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Volume 729, May 8, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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Diary
Book 729
May 8, 1944
- A -
Book Page
Appointments and Resignations
Japanese girls - employment in Treasury discussed by
C.S. Bell at 9:30 meeting - 5/8/44
729 16
- B -
Business Conditions
Hass memorandum on situation. week ending May 6, 1944 -
5/8/44
107
- C -
China
See Post-War Planning: Currency Stabilization
(International Conference)
- 1 -
Employee Relations, Treasury
Monthly bulletin for the 90,000 Treasury employees discussed
at 9:30 meeting - 5/8/44
6
(See also Book 732. page 10 - 5/16/44)
- 7 -
Financing, Government
War Savings Bonds
5th War Loan Drive: Motion picture industry not to be
headed by Charles P. Skouras although HMJr had so
indicated; correspondence concerning - 5/8/44
102
France
See Occupied Territories
- J -
Japanese
See Appointments and Resignations
- M -
Mendes-France, Pierre
See Occupied Territories: France (Currency Stabilisation)
Monnet, Jean
See Occupied Territories: France (Currency Stabilization)
Motion Picture Industry
See Financing, Government: War Savings Bonds
(5th War Loan Drive)
- 0 -
Book Page
Occupied Territories
France: Currency Stabilization
Discussed by HMJr. White, and Luxford - 5/8/44
729
21
#
by Monnet, Mendes-France, HMJr. White, and
Luxford - 5/8/44
35
a) Ordinances used in Corsica to control the profite
made since the fall of France discussed
41
b) New notes - printing of discussed
51
c) Purchasing power of troops discussed
55
HMJr, White, and Luxford discuss final draft of letter on
which Mendes-France and Monnet are now working -
5/9/44: See Book 730, page 25
(For draft see page 36)
Conference; present: HMJr, White, Luxford, Mendes-France,
and Monnet - - 5/9/44: Book 730, page 38
Memorandum to FDR - 5/16/44: Book 732, page 94
a) HMJr expresses displeasure at fractions
Luncheon for Mendes-France and Monnet - 5/17/44:
Book 732. page 177
Expenses of the United States in Continental France -
equitable adjustment of: White memorandum giving points
to be covered in letter to the Treasury by Mendes-France -
5/8/44
64
- P -
Post-War Planning
Currency Stabilization
International Conference
See also Books 724,727,728
China: Soong, T.V., rather than T.L., preferred by HMJr;
cable to Adler - 5/8/44
91,97
a) T.L. Soong assures Kung - on return to China -
that HMJr is "very friendly to China and realizes
need of maintaining official rate": See Book 730.
page 109
b) T.L. coming - Adler cable - 5/10/44: Book 730,
page 172
Dominion Ministers "approve conference and will back
debate in Parliament" - HMJr-Acheson conversation -
5/9/44: Book 730, page 26
U.S.S.R. letter of acceptance - 5/9/44: Book 730.
page 103
United Kingdom
Winant transmits Chancellor of Exchequer's message;
.
tells HMJr (1) date acceptable; (2) Chancellor
of Exchequer cannot attend: (3) exiled Governments
will be able to get travel permits for small groups -
5/11/44: Book 731. page 32
a) Opie (British Embassy) and White discuss cable:
Book 731. page 37
Winant-HMJr-White conversation - 5/16/44: Book 732,
page 69
- P - - (Continued)
Book Page
Procurement Division
Surplus Property, Disposal of
Standards (Code of Ethics) by which $1-a-year assistants
to Olrich are chosen discussed by
a) HMJr and Olrich - 5/8/44
729
1
b) # # 9:30 group.
8
c) Conference: present: HMJr, Sullivan, Olrich,
O'Connell, Hill, Lynch, and C.S. Bell - - 5/8/44
75
1) Clayton has no "formal code of ethics for
$1-a-year men working under his jurisdiction"
88
d) Conference; present: HMJr, O'Connell, Olrich,
C.S. Bell, Lynch, and Thurman Hill - - 5/9/44: See
Book 730. page 69
1) Draft: Book 730, page 76
United Nations Relief and Rehabilitation Administration:
Arrangements made for utilizing salvaged articles -
5/8/44
126
- S - -
Skouras, Charles P.
See Financing, Government: War Savings Bonds
(5th War Loan Drive)
Soong, T. V.
See Post-War Planning: Currency Stabilization
(International Conference)
- T -
Treasury Department
Monthly bulletin for the 90,000 Treasury employees
discussed at 9:30 meeting - 5/8/44
6
(See also Book 732, page 10 - 5/16/44)
- U -
United Nations Relief and Rehabilitation Administration
See Procurement Division: Surplus Property, Disposal of
- V -
War Savings Bonds
See Financing, Government
1-2
May 8, 1944
8:40 a.m.
Ernest
Olrich:
Good morning, Mr. Secretary.
HMJr:
Good morning.
0:
This 18 Olrich speaking.
HMJr:
I hope you had a good week-end.
0:
I did. I went up to New York City and I got
some things done but instead of having a nice
day, it rained from early morning until late
at night.
HMJr:
Oh, I'm sorry.
0:
But I accomplished much.
HMJr:
Mr. Olrich, there are two things. I am going
to have Sullivan get in touch with you and I
want to have a little meeting between you and
some of the lawyers and before you've seen me
I want to draw up a kind of a standard on which
we -- everybody will be satisfied on these dollar-
a-year men that you're going to bring in, you see?
0:
Yes, sir.
HMJr:
I think we ought to have a formula.
0:
Yes, sir.
HMJr:
I'll have Sullivan get in touch with you in a
little while and then I'd like to see you all
this afternoon.
O:
Yes, sir. I'll be available.
HMJr:
And then, I mean this business of -- I'm not
sure how I want to proceed on -- for instance,
in getting -- I was reading your memo on West-
inghouse and General Electric -- to appoint a
representative, you see?
O:
Well, that 1s to suggest someone.
HMJr:
Well, I -- I'd like to spell it out and have a
little talk with you.
0:
Yes, sir.
3
- 2 -
HMJr:
Then the other thing, there's nobody on your
wire, 1s there?
0:
No, sir.
HMJr:
You don't have -- I was out for dinner last
night and in my hearing what's his name --
Loeb said he spent from two to six Saturday
afternoon with Will Clayton.
0:
Yes.
HMJr:
I wondered if he did that at your request.
0:
Yes, sir, he did. It was to check over the
form that he and I had gone over, with the
reporting on the information that shall come
to the Procurement Division from the Army or
other Divisions on the surplus that they were
to give us.
HMJr:
But I mean, that was at your request.
0:
That was at my request, yes, sir.
HMJr:
I see.
0:
They called the meeting. I was going to New
York. I had some appointments there and they
called the meeting at 12:30.
HMJr:
Yeah. Well, when we get around to having you
go on in Sullivan's place, you see....
0:
Yes, sir.
HMJr:
....
then somebody has got to be appointed as
an alternate to you.
0:
Yes, sir.
HMJr:
And I very much want to be consulted. Well,
anyway, I have the appointing.
0:
That's right.
HMJr:
And you be thinking over who you want as your
second.
0:
I will.
- 3 -
4
HMJr:
And talk to me before you make any commitments
on that. Will you?
0:
Yes, sir. I will.
HMJr:
Thank you.
0:
There have been no commitments.
HMJr:
Well, that's good, because as I say, well, I
want to talk it over and, as I say, it's up to
me to do it but naturally I want somebody that
pleases you and me.
0:
Yes, sir.
HMJr:
I think you know what I'm talking about.
0:
I do, s:r.
HMJr:
Right.
0:
All right.
HMJr:
Thank you.
0:
All right.
HMJr:
I'll see you later.
0:
Yes, sir. I'll be available.
HMJr:
Thank you.
0:
Good bye.
May 8, 1944
5
9:19 a.m.
HMJr:
Hello.
Operator:
Mr. Acheson.
HMJr:
Hello.
Dean
Acheson:
Good morning, Henry.
HMJr:
Good morning to you. Anything from Argentine?
A:
I was just inquiring about it. I was out at the
farm over the week-end.
HMJr:
Yes.
A:
And I have just asked the Secretary's office
to go through the files of incoming messages....
HMJr:
Well....
A:
and see if they can find one.
HMJr:
if there's something, will you call me
back?
A:
You bet. I will.
HMJr:
Thank you.
A:
You bet. So long.
6
May 8,1944
9:30 a.m.
GROUP
Present: Mr. C.S. Bell
Mr. O'Connell
Mr. Sullivan
Mr. Gaston
Mr. Gamble
Mr. Smith
Mr. White
Mrs. Klotz
H.M.JR: For once in my life I tried to get around
the situation by saying what I did, and this Congressman
from North or South Dakota did it in a very nice way,
and I squirmed out of it, which Drew Pearson didn't get
at all.
MR. GASTON: Mundt. He is an isolationist, isn't
he?
MR. WHITE: But the story was very sordid.
MR. SULLIVAN: There is something on the ticker
this morning about a fellow trying to attack Paul McNutt.
It says he was the same man who tried to attack you in
1942.
H.M.JR: Attack me, how?
MR. GASTON: He was going to shoot Paul McNutt over
the telephone.
H.M.JR: That is very risky.
MR. WHITE: That is Radar!
7
- 2 -
H.M.JR: We have the French at eleven.
Now, I have a couple of odds and ends here. I got
this memorandum from Mr. Charlie Bell--
MR. BELL: Oh, that series of press releases. You
gave it back to me.
H.M.JR: Have you consulted Mr. Smith?
MR. BELL: No, sir.
H.M.JR: Would you?
MR. BELL: Yes, sir.
H.M.JR: And before it comes to me. He is over-all,
in case you don't know it, on public relations for the
Treasury.
MR. SMITH: Cover-all!
H.M.JR: I think you have a good idea, but it would
save me time, and you, if you would take it up with
Smith.
MR. BELL: All right, sir.
H.M.JR: This idea of getting out a monthly bulletin
to the ninety thousand employees, I think, is a good
idea. That was the only thing in there, wasn't it?
MR. BELL: That is it, one each month - a series.
H.M.JR : There is a press release - if it is all
right with Smith, it is all right with me.
Now, I got this memorandum from Mr. Oirich, and I
spoke to him this morning. I will tell you what I would
like you to do, John; I would like you to get together,
you and Joe and Lynch - do you want to make notes? Then
this Thurman Hill - that is the fellow--
8
- 3 -
MR. O'CONNELL: Chief Counsel.
H.M.JR: ...and Charlie Beil, and gt Olrich here.
I want a kind of - I don't know what you all it - proto-
col, or something - drawn up as to what we require of a
dollar-a-year man who is going to go to work over there.
Do you see?
MR. SULLIVAN: Yes.
H.M.JR: A code of ethics; I don't think we have such
a thing. Now, for example, he engaged H.O. Penn of the Penn
Construction Company, to act as head of the Construction
Equipment Section. He is to give us three weeks of his
time each month.
Now, I think he said, as I understand it, that Mr. Penn
must agree that during this time his company would not
sell any construction to Procurement. That was my under-
standing.
Well, let's say he did it; there should be something
in writing.
MR. SULLIVAN: There will be other cases, 80 we
better just draw a formula.
H.M.JR: He has arranged for top executives of
Westinghouse, General Electric and Graybar, to get to-
gether and arrange for & man to take charge of our Electri-
cal Supply Section. I don't want them picking the man
who is going to sell back to Westinghouse, General Electric,
and Graybar.
MR. SULLIVAN: I agree.
H.M.JR: The man is being perfectly frank about it,
but he has to be educated. And I think that you fellows
should get together, as I said - you and Joe and Lynch,
and Thurman Hill and Charlie Bell and this man, and draw
me up & code of ethics. Could you have it ready for me
at three? Is that rushing you too much?
9
- 4 -
MR. SULLIVAN: No, I don't think SO. You will be
away, won't you, Joe?
MR. O'CONNELL: I had expected to go on the Hill at
ten. Lynch will be there with Dan Bell on the Public
Debt bill. We will be back by noon. That is the only
thing that makes me hesitate on three o'ciock.
H.M.JR: What are you doing on the Hill?
MR. O'CONNELL: Lynch is going down with Bell in
connection with the testimony on the Public Debt bill.
I have a tentative appointment to see Patman this
morning. He is on the same Committee. I thought I
would go down with them at ten.
H.M.JR: When are you leaving?
MR. O'CONNELL: In five minutes, if you will let me.
We should be back before noon.
MR. SULLIVAN: Then you get in touch with me when
you get back and I will call Olrich.
H.M.JR: Could you still do that thing? Would three-
thirty help any?
MR. O'CONNELL: We can shoot for three. I guess that
is as good a name as any - code of ethics.
H.M.JR: Code of ethics under which the people can
come - and I thought if you fellows met first, and then
came in here--don't you think it is very. important?
MR. SULLIVAN: Yes, I do. I think you have to set
your pattern now, so when he hires these people he can
tell them where they stand.
H.M.JR: I don't want Westinghouse, General Electric,
and Graybar picking a man who is going to handle electrical
supplies. That is part of my job. It is you fellows' job
to see that we get him off to the right start. Does that
interest you at all, Herbert?
10
- 5 -
MR. GASTON: No, I think not.
H.M.JR: Oh, now on that, I wrote down - ofcourse,
I am sure that Will Clayton hasn't got a code of ethics,
but let's draw up our own and simply tell him - "Here is
the one we have; what are the other agencies under you
going to do?"
But I think we should draw up our own.
MR. SULLIVAN: I will call him up this morning and
tell him we are going to do that, and ask him if he has
any guides or standards.
H.M.JR: Do you want to make a bet on it that he
hasn't?
MR. SULLIVAN: No, I wouldn't bet one way or the
other.
MR. O'CONNELL: I don't think there is a code of
ethics in town. I don't think WPB, or any of the outfits,
have done anything as definitive as you are suggesting.
I think it is a good idea.
H.M.JR: I want something. It wouldn't do any harm
to let the world know about it. What do you think,
Mr. Over-All?
MR. SMITH: Let's take a look at it first.
H.M.JR: Well, Herbert?
MR. GASTON: I have nothing this morning.
MR. SULLIVAN: Nothing.
MR. O'CONNELL: Nothing. May I leave?
H.M.JR: Yes. You are going up on this trip that I
made?
MR. O'CONNELL: Yes.
11
- 6 -
(Mr. O'Connell leaves the conference)
H.M.JR: Theodore?
MR. GAMBLE: I have one matter I would like to bring
up. Sometime in the next week or ten days I would
like to bring down some twenty top people in the radio
industry, much as we did during the Third War Loan Drive,
in preparation for the Fifth War Loan Drive.
So, if you will set a date when we could have them
for luncheon--
H.M.JR: Well, now, this is the 8th. How is Wednes-
day, the 17th?
MR. GAMBLE: That is not so good. If you could do
it Monday, the 15th--
H.M.JR: No, and I can't promise Tuesday. What is
the matter with the 17th?
MR. GAMBLE: The 17th I have to have a bankers'
meeting.
H.M.JR: Where?
MR. GAMBLE: In the State of Colorado.
H.M.JR: Are you going clear out for that?
MR. GAMBLE: I will only be out over one day.
H.M.JR: When will you be back? Do you go to Colorado
and back in a day?
MR. GAMBLE: Yes, over night.
H.M.JR: Well, do you want to make it the 19th?
12
- 7 -
MR. GAMBLE: Is that 8 Saturday?
H.M.JR: No, a Friday.
MRS. KLOTZ: In case he can't fly back--
MR. GAMBLE: Yes, I will be back for that date. I
will be in Colorado on the 17th.
H.M.JR: That gives you an extra day.
MR. GAMBLE: The 19th is all right.
H.M.JR: Do you want the luncheon downstairs?
MR. GAMBLE: Yes, sir.
H.M.JR: Mr. Bell, will you reserve enough room for
us down there to have Mr. Gamble and twenty beautiful girls?
MR. GAMBLE: Twenty lovely starlets!
H.M.JR: Incidentally, has Mr. White asked you to supply
the entertainment for his World Monetary Conference?
MR. GAMBLE: He hasn't yet, but I will be a little
disappointed not to help out.
MR. WHITE: I should certainly think it would smooth
matters.
13
- 8 -
MR. SMITH: Gypsy Rose Lee, and put a sign on her,
"Fort Knox.'
MR. WHITE: For all those who sign!
H.M.JR: Anyway--
MR. GAMBLE: That is all.
H.M.JR: Now for tonight, would you notify--I would
like Dan Bell to come tonight.
MR. GAMBLE: Mr. Bell, Mr. Gaston, Mr. Sullivan, Mr.
Smith, Mr. Charles Bell, Mr. Haas, Mr. Lindow, and Mr.
Tickton are on the list. And I have given the names to
Fitz already for nine o'clock.
H.M.JR: What a man!
All right.
Frederik?
MR. SMITH: I have nothing.
H.M.JR: Just like that?
MR. SMITH: Yes.
H.M. JR: I talked to Acheson. He has not yet heard
whether they had any cables at ten minutes past ten. He
was going to find out and let me know.
MR. WHITE: Mr. Bill Taylor left hurriedly yesterday
morning. He had an opportunity to go and said he wanted to
come in and see you first, but he had no way of reaching you.
He left at eight o'clock on Sunday morning. He was informed
Saturday in the late afternoon.
H.M.JR: He got a seat?
MR. WHITE: He got a plane; I don't know whether it was
a bomber or not.
14
- 9 -
H.M.JR: He left when?
MR. WHITE: At eight Sunday morning. You had a note
about it. T. V. Soong--
H.M.JR: Yes--could you stay behind a minute? I would
like to talk to you about that.
Bell was upset because you called Hall at eleven
o'clock Saturday night.
MR. WHITE: I don't know why Bell should be upset about
calling Hall that night. I called Hall, not Bell.
H.M.JR: Well, it was 80 unusual for you to call.
MR. WHITE: Well, the actual story was as follows:
When I came back here I was here but a short time to pick
up the Russians for our afternoon meeting.
H.M.JR: I don't need to know. He wanted to know if
anything had happened.
I said that nothing had happened.
MR. WHITE: So I didn't think of that.
I would like to finish, since it seems so unusual and
so ridiculous for me to have called him that late. But I
thought of it after I got home. I put in a call about seven
o'clock. Hall wasn't there, and I told him to call me when
he got back. Hall came back late, so he called me. I told
him I didn't want to disturb Bell and he should tell Bell
about it. He had quite a long story, and I told him to take
it up with Bell.
Apparently the Russians misunderstand him. There is
complete misunderstanding between them.
H.M.JR: Is there?
MR. WHITE: Yes, apparently.
15
- 10 -
H.M.JR: As far as the Ambassador was concerned, he
wasn't disturbed. I told him about our bet. I don't have
to get in on it, do I?
MR. WHITE: Not unless Mr. Bell feels you do. All I
know now is that there is complete misunderstanding.
H.M.JR: Would you mind telling that to Bell yourself?
MR. WHITE: That will be all right.
H.M.JR: When he comes down off the Hill.
MR. C. S. BELL: We are going ahead with acoustical
treatment in the whole cafeteria. We found a lot of the
tile down in the Bureau of Engraving and Printing. We are
buying the additional that we need.
H.M.JR: That is good.
MR. C. S. BELL: The American Legion has taken up with
the President the matter of selling poppies in Government
buildings. We are going along with the Bureau of the Budget
and are holding that down just to the entrance so they will
sell poppies at the entrance, inside.
MR. GASTON: The Legion, or Veterans of Foreign Wars?
It is usually the Veterans of Foreign Wars.
MR. C. S. BELL: Veterans of Foreign Wars is correct.
I will have all of the dope on the air raid tonight.
H.M.JR: Is there going to be one?
MR. C. S. BELL: Apparently, according to the paper
this morning.
MRS. KLOTZ: Two hours.
H.M.JR: The boys have to play.
MRS. KLOTZ: That is terrible.
16
- 11 -
MR. C. S. BELL: We have hired two Japanese girls in
Chicago. Foreign Funds is requesting the appointment of a
Japanese girl here to interpret for them. This seems to be
a regular appointment procedure throughout the Government.
There are twenty-six naturalized Japanese appointed in the
Government service. This War Reallocation Board makes the
original recommendations to the Departments. We are check-
ing them pretty thoroughly.
H.M.JR: I hope so. I am not very enthusiastic about
that, but--
MR. C. S. BELL: That will be three in the whole
Treasury Department.
H.M.JR: One would be too many--could be too many!
MR. C. S. BELL: Yes, sir.
H.M.JR: What are they going to do in Chicago?
MR. C.S. BELL: Just routine clerical work on the bonds.
H.M.JR: Born in America?
MR. C. S. BELL: Yes, sir. Mr. White has recommended
the appointment of Otto Nathan, born in Germany, and came
to this country in 1933. We are running an investigation
on him. He has a very good background. He would get sixty-
five hundred as assistant to Bernstein. Mr. White can tell
you about it.
MR. WHITE: It is a temporary job during the summer.
The man is a professor. He is going to help work on German
reparations and some other problems connected with it. He
has been working around town with the Government here for
many years.
H.M.JR: That is all right.
MR. C. W. BELL: Do you want to see a list of the
committees, Procurement Division? There are two on
there that Mr. Sullivan feels that Mr. Olrich should have
on. (Hands Secretary list entitled "Interdepartmental
Committees with Procurement Representatives.")
17
- 12 -
H.M.JR: The President's Soviet Protocol Committee,
Cliff Mack and Walsh. Is there any reason why that should
be changed?
MR. SULLIVAN: No, sir, I am against putting Olrich on
any more than two committees.
H.M.JR: I justwant to read it. Every once in a while
I think it is a good thing to check these things.
"Procurement Policy Board Committee." Now, whom does
that meet with?
MR. SULLIVAN: Army, Navy, and Maritime Commission.
H.M.JR: Mack and Walsh.
"Surplus War Property Committee on Policy, John Sullivan
and John Loeb."
MR. SULLIVAN: Olrich will take my place on that committee.
H.M.JR: He will be the Treasury representative?
MR. SULLIVAN: Yes, he should.
H.M.JR: When will that happen?
MR. SULLIVAN: Right now.
H.M.JR: Do you want that to happen now?
MR. SULLIVAN: He can wait a couple of weeks, I mean.
H.M.JR: They will meet when?
MR. SULLIVAN: Once every two weeks.
H.M.JR: You don't want that to happen now, do you?
MR. SULLIVAN: The first of June will be all right.
18
- 13 -
H.M. JR: Then Olrich succeeds Sullivan; and then there
will be the question of appointment of an alternate. I
want to be consulted on that subject, very definitely. I
have told that to Olrich this morning.
"Army and Navy Munitions Strategic Material Committee,
Mack and Walsh." My God! Cliff Mack.
"American Standards Council Committee."
"Federal Specifications Executive Committee, N. F.
Harriman.
"Joint Contract Termination Board, Thomas J. Lynch,
Tom David."
"Purchases on Blind Made Products Committee, Mack
and LeFevre."
