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Volume 264, May 20 – May 21, 1940
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Volume 264, May 20 – May 21, 1940
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 264
May 20 and 21, 1940
- A -
Book Page
American Securities
See War Conditions
Appointments and Resignations
Viner, Jacob: University of Chicago asked again to
make services available 5/21/40
264
283
a) Hutchins' telegram: See Book 265, page 290
- B - -
Belgium
See War Conditions
Biggers, John
Possible contact with Treasury - 5/21/40
309,310
Thurman Arnold and HMJr discuss - - 5/21/40
331
a) Arnold disapproves of Biggers
345
Boeing Aircraft Company
HMJr and J. Edgar Hoover discuss - 5/21/40
327
See also Book 265, page 96
Business Conditions
Haas memorandum on situation for week ending
May 18, 1940
63
- C -
California Institute of Technology
See War Conditions: Airplanes
Carnegie-Illinois Steel Corporation (Ohio)
Federal Bureau of Investigation report - 5/21/40
259
China
Transportation: Report to Keeshin from his representative
in China
255
Communist Party
Federal Bureau of Investigation preliminary report
281
Compton, Karl T. (Massachusetts Institute of Technology)
See War Conditions: Airplanes
- D - -
Diamonds (Industrial)
See War Conditions
- F -
Federal Alcohol Administration
Reorganization discussed at Treasury group meeting -
5/21/40
317
Fine Arts, Section of
See War Conditions
France
See War Conditions
Frank, Jerome
See War Conditions: Securities and Exchange Commission
- G -
Book Page
Gold
See also War Conditions: France; Vatican
FDR approves memorandum for funds to move gold to
Fort Knox from New York and Budget Bureau sends
message to Congress - 5/20/40
264
85
Great Britain
See War Conditions: United Kingdom
- I -
Italy
See War Conditions
- J -
Japan
See. War Conditions
- M -
Massachusetts Institute of Technology
See War Conditions: Airplanes
Millikan, R. A. (Chairman, Executive Council -
California Institute of Technology)
See War Conditions: Airplanes
- N -
National Advisory Committee for Aeronautics
See War Conditions: Airplanes
Navy
See Mar Conditions
Netherlands
See War Conditions
- 0 -
Odlum, Floyd
Frank (Jerome) recommends; HWr tells FDR "no" -
5/20/40
104
Currie and HMJr discuss - 5/21/40
312
- R - -
Rearmament Program
See War Conditions: United States
Reuther, Walter P.
HMJr and J. Edgar Hoover discuss - 5/21/40
328
See also Book 265, page 297
Roumania
See War Conditions
- 8 -
Book Page
Securities and Exchange Commission
See War Conditions
Shadon Factories
See War Conditions: United Kingdom
Shipbuilding
See War Conditions: Navy
Sweden
See War Conditions
- U - -
Urited Kingdom
See War Conditions
United States
See War Conditions
- V - -
Vatican
See War Conditions
Viner, Jacob
See Appointments and Resignations
Vinson-Trammell Act
War and Navy Departments assured through FDR that
Treasury will give both opportunities to present
views regarding revision - 5/20/40
264 38
See also War Conditions (Navy) for shipbuilding
expansion bill
- 1 -
War Conditions
Airplanes:
Johnson (Louis) memorandum: Program for creation
of air power given to HMJr by FDR - 5/20/40
32
Spitfire and P-40: Comparison based on tests in
Canada - 5/21/40
136
National Advisory Committee for Aeronautics:
George Mead and Johnson confer with representatives
of Treasury and Civil Aeronautics Authority on
air expansion program - 5/21/40
139-
Engines:
Massachusetts Institute of Technology and California
Institute of Technology asked for "disinterested
advice" on new models and new sources of airplane
engines - 5/20/40
1,9-A
Deliveries (scheduled) by months through 1941
13,14
Conference of representatives of Army, Navy, Treasury,
and Civil Aeronautics Authority to work out
program - 5/20/40
15
- W - (Continued)
Book
Page
War Conditions (Continued)
Airplane Engines (Continued):
Conference in General Brett's office with Keller
and Hutchinson, of Chrysler: Young memorandum -
5/20/40
264
122
Conference in HMJr's office with Keller and
Hutchinson, of Chrysler: Sullivan memorandum -
5/20/40
126
Rolls Royce: Keller, of Chrysler, asked to examine
engine et Wright Field and report - 5/21/40
131
a) Kennedy asked to clear with Air Ministry,
London, permission to manufacture in
United States - 5/21/40
137
1) H/Jr explains to Purvis; Purvis tells
HMr that Bristol representative
(Feddon - "as well informed as anyone
in Great Britain") has been in United
States conferring with him; Rolls Royce
liquid cooled; Bristol air cooled;
French Gnome Rhone (air cooled) also
discussed - 5/21/40
177
Allison Motors: HMJr discusses with Sloan speed-up
of program - 5/21/40
165
Engine Facilities, Expansion of:
Memorandum from Brett (Army Air Corps) - 5/21/40
173
Memorandum from Purvis on new factory - 5/21/40
193
American Securities:
Destruction of in Belgium prior to German occupation -
5/21/40
292
Belgium:
See also War Conditions: American Securities
Banque Nationale de Belgique transfers seat to Paris -
5/21/40
300
Diamonds (Industrial) Memorandum on supply prepared in
London - 5/20/40
48
Exchange market resume - 5/20/40, et cetera
81,324
Fine Arts, Section of: Bruce's memorandum to FDR concerning
poster campaign to offset hysteria - 5/21/40
240
France:
Gold: Decrees to increase Government's supply - 5/21/40
285
Italy: Stock prices charts - 5/20/40
98,307
Japan: Grew's report on feeling in business circles BS
result of European developments - 5/21/40
266
Navy:
See also Vinson-Trammell Act
Naval Shipbuilding: Bill introduced by Vinson giving
Secretary of Navy final say as to cost of plant
expension, et cetera, instead of Secretary of Treasury..
249
a) HMJr's memorandum to FDR setting forth
Treasury's objections - 5/21/40
244
b) Foley's memorandum expressing disapproval
248
(See also Book 272, page 304)
Netherlands: Governor, Netherlands Bank, suggests procedure
to prevent securities stolen by Germans in Holland
being sold in United States - 5/20/40
77
- W - (Continued)
Book Page
her Conditions (Continued)
Purchasing Mission:
Vesting Order: Official sales of British-owned
dollar securities - 5/20/40
264
70
Program of purchases with priorities indicated
discussed by Purvis, Bloch-Laine, Jacquin,
Ballantyne, HMJr, and Young - 5/21/40
177,205,213,
231,233
a) Airplanes and engines
b) Armaments
c) General war supplies
See also Book 265, page 86, for discussion
between General Marshall and HMJr;
Book 265, page 192, for War Department
memorandum
Roumania:
Devaluation of National Bank's gold stock - 5/20/40
115
Securities and Exchange Commission: Frank and Eicher want
to close May 22, 1940; two other Board members and
Federal Reserve do not; HMJr recommends against but
will confer again at 8:30 A.M., May 22nd -
5/21/40
294,339
Shipping: Situation reviewed in Harris memoranda -
5/20/40
100,111
Steel: Memorandum from Monnet to Purvis stating that all
purchases will be made in future through Anglo-French
Purchasing Board in New York City
238
Sweden: German accounts being transferred from insurance
companies in United States to banks in Sweden: Report
from British Embassy, Stockholm - 5/20/40
78
United Kingdom: Cooperation between United Kingdom and
United States requested in communication from Lord
Lothian to Hull to FDR; points covered: (1) prohibition
of import of bearer securities except under license;
(2) blocking of German assets; (3) navicert cooperation;
(4) restriction of supplies of key materials to Germany;
(5) restriction of toluol exports to Italy - 5/20/40
80
Shadow Factories in Birmingham: Young memorandum -
5/20/40
112
United States:
Rearmament Program: Kennedy's program based on British
mistakes - 5/21/40
251
Vatican: Desires to transfer gold to New York City for
safe-keeping - 5/21/40
299
See also Book 265, pages 120,144,162
a) HMJr's letter of instructions to Federal Reserve
Bank of New York and memorandum to FDR concerning -
5/24/40: See Book 265, page 362
1
May 20, 1940
4:32 p.m.
Operator: Go ahead.
Come.)
H.M.Jr:
Hello.
R. A.
Millikan:
Hello.
Chairman cal.
H.M.Jp:
Mr. Millikan.
