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Volume 824, March 1- March 2, 1945
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Volume 824, March 1- March 2, 1945
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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RECISION
TRADE MARK
MICROSTAT/
us. PAT. OFF.
MICROFILM
BOLL NO.
B -
Book
Page
Bartelt. Idward 7.
See Treasury Department: Fiscal Assistant Secretary
Bretton Voods Conference
See Post-War Planning
Burokhardt, Mr. (International Committee of Red Cross)
See War Refugee Board
- C -
China
Adler resund of current evente - 3/1/45
824
50
a) Foreign exchange, taxation. Army supplies.
financial reforms as announced by Executive Tuan,
Hurley's reputation, discussed
b) Memoranda attached on
1) Procurement of liquid fuels
63
2) Cotton situation in Free China
65,67
Exports of Gold to China: Coe memorandum - 3/2/45
230
a) Kung letter
231
1) Reply . 3/3/45: See Book 825. page 171
DIART
Export-Import Bank loan of $16 million proposed for
private Chinese loan - White menorandum . 3/2/46
237
Correspondence
Book 824
Mail report by Mrs. Forbush - 3/2/45
213
March 1-2, 1945
- x -
Socles. Marriner 8,
See Financing. Government: War Savings Bonds
(7th Var Loan, Drive)
See Revenue Revision
Export-Import Bank
See China
- 7 -
Federal Reserve
See Financing. Government: Var Savings Bonds
(7th Var Loan Drive)
See Revenue Revision
Financing. Government
Var Savings Bonds: 7th Var Loan Drive
Life insurance company representatives-Treasury
conference 3/1/45
3
Eccles and Sproul, representing Executive Committee
of Open Market Committee, confer with HWr, Bell.
and Hass . 3/1/45
11
a) Memorandum containing Open Market Committee
program
13,189
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MA U.S. PAT. OFF.
MICROFILM
BOLL NO.
7 (Continued)
L
Book
Page
Book
Page
Financing, Government (Continued)
Land-Lease
War Savings Bonds: 7th Var Loan Drive
U.S.S.R.: Report on exports for November 1944 - 3/1/45
624
95
Conference of House and Treasury group - 3/2/46
824
123
United Kingdom: Federal Reserve Bank of Sev York
a) Above memorandum discussed
statement showing dollar disbursements, veek ending
b) Length of drive discussed
162
February 21, 1945 - 3/1/45
96
e) Eccles-MJr telephone conversation
177
Life Insurance Companies
4) Murphy memorandum: "Criteria for an offering of
See Financing. Government: Var Savings Bonds
securities to banks concurrently with 7th War
(7th Var Loan Drive)
Loan Drive
192
el Sproul-MMJr conversation - 3/2/45
193
Announcement of types of securities in 7th Var Loan
* -
Drive - 3/3/45
199
Songwriters luncheon. Mrs. Morgentham presiding
Miest. Florida
3/3/48
206
See Tax Evasion
Treasury group discusses call and naturity dates -
Murray, Philip (President. Congress of Industrial Organizations)
3/8/45: See Book 8,26. page 103
See Post-Var Planning: Bretton Voods Conference
a) Suggested Issues: Book 826. page 161
Bouse-HMr conversation - 3/8/45: Book 8.20. page 115
Fiscal Assistant Secretary
P
See Treasury Department
France
Post-War Planning
Exchange and its effect on silitary personnel again
Bretton Woods Conference
discussed by McCloy and HWr - 3/1/45
8
Publicity plans to date reported by Feltus - 3/1/45
24
Hoffman (Treasury Representative) report on current
Radio commentators thanked for recent endorsements
situation - 3/1/45
72
3/1/45
27
a) Index of point covered
75
(See also Book 825. page 181)
Negotiations with French "to induce the to provide
a) Raymond Swing thanked - 3/13/45: See Book 027.
special facilities for U.S. troops to offset bad effect
page 270
of high prices" - Cos memorandum - 3/2/45
239
%) Agrossky, Drew Pearson. and Cecil Brown thanked -
3/15/45: Book 121. page 248
Stassen's talk with Harvard professors reported by
G
White - 3/1/45
34
(See also Book 521- page 209 - 3/16/45)
Gold
Murray, Philip (President, Congress of Industrial
See China
Organisations). talls HMJr of letter endorsing and
Greece
willingness to testify - 3/9/45: Book 826. page 206
Possibility of loan discussed in Coe memorandum
a) Copy and Treasury thanks - 3/13/45: Book 627-
3/2/45
240
page 254
Green, William (President, American Federation of Labor)
Green, William (President, American Federation of Labor).
See Post-War Planning: Dretton Woods Conference
asks for elucidation - 3/9/45: Book 025. page 208
a) Oreen se testify for bill - 3/24/45: Book 832.
page 65
=
(See also Book 833. page 80)
Hinnler, Heinrich
Radio Commentators
a
See Mar Befuges Board
See Post-War Planning: Bretton Woods Conference
Hoffman. Michael L.
Revenue Revision
See France
Sccles' statement on capital gains tax to curb rising prices
Nurley. Patrick
of capital values - 3/2/45
228
See China
a) Blough mesorandum on 3/18/45: See Book 022- page 145
I
Insurance (Life) Companies
See Financing, Government: Var Sevings Bonde (7th Var Loan Drive)
Regraded Unclassified
PRECISION
TRAGE MARK
MICROSTAT
RSG. a PAT OFF.
MICROFILM
BOLL NO.
. a .
Book
Page
- V - (Continued)
Songwriters
Book
Page
See Financing. Government Var Savings Bonds
Var Refuges Board (Continued)
(7th War Loan Drive)
Tead Hahatzala license (Musy negotiations) (Continued)
Stassen. Harold
Personnel from Var Refuges Board to go to Switzerland
See Post-Var Planning: Bratton Woods Conference
to facilitate action - 3/7/451 See Book 12). page 13
Switzerland
a) Gasoline and trucks for use in Svitzerland
See Var Refuges Board
discussed by HMJr and Assistant Secretaries of
Var and Havy - 3/8/45: Book 121. page 90
1) McCloy cable to Eisenhower - 3/8/45:
- ? -
Book 126. page 202
a) Eisenhower reply - 3/16/45: Book 820.
Tax Braston
page 258
Mismi investigation by Trey, atc. - report on - 3/2/45 824 227
Himaler-Durckhardt (of International Committee of Red Cross)
Taxation
talks positively reported from American Legation. Bern
See Revenue Revision
3/8/45: Book 826- page 187
Treasury Department
Himmler-Kerstem (from Sweden) talks - - 3/28/45: Book 833.
EMr's letter for pay envelopes - 3/1/45
22
page 58
Fiscal Assistant Secretary
Jernan authorities-Burckhardt talks reported - 3/22/45:
Mesorandum to FIR concerning temporary appointment
Book 832. page 24
of Bartelt to position - 3/2/45
201
Executive Board meeting - minutes of - 2/28/45
824
241
Hannagan-IDWr conversation - 3/13/45: See Book 527.
Var Savings Bonds
pages 145,169
See Financing. Government
Appointment - 3/14/48: Book 628. page 189
- U -
.
U.S.S.H.
See Land-Lease
United Kingdom
See Lend-Lease
V - -
Tasd Rahatzala
See Var Refuges Board
- Y =
Wallace, Henry A.
BUr congratulates his on confirmation of appointment
as Secretary of Commerce - 3/1/45
16
Var Refugee Board
Yand Eshatzala license (Musy negotiations)
See also Book 823
Copy of license as issued March 1, 1945
36.38
Prospective Evacuations to Switzerland from German-
controlled Territory*: Report for week of
February 12-17, 1945 . 3/1/45
101
Grew concern over safeguards in license against use
of money for ranson payments reported to Treasury
group by Gaston - 3/7/45: See Book 8,25. page 9
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
1
2
March 1, 1945
10:25 a.m.
No. GASTON: why don't you say"no comment?
PHE-PRESS
MR. BLOUGH: Un speculative tax, it is still under
study, and there is nothing to report.
Present: Mr. D. N. Bell
Mr. O'Connell
B.E.JR: You're helpful.
Mr. White
Vr. Gaston
Via. FELL: They may ask you about the Seventh War Loan,
Ar. blough
or whether you are going to announce the basket over the
Mr. Shaeffer
week end, and you can say that you hope to.
Mr. Fussell
Mrs. Klotz
H.N.JR: Sylvia Porter WHS In. She knew everything
Visa Chauncey
that happened up until yesterday.
MR. BELL: She mants all of the dope today, If she
can get it. The understanding is if she writes it, it is
Have you decided whether you are going up?
to be withdrawn 1f it isn't announced.
KK. BELL: I don't know.
H.M.JR: 1 didn't tell you.
H.M.JR: I have one for you and Herbert.
MR. HALL: I am coing to ask you if I can give it to
her.
AR. BELL: I'll go. Thank you.
1 don't know what the answer is.
H.W.JR: Is there anything special?
FELL: If ne tentatively make up our minds, she wants
MR. SHAEFFER: There is the price of gold, Bretton
it, and she is going to stay here and write it, and then she
Woods, and speculative taxes. That's all I know of.
will withdraw it from the printer if you don't release it.
15. O'CORNELL: No, the answer is too--
H.E.JA: well, she's coming in this afternoon.
VR. GASTON: The answer is no.
MR. HELL: UB.
H.M.JR: I an not going to get into the price or gold.
MR. WHITE: You have competition, Dan.
We stand ready to buy gold at thirty-five collars an ounce
until hell freezes, or the Republicans get in.
MR. FELL: He sees them more often than I do.
MR. GASTON: I don't know whether me have in nine any
VIS. KLOTZ: You're losing out slowly.
proposal to change--which of course we don't know.
B.M.JR: Shall I say that about the Republicans?
Mr. BELL: There is no change in our policy.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
No. PAT. OFF.
MICROFILM
BOLL NO.
3
4
2
Notes on Meeting Held with Life Insurance
Company Representatives in the
For the Treasury Department:
Chart Room, 11:00 to 11:55 N.R.,
Thursday, March 1, 1945
Secretary Morgenthau
Under Secretary Bell
Mr. Gamble
Xr. Hane
Present:
Mr. Murphy
For the Life Insurance Companiest
The Secretary opened the meeting by saying that he
Gladden W. Baker, Vice President and Treasurer,
VRB interested in the problems of the life insurance com-
Travelers Insurance Company, Hartford,
panies, and wanted to take these problems into consider-
Connecticut
ation in planning the Seventh Ver Loan. He said that he
wanted to throw the meeting open to the representatives of
V. Howard Cox, President, Union Central Life
the companies to Gisouss any idens that they had with
Insurance Company, Cincinnati, Ohio
respect to the Loan.
Franklin D'Olier, President, Prudential Insur-
Rr. D'Oller, President of the Prudential Insurance
ange Company of America, Newark, New Jersey
Company, said that the moet important thing to the life
insurance companies vos that a. 2-1/2 percent bond be of-
Levia W. Douglas, President, Mutual Life In-
fered in the Lonn. There voa general agreement with this
surance Company of New York, New York,
statement on the part of all the life insurance repre-
New York
sentatives present.
Frederio W. Ecker, Financial Vice President,
The Secretary sold that he would give full consider-
Metropolitan Life Insurance Company,
ation to the desires of the life insurance companies for a
New York, New York
2-1/2 percent bond. In answer to B question with respect
to the permanence of the 2-1/2 percent rate, the Secretary
Laurence F. Lee, President, American Life Con-
said, that the statement of the monetary authorities that
vention, Raleigh, North Carolina
the war would be finenced nt not in excess of 2-1/2 per-
cent should be construed as placing a ceiling over this
F. A. Shatler, Vice President, Equitable Life
rete, but not necessarily placing n. floor under it.
assurance Society of the United States,
New York, Sew York
The Secretary maid that he understood that many of
the life insurance companies had bought substantially more
John 5. Sinclair, Executive Vice President,
securities in the previous drives than they had needed for
New York Life Insurance Company, New York,
reel investment, and had sold out many of these securities
New York
before the beginning of the next drive. The companies
thereby seda short-run profits on the securities; but the
George Willard Smith, Procident, Yes England
securities finally turned up in the hande of commercial
Rutual Life Insurance Company, Boston,
banks, thereby defecting the objectives of n nonbank drive.
Nassachusetts
Quite a number of the representatives of the life 1n-
F. W. Walker, 71de President, Northwestern
surance companies spoke on this point. All of then denied
Mutual Life Insurance Company, Milwoukee,
that they operated for short-term profits of the character
Wisconsin
Cecil Voods, President, Volunteer State Life
Insurance Company, Chattanooga, Tennessee
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
s. PAIL OFF,
MICROFILM
BOLL NO.
5
6
- 4 -
- 3 -
often unde portfolio changes of one kind or another neces-
alleged, although several stated that they sold securities
sary, and that the Department would not ask the companies
as they approached naturity and their yield went below a
to agree to freeze their portfolios of Government securi-
certain level. One of the representatives mit that his
ties. The Secretary agreed to this statement of the case.
company sold securities whenever their yield went below
1 percent, while another representative indicated a dend-
Mr. Soith, President of the New England Nutual Life
line of 1-1/2 percent for his company.
Insurance Company, unde the point that it would be helpful
If A 90-day, rather than a 60-day deferred payment plan,
Mr. Douglas, President of the Nutual Life Insurance
were permitted in connection with the Seventh War Loan.
Company of New York, said, however, that his company "rode
the curve", and that they had checked this matter with the
Mr. Gamble said that A. 75-day (rather than a 60-day
Federal Reserve Bank of New York and had been told by the
one) had, in fact, been allowed in the Sixth Loan.
Bank that such action vas not contrary to Treasury policy.
The Secretary said that riding the curve vas contrary
to Treasury policy, and that the Federal Reserve Bank of
NCM
New York had been remise in not telling Kr. Douglas of this.
The Secretary said that there had been considerable
discussion, both inside the Treasury and out, of the possi-
bility of A formula to prevent excessive subscriptions to
Government securities by life insurance companies during
War Loans. He anid, however, that he would much prefer
self-policing within the industry if it could be arranged.
The life insurance company representatives all agreed
that self-policing would be such preferable to a formula.
The Secretary naked that the representatives present see
that the word was passed around through the appropriate
channels to all companies, that they would be placed on
their honor, and expected to subscribe in future drives
only for the amount of securities they needed for permanent
investment.
A number of the representatives made the point that
there was B. certain agount of legitimate svitching which
they believed should be permitted. Among the types of
avitching mentioned which they considered legitimate were
the sale of tax-exempt securities, the anle of securities
approaching maturity, and the sale of short-term securities
purchased in anticipation of the Mar Loan.
Mr. Gamble said that he believed it was generally
understood that the insurance companies were agreeing nerely
that they would not purchase Government securities for pur-
poses of switching or free-riding. He and that the
Treasury Department recognized that changing circumstances
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ REG.U.S.PAT.OFF. MICROFILM
BOLL NO.
7
March 1, 1945
8
2151 3.9.
March 1, 1945
2:54 D.
RWr:
H-110.
John
Corretor:
: have (P. Johnson on the wirs. - move that
MeCloy:
Hello.
their non in over == Newburc today: that they nac
enow there that night but be von going to Ent
HMJrt
Hello.
out to the form today - total to his in time
to get his sore anples. He said throl haven's
in
Velue getting the nest out on us on this exchange
gotten anything since Sunday, that they CAD use
of It affects the soldiers in France.
some more small DOPO and BOTH nore Inrew need,
HMJ:
Yes.
too.
Vell, 1'1" ter and to IX to Balley
":
You remember vo talked about that at one meeting
in connection with French Lond-Leare.
Docretor:
Right.
FNJrt
Yes.
HMJrt
I's withing for Frenk Tabey.
%:
I wonder whether you have taken any steps with the
Does tort
Y--, I'm spring to - his.
French people to urge then to take one of those
allowisting stene that we talked about.
HVJr:
: did nothing but want voe done here in the 2020
you and Hilldring vere here.
V:
Yean.
And then : thought then the rest VS # un to you.
:
Yell, want ve did VILE to -- ve communicated with
the State Department
Teah.
:
and =ut something formally over to them.
RWn
Yeah.
V:
And I I'd better clear it with then before
you do anything, but if you would be prepered
HXJr:
Y*'11 be glad to help.
It:
You'd be glad to help?
HMJr:
Yes.
Ma
Chey. Yell, I'll talk to State Department, and then
I'll talk to you again.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
BOLL NO.
9
10
2 -
3
HXJr:
DIE you have n. and Prench dinner LAST night?
HNJr:
Yeah. Don't breathait excent to Kr. Stimson.
%:
Last night?
N:
Yeah,
FMJr:
Yeren't you
H/Jr:
Because be wanted it as a lever on them to agree
V:
Oh, yes, with Monnet. Yeah, T via with Monnet
to come to Sen Proncisco
last night.
V:
on.
HMJr:
Yell, the cinner couldn't have been no cood If
you don't remember it.
HXJr:
The French.
N:
Well, : VII with enother French dinner the night
V:
I see.
tefore. It not == confused. He brought aut bis
finest brandy.
HVJr:
And according to whet's his name -- Grew
PMJr:
Yeah.
N:
Yes.
in
His finest cigare.
UNJr:
Ed got cuite ongry when they wouldn't agree
to hold It up.
HMJr:
Yeah.
M:
the
no
And nin finest dinner. He vot in n pretty E°7
mood,
HIGHT:
But I gether Grew told thes It vas too late.
HMJr:
%e were invited and We couldn's none. I'm sorry.
=
Too Inte because they had the whole thing net un.
There would cave been n. great conference on, I
E/D.
Yeah. Well, ne VII 9 -- be who very aleased, of
suppose, if they nad: but that's funny.
course, with everything. The -- the State Depart-
ment people colled se NO today end estd they thought
HMr:
But that's Junt for you and Stimson.
there VOE going to be some rusnue on the H111.
P:
ALL right.
H/Jr:
Th, really?
HWr:
I just thought it VSS sort of amazing.
Mt
Vell, the -- there VS.# nome intination that the
thing vas being sicked uo.
:
Very. Okey.
on.
H&r:
All right. Thank you.
":
And -- in connection with the extension of Lend-
Lesse. It looked ne if they veri going to E°
into 11.
EWF:
Did you hear -- this 1 = very, very confidential
that Ed Stettinium tried to nold iso the thing
yesterday?
**
on, no.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAT. OFF.
MICROFILM
BOLL NO.
11
12
2 -
MEETING IN SECRETARY MORGENTHAU'S OFFICE WITH MR.
ECCLES AND MR. SPROUL REPRESENTING THE EXECUTIVE
if they were allowed to buy up to the $100,000 limit of
COMMITTEE OF THE FEDERAL OPEN MARKET COMMITTEE
F and 0 Savings Bonds. The Secretary also said that be
was inclined to think that if a direct bank offering
Thursday, March 1, 1945
were made it might be better to put it before rather
3:00 P. M.
than after the Drive, that the psychological effect say
be more favorable if handled in this way. Mr. Eccles
Others present: Mr. Bell, Mr. Hass
indicated that such an arrangement would be satisfactory
to theu.
The Secretary then asked Mr. Ecoles and Mr. Sproul
Mr. Eccles told the Secretary that he had a memoran-
to consider the question of the direct bank offering of
dum report to the Secretary from the Federal Open Market
43 billions, consisting only of the 7/8% certificate.
Committee with regard to War financing. The Secretary
Mr. Sproul said that be did not think that type of
asked Mr. Eccles to read the memorandum, a copy of which
offering would serve the purpose intended, 1. 0., to
10 attached.
take the steam off of switching securities into the
banks. He felt that in order to do this the banks would
When Mr. Ecoles reached point 3 in the memorandus,
have to be offered some of the 1 1/2'a included in the
which recommends that no announcement be made at the
Drive. The Becretary closed the discussion with regard
present time of the naturities of any of the issues
to the direct bank offering by repeating again that he
included in the Drive but to state the coupon rates carried
sunted to consider the matter very carefully with his
by the various issues, the Secretary indicated his approval
staff the next morning, and that he would keep in touch
of that procedure, stating that he had made a similar sug-
with Mr. Eccles during the day.
gestion to his staff. Mr. Eccles continued his reading of
point 3 which also recommende that the Treasury consider
The Secretary told Mr. Sproul and Mr. Ecoles that
lengthening the period during which these securities are
in his meeting with the insurance company representatives
ineligible for bank purchase. The Secretary setd that ne
only "Lew" Douglas admitted that his company had played
thought these restricted securities should be made eligible
the "roll down the curve of interest pattern" and that
for bank purchase at the time they have only 10 years to
Mr. Douglas said he had gone over this whole matter with
run to maturity.
the Federal Reserve people in New York and it had their
approval.
When Mr. Eccles read point 4 of the memorandus, which
recommende a direct offering to banks, the Secretary indi-
At the Secretary's suggestion, the group retired to
cated his interest and said he wanted to think the matter
Mr. Bell's office and continued the discussion. (Mr. Rouse
over carefully and would start discussions with his staff
joined the group in Mr. Bell's office.) The matter of
at 9:30 the next morning.
whether or not the announcement should include the maturity
terms of the issues in the Drive was again discussed.
The Secretary sald that the would like to work out
Mr. Bell felt that if the maturities were announced, some
something that would favor the smaller banks who have less
of the bloom on the market might be saved, and suggested
favorable earning position than the larger banke.
for the 2 1/2's & 10 year call period or a 7 or 8 year call
Mr. Sproul said that recently the smaller banks were also
period, the 10 year call period being something approximating
showing good earnings reports, particularly when the earn-
1967-77, for example.
ings are expressed as A percentage of their capital funds.
But Mr. Sproul went on to adá that some of the banke are
The possible terms for the 1 1/2% issue were also
so small that the percentage may look favorable and yet
discussed and Mr. Rouse said that on the basis of the
the total amount of earnings remains small. The Secretary
present market that would be a 5 year note. Mr. Hans
sade the suggestion that the little banks would be favored
expressed the view that he thought it was very important
that the 1 1/2% issue should be called a bond rather than
a note, and indicated that the issue instead of being of
fixed maturity could have an option period such an a 4 1/2 -
6 1/2 year obligation.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MI.
on.
MICROFILM
BOLL NO.
14
13
2
March 1, 1945,
STRICTLY CONFIDENTIAL
STRICTLY CONFIDENTIAL
to
March 1, 1945
full cycle and that the questi of continuing this increase be receamined
at that time.
KENCRANDUM TO THE SECRETARY OF THE TERASURY
The separation of the drive into two distinct parts, one for is-
YOCK THE FEDERAL OPIN MARKET COMMITTEE
dividuals. partnerships, and trust accounts, and the other for other nonbank
investore is is line with our earlier recommendations and has our full en-
dorsement. Ve feel also that the increase in the quota for the individual
In the light of the joint objectives of the Treasury and the Fed-
drive will place individuals and the selling organization under substantial,
eral Reserve System with regard to var financing, the following program is
but not impossible, pressure. It is recommended that the quota for other
recommended:
nonbank investore be decreased to 5 billion dollars. which would make 15
unnecessary for these investors to sell any of their existing holdings. The
1. That the Seventh Var Loan Drive be divided into two distinct
selling organization should be instructed to discourage the making of quotes
parts, the first for individuals and the second for other nonbank investors,
by welling from existing holdings. It would be expected that between 3.0
and that the goal for the second part be placed at 5 billion dollars. The
and 3.5 billion dollars of this total would be obtained from insurance
suggested dates, May 14 - June 16 and June 18-30, are entirely satisfactory.
companies, autual savings banks, and similar institutions, this amount
representing their accumulation of funds, The resainder would come princi-
2. That the Treasury announce at the present time that the offer-
pally from corporations.
Ings is the individual drive, in addition to savings bonde and savings notes,
will consist of 7/8 per cest certificates, 1 1/2 per cent securities, aná
À maximum rate of 1 1/2 rather than 1 3/4 per cent unrestricted
2 1/4 and 2 1/2 per cent restricted bonds and that the offerings la the
securities would have a. number of advantages. The lower rate would reduce
second part of themirive will consist of the same securities, except for
the interest cost of the debt and retard the growth is bank earnings. It
the exclusion of Series x savings bonde and the 1 1/2 per cent securities.
also would reduce the temptation for commercial banks to arrange for indirect
purchases and would reduce the amount of free-riding and speculation. At the
3. That no announcement be made at the present time of the entr-
same time, it would not be likely to reduce materially the denand from
rities of any of the Issues included in the drive, The announcement abould,
individuale.
however, state that the asturities on the 2 1/4 and 2 1/2 per cent bonds
vill correspond approximately with the last previous issues of such securi-
An extension of the maturities of the 2 1/4 and 2 1/2 per cent
time, with allowance for the lapse of time. It is maggested that the Treas-
bonde would not reduce the interest cost to the Treasury, and it might create
any consider lengthening the period during which those securities are
a bad market situation in the event of large sales by nostank investors. It
ineligible for bank purchase. The asturity of the 1 1/2 per cest securities
is expected that the prices of the existing issues of 2 1/4 and 2 1/2 per
would be determined is relation to the level of the market after the announce.
cent bonde would decline on AB announcement that sev issues bearing these
ment and at the time of the offering.
coupon rates will be offered in the drive.
4. That the Treasury also announce at the present time that, after
It is sepecially teportant to include 2 1/2 per cent bonds in the
the end of the corporate drive, 11 will nake 8. dired offering of 1,5 billion
drive. Otherwise, the prices of the existing 2 1/2 per cent bonds would 10-
dollars of certificates and 1.5 billion of 1 1/2 per cent securities to con-
crease further, with the result that the long-term rate would decline. The
mercial banks. Subscriptions would be limited to a propertion of capital
21/2 per cent rate has been the most important rate in the entire var
and surplus of a proportion of deposits, with the objective of limitime total
financiar program. Even at the 2 1/2 per cent rate, however, 11 has been
subscriptions to not far is excess of 3 billion dollars. All embecriptions
difficult to encourage purchases of Government securities. A reduction to
for $50,000 or less for each 1ssue would be accepted in full. This would
that rate would increase the difficulty by reducing the incentive to save.
make it unnecessary to continue offerings to commercial banks on the basis
These securities are is an entirely different calegory from unrestricted
of their time deposits.
securities. because they can be held only by individual savers and by In-
atitutions that hold survice of the public and therefore cannot involve an
5. That the Treasury limit the amount of war loan deposite held
unnecessary expanston in bank credit, Finally, if the long-term rate were
by any one bank to 30 per cent of its deposits, other then var loan deposits,
reduced, 1: sight be impossible later se restore the 2 1/2 per cent rate if
and that the cellateral pledged to secure such deposite be ounfined to U. 5.
that coorse genned to be destrable, because it would involve persitting
Government securities.
newly-issued 2 1/4 per cent bonds to decline below par.
6. That the Treasury continue to increase the outstanding amount
of Treasury bills by 100 million dollars a verk until the completion of the
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
NO. 1. PAT. OFF.
MICROFILM
ROLL NO.
16
15
March 1, 1945
-:50
STRICTLY CONFIDENTIAL
3
March 1, 1945.
Rello.
Story À,
Metroder
Direct bank financing should have no adverse public reaction, be-
You Eenry.
cause those who realize that indirect bank participation - been as lapor-
Hello, Rr, Secretary. I want to congratulate
tant part of recent drives would recognize the advantages of the change,
you.
wherese those who do not know this fact would be unlikely to realize that
any change had been made, Commercial banks have found that many nochank
are
Yes, you MA F lot 70 - with
investors are villiar to subscribe for securities for the purpose of resell-
Ing the securities to commercial banks at little or no presium. Banks that
INSURE
1'm
have followed the Treasury's request, however, have been able to purchase
securities only by paying substantial premiums to speculators. In effect,
St
Vell, I'm D ove. 1: von litter tion : ameeted.
therefore, the Treasury, by not making direct offerings to commercial banks,
saltes it advantageous for banks not to follow the Treasury's own request.
I the Inc ass fine.
In addition to putting bank purchases on a more straightforward basts, a
direct offering to banks would permit basica to purchase new securities at
4:
Thank port.
par rather than to pay premiums to speculators or to maice special arrange-
mente with nonbank investors. It also would reduce free-riding and would
Are : west 11 - you
reduce undestrable shifting of securities the market.
Are yes - 179 70% Henry?
The Committee also discussed a suggestion that the Treasury TO:
quire that sose proportion of war loan deposits be secured by Government
securities anturing in not more than either six months or one year, but case
to no conclusion os this matter. If, however, the Treasury decides to
S=
: 15% vers (Ding
adopt this suggestion, the Consittee recommends that such depositaries be
exempted from the requirement to the extent of $500,000 or 25 per cept of
Mides
CA. I AMA " - that on account of Pretton
their var loan deposite, whichever is larger.
:
in "!!! for - with.
W:
=a, 20%
Wint
IT pou're pit nothing better to do early next
week, Pet in tauch with 219 and ve'll walk
Jown,
e
7 will - will. T'll - looking forward to
11,
Fine. I'm dellented, Henry.
=
me, the President called -- up. You're the
third one - the President just a. whont time
ago,
FWr:
Re 001100 you 107
Regraded Unclassified
MICROSTAT MICROFILM
BOLL NO.
PRECISION
TRADE MARK
17
18
-
- 2 -
March 1, 1945
5105 p.m.
W:
Yeah.
Operator:
All right?
HMJr:
Tell, that NO F nice.
HMJr:
Yes,
Y:
Yean't that nice of nim.
Operator:
3a chead.
HMJr:
That's swfully nice of his.
HIGHT:
Yes.
Y:
Yeah.
Frank
H/Jr:
Well, I'm deligated.
Isbey:
Hello.
Y:
Thanks, Senry.
HXJr:
Frank?
HMJr:
Be speing you. Rye,
I:
Yes, sir.
Y:
Eye.
HMJr:
How are you?
HKJr:
Bye.
1:
All right. Row - you, Mr. Secretary?
All right.
I:
Thet's good.
HWr:
Frank.
::
You.
HMr:
After getting back -- say I first again thank
you for all you did.
:)
on, well, De honored to have you come.
FORM
Yell, It's wonderful. Nov
I:
"Thanks to you! Mrs. Isbey noid, "for the roses."
The will write you a note. They were beautiful.
Mr:
Yell, I's corry that I took you away on her
birthday.
I:
oh, no, that VII fine.
Frank.
I:
Yeah.
RWr:
They feel nere that -- I don't vent to nich too
hard with the Labor Union.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
20
- 2
19
It
Yes.
I:
Yeah.
HMJri
: aran, anything they want to do under their ovn
steam locally
RWr:
But the thing that they don't 11ke 1+ to pt from
all over the United States practically the same
I:
I get it.
t-lagram. You net?
BWr:
But they fool that if ve -- in, for instance, they
I:
Right. Right.
start e flood of C.I.O. here, it vill oring the
Vallace thing right back up fresh in their since.
HIJPI
T just thought I'd out that
I:
Good judgment.
T:
the I'm 304 you CATE =- that because I vot here
in Grand Rnoide last night with three of then --
HNJr:
And they'd kind of like to forget it for a while.
the C.I.C. fellow, end A.F. of L. man, all good
friends of nine, and the -- and with these men,
I:
Yeah.
the hend of the RELINDY Tentress, you know,
HWr:
Now, they've confirmed Vallace.
HMJrt
Yell, 15's just
I:
Yeah,
I:
This to In par friend's hode town. You nee?
ENJr:
They neven't yet confirmed Aubray Villiees, ind
Wr
Xail, It's just the C.T.C. right now; on account
Dod forbid -- - not plan to.
of the Vollene thing, It's got then 017 kind of un
to the sir.
I:
: TOD.
T:
Tes.
HMJr:
Fot that the C.I.D. sine of monterily
here has sort of vorn out 118 welcome.
Tex
I:
Yeah,
I:
Now, : think that's encellent judgment, and Int's
En :t just Indally here in Michigan because here
HYJr:
And If a little leter on ve para thes, then : think
1n were it really counte de those two parties.
we'd call on them. May I wouldn't ENY anything --
anything they do under their own steam that valve
SCNIP:
And the American Form Supero Federation -- they
started, all micht.
lieten to them.
I:
Yeah. I get you.
::
Ter. A11 right.
HXJP:
But ve'es not going to start - detional drive. Sent
HMJE:
9.1 : just thought I'd -- I'd tell you that.
T:
Yesh.
It
the 1st to get that.
HMJr:
You 0107
ENJPI
Right.
It
The : right.
I:
And NY -- we and en canz -- T went you to know this
because really Mrs. Iabey, when I came home, the --
HMJrt
But if they decided, they or A.F. of L., locally
you know your address VEI retrondenat. : wish ve'd
they went to de something, tost's all right.
nave known it. She mold, "Yset's the matter with
you? The Secretary could have lintened to it again
: four-thirty.'
Regraded Unclassified
MICROSTAT/ No. U.S. PAT. OFF. MICROFILM
ROLL NO.
PRECISION
TRADE MARK
21
22
HMJr:
Yes,
March 1, 1945
I:
And the anió that you are getting to be mite
nome speaker.
Fellow Employees
H&Jr:
I see. (Laughs)
I have recently talked with personnel officere here in Washington
It
(Laughe) But it yes fine, and late of nil domints
everywhere.
at their regular monthly meeting. Employees of this Department wight
HIGHT
1
be interested in knowing of some of the points I emphasised in my
It
Tox, you -- and I mean it just 2330 into the eight
remarks.
cloces.
Work under war conditions has imposed extre burdens on Treasury
HRJr:
Right.
employees. Long hours, crowded transportation to and from work, housing
It
And 85 If you'll 1-: -- Handle this, now, NP past
e few days
and health problems have all made work difficult for everyone. To neet
HXJr:
I will.
there situations I hope that working conditions oan be constantly improved
I:
I've got the call rylling and we'll do 11
80 that our employees can be an confortable as possible during working
locally.
hours. Emergency rooms adequately staffed with nurses are desirable
HWr:
Good.
wherever possible where there are large numbers of employees. Sating
I:
And then it will a on := there the corties locally.
sent
facilities at hand nake for efficiency on the job and improvement in
RVJr:
Fine.
there facilities is constantly before us.
T:
But you'll boor from carry - -
Supervinors know the personal problems of employees - young children
on what = said ve'd 10.
to care for, illness In the home, and finencial worries. I hope that due
DWr:
Right. Ever eo such obligad.
consideration will be given to such problems and whenever possible help
I:
Thanks to your
provided to assist employees. Through constant realisation by everyone
HMM
Atl right.
that all Treasury employees are human beings, the efficiency of our work
Ii
Cood aye.
will be improved.
Sincerely,
(Signed) H. Morgenthan. Jr.
copies X stall
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
us.
PAT.
OFF.
MICROFILM
BOLL NO
ITEMS OF EMPLOYEE INTEREST
24
The Civil Service Commission has just recomended several changes in pay
laws. If they become law, you stand to benefit.
One recommendation concerns overtine. The present law expires in June.
Mongenthau
A DIN law will undoubtedly be passed before then. The Commission recommends
that the DMV law be permanent. Purther, it proposes that 1% pay more overtime
than the present law. At present, your overtime pay for work over 40 hours a
week increases your psysheck by about 21.0%. This figures out to about time
and one-twelfth. The now proposal is that you be paid true time and one-half
overtine. For working a 48-hour week, you would get 30% more pay instead of
21.05.
This formula would apply on regular salaries of $5800 or less. Above
$3800, overtime pay would taper off gradually until at $6500 the overtime paid
La only elightly higher than that paid under present law.
Also proposed is a 10% differential for night work. If your regular hours,
all or part, are between 6,00 p.m. and 6,00 - 10% 1a added to your base pay
for work performed between these hours.
The Commission also recomends that employees who have to walt 18 months
for a within-grade salary advance, wait only 12 months. These would be persons
in grade CAF-10 (83800) or lower. For those who now wait 30 months, the time
would be shortened to 18 months. These would be persons in CAF-11 and higher.
Also, the advance would be effective at the beginning of the month after com-
pletion of the waiting period rather than the next quarter.
It 1s also proposed to set up . more liberal standard for within-grade
advances made for unusually fine service. At present, these our be made only
for "especially meritorious service". This would be changed to "superior ao-
complishment".
A bill containing these recommendations was introduced in Congress, imedi-
ataly after their receipt. Senator Downey, in introducing the bill in the Sen-
ats, added a provision to it. No bill proposes, in addition to the above bene-
fits, a flat 18% increase in employees' base pay.
Everyone should bear in mind that all the above is only proposed. Before
a bill is passed, and becomes law, much can happen to 1%. However, - feel
that there is reason for some optimism, especially as to certain of the pro-
visions.
FAZoda,Sab 3-2-45
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
No. PAT. OFF.
MICROFILM
ROLL NO.
25
2G
2
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
1. I nade tentative arrangmento for the fifteen
minute notion picture discussion of Brotton
Date
Woods which I mentioned in a previous misorandus.
This in not definite at either and, but I am
TO
Mr. White
February 27, 1945
confident that we can close the deal if we can
furnish top-flight participants, You will
FROM
R. Reltus
remaber that I suggested Secretary Morgenthau,
will Clayton and Walter Mppman,
For your information I am jotting down these notes of my day in
6. I made tentative arrangemento for five minute
New York, yesterday.
spota on WOR-Votual every work until Bretton
Woods in disposed of. This would be part of
1, I arranged with the Blue Network tentatively, for a
a nows-cast. This La not yet definite.
special fifteen minute program on the evening that
hearings in the House open. Because of the NAH
7. I apoke over the selephone to several of the
Code, it is necessary that both sides be presented
top commentators, who promised to witch for
on much a program. Homever, I think it is a good
the DOWD broadcasts on Syetton Woods and to
idea to expose the backers' position to the light
comms favorably. Some of these I have con-
of day.
tacted before and shry told 20 they had already
proadesst as the time of the President's message
2. I arranged with the World-wide Broadcasting Company
on the day the Bill was introduced, Among these
to naice a special fifteen-minite transcription program
mrs.
on Bretton Woods for release in mid-March, These
Quiney Howe
transcriptions are carried on a hundred smaller ore-
Shirer
tions throught the country. I arranged for professional
Halmor
radio writers and actors to produce this program. No
Vandorcock
will check the script for technical scouracy and policy.
George Klint
3. I made tentative arrangements for a meting in New Term
:. I talked to Banil Harris, Procident of the United
within the next week of radio writers, directors and
States Lines and sade a date to see his next Versiay
producers, magazine writers and aditors, syndicated
in New York," He word tied up yesterday, but seened
writers and columnists, commintators and others. This
interested in discussing the matter. : did not
group would be addressed informally by you and others
tell his specifically what I wanted, but left
in She Treasury, with a view to educating then on
that for - personal interview. I found that
Bretton Woods, The group will be hand-picked and only
would most probably give active support
friendly persons will be there, The result will be a
to the proposals. lie is now in Florida, but his
wide variety of commits en Bretton Boods in various
secretary wrote his yesterday explaining what I
media.
wanted and asking his to telephone no from Florida.
I was unable to get through to J, A, MeGraw, Prevident
4. I made arrängements for top-flight writers to come to
of Molraw-Rill, but will try his via long distance.
Rushington on special assignments from time to time,
These three man are good prospecto for & business
These individuals would com without compensation, but
men's group.
Re would guarantee expenses. McDonald telle no this
can be done.
9. I discussed strategy and siming with Boanie Baldwin
and others at PAC, They agreed to come in strongly
at the proper strategic time. They are working on
a pamphlet and their women's division is pushing
the matter quietly usong womens' groups and organiza-
tions throughout the country. I had previously sent
some literature to the and had discussed the matter
with Vorda Burnes, Head of their Women's Division,
Regraded Unclassified
RECISION
TRACE MARK
MICROSTAT No. PAT. OFF. MICROFILM
BOLL NO.
28
27
MAR 1 1945
Dear Jr. Gailmor:
Dear Mr. Shaw:
Your recent broadcast on
The substance of your recent brondcast
isolationism interested De very much.
in which you mentioned the Bretton Woods plan
I was particularly pleased with your
las been called to - attention and I a happy
statement Indicating that opponents of
to note that you favor the plan.
the Pretton ooda program are somewhat
tarred with the Isolationist brush.
I believe that as aust do everythin
It was refreshing to hear on
possible at this time to call to the attention
of the public the fact that currency cisorders
the radio such a clear statement of the
are one of the severest handloaps to expanded
close connection between international
world trade. You SAV: performed a roal public
political cooperation and International
service in Iringing this out In your broadesst.
economic cooperation. It is as earnest
have that this point #111 soon be clearly
If any of the members of the Treasury
understood by every MAD and WOMAN in
staff can be of assistance to you in the propara-
america.
tion of future programs, please feel free to call
Sincerely yours,
upon DE.
Sincerely 20 re,
(Signed H. Morgenthaw, Jr.
(Signed H. Morgentheu, Jr.
Secretary of the Treasury.
Secretary of the Treasury
Dr. William Callmor
c/o nadio Station was
Mr. Iruno than
30 Rockefeller Plase
liews /.00m
Sex York City, Jen lork
Blue Network
30 Rookefeller Plaza
New Yor City Bew York.
RB:00 2/23/45
EB:ee 2/27/45
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ 150. V. 1. PAT. OFF. MICROFILM
BOLL NO.
29
30
MAK 1 1945
- 2 -
I should be happy to have a member of ay
staff ciscuss the igreements with you If you are
interested in presenting additional material to your
Dear Mr. Halet
listeners.
In your recent broadcast on Bretton Roods
Sincerely yours,
you indicated that the monetary proposals were too
complicated for the average man. Unfortunately, the
(Signed) H. Morgenthau, Jr.
Agreements are lon, and complex, but I really believe
that every American can understand their fundamental
principles.
Secretary of the Treasury
It has always seened to ne that the average
American has a facility for reducing difficult X problems
to simple terms. As you know, every one has such to
gain from a large and profitable foreign trade and it
Mr. Arthur Hale
will be extremely difficult If not impossible to build
c/o Radio Station WOR
up a large American export trade after the war If me
1440 Broadway
have the kind of currency disorder that existed In
lieu York, Sea York
the 1930e. The International Monetary Fund is designed
to prevent that kind of disorder, and I an firaly con-
vinced that It will have a tangible effect on the well
being of every segment of the population.
You may be interested in examining further
the part that the United States would play, under the
proposed International Bank for Reconstruction and
Development, in reconstructing areas devastated by
the enemy. The Bank will relieve the United States
of a considerable portion of the burden It might
otherwise bear. The other nations of the world will
join with the United States in guaranteeing the repay-
ment of loans by private merican investors. Thus,
Instead of our Investors taking the entire risk, nearly
two-thirds of it will rest on the shoulders of the
other countries.
RB:ec 2/23/45
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
BOLL NO.
31
EXECUTIVE OFFICE OF THE PRESIDENT
32
OFFICE FOR IMENGENCY -
COORDINATOR OF INTER-AMERICAN AFFAIRS
El Presidente Roosevelt esboza un
COMMERCE SEPARTMENT SILING
WASHINGTOR, c
programa de economía extranjera
March 1, 1945
WÄSHINGTON.-KI Presidents
Reservelt estado al Congres ne
didas para Gever a is prictica el
programa de éxterior de
la Administración.
El alcance del programa de la
Administración tail pevelado en et
reciente mensaje del Presidente all
Congrem, solicitante la relificario
de las proporiciones de
Words, para el establecimiento de
un Fondo Monetario Enternacional
de MM Banco Internacional para
Mr. Beary Morgenthau, Jr.
la Reconstrucción el Fomeste, SU
Secretary of the Treasury
fendo montario de 88,800,000,000
, el bases mandal can un capital
Treasury Department
de $0,230,000,00 form descritos
Washington 25, D. C.
per el l'residente como "In pintra
ingular de la corperación
mins International." Dijo Rome-
Dear Mr. Secretary:
vilt eran similares - las propo-
miciones de Durcharton Oska e la
enfers politica.
633468-EB-1272
I thought you might be interested in seeing the
Presisiones del properto
De projecta de ley total promits
enclosed proofs of a net story which our Feature Division
do - ambas são
mares del aulicitando la
aprobación del findo montario in
sant to all the Spanish speaking countries in the Hemisphere.
termarional y del banco Internacio-
-41, and como la deregación parelal
is Ley Johnson, ryse probite las
Since they are matted, these stories usually get a.
Apristion comerciales particula-
- a las paises - BG han cubierts
our deudas contraidas not Ins Ema
El Secretario del Texera de Estados Unidos, Beary Margenthes, diri-
. la Canferencia Monetaria Internacional, - Bretten W Woods,
very good run in the newspapers of these countries.
dos Unidos - resultado de la
primera guerra recordial. Bajo el
New Bampshire, KK. ET. durante - de las de la misms.
projects aladido, la Ley
seria derogada - favor de les
canga de la aviaciés civil el trace-
y formante en lind palment nim-
Very sincerely,
países afectados, los que passrian
porte maritime y las commiracio-
brea Usa de - fusciones não
David Lock
a fermar parte del proposto fendo
nes telefónicas, telegráfiras y per
importantes ará facilitar , -
radio.
