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Volume 749, July 1 - July 3, 1944
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Volume 749, July 1 - July 3, 1944
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 749
July 1-3, 1944
Regraded Unclassified
- B -
Book Page
Bretton Woods, New Hampshire
International Monetary Conference: See Post-War Planning
Business Conditions
Haas memorandum on situation, week ending July 1, 1944 -
7/3/44
749
317
- C - -
Currency Stabilization
International Monetary Conference at Bretton Woods, N.H.:
See Post-War Planning
- F -
Financing. Government
War Savings Bonds
5th War Loan Drive
Mrs. Churchill-Mrs. FDR-Mrs. HMJr broadcast,
June 27, 1944
79
a) Mrs. Churchill thanked - 7/1/44
78
Philadelphia Navy Yard: Speech by HMJr
Drafts - 7/3/44
297,302,
(See also Book 750, page 29)
304,309
Reading copy - - 7/3/44
305,313
(See also Book 750, page 1)
Program (entire) as broadcast: See Book 750, page 10
a) Gamble congratulated by HMJr: Book 750, page 43
b) Admiral Draemel thanked: Book 750, page 306
- H - -
Hungary
See War Refugee Board
- I -
Italy
Financing Relief and Rehabilitation in Italy: D.W. Bell
memorandum - 7/1/44
108-A
- M - -
Morgenthau, Mrs. Henry, Jr.
5th War Loan Drive: Mrs. Churchill-Mrs. FDR-Mrs. HMJr
broadcast, June 27, 1944
79
a) Mrs. Churchill thanked - 7/1/44
78
- N - -
Navy Yard, Philadelphia
See Speeches by HMJr
Regraded Unclassified
- P -
Book
Page
Philadelphia Navy Yard
See Speeches by HMJr
Post-War Planning
International Monetary Conference, Bretton Woods, N.H.
I. Fund - salient points explained by White to
American delegation - 7/1/44
749
1,143
Quotas - discussion by White
225
Larger quotas desired by small countries
(See also Book 750, page 86)
British Empire in its entirety will equal
United States - possibly a little less
China to rank fourth
a) HMJr reports on private conversation
with Kung - 7/10/44: Book 752, page 2
U.S.S.R.: Misunderstanding concerning quota
discussed by Russian delegation, White,
Vinson, etc. - 7/3/44
289
a) Memorandum to Stepanov concerning
294
India's desire to be on par with China
discussed: Book 750, page 87
France: Quota discussion - 7/12/44: Book 753.
page 15
Gold participation discussed
5
a) U.S.S.R.: Effect of smaller or larger
initial contribution discussed
8
(See also Book 750, page 87)
Executive Committee: Plan for functioning
described
13
International transactions - effect of change
of par value discussed - 7/5/44: Book 750,
page 93
a) HMJr told of committee to negotiate
with each of delegations; United States
wants approximately 13% voting privilege
over United Kingdom and all subsidiaries -
7/5/44: Book 750, page 134
Conference of American delegation with HMJr -
7/9/44: Book 751, page 250, and Book 752,
page 186
a) Resume given by Collado
Latin American quotas discussed by American
delegation - 7/10/44: Book 752. pages 1,40
a) Mexican clause that brings in silver as
collateral discussed by Walter Gardner
(Federal Reserve) with American
delegation - 7/10/44: Book 752, page 41
India: Relation to British Government discussed.
13
Exchange Rates: Some flexibility advocated by
White
17
a) Inflation-ridden countries - Fund attitude
toward discussed
154
b) Further discussion in view of Keynes'
request for reply - 7/5/44: Book 750,
page 82
Regraded Unclassified
- P - (Continued)
Book
Page
Post-War Planning (Continued)
International Monetary Conference (Continued)
I. Fund (Continued)
Quotas (Continued)
Sterling debt (debt of countries within the
Dominion) discussed
749
18
Creditor and Debtor Countries: Pressure
discussed
26
Risk in investment in Fund discussed
29
Gold holdings of United States Government
discussed
30
Directors: Election and voting powers
discussed
38,143
Operation of Fund to start with end of
European phase of war
147
Newspaper opposition discussed by Wolcott and
Tobey - - 7/2/44
165
Fund merely a stabilization fund or for longer
term lending argued by White, Eccles, and
Brown - 7/5/44: See Book 750, page 108
II. Bank - salient points discussed by White - 7/2/44
173
a) Proportion of subscription to Bank and to
Fund discussed
184
b) Investment of small percentage of capital in
equities disapproved by Brown
185
Salient points discussed by Acheson - 7/11/44:
Book 752, page 218
Instruction of American delegates at Conference -
7/12/44: Book 753, page 1
a) Netherlands: Presence of de Iongh (manager,
Bank of Mendelssohn) discussed: Book 753,
page 23
b) Poll on attitude toward Bank: Book 753, page 28
U.S.S.R.
I. Fund
Quota - effect of larger or smaller contribution
discussed - 7/1/44
8
(See also Book 750, page 87 - 7/5/44)
Misunderstanding discussed by Russian delegation,
White, Vinson, etc. - 7/3/44
289
a) Memorandum to Stepanov
294
Vinson-HMJr conversation after conference above -
7/6/44: Book 750, page 237
American delegation conference to discuss quota -
7/6/44: Book 750, page 248
American delegation conference to discuss provisions,
interest rates, and rank with regard to quota -
7/7/44: Book 751, page 1
Conference with Russian delegation on quota agreement;
present: HMJr, Wolcott, Vinson, Luxford, Durbrow -
7/11/44: Book 752, page 202
a) Delay caused by lack of decision by delegation
decried by HMJr
b) Harriman cable - 7/13/44: Book 753, pages 117,119
Regraded Unclassified
- P - (Continued)
Book 749
Post-War Planning (Continued)
International Monetary Conference (Continued)
U.S.S.R. (Continued)
I. Fund (Continued)
Quota (Continued)
25% clause discussed by HMJr. Acheson, Vinson,
Wolcott, and White - 7/12/44: See Book 753,
page 40
a) HMJr calls on Stepanov to explain
press misunderstanding: Book 753,
page 47
Conference of Russian delegation, HMJr,
Acheson, Vinson, and Wolcott - 7/14/44:
Book 754, page 14
a) Still no reply to cable
b) Harriman reports after discussion with
Vyshinsky - 7/14/44: Book 754, page 21
Conference of Russian delegation, HMJr. Vinson,
Wolcott, Acheson, White, and Luxford -
7/15/44: Book 754, page 115
a) All unsettled questions discussed
b) Report on conference made to Steering
Committee: Book 754, page 140
Discrepancy in press releases in United States
and U.S.S.R. decried by Russian Embassy;
correction asked - 7/18/44: Book 755,
page 240
II. Bank
Conference; present: HMJr, Vinson, Stepanov,
and Chechulin - 7/19/44: Book 756, page 40
a) HMJr advocates no less position for
U.S.S.R. in Bank than in Fund
Conference of American delegation to discuss
Russian quota - 7/20/44: Book 756, page 126
Keynes' attitude toward Russian quota discussed -
7/20/44: Book 756, pages 147,167
a) Lady Keynes' "anti-Soviet" attitude
discussed: Book 756, page 149
Fund and Bank
Conference; present: HMJr, Stepanov, Chechulin,
and Arutiunian - 7/22/44: Book 757, page 13-A
a) Russian subscription increased to
$1,200,000,000: Molotov approval transmitted
to HMJr by Stepanov
1) Agreement due wholly to Molotov's high
regard for HMJr
2) Harriman informed - 7/23/44: Book 757,
page 198
a) Press statement (State Department) -
copy sent to Harriman - 7/31/44:
Book 759, page 243
Regraded Unclassified
- P - - (Continued)
Book Page
Post-War Planning (Continued)
International Monetary Conference (Continued)
Plenary Session (inaugural) - program for - 7/1/44
749
54,55
a) Draft of FDR's message
59
b) HMJr's speech
62
Second Plenary Session - 7/3/44
201
Committee assignments discussed - 7/3/44
193,207
Silver question discussed by American delegation -
7/3/44
220
Administrative responsibility of Secretary General of
the Conference and Secretary General of the U.S.
delegation: Bell asks for clear understanding -
7/3/44
295
- R - -
Roosevelt, Eleanor
5th War Loan Drive: Mrs. Churchill-Mrs. FDR-Mrs. HMJr
broadcast, June 27, 1944
79
- S -
Speeches by HMJr
International Monetary Conference, Bretton Woods, N.H. -
7/1/44
55,62
Philadelphia Navy Yard speech for 5th War Loan Drive,
July 4, 1944
Drafts - 7/3/44
297,302,
304,309
Reading copy - 7/3/44
305,313
Il
.
- 7/4/44: See Book 750, page 1
Program (entire) as broadcast - 7/4/44: Book 750,
page 10
- T - -
Taxation
Comparison of income and excess profits taxes, by Federal
Reserve Districts, June 1943 and June 1944 - 7/1/44
108
- W -
War Refugee Board
Reports
June 26-July 1, 1944
109
July 3-8, 1944: See Book 751, page 208
- 10-15, 1944: Book 758, page 57
. 17-22, 1944: Book 757, page 128
Hungarian Situation: Pehle memorandum for members of
War Refugee Board - 7/15/44: Book 754, page 204
Regraded Unclassified
1
Bretton Woods, N.H.
July 1, 1944
10:30 a.m.
INSTRUCTION OF AMERICAN DELEGATES - FUND
Present: Mr. Acheson
Mr. White
Mr. Eccles
Mr. Collado
Mr. Luxford
Judge Vinson
Senator Wagner
Mr. Spence
Mr. Wolcott
Senator Tobey
Mr. Brown
Mr. Sweetser
Mrs. Morgenthau
Dr. Goldenweiser
Mr. Smith
Miss Newcomer
Mrs. Klotz
Mr. Somers
H.M.JR: Gentlemen, I think we might get started.
I thought, if it was agreeable to you, I would ask
Mr. White if he would explain to us what the salient
points are for the Fund and the Bank, which, after having
conferred for two weeks at Atlantic City, the experts
feel are the things that we as American delegates should
attempt to get out of this Conference.
Now, they have been working down there for two
weeks with fifteen other countries, and I told them not
to get into too many details, but just to give us a
broad outline of what the American experts feel are in
the interest of our country as a result of the work in
Atlantic City.
So if you would bear with us, I am going to ask
Mr. White to proceed.
MR. WHITE: The chief purpose of these meetings was
to ascertain what the differences of opinion were,
what other countries wanted, what were the difficulties
that we had to contend with, what we are expected to
contend with, and what are the major issues which appear
to be troubling the various delegates; so that we could
report back to the delegates at the first meeting here
so as to provide the basis for discussion among the
delegates to determine what positions to take on the
Regraded Unclassified
2
- 2 -
various points. There was no attempt made either to get
any agreement or to insist on any position whatsoever.
It was chiefly for exploratory purposes 80 we would be in
a position to report here what are the major differences,
and in that way you can find your next moves during the
week.
I will confine myself to the major differences.
There were fifteen countries represented by some outstand-
ing men in the field, a great many of them. There were
about seventy-five there, and naturally there was discus-
sion on a great many technical points which we needn't
take any time with now. They will appear as the sub-
committees develop, but the major issues are the ones,
as the Secretary requested, that I will call to your
attention.
(Mr. Smith enters the conference)
MR. WHITE: The first one - I will deal with the Fund
first and then with the Bank.
With the Fund, the first major issue is the question
of quotas. The quotas would indicate how much countries
are expected to participate - how much money they put up,
and what rights they have, or privileges they have, to
utilize the resources of the Fund.
Now, in the quotas we find the following major situa-
tions. In the first place, all countries want larger
quotas, but the countries that will give the most trouble,
and about which a great deal of discussion in the group
here will have to take place, are as follows: China
insists that she shall have fourth place. They don't
care whether that fourth place is much above the third or
much below the fifth, but it has to be the fourth place.
France is insisting on fifth place and India is insisting
on fifth place. India claims that she has four hundred
million population; she is helping in the war; she is a
major power and needs to be treated as such, and is in-
sisting on fifth place and has sent a pretty high-powered
delegation here.
H.M.JR: May I interrupt? Mr. Wolcott, the Republi-
can Senior Member of Weights and Coinage, and Mr. Reed,
isn't it?--
MR. WOLCOTT: Yes.
Regraded Unclassified
3
- 3 -
MRS. KLOTZ: They have six pages out for them.
H.M.JR: And for Somers, too?
MRS. KLOTZ: For both of them. I have covered it in
every way I could.
H.M.JR: They are paging them? And Miss Newcomer,
too?
MR. WHITE: Yes.
H.M.JR: Just check.
(Mrs. Klotz leaves the conference temporarily)
H.M.JR: I will see Congressmen Somers and Reed and
tell them as much as I can.
I am sorry to interrupt you, but I think we will
get off to a good start among the Americans with their
help.
MR. WHITE: Those are the large countries. The
smaller countries all want larger quotas. The most
troublesome will be Australia, who is participating to
an extent far beyond the proper roll of a country of her
size and importance. But they are going to insist on a
larger quota and some other things that I suggested
before. The South American countries would like a
larger quota.
Now, it is the South American countries who in
this are going to be important to us for reasons that
we will discuss later. So you will want to consider
how far you can go in meeting their desires, and it
won't take very much, because they are all small quotas
and small countries.
The British Empire, as a whole, would, of course,
like larger quotas. England is supporting, as presumably
she has to, at least in the meetings, Australia's claim
for a much larger quota, and India's claim for & larger
position. Our position has been as follows right along,
and this is the understanding we have had even before
the Conference, and we have never receded one step from
that position: One, that the maximum quota - the
aggregate quotas - will not be more than around eight
Regraded Unclassified
4
- 4 -
billion two or three hundred million dollars, depending
on how many countriescome in, and certain other factors--
that is the maximum aggregate quotas; that our own
quota will not be larger than two and three-quarters
billion.
The third point is that the British Empire will
not have more than the United States - the whole British
Empire together will not have more, and should have a
little less.
The fourth point that we have indicated to the
British, though not to the others, is that China will
have fourth place.
Those are the four factors that we have stood by.
This business of China we have not discussed publicly -
I mean, even at the meetings, but we have that tentative
understading with China, which as they understand, is
tentative upon approval of this group, because we, as
technicians, could not commit the Delegation to anything.
That is the story with regard to quotas, very
briefly.
MR. TOBEY: What about Russia?
MR. WHITE: Russia will get third place and she
will have about ten percent of the quotas. There is no
problem - I mean, there is general agreement there as
long as she has third place.
MR. WAGNER: When you speak of the British Empire
you mean the Commonwealth?
MR. WHITE: Everything. U.K. alone will have much
less than we have, but we have indicated very definitely
that no matter what is done with their quotas among
themselves, the total must not be more than the United
States quota alone.
MR. SPENCE: It ought to be.
MR. WAGNER: It ought to be a little less.
MR. WHITE: It should be, but they have India,
Canada, Australia, New Zealand, and colonies. It
should be less.
Regraded Unclassified
5
- 5 -
The next point of importance is the amount of gold
participation, the amount of gold they put in the Fund
to begin with. The provision reads that a country
puts in either one-fourth of its quota - in other words,
if United States has a quota of two and a half billion,
one-fourth will be in gold - or ten percent of its total
gold holdings, whichever is less.
For example, ten percent of our gold holdings
would be over two billion dollars, therefore we take
the other figure of twenty-five percent of our quota -
about seven or eight hundred million, so that & country
with small gold holdings will take the ten percent, and
a country with very large gold holdings will take twenty-
five percent of its quota, because its quota is smaller
than its aggregate holdings - twenty-five percent of
the quota will be smaller than ten percent.
Now then, there is only one problem with that -
Russia. Russia is insisting on getting in original
participation, a reduction of fifty percent. And her
reason for that is, she says she has had terrific
destruction and will need to spend a great deal of money
on foreign goods during the first few years and that it
is only reasonable to give her some consideration by
virtue of the destruction.
However, she is not putting it forth on her basis
alone; she wants that fifty percent to apply to all
countries invaded by the enemy in which there has been
a substantial amount of destruction, and she wants to
vary that proportion from fifty percent in countries
that have suffered the most destruction, to twenty-five
percent in the countries that have suffered the least
destruction. So there will be a concession, she is re-
questing from twenty-five to fifty percent of the gold
participation, depending upon the amount of destruction.
or course, she feels the greatest destruction is with
her and Greece, and they would get the fifty percent.
MR. WAGNER: May I interrupt you?
MR. WHITE: Yes, by all means.
MR. WAGNER: What are the gold holdings in the
different countries?
MR. WHITE: We have an idea, but we don't know.
Regraded Unclassified
6
- 6 -
They haven't given it as yet, but they will have to.
Our guess would be that she has around a billion and
& half. That is a guess. They will have to tell us
when the time comes, and they are willing to tell us
when the time comes.
H.M.JR: Could I point out, Harry, that what we
have in mind as far as ours is concerned, we have our
own Stabilization Fund with eight hundred million
dollars--
MR. WHITE: A billion eight hundred million.
H.M.JR: of gold in it, and that if the Congress
of the United States decides to go forward with this,
that they would weld the present Stabilization Fund
into the new one. And we have, as I say, a billion,
eight, plus maybe thirty million over profit there.
So we have that on hand. The position I have always
taken is that is for a rainy day, or a very important
day, and I would consider this of such importance that
I would be willing, cheerfully, to have the present
Stabilization rund melded into the new one. And 1
think we ought to know that, because we have our nest
egg in hand which I 30 carefully guarded with the assis-
tance of Congress, through all these years. 1 think
it is an important thing to know that we have that much
on hand. I think it is to Congress' credit that they
protected that, and there is the money for this purpose
now.
MR. WHITE: Needless to say, all the invaded
countries are supporting Russia - France, Greece, Nether-
lands, Belgium, and 80 forth - China. Now, England has
not been invaded to the extent that was indicated in
the provision which Russia submitted, so England imme-
diately took the position that there is something in
that. They are not enthusiastic about it but if you
are going to make a distinction of countries in need,
then you do not take the amount of physical destruction,
but you must logically include the deterioration in
their international assets. And therefore, if anything
is going to be accorded these other countries, England
wants to get the same treatment, even though her physical
destruction has been less. That is the position.
In other words, she is saying, "If you give it to
Russia and France and the other countries, you have to
give it to us, but we are willing that you don't give
Regraded Unclassified
7
- 7 -
it to any. But we will insist if you give it to them
you give it to us."
That gives you the high-lights.
H.M.JR: Does that include - where do the Dominions
like South Africa, Australia, Canada--
MR. WHITE: They wouldn't come under that, but
India raised the question as to whether India has
suffered any destruction. They began acting as though
they would like to be included. But they probably
could be excluded. But the other countries have not
suffered any physical destruction, and those other
countries, except Australia, couldn't take the position
that their international position has deteriorated be-
cause Canada's and South Africa's has improved - but
Australia might make a case.
MR. ECCLES: India has improved, too.
MR. WHITE: Yes and no; you can make a case either
way. She would say no. I think we could make a good
case to the contrary. It depends on how you want to
value the sterling holdings, for instance.
There is a subsidiary question which will give us
a good deal of trouble, but it is not a major question -
it is more technical. It is a question as to what you
include in gold holdings, because we figure ten percent
or twenty-five. It makes a difference. It makes a
difference for other purposes in the operation of the
Fund. England wants to include as offsets - wants to
deduct from her gold holdings - certain liabilities
which she claims are equivalent to gold liabilities.
I will merely mention that in passing and go into that
in greater detail when it comes up before us.
Newly mined gold raises another question, exclusively
by Russia. Russia, using the same reasoning in which
they say that countries that have been invaded ought
to be accorded lower gold participation, says that
countries that have suffered severely from the war
ought to be permitted to utilize their newly mined
gold during the next five years in their own way and
not have it pass through the Fund, which would make a
smaller amount availab le to her. That, again, is a
technical point. It is of the same category as the
original position, the difference being that Russia
Regraded Unclassified
8
- 8 -
happens to be the only country that mines any substan-
tial amount of gold of the invaded countries, so that
it applies to Russia alone. But she is insisting on
a period of five years, during which she shall not be
required to put in a portion of her newly mined gold,
which is required by the provision. In that, Russia
has receded from a stronger point which she took in
her earlier discussions.
The position she had taken was that she shall not
put it in during the period of reconstruction, and
figured that the period of reconstruction might take
twenty or thirty years. She has now brought that down,
so it represents on her part some kind of a compromise
and we have not taken any position with respect to that.
MR. WAGNER: What are the gold-producing countries?
MR. WHITE: The biggest one is South Africa - about
eight hundred million a year, I would say. The next
is the United States. The next would be Russia, probably,
though we have never known the exact figures of Russia.
And third (to Bernstein) - what would that be?
MR. BERNSTEIN: Canada.
MR. WHITE: And then Mexico would follow. They
come pretty much down the list. Then Peru produces some
gold, and a lot of countries produce a little gold -
Australia produced some - India - but those are the big
gold-producing countries - South Africa, United States,
Russia, and Canada.
MR. ACHESON: May I ask a question at this point?
H.M.JR: If you please. Look, let's be very informal.
MR. ACHESON: What is the effect on the operation
of the Fund, or on the burden upon the United States, of
this Russian request of decreasing the initial contribu-
tion in gold?
MR. WHITE: Very little, very little. I think
that will have to be explained, but it is part of the
detail and we can do that later. But you will find the
net effect is small. of course, if we extend it to
Britain and all the other countries it becomes more
significant and we ought to oppse it. Russia is the
spearhead of that and we were going to suggest for your
consideration - though we haven't talked it over even
Regraded Unclassified
9
- 9 -
among ourselves - some way in which we can satisfy
Russia in an entirely different direction, outside the
Fund arrangement, which would maybe get her to withdraw
this claim completely so that it would save us having
to apply it to all the other countries. But it would
not be of major importance; it would be of minor impor-
tance.
MR. ACHESON: What I was getting at is that the
general tendency here is for a number of countries,
for one reason or another, to decrease their gold con-
tributions. Now, in what direction does that affect
the Fund? In what direction does it affect us?
MR. WHITE: Well, it gives the Fund less gold
resources, and the less gold resources it has, and
the fewer resources it has to buy whatever currency
happens to become scarce - chiefly dollars. So it
makes it necessary for the Fund to obtain dollars another
way, but the magnitudes of which they are talking, you
will find, are pretty small.
For example, I will give you some picture of the
magnitude. Russia's share of gold participation in
the first place would probably be ten percent of her
holdings. Now, that might be around one hundred and
twenty-five million dollars. That is what she is sup-
posed to put in. If she is given a fifty percent reduc-
tion, she puts in sixty-two and a half million dollars.
Those are pretty small amounts. Of course, if we
spread it over the other countries, it is increasing--
MR. TOBEY: From a factual standpoint, Russia has
a case there.
MR. WHITE: Yes, she has a strong case; no question
about that. But there wouldn't be as much difficulty
satisfying her if England didn't take that position,
you see.
Now, those are the things that you will have to
thrash out and iron out. But whether England would
recede from her position, or whether the other countries
might make some compromise - those are the things--
MR. TOBEY: Might I ask a question on this matter
at Atlantic City? Did you denote any attitude on the
part of these nations of the old horse trading proposi-
tion of asking more than they expect and coming down to
8. minimum eventually?
Regraded Unclassified
10
- 10 -
MR. WHITE: I think so. We didn't do any trading,
but there was an indication in a number of countries that
they felt there was no harm in trying.
H.M.JR: Senator Tobey, anything that Mr. White
or his people did in Atlantic City is available to you
and available to the American Delegation.
MR. TOBEY: I appreciate that. I am merely asking
the attitude down there. He can size that up.
MR. WHITE: That would be my judgment. I would
like to ask Mr. Luxford and Mr. Bernstein what their
reaction was.
MR. LUXFORD: I am sure that is true, that many or
them would put in a request realizing probably that
It would never go into the final document, but they have
made their show. They are making a fight for something
so they can go back to their country and say they have
made a fight. They may withdraw it later on..
MR. TOBEY: It is perfectly understandable.
MR. BROWN: I think, Senator Tobey, in those Atlantic
City conferences that a lot of the small nations put
in claims which they don't expect to get. I think your
two major difficulties are going to be with the British
and with the Russians. The British have a very strong
bloc at home which believes they are better off keeping
the sterling blocked and not going in it, just asany plan
that is put up is going to have very rough sledding in
the House of Commons. They may give something, but they
will break off if we insist on too much. As far as the
Russians are concerned, I don't know how they have traded
otherwise, but here they say nothing. One of them will
raise his hand in a subcommittee and ask for a recess
and come back after ten minutes with a typewritten
statement which says, "This is the Russian position."
Somebody asks them the reason for it, then they read
the memorandum over again and say, "This is the Russians'
position."
MR. WHITE: That is the way they operate.
MR. BROWN: Russia doesn't need the Fund. It has a
complete system of state trading - state industry. It
doesn't make any difference to them whether the ruble
is five cents or five dollars.
Regraded Unclassified
11
- 11 -
They want to get some other things; they would like
to keep a market for newly mined gold. I have the idea
that in the case of the British, for one reason, and in
the case of the Russians for another, that we are going
to have a good deal of difficulty trading with them.
As far as the other countries are concerned, my
impression there is that they will put forward all the
claims they can, they will make a great many valuable
technical suggestions and suggest improvements. There
are some extraordinarily able men from the Netherlands
and some other countries there. When you get all through
they will take what the United Kingdom and the United
States and Russia agree on. Is that a fair statement?
MR. WHITE: Yes, I think that is, with possibly
one qualification with regard to Russia - you have
described exactly what their trading method is. Their
argument consists of a statement of position which they
have got out in the caucus and received their instruc-
tions. As you will see when you get on, they get it
very formally and they make a statement and they don't
budge from it, and they don't recede one iota.
However, it is true for reasons which I think we
will point out later, that the Fund needs Russia. I
mean, you can't have a cannon on board ship that isn't
tied down because that can do a lot of harm if they
are not in.
MR. TOBEY: And world cooperation must have Russia.
MR. WHITE: That is right, and she would like to
cooperate, she has given every indication. But on the
other hand, she has certain things to gain, too. They
are very tough bargainers, but I think the shoe is not
always on that foot. It is quite right what he says
about Britain; they can't be pushed too far or they will
break off because they will have difficulty in Parliament
for opposite reasons.
H.M.JR: To illustrate the point that Senator Tobey
raises, Mexico, for home consumption is going to raise
the silver question; we are told they are not going to
press it too hard. So I mean, these fellows are good
horse traders, but I think among our delegates we have
a couple of pretty good horse traders, outside of myself -
I trade cows--
Regraded Unclassified
12
- 12 -
MR. TOBEY: Same germ behind it all.
H.M.JR: That is the idea. David Harum comes from
New York and I have read the book.
Go shead, Harry.
MR. WHITE: Kussia is raising the problem on exchange
rates which I won't take up this morning because it is
more technical and probably belongs in some other meeting.
Then comes the question of voting power. We, of
course, are taking the position that voting power and
participation is approximately the same. The more money
you put in, the more votes you have, and those votes
carry right through. There has been some objection on
the part of some of the smaller countries that there
ought to be more votes given to begin with merely because
they are countries, before you begin to give them addi-
tional votes for their participation. In other words, you
start everybody off with twenty-five votes. They want
to start with a hundred votes.
MR. WAGNER: Irrespective of their population or
anything?
MR. WHITE: Yes, because each country claims that this
is a responsibility for maintaining world monetary
stability and even though they are small, they have a
special interest quite aside from their financial status
or their wealth or population which ought to be accorded
in any international organization. Then you begin to
count from there.
Well, there will be, as I say, a demand on the part
of the small countries, particularly, to get more votes,
and we, on the other hand, don't want to budge, because
the more votes you give the small countries, the less
our proportion of influence in votes, because there are
maybe thirty, forty, or fifty members and you give them
a lot of votes and we don't get any more votes than they
do to begin with, but we do get a lot more votes on the
basis of our participation. So our position is, the
more votes we give them, the less is our proportion of
votes, and it is proportion that will count in the
decision, of course. That takes a particular point of
importance with respect to the management and the elec-
tion of the Executive Committee.
Regraded Unclassified
- 13
r
13
The Executive Committee will function as the chief
operating unit and the question which was discussed
at considerable length was how it shall be elected, and
there you have a line-up between two groups, the major
powers, particularly led by the United Kingdom. Our
position has been, in this case, the one that the small
countries like. But U.K. wants the election in such a
way that there will be certain permanent members of the
Executive Committee.
That was our proposal, that the countries with the
five largest quotas, United States, United Kingdom,
Russia, China, and the fifth, which may be France or
India or whatever other country is the fifth, will
have permanent members of the Executive Committee, and
there will be either four or six. That is being discussed -
who will be elected from all the other members.
Now, the proposal which the American technical
people made was a proposal for a first cousin to propor-
tional representation, which will give the smaller countries
a chance - a rather technical way of electing, but that
is the essence of it. U.K. wanted to have straight voting
which would give the small countries no chance.
Now there is a conflict between them and the small
countries, and even Australia has taken the position of
the small countries against U.K. We have stayed out of
that fight completely. That is going on - between all
the small countries and U.K., as to how the other four
or six members of the Executive Committee shall be elected.
That is pretty important because that is the managing
group, and the group that will make many of the decisions.
MR. WAGNER: You speak about India separately every
once in awhile. They are part of the Commonwealth, aren't
they?
MR. WHITE: It depends on whether they are asking
or taking.
MR. WAGNER: Our attitude is that they are one of
the British--
H.M.JR: Let's ask Mr. Acheson. Do you mind
answering that? I am not trying to put you on the spot,
but how does the State Department consider them?
MR. ACHESON: Practically as a Dominion. The fact
Regraded Unclassified
14
- 14 -
of the matter is true, as Harry says, that the degree of
control which the British Government exercises, or
appears to exercise over India depends on what is going
on. They can exercise a very high degree of control, or
they can not, as they choose.
MR. WAGNER: What is our attitude toward them?
MR. ACHESON: Our attitude is to treat them like a
Dominion.
MR. WHITE: There is an issue between England and
India which they are coming here to thrash out - to use
this Conference as a jumping-off board - as a forum
or sounding board. We are out of it, but India has come
up and has notified me very informally of certain things
they are going to do. There will probably be a good deal
of fuss about it in the discussions, but it really doesn't
affect us. We will keep out of it.
In the first place, she wants to get an equal place
with China, which she doesn't expect to get, but she is
embarking on the general educational program that India
is a big nation, too, and it is about time people
recognized her.
H.M.JR: May I say this, that from what Mr. White
tells me - and I think we have all got to be careful -
I take it that Lord Keynes, as the Chairman of the English
Delegation, is having his hands full with the British
Empire, and this is more or less - I hope they are not
going to use this Conference to settle their own
problems - but he has his hands full. Is that right?
MR. WHITE: That is right.
H.M.JR: He has an incipient revolution on his hands,
and we will all have to - we will let the British Empire
fight it out without making us a cat's paw.
MR. WHITE: That is right.
MR. ACHESON: I think SO.
H.M.JR: We had a little incident. At this United
Nations thing, the Fifth Avenue Association, the Indian
Delegation was seated after Liberia, I believe, and he
practically walked out of the Waldorf Astoria because
he didn't think he was seated properly. But those are
things that I am to let the State Department worry about.
Regraded Unclassified
15
- 15 -
MR. TOBEY: Mr. Acheson, I apprehend that in any
movement for international cooperation that equation
is bound to be present, isn't it?
MR. ACHESON: Yes.
MR. WHITE: The Indian Delegation itself presents,
nominally, a united front. Actually you have two
groups. You have the pro-English group as well as the
English advisers who are supposed to defend India's
position, and who will do so, nominally.
You have, along with them - India has been able to
get certain delegates who represent what they would
call the mass of Indians - they are not the British
Government. So there are things going on even within
their own representation which will make trouble.
Am I going into too much detail, Mr. Secretary?
H.M.JR: I don't think SO. You seem to be covering
ground very rapidly. Would anybody like Mr. White to
proceed differently? Is it all right?
MR. TOBEY: I think it is fine.
H.M.JR: You have unanimous approval, so far. It
is the first day, Harry! It is still the honeymoon.
MR. WHITE: Period! Until the questions begin--
MR. TOBEY: Yours and mine has lasted a good many
years.
H.M.JR: That is right.
MR. WHITE: On the voting power, some of the
countries have taken the position that maximum voting
power should be limited and that means the United States -
that there should be some maximum limit. We take the
position that there shouldn't be. That will be one of
the things that will be discussed.
They would want to limit us to either twenty percent
or somewhere around there, even though we have a larger
quota which entitles us to more votes. They say that
no country in an international organization ought to have
more than whatever "X" is. We have taken the position
that should not be 80.
MR. WAGNER: What is our position?
Regraded Unclassified
16
- 16 -
MR. WHITE: That we get as many votes as we are
entitled to by virtue of our participation. It depends
on what the quota is, but probably five percent, or SO.
Whether it is twenty or twenty-five is important.
One of the major issues between the United States
and the U.K. is in the degree of flexibility of exchanges,
the conditions under which a country can alter its
exchange rate. England has receded very considerably
from positions which she has taken earlier and has gone
a long way toward our position, but there is some
difference left.
In other words, the British people, thinking of
years in the '20's, at which time they had a depression,
you remember, a long depression - it wasn't intense,
but it persisted for many years and they were on the
gold standard then, and the British financiers and
economists - many of them led by Keynes - said that the
reason they were having that persistent depression was
because their sterling was over-valued and they ought
to be able to change it by ten percent, but being on
the gold standard they couldn't change it by ten percent
and you had a fight on in England running over a period
of many years in which you had these forces, one wanting
to depreciate, the other saying, "No, you have to stick
to the gold standard even if you have got depression.
That isn't going to help you."
Now, having had that depression, and having gone
off the gold standard since - being forced off in '31 -
the people who advocated at that time that they ought
to go down, are completely in the ascendency and now
the British people, almost as a whole, with the excep-
tion of some banking groups, say that they are never going
to be in a position like that again, in which they are
tied to the gold standard and have to suffer a depression
merely to suit somebody's notions of monetary theories.
And so they will never go back to the gold standard
as long as the people feel as they do. It will certainly
not be in the foreseeable future. One of the things
they want to be very certain of is that this doesn't
force them to do so. Therefore they will object to a
plan which, to them, would be a return to the gold
standard.
They realize, however, that this plan provides them
the degree of flexibility that they needed. Had this
Regraded Unclassified
17
- 17 -
plan been in effect in 1923 or '24, they would not
have had a depression because they would have been able,
under this plan, to make the change in an orderly fashion
as a result of multilateral agreement without the conse-
quences that took place in the '30's. So they feel that
there is enough flexibility here, although they would
like a little more - which we are adamant on. But they
asked for a great deal more and they are coming in our
direction. Our position is quite the opposite.
We look upon the trouble in the '30's, where you
had competitive depression of exchange rates, where
country after country went off of gold and the currency
began to depreciate in France, Belgium, England, and so
forth, and where you had complete monetary destruction
and chaos, we say the world cannot stand that again.
You can't correct that situation by asking the countries
to go back on the gold standard because there are
probably two countries in the world who are prepared
to go back on the gold standard at all - possibly the
United States and one other. You will never get the
others.
H.M.JR: Who is the other?
MR. WHITE: Switzerland, probably - possibly
Sweden.
H.M.JR: How about Russia?
MR. WHITE: No - yes and no. It doesn't make much
difference to her because she can do what she wants
with her rates and keep her exchange rate the same.
That is the point Ned Brown made. It doesn't matter
to her; she can adjust herself to either and play a
lone hand.
MR. TOBEY: She uses, as I understand, a theory
of relativity.
MR. WHITE: That is what it amounts to. She can
adjust herself to what the others do and play on them
because she has a domestic economy in which she can
sell at a loss, charge whatever she wants for exports,
and so forth.
MR. ECOLES: She has perpetual exchange control.
Regraded Unclassified
18
- 18 -
MR. WHITE: of a very rigid kind - exchange and trade
control - state buying and selling.
Now, the reason I dwell on this is because this has
basic importance. Therefore we feel that unless there is
something like that, what you are going to get is a return
of the '30's with floating exchanges, unilateral decision
as to what they are going to do with their exchange rates
and exchange depreciation. So we want to prevent that,
and we prevent that by producing some flexibility in
what would otherwise be a very rigid arrangement which
no country would accept.
So the alternative is to have a little flexibility
or to have monetary chaos. Now, England wants a little
more flexibility. We haven't been ready to accede to
it. We think we have enough that is necessary to achieve
the purposes we want, which is stability and strength -
and stability requires some flexibility, in our judgment.
That is one of the big issues between the two countries.
That is why England cannot make too many compromises.
If she does, her Parliament will throw it out.
H.M.JR: May I interrupt you? Aside from this - but
you can't separate it, and I think whatever we say here is
in confidence, in a sense - but the problem that the
State Department and Treasury and the President have had
opposite Churchill and his government, which has been
very difficult for over a year now, is the question of,
first, their dollar balances, and second, Mr. Churchill
always, when he is over here, brings up this question of
the debt, the sterling debt which England has accumulated
due to her expenditures in the Middle East and in India.
They have this enormous sterling debt hanging over their
heads. No one representing England has ever been willing
to come to grips with the Treasury on this thing. They
keep talking about it. It is a worry, it is a cloud
they have hanging over them on the horizon, but they have
never been willing to say - although I have said to them
a number of times, "Let's be realistic about this and
get down and talk about it. What are you going to do?"
But they haven't been willing to do it, and you may hear
about it as we go along. But there it is. Due to the
war, and due to their expenditures, they have accumulated
this enormous sterling debt which they are worried about,
and they realize that when the war is over they have got
to meet this situation.
Regraded Unclassified
19
- 19 -
But from our standpoint, I have said to Lord Halifax
and to different representatives of the British, "Now,
let's sit down and be practical. What are you going to
do about it?" But up to now, to use the American vernacular,
they have only griped about it. But they won't get down
and say, "Well, let's fight this thing out - let's argue
it out. But it is there, and in any discussions the
British will have with us they will always have that
very difficult problem of their own - their own debt
to their own Dominions or to the other countries.
MR. WHITE: Yes, this sterling debt is not the
domestic debt, but the debts of foreign countries.
H.M.JR : Within the Dominion.
MR. WHITE: That is right. It is one of the things
India is going to fight about.
H.M.JR: But I wanted to explain. If you think it
should be explained further - that will always be in the
foreground in their mind in any discussion they have with
us. Is that right, Harry?
MR. WHITE: It is a very important problem. They
have, confidentially - they expect to have the equivalent
of seven billion dollars which are deposits of foreign
countries in England, which those foreign countries are
entitled to, but England won't let them take out because
she can't afford it. India will have the largest share of
that, and one of the things that India wants to fight
about is that some arrangement shall be made through
her to force England's hand to release some of that.
That is a fact between England and India.
H.M.JR: But I wanted to explain that that is in the
mind of the English representatives because it is a great
worry. It is a great worry that Mr. Churchill and
seccessive Chancellors of the Exchequer have. It is
getting successively worse, and they don't know how to
meet it.
So, whatever they argue with us, that is always back
here in their mind.
MR. WAGNER: When you spoke of foreign countries, you
mean Commonwealths?
Regraded Unclassified
- 20 -
20
MR. WHITE: Both, but mostly Commonwealth countries,
India, Argentina, Portugal, and a few others. But the
bulk is within their own Dominion.
MR. ECCLES: Isn't it true that that blocked sterling
that they have is terribly importent from the standpoint
of the Fund, that some idea as to the way they are going
to meet that problem - because, in fact the only way they
can meet it will be through their exports, and their
ability to export, as they are going to feel, has a very
close relationship to the exchange value of sterling, and
therefore the thing is all tied together.
MR. WHITE: oh, yes, it is all tied together.
H.M.JR: I just wanted to point that out.
Will you go ahead, Harry?
MR. WHITE: I think we might pursue that one point
further, that in this question of trying to get enough
flexibility so that you will avoid a depression in those
countries and yet not get that degree of flexibility
which will permit anything like what happened in the '30's,
there is a view which has been expressed and, curiously,
it is a very naive view, even though it comes from high
professional sources, that if you have an arrangement with
England and tied the dollar sterling rate, that is all
you need, and maybe a few of the others will gather around.
Well, that assumption is completely unreal. The
trouble doesn't come from the dollar sterling rate in
the first instance - it hasn't, historically, and it
won't again. The trouble is from these smaller countries
at first. It will come from France or Belgium. Last
time it began in Australia or the South American countries.
As each country gets into trouble and begins to depreciate
its exchange, it catches on to not the next country,
geographically, but the country closest to her from the
point of view of competition. And you find the little
countries go one after another, and more and more it
spreads like ripples and the first thing you know the
large countries like France, the Netherlands, and the
United Kingdom are affected.
So if you can take care of the dollar sterling rate--
the whole situation is an absurd and unrealistic approach,
because if you took care of the most troublesome spots,
which are the smaller countries, then the dollar sterling
Regraded Unclassified
21
- 21 -
rate wouldn't be of any trouble. And when you speak of
the smaller countries, individually they are not impor-
tant, but as they begin to accumulate, country after
country, and you get twenty, thirty, or forty countries
in monetary trouble, then all the major countries are in
trouble as well.
I say that because you frequently hear the people
say, "Let's be cautious about this; let's make an arrange-
ment with just England."
Leon Frazer said, "Let's lend England five billion
dollars and take care of the dollar sterling rate. That
is the most important."
It is true it is the most important, but from this
point of view it is the others who make the trouble.
H.M.JR: Dr. Kelchner has asked me to come out a
minute. He wants to know about the twelve 'clock meeting.
At twelve o'clock the Chairmen of the various Delegations
meet.
Might I just take a minute to explain 80 that you
will all know. This is Dr. Goldenweiser in back there,
who is the senior technician for the Federal Reserve,
Mr. Luxford, who is counsel for the American Delegation,
Mr. Bernstein, who is first deputy to Harry White, and
Mr. Pete Collado, I take it, who is senior technician for
State Department. They all will be available to all of
us for advice. I nave asked Mr. McDermott to be here.
MR. SMITH: He is here now.
H.M.JR: This Conference is being run by the State
Department, not only being run by them, but also paid for.
Mr. Kelchner is really the Secretary General, and in that
way is in charge of the running of it. Mr. McDermott is
in charge of all press relations. Mr. McDermott has asked
me to say to you gentlemen that it would be helpful to
him that any formal statement that any of you would care
to make, if there is an occasion, would go through either
Mr. Smith, who is here in charge of press relations for
the American Delegation, or Mr. McDermott, who is in
charge for the whole Conference.
All of you will be button-holed by various members
of the press and I think it would be helpful if you will
Regraded Unclassified
22
- 22 -
work as a team, and if there is any formal statement to
be made, if you would consult with Mr. Smith, who would
consult with Mr. McDermott. Mr. Arthur Sweetser is here
as one of my assistants representing OWI.
As I say, I do hope that all of us can work as a
team and present a united front, not only towards the other
delegations, but towards the press.
I can say this, in this room, as far as I am concerned,
as Chairman of not only the American Delegation, but of
this Conference, this has no party politics; there are no
party politics in this. That is not only very definitely
the President's wish - after all, this is like the war;
I think it is bigger than either the Republican or the
Democratic Party. It is something which we can hope to
attain for one hundred and thirty-five million peole, and
for the rest of the world, and I think we are very fortu-
nate in having both Senator Tobey and Congressman Wolcott
here, because in the contacts I have nad with both of
them as Members of the Delegation, and as Republican
Members of the Senate and Congress, I couldn't have a
finer attitude from both of them.
I again want to say, both for the President and for
myself, this is not a party Conference, and they are not
looking for any advantage, and I am only going to say it
once, because if I say it too often I would be protesting
it too much - but in my conference this morning I was for-
tunate enough to have a few minutes with Senator Tobey
beforehand, and I opened my press conference by quoting
the very fine statement that he had made to me. If any-
body came here to this meeting with cynicism in their
heart - I didn't say they had better go home, but that
was the inference - that this was our first opportunity
to show the world that we want to take part in a World
Conference - world participation.
Is that correct?
MR. TOBEY: That is quite correct. In my heart, I
mean it.
H.M.JR: I think if that would be our approach in
this, and our attitude not only meeting other delegations,
but meeting the press - I mean, all of us will be button-
holed. To illustrate - Mr. Swarez of Mexico immediately
button-holed me in the Treasury and everything was lovely
and he said, "I just wanted a little thing, just a ittle
thing, Mr. Secretary." I said, "What is that?"
Regraded Unclassified
23
- 23 -
He said, "All I want is just silver," see? Just
that little thing he wanted was silver introduced.
Well, I laughed - joked with him, and said that that
was something to take up, but I hoped he wouldn't press.
I said, "Why don't you give us oil? We could use
oil much better than silver." He laughed.
So again, I think if we play this as a team, if
we have any differences, let's have them here in the
room and over the bar in the room here, but don't--
MR. WAGNER: Where is the bar?
H.M.JR: It will be set up right back of you, there,
for the benefit of you gentlemen.
But as I say, we have gotten off to a good start.
We have some very good New Hampshire sunshine and weather,
and let's play this as a team, looking over a broad
horizon for future generations. We have all got a great
opportunity here, and with that little statement, if
I can be excused to have Dr. Kelchner tell me what he
wants me to say at twelve o'clock - I will be back in a
minute.
MR. WHITE: Shall we go on?
H.M.JR: Please go right ahead.
(The Secretary leaves the conference temporarily)
MR. WHITE: There is just one word I want to say,
also, about the two-nation approach, that I would like to
discuss that with you at some length later, because one
of the most major difficulties - one of the major errors
in the two-key-country approach I haven't touched upon,
and that is the consequent creation of major blocs which
would do more to threaten world economic peace and possibly
political peace than even chaos in the currencies, because
you merely substitute very powerful groups who will
rally around and pull each other around with potentials
which might be very disastrous.
I will touch upon that some other time.
Regraded Unclassified
24
- 24 -
The next important point of difference is the pressure
on creditor and debtor countries, in the sense that most
of the other countries feel that in the next three, five,
or seven years the United States will be the country that
will be putting pressure on the monetary systems of the
rest of the world, on their gold holdings, and so forth,
by virtue of the fact that the United States will be
cornering a larger proportion of the world markets and
will be in a position to develop what we call an export
surplus, not only of goods, but of services as well, to
the extent that other countries will be in the position
where they will be able to pay only with their gold or
foreign exchange, and the amount of such gold and foreign
exchange is quite limited; and that we will not pursue a
policy which will enable them to pay with goods and
services, so that we will be putting pressure on their
resources until they have to break down.
Therefore they say that some of the responsibility
of maintaining--
(Mr. Somers enters the conference)
MR. WHITE: (To Somers) What you have missed I will
give you later.
They feel that the countries who have that responsi-
bility ought to be subject to some pressure through the
Fund, either in the way of interest charges, or something -
penalty charges which we will indicate later - to force
the countries, if they can, or to influence the countries
if they can - the United States, particularly - to adopt
a policy which will put less pressure on their exchange
and enable them to sell more goods here.
We have been perfectly adamant on that point. We
have taken the position of absolutely no, on that. And
that has created a good deal of discussion and will con-
tinue to create some.
MR. ECCLES: What penalty idea do they have, Harry?
MR. WHITE: The mechanics of it are two-fold: One
of them is that if they buy dollars in the Fund they want
to charge us an inverse interest rate, a penalty, because
that is a symptom of the fact that those countries need
more dollars and they want to put a charge on us.
Regraded Unclassified
25
- 25 -
And there is another way in which they want to do it.
MR. ECCLES: Instead of us charging them interest,
they want to charge us interest, as a lender.
MR. WHITE: Which is the opposite of what we are
standing for, but that is one of their points which you
will hear a good deal about.
Keynes had some of it in his original plan and it
constantly crops up with all the countries - they keep
referring to that point.
The opposite of that is that we want to charge them,
not for that reason, but for another reason, and that is,
the Stabilization Fund is designed for a special purpose,
and only for a special purpose, and that purpose is to
prevent competitive depreciation of currencies and a race
for lower rates and cut-throat competition in the inter-
national field with the use of devices which can serve
only to finally end up in a free-for-all fight with
disastrous results for everybody. It wants to prevent
that. And it uses as an instrumentality the Stabilization
Fund which enables countries to pursue a reasonable policy.
Now, the Fund must be constantly used and restored
like a revolving fund by the countries who use it. They
have to restore it. Now, the countries who use it are,
in a sense, the debtor countries - the countries who
will need currency of other countries.
Now, what we had proposed was that as countries buy
more exchange from the Fund in exchange for their own
money, they have to pay - we don't call it an. interest
charge, though it might be - what it is, they have to pay
a deterrent charge, it is a charge--
MR. ECCLES: Service charge.
MR. WHITE: It is a charge that they to pay. Now,
we have wanted that charge to grow in two different
directions: One, the more currency a country buys from
the Fund - and I will illustrate it in a minute - the more
currency it buys, it pays higher rates of interest -
higher charges for the additional amounts. It starts
with a very low charge and then as it resorts to the Fund
more and more, it pays more and more for each amount, so
that is an increasingly deterrent factor for them to use
the Fund's resources.
Regraded Unclassified
26
- 26 -
(The Secretary re-enters the conference)
H.M.JR: Excuse me. They would like the American
Delegates to have their picture taken here now, and then
I am going downstairs to meet the Chairmen of the other
delegations. But if you would keep right on with this
meeting, you see, and Dr. Kelchner and Mr. McDermott
and I will go downstairs. But if this meeting would
continue--
Aná to show you the difficulties we are working under,
the manager of the hotel is under the slight influence
of liquor! So if Mr. McDermott would have our pictures
taken now, and then we will go downstairs.
(The American Delegation is photographed)
MR. WHITE: This is what I suggest we do for the rest
of the time, if agreeable. If not, please indicate. I
just have a couple of more points on the Fund, then I
thought I might go very briefly and take a much shorter
time on the Bank. That might occupy another half hour
or SO. Then we will call it a day, or ask any questions,
if that would be agreeable.
MR. WOLCOTT: We shouldn't try to absorb too much at
one time.
MR. WHITE: Maybe we ought to just take the Fund
today and take the Bank this afternoon or tomorrow. How
would that be - because we don't come to the Bank for
some time, anyway?
MR. ACHESON: I think we had better stick to the
Fund today.
MR. WHITE: Then I had better finish these couple of
points.
MR. VINSON: I think that if we have any time after
you conclude on the Fund that shortly Senator Tobey and
Senator Wagner, and Congressman Wolcott and Congressman
Somers, who was not present yesterday - it might be well
for them to get a picture of the mechanics.
MR. WAGNER: I think, before we go further, you ought
to explain the Einstein relativity you talk so much about.
Regraded Unclassified
27
- 27 -
MR. TOBEY: Well, you know men in statescraft say
lots of things they can't explain. You ought to know
that.
MR. WAGNER:I know it about myself, yes.
MR. TOBEY: It is a disease.
MR. WAGNER: When you referred to it, I thought you
were familiar with it.
MR. VINSON: A filibuster is not in order.
MR. WHITE: You remember, I was pointing to the
charges. I said they grow in two directions and that is,
the more a country takes, it has to pay for additional
increments. For example, supposing China wants to buy
sterling. It buys over the first year, let's say, a
hundred million dollars' worth of sterling; the next year
it buys another hundred million dollars' worth. Of course,
it pays for it with its own currency. The first hundred
million will cost very little; the second hundred million,
there will be a slight increase; the third hundred million
will be a still greater increase.
MR. WAGNER: What is the purpose of the increase?
MR. WHITE: To discourage her buying and put pressure
on her to do other things the Fund suggests to bring her
balances of payment into order, so that she will be dis-
couraged from buying more and encouraged, as we will see
in a moment, to buy back her yuan, paying back in gold or
sterling, so that the Fund has about the same resources after
a few years - the same make-up.
MR. TOBEY: But of course if the exigencies of a
member nation were more acute, that penalty in the form
of increased interest wouldn't hold them very long, would
it?
MR. WHITE: It is not supposed to. That is exactly
the same point; as it becomes more acute they should
resort to the Fund. The idea of the Fund, the characteristic
feature--
(Mr. Tobey leaves the conference)
MR. WHITE: If you don't mind, I will go on with what
I was saying.
Regraded Unclassified
28
- 28 -
Now, that is the increase in one direction. Now,
supposing China has bought, as I say, over two years,
three hundred million dollars worth of sterling, paying
for it in yuan. She doesn't buy back the yuan that is
in the Fund - her currency which is in the Fund. She
is supposed to buy it back in time, because this is a
revolving Fund, just like a man is supposed to pay his
loan back in a bank, eventually. It is a short-term
loan. If she doesn't pay it back at the end of the
second year, the charges increase. The third year they
increase still more, and the fourth year. They constantly
increase as time goes on. So there is pressure in two
directions for her to buy as little as necessary, and to
keep it out as little as necessary, but never to reach
the point, as I say, never, I mean not to reach the point
where she is confronted with no alternative, because
that is when the break comes.
The characteristic of the Fund is flexibility,
always with increasing difficulty of pulling, 80 that you
are always able to help a country, but under such conditions
which assure that she will do the basic things which are
necessary to correct the situation while you are helping
her.
Now, countries accept that principle, in general, but
they don't like the magnitude of the charges which we have
put. Well, naturally we would put them at - I mean, they
might go down--
MR. SOMERS: Mr. White, aren't we sort of defeating
the fundamental purpose of the thing if we put too heavy
a penalty on? A country has to be weak before it goes
to you for sterling, and then if you put a heavy penalty you
just keep weakening it more and more until you bring about
its collapse, just as these finance companies do to the
man who goes in and borrows money. He never pays off.
MR. WHITE: That would be true if you put too heavy
a burden. But we are talking about a quarter of a percent.
In the second place, it is not necessarily the weak country
that comes to the Fund. It has many other things it can
SO. The purpose of the Fund - it is a Stabilization Fund;
it isn't the source of long-term credit which the other
institutions are; it is the purpose of the Fund to help
them out over a period of time which would permit them to
80 shape their policies 80 as to correct the basic causes
and restore equibibrium in their balances of payments.
Regraded Unclassified
29
- 29 -
That takes time; sometimes it takes a year, two, three,
four - maybe seven years, depending upon the country
and depending upon the time. What you do is create addi-
tional inducements. They are never that strong to bring
about the situation that you say, which would be the case
if the burdens were very heavy, but the rates we are talk-
ing about, as you will find, are fairly small. They
begin with half a percent and then increase.
Now, countries should do something. They are con-
fronted with a situation about which they must do some-
thing. They cannot use the Fund for the purpose of re-
sorting to it and then never repurchasing their currencies.
That would defeat the purpose of the Fund. So it is
necessary to find a medium ground between not imposing
a greater burden and not having so slight a burden that
there isn't inducement for them to do the things which
are in their own interest to do, as well as in the Fund's
interest. I think that will become a little clearer
when we take up that specific point and see the conditions
under which they resort to the Fund and then the conditions
under which they restore it.
One point may be worth repeating, that the Fund is
always worth the same amount in gold; it always has the
same value. If you start with an eight billion dollar
Fund, it is always worth eight billion. If a currency
depreciates, either by one circumstance or another, or if
there should be & default or liquidation, a country has
to put in more of its currency to make up the difference.
So the money in the Fund is always worth the same amount.
It is always worth eight billion dollars.
I might digress - I don't know wether it is worth while -
but you have heard the expression about throwing money
down a rat hole - two and & half billion - it might be
worth explaining why that is completely unrelated to the
investment in the Fund. I don't know whether - this will
take about five minutes to explain - I think it may be
worth while because it is an important element in the
Fund - there is very little risk in the Fund. Any one
who understands the Fund realizes that we have risked
very little. I would say the only risk you have is another
major war in which countries will just violate all their
obligations. But outside of that, the risk is almost
negligible in this Fund.
The reason for that is this: Some think that when
the United States puts dollars in the Fund and foreign
countries use those dollars, putting in their own currencies,
Regraded Unclassified
30
- 30 -
they say, "Well, there are no more dollars in the Fund
and all you have got are poorer currencies."
What they don't understand is the basic mechanism of
the Fund. As they buy dollars, if we say that other
countries buy dollars, they substitute their currencies
for the dollars in the Fund, so that the Fund is always
worth eight billion dollars.
Now, are their currencies good? Actually they are
as good as gold for the purposes in the Fund. Why?
How can anybody make that statement?
Well, if you understand the mechanism, you see what
happens. Our gold that is in Fort Knox, on international
transactions--
(Miss Newcomer enters the conference)
MR. WHITE: How do you do, Miss Newcomer. (Mr. White
introduces Miss Newcomer to the delegates)
The gold that is in Fort Knox can be used for only
one purpose outside of domestic monetary reserves, and
that is to buy foreign exchange. That is why the United
States is in an enviable position; that is why we are in
a powerful position in this Conference; that is why we
dominate practically the financial world, because we have
the where-with-all to buy any currency we want, you see.
If only England was in that position, or any of the other
countries, it would be a very different story. They can't.
They can't buy with sterling. India, for example, as I
pointed out before, has more sterling now than she knows
what to do with. She can't take it out and she can't
spend it anywhere. But with our gold we can buy any
currency. That is the important thing about our gold.
Now, let's 80 back to the Fund. As the dollars in
the Fund get lower and lower, and they get lower and lower
because other countries are buying dollars and they need
those to pay for the goods they buy here, then our ability -
our privilege of buying all the other currencies with
dollars increases so that the less dollars there are in
the Fund, the more valuable do other currencies become
to us, so that, in effect, they are as good as gold. You
can buy any currency. You only need currency to spend in
that country.
Regraded Unclassified
31
- 31 -
Let's take France, for example. You might say the
franc is a weak currency, yet if we need it we have to
pay gold for it. With this Fund, if we need francs we
could pay for them with dollars, which to us is equivalent
to the same, but it does mean that our rights to buy
francs, you see, increases as dollars get lower. You
needn't understand now how it works.
When we want to buy anything in francs, francs are
just the same as gold, and you can buy the francs at the
rate which is already fixed ahead of time.
So, if you understand the mechanism, and I am positive
I could make that clear in a few minutes - it is a pretty
technical matter and we will have more chance at it - but
if anyone understands the mechanism they will realize that
what we put in the Fund remains there, and is as good as
gold at any time. And anyone who says that you are throw-
ing money down a rat hole, or exchanging good money for a
lot of cheap currencies because the dollars will be gone
and you will have nothing but yuans and pesos, he just
doesn't understand.
MR. SPENCE: Will there always be the same amount of
gold in the Fund?
MR. WHITE: No, the currency will always be worth the
same amount of gold. The gold will be used for the purpose
of dollars if they get scarce. Other countries need money
because they are borrowing--
MR. SPENCE: Is there a minimum of gold that will
always be in the Fund?
MR. WHITE: There will be constant in-flows, because
they have to pay in gold for certain purposes, but there is
no minimum fixed. They may use all the gold that they may
have over a period of several years.
There will be, as we figure it - what is it, Mr.
Bernstein, about how much gold will the U.S. hold?
MR. BERNSTEIN: I would say around eighteen hundred
million dollars.
MR. WHITE: The Fund will start with a little less
than two billion dollars worth of gold, and the rest in
various currencies. They will not use any of the gold
until other countries have some of the currencies in the
Fund - probably chiefly dollars, because that is where the
Regraded Unclassified
32
- 32 -
pressure is likely to come over the next few years. When
the dollars are mostly gone, or all gone, then they will
probably use gold to begin to buy. So they will pay us
gold for the dollars that we give them - just an exchange.
MR. WAGNER: Supposing they wantour dollars and they
haven't got gold?
MR. WHITE: You mean, suppose the Fund is all out of
gold?
MR. WAGNER: No, the individual country - you are
talking about the individual country wanting to buy dollars.
MR. WHITE: Oh, if they have no gold - no, I was
meaning the Fund would buy dollars. The Fund starts with
almost two billion dollars' worth of gold. They won't
need to use that at all at first, but the time may well
come within two, three, four or five or six years - you
can't tell, because we don't know what the trade picture
will look like - but the time may well come when they need
more of a particular currency - probably dollars - it
may be Canadian dollars or it may be one of the other
currencies. At that time the Fund must get more of the
scarce currency to be able to sell to its members, at which
time it will use gold for that purpose.
If it buys - let's say it buys Canadian dollars. It
will use the gold to buy from the Canadian Treasury,
central bank, Canadian dollars; or if it is U.S. dollars
it will use the gold to buy from the Federal Reserve
Bank, the Federal Reserve System, dollars, and give them
gold in exchange.
MR. ECCLES: Harry, you said the dollars would always
be worth their amount in gold.
MR. WHITE: I said the equivalent. They are just as
good as gold for purposes of international trade.
MR. ECCLES: Yes, for purposes of trade. If the demand
for dollars in gold was such - which it may well be in the
next few years - that the amount of dollars in gold in the
Fund would be entirely used up, and then if we should want
to withdraw - if the Fund should reach a point where it
wasn't working and there should be a liquidation, then in
that case, of course, we would get neither dollars nor
gold, but would have a claim on a Fund which would be made
up of these various currencies.
Regraded Unclassified
33
- 33 -
MR. WHITE: Yes.
MR. ECCLES: So that is the risk - that is the chance.
But as long as the Fund is operative, then our dollars in
that Fund are worth the same as gold in international trade.
MR. WHITE: That is right. Let's take the first
point. You are quite right. Now the Fund - it can't
use up its gold in dollars in a few years because there
are checks on it. It has to be done more slowly than that.
Even if it used up its dollars in gold, the Fund functions
almost exactly the same; even if the Fund then has the
power to borrow, if it wishes it can borrow if somebody
will lend it - the Fund may come to the Federal Reserve
Board and say, "This is the circumstance; we are going, to
be out of dollars and other countries need dollars to pay
for exports. If you want to continue to export more, we
will need more dollars, somehow. Do you want to lend it
to us?"
Now, the Board at that time will decide whether they
do or don't. If they do, there are more dollars. They
may lend it under certain conditions. If they don't,
there are no more dollars. If there are no more dollars
in the Fund--
MR. ECCLES: The Open Market Committee!
MR. WHITE: That will be some Fund - won't it! At
that point, even if the Fund has no dollars, the assumption
that it doesn't work again arises from the fact that the
people don't understand, because all that means is that the
countries have to use the other forty-nine or fifty-nine
currencies in the world, that they would have to reduce
their purchases or shift some of their purchases. That
doesn't mean all, because they always have an incoming
stream of dollars every time they export, but they will
have to shift some of their purchases to other countries.
That is exactly what they would have to do in the
absence of the Fund, and it is exactly what we want them
to do if we don't want to increase ar exports, so the
Fund begins to be most efficient at that point, instead
of breaking down. Now, that is something that isn't
understood. It doesn't mean we stop exporting - no. It
means that our exports either diminish or do not continue
to increase and they adjust their balance of payments -
they are encouraged or forced to adjust their balance of
payments much more quickly this way, and more orderly.
Regraded Unclassified
- 34 -
34
If you didn't have the Fund, and they reached the
limit of their dollars in gold, then is where your trouble
begins - oh, long before the limit is reached.
MR. ECCLES: Harry, I wanted to ask a question. I
think it may be of importance to the delegation in connec-
tion with this discussion, and that is the right of the
various countries to call upon the Fund - the question of
whether or not, without questioning, without restraint,
they can borrow up to the amount of their contribution
to the Fund, twenty-five percent a year, and so forth, or
would restraints be put upon them if it was felt that this
equilibrium that happened to develop in that country could
be corrected without using the Fund to the extent that they
were using it?