M:
Yes.
H.M.Jr:
Henry Morgenthau, Jr.
M:
How do you do, sir.
H.M.Jr:
How are you? Mr. Millikan, you got my message about
the kind of people I wanted?
M:
I did.
H.M.Jr:
Now
M:
Now -- all right, shall you go ahead or shall I?
H.M.Jr:
You do, please.
M:
All right. I judge, from what I heard this morning,
that what you're trying to do 18 to develop new
facilities for the manufacture of engines -- aeroplane
engines on the coast somewhere.
H.M.Jr:
Well no, that isn't exactly the picture. Hello?
M:
Yes.
H.M.Jr:
For the time being I'm sort of coordinating for the
President the needs of the Army and Navy and the
Allies. Hello?
M:
Yes.
H.M.Jr:
I want what I call disinterested advice on engines --
aeroplane engines and possible new sources for engines
or new designs. Hello?
M:
Yes.
2
- 2 -
H.M.Jr:
And I don't want to rely on the -- just the Army and
Navy and the manufacturers; therefore, I'd like --
I want to go to you and to M.I.T. and ask them who do
they have who are not on somebody's payroll.
M:
Yes.
H.M.Jr:
Who has a financial stake. Now that's what I want
and who there was that you have who knew aeroplane
engines and was -- from the engineering standpoint.
Well now, I'll give you an example. Hello?
M:
Yes.
H.M.Jr:
Take the Rolls-Royce engine. Is that something we
should try to manufacture here or have we something
as good, or haven't we. You see?
M:
I see.
H.M.Jr:
Now we have two of those Rolls-Royce engines at Dayton
that just arrived. Is the engine that the -- the
new flat engine made by Continental, is that some-
thing we should push or isn't it?
M:
I see.
H.M.Jr:
Where are we -- how are we going to develop & Deisel
aeroplane engine.
M:
Yeah. It's disinterested advice then.
H.M.Jr:
Disinterested advice.
M:
Well now, I think I can -- I would answer that as
follows. I think you probably know where the biggest
experience in the whole aeroplane field 18 in the
institutions -- that 18 in the universities or
technical schools.
H.M.Jr:
Well, I'm not sure if I do or not.
M:
Well, I would say that -- the juvenile laboratories
here have unquestionably -- I think -- you can go to
somebody else because I might be prejudiced in their
favor.
3
- 3 -
H.V.Jr:
Well, I was sent to you a.8 one of the best sources.
I have gone to you and to Dr. Compton.
V:
All right. Well then what you really want -- then
I've mot it -- exactly what you want.
R.M.Jr:
Yeah.
M:
And our group here -- you see, we're here -- our group
here has done an amazing -- has been very closely
associated with the development of the aeroplane
industry in this area.
H.V.Jr:
Yes.
that manufacturers will tell you, but we
have no -- the men whom I am going to speak to you
about have no connections with them of any kind.
H.M.Jr:
I understand.
M:
What -- and our two men -- three men here would know
the field pretty well. That's on our staff. The
first would be Theodore von Carmen, who 18, I think,
recognized @6 the foremost authority in the world on
engine -- on aeroplane design.
H.M.Jr:
Yes.
M:
He is in the inter-dynamic side other than on the
en gine side, but he's a highly trained and 8 very
competent engineer.
H.M.Jr:
I see.
M:
Who would be told by -- well, I think if you'd go
to M.I.T. and ask
H.M.Jr:
Well, they've suggested Hunsaker.
M:
All right. He's their man.
H.M.Jr:
Hunsaker.
V:
He's good.
H.M.Jr:
Yes.
Regraded Uclassified
4
- 4 -
M:
But if you'd ask Hunsaker who the foremost man in
that line in the United States, or in world, he'd
say it was Carmen.
H.M.Jr:
I see.
M:
I think Carmen -- he and Carmen have worked together.
for -- for years. Hunsaker 18 the man who knows
their -- 18 the best man on their group.
H.M.Jr:
Yes.
M:
At M.I.T. Carmen 18 the best man on our group,
unquestionably.
Now, the second man who has had a great deal to do
with this also 18 Mr. -- he's my son.
H.M.Jr:
I see.
M:
Who is in the group in our laboratories.
H.M.Jr:
Right.
M:
C.B. -- Clark B. Millikan, end you can get advice from
him -- about him from anybody who knows anything about
the aeroplane game in the country rather than taking
mine.
H.M.Jr:
Well, I'm more than willing to take yours.
M:
Well, those two men, although one of them is my son,
two men are outstanding in the -- in the whole
aeroplane field.
H.M.Jr:
Yeah, Clark B. Millikan.
M:-
that that 18 the case as far as our group here
18 concerned.
H.M.Jr:
Now, let me ask what may be a very silly question.
What is the nationality of Theodore von Carmen?
M:
Carmen 18 a Hungarian
H.M.Jp:
Oh.
M:
naturalized citizen of the United States.
Regraded Uclassified
5
- 5 -
H.M.Jr:
You mean, he's not
M:
A man of Jewish blood
H.M.Jr:
Yes.
M:
And
H.M.Jr:
Well, being a Jew
M:
In fact, I got him over here.
H.M.Jr:
I say, being a Jew myself, I have no prejudice.
M:
No. Well, I haven't either.
H.M.Jr:
But I Just didn't know whether he was a Nazi.
M:
You needn't have any worries about -- about Carmen.
H.M.Jr:
I see.
M:
But if you want to know what kind of a man he 18, let
me give you this little incident, if you can take the
time to
H.M.Jr:
I have plenty of time.
M:
A little amusing talk over the phone.
H.M.Jr:
Yes.
M:
When he came to us he kept the -- his professorship
in Germany, 80 far as the roll was concerned. He
didn't have any income from there but he kept his
title there. When the -- when the -- Hitler Regime
came in they sent him a telegram and insisted upon
his going back.
H.M.Jr:
I see.
M:
And you see, of course, the reason -- because he's
probably -- two men in Germany who had the reputations
and the experience that he had. He brought it to me
and showed it to me and he said, "I'll send them my
profile."
H.M.Jr:
I see. That's amusing.
6
- 6 -
M:
Well, that's very typical of Carmen. He's B. -- he's
a very broad, extreme, outstanding man in every
particular, who has -- in spite of the fact that
he has the handicap of speaking with a -- not very
good English, and also of being somewhat deaf.
He never rete into a group but what they all are
eating out of his hand. That's
H.M.Jr:
Well now
the kind of a man he 18.
H.M.Jr:
Mr. Millikan, I'd like Theordore von Carmen and
Clark B. Millikan to come to Washington at the expense
of the Tressury. We'll pay for their railroad fare,
or rather air transportation, both ways and their
living expenses end I don't what arrangement the
University -- your University makes in regard to whether
you want us to Day them or not. Hello7
Yes.
S.V.Jr:
We can -- what we -- in the Treasury we could Day
$25 8 day, their air transport, and 85 & day for
their subsistence. Hello?
All right. That's all right. They are not after
But I mean -- that's the maximum the law allows.
I understand that, and I've been doing -- I've done
a lot of this type of thing myself.
H.M.Jp:
So if they could start tomorrow.
financial
then I an.
I say, if they could start tomorrow and ret here
Wednesday.
Well, I should have to wire you. I'll have to get in
touch with them and find out.
H.M.Jr:
will you?
Yes, I'll be gled to do it.
Regraded Uclassified
7
- 7 -
H.M.Jr:
Well, get them started just as soon as they can, and
send me a telegram, and as I say, we can pay all of
their expenses plus -- well, the regular Government
thing. I think it's either $22.50 of $25 a day,
plus $5 of subsistence. We give them the maximum the
law allows from the time that they start.
M:
There 18 another young man who 18 8. more of an engine
man, directly an engine man than either of these two
are, but they know the aeroplane game and the question
H.M.Jr:
Well, if there's an engine man let him come
M:
for fifty
H.M.Jr:
Well, 88 I say, if you've got a third man -- have you
got another man who 18 particularly an engine man?
M:
Yes.
H.M.Jr:
Let him come on.
M:
All right, fine.
H.M.Jr:
What's -- let him come on just the same.
M:
All right. Then I'll try and see if I can't get --
Lombard 16 the other man's name.
H.M.Jr:
Lombard.
M:
A young man but a very able man, and he's in engines
to a larger extent than they are. They are in the
side.
H.M.Jr:
Well, it's the engine thing
M:
The position of the engine to the plane, and that's
what you want.