Far una gran participación privada
y hanno international,
en - empréstitos,
Las otras proposiziones error
"Sin enbargo, todos saberces que
miras Internacionales que el Presi-
De accordo For el memaje del
una economia mundial préspers,
David Loth
dente 4ija al Congreso serise -
Presidente. Iss Estados Unidos tra-
dobe estar - algo não que
Chief of Publications
breve aumetidas para - considera-
tan de establecer el principio de la
inversiones extras, Les Upon
cide, Invluyen:
cooperazión económica remo have
de cambio deben estabilizare ,
Press and Publications Dept.
(1) El establecimiesto del orga-
de un mundial más MI
abrime las facilidades converciales
niamo de sprimitate y alimentos de
plio, - creando un supergobiem
en todo - mardo. Un gran comer
las Naciones Unider: (2) mejoras
sine mediante negociaciones
de exterist desouée de is victoria
- la Ley de Acurrdes Commissiales
argendos tendimies . mejorar las
generará producción, y por le tanto
de 1934; (2) un acuerds inter-
instituciones minetarias del mindo
riquera. Tambiés hará posible el
nacional para la reducción de las
y las leyes que reglamentes el 601
page de los intereses , la amortize-
barreras comerciales; (4) us searn-
mercia.
cláim de the inversiones,"
do Internacional para el control de
"Les Extados Unidos deben an-
"F) fredo," exaliné el Presidente,
los carteles , la venta ordenada de
tuar No. pérdida de tiempo," dire el
"es usa institución fleanciera para
Enclosure
les excedentes mundiales de ciertes
messaje presidencial, "con relación
preserver la estabilidad , el enjen
articules de consumo; ($) mejoras
al plas para el banco internarional
en las tipos de cambio entre las di-
en el Banco de Exportarión # In-
or correnterá 0 garantinará em-
formise monedas. Los esce-
présides convenientes para las
bios en el valor de Date monedas es-
portación de Wishington: (4) us
necesidades de la museda extran-
transerse enformente - herán des-
acarrdo Internacional sobre el -
Jers, and como para llevae . cabo
pula que el fendo haya prestado
talleo; (7) proposiziones en el
Importantes obres de recontruc-
cuidadins resideración al
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/ REG. U.S. PAT. OFF. MICROFILM
ROLL NO.
TREASURY DEPARTMENT
34
33
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
INTER OFFICE COMMUNICATION
SECRET
DATE
DATE
March 1, 1945
March 1, 1046
TO : Secretary Morgenthau
TO
Secretary Corgenthau
FROM: Sr. White
FROM
-. Lunford
Information
For your information
Governor Stassen was at Harvard and spoke to
In view of Jesse Wolcott's position on Pretton Vomin
_can Landis and Professors Marris and Hansen about the
misd. the lient that raced around the more fact that
Bretton Woods Agreements. Stassen was tremendously In-
terested and spent three hours on the discussion. They
convinced Stassen that the success of the Bretton Woods
would be on time Board of Directors or the export-Import
program in Congress is essential to the success of the
San Francisco Conference.
Bank, I n. troubled about time possible ban effects shich
might flow from releasing at this time the President's
Stassen La coming to Washington and is (oing to
see along. what he can do to push the Bretton Woods program
executive Order establishing a Foreign Leonomie rolley
Board.
To many of the "wallace haters" in Congress, this
could be used no a rallying point to say that callace
was going to "run" the Bretton acoda institutions for the
United States.
OR
Ce: lib. white
in. O'Connell
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/ REG. U.S. PAT. OFF. MICROFILM
ROLL NO.
35
TREASURY DEPARTMENT
36
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
INTER OFFICE COMMUNICATION
DATE
Date March 1,
arch 1, 1945
1965.
TO
Secretary correnthau
TO
Sra. Flota
FROM
It. Luxford
FROM
Er. Aarona
For your information
it the meeting in the Secretary's office yesterday be
lenry Edulaton called DE this morning und salu that
attked that his records the the various stages in the 7sad
license, There is attached for the Secretary's
record a conformed eony of the liconse 18 It was issued today.
Chester Davis wanted you to know that Le não spoken to
The way In thich we had originally Intended to draft the
license vu to provide that no treasfers could be nade out of
reyton, Gilbert, and velarin, rresidents of the
the Inder frane account except curcuant to mecific Foreign
Funds Control license. Althmich that was our intention, the
Dallas, and Attents Federal Minerye UNDER, respectively,
Itemse actually never not te the stare of being drafted that
way in view of the Secretary's suggestion that it be made
and thought all pare prepared to cooperate Jully in
subject to the specific prior authorization of the Mar Refugee
Board.
organizion aretings in those apons.
OR
Cet r. white
at. yeltue
--- ---- percatein
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. u. PAT. OFF.
MICROFILM
BOLL NO.
37
25
MAR 1 1945
In reply please
refer tos 01610-A
License No. V-2426
Dear Street
You are hereby authorised, se far as Executive Order No. 1389,
as asended, is concerned, and netwithstanding General Fuling No. 11,
to resit the visa frane equivalent of 1937,000 to a tanking instite-
tion in Switserland for credit to a joint account in the name of
Isase Sternbuch, representative In "witserland of the Tasd listatesla
Emergency Condittee of the Onlon of Orthodox labbia of the United
States and Canada, and D. Neclalland, representative of the
Tar Refuges Board in !witzerland, provided the following terms and
eenditions stall be complied vith,
(1) No art of the above aum shall be excended or
consitted for expenditure except " authorised
by specific action of the Tar Refuree heard,
s
Washington, D. C.
(2) Any withdrawal, transfer, or payment rder against
the above joint account shall be signed jointly by
Issue Sternbuch, representative in !witserland of
the Tead Sahatmala Emergency Condittee of the Union
of richodex Rabbie of the Inited States and Canada,
and Rossell D. DeClalland, representative of the
Far Refugee Board in Switzerland.
You, or your bank of account, are authorised to effect the
resittance licensed herein by (a) - of the dollar accunt Involved
to the Federal leserve Bank of Yes York for credit to the Receipt
Nationale Pulsee, Turich, for credit to the joint account referred to
above, or (b) purchase of the Evise france involved from the Federal
leserve Bank of les York as fiscal scent of the United States, ne shall
be prescribed by the Federal lesserve Bank of New York.
Sincerely yours,
(Signat) c. terms
1. C. larone
Acting Director
Vasd Mahatsala inergency Comittee,
Indon of Orthodox Tabbie of the
United States and Canada,
132 Street,
Sew York, New York,
1/1/45
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT / 116. u. $. PAT. OFF. MICROFILM BOLL
NO.
12"
EXECUTIVE OFFICE OF THE PRESIDENT
WAS REPUGE BOARD
38
31
Mrs. Klots
3400
(Rose)
(8)dg.)
(1)
(Rote)
(RM)
(3)
(Ross)
The Secretary requested that the
attached cable to McClelland be
cleared with him today. You will
note that it has been approved by
General 0'Dayer.
F. Hodel
min store 3/1/45
3/1/45
From:
(Sete)
2410
(Rese)
(RM)
Regraded Unclassified
CABLE TO HARRISON AND MCCLELLAND, BORN, FROM DEPARTMENT AND WAR
REFUGEE BOARD
Reference your lios. 881 of February 8, 1069 of February 17,
and 1175 of February 22, 1945, and Department's No. 703 of
February 14, 1945.
The members of the War Refugee Board met on February 28th to
consider the application of the Voad Hahatzala Energency Committee
for a license to remit the Swiss frano equivalent of $987,000 to
Iqaao Sternbuch. The Board disapproved the issuance of & license
permitting such remittance to Sternbuch. However, after careful
consideration, the Board unanimously approved the issuance by the
Treasury of a license permitting the Vasd Hahatzala to nake the
desired remittance to a joint account in a Suiss bank in the numes
of Isaac Sternbuch, representative in S.itzerland of the Vasd
Hahatzela Emergency Committee of the Union of Orthodox Rabbis of
the United States and Canada, and Roswell D. ReClelland, representa-
tive of the war Refugee Board, provided that the license clearly
stated that no part of the sus could De expended or committed for
expenditure except as anthorized by npscific action of the war
Refugee Board.
It was the further unaninous decision of the Foard that under
no (repeat no) circumstances could any part of this money be used
for the payment of ransom.
However, it la the - Rerstanding of the Board that logitimate
expenses may be involved in the release of detainees from enemy
territory and the Loard is prepared to consider requests for its
approval of any such payments In the present case upon presentation
to the Board of full details concerning the purposes for which such
expenditures are to be made.
Please advise Sternbuch of the foregoing. Text of Treasury
license being issued to Vand Behetsala will 00 sent to you in
separate cable.
10mg
PRECISION
TRADE MARK
MICROSTAT REG. PAT. OFF. MICROFILM
ROLL NO.
41
0
40
. 2 -
PARAPHRAS: OF TELEGRAX RECEIVED
avoid discussion with officials of Switzerland and, if
possible, that it be mnde directly in Swiss france. If
FROM:
American Legation, Bern
funds were transferred in instalments, he feels this
might be less difficult. On February nineteen May and
TO:
Secretary of State, Washington
his son went back to Germany by automobile.
DATED:
February 22, 1945
NUMBER: 1175
HARRISON
CONFIDENTIAL
FROM MCCLELLAND FOR WRB.
On February twenty-first the question of five million
france guarantee needed for Musy affair vas again discussed
with Sternbuch (S). (See No. 1069 dnted February seventeen
from the Legation and WR3's 403, No. 703 dated February
fourteen from the Department.)
So that he may replace present fictitions credit with
Fides Treuhand, $ thinks it in necessary that emivalent of
dollars 937 thousand be remitted nt earliest possible date.
S. hopes that, since he has led Kusy to believe that he,
3, actually holds five million france, transfer can be brought
about in R. way which will still permit his to enow credit
to this amount, even if at another bank such AR Swise
National, in his name. It is thought by S that B. joint
account, uoon which my name figured openly. would possibly
arouse Musy's suspicions, and this would not be acceptable
to Musy. However, S, who 17 quite villing that account be
tied up, aske if it would not be practicable to have it
net tin in his name only, having confidential provision
that the American Legation et Bern should have orior
authorization over any disbursements.
It is also feared by 5 that open discussion with
Swiss officials regarding conversion of such # sue into
france, in which it would probably be unevoidable not to
disclose Musy's financial demands, would be likely to prejud-
ice seriously any other efforts on Musy's port to bring
about release of Jews from Gerunny B.B. the Swiss night take
exception, on the grounds of the very questionable nature
of Musy's motives, to the whole affair. Request in there-
fore made by a that remittance be made in a manner to
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
ROLL NO.
43
PARAPHRASE OF TELEGRAM RECEIVED
- 2 -
FROM:
American Legation, Bern
to disclose the fact that nard cash 16 being demanded by Musty for
TO:
Secretary of State, Washington
actions which have been publicized widely in Switzerland during
the past week 0.0 being humanitarian.
DATED:
February 17, 1945 (Received February 18)
However, Musy, who was to have returned on the 16th of
NUMBER:
1069
February to Germany to pursue negotiations with a view to releasing
additional convoye, at the last minute refused to go for the reason
SECRET
that Berlin (with which he was in telephone communication, ne
claims) reported tast in the United States of America there had not
US UHGENT
been any favorable comment in the prese regarding the praiseworthy
humanitarianism of Nazis having released these Jews -- in fact no
The following message from McClelland for WRB and the
discernable press reaction at all. Sternbuch was reproached by
Department is transmitted.
Musy to the effect that the Government of the United States mani-
festly did not care whether Himmler released une Jews or did not
Reference 1a made to message of February 5 from the
release them. Accordingly, Musy insists that before ne will go
Legation, summer 581, and 60 Department's mesonee or February 14,
back, convincing evidence must be received by his to show in Berlin
Number 703 - WR3's 403.
that the press of the United States 18 commenting favorably along
the lines that the Nazis, no evidence of their change of heart,
On the 16th of February I was told by Sternbuch (8)
having at last seen the error of their ways, have not only stopped
that ne nad been successful in securing a paper credit of 2,000,000
the extermination of Jews, but are releasing them. However, Musy
Swice france issued in his name by & reputable concern in Zurich,
1e not insistent tast his role in tate de mentioned personally.
the fides Treuhand-Vereinigung. With the help of an international
real estate manipulator, a certain Micnel Olian, who is on our
Being afraid that the future success of the entire resoue
Proclaimed List and who 18 doing this in the hope of being removed
program may be endangered by no press comment in the United States,
from that List, it 18 certain, the foregoing was made possible.
Sternbuch and nie colleagues are very much upset.
He and managed to secure 2,000,000 and Olian had guaranteed the
missing three million france, S stated.
The above anxiety of Berlin for a favorable press rein-
forces my view that there le a great deal more behind this whole
Explanation was made by S that Musy appeared to be entis-
matter than release of Jews, and 1a nighly suspicious.
fied with this paper proof that ne (8) was holding the 5,000,000
necessary, and Musy did not insist that this money be deposited in
HARRISON
his name, at least for the noment. I as unable to recommend that
I, as a member or tue staff of the Legation, go on n. joint account
DC/L:LCW 2-19-45
with Musy which would become known to Swiee authorities without
doubt, in view of the highly unsavory and suspicious nature of
Musy's own doubtful reputation and his negotintions with the Nazio.
A joint account between Sternbuch and ne night be an alternative
plan. Should our Treasury issue a license allowing Vasd Hahatzala
to remit to Switzerland $937,000, in view of the fact that
20,000,000 france are already beine held by Saly Mayer and me to
baok up negotiations or this type, I anticipate a. considerable
amount of difficulty from Swise authorities in outaining conver-
sion or this amount of money into Swins france. Sternbuch would
prefer to die in nie tracks rather tran ank Mayer for funds, on
the other hand.
It is certain cant any discussion with the Swise with re-
gard to conversion of the $937,000 for Sternbuen would react un-
favorably on the entire resque plan and would nake it necessary
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
REG. PAT. ON.
MICROFILM
BOLL NO.
45
February 14, 1945
PARAPHRASE OF TELEGRAN RECEIVED
11 p.m.
FROM:
American Legation, Bern
AMLEGATION
TO:
Secretary of State, Washington
BERN
DATED:
February 5, 1945
103
The following for MoClelland from Department and War
NUMBER
531
(SECRET)
Refugee Board 10 WRB 403.
118 URGENT
Vand Hahatsala nas requested Board to recommend to
Treasury the issuance of a license permitting the remit-
The following message ie from McClelland for WRB.
tance of Swiss rrano equivalent of $957,000 to Sternbucn.
Reference Department's 385, January 23: WRE's 377;
Department's circular cable June 14, 1944: Department's 1168,
In view of the information contained in your 881 of
April 6, 1944, and Legation's 605, January 28, 1945.
February 8 indicating the use which may be made of these
Legation's 605 previously reported the entire matter of
funds, please :1n4 out from Sternbuon immediately whether
the Ensy negotiations which have come into considerably sharper
focus since the third of February when Sternbuch told me that
Musy will agree to the deposit of une funds in a joint
usy had come back on the first of February from Germany and
had reported that his endeavors to induce Himsler to release
account in the names of may and you as War Refugee Board
Jewn had been successful and that, on or around February 8,
e first convoy of some 1200 individuals would arrivo at the
representative, no part of the fund to be expended or com-
Swies frontier. On February 6 this convoy vas to depert from
mitted for expenditure without the express prior approval
the Dresden area. When Sternbuch requested that I bring up
the question of Bwiss persission for their entrance into
of this Government.
Svitzerland, I did this personally with the Chief of Federal
Police, Dr. Rothound, on the third of February, reaffirm-
Please report urgently to Department and Board.
ing the interest of our Government in such resoue work and
recommending that the Svins nake preliminary preparations for
the reception and housing of this group if it should actually
GREW
reach the Svies border. The Police Chief stated he would
(Acting)
take the necessary measures and brought up the problem of
(GHW)
whether our Government's assurances concerning the evacuation
from Sviss territory of Jewish refugees from Hungary to Allied
regions would hold good for el group from Germany such as this.
To this I replied that while I had no apecific instructions to
WRB:MMV:KG
12
FMA
this effect, I thought our Government would extend its
2/14/45
guarantees to include such groups from Germany. (See
assurances given in Department's circular June 14, 1944, and
reported on basic of President's statement of March 24, 1944
in Department's 1168, April 6, 1944). Since Musy himself
later stated to we that this vas to be the first of a series
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
OM,
MICROFILM
BOLL NO.
46
47
- 3 -
- 2 -
clear as to the reason for this deposit. Although there
sre a number of possible explanations, none of them is
of like convoye, this is a particularly important point on
satisfectory and it is most unclear to ne. Musy's accept-
which I should walcome the Bonrd's advice no soon as possible.
ing sioney for himself, above and beyond rather stiff travel
If the military situation in Germany persite, others vould
expenses, is not in harmony with his evident intention of
follow at intervale of amproximately a week.
playing the role of an heroic rescuer and thus rehabilitating
himself in Switzerland in n. political way.
In leter talko with the Federal Police of February 7,
this question of evacuation by us vas reised again.
My advice to Sternbuch WRS to endeavor to stall as tact-
I talked at length with Kusy, Sternbuch end Bost on the
fully as he could on this aoney issue until ve at lesst found
out whether the first convoy reached the Swies frontier.
6th of Fabruary, and they informed ne BE follows:
Information that a convoy of 1200 individuals was at
Himaler has been induced by Kusy to release all Jeve
Konstanz vas given the Federal Police by the German Legation
ns yet surviving in Geruan controlled regions, particularly
at Bern on February 6, et 6 p.m. They arrived February 7,
those not guited for labor, within proctical limits. ss
General Schellenberg, who 1a one of the top 33 triumvirate
about noon, in Switzerland. This convoy is made up of 1210
immediately under Himmler, strongly seconded (usy, according
individuals, including some 58 children under twelve, but it
to the latter. Kusy describes Schellenberg es D really good
is composed mostly of adults about equally divided between men
and women.
nan and as his own particular friend. With regard to Himsler,
he vas very such more interested in the entire propogal this
time than on Kusy's previous trip in November 1344 (*) coming,
At present this convoy is in St. Gail under Swiss Army
control and seems to be in fairly satisfactory physical condi-
if this rescue action vaa to be initiated by first convoy
tion in contrast to exchangees from Bergen Belsen, according
of 1200.
to preliminary reports.
In addition, Kuey stated that Hinsler and the 83 in
It is stated in en unconfirmed report that they come from
general were prepared to drop-all endesvore to obtain comben-
Theresienstadt and as the convoy vas to leave from Dresden
antion in goods in return for Jeve released AS they now
which is only A. short distance from Theresienstadt, this is
realized the imprectionbility of this.
geographically possible. As yet there are no exact details
A token compensation payment of five aillion Svise franch
available regarding composition of the group with respect
which was to be deposited to nn account in Musy's name vith
to nationality, documentation, etc.
8. Svise bank, after delivery of first convoy. VAB the only
string attached. The only bank which Kusy declared would be
With regard to the broader phase of Musy's negotiations
acceptable to his voir the Svice National Bank. Be also
with SS, and in particular Musy's reference to having received
assured me that this money would atny in Switzerland and
support from Schellenberg throughout, I believe it of interest
he intimated that in all prob bility the Nazia would release
to nóvise the Board that the Chief of the Swiss Army Intelli-
it to the ICRC en additional gentlenanly "genture" some
gence, Masson, informed ne on February 6, mite independently
time in the future. The five million 12 expected to be
of Nusy, that Schellenberg had recently indicated to Masson
through an intermediary that he, Schellenberg, vas interested
supplied by Sternbuch.
in doing something regarding release of Jevish refugees.
I did not press Thiey for an explanation of the surpose
behind this token deposit at the request of Sternbuch, since
Sternbuch and I cannot get away from the impression that
he ves eager not to anke an issue of the money nuestion at
Kuny's neogtiations with Himsler have not been confined to
this critical point because he feared that Huey might be
the Jewish problem which after all cannot be of major
insulted and thus the successful outcome of the entire affair
importance to Himmler, in view of Germany's present military
would be endongered.
situation. It is possible that the release of the Jewe may
be the forerunner of proposals of such greater importance
In private, Sternbuch admitted to an that Be VAE not
to the Germans,
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
NO. OFF.
MICROFILM
ROLL NO.
49
48
You vill find it interesting to note that Eusy also has
been in touch with the French Subnesy in Bern and in addition
to effecting the release of the Jewish group of 1210, has also
effected the release of some 540 French men and women,
045
presumably political prisoners. On the night of February 7,
this French group arrived at the Sviss border and they vill
be rerouted through to France by the Svies.
To:
IT. Collade
Musy VAS also successful in liberating a group of nine
From: Iff. Com
Swies nationals which the Germans imprisoned on estionage
charges, from German prisone. For over B. year the Sviss
will you please send the following cable to the
Government has been attempting in vain to secure release
American Fabanay, Chungling, Chimas
through conventional diplomatic channele, of these people.
Of this group, four have arrived in Switzerland up to nov.
FOR AUGIN FROM THE SECURITY or THE
of course, Zabasey vill keep you posted with respect to
Tour 92, January 20. - are informed that the New York
any additional interesting developments in this entire
Musy question, and in the meantime, would be *grateful for
Office of the U.C.S. - February 15, 1945 dispatched following
your advice concerning evacuation of this convoy of 1210
individuals, and later groups which may arrive, to Allied
telegras to Iwees:
territory.
"After consulation with Arnold Clearboard Cowdittee here
AS yet Embassy has heard nothing from SHARF in Paris
willing persit sale checks provided they are stamped requiring
relating to evacuation of 1672 Hungarian Jewn.
presentation payment d. this - year - if membership and at
HUDDLE
your discretion up to within three years also if stamped
limiting endorsement to payee or LE necessary to com other party."
(*) Apparent omission.
l'lease cable your commis thereom with particular reference
to question whether Treasury should persit U.C.B. to sell
negoti_ble checks in China.
11/15/2019 2/28/45
Regraded Unclassified
RECISION
TRADE
MARK
MICROSTAT/ MICROFILM
ROLL NO.
51
COPY
STRICTLY CONFIDENTIAL
c/o Amrican Scheray,
Chungld W,
50
Letter III
February 3, 1945
Dear Jr. Rite,
ASSISTANT SECRETARY OF THE TREASURY
Hope to get off . cable on Army expenditures in the last quarter of 1944
March 1, 1945
in the next day et two. Have had several conformences vith the responsible
Army people here, and while all the details are not available, the broad picture
Secretary Vergenthaus
is fairly clear. The bent Any figre for expenditures for Cotober to December
The first nine pages deal with monetary
is CN29.1 billion. This figure 1* pross and not not. After saking certain de-
matters; subsequent pages with broader questions
ductions, which are discussed below, the not figure is approximately 017.8
and some possip.
Million, which to smaller than the one spent in the third quarter of 1946, shen
U.D.T.
of corree prices were lower. On the basis of the attached price data on well
as on the barin of corroborative data from the Any, it seeld appear that the
roods and services received from the Odnesse were not as great in the last
quarter of 1944 as they were in the 3rd cuarter and vire certainly mailer than
in the 2nd cuarter. Thus, there vas practically no nirfield construction in
October and November, and while there was 6. spart in construction in December
an a remilt of the losses in Fast China, it was not enough to compensate for
the decline in provious months. As for direct expenditures for our own Any
disbursing of ficers, it will be noted that they were not greater than in the
provious quarter in ou sagnitude, while prices were rising all the time.
Unfortunately, the bronkdorn of expenditures by area La not available yet, so
that it 18 impossible to weight the local grice increase for the Use being.
allowing for the increases and the reduction in airfield construction, a
good arst guass 1.m that the goods received and services rendered in the last
quarter of 1944 were from 1/2 to 2/3 of the goods received and services rendered
in the previous warter. This estimate arra on the side of generosity to the
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
53
52
3 -
- 2 -
Kung vill uncoubtedly continue to Senore the facts in arguing for & higher
Odress. On the assumption that we prid 05660 adlion for the third cuarter
- The Secretary's response to such arguments is unquestionably the visest.
of 1944 (1.0. the Georetary's Bretton lisoda effer for July, August, and Suptember
There to no point in rebutting the argunents in detail, as this procedure would
without any allowance for the sweetimer of US825 villion for the vols 6 souths)
only lead to unnecersary acrimony. The best thing to do is to 1gnore thes,
we should be justified in offoring the Chincee 08310 million par north for October,
as the Secretary did. It is needless to add that there " no earthly reason
November, and December, with a mesterer of 08510 million for the whole marker
why RE should beaten a mettierent for the last quarter, AM our bargatning
Ln reserve to close the deal. It could be pointed out that with the (syment of
position improves with delay and as all the data become available.
08840 sillion for the last quarter of 1944, the 9dress muld have received a
The following are the resevant considerations with respect to the reduction
quarter of . Million for the your 1944, a very handscom addition on to their foreign
of the group total of CM0.1 to billion.
exchange balances. China La one major bailigament country ibose eachange
1. Instition. There is no reason why we should pay hard use for taxes levied
position has improved during the course of the w. It must also be remembered
by the Chinese Government which fall DU 11. 8. Any operations in Odra,
both that Army activities are likely to increase in this theater during 1945 -
Buch taxes total shout CN0900 million for the 4th Quarter of 1944. They
Out least with are the plans - and tlat prides are rising shouply all the the,
are made up roadily se follows:
BO that with the confirmience of the present arrangmento Clinate foreign exchange
(a) 115, or about 082300 villion, of the 083.1 Million expended by the
position is going to be further Leproved as a result of U. 0, Any activiti ne in
Ingineering Consission for 18.
China. Therefore it 18 ensential to allow for the increase in pricess and the
(b) Over 014600 million for taxes on liquid fuel, mainly aleohol. In the
reduction in goods received and services rendered unless - are going to pay
EESE of alcohol, Misse EDS of current production gous to the 1. 5, Any,
the Chinness altogether too Large in relation to that RE are getting. (An A
the tax se definitely discriminatory in character. The actual tax on
sidelight, it 14 worth nentioning that the Commitste indicated their willingness
aloohol Le rail and has recently been reduced. At the tax on PON
to build us all rfields etc. from: U.La greatly interested the Financial people
spirite, which is used chiefly for the namifacture of alcohol, is high
in the Pontagon.) finally, the Chiness included in the for
and like been increased concertantly with the reduction in the tax on
February - September items, the responsibility for which in highly arguida.
aleohol. The tax on liquid fuel of which alcohol La by far the rain
While there in no point in riking up ancient history, FU should not also thes
Item, averages 22.31. A recent attompt to incruase it sharply was
to on doling this to view of the probability of AD increase in our activities
thearted by the Army. In the last quarter of 1944 the tax anounted
in this theater. Naturally, the above suggestion " to in offer is tentative
to over CH0600 villion, a very sizeable sus and an entirely unjustifiable
and is rade in Senarance of the dircumstances in lashington, which may ever-
tribute en the Asserican var affort in China, (See attached remorandum on
ride other considerations.
*Procurement of Idquid Puels.*)
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/ MICROFILM
BOLL NO.
55
54
(e) There are sundry other Itses on which WE pay taxes. But the accunts
For your information, the price of alcohol in October was 0821100
involved are not large and in rone cases the difficulty of corputing
per gallon, and in Lovember and December CNS1200 por gallon. The
the tax burden is not 5 simple problem.
average mileage is 5 miles per gallen, which works out at 98220 - 240
2. There are a number of instances of goods no deliver and services FO render
per mile. (At a conversion rate of 016200 por used, this
to the Chinese Any from nur Ang/s cas funds, for with 98 should not be
asounts to over UH01 per sta) Rependitures on liquid fuel, 1,0.
charged.
sainly alcohol, anounted to sIncet 1/3 of total U. 8, Army expenditures
(a) à substantial asount of the liquid fuel we buy has been used for
in China in the 4th quarter of 1944. Expenditures on liquid fuel are
transporting Chinam Army forces. The recunt for the last half of
going to 20 up in 1945 both because of an increase in the unwont con-
suced and an increase in price. It La therefore all the none indertant
1944 for this 11m alone vill probably exceed cal a billion. We
took care of transportation for the Y force in Tunan throughout the
to get a clarification of the tax: situation. Chem I took up the
Sal
corpeign.
question with the Mindator of Finance, ne and consibat antigrous.
(b) le have boughtwecines for the Chindse Aray tran Chinese Government
le end that be had traned an order shout 4 north age that the Amy
presnization. paying in use for videh me have to reimburse the
should not be charged taxis. as then pressed, the address that 1%
Chinese Government Ln U. 3. dellars. The reason fee this anomlous
would be administratively eusbersom not to collect taxes on - coo-
procedure is that Chinage Government organizations are reluctant to
modity untifornly end ended by claiming that NL# order anounted to an
soll to the Chinage Army, because they are not certain of being paid
instruction that our payments of taxas should be credited to Land-
and because they connot contime to funetion without such payment.
Lense. This of course is DO help at all, as ve should be still paying
(c) le DATE rade cartain payments for the Chinese Andrican Composite line,
082 for CNG we sure devoting to the payment of toom. FOTS
wideh Le not Chinare, and for which the Chinese Government 1e responsible.
sensible sould be the deduction of tax personts from our CID 0311gations
(Durjetly for your am information, the Any La also standing ready to
as they accrue.
tray rice for a number of division, should this be the only way
Down A contract La uning regotiated with the Phinese Government trans-
of ensuring an adoquate food supply for these divisions. But the
portation agencies tax payments and other Items would be de-
Any does not nunt this fact to be known or to be rade use of. Incid-
ducted from their transportation HILL for the Any. The exempt involved
entally, the Amy 1a insisting that the two divisions flown in from
Le smill and done not significantly affect the total of million
Charge be reintained at the SIZE level of efficiancy as in hurre, and
givensiove.
Las order to de ed 11 toys time rice for then itself with funds furntabed
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ MICROFILM
BOLL NO.
57
56
7
6
Last work, the Executive Yuan announced the following financial reforms
by the Chiness Government and delivered it to the American lisison
(4) The abolition of the monopoline on salt, tobacco, and ratches.
officers to sake mire that the soldiers got it. In addition, we are
(b) The abolition of the aartise taxes and the consolidated
flying supplamentary rations for them over the Hump. The difference
tax on tea, bazboo, skins and have, etc.
between then and the ordinary Chinese soldiers in trocendous. Their
(c) The abolition of numerous overlarping agencies undertaking the inspection
morale in high and they carry themelves like non, so much 20 that the
of goods and the provention of suggling and of a musber of organs
local populare cannot believe its eyes when Lt. DOGE them. The presence
which, in the official language, have outlived their usefulness.
and operations of the American Ang in Ordine are already producing
The PERSON given were that the cont of collection in the case of the monopolise
certain repercusations. This it is reported that Chinnese soldiers in
was too high, that the warting conmaption and consolidated taxes were excrbitant,
Kundying are alrowdy asking for food and clothing each as the Americans
and that there vas - need to reduce and steplify the tax collection agenciee.
receive.)
These are undoubtedly atops in the right direction and ware partly in response
3. as have padd and are paying extremaly high priose for goods produced in
to popular demand. Neverntless, it revaine to be soun how these reforms are
China, but anounts of which -- have supplied the Quinne on Lond-losse.
carried out) there are already reports that the reduction in staff is not taking
Copper wire is CEME instance. Time in are paying large nuss for goods
place in a way. Loreover, in the short run they entail & reduction in
similar types of with ve have given the Chinese gratte. There are also
revenue and a widening of the END between expenditures and revenues which accord-
examples of our paying excelditant pricess for goods essential components of
the to some runcrs the Covernment intends to -ake up by an increase in other
which NO are emplying on Land-Lease, transformers. The problem
taxis. It to therefore necessary to wait before any final svaluation of there
would not arise if there ware a Reverse Lend-Lease arrangment which --
reforms is mde.
corprehensive in affect. lut them is no reason why we should be penalized
There is another ratter with reporting in come detail, as 15 my well
still further.
come up before the Treasury. The Chinace Gevernment 18 asking for US3100 million
4. There are also casse on record where TN have paid for grode in connection
of cotton textiles on Lend-Lease and has indicated & willingness to pay itself
with the housing and feeding of troops, with ye are supposed to receive
if 15 cannot get them on Land-Lease. The goods are intended for civilian use.
on llevarse Lend-Lease. This tim up with 2(e) above.
The reason that the Chinese are advancing the request 18 that the goods are
Zlintrating all displication, Items 2 - 4 above on a conservative entirate
needed for contatting inflation. The Y/A which has already approved a Chinnse
amount to not less than CIIS400 million, which together with the CUS900 million
request for 10,000 tone of textiles for the Chinese Any will, therefore, is all
padd in taxes totale 081.3 billion.
likelihood refer the question to the Transury. There is no case for granting
Regraded Unclassified
PRECISION
TRADE MARK MICROSTAT/ PAT. OFF. MICROFILM
ROLL NO.
58
59
Il
9 -
this report. The following are 1008 of the arguments for refusing it.
2. liver -theless, 1% La to be foured that an increase in the inflow of
(a) Transportation difficultion. These are meh 2020 avious than the Pt-
cotton goods into Free China ay surve to increase the outflow to
openting of the burna Road might inture one to expect. The Rdnesse Government
occupied China.
has 3,000 tone of cotton yarn in India and La exporiencing great difficulty
(e) In the light of previous experience B.B. well as of (c) and (d), it is doubtful
in arranging for their transportation. Iven assuring that the goods 676
whether the Chinese Government will rate the met effective use of much
available in the U. S., according to the transportation experts it vill be
supplies. moring the retrest last December, U. 0. Army authorities came
impossible to love then before the and of the year. And there are no eary
across Large anounts of goods which were being hounded and of the existence
other goods which the American Any and the Army will want to anve
of which they had not previously known. (One excuse auranced for the Chinese
before them that even that is so that by the time the goods emild
is that they themselves did not know of the existence of these gods.
get here their relevance to the inflation situation my have disinged very
Wideh may or my not be true, lut which is not very reassuring.) Thus
considerably.
over 40,000 tome of cunti na with 26 lad not known about before had to
(b) The fact that the Chinese Government has very large dollar balances in the
be destroyed in order to prevent them from falling into energy hands,
0. & which it can use for purchasing civilian gode. This arguest does
100 tons of certain types of sedicine were wearthed, for which the Claims
not apply to the Chinese purchasing the goods themselves.
had put in & requist on Lend-Lease.
(e) The fact that Large anounts of ootton are being exported to nompled China
(f) It is not known durther the Amrican economy can release mich large amounts
in apte of the acute shortage of cotton goods in Free China. (See melosed
of textiles at this time,
secorandum by a imber of the PIA staff.)
(g) Agreement muld constitute a procedent for further Ohinese requests for
(a) The fact that the economic polictos of the Chinese Government are such as
other civilian goods on Land-Inate.
to discourage the cultivation of cotton and the production of cotten goods
Prices have been rising very sharply of late. The And sitimates show an
in Free (See enclosed clippings)
increase of 30-405 in Chungking during January and even nore in Hunding. The price
with reference to (e) ena (d), is should be added thats
of rice rene over 50% in Chungldne. It is expected that this rate of 'nerease
1. The Chinese Government to about to eliminate 0005 of the greener
will continue in Policury.
anocalize. It is about to raise the office price of Für collon and
(ith respect to political developments there is nothing such to report.
to permit Tal It's organization to indulge in preclusive buying of
Chou En-lat is in Changicing again and both T. V. and Hurley are relatively
cotton at the points of departure of goods for occupied China.
optimatic. thut the best informed Americans continue not to expect too much.
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
60
61
- 10 -
- 11
the big stunbling block is the question of a one-party Government. The Communiste
buy US(=backed survice at the official rate, when her husband
wo't come into a one party Government and the doesn't poes to be willing
was Constal General in Colousta. the told an Anerican officer that this use a
to agree to any other of Government. Bun Fo has suggrated a lodge to avoid
comon practice anong officials in India. line would it be surprising
this dilema, namely the inclusion of the Consumiete in the Dupreno Sational
if it had been a counon practice arong Qdness officials in the U. 5. In fact
Defense Genneil. The only mag to that the Suprese National Defense Couneil
it agt explain the substantial holdings of savings certificates for a product
derives such authority and power se it possesses from the Eugmintang. The
Chince diplorat staticard in Washington.
thrue remains is the Funding willing to broaden its base? If Lt can's,
On the adlitary front the Injurese have stready initiated their compaign to
very little progress will be made. Hurley says that February 20 1a the desiline
sep up the rest of the Conton-Hankow railroad. For some Visa of late they
and that if negotiations have not by then, nothing such con be expected.
have been concentrating forces in northern Indo-china, which created 1008
Hurley's reputation continues to decline. He to very tidk with T. V., for
terminess in American military circles, " is accesed to is a preparation for
whos be Le no ratch; he even should one of Service's reason advecating hm policy
en offensive scatest Cunning. But latterly this concentration has owned end
vis-s-via the Generalturino to T. 1. Be to also very engry with the State
the whole question of a carpaign apainst Kunding, discussed in detail in my
Department for commiting Service for his sccellent work in Yonan. Insidentally,
provious letter, receine in the para state AS before. Redentyer se are excellent
all Aparican officials requenting from Tenan continue to be
administrator and to all appearances 18 doing a good job.
Unfortunately our first impression of Hurley at Gairo is being confirmed. Procks
The inflation here had . very decoralizing effect not only on Chánese but
Atkinson's apinton that be is at least 20% bull looks too consurvative. There
also, it must be accitted, on 3 number of Americans. The Colonel who until &
are verious nicknesse for his such as the Paper Tiger, Little etc.
for sonths ago was chief of the Servio of Supply for the whole thester was
note of then virty complimentary. The rift between Ida and is desponding.
arrasted on Ida arrival in the States and me found to lime 088130,000 in U. 8.
The latter complained that T. V. vas around U.dr jointly shared establishment
currency in his possession. In addition bis bank account had increased by
so such that there vas no privacy.
083100,000 during tis timure of office. Cad to relate, exchange speculation
You vill be amand by the folloing example of the lovel of current efficial
and other debires activities lave been vidaly proctised to officers pretty
propagania, The New Ordnose Axhas-ador to Porn told Benry Issue that Dino-
bigh up in the 14th Air Force. This 18 not too surprising, as may of the
Acerdean relations are going to Suprove now that Stilenll's American Comuntation
were recruited from the L.V.O., a considerable minber of were soldiers
advisors have been removed. (Prosunably he Le referring to John Davies) IN
of fortune in the literal estise. Them officers protected each other and
non the wife of this very nan who sent up large securito of rupee currency by
refused to en courts with the result that only the smll try wére brought
Chinese diplocatic nouch to sall in the black werket for on with with to
Regraded Unclassified
63
62
CITY
United States Forces
China Theater
- 12-
APO 879
2 Feb. 1945.
to justice and that all the afforts of the old Regular And to de
200 Mr. 5. Adler: Treasury Attache,
something about is ware defented. Hecently, 12 out of 13 planes wize directived
Chandrine,
to be londed to the due with 05$300,000 of sulfa drugs. All zeept the lead
Procurement of Liquid Puels.
plane, <td.ch was expty, were named by The load plane Fax named tgr
1. As our your requist here with are Cigures on Liquid Fuels
# Dates in the employ of the air Force: be ass undon'stedly the ring-
procured by the Army in the the last quarters of 1944. It should be
noted that the quantities and unit prices are in round figures, however
the actual figures will vary only a 11:10 either way, not sere than
leader, as he has large amounts of bonds in Mr possentim.
1 or 25.
This litter to alrosity too Long, lot it This Deceasary to include a fairly
1st Quarter 1944
detailed analysis of matters of imediate internet to the Treasury. Ad reserving
July
Alcohol
600,000 gale
C 1000.00
$600,000,000.00
a disconsion of 1000 of the implications of the present di tratian se Cldra for
Veg. Gam
35,000 -
C 1390.00
58,650,000.00
Items1 Oil
45 tona
o
360000.00
16,200,000.00
Treasury policy for my next
Gasoline
5,000 gale
= 770.00
3,850,000.00
678,700,000.00
9th kindest regards to your wife and doughters,
Address
Tours sincerely,
Alcohol
625,000 (ale
e 1000.00
625,000,000.00
Yug Das
20,000
a
c 1460.00
29,200,000.00
(signed) Dal ade
oil
45 tens
:
275850.00
12,463,250.00
Kanna Das
8,000 cals
e 770.00
6,160,000.00
672,823,250.00
with
Alcohol
650,000 gale
e 1010.00
682,500,000.00
oil
45 tom
e
275850.00
12,463,250.00
Casoline
20,000 gala
e 885.00
17,700,000.00
712.563,250.00
Total (or 3r/ cuarter 1944
2,064,186,500.00
Red cuarter 1944
Des.
Alcohol
725,000 gala
e 1100.00
797,500,000.00
identi all
45 total
C
343853.00
15,473,365.00
Kansa gas
25,000 gale
D 885,00
22,125,000.00
835,098,365.00
RECISION
TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
64
65
7YA Chunglring
A are or 1X COTTON
IN na Club, JANUARY 1945
November
I+ Cotton Consumption, 1945+
Alcohol
750,000 gala
0 1200.00
$00,000,000.00
Real oil
50 sona
= 343853.00
17,192,650.00
(1) Army passing and quilting
200,000 shih picule
Kansu (as
30,000 gals
o 988.00
29,640,000.00
(2) still consumption
550,000
#
#
946,832,650.00
(3) Handleraft spiring and people's
cadding and quilting
970,000
"
=
December
Alcohol
650,000 gala
o 1200.00
1,020,000,000.00
Total
1,720,000 shih pieuls
Veg gas
1,000 gala
e 1460.00
1,460,000.00
oil
50 tons
E 343853.00
17,192,650.00
Same as
32,000 cale
E 903.00
31,616,000.00
II. Potential Supply of Cottons
1,070,261,650.00
(1) Stocks of cotton
65,000 shills pinula
Total for 4th carter 1944
2,852,197,668.00
1,451,000
-
(2) Cotten crop of 1944
.
Total for 3rd à 4th quarter 1944
4,916,386,168.00
Total
1,536,000 with pieuls
Taxes represent 22.35
m. Cutton Pricest
Thus for 3rd quarter taxes - 6460,313,509.50
4th
"
il
- 636,040,526.96
(1) Official price in Chengi 01010,600 + 2,400 .
$13,000
(3) Open market price Ln Shenad
01822,000
Taxes for less half 1%4
1,096,354,116.46
(3) line price in the border of Sherai
111650,000
IV. Cotton Americad to Complex Chinas
(stgmad) Paul i. 11. Verply
(1) Frea Dept. 15, 1944 to Jon.14, 1944
1. Colonal v.R.
Described out from Phined
150,000 shih pieuls
Central Purchas ng rad Procursment Authority
(2) During the size period singled ovt
150,000
#
from liupsh, Horan and Human
#
Total
300,000 shih pleuis
V. Purchasing of Bur Cottons
(1) Originally planned to buy
900,000 with pieuls
(2) On Doc. 5, 1944, the plan reduced to
700,000
#
II
(9) As of Jan. 5, 1945 only bought
165,000 # #
(4) Potential cuentity to be purchased
300,000
a
.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ REG. U.S. PAT. OFF. MICROFILM
BOLL NO.
66
67
- 2 -
COTTON SERVATION IN OTH JAMES 1945
VI. Cotton Spiniles Curretion:
(1) As of Jan. 1, 1945, 30% of the cotton opinflee in Changetog
I.
Recordured quantity of Cetter Consumption in 1945:
surpended operation due to tack of FOR cotton
(2) Government plans to ask U.S.A. to send cotton and cloth to
According to the per capita corrumption of 1.6 pounds of ran
cotton in 1944-4 so extinated by nost cotton authorities, the total
China.
consumption of ran cotton in 1945 will be about 189,299,200 pounds,
VII. Suggested Xam of Solutions
or 1,720,000 sith picula, or this towl, the arey padding and quilting
requires 200,000 shill picule, the will consumption requires 550,000
(1) Increase the price of cotton in order to compute with the
picula and handicraft spänning together vith paiding and quilting of the
market end energy prices.
general public require 970,000 pieuls.
(2) Strengthen both contral and 10ml cotton marketing organa
wing experienced ootton narchante and maketing speciale 18.
()) If these two Udings can be lose imelist/ly, stort 300,000
II.