For instance, the out-flow of capital in the form of
payment of debts or for - oh, any other purposes. I mean,
it seems to me that that is an issue - the amount of re-
straint upon the use of the Fund is going to be one of the
basic issues in these negotiations.
MR. WHITE: I am glad you raised that point because
it is one of the issues, and it is a very important point.
You see, as the Fund is operated, a country can buy exchange
as it needs only up to a certain rate each year. They can
go beyond that rate if the Executive Committee or the
Board or Council, or whatever operates the Fund, believes
that it is essential and desirable from the point of view
of that country and from the other countries, to give it
a ittle more assistance. There is no absolute limit. That
is one of the beauties of the Fund.
It has perfect flexibility to the extent in which
it can help countries and perfect flexibility in the ex-
tent to which it can adjust many things to prevent break-
downs. Now, one of the flexibilities is that they can
exceed what we call their quota each year if the Board
of Directors feels that the situation warrants it. Some
may draw very little; some may draw as much as they can.
MR. TOBEY: If they haven't used it the first year,
they can add to it the second?
MR. WHITE: No, only during the twelve-month period.
MR. BROWN: Some of the other countries have raised
that question.
Regraded Unclassified
a/d
35
- 35 -
DR. WHITE: To be accumulative? I say no, because
I know in our minds we are going to say no to that. It is
our proposal, the twelve-month period. If they don't util-
ize it, it is because they didn't need it. If they didn't
need it, there is no reason for it to be accumulative. It
is not like preferred stock dividends.
I was coming back to the point which Marriner raised.
The question is, shall these countries have the right to
draw up to twenty-five percent, or does the Fund have any
jurisdiction to say, "It is true you haven't used your
twenty-five percent, but we don't think you should, for such
and such reasons." The British and a number of the other
countries--the Dutch, British, Greece, and so forth--have
insisted that it shall be & matter of right, so they can plan
ahead so that the central banks can know that this is what
we can have access to and plan ahead. The American Delegation
has taken the persistent attitude that it is nota matter of
right; that the function of the Fund is to help them main-
tain stability; and if a country is pursuing such policies,
either monetary or commercial or inflationary policies, 80
that in its own interests it is not being helped but you
are merely making possible a postponement of the necessary
corrective factors, that the Board of Directors shall have
the authority to say, "You can only get so much, even though
the quota is so much." And that is the way the provision
now reads; but it reads in a way that is not too easy to see
if you read it quickly. What it says is that they must use
the funds in accordance with the purposes and the objectives
of the Fund.
If they are buying exchange for purposes which do not
help equilibrium but serve to postpone the restoration of
equilibrium, then the Fund can say, "No, you can't get this,
but less."
MR. ACHESON: Does it put that decision in the Board
of Directors?
DR. WHITE: Yes, and that is one of the bones of con-
tention.
MR. ECCLES: That is a very important matter. We have
assumed it was a matter of right, and therefore instead of
this being a Stabilization Fund, it was merely a four-year
installment lending fund.
DR. WHITE: Yes. There are two things: One 1s, the
foreign countries always speak of it as a matter of right.
Unclassifie
36
b/d
- 36 -
Secondly, the clause limiting it is in accord with the pur-
poses, and so forth, so as to give broad powers.
But even notwithstending that, the effect of the charges
will be such that a country will not resort to the Fund.
MR. ECCLES: The managers of the Fund couldn't well
refuse the loan of twenty-five percent, certainly. It is
expected that that is about what they would need, unless they
have a very good reason, unless they can prove--unless in
their judgment it should be entirely out of accord with the
purposes of the Fund.
DR. WHITE: That should be. I don't think the Fund
should butt into every country's business and say, "We don't
like this or that."
MR. ECCLES: But it is an obvious thing that should be
prevented. There should be some rights to tell them to halt
and not give them the right to help to destroy the Fund.
That would be the effect of it, if it weren't being used in
accordance with the purposes.
DR. WHITE: No, it wouldn't destroy it. It would be
merely less effective.
MR. BROWN: I think it would be fair to say, Mr. White,
that the technical experts at Atlantic City, every single one
of them that I heard, started out saying that the agreement
as drawn gave them & right in the discussions. The British
and others began to weaken in the interpretation of the
statement of principles as it was written, but a recognition
of the fact that if a country was "condemnation"--which was
& favorite word of Lord Keynes--then the management of the
Fund ought to have some right to check them.
But as it is drawn, unless you can go back to the very
general language that it is for the purposes of the Fund, I
think it is pretty arguable if that statement of principles
doesn't give them the right.
DR. WHITE: I wouldn't put it that way. I would put
it, rather, this way: There is no question as to the authority
of the Fund to say no; but it would have to defend its
position by that statement which says that the funds must be
used in accord with the objectives. I don't think I know
in drafting that, and we were very careful in drafting that--
it has been the subject of long discussions. Our lawyers
Regraded Unclassified
37
c/d
- 37 -
have taken the position that beyond question that gives ade-
quate powers.
MR. LUXFORD: That is clearly true. The Fund has the
right at any point where it is satisfied that a country is
not using the assets of the Fund for the furtherance of its
purposes to stop the whole business.
Now, in drafting that, you have to keep in mind that
other countries have to sell this same proposition, and the
language gives us clearly that right, but we have tried to
avoid emphasizing any more than you have to.
DR. WHITE: But I think Ned is right in saying that the
Fund would and should hesitate to reduce or refuse a request
unless they were on pretty excellent ground.
MR. BROWN: I go beyond that. I say that there are
technical experts at Atlantic City who would dispute Luxford's
statement that the Fund would have a right to refuse and say
that they have an inherent right to it. That is going to be
a major item of dispute.
MR. ECCLES: The position of the American Delegation
should be, it seems to me--
DR. WHITE: There has never been any question in the
minds of the American Delegation or in the minds of the lawyers
as to the interpretation. If there is any question, it ought
to be changed.
MR. ECCLES: I brought that up, because I thought that
was the major point of difference.
DR. WHITE: As between us and the other countries, they
want that changed.
MR. ECCLES: Our Delegation should understand this
and a few of the other important points.
DR. WHITE: I am very glad you raised it. But let's
make clear that point. Our Delegation has stuck to those
grounds. Our lawyers have told us that is the authority,
and the other Delegation have tried to interpret by their
discussion--create a background which would make it more
difficult later for the management to do that, and have tried
to modify the language in such way that it would be much more
Regraded Unclassified
38
- 38 -
of & right than & judgment. And we have never receded
beyond the point where we are certain that right exists.
MR. WAGNER: Did you discuss the question of Directors
today? How we would secure the Directors?
DR. WHITE: That is one of the important points on this
matter.
MR. WAGNER: We haven't discussed it yet?
DR. WHITE: One of the items of contention--the only
thing I have said about it--is how the Directors were to
be elected. The five major Directors automatically become
part of the Executive Committee. The contention is how shall
the other four be elected. And that is part of the major
issue.
MR. WAGNER: You were talking about what the Directors
should or should not do.
DR. WHITE: We haven't discussed that yet.
MR. WAGNER: If we are not in control, what difference
does it make what our attitude should be?
DR. WHITE: The Directors are in control.
MR. BROWN: You understand the Directors vote somewhat
like the chairman of & delegation at a national convention.
The United States will have a great many more votes as the
Director of the United States in the Board of Directors than
a representative of any other country. Just as the chairman
of the New York delegation might get up in the Republican or
Democratic Convention and announce he was casting 128 votes
for what-will-you or the candidate, and then the represent-
ative of the Nevada delegation would get up and cast six.
Now, they are Directors, but their voting power is
related to the quotas of the various countries.
MR. WAGNER: I didn't hear what that voting power would
be.
DR. WHITE: I merely said it would be great on the part
of the countries that handle it. We will want to go into
that, and also the powers of the Directors.
Regraded Unclassified
39
e/d
- 39 -
MR. SPENCE: That will depend on our quota, to a great
extent?
DR. WHITE: Yes.
MR. SPENCE: If our quota is two billion, 750 million,
could you tell us what?
DR. WHITE: I should think about twenty-five percent.
MR. BERNSTEIN: It is just about twenty-five percent.
DR. WHITE: Then of course we would have a lot of other
countries that would vote with us.
There is another point. The major countries are not
those from whom you have to worry about their resort to their
quotas, because those countries have a very strong sense of
fiduciary responsibility--England, Netherlands, Canada.
They don't behave in a manner that would suggest they are
pursuing policies that are bad. You don't have those count-
ries in mind. You have a host of other smaller countries
whose sense of financial conservatism and soundness--
MR. WAGNER: Someone might say on the outside they may
all gang up on us.
DR. WHITE: On us?
MR. WAGNER: Yes.
DR. WHITE: They can't.
MR. ECCLES: There are too many conflicting interests.
DR. WHITE: Because every time country "A" buys out
of the Fund, there is less in dollars for everybody else to
buy. So everybody is interested to see that people buy as
little as possible.
Secondly, our votes increase. I didn't mention that.
One of the provisions we have is that the votes of the
country whose currency is being bought increases the more
they buy it, and the countries who do the buying decrease.
MR. SPENCE: Suppose all of our gold is depleted. How
would you purchase rare currencies? Don't you need gold for
that purpose?
Regraded Unclassified
f/d
40
- 40 -
DR. WHITE: What do you mean?
MR. SPENCE: I mean, if the gold would disappear from
the Fund eventually. Is that possible?
DR. WHITE: Possible, not likely--but possible.
MR. SPENCE: Then could you acquire rare currencies?
DR. WHITE: Only if that country wanted to lend it to
the Fund.
MR. ECCLES: If it had currencies in the Fund.
DR. WHITE: They wouldn't use the gold as long as they
have currencies in it. You begin to use the gold after 8
particular currency is scarce.
MR. SPENCE: Do you think it is very improbable that
it would be depleted?
DR. WHITE: Improbable? It is hard to know. It couldn't
take place before three or four or five years. It is hard to
know how much we are going to buy, how quickly Europe and the
other countries are going to get into the export markets,
what kind of tariff policy we will pursue, what kind of credit
policy we will pursue. It is impossible to say. Anyone who
says he knows is talking through his hat. He doesn't know.
There are too many uncertainties. It is likely during the
next few years there will be a greater demand for the dollars
than any other currencies. It is not only likely, but to be
expected, that dollars in the next few years will begin to
be diminished in the Fund. The question is the rate at which
that takes place, because there are checks on what each
country can do.
In the second place, one of the things we haven't
touched upon at all, which bears importantly on that, is
that UNRRA has already taken some of the insistent demands--
will take some-off of the Army relief, and that the Bank
will have an important effect in supplying long-term capital
to the very countries who might give the greatest pressure.
So that there will not be a resort to the Fund.
In addition to that, we must bear in mind, also, that
the South American countries and some, many, of the European
countries whom you ordinarily would not look to to have
Regraded Unclassified
41
g/a
- 41 -
large gold and foreign exchange resources, have more now than
they have had in their lives. Every one of the South American
countries have very substantial holdings. Sweden, Portugal,
China, Switzerland have very large gold holdings.
MR. WAGNER: Where do they get them from?
DR. WHITE: During the war they were able to sell and
weren't able to buy, so they were forced to save.
MR. WAGNER: Did we give them a good deal?
DR. WHITE: In South America we bought the bulk, but we
didn't sell them anything, so they had the money that they
otherwise would have spent.
Now they will spend & good deal of that surplus over
the next few years, but that means that they resort to the
Fund very much more slowly, because one of the requirements,
for example, is that when a country wants to buy currency,
it has to pay half with gold, unless it has very little gold,
unless it has gold which is less than its quota. A country
like Greece has very little gold.
MR. ECCLES: That is a provision of the Fund?
DR. WHITE: Yes.
MR. ECCLES: That it must pay half?
DR. WHITE: Yes. Also, there is another provision that
if it accumulates any gold, it has to buy back its own currency
by half. That was in answer to your question, Mr. Spence.
I said there is a constant incoming stream of gold. But it
is possible.
MR. ECCLES: Those are some of the objections that some
of them raise--that there is some objection to that provision.
DR. WHITE: Yes, but that is the provision I think the
Delegation will want to stand on.
MR. ACHESON: Harry, don't these questions raise a
very fundamental matter of principle and objective here which,
if properly solved, will answer most of the objections that
have been made to the Fund, domestically, and will make the
thing work? In other words, the Fund is a mechanism for a
Regraded Unclassified
42
- 42 -
limited purpose, and that limited purpose is to smooth
out short-range fluctuations.
MR. WHITE: Yes, if you include a short-range three-
five-six-seven year, which is short-range in these matters.
MR. ACHESON: All right, or whatever the period is.
But is is not to take care, and cannot take care, of all
the factors that make for dis-equilibrium.
It cannot make up for maldistribution or capital or
wrong movement of capital on a large scale.
It can't make up for erroneous commercial policies,
and if it is used for those purposes, then it will go
"bust" and justify the criticisms.
If it is not used for those purposes, but keeps itself
in a comparatively narrow field, saying these other things
must be done in other ways, then it will be all right.
MR. WHITE: It can't go "bust." Aside from that,
I will agree with you.
MR. ACHESON: In the sense that it won't work any more.
MR. WHITE: That is impossible. What you can say is
it won't work as well.
MR. ACHESON: It seems to me you have something pretty
fundamental here, because if people can draw on the Fund
without end, for any purpose, good, bad, and indifferent,
and if the machinery isn't strong enough to resist that,
then a good many of the criticisms will be justified.
Regraded Unclassified
43
1/d
- 43 -
DR. WHITE: It is only partly true. Obviously,
there is a point there as we have said, that the Fund
ought to have the authority to see that the result of the
Fund is not abused. We think it does have that authority.
But even if it abused, that isn't our last line of
protection, by any manner of means. There are other pro-
tections. In the first place, they can only do it at a
certain rate. In the second place, the longer they keep
their currencies in the Fund without repurchasing--and
every country can repurchase--it means the more they must
pull their belt in. They do exactly what they would have
to do without the Fund, except they have to pursue
more reasonable tactics.
This question of resort to the Fund means that you
are giving the Fund additional influence beyond anything
that exists in the absence of it; but the continued resort
to the Fund, which in nine cases out of ten would be
quite legitimate and quite reasonable, doesn't in any way
suggest that if countries resort to the Fund then a few of
the scarce currencies are gone.
To say that, as I say, is to misunderstand the whole
nature of the operations. It merely means that certain
currencies are not available. Dollars may not be avail-
able. Dollars are not available now at all. You could get
the dollars the same way you get them now. How does that
country get dollars? It exports goods to the United
States; it can borrow; it uses its gold. It does that,
anyhow. It can borrow. It does that, anyhow.
MR. ECCLES: It might not go "bust", but if it should
run out of dollars and practically run out of gold, it
isn't a very effective instrument for carrying out the
objectives.
DR. WHITE: No, I don't accept that at all. That
is fundamental. We have got to understand that, because
I don't think that will happen. But even if it does, that
only means there is one currency out of fifty they can't
buy in the Fund. They can still buy forty-nine.
MR. BERNSTEIN: They still buy that currency, too;
but they don't buy it in the quantities that they would
wish, because there is a constant influx of dollars and
gold into the Fund under the provisions of the Fund.
Those dollars and the gold that accumulate and come into
the Fund regularly would still be available for sale.
Regraded Unclassified
44
2/d
- 44 -
It would not be as large an amount as other countries
wish. So the Fund would still deal in every currency,
but its dealing in one currency would be somewhat less
than otherwise.
DR. WHITE: It sounds sophisticated to say that when
the dollars are gone it is "bust." But it is just dead
wrong. This Delegation has to understand how this Fund
works, because it is, we think, an excellent instrument
which we have protected at every phase.
I agree a hundred percent with what Dean Acheson
said, that this cannot solve all your problems. If it
could, it would be a miracle. It has a certain specialized
function, but there are other things that have to be done.
You have to supply long-term capital. That is why we are
suggesting & Bank. You have to have relief--proper
commercial policy. But that doesn't mean that this cannot
continue indefinitely to provide & very important function.
And let us bear in mind that we are overlooking one impor-
tant aspect in concentrating on this point for a moment.
One of the very important things this Fund does, equally
important, is that countries agree not to alter their
exchanges, except through multilateral action.
A country has to withdraw in order to do this. If
it withdraws, the liquidation provisions, as we would like
to see them, as we have drafted them--I don't know what
we will come out with, that is one of the things that we
will have to discuss, since there are some differences of
opinion among the delegates--will be such that there is
virtually no risk. So even if the Fund is liquidated,
you will get your funds back in the equivalent of gold;
that is, either in purhasing power in that country of gold
which is the same thing though it may take you three or
four years to get it. So the reason why I stress this
point is because that is a very common misunderstanding
on the part of some commentators who should know better--
that you put dollars in and the dollars will be gone, and
three or four or five years later the gold will be gone;
that you can't stop it from doing that, and the Fund goes
bad. That just isn't true.
MR. ECCLES: Harry, it seems to me it like a loan.
However, if you liquidate the Fund, it is true that we
would have a claim on foreign gold. Any time we make B.
foreign loan, we have that.
Regraded Unclassified
45
3/a
- 45 -
DR. WHITE: No, no. They just default.
MR. ECCLES: I know, but they default because--
DR. WHITE: Local currency?
MR. ECCLES: There are a good many loans that would
be paid here in this country if our commercial policy had
been such as to make it possible.
DR. WHITE: A transfer problem. Well, we have gotten
that protected. But you can't compare the protective
devices here with the protective devices there.
MR. ECCLES: That is right. You have a mechanism
here, and the other way you. didn't have it.
DR. WHITE: We have a way of liquidating that trans-
fer problem which doesn't exist under circumstances of
any kind of default.
MR. ACHESON: Harry, the point that I was trying to
stress was not so much whether the Fund would be "bust"
or go into that, but if you follow the principles which
are laid down, and if there is this check against indis-
criminate borrowing, then the Fund never should get to
the point where it exhausts its dollars or exhausts its
gold, because then we are not going to get anywhere,
achieve the purposes of the Fund by doing this.
The movement which brings that about is caused by
other things. It is caused by something which has to be
adjusted by loans of capital or by changes of commercial
policy. Therefore, there is no use using the Fund. You
are not getting anywhere by using the Fund. If you adhere
strictly to the principles, if the Directors exercise that
control, you will not try to do something with this Fund
which is beyond the purposes and beyond the powers of the
Fund. Isn't that true?
DR. WHITE: Yes, but I'á like to add two things to
that, because they are important: We mustn't think of
this Fund merely as United States against the rest of the
world. These problems exist between all countries, and
therefore the fact that they may not be dollars doesn't
mean the same influences don't go in between France and
Belgium, between Holland and England, and that the effect-
Regraded Unclassified
46
4/d
- 46 -
iveness of the Fund operates among those other countries
that have the same trouble. They can't all operate that
way. I mean, you never can get in a situation where more
than a few countries' currencies are scarce or even half
& dozen. If one currency is scarce, the other increases.
Therefore, I would agree that if the Fund has utilized
all one particular currency and all the gold--and that would
take you some period--can it continue to operate even in
that currency?
In the first place, it will operate in the other
fifty. That is very important. We, after all, only have
ten percent of the world trade. The way you hear some
people talk, you'd think you have all the trade in the
world. There is ninety percent of the trade you need to
keep stable without the dollars. It isn't even as little
as ten percent, because the difference is not ten or noth-
ing; it is the difference between eleven and ten, nime and
ten, and eight and ten. It is that difference which we
are manipulating with.
So the Fund still continues to operate between ninety
and ninety-five percent of the trade; I am saying, even if
the dollars are gone. It is in our interest that trade
between those other countries are stable, because we still
do the bulk of our trade outside of this Fund.
The second point, theFund itself helps achieve that,
because one of the things that the Fund does, it doesn't
permit flights of capital, 80 that I would say that if we,
for example--they all think we are likely to be the worst
offender in that sense-do nothave the type of commercial
policy which enables countries to maintain equilibrium
and the gold and dollars in the Fund have gone, you don't
assume, even with dollars now, the Fund has another impor-
tant power. It was given specifically for that reason;
namely, the Fund can go to the Federal Reserve Board and
say, "We want to borrow another half a billion or another
billion dollars or another two billion or three billion."
I don't mean they borrow it at once; they borrow so much
a month over & period of years.
Now, supposing they come to the Board and they say
the dollars are gone. They would come to the Board before
that. They would say, "The dollars are gone and we are
spending our gold. The next year, at the rate we are going,
Regraded Unclassified
5/d
47
47 I I
we will need more dollars from the Fund. If we don't get
more dollars, the Fund will not have more dollars to sell."
That doesn't mean that other countries won't have
dollars from their other sources. They have gold exports,
and so forth. But the Fund will not be able to give
them additional dollars.
At that point the Board will say to itself--it will
get into & huddle with the Committee, and the monetary
authority will say, "Do we want to lend that Fund any
money?" Remember, the loan to the Fund is pretty good.
It isn't like a loan to one government or to a small
country or a corporation. It is a loan to all the rest
of the governments in the world.
Now, the Federal Reserve Board would say, "Do we want
to lend that Fund any money? If we do lend it, then our
exporters will be able to sell more goods. If we don't
lend it, our exporters won't be able to sell more goods.
Shall we lend it and help our exporters, or shall we not
lend it and not help our exporters?" If we have a boom
period, or if there is good employment, they might very
well say to themselves, "We don't want to lend any more
money, because we have got all the business we can handle.
If you want to buy any more, you'd better buy them where
you have the currency with other countries."
In other words, if there is substantial unemployment
in the United States, they may say, "Yes, we don't want
more unemployment; we want less. We'll lend the Fund for
the next year"--let's say--"a hundred million dollars
every quarter."
Whatever the rate is, it is a constant rate. It
isn't a once-for-all decision. And we'll help our export-
ers. That is one of the important things in the Fund.
As I say, it has flexibility. Its resources aren't limited
to the eight billion dollars. In addition to the eight
billion dollars, it has borrowing capacity which consists
of the borrowing rights of all the governments together,
and never in world history has there been a loan as safe
as that, because you are not lending to one government
but fifty governments who are all responsible for the re-
payment of that currency.
MR. ECCLES: Harry, if the Fund had used up dollars
entirely and it was then a question of borrowing additional
Regraded Unclassified
48
6/d
- 48 -
dollars in order to provide exporters with a market, you
would want to say, "Well, now, is this a continuous proess
of lending, such as we had in this country from '21 to
'28, in which this country loaned the world, say, eight
billion dollars, and the only way you are going to get re-
payment is sooner or later reverse the action and have the
importers take more goods"? So that in making & loan, you
would naturally say, "Is this a temporary loan to meet a
temporary situation, or is this trend and is our commercial
policy in this country such that other countries can't pay
off even the Fund-that is, they can't pay off the Fund--
therefore how could they pay off the loan?"
So that, as I say, what this Fund seems to me to do,
whis is of value, is two things: It does establish the rate
of the various exchanges of the countries of the world on a
multilateral basis and it provides a mechanism for keeping
orderly exchanges. Now, that is in itself very important.
Another thing that it does, it points up very directly
the position of the creditor nations. It puts the pressure
on the creditor nations to recognize realistically that
foreign trade is not just a means of selling goods; that a
country that expects to sell goods and services has got to
be prepared to buy goods and services or take gold or give
long-term credits which are bad because you never know when
you are going to get paid. It does point up for the first
time that relationship.
Now, this country has thought in terms of its whole
life of itself as being 8. debtor nation. We turned to
being a creditor nation, and we pursue the policy of a debtor
nation. This Fund, it seems to me, will point up and put
the pressure not on the debtor, but this Fund enables the
debtor to put the pressure on the creditor.
DR. WHITE: Yes, only to this extent: Merely by virtue
of making the facts clear.
MR. ECCLES: That is right.
DR. WHITE: It points it up so anybody who runs can read.
Now, I'd like to make a couple of additional suggest-
ions, and then I'll stop, because the Secretary told me
not to go beyond that.
Regraded Unclassified
49
7/d
- 49
DR. GOLDENWEISER: What I wanted to say is to point
up a little this thing about how the other countries pay us.
DR. WHITE: That was the point I was going to bring up.
DR. GOLDENWEISER: The fact that they come to it only
for the net balance, this Fund in no way intrferes with the
regular workings of an exchange market. If a country sells
goods to America, it gets dollars for them, and when it buys
goods from America, it pays its currency and gets the
dollars. It is only when it finds that the two don't match
and that there is a balance, that they have more demand for
dollars than they have supply of dollars, that they come to
the Fund.
So that the great bulk of world trade will continue
without any reference to this Fund, and that the Fund will
not be called upon to make--and in no way interfere with the
regular channels of international trade and exchange trans-
actions and the way banks deal with the customers. None of
that is interfered with. They only come to the Fund when
they find themselves short on the net. And I think that
perhaps hasn't been pointed up.
DR. WHITE: I am glad you did. I think that is quite
in order.
I'd like to add one other point. You said when the
Federal Reserve Board of the United States should lend a
billion dollars, let's say, over a period of a year or two
to the Fund in order for American exporters to export a
billion dollars--you say they have not been able to buy back
the original currency--how can they buy that back?
In the first place, they are not paying anything back;
they are buying back. Now, let's see what happens under
normal circumstances without the Fund, and then compare it
with the Fund.
Under normal circumstances without the Fund, if other
countries are coming to you to buy more goods, they pay for
it in gold. Correct?
MR. ECCLES: That is right.
DR. WHITE: What do we with the gold, and what good is
the gold? We stick it in Fort Knox, don't we? To say it is
Regraded Unclassified
50
8/d
- 50 -
no good is nonsense. It is very good only for one purpose.
Let's keep that in mind. I am not speaking of domestic
monetary reserves. That one purpose is when you want to take
that gold and buy other currencies, because you are buying
goods from them. Right?
Now, that is exactly what you do when you lend money
to the Fund. When you lend money to the Fund, they owe you.
The Fund owes you in dollars or local currency. Now, that
local currency is always there whenever you want to spend it.
You can always buy any currency that is in the Fund in
exactly the same way as if you paid for it in gold, only
this time you don't pay for it in gold.
MR. ECCLES: I would sooner have that in the gold, but
I'd be afraid I'd get the gold in addition.
DR. WHITE: I agree with you.
MR. ECCLES: If we could take & choice of whether you
would take the currencies and if we could change the law so
that the foreign currencies would be accepted as a part of
the reserve set-up, whereas gold is, then I would say, "Let's
take the currencies instead of the gold." Let them keep the
gold and take the currencies.
But the difficulty which would confront me would be
that you would take the currencies by making the loan to the
Fund, call on them, and that would not stop them necessarily
from selling us all the gold they have, anyway. Now, if we
can control the gold, then that is another story.
DR. WHITE: But this fund does more to prevent that
situation coming about by introducing something entirely new
in the situation, and that is the judgment of another organ-
ization of that character, of an international organization
of that character. It grows right along as the thing grows;
it is not something that happens like that. These destructions
grow gradually in from two to six years, and this Fund makes
it possible for you gradually to get out of those difficulties.
If you don't have the Fund, then you have no such influence,
and instead of getting gradually out of the Fund, you find
that countries at once begin to depreciate their exchanges,
set up impossible import quotas, engage in multiple practices
just like Germany did. That is exactly the position Germany
was in.
Regraded Unclassified
51
9/a
- 51 -
Now, countries will be in that position again. Unless
there is some such Fund, you will have an identical repetition
of the situation in the thirties, and all that we are par-
ticipating in--and I object strenuously to having it called
& contribution, because there is virtually very little risk
in this--all we are doing is participating to the extent of
two and a half billion dollars which is what we have, anyway,
laid aside in order to assure economic peace in the post-war
world.
And we have surrounded this thing with protective
devices at every point. That doesn't mean it is without risk.
Sure, if the world is at war and a country says, "Yes, you
have balances here, but try and get them," nothing can pro-
tect you against that kind of relationship.
DR. GOLDENWEISER: Just one other thing that I'd like to
point up. That is going back to the fact that recourse to
the Fund by the foreign countries is subject to control of
the Fund; that is, I think, going to be one of the main
issues, as it was pointed out. I think that while the pre-
sent language is such that the lawyers feel that without
being offensive it gives the Fund that right, there is going
to be & great deal of language proposed which is moreelegant,
that sounds as though it in substance didn't change the thing
very much, that is going to, by imperceptible steps, diminish
that assurance; and I think that it will be awfully important
for the American Delegation to watch its step in not yield-
ing one single inch on that front, because I think that is
fundamental to the success of the Conference.
DR. WHITE: Dr. Goldenweiser, do you feel--there has
never been any doubt in my mind, because all the lawyers say
we are amply protected.
DR. GOLDENWEISER: I have no doubt at all that as it
stands now it is perfectly all right, because it does say
that they can only take it in accordance with the purposes
of the Fund, and the interpretation of that lies in the hands
of the Board of Directors and that is adequate protection.
I have perfect confidence, in addition to the common
sense of it, that the legal people have gone over it. But
you must be awfully careful about not having any modification
in that language and anything in the legislative history of
that language from now on that would give any of the countries
any right to leave here with the thought that that isn't
so.
DR. WHITE: That is something that you gentlemen par-
Regraded Unclassified
52
10/d
- 52 -
ticularly will be in a position to judge, because you are
all lawyers. When you come to that position, we will show
you.
MR. WOLCOTT: Mr. White, on that score have there been
any provisions suggested for sanctions which the Board might
enforce in compliance with the purposes?
DR. WHITE: No. There have been some suggestions, but
we have never taken them seriously, because we didn't want
anyone to interfere in our affairs to that extent. We feel
that with the other countries the sanctions lie in this
respect, that if they want more assistance, they have to ful-
fill the conditions which the Board lays down. If they don't
fulfill the conditions, they can't get the additional assist-
ance.
MR. WOLCOTT: The sanctions, then, would be keeping that
country from further partbipation by a shut-off of loans, or
something?
DR. WHITE: By further resort to these additional re-
sources. In addition to that, there are certain other economic
measures, so that a country will pretty much have to not run
counter to the views of the Executive Committee if it wants
additional assistance, unless it wished to withdraw. And if
it withdraws from the Fund, I think you will find the Fund is
amply protected, and a country would hesitate & long time
unless it was a powerful country like the United States.
We could withdraw, because we have adequate gold and
credit, and so forth. But & small country, if it were to
withdraw, would be a signal to all the creditors that that is
a bad country to do business with. Their exchange is no
longer stable.
MR. WOLCOTT: If it withdraws for other purposes, it
would indicate they are not El safe country to do business
with.
DR. WHITE: Unless it was a major country like the
United States; particularly if it withdraws as a result of
not wishing to abide by proper monetary policy. All these
things would be known. There would be nothing behind the
scenes.
MR. WAGNER: Like being kicked out of a bank.
Regraded Unclassified
53
11/d
- 53 -
MR. TOBEY: The general plan contemplated a year's
notice for withdrawal?
DR. WHITE: Yes, we did that for our own sake. We
felt if we wanted to get out, we wanted to get out. And we
figured that we would trim it down to a year, and in general
I think most countries feel that that is satisfactory to them,
because it enables them quite appropriately to tell their
Congress they are sovereign. They can always withdraw. of
course, that sovereignty exists more with us than with some
of the small countries, because we can withdraw with im-
pugnity. Many of the small countries could not withdraw
without taking the psychological consequences.
MR. TOBEY: Is & year still required?
DR. WHITE: No, just notice. There are measures in
there to protect the assets.
MR. TOBEY: Which are distributed pro rata?
DR. WHITE: Yes, it is a pretty complicated business,
because we have tried to tie the thing up as strongly as we
could. But a country would get out what it put in. It
might have to wait two orthree or four years. It is possible
that in a general liquidation there could be some losses.
MR. ECCLES: We would withdraw dollars in gold that we
put in to the extent it was there.
DR. WHITE: Yes, and to the extent it isn't there.
There are provisions for making it good in time.
DR. GOLDENWEISER: What you get is the obligation of
those governments and very primary obligations, because they
are in currencies.
DR. WHITE: And currency which they guarantee to pro-
tect against depreciation and which they guarantee shall be
protected against exchange controls; and moreover, if they
don't protect it, then there are arrangements among the
member countries to use that currency first. Our lawyers
have done a job.
Regraded Unclassified
54
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
INAUGURAL PLENARY SESSION
July 1, 1944
Assembly Hall, 3:00 p.m.
Convening of the Conference by the Secretary General.
Message from the President of the United States.
Responses on behalf of the visitng delegations by
the following:
Address by the Chairman of the Delegation
of China, the Honorable Hsiang-Hsi Kung.
Address by the Chairman of the Delegation
of Czechoslovakia, the Honorable Ladislav
Feierabend.
Appointment by the Temporary President of the Members
of the following Committees:
Committee on Credentials
Committee on Rules and Regulations
Committee on Nominations
Address by the Chairman of the Delegation of Mexico,
the Honorable Eduardo Suarez.
Address by the Chairman of the Delegation of Brazil,
the Honorable Arthur de SOUZA Costa.
Address by the Chairman of the Delegation of Canada,
the Honorable J. L. Ilsley.
Address by the Chairman of the Delegation of the Union
of Soviet Socialist Republics, the Honorable
M. S. Stepanov.
Election of the Permanent President of the Conference.
Adjournment.
"The Star Spangled Banner".
Regraded Unclassified
54
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
INAUGURAL PLENARY SESSION
July 1, 1944
Assembly Hall, 3:00 p.m.
Convening of the Conference by the Secretary General.
Message from the President of the United States.
Responses on behalf of the visitng delegations by
the following:
Address by the Chairman of the Delegation
of China, the Honorable Hsiang-Hsi Kung.
Address by the Chairman of the Delegation
of Czechoslovakia, the Honorable Ladislav
Feierabend.
Appointment by the Temporary President of the Members
of the following Committees:
Committee on Credentials
Committee on Rules and Regulations
Committee on Nominations
Address by the Chairman of the Delegation of Mexico,
the Honorable Eduardo Suarez.
Address by the Chairman of the Delegation of Brazil,
the Honorable Arthur de SOUZA Costa.
Address by the Chairman of the Delegation of Canada,
the Honorable J. L. Ilsley.
Address by the Chairman of the Delegation of the Union
of Soviet Socialist Republics, the Honorable
M. S. Stepanov.
Election of the Permanent President of the Conference.
Adjournment.
"The Star Spangled Banner".
Regraded Unclassified
55
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
INAUGURAL PLENARY SESSION
July 1, 1944
Assembly Hall, 3:00 p.m.
Convening of the Conference by the Secretary General.
Secretary General Kelchner:
The United Nations Monetary and Financial Con-
ference 1s hereby convened.
It 18 the generally accepted practice for the
host government to designate the Temporary President
of an ihternational conference held under its auspices.
Accordingly, President Roosevelt has designated as
Temporary President of the Conference the Honorable
Henry Morgenthau, Jr., Secretary of the Treasury of
the United States.
Secretary Morgenthau:
"President Roosevelt has sent a special message
to the Conference and I can think of no more fitting
way to welcome you than to have this message delivered
to you at this time. I request the Secretary General
to read President Roosevelt's message.
(The Secretary General will read the message.)
Secretary Morgenthau:
"The Chair recognizes the Chairman of the Dele-
gation of China."
(Dr. Kung will deliver his address.)
Secretary Morgenthau:
"The Chair recognizes the Chairman of the Dele-
gation of Czechoslovakia."
Regraded Unclassified
56
-2-
(Mr. Feierabend will deliver his address.)
Secretary Morgenthau:
"It is customary to appoint certain temporary
committees for the purpose of effecting the organi-
zation of the Conference. The draft regulations
which have been circulated provide for the appoint-
ment by the Temporary President of a Committee on
Credentials, which Committee will examine the
credentials of the various delegations and report
to the next plenary session; a Committee on Rules
and Regulations, which will examine the draft regu-
lations and report to the next plenary session; and
a Committee on Nominations, which will bring in also
at the next plenary session nominations for various
officers of the Conference.
"The Chair recognizes the Chairman of the
Delegation of India."
(Mr. Raisman will move that the proposal to appoint
three temporary committees be adopted and that the
Temporary President be authorized to name the members
of the committees.)
Secretary Morgenthau:
"You have heard the motion of the Chairman of
the Delegation of India that the Temporary Chairman
be authorized to appoint members of the committees
suggested. Is there a second to that motion?"
(The motion is seconded.)
Secretary Morgenthau:
"The motion has been moved and seconded; all
in favor say 'aye'; those opposed 'no'. The motion
is carried.
Regraded Unclassified
57
-3-
"The Chairman appoints the following members
of the Committee on Credentials: The Chairmen of
the Delegations of Cuba, The Netherlands, the Union
of South Africa, Liberia and Norway.
"As Members of the Committee on Rules and Regu-
lations the Chairman appoints the Chairmen of the
Delegations of China, Nicaragua, Poland, Australia,
and Iraq.
"As Members of the Committee on Nominations,
the Chairman appoints the Chairmen of the Delegations
of New Zealand, Luxembourg, Honduras, Iceland and
Peru.
"The Chair recognizes the Chairman of the
Delegation of Mexico.'
(Mr. Suarez will give his address nominating
Secretary Morgenthau as President of the Conference.)
Secretary Morgenthau:
"The Chair recognizes the Chairman of the
Delegation of Brazil:"
(Mr. de SOUZA Costa will give his address second-
ing the nomination of Secretary Morgenthau as President
of the Conference.)
Secretary Morgenthau:
"The Chair recognizes the Chairman of the
Delegation of Canada."
(Mr. Ilsley will give his address seconding the
nomimtion of Secretary Morgenthau 88 President of
the Conference.)
Secretary Morgenthaut
"The Chair recognizes the Chairman of the
Delegation of the Union of Soviet Socialist Republics."
Regraded Unclassified
58
-4-
(Mr. Stepanov will give his address seconding
the nomination of Secretary Morgenthau as President
of the Conference.)
Secretary Morgenthau: are there any other nomination
"You have heard the nomination. Those favoring
the election of the nominee, say 'aye'; opposed 'no'.
(Secre tary Morgenthau will read his address.)
"The Chair declares the meeting adjourned."
("The Star Spangled Banner")
Regraded Unclassified
7/1/44.9
$
Draft of the President's Message
Members of the Conference:
I welcome you to this quiet meeting place with confidence and
with hope. It is fitting, I think, that even while the battle for
liberation is at its peak, the representatives of free men should
gather to take counsel with one another respecting the shape of the
future which we are to win. I am grateful to you for making the
long journey here, grateful to your governments for their ready
acceptance of my invitation to this meeting.
The war has prodded us into the healthy habit of coming together
in conference when we have common problems to discuss and solve. We
have done this, with notable success, in regard to various phases
of the war and in regard to measures which must be taken immediately
after the war is won, such as relief and rehabilitation add distrib-
ution of the world's food supplies. But these are essentially emer-
gency matters. At Bretton Woods, you who come from many lands are
meeting for the first time to talk over proposals for an enduring
program of future economic cooperation and peaceful progress.
The problems you are to discuss constitute, of course but assified
-2- -
The program you are to discuss relates to somewhat technical financial and
monetary problems and constitutes, of course, but one phase of the arrangements
which must be made to ensure an orderly, harmonious world. But it is a most
vital phase, weighted with meaning for ordinary men and women
everywhere.
It concerns nothing less than the basis upon which they will
be able to exchange with one another the natural riches of the earth and the
products of their own industry and ingenuity. Commerce is the life blood of a
free society. We must see to it that the arteries which carry that blood stream
are not clogged again, 88 they have been in the past, by artificial barriers
through a
created senseless economic rivalry.
Economic diseases are highly communicable. It follows, therefore, that
the economic health of every country is e. proper matter of concern to all its
neighbors, near and distant. When the stimulus of loans or investments
is
these
necessary to recovery, must be available on terms which will be advantageous
dynamic and
to lenders and borrowers alike. For only through B. soundly expanding world
economy can the living standards of individual nations be advanced to levels
which will permit a full realization of our hopes for the future.
The spirit in whichyou carry on these discussions will set a pattern for
future friendly consultations among nations in their common interest. The
hopeful gaze of a great many million human beings will be lifted momentarily
Regraded Unclassified
- 3. -
from the smoke and wreckage of the battle fronts to this quiet place in New
Hampshire -- lifted for a sign that men of different nationalities have learned
how to compose their differences and how to work together as friends. I know that
you will approach your task with a high sense of responsibility to them. The
things that we need to do can be done only in concert. This conference affords
the first concrete test of our capacity to cooperate in peace as we have in war
The world's hopes will soar or falter as we meet this test.
Regraded Unclassified
62
Reading copy of Secretary's speech at opening
session of Monetary Conference - July 1, 1944.
63
Fellow Delegates and Members of the Conference:
[
You have given me an honor and an opportunity.
I accept the presidency of this conference with gratitude
for the confidence you have reposed in me. I accept it
also with deep humility. For I know that what we do here
will shape to a significant degree the nature of the
world in which we are to live - and the nature of the
world in which men and women younger than ourselves
must round out their lives and seek the fulfillment
of their hopes. All of you, I know, share this sense
of responsibility.
We are more likely to be successful in the work
before us if we see it in perspective. Our agenda is
concerned specifically with the monetary and investment field.
Regraded Unclassified
64
- 2 -
It should be viewed, however, as part of a broader
program of agreed action among nations to bring about the
expansion of production, employment and trade contemplated
in the Atlantic Charter and in Article VII of the mutual
aid agreements concluded by the United States with many
of the United Nations. Whatever we accomplish here must
be supplemented and buttressed by other action having
this end in view.
President Roosevelt has made it clear that we
are not asked to make definitive agreements binding on any
nation, but that proposals here formulated are to be
referred to our respective governments for acceptance
or rejection.
Regraded Unclassified
65
- 3 -
Our task, then, is to confer, and to reach understanding
and agreement, upon certain basic measures which must be
recommended to our governments for the establishment of
a sound and stable economic relationship among us.
We can accomplish this task only if we approach
it not as bargainers but as partners - not as rivals
but as men who recognize that their common welfare depends,
in peace as in war, upon mutual trust and joint endeavor.
It is not an easy task that is before us; but I believe,
if we devote ourselves to it in this spirit, earnestly
and sincerely, that what we achieve here will have the
greatest historical significance. Men and women everywhere
will look to this meeting for a sign that the unity welded
among us by war will endure in peace.
Regraded Unclassified
66
- 4 -
Through cooperation we are now overcoming the
most fearful and formidable threat ever to be raised against
our security and freedom. In time, with God's grace, the
scourge of war will be lifted from us. But we shall
delude ourselves if we regard victory as synonymous with
freedom and security. Victory in this war will give us
simply the opportunity to mould, through our common
effort, a world that 1s, in truth, secure and free.
-
We are to concern ourselves here with essential
steps in the creation of a dynamic world economy in which
the people of every nation will be able to realize their
potentialities in peace; will be able, through their
industry, their inventiveness, their thrift, to raise their
own standards of living and enjoy, increasingly, the
fruits of material progress on an earth infinitely blessed
with natural riches.
Regraded Unclassified
67
- 5 -
This is the indispensable cornerstone of freedom and
security. All else must be built upon this. For freedom
of opportunity is the foundation for all other freedoms.
7
I hope that this conference will focus its attention
upon two elementary economic axioms. The first of these
is this: that prosperity has no fixed limits. It is not
a finite substance to be diminished by division. On the
contrary, the more of it that other nations enjoy, the
more each nation will have for itself. There is a tragic
fallacy in the notion that any country is liable to lose
its customers by promoting greater production and higher
living standards among them. Good customers are
prosperous customers. The point can be illustrated very
simply from the foreign trade experience of my own
country.
Regraded Unclassified
68
- 6 -
In the prewar decade, about 20 per cent of our exports
went to the 47 million people in the highly industrialized
United Kingdom; less than three per cent went to the
450 million people in China.
The second axiom is a corollary of the first.
Prosperity, like peace, is indivisible. We cannot
afford to have it scattered here or there among the
fortunate or to enjoy it at the expense of others.
Poverty, wherever it exists, is menacing to us all and
undermines the well-being of each of us. It can no
more be localized than war, but spreads and saps the
economic strength of all the more favored areas of the
earth.
Regraded Unclassified
69
- 7 -
We know now that the thread of economic life in every
nation is inseparably woven into a fabric of world
economy. Let any thread become frayed and the entire
fabric is weakened. No nation, however great and strong,
can remain immune.
All of us have seen the great economic tragedy
of our time. We saw the world-wide depression of the
1930's. We saw currency disorders develop and spread
from land to land, destroying the basis for international
trade and international investment and even international
faith. In their wake, we saw unemployment and wretchedness -
idle tools, wasted wealth. We saw their victims fall
prey, in places to demagogues and dictators. We saw
bewilderment and bitterness become the breeders of fascism,
and, finally, of war.
Regraded Unclassified
70
- 8 -
In many countries, controls and restrictions were
set up without regard to their effect on other countries.
Some countries, in a desperate attempt to grasp a share
of the shrinking volume of world trade, aggravated the
disorder by resorting to competitive depreciation of
currency. Much of our economic ingenuity was expended
in the fashioning of devices to hamper and limit the
free movement of goods. These devices became economic
weapons with which the earliest phase of our present war
was fought by the Fascist dictators. There was an
ironic inevitability in this process. Economic aggression
can have no other offspring than war. It is as dangerous
as it is futile.
Regraded Unclassified
71
- 9 -
We know now that economic conflict must develop
when nations endeavor separately to deal with economic ills
which are international in scope. To deal with the problems
of international exchange and of international investment
is beyond the capacity of any one country, or of any two
or three countries. These are multilateral problems,
to be solved only by multilateral cooperation. They are
fixed and permanent problems, not merely transitional
considerations of the postwar reconstruction. They are
problems not limited in importance to foreign exchange
traders and bankers but are vital factors in the flow
of raw materials and finished goods, in the maintenance
of high levels of production and consumption, in the
establishment of a satisfactory standard of living for all
the people of all the countries on this earth.
Regraded Unclassified
72
- 10 -
Throughout the past decade, the Government of
the United States has sought in many directions to
promote joint action among the nations of the world.
In the realm of monetary and financial problems, this
Government undertook, as far back as 1936, to facilitate
the maintenance of orderly exchanges by entering into the
Tri-Partite Agreement with England and France, under which
they, and subsequently Belgium, the Netherlands and
Switzerland, agreed with us to consult on foreign exchange
questions before important steps were taken. This policy
of consultation was extended in the bi-lateral exchange
arrangements which we set up, starting in 1937, with our
neighbors on the American continents.
Regraded Unclassified
73
- 11 -
In 1941, we began to study the possibility of
international cooperation on a multilateral basis as a
means of establishing a stable and orderly system of
international currency relationships and to revive
international investment. Our technical staff -
soon joined by the experts of other nations - undertook
the preparation of practical proposals, designed to
implement international monetary and financial cooperation.
The opinions of these technicians, as reported in the joint
public statement which they have issued, reveal a common
belief that the disruption of foreign exchanges can be
prevented, and the collapse of monetary systems can be
avoided, and a sound currency basis for the balanced growth
of international trade can be provided, if we are forehanded
enough to plan ahead of time - and to plan together.
Regraded Unclassified
74
- 12 -
It is the consensus of these technical experts that the
solution lies in a permanent institution for consultation
and cooperation on international monetary, finance and
economic problems. The formulation of a definite proposal
for a Stabilization Fund of the United and Associated
Nations is one of the items on our agenda.
But provision for monetary stabilization alone
will not meet the need for the rehabilitation of war-wrecked
economies. It is not, in fact, designed toward that end.
It is proposed, rather as a permanent mechanism to promote
exchange stability. Even to discharge this function
effectively, it must be supplemented by many other
measures to remove impediments to world trade.
Regraded Unclassified
75
- 13 -
For long-range reconstruction purposes, international
loans on a broad scale will be imperative. We have in mind
a need wholly apart from the problem of immediate aid which
is being undertaken by the United Nations Relief and
Rehabilitation Administration. The need which we seek to
meet through the second proposal on our agenda is for loans
to provide capital for economic reconstruction, loans for
which adequate security may be available and which will
provide the opportunity for investment, under proper
safeguards, of capital from many lands. The technicians
have prepared the outline of a plan for an International
Bank for Postwar Reconstruction which will investigate
the opportunities for loans of this character, will recommend
and supervise them and, if advisable, furnish to investors
guaranties of their repayment.
Regraded Unclassified
76
- 14 -
I shall not attempt here to discuss these proposals
in detail. That is the task of this conference. It is a
task the performance of which calls for wisdom, for
statesmanship, above all for good will.
slow
seow
The transcendent fact of contemporary life is
this - that the world is a community. On battlefronts
the world over, the young men of all our united countries
have been dying together - dying for a common purpose.
It is not beyond our powers to enable the young men of all
our countries to live together - to pour their energies,
their skills, their aspirations into mutual enrichment
and peaceful progress. Our final responsibility is to
them. As they prosper or perish, the work which we do
here will be judged.
Regraded Unclassified
77
- 15 -
The opportunity before us has been bought with blood.
Let us meet it with faith in one another, with faith in
our common future, which these men fought to make free.
Regraded Unclassified
78
July 1, 1944
My dear Mrs. Churchill:
I want to express to you my personal
appreciation and the appreciation of the women of
America for your splendid radio talk last Tuesday.
Your vivid description of the situation
in England gave Americans at home a renowed under-
standing of the immensity of this terrible struggle
and all that we are fighting for. I know that it
meant much to the families of our men and women over-
seas to hear you express so eloquently the spirit of
comradeship that prevails among British and Americans
who are working side by side in this common effort.
We feel that you have made a real contribu-
tion to our Fifth War Loan Drive, and we thank you
most sincerely for your splendid cooperation.
Very sincerely yours,
Elinor F. Morgenthau
(Mrs. Henry Morgenthau, Jr.)
Mrs. Winston Churchill
Number Ten Downing Street
London, England
an Mail 7/6/44
Regraded Unclassified
79
COLUMBIA BROADCASTING SYSTEM
FOR LADIES ONLY
TUESDAY, JUNE 27, 1944
5:00 - 5:15 P.M,, EWT
CUE:
(COLUMBIA BROADCASTING SYSTEM)
(
30 seconds
)
1 ANNCR:
This program is for women and for the Fifth War Loan.
Sitting beside me in the CBS studio in New York are
Mrs. Franklin D. Roosevelt, wife of the President of
the United States, Mrs. Henry Morgenthau Jr., wife of
the Secretary of the Treasury, and Mrs. Hazel Russ, war
worker and wife of a war worker, while in our studio in
London is Mrs. Winston Churchill, wife of the Prime
Minister of Great Britain. These eminent ladies have
come to our microphones this afternoon to discuss the
contributions the women of America and England are making
to the war effort. And here is Mrs. Morgenthau.
MRS. M:
Thank you Mr.
.
Fellow female citizens
You have been told time and again what your country
expects of you, but rarely has anyone taken the time to
tell you what sort of a job you are doing for your country.
Perhaps no woman has had as great an opportunity to
examine at first hand the war work of American women,
as Mrs. Roosevelt has had. And so I have asked her
to tell you some of the things she has seen.
(MORE)
Regraded Unclassified
- 2 -
80
MRS- d:
Today there are sixteen and a half million women
employed in America's war effort. This is nearly
one third of the total working force, and it is 58%
higher than it was four years ago.
And this figure does not include the millions of women
who work long hours as volunteers for the Red Cross,
The O.P.A., the A.W.V.S., the various canteens and the
U.S.O centers across the country. Nor does it include
the hundreds and hundreds of young girls who volunteer
during the summer for work on the farms. Mrs. Morgenthau
I believe you have a group of these young girls working
on your farm up at Beacon, New York, haven't you?
MRS. M:
Yes, they just arrived from college last week.
MRS. R:
How are they working out?
MRS. M:
Excellently. Of course, the first week, there were a
lot of sore muscles from strawberry picking and peach
thinning. And a lot of very sore sunburned backs.
MRS. R:
I imagine so, but you couldn't get the crops in without
them, could you?
MRS. M:
No, it would be impossible. Crops have to be harvested
when they are ripe. In a couple of days they begin to
rot. These girls are doing a real service at my place,
and on many other farms all over the country.
(MORE)
Regraded Unclassified
81
- 3 -
MRS. R:
Yes, crops won't wait. So women harvest them. Blood
won't wait, so women staff the blood banks. Sickness
won't wait, so women wear the cheery blue of Nurse's
Aides, and replace many a registered nurse for duty at
the front lines
The battlo won't wait, so a WAC peels potatoes and another
soldier marches to the front. The war won't wait, so
women slip on slacks and overhalls, and run turrett
lathes, and overhead cranes, and rivoting machines.
It's tremendously inspiring. And it's such an immense
undertaking that it is difficult to appreciate its
enormity. So instead of speaking in astronomical
statistics, we will spoak of the individual. We have
asked a woman war worker to join us here this afternoon.
Ladies, I would like you to meet Mrs. Hazel Russ.
MRS. RUSS:
How do you do.
MRS. R:
Mrs, Russ will you tell us something about yourself.
MRS. RUSS:
Well, there isn't much to tell. Like a great many other
womon, I work at the Koarney Works of the Western Electric
Company over in New Jersey.
MRS. R:
How many women are employed there now, Mrs. Russ?
MRS. RUSS:
25,000.
MRS. R:
And what kind of work do you do?
MRS. RUSS:
I operate a drill press.
MRS: R:
What does the drill press make?
MRS. RUSS:
I can't tell that even to you, Mrs. Roosevelt.
(MORE)
Regraded Unclassified
- 4 -
82
MRS. R:
(LAUGHING) I seo, a military secret.
MRS. RUSS:
Yes. Much of the work we do at Kearney is on very
secret equipment. But I can say that it gives mo a
great satisfaction to know that equipment may be the
means of bringing my boy safely back home.
MRS. R:
Your son is in the service?
MRS. RUSS:
Very much so, Ho was in the North African Invasion.
He was wounded and got the Purple Heart in Tunisia. Ho
was in the invasion of Sicily and ho is now fighting in
Normandy.
MRS. R:
Good luck to him! Well, he is indood a veteran!
MRS. M:
Mrs. Russ, there are a couple of questions I'd like to
ask you.
MRS. R:
I have a suspicion, Mrs. Russ, that War Bonds are about
to be mentioned.
MRS. M:
Yes, indeed. You can't discuss the war effort without
talking about War Bonds. Would you mind telling us about
your personal War Bond program, Mrs. Russ?
MRS. RUSS:
Woll, you see, since my husband works, I don't nood the
money I earn to live on, so I invost my salary in War
Bonds. And my husband buys a bond each wook on the
payroll-deduction plan. And then, during the Fifth War
Loan, we're each buying two extra Bonds.
MRS. M:
Well, that's a pretty thorough program.
MRS. RUSS:
Yes, we're doing it for my son.
(MORE)
Regraded Unclassified
- 5 -
83
MRS. M:
I think a mothor with a boy in service realizos
more fully than anyone else how important it is to
buy the bonds that will buy the guns ho fights with.
MRS. RUSS:
Woll, that's quito true, but I didn't exactly moan that
when I said NO were doing it for our boy. You see ho's
engaged to a girl in
. And we want to build
up a nest egg for him, so that he'll got a good start
when he comes home and gots marriod to
.
MRS. M:
What a lovely idea.
MRS. RUSS:
We have just reached the $2,000 mark. And we won't stop
until my son gots home.
MRS. R:
Good for you, Mrs. Russ, and we all hope he will be back
very soon.
MRS. RUSS:
Thank you, Mrs. Roosevelt.
MRS. R:
Thank you for boing with us, Mrs. Russ. I am sure she will
not mind if I say that Mrs. Russ is not an exceptional
woman. She is typical of women I have met and talked to,
all over America, women who have turnod to the service
of their country in countloss ways. Women who realize
that this is a total var, a people's war, and there is no
place anywhere for the sluggard and the laggard, and the
slacker.
The bombs and machine guns of the enomy are no respecter
of sex or age, or creed or color. And the plans of
the Gorman High Command and the Imperial Japanese Staff
include the slavery of womon as well as the enslavement
of mon, We here in America are 80 fortunate that we have
Regraded Unclassified
- 6 -
84
never felt the sting of the German lash, or the nameless
obscenities of Japanoso torturo. We are so fortunate
that our towns and cities remain standing, solid and
beautiful in the clear American light. That we have never
known the horror of searching through the ruins of our
homes for the broken bodies of our loved'ones. To be so
fortunate is to be obligated to serve our country all the
more. Our neighbor across the Atlantic has not been 80
fortunate. The English woman's face is sterner today as
she goes about her wartime duties. She knows what war is,
because she is serving in a combat zone, In London
where it is now late evening, there is sitting a very
good friend of mine who knows well how well the English
woman is doing her job. She is the wiie of the Prime
Minister of Great Britain. Mrs. Churchill, will you tell
the women of America about the women of England.
SWITCH TO
MRS. CHURCHILL: (FOUR TO FIVE MINUTES)
MRS. C:
On D-plus-twenty Day of the opening of the Western Pront
we celebrate the fall and the liberation of France. I'm
happy and honored to join Mrs. Roosevelt and Mrs. Morgenthau
in a message to the people of America in the interest of
the Fifth War Loan Drive.
(MORE)
Regraded Unclassified
- 7 -
85
I'm no stranger to these campaigns. When I was in Washington
last September I saw the launching of America's Third War
Loan Drive, and Mr. Morgenthau sold my husband the first
Bond. I have vivid memories of the infectious enthusiasm
which marked that campaign, and so I can imagine what you are
all thinking and doing now this very day.
We in Britain have had a number of war savings drives to
which our people, like yours, have given without stint.
You may like to know the names we give to those campaigns,
for I think those names are not only picturesque, but sum
up in themselves the course of this war. Our first National
Savings Week began in June, 1940. That June, like this
June, was a June the world will never forget the month
of the fall of France, of the retreat from Dunkirk, and of
the Dunkirk spirit, our finest hour. Since then we've had
War Weapons Week, Warships Week, Tanks and Tax, Wings for
Victory Week -- what a stirring title that is -- and
Raise the Standard. These names spell out the progress
of the United Nations from the bottom of the Valley of the
Shadows to more than halfway up the hill. Our latest is
named "Salute the Soldier". Doesn't that express the
emotions of all of us today? We salute with pride and
love the soldiers of our two nations and our staunch allies,
whose achievements and prowess are today ringing around the
world. Through your War Loan Drive, as through our National
Savings Weeks, we can express at least some part of our
(MORE)
Regraded Unclassified
86
- 8 -
gratitude and admiration.
I spoke just now of the summer of 1940. Our thoughts go
back to it in this far distant summer of 1944. It was then
that my husband said, "We shall fight on the beaches; we
shall fight on the landing grounds; we shall fight in the
fields and on the streets." Today our soldiers and your
soldiers are fighting on the beaches and the landing grounds,
but they are not the beaches of Britain -- they are the
beaches of France. They are the beaches the Gormans have
held in their grip for four long years, and now it is with
your noble aid and under your command that this magical
-- may I say, mireculous change -- has been wrought.
I could not spoak to America without saying something of
the American soldiers in Britain, your sons, your husbands
or brothers. 170've taken them to our hearts. I think a
simplest and best expression of this is the phrase I so often
hear, "How the children love thom." Bring a child and an
American soldior together and both will be happy.
One of the good things that will come out of this terrible
war are these friendships. We can never now think ofan
American as a stranger. They're part of our daily life.
They've blended into our familiar English background. Many
of them soon to know London as well as our Cockneys, No
prize them for their kindliness, their tact, their natural
dignity and thoir senso of human values, and how stainart
and handsome they look. We're glad.tophavo such friends,
(MORE)
Regraded Unclassified
- 9 -
87
They share our experiences - grim and gay. I like to 800
them from my windows looking at the flowers or feeding
the ducks in St. James's Park.
In these new days (?) of flying bombs I've heard many
stories of Amorican soldiers going to the rescue of victims,
holping to dig out poor people buried under rubble and
tending hurt. and frightoned children. (Very low hore
hard to pick up
more than
bombs to people who have
shared such experiences."
Under Gen. Eisenhower, Suprome Commander, whose twin
qualitios of heart and mind are felt by millions who have
never scen him, the allied armies are fused into one. Out
of that unity have sprung the strength and efficiency we
see on the battlefront today. Let us give the joint forces
of our united peoples every ounce of support in thoir
tromendous enterprise. Let us 800 them through.
I return you now to Mrs. Franklin D. Roosevelt in New York,
MRS. R:
That is an inspiring report Mrs. Churchill, and one that we
are grateful to you for giving to us.
MRS. M:
Yes, Mrs. Churchill, the experience that you and your fellow
citizens have had in war savings drives has been of
tremendous value to us in conducting our War Bond Campaigns.
American womon too, have done a staggering job during each
one of our War Bond Drives. Thousands of thom have volunteero
to push the doorbells and tramp the streets and roads of the
country to make the personal and direct appeal which is 50
(MORE)
Regraded Unclassified
88
10 -
MRS. Mᵢ
vitally important in selling a bond. It is no exaggeration
CONT.-
to say that not a single state would have made its quota
in any Drive had it not been for the combined, tireless
effort of these patriotic men and women. It isn't easy,
and sometimes it isn't even pleasant to try to separate
people from their money. But these thousands of anonymous
volunteer salesmen have devoted millions of hours to doing
just that, Thanks to them, the American People realize
more fully their financial responsibility in themselves,
and their government, which is in the final analysis,
themselves. They realize now that buying War Bonds is
not a sacrifice. It is the world's best investment.
Every three dollars grows to four dollars in ten years.
And they realize that their money will mean so much more
to them in the future than it can mean now, when so many
things are not available for purchase by civilians. And
so many things that are available are of inferior quality,
or are priced beyond any sensible relationship to their value,
MRS. R:
Yes, Mrs. Morgenthau; those economic reasons are absolutely
sound, and would be sufficient reason for the purchase of
War Bonds, without the other reasons which appeal a little
more to the heart than to the head. We must buy War Bonds.
We must buy them regularly each week, and then during the
War Bond Drive we must buy extra Bonds.
(MORE)
Regraded Unclassified
89
- 11 -
ANNOUNCER:
You have just heard a special broadcast for the Fifth War
Loan with Mrs. Franklin D. Roosevelt, wife of the President
of the United States, Mrs. Henry Morgonthau, wife of the
Secretary of the Treasury, and Mrs. Hazel Russ, war worker, and
wife of a war worker, speaking from New York, from London
Mrs. Winston Churchill, wife of the Prime Minister of
Great Britain, "Back the Attack. Buy More Than Before."
This is CBS, the COLUMBIA ... BROADCASTING SYSTEM
-face theme 20 seconds-
WABC
NEW YORK
Regraded Unclassified
90
June 29, 1944
Women's Broadcast
Mr. Gamble
Per telephone conversation today Mr. Keatley of the State
Department advised they would transmit & letter to Moscow today
to tell them that the broadcast was over and to close the case.
hsh
Regraded Unclassified
91
25
June 26, 1944
Dear Mr. Keatley:
You have been kind enough to forward the invita-
tion to Madame Molotov to appear on a Fifth War Loan
program with Mrs. Roosevelt, Mrs. Churchill and
Mrs. Morgenthau. Hearing nothing from our original
communication, delivered by your department, we asked
you to follow this up. On June 15 you advised us that
this had been submitted to the Russian desk.
We assumed that because we did not hear, there were
some complications that could not be ironed out and
consequently have gone ahead with the program. There-
fore, it will not be necessary for you to do any more
on this. The program is going on the sir Tuesday,
June 27.
I do want you to know, however, that we here at
the Treasury appreciate your courteous handling of this
request.
Sincerely yours,
Ted R. Gamble,
National Director,
War Finance Division.
Mr. G. Harold Keatley,
Assistant Chief,
Division of Communications and Records,
State Department,
Washington 25, D. C.
