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Departmental Correspondence
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PSF: Treasury Dept.,
1933-36
PSF
PSF: Treasury Treasury
October 9, 1933.
MEMORANDUM FROM
THE PRESIDENT
FOR
THE SECRETARY OF THE TREASURY
The more I analyze the situation, the more
I am convinced that the Federal Reserve Banks
should continue open market purchases of
approximately $36,000,000. this week again.
There is no doubt in my mind that you and I
are being subjected to all sorts of silent
pressure by some members of the banking fraternity
who do not want to make loans to industry. They
are in a sullen frame of mind, hoping by remaining
sullen to compel foreign exchange stabilization
and force our hands. If you and I force these
funds on them they will have to act in accordance
with our desires.
Let us keep up the present policy this
week at least.
FDR MD
PSF
Treasury
FISCAL YEAR 1934
(In millions of dollars)
November 10, 1933.
Estimates
Actual
of re-
receipts
ceipts
fiscal
fisoal year
year
1934
to date
RECEIPTS:
Customs
290
133
Income tax,
876
183
Miscellaneous internal revenue
1,367
587
Processing tax.
447
81
Miscellaneous (exclusive of foreign receipts)
178
72
Total
3,158
1,056
Author-
Obliga-
Estimates
Actual OI-
1zed
tions in-
of expen-
penditures
(no of
curred
ditures
fiscal year
July
July 1,'33
f. y. 1934
to date
1, '33)
to date
EXPENDITURES:
a. General:
1. General operations
2,386
884
2,528
965
2. Agr. Adj. Adm.
....
507
152
507
129
Sub-total above
...
2,893
1,036
3,035
1,094
b. Emergency:
3. Public Works Adm.:
Public bodies.
...
930
91
400
3
Railroads
135
-
-
100
Public highways.
a
571
405
300
81
Naval construction
275
154
54
4
Rivers, harbors,
flood control.
218
65
135
3
Reclamation (includ-
ing Boulder)
...
≥ 100
8
14
4
Subsistence home-
steads
.......
25
-
9
-
Other
306
64
288
18
......
Sub-total, PRA
...
2,560
787
1,300
107
4. Farm Credit Adm.:
Banks for Cooperatives
110
85
110
75
Production Credit
Corporations
90
53
90
38
...
Commodity Credit Corp.
3
3
3
3
nos
141
203
116
Less receipts, etc.
63
48
63
52
Sub-total, FCA
lo 140
93
140
64
2.
Author-
Obliga-
Est. of
Actual ex-
1sed
tions
expendi-
penditures
(as of
incurred
tures
f. y. to
July 1,
July 1,
f.y. 1934
date
1935)
'33 to date
5. Agricultural 141.
Adm.
100
1
100
: 3
6. Emergency Conser-
vation work
...
₫ 416
124
239
103
7. Civil Works Adm.
400
I
400
-
8. Nat. Industrial
Recovery Adm.
4
2
4.
1
:
9. Federal Land Banks,
surplus .....
65
15
47
15
10. Federal Savings and
Loan Ass'ns
...
100
:
40
:
11. Federal Deposit
Ins. Corporation
150
-
150
I
12. Tennessee Valley Auth.
50
1
35
1
Sub-total, Items 5-12:
1,285
143
1,015
117
Reconstruction Finance Cor-
poration:
13. Direct expenditures.
1
411
291
1
4.11
14. Proferred stock of
banks .....
& 500
23
A 500
168
15. Relief
462
182
400
16. Insurance companies.
50
:
40
17. Agric. Adj. Act.
E 3
3
é
3
18. Loans to closed
banks ......
1,000
-
1,000
--
19. Commodity Credit
Corp.
250
4
150
4
20. Form Mortgage Relief
198
21
170
17
21. Loans to Joint Stock
Land Banks
....
100
2
70
1
22. Stock Home Loan Bks.
B2
22
60
21
23. Home Owners' Loan Corp.
199
8
50
8
Sub-total, RFC:
2,433
556
2,032
219
Total emergency:
6,418
1,579
4,487
507
Grand total expendi-
tures:
9,311
2,615
7,522
1,601
Excess of expenditures
4,364
545
Increase in general fund balance
less excess of trust fund
receipts
461
Increase in public debt
4,304
1,006
Public debt June 30, 1933
22,539
22,539
Katinated public debt June 30,
1934, and actual public debt
November 10, 1933
26,903
23,545
3,
(Forward)
26,903
Estimated repayments applicable to
retirement of public debt (see note):
(1) From public works loans
on self-liquidating
projects
..........
500
(2) From RFC loans
2,000
2,500
Public debt to be retired
from taxes after June 30,
1934 (see note):
24,403
NOTE: The application in this statement of repayments of loans or advances
mde by the Reconstruction Finance Corporation and by the Public Works Ad-
ministration for self-liquidating projects to retirement of the public debt
rests on the assumption that the Budget for the fiscal year 1935 will be
belanced in the sense that there will be no further increase in the public
debt after the close of the current fiscal year. In this connection it must
be borne in mind that large commitments during the current fiscal year under
the emergency public works program will be carried over to the fiscal year
1935. Unless receipts for the fiscal year 1935 (exclusive of such repayments)
are sufficient to meet the general expenditures of the Government and also
the emergency commitments carried over from 1934 to 1935, the application
of Public Works and Reconstruction Finance Corporation repayments to public
debt retirement as reflected in this statement is wholly misleading.
(a) $437M NRA and $134M unobligated balances carried over. Obligations
include $394M commitments prior to July 1, 1933.
(b) $97M NRA and $3M unobligated balances carried over.
(c) $100M NRA (A.A.A.) and $40M Farm Credit Act.
(d) $323 NRA and $934 unobligated balances carried over.
(e) Excess credit, deduct.
(f) Doduct. In allowing $1,000,000,000 for loans to closed banks, the
R.F.C. will be overcommitted (obligations not yet actually in-
curred) about $411,000,000. Payments on account of this overcommit-
ment must be net out of receipts which are now coming in at the
rate of about $50,000,000 a month.
(g) Indefinite authorization; subject to revision.
NOVEMBER 10, 1933.
ACCOUNTS AND DEPOSITS,
TREASURY DEPARTMENT.
THE UNDER SECRETARY OF STATE
WASHINGTON
November 15, 1933.
Dear Louis:
I enclose herewith a copy of a confidential
telegram, in paraphrase, which reports the meeting
of the directors of the Bank of International Settle-
ments, which was held on November 13th in Basle,
Switzerland. Possibly you may feel that the Presi-
dent will wish to see the informal and confidential
expressions of opinion, which are set down in the
paragraph beginning on page two, regarding the mone-
tary policies of this Government.
Sincerely yours,
Enclosure.
The Honorable
Louis McH. Howe,
Secretary to the President,
The White House.
Paris
PARAPHRASE
November 14, 1933
Received 11:30 a.m.
Secretary of State,
Washington.
502, November 14, 11 a.m.
STRICTLY CONFIDENTIAL
Cochran returned from Basel reports that B.I.S.
directors at yesterday's board meeting approved economies
which will result in 20% diminution of budget. This included
dismissal of 18 minor officers and clerks with six months
full pay. The directors decided to dontinue the original
policy of the bank accepting deposits on its own account in
only those currencies which satisfy the requirements of the
gold or gold exchange standard.
The directors were generally skeptical with reference
to efficacy of the American monetary program and especially
the gold purchase idea. They believe that actual inflation
will be necessary if the President insists upon achieving
his aim in price raising. The technical position of the
gold block central banks is sound. Their governors are recon-
ciled for the present to watching the American experiment and
they will resort to no joint action 80 long as the purchases
abroad are on the present small scale although there was some
informal discussion of an agreement by the gold bloc central
banks
- 2 -
banks not to release gold to any central bank that does not
reciprocate. Should such American purchases become heavy the
central banks would view the situation more seriously. In
present circumstances their chief complaint is supposed to be
economic effect through deflation of European gold prices and
the psychological effect on their people who are under the
constant uncertainty as to the future of their own currencies
as long as the American program is Bo doubtful.
The following expressions of opinion are informal and
ultra-confidential. Norman (England) condemned the policy of
a government as intolerable which sits up nights devising means
for depressing its currency and the gold of other peoples.
Beneduce (Italy) bitterly assailed gold purchase policy as a
factor in deflating Italian prices mentioning as an example,
wheat. Warren's activities, he thinks should be limited to
drawing curves of a statistician and not extend to the respon-
sibility of developing monetary policy of a government.
Francqui (Belgium) thinks steps should take place toward
definite revaluation and stabilization of the dollar. Trip
(Netherlands) said that the Dutch Government and central bank
are still firm in their policy of maintaining the gold standard
substitute for strangling
but that it is felt by Dutch trade that it 18/X X and
that sentiment is growing in favor of a devaluation of the
florin. Rooth (Sweden) favors stabilization of dollar at
4.86 to the pound and sale of gold rather than purchase by
the United States. Bachmann (Switzerland) said his government
is gaining gold but that railways and hotels of Switzerland
are
- 3 -
are being obliged to make reductions in rate which they cannot
afford. He is nervous over the French situation. Farnier
(France) admitted that Moret's estimate given in the Embassy's
telegram number 493, November 3, 11 a.m., that potential gold
hoarding capacity in France has been emphasizing 12 billion
francs is too conservative considering the extent to which French
holders might dispose of government securities if the situation
becomes more threatening. Vocke said no repercussion in the
monetary field was felt in Germany from the American experiment
and he understood that the United States would not desire that
its policies inconvenience other countries any more than it was
desired by Germany that her policies discommode others. He
stressed the need, at this time, for strong governments.
Incidentally another meeting of long term foreign creditors
is being summoned by Schacht at Berlin in December when it is
probable that he will suggest an extension of the six month
moratorium and perhaps a decree in the percentage of transfer.
MARRINER
PSF:
[Nov. 4933]
Trasury form
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
my diar mr. President,
In view of the have of a van u
which Secretary Woodin's halls riquires is
him to The , am sure that you
will wis i, and you. of course should
have. from the freedom of choice as to
whom you will flace in charge aT The
Treas my. in order to tocilitate This 9
in landuing my maignation as under
Signature of The Triasmy to Take affect
when my rauussor is affointed, or at
an cartier duta should you so desire.
X am mosT affinciative of The
opportunity which you and The secretary
have given me to have had some fait
in your admin in nation during These sTirring
Times, and also of the many mm the
of him dress which you and the have
stown me. m kaving the Treasury
may , also have with you my most
sin are good wis his for the sucurs of
your edministration in the years that
tie a a head.
Restactfully
bran Gehrson
Private
This memorandum requires elucidation for the
historical record.
Dec. 16, 1933.
During the last three weeks of November, a very
definite drive was made by New York bankers and by political
forces led by Ogden Mills and by pressure originating from
British sources, to create definite sentiment in this
country to have the gold content of the dollar definitely
fixed by the United States. As a part of all this, assurance
was given by the same sources that if the United States would
go back on gold that Great Britain would follow.
My advices were (a) that England would not go back
on gold simultaneously with us; (b) that England would like to
have us go back on gold but would not follow herself, thereby
keeping her favorable trading position absolutely liquid.
In order to place England on record, and solely for
that purpose, and not because we intended or expected
to go back on gold standard, George Harrison made this
unofficial interrogation of Montagu Norman. ** As we expected,
it was turned down by the Bank of England and the British
Treasury.
Franklin :- Roosevelt.
The White House
FOR
FEDERAL RESERVE BANK
OF NEW YORK
December 12, 1933.
Dear Mr. President:
On November 27, following his return from Warm
Springs, Secretary Morgenthau asked me to inquire of
Governor Norman of the Bank of England, whether he thought
the British government would be willing to join the United
States government in de jure stabilization of their curren-
cies in terms of gold either at once or following a short
period of de facto stabilization.
While 1 have reported to you orally the substance
of my conversations with Governor Norman on this subject, I
am enclosing herewith a memorandum, as you suggested, record-
a
ing the essence of these talks with respect to the specific
question which Secretary Morgenthau presented to me. This
memorandum has been prepared from contemporaneous and detail-
ed notes of my conversations with Governor Norman.
to
Respectfully yours,
Hon. Franklin D. Roosevelt,
The White House,
Washington, D. C.
Enc.
PSF reasury
MEMORANDUM OF CERTAIN CONVERSATIONS BETWEEN
GEORGE L. HARRISON, GOVERNOR OF THE FEDERAL RESERVE
BANK OF NEW YORK, AND MONTAGU C. NORMAN, GOVERNOR OF
THE BANK OF ENGLAND.
On November 28, 1933, I telephoned Governor Norman to
inquire whether he thought the British government would be willing
to join the United States government in de jure stabilization of
their currencies in terms of gold either at once or following a
short period of de facto stabilization. I told Governor Norman
that while I had no assurance that the United States government
would agree to prompt de jure stabilization of the dollar in
terms of gold, nevertheless I would take the matter up with the
Administration if Governor Norman thought there was a prospect
that the British government would be willing to undertake an early
de jure stabilization of the pound, if at the same time the United
States government took similar action with respect to the dollar.
On December 1, Governor Norman advised me on the tele-
phone that he had discussed the matter with Sir Frederick Leith-Ross
of the British Treasury, and that he (Governor Norman) was quite
certain that the British government would not now be willing to con-
sider de jure stabilization of the pound in terms of gold in the
near future whether by their own action alone or jointly with the
United States government, nor would they be willing to give any com-
mitment as to a minimum rate of stabilization in the future.
Governor Norman went on to say, however, that they would be glad
to consider an arrangement for de faco stabilization of the dollar-
sterling exchange rate for & temporary period through the use of an
agreed amount of gold. He asked me to ascertain, if possible,
whether Washington would be interested now in considering such an
arrangement.
PSF
Treasury
Full
December 29, 1933.
Dear Governor Black:
In line with our previous conversations, I very much
hope that arrangements for the immediate transfer of the gold
of the Federal Reserve Banks to the Treasury can be made under
existing legislation and without resort to a formal executive
order. With a view to resolving doubts which some entertain,
but which I do not share, the matter may be handled as follows:
(1) All gold coin, bullion and certificates received
from others by the Federal Reserve Banks or
Branches since March 4, 1933 (except in settlement
of foreign balances) shall be turned over to
the Treasury immediately and unconditionally;
and payment therefor will be made in any coin
or currency, dollar for dollar or at $20.67
per ounce as the case may be.
(2) The Federal Reserve Banks, Branches and Agents
will forthwith transfer (subject to the condi-
tion subsequent mentioned in (4) below) to the
Treasury, possession of, and title to, all
other gold cointor bullion owned by them or on
deposit with the United States, and will
receive therefor gold certificates at the rate
of $20.67 per ounce.
(3) All gold certificates by whomever held shall be
deemed and treated by the Treasury as dollar ob-
ligations so that no profit or loss will accrue
to any holder thereof as a result of any change
in the gold content of the dollar; and they will
be secured at all times by 100 percent. deposit
of gold pledged as collateral therefor.
(4) Should the forthcoming session of Congress adjourn
without ratification of the transfers above men-
tioned, and of any change in the gold content of
the dollar theretofore made, the absence of such
ratification shall operate as a condition subse-
quent to the transfer mentioned in (2) above, re-
vesting title to the gold so transferred, except
as to that portion of such gold as is attributable
to profits resulting from any such devaluation,
which in any event will be retained by the Treas-
ary upon the surrender of the gold OOP
eaca
Tind
- 2 -
ury. Possession of such gold will be sur-
rendered by the Treasury upon the surrender
of the gold certificates received in payment
therefor.
(5) Upon devaluation so much of the gold as is
not attributable to profits therefrom will
be returned to the Federal Reserve Banks but
without agreement express or implied that
such gold will not later be called into the
Treasury.
(6) Such administrative acts and recommendations
to the Congress as may be necessary for car-
rying out the foregoing arrangements will be
made at the appropriate time.
Very sincerely yours,
Honorable Eugene R. Black,
Governor, Federal Reserve Board,
Treasury Department,
Washington, D.C.
COPY
35-57
PSF
January 22, Treasury 1934
File under Morgenthau
F. D. R.
MEMORANDUM
Senator W. H. King and Senator Burton K. Wheeler have talked
to me about their proposal to add to the Gold Reserve Bill & section
requiring the purchase of silver up to a billion ounces at a minimum
rate of fifty million ounces per month, or until 3711 grains of silver
equal to 23.22 grains of fold in purchasing power.
At my request they talked the matter over with Secretary
Morgenthau. It was pointed out to them that the President is now
authorized, under the Thomas Amendment, to provide for the unlimited
coinage of silver, which, as a practical matter, means that we can take
silver in any quantities, from any place in the world, at any price up
to $1.29 per ounce. The President now has the power to provide for the
coinage of half, three-quarters, or any major fraction of the silver so
taken. Accordingly, further enabling legislation is not needed. In
consequence, no useful end would be served by introducing the complica-
tions of the whole subject of silver into Congressional consideration of
the Gold Reserve Bill.
It was suggested to Senator King and Senator Wheeler that the
word silver might be added to Sension 10 (a) of the Bill, authorizing
the Secretary of the Treasury to buy and sell gold, foreign exchange,
etc., in order to stabilize the exchange value of the dollar. They were
clear that this proposal added nothing to the bill from their standpoint.
Accordingly, it will be most fortunate if the Gold Reserve
Bill passes without any amendment of any kind relating to silver.
Memo. filed 21
THE SECRETARY WASHINGTON OF THE TREASURY Treasury
January 24, 1934.
Dear Mr. President:
I am sending you herewith a
memorandum in regard to the
$2,000,000,000 fund which you
asked me for today.
Respectfully,
Enclosure.
The President,
The White House,
Washington, D. C.
MEMORANDUM
Re: Authority to Purchase Gold with $2,000,000,000 Equalization
Fund without Further Legislative or Administrative Action.
The question is raised whether the Secretary of the Treasury
may cause payments to be made from the general fund of the Treasury for
the purpose of purchasing gold after the Gold Reserve Act has been
enacted and after the President has issued a proclamation decreasing
the gold content of the dollar, without further legislative or adminis-
trative action.
It is the view of the Treasury that the Secretary may make
such purchases. The Gold Reserve Act specifically appropriates "out
of the receipts which are directed to be covered into the Treasury
under Section 7 hereof, the sum of $2,000,000,000, which sum when
available shall be deposited with the Treasurer of the United States
in a stabilization fund under the exclusive control of the Secretary
of the Treasury * * *."
There are various means by which the profit in gold may be
converted into credits. The best method from several points of view
would be for the Secretary of the Treasury to deposit such of the gold
as he desires to convert into a credit in the Gold Settlement Fund
maintained by the Treasury for the Federal reserve banks. The gold
would be deposited to the credit of specified Federal reserve banks
who would create corresponding credits to the account of the Secretary
of the Treasury on their books. This is a practice which has long been
followed by the Treasury with gold in the general fund.
THE SECRETARY OF THE TREASURY
Treasury
WASHINGTON
January 31, 1934.
Dear Mr. President:
I respectfully submit herewith
information which I asked the State
Department to secure for me. It is of
such great interest that I am taking
the liberty of sending it to you.
Faithfully yours,
Enclosure.
The President,
The White House.
PARAPHRASE OF TELEGRAM RECEIVED.
From: American Embassy, London.
To: Secretary of State.
Dated: January 31, 11 a.m.
Last evening in the House of Commons the Chan-
cellor of the Exchequer was asked "whether His
Majesty's Government were using the exchange equali-
zation fund to create an artificial value of sterling
abroad in order to return to the gold standard; and
what steps were being taken to safeguard the tax-
payers against loss arising out of the purchase of
foreign exchange."
Chamberlain replied "no, sir. The purpose of the
exchange equalization account is to correct temporary
fluctuations in the exchange value of sterling. It
has not been used to create an artificial value for
sterling for the purpose of returning to the gold
standard or for any other purpose, and as there is a
good deal of misunderstanding on this matter I should
perhaps add that it would in my opinion be ineffective
if so used. In reply to the last part of the question
I would refer my honorable friend to the discussions
which took place during the passage of the Exchange
Equalization Account Bill and finance bill last year".
Question: "In view of the equalization fund that
has been created in America, is there any likelihood
of competition between our equalization fund and the
equalization fund of America?"
Mr. Chamberlain replied: "We had better wait
-2-
and see what the operation of the fund in America is
likely to be".
Question: "May I ask the right honorable gentle-
man whether the three hundred fifty million pounds
is still in the equalization fund?"
Mr. Chamberlain replied: "Yes, sir".
Question: "Is not the existence of the new Am-
erican exchange equalization fund an added reason why
the conversations between us and America should be
expedited?"
Mr. Chamberlain replied: "I do not know to what
conversations the honorable gentleman refers".
Question: "Regarding currency and regarding our
mutual obligations, are there no conversations now in
prospect?"
Mr. Chamberlain replied: "No, sir, not that I
know of".
Foregoing quoted from official text published this
morning.
Confidented In connection with the foregoing well informed
circles today state that Great Britain would accept
an invitation from America for stabilization discussions,
inasmuch as it would be cohsidered unfriendly to refuse.
Great Britain would realize, however, that any pound-
dollar stabilization figure which would be acceptable
today in Great Britain might give the French cause for
claiming that Great Britain was driving them off the
gold standard. It is therefore presumed that Great
-3-
Britain will endeavor to reach an understanding on
this point in the discussions under contemplation,
or as an alternative to drag out the course of
stabilization procedure with the United States.
ATHERTON.
PSF
PPF
Box
/
Treasury
my
THE SECRETARY OF THE TREASURY
WASHINGTON
COCD (s)
October 17, 1934.
My dear Mr. President:
This message has just been
phoned to me by the Federal Reserve
and I am enclosing a copy herewith
for your information.
Respectfully,
Mynitan
The President,
The White House.
Basle, October 17, 1934.
Personal
Harrison,
Federal Reserve Bank of New York,
New York.
#17
Confidential for Governor
At private meeting of gold bloc Governors held in
Basle after our Directors meeting, they expressed concern
about the forthcoming conference at Brussels of the commercial
and political representatives of the gold bloc countries,
designed to study possibilities of making trade arrangements
within the gold bloc which would tend to strengthen it
economically. The Governors were concerned because the con-
ference had been suddenlycalled with much publicity but
without any preparation, and they feared it will consequently
break down or reach trivial conclusions, thereby causing
injurious repercussions in the monetary field, in that this
failure would reveal to the world and to the gold bloc publicly
that the gold bloc was only an expression and not a monetary
or economic entity. Pressure for the meeting originated with the
Belgians, who have suffered more than any other country from
the recent fall of sterling. They see no reason on the business
and economic side for continuing to suffer unless they can get
some compensation by sending goods to other members of the gold
bloc, several of whom have trade barriers and quotas which
- 2 -
operate against Belgium as well as against countries of the
Sterling area. In particular the Belgians are trying to force the
hand of the French to grant concessions such as taking Belgian
coal instead of British. According to information from usually
trustworthy persons in Belgium, if this conference fails utterly
the Belgians will then leave gold bloc and let Belgas fluctuate
with sterling. At present high Belgian authorities are making
this statement privately but fairly openly, partly perhaps to
frighten the French into making concessions because 1f Belgium
suspends the operation of the gold standard Holland will be
obliged to follow shortly. Such central banks as have been
holding Belgas with us are transforming these deposits into
gold because of their fear of the immediate future. The gold
bloc central banks have nothing to do with the meeting, but each
Governor agreed to warn his government of the grave reaction
in the monetary field which might result from a public failure.