H.M.Jr:
Well, but -- also engines.
M:
All right.
B.M.Jr:
I mean, we've got to start with the engine first.
M:
All right. I understand that.
8
- 09 -
H.M.Jr:
So if you can get them to come 88 soon as they can
and -- and send me a telegram to the Treasury.
m:
I'll do so, Mr. Morgenthau.
H.M.Jr:
And we've got George Mead coming down also.
M:
Who's this?
H.M.Jr:
Isn't that his name, -- wait a minute?
M:
Mead?
H.M.Jr:
Yes, George Mead.
M:
Geologist at M.I.T.
H.M.Jr:
No, no. No, no. This man used to be with Pratt and
Whitney.
M:
Oh well then -- Yes, well, he's more of an engine man
than any of these are.
H.M.Jr:
Yes, he used to be with Pratt and Whitney.
M:
I know who her 18.
H.M.Jr:
We've got Mead and Hunsaker coming down.
M:
Yeah, they're good.
H.M.Jr:
Both of them.
M:
All right. Very well then, I'll see if I can't get
them -- come on tomorrow.
H.M.Jr:
Fine.
M:
When are you going to have your meeting?
h.m.Jr:
Well, we'll have it when they get here.
M:
All right, sir.
H.M.Jr:
We'll have it......
M:
I'll see if I can't get them to come down.
9
- 9 -
H.M.Jr:
We'll have it when they get here.
M:
All right.
H.M.Jr:
Thank you.
M:
Thank you, Mr. Morgenthau.
9-A
May 20, 1940
11:33 a.m.
H.M.Jr:
Hello.
LMS.
Operator:
Dr. Compton.
Tahnology
H.M.Jr:
Right.
0:
Go ahead.
H.M.Jr:
Hello.
Dr. Karl T.
Compton: Oh, hello.
H.M.Jr:
This 18 Henry Morgenthau, Jr.
C:
Oh yes, good morning.
H.M.Jr:
How are you, sir?
C:
Lieutenant McKay told me what you were calling up
about.
H.M.Jr:
That's right.
C:
Now, I have a list of men here. Would you like,
perhaps to put a stenographer on the line and let
me pass them on to her, or shall I give them to
you just in person.
H.M.Jr:
You just give them to me and I can take them down.
C:
Yes. Well, I -- I think the number one man, in
our judgment here, would be George J. Mead.
H.M.Jr:
I see.
C:
He 18 retired, although he 18 a relatively young man.
He was formerly chief engineer of Pratt and Whitney.
H.M.Jr:
Yes.
Advisory
C:
And he's now the Vice Chairman of the National/Com-
mittee for Aeronautics and Chairman of its Power
Plant Committee.
H.M.Jr:
Right.
9-B
- 2 -
C:
Then other men that are thoroughly first-class in
both design and production of aeroplanes are Leonard
Hobbs -- H-o-b-b-s
H.M.Jr:
Yes.
C:
of the Pratt and Whitney Company in Hartford,
and Roland
,
who 18 Vice President and Chief
Engineer of the Allison Engineering Company of
Indianapolis.
H.M.Jr:
Well, Dr. Compton, I was thinking of people more
like Mr. Mead who are outside the industry, who
are not interested in it, you see?
C:
Oh, I see.
H.M.Jr:
I mean, some -- I mean, -- well, for example, if I
want to ask the question, "Why don't we have a
Deisel engine?" There's no use going to the industry
because they haven't produced one.
C:
Yes.
H.M.Jr:
I mean, it's questions like that. Now, Mead -- they
tell me your man Hunsaker 1s very good.
C:
Well, Hunsaker -- Hunsaker 18 a first-class man.
He's -- he's not primarily an engine man.
H.M.Jr:
Oh.
H.M.Jr:
We have two very good engine men on our staff.
C.F. -- they are two brothers -- C.F. Taylor,
and E.S. Taylor.
H.M.Jr:
I see.
C:
C.F. Taylor used to be Chief Engineer of the Wright
Aeronautical Corporation and E.B. used to be on
their staff but they've both been with us now for
some fifteen years.
H.M.Jr:
Well then, the engine people who are not connected
with the industry gets down to Mead and the two
Taylors?
Regraded Uclassified
9-C
- 3 -
C:
Yes, they're the only ones I have on my list. I
hadn't realized -- Lieutenant MoKay said you didn't
want men in Government service.
H.M.Jr:
No, and I don't want men
C:
And I hadn't realized that the -- exclusion of industry.
H.M.Jr:
Well, because I take it that they're doing every-
thing that they can.
C:
Yes. Well now, I should say George Mead 18 the
number one man in any case, and C.F. and E.S.
Taylor are both good men.
H.M.Jr:
C.F. and what's the other one?
C:
E.S.
H.M.Jr:
E.S., yeah.
C:
E.S. Taylor and C.F.
H.M.Jr:
Right.
C:
Now, of those two E.S. 18 the younger but I think
he has the better judgment of the two.
H.M.Jr:
I see, but George Mead 18 sort of the granddaddy of
them all?
C;
Yes. Yes, I should say BO. And he's independent
now of the industrial -- industrial connections.
H.M.Jr:
Right. Well, I'm ever so much obliged.
C:
Hunsia ker is an exceedingly good man for general
advice and he's -- has a good deal of statesmanship.
H.M.Jr:
Well, I may
C:
He's primarily an engine man.
H.M.Jr:
Now, if I need any of these people from your M.I.T.
should I do it through your office?
C:
Well, it could be done in that way or directly with
them. I wouldn't care.
9-D
- 4 -
H.M.Jr:
Well, I'll do it through your office.
c:
Yes. All right.
H.M.Jr:
I'm very much obliged.
C:
Well now, Secretary Morgenthau.
H.M.Jr: Yes.
C:
Perhaps in going back to discuss with my people to
go outside of the industry, I could send you several
more names. If 80 should I send you a telegram?
H.M.Jr:
If you would do that.
C:
All right, I'll do that.
H.M.Jr:
Thank you 80 much.
C:
Goodbye.
10
May 20, 1940
4:46 p.m.
H.M.Jr:
Hello.
Robert
Hinkley:
Mr. Secretary.
A
H.M.Jr:
Hello, Bob Hinkley.
H:
if it's agreeable to you I think we'll have
come down just Mead and Hunsaker and leave the
Taylors out.
H.M.Jr:
0. K.
H:
And we'll pick up Paul Johnstone here in Washington,
who 18 a former editor of "Aviation" and 18 now
working for M.A.C.A.
H.M.Jr:
Good.
H:
And then I'll have another suggestion on somebody
that might be extremely helpful to you, who 1s now
with an engine company.
H.M.Jr:
Yes.
H:
He's with Wright. His name 18 T.P. Wright, but he
would leave and resign all connections in order to
do some public service. I've been trying to use
him for some time past and I think he'd be a corker.
H.M.Jr:
Well, before we ask him that, we'd better -- you
know, it's a responsibility.
H:
What's that?
H.M.Jp:
That'll be a responsibility to ask him to give up a
regular job.
H:
on, yes. Yes, I realize that. I just want to get
his name in your mind now.
H.M.Jr:
Swell.
H:
Ted Wright.
H.M.Jr:
O. K.
11
- 2 -
H:
One of the best engineers and a production man.
H.M.Jr:
Wonderful!
H:
Yeah.
H.M.Jr:
Snappy work.
H:
Yeah.
M.M.Jr:
Thank you.
H:
All right, sir. I-- I haven't got any other gentlemen
yet but we're trying to get them for three o'clock
tomorrow.
H.M.Jr:
O. K.
H:
Fine. Goodbye.
tall 1 5/20
12
13
CONFIDENTIAL
Scheduled Delivaries, by Kenths, of Airplane Ingine Orders of Brittsh and Prench Gevernments
Classified by Manufacturer and by Type of Ingine, May 15, 15%0
1
Adjustance from prior months
Subetuled deliveries for fulure anoths
Total unfilled
Fehind schedule About of ashetule
:
Manufacturer and 1920 of engine
orders as of
as of Mag 15
.. of May 15
1940
1941
May 15
(to be added to (to be deducied from: May 16
:
:
future establed:
fature
1
to
June
July
Aug.
Days.
Deta
New.
Dec.
Jan.
243.
Mar.
Apr.
May
Zum
July
:
ing.
Sept.
Det.
Ret.
Sec.
delivarion)
delivaries)
Mar 31%
in é Whitesy
600 a.p.)