Regraded Unclassified
DEPARTMENT
INCOMING
DIVISION OF 92
OF
COMMUNICATIONS
STATE
TELEGRAM
AND RECORDS
FBM-119
Moscow
This telegram must bE
paraphrased before being
Dated June 13, 1944
communicated to anyone
other than a Government
Rec'd 3:47 a.m., 14th.
Agency. (RESTRICTED)
DEPARTMENT OF STATE
Secretary of State,
JUN 15 1944
Washington.
DIVISION OF
COMMUNICATIONS & RECORDS
2116, June 13, 8 p.m.
The Embassy took up the question of Mrs.
Morgenthau's invitation (Department's 1471, June 10,
7 p.m.) on June 9 and June 12 with the chief of the
American Section of the Fortign Office and stressed
its urgency. The chief of the American Section
stated that hE would look into the matter.
HARRIMAN
RB
WSB
Regraded Unclassified
93
COPY
THE UNDER SECRETARY OF STATE
WASHINGTON
June 10, 1944
Dear Mr. Gamble:
Thank you for your note of June 9
enclosing a message to Madame Chiang
Kai-shek from Mrs. Morgenthau. The
message has been sent this morning
exactly as you submitted it.
With best wishes,
Sincerely yours,
)S( Edward R. Stettinius, Jr.
Mr. Ted R. Gamble,
National Director,
War Finance Division,
Treasury Department.
Regraded Unclassified
94
June 9, 1944
Mrs. Morgenthau told me today that Mr. Gamble will
handle this matter from now on, including letting
the Chinese and Russian Ambassadors know what is
being done. She said that we did not need to worry
about it at all.
Mrs. McHugh
Regraded Unclassified
95
June 9, 1944
Mr. Gamble
M. K. McHugh
Mrs. Morgenthau asked that I send you a copy
of this letter which she received from Ambassador Halifax.
Regraded Unclassified
96
BRITISH EMBASSY,
WASHINGTON 8, D.C.
June 8th, 1944.
Personal
Dear Mrs. Morgenthau,
Thank you very much for your letter of
June 5th, which I was very glad to get.
I hope the programme will go well.
Yours very sincerely,
Halifax
Mrs. Henry Morgenthau, Jr.,
War Finance Division,
Treasury Department,
Washington, D.C.
Regraded Unclassified
97
June 9, 1944
Dear Mr. Stettinius:
We will appreciate it very much if you will
have the attached message transmitted as quickly
as possible to Medam Chiang Kai-Shek.
Unfortunately, due to circumstances beyond
our control we will not be able to avail ourselves
of her part in our War Bond program.
Sincerely,
Ted R. Gamble,
National Director,
War Finance Division.
Honorable Edward R. Stettinius, Jr.,
Under Secretary of State,
Washington 25, D. C.
TRG:ecb
Regraded Unclassifi
98
STANDARD FORM No. 14
APPROVED BY THE PRESIDENT
FROM
MARCH 10, 1926
BUREAU TREASURY DEPARTMENT
TELEGRAM
CHG. APPROPRIATION EXPENSES OF LOANS
OFFICIAL BUSINESS-GOVERNMENT RATES
CABLEGRAM
c. a. AUTHORIZED PROFFING -
10-1723
MADAM CHIANG KAI-SHEK
THANK YOU FOR YOUR FRIENDLY AND AFFIRMATIVE CABLE IN ANSWER TO
MY INVITATION OF MAY 26. I AM TERRIBLY SORRY TO HAVE TO INFORM
YOU THAT THE NETWORK RADIO PEOPLE AS A MATTER OF LONG STANDING
PRACTICE HAVE A RULING FORBIDDING THE USE OF TRANSCRIBED
MESSAGES ON A LIVE PROGRAM AND CONSEQUENTLY WILL HAVE TO FORGO
THE PLEASURE OF HAVING YOU JOIN US.
MRS HENRY MORGENTHAU, JR.
TRG:
Regraded Unclassified
99
Mr. Gamble is preparing an answer to
Madame Chiang Kai-shek and will have
it ready this afternoon - Wednesday.
ADDRESS OFFICIAL COMMUNICATIONS TO
Chuch with
100
THE SECRETARY OF STATE
WASHINGTON, D.C. 25
Sery.
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
FE 811.51/6515
June 5, 1944
My dear Mr. Secretary:
With further reference to your letter of May 22,
1944, Madame Chiang Kai-shek has replied as follows to
Mrs. Morgenthau's message:
"I received your cablegram of May 26. After
consultation with my doctors they unanimously
insist that I must leave Chungking before heat
begins in July 8.8 I have been 111 for several
months. But I am eager to do my part and wonder
whether it will be feasible if I make a record
to be sent to you before I leave. If suggestion
is acceptable, please inform me subject on which
you wish me to speak, also duration.'
Sincerely yours,
Actiong Secretary
The Honorable
Henry Morgenthau, Jr.,
FORVICTORY
BUY
Secretary of the Treasury.
UNITED
STATES
SAVINOS
BONDS
AND
STAMPS
Regraded Unclassified
101
June 5, 1944
Memorandum
To:
Mr. Gamble
From:
Mrs. Morgenthau
I am enclosing herewith copy of a letter which
I have written to Lord Halifax today.
When the final arrangements are made, would
you please have some one inform the Ministry of Information.
Regraded Unclassified
102
June 5, 1944
My dear Mr. Ambassador:
Through the State Department, I sent the following
message to Mrs. Churchill:
"In the interest of the United States
Fifth War Loan Drive, a special women's
radio program is planned for some time the
week of June eighteen stop I would be honored
to have you join with Mrs. Roosevelt and myself
stop I am also inviting Mme. Molotov and Mme.
Chiang Kai-shek to appear with us stop
We believe such a program in addition to helping
Bond Drive will demonstrate to the world the
solidarity of the women of the United Nations
stop Would appreciate an early reply."
I was very happy to receive the following answer
from her:
"I am honored to accept your invitation to
join Mrs. Roosevelt and yourself in the women's
radio programme in July. Thank you so much for
asking me. Clementine Churchill."
I thought you would like to know about this, and we
will be glad to keep the Ministry of Information informed
when the final arrangements have been made.
With kind regards,
Sincerely yours,
Mrs. Henry Morgenthau, Jr.
The Right Honorable the Viscount Halifax, K.G.,
Ambassador Extraordinary and Plenipotentiary,
British Embassy,
Washington, D.C.
Regraded Unclassified
102
June 5, 1944
My dear Mr. Ambassador:
Through the State Department, I sent the following
message to Mrs. Churchill:
"In the interest of the United States
Fifth War Loan Drive, a special women's
radio program is planned for some time the
week of June eighteen stop I would be honored
to have you join with Mrs. Roosevelt and myself
stop I am also inviting Mme. Molotov and Mme.
Chiang Kai-shek to appear with us stop
We believe such a program in addition to helping
Bond Drive will demonstrate to the world the
solidarity of the women of the United Nations
stop Would appreciate an early reply."
I was very happy to receive the following answer
from her:
"I am honored to accept your invitation to
join Mrs. Roosevelt and yourself in the women's
radio programme in July. Thank you so much for
asking me. Clementine Churchill.'
I thought you would like to know about this, and we
will be glad to keep the Ministry of Information informed
when the final arrangements have been made.
With kind regards,
Sincerely yours,
Mrs. Henry Morgenthau, Jr.
The Right Honorable the Viscount Halifax, K.G.,
Ambassador Extraordinary and Plenipotentiary,
British Embassy,
Washington, D.C.
Regraded Unclassified
ADDRESS OFFICIAL COMMUNICATIONS TO
photostat to m 8am103 103 6/3
THE SECRETARY OF STATE
WASHINGTON, D.C. 25
say took carton
home for them. m.
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
BC
June 1, 1944
Dear Henry:
With further reference to your letter of May 22,
1944, Mrs. Winston Churchill has replied 2.3 follows to
Mrs. Morgenthau's message:
"I am honored to accept your invitation to join
Mrs. Roosevelt and yourself in the women's radio pro-
gramme in July. Thank you so much for asking me.
Clementine Churchill."
Sincerely yours,
The Honorable
Henry M. Morgenthau, Jr.,
Secretary of the Treasury.
FORVICTORY
BUY
UNITED
STATES
SAVINGS
BONDS
AND
STAMPS
Regraded Unclassified
104
MAY 22 1944
Dear Cordell:
I will greatly appreciate your forwarding
the attached cables to Mrs. Winston Churchill,
Madame Chiang Kai-Chek and Madame Molotov. We
are hoping to have a world-wide broadcast during
the Fifth War Loan featuring these important
women.
Anything you can do to expedite these cables
will be very helpful to the Bond Drive.
Yours sincerely,
(Signed) Henry Morgenthau, Jr.
Honorable Cordell Hull
Secretary of State
Washington, D. C.
Attachments
FS:vem
P
Regraded Unclassified
105
MME. MOLOTOV
IN THE INTEREST OF THE UNITED STATES FIFTH WAR LOAN DRIVE
A SPECIAL WOMENS RADIO PROGRAM IS PLANNED FOR SOME TIME
THE WEEK OF JUNE EIGHTEEN STOP I WOULD BE HONORED TO HAVE YOU
JOIN MRS. ROOSEVELT AND MYSELF STOP I AM ALSO INVITING
MRS. CHURCHILL AND MME. CHIANG KAI-CHEK TO APPEAR WITH US
STOP WE BELIEVE SUCH A PROGRAM IN ADDITION TO HELPING BOND
DRIVE WILL DEMONSTRATE TO THE WORLD THE SOLIDARITY OF THE
WOMEN OF THE UNITED NATIONS STOP WOULD APPRECIATE AN EARLY
REPLY.
MRS. HENRY MORGENTHAU, JR.
Regraded Unclassified
106
MRS. WINSTON CHURCHILL
IN THE INTEREST OF THE UNITED STATES FIFTH WAR LOAN DRIVE
A SPECIAL WOMENS RADIO PROGRAM IS PLANNED FOR SO ME TIME
THE WEEK OF JUNE EIGHTEEN STOP I WOULD BE HONORED TO HAVE YOU
JOIN WITH MRS. ROOSEVELT AND MYSELF STOP I AM ALSO INVITING
MME MOLOTOV AND MME CHIANG KAI-CHEK TO APPEAR WITH US STOP
WE BELIEVE SUCH A PROGRAM IN ADDITION TO HELPING BOND DRIVE
WILL DEMONSTRATE TO THE WORLD THE SOLIDARITY OF THE WOMEN
OF THE UNITED NATIONS STOP WOULD APPRECIATE AN EARLY REPLY.
MRS. HENRY MORGENTHAU, JR.
Regraded Unclassified
107
MME CHIANG KAI-CHEK
IN THE INTEREST OF THE UNITED STATES FIFTH WAR LOAN DRIVE
A SPECIAL WOMENS RADIO PROGRAM IS PLANNED FOR SOME TIME
THE WEEK OF JUNE EIGHTEEN STOP I WOULD BE HONORED TO HAVE
YOU JOIN MRS. ROOSEVELT AND MYSELF STOP I AM ALSO INVITING
MRS. CHURCHILL AND MME. MOLOTOV TO APPEAR WITH US STOP WE
BELIEVE SUCH A PROGRAM IN ADDITION TO HELPING BOND DRIVE WILL
DEMONSTRATE TO THE WORLD THE SOLIDARITY OF THE WOMEN OF THE
UNITED NATIONS STOP WOULD APPRECIATE AN EARLY REPLY.
MRS. HENRY MORGENTHAU, JR.
F
Regraded Unclassified
Secretary of the Treasury
108
7-1-44
INCOME AND EXCESS PROFITS TAXES
FOR JUNE 1944
AS COMPARED WITH JUNE 1943
BY
FEDERAL RESERVE DISTRICTS
June 1944
June 1943
BOSTON
$
338,313,011.14
$
258,490,469.34
NEW YORK
1,110,351,567.18
1,010,525,256.15
PHILADELPHIA
317,436,568.99
330,141,819.30
CLEVELAND.
551,806,852.48
450,719,491.53
RICHMOND
272,252,238.00
218,487,780.31
ATLANTA.
165,253,963.50
157,450,735.21
CHICAGO.
836,940,185.52
694,114,598.72
ST. LOUIS.
130,318,267.46
109,044,745.80
MINNEAPOLIS.
71,802,624.36
74,673,867.95
KANSAS CITY.
136,876,796.86
134,057,356.27
DALLAS
103,268,809.07
94,393,902.66
SAN FRANCISCO.
393,682,986.72
257,526,696.77
TOTAL, FEDERAL RESERVE BANKS $ 4,428,303,871.28
$ 3,789,626,720.01
TERRITORY OF HAWAII.
* 1,350,497.70
** 1,570,782.68
GRAND TOTAL.
$ 4,429,654,368.98
$ 3,791,197,502.69
* Reports June 10 - 30, 1944 Incl. not yet received.
** Reports June 15, 16, 17, etc. not yet received.
Regraded Unclassified
108-A
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 1, 1944
TO
Secretary Morgenthau
FROM Mr. D. W. Bell
Subject: Financing Relief and Rehabilitation in Italy.
The following is a proposed Treasury program for
financing relief and rehabilitation in Italy:
(1) The proposal to use Lend-Lease for relief and
rehabilitation supplies on a basis of cash
reimbursement in lire is not deemed desirable
by Treasury.
(2) AS an alternative it is suggested that we
apply to Italy on a retroactive basis the prin-
ciple adopted for the western European coun-
tries of making the dollars used for troop pay
available to pay for relief and rehabilitation
supplies.
Acceptance of this proposal will be subject
to approval of appropriate Congressional com-
mittees.
(3) The U. S. and British Governments should ask
UNRRA to take part of the burden and should
accept any aid which UNRRA will give.
(4) The Army should continue to furnish civilian
supplies at least until October 1, 1944.
(5) A program should be initiated to build up
the AF accounts. The foreign exchange in
these accounts should be made available immed-
iately for payment for supplies which the Army
cannot or will not furnish and for necessary
reconstruction goods not otherwise provided
for.
Regraded Unclassified
108-B
- 2 -
(6) The problem of financing reconstruction in
Italy should not be dealt with at present.
Meanwhile, the possibility of furnishing such
supplies under Section 3-C of the Lend-Lease
Act or the mechanism of the Export-Import
Bank should be explored.
The main point of this program is to make available
for relief and rehabilitation supplies the dollars used
for the pay of troops in Italy. The following are the
advantages of this proposal:
(a) This is the policy which will be applied to
Belgium, the Netherlands and Norway and is
consistent with the President's policy of
treating Italy as a liberated area rather
than an occupied enemy country.
(b) It will be politically difficult for the British
to avoid following a similar policy. This
would mean that the British would undertake a
larger share of the cost of relief and rehabil-
itation in Italy than by any other method.
(c) If the principle is applied retroactively as
we recommend, it would mean making available
about $120 million and the equivalent of
$80 million in sterling. In addition, it
would give Italy currently about $15 million
and the equivalent of about $10 million sterling
monthly. This would probably provide enough
foreign exchange to do the full relief and
rehabilitation job during the next year.
(d) Our long run financial position would be better
under this arrangement. By using the dollars
in the special account now in payment for
supplies to Italy, we will be returning to
the U. S. the full amount of dollars used for
troop pay, which we will undoubtedly be turn-
ing over to Italy at some point. If, on the
other hand, these dollars are merely thrown
Regraded Unclassified
108-C
- 3 -
into the settlement of all claims against Italy
and Italian counterclaims, we might have to
share these assets with other countries that
have claims against Italy. In addition, we
would not be foreclosing the possibility of
adding the cost of the pay of our troops to
our claims against Italy.
(e) Such a policy would give the final blow to any
allegations that the expenditures of our troops
are causing inflation in Italy because we would
then be bringing in supplies at least equal in
value to the total expenditures of our troops
in Italy.
We believe a better case can be made to Congress for
this proposal than for the F.E.A. proposal or for a pro-
posal to give Italy relief and rehabilitation supplies
on straight Lend-Lease or on credit.
DWB
Regraded Unclassified
109
Report of the War Refugee Board
for the Week of June 26 - July 1, 1944
TEMPORARY HAVENS FOR REFUGEES IN THE UNITED STATES
Ambassador Murphy and Board Representative Ackermann are
continuing to work out details involved in the evacuation
of the 1,000 refugees from southern Italy.
According to newspaper reports from Bari, hundreds of
refugees have been crowding the offices of the Allied
Control Commission to register their desire to be included
in the group that is to come to this country.
The War Relocation Authority has arranged to send a
representative to accompany these refugees to the United
States.
Meanwhile we have cabled Murphy and Ackermann for certain
specific information in connection with the refugees
selected for evacuation, including breakdowns by age, sex,
marital status, religion, languages spoken, occupations
and professions, and countries of origin.
President's Message to Congress Publicized
Ambassador Harriman has advised us that the Moscow
press on June 27 published the text of the President's
special message to Congress with respect to our plans to
provide a haven for these refugees from southern Italy.
According to a cable from Minister Harrison in Bern,
the President's message was also communicated to the Swiss
Foreign Office and to 145 newspapers in Switzerland. It
was reported that assurances were received that every
leading newspaper in the country would carry the message
in full. Harrison also indicated that editorial comment
on the President's action had been furnished seven
influential German-language and French-language Swiss
papers, all with extensive coverage. Swiss Radio coverage
was also arranged. Efforts were to be directed toward
transmitting the substance of the President's message from
Switzerland to enemy territory through all available channels.
Regraded Unclassified
110
- 2 -
COOPERATION WITH GREAT BRITAIN
In the course of recent discussions with the British,
certain information was requested with respect to Treasury
licenses authorizing refugee rescue and relief operations
in enemy territory. We have now advised Mr. Thorold of
the British Embassy that, as of June 1, the total amount
authorized by the Treasury for such operations is $2,088,100.
Although this is the total amount authorized to be remitted
to neutral countries, the amount actually sent is consider-
ably less.
With respect to the third method of financing permitted by
the licenses under question - the use of free currency in
enemy territory, only a very small fraction of the total
amount authorized has been used in this manner, according
to reports presently available. Cables are now being sent
to the U.S. Missions concerned requesting reports on the
total amount, if any, of free currency sent into enemy
territory under such licenses.
British Response Re Other Temporary Havens
Ambassador Winant has reported from London the substance
of a memorandum from the British Foreign Office with respect
to our proposal that refugees escaping from enemy territory
to southern Italy be removed as soon as possible to temporary
havens elsewhere. In this memorandum the Foreign Office
stated that it agrees emphatically with our views that the
escape of refugees from the Balkans to Italy should in no
way be discouraged. Toward this end, it was said that British
military authorities in the Middle East remain prepared to
accommodate some 40,000 Yugoslav refugees in Egypt provided
the United Nations Relief and Rehabilitation Administration
succeeds in obtaining the necessary medical staff. In the
absence of the required personnel, however, British military
authorities doubt that they can accommodate more than the
25,000 who have already arrived in Egypt. The British
indicated that they are therefore pressing the European
headquarters of UNRRA on this matter.
The Foreign Office also indicated that as soon as the
Rumanian Red Cross, the Swiss authorities in Rumania, and
the International Red Cross, in conjunction with the Jewish
Agency for Palestine, can make the necessary arrangements,
a British ship can be ready on thirty days' notice to
proceed to Constanza for the evacuation of Jewish refugees.
While the Foreign Office felt that the German Government is
no more likely to grant the necessary safe-conduct in this
Regraded Unclassified
111
- 3 -
case than in that of the "S.S. Tari," it was said that
nevertheless the matter would be actively pursued.
At the same time the Foreign Office indicated that it
is examining the proposal that Sicily might be used as a
temporary haven for refugees.
In connection with our belief that Camp Lyautey at
Fedhala should not be opened to refugees from Italy but
should be kept available for refugees arriving from Spain,
complete agreement was expressed.
With respect to our proposal that the British grant
Palestine certificates to Jewish refugees in liberated Italy,
the British feel that since these refugees are in an area
where they are safe from enemy persecution, preference should
be given under the limited quota allotted for immigration
into Palestine to those Jews elsewhere whose lives are still
in danger as a result of enemy oppression. The Foreign Office
concluded by pointing out that while considerable numbers of
Yugoslav refugees from Hungary have already been received in
Palestine, and while they do not doubt the desirability of
moving other refugees from southern Italy for operational
reasons, it believes that alternative places of refuge should
be used to the greatest possible extent.
FOOD PARCELS TO UNASSIMILATED CIVILIANS
We have been advised from Algiers that the sale of salvageable
food packages on board the "S.S. Christina" for allocation
to French concentration and refugee camps, at & price to be
decided by the International Red Cross, is acceptable to the
French Committee. This decision has been transmitted by the
Committee to a French representative in Washington, and
negotiations are continuing here.
Efforts to obtain the agreement of the Belgian Government-in-
Exile, which holds part title. to the food packages, are also
continuing.
Other Approaches to Germans Proposed
In view of the disappointingly negative answer which we
received from the International Red Cross in response to our
proposal that Intercross attempt to obtain from the German and
satellite governments assurances that Jews and other persons
confined in Axis territory would be accorded treatment equal
to that of civilian internees, we have asked Minister Harrison
to approach the Swiss Government informally in the hope that
Regraded Unclassified
- 4 -
112
Swiss influence can be brought to bear upon German officials
in this matter, in the interest of assuring the survival of
these helpless peoples.
We have also addressed an appeal through the Apostolic
Delegate in Washington to the Holy See, in the hope that the
Holy See will find it appropriate to use its good offices
with the German and satellite governments to alleviate the
lot of Jews and other persons detained in enemy territory,
at least to the extent of permitting them to receive standard
packages under Intercross supervision.
CONDITIONS IN THE SATELLITE COUNTRIES
Secretary Hull at his radio and press conference on June 26
acclaimed the protest issued recently by the House Foreign
Affairs Committee over the persecution and murder of Jews in
Hungary. Secretary Hull asserted that there cannot be too
many protests against the wholesale murder being practiced
by the Nazis. Pointing out that the House Committee resolution
demanded that the puppet Hungarian Government put an end to
these assassinations, Secretary Hull reiterated in an extremely
helpful manner this Government's intention of seeing to it
that those who are guilty of such inhuman conduct are fittingly
punished.
Spellman Statement Released
The statement recently forwarded to the Board by Arch-
bishop Spellman of New York and directed toward Hungarians,
has now been released by the Office of War Information. This
statement is to be shortwaved to appropriate areas. At the
same time, we have asked our Missions in Switzerland, Turkey,
Portugal, Spain, and Sweden to promote such additional use of
the statement as may be feasible on the part of local news-
papers and radio stations in these various European countries.
The statement is also to be brought to the attention of
Hungarian and other satellite authorities through whatever
channels are available.
Report from Jerusalem
According to a communication from Consul General Pinkerton
in Jerusalem, a Jewish Agency representative has now furnished
additional information on the matter of Jewish persecutions in
Hungary and Rumania. Hundreds of thousands of Jews are said
to have been interned in Hungarian camps and ghettos. The names
of twenty-six such ghettos were forwarded.
Regraded Unclassified
113
- 5 -
Details were supplied by the Jewish Agency representative
with respect to previous reports concerning the arrest of a
number of Jewish leaders in Bucharest late in March. While
intervention on the part of representatives of the local
Jewish community is said to have effected the release of two
of the persons arrested by the Rumanian police, all of the
others are reported to be still under detention and are to be
tried before & court martial. The charges brought against
them are "activities harmful to the security of the state,
communication with the enemy, and smuggling of Polish Jews
to Rumania."
According to the recently arrived refugee from whom this
information was obtained, there are reasons to believe that
the authorities in Rumania are showing a tendency to alleviate
the conditions of the Jews there in the hope that this may
place them in a more favorable position with the Allies. It
was thought that diplomatic intervention with respect to the
persons still detained in Bucharest might therefore produce
results. Contrary to the original report that only 12 to 15
persons remain in custody, it was indicated that there now
appear to be some 26 persons involved.
Report from Bern
Board Representative McClelland has advised us that there
is now no doubt but that the majority of the Jewish population
east of the Danube, especially in eastern, northern, and
northeastern Hungary, have been deported to Poland. McClelland
indicated that information confirming this fact had come to
him over the past two weeks from various reliable, independent
sources.
Prior to the deportations there were said to have been
two weeks to a month of brutal concentration, during which
thousands of Jews were crowded together in primitive quarters
without sufficient food, clothing, or water and without
respect to health, sex, or age. Hungarian gendarmes are said
to have carried out this action.
The actual large-scale deportations apparently began
about May 15 and lasted until the middle of June, according
to the information reaching McClelland. Some 12,000 persons
per day were said to have been involved. It was reported
that, characteristically, people were deported 60 to 70 per
sealed freight wagon for a trip of two to three days, without
adequate food or water.
Regraded Unclassified
- 6 -
114
The particular stretches of railroad used in these
deportations were indicated to McClelland, who relayed to
us without recommendation the fact that all his sources of
information in Slovakia and Hungary had urged that vital
sections of these lines, especially bridges, be bombed as
the only possible means of slowing down or stopping future
deportations.
According to the figures received by McClelland, at
least 335,000 Jews have already been deported from Sub-Car-
pathian and Ruthenian areas, from Transylvania, and from the
Tisz region. Some 350,000 Jews are said to have been con-
centrated in Budapest and environs.
McClelland also forwarded the names of individuals in
the Hungarian Government who are said to bear the major
responsibility for these persecutions.
Substantial Sums Sought for Rescue Work
Various private organizations in this country have been
receiving appeals for substantial amounts of money to be used
in efforts to stop deportations and to permit departures for
safer countries. According to one such appeal, there is the
possibility that an additional 8,000 persons can be rescued
from the Balkans at an approximate cost of two to two and
one-half million dollars. The American Jewish Joint Distri-
bution Committee, to whom the appeal was addressed, has
indicated that it is willing to underwrite these operations.
Accordingly, we have cabled details of the proposal to
Ambassador Steinhardt and Board Representative Hirschmann
in Ankara, asking that they forward to us immediately their
recommendations in the matter.
Another appeal indicated that some 2600 persons from the
Balkans might be evacuated if the operations proposed could
be underwritten to the extent of $800,000. In these evacua-
tions ships similar to the "Milka". and "Maritsa" would be
used, without hope of safe-conduct, for transporting refugees
to Istanbul. In view of the risks involved, responsibility
would be shared by the Board, the Jewish Agency, and the
Joint Distribution Committee. Under these conditions, the
JDC has agreed to provide up to $800,000 for the program
contemplated. The recommendations of Steinhardt and Hirschmann
have also been solicited in this connection.
EVACUATIONS TO AND THROUGH TURKEY
Minister Johnson has advised us from Stockholm that the
Swedish Foreign Office has indicated, in response to our
Regraded Unclassified
115
- 7 -
request, that it will again sound out the Germans with respect
to & safe-conduct for the "Bardaland" on the basis of our
assurances that the refugees evacuated from the Balkans on
this vessel would be taken to havens of refuge other than
Palestine. A Foreign Office spokesman, however, indicated
his belief that the Germans' previous refusal to grant a
safe-conduct for the "Bardaland" is attributable to the
general Nazi policy of preventing Jews from getting out of
German-occupied territory to go anywhere, since to do other-
wise would be contrary to the Nazi determination to exterminate
all Jews. Despite these views, we are cabling Johnson that
since human lives hang in the balance, we feel strongly that
all possibilities for obtaining a German safe-conduct should
be exhausted. Tie are therefore requesting that Johnson press
the Swedish Government to take the action suggested.
Indemnity on the "Bardaland"
With respect to the indemnity claimed by the owners of
the "Bardaland" covering the period during which the vessel
was tied-up at Piraeus by our negotiations for its use, we
have cabled Johnson that since only a preliminary estimate
have been presented, we are withholding action pending sub-
mission of a final itemized claim.
The preliminary estimate of 80,000 kronor (approximately
$19,000) has meanwhile been discussed with a representative of
the War Shipping Administration. The estimate submitted is
considered by the WSA representative to be a reasonable
indemnity under the circumstances.
Arrivals from Bulgaria
In a cable to Steinhardt and Hirschmann we are indicating
that we were gratified to learn that Turkish border guards
have been instructed not to turn back Jewish refugees at the
Bulgarian border, notwithstanding their lack of Turkish visas.
Since Steinhardt's cable confined itself to arrivals by rail,
we are asking that inquiry be made as to whether these in-
structions to border guards extend to Jews and other persecuted
people attempting to cross the Bulgarian border clandestinely
on foot. Information is also being requested as to the
number of refugees coming over the Bulgarian frontier without
Turkish visas during the past month.
In another communication to Board Representative Hirschmann
we are relaying a report to the effect that 1,000 Turkish
pounds are demanded in Sofia for each Turkish visa. Hirschmann
is being asked to investigate this report, and if verified,
to endeavor to have the amount materially reduced.
Regraded Unclassified
116
- 8 -
Katzki Reaches Ankara
Herbert Katzki, who is to assist Hirschmann, reached
Ankara on June 29.
EVACUATIONS TO AND THROUGH SWITZERLAND
Following discussions between Mr. Pehle and Swiss Minister
Bruggmann in Washington, Ambassador Harrison and Board
Representative McClelland in Bern were asked to discuss the
refugee problem informally with the Swiss Foreign Office.
We have suggested that this discussion emphasize the con-
tribution Switzerland has made and is making to the refugee
problem. We have also indicated that we would appreciate
receiving from the Swiss Government, informally and con-
fidentially, any and all suggestions on what can be done in
the matter. Since certain phases of the problem can best
be handled by informal arrangement with the Swiss Government
rather than by*formal requests to make demands on the German
Government, we have indicated to Harrison and McClelland that
where such action would be helpful, they are authorized to
discuss particular problems with the Swiss Government on an
informal basis before making formal requests.
Evacuation of Abandoned Children from France
According to a cable from our Embassy in Lima, the
Peruvian Government has indicated that it is willing to
receive up to 50 child refugees who have reached Switzerland
from enemy territory, provided that they are of French or
Belgian nationality and provided that Peru's responsibility
begins at the port of Callao.
We have been advised by our Embassy in Paraguay that
the Paraguayan Government is also willing to cooperate in our
efforts to secure havens for these refugee children provided
adequate financial assistance is made available. A copy of
the note to this effect received from the Paraguayan Ministry
of Foreign Relations was forwarded by the Embassy. With
respect to the proposal that Paraguay notify the Swiss Govern-
ment of its position in this matter, we were advised that
the Paraguayan Government does not maintain a diplomatic
mission in Switzerland.
EVACUATIONS TO AND THROUGH SWEDEN
We have now learned through Minister Johnson that the Swedish For-
eign Office has agreed to issue visas to some 60 central European
Jews remaining in Finland, on condition that assurances be given
as to the maintenance of this group in Sweden. The necessary 48-
surances were promptly given by the Board, and this group of
Regraded Unclassified
117
- 9 -
refugees is expected to be evacuated shortly to Sweden on the same
vessel that is to carry American and Allied groups from Finland.
Swedish Committee to Aid Stateless Refugees
Minister Johnson and Board Representative Olsen have
also advised us that, largely as a result of their efforts,
the city of Stockholm has sponsored the organization of a
committee for the relief of stateless refugees. A central
office is to be established for the purpose of assisting
stateless refugees with their personal problems, in obtain-
ing employment, and in obtaining direct relief in seriously
distressed cases. Because of the urgency of the problem,
Johnson and Olsen strongly recommended that American groups
be found to make a joint contribution of $10,000 to further
the activities of this committee. It was pointed out that
such an action would not only contribute materially to the
effectiveness of this committee's program for stateless
refugees, but would reflect the sincerity of American concern
with refugee problems.
In order to facilitate the procurement of the funds
requested, we are asking that information be furnished with
respect to the former nationalities of the stateless refugees
in question and with respect to the extent to which the group
includes Jews. Information is also being requested as to the
extent to which aid is being furnished such stateless refugees
by organizations already receiving support from private American
agencies.
Relief to Czechoslavaks in Sweden
According to another cable from Stockholm, discussions
have been held with the "non-recognized" Czchoslovak Minister
there concerning his difficulties in taking adequate care of
the 800 Czechoslovak refugees in Sweden. It was indicated
that only limited funds have been made available by the
Czechoslovakian Government-in-Exile in London, and that it
has therefore been almost impossible to render adequate
assistance to many severe hardship cases, notably unemployables
and children. It was urgently recommended that arrangements
be made to provide the Czechoslovak relief organizations in
Stockholm with $2500 to help finance its activity. We have
approached interested organizations on this matter and expect
to be able to advise Johnson and Olsen of their decision at
an early date.
Regraded Unclassified
118
- 10 -
Funds for Norwegian Rescue and Relief
In response to another cable from Johnson and Olsen,
we have indicated that American Relief for Norway is willing
to provide additional funds for certain relief activities in
Norway and for the evacuation to Sweden of Jews in concentra-
tions camps in Norway. Under the Treasury license issued
upon the recommendation of the Board, American Relief for
Norway will remit $10,000 to Olsen, to be expended under his
direction by such agencies as he may select for the operations
envisioned. American Relief for Norway has indicated that
it will furnish additional monthly remittances of $10,000
each if the results on the use of the initial $10,000 are
satisfactory.
EVACUATIONS TO AND THROUGH PORTUGAL
Minister Norweb has advised us that the Mexican Legation in
Lisbon has not yet received instructions from Mexico with
respect to granting to certain Spanish and other refugees in
hiding in Portugal the 500 residence visas to which the
President of Mexico is reported to have agreed. It was re-
ported that the Mexican Legation is already preparing lists
but can do nothing further until authorization is received.
Norweb also reported that efforts are continuing to arrange
for the granting of U. S. transit visas in some appropriate
manner, in view of the danger to the applicants if they should
be apprehended by the International Police before they are in
possession of both Mexican residence and U. S. visas.
RECOGNITION OF LATIN AMERICAN PASSPORTS
In a cable to Harrison and McClelland in Bern we are noting
the fact that United States practice is not to authorize the
extension of passports beyond their two-year period of validity.
Since Swiss authorities, acting in their capacity as protecting
power, issue Swiss certificates of identity to the holders of
expired U. S. passports, we are suggesting that a similar
practice, if necessary, be adopted in the case of passports
issued in the names of other American republics whose interests
in enemy territory are protected by Switzerland. Harrison and
McClelland are to discuss this matter with appropriate Swiss
authorities and endeavor to obtain their cooperation in
developing some procedure to assure the continued protection
of holders of expired Latin American passports.
We are also asking that Harrison and McClelland confirm
through the Swiss Government our assumption that German
authorities will accept recognition by the United States of
the status of all Jews interned in German camps and bearing
Regraded
Unclassified
119
- 11 -
Latin American identity documents as a basis for their
treatment and eligibility for exchange. Since it would
appear, on the basis of this assumption, that affirmative
approaches by individual Latin American countries may not
be considered essential by the Germans, we are asking that
Harrison and McClelland explore with Swiss authorities the
possibility of proceeding on this basis.
We are also drawing to the attention of Harrison and McClelland
the problem of persons in enemy-controlled areas in whose names
Latin American documents have been issued but who are not in
physical possession of these documents because delivery has
been impossible. In order that such persons may be included
among those eligible for exchange, we are asking for their
names, ages, and last known addresses. We are also asking
that Harrison and McClelland forward to us their views, along
with the informal opinion of Swiss authorities, as to the
advisability of making such a list available to the Germans
in an effort to protect the persons involved.
We are pointing out that the term "German-controlled" territory
or areas, as used in our negotiations relating to the protection
of persons holding documents issued in the names of American
republics, includes Hungary. If, in the opinion of Harrison
and McClelland, there is any possibility of doubt on this
score, Swiss authorities are to be informed accordingly and
asked to transmit such information to German and Hungarian
authorities.
Haitian Action Again To Be Urged
According to one report from McClelland, the Haitian
Legation in Bern was recently approached by an interested
Jewish organization with respect to four persons holding pass-
ports issued in the name of Haiti, who were among the persons
listed as removed from Vittel. The Haitian Legation there
is said to have informed this Jewish delegation that such
documents were fraudulent and of no value, as far as it was
concerned.
Since this report from Bern makes prompt action on the
part of Haiti all the more urgent, we are asking the U. S.
Embassy in Haiti to attempt to expedite affirmative action
on the part of the Haitian Foreign Office, including the
prompt transmission of an appropriate message to the Haitian
Legation at Bern affirming the validity of passports issued
in Haiti's name and held by persons subject to enemy persecu-
tion.
Regraded Unclassified
120
- 12 -
Salvadoran Government Reorganized
Because of the recent complete reorganization of the
Salvadoran Foreign Office, Ambassador Thurston has again
taken up with the Foreign Office the matter of extending
protection to refugees holding documents issued in the
name of El Salvador. The text of a note sent on May 20
by the Salvador Minister for Foreign Affairs to the
Spanish Minister was given Thurston and subsequently
forwarded to the Board.
Since it is not clear in what respect this note
modified the previous request made to Spain as a result
of our approaches, we have asked Thurston to investigate
the matter and send us his conclusions.
In view of the fact that the Swiss Government, which
acts as the Salvadoran protecting power in enemy territory,
has received a formal declaration from El Salvador recogniz-
ing Salvadoran passports held by Jews in Germany and in
German-occupied territories, we have also asked that the
Salvadoran Government be requested to take no steps which
might weaken this declaration or confuse Swiss authorities
as to its continuing validity.
Ecuador and Nicaragua Being Pressed
In cables to our Missions in Ecuador and Nicaragua
we are asking that efforts be continued to persuade the
Governments of Ecuador and Nicaragua to take more
affirmative action in connection with safeguarding from
enemy persecution persons holding passports issued in
the names of these two countries.
(Signed) J. W. Pehle
J. W. Pehle
Executive Director
Regraded Unclassified
121
ORIGINAL TEXT OF TELEGRAM SENT
FROM: SECRETARY OF STATE, WASHINGTON
TO:
AMEMBASSY, QUITO
DATED: JULY 1, 1944
NUMBER: 570
CONFIDENTIAL
Reference is made to your A-245 of May 6. By communica-
tion dated June 13, Swiss government has informed Minister
Harrison that it has received no request from Ecusdor to
safeguard persons holding passports issued in the name of
Ecuader from enemy persecution.
Please urgently ascertain actual situation and endeavor
to cable us date and text of Ecuadorean telegram referred to
in section 2 of your A-245.
HULL
Regraded Unclassified
122
CABLE TO AMERICAN EMBASSY, LONDON
The War Refugee Board requests that you deliver the following
message to Dr. N. Barou, 55 New Cavendish Street, London W.1, England:
QUOTE Understand you informed of important resolution
adopted by Emergency Advisory Committee for Political Defense
of the American Republics and transmitted to the governments of
these Republics on May 31. This resolution endorses the position
taken by the United States Government that persons belonging to
persecuted groups in enemy territory holding documents issued
in the name of certain American Repbulics must be treated by the
enemy as nationals of such countries for all purposes. By the
terms of this resolution, all such persons would be considered
eligible for exchange.
Since Palestine certificates authorize the admission of
holders thereof to territory under the control of the British
Government, the War Refugee Board has always considered that the
exchange of Palestine certificates holders for enemy nationals is
a matter that can be handled by the British Government more
correctly, and therefore with more probability of success, than
the United States.
Kindly advise usurgently of steps taken by you.
WORLD JEWISH CONGRESS
LEON KUBOWITZKI UNQUOTE
July 1, 1944
9:00 a.m.
BAksin:ar 6/29/44
Regraded Unclassified
123
CABLE TO AMERICAN CONSULATE GENERAL, JERUSALEM
The War Refugee Board requests that you deliver the following
message to Dr. Itschak Gruenbaum, Jewish Agency for Palestine, Jerusalem:
QUOTE Understand you informed of important reselution
adopted by Emergency Advisory Committee for Political Defense
of the American Republics and transmitted to the governments of
these Republics on May 31. This resolution endorses the position
taken by the United States Government that persons belonging to
persecuted groups in enemy territory holding documents issued
in the name of certain American Republics must be treated by the
enemy as nationals of such countries for all purposes. By the
terms of this resolution, all such persons would be considered
eligible for exchange.
Since Palestine certificates authorise the admission of
holders thereof to territory under the control of the British
Government, the War Refugee Beard has always considered that the
exchange of Palestine certificate holders for enemy nationals is
a matter that can be handled by the British Government more
correctly, and therefore with more probability of success, than
the United States.
Kindly advise us urgently of steps taken by you.
WORLD JEWISH CONGRESS
LEON KUBOWITZKI UNQUOTE
9:00 a.m.
July 1. 1944
Baksin:ar 6/29/44
Regraded Unclassified
124
CABLE TO AMBASSADOR NORWEB AND DESTER, LISBON, PORTUGAL
The War Refugee Board requests that you deliver the following message
to Elijahu Dobkin, Tivoli Hotel, Lisbon, Portugalt
QUOTE Astonished my June 20 unanswered. JDC accepted principal
Jewagencys program received from Shwars. Cable me immediately 510
West 112 maximum certificates you can allocate next months monthly
Spain Portugal refugees which categories acceptable defacto if
dejure British instructions unchanged. Your confidential information
this paragraph may give new prospects my negotiations JDC.
ISRAEL MEREMINSKI UNQUOTE
THIS IS WHB CABLE TO LISBON NO. 46
11:05 a.m.
July 1, 1944
BAKsintar 6/30/44
Regraded Unclassified
125
LFG
July 1, 1944
Distribution of true
reading only by special
5 p.m.
arrangement. (SECRET w)
AMEMBASSY,
LISBON
1887
War Befuges Board cable no. 44 follows.
Procurement of report at earliest opportunity from
representatives in Portugal of organizations listed
below giving total in dollar equivalent in amount of
free currency, if any, sent into enemy term tory during
period ended June 1 pursuant to section 1 (c) of the
respective Treasury licenses requested by Department,
War Befugee Board and Treasury. Where exact figures
are not available estimates say, of course, be given.
Joint Distribution Committee, W=2154; Jewish Laber
Committee, W-2177: World Jewish Congress, pursuant to
authorization of Dexter, WRB representative Lisbon; and
Unitarian Service Committee, W-2167.
HULL
(GLW)
WHB:MMV;KG
S/CR
WE
SWP
VT
Regraded Unclassified
126
KEM - 965
PLAIN
Lisbon
Dated July 1, 1944
Rec'd 2:50 a.m., 2nd.
Secretary of State,
Washington.
2055, First, BOOR.
Referring Department's telegram 1865.
Doing all possible secure widest possible publicity
Portugal. Also following suggestions final paragraph.
WEB 90.
NORWEB
EDA
Regraded Unclassified
127
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Embassy, Lisbon
TO:
Secretary of State, Washington
DATED:
July 1, 1944
NUMBER: 2054
CONFIDENTIAL
The first part of this week a group of some 32 Hungarian
Jews, among whom were members of the most wealthy and prominent
Hungarian Jewish capitalists and industrialists, arreved here. Mr. W.
Billits, director of the Manfred Weise airplane factory, Dr. George
Hoff and son, Baron Bugene Weise and family, Dr. Maurice Kornfeld and
family, Mr. Zoltan Fenyvesi and wife, Francis Demanfhner and family and
Dr. Francis Chorin and family are the most outstanding among the group.
These people came from Berlin via Lufthansa planes and
only after readhing Barcelona were they given passports. Portuguese
and Spanish visas (the former issued at Berlin) were affixed to these
passports. Previous knowledge that the visas were to be issued is denied
by the authorities of Portugal, and inquiry as to whose authority was
invoked is being made, The Portuguese authroities are requiring this
group to proceed (for enforced residence) to Curia near Coimbra.
All kinds of rumors are current, and a great amount of
mystery in connection with the presence of the group here exists. Some
of the rumors indicate that this prominent group of Jews has been allowed
by the Germans to leave in order to arrange peace terms through intermediary
of influential controlling Jewish leaders in Great Britain and the United
States while other rumore suggest the United States Government is involved
in unfreesing certain monies belonging to the group.
That such rumors are intended to create suspicien and
foster misunderstanding in Moscow in an effort to create schism between
her Allies and Ruesia is, of course, a grave peril.
NORMEB
DCR/GPW
7/12/44
Regraded Unclassified
128
DISTRIBUTION OF TRUE
READING ONLY BY SPECIAL
arrangement. (SECRET w)
July 1, 1944
7 p.m.
AMLEGATION,
STOCKHOLM
1310
The War Refugee Board calle 39 below, referring to
Stockholm's 2224 of June 20, is for Olsen.
Your efforts in organizing committee deeply appreciated
by Board. Please advise with respect to former nationalities
of stateless refugees in question and the extent to which
group includes Jews in order to facilitate procurement of
funds. Also kindly advise to what extent Mosaiska
Forsamlingen or other organizations receiving support from
American voluntary agencies have granted aid to persons in
this groups. Please inform why aid is inadequate or has
been terminated if any persons in the group receive or
have received such aid.
HULL
(GLW)
WHB:MMV:KG
NOW
S/CR
7/1/44
Regraded Unclassified
129
Distribution of true reading
July 1, 1944
only by special arrangement.
(SECRET W)
9 p.m.
AMLEGATION
STOCKHOLM
1313
The War Refugee Board cable 38 below is for Olsen.
Willingness to provide funds for program outlined in
Stockholm's WRB nos. 18 of May 19 and 22 of May 31 in addition
to funds being provided by them for operations covered by
License No. W-2152, text of which was cabled to Stockholm in
Department's 619 of April 8, expressed by American Relief for
Norway, Incorporated. Organization in question will remit
$10,000 to you, as WRB representative and under new Treasury
license issued on recommendation of Board, to be expended by
such agencies as you may select for the operations and under
your direction. Please report disposition of this amount
and results achieved theseby. American Relief for Norway,
Incorporated, proposes to furnish additional monthly remittances
of $10,000 each if results on use of this $10,000 are satis-
fadory.
Board has arranged, through contact with Dr. Conrad
Hoffman, for provision of funds for relief of Christian Jews in
occupied Europe (reference Stockholm's WRB nos. 17 of May 19
and 24 of June 2) by Board of National Missions of the
Presbyterian Church in the United States. Treasury has issued
license to Presbyterians, on recommendation of Board, permitting
remittance of $5,000 to Reverend Birger Pernow, Director of
Svenska Israels Missionen, Stockholm, providing that expendi-
tures made by Pernow are such as you as WRB representative
may authorise. Use of $5,000 remittance above should be
reported through you. Procurement additional funds for this
program will be attempted.
HULL
(GLW)
WRB:MMV:KG:
NOE
WT
SWP
S/CR
Regraded Unclassified
130
10/S
July 1, 1944
Distribution of true
reading only by special
Midnight
arrangement. (SECRET w)
AMLEGATION,
STOCKHOLM.
1319
War Refugee Board cable no. 40 for Olsen follows.
Procurement of report at earliest opportunity from
Evensen and Traumael giving total in dollar equivalent
of amount of free currency, if any, sent into enemy
territory during period ended June 1 pursuant to
Section 1 (c) of Treasury license W-2152 requested by
Department, War Refugee Board and Treasury. Where exact
figures are not available estimates may of course be
given.
HULL
(GLW)
WRB:MMV:KG
NOE
WT
SWP S/CR
7/1/44
Regraded Unclassified
131
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMLEGATION, STOCKHOLM
TO:
Secretary of State, Washington
DATED: July 1, 1944
NUMBER: 2404
CONFIDENTIAL
Reference is made herein to the Department's telegram
of June 30, no. 1301 and also to the Department's no, 1295,
dated June 30.
On Monday afternoon, July 3, at approximately 5 p.m.
the ship BIRGERJARL, which is owned by Stockholm's
Rederiaktiebolag Svea, will leave Stockholm for Abo, Finland.
On Tuesday at 8 a.m. the train connection will leave Helsinki,
reaching shipside at Abo about 1 p.m. the same day and the
ship es expected to sail from Abo on Tuesday about 5 p.m. and
to arrive Stockholm Wednesday, July 5 at approximately 8 a.m.
A desire to be included in the evacuation had, up to noon
today, been expressed by only 45 United States nationals of the
312 total of native-born and naturalized United States nationals
in Finland. By Tuesday July 4, Gullion estimated at the same
time that possibly no more than a total of 100 persons would be
ready to depart. A large proportion of the central European
refugees, as mentioned in Helsinki's 513, June 27, for whom
the War Refugee Board has guaranteed maintenance and the Foreign
Office has authorized issuance of visas, would be included in
this total.
With respect to the possibility of effecting evacuation
Gullion has approached the Finnish Government and he under-
stands that they will interpose no difficulties. Gullion
and the other members of the former Legation staff at Helsinki
will be permitted to leave Finland aboard the evacuation
vessel, according to his understanding. Since it will enable
Gullion to complete the necessary documentation it is hoped
that this will prove feasible. Rather than rely upon the Swies'
representative to do so Gullion will sign the letters of
identification himself.
Both the Swiss and the Swedes have been requested to assist
in meking known the availability of the evacuation vessel and
the scheduled date of departure, also Gullion has circularized
as many as possible of the nationals involved. (The request
of the Belgian Government to protect its interests in Finland
has been accepted by the Swedish Government.
In order to facilitate the entrance of their respective
nationals by the Swedish authorities, the representatives of
the British,
Regraded Unclassified
132
-2-
the British, Belgian, Italian and American Legations will meet
the BIRGERJARL upon its arrival in Stockholm and the other
nationals will be received by Olsen. For account, of WRB.
Arrangements for appropriate living quarters are being made by
Olsen through the Swedish Red Cross and local Jewish organiza-
tions. Gullion stated, in a telephone conversation at 5:30
this afternoon that the Swiss representative at Helsinki is
being somewhat difficult about taking over our interests and
those of the countries we formerly protected in Finland since
no direct authorization from his Government at Bern has been
received as yet by the Swiss representative. Although he
might be delayed if the Swiss Minister has not in the mean-
time received satisfactory instructions, Gullion added that
he still hoped to leave with the evacuees on Tuesday.
JOHNSON
Regraded Unclassified
133
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
The American Legation, Stockholm
TO:
The Secretary of State, Washington
DATE:
July 1, 1944
NUMBER: 2412 (SECTION ONE)
SECRET
Boheman has advised me that information just received from
Budapest concerning treatment of Jews is 80 terrible that it 1s
hard to believe and that there are no words to qualify its de-
scription. He said that of the total number of Jews in Hungary
originally not more than four hundred thousand remain now and
these are mostly in Budapest. He also said that the others of
whom there were well over six hundred thousand (this is & con-
servative estimate) have been either deported to Germany to uncer-
tain destinations or killed. According to the evidence, these
people are now being killed en masse by the Germans and large
numbers are being taken to a place across the Hungarian frontier
in Poland where there is an establishment at which gas is used for
killing people. It is said by Boheman that these people of all
ages, children, women and men, are transported to this isolated
spot in box cars packed in like sardines and that upon arrival
many are already dead. Those who have survived the trip are
stripped naked, given a small square object which resembles a piece
of soap and told that at the bath house they must bathe themselves.
The "bath house" does in fact look like a big bathingestablishment
being a large building which has been built by the Germans. Into
€ large room with & total capacity of two thousand packed together
closely the victims are pushed. No regard is given to sex or
age and all are completely naked. When the atmosphere of the
hall has been heated by this mass of bodies a fine powder is let
down over the whole area by opening 8. contraption in the ceiling.
When the heated atmosphere comes in contact with this powder a
poisonous gas is formed which kills all occupants of the room.
Trucks then take out the bodies, and burning follows. Jews in Hungary
have been successful in getting an appeal through the King of Sweden
and I an advised by Boheman that under the signature of the King a
telegram has been sent through their Legation to Horthy appealing to
him in Humanity's name to do what he can to stop this horrible massacre
of a defenseless people and to save the lives of those who are left.
It is not known by Boheman whether an opportunity to see Horthy to
deliver this message will be given to the Swedish Minister at Budapest.
The message will be delivered to the Foreign Office if he is not per-
mitted to see the Regent and it will be published here as soon as the
Government of Sweden has received confirmation of its delivery in any
form.
JOHNSON
DCR:MPL
7/3/44
Regraded Unclassified
134
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
The American Legation, Stockholm
TO:
Regraded Unclassified
The Secretary of State, Washington
DATE:
July 1, 1944
NUMBER: 2412 (SECTION TWO)
SECRET
The Hungarian Jews, in spite of all their difficulties, have
collected money to the equivalent of 2,000,000 Swedish crowns to
be used in aiding the Jews and this has been turned over to the
Swedish Legation in Budapest. Wallenberg who is going to the
Swedish Legation at Budapest as an attache to handle refugee mat-
ters, was highly praised by Boheman who said that if our War
Refugee Board could formulate some form of directive for him which
the Foreign Office will be glad to transmit, it would be of great
help to Wallenberg. There is no doubt in my mind as to the sin-
cerity of Wallenberg's purpose because I have talked to him my-
self. I was told by Wallenberg that he wanted to be able to help
effectively and to save lives and that he was not interested in
going to Budapest merely to write reports to be sent to the Foreign
Office. He himself is half Jewish, incidentally. I refer in this
connection to my number 2360 dated June 28 (number 40 for the War
Refugee Board) and to the suggested desirability of the formula-
tion w WRB of some directives for Wallenberg at the earliest
possible moment. My number 2271 dated June 23 is referred to also.
Provided the source is not (repeat not) revealed there is no ob-
jection on the part of Boheman to any publicity use we may desire
to make of that portion of the foregoing which deals with the
treatment of Jews in Hungary.
I have been advised by Boheman that he is now having copies
made of the last reports from Budapest to which reference has been
made above and that as soon as they are ready he will turn them
over to me, Copies will be forwarded by air pouch and a summary
will be given by cable.
JOHNSON
DCR:MPL
7/4/44
135
CABLE TO MINISTER HARRISON AND MCCIELLAND, BERN, SWITZERLAND
Thew War Refugee Board requests that you deliver the following
message to Dr. Gerbart Riegner and Dr. Richard Lichtheim, 37 Quai
Wilson, Geneva:
QUOTE Understand you informed of important resolution
adopted by Emergency Advisory Committee for Political Defense
of the American Republics and transmitted to the governments of
these Republics on May 31. This resolution endorses the position
taken by the United States Government that persons belonging to
persecuted groups in enemy territory holding documents issued
in the name of certain American Republics must be treated by the
enemy as nationals of such countries for all purposes. By the
terms of this resolution, all such persons would be considered
eligible for exchange.
Since Palestine certificates authorize the admission of
holders thereof to territory under the control of the British
Government, the War Refugee Board has always considered that the
exchange of Palestine certificate holders for enemy nationals is
a matter that can be handled by the British Government more
correctly, and therefore with more probability of success, than
the United States.
Kindly advise us urgently of steps taken by you.
WORLD JEWISH CONGRESS
LEON KUBOWITZKI UNQUOTE
THIS IS WRB CABLE TO BERN NO. 66
11:05 a.m.
July 1, 1944
BAkzin:ar 6/29/44
Regraded Unclassified
136
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Legation, Bern
DATED:
July 1, 1944
NUMBER: 2241
CONFIDENTIAL
TO HARRISON FOR McCLELLAND, BERN
Department, War Refugee Board and Treasury request that
you obtain as soon as possible from the representatives in
Switzerland of the organizations listed below a report giving
the total in dollar equivalent of the amount of free currency,
if any, sent into enemy territory during the period ending
June first pursuant to section 1 (e) of the respective Treasury
licenses. Estimates may, of course, be given where exact
figures are not available.
American Committee for Christian
Refugees
-W-2150
Jewish Labor Committee
-W-2126
Joint Distribution Committee
-W-2106
International Rescue and Relief
Committee
-W-2138
Union of Orthodox Rabbis
-M-2117
World Jewish Congress
-W-2115
THIS IS WRB CABLE TO BERN NO. 65
Regraded Unclassified
137
CABLE TO AMERICAN CONSULATE GENERAL, ISTANBUL, TURKEY
The War Refugee Board requests that you deliver the following messas
to Zeev Shind, Istanbul, Turkey:
QUOTE Yours June 20 received immediately utilised after
informed all concerned. JDC accepted principle Jewagencys plan
2600 refugees as submitted by Shwarts. Cabled Remes inform Barlas.
Barlas cable Montor 460 May refugees yours 1712 if difference due
your special motorboats action cable which assistance motor and
other boats money etcetera from here necessary strengthen your
special program also cable your recent information Naluts Lochem
and his special needs.
ISRAEL MEREMINSKI UNQUOTE
11:05 a.m.
July 1, 1944
Baksintar 6/30/44
Regraded Unclassified
138
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
AMEMBASSY, ANKARA
DATED:
July 1, 1944
NUMBER
591
CONFIDENTIAL
FROM WAR REFUGEE BOARD TO STEINHARDT.
Please deliver the following message to Dr. Joseph
Schwartz, c/o American Embassy, Ankara, from Moses A. Leavitt
of the American Jewish Joint Distribution Committee:
"Regarding proposal finance evacuation from Balkans we
arrived following decision after serious consideration.
While we appreciate your Magnes Resnik recommendations
in view risks involved we believe responsibility for
boats operating without safeconduct should be shared by
War Refugee Board Jewish Agency and Joint Distribution
Committee. In light present situation we ready accept
responsibility and War Refugee Board is prepared to assume
such responsibility subject to concurrence of Steinhardt
and Hirschmann. We approve therefore program up to
$800,000 for 2600 persons and mope amount can be reduced
by refugee participation Jewish Agency. We prepared pro-
vide 500,000 Swiss francs. Cable to whom francs should
be paid in Switzerland. Also cable banking instructions
for remittance to Turkey or Palestine as and when sums re-
quired. Essential that refugees be warned in advance of
risks involved in such voyages and assume Barlas will be
instructed accordingly. It is essential that arrangements
be worked out whereby Resnik and Hirschmann will be kept
continuously advised of all plans of Harlas for such trips
and that Hirschmann Pesnik approve each project. If pos-
sible we would prefer making our remittances directly to
Resnik for him to pay out as and when required by Barlas.
We cabled Resnik to give Hirschmann his complete whole-
hearted cooperation."
THIS IS WRB CABLE TO ANKARA NO. 66.
Regraded Unclassified
139
BE
July 1, 1944
Distribution of true
reading only by special
4 P.M.
arrangement. (SECRET w)
SECRET
AMEMBASSY,
ANKARA.
592
The War Refugee Board cable 61 below is for Hirschmann.
The following cable received from Lisbons
QUOTE British Embassy Ankara has telegraphed British
Legation Lisbon stating number Jewish refugees Constanza
1,300 not 5,000 as claimed by Joint here. Suggested tranship-
ment from Istambul by rail also questioned by British repre-
sentatives Ankara who claim inadequacy rail facilities for
even this smaller number UNQUOTE
It is assumed a plan can be evolved, in view your talk
with Secretary General of the Foreign Office referred to
in Ankara's 1066 of June 14, for transhipment if refugees
arriving in Istanbul on Turkish ships to Palestine by rail.
HULL
(GMW)
WRB: MMV: KG
NB
7/1/44
Regraded Unclassified
140
BE
July 1, 1944
Distribution of true
reading only by special
6 p.m.
arrangement. (SECRET w)
AMEMBASSY,
ANKARA.
594
Reference is made in WHB cable 69 below to Hirschmann to
Embassy's 1104 of June 19.
Knowledge of instructions to Turkish border guards not to
turn back Jewish refugees at Bulgarian border notwithstanding
lack of Turkish visas very interesting to Board. Board had no
previous intimation regarding any such instructions. Reports
received here concerning non-admission cover incidents before
issuance thereof, we therefore assume. Board notes that
arrivals by rail only mentioned in your cable. Question thus
arises whether Jews and other persecuted people trying to
cross Bulgarian border clandestinely on foot or otherwise are
covered by these instructions. Do these instructions extend
to all clandestine refugees? Board hopes the instructions can
be continued in effect and, if they do not now extend to those
arriving at border by other means than rail, that such cases
will be included therein. Please use your best judgment regard=
ing means to fulfill these hopes.
Information concerning number of refugees crossing from
Bulgarian frontier during past month without Turkish visas
would be appreciated.
HULL
WHB:MMV:KG
SICR
ES
(GLW)
6/30/44
Regraded Unclassified
141
MMS
Distribution of true
July 1, 1944
reading anly by special
arrangement. (SECRET w)
7 p.m.
AMEMBASSY,
ANKARA.
595
War Refugee Board cable no. 71 follows
Procurement of report at earliest opportunity from
Jacob Griffel giving total in dollar equivalent of amount
of free currency, if any, sent into enemy territory during
period ended June 1 pursuant to section 1 (e) of Treasury
license W-2166 requested by Department, War Refugee Board
and Treasury.
HULL
(GLW)
WEB:MMV:KG
NE
WT
SWP
S/CR
7/1/44
Regraded Unclassified
172
Copy No
NOT TO BE RE-TRANSMITTED
SECRET
OPTEL No, 214
Information received up to 10 A.M. 1st July 1944.
1. NAVAL
On 30th weather off NORMANDY prevented aircraft from observing
fire for ships on Eastern flank. In the afternoon S.W. wind increased.
Mine laying by aircraft continues nightly. 5 were shot down by
cruisers on 28th/29th. Yesterday a Liberator sank a U-Boat north of
the SHETLANDS, 30 crew seen in water.
2. MILITARY
France A further advance of 21 miles has been made against the
German forces in N.W. of peninsula. On British front
S.W. of CAEN the most determined German counter attack yet delivered
was repulsed on 29th, After a fairly quiet night, morning 30th
spent in reorganising with little or no enemy opposition. Mopping
up of isolate groups of Germans continues.
Italy In ADRIATIC sector Polish patrols have advanced some 3
miles across CHEINTI from which Germans have apparently
withdrawn. In centre British and South African troops pressed on
against strong German resistance astride LAKE TRASIMENO making advance:
up to 5 miles. Fur.ther West, French are in contact along their whole
front running approximately East-West about 7 miles S. of SIENA. In
coastal area, U.S. troops occupied POMARANCE and have made seneral
advance. They have entered outskirts of CECINA
3. AIR OPERATIONS
Western Front 30th. Aircraft of bomber command bombed a flying
bomb supply site in the ABBEVILLE/AMIENS area 554
tons and a concentration of German troops and armour near VILLERS
BOCAGE 1092 tons. U.S. heavy bombers dropped total 283 tons on five
airfields Northern FRANCE and BELGIUM. In addition to usual armed
reconnaissance and standing patrols, 380 bombers and fighter bombers
of A.E.A.F. attacked transport and fuel dumps behind the battle area.
Enemy casualties 16:6:11, ours two bombers, two fighters missing,
30th/1st. Aircraft despatched: VIERZON railway centre 118
(14 missing); synthetic oil plant HOMBERG 40 Mosquitoes (1 missing)
other tasks 41, Over VIERZON weather clear and attack concentrated.
German activity - 29th/30th 118 flying bombs launched.
Balkans 28th/29th. Heavy amd medium bombers, 5 missing,
dropped 140 tons on GIURGIU oil installations.
30th. U.S. heavy bombers of XV Air Force unable to reach primary
targets oil installations in Germany dropped 431 tons on railway
centres BUDAPEST and CAPOSVAR, ZAGREB airfield and other objectives
YUGOSLAVIA,
143
Bretton Woods, N.H.
July 2, 1944
10:15 a.m.
INSTRUCTION OF THE AMERICAN DELEGATION - FUND AND BANK
Present: Mr. White
Mr. Acheson
Mr. Eccies
Mr. Luxford
Juage Vinson
Senator Wagner
Senator Tobey
Mr. Collado
Mr. Spence
Mr. Wolcott
Mr. Brown
Mr. Sweetser-
Mrs. Morgenthau
Dr. Golgenwelser
Mr. Smith
Miss Newcomer
Mr. Somers
Mrs. Klotz
Mr. Ness
H.M.JR: I think, gentlemen, if it is agreeable to
you, if Mr. White would continue where he left off I
think it would be very useful.