The Italians are particularly anxious and made an effort to
get the conference adjourned until after & preparatory commission
had explored practicability of any agreement. The fundamental
difficulty in any agreement for lowering trade barriers within
the group is that the Belgian price levels and costs of
production are lower than those of any other country in the
gold bloc. Consequently they would benefit most from the
creation of anything like an economic unit and industrialists
in the other countries consider that they would suffer pro tanto.
Fraser
3
pie THE
PSF
October 29, 1934
MEMORANDUM
Internal Revenue proposes to file an amended answer in the appeal of
the Union Trust Company of Pittsburgh on its income tax liability for the
year 1930. This answer alleges that the Trust Company fraudulently under-
stated its income by $1,722,082.90, on which the additional tax would be
$218,333.79. The answer will set out the following facts to substantiate
this claim:
On November 8, 1930, the Trust Company went through the motions of
a sale to the Union Savings bank (98% of whose stock was owned by the
Trust Company and all of whose directors were directors of the parent
Trust Company) of certain securities which had cost the Trust Company
about $3,500,000.00. The then market price of these securities was about
half of what they had cost. The Savings Bank. not having cash to go
through the form of paying the market price, the Trust Company "deposited"
a little over this amount with the Savings Bank so that it would not need
to pay out its own cash for the "purchase". On January 2 and January 3,
1931, the Union Savings Bank re-transferred the identical securities to
the Union Trust Company. The price named in this re-transfer was equal
to the purchase price of the said securities, plus incidental costs.
The Trust Company's "deposit" was thereupon withdrawn.
On November 20, 1931 the Trust Company made a fictitious sale to
the Savings Bank, at their then current market price plus accrued interest,
- 2 -
of certain United States Treasury Bondshaving a par value of ten million
dollars. On the same day the Trust Company deposited with the bank the
exact amount of the "sale" price (approximately $9,500,000.00), taking
therefor a thirty-one day certificate of deposit. Meanwhile, the market
price of the bonds declined and on December 16, 1931 the Trust Company re-
called the sale, withdrew its pretended deposit and sold the bonds in the
open market at 8. price lower than that of the pretended sale to the Savings
Bank, thus taking 8. bigger loss than the fictitious sale would have shown.
On December 9, 1931 the Trust Company "sold" to its subsidiary Sav-
ings Bank at the then market price of $2,163,549.50, securities which had
cost the Trust Company about $4,500,000.00. At the same time $2,200,000.00
was "deposited" with the bank. At the expiration of thirty days the identi-
cal securities were re-tranaferred to the Trust Company and the certificate
of deposit was cancelled. The Trust Company claimed a deduction of
$2,347,411.23 from its income for the year 1931 on account of such pre-
tended sale.
By acting as an "accommodation purchaser", the Trust Company enabled
other persons and corporations to fraudulently understate their incomes. In-
stances of accommodation purchases on the part of the Trust Company are the
following:
On December 1, 1931 the Trust Company "purchased" from the Union Sav-
ings Bank for $83,500.00 certain bonds (Cuban and Chilean, the latter then in
default!) which had cost the bank $274,054.25. The "loss" sustained by the
bank as a. result of this "sale" to the Trust Company was $190,204.25. On De-
cember 5, 1932, the bonds were re-transferred to the bank at approximately the
same price. Payment in each instance was merely a matter of bookkeeping
entries.
- 3 -
On December 30, 1931 the Union Trust Company pretended to purchase
from Andrew W. Mellon certain common stock of the Pittsburgh Coal Company.
The purchase price therefor, $500,000.00, was immediately returned to the
Trust Company by Mellon to be applied upon his demand note. The Trust Com-
pany did not alter its cash position in making the purchase. In April, 1932
the Trust Company transferred the stock to Coalesced Company, a Mellon
dominated corporation, upon"repayment" to the Trust Company of the pretended
purchase price plus 6% interest for the number of days that the Trust Company
had pretended to hold and own such stock.
On December 2, 1931, the Union Trust Company purchased from Andrew
W. Mellon and R. B. Mellon, who was one of its vice presidents as well as
a member of its Board of Directors and its executive committee, 54,000
shares of Western Public Service Corporation stock for $216,000.00. On
January 8, 1932 this stock was re-transferred to the Mellons at a figure
approximating the purchase price. By virtue of the sale of December 2
the Mellons sustained a "loss" of $804,000.00, half of which each claimed
as a deduction in his income tax return for the year 1931.
On November 27, 1931 the Union Trust Company became an accommoda-
tion purchaser of 6,000 shares of Western Public Service Corporation stock
from Roy A. Hunt (a member of the Board of Directors of the Union Trust
Company and of its executive committee and president of the Aluminum
Company of America) for a net price of $25,260.00. The identical shares
were re-transferred to Hunt at a similar figure in February, 1932. Hunt
sustained a "loss" of $99,740.00 as & result of this "sale".
- 4 -
On December 11, 1931 the Trust Company purchased from William B.
Schiller, one of its directors, 5,000 shares of Western Public Service
Corporation stock for $19,800.00, re-transferring said stock to Schiller
in January, 1932 for $20,625.00.
On December 26, 1931 the Trust Company purchased from John H.
Nicholson, a large customer, 500 shares of Armstrong Coke Company stock
for $3,980.00, which stock was re-transferred to him on February 1, 1932
for $4,052.50.
my dear mr. this President: cable seems important
in
THE
enough this time. Hope you are
to bother you with it at
PARAPHRASE OF TELEGRAM RECEIVED feeling better,
FROM: American Embassy, London, England
DATE: January 7, 1935, 6 p.m.
Herry
Treasury PSF
No.: 3 STRICTLY CONFIDENTIAL
Reference is made to telegram No. 21 of January 29,
11 a.m., from the Department.
Butterworth returned from Paris yesterday, where he
had been consulting Cochran. On the return journey he
had the following conversation with Monick, the French
Financial Attache in London. Monick had previously been
summoned to Paris for consultation with Flandin in connec--
tion with Flandin's visit to London about January 20 -
It was stated by Monick that Flandin, in the course
of his conversations, wishes to explore with the British
economic and financial matters, sterling stabilization in
particular. It is Flandin's opinion that if he is to keep
control of the French political situation, he must move
with some rapidity in this direction. Flandin and Monick
are convinced that, in the absence of external pressure,
the British will continue to play a passive role. Ster-
ling stabilization is desired by the French. They seem
to have firmly in mind the fact that it might be accomplished
early in 1935, because of the impending British, French,
and American elections in 1936, or that there will be
indefinite delay of the matter.
The French furthermore anticipate movements from
London - with a consequent weakening of the pound - in
view
- 2 -
view of the favorable prospects of Saar settlement,
Franco-Italian rapprochement, and alleviated
political influences at work on the Continent, to-
gether with returning confidence and economic progress
in the United States. There will be a corresponding
advantage to British exporters as the pound declines,
and the French fear that in attempting to achieve a
de facto stabilization agreement, there will be in-
creased political as well as technical difficulties.
Because of this, immediate action is desired by the
French.
It was indicated by Monick that it is also feared
by Flandin that agitation in America for further dollar
devaluation to 50 cents would be stimulated by a decline
in the pound. Such a devaluation could not possibly be
survived by Flandin, since he had committed himself to
his announced policy of ending deflation. Nor under such
conditions could any of his possible successors deflate
sufficiently to stay on the gold standard. The result
would be the breaking up of the gold bloc, with chaotic
consequences because of the disorderly disruptive inter-
national currency depreciation race that would inevitably
follow.
Flandin in no way minimized the difficulties surround-
ing such a move towards stabilization, Monick said. That
the
- 3 -
the British would raise the question of a reduction in
French trade barriers and tariffs is known to Flandin.
However, Flandin was in a susceptible frame of mind
since French opinion was losing faith in the efficacy
of quotas. In addition, if it were not asked that
concessions should be all on one side, Flandin would
be willing to enlarge the scope of the Franco-British
trade agreement. Flandin wished in any event to find
out the British terms - on what terms, if any, stabiliza-
tion in the near future would be undertaken by them.
In any undertaking towards stabilization, an obvious
British difficulty (and British argument against stabil-
izing) which would have to be dealt with was the matter
of gold moving out of Great Britain after stabilization.
This would have two causes: (1) the probably adverse
balance of payments, and (2) the repatriation of foreign
funds, especially American, now in London.
There might be a serious check of confidence here
due to losses of gold by Great Britain pursuant upon
stabilization. Therefore it would probably be necessary
to devise some means (perhaps through the equalization
funds) of meeting this difficulty. Reference is made to
despatch No. 1132 of December 29.
It was stated by Monick that in this complicated
problem
- 4 -
problem the United States also presents difficulties.
Inquiry was made by Monick regarding renunciation of
the President's power to further devalue the dollar.
In answer I expressed the opinion, which I explicitly
indicated was merely personal, that since the United
States was already on the gold standard, such an action
would be among other things, irrelevant. I also said
that the selection of the branch of the Government to
have power over the currency was, and should be, essen-
tially a domestic concern. I reminded him of the former
perennial complaints of Europeans of the lack of power
vested in the Executive, and pointed out that now that
the balance had been somewhat rectified, unfounded
rumors and illogical uncertainty had paradoxically been
given rise to. The admission was made by Monick that
Flandin was not hopeful that such an eventuality was
possible. Flandin knew that it certainly was not when
he was in the United States, but did not know whether
the situation had changed since then. Should a stabil-
ization arrangement be entered into, however, he did
harbor hopes that the President might be willing to
agree to some such formula like this: that inasmuch
a.s changes in rates of exchange involve international
as well as national consequences, without previous con-
sultation
- 5 -
sultation with each other, Great Britain, France, and
the United States agree not to alter parities.
Another stumbling block is also constituted in war
debts. In passing Monick referred to some semi-official
scheme of settlement. It seemed unwise to pursue the
discussion in that direction, inasmuch as I had no cog-
nizance of it. However, the French I gathered were dis-
turbed by war debts as a question which the British would
raise in conjunction with de facto stabilization. The
French also regard the question as one which the United
States might find internally embarrassing if a public
undertaking on stabilization produced a renewal of
agitation for full payment on war debts. Monick created
an impression - without being specific - that the French
(repeat French) might be satisfied by private and con-
fidential assurances regarding dollar devaluation, in
the absence of any way out on war debts.
The French consider stabilization sufficiently vital
to be willing to explore the issue, according to Monick,
even though they are aware of the difficulties inherent
in such a move and realize the extent of British unwilling-
ness to undertake stabilization, as was recently indi-
cated by Chamberlain in the House of Commons (see Embassy's
632, December 21, 6 p.m.). I was asked by Monick to keep
our conversation strictly confidential. Monick was par-
ticularly
- 6 -
ticularly anxious that no mention of it to British
sources be made. The offer was made by Monick to keep
me informed regarding developments in connection with
Flandin's proposed visit here on or about January 20th.
Monick at the same time did not conceal the importance
which he attached to the American point of view, as a
contributing factor to the British decision, or his
interest in ascertaining what may be the American point
of view.
It is intended by Flandin that a policy of credit
expansion is to be pursued, according to Monick. Author-
ization will be obtained by Flandin for the issuance of
fifteen billions of franc Treasury bills, which under
budgetary legislation, are now limited to ten billions.
They have consulted with the banks, insurance, companies,
et cetera, and these institutions are willing to absorb
the extra five billions, provided the Bank of France
will at any time re-discount them. Objection to this
was voiced by Moret, who is timid and anxious; his view
was that it would set a precedent which, if a less finan-
cially orthodox government came into power, might be
dangerous. Thus he was succeeded by Tanney, who is in
sympathy with the present policy of the Government. It
is felt by Flandin that this step is a beneficial accom-
plishment.
- 7 -
plishment. He is aware, however, that the improvement
in France's finances, as exemplified by the upward move-
ment in rentes, is merely a springboard from which he
must move on to levels which are more substantially pro-
ductive.
ATHERTON.
EA: LEW
February 2, 1935
Deaths in Utica and Gloversville, personel" New York:
PSF
DuPont "Zerone"
Bee Drug Co. & Thrift
----
Co.
Rubbing Alcohol
Gas Station
Several shipments -
one seized
7 drums= 350 gals.
Nick Nole & Bros.
under in-
Sam & Salvatore
Anthony Barresi
dictment
DiBenidetto
Roaco Fanelli
under $2000 bond
Joseph Enea &
& disappeared
Azzaritis'
Pape or "Pepe"
>
disappeared
Garage
Di Pietro
Mary Derrico
Rose Calabrese
and son
& daughter
same name
Gloversville
deaths
Utica deaths
Hilda Trapnick
John Callahan
Utica Deaths
Utica Deaths
MEMORANDUM
Treasury's
As a result of the enforcement of regulations now in effect,
the bootleggers raw materials have dropped to a fraction of their former
figure.
The bootlegger, in an effort to meet his requirements for illicit
alcohol, has been forced to resort to the "cleaning" of denatured alcohol,
and substitution of synthetic wood alcohol.
The death of 31 people in Utica and Gloversville,N. is an immediate
result of the shortage of non-tax-paid alcohol. There, the bootlegger
merely bleached the color from poisonous synthetic wood alcohol andthen
sold it for beverage purposes.
The Treasury Department has also been prosecuting a vigorous anti-
smuggling campaign by the Coast Guard and Customs Service, in coordination
with the Alcohol Tax Unit.
This has resulted in such a stiff front against smuggling from the
seaboard that rum runners are having great difficulty in landing their
cargoes.
The situation in this regard has been helped considerably by the
commendable steps taken by two foreign Governments. namely, Canada and Cuba.
The most effective of these steps was the requirement of a "landing
certificate bond," in cases of exports of spirits. This bond is double the
import duty on the commodity, and insures that it will be legally landed
in the port for which the vessel clears.
This effectively blocked the efforts of rum runners who would clear from
B. foreign port with liquor, but, instead of going to that port, would proceed
to the coast of the United States, into which the liquor would be smuggled.
2.
Cuba has just recently taken a particularly commendable step to prevent
the smuggling of alcohol into the United States. The requirement for land
certificate bonds was already in effect in Cuba.
However. alcohol was
being shipped to smiggling bases in the West Indies, from which no such
certificates were required, and from these bases the alcohol was smuggled into
the United States.
To prevent this the President of Cuba issued a decree
to the effect that no shipments of alcohol or liquor would be permitted from
Cuba to these smuggling bases.
Cuba,being the principal source of supply
to said bases, this resulted in the drying up of their supply.
In view of the commendable action of Canada and Cuba, it is confidently
expected that several other foreign countries concerned will see fit to take
similar action, particularly since the smuggled alcohol, in & considerable
measure, eventually enters into direct competition with the legal liquor
imported from these countries into the United States.
The principalsources from which run runners may now obtain cargoes of
liquor or alcohol are St.Johns, New Foundland, St. Pierre Miquelon and Mexico.
It is expected that the British Government will take steps to insugurate a system
of landing certificate bonds on exports of spirits from St.Johns,New Foundand,
that the French Government will take similar action in the case of St.Pierre,
and that Mexico will insugurate this system with respect to her ports on both
the Atlantic and Pacific coasts
1618
Suld Inp.IT tases
35
Win unprevate abligations
Win fold certificate
Joint Preal innal
but plantiffs
Certificates - unfaction
in Thrry
layress ND right?
34
tap
First home nuw for your
Buccaneer replomat.
37E
MEMORANDUM FOR THE SECRETARY
Henry. (1) (1)
PSF
February 19, 1935.
Treasury
Subject: Newfoundland.
We have received confidential information from our Consul General at
St. John's, Newfoundland, that the Newfoundland government has established &
system of control over liquor exports, along the lines requested by us, said
system having been approved by the Dominions office in London. This system
went into effect last Saturday, February 16, at midnight.
The system is described as the Bermuda system of landing certificates,
applying to vessels under 200 tons. (The rum running vessels are all under
this tonnage, averaging around 100 tons.) This means that before a rum runner
can clear with & cargo of alcohol or liquor, the exporter will have to deposit
a cash bond equal to double the import duty on the spirits. This bond may
only be returned upon the presentation of & landing certificate, from the
port for which the vessel clears, to the effect that the spirits have been
legally landed. Since the import duty on alcohol in Newfoundland is $5.80
a proof gallon, the amount of bond necessary per gallon of 180 proof alco-
hol is $10.44. In other words, a gallon of alcohol which costs the smuggler
$.50 at St. Johns, will have to be covered by a bond amounting to over twenty
times that amount, to insure its legal delivery in a designated foreign port:
before it can be exported. Since this puts up a prohibitive bar in the way
of the smugglers profit, it is safe to say that it will stop smuggling from
Newfoundland.
The above information has not been received officially as yet, since
the British Embassy here has not been notified in the premises by London.
- 2 -
To speed up the official notification (in order that we may be in a position
to immediately arrange with France as to closing up St. Pierre by & similar
arrangement), I have requested Mr. Osborne, Counsellor of the British Em-
bassy to inquire by cable of London as to the decision in the matter. I did
not disclose to Mr. Osborne the source of our information, but merely told
him we had received word in a roundabout way, and would appreciate official
verification if the facts were as reported. Upon receipt of the necessary
official information from the British Embassy, the State Department will
then proceed to close the deal with France.
The above information should not be given publicity at present, since
the British Embassy, as I have stated above, do not know it as yet, other
than what I told Mr. Osborne. If we should give it publicity at this time,
the favorable position in which our Consul General is now established in
Newfoundland might suffer, in other words, his information might be shut off.
Therefore, I would suggest withholding publicity for a few days, until after
we close with France.
B. m. Thompson
B. M. Thompson.
(Confirmation of cable taken over phone)
SECTION TWO. Telegram No. 444 of May 29, 1935, from
the American Embassy, Paris.
up to $200,000,000 at their disposal. Should the present
tendency continue, they feel, the present allotting daily
of a fixed amount may conceivably fail to take care of
the situation. The Bank of France would earmark gold
automatically as sales of dollars were made, should such
a large authorization be given to it. Guarantee was
given by the two Bank of France officials that such gold
as was earmarked would be free for export, and that even
if an embargo should be imposed, no risk would be involved.
While I was at the Bank of France, Cariguel had brought
this matter up. He even suggested that the Bank of France
would be willing to make daily shipments of gold to England
should our people be the least hesitant about this pro-
cedure.
I visited Rueff at the Ministry of Finance after I
had this conversation with Cariguel. Rueff also gave me
assurances that should an embargo be imposed there would
be no question of holding up gold earmarked for the United
States. h his opinion the real test was occurring this
morning when the project of law which was deposited with
the Chamber yesterday was taken up for consideration by
the Finance Committee. The decision had been made by
Flandin that if the Committee meeting this morning should
so oppose his policies that defeat appeared inevitable,
this afternoon he would tender the resignation of the
Government.
- 2 -
Government.
At noon at the close of trading $21,500,000 had been
sold by Guaranty. It is the opinion of this Bank that the
market could be stopped if the Bank of France had authoriza-
tion to sell $200,000,000.
END SECTION TWO.
STRAUS.
EA:LEW
OC/CT/Q
MISS LE HAND:
The President wants to take this with him
the next time he goes to-Hyde Park.
W.L.M.
file
PSF
Treasury
June 6, 1935.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
SUBJECT: Poughkeepsie retail liquor inspection.
There are attached hereto news and editorial clippings
from newspapers in Poughkeepsie, N.Y., reflecting a highly
critical attitude as to the inspection of retail liquor estab-
lishments in Poughkeepsie by special deputy collectors of
Internal Revenue on May 27th, 28th and 29th, 1935.
The inspection of retail liquor establishments in
Poughkeepsie, N.Y., was a part of a checkup of such establish-
ments which is being carried on throughout the United States to
determine to what extent there is wilful violation or failure
to comply with federal laws and regulations with respect to the
sale of intoxicating liquors and to advise retail merchants
more fully of the requirements of such laws and regulations.
The work was inaugurated in New York City on February 4, 1935,
and has since been extended to eight other large cities and to
various smaller communities. A list of principal cities in
which a canvass has been conducted and a summary of results there-
in is attached. In the cases of the larger cities listed the co-
operation of state and city liquor control agencies and police
departments was enlisted, so that there might be a joint check-
up as to compliance with federal, state and local laws, ordinances
and regulations. In all casés the local authorities have welcomed
the opportunity to cooperate with federal officers and the attitude
of the press almost without exception has been one of commendation
of the project and the manner in which it is being prosecuted.
It is worthy of note that extensive newspaper publicity
was given to the New York drive and to the fact that similar
canvasses would be carried on in other parts of the country, so
that the community of Poughkeepsie should have had adequate notice
of the character of the work contemplated in that community. In
carrying on the canvass those in charge of the field crews have
been instructed not to bring prosecutions except in cases of
obvious wilful violation of the law and to impose only nominal,
that is minimum, penalties as to all violations which are not of
the wilful type. The aim has been simply to obtain as full
- 2 -
compliance as possible with federal laws and regulations and
to inform dealers what will be expected of them. There was
nothing peculiarly drastic in the treatment of the Poughkeepsie
retailers, although the accounts in the Poughkeepsie newspapers
tend to give that impression.
The check-up throughout the country has brought into the
Treasury considerable suns in immediate revenue, besides guarding
against future loss of revenue. Incidental to the major purpose
it should also be noted that these inspection surveys have re-
vealed to state and city authorities evasion of state taxes and
local license fees and have thus augmented state and local revenues.
Generally they have promoted better understanding of federal, state
and local laws and regulations on the part of retailers.
The federal violations found in all cities include: Failure
to have or to post the federal occupational tax stamp, which all
retail dealers in spirits and beer are required by law to purchase;
the possession of unstamped bottles; the possession of unattached
strip stamps; failure to destroy beer stamps; refilling of bottles;
the possession of non-tax-paid liquor and the carrying on of recti-
fication operations without legal authority to do 60 and without
the payment of the special tax required.
It is worth noting that the inspections in all nine princi-
pal cities listed in the attached tabulation revealed & total of
10,310 violations in 68,864 inspections, the number of violations
being 15 per cent of the number of inspections. In Poughkeepsie
the number of inspections made WELB 152 and the number of violations
found was 64, the percentage there being 42 as compared to 15 in
the nine large cities. Only 2 of the 64 Poughkeepsie violations
were referred to the enforcement branch for prosecution. These
were cases of the possession of non-tax-paid liquor. Tax and
penalties collected in Poughkeepsie amounted to $123.99, and offers
in compromise in the amount of $1,195, with respect to the 62 vio-
lations not referred to enforcement, were submitted to the Collector
of Internal Revenue. The average amount of tax, penalties and
offers in compromise for each inspection in Poughkeepsie was $20.61.
In the nine large cities listed the average amount collected for
each inspection was $3.00.