952
1
3
7
F
55
55
55
55
72
78
n
75
77
e
R
57
mat
( 55 a.p.)
5
27
5
125
125
120
12%
131
137
115
15
1
8989-582
(856)
2
E
(d)
(1050 hall
"
4
6033
(1050 MAI
37
a
17
X
32
13063
3,012
275
126
2
251
ets
251
ENE
857
275
as
737
250
137
(1800 hopel
2
I
1
new
(120) h.p.)
90
2
à
E
2
,
R
et
20
.
11200 h.p.)
2
2
(1200 h.p.)
144
2
4
-
.
#
30
17
n
11
11
18
12
14
12
13
SLARG
(1850
908
75
156
166
1ST
161
157
Total Prast à
5,94
201
59
146
429
511
ARD
433
AET
460
395
use
157
mz
a
260
260
236
179
14
12
2
right Approautical Corp.
(1200 h.p.)
25
20
32
53
59
55
36
(1200 6.7.)
192
12
17
15
all
2M
39
2.
(120)
600
2
to
DE
50
E
a
BO
#
100
100
(sage h.j.)
436
3
W
se
68
61
so
37
30
59
(1700 4%)
1,382
18
30
150
180
180
ano
200
año
zon
(1700 ).p.)
583
22
30
50
-
un
150
150
M.)
1,133
zz
or
154
165
175
176
ITE
ITÉ
kg.)
297
TO
-
as
la
-
wis
1
Total Fright Cary.
4,878
43
96
315
327
38
398
38%
418
472
274
311
375
19€
209
220
zz)
aeo
then
Alliens
V1710-015
Shill ho)
85
4
.
a
11
us
58
80
50
TO
70
70
1
20
TO
R
NJ
North American aviation
*795-W3
I lago k.p.)
57
12
10
5
5
10
5
"
K.
Total All Companies
11.5%
359
59
ZIT
3%7
792
PA
977
DE
1,011
67%
71%
18
570
533
550
510
will
199
14
12
11
Transury Department, Division of Research set Statistics.
Mag 20, 1940,
Anglo-Pranch Purchanting Neart
* Represents não of acteduled delivaries fee May
as Mei. pl determined.
CONFIDENTIAL
Regraded Uclassified
CONFIDENTIAL
Scheduled Deliveries, y Natio, of Airplane Orders of Brittish el Treach Invertments
Classtfied by Mandacturer and by tre of Plane, May 15, 1940
Adjustments from prior noctia
Schettlet deliveries for fature anthe
Total suffilled Bahind edetis About of echedule
15%
1941
est type of plane
ordere as of
M at May 15
as of 15
Intef-
MAY 15
to be added to
1(90 be delocted from 18 :
future adveduled: future acheduled
,
to
2ma
July
log
Sept
Des
It
les
20.
MAT
Apr
MAY
2ure
July
Ang
Sept
Dat
Sev.
Dec
tatte
delivaries)
deliver(ss)
1952
State L: Marian do-
LAZE 2-engise beiter
K
7%
12
Dury.
Bank T5AM purents
20
20
Bank 75A5 purents
230
to
15
$
#
IF
33
15
-
16
Bank permits
TOO
it
37
Is
et
g
98
15
If
a
is
8
360
14
la
Time REAL
et
71
72
e
29
Total durg.
1,290
40
15
e
ét
n
se
%
et
114
If
If
a
61
%
53
71
R
73
5
nesh American artation
MAS4 Seale treiner
141
39
20
5
40
R
30
health tradmer
590
1
1
1
21
H
55
-
5
66
66
66
66
%
TE
30
Total Norks aviation
f31
R
12
ky
47
77
55
et
"
M
66
"
66
66
66
TE
a
Imagine Airporaft
187 2-engine himber
152
27
15
to
MD
30
DSTA 2-engise -
see
1
,
10
15
20
24
25
DATE 2-engine hamber
360
E
3
1
,
17
zz
27
33
B:
5
M
M
6e
Total Donglas Aircraft
612
27
15
57
5
40
15
=
28
%
9
17
zz
F
13
39
$
We
M
Ee
Talted Airoraft Owry
não Change Youth bester
50
3
1
11
12
12
5
Consolidated Aircraft
28-5MB 2-engine boster
so
1
2
1
1
3
1
au
.
4
-
la
5
:
E
5
5
a
5
5
5
5
5
28-547 i-engine
NO
1
y
8
$
13-30 lonber
150
2
is
-
If
.
10
10
9
9
9
6
5
6
5.
5
60
Total Conselldated Aircraft
Aircraft
0366 DATE fighter
51
50
an
11
Treaster germentical derp-
1.68
12
17
24
at
21.
n.
36
Purposit
sell Afreraft Durp.
zon
3
2
6
10
13
16
a
La
zu
30
If
17
FYS Airecabre parents
Lostbant Aircraft Daty
a
Z-angine Soshet
año
3
,
13
и
St
49
ME
5
20
Z-engthe recomalasance
78
3
13
H
24
6
10
MA 102A Z-angine toolver
24
zu
.
no 205A 2-engine reconnalasance
36
11
16
17
16
17
11
e
Total Leckbeed Atmonts Dury.
438
3
13
22
24
37
30
17
19
26
a
30
3%
is
*
F
20
the All Companies
3,909
12%
79
e
195
18
280
220
253
224
268
N
25
250
229
#70
210
202
152
150
un
5
5
60
May 20, 1941
Treasury Department, Division of insurérés and
Bournes Purchasing Start.
. Represente - half of asheduled inliveries for May
CONFIDENTIAL
Regraded Uclassified
14-A
May 20, 1940
8:45 a.m.
Harry
Woodring: I have General Arnold and General Brett in the office
here and we were just talking about the meeting this
morning.
H.M.Jr:
Good.
W:
Now look, are you going to take up the motor thing
first?
H.M.Jr:
I'm going to take up the motor thing first.
W:
Yes.
H.M.Jr:
I have Guy Vaughn and Mr. Wilson of Pratt and Whitney
coming at nine. Nobody else from the outside.
W:
Now, the second thing is that -- you want us to leave
word over here that when these plant -- aeroplane
plant manufacturers come in that they're to come
over there.
H.M.Jr:
Well, that was what the President suggested.
W:
That's right. Now -- as I understood it. Now, where
- we want to leave word here, where do they -- for
them to come.
H.M.Jr:
Just a second, they have a room to -- can you hold
the wire a minute?
W:
Yes.
H.M.Jr:
And I'll ask. Just a second. (Aside: What's that
room they say they fixed up downstairs, the meeting
room? No, it isn't. Ask Mr. Bell, he has fixed
some room. There's some -- yes, I want the room
number. Hurry, please.)
While they're getting in the room number, Harry
W:
Yeah.
H.M.Jr:
I wish you'd be thinking about this. Who 18
going to go down and talk to these people and what
they're going to talk about, you see.
Regraded Uclassified
14-B
- 2 -
W:
Well, that won't be in the same -- with us, will it?
H.M.Jr:
Well -- I mean, don't you want to go down
W:
Yes, I think that I'd like to. I'd like to go into
both meetings. I want to know what they're doing.
H.M.Jr:
Fine. Well now, don't you
w:
Will you go down?
H.M.Jr:
Just a second -- the room is 81 in the Treasury.
W:
81 in the Treasury.
H.M.Jr:
Yeah. Room 81.
W:
Yeah. Well look, will you go down?
H.M.Jr:
Well, I'll go down if you'll go down.
W:
Well all right. I think we should.
H.M.Jr:
Supposing I just went down and said I'd like to welcome
them to the Treasury and we'll all work together and
then say I'd like to turn this meeting over to Mr.
Woodring
W:
Yes.
H.M.Jr:
the Secretary of War.
W:
All right, before -- after you do that I want to know
this. At that meeting -- of course the main work
would fall on Arnold and Brett.
H.M.Jr:
Right.
W:
Now, I don't want -- but I'd want to guide them as to
what to take up. Don't you think that it's all right
to take up the immediate program of deliveries with
them and then the second one take up the 2700 program
and then the third -- then the expansion and of the
50 thousand.
H.M.Jr:
Well, if you're asking me for suggestions
14-C
- 3 -
W:
That's what I'm asking.
H.M.Jr:
I'd keep it in generality and I wouldn't get down to
bress tacks at all.
W:
Yeah.
H.M.Jr:
I'd keep the meeting, as Brett put it, a sort of a
pep meeting.
W:
Yes.