Patential of Cotton Le 1942+
pieuls of cotton can be bought from the Orina and 150,000
pieule from Occupied China.
at the beginning of 1945, the stock of the all cotton crop of
1943 was only whout 05,000 with piculs, of which 35,000 piculs was
government stock and 50,000 pieuls belonged to perchants. The cotton
crop of 1944 was 1,451,000 with piculs according to the Information
from a mustice of cilinble The potential supply of
totton for 1945 is therefore 1,530,000 shih pienis.
III. Cotton
There are now three different kinds of cotton prices previlling
in Free China, namily the official frice, the open market price and the
anery price. The efficial price 5.m far below the market price. The
energy price 18 higher than the sarket price but pretty close to 11,
[Table 1,1
Table I. Cotton Price in (ree Chinage
Locality
official (C.) Market (C.M.)
there Puppet
Chanci
10,600
22,000 (Jan.)
50,000
North Empeb
8,000
28,000 (Nov.)
50,000
Central trupals
7,000
28,000 (lov.)
50,000
Sources Official - From Cotton, Irro and Cloth Administration.
and They - I'mites Gotites.
On Doc. 5, 1944, . price of 0132,400 was added to the official price
for ad pied of cotton. That is to say, the official cotton price has
been incressed IN 2,400 rince Liec. 5, 1944.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
68
69
5
VII.
Quantities Gate of Solutions
IV.
of Cotton to Decupted Chinges
(1)
To them the price of ootton - The best any of solution is
to Increase the cotton grice so that L. - compete 10 the the rest
On account of the los official price knd the High my price,
grice and the ensure rice. Right non the action price should be increased
cotton naturally (pur to Occupted Cidra from tane to time. It to
to 09330,000 por piesl. If U.S. can be done immittely, the
activated by - onliten impirts that over 100,000 with vicule Ln
government by Feb. 12 may be able to Trugh 300,000 picule from Free China
Shenal were muggled out from bentember 15, 1944 to January 12, 1945.
and 150,000 picils from Occupied China. in addition, the cotton acreage
During the BLUE cariod, shout 150,000 piculs were setaggled eut from the
can also be increased this pring.
free ar-as of Home, Supib and lisman. 2a of January 14, Altogether
about 300,000 steuls of the 1944 cottac crep han been ameried ms.
(2) To improve No cotton worketing organ - The present cotton
marketing organ is the from estisfactory. It has a large organization
and a big indget. But en one and it has un inefliefent and loose
V.
Government Purchasing of Rain Octton:
administration and on the stier, 11 hão not valid the right with to CO the
right job. It has been strongly opposed or tie Peoples' Political
In the of 1964-65, the gov-rament planned to may 200,000
Council, the cotton interests and the entido growers. In order to carry
pieuls of PUN ostton. Beasure the production of 1044 crop 200 lev and
out mich an important entton programs during this period, there should
the official price vas 10 Lov that such an amount could lardly be
be a strong, displified and margetto central cotton writing organ,
purchased, the government resuced the enport true 000,000 picale to
Under this central prgan, suo strong Provincial Cotton Marketing
700,000 pieuls, of rich 450,000 TM to be bought from
Corporations should be out =p - doe in Strent end the other in Hupsh,
200,000 pients from Hupsh and 50,000 picols Trus donan. As of January
Such kind of Corporation may hu organized by the central cotton agen,
6, altogither only 165,000 stub picula just been purchased, at vid.di
the Provincial Government and the ention merchants. Buch kind =
110,000 piculs - bought from Shanti, 20,000 stoule from and
organisations can vtilize the political power of both central and local
$
5,000 pieuls from lionan.
gevernments, together vith the shility of experienced cotten eurbiting
apecialiste and cotton michante.
Since Dec. 2, 1944, the governor of Chemas has started - octtod
contribution compaign. The formire LA Chenai have been ordered to **11
450,000 shih pietils of Part cotton to the Cotton, 14m end Cloth
701.
The collenting translation from the Chiness proce reveale Ute
Administrati on before Feb. 12, 1945. Describing this, the form use
attitude of the oction textile industry.
the Chinese proviebs 170 HII the alticiten 19 at to take out its "EC."
The Firmers are forced to sell Untr cotton as the low afficial price
DECLARE F COMPLE
and they will not grow ootton again mort year.
ASUD 77 THE CONTON TENTAS
It 1a estimated that no atter tor mich polition] force Le mai,
the government, before Feb. 15, can arily buy 300,000 picule of action
Ven Ta Eung Pao, January 15, 2045
including the 165,000 pieuls which lave already been bought, or the
300,000 picols, 200,000 jdends By be bought from Should and 100,000
The cot ton textile injustry las enheitted - petition to the
picule from Hupels and liocan.
Executive Yuan for relief from current difficulties in the my of 12'00
duction. the important pointe of the petition AN reproduced below.
C.
30% of Chandrine Cotton Scindles
1.
Supply of Costen -- The gotton mills in From Qdra depend on the
cotton supply from the Derthment. This your such supply facas serious
As of Jan. 1, 1945, 30% of the ootton (1.0. 60,000 apiniles)
chartage both on account of reduced groduction and extensive souggling.
in Changling had already supporided operation cimply because of the
At the use, oring to the ladity of the control accinistration, the
chartage of raw cotton. If the situation does not improve, cotton
adulteration of entiten a with vora than before, saking the work of
spindles vill suspend operation time after Date It is acid that the
spinning - difficult. The addition has moreover become curoless
government 1= planning to ask the United States to and cotton and cloth
in grains, EST that hardly 95% of onch pieul of wotton comes up to standard.
to China. This is not . sound a to solve the groblem since transportation
If the above conditions are allowed to continue all the cotton mills say
if viry difficult and summition is inportant tisan notten or cloth.
surpend operations at any for Incl of ran naterial. The deterioration
of the quality of cotton not only outs com the afficiency of procuction
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
70
but the sound Intruation of estten It is
imperative to raise the prior of cotton secording to writt conditi nos
visnover to order to cradicate smegling and netion
Treasury Department
71
cultivation. Also the cotton furnera should be given Inans nt planting
Division of Monetary Research
tim, and the control administration should correctes strict care Ln grading
and stamping out addistration.
Date Varch 5 1945
2.
Poster Protoction - The notion mills in True Châna Love dona
To:
Secretary Morgenthau
their best, but Chair equipment absolete and out of regair liter the
var will not be of such use. The government should recognium their
From:
Mr. Coe F.C.
contribution and secrifices in wartten et adopt support recession for thair
protectic not only for the nake of the oction -ills but also for the
purpose of laying the postwar for indictrial collection.
For information
3.
Cotton The government control reching shmild 24
You will want to read at least
simple, efficient and sconomical. The Cotton, Tarn and goth Control
the summary of this report by
Administration controls the Changling factories of Tuffery
Hoffman on France and, If
Mill; Tulara Milli Changline, Changes and Tacki factorias of Sung 01ng
possible, the full report.
MILLI Chart Hilli and Sian factories of Tabra vill; Teachhape
Milli Haiergrang vill, Tuochen Tehching - 12 factories In all
with a costined staff of a 1000 ado persons. Before presents control
these people did «11 the work of purchasing, storing and
assisting. The Administration TIGN any/oys - staff of over 4000 to de
this work dità an enorrow outlig in salary and W expense.
This miste of public funds lange with it 5 of *rod will ch
may well be steplified. If the cotey esved - increasing the
of the control administration and wring and of its staff 14 well to
getting nieded squipment for the alls, their penitation our be
considerally increased.
4.
Conclusion - The Control should understand the
business it controls vi be shie to help colve its
The present address stration Le Ignorant of the werking == the and
maving =11 and assinot be expected to alloviate its difficultion. If the
government takes good us of the textile guald and Vide U.s.
control additionation and the wills may be muse to coope - to the
benefit of =11 concerned. AS it 18, the centrol address Man coes nothing
beyond supplying cotton to the mills, and has never ev.: inquired about
such difficulties as the lov stock of lobricating oil and the enterials,
witch, if not increased in time, may force then to close dom. log has
the addinistration bothered check the serious shortage of 11/Jund espital
which has haspered proper raintenance of their equipment.
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
72
73
TREASURY DEPARTMENT
2
INTER OFFICE COMMUNICATION
DATE
again requested your agreement to do the paris thing. They will
TO
Secretary sorganthau
March 1, 1945
make an exchange of such Information 8. condition to the conclu-
nicn of compercial treaties with other European countries. They
FROM Michael L. Hoffnan
Intend particularly to break the Swine hot money Industry which
has long been a source of trouble to Prence. I feel that on this
point they deserve our cooperation.
In accordance with your instructions, I submit herewith à re-
port prepared upon ay return from France. This report covers the
4. French viens on Germany are gradually crystallising.
following nain questions which are important in the current French
Prinarlly, the French wast territorial security and do not intend
situation and which I believe will be of special interest to you:
to trade this for any International assurances. They want run
materials and aquipment from Jersony, but have not thought through
1. The frane is obviously overvalued at the present rate of
the question of Commany's Industrial position. In general, nothing
49,556 to the dollar, but in the present state of affairs it is
which will tend to keep Germany down can be too strong for the
impossible to say what the rate ought to be. No responsible offl-
French public, though there is, of course, an element which is
cial in the Ministry of Finance believes that the rate cen be
still receptive to the argument that Cernany is needed as & barrier
maintained at less than 75 and it may (° to 100 or even higher.
against Russia.
So far no hint that the rate will change in being given out. The
French will try to hold the present rate as long AS our troop pay
The French doubt America's ability to sustain interest in
provides substantial amounts or dollars and so long no France is
controlling Germany after the war. They expect Russia to play a
not In a position to do much exporting.
dominant role in the settlement of the Geruan problem and the
Government seess to feel that it DAS Russian support for some of
2. The perioan soldiers fael that they are being Eypped by
Its views. It was as clear impression that the French are assre
the present rate of exchange. This is the number one complaint
that the Russians are highly susplcious of an Anglo-Imarican
of nearly every American soldier In France. I have talked with
united front on the German question and that the Russians have
mindreds of soldiers and In my opinion this complaint in due
not been dealing with Zisenhouer's headquarters for this reason.
largely to the knowledge of the coldiers that there 1a a high
The Fresca re trying to exchange views directly with the Russians
black market price for dollar currency and to the fact that no
to avoid giving grounds for similar Russian suspicions of France.
real attempt has been made to explain to the soldiers shat the
In sy opinion, they will follow the Russian lead on all German
real situation Is. In fact, insofer as there is E real babis for
questions not vitally affecting French security in return for
complaint about prices, changing the exchange rate would not
which they hope for Russian support on these latter questions.
materially help this situation.
5. questions of lend-lease and credits under the Lend-Lease
3. The French are making & strong effort to mobiline their
not have attracted loss attention in France than questions of in-
foreign exchange assets and to put no end to evasion by Frenchmen
mediate supply possibilIties, on the one hand, and long-term re-
of their fiscal responsibilities. You will recall that prior to
establishment of France's current balance oz payments and credit
the war the evasion of taxes and the flight of capital from France
standing, on the other hand.
were among the most important causes of economic weakness und de-
noralization in France. The only really progressive thing about
6. The supply situation in France is bad and is deterio-
the kinistry of Finance le the determination of - Pleven to put
rating. At best, the French economy will not be working even at
an end to evasion and fraud in this field. D. Pleven got the
minimum lovels for some time. Nothing can be accomplished until
agreement of the British Treasury to cooperate by providing them
the internal transport system is able to work for the civilian
with information on private French assets in Britain. They have
economy. Lack of transport equipment is the key to all other
economic problems.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
ROLL NO.
74
75
3
7. De Caulle in following is policy of placing political and
REPORT OUI FRANCE
milltary prentige above sconomic reconstruction az objectives of
his Covernment. be 18 meeting more and core opposition on this,
even from none of nin own ministries, but 10 for de
Dave corried the people along. Juny people are narried sbout Ma
I. Date of Exchange - General.
super-nationalistic position in dealing with the Alliet and feel
that nie Inability to (et along with President Hoonevelt will
II. Date of Exchange - Attitude of U.S. Soldiers.
eventually load to his domicil. de continues to reflect to an
exaggerated degree French sensitivity to being treated as a personal
III. Domestle Plood Policy.
rate power.
IV. International Financial Policy.
8. Encically, relations are friendly, la
spite of the absence of any aucouragment from de Caulle, but we
V. French Viear on Tractment of
tre being criticized in DOCE for monopallsing French
railway equipment mil for the fuilure of supplies to arrive. The
TL. Land-Inase.
French ere just beginning to exemine the extent to which the are
being treated less (nvorably than Britain. they are just Mading
VII. Supply Situation.
out about the Leitish stockpiles and about the British shipping
allocation. There Le danger that the crition will et 10m credit
vin. Responsibility Imp Supply Situation.
for shot help Le given to rance, while no Lace the blane for lbs
inadequacy.
n. Be Coulle's General Policy.
8. France Le making is BIG bid for support una 78-
... Relations nith the UnIted States.
ards Russia as the world power with which friendably and close
working relations are most empectial.
2. Relations with Russia.
10. Political grouping are crystallizing In France along
M. Internal Political Duvelopments.
traditional lines. The Left with Center parties are in the
strongest positions because of toeIr Realstance records. The
MII. Service Influence in France.
French Right in strong in de Gaulle's Imediate official family
and in trying to stage & public cons-back. The Comunists NOT
supporting the Doverment and are not pressing E revolutiousry
program non. Although all parties are represented la the mink-
tries, therefore, de Caulle und en essentlelly Mght-wing (evers-
nent, with Communistic support, & eltuation which cannot Lest,
No sejor changes are likely, however, prior to the loan! elections
this syring.
nichal
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
76
77
2
I. RATE (If EXCHANGE
GENERAL
II. RATE OF EXCHANGE . ATTITUDE OZ U.S. SOLDIERS
In view of the failure of the French to follow a real
policy of deflation and price stabilization, It Le obvious
that the present rate of exchange for the franc cunnot be
Le we have reported from time to time, the American sol-
maintained except through the most stringent type of exchange
dier in Paris feels that he La being "gypped" by the present
control and at the expense of French export industries. In
rate of exchange for the franc. This feeling is very strong
the Ministry of Finance there is today no one who believes
and midespread. It is likely to be a continued cause of oon-
that the 50 frane rate can be maintained after the war,
plaint for those troops who renain in France.
There are some идо taink it should be changed at the time of
the currency conversion but the general opinion soons to be
The [act lo that the Imerican soldier really has very
that it should be maintained until developments make & PO*
little reason for complaint. The Army in doing c. good job of
sumption of exports practically possible and until after the
providing the soldiers with everything they need and many
period of large-scale American troop expenditures in France
forms of recreation and entertainment. Furthermore, ordinary
has passed.
types of entertainment available in Paris are not expensive
for the soldiers even at the 50 frano rate. I have talked
At present it would be unrealistic to attempt to esti-
with large numbers of soldiers of all grades in an attempt to
note what the franc rate of exchange ought to be. An essen-
find out In what respects they really feel they are being
tial characteristic of the present sconomic situation in
"gypped". I tun sonvinced that there are three reasons for
France is that no such thing as price levels exist. Until
this feeling:
there is restoration of something approximating normal move-
ment of goods, no one ONLY tell what prices will be. For In-
(a) By far, the most important reason In the knowledge
stance, the price of butter In Paris is approximately 350
on the part of the soldiers that dollar currency in the black
france (37.00 per pounô), the price in Hormandy is approxi-
market Is morth three to four times the amount in france which
mately 30 francs (60a per pound). It Is impossible to tell
they receive for their dollars. They naturally conclude that
wisnt will be the price of butter in Paris when It can again
this rate 1s correct and that the rate that they receive is &
move from Hornandy through regular legal channels. Ho one
discrimination. No real effort has been made to tell the nol-
would contend that either the present Paris price or the
diers mything different.
present Hornandy price was a good basis for estimating what
should be a non exchange rate, This is the altuation with
(b) The 0116 thing which the soldiers buy and which is 02-
respect to ever, essential commodity. With respect to export
pensive La beverages of all kinds. with one or two exceptions
products such AS brandy and perfumes, while the price of 0%-
I have never found A soldier able to cite anything except
isting stocks could concelvably be fixed at any level, pro-
drinks when pinned down AS to what he could not afford In
docers cannot tell at present whether 5. given price is or In
France. In a fan cases I have had complaints of laundry ex-
not adequate because the cost of practically everything used
penses and charges made by horse-dremn taxicabs. Drinks are
in the production of future stocks la unknown. It is for this
expensive. Food 10, of course, even more expensive but the
reason that most of the economists who have expressed views on
soldiers generally realize that they have no business to be
the problem feel that & fixation of a non franc rate should
buying food in France.
be postponed as long as possible.
(c) The soldiers, although they do not buy clothes,
women's hats, dishes, etc., see the prices posted on these
Items in the Paris stores and are impressed when they convert
these prices into dollars with the fact that "everything is
outrageously expensive In Paris."
Regraded Unclassified
PRECISION
TRADE MARE
MICROSTAT/ MICROFILM
BOLL NO.
79
78
- a -
4 -
à far as prices ectually paid by the troops are con-
upward adjustment or legal prices and by working hard to re-
cerned, a change In the rate of exchange would case little
store transportation and the movement of goods within the
difference anyway as long as supplies remain AS tight as at
country. Without the restoration of transportation and move-
present. Such prices would be exorbitant in dollars et any
capt of goods, It is held, no financial measures will succeed
rate that would be at all realistic from the point of view
in eliminating the black market or in renoving the pressure
of the French economy In general, and many prices would sin-
for higher prices and wages. The corner stones of the Ministry
ply rise further following a change la the rate.
of Finance's policy, therefore, are flotation of public loans,
encouragement of the regular flow of sevings through savings
This feeling on the part of the soldiers that they are
banks and other savings institutions, taxation of war profits,
getting Фурред is E serious problem and in my opinion a care-
and a high lovel of regular tax collections. In the proposed
ful program of education should be Instituted in Paris in 00-
budget for the coming year the French plan to raise about
operation with appropriate are authorities,
thirty to thirty-five per cent of their expenditures by cur-
rent taxes,
III. DOPESTIC FISCAL POLICY
Am soon 0.8 possible they plan to carry out their program
of currency conversion which will be accompanied by L census
of liquid wealth. On the basis of such a census they plan to
There has been a enormous amount of discussion, both In
impose a moderate capital levy which will not, however, have
France and elsenhere, of the fiscal polley which should be
very much effect on the inflation picture inassuch 8.8 it will
followed in trying to reestablish stable monetary and price
probably allow for # payment over a substantial period. The
conditions in France. This discussion 1a still poing on. It
currency conversion 1s being delayed by the practical diffi-
is well known by now that there have been throughout two ¿-
culties of distributing the currency and by the fact that,
eral views as to the methods of tackling the monetory problem
due to the case of counterfeiting, the higher denomination
in France. One stresses the matter for drastic measures to
currency notes propared In the United States will not be used
eliminate & substantial part of the nonetary circulation and
and the French are therefore amaiting completion of printing
debt created during the occupation. The other view favors
of additional notes in the United Kingdom. The 100-frano
stabilizing the debt of conetary circulation et Its present
notes printed in the United States will be used and are al-
lovel and tryin to prevent any further expansion of dobt and
ready In France. The problem of distributing the currency
circulation. There are, of course, numerous ranifications
within the country to something over 23,000 different local
and variations to each of these points or vim which we have
exchange centers 10, however, difficult of solution at B. time
reported from time to time. The French record the Belgian 62-
when using transport for surrency means taking it away from
parlment as typifying the first approach while their own polley
carrying lood. An effort has been nade to work out a system
la an application of the second.
of having trucks carry currency out from Paris and carry food
back. On this basis the Ministry of Finance has been able to
The Kinistry of Finance takes the position that drastic
get certain trucks allocated to the program. It is now anti-
nessures to reduce the circulo tion by a heavy capital levy, e
clpated that the currency may be distributed by the first of
blooking program, or otherwise, would nerely appravate the
April.
essential difficulties in the supply and employment situation.
with few exceptions both government circles and the press 20-
IV. INTERNATIONAL FINANCIAL POLICY
gard the Belgian program as having failed and 52 having con-
tributed to the unrest in that country. It in argued while
France's monetary and debt position is bad, it can be supported
The dominent trenê In France's International financial
11 It In prevented from becoming worse by permitting moderate
policy is to obtain centrol of all Franch foreign assets in
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
BOLL NO.
80
81
5
6 -
order that the pay be mobilized by the Government. In this
V. FRANCE VIEWS OF THE TREATMENT OF GERRANY
connection the French are taking à drive to obtain the 00-
operation of other overnments In an exchange of fincel In-
formation withh will result in the respective overwents have
There has recently been a great increase In public dis-
Inc the details as to the holdings of their nationale in for-
cussion or the treatment to be applied to Germany after the
ein countries. The Fronon have obtained the agreement of the
mar, French overmental views are still not completely
British Government to turn over the Information held by the
crystallized out it is becoming possible now to define a more
British Energy Property Custodian concerning France's private
OF less generally accepted French position.
assets in the United Kingdom. Since all known French ussets
In the United Kingdom are under control of the Every Property
The French position la a natural development of the tra-
Custodian, this amounts to turning over to the French full
ditional French views on the treatment of Cermany AS formu-
information of French holdings in the United Kingdom. The
lated, for example, by Clemenceau. The French are still very
French are waking corresponding data available to the British.
much impressed will th what they regard as the betrayal of France
following the war of 1914-1916 by the British and W those
The Ministry of Finance is taking the position in the
Frenchmen who were willing to trade concrete measures of se-
French Government that no international, commercial, or finan-
curlty for the Locarno Pact and dependence on the League. All
cial agreement should be concluded with other European coun-
statemento of France's position start with the assertions that
tries without the inclusion of the provisions of such ex-
this time they will not rely on promises and will insist on
changes of Information. The French appear to be particularly
concrete security neasures.
determined to force the Swice to reveal the names of the orders
of the very substantial enount of /rench money which in In
Although there is no one view OIL what should be done with
Switzerland. They hope that the United States Treasury will
Germany, there 1s E strong feeling that whatever is done France
agree to make information available concerning French holdings
should be consulted as M. equal partner. De Gaulle has gone no
for 0.8 to say that France will accept no settlement of bound-
in the United States.
aries or any other German question In which France has not been
It 1a well known that in the past wealthy people In
consulted.
France escaped taxation on an enorcious scale by hiding their
noney abroad. The Government is requiring all persons having
More concretely, France's thinking about the treatment
assets abroad to file new declarations on the onsis of which
of Germany tends, 65 always, to emphasize primarily territor-
they cay, by payment of - flat 30 percent penalty, be forgiven
(al security. The French do not want to annex any territory
all back taxes. If they do not file and cottle with the French
except possibly the Saar, because they do not want territory
Treasury, all their property, Including property in France,
with German population, They do want military occupation of
will be confiscated If their evasion is later discovered and
both banks of the Rhine and have recently taken the position
they will be treated as deserters in time of war. It remains
that this occupation should be by French troops.
to be seen how effective the French will be in earrying out
this policy if evacions are on & large scale. The announcement
There le also a general agreement on the internationali-
of the British agreement to furnish the French with data on
ration of the Ruhr, although Just what this ceans concretely
French holdings In the United Engdos has, of course, been of
is by no coass clear. There is a great doal of sympathy for
great analstance in bringing about compliance vál. th the orders
the view that Jersany should be deprived of all heavy indus-
requiring declarations of foreign holdings.
trice and all Industries capable of being converted into war
purposes but DO Tax it le by impression that the French have
not thought through this question, They are more inclined to
think in terms of has such industrial and transport equipment
Regraded Unclassified
82
83
7
a
they can move out of Germany. Generally speaking, French
little attention. The press has carried quite a number of
thinking seena to be less concerned about the possible com-
releases concerning the Monnet program but both in the Gov-
nercial disadvantages of having & deindustriallsed Cereany
arment and mong Frenchmen outside the Government I have
than British thinking, although there sre, of course, many
found very little concern with or knowledge about the size
people who will be receptive to the ar,iment that Ceruany
of the program or Its financial aspects. The French know
must be maintained an a barrier against Soviet Russin. I an
that their armies have been getting a lot of military sup-
inclined to think that the French have taken Suncia's pro*
plies and assume that these supplies are being provided on
dominance on the continent 80 for granted that this separent
Lond-Lease, With respect to civilian supplies, it le gen-
will not be EO potent as In England or in certain quarters
orally insom that they are getting some kInd of a credit but
in the United States, but It will likely be influantial be-
up to the time I left there was only the vaguest notion of
hind the scenea in the present Government. In the present
the size of the credit and no real understanding of the terms.
political atmosphere I can hardly imagine anyone publicly ex-
pressing or evan Minting at such a view, The attitude of the
Among the many official and unofficial expressions of
French Socialists is somewhat discouraging as they 0002 to be
French views on the problem of supplies and collateral finan-
unable to forget the doctrinaire Socialist internationalism
cial problems, I found very little concern with the duration
of the prevar period sufficiently to enable then to seriously
or terms of the credits which the Fresch were to get in a
consider strong neasures to wreck the Jernan war potential.
Lond-Lease agreement. For the short-run, they are primarily
concerned with how may tons of goods will arrive next week
Tue French to feel confident that the Humalans are
or next month, and not with the question of whether they will
sympathetic toward their demands for territorial security and
247 for these goods in cash or get then on credit or what the
occupation of the Phinelend as will at their potential demands
terms of settlement will be. In informed circles it is well
for coal, other PER naterials, and Industrial equipment from
income that the French have substantial foreign assets and
Germany. I have no way of telling to what extent this 1a
there is as great reluctance to utilize then for reconstruc-
true. It is significant that the French have unde a strong
tion purposes as long 0.0 they last.
effort to exchange views vil th the Russians on these matters.
They have not tried to coordinate with us or the British first,
I talked with Mondes France, the Maister of National
and present a united front to the Russians. It la well from
Economy, about 4 week before I left Paris and widle he talked
that the Russians have so far refused to denl with the Anglo-
at longth about supply difficulties, the gravity of the un-
american Supreme kilitary Meadquarters (SHARF) on Corman eat-
employment situation, and the need for Allied supplies, he
ters except on one ninor matter involving displaced persons.
never contioned Lend-Lease or indicated any concern about
Consequently, our military people know nothing about west the
Minancial settlements. When discussing the longer term, the
Russians went or what the Russians are doing In that part of
people I spoice with did not think in terms of Lend-Lesse at
Germany under their control. The French probably know little
all, but In terms of long-tern credits for reconstruction
core but they are evidently trying to deal with the Russians
which would be granted on & strictly business basis, which
directly and to avoid the difficulties which we have pan into
they feel they our justify. Much more important than ques-
because of our continued joint action with the British.
tions of credit, Land-Loase or otherwise, in the concern of
the French with how to recotablish a flow of current payments
which will enable them to buy what they need In the United
VI, LEND-LAASE
States. The size of the French reconstruction problem la
such that no amount of credit can by itself restore the situ-
ation. Prenchmen não think in terms of the next five, ten, or
Outside of limited governmental circles the Lend-Lease
twenty years realize that the problem of credit will solve it-
Agreement which has just been signed has attracted relatively
solf If they can solve the problem of restoring the healthy
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
84
85
10
- 9
They would like to borrow locomotives from the United Kingdom
flow of ourrent payments. They regard this as being primarily
but have so far not been able to get British agreement to
the problem of restoring exports to the United States and,
such a transfer. Unless the war ends very soon, thus releas-
consequently, regard as of primary importance United States
ing the French locomotives now tied up by the military, no-
policy concerning the amount of imports ne will accept.
body sees how any real improvement in industrial production
or in the distribution of agricultural products can take
In my opinion, the recently signed Lend-Lease Agreement
place. On the other hand, If the French can get, say, 2000
will tend to have an unhealthy effect on French thinking on
additional locomotives in working order within the next three
these problems because they will be astonished at the appar-
nonths and use them for the purposes of civilian economy, 4
ent ease of obtaining credit. Above all, it will give the
great many of the other problems which appear to be pressing
de Gaulle group another excuse for failing to tackle supply
now vould disappear. The supplies which they have and those
problems realistionlly in France.
which will be coming in could be put Into useful channels
and the effects would be cumulative on the whole system.
VII. SUPPLY SITUATION
VIII. FOR SUPPLY SITVATION
You supply situation has deteriorated considerably
since the liberation of France and It is expected to deteri-
From a broad point of view It can already be foreseen
orate further before any substantial improvement sets in.
that the United States in going to take the blane for the
Practically no supplies apart from those included in Plan A
Isilure of France to receive needed supplies, while the British
(consisting mostly of food and items for incodiate direct
are coing to get the credit for alleviating the situation. The
consumption) have arrived in France from the United Rations
French have concentrated on getting supplies from the United
sources. Stocks of raw material on hand at the time of liber-
States and the French publlc, naving been told nothing to the
ation are running out rapidly and factories are closing at an
contrary, naturally assumes that this la where they can get
increasing rate. The situation is worse than it was under
what they need more readily. They do not know about the enor-
German occupation from an industrial point of view.
pour stocks of food and materiols in the United Kingdom nor do
Biay know the [sate about the shipping allocations to the
An effort is being nade to alleviate the situation by
United Kingdom or the reasons therefor. Even with respect to
bringing in United States owned raw material for processing
inmediately available rell equipment, the United Kingdom is
in French plants and a large program for tires was recently
probably = much better source than the United States. Further-
been inaugurated which will provide employment for neveral
more, the French public does not know how badly the French
thousand workers and produce tires for American and French
Supply Kission In the United States has handled its problem or
armies as well as some for rehabilitation or trucks for use in
how much responsibility the French Government bears for delays
civilian economy. Programs such as this, however, are no sub-
to date.
stitute for the restoration of imports of industrial ron nater-
inlo which could start flowing through the regular channels of
The Maintry of National Economy is just beginning to got
the French industrial system.
some facts on the situation In the United Kingdom and In be-
ginning to try to get at name of the British stockpiles. I
No real improvement can be expected until transportation
understand that State Department is also beginning to press
equipment is made available to the civilian economy. Every
the British to release sque of their stocks and that Prime
analysis of the supply program comes back to this same point.
Minister Chruchill was approached at Yalta on the question
The French have ordered locomotives in the United States but
but refused to liscuss It. In the British Perliament 6.
understand that they will not be ready until the end of 1945,
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
86
87
- 11 -
12 -
Government representative recently stated flatly that the
point of view, and = Government which tells the people that
British Government would not take any steps that would on-
things are bad and will be worse but that they must make
danger existing British rations.
further sacrifices in order to have a strong army and = posi-
tion of power in world councils.
At the same time the British have been free with their
services As spokesnan for the liberated areas In trying to
Do Gaulle's policy can be illustrated by the story of
get larger allocations of supplies and shipping from the
his visit to the Paris suburbs during the extreme cold of
United States. All the attention Tune been directed to us and
late January. There had been no coal In Paris except for
away from their our stocks. If there is E. real airing of the
gas and a little electricity for several weeks. Electricity
facts, It is almost certain the British will have to rolease
was off all day long and consumption was severely limited at
name of their stocks and possibly none of their transportation
night. Food rations had reached a low point and suffering in
equipment. Decause of the REV In which the situation has Leen
both rich and poor districts of Paris WILLS intense, being par-
handled to date, however, they will be able to take credit for
ticularly severe In the poor sections. De Gaulle visited
for magnanimous gesture undertaken by them (LD a result of the
various local government centers where he WAS net by the
failure of the United States to live up to its promises to
Mayors of the Arrondissements, the local committees of liber-
supply the liberated areas.
ation, and other comunity lenders. In each place be would
get out of his car, L° into the building, shake hands with
all the group, and then ask a spokessen what were the prob-
IX. Da CAULLE'S POLICY
less of the comunity. Invariably he WAS told that the
poople were cold and hungry, that the old people were dying,
that there was no coal for the schools, that the children
In general, de Deulle's 201102 since the liberation nes
sere underfed, that factories were closing, etc. In each
consistently been to work for the restoration of French mill-
case de Caulle would listen patiently and sympathetically and
tary strangth and the French political position In Informational
then would make a abort speech mich started 6111 & sumary
affairs at the expense, If necessary, of scondale reconstruction
of the miseries of the people and E. statement of how much
and reform. Not all decbers of the Covernment and certainly
Prance had suffered end ended with the statement that France
not all sections of the population upron KIL de Janlie's on-
Was going to continue to suffer and that times would continue
charle on strictly political objectives at the expense of In-
to be hard and get worse but that France would be great and
proving the conditions of life In France, but this disagree-
that /runce would stand on her on feet, Equally invariably
ment üper not 29 to the point of being unwilling to Collow
this gloomy prediction, followed by de Gaulle's confident as-
de Gaulle's lendership. There 10 5 definite feeling, however,
certion that France would be great in spite of all obstacles,
on the part of practically all groups who are actively con-
WILD creeted with fervent cheers.
cerred with the French internal economic situation that there
must soon 2016 a time then economic recuistruction is _iven
first priority.
X. MALATIONS WITH THE UNITED STATES
It has been vary surprising to witness the development
of this situation. 1. country that bus under_one sovere 167-
Next to Russia, all shader of French opinion agree that
chological and material suffering suddenly finds the enemy
relations with the United States are the most important for
gone from most of the territory, immediately be ins to hope
France. The French Prese is very sensitive to fluctuations
for Improvement in the conditions of life, but finds, on the
in France-American relations and while differences are frankly
contrary, that It is faced with a deterioration of living
discussed and recognized and criticians of the United States
conditions, the hardest winter in history from a naterial
are quite open, there is great concern at any sign of friction
with the United States. The bad relations between de Gaulle
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
ON.
MICROFILM
BOLL NO.
88
89
13 -
14
and the President are # source of constant worry to all ex-
France coeds 10 not relief but replacement of basic trans-
cept the few adventurers in the Government who have made a
portation equipment and raw material supplies which were
career out of profiting from the situation. Many individuals
oither taken by the Germans, dissipated in the fighting, or
to whom I have talked say that they feel that de Goulle's bad
are currently being used by the Allied armies. They feel
relations with President Roonevelt will ultimately lend to
that strictly from the point of view of war production,
his failure to retain leadership in France.
France's marginal contribution could be very much greater
than that of the United Kingdom and that they therefore de-
There are a number of specific points at which, from the
serve better treatment in the allocation of supplies. They
French point of view, Franco-American relations are weak,
cite figures to show what France could do with one more loco-
The most important underlying problem is the look of confi-
notive in the way of steel production, aluminus, tires, and
dence on the part of the French in the aillingness and ability
other products. Hoat American observers of the French in-
of the United States Government to accept a share of responsi-
dustrial situation agree with the French claim that their
billty after the war for the maintenance of peace and world
marginal contribution would be greater than that of the
economic reconstruction. They are afraid to rely on continued
United Kingdom.
American participation in European affairs and they tend to
preface all their reactions to United States views or actions
American representatives are constantly stressing to
with reflections along these lines. This fear of the revival
the French the shortage of shipping as the reason for
of American isolationism is quite general In France.
inability to deliver needed supplies. The French, however,
know that the United Kingdom gets about 2,000,000 tons of
There la BE increasing tendency to blane the Allies for
shipping por month while France was allocated less than
the continued distross of the French population. The de
100,000 tons per month for the next few months. While recog-
Gaulle Government does very little to discourage this tendency.
nizing the importance of the United Kingdom as a base of mill-
Insemuch as the Americans are predominant in France, we are
tary operations and from the point of view of war production,
the nain target of these complaints. This feeling 10 Crequent-
they real that the importance of Prance in both of these re-
ly surmed up in the statement that France Lo bearing the brunt
spoots is reater than is indicated by this 20 to 1 ratio.
of the effect of miscalculation on the part of the Allied migh
TDAY see no reason why British food rations should continue
Command of the duration of the wer, Churchill's recent state-
to be adequate while France's retions are very much sub-
ment to the effect that the Allied HIGH Command did miscolou-
standard, when both countries depend primarily on the use of
late will certainly encourage this opinion. In Government oir-
Allied pool ships, to which pool the French have contributed
clea It is argued that if the american and British Armies had
about & million tons.
been more willing to utilize France's industrial capacity for
war production, there could have been both economy in shipping
space, permitting increased shipment of civilian supplies, and
II. STATIONS WIIE MUSSIA
prevention of the cass unemployment which in now threatening.
They are grateful for our Aray's pollcy of not trying to live
off the country for food and other supplies but they point out
It 10 no aration to say that de Goulle's ability
that we have in effect done the 50016 thing by monopolizing the
to maIntain his position in the face of the Government's
transportation to the point that the food and materials which
failure to press vigerously on internal program of economic
the country has cannot be moved to the heavily populated areas.
reconstruction and reform and In the face of the failure of
living conditions to Improve since the liberation is the di-
closely allied to the above source of dissatlsfuction with
rect consequence of the conclusion of the Franco-Soviet Alli-
United States policy is the complaint that we have constantly
ance. Although the full story of the negotiation of this
treated the French supply problem as a relief problem when what
Alliance and of the various formal and informal agreements
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
90
91
- 15 -
- 16 -
made at Loseow in not known to no, it is generally believed
this process is only beginning, certain interesting develop-
that de Coulle WAS willing to make almost any sacrifice in
ments BAY already be noted. It must be kept in mind, however,
order to come back with a treaty and that he (RYO in on
that for the great bulk of the population, participation in
practically every Soviet request,
organized polítical activity continues to be kept to n mini-
2001 by the pressure of the material difficulties of life, In-
The conclusion of the Tranco-Sovist Alliance not only
cluding pluin lack of sufficient energy In saay sections of
improved France's position in dealing with her other Allies
the population.
but definitely removed the possibility of serious organized
internal trouble in France for the time being. The French
At the time I left Paris It was agreed on all sides that
Communists were not in conflict with de caulle prior to the
the de Snulle Government was not going to carry out the poll-
visit to Hoseow but their position had not been defined and
tical objectives of the Resistance Novement which had been so
It is quite ponsible that It would have become one of opposi-
widely proclaimed during the carlier period of the liberation.
tion. At any rate, the de Goulle Dovernment mas quite obvious=
The Resistance Prese has texen on E tone of disillusIonment to
ly afraid of the Communists. In Moscow de Goulle succeeded In
en increasing extent. Even if the Covernment desired to carry
getting Stalin's agreement to discourage any tendency on the
through the political, structural, and economic reforms which
part of the French Communists to make trouble OP to utilize
are generally regarded as being the ains of the major Resist-
their very considerable potential military and financial
ance groups, it tould have been faced with major practical
strength against the de Soulle Government. As E. consequence
difficulties. The fact that the basic economic situation has
of this, the Communists became not only non-ravolutionary
been bad and getting norse during the winter months would have
but, in A roal sense, the only party supporting de Jaulle.
made It difficult to carry out changes, the short-run effect
Maurice Thores returned to France with the Soviet "party
of shich would have been further to Impede the carrying on of
line" and within three weeks Lad reversed the Party's post-
ordinary business and adudnistrative functions. Even in
tion on every important point of conflict with the Covernment.
ministries in which there has been no question of desire to
put through a thorough reform in administration, such as the
The decisive effect of the Russian Alliance on the French
at Ministry and the Ministry of Mational Economy, it has
internal situation in the neet spectacolar but not the only
been impossible to do 10 under conditions In which the capa-
indication of the fact that the French of all shades of politi-
city of the administrative machinely has been strained to the
cal opinion regard their relations with the Soviet Union AE the
utmost.
most important aspect of French foreign relations. There is a
strong feeling that good relations with Russia are the essen-
Honover, the departure of the Dovernment from the Resist-
tial corner stone of postwar French policy. This Is Just as
nace program is not simply a question of lack of opportunity
true of the Right, chore the feeling It based on fear, 0.5 of
to carry out reforms. It is due also to opposition In the
the Left, where It La based an genuine cope of greater Russian
Government to the meking of fundamental changes at the prosent
Influence In France. Consequently Sussian In/luence In France
time. This opposition is partly In good faith and partly not
today 10 (ar greater than that of the United States or the
in good faith. There are some groups miso admit the need for
Britleh as for as concrete policy declaions are concerned.
fundamental social, economic, and administrative reforms in
France but who feel that such reforms under present conditions
would risk creating & situation in which the reforms would be
XII. ENTERNAL POLITICAL
discredited because of the Impossibility of carrying them out
effectively. The Communist Party's position represents the
cost thoroughgoing adoption of this view. While their program
Within the past month there has been as: Increasing crystal-
comits then to social and economic changes of the most drastic
limation of the Franch Internal political situation. Although
Regraded Unclassified
92
93
- 17 -
- 18 -
and fundamental type, the Communist Party is not at present
support of de Goulle meant support of de Caulle by all French.
taking the lead in advocating the adoption of basic reform
It la true, of course, that the Resistance does not represent
neasures by the Government, and is stressing unity, winning
all Frenchmen on matters of social, political, and economic
the war, and support of de Coulle. The Communists do, how-
reforms although it night be said to have represented all
over, press for changes in personnel and the application of
Frenchmen in fighting the Germans.
senctions against certain individuals and groups who are re-
garded by them no being remants of Vichy or of collabora-
tionist interests. There is another group which doesn't want
XIII. INFLUENCE IN FRANCE
reforms now because it doesn't want reforms at all. This
group is the French Right and it is becoming increasingly
vocal. The Right-wing point of view has always been strongly
The French are confiscating all enemy property which can
represented anong persons Influential with de Gaulle. It ass
be discovered in France. They have been slow, however, to
now, however, also acquired a press and E small following in
recognize the need for & vigorous program of uncovering hidden
the consultative assembly.
Corman interests and for investi ating the intricacies of cor-
porate tie-upa which may cloak enemy economic penetration.
The breach between the Government and the Resistance has
Nothing like a full picture of the situation will be available
been brought about not only by the Government dragging Its
for come time,
heels on carrying out the Resistance program but, perhans
even more fundamentally by the tendency by the political
Te have been pressing the French to pay more attention to
parties to carve out their own influence at the expense of
this problem. In this connection the use of cases arising
the unity of all Resistance Groups. This in particularly
under our freezing control to force the French to take the pe-
notable in the Socialist and Communist Parties, both of when
sponsibility for looking into certain of their companies has
provide important elements in the membership and leadership
been very helpful. Largely through the careful use of this
of the Resistance Movement. These parties, and to & lesser
tochnique we have been able to get n. number of investigations
extent the Catholic Labor Party, and the Redical Sociallate
started and n. number of supervisors appointed In French banks.
are showing an increasing concern for party prestige and in-
This natter, of course, is extremely delicate because of the
fluence. This tendency to disintegrate is not surprising,
strong movement in France for nationalization of the banks
of course, and its importance should not be over-catimated.
which Is being resisted by the Ministry of Finance. The
Ministry in reluctant to uncover anything which will provide
The de Gaulle Government's position in the [ace of these
ammition to those pressing for nationalisation but is also
developments is fundamentally strong at the moment because
anxious to avoid the charge that It is shielding collabora-
shatever disagreements there are on policy, ell Toups are
tionist elements.
anxlous to maintain the flotion of unity, which the de Gaulle
Government has represented from the beginning, pending the
One LOVE the French have unde towards uncovering hidden
carrying out of elections. Elections will provide the only
enemy asseto is to sequester nearly a billion france worth of
possible indication of the relative strength of the various
assets located in Honnoo, with when the Finance Equistry has
groups which are now either reviving or in the process of
an agreement permitting the French to not directly in the
formation. or course, It is somewhat embarrassing to the
Principality. It una In this may that the Bank Charles case
Govermment to have it pointed out by the Resistance Pross
was uncovered, involving at clear case of "safe haven" for
that whereas the Government and the Right Press now say that
Ceruan, French, and American money floeing France to escape
the Resistance does not represent all France, de Gaulle al-
possible taxation or confiscation. The revelation of the
mays took the position prior to the liberation that the Re-
American Government's policy to cooperate with the French in
sistance did speak for all Frenchmen and that the Resistance
any CESSE involving United States citizens found to be involved
MICROSTAT/ MICROFILM
ROLL
NO.
RECISION
TRADE MARK
94
95
TREASURY DEPARTMENT
- 19 -
INTER OFFICE COMMUNICATION
in such collaborationist activities has had nn extremely
DATE
healthy effect in Paris and puts un In a ver, strong posi-
warch 1, 1945
tion to tipo cases of this type to strengthen generally the
TO
Secretary Morgenthau (For information)
French policy on similar positions.
FROM
Fr. white prf.
The decision to invite the French to ticipate in the
safe haven mission to Switzerland, in which the American delo-
Subject: Land-Lasse Exports to Ruesis
gation is headed by Lauchlin Currie, has also had = very good
effect. It given the French a feeling of responsibility for
If
the cormon program. Following the departure of the joint
mission, meetings were held with the French to try to stir
1. in Hovember, 1994, United States Lend-Lease exports to
them to greater activity in France itself on all matters re-
Russia totalled approximately 4800 million BE compered with
lating to the rooting out of Passist economic influence. In
about a255 million in October, 1044.
the course of a subsequent conversation with : Pleven, the
Minister of Finance, I was able to put before his very frankly
B.
