is no such thing: the British, to 20 percent of the total of its deposits, no sented in principle to the Rio Conference French, Canadiana, and Americans all matter of what type. (Library of Congress, of foreign ministers in January 1942. had preliminary drafts, all published, all Law Library, November 15, 1943.) Anyone with the slightest understand- different-he says the scheme could Treasury data used for computing gold ing of International exchange and mone- involve the United States to the extent reserve requirements. The percentage tary questions would say that the plans of upward of $15,000,000,000. The figure shown in column 2 must therefore have only one thing in common and tentative proposal by the American tech- be qualified accordingly. that is they both attempt to deal with nicians specifically states that our par- Bixty million pesos, plus 12,000,000 the International monetary problems. ticipation shall be limited in the neigh- pesos subtracted from 119,715,000 pesos- The two proposals are completely differ- borhood of $2,000,000,000. This la a small Federal Reserve figure as of June 30, ent in their approach and suggested so- error of 700 percent on the part ot the 1943, of outstanding peso notes-times Jution. gentleman and involves some $13,000,- 65.83 cents to peso-same source and -The gentleman from Ohio says that 000,000. data as above-equals $31,410,000. the draft proposal neeks to replace gold Finally the gentleman from Ohio seems VEHIBULA with B fictitious standard. The fact is to be disturbed by the fact lhat the Inter- & 50-percent reserve is required against that the proposal of the American tech- state Commerce Commission was differ- note and deposit liabilities. No more than nicians provides for defining the cur- 10 percent of the reservé may be in the form ent in 1887 from what 16 is now. This renoles of all member countries in terms of foreign archange. and at least 60 percent perhaps is the key to the understanding must be gold on hand. (Treasury data, M of of gold and tieing their currencies to of his entire speech. This Republican June no, 1943.) gold. Instead of weakening the possi- bility of B return to the gold standard, It gentleman is complaining because we SPECIAL ORDER would do the very opposite. It attempts cannot meet the complex problems of the The SPEAKER. Under a previous to strengthen the Lies between all cur- 1040's with the facilities of the order of the House, the gentleman from rencies and gold. To say that the plan when as & free, sun-kissed barefooi Texas (Mr. PATMAN) is recognized for alms to destroy the supremacy which the be first graced Shanesville, Ohio, in the 30 minutes. dollar holds in International trade and 1880's. He was born there, I understand Mr. PATMAN. Mr. Speaker, I ask finance is an obvious faisehood. in 1884, and like the Interstate Com- unanimous consent to revise and extend The gentleman from Ohio says that the merce Commission, has altered his carlier my remarks and include therein certain scheme would Involve the assumption by limits and become increasingly complex excerpts. the United States of $5,000,000,000 or In the intervening years. Regraded Unclassifie 33 CONGRESSIONAL RECORD-HOUSE 3001 The preliminary work on stabiliza- I do not believe that we should resurn tested visorously, and to reported to have tion-and all the work that has been done to those unrealistic days of "let us pre- said: to date is preliminary-Is an effort by an tend it is not 50." believe that we should de Tax the effects of them Secure alert Government department to pre- continue to anticipate problems and try upon the Outline Blains, #6 - inflation pare a remedy beforehand for a difficulty to find solutions before they have an op- with townthille collapes which was was the that seems certain to strike when the portunity to send the international ocon- greatest estimitties upon our - omy into a tailspin. And further 7 be- worksrs. ADD Hyphimate bustomes. war is over, or before, When the economies of various coun- Heve that this viewpotnt is representa- As Secretary of Commerce, Mr. Hoover tries began to shudder under the strain of tive of & large majority of the American seems to have bad SUDO Influence. for approaching war, Secretary Morgenthau people. Most Americans would rather this inflationary program was apparently and his technical experts anticipated see us on the ball than behind It. sidetracked for the time being. that world reconstruction would be very Some people have a tendency to view But in July 1927, Mr. Norman, of the difficult Indeed if all the moneys of the with alarm anything going on that they Bank of England, Dr. Schacht, president world had no common denominator and do not quite understand, Certainly there of the Reichebank, and Prof. Charles Rist, if there were no basis for international is no crime in being alert, but 16 seems to deputy governor of the Bank of France, cooperation. If we were to come out of me almless for anyone to take, up time visited the United States, and In epite of the war with a sound dollar and all other to discuss, as though It were a falt ne- Mr. Hoover. who was soon to become nations were benkrupt and their ex- compli, & plan which in the first place President and certainly in & position to change were fluctuating in a disruptive in in Its preliminary stages and in the protest If he wanted to, these redoubtable manner, the Secretary recognized that second place he has confused with at gentlemen apparently got the plot started the soundness of our dollar would be a least one other plan. And especially all over again, and this time they went virtue in & vacuum. since he has not revealed the pertinent through with 11. Now, mind you, Mr. The war is likely to aggravate a situa- fact that this thing which he views with Hoover made no move to stop It, though tion which will make it extremely dim- such alarm la nothing more than a logical, he was on record no knowing what the cult to avoid a break-down of interna- conservative development which has consequences would be. Perhaps be had tional economic relations. evolved out of proved practices of this been won over by those Republican lesd- In an effort to find a solution to this Government. It would appear that my ers who seem so fond of inflationary poll- problem-and unless a solution is found, colleague is so concerned about motives cies that they have maintained a star- the reconstruction, restoration of a pros- that be is losing sight completely of the thing record of supporting inflation up to perous level of world trade and the estab- facts in the case. the present day. lishment of sound monetary systems will I should like to take a few minutes to In the final analysis, there could be be delayed Indefinitely-in an effort to tell you how this proposal for monetary only one cure for this disease which had find a solution, Secretary Morgenthau's cooperation, aimed at the protection of been started 80 deliberately in the Cool- technicians began exploratory conversa- the American economy, came about. Its idge administration. That cure was ad- with technical representatives of evolution is as important as the project ministered on March e, 1933, when Presi- of nations. itself, for It demonstrates its basic sim- dent Franklin D. Roosevelt closed the Now, in spite of those who, through plicity. banks for 4 days "because of unwarranted lack of understanding or, for political The story of this stabilization fund withdrawals of gold and currency from purposes, choose to distort the facts in really began back in the twenties, when a banking Institutions for the purpose of the case, these early conversations were surprisingly large and substantial group hoarding, and undue speculative activity not launched with the Idea of letting the of people suddenly awakened to the fact abroad in foreign exchange." United States rescue or support the other that fortunes could be made by trading That was a medicine swiftly and cour- nations of the world-any of them. Mr. in foreign exchange: and nations believed ageoualy administered. Less than a year Morgenthau is no economic Santa Claus. that, by manipulating exchange rates, later, concrete steps were planned to Anyone who has watched the handling they could avoid payment of war debts to make It impossible for such calamity as of Treasury matters over the past 10 this country. we knew in 1929-30 and 31 to befalt us years knows that. The present Secre- All this was going on during the Cool- again. These steps were planned under tary of the Treasury has worked hard Idge administration, and It continued the same Secretary of the Treasury, and long to make and keep Washington through the Hoover administration. Henry Morgenthau, Jr., who has just been the financial center of the world. He has There was no mystery about it. The criticized for trying to get things done, been diligent in keeping foreign debts in Republican administration which then and constated of setting up a stabilize- hand, and he invented reverse lend-lease had the responsibility of mfeguarding tion fund in the United States to protect to help keep dollar balances down. Bo the value of the dollar abroad, and to the welfare of the American people knew you may rest assured that our country's make It difficult for foreign currencies all about It. economic wherewithal will not be dissi- to be manipulated to the great detriment In the record of the Hoover adminis- pated across the oceans by the watchdog of the American economy. tration written by William Starr Myers of the Treasury Department. This stabilization fund, which has and Walter H. Newton, much is said But let me repeat, the point at Issue been functioning for 9 years with com- about- is really whether or not, having seen the plete success, was the real foundation The deliberate credit inflation policy under- necessity for stabilising foreign exchange, of the present International Stabiliza- taken by the Federal Reserve System and the our Secretary of the Treasury would have tion Fund Idea. important central banking systems of Burope served the public Interest better by pre- in the year 1927. Through the use of this fund, the tending no problem exista, and accord- American Government, on many occa- ingly done nothing about 1t. By infer- Then the authors review the growth alons, has invested temporarily in for- ence, at least, the gentleman from Ohio of that inflation policy. They say, and eign currencies for stabilization pur- and others who criticlee a plan which I quote: poses. still is in its formative stage are, ap- In late 1925 the Federal Reserve Bank of In all of the 9 years that this fund parently, suggesting that we go back to New York, through its governor, Benjamin has been in operation, the United States Strong. entered Into the discussion of a pro- those good old do-nothing days-those Government has not lost a cent. gram of joint action with Montagu Norman, days that reached their pinnacle in 1929- To those who may a stabilization fund governor of the Bank of England. This wis when the administration In power real- joined in by the officials of various central will not work, here is pretty strong evi- full well that calamity lay just over banks of continental Europe. The objectives dence that It will work. Ours has been horizon, but chose to make no effort were the expension of credit, "easy money working in this limited field for 9 years. whatever to stop it. They felt that It policies" by "open market" operations, and In 1936. Secretary Morgenthau took was none of the Government's business the manipulation of discount rates. The pur- another step to reinforce International pose of the arrangements was to strengthen stabilization. He established the tri- to keep people from- starving, to keep the situation in Europe. businesses from closing their doors, to partite arrangement with the Govern- The book then pointe out that Mr. Hoo- ments of England and France. The keep the wheels of commerce from alow- ver, then Secretary of Commerce, pro- Governments of Belgium, the Nother- ly grinding to a stop. Regraded Unclassified 33 3002 CONGRESSIONAL RECORD-HOUSE MARC and prantical proposals must be formulated cum 4. policy of sachings stability and - lands, and Bwitzerland also held to this agreement. This, too, was successful and must be carefully considered by the trains from moursing Le - policy-shaping officials of the various coun- change protess. Beyoul that the 18 copy until the outbreak of war made 14 impos- tries. the duty of consulting and agreeding before sible to continue for obvious reasons. enchange rates, a estimation of Uu The present international stabiliza- And then the Secretary said very principie that we have zur THATE 5. tion plan which we have heard ao bit- clearly, so that we could not fail to un- our OWN terly denounced as impractical, is a com- derstand: We have held technical within bination and extension of these two tried In each country acceptance of a definitive the experts of more thro 20 countries and and proved methods of stabilization. plan can follow only upon ingislative or - - are continuing these discussions WIED De In January of 1042 the ministers of scutive action. experte of BOOM of the countries. These 83- ploratory conversations bate been unreffied foreign affairs of the American repub- After explaining the nature of the pre- and confinsd to the technical lovel. No gov. lics, meeting in Rio de Janeiro, recog- !iminary proposal which Was sent to the ernment, including the United States Mi nized the need for a greater degree of other nations to start them thinking, the commisted to any of the tentative proposia cooperation in the stabilization of cur- for International monstary cooperation thes Secretary said, upon leaving: rencies. Accordingly. they adopted a have been presented by the experts, I have been anxious to discuss this matter resolution recommending- with you and to keep you informed of devel- The Secretary then explained more of First, that the governments of the opinents. Obviously, we afe still In the early the changes which had been made in American republics participate in a spe- stagns of our thinking and discussions. How- the proposal previously described to the cial conference of ministers of finance ever, I did want you to know what we are committees and presented a summary of or their representatives to be called for doing and I do want to feel free to come back a (entative proposal for a United Na- the purpose of considering the estab- from time to time and discuss the subject tions Bank for Reconstruction and De- lishment of an international stabilization with you and obtain your views and advice. velopment, the principal function of fund; Here I should like to point out that which would be to "guarantee loans Second, that the conference in con- the gentleman from Ohio has taken ad- made by private capital for sound and aldering the establishment of such a fund vantage of this offer on numerous occa- constructive purposes, when such loans shall formulate the plan of organization, sions, He has written many letters to the are also guaranteed by B member NOV- powers, and resources necessary to the Treasury and each has been answered, ernment." proper functioning of the fund, shall although the answers to many of them Upon leaving the committees, the determine the conditions requisite to seem for the most part to have been mis- Secretary said: participation In the fund, and shall pro- interpreted. I want to assure you egain that I shall pose principles to guide the fund in its One of these letters I must comment always be available for discussion of both operation. upon here: He wrote to the Secretary, the bank and fund proposals. I know that Following this conference, an Amer- asking the Secretary for a direct answer some members of your committees are de- lean technical committee was set up to as to whether or not contributions to the strous of moperating with us in studying pursue the subject further. Represent- fund will be physically delivered to one these preblems. speaking for the Tree ed on that committee were the Treasury we would be very happy If an Informal central point in one of the United Na- mittee were formed which would co. dt Department, the State Department, the tions. Department of Commerce, the Board of with our technical - M frequently AS In answer, Mr Morgenthau told him fesaible. Governors of the Federal Reserve Bys- that It was generally assumed that at tem. and the Board of Economic War- That is the story of the international least the major contributions to the fund fare. This group prepared a tentative stabilization fund to date. It is the would simply be earmarked and kept in proposal which, in March 1943, the whole story. the contributors' central banks. In other Secretary of the Treasury sent to the words, our gold would be kept right here On the basis of a rumor circulating in ministers of finance of the United if that is what interests the gentleman a foreign capital, some sections of the Nations for study by their technicians. from Ohio, House of Representatives seem to have On April 5, Secretary Morgenthau re- Whereupon the esteemed gentleman become excited about possible infrac- ported to seven committees of the House from Ohio, apparently spitinterproting tions of the rights of Congress by the and Senate on the progress of this study, what "carmarked" means, throws his Treasury Department. Statements have even though it was then in USA infancy. hands in the air, and says, "See what I been made that the executive depart- so to speak, I think It is important that told you. How could there be any ques- ment of the Government is making the Secretary asked permission to keep tion about the manner in which the gold agreements with foreign nations, which us advised, a program which he has should be delivered? How could it bé Is wholly and absolutely absurd. There maintained consistently on this and done except by shipping?" have been inferences that the Treasury other projects falling within the scope But let me continue with the progress Department, behind the backs of Con- of the Treasury Department. On April of the stabilization fund. gress, has been making arrangementa to 5 he said, in part: Following the April 5 report, there give away our money and our credit. For some time - in the Treasury have were many meetings of the technical ex- This, of course, is even more absurd been deeply conserned with the threat of perts of various countries. By fall the than the first charge. International monetary chaca at libe end of this war. technicians had made enough progress Secretary Morgenthau assured the We feel that international currency eta- so that a revised proposal could be pre- gentleman from New York, Representa- billiy in essential to reconstruction in the pared, and the Secretary again reported tive BLOOM, only last week that sufficient post-war period and to the resumption of to the committees in the House and the progress had not yet been made to war- private trade and finance. It to generally Senate. He said at that time: rant taking the time of House and Ben- hald that this formidable task can be auc- cessfully handled only through international I want to that the International ate committeemen to listen to a further Stabilization Fund, tentatively proposed by report. ocoperation. I think further that most of us would the technical experts of this Government, is fundamentally an adaptation of the methods The entire project is still nt the level agree that the establishment of a program adequate to deal with the Inevitable post- we have successfully used on & more limited of Various Government technicians. A scale with our own Machange Stabilization group of technical men from Russia in war monetary problems should not be post- Pund. We have tried to adapt that exped- at present discussing the matter with poned until the end of bostilities. It would be ill-advised, If not dangerous, to be un- ence to the banader and more difficult cur- the American technicians at the Treas- prepared for the difficult task of Interna- receipt problems confronting the world dur- ury. When progress has been made. tional monetary cooperation when the war log the post-war years. The International when A. recommendation has ends. No one knows how long or how abort Stabilization Fund is an extension of the principle of the tripartito agreement that agreed upon by the technicians, a the war will be. We therefore believe it is destrable to begin now to devise wn Interna- the responsibility for maintaining stability mal meeting will be held by accredited tional monstary agency adequate to cope of exchange rates in International and that representatives of the various govern- with the problems with which - shall be countries must cooperate to maintain etc- ments and following that, the various confrunted when the war doss end billty of exchange. legislative bodies will decide upon what The completion of such a task is certain The obligations a country nasumes under action to take. to take many months at the least. Specific this proposal are no more than a country voluntarily Imposes on Itself when 11 pur- I think Congress should commend Secretary Morgenthau for keeping us CONGRESSIONAL RECORD-HOUSE 3003 abreast of developments concerning the COMMITTEE HEARINGS same, & Better tran the Encretary of War, stabilization fund project, rather than COMMITTEE off Roase transmitting N letter bean the Chief of Engl- criticize him for having made agree- (Thunday, March 23, 1944) news, Volted States Army, desed January as, ments which we all know very well he 1046. submitting a report, Ingether with no- has not and could not make, and which Hearings will be continued on H. R. numpanying papers, on a THE of reports OD he himself described on April 5 of last 2426 in the Roads Conmittee room, 1011 Deproit River. Mich, requested by a resoto- year as being out of his province. New House Office Building, at 10 a. m., Nob of the Committee am Divers end Barbon, All this is a tempest in the teapot. Thursday. March 23, 1944. Holde of Representatives, Adoptant us May Committee our PATIENTS so, 1041; to the Contritute sm Given enst It is an effort to create B. political issue Harbore, where no political issue could possibly (Thurday, March 29, 1944) 1539: A letter from the becretary of War, exist. I suppose we can expect more The Committee on Patents will hold an transmitting a letter from the Onler of Zip- and more of this as we come closer to executive meeting on Thursday, March gineers, United Army, dated election. 23, 1944, at 10:30 a. m., to further con- 11. 1948, educations & report, together with But I sincerely hope that the admin- sider H. R. 2994. accompanying papers, on a revisor of reports istration will not find is necessary to un Detrois Itiver, Mich_ with A. view to Im- COMMITTEE on THE Post OFFICE AND Posr provement along the eastering share of Orders curtail its Investigations and forehand- Boarn De, requested by & resoltation of the Occunit- ed projects, because some groups want (Thursday, March as, 1944) tea on Bivera and Harbon, House of Repre- to make It politically inexpedient to do There will be a meeting of the Com- sentatives, adopted on December e. 1907; to anything but sit, the Committee on Rivers Brad Harbora mittee on the Post Office and Post Roads LEAVE OF ABSENCE on Thursday, March 23, 1944, at 10:30 REPORTS OF COMMITTEES ON PUBLIC By unanimous consent, leave of ab- 8. m., to consider H. R. 1565, relating BILLS AND RESOLUTIONS sence was granted BS follows: to the appointment of postmasters; and To Mr. CANFIELD, for Wednesday, H. R. 3688, to change the name of "watch- Under clause a of rule XIII, reports of man" in the Postal Service to that of committees were delivered to the Clerk March 22, on account of official business. To Mr. WEICHEL of Ohio, for March 23 "post-office guard." Hearings will be for printing and reference to the proper calendar, as follows: and 24, on account of official business. had. Mr. PATTON: Committee on Accounts. To Mr. WARD, for March 23, 24, and 27, EXECUTIVE COMMUNICATIONS, ETC. Bouse Resolution 400. Besolution authoris- on account of official business. sag the expenses of conducting the Investign- To Mr. BULWINKLE, for 9 legislative Under clause 2 of rule XXIV, executive Uon authorised by Honse Restrution 160, days, on account of official business. communications were taken from the Seventy-eighth Congress: without amend- ENROLLED BILLS SIGNED Speaker's table and referred as follows: nent (Rept, No. 1274). Referred to the House 1322. A communication from the Prest- Calender. Mr. KLEIN, from the Committee on dent of the United States, transmitting a Mr. DELANEY: Committee on Bules. Enrolled Bills, reported that that com- supplemental estimate of appropriation, in House Resolution 400. Resolution for the DI had examined and found truly en- the amount of $80,000,000, for the Navy einsideration of EL It. 4381, a bill to authorize Department and naval service for the fiscal he Secretary of the Navy to proceed with di bills of the House of the following year 1945, in the form of an amendment to the construction of certain public works, and times, which were thereupon signed by the Budget for said fiscal year (H. Doe. No. or other purposes; with amendment (Bept. the Speaker: 808): to the Committee on Appropriations No. 1275). Beferred to the House Calender. An act to place postmasters at and ordered to be printed. Mr. RANDOLPH: Committee on the Dia- fourth-class post offices on an annual-salary 1823. A letter from the Secretary of War, trict of Columbia. H. R. 3800. A bill to ast- basis, and fix their rate of pay, and provide transmitting a letter from the Chief of thortae the resoning of certain property in allowances for rent, fuel, light, and equip- Engineers, United States Army, dated Feb- the District of Columbia ne a residential area: ment, and fix the rates thereof; and ruary 14, 1944, submitting a report, together without ammondment (Rept. No. 1276). Rd- H. R 4410. An act to extend for an addi- with accompanying papers and Illustrations, Insted to the Committee of the Whole House tional DO days the period during which cer- on & review of the navigation provisions of on the State of the Union. tain grains and other products to be used the project for the Improvement of the Mis- for liventock and poultry feed may be im- sissippi River adopted by the not of May 15, PUBLIC BILLS AND RESOLUTIONS ported from foreign countries free of duty. 1928, na amended, with a view to determin- Under clause a of rule XXII, public The SPEAKER announced his signa- ing the advisability in the Interest of navi- gation and Bood control of Increasing the bills and resolutions were introduced and ture to enrolled bills of the Senale of the depth of the navigable channel from 9 severally referred as follows: following titles: to 12 feel between Cairo, III., and Baton By Mr. CANNON of Florida: B. 1849. An act to authorize the Secretary Rouge, La. This report was requested by H. R. 4485. A bill to provide duplicate post- of the Navy to convey to the city of New resolutions of the Committee on Flood Con- humous awards; to the Committee on Mill- York certain landa within the Brooklyn Navy trol, House of Representatives, adopted on tuy Affairs. Yard In the city of New York: March 8, 1943, and the Committee on Com- By Mr. MAY: 8. 1410. An act to amend section 4 of the merce, United States Senate, adopted on H. 4456. A bill to amend that portion of net approved June 13, 1940; March 9, 1943 (H. Doc. No. 500). to the Com- the not approved June 30, 1906 (34 Stat. 697, 8. 1420. An act to amend the provision of mittee on Flood Control and ordered to be 750). authorising the settlement of accounts the not authorizing payment of 6 months' printed. with two Illustrations. of deceased officers and enlisted men of the death gratuity to widow, child, or dependent 1324. A letter from the Administrator, Army: to the Committee an Military Affairs. relative of officers, enlisted men or nurses of Office of Price Administration, transmitting By Mr. ELLIOTT: the Navy or Marine Corps, and for other pur- a copy of estimate of personnel requirements, H. B. 4457. A bill to provide that, in dis- for the quarter ending June 30, 1944; to the poses, posing of lands which have been acquired by. Committee on the Civil Service. the United States for national defense or war 8. 1635. An act to eliminate a pay discrim- 1325. A letter from the Chairman, War purposes, a preference shall be given to the Instion against the teacher of music at the Production Board, transmitting the tenth furmer owners of such lands or their sue- United States Military Academy; and report on the operations of the Chairman ensire in interest; to the Committee on Pub- 8. 1653. An set to provide title for bends of of the War Production Board; to the Com- lie Buildings and Grounds. staff departmenta of the United Biates Ma- mittes on Banking and Currency. By Mr. BRYSON: rine Corps, and for other purposes. 1326. A letter from the Secretary of War, H. R. 4458. A bill for the relief of J. o. ADJOURNMENT transmisting - draft of 6 proposed bill, to re- Power and L. D. Power, to the Committee un move the Imitation on the right to command Claims. Mr. HAYS. Mr. Speaker, I move that of officers of the Dental Corps of the Army the House do now adjourn. which limits such officers to command to that PRIVATE BILLS AND RESOLUTIONS he motion was agreed to: according- corpe, to the Committee on Military Affairs. 