H.M.Jr:
I think it's a mistake, because I really don't think
that they know and I think it would be nice if
Compton, as acting secretary of the Navy, if he
went down and said a few words.
W:
Yes, I
H.M.Jr:
Cooperation between the industry and the government,
and I think leave it on that plane and not get down
to too much detail because I don't believe we know
ourselves.
W:
Well now -- then what about 8. -- a follow-up meeting
later?
H.M.Jr:
Definitely! And then call in the particular people.
And I -- I've gone far enough in this thing to
realize that before we can talk about planes we're
going to have to settle this engine business.
W:
Yes, I do too. I saw your statement and I'm -- I
agree with you.
H.M.Jr:
Now -- I mean, for instance I understood they were
going to say some things about wages and hours and
the Walsh-Healey Act and taxes, and all of that 18
a mistake.
W:
I think 80 too.
H.M.Jr:
I think if they just talk -- keep it on the plane
of cooperation between industry and the government.
w:
Yeah.
14 - D
- 4 -
H.M.Jr:
The government and the industry.
W:
Well now, I'm glad to hear you say that because
unquestionably that there will be some people who
think that we ought to go into these other items.
H.M.Jr:
Well, my own feeling 18 to keep it on a general
plane and no details because I'm convinced that
neither the Army or Navy knows what they want or
need.
W:
That's right. Now, then -- with the 1dea that later
on we'll have 8. general meeting of the whole three
services, Treasury, Navy and Army, on -- when we get
around to the aeroplane plant expansion. Is that
all right?
H.M.Jr:
Surely. I mean -- I take it that Brett, who was
with me yesterday, --- reports to his superiors.
W:
Yes.
H.M.Jr:
And what he talked about with me.
W:
That's right.
H.M.Jr:
And I've asked both Brett and Kraus to bring back a
program as to how they think it should be done.
W:
Well, I think that's o.k. and that's the way we'll
do it.
H.M.Jr:
And they have no program.
W:
Not yet.
not
H.M.Jr:
And that's why I think that we ought/to go off the
deep end.
W:
O. K.
H.M.Jr:
Now the other thing 1s they've got a bunch of movie-
tone fellows outside, and I don't know what they
want to take a picture of. Think about it. They're
all in my outer office there. They want a picture
of that meeting.
14-E
- 5 -
W:
Well, I don't want to spend a whole lot of time
doing it. I'll do whatever you folks say but I
don't want to spend much time.
H.M.Jr:
Well, think about it. Now, what time will these
people come over to this room?
W:
Well, they'll call here at ten o'clock and we're
letting them come on 80 I imagine it'll be ten-
fifteen before they come over to that room.
H.M.Jr:
I see.
W:
So if we got down there by -- I imagine if we got
down by ten-thirty it would be plenty of time.
Why couldn't I leave to tell Brett and Arnold that
we probably would be there at ten-thirty, although
we don't want them starting out until we get there.
Maybe ten-fifteen.
H.M.Jr:
I think if we told them we'd be there by ten-fifteen
it would be time enough.
W:
All right, and I'll tell Brett and Arnold not to
start anything until we get there.
H.M.Jr:
You're coming over here at nine, aren't you?
W:
I'm coming at nine. We're leaving in a few minutes,
with General Annold and General Brett.
H.M.Jr:
Thank you.
W:
O. K. Goodbye.
Regraded Uclassified
15
RE LICENSING OF AIRCRAFT
May 20, 1940
ENGINE MANUFACTURE
9:00 a.m.
Present:
Mr. Johnson
Mr. Compton
Mr. Young
Mr. Collins
Captain Kraus
Colonel Burns
Mr. Sullivan
Mr. Wilson
Mr. Vaughan
Mr. McReynolds
Mr. Hinckley
Major Persons
Major Griffiss
Colonel Brett
Admiral Furlong
General Arnold
General Marshall
Mr. Foley
H.M.Jr:
I want to be as brief 8.5 possible. At Cabinet
the President asked that the Army and Navy
and Treasury and Civil Aeronautics get together
with the industry and try to work out a program
whereby the Government and industry can accom-
plish what he would like and I think what the
Congress would like and the people of the United
States would like.
The reason that I asked - do you want to sit
up here, Mr. Vaughan?
Vaughan:
I would like to, thank you. It is terrible to
get old.
H.M.Jr:
I know. I am afraid I talk very low.
Vaughan:
This is fine, thank you.
H.K.Jr:
In the little that I know about this problem,
I felt that the engine problem really came first.
I mean, we can't have planes unless we have
engines and therefore I asked Mr. Wilson and
Mr. Vaughan to come here first and we had a
preliminary meeting at my house last night
whereby we discussed this question of language
and both Mr. Vaughan and Mr. Wilson told me
that irrespective of whether they think it
16
- 2 -
18 wise or not, they are willing to license
any manufacturer that the Government wishes
to produce their engines. Is that correct?
Vaughan:
That is correct, sir. I would advise against
it.
H.N.Jr:
You do. I don't know whether Mr. Wilson does,
but irrespective of the advisability, you are
ready to play ball?
Vaughan:
Yes, sir.
H.M.Jr:
And as I told them, we would argue this week,
but while we were arguing I want to - a con-
tract drawn up and they are sending their
attorneys down here to meet with Mr. Sullivan
and Mr. Sullivan will keep in touch with the
attorneys of the Army and Navy to get B. con-
tract you gentlemen think is fair, so that we
can have it in our pocket if, after we have
given the industry plenty of chance to argue,
we still think we want to license. Is that
about the way to put it?
Vaughan:
Yes, sir.
H.M.Jr:
In order to save time, if at the end of a week
you should happen to lose the argument, then we
want to be able to do business. So the first
step, that is the licensing, has been accom-
plished if we want to do it, you see. Now, these
gentlemen are here. I don't know whether you
want to ask them anything or whether Mr. Compton
wants to ask them anything.
Furlong:
I think it would be well to outline what, if any,
program of coordination and cooperation between
us, all of us, on this thing - - 1f there is any-
thing you want to tell us further about the plan,
is the only thing I can suggest.
H.M.Jr:
Well, I think that is all I would like to say at
this time and then I am going to ask these gentle-
men if they will withdraw and then come back to
this meeting at 10:15 in Room 81. So, there 18
17
- 3 -
going to be another meeting in Room 81 in the
Treasury at 10:15.
Vaughan:
All right, sir, we will be there.
H.M.Jr:
Thank you very much.
(Vaughan and Wilson left the conference)
The way I operated, on a minute to minute basis,
is this: I got this memorandum which was drawn
up under great pressure and I thought great skill
by General Brett and Captain Kraus in an hour
and a half, which I sent everybody copies of.
You (Furlong) got a copy and you (Johnson) got
a. copy.
I had a chance Friday to show that to the Presi-
dent and explain to him that that was - how
should I say - well, something done under great
pressure, but I thought it showed great skill.
Until I am advised differently by Army and Navy,
I take it that that is the way they would like
to have us proceed. I asked General Brett and
Captain Kraus whether they would come in vd th a
program as to how they thought we could build up
the engine capacity of this country sufficiently
to take care of 50,000 planes and they said it
would take 8 couple of days. Is that right?
Brett:
We plan to have that by tomorrow noon, sir. I
think that was our program. Captain Kraus is
working on it. We are working on it at the
present time and it follows out the lines we
discussed yesterday.
H.M.Jr:
And then I asked these two gentlemen if each of
them would submit a memorandum, 1f they would
write the ticket, how they would like to do it.
Johnson
You mean the engine people?
H.M.Jr:
Yes. I am not going to have them together again.
It worked pretty good, but not too good. I will
have them separate.
18
4 -
Now, I am doing this thing temporarily for the
President. I an trying to do it as well as I
know how with as little friction as possible. I
don't pretend to have any preconceived notions on
any of this business and I will simply be B. filter
for the thing to go direct to the President. I
take it that when I worked with General Brett
and Captain Kraus, that they keep their superiors
advised what I am doing. I work with them because
they are the procurement officers of the two
departments. When I asked to see them, I arranged
for it through the office of the Secretary of War
and Secretary of Navy. We are all moving very
fast. I am personally under great strain and 1f
I make any mistakes as I go along, I hope you will
all be charitable.
Purlong:
I don't think it is any time right now to stand
back on too much formality as to how you ask and
when. Any time you want them, I think you ought
to have them. As far as we are concerned, there
is not going to be any trouble over that.
Compton:
I can assure you that goes for Navy, too, Mr.