Amon. the principal non-military Items were:
my concern about the incapacity of the staff in the Ministry
which had principal responsibility on these matters - the
Motor trucks (all 81785) ($2b million)
Direction of the Lloous. 1. Pleven agreed, and is non looking
Dried B/WS (d) million)
for new men to head up this work who will be more nearly ado-
6001 cloth and dress goods (511 million)
quate to the tack, This la one good result of the recent meet-
Lard ($? million)
Ings in which we have tried to create the strosphere of n. joint
canned saussge (as million)
effort in dealing with such problems.
Linesed 011 ($5 million)
Butter (04 million)
3. Among the munitions sent ware:
1756 railway freight cars (over 10 tons)
064 universal carriers
908 motorcycles
Richael L. Hoffnan
400 4b coliber Thompson sub-mschine runs
228 medium tenks
133 orgnance comnat vehicles
do is one. medium bombers
3 2 ons. 11ght compers
de P63 à one. pursuit fighters
21 J47 2 aruc. sedium trensports
Loroh 1, 1945
16 44m AA June
4 00m AA guns
-.
Shippents to astern Russia, presumsbly on Russian Doats
via Vircivostok or some other Siberian port, accounted for
about 8142 million or the total or approximately 8300 million
exported during the month under review.
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MG. u. s. PAT. OFF. MICROFILM ROLL
NO.
96
97
TREASURY DEPARTMENT
COPY
OFFICE OF THE SECRETARY
FEDERAL RESERVE BANK
March 1, 1945
OF NEW TORK
CONFIDENTIAL
February 28, 1945
Received this date from the Federal Reserve
Bank of New York, for the confidential informa-
CONFIDENTIAL
tion of the Secretary of the Treasury, compila-
tion for the week ended (see incoming letter),
Dear Mr. Secretary:
Attention: Mr. H. D. White
showing dollar disbursements out of the British
Expire and French accounts at the Federal Reserve
I as enclosing our compilation for the work ended
Bank of Sev York and the means by which these
expenditures were financed.
February 21, 1945, analyzing dollar payments and receipts in
official British, French, Canadian, and Australian accounts
as the Federal Reserve Bank of Senr York.
Very truly yours,
H.
(Signed) H. L. Sanford
14. L. Sanford,
Assistant Vice President.
The Honorable Henry Morgenthau, it,
Becretary of the Treasury,
Washington 25, D, C.
Anclosures 2
Regraded Unclassified
ECISION
FRADE
MARE
MICROSTAT MG. FAT OFF MICROFILM
ADL: NO.
12"
and Snalysis
ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS
Strictly
(In Hillions of Dollars)
week Knded Fabruary 21, 1945 Confidential
OF
CANADA (and Canadian Government)
COMMONWEALTH D.JIK OF (and Australian Government)
DELITS
CREDITS
DEBITS
CREDITS
Transfers
Transfers from Official
Transfers
to
Proceeds
Net Incr.
British at
3
Proceeds
Set Incr.
Official
of
(+) or
Official
of
(+) or
PERIOD
Total
British
Others
Total
Gold
For Own
For French
Other
Decr. (-)
Total
British
Other
Total
Gold
Other Decr. (-)
Mar Years (a)
Tubita
n/c
Debite
Credita
Sales
A/C
A/C
Credits
instruct
Debits
L/C
Debita
Credits
Sales
Credita instructo (e)
First
323.0
16.6
306.4
504.7
412.7
20.9
38.7
32.4
. 161.7
31,2
3,9
27.3
36.1
30.0
6,1
: 4.9
18.3
Second
400.4
-
450.4
462,0
246,2
3.4
123.9
88.5
+ 1.6
22.2
16.2
55.5
81.2
62.9
+ 9.9
Third
525.8
0,3
525.5
566.3
198.6
7.7
.
360.0
. 40.5
107.2
57.4
49.8
112.2
17.2
95.0
-
5.0
723.6
741.3
235.2
197.0
155.1
41.9
200.4
-
200.4
Fourth
723.6
,
958.8
47.1
170.4
- 3.4
-
Fifth
"49.3
1,0
848,3
958.5
38.1
61,4
-
-859.0
+ 283.3
298.6
253,0
45.6
287,7
-
287.7
-
10.9
1944
J
14.6.
91,8
50,4
41-4
17.3
5,8
1,0
4,8
7.3
.
7.2
:
1,5
September
74.5
-
-
otober
24.1
24.1
84,2
-
7.4
-
76.8
. 60.1
20.5
1,0
19.5
21,0
-
21.0
0.5
36.8
36,8
53.7
-
2.9
-
52.8
. 14,9
1.6
1,0
2.6
5,8
-
5,5
-
3-4
over
21.5
0.2
20.8
AR
3.1
1.1
19.6
19:6
16.5
-
,
32.7
-
32.7
-
1 145
35.1
-
35.1
91.6
10.0
31.3
-
50.3
+ 56.5
27.4
-
27.4
5.6
-
5.6
- 21.8
are
1Aprid
the
Repe
2022
Week unded
cabity 11, 1945
bes
-
5.3
7.6
Tab
- 0.7
0.1
0.1
0.3
-
-
-
-
-
0.3
+ 0.2
7. 1945
1.0
-
1.0
16+)
-
/
0.4
-
16.1
15-5
0.6
-
0.6
3-6
-
3.6
+ 3.0
Februiry 14; 1995
3.1
-
304
25.2
-
4.5
-
22.1
0,2
-
0.2
0.3
-
0.3
+ O,1
Fabruary 21, 1945 4.1(c)
-
4.1
54.7(0)
-
-
54,9(a)
50.6
O.1
-
0,1
0,4
-
0.4
. 0.3
America docat) reportatures for
Test and of ar
6.2 million.
(a) For monthly breakdowns see tobulations prior to: April 23, 1941; October 8, 1943;
Guard y-3r -
8.9 million.
October 14, 1942; Septomber 29, 1943; September 6, 1944.
Third your Eune
10.1 million.
(b) Reflects changes in all dollar holdings payable on demind or enturing in one year,
Pourth your of er
13.9 million.
(c) Dxis not reflect ressetions in short term C. S. securities.
Fifth your of or
16,1 million.
(1) Includes 8 2.8 million deposited by When Supplies, us.
Sixth your TF (thine to February 21, 1°455)
7.5 million.
and $ 3.0 million received from Res Their accounts of Gupadian chartered braks.
and # 48.3 million representing ******** of sales of United States Treasury Dotes.
(a) includes payments For servent of "ritiga Think? of Tacion,
Control, nn-i quistry of disping.
(b) detivated flurres based on transfere
procossis of official Sritish value of with cartier, beladed H U.e.a. Jimit
to the official selling, substantial Implication provider or prive want
early of the war, although the procipt H the provide = ship best cream
to data supplied by the Pritich Proasury 754 by secretary
of our securities through December, BW - .334 million.
(c) Includes shout $85 million received during Cotobor, 100 imm the accounts of with 100%,
presumably reflecting the requisitioning of /rivate dollar ,Liver Have
1939 apparently rupresent current acquisitions of experte from the une and
receipts. See (i) below.
(d) Seflects nut change in all collar holding payside an Leard or The
(a) For breakdown by types of debite and rel K.
(r) Adjusted to climinate the affect of 320 villim et - June 26,
(g) For monthly brooklown see taBulations prior to April 23. P41;
(b) Transactions for secount of Caire Central 47 LA France
(1) Includes $ 2.8 million appirently current IN
exports, and # 17.0 million An connection with Lia expenses of our Total ferees streed.
ITR
Strictly
Silliam of
faculty 11, 1245
Confidential
(
-5)
DEVITS
CHEDITS
Gov't
Proceeds of
liet 1155. (+)
PERTID
Transports
Expendi=
official
tre
Potal
Total
Door. (-)
Total
Other
Ted
unread
FY
Midia
Credito
to , we
tures
Dubits
(E)
may
Credits
will
avairalian
the Years (g)
(1)
Account
(4)
(n)
(-)
(d)
First
1,793.2
(05.5)
20.9
1,166.7
1,682
1,150.2
52.0
1.9
5,0
(f)
1,05.200
+
99,0
Gooond
2,203.0
1,792.2
1.4
57.6
2.1m.8
1,125.0
774.0
100%
ID.2
3'.9
0.0
- 30.1
Third
1,235.6
904.8
7.7
20,1
1,301.5
212
5.5
71:4
10.5
4.4
- 14,1
Fourth
764.0
312,7
170.4
-
C.5
150.1
08,3
0.3
1,0
-
Fifth
1,197.7
300,4
61.4
135.9
,30.5
-
-
253.0
171.7
-
1944
Septomber
151.0
19.9
50.4
-.5
-
-
1,0
-
-
October
127.9
21,0
7.4
A.5
54.7
-
-
1,0
73.2
-
-
Lowsiver
74.2
45.4
2.9
0.1
-
-
1.0
A.1
17.9
1.4
21,9
56.7
6.5
1945
January
145.9
96.)
3203
1:.9
-
20104 (r)
-
(r)
February
Birch
April
May
June
July
August
Neek Stated
January 31, 1945
43.2
30.9
-
4.3
10.1
.
-
February T, 1945
12.5
5.9
1.2
way
-
-
Futurary 14, 1945
5.3
1.5
1.)
1.5
flow
-
-
-
February 21, 1945
12.8
4.4
also
-
-
Jensis Expenditures linee
Γ
France 19. 1940) (19.6)
Shipping (throuch I'M (363)
Tast
(through
Jule
A1)
inclunt 12, (44) 21.9
T # Revisad.
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
BOLL NO.
101
102
EXECUTIVE OFFICE OF THE PRESIDENT
WAR REFUGEE BOARD
WASHINGTON 25. D.C.
Report of the Yor Refugee Board
for the Week of February 12 to 17, 1945
CHICE OF THE
EXECUTIVE DIRECTOR
MAR 1 1945
PROSPECTIVE EVACUATIONS TO SWITZERLAND from GEREAN-
AHOLIMHEL CETTONANOO
Reports reaching 110 indicate that there in n. growing
conviction in responsible quarters that n. progressive
increase is to be expected in the number of Jewish
refugees released from Germany end German-controlled
areas. Practical factors pointing to tris conclusion
My dear Yr. Secretary:
include the difficulties enticipated for the Germans 88
I na pleased to and you herewith a
n result of a reported Inck of food for Jewish internees
and the probable need of Jewish internment casos for
copy of the report of the Ver Refugee Board for
housing German refugees from Sovist-occupied areas. On
the theoretical side, expression has been given to the
the veek of February 12 to 17, 1945.
possible existence of B. desire on the part of German
officials to gain credit for releasing Jewish internees,
Very truly yours,
n.B. well B.F. a wish to avoid emberrassment to the local
population which eight result from the presence of
Jevish internment comps in Germany proper where in-
criminating evidence of any ansa exterminations might
remain.
William O'Dwyer
Executive Director
In view of intimations that additional transports are
to follow the recently arrived group of 1,210 refugees
from Theresienstadt, the Board requested Representative
McClelland by cable to advine ue whether in his judgment
there appears to be an imminent possibility that Gerwan
The Honorable,
authorition, under the pressure 02 groving overcrowding
in Germany resulting from the floy of refugees from the
The Secretary of the Treasury.
coat, any present increasing numbers of refugees at the
Svies border for admission. While it is requesed that,
if much arrivals take place in "n orderly manner and
not in too great numbers at one time, the Sviss Govern-
ment any be willing to accept them, both supplies and
Enclosure.
assistance in removing corresponding numbers of refugees
already there any be requested by the Sviss if the flov
becauses substantial. Ve occordingly suggested to Vc-
Cielland the desirability of initiating appropriate
discussions with a view to determining and organizing
the action to be telren in the event that the indicated
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAT.
OFF,
MICROFILM
ROLL NO.
103
104
3 -
our request ver ande to secure the indirect influence
possibilities exterialise.
which might be exercised by the presence of Sviss and
Swedish consuler officials near localities where Jeve
EVACUEES FAC THERESINNSTART AND BERGEN BELSEN
are concentrated and by such informal conversations
which they could hold in those places rather than
In order that appropriate arrangements night be sode
official note of intercession.
for their transportation and for their reception and
maintenance no Philippeville or other mitable 01/200,
CONDITIONS IN GERMAN CONCENTRATION GAMPS DISTRIBUTION
we notified the Yar Department the United Intione
OF RELIEF PARCELS
Relief and Rehabilitation Administration of the arrival
in Switzerland of the group of 1,210 refugeon from
There is evidence that large mimbers of Schutzhaeftlinge
Theresionstad: and of the urgency for their renoval
(a term apparently applied to designate persone detained
from Sviss territory. Representative MeClelland WSB
for security reasons) are being transferred by the Germans
advised of this action. According to information from
from the east and the north, and it is believed that 8.
it, private source, the Dutch Jeva in this group are
great many of them are being taken to a point near Nunich
receiving assistance from their covernment and the
which seems to be ri distribution center from which
German, French, and Polish refugees are being cared
prisoners are routed to Intor camps. While central German
for temporarily by Svise authorities.
authorities have hitherto categorically refused permission
for the International Red Cross to distribute relief
Concerning the group of 1,672 refugees from Borgen
parcels and the reception of Intercross Dorcels by
Bolsen, ve vero informed that military authorities are
interness has been tolerated only in n. small number of
in consuniontion with Representative ReCiellend with
campo, present indications are that the BS any officially
regard to the details of rrrangements for their
permit the distribution of relief parcels to certain
evacuation from Switzerland.
categories of Schutzhaeftlinge In concentration camps.
Although the motivation of the more liberal attitude is
A report from a. private source indicated that, of the
not clear, It 1- felt that it offers nn excellent
stateless persons and individuals holding Lotin-American
opportunity for sending into Germany additional Inter-
documents from Bergen Belsen who were included in the
cross personnel whose presence might serve all an in-
exchange recently effected in Avitsorland, 141 are
valuable protection for the lives of thousends of gen
being sent to Philipoeville and 11 are hospitalized
and unaen 0.0 the Nazi system collanses. In order that
in Switzerland.
full advantage 107 be taken of the promise suggested in
this situation, Representative in exploring
COOPERATION OF SWISS AND STEDISH GOVERNY ETS
with Intercross the possibilities which any be thus
afforded.
As indicated in their reolics to our suggestions that
frequent and extended visits of consular officials to
Our Embassy in Loscow relayed to us information obtained
places where Jeva nro concentrated be ande nº TL part
by an American neva correspondent concerning the recently
of intensified neasures in behalf of Jewn and other
liberated Osviecia (Auschvitz) death camp. It vas
internees surviving in Gerunn territory, it is
reported that approximately 4,000 prisoners, exhausted
apparently the impression of the Dving and Swedish
Governments that we vere requesting reneved inter-
from suffering, overwork, and hunger, vere freed from
the casp and that there vere Opech, Yugoslev, Dutch,
cessions, the positive effect of which they regard as
French, and Belginn nationale -mong them. Arrengements
extremely questionable. Accordingly, we cabled our
were insediately underteken by the Polish Provisional
Legations in Bern and Stockholm and Representative
Government for shipments of urgently needed medical
McClelland and Olsen asking that it be explained that
and food supplies to allevinte their condition.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
105
106
-
- 5 -
The Swise Legation nt Berlin reported that, according
to information supplied by persons who had vitnessed the
3,000 Jeve who formerly lived on Rhodes, only 14
fate of Jeve interned in Change in Upper Wilenin, nn
remained besides themselves, all of the others having
attennt vas mode to ovacunte the interness from Aurchvitz
been deported, presumebly to Polend. That the 20
on foot under deplorable conditions. Representative
survivors escaped deportation vas attributed to their
McClelland advised DO that he had received from other
Turkish or Italian nationality.
sources confirmation of the fact that the proter mert
of the interness reusining in Auschvitz vere evacuated
REPORTS FRO TURKEY
on foot before the Soviet advance. Unconfirmed reports
in Switzerland indicated that only 2,000 to 3,000 persons
From Istenbul, it vas learned that B. Jevish refugee
were found in Auschvitz et the time of the Ruggian
who recently renched Sofie from Albenie reported that
occupation.
there are in Albenia et present 350 Jews, nost of whom
are Yugoolava, Greeks, and Italians. Jewish refugees
A cable vas received from our Subney In London edvising
arriving in Bucharest from Trensylvania stated that
that the Ministry of Economic Worfare and approved a
Transylvanien Jews vere deported to Oranienburg and
proposed progrem for shipments of clothing parcels through
Vienerneustedt no well BS to Auschwits, with most of
the International Red Cross to Bergon Belson, provided
the Jeve of Solnoc and Liskoles confined at Wienerneustadt.
that reasonable assurances can be given that percels
Absence of communications with these deportees makes
will reach addresses and that results of food opreel
it impossible to determine their present situation,
shipments to Bergan Belsen vero entiefectory.
and the only facts known <re that they were divided
into three groups: (e) nen between 15 and 50, (b) women
JEVISH REFUGEES IN SHEDEK
between 15 and 50, and (c) children, elderly people,
the physically disabled, -nd mothers who refused to
According to statistics went to the by inister Johnson,
be separated from their children. It vas reported
there are 5,508 "Gernan refugees" registered with the
that the first two groups were sent to labor camps,
Swedish Department of Social Welfare. All of these any
while the third group vali gassed.
be assumed to be stateless dereons, and 11 1- estimated
that about 2,500 of then are Jewish. or the estimated
total of 11,916 Jevish refugees in Sweden, the others
include 115 Czechs, 70 Poles, 750 Norvegians, 6,000 Denes,
3 Finns, and 673 stateless persons, of whom 350 ere from
Norway, 200 from Dennerk, and 123 from Finland. of the
(illiam O'Dwyer
total, 50% live in and sround Stockholm: the location of
Executive Director
the others vas not indicated.
EVACUATI THROUGH TURKEY
A report received from Turkey brought the information
that six Jevieh refugees, three of Italian nationality
and three of Turkish, had succeeded in eacaping from the
Gerann-occupled Island of Rhoder end in lending at
Marmaris, Turkey. Palestine certificates for them have
been requested. These refugees reported that, of the
Regraded Unclassified
PRECISION
TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
107
CARLE TO AMERICAN EXPASSY, LONDON, FOR HAVE, PROM MAR BOARD
Please deliver following to Joseph Schwarts from N. &.
Leavitt of American Jewish Joint Distribution Committee:
QUOTE UNDERSTAND NOTISE PASSPORT PICE CABLISO
TODAY CONCEPTIONS ANDIOVICE APPLICATION Zur VISA.
WOULD no INSURED 17 IN ADDITION YOUR LEGRARD
MONTISPIONS AS BOAND POUNDATION IDE/EDIATELY APPROACHES
BOX (YYICK. IN on LETTER ACCOUPASTING APPLICATION is
STATED VISA RESURSTED FUR TERPORARY STAT THE 70 51% MONTHS
THAT ARONOTICI HOLDS MEENTRY PEACT TO UNITED STATIS VALID
TO JANUARY 1946. HAS FIRST AMERICAN PAPES ISSUED 1942.
LET FORMANTA 1924. HAS JDC STAFF
FROM 1919 AND PHON 1924 AS GENERAL SECRETARY
AND TICS NANAGIRO DIRECTOR FOUNDATION. IMPORTANT INDICATE
ms FAMILY FAMATHING UNITED STATES STOP YOU! REPLY NIGARD-
DO EMPATING ISVANT BROOK PO OVERSIAS SERVICE INSURITY
AMAITED. UN JOTS
$
2,15 p.m.
Barch 1, 1945
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MG. PAT. OFF. MICROFILM
ROLL NO.
15-1167
PLAIN
108
London
NO
March 1, 1945
Dated Harch 1, 1945
Matribution of true
reading only be special
4 Delha
Rec'd 12:32 a.m., 2nd
arrangement. (SECIET =)
Secretary of State,
mashington.
ax, /trst
POP TH DISCOUNT PRIM HAVE
AMERICANT
Please deliver the following ussages to
LONDON
Leavits of AMERICAL Joint Retribution Committee from
Joseph Schwarts.
1554
lessage begins. Have allocated 14,000 monthly
For Timet from Department, you and 1RB as 199 50.
to Jendish Countinating Condittee in liberated Holland
for mergency purposes especially non-Dutch nationals
information Department's 6035, July 31, 9619, forember 10,
that territory until regular transmissions. Possi ble
Dutch Government here will accept payments in starling
end your 6279, August 5, 10022 of November 16.
and pay equivalent to Jewish Committee Holland. Suggest
therefore, you transmit imediately our account here
In view of the extense urgenay of extending additional
38,000 cover two months budget. Dessage ends.
aid to unassimilated persons in enaty=comtrolled consentration
Issurage begins. At the time I left Help: the
comdittee did not actually receive $150,000 which you
camps and in view of recently received reports from Intureram
paid Belgian Committee, however, was advanced
equivalent that amount by three local banks including
that sore widesured distribution can be effectunted under terms
Jules Philippeon who acted with consent of Belgian
listional Bank. The Belgian Finance lamstry during
of Berle-Foot Agreement, the Department, FIA and - recommed
my stay there indicated that the noney would be re-
paid to the three banks within a few days so that I
the shipment from this country by the Tar lieftigee Board of -
anount that the soney has already arrived Belgiun but
have no direct knowledge this effect. Have already
additional 300,000 packages of three kiles each of foodstaffs
told Heardk sonetime ago not to service responsibility
Oreece at least until my arrival 18 Italy and Parman
for distribution by the International Red Cross. It is requested
fully informed. Expect see Reenik 8005 and clarify
situation. Inference Harry Mele, would be glad have
that this atter be referred urgently to the Relief
him overseas service and believe be should be assigned
!witserland imediately. Have no objection Canadian
for Blockmie authorization to proceed with this program at the
field workers provided they met our usual standard.
mill nake every effort ane Samuel Goldwyn in Paris.
Incoage ends.
surlicat possible date.
impreço begins. Budgetary recommendations for
-
"wreh and April BLOW as previous nonthe except for
(Anting)
following: Prance 200,000 Griece 150,000 Palard
(non)
1200,000 via amo,000. total reduction
325,000 nonthly. For time being believe unnecessary
DC
#?
TEA
vote additional onetine grants for next taro months.
writing fully. ends.
Unanage begins.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ REG. u. 5. PAI. OFF. MICROFILM
ROLL NO.
110
111
- 2 -
Issuage begins. liave made formal applications
Inter-govermental Connittee for additional grants
18-1-23
PLAIN
$300,000 such Munanta and llungary for first quarter
1945. Pessage ends.
Puris
WI ANT
Dated March 1, 1945
MP
lied'd 7:40 2nd
Secretary of State
Mashington
956, First
FOR LEAVITT AMERICAN JOINT LISTRIBUTION
PROP ARTHUR ORGENLATOR
"Resk Baskind claims to have deposited equivalent
three thousand dollars harch 1960 Poland with David
Cusik. Please cable verification."
CAPPUIT
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
REG. u, 1. PAT. OFF.
MICROFILM
BOLL NO.
113
WOR-934
Caserta
LC-860
PLAIN
This telegram must be
paraphrased before being
Dated March 1, 1945
loss
comminicated to anyone
other than a Doverment
Rec'd 3:10 p.m.
Dated isarch 1, 1965
Agency. (RESTRICTED)
Rec 'd 10:57 a.m.
Secretary of State
Secretary of State,
Washington
Washington.
769, 1, 10 p.m.
568, March 1, Noon.
PM MAR REPUBLE BOARD.
POP MOBILE INAVITT FIO: RESNI
Be my 436 February 5, noon.
Number four. Your letter February 21 concerning
gatsoth distribution received. Our distribution
101 foreign refugene femarly at Topustro arrived
facilities already completely organized working in
close cooperation with Invel and others. still
at Bart yesterday wiere they are non being acreened by
smaiting shipments. For your information we supplying
two tons natsoth additional packages for 900 refugees
British before being turned over to intergovernesstal
leaving for Palestine during passover holidays.
refugee authoritive in Italy. A few who were not
Have secured through American relief for Italy
clothing for 1600 children distribution taking place
evecuated from ?ugoslavia were obliged to renain there
February 27 in home. Other supplies promised for
other areas including sons from UNITA. Regards.
due to illness, pregnancies, et cetera and are in the
XERX
Split area where they are receiving proper attention.
TOB
CRE
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
ass. PAR. OFF.
MICROFILM
ROLL NO.
115
DCG-1192
Jerusdes
This telegran wast be
before being
Dated March 1, 1945
comminicated to anyone
CONSICTION
other than $ Government
lec'd 2:11 belo 200.,
Leney.
AIR
PLAIN
Varch 1, 1945
Corretary of Mate,
Fashington.
In cable from Lisbon 386 February 20 for 18
JDC 100 serial number should read 305 instead 386.
4. Woreh 1, 7 2+7+
Correction from the Entassy.
Following - La from Jacob Criffel sho requests
be pent through -ar Leftagen lount to nico
INVISION (If CENTRAL SERVICES
Orthodox Nabble lesgue Coxditee, 1,32 Pizes,
The York
CAR
*Ageney representative Lichtels exhles
thapp release Therein obtained from Inster personally
by Dwine right wing politician - abo sect lerming
by rthodar (roupe originally to :mor Vittel (roup.
In destitute condition las millenly obtained release 1200
Deresin. More such teansporte procised but not arrived
probably onling transport difficulties. sttitude
result peneral situation terminy by memority
constantly evacuating 100,000 prisoneru of - cirilian
internes. In Thereain sor number of 11.
lessue efforts - rafis from allistion In order to obtain
Large scale release of Jews. lieur Lane propently discussed
with official quarters here. represe with
Government prosised vala admittance all Insider Derivobelsen
and part Cheresin, this report confirmed DENE - yester-
day. This Last possibility cave lemate ibo - in greatest
danger imellate entermination unless enculated to sufety.
Rest not, mis every human effort utilize Matorie or
Unity. ingo chief labbi liabble rouning all emetime
local consinity this atter do
LLC
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ REG. PAT. OFF. MICROFILM
ROLL NO.
117
116
101-897
PLAIN
CARES TO AMERICAN STRASST, LISBON, PHONE WAS REPUBLICE DATO
[Labon
Please deliver the following sessage to Harold Trobe from
[uted March 1, 1945
11. A. Leavitt of American Jewish Joint Distribution Condition:
Rec'd 12:48 p.m.
QUOTE ROSAISKA HEQUEST PAY on
Secretary of State,
DESIGNATED sus WX "ATE so COMPETENCE THIS MATTER ADD
M/ST US DIRECTLY 1019
Washington.
HOSATSKA. UN,UCTS
461, First
THIS 15 are LISION CARLE no. 150.
ma 347 se 192 FX LENVITT FROM HAROLD TROBS
Reard): cables APIN informed gritish and american
Sibancies and Governor of Dreece that (ireace approved
reditions 175,000 each January February. Hank of
1
Greene selected Cuaranty Trust Company New York and
Bank of Singland to receive sterling or dollar deposits
for payment equivalents our Greek representative.
Reanik now ready proced (freece. Advised Scimarts.
CROCKER
2:15 Pelle
March 1, 1945
I
Regraded Unclassified
MICROSTAT RSG. 5. PAT. OFF. MICROFILM ROLL
NO.
PRECISION
TRADE MARK
119
HTP-1225
PLAIN
Barn
CP-977
PLAIN
Dated 'arch 1, 194)
Lisbon
line'd 7.65 S.D., 2nd.
Dated March 1, 1945
flec id 3:51 p.m.
Secretary of State
Secretary of State,
mashington
Washington.
WITH
1331, ne
462, First.
P.R 100% 20. REARD PROM DOCLELLAND
WRB 346. For: HIAS 425 LAFATETTE struct, HER TORK,
Rease deliver following to world Jevish
PROM DAVID SCHWEITZER INCEM.
Congress from Leon "imette and world
Received following cable from Bulgaria transmitted
by Harry Baltsan of Istenbul, "the of liberated Bulgaria
Horbbarg are not Among (Toup which recently arrived in
hereby send our heartiest (restings to annual meeting
HIAS and entire American Jewry for help already
instamrland from Therestenstadt".
extended and for more which - hope is on its way,
la particularly thankful to HIAS for having undertaken
HAIRTSON
through HICEM the bridging together of hundreds Jewish
families Milgaria with relatives throughout world from
whom been separated during war. le hope HIAS will find
way nake possible for impoveriabed Bulgation
Jews receive individual money remittances, clothing,
parcels from relatives overseas consistoire Deceral
des Juife en Bulgaria".
CROCER
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
120
CASLA TO AMERICAN EMPASST, ANXARA, FROM THE WAR REPUBLICS BOARD
Please deliver tie following to Charles Passnan from
14. A+ [eavitt of Averican Jewish Joint Distribution Committee:
JUSTS THIS WILL CORPIRE YOUR APPOINTMENT AS DIRECTOR
OF DE JOINT DISTHIBUTION CONSITTE'S ACTIVITIES IN
MIDDLE EAST AND HALKANS. TO VEHY AMXICUS YOU PROCEED
TO BALKAR COUNTRIES. PARTICULARLY RUMUCA
AND HULDARIA TO CHDANIZE EFFICIENT VELIZE AND REHARTL-
ITATION PROGRAMS. PLEASE KEEP us ADTISID. UNQUOTE
THIS IS de ANKARA CABLE NO. 144
=
11,15 ---
March 1, 1945
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
/
NO. PAT. OH,
MICROFILM
ROLL NO.
F0-1092
Istantel
This telegran must be
persphrased before being
lated March 1, 1945
comminicated to enyone
other than a Government
line'd 8:40 p.m.
Agency. (RESTRICTED)
Secretary of litate
Residenton
74. Hareh 1, 1 p.m.
FOR TAR BOARD.
Please deliver to llease Leavitt Joint Distribution
Comittee. From Passman.
1. with regard to Reanth's projected enigration scheme
from Prosce your emble - relayed by Names to Scients.
2. Prior to my departure from Jerusales, Unrold In (1)
telegraphed to us the contents of Boanth's calide. I thereupon
telegraphed immediately to Schwarts to the offect that the Jewish
Agency has no imerladge this project and that the cost thereof
is extremaly excessive. I suggested to Schwarte also to aivise
Reanik by telegraph not to be concerned with Balkan enigration
projects.
3. For your information I have - at a cost of less then
$100 per - negotiated various transportation projects from
Crosse to Palestine in conjunction with Jovish Ageney represent=
atives in Palestine and at Istanbul.
4. Although certificates are at present unavailable,
transportation at reasonable rates will be -rranged na soon
AS certificates are granted.
TROUTMAN
ne
Regraded Unclassified
PRECISION
TRADE MARK
M
NOT TO BE RE-TRANSMITTED
122
SECRET
COPY NO.
OPTEL No. 69
Information received up to 10 0.0,, 1st March, 1945.
NAVAL
1.
HOME WATERS. Last night E-boats probably mine laying,
active on convoy route to Antwerp and engaged by our patrole when one
of H.M. Prigates sunk one E-boat and took 26 prisoners.
2.
MEDITORRANEAN. Under cover fire from gun landing craft
and air attack coastal craft assisted evacuation of Partisans from
Pag (N.W. Zara) which necessitated by strong enemy counter attack.
3. sunk by U-boat St, George's Channel. é 3517 ton ship damaged by nine
ENEMY ATTACKS ON SHIPPING. 28th, A 1926 and 646 ton ships
or torpedo off the Wash yesterday. A 798 ton ship damaged by enemy
aircraft Antworp. 28th/lat (night). h 1349 Panamanian ship in con-
voy damaged by nine or torpedo off Boykjavik.
MILITARY
4. Saarburg further advance three miles made, Further northeast of River
WESTERN FRONT. South Central Secter: In bridgehoad east
Prum advance continues on wide front with forward troops reaching line
River Kyld while house to house fighting continues Bitburg. North
Central Sector: N.E. of Duren U.S. forces reached Erft Conal where
two bridgeheads estoblished, while further north troops of 9th
Army reaches southern end western outskirts Rheydt. Northern sector:
U.K. and Canadian troops meeting strong resistance Hochwald Forest
made limited advances.
berg 5. taken. Central Sector: In Ponrania on right flank this sector
EASTERN FRONT. Northern Sector: Further places 8.7. Kongs-
base of thrust towards Baltic widened by capture of important rail
and road junctions Prechlau and Roustettin. Further south progress
continues reduction Breslou.
6. finally cleared of enemy after fierco fighting lasting 56 hours and
BUBMA. Central Sector: Village in Myinnu bridgehead
506 enemy dead have been counted. Bridgebend to cost 10 being en-
larged and strengthened, Northern Sector: Chinese troops continue
advatice down road Hsenwi Leshio against stiff opposition.
AIB
7. casters dropped 699 tons through cloud on benzol plant Nordstern
WESTERN FRONT. 28th. 154 escorted Bember Command Len-
with unobserved results. 1072 escorted U.S. heavy bombers (3
bombers end 8 fighters outstanding) attacked through 10/10th cloud
five railway centres in N.W. Germany (2199 tens), two railway via-
ducts Biolofold (203 tons) and "rnsberg (226 tons) and costing plant
Meschede (187 tons). Enemy opposition very small but 18 snemy air-
craft destroyed and 10 damaged on ground.
SHAEP (Air ). 121 bombers attacked Geldern and Rheinberg
and 34/- (2 missing others dropped 53 tons communication targets
North and Control Sectors, while 2200 fighters (16 missing) supported
land forces end attacked communications scoring 9,2,12 in combat and
2,0,4 on ground and destroying or damaging 43 locomotives, 375 rail-
say wagons and 201 K.T.
69 Fighter Connend Spitfires attacked rocket sites Holland
with good results, 28th/lst (night). 262 aircraft despatched (1
vissing, 1 crashed): Berlin 74, bomber support 72, sen sining 5
- other missions 111.
F
MEDITERRANEAN. 27th, 557 escorted heavy bombers (15
(llasing) attacked reilway centres Augsburg (979 tons), Salzburg (179
(05%) and Liens (43 tons), while incomplete reports show tactical
!raraft 589 two end damaging two railway bridges.
SOUTH EAST ASIA. 24th, 105 Super Fortresses (1 missing)
!ropped 221 tens Empire Dock area Singapore with good to excellent
results,
10.
ROCKETS. Five incidents reported morning 1st.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. U.S.PAT.OFF.
MICROFILM
ROLL NO.
123
124
- 2 -
March 2, 1945
9:30 a.m.
MR. HELL: I don't know that there is anything in there
that you haven't talked about generally.
FINANCING
MR. HAAS: At one time or another, but I think--I hoped
Present: Mr. D. W. Bell
the Secretary could sit down through the whole thing, but he
Kr. Gamble
says he can't.
Vr. Haes
Mr. Tickton
H.M.JR: You fellows all know it? You have seen It?
Kr. Lindow
Mr. Murphy
MR. GAMBLE: Yes, I don't think it is the clearing house
Mr. Rouse
for all the subjects we have had under discussion. I think
Mrs. Klotz
It is very informative. When you have the time you ought
to do it, but it is not pertinent to the decision you need
to make.
H.M.JR: Hello boys. Why don't you take 8. comfortable
chair, Henry. There are 8. couple of new ones in reserve
MR. BELL: How about the books you need to get up?
back there.
=
MR. HAAS: We are putting it up 80 you can look at it
MR. HAAS: I've set in these 20 long, I think--
at your leisure. You don't have to take the time--
MRS. KLOTZ: There is e difference, though, isn't
H.M.JR: On the farm?
there?
MR. HAAS: Any place that you have the time to look
MR. HAAS: Surely.
at it.
H.V.JR: Vr. Tickton, is there anything you have that
H.V.JR: I have a satchelfull there that I took to
these people are 80 thrilled about that I ought to know
Detroit. Well, I think that is El good thing to work from,
that I don't know?
unless you people have scare other suggestions. Why not
work from that? Is that the Ecoles and Sproul memo? What
MR. HAAS: Yes, sir, I can answer that.
do you think?
H.V.JR: I mean Lindos. ALL right.
MR. RELL: That's all right, work from that.
MR. HAAS: I think we should go through that--
H.M.JR: Have you ail got copies of it?
H.M.JR: Is there anything I ought to know to help ne
MR. GAMBLE: Well, I haven't. Are you talking about
make up ay mind that I don't know? I have talked to you
this?
fellows non for three weeks. Nobody asked ne to see Lindow's
sturf.
MR. HELL: Yes.
MR. BELL: Didn't you submit a memo?
H.M.JR: Is that not as good e thing to work from as
any?
H.M.JR: Was there anything in there?
MR. RELL: Yes, that's all right " far as I am con-
cerned.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT MICROFILM
BOLL NO.
176
126
- 5 .
- 4 -
MR. GAMBLE: Or the approach itself--
B.M.JR: She said, "I have :iready seen Mr. Beil.
You are not the only one who gets sround." She in .
VR. HELL: T don't tnink we are too for apart, and
smart cooky!
you can nake the necision as you go down the line.
"That the Seventh Yar Loan Drive be divided into
H.V.JR: (Reading from "Venorandum to the Secretary
two distinct parts, the first for individuals and the
of the Treasury from the Federal Open Market Comulttee,
second for other non-bank investors, and that the goal
attached.) "In the light of the joint objectives of the
for the second part be placed at five billion dollars.
Treasury and the Federal Reserve System with regard to
The suggested dates, May 14 - June 16 and June 18 - 30,
war financing, the following program is recomended:
are entirely satisfactory."
"Inst the Seventh far Loan Drive be divided into two
MR. HELL: Ted has some objection to the five, and
distinct parts, the first for individuals, and the second
be has discussed it with his Chairmen.
for other non-bank investors, ano that the goal for the
second part be placed at 5 billion dollars. There are
KR. GAMBLE: Tie have received arguments against the
two things. They continue to go down the line, don't
five billion dollars. One is, psychologically if we
they? But not much.
asked for twelve million dollars, that is not going to
support the extra demand for individuals, their quotas
MR. WURPHY: Just keep turning.
in many instances are going to be too low; two, upon
examination anybody can see there is five billion dollars
MR. FELL: One went for eight thirty-seconds.
fighting to get into the corporate field, and it all comes
rushing in in . few days; they are over the top on cor-
MR. EURPHY: They all went over eight thirty-seconds
porate sales. It makes their operation look too easy
for three consecutive days. Piser told ne over the phone
from the corporate side of it.
that they had fixed it up so that eight thirty-secones is
the day's quota.
H.M.JR: May I interrupt you? Can the corporates
come between the 14th of Kay and the 16th of June?
H.K.JR: The said that?
MR. (MMBLE: No. But they have always come in before
MURPHY: Piser. I remarked to him that it una
the individual goal has been reached; they come bounding
going down-the long bonds each have been going down et ght
in, and in 8 couple of days corporate loans are over the
thirty-seconds for taree consecutive days. the salu that
top.
could be prearranged.
H.V.JR: Why couldn't the individuals be from May 14
H.V.JR: Can I make up as mind in time to toil Sylvia
to June 16?
Porter? She is in a great hurry. I said something to her
about when the things go to press. She said, "Thet's all
MR. GAMBLE: They are, but it all opens as part of
right, Kr. Bell agreed to take care of ne."
the Drive, and individuals continue to the 30th, as they
have in the past.
MR. RELL: I simost ned to do that for you to get
her down here.
H.W.JR: It doesn't any that here.
MR. GAMBLE: I - not for this, and neither are they.
They wouldn't like this distinct break on it. Vie have
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAT.
OHF.
MICROFILM
SOU NO.
127
128
- à -
- 5 - -
never done this before, and the may it is worded, it sounds
H.M.JR: What I want to know is the estimate of
like that is what we are doing, but we are not. %e have
our balance June 1 and July 1, our balance position.
individual sales from May 14 to June 30, and corporates
Do you want anybody else in for your side?
open on the 18th of June. Corporates overlap; they need
that extra time. Hany States have opposed the Treasury's
MR. RELL: T WAS going to tell you that Bob Rouse
saying in the middle of the drive, The sale for indivi-
is here in my room if you would Like to have him In at
duals is closed, and the corporate drive opens tomorrow,
this time or later.
in effect.
H.K.JR: You should get another one.
MR. HELL: It only overlaps the E bonds.
MR. GAMBLE: If we are going to talk about indirect
MR. GAMBLE: That is true. That is the one they
bank financing, we may want to say some taings we don't
have trouble with at that time.
want him to hear.
Another valid argument, Kr. Secretary, that they
H.M.JR: Do you want Heffelfinger or anybody?
offer is that in all these previous drives we have appeared
to nsk businesses ano corporations to do nore than incivi-
MR. FELL: I don't think so.
dusis. It is not important to us, but they taink it is
important to them. In some counties lots of facturies and
H.M.JR: Let ne have the cash balance. I would like
corporations are being asked to do at least as much es
It for Eay 1.
individuals. I don't wholly agree with them, but that is
what they tnink.
MR. HELL: For May 1?
(Mr. Bell leaves the conference temperarily.)
H.M.JR: May 1, June 1, and July 1.
VR. GAMBLE: They wanted seven billion and seven
MR. HELL: Well, this is based on the assumption that
billion, and that is want they voted on. I tried to
we have the Drive in May and June and we raise sixteen
sell then seven and six.
billion dollars and also one billion, eight hundred million
in bills. According to the program we won't raise quite
H.E.JR: Before I do tnst I have to have E littie
that, no will only raise one billion, seven hundred million.
more information.
So no will the out of April witnout any money from the drive
except normal savings bond sales with about nine billion
MR. GAMBLE: I think I can answer those questions.
dollars.
H.M.JR: You don't know K.D.S.A I ELL going to 686.
H.M.JR: That is the 1st of Lay?
MR. GAVIBLE: What the corporate sales possibilities
MR. MELL: Yes, that is the 1st of May.
are out there.
H.K.JR: Nine billion?
H.V.JR: No, guess again.
MR. BELL: And Re would go out of May without any
MR. GAM BLE : Six--
money from the Drive with about three and one-half billion
dollars.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
us, PAT. OFF.
MICROFILM
ROLL NO.
130
12'
- 8 -
- 7 -
MR. BELL: Well, your belance on May 1 would be
down to around nine billion dollars; and if you had a
H.W.JR: Before I write that down, will that mean
bank financing of three billion dollars, that would
that you won't have any money from June?
raise your balance in that period of May up to sround
twelve billion dollars.
MR. AFLL: Oh, no. The have estimated that we will
get five billion dollars from the Drive, and these
H.M.JR: Let me just talk to Gamble a minute.
estimates were made up before the dates were decided.
You will probably get more than five hillion dollars Irem
Look, I don't know what--you weren't invited yester-
the Drive, but that would give you about nine billion
day when the meeting got started because I thought it was
dollars going into June.
a mistake to puil you out of your meeting with your State
Chairmen, but we had this meeting when they presented this
H.E.JR: During the Drive or whatever you have in
report.
mind?
MR. GAMELE: Yes.
VR. FELL: Yes, mhatever--if you start Eag 14, you
H.M.JR: And this is my own thinking, not theirs.
ought to get at least five billion dollars.
Let me just give it to you for whatever It is worth. Let
H.M.JR: So you will have about nine billion dollars
ne tell you fellows wast I an trying to do here, see?
Witnout giving away my shirt, I an trying at tnis time--
for the 1st of June?
I have changed to go along--I en going to try to--you
know, Mrs. Klots, If Kr. Fussell is around, it would be a
MR. HELL: On the 1st of June, assuming you get
sixteen billion dollars from the Drive, you would have
very good idea to have him sit in here, don't you think?
between fifteen and sixteen billion dollars.
MRS. KLOTZ: Yes.
H.M.JR: When?
H.M.JR: You haven't taken on Fussell?
MR. HELL: On June 30.
MR. GAMBLE: No.
H.V.JR: How much?
H.M.JR: He used to be here a great many years ago.
he is a great friend of Gaston's. He was formerly Senator
MR. BELL: Fifteen and one-half billion dollars.
Schwellenbach's secretary and 8. first-class newspaperman,
and knows the Hill. Be is coming here to look after only
H.N.JR: I will any between fifteen and sisteen.
me; if he gets into anything else, be gets nis wings
clipped. He is to do my mail and that sort of thing, but
VR. HELL: Yes,
just devote himself exclusively to ne. I think you will
all like nin. Be is very easy going. Do you know him?
H.V.JR: The reason I santed to get this thing
straight first is that I want to talk about the bank
MR. BELL: Yes.
financing. Let's get that thing settleo.
H.M. JR: And he will supervise our press room, because
lion, with that much money on hand, to do 6. bank
the job is just e--you know, to sit here all day long--he
financing before the Drive starts would be retner foolish.
is just what we have been looking for. He will write
speeches and that sort of thing.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
FAT.