"Advisory Committee on Procurement Policy, Robert
LeFevre." What is that, Advisory Committee on Procurement
Policy?
MR. SULLIVAN: I don't know what that is.
MR. C. S. BELL: It sounds like a small inter-office
committee.
H.M.JR: I thought LeFevre had been moved out.
MR. C. S. BELL: No, sir, he is still there.
H.M.JR: "Inter-Agency Committee on Standard Commodity
Classifications." Would you mind, John, sort of taking
up these others, other than the ones of surplus war? Sort
of raise the question with Cliff on all of these. Would
you mind?
MR. SULLIVAN: Sure, I will be glad to.
H.M.JR: My God, if he goes to all of these things, I
don't see how he ever gets a chance to work.
19
- 14 -
MR. SULLIVAN: They take up an awful lot of his
time, Mr. Secretary.
H.M.JR: Would you mind? Can I give him this?
MR. SULLIVAN: Sure.
H.M.JR: One other thing, John, that I wish you would
take up when you meet with him is, I want a method of
reporting from Olrich to me. For instance, he closes these
seventeen hundred automobiles on a negotiable basis, not on
a bid basis. When that thing is finished--while it is too
late for me to change it, still I want a report that such
and such & deal was consummated. In other words, I want,
as he does these things, to be informed, how he sold
several hundred automobiles, the method, and 80 forth, and so
on. I don't want to wait too long. After all, there should
be some reporting somewhere of what he does, Charlie. See?
Now, I understand he will have an inventory every two
weeks. He says he has thirty-seven million dollars worth
of stuff on hand. Well, if he is going to get one, I would
like to know it. If he sets up a statistical organization,
I want Haas to be consulted. In other words, if it is going
to be every two weeks, I want to know it. As he closes
these things, I want to know it. He has to set up a report-
ing system between his office and mine. I think Charlie
ought to get in on that.
MR. SULLIVAN: That is right.
H.M.JR: There should be some kind of reporting system.
MR. C. S. BELL: Well, we have that definitely in mind.
We will let him feel his way along this week.
H.M.JR: But he is moving very fast. He had dinner
with me Friday night. Stuff that has been hanging fire,
he is just closing it. He is a very fast mover. So you
can't wait too long. I want him to move fast.
MR. SULLIVAN: Sure, he does.
20
- 15 -
H.M.JR: He set up a little policy board of his own.
Harry, would you stay?
21
May 8, 1944
10:30 a.m.
FRENCH CURRENCY STABILIZATION
Present: Mr. White
Mr. Luxford
H.M.JR: Why is the deadline tonight?
MR. LUXFORD: We have a'hotification provision
under their license which says we have so many days in
which to say no. Otherwise, under the license they
may proceed.
Now, previously, we had to withdraw the notifica-
tion. We then went to State and State said, "You must
go ahead with this transfer." So they have again filed
for the transfer, and under the notification, it will
expire unless we stop it. I, personally, don't see
how we can stop it with State squarely on record.
MR. WHITE: All right then, we won't.
H.M.JR: This is stopping the transfer of funds -
frozen Jugoslav funds.
MR. WHITE: They are now in commercial banks, to
the account of the Royal Jugoslav Government.
They are making one significant change in the
negotiations with the Russians on this post-war Lend-Lease.
They have accepted the terms which were suggested.
H.M.JR: Who accepted them?
MR. WHITE: State Department in their negotiations
with the Russians. Whether it was satisfactory to the
Russians, we don't know yet, but they are including this
22
- 2 -
phrase - I think it is good, but it is something new -
If by reason of extraordinary and adverse economic
conditions, during the course of the payment, the making
of the transfer of money is not in the joint interest
of the United States and Soviet Russia, further trans-
fers may be agreed upon by both countries."
In other words, for some reason or other, either
they are unable to transfer - in the case of Russia, it
is a matter of transfer - it is a question of whether
they can get dollars. Here is a provision which permits
postponement of payment by both countries. It is the
only other change. I gather that would have your
approval.
H.M.JR: 'Now, wait a minute. Is this what you are
reading from? (Refers to schedule of transfers submitted
by State Department)
MR. WHITE: This is a further move than that. We
just got this yesterday - - this additional item.
On the Dutch monetary agreement - I have just been
talking with Luxford on it and he thinks, and he convinced
me, that we can stall on it even as long as a week or two,
and desirably so, because in the first place, that other
matter - that Argentine matter - hasn't come through; and
in the second place, he feels we ought to deal directly
with the Dutch Government on this, rather than through
State, so as not to give the Dutch Government the impres-
sion that State has forced us to change our mind.
H.M.JR: That is ail right.
MR. WHITE: But he has convinced me it isn't urgent
within the next week, so we can let that slide. So he
will unquestionably--
H.M.JR: He hasn't pressed me. I keep bringing it
up. I get a lot of fun kidding him on it.
MR. LUXFORD: He can't press the Secretary now.
23
- 3 -
H.M.JR: He didn't say a word the other day. His
answer was, "Please don't kid me in front of anybody
from the State Department," but he has got it very much
in mind, and so forth and so on.
Incidentaily, I don't know whether I told you, &
week ago I saw Herbert Lehman and I said, "Does this mean
anything to you from the standpoint of relief?"
He said, "I frankly don't know what you are talking
about."
I tried to explain it to him. He said, "I can imagine;
I don't know."
I said, "If you will call up, I will be glad to
have somebody come over and explain it to you."
He said, "Can I have other people present?"
I said, "Yes," and he has never done anything about
it. It is so important on the relief problem, and Herbert
Lehman doesn't even know about it.
I was there, roughly, & week ago.
MR. WHITE: He hasn't called?
H.M.JR: He hasn't called. And if it isn't important
to him, and everything - I just think it is another one
of these things that the State Department made a pretty
tough bargain and they would like to sweep it up at our
expense. So, it doesn't worry me, but I am dying to
know what Armour's answer is.
MR. LUXFORD: He should be replying by now. He
sent that, "Special, Urgent."
H.M.JR: I called this morning - I called Acheson.
He had just gotten in.
MR. WHITE: I would like to bring you up to date
in our discussions on the mark rate.
24
- 4 -
H.M.JR: I think you ought to bring me up to date
on the French before you do that.
MR. WHITE: The French - he is going to bring you
up to date - Mendes-France.
H.M.JR: But you better tell me our side of the
story first.
MR. WHITE: I will dispose of the mark. It will
take me less time, I think.
There have been prolonged discussions as to what
rate will be over the mark.
H.M.JR: I can't move Harry this morning. Have
you tried him? He wants to go right down the line.
MR. LUXFORD: He makes an excellent trial lawyer.
The Judge asks the question and he goes right back to
what he was saying.
H.M.JR: I don't think he wants to hear me this
morning.
MR. LUXFORD: He is coming to that.
MR. WHITE: They are bringing pressure to come to
a decision. There is a very great variation in opinion.
The British first suggested a twenty-cent rate.
H.M.JR: This is for the mark?
MR. WHITE: For the mark.
H.M.JR: My God!
MR. WHITE: I don't know why they are in 8. hurry.
H.M.JR: Twenty cents!
25
- 5 -
MR. WHITE: Ridiculous, absurd! The official rate
is forty cents. The rate at which they operate mostly
is twenty-four. The black market rate is thirty-four
and thirty-five cents. By the time they get into Germany
it will be something else again. But the State Department
wanted the seventeen-cent rate; FEA wanted the sixteen-
cent rate; the Treasury - we said something between a
five and a ten-cent rate. They thought it was very ridi-
culous. I called a very large meeting, finally, at our
office. We got them all around the table and explained
to them why we thought this rate should be low, because
if the occupation authorities were going to be saddied
with the responsibility of maintaining some kind of order,
they had a chance only at a low rate; they had no chance
at all at a high rate.
Suffice it to say that when we got through with the
discussion they backed away from their high rates and be-
gan coming down. They agreed we were correct, in the main.
The British had a discussion with us; they, too,
abandoned their position after hearing us. They have come
down to a thirteen-cent rate. So they are probably making
for about a ten-cent rate, but before we finally decide,
I will marshall ail the arguments for you, and tell you
why, before we let them know.
H.M.JR: What does Macy's want?
MR. WHITE: Macy's would probably like a five-cent
rate.
H.M.JR: You just want to bring me up to date? Is
that all?
MR. WHITE: That is all on that, because you will
probably hear from that from many sources. Thething is
assuming an urgency which really doesn't exist. We
asked permission to take it up with the British and
Russian Governments, which they gave us. We have dis-
cussed it with the British; I don't know who discussed
it with the Russians.
26
- 6 -
I asked them whom we should discuss it with. They
got & message back that Morozov is coming back. It
will be interesting to hear. We haven't heard their
view yet.
H.M.JR: Incidentally, can't you ask the Russians
what rate they are using in Roumania?
MR. WHITE: I will ask them.
H.M.JR: And what they are doing for money.
MR. WHITE: I did ask them, and got nowhere. I
will ask them officially.
H.M.JR: The rate and the money.
MR. WHITE: The money, I think they told you. Didn't
they tell you they are using special Roumanian money?
You remember, you asked him a question to find out, and
he came back about a week later. The rate they never
told us.
H.M.JR: And while they are right on the edge of
Czechoslovakia, what rate are they going to use there?
MR. WHITE: Their answer to that question to me
was a perfectly blank answer, but it said, "Well, you
know the Russian soldiers don't need any foreign money.
We give them everything they need and they don't need
any money." So he said, "We are not very interested in
thar." We asked them what about the marks. They thought
that would be & different story.
H.M.JR: Very interesting.
MR. WHITE: Now, the French situation is as follows:
Monet brought Mendes-France up to see me at my house
last night, because he wanted to know how to clear some
ground, because he felt he wouldn't have time enough with
you. He wanted to clear some of the ground and get some
of the facts.
27
- 7 -
Now, this is what their view is - what he wants:
They are very worried that the two-cent rate, which is
the same rate which the President gave in North Africa,
and which is the rate which practically the whole Com-
mittee wants to apply in Metropolitan France, they are
very much worried that that rate is too high. They are
afraid they can't keep it.
Then, I think I told you, I had a long number of
discussions previously to that. It is my view that they
can't keep it, either, but they don't want to go in for
a lower rate for political and psychological reasons.
It will be bad psychologicaily, because they feel that
the people in France will say, "Ah, the franc is on the
skids again. You are going to make it less than two
cents, and it is going to be still less, and we are
going through the same process that Germany went through."
Politically, they will be very unpopular with the lower
rate.
On both accounts, they want to go in with the two-
cent rate; that is the same rate which prevails in North
Africa; and then sometime later, make an adjustment -
some adjustment - in the light of the prevailing circum-
stances.
They are placing very strong emphasis, and he will
repeat that here, on the fact that they can make that
adjustment later without difficulty if there is an Inter-
national Stabilization Fund, because then it will become
part of a large agreement, and the French people won't
feel it is a sign of weakness, but rather & sign of ad-
justment to a new circumstance.
So they are pressing, and are hopeful that there
will be an International Stabilization Fund in operation
before the end of the year, which will enable them to
make the adjustment which they feel is absolutely essen-
tial.
Now, he has also added this one thing, which I think
is very reasonable and very decent of them, which the
28
- 8 -
other countries are not ready to do. They know that that
rate is going to be lower. Now, if we get the francs
which we need for our soldiers now, at the high rate,
and then later on the rate gets lower, it would seem as
though we are not getting a fair deal, or at least they
would get the better of the deal. So this came entirely
on his own, and no mention on my part. He said, "What
we propose to do" - Mendes-France stated this definitely -
"...is to adjust the rates sometime later, whenever the
adjustment takes place for the costs, not on the basis
of what prevailed before, but on the basis of what is
reasonable, which may be much lower, even though you
must have the francs now at a higher rate." He is the
only one that has. said that.
H.M.JR: Say it again, will you?
MR. WHITE: You see, if we were to buy the francs
now in the same way that the Dutch want us to buy the
guilders, it would be at the present rate of exchange,
which is two cents a franc. Actually, they are not worth
it. Actually, at a later period, both the guilder and the
franc is going to be lower. But by that time we will have
bought all we had to buy for our soldiers, and will have
paid this high price, which is far above their actual
worth.
Now, Mendes-France, knowing that, is not asking us
to pay, in the final adjustment, the present rate. What
he says is--
H.M.JR: You had better get that in writing.
MR. WHITE: He will. You ask him for that. He is
going to tell you this, and I think that is important,
and I think you ought to get it in writing. I have told
him that was important, and among the things - he went
over a list of the things as to what was important enough
to talk to you about, and that is one of the several
which he will explain.
Is it clear what he has in mind with respect to that?
29
- 9 -
H.M.JR: Yes, that is good.
MR. WHITE: There is another part of that.
H.M.JR: I am scared to interrupt you, because you
go right ahead, anyway.
MR. WHITE: Oh, well, I didn't know you interrupted
me.
Another matter that they are interested in is the
question as to whether or not they will get any dollar
credits if they need it prior to the adjustment.
In other words, we are using this French currency;
the assumption is there is not going to be any adjust-
ment, and we are not going to settle the balance until
sometime in the future. They have already agreed to pay
for the imports of civilian goods in cash - in dollars.
They have, as you know, two billion dollars.
MR. LUXFORD: Over here?
MR. WHITE: No. Mendes-France is very much concerned
that they can't afford to spend, at the most, half of
that, because they will have no backing at all for their
monetary system, and that is an important item.
So he doesn't know how rapidly the rest of the money
will go, and he is wondering - he is not certain whether
he is going to raise this, because he is not clear in
his own mind.
H.M.JR: He made a good impression on you, didn't
he?
MR. WHITE: He is sincere; he has a rather simple
mind, you know, compared to Monet. Monet gives you the
impression of being very shrewd - one of the fellows
you want to nail down everything while he is around. But
this other fellow did not give me that impression.
30
- 10 -
H.M.JR: Any relation to Anatole France?
MR. WHITE: I didn't find out; I didn't want to ask
him then.
He is a young fellow who spent the first couple of
years of the war on a bomber. lie was a flier. He went
over Germany and France many times on bombing missions.
He was either bombardier or tail gunner, I don't know
which.
H.
JR: How long has he been out of France?
MR. WHITE: Four years. He was in England.
H.M.JR: He has been out four years?
MR. WHITE: I think he went out right at the start.
H.M.JR: I thought he just came out.
MR. WHITE: I asked Monet about anyone out recently.
They couldn't think of anybody.
This fellow France suggested once, "Well, we have
plenty of people in Algiers who have just come out; why
don't we get somebody over right away to talk with the
Secretary?"
H.M.JR: Oh.
31
- 11 -
MR. WHITE: They have plenty of people there, but
apparently there is no one here who has been there recently.
Monnet mentioned this same chap whom I had talked to and
said he had been out eight months. France says that is too
long ago.
So this fellow seems like a simple, able chap. I would
judge he is in the middle thirties.
H.M.JR: Somebody said thirty-five.
MR. WHITE: Somewhere around there.
H.M.JR: But he has come up through the school of the
French Treasury, hasn't he?
MR. WHITE: I think he has been in the French Treasury
at some time in the past. I don't think he had a very high
office, but I don't know. He seemed able and straightforward.
He speaks English pretty well, better than--
H.M.JR: What am I going to do about entertaining him?
MR. WHITE: I didn't find out how long he was going to
be here, but I think he is going to be here at least a
couple of weeks. That will give you time to do anything you
want.
H.M.JR: Is he here with his wife?
MR. WHITE: His wife is in New York. He hadn't seen
his wife and children for four years. They were in New York.
I don't think he brought them down here. Monnet suggested
that they wanted to have a dinner in his honor and invite you
some evening that was satisfactory to you. I just shrugged
my shoulders, because I didn't know. But I think that if
he is going to be here next week, as I suspect he will, that
will give you time.
They a re also interested--particularly interested--in
knowing whether they can look for assistance from the United
States in getting them going. They are always interested
in that. Their position, as they expressed it, is that
the opportunity that France has of assuming the leadership
in Europe and not being forced to do business too closely
or depend entirely upon England, depends in part on whether
32
- 12 -
they can get some support here. I don't mean to say
giving business to England, but it is a question of their
feeling that England cannot help them enough, anyhow. She
is too weak herself. It is important that they have a
successful democracy, and they cannot have that without
either support for their monetary system or some additional
funds.
Now, whether he will mention that or not, I don't know.
H.M.JR: I interrupted you. They want an advance on
this currency?
MR. WHITE: Not yet, but if the occasion comes in which
they feel that the money they are spending is leaving them
too rapidly, they would like to know whether it would be
possible to get something on account.
MR. LUXFORD: The more I think of that, the more I
think they made 8. bad deal when they didn't allow Lend-Lease
to cover civilian supplies in this period. That is where
State made the real mistake.
MR. WHITE: They took the position that as long as
they have money they want to pay for it.
MR. LUXFORD: But every one of these countries is going
to run short of dollars because they have to pay dollars
for civilian supplies. That could have been lend-leased.
H.M.JR: Why did State do it that way?
MR. LUXFORD: I don't know, myself.
MR. WHITE: Wait a minute. We took the position; it
wasn't State. We took the position as long as they have
more money than England and we couldn't treat them better
than England, if they had money they ought to pay it. I
still think that is true. The time to assist them is when
their money is running low.
MR. LUXFORD: I agree with that, but if you say now
we have to work out some other way to pay them--
33
- 13 -
H.M.JR: You and I went further than that.
MR. WHITE: Yes, I think so.
H.M. JR: We said it would be easier for the President
around the peace table if they were broke. I don't know
whether it was your language or mine. That is before you
met Mendes-France.
MR. WHITE: I still feel that they ought to have a lot
less money.
H.M.JR: That is what you thought.
MR. WHITE: I still think so.
MR. LUXFORD: I only had in mind why we have to work
out a system now to give them some dollars.
MR. WHITE: We don't now.
H.M.JR: Is Luxford going to stay with us? I think
it would be nice.
MR. WHITE: It normally would have been Taylor, but
Taylor is gone.
H.M.JR: I would like for you to step out and ask if
it is all right to have Mrs. Dickinson here.
Now, who is taking Taylor's place on the McCloy Com-
mittee as your alternate?
MR. WHITE: Well, Glasser will when he comes back.
In the meantime, if the big committee meets, I will go
myself with one of the boys, one of the lawyers. Glasser
will be back in a few weeks.
H.M.JR: Will you tell that to McCloy? He was quite
bothered as to who--
MR. WHITE: Yes, I will when I see them, but if there
is a meeting of the larger committee, I will go myself.
34
- 14 -
H.M.JR: We don't know, though, whether it has finally
been cleared as to recognition of this committee, but that
doesn't have to bother us. The French committees are
recognized to do business with?
MR. WHITE: Yes, everybody is doing business with them.
State is doing business with them. We actually aren't
giving them anything yet. The only business we are doing--
what he is coming here for mainly, and his principal business
is to get you to agree on the two-cent rate. That is what
is holding the Army up. We have to hear definitely from
them. The minute he tells you that and if you accept--
H.M.JR: Accept what?
MR. WHITE: The two-cent rate for metropolitan rate;
that is the one rate that remains unsettled.
H.M.JR: Why should we not?
MR. WHITE: Naturally we should. I expected that we
probably would agree to that, but that is going to be their
recommendation.
H.M.JR: I think I will listen and then talk it over
with you boys; then I will tell him to come back tomorrow
morning. You can't expect anything faster than that.
MR. WHITE: That is right.
35
May 8, 1944
11:00 a.m.
CONFERENCE WITH FRENCH AMBASSADORS
Present: Mr. White
Mr. Luxford
Mr. Monnet
Mr. Mendes-France
H.M.JR: Won't you gentlemen sit down, please?
How did you find your family?
MR. MENDES-FRANCE: Very fine, thank you very much.
H.M.JR: How many children do you have?
MR. MENDES-FRANCE: Two.
H.M.JR: How old are they?
MR. MENDES-FRANCE: Nine and ten.
H.M.JR: And how many years since you have seen them?
MR. MENDES-FRANCE: Two years.
H.M.JR: That is too long.
MR. MENDES-FRANCE: That is right. They are quite
American boys.
H.M.JR: Both boys? Where did they go to school?
MR. MENDES-FRANCE: In New York. They forget the
French; they only speak English.
H.M.JR: Really?
Last night we were at MadameT. V. Soong's. She has
three girls. They have been here three years. They have
36
- 2 -
American slang; no foreign accent of any kind. She is very
rapidly forgetting Chinese.
MR. MONNET: That is the case with our little girl.
She speaks French with a terrible accent.
H.M.JR: Well, gentlemen, I am at your service.
MR. MENDES-FRANCE: I am very glad to come to see you
and to speak of such affairs, but first you must excuse me
for my English; it is 80 bad.
H.M.JR: You must excuse me, because I don't speak
any French.
MR. MENDES-FRANCE: Maybe it would be good for you to
understand what I am speaking.
H.M.JR: I understand you very well.
MR. MENDES-FRANCE: In these last months we were speak-
ing of some questions, and I assume it would be a good
thing if I come here to speak with you and with him, because
we have a feeling that the moment came now and we thought
it was very important that you know exactly what we mean and
what we think and what we hope.
And I understand with the information that Mr. Monnet
gave us that finally--I think we have the same aim and the
same motives to realize. What we want to establish in France
is, I think, what you want to establish in the world after
the war. And we wanted to do it in the best cooperation
with you, and we understand we cannot do it without you.
We were very concerned in the last times with the exchange
rate question.
The aim we have--what we want to realize is, of course,
to get a sort of equilibrium in the money, which will be
reached in other countries, and the exchange rate will be
exactly the rate that will realize this equilibrium. But
we feel it is quite difficult to know immediately which
will be this leaven, inside or outside. And we think maybe
it would be 8: good thing to realize this exchange rate, not
37
- 3 -
immediately, but in the time we have more information than
we have now. We have a plan for cleaning up our monetary
situation in France, and we hope very much about these
policies we will try. It will mean for the French people
courage and hard work and, of course, privation. We think
it will be better realized if the French people understand
exactly that we will and we can save our money.
Our worst enemy in this thing is the lack of confidence
which exists in Europe about monies, and principally in
France about all money. The French people think that we
have in the franc the same as what happened after the last
war with the mark. They think the franc cannot be saved.
And this lack of confidence is the most important enemy
we have to fight at the beginning.
H.M.JR: May I interrupt you? I should know, but I
don't, what the internal and external debt was prior to
September '39.
MR. MENDES-FRANCE: In September of '39 the external
debt was negligible. It is a very little thing. Of course,
after the war it will be different. But before the war it
wasn't.
H.M.JR: May I interrupt again? External--that is
Government. Did you have many private debts outside,
dollar bonds, and so forth?
MR. MENDES-FRANCE: Not as much as we had credits. We
had more external credits and external debts before the war.
MR. MONNET: Yet not much external debt.
MR. MENDES-FRANCE: This is a big question for us.
H.M.JR: That will not be a big question after the war.