The Amrita Club at 170 Church Street, Poughkeepsie, was
among the places visited by inspectors and there were found 25
bottles of liquor without strip stamps and the standard compromise
penalty of $100, applied in such a case, was suggested, which the
officers of the club and President refused to offer. An investi-
gation was subsequently made (on June 1) by 0. W. Jones, Inspector
in Charge, who interviewed four members of the Board of Governors
and William E. Gibson, Steward-Manager. Jones believes that Gibson
- 3 -
and the officers of the club are truthful in their statement
that the liquor was all tax paid but that the stamps had been
washed off. It appeared that the club might offer a nominal
compromise settlement of $25, although one member of the board
objected to this as an admission of guilt. All asserted that
the club had meticulously lived up to the letter of the law
even during prohibition.
on
These are the results of inspections in leading cities:
New York City:
Number of inspections
23,453
Federal violations
3,684
Taxes and penalties collected
$47,923
Offers in compromise
49,192
ChiChicago:
Number of inspections
26,089
Federal violations
3,726
Taxes, penalties & offers in compromise $55,129
Milwaukee:
Number of inspections
.....
2,838
Federal violations
573
Taxes and penalties collected
and offers in compromise
$
$ 8,122
Pittsburgh:
Number of inspections
2,353
Federal violations
196
Taxes and penalties collected
$ 1,596
Offers in compromise
2,415
Philadelphia:
Number of inspections
4,186
Federal violations
844
Taxes and penalties collected
$ 10,533
Offers in compromise
10,477
Buffalo:
Number of violations
2,075
Federal violations
251
Taxes and penalties collected
$ 1,191
Offers in compromise
3,195
San Francisco, Oakland
and Los Angeles:
Number of inspections
7,870
Federal violations
1,036
Taxes and penalties
$ 5,438
Offers in compromise
12,515
ALKIKA
Monday, June 3, 1935
IT WOULD BE WORTH WHILE
The Eagle-News hopes that the report, cur-
rent on Saturday, that licensed liquor dealers
who were penalized last week by agents of the
Internal Revenue bureau for highly technical
violations of the federal liquor laws will protest
to higher-ups in the bureau or the Treasury de-
partment proves well founded.
That such a protest will result in a waiver
of the penálties imposed is probably to be
doubted. So far as this paper knows, the agents
neither exceeded their authority nor went be-
yond the strict letter of the law. There was ap-
parent warrant for all the $10 levies imposed in
the regulations which the federal government
has devised to control the liquor traffic.
But perhaps it might do some good if the
commissioner of Internal Revenue and some
of his higher-up assistants had an opportunity
to learn the reaction of reputable licensees to
the sort of enforcement that came to Pough-
keepsie's attention last week. If the matter is
presented to them properly, they may well
realize that harsh treatment of persons who
have every intention of observing the law but
may fail in some minor technicalities is not a
good way to promote respect of law and whole-
hearted support for it. They may realize too
that the man thus penalized after he has paid
license fees may be inclined to think that there
may be some advantage in not trying to observe
the law at all. If they do come to such ideas,
perhaps they may decide that the way to use
the man power at their disposal is primarily in
warfare against those who are engaged illicitly
in the liquor business rather than in harassing
dealers and organizations that are trying in good
faith to co-operate with government.
EDITORIAL
Poughkeepsie EAGLE-NEWS
Friday May 31, 1935
The Poughkeepsie Eagle-News
(Established 1785)
Official Newspaper of the City of Poughkeepsie
Official Newspaper of the County of Dutchess
PUBLISHED DAILY, EXCEPT SUNDAY
By PLATT & PLATT, INC.
Entered at Poughkeepsie, N. Y, Post Office
as Second Class Mail Matter
Friday Morning, May 31, 1935
Subscription Rates
By carrier: per year $7.00, six months $3.50, three
months $1.75, per month 60c; per week 15c.
By mail in first postal zone: per year $5.00, stx
months $2.50, three months $1.25, one month 50c.
By mail outside first postal zone: same rate as
by carrier.
Audit regulations prohibit delivery of this newspaper
to subscribers who are in arrears,
The two day visit of the agents was a
carnival of ferreting out technical offenses of
Member A. N. P. A.
Member N. Y. S. P. A.
which it is safe to say that 90 per cent were of
MEMBER OF THE ASSOCIATED PRESS
the most innocent sort. The agents were not
The Associated Press is exclusively entitled to the use
daling with bootleggers or speakeasy proprie-
for publication of all news dispatches credited to it or
not otherwise credited in the paper and also the local
tors, but with honest business men and organiza-
news published herein. All rights of republication of
tions holding state and federal licenses. They
special dispatches are also reserved.
were showing their authority not to crooks and
.....
criminals but to reputable proprietors of decent
NEUTRAL IN NOTHING
establishments. It may be said that those pro-
prietors should have memorized every regula-
LIQUOR LAW ENFORCEMENT
tion in the long list sent out by the Internal
Revenue department, and that failure to do so
Poughkeepsie had an opportunity Tuesday
does not excuse them. But we think it also
should be said that government and its agents
and Wednesday to observe the type of enforce-
ought to show some reasonable appreciation of
ment of the federal prohibition laws which the
the fact that drastic treatment of those who are
Internal Revenue bureau is undertaking with
trying to live up to the law is a harsh and a silly
its bands of roving agents.
business.
Sixty of them came into town on Tuesday.
The present liquor regulations are compara-
While official secrecy marked their activities,
tively new. Those who are obviously trying to
engage in the liquor business lawfully ought to
it is known that they made two arrests and
be given a reasonable period to become familiar
scores of seizures of liquor allegedly possessed
with the details of the regulations. In the vast
in violation of some section of the statutes, and
majority of technical violations discovered by
affected many civil compromises which cost
the Internal Revenue men in Poughkeepsie, a
licensed dealers in the aggregate hundreds of
courteous warning would have been all that the
dollars.
situation warranted. Those who might have
offended unwittingly should simply have been
There can be nothing but commendation for
informed of the fact and advised of federal re-
action taken by the revenue men against
quirements which they had overlooked. If the
obviously intentional violations of law. But the
aim of the Internal Revenue bureau is to have
vast majority of the seizures and civil assess-
the law observed and respected, such a pro-
ments attributed to them were the result of the
cedure would have served its purpose.
most minor sort of technicalities by law-abiding
Prohibition lost the support of the public in
licensees of good reputation who even the agents
part because of the manner of its enforcement.
themselves, if they had one iota of intelligence,
If enforcement of the liquor laws which followed
knew had no intention of circumventing any
repeal is to be permitted to become unreason-
federal statute. There were penalties in cases
able and idiotic, these laws, too, will fall into
of kegs or bottles on which tax receipt stamps
disrepute and meet with resistance. If honest
had fallen off; seizures of liquor of well known
licensed dealers are to be subjected to severe
brands because stamps had dropped or been
penalties for minor technicalities, the Treasury
washed off the bottles that contained them when
department will find public indignation wide-
the agents must have been fully aware that the
spread. If the Internal Revenue bureau wants
tax had been paid. On-the-premises retail deal-
to enforce the liquor laws, it would do better
ers whose employees had made the unhappy
to send its squads of 60 out hunting bootleggers
mistake of putting fruit juices in empty liquor
than to loose them upon honest, law-respecting
bottles were penalized. Dealers who buy, liquor
licensees.
of foreign origin on which importers, do not
affix stamps to every bottle but send stamps to
cover shipments were disciplined for any
stamps that happened to be found loose.
IT WON'T HAPPEN AGAIN
Tempers are boiling as a result of the sweep-
ing visit of the "G" men in search of violations
of the alcoholic tax regulations of the Internal
Revenue department. Moving on the city in a
concerted force of about 30 men, the unit delved
into liquor, wine and beer dispensing establish-
ments indiscriminately and proceeded to enforce
the letter of the law so vigorously that scarcely
anyone escaped. There was no arguing with
their actions. They explained who they were and
POUGHKEEPSIE EVENING STAR
went to work.
The regulations they enforced were picayune
FRIDAY
in many instances. Where strip stamps were
found unattached, violations were charged: where
strip stamps had been removed in the interests of
May 3, 1935
cleanliness, violations were charged: where strip
stamps had fallen from bottles and kegs, viola-
tions were charged: where bottles were used for
non-alcoholic mixing beverages, violations were
charged. If the letter of the law was not adhered
to, they charged violations, admitting withal that
there was no intent to violate the law. In such
instances they offered opportunities of civil com-
promise in which the violator was permitted to
offer to pay a fixed fine.
Reports indicate that such fines totaled more
than $2,000. The swankiest clubs and hotels
were victimized along with the more modest in-
stitutions. Where wilful violation was suspected,
formal charges were filed.
Naturally, legitimate dealers who have been
trying to obey the multitude of laws and regula-
tions were incensed over such treatment. They
resented being treated. as they phrased it, "like
bootleggers and criminals", when they had paid
their good money for the privilege of selling
alcoholic beverages, and had made conscientious
endeavors to obey the laws and regulations.
They have just cause for complaint, but on the
other hand, the "G" men had a better story. They
explained that the regulations have been known
and in force for two years. They feel two years
sufficient time for any legitimate dealer to ac-
quaint himself with the regulations. They ex-
plained, too, that the drive is pointed toward
abolition of illicit liquor. They contend that the
taxpayer who pays for the privilege of selling
alcoholic beverages is entitled to maximum pro-
tection, and they are striving to give it to him by
driving out illicit liquor.
If the system is going to work, the "G" men
have got to be tough about the whole business.
Canada achieved its admirable regulatory system
by being tough with the people and the United
States must adopt the same attitude.
Warnings such as were served by formal
charges and civil compromises are bound to have
a lasting effect. It's a safe bet that the honest
places nipped in the first drive, won't be caught
again.
The drive was unpleasant, because it caught
so many innocent violators-but it should have
a most lasting effect in rectifying the situation.
Revenue Agents Visit City;
Arrest Catharine St. Man;
Levy Scores of Civil Fines
Squad of 60 Federal
Men Check on Local
Many Compromises Reported
Drink Dispensaries
Many of the leading hotels, restau-
rants, clubs and beer gardens of the
city were reported to have compro-
fised their claims civilly with the
WEISSMAN HELD
raiders, as provided by law, to escape
the necessity of arraignments and
court procedures.
Accused of Possession
It was said the agents devoted their
attention mostly to an examination
Of Untaxed Liquor;
of bottles for tax stamps, an examin-
ation of kegs for stamps, and testing
Is Freed in Bail
of liquor for possible watering. It was
said that one hotel was fined $70, that
fines in other cases ranged from $10
Sixty agents from the federal In-
to more than $100. It was reported
ternal Revenue department swooped
the compromises made totaled more
down on licensed liquor dispensaries
than $1.000.
in Poughkeepsie yesterday morning,
It was said that In most cases where
affected one arrest, and made re-
violations were found the raiders
ported civil compromises with more
made no charges of possession of
than a score of other proprietors in
bootleg liquor, but conceded that
whose establishments violations of
many bottles that bore stamps when
federal law were found.
purchased were without them because
Arrested was Samuel H. Weissman,
they had dropped off while the bot-
proprietor of the Congress tavern in
ties were in use behind the bar.
Catharine street, who was arraigned
The testing of liquor for watering
at noon before U. S. Commissioner
was said to have taken place directly
Platt and released in bail of $2,000
behind the bars where the bottles
for a hearing on June 12. Ball was
were in use.
furnished by Samuel Meyer and
Squad Strikes Quickly
Weissman was released after spending
The raiders, who have been swing-
& few minutes in jail,
ing through the entire Hudson Val-
He is charged specifically with vig-
ley region, were reported to have ar-
lating section 274, title 26 of article
rived in this city shortly before 11
201 and 207 of the liquor taxing gict
o'clock. Working much like the
of 1934, and section 3328 of the rev-
agents of prohibition days, they
enue statute. According to the com-
swooped down on some 30 places all
plaint filed against him by Cleveland
at once, two men going to each place
B. Dodge, one of the agents, he was
chosen. The examinations in most
in possession of untaxed liquor, re-
cases took up to a half hour, and
filled bottles of untaxed liquor, al-
then other places were visited.
tered strip stamps and six strips of
At the Newburgh office of the in-
stamps.
ternal revenue department it was said
When he was arraigned before
the raiders were out on the road for
Commissioner Platt Weissman, who
several days and that they had been
is represented by John J. Mulvey
instructed to give out no information
pleaded not guilty.
as to their operations. This informa-
tion, It was said, might be forthcom-
ing later.
POUGHKEEPSIE EVENING STAR
Wednesday, May 29, 1935
Operatives of the unit declined to
FEDERAL SQUAD
known retail liquor dispensers in the
city.
name any places against which pro-
Before coming to Poughkeepsie the
ceedings were instituted. Proceedings
same unit, which works out of New
are of two kinds: If there is a willful
ARRESTS WOMAN
York city, conducted a similar clean-
intent to violate the regulations,
up in Newburgh. They are searching
formal charges are lodged before a
for liquor without proper U. 8.
U. 8. commissioner; if the violation
government strip stamps, liquor
is "Innocent", and committed through
without occupational tax stamps,
ignorance of the regulations on the
part of the dealer, he is offered on
Inspectors File Charge
bootleg liquor contained in properly
Inbeled bottles, and other violations
opportunity to compromise the claim.
of the regulations governing retail
Operatives declined to tell what com-
Against Mrs. Andrews
liquor, wine and beer selling under
promise offers had been received, ex-
federal laws.
plaining that all offers are subject to
The drive is the first of its kind
approval. It was reported, however,
since repeal became effective two
that more than two score of com-
years ago, and it is to be the first
promise offers were made, and that
BULLETIN
"G" men conducting a clean-up
of periodic visits to retail dealers in
fines ranging from $10 to $100 and to-
campaign in Poughkeepsie for viola-
Poughkeepsie and Dutchess county by
taling more than $1,500 are involved.
flying squads of "G" men.
Formal charges were lodged against
tion of federal regulations on liquor,
The flying squad consists of 30
one dealer yesterday, Samuel H.
wine and beer, this afternoon lodged
operatives. They arrived in Pough-
Welssman, proprietor of the Congress
a charge of possession of illicit liquor
against Mrs. Sarah Andrews, who
keepsie yesterday, set up headquarters
Tavern in Catharine street being
in the Internal Revenue department
charged with violating section 274,
conducts & grocery store at 580 Main
street. In the absence from the city
at the postoffice, and then went out
title 26 of articles 201 and 207 of the
in teams to make indiscriminate in-
liquor tax act of 1934, and section
of U. S. Commissioner Platt, she was
released on $1,000 bond in city court
spections of all liquor selling places in
3328 of the revenue laws. Cleveland
for & hearing Saturday before Mr.
the city. They do not operate on lists,
B. Dodge, the operative who lodged
the charges, accused Welsaman of
Platt. Thomas F. Purcell appeared M
but merly pass along the streets and
visit all places where aleoholic bev-
possessing untaxed liquor, possessing
her attorney and Mrs. Anna Moawood
refilled bottles of untaxed liquor, al-
gave bond for her appearance.
erages are sold. They identify them-
tered strip stamps and six strips of
selves when the visit retail places, and
stamps. Held in custody, he was ar-
Declaring war on illicit liquor, a
then make their inspections. The
raigned before U. 8. Commissioner
flying squad of "G" men comprising an
teams are equipped, with devices for
Platt and released on $2,000 ball for
alcoholic tax unit of the Internal
analyzing and examining alcoholic
a hearing June 12. Bamuel Meyer
Revenue department, swept into
beverages, and for measuring them
I
gave bail and John J. Mulvey appear-
Poughkeepsie yesterday, and today
to see If the labels are accurate.
ed with Welssman, who pleaded not
were winding up a canvass of all
So many violations were uncovered
guilty.
that a spokesman for the unit ob-
served that "when we get through to-
night, we'll be pretty sure this city is
cleaned up."
Poughkeepsie EVENING STAR
Saturday, June 1, 1935
RAIDS MAY CAUSE
FORMAL PROTEST
Members of Local Clubs
Reported to Be Angry
Aroused over the manner in which
a flying squad of 30 "G" men of Un-
cle Sam's alcohol tax unit conducted
their operations in Poughkeepsie and
obtained civil compromise offers from
3
swanky clubs, some members are con-
templating banding clubs and hotels
and restaurants to engage in & legal
battle seeking return of the monies
they offered in compromise. President
Roosevelt and Henry Morgenthau, Jr.,
secretary of the treasury, are reported
to hold membership in two of the
clubs which may join the protest
move, according to reports.
Considerably angered over the way
in which "G" men obtained com-
promise offers because of "innocent"
violations of the tax regulations,
victims have sent numerous letters to
influential personages at Washington
in protest.
Poughkeepsie SUNDAY COURIER
June 2, 1935
Formal Protest On Liquor Raids
Will Be Forwarded to Capitol
Formal protest against the action
liquor," said a prominent club mem-
of federal agents who a few days ago
ber yesterday. "The federal agents
imposed heavy penalties upon local
were extremely discourteous and un-
clubs and hotels and confiscated many
necessarily rough in their tactics.
bottles of liquor will be sent to the
The proper officials will probably
Enforcement Bureau, It was said
know on Monday what Poughkeepsie
last night.
thinks of the whole matter."
One club connected with a promi-
nent fraternal order is raid to be
contemplating this action and a let-
ter may be forwarded to Washington
tomorrow. It is said that officials of
the organization have the matter in
hand.
While there have been reports that
the federal agents imposed penalties
of approximately $1,000, It was said
last night that the total was nearer
$10,000.
There were 30 men in the raiding
party which visited the city to en-
force liquor tax provisions. They con-
ducted similar raids in all the cities
and larger villages in the Hudson
Valley.
The alleged violations in high class
clubs and hotels were purely techni-
cal, an officer of one of the clubs said
yesterday. There had been no at-
tempt to evade the law he said. The
victims simply did not know of the
existance of the petty rules which
they were accused of violating.
"Penalties were imposed where
orange and lemon juices were found
in bottles which formerly contained
Poughkeepsie EAGLE-NEWS
Friday, May 31, 1935
REVENUERS GO;
VICTIMS ANGRY
Reputable Licensees Wrathy
payable to the collector of Internal
Revenue. It is understood that such
settlements are subject to his ap-
Over Penalties Imposed
proval.
There seemed to be some doubt yes-
For Technicalities
terday whether appeals could be
taken, but it is understood that some
of the cases may be reviewed. There
was talk that protests would be made
The 60 roving agents from the In-
by some of those penalized, and that
ternal Revenue bureau of the Treas-
perhaps the attitudes of some of the
ury department who spent Tuesday
agents would be subjected to sharp
and Wednesday in Poughkeepsie
criticism to their superiors.
checked out of town Tuesday night
The reaction of the average victim
leaving behind them & record of two
of the agents' foray was that the gov-
arrests, soores of civil compromises
ernment was dealing much less than
effected for technical violations of
fairly with reputable dispensaries and
federal liquor regulations, and just
organizations which were trying to
about as many wrathful licensees.
liveup to the law and which had vio-
How much the agents took out of
lated its details wholly unwittingly.
Poughkeepsie could not be estimated
There was plenty of bitter comment
yesterday, since their activities were
on the alleged unreasonableness of
velled in official secrecy, but the
the procedure. One widely known
amount was reliably reported to have
north side club was reported to be
run well into four figures, to say
seething with wrath.
nothing of the confiscation of liquor
In one-instance at least, It was re-
valued at many hundreds of dollars.
liably reported that bitterness result-
The victims of the agents' activities
ed in more than comment and that
recalled their experiences yesterday
one agent found himself on the re-
with well nigh unanimous anger. In
ceiving end of a vigorous right hook.
most cases the offenses for which
Hauls Are Labeled
they were penalized were highly tech-
The hauls made by the agents were
nical. In some instances it was re-
carried to the Internal Revenue bu-
ported that fines were levied for kegs
reau office in the Post Office where
of beer on which revenue stamp taxes
they were labeled for future reference.
had failed to stick. In other cases,
Whether they are to be sent to New
bottles of well known brands produced
York, nobody seemed to know, but It
by distillers whose names are such
was agreed by those who saw the pro-
cession of agents bearing bottles into
as to guarantee the legality of all
the federal building that a fine col-
transactions were seized because
lection of high priced liquor had been
stamps had been inadvertently washed
gathered.
off. At least one reputable establish-
On Wednesday afternoon the agents
ment said to have been debited with
made their second arrest, taking into
a violation because fruit juice used
custody Mrs. Barah Andrews, who
for mixed drinks had been put into
conducts a grocery store at 580 Main
& liquor bottle. When civil compro-
street, on a charge of the possession
mises were made, the uniform penalty
of illicit liquor. In the absence of
for every offense, and each bottle con-
United States Commissioner Isaac
stituted an offense, was $10.
Payment by Check
Platt, -ne was released in bond of
It was reported that those with
$1,000 in city court for a hearing Bat-
whom civil compromises were made
urday. Her ball was furnished by Mrs.
were Instructed to obtain certified
Anna Moawood.
checks covering the amounts, made
Friday, May 31,1935
'G' MEN ACCUSE MOAWOOD
LOCAL FLIER
OF INTERFERENCE
OUT ON BAIL
Understood to Be Result
'G' Men Nab Him
of Liquor Inspection
NO ASSAULT CHARGED
Mrs. Andrews Arraigned
for Hearing June 13
Accused of interfering with "G"
men when they visited the store of
Mrs. Sarah Andrews at 580 Main
street in their two-day clean-up this
week, Thomas Moawood, local aviator,
was released on $3,000 ball before U.
S. Commissioner Platt this morning.
At the request of his attorney, Thomas
F. Purcell, the case was adjourned for
hearing until June 13. Mrs. Andrews,
understood to be an aunt of Mr. Moa-
wood, was released on $1,000 bail for
hearing on the same date on 8 charge
of possession untaxed liquor. "G" men
allege that they found some liquor in
gallon jugs.
THOMAS MOAWOOD
Lodging of charges against the flier
raised to three the number of formal
cases brought against local persons
in the whirlwind clean-up of the
"G" men. The first day of their visit
they lodged charges against Samuel
Weissman, Catharine street restau-
rateur, for alleged wilful violations
of the federal regulations on liquor.
Subsequently the charges against Mrs.
Andrews and Moawood were brought.
Judge Purcell said that he did not
know the exact nature of the charge
against Mr. Moawood, but he under-
stood. from the proceedings that his
client was accused of in some manner
interfering with the work of the "G"
men when they made their visit at
the Andrews place. He said that Mr.
Moawood did not commit any assault,
but that there was some sort of a dis-
turbance at the time of the visit.
BEACON LIGHT AND FISHKILL STAR
Friday, May 31, 1935.
G-MEN IN CITY
CATCH LIQUOR
LAW VIOLATORS
Compromise Infractions By
Money Settlements-in
Poughkeepsie Also
Government agents representing the
Alcohol Tax Unit of the Internal Rev.
eue Breuau made a flying visit to
Beacon on Monday and visited all 11-
censed liquor stores and saloons, Sev-
eral infractions of the law were found
and compromises were arranged with
the violators who paid varying sums.