1327. A letter from the Archvist of the Under claime 1 of rule XXII, at 5 o'clock and 33 minutes p. m.) United States, transmitting report on records Mr. BODGERS of Pennsylvania introduced the House adjourned until tomorrow, proposed for disposal by various Government bill (H. B. 4459) for the relief of Dominik Thursday, March 23, 1044, at 12 o'clock agencies; to the Committee on the Disposi- Tyenkowski, which was referred to the Com- noon. tion of Executive Papers. mittee on Invalid Pensions, Regraded Unclassified 35 Congrobenan Wright Patrian For Release Texas Late afternoon Papers March 22, 1944 The International Stabilization Fund Project which we have heard criticized 50 sharply in not by any strotch of the imagination far enough along to warrant such detailed discussion. Noreover, the criticism is based chiefly upon a preliminary draft which, I understand, has been worked over and changed materially by the technical people of thirty-odd countries since its publication four months ago. It seems to me, however, there is a far lerger issue at stake than whether or not a stabilization plan which might conceivably be adopted by this or any other Government looks good or bad at this highly premature point. The issue is whether or not the Government of this country should attempt to be forehanded about problems wh ch are certain to arise in the future; whether or not government departments should make preliminary investigations and studies, with the full knowledge and consent of Congress, leading to possible solutions for unavoidable difficulties which lie shead. I think they should, and I believe that we in Congress should cooperate, not carp. The alternative, of course, is to have the Government operate as it did in late Republican years, and spend its time running around looking barn doors after horses are stolen. by hepublican colleague from Ohio may prefer this. How, before we go any farther, let's set the record straight on Dome of the more obvious accusations: The Gentleman from Uhio says that the monetary proposal, drafted by American technicians, in nothing but a rewording of the text of the British proposal. Nothing could be further from the truth. In the first place the proposal of the American technicians was drawn up in the winter of 1941 fully 15 months before the British plan, and was presented in principle to the Rio Conference of foreign Ministers in January 1942. Anyone with the slightest understanding of international exchange and monetary questions would say that the plans have only-one thing in common And that is they both attempt to deal with international monutary problems. Two proposals are completely diffurent in their approach and suggested solution. The Gentleman from Ohio says that the draft proposal seuks to replace gold with a fictitious standard. The fact is that the proposal of the American technicians provides for defining the currencies of all member countries in terms of gold and tying their currencius to pold. Instead of weakening the possibility of n return to the gold standard, it would do the very opposite. It attempts to strungthan the ties betwoon all currencios end gold. To ary that the plan nime to dustroy the supremecy which the dollar holds in international trude and finence 10 an obvious felsehood. The Guntlumnn from Ohio anys that the scheme would involve the assumption by the United Status of 65 billion or more of British dobts. This is complete nonsense. An early drrft of the Fund proposal provided for the purchase by the Fund of very limitud amounts of blocked belancus on those occusions on which the Fund finds it dusirable to DO so, and only under turms und conditions which make it nctually impossible for the Fund to incur n loss. This provision, I bullow, has alrondy bown droppud. Strongoly enough, in view of my collengue's inferences, I understand it was dropped because of the opposition of the British experts, The Gentleman from Chio says that the control of our money would be given over to on international money authority. Again I wonder whether he has read the proposal. There in nothing in it which reduces the authority of the United States over its monetary system or over the dollar, The Fund can make no change in the value of the dollar and the proposal specifically ruservos to each country the complete control of its monoy policies. My estoemed collengue has placed before you a chart which purports to show you the figures on the gold holdings and gold contributions of some of the Unitud Nations, The figures shown are completely urronoous, They PTO braud larguly upon data published yours ago, some going back no for ED 1935, and I rm surprised that anyone should assumo that data of this Regraded Unclassified 2 36 character can che all represent the actual situation. I - told, in- cidentally, that this table overlooks helf the gold holdings of the other United Nations, The true information, I might point out, 10 secret and cannot be given out by any country, The publication of n. completely unfounded table by the Gentleman from Ohio serves no purpose other than to confuse and mislead the interusted public. I do not know what the Gentluman from Ohio monns whom he says the = the Keynes-Morgunthau schume (and by the way, there is no such thing, The British, Frunch, Cenadians and Americans all had proliminary drafts - all published, nll differunt) - ho anys "the scheman could involvo the United Stntos to the extent of upwards of #15 billion. The tentative proposal by the American tuchnicians specifically states that our participation shall bu limited in the noighborhood of 82 billion. This is a small urror of 700 purcent on the part of the gontloman and involves some 613 billion. Finally the Gentluman from Ohio secms to be disturbed by the fact that the Interetate Commerce Commission was different in 1887 from what it is now. This perhaps is the key to the understanding of his entire speech. This Republican gentleman is complaining because we cannot meet the complex problems of the 1940's with the facilities of the years when as A free, sunkist barefoot boy he first graced Shanesville, Ohio in the 1880's. He was born there, I understand, in 1884, and liko the Interstate Commerce Commission, has altered his earlior limits and become increasingly complex in the intervening years. The preliminary work on stabilization - and all the work that has been done to date is preliminary - is nn effort by an Alert Government Department to prepare- remedy beforehand for a difficulty that secms certain to strike when the war is over, or before, When the uconomies of various countries bugan to shudder under the strain of approaching war, Secretary Morgenthau and his technical experts enticipated that world reconstruction would be very difficult indued if all the moneys of the world had no common dunominator and if there were no bosis for international cooporation. If we were to como out of the war with a sound dollar and all other nations were bankrupt and their exchange wore fluctuating in a disruptivo mannor, the Secretary recognized that the soundness of our dollar would be a virtue in a vacuum. The war is likely to aggravate a siturtion which will make it extremely difficult to avoid a brunkdown of international economic relations. In an effort to find a solution to this problem and unless a solution is found, the reconstruction, restoration of a prosperous lowl of world trade and the establishment of sound monutary systems will bo delayed indefinitoly - Sucretary Morgenthau's technicians began exploratory conver- sations with tochnical ruprosentatives of other nations, Now, in spite of those who, through lack of understanding or for politionl purposes, choose to distort the foots in the caso, those early conversations wore not launched with the idea of letting the United States rescue or support the other nations of the world - any of thum. Mr. Morgenthau is no economic Santa Claus. Anyone who has watched the handling of Treasury matters over the post ton years knows thet, The present Secretary of the Treasury has worked hard and long to make and keep Whshington the financial center of the world. He hns buen diligent in keeping foreign debta in happy and he invented reverse lond-lonso to help koup dollar bolances down. So you may rest Ausured that our country's economic wherewithal will not be dissipated across the ocurns by the watchdog of the Trunsury Department, But let no report, the point nt issue is really whother or not, having seen the necessity for stabilizing foreign exchange, our Secretary of the Treasury would have surved the public interest botter by pretending no problem exists, and accordingly donu nothing rbout it. By inforence, at least, the Gentleman from Ohio and others who criticize a plan which still is in its formativo stage aro, apparently, suggesting that NO go back to those good old do-nothing days - those drys that renched thoir pinnacle in 1929 - when the Administration in power realized full woll that colmity lay just over the horison, but chose to mnke no effort whatever to stop it. They felt that it was nonu of the Revernment's business to keep people from starving, to keep businesses from closing thoir doors, to keep the whoels of commurce from slowly grinding to c stop, Regraded Unclassified 37 I do not believe that we should return to those unrealistic days of "let's pretend it isn't 50," I believe that TO should continue to anticijeta problems and try to find solutions before they have an opportunity to send the international economy into a tail-spin. and further I believe that this viewpoint is representative of a large majority of the American people. Most Americans would rather see us on the ball than behind it. Some people have a tendency to view with alam anything going on that they don't quite understand. Certainly there is no crime in being alert, but it seems to ne simless for a Representative to take up the time of this House for an hour to discuss, as though it were a fait accompli, & plan which in the first place is in its preliminary stages and in the second place he has confused with at loast one other plan. And especially since he has not revealed the pertinent fact that this thing which he views with such alam 18 nothing more than a logical, conservative development which has evolved out of proved practices of this government. It would appear that my colleague is Bd concerned about motives that he is losing sight completely of the facts in the case. I should like to take a few minutes to tell you how this proposal for monetary cooperation, aimed at the protection of the American economy, cime about. Its evolution is as important as the project itsulf, for it demonstrate its basic simplicity. The story of this Stabilisntion Fund really began back in the 20's, when El surprisingly large and substantial group of people suddenly mickened to the fact that fortunes could be mndo by trading in foreign exchange and nations believed that, by manipulating exchange rates, they could avoid payment of war debts to this country. All this was going on during the Coolidge Administration, and it continued through the Hoover Administration. Thore was no mystery about it, The Republican Administration which then had the responsibility of safew guarding the welfere of the American people know all about it. In the record of THE HUOVER ADMINISTRATION written by William Starr Myers end Walter H. Nuwtom, much is said abouts "the deliberate crudit inflation policy undertaken by the Federal Reserve System and the important contral banking systems of Europe in the year 1927." Then the authors review the growth of that inflation policy. They Day, and I quotes "In late 1925 the Federal Reserve Bank of New York, through its governor, Benjamin Strong, entured into the discussion of a program of joint action with Montagu Norman, governor of the Bank of England. This was joined in by the officials of various central brinks of continental Europe. The objectives wore the expension of credit, 'casy money policies' by 'open market' operations, and the manipulation of discount rates. The purpose of the arrangements was to strengthen the situation in Europe." The book then points out that Mr. Hoowr, then Secretary of Commerce, protested vigorously, and is reported to have said: "AS to the effects of thuse Reservo policies upon the United States, 10 means inflation with invitable collapse which will bring the greatest colamities upon our farmers, our workers and logitimate business. As Secretary of Commerce, Mr. Hoover seems to have had notu influence, for this inflationary program was apparently side-tracked for the time buing. But in July, 1927, Mg. Norman of the Bank of England, Dr. Schacht, President of the heichsbank, and Professor Charles Rist, deputy-governor of the Bank of France, visitod the United States; and in spite of Mr. Hoover who was soon to become President and certainly in A position to protest if he wanted to, these redoubtable gentlemen apparently got the plot started all over again and this time they went through with it. Now, adnd you, Mr. Hoover made no nove to stop it, though ho was on record as knowing what the consequences would be. Purhaps ho had boon won over by those Republicrn looders who sum BO fond of inflationary policies that they have mrintained a startling record of supporting inflation up to the present day. Regraded Unclassified 38 In the final analysis, there could be only one cure for this disease which had been started BD deliberately, in the Coolidgu Administration." That cure was administered on March 6, 1933, when President Franklin Do Roosevell closed the banks for four days "because of umarranted withdrawals of gold and currency from benking institutions for the purpose of hoarding, and undue speculative activity abroad in foreign exchange." That was a medicine swiftly and courageously administered. Less than a year leter, concrete steps were planned to make it impossible for such colamity ns we knew in 1929-30 and 31 to befall up again. These steps were planned under the same Sucretary of the Treasury, Honry Morgentheu, Jr., who has just been criticized for trying to gota things done, and consisted of setting up a Stabilization Fund in the United States to protect the value of the dollar abroad, and to make it difficult for foreign currencies to be manipulated to the great dotriment of the amorican economy, This Stabilisation Fund, which has been functioning for nine years with complete success, was the roal foundation of the present International Stabilization Fund idua, Through the use of this fund, the American Government, on many occasions, has invested temporarily*in foreign currencies for Stabilisation purposes. In all of thu nine years that this fund has been in operation, tho United States Government has not lost a cunt. To those who any n. Stobilization Fund won't work, here 1a pretty strong evidence that it will work. Oure hns boen working in this limited field for nine years. In 1936, Secretary Morgenthau took another stup to reinforce Intur- national Stabilization. Ho established the Triportite arrangement with the Governments of England and France. The Governments of Bolgium, the Nothorlends end Switzerlnnd also held to this agreement, This, too, wis successful until the outbreck of war mnde it impossible to continue for obvious reasons. The present International Stabilisation plan which to have heard so bittorly denounced no impractionl, is e combination and extension of these two triud and proved mothods of mtobilization. In January of 1942 the Ministers of Foreign Affairs of the American Republics, meeting in Rio de Janeiro, recognized the need for a greater degree of cooperation in the stabilization of currencies. Accordingly, they adopted a resolution recommending: (1) That the Governments of the American hepublics participate in a special conference of Ministers of Finance or their representatives to be called for the purpose of con- sidering the establishment of an international stabilization fund. (2) That the conference in considering the establishment of such a fund shall formulate the plan of organisation, powers and resources necessary to the proper functioning of the fund, shall determine the conditions requisite to participation in the fund, and shall propose principles to guide the fund in its operation, Following this conference, an American technical committee was set up to pursue the subject further. Represented on that committee were the Treasury Department, the State Department, the Department of Commerce, and the Bonrd of Governors of the Federal Reserve System, and the Board of bconomic Warfare. This group prepared a tentative proposel which, in March, 1943, the Secretary of the Treasury sent to the Ministers of Finance of the United Nationo for study by their technicians, On April 5, Secretary Morgenthau reported to seven committees of the House and Senate on the progress of this study, even though it was then in its infancy, so to spenk. I think it is important that the Secretary naked permission to keep us advised, a program which he has maintained con- sistently on this and other projects falling within the scope of the Treasury Department, On April 5, he said, in parts Regraded Unclassified 39 - 5 "For some time we in the Treasury have bown deeply concerned with the threat of international monetary chaca at the end of this war. "We feel that international currency stability is essential to reconstruction in the post-war period and to the resumption of private trade and finance. It is generally held that this formidable task can be successfully handled only through international cooperation. "I think further that most of us would agree that the establishment of a program adequate to deal with the inevitable post-war monetary problems should not be postponed until the end of hostilities. It would be ill-edvised, if not dangerous, to be unprepared for the difficult task of international monetary cooperation when the war ends. No one knows how long or how short the war will be. We therefore believe it is desirable to begin now to devise an international monetary ngency adequate to cope with the problems with which we shall be confronted when the war does end. "The completion of such & task is certain to take many months at the least. Specific and practical proposals must be formulated and must be carefully considered by the policy-shaping officials of the various countries... And then the Secretary said very clearly, so that we could not fail to understand: "In each country acceptance of a definitive plan can follow only upon legislative or executive action." After explaining the nature of the preliminary proposal which was sent to the other nations to start them thinking, the Secretary said, upon leaving: "I have been anxious to discuss this matter with you and to keep you informed of developments. Obviously, we are still in the early stages of our thinking and discussions. Howover, I did want you to know what we are doing and I do want to feel frue to como back from time to time and discuss the subject with you and obtain your views and advice." Here I should like to point out that the Centleman from Ohio has taken edvantage of this "for on numerous occasions. He has written many letters to the Treasury and each has boen answered, althowsh.The answers to many of them seem for the most part to have been misinterpreted. One of these letters, I must comment upon here. He wrote to the Secretary, asking the Secretary for a direct answer as to whether or not contributions to the Fund will be physically delivered to one central point in one of the United Nations. In answer, Mr. Morgenthau told,him thet it was generally assumed that at least the major contributions to the Fund would simply be ear-marked and kept in the contributors central banks. In other words, our gold would be ke,it right here if that is what interests the Gentleman from Ohio. Whereupon the esteemed Gentleman from Ohio apparently not understanding what "ear-marked" means, throws his hands in the air and says "See what I told you! How could there be any question about the manner in which the gold should be delivered? How could it be done except by shipping?" Gentlemen, I propose this logic as the most elaborate non sequitur in the history of the American House of Representatives. But let me continue with the propress of the Stabilization Fund. Following the April 5 report, there were many meetings of the technical experts of various countries. By fall, the technicians had made enough progress so that 6 revised proposal could be prepared, and the Secretary again reported to the committees in the House and the Senate. He said at that time: Regraded Unclassified - 6 - 40 "I want to emphasize that the International Stabilization Fund, tentatively proposed by the technical experts of this Government, is fundamentally an adaptation of the methods we have successfully used on a more limited scale with our own Exchange Stabilization Fund. To have tried to adapt that experience to the broader and more difficult currency problems confronting the world during the postwar years. The International Stabilisation Fund in an extension of the principle of the Triportite Agreement that the responsibility for maintaining stability of exchange rates is international and that countries must cooperate to maintain stability of exchange. "The obligations & country assumes under this proposal are no more than e country voluntarily imposes on itself when it pursues a policy of exchange stability and refrains from resorting to discriminatory exchange practices. Beyond that, there is only the duty of consulting and agreeing before altering exchange rates, an extension of the principle that THE have embodied for years in our own stabilization agreements. "No have held technical conversations with the experts of more than thirty countries and we are continuing these discussions with the experts of some of the countries. These exploratory conversations have been unofficial and confined to the technical level. No Govern- ment, including the United States, is committed to any of the tentative proposals for international monetary cooperation that have been presented by the experts." The Secretary then explained some of the changes which had been made in the proposal previously described to the conmittees, and presented a summary of a tentative proposel for a United Nations Bank for Reconstruction and Development, the principle function of which would be to "guarentee loans made by private capital for sound and constructive purposes, when such loans are also guaranteed by n member government." Upon leaving the committees, the Secretary said: "I want to assure you lighin that I shall always be available for discussion of both the Bank and Fund proposals. I know that some members of your committees are dusirous of cooperating with us in studying these problems. Speaking for the Treasury, we would be very happy if an informal committee were formed which would consult with our technical men as frequently as feasible." That is the story of the International Stabilisation Fund to date. It is the whole story. On the basis of a rumor circulating in a foreign capital, sone sections of the House of Representatives seom to have bocome excited about possible infractions of the rights of Congress by the Treasury Department. State- mente here boun made that the Executive Department of the Government is making agreements with foreign nations, which is wholly and absolutely sbourd. Thore have boen inferences that the Treasury Department, behind the back of Confress, has beun making arrangements to fin away our money and our crudit. This, of course, is dvon more absurd than the first charge. Sucretary Norgenthau assured Representative Bloom only last wook that sufficient progress had not yut been made to warrant taking the timu of House and Sunate Committoumon to listen to & further report. The entire projuct is still at the level of verious government technicians. A group of technical mun from Russia 15 at present discussing the matter with the American tochnicians at the Treasury. When progress has boun mado, whon a rucommundation has boun agroud upon by the tuchnicians, a formal meeting will be hold by accrodited rupresentatives of the various governments and following that, the various legislativo bodies will docide upon what action to take. I think Congruss should commund Sucretary Morgenthau for keeping us abreast 01 devolopmente concerning the Stabilization Fund project, rather than criticize him for having made agreements which we all know very well he has not and could not make, and which he himself described on April 5 of last year an being out of his province. All this is a tempest in the tea pot, Regraded Unclassified 41 - 7 - It is an effort to create a political issue where no political issue could possibly exist. I suppose we can expect more and more of this as we come closer to election. But I sincerely hope that the Administration will not find it necessary to curtail its investigations and forehanded projects because more groups want to make it politically inexpedient. to do anything but sit. # Regraded Unclassified 42 THE SECRETARY OF THE TREASURY WASHINGTON MEMORANDUM FOR THE PRESIDENT You may be interested to know that the Russian repre- sentatives to the Monetary Committee have seen the United States Army version of the film "Battle for Russia" and were very much impressed with it. Nikolai Chechulin, Head of the Russian Mission said that he thought it would be a very good idea to exhibit the film in Moscow. You may wish to consider sending a copy of the film to Premier Stalin for showing in Moscow. FORVICTORY BUY UNITED STATES WAR BONDS AND STAMPS 43 MAR 22 1944 My dear Mr. Secretary: This letter is in response to the request of the State Department for the views of the Treasury with re- gard to the appropriate financial terms of the proposed extension of post-war credits to the U. S. S. R. under the Lend Lease Agreement. It is the view of this Department that the credits should be amortized over a twenty-year period beginning three years after the commencement of the credits and that the interest rate charged should be set at the av- erage rate of carrying costs on the U. S. public debt plus 1/8 of 1%. Under the present circumstances, the in- terest rate would thus be set at 2.1%. The Soviet Gov- ernment should be notified in December of any given year of the rate applicable to the ensuing year. This proce- dure would assure our public that the cost of the credit advanced to the U. S. S. R. is fully paid and it would assure the U. S. S. R. that it is getting the best terms which this government can extend. The Treasury believes that the question as to whether a shorter amortization period should be used as a basis for discussion can best be left to those responsible for conducting the negotistions. Very truly yours, (Higned) H. Morgenthou, Jr. Secretary of the Treasury. Honorable Cordell Hull, Secretary of State, Washington, D. C. WHT:SG:gp 3/22/44 Regraded Unclassified 44 EXECUTIVE OFFICE OF THE PRESIDENT WAR REFUGEE BOARD Inter-Office Communication Date To Mr. Standish March 22, 1944, From Mr. McCormack Complementing, if you will, your Spanish plan of March 17th, there are attached copies of a paper on the Nansen Passport which represents a saga of that document from 1922, when Dr. Nansen devised it, through 1939 when it fell into the hands of the High Commissioner and the Intergovernmental Committee. Att. Regraded Unclassified 45 THE NANSEN PASSPORT An old Russian adage has it that a "man consists of body, soul and a passport" and it could be that Dr. Nansen, faced with the problem of protecting people without "state", had to regulate their status and give them some sort of identity paper. For this purpose he created in 1922 the "Nansen Certificate" or "Nansen Passport" which W&B adopted by fifty governments. The certifi- cate was valid for one year only and issuance was discretionary with individual governments. Inasmuch as it was not valid for return to the country of issue unless specifically inscribed to that effect, the Nansen certificate was - at least a travel passport - inferior to national passports, some countries being reluctant about permitting people to enter who could not go back or be returned to where they came from. A. convention in 1933, however, provided that the Nansen passport should authorize the return of its holder to the country of issue and that it could be extended for a period of six months. Though only five nations - Bulgaria, Czechoslovakia, Denmark, Norway and Italy - actually ratified this convention, and three others - Belgium, France and Egypt - signed it, the convention is practically in force. In an emergency, moreover, the Nansen certificate proved its value: namely, when in 1933 the Russian-Jewish refugees in Germany were compelled to flee once more, they found that their Nansen certificates still opened the frontiers for them. While it might be a fantastic commentary on the inhumanity of our times that for thousands and thousands of people a piece of paper with a stamp on it is the difference between life and death - detention and freedom - there is little doubt that, by and large, the Nansen certificate is the greatest that has happened for the individual refugee. It returned to him his lost identity. And while the refugee could never be sure whether he would get a labor permit by means of the Nansen certificate, he could be sure that without the Nansen certificate he would never get a labor permit. The Nansen certificate gave the refugee moral support. While the refugee without an identification paper was exposed to petty police tyrannies, the holders of the Nansen passport could turn to the representatives of the High Commission in various capitals, who afforded them a kind of consular service, These Commissioners took matters up with the Ministrees when expulsion orders were issued, or labor permits refused, and in a more general way saw to it that the governments kept the arrangements they had entered into on behalf of refugees. Regraded Unclassified -2- 46 The Nansen Certificate, at the outset extended only to the Russian and Armenian refugee, was