Your external debt both public and private--that will not be
a big post-war question?
MR. MENDES-FRANCE: I hope so, but I think it is more
than it was before the war.
38
- 4 -
H.M.JR: As of September '39.
MR. MONNET: We will have after this war, or we will
create a debt, but as of '39, no.
H.M.JR: I mean as of '39.
Now, what about your internal debt as of '39.
MR. MENDES-FRANCE: That was about five hundred billion
francs before the war. I think it is now about twelve
hundred billion. And when we make calculations, we make
about fifteen hundred as the internal debt, but it is a big
change. It is three times more than before the war. But
this new debt is not so heavy as you can first see, because
it was done at a very low interest rate. The internal con-
ditions prevailing now in France are that the Vichy Govern-
ment can find money at about one and a half percent, two
percent, or two and a quarter percent.
H.M. JR: May I interrupt you? Is it your thought that
you will recognize the Vichy?
MR. MENDES-FRANCE: I think we are obliged--the internal
debt--I think we can't do otherwise, because what is this
internal debt? Most people in France have a lot of notes,
but you can't do anything with the notes. You can't buy
anything. They have notes or money in banks, and they
are two kinds: All these people who have nothing to do
with their money--and I think it is more important--they are
banks who have deposits, and these deposits they buy Treasury
bonds with. If we wash out the Treasury bonds, all the
banking system will receive a shock.
H.M.JR: What I would like--there must be different
stages. I mean, what was the internal Government debt as
of September, '39?
MR. WHITE: We have it.
H.M.JR: I mean by stages.
39
- 5 -
MR. WHITE: You want to see the development?
H.M.JR: Yes, and I would be interested, because you
are going to recognize the debt credit by the Vichy Govern-
ment.
MR. MENDES-FRANCE: I think we can't do otherwise. We
studied a few months ago the question to say on the radio
to the people, "Don't take these bonds; we will not recognize
them after the war."
H.M.JR: You did do that?
MR. MENDES+FRANCE: No, we studied it. Finally we
decided we couldn't do it because now we have to choose
when we arrive in France whether we will find more notes
in circulation or more Treasury bonds. We prefer to find
more Treasury bonds than more notes.
MR. WHITE: In other words, the French Government would
have been forced to meet their financial needs both to
Germany and themselves by printing more currency instead of
borrowing from the banks, so by stopping it from the banks
they merely would have had more currency. But I think there
is another point he said first that probably didn't register
because he went over it very quickly. They do have in mind,
when he said cleaning up the monetary system, freezing all
the bank accounts and permitting only withdrawals until
until they are examined, the large amount, to see whether
they are collaborationists or whether they have them under
conditions which they would want to check.
H.M.JR: They shoot the collaborationists and seize their
money; isn't that what they do?
MR. MONNET: Yes.
MR. WHITE: That will settle a lot of debts.
MR. MENDES-FRANCE: We started to do it in Corsica; we
obliged all the people to bring their notes, and each man
received only five thousand franc notes. We find it is too
40
- 6 -
much. We think in France it will be, say, four thousand
or less. But it doesn't matter.
MR. WHITE: Turn in all their money.
H.M.JR: You mean five thousand was the maximum, or
they only took up to five thousand?
MR. MENDES-FRANCE: They are obliged to give all the
notes they have, and they only receive five thousand.
H.M.JR: On the average?
MR. MENDES-FRANCE: Not on the average. Each man
receives five thousand francs.
MR. MONNET: To begin with the beginning, we go in
France--
H.M.JR: What did they do in Corisca?
MR. MONNET: The moment we went into Corsica, all the
notes that anybody had had to be turned in because it was
declared that they couldn't be used any more.
Now, this man had ten thousand francs. Five thousand
francs were put into a bank account that was frozen, and he
received in new notes five thousand francs. In other words,
every man had to turn in the total of the notes; he received
part in an account in the bank which was blocked, and five
thousand in new notes.
H.M.JR: In other words, irrespective of whether he
had fifty thousand, he would only get five thousand back
and forty-five thousand would be frozen.
MR. MONNET: That is ight.
MR. MENDES_FRANCE: Then we make an investigation of the
origin of this.
MR. WHITE: An investigation of how he got the money?
41
- 7 -
MR. MONNET: Go over the accounts and investigate?
MR. MENDES-FRANCE: Yes, an investigation. Now in
Corsica we made very drastic two things: First, requisition
and confiscation of all the money which has a dishonest
origin. And secondly, taxation--drastic taxation for the
people who are rich; but when it is an honest origin, first
people who are mortgaged have to pay taxation. For those
on which the origin was illicit, it is requisitioned, and
it is taken.
MR. WHITE: They put into effect in Corsica what the
Treasury advised them to do in Tunis.
H.M.JR: While I was in Algiers, I received a delegation
of Jewish people, and among them was a very prominent owner
of cinema houses. You most likely know who he is.
MR. MENDES-FRANCE: Yes.
H.M.JR: I am interested in what happened. He had sold
out his cinema theaters to somebody--I forget who. Let's
say he got thirty or forty million francs, and he wanted
to buy them back at the same price he sold them for, but the
man said that now they were worth seventy-five million
francs. As I got it, all the people while I was there were
waiting; nothing was happening. Now, in that particular case,
do you know what finally happened?
MR. MENDES-FRANCE: I know what you mean. It is not
settled today, because there is a resistance of the local
situation which, of course, is not exactly the same as it
was in occupied territories. For these now we have an
ordinance which is not settled by the Comite', but will be
settled quite soon, I think. But what I mean is another
thing which is connected with this one, but not exactly
the same, and which is to take requisition of all the
increasing of money, of fortune, by people who vote on
such things, because they profit on the situation. It is
done for Corsica now, and the text we made at Corsica--
there are two ordinances; we made them with the idea of the
same text we had taken in France.
42
- 8 -
H.M.JR: Could we be furnished with copies of that?
MR. MENDES-FRANCE: Yes. It is quite new.
MR. WHITE: We know they were contemplating that
because it was in the discussion.
H.M.JR: Could you get those, because what the people
did--and I appreciate that everybody has to learn, including
ourselves, but both in Algiers and Tunis, the Banque du Maroc--
in all of that our experience wasn't & very happy one, and
when I visited there with Couve de Murville and all that--
MR. MENDES-FRANCE: In the beginning, things were not
as clear as they are now.
H.M.JR: If you don't mind my saying so, from our
standpoint, and we think from yours, it is 8. better job in
Corsica.
MR. MENDES-FRANCE: We have these two things here.
H.M.JR: I want to know about them if you have them.
MR. MENDES-FRANCE: Yes, I have them in Washington.
H.M.JR: Do you have the original?
MR. MENDES-FRANCE: Yes, it is in the French text, but
we can translate it.
H.M.JR: We can have both?
MR. MENDES-FRANCE: Yes, but I hold them here because
it is new and I thought it wasn t here. All the people have
to bring their notes, and these^notes will be frozen. These
frozen notes will be subjected to first investigation, and
second, this confiscation.
H.M.JR: Could it be set down in a condensed form, Harry?
MR. WHITE: Yes. It will be quite a difficult job to
do that in France, and Corsica has a small population, but in
France instead of freezing that, they expected to make the
43
- 9 -
large notes--notes of large denominations--not valid until
investigation has been made, and they expect to freeze the
bank accounts.
H.M.JR: All bank accounts will be frozen by the Army
when they first go in?
MR. WHITE: Yes, in their territory.
H.M.JR: Certainly in occupied France.
MR. WHITE: Yes, that is what they expect to do, but
very quickly release--
MR. MONNET: That is why we are so anxious to have the
famous notes--I mean the notes which you are printing here
for us. Without these notes, what he is talking about is
impossible.
H.M.JR: Have you seen the two-franc pieces?
MR. MENDES-FRANCE: No.
MR. MONNET: I forgot to show them to you.
H.M.JR: I stole a couple! (Shows them to Mr. Mendes-
France.)
MR. MENDES-FRANCE: That is very nice. Is it good?
H.M.JR: It looks all right. I stole a couple.
MR. MONNET: That is a very nice job.
H.M.JR: Don't you think it is nice?
MR. MENDES-FRANCE: It is very good. It is exactly
the size we have in France.
H.M.JR: Is that made from discharge shells the way
the other is?
MR. WHITE: I don't know. I think it is, because
that is what they have plenty of.
44
- 10 -
H.M.JR: Our own pennies now--we take the outside
of 8. cartridge and melt it down and make it into money.
I think that is what it is; that is why it is so pretty.
MR. MENDES-FRANCE: It is interesting.
MR. MONNET: It is quite a story.
H.M.JR: I think that is correct. It is made from
discharged shells. They save them and melt them down.
MR. MONNET: Do they bring them back from the battle-
field? That is quite an interesting point.
H.M.JR: We will find out. I am sorry to interrupt
you so much.
MR. MENDES-FRANCE: You are right; it is better to.
H.M.JR: What got me started was the question of post-
war France. You were going to lead up to the rate, I take
it.
MR. MENDES-FRANCE: Yes, it was about the rate. I
think I was saying what we have to do after the war is over.
Of course, as you know, prices in France are quite low, but
salaries--
MR. MONNET: The official prices--
MR. MENDES-FRANCE: The black market, which is very
important, but salaries are lower. Salaries are about
one hundred and thirty or one hundred and forty in comparison
with September '39, but prices--official prices are about
twenty-seven or twenty-eight. That is to say, the salaries
today have buying power half of what they had in '39.
MR. MONNET: Unofficial prices.
MR. MENDES-FRANCE: And it is not possible for anyone
to live only with official things you buy. All the people--
45
- 11 -
some of them have much, some of them not so much, but all
the people buy things in the black market. They can't live
without them. Then you understand how low the purchasing
power of the salaries is. We have to increase the salaries
very much, but we think it should be done quite slowly. At
the beginning, say, thirty or forty percent, and then as
the food comes, the production is better, the imports come,
then we have to give more to the worker so it is possible
for him to buy with the salaries all the things which are
available and which are on their ration cards. The prices,
we think, have to be increased, too, but not SO much. When
the market is full, and when the products and food are there,
I don't think it is necessary to bring the official prices
very high in comparison with the actual official prices.
When we calculate all these things, and when we think
an equilibrium will come a few months after the liberation,
and when we can create this equilibrium equal to the other
countries--as fast as we can know what will happen--we
understand we have to make quite an important devaluation
of the franc. The only question is, is it necessary to do
it immediately without knowing exactly how far it is necessary
to go, or is it better to do it in the moment when we have
the information about prices, salaries, inside and outside.
What will be difficult for us is the lack of confidence
in France about money. If we come in France, and if we
say, for example, it is three hundred for a pound, people
who have the experience of before the war that each new
devaluation--
H.M.JR: Like myself, I went all through that with you.
MR. MENDES-FRANCE: Yes, I know. You knew this thing
before the war. And, of course, you know all these difficulties
we had, and I know you helped us as far as you could. But
always the internal situation was bad, and always the lack
of confidence was the same situation for us.
H.M.JR: Is Bonnet alive or dead?
MR. MENDES-FRANCE: He is alive, unfortunately.
46
- 12 -
H.M.JR: Where is he?
MR. MENDES-FRANCE: I think he is in France, but we
heard a few weeks ago he was in Switzerland; it was not
confirmed.
H.M.JR: Is Madame Bonnet alive, too?
MR. MENDES-FRANCE: Unfortunately, yes.
H.M.JR: She was a smart piece--too smart!
MR. MENDES-FRANCE: Then this experience before the
war will lead the French people to say it was one hundred
and seventy-six for a pound; then it was two hundred; now
it is three hundred. Maybe in a few weeks it will be three
hundred and fifty or four hundred.
It is a bad thing for the country if we start with
the devaluation. I think on the contrary if we arrive
and if we say in the Empire it is two hundred for the
pound, that is fifty for the dollar, and we think it is no
reason to change it immediately before we know what will
happen.
If the French people see that it is very surprising
for him that we don't do a very large devaluation at the
beginning, and if he sees we do it with the approval of
the Allies, it is a very big reason for them to have con-
fidence. If they think that the French Government, with
the help of the Allies, will try to save the money and
that it is possible to save it, then it will be a very good
thing for the French confidence in the money. And it will
be a help for the Government to avoid excess in prices and
salaries, because we will be asked very big increases for
farm prices, corn, and so forth, and for salaries, and so
forth.
47
- 13 -
I think we can resist it better and give these modi-
fications quite slowly if the French people understand that
it is to organize monetary systems in which the money will
be saved.
Then after a few months, if they have the feeling it
is possible to realize it, and if a good equilibrium is
realized inside, and if we come, say, and make a devalua-
tion based on the prices which prevail now and which is
based on an international arrangement, if, for example the
plan you have now for international stabilization is realized,
in this time I think the French people will understand it
very well, and the devaluation which will come then, instead
of being a reason for lack of confidence in between, that
is to say, in the early times.
Of course, we will have an exchange rate which is not
an actual exchange rate, which is not a technical exchange
rate, but which is more in my opinion a political manifes-
tation, and I think in such a case we can have in France
a goodly action, and it will help to make & good internal
monetary policy.
H.M.JR: Excuse me, what rate do you have in mind?
MR. MENDES-FRANCE: For the first or last one?
H.M.JR: When you start.
48
- 14 -
MR. MENDES-FRANCE: To start, I think there is no
reason to change what we have. I give you an example:
When We came in Corsica, nobody asked, What are the
prices? What are the salaries in Corsica?" We had
two hundred in North Africa. It was not a very good
one, I thought. But so it was. Then we kept it. What
is the difference between Corsica and a little foothold
you have on the Continent? I don't know how the inva-
sion will be. Maybe all of France will be invaded in
two or three months. Maybe you have a little foothold.
It can be. Maybe half of France is liberated and the
other half is occupied. Do you think it is a good thing
to give an exchange rate immediately, without knowing
for which territory it will be?
MR. WHITE: You have to give a rate.
MR. MENDES-FRANCE: You have to have a rate, but--
H.M.JR: May I interrupt? Whatever happened about
some of these other places that General DeGaulle was
going to bring into line? Weren't there some other
places?
MR. WHITE: They have all been brought into line,
now - all except Syria, which is two hundred.
H.M.JR: What about that Island down in the South
Pacific?
MR. LUXFORD: Madagascar?
MR. WHITE: It is two hundred.
MR. MENDES-FRANCE: Yes, we united it.
H.M. JR: Everywhere now?
MR. MENDES-FRANCE: Yes, every place it is two hundred.
And I think if we could know exactly what happens after
the invasion, of course, it would be easier. But now we
don't know, if the invasion will be a very big success or
a slow success. We don't know, after the liberation of
49
- 15 -
France if Germany will be collapsed and finished, or
if Germany will continue the war.
H.M.JR: Again, I am sorry to interrupt you--
MR. MENDES-FRANCE: No, please, please.
H.M. JR: One thing Mr. White told me he had in the
conversation with you last night, as I understand it, one
of the things you said was that if we agreed on the two
hundred rate, that you su ggested that later on in a period
of adjustment, that if that proved not to be right, you
would be glad to make the final adjustment with us on
that.
MR. MENDES-FRANCE: Yes, so I said.
H.M.JR: I think that is very important, and that
will influence me, and I think that if you didn't mind,
I would like to get that formaily in writing.
MR. MENDES-FRANCE: Yes.
H.M.JR: That would influence me largely. I think
that if I could get that in writing - would that be
possible?
MR. MENDES-FRANCE: Yes, yes; it is possible. It
is no difficulty; I tell you why, because the first
exchange rate - this two hundred exchange rate - for me
it is not an exchange rate; it is a political manifesta-
tion.
H.M.JR: Well, if I could get that in writing, that
would influence me in making up my mind, do you see?
MR. MENDES-FRANCE: Yes, we can write it.
H.M.JR: I think we have heard most of the arguments
and I would like to think this over for twenty-four hours.
I would like to explain what my plans are - I had expected
you last week.
50
- 16 -
MR. MENDES-FRANCE: Yes. Excuse me.
H.M.JR: I am planning to leave here Wednesday noon
and not to be back until next Tuesday, but I will be
where they can get me. But I can meet with you Tuesday
morning, and I can meet with you Wednesday morning. We
can settle this rate thing before I go away. We will
settle it.
So, if there are any other things which ought to be
settled in the next day or two, if you would mention
them now, do you see? Then, if it is convenient for you
gentlemen, we would work each morning before I go. There
is no reason why the rate cannot be settled between now
and noon, Wednesday.
I don't know what else there is which is pressing,
and I don't know how long you are planning to stay.
MR. MENDES-FRANCE: Of course, it depends on this
settlement, but my idea, of course, is not to stay here
too long, if it is possible to settle it before. But
other questions that we wanted to speak to you about are
these notes which we were speaking about.
MR. MONNET: The printing.
MR. WHITE: The printing of the additional notes -
the same kind of notes that are being printed. That is
in the mill. But they are interested in getting substan-
tial amounts sent to North Africa, not in this control,
but control of the Army, so if a decision is made to
turn it over to them for the pay of their troops, which
they will need, and other purposes, that it will be easily
available in North Africa instead of in Washington or
London.
H.M.JR: Well, couldn't you maybe explore that with
the Minister this afternoon? Have you got any conferences?
MR. WHITE: Well, they had written a letter on it and
we are preparing a draft. I think that is something we
51
- 17 -
will probably have to take up with the Army. We just
turn the money over to the Allied authorities; whether
the Allied authorities want to ship it there is a
matter which I think we will have to take up, also, with
the Army.
H.M.JR: With McCioy?
MR. WHITE: Yes.
H.M.JR: Is it waiting on me?
MR. WHITE: This is something they raised at the
end of last week.
MR. MONNET: But we need your support.
H.M.JR: Well, this is the first time I have heard
of it. I want to do everything - I mean, I don't want
anybody to wait on me.
MR. MONNET: No, we are not waiting.
MR. WHITE: Just got the letter Friday.
H.M.JR: Well, there is that question; between now
and tomorrow morning we can say whether we will give
them our support or not.
MR. WHITE: That is right.
H.M.JR: We will have an answer for you on that
tomorrow morning. I will try to have an answer for you
tomorrow morning on the franc rate. I will try to have
one for you, if possible.
Now, what else?
MR. MENDES-FRANCE: Another thing about these notes -
I explained to you before the idea we have to make a change
in notes which are in circulation in France. The people
have to give their notes and receive other notes.
52
- 18 -
Of course, it is necessary that the new note is
not the same as the old one. If, instead of taking this -
of course, there will be terrible speculation, and some
people will keep their old notes. Then you have printed
forty or fifty billion notes for military purposes of the
first times.
These notes are now printed, and as I understand,
these notes are now in England and will be used ata
given time. When we try to clean up the monetary situa-
tion, we find two kinds of notes in circulation; in
the first place, these Banque de France notes, and
second, these notes you have given.
H.M.JR: The military.
MR. MENDES-FRANCE: Our new notes must be different.
Then I wanted to ask you to put on these notes which are
now in printing, some modification that the people cannot
mix them with the military ones.
H.M.JR: You mean the ones that will be the final
ones.
MR. MONNET: Now there is no printing the same notes
as the first forty billion. What he is now asking is if
it is possible to make some change to this text of the
note which is now in the course of being printed.
H.M.JR: Text or color?
MR. MONNET: Something.
MR. WHITE: I had in mind an over-printing; 1 suppose
"The French Republic," or something like that. (Laughter)
H.M.JR: I don't think we want to start that, do we,
Mr. Monnet?
MR MONNET: I would like it very much if we could
finish it.
53
- 19 -
H.M.JR: Right. We tried hard enough.
MR. MONNET: I told him about it.
MR. WHITE: I think what they have in mind is not
quite the same thing.
H.M.JR: He knows about this discussion which Jack
McCloy and I had. we got by the "Liberte, Fraternitè,
Egalite."
MR. WHITE: He is suggesting something that will be
kept for later use. I thought - you are printing these
notes in England, are you not? Aren't you printing some
new notes in England?
MR. MENDES-FRANCE: No, I think we can ask them to
do it, but at this time, we have not the arrangements
made.
MR. MONNET: In any case, they can't print enough.
The question is very simple. The only way by which he
can get his note is to have them printed in this country.
They are in the course of being printed, but they are the
same as the original batch. The question is, what
change could be made in this issue so that not only the
Bank of France notes, but also the military notes could not
be exchanged with this. That is the point.
MR. WHITE: That is a large question.
H.M.JR: That they couldn't answer by tomorrow. I
have got to leave something I can't answer so you can
have a little time to your family. If I answer every-
thing too quickly, you have to have some excuse.
MR. MENDES-FRANCE: So I have.
MR. MONNET: We could try to produce that in writing.
MR. MENDES-FRANCE: Only I wanted to say, to finish
this thing - I wanted to ask you, on these notes, two
54
- 20 -
things: First of all, to put something which is a dis-
tinguishing mark; and secondly, I want to ask you
another thing, to take out something which is on this
one, because--
MR. WHITE: Your "Liberte, Egalite, Fraternite."
MR. MONNET: He means the counterfeiters.
H.M.JR: They can print something on the notes,
but what they can't do is to take off. Then I wanted
to ask you, first of all--
MR WHITE: It is the same problem; not only putting
something on, but also taking something out.
H.M.JR: They can take these notes and print right
across them, "Victory," and cail them the "Victory Notes."
MR. MONNET: That is right.
MR. WHITE: He also would like to take something out.
H.M.JR: There is a technical question, but if you
printed right across the word--
MR. MENDES-FRANCE: Yes, "Victory," that is good,
but counterfeiters can print it, too; but what the counter-
feiters cannot do is to--
H.M.JR: That could be done. You could make them
a different color, too, which the counterfeiter can't do.
When you start tampering with those plates, then you
have to make all new plates. But if you made it a
different color - the color thing is very hard to counter-
feit, you know.
MR. MENDES-FRANCE: Yes.
MR. WHITE: And mix different inks.
55
- 21 -
H.M.JR: Just make a different color, and print the
word; but if you start taking something out, it means
all new plates. But that could be done. I don't know
whether we are through printing what the Army thinks
they need - is that done here in Washington?
MR. WHITE: Partly. Most of it is not.
H.M.JR: Now, what else is there?
MR. MENDES-FRANCE: Another question which is a
very delicate one, is the purchasing power of the troops
and our troops in France. As you know, when the troops
are hired in France, at the beginning there is nothing
to buy in the shops - and the few things which are
available - of course, we hope they are reserved for the
civilian purposes. Then we are very anxious about the
situation which will appear - and is it not possible from
the very beginning to have a temporary arrangement to
avoid this competition between troops who have plenty
of money and people who have very little?
H.M.JR: I don't think there will be any trouble,
but you are going to see McCioy, aren't you?
MR. MONNET: Yes.
H.M. JR: I don't think there will be any trouble.
An order can be issued that the troops don't buy any.
It is true here in America. My son, when he was on
maneuvers, could buy nothing from the local population.
No soldiers, when they were on maneuvers in Tennessee,
could buy anything from the local population. I mean,
that was an order.