The agents were looking especially
for Illicit liquor and liquor on which
the tax had not been paid. All of the
violations found In Beacon were minor,
the highest sum being paid amounting
to $30.
In Poughkeepste, where the agents
were also active, two were found with
untaxed liquor and arraigned before
the U. 8. Commissioner, Isnao Platt.
PSF
fin
THE
SECRETARY OF THE TREASURY
Treasury
WASHINGTON
29 aug 1935'
AUG
28
1935
My Dear Mr. President:
In reply to your inquiry of August 26th relative to status
of the case of former Senator Jim Watson, I transmit to you the
following information which I have received:
The investigations in this case and the allied Finkelstein
case were completed some time ago. In the Finkelstein case,
which is already officially in the Department of Justice, infor-
mations have been filed charging failure to file returns in two
different years. These are misdemeanor counts. The case has
been receiving careful consideration as to the advisability of
procuring an indictment for intent to defeat and evade tax, a
felony.
A conference was held several weeks ago, attended by Mr.
James Morris of the Department of Justice, Mr. Oliphant, Mr.
Jackson, and Mr. Kent, Assistant to Mr. Jackson, at which the
procedure to be followed in the Finkelstein and Watson cases
was fully discussed, and the following conclusions reached. An
indictment should be sought in the Finkelstein case immediately
and the trial of that case should be expedited in every possible
way. The Watson case should be held in statu quo for the time
being, awaiting the outcome of the Finkelstein prosecution.
The above course of action was deemed advisable by the con-
ferees for the following reasons: The case against the former
Senator as it stands is not so overwhelmingly strong as to create
a reasonable assurance of a conviction or to negative completely
the charges of political persecution which would inevitably ensue
upon his indictment at this time. The period of the statute of
limitations will not run upon the earliest year involved in the
Watson case until next Spring. The transactions which will form
the basis of the Finkelstein prosecution are also transactions
in which the former Senator was in some manner involved and which
resulted in financial benefits to him. His claim is that these
benefits were all in the nature of gifts and therefore did not con-
stitute taxable income. The developments in the Finkelstein prose-
cution may go far to establish the existence of some form of partner-
ship relation between Finkelstein and the former Senator, which would
strengthen greatly the Government's case against the latter, or they
may tend to support Mr. Watson's explanation of the transactions. It
seems possible that Mr. Watson may feel it necessary to come to Finkel-
stein's defense. Should he appear as a witness and subject himself to
cross-examination, the advantage from the Government's point of view
would be considerable.
In any event, it is felt that a much more accurate judgment as to
the probable outcome of a criminal prosecution of the former Senator
will be possible in the light of the record and outcome of the Finkel-
stein case.
Sincerely,
Mymitan Secretary of the Treasury.
The President,
The White House.
prinate
Filleasury.
DEPARTMENT OF STATE
WASHINGTON
September 10, 1935
My dear Mr. President:
I forward an important report just received from our
Embassy in London, relating a confidential conversation
with Monsieur Monick, the French Financial Attaché in
London. Monsieur Monick was previously stationned in
Washington and I know him to be in the direct conficence
of the French financial authorities and a reliable re-
porter. Hence, I am inclined to give faith to his
presentation of the serious possibility that the French
Government may, between now and next May, devalue at
least twenty-five percent.
If such an event should occur in the framework
indicated by Monsieur Monick, I think it quite possible
to state that a relationship between ourselves and the
British authorities in this general field may be impor-
tant in examining just how far the French will go, and
what might happen to the pound-dollar rate.
Faithfully yours,
Corduceshnee
Enclosure:
Telegram from
London, September 6,
1935.
The President,
The White House.
Department of State
BUREAU
EA
DIVISION
ENCLOSURE
TO
Letter drafted
ADDRESSED TO
PRESIDENT
U.S. GOVERNMENT PRINTING OFFICE
1-1000
toxtva
MJP
A portion of this
London
tolegram must be closely
paraphrased before boing
Dated September 6, 1935
communicated to anyone.
(B)
Rec'd 3:20 p. m.
Secretary of State,
Washington,
428, September 6, 6 P. m.
FOR TREASURY FROM BUTTERWORTH.
The following strictly confidential conversation with
Monick French financial attache may be of interest, parti-
cularly in comparing this French viewpoint with the
British attitude, reported in my 423, September 4, 4 P. m,
and previous telegrams:
Monick stated that the crisis in France was much more
than a budgetary matter; that the two great problems are
the high level of French prices as compared with world
prices, and the gap between the prices which the farmer
receives for his products and the prices he has to pay for
what he has to buy. In attempting to cope particularly
with the first problem, the Laval measures had been
predicated on two aspirations: (a) That a rise in pricos
would take place in the United States in the near future,
(b) That a tripartito stabilization arrangement, which
would
MJP -2- # 428, September 6, 6 P. m. from London.
would include a roadjustmont of the franc's value, could
be offected before the May oloctions. Unfortunately the
trond of events now indicates that these hopes would
probably not be realized; likewise confidence had not been
reestablished in France, deposits were not coming out of
hoarding, nor being repatriated, revenues continued to
decline with the result that it was improbable that the
conversion operations which were planned for the end of
September could be carried out. In which case further
borrowing would have to be resorted to which would
further weaken confidence. Reports to the contrary not-
withstanding, the relations between the Bank of France
and the commercial banks still left much to be desired
and, although the Bank of France was now discounting
Treasury bills, it was doing so with the proviso that the
presenter of the bills must prove, to the satisfaction of
the Bank of France, the actual need for such action.
Therofore even disrogarding the disadvantageous offect
which the Itals-Ethiopian disputo was having, it soemed
probable, ospecially in view of the deterioration in the
Dutch position, that another gold bloc crisis might occur
this autumn, perhaps following the meeting of the French
radical party on October 25th.
According
MJP -3- # 428, September 6, 6 p. m. from London.
According to Monick, it is becoming increasingly
clear to those in authority that if devaluation is not
undertaken before the French elections in May, the left
groups, who will then assume control, will cast aside
the Laval decrees and, motivated solely by domestic
considerations, will undertake a drastic devaluation
regardless of international considerations; in which
case a new cycle of currency dis-equilibrium would be
instituted. Contained among the Laval decrees were
many measures of a permanent reformative character which
were long overdue. These should be preserved; and
certainly the world should not be put through another
series of currency depreciations. Therefore those in
authority were seriously considering the question of
devaluation. But such a devaluation would have to be
on the Belgian rather than on the American model; the
Government would have to devalue to the full extent and
could not, for social and political reasons, hold any
reserve power further to devalue.
That being the case, the question arose as to the
course of the pound after such a French devaluation,
when funds returned to France and French export
competition was ronewed. Whereas the Laval decrees,
from
REP
4-#428, Sept. 6, 6 p.m. from London
from a technical point of view, made it unnecessary for
the French to undertake a drastic devaluation, given
the instability of the pound and the indefiniteness of
the British intentions, it was probable that France
would be forced to devalue by at least (repeat at
least) 25% in order to obtain some measure of protection
from a further weakening of the pound. Monick took the
view that after such a French devaluation, which would
take Switzorland and Holland with it, the British might
not have the means, much loss the incentive, to prevent
a weakening of sterling, for the issue would then
become joined as to the dollar storling rate period,
Honick stated, it was important to know whether America
would in the final analysis accept a sterling rate
below $4.86. Questioned on this point, I confined my
romarks to indicating that my personal observations on
my recent trip led mo to bolieve that Amorican costs
wore and probably would continuo to rise, and that
porsonally I viewed the dollar storling rato in terms
of its significance to our raw matorial producers who
compoted not with the United Kingdom but with the
storling aroa.
Monick
REP
5-1428, Sept. 6, 6 p.m.from London
Monick intimated that after a decision had been
reached before any action was taken it was probable that
Washington would be advised (and I presumed questioned
on this score). Monick inferred that the British would
not be advised in advance, but it is obvious that little
would be gained by this, for if Monick's account is
correct the French are on the horns of a dilemma: the
unwillingness of the British to commit themselves and
the necessity of the French to take action before the
May elections.
(GRAY) Gold at 140 shillings 10 pence, amount 30
bars. With the indications that the American authorities
are willing to advance their sterling silver buying price
in consonance with the appreciation of the dollar,
India turned a buyer and took more of the fixing.
Buying by India has continued after fixing. Chinese
buying and selling approximately balanced at fixing.
The feature of the exchange market was the demand
for dollars, which was general in character. Apparently
no gold has yet been contracted for shipment from France
to the United States but a movement is expected to
develop on Monday.
The
REP
6-#428, Sept. 6,65.m. from London
The Bank of France supported sterling. When it
closed the British control sold francs, moving the
rate to 74 29/32. (END GRAY)
ATHERTON
KLP
I
Topuss priss
file
TREASURY DEPARTMENT
Treasury
INTER OFFICE COMMUNICATION
DATE May 19, 1936
TO
Mr. Gaston
FROM
Mr. Haas 9RA
Subject: The Business Situation.
Business this spring is the best in six years. In the week ending
May 9 the New York Times index of business activity reached 100 for the
first time since the week ending May 3, 1930. Except for a few minor
set-backs, the Times index has shown a sustained uptrend since the mid-
dle of 1935.
Other indexes of business activity tell the same story. The index
of industrial production (adjusted for seasonal influences) computed by
the Federal Reserve Board stood at 93 percent of its base period, 1923-
25, in March of this year; business records already available indicate
that the index for April will be close to 100.
Moreover, unlike some of the earlier upturns of the recovery period,
the current advance has not been built on inventory accumulation. It is
encouraging also that the ten-months' upswing in business which began
last July has been characterized by a broadening of the recovery move-
ment to include many of the heavy industries,-- the sector of the re-
covery front which had formerly lagged farthest behind in the record of
progress since March 1933.
Greatly expanded purchases of railroad equipment during the first
quarter of this year, for example, reflect not only maintenance needs
which can no longer be postponed, but also the improved financial
position of the roads. Construction since the mid-summer of 1935 has
been scoring wide leads over year-previous levels. Automobile output
this year has been bettering the good record of the like period in 1935,
despite the handicap of an abnormally high rate of production and sales
toward the close of last year, due to the advanced automobile season.
The sharply higher rate of steel activity during 1936 as compared with
the early months of 1935 gives additional evidence of the strength of
business improvement as reflected in the demand for this basic product,
particularly important to heavy industry.
Although the New York Times index, unlike the index of industrial
production computed by the Federal Reserve Board, purports to represent
8. percentage of "normal," this is far from being the case if we under-
stand "normal" to mean relatively full employment of our human and
material resources. Because of its peculiar construction, the Times
- 2 -
index does not measure our progress toward "normality" as thus defined.
Similarly, recovery of the FRB index to 100 would not mean "normal"
activity, but only activity on the scale of 1923-25, the base period
for this index. The output of goods and services in this country must
move above that in any previous year to bring full employment of our
technical organization and of our working force. This follows from the
fact that 8. "normal" rate of activity in this country must be a rate
which increases each year. Due to the annual increase in our popula-
tion, our laboring force is larger each year; additions are constantly
being made also to our capital equipment, and it is a matter of common
knowledge that the efficiency of our business organizations and the
productiveness of our machinery are undergoing constant improvement.
Thus, it is not possible to express our recovery toward "normal"
as a percentage of the figures for past years. We must produce more
goods and find employment for more people now, to represent full en-
ployment of all our resources, than was true in any prior year. The
New York Times index, although it purports to represent "normal,"
does not in fact define "normal" in these terms. As a result, it over-
estimates greatly the degree of our progress toward the elimination of
unemployment, both of men and of machines.
PSF: Treasury
THE SECRETARY OF THE
WASHINGTON
May 22, 1936
TREASURY free mal Freasury
THE WHITE HOUSE
MAY 22 1936
My dear Mr. President:
RECEIVED
I am returning herewith your copy
of "A Permanent Monetary Policy" together
with Secretary Roper's letter, dated
May 4 which you sent me. I am also
inclosing a one-page memorandum prepared
by Mr. Eccles expressing his views on
this report.
Respectfully,
Secretary of the Treasury
The President,
The White House.
PSF
TREASURY DEPARTMENT Treasury
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 27, 1936
Personal and Confidential
MEMORANDUM FOR
prints file
THE PRESIDENT
In accordance with oral instructions of this morning
I have examined, personally, the provisions of each
Article of the Navy Regulations and of the changes proposed
therein as listed in the two accompanying letters from the
Chief of Naval Operations, and find they pertain merely
to routine matters not fundamental in character in any
respect and recommend they be approved accordingly.
Director of Procurement
PSF
OFFICE
OF
Treasury
TREASURY DEPARTMENT
WASHINGTON
THE
SECRETARY
June 19, 1936.
My dear Mr. President:
The United Press News Service carried the following news item
yesterday:
"Already making plans to spend his new $300,000,000
fund, Administrator Ickes said today that 'preference will
be given applicants seeking grants only' in distributing
the money to finance construction work-relief projects.
"The grants, outright gifts to political subdivisions,
will be 45 per cent of 8. project's cost. The applicant
will supply the other 55 per cent from its own sources or
by borrowing."
In view of our discussion of yesterday naturally this state-
ment on the part of Secretary Ickes is very disturbing to me.
I would like to draw your attention to the following statement
showing total emergency expenditures for relief of unemployment made
during the months of July, August and September, 1935, and the total
emergency expenditures for this purpose to be made for the same months
of 1936, 8.8 estimated by the organizations involved, exclusive of any
expenditures contemplated from the new relief appropriation of
$1,425,000,000:
1935
1936
July
$196,000,000
$269,000,000
August
267,000,000
225,000,000
September
248,000,000
178,000,000
$711,000,000
$672,000,000
If you allocate $125,000,000 a month out of the $1,425,000,000 to
Mr. Hopkins for July, August and September, we would spend $336,000,000
more in the first three months of the fiscal year 1937 than we did in the
same three months of the fiscal year 1936, in spite of the fact that
business conditions at this time are considerably improved over last
year.
-2-
Under the existing circumstances and in line with your Relief
Message to Congress of March 18, 1936, I would like to make two
suggestions, (i) that no new money be allocated to any agency other
than to the Works Progress Administration, and (2) that, inasmuch as
the $300,000,000 limitation in the pending Deficiency Bill applies
only to grants and not to loans, the Public Works Administration be
restricted to making loans from the $250,000,000 revolving fund,
and that if any grants are to be made they be restricted to funds
made available to the Public Works Administration through allocations
heretofore made by you from old Emergency appropriations.
Henry Faithfully Secretary yours, of the Treasury.
The President,
The White House.
OFFICE
OF
33
pilismal
me
leynolds
TREASURY DEPARTMENT
WASHINGTON
THE
SECRETARY
File
July 29, 1936.
Dear Secretary:
Pursuant to your suggestion over the telephone today, I
enclose a brief sketch of my Government service. The following
supplement of personal history may be added:
I was born in Wilson County, Kansas, in 1880, and was
brought up on various farms in the Southwest, including Kansas,
Arkansas, Texas, and Oklahoma, where I remained except for brief
periods of schooling until 1902. I went from Oklahoma to Battle
Creek, Michigan, in November 1902, where I was employed in the
law offices of Jesse Arthur, practising lawyer. My duties were
those of Chief Clerk and Cashier. I studied law in that office
for four years, had charge of the collection department for the
firm, and handled all suits in Justice Courts, and participated
in the trial of a few cases in the Circuit Court. I also did
some court reporting during summer recess when trials were held
during the absence of the official reporter on vacation. My
formal education is limited to high school. Since I entered
the Government Service in 1906, and have been constantly in
Washington since that time, my only opportunity for voting dur-
ing a National Election was in 1904 when I voted for Theodore
Roosevelt for President. I have never taken active part in
- 2 -
political affairs, have never solicited endorsement or support from
any political source for any purpose whatever. In the performance
of my official duties, I have had personal contact with the high
officials of several administrations, but my duties have never COV-
ered political questions in any manner whatever.
Sincerely,
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury.
William H. McReynolds
Appointed July 16, 1906, in the office of the Chief Post Office
Inspector in Washington, coming from law office of Hon. Jesse Arthur, of
Battle Creek, Michigan. Served on various investigating committees
studying organization and procedure in Post Office Department and Postal
Service.
Acted as Head of the Review Unit in the Chief Inspector's Office
handling all inspectors reports until May 1913.
Detailed by Postmaster General Burleson to work with newly created
Division of Efficiency which took over some of the functions formerly
delegated to the President's Commission on Efficiency and Economy then
being discontinued. In cooperation with other members of this group
made studies of the organization and procedure in all bureaus of the
Post Office Department which were utilized by the Postmaster General in
reducing the personnel of that Department and the expenditures in sub-
stantial amount. Subsequently transferred to the rolls of the Bureau
of Efficiency after it became an independent Bureau, and participated
with other staff members of that Bureau in organization and procedure
studies in all Government Departments and practically all bureaus. These
studies involved the development and installation not only of new pro-
cedure and methods of office routine and the elimination of duplication
and the installation of modern equipment, but also the development and
installation of new systems of accounting and fiscal procedure. One of
the incidents to the work on procedure was the development of equitable
- 2 -
standards of compensation for employees. The first concrete evidence of
the development of this idea is contained in the provisions of the Appro-
priation Act for the Post Office Department at the time when the studies
were being conducted there. While salaries were then uniformly provided
in specific amounts for a definite number of positions, the Congress
authorized the Department to adjust such salaries $100 above or below the
specified rate to conform to the earnings shown to be due on the basis of
the standards set up. Subsequently, this principle was carried into the
Personnel Classification Act of 1923.
Acted as Director of the staff of the Personnel Classification Board
established by that Act, having direct charge and responsibility for the
installation of that system and the determination of the appropriate
services and grades for all positions in the departmental service. After
this installation was made became an active member of the Personnel Clas-
sification Board, representing the Bureau of Efficiency. Conducted the
classification survey of all positions in the field service of the Federal
Government in pursuance of the amendment to the Classification Act of 1928.
Proposed and successfully supported the amendment to the Classifica-
tion Act of 1930 which abolished the alternate members of the Personnel
Classification Board and created the position of Director of Classifica-
tion as the operating head of that organization. Was appointed Director
of Classification and occupied that position until the work was consoli-
dated with the functions of the Civil Service Commission and placed under
its jurisdiction.
- 3 -
Was appointed as Special Assistant Director of the Bureau of the
Budget with the primary duty of recommending what changes should be made
in the organization of the executive branch of the Federal Government
with a view to eliminating jurisdictional confusion, and overlapping
and duplication of effort.
Directly after the present Administration was inaugurated was ap-
pointed by the then Governor Morgenthau of the newly created Farm Credit
Administration as his Administrative Assistant.
Came to the Treasury Department in November 1933 with Mr. Morgen-
thau when he became head of that Department and have since functioned as
his Administrative Assistant and Budget Officer.
00000oo00000
Treas morg.
THE SECRETARY OF THE TREASURY
WASHINGTON
September 9, 1936
My dear Mr. President:
I am sending you through Coast Guard the
original text of a cable from Mr. Cochran received
at the Treasury at noon today.
In collaboration with the State Department
we have hurriedly drafted a tentative reply to
this message. I am not at all sure just how we
should handle this very important and delicate
situation.
After you have read Mr. Cochran's cable and
our tentative answer I would appreciate it if you
would call me on the telephone.
Respectfully yours,
The President,
Asheville, North Carolina.
1.
FS
A portion of this
Paris
telegram must be closely
paraphrased before being
Dated September 9,1936
communicated to anyone.
(C)
Rec'd 8:35 a, m.
Secretary of State,
Washington.
RUSH
844, September 9, 9 a, m.
PLEASE DESTROY
FROM COCHRAN.
UTMOST SECRECY AND CONFIDENTIAL.
Reference to my telegram 843, September 8, 8 p. m.,
when Minister of Finance Auriol handed me the document
under reference yesterday evening he stressed its secret
and unofficial character. He said that any equivocation
in the present negotiations would lead to an attack on
the franc which would necessitate immediate imposition of
exchange control. He seeks Secretary Morgenthnu's reaction
to this draft including any suggestions for modifications.
In my 831, September 2, 5 P. m., I gave the background for
this draft. There follows an English translation of the
constituent parts of the draft, which has been checked by
Rueff.
(SPECIAL GRAY). "Proposed note to the American and
British Government's.
One.
PLEASE DESTROY
2.
FS
2-No. 844, September 9, 9 a. m. from Paris
One. The Government of the Republic, while it
has always discarded the possibility of unilateral
devaluation, a simple episode in the economic struggle
among nations, susceptible in turn of giving rise to new
devaluations, is, on the contrary, very desirous of a
real economic and monetary peace. It sees in this the
principal means of putting an end to the development of
autarchic tendencies, o f Germany lessening the restric-
tions and restraints of all sorts which paralyze trade
and which create an atmosphere of general insecurity,
involving the (END SECTION ONE)
KLP:CSB
WILSON
ONFIDENTIAL
PLEASE DESTROY
3
U
SPECIAL GRAY
Paris
Dated September 9, 1936
Rec'd 8:25 a.m.
Secretary of State
Washington
RUSH
844, September 9, 9 am. (SECTION TWO)
DESTROY
gravest dangers to peace.
Two. To this End the Government of the Republic
desires in the first place to remedy the Economic dis-
Equilibrium occasioned in the world by the fall of prices
and by resultant devaluation of certain currencies. It
is ready in so far as it is concerned to participate in
a pre-stabilization agreement fixing the new monetary
relations with precision and clarity, taking into ac-
count the world lEVEl of prices. The stipulations of
such an arrangement should bE maintained through the
practice of close collaboration among the contracting
parties and could not bE modified EXCEPT by common;
accord or in CASE of Exceptional and unforeseen circum-
stances the final objective of the contracting parties
being the general return to the international gold stand-
ard when the conditions necessary are found realized.
The text which constitutes an annex to the present
note if it receives the approval of all the parties
concerned
U -2- #844, Sept. 9, 9 am. (SEO. 2) from Paris
concerned would presumably bE of a nature to lead
to the desired result.
Three. The Government of the Republic deems also
that the conclusion of the afore mentioned agreement by
attenuating the dissquilibrium which at present isolates
certain national Economies should make possible immediate
and vigorous action with a view to reduction of ob-
stacles to trade. It is ready to consult with the
American and British Governments as to the conditions
under which such action could bE undertaken with c.
WILSON
BLP:CSB
CONFIDENTIAL
PLEASE DESTROY
5.
U
Paris
A portion of this telegram
must bE closely paraphrased
Dated September 9, 1936
before being communicated
to anyone. (c)
REc'd 8:50 a.m.
Secretary of State
Washington
RUSH
844, September 9, 9 a.m. (SECTION THREE)
view to general resumption of trade and international
transactions which it holds to be the necessary preface
to political organization of peace.
(End of note)
PLEASE DESTROY
Proposed prestabilization agreement.
The high contracting parties are decided to devote
all their Efforts and to establish the closest collabora-
tion among themselves towards maintaining the rates of
their respective currencies within the limits fixed in
the attached table. These limits shall not bE modified
EXCEPT by common agreement or subject to notifying the
contracting powers in CASE of Exceptional and unforeseen
circumstances, the final objective of the contracting
parties being the general return to the international
gold standard when the conditions necessary are found to
bE realized.