then extended to the Chaldean, Assyrian and Turkish refugees, and in 1935 to refugees from the Saar, who were all under League protection; it never reached the political "sans patries" from Hungary, Italy and Spain who were not considered as coming within the League's province. Concerning these stateless persone outside of League protection, the Connection and Transit Organization of the League adopted at its third conference in 1927 a series of recommendations to governments to employ a uniform document of identity and travel, similar to the Nansen Certificate but bearing the notation "good for return". These recommendations were accepted in principle by most states, and the "international passport" came to life. When refugees began "coming from Germany" in 1933, the Council of the League, to spare embarrassment to Germany then a member of the Lengue, set up the "High Commissioner for Refugees coming from Germany" as an autonomous organization. The Council appointed Jas, G. McDonald as High Commissioner, and invited fifteen states to send representatives to the governing body. The organization of the High Commission was similar to that of the Nansen Office. The seat of the office was initially at Lausanne, but in October 1934, was removed to London. This removal was significant of League detachment which was more completely expressed. in other ways, While the League bore the administrative costs of the Nansen Office, the expenses of the High Commissioner's office were borne by contributions from philanthropic organizations, save for a Swedish Government contribution. The High Commissioner's reports were not sub-> mitted to the League. One of the High Commissioner's first tasks was to have the "International Passport" of 1927 extended to refugees who while still Germans, could not obtain renewals of their German passports or a new German document. Although the governing body, comprised of representatives of thirteen states, generally agreed, it was here that McDonald ran into difficulty. The High Commission, because of its autonomy, lacked the moral authority which the Nansen Office in theory enjoyed by means of invoking the resolutions of the League assembly, could only use therefore persuasion and consultation to produce results. Regraded Unclassified -3- 47 In 1938 the Nansen Office was merged with the Office of the High Commissioner and was commissioned to concern itself with the legal and political destinies of refugees. On July 14, 1938 at Evian the IGC adopted a resolution for the formation of a permanent committee for refugees. Item "e" of this resolution follows: (e) "That, with regard to the documents required by the countries of refuge and settlement, the Governments represented on the IGC should consider the adoption of the following provision: 'In those individual immigration cases in which the usually recuired documents emanating from foreign official sources are found nót to be available, there should be accepted such other documents serving the purpose of the requirements of law as may be available to the immigrant, and that, as regards the document which may be issued to an involuntary emigrant by the country of his foreign residence to serve the purpose of a passport, note be taken of the several international agreements providing for the issue of a travel document serving the pur- pose of a passport and of the advantage of their wide application. If PJMcCormack:ia 3/23/44 Regraded Unclassified 48 Convention Relating to the International Status of Refugees Geneva, October 28, 1933 (c. 650, M. 311, 1933) Chapter II - Administrative Measures Reservations Article 2 (1) Each of the Contracting Parites under- takes to issue Nansen certificates, valid for not less than one year, to refugees residing regularly in its territory (2) The text of the said certificates shall Pars. 2 & 3 - Bulgaria. The depar- include a formula authorizing exit and re- ture from the country of refugees turn. Bearers of Nansen certificates which possessing Nansen certificates shall have not expired shall be free to leave the be governed by the general regulations country which has issued these documents in force in this respect, Bulgarian and return to it without requiring any consuls will be empowered in authorization on exit or visa from the con- case of 'force majeur' to extend Name suls of that country on their return. certificates issued in Bulgaria (3) The respective consuls of the Con- for a period of three months, tracting Parties shall be qualified to extend Par. 3 - Belgium, Not accepted these certificates for a period not exceeding Czechoslovakia, Not accepted six months. Norway. Reservation made (4) The cost of visas for Nansen certifi- Par, 4 - Bulgaria. The cost-of"visas cates shall, subject to their issue free of for Nansen certificates shall be fixed charge to indigent persons, be established in accordance with the tariff appli- according to the lowest tariff applied to the cable to the nationals of the country visas of foreign passports. by which the certificate was issued. PJMcCormack:ia 3/23/44 Regraded Unclassified 49 Convention Concerning the Sta tus of Refugees Coming from Germany Geneva, February 10, 1938 (c. 75. M. 30. 1938, XII) Chapter III - Travel Document Article 3 Issue and renewal (1) (a) The High Contracting Parties shall issue, to refugees coming from Ger- many and sojourning lawfully in their ter- ritory to which the present Convention ap- plies, a travel document in the form of a certificate similar to the attached specimen (see annex), or some other document tak- ing the place of a passport. (b) As a transition of measure, such travel documents may be issued to refu- gees not staying lawfully in these terri- tories on the date of the coming into force of the present Convention, provided such refugees report themselves to the authori- ties within the period prescribed by the Government of the High Contracting Party concerned. (2) The issue of the travel document shall Par. 2. Norway. Not appli- be subject to the following conditions: cable (a) It shall be in conformity with the laws and regulations governing the super- vision of foreigners in force in the terri- tories of the High Contracting Party to which the present Convention is applic- able; (b) It shall as a general rule be valid for one year as from the date of issue; (c) The renewal or extension of the travel document shall be a matter for the issuing authority, until such time as the holder may be able to secure the issue of a fresh travel document. Should a refugee lawfully take up residence in another ter- ritory to which the Convention applies, the authorities of that territory shall be requir= ed to supply him with a new travel docu- ment; (d) Consuls specially authorized for the purpose by the country issuing the travel document shall be empowered to extend Regraded Unclassified - 2 - 50 Chapter III - Travel Document - Cont. its validity for a period which, as a rule, shall not exceed six months; (e) The travel document shall be made out in the language of the issuing author- ity, and also in French; (f) Children under 16 years of age shall be entered on the travel document issued to their parents or parent; (g) The fees charged for the issue of travel documents shall not exceed the lowest scale of charges for national pass- ports. It is recommended that, in case of indigent persons, travel documents should be issued free of charge Article 4. Effects (1) (a) The travel document shall entitle the holders to leave the territory where it has been issued and to return thereto dur- ing the period of validity of the said travel document. (b) The High Contracting Parties re- serve the right, in exceptional cases, to limit the period during which the refugee may return, such limitation being noted on the travel document. (2) The competent authorities of the ter- ritory to which the refugee desires to proceed shall, if they are prepared to admit him, affix a visa to the travel document of which he is the holder. (3) The authorities of the territories of transit undertake to grant facilities for the issue of transit visas to refugees who have obtained visas for the territory of final destination. (4) The fees for the issue of entrance or transit visas shall not exceed the lowest scale of charges for visas on foreign pass- ports. It is recommended that, in the case of indigent persons, visas shall be issued free of charge. Regraded Unclassified 51 EMBASSY OF THE UNITED STATES OF AMERICA Chungking, March 22, 1944. No. 2345. Subject: Protection of Victims of Enemy Oppression. The Ambassador has the honor to refer to the Department's circular airgram of January 26, 7:00 p.m., in regard to relief measures for victims of enemy oppression, and to enclose a copy of the Embassy's circular instruction of February 28, 1944 addressed to American diplomatic and consular officers in China requesting reports on the matter for transmission to the Department. There is also enclosed a copy of the Embassy's formal note of March 6, 1944 to the Ministry of Foreign Affairs which has orally informed the Embassy that the matter has been referred to the Executive Yuan for consideration. Despatches to the Department received from the officers stationed at Kunming, Sian and Chengtu in accordance with the Embassy's circular are transmitted herewith. Replies from other offices will be forwarded when they are received. Regraded Unclassified 52 - 2 - Enclosures: 1. Copy of circular instruction to American diplomatic and consular officers in China; 2. Copy of Embassy's note to the Ministry of Foreign Affairs; 3. Despatch no. 50 of March 7, 1944 from the American Consulate General, Kunming; 4: Despatch no. 3 of March 9, 1944 from the Secretary on detail at Sian; 5. Despatch no. 10 of March 12, 1944 from the Secretary on detail at Chengtu. Single copy to the Department. 320 HP/kky Regraded Unclassified 53 Enclosure no. 1 to despatch no. 2245 of March 22, 1944 from the American Embassy, Chungking. Chungking, China, February 28, 1944 CIRCULAR NO. 30 Subject: Protection of Victims of Enemy Oppression. To American Diplomatic and Consular Officers in China. Sirs: There is enclosed a copy of an airgram dated January 26, 1944, 7:00 p.m. received by the Embassy from the Department in regard to relief of victims of enemy oppression. It is desired that each office render a report on its district as called for in the fourth paragraph of the airgram. These reports, addressed to the Department, should follow the form specified in the Embassy's circular no. 27 of February 7, 1944 and be transmitted through the Embassy. Other action required in the airgram will be taken by the Embassy. Very truly yours, C.E.Gauss Copies to: Consulate General, Kunming. Consulates, Kweilin, Tihma. Secretaries of Embassy on detail at Chengtu, Lanchow, Sian. HP/ccw Regraded Unclassified 54 Enclosure no. 2 to despatch no. 2245 from the American Embassy, Chungking. Chungking, March 6, 1944 Excellency: I have the honor to inform Your Excellency that I have received an instruction from my Government reading, in part, as follows: "The President has instructed the Secretaries of State, Treasury and War to take action for the immediate rescue and relief of the Jews of Europe and other victims of enemy persecution. In an execu- tive order issued January 22, the President declared: 'It is the policy of this Government to take all measures within its power to rescue the victims of enemy oppression who are in imminent danger of death and otherwise to afford such victims all possible relief and assistance consistent with the successful prosecution of the war'. The order establishes special governmental machinery for executing this policy. It creates a Mar Refugee Board consisting of the Secretaries of State, Treasury and Var. The Board is charged with direct responsibility to the President in seeing that the announced policy is carried out. The President indicated that while he would look directly to the Board for the execution of this policy, the Board would cooperate with the Intergovernmental Committee, UNRRA, and other interested international organizations. The President stated that he expected the cooperation of all members of the United Nations and His Excellency Dr. T. V. Soong, Minister of Foreign Affairs, Chungking. Regraded Unclassified 55 - 2 - and other governments in carrying out this difficult but important task. He stated that the existing facilities of the State, Treasury and Far Departments would be employed to furnish aid to Axis victims to the fullest extent possible. He stressed that it was urgent that action be taken to forestall the plot of the Nazis to exterminate the Jews and other persecuted, minorities in Europe". I am directed by a later portion of this instruction to ascertain the extent to which the Chinese Government is prepared to cooperate in the policy expressed in the President's Executive Order referred to above. I should accordingly appreciate being informed as to the attitude of the Chinese Government on this matter in order that I may report accordingly to my Government. Accept, Excellency, the renewed assurances of my highest consideration. C. E. Gauss Regraded Unclassified 56 No. 50 AMERICAN CONSULATE GENERAL Kunming, Yuonan, China, March 7, 1944. SUBJECT: Protection of Victims of Enemy Oppression. The Honorable The Secretary of State, "ashington. Sir: I have the honor to refer to the Department's cir- cular airgram of January 26, 1944, 7:00 p.m., addressed to certain American missions, a copy of which was for- warded to this Consulate General under cover of Circular Instruction no. 30 from the Embassy at Chungking, in regard to relief of victims of enemy oppression, and to submit a brief report as called for in the fourth para- graph of the airgram. The legal position of the German Jew in Yunnan was discussed in some length in this Consulate General's despatch no. 42, dated February 12, 1944, addressed to the Department, a copy of which was submitted to the En- bassy. It was stated that the Chinese Government had failed to draw the obvious and necessary conclusion that "stateless" Jews could not be regarded as enemy aliens and that the Chinese ordinances dealing with the treatment of enemy aliens should not be applied to them. One of the less admirable characteristics of the Chinese is their lack of a sense of fair play and their tendency to take advantage of those who are defenseless, or, as the Chinese themselves would express it, to kick a dead horse ( ). As far as is known, nothing has been done to assist persecuted minorities. It is often said that the Chinese is the only race capable of Regraded Unclassified 57 - 2 - absorbing the Jew, and a Jewish racial problem cannot be said to exist here in any form. Nevertheless, there has been observed a growing, and an entirely baseless and illogical tendency to heap scorn on the Jew and to treat him with contempt. Chinese in authority have man- ifested in many ways their admiration for present day Germany and the fascist, as opposed to the democratic form of government. The only reasonable explanation of the present-day Chinese attitude toward the Jew is that it reflects the effectiveness of Nazi propaganda. There are, in all probability, not more than twenty German Jews in Yunnan Province. The last known German Jens to come to Yunnan-were a Mr. and Mrs. Ludwig HEIN- RICH, who arrived in Kunming in September, 1940. Mr. Heinrich was formerly a moderately prosperous traveler in the wholesale woolen trade, and was admitted under the guarantee of another German Jew, a certain Mr. BEAL, an erstwhile employee of his in Germany. Mr. Beal himself, along with three or "our other German Jewish mechanics from Shanghai, had previously been brought to Kunming under the suspices of the International Red Cross to work as chauffeurs on the Burma Road. The Special Yunnan Delegate of the Ministry of For- eign Affairs is without information in regard to require- ments for immigration visas. German Jewish refugees, like other prospective immigrants into China, are under- stood to be required to submit evidence (1) that they are of good moral character, and (2) that they are suf- ficiently responsible from a financial point of view to warrant the belief that they are not liable to become a public charge. It is said that in practice immigrants into China from places in the Far East are for the most part granted visas by the Chinese Consul General in Cal- cutta; doubtful cases are referred by him to the Chinese Foreign Office. Respectfully yours, Arthur R. Ringwalt American Consul Approved for transmission: Original ozalid to Department C. E. Gauss Copy to Embassy, Chungking. 840.1 - ARR:sam Regraded Unclassified 58 EMBASSY OF THE UNITED STATES OF AMERICA Second Secretary on detail at Sian, China, March 9, 1944 No. 3 Subject: PROTECTION OF VICTIMS OF ENEMY OPPRESSION The Honorable The Secretary of State, Washington. Sir: I have the honor to acknowledge receipt of the Depart- ment's sirgram of January 26, 1944, 7:00 p.m., in regard to the rescue and relief of victims of enemy oppression and persecution. I received with the airgram an instruction from the Embassy at Chungking to submit a report to the Department in accordance with the terms of the fourth paragraph of the airgram. My report follows herewith. Summary: While the plight of Jewish, Russian and other refugees domiciled in the Jepaness-occupied areas of China is reported to be serious, it would appear that the Japanese have not deliberately maltreated or persecuted them in a manner reminiscent of the atrocities perpetrated by the German Nazis against the Jews of Europe. Very few if any of the refugees in Japanese-occupied Chinese cities appear to have made any effort to emigrate to unoccupied China. The Chinese Government would appear to be without the facilities to extend any substantial aid to such refugees if they were to migrate to unoccupied China. Removal from occupied to unoccupied China probably would not in any event relieve the economic plight of such re- fugees; indeed it might add to their distress and diffi- culties. In so far as is known, there are no official regulations barring the entry of war refugees, but un- identified refugees entering unoccupied China would almost certainly be detained for examination. The Chinese official Regraded Unclassified 59 - 2 - attitude toward the entry of war refugees would appear to be negative and formless, it does not seem to have crystal- lized. If faced with the concrete problem of the reception and care of any substantial number of war refugees (Jewish, Russian, et cetera), it seems doubtful whether the Chinese reaction would be favorable for various reasons. No report has been received of Chinese failure to admit to the unoccupied areas war refugees seeking exit from the Japanese- occupied areas. End of summary. Introductory explanation. This report has reference to conditions and developments in China, and more particular- ly to those relating to occupied China and to the northern and central Provinces of Shensi, Shansi, Honan, Hupeh and Anhwei. Moreover, it has reference primarily to European refugees residing in the Chinese port cities who may have been or may be subjected to Japanese oppression and per- secution, the German Nazis apparently having been unable to carry out their policy of racial persecution in the Far East. Japanese attitude toward refugees. Accurate information in regard to the Japanese attitude and actions toward the Jews, "white" Russians and other minorities in Japanese- occupied China is scanty and inconclusive. But on the basis of available information it would appear that the Japanese have not embarked on a deliberate campaign of persecution or elimination of the Jews or other racial minorities that would compare in any wise in barbarity or severity with the acts reportedly perpetrated by the Germsu Nazis against European Jews, Russians, Poles, et cetera. According to Chinese refugees arriving from Shanghai and other Japanese-occupied cities of China, the economic plight of many Jews, Russians, et cetera, is very serious, but no more so than that of millions of Chinese. The bulk of the Jewish and Russian refugee population has from the time of its arrival in Shang- hai and other Chinese port cities lived in poverty and on a low economic level; and it would appear that this group has suffered increasingly as economic conditions have pro- gressively deteriorated. This would appear to be true especially of the Jewish population which is reported to have been concentrated by the Japanese authorities in the narrow limits of Hongkew at Shanghai. In so-far as is known, actual Regraded Unclassified 60 - 3 - physical concentration of Jewish, Russian and other European refugees does not appear to have occurred on any marked scale in Japanese-occupied China. It would appear that few, if any, of these refugees in Japanese-occupied China have en- deavored to come into unoccupied China. The precise reasons why such migration of these refugees has not developed are unknown: they may be subject to Japanese travel restrictions or they may lack travel funds or they may feel that conditions in unoccupied China would be no more favorable than those obtaining in Japanese-occupied China. Rescue of Jews and other minorities from Japanese- occupied China. It would appear, in general, that the Chinese Government, which seems hard-put to cope with the problem of aiding the thousands of Chinese students who have been and are now fleeing from Japanese-occupied China to un- occupied China, not to mention its apparent inability to offer any appreciable succor to millions of China's own famine and war stricken population, is scarcely in a position to extend active aid or relief to the suffering Jews, Russians and other racial minorities of Shanghai, Tientsin and other Japanese-occupied Chinese cities. And even if such refugees evinced a desire to come to unoccupied China and if the Chinese Government had the will and the resources to administer relief to such refugees, it 1s doubtful whether the Chinese Government has the machinery in the Japanese-occupied areas of China to carry out such a program. Moreover, it would appear that their removal, even if it were feasible, would not ameliorate their lot or solve their pressing economic problems. Having due regard to existing conditions and developments, it seems the wiser course that such refugees should remain at Shanghai, Tientsin and other enemy-occupied cities pending conclusion of the war. If it is found that such refugees are in need of urgent relief, it may be found possible to afford them succer through the International Red Cross or the agency of some neutral government. The extent to which such war refugees are permitted to enter unoccupied China. In so far as is known there is no specific bar to the entry of Jews and other war refugees from the Japanese-occupied areas to unoccupied China. No case is known of the turning back at the border of such refugees. Regraded Unclassified 61 - 4 However, based on the experiences of citizens and subjects of various European Powers proceeding from the Japanese-occupied areas of China to this portion of China during the past year or more, it would seem safe to predict that many such refugees would be hindered, delayed and subjected to detainment. More particularly would this be likely to occur in cases involving refugees of former German or Austrian nationality. It is more than likely that, unless well known and guaranteed, such refugees would be regarded by the Chinese authorities with suspicion and as possible German or Japanese agents. Unidentified Russian refugees would most certainly be the objects of Chinese suspicion; it seems doubtful whether they could travel far into unoccupied China without being detained for investigation. Even if war refugees were allowed to travel freely in unoccupied China, they would find the cost and the diffi- culties of transport to be very great. It may be stated without qualification that should any appreciable number of European war refugees endeavor to enter unoccupied China by the generally traveled route--that is, via Kaishowtsi in eastern Honan Province--they would tax relief and transport facilities to the limit. Even if it were possible and feasible to transport European war refugees from Shanghai, Tientsin and other enemy-occupied cities to the border of unoccupied China, it would seem that conditions in unoccupied China are most unpropitious for their movement and residence. The extent to which China encourages and cooperates in the entry of war refugees. Owing to the very limited number of war refugees (other than those of Chinese nationality) coming into unoccupied China, it seems impossible from this vantage point to define with any precision China's real attitude in regard to the entry of European war refugees. It would appear, however, that the Chinese authorities have, in anything, taken a negative attitude in relation to en- couraging the entry of war refugees (including those of Chinese nationality) from the Japanese-occupied areas of China. If the Chinese-Government were faced with the concrete problem of the admission and care of a substantial number of Jewish or "white" Russian refugees, for instance, it is highly doubtful whether the reception would be a welcome one. In all probability the Chinese Government would take the attitude Regraded Unclassified 62 - 5 - that Jewish and Russian refugees could not be favored over millions of distressed Chinese war refugees who must shift for themselves. Moreover, as indicated above, the Chinese Govern- ment would seem to lack the facilities to receive and absorb any appreciable number of war refugees. Furthermore, as suggested above, the Chinese Government would probably not favor the indiscriminate admission of European refugees owing to the possible danger of espionage. The extent to which war refugees are not able to enter unoccupied China. No information has been received of the turning back by the Chinese authorities of European war refugees. As has been pointed out above, very few European war refugees appear to have tried to leave Japanese-occupied China for unoccupied China. In the large sense, therefore, this problem does not appear to have arisen. The few Euro- peans who have fled from Japanese-occupied China to this portion of unoccupied China have found that difficulties with the Chinese authorities are more apt to arise after they have reached a city somewhat to the rear of the border; Sian is a case in point. At least six Europeans have been detained here for varying periods in the course of the past year or more following their arrival from the Japanese-occupied areas. Respectfully yours, Fverett F. Drumright Second Secretary of Embassy on detail at Sian Approved for transmission: C. E. Gauss Regraded Unclassified 63 Enclosure no. 5 to despatch no. 2245 of March 22, 1944 from the American Embassy, Chungking. No. 10. DUPLICATE Office of the Secretary on Detail at Chengtu, Chengtu, Szechwan, Merch 12, 1944. Subject: Protection of Victims of Enemy Opression. The Honorable The Secretary of State, Washington. Sir: I have the honor to refer to the Department's air- gram dated January 26, 1944, 7:00 p.m., to the Embassy at Chungking, in regard to the relief of victims of enemy oppression. In compliance with the Chungking Embassy's circular instruction no, 30 of February 28, 1944, the following is this of fice's reply to the points raised in the fourth paragraph of the Department's airgram under reference: So far as this office is aware, nothing in particu- lar is being done by the authorities of this district (Szechwan north of 30° latitude and the whole of Sikang Province) to rescue the Jews and other persecuted minorities from Hitler. Although no actual case of arrival of enemy persecuted minorities has come to the attention of this office, it is believed that should such people, of German or other enemy nationality, arrive here from abroad or from other parts of China they would be regarded and treated as enèmy aliens in accordance with the provisions of Chinese Regulations Governing the Treatment of Enemy Aliens. Refugee Jews of non-enemy nationality would, it is believed, be treated by the Chinese authorities of this district with as much consideration as friendly gen- tiles. Respectfully yours, Approved for transmission: Harry E. Stevens C. E. Gauss Second Secretary of Embassy American Ambassador on Detail at Chengtu HES. Regraded Unclassified 64 CMW-750 PLAIN London Dated March 22, 1944 Rec'd 3 p.m. Secretary of State Washington 2324, 22nd Sir Herbert Emerson 1s pleased at suggestion in Department's 2043, March 17, midnight and plans to visit Washington very soon. Please 80 inform Myron Taylor, Secretary Morgenthau and Pehle. Embassy requests immediate authority issue visa to Emerson to proceed United States for discussions concerning refugees with Secretary Morgenthau, Pehle and others. References Taylor and Pehle. WINANT BB ch:copy 3-25-44 65 3/22 CABLE TO MINISTER NORWEB, LISBON, PORTUGAL Please refer to Department's No. 200 of January 25, 1944, in regard to the establishment of the War Refugee Board. The Executive Director of the Board, Hohn W. Pehle, has informed the Department that in conformity with the President's Order of January 22, 1944, the Board proposes to appoint Mr. Robert C. Dexter, European representative of the Unitarian Service Come mittee end en route to Lisbon at the present time, as the special represents- tive of the Board with the designation by the Department as special attache to the Legation on war refuges matters. The President's order provides that the State Department shall appoint such special attaches upon recommendation of the War Refugee Board, that they shall have diplomatic status, and that their duties and responsibilities shall be defined by the Board, in consultation with the State Department. The Unitarian Service Committee has indicated that it has no objection to Mr. Dexter's accepting this appointment. If, after discussing the matter with Mr. Dexter, the appointment meets with your approval, you should advise him that he is 80 designated and that he is to have diplomatic status. It is assumed there will be no objection on the part of the Portuguese Government to this designation, although you may, in your discretion, approach the Portuguese authorities if you consider it necessary or advisable to do 80. You are requested to confirm by telegram Dexter's designam tion or to advise us promptly if there is any reason why it should not be effective at once. You should advise Dexter that: (a) He is charged with the duty and responsibility of carrying out the Board's policies and programs in Portugal# (b) He is responsible to teMinister and should discuss his activities and problems with him regularly and fully; (c) The Legation will provide him with the necessary communication facilities in carrying on his official duties; (d) He shall extend all possible assistance to the Minister in carrying out the instructions contained in the Department's reference telegram; (e) He shall work with and give all assistance to public and private agenciesoperating in Portugal in this field regardless of whether such organ- izations are Emerican, foreign or international; (f) He shall develop and assist in the development of programs and implementation of measures for the rescue, transportation, maintenance and relief of refugees; (g) He shall forward to the Board recommendations and frequent reports on progress of work and difficulties encountered; Regraded Unclassified 66 - 2 - (h) In so far as the Trading with the Enemy Act is concerned, the Secretary of the Treasury has vested in the War Refugee Board and its repre- sentatives in the field full autho ity to communicate with enemy territory to carry out the purposes of the Order. The Secretary of the Treasury has also delegated to the War Refugee Board and its representatives the power to authorize any public or private agencies which may be subject to the provisions of our Trading with the Enemy Act, to communicate with enemy territory for the pur- pose of carrying out the order. Dexter is authorized to act accordingly. After receipt of confirmation of Dexter's designation further detailed instructions will follow from time to time. + April 1, 1944 9:35 am. JHMurphy:dh 3/22/44 JHM:JEF:WS:LSL:FH Regraded Unclassified 67 1944 MAR 22 AM 8 36 WU6 13 TDB BELMONT MASS MAR 22 1944 823A JOSEPH FRIEDMAN WAR REFUGEE BOARD ROOM 192 TREASURY BLDG UNITARIAN COMMITTEE ACCEPT PROPOSTION. I SUGGEST SPANISH REPRESENTATIVE CONTACT ME LISBON BEFORE ENTRY ROBERT DEXTER. 