OFF,
MICROFILM
BOLL NO.
131
132
- 9 -
- 10 -
Well, anyway, what I as trying to do is, I would
Then I began to talk and eay, "Well, should we do
like to leave the financial comunity in en steesphere
it before the Drive, or after the Drive? I was inclined
of feeling that what the Treasury nas done is fair,
to do it before the Drive because of the theory that if
extra fair, see? Ano I nave decided I don't went then
the banks know they have this security, part of their
to feel I an going to try to punish them because they
appetite is satisfied.
are opposing se on Bretton Loods, see? I mean, ne are
going around in & circle, and 1 BILL not going to let any-
MR. GAMEL: Yes.
one have an excuse for anying, "Recause ne are fighting
the Treasury on Bretton Roods, be is trying to get even
H.V.JR: And then they won't try to devise plans
with us," because, after all, in the final analysis BY
for other companies to sell out the Sixth har Loan
first joe in to finance the LED: everything eite coues
securities and toen invest in the Seventh--sell their
second. And 1 an not going to give the financial cos-
Sixth Tar Loan securities to the banks. But if Vr.
munity any excuse to point 5 finger and say that we are
Bell is going to have nine billion dollars on hand in
being vindictive, and I went you people to know that
May and June, the only possible suggestion from the
in heiping no to get e program, see? I meen, my first
standpoint of sales is, I think, It is had to have it at
job is just to finance the war. It would be interesting
the end because it looks es though it is sort of 8. prop.
just to digress a minute to give you B. little background.
If ne don't sinke it, we have that on the end. If we have
Little pieces come in.
it f est, ne burn our bridges and say we need that money.
That is benind us, and--mell, Phil Trounstine said 1sst
I invited, through Frank Teney, K. 7. Keiler, President
night, "Everything works for the bankers.' It doesn't.
of Chrysler Corporation to neet me in Mr. Isbey's home, and
No don't do it, anyway, just through the Federal Reserve.
we spent one hour and & half together--at least one hour
How long would It be open, two or three days?
and a half. he has rather sore et first; be said, "Goan,
Mr. Secretary, we keep our nose right on one thing, making
MS. HELL: Three days.
munitions, and you have got time to go around the country
talking about the post-war period. 1 don't coe Los you
B.K.JR: No publicity. If we did it, it would be
have time to do that."
like that, and nobody but professionals would клов about
it. Now, I na--
I explained to his why, eng DO forth, but his first
reaction was that he was quite angry that I 688 bothering
MR. HELL: It would be over by the time you got into
bin with * post-ner problem.
your main drive, but they mouldn't have forgotten it.
Then be ment on to say, "Yon, Studebaker, for instance"--
H.L.JR: I . ould be over in two days.
you learn these things "They have gone to Mexico and set
up an experimental branch. They have got 8. car already.
Now, let's give Mr. Gamble 8 chance for rebuttal. If,
General Motors and ourselves are specifically devoting
let's say, we did this financing thing, for argument's
ourselves to the war effort." You pick up plenty of this.
sake, around the 1st of Way, you couldn't do it and then
Therefore, I think there is something to this argument
cate all of the securities the 1st of July.
from the standpoint of the banks, that they have to go to
the market and always have to pay & premium; toey can't
KR. BELL: The lat of June.
get it at par, and everybody eise does. So I am interested
in e straight bank financing.
H.V.JR: No, the 1st of July. That would be 6.
long time; you would have your individual drive to June 16,
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
ROLL NO.
133
134
11 -
- 12 -
and you night not get some of that money if you let it
E° that long.
H.M.JR: I don't follow.
H.M.JR: You don't need it.
MR. NAMBLE: The banks, under Murpay's formule, would
MR. HELL: The people who subscribe don't have to
get one billion eight hundred million dollars of one ano
pay until July 1. You night lose 8 lot.
one-naif's, just as they got one billion dollars in the
last drive concurrently, and it doesn't need to change
H.M.JR: Let them put down ten percent.
our operation and doesn't need to make it 6. direct bank
offering; it is going to give the banks 8. littie more
MR. HELL: Any date can be fixed. It seess to ne
than they got before, anyway, or as many one and one-haif's
to be 8. little long. We had plenned to, since WE have
88 were recommended earlier when you recommended one bil-
been disucussing bank financing end ne are going to do it
lion one and one-naifs and two billion seven-eightns. I
before the Drive, make it May 7. That is & Monday. It
think if you nade A. direct offering to the banks as such
would be over by Key 9, and then date the recurities
prior to the drive you could be bitterly criticized for
June 1, and the banks would pay for then on June 1 along
offering anything more than 8. certificate, and I taink you
with everybody else.
will be, and I taink that the banks-Fred Gehie came down
here yesterday with a letter from Burgess that said, "Dear
H.K.JR: I see,
Fred: There are only two declaions to be made in Washington, one,
whether we are going to get two and one-naif percent conds,
MR. FELL: If you delay it another month--
and the other is whether we are going to get & direct bank
financing. I would appreciate your lobbying for both of
H.M.JR: Well, I just wanted to tell you what I had
these.'
on ay mind. I would like Kr. Gamble to answer that.
H.M.JR: Is be still on 8 dollar a year basie?
MR. GAMBLE: Well, we have proceeded on the theory,
Mr. Secretary, that there are probably helf A dozen good
MR. GAMBLE: Burgess is not.
reasons for doing something with the banks in this Drive,
but no certainly haven't given any thought to It being
H.V.JR: He is not?
anything more than à concurrent offering expanding the
operation that We had in the last Drive; instead of confining
VR. GIMBLE: But be took this liberty with Gehle. The
it to type of deposits, confine it to all deposits.
spent two hours yesterday on direct bank financing versus
indirect, and we think indirect bank financing in better for
H.M.JR: You had not thought--
the Treasury. lie can make some adjustments to take care of
the matter you have presented here by making e concurrent
MR. GAMBLE: We had thought of that. It mould take
offering and expending without appearing to be departing
care of the intermediate bond requirements of tanks in
from our indirect bank plan, and I an a little skeptical of
proportion to any figure that has been recommended, anyway.
the outcome. I en not sure it will defeat the thing you are
The one billion, eight hundred million dollars in the
trying to achieve if you give the banks direct offerings
formula that Murphy has recommended would give the banke
and place yourself in a position of having a lot of folks
within two hundred million dollars on a distribution basis
throw it back in your teeth, end they could do it.
of all intermediate securities, and so far, that in all
anybody has recommended up to now.
H.M.JR: Well, let me just go a step further. Before
ne do this, supposing this Drive--Mr. Gamble is not counting
on the banks, I take it.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
135
- 13 -
136
- 14 -
MR. GAMBLE: Yes.
H.M.JR: You say seventeen billion dollars?
MR. HELL: Below six billion dollars.
MR. GAVELF: Between seventeen and eighteen billion.
H.V.JR: How much would you say?
H.M.JR: Let's say seventeen, Dan, and figuring bills
MR. HELL: Five and one half.
the way you do it and not figuring any bank financing,
where would we be? Let's go right down, August 1 and
H.M. JR: Tell, you most likely would repeat the thing
September 1.
in October, November, and December. Tell, we don't need
any bank money.
MR. FELL: Where ne would be with seventeen billion?
MR. GAMBLE: You are in the best shape because you are
H.M.JR: Yes.
going to get bank money in this drive indirectly.
MR. HELL: Well, going out of July and on August 1
H.W.Ja: lie don't need E direct offering.
you would have about eleven and one-half billion.
MR. GAMPLE: You are in the best shape in 1945 to go
H.E.JR: Eleven and one-haif?
niead and nake these gains down. Le have made, by virtue
of the Sixth War Loan, 8. great contribution; while it looks
MR. HELL: Yes, and on September 1 you would have just
bad, it gave us money to run for six months, and it has
under nine billion.
also puiled down the bank participation in the over-all
picture; and if no take an exchange in the Seventh and
H.W.JR: How much?
Eighth Ear Loans me can end up the calender year of 1945
with the best picture of the war so fer as bank participation
VR. HELL: About eight, eight--no, wait 8 minute. I
is concerned.
en sorry; you would have about seven, eight or seven, five;
somembere in that neighbornood.
H.V.JR: Inis is based on an estimate of seventeen,
isn't it?
H.W.JR: About eight.
MR. GAVILE: And that is conservative. That doesn't
VR. HELL: Eight would be all right, sir.
include the one billion eight if you let them have it, and
I think you should let then have it ES an insurance policy.
H.M.JR: When are ne going to have anot, er drive?
H.N.JR: Now wait B. minute. The only thing I went
MR. GAMELE: In October.
to do which I think is E. good wrinkle on the bank thing
is, I noulo like to let every bank that has time deposits
MR. HELL: You would have to have another drive in
buy up to one hundred thousand of F and 0's.
October because the balance st that time would be down to
below six billion collers.
KR. H/AS: liot E'st
H.M.JR: What?
H.S.JK: F and G's.
MR. GAMBLE: Not E's.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
NO.
PAT.
OFF.
MICROFILM
BOLL NO.
137
138
15
- 16 -
MR. HANS: We did that once before.
H.M.JR: Just let the buy time deposite up to one
MR. GAMBLE: It really doesn't.
hundred thousand.
H.M.JR: It takes care of the littie banks.
MR. HELL: One hundred thousand F and 0's
MR. GAMBLE: Well, I an arguing two things here. I
H.N. JR: F and G.
don't want to appear to be inconsistent, because I appreciate
MR. GAMBLE: Concerning your problem I would recomend
what you say, and I think we can stand what we did in the
last Drive without hurting anything. It doesn't involve
to you that the offering of one billion eight woulen't
a direct bank offering, it--
hurt us B. particle.
H.K.JR: Wait 8. minute. I would like 1.0 let somebody
H.S.JR: How much do you think we would raise if lice
make an estimate of how such me would get from time deposits.
let every bank that had savings accounts take either F or
le didn't even say ten percent of the deposits or whichever
G up to one hundred thousand dollars?
is lower, just straight; they can have one hundred thousand.
MR. HELL: I suppose the potential is around one bil-
13. BELL: Yesterday we discussed giving only those
lion dollars, isn't It? If every bank with savings accounts
banks that had savings accounts one hundred thousand dollars,
bought it would be something over one billion dollars.
not time deposits, just envings accounts.
M. GAMBLE: They all couldn't buy one hundred
thousand. They haven't money to buy one hundred. I would
H.H.JR: Sevings accounts.
say one half to three quarters of the buying--
MR. HELL: That was instead of the formula Le had In
the last Drive, ten percent of their sevings accounts or
MR. BELL: That is what it NIS list time, five hundred
five hundred thousand, whichever is lower. The would
and fifty million based on ten percent of their savings,
or one hundred thousand dollars.
nerely give one hundred thousand of F and G's If they ned
savings accounts.
MR. eurphy: There ERA a restrictive provision, ten
(Mrs. Kiots leaves the conference)
percent.
B.V.JR: We weren't going to do that.
H.K.JR: I meant sevings.
KR. BELL: And no wouldn't base it on any percentage,
MR. BELL: It snould be somewhere, I snould say,
but let any bank tost had savings accounts buy to the limit
between one nail a billion and maybe eight or nine hundred
million, some place in there.
of F and G.
B.K. Jis: Any bank tast lied savings.
H.K.JR: I an not sure. Is this the thing you are
talking about?
MR. GAM HLE: That doesn't do what you want to do.
MR. NURPHY: It looks like it from & distance.
H.W.JR: This is the first--no--mell, yes, It does.
H.W.JR: Let me just read this thing. (Indicates
"Criteria for an Offering of Securities to Banks Concurrently
with the Sevento har Loan, =ttached.") You any, "If all
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
140
139
- 17 -
- 15 -
commercial banks were permitted to subscribe for a nem
the banks would have occasion to feel friendlier toward
offering of Government securities in an amount equal to
the Treasury than any previous drive.
10 percent of their total assets, but not in excess of
$200,000 for each bank, the total potential subscription
H.M.JR: That did we do last time? We got about one
would be about $1.8 billions." You don't say what the
billion one, didn't we?
securities would be.
MR. BELL: A little over a billion dollars from the
MR. MURPHY: If the securities are attractive, the
formula.
potential would be the same. This perticular memo didn't
pass on that matter. It WES 8. recommendation.
H.M.JR: libet #88 the formula?
MR. FELL: It would probably be the one and one-half.
MR. RELL: Ten percent of the savings deposits or
five hundred collars, whichever was smaller.
H.M.JR: Just offer the one, their choice of the two
or the seven-eighths?
H. .23: of savings deposits?
MR. MURPHY: It was in a subsidiary meno that I wrote,
NR. HELL: And ne called then time deposits, savings
but we didn't get beyond the discussion stage in our dif-
certificates, and savings deposits.
ferences. It WSS stated there that there would be a choice
of the seven-eighths or the one and one-half.
H.V.JR: You are making a distinction on the F and G's.
KR. HAAS: I would think this was fevoring the small
MR. HELL: Did we?
banks. They don't want seven-eighths. You might give
them one and one-half. You could also include in this
H.M.JR: No. You said just savings.
proposition the F and G.
MR. HELL: Yesterday I asked the question whether you
H.M.JR: I don't like this as well today BE the sug-
would give it to all the banks or whether just to those
gestion I made.
that had savings accounts like you did before, and I under-
stood you to say we ought to confine it to savings accounts.
ER. GAMBLE: About savings deposits?
H.V.JR: What is the difference?
H.W.JR: Yes,
YR. HELL: No difference between savings and time,
MH. HAAS: You can tell be has copied that right in
except savings are demand accounts.
this thing.
H.V.JR: I don't mean savings. Some of these banks
MR. GAMBLE: During the last drive we sold about one
you put money in and can't draw it out for six months.
billion dollars' worth of securities on that formula of
allowing then to buy against time deposits. I had in
MR. BELL: Thirty days.
mind the thought that we were interpreting your suggestion
correctly when we were trying to reach for something that
E.M.JR: The Board of Governors has a regulation
would do a little more so that in this particular drive
defining savings accounts and passbook accounts, and in
the last Drive everything was savings accounts, 6,8 80
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. U.S.PAT. OFF.
MICROFILM
BOLL NO.
141
142
- 19 -
- 2U -
defined, plus time certificates of deposit in the names
H.M.JR: In what may 18 tais Drive different?
of individuals and non-profit corporations, but excluded
time certificates of deposit in the names of corporations
MR. GAMBLE: Banks were permitted to buy ten percent
organized for profit.
of their time deposits or five hundred thousand dollars'
worth of securities, whichever NOS lower, and they bought
MR. HAAS: Last time, Mr. Secretary, the F and G's
one billion eighty-four million dollars' worth.
were in that, They were offered, too.
MR. HELL: This formula would apply to all banks.
MR. WURPHY: They were part of the basket for current
This formula of henry's would take all banks regardless
security offerings.
of the type of deposits, and you would take ten percent
of their total assets or two hundred thousand, whichever
MR. HELL: As 6. matter of fact, the banks having
la smaller.
sevings accounts could subscribe for the entire fiscal
year, calendar year of '44, too, of F and G bonds. Tie
MR. EURPHY: There are two fundamental differences.
started that in one drive, I Delieve, and cerried it through
First you take the total deposits instead of time deposits,
the calendar year. Nom, they haven't been able to subscribe
excluding those of corporations, and you lower the ceiling
since January 1 to those securities.
from five hundred thousand to two nundred thousand.
by classification.
MR. MURPHY: Here in what they bought, Mr. Secretary,
MR. GAM BLE: You take in more banks.
VR. TICKTUN: It goes up because you take the total
H.W.JR: When?
deposits instead of time deposits.
MR. EURPHY: In the last Drive, concurrent in the
H.M.JR: The total is n. suco broader base than time
last Drive.
deposits.
H.M.JR: Two percent?
MR. RELL: You may get thirty-five million for time
deposits and seventy--
MR. MURPHY: Practically all two percent.
MR. GAMBLE: The only difference between that and a
H.W.JR: We don't want that.
direct bank offering is, if you do it curing the Drive
when the formula is not too for departed from the formula
MR. TICKTON: They were loaded up on F and G'a because
adopted in the two previous drives, there doesn't appear
they had gotten them earlier in the year.
to be too great a difference. The banks will know the
difference and will appreciate the difference, ano it would
MR. BELL: The only thing you sold were two hundred
create n. very good feeling.
million F and 0's during the whole year.
H.M.JR: Tnls my you are including all banks.
H.M.Jr: How does this formula differ from the one
in the Sixth War Loan for the banks? Have you a copy?
MR. GAMBLE: Yes, and one billion six of it would go
to little banks, and about two hundred million would go to
MR. BELL: Unere is it?
the big banks.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAI, OFF.
MICROFILM
BOLL NO.
144
143
- 22 -
- 21 -
NR. LINDOT: Last year when we had direct and indirect
offerings that didn't seem to stop them a bit--the indirect
H.V.JR: that do you think, Dan?
aidn't seen to stop them e bit; they just went out and got
that much more. we offered then three billion dollars in
12. BELL: I don't like it; I think it is obvious
October after the Third lar Loan in '43, and 1 didn't see
what you are trying to do, penalize the larger banks, and
that it made any difference matever 65 to must they went
the larger banks are the ones that cause you all the trouble
out in the market for.
in the market. They are the ones that are going out and
buying these securities and taking these snifts from cor-
H.K.JR: Say that again.
porations, and so forth. I tnink if me are going to DEVE
any bank financing ne ought to have it open and above board,
MR. LINDOW: We had direct bank financing following
and I favor the Board's recommendation, and nave nli along,
the Third War Loan. The Loan was in September. And when
that no have 8. direct bank financing, and I like your sug-
you look at the figures in the Third Tar Loan, the banks
getion that we have it first and get it out of the way.
were out there, and they got indirect purchases notwith-
standing the fact that there has three billion coming to
I think if we are not going to have direct bank finan-
them after the Drive. I think they will go out for just
cing we ought LO go back to the other formula. I wouldn't
as much whether you give it to them this way or don't,
care if you reduced it to five hundred thousend doilars
ninety percent 88 such anyway.
or some low figure.
MR. BELL: They will.
H.M.JR: The last formula was for five hundred thousand.
MR. LINDOW: You have increased your bank financing.
MR. PELL: You suggested one hundred. I think that
is a little low, about two or three hundred thousand.
MR. HELL: Have you? If you don't get any more, you
haven't increased it.
MR. TICKTON: There are always these little banks
that say they had to buy things at 8 premium, but you
MR. GAVALRE You build up your money and have to
don't get that story from the big banks.
spread your drives out further.
MR. FELL: There are fairly good sized banks throughout
MR. LINDON: You had your next drive in January and
the country, and they wouldn't get what they went in your
lost sosie individual money for--
rural sections where you got the complaint from, Kansas
City, Dallas, and Atlanta.
MR. RELL: You may not get more money, or you may
get 12 much.
MR. HAAS: You can't satisfy their appetite if you
give them twenty-five billion for each of three years, Den.
MR. GAVBLE: Everybody reverses tais thing. Start
out by saying direct nank financing is good, and probably
VR. HELL: You don't--
you won't get any more money.
Nh. GAMBLE: You sold them fifty billion, and they
MR. BELL: It is anybody's guess; I certainly don't
bought enother twenty-five. After you sold then fifty
know.
billion they still wanted another twenty-five, and if you
sell them more, they still want twenty-five.
MR. GAMBLE: 1 think that is tae strongest argument
in the world for indirect bank financing, because they say
you won't get any Less than direct, and you may get more.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAT. OFF.
MICROFILM
sou NO.
145
148
as -
- 24 -
VR. HELL: I agreed because of Ted's arguments, but
MR. BELL: And they believe you net less.
my first recommendation early in January were that we have
BAASt There is no proof of it.
some direct bank financing and have this thing open and
above board. Esving this nine million dollars covered up
worries me. It comes up every time, and if you got some
101. GAURLE: se have followed A certain pattern, and
of it direct and It is deliberately done by the Secretary,
I would be violently opposed to direct bank financing, and
I have talked about It for six months. I Am violently
they can't criticize it so much.
opposed to direct bank offerings, and 1 am propored to
MR. GAMBLE: Le adopted the practical solution. It
talk for two days about it.
is the only solution me could make if we monted--if we were
honest about the thing and wanted to improve it. I don't
H.M.JR: I AUS not prepared to listen.
think--the fact we are going to give the banks fifty all-
lion dollars won't improve it at all, and nobody could make
Vit. GAMBLE: I can fillbuoter on it.
n. case for it, Dan, except to write something on paper and
say, "If banks have sometting before the drive, they probably
B.K.J.tt Let me a.ok you something before you met
violent, because I an e very gentle soul. The thing that
will buy less in the drive."
interests ne is this incression of the war Finance organiza-
MR. LINDOW: If you deduct the corporate quota, Ted's
tion-if you can be unrejudiced in your remarks, which I
seven billion quota is a drop of two billions in the cor-
know you can, what effect would this have on the Mar Finance
organization if se did the direct financine.
porate quota. You are also talking about the insurance
company allotment. It seems you are taking three steps
there; at least you are taking some steps to cut down
VII. GAMELE: Direct?
indirect. One 1s, you are cutting down any long-term
issue. That ought to have some kind of effect on indirect.
Supposing ne needed money?
Another issue cutting the corporate quota from nine billion
to seven and cutting down some of the quote pressure which
NR. GANDLE: Then It would be en entirely different
has been a significant factor-the insurance companies,
matter, but they are no familiar with the picture as we
whether or not you put an allotment on thes, will do less
are. They would accept it with very bad reace, I think,
switching around under this basket, ano after having come
because they would think It me 5 sock of seme kind,
COWD and found out--everybody knew how such funny business
looking at the Treasury picture.
they were doing--they will do Less next time.
N.V.IR: Just a son of a cun. Nobody thinks he is
When we estimate the drive will bring seventeen or
dumb. Rurress' letter--he knows damn well the effect on
eighteen billion against twent,-one, that whole drop will
you and me.
neen that much in direct bank participation.
Bellt Nothing un no. I still recomenti bank
financing.
MR. BELL: That our estimate in the Sixth.
LEVEL LAAS: I thought you changed (Bell). 1 thought
MR. HAAS: If you estimate boto, Dan, you will have
you arreed to it without the bank financing when ae went
the bank on top of the wrong estimate.
on the plane trip.
MR. BELL: If you got both--
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
REG.
PAT.
OFF.
MICROFILM
ROLL NO.
146
- 26 -
- 25 -
MR. GAMBLE: Dan, Let se ans you a question. Do
MR. TICKTON: They knew they would have to go over
you think with the intermediate bond out of the basket
the quota; it was top low.
there is any danger of getting nine million dollars of
Between people here in the room ne will get
indirect tank financing?
hold of sque Kutual Life people and some other people and
MR. HELL: No, because the insurance companies, 68
have 6 similar meeting to what we had yesterday. That
Wes sald, will go along. They said yesterday they would
would be much more effective.
cooperate in th the Secretary, end I think thatwas one
factor. how, if we can get the savings banke to do the
VR. GAMELE: I tnink you need to do it, and it should
same thing--
come directly from you.
H.M.JR: We can. 1 can have # similar meeting with
H.V.JR: That has got nothing to do--I'll tell you
this: I an not going to rough edge my remark by saying I
savings banks.
have been consistent. I said T wouldn't nake up ay mind
LR. HELL: Bob Rouse has already talked to--
until five minutes of one tomorrow. That gives ne every
prorogative to change continuously up to that time. The
H.M.JR: Lew Douglas didn't want ne to say anything
thing that in throwing ne is, how much money do we need?
to the Federal Reserve, but I heard Lim say ne WOO worried.
And I don't see any justification for 8. three or four
He said, "I iaid my whole plan before the Federal Reserve,
billion dollar direct financing to the banks. 1 just don't
and they approved it." Then be said, "But let Bie talx to
see it.
the Federal Reserve." See? But you heard him say, "I
Isin the whole thing before then, and I believe Lew Douglas.
VR. NAMBLE: You Lave less reason to do it today as
He wouldn't lie to me.
E. regulatory matter than you have nad in the last two years.
lie are in that much better shape, it seems to no. that
MR. BELL: I think he has laid his whole program the
happened? What do you nean you did one?
last three or four years before the Federal Reserve, and
MR. LINDON: After the Third har Loan there was
nas done it quite often, because we found sort of a mess,
you know, in nie company, and he nes been ciearing it up
direct bank participation in the Third War Loan just as
there had been in the Second, but I don't have the figures.
for e period of three years, railroad securities and other
securities that he didn't want, and he bas no doubt gone
It ran about five billion dollars, which is the same
over and talked to Bob about it, and Bob thought it RRS a
figure we had in the Fourth. We had approximately as much
good thing to clean it up. Bob called in Thlefeid and the
indirect participation.
next nan there and told then what they have done and asked
if there wouldn't be an improvement on that line in the
H.M. JR: It didn't make any difference?
next drive, and they said yes. They thought they went too
MR. TICKTON: A little, but you can't measure small
far in the last one. (Laughter)
amounts. It has been going up all the time.
They started out deliberately, and Bob is especially
responsible for it because we nsd 5 quota of seven hundred
MR. HELL: Every time the indirect bank position has
million, and be put In his literature that they set a
gone up.
quota for themselves of seven billion, four, and they
knew they couldn't make it, unless they did this very thing
KR. LINDON: They were getting three billion dollars,
and they went out and got five billion, anyway.
they are talking about.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
PAT. OFF.
MICROFILM
ROLL NO.
150
149
27
- 28
MR. GAMBLE: It proves the Treasury can make--they
MR. GAMBLE: Notning. That gave them securities
didn't get tost at all, and you cut the corporation quota,
in many instances at n. little higher premium toan they
ought to have--higher coupon than they ought to have,
MR. TICKTUN: There it another answer to the question
which is sil right, and we are not against that.
you asked Ted before 6.5 to want his people would say about
bank financing which came out clearly when he first sprung
H.M. JR: What would be the matter if we used the
seven million dollars on nis Chairmen and they weren't
same formula 88 we did last time, cut it down from five
enxious to postpone the Drive. A lot of then argued that
hundred thousand to two hundred thousand.
starting the Drive activity in April was too late; they
manted to have It earlier. If you said, The have to have
MR. GAMBLE: I would let then win--give then ---
three billion dollars from banks," their answer would be,
"Let's start the drive earlier, because a lot of them
H.V.JR: Keep the five hundred thousend?
uidn't like the idea of postponing it. The push was
coming closer, rather than pusning any from the last
MR. GAMBLE: No, I would cut It down to two hundred
drive.
thousand on 8 ten percent basis and use this formula Henry
has set up, because I think that you make some gains in
MR. LINDO : The same thing will happen in the fall
the direction in which you told us you wented to make then.
If you put three million more on there. It will push the
drive out furtner in the fall, push It into December when
B.K.JR: If no have 6. seven-eighths and one and one-
they don't want 1t, and It will be that auch harder to
half and limit the to that, I wouldn't limit the two
get individual money.
and one-quarter.
MR. GAIBLE: 20 might be enbarrassed to start the
MR. GAMBLE: Aldrich said he mouldn't change the
Eighth har Loan Drive earlier in order to get it out of the
five million dollars of securities one iota.
way before the year ends.
H.M.JR: Whatever the quota is I would let them sub-
H.W.JR: You mean starting in October, just for a
soribe to F and G's up to one hundred thousand, and also
month. It still isn't decided. Let's say we won't have
seven-eighths and the one and one-helf. But my inclination
a direct bank financing, see? Let's say that for the minute
is to confine it to those banks with savings accounts.
and then say what we will do for the banks if we don't do
that. Let's say for the minute we won't do it direct.
MR. HELL: Heretofore we have given then the higher
Then we still want to do something for the banks. We
coupon, not the lower. The have given them the two and
want to do it the way we did lost time. Let's argue about
two and one-half's for their ravings accounts.
that for a minute. What is the next best thing. Because
before anybody says anything I would like to--I believe
H.V.JR: The two and what?
the fewer changes we keep making each time between drives
the better, see? You heard ne zaj that,
MR. FELL: The two and one-half's. That is what
they need, the higher coupon.
MR. HELL: It is simpler.
MR. TICKTON: They will get F and G's this time,
H.V.Jk: I mean if--mbet was tae matter with the
brand new.
thing ae did last time for the banks?
MR. HELL: They have had those before.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
NG. PAIL OFF.
MICROFILM
ROLL NO.
152
151
- 29 -
- 30
H.V.JR: Not this year.
B.M.JR: Yes. That wes the forcula?
MR. LINDOS: They didn't take many of the two and one-
RR. SURPRI: And that resulted in subscriptions
hair's.
of slightly over one billion dollars, most of which was
in two percent bonds. However, they were permitted to
MR. HELL: There is a question here as to whether
subscribe to the F's and G's and the two's and two and
you want to give them the F and 9's. It seems to ne
one-half's. One reason for the small subscription to
one and one-half and the two and one-quarter if you are
P's and G's is they had been offered the opportunity to
doing It for sevings accounts, on Henry's formula I
subscribe to P's and G's twice before during the year,
wouldn't give them two and one-quarter and LWO and one-
and F and G subscriptions for the whole year were limited
halt; that taker in all commercial banks.
to one hundred thousand dollars.
MR. HAAS: It doesn't make much difference.
H.L.JR: Don't let's talk for a minute about what
kind of securities ne are going to offer, just the formula.
H.A.JR: Who BES eligible last time to subscribe?
What was the matter with the fornule of the Sixth War Loan?
KR. GAMBLE: All banks with sevings accounts.
MR. BELL: Notning, and that has been recommended by
bankers to be continued.
H.M.JR: All banks?
H.V.JR: Including the five hundred thousand?
MR. HELL: Any commercial bank with savings accounts
in the type Henry--
MR. HELL: Yes. They recommended the same formula.
MR. MURPHY: Either passbook accounts or time
MR. GARBLE: There is notning wrong with that, no
certificates of deposit in the name of individuals and
objection.
non-profit corporations up to ten percent of such sevings
accounts in time certificates, but not more than five
H.U.JE: Jid anybody complain about that formula?
hundred thousand for the bank.
KR. BAS: %e just made up this other formula trying
H.M.JR: Is this the formula as laid down by the
to meet the idea you had.
Federal Reserve?
MR. RELL: Nobody complained about that.
MR. L'URPHY: The laid it down. The thing that's been
lald down by the Federal Reserve, Mr. Secretary--
MR. GAVBLE: Ne were just working on your idea when
the other was developed.
H.E.JR: Just a minute. That is the formula we used
in the Sixth her Loan, not the amount, but who could
R.V. JR: Have you any suggestion for changing the
qualify?
formula of the Sixth Yor Loan?
VR. WURPHY: Every bank could subscribe to the anount
MR. BELL: liave I any objection?
equal to ten percent of Its aggregate of sevings accounts,
pass book accounts plus time certificates of deposit, other
H.M.JR: As to who can qualify.
than those of private banking corporations, but not more
than five hundred thousand dollars per bank. Is that clear?
MR. FELL: No. If no don't have direct bank financing,
I sould leave the formula alone.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
M, PAT. OFF,
MICROFILM
BOLL NO.
154
153
32 -
31 -
H.M.JR: Leave it alone?
ER. GAMELE: There sould be no here in that.
MR. HELL: Yes, I would.
MR. TRPHY: No.
H.M.JR: Is that agreeable to you?
B.E.JR: Just for a minute let's run--is there going
to be & one and one-hair? will we let then have a one and
MR. GAUBLE: Yes, I have no objection to leaving the
one-haif?
formula alone, but if you have--and I nee scae merit in
this idea of doing e little more for them, I think a
MR. VURPHY: Yes.
changed formula is 5. good compromise, end I think it
clearms 8 little of the banks' orgument for 5 direct
H.V.JR: And let then have two and one-quarter if
offering, and it would further dissru them if you made
there is e two and one-quarter.
it seven-eighths or one and one-half percent securities.
MR. BELL: I would.
H.W.JR: If ne are going to use the saze formula,
do we want the five hundred thousand? That is awfully
HA.JR: How about letting then have 5. two and coe-
big, isn't it?
half?
VII. HELL: It probably wouldn't give you more than
VR. RELL: I would cut tast out tals time.
one billion dollars, one billion and n quarter, I think.
MR. HAAS: Pake 8. special job of tast.
MR. GAMBLE: About the maximm--
VR. FELL: They didn't take the two and one-half,
MR. HELL: That is, you might get 8. little more
and they can take the o bond, which la . two and one-
this time because it brings in for the first time this
helf bond.
year the F and G limitation, 80 you night get es little
nore, but I should think about a billion to B. billion
kr. TAMPLE: It is inconsistent with your ten-year
and one-quarter.
program.
H.M.JR: Say we hed exactly the sace formula 8.8 we
EN. BELL: The type of banks that will take the two
had in the Sixth. The question is, what kind of securities
and one-half are the ones that shouldn't have it.
should we let then have, see? The all agree on P's and P.
Is that right?
VR. LURPHY: Doesn't the same thing apply to the two
and one-quarter?
MR. HELL: That is right.
VR. HELL: Yes, it does.
E.E.JK: Small ne let then subscribe to the seven-
eighths?
MR. LURPHY: Very few oanks pay out more than one and
one-half on time deposits, anyway. And those that do are
MIL. HELL: That is not a problem; they can get those
ill-advised. I feel it would be B cleaner deal if the
in the market volume there and don't have to pay much
two and one-quarter were out.
premium for them.
H.M.JR: How long would that run?
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
BOLL NO.
156
155
- 34 -
- 33 -
VR. CURPHY: Two and one-quarter? To 1960.
MR. HELL: That is all right with me.
H.M.JR: Murphy's looks good to де; it looks good
MR. TICKTON: Fifteen-twenty.
for about one billion dollars. When you said seventeen
MH. BELL: It would be '58-'61.
or eighteen--
H.M.JR: houghly?
MR. MMBLE: I wesn't counting this.
KR. MURPHY: Either '61-'64 or '60-'65.
H.M.JR: You didn't count it last time.
H.M.JK: It shouldn't be in.
MR. RELL: Not ns part of the Drive.
MR. GAMBLE: Tast is the way I feel.
H.K.JR: Why don't we do this just to save time,
tell this to Rouse, or house could teil It to Eccles,
MR. BELL: The two and one-half was in last time,
and they could be thinking about it?
which was even 6 longer bond.
KR. HELL: No bank financing except the same formula
YR. TICKTON: They didn't take it.
they had the last time.
B.V.JR: F and G, seven-eighths, and one and one-
H.V.JR: That is right, and it would unve--we have
half's--I would be inclined to say out it down from five
decided it would be a one and one-half?
hundred thousand to two hundred thousand.
MR. HELL: I think we are all agreed on the one and
VR. GAMBIE: I W&S going to suggest the same formuin;
one-half.
I wouldn't change it.
MR. HAAS: You haven't discussed it, but ne have.
H.C.JR: It neans aore explanation.
LR. GLABLE: It is the one thing everybody agreed on,
MR. HAAS: It looks like you are chiseiling then and
only for individuals.
won't--
B.V.JR: %hat did you say?
MR. GAMBLE: It won't mean anything, and psychologically
you are going in the other direction from which you want
MR. GUIBLE: Only to individuals. That is out of the
to move.
corporate basket.
VR. MURPHY: And the bank concurrent offering, but
H.M.JR: Which my?
not the regular corporation.
MR. GAMBLE: It will seem like you are chiseiling on
H.V.JR: That won't--I an telling than now what would
them or tigatening them.
be for the banks.
H.V.JR: I would say seven-eighths, one and one-
half, F's and G's, and the same formula you had 1sst time.
MR. GAMBLE: Yes, that wouldn't apply to that.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ MICROFILM
ROLL NO.
158
157
- 36 -
- 35
H.M.JR: Hello Bob. How are you?
H.K. JR: No, that is the next thing in the mint.
But I mean, I just thought that--well, I told Eceles we
NR. ROUSE: Good morning, sir.
would keep him posted.
H.W.JK: We are making * little headway, end I thought
MR. RELL: You said you night want to see his some-
you might get hold of Mr. Eccles and ar. Sproul end be
time this morning.
thinking about it in order to save time; and if they want
to see me, at least they will know as I move, you see?
H.M.JR: He can be thinking about it if be wants to
They said they would come out of their meeting, but the
see se on that, you see?
thought is on bank financing that we have ail come to an
It's - monderful job I have got. I get e lot of fun
agreement here that we don't ment any bank financing. Not
counting anything free. any banks, no figure no will get
out of it.
seventeen in this, according to Gamble. And we would start
the lst of October with five and one-half billion on hand.
MR. HELL: Out of what?
VR. RODSE: The 1st of October?
H.V.JR: Wonderful job I have got here as Secretary
of the Treasury.
H.M.JR: Tue ist of October. And then ne figure we
would Like to start another drive similar to this one in
MR. HELL: Rest after you go home.
October, covering vetober, lovember, end December. What
H.E.JR: Under the sod. (Laughter)
ne are thinking of is using exactly the same bank formula
no no had in the Sixth.
If that is right, you get another biilion out of that
NR. ROUSE: Five hundred thousand dollars?
seventeen. Your total was six and one-half billion.
MR. HAAS: You may get nore than a billion out of
H.W.JR: Just the same, offer then F and G's, seven-
eightne, and one and one-haif.
that.
MR. ROUSE: Offer then the two shorter issues in
VR. GAMBLE: Then the two comes out of the corporate
addition to the long.
basket you night get everybody to mare sure they get full
quotes.
MH. HELL: Cut out the two and one-helf.
MR. HAAS: You get F and G's.
H.M.JR: Seven-eightns and one and one-half. They
would have the choice of buying F and G up to one hundred
MR. GASTON: It could run a billion three.
thousand dollars, which they have not had yet this year.
MR. HELL: I taink the potential is one billion
That has not been open to thee. Or they could buy seven-
eighths and cne and one-haif's. lie mould have the same
five. And you couldn't get more than the potential.
formula with two changes, possibly. What do you think?
MR. LINDOW: The reserve problem would be the same
88 it has been, end if we do have some, that would be that
auch more money.
(Mr. Rouse enters the conference.)
Regraded Unclassified
RECISION
TRADE MARK
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MICROFILM
sou. NO.
157
160
38 -
- 37 -
MR. ROUSE: I think it is n. mistake to onit bank
MR. GAMBLE: Don't you want to mention--] don't
financing myself.
think we have ever told them, but they know what we have
been discussing--I don't know whether we changed from
H.W.JR: dut if ne stick by, then what?
that about one and one-half's being out of the corporation
basket, because it would affect their reaction to that.
MR. ROUSE: Weil, it would, of course, result in &
good deal, I tnink, of an increase in indirect purchases
MR. HELL: They recommended that.
by banks. It wouldn't be much of 6. problem in the New
York District; me wouldn't have that problem up there.
MR. ROUSE: We recommended that. If you cuit the
bank financing, of course, that puts the corporation figures
H.M. JR: Let's say that that puts us across. What
at seven billion dollars?
do you say about opening the same as last time? I have
MR. HELL: The haven't crossed that yet. We haven't
had sil the arguments.
figured a quota for the corporate end.
MR. BELL: I have included the old formula.
MR. ROUSE: It takes that much off.
MR. ROUSE: I think the old formula worked very well.
MR. HELL: If it is higher--
H.M.JR: Any suggestions for modification of the old
formula?
B.M.JR: But just say this, that 88 we come to an
agreement here I want to keep then posted so they have 8.
MR. ROUSE: I have none; it worked well, Mr. Secretary.
chance to tnink about it.
H.M.JR: It worked well? No criticiams your say:
MR. ROUSE: I will call thes.
VR. ROUSE: I like the F and G's; that is going to
H.N.JR: Then they will know, and they can be thinking
solve the problem of our small banks, and it will help
about it, but I can't see any excuse for offering the
from a supervisory angle.
banks three billion noilars. To don't need the money.
Other than doing it the may we did it in the Sixth Yar
H.V.JR: F and G's, one and one-half's, and seven-
Loan--end you say in your District there were no complaints
eighths--would you give them that cessage?
about the formula.
MR. HOUSE: I will.
MR. ROUSE: No 68 far 88 the formula is concerned,
just the may you get it from the banks. That WAS our reason--
H.K.JR: And then ne are going to go on to the next
thing now.
H.W.JR: Well, anyway, I nm going to drop downstaire
for 8 minute.
MR. ROUSE: I will go shead.
(Kr. Rouse leaves the conference.)
H.M.JR: Don't tell then the formula this way, but
that I an still sticking to the position. The thing is
H.V.JR: They are working right below here on posters.
still open, but the group nere feels that that is 5 good
Do you want to drop down n. minute or stay here?
nove, and I an largely influenced by the fact that we don't
need the money.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ REG. DIF. MICROFILM
ROLL
NO
161
162
- 39 -
- 40 -
VR. GAMBLE: I want to stay here. I don't want to
LOBE any ground. (Laughter)
MR. RELI.: He is satisfied with your decision giving
banks the old formula. lie thinks bank financing would be
(Secretary leaves the conference temporarily.)
better. I have no doubt he will accept that.
H.V.JR: Now, we have momentarily settied that,
H.M.JR: Well, we will see.
haven't we, which was pretty importent?
Let's take the Seventh war Loan. The goal for the
Non, are you all right, Henry on that?
second part will be placed at five billion. Let's get the
time schedule straightened out first. We are going to
MR. MURPHY: Yes, yes, I an sil right on it.
start this Drive when?
H.H.JR: You did the other thing that pleased ne?
MR. GAMELE: April 9.
MR. MURPHY: I was just anused because the strongest
argument on it occurred after it was settled.
H.M.JR: April 9?
H.H.JR: What was that?
MR. BELL: For E bonds.
H.M.JR: I thought it ass the 7th.
MR. MURPHY: While you were out.
MR. GAMBLE: April If to July 7.
MR. HELL: Bank financing.
H.V.JR: April 9--any argument about that?
MR. MURPHY: They spoke of an aftermath of the war
which they say would classify expenses.
MR. BELL: No.
MR. GALBLE: Tie tried to understand each other's
H.M.JR: That is settled.
position. I understand Dan's position; be 18 the most
honest guy. I taink he hes & good point.
H.W.JR: They suggested Kay 14 to June 16 for what?
MR. FELL: Ted wanted to sit down for two days, and
KR. HELL: The individual drive part of the other
I wondered what we would accomplish.
than E, but, of course, including E.
MR. GAMBLE: It is a tremendous problem and involves
H.M.JR: Are there any arguments on that?
e lot of fundamentals.
KR. GAMBLE: Only in the may it is worded; it amounts
H.M.JR: You are satisfied?
to the came thing.
MR. HELL: Yes.
H.V.JR: Excuse me.
H.V.JR: house is satisfied with the other.
MR. GAV PLE: The way we wanted the press release
phrased for the Drive it, The formal period of the
Seventh War Loan is May 14 to June 30, with the corporation
end of It starting June 18. Instead of making 6. distinction
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
REG. 5. PAT. OHF,
MICROFILM
ROLL NO.
163
164
- 41 -
- 42 -
between the drives to naze it appear as though we are going
to have individual drives, close one and go out of business
H.M.JR: A shill?
and have the corporation drive and open it.
MR. GAL BLE: Not 8. shell--e finger nan.
H.M.JR: All right?
MR. BELL: I didn't have any strong feelings on it
yesterday; I hoped it would be six, because I thought it
MR. HELL: Sure.
would look good for the corporation drive, not only the
H.V.JR: Well, that takes care of that pert, Non,
reduction, but it would be below--the corporation goal
we have got to talk about how much the individual drive
would be below the goal for individuals. I like that.
is going to be for.
KR. GANELE: Let are give you just one specific
arguement. Genle said, "After all, we have had a certain
MR. GAMBLE: Seven.
national interest built up for high quotes for the State
H.V.JR: Four and three. In there any question on
of New York, and you are giving us n. higher individual
that?
quota than they have ever had before, over one billion
one hundred million dollars. If our corporation goal is
MR. HELL: No, me all agree, four ano seven.
puiled down so low that we talk in terms of three billion
or four billion dollars against five and one-half billion
H.W.JR: And other than individuals is how much?
dollare, psychologically we couldn't look so good. It
is difficult to sell to county chairman who had a single
MR. GAMBLE: The Chairmen recomended seven.
goal. They think the E is too important not to give may
to it on the 14th.
H.M.JR: Yesterday you said six.
H.M.JR: I don't care. Do you?
MR. GAMBLE: I tried to seil six, but 1 was not
successful. New York, Ohio, Pennsylvenis--we spent a couple
MR. FELL: I think it meens you have got to get some
of hours on it, and they persuaded me at lesst that their
money from the banks indirectly in the corporate drive,
position W&S one that should win the consideration psycho-
because--
logically, and they want seven and seven.