MR. MONNET: That would be something.
H.M.JR: If they do it here in the U.S., they cer-
tainly can do it there.
MR. MONNET: But you see, it goes further; restric-
tion of purchases, but also a limitation of amount.
56
- 22 -
H. JR: If you would take that up with McCloy,
we would be very glad to back you up on that.
MR. MONNET: That is what we are asking you.
H.M.JR: I don't have to think that over. We hope when
the soldiers land they will have no money in their
pockets.
MR. MONNET: I don't know that you can go to that
extent, but certainly they don't need any.
H.M.JR: I will be very glad to back you up. There
should be no question that the Allied troops when they
land should have orders not to buy any food or whatever -
anything at the beginning - at least they shouldn't.
MR. WHITE: But not approach it from the point of
view of not giving the soldiers money. The approach
should be prohibitions on what the soldiers can spend.
He had the idea that he could stop them from paying
money.
H.M.JR: I think that they just would have to be
told that they cannot buy any French - I remember an
amusing story an American soldier told me about the
occupation after the first war. In Germany they had
orders that the American troops could not buy any food
in the Rhineland. This morning, after they had been
there about a week, at the officers' mess they all had
fresh eggs. So the Colonel said, "Well, you know about
the order. He was very cross. "You have been told
not to buy it; where did you get these fresh eggs?
The answer was, "It didn't say we couldn't rent the
hens."
Had you heard that?
MR. MONNET: I hadn't heard that, but that is a very
good story. That showed which way.
H.M.JR: It always will be 30. Had you heard that
story?
57
- 23 -
MR. mendez-france: No. That proves it is difficult
to limit.
H.M.JR: So they rented the hens.
MR. MONNET: But you realize?
H.M.JR: It is very important, and I can assure you
that we will do everything possible to back you. I
don't think you will have any trouble with Mr. McCioy,
but if you do--
MR. MONNET: We want to ask, not on the restriction
of purchase, but restriction in the money given to the
soldiers.
H.M.JR: As far as I am concerned, we feel they
really oughtn't to have any money when they land.
MR. MENDES-FRANCE: What is important is that the
French people see a contradiction on what happened when
the Allies arrive and what happened when the Germans
came. When the Vermans came, they had plenty of money.
They were ordered to buy things in shops and to send
them to Germany.
H.M.JR: I know.
MR. MENDES-FRANCE: We must make the French people
feel that it is contrary to what happened--
H.M.JR: I don't know when you are going to see
Mr. McCioy, but--
MR. MONNET: Today or tomorrow.
H.M.JR: Now, have you something else?
MR. MENDES-FRANCE: No.
H.M.JR: I would like to continue again at eleven
o'clock tomorrow, if that is agreeable. Is that all
right?
58
- 24 -
MR. MENDES-FRANCE: Yes.
H.M.JR: I have had such short notice. It seems
silly to put it so far in advance, but I would like to
have some of the people here in Washington meet you at
a luncheon, do you see?
As I say, it so happens that I can't just explain
now, but I have a very good reason for going. You will
be here the 17th? That is a week from wednesday.
MR. MENDES-FRANCE: That is all right.
H.M.JR: Mr. Monnet, too?
MR. MONNET: Yes.
H.M.JR: Would you put that down?
MR. MENDES-FRANCE: Yes, thank you very much. I
think it will be exactly at the end of my stay.
H.M.JR: I am sorry, but I have certain things.
I had planned it all. You didn't expect him?
MR. MONNET: Transportation from North Africa is
awful.
H.M.JR: I had expected you last week, but you
understand.
MR. MENDES-FRANCE: Yes.
H.M. JR: Tomorrow is Mr. Stettinius, just so you
can see - today is Mr. Sulzberger of the New York Times.
The arrangements I have made, and then Wednesday noon I
won't be here and I couldn't change them.
MR. MENDES-FRANCE: I understand.
MR. MONNET: The travelling was in the hands of the
Army, as you know.
59
- 25 -
H.M.JR: I know, but normally I would have been ready,
and would have dropped everything, but this way I am
going to give you my business hours, although I can't
give you my social hours.
MR. MENDES-FRANCE: I see.
MR. MONNET: Mr. France will want to have a general
talk with you, not in detail, but a general talk about
the Stabilization Fund, and Monetary Conference views.
MR. MENDES-FRANCE: Yes, we are very interested.
H.M.JR: Definitely, but I am not going to leave
until I have what is, I think, tomorrow, the most
important, the rate. Is that right?
MR. MENDES-FRANCE: Yes.
H.M.JR: We will try to be ready to talk to you by
eleven tomorrow. Then this other matter, at that time
you will bring a letter saying for the rate to be adjusted
in the future.
MR. MONNET: That is a very important document.
H.M.JR: Could I have that by eleven tomorrow?
MR. MONNET: Yes, but we would like to know in just
what form.
MR. WHITE: I should imagine it would be & letter
from Mr. Mendes-France to the Secretary.
MR. MONNET: How would it be phrased?
MR. WHITE: I think we can work something out,
if you would like a suggestion.
MR. MONNET: Yes, we would be glad to have it from you.
H.M.JR: Then I will look for you at eleven o' clock
tomorrow.
Treasury Department
Division of Monetary Research
60
Date May 8, 1944
19
To:
Mr. White
From:
Mr. Tonlinson
M. Pierre Mendes-France "Commissaire aux
Finances du Comite Francais de la Liberation
Nationale".
This may be translated "Commissioner of Finance
of the French Committee of National Liberation" or
"Commissar of Finance of the French Committee of
National Liberation". There is no exact translation.
"Commissioner" is usually used but he is really more
than a "Commissioner" as his office is comparable
to the Minister of Finance in Metropolitan France.
The French Committee has not accorded any of its
members the title of "Minister".
61
OFFICE OF
THE SECRETARY OF THE TREASURY
Tiene Mendes France
Commissaire any Finances.
62
62
OFFICE OF
THE SECRETARY OF THE TREASURY
ban Monnet
Commissioni en Mission
Comete Francais a a
,
beheration Nationals-
/
63
Dr. "hite thinks Secretary might
be interested in reading this.
64
14
May 8, 1944
MEMORANDUM FOR THE FIIES
In connection with the letter to be sent to the
Secretary, of the Treasury by M. Mendez-France confirming that
the Comite intends that there should be an equitable adjustment
in the expenses of the United States in continental France in
the light of the permanent rate of exchange established in
France after liberation, the following points should be noted:
(1) The letter is worded in terms of the intention
of the Comite, rather than in terms of an agreement with the
Comite. This is due to the fact that this Government has not
recognized the Comite as the Government of continental France
and hence the authority of the Comite to bind any future
Government of continental France is open to question. All that
we can hope for is that the Government of continental France,
ultimately recognized by this Government, will adopt the
position of the Comite as a moral obligation.
(2) It is not intended that the letter in any way
should represent an understanding between France and the United
States, or between the Comite and the United States, as to the
terms of any ultimate financial settlement between France and
the United States or to indicate the nature or extent of any
obligation on the part of the United States to reimburse France
for expenses incurred in connection with U. S. participation in
the liberation of France.
(3) It is specifically contemplated that the
"equitable adjustment" for U. S. expenses in continental France
prior to the establishment of a permanent rate, does not necessarily
mean that the permanent rate will be automatically applied
retroactively to all U. S. expenses between the date of invasion
and the date upon which a permanent rate is ultimately established.
Thus, the "adjustment" may very well reflect some rate (or rates)
65
- 2 -
between the North African rate and the permanent rate, i.e.
an adjustment that tends to compensate for changing conditions
between the date of invasion and the establishment of a
permanent rate.
(4) It is recognized that this arrangement makes no
provision for passing on the rate "adjustment" to U. S. troops.
Thus, we will be paying our troops at the rate of approximately
fifty francs to the dollar for that portion of their pay they
receive in local currency. At the same time we may actually
settle for these franc expenditures at a substantially lower
rate (e.g. seventy-five francs to the dollar). Whether or not
this subsequent adjustment could or should be passed on to our
troops is left entirely open for future consideration. In any
event it is a matter exclusively of interest between the United
States and the soldiers and of no concern to the French.
HDW
aoh
May 8, 1944
66
12:13 p.m.
HMJr:
Hello.
Operator:
Gromyko.
HMJr:
All right.
Ambassador
Gromyko:
Hello.
HMJr:
Yes, Mr. Ambassador.
G:
Good morning, Mr. Secretary.
HMJr:
How are
G:
How are you today?
$
HMJr:
Fine. After your good luncheon Saturday, I
felt good all week-end.
G:
Oh, I am very glad to hear this.
HMJr:
Yeah.
G:
I'm very glad. Mr. Secretary, I have just
one question I would like to -- to ask you to
explain it.
HMJr:
Please.
G:
Mr. Chechulin left already -- already Washington.
HMJr:
Yes.
G:
I am wondering -- I am seriously wondering whether
he will be able to -- to come back by the proper
time.
HMJr:
Yes.
G:
Please tell me, Mr. Secretary, whether the
conference which was scheduled for May the 26th
will be held in this -- will begin its work on
this date or there is -- there is chance that it
will be postponed.
HMJr:
Well, Mr. Ambassador, I can't answer you because
I don't know what the answer 1s.
G:
I see.
67
- 2 -
HMJr:
See?
G:
Uh huh.
HMJr:
And the minute I do know, I'll let you know,
but right now, I don't know myself.
G:
Because I am wondering -- I am thinking -- uh --
if this date is certain
HMJr:
Yeah.
G:
I am ready to give -- to give a red light
for Mr. Chechulin to proceed -- to come back
from Great Falls, Montana.
HMJr:
No.
G:
But if there is -- there is chances that it
will be postponed, I am not going to stop Mr.
Chechulin.
HMJr:
Well, it may be several days before I know the
answer.
G:
But certainly not today?
HMJr:
Certainly not today.
G:
Uh huh.
HMJr:
I'm sorry, but I'm giving you the fact. I just
don't know myself.
G:
Uh huh. Well, but from my conversation with you,
I think that you -- you are not fully sure -- you
are not certain that it will be held on this date.
HMJr:
I just don't know, Mr. Ambassador.
G:
Don't know?
HMJr:
I don't know.
G:
All right. Thank you.
HMJr:
Thank you.
G:
Thank you. Good bye.
HMJr:
Bye.
May 8, 1944
68
2:27 p.m.
Operator:
Go ahead.
HMJr:
Hello.
Fred
Vinson:
Henry?
HMJr:
Yes, Fred.
V:
This is Fred.
HMJr:
How do you do?
V:
How are you?
HMJr:
Fine.
V:
Have you seen the Boss?
HMJr:
No.
V:
I understand
HMJr:
Have you?
V:
I haven't seen him, no, but I understood
that he is in fine fettle.
HMJr:
That's what they say.
V:
Well, that's fine.
HMJr:
No, I haven't seen him.
V:
Did you -- were you able to contact Gamble?
HMJr:
Yeah.
V:
In regard to that.
HMJr:
There's a letter coming over from his office
this afternoon which ought to reach you this
afternoon.
V:
I see.
HMJr:
On that subject. He had very positive notions.
V:
That's all right.
- 2 -
69
HMJr:
And it will be in your hands before you go
home.
V:
Well, that's fine. Whatever
....
HMJr:
Sorry, the delay, but he only got back
Saturday.
V:
And he 1s stating your views?
HMJr:
He is stating -- I'm going to sign the letter.
V:
I see. Well, whatever you say about it, we'll
do.
HMJr:
Thank you 80 much.
V:
All right, old man.
HMJr:
Sorry there's been the delay.
V:
All right, Henry.
HMJr:
Thank you.
70
May 8, 1944
Dear Fred:
In our recent phone conversation you suggested a
change in some fact material you are getting out in
connection with your Economic Stabilization program.
The statement that you offered as a substitution for
point "4", "Buy and hold all the War Bonds you can
afford....", instead of the line "Save. Pay off debts.
Protect yourself and family against a rainy day with
adequate life insurance and savings.' is much more
compatible with our own guide material on War Bonds.
In all of our dealings with life insurance
companies and savings banks the point that buying War
Bonds was the first and most important place for the
individual's funds in time of war, has been clearly
understood. There has never been any serious question
raised about this and in the main, their support of
our program has been commendable.
I appreciate your interest in the question that
was raised about this and your willingness to modify
some of your own copy to the end that we are more
consistent in our mutual undertakings. Thanking you,
I am,
Sincerely yours,
(Signed) Henry
Mr. Fred Vinson, Director,
Economic Stabilization Board,
The White House.
TRG:ecb
71
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE May 6, 1944
TO:
Secretary Morgenthau
Ted R. Gamble
FROM:
With reference to your conversation with Mr. Vinson
please be advised that I am the fellow who has objection
to OWI's new fact sheet on the Economic Stabilization
program.
There is no question but that we have benefited by
the work carried on by Economic Stabilization and I am
sure, as I know they must be, that their program has
acternal
materially benefited as a result of our efforts. The
two
substitution suggested by Mr. Vinson, where they would
use for point "4", "Buy and hold all the War Bonds you
program
can afford
instead of the line "Save. Pay off
Lo
debts. Protect yourself and family against a rainy day
with adequate life insurance and savings." is certainly
more compatible with our work. For your information
there is a strong inference in the material prepared by
OWI and Economic Stabilization that buying life insurance
is as good as buying War Bonds. Personally, I don't think
they ought to make any reference to life insurance at all.
The substitution suggested by Mr. Vinson is not bad.
OWI got the life insurance people to spend some
money on an Economic Stabilization advertising program
and as a consequence they have been "pulling a few
chestnuts out of the fire".
Because of the early policy set by yourself in this
connection, we have been very successful in our dealings
with both life insurance companies and savings banks in
their handling of War Bond appeals. My objection was
based on a reluctance to lose any ground on this front.
72
May 8, 1944
3:00 p.m.
CABARET TAX
Present: Mr. Blough
Mr. Surrey
H.M.JR: I read this memorandum of yours. (Hands
Secretary Memorandum of May 8, 1944, attached)
It doesn't make a recommendation on the cabaret tax.
I promised to let what's-his-name know.
MR. SURREY: The reason I wrote it that way was this:
We had been requested by the Committee to make a report
on the bill, and I presumed that we would let that report
go through in the general fashion, and any recommendation
we care to make would be given to them in that report
which they asked for by wednesday of this week.
H.M.JR: I tell you what I would suggest: I told
him I would let him have something today. Supposing one
of you find out if it is all right to have it by Wednes-
day.
MR. BLOUGH: Yes.
H.M.JR: Will you do that? Well, one of you do it,
anyway, 80 Doughton won't say that I was to let him know
today and didn't.
MR. SURREY: As you notice, that indicates we haven't
enough information upon which to make a recommendation.
That would be in our report, if that is all right.
H.M.JR: My inclination is that we should say it
ought to run for at least a couple of months.
73
- 2 -
MR. BLOUGH: We won't know a thing about it until,
certainly, May 12, when the Bureau gets done with its
spot check, and really not very much until after a month
or two of operation.
As a matter of fact, since the spring is the time
when this tends to decline, you probably wouldn't get a
real accurate picture until considerably later; their
reply being that in the meantime - "We are being driven
out of business while the Treasury tries to get some
information.'
I doubt whether there is sentiment enough in the
Committee to put this thing over.
H.M.JR: One of you contact Doughton.
Did you have a nice trip home?
MR. BLOUGH: Very, thank you.
H.M.JR: That is about all.
Is everything else all right?
MR. SURREY: Yes. We had a meeting this morning
with the Senate Finance Committee - just a short meeting.
The plan was generally explained by Stam. They seem
disposed to move very rapidly on it.
MR. BLOUGH: Nothing came up to indicate substantial
resistance.
H.M.JR: Good.
Thank you all.
74
MEMORANDUM
TO:
Secretary Morgenthau
May 8, 1944
FROM:
Mr. Surrey
SUBJECT: Cabaret Tax /
I telephoned Chairman Doughton and stated that
we expected to get our report to him on Wednesday.
He said that was satisfactory and asked if I could
give him a "hint" as to our position. I stated that
since the tax had been in effect for a short period
of time there was no accurate information available
upon which to base any recommendation.
75
May 8, 1944
3:05 p.m.
DISPOSAL OF SURPLUS PROPERTY
CODE OF ETHICS
Present: Mr. Sullivan
Mr. Olrich
Mr. O'Connell
Mr. Hill
Mr. Lynch
Mr. C.S. Bell
H.M.JR: Do you fellows have something for me?
MR. O'CONNELL: Well, we have a very rough draft.
We are finishing it up and it hasn't been retyped.
But Mr. Olrich could read to you what we agreed upon.
It is only one page long - very rough.
H.M.JR: Are you a lawyer, Charlie?
MR. BELL: No, sir.
H.M.JR: That makes three of us who aren't.
MR. O'CONNELL: Just three.
MR. OLRICH: We are in the minority.
(Reading from draft of Code of Ethics:) "Mr. Olrich
suggested as a matter of general personnel policy for the
selection of Divisional Managers: - Divisional Managers
are the top group - "Divisional Managers acquainted with
particular commodities may be selected from within the
industry, which selection shall be referred to the Secretary
for confirmation. No Divisional Manager who retains any
connection with the company shall participate in any tran-
saction involving that company. Any transaction in the
commodity field of such person involving his company shall
be submitted for approval of Mr. Olrich and the General
Counsel. On any significant case, Mr. Oirich may refer
same to the Secretary.
76
- 2 -
"Wherever possible, Divisional Managers will be
selected on a full-time, salary basis. Where this is not
possible, he may be retained as Consultant by Mr. Olrich
on a part-time and/or per diem basis."
H.M.JR: Is that the whole thing?
MR. OLRICH: Yes.
H.M.JR: Would you mind reading it again? There are
8. lot of ideas in a few words.
MR. OLRICH: Ail right. (Mr. Olrich re-reads first
sentence from draft of Code of Ethics.)
H.M.JR: Why limit it to that top? Why limit it?
MR. O'CONNELL: I thought our rule would be at least
as stringent and possibly more so with respect to people
further down the line. There isn't any reason why these
rules shouldn't be applicable to everyone.
H.M.JR: That would be the first question.
MR. OLRICH: We were trying to have the selection
of as few people come to you as possible.
H.M.JR: I am going to come to that later. But I
would like - Mr. Olrich, these rules apply to anybody
who is coming out of business - coming into your group -
if that is agreeable to you.
MR. OLRICH: That is right.
H.M.JR: Let me just tell you a little story to
show you how embarrassing this can become for you or
anybody in the room, including myself. In the first
place, we have always had our own standard of ethics
here; this isn't apropos, but for example, nobody who
works for the Treasury can sell a story to any publica-
tion. That doesn't apply in the Government, generally,
but it applies here. They can say, "Well, so-and-so
does it. I say, "That doesn't make any difference; as
long as you work for the Treasury, you can't sell &
story. I wouldn't write a story for any publication
77
- 3 -
over my signature. So, I mean, we have got different
rules, and maybe that is one of the reasons you were
willing to come to work for the Treasury.
But to show you how embarrassing this can be, I
know of an incident - I think Mr. Sullivan told me -
where a man who used to be a secretary for & trade
organization - he happened to be a rubber man - he
is here in another Section but comes over to see us in
regard to taxation affecting the former industry that
he was on leave of absence from. Now, it is just as
bad, isn't it?
MR. OLRICH: Yes, sir.
H.M.JR: So I am not going to make it so difficult -
although you, yourself, from what you told me - the
case of this Penn man - you made it as difficult as for
anybody. But I just thought, rather than having it
in your head, and not too good in my head, I thought we
ought to set it down on paper.
MR. OLRICH: Well, we discussed that, and ultimately,
what reflects on me, reflects on you, so we want the whole
Department to clear the original words we had in here -
"No Divisional Manager or other person who retains any
connection with a company, shall participate in any tran-
saction involving that company."
H.M.JR: What is the matter with that?
MR. OLRICH: There is nothing the matter, except
we were figuring how an employee could retain any con-
nection with the company - where he might be & large
stockholder - but if we put that "No Divisional Manager
or other employee who retains any connection"-
H.M.JR: II can do business with that company."
That is all right. I will give you case after case.
I am an old-timer here.
78
- 4 -
Before Lend-Lease we were buying & lot of planes.
Mr. Hanes, before he came in, laid down his list of
securities. He was a large holder in GlemMartin, as
was his stockbrokerage firm which he used to be connected
with but had resigned from. So I said, "Johnnie, I think
you had better get rid of the Glenn Martin. We are buying
a lot of planes, and it might hurt you."
He said, All right. But I am also going to make
every one of my associates sell." He went that far, and
he did. He made the people that he formerly was asso-
ciated with, sell. I think that was unnecessary, but I
am citing it. the went so far as to make everybody he
had been associated with in business, so they caulen't
say that his former business associates had brought in-
fluence on him and on me to buy Glenn Martin planes for
the Treasury.
So I think this, that if 8. man is connected with
the Penn Company, and is going to help us, let's say,
with agricultural equipment machinery, and let's say
he severs his connection and goes on our pay roll, but
he is still a stockholder - that is your point - I
don't think that the Penn Company - the Penn Company,
Iwould say, could not buy from Procurement while this
man was a large stockholder working for us.
MR. OLRICH: Yes, because if he is a large stock-
holder, he is still working for the company.
H.M.JR: I don't think that is unreasonable.
MR. SULLIVAN: That is not the way it is here.
MR. O'CONNELL: I just wanted to be clear.
H.M.JR: No, I am thinking out loud - you men have
been thinking about this and I haven't.
MR. OLRICH: "No Divisional Manager or other
employee who retains any connection with a company,
shall participate in any transaction involving that
company. Any transaction in the commodity field of
79
- 5 -
such person involving his company shall be submitted
for approval of Mr. Olrich and the General Counsel."
H.M.JR: Wait a minute. Aren't we going to say
his company can't? why submit that?
MR. O'CONNELL: That is what I say. what we have
been saying is not exactly what you have been suggesting.
We discussed that, and the sort of situation we were en-
visaging was, Mr. Olrich wants to get a man to handle
drugs, pharmaceuticals, or something of that sort;
there are six companies, as I say, in the business. He
finds that the best man that he can locate is with Parke
Davis; so Parke Davis lets the man " to us, say, on a
leave of absence basis, but we hire him - he is a full-
time employee for us; and having gotten to that point,
our solution for that situation was that Parke Davis
Company could participate in connection with this purchas-
ing surplus property, only ruling this man out of partici-
pating in the deal, and on the approval of Mr. Olrich
and the General Counsel, but they would not be barred
completely from participating.
H.M. JR: Now, let me just talk. I have from now
until three-thirty - I can't go beyond that.
I read a story in the New York Times a couple of
days ago, on the back page. This fellow who used to
cover the Treasury and went with Time Magazine--
MR. SULLIVAN: John Crider.