835A... Regraded Unclassified 68 AIRGRAM From LISBON Date: March 22, 5:40 p.m., 1944 Rec'd: March 27 4 P THE SECRETARY OF STATE WASHINGTON A-212 March 22, 5:40 p.m. Please transmit urgently following telegram to Rabbi Stefan Wise, Nahum Goldman, World Jewish Congress, 330 West 42nd Street, New York: "Following suggestions in connection War Refugee Board handed American Ambassador. Intervention with Portu- guese authorities vising permission entry permanently till war end ten thousand refugees, thus securing rescues thousands. That Portuguese Red Cross be authorized large scale expedition food parcels to concentration camps and ghettos, preventing starvation thousands. Official inter- vention supported by Portuguese clergy with German authorities for release and entry three thousand registered children from France. Ambassador opines that successful intervention only possible against guarantee that necessary food supplies be delivered in Portugal for new arrivals and above mentioned Red Cross expeditions. Suggest these guarantees best obtained your end through intervention UNRRA or Intergovern- mental Committee. Ambassador should be instructed by State Department on these points. End item. Regarding our suggestions creation reception centres in Portugal for hidden children France via underground channels. American Legation and British Embassy promise support and are inter- vening Portuguese authorities for respective permission. American Friends and Unitarians already cooperating. Expect Joint will follow suit when official authorization obtained. Please cable." Signed ISAAC WEISSMAN NORWEB Regraded Unclassified 69 PARAPHRASE or TELEGRAM RECEIVED FROM: AMERICAN EMBASSY, MADRID. TO: Secretary of State, Washington DATE: March 22, 1944 NUMBER: 997 CONFIDENTIAL I have not transmitted the substance of Department's 752, March 18, to Sequerra, JDC representative in Baroe- lona, by reason of the following considerations: (a) David Blickenstaff is understood by me to be the principal JDC representative in Spain, and not Sequerra; all business with the JDC has been transacted by the Embassy through Blickenstaff. (b) Sequerra's loyalty to the Allied cause is not considered to be beyond doubt although apparently this fact has not been brought to the Department's attention. Sequerra is a neutral subject (Portuguese) and although he has apparently done effective work in the field of relief of refugees, we have no basis for assuming that he would not deal with our enemies, particularly if pressure is applied. Until recently, Sequerra had a personal representative in Madrid who was a disreputable individual to when a Palestine visa was refused by the British on the grounds that he was suspected of having given information to the Germans. It therefore appears to me to invite obvious and unnecessary risks which could have the most serious repercussions to entrust a person of this type with the responsibility of carrying out the operations described in the Department's telegram under reference. (o) For any American charitable organization or its representatives to engage in clandestine operations of the type contemplated by the license could well jeopardize in Spain the entire position of these organ- izations. The work of these organizations has in the past been centralized in Blickenstaff's office, and with the Embassy's support, they have won respect and confidence of the Spanish Government, which has enabled them to do valuable work on behalf of unprotected and stateless refugees. Regraded Unclassified - 2 - 70 refugees. This has frequently caused extreme discomfert to the Germans who want the Spanish Government to supress the activities of these organizations, and welcome every pretext to bring force to bear to this end. We must assume that the operations contemplated by license W-2155 would soon become known to the Germans and a pretext to apply such force to the Spanish Government would be pro- vided by the participation of the organizations in such operations. (d) On the other hand, if the Germans considered that these operations could be turned to their own ad- vantage, they might accomplish this purpose by using these operations as an additional channel for getting their agents into territory controlled by Spain and the Allies. (e) My most serious objection is the danger that existing underground facilities within German occupied territory for accomplishing the escape of American and Allied airmen who have thereby been enabled to reach the Spanish frontier without detection, may be compro- mised by these operations. I am firmly convinced and determined that no steps should be taken which might in the slightest measure jeopardize the chances of es- cape to safety of these airmen whose safety must be given first priority by our Government (prior to that of any other class of refugees) irrespective of human- itarian considerations, with which last I an, of course, in complete sympathy. (f) In view of the inevitable military significance which must be attached at this crucial time with any activities involving communication or the passage of persons into or out of occupied France, and having in mind the above considerations, I feel that the Joint Chiefs of Staff should give prior approval to the oper- ations envisaged by the license embedied in Department's telegram under reference, and that my views in the matter should be conveyed to the Joint Chiefs of Staff in con- nection with their consideration of the matter. Pending consideration by the Department of the points mentioned above, I intend to take no action on Department's telegram 752 under reference. This telegram has been repeated to Lisbon and London. HAYES WT:WIR:AMN 3/25/44 Regraded Unclassified 71 DMH-53 Madrid This telegram must be paraphrased bafore being Dated March 22, 1944 communicated to anyone other than 6 Governmental Rec'd 1:30 p.m., 23rd agency. (SC-00) Secretary of State, Washington. 997, March 22, 6 p.m. In light of following considerations I am not (repeat not) transmitting substance Department's 752, March 18, to Sequerra, JDC representative, Barcelona: One. It is my understanding that principal JDC repre- sentative in Spain is not (repeat not) Sequerre but is David Blickenstaff and it is Embassy's practice to transact all business with that organization through latter. Two. Although it has apparently not been brought to Department attention, Sequerre's loyalty to Allied cause is not considered beyond question. He is a Portuguese and therefore 8 neutral subject and, although hebas apparently done effective refugee relief work, there is little if any- thing to indicate that he would be above dealing with our enemies, particularly if subjected to pressure. Sequerra's reputable individual who was refused Palestine visa by British because of suspicion that he had been giving infor- mation to the Germans. To entrust such a person with carry- ing out of operations described in Department's telegram would therefore appear to be inviting obvious and unneces- sary risks which could have gravest consequences. Three. Participation of any private American charitable organization or its representatives in such clandestine op- perations as those envisaged under authorization contained in Department's telegram might well prejudice entire posi- tion of such organizations in Spain. With Embassy's sup- port these organizations, centralized in Blickenstaff's office, have won respect and confidence of Spanish Govern- ment and have been enabled thereby to do valuable work on behalf of stateless and unprotected refugees often to acute discomfort of Germans who would welcome pretext to force Spanish Government to suppress their activities. Their participation in operations authorized by license W-2155, which we must assume would not long remain unknown to Germans, would provide such a pretext. **Omission of following: personal representative in Madrid, until recently, was dis- Regraded Unclassified 72 -2- 997, March 22, 6 p.m., from Madrid Four. If on the other hand, Germans should consider it more profitable to turn these operations to their own ends they might by allowing them to continue provide them. selves with an additional channel through which to send am gents into Spain and Allied controlled territory.. Five. Of even greater importance is danger that such operations might compro mise existing underground facilities within German occupied territory by means of which hun- dreds of American and Allied airmen have been enabled to reach the Spanish frontier without detection. It is my firm and determined conviction that, regardless of humani- tarian considerations involved with which I am, of course, entirely in sympathy, no (repeat no) steps should be taken which might in even the slightest measure jeopardize the chances of escape of these airmen whose safety must have a prior claim on the efforts of our Government to that of any other class of refugees. Six. In view of above consideration and of the in- evitable military significance which we must attach at this crucial time to any activitissinvolving passage of communications and persons into or out of occupied France, it is my feeling that any operation such as that envisaged in Department's telegram under reference should be sub- mitted for prior approval to Joint Chiefs of Staff who shall be made acquainted with my views in the matter. It is my intention to take no (repeat no) action on Department's 752 pending consideration by Department of points raised herein. Repeated to London and Lisbon. HAYES WTD Regraded Unclassified 73 PARAPHRASE OF TELEGRAM SENT FROM: Secretary of State, Washington TO: American Legation, Bern DATED: March 22, 1944 NUMBER: 950 SECRET FOLLOWING MESSAGE FROM WAR REFUGEE BOARD. The following cable is for Isaac Sternbuch, 3 Teufener Strasse, St. Gallen, froi Rabbie Abraham Kalman owitz and Aron Kotler of the Vaad Hahatzala Emergency Committee: The interventions which you requested in your communication via the Legation are being made by us. Necessary funds are being raised in order to do everything possible to expand rescue work in France, Lithuania, Belgium, Holland and wherever else possible. Regarding rescue work for Jews who enter Hungaria and those in Rumania, Advise whether it can be done by Jacob Grifill of Istanbul and you. HULL (GLW) Regraded Unclassified 74 COPY KIN-756 Bern This telegram must be paraphrased before being Dated March 23, 1944 communicated to anyone other than a Government Rec'd 2:56 pos. agency. (BR) Secretary of State, Washington. US URGENT 1754, March 22, 6 p.m. Federal Political Department infgrms me that it is willing to include Roswell Dunlop McClelland in Diplomatic List as "Special Assistant" (thue according him Diplomatic status) and that Swiss federal authorities will be pleased to treat with him on questions concerned with the refuges problem. Befer to myl387, March 8 and related telegrams. Your confirmation McClelland's appointment awaited with instructions as to salary, other expenses, appropria- tions to be used et cetera. HARRISON BB Regraded Unclassified 75 PARAPHRASE OF TELEGRAM SENT FROM: SECRETARY OF STATE, WASHINGTON TO: AMCONSUL, GENEVA DATED: MARCH 22, 1944 NUMBER: 126 CONFIDENTIAL War Refugee Board sends the following message from Leland Rex Robinson and Henry Lieper, The American Committee for Christian Refugees for Adolph Freudenberg, 41 Champel, Geneva: During the six months beginning March 1 you are authorized as our representative to use 21,200 Swiss francs or dollar equivalent monthly for work in France according to the outling and assurances contained in your communications of November 18 and November 29. You should establish contact with the American Legation at Bern regarding our license no. W-2150 which Treasury issued March 8. You should kirep us informed through the Lega- tion whenever possible. HULL DCR:IDB:JTM 3/28/44 Regraded Unclassified 76 PARAPHRASE OF TELEGRAM RECEIVED FROM: The American Consul, Zurich TO: The Secretary of State, Washington DATE: March 22, 1944 NUMBER: 36 CONFIDENTIAL With reference to immigration visas for refugee children from France, the Consulate General has been provided by the Legation with a copy of Department's message number 891 dated March 18, 1944. The necessary steps are being taken by this office to have all consulates in Switzerland issue such visas and further developments will be reported. WOODS DCR:MPL 3/24/44 Regraded Unclassified 77 March 22, 1944 11:00 a.m. CABLE TO AMBASSADOR STEINHARDT, ANKARA, TURKEY. FOR HIRSCHMANN FROM PEHLE. Your return to the United States to report to the War Refugee Board has our full sp proval. We are taking up with the War Department the matter of priority. The swell job which Ambassador Steinhardt and you have done has received the highest praise. We obviously desire the continuance of your activities on behlf of the Board and I will discuss this with you when I see you. WRB Ankara Cable No. 9 JEDuBoistecr 3/22/44 Regraded Unclassified 78 3/221 CABLE TO STEINHARDT AND HIRSCHMANN, ANKARA, TURKEY, FROM THE WAR REFUGEE BOARD. WRB Cable Ankara No. 10 Refer your 455, 458, 471 and 472 concerning the matter of obtaining shipping for the evacuation of refugees from the Balkans. We are requesting the Swies Government to support the efforts of the International Red Cross to obtain safe conduct for the SS TARI which has been placed at your disposal for a trip to Constanza to evacuate Jewish refugees. The matter of this Government making available a substitute vessel in order that the S. S. TARI may make repeated voyages to evacuate refugees has been discussed with the War Shipping Adminie- tration. The War Shipping Administration is cabling Myron Black requesting further information as to (1) the type of vessel desired and where it is intended that the vessel trade; (2) if vessel is to trade in enemy controlled areas, advice as to whether enemy will treat vessel as Turkish vessel, including question as to whether safe conduct is necessary. The War Shipping Administration has made clear that any recommendation submitted by Black will be sympathetically considered even if practical difficulties are involved. They feel however that most practi cal way of handling situation would be to treat it as poblem of allocation and attempt to work out arrangement whereby equivalent space on Allied vessel proceeding to Eastern Mediterranean port would be made available for Turkish requirements thereby conserving use of Turkish vessels. The War Shipping Administration is also cabling Kalloch, their representative in Algiers, requesting advice 88 to whether any small freighter is available in the Mediterranem which could be chartered to the Turks. You should explore all possibilities in this aituation with Black. Since time is of the essence in view of military situation whatever proposal is submitted met of course be one which will involve least delays. The War Shipping Administration has pointed out the practical difficulties in obtaining without delay a ship now available in the Mediterranean which could be chartered to the Turks for this purpose. We will do whatever we can to carry out any recommendation that you and Black may make after considering all of the difficulties involved. However, you will bear in mind that an effort to actually Regraded Unclassified 79 - 2 - put a vessel into the hands of the Turks by the time that the S.S. TARI completes the f irst voyage may be fraught with consider- able difficulties if the voyage were completed in a short period of time. On the other hand, if you could reach an understanding with the Turks whereby the S.S. TARI would be made available any for three months on the assurance that this Government would see to it that an equivalent space on an Allied vessel was made available for Turkish requirements for a three months period, not necessarily concurrent with the period during which the S. S. TARI will be used, such an arrangement would be much more feasible from the standpoint of the shipping situation. With respect to the purchase of the S. S. NECAT for donation to the Turkish Red Crescent, it is noted that the Turkish Government has indicated that to withdraw a second vessel from the ships at the disposal of the Turkish Goverment would be impossible. Have you explored the possibility of making the S. S. NECAT available to the Turkish Red Crescent as soon as the S.S. TARI completes its first voyage, in the event that arragements can not be made to have the S.S. TARI make repeated voyages. JEDuBoistecr 3/22/44 Regraded Unclassified 80 PARAPHRASE OF TELEGRAM SENT FROM: SECRETARY OF STATE, WASHINGTON TO: AMEMBASSY, ANKARA DATED: MARCH 22, 1944 NUMBER: 230 SECRET Following for Hirschmann from War Refugee Board. War Refugee Board cable no. 7 It is stated in a letter dated February 25, from Inter- cross that the "Bellacitta", a Bulgarian vessel, is available to transfer refugees at the rate of 150 per week to Istanbul presumably from Mangalia. Red Cross also informed us that two Bulgarian vessels, "Milka" and "Maritza", are also available to Jewish organizations for this purpose but since Turkey is not allowing more than 150 a week to go to Palestine by rail, it is presumed that the last two mentioned boats will not be usable since the "Bellacitta" can fill the limit imposed. Red Cross as intermediary will give notification of sailings you are requested to do everything possible without lee- sening efforts concerning Swedish and Turkish boats. RedCross has requested and the United States has granted safe conducts for the "Bellacitta" and cable is being sent to the American Embassy at Moscow requesting that the Soviet Government take prompt action on the British Government's safe conduct requests. HULL Regraded Unclassified 81 GEM-703 Chungking This telegram must be paraphrased before being Dated March 22, 1944 communicated to anyone other than a Governmental Rec'd 1 p.m. agency. (BR) DEPARTMENT OF STATE DIVISION OF Secretary of State, MAR 23 1944 Washington. COMMINICATIONS MAD RECORDS 508, March 22, 2 p.m, Department's circular February 22 and Embassy's 384, February 26, 10 a.m. Central News Agency March 20 report official statement issued by Finance Minister that Chinese Government will not recognize transference of title to looted gold which Axis powers at any time hold or have disposed of in world market. Embassy will expect to forward by pouch full text of statement upon its receipt from Foreign Office. RR GAUSS Regraded Unclassified NOT TO BE RE-TRANSMITTED SECRET COPY NO 11 OPTEL No. 94 Information received up to 10 A.M. 22nd March 1944 1, NAVAL On 19th/20th heavily escorted ship believed German 5,000 ton tanker proceeded up channel from BOULOGNE shelled by DOVER Coastal batteries and possibly sunk. 2. MILITARY Italy 21st. Intense fighting continues in and around CASSINO. Heavy German artillory and mortar fire and ithin the town opposing troops so close that noutralising enemy fire is dangerous to our forward infantry. On heights to the West attack and counter-attack has left general aituntion unchanged. In Bridgehead situation relatively quiet. Russia Russians have advanced further South West of DUBNO and Westward between ZHMERINKA and MOGILEV-PODOLSKI. They have extended their bridgehead on right bank of DNIESTER and have cut railwgy between CERNAUTI and BALTI. Further eastwards they have ro-taken VOZHESENSK, Burma CHINDWIN. Japanese advancing West parallel to and south of TAMU-PALEL road reported reached point 3 miles East ANGBRESHU Four miles south of TAMU our tanks have destroyed four or five Japanese tanks for the loss of one. HOMALIN. Japanese forces hich crossed CHINDWIN now thrusting towards URKHUL North East of IMPHAL and are in contact ith our troops. HUKWANG VALLEY. U.S. and Chinese troops continue their advance. North BURMA. Our troops have captured SUMPRABUM. 3. AIR OPERATIONS Western Front 21st. Liberators dropped 191 tons through cloud on military constructions Northern FRANCE. 51 Mustangs sweeping BORDEAUX area destroyed 12 enemy aircraft in the air end 9 on the ground 7 Mustangs missing. Two Mosquitoes over STRASBOURG area shot down 3 enemy aircraft and destroyed 4 and damaged 12 on the ground. 21st/22nd. Aircraft despatched: COLOGNE 27, AACHEN and OBERHAUSEN 9, Intruders 21, Sea-mining 18, Leaflets 10, Anti-shipping 5. All returned safely. About 95 German aircraft were over LONDON and Home counties of hich 70 came over SUFFOLK and 25 over South Coast. Enemy casualties by night fighters 9:2:4. Italy 19th/20th. 38 heavy end medium bombers attacked the submarine base at MONFALCONE. 4. HOME SECURITY 21st/22nd. LONDON. Raid mainly incendiary, East end and docks chiefly affected. 3 large fires reported but fire situation never serious and all under control by 4:35 A.M. Killed, 1944 MAR 23 PM 4 20 Regraded Unclassified 83 March 23, 1944 9:20 a.m. GROUP Present: Mr. Bell Mr. Gaston Mr. Smith Mr. Sullivan Mr. Thompson Mr. O'Connell Mr. Blough Mr. Nunan Mrs. Klotz H.M.JR: There are two things that I need some advice on, and that is the press. I mean, the press is just forcing my hand. Can I get away, for instance, by saying that during this simplification bill there will be people from the Treasury, Mr. Bell and Mr. Surrey, and from the Bureau, Mr. Cann and Mr. Atkeson? MR. NUNAN: Mr. Cann is away. He left on a trip, and will be gone two or three weeks. In the meantime, Mr. Atkeson will represent the Bureau. MR. BELL: You meant Mr. Blough and Mr. Surrey would represent you in this simplification. Have you crossed the bridge yet as to who is to represent you on taxes? H.M. JR: I would like to be ready. I was thinking about it last night. I don t like to be caught off base. I don't know. MR. BELL: I was wondering why you couldn't say that you haven't decided yet who is to represent you on the Hill in general tax matters for the time being. On sim- plification the technical people will handle it, those who have been working with the Committee. Regraded Unclassified 84 - 2 - MR. SMITH: Why couldn't you say that whoever would be most helpful to you would handle it for the time being? MR. O'CONNELL: There isn't anything before the Congress except simplification, and the work is practically all done there except the technical work, as understand it, completing the drafting. I more or less agree with Dan that you don't need to make the decision. MR. GASTON: Yes, I agree with that. I don't think there is any serious problem yet. The same people who have been working with the Committee will continue to work with the Committee, I should say, under the general direction of Mr. Blough. MR. NUNAN: That is the way I feel about it, Mr. Secretary; that will take care of it. H.M.JR: Well, of course, there are two ways. If I had a glib answer, it would look as though I had thought the whole thing through, which I haven't. On the other side of it, if I don't have an answer, it looks as though they had caught me unawares. Is that all right? MR. BELL: It is probably all right. H.M.JR: I am going all around the lot. What do you think? MR. BLOUGH: The Chairman of the Committee, I think, would prefer to keep the Treasury's participation in this bill on a technical level, because they consider it a technical bill, primarily. There may be & point or two, if the policy comes up, where you will want to send some- body else down. But I think that is unlikely, and it can be met when it comes. It seems to me for the time being, in view of the fact that the Treasury has, in effect, been represented by these technical people that it would be entirely appropriate to say that for this purpose, and when other problems arise they can be met as you desire at that time. 85 - 3 - H.M.JR: On the Treasury chart you are directly responsible to me, aren't you? MR. BLOUGH: Well, my responsibility has been a joint responsibility. I have been responsible to the Under Secretary, to the Assistant Secretary, to the General Counsel, with sort of a side responsibility to you. I don't know whom I am responsible to. H.M.JR: It is between Bell and myself; it is the same thing. MR. BLOUGH: I have been responsible in part to Mr. Paul, and in part to you. MR. BELL: But on the chart, Norman, he is under the Secretary. MR. THOMPSON: No, he was under Mr. Sullivan, and that responsibility on the chart is transferred to the General Counsel. MR. BLOUGH: It is transferred to the Tax Adviser to the Secretary, not to the General Counsel. When Mr. Magill was the Under Secretary the responsibility was to him, and when Mr. Hanes was the Under Secretary the responsibility was to him. Then when the tax work went to Mr. Sullivan, the responsibility was to him. When the Tax Adviser was brought in the responsibility was to him. There has never been a responsibility to the General Counsel as General Counsel. MR. BELL: It has always been to the man who handled tax policy. H.M.JR: I thought there was a responsibility to the Office of Secretary direct. MR. BLOUGH: Well, I think practically everyone-- MR. THOMPSON: Administratively he comes directly under you, but for tax responsibility through Mr. Paul. That is the way it is set up. Regraded Unclassified 86 - 4 - H.M.JR: How am I to be kept posted? Have you any suggestions, John? MR. SULLIVAN: The only thing I think you have to avoid in this press conference is the idea that there isn t going to be any more tax legislation this session. H.M.JR: And, if I am not prepared to say anything? MR. SULLIVAN: No, no, I think Dan is quite right; there is no reason why you should be prepared this morn- ing. I mean, the idea is that the only thing that is pending is something being handled on the technical level. You might say that in a way that would be interpreted as meaning we don t have to worry about this because there isn't going to be any request for additional revenue this year. That is the only thing I see that you have to avoid in the Press Conference this morning. H.M.JR: Does anybody else have anything to say? MR. NUNAN: I think exactly as Mr. Bell does. I would simply take the position that the only thing pend- ing at this time is the working out of the simplification plan, and the Treasury will be represented by Mr. Surrey and Mr. Blough, who have been there since its inception and know all about it. In addition to that, you have your representatives from the Bureau there. They will keep you advised as to anything that is going on. H.M.JR: Will you be kept advised by your man? Regraded Unclassified 87 - 5 - MR. NUNAN: Yes, sir. I can always call Mr. Blough if I want to. Mr. Atkeson keeps me advised. H.M.JR: Doesn't somebody have to be boss up there? MR. BLOUGH: It is a rare case where somebody has to be boss. The occasion might arise where a decision would have to be made. My guess is that if that situation arose we would have to refer back to the group, anyway. Mr. Surrey and I work very well together. That is not a problem. H.M.JR: My inclination would be to make you sort of senior. MR. BLOUGH: That would be better than to make me boss. H.M.JR: If that were agreeable to the Commissioner-- MR. NUNAN: It is perfectly all right. As far as I have seen, the Committee has worked in perfect harmony. I have