(Table, read down:)
Currencies:
6.
U -2- #844, Sept. 9, 9 a.m. (SEC. 3) from Paris
Currencies:
Dollar.
Pound.
Franc.
Rate against:
Pound, franc.
Dollar, franc.
Dollar, pound.
Lower limit:
Upper limit:"
(The above headings in the final paragraph are for
a table which the French prefer to leave blank for the
present. The rates would bE established once the text
of the agreement is approved in principle). (END OF
SPECIAL GRAY)
Rueff suggested to me privately the need for
haste lest circumstances may yet force France to act
unilaterally. (END OF MESSAGE)
WILSON
CSB
ONFIDENTIAL
PLEASE DESTROY
For The Embassy at Paris,
FOR COCHRAN from the Secretary of the Treasury.
Your 844 September 9th. The document which Minister
of Finance Auriol gave you last night for transmission to
this Government has received our most interested considera-
tion.
Please give the Minister of Finance the following
message verbatim:
I have studied with most interested attention the
text of the communication which the French Government
indicates it might send to the American and British Gov-
ernments. I understand the circumstances which have
brought the French Government to consider realignment of
the franc and to seek to take this action in such a way
as it might result in bringing added stability into the
field of foreign exchanges and increasing the movement
of international trade. Furthermore I foresee that the
creation of such stability should correct and ultimately
bring to an end the disturbing and unwelcome movement of
funds from one monetary center to another, which in itself
is so clearly an element of uncertainty in the exchange
and monetary situations. It would bring it about that
the movements of capital would be governed by economic
considerations and not by panic fears which have so re-
cently caused extensive and disturbing refuge movements.
-2-
The text as now drafted seems to me possibly to
raise certain questions and to foreshadow certain 1m-
mediate commitments which I do not believe to be es-
sential to the achievement of this desirable purpose,
and on which the American Government must necessarily
express its views. I have in mind particularly the
last sentence in the English translation of numbered
section two. I do not wish to suggest any specific
revision of the text of this communication but rather
merely to state what the position of this Government has
been and would be in the contingency which his communi-
cation envisages:
(1) It is and has long been the purpose and con-
stant effort of this Government to maintain stability of
the dollar in international exchanges, and thereby to con-
tribute to continued exchange stability, and during the
large part of this period substantial stability has been
achieved
(2) This Government has not been unmindful of a
like purpose and effort on the part of the British and
the measure of success which has attended their efforts.
(3) Should the French Government for reasons of
domestic policy realign on/mutually satisfactory basis the
value of the franc in international exchange, this Government
-3-
will continue to use appropriate available resources for
maintaining stability in international exchange on such
new basis in the confident expectation that the British
authorities will continue their purpose and effort in the
same direction.
(4) The French Government will understand that in
the continuous development of this Government's policy and
decisions in the exchange field our ultimate and final
decisions will have to take into consideration internal
prices and economic conditions.
This Government would anticipate that some statement
of intention substantially similar to that which it has
just made would be forthcoming as well from the French and
British Governments and possibly given simultaneous publica-
tion by all three Governments. This Government is further-
more prepared to discuss the precise measures that the
central banking institutions of the three countries might
contemplate in immediate fulfillment of this statement of
intentions.
PSF
ASSISTANT SECRETARY OF THE TREASURY
file Treasury
WASHINGTON
September 20, 1936.
Dear Mr. President:
Secretary Morgenthau has asked me to
hand you the enclosed cable which we have just
received from Cochran in Paris.
At four o'clock this afternoon I showed
Broadmead of the British Embassy the text of
our message which Cochran delivered to the
French authorities this morning. Broadmead
is cabling his Government this evening so that
the Chancellor of the Exchequer will have com-
plete information on the situation when he
returns tomorrow morning.
Faithfully yours,
wayne Chaylor
The President,
The White House.
encl
MED
This telegram must bE
PARIS
closely para: hrased
before being communi-
Dated September 20, 1936
cated to anyone (c)
RECEIVED 9:15 a.m.
Secretary of State,
Washington
RUSH, 898, September 20, 11 a.m.
FOR SECRETARY OF THE TREASURY FROM COCHRAN.
At 10 o'clock this morning I read to Baumgartner
Department's 359, September 19, 2 p.m., and handed to
him a copy of our draft of suggested statement. HE
will now Endeavor to obtain reactions of Minister of
Finance Auriol to this draft and will confer thereupon
with Monick. The latter leaves Paris for London at
3 O'clock this afternoon and has an appointment to
SEE Chamberlain tomorrow morning before the Chancellor
of the Exchequer confers with his assistants in regard
to the French draft proposal.
WILSON
KLP
PSF
Treasury Dept., 1937
persones
PSF -0 Drawn
35 CLAREMONT AVENUE
Treewing
newyork
2200 Lawary 1937
Dear mr. President.
Thope that Ishall soon be able toey press to
you us person my gratitude for the opportunity
which you and m Morgethan have given me
oserve again m your administration. The
responsibilities which the Undersecritaryship
carries are very great, and there us no work
know of which w more vital and interesting.
The association with yoursey and with the
secretary w 1933-34 was a valued privilege.
rean only assure you that shall do all
w my power toserve you well.
Faithfully yours-
Roswell magiel
UNITED STATES TARIFF COMMISSION
6TH AND E STREETS N. W.
WASHINGTON
Treasury
fill PSF
RAYMOND 8. STEVENS
VICE CHAIRMAN
<
January 23, 1937.
Dear Mr. President:
I have conferred briefly with both Secretary Hull and
Mr. Sayre about the vacancy created on the Tariff Commission by
the death of Thomas Walker Page. I understand that Secretary Hull
has recommended for your consideration two men, - Mr. Grady and
Mr. Edminster.
I have no intention of suggesting any other names. Both
of these men are very competent and well qualified to be members
of the Commission.
I do not think that you have met Mr. Edminster. I know,
however, that you do know Mr. Grady personally, and undoubtedly
have a high opinion of him. If you are disposed to choose Mr. Grady,
I would like to see you for a few minutes before the appointment is
offered to him. His selection would have one angle that might direct-
ly concern me personally. It is a matter that would be rather diffi-
cult for me to express in black and white, but I think it desirable
that you know about it before any final action is taken.
I feel uncomfortable in taking up any of your time when
you have so many serious and pressing problems, and I would not do
so if it were not for the fact that you mentioned in your letter to
ne of last November the matter which now concerns me. A brief in-
terview now would be a relief to my own mind, and, I think, avoid
2
the possibility of any slight enbarrassment later.
I appreciate very much ay designation as Vice Chairaan
of the Teriff Commission.
I thought your insugural address en excellent one, both
in substance and form. The only adverse criticiam I have heard
was that it was too general. I, myself, consider this praise.
I an confident you were wise in not outlining definitely in ad-
vance the particular steps you are planning to take in the direction
you have clearly indicated that you intend to go. An announcement
of a specific program in advance would arouse the maximum amount
of opposition and might divide support.
Yours, as ever,
Raymonds Slevens.
THE WHITE HOUSE
WASHINGTON
Printert vening
January 29, 1937.
yRs
R
MEMORANDUM FOR THE PRESIDENT
You said you wanted to
+
take this up with Secretary Hull
at the Cabinet meeting.
G.
UNITED STATES TARIFF COMMISSION
8TH AND E STREETS N. W.
WASHINGTON
realing
(5)
PSF
RAYMOND B. STEVENS
VICE CHAIRMAN
January 28, 1937.
Treasury
Dear Mr. President:
I am somewhat reluctant to take up any of your time by
an interview when you have 80 many problems on hand, - floods, strikes
and Congress. I think I can state in this note briefly but fully
all I wish to say about filling the vacancy on the Commission.
Mr. Grady now holds an important place in the University
of California and has been recently selected by the League of Nations
8.8 a member of its Economic Council. If he should give up these
two positions to come to the Commission, he would naturally expect
to be made Chairman as soon as the change would be made. Also I
have reason to believe that Mr. Hull would recommend his selection
as Chairman.
This situation troubles me a little because I had some
desire myself to become Chairman in case Mr. O'Brien gave up the
position, and last November you were kind enough to write me that
if I wanted to be Chairman I was entitled to it. I think I could
fill the place reasonably well, but it is not unlikely that Mr. Grady
would make a better Chairman. While I would like the position I
do not really care much about it. I do not dislike prestige and
could endure a good deal of it without discomfort, but I have never
2
cared enough to make any sacrifice either to get it or retain it.
All I have set my heart on is to retain the respect and affection
of my friends. What satisfaction I might have in being Chairman
would be destroyed if I thought you had selected me out of con-
sideration for my feelings rather than in accordance with your
own judgment 8.8 to what was best for the Commission.
To sum up the situation, -- either Mr. Grady or Mr.
Edminster would make an excellent member of the Commission. If you
prefer Mr. Grady, and desire to make him Chairman, I wish you
would feel entirely free to do SO.
If you desire to talk the situation over with me, of
course, I will be very glad to do SO.
Yours, as ever,
RaymoudB Slevens.
TREASURY DEPARTMENT
Office of the Secretary
Secret Service Division
MEMORANDUM
May 17, 1937
( m)
To:
Miss Le Hand
From:
Mr. Murphy
On April 7, 1937, we received a circular sent
to the President, for the attention of Miss Le Hand,
mailed from Indianapolis, Indiana, purporting to be
issued by the Vigilantes, and I caused investigation
to be made in Indianapolis, Chicago, and Los Angeles.
An organization named The Vigilantes was formed
in 1923 in Indianapolis to counteract the Ku Klux
Klan, but it is now out of business and has not
operated for years.
One Harry A. Jung is conducting an American
Vigilant Intelligence Federation in Chicago, aimed
to combat Communism; and one Jack Hughes is the head
of an organization in Los Angeles, supposed to be
against crime in general.
So far our investigation has not disclosed any
Vigilantes organization operating in Indiana.
The above described circular stated that copies
were being sent to senators, congressmen, and other
prominent officials. So far this has not been con-
firmed. Congressman Louis Ludlow of Indianapolis
and others have never heard of this organization.
Investigation is being continued.
TREASURY DEPARTMENT
Office of the Secretary
Secret Service Division
MEMORANDUM
April 20, 1937
To:
Miss Marguerite A. Le Hand,
P.F.
Private Secretary to the President,
The White House.
From: Mr. Murphy, Secret Service
Attached is copy of report dated April 14,
1937, from our Chicago, Illinois office concern-
ing communication addressed to the President by
the National Executive Council of "The Vigilante's.
This is a status report and copy of supplemental
report will follow as soon as received.
Treasury PSF CHIEF Freden
April 14, 1937.
Ro: "The Vigilantes"
MR. FRANK J. VILSON,
Chief, U. S. Secret Service,
Washington, D. C.
Sir:
I have the honor to submit the following special report
covering the investigation relative to "The National Executive Council
of THE VIGILANT'S'", CHINF'S reference dated April 7th, which com-
munication has several aspects of 8. threat against the life of the
President. This investigation was conducted under my personal super-
vision, the result of which is as follows:
on April 9th I called at the Post Office Inspectors' office
in Chicago and with Chief Clerk Wilbur a search was made of their
files but they reveeled nothing in connection with the organization
known as "THE VIGILANTES".
I then called on Lieutenant Make Mills of the Industrial
Squad, Chicago police department, end conferred with him relative to
the above matter; however, he stated he had no recollection of the
above mentioned organization nor did their records reveal anything
relating to same.
& check of the AMERICAN VIGILANT INTELLIGENCE FEDERATION,
of Chiengo, revealed that they maintain post office box 144, and that
their offices are located in the Tribune Tower in Chicago; also, that
this organization is still backed by HARRY A. JUNG, who was subject of
an investigation covered by our special report of October 31, 1933.
The activities of this organization have been centered in Chicago and
apparently they have no connection with "THE VIGILANTE'S".
Under date of April 13, 1937, I proceeded to Indienapolis,
Indiana, end, accompanied by Agent Gallagher, called at the police
department end interviewed Detective Captain John Rademacher relative
to the mimeographed letter which wes mailed from Indianapolis on April
4, 1937, and addressed to the President. Mr. Redemacher disclosed that
his department has no knowledge whatever of such an organization as
that mentioned above. Be then interviewed Postmaster Adolph Seidensticker
relative to this matter and he advised that they had no record whatever
of such en organization. We also contacted the Post Office Inspectors'
office and the Superintendent of Mails and a search was made of their
files relative to this matter, but nothing was found concerning any
such organization.
The Vigilentes
2.
No then interviewed Walter Boottcher, City Comptroller and
Democratic county chairman of Marion County, but he had no informa-
tion of any such organization that was active in the last campaign
or at any time since. Their organization et Indianapolis had received
no such communication.
To then interviewed JOHN ZAHND, who has organized various
political groups during the past few years at Indianapolis. This
man is considered 8. political crank but has never been suspected of
any subversive activities or any entagonism towards the present ad-
ministration. He advised us that he had nover heard of "THE VIGILANTE'S"
organization end said that his followers, known se the National
Greenback Party, favored the Democratic candidates in the last elec-
tion and still are largely in favor of the administration's policies.
A check of corporation papers on file with the Secretary of
State of Indiana disclosed only one organization whose name approxi-
mates that of the one under investigation - THE VIGILANTE'S - which
was incorporated in 1923. A copy of their articles of association is
attached hereto. JAMES L. NIMAL, one of the incorporators, was inter-
viewed at his rooming house, 1830 North Delaware Street. He said this
organization was never completely get up and was discontinued within
a year of its inception; that its purpose was to offset by education
and propaganda the Xia Klux Klan activities which were widespreed
in Indians in 1983. He stated VERL N. BENNETT, one of the three
incorporators, 1s now an accountant in Government bureeu et
Washington; that N. T. GIIMORE, the third incorporator, 1s believed to
be dead. Nimel disclaimed all knowledge of on organization known as
"THE VIGILANTE'S". No organization of this name or any similar name
is listed in the Indienapolis telephone book or city directory. Agent
Gallegher was instructed to investigate any information be might re-
ceive relative to "THE VIGILANTE'S" end in this event to submit a
supplementary report immediately.
Upon receipt of information received at this office today
from Licutenant Make Mills of the Industrial Squad, Chieego police
department, to the effect that he had name !nformation of interest to
us in connection with the above matter, Agent Peterson was instructed
to proceed there. and he interviewed Captain 1. E. Kynett of the Los
Angeles police department. Ceptain Kynett stated he had done consider-
able work in connection with the VIGILANTES organization in Los Angeles;
that the principal organizer there was one JACK HUGHES, age 40, married,
no children, residing et 883 South Fedore Street, Los Angeles, with
his wife; that Hughes vas formerly a police officer of the Los Angeles
force and was discharged for brutality and conduct unbecoming en
officer in 1928; that since this time Hughes has had no steady employ-
ment, and it is alleged that he 1a devoting his time in the effort to
organize the VIGILANTES in Los Angeles, which is known as "THE
The Vigilantes
3.
CALIFORNIA VIGILANTES", which it is alleged is affiliated with the
"INTERNATIONAL ORDER OF VIGILANTES". Captain Kynett also stated
that although he had no definite information to substantiate his
theory, he wes convinced the international headquarters of the
"VIGILANTES" was located in Indianapolis, Indiana; that he has kept
Hughes under surveillance day and night for the past year and that
Hughes' numerous contacts are 8 matter of record of the Los Angeles
police department that Hughes was the editor of a weekly mimeo-
graphed pemphlet describing the activities of the order; that Hughes
collected yearly dues of eight dollars each from the members of his
organization; that Hughes at verious times during the past several
years attempted to affiliate his organization with various police and
enforcement organizations in southern California; that Hughes had
formulated a small intelligence unit within his organization for the
purpose of probing into vice and graft conditions. Captain Kynett
further stated that Hughes had at various times attempted to secure
police permits to operate sound cars throughout the city for the pur-
pose of enrolling members and advertising the VIGILANTES organization,
but that such permits so far have been refused by the local police
department. Captain Kynett stated he had in his files copies of verious
mimeographed pemphlets allegedly edited and distributed by Hughes end he
advised be would be glad to furnish this Service with copies. He also
stated he would notify this Service of any further information or
developments in Los Angeles in connection with the VIGILANTES organize-
tion.
In view of the fact that JACK HUGHES, mentioned above, is
evidently located in Los Angeles, I as forwarding the file in this case
to Agent Grube in Los Angeles for investigation, with the suggestion
that 8. cover be placed on Hughes' mail to ascertain whether or not he
receives any communications from Indienapolis. It is also respectfully
requested that Agent Grube call at the office of Captain E. E. Kynett
end secure copies of the mimeograph circulars and any other informa-
tion available about "THE VIGILANTE'S" organization.
Respectfully,
THOMAS J. CALLAGHAN
Acting Supervising Agent.
By
HDA-L
Acting Agent in Charge.
00: Agent Grube, Los Angeles.
Agent Foster, San Francisco.
Agent Gallegher, Indianapolis.
PSF
file pus THE
UNDER SECRETARY OF THE TREASURY
WASHINGTON
Jill Deceasery
June 3, 1937
MEMORANDUM FOR THE PRESIDENT:
Following our conference with you this afternoon I saw Messrs. Ray-
burn, Doughton, Vinson and Cooper at the Capitol regarding the pending
joint resolution for the tax investigation. Mr. Rayburn and Mr. Doughton
told me that they had talked to Mr. O'Connor this afternoon and that he
is adamant against making public the information developed by the joint
committee, and against any part of the investigation being conducted by
persons other than the committee or subcommittee. In other words he in-
sists on the amendments which the Rules Committee made to the joint reso-
lution. He has agreed, however, to call a meeting tomorrow morning of
such members of the Rules Committee as he can get together, to reconsider
the matter. Messrs. Doughton, Vinson and Cooper will attend the meeting
and will try to persuade the Democratic members that the resolution should
be reported in substantially the form in which introduced. Mr. Rayburn
will try to see the Democratic members of the Rules Committee in the mean-
time. They are not convinced, however, that they can succeed in persuad-
ing the Rules Committee to reverse its former action unless further
pressure is brought to bear upon them.
Mr. Rayburn stated that he had to let the joint resolution go over
until Monday on account of Mr. O'Connor's opposition and the Republican
opposition.
Roswell magile -
PSF: Treasury
THE SECRETARY OF THE TREASURY
WASHINGTON
October 7, 1937
My dear Mr. President:
I am inclosing herewith a confiden-
tial report which I thought would be of
interest to you.
Respectfully,
The President,
The White House.
PSF: Treasury
COPY
TREASURY DEPARTMENT
Inter Office Communication
October 6, 1937
To
Secretary Morgenthau
From
Mr. Haas
Subject: Recent exports of cotton and scrap iron and steel
to Japan and imports of silk from Japan.
1, Scrap iron and scrap steel exports from the United States
to Japan continue but in much smaller volume.
September exports of scrap iron and scrap steel from the
United States to Japan were approximately 50,000 tons. This is
about one-fifth of the monthly shipments during the first half
of 1937. Shipments are being loaded right now on ships going
to Japan, and other shipments are scheduled to leave within
the next two weeks.
Scrap iron exporters claim that all Japanese buying of
scrap iron and scrap steel in the United States stopped about
four or five months ago. Shipments leaving now are on orders
given before April. They claim that only 8. small amount of
unfilled orders remain.
2. Raw cotton is still being exported to Japan but only in
small amounts.
September cotton exports to Japan totaled about 40,000
bales (compared with 170,000 bales in September 1936 and an
average of 124,000 bales for each of the first six months of
1937). It is estimated that there have been about 135,000
bales of American cotton ordered by Japan since August 1st,
but most of these new orders have not been shipped. They
await receipt of permission to ship. (Permission to ship
about $100,000 worth of cotton was received yesterday accord-
ing to the National City Bank.)
It is reported that Japan now has enough cotton to last
three, possibly four months. The area in North China under
control of Japan expects to have about 1 million bales of
Secretary Morgenthau - 2 -
cotton ready to move within a few weeks. This cotton formerly
went mostly to Japanese mills in China. It will now be
diverted to the mills in Japan.
The Department of Agriculture estimates that Japan will
purchase 600,000 bales this cotton year (August 1, 1937 to
August 1, 1938), compared with 1,5 million bales last cotton
year. Japan has set aside 50 million yen for cotton purchases
for months of September, October and November. Were half of
that sum to be spent on American cotton it would represent ap-
proximately 50,000 bales a month which is close to our
September exports to Japan.
We can obtain no evidence of any shift of cotton manu-
facture under Japanese direction from Japan to India. Two
exporters, presumably conversant with cotton textile conditions
in the Far East and in India felt that such a move on any sub-
stantial scale would definitely not be feasible. They were
very skeptical about the possibilities of any such shift.
3. United States is still importing silk from Japan.
No restrictions have been placed on exports of silk from
Japan to the United States. Silk importers in the United States
are buying now and have been buying in recent weeks as much
silk as they want, and they have been receiving their shipments
on time. The latest cargo of silk arrived a few days ago and
another one is due in a few days.
PSF Treasury
TREASURY DEPARTMENT
PROCUREMENT DIVISION
PUBLIC BUILDINGS BRANCH
дет. BULDING, AND THESE LETTERS
The Honorable full
WASHINGTON
N REPLYING. QUOTE THE ABOVE -
PB-
SA-P&S
October 8, 19th WHITE HOUSE
OcT 9 9 33 AM *37
The President of the United States
RECEIVED
My dear Mr. President:
Thank you very much for your letter of October 2.
I am delighted that you liked the design for the pro-
posed Presidential Series of postage stamps. The Bureau
of Engraving and Printing is following your suggestion
and is working on an experimental engraving design to
submit to you. There are, I understand, some technical
questions involved 88 to how far the Bureau can preserve
the general quality and effect of the design.
I enclose herewith a photograph of the design which
won the second prize which I thought you might be inter-
ested in seeing. I particularly like the border around
the stamp and I have suggested to the Bureau that they
might use this 8.9 a sort of frame to use in connection
with the final design.
Edward Very respectfully yours, Bruce
Edward Bruce, Chief
Section of Painting & Sculpture
will
782
UNITED
STATES
POSTAGE
CENT
1141
Second Prize
P.A.S.
BUILDING: TYPE OF WORK: Stamp Disegn
The following acknowledgment must
BY: Bauer, chas
accompany any reproduction of this
photograph; "COURTESY OF THE
TITLE:
TREASURY DEPARTMENT ART PROJECTS"
PSF
THE SECRETARY WASHINGTON OF THE TREASURY Treasury
October 15, 1937
My dear Mr. President:
I am sending you this confi-
dential memorandum on our current
trade with Japan, which may be of
interest to you. The information
was collected by
Respectfully,
The President,
Hyde Park, New York.
COPY
TREASURY DEPARTMENT
Inter Office Communication
October 14, 1937.
To
Secretary Morgenthau
From
Mr. Haas
Subject: Current U. S. trade with Japan.
1. For the first week of October, 1937:
U. S. exports to Japan
$ 1,727,000
U. S. imports from Japan
3,328,000
(Past weekly export figures are not available. Monthly
table of U. S. exports to Japan is appended.)