H.M.JR:
...in which he said - I don't know whether
he was quoting Charlie Wilson or not, but it certainly
was a credit to Charlie Wilson - said when he came they
placed a lot of orders for irons, that Charlie Wilson
had given the order to Westinghouse, although General
Electric was anxious to have the business and were
equipped and ready.
MR. OLRICH: I can tell you of my own case, Mr.
Secretary. We have issued instructions we will bid on
80
- 6 -
no Lend-Lease goods, nor will we attempt to purchase any
commodity--
H.M.JR: You told me you wouldn't buy any. I
didn't ask you not to continue to sell to Procurement.
Do you remember?
MR. OLRICH: Well, if you want us to bid on them,
we will, but I have issued those instructions until I
have an opportunity to clarify it. We have cut that.
H.M.JR: No, but do you remember?
MR. OLRICH: Yes, sir.
H.M.JR: You can think the thing over. I will have
to think this over. I want this thing to sort of boil
inside of me a little bit. But let's be thoroughly
honest with the fellow who is coming from Parke Davis.
Let me look at Joe O'Conneil. Now, don't let's kid the
fellow, because it is much better to say no to him first.
To say no to Mr. Olrich - "Your company must discontinue
bidding from Procurement for underwear" - the thing was
discussed and I didn't think that was necessary, because
he is selling us something. I wouldn't want him to buy
used underwear back again, but I didn't see why it
wasn't all right to sell.
But take the Parke Davis fellow - we are going to
buy drugs, now--
MR. O'CONNELL: Sell drugs.
H.M.JR: Let's say we are going to buy, and a big
order comes; if it were up to you (0' Conneil) tomorrow,
would you say that Parke Davis could be one of the six?
MR. O'CONNELL: I would probably lean over backwards,
but I would say they could. If this fellow had nothing
to do on the operation, and on quality and everything
Parke Davis was as good as the others, I would not think
that ought to disqualify them, if I kept their man from
participating in the transaction.
81
- 7 -
Now, ideally, you are right, 1 think.
H.M.JR: No, I said that in the case of Munsingwear
that I didn't see why they couldn't continue, because
the buying, I feel, is to be entirely separate from the
selling, and Mr. Olrich isn't to have anything to do with
it.
Now, I would say, offhand, that these drugs that
we have got to sell, that Parke Davis could not bid on
them as long as this man was an assistant to Mr. Olrich
on the selling side; they couldn't buy any used drugs.
I don't think there will be any question about that.
MR. SULLIVAN: Then you get into the situation where,
in a small field, you don't have very many boys with the
know-how. You are going to run into a great deal of
reluctance on the part of anyone to furnish you a top-
notch man, because automatically, that forfeits their
right to participate in the business.
H.M.JR: I have heard all about this know-how busi-
ness. Take Mr. Olrich's own case: He is perfectly
willing to forego the buying of these second-hand goods, but
I am not so sure that you are right and, anyway, I am
not so sure that a good merchandising fellow can't sell
some drugs to a group of drugstores. Take a drugstore
today - it is a general merchandising store, anyway,
isn't it - pretty near?
MR. OLRICH: Everything except drugs.
In this particular case there may be instances
where the policy of the Unit may be to have them go back
to the manufacturer for resale. That would preciude
that manufacturer having his product go through the
regular channels.
Now, there are places where manufacturers have
arrangements with various companies limiting the sale of
their product to specific stores. That might be in the
drugstore field, and I am just giving you hypothetical
cases.
82
- 8 -
This would prevent that company from acquiring its
own products and throwing them on the field. I don't
know now serious it might be.
The man we have in this particularly narrow field
is now a Major in the Army, who is acquiring these goods
for the Army, and may soon be available. He is probably
the best man in the field. he is from McKesson and
Robbins. His name is Noh.
H.M.JR: That is why he has the know-how? (Laughter)
MR. OLRICH: Yes, but on this I think I would like
to look it over. It isn't any serious bar.
H.M.JR: I think this is so important that nothing
should be decided today.
MR. OLRICH: No, this was to get our thoughts
together.
H.M.JR: The last thing in the world I want to do
is to make it impossible, but I think it is much better
to be a little stiff-backed and have a few less head-
aches. But let's think the thing over, and I don't want
to put anything in here - for instance, like - "...refer
to the General Counsel," knowing in advance he is going
to turn it down.
MR OLRICH: No, that wouldn't be smart.
MR. O'CONNELL: Under your rule we wouldn't have to
refer it to anybody. Just have an arbitrary rule?
H.M.JR: I don't know. I am not saying.
MR. O'CONNELL: The only reason for not doing it,
and for doing it the way you suggested, it seems to me
that if it would embarrass Mr. Olrich in getting people -
if it was impossible for him to get top-notch people under
such a rule, would be a reason--
83
- 9 -
MR. OLRICH: This is going to be particularly so,
Mr. Secretary, when we get into the textile and depart-
ment store field. For instance, we are now talking
about getting a young man from the May Company. I am
trying to get that young men. We seil a lot - the Army
and Navy is already selling a lot of goods to the May
Company and Macy's.
H.M.JR: Of course, as long as he keeps his Army
status--
MR. SULLIVAN: Oh, I don't think that solves the
problem at all, Mr. Secretary.
MR. O'CONNELL: He might very well be getting paid
by the May Company; many companies continue to pay.
H.M.JR: All right. This is difficult, but it can
be solved. I am not going to solve it today. Let's
hear some more.
MR. OLRICH: "Wherever possible, Divisional Managers
will be selected on a full-time, salary basis. where
this is not possible, he may be retained as Consultant
by Mr. Olrich on a part-time and/or per diem basis."
H.M.JR: That is all right.
MR. OLRICH: That is the gist of the matter.
H.M.JR: The part where it was referred to me, I
definitely want to change that.
MR. OLRICH: "Divisional Managers acquainted with
particular commodities may be selected from within the
industry, which selection shall be referred to the
Secretary for confirmation."
H.M.JR: No.
MR. O'CONNELL: There is another one later.
84
- 10 -
MR. OLRICH: Regarding appointments?
MR. O'CONNELL: No, transactions.
MR. OLRICH: "No Divisional Manager who retains
any connection with the company shall participate in
any transaction involving that company."
Then it says, "Any transaction in the commodity
field of such person involving his company shall be
submitted for approval of Mr. Olrich and the General
Counsel. In any significant case, Mr. Olrich may
refer same to the Secretary."
That is the way we had it.
H.M. JR: Where it goes back and says to refer to me,
I don't want anything referred back to me. I would say,
where it says to me or the General Counsel - I think
this may make it & little bit slower, but I would say,
"
to the General Counsel and Charles Bell." Does
General Counsel include both of you fellows (O'Connell
and Lynch)?
MR. O'CONNELL: Yes.
H.M.JR: I am leaving you (Sullivan) out.
MR. SULLIVAN: That is right.
H.M.JR: Now, you are part of the General Counsel's
Office?
MR. HILL: Yes, Treasury Procurement, Chief Counsel.
I am the workingman over there. I bother Joe.
H.M.JR: Let's have a little committee of four to
work with you on this thing, see, which will have full
power to act without referring it back to me; and that
would be Mr. Hill, Charles Bell, Lynch and O'Conneil.
This is your group, and if you have something that is at
all bothersome on this thing - and I think you should
85
- 11 -
rewrite it and leave it elastic enough 80 this committee
and yourself have some leeway--
MR. OLRICH: So we can sell goods.
H.MJR: And I don't want anything to come back up
to me. Mr. Hill says he is the workingman. These other
people are supposed to be, too. But I would much rather
have a certain amount of elasticity. llere is a group,
that any time you have somebody, they are there to meet
with you, and they give you a yes or no, and just tell
me the results. That ought not to slow you up more than
half a day at any time. If it has to come to me it
might hold you up more than twenty-four hours.
Is that satisfactory?
MR. OLRICH: Yes, sir, it is.
11
selection shail be referred to the Secretary
for confirmation. The selections?
H.M.JR: No.
MR. OLRICH: You don't want that?
H.M.JR: No, I don't even want that.
MR. SULLIVAN: I like your suggestion. It is very
easy to put down on paper - the ideal situation - assum-
ing there are a lot of top-notch Divisional Managers who
are just waiting for a chance to go to work for Uncle Sam.
What you are up against here is that you are terribly
anxious, because of the importance and the size of the job,
to get the very best people; and your very best people
are often people who are in a personal situation that they
can't afford to give up everything, and their companies
can't afford to give up everything, and you just weigh
the advantages and disadvantages. This suggestion of
yours, I think, is the very best one.
86
- 12 -
H. JR: It gives it a certain amount of elasticity,
but nothing has to come back to me. You want to appoint
somebody; you say, "Boys, can you see me this afternoon?
Can we get together?" They say, "Sure." They get to-
gether and the thing is settled.
MR. OLRICH: We will write it up and have the memo-
randum on your desk.
H.M.JR: I would like once more to go over those
regulations after you have another meeting.
MR OLRICH: When would you like to set the time, sir?
H.M.JR: I would make them fairly elastic; John
has elaborated. Do you want to sit in with them?
MR. SULLIVAN: I will, if I am here.
H.M.JR: You sit with them when you can. How is
that?
MR. SULLIVAN: That is fine.
H.M.JR: I am available at three, tomorrow. And
then you will have another drafting of the thing?
MR. OLRICH: All right, sir.
H.M.JR: Is what I have suggested all right, Charlie?
MR. BELL: Fine. I haven't had an opportunity to
clear the other little item, that is the weekly report.
H.M.JR: Well, I want to have you work out, at
regular intervals - I am a great fellow for statistics,
like you are - I want to know what our position is - I
want a report. I don't know - you teil me we have thirty-
seven-odd million dollars' worth on hand; I want to know
the in-take and out-put, and net position.
87
- 13 -
MR. OLRICH: The report is under way and it is promised
me it will be on a regular basis on the 16th of May, in
which we will be able to report to you the opening inven-
tory, the acquisitions, the disposal by transfer, disposal
by sale, and the closing inventory by a significant group
with high spots marked.
H.M.JR: Well, what I would like is to have it come
in the form which I am used to. George Haas is our chief
statistician. If you could consult with him so it will
come to me in a way that I can absorb it--
MR. OLRICH: Yes, sir.
MR. SULLIVAN: That doesn't mean the way we have been
getting it, Ernest, because I have been getting reports.
I have one in my desk now; it took me so long to make
sense of it, I didn't bring it in to the boss.
MR. OLRICH: No report is a good report that doesn't
make sense.
H.M.JR: Well, I think if you meet this fellow Haas
you will like him. He does do a nice job.
Are you going away satisfied with this meeting?
MR. OLRICH: Yes, sir.
H.M.JR: Completely?
MR. OLRICH: Yes, sir.
H.M.JR: Still happy?
MR. OLRICH: Yes, sir.
H.M.JR: All right.
Anything else?
88.
May 8, 1944
MEMORANDUM FOR SECRETARY MORGENTHAU
AM
From: John L. Sullivan
JLS
Mr. Clayton advises me that there is no "formal
code of ethics" for dollar-s-year men working under his
jurisdiction. He says he believes the general rule that
no dollar-s-year man can participate in the discussion of
transactions in which his own company is involved is the
only practical solution of the problem.
89
OFFICE OF
S
TREASURY DEPARTMENT
WASHINGTON
THE
SECRETARY
May 8, 1944
MEMORANDUM TO THE SECRETARY:
Met with other members of the Space Control
Committee and drew up final draft of order to be
submitted to Mr. Clayton for his signature and
issuance. This order will formally establish the
Space Control Committee and state its purposes.
Sold 500,000 square feet of shearlings,
backed 3/8" pile, at 30 cents per square foot,
f.o.b. Topeka, Kansas, through negotiation, to
one company. This is the approximate market price.
Initiated plans for expansion of office
space for surplus property disposal organization.
Attended sub-committee meeting of Clayton
Board to discuss proposed Regulation #1 which
has to do largely with the division of commodities
among the disposal agencies.
Edul
SO
May 8, 1944
Harry White
Secretary Morgenthau.
Would you talk to me to see if there is anything
that I could do about bringing T. V. Soong back to
this country? I understand that T. L. Soong has been
designated to be one of the Monetary Committee delega-
tion to come over here and it 18 in my mind and I
don't know where but I think that T. L. Soong has
given the impression that it is I who want him over
here. If I wanted anybody over here, I'd want T. V.
Soong over here, so please talk to me about it.
Famished
91
May 8, 1944
3:35 p.m.
CABLE TO CHINA
Present: Mr. White
Mr. John Carter Vincent
MR. WHITE: Since talking to you, this cable came in.
(Hands the Secretary cable from Mr. Gauss dated May 6, 1944.)
We checked back at this end to make sure it isn't an
error at this end, but we are both inclined to think it is
an error at the other end.
MR. VINCENT: I don't know what they have done, but
it isn't a decoding error. That is the only thing.
H.M.JR: Are you sure the V is for "V"?
MR. WHITE: I thought we might make sure and send that
cable. (Hands the Secretary memorandum to Mr. Collado from
Mr. White dated May 8, 1944, attached.)
H.M.JR: The only suggestion I would have is, I would
say, "Secretary Morgenthau learned that T. V. Soong has
planned to c ome to the United States" period.
MR. VINCENT: I didn't recall the rest.
H.M.JR: The rest is to attend the monetary conference.
MR. VINCENT: Yes.
H.M. JR: Let's just put brackets around it and take a
look at it.
MR. WHITE: We have been informed that T. L. Soong is
a member.
92
- 2 -
H.M.JR: I know, but leave the rest in. You say,
"We will be glad to have him come to the United States."
MR. WHITE: I think if we place this emphasis on
"V as in victory," Adler will get the point, and the
Ambassador--
H.M.JR: But by leaving it that way, "We will be glad
to have him come to the United States," doesn't just limit
his coming to the monetary conference.
MR. VINCENT: What the Secretary has in mind is that
any time now T. V. Soong might come back. And again, I
asked him whether he had heard anything about T. V. planning
to come back. He says, "No, he is too busy. I am quite
sure he is not going to come back." But Wei is not the most
truthful man in Washington, anyway.
H.M.JR: But do you see what I mean? Then the next
sentence says--but this leaves it SO he can read it--"We
will be glad to have him come to the United States.' I
think it improves it, personally.
MR. WHITE: We can at least send that. I don't know
whether that will--if it is a mistake over there-
H.M.JR: I would like you to add this sentence--put
this sentence on at the end: "How soon may we expect him?"
MR. WHITE: That is a little hard in the light of his
asking us how soon he should be here. His cable questions
what is the last minute he can leave. I see a little double-
talk; you men might help.
Well, let's cut this last sentence out then and say,
"T. V. Soong is to come to the United States. How soon can
we expect him?"
H.M.JR: How would it read?
MR. WHITE: "Secretary Morgenthau was glad to learn that
T. V. (V as in victory) Soongis planning to come to the
United States. How soon may we expect him?" They will
93
- 3 -
puzzle like the devil over it, which is all right. They
will come back with something. They might say, "We meant
T. L. Soong," but at least they will know that you are
glad. You can say "very glad" if you want to.
H.M.JR: Yes.
MR. VINCENT: Why not say "return"?
MR. WHITE: "Very glad to learn that T. V. Soong is
planning to return to the United States. How soon can we
expect him?" They will rush for the cables to see what
they wrote. Then we won't refer to his cable.
MR. VINCENT: Yes, I would. As 8. matter of fact, I
still think that having gotten that off your chest, I would
take this sentence here still as a separate paragraph.
MR. WHITE: We can't tell them anything, anyhow.
H.M.JR: The Russian Ambassador called me up just
before lunch, pressing me very hard, and I can't tell him.
We are waiting on him.
MR. WHITE: "How soon may we expect him?" They won't
know what to make of that, and they will cable back and
say, "Well, we asked you how soon he has to be there, but
that will fix that. If they meant T. L. Soong, then you are
getting across a message which you had no way of doing without
it.
H.M. JR: That is right. The way I feel is this: I had
dinner with the Ambassador Wei the night before he left. He
went back and completely misquoted me on this question.
Then White had an experience. He said that they wanted
T. L. Soong. I don't know how you feel, but I have real
confidence in T. V. Do you agree?
MR. VINCENT: I do, too, confidence in his ability.
H.M.JR: I go further, and his integrity.
94
- 4 -
MR. VINCENT: On this thing, yes; not on China.
H.M.JR: I have never seen him, but vis-a-vis me, he
has been 8. hundred percent on the level.
MR. VINCENT: I can say that Gauss finds him the same
way.
H.M.JR: Well, with me--you say Gauss does, too?
MR. VINCENT: Yes.
H.M.JR: Now, I have nobody here I can do business
with representing the Chinese Government. That would still
be true after T. L. Soong got here, SO I would like to have
somebody here at this very critical time that I do have
confidence in. I am not familiar with what he does in China
and the goings on there.
95
May 8, 1944
To:
Mr. callade
From:
Mr. White
Please send the following cable to the American Embassy,
Chungking, China.
To Adler from the Secretary of the Treasury.
"Reply to your cable 787 of May 6.
Secretary Morgenthan is very glad to learn that T. V.
(v as in victory) rather than T. L. (L as in liberty) Soong
is planning to return to the United States. How seen could
T. v. leave?"
- 5/8/44
mr. Ite 1000. Friend
DEPARTMENT
INCOMING
DIVISION OF
96
OF
STATE
TELEGRAM
COMMUNICATIONS
AND RECORDS
GMY-599
Chungking
This telegram must bE
paraphrased before being
Dated May 6, 1944
communicated to anyone
other than a Government
REc'd 10:14
CONFIDENTIAL
Agency. (SC-00)
For security reasons the
text of this massage must
Secretary of State,
DEPARTMENT OF STATE
Washington.
MAY 7 1944
DIVISION OF
URGENT
COMMUNICATIONS 0 RECORDS
787, May 6, 9 a.m.
TO SECRETARY OF TREASURY FROM ADIER.
T. V. Soong having much Government business to attend
to here wishes to leave for conference at last minute. HE
has asked ME to ascertain when approximately monatary con-
ference is due to begin. Immediate reply would bE apprec-
iated.
GAUSS
LMS
WTD
PECLION
bis V 11
BESEARCH
PION Ot
EPARTMENT
OUTGOING
97
DIVISION OF
OF EC
STATE telegram must TELEGRAM
COMMUNICATIONS
paraphrased before being
May 8, 1944 AND RECORDS
communicated to anyone
other than a Government
7 p.m.
agency. (SC-00)
CONFIDESTIAL
For security recions the
DEPARTMENT OF STATE
text of this first
DIVISION OF
be closely que
MAY 12 1944
COMMUNICATIONS
AND RECORDS
AMEMBASSY,
CHUNGKING.
621
FOR ADLER FROM THE SECRETARY OF THE TREASURY
Secretary Morgenthau is very glad to learn that
T. V. (V as in victory) rather than T. L. (L as in
liberty) Soong is planning to return to the United
States. (Reference your 787 of May 6.) How soon
could T. v. leave?
HULL
(EGC)
PEOLION
CA
5/8/44
Ot
98
May 8, 1944
Mr. Smith
Secretary Morgenthau
I met Mr. T. Y. Lo, 1601 V Street, N.W.,
Telephone Dupont 1530, Extension 23, and he is in
charge of getting moving pictures in and out of
China. I suggested that perhaps he might like to go
to Bridgeport, and he said that he would like to very
much.
He has been asked to furnish some movies
for War Bonds in the Chinese section of Seattle. I am
wondering whether it wouldn't be a good idea to do this
in other cities with large groups of Chinese.
Fil-
JULY 1944
CONTENTS ON BACK COVER
99
Reader's The Digest
UNITED STATES SAVINGS BOND
100
UNITED STATES OF WILL MERICA WAY
ONE TEN HUNDRED DOLLARS
FROM THE ISSUE DATE HEREOF
B.
To
Mr. and Mrs. America
No. 1 Main Street
U.S.A.
CLEVELAND
Twis BOND & ISSUED UNDER yes SECONO LIBERTY BOWD ON M
WNO CONSITIONS STATED
M AMENDED, AND is SUBJECT
INSCRIBED AND DATED
war SAVINGS
BOND SERIES
E
BACK WEWEOF a will or van
VECEIPT or NON/INT THERE
DELIVERED BY BY AN AUTHORIZED
TREASURY DEPARTMENT
STATE
WASHINGTON
Morgertta
of
Buy One of These
Bonds Today!
TO:
100
Secretary Morgenthau
D
This came over from War
Finance for the use on the front
of a radio promotion book.
F.S.
FS
Fred Smith
Room 2901
5/8/44 101
TO THE RADIO STATIONS OF AMERICA
On June 12, the Treasury Department will
launch the Fifth War Loan --the world's largest
war financing program, and perhaps the most
important of all the war.
The goal is $16,000,000,000 of which
$6,000,000,000 is to come from sales to indi-
viduals. To achieve this goal we must increase
our sales to imdividuals by $700,000,000 over
the amount subscribed by individuals during
the Fourth War Loan.
The Fifth War Loan comes at a busy season
for rural people, and at a time of the year
when urban dwellers will be tempted to spend
extra money for vacations. It will take added
effort on the part of everyone to reach our
goal -- a goal $2,000,000,000 higher than that
of the Fourth War Loan.
The Treasury Department sincerely appreciates
the splendid cooperation of the radio industry
during the past War Bond campaigns, and urges
even greater effort in the Fifth War Loan Drive.
Sincerely,
(s) Henry Morgenthau, Jr.
102
Although Mr. Skouras understood that
was to head Motion Picture Industry's cam-
paign in the 5th War Loan Drive, unfortunately
the War Activities Committee appointed 8. new
chairman, Mr. R.J.O Donnell of Dallas, Texas.
when Ted gamble
returns please talk (5/6.)
to me about
103
May 8, 1944
Dear Mr. Skouras:
In the light of the excellent campaign conducted
by the Motion Picture Industry under your leadership
in the Fourth War Loan, it had seemed to us here that
the same committee might well be held for the Fifth
War Loan. Your letter, and a subsequent talk with
Ted Gamble, explains to me why this did not work out.
I regret that we are not going to have the benefit
of your good services, but I am happy to receive the
pledge of support of the numerous companies and theatres
under your direction. I wish to assure you too, that
we at the Treasury are delighted to know that the War
Department Art Exhibit is to be handled by yourself and
your associates. This is a most important undertsking
and properly identified with our War Bond program will
unquestionably bring about a more realistic understanding
of the needs for and uses of the individual's participa-
tion in the big task of financing the war.
Sincerely yours,
(Hgued) IL Morgenthau, Jr.
Mr. Charles P. Skouras, President,
National Theatres Amusement Company, Inc.,
1609 West Washington Boulevard,
Los Angeles, California.
TRGiecb
National Theatres Amusement Co. Inc.
1609 West Hashington Boulevard
Tiv Ingeles, California
Kourius
April 25, 1944
Hot fenry Morgenthau, Jr.
Set ary of the Treasury,
Was ngton, D.C.