worked in a couple of sessions with the Ways and Means. First Mr. Blough and Mr. Surrey would state their opinion. Then the Members would ask the members of the Bureau for their opinion. Mr. Stam would give his, and they would give theirs. H.M.JR: If they say - who speaks for the Treasury if they get into disagreement? Regraded Unclassified 88 - 6 - MR. NUNAN: For the time being, let it be Mr.Blough. H.M.JR: Is that all right? MR. BELL: Yes, sir. H.M.JR: How about you, John? MR. SULLIVAN: Yes, certainly. H.M.JR: Let's leave it that way. Let me leave a little leeway and see what happens. I think a little bit depends on whether there is going to be another tax bill. Mr. BLOUGH: That, of course, is the case. If a tax bill comes up that requires a policy position on the part of the Treasury, which may be different from the policy position of the Congress, you should be represented by someone above the technical level, be- cause to put one of the technical people into that position spoils the amateur standing for this particular-- H.M.JR: You don't mean that. MR. BLOUGH: I don't mean amateur standing-- H.M.JR: Professional standing. MR. BLOUGH: Spoils the professional standing. MR. BELL: Puts him into the policy level where they can shoot at him. MR. BLOUGH: I don't think it matters here, but I do think if you have a bill where you have a policy fight, or even policy positions to take, you will probably want to be represented by somebody above the technical level. But this time Surrey and I would be the ones to suffer most from the situation which might arise there. Regraded Unclassified 89 - 7 - I say at this time I do not think that is a con- sideration. I don't think there will be any problem if vie 8° on as we have been. H.M.JR: What happens to Surrey? Where will his time be spent? MR. BLOUGH: He will go on working just like he has been. H.M.JR: For whom? MR. BLOUGH: He and I have been in the same posi- tion except that he has had, even in these last two years, a full responsibility to Mr. Sullivan with respect to certain matters coming up from the Bureau, and Mr. Paul with respect to legislative policy and legislative problems. H.M.JR: Boys, talk up. Don't go out of here with any gas on your brain, or anything. MR. SULLIVAN: I think this is the way to handle it. H.M.JR: So you can see I am groping. If anybody isn't happy, please say SO. MR. O'CONNELL: It occurs to me it isn't a problem that needs to be decided today, but the sort of problem that would obviously come up if there is another tax bill - may very probably be coming up from time to time during the year even if there isn't a definitive tax bill of the sort we have been working on in the last year or two. It raises in my mind the question of whether you ought not to have, soon, someone who would be responsible for tax legislation in the same way that Mr. Paul and others prior to Mr. Paul have been. You always had a man, it seems to me, at the top level in that sort of position, even though he wasn't actually dealing with the Committee all the time. Regraded Unclassified 90 - 8 - I mean, in prior years we have had tax legislation only a part of the year, and yet you have always had an Under Secretary or someone at that level. MR. GASTON: We didn't have before Magill came in here, did we? We were represented on the Hill by a Legislative Counsel. Arthur thad something to do with the tax matters, but he didn't go up on the Hill. We had simply the Tax Counsel's representative. MR. O'CONNELL: From Mr. Magill's time on you always have had. There has been much more emphasis on taxes since then, of course. MR. SULLIVAN: Of course, you have a lot of corres- pondence, Joe, and people on the Hill-- M.. O'CONNELL: Tax problems go on. Mr. Paul and Mr. Blough were having meetings with people on things like post-war taxation. Taxation doesn't stop being a problem because the Congress isn't considering a bill. H.M.JR: Who is Surrey's boss? MR. BLOUGH: Surrey's boss is the Tax Adviser to the Secretary. MR. BELL: He is about in the same status as Roy. We have no Tax Adviser, so what happens? MR. Thompson: Put him directly under you. H.M.JR: I tell you what you do, Norman; supposing you take a fresh look at his status and Surrey's status and the people under them in relation to the rest. MR. THOMPSON: Yes. MR. BLOUGH: Until 1940, Surrey's predecessor and I stemmed directly from the Under Secretary. That was due, however, to the fact that the Under Secretary was in charge of taxes. But that was the organization chart at that time. Regraded Unclassified 91 - 9 - H.M.JR: I think if Norman would have & fresh look, consult the people involved, with the help of Mr. Sullivan and Mr. O'Connell - I get my North and South of Ireland mixed up! MR. SULLIVAN: We never do! MR. O'CONNELL: It is very different! H.M.JR: While you are at it, make him Acting (O'Connell), will you, please? This morning - if there is something I have to sign - and consult Mr. Bell and Mr. Gaston. I think you could maybe have several suggestions from them. I think it is in kind of a nebulous state. Then let's leave it this way for the time being, until something hits me: Mr. Blough will be Senior Representa- tive on the Hill; it is his job as well as Surrey's and all of them, to see that we are all kept posted as to what is being done. Those memos you have sent me, I circulate to make sure-- MR. BLOUGH: I checked with Miss Chauncey about whether I should circulate them. She was a little dubious on that point, so I did not. H.M.JR: The people in the room here are all interested. MR. BLOUGH: With your permission, I will circulate them. H.M.JR: Will you'. And until we get this thing settled, be a little more communicative as to what goes on, and consult a little bit more. MR. BLOUGH: Of course, with my responsibility to do it, I will do it. When it was somebody else's responsibility, I didn't feel like inserting myself between. H.M.JR: I am asking without making any reflections on anybody. Until we get settled, I think all of us Regraded Unclassified 92 - 10 - would like to know - I am talking for myself - would like to be a little bit closer to the situation. MR. SULLIVAN: Will he circulate directly, Mr. Secretary? H.M.JR: He will circulate personally, and his writings, both, to save time. MR. SULLIVAN: Yes. The memoranda have been very good, but a little late in getting in. MR. BLOUGH: If I have your permission, I will at the same time I send a memorandum to you, send a carbon to the others. It was a question of whether you would wish to have that done. Miss Chauncey didn't know. H.M.JR: After giving careful consideration-- MR. BLOUGH: Thank you. H.M.JR: Now, I have Mr. Gamble in the other room, unless somebody wants to bring something up. But until we get this thing settled and everything, I would like to work a little closer to the situation, myself, to get the sense of it - and hope for the best. Regraded Unclassified 93 March 23, 1944 10:30 a.m. PRE PRESS CONFERENCE Present: Mr. Bell Mr. Shaeffer Mr. Smith Miss Chauncey Mrs. Klotz H.M.JR: We are going to kill that fourteen billion dollar story. MR. SMITH: You are? H.M.JR: Yes, it is now sixteen billion. MR. SMITH: Good, that is very good, because some- body must have leaked it out. MR. BELL: One of the bankers. MR. SMITH: It is nice to have them wrong. MR. BELL: It is unfortunate to have to do that. (The Secretary holds a telephone conversation with Mr. Ronald Ransom, as follows:) Regraded Unclassified 94 March 23, 1944 10:27 a.m. HMJr: Hello. Operator: Mr. Eccles hasn't arrived at the office yet but they expect him shortly. HMJr: I can't wait. Ronald Ransom, if he's there. Operator: All right. HMJr: I've got to talk to somebody right away. Operator: Right. 10:28 a.m. HMJr: Hello. Operator: Mr. Ransom. HMJr: Hello. Operator: Go ahead. HMJr: Hello. Ronald Ransom: Hello, Henry, how are you? HMJr: Fine. How are you? R: Fine, thank you. HMJr: I tried to get the Chairman but he's not available so I'll ask your help. I have a press conference at 10:30 R: Yes. HMJr: and yesterday some of the bankers must have given out to the press that the quota was fourteen billion. Hello? R: Yes. HMJr: On the Fifth War Loan. Well, we haven't made up our minds. We were going to discuss this thing with you.... Regraded Unclassified 95 - 2 - R: Yes. HMJr: and 80 forth and so on. R: Yes. HMJr: Well, I've got a dozen of our State Chairmen in R: Yes. HMJr: and they all would like to have it at sixteen billion R: I see. HMJr: of which either five and a half or six would be for individuals. R: Yes. HMJr: Now, they are very enthusiastic and they'd like me to say something this morning because they say if they go home and it's fourteen and it's a let-down and we need the money and they're in a fighting mood and they'd like me to announce sixteen. R: Yes. HMJr: So that I kill that other story. R: Yes. HMJr: Now, I don't want you to say your approval but I did want to do the courtesy 80 you people wouldn't think, "Well, why go over and see the Treasury? They make up their mind." Well, we hadn't and I wasn't going to until next week, but my hand has been forced. R: I see. You merely want us to know why your hand was -- and how your hand was forced. HMJr: That's right. And I've felt that this would be something that you'd like anyway. Hello? R: Henry, I am, at the moment, somewhat out of touch Regraded Unclassified 96 - 3 - HMJr: Oh. R: somewhat out of touch with that and I am not, this year, on the Executive HMJr: Oh. R: Committee. HMJr: Well R: I will see that your views are conveyed to the Chairman and to the members who are on that Committee. HMJr: Will you, please? And explain that R: And also to Sproul unless you're talking direct to .him. HMJr: No, I'm not talking to him. R: Well, I'll talk to him. HMJr: I'm only talking to you as Acting Chairman. R: Well, I'm not Acting Chairman HMJr: Well R: of that damn Committee. You see, I'm Acting Chairman of the Board in the Chairman's absence, but I will nevertheless convey your statement to the right people for you. HMJr: Well, for my purpose, as I can't reach the Chairman, so you've got to act. R: All right, Henry. HMJr: I had not intended to make any announcement until a week from tomorrow. R: I see. HMJr: But we all think it's a mistake to let this thing drag for ten days. R: I see. Regraded Unclassified 97 - 4 - HMJr: So R: I wouldn't know -- I don't happen to know what the views of any of my associates who are working on that immediate problem may be but I can certainly pass on your statement to them and will do it. HMJr: And please tell them why I've done it this way. R: Yes, I will. HMJr: Thank you 80 much. 98 - 2 - H.M.JR: I am not going to call Sproul. I think we are all right. Don't you think so? MR. BELL: Yes. H.M.JR: Have you boys anything to suggest? Mr. BELL: Just going to say that the goal is sixteen billion instead of the fourteen billion. H.M.JR: What has "DeGaulle" got to do with this? MR. BELL: The goal, the goal, the goal. JR: Have we recognized him? M. BLLL: We will at sixteen billion! H.M.JR: We will set a quota of sixteen billion. MR. BELL: Set a goal for the Fifth War Loan. H.M.JR: Do you want me to say that instead of-- Mit. BELL: Instead of quota. The quota is a State thing and is 8 good deal less. It is based on individual-- MR. SMITH: Better say it was an unauthorized statement SO they don't think you are changing your mind. H.M. JR: Why meet it unless they ask me? Why get into an argument? Why not simply say that I have been meeting this morning with-- MR. SMITH: All I am thinking about is up at the other end people read the newspaper, and it said fourteen billion. This was apparently an authorized statement by the Treasury. Regraded Unclassified 99 - 3 - They are going to open their papers tomorrow and it will say sixteen billion. It would be just as well if they would say that the Secretary announced sixteen billion and earlier stories were unauthorized. MR. BELL: That it did not come from the Treasury. MR. SMITH: I am just trying to keep you clear at the other end of the line. H.M.JR: Who is there? MR. SMITH: One hundred and thirty-six million Americans, with whom we must keep our relations straight. MR. BELL: Including the Chicago Tribune. Regraded 100 March 23, 1944 10:56 a.m. HMJr: Hello. Operator: Mr. Crowley. Go ahead. HMJr: Hello. Leo Crowley: Hello. How are you? HMJr: I'm all right. And you? c: Fine. HMJr: Leo, you may have seen by the papers that Paul resigned. C: Yeah. HMJr: Now, I'd like to take somebody from your organization if I can for General Counsel. C: Oh, my gosh, Henry, don't do that to me with all the legislation we've got up there on the Hill and everything else. It would just ruin me. We're just right in the midst of Lend-lease. We've got our appropriation on UNRRA. We've got our own appropriation that we've got to work out and we've got to do something about funds for U.S. Commercial and you'd just take the backbone right out from under us entirely if you do that. HMJr: Does Oscar do all that? C: Yeah, he handles all of that and it's necessary that we have someone that can work with Harry in things like that and he can do that, and if we lost him I don't know what the devil I'd do, Henry. HMJr: Really? C: Really, that's true and I don't know what I -- where I'd turn. I'd be glad to talk to you about that, but that's what I'm up against. HMJr: Well, I would like to talk to you about it because -- you wouldn't want to let the President decide? Regraded Unclassified - 2 - 101 C: Oh -- really, it's 80 darn serious. HMJr: Yes. C: It's BO serious to me that I -- I -- I don't see how I could physically stand the darn thing if I lost him. HMJr: I see. 0: He -- for instance, on all this lend-lease stuff, now, he's carrying that load up on the Hill. HMJr: Yeah. C: And he's been such a lot of help and he's got a good organization, and you know what I inherited in this thing here. And it would be so much easier for you, an old established agency, to find someone than it would be for me. HMJr: Yeah. C: Any time this afternoon or tomorrow that you have some time, I'll be glad to talk to you but -- uh -- HMJr: Well, I doubt whether C: It wouldn't do any good because, really, it would just -- just bust me up entirely if I lost him. HMJr: Yeah. 0: And you know how well we've been able to work with Harry and all the fellows with -- through him. HMJr: Yeah. C: And that's worth a lot to this whole picture. HMJr: Well, that -- that's right. C: See if you can't find someone else and then if you can't, I'll talk to you. HMJr: Well, let me think about it anyway. C: All right. Thank you. HMJr: Thank you. Regraded Unclassified 102 March 23, 1944 11:10 a.m. TAR FINANCE CHAIRMAN Present: Mr. Haas Mr. Gamble Mr. Lindow Mr. Tickton Mr. Wood Mr. Isbey Mr. Rebmann Mr. Puliiam Mr. Sherer Mr. Hall Mr. Ford Mr. Trounstine Mr. Reilly H.M.JR: I just thought you might like to see what the Dow-Jones ticker said. (Reads from ticker release of March 23, 1944.) "The Secretary of Treasury Morgenthau announced today that the goal for the Fifth War Loan Drive would be 16,000,000,000 dollars as compared with 14,000,000,000 dollars fixed for the Fourth War Loan Drive. "The Treasury head stated main feature of forth- coming drive would be concentration on sale of E bonds. Details of whole program, Mr. Morgenthau said, would be announced at end of next week. "So far the Treasury has conferred with a committee of American Bankers Association and the State Drive Committee Chairmen. Some of these participants had indicated earlier in week that goal would be 14,000,000,000 dollars for the Fifth War Loan Drive, and this figure was given widespread publication. "Secretary Morgenthau said that since the 14,000,000,000 dollar figure had been made public he wanted to make the announcement today that the figure was 16,000,000,000 dollars. Regraded Unclassified 103 - 2 - SO that the American investing public would not be con- fused or misled. The Treasury Secretary said he had not intended to make any official announcement on the Fifth War Loan Drive until next week, but that publication of the unofficial estimate made the announcement necessary at this time. That is it. We got some results, anyway. At least we decided something. Now, Gamble, what else? MR. GAMBLE: When you left we were at the point of having Mr. Wood review those one or two points for dis- cussion. We have settled, it seems to me, the matter of the quota, so we can pass over that one. We can talk about this bond, if you would like to have Mr. Bell and Mr. Haas and others discuss this at that time. H.M.JR: I am not ready to discuss that further. As it is, I had to call up the Federal Reserve Board and explain why we were doing this so hastily. They are coming here Tuesday. I want to talk it over more with our own people first. It would be a waste of your time to discuss it any further. Haas and his group know what your views are, don't they? MR. WOOD: That is right. H.M.JR: It would be a waste of their time. MR. FORD: We will have it in this memorandum for you. MR. BELL: You wanted a two percent bond, I take it, whether it is a two percent restricted or unrestricted. MR. WOOD: That is right, Mr. Bell. We wanted six billion for individual sales if you did have 8. modification of your basket to include a more salable piece of merchan- dise than we had before. Regraded Unclassified 104 - 3 - MR. BELL: If we decide, after hearing everybody, that it is to be restricted, that really helps you 8 little, doesn't it? MR. WOOD: Yes, it does. MR. BELL: So you wouldn't kick much if it were unrestricted? MR. WOOD: We will call that the Bell amendment to the basket. H.M.JR: The Bell amendment happens to be one on soft drinks, which never went through. That is what it is known as in the Treasury. Is that right, Dan? MR. BELL: That is right, except I wanted to make it a good deal more than a cent. MR. WOOD: Then the next thing we had, Mr. Secretary-- you suggested item by item. The next is the matter of a split offering, having a split drive, having for the first period purely individuals, and then going on to broaden to everyone else except commercial banks. H.M.JR: I am sympathetic with that. I don't know how Mr. Bell feels. That is contrary to the ABA. MR. BELL: I thought the last time it worked very well, but I haven't any strong feelings one way or another. I think these fellows ought to have & great deal to say. After all, they have to do the selling. MR. WOOD: We were unanimous in that, Mr. Secretary. H.M.JR: You will have no trouble with us on that. MR. FORD: I think the ABA's point of view was some- what polluted by Randolph Burgess, who hadn't sat in at the discussion we had last week. Our point of view after the drive was to revert to the Third War Loan technique. After we had thrashed around on it all day long in the State, they came up with this feeling. Randy wasn't aware of that then. Regraded Unclassified 105 - 4 - H.M.JR: He hadn't rid himself of the pollution. You had better tell him that. MR. FORD: I have, and he agrees with me. H.M.JR: Good. Well, you will have no trouble on that one here. MR. WOOD: The next one was the period of offering, of having it not over four weeks, preferably nearer three weeks, that the periods that you had before were too long and exhaustive. H.M.JR: Again, I don't think there will be very much trouble on that. I may have an opinion as to whether I would like to start in May or June, but I don't want to state the day. As to the length, I think it is up to you salesmen. MR. BELL: I think that is right. MR. PULLIAM: There is one serious difficulty in starting in May. I think we would all take the thing on and go ahead provided you could give us materials, but we do have to have materials actually in our hands at least thirty days before this drive starts. You can- not organize down to the county and township levels without materials. I don't see how you could possibly get that out and get started the last week in May. If you can, we can go, but that is the first consideration on fixing the date, now soon you can deliver. It balled us up in the Third War Loan. This time it was fine. It is a very important item. We had the materials in time. H.M.JR: Well, Mr. Gamble will have to weigh that. MR. WOOD: Our first choice was June 14 to July 8 on account of the tim Nevil's manpower problem of getting enough coverag or New York State. The second choice was May 23 to sometime in June, a three or four-week period. Regraded Unclassified 106 - 5 - Then the next was--the coming period would be two calendar months in any event, either June and July, or May 13-- H.M.JR: You won't have any trouble. MR. WOOD: We have discussed the basket. It is the same thing. Then when it came to the sales approach, we liked Mr. Gamble's suggestionsto you, Mr. Secretary, to go further in this development of plant quotas through wires from you to companies suggested by Dan. H.M.JR: That is agreeable to me. MR. GAMBLE: This was for thirty-five thousand. The other was only for five hundred. MR. WOOD: Next we recommended greater emphasis on corporation subscriptions by the use of industry quotas set at State levels and backed by intensified committee solicitation, and the next, greater emphasis on house-to- house solicitation. That was all. MR. BELL: That is 8 good program. MR. WOOD: Except the ABA thing of going after all customer lists. MR. GAMBLE: We talked over some of the details, Mr. Secretary, about advertising and promotion, but I don't think you want us to go into that. H.M.JR: I would like to say what I feel about this. My own feeling is that this time we have to begin to edu- cate the people 8. little more on the basic economics of this thing. I don't think during this Fifth War Loan it will be so necessary for the War Finance Committee to sell the war to the country. I think that that will be pretty well done by the Army and Navy. I do think, though, that we have to explain to them some of the very simple rudiments of this thing and why it is necessary to buy and keep bonds. Regraded Unclassified 107 - 6 - I think that some of the publicity will be along that line. I talked that way to the bankers, and they agreed. I tried to get them to say they would do something, and they said they couldn't get the space in the paper, but that is no answer. But, also, I personally think we have gone about as far 8S we should in the direction of making a man feel almost as patriotic as a soldier when he buys a twenty- five dollar bond. I think it has all been good, but we need a little bit more on inflation, a little bit more on this whole question of why it is to his interest to take this money out of circulation by lending it to the Treasury. I hope there will be more of that, and less of the other. I think the other was very important at the time, particularly selling the war, especially when we started the Third War Loan with Italy declaring peace. We were not very far along. I don't know whether there is any disagreement with that on the Committee. MR. WOOD: I think you would be interested in this, Mr. Secretary, that in all the farm areas--the same thing is true in Iowa and Minnesota--any request we get to go out and talk to fermers, any audience except in the cities, they want nothing talked about except the stabilized value of those securities at the end of the war. They said the greatest resistance to selling is that eighty-two market in 1920. We have directed all of our publicity at that thing. MR. BELL: We are still answering those letters. They come in every day. H.M.JR: I think this is very good, and I think the record of Gamble and his associates in previous drives has been sufficiently high that I feel when you people come in with this kind of recommendation you can back it with action and fulfillment of the promise. But I think you undoubtedly know how difficult the thing is. However hard you worked last time, I think you have to work that much harder, and everybody else, your indus- tries, labor unions, pay-roll deduction--I just don't think you can overlook anything. Regraded Unclassified 108 - 7 - You people know as well as I do which State went over the top, and which didn't. Too many didn't, and the last few days we had to do a little finagling with Army and Navy receipts to help put a few of the States across, with the result that our sales for this month have been very meager. But, anyway, I am delighted, Gamble, with the attitude of these people; and if they can reflect that down to their subordinates and the army of volunteers, I think we are all right. MR. GAMBLE: I do, too, sir. They have spent fifteen or sixteen hours arriving at these decisions. H.M.JR: I will be on hand and will be glad to help when and where it is necessary, personally. MR. WOOD: I would like to say this as one of the "sticks" States--and I know all the Chairmen feel the same way--you haven't any idea of how efficient this Washington office is as we telephone in and they service us. It is simply perfect. Ted's one mistake was that Oregon deal in the Third Drive. Outside of that, it is perfect. (Laughter) MR. BELL: They are riding you, Ted. MR. FORD: I would like to concur in your statement. H.M.JR: He was playing safe. He had been in Washington so long he wasn't sure of Oregon. (Laughter) Well, I will say good-bye to you all. 109 OFFICE OF TREASURY DEPARTMENT M WASHINGTON THE SECRETARY March 23, 1944 Memorandum to the Secretary of the Treasury. After a full discussion of the problems arising out of our experience in the Fourth War Loan Drive and having the successful prosecution of the Fifth War Loan Drive in mind, and after cereful study of the statistical information which reveals convincingly the increased needs of the Treasury, and recognizing the desirebility of keeping to a minimum borrow- inc from banks, we have come to the following general conclu- sions later to be taken up in great detail. While our ap- proach was primarily of sales, we attempted a detached point of view on the over-all situation. We are convinced that the general pattern of the Fifth Drive should follow that of the Fourth, with however, an intensification of certain techniques. There are four practical steps which we feel are of primary importance that additional sales to individuals and corporations may result, and as a consequence, more effectively get at a far greater proportion of income accruals. These are the four steps: (1) Further development of plant quotas. PVICTORY BUY United STATES WAR BONDS - STAMPS Regraded Unclassified 110 -2- (2) As complete as possible coverage of bank customer lists. (3) In the corporate field, establishment of industry quotas at state levels. (4) Intensification of house to house, farm to farm and face to face solicitation. SIZE OF LOAN In view of the increased needs of the Treasury we suggest 16 billion and regard it a stimulating challenge to workers end buyers. UOTA Over-all $16 billion of which $6 billion to individuals rovided (a) A.B.A. carries forward its stimulation program among banks and bank depositors and (b) some slight changes ere made in Basket as suggested below. In the event the above provisos are not possible we feel the individual quota should be reduced to five billion five hundred million dollars. In either case, we suggest the E Bond portion of the individual quota be three billion dollars, the ouota to corporations and others to be either ten billion dollars or ten billion five hundred million dollars depending upon the amount determined for the individual cuota. Regraded Unclassified 111 -3- LOAN PROCEDURE We suggest a split offering similar to the procedure followed in the Fourth War Loan the initial period of the Drive to be devoted solely to individual solicitation followed by a broadening of the offering to others except commercial benks. PERIOD OF OFFERING We believe the Fourth War Loan Drive was a little too long and suggest the Fifth War Loan be not over four weeks of active offering and preferably nearer three weeks. TIME OF OFFERING Our first choice is June 14th to July 8th. Our second choice is May 23 to approximately June 13th. Our reasons for preferring the June 14th date are that it gives us a longer period to recruit and train volunteers which we consider essential, that it will give greater assur- ance of the timely receipt of selling material throughout the states and lastly and less important, it may tend to obviate any criticism of including E, F and G bond sales and C Notes in the tabulation for the two month period. In the event the May 23 date is selected, we suggest the counting period commence May 15th and end July 15th; otherwise it be the calendar months June and July. Regraded Unclassified 112 -4- BASKET To consist of E's, F's, G's and C's, one year 7/8's, the usual long term 2-1/2's, and either a nine year 2 callable in 7 years to be restricted for six months to 1 year, or an eirht-ten year 2 without restriction. We feel that the introduction of a new element into the basket would be stimulating to bond sales-people and buyers. SALES We approve heartily and recognize the necessity for further development of employee plant quotas as suggested by Mr. Camble. We feel it would be extremely helpful if these nuotas were determined by the Treasury and initiated by wire from the Secretary to the plant executive as outlined to us by Mr. Gamble. We recommend greater emphasis on subscriptions from corporations and that industry quotas be set at the state level to be backed by intensified solicita ion and recommend greater emphasis on this type of selling. In general we believe the answer to the many problems fecing all of us is harder work by all and direct face to face selling. We feel that the program of intensified solicitation of depositors by commercial banks would be extremely helpful and Regraded Unclassified 113 -5- hope that they will recognize, as well as we do, the necessity for direct rather than indirect