Export declarations received during the first week
in the month are apt to be lighter than during the re-
mainder of the month. Therefore, no conclusions can as
yet be definitely drawn from the low figures for exports.
2. The leading items of export during the first
week of October were as follows:
Sulphite (wood pulp used for rayon
manufacture)
$ 445,000
Pig iron
197,000
Steel sheet bars and plates
644,000
Diesel oil
123,000
Steel scrap
65,000
Molybdenum concentrate
64,000
Lumber
23,000
Machinery
26,000
1 Truck chassis
4,000
Miscellaneous
136,000
Total
$ 1,727,000
There were no exports of cotton to Japan.
Secretary Morgenthau - 2 -
3. Leading items of import were:
Raw silk
$ 2,040,000
Perilla oil
178,000
Cotton manufactures
124,000
Rayon manufactures
123,000
Silk manufactures
73,000
Sardine meal
60,000
Fish, canned tuna, crabmeat, etc.
60,000
China and porcelain
63,000
Lily bulbs
53,000
Woolen manufactures
44,000
Earthenware
38,000
Vegetable food products
35,000
Pyrethrum flowers
34,000
Camphor
21,000
Novelties, toys, jewelry, etc
167,000
All others
215,000
Total
$ 3,328,000
United States - Trade with Japan - Monthly - January 1936
to date
(In thousands of dollars)
:
1936
:
1937
:
Total
:
General
:
Total
:
General
: exports
:
imports
:
exports
:
imports
January
19,022
15,384
22,364
17,683
February
13,339
14,539
24,745
18,382
March
16,401
12,670
29,971
17,660
April
16,250
13,141
26,928
20,423
May
14,403
12,053
36,177
18,244
June
13,627
11,088
25,194
18,637
July
11,995
12,187
26,509
16,482
August
10,764
16,948
24,644
16,297
Total - 8 months 115,801
108,010
216,532
143,808
September
21,328
16,017
October
26,663
15,930
November
24,100
15,340
December
16,433
16,427
Total - Year 1936 204,325
171,724
THE SECRETARY OF THE TREASURY
WASHINGTON
October 26, 1937
PF.
ml I
china
My dear Mr. President:
I am sending you herewith a
memorandum on current United
States trade with Japan and China,
which I trust you will find of
interest.
Faithfully,
The President,
Hyde Park, New York.
Enclosure.
INTER OFFICE COMMUNICATION
DATE October 26, 1937
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject: Current trade with Japan and China. (Preliminary data)
Trade with Japan
1. United States exports to Japan
October 1937
October 1936
August 1937
1st Week
$1,727,000
2nd Week
5,746,000
For whole
For whole
3rd Week
4,492,000
month
month
Three weeks
$11,965,000
$26,663,000
$24,644,000
Excluding cotton, our exports this month are already
greater than exports of October 1936:
Exports - 3 weeks October 1937, excluding cotton - $11,410,000
11 whole month October 1936
11
11
9,787,000
2. United States imports from Japan
October 1937
October 1936
August 1937
1st Week
$3,328,000
2nd Week
3,984,000
For whole
For whole
3rd Week
3,419,000
month
month
Three Weeks
$10,732,000
$15,930,000
$16,297,000
Aside from imports of perilla oil ($332,000 this month and
none last October) the make-up of imports from Japan appear
to be approximately the same. So far it appears that the
total of imports from Japan will be about 8 percent less
than last October, and 10 percent less than August 1937.
(Figures for our trade with Japan for September are un-
obtainable from the Department of Commerce until about
November 3rd.)
Secretary Morgenthau
- 2 -
3. United States cotton exports to Japan remain
negligible.
1st Week --
nil
2nd Week
$192,000
3rd Week
297,000
Three weeks $489,000
Last October cotton exports to Japan amounted to
$16,876,000.
4. Compared with previous months, there is a sharp decrease
in exports of scrap iron and steel.
1st Week
$ 65,000
2nd Week
354,000
3rd Week
468,000
Three weeks $887,000
Monthly average March to August 1937, $5,600,000.
5. Raw silk imports from Japan continue at a remarkably
even rate.
1st Week
$2,040,000
2nd Week
2,087,000
3rd Week
2,095,000
Three weeks$6,223,000
(Average monthly imports from Japan in 1936, $8,000,000)
Secretary Morgenthau
- 3 -
6. The following items show large decreases in exports
to Japan compared with October of last year.
1st 3 weeks of
Month of
October 1937
October 1936
Cotton, unmanufactured
$489,000
$16,876,000
Finished iron and steel
manufactures
100,000
1,440,000
Wood, unmanifactured
90,000
420,000
Tobacco
10,000
384,000
7. The following items show large increases in exports to
Japan compared with October of last year.
1st 3 weeks of
Month of
October 1937
October 1936
Iron and steel semi-mfg.$3,084,000
$197,000
Pig iron
567,000
None
Hides and skins
545,000
141,000
Ferro-alloys
224,000
6,000
U. S. Trade with China
(We have begun with the third week; will not be able
to obtain trade figures of the first two weeks of October
before December.)
8. U. S. exports to China and Manchuria.
North China
Shanghai, South China
and Manchuria
and Hong Kong
3rd week only of
October 1937
$457,000
$787,000
For whole of China and Manchuria
Whole month
October 1936
$4,283,000
If the exports during the third week are a good sample,
our exports to China for the whole month will be greater than
last October.
Secretary Morgenthau
- 4 -
9. United States imports from China and Manchuria.
North China
Shanghai,
and
South China
Manchuria
and Hong Kong
3rd Week of
Oct. 1937
$414,000
$956,000
For whole of China and Manchuria
Whole month
Oct. 1936
$4,957,000
Our imports from China likewise will be greater than
last year, if the 3rd week is a good sample.
10. Leading export items to China:
(a) North China and Manchuria - - 3rd week only.
Petroleum products
.....
$ 194,000
Steel sheets and plates
123,000
Vehicles and parts
32,000
Electrical machinery and
appliances
18,000
Industrial machinery
17,000
Cotton
14,000
Lumber
12,000
Other
47,000
Total
$457,000
(b) Shanghai, South China ports, Hong Kong.
Tobacco
$306,000
Edible vegetable products
97,000
Steel sheets
89,000
Printed matter
46,000
Petroleum products
69,000
Electrical machinery
46,000
Radio and apparatus
45,000
Other
89,000
Total
$787,000
Secretary Morgenthau
- 5 -
11. Leading imports from China.
(a) Imports from Manchuria and North China - 3rd week only.
Bristles
$ 135,000
Wool and manufactures
132,000
Leather
68,000
Other
79,000
Total
$ 414,000
(b) Leading imports from Shanghai, South China ports and
Hong kong.
Raw silk
$ 244,000
Wood oil
189,000
Tin
142,000
Flax and hemp manu-
factures
128,000
Food products
56,000
Tea
37,000
Other
160,000
Total
956,000
Secretary Morgenthau
- 6 -
Of the total of $11,900,000 of exports to Japan
during the first three weeks of October, the following
items account for almost all of the total:
Iron and steel semi-manufactures
$3,084,000
Petroleum products
2,364,000
Scrap iron and steel
889,000
Copper
833,000
Paper base stocks
623,000
Pig iron
567,000
Industrial machinery
565,000
Hides and skins
545,000
Cotton
490,000
Chemicals
393,000
Asphalt
300,000
Ferro-alloys
224,000
Automobiles, trucks and parts
207,000
Lead
167,000
Photographic and projections goods
105,000
Other
544,000
$11,900,000
Of the total of $10,737,000 of imports from Japan
during the first three weeks of October, the following
items account for the bulk:
Raw silk
$6,223,000
Cotton manufactures
625,000
Perilla oil
332,000
Tea
305,000
Silk manufactures
292,000
Rayon manufactures
287,000
Porcelain and chinaware
274,000
Fish
268,000
Inedible animal products
215,000
Wood and paper manufactures
209,000
Wool manifactures
188,000
Lily bulbs
155,000
Perethrum flowers
135,000
Eartherware
138,000
Metal manufactures
121,000
Other
970,000
$10,737,000
THE SECRETARY OF THE TREASURY
WASHINGTON
October 28, 1937.
PS
Treasury
My dear Mr. President:
I am sending you herewith a confidential
report on market conditions from Dr. W. Randolph
Burgess, Vice President of the Federal Reserve
Bank of New York. I am sure you will be interested
in reading this.
Faithfully,
The President,
Hyde Park, New York.
Enclosure.
FEDERAL RESERVE BANK
OF NEW YORK
October 23, 1937.
Dear Mr. Secretary:
Accompanying general disorder in the securities markets this week
the market for new issues continued to be practically closed. Two sizeable
issues mentioned in my last letter as pending were deferred or withdrawn:
those of North Boston Lighting Properties and the Appalachian Electric Power
Company. The only issues sold were several small, relatively short term,high
grade offerings totalling about $12,000,000. They were the following:
Chicago, Burlington & Quincy R. R. equipment
trust, 1938-47
$ 3,650,000
California 3 months warrants
3,350,000
Massachusetts serial bonds 1938-67
3,000,000
Maine serial bonds 1938-48
1,000,000
6 other municipal issues
974,000
Total
$11,974,000
These issues were reported to be fairly well received.
In the absence of any substantial new issues the principal problem
for the underwriters has been the disposition of previous commitments, and
especially the Bethlehem Steel 3 1/2 per cent convertible 15 year debentures
and Pure Oil Company 5 per cent preferred stock.
Bethlehem Steel 3 1/2 per cent convertible 15-year debentures,
(originally $48,000,000) first offered to stockholders at 100 and then by the
underwriters (who bought the issue at 98) to the public at 95 1/2, are reported
to have sold as low as 78 last Monday but have since recovered to around 84.
Within this range of prices underwriters and dealers have disposed of fair-
sized amounts of their portions of this issue during the past week. At these
DERAL RESERVE BANK OF NEW YORK 2
Hon. Henry Morgenthau, jr. 10/23/37
prices the issue showed a yield of 5 per cent or better. Losses on sales at
prevailing prices are of course substantial . - 10 to 20 per cent of the original
cost, but most of the underwriters prefer to take losses promptly at the market
than to have an issue, once publicly offered, remain hanging over the market.
Some of the stronger syndicate members, however, are retaining their bonds for
a better market.
The largest issue still overhanging the market is the Pure Oil Com-
pany 5 per cent preferred stock, of which stockholders took less than a million
dollars. Yesterday the underwriting syndicate paid the company for the
$43,439,400 stock remaining unsold, and apparently contemplates holding the
issue off the market entirely for the time being. The outstanding 6 per cent
preferred stock of the Pure Oil Company, which has the same preferences (as to
earnings and dividends) as the new issue, but no conversion rights, closed last
night at 92. The new issue would have to sell around 77 to give the same
yield.
Other recent issues, even though successfully sold by the underwriters,
have likewise sold at sharp discounts from their offering prices but have since
recovered most of the ground lost. The renewed losses in the stock market Fri-
day and to-day have not as yet diminished materially the recovery on the part of
these bonds. Idaho Power first mortgage 3 3/4 per cent bonds, offered at 98 1/2,
on October 6, were offered at one time as low as 93 3/4 after the syndicate was
closed, but are now quoted around 98. Central New York Power general mortgage
3 3/4 per cent bonds, offered at 99 on October 7, another fairly high grade
issue which the underwriters disposed of successfully, were offered as low as
93 1/2 but the market is now about 97 1/2.
The fair reception to the few new issues this week and the partial
recovery in the price of previous offerings and bond prices in general leave
the market perhaps a little better than a week ago but not in condition to
take sizeable amounts of even the highest grade bonds. A very substantial
change would be necessary before it would furnish the capital necessary for
new undertakings.
Very truly yours,
w.kandogh Bugen
W. Randolph Burgess
Vice President.
Honorable Henry Morgenthau, jr.,
Secretary of the Treasury,
Washington, D. C.
WRB.H
60
PSF
Treasury
THE SECRETARY OF THE TREASURY
WASHINGTON
November 15, 1937
The Confidential
My dear Mr. President:
I am sending you herewith
reports dated November 3 and 12 on
the subject of "Current Trade with
Japan and China".
The report of November 3
covers preliminary data for the
month of October and the November
12 report reviews that period and
includes data for the first week
of November.
Faithfully,
The President,
The White House.
Enclosures.
PSP
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 3, 1937
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject: Current trade with Japan and China. (Preliminary data)
Trade with Japan
1. United States exports to Japan
October 1937 October 1936 September 1937
1st week
$ 1,727,000
2nd week
5,746,000
3rd week
4,492,000
For whole
For whole
4th week
6,763,000
month
month
Four weeks
$18,728,000
$26,663,000
$16,842,000
Excluding cotton, our exports this month, although
incomplete, are almost twice as great as the exports during
the whole month of October 1936, and considerably greater
than the exports of September 1937:
Exports - 4 weeks October 1937, excluding cotton - $17,715,000
If
whole month October 1936
"
11
9,787,000
II
If
If
September 1937
If
11
15,354,000
2. United States imports from Japan
October 1937 October 1936 September 1937
1st week
$ 3,328,000
2nd week
3,984,000
3rd week
3,419,000
For whole
For whole
4th week
4,060,000
month
month
Four weeks
$14,791,000
$15,930,000
$15,988,000
The composition of our imports from Japan is approxi-
mately the same as that of October 1936. It now appears
that the total imports this month may be slightly less
than that of a year ago, or of a month ago, but not by
more than 5%.
Secretary Morgenthau - 2 -
3. United States export of cotton to Japan remains
negligible.
1st Week
nil
2nd Week
$192,000
3rd Week
297,000
4th Week
452,000
Four weeks $941,000
Last October cotton exports to Japan amounted to
$16,876,000.
4. Compared with previous months, there 1s a sharp decrease
in exports of scrap iron and steel.
1st Week
$ 65,000
2nd Week
354,000
3rd Week
468,000
4th Week
106,050
Four weeks $993,050
Monthly average March to August 1937, $5,600,000.
5. Raw silk imports from Japan continue.
1st Week
$2,040,000
2nd Week
2,087,000
3rd Week
2,095,000
4th Week
1,861,000
Four weeks $8,083,000
(Average monthly imports from Japan in 1936, $8,000,000)
6. The following items show large decreases in our exports
to Japan compared with October of last year.
Four weeks of
Month of
October 1937
October 1936
Cotton, unmanufactured
$941,000
$16,876,000
Finished iron and steel
manufactures
136,000
1,440,000
Wood, unmanufactured
192,000
420,000
Tobacco
19,000
384,000
Secretary Morgenthau - 3 -
7. The following items show large increases in exports
to Japan compared with October of last year.
Four weeks of
Month of
October 1937
October 1936
Iron and steel semi-
manufactures
$ 3,580,000
$ 197,000
Pig iron
887,000
None
Hides and skins
833,000
141,000
Ferro Alloys
279,000
6,000
Petroleum products
4,216,000
2,224,000
Copper
1,441,000
956,000
Pig lead
167,000
None
Scrap brass
418,000
104,380
Industrial Machinery
1,345,000
658,000
Coal tar products
255,000
63,000
United States Trade with China
8. United States exports to China and Manchuria.
North China
Shanghai, South China
and Manchuria
and Hong Kong
3rd Week
$ 457,000
$ 787,000
4th Week
565,000
1,788,000
3rd and 4th
Weeks of
October 1937
$1,022,000
$2,575,000
For whole of China, Manchuria and Hong Kong
Whole month October 1936 $5,049,000
If the exports during the third and fourth week are a
good sample, our exports to China for the whole month
will be considerably greater than last October.
9. United States imports from China, Manchuria and Hong Kong.
North China
Shanghai, South China
and Manchuria
and Hong Kong
3rd Week
$ 414,000
$ 956,000
4th Week
653,000
724,000
3rd and 4th
Weeks of
October 1937
$1,067,000
$1,680,000
Secretary Morgenthau - 4 -
For whole of China, Manchuria and Hong Kong
Whole month October 1936 $5,446,000
Our imports from China will probably be somewhat greater
than last year if the 3rd and 4th week is a good sample.
10. Leading export items to China
(a) North China and Manchuria - 3rd and 4th weeks only
Iron and steel semi-manufactures
$ 218,000
Tobacco
205,000
Petroleum products
205,000
Vehicles, parts and accessories
136,000
Electrical machinery and apparatus
44,000
Cotton
38,000
Industrial Machinery
36,000
Other
140,000
Total
$1,022,000
(b) Shanghai, South China ports and Hong Kong
Petroleum products
$ 608,000
Tobacco
409,000
Iron & Steel semi-manufactures
280,000
Vehicles, parts and accessories
216,000
Edible vegetable products
209,000
Iron & steel finished manufactures
112,000
Radio and apparatus
90,000
Wood, unmanufactured
80,000
Electrical machinery
72,000
Industrial machinery
76,000
Copper
70,000
Industrial chemicals
60,000
Other
293,000
Total
$2,575,000
Secretary Morgenthau - 5 -
11. Leading imports from China.
(a) Manchuria and North China - 3rd and 4th weeks only
Bristles
$ 340,000
Food products
171,000
Wool and manufactures
168,000
Leather
104,000
Other
284,000
Total
$1,067,000
(b) Shanghai, South China ports and Hong Kong
Wood oil
$ 419,000
Raw silk
341,000
Tin
193,000
Flax and Hemp manufactures
181,000
Tungsten ore
103,000
Food products
98,000
Tea
58,000
Chemicals
33,000
Other
254,000
Total
$1,680,000
Secretary Morgenthau - 6 -
Of the total of $18,728,000 of exports to Japan during
the first four weeks of October, the following items account
for almost all the total:
Petroleum products
$ 4,216,000
Iron & steel semi-manufactures
3,580,000
Copper
1,441,000
Industrial machinery
1,345,000
Paper base stock
1,106,000
Scrap iron and steel
994,000
Cotton
941,000
Pig iron
887,000
Hides and skins
833,000
Vehicles
634,000
Scrap brass
418,000
Ferro Alloys
279,000
Coal tar products
255,000
Fertilizer
208,000
Wood, unmanufactured
192,000
Pig lead
167,000
Industrial chemicals
133,000
Photographic and projection goods
131,000
Other
968,000
Total
$18,728,000
Secretary Morgenthau - 7 -
Of the total of $14,791,000 of imports from Japan
during the first four weeks of October, the following
items account for the bulk:
Raw silk
$ 8,021,000
Cotton manufactures
1,119,000
Tea
457,000
Silk manufactures
456,000
Chinaware and porcelain
374,000
Rayon manufactures
356,000
Fish
333,000
Inedible animal products
331,000
Perilla oil
307,000
Wool manufactures
272,000
Pyrethum flowers
260,000
Paper manufactures
237,000
Earthenware
197,000
Chemicals
189,000
Lily bulbs
183,000
Wood manufactures
163,000
Metal manufactures
156,000
Food products
153,000
Glass manufactures
136,000
Flax and hemp manufactures
135,000
Other
956,000
Total
$14,791,000
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 12, 1937
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject: Current trade with Japan and China
A. Trade with Japan for month of October 1937 1/
(1) United States exports to Japan.
United States exports to Japan during October
1937 were 25 percent greater than during September
1937, but considerably less than our exports during
the summer months of 1937, and less than our exports
for October 1936.
1937
1936
October
$21,133,000
$26,663,000
September
16,842,000
21,328,000
August
24,643,000
10,763,000
July
26,509,000
11,995,000
June
25,194,000
13,627,000
Excluding exports of raw cotton, our exports for
October 1937 were twice as great as our exports during
the same month of 1936.
United States exports to Japan, excluding raw cotton
1937
1936
October
$19,582,000
$ 9,787,000
September
15,354,000
10,552,000
August
23,449,000
9,201,000
July
24,566,000
10,965,000
June
21,962,000
9,352,000
1/
Previous reports cover weekly figures only. This
report is for the whole month of October. The
report also includes the trade for the first week
in November. See page 6.
Secretary Morgenthau - 2
(2) United States imports from Japan.
United States imports from Japan in October 1937
were 4 percent less than during the preceding month, and
4 percent less than during October 1936.
1937
1936
October
$15,338,000
$15,930,000
September
15,988,000
16,012,000
August
16,297,000
16,948,000
July
16,482,000
12,187,000
June
18,637,000
11,088,000
(3) Cotton exports to Japan increased during the
latter part of October, but the total for the month was
but a small percentage of the total exports of cotton
during October, 1936.
U. S. cotton exports to Japan - October 1937 - $ 1,551,000
U. S. cotton exports to Japan - October 1936 - 16,876,000
(4) Compared with previous months, there was a
decrease in exports of iron and steel scrap to Japan.
Exports of iron and steel scrap to Japan - October 1937 -
$1,148,000
Exports of iron and steel scrap to Japan - September 1937 -
1,402,000
Exports of iron and steel scrap to Japan - Monthly average,
May to August 1937 5,600,000
(5) The following items show large decreases in our
exports to Japan compared with October 1936.
October 1937
October 1936
Cotton, unmanufactured
$1,551,000
$16,876,000
Finished iron and steel
manufactures
136,000
1,440,000
Wood, unmanufactured
223,000
420,000
Tobacco
19,000
384,000
Naval stores, gums and
rosins
4,000
103,000
Secretary Morgenthau - 3
(6) The following items show large increases in
exports to Japan compared with October 1936:
October 1937
October 1936
Petroleum products
$4,585,000
$2,224,000
Iron and steel semi-mfg.
3,982,000
187,000
Copper
1,893,000
956,000
Industrial machinery
1,394,000
658,000
Paper base stock
1,222,000
798,000
Scrap iron and steel
1,148,000
nil
Hides and skins
898,000
141,000
Pig iron
887,000
nil
Scrap brass
418,000
nil
Ferro-alloys
279,000
6,000
Coal tar products
255,000
63,000
Lead
167,000
nil
(7) The composition of our imports from Japan, with
a few exceptions, was approximately the same in October
1937 as that of October 1936. These exceptions were:
October 1937
October 1936
Silk manufactures
$ 475,000
$ 253,000
Flax, hemp and Ramie
manufactures
136,000
19,000
Wool manufactures
277,000
148,000
Rayon manufactures
374,000
142,000
Perilla oil
346,000
nil
Pyrethum flowers
260,000
75,000
Raw silk
8,076,000
9,077,000
Food products (excluding
tea)
193,000
475,000
Secretary Morgenthau - 4
(8) Of the total of $21,133,000 of exports to
Japan during October 1937, the following items account
for almost all:
Petroleum products
$4,585,000
Iron and steel semi-manufactures 3,982,000
Copper
1,893,000
Cotton, unmanufactured
1,551,000
Industrial machinery
1,394,000
Paper base stock
1,222,000
Scrap iron and steel
1,148,000
Hides and skins, raw
898,000
Pig iron
887,000
Vehicles, parts and accessories
788,000
Scrap brass
418,000
Ferro-alloys
279,000
Coal tar products
255,000
Fertilizers
238,000
Wood, unmanufactured
223,000
Lead
167,000
Industrial chemicals
137,000
Photographic and projection goods
131,000
Others
937,000
$21,133,000
Secretary Morgenthau - 5
(9) of the total of $15,338,000 of imports from
Japan during October 1937, the following account for the
bulk:
Raw silk
$8,076,000
Cotton manufactures
1,157,000
Silk manufactures
475,000
Tea
462,000
Chinaware and porcelain
385,000
Rayon manufactures
374,000
Fish
365,000
Perilla oil
346,000
Inedible animal products
343,000
Wool manufactures
277,000
Pyrethum flowers
260,000
Paper manufactures
252,000
Earthenware
206,000
Chemicals
199,000
Lily bulbs
198,000
Food products
193,000
Wood manufactures
175,000
Metal manufactures
164,000
Glass manufactures
142,000
Flax, hemp and Ramie manufactures
136,000
Other
1,153,000
$15,338,000
Data on our trade with China for the whole month
of October can not be reported as yet inasmuch as we
began collecting weekly figures of our trade with China
in the third week of October. October trade figures
will be available from the Department of Commerce in a
few weeks.