Des Mr. Morgenthau:
Recently when I had the honor and pleasure of meeting you in
New York you paid me a very high compliment by urging me to head the Motion Pic-
ture Industry's Campaign in the Fifth War Loan, 8,8 I had done in the case of the
Fourth War Loan.
I deeply appreciate your most gracious invitation and em
mindful of the Honor which you thus bestowed upon me. You made the path of duty
clear to me in the presence of those who head the War Activities Committee of the
Motion Picture Industry, and after the conversation I had with you, official accep-
tance on my part was understood by you and me to be but a mere formality. Unfor-
tunately, however, perhaps because of jealousy that existed among those members of
the War-Activities Committee, they ignored my understanding with you reached in
th ir presence, and the very next day they appointed a new chairman for the Fifth
Was Loan, Mr. R.J. O'Donnell of Dallas, Texas.
The entire incident as far as you, Mr. Ted Gamble and I are
:
irned is most regrettable and embarrassing, and I fully intended informing you
matter personally, but Mr. Gamble told me that the pressure of events made
fficult for you to talk to me.
I want to assure you that Mr. O'Donnell who is a personal
a of mine of many years standing, is an able citizen well qualified and
ped to do a good job. He will have my fullest support, especially in view of
ery great impression you made upon me by your friendly expression of appre- to
on for what we had accomplished in the Fourth War Loan, and your desire ...
kind of a job continued.
As President of National Theatres Corporation operating in
than six hundred important situations in nineteen states, I believe I will be
Mrs. cipation and her associates will give me an opportunity not only
position plus the Treasury, War Department Art Exhibit which we are undertaking to
to contribute materially to the success of the Fifth War Loan. This
fy the Morgenthau great faith that you have shown in our work, but to unify many useful
a for the good of the War Finance Program.
123
Charles P. Skoures
Charch
repun TION queq.rodu; #144 at Arqunce 20 w
USTA 7704 in 4044 upon Aus of OXFT ptnom I
142 -
106
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
May 8, 1944.
MEMORANDUM TO THE SECRETARY:
I found that Jake Viner was in Princeton on
Friday with Walter Stewart so I called him there
and asked him to come down this week. He said he
had been away for ten days and was compelled to go
home Saturday night. He did not want to leave
again this week unless it was absolutely urgent
that he come. He would, however, be glad to come
down next week.
I told him the problem and asked him if he
would be thinking about it and he said he would.
He said, just thinking about it while we were talk-
ing over the telephone, it seemed to him it was not
worth running the risk of disturbing the American
public on a currency matter.
DWB
FORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
107
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE May 8, 1944
TO
Secretary Morgenthau
FROM
Mr. F
Subject:
The Business Situation,
Week ending May 6, 1944.
Summary
Food situation: The removal of most meats from rationing focused
attention last week on the improvement, at least temporarily,
of the civilian food supply. Important factors in the
improvement include the shortage of livestock feeds, E tight
storage situation, and a reduction in Army, Navy and Lend-
Lease requirements. While increased food supplies are
currently helping to stabilize living costs, lower prices
for some foods, together with the tight feed situation,
may result in a decrease in food supplies next year.
Commodity prices: Commodity prices showed little change in
quiet markets last week. The BLS index of 28 basic
commodities was up a trifle but it continues within the
narrow range of the past two months. The all-commodity
index remains about unchanged.
Stock prices: Industrial stock prices in London last week rose
to a new war-time high, and now stand 37 percent above the
level prevailing on the eve of the outbreak of war in Europe.
In comparison, industrial stock prices in New York are only
3 percent above that level. Recent buying of stocks in
London is reported to have been prompted by inflationary
warnings and prospective post-war tax concessions contained
in the recent budget message.
National income: Payments rose less than seasonally in March,
and the annual rate of income dropped to $154.1 billions
from the previous month's record high of $155.1 billions.
In contrast to the gradual decline in factory payrolls since
last fall, Government payrolls (including military pay) have
continued to rise, and in March accounted for approximately
one-sixth of all income payments.
Retail trade: Department store sales in April were 5 percent
above those of April 1943, but substantially lower than in
March. Indicative of the heavy volume of pre-tax buying in
March, department store sales of furs and jewelry in the New
York Federal Reserve District rose 141 percent and 73 percent,
respectively, above year-earlier levels.
108
- 2 -
More food for civilians
Attention was focused last week on the improvement in
the civilian food supply situation by the startling action
of the OPA in removing all meats from rationing except beef
steaks and roasts, and the dropping of canned fish from the
ration list. Coupled with this Was the statement of the
Deputy Director of the WFA, Lieut. Col. Olmstead, before a
Senate Agriculture subcommittee, that within the next few
months there would develop surpluses of 10 to 15 farm
commodities, on a scale that will require Government
buying to maintain farm prices.
The removal of most meats from rationing follows similar
action taken recently in which most canned vegetables and all
shortening and rationed salad and cooking oils were, at least
temporarily, made point-free. Moreover, the ration cost of
butter and oleomargarine has been reduced for May, and all
frozen foods are free from rationing. Meanwhile, the WFA
has increased the sales quotas of fluid cream and fluid milk
by-products, and bountiful supplies of eggs and potatoes have
necessitated the WFA taking various steps to support prices
of these items.
Feed shortage increases livestock marketings
Among the factors which have importantly contributed to
the current improvement in civilian food supplies are the
following: (1) the shortage of feeds, (2) a tight storage
situation, (3) a reduction in Army, Navy and Lend-Lease
requirements, (4) the mild winter, and (5) large production
in victory gardens.
Under the influence of high prices and plentiful feed
supplies, the livestock population of the country had by
January 1, 1944 reached record levels. During the past year,
however, consumption of feeds has outrun production, and feed
supplies have become very tight. Moreover, rising feed costs
have reduced considerably the profit margin in livestock
production.
The tightening feed supply, particularly for corn, and a
reduction in the Government support prices on hogs scheduled
for next October, appears to have already caused some liquidation
of hogs. Thus, although hog marketings and slaughtering have
shown some seasonal decline from the peak levels reached in
January, they have continued to be very heavy in recent months.
(See Chart 1.) The demand for hoge has become noticeably
sluggish, due in part to a marked decline in Government
109
- 3 -
purchases, and some stock yards have had to place embargoes
on shipments, with the result that prices of non-support
weights of hogs have declined sharply.
Sheep and lamb slaughter is now moderately larger than
last year, and calf slaughter 18 substantially larger. In
addition to a tight dry-feed situation, drought conditions
in pasture lands of some of the more important producing
sections of the Western states is expected to cause premature
marketings of lambs and calves. The early lamb crop, however,
which 18 marketed in May and June, is estimated to be about
6 percent smaller than that of last year.
Lack of storage space increases civilian food supplies
The increase in civilian food supplies is partly the result
of E. lack of storage space to hold reserve stocks. Food holdings
in cold storage have been at very high levels during the past
eight months, with freezer space 87 percent or more occupied.
The elimination of frozen foods from rationing represents an
effort to move these items out of storage to make space for
current production of various products. Storage stocks of
meat on April 1 were almost 60 percent larger than a. year
ago, and stocks of lard, which 18 now ration free, were
230 percent above a year ago. Moreover, the action eliminating
most canned vegetables from rationing was taken to move existing
stocks into the hands of retailers and consumers, in order to
make way for new supplies from this year's crops.
Army, Navy and Lend-Lease food purchases lower.
A reduction in current Army, Navy and Lend-Lease food
requirements has undoubtedly been an important factor in the
increase in civilian food supplies. While no figures are
available on Army and Navy purchases, Price Administrator
Bowles and Deputy Director Olmstead of the WFA indicated
last week that Army, Navy and Lend-Lease demands had moderated
considerably, with the Army and Navy buying now on a monthly
basis. Food stock preparations for the European invasion
have probably been completed. England is reported to have
set up food stocks for the invasion period, when perhaps
little ocean transportation will be available for importing
food. The elimination of meat rationing in Canada, which was
announced over two months ago, was attributed in large part
to a reduction in export requirements due to a tight shipping
situation.
110
- If -
A relatively mild winter has tended to increase the
production of milk and eggs. The winter and spring vegetable
crops are considerably larger than those of last year, although
this is chiefly due to expanded acreage. Meanwhile, home
canning of victory garden produce last year has moderated the
pressure on supplies of commercially-canned vegetables.
Larger civilian food supplies aid in price control
The improvement in food supplies has tended definitely
to help stabilize food prices, which hold a dominant position
in the stabilization of living costs. In fact, prices for
eggs, potatoes and several other vegetables in recent months
have fallen below the levels of a year ago. The farm price
index in April dropped below year-earlier levels for the first
time since December 1939. Moreover, a 2.4 percent decline in
retail food prices during the past year has largely offset
increases in other living costs, with the result that the
BLS cost-of-living index on March 15 (the latest data available)
vas only 0.8 percent above that of a year ago. This has doubtless
tended in some degree to restrain demands for further wage
increases. Important factors in the decline in retail food
prices from last year's levels, however, have been the subsidies
on butter and meat, and the extension of price ceilings.
While an increase in food supplies may tend to ease food
prices, it should be noted that its influence may be offset in
part by the elimination of rationing of many items. By reducing
the demand, rationing has had a restraining influence on prices.
With most meats now ration-free, it is possible that the increase
in demand may forestall price declines for meat products. Never-
theless, the spending of a larger portion of the consumer's
income on increased food supplies will, in general, tend to
relieve pressure on other prices. The elimination of many
items from rationing should help to curtail black market
activity.
Food supplies may be lower next year
On the other hand, in the current food situation there
are certain factors which have unfavorable implications for
the food supply next year. The tight feed situation, the less
favorable corn-hog ratio, and the reduction in support prices
on hogs next October, may result in a sharp decrease in meat
supplies next year. According to the December 1 pig report,
111
- 5 -
farmers intended to farrow 16 percent fewer BOWS this year
than last, and actual farrowings may show an even lower
figure in view of the tightening supply of feed. The sharp
break in egg prices in the latter part of March caused a
cancellation of hatching orders, with the result that egg
hatchings during the first five months of this year are
expected to fall 18 percent below those of last year.
Finally, the current easing in the food supply situation
may tend to encourage a relaxation in the efforts of
farmers and victory gardeners. Concern 18 felt over such
e. possibility, as was evident in a statement by Food
Administrator Jones last week, in which he pointed out
that the present abundance of food is only temporary.
Weather more favorable for arriculture
Since the continuance of abundant food supplies will be
dependent in part on favorable crops this year, the rapid
progress in planting made last week in some sections of the
country as a result of much sunny weather and light rainfall
is distinctly encouraging. Improvement in farming conditions
was marked in the Northeast and Middle Atlantic areas, but
continued heavy rains in the western Ohio, central Mississippi,
and lower Missouri Valleys continued to impede or prevent
planting.
Drought conditions, however, continue to prevail on the
ranges in some parts of the Southwest, and last week's
substantial rainfall in the central and northern states from
the Rockies westward was decidedly favorable, particularly
for the Pacific Northwest. According to the Weather Bureau,
moisture is now ample for present needs practically every-
where except in the Southwest from Texas westward.
Commodity markets quiet
Commodity markets were quiet last week and prices showed
very little change. While the BLS index of 28 basic commodities
was a trifle higher, it has continued to move in a very narrow
range during the past two months. (See Chart 2.) Steer prices
were up moderately, and hog prices of non-support weights firmed
near the end of the week following the suspension of pork
rationing. Prices of support-weight hogs, however, continued
at the support level. Rosin and wool top prices were up very
slightly, while spot cotton prices were off fractionally.
The corn supply situation for the processing industry
improved considerably last week as a result of the recent
112
- 6 -
action making the 000 sole purchaser of corn in certain
Corn Belt areas. At the beginning of last week farmers
had made commitments to supply over 27 million of the
80 million bushels which the Government has requested
in the next 60 days. Several important corn refining
plants that had been closed for lack of supplies were
able to reopen. This diversion of corn to processors,
however, reduced the supply for livestock feeders. To
help offset the reduced corn supplies for feed, the CCC
has increased its allocation of feed wheat from 29 mil-
lion bushels in April to 37 million bushels in May.
In the week ended April 29 the BLS all-commodity
index rose 0.1 percent. Higher prices for apples, potatoes,
and meats, and the OPA action in allowing an increase in
cement prices in the Northeastern area largely accounted for
the rise in the index. At 103.7 percent of the 1926 average,
the index is only 0.2 percent higher than a. year ago, although
it is 38.3 percent above the pre-war level of August 1939.
Stock prices rise moderately
Recent nervousness of speculators and investors over
invasion prospects appears to have abated somewhat, and stock
prices have strengthened moderately, although the aggregate
rise since April 24 has been less than 3 percent. At the
close on Saturday the Dow Jones average of 65 stocks was
about 1.5 percent higher than a week earlier, and the recent
recovery has carried it to around mid-April levels. Stock
trading activity on the New York Exchange in April dropped
to the lowest level since November 1942, and showed a decline
of 59 percent from the corresponding month last year. Trading
activity last week continued relatively quiet, with daily
average stock transactions amounting to less than 630,000 shares.
London stock prices rise to new high
Despite the recent moderate improvement, industrial
stock prices at New York are still 5 percent below last year's
high, and are only 3 percent higher than on the eve of the
German invasion of Poland. In contrast, industrial stock
prices in London last week rose to & new war-time high and
stood 37 percent above the pre-war level of August 31, 1939.
(See Chart 3.) The latest show of strength in stock prices
message presented to the House of Commons by the Chancellor of
at London appears to have been generated by the recent budget
the Exchequer. The Chancellor's warning of the inflationary
113
- 7 -
dangers of rising wages 18 said to have provided the initial
impetus to renewed buying of stocks 8.8 an inflation hedge.
In addition, greater optimism over post-war prospects appears
to have developed recently, stimulated in part by liberal
post-war tax concessions for new plant and machinery costs
and for research, as announced in the Chancellor's budget
message. Moreover, the relative shortage of stocks caused
by the war-time ban on new issues, together with the
continuing pressure of idle funds, serves to provide a
generally favorable background for the rising trend of
prices in the London market.
Income payments rose less than seasonally in March
Due largely to the customary March rise in interest and
dividend disbursements, total national income payments during
the month rose above February levels. However, the increase
in the total was less than seasonal, and the annual rate of
income payments in March declined to $154.1 billions from
$155.1 billions in the previous month. (See Chart 4.)
Payments for salaries and wages in trade and industry actually
declined slightly, but all other major categories showed in-
creases. Government payrolls, including military payrolls,
rose to a new high in March and accounted for approximately
one-sixth of all income payments.
In contrast to the gradual decline in factory payrolls
since last fall, Government payrolls have moved steadily
higher in line with the expansion in the armed services, and
in March were 23 percent above year-earlier levels. All
major groups shared in the rise during this period, but the
gain in Government payrolls was considerably larger than the
12 percent rise in total income payments. (Refer to Chart 4,
lower section.) Interest and dividend payments in March were
22 percent greater than in the corresponding period last year.
This doubtless reflects the increased interest payments on
Federal security issues, since reported cash dividend payments
in March, according to the Department of Commerce, were only
7 percent higher than a year earlier.
Department store sales above year-earlier levels
With sales comparisons no longer distorted by holiday
rose 17 percent above last year's levels. This contrasts with
influences, department store sales in the week ended April 29
a decline to 11 percent in the previous week, when year-to-year
sales comparisons were adversely affected by the later occurrence
of Easter in 1943. (See Chart 5.)
114
- 8. -
For the month of April a.8 a whole, department store
sales were 5 percent above those of last year. They were
lower than in March, however, and the FRB seasonally-adjusted
index of sales for April dropped to 140 from 154 in March.
(See Chart 6.)
Heavy sales of luxury items in March
Department store sales (adjusted) in March had risen
to the third highest level on record, due to the stimulus
of pre-Easter and pre-tax buying. Indicative of the heavy
advance buying of luxury items to escape higher excise taxes,
department stores in the New York Federal Reserve District
reported that sales of furs and jewelry in March were 141 per-
cent and 73 percent, respectively, above the March 1943 levels.
Likewise, sales of handbage and small leather goods were up
88 percent, while toilet articles and drug sundries showed
a gain of 62 percent.
Further evidence of booming jewelry sales in March 1s
seen in a Census Bureau report for the month, which showed
sales of independent retail jewelry stores 63 percent above
year-earlier levels. This exceeded gains of all other groups
by a very wide margin, and contrasted with a 14 percent gain
in total retail sales of independent stores for the same
period.
Department store stocks still relatively large
Despite the boom in sales in March, department store stocks
(in dollar value) increased about 2 percent during the month,
and at the end of the period were 11 percent above the previous
year's levels. However, this rise was less than seasonal and
the FRB adjusted index of stocks dropped to 101 from 105 in
February. (Refer to Chart 6.) While this figure represents
a considerable decline from the war-time peak of 142 reached
in July 1942, it is still 6 points above the level prevailing
in November 1941 just before our entry into the war.
Despite the heavy sales of jewelry in March, jewelry
stocks of department stores in the New York Federal Reserve
District at the end of that month were 28 percent higher than
a year earlier. The maintenance of large jewelry stocks 18
surprising, in view of the cessation of output of watches and
clocks for civilians, the WPB restrictions on the use of gold
and silver, and the ban on platinum in jewelry manufacture.
Rising prices for jewelry have tended to inflate inventory figures,
however, and supplies have been augmented by large imports of
Swiss watches, the increased use of non-restricted materials, and
perhaps by some black market manufacturing.
HOG PRICES COMPARED WITH HOG SLAUGHTER
AND U.S.D.A. PURCHASES
1942
1943
1944
SEPT
NOV.
JAN.
MAR.
MAY
JULY
SEPT.
NOV.
JAN.
MAR
MAY
JULY
SEPT.
NOV.
DOLLARS
DOLLARS
Per 100 Lbs.
Per 100 Lbs.
16
16
14
14
Price of Live Hogs'
12
12
10
10
THOUSANDS
MILLIONS
OF HOGS
OF LBS.
(Sloughter)
(U.S.D.A.
Purchases)
1400
Slaughter
1200
240
27 Centers
1000
200
800
160
600
120
400
U.S.D.A. Purchases
80
200
40
o
o
JULY
SEPT.
NOV.
JAN.
MAR.
MAY
JULY
SEPT.
NOV.
JAN.
MAR,
MAY
JULY
SEPT.
NOV.
1942
1943
1944
. Chicago good to choice, 180-200 pounds
132 Centers beginning week ended April 8
Source: Department of Agriculture
Office of the Secretary of the Treasury
Division Retainsh and Statistics
P-248-B
115
MOVEMENT OF BASIC COMMODITY PRICES
1942
1943
1944
PERCENT
PERCENT
AUGUST 1939.100
220
220
210
210
9 Uncontrolled Commodities
As of February 1942
200
200
190
190
28 Commodities
180
180
170
170
19 Controlled Commodities
160
160
DEC
FEB
APR.
JUNE
AUG
OCT
DEC
FEB
APR
JUNE
1942
1943
1944
PERCENTAGE CHANGE DEC. 6. 1942 TO APR. 28. AND May 5. 1944
PERCENT
PERCENT
19 Controlled
9 Uncontrolled
Barley 760%
Commodities
Commodities
+ 70
+ 70
Flaxseed 64.6%
+ 60
60
Rosin 603%
Carn 56.9%
+ 50
50
Wheat 44.6%
116
. 40
40
"Hogs 35.8 %
Lard 28.8%
+ 30
Shellee 12.3%
+30
Load 111%
Sugar 6.9%
Steers 27.6%
Cottonseed Oil 6.3%
+20
Print Cloth 4.9%
20
Cotton 205%
Burlap 2.6%
Mool Tops %
Butter 18.8%
Zinc 3%
. 10
0% Change
- 10
Hides, Sill,
Tin, Rubber,
Coffee, Copper,
o
St. Scrap, dom.,
St. Scrap. exp.
o
Cocoa -.0%
Tellew -4.1%
- 10
10
Dec. 6.
Apr. 28,
May 5,
Dec. 6,
Apr.28,
May 5,
1941
1944
1944
1941
1944
1944
*All commodities in index are now under some form of price control, except rosin and cotton.
Office of the Secretary of the Treasury
of Research and Subtotics
P-244-B
Chart 2
INDUSTRIAL STOCK PRICES IN U.S. AND U.K.
AUGUST 1936 = 100
1942
1943
1944
PERCENT
PERCENT
Weekly (Average of Daily)
115
115
110
110
105
105
100
100
U.K. 56 Industrial
95
95
Stocks
90
90
85
85
80
80
75
75
U.S. 30 Industrial
70
Stocks (Dow-Jones)
70
65
65
60
60
55
55
50
50
APR.
JUNE
AUG
OCT
DEC
FEB
APR.
JUNE
AUG.
OCT.
DEC.
FEB.
APR.
JUNE
1942
1943
1944
Chart 3
FO-MA-C
117
Chart 4.
118
NATIONAL INCOME PAYMENTS AND COMPONENTS
1939
1940
1941
1942
1943
1944
DOLLARS
DOLLARS
Billions
Annual Rote. by months
Billions
160
160
150
150
140
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
A O D F A J A 0 D F A J A o 0 F A J A o o F A J A o D F A J A o D
1939
1940
1941
1942
1943
1944
Dollar Totals for Selected Components. Mar. 1943 and Mar. 1944
DOLLARS
DOLLARS
Billions
Billions
4.5
4.5
Mar. 1943
Mar. 1944
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
I.O
is
.5
o
o
Commodity Pro-
Government
Dividends
Net Income
Other Income
Distributive
duction Industries
Including
and
of Proprietors
Payments
and Service
Military
interest
(includes Forms)
Industries
Chiefly Mfg)
Solories and Wages
Source Department of Commerce
You el - Secretary of the Trumery
C-485-A
- # Reserved - -
Chart
119
DEPARTMENT STORE SALES
1935-39 . 100. Unadjusted
PERCENT
PERCENT
300
300
Weekly
280
280
260
260
240
240
220
220
200
200
180
180
160
160
1944
1943
140
140
120
120
1942
100
100
80
80
60
60
JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC.
Office of the Secretary of the Treasury
C-390-C
Division of Research and Statistics
DEPARTMENT STORE SALES AND STOCKS
Dollar Values, 1923-25=100. Adjusted
PERCENT
PERCENT
IBO
IBO
170
170
160
160
150
150
140
140
130
130
120
120
110
110
100
100
Sales
90
90
so
BO
Stocks
70
70
60
60
50
1938
1939
1940
1941
1942
1943
1944
50
that
1936
1937
Source: Federal Reserve Board
C-430-A
Office of the Secretary of the Transury
- # - - -
120
LISTER HILL, ALABAMA
121
COMMITTEES
DEMOCRATIC WHIP
EXPENDITURES IN EXECUTIVE
DEPARTMENTS, CHAIRMAN
CURTIS MCPHERSON
MILITARY AFFAIRS
SECRETARY
United States Senate
INTERSTATE COMMERCE
EDUCATION AND LABOR
OFFICE OF THE DEMOCRATIC WHIP
WASHINGTON, D.C.