MR. WHITE: I think we were about through with the
high-lights of the controversial points on the Fund.
MR. SPENCE: Not all. There is the question of
Directors, for instance.
MR. WHITE: Yes, the question as to what powers
they shall have.
MR. WAGNER: Where do they come from?
MR. WHITE: Well, on the Board of Directors - that
is, we call it the Board of Directors - the British want
to call it the Council - there is one member from each
country. He has an alternate and they meet once a year
Regraded Unclassified
144
- 2 -
or oftener if they are called for some special problem.
The work is done by an Executive Board, as I said, con-
sisting of nine or eleven members - they haven't agreed
on that. As I mentioned, the countries with the five
largest quotas automatically have each a member on the
Executive Committee. The other four or six, depending
upon the total in the Executive Committee, are to be
elected, and you remember I said that there was a contro-
versy between the small countries and chiefly England as
to how those shall be elected.
The American experts had proposed a system called
proportional representation, if that might describe it,
which gives the small countries some advantage. It gives
them a better chance of being on. The British preferred
another type which would probably favor the medium quota
countries and that controversy is going on.
The American experts have not taken much of a posi-
tion beyond the original proposal, since there are enough
small countries to defend their own interests at the
discussion.
The problem as to whether or not the Executive
Committee shall exercise the authority for deciding on
most problems has come up. A number of the delegates
want to exclude from the authority of the Executive Com-
mittee certain important matters, and that is our view,
too, that the Executive Committee ought not to decide on
certain questions.
For example, the Executive Committee wouldn't have
the power to alter the price of gold. The Executive
Committee wouldn't have the authority to suspend a member
country or to declare it in default.
Luxford, can you think of some?
MR. LUXFORD: Liquidating the Fund - the Executive
Committee could not liquidate the Fund. That must be done
by the over-all Board. There are several others of that
type powers which are reserved for the Board rather than
for the Executive Committee.
DR. GOLDENWEISER: Can you change the quota?
MR. WHITE: No, they can't, and it can't be changed
without the approval of any country in any case, as well
as by the Fund.
Regraded Unclassified
145
- 3 -
Now, there is a broader problem that centers around
that which is the center of a pretty substantial controversy,
chiefly between ourselves and the British. The British
want the management of the Fund to be the important thing -
the higher manager to make most of the decisions, because
they want the operations of the Fund to approach the
automatic.
We, on the other hand, believe that the Executive
Committee ought to make important decisions, and not the
manager, because the decisions are too important. They
affect the interests of too many countries and therefore
we believe they should not be left to a manager. And
that is one of the points of discussion which you will
hear more about.
We haven't been able to agree with the British as
yet on that. One of the reasons why they would like a
manager is because they want less of that type of control
that Ned Brown was speaking about in which countries
would feel that they can purchase from the Fund as a
matter of right. The more a matter of right it becomes,
the more automatic it becomes. We are taking the oppo-
site view, that it is not a matter of right, it is a
question of their being able to utilize the resources
of the Fund; that is, various member countries being
able to utilize the resources of the Fund only if such use
contributes to reestablish equilibrium, and that involves,
on many borderline cases, a lot of judgment. That judg-
ment cannot be left to a manager, but to an Executive
Committee.
There will be a lot of cases about which there will
be no question, but there will be borderline cases and
they will usually be important ones, because a decision
to curtail the requests of any member country is an im-
portant decision; or the decision to let a country exceed
its quota would be an important decision. We feel that
those decisions ought to be made by an important group
which would be the Executive Committee. There is that
difference between the British and ourselves. It is a
little too early to say what countries side with the
British on that, and what countries side with us.
We do know, and I think it is fair to say - don't
you, Mr. Bernstein, that the Dutch and, of course, Greece,
will always side with U.K. no matter what it is - even
more 80 than the Dominions. The Dutch will almost always
side - they are almost like stooges - they always support
the British. The rest of the smaller countries, I don't
know.
Regraded Unclassified
146
4
MR. BERNSTEIN: I have a feeling that many of the
Latin American Republics feel as we do, that it simply
wouldn't be good to have too much automatic operation,
that there should be a review of policies and purposes
by the Executive Directors. And I have the feeling that
Canada would agree with us.
MR. WHITE: I think China would, too.
MR. BROWN: I am not so sure about some of the
smaller Latin American countries, however. The impres-
sion in the discussions I heard was that they would like
it as a matter of right rather than a matter of descretion.
MR. WHITE: Yes, I think that is certainly true. I
don't think that is true of Mexico or Brazil.
MR. BERNSTEIN: It wasn't true of the group we had
at Atlantic City.
MR. BROWN: It was true of Mexico, for instance.
There is one other question, Dr. White, that developed
at Atlantic City which I think is very important and on
which there is a very marked difference of opinion, and
that relates to the time when the Fund is going to go
into operation; that is, when it is actually going to
begin to buy and sell. The American position has been
that - in the preliminary discussions - that it should
not take place until after the termination of major
hostilities in the present war - meaning both Germany
and Japan. China sides with us on that. England, every
other European country, and I think the South American
countries, expressed the opinion that they are utterly
unwilling to nave any such late date for operation.
Now, the question is important because in my opinion
if the Fund starts operation and actually deals in exchange
before a country has gotten at least a minimum of economic
stability, the Fund wouldn't work.
If a country like Greece, for instance, has a large
part of its population starving and has access to the Fund,
it will try to get access to the Fund for the purpose of
feeding its people and not for the purpose of exchange
stability. Even in the case of very important countries
like France, where the future of the government is very
uncertain, if there is going to be civil war, it is unsafe
to deal in their exchange, and I think it is very important
that the American position taken by the experts at Atlantic
City be maintained. And I am sure you will have four-
fifths of the other countries against you on that point.
Regraded Unclassified
147
5 I I
MR. WHITE: I didn't know that the American experts
took quite that position, Ned. Our position has been
that they shouldn't begin operations until the European
phase of the war is over - but the Far East - I don't
think we have felt that operations could not begin after
the European phase, with the lapse of time that is
permitted by the regulations, which are substantial -
because there is a period at which they first meet,
and then they get organized, and there is a lapse of a
number of months before they can begin operations. But
there is one important provision in there that might make
it amount to much the same thing, and that is that opera-
tions cannot take place with a country until the Fund
agrees on the exchange rate with that country as being
the more or less permanent one.
Now, none of the countries in the actual fighting -
none of the occupied countries, rather - have an exchange
rate which is appropriate to the post-war conditions, and
one of the reasons for the necessity for the Fund to come
into being as soon as possible is to provide some mechanism
whereby these various counties can adjust their exchange
rates and have it considered as a unilateral decision.
Now, for adjusting their exchange rates they are
allowed, I think, six months, but that could be extended.
But they can't begin operations until they state exactly
what their permanent rate will be, and until the Fund
has accepted it. Now, if you consider the time it will
take to get this by the various parliaments and congresses,
even if it emerges as an agreement here, and then there is
a lapse of time before the first initial meeting is called,
then there is a lapse of a couple of months before the
first group is called to establish - and then there is
another lapse of a few months before they are permitted
to get organized - you are running into a long enough
period, I think - a good deal of that question will
become academic. But that hasn't been settled yet.
I didn't think that we took the position - and I
am not sure we should - that we ought not to begin
operations until the Far Eastern war is over. It depends
upon when the Far Eastern war takes place. We did think
that the Executive Committee could be permitted jurisdic-
tion to determine when to begin operations in a particular
currency. So much depends upon uncertain factors that I
don't see how we could take a position of that kind, now.
Unclassifie
148
- 6 -
We would expect that the Far East would be settled
within six months, if we are optimistic - or a year,
moderately. But the thing may drag out two or three
years. To say it can't operate until the Pacific thing
is closed is quite unwarranted.
MR. BROWN: That was in your proposal submitted at
Atlantic City. It was explained that it meant both the
Japanese and German wars.
MR. LUXFORD: I think that is right, Harry, as far
as the text is concerned; but on the other hand, it
certainly hasn't been resolved.
MR. BROWN: It hasn't been resolved, but our proposal
was urged very definitely on that basis in Atlantic City.
MR. WHITE: That there has been a proposal not to
begin operations until--
MR. LUXFORD: That is in one of the texts submitted,
yes.
MR. WHITE: By whom?
MR. LUXFORD: I think one of our alternates.
MR. WHITE: Yes, but it is not ours.
MR. BROWN: It is.
MR. LUXFORD: We left a little flexibility there.
MR. WHITE: One of your boys may have slipped it in.
H.M.JR: Don't look at me!
MR. WHITE: However, that is still a basis for dis-
cussion.
H.M.JR: Harry, one of your boys!
MR. BROWN: I think it is important to set up a
proposition that no dealings in a country's exchange
shall take place until it is past the period where a
considerable number of its people are facing actual
starvation, and until there is at least a minimum of
political stability.
Regraded Unclassified
149
- 7 -
MR. WHITE: We would agree with that.
MR. BROWN: I don't care what the machinery is, but
a lot of these European countries would like to start up
tomorrow if they could.
MR. WHITE: We have made allowances for that, and
there is some justification for that - not tomorrow, but
as I said before, it will be at least- under the most
optimistic circumstance, the Fund couldn't operate even
if Congress were to pass it within two months after they
got it - which would be a miracle - it would take at
least, I should think, a year.
MR. BROWN: I don't want to argue with you, Harry,
except to state my own feelings. It is an important
point on which there will be a radical degree of difference
with England and with other countries, and that the Ameri-
can Delegation ought to consider that point very carefully.
I think it is quite as important as the voting power
and the Directors, and some other things.
H.M.JR: I think the fact that you brought it up is
important because there seems to be some difference of
opinion in our own group.
MR. WHITE: That is what these meetings are for.
H.M.JR: Excuse me! I thought you had yours 80 well
trained that there weren't any differences.
MR. WHITE: Well, it disturbs me! (Laughter)
MR. ECCLES: A country can't become a member of the
Fund until its exchange rate is established. As I under-
stand it, countries will agree to a participation in the
Fund, to become members of the Fund, and it may be spread
over a period of years before those who have agreed to
become members of the Fund actually can participate as
members of the Fund, because of a question of establishing
an exchange rate.
Now, doesn't that automatically take care, to some
extent, at least in the question that Ned Brown raises
here, that if there are thirty or forty members who want
to come into the Fund, those that participate in the
operation of the Fund, the beginning will be only with
those where an exchange rate has been agreed upon, and
Inclassified
150
- 8 -
there are going to be conditions in other countries -
China, Greece, and other countries - where it may take
some time before you can agree upon the rate, because
certainly when they actually come in you have to have
some feeling that the exchange rate established has some
stability at the time; otherwise you immediately start
off permitting a depreciation of exchange rates.
MR. WHITE: Yes, if I indicate the order of events
I think it will bear out the point you are making. When
they agree to participate as members, if enough counties
agree to become members by action of their various
parliaments and legislatures--
MR. FCCLES: How many would that be?
MR. WHITE: Sixty-five percent of the aggregate
quotas, the major countries. It has to be United States
and England.
MR. ECCLES: Two, anyway.
MR. WHITE: The Fund begins - actually there is a
lapse of several months before they get the machinery
started, then the countries are members. They are not
full members; they are, shall I say, half members; the
difference being that as half members they have all the
obligations - they agree not to enter upon competitive
depreciation; they agree to discuss their affairs multi-
laterally - to do many things - but they do not have
access to the resources of the Fund until the Fund agrees
with the member country on the permanence of the exchange
rate. You said that might take a couple of years. It
might in the case of China, because of the situation
there. It is not likely to take - we would be surprised
if it took anything like that with Europe if the war
ended in Europe.
MR. ECCLES: You have to get rid of the revolutions,
and the occupied countries would have to get some rehabili-
tation.
MR. WHITE: One of the ideas of this is to prevent
revolutions. Some of the countries, I think you will
find, will probably establish a rate of exchange in con-
sultation with the Fund which will be satisfactory in the
Fund, within a few months after the cessation of hostilities.
Now, it is true that there is greater need in those
countries at that time for assistance of all kinds. It
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is also true that there is greater need of assistance
for the Fund. Now, we want the Fund to assist them at
that time, even though they are in & more difficult
position, because one of the purposes of the Fund is to
reduce the acuteness of that position in Europe, as well
as during the longer-range time.
The Fund can stand it; it is so arranged and con-
structed that it can stand it, because there is a rate
which they cannot exceed, 80 that there is a ceiling to
the amount which they can have access tointhe Fund within
the first year after they agreed to the Fund, and that
ceiling was set for the specific purpose of providing some
support to those countries who will very badly need it
during the reconstruction period. And I think it would
be--
MR. ECCLES: What ceiling do you mean?
MR. WHITE: The twenty-five percent rate. I think it
would be a mistake to assume that you are going to wait
until these countries are normally settled before this
Fund begins to operate because that would be to throw
away the very valuable aid that this Fund can be in pre-
venting revolutions and in helping to reestablish those
countries on some kind of a basis which will give promise
of continued peace and prosperity.
We have put a limit on it, but we want it to be used
by those countries during the initial period - take a
country like Greece - yes, there is starvation there,
there is wild inflation, and a completely upset economy,
but the minute war stops you will have UNRRA coming in
taking care of part of that, and it will take Greece at
least a number of months before she can establish any
kind of a permanent rate and reestablish her currency.
She will get credits, probably, of one fashion or another.
Now, she will also need some assistance from this. It
isn't very much - Greece is a small country. She can't
get very much even out of the Fund. Her quota is small.
But the Fund should stand ready to help her at that point.
H.M.JR: May I interrupt a minute, Harry? What we
have been doing in these countries so far - we try very
hard to establish a rate of exchange, which we have in
Italy, and we have met with a certain amount of success.
I mean, we start with this military currency, and in
Africa we started with gold seal currency. What we do is,
we start with just as low a rate as possible. Now, in
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France we started with a two-cent rate and notwithstand-
ing General DeGaulle Hoppenot was in, the head of the
French Mission, and I asked him point blank whether the
people of France accepted this money, and he said, "Yes,
readily."
We are now working on a rate for Germany. In every
case we are trying to be as realistic as possible so that
the jump-off from now until they begin to ao business
will not be a very sharp one. And as I say, in the case
of France we have an understanding with the Minister of
Finance that we will adjust it as often as it is necessary,
so that they won't say, "Well, a two-cent rate - and we
have to keep it, come hell or high water."
So I think, so far, Italy, France - the little piece
that we have occupied - if we are successful in getting
the rate that we think we should have, I think these rates
which are being artificially established in the first
instance will be helpful towards stability if the Fund
is created.
I just wanted to put that in.
MR. WHITE: We haven't established a rate for Greece
yet. That is why it is & preposterous rate.
HM.JR: We are not in there. But take the case of
China, for instance. Dr. Kung holds out for a five-cent
rate and the rate is about eighteen yuan to the dollar.
But he is still running it and the time may come when
he may, even before there is El Fund, say to us that he
wants help in establishing a realistic rate.
MR. WHITE: He won't be eligible for any operations
in the Fund until the rate he established was agreeable
to the Fund, and of course, any rate that would be agree-
able to the Fund wouldn't bear any resemblance to the
present rate.
MR. BROWN: I don't want to argue the question too
far, except to point out that I agree with you that we
can't wait until there is complete economic and political
stability of these countries, but I think you have got
to get back past a minimum amount of political order--
(Mr. Wolcott enters the conference)
MR. BROWN: The question that Senator Wagner raises
about the voting is important because these countries
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whose rates are not established will have full votes,
even before their own rates are established. You may not
have the Chinese, or the French, or the Greek, or the
Czechoslovak rate established, but under the plans that have
been discussed, their Directors and their representatives
on the Executive Committee would have equal votes, and
since it only takes a majority of the Fund to establish
a rate, the question which has to be considered and worked
out pretty carefully, unless you run the risk of establish-
ing a rate for a country--
MR. WHITE: Wait, I think there is some misunder-
standing about an important matter. Maybe some of the
things Ned said might be misleading. The voting in the
Executive Committee is not - they don't have equal votes.
MR. BROWN: I understand that.
MR. WHITE: That means the United States, the United
Kingdom, and Canada, with a few of the other countries
dominating the situation. If all the other votes were
piled together they couldn't control. The United States,
and the United Kingdom, and Canada, and one or two others--
MR. BROWN: Yes, but the United Kingdom is quite apt
to take a different opinion on that subject. It has been
indicated in some of the discussions that it was felt
they differed from the American experts as to how soon it
should be started.
MR. WHITE: I didn't gather that. Maybe it was in
private discussions.
MR. BROWN: It was in a full meeting of the Council.
H.M.JR: You Atlantic City boys better have a private
meeting.
MR. WHITE: There is agreement between us except
that they probably had some private conversations. How-
ever, that may all be raised again. That will appear
in the--
MR. ECCLES: If a country doesn't like the rate
that has been established for it by the Fund, of course
it then withdraws.
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MR. WHITE: It isn't that the Fund established it.
They want to be very careful that that is not stated.
What it is is that the Fund accepts the rate - the same
thing. They don't come in or withdraw - I mean, they
may come in at the beginning to be a member--
MR. ECCLES: But they haven't put the money in yet.
MR. WHITE: They have to put the money in when they
become a member.
MR. ECCLES: They have to commit to put the money
in, but if the Fund doesn't like the rate that they want
to establish, then the money is never put in.
MR. WHITE: No, I think the money is called for at
the beginning.
DR. GOLDENWEISER: How do they decide how much to
put in if they have no rate?
MR. LUXFORD: You set the quota, but the quota will
be fixed in terms of the gold, at the rate that is presently
being worked out. They will have to pay in their full
amount before you start operations in that currency.
MR. WHITE: That is what Marriner said, but I said
at what point, after they agree to participation, is it
calling for the money?
MR. LUXFORD: Frankly, it is open right now.
MR. BROWN: The discussion called for a rate of
July 1, 1944, of whatever it was, and they would pay in
at that rate.
MR. LUXFORD: That is in one of the drafts.
MR. WHITE: That will be one of the open discussions.
But in any case, you are right, because if they don't
agree on the rate, if they have put the money in, they
can withdraw.
MR. WAGNER: Can I ask a question, Harry? I am one
of the amateurs here, but I think in this matter I can
probably speak for the other members of the Congress.
I think we are going to be asked, as one of the first
questions - here is a country which still has inflation,
and you are going to establish a rate for them. Now,
how are you going to establish the rate?
Regraded Unclassified
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MR. WHITE: That is the way to stop inflation -
to establish a rate and do other things at the same time.
There is no sense in establishing a rate if that is all
they did.
MR. WAGNER: How do you establish a rate that is
feasible?
MR. WHITE: Take China, for example, as one of the
extreme cases of inflation: China can agree with the
Fund on a rate, no question about that. Now, whether
she would be able to hold that rate would depend on her
doing a lot of things.
You could pick a rate and say that this rate she
has some chance of keeping, providing she does a lot
of other things. The Fund would have to be satisfied
that is in prospect.
MR. WAGNER: You say from the beginning, fix a rate;
how is that to be determined?
MR. WHITE: We can agree, just as we agreed on the
Italian rate. We knew in setting the Italian rate that
we were setting it lower than the Italians and some of
the other people wanted. We set it at one cent because
we said that we wanted to set a rate that had an excellent
chance of holding. If things improve, it can get stronger,
which will be fine for Italy and everybody else, but it
won't easily get weaker. The others wanted us to set it
at three or two cents, but we were afraid it would begin
to slip down to one. I think so far events have justified
us. There is a one-cent rate. The Italians want to im-
prove it - they want a two-cent rate, which is fine. But
you have picked a rate which has an excellent chance of
holding as the country recuperates gradually.
H.
JR: Could I help out a little bit?
Bob, this thing, you see, we in the Treasury have had
the experience of the Tripartite Agreement with England
and France, and we had the unfortunate experience with
France of successive depreciation and devaluation, and
we have learned through experience. We have nad experience
with other countries, and now we have started, as I say,
with not only North Africa French, but what was left
of the French colonies. And I think in establishing
these things that if this Fund is born they will have to
be just as tough as we have been in these countries where
we have gone. I have always felt, particularly on account
of my experience vis-a-vis the French, that I would much
rather err on the Iow side and find I have placed too Iow
Regraded Unclassified
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a rate on the thing, and then gradually come up.
MR. WAGNER: Supposing the other countries are all
against you on that proposition.
MR. WHITE: They couldn't be.
MR. ECCLES: It isn't to their interest to be.
H.M.JR: Because they will lose money on it. It is
to everybodyls interest, as I see it. It isn't a selfish
one on our part to fix a rate so that the thing will get
better. I mean, nothing is better for a country than to
see its currency appreciate, and the most refreshing
thing on this thing is the question of the French. They
came over here - this Mendes-France, and I think it was
nis own suggestion - he said, "Now, we don't like the
two-cent rate, but we realize that that is the best you
can do, but we on our own want to suggest that this be
readjusted as often as is necessary and the final settle-
ment with you for your troops and your expenditures and
everything else will be on the ultimate rate, and not on
the month-to-month rate."
So all the time we are establishing precedents which
we can use, Do you see? Immediately we said to the
President, "The French formula is the best we have heard.
We want that with all the other countries if and when we
invade them."
He has accepted that, as has State and War, as a
formula. So we are building precedent. So far, what we
have done in these countries - we have gone along - we
have had our share of success - and I think by the time
this reaches Congress we will have been in other countries
and we can show what we have done. So we in the Treasury,
with the help of State and War Department, are not
approaching this entirely as amateurs. I mean, we have
definite examples that we can give you where so far we
have been fortunate enough to be successful.
MR. WHITE: I think it should be made clear that
all these problems you speak of exist, anyhow, without
the Fund, except in a much more intensified form, because
without the Fund they take unilateral action, and in taking
unilateral action, they are always in favor or taking it
on the low side, which forces the next country to meet the
situation. They have to fix a rate and they have to meet
their monetary, inflationary problems.
Regraded Unclassified
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- 15 -
Now, all we do is introduce some multilateral decision
so that they will pay attention to the effects of any
decision on other countries, and also assist them in main-
taining, so that many of these complex problems you speak
of, and are very difficult in the post-war period, exist.
That is one of the reasons why we need the Fund - to
help solve those problems.
H.M.JR: May I say, when you don't have something -
for instance, the thing that the Army did in China was
just unbelievable. We had nine hundred thousand people,
or something like that, working on one airfield. That
may be slightly exaggerated - I will minimize it. Dean
Acheson's brother was there--
MR. WHITE: Two hundred thousand on one field.
H.M.JR: The expenditures have been just unbelievable.
We have had to use all kinds of artificial devices in
order to keep the thing down. Well, you can do it tem-
porarily, but if we go into this thing after the Armistice -
I mean, we can't do what we have done in China because
in the final analysis we just had to say to General Stilwell,
"You have got to do it as a soldier."
But the thing you are up against is - we have been
in China where they are building these fields to take
care of the B-29's, and the time and thought and effort
is just unbelievable. Now multiply that about forty-four
or fifty times, and you go into something like that, with-
out something like this - the world will go crazy. You
just can't do it.
It has taken the best brains that we have, and
conference after conference, to handle this Chinese
thing - to get over the period until these fields were
finished. But we have done it, and we have done it at
half the expense that we thought it would cost. But
nobody has the time to do it for forty-four countries, or
fifty countries. I don't know how many countries there
are in the world, but you just can't do it.
MR. BROWN: Senator, again I don't want to discuss
the details of it, but it seems to me that to get public
acceptance of this plan - and I think properly so - the
more assurance you can give the people of the United
States that the Fund is not going to begin operations
until there is some minimum of political stability and
some minimum of economic stability - I don't think a
Regraded Unclassified
158
- 16 -
very high degree of either political or economic stability
is necessary - the greater chance you have of acceptance.
Now, I don't care what the machinery--
MR. WHITE: Unquestionably.
MR. BROWN: I don't care what the machinery of the
Fund is to accomplish that result. I don't particularly
care, after the termination of both wars. I mean, if
the Japanese war is in full blast, it is going to be a
tremendous strain on sterling - on India, on Australia,
and on the maintenance of their currency. It isn't going
to affect Czechoslovakia, or France, or Greece; it is
going to be important in the Dutch Netherlands--
MR. BROWN: I think it is perfectly possible, within
the framework of these principles, to get a sufficient
actual protection, but I think it is very important that
we get it, and I think we are going to have difficulties
in getting it unless we stand our ground, because I
think the majority of other countries would like to see
the Fund opened for business at the earliest possible
moment.
That is the only point I want to make. I think it is
something that the American Delegation, in considering
a great many of these questions, have to bear in mind
constantly.
MR. ECCLES: As I followed the discussions and the
opposition, I know that the Federal Reserve people - we
have had communications from every Reserve Bank, practi-
cally, and that is a reflection of the banker and busi-
ness view, and I agree fully with Ned, that unless we can
give assurance to the American public, that this thing
would fail of getting enough support for passage. The
base, almost, of this opposition centers right there;
at least, it is one of the principal factors in the whole
picture. Why they are against this approach, this sort
of Fund is against the John Williams type of approach.
And I think that you go quite a long way to meeting that
opposition if what Ned mentioned here can be worked out.
MR. WAGNER: As to time?
MR. ECCLES: The time and conditions, yes.
MR. WHITE: Let's keep this in mind because it is
very important, and something we are liable to overlook.
Regraded Unclassified
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- 17 -
We are not playing tiddle-de-winks. You are dealing with
countries who are politically unstable, economically un-
stable, and who are confronted with potentialities that
are fearsome in their possibilities; and the necessity
of our job is to help them to achieve political stability
and begin economic reconstruction. If you are going to
take the position that you are not going to help them -
not take any risk - not take the risk of a loss of what is
really a few dollars, which you can't lose on this thing
in the long run - on the assumption that you are going
to wait until they are well established - then you are
not being conservative, you are being a gambler of the
highest order. You are gambling with the political
stability of Europe and the world.
Now, we don't want to take that risk; we don't want
to take that gamble. That is why we want to do every-
thing we can to help them achieve that degree of political
stability and economic promise. That means that you have
got to begin to assist them as soon as there is a reason-
able degree of stability.
Now, the only question is, when does that reasonable
degree appear? Obviously, when you have the armistice
you don't make funds available the next day. In the first
place, I needn't tell you gentlemen on the Hill, but it
is going to take a long time to get this into operation,
and then it is going to take months, and so forth, but
without knowing the exact date of the end of the war, you
can't know to what extent you have any influence over
the timing, because it may take so long - the European
war may be over in four or five months, and it may take
a year for this to get going. But to assume that the
Fund shouldn't begin to operate until these countries are
well on the road to recovery is, as I say - in the first
place, they will never get on the road to recovery if
you don't help them, and in the second place, you already
have the Fund protected, because they cannot draw but a
certain amount over a twelve-month period. And to assume
that the Fund is jeopardized by coming to the assistance
of Europe when they most need it is, It seems to me, over-
looking one of the most important aspects of this Fund.
Certainly there are risks. The risks are small in
terms of money to the United States, but there are some
risks. But there are a lot greater risks if you don't.
MR. VINSON: Is there any difference between you,
Harry, and Mr. Brown, in the fact that there should be
reasonable stability before it goes into operation?
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- 18 -
Mr. White: I don't think SO. There may be some
difference between us as to what constitutes--
MR. VINSON: That would be determined by the Board.
MR. WHITE: That is right, but his opinion is that
the Board might be biased in the other direction. I
wonder whether that is so. Where do the interests of
Canada and the United Kingdom and Holland lie, just to
name only a few? It lies in political stability; it
lies in hope for peace. Those countries have a high
sense of responsibility for the dangers. They are not
looking at this as something in a grab bag which they can
take out - to hell with the world when they get through.
In fact, England has told us a dozen times that she
doesn't expect to utilize this Fund herself hardly at all
because she thinks she can make the grade without resort-
ing a great deal. But she will need the others. She
knows what the others have to do, and England cannot have
peace and prosperity unless Europe does, and we can't
:
have it unless England and Europe does. So there isn't
any difference on the principle; there may be on the timing.
MR. VINSON: There may be on the execution - on the
administration.
MR. WHITE: That is right, as to what is reasonable.
Well, naturally these small countries that are in trouble,
overwhelmed with danger of being thrown out of office - if
there is one thing you are certain about, people are not
going to stand for prolonged unemployment in Europe. They
will kick over the traces for Communism, or some other
"ism." They are not going to stand for depressions, and
so forth. Now, these governments know that. Naturally
these governments are eager to do everything that is pos-
sible to prevent that. They want stability, improvement.
So naturally they are going to press for assistance,
But to assume that they are coming with their hands
to dig into somebody else's pockets is not fair to them
and not realistic. So we mustn't too lightly assume
that what is a reasonable period means you have to wait
until there is stability.
Then the question of those bankers who feel this
is an important point, the reason is they are smart
enough to know, if you want to kill this thing the way to
do it is not a frontal attack; they will never get to
first base with the people; the people are too smart.
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- 19 -
The people know something has to be done in the field of
international monetary stability. Those fellows are too
shrewd to expose them to that. They say, "We are all
for this, but go gradually, take it easy, wait until the
transitional period is over."
They know that within a few years after the end of
the war you won't be able to get an international arrange-
ment of this kind any more than you could fly. At least
they figure they could kill it then. Their job now is to
postpone it. This talk about a two-country approach -
most of the people don't know, but the spearhead knows
that England doesn't want a two-country approach, and that
the other countries won't accept it.
Therefore they know that what they are actually
doing is killing it - "Postpone it, wait until times are
stable, wait until you see a little more clearly ahead
of you."
That is a smart tactic.
MR. ECCLES: I think the answer to that, Harry, is
that when you establish a rate you have got some idea
that that rate is going to prevail.
MR. WHITE: Otherwise it would be senseless.
MR. ECCLES: That is right. That is the answer to
that one. Establish a rate when there is a revolution
going on, and when you have no basis upon which to
establish it--
MR. WHITE: I don't think there is disagreement among
any of us on that score. But we are not dealing with
normal times, and we are not dealing with a situation in
which we can sit back and wait.
You know, I would say, we have always felt that
conservatism in its true sense, in its best sense, means
not taking unnecessary risks. That is what conservatism
means to me, not taking unnecessary risks. Well I hold
that sometimes when you sit down and do nothing you are
taking more risks than when you do something, and we are
confronted with bad alternatives.
MR. TOBEY: If you would guide in the light of reason
in troublous times, you must let your minds be bold.
MR. WHITE: That is fine. Boldness is sometimes much
more conservative than caution. Caution is all right
Regraded Unclassified
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- 20 -
when things are going pretty well, when nothing very bad
can happen; then it is easy to go slowly and wait and see.
When you are confronted with the potentialities existing
in Europe today - Greece, Czechoslovakia, France - take
France, the French are very eager to see this go in. You
think they want the additional foreign exchange. They
can't get very much out of it. They expect to get more
out of credits than they do out of this. No, they want
it because they are afraid of monetary instability after
the war. Mendes-France is coming here, specially. He
talked with the Secretary - had some long conferences
with the various departments and the Secretary, flew back
to Algiers to talk it over with his government and he is
coming back. Why? One of the chief reasons is that
France is worried, not that she may not be able to get
a few hundred million dollars in credit. That wouldn't
stand between her and instability. You are dealing with
a country that deals in very large sums. She is afraid
that the rate of exchange she has established she will
not be able to hold.
As the Secretary said - he didn't tell you quite
the whole story, but we don't think she can hold it, and
we said if she wants it, all right. She knows she can't
hold it, but for political reasons she had to take it.
Now then, she feels that it is vital to her economy
to be able to have an international Fund in which there
can be multilateral agreement on the rate - an orderly
justment of the rate at that time. And having experienced
'34, '35, and '36, which practically brought along civil
war because of her monetary disturbances, she is scared
to death about it.
It isn't because she wants the money and additional
credits. Now, France is a key country in Europe. What
happens to France will affect Belgium and Holland, and
those countries are going to look to the Fund as a medium
which will help to establish this orderly rate of exchange
and give them some chance of maintaining it.
rodain
I repeated the remark to you of one of the leading
economists who is here, Dr.
he is not known in
this country - if the common people realized what is in-
volved in these provisions, he said, they would pray every
night for its success. Now, why? It isn't because of
a few hundred million dollars that they can get for credits,
because most of these countries can only get small amounts.
Regraded Unclassified
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- 21 -
It is because you are establishing an international
medium that tackles cooperatively these major monetary
and economic problems, and in order to help them tackle
them successfully you have got to give them assistance.
But we all agree you have to give them assistance under
those conditions which will help them help themselves.
That is our job.
DR. GOLDENWEISER: It is generally understood that
you can't wait until stability is established because you
would never get anywhere, because stability, as a matter
of fact, exists entirely.
On the other hand, it is also agreed that you can't
start: it before there is some point from which to start
the development of stability, and I think it is a matter
of interpretation. Beyond that point, of course, when
that stability has been once established, then the intro-
duction of this stabilizer will help bring about & great
deal more of stability in the course of a short time,
which established. is what we are hoping for, and which is being
You don't differ with that, do you, Mr. Brown?
MR. BROWN: Not at all. I don't think you can wait
for any such degree of stability as Dewey, for instance,
suggests. I think that is impossible. I am worried about
the effect on the exchange of the United Kingdom and
the Netherlands while the Japanese war--
MR. WHITE: That isn't going to affect them, because
that is blocked. It won't help them, but the expenditures
of India will be blocked. It makes it all the more neces-
sary, getting those other countries on their feet.
MR. BROWN: When you said you thought we had dis-
cussed the major question, I am sure that as far as
popular acceptance in this country and in Congress goes
that that question, and the ability to be able to point
out to the American people that the practical machinery
of the Fund safeguards it, is essential for its acceptance,
and I think you agree with me on that.
MR. WHITE: Absolutely. And I think that is the
point Marriner makes. The best plan in the world is no
good if you can't get Congress to accept it; therefore
it is vital that you meet these oppositions.
Regraded Unclassified
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- 22 -
MR. WAGNER: Don't misunderstand me, I am strong
for stabilization of some kind, and I am going to rely
on you experts to determine when that time is, but I say
that is an important factor.
MR. WHITE: It is important.
MR. WAGNER: Speaking as an individual, now, of
course.
MR. WHITE: It is an important factor, but it is
one we have been conscious of, and one--
MR. TOBEY: I suppose--
MR. WHITE: You are apprised of the fact that you
will get some saboteurs at this hotel doing all they can
to stick a knife into this thing.
MR. WHITE: I would be surprised if that were not so
because if this thing were being considered on its merits
people would be looking at it objectively and saying, "We
don't like this. We think this is better" - or "we think
this is weak here and ought to be improved" - or "this
ought to be changed," but that is not the approach at all.
You haven't got the people who are interested in the
objectives. They just pay lip service to it. They are
interested in defeating this. The man who is interested
in defeating it is a man who is going to resort to all
kinds of devices, one of them being sabotage. He is
going to try many attacks in different ways. It isn't
a man - there is a group not interested in this. If
they can't defeat it frontally, as they know they can't,
because mass opinion is too smart for them - sometimes
even the mass of people understand certain things. They
don't know the technical details, but they appreciate
the broader implications. So it is being attacked on
several fronts. On one front you get the technicians
of that group who are saying, "Wait - wait until the
transition period is over. This thing may work out during
good times, but it can't work both in good times and bad
times. If it is fit for good times, then not for bad."
It is like saying not to have a physician during an
epidemic because physicians are being made for only normal
times.
You have another group that is saying, "This is the
wrong approach; it is something new." or course it isn't
new, but either they don't know or if they do know, they
don't say, because it is merely an extension of what is
already being done.
Regraded Unclassified
165
- 23 -
H.M.JR: Let's go on to the next thing, Harry.
MR. ECCLES: I am interested, though, in this ques-
tion of saboteurs here. The countries repesented here
are sympathetic with getting this Fund. Certainly, I
would think, the American group would be here for con-
structive purposes; unless they are connected with some
group - why are they here?
H.M.JR: I don't know what the Senator meant, but I
think his contribution was friendly.
MR. TOBEY: I am speaking of experiences I. nave had
since I have been here - of approaches I have had from
men showing animus and a very earnest desire to see this
thing fail, and I came back to them. I speak of it be-
cause that type of vermin is here, and they will do the
poisonous work. It may not have much effect, but they
quote the New York Times editorials. I thought I would
bring it up, not to prolong this discussion, but to let
us know we have to be on guard.
H.M.JR: Like the chicken, or the egg - which comes
first, the New York Times editorials or the saboteurs?
MR. WOLCOTT: I think what Senator Tobey says, we have
to bear in mind. Within the hour I have had the charge
thrown at me that this is throwing money down a rat hole.
Now, Harry, in your press conferences, I wish you would
stress that, because it might help. Senator Tobey and I
get these things, probably, when you don't. We
have been in the opposition so long that they think we
are going to oppose everything that comes up. If the
opposition has any voice here, they expect that Senator
Tobey and I are going to be the opposition. It is becoming
rather difficult for us, because all of the opposition
spearheads on us. We don't want to do anything about
it. Now the pressure is getting pretty strong. I think
we have got to take cognizance of this opposition - this
sabotaging, as you put it. You have got to cover it in
your press conferences if you can.
MR. WHITE: Do you think it would be helpful to cover
it in a press conference?
MR. WOLCOTT: I think SO. In the last hour I have
had the proposition put up to me that we are pouring money
down a rat hole. I believe that next week there will be
articles written along that line. They haven't had the
benefit of your explanation of it.
Regraded Unclassified
166
- 24 -
The only way that you can offset that and perhaps beat
them to it is to anticipate those arguments.
H.M.JR: Mr. Wolcott, without asking you to disclose
anything - or Senator Tobey - are these American people?
American newspaper people?
MR. WOLCOTT: Yes. We have got to be realistic about
it.
MR. TOBEY: They are American newspaper people.
MR. BROWN: on, yes, Sam Crider is up nere. He has
talked to me. lie doesn' anything about it; he doesn't
want to know anything about it - in this room. He wants
to defeat it. He has done a good deal of writing for
President Hoover and he just doesn't like it. I have
argued with him.
MR. WHITE: They are influential writers. They are
widely syndicated.
MR. TOBEY: Mr. Crider is specifically representing
the Hearst papers. I would rather you didn't quote that
from me, but it is true.
MR. BROWN: He told me he was arranging a syndicate
of articles which were going to appear not only in the
Hearst newspapers, but all over the country, and that
Hearst was arranging the syndicate for nim.
MR. WOLCOTT: As I have suggested at one of the pre-
liminary conferences, if we are going to be successful
with that, we have to have public sentiment with us because
public sentiment will control whatever action is taken
by the Congress, and I think we have got to begin and
start building public sentiment right today and now.
H.M.JR: To be practical, what would you suggest,
Mr. Wolcott?
MR. WOLCOTT: I made this one suggestion, that
in the press conferences this opposition be anticipated.
There have been hints about it, and the fact that the plan
is bound to be a failure because, as Dr. Goldenweiser
mentioned, many people think, probably as Charlie Dewey
does, that we can't do anything here until all the
currencies of all the countries have been established.
They are putting the cart before the horse. I think
Regraded Unclassified
167
- 25 -
stressing your idea that this conference is designed to
stabilize their currencies and keep them stable after
they have been established, is going to be helpful in
building up public sentiment for the plan. And that is
done largely, of course, over the radio and the press.
MR. TOBEY: Mr. Chairman, I amplify what Jesse
says. It seems to me, looking at the matter from the
public opinion standpoint, utilizing the medium of the
press to get this thing out and beat them to the punch,
take the edge off this criticism, it is awfully important
that we link this up as a very definite concomitant of
our sincere purpose for world cooperation. There is the
germ that is in the hearts of all of us, and back of
that is desire for world peace and the constructive
movement of the world atlarge. We mustn't lose sight of
that. This only amplifies and implements the efforts
of the nations of the world for world cooperation in a
very practical manner, and by doing that we at once put
a foundation under the thing, it seems to me, in the
minds of the public, and that will appeal to them.
And then I also think that, and I say this entirely
impersonally, that these press people should be encouraged
to come to members of this Conference and get interviews
along the lines - that we are yearning for this principle -
and particularly come to the two Republican members who
are here. Not that we will come out and do anything we
should not do, but what we should do, which is to show
we are here in a constructive way, and not a negative
way, with a yearning in our hearts to see this successful.
I go a good deal farther than most of you here. I
would put it - you take the maximum amount we put in this
thing, if the whole thing is a failure, personally, I
would put it in there and say we made & great try for
something; even if we failed. So that part of the failing -
of the losses - is to me a crass indictment of this in-
ception here. Throw that out the window now, but come
back to my thesis that we must link this with world
cooperation in a very definite way to estabish unity.
MR. WOLCOTT: We want to cooperate, and I think my
position is pretty well placed. I want to see this Con-
ference succeed, and I think we all want to; because we
are expected to spearhead the opposition, which we are
not going to do, and which we don't want to do, we have to
have an awful lot of help - an awful lot of support. We
don't know enough about the subject to answer all these
questions ourselves.
Regraded Unclassified
168
- 26 -
H.M.JR: Mr. Wolcott, all I can say is this - I
have been Secretary of the Treasury now - this is my
eleventh year, and I have tried the best I can to run
this thing on a basis that I am there serving one hundred
and thirty-five million people, and those of you who
watched us run the Stabilization Fund - we certainly
haven't run it for the Democratic Party, and webaven't
been accused of it.
As a matter of fact, I don't think we have ever
had any paper attack us that have misused the Stabiliz-
ation Fund in any sense. It aoes seem tome that that
is an example that you gentlemen could use. Here we
have had this thing - Congress has renewed it four times -
am I right?
MR. WAGNER: The Stabilization Fund, yes.
H.M.JR: And there is an example of what can be
done aboveboard and in the interests of the country.
MR. WAGNER: It has been unanimous.
H.M.JR: It seems to me that is a fairly good example
of what can be done without putting the money down a rat
hole.
MR. WOLCOTT: May I suggest that there are perhaps
three things which we have to have some help on. That is
one of them, that we are pouring money down a rat hole.
Another is that we might in some manner or other turn over
the management of our domestic economy to an international
Board. That is the second one. Probably that is more
important than the first.
Then as I think of some others I will give them to
you. Those are the two things that have been put to me.
MR. TOBEY: I will give you another one, that the
existing Stabilization Fund is nothing new, that we just
use this one we have now and carry on without creating
all this machinery.
And fourth, there is a charge that a nation that
might be & piker and have no moral principles could come
into this Fund and use printing-press money, and be in
regular standing with the other nations puting in good
money. And when they draw out by giving a notice, they
will divide up the assets - the money isn't worth a damn.
Regraded Unclassified
169
- 27 -
I say this merely because you are the experts and
amplifying what my good friend Jesse has said, that we
would like answers to these things.
MR. WOLCOTT: If you answer them in your press con-
ference, it will relieve the pressure on us.
MR. SPENCE: The members of the press have complained
to me about the secrecy of the meeting. I suppose it is
absolutely necessary that it shall be, but I think it
would be advisable to give them as much information as
you can.
MR. WHITE: That is the Secretary's intention.
MR. SPENCE: Two or three of them have complained
to me that they didn't know about the meeting in Atlantic
City.
MR. WHITE: I think we ought to tell them about that.
MR. SPENCE: But they are going to write, and if you
give them what you think they ought to write, I think it
would be desirable.
H.M.JR: I read the New York Tribune this morning
rather hastily. But certainly - and I look on that as a
Republican Party organ - and there couldn't have been
a more constructive story written out of Bretton Woods
than was written in the New York Tribune this morning.
DR. GOLDENWEISER: I understand that John Crider
has a rather favorable one in the Times this morning.
H.M.JR: John Crider has a favorable one in the
Times. He has two stories, one on the business, and one
on the comforts of the people. He writes one paragraph
in which he says that in the morning they were uncomfortable
and by night the thing was straightened out.
MR. TOBEY: Isn't it possible to get these pressmen
together in the presence of this group here, and to impreg-
nate them or stimulate them with the sincerity of purpose
and the aspiration we have here, and a frank statement,
and let them feel the unity that is in this room here for
this cause, that it is a passion with us - something more
than merely verbiage - and impress them? They are pretty
hard-boiled, but nevertheless, they recognize when people
are sincere. Let them have it with both barrels.
Regraded Unclassified
170
- 28 -
H.M.JR: In view of these suggestions - I have just
sent for Mr. Fred Smith. I thought that he and Mr.
Sweetser and Mr. McDermott and I could get together and
in view of these very valuable suggestions made here in
the last few minutes, plan something.
After all, as I say, between Mr. Sweetser and Mr.
McDermott and Fred Smith, they ought to be able to take
this thing and capitalize on it. With all sincerity,
I think the attitude of both Senator Tobey and Mr. Wolcott
are magnificent, and I think, if I may say so, that they
are just a hundred percent good American citizens, and I
will try to live up to their standards.
MR. TOBEY: There is nothing extraneous - nothing
here - no barriers at all, as I see it.
H.M.JR: After all, we picked you gentlemen not be-
cause you were handsome, but because you were ranking
members of these Committees.
MR. TOBEY: Thereby hangs a tale, but I won't take
that up!
H.M.JR: May I just say that the Loru is with us.
MR. WAGNER: I would like to say for Charlie Tobey,
we have been on committeetogether and he puts patriotism
above politics, any time - always has. That is why I
knew he was here, and Jesse, too, in our conferences.
MR. SPENCE: I would like to say the same for Jesse
Wolcott, too.
H.M.JR: Anyway, I think when these press people
come - we will have a little talk and plan something for
this afternoon. You might ask, also, for Mr. McDermott.
Then we can get them together. I think if they will all
listen--
MR. TOBEY: Mr. Chairman, I realize that bringing
up this matter of saboteurs - I was digressing from the
trend of the meeting.
MR. VINSON: Nothing could have been more important,
I think, Senator.
MR. WOLCOTT: One other thought right there - that
it is possible, and it is designed to establish the price
of specific commodities. For example, wheat, we will say.
Regraded Unclassified
171
- 29 -
Many have the idea that we could pick out one commodity,
so the wheat people might be opposed to it, or the corn
people might be opposed to it. They don't view it as an
over-all stabilization; they feel that we can manipulate,
through the Fund, the price of specific commodities.
I think that should be covered.
MR. WHITE: I didn't realize that.
H.M.JR: Wait a minute.
MR. WOLCOTT: No, I don't think you have been getting
some of these. The wheat people are very much concerned
about this Conference.
H.M.JR: You mean they think that through inter-
national action we can affect the price of wheat?
MR. WOLCOTT: That is right. That misconception of
the whole thing has gone on.
MR. WHITE: The only way to affect the price of
wheat is to raise it by helping countries to be prosperous
so they will be able to buy more wheat.
H.M.JR: I wish they could affect the price of string
beans! We sold one hundred and thirty-five bushels yes-
terday for a dollar and a half, which is half as much as
we got last year.
MR. VINSON: Don't look at me, Mr. Secretary!
H.M.JR: So if you will please get busy, Mr. Vinson -
if you can ao something, will you do something for my
string beans, please?
MR. WOLCOTT: We got this during the Price Control
Act, that they were price conscious in Congress on
specific items - cotton particularly. They think, through
manipulation of these funds in some mystical manner or
other, that we can raise the price of Mediterranean cotton
to the prejudice of American cotton.
MR. WHITE: Interesting. I hadn't heard that.
MR. VINSON: Well, the ideas nave just started.
MR. WHITE: I am afraid so, yes.
Regraded Unclassified
172
- 30 -
MR. WOLCOTT: I shouldn't have brought up cotton,
I guess.
MR. WAGNER: Oh, you aid well.
H.M.JR: It is an interesting thing that in this
group there is no representative of a cotton State.
MR. WOLCOTT: Very unusual.
MR. SPENCE: We would probably have had a resolution
introduced before this! (Laughter)
MR. SOMERS: The suggestion I was about to make was
either covered by the Senator or by my colieague here on
my left.
H.M.JR: Wouldn't you amplify it, please?
MR. SOMERS: Well, the two suggestions I was about
to make at that time were, one; that Charlie Dewey should
be answered immediately, because he has fifty-four
Members of Congress signing a proposal which might dis-
rupt this proposal of ours, and some of them are important
Members, Mr. Wadsworth of New York, for instance, and
several others.
In addition to that, I would like to suggest that
these newspapermen be called together, and that Mr. White
speak to them as he has spoken to us. Let them ask any
questions, and let him answer directly as he answers us.
I think that would have a very beneficial effect.
That was all, and I think both of those things were
covered.
H.M.JR: Well, it is planned that Mr. White meet
with them at three this afternoon.
MR. WHITE: I think, Mr. Secretary, probably in the
few minutes remaining it would be well to cover the Bank
and drop the Fund. Then we can go back to these. All
these points will be re-raised again for special consider-
ation.
H.M.JR: Mr. Sweetser, you were making notes, I
notice. You can tell McDermott what happened here between
you and Fred Smith, and I expect some very bright ideas
in the not-too-distant future.
Regraded Unclassified
173
- 31 -
MR. SWEETSER: We were arranging to have lunch this
noon together, all of us, and to talk with Mr. White
about his conference this afternoon. That has been very
widely advertised. I think all the press will be there,
and I think some of them will be there with knives, and
they will bring out all these particular points. One
other thing I would like to mention - because we were
talking about what Senator Tobey said - we are coming
close to the 4th of July and some idea of having some
recognition of that in the Conference, if we could arrange
it, and that would give a chance for a speech or declara-
tion about national independence leading on to inter-
dependence. I thought that we might be able to work up
something of that sort, and we were thinking 01 Senator
Tobey in connection with it.
As far as OWI is concerned, itself, our people would
like to get just as many statements as they can get from
the different members of the delegation, which they would
use first to send abroad on the short wave, but which at
the same time they would like to give out domestically,
so you get a double-barreled arrangement. They like a
statement from the overseas side every day, so there will
be a chance for everyone on the delegation to make such a
statement. It should be short - three minutes or SO.
And you could take up exactly the lines that Senator Tobey
mentioned about world interdependence.
MR. WHITE: Could I take up very briefly the Bank,
then you can raise whatever questions you want on it.
Then we will come back to the Fund.
The Bank, as you know, is a Bank for the United and
Associated Nations, with a capital of ten billion dollars,
in which countries subscribe. This is different from the
Fund. The Fund is just a participation in which there is
no risk of loss, in our judgment, at all.
This is different from the Fund. This is a Bank in
which you have ten billion dollars' worth of capital and
its business, its chief business, in fact, is the simple
one of helping to promote private investment to foreign
governments for special projects of reconstruction and
development.
The way in which it would work is as follows: There
would be a sum of probably twenty percent of the total
subscription called up at first from all the members.
It may be less than that, but that is the maximum -
twenty percent.
Regraded Unclassified
174
- 32 -
Members can subscribe in varying proportions. The
proportions are determined by a formula which takes into
consideration a country's national income and the amount
of gold and foreign exchange resources. The net result
is that the United States would subscribe a little less
than a third; the United Kingdom probably about a half
of the U.S., and so on, down the line.
Now, the Bank has two separate operations, one
important, the other much less important. The important
operation which I will take up first is that the Bank
guarantees loans which are made by private investors
through the regular channels of underwriting houses, and
by its guarantee, agrees obviously to pay up in case of
default.
Loans can be made only to foreign cuntries when
the governments of those foreign countries guarantee
them, so that the investor has for his investment, the
guarantee of the government to whom the loan is made;
or if it is a municipality, then the government has to
guarantee it as well as the municipality. He has the
additional guarantee of the Bank which represents, in
effect, the guarantee of the thirty or forty governments
of the nations who subscribe.
As far as the investment is concerned, he couldn't
get a safer one. Therefore he would accept a lower rate
of interest. NOW, the Bank would have a pretty substan-
tial charge for taking care of that guarantee, and the
fees which it would collect. The charges which it would
make for guaranteeing it would go into a reserve to build
up against possible defaults in the later years.
No further money would be called for from the
governments unless there was a default on the service,
in which case the countries would contribute - the way
England's proposal has it, they would contribute gold -
all the countries would contribute gold to meet the default.
Other countries haven't discussed that in any detail and
we don't know how acceptable it would be to other countries,
but we assume that would have a good chance of being
accepted. The Bank guarantees the loans of private investors.
Why should that warrant the creation of a Bank of that kind?
The situation is that there probably nas never been a time
in history when countries are more in need of capital to
reconstruct their economy, get back on a working basis,
and also develop some of the necessary industries without
which they couldn't have any hope for full employment
or anything like it.
Regraded Unclassified
175
1/d
- 33 -
MR. TOBEY: Wouldn't it be better to say they need
tremendous sums of capital which can only be supplied by
foreign governments?
DR. WHITE: Possibly we could amend it & little further.
They need tremendous sums of capital, only part of which they
can supply locally.
MR. TOBEY: I'd put it that way, because it puts the
whole pyramid on us in the public imagination.
DR. WHITE: They would supply a substantial amount
locally. That is one of the requirements of the Fund. But
they can't supply it all. They need imports. They need
import machinery, they need import raw materials, they need
to import technical--
MR. TOBEY: Bring out self-participation there which
softens the blow in the public mind.
DR. WHITE: They do have to supply a substantial amount
of the necessary capital for construction locally. We can
go into details and show how that is protected at this end.
Now, unless these countries get that capital, you will
not be able to stabilize those countries on any kind of a
sound basis. It is just impossible. They need too much.
And they must have it within the next few years to begin
with, to get started.
Now, that being so, the question then becomes, who is
going to supply it? Now, the American technicians have felt
that it is unfair, unjust, to put the burden on the American
tax-payer for the risk or fault, because a lot of these loans
are risky. You take loans to Greece, to Jugoslavia, to
Czechoslovakia, then you have Norway and France and you prob-
ably will have Italy after they come into the fold; even the
enemy countries after they get to & stage where you want to
help them so you won't have communism and anarchy and chaos--
even they will need assistance.
Now, they are pretty risky loans. I am not talking
about loans to England or Holland, who has good credit.
Unless there is severe destruction in the course of the war,
she ought to be able to borrow in the private markets.
England certainly ought to be able to. It may even be possible
for France to borrow a little. But you have some twenty or
thirty countries where the risk is high. You can't expect
the private investor to take those risks. He would take them
Regraded Unclassified
176
2/a
- 34 -
only if he wants to gamble at eight or ten percent or an
eight percent interest loan, like after the end of the war,
and underwriters buy and sell it at high rates. The country
simply cannot pay those rates. They will default; so they
must get capital and get it at reasonable rates of interest,
and they must get it for long periods of time so they can
pay the things back.
You cannot expect the American investor to supply cap-
ital under those conditions. There has to be some assistance
from the Government. We feel that the American tax-payer
ought not to be called upon to bear that entire risk--I mean,
when the Government guarantees it, it is the tax-payer who
pays. We say that the benefits that come to the world as a
whole from reconstruction and development, from preventing
civil wars and depressions--we say those benefits accrue to
the world as & whole, not only to the United States. There-
fore, we feel that the world as a whole ought to bear the risk
of loss. And that is what this Bank does. Should there be
a default, the loss does not fall on the United States, but
it falls on all the Governments in proportion to their sub-
scription.
of course, we are the richest, most powerful nation. It
is only to be expected that we would bear a larger share,
but we only bear a share and not the whole, as would be true
of most schemes which you hear suggested, like the Dewey
scheme.
The Dewey scheme would have the United States extend
all the capital; even though it is smaller, it is more costly.
It is smaller because it can't loan that much, but you get
back much less of what you loan. You stand to lose much more.
MR. VINSON: How is it smaller?
DR. WHITE: He has six hundred million dollars. His
proposal is six hundred million. How he gets that, I don't
know. Why not a hundred million; why not anything? Six
hundred million couldn't begin to do the job of loans. These
countries need capital at the rate of probably a billion and
a half to two billions a year. You are dealing with some
fifty countries with greater capital needs than ever in
history, and the risk of loss in this to all the subscribers
is small, because you don't have one Government guaranteeing
it; you have the borrowing government guaranteeing it. You
have all the governments in the world guaranteeing it who
Regraded Unclassified
3/d
177
- 35 -
stand between the American tax-payer and the default.
DR. GOLDENWEISER: It might be helpful if you mention--
perhaps they all have it in mind--but one of the provisions
is that neither the guarantee nor the loans will be made by
this Bank unless they can't get it outside on reasonable
terms.
DR. WHITE: That is a good point. There is no desire
to interfere with the private market. In other words, what
we say is that to the extent that private underwriters and
bankers could make the loan, fine. If they took care of it,
the Bank wouldn't do a nickel's worth of business, and that
would be fine. But it is only to the extent that private
investors will not, and all the people say they will not who
are conversant with the monetary market. You can't expect
them to.
MR. WAGNER:
On a larger scale like our FHA.
Marriner, the bill you introduced here a short time ago is
along the same line, isn't it?
MR. ECCLES: Yes.
MR. SPENCE. The Bank will make no direct loans?
DR. WHITE: I was coming to that with the twenty percent,
but I was speaking of the bulk of its business. The bulk of
its business will be ninety or ninety-five percent of these
guaranteed loans, not on direct loans. But I wanted to make
clear, this capital must be forthcoming if you are to have
peace and prosperity. We say the American tax-payer ought to
bear only his legitimate share.
MR. ECCLES: Harry, that guarantee by the Bank is &
proportionate guarantee.
DR. WHITE: That is, we guarantee up to the amount of
the share of our participation.
MR. VINSON:
Joint and several obligations.
DR. WHITE: You are talking in legal terms.
MR. VINSON: If it is a guarantee up to our partici-
pation, it seems to me it is several.
DR. WHITE: It is a guarantee up to our participation;
it is limited liability.
Regraded Unclassified
178
4/a
- 36 -
H.M.JR: Mr. Brown?
MR. BROWN: I was just going to say, I think after you
left Atlantic City the English proposals, our proposals,
put forward in the discussion, not at all conclusive, were
while each nation's obligations are limited by its total
amount of uncalled capital, subscription, that the obligations
of the several nations to make their uncalled subscriptions
are joint and several. That is, if any one country falls
down, such as Greece or Guatamala, why the United Kingdom
and Russia and the United States and all the other solvent
countries would have--
MR. VINSON: That would be joint and several, but
limited to the amount of participation.
MR. BROWN: Just like the case of a national bank. It
used to be where you had a double liability on the stock and
it affected some of the other stockholders who were insolvent
and relieved the stockholders from paying up. On the other
hand, & man couldn't be made to pay gold. In other words,
if all the countries except the United States defaulted,
the United States would have to make up the difference up
to the amount of its subscription. Isn't that right?
DR. GOLDENWEISER: But not beyond that amount. And
of course that is an impossible hypothesis.
H.M.JR: That would be the worst.
MR. WOLCOTT: The total amount of our liability under
any circumstance would be the total amount of our subscription.
DR. WHITE: If everybody failed. But, you see, this
charge that they have all goes into a reserve. No country
defaults for some time. So you are beginning to accumulate
a reserve right away as against potential defaults.
MR. WOLCOTT: It would be impossible for us to lose all
of our subscription.
DR. WHITE: I would say that is impossible.
MR. ECCLES: Let's take an actual case. Here is an
American investor who loans a million dollars, guaranteed by
the Bank, to Poland. That loan defaults. That investor
wants dollars. And we are & participant in the Fund to the
Regraded Unclassified
179
5/a
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extent of thirty percent. Would he get thirty percent in
dollars and fifteen percent in sterling and a certain percent-
age in the currencies of other countries, or would he get the
full amount in dollars?
DR. WHITE: He would get it in gold, the equivalent of
dollars. You remember I said the default would be met in
gold.
MR. ECCLES: Can only a country that can put up gold
for its P rticipation come into the Bank?
DR. WHITE: Oh, yes, it has to put up some gold to
begin with, but they have to pay the defaults in gold.
MR. ECCLES: When they can't, the countries who pay it
in gold have to take care of it. Well, of course it is equiv-
alent to paying it in dollars.
DR. WHITE: Not in our dollars. When a country defaults--
and there isn't enough in gold assets accumulated in the Fund
to make it--then you call on the other countries in gold.
All countries have very substantial amounts of gold. These
defaults can never amount to very much. Let's say on a
billion dollars it could mean thirty million dollars for forty
countries.
MR. ECCLES: Then the American investor who had the
guarantee really gets paid in dollars.
DR. WHITE: Yes, as far as he is concerned, he gets
dollars; he loses nothing. He can't lose. It is the safest
kind of an investment. For that reason, the whole risk is
reduced--for two reasons: It is less risky to undertake loans
not only fr the investor, but also for the borrower. In the
first place, if the Bank guarantees a loan, it has to make
certain that the loan is to be used for a productive ject.
In other words, you can't have the kind of loans that we had
in the Twenties--many of them. The Bank wouldn't guarantee
that type of loan. It not only has to be productive, but the
rate of interest has to be reasonable, and the term of years
has to be long. Now, those three factors will do more to
reduce the actual risk of default than probably any three you
can think of.
MR. ECCLES: Yes, the competition would force an ex-
tremely low rate. We'll have such an excess of capital for
investment that the investors would be seeking these guaran-
teed loans, and the rate wouldbe--
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180
6/d
- 38 -
DR. WHITE: They should be low.
MR. ECCLES: Yes, the competition for the loans would
make them extremely low.
DR. WHITE: That would reduce the risk, because it is
much easier for a country to repay a loan when it has borrowed
at reasonable profits. So the risk is reduced, of defaults.
If there is a default, the burden upon the tax-payer will be
one-third, & little less than one-third, what it would be
had America made the whole loan-well, more than that. I
think many of the men in discussing it felt that no country
would dare default to an international organization of this
kind.
We are discussing certain consequences that would
follow. An international organization of this kind can put
pressure on a country that no country could afford to do,
because it is imperialistic, it is butting in. But if you
have thirty or forty nations doing it, it becomes a very
different story. The country cannot accuse a particular
country of being imperialistic.
Also, there is another provision. You speak of default.
A country rarely defaults in payment of local currency. It
is a transfer problem. Isn't that right?
MR. ECCLES: Yes.
DR. WHITE: Therefore, we get paid in local currency,
anyhow. Now, the Bank will have certain rights to transfer
that local currency, which no individual currency in a Bank
could have. That is oneof the things being discussed.
So if you consider this thing in the large, this is
the cheapest possible kind of instrument to almost assure
recovery in foreign countries, because if 8 Bank like this
operates successfully, you can get enough foreign loans over
the critical period of the next three or four years, and that
is the critical period in this as distinct from the Fund,
which will operate equally well or more effectively even later.
MR. ECCLES: This will supplement the Fund, because
it will provide the country that gets these loans with the
currency that otherwise would be--
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181
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DR. WHITE: That is right. In other words, this Bank
very greatly strengthens the effectiveness of the Fund, and
the Fund helps the Bank because the Fund gives some assur-
ance to the investors that they can withdraw their earnings
and that the interest and dividends which they earn on their
foreign investments will not be subject to the monetary dis-
turbances and disruptions such es their past investments are.
I'd like to go back to that, because it ties up with
this. One of the effects of the Fund which we haven't mentioned
is that with the establishment of the Fund you will find
American corporations much more willing to establish branch
plants in these foreign countries, because one of the con-
ditions of the Fund which we. haven't mentioned--and I think
it is important, don't you, Ned?-about the withdrawal of
dividends as being current earnings--
Let's say the General Motors Company establishes a
plant in Brazil. As it has been in the past, they have
earned local currency. Now, they weren't at all certain
that they could withdraw those currencies. Sometimes they
would re-invest them. But under the Fund arrangement, these
current earnings on investments must be treated just like
payment for exports and imports, and are not subject to ex-
change controls.