M. GAMELE: Which we know we are going to get, anyway.
MR. TICKTON: For the Seventh.
Insurance savings, three billion, nine, corporations
four billion two.
H.M.JR: I don't play crep; seven is good when you
H.M.JR: now much was it last time?
play crap.
MR. BELL: Then you get them. (Laughter)
MR. GAMBLE: Twenty-one billion.
H.M.JR: What had we asked for?
H.M.JR: what is 6. shell in #: crap game?
MR. GAMPLE: There is a shell (ame.
MR. GAM RLE: Nine and five, fourteen.
MR. TICKTON: A shill in an auction sale in a come-on
H.M.JR: The war is costing just as much. It is a
mistake to a sic for less, and it is a month longer.
person.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. U.S. FAT. OFF.
MICROFILM
ROLL NO.
166
185
- 43 -
- 44 -
MR. HASt That la another argument for it.
VR. GAMPLE: That is the big step you are taking.
MR. BELL: I thought no would explain in press that
H.S.JR: But the corporates can take the two and one-
we need that much money and will try to get it from the
quarter.
right sources.
MR. GAMPLE: Yes, but banks couldn't get them.
H.V.JR: You want just HE much end it in a month
longer. If it mas fourteen last time, it should be
H.M.JR: I see, and the banks can't get them.
fourteen this time.
NR. HELL: If they buy them in this Drive, the only
MR. BELL: All right. Seven?
place they can sell then is in the restricted market
like insurance and savings.
H.M.JR: "That the Treasury announce at the present
time that the offerings in the individual drive, In addition
MR. GAMBLE: That is the most courageous decision we
to savings bonds and savings notes, will empsist of 7/8
ever made.
per cent certificates, 1 1/2 per cent securities, and 2
1/ 4 and 2 1/2 percent restricted bonde and that the
H.M.JR: I feel courageous.
offerings in the second part of the drive will consist of
the same securities, except for the exclusion of Series E
MR. GAMBLE: They both serve the same purpose.
savings bonds and the 1 1/2 per cent securities."
H.F.JR: Corporations cannot buy them?
Any question about one and one-calf's?
MR. HAMBLE: That is correct.
MR. HELL: No.
H.M.JR: So they can't buy then and sell them to
H.M.JR: Any on two and one-quarter?
banks.
MR. BELL: I have 't heard any.
MR. GAMBLE: They won't be in the basket.
H.V.JR: Any on two and one-half?
H.C.JR: The thought I had on this is, this would be
the simplest way, simply say that these aren't eligible
MR. H/ASt There used to to, but It's all over.
to the banks until they only have ten years to run.
(Laughter)
MR. HELL: That is the way.
H.M.JR: Now, they said to restrict bonds, and in the
offering of the second part of Lhe drive exempt series E,
MR. GAMBLE: That is just about It.
well, we straightened that out ourselves, I mean, se to
the basket.
MR. HELL: The two and one-half's ought to be fifteen
years before the banks can own them, and the two and one-
MR. HELL: lie have agreed to this. That was the
quarters ought to be ten years from the issue date.
original recommendation that the one and one-neif percent
security be eliminated from the corporate basket.
H.M.JR: No, but these securities must have only ten
1
years to run before they become eligible to the banks.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
/
PAT. OFF.
MICROFILM
BOLL NO.
168
157
45 -
- 46 -
MR. EURPHY: You neat to naturity?
H.M.JR: He was satisfied yesterday on the Inc and
one-quarters.
H.M.JR: Yes, to naturity.
MR. HELL: I think that is right.
MR. HELL: How about the two and one-quarters? If
you--
H.M.JR: "That no announcement be made at the present
time of the maturities of any of the issues included in
H.M.JR: The seme.
the drive." Now, I ass for that. I ment to leave the
naturities open for another few days.
MR. PELL: If you have, say, 1960 just for argument's
sake, the banks could buy them in 1950, five years from
MR. HELL: You do?
now? Louldn't it be a good thing to turn it eround the
other may and say they can't buy them until ten years
MR. TICKTON: How long?
from issue date so that would be 1955, and then you would
have five or six years to run from there on, the banks
H.H.JR: I en not going to say.
could run them?
MR. HAAS:I taink that is mart.
H.K.JR: I would rather have the formula say that
when securities have ten years to run they would be
I want LO leave it open for a few days. I
eligible to buy them. That is LDS simplest way, and
nu not going to say.
anybody can figure when a security has ten years to 20
to naturity. Then it becomes eligible for & bank. It
MR. HELL: You could decide maybe a week from today.
makes it much simpler, and I tnink it is good, sound lineo-
cing.
H.C.JR: Or I aight decide on Tuesday. I an not
going to say--just lenve it open.
MR. FELL: I do, too. That fits our formula.
VR. BELL: It will only take & coupie of days to
MR. &DKPHY: That is correct. I mouse just like to
settle down.
say for your information, Mr. Secretary--
MR. RURPHY: The punch is in the next sentence that
H.K.JR: Yes, Vr. Surphy.
they have, the one you are sbout to read.
VR. KURPEY: Piser asked us to give reguistions to
H.W.Jh: "The announcement should, homever, state
restrict them to five years IPCL naturity. I think your
that the maturities on the 2 1/4 and 2 1/2 per cent bonds
[ormule is sufficiently drastic, but I promised him I
will correspond approximately with the last previous
would pass that word siong.
issues of such securities, with allowance for the lapse
of time. It is suggested that the Treasury consider
E.H.JR: You have done it. They had e complex thing,
lengthening the period during which these securities are
and not they can look on the sheets and tell when they
ineligible for bank purchase. The maturity of the 1 1/2
have ten years to run end when it becomes eligible for
per cent securities would be determined in relation to
banks.
the level of the merket after the announcement and at the
time of the offering."
VR. BLAS: Marriner would like to have them never
eligible.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT MICROFILM
BOLL
NO.
163
170
- 47 -
- 48 -
Oh, that doesn' t--they are advising me. I an not
B.M.JR: Some morning when we walk com you can
going to say that st all in the announcement; ne will simply
explain it to no.
say it verbaliy; it won't be in the form of writing. within
a few days we will decide what the anturities will be.
MR. FELL: O.K. I like fixing the meturity date. I
don't like to go back, but I taink it puts a peg 00==
MR. HAAS: But that next sentence does take the bloom
all off.
H.K.JR: I don't want 8. peg.
B.B.JR: On, no, just within & fes days.
MR. BELL: I would like to have n. seven-year cell
date.
CR. TICKTON: In this meno?
H.M.JR: I an different from you. I am. afreid the
H.W.JR: Yes, but I - not paying any attention to
market settled 8. little too low. It will bob right back
it.
with all this money. The worst thing that could happen
is they will shove it down to the floor if the price is
MR. LINDOV: Good.
too good. I - not worried about the thing not going.
That I will take the soie responsibility for.
MR. TICKTON: We all agree. (Laughter)
KR. BELL: But I don't think--
H.K.JR: I mean that sentence.
6.M.JR: Within two weeks the market will be in shape
MR. RELL: I don't think you have to my it when you
from the time we announce the maturities--mithin tao weeks,
announce it;without a naturity date the bloom is gone.
with all the pressure.
MR. MURPHY: I think most people will read that
KR. HELL: I don't think there is any doubt about
sentence into it.
that in the next forty-eight nours.
MR. FELL: You don't have to announce it, but I
hope it doesn't 20 further. I don't think it mill.
H.K.JR: The boys put the thing down a little too
much so that the toing will be a little richer.
MR. MURPHY: then flowers droop, they droop fast.
MR. HELL: The present securities probably by Monday
E.E.JR: Then T get through I have to suggestion I
night will have dropped down to bout one hundred and
want to make.
three-quarters.
The next thing is out, number four; we nave settled
H.M.JR: I would rather have the price 6 little too
that.
sweet than a little too sour.
Number five, that war loan--I don't uncerstand it,
MR. BELL: I tnink it you fixed the maturity date--you
anyway.
would have to take the bloom off by fixing It anyway.
MR. BELL: I don't taink we have to do that with
all this. If this is going to do any good at all--se
are only going to get seventeen billion dollars, and it
isn't going to be a problem.
Regraded Unclassified
RECISION
TRACE MARK
MICROSTAT/
MICROFILM
BOLL NO.
172
171
50
49 -
H.M.JR: Wast 0180 18 there besides that? have ne
H.M.JR: Then I will be accused or anoving it down.
covered the whole tring?
Look, Den--
MR. GAMBLE: Yes, that is the end of it.
MR. BELL: No, you put out a little different security
and keep some of the bloon.
H.V.JR: Non, the only thing that I have got in mind
is this--
H.M.JR: This is the first time By eloow is doing
the whole conference.
MR. BELL: There are two other things; one is we
decided the bank participation on the its and G's, and the
MR. GAM HLE : Everybody is entitled to one; I am
other--and I assume from your statement yesterday about
saving mine.
the insurance companies that you want to grant them defer-
red payments for sixty days.
VH. BELL: You a re saving yours? It must have been
the elbow.
MR. MURPHY: Just insurance companies, or the same
classes of investors?
H.W.JR: It wasn't nis elbow; it was the bludgeon; ne
scared us ail by saying ne was going to get violent, and
MR. HELL: The savings banks are in there. I suppose
like the poor Alice Ben Bolt we trembled.
it would be ratner--
Well, we passed five. 1 don't understand it, and
MR. RAAS: Like we had last time?
Bell hasn't time to explain it. I tnink 1 know about it,
anyway. But six, the bill thing--
VR. RELL: It would be difficult to take them out now.
MR. HELL: That in the program we are on now. he
H.V.Ja: Did we do that?
said, really, when We started it we would keep the one
hundred million dollars 8. week until this program is
MR. MURPHY: For quite & class of investors, insurance
announced, and 8. few any after it had it's effect on the
companies, State and local governments.
market ne would sit down and discuss the question of
whetner we need two hundred million collars a neek.
MR. HELL: The same class as we had before. That is
Now tooy put it off to toe sevents Issue, which would be
what I meant to ask & question on.
April 5 or 6, somembere along there, before you discuss
It--ir you discuss it--ii you agree with this. I think
KR. LINDOE: Savings banks have used that. I hope
you can let it go.
we can talk to them and tighten that up.
MR. BAAS: I don't aind discussing it, but I would
MR. URPHY: With the one and one-half out now there
continue it after discussing it.
wooldn't be much opportunity.
H.H.JR: It 1s mil rignt no of today?
MR. LINDOM: They night move out two's and buy two
and one-quarters, Henry.
MR. PELL: Yes, and 11 we want it next week, we can
call them and any we want to increase it end discuss it
MR. TICKTON: Part of the discussion ought to be on
earlier toan what they propose. There will be B. lot of
their abuse last time so they will know what Re know shout
discussion.
then.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
FAT. OFF,
MICROFILM
BOLL NO.
174
173
- 51 -
52 -
H.V.JR: Non, I have got E suggestion to make. If
H.W.JR: Why don't I do this?
we are 50 near agreement, I think that we could just verbaily
tell this to the prece this afternoon for tomorrow norning's
KR. FELL: I would also like to send it to the Fed
papers after the market closed and gain 8 day and stop--
so they can have it when it hits the papers.
I mean, everybody has talked about 80 many rumors.
H.C.JR: You can do that, too, ano instead of having
MR. GAMPLE: It would be wonderful.
it at four, give ne a little time. 1 would rather have it
at five o'clock.
H.V.JR: Without having 8. formal announcement, just
tell the boys--I can tell It to then verbelly that this is
MR. BELL: Tast is all right.
what we are proposing to do.
H.K.JR: that will give you another hour.
MR. GAMBEL : I want you to urge to do one thing I
was going to ask you to do. I don t want to appear to be
MR. HELL: I think we could have something, Yes,
Poliyannish about this, out there is & very important
that would be a better thing to send out to everybody
decision to be nade in connection with the Sevento lar
as well as toe State Chairmen.
Loen. There are seven billion collare in this, and I
tnink you ougnt to drenatize it.
MR. GAM NLE : You would have to have that in any
event.
H.M.JR: Well, the three of us--
H.V.JR: with all these people here, what's the sense
MR. It is better if you do it personally:
of holding this thing-until Monday?
they will never get it in a press release.
MR. GAMPLE: You went coverage for Monday, anyway.
H.M.JR: This won't be E press release. I mon't
have any press release. Some people know about this, and
VR. FELL: It is better than what I not going to
some people have the advantage.
suggest, that we give this to Bob mouse tomorrow and let
him, after the market closes, call In all the dealers and
MR. GAMPLE: I suppose you are going to run a story
tell it to them so they won't get it an hour before the market
on it, anyway, and you had better get the story out.
opena Monday; they can tnink about it over the week-end.
H.D.JR: We will get the story out.
H.H.JR: You can do that at nine o'clock tomorrow
morning.
MR. HELL: I would like to have B formal press release
if you want to have & press conference at four o'clock.
MR. HELL: Be could do that, but it isn't 50 bad now.
That would make it rather simple, and--
MR. GAMPLE: Three o'clock today?
H.L.JR: If you can have it, so nuch the better.
B.M.JR: I have Cabinet, you see.
VR. AELL: I have che partially drafted with the
blanks to fill in and change whichever way we decide.
MR. GAMBLE: lie said after the market closes.
ME. GAN BLE: : would support it with that.
MR. HELL: You could have Marriner de it.
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
RSG. 5. PAT. ORI.
MICROFILM
BOLL NO.
175
176
- 53 -
- 54 -
H.W.JR: that do you think
H.F.JR: I en trying to get Kr. Eccles non.
MR. HELL: It is a good idea.
The only difference ne have nom 18--
H.M. JR: The quicker this thing is decided, the
MR. ROTE: Bank financing? Good.
quicker we can get it out. Taxe some small bank out
there; they won't know any the one and one-half's are
MR. FELL: The goal of fourteen instead of tweive.
going down, and all the rest of that stuff.
H.V.JR: I wrote you e nemo about tois juncheon
MR. GAMBLR: It is e very good thing to do. I as
Seturday. I would like to know who is coming end all
heartily in fevor of it.
about it. You will find It on your desk.
H.N.JR: That is wnst I RBC thinking; you just gain
(The Secretary nolds el telephone conversation with
that much; then they talk about the uncertainty end they
Mr. Scoles, AS follower)
are that much Less uncertain.
Which any can I shut them off quicker.
MR. HELL: I think you can shut then off quicker by
going over there and giving then B. half hour. He is
anfully hard to get off the phone once ne gets on.
H.M.JR: I will ask just for Line Ecoles.
AR. GARBER: lie are more closely togetner with them
tean ne have ever been.
MR. HAAS: Yes, cioser then we Dav. ever been.
VR. GAMELE: Yes.
H.H.JR: Do they know the one and one-helf in not
available to the corporations?
MR. DAMBLE: They recomended that.
(Mr. house enters the conference.)
H.W.JR: Sit domn, Bob. Have you had a chance to
speak to anybody over there?
VR. ROUSE: I talked to Fr. Sproul.
RECISION
TRADE MARK
MICROSTAT/
PAY. OFF.
MICROFILM
ROLL NO.
177
178
March 2, 1945
11:17 A.m.
E:
In the drive.
HXJr:
Ye're here with our group. You're on the loud
speaker, and Rouse is here.
HXJr:
Teah.
Marriner
E:
My - my point Le you -- you get the seven billion
Ecoles:
Yes.
from the individuals. They got the money.
HMJr:
I don't know whether you wont to code over or
HMJr:
Yeah.
whether you'd like for DE to tell it to you on
the chone, whichever you would prefer. The only
de
And the seven that you propose to get from the
difference le on the question of direct firencing
corporations -- they haven't got the money ithout
for the banks. Everything else I think we're In
reselling what they've got to the banks, no that
agreement.
what will happen 18, the banks will get at least
two billion of the seven and then any oversubscrip-
E:
Uh huh. Vell, of course, that's -- that's cretty
tion you get -- If you get instead of seventeen -
beste because if you only expect to get twelve
instead of fourteen billion, you get seventeen
billion
billion, which is your oversubscription
MMJr:
No, ve're going to net for fourteen, seven and
HMJer
Yes,
seven.
F:
I think you'll find the banke vin get at Inset
in
on, yes. Yell, of course, 11 menne the benks are
three of that, and it would be my judgment if
going to have to take indirectly, and our point VAS
seventeen billion In reised
that it would be n little bit more -- it seemed to
un a little bit more connet and n. little mrs
HMJrt
Yeah.
better policy. if ve recognize what the situation
is that has developed.
=
that you'll end up with at least five billion
of that in the banks.
HaJri
Well, there are two things. The first, ve wented
to net for se much money no we did lest time,
REJet
Vell, that would be four billion less than last
which 1e fourteen
time.
E:
Yes.
F1
Well, that's right, but that will be four billion
Less that you will have also releed -- four billion
HXJr:
because vita the Government spending " much
less then you die lost time.
for the var, it would be difficult to exclain if
we maked lega, 20 we thought ve'd ask for the dame
HEJP:
That's correct.
amount, seven and reven. And then If ve add that,
and not counting on anything from the banks :
71
So tost It VSE our thought that to the extent you
mean, If se 40 this procosal the way Ve did last
could reduce the indirect financing by giving the
time -- and figuring we'd get a minimus of seventeen,
banks the three billion direct, We could then
we'd TO into the first of October with five and n.
instat that the bank play ball and not try to
half billion dollars.
come 10 through the back door by getting the
corporations to out in heavy subscriptions for the
di
Vell, that's getting, of course, about four billion
certificates, which they vill do to get the noven
Less then you got lest time
billion. You vill find there will possibly be two
billion more subscriptions on the corporations to
HMJr:
Yeah.
the certificates which they will inmediately sell
out certificates they now own at e premium,
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
REG. U.S. PAT. OFF.
MICROFILM
ROLL NO.
179
180
HXJr:
Yeah.
E:
Et
In order to take two billion -- the two extra billion
Cont'd.
Will take nore end the benire -111 est then indirectly.
up to the reven billion In.
How, that -- that's why ve nace this recommendation.
I do say this, that the orogram 10 n big improvement
RMJr:
Yell, you know we've taken your suggestion which in a
over the others. It hasn't got quite AS far on we'd
very issortant one, about the 1-1/28 - not making
like to par it.
then available to corrorations.
H/Jr:
Vell, now, ase Soroul tell you about the thought --
Et.
Yell, I think -- I think this big improvement.
box we would handle the banke?
flow, there inn't any question that the 1-1/2, as
connared with the 2 lest time 1 m noing to be a big
E:
In what way?
improvement and will helo cut out the free riding.
HMr:
Yell, the formula will be just the 8858 as last
HXJr:
And -- the boye just gave ne If note - they any
time,
that the corcorations have About four billion
dollars new money on hand, and the Insurance --
E:
Vall, except
savings banks and insurance
HMJr:
Except that we would offer ther the F and Gs, the
E:
We figured three.
7/8e nnd the 1-1/20, but nothing else.
HVJr:
They any about nother four,
Et
Yell, you -- you mean -- you sean the System to
take up the 10% or 500,000
E:
They really think they nan get tost out of the
corcorations?
HAJHI
Yes.
HMJri
They think so, 200. They any there's four billion
E:
with a limit -- with a limit of 100,000 in
three and there's another four billion to the
the -- in the F and 38, which would mean that the
insurance and savings banks, no there's eight there.
banks that took core than 100,000 would -- would
have to core in on the 7/5g or the 1-1/Ps.
in
Vell, I : I hope 11 can res more out of the
corporations and they wor's sett to the cance. It
HWT
That's right.
would be just my judgment that this Le vent you'd
get
E:
Well, that heloe -- I mean, that would helo the
smill -- that will help the banks un to 500,000.
H/Jr:
Well
HMJri
That's right.
E:
yould 2019 this -- that you vould NE time the
individuals instead of 84710 Willion -- you're et
E:
And if the big banks vill not be running -- here's
more than 11700 and noves 17 git eight billion.
the thing that -- If you're going to do it this
You'll get it Least n. billion in tve billion note
way, this 10 -- this 18 -- it 80038 to me that this
in 1-1/28 the vill go into the bening through the
1e going to take a very strong market in the 1-1/2a,
individuals. You'll get from the corporations
and I would suggest that you don't price then --
Instead of seven billion, you'll gat eight or nine
I nean that you don't announce them -- the naturity
billion, and you'll net at least e count- of billion
with the announcement in the basket.
to three billion more in certificates that vou e 6º
into the corporations. I think really vast this
HMJrt
No, we're -- we're following that suggestion, and
does no against direct bank offering, 11 Just seene,
we both had that idea. I had it and you people had
of course, that the individual and the corocration
11, and we're going to announce, and then -- not
announce Now long it will nature until ve get a
change to see,
Regraded Unclassified
RECISION
TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
181
182
6
E:
For a week at lenst.
HWr:
HKJr:
That we're going to do 18 any we're going to take
Cont'd.
121 A little bit worried -- If ve followed that
a number of days. We're not going to any how cany
sentence, that would above them down too Car, and
days.
what I compromised with them was -- VIII just to
any Me'd leave It onen and ene what handent,
E:
llow, on the
en
Uh nun.
HXJr:
Ye'll leave 11 open to ser now the market resote.
HMM
I understand that Piser says that eight pointe a
E:
Ne felt 6. little different on the 2-1/88 and the
day seems to be the nuota that they're outting
2-1/48.
thes com -- joking, you know.
is
HW:
Teah.
Yell, that's what they die for two days.
We suggested vesterday to Dan and George after
UNIT
Teah.
E:
ve vent in their office, and I think we all
agreed that there vale no desire to numo out the
E:
The -- 414 -- dié you discuss this other assect
2-1/28 end the 2-1/48, and that it might be well
that va discussed yesterday morning on the 2-1/2a
to announce at this time that the naturity of
and 2-1/48
those would be anbroximately in line with vast
it had been before.
HXJr:
Yeah.
Yes.
=
HIGHT:
000 that they not be made eligible for bank
investment for = longer period?
E:
Leaving a little leaway, but approximately. Did
you expect to defer ....
HXJr:
Well, what we had in sind vae this -- we thought
that this would come within shat you had in mind --
HHJr:
On the whole thing - ve -- will -- sont ve're
we'd singly any in announcing It that the banks
going to do if we're in agree -- if you and : can
sould only buy these securities when they had ten
get to an agreement -- ve hope to do 1% at five
years to run, Put it that vay,
o'elock tonight, for tomorrow morning's ingere --
we'd like to stop the gossip 18 quickly as possible.
is
I non, and out out the
I think that's desirable.
HWr:
a
When they have ten years to enturity, then they
become eligible to the banks,
HMJr:
But we'll tell them about the coucone but not now
long they run, We'll keep that open.
a
Yeah, vell. I think that night that vill be
8078 improvement. D16 you also discuss the --
S:
Yes.
the call -- a limit -- spreading out the call to
saturity date? We talked yesterday ....
HiJr:
And than we'll witch the market.
HNJr:
%0, we didn't talk about that today.
E:
Vell, don't you think on the 2-1/20 and the 2-1/
that 11 micht be well to indicate that -- that your
E:
of instead of the five years, it vas suggested
desire 10 to maintain that -- that battern sporoxi-
here We call -- yesterday -- . ten years' spread
mately where it's been?
and then Dan thought that it might be well to have
. seven year, and we agreed with him.
Vell, : know what's in your memorandum. I've been
studying it all morning, but vest the boys more
HNJr:
= cuess I ween't in the room st that time.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
OFF.
MICROFILM
ROLL NO.
184
183
7
RMr:
Would you do that?
E:
No, this van in the -- ** vint out and discussed
is
5o for ne I'm concerned -- of course, I'm dissonsinted
this thing for a helf hour, you remember, in Dan't
in that -- that the -- that the bank three billion
office.
didn't come from them, and we'd get that much less
indirectly from the banks. Now
HMJr:
Vell
HXJr:
My sales organization Le violent on that subject.
E:
But : voz wondering -- they Meme going to discuss
that this marning and we selted to -- V ᵒ agreed
is
: know. or course, they've got an noe in the hole
with him that the 2-1/20, It minht not be bad to --
on this other because they'll got -- they'll get e
to -- to video the period between the maturity and
lot of secondary market, and a certain amount of
the call date.
free riding, and of course, it becomes -- it becomes
ensier to get fourteen billion if the banks don't
HMJrt
Well, I - I've been trying to do that. I've olways
come in, or it becomes easier to get twelve. It
been trying to do that, starting when I VII in Para
it follows -- it's following the old pattern of a
Credit, you know. I think ve and twenty 74873'
lot of indirect bank financing,
spread there at one time.
HMJr:
Yell
E:
Well, it's five now, and Me thought ten via suching
1: a little too for the first time, but No agreed
Et
And it make the esles -- it make the quota, of course,
that seven would -- micht be n. good 1dea to start.
ensier to reach, and our whole basis is reduce the
quota to the individual and the corporation and be
MMJr:
Right. Rouse get 0 little pale When = entd n.
nore honest about it and get it from the banke instead
twenty-year scread.
of -- instead of giving the impression we're getting
it by non-bank financing, when, 58 a. matter of fact,
a
Well -- (Laughe) -- Date afraid that would
ve're not. I mean, now, that's the basic difference.
Sowever, I've stated my case not we've stated our
HMJri
No, he says I misinterpreted. I VISE just being
recommendatione in e mescrendum,
I didn't vant to be too serious. I misinteroreted.
MNJri
Yeah.
E:
Vell, ve -- I think It's worth thinking about.
E:
And -- and, of course, it's your responsibility to
HKJr:
I'd be interested in that, and ve could discuss
take the decision.
that next week when ve ... what the market does,
But I've always been for e longer sprend. I'd
HWr:
Vell. the other thing 10 this, ve looked at the
like to have 6 ten-year spread. on those long
Third War Loan, and In the Third Yer Loan we had
bonde.
B. direct bank financing, and we couldn't see that
1: sade an awful lot of difference.
E:
Uh mis. That would be part of the enturity terms,
of course. Wouldn't 117
en
Vell, : think in the Third War Loan you -- the
cattern hadn't been developed or set like it -- like
HWri
Yes, and then we wouldn't say anything about that
it has now. I mean, there vae so -- there vas a
tonight.
lot of difference at that time on the part, I think,
of the general -- of the corporations and the
a
Yes.
individuals and the banks. I think at the present
time the amount of free riding in the Fourth got a
HMJr:
See? Ye'd leave
little worse. The amount in the Fifth got still
vorse, and last year, ne you know, It vos terrible.
E:
Vell, I don't know that there's enything further
for -- I'll talk to Alan and see if be wants to
talk to you. I'll have his call you back If be
does.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO.
185
186
- 9 -
- 10 -
HMJr:
Yeah.
HMJr:
I know.
in
And it -- it because that the banks -- all of then
is
We're in the name -- listen, we're in the name
then, or more of then at least, were unwilling to
boat together. Ve sink or evin.
follow the instructions, and those that did vere
sore because the fellow that broke the rules got
WMJr:
I know that. : know that. I appreciate the time
the benefit and the fellow that played according
and thought you have given on it.
to the game didn't.
is
Well, I'll call Alan and have him -- see If he
HMJrt
I know.
wants to talk to you.
E:
And -- and it created, : think, a bad psychology
BWrt
Thank you very much.
on the part of 8 lot of the banks, and it still 1 e --
11 still is there in the cicture, but not to the
E:
All right, Menry.
extent that it would be if you had 8. two percent
bond. I think we've improved it, as I say, by
outting the 1-1/2 in, and by cutting out -- by not
permitting your corporations to take the 1-1/2e.
HMJr:
Right.
a
Now, I do think you've made a big incrovement on
it. Now, maybe next time we can -- ve can cross
the other bridge.
HXJr:
Well, if we made all the improvements this time,
we'd have nothing left.
E:
Well, that's right. (Laughs)
HWr:
So we ++++
E:
Vell, I'll tell you what I'll do -- I'll have Alan
call you back, but no for ne I'm concerned I don't
know that -- 1t wouldn't be necessary for ne to -- to
meet because I've had my eny, and I don't know that
I could say any more if I
HMJr:
Well, if Alan is going to call us back, I'd like for
him to do it between now and twelve.
E:
I'll -- I'll -- he's in this meeting with the group
and I'll call him right out.
HMJr:
Vell, I vent to thank you very much for all your
help and advice.
R:
Yell, ve have the anse interest you do.
Regraded Unclassified
187
188
- 55 -
- 56 -
H.M.JR: He is very reasonable.
H.M.JR: Would you mind not seeing nim until five
o'clock?
MR. MURPHY: When I an in 8 boat I prefer neitner to
sink nor swin. (Laughter)
MR. ROUSE: I could see nim the first thing tomorrow
morning. We could have 8. meeting with the group.
H.M.JR: When I get into a boat I just want to float,
period. I think you can start your boys, and will you
H.M.JR: Either five o'clock or the first thing in
tell Shaeffer we will have 8 press? will you take care
the morning if that is all right with you. There is
of that?
three hours difference, and the market doesn't close until
four. Let's say tomorrow morning.
MR. BELL: Yes, I will have Sheeffer in right after
lunen on the press statement.
Thank you very much.
H.K.JR: I would like Mr. Gamble to be here. Would
you like to bring in anybody from your organization?
nim. I tnink not. I think Shaeffer--
MR. GAMBLE: Nobody other than Coyne if I can bring
MR. HELL: Five o'clock. Do you want to see us before
just to read over the statement? We had better go ahead
and have it mimeographed.
H.M.JR: I don't want to see it, because I am not
getting confused. And if you could see the dealers before
the market opens tomorrow morning--
MR. ROUSE: I will have Marrinersee them late this
afternoon.
like tast.
MR. BELL: Four o'clock this evening, or something
H.M.JR: See them at four.
VR. ROUSE: About nalf past four.
MR. HELL: After the market closes.
H.M.JR: San Francisco is closed, isn't it?
MR. ROUSE: San Francisco is still open.
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL NO
Eccleo showe)
1,
1945
190
189
CONFIDENTIAL
March 1, 1945.
STRICTLY CONFIDENTIAL
March 1, 1945
full cycle and that the question of continuing this increase be reexamined
at that time.
MEMORANDUM TO THE SECRETARY OF THE THEASURY
The separation of the drive into two distinct parts, one for In-
FROM THE FEDERAL OPEN MARKET COMMITTEE
dividuals, partnerships, and trust accounts, and the other for other nanbank
investors le Ln line with our earlier recomendations and has our full en-
In the 11ght of the joint objectives of the Treasury and the Fed-
doreement. We feel also that the increase in the qunta for the individual
ml Reserve System with regard to war financing, the following program is
drive will place individuals and the solling organization under substantial,
out not impossible, pressure. It is recomended that the quota for other
recommended:
neetank investore be decreased to 5 billion dollars, which would make it
1. That the Seventh War Loan Drive be divided into two distinct
undecessary for these Investors to sell any of their existing holdings. The
selling organization should be Instructed to discourage the making of quotas
parts, the first for individuals and the autond for other nontank investors,
by colling from existing holdings. It would be expected that between 3.0
nesd that the goal for the second part be placed at 5 billion dollars. The
and 3.5 billion dollars of this total would be obtained from insurance
suggested dates, May 14 - June 16 and June 18-30, are entirely astisfactory.
companies, mutual savings banks, and similar institutions, this anount
2, That the Treasury unnounce at the present time that the offer-
representing their socumulation of funds. The remainder would CODE princi-
ings In the individual drive, in addition to savings bonds and savings notes,
pally from corporations.
will consist of 7/8 per cent certificates, 1 1/2 per cent securities, and
A maximus rate of 1 1/2 rather than 1 3/4 per cent on unrestricted
2 1/4 and 2 1/2 per cent restricted bonds and that the offerings in the
securities would have a number of advantages. The lower rate would reduce
second part of the drive will consist. of the sure securities, except for the
the interest cost of the debt and returd the growth in bank earnings. It
exclusion of Series El savings bonds and the 1 1/2 per cent securition.
año would reduce the temptation for commercial banks to arrange for indirect
3. That no announcement be made at the present time of the natu-
purchases and would reduce the idount of free-riding and speculation. At the
rities of any of the insues included in the drive. The announcement should,
FOR Line, It would not be likely to reduce naterially the denand from
individuals.
however, state that the naturities on the 2 1/4 and 2 1/2 par cont Londs
will correspond approximately with the last previous issuee of rush securi-
in extension of the maturities of the 2 1/4 and 2 1/2 per cont
ties, with allowance for the lapse of Line. It In ouggrated that the Treas-
bonds would not reduce the Intervet cost to the Treasury, and It night croste
ury consider lengthening the period during which thean securities are
ineligible for bank purchase. The naturity of Use 1 1/2 per cant recurities
IN taid market situation in the event of large mins is nontank investors. It
would be determined in relation to the level of the nerket fur the announce-
La expected that the prices of the existing issues of 21/4 and 2 1/2 per
test Licnda windle decline on 5 announcement that new Issues bearing these
ment and at the time of the offering,
coupon rated will be affered Ln the drive.
he That the Treasury also announce at the present time that, after
the and of the corporate drive, It will make a direct offering of 1.5 billion
It Le supecially important to include 2 1/2 per cent bonds in the
dollars of certificates and 1.5 billion of 1 1/2 per cent securities to con-
nelve. Otherwise, the prices of the existing 2 1/2 per cent bonde would In-
mercial banka, Subscriptions would be limited to a proportion of capital
cream further, with the recult that the long-term rate would decline. The
and surplus or . proportion of deposits, with the objective of limiting total
2 1/2 per cent rate has been the nost important rate In the entire war
subscriptions to not far in excess of 3 billion dollars. All subscriptions
financing program. Even at the 2 1/2 per cent rate, however, it has been
for $50,000 or less for each issue would be accepted in full. This would
difficult La encourage purchases of Government securities. A reduction in
make It unnecessary to continue offerings to commercial banks on the basis of
that rate would Increase the difficulty by reducing the incentive to save.
These securities are in nn entirely different category from unrestricted
their time deposits.
because they can be hold only by individual savers and by in-
5. That the Treasury limit the amount of war loan deposite held
stitutions that hold savingo of the nublic and therefore cannot involve in
by any one bank to 30 per cent of its deposito, other than war loan deposits,
emercesary expansion in bank credit. Finally, if the long-term rate were
and that the collateral pledged to secure such deposits be confined to U. 5.
reduced, it might be impossible later to restore the 2 1/2 per cent rate if
that course second to be desirable, because It would involve permitting
Government securities.
newly-issued a 1/4 per cent bonda to decline below par.
6. That the Treasury continue to increase the outstanding amount
of Treasury bills by 100 million dollare a week until the completion of the
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
191
STRICTLY CONFIDENTIAL
-)-
March 1, 1945.
Direct bank financing should have no adverse public reaction, be-
cause those who realize that indirect bank participation her been an impor-
tant part of recent drives would recognise the adventages of the change,
whereas those who do not know this fact would be unlikely to realize that
any change had been made. Commercial banks have found that many nonbank
investors are willing to subscribe for securities for the purpose of resell-
ing the securities to comercial banks at little or no premium. Banks that
have followed the Treasury's request, however, have been able to purchase
socurities only by paying substantial premiums to speculators. In offect,
therefore, the Treasury, by not making direct offerings to commercial banks,
maken it advantageous for banks not to follow the Treasury's Own request.
In addition to putting bank purchases on a more straightforward basis, a
direct offering to banks would permit banks to purchase new securities at
par rather than to pay premiums to speculators or to make special arrange-
sents with nonbank investors. It also would reduce free-riding and would
reduce undesirable shifting of securities in the market.
The Committee also discussed a suggestion that the Treasury N-
quire that some proportion of war loan deposits be secured by Government
securities naturing in not nore than oither six months or one year, lut clime
to no conclusion on this matter. If, however, the Treasury decides to
adopt this suggestion, the Committee recomends that such depositarios be
exampted from the requirement to the extent of $500,000 or 25 per cent of
their war loan deposits, whichever is larger.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
No. W. LMC OFF.
MICROFILM
BOLL NO.
train Ham Unity 192
Criteria for An Offering of Securities
to Banks Concurrently with the Seventh War Loan
You asked us to suggest a method by which an offering of
long- or medium-tern securities might be made to commercial
banks concurrently with (but not as a part of) the Seventh
War Loan, in such a manner as to favor distinctly the smaller
banks and possibly to exclude the larger banks altogether.
If all commercial banks were permitted to subscribe for
& new offering of Government securities in an amount equal
to 10 percent of their total assets, but not in excess of
$200,000 for each bank, the total potential subscription
would be about $1.8 billions. This compares with an actual
subscription of $1.0 billion to the concurrent offering of
securities to banks, based on their time deposits, made at
the time of the Sixth War Loan.
Of the total potential subscription of $1.8 billions
permitted by the formula just described, only about $200 nil-
lions would be allowed to the approximately one thousand
largest banks in the country, which hold over 75 percent of
total deposits; while the remaining $1.6 billions would be
allowed to the smaller banks.
The formula just described does not exclude the larger
banks altogether. We do not believe that this would be wise,
for the following reasons:
(a) It would present a difficult "notch" problem
-- 1.0., a bank just over the limit would be
substantially worse off than a bank just
under it. This could be obviated only by an
arbitrary and complicated "notch" provision.
(b) Eliminating the larger banks would appear
arbitrary and might very well be the target
for significant criticism.
(c) Substantially the same purpose can be achieved
by means of a "ceiling" as here suggested,
since a $200,000 subscription means a great
deal to a small bank and a very little to a
large bank.
February 27, 1945
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
ROLL NO.
194
193
- 2
March 2, 1945
11:57 8.0.
HMJr:
Yes.
Operator:
Go shead.
5:
But if you're going to have three billion of
indirect bank financing of the Drive 88 we think
Alan
you can't avoid with a seventeen billion Drive,
Sproul:
Hello.
that then it vill be impossible to have that sort
of B. program because to the extent of three billion,
HVJr:
Hello, Alan.
at loast, you're going to have switching, and you
can't any, "Well, svitch un to the three billion,
S:
Good morning.
but don't switch beyond that. You'll probably
have svitoning of four or five or six billion
HMJri
Now are you?
because It's impossible to say, "Don't switch to
Pine. Marriner has been talking with me and telling
buy* -- "Don't sell to buy", 60 that we still
5:
ne of his conversation with you earlier.
think it would be better to have the fourteen
billion quota, and 20 out after it with all the
pressure ve can, and to get it without selling
HNJr:
Yeah.
to buy, and to get the other three which 18 going
5:
And I agree with what be said to you, and thought
to have to COTE from the banks in any case, directly
T night smohagize one or two noints.
from the banks.
HKJr:
Vell, I'm very clad to get your opinion.
HMJri
Please.
First, ve see the desirability from your standpoint
5:
Right.
S:
and from the standpoint of the sales organization
of berhade having a fourteen billion quote
MMJr:
I hose you don't -- won't be angry if I don't follow
it.
HKJr:
Yeah.
5:
Well, I never have been.
8:
But we also see that you expect to get at least
seventeen billion, and that any way you figure it,
HMJr:
All right, but I give Marriner all the reasons.
it looks to un as if there's going to be three
I don't know whether he receated them.
billion of bank money in the financing: and that
therefore, ve still think it would be better to
5:
Yes, he did.
get st least that three billion by n. direct offer-
HNJr:
And our bank belance in 80 ve don't need it -- our
ing to the banks.
cash balance.
HMJr:
Yeah.
:
%o, I know you don't need the money, but you're
And in that way you'd be likely to have less bank
going to get it in any case. You're going to get
B:
money in the whole financing, rather than more
seventeen billion, approximately. That -- all
bank money. Second, ve had understood that one
the estimates agree, and whether you
of the slogane of the Drive, or one of the under-
lying bases of the Drive van "Don't sell to buy*.
HMJr:
Vell
Don't sell to what?
5:
you get it directly or indirectly, you're
HMJr:
going to get three of the seventeen, at least, from
Don't sell securities in order to buy securities
the banks.
S:
in the Drive. In other words, to reduce shifting
HMr:
Well, Marriner thinks the whole program 16 a big
and switching.
improvement. I hope you do, too, even though we
don't offer the banke anything direct.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
196
195
March 2, 1945
3
4:16 p.m.
8:
I do think it's an improvement. I think if you
HIJr:
around four o'clock this afternoon with my
don't come to a direct offering this time, you'll
remarks for the House -- Ways and Means.
come to it next time.
Herbert
HMJr:
well, thank you very much for calling.
Gaston:
Re vas in to see ne yesterday with an outline
which we discussed, and he discussed with Harry
5:
All right.
and others, and said be would be in today with
e draft.
HMJr:
I'll be speing you.
HXJr:
Yell, would you sek DuBois -- Loth -- I mean
B:
Righto.
Fuesell -- I don't sean Fussell -- Luxford.
G:
Yes,
MMr:
He's supposed to have been in here at four.
G:
Yes.
HMJr:
I'd like very much to have you are him and
Fussell cen the thing.
Gt
Yes.
HMr:
I've been planning to start in tonorrow morning
at nine-thirty on it.
0:
Yes, Yes. You'd like us to 800 it today, and
then you'll talk to us about it tomorrow?
HMJr:
At nine-thirty.
a
Yes. All right.
HXJr:
Tell that to Loth.
Gt
I'll do that. Yeah.
HKJr:
But I just -- I want to be sure that If he's around
the office, that you get hold of him now and you
and Fussell familiarize yourselves with it.
D:
Correct.
HMJr:
Thank you.
3:
Yesh.
Regraded Unclassified
198
197
- 2 -
March 2, 1945
4:55 p.m.
PRE-PRESS
H.M.JR: Well--
Present: Mr. D. n. Bell
MR. GASTON: It isn't wrong, It is just a case of pre-
ference.
Mr. Gaston
Mr. Gamble
Mr. Shaeffer
MR. BELL: Well, it sounds funny.
Mr. Coyne
Mr. russell
Mrs. Klotz
Miss Chauncey
H.M.JR: Now, where is Mr. Bell?
Mr. GASTON: This is the whole thing here.
MR. SHAEFFER: Everything but maturities.
H.M.JR: Are the boys here?
MR. SHAEFFER: Yes.
(Mr. D. W. Bell, Mr. Gamble and Mr. Coyne enter the
conference.)
E.M.JR: Hello. Do you want to sit on that side?
MR. BELL: There's the basket, and these lines show
what is left out of the corporations, and on bank investors,
and this is sort of different from any other drive that we
have had.
H.M.JR: All right, that's very good.
All right, Bell, do you think it is necessary to call
his attention to the little mixup?
MR. BELL: There is a little that I night show to you.
This phrase here, "To obtain maximum funds necessary to
prosecute the war from non-bank investors," that ought to
be up after "attained". It can't be misread.
RECISION
TRADE MARK
MICROSTAT/
PAT.
OFF.
MICROFILM
ROLL NO.
199
200
TREASURY DEPARTMENT
3
Washington
Press Service
The Treasury requests that oll non-bank investors refrain
FOR RELEASE, MORNING NEWSPAPERS,
No. 45-35
from selling securities heretofore acquired to obtain funds
to subscribe for the securities offered in the Seventh Mar Loan
Saturday, March 3, 1945.
Drive. However, this request la not intended to preclude normal
portfolio adjustments.
>ecretary Morgenthau ennounced today the types of securi-
ties to be cold in the Seventh War Loan Drive and the periods
Life insurance compenies, sevings institutions, and States,
during which intensive cempeigne will be conducted to sell
municipalities, political subdivisions and similer public
these securities to the verious classes of invertors,
corporations, and agencies thereof, will be permitted to make
deferred payment, at per and socrued interest, for. the 2-1/4%
The goal for the Seventh War Loon her been set et
1945. nnd 2-1/2% marketable bonds allotted to them, up to August 31,
$14,000,000,000, of which £7,000,000,000 is to como from nolos
to individuals end $7,000,000,000 from other non-bank investors.
Again the major emphasis throughout the "untire Drive will be
During the period from June 18 through June 30 commercial
placed on the quote for individuals, which In the highest
banks, which are defined for this purpose as banks accepting
established in any of the wer loan drives. or that quota,
demand deposits, will be afforded on opportunity to subscribe
$4,000,000,000 has been established de the goel for Series El
for Serias F and Series G savings bonds, and for the 1-1/2%
War Savings Bonds, which is siso the highest quote established
bonds and the 7/8% certificates offered in the drive, in
aggregate amounts not exceeding $800,000 or 10 percent of the
in any drive for that security.
time deposits (of which,not mor, than $100,000 may be Series P
The goal and the securities to be offered were determined
and Series G savings bonds) under the some Cormula n.e. was used
by the Treasury after full discussion with various groups, In-
during the rest Drive, Securities no sequired by the banks
cluding chairmon of the State Yor Finance Committees, officials
will not be included in the Drive nor will they be counted
toward any qoots:
of the Federal heserve Eystem, members of the American Bankers
Association, ropresentatives of insurence companies, and other
investment authorities.