May 8, 1944
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
Upon my return to Washington, I find
your good letter of May 5 and I do want to thank
you for it.
It was indeed a splendid victory for
All of us and I want you to know that I appre-
ciate your fine message.
All my thanks.
Very sincerely,
LH:RM
Protorphice
122
TREASURY department
INTER OFFICE COMMUNICATION
Date
TO
Secretary Morgenthau
May 8, 1944
FROM Fred Smith FS
A group of State Liquor Administrators, appointed by
the various governors, would like to come in and see you
about liquor black markets and etc. As I understand, they
will be in town tomorrow morning. They would very much
like to have an appointment at that time.
Howard Jones, of the Distilled Spirits Institute,
is asking for the appointment.
Do you want to do anything about it?
10 am Trues.
smith
Bankshire
here.
fullwan
numan
orine,
123
May 8, 1944
MEMORANDUM FOR SECRETARY MORGENTHAU
FROM: Assistant Secretary Sullivan Jeff,
I an attaching herewith a memorandum regarding an
increase for Emil Schram.
124
TREASURY DEPARTMENT
WASHINGTON
OFFICE OF
OMMISSIONER OF INTERNAL REVENUE
ADDRESS REPLY TO
MAY
COMMISSIONER OF INTERNAL REVENUE
6
1944
AND REFER TO
SSU
MEMORANDUM FOR MR. SULLIVAN:
In Re: Salary plan for Mr. Emil Schram,
President, New York Stock Exchange.
The New York Stock Exchange, on March 22, 1944, filed
an application requesting approval to increase the salary of
Mr. Schram from $48,000 to $65,000 a year for three years be-
ginning July 1, 1944 and ending June 30, 1947 and for seven
years thereafter to employ him in an advisory capacity at a
salary of $30,000. After some discussion with Mr. Drake of
the New York Regional Office as to the propriety of the
seven year contract, Mr. Coleman asked for some time for the
Board of Governors to further consider the matter, as a result
of which, on April 11, they filed the present application,
which requests 8. salary of $55,000 a year (an increase from
$48,000 to $55,000) for a three year period beginning July 1,
1944 and ending June 30, 1947. This employment contract also
provides that he would be employed in an advisory capacity for
8. seven year period beginning July 1, 1947, at 8. salary of
$35,000 a year, and contained the further provisions that in
the event of his death during the three year period his widow
would receive $35,000 a year for seven years from the date of
death and that in the event of his incapacitation during the
three year period, Mr. Schram would continue to receive com-
pensation at the rate of $35,000 a year for seven years.
When the presidency of the Exchange was vacant in
1938, the Exchange proposed to pay a salary of from $80,000
to $90,000 a year and made an offer of that amount to one
person, but not being successful in obtaining his services
they employed Mr. Martin at $48,000 a year. He served in that
capacity until his induction into the United States Army in
1941, at which time Mr. Schram became president. Since the
Exchange considered this position to be one calling for a
salary of from $80,000 to $90,000 a year, it may be assumed
PORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
125
Memorandum for Mr. Sullivan.
- 2 -
that for policy purposes that such a rate was established,
and any annual salary not in excess of $90,000 a year could
be approved under the Act and regulations. The question
arises however, from a policy standpoint that the salary for
the advisory position beginning at the end of the three year
contract as president might be considered as an inducement
(in effect, a deferred salary payment) to accept the salary
of $55,000 a year for a three year period.
Mr. Wenchel, Chief Counsel, has stated that his ad-
vice to the Commissioner, if called upon, would be that in
his opinion the Commissioner should not attempt to issue a
ruling at this time on the contract for the employment of
Mr. Schram for seven years as a consultant after the termina-
tion of his present employment. It is impossible to know
whether the duties of Mr. Schram as a consultant are to be
real or whether the position is intended to be a sinecure.
When the duties and responsibilities of the position are
known, the Commissioner will then be in a position to issue
a ruling, not only for salary stabilization purposes, but
also for the purpose of ascertaining the amount which may be
deductible under the provisions of Section 22(a) of the In-
ternal Revenue Code. Approval of the application without
knowing the duties and responsibilities of the position would,
in effect, be tantamount to a deferred salary increase.
So far as concerns the proposed payments to Mrs. Schram
upon the death of Mr. Schram, this rests upon a different basis.
It appears that the New York Stock Exchange has established a
policy of making payments to its former employees' widows.
Therefore, there should be no objection to permitting the con-
tinuance of what appears to be a well-established policy. It
is also believed that the payment to be made in the event of
the total disability of Mr. Schram may be likened to payment
in the event of his death and treated accordingly.
Deputy Commissioner.
126
LYICTORY
TREASURY DEPARTMENT
BUY
PROCUREMENT DIVISION
WASHINGTON 25
PFICE OF THE DIRECTOR
May 8, 1944
MEMORANDUM TO THE SECRETARY
To meet the requirements of the Relief and Rehabili-
tation of the Foreign Economic Administration, the
Procurement Division has entered into contracts for the
purpose of utilizing existing Government salvaged articles;
also, for the packing of new supplies which are produced
by sources which are not in position to prepare merchandise
for export shipment. These various facilities are as
follows:-
Rockaway, New Jersey- Sorting and packing of new
shoes procured from distressed stocks of retailers and
wholesalers. The shoes are delivered from various
suppliers, sorted, packed for export, then stored awaiting
call forward.
At the following locations, the salvaged army
clothing is cleaned, repaired, dyed and baled, then stored
awaiting call forward.
Bachman Comfort Products
Clothing Reclamation
Cohoes, New York
Services
10 Kingsland Road
Dadour & Belikoff
Natley, New Jersey
17 Elizabeth St.
New York, N. Y.
A. Milder's Sons
Winston Salem, N. Carolina
Buford, Georgia - Salvaged army shoes are delivered
by the War Department. These shoes are rebuilt at this
plant under the supervision of the International Shoe
Company. This plant will rebuild approximately 150,000
to 170,000 pairs of shoes per month. This was in opera-
tion under the jurisdiction of the army who discontinued
it as of May 1, 1944. Since May 1, it has been operated
under the jurisdiction of the Procurement Division.
127
Memorandum to the Secretary - 2 -
5/8/44
At & location not yet determined, the Foreign Economic
Administration has asked the Procurement Division to take
over the packaging of medical supplies procured under Lend-
Lease appropriations for distribution to the civilian popula-
tion in the occupied countries. This operation would require
the packaging of medical and hospital supplies on the basis
of specifications furnished by the Foreign Economic Adminis-
tration for requirements based on the number of beds per hos-
pital. Certain of these supplies are already available from
purchases made by the Surgeon General; others will have to
be purchases to be made known to the Procurement Division by
the Foreign Economic Administration.
It will be noted that the operation at Rockaway, N. J.,
also the proposed packaging of medical supplies for export,
do not involve manufacturing operations but are more in the
nature of sorting, packing, and marking for shipment. The
operations at Buford, Georgia, involve the rebuilding of
salvaged shoes, and at the four locations specified; there
are cleansing, repairing, dyeing and baling operations of
salvaged clothing. All of these are Lend-Lease activities,
and in the operations we are now carrying on, whether sorting
or packing preliminary to shipment, or processing, as in the
case of salvaged shoes and clothing, the work is performed
under a contract arrangement in each case.
Clifton E. Mark Mack
Director of Procurement
128
MAY 8 1944
* door Mr. Ministers
Thank you for informing as of the decision of your govern-
1 to fix - enchange parity of the Belgian frane at
43.887 france to the dollar.
this desision will of - be treated as highly con-
fidential.
Very truly yours,
(Wigned) H. Mergenthau, Jr.
Secretary of the Treasury.
I 1 I
Suban
/
N.W.I.
I
129
MAY 8 1944
I é * any
Thank you for forwarding a letter from Mr. Outt, the
Delgiam Maister of Finance and Homondo Affeirs, to m.
Inclesed horowith to a reply to Mr. Outt's letter which
É I $ I 1 1 H E
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Trensury.
Me Resellary,
the of Helgium,
Washington, D. c.
Hup 5/0/44
DE BELGIQUE
43/6
Washington, May 1, 1044
140
osure
My dear Mr. Secretary:
I, am enclosing herewi th a letter Mr
du
the Belgian Minister of Finance and Economic
Affairs, asked me to forward to you.
May I avail myself of this opportunity to
renew to you the assurances of my highest estee
Very sincerely yours
The Belgian Ambassador
hau, Jr.
Treasus
D. C.
Tel: Bloone
and
entia
1.
13 th April,1944.
ny dear Secretary,
I wish to inform you that at one
of our last Cabinet meetings my Government
agreed to fix the exchange parity of the
Belgian franc from the day of the entry
of the Allied troops into Belgium, at
43,827 france to the dollar.
May I ask you to consider this
decision as highly confidential ? It has
been taken in view of the present situation.
It goes without saying that if & very long
time elapsed between now and the landing
of the \llied troops, or if the volume of
quite unforeseen destructions wrought in
Belgium before the landing were 80 much
}
beyond expectations that it would have a
marked detrimental effect on the economic
situation of our country, my Government
would have to reconsi der such a parity.
B lieve m, my dear Security
with ben bot regards
Yours very micorly
Morgenthau, Ssq.,
Secretary of the Treasury,
Washington.
Guts
SECRET
RESTRICTED
CONFEDENTIAL
Photoctat to SECRET Whit 5/10/47- 132
P-A-R-A-P-H-R-A-S-E
PRIORITY
INCOMING
AMXXXXX
WAR DEPARTMENT MESSAGE
FROM: CG, Allied Central Commission, Naples, Italy
TO:
War Department
4545, 8th May 1944
NUMBER:
DATE:
For Morgenthau to AGWAR repeated AFHQ for MGS from ACC
Main signed McFarlane.
Received from troopers is the following paraphrase cable.
Understand that Glasser from US Treasury studying inflation in
Italy at present. Grafftey Smith suggests that it would be of
assistance if British expert could join Glasser for a few weeks
and have a joint report submitted. Resident Minister Staff, Lloyd
of Cairo, has been closely associated with the Middle East Anti
Inflation measures and has a great deal of experience in finance.
Lloyd is in Cairo and is immediately available to travel by air
and remain for one month. It is considered that his cooperation
would be of value. Cable Minister Resident, if you agree, who
agrees to Lloyd's parting for one month.
Paraphrase of reply which has been forwarded is as
follows. Finance subcommission is preparing financial Anti
Inflation programme for submission with assistance of Glasser to CCS.
Lloyd's assistance would be welcomed by Finance subcommision if
he is available at once. Glasser, who was to have left shortly,
is still requested by us to remain pending Lloyd's arrival.
No sig.
G-2 for Mr. Morgenthau
ACTION:
INFORMATION:
CM- IN-6012 (8 May 44)
RESTRICTED
RONDIDENTIALX
SECRET
SECRET
133
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, London
TO:
Secretary of State, Washington
DATED: May 8, 1944
NUMBER: 3728
SECRET
The discussion regarding the monetary fund which was
scheduled for last Friday has fixed the Government's posi-
tion in support of the debate which will take place this
Wednesday in the House of Commons and it is requested that
you so inform Secretary Morgenthau.
WINANT
Igane copy to
White
any
134
25
MAY 8 1944
Dear Mr. Secretary:
is you know Mr. Harriman and Mr. Handl ton have given
w effective help in securing the adherence of the technical
delegation of the Seviet Union to the Joint Statement of
principles on an International Monetary Fund, and the
agreement of the Seviet Government to attend a conference
e I 8
Would you be no good as to inform the Ambassador and
the Charge at Monoow of w appreciation of their help and
my thanks for what they have accomplished.
Sincerely yours,
(Rigned) H. Morgenthau, Jr.
Secretary of the Treasury.
the Monorable,
the Secretary of State.
5/3/44
Ret to Rm 221
135
May 8, 1944
MEMORANDUM FOR THE PRESIDENT
Attached is a memorandum discussing the proposal that this
Government provide temporary havens of refuge in this country for
oppressed peoples escaping from Hitler - these people to be placed
in camps established in this country and to remain there until the
termination of the war at which time they will be returned to their
homelands.
Under this proposal the refugees would be brought into the
country outside the regular immigration procedure just as civilian
internees of Latin American countries have been brought here and
placed in internment camps. There could be no objection on security
grounds any more than in the case of prisoners of war.
The overwhelming humanitarian reasons for taking this action,
and the considerations involved in deciding whether this step should
be taken now by Executive action or submitted to Congress, are
discussed in the memorandum, which indicates the views of the
Board members on this matter.
The Board has decided that, in view of the importance and
urgency of this question and the great responsibility involved in
reaching a final determination as to what should be done, the whole
matter should be submitted to you for your consideration.
Among the possible courses of action which you will of course
want to consider are:
(1) Consultation with appropriate members of Congress with
& view to Executive action.
(2) Putting the program into effect at once by Executive
action.
(3) Presidential message submitting the matter to Congress
for urgent action.
(4) Having a bill first introduced in Congress, followed
by a Presidential message urging its immediate enactment.
Secretary of State.
Secretary of the Treasury.
Henry < Stenson
Secretary of War.
Attachment.
136
MEMORANDUM RE: Establishment of Temporary Havens
of Refuge in the United States.
In the Executive Order creating the War Refugee Board you
directed that the Board make appropriate recommendations to you
to overcome any difficulties encountered in the rescue and relief
of war refugees.
Although the Board has already initiated many measures which,
if fully implemented, may result in saving many lives, there is
one basic obstacle which lies athwart all our efforts. This is
the simple fact that the United Nations have not been prepared to
supply even temporary havens of refuge for substantial numbers of
the persecuted peoples of Europe, particularly the Jews.
Why This Is The Main Obstacle
The following brief summary will reveal why this constitutes
the basic weakness in our whole program.
(1) Our best chance of saving many people from death, partiou-
larly after recent events in the Balkans, lies in an effort to
convince the Hitlerite forces, and more particularly their function-
aries and subordinates, that it is in their interest to spare the
lives of these people. In this connection, the statement issued
by you on March 24, which is being given the widest possible
publicity in German controlled territory, will of course be most
helpful toward this end, especially if followed by concrete action.
(2) And there is also an opportunity to actually bring some
of these people out of enemy territory. The recent developments
in the Balkans may limit opportunities there, but there still remains
a possibility of stimulating the flow of refugees to Spain and
Switzerland.
however, that we and our allies convince the world of our sincerity
(3) It is essential to both of these avenues of approach,
and to bear our share of the burden. Thus, great
substance our willingness would be added to our threats, and other countries would
be much ready to cooperate in aiding the escape of refugees,
if we made more it clear now by action that our doors are open to these
people.
and ask them to stop killing Jews; the United Nations must
(4) The United Nations must not merely threaten our enemies them-
selves offer the Jews a haven. Only in that way can the great
moral issue involved be made clear.
It is even possible that after such an announcement of the these
threats of punishment a and promises of action are not mere Germans words.
Such step would show the Germans clearly that our
might be prepared to release or permit the escape
persecuted peoples.
137
- 2 -
(5) And such a step would certainly cause the neutral
countries to encourage the entry of more refugees into their
territory since they would then know that they would not be
required to keep all refugees until the war ends. Thus, one
of the reasons why we are not meeting with any success in Spain
is the fact that the Spaniards are not convinced that we will
take the refugees off their hands. Although we have been stating
for a long while that we are going to take the Jewish refugees in
Spain to Camp Lyautey at Fedhala (near Casablanca) in North Africa,
none have been moved there to date. And although several hundred
are expected to be moved there shortly, under the agreement with
the French authorities only 2000 refugees may be in this small
camp at any one time. The Spaniards of course know of this
limitation and of the reluctant attitude of the French, which
attitude has been the main reason for the long delay in moving
these refugees. And the inarticulate major premise of the French
attitude is the conviction that such refugees are to be dumped and
left in French Africa and that neither the United States nor Great
(
Britain will receive them.
Proposed Solution
Many private organizations, as well as John Pehle and his
staff, have strongly recommended that this Government act at once
in this humanitarian cause and announce to the world that we will
provide temporary havens of refuge in this country for all oppressed
peoples escaping from Hitler - these people to be placed in camps
established in this country and to remain there until the termination
of the war at which time they will be returned to their homelands.
Nature and Benefits of Proposal
effect as prisoners of war. They would be brought civilian into the internees country
(1) Under this proposal the refugees would be treated in
outside from laws internment the termination would Latin the American be camps. regular involved of No the immigration countries violation war since and the have would procedure or refugees been attempt not brought come would just to evade in as here remain under immigration and only the placed quota until more in
system. There could be no objection on security grounds any
than in the case of prisoners of war.
(2) The principal United Nations involved have already who agreed have
that each their lives and have been given asylum in other countries. settled
of them will receive after the war its nationals
These fled for nations have also agreed that it is 8. part of their
policy countries assure as will permit the return thereto of all persons displaced
to such conditions in enemy and enemy occupied
138
- 3 -
therefrom who have sought refuge elsewhere. This agreement,
already concurred in by the United States, Great Britain, the
Soviet Union, Luxembourg, Yugoslavia, Norway, The French Committee,
Greece, Belgium, Poland, Czechoslovakia, and the Netherlands should
serve to make clear to those concerned that such refugees as may
be accepted in camps here will be returned to their homelands at
the end of the war.
(3) The humanitarian considerations which might be urged
against the confinement of the refugees are answered by the simple
fact that treating them as prisoners of war is better than letting
them die.
(4) The general idea has been discussed with 8. number of
organizations, Jewish and non-Jewish, and they have all expressed
their approval. Most of them feel that it is by far the biggest
step the Board can take to accomplish the purposes for which it
was established.
(5) The necessity for unilateral action now by this Government
lies in the fact that we cannot expect others to do what we ourselves
will not do, and if we are to act in time we must take the lead.
(6) The practical effect of such 8. step by the United States
might be tremendous. Our allies would without doubt follow our
lead. That this country, which has always been a refuge for the
fugitive from injustice, oppression and persecution, should take
the leadership in this matter would be in keeping with our heritage
and with our ideais of liberty and justice.
(7) In the hearts and minds of all peoples under Nazi domina-
tion and throughout the world such action might well have an effect
very much favorable to our whole war effort and to our reputation
as a nation which has always carried the torch in great undertakings.
In a report to the War Refugee Board in early March,
Ira Hirschmann, the Board's representative in Turkey, concluded as
follows:
"I am sure you will be gratified to learn that
although still on the threshhold, the work of the War
Refugee Board has injected new life and hope into
thousands of down-trodden, tormented refugees throughout
the European continent. This is not my opinion but one
that is confirmed by all of the refugees I interviewed
during my visit in Istanbul. The first Jewish refugees
of Turkish origin just arrived from France said to me
feelingly, 'For two years there has been only one phrase
on everyone's lips - when are the Americans coming?"
139
(8) Even if no refugees were ever actually brought to
these camps, the mere announcement of our readiness to receive
them would remove the basic obstacle to our efforts to save them.
In view of geographical and time factors, it is not likely that
many refugees would actually come to the United States. The
important thing is that we offer to receive them.
Question of Congressional Approval
Secretary Hull, Secretary Morgenthau and Secretary Stimson
carefully considered this proposal at the meeting of the Board on
March 21. There was no disagreement as to the potential benefits
of such 8. program, and all the members of the Board agreed that
the matter should be presented to the President.
Secretary Stimson in particular felt that it was a matter
which should be presented to Congress for its approval. Secretary
Stimson's views on this, in his own words, are as follows:
"The principal objection which I had to the proposal to bring
these refugees into the United States was my fear that the proposal
would be considered so at variance with the policy of our immigration
laws that the President should not undertake it without conferring
with and obtaining the consent of Congress. The reasons were as
follows:
"Our present immigration laws were the result of a very deeply
held feeling of our people that the future immigration of racial
stocks should be 80 limited as to coincide with the existing ratio
of such stocks already within the country. Furthermore these laws
were adopted at the close of the last war by overwhelming majorities
of our Congress for the purpose of preventing the entrance into this
country of large blocks of immigrants who were likely to come from
we are concerned now originate. Our people then showed that they
the very countries in which most of the present refugees with whom
strongly feared that an uncontrolled immigration from such countries
would modify the proportion of the racial stocks already existing
in our own population and would introduce into the United States
population and brought into conformity with our own institutions
many people who would with difficulty be assimilated into our own
and traditions.
"I fear that your proposal would meet with a similar reaction
from our people today who would feel that it was merely the beginning
of 8. permanent immigration. This would be accentuated if it was
carried through by Executive authority alone and without the assent
of Congress.
obtain the consent of the European nations to take these people off
"One of the considerations which faces us in attempting to
not now free to make valid commitments supported by responsible
our hands at the end of the war is that many of these countries are
governments.
- 5 -
"But even if the obtaining of such commitments were possible,
I an informed that the mere introduction of these people today on
such 8 scaie and for humanitarian purposes alone would be contrary
to existing American law. In this connection I am not at all clear
that the war power of the President would be held to cover a trans-
action like this which has no direct connection with the prosecution
of the war.
"For these reasons I feit then and feel now that it would be
unwise to advise the President to take such a step without the
consent of Congress.
"At our meeting at which this was discussed I think you stated
your belief that it would be impossible to get the consent of Congress.
On reflection I am not at ail sure that you are right. If presented
with the support of the overwhelming humanitarian reasons and with
adequate safeguards for returning the refugees to their own countries,
I am not at all sure that the measure could not be carried. If thus
presented, the Congress would be able to take such precautions as
it would deem necessary and would be consulted in regard to the
financial responsibility which it is quite evident that this country
must ultimately assume.
The Attorney General has informally advised the Board that
if you wish to put this program into effect without Congressional
approval, legal justification could be found for such a temporary
arrangement. The Attorney General believes, however, that in view
of the attitude of the Congress toward all immigration policies
it would be unwise for you to take the proposed action without
Congressional approval having been first obtained.
Secretary Hull and Secretary Morgenthau feel that before
taking any action you should consult with appropriate members of
Congress.
In considering whether this step should be taken now by
Executive action or submitted to Congress for its approval the
following points should also be borne in mind:
(1) Time is of the essence and, even assuming Congressional
approval could eventually be obtained, it might be too late to do
any good.
(2) If, as many believe, the immediate adoption of this
is fundamental to our efforts to save many people from
program death, the question arises as to whether you should not act at once,
Britain - taking the leadership in molding public opinion in
as you did in the case of the delivery of destroyers to Great
support of the action.
failed to act, the result might be to minimize the gains which
(3) If the proposal were put up to Congress and Congress
have already resulted from your establishment of the War Refugee
Board.
141
Hotel Aldelphia
Philadelphia, Pa.
May 8, 1944
The Honorable Franklin D. Roosevelt
President of the United States
White House, Washington, D. C.