I digressed because I forgot to mention that important
fact. That would mean that you would have a considerable
stimulus for the kind of investment which is best for the
country and best for us.
The establishment of branch banks in all the foreign
countries-we have done some of that. They will do a great
deal more with the Fund. The Bank will greatly strengthen
the other, because it will supply dollars.
MR. BROWN: I think there will be a lot of discussion.
MR. ECCLES: You mean exercise some control over the
foreign investment 80 that the burden upon making the transfer--
DR. WHITE: You have complete control over the foreign
investment in this sense through the Bank. The Bank cannot
make the loan without the approval of the American Government.
Regraded Unclassified
182
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MR: ECCLES: I was thinking of a private corporation
establishing plants on the assumption that they could with-
draw dividends, and it would not be subject to exchange
control; to the extent that that may be done extensively, it
may well put a burden upon the Fund of making a transfer.
DR. WHITE: It doesn't put the burden upon the Fund,
but you are right that it puts a burden upon the country, and
it would be one of the functions of the Fund to watch that.
That is very true. But they would do that not by going
to the particular company. They wouldn't interfere with the
company's business and say, "You can't put a plant there."
But they might say to the country, "You are getting more
foreign investments than we think your trade can handle, be-
cause you are not setting aside something," and so forth
and so on.
MR. ECCLES: Provide the dividends, that is right.
DR. WHITE: Now, there may be some loans which the
public will not undertake, and so the Bank has the authority
within that twenty percent to make direct loans, itself. It
has to be guaranteed by the Government and guaranteed by the
Bank in the same way against losses.
There is & further requirement: If any new loan is
made out of that twenty percent, the money has to be spent
in the country where the currency is spent.
I will have to explain that a little. That is an im-
portant point. A country borrows ten million dollars.
Let's say Jugoslavia borrows the equivalent of ten million
dollars. But there are many currencies in the Fund. There
are dollars and sterling and francs, and so forth.
Now, Jugoslavia would determine roughly--these are only
rough approximations--what proportion she wants to spend in
what country. She knows approximately what she wants to buy.
She can't borrow unless she does know. She has & definite
project. She decides she wants to spend about half of it, some
in the United States and some in England, and some somewhere
else.
The Fund agrees to the loan. Now, the Fund gives her
five million dollars out of the ten that has to be spent in
the United States. For what she spends in England, the Fund
gives her sterling. For what she spends in the other countries,
she is given those other currencies, so that all the currencies
which are in the Fund are utilizable, not only dollars.
Regraded Unclassified
183
- 41 -
But that applies only to direct loans. What the
United States lends out of the Fund has to be spent in the
United States for American exports. What England lends in
sterling will have to be spent in England, and so forth.
MR. ECCLES: That doesn't apply to the guaranty.
DR. WHITE: No, we don't interfere with that. They
can borrow the money from a private investor. They always
have had that privilege. Frequently, as you know--
MR. ECCLES: We have had some complaint about it.
DR. WHITE: There are many details in the Bank. The
voting is in the same proportion as your subscription, and
each country has absolute veto power on the use of its
Funds in direct loans.
In other words, let's take that same illustration.
Jugoslavia might want to borrow and spend the money in the
United States. If we are having full employment like we
have now, if that would continue, we don't need any foreign
business if they can get it elsewhere. The American repre-
sentative on instructions from the American Government would
say, "No, we don't want to make any loans; it will only be
inflationary here. Better buy in this or that country.
If you put the business here it will only mean more inflation."
So if the United States didn't wish the loan to be made, it
wouldn't be made. Just as if England didn't want the
sterling portion to be made. They would have to lend it
somewhere else.
So the Bank cannot deal with any one country in any
way without the approval of that government. So the Bank
can't come in the American market in any way and deal in
the American market, either through the sale of its securities
or in any other fashion.
MR. ECCLES: How about the guaranty?
DR. WHITE:
without the approval of the Americans.
Then there is another provision which I think would be
interesting along that line. The Bank can, if it wants to,
borrow money in a country, but only with the approval of
that member and only if somebody wants to lend the money. But
if it wanted to increase its assets that way--
Regraded Unclassified
184
- 42 --
DR. GOLDENWEISER: You mean if the twenty percent wasn't
enough, wouldn't give them enough dollars, they can get
more dollars; but they have in the first place to get per-
mission of the country and of an investor who is willing to
buy.
MR. SPENCE: Would E. country subscribe to the Bank in
the same proportion it would to the Fund?
DR. WHITE: No, it is somewhat different, if you take
a few other factors into consideration; but it is approxi-
mately the same. Ours would be a little higher. I think if
all the countries join, ours would be three billion instead
of two and three quarters. There is some difference, but
that is roughly it. We are the largest subscriber. United
Kingdom is the second. There are some differences in the
third, fourth, or fifth on that basis. They subscribe partly
in gold and partly in their local currency. That is an
interesting aspect of it. The part that they subscribe in
their local currency doesn't cost them anything until it is
used. They don't have to provide it in cash. If they wish,
they can have their cash invested in treasury bills.
DR. GOLDENWEISER: You are talking about the Fund or
the Bank?
DR. WHITE: About the Bank. No, they have to put cash
in the Fund.
That is to make it easy for some countries who may have
difficulty in borrowing to avoid a contingency until the
money is needed. When the money is needed, they have to
supply the cash.
MR. ECCLES: A country wanting a loan to buy in this
country from the Bank could possibly borrow the full amount
in dollars. I mean, it isn't a pro rata.
DR. WHITE: No, he doesn't specify what money he needs.
He has no choice.
MR. ECOLES: He has to merely tell where he spends it.
DR. WHITE: When he presents the invoices, the plans,
that money is paid by the Bank. He spends it in the United
States, the American manufacturer gets dollars; he spends it
in England, the British exporter gets sterling.
Regraded Unclassified
185
- 43 -
MR. ECCLES: It is all decided beforehand, because the
government has to decide whether they want the money spent.
DR. WHITE: But it is not spent down to the last nickel.
MR. BROWN: All loans made by the Bank have to be
expressed in gold, which practically means they could be
expressed in dollars.
DR. WHITE: Expressed in dollars, but not spent in
dollars.
MR. BROWN: But it is expressed in terms of gold.
MR. ECCLES: You would have to have stability of cur-
rency to make the Bank operate.
DR. WHITE: It would certainly be hard if you didn't
have stability, but I think loans could be made even if it
weren't in existence.
MR. BROWN: One question, Harry, that I think is impor-
tant on the original American plan. There is a clause that
provided that the Bank could invest a small percentage of
its capital in equities. The American experts said that on
reconsideration they thought that that proposal should be
dropped. Luxford, I think, suggested that the Americans
do it. The English, to my surprise, said they put it in
only because the suggestion came from America and it was the
judgment of the English Delegation that that ought to be
dropped out.
DR. WHITE: I think in our own defense we put it in
because the SEC wanted it.
MR. BROWN: I am very clear in my own mind. I'd like
to argue with the delegates that that provision for direct
equity should be struck out, and also the similar provision
that the Fund could provide in the case of private individuals
a direct investment, dividends, amortization, and so forth,
which would be transferable without any exchange restrictions
in the future. I think that is a very bàd proposal, myself,
and the English thought it was for two reasons: In the
first place, we have tremendous investments, particularly
in Canada and South America, which provisions would only
Regraded Unclassified
186
- 44 -
apply as to future investments which would work greatly
against American industries already established. In the
second place, I think there would be danger, particularly
in Latin America and in & great many countries at least
sufficient for the government in power to get an exemption
that would put an absolutely intolerable burden on the ex-
change facilities of the country and would very seriously
interfere with the working of the Fund.
I think it was the judgment of the American experts
after discussion that thatwas probably the case, and it was
the view of the English, to my complete and great surprise.
I don't know what country originally suggested it.
DR. WHITE: SEC suggested both. They pushed us around
& good deal on that. I think some of the State men thought,
too, that it would be very helpful if we could get some
equities investment. We said we would include them both,
thinking that in the discussions that would follow there'd
be ample time to consider them.
There are two separate points. One is the purchase
of foreign stocks and investment, and the other a more tech-
nical matter, guarantee of withdrawal against exchange
controls. You will find the American experts--particularly
the Treasury--will pull out of that without much coaxing.
MR. BROWN: The English want it out.
MR. ECCLES: Is there any relationship between the
amount of money that a country may borrow from the Bank and
its participation in the Bank?
DR. WHITE: None whatsoever.
The desire to borrow gold for monetary stabilization
purposes on the part of many of the countries is important.
It has been proposed by many of the other countries.
DR. GOLDENWEISER: On the one you just mentioned, I
should think our answer would be negative. I don't think
that borrowing gold for stabilization, domestic stabilization
purposes, is a capital investment in the sense that this
Fund should function. My own judgment would be that we ought
not to be willing to.
Regraded Unclassified
187
45 I I
DR. WHITE: I would think that would be the judgment
of this group after consideration.
The second point, some countries, led by Czechoslovakia,
want to be able to borrow not for 8 special project which we
have indicated, like a power plant or public utilities or a
railway, but to restore her inventories which have all been
despoiled by the Germans. She has taken this position. She
says & certain amount of inventory is not working capital,
but permanent capital, because you never dip very much below
it. You always have to have a certain amount of inventory.
Now they said, "Here Germeny will leave us with denuded
stocks of inventory. We have to build those up and they have
to remain at that level to be sure we turn it over. But we
have to replace it." They want to be able to borrow for that
purpose.
One of the things that the Bank does not do, which the
American group has insisted on its not doing, is to make
short-term or medium-term loans. We have said there were
adequate institutions all over the world to take care of
short-term loans, if they are meritorious. That also applies
to three or five-year loans, we think. There is some doubt
about that. And whether this would be the type of a five-
year loan or whether it would be a long-term loan, or whether
the Bank should undertake it is one of the problems that
will come before you. Those are the only other two points.
MR. TOBEY: Are those made on the trust receipts?
DR. WHITE: Except it isn't a single item.
H.M.JR: Gentlemen, this has gone on several hours. I
know it has been useful to me. I don't know just what is on
this afternoon. Is there anything that the American delegates
are expected to do this afternoon?
DR. WHITE: No, they have the afternoon free as far as
any committee meetings are concerned, but tomorrow morning
they begin, and sometime tomorrow, I think probably preferably
after the plenary session, we'll want to meet, in addition
to other purposes, to indicate the assignment and what the
program will be.
H.M.JR: I would very much like to have a meeting at
ten o'clock tomorrow morning here.
DR. WHITE: I think the plenary session is at ten.
Regraded Unclassified
188
- 46 -
MR. BROWN: I should like to make a suggestion, if I
may. I suggest that Miss Newcomer, Senator Tobey, Mr. Wolcott
and I get together and talk to the press to show that we are
all together on this thing, along with those in the Government.
MR. WAGNER: What are you--a Republican or a Democrat?
MR. BROWN: I think I am regarded by the newspaper re-
porters as entirely independent of the Administration, so I
think I could help.
H.M.JR: Why don't you tell them what you did in 1940,
as long as you are boasting?
MR. VINSON: He doesn't like to do it!
DR. WHITE: As long as you confine yourselves to gener-
alities, but if you let the press go into details, they might
take the position that the Conference hasn't started yet.
H.M.JR: MI. Oweetser, Mr. Smith, and Mr. McDermott are
waiting on something now, and I'll pass this along. Your
suggestion is & good one, Ned.
I have this suggestion to make in regard to public
relations. What would you gentlemen think? I happen to
know Mr. Eugene Sloan on a purely official basis. If I asked
him--he's with General Motors--to send up the man who handles
their foreign exchange problems, what would you think? They
have such a man. Then if I asked International Harvester--
whoever their man is--and possibly General Electric. Those,
I think, are the three outstanding companies that do business
around the world.
DR. WHITE: Do you know whom General Motors has as
Vice President?
H.M.JR: Yes, but that is all right. Some of these
companies do business around the world. Ask them to send
somebody up here. Whom does International Harvester have?
MR. BROWN: I don't know, I am sorry to say. I know
we have four International Harvester directors on our Bank
Board. They all feel the need of monetary stabilization, but
I don't know who handles it.
Regraded Unclassified
189
- 47 -
H.M.JR: I could get hold of the President. We'll
have some of them come up here. What would you people think
of that?
MR. WAGNER: You mean now? Yes.
MR. WOLCOTT: I think the timing is the essence there.
I am not so sure but what the Secretary's conference might
be premature.
MR. VINSON: I just think we mustn't flush too quickly.
We really haven't gotten under way. We haven't gotten started.
MR. WOLCOTT: Let them build up a little foundation,
first, then we will put the superstructure on.
MR. VINSON: I think the Fourth of July suggestion is
a very happy one. It will be a good day for thought, and
a real message can come forth.
H.M.JR: They are working on 8 speech with Senator
Wagner now, I believe, for tomorrow.
MR. WAGNER: Yes.
H.M.JR: Then they thought if Senator Tobey was agree-
able, they would work with him for a talk for the Fourth of
July. That is what, as I understand it from Mr. Sweetser,
is in the works now. I don't think they are going to ask
the English to make a Fourth of July oration, though!
These people are working very hard, and I think that
they will get to Mr. Brown's suggestion very promptly.
Mrs. Morgenthau gave me a very good suggestion, that
if Miss Newcomer, as soon as possible, could get a statement
out to people like the League of Women Voters and the
Federated Women's Club, and the Business and Professional
Clubs, giving them just simple facts of this thing before
their opinion jells, do you see, Miss Newcomer, so at least
they would know the facts before they come out against us.
If you would be thinking about that--
MISS NEWCOMER: All right.
H.M.JR: So that the thinking women of America could
get something from you as promptly as possible.
Regraded Unclassified
190
- 48 -
Mrs. Klotz tells me that the plenary session is at ten.
Could we meet at nine-thirty tomorrow morning here just to
sort of see where we are? I'd like to meet with you people
every morning. So if it is agreeable, if that isn't too
early, we will meet at nine-thirty here.
MR. WOLCOTT: May I announce, also, that I am arranging
a party to climb Mount Washington this afternoon, if anyone
would like to come along?
MR. VINSON: Seriously, that is just purely a bluff!
H.M.JR: I would be glad to meet you on top of Mount
Washington and walk down with you.
Regraded Unclassified
191
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Stockhelm
TO:
Secretary of State, Washington
DATE:
July 2, 1944
NUMBER:
2437
CONFIDENTIAL
Reference is made herein to the Legation's July 1
cable no. 2404.
According to estimate of Gullion evacuation
party, including Central Buropean Jewish refugees, will
not total more than approximately one hundred thirty
persons. Although these Central European Jewish refugees
have had longer notice than others, at 4:30 p.m. on July
3 they still did not know which of their number would be
about the special train which leaves tomorrow morning
for Abo from Helsinki. As a result of this lack of
cooperation. on the part of Jewish refugees Gullion has
found it impossible to obtain exit visas for evacuation
group in Helsinki, and it has been necessary to postpone
Passport formalities to arrival at Abo of the party.
This afternoon Gullion was informed by the Head of Jewish
Communisty at Helsinki that seventy Jews had told him they
would leave but he expected that only about twenty-fise
would actually appear, and who these twenty-five would be
he da not know.
It is Gullion's plan to drive to Abe from Helsinki
and to have anther car follow him to pick him up should
a breakiown occur. Furthermore he expects to travel to
Stockholm from Abo with Bric Lindahl and John Vanderlieth
aboard the BIRGER JAHL. Former Legation staff's other
three American members will proceed to Stockholm via air.
The steamship line. pubicipating the possibility that
there might be an overflow of persons desiring to be
included in evacuation party at the last minute, has agreed
to take all passenger overflow on the regular run of a
vessel which leaves Abo about the same time as departure of
BIRGER JAEL is scheduled.
Two meals will be served to evacuees on vessel and
doctor and nurse will be on board.
In connection with currency problem, as result of
Finland's exchange position evacuees are having difficulty
in securing Kroner drafts in Finland. However, Swedish
Riksbank has stated that without farther consideration it
eannot guarantee purchase of Finnmarks from ovanuees.
Evacuses who do not succeed in securing krenor drafts will
accordingly have to take their chances upon arrival as
regards purchase of Swedish crowns with Finnmarks.
JOHNSON
Regraded Unclassified
192
NOT TO BE RE-TRANSMITTED
COPY NO. 11
SECRET
OPTEL No. 215
Information received up to 10 a.m., 2nd July, 1944.
1. NAVAL
A swept channel has been established from the Western
Assault Sector to the outer harbour of CHERBOURG. Yesterday
shelling of Eastern anchorage increased causing further restriction
in unloading. On 30th one of H.M. Battleships and two of H.M.
Cruisers bombarded German concentrations,
2. MILITARY
FRANCE. Unconfirmed report states all resistance
ceased in CAP-DE-LA HAGUE Peninsula, In spite of many attacks,
mostly in about 2 company strength supported by armour, against
British salient across the ODON, all our positions remain intact
while German losses both in infantry and tanks have been severe.
ITALY. In ADRIATIC Sector Poles have advanced against
slight resistance and occupied PORTO RECINTI and RECANTI. Italian
reconnaissance units reached area VILLA POTENZIA, 3 miles north of
MACERATA. Troops of Indian Division found CAMERINO clear of enemy.
Slight advances on remainder of front by U.K. South African and
French, while U.S. troops crossed river CECINA on broad front.
3. AIR OPERATIONS
WESTERN FRONT. 30th/1st. 630 tons on VIERZON and 55
011 Plant HOMBERG,
1st, In cloudy weather escorted Halifaxes (1 missing)
Lancasters, Mosquitoes and Liberators (1 missing) bombed 3 flying
bomb supply sites, releasing 1120 tons with unobserved results.
Escorting fighters (2 missing) destroyed 8 German aircraft and
damaged 8 others.
1st/2nd. Only 16 aircraft despatched, All returned
safely.
German activity from 6 a.m. 30th to 6 a.m. 1st. 169
flying bombs launched, 40 destroyed by fighters, 18 by A.A., 4 by
balloons, total 62. During 24 hours ended 6 a.m. 2nd, 169 flying
bombs launched of which 135 crossed coast.
ITALY. 30th. 250 sorties flown against railways in
the north and 86 Allied light bombers and fighters operated in
the battle area.
Regraded Unclassified
193
Bretton Woods, N.H.
July 3, 1944
9:30 a.m.
APPOINTMENTS TO COMMITTEES
Present: Mr. Acheson
Mr. Kelchner
Mr. Collado
Mr. Wagner
Miss Newcomer
Mr. Eccles
Mrs. Morgenthau
Dr. Goldenweiser
Mr. Ness
Mr. Somers
Mr. Spence
Mr. Luxford
Mr. Sweetser
Mr. Bernstein
Mr. Brown
Mrs. Klotz
Mr. Wolcott
Mr. White
Mr. McDermott
H.M.JR: Bernstein, while we are waiting, did any-
thing happen in any of the committees yesterday
that the delegates should know about?
MR. BERNSTEIN: No, sir. We are still polishing
the draft, but nothing has been done. The first com-
mittee meetings, I believe, are tomorrow.
H.M.JR: I see.
(Mr. Wolcott enters the conference)
H.M.JR: Nothing has happened at all during the day?
MR. BERNSTEIN: Nothing except refining papers that
we have, and they will be distributed in a day or SO.
(Mr. White and Mr. McDermott enter the conference)
H.M.JR: Dr. White, do you want to tell the delegates
anything that happened yesterday?
MR. WHITE: Yes, the boys were meeting all day with
the British representatives and they were trying to
eliminate some of the grounds of differences on the
Regraded Unclassified
194
- 2 -
minor things, and to arrive at a common formulation for
the purpose of submission to the Commissions. They are
not attempting to get an agreement on the major issues
which I described briefly in the past two meetings.
They are merely trying to get & formulation of each of
those differences, and eliminate as many of the minor
differences as possible so that the Commissions can go
forward with a copy that is streamlined SO far as the
minor variations are concerned, and high-lighting the
major differences 80 the Committees can begin working
much more effectively than they otherwise would.
The British had thought that they would have to
submit a separate draft after they had seen the results
of our draft of the Atlantic City Conference. They
recognized that that would have mixed things up con-
siderably, and so they were eager to see what could be
done to avoid that. That is what the men are working
on now. They have got about three-fourths of the way
through.
MR. LUXFORD: Approximately SO.
MR. WHITE: They will get through by today and by
tomorrow morning the completed draft will be mimeographed
and will be ready for distribution to the Committees.
The first half of the afternoon will be given to the
Commissions.
MR. LUXFORD: I think it will probably be around
press time tomorrow afternoon that the completed docu-
ment will be ready.
MR. WHITE: We will have the first part earlier, and
the completed document then.
I had a long discussion with Keynes. He asked me
to see him about the question of quotas. They are having
a table resulting from discussions, conferences which they
have had among themselves all morning. They feared that
any introduction of quotas which will call for a retreat
on any one of the major countries, or a reduction on any
one of the major countries as a result of conferences
around the table will have unfortunate consequences - be
public - and then the country will have to accept a smaller
quota.
Therefore we are trying to work out something that
if there are going to be any changes it will be on the up
side, so that they will be cutting them all. We will
Regraded Unclassified
195
- 3 -
try to have that ready today for consideration by this
group. That table will be one of the important things
to come before this group before it is given out to any-
body, so that we will have a chance to discuss it here.
We have got some Committee assignments that I would
like to suggest.
H.M.JR: Please.
MR. WHITE: So we can break up the work, I would
like to get more of the technical people to participate
because from now on we will be taking up specific matters.
Now, we are pretty short-handed. We have a lot of
men, but for one reason or another there are so many
things to be done, and the Secretariat which is connected
with the Conference itself has continually robbed us of
man after man, which they have said they absolutely had
to have. Men that we had expected to use for other work
are now being taken over by the Secretariat to act as
Secretaries and Assistant Secretaries of the various
Committees.
Dean, will you say a word about their role? I don't
think it is generally recognized or appreciated why it
is necessary to put people that we had thought to use as
advisers in the Secretariat, and why that eliminates them
from acting in the capacity of advisers.
MR. ACHESON: Yes. The function of the Secretariat
of the Conference is to serve all the forty-four countries
here on the Commissions and the Committees. One of the
most important things that a host country can do is to
provide a Secretariat which has such a high degree of
technical competence that is has the confidence of all
the countries. These secretaries are the people who,
after a discussion, have got to formulate what is regarded
as the sense of the committee meeting. They must be
people in whom all the countries have complete confidence
as to their ability and their disinterestedness, and
their ability to guide the Committee. It is particularly
important where you have as large an international con-
ference as this, with a great many small countries with-
out technical advisers with them, because those countries
will rely on the Secretary of the Committee who is an
international official for this purpose and is advising
them. Therefore these men can do a tremendous job in
guiding these countries and in formulating the conclusions
in a way which is acceptable to everybody.
Regraded Unclassified
196
- 4 -
At the Conference at Hot Springs, and in the UNRRA
Conference at Atlantic City, all of the countries expressed
their great appreciation for the high quality of the
Secretariat. They said not even in the heyday of the
League of Nations had they been at meetings where the
people who were serving them were SO well qualified and
80 eminent in the field.
Therefore it would seem to me that the very best
people that we could get would not be too good to be
Secretaries of these Committees. I want to urge any
of the men who are here on our staff who are asked to be
Secretaries of Committees, to do it. It is a service to
the country and to this Conference.
H.M.JR : Who does the asking?
MR. WHITE: I do - Dean and I, and the Secretary
General.
We have had only a couple of problems there - reluc-
tance to shift from advisers to Secretaries because in
their judgment that cuts them out of discussions of this
character and similar. But there has been no problem
from the point of view of refusals. I merely wanted to
indicate why there will be many fewer advisers than we
had originally intended, and why we are very short-handed
on doing & lot of work, which will not be the advisory
work, but there is a lot of drafting and conferences
which are going on all the time at the lower level.
The best men - I am sure Dean didn't mean to give
the impression that the best men are serving in a
Secretarial capacity. There are a certain number of
economic advisers you have--
MR. ACHESON: I think I said the best men are none
too good for the job of Secretaries of the Committees.
MR. WHITE: Now, the setup is as follows, for your
consideration, so far as the delegates here and advisers
here are concerned: In addition to these matters that I
have mentioned, there has, of course, been going on in
the last two days a good deal of conferring and shuffling
around wih the Committees to get the appropriate countries
and the appropriate designations. As you will appreciate,
there are many considerations. Every country has to have
a place. We are particularly interested in some Committees
and not in others.
Regraded Unclassified
197
- 5 -
Some have to have men of the foreign countries in
some Committees who not only speak English well, but also
know the Fund, and all that has meant a good deal of
maneuvering. Many countries take great pains to make
certain they get on the important Committees, and there
is a good deal of competition, and so forth. But I
think they have done an excellent job.
Nash, who is head of the Nominating Committee, I
understand - I wasn't present at the meeting, I conferred
with the Secretarial Staff before he went in and found
him very helpful - and he, in general, took our slate
right through and put it over very nicely. So that
angle is taken care of.
Now, on the Commission there will be U.S., Chairman
of the Commission, which is the International Monetary
Fund, and Vice-Chairmen, Venezuela. It is not an impor-
tant job at all; it is just to give them a place.
The Reporting Delegate, which is important, will be
Canada. They do their job very ably. The Secretary
will be Stinebower, State Department, who is an excellent
man, and his assistant will be Miss Dulles.
(Mr. Wagner enters the conference)
In Commission One, that Commission will break down
into four Committees. The delegates can all attend the
Commission One, because the meetings of Commission One
and Commission Two and Commission Three are staggered
so that they can all attend any one of the Commission
meetings.
The first Commission meeting will be this afternoon.
That will be merely for purposes of organization, but I
think it would be helpful if some of the delegates will
come if possible.
H.M.JR: What time and where?
MR. WHITE: I think it is two o'clock.
MR. KELCHNER: Two o'clock in the auditorium.
MR. WHITE: The next one is when?
MR. DELCHNER: Three-thirty, also in the auditorium,
and Commission Three at five o'clock in the auditorium.
Regraded Unclassified
198
- 6 -
MR. ACHESON: Are they setting up tables?
MR. KELCHNER: Yes, and the Plenary Session this
morning is ten clock.
MR. WHITE: Now these four Committees - China is the
Chairman, Greece is the Reporting Delegate - very compe-
tent person, Varvaressos. The Secretary is William Brown
of the State Department, and Assistant Secretary is J.P.
Young from the State Department.
The operations of the Fund - now, that is one of the
very important Committees from our point of view, and
we wanted the U.S.S.R. to be Chairman of that very much.
The reason was, not that we wanted the U.S.S.R. so much,
but there had to be a big country, and we might otherwise
have had to take some other country. They didn't want to
take it because they were afraid they couldn't handle
it. I had a conversation with them and we worked out a
compromise. Jessup had a good suggestion that as soon as
they get in the Chair, or whenever they please, there-
after, he is going to appoint a Vice-Chairman who will
be an American, and the Vice-Chairman will take over
whenever the Chairman doesn't wish to, which will probably
be most of the time. That means that we have to have a
Vice-Chairman - one of our delegates.
Now, I think you want to decide on who that will be.
The men whom we had assigned, the delegates who we thought
should attend that Committee were Mr. Eccles, Mr. Brown,
and Senator Tobey. NOW, I think it will be Mr. Brown who
will be most familiar with it. And Eccles - his position
ought to be the Vice-Chairman and take over. Then we
will have to indicate which delegate in each one of these
meetings will represent the U.S. in discussion, and will
take care of calling on the appropriate American people
to discuss the matter. That Committee is very important.
The Americans have got to be prepared to defend their
position on almost every point, and to oppose points.
The technicians, of course, know that already, and we
will discuss those with the delegates prior to the Com-
mittee meetings. That is one decision that can wait
until tomorrow.
On Committee One we thought that Judge Vinson and
Miss Newcomer would have the prime responsibility; and on
Committee Three, Senator Wagner and Congressman Wolcott;
and on Committee Four, Mr. Acheson and Mr- Crowley.
(Mr. Eccles enters the conference)
Regraded Unclassified
199
- 7 -
Then we have assigned some of the technicians to
each of these Committees, and in order for us to keep
track of our own technical people, to see that they are
all busy, and some are not too busy, and others not busy
enough, and because we think that we will be better
able to serve you, it will be very helpful if anybody who
wants anything from the technicians to be prepared,
ought to be with them at any Committee, would operate
through Mr. Bernstein, who is Secretary General of this
Delegation. He knows all the technicians and will know
where they are. He will be able to supply any of them
for any particular meeting if they are not already as-
signed.
Now, Commission Two, which is the Bank, has four
Committees, numbers five, six, seven, and eight. There
the line-up will be slightly different. Committee Five
will be Congressman Vinson and Senator Tobey, because
the work is much similar to what they might do on the
other Committees, and similar arrangements are made with
the others. We don't need to go into that now because
they won't break up until Tuesday and we will meet before
then.
The time is getting short, so I think I will have to
postpone the remainder until after the Commission meeting.
MR. ACHESON: Are we going to meet again after this
meeting?
MR. WHITE: The important thing is to meet sometime
before the Committees meet tomorrow morning. That is
when the important work begins and it would be desirable
to meet for possibly a half hour before the Commission
meets this afternoon. There are a few other things we
want to discuss, but it would be desirable if it were
possible to meet a half hour before the Commission, and
certainly a longer meeting of an hour or an hour and a
half tomorrow morning.
MR. KELCHNER: How would twelve o'clock noon be,
Mr. Secretary?
MR. ACHESON: The Commission meets at two.
MR. KELCHNER: The Plenary Session meets at ten 'clock.
MR. ECCLES: Right after that?
MR. WHITE: Right after, irrespective of the time.
Regraded Unclassified
200
- 8 -
H.M.JR: I would like a little break, if I may. I
haven't had a chance to talk with White, so if it is just
the same, couldn't we meet here at twelve o'clock? Does
that interfere with anybody's plans?
MR. VINSON: How long will the meeting last, Mr.
Secretary?
H.M.JR: Let's put it this way. Give me thirty
minutes from the time the Plenary Session breaks, what-
ever the time is - thirty minutes after that thing
breaks, would you gentlemen and ladies come here?
MR. KELCHNER: With regard to the seating this
morning, the spokesmen for the Delegations will be
seated around a "U" table, the delegates and advisers
flanked on either side or in the back. I would suggest
that this group sit around the sides of the table insofar
as possible. Hereafter the same seating arrangements
will be maintained.
Regraded Unclassified
201
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
SECOND PLENARY SESSION
July 3, 1944
Assembly Hall, 10 a.m.
Secretary Morgenthau:
"The Second Plenary Session of the United Nations
Monetary and Financial Conference is hereby convened.
"I recognize the Chairman of the Delegation of Cuba
who will present the Report of the Committee on Credentials."
(Dr. Montoulieu will then read the Report of the
Committee on Credentials.)
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of the
Union of South Africa.'
(Mr. Gie will second the motion to accept the Report
of the Committee on Credentials.)
Secretary Morgenthau:
"It has been moved and seconded that the Report of the
Committee on Credentials shall be approved by the Conference.
Are there any objections? (Pause)
"I hear no objections. All those in favor of the
Report, please say 'aye' (pause); opposed 'no'. The 'ayes'
have it and the Report stands approved.
"I now recognize Dr. Kung, the Chairman of the Committee
on Rules and Regulations of the Conference, who will present
the Report of the Committee."
(Dr. Kung will read the Report of the Committee on
Rules and Regulations and will move its adoption.)
Regraded Unclassified
201
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
SECOND PLENARY SESSION
July 3, 1944
Assembly Hall, 10 a.m.
Secretary Morgenthau:
"The Second Plenary Session of the United Nations
Monetary and Financial Conference is hereby convened.
"I recognize the Chairman of the Delegation of Cuba
who will present the Report of the Committee on Credentials."
(Dr. Montoulieu will then read the Report of the
Committee on Credentials.)
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of the
Union of South Africa.'
(Mr. Gie will second the motion to accept the Report
of the Committee on Credentials.)
Secretary Morgenthau:
"It has been moved and seconded that the Report of the
Committee on Credentials shall be approved by the Conference.
Are there any objections? (Pause)
"I hear no objections. All those in favor of the
Report, please say 'aye' (pause); opposed 'no'. The 'ayes'
have it and the Report stands approved.
"I now recognize Dr. Kung, the Chairman of the Committee
on Rules and Regulations of the Conference, who will present
the Report of the Committee."
(Dr. Kung will read the Report of the Committee on
Rules and Regulations and will move its adoption.)
Regraded Unclassified
202
-2-
Secretary Morgenthau:
"with reference to that part of the Report of the Com-
mittee on Rules and Regulations which makes a slight change
in Article 28 in the interest of clarity, the Chair under-
stands that the Committee had in mind making it plain that
Article 28 refers to additional matters which it might be
desired to bring into the discussion. In regard to these
new matters Article 28 requires delivery to the Secretary
General and special advance distribution. Article 28 of
the regulations, in the understanding of the Chair, is not
intended to apply to the ordinary exchange of views or
amendments endorsed in the normal course of Committee dis-
cussions. The Chair understands, however, that any impor-
tant amendments to any text which is under consideration
by a committee or commission will not be submitted to the
committee or commission for any final expression of its
views until after & lapse of time sufficient to enable the
delegations to give careful consideration to the proposed
modifications of the text. Of course, like all other rules
of the Conference, this procedure might be varied, if con-
sidered desirable by unanimous consent.
"I recognize the Chairman of the Delegation of Poland."
(Dr. Grosfeld will second the motion.)
Secretary Morgenthau:
"Do I hear any objections? -- (pause) -- I hear no
objections. All those in favor say 'aye' -- (pause) --:
opposed 'no', The 'ayes' have it. The Regulations are
approved.
203
-22-
"I recognize the Chairman of the Delegation of New
Zealand, Mr. Nash.¹
(Mr. Nash will present the Report of the Committee
on Nominations and move that it be received.)
Secretary Morgenthau:
"You have heard the Report of the Committee on Nomina-
tions which the Chairman has moved be received. Unless
there is objection the Report will be received. Do I
hear objections?" (There being no objection Secretary
Morgenthau will say that the Report has been received.)
Secretary Morgenthau:
"I recognize the Chairman of the Delegation from New
Zealand, Mr. Nash."
(Mr. Nash will move the election of four Vice Presidents
of the Conference).
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of Luxembourg,
Mr. Le Gallais."
(Mr. Le Gallais will second the nominations for the
four Vice Presidents.)
Regraded Unclassified
- 3 -
204
Secretary Morgenthau:
"You have heard the motion made and seconded. Do I
hear any objections; -(pause) -- I hear no objections.
All those in favor say 'aye' -- (pause); opposed, 'no'. 'Ayes'
have it. The four Vice Presidents are elected."
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of New Zealand,
Mr. Nash."
(Mr. Nash will move the election of the Steering Committee.)
Secretary Morgenthau:
&
"I recognize the Chairman of the Delegation of Peru,
Mr. Beltran."
(Mr. Beltran will second the motion for the election
of the Steering Committee.)
Secretary Morgenthau:
"You have heard the motion made and seconded. Do
I hear any objections; -- (pause) -- I hear no objections.
All those in favor say 'aye' -- (pause); opposed 'no'.
'Ayes' have it."
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of New
Zealand, Mr. Nash."
(Mr. Nash will move the election of the Chairman,
Vice Chairman and Reporting Delegates of Commission I,
together with its respective committees and officers
thereof.)
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of Honduras,
205
-4-
Mr. Caceres."
(Mr. Caceres will second the motion for the
election of the Delegates participating in Commission I
and its Committees. He will make a short speech in
support of the recommended panel).
Secretary Morgenthau:
"You have heard the motion made and seconded. Do
I hear any objections; -- (pause) -- I hear no objections.
All those in favor say 'aye' -- (pause) -- opposed 'no'.
'Ayes' have it."
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of
New Zealand, Mr. Nash."
(Mr. Nash will move the election of the Chairman,
Vice Chairman and Reporting Delegates of Commission II,
together with its respective committees and officers
thereof).
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of
Iceland, Mr. Sigurdsson."
(Mr. Sigurdsson will second the motion for the
election of the Chairman, Vice Chairman and Reporting
Delegates of Commission II together with its respective
committees and officers thereof).
Secretary Morgenthau:
"You have heard the motion made and seconded. Do
I hear any objections; -- (pause) -- I hear no objections.
All those in favor say 'aye' -- (pause); opposed 'no'.
'Ayes' have it."
Regraded Unclassified
206
-5-
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of New
Zealand, Mr. Nash.'
(Mr. Nash will move the election of the Chairman,
Vice Chairman and Reporting Delegates of Commission III.)
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of Peru,
Mr. Beltran."
(Mr. Beltran will second the motion for the election
of the officers of Commission III.)
Secretary Morgenthau:
"You have heard the motion made and seconded. Do I
hear any objections; -(pause) -- I hear no objections.
All those in favor say 'aye' -- (pause); opposed 'no'.
'Ayes' have it."
Secretary Morgenthau:
"I recognize the Chairman of the Delegation of Peru."
(Mr. Beltran will move the adoption of a resolution
regarding July 4th.)
Secretary Morgenthau:
"Do I hear a second to the motion?
"Senator Tobey, a Member of the United States Delegation
and United States Senator from the State of New Hampshire."
(Senator Tobey will address the meeting.)
Secretary Morgenthau:
"You have heard the motion. Those in favor say 'aye'.
(Pause) -- Opposed 'no'. The motion 18 carried.
"There being no further business, I declare the
meeting adjourned."
Regraded Unclassified
207
Bretton Woods
July 3, 1944
11:30 a.m.
COMMITTEE ASSIGNMENTS - OVERSEAS BROADCASTS -
SILVER QUESTION
Present: Mr. Somers
Mr. Spence
Judge Vinson
Mr. Wolcott
Miss Newcomer
Mr. Acheson
Dr. Goldenweiser
Mr. Smith
Mrs. Klotz
Mr. Brown
Mr. Eccles
Dr. White
Dr. Kelchner
Senator Wagner
H.M.JR: I have had a chance to go over--I don't
know but what we can give this to you afterwards--these
various Committees.
This Committee One, Purposes, Policies, and Quotas--
that is on Commission One. I am going to ask Judge Vinson
and Miss Newcomer to go on that. I am asking Judge Vinson
to be the leader of that.
Then this Committee Two, Operations of the Fund, I
am asking Mr. Brown and Mr. Eccles and Congressman Wolcott
to go on that, because as I understand there is some question
about the Russians not wanting to be Chairman all the time.
So we have to appoint a Vice Chairman. I am going to ask
Mr. Eccles to be Vice Chairman of that, and Mr. Brown to be
the leader.
DR. WHITE: I don't think the Russians will be Chairmen
at all, except in the beginning.
MR. ECCLES: Does that mean I will have to preside?
H.M.JR: When the Russian doesn't want to.
MR. ECCLES: I am willing to go on, but I don't want to
take the position of presiding.
Regraded Unclassified
208
- 2 -
H.M.JR: Well, the Russian will be the Chairman.
MR. ECCLES: Yes, I know; but the way this apparently
works out, just let me just represent. I am only going to
stay here, I think, the balance of the week. So don't put me
on, except as a member of the Committee. I am willing to
work on the Committee.
DR. WHITE: Well--
H.M.JR: Let's leave it with the same members on--
Mr. Brown, Mr. Eccles, Congressman Wolcott--and we will still
leave it with Mr. Brown, the leader.
MR. ECCLES: Some other nation could do that, couldn't
they, Harry-act as Vice Chairman there? I think we might be
more effective if that were done, anyway.
H.M.JR: Well, we can think about it.
Then Committee Three is Organization and Management. I
am asking Senator Wagner and Senator Tobey to go on that,
and Senator Wagner to be the leader.
And the next Committee is Form and Status of the Fund:
Congressman Spence, Mr. Acheson to be leader, and Mr. Crowley
to be E member.
Then Commission Number Two, Bank for Reconstruction
and Development. Committee Five is Purposes, Policies,
and Capital Subscription of the Bank: Judge Vinson to be a
member, Senator Tobey to be leader.
And then Committee Six, Operations of the Bank:
Governor Ecoles to be amember, Mr. Crowley to be leader, and
Mr. Brown to be a member.
Number Seven, Organization and Management: Congressman
Wolcott to be leader, Miss Newcomer to be a member--
(Senator Wagner enters conference)
MR. WAGNER: I am late again!
H.M.JR: Number Eight, Form and Status of the Bank:
Congressman Spence to be leader and Mr. Acheson to be a member.
Now, if those assignments aren't agreeable, I wish any
Regraded Unclassified
209
- 3 -
of you would speak up, please. And Congressman Somers and
Congressman Reed, please feel free to attend all or any of
these meetings you would like to. You will be welcome at
all.
Are there any suggestions that you have to make? We'd
be pleased to receive them.
Now, is there anybody not perfectly happy? Who would
like to do a little swapping?
DR. WHITE: Some of those Committee meetings are going
to be staggered 80 that even though you are assigned to one
Committee, you can participate in others, if you are inter-
ested.
I gather that the role of the leader will be to indicate
who is going to talk.
H.M.JW: As we explained the other day at that meeting
in the Treasury, the role of the leader is to be the leader,
and it is up to him to call on any other American delegate
or adviser to assist him. But he will have to assume the
leadership for the American Delegation on that particular
Committee which he is assigned to.
Now, this will be rapidly typed, and each member will
receive his assignments and assignments of all the Delegations.
And the advisers--I didn't read them off, but everygroup
except Committee Seven has two advisers.
DR. WHITE: There will be at least two.
H.M.JR: Can you, within an hour or two, get this typed
for these people?
DR. WHITE: Glad to.
H.M.JR: When do these various Commissions begin to
sit?
DR. WHITE: Commission Number One at two o'clock.
DR. KELCHNER: Numeber One at two o'clock; Commission
Number Two at three-thirty; Commission Three at five o'clock.
They all meet in the Auditorium.
DR. WHITE: They'll probably be duplicates of the
Plenary Session.
Regraded Unclassified
210
- 4 -
DR. KELCHNER: Somewhat. They'll merely be organizing
meetings. There'll be an announcement, of course, of the
election of the officers, and then the Chair will take over
and proceed. That will vary, I suppose, according to the
desires of the respective Chairmen.
H.M.JR: Dr. Kelchner, I don't understand. You say
Commission Number One meets at two. Now, take Committee One.
DR. KELCHNER: That will not meet today--just the
Commissions. And each Commission, I should think, in their
meeting this afternoon, would determine the policy to be
followed with regard to their respective Committees.
H.M.JR: Have you got a formula and agenda worked out
the way you had this morning?
DR. KELCHNER: That is what Dr. White was speaking about
& little while ago, about the scheduling of our Committee
meetings. They will have to be flexible.
DR. WHITE: Yes, the Committees are chairmanned by
the Chairmen of the Commissions. An American will be
Chairman of Commission One; United Kingdom of Commission Two--
Keynes--; Commission Three will be Mexico.
H.M.JR: But who presides at Commission One this after-
noon?
DR. WHITE: An American.
H.M.JR: Who is it?
DR. WHITE: I presume that will be my job, because that
is all technical discussion.
H.M.JR: You reluctantly accept!
DR. WHITE: I accept reluctantly and inevitably!
H.M.JR: You preside at that?
DR. WHITE: Yes, Keynes presides at his, and that is
broken up into the Committees. The Committees will report
back to this. The importance of why we need somebody to
Chairman this, who knows the complete matter, is that he
should prevent coming to a vote on matters which he doesn't
Regraded Unclassified
211
- 5 -
wish to come to a vote on, and in general arranging the dis-
cussion in such way that we are never caught with an agree-
ment among the Commission on something that we don't want,
because then it is too late.
Then it goes to the Plenary Session, and you don't have
any chance. So the reason I spoke up was because it is
pretty obviously a technical job, completely.
H.M.JR: I don't know anybody more competent.
Do you have something?
DR. KELCHNER: May I raise a question? Mr. McDermott,
just before I came in, inquired as to whether or not the
Commission meetings this afternoon would be public, open to
the press. The regulations provided, of course, that the meet-
ings of the technical Commissions and their Committees shall
be private unless otherwise ordered by a majority vote of the
Delegations. The meetings of the General Committee shall
be private. The reason McDermott raised the point, he said
that they had heard that Lord Keynes would be making & few
remarks, and wondered whether the press could be present.
That would be in violation of the regulations. I wonder how
the Delegation feels with regard to that?
MR. VINSON: Who orders it?
DR. KELCHNER: The majority of the Delegation. It has
to be a vote. The regulations were adopted this morning.
MR. VINSON: Do you mean it is a majority of the dele-
gates who are members of the Commission?
DR. KELCHNER: No, no, it would be of the Conference,
according to the regulations--plenary session of the Confer-
ence.
MR. ACHESON: Wouldn't you decide it in the Commission,
itself?
DR. KELCHNER: Each Commission decide?
MR. ACHESON: What is the provision?
DR. KELCHNER: No, that is the policy of the Conference,
itself.
Regraded Unclassified
212
- 6 -
MR. VINSON: If that is the policy, doesn't the lang-
uage of the rules and regulations answer your question?
DR. KELCHNER: It does answer the question. The only
question is, since this is an organization meeting, whether
we should forget the regulations for the opening session. I
think it would be establishing a bad precedent, however.
MR. VINSON: Better not start this early in the game,
amending the rules.
DR. WHITE: If they want his remarks, he can give them
to him.
DR. KELCHNER: They can be handed to the press textually.
H:M.JR: Can you envisage anything happening at
Commission Number One which you wouldn't want the press to
know about?
DR. WHITE: No, it is & bore!
H.M.JR: I was approached. I told Mr. Kelchner about
it. If nothing is going to happen--
DR. WHITE: That is only the first meeting, however, and
the others are very important.
H.M.JR: You wouldn't want the press there?
DR. WHITE: Not in the other meetings.
MR. SWEETSER: Mr. Secretary, it is & difficult thing
to have a shifting policy, because you never can tell where
you are going to get caught. If the press are in at the
first session and then excluded at later sessions, you are
in difficulty.
H.M.JR: I am just raising the question as to whether
at subsequent ones you don't want the press.
DR. WHITE: I think it would be difficult, because the
most important discussionson the most controversial points
will come in, because the Committees will not be able to agree
on the most important differences of opinion. It will have
to come before the Commission, and--I don't know--I should
Regraded Unclassified
213
- 7 -
imagine that the press ought not to be there during those
discussions.
MR. ACHESON: I should think that was very clear.
H.M.JR: That they should not?
MR. ACHESON:
should not be present at the Committee
or Commission meetings.
H.M.JR: You have your answer, then.
MR. ACHESON: You are going to have complaint about it,
but I think the thing to do is not be rattled by the complaint.
MR. SWEETSER: I think you can take the position that
all these things are going to come back to the Plenary Session
in the end, and these are negotiating and business meetings.
I think the press will complain, but & great many of them
will understand that.
DR. WHITE: They will complain, but they don't expect
to be permitted in. There is less excuse for it than ordiner-
ily, because you promised to keep them abreast.
MR. ACHESON: Somebody will have a conference for them
every day.
DR. WHITE: Yes, I understand there is a conference
today.
H.M.JR: What time?
DR. WHITE: It wasn't set. At first it was set for
three, but these Commissions interfere.
MR. SMITH: We would like to have it--
DR. WHITE: ...after the Second Commission. That is at
three-thirty. It will probably be over in less than an hour.
So if you make it at four-thirty, it will be quite adequate.
H.M.JR: Is there anything else at this time?
DR. KELCHNER: May I raise, in connection with the
handling of the press, one question--the matter of mechanics?
Regraded Unclassified
214
- 8 -
It is very important, however. If the press are not going
to be present, should the doors be guarded, so to speak, and
should the individuals going into the meeting be required to
show their passes? Otherwise, there is no check; no way of
preventing anyone going into the meetings. I'd like to have
an answer.
H.M.JR: I'd like to have Mr. Sweetser answer that.
MR. SWEETSER: I think you will have to have a control
like that; if the meetings are closed meetings and they are
open only to official delegates, you have to have somebody
on the door to keep other people out. Otherwise, they will
walk in.
H.M.JR: There is your answer.
Fred, do you agree on that?
MR. SMITH: Sure. If it is going to be closed, you have
to keep them closed. One man getting in can make a lot of
trouble.
MR. BROWN: You speak of passes--
DR. WHITE: Everybody has one.
MR. BROWN: I haven't received any.
MR. WOLCOTT: I have two. I'll give you one.
MR. VINSON: How does that give you the check you really
want?
DR. WHITE: It doesn't, because I had to get it. I am
sure they must have issued one for me which somebody else has.
DR. KELCHNER: They were sent to the Secretary of the
Delegation.
H.M.JR: What else is there?
Now, I take it that as many of you as can be will be
at the two o'clock and stay through, and then we'll get
organized.
Regraded Unclassified
215
- 9 -
DR. WHITE: There won't be anything much important this
afternoon, but I think you ought to have at least an hour, if
not two hours, meeting between now and tomorrow morning. The
evening might be the best time.
H.M.JR: Then why not let's say we will meet here at
eight-thirty tonight?
DR. WHITE: I think that would be a good time.
H.M.JR: Is that all right? Is it spoiling anyone's
poker game?
MR. SPENCE: Eight-thirty? No.
MR. VINSON: I haven't been invited to any poker games
yet. It is a very good suggestion!
MR: ECCLES: One of the Delegations, the French, have
invited me to dinner. But there will be other members.
H.M.JR: Let's get here as near eight-thirty as possible.
MR. ECCLES: It is just a question of getting through
the dinner. Sometimes some of the tables are awfully slow.
H.M.JR: Let's say eight-thirty, anyway. You could
excuse yourself--say you have 8 poker game to go to!
Then we have this afternoon. Dr. White will get this
thing typed up, and we'll see each other definitely at eight-
thirty here. Is that all right?
Anything else, Mr. White?
MR. ACHESON: There is one point I'd like to get
straightened out. If you are going to preside over Commission
One, is there going to be another delegate who sits in the
United States seat, or not? What do the rules say about that?
DR. KELCHNER: That is provided for, the same as this
morning's plenary session when Judge Vinson occupied--
MR. ACHESON: I didn't notice you assigned anybody to
that.
DR. WHITE: oh, yes. Oh-to the Commission--oh, no.
That is right; we didn't assign a leader of the Commission.
Regraded Unclassified
216
- 10 -
MR. ACHESON: That is a matter that you will want to
work out very closely.
H.M.JR: You stay behind a minute, Mr. White, and
we will consult with each other. A leader for the
Commission?
MR. ACHESON: Just as this morning when you were
presiding over the Plenary Session, Judge Vinson sat
in the U.S. seat, so when Mr. White presides over Com-
mission One, unless you have somebody in the U.S. seat,
it will be vacant. Ana under the rule, the Chairman does
not vote. Therefore you want somebody there.
You will have to work that out very closely.
H.M.JR: That will have to be from Commissions Two
and Three.
MR. WHITE: One, Two, and Three need leaders in the
same way that the subcommittees have them. And of course
they need advisers, but all the advisers of the Committees
will become the advisers of the Commission.
The mechanics of that table is extremely difficult
for us to operate under effectively when we have to dis-
cuss these problems, because the leader of the Delegation
will be sitting at the table the way you have it.
There are a number 01 things that come up; ne wants
to talk to the advisers, or one of the other Delegates
or the adviser wants to whisper something in his ear, and
with that kind of arrangement - I don't quite see the
mechanics of it. It seems to me to make the thing im-
possible.
Would it be possible to extend that oval table to
make it twice as big 80 at least two or three Delegates
could sit at the table, and then the rest would be closer?
MR. KELCHNER: I should think it would work out
better this way. It has proven more effective at other
conferences than spreading them out along the table. It
also points up the respective size of the Delegations.
If the U.S. has three or five members at the table--
MR. WHITE: I am suggesting two or three for each,
at least, because the leader in this problem will, in
most cases, have very little familiarity with the sub-
ject matter, and you can't expect them, every time
Regraded Unclassified
217
- 11 -
anything comes up, to be constantly looking around and
shuffling around. The mere mechanics of this thing is
such that he has got to have one of either the leading
advisers, or another Delegate, if possible, right behind
him or at his side.
MR. KELCHNER: That is the usual way - right at
his elbow - right back of nim.
MR. WHITE: I am positive that will lead to all
kinds of confusion, because it is a little different
from the ordinary. Ordinarily the leader of a Delega-
tion knows all about it, and he can talk a good deal
and turn around occasionally. But the leaders of many
of the Delegations are not familiar with the material -
they haven't had an opportunity to see it. It will take
them a number of days to catch up.
In order for this thing to run smoothly, so far as
the U.S. Delegation - you see, Mr. Secretary, the British
Delegation consists of the equivalent of our technicians.
H.M.JR: I read about that in.the New York Times.
MR. WHITE: What I mean is, they will be the ones
who perform the role. Keynes, for example, doesn't need
any - very rarely he may turn - therefore he can handle
it - and any one of them could handle the leadership.
MR. KELCHNER: May I suggest in that connection, that
I think that when the Committees get down to work, that
that will work out satisfactorily, because the Committees
will be less formal and the people can sit at table.
MR. WHITE: I nope so, out I am skeptical.
MR. KELCHNER: But I suggest at Commission meetings
that they be kept more formal.
MR. WHITE: I remain skeptical, but ir it doesn't
work, we will come back at you.
H.M.JR: what else?
MR. SWEETSIR: Mr. Secretary, we have a little
problem with the OWI and overseas. I find out they would
like to have a great deal of material expecially from
the different members of the American Delegation. They
want two kinds of things: First, statements on more or
Regraded Unclassified
218
- 12 -
less current news which can be sent immediately by wire to
New York, and then over all the various broadcasting
services to Europe; and second, more feature material -
more general material - which can be put onto recording
and sent down to New York by train.
NOW, they want just as much as they can get, and
I have been discussing it with them. There are two
ways of doing it, one would be to have one or two people
in the Delegation who would ao it regularly; they would
take a statement every day or every other day, right
through, or else divide it up among the members of the
Delegation. But it does mean a certain amount of work
and they would like to feel free, if they can, to draw
upon members of the Delegation as the need comes up.
H.M.JR: May I suggest that you work that out with
Mr. Smith. Anything that the two of you agree on, I am
sure the American Delegates will be glad to cooperate in.
MR. SMITH: McDermott will have to clear all of
that.
MR. SWEETSER: I just wanted to explain that, to
make clear that this is a very necessary and useful
thing, and if we could feel free to call on you--
H.M.JR: If you and Mr. McDermott and Mr. Smith
will work it out, I am sure the Delegates will be glad
to cooperate, but I feel that is the responsibility of
you people.
Anybody else?
Is anybody going to walk up the mountain this afternoon?
MR. WOLCOTT: That is why I got my pass yesterday,
I didn't know but what I would be leaving the grounds.
MR. VINSON: Engagements this afternoon will prevent
Mr. Wolcott's excursion.
MR. WOLCOTT: Senator Wagner was the only one.
MR. WAGNER: Yes, I missed you up there yesterday.
MR. WOLCOTT: Later on will we have a list of the
alternate members of the Committees, especially those on
which we serve?
Regraded Unclassified
219
- 13 -
MR. WHITE: Yes, the Secretariat will prepare that.
MR. KELCHNER: Just as soon as the Delegation sub-
mits their respective panels, of course, a composite
list of the Committee and Commission membership will be
prepared and circulated. I would imagine it would be a
couple of days, however, before the complete slate can
be circulated, because some Delegations are slow in
getting in their respective panels.
MR. WHITE: It would be desirable - I don't know
where we can work the time in - for the Delegates who
are assigned to a particular Committee to get together
with the advisers to that Committee before that Committee
opens up - to spend at least an hour with them. I
don't know when we can work that in. It may be that
we might be able to work it in sometime this afternoon.
I mean, it is crowding it today, out 1 don't know what
else to suggest.
H.M.JR: I might suggest this, that each group of
advisers - they might have breakfast together tomorrow
morning.
MR. WHITE: That would be very helpful - if they
could make an appointment downstairs, let's say at half
past eight, or something like that, and spend an hour
over breakfast.
H.M.JR: My people outside will assist you if you
want to make those arrangements - if you tell them outside.
MR. BROWN: The only difficulty to talking at break-
fast is that you fina a Chinaman who understands English
perfectly well sitting a half foot behind you. I had
that experience this morning. One of the American tech-
nicians wanted to speak to me. Obviously a Chinaman was
listening. I stopped him. Unless you have breakfast
in your room, it is almost impossible to hold a breakfast
meeting.
MR.WHITE If you could forego the morning meeting
tomorrow and substitute the evening meeting tonight -
then they could have from nine to ten tomorrow with the
advisers of their particular Committee and get at least
a survey.
H.M.JR: I thought you were going to suggest that
they forego breakfast!
Regraded Unclassified
220
- 14 -
MR. WHITE: Some of them could, very well!
MR. WOLCOTT: You are not getting personal, are you?
MR. SPENCE: Won't the Committees have regular
meetings?
MR. WHITE: That can be arranged.
H.M.JR: Well, we will leave it this way. You get,
this list and each of you on the Committee, with your
experts, will get together with them tomorrow morning
before your Committee meets and we will not have any
morning meeting here. How is that?
MR. WHITE: The evening meeting will be at eight-
thirty and we will take as much time - there won't be
any end hour, but there will be a beginning hour.
MR. SMITH: Senator Wagner wasn't nere when you
read his name.
H.M.JR: lie will get the list. You are on two or
three different Committees, Bob.
MR. WAGNER: I dian't know I would be on any.
H.M.JR: liave you got your pass for two o'clock
this afternoon?
MR. WAGNER: Yes.
MR. WHITE: who hasn't a pass?
(Mr. Somers and Mr. Brown raise hands)
MR. WHITE: Mr. Kelchner will take care of that.
MR. WOLCOTT: I have an extra one which I must
turn back to the Transportation desk.
H.M.JR: I have no pass, and Mrs. Morgenthau needs
a pass.
MR. WOLCOTT: Mr. Secretary, does the Delegation
want to anticipate that you might receive a letter from
the silver bloc in the Senate in the next twenty-four
hours, and take any action on it? I might say that I
already have.
Regraded Unclassified
221
- 15 -
H.M.JR: Could we wait until tonight?
MR. WHITE: The action is pretty simple because
Mexico is bringing up the silver thing.
MR. BROWN: There is a resolution in the Times
signed by twenty-five Senators.
MR. WOLCOTT: That must be it. I know it is coming.
MR. SPENCE: I have seen the letter.
H.M.JR: I always, on silver, give the most intelli-
gent explanation I can. When I first was in the Treasury
in my complete innocence, I went to Senator Ashurst
and said, "As the Senior Senator from Arizona, and the
Senior Senator of the silver bloc, would you mind sitting
down and explaining to me why you are for silver?"
He drew himself up said, "My dear boy, I learned about
silver at my mother's breast. I could no more discuss
silver with you than I could discuss religion."
I said, "Senator, I understand perfectly." And that
is the best explanation!
MR. WHITE: The only difference is that a man
doesn't exchange his religion - well, never mind!
H.M.JR: Anyway, 1 think if that is coming, and we know
it, maybe we can take a look at this evening. Twenty-
five Senators is not even a third?
MR. WAGNER: Twenty-three. I am back here where I
belong.
MR. WHITE: Give it the consideration it deserves.
H.M.JR: We will let you and Senator Tobey, a
committee of two, draft an answer.
MR. WAGNER: I see. Harry, will you be around?
MR. WOLCOTT: On my own behalf I have answered it
in this way: I offered an amendment on two different
occasions to prevent the remonetization of silver, and
it was adopted. So I said that in order for me to be
consistent, if there was any virtue in being consistent,
Regraded Unclassified
222
- 16 -
that I felt that I would have to oppose in the Congress
the remonetization of silver if the Conference did the
very unusual thing of adopting it as part of the program.
That is all.
H.M.JR: Well, talking for myself, in the words of
Mr. Coolidge, I am "agin" silver. So I don't think
that with me you will have any trouble.
MR. WHITE: I don't think the request they are
making will affect the domestic monetary policy with
respect to silver. The request that Mexico is making,
and the request that I am sure the Senators are making,
would be, all they expect to get is to some way intro-
duce silver along with gold in the settlement of inter-
national balances in such a way that it has some status.
There will be plenty of time to discuss it, but I
think there may be an opportunity to satisfy them with-
out in any way conflicting with any theories with regard
to silver that you may have.
MR. WOLCOTT: They are virtually asking that bimetallization
replace gold.
MR. WHITE: Yes, I think that is what they are asking
for, but I think they will take a lot less.
H.M.JR: Mr. Somers, may I bring Congressman ©mith
of Ohio up here?
I don't think, Mr. Wolcott, you are going to have
any trouble with this group.
MR. WOLCOTT: I haven't nad any trouble. I thought
I sensed the attitude.
H.M.JR: In Kentucky, there is only gold in "them thar
hills."
MR. WOLCOTT: The only thing I wanted to ao was let
the Delegation know what I have already said about it, and
if there was any difference about it, perhaps I should be
forewarned, because I couldn't imagine we were going to
change the whole program at this late date.
MR. SPENCE: I think we ought to take a stand for
gold - don't you understand? We have all the gold in
the world down there.
Regraded Unclassified
- 17 -
223
MR. WHITE: There is a little more that you will
get.
H.M.JR: Mr. Wolcott made his position clear and
I think he will find--
MR. SPENCE: How about Cuba?
MR. WHITE: They will get a number of countries
and it will be a matter of much discussion later.
H.M.JR: I think most of the discussion will take
place in the Halls of Congress.
All right, gentlemen.
Regraded Unclassified
224
Bretton Woods, N.H.
July 3, 1944
8:30 p.m.
INSTRUCTION OF THE AMERICAN DELEGATION - QUOTAS OF THE FUND
Present: Mr. White
Dr. Goldenweiser
Mr. Bernstein
Mr. Durbrow
Mr. Spence
Mr. Wolcott
Miss Newcomer
Mr. Sweetser
Mrs. Morgenthau
Mr. Brown
Senator Wagner
Mr. Cox
Mr. Collado
Mr. Ness
Mrs. Klotz
Mr. Acheson
Mr. Luxford
Mr. Vinson
Mr. Angell
Mr. Cohen
H.M.JR: May I compliment you all on your punctuality?
I hope that doesn't mean you didn't have a good dinner.
We entertained the Russians this afternoon. They
seemed to be in a very good humor. We drank to the fall
of Minsk, which has been announced by Marshal Stalin in
an Order of the Day.
MR. WAGNER: Harry, Lord Keynes - is he the Lord?
MR. WHITE: Yes.
MR. WAGNER: He talked longer than you did.
MR. WHITE: Well, he is a better man.
MR. WAGNER: Well, I don't agree with that!
MR. VINSON: If that is the way you judge it, we
will start a filibuster, sure enough!
H.M.JR: The National City Bank has a bulletin out
which I understand is very critical.
Regraded Unclassified
225
- 2 -
MR. WHITE: They have done it several times. They
have sent us preliminary drafts.
H.M.JR: If you will proceed, please, Mr. White--
MR. WHITE: Well, tomorrow morning, of course, the
Committees will meet and various delegates and advisers
will be present at those meetings, and I thought what we
might do is to go over those things that are coming up
tomorrow - concentrate on the matters about which there
is a substantial difference, to see what position we
should take - let the Delegation decide.
There are two major problems which we might begin
with. The first one is the question of quotas. It is
something that all the countries are extremely interested
in and they are all asking about it, and they all expect
to participate in the discussions on them, and it will
give us considerable trouble.