Morgenthau. We are ready to out all red tape
procedures to get the job done.
M.M.Jr:
How about you, Mr. Johnson?
Johnson:
I go further. When you want them, just summon
them. They will keep us advised so we know what
is going on. There is a job to be done and every-
body has got to pull.
H.M.Jr:
General Marshall?
Marshall:
Are you asking me for any comment?
H.M.Jr:
Please.
Marshall:
I have none to make, sir, except that I think
you are proceeding on the right lines because
everybody wants to cooperate and it is B. ques-
tion of how you do it and it seems to me you are
doing it the best way you can.
15
5 -
H.M.Jr:
Well, I say, in talking for B. number of hours
yesterday and in going to school with them just
the way I went to school with you (Marshall),
this engine thing - in the room - the picture
is so terrible. These two gentlemen, I pushed
them and pushed them and they say they cannot
increase their production over what they are
doing one 1ota. They say the orders that they
have, that they are absolutely at their maximum.
In the case of Pratt & Whitney, they are working
seven days a week, three shifts. In the case
of Curtiss, three shifts, six days B week. They
don't believe in the seven-day week. Far be it
from me to argue with them. So they say it 1s 1m-
possible - he said all the money in the world
wouldn't make them turn out engines any faster.
They just can't do it.
Now, the thing that pleased me particularly with
these people, they didn't ask any changes in the
tax law; they didn't ask any changes in the
wages and hours; they didn't ask for any changes
in the Walsh-Healy Act. They said they can get
along. I complimented them on their attitude
and said I thought it would make an excellent
impression in the Administration, the fact that
they didn't ask.
Now, in talking last night with the President,
he said that he would see that when the time
came - I think it is on the first of October -
that they would have to drop back from 42 hours
to 40, he would keep it at 42 hours. He is
willing that we do away with competitive bidding,
but he feels that the profits in the industry
are too high and he wants that shaved down. He
feels that the Industry is making too much money.
Beyond that, as of last night, he wasn't ready
to go and I think, Ed, you had better get to-
gether - and John - and look over those Army and Navy
bills because I think there are things in that that
the President doesn't want. I think there are
certain provisions which he doesn't want, such
as the transfer of evaluating the Vinson-Trammell
Act.
Regraded Uclassified
20
- 6 -
Sullivan:
Determining what should be allowed against
the contract.
H.M.Jr:
I don't think the President wants that, but 1f
he does, it is all right. I think we had it
up once at Cabinet and he said to tell your
people to lay off, as I remember it.
Compton:
We did, we backed away from it. That situation,
as I understand it now, Mr. Secretary, will go
through with a spread of losses over four years
for the shipbuilding industry and stop there
until next session of Congress, that is the way
it is now.
H.M.Jr:
Well, I understand the President doesn't want it.
Compton:
Spread losses? I had it from him in a memorandum,
sir, that it is all right, about three days ago.
Maybe he has changed since then.
H.M.Jr:
I brought up that particular thing.
Sullivan:
I think the change in the new bill is to reintroduce
a transfer of the Treasury functions to the Navy,
reviewable only by the President.
Compton:
I don't know about that. All I know is the last
word we had two or three days ago where the spread
of losses was approved by both Treasury and Navy
and had the White House approval in B. memorandum.
Sullivan:
That is the carryover of four years of losses,
not of deficiency of profit.
H.M.Jr:
Is it all right with you?
Sullivan:
It is, sir.
H.M.Jr:
All right, I will withdraw.
McR:
I think you have got to do it.
Compton:
Well, the shipbuilding industry - I am not too
familiar with the aircraft industry, but with
the shipbuilding industry it is highly desirable
Regraded Uclassified
21
- 7 -
to have that spread of losses over four years.
In regard to the Walsh-Healy Act, Mr. Secretary,
there 18 no occasion that I can see for any
change in the fundamental law, because there is
a provision right in the fundamental law that
when the head of any executive department of the
Government certifies to the Secretary of Labor
that the best interests of national defense be
served thereby, the Secretary of Labor shall
grant exemptions, exceptions. Now, that word
"shall", in my interpretation of the English
language, isn't simply futurity, it is mandatory,
80 that in the basic law there is a provision
to make an exception. For instance, on this
42 hour a week thing, it would be simply on the
certification of the Secretary of War or the
Secretary of Navy.
H.M.Jr:
Well, my two watchdogs are Sullivan and Foley
and they are going to watch that; as they think
that you fellows are encroaching on any of
this special legislation, they are going to
let me know, and I understand the Attorney
General has also been asked by the President
to watch this particular phase, so you have got
the Attorney General, plus Sullivan, plus Foley,
watching you.
Compton:
If the law 1s followed out as written, Mr. Secre-
tary, you will have no trouble with the Navy
on the Walsh-Healy Act.
H.M.Jr:
Plus Frances Perkins, who is very much worried,
so you have got the Attorney General, Frances
Perkins and these two gentlemen here and if there
is anything wrong, they will yell.
Compton:
All the Navy wants is the law carried out the
way it is written, Mr. Secretary. That is the
truth. I insist on that point.
Sullivan:
You recall, Mr. Compton, we agreed that in return
for the four years' carryover of losses, we would
drop the other phases of the provisions.
22
- 8 -
Compton:
Oh yes, that is all dropped until next year and
as I understand it --
Sullivan:
Have I authority to tell Mr. Vinson you still
agree wi th me on that subject? That is in your
present bill.
Compton:
Well, I want to talk to you about that.
M.M.Jr:
Well, you can talk to him --
Compton:
As far as my understanding 13, the spread of
losses over four years --
Jullivan:
Let's talk today on that one. I want to move
fast.
H.M.Jr:
Is there anybody I have overlooked? General
Arnold, do you want to say anything?
Amold:
I just want to bring out that I am as anxious
to cut red tape as anybody, so anybody you
want in the whole Air Corps, they are yours
for the asking. All you have to do is go
direct, through channels or any other way.
They are yours.
Well, anybody I want in the Mar Department, I
will do it through the office of the Secretary
of Var and the office of the Secretary of the
Navy and I will start from the top down, but I
appreciate the offer. I will do it through
your office (Johnson's) and the Secretary of
the Navy to see that everybody in the Army and
Navy knows what is going on and as I say, to-
morrow the President wants somebody else to
do this, so there will be two happy people in
Washington. One is my wife and the other is
myself.
As to this meeting st 10:15, I understand that
these people are coming over and I simply
thought I would E° down and welcome the people
and then turn it over to the Army and Navy. Is
that all right?
Purlong:
Yes, but I think we ought to discuss the thing
you and I discussed.
Regraded Uclassified
23
- 9 -
H.M.Jr:
What would you like to talk about?
Furlong:
I think it ought to be B. general meeting on
that until we can get a plan worked out here.
Brett tells me they haven't got it ready yet
and then have a later meeting to discuss the
details of the thing.
H.M.Jr:
Well, if that 18 - I mean, supposing I just go
down. I will not say more than fifteen words,
and then if you say & few words, possibly
Mr. Johnson and Compton and General Arnold --
Arnold:
No, sir, I will not be here this morning. General
Brett will handle it for me, sir.
H.M.Jr:
General Marshall?
Marshall:
I am to go to a committee hearing.
Furlong:
What about CAA?
H.M.Jr:
And Mr. Hinckley.
Hinckley:
Yes, sir.
H.M.Jr:
I would just like to say my fifteen words and then
withdraw, and who would you like to have run the
meeting, stay and act as chairman?
Furlong:
Well, I think Mr. Johnson.
Johnson:
I think there that they will get into technical
stuff very largely and after we have all said B.
word, we can just withdraw and they can call us
back if they want to.
Arnold:
May I suggest General Brett run the meeting?
Brett:
Mr. Morgenthau, if that is the case, I would cer-
tainly like to get an approval on what I am going
to say so that I won't step into anything. I
have an outline here of about what I considered
might be said in case - no matter who said it,
it could be checked on.
H.M.Jr:
Do you want to do it now?
Regraded Uclassified
24
- 10 -
Brett:
Yes, sir, may I?
6.9.Jr:
Please. On what you are going to say, though,
please don't look to me for approval. Please
look to your own superiors.
(cette
Whether or not somebody ought to explain the
new set-up as to the coordination activity
between the Treasury and the Army and the Havy.
Would you care to do that, sir?
Johnson:
Well, he is doing it. Suppose I do that.
A.S.Jr:
All right.