Commercial banks will not be permitted to own the 2-1/2%
or the 2-1/4% mrketable bonds offered in the Drive until
The &ecretary stated that there In every evidence that
within ten years of their respective maturity dates.
Federal expenditures are going to remain st n high level for
some time to come, and that the Seventh War Lonn program was
nOn
designed to obtain maximum funds necessary to prosecute the
Sar from non-benk Investors.
The securities, which will be sold under the direction
of the State For Finence Committees, are 58 follows:
Series E, F and G Envings Bonda
Series C Savings Notes
2-1/2% Bonde
2-1/4% Bonds
1-1/2% Bonde
7/8% Certificates of Indebtedness
(The 1-1/2% Bonda will not be offered in the Drive to
corporations)
The Drive for individuals will extend from May 14 to
June 20. However, on Intensification of activities In the
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
ROLL
NO.
2
sale of Series Dell' bonds will begin April 9, when millions of
persons on payroll savings plans throughout the country will
be saked to enlarge their perticipation 05 6 part of the
Seventh War Loan. All Series E, F and G Savings Bonds and
Series o Savings Notes processed through the Federal Reserve
Banks between April 9 and July 7 will be credited to the Drive.
During the final phose of the Drive which will cover the
The Comptroller of the Currency, the Federal Deposit
period from June 18 through June 30, subscriptions will be
Insurance Corporation, the Board of Governors of the Federal
received from all other non-bank investors for the 2-1/45 and
Feserve System, and the Executive Committee of the National
2-1/2% marketable borida and the certificates of indebtedness.
Association of Supervisors of State Benks made the following
statement of their examination and supervisory policy with
The Treasury will request that there be no trading in the
special reference to investments in and loans upon Government
marketable securities and no purchases of such securities other
securities.
than on direct subscription until after the closing of the Drive
on June 30.
1. There will be no deterrents in examination or
supervisory policy to investments by banks in
To avoid unnecessary transfers of funda from one locality
Government securities of all types, except
to another, the Tressury again urges that oll subscriptions
those securities made specifically ineligible
by corporations and firms be entered and paid for through the
for bank investment by the terms of their issue.
banking institutions where fundo are located. This request La
made to prevent disturbance to the money market and the banking
2. In connection with Government financing,
situation. The Treasury will undertake, 11 in the Sixth Mar
individual subscribers relying upon anticipated
Loan Drive, to see that statistical credit is given to any
Income may wish to sugment their subscriptions
locality for such subscriptions es the purchaser may request,
by temporary borrowings from banks. Such louns
except that subscriptions from insurance companies will be
will not be subject to criticiam but should be
credited to the State of the home office es in the past. The
on . short term or amortization basis fully yes
Treasury appreciates the substantial cooperation It has received
payable within periods not exceeding six months.
in this respect.
3. Banks will not be criticized for utilizing their
In order to help in schieving its objective of selling 08
idle funde ne for as possible in making such
many securities as possible outride of the banking system, the
investments and loans and availing themselves of
Secretary will request the cooperation of all banking institu-
the privilege of temporarily borrowing from or
tions in declining to nake speculative loans for the purchase
selling Treasury bills to the Federal Reserve
of Government securities, and In declining to sccept subscrip-
Banks when necessary to restore their required
tions from customers which appear to be entered for speculative
reserve positions.
purposes. The acquisition of outstanding securities by banks
on the understanding that a substantially 11ke amount of the
new securities will be subscribed for through such banks, thus
enabling them to expend their war loan deposit balances, 10
regarded 05 an improper practice by the Treasury. The Secretary
will request banking institutions not to make such purchases,
and not to make loans for the purpose of acquiring the Drive
securities later for their own account. The Treasury is in
favor of the banks making loens to facilitate permanent invest-
ment In Government securities provided such loans are made in
accord with the joint statement issued by the National and
State Bank Supervisory Authorities on November 23, 1942.
(Attached)
PRECISION
TRADE MARK
MICROSTAT
us, s. PAT. OFF.
MICROFILM
ROLL NO.
201
202
- 2 -
March 2, 1945
Since this is a position to be filled by
appointment from the career service, it is subject
MEMORANDUM TO BE USED AS A BASIS FOR
only to the approval of the Secretary of the Treasury,
DISCUSSION WITH THE PRESIDENT
but in view of the fact that the political position
of Assistant Secretary of the Treasury was abolished
to make a place for the Fiscal Assistant Secretary, it
In Reorganization Plan III which the President
is only courteous that the matter be discussed with
submitted to Congress in the spring of 1940 and
the President before the position is filled.
which W&B approved by an act of Congress dated
June 4, 1940, he set up in the Treasury a Fiscal
Service which would embody the functions of
(1) the financing and fiscal activities;
(2) the Office of the Treasurer of the
United States;
(3) the Bureau of Accounts; and
(4) the Bureau of the Public Debt.
He stated in his report to Congress that in order
to assure continued effective management of this
important phase of the Treasury functions, be was
placing the Fiscal Service under the supervision of
a career official.
This position has not been filled since it was
created on July 1, 1940 as it VAB created in the first
instance with the understanding that D. W. Bell would
fill it. Mr. Bell has, since January 1, 1940, occupied
the position of Under Secretary and at the same time
has administered the functions of the office of Fiscal
Assistant with his other duties. The duties of Under
Secretary have become BO burdensome that it is deened
advisable to fill the position of Fiscal Assistant
Secretary at this time. It is recommended, therefore,
that Mr. E. F. Bartelt, Commissioner of Accounts, be
appointed to the position of Fiscal Assistant Secretary
with the understanding that whenever Mr. Bell leaves
the position of Under Secretary he can be appointed
to the position of Fiscal Assistant Secretary and
Mr. Bartelt will likewise return to his position as
Commissioner of Accounts.
DWB:NLE
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
REG. U. 5. PAT. OFF.
MICROFILM
BOLL NO.
203
Excerpt from Message of the President of the United
204
States transmitting Reorganization Plan No. III
TREASURY DEPARTMENT
April 2, 1940
INTER OFFICE COMMUNICATION
DATE
The functions brought together in the Fiscal
Service are all closely interrelated and are essential
TO
Mrs. Klotz
March 2, 1945
parts of the general functions of financing and fiscal
control. The internal organization of the Fiscal
FROM
Mr. O'Connell
Service conforms to accepted principles of financial,
management and provides the framework for adequate
internal controls. At the name time, under the proposed
Mr. Ernst asked me to remind you to let him know
plan, these functions can be coordinated more effectively,
duplications eliminated, and a more efficient service
when the Secretary has spoken to Nathan Strauss.
provided. To assure continued effective management of
this highly important and technical phase of the Treasury
functions, I am placing the Fiscal Service under the
supervision of a career official. The plan, therefore,
provides that the Fiscal Assistant Secretary will be
Jusych 20
appointed by the Secretary of the Treasury in accordance
with civil-service laws and will perform his duties
under the general direction of the Secretary. This is
in accord with the policy of this administration of
bringing higher administrative positions within the
career service. The creation of the office of Fiscal
Assistant Secretary will not increase the number of
Assistant Secretaries in the Treasury Department since
the plan expressly provides for the abolition of one
of the three existing offices of Assistant Secretary.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT MICROFILM
BOLL NO.
205
206
TREASURY DEPARTMENT
Song Writers Luncheon - March 3, 1945
INTER OFFICE COMMUNICATION
DATE March 2, 1945
ASENDA
TO:
Secretary Morgentheu
(Mrs. Morgenthau to preside)
FROM: Tod it. Gamble
Julian Street, Jr.
1. Mrs. Morgenthau - Welcomes guests and introduces Secretary
Morgenthau.
2. Mr. Morgenthau -
In reply to your nemorandum on the Song Writers
Luncheon tomorrow (Saturday) et 1,00 P.N., attached are
A. Thanks the composers of popular music for what
an agenda and notes on the eleven song writers who will
they have done for the War Bond Campaign.
attend.
B. Explains that the War Bond Campaign is more than a
The purpose of the meeting to to enlist their aid
selling program. It 10 an outstanding evidence of the
for e Seventh Tar Loan transcribed series of fifteen-
unity of the American people.
minute radio programs and to get their Idens for other
ways in which they can be useful to the Bar Pinance
C. Asks song writers present if they will not help the
Program.
Seventh Yar Loan and suggests they cooperate with
Treasury in forming a similar song writers' committee
The attached agenda, on which Nra. Morgenthau has
in Hollywood.
been consulted, outlines the four principle topica which
you may wish to mention in en informal talk.
D. Points out need for DOR war effort songa and desire,
if possible, for a new Mar Bond song.
3. Mrs. Morgenthau - Introduces Lt. Levy,
4. LA. Levy - outlines plans for Treasury fifteen-minute trans-
cribed series,
PLAN: Top name singer to interview top name composer.
Orchestra to play medley three of his best known
songe; one to be sung by vocalist. Program to wind
up with new war song related to theme of patriotism
or sacrifice. Transcribed programs to be sponsorable
locally. will be produced by outstanding radio
writers and directors under LA. Levy's direction.
5. MER. Morgentheu - Introduces Mr. Gamble.
6. Ht. Gamble - Explains importance of Seventh War Loan and contri-
bution song writers can make - mentions War Bond songa written by
Losseer (Road to Victory), Razaf (That Mar Bond Man) and Johnson
(That's Why I Buy Bonds).
7. Mrs. Morgenthau - Thanks Mr. Loesser for his help in organizing
meeting.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT ass, M. & PAT. OFF. MICROFILM
ROLL NO.
208
207
SONO WRITERS LUNCHEON - SATURDAY, MARCH 3, 1945
- 2 -
Date 89 Queste
8, Mr. Replies for song writers.
(Note: Most of the song writers present are lyricists rather
than composers.)
9. Mrs. Morgenthay - Adjourns meeting to Projection Room at 2 P.M.
DOROTHY FIELDS - (Daughter of Lev Fields of Weber & Fields.
Author of librettos for many musical shows including
the current hit Up in Central Park, first libretto
# # #
Lew Leslie's Blackbirds.)
Has written lyrics for following songs:
"I Can't Give You Anything but Love* (Blackbirds)
*I Must Have that Man* (Blackbirds)
"Exactly Like Iou" (International Revue)
"On the Sunny Side of the Street*
*Lovely to Look At" (film Roberta with Jerome Kern)
*I Non't Dance" (film Roberta)
"I's in the Mood for Love"
"The lay You Look Tonight"
JOAN WHITNEY - (Used to be popular singer. Sang at Mayflower
Hotel in 1938. Has teamed up as lyric writer with
ALEX KRAMER, composer, who is also guest at luncheon)
Has written lyrics for:
"My Sister and 1"
"High on & Windy Hill*
"It's Love, Love, Love"
"Candy"
ALEX KRAMER - (Composer)
Wrote music to songe listed above,
**LEX BROWN - (Lgrie writer with encrmous list of hits to his
credit. Wrote words for songs in Scandale, Flying
High, Good News; Notion Pictures "Sonny Boy, *Sunny
Side Up".)
Recte words for:
"Last Night on the Back Parch*
"Ob, By Jingo"
"Annabelle"
*Whose Issy Is He?"
. Seated beside Secretary Morgenthau
-- Seated beside Mrs. Morgenthau
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/
NO. W. PAT. OFF.
MICROFILM
ROLL NO.
209
210
- 2 -
- 3 .
*I'd Climb the Highest Mountain"
JOB METER - (Composer)
"Don't Bring Lulu*
Nust a Memory"
Songal
*Sonny Boy* (Sonny Boy)
"You're the Cream in my Coffee* (Hold Everything)
"California, Here I Come*
"I's on the Crest of the Nave* (Scandals)
"Clap Sands, Here Comes Charlie*
*My Song" (Scandals)
*Crasy Rhythm"
"Life is Just & Bowl of Cherries" (Scandals)
*I Wish I Here Twins"
"Button up Your Overocat* (Follow Through)
"If I Bad a Talking Picture of You" (Sunnyside Up)
HERMAN HUPFELD - (Mriter and Composer)
"I Want to go There You Go" (Good News)
*Thank Your Father* (Flying High)
Songa:
**FRANK LOESSER . (Writes Words and Music)
"As Time Goes By"
"Mhen Tuba Plays the Rhumba om His Tuba"
"Small Fry*
"Let's Put Out the Lights and Ge To Sleep*
"Two Sleepy People*
"Sing Something Simple*
Vingle, Jangle, Jingle*
"I Get the Neck of the Chicken
SGT. HAROLD ROME - (Writer and Composer -- Pins and Noodles
"Praise the Lord*
Länchtime Follies, Stars and Gripes)
"Private First Class Mary Brown" (This is the Aray)
"Lat's Get Lost"
Songe:
"In My Arms*
"That do You do in the Infentry"
*Franklin D. Roosevelt Jones"
"Rodger Young*
"My Heart Sings"
Note: Losseer also wrote "Road to Victory" for the Neg Finance
ROBERT SOUR - (Writer and Composer)
Campaign.
"Body and Soul*
L ROSAMOND JOHNSCH - (Negro Composer and Lyric Friter)
"Practice Makes Perfect"
Walking by the River*
"Undermesth the Bamboo Tree"
*My Castle on the Nile"
liste' Johnson wrote special Sixth Noz Loan "That's Why
Bur Bonds".
ANDY RAZAF - (Negro Lyric Writer and Composer)
"Sposin"
"Honeysuckle Rose"
"Ain't Misbehavin
*Stomping at the Savey*
Note: Bazaf wrote words and music for Sixth Har Loan LORE
"The Har Bond Man"
**Seated beside Mrs. Morgenthau
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ NO. PAT. OFF, MICROFILM BOLL
NO.
BOEING AIRGRAFT COMPANY
211
212
SEATTLE WASHINGTON
March 2, 1945
MAN 2 1945
My dear Mr. Grafton:
It has been encouraging to see the con-
The Hom, Benry Morgenthau, Jr.
structive way in which you have handled the
The Secretary of the Treasury
Bretton Woods proposals. As usual, you have
Washington, D. C.
out through the irrelevancies to the core of
the subject, and you have made & rather com-
Dear Mr. Morgenthaus
plex subject understandable to the average
reader. That is so very important, for the
Thank you very much for your kind letter of
February 2h. I deeply appreciate having had the
public must be brought to a full understanding
of the vital issues which confront the world
opportunity to participate in the February 18th
If we are to have real democracy in America.
program with you.
Thanks again, and best wishes for the continued
We shall be glad to supply you with any
success of your endeavors.
available information on the subject which
may be of use to you. If you should wish to
Sincerely,
talk with some of the experts on the subject
ruhu E.C. Wells
in the Treasury or in the Department of State
and other government agencies, I as sure that
could be arranged either in Washington OF in
New York. Please call on us for any assistance
that we can render to you and to The Post.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
fort
Mr. Samuel Grafton
The New York Post
New York, New York
RVeatch:JHRF:Eg
2/23/45
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
PAR. OFF.
MICROFILM
ROLL NO.
213
214
- 2 -
MEMORANDUM FOR THE SECRETARY.
Memorandum for the Secretary.
March 2, 1945.
March 2, 1945.
Mail Renort
14 reports of delays in receiving bonds purchased
by service men. Two donations were addressed
directly to this office and 4 rather large ones
The stepped-up pace of last week's mail con-
were transmitted by the Navy.
tinued through this week, with several current
matters bringing in interesting comment. Reactions
The short month of February was also a low
to the Treasury's support of the proposal by the
one in mail receipts forwarded from the White House.
Federal Reserve Bank to control inflation by taxing
In all, 214 pieces of mail were received, 140 of
stock profits, etc., are given in 8. separate section
which were rerouted within the Treasury, and 69
of the attached abstract -- obviously, the score is
handled In the Correspondence Division.
against the Treasury. Correspondence about the
Bretton Woods plans was pretty well limited to re-
quests for further information or for simplified
explanations, with only now and then an expression
FEForbush
of approval or disapproval.
Further comments on the radio program "We, the
People" were for the most part friendly, but only
half of those regarding the address before the Council
of American-Soviet Friendship were favorable. Four
additional copies of the editorial "An Insult" by
Benjamin de Casseres were forwarded, three endorsed
by the senders and the fourth protesting it. The
midnight curfew imposed by Mr. Byrnes provoked a few
of the usual "no-more-bonds" refrains. The very
recent picture of the four Marines planting the flag
on Mt. Suribachi caught the attention of 8. number of
persons who asked that it be used 8.5 a bond poster
for the coming Drive.
Other mail, about both taxes and bonds, WES of
average volume and quite routino. There were but 3
demands for tax refunds, 5 bonds for redemption, and
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
V. s. PAT. OH.
MICROFILM
BOLL NO.
215
216
- 2 -
Favorable Comments on Approval of
Federal Reserve Statement
Unfavorable Comments on Approval of
Federal Reserve Statement
N. M. Klein, Rafalklein Incorporated, New York City.
I am in favor of your suggestion to freeze all real
A. Frank Greenhall, Rumson, New Jersey. You have
estate values and stock exchange securities until
indicated your approval of the proposal of the Chair-
after the war. I an engaged in real estate work
man of the Federal Reserve Board to levy a prohibi-
and see the evils of permitting runsway prices to
tive tax upon depreciation on farms, homes, and
prevail, with the real danger of inflation. e - e
securities. This is most interesting to me as a
À celling should be put on everything. e e . If we
home and security owner. There would be little or
are to hold labor to a pegged price, then it is only
no incentive for me to attempt to improve the value
fair to hold capital to a pegged profit; otherwise,
of my property, nor would there be any value in using
one or the other will tear away from its safe mooring.
discrimination in the selection of an investment in
Inflation would be a major victory for our enemies,
a growing industry. Your motives are appreciated
and we are getting closer and closer to it. As some-
one remarked, "Brosdway is New Years every night, with
but the proposed method would do more harm than good.
spending at all-time high". If I, in my small way,
can help, I would be most willing.
Hugh W. Sanford, Fidelity Building, Knoxville, Tenn.
The recent suggestion by Mr. Rocles, which I under-
stand has been approved by Mr. Morgenthau, that some-
thing should be done to stop people from making money
on the rise in the selling price of stocks has filled
me with dismay, and I think has had the same effect
on a great nany other people in the United States.
The psychology of the investor is being hanmered
into pessimism, it would seem, on every occasion
when the investor has some reason for being slightly
optimistic. R Just at the time when we had hopes
that enough interest would be shown in the stock
market to bring us back at least to the 1937 level,
where we could get out without a loss and perhaps
make a few pennies, we are informed that you two
gentlemen are going to try to do something to prevent
the stock market from going higher, and are ready to
propose a measure by which the profit on increased
values of stock will be very heavily taxed. This is
quite contrary to what I regard as the wiser practice
of England and Canada to place no tax whatever on
capital gains, and it seems to be done with the Idea
of keeping people out of the stock market. e
Personally, I think that all this la & great mistake,
217
218
- 3 -
- 4 -
and I think that anything you gentlemen do to dis-
Tom Connally, Yonkers, New York. M. E. Ecoles' sug-
courage the business man worse than be is already
gested tax on "securities speculation" is highly
discouraged by what has already been done is a mis-
discouraging to the American people who are looking
take. e 9 45 Therefore, I hope that you gentlemen will
for 8. safe place for their very haré earned reserve
reconsider the question of taxing capital gains, and
funds. I wish to make a counter suggestion and that
instead of increasing the tax, I hope that you will
is that we resolve to "throw overboard the Churchill-
follow the English and Canadian lead and out out
Roosevelt doctrine of unconditional surrender of
this tax altogether, which to my mind would be a. far
Germany and Japan". Any sane man knows that this
wiser course and would be for the benefit of the
objective is costing us much more than its worth.
country in the long run. ...
Furthermore, you cannot deny that we are now fight-
ing for Russia -- surely not America.
Henry A. Pierce, Jersey City, New Jersey. Really
your office does the wrong things at the wrong time.
Robert S. Charlton, Brooklyn, New York. I an some-
I cannot understand your attitude toward the stock
what nonplussed by the proposals of Mr. Ecoles, which
market at this time. As one who has saved a little
seen to have your approval, to tax stock profits and
money, I am naturally interested in conserving its
to reduce the gold reserve held against the issue of
value and not let it evaporate in inflation. I, like
paper money. First, if the gold reserve held against
others, have invested in stocks with the idea of
the issue of paper is to be reduced, what would that
protection against this menace, which doubles daily,
be other than inflation of a type we all are trying
due to decisions -- or lack of decisions, taken by
so hard to avoid? A tax on stock profits would simply
the Government. I once proposed to you the idea of
curtail stock sales. with margin accounts buttressed
a guarantee that all Government Bonds would be reim-
at 50% where is the speculation? If the average
bursed at the dollar value of their origin of issue.
trader can margin at 50%, he certainly can do the same
If the average price of commodities has risen 10%,
at 75%, or even higher. The proposals seem to have
20%, or 50%, such value will be added to the payment
been made without much practical sense. If common
of the bond when turned in. This idea W&S turned
stocks can pay investors 6 and 7%, why should they buy
down for some high-fandangled reason. Now there is
Government Bonds paying less than 3%. " - # Let the
one of two things. Either the Government hold prices
market climb, I say, until there is a sensible relation
by O.P.A. on all commodities with the idea of con-
between the prices of stocks and their yields, then
trolling inflation -- which you now have the power to
we can sell more Government Bonds in competition.
do -- or, you do not intend to keep down inflation
Just look st stock prices today and their yields
and therefore want no strings tied around yourself in
against the same in 1937 and you will find not in-
such guarantees, so you can permit inflation. As you
flation but the exact opposite. There is not one of
turn down such a good idea, I assume you eventually
the leading industrial stocks which is not now under-
might want inflation. e # 4 O.P.A. control of real
valued In relation to its peacetime possibilities.
estate is 5. necessity, I believe. The price of land
...
in the basic value of all things. When It goes up,
we have inflation. The stock market values are of
no importance. ...
Regraded
RECISION TRADE MARK MICROSTAT/ MICROFILM BOLL NO.
219
220
- 5 -
- 6
Comments on "No, the People" Broadcast
victories and lost enough good men that regardless
of their political beliefs, they are entitled to our
praise and respect. I have yet to hear the first
Favorable
Marine speak with other than admiration of the Red
Army's exploits. to e The Russian people and ours
James Forsythe, The Bronx, New York City. I was in-
can be and must be friends if peace is to follow
terested in your address over the We, the People"
this war. I wish you success In your forthcoming
broadcast on the 18th. There were rates of interest
talk, # #
on bonds you mentioned which puzzle me. I WILD speak-
ing to 8. friend who claims the rate is 2 9/10%; you
gave other figures. I could not make myself clear
E. C. Byers, Teacher, William Penn Senior Righ School,
to him and it is likely I quoted you wrongly -- the
York, Pennsylvania. Kindly send me 50 copies of your
spoken word over the radio is gone, unlike the press,
February 22nd address before the National Council of
it cannot be referred to. I would take it as a great
American-Soviet Friendship, If available, for our
favor if you will send me 5. copy.
History and English Departments.
Ira Platky, Atlantic Highlands, New Jersey. Would it
interest you to know that your M.C. job on "Ne, the
Unfavorable
People", in considered by many as & 'swell performance"?
The show itself was well done, but your contribution
should be a source of great satisfaction to you.
Mrs. E, L. Crider, Pasadena, California. ... I think
I hope it may soon again be our pleasure to hear your
the enclosed clipping is an insult to the memory of
dignified but thoroughly refreshing radio "work".
George Washington, whose birthday we revere. wish We
With well wishes for your continued success.
had more "American Firsters" like this writer. If we
did, we would not be In this mess today, "Old Glory
and Sickle and Hammer" -- well, that makes my blood
boll, what next?
Comments on American-Soviet Friendship Address
.....
Comments on Detroit Address
Favorable
Hume Wilson, Detroit, Michigan. Your scholarly speech
Pfc. John J. Hastings, U.S.M.C.R., El Centro, Calif.
at the Book-Cadillac here today Was a real treat for
As you can see from the enclosed editorial that great (?)
me. At my idle moments I think of the great burden
American, Hearst, doesn't think much of your address
upon your shoulders during this tragic war, and I pray
on Washington's Birthday. May I, as one of the plain
that the formula mentioned by you today will prevent
Americans, say I do not agree with his comments. Cer-
future wars. # # #
tainly the Russian Army has achieved great enough
D. E. Scott, Chicago, Illinois. If copies of your
splendid address broadcast February 26 are available,
please send me & copy.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
MICROFILM
BOLL NO.
221
222
- 7 -
- 8
General Comments
business is handled by lb. Ben Dexter, whose signature
appears on this check. Both of these men are members
John L. McMillan, Member of Congress, 6th District
of our Farm Bureau Organization and are good sub-
of South Carolina. 40 # * I have had numerous com-
stantial men. Mr. Miller has two sons who are now
plaints from residents of my District because they
somewhere in France, and he would prefer this money
were not permitted to purchase surplus war material
go to one of the hospitals in France, if at all pos-
just across the line in North Carolina. I will ap-
sible. This money came from lunches served at a
sale which Mr. Miller had st his farm. Therefore,
preciate it If you will give no some justifiable
reason sa to why a rule or regulation of this nature
in reality, of course, it has come from & number of
was placed on the surplus war material. I think in
people in his and surrounding communities and this
a Democratic country & person should be able to pur-
is the my that he would like to have this handled.
...
chase property from any Procurement Office In the
United States if he has the purchasing price. I hope
this rule or regulation can be regulated before it
causes our Bureauoratic Government to receive more
Rosenthal Brothers, Joseph Durbacher, Proprietor,
unfavorable criticism.
Rising Sun, Indiana. We read in the Cincinnati
Inquirer that the Procurement Division wants to buy
some out-of-date clothing for needy people abroad
Senstor Raymond E. Willis Indiana. # " " I am en-
from Wholesalers and Retailers. We made an offer as
closing a Chinese bank note, which I wish you would
per enclosed copy, and received the enclosed answer.
to th e Your offer must be rejected due to the fact
return, and ask you if the fact that part of the word-
ing on this note is in English, if there are any
that the quantity involved is too small to marrant
consideration in this program. We are will-
comi tments on the part of our Government with respect
to its solvency. Just what are, If any, the responsi-
ing to sell these clothes to reduced prices; if we
cannot sell then to the Procurement Office, we have
bilities of the United States, and what connections do
to sell them to some Wholesaler for 6. very cheap
we have with China which would impel that nation to
use English in some of the printing on a note?
price, and he, in return, can sell it to the Office
with profit -- at our cost. Do you think your Office
is treating the small merchant fair? You want us who
Leslie B. Broome, Farm Adviser, Pulaski-Alexander
are called the backbone of the Country to buy bonds
Farm Bureau, Mounds, Illinois, Enclosed is n. check
and pay all kind of taxes; we are not too small for
for $50.00 NS a contribution which the donor would
this, and what treatment do we receive for it? The
like to go for the purchase of records, cigarettes,
small merchant cannot buy any merchandise any more,
and if there is a chance to realize some cash to
and other things which the wounded men in hospitals
need and would like to have. This money is being
bridge him over these troublesome times, he is turned
contributed by Mr. Arch Miller of Pulaski County,
down because the Item is too small. We can assure
Vilin, Illinois. However, he cannot write and his
you, Mr. Secretary, the item is not small for us; we
bought bonds in every Drive, but if we cannot buy any
now merchandise and cannot sell the old, we are unable
to buy any more bonds, much 0.8 We hate to be forced
to act this my.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
REG. PAT. OR,
MICROFILM
ROLL NO.
223
224
- D -
- 10 -
Unfavorable Comments on Bonds
Robert Shorman, President, Washington Industrial
Union Council, Washington, D. C. Last evening
Mr. Edward Bernatein of your Department gave 5. most
E. N. Clark, President, United Home Bank & Trust Co.,
informative and stimulating talk before our organi-
Mason City, Iowa. I prosume I tim just wasting my
zation on Bretton Woods. The meeting mg n. Conference
time in writing this letter N.S. it will probably be
on Dumbarton Oaks and Bretton Woods for the purpose
consigned to the maste basket by some underling, but
of informing our londership on these important mat-
even if it should reach someone in authority, he
ters so they may function nore effectively with
probably would give It little attention as it comes
their membership. be feel that you are doing a
from & smill town banker in the Middle West who is not
great service to the Nation In having such capable
presumed to know very much about the affairs of finance
persons as Mr. Bernstein present the subject to the
and the State, and being from the Middle West, of course,
people.
is presumed to be complacent, not really knowing that
there is a War. The mere fact that the Middle West has
bought more bonda in accordance to its population than
David Greenberg, San Diego, Callfornia. On February 21
has the East: and the mere fact that thousands of its
I walked Into the Security Trust & Savingo Bank,
sons, brothers, and fathers have lost their lives or
Sen Diego, California, and asked the teller to change
5. $20.00 bill for four rolls of dimes. He refused to
are now away in the service of their country does not
give me this service when I told him I did not have
seem to convince people that the Widdle West is other
than complacent. Homever, here goes -- I have read in
an account there, and referred zur to the head cashier
who, In turn, informed me that Insurach as I had no
numerous newspapera and magazines that the Honorable
account with their bank, it would be necessary to
Secretary of the Treasury is considerably concerned be-
place 5. service charge for this accommodation. 1 have
cause the banks seen to be buying the 25 War Bonds.
always been under the Impression that there Le never
It is the opinion of the powers that be that the rate
of Interest is too high and that similar bonds in the
a charge for money exchange. e " u
next Drive should only bear interest at the rate of
13% per annum. The fear being that because of the
purchase of these 2% bonds by the banks, inflation
my be the result. To 5. limited extent that might be
true, but the danger of inflation that will be caused
by the Government issuing 10-year 25 bonds rather than
10-year 135 bonds is so omall as compared with the
danger of inflation caused by many other agencies,
such no these Government agencies that are continually
being organized for the purpose of making large loans
to farmers, to businessmen, manufacturers, and every-
one else, and while they are making these loans that
should legitimately be made through banks using up
those large deposits, the money remains unloaned, and,
course, it is G. constant temptation to the banker to
Regraded Unclassified
PRECISION
TRACE MARK
MICROSTAT
MICROFILM
225
226
11
- 12 -
Unfavorable Comments on Taxation
buy anything that will, within reason, keep the money
busy. # 4 - This present Administration has taken
many wise steps to protect banks against any recur-
J. M. Miller-Aichhols, Danbury, New Hampshire. Several
rence of the troubles following World War I, never-
years ago, when I earned considerable more money than
theless, it is desirable and necessary that large
today, I purchased, in anticipation of my future tax
reserves should be set up and if they cannot earn the
liabilities, quite a few of your tax anticipation
money by buying the bonds, or because of undue Govern-
notes. I still have a few left, although they have
ment competition in the banking business, they cannot
reached their maturity. My tax this year was $78.00,
set up these reserves. The FDIC cannot bear all the
50 I sent them a $100.00 bond and asked them to hold
burden that will be theirs to bear if these reserves
the balance until the final tax for 1945 could be
are not set up. Then too, there are retired people,
determined. The agent sent the bond back, quoting
widows, etc., who are dependent on the returns of their
a ruling from your office that no bonds should be
small amount of earnings to live. Because of so many
accepted in excess of the tax due. Now this seems
various loaning concerns, the interest rates are down
unfair to me, as when I owe you money and pay you
to a point where investments pay but little and where
with & note, where you owe ne money, it should be
there are practically no loans to be made outside of
accepted and the balance refunded or credited, or
Government Bonds, and if you out down the interest
there should be & way to have By bonds split into
rate on these, I do not know what these people will
small denominations. Will you please let no have
do, as some people barely get by now. I know that
your opinion and advice on this matter?
this is not a convincing argument to people with the
weight of the Financial World on their shoulders, but
nevertheless it is real to the common herd of bankers
Morris W. Lindquist, Detroit, Michigan. I am a married
in the Middle West and I an inclined to think all over.
man with a wife and six children. Therefore, you will
I have heard a lot of them talk and they are not so
understand my need in the following. I filed my 1943
hot about this idea of reducing the interest rate on
income tax return in January 1944, and found & sizeable
10-year bonds from 2% to 1%, simply because there is
refund due me. Due to outbacks on the defense program,
n. demand for these 2% bonds by the banks and by in-
my pay checks have been rather small, and I have been
vestors generally. Well, I presume that this spasm
unable to keep up my furniture payments. This furni-
will slip from my mind to the waste basket, but nover-
ture will be repossessed in 7 days unless my payments
theless, I will spend three cents to send it in.
are made up. Now, in view of the fact that the
Treasury Department owes me & refund from 1943 as well
as 1944, I would like to know why I don't receive my
International Association of Machinists, Local 1426,
1943 refund. Some of my neighbors received their re-
Sioux City, Iown. (Telegram) Two years ago the union
fund as early as last September 1944. 9 # #
employees of Albertson & Company voted unanimously in
fevor of bond payroll deduction. Four months ago at
signed me jority carried favorable 5 to 1 for bond
deductions. Still no cooperation on company parts.
Suspect coereion and deliberate delay. Check im-
mediately. Yours for Victory.
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT NO. 1. PAY. ORI. MICROFILM
ROLL NO.
227
March 2, 1945.
Memorandum
TO: Secretary Morgenthau
FROM: Mr. Gaston
The special investigation by Irey in Miami looks
rather promlsing. He is working with Palmer, Chief of
the Intelligence Unit at Atlanta, Collector Fahs and
the Revenue Agent in Charge of the District and is also
being assisted by the other enforcement agencies. They
have listed a fairly large number of persons spending
freely in Miami and are having their returns checked at
their homes. Yesterday they gave out 8. story to news-
paper reporters who have been hounding them as a result
partly of Drew Pearson's broadcast last Sunday night.
I think it will get a play and have a good effect.
One of the banks has informed them about an unusual
transaction. A man who gives his name as Dr. Anselmo
Alliegro of Havana, Cuba, opened an account in the First
National Bank of Miami on December 15, 1944, with & de-
posit of $4,000. Last Friday he made a cash deposit of
400 one thousand dollar bills. Most of the bills were
new, were consecutively numbered and bound with currency
straps. Alliegro was 6. member of the Cuban House of
Representatives in the Machado regime, but fled at the
time of the Batista revolution. Alliegro's current
balance at the Miami First National is $551,000. We are
checking on the matter just on general principles.
Mr
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
sou
NO.
228
229
BOARD OF GOVERNORS
Yet these profits are just AS much . result of var expenditures
OF THE
FEDERAL RESERVE SYSTEM
us une high individual and corporate incomes which are subjected to high
wartine tax rates. The inequity of this situation 18 the more pronounced
because the benefit of the tax differential accrues only to those in the
higher income brackets. The smaller income taxpayers can derive no tax
FOR THE PRESS
benefits from it. Large operators, however, -- so-called shart money --
are taking more and nore advantage of the opening, and this is a principal
For release in norming newapapers of
factor at present In bidding up Nal estate, stocks and other capital values.
Saturday, March 3, 1945
It is hot the bons fide investor or the small taxpayer who is applying this
March 2, 1965
upward leverage to prices of capital assets. This 18 speculation -- not
Investment. It 10 speculation in basic essentials such 63 homes, or fame,
STATEMENT BY MARRINEN a. ECCLES ON A CAPITAL GAING TAX
or in stocks representing business investments. It adds nothing to national
muslth. Such forma of gambling as betting on horse races or playing slot
TO CURB RISING PRICES OF CAPITAL VALUES
machines do little economic damage. But speculating in the things that
people need and use, spoculation that loads to disruption of production and
Nhen questioned by members of the Senate Banking and Currency
employment, is the worst form of gambling.
Committee last week as to what could be done to prevent further inflation
of capital values, : reiterated my opinion that the nost effective single
4. The proposal : have In mind would simultaneously reach und
instrument would be a wartine penalty rate on capital gains. Since the
discourage all such speculative transactions, whether in homes, farms,
proposal, which vas only briefly discussed before the Committee, list been
stocks or commodition, and whether based upon sredit or cash -- and would
widely misunderstood and misrepresented in some quarters, I feel that I
do 10 without Interference with normal, nonspeculative transactions, whereas,
should outline what I advocated and why,
if credit restrictions alone were applied, they would fail entirely to reach
CA48 transactions for speculative purposes and would interfere with legiti-
I did not propose any change in the present capital gains tax.
nate, nonspeculative cradit transactions. The bons fide investor would not
My proposal would apply only to the sale of capital naseta (sin defined
be deterred either now or in the reconversion period by the proposed tax,
under the present Law) acquired during a period to be fixed by Congress.
for he puts his noney into 6. from, or into stocks of sxisting or of new
My suggestion vas that this period be from January 1, 1945 until such time
enterprise for the purpose of obtaining current income and for long-range
as inflationary dangers have passed, which night be two, or possibly three
appreciation of values. It is the speculator, not the investor, who puta
years after the war. This special wartine capital gains tax would not be
money into capital assets in anticipation of a quick rise in price from
superimposed upon the existing tax, but would apply only to sesets pur-
which a. apeculative profit can be realized through selling before the price
chased during this period. It would not apply to real estate, stocks or
breaks. However, should the investor be obliged or desire to sell while the
other assets acquired at any time prior to January 1, 1945. These assets,
warting rate is still in effect, he would not be injured, since he load not
if sold, would continue to be subject to the existing capital gains tax.
purchased in anticipation of selling in order to make a. speculative profit.
The special tax I have in mind would impose a 90 por sent rate on capital
In any event, under the proposed tux, he would be permitted to retain a
gains derived from the sale, within two yours, of capital esseta sequired
profit of 10 pur cent, or nore, depending on how long he held the asset,
during the specified period, thereafter it would diminish by 10 per cent,
5+ To the extent that the proposed tax would discourage surplus
or nore, annually until equal to the existing rate, Capital losses In-
cyrred on transactions subject to the special rite would be deductible
funds from going into speculative fields, to which they will be attracted
against profits.
so long na prices are rising, there will be that much more available to E°
into Government securities where they should Cº to help finance this var.
The special tax, like any other anti-inflation control, should
It would appear from criticiams expressed by some of the financial press and
be discontinued when the need for it no longer exists, Since the purpose
market operators that they fear the tax would be affective in greatly re-
of the special tax is anti-inflationary, revenue 18 not the objective and
dueing buying activity that might otherwise develop. That is the purpose
the more effective the tax, the leas it would yield. However, such yield
of the tax. According to these critics, the proposed tax would dry up the
market because it would deter holders of capital assets From selling. But
M resulted would be based on rates in line with those imposed under the
it and not deter holders of assets acquired prior to the effective date
wartine individual and corporate income tax structure.
of the tax from selling, because it would not apply to them. It would de-
ter the buying and henne the bidding up of capital assets while the tax is
The reasons for such a special espital gains tax may be sumarized
as follows:
in affect, and that is exactly the result desired. It 1a the only way to
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
1. Capital values, as reflected in current prices of homes,
koop the prines of these nasets from being bid higher and higher until the
Carms, business properties and stocks, have increased sharply since this
bubble bursts. Nothing would be a greater deterrent to postuar reconversion
country entared the war, and are still increasing. If unchecked, this
than such an inflationary rise is prices, which would inevitably be followed
trend would undermine the entim price and wage stabilization program, with
by & deflationary collepse. Bence nothing would do more to wreck posteur
grave consequences to postwar reconversion. It would sexe war-financing
programs for full employment and economic stability on which B. leating pesce
problems more difficult and increase the cost of the war. It would nake 9.
depends.
rage of the hopes of millions of war veterans who are counting on being
able to obtain a home, or B farm, or to get started in business when they
o. The proposed tax is an essential wartine expedient, like
return from the front. Congress has encouraged this hope in the so-called
price, wage and other direct measures of control that deal with the effects,
0. I. Bill of Rights, and by providing dismissal pay and otherwise. Those
not with the causes, of inflationary forces resulting from huge deficit-
on the home front have an inescapable obligation to take whatever steps my
financing of the war. Had the public and hense the Congress been willing
be necessary to protest the values of homes, farms and other necessities so
to deal with inflationary causes, deficit-financing would have been held
that they will not be -hopelessly out of reach of the veteran's purse. There
to a sinimm by far higher taxes and by far greater economy and efficiency
are no war profits in that pures.
in war expenditures. Sonn of us urged that sourse from the outset, but
simoe it has not been followed, the only alternative is to denl with infla-
2. Mhile other sectors on the home front have been protested by
tionary effects by such expedients Bill are necessary to hold the line so
direct measures, such 6.8 retioning, allocations, price and wage controls,
long NA inflationary dangors exist. After reconversion, denand, which has
no effective controls have been applied to curb rising prices of homes,
ao vastly exceeded supply in wartine, should be net by fully employing our
farms, stocks and other capital assots. The wartine expansion of liquid
nandower and material resources in pricetine production, and creation of
assets pregents a vast and growing danger to those unprotested sectors.
further inflationary forces should be ended by greatly reducing public DR-
Currency, demand deposita and Government securities held principally by
penditures and by mintaining such taxes as are necessary to bring about -
individuals and corporations are rapidly approaching 200 billion dollars
belonced budget,
and have nearly tripled since we entered the ware This huge inflation
potential will continue to grow as long as deficit-financing continues. Un-
1 have received . few letters from civilians who fail to see why
loss effectivo action 18 takin to prevent Unde liquid fundo From incrowsing
should have either such disagreeable things 11 taxes sufficient to deal
inflating capital values, it will become nore and more difficult, if not
with inflationary causes or, alternatively, direct control measures neces-
impossible, to hold the line against inflationary price and wage increases.
sury to doal with inflationary affects. On the other hand, I have also re-
Veterans of the last war, especially famers, have not forgotten the infla-
cui vod a. number of letters from nen in the armed forces the hope, if their
tion and the conséquent ruinous deflation resulting from failure to control
lives are spared, to buy a home or a farm. They do see, with a clarity
a relatively small volume of liquid funda in the last var. The present
that should be & warning, why those on the home front should do whatever Le
volume of quch funda le already four times ns great wh it 119.5 in 1920. The
necessary to make this country's economic future secure, with all that por-
national dobt is nearly ten times larger today and in still growing.
tende for the passe of the world.
3. The post serious ENP in the line of defense against infla-
tionary forces LA the capital gains loophole in the wartine tax structure.
While Congress has provided sharply progressive surtax rates, rising to a
high of 91 per cent on indi vidual incomes, she n. naxime excess profits tax
of 95 per demt levied upon operating profits of corporations, the corres-
ponding curb liss been put upon capital gains, which continue to be subject
to prevar rates, with a 25 per nent naximum. This huge differential in
favor of the capital gains tax benefits only the larger eaxpayers. The
bigger they are, the greater the inducement today to dispose of or refuse
to put money into fixed Interest-bearing obligations that return only a
small yield and have little chance for a capital gain, and to put money
instead into capital assets, which, when sold en a rising market, yield
profits subject only to - capital gains tax of 25 per cent, or less,
Regraded Unclassified
230
TREASURY DEPARTMENT
231
EXECUTIVE THAN
National Government of China
INTER OFFICE COMMUNICATION
Room 4201
Waldorf-Astoria Hotel
DATE KG 140
New York, N. Y.
TO
Scoretary l'appliction
FROM
- Cos Fic
February 26, 1945
Subject: Streets or 22 23 Children
1. It. Ln of February 36, 1045. Losta
The Monorable Henry Forgenthan, Jr.
together with rely, regisate that the
Secretary of the Treasury
lest =: 47,800,000 of gold be apported to Co. In
Washington, D.C.
addition, be 01/20 City worly advice on the Dain
male on the minting of the 100 addition of gold 1
Tear The Secretary:
In use letter of Jenuary 3, 1945, 11% Date requested 110
million of gale La addition to the (100 million of interes.
You will recall that on several occasions we have dis-
2. linee the ribistion in COM -- remained fundementally
cassed the provision of mid for China, and that you kindly undertook to
the una and no taben place in the 10330
program, you +111 probably wish as continue the outder
excedi to this catter. Since shipments to China have been considerably
of promitting mly mill chipments of only to Dise, t
vill be regulled tat Amberador The Agreed do 200
slower than we feel necessary, I wish now to present the situation for
on the destrability of bulling firm 2030 reducts to
approximately the code magnitude - in the past.
urgent attention.