We had attempted to decide what the quotas will be
on the basis of a reasonable formula - a formula that
gave attention to a country's foreign trade, to its gold
holdings, to its national income, to its balance of pay-
ments, and we weighted it, and mixed it up, and came out
with a result, and then we applied that result to the
various countries, and we adjusted those that seemed to
be way out of line, and we got a certain set of figures.
The British have been working on it in an effort to
increase the quotas of the Commonwealth countries, parti-
cularly India and Australia and Egypt, and also Greece,
but particularly India and Australia.
They have therefore cut substantially into many of -
the other countries, chiefly the Latin American countries,
and increased India and Australia. The British agree
with us that they will support our figure of a maximum
aggregate of eight billion.
As a matter of fact, our aggregate was eight billion
three hundred and fifty million. We said, roughly, eight,
but there is a three hundred and fifty million more that
we would go. That was the case in the earlier discussions.
Since then we have taken the position that we think that
eight billion would be the maximum, and that we will have
difficulty getting that from the delegation, but we are
going to try to get the delegation to agree to eight
billion.
Regraded Unclassified
226
- 3 -
So we are receding from our figure, going down, be-
cause of the Delegation. They feel that that is a reason-
able approach, that will give us something to bargain
with. They say they will support the eight billion.
Therefore, if any country gets more, it must be out of
some other country, and so they have increased the Common-
wealth countries and diminished the others.
They are extremely eager to get an agreement between
the United States and England before these quotas are
submitted. The reason, they say, is that it will be
extremely difficult for a country to accept a lower quota
than the one that is indicated on any table which is
bound to be published - which will be published - and
the people at home will regard it as a serious defeat.
For example, they were put on the table as a hundred
million and finally ended up with eighty million, or
something of that sort and no delegation could go back
home and meet the charge that they weren't good negotiators
and they lost out on it. That is why they want to try
to settle that issue beforehand.
Now, they are not particularly interested in what
the reaction will be in most countries, but they are
interested in what the reaction will be with respect to
India and Australia.
(Mr. Wolcott enters the conference)
MR. WHITE: Australia, they say, is very insistent,
and we have already had discussions and know Australia is
very rambunctious about this and is almost belligerent
in the attitude that she should have a much larger quota
than what she suspects she is going to be accorded.
Now then, they give us a list of quotas and I will
give you some of the larger ones. We have had a couple
of meetings among ourselves, the technicians, and we have
tentatively agreed to present to you another list of
quotas, which is different in some of the countries than
the British, in the expectation that after we get your
views as to what the appropriate approach would be, we
would go to the British and say, "This is what our
delegates want," and they either have to go in or we will
present other quotas. They will present theirs and we
will present ours, and it will go into the Committee.
There will be a cat-and-dog fight, anyhow, because every
country will want to change.
Regraded Unclassified
227
- 4 -
Our safeguard is, however, that if the maximum is
fixed, any increase that a country gets has to come out
of some other country. That means there are defenders
and we don't have to be constantly defending the position.
It will be a struggle between countries.
England doesn't want to go into this Conference and
be arguing for an increase in the Dominions at the expense
of all other countries. She feels that wouldn't look so
good for her, to put it mildly. Therefore she wants our
agreement before.
Now, Mr. Secretary, what I would suggest - I would
take about four of the large countries and show what
the differences are and what the figures are.
H.M.JR: All right.
MR. WHITE: The United States, England has down as
twenty-seven hundred and fifty. We have put twenty-six
hundred for reasons, really, of strategy of bargaining,
because we expected to go to twenty-seven fifty. The
United Kingdom has thirteen hundred; we have made it
twelve hundred and fifty. The U.S.S.R., they have made
eight hundred and we have made eight hundred. The U.S.S.R.
is not satisfied with that, incidentally. They have come
to see me, and will try to get more.
China, they have made four hundred and fifty, and
we have made four hundred and fifty. China will not be
satisfied with that and will probably try to get six
hundred and be satisfied with five.
France, we have each made four hundred. I will men-
tion two more and then we will discuss those. They have
put India as four hundred and we have made India three
hundred and twenty-five. And Australia, they have put
at two hundred and we have made one hundred and fifty.
Those are some of the countries.
Now I will open it up for discussion.
MR. VINSON: I thought Australia wanted three hundred.
MR. WHITE: Australia wanted three hundred, but
England agreed that if we would accept two hundred, she
would not fight for more for Australia, but Australia
will fight for it herself, but England will not back her.
She won't oppose her; she might even say a few words
Regraded Unclassified
228
- 5 -
publicly in favor, but she has informed us that two
hundred would satisfy her. So when Australia hears
one hundred and fifty, probably the Delegation will get
up and walk out.
MR. COX: Have the British got an objection to going
above the eight billion?
MR. WHITE: They would be delighted.
MR. COX: If countries like Russia and China go up--
MR. WHITE: They would be delighted.
MR. COX: What is the disadvantage, from the American
public standpoint, if the others go up as long as you
don't lose your voting position?
MR. WHITE: Well, speaking for the technical people,
we don't mind going up a couple of hundred million, but
we think we had better start at eight billion. We don't
want to go more than a few hundred million because we
think that is adequate.
H.M.JR: I take it everybody knows Oscar Cox, General
Counsel for FEA, on loan to us?
Go ahead, Mr. Cox.
MR. COX: The only question I see, Harry, is if
Keynes' view is right, that as a matter of publicprestige
most countries wouldn't want to take a cut, then they will
be gratified if they got an increase. So within the limits
of direct effect on the voting, I should think if the
U.S.S.R. and China wanted an increase, it would seem on
the face of it to be desirable to let them have it.
MR. WHITE: Well, we have in mind that we will have
to increase these figures. We have put them low for that
reason.
MR. VINSON: Everybody else will want an increase,
too.
MR. WHITE: Yes, but many of them we don't have to
consider. We would like to increase the small Latin
American countries because you can give them an increase
and it makes very little difference in the total.
Regraded Unclassified
229
- 6 -
H.M.JR: May I interrupt? I think if you would say
which Committee this goes to, who is the leader and who
is on it, so those particular gentlemen would be parti-
cularly on their toes on this--
MR. WHITE: I should. It is Committee One. Unfor-
tunately I left the names.
MR. VINSON: Miss Newcomer and I.
HM.JR: It is on my desk, Mrs. Klotz.
MR. VINSON: We know.
MR. WHITE: We were talking it over.
H.M.JR: Who were their advisers, so they would
know? I thought it would be a way to get the team
together.
MR. WHITE: Goldenweiser, Collado, and Ed Munson.
H.M.JR: Is Ed Munson here?
MR. WHITE: No.
MR. BROWN: Mr. White - correct me if my view is
wrong - on this question of quotas, it seems to me it
is primarily a matter for the State Department and no-
body else, from the domestic standpoint. We want to
decide what our over-all liability is, I mean, whether
that is two and & half billion or two and three quarters
billion - we want to be sure from our own collective
viewpoint that the entire British Dominions and India
and the United Kingdom don't have more than we do.
Russia is necessary to winning the war. She wants ten
percent, or some such amount. It seems to me the past
and probable foreign trade, need of exchange, can justify
it. I am perfectly willing to say that it is well worth
while to give them a much larger quota than they would
otherwise be entitled to because of their military im-
portance and their importance in the post-war world.
To my mind, and you may disagree with me, it is
foolish from purely trade considerations to give China
more than India. On the other hand, if we are going to
beat Japan we have got to keep China happy. And again,
I am perfectly willing to agree that China has got to get
more.
Regraded Unclassified
230
- 7 -
But what you give the other nations is of relative
unimportance, from my own point of view. I mean, both
France and India, for instance, ought to be given more
than China from a strictly trade and exchange stabiliza-
tion basis. From the point of view of respective influence
in the post-war world, clearly Russia and China ought
to be given more than India or France.
A balancing of those factors, it seems to me, has to
be left to our State Department, and so far as I am con-
cerned, as a member of this Committee, I am not a member
of this particular subcommittee - I realize that - and
I would leave it almost entirely to the State Department.
I don't know - Congressman Vinson and Miss Newcomer
are on this subcommittee - I think that that is wholly
Goldenweiser's point of view, and if the other members
of the Committee agree with me to dispose of it - if I am
wrong in my general approach to the subject - I am very
ignorant and I would be glad to be corrected - but it
seems to me, in the shortness of the time, that it is better
to state the position as I see it as a member of this
Delegation. And I do it with all humility.
(Dr. Goldenweiser enters the conference)
H.M.JR: I don't know whether Mr. Acheson wants to
speak at this time, or Mr. Collado.
MR. ACHESON: I think that approach is right, Mr.
Secretary. It seems to me that what you have to start
out with is the soundness of the British idea that you
cannot let out any quota which is going to be reduced;
you just can't do that because you will have a crisis
on your hands that isn't worthwhile.
If you will decide what the top amount is going to
be, state it considerably lower, and then decide where
the other items are going to go, we shall work it out.
I don't mean the State Department - all of us together.
I think you can be guided to some extent by what the
State Department says. But the main order of countries,
I think, is right, the way we have it on the list. But
we must start below what we are going to end up with.
You cannot announce to a country that we think its quota
ought to be a hundred and end up with fifty.
H.M.JR: May I ask you this? Do you think the
Regraded Unclassified
231
- 8 -
approach should be, well, we know pretty much what our
own can be, and then there is so much left over, and let
these other countries fight for it?
MR. ACHESON: No, I think we have to take an active
part in guiding the result.
H.M.JR: You do?
MR. ACHESON: Yes, I think Mr. Brown is entirely
right that on the decision about China - that has to be a
political China, and the decision about Russia, also,
at this time. I don't think that the problem of Australia
is difficult at all.
H.M.JR: You mean we would throw our weight in favor
of Russia and China, say, as against the Dominions?
MR. ACHESON: Yes, most certainly SO.
H.M.JR: Is that what it gets down to?
MR. ACHESON: Yes.
H.M.JR: Well, I think on a thing like this, if
Judge Vinson, who is the leader of this group - we are
all sort of groping - I think if you would ask questions
to satisfy yourself, and satisfy Miss Newcomer, that you
can present it properly.
I think that that might be a good way to proceed. I
think if you would cross-examine these various witnesses,
and then come to a conclusion with Miss Newcomer, and then
say, "This is the way we would like to proceed" - is that
agreeable to the other American Delegates?
Now, you are entirely familiar, as a practicing
attorney - so would you mind sort of acting as leader,
now, and satisfy us by cross-examining the people around
the room who are experts, and then say, "Well, this is the
way I would like to proceed." Is that agreeable?
MR. VINSON: You do me too much credit, .Secretary.
Miss Newcomer is the leader, but I am perfectly willing
to ask questions.
MISS NEWCOMER: I think that is a mistake. This
morning you were appointed leader, and I certainly think
you should be.
Regraded Unclassified
232
- 9 -
H.M.JR: On this thing - I don't know how recent
it is, but you are down as leader.
MR. VINSON: Commission One - no, Committee One -
Miss Newcomer is leader of Committee One.
H.M.JR: Well, I apologize.
MISS NEWCOMER: I think Judge Vinson should be
leader. I would very much like to defer to him.
MR. WHITE: There was a change made after you saw
it.
MR. VINSON: I am delighted to be inquisitive.
H.M.JR: May I start over again? Pardon me. How
would you like to proceed, Miss Newcomer?
MISS NEWCOMER: I would like very much to have
Judge Vinson be the leader. I think it would be much more
appropriate.
H.M.JR: Could we do this for this purpose, just for
this evening, and then we could settle it later on. Is
that all right? I got mixed up on my papers, here.
You will have to believe me, because it comes first
here, Mr. Vinson. So, if it is agreeable - then after-
wards the two of you talk it over and settle it between
you. That will be quite satisfactory to me. But because
of your judicial training, would you mind proceeding the
way I suggested?
MR. VINSON: I would be very happy to get all the
information I can, because this is the first time--
H.M.JR: You sort of set the pattern for other leaders.
MR. VINSON: This is the first time that the figures
of the quotas have been discussed. We heard some figures
mentioned for our country, and I believe that possibly
Russia - they were wanting ten percent, and as I understood
it, they would be satisfied with ten percent.
MR. WHITE: They now claim it is ten percent of the
votes and not the quota, which would make it closer to
nine hundred million than eight. There is room for some
Regraded Unclassified
233
- 10 -
difference of opinion about that, but that is the posi-
tion they are now taking, that they will want more.
Whether that is just bargaining, or what, I don't know,
but they saw me today. It will be in that vicinity,
plus or minus.
MR. VINSON: What were the suggestions to the
smaller countries? In one memorandum, as I recall it,
it was suggested that ten percent of the total quota, or
eight hundred million dollars, might be used to augment
the quotas of the smaller countries.
MR. WHITE: That is what we have done - not the
smaller countries - all the countries. It was used
chiefly to augment China and Russia because when we apply
the formula we worked out, China fell far below, as
Mr. Brown says, if you take it on any trade basis or gold
holding basis prior to the war.
MR. VINSON: What would China rate on that basis?
MR. WHITE: Maybe four hundred million dollars, at
the most.
MR. VINSON: Ana what have we tentatively thought
of in connection with China?
MR. WHITE: We think we can settle for five hundred,
but we have four hundred and fifty down here.
MR. VINSON: How much of the eight hundred million
did you allocate to China?
MR. WHITE: I should say about a hundred and fifty
million. We took ten percent of all of them, which we
have restored now, and then took that eight hundred
million and distributed it over many countries, and China
we brought up to five hundred million.
DR. GOLDENWEISER: Does the total add up to eight
billion?
MR. WHITE: Yes, seven billion nine hundred and
eighty.
MR. VINSON: If you would go up to the eight and a
half billion, what could you do with the five hundred
million? Could you reasonably meet the demands?
Regraded Unclassified
234
- 11 -
MR. WHITE: Oh, yes, don't you think so?
MR. BERNSTEIN: Yes, sir. I think that extra five
hundred million would make it possible to meet the wishes
of China, Russia, and a few others without cutting anyone
else.
MR. WHITE: I think there would be a little to spare.
MR. VINSON: I take it that is what you had in mind?
MR. WHITE: Yes, we hoped to get not quite up to
eight, five, but if we got to eight, three-fifty - but
in our conversation with Keynes we told him we are finding
the delegates are pretty stubborn on this, and we didn't
think we could get even up to eight billion.
MR. VINSON: If you take Keynes' suggestion, that is
without the five hundred million - right?
MR. WHITE: Yes, his figure is eight billion straight,
and they said they would support us on that eight billion
as an outside amount, although he asked - he said, "It
would be very helpful if you could increase that by a
couple of hundred million, which would solve our problem."
I said I didn't think we could.
MR. ACHESON: What would you decide on as the top
figure, just in your own mind?
MR. WHITE: Something less than eight, five - eight,
four or eight, three and a half.
MR. ACHESON: What would you cut this total to in
order to have a kitty to negotiate - seven, five?
MR. WHITE: We cut it to seventy-nine hundred.
MR. ACHESON: But you have sort of gone all-out on
this. Supposing you wanted to cut everybody back to the
lowest point which they were likely to get, and therefore
suppose you took a figure of seven, five. Would that be
too low?
MR. WHITE: I think SO.
MR. BERNSTEIN: I don't think we could start with seven,
five without explaining why it is that the joint statement
Regraded Unclassified
235
- 12 -
speaks of eight billion. What we could do is to raise
ours and keep the total at eight billion; that would be
reducing the others. Then when we give way, give way by
reducing ours and adding to the others.
MR. VINSON: Why don't you start with eight and
then subtract your ten percent and say that that eight
hundred million might be allocated where it should go.
MR. ACHESON: That is more or less the same idea I
was getting at.
MR. VINSON: You start with eight, but you want ten
percent to play with, so you at first allocate your seven
point two billion and then use your eight hundred for
spread.
MR. ACHESON: What Mr. Bernstein is saying is that
you then come out with something less than eight, and you
have got to have something--
MR. VINSON: How would that be less than eight?
MR. ACHESON: You are taking ofi your ten percent--
MR. VINSON: But you put it back on - no, not in
accordance with the formula, but in accordance with
special conditions.
MR. ACHESON: Not at the outset. You mean to
put it back on later on.
MR. VINSON: That is right.
MR. ACHESON: Then you put it down at the bottom as
a kitty and you have everybody grabbing for it; whereas,
if, for instance, you said, "Surely we talked about eight,
but we find the Members of Congress are tough, they just
say we can't, we have to have seven, five. So we have
cut it back to seven, five" Then as we go along we can get
it finally up to eight, three or four.
MR. ACHESON: If you have a pool you are going to
have a lot of claimants.
MR. BERNSTEIN: If we reduce by eight hundred million
and present a table showing seven point two, and say
that there are eight hundred million left to be distributed,
we will then have forty-four claimants for the eight hun-
dred million.
Regraded Unclassified
236
- 13 -
MR. VINSON: I didn't have that in mind at all. I
had in mind getting this package wrapped up before we went
into committee, and in the conversations with the British
have your seven point two and work out your eight. I
didn't have in mind presenting this to the Committee as
seven point two.
MR. WHITE: That is about what was done, Judge - that
is just what was done. We took the ten percent and we
allocated it around so that the total remained just about
eight billion. But now he is taking that and readjusting
that.
MR. VINSON: They had you at eight billion, and now
they have upped the ante.
MR. WHITE: No, it is still eight billion.
MR. VINSON: No, but we want to ante up.
MR. WHITE: They want the ante of the Commonwealth
up, but they have taken the others down, so the total
remains eight billion.
MR. VINSON: I thought you said a minute ago that
they said they wanted two hundred million more.
MR. WHITE: They said they would very much like to
have two or three hundred million more, which would
solve all their problems. They wouldn't have to take it
away from a small country, and they could give a little
more to the Commonwealth. But I told them I didn't think
the Delegation would agree to that, that they would have
to work within the eight billion limit.
H.M.JR: What is there of credit about the eight
billion dollar figure?
MR. WHITE: Nothing, except we didn't want to give
our top figure to begin with because we knew we would have
to bargain it up. We wanted to leave something to bargain
with.
H.M.JR: But do I take it that we are ready to go up
to eight, three or eight, four?
MR. WHITE: The technicians are. We told them when
we had the discussion at the joint conference that it
237
- 14 -
amounted to eight billion four, and then we said to call
it about eight billion, because it will be a little easier
to talk that way and it wouldn't seem as though we have
worked it out to four digits in a rough formula. And
that will give us a little leeway of a few hundred million
dollars, and what surprises me very greatly is the British
don't push us more on it, because we did make that state-
ment, and I have taken the position now that I find that
the delegates are being pretty adamant on this thing, and
we are going to have a hard time getting eight billion.
H.M.JR: Well, I would just like to raise a question
on approach, Judge Vinson. I would be largely guided by
what this Delegation says. I know that the orthodox
method is to go in and horse trade, see? There is also
another method, to very carefully figure out what we
think is fair and stick to it and say we are a one-price
house.
DR. GOLDENWEISER: That is a very much better method,
Mr. Secretary.
H.M.JR: I just would like to raise the question for
consideration, whether we want to go in on the David Harum
basis or whether we want to very carefully consider it and
say--
MR. VINSON: Are you speaking of going into committee?
H.M.JR: Yes.
MR. VINSON: I don't think we could go into committee
and trade.
H.M.JR: Well, I justwondered, as a policy for the
American Delegation, whether we don't want to decide,
"Well, this is fair; that is our proposal," and then
stick by it; using the vernacular, we are a one-price
house and we don't want to get into a lot of bargaining.
I know there are two methods, and I don't say which is the
best, but I am just raising the point as a different
method of approach.
MR. LUXFORD: Mr. Secretary, there is only one thing
that worries me about that. I think if you did that, the
countries would feel that the U.S. was trying to dictate
the terms. That would be my fear of it. They would say,
"What kind of a Conference is this? The U.S. comes in
and is laying down terms - 'You get so much and we won't
even talk about it.
238
- 15 -
If you would instead hold back a kitty, then say,
"This is for you countries to decide, not us. We are
only going to try to shape the larger aspects of it."
But leave the balance in a democratic way for the countries
to decide.
H.M.JR: I am raising the question--
MR. WHITE: I think there is something even more
than that. I think that in the discussions which take
place in the Committee that you go in at a very disas-
trous position if you go in with the limit you can
accept, because they put up all kinds of strong arguments
and either you become very stubborn and don't listen to
their discussions, or if you have a little leeway - some-
thing to give in - eventually you can be convinced and
make concessions and they regard you as reasonable. That
is more nearly true of this than probably anything else
in there.
They will make strong arguments for them, and if you.
can give them a little something, they feel that they have
negotiated; they feel that you have been reasonable and
gone beyond the limit that you expected in order to arrive
at a common goal. You have sacrificed something. They
have had to give something up, and you have given some-
thing up by increasing the total, and I think that they
feel better. I think you much more quickly get unity,
because if you start with your final figure they will keep
pushing and pushing, because they don't believe we will
stop there.
Nobody in any negotiations in international arrange-
ments that I know of has ever given its final position
first, whether it is naval strength, or whether it is
anything very moderate, or whether it is a trade agree-
ment.
MR. COX: The other question, Harry, isn't the public
view of this fairly right, that the quotas, in a large
part, represent responsibilities as well as benefits?
MR. WHITE: They do.
MR. COX: Now, from the American standpoint, a lot
of people are going to figure out in terms of the quota,
what the percentage of responsibility is in the U.S. as
against the other countries.
Regraded Unclassified
239
16 I I
Now, if yaigo up to eight billion four, and the
American amount still remains two billion seven hundred
and fifty, and has a degree of control on the votes,
then if you increase by concession you get into a position -
take Poland, for example, for reasons of prestige and what
not, it is down tentatively at seventy-five million on
the U.S. estimate, and a hundred million on the U.K.
I should think the U.S. Delegation wouldn't want
to be in the position of opposing the twenty-five million
dollar increase in the case of Poland, and similarly in
the case of the Latin American countries, or some of the
other countries.
The major problem would be not to increase the
British Commonwealth to where the disproportion in terms
of the U.S. quota is out of whack.
MR. WHITE: Pete, you have had a good deal of ex-
perience in these discussions with foreign countries.
What is your judgment?
MR. COLLADO: I think that you can go in with a
certain leeway to play with. I rather doubt whether
you should try to get it down much below the eight
billion in your first table. I think that the eight
billion table, with a few little adjustments here and
there on specific countries, can be presented and you
still have three or four hundred. I should think you can
take care of all your problems with that. I prefer not to
try to get down to anythng like seven, five; I think it
would be very difficult. I think you will have to do a
small amount of trading, and three, four, or five hundred
million should be adequate for that purpose.
MR. WHITE: We have used the figure eight billion
so much that it would be pretty difficult for us to de-
fend going in with anything much lower. We can add it up
so it is seven, nine hundred and ten, or something like
that, and say that is about eight, but to make a sub-
stantial reduction, I think they would regard that either
that we are retreating from a position, or that we are
out to bargain:
MR. COLLADO: Another thing is that if you are pre-
pared to have the U.S. go us as high as the two, seven-
fifty, you have adequate voting to take care of any
probable increase that you would give the Dominions, so
Regraded Unclassified
240
- 17 -
I think you have enough leeway there so you can start
within that range.
MR. WHITE: Another thing I was going to suggest is,
I wonder whether we might not hold some of these conces-
sions in the quotas to get some other things that we want
from them, or stop them from asking for some things that
they want. That is particularly true of Russia. Russia
is asking for some other things, and is pretty insistent.
H.M.JR: Who of your experts is particularly working
with the Russians?
MR. WHITE: Mr. Bernstein, Luxford, and I.
H.M.JR: The Chairman of the Russian Delegation has
asked to see me, and I have asked Durbrow to be there.
Who else here knows this, Harry?
MR. WHITE: They have conducted conferences over a
month, and they nave all beenpresent.
H.M.JR: Has Bernstein been present at them all?
MR. WHITE: Oh, yes, all of them - I would say all
of the technical people except Oscar Cox.
H.M.JR: When I go down I will take Bernstein with me.
MR. ACHESON: Harry, how much do you have tohave
to trade on here?
MR. WHITE: Not more than three hundred million.
That would be plenty. The Russians are a hundred million
to a hundred and fifty million; the Dominions, maybe
another hundred.
MR. BERNSTEIN: Including India.
MR. VINSON: What about China?
MR. WHITE: China will have to get at least five hun-
dred, and it is going to be difficult to satisfy her
with that because she expects closer to six.
MR. VINSON: What have you?
MR. WHITE: We are starting her with four hundred and
fifty; we thought we would go up to five.
Regraded Unclassified
241
- 18 -
MR. VINSON: What about the smaller countries? U.K.
has a larger figure than we have. Now your five hundred
million has already run out.
MR. WHITE: Well, but you can increase the smaller
ones. They are so small - there are about ten Central
American countries that have three to five million dollars
each, SO you can give them a few millions.
MR. VINSON: How about the European countries?
MR. WHITE: The major ones that may require some in-
crease are France and possibly Netherlands, and Poland
might have to be moved up to a hundred million.
MR. VINSON: That is twenty-five million more. The
thought I have in mind is that your five hundred million
is already gone.
MR. WHITE: Well, that is all you need.
MR. VINSON: I mean you are past it; if you take
one hundred and fifty million for Russia - and how much
for the British Dominions?
MR. WHITE: I don't know. I can calculate it. Why
don't you do so tomorrow?
MR. BERNSTEIN: Suppose you have one hundred and
fifty million for Russia, a hundred million for China,
maybe one hundred and fifty for the British Dominions,
and fifty - that is four hundred - that will leave you a
hundred for the rest of the world, which is probably
enough, since the European countries, except France, are
not likely to be pressing for increases in quotas.
MR. COLLADO: I calculated it here crudely while we
were talking, and without allowing for France I have come
out with only three hundred and fifty million in increaes,
including all the Dominions.
MR. BERNSTEIN: That doesn't include a hundred
million for the little countries.
MR. COLLADO: It includes fifty.
MR. VINSON: What are your figures?
Regraded Unclassified
242
- 19 -
MR. COLLADO: Well, I have got the Russians at a
hundred to a hundred and fifty; I have got the Chinese
at fifty more--
MR. WHITE: That would bring them up to five.
MR. COLLADO: That is right. Then the next one is
India, I increased them twenty-five; I increased the
Belgians twenty-five, and I am not at all sure you need
to. I increased the Australians by twenty-five, which
is splitting the difference with the British on Australia -
that is not particularly good justification for doing it,
either. I have increased - let's see - there is a little
difficulty here on Brazil and Mexico. I left the rest
of the Dominions alone, and I have put down twenty-five,
possibly, for Poland. On Peru and Mexico I should think
you would move one up and the other down.
MR. WHITE: You think they should have the same?
MR. COLLADO: I think you should increase Brazil.
I don't think it is big enough in proportion to Mexico.
You have a hundred and twenty-five and a hundred, and I
don't think thatis good enough differentiation. The
British have a hundred and fifty. I suggest that you might
consider a hundred and fifty and seventy-five. Brazil
is a tremendous country, twice the population.
MR. WHITE: I think you have to give Mexico a hundred
million.
MR. COLLADO: I think if you give Mexico a hundred
you will have to give Brazil a hundred and fifty. That
only adds up to three hundred and seventy-five.
DR. GOLDENWEISER: What is your total, Pete?
MR. COLLADO: With the U.S. at twenty-seven fifty, I
have just made changes from this list, it would come to
about eight, three-fifty.
MR. VINSON: Well, you had Russia either a hundred
or a hundred and fifty; I take it you added in a hundred.
MR. COLLAGO: That is right.
MR. WHITE: The Judge is asking, if you start with
eight billion and raise it five hundred, how do you get
eight, three-fifty?
Regraded Unclassified
243
- 20 -
MR. COLLADO: I only raised it three hundred and a
quarter. I started with nine, seven-eighty, so I ended
up with eight, three ought five.
MR. BERNSTEIN: Mr. Secretary, there is always the
possibility of getting a little more by reducing our own
quota from twenty-seven hundred and fifty to twenty-five
hundred. That would give us some to play with, provided
always that the sum of the quotas of the British empire
desn't get too close to ours.
MR. COLLADO: If you make all the increases I mentioned,
the British total votes would be twenty-four forty-five.
If you reduced our quota to twenty-five hundred, we would
have twenty-five and a quarter; 80 we are still a little
ahead. If we stay at twenty-seven fifty, we would have
twenty-seven seventy-five.
DR. GOLDENWEISER: Wouldn't it be a great deal eaiser
to get American support if the difference between us and
the British Empire was more than just a trifle?
MR. WHITE: It would be.
H.M.JR: What do you think about it?
MR. ACHESON: I think it would.
H.M.JR: Mr. Wolcott?
MR. WOLCOTT: There would always be the fear that
somebody would think that Great Britain could get some of
the smaller countries to go along and offset that.
DR. GOLDENWEISER: Mr. Secretary, I have had absolutely
no experience in international negotiations, and perhaps
ought not to say anything, but my feeling is that it isn't
a dignified situation for America to bargain with all these
people about little items of twenty-five or fifty million
dollars. I think we would be in a stronger position if
we either come out with no total at all and just say, "Well,
now, these are the calculations; let's work it out," or
else give them a figure and say, "This is where we stand,
insofar as the Committee is concerned, and if there is any
change in that we will have to get special ratification
from the Delegation as a whole."
I think these people will find it something of a help
to them if they can say, "Well, Uncle Sam was hard-boiled
and just wouldn't yield, and that is absolutely as much as
we could get."
Regraded Unclassified
244
- 21 -
MR. LUXFORD: It would make them more mad at us,
though. Why should we be the scape-goat for thirty-
nine other countries?
MR. VINSON: And then let U.K. say that they wanted
increases for them.
MR. LUXFORD: That is right. Why should we be put
in that position?
MR. WHITE: I don't know, but I don't think they
regard that as a virtue, particularly. They regard that
as being stubborn and dictatorial. If you say that this
is what it is, and you are not going to budge from it, that
is all right after there have been negtiations and you
have given way, and then you say that we have given in
as far as we can, and then stick to it. But to start
right crack off the bat and say, "This is our top limit"--
MR. GOLDENWEISER: I don't want to prolong this,
but the only point I would want to make is that we could
say that the total Fund for which the U.S. would stand is
so much - eight billion, or eight two, or eight three,
and out of that amount the U.S. feels that it is absolutely
necessary for it to have so much, and the rest of it they
can divide among themselves, and let them bargain with
each other. But then they wouldn't get very far, because
any increase for any one would mean a decrease for another.
MR. ANGELL: Would it be possible to go into this
with an agreement with the British, so to speak, so there
would be a kitty of a hundred million for trading purposes?
MR. WHITE: You could. You don't have to tell them
what you have in mind. If you are ready to do that after
you have struggled along a bit--
MR. LUXFORD : The British wouldn't give any away.
MR. VINSON: The trouble with that is the British
would be making the fight and would De getting the credit.
MR. LUXFORD: That is right.
MR. WHITE: You mean if you told them. I think it
is much better for them to support you.
MR. VINSON: Or if you don't tell them - if they
make the fight and win the game!
Regraded Unclassified
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- 22 -
MR. WHITE: But they are not making the fight on the
aggregate. They said they would support us on the total
eight billion. Therefore it is a question of getting
something out of somebody else's or their own quota.
They can give up some of their own quota if they want to
help their Dominions. At some time in the discussions,
after no progress has been made, then would seem to me to
be the appropriate time for us to say, "Well, in order
to get an agreement on this thing, we are willing to up
it a little here, and then you can be the one to put it
where you want it. But if you just go in and say it is
eight billion - "We will take so much; boys, divide the
rest among yourselves," you are taking one of the most
dominant factors out of the discussion that can attain
any kind of peace. You are letting it become a cat-
and-dog fight.
MR. ANGELL: You don't want to be completely and
flatly dictatorial.
MR. WHITE: That is right.
H.M.JR: If you people will excuse me, I will go
down and see what the Russians want, and I will come
back. I would like you to come, Mr. Bernstein. Mr.
Collado, do you mind coming along?
(The Secretary and Mr. Bernstein and Mr. Collado
leave the conference temporarily)
MR. WHITE: I think if the Delegation feels that they
are willing to go on the eight billion four, that there
will be no trouble getting an agreement, but I think in
order to do that properly, we have got to say that it is
eight billion and let them fight around. They have got
to fight around for a couple of days and get nowhere.
But if you come right in at the beginning - they are
accustomed to bargaining and negotiating, and they will
prolong the discussion interminably because they wouldn't
believe that is your final figure.
So if you go in with the eight billion, and if the
Delegation feels they are willing to raise that three
hundred million on some such basis - as Mr. Brown said,
about making up their own minds on other grounds, then I
think if Judge Vinson is going to be the leader, then he
can repeat that that is the maximum as of now, and give
Regraded Unclassified
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various reasons, and then they will begin discussing
among themselves who is going to get an increase at
whose expense. And then at some point along there,
after things look pretty much mixed up, the Judge can
say, or a committee can work out and come back with a
report that the U.S. has made some concessions. They
will think we are great guys and everybody is happy.
It would seem to me that would be the approach,
if the group feels they can exceed eight billion by several
hundred million. I am sure if we had told the British
we were willing to go to eight and a half billion you
would find that they would put us in a spot where it would
be necessary to go to nine or be adamant, because they
would like to satisfy the claims of their Dominions.
Why not?
MR. ACHESON: I think that is right, Harry. If you
will take what you think the top is - take off whatever
you want to negotiate with - if it is four or five hun-
dred million, you will come out somewhere about seven
billion, eight hundred and something. Work it out on
that basis - do not get anybody higher than you will
end up with - and have some arguments referred to a
Committee, and you will come out just about right.
MR. WHITE: The Committee will come back with con-
cessions, and the Committee will go out at a time when
things look pretty mixed up; it will come back with con-
cessions and you may be able to get a concession here and
there out of England.
At that point you can say you are adamant and remain
there.
MR. LUXFORD: You can almost force the group to accept
the Committee's report before we indicate whether we will
take it or not, in which event the only person holding
out will be the U.S., until the other countries have
indicated they are willing to go ahead.
MR. WHITE: Then there is something else I mentioned
before about the negotiations. We are going to have some
trouble with the Russians on two points, their newly mined
gold, and the concession on their gold holdings. Now, we
have a very nice bargaining card here. They are interested
in a larger quota. It seems to me it might be worth trying
to say that after they haven't been able to get anywhere,
that we can up them, that we are willing to up them one
hundred and fifty million providing they abandon their
Regraded Unclassified
247
- 24 -
claim for this gold reduction. They might do that, be-
cause this might look better to them. That gold reduc-
tion they want is going to give us trouble because all
the countries will want it if they get it.
I think that is the way those things are done. They
may be smarter negotiators, but, shucks, we have plenty
of good negotiators here besides the technicians - a lot
better.
MR. WOLCOTT: Wouldn't it be helpful to our Delega-
tion on that Committee if we gave them the figure that we
felt that theyshouldn't go beyond, and give them to under-
stand that if they found themselves in a position where
they had to go above that, that they could bargain up to
a certain point and come back to us and be relieved of the
obligation, and stick to that figure?
It would give them the argument that they couldn't
go above that figure without coming back to us, and then
they could advise us as to how adamant they wanted us to
continue in the matter.
MR. WHITE: That might be an approach. I am a little
bit worried, though, about not going in there with a
table which England and the U.S. wouldn't approximately
support.
In other words, the argument ought to be on a few
countries, but if you go in there saying, "This is our
maximum; see what you can do about it," why they will be
weeks at it. You see, we have spent many, many hours at
conferences - I under-state it - in trying to arrive at
some such formula, and every country that we talked to
wanted to change the formula, and so forth - so it is very
easy to have the days run by unless the discussion is
crystallized around a relatively few countries and around
relatively small amounts. I mean, it seems to me you
have to go in with a table which the U.S., as one of the
participants, should have some views on. I don't think
the U.S. can take the position of "Well, this is the
maximum; this is what we want, come and get it; the rest
divide up among yourselves." It would seem to create,
I think, the wrong impression.
This is an international thing; we are all trying
to work out what is reasonable. The U.S. has some ideas;
England has some ideas; other countries have ideas. When
Regraded Unclassified
248
- 25 -
you start with a list of figures - if you start with a
list of figures like this, for example - let me pick out
a country - Guatamala has five million; she knows approxi-
mately where she is, and the most she might ask for is a
couple of million more. That takes care of, oh, twenty
countries right off the bat that have small amounts.
MR. VINSON: If an agreement were reached with the
British, what about a subcommittee bringing in the table?
If we bring a table in tomorrow, it has got to be some
kind of a table - U.K. may get the advantage in fighting
for the other countries--
MR. WHITE: I think there is an advantage in having
the subcommittee bring it in. The question is, who is
going to present it at a subcommittee. Now, you can try
to work out an agreement ahead of time with the British.
That is what they want, and that is what we are consider-
ing - their figures. But I don't know whether you could
get an agreement with them.
MR. WAGNER: Couldn't one of the smaller countries
ask for a subcommittee?
MR. WHITE: Oh,yes, any one of them could ask.
MR. WAGNER: I mean on the question of asking for
one.
MR. WHITE: It wasn't so much asking for the sub-
committee as it was who is going to present the table.
You see, somebody has to present it, otherwise, if this
Committee starts from scratch they might come out with
an entirely different--
MR. VINSON: But if you had an agreement between the
British and ourselves, and there was a joint submission
of it to the subcommittee, then you would take the curse
of dictation off of it, and it seems to me it might take
away the disadvantage that would come to us in Britain
fighting for the increases which we are willing to give.
MR. WHITE: Yes, I think that is a possibility. If
I understand you correctly, you would have an understand-
ing with England as to what you finally want to end up
with, but agree with England that it is better to give
some lower figures which we submit jointly, and that she
will agree not to argue for any increases. Let the
other countries argue for increases.
Regraded Unclassified
249
- 26 -
Then it can go back to a Committee and at that
point we can give the additional amounts and the arrange-
ments which you have agreed to prior.
Is that it?
MR. VINSON: I was thinking about the subcommittee
first.
MR. WHITE: Yes, I would say the subcommittee - you
get an agreement with England on the outside. The thing
is referred to a subcommittee by the Chairman, one of the
American Delegates requests that the matter be turned
over to the subcommittee, of which the Americans and
British will be members. At that subcommittee there will
be presented a table by the British, on which you will
have had prior agreement with the British, and an American
will agree, but the table wouldn't present the final word.
You will have had another extra agreement as to the final
word, which the British are cognizant of.
MR. VINSON: That is my thought.
MR. LUXFORD: There is one variant of that, Harry.
I am still afraid the British might get around on the side
after they come out of the Committee and say, "You fight
hard, now," especially to those countries they know you are
going to raise, 80 they will sound like they are giving
support to these countries and get some of the indirect
benefits of our concessions.
Why can't the subcommittee report out the base figures
that we start with, then there will becomplaints from
all over in the Committee about it, but don't take the
British into your confidence that we are willing to make
the raises.
MR. ECCLES: Harry, how would it be to agree on our
quota that we would be willing to recede from - reduce it
if we nad to - agree upon the British quota and Dominions,
as one, so that we would establish the amount of our quota
in relation to the British and the Dominion quota? That
relation would have to be maintained.
Now, we could concede some of ours; they would have
to concede a certain proportion of theirs. That would be
the British and ourselves conceding to the other countries.
MR. WHITE: I think that is a good suggestion.
Regraded Unclassified
250
- 27 -
MR. ECCLES: You might agree on Russia separately -
maybe China with the British - and that would be final.
Now, when all the rest of them come in, whatever they get
will come from the U.K. and the Dominions, and from the U.S.
But we want, when the final result comes out, to have
maintained the differential, and then we would be willing
to concede, but the British would likewise have to concede.
We couldn't take advantage of them and they couldn't
take advantage of us. And between the two of us, we would
have to satisfy the smaller countries by giving a propor-
tionate amount of the respective quotas.
MR. WHITE: I think that has interesting possibili-
ties. One of the things that disturbed us about letting
our quota go down, which we are very glad to do, was the
fact that if we let our quota go down below a certain
point, there isn't enough difference in the voting power
between the British and ourselves.
MR. VINSON: If you have the proportion decline in
the British quote--
MR. WHITE: It solves that problem.
MR. ECCLES: I don't care what figure you go to.
MR. WHITE: I think that is an interesting suggestion.
MR. ECCLES: Whether it is from the eight hundred - if
we want to reduce our proportion from the two seven-fifty,
and the British and Dominions from what they have, whether
it is from a higher figure - we then have to attempt to
satisfy the smaller countries between the two of us.
MR. ANGELL: The only catch in that is that you are
increasing the quotas of some of the Dominions, even if
U.K. goes down and the Dominions go up--
MR. WHITE: He said the British Empire. That is
where the difficulty will be.
MR. ECCLES: But after all, we can't--
MR. ANGELL: Australia goes up fifty but the U.K.
goes down fifty. If it is a total, that is fine.
MR. ECCLES: That is the only way you can handle it.
Regraded Unclassified
251
- 28 -
That is an internal situation and they can handle it; we
shouldn't attempt to get into it - we shouldn't take a
position there.
MR. WHITE: I think something could be worked out.
We could keep that principle in mind. In other words,
if there is any attempt to increase, we will say we are
ready to have our quota reduced provided the ratio of
our votes to the British Empire's votes remains the same.
If you have that, and you don't have to confine your-
self in the earlier part to any specific ceiling, if you
go in with an eight billion ceiling as has been suggested,
throw it into a Committee, let the Committee come out with
a report on which there will be controversy, then throw
it back into the Committee. At that point the Committee
will make adjustments and concede some increase which
will make adjustments very much easier. I think the
thing could be settled in two days - two or three days.
While the subcommittee is working on it, the work
of the main Committee could go forward so that even if the
subcommittee took two days to fight the thing out, I
think it can be worked out. But whether it is necessary
to get an agreement with the British not only as to the
schedule, but what you are going to do, I don't know.
Why wouldn't it be possible to get agreement with
the British, meet them as closely as we can on these many
points on an eight billion ddlar limit? They are not
going to be wholly satisfied, but they might be willing
to submit a table on that basis, and they are going to
say, "Now, this is not going to satisfy Australia, and
this is not going to satisfy India," and we will have to
support them.
MR. ECCLES: Let them take some off of their own to
satisfy them.
MR. WHITE: Yes, every approach has some advantages
and disadvantages, but I think that the end-all settle-
ment is within sight if the Delegates are willing to go
up as far as eight billion four hundred million. There
is no shadow of doubt there can be an agreement. So it
is merely a question of tactics.
The one thing that worries Mr. Luxford is that the
British will get the kudos for having upped them. You
might say, "So what?" Suppose Australia and India do feel
England has gone to bat for them. I don't know why we
Regraded Unclassified
252
- 29 -
should object very much to that.
MR. LUXFORD: I wouldn't either, on that basis, but
I don't want England fighting for everybody's increase
and the end result will be it is at our expense.
MR. ECCLES: If it comes off the British proportion
it wouldn't be.
MR. LUXFORD: That is one of the advantages of that.
MR. COX: As I add up these figures, the British
have asked for an increase of one hundred and eighty-
five million for the U.K. and the Dominions and India.
Now, I gather that wouldn't create very much of a dispro-
portion as against the two, seven-fifty.
MR. WHITE: No.
MR. COX: Suppose you say that we agree with that one
hundred and eighty-five million increase; if you agree,
that would bring up the seven, nine-eighty with no other
cuts or changes, if you agree that any increases or ad-
justments to be made upward would be in the same proportion
for us and the British Empire.
MR. WHITE: She would be delighted; how are you going
to take care of the U.S.S.R. and China?
MR. ECCLES: That is why I wanted to include those
in a fixed amount and leave the rest to be settled.
MR. COLLADO: If you add that, that gives you a
certain amount of difficulty with your small Latin American
countries because that is where it is coming from.
MR. COX: I am assuming you have two sources; one
is a reduction in the U.S. and the British Commonwealth
countries, if they want to give on that, and the other is
your three hundred and fifty million you are going above
the eight billion, if necessary.
MR. ANGELL: If you give one hundred and seventy-five
to the British Empire, without increasing ours, thenyou
have the two pretty close together.
MR. ECCLES: Increase ours the same amount; then we
start from there, both conceding to meet the other's require-
ments.
Regraded Unclassified
253
- 30 -
MR. ACHESON: Can't you do all that in the sub-
committee? It seems to me you are not going to fool any-
body. They know that we are working on this list.
MR. WHITE: We have handled this for a year and a
half.
MR. ACHESON: I would put it out somewhere in the
neighborhood of seven billion eight-fifty. You have
worked on the formula. And be very sure that you have
gotten the Latin American countries right so the British
are not fighting for them. Then I think your subcommittee
could settle it.
MR. WHITE: It is easy enough to take care of the
Latin American countries by calling them all in separately
and saying that we will take care of them all.
MR. COLLADO: 1 think you will probably have to do
that, but that is only a small item.
MR. ACHESON: Get them right, so they are satisfied.
MR. WHITE: In fact, I think you can ao most of it
outside the meeting. I think there are two major deci-
sions, one of tactics, and the other is end result.
Now, if the Delegation feels that they are willing
to let the figures go up to, as I say; eight, three-
fifty or eight, four, so they can have another crack at
it after they see what it looks like, then I think that
we can try to work out the tactics, get to as close agreement
as you can with the British on the basis of the eight billion.
Go in with that, and then make our bilateral discussions
confidential discussions with the various Latin American
countries, telling them we will up it a little bit, or
something of that sort, and we will do the same thing
with China, and let Russia fight it out with us at the
meeting. I think the thing can be handled.
Make it as nearly right as you can in the first
place, but on an eight billion dollar limit, and also
use the technique that Marriner suggested, that if Britain
wants the colonies to get any more than what we have
suggested, let it come out of her total, or out of ours,
proportionately, so it won't affect the votes.
(The Secretary, Mr. Bernstein, and Mr. Durbrow re-
enter the conference)
Regraded Unclassified
254
- 31 -
H.M.JR: Let me report what happened downstairs.
These two gentlemen will assist me.
The Chairman of this Russian Delegation seems to be
very much disturbed, and he said in view of the conversa-
tion which you had this afternoon with them in regard to
the quotas, it doesn't agree with their previous under-
standing which they have here, and which they have with
Moscow. They said that in an earlier conversation you
left them under the impression - Professor Chechulin -
that they would have ten percent of the total amount,
amounting to eight hundred million, and that they could
add one third to that, or approximately a billion dollars.
If that is incorrect, they would immediately have to
communicate with Moscow, because that is the impression
that Moscow has, and you will bear me out--
MR. DURBROW: May I suggest, sir, the impression,
when the experts left here from Washington to 80 back
there, they knew about the eight hundred million dollars,
but Moscow said that they wanted to have the quota around
a billion dollars to bring it a little bit nearer the
British quota. My impression is the instructions he got
after discussions three months ago in Moscow - they wanted
a billion dollars.
H.M.JR: I gathered - and you can bear me out -
that they are not trading, that they are very much dis-
turbed.
MR. DURBROW: Yes, sir.
H.M.JR: They said Mr. White told them there was a
great hurry about this thing, and this would be taken up
tomorrow. They immediately wanted - I don't know -
leave to get something off to Russia. so they asked me -
they apologized for taking it up with me, but they felt,
in view of this misunderstanding, that they wanted to
take it up with me.
So I told them that I couldn't answer them at this
time because the American Delegation and the experts
were in session in this room - that we were discussing
all quotas. I said that I would report this to the
American Delegation and I would try to give them an answer
tomorrow, but I couldn't promise them an answer, but that
in case I couldn't get them an answer before I left, that
Mr. Vinson was the leader of this group and would be
Acting Chairman during my absence.
Regraded Unclassified
255
- 32 -
I didn't get the feeling that this was simply trading;
I felt that this was something that they really were
disturbed about. You were there--
MR. DURBROW: Very definitely, I did. He said
quite categorically, "Since this is a matter that is going
to be discussed tomorrow, if we are going to get a quota
of only eight hundred million dollars, I must send a
telegram right to Moscow to tell them about this."
There is one more thing, sir. He wants to know what
the attitude of the American Delegation will be in regard
to that particular request.
MR. WHITE: They asked to see me this afternoon,
urgently. They came down and raised this question of the
quota. I said that the Committee was going to take it
up tomorrow and they could discuss it there. I said that
our earlier discussions had been that we would support a
ten percent quota for them, and that is the position we
still would take as far as the technicians are concerned.
I said I hadn't cleared with the Delegation because
we didn't have a Delegation at the time we had our dis-
cussions with them. But I said that the technicians
would continue to support the position that we took, that
we would give them ten percent.
They said they didn't think that was enough, and I
said they were free to raise it at the Committee just the
same as anybody else did, and I said they didn't have to
decide at the Committee tomorrow, that they could merely
say they want to study it, and that we would like to show
them some of the tables that we were working on, not
with reference to their quota, but with reference to some
of the other quotas, so they would have a preview of it
just as the English did, and we could get some of their
reactions.
I said that since that may go into the Committee
tomorrow, I wondered whether I couldn't show them sometime
tomorrow morning, or tonight, after the Delegation had
acted. So they got the thing probably confused with re-
gard to this morning.
H.M.JR: That is not what Bernstein told me, either.
MR. WHITE: Bernstein wasn't there.
Regraded Unclassified
256
- 33 -
MR. BERNSTEIN: Mr. Secretary, they made the state-
ment that at one stage we told them the quota would be
ten percent of the aggregate; that would be eight hundred
million dollars. Apparently at another time they have
the feeling that they were told the quota would be increased
by one-third, and they assumed that increase of one-third
was based on the eight hundred million.
As I explained this evening, we nad intended that
one-third increase to be applied to what the data would
show. The data would not show an eight hundred million
dollar quota; that eight hundred million is after the
increase is made -- a six hundred million or six hundred
and thirty million quota increased by a third would bring
it to eight hundred million or a little above.
MR. WHITE: That figure of a third probably originated
from the fact that we said that in order to make the adjust-
ment which would bring it up to the ten percent which
they first requested, we were going to deduct ten percent
on the quota; that would leave about eight hundred million
dollars to be distributed. We said we thought about a
third of that added to their quota would bring it up.
We said we didn't know exactly, because we didn't nave
the exact figures.
H.M.JR: Harry, are you talking of the conferences at
Bretton Woods, Atlantic City, or Washington?
MR. WHITE: The conferences which took place in
Washington for a period of many days, discussing that
very point. They- communicated back, I suppose, because
they didn't give us any answer. What they must have done
was to add that third onto their eight hundred million
instead of deducting the ten percent previously.
H.M.JR: That is what they*did. I amquite sure from
the way they talked that they feel that Moscow thinks
that they are going to get eight hundred million plus
ten percent, and before they can go into any meeting, or
do anything more, if it is different they have to get new
instructions.
MR. DURBROW: May I add one thing? They give the
very definite impression that they want to have a quota
near the British, and the way they put it, it looked to
me as if it was a matter of prestige. I asked them the
specific question and didn't have a chance to tell the
Secretary - "You don't mean one similar to the United
States?"
Regraded Unclassified
257
- 34 -
"Oh, no. That is too high, but we do want to have
one near, but less, than the British one."
I got the impression that it was a matter of prestige.
MR. VINSON: Let me see if I understand the position
that you took in Washington. At that time their quota
figured out near six hundred million dollars?
MR. WHITE: Something like that.
MR. VINSON: And the third increase was a third of
the figure that you arrived at - around six hundred
million dollars - and this brought it up to eight hundred
million or ten percent of the total quotas.
MR. WHITE: No, the third referred to something else.
We took ten percent off all the quotas to get a kitty of
eight hundred million, it was eight billion. We took ten
percent of eight hundred million, which we said we could
apply to Russia and China to adjust the formula, because
we couldn't find quantitative measures which would rit
the Russian case.
We went into a great deal of discussion about that,
and there is no reason why there should have been any
doub't about that figure. Then we said in dividing this ten
percent, this eight hundred million, among the various
countries that we thought ought to have it, probably about
a third would go to Russia.
MR. ECCLES: A third added to that - what part of
the eight hundred million did the Russians have?
MR. WHITE: After the ten percent was deducted from
their quota, as well as the others, it was about five
hundred-odd.
MR. BERNSTEIN: Close to six hundred million, I think.
MR. WHITE: So that was around eight hundred - eight-
fifty million. We said that would bring them up to ten
percent of the quota. They then wanted ten percent of the
votes and we said it would be almost ten percent of the
votes - we said not quite, because many countries are
getting some shares - all countries get some shares to
begin with. We told them that meant their quota does not
quite measure their votes. We went into a good deal of
discussion on that.
Regraded Unclassified
258
- 35 -
They next raised the question at Atlantic City.
They wanted to see our minutes - not in Atlantic City -
before we went to Atlantic City - they wanted to see our
minutes. We gave them a copy of the minutes. Then at
Atlantic City they raised the question again. We re-
explained it. Then they came to me today, disturbed about
the same point, and I gave them the same explanation as
I have just indicated, that the thing had come up in
Committee and we would like to get their reaction to some
of the other figures before they went in, so that we could
have a sort of common front with England to support any
particular position.
Now, what must have happened was in their cable back
they used the figure of a third on top of the eight
hundred million.
H.M.JR: That is what they did.
Well, let me ask Dean Acheson a question. In view
of the world situation - I am just asking - why isn't
it a reasonable request of the Russians that they should
have about as much as the British, but a little bit less -
in view of their world position?
MR. ACHESON: That is a hard thing to answer. From
an economic point of view, I don't suppose it makes much
sense, because they don't need it; they are not going to
use it.
H.M.JR: But in the sense of a military power?
MR. ACHESON: I suppose from the point of view of
military power, they ought to have as much as we have.
They have developed more military power than we have. I
think we have been talking here about adding somewhere in
the neighborhood of a hundred million or a hundred and
fifty million to the Russian quota. Isn't that right?
That brings them to just about what they are talking about.
I think that the best thing to do with the Russians
is to tell them that you think there is a complete mis-
understanding about this, that we have been thinking of
eight hundred million, that this error has been made, and
in view of the misunderstanding, we are willing to go
along and increase it to nine hundred and we think that
solves the problem for them, and we hope they think SO.
What is the British quota?
Regraded Unclassified
259
- 36 -
MR. DURBROW: Twelve-fifty.
He talked about a billion dollars and then explained
it later, without using the figure, of being near but less
than the British quota.
I am sorry I don't know the details, but I presume
it is the voting power they are particularly interested
in.
MR. ACHESON: I wouldn't be particularly alarmed at
this effort on their part, would you?
MR. DURBROW: Not knowing very many of the details,
I wouldn't be, either.
H.M.JR: But you would feel, though, that they will
do nothing until they go back and cable?
MR. DURBROW: Very definitely, unless as soon as
possible we can give them some assurances that their quota
is going to be larger than eight hundred million dollars,
they have definitely to wire back to Moscow before they
can really take any part in the discussions, is my im-
pression.
H.M.JR: Well--
MR. VINSON: If you take that literally, I think
they could be assured that it would be more than eight
hundred million dollars.
H.M.JR: What I was going to say, if we could' arrive
at anything tonight - knowing the Russian habits - they
are just beginning to work now, at this hour - so if we
arrive at anything and tell it to them, we will save at
least twenty-four hours, if they get the message off
tonight.
MR. WHITE: Of course, we all recognize that we can't
make that decision. I assume the decision we make is
final, but--
H.M.JR: what they are asking for is an expression
of the view of the American Delegation. Isn't that
correct?
MR. DURBROW: Yes, sir.
MR. WHITE: That is quite different.
Regraded Unclassified
- 37 -
260
H.M.JR: Am I not right? They wanted to know what
the American Delegation thought.
MR. DURBROW: Yes, sir.
MR. BROWN: Is there any understanding with the United
Kingdom as to the relative size of the Russian and U.K.
quotas?
MR. WHITE: We told them about a ten percent commitment.
MR. BROWN: Suppose you raise that to thirteen. It
seems to me you have to watch your step with U.K.
MR. COLLADO: Hadn't we better get some of these
figures quite precise? We are talking in terms of eight
hundred as against eight billion, which would be exactly
ten percent. If youactually increase that by a third,
that would be thirteen and a third percent and would De
increasing it up to about ten seventy, which is pretty high.
You can't increase it to ten seventy without keeping the
others pretty low.
If you increased it here to nine or nine fifty, it
would be meeting them approximately half way, which might
be enough.
MR. WHITE: I don't see why we should increase them
a third just because they made a mistake in communication.
Is there any question in your mind, Morris, about the
possibility of their making an error of that kind?
MR. BERNSTEIN: No, sir. I think we will haul out
the minutes.
MR. LUXFORD: More than that, the mere fact that
they were talking about the ten percent quota, or ten
percent of the votes, spells out that their quota could
not only be between eight and nine.
MR. WHITE: I think if you are willing to go to nine-
fifty, there is no question that they will accept.
MR. COLLADO: I would think that nine or nine-fifty
would be adequate. The question is when you want to use it,
because that is upsetting your proportion.
MR. ANGELL: Would that be absolutely cleared with
the British?
Regraded Unclassified
261
- 38 -
MR. WHITE: I don't know. We would certainly want
to tell them. I don't know what their reaction would be,
but as I say, I don't know which would be decisive. I
suspect that our views on that matter would be decisive,
but I don't think we can proceed on that assumption to
begin with.
MR. ANGELL: Do you want to discuss it with the
British to begin with?
MR. WHITE: Yes, because you will have to get the
British support.
MR. ANGELL: Before you give it to the Russians?
MR. LUXFORD: There is one point there. Will the
British use it as bargaining - if we want to raise theirs,
they will want to raise some of the Dominions. Why
can't we support the Russians on this position? We
start, though, from the basis of eight. We give them
assurance we will support them for more, but that is all.
MR. VINSON: That is the question I would like to
ask. What was their precise statement in respect to
sending the wire?
As I understood it, you stated that unless they were
assured that the American Delegation would support a
larger figure they would send the wire. Is that correct?
MR. DURBROW: Yes, sir. In connection with that they
mentioned the figure of a billion dollars as the one that
they had had the impression would be more or less their
quota; then later on they brought in the British angle
by saying they wanted something near the British but less.
H.MJR: A little less.
MR. VINSON: But what was the condition upon which
they would not send the wire?
MR. BERNSTEIN: They asked the Secretary for his
opinion.
H.M.JR: As I got it, if we supported them in this
position, which is the impression in Moscow, it would not
be necessary to send the wire. If it is not a billion
dollars, but something else, then they would have to send
a wire for instructions. That is the impression I got.
Regraded Unclassified
262
- 39 -
MR. BERNSTEIN: Mr. Secretary, we have other ques-
tions with the Russians and if we start in by giving them
the whole of the request on quotas we will have given
away the best thing we have in talking to the Russians
while we still have untouched all of the other questions.
H.M.JR: Yes, but Mr. Bernstein, I started in 1933
at the President's request, when we first recognized the
Russians - I mean, I started the negotiations with them
when I. was in Farm Credit and I have dealt with them
ever since, and I feel I have had some experience and I
have always felt that they were sincere.
Now, these people come tonight and say it is the
opinion of Moscow through a remark that Mr. White made
to Professor Chechulin that they could expect eight
hundred million plus a third, and if that is not so they
will have to so inform Moscow.
I believe they are sincere. If we don't want to give
it to them we can say SO. They say, "Will the American
Delegation support that position, or will the American
Delegation not support that position?"
MR. VINSON: But, Mr. Secretary, if the minutes
show that their idea isn't supported as a fact, I just
wonder whether we should start giving tonight. I have
no doubt, if we were to say we will support nine hundred
million, that tomorrow they would still say a billion
or a billion, one, because that is a little less than
a billion, two.
H.M.JR: Well, Judge, I don't know where Mr. White
has kept the minutes; nobody knows but Mr. White.
MR. VINSON: He said he showed them to them in
Washington.
MR. WHITE: What do you mean, I am the only person
that knows?
H.M.JR: I don't understand your answer to me.
MR. WHITE: You said I am the only one that knows.
H.M.JR: Here, of us, have you minutes?
MR. WHITE: We have minutes of every meeting.
Regraded Unclassified
263
- 40 -
MR. VINSON: I understood him to say he hauled
the minutes out and showed him the minutes.
MR. WHITE: They asked for the minutes and we
gave them to them.
MR. BERNSTEIN: They asked for them before they
left for Atlantic City. We gave them one of the
sets of minutes in Washington, and they asked us
then for two other sets of minutes and we gave them
those the day we arrived in Atlantic City.
MR. WHITE: The minutes of all the conferences
were taken, not stenotype minutes - they were just
minutes writen up of the significant decisions
which were made.
H.M.JR: Let's stop arguing. Are there minutes
on this particular question, or are there not minutes
on this particular question?
MR. WHITE: There are minutes.
H.M.JR: Have you showed them these?
MR. WHITE: We gave them a copy of these particular
minutes.
H.M.JR: What did they show?
MR. WHITE: The minutes showed that we had agreed to
give them about ten percent of the quota and the disput-
able point at the time, which they were raising, was they
claimed they were going to get ten percent of the votes.
I said that we referred to ten percent of the quota - that
it was ten percent of the quota, not of the votes.
1 said that we had explained they would get ten per-
cent of the quota and that would be approximately ten
percent of the votes, but it would be something less.
Now, the specific words of the minutes, I don't re-
member. We can get the minutes.
H.M.JR: But that doesn't answer it. Are there
minutes of the conversation which they said took place
between you and Professor Chechulin in which they say that
you said ten percent or eight hundred million dollars,
plus one-third?
Regraded Unclassified
264
- 41 -
MR. WHITE: Which took place with him alone?
H.M.JR: I don't know. He said between you and
Professor Chechulin.
MR. BERNSTEIN: Mr. Secretary, 1 have examined
those minutes recently in giving them to the Russians.
On different occasions there are different statements
covering this point. One covers ten percent of the
quota, eight hundred million dollars; on another occa-
sion of what the data would show of the Russian quota.
At that stage there is a statement that obviously an
adjustment will be needed, and the figure one-third
comes in then. They didn't take place the same day
at all. Those are on different occasions and both or the
facts are mentioned in the minutes.
H.M.JR: That isn't very helpful.
MR. COX: Mr. Secretary, don't you have this point
in dealing with the Russians? Assuming either they under-
stood it correctly, or it was a misunderstanding, they
deal generally on instructions from Moscow on this issue,
0
and I would accept the statement that if ne was wrong, and
the thing is eight hundred million, he has to cable back
to Moscow to either get power to recede r to hold out for
the billion, or slightly less than the British.
So it seems to me the issue is what you want to indi-
cate to the Russians - what the view of the Russian Dele-
gation was as to whether there was r was not a misunder-
standing--
H.M.JR: If I may go on - I feel, either there was or
wasn't a misunderstanding, and to tell them we will offer
them nine hundred million dollars, I think that is a
mistake. I think we should either say that Mr. White in
nis dealings meant the gross figure of eight hundred
million, and that is what he nad in his mind - and I said
only Mr. White, and I mean he and his Department, would
know - or we meant the other.
Now, if Mr. White knows what he meant - and his asso-
ciates - if they will tell us, then it is up to us to
support him and tell that to the Russians and ask them to
get new instructions; or say, "You are right, and we, as
American Delegates" - but I don't think we should bargain
and then split it and say it is nine hundred million.
I would like Oscar Cox's advice on that.
Regraded Unclassified
265
- 42 -
MR. COX: I think you are right with this one excep-
tion, and that is that they ought to ask for new instruc-
tions, and because of the misunderstanding, as Bernstein
says, there would obviously have to be some adjustment
for unusual circumstances; then you say that we under-
stood it was eight hundred million, but we will support
some reasonable adjustment that probably wouldn't be up
to a billion, or above a billion.