solicitation. This memorandum makes no attempt for sake of brevity to outline the many promotional and advertising suggestions developed by those concurring in this memorandum. Signed by: John Reilly - District of Columbia Frank Isbey - Michigan Franklin D'Olier - New Jersey Horace Corbin - New Jersey Harold Wood - Minnesota Randolph Burgess - New York Nevil Ford - New York G. R. Rebmann - Pennsylvania id Edward B. Hall - Illinois R. P. Sherer - Illinois F. Winchester Denio - Massachusetts Eugene Pulliam - Indiana Phil J. Trounstine - Ohio Regraded Unclassified 114 March 23, 1944 11:40 a.m. DEFERMENTS Present: Mr. Thompson Mrs Klotz Mr. White Mr. THOMPSON: Puryear is reconsidering these cases but I don't think We will get many of them. However, I think we will come out pretty well because he approved fifty, and on the list there were thirty- six cases that went on the key list after you turned them down. So we get those thirty-six. That is eighty- six. Then we had a lucky break in the Bureau of Engrav- ing and Printing. Sixteen pressmen were on the list. They were scarce. Suddenly the Government Printing Office dismissed seventy-five pressmen. So we had all we needed. H.M.JR: Dismissed seventy-five? MR. THOMPSON: Yes, sir. So we went up over a hundred out of the one hundred and fifty-seven. We go direct to the Board and I haven't had a turn-down yet from the local Board. As a matter of fact, Puryear gives us sixty days and the Board gives us six months. H.M.JR: The President was going to say something, I gathered, on this whole question. I gather, on account of Lis illness it has been postponed. I see now more confusion than ever, under twenty-six. Every day it is a different story. MR. THOMPSON: I asked Puryear why he got so tough on these pre-Pearl Harbor fathers over thirty when we know the Army doesn't want men over thirty. Regraded Unclassified 115 - 2 - he said, "We can't consider age at all." Then the next minute we were discussing Gunter and Friedman. We argued back and forth on that. He said he couldn't defer them because they weren't thirty years old. They are twenty-nine. He agreed to reconsider them and take them up and give us final word, but that is where we were left there. I gave him a very strong argument on both of them and he left some papers with Harry. MR. WHITE: We may get them, but his argument was that he couldn't do it because of age. In the other case he said he couldn't consider them. He is just crazy. You can't argue with the man. His whole purpose is a record before the Costello Committee. The merits of the cases are secondary in every instance. It is pathetic! (The Secretary approves the attached list of deferments) Regraded Unclassified DEFERMENTS 116 3-22-44 ( Name Title Age No. of Children INTERNAL REVENUE: Bratt, Bryce N. Economic Analyst 35 1 Crenshaw, Stuart L. Chief Adm. Officer 36 2 Davis, Dalmon Special Agent 36 2 Liotta, Casimiro Chemist 36 2 MINT BUREAU: Frisch, Steve Die, Gauge & Toolmaker 34 2 SECRET SERVICE DIVISION: Benavides, Luis M. Agent 35 2 Burger, Michael P. Resident Agent 33 2 Cowles, Melvin A. Agent 37 2 ately, William Jr. Agent 37 2 Johnson, George M. Agent 35 2 Jukes, George N. Agent 32 1 Keithahn, George Q. Agent 36 4 Malkowski, Joseph F. Agent 32 2 WAR FINANCE DIVISION: Knecht, Joseph J. Exec. Manager for the 37 2 State of Louisiana Deferments for the above 14 employees are recommended by the Agency Committee. APPROVED: Secretary of the Treasury. Regraded Unclassified 117 March 23, 1944 2:16 p.m. Smith Webb: Hello, Mr. Morgenthau. HMJr: Hello, Webb? W: Yes. HMJr: Morgenthau speaking. W: Yes. How are you? HMJr: Can you hear me? W: Yes. HMJr: The reason I'm calling you, Bailey tells me that the Warrens are thinking of having an auction sale and selling out. W: Who 1s? Warren? HMJr: Ralph Warren. W: Yes. HMJr: Do you know anything about it? W: No, I haven't heard about it. I didn't see anything about it in the Courier. HMJr: Well, I don't think they've announced it yet. But evidently they've made up their minds. There are the two brothers and they can't, evidently, agree. W: I see. HMJr: And also Bailey's been sort of talking to them and they also can't agree on the place, but I gather they've been showing it to people. W: I see. HMJr: But I -- I thought that I'd rather let you handle it for me than -- rather than try to deal with them direct. W: Well, I know them very well. Regraded Unclassified 118 - 2 - TWr: Well, supposing you look into it. It would have to be very reasonable for me to be interested. %: Yeah. AMJr: See? All right. Well, I'll get the story on it for you. HMJr: It would have to be a bargain. Y: Yeah. 19Jr: Let me ask you a question. What commission do you charge when you sell a place? : Well, the County scale 1s 7%.... "MJr: Yes. on anything outside of the City Limits. VMJr: Yes. And when it's in the City Limits, it's 5% for Beacon. HMJr: No, but I mean a farm. Well, on farm property, it's 71%. :IMJr: Is that what you get? %: Yes. TMJr: Always? Well, I won't say always, no, but that's the -- that's the Board scale. HMJr: I see. I'll admit that sometimes somebody takes some little -- something less than that. HMJr: Well, the reason I'm asking is -- I thought you ought to know -- that if I could get the Warren, I might want to sell the Ben Hickman place. Regraded Unclassified 119 - 3 - W: I see. HMJr: See? W: All right: HMJr: I might want to sell it. W: Well, we'll work with you on a basis that will be satisfactory to you. HMJr: You will? W: Now, on this Rushmore place, I've had a talk with him and he's interested in doing business there on a reasonable basis and I think that if you haven't seen the place personally, the next time you're up here, if it is good weather, if you'll give me a ring, We can arrange to go up and look it over. HMJr: Well, we'll be up the week-end of April 1. W: I see. Well, suppose you give me a call then, whenever you've got some free time. I'd like to go up with you. HMJr: All right. W: And I'll get the story on this other matter and drop you a line at Washington. HMJr: Do that. Do that. Thank you. W: All right. Good bye. Regraded Unclassified 120 March 23, 1944 3:15 p.m. ARGENTINA Present: Mr. Schmidt Mr. Luxford Mr. DuBois Mrs. Klotz H.M.JR: All right, come on! I still don't know what this fellow (DuBois) is doing. He has an office with the General Counsel, he works with Pehle, and he is in on the Argentine. MR. LUXFORD: You want to know what the story is? You suggested I bring some men in, so I suggested some men including Jim Mann and myself, and Schmidt and myself, and John and DuBois. At the end, if you were going into policy on the thing - the word I got back was Schmidt and DuBois. H.M.JR: That isn't the memo I got. I was given the choice of two groups. (Secretary quotes memorandum) "If merely a progress report, Luxford, Schmidt, and DuBois. MR. LUXFORD: It was Mann who should have been in there. MRS. KLOTZ: The Secretary is never wrong. H.M.JR: Yes I am, but-- Regraded Unclassified 121 - 2 - M.. LUXFORD: I believe you. I spoke first to Fitzgerald and then to your other secretary. She took it over the phone. H.M.JR: If DuBois sounds like Mann - maybe "DuBois" or "the boys"-- Well, should Mann be in on this? M.V. LUXFORD: It is all right. I am quite confident there will be no loss by DuBois being present. He keeps generally familiar with what is going on. H.M.JR: I was just kidding. But anyway-- MR. LUXFORD: On Argentina, I didn't know whether you noticed this morning's paper - two little items-- H. JR: I admire his activity, the way he gets around. I see him on rollerskates going up and down the hall. MR. DuBOIS: Good walker. MR. LUXFORD: Did you notice this morning, Farrell announces he is still loyal to Franco Spain, in"PM". I will just read you the opening line on it. This is Ray Josephs from Montevideo. H.M.JR: Did you send a wire down there? MR. LUXFORD: I could do better than this on the basis of what you gave me the other day. Here is just the headline on it: (Reading) "Farrell still loyal to Franco Spain. Argentina looks and will continue to look to Spain as its mother country and as a source of guidance and inspiration, Colonel Farrell, President of Argentina has pledged. This pledge of loyalty to Fascist Franco Spain was made in an interview granted by the President to the B.A. correspondent of Franco's official newspaper." Regraded Unclassified 122 - 3 - It goes on with a news story, if you would like to have it. H.V.JR: Swell. MR. LUXFORD: I don't know whether you noticed, in Paraguay they have now ousted the Foreign Minister of Paraguay who was the United Nations man, together with his two men who were backing him, that is, the Minister of Education and the Minister of Finance. And they didn't oust the President, General Morinigo, because he promised that he will collaborate more closely with Argentina than with the United Nations. That was the Colonel's scoop, according to the report. H.M.JR: All right. MR. LUXFORD: Now, the other day, at the time-- H.M.JR: This is the overture! MR. LUXFORD: Yes. The other day, just at the time you furnished me with this report from Acheson on Argen- tina-- H.M.JR: Yes, now I asked for that. I will tell you why I want to have that. Would you fellows make a note, and I would like to follow up, you see - Acheson first said two days. First he said it would be a Tuesday, then he said it would be a Thursday. Then when we get this thing from Acheson which is a report as of last January and I am still waiting for it, you see - if you would write a little letter to Mr. Acheson, go back over it. First Mr. Stettinius said he could give it, when Acheson was sitting here - two days - four days - then this thing (refers to report on Food Board submitted by Mr. Acheson). MR. LUXFORD: All right. Regraded Unclassified 123 - 4 - H.M.JR: I want to make a record. Do you agree? Think about it. MR. LUXFORD: One other item I would want to inject into it. We will come to that. H.M.JR: If I don't do something like that - I mean, here is the Acting Secretary of State saying he will give it to me in two days, then Thursday, then the following Monday, then I get a report as of last January and I am still waiting for a plan. MR. LUXFORD: The reason is quite obvious; that is, on March 10 they sent letters again to each of the Boards asking them if conditions hadn't changed enough. H.M.JR: You draft that letter and then you fellows talk about it. But let's make the record and take a look at it. MR. LUXFORD: I will be glad to. His answer will be that he hasn't received the reports. H.M.JR: But I want to make the record and let him say, "You will get it in 8 month." Here they tell me they will give me an answer in two days and it is now about two weeks. If you boys haven't read this morning's editorial in the Post, I suggest you do. MR. LUXFORD: We did. Às I was explaining, on the day I received this we were ready to send to you a memorandum on Argentina which would be from you to Hull. Now, in the light of this document, you can't send this to Hull, but I still believe that it is the best summary of Argentina on the political, military, and so forth, that we have to date. I would like to leave it with you just for your own back- ground, Mr. Secretary. Regraded Unclassified 124 - 5 - H.M.JR: You say this is the best in town? MR. LUXFORD: The best one to date, that is right. It represents not only what we know about the matter, but it was prepared in conjunction with Towson on the military, and the questions that are raised there, in- formally, are pretty sure to be answered our way; that is, if we were to ask the Army those questions on the military side, that that must inevitably be the result as borne out by the report that the Army furnished us in January. In other words, if we could have used the material in this report, on the military side, we could have answered most of those questions. It is very strong - the report the Army gave us. - but we felt we weren't in & position-- H.M.JR: You mean on the Falangist thing? Mr. LUXFORD: No, I am talking about the report they furnished us on the Argentine. H.M.JR: On the smuggling and all? MR. LUXFORD: That is right. The military waid that Argentina did foment the revolution in Bolivia, they are trying to do it in Chile and in every other country in that area. But we felt we couldn't put that into a report to the Secretary of State because Towson felt that since Strong had given this to you on his own, it would be unwise for it to come out as a document that might get into the record. But his answers to the questions we have raised there will force response of the same type. H.M.JR: But you don't feel, in view of Acheson's most recent letter, that I can send this to Hull. MR. LUXFORD: I don't believe you can because we, for instance, based our analysis of the food situation upon the statements he made to us orally. Regraded Unclassified 125 - 6 - Those statements he made to us orally, I do think are more favorable to our cause than the report he transmitted to us in writing coupled with the fact that as soon as we got that to Secretary Hull, by the time he got it, he would have, probably, the new ans- wers from the Food Board, so he could say our analysis is obsolete in the light of these new analyses. On the other hand, Mr. Secretary, there is one thing we could do. It would require your help. The key to this whole thing is the food situation. Now, Stettinius told you informally that the food situation was not as bad as it had been held out to be, that they had discovered additional food, and I understood from you that Marvin Jones, in speaking to you, had intimated that same thing. H.W. JR: No, what he said to me was this - to get the thing straight - I asked him point-blank about the food situation and everything else, and he told me that weather being average, we would have more tonnage of food raised in this country this year than last, and last year was a bumper year. I understand that since then, the thing they were looking for, the snows where they need them for irri- gation, had been quite heavy. I asked him point-blank; I said, "Well, supposing we had to blockade the Argentine, what could we do?" lie said, "It would be an awful burden - throw an awful burden on me. It would be very difficult, but we could handle it." MR. LUXFORD: As I recall, you suggested an educa- tional program and an appeal to the public. H.M.JR: He said could handle it." The whole thing gets down to this. We have waged war on the diplo- matic front about twenty-five percent. Regraded Unclassified 126 - 7 - MR. LUXFORD: That much? H.M.JR: Well! I don't know how to rate it, but anyway, it is a question of getting tough and rough. Nobody who has anything to do with it wants to. live can't set up another Board like the War Refugee Board outside of the State Department. M.D. LUXFORD: We are trying to, Mr. Secretary, on foreign economic policy. H.M.JR: Where? MR. LUXFORD: You signed the letters yesterday. The Budget or the Foreign economic Policy Committee. Do you recall it now? H.M.JR: Oh, yes, sure. Well, that will be under the chairmanship of Hull. MR. LUXFORD: Yes, but it would be reporting to the President. H.M.JR: True, but lacking something like that, you wouldn't get anywhere. And you are not going to change this man at the eleventh hour. MR. LUXFORD: Surely. MR. DuBOIS: All the more reason why it seems to me it is hopeless if you are going to wait until you convince everybody that we should go ahead with a hundred percent program, which comes back again to the question which we may want to weigh from time to time as to whether or not taking a small part may not force the whole thing, the public reaction and the like. In other words, whether or not we shouldn't consider at some stage of the game, seeing this other is hopeless, the freezing. H.M.JR: You may be right, Joe, but unfortunately, I am beginning to talk like the old man that I am, I Regraded Unclassified 127 - *8 - mean in experience here - things don't happen in Wash- ington on this front until they get 80 stinking bad that it is either too late, or there is an investigation, or Congress appoints a Committee. Don't forget, Congress had & parallel committee to the War Refugee Board all ready, you know. That is what assisted this thing. But suddenly it gets to the point where somebody says, "We have to do it before Congress does." But we are sort of going around. Let me read this report. Let me digest it, and then let me see if I can get any hunch. MR. LUXFORD: May 1 just lay one on the table? H.M.JR: Let me see how I react after reading the thing. Maybe I will get all excited and want to do something tonight, I don't know. MR. LUXFORD: May I lay one on the table? H.M.JR: I don't know. Lay! MR. LUXFORD: If Marvin Jones were to read this report unofficially, so that the boys writing the Food Report would write it in the perspective of the realities, that is, how critical it is that we meet the problem on the food side, the same that I know if you were to read the thing, the instructions we would get would be such that they would really begin to deal with this food problem in a real sense. H.M.JR: You have laid it! I don't know - let me read it. I mean, it is a little bit remote. Here you have Sumner Welles coming out not to do anything to the Argentine. MR. LUXFORD: That was terrible. Regraded Unclassified 128 - 9 - H.M.JR: The President saying something about how he misses Sumner these days - his advice on South America. Did I tell you that? MR. LUXFORD: No. Is that true? H.M.JR: Sure, everything I say is true. MR. LUXFORD: I just can't believe he would make that kind of remark. H.M.JR: Well, he did. Where is Nelson Rockefeller on these things? MR. LUXFORD: I dor't know. H.M.JR: Somebody said he was leaving the country. Ever called him up and found out? MR. LUXFORD: Never. I don't see how he could help us. I don't think he can change State if you can't. You have had more luck than anyone else. H.M.JR: Now. don't begin to hand me soft soap. MRS. KLOTZ: They have. MR. LUXFORD: Let's look at the record, then. MRS. KLOTZ: Let's knock wood. H.M.JR: As between handing a thing like that to Marvin Jones - the thing is different. How much does Nelson know, you see - what is he doing about it? MR.SCHMIDT: The questions that State has given are all loaded to get exactly the kind of answers they want, and the idea is if you can influence them 8 little from the other side-- H.M.JR: You mean the whole thing hangs on Marvin Jones. Regraded Unclassified 129 - 10 - MR. LUXFORD: I think so; I think it does. In other words, here the worst thing that that food report came out with was that if we were to try to meet the British food requirements, it would require 8. ten percent cut in the meat supply of the United States. The true answer would be, "So what?" But now I am sure that if Jones were confronted with that as being the true issue in the light of this memorandum, that is, how serious the situa- tion is in the light of what is happening today in Paraguay and what Farrell is saying about Spain, that to ask us to give up ten percent of our meat for three months is certainly of inconsequential standing. H.M.JR: I am thinking--it just doesn't click with me, this Marvin Jones thing, because it is too much trying to influence the jury. He is 8 judge, and he might resent it, you see. He could say, "I am asking for a factual report. What makes you think you could influence me on that factual report?" He is a very decent fellow, Marvin Jones. I am not saying I wouldn't, but he is a very decent fellow, and he is doing a good job. I am just wondering if we could get the Vice President excited a little bit about this thing, because he told me, you see--what did he tell me about Collado telling him everything was all right? I don't know. At least he got information from Pete Collado which I had to tell him was just a lie. MR. LUXFORD: It wouldn't be the first time. H.M.JR: You know, he is going off quite a lot on his own. What would you boys think of asking to see Wallace and show him this stuff from me? MR. LUXFORD: I think it would be very much worth while, but I still come back that somebody has to get to the Food people, because the facts there are not as black and white as they say. H.M.JR: All right, wait a minute. If Wallace wants to go to Marvin Jones, see, and have a talk with him as Vice President of the United States and former Secretary of Agriculture, see-- Regraded Unclassified 130 - 11 - MR. LUXFORD: That sounds all right. H.M.JR: It won't look as though I were a suppliant before the court. MR. LUXFORD: You are doing all right. H.M.JR: Is that all right? MR. LUXFORD: That is very good, only we think you have a position as a matter of right. H.M.JR: I know, but I am thinking out loud. If the Vice President would say--he swears-- This is the damnedest thing. Now, what can I do to help?", I would say, "Will you talk to Marvin Jones?" MR. LUXFORD: Give him that memorandum and this file and say, "What do you think?" H.M.JR: Well, let me read it tonight; and then if I get it out of this thing, I think we might move in on the Vice President. MR. LUXFORD: Good. H.M.JR: I don't think it would be difficult to get him excited. Then if he says, "What can I do?", all right, I will say, "Will you send for Marvin Jones?" MR. LUXFORD: Fine. H.M.JR: How does that sound to you boys? MR. LUXFORD: It sounds very good, very good. H.M.JR: In the whole town, who is there that might get excited about this thing? MR. LUXFORD: You would obviously give the Vice President, too, that thing you have from the Army on the Falangists? Regraded Unclassified 131 - 12 - H.M.JR: Yes, I can show him that. MR. LUXFORD: Also, we can get him some choice excerpts out of the military report. I should think the Vice President could have it, which would answer some of the questions that otherwise we couldn't. H.M.JR: The trouble with the Vice President is-- I have given him stuff like this before--you have to be prepared for the fact that when he gets in a corner and they ask him where he gets that he will say, "I got it from Henry Morgenthau, because he has done that before. He has done that at Cabinet. He will get excited and say, "I got it from Henry Morgenthau.' I mean, I could call up Marshall and ask him if I could show that. MR. LUXFORD: Marshall doesn't even know General Strong gave you this. That is what Towson is worried about. H.M.JR: What is Strong doing? MR. LUXFORD: Towson spoke to me about that yesterday; he said he was retired and then recalled to active duty. But they have been kicking him around without giving him an assignment to the point where he is about ready to ask for retirement again. Towson thought it was a shame, that he was an able man and was being wasted. H.M.JR: Somebody told me that he stood up too much to Stimson, and Stimson didn't like it. MR. LUXFORD: That is exactly what Towson told me, that he didn't "aye" the brass hats. That is why Towson inquired whether there was any place in our organization where he might be used, because this is the only place in town where you could disagree with your boss. H.M.JR: Thank you, but I like that. Regraded Unclassified 132 - 13 - MR. LUXFORD: I told him I would mention it to you. He would be most interested. Towson has been telling me that the Treasury ought to set up an economic intelligence organization, world-wide, and that he felt that the General would be the right man to do that. H.M.JR: The place to do it would be to put the man on the Stabilization Fund. MR. LUXFORD: Let him set up a staff. H.M.JR: Yes. There is a place for that on Stabiliza- tion. MRS. KLOTZ: It is & very good idea. MR. LUXFORD: The General would love it. H.M.JR: I had that idea four or five years ago. MR. LUXFORD: Towson told me, and I don't know whether it is true or not, that the General has strong political backing and can get along with State. H.M.JR: Strong political backing of which party? MR. LUXFORD: I don't know. H.M.JR: It is important. MR. LUXFORD: I would assume there is only one that is important today. What is the use of having a strong Republican backing today? Maybe I am wrong. H.M.JR: I don't agree with you. MRS. KLOTZ: What? H.M.JR: I think it is important to have a Democratic background. MRS. KLOTZ: You didn't hear him. Regraded Unclassified 133 - 14 - MR. LUXFORD: I assume Towson must be talking about Democratic backing if he has strong backing. H.M.JR: Oh, I thought you said the only important thing-- MR. LUXFORD: Can we take one minute more of your time? H.M.JR: Can I read this thing tonight? Then if I think it is good enough, I will get hold of the Vice President and ask him whether he wouldn't do this soon. MR. LUXFORD: Give him these two while you are at it. H.M.JR: I won't give him anything. MR. LUXFORD: All right. Now, you have 8 cable from Tito, which we want to deliver to you. H.M.JR: Oh, somebody was asking me this morning about whom we gave the money to in Jugoslavia. MR. LUXFORD: You got 8 cable by-- MR. SMITH: Straight from Tito himself. H.M.JR: Boy! MR. LUXFORD: This is most interesting. Let's give Mrs. Klotz a copy. You are in it now. (The Secretary reads aloud cablegram from Director of Central Telegraph of USSR, dated March 23, 1944, attached.) H.M.JR: Where is old man Bicanic? MR. SMITH: I gather he is probably over in Jugoslavia. Regraded Unclassified 134 - 15 - MR. LUXFORD: We will send to the War Refugee Board to get him. H.M.JR: I. B. Tito--are those his initials? MR. LUXFORD: I guess 80. H.M.JR: Or does that mean, I be Tito? MR. LUXFORD: It was sent through the Central Telegraph. H.M.JR: You can acknowledge receipt of it, anyway, as to the time. MR. LUXFORD: Now, we have sent informally a copy of this to State. It came through our channels, not even through State. H.M.JR: Ask them to advise us. I was asked in Press this morning who decides-- MR. SMITH: Did you see this? (Hands the Secretary clipping entitled "King Peter's Secret Source of Funds, from PM, March 23, 1944.) H.M.JR: How much have you withdrawn? MR. SMITH: Originally ten million was made available, was certified over. We are checking to get all the details and bring them to your attention. H.M.JR: My hunch is that the stuff should be frozen. MR. LUXFORD: Can I give you a little background on this? H.M.JR: It always helps. MR. LUXFORD: You will recall at the time Jugoslavia was beginning to fall we were beginning to get signing power, and we worked out a certification scheme so that Fotich might sign on the Jugoslavian funds. Regraded Unclassified 135 - 16 - Now, right at the same time the Jugoslav Government got a request to send ten million dollars down to Brazil. We were not anxious to do it, but the President decided we should, because Jugoslavia was going our way and we didn't want to quarrel with them about small matters of this character. Thereafter, once the Jugoslav Government sided up with us we were anxious to get that money back from Brazil, and the Central Bank of Brazil said they were perfectly willing to send it back to the United States, provided we would hold them free and harmless in the event later on there was litigation about the authority of this group to take the ten million. Well, that has been kicking around between State and the Fed for two years now. Recently they got very excited about it. H.M.JR: Who are they? MR. LUXFORD: State, because the Jugoslav Refugee Government has used up all of the dollar assets in the United States except the gold. Now, they wanted to borrow against the gold, and the State Department didn't want to have to make an arrangement of that character; and to avoid having to do that, they wanted to get the ten million back from Brazil. The thing got very critical the other day, and we couldn't quite understand why it was they were going to put the whole certification through on an hour's notice basis. There was going to be a whole series of transactions occur so it would go right into the Central Bank account and right out again. We couldn't quite figure it out until the headlines the next day showed that Tito wanted to attach the Jugoslav funds and to freeze them. So the whole thing is a play, apparently, between Tito and the Refugee Government, and this is just part. We are getting the other side of it. H.M.JR: Well, anyway, who over there can advise us? MR. LUXFORD: In State? Who have we been dealing with over there? We notified Hiss this morning. Regraded Unclassified 136 - 17 - MR. SCHMIDT: We told Hiss about it this morning, and I think it is in Collado's lap at this point. H.M.JR: Should I call up Mr. Hull and tell him I would like to get an answer? MR. SCHMIDT: As I see it, the question is basically the political one of whether or not this Government is recognizing the government-in-exile. H.M.JR: How long will it kick around? MR. LUXFORD: Supposing we do this? Supposing we try to pursue it through channels and see what will happen on it. If they kick it around, we will come back to you. H.M.JR: I don't think you will get anywhere in any time, will you? I will give you 8. chance. MR. LUXFORD: I don't think we are going to get them to recognize the Tito Government. H.M.JR: No, but the freezing of the funds is something else again. MR. SCHMIDT: The funds are presently frozen. There is no question about that. H.M.JR: Are they? MR. SCHMIDT: Oh, yes. The funds that have been made available were made available to support the government-in-exile, which was the recognized government, as far as this Government is concerned. H.M.JR: Yes, but supposing King Peter wanted to give his wife a million dollars as B. present? MR. LUXFORD: He couldn't do it without a further certification against this gold. We have it stopped as far 88 anything further is concerned. H.M.JR: O.K. All right. I will read that stuff tonight and get some kind of a hunch, I hope. Regraded Unclassified 157 Received FOREIGN FUNDS CONTROL Treasury 1944 Mar 23 AM 