Secretary Morgenthau - 6
B. United States trade with Japan and China during
first week of November 1937.
(1) United States exports to Japan during the first
week of November were considerably lower and imports from
Japan were somewhat lower than the first week of October,
but the report of the first week is inadequate to draw
any definite conclusions. The inadequacy is particularly
true of exports, for export declarations received during
the first week do not represent the full volume of actual
exports during the week.
First week of
First week of
November 1937
October 1937
U. S. exports to Japan
$1,180,000
$1,727,000
U. S. imports from Japan
3,245,000
3,328,000
(2) The leading items of export to Japan during the
first week of November were as follows:
Petroleum products
$ 639,000
Iron and steel semi-manufactures
132,000
Cotton, unmanufactured
97,000
Copper
76,000
Fertilizer
72,000
Wood, unmanufactured
38,000
Vehicles, parts and accessories
36,000
Other
90,000
$1,180,000
Secretary Morgenthau - 7
(3) The leading items of import from Japan during
the first week of November were as follows:
Raw silk
$2,157,000
Cotton manufactures
205,000
Tea
98,000
Fish
85,000
Porcelain and chinaware
67,000
Rayon manufactures
66,000
Silk manufactures
65,000
Food products (vegetable products)
52,000
Pyrethium flowers
45,000
Earthenware
35,000
Paper manufactures
33,000
Camphor
31,000
Other
306,000
Total
$3,245,000
(4) United States trade with China during the first
week of November 1937.
North China
Shanghai, South China
and Manchuria
and Hong Kong
Exports, 1st week of Nov.
$425,000
$116,000
Imports,
If
If
"
II
215,000
609,000
The documents received, particularly export declara-
tions, during the first week of the month are inadequate
for drawing definite conclusions as to the totals of our
monthly trade with China.
(5) The principal items of export to China were as
follows:
(a) To North China and Manchuria:
Tobacco
$166,000
Iron and steel semi-manufactures
$157,000
Petroleum products
103,000
Other
2,000
$428,000
Secretary Morgenthau - 8
(b) To Shanghai, South China and Hong Kong:
Iron and steel semi-manufactures
$37,000
Fruits and nuts
25,000
Vehicles, parts and accessories
18,000
Other
36,000
$116,000
(6) The principal items of import from China were:
(a) From North China and Manchuria:
Wool and manufactures
$116,000
Bristles
32,000
Leather
28,000
Other
39,000
$215,000
(b) From Shanghai, South China and Hong Kong:
Tin
$173,000
Inedible vegetable products
119,000
Flax, hemp and ramie manufactures 109,000
Wood oil
25,000
Other
183,000
$609,000
PSF
-
THE SECRETARY OF THE TREASURY
WASHINGTON
Filgidented
November 18, 1937
wife
My dear Mr. President:
I am inclosing herewith the
preliminary report for the first
two weeks of November on, "Current
United States Trade with Japan and
China," in the hope that it will be
of interest to you.
Faithfully,
The President,
The White House.
Enclosure.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 17, 1937.
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject: Current United States trade with Japan and China
(Preliminary data)
United States trade with Japan during first two weeks of
November 1937.
(1) United States exports to Japan during first two
weeks of November were considerably lower than during the
first two weeks of October of this year.
United States exports to Japan
First two weeks of
Month of
November 1937
October 1937
November 1936
1st week
$1,180,000
$1,727,000
For whole
2nd week
4,813,000
5,746,000
month
Total 2 weeks
$5,993,000
$7,473,000
$24,100,000
(2) United States imports from Japan during the first
two weeks of November were somewhat less than the imports
during the first two weeks of October.
United States imports from Japan
First two weeks of
Month of
November 1937
October 1937
November 1936
1st week
$3,245,000
$3,328,000
For whole
2nd week
3,654,000
3,984,000
month
Total 2 weeks
$6,899,000
$7,312,000
$15,340,000
Secretary Morgenthau - 2
(3) United States export of cotton to Japan remains
negligible.
November, 1937: 1st week $ 97,000
2nd week
149,000
$246,000
November, 1936: Whole month $14,701,000
(4) There apparently has been a shift in the composi-
tion of our exports to Japan during the first two weeks of
November, compared with the first two weeks of October.
(a) The following items show large increases
in our exports to Japan, comparing the first
two weeks of November with the first two weeks
of the preceding month.
First two weeks of
November 1937
October 1937
Petroleum products
$1,694,000
$1,289,000
Copper
738,000
577,000
Vehicles, parts and
accessories
481,000
149,000
Industrial machinery
526,000
265,000
Hides and skins
311,000
186,000
Industrial chemicals
191,000
33,000
Ferro-alloys
331,000
189,000
(b) The following items show sharp decreases
in our exports to Japan during the first two
weeks of November compared with our exports
during the first two weeks of October.
First two weeks of
November 1937 October 1937
Iron and steel semi-
manufactures
$512,000
$2,639,000
Scrap iron and steel
44,000
419,000
Pig iron
25,000
354,000
Secretary Morgenthau - 3
(5) The composition of our imports from Japan remains
without significant change. Raw silk imports were $3,916,000
during the first two weeks of November, compared with
$4,127,000 during the first two weeks of October, which is
very similar to the $2,000,000 average per week importation
during the whole of 1936.
(6) Of the total of $5,993,000 of exports to Japan
during the first two weeks of November 1937, the following
items account for almost all:
Petroleum products
$1,694,000
Copper
738,000
Industrial machinery
526,000
Iron and steel semi-manufactures
512,000
Vehicles, parts and accessories
481,000
Ferro-alloys
331,000
Hides and skins
311,000
Paper base stock
260,000
Cotton, unmanufactured
246,000
Industrial chemicals
191,000
Fertilizer
118,000
Naval stores, guns and rosins
84,000
Coal tar products
81,000
Scrap iron and steel
44,000
Pig lead
41,000
Wood, unmanufactured
40,000
Other
295,000
$5,993,000
Secretary Morgenthau - 4
(7) Of the total of $6,899,000 of our imports from
Japan during the first two weeks of November, the follow-
ing items account for almost all:
Raw silk
$3,916,000
Cotton manufactures
411,000
Silk manufactures
227,000
Tea
214,000
Fish
183,000
Pyrethium flowers
164,000
Chinaware and porcelain
144,000
Rayon manufactures
129,000
Paper and manufactures
111,000
Wool manufactures
100,000
Perilla oil
86,000
Food products
83,000
Glass manufactures
78,000
Earthenware
74,000
Metal manufactures
64,000
Flax, hemp and ramie manufactures
62,000
Wood and manufactures
50,000
Chemicals
50,000
Lily bulbs
36,000
Other
717,000
$6,899,000
Secretary Morgenthau - 5
United States trade with China during first two weeks
of November.
(1) United States exports to China and Manchuria
during the first two weeks of November were considerably
less than during the third and fourth weeks of October
1937 (which is the only available basis of comparison
of weekly figures). The decrease was particularly severe
for South China and Hong Kong.
United States exports to
North China
Shanghai, South
and Manchuria
China and Hong Kong
Total
1st 2 weeks of
Nov. 1937
$ 854,000
$ 770,000
$1,624,000
3rd and 4th
weeks of Oct.
1937
1,022,000
2,575,000
3,597,000
For whole of China, Manchuria
and Hong Kong
Whole month of November 1936
$3,769,000
(2) United States imports from China and Manchuria
during the first two weeks of November were somewhat less
than during the third and fourth weeks of October 1937.
United States imports from
North China
Shanghai, South
and Manchuria
China and Hong Kong
Total
1st 2 weeks of
Nov. 1937
$ 797,000
$1,498,000
$2,295,000
3rd and 4th
weeks of
Oct. 1937
1,067,000
1,680,000
2,747,000
For whole of China, Manchuria
and Hong Kong
Whole month of November 1936
$4,659,000
Secretary Morgenthau - 6
(3) Leading export items to China
(a) North China and Manchuria, 1st 2 weeks of Nov.
Iron and steel semi-manufactures
$467,000
Tobacco
166,000
Petroleum products
114,000
Vehicles, parts and accessories
35,000
Other
72,000
$854,000
(b) Shanghai, South China ports and Hong Kong
Iron and steel semi-manufactures
$375,000
Petroleum products
110,000
Edible vegetable products
74,000
Fish
36,000
Vehicles, parts and accessories
33,000
Medicinal products
23,000
Other
119,000
$770,000
(4) Leading imports from China during the first two
weeks of November 1937.
(a) From North China and Manchuria
Bristles
$308,000
Wool and manufactures
271,000
Perilla oil
63,000
Leather
57,000
Other
98,000
$797,000
(b) From Shanghai, South China ports and Hong Kong
Tin
$463,000
Inedible vegetable products
(other than wood 011)
198,000
Raw silk
155,000
Flax, hemp and ramie manufactures
149,000
Wool and manufactures
82,000
Wood oil
73,000
Inedible animal products
70,000
Edible vegetable products
64,000
Cotton manufactures
41,000
Other
203,000
$1,498,000
THE SECRETARY OF THE TREASURY
WASHINGTON
PaT
December 4, 1937
moguelhair
My dear Mr. President:
For your information I am
transmitting herewith a memorandum
on "Current United States trade with
Japan and China."
This report is a preliminary
one for the first four weeks of
November.
Faithfully,
The President,
The White House.
Enclosure.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE December 2, 1937
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject:
Current United States trade with Japan and China
(Preliminary data)
United States trade with Japan during the first four
weeks of November 1937
(1) United States exports to Japan during the first
four weeks of November were considerably lower than during
the first four weeks of October of this year.
United States exports to Japan
First four weeks of
Month of
November 1937
October 1937
November 1936
1st week
$ 1,180,000
$ 1,727,000
2nd week
4,813,000
5,746,000
For
3rd week
4,745,000
4,492,000
whole month
4th week
3,730,000
6,763,000
Total 4 weeks $ 14,468,000
$18,728,000
$ 24,100,000
(2) United States imports from Japan during the
first four weeks of November were slightly higher than
the imports during the first four weeks of October.
United States imports from Japan
First four weeks of
Month of
November 1937
October 1937
November 1936
1st week
$ 3,245,000
$ 3,328,000
2nd week
3,654,000
3,984,000
For
3rd week
4,356,000
3,419,000
whole month
4th week
4,027,000
4,060,000
Total 4 weeks $ 15,282,000
$ 14,791,000
$ 15,340,000
Secretary Morgenthau - 2
(3) United States export of cotton to Japan remains
negligible.
November 1937:
lst week
$ 97,000
2nd week
149,000
3rd week
266,000
4th week
161,000
Total
$673,000
November 1936, whole month $14,701,000
(4) The major items in our exports to Japan during
the first four weeks of November 1937 are given below, with
a comparison of the exports during the first four weeks of
October 1937:
United States exports to Japan
First four weeks of
November 1937
October 1937
Petroleum products
$ 4,451,000
$ 4,216,000
Copper
1,570,000
1,441,000
Industrial machinery
1,383,000
1,345,000
Iron and steel semi-mfrs.
1,171,000
3,580,000
Paper base stocks
940,000
1,106,000
Vehicles, parts & accessories
840,000
634,000
Cotton, unmanufactured
673,000
941,000
Scrap iron and steel
564,000
994,000
Brass
550,000
418,000
Hides and skins
372,000
833,000
Ferro-alloys
356,000
279,000
Fertilizer
234,000
208,000
Industrial chemicals
216,000
133,000
Pig iron
201,000
887,000
Coal tar products
181,000
255,000
Wood
94,000
192,000
Pig lead
41,000
167,000
Photographic & projection goods
13,000
131,000
Other
618,000
968,000
Total
$14,468,000
$18,728,000
Secretary Morgenthau - 3
(5) The major items in our imports from Japan during
the first four weeks of November 1937 are given below, with
a comparison of the imports during the first four weeks of
October 1937:
United States imports from Japan
First four weeks of
November 1937
October 1937
Silk
$ 8,094,000
$ 8,021,000
Cotton manufactures
979,000
1,119,000
Fish
500,000
333,000
Silk manufactures
455,000
456,000
Wood and manufactures
443,000
163,000
Tea
433,000
457,000
Pyrethrum flowers
373,000
260,000
Perilla oil
357,000
307,000
Porcelain and chinaware
308,000
374,000
Paper and manufactures
260,000
237,000
Earthenware
220,000
197,000
Rayon and manufactures
205,000
356,000
Food products - vegetable
193,000
153,000
Glass and manufactures
189,000
136,000
Wool and manufactures
183,000
272,000
Inedible animal products
163,000
331,000
Flax, hemp and ramie manufactures
142,000
135,000
Metals and manufactures
139,000
156,000
Chemicals
94,000
189,000
Lily bulbs
69,000
183,000
Other
1,484,000
956,000
Total
$15,283,000
$14,791,000
Secretary Morgenthau - 4
United States trade with China during the first four weeks
of November
(1) The value of our exports to China during the first
four weeks of November 1937 18 already much higher than our
exports during the whole of November 1936.
United States exports to
North China
Shanghai, South
and Manchuria
China and Hong Kong
Total
November 1937
1st 2 weeks
$ 854,000
$ 770,000
$1,624,000
3rd week
1,229,000
1,616,000
2,845,000
4th week
573,000
616,000
1,189,000
Total 1st 4 weeks
of November
$2,656,000
$3,002,000
$5,658,000
For whole of China, Manchuria
and Hong Kong
Whole month of November 1936
$3,769,000
(2) The value of United States imports from China and
Manchuria during the first four weeks of November 1s consid-
erably higher than during the whole of the same month last
year.
United States imports from
North China
Shanghai, South
and Manchuria
China and Hong Kong
Total
November 1937
lst 2 weeks
$ 797,000
$1,498,000
$2,295,000
3rd week
396,000
1,121,000
1,517,000
4th week
652,000
1,279,000
1,931,000
Total 1st 4 weeks
of November
$1,845,000
$3,898,000
$5,743,000
For whole of China, Manchuria
and Hong Kong
Whole month of November 1936
$4,659,000
Secretary Morgenthau - 5
(3) Leading export items to China:
(a) North China and Manchuria, first four
weeks of November:
Iron and steel semi-manufactures $1,510,000
Vehicles, parts and accessories
312,000
Petroleum products
267,000
Tobacco
197,000
Cotton, unmanufactured
168,000
Wood, unmanufactured
61,000
Other
141,000
Total
$2,656,000
(b) Shanghai, South China ports and Hong Kong:
Petroleum products
$ 808,000
Iron and steel semi-manufactures
524,000
Tobacco
333,000
Vehicles, parts and accessories
231,000
Edible vegetable products
201,000
Printed matter
133,000
Industrial machinery
130,000
Other
642,000
Total
$3,002,000
(4) Leading imports from China during the first four
weeks of November 1937:
(a) From North China and Manchuria:
Bristles
$ 787,000
Wool and manufactures
494,000
Leather
98,000
Perilla oil
63,000
Other
403,000
Total
$1,845,000
Secretary Morgenthau - 6
(b) From Shanghai, South China ports and Hong Kong:
Wood oil
$ 624,000
Tin
622,000
Flax, hemp and ramie manufactures
423,000
Raw silk
412,000
Inedible vegetable products
(other than wood 011)
255,000
Bristles
194,000
Food products - vegetable
142,000
Wool and manufactures
139,000
Tea
132,000
Other
955,000
Total
$3,898,000
PSF
THE SECRETARY OF THE TREASURY
Treasury
WASHINGTON
December 14, 1937
MEMORANDUM FOR THE PRESIDENT:
Our best information is that the
net current liquid assets of the Jap-
anese Government, as of December 11th,
are $55,000,000.
THE SECRETARY OF THE TREASURY
WASHINGTON
December 15, 1937
My dear Mr. President:
I an enclosing herewith
for your information a memorandum
dated December 14, on, "Current
United States Trade with Japan and
China."
Faithfully,
The President,
The White House.
Enclosure.
PSF
TREASURY DEPARTMENT
Treasury
INTER OFFICE COMMUNICATION
DATE December 14, 1937
TO
Secretary Morgenthau
FROM
Mr. Haag M
Subject: Current trade with Japan and China
A. United States trade with Japan during November 1937 1/
(1) United States exports to Japan.
United States exports to Japan in November 1937 were
9 percent less than during October 1937, considerably less
than our exports during the summer months of 1937, and
24 percent less than in November 1936.
1937
1936
November
$18,295,000
$24,100,000
October
21,133,000
26,668,000
September
16,842,000
21,328,000
August
24,643,000
10,764,000
July
26,509,000
11,975,000
June
25,194,000
13,627,000
Excluding exports of raw cotton, our exports to Japan
in November 1937 were almost twice 8.8 large as our exports
in the same month of 1936, but considerably less than our
exports to Japan during the summer months of 1937.
United States exports to Japan, excluding raw cotton.
1937
1936
November
$17,498,000
8 9,335,000
October
19,582,000
9,787,000
September
15,354,000
10,552,000
August
23,449,000
9,201,000
July
24,566,000
10,965,000
June
21,962,000
9,352,000
Previous reports cover weekly figures only. This report
1s for the whole month of November.
Secretary Morgenthau - 2
(2) United States imports from Japan.
United States imports from Japan in November 1937 were
12 percent larger than during the preceding month, and
13 percent larger than during November 1936.
1937
1936
November
$17,282,000
$15,340,000
October
15,420,000
15,930,000
September
15,988,000
16,012,000
August
16,297,000
16,948,000
July
16,482,000
12,187,000
June
18,637,000
11,088,000
(3) Cotton exports to Japan continue to be negligible.
U. S. exports of cotton
to Japan
November 1937
$ 797,000
October 1937
1,551,000
November 1936
14,765,000
(4) Exports of iron and steel scrap to Japan were
lower in November than in the preceding months.
U. S. exports of iron
and steel scrap
to Japan
November 1937
$ 633,000
October 1937
1,148,000
September 1937
1,402,000
Monthly average, May
to August 1937
5,600,000
(5) The following export items show increases in trade
with Japan during November 1937, compared with October 1937.
The value of exports in November 1936 is shown for comparative
purposes.
Secretary Morgenthau - 3
November
October
November
1937
1937
1936
Petroleum products
$5,706,000
$4,585,000
$3,611,000
Copper
2,433,000
1,893,000
567,000
Industrial machinery
1,507,000
1,394,000
654,000
Vehicles, parts and
accessories
1,217,000
788,000
960,000
Brass
723,000
418,000
79,000
(6) The following export items show decreases in trade
with Japan during November 1937, compared with October 1937.
The value of exports in November 1936 1s shown for comparative
purposes.
November
October
November
1937
1937
1936
Iron and steel semi-
manufactures
$1,622,000
$3,982,000
$ 170,000
Cotton, unmanufactured
797,000
1,551,000
14,765,000
Scrap iron and steel
633,000
1,148,000
274,000
Hides and skins, raw
372,000
898,000
32,000
Pig iron
234,000
887,000
N11
Ferro-alloys
170,000
279,000
16,000
Wood, unmanufactured
94,000
223,000
28,000
Lead
63,000
167,000
N11
Photographic and projec-
tion goods
13,000
131,000
142,000
(7) The composition of our imports from Japan, with
a few exceptions, was approximately the same in November
1937 as that of October 1937.
(a) The import items showing large increases in
trade were:
November
October
November
1937
1937
1936
Raw silk
$8,943,000
$8,076,000
$9,987,000
Fish
764,000
365,000
300,000
Tea
535,000
462,000
203,000
Silk manufactures
533,000
475,000
299,000
Pyrethrum flowers
455,000
260,000
82,000
Paper and manufactures
315,000
252,000
67,000
Glass and manufactures
222,000
142,000
54,000
Secretary Morgenthau - 4
(b) The import items showing large decreases in
trade were:
November
October
November
1937
1937
1936
Lily bulbs
$ $4,000
$198,000
$ 43,000
Rayon and manufactures 227,000
373,000
381,000
(8) Of the total exports of $18,295,000 to Japan
during November 1937, the following items account for almost
all. The value of exports during October 1937 and November
1936 are shown for comparison.
November
October
November
1937
1937
1936
Petroleum products
$5,706,000
$4,585,000
$3,611,000
Copper
2,433,000
1,893,000
567,000
Iron and steel semi-
manufactures
1,622,000
3,982,000
170,000
Industrial machinery
1,507,000
1,394,000
654,000
Vehicles, parts and
accessories
1,217,000
788,000
960,000
Paper base stock
1,103,000
1,222,000
700,000
Raw cotton
797,000
1,551,000
14,765,000
Brass, including scrap
723,000
418,000
79,000
Scrap iron and steel
633,000
1,148,000
274,000
Hides and skins, raw
372,000
898,000
32,000
Fertilizers
262,000
238,000
115,000
Pig iron
234,000
887,000
Nil
Industrial chemicals
216,000
137,000
223,000
Coal tar products
206,000
255,000
75,000
Ferro-alloys
170,000
279,000
16,000
Tobacco and manufactures 140,000
18,000
217,000
All other
954,000
1,440,000
1,642,000
Total
$18,295,000
$21,133,000
$24,100,000
Secretary Morgenthau - 5
(9) Of the total imports of $17,282,000 from Japan
in November 1937, the following items account for almost
all.
November
October
November
1937
1937
1936
Raw silk
$8,943,000
$8,076,000
$9,987,000
Cotton manufactures
1,130,000
1,157,000
1,162,000
Fish
764,000
365,000
300,000
Tea
535,000
462,000
203,000
Silk manufactures
533,000
475,000
299,000
Pyrethrum flowers
455,000
260,000
82,000
Perilla oil
385,000
346,000
Nil
Porcelain and chinaware
355,000
385,000
140,000
Paper and manufactures
315,000
252,000
67,000
Vegetable food products,
except tea
284,000
193,000
175,000
Metals and manufactures
234,000
216,000
131,000
Earthenware
232,000
206,000
92,000
Wool and manufactures
227,000
277,000
57,000
Rayon and manufactures
227,000
373,000
381,000
Glass and manufactures
221,000
142,000
54,000
Wood and manufactures
164,000
175,000
62,000
Flax, hemp and ramie
manufactures
157,000
137,000
27,000
Chemicals and related
products
123,000
199,000
306,000
All other
1,998,000
1,724,000
1,815,000
Total
$17,282,000
$15,420,000
$15,340,000
Secretary Morgenthau - 6
3. Trade with China for the month of November 1937
(1) United States exports to China, Hong Kong and
Kwantung.