Spett:
The next point would be this: They would just
simply be toll that we gathered them together
to think about certain things in connection with
the future and that the possibility of increasing
deliveries under present contracts - are there
any steps, are there any things that can be done
to increase those deliveries and to Improve present
conditions and any aid that could be asked for from
the Government. In other words, we are not suggesting
anything. We are asking them to think about it.
How, the second thing, what steps could be taken
to increase and double or consider the possibility
of increasing their production, their productive
capacity. The first was deliveries and the second
was productive capacity.
Then, going even e little further, what suggestions
might they consider and what thoughts would they
have and vould they please give It some thought
as to methods of doing it. Then the troubles that
they may have would be brick and morter, machinery,
machine tools, raw materials, training management,
engineering supervisory personnel, and the training
of mechanics, which is B very, very pertinent
bottleneck and could they give us any suggestions
8.9 to the methods of doubling up or tripling up
on each and every machine that they have for the
purpose of training, starting schools and how -
what would their suggestion be as to methods of
payment, because somebody has to pay for that.
Regraded Uclassified
25
- 11 -
What would their suggestion be as to the
Government's part in endeavoring to immediately
build up a much greater mechanical force, and
then the last item would be the elimination
or considerable thought spent upon the ques-
tion of inspection, Government methods of pro-
cedure at the present time pertaining to com-
pleted items and how or what can we do to
eliminate many of the little things that we
have demanded in the past which are not war-
time requirements.
Now, that was all I was dealing with, sir.
Furlong:
Well now, as I understand it, General Brett,
you are leaving that with them just to take
home with them.
Brett:
That is it.
Furlong:
And study and to come back for a later meeting
at which they will be prepared to --
Brett:
Give suggestions pertaining to it.
Furlong:
But you don't want any discussion this morning
of that, do you?
Brett:
No discussion at all. This is just thoughts
we would like to have them consider.
Johnson:
You can't shut them off, Mr. Secretary, 1f they
want to ask questions and talk.
Furlong:
I think the more you avoid getting into more
than a general discussion this morning when
they are not prepared, the better it is for the
meeting.
Johnson:
I agree to make it as short as you can along
that line, but if we tried to shut them off
from talking, it might give a bad impression.
Furlong:
I think General Brett can handle it.
H.M.Jr:
Is that all, General Brett.
Regraded Uclassified
26
- 12 -
Brett:
Yes, sir, unless there are some suggestions.
H.M.Jr:
Is that all right with you?
Marshall:
Yes, sir.
H.M.Jr:
Now, this is the most difficult. As B. result
of the White House announcing this meeting, since
8:00 o'clock this morning there have been Movietone
people outside who want to take a picture of the
big meeting. What are you going to do with them?
Johnson:
It is up to you.
H.M.Jr:
I don't see what they are going to get.
Marshall:
Can it do any harm?
H.M.Jr:
I don't think so.
Marshall:
It does B. little good, doesn't it?
H.M.Jr:
I think it might. I think it might help.
Marshall:
People are aware of the fact that we are trying
to do something.
H.M.Jr:
What do you think, Compton?
Comp ton:
I think it will have a good reaction on the public
to see a meeting of Government and industry on this
problem of aviation. It is a live subject. It
is public relations.
H.M.Jr:
Supposing --
Compton:
It takes time and a lot of confusion.
H.M.Jr:
Bob, got any reaction on it?
Hinckley:
Well, of course the civil side is always in favor
of a little publicity.
H.M.Jr:
All right.
Hinckley:
These are wartimes and I will have to refer to
the departments.
27
- 13 -
H.M.Jr:
Could the War and Navy send somebody over to
cooperate with my fellows to handle these boys?
My man's name is Chick Schwarz. Can they send
somebody over to cooperate with him, whoever
handles the press for you with Movietones?
Compton:
Where is Mr. Schwarz' office, where will we find
him?
H.M.Jr:
He is most likely sitting outside with the per-
spiration running down his forehead. Since 8:15
he has been on my neck.
Marshall:
I must leave now.
H.M.Jr:
All right, General, I will see you later.
(General Marshall retired from the conference)
Johnson:
You have no objection to our having our own Army
and Navy photographers?
H.M.Jr:
No.
Hinckley:
Mr. Secretary, will this licensing business be
discussed at all in this meeting this morning
or is that all settled?
H.M.Jr:
It is settled. I can't discuss this thing in
a big meeting.
Hinckley:
I was afraid of that and I was wondering if some
of them would bring it out.
H.M.Jr:
Well, I want to go along - the thing that we have
accomplished is, we are going to have B. contract
with each of these people and we can license them,
see, that is the point, and then the question 10 --
Hinckley:
What is their objection?
H.K.Jr:
Their objection to licensing is this: They say
that if you license somebody, say, for the Pratt
& Whitney engine, the fellow, 1f he falls down,
he is going to say the engine is no good and
they themselves can do it better than anybody
else.
28
- 14 -
Hinckley:
Do they say that if they did license it would
not increase the production?
H.M.Jr:
No, I think the easiest way to sum it up - the
thing is that they just want to hold on,
Hinckley:
I think that is logical, but I wondered if they
said it would not increase the production even
though they did license this lower horsepower
motor.
11.2.2c:
No, what they said repeatedly was that there
WELS nothing they could do to increase their
own production over the present situation in
the next three months. There is nothing they
can do. They said money means nothing to them.
Purlong:
How much could they increase the production of
the large motors, if and when the small ones
were taken out?
H.M.Jr:
The amazing thing they came through with, what
took our breath away, was that they both sug-
gested that as an alternative that they be
permitted, or that the Government build & factory
for them. This is the industry. They wanted us
to let them run it with B. management contract.
My own people last night were amazed. So I said
all right, "You gave us EL plan along those lines.
How would you like to have it run, if you were
writing the ticket?" Rather than license, they
would like us - now, Wright said you could take
a factory 500 miles or 2500 miles away and build
it for them and they will run it. Pratt & Whitney
say they can't do it, because all their supply
is in New England and you would have to move into
New England with them, so there 1a the difference,
but Curtiss would like to have the Government
build B plant and lease it to them at any place
in the United States that the Covernment wants
-to put 1t.
I am trying to take this slowly, because both
the Army and Navy are not ready with B. plan.
These engine fellows are not ready. I was
earnestly impressed with this list that General
Brett gave me, showing the additional plant
Regraded Uclassified
29
- 15 -
capacity which is available. It is amazing how
many of them run out of orders very soon and
they go from something like - I forget the
square footage which is available here, but I
was simply amazed that in the plane industry
the productive war capacity is - in present
use, is 7,600,000 feet and the man hours 18 -
no, 86 million man hours and with the present
floor space, they would go to 21 million. It
shows what could be done without any more brick
and mortar, so that all goes back to the engines.
With Brett and Kraus working day and night to
bring in a plan, these engine fellows working
to bring in a plan, by the end of the week
we ought to have something that we can sit
down and say, "This is what we would like to
do with the engines. Army and Navy would like
to do this."
Maybe your fellows (Hinckley's) can work on
this, too,
Hinckley:
Sure.
H.M.Jr:
And just to make sure we don't overlook anything,
I am going to get some engineers not in the Army
and Navy and I think by the end of the week we
will have an engine program and I think we will
be doing swell 1f we have one by the end of the
week.
Then the other thing which I impressed on these
people is, I think the Navy is EL little bit ahead
of the Army on their paper work, when the bill
passes, as to letting contracts. Maybe that is
unfair.
Brett:
We have gone as far as we could with options.
Johnson:
Oh, we are pretty well set.
H.M.Jr:
Are you sure?
Johnson:
We are in pretty good shape.
- 16 -
H.M.Jr:
If there was no competitive bidding and the
bill passed 8 week from today, would you be
ready to let the contracts?
Johnson:
As soon as the typewritten forms are ready,
we are just ready for them.
Brett:
I don't mean to say that the signature would
be on the contracts so the contractor would
start working.
Johnson:
We can sign contracts in 24 hours after we get
the money, sir. These men know what they want
and --
H.M.Jr:
You have got a lot of witnesses here, Louie.
Johnson:
We did it once before. We can do it again.
H.M.Jr:
We will hold you to it.
Johnson:
We will do it. oh, there may be some isolated
instance there, but I mean the bulk of them
can be done in 24 hours.
H.M.Jr:
But this engine thing - and I was thinking of
the possibility of calling up Mr. Sloan and ask-
1ng him to come down here tomorrow because that
Allison thing is & mess.