Dear Mr. President:
Permit me to call your attention to a resolution adopted
by the American Federation of Labor at its last convention which was
held during October 1943. As you will no doubt recall, the millions
of men and women who compose the rank and file of the American Federation
of Labor membership went on record urging the United States to grant
at least temporary asylum to the victims of Hitler's bestial persecution.
The term "free port" had not been coined at that time but the sentiment
of the membership was and is none-the-less synonymous with the proposal.
I quote the following section from Resolution No. 73 which
was adopted at the convention:
"To this end, the American Federation of Labor
calls upon the United Nations to take immediate
steps to rescue the remaining Jews of occupied
Europe. We call upon the United Nations, and
our own country, to provide for them temporary
haven in their territories."
I am writing at this time because I have learned that the
War Refugee Board which you established recently is interested in what
is referred to as the "free port" plan. Please be advised that I fully
and unreservedly support this program of rescue for refugees. I urge
you to effect the realization of this humanitarian measure, which is
really a small undertaking for a nation as great as ours. We are feeding,
clothing and housing over 130,000 captured Nazis, while at the same time
we have made no move in the direction of alleviating the suffering of at
least a small fraction of that number.
I understand that tiny Switzerland, despite its neutrality
and hazardous geographical position on the map of Europe, has welcomed
to its territories a far greater number of men and women driven out by
the Nazis than might be expected of her. These refugees live in camps
142
- 2 -
and are permitted much more freedom of movement than the original
"free port" suggestion calls for.
I am proud to know that a great many newspapers in our
country have published editorials supporting this proposal. It is
encouraging to note that the carnage in which mankind at present finds
itself engaged on a world-wide scale, has not lessened the American's
traditional sympathetic and humane attitude toward his fellow man.
I urge you, Mr. President, in my own name and in the name
of all the members of the American Federation of Labor to cause the
creation of "free ports" in this country for refugee victims of a
cruel war -- now, before it is too late. Such action on your part,
I believe, will clear the way for similar action in other parts of
the allied and neutral world.
Sincerely yours,
William Green
President
American Federation of Labor
The Honorable Franklin D. Roosevelt
May 8, 1944
Note: This was dictated by Gomberg of NRS from a carbon copy of the
original sent him by Green.
A.A.
May 9, 1944
143
CABLE TO AMBASSADOR WILSON, ALGIERS, FORACKERMANN FROM WAR REFUGEE BOARD
Please refer your No. 16 (Department's No. 1453) of May 3rd.
Your prompt action in taking up admission of Sephardic Jews to
Camp Lyautey is appreciated. Please confirm our understanding that so long
as total number of refugees in Camp Lyautey does not (repeat not) at any one
time exceed 2,000, French will not object to entry of refugees merely because
they arrived in Spain subdequent to March first.
We are not able togige you information as to number of Sephardics
who might be rescued from occupied territory. This information must come from
Schwarts, and if you do not hear from him please advise us.
Ve are inclined to believe that camp quota should not (repeat not) be
filled by bringing Jews there from Italy. If we are able to bring more from
Spain in the future this may put us in a position to encourage entry of refugees
into Spain from occupied territory. For your information it is understood that
many Jewish refugees in s outhern Italy already have certificates entitl/ing them
to enter Palestine and the possibility of their being taken to Palestine should
not be overlooked. As you probably know the British Government is presently
admitting into Palestine Jewish refugees who reach Turkey. It is understood
that more than twenty thousand refugees may still be admitted to Palestine under
the terms of the White Paper. When you have investigated the matter please
give us your views.
This is WRB Cable to Algiers. No. 8
May 8, 1944
2:35 p.m.
JDjpdk 5/8/64
001 Sec'y. Abrahamson, Colum, DuBois, Friedman, Hodel, Laughlin, Lesser, Mana,
Stewart, Central Files, Cable Control Files.
144
CABLE TO AMERICAN EMBASSY, LONDON
The War Refugee Board requests that you deliver the
following message to Mr. Alex Easterman, 55 New Cavendish
Street, London, England:
QUOTE Urge you to titke up matter of food for interned
and segregated Jews with Shelbourne and Dingley Foot. Be-
mind you of Law's assurance to you and Goldmann that there
is no objection to using 12ed Cross food parcel stocks in
Switzerland for such internees. World Jewish Congress
Leon Kubowitski UNQUOTE
May 8, 1944
2210 P.M.
BAksinijp 5/2/44
145
CABLE TO LONDON
From War Refugee Board to Schoenfeld near Belgian Government
Reference our No. 634 of January 28 and your No. 109 of March 4
concerning cooperation between Belgian Government and War Refugee Board for
fulfillment of objectives set forth in Executive Order No. 9417 of January
22.
Following cable has been received from Minister Norweb in Lisbons
Quote. In getting adults and children from occupied
territory, representatives of Belgian Convention, Lisbon,
are prepared to cooperateowith War Refugee Board. How-
ever, instructions from the Belgian Government in London
are desired by the Belgian Legation Here. It is suggested
that the Belgian Government be approached as regarding its
attitude if the War Refugee Board agrees and the Department
concurs. We suggest that information be furmished its
representatives in event that it does not participate in
program. Unquote.
Please request Belgian Government to instruct its Legation in
Lisbon to cooperate fully with Minister Norweb and Dr. Robert Dexter, War
Refugee Board representative in Lisbon, as suggested in the above quoted
cable. Please report result of your approach to Belgian Government.
May 8, 1944
2:10 p.m.
MJMarketlsk 5/6/44
146
ORIGINAL TRXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Embassy, London
DATED:
May 8, 1944
NUMBER: 3684
SECHET
The War Refugee Board requests that you deliver the following
message to Albert Cohen, World Jewish Congress: 55 New Cavendish,
London, Englands
"Most anxious receive urgently &tailed report your
conferences Speak Dents and other officials concerning
rescue Belgium and Dutch Jews, what agreement reached,
what instruction sent, what contact people appointed.
Also what latest suggestion made by Boris. World
Jewish Congress, Leon Kubowitski."
HULL
147
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Lim
TO:
Secretary of State, Washington
DATED: May 8, 1944
NUMBER: 610
CONFIDENTIAL
In reply to an inquiry mentioning 48 unnamed persons, the Peruvian
Foreign Minister informed Born on August 19, 1943 that the passports which
the Consulate General issued were null as they had been obtained fraudulently.
In spite of a request for the names of these persons, they were never received
here. It was only in December that the Polish Charge, fellowed by the
Vations, Belgian and American representatives, attempting intervention for
Peruvian passport holders detained in Germany. It is presumed that these
48 persons are those which your secret airgram of May 1, 1944, 327 described
as lest.
No others who would cerrespond to your "remainder" are known to the
Secretary General of the Foreign Office. " H. asks that the names be
supplied if such exists, and he will attemtpt for humanitarism purposes to
secure recognition of their passports.
WHITE
DCR:IDB:HL
5/10/44
148
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Lisbon
DATED:
May 8, 1944
NUMBER: 1289
CONFIDENTIAL
Reference your Nos. 11, 12 and 15 of May 1 (Embassy's 1307, 1308
and 1317).
It appears that all of the foregoing cables may have been sent
by you before you received our No. 8 (Department's 1229 of May 1).
As stated in that cable (WRB No. 8), Board is deeply disturbed over
possibility that friction among private agencies operating in Pertugal
will interfere with the actual rescue of children from France. Board
is relying on you to use your powers as WRB representative to prevent
competitive duplication in this important rescue program. Our main
goal is the saving of lives and nothing must prevent the attainment
of this end.
Board appreciates having Weissman's views on this program.
However, Board requests you send at once the views of Dr. Schwartz of
the JDC, together with your own conclusions and recommendations.
As we stated in our No. 8 of May 1, the question of where to send
the children who are actually rescued should be determined after they
have been saved. The decision should be made on an individual case
basis. In this connection it should be borne in mind that 1000 U. S.
visas are presently available for these children in Spain and Portugal.
Canadian visas are also available in addition to the Palestine certificates.
With respect to financing these rescue programs, the Board has
publicly taken the pesition that it will rely on established private
organizations for the necessary funds unless such private sources are
inadequate, As you know the JDC is presently licensed to carry on a
rescue program from Portugal and has substantial funds available for
these operations. In addition, the World Jewish Congress has applied
for a similar license, the issuance of which the Board has recommended.
As long as adequate funds are available from private sources, Board
is net (repeat not) prepared to authorise use of Board's funds
either for rescue of these children on their maintenance after rescue.
Please advised all interested persons of foregoing.
THIS IS WAR REFUGEE BOARD CABLE TO LISBON NO. 16.
HULL
149
CABLE TO LISBON
From War Refugee Board to Minister Norweb and Dexter
Reference your 1292 of April 28, concerning cooperation between
Belgian Convention, Lisbon, and War Refugee Board.
We have cabled Schoenfeld, London, asking him to request Belgiam
Government to instruct its Legation in Lisbon to cooperate fully.
This is Var Refugee Board No. 12.
May 8, 1944
2110 p.m.
arkstlakic 5/6/44
150
ORIGINAL TECT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Lisbon
DATED:
May 8, 1944
NUMBER:
1293
SECRET
From War Refugee Board to Norweb
Please deliver the following message to Dr. Joseph
Schwartz, 242 Rua Aurea, Lisbon, from Moses A. Leavitt of the
American Jewish Joint Distribution Committee:
"Most important you await Pat Malin's arrival Lisbon
third week May thereafter agree your proceeding Algiers,
Cairo other points. Your cable regarding purchases
Azores not clear. If food packages intended for designated
individuals under our licenses for Theresienstadt, Poland
other camps then no authorization from blockade authorities
would seem to be required since licenses specifically
include purchase of supplies indigenous to Portugal and
its European possessions. If supplies intended for stock-
piling Switzerland and therafter distribution by International
Red Cross we may have to secure requisite authorization.
Proposal for shipping shoes to Turkey from Palestine must
be authorized and matter being followed up. Agudas Israel
remittance $25,000 Istanbul is for general relief rescue
purposes not earmarked any specific proposal."
THIS IS WRB LISBON CABLE NO. 13
HULL
151
ORIGINAL THAT OF TELEGRAM SENT
PROM:
Secretary of State, Washington
TO:
AMLEGATION, Lisbon
DATE:
May 8, 1944
NUMBER: 1294
SECRET
From War Refugee Board to Norweb.
Please deliver the following message to Dr. Joseph
Schwarts, 242 Rua Aurea, Lisbon, from Moses 4. Leavitt
of the American Jewish Joint Distribution Committee:
"Please have our Barcelona office contact Jack Van
Messel care of Netherlands Legation Barcelona or Ritz
Hotel Barcelona with reference to cable sent by him to
Barend Brookman Stop Cable reply through American Legation
channels all circumstances surrounding purpose cable and
advise Van Hossel every effort being made to comply his
request."
WHB CABLE TO LISBON NO. 14.
HULL
(GHK)
WHB:MMV5KG
5/8/44
152
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Lisbon
TO:
Secretary of State, Washington
DATED:
May 8, 1944
NUMBER: 1382
CONFIDENTIAL
Following is substance of WRB 23.
Reference is made herewith to Department's message
20. 1265 (WEB 12).
Dexter feels salary arrangements are satisfactory.
For accounting Department in Lisbon, advi se account to be
charged, sesume to WRB.
With Embassy accountant allocation of salary is being
arranged.
NORWEB
PARAPHRASE OF TELEGRAM RECEIVED
153
FROM:
American Legation, Stockholm
TO:
Secretary of State, Washington
DATE:
May 8, 1944
NUMBER:
1622
SECRET
Following 1= for attention of WRB, and refers to
our telegram No. 8.
Marcus Ehrenpreis, Chief Rabbi of Sweden, and I
have held extensive disscussions. At present he is
presiding over two Swedish committees which are actively
engaged in relief operations for Jews in Europe, a
special committee for saving Jewish children, and
executive committee for Relief of Jews in Europe.
Approximately half a million kronor have been expended
on following activities in recent years:
One. Relief for Rumanian Jews. Providing refugees
returning to Rumania from Transnistria with substantial
amounts of local currency which enabled them to purchase
necessities, was most recent help. With good prospects,
efforts are being made now to expand this activity into
Bulgaria and Hungary.
Two. Assistance to Jews in Poland through contact
in Cracow with Judi Scheunter Schutzungstelle. Shipment
of paper clothing and medicine in March 1944 was most
recent help.
Three. Local currency, food parcels and medicine
are sent to the Resienstadt, to refugee groups in
Shanghai, to Jewish refugees living in Italy, Germany,
and France, and to Jewish prisoners of war in Finland.
Four. Jewish children in Rumania, Slovakia, Hungary,
southern France, and Shanghai are given assistance. Much
of current activities of these two organizations has been
made possible by Swedish Foreign Office with which they
have strong position, particularly Ehrenpreis. Communi-
cation with enemy and occupied territory for example, has
been made possible through facilities of Foreign Office
with Swedish Missions in these countries, the Swedish
Ministers in those posts have in most instances, themselves
provided every possible assistance for execution of
operations mentioned above.
At present time the two organizations are short of
funds and it is strongly urged that they be sent fifty
thousand dollars. They have worked closely in the past
with Hias and the Joint World Jewish Congress. The
leaders
154
- 2 -
leaders of these organisations are known personally by
Ehrenpreis. Latter understands necessities of this type
of problem and appears to be extremely capable. It is
believed that with proper financial support his activities
cah be expanded to considerable degree. In addition to
current relief activities, we are now working with
Ehrenpreis on methods of accomplishing certain
evacuation programs.
JOHNSON
155
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Steckholm
TO:
Secretary of State, Washington
DATED:
May 8, 1944
NUMBER: 1628
SECRET
Fellowing is our no. 9 for the War Refugee Board.
Through confidential channebs, Bulgarian Minister
here, who recently replaced strong pro-Nazi, has expressed
sympathy for the Jewish situation. We believe that he can
be induced to lond aid to any program that the Board may
be pushing in Bulgaria, although he is very much afraid of
the Gestapo element in lecal Bulgarian Legation. He has
only been brought in contact, for the present, with chief
Rabbi Ehrempries who for 15 years was formerly chief Rabbi
of Bulgaria. It would be helpful, while this situation is
developing, to have details of any program under considers-
tion for Bulgaria which would to pe rtiment to the above,
as well as any suggestions which the Board may have as to
methods of expleiting the foregoing situation to the full-
est advantage.
MOHNSON
156
CABLE TO MINISTER HARRISON, BERN, SWITZERLAND
The War Refugee Board requests that you deliver
the following macsage to Isaac Sternbuch, Postfach 168,
St. Gallen, Switzerland:
QUOTE Doing utmost for Vittel internees. Hopeful.
Advise us if detention place of deportees from Vittel known,
also if you have details condition internees Belsen-Bergen
and other internment camps.
Regarding proposed large number passports advise if
after Vittel matter you have positive definite hopes such
passports useful, since we question their effectiveness but
ready cooperate on receipt report. Suggest you send funds
Lithuania, Hungary, Rumania via couriers to Rabbis, scholars,
religious leaders for use in redeeming themselves and commu-
nities from extinction through all possible methods. Advise
if you have reperts from couriers to Lithuania and Hungary.
Vaad Hahatsala Emergency Committee Rabbi Kotler and Kalmanowitz
UNQUOTE
THIS IS WRB CABLE TO BERN NO. 16.
May 8, 1944
2:10 p.m.
BAksin:jp 5/4/44
157
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED: May 8, 1944
NUMBER: 1595
CONFIDENTIAL
Reference is made to your 2282 of April 13, specifically
to passage regarding reply by Cuba to Vatican.
For your information, Ambassador Braden has been instructed
to convey to the Cuban authorities the Department's appreciation
of Cuban attitude and the assurance that the United States has no
(repeat no) objection to Cuban recognition of such documents.
Ambassador Winant has been instructed to request a similar British
assurance to Cube. Tittman has been asked to inform Vatican
accordingly with a view to further Vatican action.
Às regards actual admission, Ambassador Braden has been asked
to ascertain Cuba's attitude. Should he find that Cuba is not
(repeat not) agreeable to the admission of such persons holding
Cuban documents, he has been authorized to repeat to Cube the
assurance given to other Latin American republics to the effect
that Cuba will not (repeat not) be expected to admit persons con-
cerned but that they will be routed elsewhere.
Ambassador Hayes has obtained assurance that Spain will
endeavor to arrange for return of deported refugees to Vittel.
Among the Latin American countries approached, Honduras and
Venesuela have already acceded to all our requests referred to in
Department's 1221 of April 10 to you.
Refer to your 2510 of April 20. Appreciate your speedy action
concerning 238 deportees. War Refugee Board received unconfirmed
report that most or all of 238 d eportees from Vittel have been or
are being place in Camp Drancy near Paris. Please take all necessary
steps through Swies, Intercross and otherwise to assure their welfare.
Please advise whether Swiss authorities have made the demarches
requested in our 1221 of April 10 and in our 1269 of April 13.
THIS IS WRB CABLE NO. 12
HULL
158
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
May 8, 1944
NUMBER: 2915
CONFIDENTIAL
Given below is the substance of & cable which was sent to Lisbon
on May 8, 1944 as our No. 107.
We refer herewith to your cable dated May 4, 1944, No. 65.
It is requested that the following message from Islambek Khan,
Counsellor, Afghan Legation, Bern, be delivered to Mr. Joffo:
I very happy to know that you have arrived in Lisbon.
It is difficult to travel. I an attempting to obtain the
visas needed. I would like to know how long you expect to
remain. I am at your disposal to be of any possible service
under the circumstances. Regards.
The officer of the Legation was informed by Islambek that it
would inevitably take time to obtain the visas for which application
was needed; that he would like to see Mr. Joffo, regarding who he spoke
in very friendly terms; five weeks were required for him to obtain
German permission to proceed from France to Switzerland where he is
also assigned as Counsellor of the Legation. Furthermore, there
recently arrived here from Vichy the Afghan Minister who is accredited
to both countries and neither expect to return.
The foregoing message is in reference to Bern's cable of May 3, 1944,
No. 2800.
HARRISON
DCR:IDB:HL 5/10/44
159
CABLE TO ANKARA
Please deliver following message to Robert F. Kelley, Counseler of
Embassy, Ankara, from J. W. Pehle.
For our information please advise date you received 160,000 dollar transfer
from War Refuges Board.
THIS IS WRB CABLE TO ANKARA No. 34.
May 8, 1944
2:45 p.m.
WStewart; pdk 5/5/44
160
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Ankara
TO:
Secretary of State, Washington
DATE:
May 8, 1944
NUMBER: 828
SECRET
Reference is made herewith to the Department's
telegram of May 5, 1944, No. 394.
It is requested that you advise Ira Hirschmann that
the familiarity which he has with conditions here makes it
more desirable, in my opinion, for him to remain in close
contact with WRB in Washington rather than to return at
this time to Turkey, especially in view of my probable
arrival in June in Washington. However, it is desirable
that a representative of WRB be sent to Ankara at the
earliest possible moment by WRB to care for the innumerable
details which arise each day in connection with war
refugee matters and which I have had to care for personally
since Hirschmann's departure from here. This function could
easily be discharged by any young man or woman of limited
administrative ability. I will be glad to discuss with
Hirschmann the question of his return here after I arrive
in Washington.
STEINHARDT
DCR:IDB:RM
5-12-44
161
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Consulate General, Istanbul
TO:
Secretary of State, Washington
DATED:
May 8, 1944
NUMBER; 281
CONFIDENTIAL
Following is for Vaadha Hatzala Emergency Committee,
132 Nassau Street, New York, From Griffel, Kastner and
Klarmann.
You are informed that sea transports started success=
fully, in the last five weeks about one thousand persons.
With our help there is seen a possibility of enlargement.
For this purpose we need two hundred thousand dollar allot-
ment. Action is crucial in the next month. To ensure continuation of
sea transport you are asked to please send this amount in
free Swies cureency at our disposal.
SQUIRES
162
NOT 20 BE RE-TRANSMITTED
COPY NO,
11
SECRET
OPTEL No. 147
Information received up to 10 a.m., 8th May, 1944.
1. NAVAL
U.S. Destroyers bombarded supply dumps and positives in ANZIO area.
pedoed by MTB' on 6th/7th and is now considered wish LOSS. On 5th
The German Destroyer (reference OPTEL N: 1181 was tor-
2. MILITARY
BURMA. On 6th/7th our forces evacuated BUTHIDAUNG in
accordance with monsoon dispositions. 182 Japanese killed in this
area on 5th. At KOHIMA although the Japanese occupy a strong posi-
places have been cleared about five miles northeast and north of it.
tion across the road immediately southeast and south of the town, some
3. AIR OPERATIONS
6th/7th. MANTES.- 602 tons, Two ammunition dumps, - 384
tons and 267 tons. Clear weather and bright moonlight all three
objectives. Marking carefully carried out and accurate bombing re-
sulted. Impressive fires and explosions both dumps.
7th. Allied bombers with escorting fighters flew 3,881
offensive sorties. Fortresses (8 missing) dropped 1,288 tons at
BERLIN. Liberators (one missing) bombed OSNABRUCK - 400 tons.
MUNSTER - 368 tons and goods yards LIEGE - 75 tons. Two enemy air-
craft shot down. Six escorting fighters missing. Medium and light
bombers over FRANCE attacked 8 railway centres - 250 tons and 380
rockets; Canal bridges - 92 tons and 535 rockets; military construc-
tions and coastal defences - 222 tons; and aircraft repair factory -
88 tons. Enemy casualties 2, 1, 2. Ours - nine aircraft missing.
7th/8th. Aircraft despatched:
Airfields NANTES, RENNES and TOURS
210 (2 missing)
Ammunition dumps BRUZ near RENNES and
SALBRIS, south of ORLEANS
117 (7 missing)
Battery at ST. VALERY-EN-C/UX
64
Nine-laying
42
Leaflets
4
Mosquitoes to LEVERKUSEN and CHATEAUDUN 32
Bomber Support and Intruders
39
ITALY. 5th. 78 bombers and 494 fighters (2 missing) at-
tacked communications and supply dumps in Central Sector. 35 Kitty-
hawks and Mustangs attacked Sluice Gates of a dam at TORRE, 20 miles
southwest PESCARA and scored direct hits.
RUMANIA. CAMPINA bombed by 71 aircraft and DANUBE mined
on 5th/6th. On 6th escorted heavy bombers (7 missing) bombed PLOESTE
215 tons, Goods yards TURNUL SEVERIN - 90; ORAIOVA - 180; CAMPINA-290
and BRASÓV - 305. Aircraft factory BRASOV also received 272 tons.
Enemy casualties 23, 9, 11..
6th/7th. Wellingtons, Liberators and Halifaxes (4 missing)
dropped 76 tons on BUCHAREST.
7th. Escorted Fortresses and Liberators dropped nearly
1,000 tons on railway centre BUCHAREST. Photographs show consider-
able damage to rolling stock and two goods yards. Enemy casualties -
20, 2, 7. Ours - four aircraft missing.
HUNGARY. 4th/5th. Wellingtons (1 missing) dropped 76 tons
BUDAPEST.