3. It in tat arrangements De vale
The chief present financial problem of the Chinese Gov-
the Army to to 2019 Cording the next tires nonths
above 77 million of 020 no- on ocreark In the Feteral
ement, as you min, is to finance its large and growing deficit. The
Reserve resk or ileu TOTAL me-half of rich must be
gold sopires in syment of tin expirts from China to tal
dovement surt mandle this deficit in such way that the inglation does not
the ved States. Hometon Administration the In-
formed na that the ext of 1020 addited no provide to
at cut of hand - since if tide took place, it would cause nost serious con-
tin exports is accontial by identido to production La
sequences to the war effort of China and would be very hurtful to the conduct
4. the angulated reply - Date - core not name 5.00 declar-
of American, operations against Japan in and from Cidra. Horeover, if Infla-
tive consitments but, the $100 na you will
do represent tives smally list -15 170 manualed
tion should perioualy mocelerate, this condition would undersine Crina's
in salting arrangements V.G the Any the expires no
rest 77 million of will with the must three months.
economic structure, impair internal statility, saice it much harder for Cidna
to reoccupy and restore the areas now in energy hands, gravely resper China's
reconstruction and progress in the next few years, and nake it much harder
for China to play the part in statilization and peace maintenance in the Far
East which its Government and people wish to play and which is desired by the
American Government and people.
PRECISION
TRADE MARK
MICROSTAT/ REG. U.S. FAT. OFF. MICROFILM
BOLL NO.
232
233
:
It is of visal importance, tierefore, to reduce in every
4:50 the central Date will act be able to sect its contrato
possible way the deficit financed through indiesse at unte ISSUA, For a
for document - unless shipments am enterfally expedited. is this commention,
little over 5. year, the Government has teen melling cold to realize Cidness
I danta the cubetance of . telegram the the work received 54
currency. In that way, the have sold frue the latter part of 1943 to date over
*Freward delivery miss of gold for - mare 61,720 tools,
total undelivered w to end of January 229,230. Stx mother deposits
900,000 ouncess (sonething over USVIDO aillion) -- which lave realized
(that to due May) with 223,501 tuels. Our experience shows that
for bost take tim senthe to arrive it Changlding, Derefore,
around CH616 cillion. Widdle exact finures are not at land, available data
- Suripe that arrangements may be cade for M least four right
assy. This will emaile as to have the Anerican hare sinted tate 5 and
indicate that this exem Le squivalent to senting like a auxta of the
20 tael mall born, La order to the deposite due in April, May and
June. arth forward delivery males sté deposits require suppline."
deficit in the period. The sale of old - tesm cost wiphi, and nas
Under present acuttions " is specially ungest to sell gold
definitaly prevented the inflation Date attaining - ligher level with
actively in Other. In the part half-gear De DIELO hudgetary extuation has begone
would have benn reached. It below to check increase of the rearnd
definitely sure withol. Gots the had Increased because of the progress of
price 10ml by diverting to purvise of mão certain none nich otherwise
Now MV, the operations if Die vertein Any, and the outley
would be seed to buy commonities to be celd for Higher prices,
of 1 - list Produce No and 25 the ten Seno not by
The American Government, in crust in hale Cline, made
milliory specialism, ou benefits the Invent certain taxes.
available 095200 willion of pola our of Use VERSOO million credit of this
4d advises Ins Chica della that the - expects to rely to à Isrge extent
2020, the first instalment van 11:20 million. informately, deliveries of
- miles = april of under to MM the e-main line. Stude the first of
gold to China out of this USE20 million have totalled only 1517,276,066.00,
2945 relate YES risks are repidy and the etaing tendency is continding.
including 40,000 ounces (out-tum being $811,399,947.99) delivered in Int York
our Intely las DENO that print +Lis are repidly in the that half of
to the Bank of England acainst a sindiar amount in India. letral sidgents to
Lie enterior year. 25 is particularly important, - - un actively ricing,
Crdina out of trie million sure only $83,876,117.12. Time, shipmente
to - in marries to sell 2014 to mmeg From the certify thereity leasening
have railen far stres of what is needed, Le L revilt, Lue Central we
the pend Ter of cirestating notas. The wordown - nas leep one
chilized to aubstitute forward sales for spot sales. A Wast service for ext
person and Edition and for the present 2024 sales are the with offective
gold developed, which the deverment could not motrol wine le lack of may
to assost It.
supplier. The black carnot price sur rale as tisen to around 21735,000 per
there to now an catine denand for gold in China.
ounce, whereas the agot price - though no recont sales DATE bern cade - renains
If sufficient 26 in Chican, the Dectral assic of China will be in
01/20,000 per oction. Teasure of lack of mis, im Tenances last rad to print
positive to nie its willing price Dor inld, the getting back larger issunts
and import more DOLME tas wain have been received, E nis and to the
of Chicago otherwise, benefit, the and cannot acutrol the price of
inflation.
gold. If the peice RETA to De raised without AD adequite supply on hand, the
"The Ordness ounes in comon - called the tool or 5/28 liane, Le ential to
1,00471 Troy himoon.
Regraded Unclassified
PRECISION
TRADE
MARK
MICROSTAT
MICROFILM
NO.
234
235
&
5
Mark market would only he griven to m Mater level with a had affect DE
for export reppiter to China, verther, 11 to our Intention to obtain and
confidence and upon the general order invel. At to orice policy, - Carl 11.
transport larger quantities of necessary goode - com at ARE communication
in important to rules the price is the hear future to rubstantially Lbe present
1115 China 18 re-opened. the urgency of military requirements,
level of the link market (CH835,000 per nume), Theresfter, our celling orice
I rent that 14 " to the Interest of the THE affort of china and the United
will be (p verned by the demand for (nin mind. the course of (Ters) prices.
Distem to ship large quantition of moh goods, incluse of the beneficial effect
In view of the urgmt need for gold in China, en are net
of this operation in retarding inflation and renoving the threet of discrginized
accident to send formate nt nace tor dr the hereace of
the extrain price mines thin, If they occurred, would cirrupt the Chinese -
(nay 364,000 nunces) of the using -111100, which in required at the -aritert
affort End alm make 15 very difficult for the Chinnee Covernment to afford to
pensible connt to not near deliveries and to THE spot nies. - wild,
the forem the cooperation which they require and with china Le
Sherefore, appreciate your good affroed 18 arrancing with the american Any Air
to give.
Transport command for much dispens. Also - will the to have If further
AS precent, 5 request from the Cidense Government to procure
amount of my 500,000 minced (65417,500,000) 2° ar seen " constitutive
and ship to China about 20,000 tean of enkten textiler :- penting before the
by air to mable the central of chine th net Nother neur delivarise and
authorities concerned. I very much hape that you will Ave your valuable
to mine npot reles. In addition, - will 15km to this at case 500,000
supports to Unio and other proposale for of goods, in order that me may
(85$17,500,000) by the to met later dispute cherild
obtain the gode and the transport required.
he edapted to neede in proor to areid again ruming most of old - China,
I -1** Heally to min to the pla solcone of 1 mince,
1 fully realize of limit this nale of gold 15
I nunes, end our denotinations to be mde in the Anordom elote, which yes
financial expections which should not accionally The 12 m, mail 15 in mily the
vill recall se have discussed and insurance of which 19 in accordance with your
present membership that this policy. We <10 to Voter off not náme-
The destine approved for there tokenn were rade with a view to
time the ride of geld after goods, appeaially cotton bettler, orgin
commentating respersion between China and the United States. Ne are very
10 read. Cidne in good volume, IS 10 the priday n° the chinne- Government to
and/or that there tokens be completed and shipped as soon as possible, in order
obtain abroad and stap to Cldre united goods - no of pro-
to obtain Name maxsmer benefit through broadening the mirket. Obviounly, gold in
curesent und transport penus. In thise my, the infiation will le checked neet
the form of ordinary here in not edaptable to ready distribution; tokens
effectively first, by adding to the repuly of necessary goods, and secont, by
such as there would be videly distributed whong the public in China. It mis
realizing from their rale en the larie of current market prices large mounte of
stated 10st fall that 15 107 expected that production of the tokenn could be
Chinese currently which can be applied in meet the definit and the obviate the
negion #0000 the end of 18e? Devember. T with approviate werly service all
need for retying to that extent on Increased note-decus. The opening of the
to hew the preparetion of these takent " progressing md how moon are my expect
Vitilwell mad", together with She growing volue of air transport 1997 the There
and the progress of the off nipe-tine, greatly nose to the svailable especity
Regraded Unclassified
237
-
6
236
TREASURY DEPARTMENT
deliveries.
INTER OFFICE COMMUNICATION
DATE March 1, 1945
I shall ettch appreciate favorable notion on these nations
as soon as possible. I repret that I - temporarily wards to sest with you
TO
detentary Registered
In person to discuss these latters, because of receiving medical In
FROM
- Rise HPW
hospital. I shall, homever, delecate representatives to arrange details
proplet :10 affilion Benk bon to
with the officers of the Treasury.
crimate Didness firm.
with personal regards and rood idaline, I -
1. The Bunk has under consideration sa sould-
cotton a Uniness private to Claim, the Yungli Chemical
Industries, 160. for : loon or 116 million to be guaranteed
Tours recentary,
by Cia Chinese 17 in approved Chinnes banker The
are to be to linesse ", S. dollar expends-
these for construction end naintanance of charled plants,
winly to 20 post-ter person. opficiate of the Suport-
TT. E. Know
benet Mart It and State lave streety initiated mair
no the
DE 2,479 - to 150 10 result to Wills request.
Deject DU one : propose to reply Shat Security
- cut :- less should 30 grasted at Via time not to
will - - DPD - of
0. THE -
(a) the - - mole . 3. coller Cande
No. sill to interved ...
in accept 2022 2315 France our be provided
Ln - open -
(ii) their - Last La persure. DE conservial
DUD the Just at present end nont of the
required drait is admitably to be reed Liter
= -
(=) - grating of 0,14 1 mell be discriminatory
tai in Cuine
- 17 JOE in Cuver = Comment
and - Carefine dannes to the mised States.
- the President 95 the
mall ... /En diniton, to represent
The at the replet into = Home! business con-
et Rye, law Tax and DIA company se received
want provided
12) the rest and williams signation in
China - any prévate loan E. viry serious risk
at -
copyahah
2/28/15
Regraded Unclassified
ICROSTAT
RIG. M. FAT, OH,
MICROFILM
ON Thow
12"
R
MAR 8 1945
Dear Mr. Effland:
This 10 in reply to your letter of Teleruary 26,
1945 attaching world to the Board of Trustees
of the Export=Import Bank recommending approval of
& request from the Tengli Chemical Injustries, Ltd.,
for a loan of $16 million.
I feel that the lean should not be granted at
this the and I - attaching a setting
forth - of the reasons for this decision. I -
therefore returning the original assorandias without
my initials. Thank you for sending & copy for my
files.
Yours wry truly,
H. D. White
H. D. White,
Assistant Secretary.
Mr. Richard W. Effland,
Secretary, Export-Zeport
Dank of Washington,
Washington 25, D.C.
Enclosures.
Okinh
1SF INF/ere 3/3/45 FL. PUNY
RECISION
TRADE MARK
MICROSTAT
PAT.
ON.
MICROFILM
ROLL NO.
239
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Mar. 8, 1945
TO
Secretary Morgenthau (For information)
FROM
Mr. Coe F.C.
Subject:
Negotiations with the French to incuoe them to provide
special facilities for U. S. troops to offset the bad
effect of high prices.
1. About January 15 we discussed with Mr. Valensi, French
Treasury representative, the antagonism developing among the U.S.
troops in France over the high prices prevailing for the things
the soldier buys. 40 suggested that the French Government consid-
er the possibility of providing services for American troops at
special prices and to take other messures to alleviste the growing
discontent of the American soldiers. Mr. Valensi cabled his Govern-
ment to consider these problems.
=
2. On February 8, Valenal reported that the French Government
had replied to his cable but evidently die not understand the prob-
len. He planned to discuss the matter in Farle during the following
week.
3. On February 27, Valensi returned to machington and unld that
the French Government had given full consideration to the proposals
but found great difficulties in taking action. However, the French
Government NOS giving further consideration to the matter and would
report its conclusions to kr. Valensi.
I also nsked Mr. Ponnet If be had discussed the matter in Peria
and he said he had not, referring to conversations with Secretary
Morgenthau and Mr. white 6.0 justifying his not having taken action
himself in Paris.
4. Mr. Valenai promised to give the Treasury & full report on
his discussions in Paris but ne should take the next step only after
he has given us his report shich should be In the next few days.
copy
r
the
duecloy
green
May
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT/ sso, u. S.PAI. OFF. MICROFILM
BOLL NO.
H240-
241
TREASURY DEPARTMENT
EXECUTIVE OFFICE OF THE PRESIDENT
INTER OFFICE COMMUNICATION
WAR REFUGEE BOARD
DATE March 2, 1945
WASHINGTON 25, D.C.
OFFICE OF THE
TO
Secretary Morgenthau (For information)
EXECUTIVE DIRECTOR
FROM
Mr. Coe F.C.
March 2, 1945
Subject: Loan for Greece
The Finance Minister and several other officials
in Greece have several times mentioned to our representa-
My dear Mr. Secretary:
tive, Patterson, their need for loans or credits. None
of these requests is formal enough or well enough based
I an forwarding to you herewith the
to require any answer from here. They are but one of
sany signs that the Greek Government is confronted with
proposed minutes of the sixth meeting of the War
problems which it does not yet know how to solve.
Refugee Board.
The approval of these minutes will be
on the agenda for the seventh meeting of the Board.
Very truly yours,
William 01Dwyer
Executive Director
The Honorable
The Secretary of the Treasury
Enclosure.
Regraded Unclassified
PRECISION
TRAGE MARK
MICROSTAT/
PAT.
OFF,
MICROFILM
BOLL NO.
243
KINUTES OF THE SIXTH MEETING OF THE
VAR REFUGEE BOARD
not Deen net. He also stated that no had requested the group to
cease using communication channels other than those of this
Held in the Office of the Secretary of War, 3:15 Pollo, Wednesday,
Government.
February 88, 1945.
Roswell MoClelland, the Board's representative in Bern, has
Present: Secretary of the Treasury Morgenthau (noted BE
reported that Musy's reputation is that of A Naziphile on anti-
Chairman)
communist grounds and that he 1a interested in obtaining a cod-
Secretary of War Stinson
promise peace for Germany. Musy 18 also concerned over the
Acting Secretary of State Grew
rehabilitation of his personal political reputation in Svitzer-
Assistent Secretary of the Treasury Gaston
lond. He claims to have arranged for the release of the 1210
Assistant Secretary of War McCloy
Jewe with Himmler personally, supported by General Schellenberg,
William O'Dwyer, Executive Director, War Refuges
one of the top triumvirate under Himmler. Husy has stated that
Board
the group of 1210 is the first of a series of like convoys to
John Pehle, Accistant to the Secretary of the
follow et intervals of one week.
Treasury
George Warren, Boecial Advisor on Refugees to
Further arrivals, however, were unid to be conditioned on the
the Secretary of State
deposit of 5,000,000 Swine france to an account in Musy' name at
Florence Hodel, Assistant Executive Director, War
the Swiee National Bank, the funds to be supplied by Sternbuch,
Refuges Board
the Swies representative of the Union of Orthodox Rabbie, The
reason for this payment is not at all clear. Musy has stated that
At the request of the Acting Chairman, the Executive Director
the money would remain in Switzerland. The Board's representative,
explained that this special meeting had Deen called in order that
McClelland, has reported, however, that Musy's acceptance of
the members of the Board might consider, in the 11ght of all avail-
noney for himself would not be consistent with his desire to play
able facts, an application of the Vasi Rahatzala Emergency Committee
the role of heroic resoder and great humanitarian. Sternbuch
of the Union of Orthodox Rabbie of the United States and Canada to
claims that the funds must be sent to him in order that the fur-
remit $937,000 to 110 representative in Switterland, Issee Sternbuch.
ther release of Jews in Germany will not be forestalled.
The facts of the case were stated as follows: on February 7,
The Executive Director exclained that, while the information
there arrived in Switzerland 1810 Jews from the Germen concentre-
available does not clearly indicate the reason the funds are de-
tion camp at Theresienstadt. The Swine press carried notices
sired in Switzerland, it 1s conceivable that legitimate expendi-
that these refugees had been released as the result of personal
tures, such es transportation charges, maintenance and care of
negotiations with Himmler conducted by former Svise Federal
refugees, etc., might be involved in connection with the release
Councillor, Musy, at the request of the European executive council
of detainess from Gernan territory. In view of the foot that
of the Union of Orthodox Rabois of the United States and Canada.
there 1e no clear information concerning the desired use of the
The latter organization is well known to the Board and the State
funds and since the failure to send the money to Switzerland
Department and has carried on certain resous and relief work under
might operate to interfere with the further release of Jeva from
license of this Government through its representative in Switzer-
Gerach-controlled territory, the Executive Director recommended
land, Isaso Sternbuch. The Husy negotiations, however, were
that the Board approve the issuance of a Treasury Department 11-
carried on without the full knowledge or approval either of the
cense permitting the remittence to be made to a joint account
Board or the State Department. The Executive Director explained
in A Bviss cank in the names of Issac Sternbuch and Roswell
that this Government's facilities had not ceen used for the trans-
Mc-lelland, provided that no expenditure or commitment for ex-
mission of messages on these negotiations between the group in
penditure be made without the prior authorization of the Var
the United States and its Swies representatives. It is possible
Refugee Board. It vas also reconcended that the Board De pre-
that these negotintions were carried on through Polish channels.
pered to give consideration to requests for its approval of any
He stated he had asked the American group to furnish the Board
payment for legitimate expenses involved in the release of de-
with copies of all of these messages but to date this request had
tainees in the present case, provided, of course, detailed
Unclassified
PRECISION
TRADE MARK
MICROSTAT/ PAT. OH, MICROFILM
ROLL NO.
244
- 3 -
information were presented to the Board concerning the purposes
for which such expenditures were desired to oe nade.
Secretary Stimson, stating that ne Vas sure no one present
wanted to benefit the enemy, raised the question 56 to whether
or not this money might be desired for & ransom payment. He
also inquired whether the Treasury Department under any circum-
clonces would issue a license for the payment of renson. The
Secretary of the Treasury stated that the Treasury would not
issue any license permitting a renson payment.
Xr. Grew then raised the question as to whether or not the
sending of the money from this country, even under the restric-
tions suggested, might in any way be misleading to the negotiatore
in Switzerland or to the Germans. The Executive Director ex-
plained that, since ve have not been informed that the money le
desired for ranson and since it Le intended that conditions be
attached by the Board absolutely forbidding its use for that pur-
pose, the negotiators in Switzerland would be the misleaders if
they had ranson in sind. In any event, he added that it is still
desirable to permit the remittance because of the possibility
that the mere presence of the money in Switzerland might facili-
$
tate further negotiations and night be needed for legitimate ex-
penses.
It was then poinced out that our best information indicates
that the Germans do not appear to de primarily interested in
ranson now; that, in fact, a. payment of $1,000,000 would not
appear to be of sufficient interest to one in Himaler's position.
The real motive behind the release of these refugees appeared from
recent cables read by Acting Secretary Grow to ce e desire on the
part of the Germans to gain favor in the eyes of the Allies.
After thorough consideration of all the facts in the case,
Acting Secretary of State Grew moved that the Board approve the
issuance by the Treasury Department of 8 license permitting the
desired remittance to 5. joint account in the names of Isano
Sternbuch and Roswell McClelland, provided that no expenditures
or commitment for expenditure be nade without the prior specific
action of the War Refugee Board and provided that under no oir-
cumstances could any part of the money in question be used for
the payment of renson. Secretary Stimson agreed and Secretary
Korgenthau, BE chairman, stated his concurrence.
Regraded Unclassified
MICROSTAT M.D. M. s. PAT. OFF. MICROFILM
BOLL NO.
RECISION
TRADE MARK
EXECUTIVE OFFICE OF THE PRESIDENT
MAR REPUGER BOARD
3/2/45
Ter
245
Mrs. Klets
3400
(1)
(Ress)
(Rider)
(2)
(Rees)
(Ride.)
(3)
(Ress)
(Bleg.)
The attached cables high-light the
problems we are faced with in Switzer-
land concerning our proposed relief
and resoue program. They were the
subject of our discussion with you
this noon and may be of interest to
the Secretary if you have a chance to
=
mention it to his this evening.
F. Hodel M
From:
(Date)
(Ense)
(Ride)
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT/
PAT.
OH.
MICROFILM
BOLL NO.
240
-2- #1345, March 2, 11 a.s., from Bern
247
C
o
P
There 18 therefore very little prospect of Swies
Bern
being able furnish ICRC with trucks and certainly not
MES-1519
unlees tires are first supplied from outside.
Distribution of true
reading only by special
Dated March S, 1948
For prisoners of war ICRC plan to send across Swins
arrangement. (SECRET w)
Rec'd. 9:18 a.s.
corder into Germany two initial convoya of ten trucks each.
One convoy will go to Luebeck carrying mainly gas and oil
Secretary of State,
to supply aix trucks placed at disposal ICRO Berlin
delegation by German authorities. These six trucks are
Washington.
nov performing involuable service delivering parcels to
Allied POWS on roale and in assembly center that region.
1345, March 2, 11 a.s.
Second convoy will proceed to Hunion area loaded with
POW parcels.
FOR DEPARTMENT AND WRB FROM MOCLELLAND
Department's 819, February 23 and Legation's 1217,
It is not anticipated that Germans will make any
difficulties for entry these two convoys which will leave
February 24.
ou or About March 2.
Following 16 preliminary never to your 819.
I understand that if these first two convoys get off
From recent conversations with ICRO it can be defin-
successfully SHAEF in France will agree to supply ICRA
itely stated that it is not now necessary to 656 Swies
vith further stocks of fuel to be brought up from
Government to make food supplies for relief shipment to
Morseille in tank cars. If therefore adequate supply of
fuel 1s available to ICRO it 1: assused that truck
Germany available to ICRC.
delivery of POW parcels into Germany will be rapidly stepp
60,000 - 2½ kilo WRB parcels have just reached Geneva
up until majority of 100 Ancross and Canadian Red Cross
trucks available to ICRC in Switzerland are In use. in
from Toulon. This makes 150 tons of relief parcels.
this event Azoross Washington might find Lt cossible to
ICRO's Division of Special Assistance which specializes
release four or five of these trucks to ICRC for carrying
in relief to unassimilated groups has adequate supplies
oarcels to unassimilated groups in Germany.
on hand for all French and Belgian "Sohutzhaeftlinge" in
Should sufficient trucke become available to sove
Germany.
150 tons of WR3 Toulon parcela into Germany within next
ICRC has at least 80,000 tons of POW relief supplies
few weeks question of further supplies can arise. You
sight, therefore, also discuss with Ancross question of
warehoused in Switzerland at present moment, en amount
their releasing from unused POW stocks in Switzerland
considerably in excess of what can actually De shipped
into Germany during coming months under prevailing trans-
60 to BQ thousand parcels for VRB program. At this point
it 18 not anticipated that Germans will object to use of
port conditions unless several hundred trucks becone
five kilo parcels for unsesimilated persons since there
available.
is no longer any question of using Geruan postal service.
À few days ago IORA discussed exhaustively with
Limited amounts of certain essential medicines are
competent Swien authorities particularly from Swips Army
availability of motor trucks in Switzerland for ICRC
available for purchase in Switzerland; and Larger acounts
shipments into Germany. These conversations revealed
ments. could probably be secured against guarantees of replace-
that total number trucks available to Swiss Aray is only
about 1,500, of which some 357 are already laid up for
lack or suitable tires. Swies Aray has accordingly
There 1s no (repeat no) clothing worth mentioning
already been forced requisition private vehicle. All
obtainable in Switzerland unless it be from Ascross or
further example Swiss experienced greatest difficulty in
other POW supplies concerning volume of which I nin not
equipping with tires twelve heavy duty trucks and trailer
informed. Any clothing parcels shipped into Germany will
which were used some months ago to sove Swiss food stuffs
therefore have to 00/36 from outside.
from Spanish border across France.
ICRC is
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTAT
MICROFILM
ROLL NO.
248
249
-3- #1345, March 2, 11 8.3., From Bern
Jerusalem
ICRC is in principle quite willing undertake delivery
Y
Dated March 1, 1945
relief supplies to any category of accessible *Schutzhae-
Rec'd 2:11 a.m. 2nd.,
tlinge" provided consittee is supplied with necessary
transport equipment.
Secretary of State,
I have taken up question of ICRC organizing and
Washington.
effectuating removal of physically unfit detainees from
Germany to Switzerland. I entertain, however, some
doubt concerning feasibility this program. Outside of
64, March 1, 7 p.m.
Musy affair, Nagia have displayed no willingness to
release civil detainees unsulted for labor in general
although such an eventuality is not excluded. I have
Following message 16 from Jacob Griffel who requests
asked Burkhardt of ICRC to bear this important request
in mind in course of negotiations with Himmler and other
paraphrase De sent through War Refuges Board to Union
Gersan authorities which is hoped he vill be able under-
Orthodox Rabbia Resoue Conmittee, 132 Nassau Street, New
take in near future. I vill infors board an soon B.B.
possible concerning this point.
York:
Regarding Switzerland's acceptance of such additional
groups of refugees as night be extricated by ICRC under
"Agency representative Lichteim Geneva cables
this program this will be made subject of special
conversations with Swise authorities. It in my feeling
Knapp release Therezin obtained from Himmler personally
that such discussions will have to be supported by concrete
assurances of evacuation within 8. given time as well as
by Swiss right wing politician Kusy who was sent Germany
granting of rapid import facilities to Switzerland for
necessary supplemental food stuffs. Latter point will
by Orthodox groups originally to trace Vittel group.
be discussed with Currie Mission.
In destitute condition but suddenly obtained release 1200
HARRISON
Theresin. More such transports promised out not arrived
probably owing transport difficulties. German attitude
33
result general situation Germany enterrassed by necessity
constantly evacuating 100,000 prisoners of var civilian
interness. In Therezin now large number prisoners of war.
Rescue efforts can profit from situation in order to obtain
large scale release of Jews. New plans presently discussed
with official cuarters here. Storch reports Swedish
Government
Regraded Unclassified
PRECISION TRADE MARK MICROSTAT ass, u. & PAT. OFF. MICROFILM ROLL NO.
251
250
- 2 -
JD-1597
PLAIN
Government promised again admittance all inmates Bergenbelzen
Puris
and part Theresin, this report confirmed news message yester-
Dated March 2, 1945
day. This last possibility save Remnants who are in greatest
Ise'd 12a15 L. 3d
danger immediate extermination unless evacuated to safety.
Secretary of State
Rest not, make every hunan effort utilize historio oppor-
Washington
tunity. Here chief Rabbi Rabbie rousing all sections
965 Second
local community this matter do likewise."
FOR 10585 INAVITY AMERICAN JOINT DISTRIBUTION CONNITIES
FROM JOSEPH SCHARTZ
PINKERTON
"Regarding Mextean children enigration 0.5% here will
EEC
net take any active atops select or transport children to
Mexico or any other country without consulting as and
giving - the opportunity of taking is up with other
interested agencies. Wish pednt out also ONE will not
as general policy enigrate children from France except
for very valid reasons such M reuniting families, et estera.
Naturally - have long ago advised both International
Redoross and Filderman that - wish operate in our -
and that Congress may not operate with our funds, lost
again emphanize these difficulties cannot be cleared up
until our representative admitted Ducharest and Sofia".
CAFFERY
as
Regraded 1 Inclassified
RECISION
TRADE MARK MICROSTAT/ REG. U.S. FAT. OFF. MICROFILM
BOLL NO.
253
252
CARLE TO AMERICAN IRGATION, em, FOR NOCILLIAND, PA21 VAI rervise "CARD
CARLE TO ASSISTICAN INGATION, ses, FOR NOCIELLAND, PROM MAR REFUCES FOARD
Please deliver the following nansage to Lean 37 Quat.
Milson, Deneva, from part Grossuan of World Jewish Congress:
Please deliver the following message to Gerard Megner, 37
QUOTE SINCE YOUR DERAMTURE RECEIVED cets LETTER FROM YOU. SENT
qual Wilson, Geneva, from Kurt R. grossman of "orld Jewish Congress
YOU THE REPORTS EMERIOUS CARLES. FOLLOWED UP ATTNITIVELY EXCRANGE
SCREWS. LAST TRANSPORT mar AMOUND PARTLY - YORK
QUOTE HAVE TAXEN JP NATTER OF TREATMENT or EXCHANGES IN
PARTLY PHILIPPSVILLE ALOTERS. AFFROACHED BIG THREE AND IRC ASTING
- RESTRICTIONS ARS IMPOSED FOR SECURITY REASONS.
FOR INCREASED PROTECTION VIEN SITUATION WITHIN GENNANT. CANLED
IT IS RECOMPENDED BY OUL AUTHORITIES THAT IN FUTURE EXCHANGES
RIBONER STORCH SUPPLY SWITZS:LAND ADDRESSES OF CONCES-
JENISH CONSUNITY SWITERRLAND MAKE ARRANGEMENTS PREVIOUSLY
TRATION CAMP INVATES IN CREDER THAT FOOD PARCHIS BE SENT. ADVISE
GTN suras PED CROSS FOR DELIVERY COMPORT ARTICLES AND CARRY-
THAT HANS KIRS OTHERS BE ASKED GIVE ALL AVAILABLE SUMES TO I/C
INJ our CL" MEASURES COMPATIBLE WITH SECURITY REDUEATIONS.
CIRLLAND. PURTHER EXCLANCES IN PROSPECT. UNQUOTE
unquots
THIS IS VGLB BERN CARLE no. 428
THIS is win medi CARLE NO. 429
10:45 Rette
barch 2, 1945
10:30
March 2, 1945
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ MICROFILM
ROLL NO.
254
CARLE TO AMERICAN CONSULATE GENERAL, JERUSATISM, FROM WAY REFUGES ROARD
Please deliver the following neasage to Dr. Judah Magnee from M. &
Leavitt of Anerican Jevich Joins Distribution Condittes,
QUOTE REGARDIENO LIRA DEPOSITS VADE me ITALIAN REFUCES NOW
PALESTINE PLEASE ABY PATESTINE TREASURY TO CERTIFY TO ALLIED
COMISSION HOME THAT STINILING EQUIVATENT HAS RESIT
TO INDIVIDUALS so THAT LTRA sor PATASLE JDC ACCOUNT HOME.
UNQUOTE
11:00 Melle
yarch 2, 1945
Regraded Unclassified
RECISION TRADE MARK MICROSTAT/ ass. 1. PAT. OFF. MICROFILM ROLL
NO.
256
255
PLAIN
-2-#2154, Second, from London.
DCG-1305
London
first six months of 1965 and my sirgram A-159 of February
Dated March 2, 1945
17 requested authorization for ICC operational expenditure
Rec'd 12:07 p.m.
of pounds 200,000 in Spain and Portugal for the eight-month
Secretary of State,
period May 1--December 31, 1945. These sum totalling
Washington.
pounds 619,000 are included in the pounds 2,000,000 requested
us URGENT
for IDC 1945 operational expenditure. To date, however, I
2154, Second
have received no instructions whatsoever in reply to My
I feel compelled to point out that five months have
communications. One-third of the first semester of 1945
elapsed since I first requested in my telegram No. 8362,
has already gone by and the ICC while going ahead with the
October 5, instructions as to the payment of pounds 1944
necessary plans for this year is unable to sot with any
- the share of the United States Government for 1945
degree of certainty unless it know the viabes of the
administrative expenses of the Intergovernmental Committee
United States Government in the prenises. the British
Government has given its approval in principle to the
on refugees and instructions as to the underwriting by
the United States Government of one-half of pounda 2,000,000
underwriting of 1945 operational expenditure. I urgently
the sun estimated necessary for 1945 ICC operational expend=
request the Department to expedite its decision in order
iture. My further tolegram No. 11443, December 26 emphasized
that the present anomalous position of the IX my be
the necessity of receiving instructions as to the decision
clarified.
of the United States Government with respect to the 1945
WINANT
operational expenditure in order that the ICC could make
plans. My airmail despatch No. 20343 of January 12
NO
requested authorization for the IDC to expend pounds
350,000 in France and pounds 69,000 in Belgium during the
first six
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT/ PAT. OFF. MICROFILM
ROLL NO.
257
258
20
Distribution of true
March 2, 1945
reading only by special
arrangement,
4 pollo
CARLE TO HARRISON AND MOCISLLAND, BEHN, FROM DEPARTMENT AND WAR REPUGER BOARD
inference Department's No. of March , 1945.
AMERICANT
Following is text of Treasury license No. W-2426 issued to Tand Mahatzalar
LONDON
1593
"You are and notwithstanding General Ruling No. 11, to remit the 9wiss
hereby authorized,so car an Executive order No. 6389, an amended,
16 concerned, equivalent of 3937,000 to - banking institution in switzerland for Britzer- credit
The following for Finant from Department, Treasury
to a joint of the Tand Hahatzala [mergency Committee of the inton of Orthodox of
frano account 10 the nanes of Issac Sternbuch, representative in Rabbie
and Far Refuges Board in 13 48.
1an4 of the United States and Canada, and Roswell D. McClelland, representative the
Har Refuges word in Switzerland, provided the following terms and conditions
Beference your no. 1403 of February 8, 1945, con-
shall be complied with:
cerning negotiations for lives of 1500 Dutah Jemo in
(1) No part of the above our shall be expended or
comutte: for expenditure except as authorized
Germany.
by specific action of the Har Refugee scard,
Machington, D. C.
This Covernment approved the continuing of them
(2) MV withdrawal, transfer, or payment order against
negotiations and agrees that any money involved should
the above joint account stall be signed jointly by
Teaac Sternbuch, representative in Switzerland of
be paid to a blocked account or other estisfactorily
the Yead Mahatzala Emergency Committee of the Union
of Orthodox Rabbie of the United States and Canada,
controlled account.
and Roswell D. MeClelland, representative of the
mar Refuges Hoard in Switzerland.
an
(vering)
consed herein by (a) payment of the dollar amount involved to the Federal
*You, or your bank of account, are authorized to effect the remittance 11-
(our)
Bank of New York for credit to the Banque Nationale Suisse, Durich,
for eserve credit to the joint account referred to above, or (b) purchase of the Swice
involved from the Federal Reserve Bank of jew York as fiscal agent of
france the United States, all shall be prescribed by the Federal Reserve Bank of sew
DO
ICE
TILL
TEA
2/22/45
York."
THIS IS was sew CARE NO. 430
5:00 p.m.
March 2, 1945
If
Regraded Unclassified
PRECISION
TRADE MARK
MICROSTATI
MICROFILM
BOLL NO.
260
AUI-1432
Dem
WIE-2435
PLAIN
distribution of
ture realing only by
Dated March 2, 1965
Lisbon
special arringment.
(cachet #)
Ree'd 5122 person
Undated
lime'd. Usrah 2, 1945
Secretary or litate
5:58 palla
Fashfagton
Secretary of State
1346, March 2, loon
Mashington
FOR 12 PROJ DURMARY
4%,
Department's 304, Tobrary 23.
min 340, P.R. HIAS, 425 LAFATETTE STREET, 137 YORK,
PROM DAVID, ICCEL
In general 15 can be sald that according to best
available information, aget "schute hasftlings* (su)
Inform relatives United States of Americanall fol-
capable of physical labor are bela: worked to laste
lowing people in nice health, asking financial help.
at a great variety of tasks are or less directly
Galla George, 1800 Davidson Avenue, Bronx Louis Issosi,
annected with ver affort. It La Impossible
32 the Vardi. Baron, 320 East 1% Street, From, family
however to obtain any statistic 60 number: solually
Taitler, e the Angleterre. Tax Servidas, 2157 Vallace
engaged In what could be called Post work" 1.0.
Avenue, Bronx, Fanny Barnklau, 6 Rue de France. noss
unition plants 8 war mierial factories). 4. large
Scharfer, 1070 Sherman Avenue, Bronx, cousin Esinrich
mumber of SR are telane used literally as "elave labor"
Scharf, Hotel Inchelisu. wills Musket, care of trusie-
performing heavy physical web each as rost building
wits, 1459 Rythe Mace, Bronx, sister Sare Rimelfort,
detarts clearing, disclos of anti-tank ditches and
care of Colonge, 6 Passage Gioffredo, Helen Spits, 516
11ke. Mary in for Instrunce -
West sure Street, liew Tork, cousin Alexandre Dyketein,
engaged In reconditioning used elothing shipped from
7 line de Hussie. Jenny Pintchman, 20 neet 116 Street,
externination campe in roland. Jewish departed who
New York, Ihrie Pintehmann, 39 the Saint Philippe. Saulis
recently reached Deliverland inn De lestenated.
Somerfeld, care of Inder Reiner, 317 Greenwich Street,
reported having worked at sentor known 1 undiforms
New York, Sala Anne Fortska, Leon Reicher, 1 lisa Hardon,
and at middle heavy wooden casos for machinery and
parents, sister Herta deported, Rhadelf Sobarheia, 303
11ke. Again at Dergenbelenn some extenizier of In-
West 78th Street, New York and Flora Venger and adams,
termes werk while others do mile
2 Bast 86 Street, New York, Ernst Ilse Imager, 20 The
Mayarbeer. Joe Osterweil, % Broadway, lieur York and
At this Line however a past any 511 are Insolve
Street Offurann, 178 last 7 Street, New York, Imanuel
In terribly arouded assembly having bein emented
Rohn, 5 Avenue Bollevus. Roma Grosfeld, 152 Neet 72
from previous camps and Jobs In m.
Street, law York, mother Clara Doron and sister Mra,
24 tom Max Packs, 247 West 30 Street, lieu
In any special relief program for I undertaken at
York City, neplem tax Pucha, 20 Rune Dante. Arthur Jaller,
this soment IDPC plans deliver jarcels insofar M
54 that 21 Street, York, sister Bara Jeller, 70
practically possible only to 111 and exhaurte! 04
Victore Avenue, Janques Lorber, care of Rialo 488 or
SUS Fifth les York, brother Oscar Lorber, fristal
National proupe sentioned In legation's 1056
Hotal, family deported. Harry lisenkraft, 117 part Inc
February 16, comprise Jerse of respective nationalities.
Street, Law York, replase Pepil Dienes, Regence liotal.
Fol meiner, 240 Test 98 Street, Name York, cousins Abel
Time Spruch and Albert Volpati, 2 the Marechal Joffre.
MARRISON
Joschin Kapelmar,
RII
Regraded Unclassified
RECISION
TRADE MARK
MICROSTAT
No. M. 5. PAT. OFF.
MICROFILM
ROLL NO.
251
- 2 -
262
Joachim tapelmer, 1471 loston hoad, Name York, brother
Mapelmer Barnhard, l'ernos Hotel. Hugo nothechild Mu,
42 Cloburst Avenue, Indurst, Long Island, New York, cousin
Siegfried Faufman, 7 instole France Avenue, wife Prancisca,
10-15555
PLAIN
son Halter deported. Bernard Karrita, 8921 15) Street,
Janaice, tem York, (lateth 1 Avenue des Flours,
Pario
Harry Kosofaky, % Creen Street, Yes York, brother Joenf
Proofally and fastly, 7 cue du Petit l'arc. twice Tris,
Dated -, 1/945
106 Test 60 Street, Tork, brother Stenisles Tris and
Satime, Sarango lotal. loas tustic, 37 neat 76 Street,
Recid 10:44 p.m.
the York, sister Marie Neil, 26 Victor Hugo Boulevard.
Andre Cloeciner, 15 Fifth ivenue, New York, wife Helene
Decretary of date,
dloeckner, Interator Hotel. Goldmann, 295 Central Park
test, New York, POSS Frike Janek Silberstein, 6 true
Terlington,
Francots Crosso, tax deported. treat Covo, Toodstock
Hotal, 127 test ZRA (Zee?) Street, liew York, AVENUE and
family, 10 Tuarevith Boulevard. Adolf Holatein, Gelstone
906, Decord
Avenue, 208 Street, New York, Alex Weyer family, Penation
Here, 34 Acacias Avenue, Theolex Hoseph Alfred deported.
200 LEAVITT, AMERICAN JOINT
Howard Silbey, 536 lest 113 Street, Apartment 62, New
no INSURY SCHEAUTE.
York, Siegmund Bilberberg, Carabacel [lote]. Joseph
Wilcank, BO Nall Street, Now York, Irms de Hippert, 2 Ter
"Suggest you engrage Henjands Brook and sesign htm
Hum Spitalieri, Charles deported. [Inanue] Stern, 11 Test
Reendk Raly. Could use additional times or four
30 Street, liew Tork, mother The Stara, 28 Pue de Chatmau-
sinilar qualifications provided they have real possi-
neuf. Sipeer pressesport, 1333 Broadway, New York, Fanny
bilities development within reasonable time. would
Pred Derson, 11 Hix ivenue des Yleurs.
sesign Que core to Deantk balance Ireenleigh. Inlieve
neither Joseph Iguen nor Dr. Morris Davidson because
tax Klein, Farmingdale, lew York, nephew Schlama
of age or physical condition could neet requirements
Klajnik, wife, two children, 24 liue Veniseles Cannes.
overseas employment this time. Therefore surgest neither
nerhard Chreanowald, Migria State Hospital, Brentwood,
be on. liave already advised you WIT lam received
L. I., Suffelk County, Bew York, father Paul Chresand
trenty million france fro Undversal*.
Hotel des Colonies, Monte Carlo. Hermann Voldberg, 176
Trest 95 Street, liew York, family Henry Holdberg, Villa
CAPPINT
Vart, Cottage Beaulieu, Alpes Haritimes.
CHOCIGR
Regraded Unclassified
PRECISION
TRADE MARK MICROSTAT REG. M. S.PAI. OFF. MICROFILM
ROLL NO.
12"
263
100-1558
PLAIN
Bern
Dated March 2, 1945
Rec'd 10:58 pulle
Secretary of State,
Washington.
1354
1345, Second
FOR win FROM NOCIELLAND
I have received considerable mmber of andow
requests from persons in Suitoerland having relatives
anong recent Category F (repest r) exchange saking
how they can correspond with and receive - of
=
latters velfare. Would accordingly appreciate any
suggestions you wight have to offer. la yet I have
received no confirmation how sany of this group wire
actually sent to Philippeville. Perhaps you could
eventually end no list of those who arrived safe and
are in North Africa.
HARRISON
MY
Regraded Unclassified
RECISION
TRADE MARK
264
NOT TO BE RE-TRANSMITTED
COPY NO. 4
SECRET
OPTEL No. 20
Information received up to 10 a.m., 2nd March, 1945.
NAVAL
1.
ENEMY ATTACK ON SHIPPING. 1st. A 7176 ton.V.S. ship
sunk by mine or terpedo North Oatend.
MILITARY
2.
WESTERN PRONT.
Southern Sector: Further progress made north and
south Trier and advanced elements of 20 U.S. Corps are reported
in southern outskirts city.
South Central Sector: 1st U.S. Army continue advance
and U.S. troops now reported within 7 miles Cologne.
North Central Sector: Considerable advances made by
9th U.S. Army and greater part Munchen-Gladbach now in our
hands while advanced elements within two miles Houss.
Northern Sector: Steady progress by 1st Canadian
Army continues.
3.
EASTERN FRONT.
Central Sector: On right flank further ground
gained N.E. and north Neustettin. In south two further süburbs
and ten blocks occupied in Breslau,
4.
BURMA.
Central Sector: Nyaungu bridgehead has been enlarged
N.E. and south along east bank Irrawaddy where no report of con-
tact with enemy. North of Mandalay our troops advanced five
miles east and nine miles south against opposition.
AIR
5.
WESTERN FRONT.
1st, 612 Bember Command aircraft (3 missing) at-
tacked through cloud Mannheim (2039 tons) and synthetic oil plant
Kamen (660 tons), escorted U.S. heavy bombers 1174 (9 outstanding
but believed safe and 5 fighters missing) attacked railway
centres in South Germany. Good results reported Bruchsel (304
tons) Heilbronn (283 tons) and Neckarslum (223 tons), while re-
sults other targets including Ulm (1183 tons) and Ingolstadt
(541 tons) unobserved. 9 enemy aircraft destroyed by fighters.
427 medium bombers dropped 702 tons targets Central Sector with
mainly unobserved results while 1538 fighters (14 missing)
operated whole front destroying 22 enemy aircraft and large
number road and rail vehicles.
1st/2nd (night). 148 Bomber Command aircraft
(without loss) despatched including 55 Berlin and 40 Erfurt.
6.
VEDITERRANEAN FRONT.
27th/28th (night). 79 Strategic Bombers obtained
good concentrations railway centre Verona (253 tons).
26th. 694 heavy bombers (11 missing) attacked rail-
way targets Brenner Route (1594 tons).
514 tactical aircraft (1 missing) successfully at-
tacked communications and Army support targets while fighter
bombers and fighters 96 attacked railway targets Alagenfurt
with good results.
HOME SECURITY (Up to 10 a.m. 2nd)
7.
ROCKETS. Thirteen incidents reported during period.
Regraded Unclassified