9 15 K1 RADIO VIA MACKAY RADIO MOSCOU 22 BOARD OF TREASURY WASHINGTON WE ARE FORWARDING TELEGRAM RECEIVED BY CENTRAL TELEGRAPH IN MOSCOW FROM NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA AND ADDRESSED TO YOU COLON QUOTE NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA INFORMS BOARD OF TREASURY THAT IT AUTHORIZED MR DOCTOR RUDOLPH BICANIC VICEGOVERNOR OF NATIONAL BANK OF KINGDOM OF YUGOSLAVIA TO REPRESENT INTERESTS OF NATIONAL BANK OF KINGDOM OF YUGOSLAVIA AND TO PREVENT WITHDRAWAL OF ITS DEPOSITS WITH YOUR TREASURY BY ANYONE AND IN ANY AMOUNT WITHOUT CONSENT OF NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA STOP NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA AUTHORIZED DOCTOR RUDOLPH BICANIC TO REPRESENT IN THIS MATTER INTERESTS OF NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA AS LAWFUL REPRESENTATIVE OF PEOPLES OF YUGOSLAVIA STOP SIGNED PRESIDENT OF NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA I B TITO COMMA ACTING COMMISSIONER FOR FINANCE I MILUTINOVIC STOP MARCH EIGHTEENTH NINETEEN FORTY FOUR STOP YUGOSLAVIA STOP SEAL OF PRESIDIUM OF NATIONAL COMMITTEE OF LIBERATION OF YUGOSLAVIA UNQUOTE STOP CENTRAL TELEGRAPH OF SOVIET UNION REQUESTS YOU INFORM IT OF TIME OF DELIVERY THIS TELEGRAM TO ADDRESSEE STOP DIRECTOR CENTRAL TELEGRAP H OF USSR. 914A MAR 28 Regraded Unclassified King Peter's 138 Secret Source Of Funds Yugoslavs Charge 20 Millions of 'People's Page Money Withdrawn From U. S.; Britain Keeps Lid On 7 PM, TRUBSDAY, MARCH 11, T94 Yugoslavs Say King Peter Gets Funds Here But Not in Britain Charge 20 Million - The treating ender. the thirienth that Potich la ining "much money or People's Money' Has to H signed - the Garman to on propaganda- much I can- vasion of Deseark soll Norwal not any Been Withdrawn tam Treasury. April, It did not matter that was - by The He added that e is imposible to Tagularia had not been compled and the answer lo that in the Yuge Result A. Time by Germen troups. Mr. Welles eb and slav budget because e petains explained, store the Fumpi Securitary Eden's of this many were The As - alientbright, be sake - Limitams 7 think Fattich the the Regal That the R may - also think that King in 65 de which - elega - taken Peter's givernment wastes nich any part 7 the every instation, be emphanized. money of the people." jumés deposited to Britain Activa, This former official understands the New that Os March 26, 1941. thes Un- why the V. % A. has been dow in Information is enting and chewleng dec-secretary of State Summer recognizing Tito, Be birrelf MIAS (lat the II Welles stated dearly U. 5. A. not one of the first to hop no the Tugesfer cirths represent a the policy toward funds held here Marshaf's bandwagen. But be la contred that the U.S. A. will - - - mile darge this to the tame of countries over They have PM that the oging the belog done by fun by Hitler. The elipping la Transfer givernment in salle lus mpplying the Cabo government form the New York Times, with money that dod not belong to design its unhander il. Be saids here, $20,000,000 - BOX in the last tax vers e the Cairo interests of the people (ane répru- 7 5 - that the U. 8. A. vill duction), imglise They - Anhameler Co- - day retars that money to the It e declared that when Am people The government will be Hamile - also withhes househor Potich and Secretary of asked order day why it had named las time banks = Brank the Timerary Margeothan for per- this money losse to the writing pet- ik bene prent out nievo - withdraw funds, the (e- was in will nt lave the - del - may deposited in the quest - refund mtil Yuguslar U A. final lintain and Trukey # will not le shile to justify its ao- Monter of Finance Surie) could the Therefore, being an benest done int heling to the Crims or documents authorizing to the Cum regine. The money, and just it will repay withdrewals. The Tugelass here May declare, ai the peripio that after bus in (M) podut. ay that Suiej names replied, but -m the depending who pland their the and M wgt hoping dar flut Fatich produced ame does diorta to art King Feter unless to the Begal Tugelas No ments and has bon able M driw and Marshal Tito together would timel Bank live safe keeping. Durals freely last las had give The some my that both Marchd This request to the As bug 48 Mikhailmitch remains Betain and Turkey lane refused to United Nations to free hande is the ghrmant, be est, The triese any part of a Imlog's cralited - the National Bank of and the pringle cannot consit to de transa in known) it was stated to made - or before Mar with it. members of the Boyal government. 15 of this year, is content a lare When King Pours read miss for a request to withdraw for withdriw the $2,000.00 de these frands for their return to the pated them, they were NM that people to help them in their light the deda would have to be rigied aprint the invalet. One former by une of the these if legh Tugular efficial declared: the hank, an instito- The miney does - belong to tim. Nom of the givenor ve the givennent in tn the crown It present. belongs for the people. King Peter thereque appointed "N you want to help The and a governor, but to authority was through him Ber people the not recognized because the appoint- people-mas must release that ment was tot made according to may to them. the terms of the Toginlar conti- "They are leging for arros and fution. amountion. They light without The same situation probably wrispons, without limited, without prevailed-an will Brit- clothes, without been. ais, according In the Yugalars. "They count bery the materials As for the U. 8. A., a policy was of were with their our new and down on March 26, 1941, by Os deposit in the U. 5. A. when the State Dept. which from funds Hater overtan MARIO of invaded constries to protect, - $60,000 $40,000,000 a cording to the them Under Secre- gold and the bilance in foreign n. tary of State, Summer Wells, the change, this loner official revealed. Twenty udlion of the has been settlsdrawn by Fotich in the two yours since, be gald. The handen of King Prior's gos- oh fre $10,000,000 . your The arthoutic - simple- Funds taken from U.S. banks have the Yugrisher government mile, be printed out, The Email Togalay official mitd be did - law wild not imagine -under what law the Treatury Dept. was able no release hade to the enile government, because 3 of - law to it. PM attempted to - - - planting faming the Truenty Dept. about the general questions of Togalar last and - adomed that the State Dept was the nich- ling department, and that the Trank my was only everying and orders, We have been usable - get - explanation from the State Dept. Asked whether - - Futiels using withhom funda for purpa- perpose in this comitry, - the offetal a Regraded - and 139 TREASURY DEPARTMENT All INTER OFFICE COMMUNICATION DAVEMarch 23, 1944 TO Secretary Morgenthau FROM O'Connell 'orvin Jones testified yesterday before the Senate and Currency Committee recommending the extension price stabilization laws. He read the attached brief statement which describes in broad terms the benefits the and others have derived from price stabilization. is. Jones was questioned by Senators Danaher and Taft to whether he had any amendments to propose or suggest to rice stabilization laws, the questions being designed -lioit from him & recommendation that requisitioning, timing and other powers relating to food be centered in Food Administrator. Mr. Jones said he had no amend- to suggest. Several Senators asked the Administrator whether, 8.8 Jarn and other feed grains, an increase in ceiling prices 1 encourage production. Mr. Jones stated strongly that Vice increases would not bring more production. He added tat grains are not in short supply except in relation to 01 trémendously increased number of poultry, hogs and cattle iol, require feed. He also mentioned the use of grains in indostrial alcohol. Mr. Jones explained that the grain situation is still evitionl, particularly in wheat. The carry-over from 1943 is loss than that from 1942, despite the fact that the 1942 own crop exceeded the all-time record. The 1943 total supply less than anticipated because of the failure of about half of the Argentine crop. Notwithstanding the fact that, if -"ficient shipping is available, it may be possible to bring 10 1026 greins from Argentina during 1944, the estimated production for 1944 is not sufficient to cover all of the oteds. On the whole there was nothing in Mr. Jones' testimony ich offers any hope that grains for beverage production X will be available in the near future. Attachment good Regraded Unclassified UNITED STATES DEPARTMENT OF AGRICULTURE War Food Administration 140 Washington 25, D.C. for Release on Delivery Statement by Judge Marvin Jones, War Food Administrator, before the Senate Banking and Currency Committee, Wednesday, March 22, 1944, at 10:30 B.D., E.V.T. I welcome this opportunity to state my views with respect to S. 1764, which would extend the life of the Emergency Price Control Act of 1942 and the Stabiliza- tion Act approved October 2, 1942, through June 30. 1945. I will of course limit my observations to the field in which my primary interest and responsibility lie, the field of the production and distribution of food and farm products. The necessity for continuing a stabilization program seems apparent. No Nation can long afford to engage in total war without instituting some safeguarding controls to see that food and the other necossities are produced in abundance and equitably distributed, and this means at prices which the masses can afford. This is a fundemental wartime objective. The present controls, under the current stabilization program, have proven successful. It is apparent that both farmers and consumers have benefited. One of the tests is that of production, a. sound and a very practical measurement. Food Production in 1943 was 32 percent greater than the five-year prewar average. It WAS 5 percent greater than in 1942. As a result of this production, our consumers have had somewhat more food per capita than prewar, even though about one-fourth of that production is being used for the armed services and for export. Suppport price for farm products are an integral part of the wer food pro- gran and have played their large part in inducing this large production. Generally announced in advance of planting time they not only encourage the necessary total production, but the relative prices for the various products encourage the most desirable pattern of production. A successful production program is to some extent an automatic stabilization program. The two are closely linked. 8585 (over) USDA 1887-44 Regraded Unclassified Farmers are interested not only in price control as related to their but are also interested in & general stabilization program which will protect the prices of the things they need as producers and which thus induces and protects production. Although farm prices have been stable since April 1943, production has helped to increase farm income to a record level. The net realized income of farm oper- ators (income after deducting operating expenses including wages, taxes, and interest) is estimated at about $12,500,000,000 for 1943, compared with $9,500,000,000 for the year before and $4,700,000,000 for the five prewar years 1935-39. While the farmer was receiving this benefit, food costs to consumers have been maintained at reasonable levels. It is true that the average per capita income of farmers in 1943 was still well below that of non-farmers but it was at a record level. I am sure there is no question but that farmers would rather have stable prices and a fair break than uncontrolled high prices all along the line, the dons- quent inflation and the deflation which inevitably follows. Farmers tell ne they want the stabilization program continued. They know from experience that excessive prices, speculative advances and short-time rises in land values load finally to an ever-increasing burden of debt for themselves and their sons to pay. I should also mention that farners are likely to become increasingly interested in wage stabilization during 1944. Although farm wages were at a relatively low level when the war started, they have increased substantially. There have been sone areas, sepecially during the harvest season of certain perishable commodities, when the immediate. pressing demands caused wages to reach prohibitive levels. Faced with the danger of loss of vital war crops, the producers themselves found it necessary to ask that a limit be placed, on fam wages in such areas. We have put into effect several wage ceilings in such areas and there may be need for extending such neasures this year, in the interest of production. It seems apparent that a program which has proven itself in the past by the practical test of production should be continued. A direct increase in price which night result from one or two breaks in the line would produce pressure for further breaks. Too many such breaks would prevent achievement of the objective I nentioned at the outset-which is to see to: it that food and other necessities are equitably distributed at prices which the masses of the Nation can afford. of all groups and to the nation itself. Any substantial break in the stabilization can work only to the disadvantag USDA 1587-44-2 Regraded Unclassified 141 March 23, 1944 3:16 p.m. HKJr: Hello. Operator: Mr. Crowley. HMJr: Hello. Leo Crowley: Hello. HMJr: Leo. C: Yeah. HMJr: This is Henry talking. C: Yeah. HMJr: Now, Leo, I've been thinking over the conversation I had with you. C: Yeah. HMJr: And in the interest of team-play I've decided to drop this idea about Oscar. C: Well, I appreciate it, Henry, because it would be a very, very sad thing from my point. HMJr: Well, I don't want to do anything that's going to crimp you. C: And I think it does make it possible for us to work together very well and it certainly would hurt me terribly. HMJr: Well, I don't want to hurt you and -- uh -- I mean I don't want to benefit by hurting you. C: I know that. I know that. HMJr: And so we'll forget it and I think the less said about it, the better. C: Thank you a thousand times. HMJr: All right. Bye. C: Bye. Regraded Unclassified March 23, 1944 142 Dear Secretary Morgenthan: I can't resut telling you. how heartening it is to deal with you. not only are you one of the best ad- minustrators I have ever seen, but your human qualities are unique. you have handled the last situation with such understanding, kindness and retegrity that my respect and appreciat 10n are over- flowing. This kind of experience-and your example-gwes me am urge to try to do a good job in a way that I cant put into words. And thats one of the greatest kicks m life. Hon Henry Morgerthan Jr Oscar Cox Regraded Unclassified 143 MAR 23 1944 Mr. Joseph J. O'Connell, Jr., Assistant General Counsel. Effective this date and while the present vacancy exists in the Office of the General Counsel for the Department of the Treasury, you are hereby designated to act as General Counsel for the Department of the Treasury with the operating title of Acting General Counsel. Very truly yours, (Signed) H. Mergenthau, Jr. Secretary of the Treasury. WNTiaja ByHand Regraded Unclassified 144 March 23, 1944 Fred Smith Secretary Morgenthau In today's New York Tribune, W.P.B. announces the addition of two industrial alcohol plants and say that indirectly that will help portable alcohol. If W.P.B., within a week, doesn't announce that Union Carbide five-million-gallon plant, I suggest that you call up Dr. Whitman and follow up on it. Please watch for the announcement and when it comes, let me see it. Thank you. Finished- Regraded Unclassified 145 ASSISTANT SECRETARY OF THE TREASURY March 23, 1944. Memorandum TO: Secretary Morgenthau FROM: Mr. Gaston I have discussed with Harry White and Dan Bell your proposed letter to Secretary Hull. We all agree that no letter should be sent. Mr. Hull's paragraph on inter- national finance in his general state- ment covers projects that we have dis- cussed with the State Department and is entirely consistent with statements we have made as to Treasury objectives in the international field. It would have been the courteous thing for the State Department to show us this portion of the general statement before it was issued, but since it covers matters on which there is complete agreement, it does not seem necessary that they should do so. We can't complain about the substance of the statement but only that they didn't show it to us. Mr. 146 DRAFT My dear Cordell: I read in yesterday's newspaper for the first time the story accredited to you about the seventeen points on foreign policy. I note that Point No. X refers to finance. I would like to draw your attention to the fact that the Treasury was not consulted in advance in regard to Point No. X. Sincerely yours, Honorable Cordell Hull, Secretary of State. Regraded Unclassified 147 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE March 23, 1944 TO Secretary Morgenthau FROM ,P. White This is in reply to your note of March 23. we were not consulted about the paragraph on finance test appeared in Hull's speech. However, about a week ago, ,011800, in & conversation about other matters, referred to the fact that Hull was going to make a speech and that 1 t 1.3 soing to contain some remarks on international costery matters which he thought we would like. The paragraph in Hull's speech (quoted in full below) contains nothing that we could take objection to in any GUI. The statement is quite in accord with our own objec- SEVES: it would have liked to have had the statement in less general terms but that same criticism goes :- the whole speech. do not think we should bring this to Mr. Hull's attention. "International Finance -- Equally plain is the need for making national currencies once more !reely exchangeable for each other at stable rates of exchange; for & system of financial rela- tions so devised that materials can be produced and ways may be found of moving them where there are markets created by human need; for machinery through which capital may -- for the development of the world's resources and for the stabilization of economic activity -- move on equitable terms from financially stronger to financially weaker countries. If Regraded Unclassified 148 March 23, 1944 Harry White Secretary Morgenthau In Hull's seventeen points I see he has a paragraph on finance. Were we consulted about this? If not, please let me know in the form of a memorandum not later than two o'olock today. Also, whether you think I should bring it to Hull's attention if we were not consulted. File Regraded Unclassified 149 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE March 23, 1944 TO Secretary Morgenthau FROM Fred Smith As you know, Congressman Smith bowed out on making his speech at the last minute, so Patman did likewise. However, they are both in the record. This put & crimp in our pub- licity, but the very fact that we were on the ball also put 8 very serious crimp in Smith's publicity, except in the early editions. We slipped up by not releasing a very early story on the Patman speech to nullify Smith's early story. We didn't do it because we thought we would get a better play in this morning's papers if we waited, and we probably would have if the speeches had been made. But next time we will plug the holes as we go along. We learned something. However, we are not letting the project drop here. Not only for the sake of the Stabilization Fund, but more im- portantly for the sake of Henry Morgenthau, Jr., this speech should get wide circulation. Accordingly, we are planning to do the following things: (1) Have copies of the speech slipped to various columnists by people who know them -- Gaston, Irey, etc. Regraded Unclassified 150 - 2 - (2) If Patman will reprint the speech, we will take care of the mechanics of sending out, under his frank, and from his office, about a thousand copies to editorial writers and other interested parties. (3) We are working on a Treasury release which will recap the story as contained in Patman's speech, and if it works out, I will send it in to you for clearance. Regraded Unclassified 151 March 23, 1944 Fred Smith Secretary Morgenthau Please write two letters for me today and I'd like to have them by two o'clock; one, to the Speaker thanking him for arranging to have Congressman Wright Patman come to our defense; two, a letter to Congressman Wright Patman thanking him for doing it. Please see that they are both in Mrs. Klotz' hand not later than two o'clock today. Thank you. time- Regraded Unclassified 152 March 23, 1944 Personal Dear Sam: I want to thank you for arranging to have Congressman Wright Patman reply to Congressman Smith's attack on the Stabilization Fund. I think we upset a pretty well planned Republican project. It also gave us an opportunity to tell the full story of the Stabilization Fund, for the first time. If Patman's speech could be circulated, it is my belief that it would not only help the Stabilization Fund, but would help set the record of the Democratic Administration straight on the matter of being forehanded about post-war problems. Sincerely, (Signed) Henry Honorable Sam Rayburn Speaker of the House of Representatives Washington, D. C. FS:gr Regraded Unclassified 153 March 23, 1944 My dear Mr. Patman: I want to thank you for agreeing to come to the defense of the Stabilization Fund -- and, for that matter, to the defense of the Adminis- tration's record. I am sorry you didn't get an opportunity to deliver the speech, because I think it would have made good publicity for our side, and rather bad publicity for the other side. However, I am convinced that having this statement on the record will pay dividends for a long time to come. Your help was greatly appreciated, and I hope we will have the opportunity of working with you again. If there is any way that we can be of assistance to you, please do not hesitate to let us know. Sincerely, (Signed) H. Morgenthan, " Honorable Wright Patman House of Representatives Washington, D. C. FS:gr Regraded Unclassified 154 MAR 23 1944 Dear Sir: Receipt is acknowledged of your letter of March 15, 1944 enclosing copies of a memorandum dated February 21, & letter of February 24, 1944 from the Acting Secretary of State, and a proposed Executive Order "establishing the Executive Committee on Reonomic Foreign Policy". I as gratified that consideration is being given at this time to the establishment of an interdepartmental committee for the purpose of formulating recommendations on our post-war foreign sconomic policy. I can think of son, If any, post-war problems of more challenging propertions and with greater potential implications on the economy of this country than the problem of post-war foreign economic policy. The type of interdepartmental machinery needed to cope with this problem therefore should be the subject of most careful study at the highest levels in the Government. I have several comments to make with respect to the draft of Executive Order transmitted with your letter of Vareh 15, 1944: 1. From & purely political point of view the Order does not establish machinery of adequate stature for dealing with a problem of political and economic magnitude. In the first place the Order attempts to resurrect an old interdepartmental committee, give it & new face and name, and launch it on a new course. This might be understandable if the committee to be revived was one of nationally known importance in the past and had a public record of outstanding ac Revement and prostige. However, the committee singled out for resurrection, whatever its real merits may have been in the past, was never well known to the publie; has no public Regraded Unclassified 155 2 - record of achievement; and certainly can lend no preatige to the new committee. Secondly, the membership on the proposed committee is confined to "reprosentatives" of the various interested agencies with & chairman to be appointed by the Secretary of State. The announcement of a committee at this level may very well loose an attack upon the administration charging that it fails to recognise the magnitude and importance of formulating a sound post-war foreign economic policy since it is sending a boy to do a man's task. Certainly, there can be no argument but that a committee comprised of the heads of the interested departments and agencies, under the chairmanship of the Secretary of State, and reporting directly to the President, would lend the committee public prestige and lessen the scope of critical attacks. Finally, it should not be ignored that there are at least three resolutions presently pending in Congress (S.J. Les. 120, H.J. Res. 247 and H.J. Res. 249) calling for an elaborate "foreign economic commission" comprised of the leaders of Congress, interested cabinet officers and agency heads, and important public leaders. It is most doubtful that a committee at the level contemplated by the proposed Order will be regarded in any way as an effective substitute for the proposals now before Congress. 2. From an administrative point of view the machinory contemplated by the Order is inadequate to cops with the problems with which It will be confronted. Responsible participation in the formulation of a sound post-war foreign economic policy should be fixed on the head of each of the interested departments and agencies rather than on one of their subordinates. Placing the responsibility squarely on the agency heads means that each agency will accord to this problem the time and staff necessary to discharge the task. Placing it on the shoulders of a subordinate tends to relieve the agency head of a responsibility that should be his and projudices the chances of full agency participation as distinguished from individual participation. This seens that Regraded Unclassified 156 3 as a purely administrative matter the committee should be comprised of department and agency heads with the Secretary of State as chairman. The mere fact that department and agency heads may designate alternate members does not mean that the counittee will be relegated to the same level as that proposed in the draft Executive Order. On the contrary, the alternate acts and speaks for his agency head and on major issues the agency head can personally intervene as a matter of right to insure the discharge of his personal responsibility. The proposed Executive Order is deficient also in the type of machinery it provides for doaling with the complex problems that will be raised in the field of foreign economic policy in the post-war period. With the position of world wide dominance whi oh the United States will be called upon to occupy in both the political and economic field in the post-mar period it is unreal to attempt to guide our economic action by machinery that was designed to deal with pre-war problems and was no startling success in even that atmosphere. Either we should now concede that we propose to get along with masko-shift machinery and deal with the fundamental problems on an ad hos basis or we should establish a new mechanism for formulating post-nar economic policy which will be geared to the magnitude and complexity of the problem. If the latter be our choice, it is submitted that no one committee at any level can intelligently review the post-war foreign economic problems of commercial policy, shipping, svistion, labor, commodity agreements, money and credit, communications, patents and cartols, etc. and formulate sound policies. Rather it will have accomplished a Herculian task If it merely succesds in coordinating the work and over-all policies of other committees assigned the specific task of developing policy in each of these fields. If this be true, then the proposed Executive Order should recognize these premises and provide mohinery adapted to the task. Thus the Executive Order should specifically provide for sub-committees to examine the problems and developments relating Regraded Unclassified 157 4 - to each field; it should stipulate that representation on each sub-committee would be confined to those departments and agencies having g. direct interest in the subject and each sub- committee would be under the chairmanship of the head of the department or agency most directly concerned; it should accord each sub-committee the widest degree of autonomy consistent with the committee's responsibility for the formulation of over- all foreign economic policys and it should clearly recognize that the magnitude and complexity of this government's foreign economic relations requires a large measure of decentralisation and & high degree of departmental and agency responsibility. 3. From a policy point of view the proposed Order is so vague in Its premises as to portend its failure as an effective mechanism. Little will be gained by the establishment of adequate machinery to cope with the problems of our post-war foreign economic policy unless the Order establishing such machinery establishes certain fundamental premises. Everyone concedes the important interrelationship between our foreign political polley and our foreign sconomic policy. It also Is hoped that everyone recognises the fundamental interrelationship between our domestic coonomic policy and our foreign economic policy. in the other hand, it is not nearly as clear that everyone concedes that the fundamental interrelationship between our foreign economic policy and our domestic economic policy requires that the formulation of our post-mar foreign economic policy be the joint responsibility of those agencies in the Government sharing primary responsibility for our economic policy--both domestic and foreign. Certainly the proposed Rxecutive Order does not reflect the foregoing premises. In fact its context would tend to negate these assumptions. If I am wrong, and the foregoing premises are acceptable there is much to be said for their express inclusion in the Executive Order or at least that there be informal agreement, with the approval of the President, on the premises before an Order is issued. On the other hand, if the foregoing premises are not acceptable and we are to proceed on 8038 different premises, I think there is all the more Regraded Unclassified 158 $ . 