H.M.JR: Now, can I ask Mr. White if he or his asso-
ciates would state for us what his impression is - what
he meant to get to the Russians during his discussions
in Washington with Professor Chechulin? What did you
try to imply to them?
MR. WHITE: One reason for the possibility of a
misunderstanding is that we never were very clear - never
very specific - purposely so, with what the quotas were.
That was not a point of careful discussion with any of the
countries. We always took the position that the formula
was not agreed upon, that it was a rough formula. We
said we didn't know what the Russian data was; they didn't
give us any data. We were guessing at what their national
income was; we were guessing at their gola holdings. We
said, "We don't know your figures, but as we figured it roughly
the formula would give you a figure that is smaller than what
would be appropriate for you." And at that time we had
talked with them after the Chinese.
The Chinese had made a very strong plea for a larger
amount on the basis which was very reasonable to us, that
their trade data that we used during the periods of '33,
'34, and '35, and '36, was very unfair to them, and the
national income figures nobody knew, and we were trying
to find some formula which would give China and Russia a
higher rate. - this was before Russia came - without giving
India a high rate and some other countries a very small
rate. We tried many formulas and many provisions. We
weren't very successful
Then the idea came to us, I don't remember whether
it was suggested to us or came to us - there was so much
discussion on it - that what we had to do was to apply
the formula that we had worked out on the basis of whatever
data we ourselves utilized; we would get a certain result,
then we would take ten percent off everybody's quota.
That would give us, roughly, eight hundred million dollars.
Then we would divide that eight hundred million dollars
in ways that would represent, in our judgment, forces and
influences and factors which could not be susceptible of
measurement.
Regraded
Unclassified
266
- 43 -
That would enable us to give China as much as we
could bargain with - as much as she felt she could have.
It would enable us to apply more to Russia. China was
glad of that. She said, "That is fine." That would
give them, we thought, twenty-five and six hundred mil-
lion, but we didn't know, because we didn't have their
figures.
H.M.JR: You are talking China, now?
MR. WHITE: China was pleased with that. We left it
vague. They were satisfied. Their insistence was the
fourth place. We said the American technicians would
back China for fourth place.
Then Russia came on the scene last. The question
arose as to what their quota was. We said, "We don't
have the figures to apply to theformula. You are not
telling us how much gold you have got and we don't know
what your national income is now. There is some question
of the exchange rate."
We said, "We don't know your figures, but we have
this eight hundred million dollars which we have lopped
off the total, and part of that will be applied to your
formula to bring you up to about ten percent."
How the figure of ten percent came - I think it was
their suggestion, I don't remember.
MR. BERNSTEIN: It was their suggestion.
MR. LUXFORD: And they wanted ten percent of the
quota; that was what they were asking for. Later they
got to fussing around on whether it was votes or quotas,
but it was still a range of eight to nine hundred million.
MR. WHITE: May I pursue this point?
Then I said, "Now, in order to bring it up to ten
percent we use some data which gives us around six hun-
dred million," in which we were guessing at their gold
holdings. We said, "We don't know, but we will probably
be able to give you a third of the kitty." We may not
have used the word kitty, but a third of the eight hun-
drea million to apply on their quota as reflected in the
formula, less ten percent. Then that apparently satisfied.
Regraded Unclassified
267
- 44 -
H.M.JR: Repeat that. That is getting down - be-
cause this is the guts of the thing.
MR. WHITE: This was said over several meetings.
We worked out a formula and we applied the formula to the
data which we thought was Russia's - which were only
guesses on our part - and we told them so - we said,
"You can apply the formula to your own figures or give
us the figures and we will apply it," and we gave them
the formula. We made some guesses and we told them it
was just a guess, and it wasn't accurate, and we said
that even the formula wasn't acceptable all around.
But we said that the formula gives - I have forgotten
now - somewhere around six hundred million dollars, accord-
ing to the figures we had. We said, "We will bring your
quota up to ten percent by dipping into this kitty of
eight hundred million," and that eight hundred million,
you remember, was obtained by cutting everybody's quota
ten percent. We said we would dip into that kitty and
probably about a third of it would be applied to Russia,
and we said about a third would be applied to China, or
something like that, and that would bring it up, we said,
approximately to ten percent. We may have said - whether
that will be around eight hundred or seven-fifty, I don't
know - we weren't that exact.
The quotas were not a basis for discussion as to
exactness. There were a number of other discussions
which took place on other matters in which there was
greater exactness. And I thought, on the whole, that
they were satisfied with that quota.
Wasn't that your impression?
MR. BERNSTEIN: That was mine, too.
MR. LUXFORD: No question about it, Mr. Secretary,
that that was the range we were talking about.
MR. WHITE: They may have gotten the idea, because
of the language difficulties, that we said we would
take a third of their quota and add it. Thatis apparently
what they are talking about.
H.M.JR: Are you through, Luxford?
MR. LUXFORD: Yes.
Regraded Unclassified
268
- 45 -
MR. COLLADO: Mr. Secretary, I didn't attend all
the meetings with the Russians, but I attended a great
many of them, and I must say that I never had any reason
to believe that they could ask for anything more than,
conceivably, ten percent of the votes. There was some
little argument of votes versus quota, but I have never
heard anything else argued before.
Now, I remember very well at a meeting, a particu-
larly grim meeting there sometime in the beginning of
April, they came in and presented us with ten or twelve
written points, and we went right through them all.
One of them was that there should be - the four major
countries should have places on the Executive Committee
and they proposed that the four major countries should
have ten percent of the votes as a minimum each, and that
the Executive Committee should state that countries with
ten percent of the votes should automatically be on the
Committee, and then at the same meeting they talked about
having ten percent of the quota.
I remember we had quite a lengthy discussion at that
meeting. It was pointed out that perhaps they should
change the ten to nine percent of the votes to be on the
Executive Committee, because the ten percent of the
quota might he only nine percent of the votes. They had
a very lengthy discussion of that. And I must say that
there was nothing in any of those discussions that I
attended that could possibly have given rise to eight
hundred plus a third.
DR. GOLDENWEISER: I will support that, too, from
my memory, Mr. Secretary.
MR. VINSON: If the data that the boys assembled
figured out a quota of six hundred million dollars, and
that quota were reduced ten percent, you would have a
figure of five hundred and forty million. Then if you
take one-third of eight hundred million dollars, which
represents ten percent of the entire quota, you would
have eight hundred and six and two-thirds million dollars.
MR. WHITE: It was something around that. We didn't
deal with exact figures quite that way.
MR. VINSON: I say, though, that the figures come
out to your eight hundred million dollars.
Regraded Unclassified
269
- 46 -
MR. WHITE: There is something else, now that I
think of it. They asked us before the Atlantic City
Conference for a written memorandum, and they wanted a
written note and they wanted me to sign it. Did it
include the quota, Morris - I have forgotten? I didn't
want to sign any notes because I said this was not an
agreement between governments. I said, "This is an
understanding among technicians. So far as I know,
the Secretary of the Treasury, or the Delegates, might
kick the whole thing out the window" - that this was an
acquiescense among technicians, but we said we would
give them a memorandum, and we did give them a memorandum.
Was the question of quotas on that?
MR. BERNSTEIN: I think they wanted to know whether
it would be ten percent - the quotas - something overing
recommendations, and I am not sure whether the thiru one
was exchange rates or votes.
H.M.JR: You didn't answer White. He asked you a
question. Did you give them a memorandum before they
went to Atlantic City?
MR. BERNSTEIN: No, we didn't give them a memorandum.
MR. WHITE: Didn't we?
MR. BERNSTEIN: We gave them copies of the meetings,
not a memorandum.
MR. COX: Harry, is it possible--
MR. WHITE: They may have thought that ten percent
of the quota was ten percent of the ten billion.
MR. COX: Let me raise this question. Is it possible
that ten percent of what you are discussing - if generally
the Fund was discussed as eight billion--
MR. ACHESON: My suggestion would be to say to the
Russians that they have a misconception of the discussions
and tell them what the discussions were in our impression
of them. Say that we think it is desirable for them to
report this to Moscow so that Moscow can be clear in its
mind as to what went on; that if they want to raise this
question again, we will give their position the most
sympathetic consideration, and we will do what we can to
help them out; that in all frankness we ought to say to
Regraded Unclassified
270
- 47 -
them we do not believe it is possible to satisfy the
aspiration we have just told them about, because in view
of the commitments to other countries it would take us above
any limit which the Congress would approve.
MR. WHITE: I also remember earlier, there are some
possible grounds for their confusion, because I remember
earlier when we didn't speak of any exact figures and were
talking in very rough figures, we said maybe the formula
will work out and they might get even something almost
up to a billion, maybe nine hundred million. We were
just jockeying figures around because we said we didn't
have any data, and the quotas we were not discussing.
We were not discussing specific amounts, but the formula.
So they might have misunderstood.
MR. LUXFORD: I think we ought to emphasize that
when you are dealing with the Russians it is not like a
conference here; you operate through a translator, and
there is a very, very difficult language problem and
you have got to translate through a translator, every
statement. It is a highly technical discussion and I,
for one, would say it would be altogether possible -
going through those translations is very laborious -
that very likely they could have misunderstood, although
there is not a question on the part of any American that
attended those discussions as to what the quotas were
that we were talking about, yet going through that
language difficulty, I can understand their misunderstand-
ing.
H.M.JR: Well, Mr. Acheson made a suggestion here,
and that was that we say to the Russians that if they
are under the impression that it was to have been eight
hundred million plus ten percent, that they must have
misunderstood and that we, as American Delegates, naturally
can't support that position, because it is due to a mis-
understanding, and therefore they will have to ask for
new instructions, or something like that.
MR. ACHESON: Yes, that we will consider it sympa-
thetically, but we want to say in frankness that we don't
believe we can satisfy the full amount.
H.M.JR: Don't you think we had better write out
what we are going to say, so there won't be any mis-
understanding?
MR. WHITE: There is some difficulty you want to
consider in doing that. If you are going to put them
Regraded Unclassified
271
- 48 -
down for eight nundred million, and then you end up
with nine hundred million or a billion, don't you think
it would create some difficulties? If you think you
are going to do that, you nad better start with a higher
figure. I was thinking of other countries, and of the
United States and the American people.
MR. ANGELL: Mr. Secretary, do you think it would be
worthwhile in anything sent to them to make quite clear
the issue of fact involved about this third? Mr. White
pointed out, the figures arrived at were arrived at in
three stages; original formula figure, about six hundred
minus ten percent, and then plus a third of the kitty.
It is that third that has made all the difficulty, and
that might he restated, too.
H.M.JR: Well, I would like to say this: I can
see from the way Mr. White reports it that over a series
of meetings it could be misunderstood, but I think, so
there will be no further misunderstanding, we ought to
write out what we are going to say to them and give
them a sort of memorandum.
MR. DURBROW: Having spent some time there, I know
the difficulty that we will have for a long time in
getting any precise data to apply any formula to, and
if you are going to put it down in writing, I should
think you should have some definite understanding that
this is based on guess-work data, because they are
liable to hold you to that figure if you put it down
that we don't know what their gold production is, or
national income, and so forth--
MR. WHITE: They have a memorandum which explains
all that.
H.M.JR: Might I suggest this? I don't know how
tired all of you are, but I think this Committee, Judge
Vinson and Miss Newcomer - I think that they, with Mr.
white and whoever else he wants, certainly somebody from
the State Department, should meet, if they could - the
sooner the better - and draw up a memorandum which could
be referred back to this group, the first thing tomorrow.
morning. I think this time we better give them some-
thing in writing.
I wouldn't want to trust myself to present it to
them verbally.
Regraded Unclassified
272
- 49 -
MR. LUXFORD: Could I ask one question, Mr. Secretary?
Should we canvass? I have a hunch that you don't have
much in the way of bargaining with the Russians, and if
you were to tell them now, not a figure, but notwith-
standing this was our position all along, and this was
our understanding, nevertheless, we are prepared to talk
in terms of another hundred million; that is, we were
thinking about that, notwithstanding this, that it would
be reassuring to them, and it is not a problem, I believe,
of bargaining with the Russians.
H.M.JR: Luxford, I agree with you entirely. In
the first place, I think we ought to tell them there has
been an honest misunderstanding, and you can certainly
go into explanation of the series - and Professor
Chechulin should be there.
Then, if it were left to me, I would tell them the
figure.
MR. LUXFORD: You don't bargain with them.
H.M.JR: Because they can't bargain; they don't get
that leeway. They are going to get another instruction
of so much, and after all, we have to remember that this
is, as far as I know, the first meeting of its kind
where they have ever dealt in external problems. The
Russians have never taken part in commercial proceedings
or agreements among other nations. Do you know of any
other? Isn't this about the first one?
MR. ACHESON: Idon't know, Mr. Secretary.
H.M.JR: I don't know of any other.
MR. BROWN: They have two other demands.
H.M.JR: This is something quite new for them. I
don't know of any other similar international conference
that they have taken part in since they have been under
this form of government.
MR. DURBROW: On a multilateral basis. or course,
they have many unilateral monetary and economic discus-
sions with countries.
H.M.JR: But not multilateral.
MR. DURBROW: That is right, sir.
Regraded Unclassified
273
- 50 -
H.M.JR: I would like to suggest - I don't know
how much staying-power you people have got, but if Judge
Vinson and Miss Newcomer and Mr. White, and whoever he
wants to associate with him, could draw up a sort of
memorandum of what we could tell them the first thing
tomorrow morning and then possibly refer it back to this
group for its approval--
MR. WHITE: I think along the lines you and Mr.
Luxford think, that you may obviate all that if you
are willing to indicate to them that you are willing to
fight for nine hundred and rifty million dollars for them,
that you will forget all the others; and you don't have
to rehash, and at the same time we will explain in con-
siderable detail what we said so that they will under-
stand it, and make that very clear to them to show them
we are not reneging on our word, but that we, in the
light of the general situation, and so forth and so on,
are willing to up them.
Then they will feel, not that they have got us in a
corner, but rather that they nave made a mistake and we
are being very nice about it in the light of other cir-
cumstances, and I think you will get their good will.
If you begin giving them memoranda which they cable
back home - and back home. apparently, if they are
sincere, has that understanding - they will think there
is something funny either with the fellows who are
communicating with them here, that they did a bad job,
which they certainly wouldn't like to admit to the folks
back home - or the fellows back home aren't sincere.
and of the two, it seems likely that they have misled
the people back home quite probably unintentionally.
H.M.JR: I am not going to say that.
MR. WHITE: It seems to me it is better to explain
to them what the misunderstanding was, and add, nowever,
in view of the circumstances, and so forth--
MR. LUXFORD: You lay down one figure; I wouldn't
bargain. That is where your rule is very good. Lay
down one figure and you are ready to go.
H.M.JR: I don't.
Regraded Unclassified
274
- 51 -
MR. WHITE: You agree to nine hundred and fifty
million and that is going to be made up by our increasing
the amount, and I think that might well satisfy them -
whatever they cable home, this will satisfy them. To
be sure, that will still leave their other claims, but
we can be adamant on their other claims.
H.M.JR: What do you think?
MR. ACHESON: You might tell them that, at the
same time.
MR. WHITE: We have already told them.
MR. VINSON: what do you think about that?
MR. ACHESON: I think if you are prepared to ao it,
irrespective of these other demands, I think that is
all right. If you are not--
MR. WHITE: Well, you still have something for the
demands. That is one hundred and fifty million.
MR. COLLADO: Before this came up we would say
that.
MR. LUXFORD: We had already decided.
MR. WHITE: But we thought we would get something
for it.
H.M.JR: May I say something, please? This is as
good an illustration as we will have. We have appointed
certain leaders for these different groups. I am going
to ask these leaders, not only among ourselves, but
opposite the others, to assume the responsibility and to
see these--
MR. VINSON: Mr. Secretary, I am willing to assume
any responsibility that the Delegation places upon me,
but it seems to me that we are here for the purpose of
having the voice of the Delegation as to what we, the
Delegates who are on this Committee, shall do.
H.M.JR: I made a suggestion and I would like to
know whether you think we will have it or not, and that
is, I made the suggestion that you and Miss Newcomer
and Mr. White and those associated with him, meet to-
gether and try to draw up something, and that you report
back the first thing tomorrow morning.
suggestion made subsequent to the time you made your
MR. VINSON: But I thought that there was a sort of
Regraded Unclassified
275
- 52 -
suggestion that it might be better to 60 to the figure,
nine hundred and fifty million, notify them that we
were going to stand on it, period.
MR. LUXFORD: Oh, the memorandum plus the advice
on what we are willing to GO.
MR. VINSON: I think the memorandum should bepre-
pared in order to show our good raith. I think that
suggestion should be carried out.
H.M.JR: Because it looks to me - I mean, the way
you first stated it, that we say, "Well, this is kind
of a misunderstanding, but we will split the difference
with you.' I would hate to be put in that position.
I think we have got to back up the work that
Mr. White did in his preliminary meetings and say we
are very sorry they misunderstood Mr. White, and notwith-
standing that, and so forth and so on - out we have to
hold up nis hand.
MR. BROWN: Well, you have some other agreement with
them about seventy-five percent on what they had other-
wise contributed on gold, on account of their devastated--
MR. WHITE: We have, I think, four items of agree-
ment among the technicians which doesn't bind our Govern-
ment, with which our technicians do not bind this Delega-
tion, but these are the four items of agreement: One,
that they would be the third largest holders - there will
be U.S., U.K., and Russia - that was clear; two, that
they would be members of the Executive Committee; three,
that we would concede the twenty-five percent reduction
in gold because of the devastation; and four, that
they would get ten percent of the quotas.
There was a difference, which is of a different
character, that we would have some phraseology in one
of the provisions which would permit them to make any
change in their internal - what they call their internal
value of the ruble - provided it doesn't affect inter-
national transactions. I think we got some language
which they seemed to agree to.
Now, that is what we said we would concede. On
their part, they said they wanted fifty percent reduction
in the gold content, not twenty-five, and they don't
want to put any newly mined gold in.
Regraded Unclassified
- 53 -
276
We said both those things were unacceptable to us,
that we would give them twenty-five percent reduction,
and we wanted newly mined gold. Those two last problems
were never settled, and you remember the last cable -
there were some unsettled points.
NOW, have I missed anything, Luxford?
MR. LUXFORD:Not at all.
H.M.JR: Morris?
MR. BERNSTEIN: No, sir.
MR. COLLADO: That is right.
MR. BROWN: The only question I have is, if you
give them one hundred and fifty, can you get them to
stick to the newly mined gold?
MR. WHITE: They have never agreed to that and we
never have. There was one further concession which we
suggested, but we never came out with. we said we
couldn't go anything with them on the newly mined gold,
but they had a pretty fair case and we said what we
might do is allow for the transition period of a few
years in which the newly mined gold might not be used.
We said one or two years. They have taken that scheme
and made it five years. And they have compromised on
the fifty percent reduction by saying make it from
twenty-five to fifty for each country according to the
extent of devastation. That is the nub of the major
differences between us. So they are not committed to
accept the seventy-five and we are not committed to
have offered them that.
ME. ECCLES: Harry, this situation is an entirely
different one from any other. It nas to be dealt with
separately. Why wouldn't it, in the light of that, be
the realistic thing to do, to explain to them this mis-
understanding, and to tell them that the American Dele-
gation is sympathetic in considering an increase in the
quota, that we are not prepared today to say just what
that would be, that we would like to consider that in
connection with this question of whether or not they
put the newly mined gold in, and also with reference to
the question of whether or not they put in the same
proportion of gold that other nations are required to
put in. They are very closely related.
Regraded Unclassified
277
- 54 -
Now, the U.K. is a very important partner in this
whole situation. We then could 60 to the U.K. and say,
"This is the Russian situation," instead of proposing -
suggesting at this time - nine hundred and fifty million -
I wouldn't do that. I would leave that out, and consider
it altogether after you have discussed the thing with the
U.K.
Now, I say nine hundred and fifty million. There
is very little difference between nine hundred and fifty
and a billion. It may well be that it would be desirable
and advisable under all the circumstances to give them a
billion dollars - to give them no concession whatever
in the question or newly mined gold, and treat them
like everyone else with reference to the twenty-five
percent reduction.
MR. WHITE: We would like that because we would be
ahead of the game. When we give them a concession on
the gold, we have to give it to france, China, and a
lot of others.
MR. ECCLES: That is right. You can't settle this
Russian problem tonight or tomorrow. Explain this,
and let them know that the door is open, that we are
sympathetic in consideration of an increase in the quota
in connection with these other factors. Then settle
them altogether after you discuss the thing with the
U.K.
You may say that the billion dollars, the ten per-
cent vote, and eliminate theother factors would be the
simple way to do it. That is what I would do.
MR. LUXFORD: If you would take just one item out
of that, Mr. Eccles - I doubt whether you are going to
get a settlement with the U.K. - I think the U.S. can
say we will support Russia on this proposition, but I
don't think there will be any particular disposition
on the part of U.K. to join us in supporting Russia.
We will have to be the ones to support Russia on this
issue.
MR. ECCLES: I wouldn't tell Russia that it is a
question of U.K. at all.
MR. LUXFORD: I don't mean even telling U.K. I
don't know whether you are going to get any support
from them.
278
- 55 -
MR. ECCLES: After all, if this Conference is going
to work out, basically, you have to work it out with
the U.K.
MR. WHITE: We have informed them of what the
Russians asked, and what we have agreed to, and the
British put one condition. They said, "If you give this
twenty-five percent concession to Russia, you will have
to extend it to England, and that is the only condition
under which we will accept it."
MR. ECCLES: Give no concession on the twenty-five -
on the question of newly mined gold - and it is a ques-
tion of quota. Now, if Russia says, "We want ten percent
of the votes, and we want a billion dollars, or we don't
go," it would seem to me that we would do much better
to give them the billion dollars, give them the ten
percent quota, and eliminate the other factors in the
picture.
If you are going to raise it - we are interested
in the U.K., in keeping our position of relationship.
So far as the public sentiment is concerned, you will
get public support for the participation of Russia in
this picture much quicker than you will in that of any
other country, and I think that is the politics, it
seems to me, of the situation.
I am like the Secretary, it is hard for me to see -
well, why not a billion dollars here? And why quibble
between nine hundred and fifty million and a billion?
I wouldn't make the issue over fifty million, I would
give them the billion.
MR. WHITE: IT we could get the other.
MR. ECCLES: I would say we have gone the limit
on this quota of a billion dollars.
MR. WHITE: I think that would be a good bargain.
MR. ECCLES: I wouldn't make a commitment at all,
tonight.
MR. GOLDENWEISER: Did you mean, Mr. Eccles, that
you would eliminate the twenty-five percent reduction al-
together?
MR. ECCLES: Yes, by going to the billion dollars
279
- 56 -
and the ten percent, so that you don't open it up with
all of the other delegates. Let them know that is
what it does, and it complicates the whole issue terribly.
H.M.JR: Go ahead.
MR. DURBROW: I have a thought on the idea of using
this increase up to nine hundred and fifty to a billion
dollars as a bargaining point to get something from the
Russians. I don't know how it has been before on these
monetary matters, but that is not usually a good way
to go at the Russians. The best way, 1 should say, is
to explain very carefully the misunderstanding and then
say that we are prepared - because apparently you are
prepared to 80 to nine hundred and fifty - to support
them in increasing this amount, and that the formula is
not worked out completely, perhaps. "We naturally have
to talk tothe other delegates, but the American Delega-
tion is prepared to support you to get a higher quota."
But if you start in saying, "If you get this, you
will not get that," they will get very suspicious.
H.M.JR: Might I just say this, along the line
Mr. Durbrow is talking. I think that we can say to them
that the understanding which Moscow has, we think, is
incorrect and we are very sorry. And go over the various
talks we have had and simply say we are very sorry,
that naturally we will approach this in a sympathetic
manner, and not use any figure, but simply let them
get that cable off and go no further than that.
That gives us time to talk with the British, and
so forth and so on; but I am very reluctant to say,
"Gentlemen, we are sorry we misunderstood it, out we
will give you nine hundred and fifty; you asked for a
billion."
MR. DURBROW: I agree very much on that.
H.M.JR: I would be very reluctant to do that.
Say that we are sorry - "It has been an honest difference
of opinion, with the language difficulty," and so forth,
"and would you please inform Moscow of that fact. But
we will approach this matter with a sympathetic attitude."
MR. DURBROW: Yes, sir, and that is what they
really did ask for except they did give a figure them-
selves. They said, "We want to know what the attitude
is of the American Delegation." And if we can give
Regraded Unclassified
280
- 57 -
then an indication that we will do what we can, but
that we are not the only people in this "onetary Con-
ference, and they can wire that to Moscow - explain the
misunderstanding and say they have the sympathy or the
American Delegation - but I really mean it very much -
I don't think it is a very good idea to bring in this
bargaining. Perhaps later on, sometime--
H.M.JR: Yes.
MR. WHITE: I don't think that Mr. Eccles neces-
sarily meant you should do that at the beginning.
MR. ECCLES: I would just wire an explanation of
the misunderstanding, and then discuss the thing with
U.K. with the idea of going to the billion dollars and
the ten percent, assuring them of those two things, but
leaving out the complications because it complicates the
whole issue.
MR. WHITE: That is exactly what we had in mind
prior to the whole discussion that the Russians initiated
by speaking to the Secretary. We said downstairs we
would go up to nine hundred and fifty provided they
would go to the twenty-five percent. We would have gone
to a billion, but we said provided the twenty-five per-
cent, which is giving us a lot of trouble.
We didn't realize at this time that they felt they
were entitled to any more than eight hundred million;
therefore, what we thought we were doing was answering
parts of their desire for something, but giving them
something in return. The only way that situation is
changed, 'there has apparently been a misunderstanding
which should be cleared up to begin with. Then the rest
should proceed.
MR. VINSON: I would like to inquire as to the
mechanics of the committee meeting in the morning. This
is the first meeting of committee, and I have views in
regard to how it should proceed, but it may very well
be that Harry has a formula that he wants to follow.
H.M.JR: What are your views?
MR. VINSON: Well, just offhand, my thought was
that we would take up the draft of the statement of
principles of April 21st this year, and there would be
submitted amendments or alternatives, that we would con-
sider the draft by sections, and when the amendments
Regraded Unclassified
281
- 58 -
are discussed, if agreement is reached, all right; if
agreement is not reached, all right.
Then, of course, the Committee would report to the
Commission the matters that were not in agreement.
MR. WAGNER: All matters?
MR. VINSON: Well, the portion of the section to
which no amendments or alternatives were proposed, of
course, would be in the identical language of the
section or the portion of the section in the statement
of principles.
H.M.JR: Does anybody want to make any comment?
MR. WHITE: No, that is perfect; that is the way
we prepared the document. We had the document here pre-
pared just that way, in which there is the statement of
the joint principles, and then there is beneath that
the various alternate amendments and proposals which
have been submitted on each provision by the various
delegations, and one of the things we had hoped to do
here tonight, if we hadn't been stymied by that Russian
matter, was to go over them in sequence now 80 as to let
the Delegation agree on the position it was going to
take on these various points. I had hoped we would be
able to do some of that tonight.
MR. VINSON: We just must know about that before
those amendments or alternatives are taken up in com-
mittee, else we do not know the position of the Delega-
tion.
MR. WHITE: Exactly. That is why we said we would
meet tonight and take it as far as we could go, but we
didn't anticipate this couple of hours' delay, and I
still think that at least those who are in Committees One
and Three, which meet early - you see, Committees Two
and Four meet later and we can take care of them in
the morning, but One and Three meet early - we are to
meet at ten o'clock--
MR. WAGNER: What is Three, harry?
MR. WHITE: Three is Management.
MR. WAGNER: That is what I am on.
Regraded Unclassified
- 59 -
282
MR. WHITE: Now, what I was going to say is, if
we can take Committee One tonight and take Committee
Three from nine to ten tomorrow morning, we will get
far enough along so that you can carry through the first
meeting. Where we are in difficulties, you can stall.
MR. VINSON: Well, I take it, in order to move - take,
for instance, the question of quotas if we should happen
to get the quotas, why we would have to request that
consideration of that section be passed.
MR. WHITE: Right.
MR. WOLCOTT: Wouldn't it be suggested that the
burden would be upon those who are offering the alterna-
tives to explain their positions first and that will give
us an opportunity--
MR. WHITE: Quite, but unfortunately, many of them
are ours, but that is the way it would be approached.
The alternative would be presented by the country who
explains why they want that alternative.
MR. VINSON: Getting down to brass tacks--
MR. WHITE: Page One in your draft.
MR. VINSON: On Section One, 1-A is Alternative A,
which is the substitute for Section One.
MR. WHITE: Alternative A is always the American
proposal, and usually you will find that they are not
changing in substance but are better clarity in language
which we nave agreed on with the British, and so forth.
They are marked with asterisks, and there is only one
item which is a change in substance here, which is the
last one.
MR. VINSON: Number Six.
MR. BERNSTEIN: That is the extra paragraph after
that which is a shift in position.
MR. VINSON: That is a shift of position from the
original one, from the top of the section to the bottom
of the section.
MR. WHITE: Yes, that is right.
Regraded Unclassified
283
- 60 -
MR. BERNSTEIN: You drop the word "Policies" be-
cause United Kingdom people have said that that word
"Policies" is a meaningless thing when added to the word
"Purposes," and it only adds confusion in terms of what
you are after. That has been done now, throughout the
draft, and the "Purposes" remains.
MR. VINSON: Do I understand that U.K. agrees to
the last sentence in Alternative A?
MR. BERNSTEIN: Yes, sir.
MR. WHITE: But no other country may. We have only
cleared with U.K.
MR. BERNSTEIN: In fact, we know some other countries--
MR. COLLADO: What did you say, Harry - that it
was a safe assumption that in Committee One they would
never get beyond Purposes tomorrow morning? You have
got all these miscellaneous alternatives.
MR. WHITE: No, I think they would get beyond Pur-
poses, Pete. I think they wouldn't get beyond - my
judgment would be - they only have an hour--
MR. VINSON: You have six alternatives.
MR. WHITE: Yes. You might not get beyond there,
but I think you would get beyond the next point, too.
MR. COLLADO: That Brazilian might make a speech
which would take twenty minutes.
MR. WHITE: Tomorrow is the short meeting. Instead
of the nine to eleven o'clock meeting, they are going
to be from ten to eleven-thirty.
MR. BERNSTEIN: I think it will take you at least
three meetings to get through Purposes. The Australians
will make a speech and the Indians will make a speech.
May I make an inquiry, Mr. White? I wonder whether
it wouldn't be wise under any circumstances to hold
off setting up a table of quotas and throwing it into
the Committee for three or four days while the Operations
Committee stews a little.
MR. WHITE: There is no disagreement, I take it,
that when it comes to quotas we should pass, anyhow.
Regraded Unclassified
284
- 61 -
MR. COLLADO: It also says that Schedule A is to be
added later.
MR. WHITE: I tolá the press we probably would have
schedules tomorrow. I can merely say that the Committee
hasn't decided to pass that.
MR. COLLADO: Couldn't you almost agree with the
Chairman of the Committee that at the first meeting they
should concentrate on Article One?
MR. WHITE: Unfortunately we haven't got many
meetings. You have to push the thing as fast as you can.
We are in a position to postpone certain things if you
take other things.
MR. VINSON: Article One, you say?
MR. COLLADO: Article One is Section One. It is
the same thing - Purposes. That runs through these
first several pages.
MR. VINSON: If we want to do it, if we get through
that tomorrow, why it is always in order to move to
adjourn.
DR. GOLDENWEISER: I think, Judge Vinson, that it
is hopeless to think that we can do more than that in
an hour.
MR. VINSON: I have no idea that we will get through
this Section One tomorrow.
DR. GOLDENWEISER: Because that is one of those
sections that offers wonderful opportunity for oratory.
MR. WHITE: More than any other.
MR. COLLADO: It is the best.
MR. VINSON: What are the rules of debate?
MR. WHITE: You can make them. I don't know.
MR. VINSON: The Chairman, of course, will do that,
I think.
MR. WHITE: I think that in discussion on this that
the United States doesn't have to take much discussion
on it, but the boys that will be with you will be able
Regraded Unclassified
285
- 62 -
to indicate whether they think something ought to be
said, but I think you will probably find that most of the
others will want to talk. Now, I am not quite sure how
you want to handle that.
For example, they will logically take up Alternative
A. Alternative A is always ours, merely because we
drafted the document and did the mimeographing, so we
could easily know what is ours. Now then, that means
that somebody will have to get up to explain the changes
and they might first call on--
MR. VINSON: Goldenweiser. I am assured he does
know about it. You might skip the mere change in
language and go to substance.
This thought just occurred to me. We could move
as an alternative, paragraph one. There is no alterna-
tive to that, is there?
MR. BERNSTEIN: I don't think there is for One,
but there are several for Two.
MR. VINSON: Then Alternative C is One, and Alter-
native E, you have--
MR. BERNSTEIN: Alternative B in Management has
two.
MR. VINSON: But you have an asterisk there.
MR. BERNSTEIN: But you still have to consider it
if you change the language.
DR. GOLDENWEISER: You will do better, Judge, I
think, if you take each paragraph separately, rather
than the whole thing. That is what you have in mind?
MR. VINSON: Then when you got through there, if
there weren't any amendments, that is passed, unless
there is some extraordinary situation. I don't know
how you would go back, whether you would go back just
as a matter of grace - if someone had an amendment to
offer - or whether you would go back for unanimous con-
sent. I am trying to get information as to what the
rules of the Committee will be. It may be just catch
as catch can.
Regraded Unclassified
286
- 63 -
MR. COLLADO: It is my impression, Judge, although
I don't know, that the rules for the Committees will be
quite informal. It is in the Commissions that you begin
to get some formality.
DR. GOLDENWEISER: Just make one general rule, that
anybody can talk as long as he pleases provided he doesn't
say anything! Separate the business of the Committee
from the talk.
Excuse me for facetiousness.
MR. WOLCOTT: There may be occasions when you have
passed a paragraph that the change in language of the
subsequent paragraph might necessitate a return to the
paragraph that is passed. It shouldn't close the door
to doing so.
MR. VINSON: If it informal, why of course we
wouldn't have any trouble about that.
MR. WOLCOTT: The Senate does that.
MR. VINSON: The Senate hasn't any rules.
MR. ACHESON: What you do, then, is to take up all
the alternatives to paragraph two.
MR. VINSON: That is right.
MR. ACHESON: Somebody talks about this paragraph
two and you take up paragraph one, and there isn't any
argument about paragraph one because there are no alter-
natives. That is fine, unless they are presented from
the floor.
MR. COLLADO: You have got to go through the motions -
the Chairman should go through the motions, at least, of
asking whether there are any alternatives, because, after
all, these are the alternatives of Atlantic City and
there were thirty countries not represented.
MR. VINSON: I think that is the way to handle it.
MR. ACHESON: Now you come to Two; somebody presents
Two in A and then you say you see that there is an
alternative for Two in B and another one in C, and that
is all. "Does anybody want to speak on these other
alternatives?" Maybe nobody will. In that case, you
Regraded Unclassified
287
- 64 -
say, "Are we agreed on paragraph two in A?"
If nobody says anything - or if there is some argu-
ment, I think you would try to iron it out and get an
idea of how much support there is. Support Alternative
2-A with the statement that there is some support for
Alternative 2-A, but none for 2-0, or whatever it is, and
go on down the line - not attempting to get a show of
hands.
MR. VINSON: There are no votes to be taken, as I
understand it. Right?
MR. ACHESON: Yes, but you can eliminate some of
these things in the discussion - say it means the same
thing. People will not press it so hard.
MR. SPENCE: There is no limit on debate?
MR. ACHESON: There is quite a limit, really.
MR. COLLADO: A little later in the week.
MR. ACHESON: They will only say a thing once - not
again.
DR. GOLDENWEISER: This first section really is, in
the proper sense of the word, a sort of overture to
this whole operation, because everything that will develop
in the course of the discussion are foreshadowed in that.
MR. BERNSTEIN: I think what Dr. Goldenweiser says
is of the greatest importance. Whenever a country has a
proposal that affects Management or Operations, it will
affect the wording back in Purposes. So you will begin
to feel what is going on in the other countries in this
Committee on Purposes. You will find Australia the
leader in this movement to get easier exchanges - propos-
ing all sorts of things.
DR. GOLDENWEISER: For example, Number Four in our
version says to promote exchange stability, and in
Alternative B it says to secure orderly exchanges in
exchange rates. That shows--
(The Secretary leaves the office temporarily)
Regraded Unclassified
288
- 65 -
H.M.JR: Could I have your attention a minute,
please?
This is the suggested draft - a memorandum for
Mr. Stepanov: "As we have explained to you orally,
there has, unfortunately, been a misunderstanding
between us regarding the amount of the Soviet quota.
It was always our understanding that the Soviet quota
would be in the neighborhood of eight hundred million
dollars, approximately ten percent of the total quota
for the whole Fund. Notwithstanding this regretable
misunderstanding, I want to assure you that the U.S.
Delegation will associate itself with the Soviet Dele-
gation in efforts to obtain an increase in the quota
for the U.S.S.R. at this Conference."
MR. WAGNER: Sounds clear to me.
H.M.JR: Sounds very good to me. If that is all
right - I think if Mr. Vinson will stay a minute, and
some of the others who are directly interested in this,
I would like to talk about what we will do with it in
order to save time.
Fred, would you be willing, with Mr. White and Mr.
Durbrow, to see the Russians now?
MR. VINSON: I am perfectly willing and ready.
MR. WHITE: See the Russians now? If the explana-
tion has to be made, yes.
H.M.JR: Would you want to do it now or tomorrow
morning?
MR. WHITE: I would rather do it now.
H.M.JR: (To Vinson) Could you do it now?
MR. VINSON: I certainly could.
H.M.JR: Are you available, Durbrow?
MR. DURBROW: I am perfectly willing, sir, but the
translation--
MR.WHITE: They have it.
Regraded Unclassified
289
SECRET
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
July 3, 1944
Memorandum of conversation between Mr. Stepanov, Chairman
of the Soviet Delegation and Mr. Harry D. White, United
States Delegate. Other persons participating: Mr. N. F.
Chechulin, Mr. A. M. Smirnov, Mr. N. A. Maletin, Judge
F. M. Vinson, Mr. E. M. Bernstein, Mr. A. F. Luxford and
Mr. Elbridge Durbrow,
After Mr. Morgenthau had read to Mr. Stepanov the prepared
statement (copy attached) regarding the misunderstanding which
apparently had arisen in regard to the Soviet quota and had assured
Mr. Stepanov that the American Delegation would associate itself
with an effort to obtain an increase in the Soviet quota, Mr. Harry
White and other members of the Delegation explained carefully the
American position.
Mr. White reviewed the previous discussions with the Soviet
experts regarding the formula as well as the American estimate of
the Russian quota which ensued therefrom, and explained in some
detail how it might have been possible for & misunderstanding to
have arisen. After this explanation, Mr. Stepanov explained that
he could understand how, with the language difficulties and other
complications of the extended discussions, a misunderstanding might
have taken place. He explained further that, although the Soviet
experts in Moscow may not have studied the American proposals as
carefully as they might have, they had received the impression that
on the basis of the American formula and adjustments thereof the
quota for the Soviet Union would amount to approximately a billion
dollars.
Mr. Stepanov added that when he had heard this afternoon that
on the basis of the American delegations calculations the Soviet
quota
Regraded Unclassified
290
-2-
quota would amount to approximately $800,000,000, he had felt
obliged to ask to see Mr. Morgenthau in order to obtain a
definite understanding of the American delegation's position, since
his government had the impression that the Soviet quota would
be a billion dollars or more which would bring it to a figure
only slightly less than the quota of the United Kingdom.
In this connection, Mr. Stepanov emphasized that he felt
that other considerations should be taken into account in
fixing quotas than the purely economic considerations provided
for in the American formula. He explained that the Soviet
authorities in Moscow felt that the proposed formula was based
upon past economic data such as foreign trade and that since it was
hoped that the foreign trade of all countries would be increased,
particularly that of the Soviet Union and the United States, the
calculations for the quotas should be based upon future prospects
rather than past statistics.
After further explanations by Mr. White, Mr. Stepanov asked
whether the American delegation proposed to use the formula
exclusively as a basis for setting the quotas for the various
nations or whether it planned to set the quota, at least for
the principal powers, by taking into consideration the other
factors which do not enter into the formula.
Mr. White
Regraded Unclassified
291
-3-
Mr. White explained that it would be impossible arbitrarily
to set the formula for all the countries participating in the
Conference unless some yardstick could be used to establish an
equitable base upon which final quotas could be established. He
added that once the base had been established by using the formula
it had always been the intention of the American delegation to make
adjustments in the basic quotas by taking into consideration other
than economic factors in order to establish the final quotas for
each country. On this basis Mr. White explained that it had been
possible for Mr. Morgenthau to give the written assurances to the
Soviet delegation that the American delegation would associate
itself with efforts to increase the Soviet quota.
After hearing this explanation Mr. Stepanov asked whether the
American delegation planned to discuss the entire quota situation in the
Committee or establish the quotas for the principal powers by private
discussion out of the Committee. Mr. White explained the reason why
it would be difficult to arbitrarily set the quotas completely out
of Committee, but again assured Mr. Stepanov that the American delega-
tion was prepared to give sympathetic consideration to the Soviet
position.
Toward the end of the discussions Mr. Stepanov again referred to
the relative positions of the United Kingdom and the Soviet Union
and indicated that as soon as a figure had been set for the British
quota it would be possible for the Soviet delegation to indicate
what quota they felt their country was entitled to. When Mr. White
replied that on the basis of the American formula, without giving
consideration
Regraded Unclassified
292
consideration to possible adjustments, calculations indicated that
the British quota would be approximately $1,250,000,000, Mr. Stepanov
stated under such circumstances he felt that the Soviet quota should
be about $1,200,000,000.
In discussing this point Mr. White asked whether, if the British
quota was reduced to $900,000,000 the Soviet Government would be
prepared to accept a quota of $850,000,000. Mr. Stepanov said that
he did not feel that his Government would be prepared to accept this
figure particularly since he felt that the British Government would
not accept such a small quota.
Before ending the discussion Mr. Stepanov asked specifically
whether the questions of quotas would be discussed in the First Com-
mittee meeting tomorrow morning and expressed the hope that this
question would not come up. Mr. White explained to Mr. Stepanov
that before the Soviet delegation had brought up this question the
American delegation had already decided it would not be advisable
to discuss the quota question at the meetings of the Committee
tomorrow.
CONCLUSIONS
The following are my personal conclusions as to the reasons
for the position taken by the Soviet delegation:
1. Although there is a possibility that a misunderstanding
took place as to the exact size of the Soviet quota, it is also
possible that the misunderstanding was not as fundamental to the
issue as it first appeared. The alacrity with which Mr. Stepanov
admitted the possibility of a misunderstanding and the subsequent
indications given by him that the Soviet authorities desired to
have
Regraded Unclassified
293
-5-
have a quota of at least a billion dollars give rise to the
probability that the principal reason for bringing up the question
was that the Soviet authorities had decided that they should make
every effort, for reasons of prestige, to obtain a quota
approximately as large as that of the United Kingdom.
2. Since the calculations based on the American formula
would not give them a quota which approximated that of the United
Kingdom, the Soviet delegation desired to make an effort to persuade
the American delegation that the quotas for the large countries at
least should be set arbitrarily out of Committee in order to assure
a larger quota for the Soviet Union.
3. It appears probable that Mr. Stepanov' instructions require
him to obtain, if possible, a quota of approximately a billion dollars
and to make every effort to raise the Soviet quota 80 that it would
be as near as possible that of the United Kingdom.
4. It also appears possible that they have "set their sights
quite high" in order (a) to obtain for prestige reasons a higher quota
and (b) to be in a position to reduce their demand on this point in
return for concessions by the American delegation on the other points
of difference which were not settled with the Soviet experts last
spring.
E.Durbrow:GBA
&
Regraded Unclassified
294
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
7/3/44
Memorandum to Mr. Stepanov:
As we have explained to you orally,
there has unfortunagely been a misunder-
standing between us regarding the amount
of the Soviet quota. It was always our
understanding that the Soviet quota would
be in the neighbowhood of 800 million
dollars i.e. approximately 10% of the
total quota for the whole fund.
Notwithstanding this regrettable
misunderstanding, I want to assure you
that the U.S. delegation will associate
itself with the Soviet delegation in
efforts to obtain an increase in the quota
for the U.S.S.R. at this conference.
294-A
Room 319
- July 3/44 3/44
UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE
9.05 PM
Mr. Secretary:
The Chairman, Russian Delegation
would like very much to see the Secretary this
evening.
Dulwon
295
July 3, 1944.
To:
Warren Kelchner
Secretary General of Conference.
From:
Charles Bell,
Secretary General of the
U.S. Delegation.
Since it was definitely under-
stood in conference between Secretary Morgenthau,
Dean Acheson, you and myself, that I would assist
the hotel management in the interest of the confer-
ence and that I would not overlap in any way re-
sponsibilities of the State Department where their
appropriations were involved without specific clear-
ance from either Deen Acheson or you. It is my feel-
ing that we must have some orderly procedure on all re-
quests made of Treasury personnel and thus assure pro-
per compliance to our verbal understanding.
Might I propose that in the fu-
ture all requests made upon Treasury personnel for
services, equipment and the like, involving expenditures
from State Department appropriations, be routed to your
office by members of your staff for approval and, in
turn, routed to me.
1. Typically of the kind of items that are causing
confusion, it 1s found that goday members of your staff
have requested members of my staff to detail from Wash-
ing eleven stenographers at the expense of the State
Department without proper clearance from either you or
I.
2. Arrangements were made for Miss Grace Waite
to proceed from Washington to Bretton Woods without
proper clearance.
3. An automatic electrical stapling machine was
requested which would involve shipping expense and possi-
ble rental or purchase expense for a turn table for the
Regraded Unclassified
296
2. Cont'd.
mimeograph operations was requested which again involved
trucking and possible purchase or rental.
Such items as the above should, in
my opinion, have your approval particularly since you
were not too enthusiastic about bringing on a turn table
for the mimeograph when I discussed this with you in the
lobby.
I want to again assure you that there
is every willingness to assist the State Department and
to make available to you every Treasury facility but I
must insist upon your or Dean Acheson's clearance on all
items involving expenditures, and further, that such re-
quest be made direct to me and not to Treasury rsonnel
generally.
CC - Mr. Dean Acheson
Mr. Warren Kelchner
Mrs. H. Klotz
Miss Polly Morris.
Regraded Unclassified
297
7/3/44
Drafts of Alan Barth's #1 and #2
speeches for HM, Jr's use on the Philadelphia
Navy Yard program. Secretary preferred the
#1 speech.
298
Mr. Schaefer came by to inform
us of this change:
If
cooperation with the
sea forces of our Allies,
the Atlantic
If
7/3/4+
299
ADDRESS BY SECRETARY MORGENTHAU
shoft from
alam Barth's# (
NAVY PROGRAM
which
speech with changes
INDEPENDENCE DAY
as phoned in by
m smith
There could be no more appropriate occasion for a Navy
program than Independence Day. For the simple fact is that
the American people, in very large measure, owe their inde-
pendence, now as in the past, to the strength and courage and
resolution of their fighting forces at sea. The Navy has seen
to it, over a period of 130 years, that no invader has set
foot upon the soil of the United States.
During the past two and a half years, the Navy has served
as America's first line of defense in two oceans at once. On
this side of the world, in magnificent cooperation with the
British and Canadian sea forces, the Atlantic Fleet broke the
back of the U-boat menace upon which Hitler had pinned so much
of his hopes. On the other side of the world, in the Coral
Sea, at Midway and around the Solomon Islands, it stopped the
Japanese Grand Fleet in its tracks. And just a fortnight ago,
off the Marianas, it made that fleet turn tail and run for
cover. Something tells me that the Japanese will not be able
to remain under cover very much longer. Admiral Nimitz will
see to that.
Regraded Unclassified
300
- 2 -
Today the United States has the greatest navy in the world.
I think it will interest you to know that, from the founding
of this Republic in 1789 up through the year 1940, we expended
on our naval establishment a little over six and a half billion
dollars. During the last four fiscal years, however, naval
expenditures have amounted to almost 58 billion dollars --
approximately nine times as much as during the whole preceding
century and a half of our history. And just a few days ago,
because of the new needs of the war, Congress approved another
naval appropriation of 33 billion dollars. This is more than
twice the sum we set out to raise during the Fifth War Loan Drive.
The immediate task before our Armed Forces today is to beat
back the Germans and the Japanese until they are crushed so
completely that they can never again embark upon their mad
scheme of world conquest. We are waging total war, and we
cannot be content with anything less than total victory. If
we fall short of that goal, all of this expenditure, all of
this effort, will have been thrown away. Worse, we shall have
betrayed basely all those who fought and aied. I hazard the
guess that we shall be tempted, both in the west and in the
east, with some sort of false capitulation. Let us make sure,
before we accept the enemy's surrender that it is real and
unconditional and final.
Regraded Unclassified
301
- 3 -
(Punctuate with Navy music)
In these times, it takes a certain temerity for any civilian
to present a citation to the fighting chief of a fighting fleet.
But the personnel of the Navy have made 80 splendid a record,
not only in their capacity as seamen but in their capacity as
American citizens, that they merit the warmest public congratu-
lation. They have not been content simply to take their ships
and planes into battle. They have shared in the cost of building
them. Two-thirds of the officers and the enlisted men and women
of the Navy, Marine Corps and Coast Guard are now purchasing
War Bonds regularly at the rate of about 300 million dollars a
year. And during the Navy's current bond campaign, arrangements
have been made to give each man and woman in uniform an opportunity
to participate through the purchase of an additional bond.
Admiral King, I am honored, on behalf of the Treasury Depart-
ment, to present to you, as Commander in Chief of the United
States Fleet and Chief of Naval Operations, this citation for the
Navy's outstanding contribution to the success of the War Bond
program.
Regraded Unclassified
302
Secretary Morgenthau's 1-Minute Speech
on Navy Program
The civilian employees of the Navy have made or a splendid
outstandingly good go record in the War Bond Program. The
Philadelphia Navy Yard, where we are now, was the first
yard to receive the Secretary of the Navy's War Bond
Honor Flag in November 1942, and it has held a preeminent
place since that time with 97 per cent of all employees
now purchasing War Bonds regularly through Payroll Savings.
Duringth
In
- first five months of 1944 more than 93 per cent
of all the civilian employees of the Navy were participating enrolled in
the Payroll Savings Plan, and purchased War Bonds aggregating
more than 12 per cent of the total payroll. For the Fifth
War Loan Drive, a goal of an extra $100 Bond over and above
payroll deduction has been established for every civilian
employee.
Secretary Forrestal) It gives me great pleasure to
Regraded Unclassified
303
-2-
present to you, on behalf of the Treasury Department,
contribution to the
this honor flag in token of the magnificent ^ War Bond program
record emessed by the Navy's civilian employees.
-o0o-
Regraded Unclassified
304
Secretary Morgenthau's 1-Minute Speech
on Navy Program
when on Aut was from name 7/2/14
The civilian employees of the Navy have made a splendid
record in the War Bond Program. The Philadelphia Navy Yard,
where we are now, was the first yard to receive the Secretary
of the Navy's War Bond Honor Flag in November 1942, and it has
held a preeminent place since that time with 97 percent of all
employees now purchasing War Bonds regularly through Payroll
Savings.
During the first five months of 1944, more than 93 percent
of all the civilian employees of the Navy were participating
in the Payroll Savings Plan, and purchased War Bonds aggregating
more than 12 percent of the total payroll. For the Fifth War
Loan Drive, a goal of an extra $100 Bond over and above payroll
deduction has been established for every civilian employee.
Secretary Forrestal, it gives me great pleasure to
present to you, on behalf of the Treasury Department, this honor
flag in token of the magnificent contribution to the War Bond
program by the Navy's civilian employees.
Regraded Unclassified
(Orig Mallan
12arthet ( spach)
305
ADDRESS BY SECRETARY MORGENTHAU
("wed"
NAVY PROGRAM
cerred to m smith
INDEPENDENCE DAY
at britten Words,
(
There could be no more appropriate occasion for a Navy program
than Independence Day. For the simple fact is that the American
people, in very large measure, owe their independence, now as in the
past, to the strength and courage and resolution of their fighting
forces at sea. The Navy has seen to it, over a period of 130 years
that no snamp invader has set foot upon the soil of the United States.
During the past two and a half years, the Navy has served as
A
America's first line of defense in two oceans at once. It has helped
its Allies to drive the German U-boat menace from the Atlantic and
to open the highway for our assaults upon Hitler's European dungeon.
On the other side of the world, it stopped the Japanese Grand Fleet
in its tracks in the Coral Sea, at Midway and around the Solomon
Islands. And just & fortnight ago, off the Marianas, it made that
fleet turn tail and run for cover. Something tells me that the
Japanese will not be able to remain under cover very much longer.
Admiral Nimitz will see to that.
Regraded Unclassified
306
- 3. -
Today the United States has the greatest navy in the world.
I think it will interest you to know that, from the founding of this
ala
republic califiry in 1789 up through the year 1940, we expended on our naval
Branth
establishment a little over six and & half billion dollars. During
the last four fiscal years, however, naval empenditures have amounted
to almost 58 billion dollars - approximately nine times as much as
during the whole preceding century and & half of our history. And
AA
Just & few days ago Congress approved another naval appropriation of
Tno
20
0
33 billion dollars, more than twice the sum we Inco attempting to
raise during the Fifth War Loan Drive.
0
It is clear, I think, that the American people intend to main-
tain a great Navy in the future. It has two vital tasks before it.
The first of these is to play its essential role in beating back the
forces of aggression until they are crushed BO completely that they
can never again embark upon their mad scheme of world conquest. We
are waging total war and we cannot be content with anything less than
total victory. If we fall short of that goal, we shall have basely
betrayed all those who fought and died to attain it.
I hazard the
guess that we shall be tempted, both in the west and in the east,
Regraded Unclassified
- 3. -
307
false
with some sort of quesi-capitulationg
Let us make sure, before we accept the enemy's murrender that it is
real and unconditional and final. space (pune - I. not
The Navy's second task, when the first has been completed, must
be to serve, in cooperation with the forces of other nations, as LA
the world's
bulwark of A security and freedom. I hope that it will stride the seas
in the future as an invincible guarantor of equal opportunity and
friendly relations among all the peoples of the earth.
In these time s it takes a certain temerity for any civilian to
present a citation to the fighting chief of a fighting fleet. But
have
the personnel of the Navy ERE made 80 splendid & record, not only
in their capacity as seamen but in their capacity as American citizens,
that they merit the warmest public congratulation. They have not
been content simply to take their ships and planes into battle. They
have shared in the cost of building them. Two-thirds of the officers
and the enlisted men and women of the Navy, Marine Corps and Coast
Guard are now purchasing war bonds regularly at the rate of about
300 million dollars a year. And during the Navy's current bond
Regraded Unclassified
308
- 4. -
campaign, arrangements have been made to give each man and woman in
uniform an opportunity to participate through the purchase of an
additional bond.
Admiral King, I am honored, on behalf of the Treasury Department,
to present to you, as Commander in Chief of the United States Fleet
and Chief of Naval Operations, this citation for the Navy's outstanding
contribution to the success of the War Bond program.
Regraded Unclassified
Coriguial speech
6/30/44
of
prepared m Buth
Deaft
#1
309
not wed
pa
There could be no more appropriate occasion for a Navy program
than Independence Day. For the simple fact is that the American
people, in very large measure, owe their independence, now as in the
strength, courage and resolution
past, to the ptout hearts, the stout arms and the stout ships of
Overa spain
their fighting forces at sea. Feer 130 years, the Navy has seen to
it that no enery invader has sust set foot upon the soil of the
United States.
During the past ********* and a half years, the havy has
That record has had 115 toughest test in the
served as america's first live of defend in two occ airs at
past two and a half years. The little men who talk over the radio
thanks to their snick attach a Pearl Hash
from Tokyo assured us at the beginning of this war that the United.
States Navy was at the bottom of the Pacific Ocean. If so, it has
shown rather marvellous powers of recuperation. The Japanese must
have been quite surprised by the state of its health in the Coral
sea, They you. overwhelmed by Hondger at Midway and Around the
Solomon
Ielands,
this
dive
convalosced
And off the Marianas
just a fortnight ago, they apparently
came to the conclusion that the best policy they could Regraded U classified
-2-
0
310
pretend that they had never heard of our Pacific fleet. Something
tells me, however, that they will not be able to go on ignoring it
much longer. Admiral Nimitz will see to that.
The Navy's job in the Ablantic, if 1038 spectacular than in the
Pacific, has been no Loss heroic and no less vital to the winning of
on this side of the world,
the
wath In magnificent cooperation with the British and Canadian
sea forces, the Atlantic fleet beat back the U-boat menage upon
which Hitler had pinned so much of his hopes. They tell me that
the sea voyage to England today is about as safe as a cruise on the
Great Lakes. If the combined Allied navies had not made it so, there
could have been no invasion of North Africa and Italy and no landings
on the Norman coast of France. The Navy delivered the men and the
material.
Today the United States has the greatest Navy in the world.
I think it will interest you to know that from the founding of this
Republic in 1789 up through the year 1940, we expended on our naval
establishment & little over six and a half billion dollars. During
the last four fiscal years, however, from fakyr 1941 through
June 30, 1044 naval expenditures have amounted to almost 58 billion
dollars - approximately nine times as much as during the whole
Regraded Unclassified
- 3. -
311
0
preceding century and 8. half of our history. And just a few days
age Congress approved another naval appropriation of 33 billion
dollars -- more than twice the sum we are attempting to raise during
the Fifth War Loan drive.
The men of the United States Navy have not been content simply to
their
take the planes and ships into battle. They have been sharing in
the cost of building them. About two-thirds of the officers
and enlisted personnel of the Navy, Marine Corps and Coast Guard are
now purchasing war bonds regularly at the rate of approximately ***
300 million dollara a year. And during the Navy's current campaign,
which will and on the final day of the Treasury's Fifth Were bean,
arrangements have been made to give each
I
man
and
woman in uniform an opportunity to participate through the purchase
of an additional bond.
special pride a pleasure
It litting that the men and women of the
Navy should share in this were in a program directed primarily at
civilians. For ours is a citizens' navy. And those who serve the ships
have an seeential part dt play in the shaping of our
economic and political future. War hends are an instrument designed
Regraded Unclassified
- 4. -
312
In these times, it takes a certain temerity for any civilian to offer a
citation to the fighting chief of 8. fighting fleet. But the personnel of the
Navy have made 80 splendid a record, not only in their capacity as seamen but
in their capacity a.8 American citizens, that they merit the warmest public
congratulation. I salute all of them, Admiral King,
through you. On behalf of the Teeasury Department, I am honored to present
to you, as Commander in Chief of the United States Fleet and Chief of Naval
Operations, this citation for the Navy's outstanding contribution to the
War Bond program.
#
Regraded Unclassified
her alan Barth's
313
# 2 spach
Dropt # 2
0
as reneed on mn gaston
7/1/44.
There could be no more appropriate occasion for a Navy program than
Independence Day. For the simple fact is that the American people, in very
large measure, owe their independence, now as in the past, to the strength,
courage and resolution of their fighting forces at sea. Over a span of 130
years, the Navy has seen to it that no invader has set foot upon the soil
of the United States.
During the past two and a half years, the Navy has served as America's
first line of defense in two oceans at once. The little men who talk over
the radio from Tokyo assured us at the beginning of this war that, thanks
to their sneak attack on Pearl Harbor, the United States Navy was at the
bottom of the Pacific Ocean. If so, it has shown rather marvelous powers
of recuperation. The Japanese must have been quite surprised by the state
of its health in the Coral Sea, at Midway and around the Solomon Islands.
And off the Marianas Just a fortnight ago, they apparently came to the
conclusion that the best policy they could pursue was to pretend that they
314
- 2 -
0
had never heard of our Pacific fleet. Something tells me, however, that
they will not be able to go on ignoring it much longer. Admiral Nimitz
will see to that.
On this side of the world, in magnificent cooperation with the British
and Canadian sea forces, the Atlantic fleet beat back the U-boat menace upon
which Hitler had pinned so much of his hopes. They tell me that the sea
voyage to England today is about as safe as a cruise on the Great Lakes.
If the combined Allied navies had not made it so, there could have been no
invasion of North Africa and Italy, and no landings on the Normandy coast
of France.
Today the United States has the greatest Navy in the world. I think
it will interest you to know that from the founding of this Republic in
1789 up through the year 1940, we expended on our naval establishment
a little over six and a half billion dollars. During the last four fiscal
years, however, naval expenditures have amounted to almost 58 billion
dollars approximately nine times as much as during the whole preceding
Regraded Unclassifie
315
- 3 -
century and a half of our history. And just a few days ago Congress approved
another naval appropriation of 33 billion dollars - more than twice the
sum we are attempting to raise during the Fifth War Loan drive.
The men of the United States Navy have not been content simply to take
their planes and ships into battle. They have been sharing in the cost of
building them. About two-thirds of the officers and enlisted personnel of
the Navy, Marine Corps and Coast Guard are now purchasing war bonds regularly
at the rate of approximately 300 million dollars a year. And during the Navy's
current campaign, arrangements have been made to give each man and woman in
uniform an opportunity to participate through the purchase of an additional
bond.
In these times, it takes a certain temerity for any civilian to offer
a citation to the fighting chief of a fighting fleet. But the personnel of
the Navy have made 80 splendid a record, not only in their capacity as seamen
but in their capacity as American citizens, that they merit the warmest public
congratulation. I salute all of them, Admiral King, through you. On behalf
Regraded Unclassified
1
316
- 4 -
of the Treasury Department, I am honored to present to you, as Commander-in-Chief
of the United States Fleet and Chief of Naval Operations, this citation for the
Navy's outstanding contribution to the War Bond program.
Regraded Unclassified
317
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE July 3, 1944
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject:
The Business Situation,
Week /ending July 1, 1944.
Summary
Steel operations: Confronted with heavy demands for steel
for shell production and other war needs, steel operations
are being hampered by a manpower shortage estimated to
total about 50,000 workers. Steel operations last week
dropped 1.6 points to 95.7 percent of capacity, the lowest
level since early January. More than 30 open hearth
furnaces are now shut down due to a lack of labor.
Consumer goods: The tight steel supply situation is adversely
affecting the outlook for production of consumer goods,
including such items as refrigerators and enamel ware.
Civilian paper supplies are expected to show a further
tightening, while third quarter demand for lumber has been
scaled down 12 percent in order to match supplies. On the
other hand, wool supplies are abundant, and restrictions on
aluminum have been relaxed.
Stock market: Swelled by heavy trading in low-priced stocks,
transactions on the New York Exchange during June were the
largest since May 1940, and totaled nearly 38 million
shares 8.8 compared with 17 million in May. Stock prices
showed only a small net gain last week despite a 15 percent
increase in trading activity. Industrial stock prices in
London continue to move gradually higher and at the close
of last week were 44 percent higher than on the eve of the
outbreak of war in Europe.
Commodity prices: A continued advance in cotton prices and
higher prices for wheat and steers last week caused a rise
to a new high in the BLS index of 28 basic commodities.
This index has shown a very gradual advance for 9 con-
secutive weeks. In the week ended June 24 the general
wholesale price index was unchanged from the previous week.