United States exports to China, Hong Kong and Kwantung
increased considerably in November 1937 over October 1937,
and are greatly in excess of our exports one year ago.
North China, Manchuria
South China
and Kwantung
and Hong Kong
Total
November 1937
$3,490,000
$6,212,000
$9,702,000
October 1937
-
-
7,153,000
November 1936
-
-
4,035,000
(2) United States imports from China, Hong Kong and
Kwantung.
United States imports from China, Hong Kong and Kwantung
were about the same in November 1937 as during the previous
month, but considerably higher than imports during November
1936.
North China, Manchuria
South China
and Kwantung
and Hong Kong
Total
November 1937
$2,129,000
$4,749,000
$6,878,000
October 1937
-
-
6,914,000
November 1936
-
-
4,668,000
(3) The principal items of export to China were:
(a) To North China, Manchuria and Kwantung:
Iron and steel semi-manufactures
$1,967,000
Petroleum and products
572,000
Vehicles, parts and accessories
325,000
Tobacco and manufactures
198,000
Raw cotton
192,000
All other
236,000
Total
$3,490,000
Secretary Morgenthau - 7
(b) To Shanghai, South China and Hong Kong:
Petroleum and products
$1,566,000
Vehicles, parts and accessories
1,354,000
Iron and steel, semi-manufactures
762,000
Tobacco and manufactures
415,000
Vegetable products, edible
292,000
Firearms and ammunition
243,000
Explosives
165,000
Industrial machinery
156,000
Medicinal and pharmaceutical products
88,000
Electrical machinery and apparatus
85,000
All other
1,086,000
Total
$6,212,000
(4) The principal items of import from China were:
(a) From North China and Manchuria:
Bristles
$ 879,000
Wool and manufactures
545,000
Leather
139,000
All other
566,000
Total
$2,129,000
(b) From Shanghai, South China and Hong Kong:
Tin
$ 776,000
Tung (wood) oil
721,000
Flax, hemp and ramie and manufactures
653,000
Raw silk
420,000
Wool and manufactures
263,000
Bristles
210,000
Tea
153,000
Vegetable food products (except tea)
170,000
Cotton manufactures
113,000
Silk manufactures
113,000
All other
1,157,000
Total
$4,749,000
marking
GENERAL COUNSEL
Dream
PSF
TREASURY DEPARTMENT
WASHINGTON
December 15, 1937.
MEMORANDUM TO SECRETARY MORGENTHAU
Pending study of other angles, the President may be advised
to this extent:
Under the amendment of March 9, 1953, to The Trading With The
Enemy Act, the President is authorized to find and declare a
"national emergency" existing, for example, by reason of the
necessity to forestall acts and events which might plunge this
Nation into war, to quarantine a war situation which is endanger-
ing the United States, or to assure reparation in order to avoid
the necessity of resort to force.
Upon such a declaration of a "national emergency", the
President could prohibit transactions in foreign exchange, with-
drawal of bank credits in this country or export of gold or its
proceeds. This reference is to exchange, credits and gold owned
by the Japanese Government. Those privately owned are being studied
further.
This proclamation declaring the "national emergency" would,
in terms, be limited to the Oriental situation and the events flowing
therefrom. Likewise, action under this proclamation would be
limited to foreign exchange, credits and gold directly or indirectly
related to the Oriental situation.
PSF
\
December 28, 1937.
Treasury hear (1)
Dear Ray:-
I do not know that I have over re-
ceived a more delightful and wholly satisfactory
letter than yours, and especially because your
health is fully restored and the worries are
gone.
Do not forget, however, that you are
still one of the youngsters carrying the torch
of liberal democracy and that you and I are
going to 800 the fight through together.
My affectionate regards to you all.
Always sincerely,
Hon. Raymond B. Stevens, Chairman,
United States Tariff Commission,
Washington, D. c.
UNITED STATES TARIFF COMMISSION
WASHINGTON
RAYMOND B. STEVENS
December 22, 1937
CHAIRMAN
Mr. Marvin H. McIntyre,
The White House
Dear Mac:
I am enclosing with this note a very personal
letter to the President which contains some information
about myself which I know will give him some pleasure.
Some time just before Christmas Day when he is at
leisure please give it to him. It contains no matters
of business that will worry him at all.
With best regards and my best wishes for a
Happy Christmas and New Year,
Yours sincerely,
Raymoud B. Stevens
is
UNITED STATES TARIFF COMMISSION
WASHINGTON
RAYMOND B. STEVENS
December 22, 1937
CHAIRMAN
The President
The White House.
Dear Mr. President:
This will be the happiest Christmas I have had for many years and I
look forward to the next year with courage and with pleasure. In large measure
this is due to you and I want you to know how fortunate my present situation is.
I. I am entirely out of debt to any person in the world for the first
time in thirty years. I own some five to six hundred acres of land on which
there is now no mortgage or lien. The land is not of great worth to anyone
else but very valuable to me.
There is now 8. good prospect that the money I loaned during the de-
pression to relatives and friends will be repaid to me.
At last I have a home that gives me great satisfaction both as to
interior and exterior. It is situated on the spot I love best in the world
"In Landaff Town on Jockey Hill". I am enclosing several pictures which show
what my wife did with the old barn that remained on my old place after the fire
in 1926.
Twenty years ago I saw a spot on the West Coast of Florida which I
set my heart on owning some day. Last year I was able to buy it. It is a
remote and lonely spot with superb fishing right at the door and endless
opportunities for inland and gulf fishing within easy access. It is taxed
for $100 but I would not sell it for $10,000. I am going to spend my
2
Christmas vacation there camping on the beach with my wife and my two boys.
I enclose a picture taken from an airplane which shows Little Marco
Pass and the plot of land I own.
II. I am on very friendly terms with my wife and with all my wife's
relatives. My son, now a junior at the best college in the United States,
and my two step-children, who are grown up and now have good positions, are a
great help and comfort to me.
III. I have a position which pays a good salary and work which I like and
which I can do fairly well, and if I give it up I shall only do so because I
can have another position which I would like even better.
IV. I have more good and devoted friends than any person I know. Some
of these friends are farmers and working people in New Hampshire whose confidence
and affection are very valuable to me. Some of my friends occupy very high
positions in the world. One lives in the White House.
V. Last, and perhaps most important of all, my health is good and still
improving. I recently went to Dr. Ruffin and he told me that I was sound as an
old pine knot and the only thing I had to fear now was old age.
You will see that from every standpoint I am in a more fortunate
position today than I have ever been. I am convinced that I would never have
been able to recover my health had it not been for the help you gave me. The
certainty that I could secure a good position which would permit me to carry
out all my obligations to my family relieved me of worry, which is a devastating
force. I do not think you will ever realize quite how much your support and
confidence has meant to me.
You will receive thousands of letters with holiday greetings and
good wishes. You will receive none, however, that came from & fuller heart
Raymouds Slevers
3
than mine. I do not wish you a Happy Christmas because I know you will have it
and I do not wish you a Happy New Year because I am sure you will go through the
coming year with courage and good cheer. I do wish you with all my heart some
good breaks during the new year. You have had some unfortunate ones during the
past year. I am not one of those who regret the fight you made on the Supreme
Court or consider the final action in the Congress as a serious personal defeat.
You lost the battle but you won the campaign and the fight had a great educational
value not only on the public but on the Court itself. During the fight, however,
you did have a few bad breaks. Senator Robinson's death was one and Black's
undisclosed connection with the K.K.K. was another. I do not think, however,
that the effects will be serious or lasting.
A good part of the recession in my opinion is due to business itself.
The tax situation and some uncertainty about your policies on utilities may or
may not have been a. factor. The chief reason for the recession was the too
rapid expansion of business and the too rapid increase in prices.
I am not surprised at the decrease in Party cohesion and discipline
in Congress. I regret it but I have long expected it and consider it to some
extent inevitable. The Democratic Party has long been composed of conflicting
elements. The surprising thing is that for over four years you were able to
wield it into an effective and unified instrument of recorery and reform.
When I return from Florida after the New Year I want to see you again.
I have an important matter with regard to the Tariff Commission itself to take
up with you and I have a complete report to make to you about the International
Boundary Commission which is most satisfactory.
My wife and my children join with me in sending to you and yours our
best wishes, our respect, and our affection.
Yours, as ever
RaymoudB Slevens.
PSF
THE SECRETARY OF THE TREASURY Treasury
WASHINGTON
Lile
December 30, 1937
My dear Mr. President:
I am enclosing herewith
for your information a memorandum
dated December 30, on, "Current
United States Trade with Japan and
China."
Faithfully,
The President,
The White House.
Enclosure.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE December 30, 1937
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject: Current United States trade with Japan and China
(Preliminary data)
United States trade with Japan during the first three weeks
of December 1937. 1/
(1) United States exports to Japan during the first three
weeks of December were lower than during the first three
weeks of November of this year.
United States exports to Japan
First three weeks of
December 1937
November 1937
October 1937
1st Week
$1,704,000
$ 1,180,000
$ 1,727,000
2nd Week
5,305,000
4,813,000
5,746,000
3rd Week
2,394,000
4,745,000
4,492,000
Total 3 Weeks
$9,403,000
$10,738,000
$11,965,000
(2) United States imports from Japan during the first three
weeks of December were sharply lower than the imports during
the first three weeks of November 1937.
United States imports from Japan
First three weeks of
December 1937
November 1937
October 1937
1st Week
$2,159,000
$ 3,245,000
$ 3,328,000
2nd Week
3,406,000
3,654,000
3,984,000
3rd Week
2,672,000
4,356,000
3,419,000
Total 3 Weeks
$8,237,000
$11,255,000
$10,731,000
1/ Our trade with Japan for the three weeks must be inter-
preted extra cautiously because of the holiday inter-
ference with the filing of import and export declarations.
Nonetheless, the continued lower level of imports is not
without significance, for past data show no seasonal
decline during December.
Secretary Morgenthau - 2
(3) The following items show large increases in our exports
to Japan during the first three weeks of December as compared
with the first three weeks of November 1937:
First three weeks of
December 1937 November 1937 October 1937
Paper base stock
$1,389,000
$841,000
$623,000
Industrial machinery
939,000
745,000
565,000
Cotton, raw
854,000
512,000
490,000
Tobacco
257,000
N11
10,000
Wood, unmanufactured
100,000
71,000
90,000
Chemical specialties
51,000
13,000
22,000
The following items show sharp decreases in our exports
to Japan during the first three weeks of December as compared
with our exports of these items during the first three weeks
of November 1937:
First three weeks of
December 1937
November 1937
October 1937
Petroleum products
$2,186,000
$3,262,000
$2,651,000
Copper
417,000
1,091,000
833,000
Brass & scrap brass
304,000
440,000
29,000
Fertilizer & fertil-
izer material
134,000
178,000
119,000
Coal tar products
102,000
139,000
137,000
Hides and skins
79,000
345,000
545,000
Ferro-alloys
51,000
342,000
224,000
Industrial chemicals
31,000
207,000
87,000
Naval stores, gums
and rosins
15,000
88,000
5,000
(4) The imports of raw silk were over $1,500,000 less in the
first three weeks of December than in the first three weeks
of November 1937. The relative composition of the imports
other than silk was approximately the same, although the total
was lower.
Imports during the first three weeks of
December 1937
November 1937
October 1937
Raw silk
$4,487,000
$6,169,000
$6,223,000
Imports other than
raw silk
3,750,000
5,086,000
4,508,000
Total
$8,237,000
$11,255,000
$10,731,000
Secretary Morgenthau - 3
(5) Of the total of $9,403,000 of exports to Japan during the
first three weeks of December 1937, the following items account
for almost all:
Petroleum products
$2,186,000
Paper base stocks
1,389,000
Industrial machinery
939,000
Cotton, raw
854,000
Iron and steel semi-manufactures
712,000
Vehicles, parts and accessories
690,000
Scrap iron and steel
448,000
Copper
417,000
Scrap brass and brass
304,000
Tobacco and manufactures
257,000
Fertilizers
134,000
Coal-tar products
102,000
Wood, unmanufactured
100,000
Hides and skins
79,000
Pig lead
75,000
Edible vegetable products
55,000
Chemical specialties
51,000
Ferro-alloys
51,000
Industrial chemicals
31,000
All other
529,000
Total
$9,403,000
(6) Of the total of $8,237,000 of our imports from Japan during
the first three weeks of December 1937, the following items ac-
count for almost all:
Raw silk
$4,487,000
Cotton manufactures
605,000
Tea
345,000
Porcelain and chinaware
219,000
Pyrethrum flowers
206,000
Paper and manufactures
197,000
Fish
190,000
Silk manufactures
170,000
Chemicals and related products
144,000
Vegetable food products, except tea
136,000
Flax, hemp and ramie and manufactures
125,000
Metals and manufactures
123,000
Earthenware
96,000
Wool and manufactures
81,000
Wood and manufactures
80,000
Glass and glassware
76,000
Rayon and manufactures
74,000
Bristles
60,000
All other
823,000
Total
$8,237,000
Secretary Morgenthau - 4
United States trade with China during the first three weeks
of December 1937.
(1) United States exports to China and Manchuria during the
first three weeks of December increased over the first three
weeks of November 1937, the increase going wholly to Shanghai,
South China ports and Hong Kong.
United States exports to:
North China &
Shanghai, South
Manchuria
China & Hong Kong
Total
1st 3 weeks of
Dec. 1937
$2,003,000
$4,093,000
$6,096,000
1st 3 weeks of
Nov. 1937
2,083,000
2,386,000
4,469,000
Whole month of December 1936
$5,255,000
(2) United States imports from China and Manchuria during the
first three weeks of December were approximately the same as
in the first three weeks of November of this year.
United States imports from:
North China &
Shanghai, South
Manchuria
China & Hong Kong
Total
lst 3 weeks of
Dec. 1937
$ 864,000
$2,926,000
$3,790,000
lst 3 weeks of
Nov. 1937
1,193,000
2,619,000
3,812,000
Whole month of December 1936
$5,365,000
(3) Leading export items to China:
(a) To North China and Manchuria
First three weeks of
December 1937
November 1937
Iron and steel semi-manufactures
$1,091,000
$1,126,000
Vehicles, parts and accessories
439,000
276,000
Petroleum products
174,000
263,000
Tobacco
24,000
166,000
Other
275,000
252,000
Total
$2,003,000
$2,083,000
Secretary Morgenthau - 5
(b) To Shanghai, South China ports and Hong Kong
First three weeks of
December 1937
November 1937
Petroleum products
$1,055,000
$ 750,000
Vehicles, parts & accessories
848,000
189,000
Tobacco and manufactures
502,000
131,000
Iron and steel semi-manufactures
461,000
504,000
Edible vegetable products
247,000
106,000
Printed matter
108,000
107,000
Firearms and ammunition
99,000
N11
Paper and manufactures
95,000
59,000
Wood, unmanufactured
83,000
28,000
Industrial machinery
63,000
129,000
Electrical machinery and appliances
61,000
50,000
Other
471,000
333,000
Total
$4,093,000
$2,386,000
(4) Leading import items during the first three weeks of
December 1937:
(a) From North China and Manchuria
First three weeks of
December 1937
November 1937
Bristles
$342,000
$ 391,000
Wool and manufactures
137,000
417,000
Furs. leather and manufactures
78,000
94,000
Perilla oil
57,000
63,000
Cotton manufactures
49,000
47,000
Edible animal products
31,000
19,000
Other
170,000
163,000
Total
$864,000
$1,194,000
Secretary Morgenthau - 6
(b) From Shanghai, South China ports and Hong Kong
First three weeks of
December 1937
November 1937
Tin
$ 528,000
$ 482,000
Flax, hemp & ramie & manufactures
455,000
305,000
Tung (wood) oil
372,000
305,000
Bristles
251,000
113,000
Edible vegetable products
221,000
171,000
Wool and manufactures
141,000
90,000
Furs, leather and manufactures
140,000
52,000
Edible animal products
136,000
38,000
Raw silk
125,000
335,000
Cotton manufactures
102,000
67,000
Tungsten ore
60,000
N11
Other
395,000
661,000
Total
$2,926,000
$2,619,000
TOTAL GOVERNMENTAL DEBTS AND LONG-TERM PRIVATE DEBTS
IN THE UNITED STATES, 1930, 1934, 1935, 1936
(Billions of dollars)
1930
1934
1935
1936
GOVERNMENTAL DEBTS (June 30)
Gross direct debt of the
Federal Government
16.2
27.1
28.7
33.5
Obligations of governmental
corporations and credit
agencies (excluding inter-
agency interests)
--Guaranteed
---
.7
4.2
4.7
--Not guaranteed
1.3
2.6
2.3
2.3
Total debt of the Federal
Government and its corpora-
tions and credit agencies
17.5
30.4
35.2
40.5
Estimated debts of State and local
governments (gross debt less sinking
fund assets)
16.4
17.2
17.4
17.6
Total governmental debts
(June 30)
33.9
47.6
52.6
58.1
PRIVATE DEBTS (end of year)
Total long-term private debt
84.6
75.3
74.2
72.9
Total governmental debts and
long-term private debts
118.5
122.9
126.8
131.0
Based on materials prepared by the Department of the Treasury and the Depart-
ment of Commerce.
Long-Term Private Debt in the United States
(December 31 of each year)
(Figures in billions of dollars)
1930
1934
1935
1936
Railway
15.41
13.41
13.25
13.27
Public Utility
14.02
14.78
15.03
14.76
Industrial
10.82
8.47
8.15
7.80
Farm Mortgage
9.10
7.65 #
7.55
7.30
Urban Home Mortgage
22.30
18.35 *
17.95
17.80
All other urban realty
14.95
12.68
12.30
12.00
Total
84.58
75.34
74.25
72.93
* Revised figures.
Except as noted, the figures for the years 1930 and 1934 cor-
respond with those shown in "Long-Term Debts in the United States",
U. S. Department of Commerce. The figures for 1935 and 1936 are
preliminary only.
Prepared by the Division of Economic Research,
Bureau of Foreign and Domestic Commerce,
Department of Commerce.
December 16, 1937.
THE SECRETARY OF THE TREASURY
WASHINGTON
DEC 2 1937
My dear Mr. President:
In response to your request of November 12, transmitted
through Mr. Magill, for information on the total amount of pub-
lic and private debts in the United States for 1929 and subse-
quent years, I beg to submit the following data:
Accurate information respecting the debt of the Federal
Government and its agencies is of course available for each of
the years covered by your inquiry. We also have available for
each of these years fairly good estimates of the amounts of
State and local debts. As respects the amount and composition
of private debts, however, reliable and adequate data are most
difficult to obtain and are available for only three of the years
covered by your inquiry; and even then only if short-term debts
are excluded.
The only official study that has been made of private
debts in recent years is that summarized in a report issued in
the fall of 1936 by the Department of Commerce, entitled "Long-
Term Debts in the United States." This report, a copy of which
is attached hereto, gives estimates for the years 1930, 1934,
and 1935 of private long-term debts, that is, in general, debts
with a maturity of one year or more. These estimates are based
upon summations of the debts of individuals and reporting busi-
ness units other than financial corporations. By reason of
various duplications and omissions in the estimating process,
the final estimates are subject to a considerable margin of
error.
In the following table, there are presented the estimates
of long-term private debt contained in the volume cited, the
total short- and long-term debt of the Federal Government and
the obligations of governmental corporations and credit agencies,
and the estimated short- and long-term debts of State and local
governments, for the years 1930, 1934, and 1935:
- 2 -
Total Governmental Debts and Long-Term Private Debts
in the United States, 1930, 1934, and 1935
(Billions of dollars)
' 1930 ; 1934 : 1935
Governmental debts (June 30)
Gross direct debt of the Federal
Government
16.2 27.1 28.7
Obligations of governmental cor-
porations and credit agencies
(excluding inter-agency interests)
- Guaranteed
-
.7
4.2
- Not guaranteed
1.3 2.6 2.3
Total debt of the Federal
Government and its corpora-
tions and credit agencies
17.5 30.4 35.2
Estimated debts of State and local
governments (gross debt less
sinking fund assets)
16.4 17.2 17.4
Total governmental debt
33.9 47.6 52.6
Private debt (end of year)
Total long-term private debt
84.5 74.9 73.4
TOTAL GOVERNMENTAL DEBTS AND LONG-TERM
PRIVATE DEBTS
118.4 122.5 126.0
- 3 -
Great difficulties are involved in arriving at any useful
estimates of the aggregate volume of short-term (under one year)
private debts, which are excluded from the above compilation.
An estimate made by the Twentieth Century Fund ("The Internal
Debts of the United States," Macmillan, 1933) placed the amount
of this debt at $103.6 billions, as of December 31, 1932. This
estimate, however, included $41.5 billions of liabilities of
banks to their depositors, as well as loans by banks to these
depositors; whereas much of the depositors' claims against the
banks arose out of bank loans to the depositors. The overlap-
ping and duplications involved in such treatment of short-term
debts in the case of banks and their depositors are also
involved to some extent in other data bearing upon short-term
debt. I may point out that the total volume of notes and
accounts payable of corporations submitting balance sheets with
their income-tax returns for the year 1934 amounted to $27
billions.
I believe you may be interested in a classification of
long-term private debts, as presented on page six of the
attached volume. For the years 1930 and 1934, the only recent
years for which the data are cited, the classification is as
follows:
Department of Commerce Estimates of Long-Term
Private Debt (end of year)
(Billions of dollars)
:
:
1930
1934
1
:
Railway
13.4
13.4
Public utility
14.0
14.8
Industrial
10.8
8.5
Farm mortgage
9.1
7.8
Nonfarm - home mortgage
22.3
17.7
Other urban real estate debt
14.9
12.7
Total
84.5
74.9
- 4 -
The official figures for the debts of the Federal Govern-
ment and its corporations and credit agencies, and fairly close
estimates for the debts of State and local governments are
presented for 1929 and subsequent years in the appended table.
Faithfully yours,
The President,
The White House.
Attachments
Total Governmental Debts in the United States, June 30, 1929-1937
(Billions of dollars)
: 1929 : 1930 : 1931 : 1932 : 1933 : 1934 : 1935 : 1936 : 1937
Gross direct debt of the Federal Government
16.9 16.2 16.8 19.5 22.5 27.1 28.7 33.5 36.4
Obligations of governmental corporations
and credit agencies (excluding inter-agency
interests)
- Guaranteed
-
-
-
-
-
.7
4.2
4.7
4.7
-- Not guaranteed
1.3
1.3
1.4
1.3
1.4
2.6
2.3
2.3
2,3
Total debt of the Federal Government
and its corporations and credit
agencies
18.2 17.5 18.2 20.8 23.9 30.4 35.2 40.5 43.4
Estimated debts of State and local govern-
ments (gross debt less sinking fund assets) 15.2 16.4 17.5 17.7 17.9 17.2 17.4 17.6 17.6
Total governmental debts
33.4 33.9 35.7 38.5 41.8 47.6 52.6 58.1 61.0