0 reason for the Executive Order to be explicit on the subject or for the members of the Committee to be otherwise so advised. Clarity on this score will do much to facilitate the working relationship of the Committee membership and to lift the work of the Committee above the jurisdictional level. The Treasury Department has prepared an alternative draft of Executive Order, a copy of which is enclosed herewith, which embodies the principles above stated. It is the opinion of this Department that an Executive Order along the lines of the enclosed draft would produce far MoΓo effective coordination of policy on foreign economic matters than would be produced by the proposed Executive Order transmitted with your letter of March 15. Copies of this letter and enclosure are being transmitted to the Secretaries of State, Agriculture, Commerce, and Labor, and to the Chairman of the United States Tariff Commission, and the Foreign Aconomic Administrator. Very truly yours, (Wigned) E. Mergenthon, Jr. Secretary of the Treasury. Honorable Harold Smith, Director, Bureau of the Budget, Washington, D. C. Enc. AFL:nrd - 3/21/44 Regraded Unclassified 159 9835 a a March 21, 1964 SXECUTIVE ORDER Establishing the Foreign Economic Policy Committee and Defining Its Functions end Hembership the problem of post-war foreign economic policy is becoming increasingly important; and MARRAS the formulation of a sound post-war foreign economic policy requires a clear recognition of the fundamental interrelstion- ship between our domestic economic policy and our foreign economic policy; and HEREAS our post-mar foreign economic policy will affect the operations and responsibilities of several of the executive depart- nonte and agencies of the Government KOE, Therefore, by virtue of the authority vested in no as President of the United States, it is hereby ordered thats 1. There is hereby established the Foreign Boonomic Policy Comittee (hereinafter referred to as the Committee). The Committee shall be composed of the Secretary of state, who shall be Chairnan of the Committee; the Secretary of the Treasury) the Attorney Ceneral; the Secretary of Agriculture; the Secretary of Comerce; the Secretary of Labor; the Chairman of the United States Tariff Commission; and the Foreign Economic Administrator+ Each netier of the Conmittee shall designate an alternate member authorised to act in his stead on the Committee. The Committee may from time to time invite the heads of other executive departments and agencies to participate in its activities for such periods and purposes as Regraded Unclassified 160 - 2 - to the Committee seen desirable. 2. The Committee shall consider the over-all problems and developments affecting the long range economic policy of the United tates, both domestic and foreign, and shall formulate general rinciples of foreign economic policy subject to the approval of the President. 3. The Committee shall establish sub-committees to examine problems and developments relating to commercial policy, nonstary and credits problems, patents and cartels, and other as ects of our foreign economic policy as are necessary or desirable in the opinion of the Counittee. The chairmen of each sub-comvittes shall be the head of the executive department or agency which is most directly concerned in the subject assigned to the sub-cammittee. Any executive department or agency having a direct interest 1. the subject assigned to any sub-consittee shall be represented on such sub-committee regardless of whether such department or agency is represented on the Committee; and representation on the sub-committee shall be confined to the departments and agencies having & direct interest in the respective subjects. Each sub-committes shall make such reports to the Committee as the Committee may from time to time require. 4. Each of the sub-committees established pursuant to aragraph 3 above shall be accorded the widest degree of autonomy consistent with the Committee's responsibility for the formulation of over-all foreign economic policy. The Committee also shall recognise that the magnitude and complexity of this government's foreign economic relations requires a large seasure of decontralisation and a high degree of departmental and agency responsibility. Regraded Unclassified - 3 - 161 5. Nothing contained is this Order shall be deemed to resere the responsibility or authority of each executive department or agency for carrying out its OWN functions and operations but such functions and operations shall be carried out in accordance with the over-all foreign economic policy formulated by the Committee with the approval of the resident. 6. The Executive Committee on Commercial Policy established by the letter of November 11, 1933, from the President to the Secretary of State, and continued by Executive rders 10. 6656 of March 27, 1934 and No. 7260 of lecember 31, 1935, is hereby abolished. LCA:AFL:RBjemj 3/21/44 Regraded Unclassified EXECUTIVE, OFFICE OF THE PRESIDENT BUREAU OF THE BUDGET WASHINGTON, D.C. 25 MAR 15 1944 My dear Mr. Secretary: Enclosed herewith are copies of a memorandum dated February 21, and a letter of February 24, 1944 from the Acting Secretary of State, and of a proposed Executive Order "Establishing the Executive Committee on Economic Foreign Policy and Defining Its Functions and Membership". The proposed order is intended to revise the functions of the Executive Committee on Commercial Policy as presently constituted under Executive Order 7260 of December 31, 1935, and to provide for member- ship thereon of representatives of the Departments of State, Treasury, Agriculture, Commerce, and Labor, and the United States Tariff Commission and the For- eign Economic Administration. The Director of the Bureau of the Budget will appreciate receiving, not later than Saturday, March 18, any comments which you may care to make with re- spect to the proposed Executive Order. Very truly yours, Legislative Reference Assistant Janey Director The Honorable; The Secretary of the Treasury. Enclosures. Regraded Unclassified THE UNDER SECRETARY OF STATE NASHINGTON February 21, 1944 COMORANDU FOR THE PRESIDENT for Executive Committee on Economic Foreign Policy 1. The Department of state, in its efforts to for- mulate policy recommendations in the post-war interna- tional economic field, has established & number of working committees on subjects of commercial policy, shipping, aviation, labor, commodity agreements, et cetera. Most of these committees are reasonably advanced in their work. 2. An executive interdepartmental committee is needed at a level capable of reviewing this work and formulating policy recommendations in the name of the departments and agencies most intimately affected. This evald be most readily effected by reviving the Executive Committee on Commercial Policy and revising and expand- ing its functions. 3. The recommended Executive Committee on Economic Foreign Policy would have as its function the examination of problems and developments affecting the long-range foreign economic policy of the United States and the for- mulation of recommendations in regard thereto for the omegideration of the Secretary of State and, in appropriate cases, of the President. 4. The suggested membership would be the Depart- ments of State, Treasury, Agriculture, Commerce, Labor, the United States Tariff Commission and the Foreign Economic Administration. Other agencies should be drawn in as matters of particular interest to then are under consideration. 5. The chairman should be appointed by the Secretary of State. /a/ E. R. Stettinius, Jr. Regraded Unclassified Regraded Unclassified COPY , EXECUTIVE ORDER "STABLISHING TII" EXECUTIVE COMITTEE ON ECONOMIC FOREIGN POLICY VHERRAS the Executive Committee on Commercial Policy was established by the letter of November 11, 1933, from the President to the Secretary of State: and continued by Executive Orders No. 6656 of March 27, 1934 and No. 7260 of December 31, 1935, and WHEREAS it is desired to revise the functions of the said Committee to correspond mare closely to current and prospective problems of economic foreign policy with which this Government 10, and will be concerned: NOW, THEREFORE, by virtue of the authority vested in no as President of the United States, it is hereby ordered that: t 1 1. The name of the said Executive Committee on Commercial Policy is changed to the Executive Committee on Economic Foreign Pelicy. 2. It shell be the function and duty of the Executive Committee on Economic Foreign Policy to examine problems and developments affecting the long- range economic foreign policy of the United States and to formulate recomendations in regard thereto for the consideration of the Secretary of State and, in appropriate cases, of the President. Regraded Unclassified COPY - 2 - 3. The membership of the said Committee shall be composed of representatives of each of the following departments and agencies: The Department of State, The Treasury Department, The Department of Agriculture, The Department of Commerce, The Department of Labor, The United States Tariff Commission, The Foreign Economic Administration. The Committee may, with the approval of the President, from time to time add representatives of other governmental departments and agencies to its membership for such periods and purposes and with such rights and privileges as to the Committee seen desirable. 4. The representative of each member department or agency on the said Committee shall be designated by the head of such department or agency. The Chairman shall be appointed by the Secretary of State. 5. The provisions of the aforesaid letter of November 11, 1933, and the said Executive Orders Nos. 6656 and 7260, are revoked. THE WHITE HOUSE, March , 1944. Regraded Unclassified 166 MAR 23 1944 y dear 11". Secretary: in March 15, 1944 life F. do Bailey of the Dureon of the Badget sent a letter to you enclosing copies of a ADMO- rendus dated February 21, and a letter dated February 24, 1966 from the Acting Secretary of State, and of & proposed xecutive rdor "Xstablishing the Executive Committee on Sconomic Foreign Policy." It is understood that similar letters were sent to the heade of all departments and egencies who my be represented on the proposed Comittee. Secretary Morgenthau has written a reply to the Mirector of the Suress of the Budget and has suggested an alternative draft of Executive Order. % saked no to bring this letter of roply and proposed alternative Order personally to the attention of the heads of the departments and agencies concerned. Accordingly, cupies of these papers are enclosed herewith for your information. Very truly yours, (SIGNED) W.N. THOMPSON Administrative Assistant to the Secretary The Eonorable The Fecretary of State. anclosures. This same letter also went to: The Secretary of Agriculture Mr. Crowley, Adm., FEA The Secretary of Commerce 5/22/24 The Secretary of Labor Hon. Oscar B. Ryder, Chairman, U.S.Tariff Commission. Regraded Unclassified 167 MAR 23 1944 Ky dosr 15. Attorney General: in March 15, 1944, Mr. F. J. Mailey of the Bureau of the Judget sent to this Department a letter enclosing copies of a necorandes dated February 21, and a letter dated February 24, 1944 from the Acting Secretary of into, and of & proposed Executive Order "Ratablishing the Executive Committee on Sconomic Foreign Felicy." it is understood that sinilar letters were sent to the heads of all departments and agencies who may be repre- cented on the proposed Committee. Copies of the foregoing correspondence are enclosed for your information. Secretary Morgenthau also astred 18 Le bring to your personal attention copies of his reply to the Director of the Bursan of the Budget and the alternative draft of Recutive Order transmitted therewith. Accordingly, copies of the latter papers are also enclosed for your information. A copy of this letter is being sent to hr. F. J. Bailey. Very truly yours, (SIGNED) W.N. THOMPSON Administrative Assistant to the Secretary The lionerable The Attorney General. inclosures. its 130% 1/22/14 Regraded Unclassified 168 MAR 23 1944 Dear Mr. Baileys There is enclosed for your information a copy of a letter dated today, sent by this Department to the Attorney General with reference to the preposed Executive Order *Satablishing the Executive Condittee on Economic Foreign Folicy." Very truly yours, (SIGNED) W.N. THOMPSON Administrative Assistant to the Secretary er. F. J. Bailey, Assistant Director, Legislative Reference, Huren of the Budget, Washington, D. C. LCA mou 3/22/44 Regraded Unclassified positive to white 169 Ciar 3/28 to talk to seen to in Cot on 3/2x Ruthon copy retd Secret Office Memorandum UNITED STATES GOVERNMENT DATE: March 23,194 Hon Henry Morgeathan In nom Oscar lox swajact: Petroleum Insentories m the ик Here is some of the material you wanted. In order to get it to you quickly thave not degated and briefed of you. If conventent, would appreciate t of your attached office could make a copy and sendit it to me. This is my only set. Action will be taken as quickly as possible on the point Ernot makes. ose Regraded Unclassified FOREIGN ECONOMIC ADMINISTRATION OFFICE MEMORANDUM SECRET "o: x. Oscar S. Cox rom: John B. Howard Date: March 23, 1944 object: Petroloum Inventories in the United Kingdom 1. I am attaching a table which Al Srnst has prepared showing the lend-lease percentage of V.K. supplies of petroleum products during the fiscal year 1945. 2. I am also attaching Al's memorandum to me on the subject. I have marked in red pencil his suggested method for determining the lend-lease percentage of stocks on hand at any given moment. This method strikes me as being both sound in principle and simple. It can be applied to other products, and for the purpose of recapture at the end of the war as well as for the purpose of diverting lend-lease supplies during the war. 3. The Army-Navy Petroleum Board has informed us that during the fiscal year 1945, it is anticipated that the U.S. will receive from our allies on reverse lend-lease a quantity of petroleum products totalling slightly less than half the total quantity of lend-lease exports during that period. Inasmuch as the bulk of lend-lease and reverse lend-lgase petroleum transactions take place with the U.K., it is probably/fair assumption that the two-to-one ratio also applies in the U.K. The actual figures for reverse lend-lease of petroleum products in the U.K. is highly secret and the Army-Navy Petroleum Board would be very reluctant to supply them to us. Attachments fohnblowerd Regraded Unclassified PORKIGN ECONOMIC IMINISTRATION OFFICE MEMORANDUM SECRET John Howard B. Ernst E Date: March 22, 1944 of Stocks of Petroleum Products on hand in the United Kingdom Estashed is a statement which will give an idea of the approximate of the origin of petroleum stocks on hand in the U.K. at an provide moment during the period of the Fifth Lend-Lease Appropriation. in this connection, I summarize briefly below the net outcome of our various conversations including that with Captain Shaffer in my office last deterday, on the general subject to which the attached statement pertains. As you will recall, the Army particularly, but various others as well, 170 desserned with the ownership, control and disposition of the large petro- 2002 stocks which are being built up in the U.K. through Lend-Lease shipments. Our Army is especially concerned that at any given moment it might, for operational reasons, find it desirable to make an emergency shipment of petro- Inco products from stocks on hand in the U.K., and find itself obstructed Drink delng 80 because the petroleum has been transferred to the possession the British or through some other technical objection by British function- To remedy this situation, it is proposed that an agreement be made with British to clear up such technical obstacles immediately. Such agreement provide - (2) That our armed forces - or others that may be specified - may seame possession of and dispose of stocks of petroleum products on hand in the U.K., and That this action can be taken under conditions and by a mechanism to be stated specifically in the agreement. The mechanism might, for example, be put in motion by a directive from General Eisenhower. tion has arisen as to how the amount which U. S. representatives could under such conditions, could be determined. One suggestion for ac- ing this, consistent with lend-lease general policies, might be to agree such withdrawals to the portion of stocks on hand that are of lend- gin. This limitation could be accepted for the solution of the in- urgent problem at hand, without prejudice to the solution of any over Reas on which this question may impinge. computing the portion of stocks on hand that are of lend-lease origin, Aven moment, the following suggestions might be followed: (Continued) Regraded Unclassified - Page 2 - March 22, 1944 R stocks of the product involved, on hand in the country 8.6 a whole - rely at a particular locality from which our representatives pro- to lift products - would be considered. (2) basic statistics of the 011 Control Board would be used. The figures the total stocks on hand at any moment are regularly available from the U.S. representatives in the country concerned. Information on arrivals British 011 Control Board records and could be supplied currently to of principal petroleum products, vessel by vessel, could also be supplied currently to our representatives designated for the purpose. (3) At any moment at which liftings by U.S. authorities might be desirable, these figures could be used to determine the latest inventory and the ships by which that inventory arrived. For simplicity this calculation should be based on the assumption that the stocks on hand were received by the most recently arrived ships which, in the aggregate, carried quantities equal to the inventory. This presupposes that products ar- riving by earlier vessels have been completely consumed. (4) From this information the origin of the stocks on hand could be readily determined and the percentage of lend-lease origin calculated. The U.S. representatives could be given the right to lift up to such bobed Quanti- ties. To avoid creating an emergency situation, it might be desirable to provide that in no case should the total stock available in a given locality be permitted to be drawn below a point - to be fixed in numbers of tons in advance - which might be considered to jeopardize the public welfare. This would be a very small quantity, however. ALL of the foregoing is, of course, merely a tentative suggestion which I out= line above as perhaps a useful basis of discussion. This is a question with many aspects, and all the factors of importance will naturally have to be considered. However, resolution of this problem is a matter of extreme urgency. Our military authorities are greatly concerned over the problem and I know we would be rendering & service which they consider a "must" if we could consummate an arrangement which will mplish the burnoses outlined above in the near future. Regraded Unclassified STATEMENT SHOWING THE EXPECTED ORIGIN OF PETROLEUM PRODUCTS WHICH will BE AVAILABLE IN THE UNITED KINGDOM DURING THE FIFTH APPROPRIATION PERIOD, JULY 1, 1944 TO JUNE 30, 1945, BY PRINCIPAL CLASSES OF PRODUCTS, TOGETHER WITH THE PERCENTAGE OF THE TOTAL AVAIIABILITY WHICH WILL BE OF LEND-LEASE ORIGIN (In 1000's of Barrels) Produced by Refining Produced by Refining of U.K. Crude Production Imports Total Total Grand Total Percentage of Imported Crudes and Substitutes from Sterling Sterling Refined Lend-Lease of U.K. Lend-Lease in U.K. Refineries in U.K. Refineries Sources Products Refined Products Sew Supply to Total Aviation Gasoline 2,587 1,329 8,371 12,287 38,762 51,049 75.95 Motor Gasoline 45 1,840 22,870 24,755 47,676 72,429 65.82 6,938 9,570 72.50 Kerosene 23 8 2,601 2,632 Gas/Diesel/Fuel Oils 1,477 5,495 15,009 21,981 29,592 51,573 57.38 Lube 011s, Greases and Waxes 1,267 147 - 1,414 8,027 9,441 85.02 Other Petroleum Products 60 1,177 2,572 790 3,362 23.48 1,335 TOTALS 6,732 8,879 50,028 65,639 131,785 197,424 66.75 9 45.12% from Land-Lease and 56.88% from Sterling origin. SECRET Petroleum Division Foreign Economic Administration March 22, 1944 Regraded Unclassified 175 AGUDAS ISRAEL WORLD ORGANIZATION 226 West 97th Street New York 25, N. Y. March 23rd, 1944 Vr. John Pehle, Director "iar Refugee Board U. S. Treasury Building Department of State Washington, D. C. Sir: Ve are respectfully presenting for your consideration and action this brief memorandum pertaining to Jewish internees in French-German camps, who possess South American and Latin American passports: I. A number of Polish, Belgian and Dutch Jews possess documents from various South /merican states, which were issued to them by their respective Consuls. A part of the above mentioned have passports and some have only Detters from the Consuls, stating that their governments have recognized them as citizens of their respective countries. Several hundreds of these people are 1 terned in the following camps: Vittel Liebenau Tittmoning all in Germany and Compiegne in France. Newever, the major part are interned in Belsen-Bergen near Hanover. In November 1943, the German authorities at camps Vittel, Liebenau, Tittmoning and Compiegne, took away all the documents of the interned Jane, and until February 29th, 1944, they had not been returned to them. In December 1943, these internees were in grave danger of being deported to Poland, which would have meant instant death. However, through the efforts of the State Department which intervened with the Paraguay Govern- ment (which had issued most of these passports) and the other South unerican countries, the pasments and documents is question were acknow- ledged as valid. It is evident, however, that the German camp authori- Use are aware of the nature of these passports and documents, and accor- (Ing to the remarks and actions of the various camp commanders, it seems U.S. these people are saved merely for the purpose of future exchange- possibilities. These internees are a part of the last remnants of Polish, Belgian and Outch Jewry, and many of them are outstanding Rabbis, spiritual and cul- tiral leaders. Regraded Unclassified 176 - 2 - 11 :- TAX urgent to begin with the exchange of at least some of these Literings so that the German government may become aware of the con- are " the United Nations in behalf of the people who possess the South documents. It is through this method alone, that the people - various camps can actually be saved. They may otherwise be con- - Oreatened with being suddenly deported to the death-camps of 100 number of these internees are in possession of immigration cer- to Palestine, and the South American countries may therefore - that these people will not become & burden to their countries, at will setually go to Palestine. Even pending protracted negotiations, HAVE regatistions would thus themselves mean a certain kind of protection that the danger of being deported. We are prepared to submit on request Itst if approx. 150 names of internees in the camps mentioned, who could :- taken in view for such an exchange. II. Ith reference to the internees in Belsen-Bergen, we are informed that it 1- Dependible to establish any contact with them. Even the American and Red Cross have not succeeded. Since the South American especially Paraguay, have recognized these internees as their it is urgent that the strongest pressure be exterted on the - authorities, to permit the Red Cross to contact this camp, so that 110 Internées in Relson-Sergen could be treated in the same manner as 110 American internees in all other camps. III. recently been informed from Switzerland, that an intervention on the Yar ilefugee 3oard at the Government of HONDURAS would be desirable and very urgent, in order to obtain also from that Govern- - "line acknowledgment of citizenship documents, rightly or wrongly to save threatened human life from certain annihilation. Respectfully submitted AGUDAS ISRAEL NORLD ORGANIZATION President Mas Chauncey (for the Sec'y) Abrahamson, Akzin, Bernstein, Cohn, Dubois, Friedman, Gaston, Hodel, Laughlin, Lesser, Luxford, Mann, Marks, McCormack, Murphy, Paul, Pollak, Rains, Sargoy, Smith, Standish, Stewart, H. D. White, Fehle, Files Regraded Unclassified 177 American Embassy near the Government of Greece. Cairo, March 23, 1944 No. 81 Subject: Measures for the rescue and relief of the refugees of Europe. The Honorable The Secretary of State, Washington, D.C. Sir: With reference to the Department's circular airgram of February 29, 7:30 p.m., concerning measures for the rescue and relief of the refugees of Europe, I have the honor to report that this Embassy failed to receive the Department's previous circular airgram of January 26, 7:00 D.S. on this subject, mentioned therein. However, when the matter was brought to the Embassy's attention by the receipt on March 14th of the later message, copies of the earlier one were obtained from the Legation and, as instructed, the Royal Hellenic Ministry of Foreign Affairs was approached, by an aide memoire dated March 16, 1944, with & view to explaining the policy of the United States Government in respect to this question and to ascertaining the extent to which the Royal Hellenic Govern- ment is prepared to cooperate. So far, no reply has been received. As regards the report requested concerning the situation at present, the Greek Government is, of course, itself in a refugee status and consequently controls no CC: Miss Chauncey (For the Sec'y), Mr. Abrahamson, Mr. Aksin, Mr. Bernstein, Mrs. Cohn, Mr. DuBois, Mr. Friedman, Mr. Gaston, Miss Hodel, Miss Laughlin, Mr. Lesser, Mr. Luxford, Mr. Mann, Mrs. Mannon, Mr. Marks, Mr. McCormack, Mr. Murphy, Mr. Paul, Mr. Pehle, Mr. Pollak, Mr. Rains, Mr. Sargoy, Mr. Smith, Mr. Standish, Mr. Stewart, Mr. Weinstein, Mr. H. D. White, Files Regraded Unclassified 178 territory on which refugees might find haven. However, as the Department is aware, that Government is actively concerned with measures for the rescue of its own nationals from occupied Europe and for their reception and maintenance in various countries of the Middle East and Africa. Respectfully yours, For the Ambassador: Harold Shants Counselor of Embassy File no. 848 Sent in hectograph to Department WB/ad Regraded Unclassified 179 FG-185 Cairo telegram must be persphrased before being Dated March 23, 1944 accomunicated to anyone other than a Governmental Rec'd 6:29 p.m. agency (BR) Secretary of State, Washington. 680, March 23, 4 p.m. The Legation has received a note dated March 20 from the Egyptian Foreign Office stating that the Egyptian Government has received reports of persecution, pillage and atrocities committed by certain (unspecified) Tugoslav military elements against Moslems in Bosnia and herzegovina, including massacre of women and children. Vite observed difficult to confirm accuracy of these reports but that Egyptian Government as a Moslem Govern- ment deemed it its duty to invite attention thereto since such acts, if actually committed, would constitute serious infraction of most elementary human principles as will as of ideals for which the United Nations are fighting. Note concluded that Egyptian Government would be happy to learn that such events have not taken place but in contrary case would appreciate receiving Legation's assurance that effective immediate steps would be taken with view to preventing their recurrence. I have replied to Foreign Office that the Legation has no information to enable it to cast any light on Uni- matter, but that it was being brought to the attention of the Department for appropriate consideration. Copies d' Foreign Office note and of this telegram have been furnished the American Ambassador to ingoslavia here for his information and possible comment to the Department. KIRK JT Regraded Unclassified 180 PARAPHRASE OF TELEGRAM RECEIVED FROM: SECRETARY OF STATE, WASHINGTON TO: AMEMBASSY, LONDON DATED: MARCH 23, 1944 NUMBER: 2224 CONFIDENTIAL Given below is the substance of a cable for Joseph Schwartz, Central Council for Jewish Refugees, Upper Woburn Place, London, from Leavitt, Joint Distribution Committee: Please contact the Financial Officer of the British Foreign Office regarding the return of $20,000 which we sent on behalf of the Jewish Community in Rome. It is requested that you arrange to open an account in the name of the Joint Distribution Committee at Barclays Bank London. Signatures of officers authorized to draw on accounts will be filed with Barclays Bank New York. It is probable that the funds will stay in London until it is possible to repay individuals in Rome who are now advancing funds against this account. HULL Regraded Unclassified 181 MEN-296 PLAIN London Dated March 23, 1944 Rec'd 10:36 p.m. Secretary of State, Washington. 2381, 23rd. Malin has suggested by telegram to Emerson from North Africa that the IGC appointee to MERRA contemplated in Embassy's 1762, 3rd by Keeny. Emerson while recog- nising that arrangements must depend upon still pending decisions concerning UNRRA relations with MERRA accepts Lalin's estimate of Keeny's suitability and says he would be greatful if Department could ascertain whether UNICRA will be prepared to release Keeny (said to be now -1th UNRRA) for employment under IGC to Cairo if decision is in favor of IGC having a representative there. Please instruct. WINANT LRL. Regraded Unclassified