Farm prices: The index of farm prices declined 1 point to
193 in June, but prices continued to average 114 percent
of parity, the same as in May. A year ago the parity ratio
was 119 percent.
Regraded Unclassifie
318
- 2 -
Repercussions of invasion successes on domestic economy
Allied successes in launching the invasion of France, to-
gether with gains in Italy, on the Russian front, and in the
Pacific, have been accompanied by shifting undercurrents in
the domestic economy which reflect increasing preoccupation
over the prospects of resuming normal peace time activities.
In the stock market, heavy buying has occurred in the
securities of companies expected to benefit from the
release of huge deferred demands, with low-priced stocks
of marginal automobile producers featuring market activity.
At the same time increased attention has been focused on
planning for reconversion, with some observers critical
of the progress thus far achieved.
While war workers' morale apparently improved with
the initial invasion reports, subsequent military successes
seem to have been accompanied by some recurrence of
restiveness and a loss of workers in war plants. Moreover,
near the end of last week, labor troubles tied up the main
plant of the Timken Roller Bearing Company, one of the
largest bearing manufacturers in the country, leaving
9,000 workers idle, despite the existing critical need
for bearings in the war program. (The strikers have since
agreed to return to work.) Effective July 1, the WMC
has put into effect new nation-wide hiring controls
designed to achieve more efficient utilization of manpower,
but it remains to be seen how successful the new program
will be in actual practice.
Steel operations decline
Work stoppages due to labor troubles are reported to
have increased in the steel industry recently, but the
major problem confronting the industry 18 the over-all
manpower shortage. This factor, together with the adverse
effects of hot weather and repair delays caused steel
operations last week to drop 1.6 points to 95.7 percent
of capacity, the lowest operating rate since early January.
(See Chart 1, upper section.) It will be noted that
operations in the corresponding week last year showed an
even sharper decline but that was due to the fact that the
1943 week included the Independence Day holiday, adverse
effects of which will be felt one week later in 1944.
Steel operations for the holiday week this year, as shown
on the chart, are scheduled at 94.3 percent.
Regraded Unclassified
319
- 3 -
More than 30 open hearth furnaces are now shut down
due to a lack of labor, thus causing a monthly production
loss of about 200,000 tons of ingots. Moreover, several
hundred thousand tons additional per month are being lost
owing to delays in furnace repairs. According to WPB
estimates, the steel industry 1s now short about 50,000
workers, and meetings of steel industry and labor advisory
committees are scheduled for the early part of this month
in an effort to solve the problem.
Despite manpower shortages and other operating
difficulties, enlarged capacity has enabled the steel
industry in 1944 to maintain ingot tonnage above year-
earlier levels, with the cumulative gain to June 1
amounting to nearly 1 million tons. (Refer to Chart 1,
lower section.) Nevertheless, the industry continues to
be hard pressed to keep up with demand. The Iron Age
reported last week that "heavy requirements for the shell
steel program and the Maritime Commission have the effect
of further tightening a steel market which is now tighter
than at any time during the past few years."
Consumer goods production hampered by steel shortage
In contrast to the prevalent optimism over prospects
for civilian goods production, the Director of the Office
of Civilian Requirements last week indicated that demands
for more tanks, heavy artillery shells and landing craft
will adversely affect the outlook for consumers' goods made
of steel. Specifically it was stated that refrigerator
production 18 likely to be held up, while plans to remove
stoves from rationing have been delayed. Likewise the
tight steel situation will delay a proposed increase in
enamel ware output. Support for this pessimistic appraisal
of the steel supply situation was seen in a subsequent state-
ment from the WPB that steel production in the third quarter
might fall short of allotments already made for war and
essential civilian needs.
Numerous other materials in short supply
In addition to the shortage of steel, further tightening
in civilian paper supplies 1s expected, while supplies of
lumber and lumber products are short of demand. In this
connection it has just been announced that third quarter
lumber demands of the Army, Navy and industry had to be
scaled down about 12 percent in order to match available
supplies. Soft coal production thus far this year has risen
about 11 percent above last year's levels. Nevertheless,
a WPB official last week predicted that production would fall
38 million tons short of requirements in the 12 months ending
320
- 4 -
March 31, 1945, and stressed the need of conserving coal
supplies. Cotton textiles are in short supply, but the
wool situation is characterized by the OCR Director as
"the only comfortable situation in the entire economy."
However, even in this instance lack of manpower 1s
militating against letting up on restrictions.
Department store stocks above last year's levels
In the face of shortages in many lines and an expanded
sales volume, department stores continue to maintain stocks
substantially above the pre-war levels of 1935-39, although
a considerable portion of the gain is due to the intervening
rise in prices. (See Chart 2.) At the end of May, seasonally-
adjusted department store stocks were 46 percent above the
1935-39 average, and 11 percent above last year's level.
The relative success of department store managers in
maintaining total stocks at fairly high levels apparently
has been due in large measure to their ability to secure
women's apparel and accessories. At the end of April stocks
of these items (excluding basement departments) were 25 per-
cent higher than a year earlier, as compared with a gain in
total stocks of only 11 percent. Home furnishings and piece
goods showed declines of 4 percent and 1 percent, respectively.
Department store sales in May rose more than seasonally,
and the FRB adjusted index of sales rose 10 points to 183,
thus attaining the third highest level on record. (Refer to
Chart 2.) Sales gains over 1943 levels narrowed considerably
in the first 2 weeks in June but widened to 15 percent in
the week ended June 24.
Stock prices show only small rise despite heavy trading
The post-invasion burst of activity in the stock market
continued during the past week, with daily average trading on
the New York Exchange exceeding 1,800,000 shares, or about
15 percent more than in the previous week. The Dow-Jones
industrial average, however, failed to penetrate the recent
high reached on June 20, and at the close on Saturday was
only 1 point higher than a week earlier. The railroad and
utility stock averages showed only fractional changes for
the week.
Stock trading continues to be featured by heavy activity
in low-priced stocks, with the average closing price of the
ten most active issues on Friday dropping to $5.61. Expanded
by this activity, total stock transactions on the New York
Exchange last month were the largest since May 1940, and
totaled nearly 38 million shares as compared with only 17 mil-
lion in May.
Regraded Unclassified
321
- 5 -
Meanwhile, industrial stock prices in London continue
to forge gradually ahead to new wartime highs. (See Chart 3.)
At the close of last week the London industrial stock price
average was 44 percent higher than on the eve of the out-
break of war in Europe, whereas industrial stock prices in
New York were only 10 percent higher.
Commodity prices higher
Commodity prices tended to strengthen last week, partly
in reflection of the belief that the Price Stabilization
Extension Act will result in higher prices for some sub-
parity commodities. The Dow-Jones futures index rose 1 per-
cent, while the BLS spot index of 28 basic commodities moved
up 0.1 percent to a new high. The latter index has shown
a very gradual rise for nine consecutive weeks, due largely
to rising prices for cotton and rosin. (See Chart 4.)
Cotton prices were up noticeably at the early part of
last week, but failed to hold all of their gains. Wheat
prices rose moderately on heavy mill buying. Since wheat
was substantially lower in June than during the preceding
month, a reduction in the millers' subsidy is expected for
July. However, with wheat prices below parity, it 1s feared
that the Government may take action to bolster prices in
accordance with the Stabilization Act. Prices of steers
rose 1.6 percent. The spectacular rise in gum rosin prices
came to a halt last week with the OPA's imposition of ceiling
prices.
The OPA has ordered cotton textile mills to increase
prices on about one-third of all items produced, in accordance
with the recently-enacted price control law. Mr. Bowles
estimated the average increase at 7% percent, or about $150 mil-
lion yearly, but said part might be absorbed before reaching
the retail level.
The BLS all-commodity index was unchanged in the week
ended June 24, with farm product prices steadying after the
decline of the previous week. This index, having moved in
a very narrow range for more than a year, is now only 0.6 per-
cent above the level of a year ago, although it 1s 38.3 per-
cent above the pre-war August 1939 average.
Farm prices in June slightly lower
The index of farm prices in June declined slightly for
the second consecutive month, but it continued within the
narrow range of the past fifteen months. At 193 the index
1s 1 point below the May level and 18 2 points lower than in
June last year. (See Chart 5.)
Regraded Unclassified
322
- 6 -
Lower prices for fruits, grains, meat animals and
dairy products in June more than offset advances in the
prices of cotton, truck crops, and eggs. Peach prices
were sharply lower than last year, reflecting this year's
larger crop, which 1s estimated to be 60 percent more than
the short crop of 1943. Average prices for most farm
product groups (except truck crops) are now appreciably
higher than a year ago, but offsetting these increases,
prices of meat animals and poultry and eggs are considerably
lower.
Farm prices in June continued to average 114 percent
of parity, the same as in May, since the index of prices
paid (including interest and taxes) was unchanged, and the
slight decline in the index of prices received was insufficient
to change the parity ratio. A year ago, however, the parity
ratio stood at 119 percent. Wheat, cotton, and eggs were
the only principal farm products sold in June whose prices
were below parity. Cotton prices were 4 percent below;
wheat, 5 percent; and eggs, 6 percent.
Egg prices substantially higher
With egg production declining seasonally and market
receipts falling off, egg prices have risen substantially
in recent weeks. Prices which only a few weeks ago had
been hovering around support levels are now approaching
ceiling levels in some markets. Egg prices have shown a
larger rise in the mid-Western markets than in the Eastern,
and prices of top quality eggs have registered a steeper
rise than prices of poorer grades. In the Chicago market,
wholesale prices of fresh standard eggs have risen almost
4 cents in the five weeks ending June 24, but they are still
considerably below the levels of a year ago. (See Chart 6,
upper section.)
The seasonal decline in egg receipts at the four leading
markets during the latter part of May was steeper than that
of last year, and receipts during the first three weeks of
June fell considerably below those of last year. (See Chart 6,
lower section.) Although production during May (the latest
month available) was at record levels for that month, 3 per-
cent above May 1943, the increase over last year's levels
has been narrowing considerably since January.
As a result of declining production and the rise in
prices, Government support buying of shell eggs has practically
ceased during the last two weeks. (Up to mid-June the WFA
Regraded Unclassified
323
- 7 -
had purchased around 5 million cases of shell eggs to
support prices.) In fact the WFA 18 reported now to be
supplying dryers with some of its storage-held eggs, and
dealers are beginning to withdraw eggs from storage to
supply the shell egg market.
It appears likely that egg prices will reach ceiling
levels in the relatively near future and will probably
remain there until next winter. (Ceiling prices, however,
provide for seasonal upward adjustments.) The Department
of Agriculture indicated last week that egg production will
decline more from now until winter than during the comparable
period of last year, since continued heavy culling of
laying flocks is in prospect and fewer birds are being
raised for replacement. The decline in production, however,
will be partly cushioned by the record stocks now on hand.
Cold storage holdings of shell eggs on June 1 were 18 per-
cent above those of a year ago.
Hog production down sharply
Hog production will decline very sharply this year
according to the June pig report of the Department of
Agriculture. It is estimated that the total 1944 pig
crop will be about 87,925,000 head, which would be 28 per-
cent below 1943 and 16 percent below 1942, but larger than
any other year on record. The spring pig crop 18 estimated
at 24 percent below the record spring crop of 1943, while
farrowing intentions indicate that the fall pig crop will
show a decrease of 33 percent from 1943. The food production
goals call for only about 8. 16 percent reduction in the
1944 pig crop.
The reduction in the pig crop does not indicate any
immediate curtailment in pork production, since the supply
of hogs available for marketing during the 4 months June
to September will be about as large as a year ago. In the
longer outlook, the reduced hog production should result in
more feed being made available for beef and dairy cattle,
poultry, and other uses.
Regraded Unclassified
Chart 1
324
STEEL INGOT PRODUCTION
PERCENT
PERCENT
Percent of Capacity
1943
1942
100
100
1940
1944
90
90
80
80
70
70
60
60
JAN.
FEB
MAR.
APR.
MAY
JUNE
JULY
AUG,
SEPT.
OCT
NOV.
DEC.
NET TONS
NET TONS
Millions
Millions
Tonnage
8
8
1944
1943
7
7
1942
6
6
1940
5
5
4
4
3
3
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
DEC.
Source: American Iron and Steel Institute
Office of the Secretary of the Treasury
- of Research and Stations
C-532
Regraded Unclassified
DEPARTMENT STORE SALES AND STOCKS
Dollar Values, 1935-39=100, Adjusted
PERCENT
PERCENT
210
210
200
200
190
190
180
180
170
170
160
160
Sales
150
150
140
140
130
130
120
120
Stocks
110
110
100
100
90
90
80
1939
1940
1941
80
1942
1943
1944
1945
Source Federal Reserve Board
Office of the Secretary of the Treasury
, I I 1 1
C-430-9
Chart 2 32
Regraded Unclassifi
326
INDUSTRIAL STOCK PRICES IN U.S. AND U.K.
AUGUST 1936 = 100
Chart 3
1942
1943
1944
PERCENT
PERCENT
Weekly (Average of Daily)
115
115
110
110
105
105
100
100
U.K. 56 Industrial
95
Stocks
95
90
90
85
85
80
80
75
75
70
U.S. 30 Industrial
Stocks (Dow-Jones)
70
65
65
60
60
55
55
50
APR.
JUNE
AUG.
OCT.
DEC.
FEB
APR.
JUNE
50
AUG.
OCT.
DEC.
FEB.
APR.
1942
JUNE
1943
1944
Office of the Secretary of the Treasury
Division of Reserved and -
FO-156-C
Regraded Unclassified
WHOLESALE COMMODITY PRICES
1943
1944
PERCENT
PERCENT
WEEKLY
1926-100
106
106
105
105
104
104
889 Commodities. B.L.S.
103
103
102
102
28 Basic Commodities. B.L.S.
101
101
100
100
JUNE
AUG
OCT.
DEC.
FEB.
APR.
JUNE
AUG.
OCT:
DEC
1943
1944
SELECTED BASIC COMMODITIES
Percentage Change December 6, 1941 to June 23 and June 30, 1944
PERCENT
Rosin 1021%
+100
+80
Barley 76.0%
Flaxseed 64.5%
+60
Care 56.9%
+40
Wheel 40.5%
Hogs 35.8%
Steers 316%
"Lard 288%
Coffee 246%
+20
Butter 18.8%
Coffonseed Oil are
Super 6.9%
Print Cleth 49%
Wool Tops 39%
o
Hides 0%
Tollow -4./%
-20
Dec.6.
June 23,
June 30,
1941
327
1944
1944
Office of the Secretary of the Trustry
Into of - and -
P-282
Chart 4
Regraded Unclassifie
AVERAGE PRICES RECEIVED BY FARMERS
Indexes, August 1909-July 1914=100
PERCENT
PERCENT
All Farm Products
225
225
1944
200
200
1943
175
175
150
150
125
125
1941
100
100
J
F
M
A
M
J
J
A
S
o
N
D
PERCENT
PERCENT
PERCENT
Truck Crops
Feed Grains
Fruit
350
200
225
1944")
325
175
200
1944
1943.
300
150
175
1943,
275
125
150
1941
250
100
125
1941
1944
225
75
IDO
J
F
M
A
M
J
J
A
5
o
N
D
1943
225
200
Cotton
75
200
175
50
1944
J
F
M
A
M
J
J
A
5
o
N
D
175
250
150
Meat Animals
1941
150
1943
225
125
125
200
1943
1941)
1944
100
100
175
75
J
F
M
A
M
J
a
A
3
o
N
D
75
150
J
F
M
A
E
J
J
A
5
o
N
D
1941
225
225
Food Grains
Poultry and Eggs
125
J
F
M
A
M
J
J
A
5
0
N
D
200
200
250
1943
Dairy Products
1944
175
175
225
1944
150
150
1944
200
1943
1943
125
125
175
1941
1941>
100
100
150
1941
75
75
125
J F M A If J J A 5 o N D
J F M A M J J A $ o N D
J F M A M J J A $ o M D
328
Office of the Secretary of the Transury
P-257-B
- of - - -
Regrade Unclassified
Chart 6
329
EGG PRICES AND RECEIPTS
Year Beginning in November
CENTS
CENTS
Per Dozen
Per Dozen
Price, Chicago*
50
50
45
45
42-43 Season
40
40
35
35
43-44 Season
30
30
25
25
NOV.
JAN.
MAR.
MAY
JULY
SEPT.
CASES
CASES
Thousands
Thousands
Receipts, 4 Markets
450
450
400
400
350
350
43-44 Season
300
300
250
250
200
200
42-43 Season
150
150
100
100
NOV.
JAN.
MAR.
MAY
JULY
SEPT.
* Weekly average, fresh standards Previous to July 17, 1943 certain comparable grades used
Office of the Secretary of the Treasury
Division of Research and Statement
P-277
Regraded Unclassified
330
AIRGRAM
SECRET
FROM American Embassy
San Salvador, El Salvador
DATED July 3, 1944
REC'D: July 8, 8 an
Secretary of State
Washington
A-279, July 3, 1944
Department's airgram No. A-189 of June 16, 5,55 p.m.
In a note dated June 29, the Foreign Minister states
that on that date he sent a note to the Advisory Committee
which reads in translation as follows,
"San Salvador, Republic of E1 Salvador, June 29,
1944. Honorable Mr. President: Upon acknowledging
to Your Excellency the receipt of the Recommendation
approved by that organization, regarding the exchange
of persons between American and German countries,
permit me to make the following observations: The
Recommendations of the Emergency Committee are just
and eminently humanitarian; and my Government imme-
diately approves them without reservation. As for
the Republic of El Salvador, we do not have informa-
tion that there are persons to whom documents of
identity or naturalization have been issued, who are
in the conditions set forth in the Recommendations
adopted by the Committee. There are in German terri-
tory a few Salvadorans whose present situation the
Government has not been able to ascertain; and outside
of Germany there are five Salvadorans who should be
repatriated. Promptly, by reason of the declaration
of war against the Axis nations, El Salvador first
watched and then sent to an American concentration
camp various persons belonging to the Axis nations.
At present there are no dangerous elements in our
territory, who deserve that treatment. My Government
will begin direct negotiations regarding the repatria-
tion of the Salvadorans who are still in Europe; and
in any case it will be pleased to count on the
cooperation of the Honorable Comittee."
711.5
GADE
GG/mdm
Regraded Unclassified
331
No. 3633
Stockholm, July 3, 1944.
Subject: Transmitting Dissident Hungarian
Minister's Letter Concerning American
Warning to Hungary.
UNRESTRICTED
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to transmitta copy of a letter
addressed to no on June 27 by Dr. Antal Ullein-Revicsky,
the dissident Hungarian Minister in Stockholm, in which
he argues that the Hungarian nation, itself a victim of
Nasi oppression, is unfortunately unable to heed the
warning contained in the recent resolution of the Com-
mittee for Foreign Affairs of the House of Representatives.
Dr. Ullein-Revicsky's letter bore no indication of
having emanated from the Hungarian Legation and was
signed by him as a private individual, without any official
title
Respectfully yours,
Herschel V. Johnson.
Enclosure:
As stated above.
File No. 711
HPC:FEN
Original to the Department
for possible oxaliding.
Regraded Unclassified
332
Enclosure No. 1 to despatch No. 3633 of July 3, 1944
from the American Logation at Stockholm.
COPY
Stockholm, June 27th, 1944.
Mr. Minister:
The news papers have registered a warning addressed
to Hungary on the 21st of June by the Committee for
Foreign Affairs of the House of Representabts of the
United States of America in order to stop prosecuting
Jews.
May I, Mr. Minister, draw your attentionto the fact
that Hungary ceased to be an independent State since the
19th of March day of the nasi putsch and occupation of
the country. The Hungarian nation being actually itself
a victim of nazi oppression and atrocities is unfortunately
unable to react to any humanitarian reasoning. ÀB soon as
Hungary recovers her freedom not only will the Jews be
rehabilitated by the nation itself will give exemplary
punishment to the persecutors of the Jews.
I should be very grateful, Mr. Minister, if you would
kindly transmit the above to Mr. Bloon President of the
Foreign Affairs.Committee.
Believe me,
yours sincerely
Signed: Dr. A. Ullein-Revicaky
His Excellency
Mr. Herschel V. Johnson
Minister of the United States
of America
STOCHHOUM.
Regraded Unclassified
333
PARAPHRASE OF TELEGRAM SENT
TO:
American Consulate General, Naples
FROM:
Secretary of State, Washington
DATE:
July 3, 1944
NUMBER: 298
CONFIDENTAIL
This is to inform you that approximately a week ago
eiphers were sent for future use in Rome and for present
use in Naples. It is not possible to send them for Bari
or points where there are no missions or consulates.
The foregoing is in reference to your June 20 cable
No. 247 and Ackermann's message No. 2.
HULL
Regraded Unclassified
334
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Consul, Jerusalem
DATED:
July 3, 1944
NUMBER:
122
CONFIDENTIAL
Please deliver the following message from the War Refugee
Board, Pehle, to Chaim Schein, 31 Masestr, Tel-Aviv:
QUOTE. Every effort being made to safeguard victims of
enemy persecution and special program has been evolved for
those holding passports issued in names of American republics.
I - referring your message to Department of State which is
charged with making the necessary arrangements to effectuate
such program. UNQUOTE.
HULL
Regraded Unclassified
335
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Embassy, Lisbon
DATED:
July 3, 1944
NUMBER: 1900
CONFIDENTIAL
The Governments of the United States and Great Britain
have agreed that in furtherance of their joint policy to use
every means available consistent with the successful prosecu-
tion of the war to bring about the rescue of the victims of
German persecution in imminent danger of death a joint approach
should be made to the Portuguese Government in the sense of the
following:
QUOTE The Governments of the United States and Great
Britain are appreciative of the assistance already rendered
by the Portuguese Government to refugees who have fled from German-
controlled Europe as the result of persecution on account of
race, religion, or political belief. The Governments of the
United States and Great Britain believe, however, that if the
persecuted minority groups still remaining in German-controlled
Europe have further assurances that, if they are ableto make
their way to neutral territory, they will be received and their
minimum material needs provided for until such time as they can
be moved onward to other havens of refuge or repatriated to
their homeland, the rescue of still greater numbers from
inhuman oppression might be effected. If such assurances are
not forthcoming, it is feared that thedeath toll among the
persecuted minority groups will continue to increase.
The Governments of the United States and Great Britain
in furtherance of their joint policy to use every available
means consistent with the successful prosecution of the war to
bring about the rescue of victims of German oppression in
imminent danger of death, appeal to the humanitarianism
of the Portuguese Government in behalf of these persecuted persons
in the hope that the Portuguese Government will find it possible
to adopt an even moreliberal policy than heretofore as regards
the reception and temporary care of refugees from German-controlled
Europe.
The Governments of the United States and Great Britain
wish to assure the Portuguese Government that for their part they
will be glad to arrange for the provision of such additional
food and other supplies as may be required to meet the added
burden on Portuguese resources resulting from the temporary care
of refugees, as well as funds if needed. The Governments of
the United States and Great Britain wish further to assure the
Portuguese Government that they will make every effort to
arrange for the onward movement to other havens of refuge of such
refugees as may be received by Portugal. UNQUOTE
Regraded Unclassified
336
You are requested to concert with your British colleague
who is expected shortly to receive instructions substantially
in the sense of the above.
Similar joint approaches are being made to the Swedish,
Turkish, Swiss, and Spanish Governments.
HULL
Regraded Unclassified
337
CABLE TO AMBASSADOR HAYES, MADRID, SPAIN
1. Department and Board appreciate your 1397 of April 21, 2384
of April 24, and 2459 of May 11, with enclosures.
Kindly advise whether, subsequently to your note 2410 of May 11,
Spanish authorities have made any effort to protect Jews in enemy-
controlled territory holding documents issued in the name of Latin
American countries and to secure the return to Vittel or Compiegne of
any such persons previously remeved therefrom.
2. Please note that the term QUOTE German-controlled UNQUOTE
territory or areas as used in this message and in all other communica-
tions dealing with protection of persons holding documents issued in the
names of American republics includes Hungary. Should there be any pos-
sibility of doubt on this score, the Spanish authorities should be
informed accordingly.
1:40 p.m.
July 3, 1944
BAksin:ar 6/30/44
Regraded Unclassified
338
ORIGINAL TEXT OF TELEGRAM SENT
FROM:
Secretary of State, Washington
TO:
American Embassy, Madrid
DATED:
July 3, 1944
NUMBER: 1887
CONFIDENTIAL
The Governments of the United States and Great Britain
have agreed that in furtherance of their joint policy to use
every means available consistent with the successful prosecu-
tion of the war to bring about the reseue of the victims of
Germen persecution in imminent danger of death a joint approach
should be made to the Spanish Government in the sense of the
following:
QUOTE The Governments of the United States and Great
Britain are appreciative of the assistance already rendered
by the Spanish Government to refugees who have fled from German-
controlled Europe as the result of persecution on account of
race, religion, or political belief. The Governments of the
United States and Great Britain believe, however, that if the
persecuted minority groups still remaining in German-controlled
Europe have further assurances that, if they are able to make
their way to neutral territory, they will be received and their
minimum material needs provided for until such time as they can
be moved onward to other havens of refuge or repatriated to
their homeland, the rescue of still greater numbers from
inhuman oppression might be effected. If such assurances are
not fortheoming, it 18 feared that the death tall among the
persecuted minority groups will continue to increase.
The Governments of the United States and Great Britain
in furtherance of their joint policy to use every available
means consistent with the successful prosecution of thewar to
bring about the rescue of victims of German oppression in
imminent denger of death, appeal to the humanitarianism
of the Spanish Government in behalf of these persecuted persons
in the hope that the Spenish Government will find it possible to
adopt an even more liberal policy than heretofore as regards
the reception and temporary care of refugees from German-
controlled Europe.
The Governments of the United States and Great Britain
wish to assure the Spanish Government that for their part they
will be glad to arrange for the provision of such additional
food and other supplies as may be required to meet the added
burden on Spenish resources resulting from the temporary care
of refugees, as well as funds if needed. The Govern of the
United States and Great Britein wish further to assure the Spanish
Government that they will make every effort to arrange for the
onwerd movement
Regraded Unclassified
339
-2-
onward movement to other havens of refuge of such refugees as
may be received by Spain. UNQUOTE
You are requested to concert with your British colleague
who is expected shortly to receive instructions substentially
in the sense of the above.
Similar joint approaches are being made to the Swedish,
Turk, Portuguese, and Swiss Governments.
HULL
Regraded Unclassified
340
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
AMLEGATION, STOCKHOLM
TO:
Secretary of State, Washington
DATED:
July 3, 1944
NUMBER: 2444
CONFIDENTIAL
Reference is made herein to the Department's 1323,
July 3, and the Legation's 2437, July 3.
Gullion reports that up to 9:30 p.m. tonight Finnish
exit visas and Swedish entry visa had been obtained for 28
British, 49 Americans, 4 Belgians, 7 Canadians, 57 Jewish
refugees, 2 Polish, 1 Dutch, 5 Italians, 1 Estonian and 4
stateless.
On board the BIRGERJARL there will be five of the Lega-
tion personnel including one Finn and one Dane.
Entry visas were refused by the Swedes for 62 Jewish
refugees on separate list from group of 57. If any of this
62 group appear at Abo they will, however, be taken along in
anticipation of receiving permission to enter Sweden when
support there is guaranteed by the WRB. Not more than 25
Jews will actually appear in time to join the evacuation
party is the belief of the head of the Jewish Community at
Helsinki.
JOHNSON
Regraded Unclassified
341
CABLE TO MINISTER JOHNSON AT STOCKHOLM AND OLSEN
SECRET
For your information and guidance as well as Wallenberg's in
your discretion there is herewith repeated to you the substance of
B. message sent by the Board to AmLegation Bern: QUOTE In view of
consistent neutral press reports carrying Berlin and Budapest
datelines and other information to the effect that the eight hundred
thousand Jews in Hungary are being segregated in ghettos and
concentrated in camps, there seems little doubt that the pattern
heretofore set in Poland and repeated elsewhere is again being
followed. In an effort to develop means to forestall the effectuation
of the ultimate ends of such program, that is mass-executions either
before or after deportation, consideration has been given to the
advisability of requesting the Swiss Government to address an inquiry
on behalf of this Government to appropriate authorities in Hungary
asking then to state their intentions with respect to the future
treatment to be accorded to Jews in ghettos and concentration camps
and specifically whether they contemplate forced deportations to
Poland or elsewhere or the imposition of discriminatory reductions
in food rations, or the adoption other measures which like those
mentioned will be tantamount to mass-execution. At the same time,
the Swiss government would be requested to remind the same authorities
of the grave view that this Government takes with respect to the
persecution of Jews and other minorities and of the determination of
this Government to see to it that all those who share the responsibility
for such acts are dealt with in accordance with the President's
statement of March 24, 1944. Also at the same time the fact of this
Government's request of the Swiss Government and the nature thereof
would be given the widest possible publicity in Hungary through
broadcasts in the Hungarian language and such other means as may be
practicable. UNQUOTE
The reply received is in substance as follows: QUOTE A note
requesting transmission of inquiry to Hungarian Government, as
suggested, has been delivered to the Swiss Foreign Office. This note
requests an indication of the intentions of Hungary as regards further
treatment of Jews with special reference to forced deportations,
discriminatory reductions of food rations or adoption of similar
measures that amount to mass execution and reminding them of the
grave view which the United States takes regarding persecution of
Jews and other minorities and the United States' determination to
punish those sharing the responsibility in accordance with the
March 24 warning by the President.
The Foreign Office has accepted the note as presented and will
transmit verbatim as annex to the note to the authorities of Hungary.
It has been agreed by the Swiss to report the date of the delivery of
the note.
Regraded Unclassified
342
-2-
It is recommended that the foregoing be given no publicity
pending receipt of information of delivery of the note by the Swiss
to the Hungarians and that no mention of Swiss intermediary be made
should publicity then appear to be advisable. UNQUOTE
Board expects verbatim text of note and date of Swiss action
momentarily. You will be kept advised so that Wallenberg may be in
a position at your discretion to note and report any reaction and
take advantage thereof if circumstances favorable.
THIS IS WRB STOCKHOLM CABLE NO. 42
1,40 p.m.
July 3, 1944
LSLesser:als 7/1/44
Regraded Unclassified
343
1/3/44
SECRET
CABLE TO MINISTER JOHNSON AT STOCKHOLM AND OLSEN
Bohm, Andersen and Polen Hjalpen reports received.
Reference your 2231, 2344, and 2360 of June 21, 27 and 28, your 31, 39 and
40 to War Refugee Board. While it is difficult to attempt precisely to
outline program from here, the following general approach is suggested:
Since money and favorable post-war consideration may motivate action
impeding, relaxing or slowing down tempo of persecution and facilitate
escapes and concealments, it should be ascertained in what quarters such
inducements may be effective. In this connection, contact should be
established, at discretion, with appropriate persons mentioned in
Department's 1246 of June 23 and such others as may become known, If
circumstances warrant funds will be made available at neutral bank for
post-war use or in part in local currency now, procured against blocked
counter-value here or in neutral bank. For latter purpose local funds
may be procurable from appropriate persons mentioned in Department's 1246
such as (c) in first group and such others as may become known. Whenever
a concrete proposal based on financial arrangements of substantial
character or on favorable post-war consideration is broached, the matter
should be referred to the Board for clearance, which will require evidence
of effectiveness and good faith in the meantime. In order to care for
less substantial transactions a fund of $50,000 will be placed at Olsen's
disposal which may be used in his discretion in addition to the fund
already available to him for discretionary use.
The problem may be dealt with on various levels such as high official,
low official and unofficial, central and local, In connection with un-
official channels an informed source suggests that ships and barges going
down the Danube are generally empty and may afford a means of escape for a.
limited number of refugees in the guise of seamen or otherwise. Same
source suggests that skippers can be approached on financial basis and crews
through so-called communist channels. Board is also advised that railroad
line from Budapest to Mohacs, said to be about ten miles from partisan-
controlled Yugeslave territory, might afford similar opportunities if
contacts made with trainmen through what are termed communist channels.
Board further advised that Transylvanian Unitarian Church, socialist and
partisan groups may be in a position because of geographical situation and
absence of real occupation to shelter refugees if they can reach that area.
In addition, Board believes that Roman Catholic clergy and Nuncio may be
helpful both in action and with advice.
Further in connection with lower official and unofficial channels
the following list of persons, secured from same sources as list given in
Department's 1246 may be useful: In or near Budapest: (a) Dezso Vilmanyi,
said to be former official in the Police Headquarters in Budapest, in 1939
transferred to the Police Department in the Ministry of Interior, in
Regraded Unclassified
344
- 2 -
charge of passport matters and to have granted many persons passports
for consideration. Also said to have ingratiated himself with the
Arrowcross Party and was counted among their fellow travelers by them,
but that Jews could always count on his favors if they met his terms,
in cash; (b) Zoltan Timke, said to be Chief Prosecutor, Superior Court of
Hungary, a chauvinist and reactionary, but opposed to the Nazis. It is
said that he can be depended on to help Jews of reactionary and financial -
commercial background; (c) Colonel Denes Deak-Horvath, said to be wealthy,
independent, and politically unaffiliated. It is said that he is
Chairman of Barcs Farmers' Granary Cooperative, General Manager of Hungarian
Food Supply Co. It is also said that since 1940, he has been one of the
leaders of the action protecting Polish refugees in Hungary and that he
was fined for violation of the anti-Jewish laws. He is also said to have
close connections with certain members of the present Hungarian government
through which he may render useful services to our cause, notably with
Anthony Kunder, the present minister of commerce; (d) Rezse Koszeghy,
said to be 49 years of age, a native of Hungary of German-Swabian
descent, and a former official of the National Bank of Hungary who is
now general manager of a textile and fur concern. Said to be trustworthy
as assistant and go between and to have a student son in Switzerland,
Said to have good contact with rank and file in government officers;
(e) Dr. Jeno Bozoky, said to be a lawyer who for a number of years very
skillfully played the role of an ardent Nazi and anti-Semite, with the
objective of helping distressed or endangered Jews and liberals.
With reference to high official channels exploration
may be made of the possibility, suggested by pages 29 and following of
Bohm's report, of evacuation of Jews and persons similarly situated
belonging to specific groups such as (a) holders of Palestine certificates,
(b) holders of visas for entry into neutral countries, (c) persons to whom
the issuance of visas for entry into an American republic is authorized
provided they appear personally therefor before a consular office in a
neutral country, (d) persons holding passports or consular documents issued
in the names of American republics, or who are under the protection of a
neutral country as indicated by Bohm at page 26, (e) women and children,
(f) aged and infirm men, and (g) parents, husbands, wives, children, etc.,
of American citizens.
You should advise Wallenberg of the foregoing to the extent that you
deem advisable and inform him that the same constitutes a general outline
of a program which the Board believes can be pursued. While he cannot, of
course, act as the Board's representative, nor purport to act in its name,
he can, whenever advisable, indicate that as a Swede he is free to communicate
with Stockholm where a representative of the Board is stationed. He may
thus express his willingness to lay before the Board's representative
specific proposals if in any particular case he should deem so doing to
Regraded Unclassified
345
- 3 -
be advisable, or if by reason of the nature of the proposal Olsen's
or the Board's approval is necessary. Wallenberg should have with
him copies of the President's statement of March 24, Department's 502
of March 24, the Statement of the Senate Foreign Relations Committee,
Department's
of June
, the Statement of the House Foreign Affairs
Committee, Department's circular of June 28, and Archbishop
Spellman's statement, Department's 1283 of June 29. These he might on
proper occasions call to the attention of appropriate persons, expressing
the view, having just come from outside German-controlled territory,
that there is no question of American determination to see to it that
those who share the guilt will be punished, but that helpful conduct
now may result in more favorable consideration than actions heretofore
might warrant.
Wallenberg should consult with the representative of the Inter-
national Red Cross and impress upon him the urgent need of increasing
Intercross representation in Hungary and intercession in an effort
to secure permission to visit and inspect concentration camps, ghettos
and other places of detention. Wallenberg might undertake also to see
whether such permission might be granted him and his colleagues. To
the extent that you deem it advisable you may call Wallenberg's attention
to Bohm's suggestions so that he may undertake to determine their
feasibility and whether they offer channels through which effective
measures can be taken. Please express to the Foreign Office and to
Wallenberg the Board's sincere appreciation for their wholehearted
cooperation. The Board is aware of Sweden's great concern and active
measures of assistance for the victims of Nazi persecution and is
confident that through cooperation such as has been evidenced in this
and other instances, further lives will be saved.
THIS IS WRB STOCKHOLM CABLE NO.
41
1:40 p.m.
July 3, 1944
Regraded Unclassified
This telegram must be
July 3, 1944
34
paraphrased before being
communicated to anyone
8 Pollo
other than a Government
agency. (RESTRICTED)
Regraded Unclassified
AMLEGATION,
STOCKHOLM.
1327
FOR THE MINISTER
The Governments of the United States and Great Britain
have agreed, in furtherance of their joint policy to use every
available means consistent with the successful prosecution of
the war to bring about the resoue of victims of enemy oppression
in imminent danger of death, jointly to approach the Swedish
Government in regard to the reception and care of refugees with
a view to renswing assurances previously made concerning addi-
tional imports, if needed, to assist the Swedish Government in
meeting the needs of refugees admitted to Sweden.
After concerting with your British colleague, who has
already received general instructions in the matter, a joint
approach should be made to the Swedish Government in the sense
of the following:
QUOTE The Governments of the United States and Great
Britain desire to confirm the statements made in the joint 00
minication from the two Governments dated January 19, 1944 in
regard to increases in Swedish blockade quotas, if required,
in the event that it should become possible for the Swedish
Government to afford asylum to additional children evacuated
from Germany or German-cocupied territories.
The Governments of the United States and Great Britain
wish to express again their admiration for the humanitarian
policy followed by the Swedish Government in affording asylum
to refugees, both child and adult, from Denmark, Finland, and
other areas under German domination and wish to renew assurances
previously made that should the Swedish Government 80 desire,
the Governments of the United States and Great Britain are
ready to give prompt and sympathetic consideration to requests
for increases in Swedish blockade quotas in order to case the
burden on Swedish resources resulting from the temporary care
of refugees already received in Sweden and those who may sub=
sequently be received under the liberal and humanitarian Swedish
policy in this regard. UNQUOTE
A similar
347
+
#1327, July 3, 8 Pollo, to Stockholm.
A similar joint approach is being made to the Government
of Switzerland. Joint approaches also are being made to the
Governments of Turkey, Spain, and Portugal expressing the hope
that they will adopt a more liberal policy as regards the
reception and temporary care of refugees and offering to
arrange for the provision of such additional imports and funds
as may be required to case the burden on local resources arising
from the care of such refugees as may be received.
HULL
(GEW)
SWP=RIK:EHJ
7-1-44
NOB
WRB
S/CR
BC
BE
Regraded Unclassified
348
RECT-83
Stockholm
Distribution of true
Regrade Unclassifie
reading only by special
Dated July 3, 1944
arrangement. (SECHED-W)
Rec'd 11:45 s.m.
Secretary of State,
Washington.
2420, July 3, noon.
Following is paraphrase of message for World Jewish
Congress, New York, from Congress Committee, Steckholm.
This our No. 45 for War Refugee Board.
Deportation of all Hungarian Jews ordered before
July 15 reliable sources report. Importance of United
Nations help in hindering this mass deportation which
would liquidate almost last big Jewish community in
Europe is essential. Confirmation from Rumania to
Ehrenpreis that last amount from Sweden transferred
and distributed through Swedish channels. Changed at
twelve and one half times official rate. Used for
feeding and clothing poor Jewish, mestly children.
Threnpreis implored by leading Rumanian Jew to procure
further help from America and Sweden. Cenfirmation by
Swedish Minister at Bucharest funds badly needed. Small
Swedish collections being transferred sext few days but
large suas necessary. Important the World Jewish Congress
hasten transfer of $10,000 to Phrenpreis and secure
additional funds for Rumanian help from other sources.
JOHNSON
WSB
CSB
349
SECRET
CABLE TO MINISTER HARRISON AT BERN AND McCLELLAND
A neutral government is about to dispatch new attache to its
legation Budapest as result of message similar tothat contained in
Department's 1805 of May 25, War Refugee Board's 26. He is generally
familiar with Board's programend has had extensive conversations
with Board's representative concerning immediate problems, which he
is prepared to attempt to deal with through any available channels
on practical basis. He is prepared also to operate on specific
projects suggested by Board. In line with your 3390 of May 27, you
may desire that he contact specific persons or undertake specific
projects. If so, please advise the Board promptly.
THIS IS WRB BERN CABLE NO. 68
.
1:40 p.m.
July 3, 1944
ISLesser:als 7/3/44
Regraded Unclassified
350
CABLE TO HARRISON FOR McCLELLAND, BERN
Please deliver the following message to Rene Berthelet,
Waserstrasse, 14, Surich, from the International Rescue and Relief
Committee:
"Cable immediately Leon Denenberg American Consulate
Istanbul our representative working on rescue from Hungary
Boumania Bulgaria and establish contact. Stil awaiting
reply to our 26 and subsequent case cables. Transmitted
5000 service social. Sending same amount middle July. Ask
Feriere send all possible assistance via Intercross to
Largo Caballero Camp Oranienburg.
FRANK KINGDON"
THIS IS WRB CABLE TO BERN NO. 67
.
July 3, 1944
11:30 some
BAksiniar 6/30/44
Regraded Unclassified
351
PARAPHRASE OF TELEGRAM SENT
TO:
Americal Legation, Bern
FROM:
Secretary of State, Washington
DATE:
July 3, 1944
NUMBER: 2236
CONFIDENTIAL
Reference is made hereiwth to Department's March 18
telegram No. 891.
This is to inform you that provisions concerning
issuance of immigration visas to refugee children which
was mentioned in reference cable has been extended to
1945, July 1 of that year. For issuance July through
October the nonpreference quota immigration numbers
given below were allotted to Zurich:
German 609 to 3008; Belgian 31 to 200; French 83
to 382; Polish 162 to 761; Netherland 81 to 360; and
Csechoslovak 63 to 312.
This 1s 25% monthly. Additional allotment will be
made then. It is requested that you inform consuls and
current information as to developments would be appreciated
by the Department.
HULL
Regraded Unclassified
The telegram must be
July s, 1944
352
paraphrased before being
comminicated to anyone
8 Pollo
other than a Government
agency. (RESTRICTED)
Regraded Unclassified
AMLEGATION,
BERN.
2259
FOR THE MINISTER.
The Governments of the United States and Great Britain
have agreed, in furtherance of their joint policy to use every
available means consistent with the successful prosecution of
the war to bring about the resoue of Victime of energy oppression
in imminent danger of death, jointly to approach the Swies Govern-
ment in regard to the reception and care of refugees with a view
to renewing assurances previously made concerning additional
imports, if needed, to neet the needs of refugees admitted to
Switserland.
After concerting with your British colleague, who has
received general instructions in the matter, a joint approach
should be made to the Swies Government in the sense of the
following:
QUOTE The Governments of the United States and Great
Britain desire again to express their admiration for the humani-
tarian policy which has been followed by the Government of
Switzerland in giving asylum and care to the large numbers of
refugees who have made their way to Switserland.
The Governments of the United States and Great Britain
desire to re-affira their willingness to arrange for the pro-
vision of such additional imports as may be required to case
the burden on Swiss resources resulting from the temporary care
of refugees already received in Switserland or those who may
subsequently be received under the liberal and tarian
Swine policy in this regard. UNQUOTE.
A similar joint approach is being made to the Government
of Sweden. Joint approaches also are being made to the Govern-
ments of Turkey, Spain, and Portugal expressing the hope that
they will adopt a more liberal policy as regards the reception
and temporary care of refugees and offering to arrange for the
provision of such additional imports and funds as may be
required to case the burden on local resources arising from
the care of such refugees as may be received.
HULL
(GLW)
7-2-64
we
WRB
EH
S/CR
BC
353
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern
TO:
Secretary of State, Washington
DATED:
July 3, 1944
NUMBER: 4221
CONFIDENTIAL
Reference is made herewith to Department's cable of
June 5, no. 1921, WRB no. 31.
The June 27 note received from the Foreign Office June
29 encloses two notices dated June 20. In my no. 4223 today
I am transmitting English translation. There follows by
airmail a copy and translation of both notices.
HARRISON
Regraded Unclassified
354
BJR - 254
Bern
This telegram must be
paraphrased before being
Dated July 3, 1944
communicated to anyone
other than B. Government
Rec'd 7:23 pame
Agency. (RESTRICTED)
Secretary of State,
Washington.
4223, July 3, noon (SECTION ONE)
Notice number one: Swiss Legation Berlin has
no knowledge of camps Bostortost Silesia and Bergau
near Dresden but will nevertheless immediately under-
take all necessary measures with a view to establishing
both nature and object thereof. Reports concerning
said camps will be transmitted earliest possible.
For some time in connection with foregoing there
have been held internment camp of Bergenbelsen near
Celle, Hanover whose inclusion civilian exchanges is
contemplated but not possessing American citizenship
or citizenship other Swiss represented countries.
"Alien relatives" that is, those close relatives
of American nationals not possessing American citizen-
ship are not being admitted internment camps reserved
for nationals of American nations. While awaiting
exchange they are detained in above-mentioned temporary
camp in which are held, for example, persons approved
for Palestine Civilian Exchange but not possessing
British nationality. (Note: Please see penultimate
paragraph Department's 1846, May 27, indicating more
lenient attitude in this regard).
It is appropriate to indicate with respect to
remainder of Department's 1921 that to the knowledge
of Swiss Legation no authentic national of American
nations has been deported or otherwise deprived of
rights resulting from his American nationality except
for Venezuelan family Malkowsky and Chilean families
Gorlin and Frumkin on whose behalf Swiss Legation
made repeated representations as & result of their
removal during April from Vittel.
German authorities continue to treat persons in
question as nationals of American nations even in
cases where respective governments on basis of infor-
mation furnished by Swiss authorities have not
definitely ruled regarding their status.
Polish and
Regraded Unclassified
355
-2- #4223, July 3, noon (SECTION ONE) from Bern.
Polish and other Eastern European Jews, it is
quite possible, thought it advisable to obtain a false
Latin American passport. German authorities have
subjected them to general treatment accorded to eastern
Jews having established that these documents not
authentic. As persons concerned have not had
possibility approach Swiss authorities cases this
character not generally known to the Legation.
Formal assurances limited to persons who were
on May 11 in civilian internment camps reserved for
nationals of American continent were only given on
that date by German Foreign Office to Swiss Legation.
No protection could be assured persons possessing
more or less doubtful passports in eastern territories
except by furnishing appropriate lists to German Govern-
ment and communicating declarations similar to
those which Honduras and Venezuela recently made in
stating even more the declaration regarding all
identity papers of Latin American countries of every
kind found to be in possession of persons concerned.
HARRISON
RB
WSB
Regraded Unclassified
356
GEM-330
Bern
This telegram must be
paraphrased before being
Dated July 3, 1944
comminicated to anyone
other than a Governmental
Rec'd noon.
agency. RESTRICTED)
Secretary of State,
Washington.
4223, July 3, noon (SECTION TWO)
Notice two.
A. None of persons removed from Vittel had been
able furnish proof Latin American nationality according
statement made May 3 by chief competent section German
Foreign Office to representative Swiss Legation Berlin
in reply to latter's request. For most part these
persons are Jews from east who previously claim to be
Paraguayan nationals or nationals other American coun-
tries. They were assimilated on the basis of this
delaration with nationals of countries at war with
Germany and under protection Swiss Legation. They
were consequently interned in camps reserved for nationals
of Latin American Republics, United States and Great
Britain.
These persons it developed in due course possessed
no proof of nationality which they claimed. Consequently
they were removed from camp where they had no right
to be. It was further stated by competent German
Foreign Office official that he could not accede to
Legation's request for list of persons removed from
Vittel because question merely involved internal German
police measures and persons concerned had no right to
Swiss protection. (Legation's telegram No. 3171, May 18
summarized this representation). Deportation measures
taken at Vittel and Compiegne have effocted no United
States national according to the statements secret
Counselor Sethe. The Swiss Foreign Office transmitted
during April to Swiss Legation Berlin the list bearing
238 names deported from Vittel as result of measures
taken by Germans which received from American Legation.
None of these persons appeared in Swiss Legation's
register of United States nationals - it was established
following examination. Swiss Consulate at Paris some-
what later forwarded list of 163 persons deported from
internment camps to the Swiss Legation. The authorities
of occupation furnished this list and none of these
persons claimed American nationality.
United States
Regraded Unclassified
357
-2-|/4223, July 3, noon (SECTION TWO) from Bern.
United States false passports are practically
nonexistent. German authorities have shown greatest
reserve regarding deportation American nationals as
this fact is shown to them. It is against persons
claiming Latin American citizenship that "Cleaning"
of internment camps is directed. It rests on fact
that Jewish population in Poland and other Eastern
European regions is in possession very large number
false Costa Rican, Guatemalan, Haitian, Honduran,
Ecuadoran, Paraguayan and Nicaraguan passports.
B. It was disclosed by an examination of two
lists of persons removed from Compiegne and Vittel
camps forwarded to Swiss Legation that large number
internees concerned alleged to be Paraguayan citizens.
Swiss Legation has not been able to determine whether
persons concerned have claim to Paraguayan citizenship
because Spanish Embassy Berlin represents Paraguayan
interests in Germany and occupied countries.
HARRI SON
WSB
RR
Regraded Unclassified
358
LFG-156
Bern
This telegram must be
paraphrased before being
Dated July 3, 1944
communicated to anyone
other than a Government
Rec'd 5:13 p.m.
Agency. (RESTRICTED)
Secretary of State,
Washington.
4223, July 3, Noon, (SECTION THREE)
Among persons appearing on lists in question
only following bearing numbers corresponding to those
of list from Swiss Consulate Paris (Note: Transmitted
to Department with Legation's airmail 8466, June 12
pursuant Department's telegram No. 2001, June 10)
were known to Swiss Legation:
143 Saul Malcowsky, Venezuelan; 144 Sara Malcowsky,
Venezuelan; 145 Maurice Malcowsky, Venezuelan; 1
Eugenia Gorlin, Chilean; 2 Anna Frumkin, Chilean;
3 Hermine Frumkin, Chilean.
Chilean Legation Bern stated in note November 4
1943 that as passports of Gorlin and Frumkin families
were issued by Chilean Consulate Kobe, they were to
be considered invalid as all documents issued by this
Consular representation. It was declared by Chinese
Legation in note of March 30, 1944 that deportation
above named persons had come to its attention and
Swiss Legation Berlin was requested by it to undertake
on their behalf all necessary representations.
German Foreign Office in notes dated May 5 and
June 20 considered cases of Gorlin and Frumkin families
and strong representations for return to an internment
camp of these Chileans were made. On behalf of
Malcowsky family similar representations made.
C. Authorization of German authorities have
been sought by Swiss Legation to have representative
Swiss Consulate Paris visit Vittel Camp with a view
to informing American internees of communications from
their Government (Note: Please see penultimate
paragraph Department's 1222, April 10 and its 1269,
April 13). Camp will be visited near future as
authorization given in principle.
D. Every opportunity taken by German authorities
to reiterate that there has been deported no internee
able furnish
Regraded Unclassified
359
-2- #4223, July 3, Noon, (SECTION THREE), from Bern
able furnish proof Latin America citizenship or
American nationality. Relatively large number of
persons, German authorities observed, claimed citizenship
of South America Republic supporting this with documents
evidently false or being able furnish slightest proof.
These persons never left Polish territory and Spanish
is not spoken by them. Right is claimed by German
Foreign Police to assimilate bearers of false documents
with rest of population of Poland or other occupied
countries and not to recognize subject false document.
HARRISON
WMB WFS
Regraded Unclassified
360
BAS -378
Born
This telegram must be
paraphrased before being
Dated July 3, 1944
communicated to anyone
other than a Government
Rec'd 4:40 a.m. 4th
Agency. (RESTRICTED)
Secretary of State,
Washington.
4223, July 3, noon (SECTION FOUR)
Swiss Legation Berlin following representation
made by American Legation to chief of Federal
Political Department requested and on May 11 obtained
from German Foreign Office formal assurance that
henceforth there would not be subjected to deporta-
tion action even bearers of doubtful Latin American
identity papers on the condition that persons con-
cerned already in internment camps for citizens
American continent. On May 15 Swiss Minister at
Berlin forwarded to chief of Federal Political
Department a circumstantial report on subject. No
new case of deportation bearers South American
identity papers reported since this representation.
It has not been possible to provide any assurance for
bearers of doubtful South American identity papers
who were not already on May 11 in internment camps.
E. With regard to request that Swiss authorities
protest to German authorities against their action in
passing on "merits of individual claims of persons
holding United States or Latin American documentation"
it must be pointed out in admitting that above quoted
term envisages priority claims for civilian exchange
that Swiss Legation has often indicated to German
authorities that North and South American citizens
included in civilian exchange groups were often per-
sons other than those proposed and recommended by
Swiss Legation and in whom greatest interest shown
by American Government.
German Foreign Office replied to these strong
oral representations that German Government also had
to accept persons in whom it had only secondary interest
and had no voice in composition German Civilian
repatriation groups in America. German authorities
unable in circumstances to admit that strong American
representatives were well founded.
According to
Regraded Unclassified
361
-2- #4223, July 3, noon (SECTION FOUR) from Bern.
According to view Swiss Legation owing to the fact
that exchange groups constituted in Germany by
domestic authorities particularly police no substantial
consideration being given to Swiss Legation's suggestions
satisfactory composition exchange groups can be only
obtained through exchange by interested governments
prior to departure of groups of formal lists. Except
in cases of Malcowsky, Gorlin and Frumkin families
no person able show valid claim to citizenship of
American country has been deprived of rights pertaining
there to during 1944 to knowledge Swill Legation.
Additionally several hundred citizens of United States
and Latin America protected by Swiss Legation whose
papers forwarded through intermediary competent
authorities ("pending case") not yet recognized
countries concerned. Nevertheless these persons
thus far permitted remain in internment camps foreseen
for citizens of American Continent. German authorities
in certain number cases this category already awaiting
decision for one or two years formerly inquired recently
whether one or another citizens of American countries
is effectively recognized by his government as such
and whether he is accepted for civilian exchange.
F. All Latin American countries represented in
Germany by Swiss Legation Berlin except that Sweeden
represents Mexico, and Spain represents Bolivia and
Paraguay. The matter in question (note: recognition
of individual claims to nationality of Latin American
countries pending roview of case by government concerned)
has been taken up with Swiss Legation by no Latin
American country which Switzerland represents. Only
Venezuela and Honduras during first half of June
signified to German authorities that all bearers of
identity papers issued by Venezuelan Honduran
Governments are to be treated in accordance with
international regulations applicable civilian internes.
End notices.
End of message.
HARRISON
BB
WSB
Regraded Unclassified
352
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Born
TO:
Secretary of State, Washington
DATED:
July 3, 1944
NUMBER: 4225
CONFIDENTIAL
It is stated in Swiss note of July 1, pursuant first
paragraph notice number one summarized in Legation's cable of
July 3, no. 4223, that Swies Legation in Berlin confirms
answer from German Foreign Office that no internment camp
exists bearing names Bostorost in Silesia and Bergau near
Dresden. It is suggested by Swise Legation in Berlin that
Bergau camp may be Bergen-Belsen near Celle, Hanover, which is
a special camp for assembling exchangeable persons (especially
Jews) who do not possess nationality of states which Switser-
land represents. The second camp might well concern former
internment camp for British men at Tostin Silesia.
With a view to undertaking inquiry concerning deported
persons, a representative of the Swiss Legation in Berlin will
visit Vittel comp. early in July.
Foregoing has reference to American Interests, Germany.
HARRISON
DCR:VAG 7/7/44
Regraded Unclassified
363
PARAPHRASE OF TELEGRAM RECEIVED
FROM:
American Legation, Bern.
TO:
Department of State, Washington
DATED:
July 3, 1944
NUMBER: 4237
CONFIDENTIAL
With reference to the Department's message
4WRB 36) of June 2, Number 2149, the information
given in my cable of July 3, Number 4225, with
regard to designations of camps may be interesting.
This is in connection with American
interests in Germany.
HARRISON.
DCR3LCW 7/6/44
Regraded Unclassified
364
CABLE TO AMERICAN CONSULATE GENERAL, ISTANBUL, TURKEY
The War Refugee Board requests that you deliver the following
message to Mr. Leon P. Denenberg:
QUOTE Received your interesting report of June 19.
Bagerly awaiting further details. Certainly approve man
for Hungary if feasible. List follows of endangered
political Hungarians. Transmitted your messages pat to
which he replies, "Zionist Organization of America cabled
Barlas representing Jewish agency Istanbul our first list
containing 168 names Hungafian Jewish notables for
certificates additional list of 600 more will follow.
Please take care facilities exit. Have provided relief
refugees Shanghai through Polish Embassy. However inform
future possibilities and contacts. Working concerning your
request names Roumanian Jews. Advice will follow. Use
list of Barlas in case other rescue facilities. Cable all
data available situation Polish Jews regards." Cabled
Bertholet contact you Istanbul. You cable us names most
endangered people chaiming possession Western Hemisphere
nationality.
SHEBA STRUNSKY
INTERNATIONAL RESCUE AND RELIEF COMMITTEE
UNQUOTE
*********
July 3, 1944
1:40 pomo
BAksintar 6/30/44
Regraded Unclassified
365
FEM-374
Ankara
Distribution of true
reading only by special
Dated July 3, 1944
arrangement. (SECRET W)
Rec'd 4:30 a.m., 4th.
Secretary of State,
Washington.
1202 2002, July 3, 11 a.m.
FOR WRB FROM THE AMBASSADOR
Ankara No. 83.
As requested appropriate efforts are being made
by the Embassy to obtain publicity in the Turk press
and through the Turk radio stations for the statement
of Archbishop Spellman. I have taken the liberty of
deleting from the text of the statement the reference
to "Whether under attack by the Mongols and Turks in
centuries past, or in our own times under the bitter
persecution of Bela Kun and his cruel cohorts" 8.8 it
seems to me undesirable to offend Turk susceptibilities
or to remind the Hungerians of the persecution to which
they were subjected by Bela Kun, generally believed to
have been a Jew.
STEINHARDT
JMS WTD
Regraded Unclassified
366
MJB-368
Ankara
This telegram must be
paraphrased before being
Dated July 3, 1944
communicated to anyone
other than a Government
Rec'd 4:05 a.m., 4th
agency. (RESTRICTED)
Secretary of State,
Washington.
1195, July 3, 7 p.m.
FOR LEAVITT JOINT DISTRIBUTION COMMITTEE NEW
YORK CITY FROM JOSEPH SCHWARZ.
HAve arrived here with Judah Magnes. Examining
extent of obligations incurred here in connection with
all phases rescue work and amounts we being called
upon to pay. While not ready with final figures believe
it important to indicate approximate totals 80 that you
may be enabled to make some provision on your books
and help in preparing your case for the allotment
committee. 1943 balance for transportation refugees
from Istanbul to Haifa approximately $16,500 covering
185 persons. For similar transportation ofor
approximately 2,100 persons from January through May
this year approximately $150,000. This includes 1200
persons who came by sea from Rumanian port, 342 persons
who came by sea from Greece and balance persons who
came through Bulgaria by overland route for the
maintenance of these groups in Turkey approximately
$14,000. Above figures do not include cost of sea
transportation which estimated at $500,000; this is
exclusive fof projects for future emigration concerning
which I cabled from Jerusalem. We are asking for no
appropriations until careful check-up to determine
final figures but would request you transfer immediately
$50,000 to British Passport Control Office, Istanbul for
use of Chaim Barlas as advance against transportation
costs Istenbul to Haifa. Will cable final figures
at the earliest opportunity address in care of
American Consulate Gemaral, Istanbul .
STEINHARDT
CAW WSB
Regraded Unclassified
367
HIS-589
Ankara
This telegram must be
paraphrased before being
Dated July 3, 1944
communicated to anyone
other than & Government
Rec'd 3:39 a.m., July 5
agency. (RESTRICTED)
Secretary of State,
Washington.
1211
2011,
July 3, 11 p.m.
The War Refugee Board Ankara No. 84. Please
deliver following message from Joseph Schwartz, JDC
for Moses Leavitt;
Please transfer $100,000 to Hollantse Bank,
Istanbul, account Gilbert Simond International Red
Cross for purchase additional food or shoes for Rumania,
Theresienstadt, Slovakia, et cetera. Also advise
status application for license purchase 20,000 pairs
shoes. This is the proposal concerning which we
cabled month ago. Still hopeful obtain favorable rates
though not certain. Address American Consulate,
Istanbul.
STEINHARDT
RB RR
Regraded Unclassified
NOT TO BE RE-TRANSMITTED
368
COPY NO,
11
SECRET
OPTEL No, 216
Information received up to 10 a.m., 3rd July, 1944.
1. NAVAL
Owing to shelling, unloading in most eastern assault
area suspended, Two minesweepers sunk by mines off CHERBOURG
yesterday. The port of PIOMBINO was opened for tank landing
ships and tank landing craft on 20th.
2. MILITARY
FRANCE. Officer commanding remaining German troops
in N.W. corner CHERBOURG Peninsula surrendered lst. Counter
attacks against bridgehoad over ODON have been repulsed with
considerable loss to the enemy in infantry and armour and German
concentrations have been successfully broken up by artillery,
ITALY. Poles have occupied OSINIO. East of LAKE
TRASIMENO German withdrawal continues and U.K. troops have
reached ST. SEVERINO 8 miles N.E. of CAMERINO and are 10 miles
S. of GUBBIO. West of the lake U.K. and South African troops
occupied FOIANO and SINALONGA respectively, latter without
contact. French troops are within two miles of SIENA and
further west U.S. armoured formations have advanced another
three miles towards VOLTERRA. CECINA is firmly in U.S. hands
and heavy fighting continues N.E. of the town.
BURMA, Our troops advancing from the north are now
established within five miles of UKHRUL and have carried out
small raid on UKHRUL itself,
RUSSIA. In central sector Russians have reached a
point 45 miles west POLOTSK; have cut the railways POLOTSK-
MOTODECZNO and MINSK-MOTODECZNO and have reached a point 16
miles E.N.E. of MINSK. Advancing from SLUTSK they have cut
the railway MINSK - BARANOWICZE, 40 miles N.E. of latter town,
3. AIR OPERATIONS
WESTERN FRONT. 2nd. 665 heavy bombers (1 missing)
dropped 2,721 tons on flying bomb supply and launching sites;
at one site photographs show bombing well concentrated on aiming
point but elsewhere results difficult to assess owing to cloud.
Little offensive activity over NORMANDY owing to adverse weather;
a bridge over ORNE hit; 13 enemy aircraft destroyed; four Allied
missing.
ITALY AND YUGOSLAVIA- 1st. 531 medium, light and
fighter bombers attacked objectives in north and central ITALY,
Fighters over YUGOSLAVIA destroyed or damaged eight locomotives,
17 motor vehicles and 74 railway wagons.
HUNGARY. 2nd. 670 U.S. heavy bombers dropped 1,324
tons on four railway centres, two oil refineries and an airfield
all in BUDAPEST area. Enemy casualties by bombers and escorting
fighters 57, 14, 15. Allied - 16 bombers, 8 fighters missing.
German activity from 6 c.m., 1st, to 6 a.m., 2nd.
169 flying bombs launched, 19 destroyed by fighters, 12 by A.A.,
and 13 by balloons, total 44.
During 24 hours ending 6 sem., 3rd, 113 flying bombs
launched of which 91 crossed coast, None operated between 3.15
Dame 2nd and 12.45 a.m. 3rd.
Regraded Unclassified