Johnson:
Did you get hold of Chrysler?
H.M.Jr:
He is coming in at 10:30. Unfortunately, the
story is out in the newspaper about Chrysler.
They knew it Friday. The Times reporter asked
me about it and I said I wouldn't lie, but they
are coming in at 10:30. If I could work this
way for the time being with General Brett and
Kraus and then having them - it is up to them
to keep feeding their superiors the stuff. It
saves me - it makes it much easier for me. Is
that all right?
Compton:
Perfectly all right.
Johnson:
It is the smart thing to do.
Regraded Uclassified
31
- 17 -
H.M.Jr:
And you (Hinckley) sit in, too. They will
know --
Johnson:
If they don't, we will shoot them as the first
war casualties.
H.M.Jr:
They will know and if they don't tell you, it
is on their heads, but it makes it much easier
for me.
Sullivan:
I would like, if possible, to get a list of
the licensing rights both the Army and Navy
have from Pratt & Whitney and Curtiss-Wright.
The Curtiss-Wright licensing fellow, their
attorney, is in town right now and we are
going right to work on that.
Johnson:
It oughtn't to take very long. What is the
name of the Major that has got that stuff?
Brett:
Colonel Bogan.
Johnson:
Yes. Will you phone him, General Brett?
Brett:
Yes, sir.
H.M.Jr:
Gentlemen, just use my room in any way you want.
I am going in the other room.
C-A
May 20, 1940
11:26 a.m.
H.M.Jr:
Hello.
Onerator: Mr. Purvis has not returned to his office and they
are trying to find him and ask him to call you.
H.Y.Jr:
Will you do that?
0:
Right.
H.M.Jr:
Thank you.
11:27 a.m.
H.M.Jr:
Hello. Hello.
Arthur
Purvis:
Arthur Purvis speaking.
H.M.Jr:
How are you?
è:
Good morning. Fine, except that there's about a
nine-ring circus going on end I'm sure it must be
just as bad AB worse for you.
".M.Jr:
Now, I'm calling -- can I get what I have off my
chest first?
P:
Yes.
H.M.Jr:
I've been working on this engine business, and I
really -- it -- we have no inlined air cooled
engine that -- with the exception of Allison and
we're not getting any of those. Therefore, we'd
like your Government -- hello?
P:
Yes.
H.M.Jr:
To consider AS promptly as possible -- hello?
d.
Yes.
R.M.Jr:
Whether they'll give the United States Government
B. license to manufacture the Rolls-Royoe engine.
Mello?
Regraded Uclassified
31-B
- 2 -
e:
Yes.
H.M.Jr:
And we in turn will turn that over to Chrysler.
Motors. Now, Mr. Keller Just left here and he
says he's a great friend of yours.
P:
Yes, I know him.
H.M.Jr:
He's going to leave on the four o'clock train to go
up to New York, and he'd like to see you tonight
and talk to you about it.
è,
Yes. Now, that would be fine except that I'm
terribly -- I've got 8 terrible list of stuff that
I wanted to talk with you, if I could.
H.M.Jr:
Well, I know but -- I mean, could you see Keller
tonight?
e:
of course I will. Yes. My only hope wee that I
might have come down and been able to talk with
you but perhaps if you would let me
by send-
ing in some memorande on the very most urgent things
through Ballantyne to Young for you to look at,
perhaps we could cerry on on the telephone until
after I have seen Keller and then for me to come
down tomorrow, if you could spare the time.
H.M.Jr:
Well now, Keller 18 here. He just -- you could see
him here.
in
Yes, my thought was to come on down this afternoon
anyway immediately -- I've got two other urgent
appointments that I ought to make that bear on the
same kind of things and then I thought I'd come
down and await the opportunity of a talk with you.
But I could see him there and would be there this
afternoon.
H.M.Jr:
Well, will you hold the wire just a minute?
e:
Yes.
(Brief pause.)
H.M.Jr:
Hello.
P:
Yes.
Regraded Uclassified
31-C
- 3 -
H.M.Jr:
The best I can do would be to see you at my office
tomorrow morning at nine o'clock.
P:
Yes.
H.M.Jr:
Now, that's the best I can do.
P:
Well then, in that case it might be better for me to
get my stuff all together and see Keller this after-
noon.
H.M.Jr:
Well, any way that you want but the best that I can
do would be nine o'clock my office tomorrow morning.
?:
Good. Now then, in that case may I make one other
observation. If I get into a great difficulty on
for instance Colt guns or something like that, can
I pass word through Young today?
H.M.Jr:
Yes, you can.
P:
Good.
H.M.Jr:
Now what would you like me to tell Keller?
P:
That I will see him if he would -- if he would tele=
phone me when he gets in I will be sure to see him
this afternoon.
H.M.Jr:
Well, where could he reach you?
P:
He can reach me at my office on Hanover 246 --
Hanover 2-2460 -- Hanover 2-2460.
H.M.Jr:
Well, Hamilton
P:
Hanover 2
......
H.M.Jr:
Well, will you be there? He'll get in there about
7:30 or 8:00 you know.
P:
Well, in that case he'd better have the Hampshire
House, and I shall be available at the Hampshire House.
H.M.Jr:
At the Hampshire House?
P:
Yes.
31-D
- 4 -
H.M.Jr:
Just call Hampshire House.
P:
If he calls Hampshire House he'll get me.
H.M.Jr:
Right. Then I'll see you at nine tomorrow morning.
P:
All right, fine.
H.M.Jr:
Thank you.
P:
Thank you very much.
mondap meeting" . 32
was 5/20 /40
H.M.J.
Mundays masting
Rind Infore
& return
will you 4 H VF humin /
mis
ave
1:3p'm
Regraded Uclassified
May 15, 1940.
ORANDUM FOR THE PRESIDENT.
Subject: Program for Creation of Air Power.
1. Events in Europe of the last few months, and especially
of the last few days, convince se that this government nd this
country must accept the fact that air power is not simply an
suriliary to land and sea forces, It has become a paramount
factor in national defense.
2. At the time of Munich, in October 1938, you foresaw the
full portent of air power. You inaugurated action looking to &
very substantial increase in our air force. You desired large
increases in planes, a more extensive program for the establishment
of 4. reservoir of pilots and & very appreciable expansion of the
aircraft industry. Your purpose was to add to our air fighting
strength and to provide for replacements for the large losses that
insvitably result from combat.
3. A program was adopted calling for some 5,400 planes, of
which 3,000 would be of the fighter class. Although some funds
were made available in May 1939, the progrem did not become effec-
tive through legislation until July 1, 1939. Immediately the War
Department set out to achieve its purposes. As early 88 the fall
of 1938, and in anticipation of an expansion program, it had
completed plans for the placing of contracts. Most contracts were
let as quickly as the funds became available and industry immediately
got under way.
4. In spite of these efforts, America today has approximately
1,350 fighting planes. By January 1, 1941, under present conditions,
" will have 1,700. On July 1, 1941, TO will have 3,000. The
original program called for 3,000 fighting planes on or by July 1,
1941, and that mumber se expect to achieve. Of these 3,000, only
2,000 will be available in fighting units; the other 1,000 will be in
reserve. It takes time to build planes and the figures here presented
are clearly indicative of the importance of the time factor. In look-
ing ahead, our time factor must include the period between your
decision and the availability of the planes as 6. fighting force.
Regraded Uclassified
Our air procurement planning program should also consider the
reserve factor. Based on battle experience, it is fair to say
that for every two planes available, there should be one hald in
reserve.
5. Our plans call for 800 planes with the units in our
overseas possessions and e reserve of 400 for them. Based on
these figures, it is clear that if To were to take care of the
full needs of our overseas possessions, we would have in this
country today but 150 fighting planes. At the present time,
planes are the limiting factor. In a few months, pilote may
become the limiting factor. To aid in providing the additional
pilots, the program of May 14, 1940, was approved by you. It is
important to recognize that the marima available personnel
suitable for pilots in this country is approximately 19,000 per year.
6. It is my conviction that this question of air power
murt be faced boldly, fearlessly and comprehensively on the basis
of having to use it in TLC in 4. big may on short notice. The
question must be solved in accordance with e simple formula which
Congress end the public can understand. Dollars must not control.
7. The following is believed to be a sound objective end
one that can be substantially achieved, both as to personnel and
squipments
1. Round out end complete present authorised
fighting strength 00 that it will be ready for continuous
combat by July 1, 1941. This calls for 2,000 fighting
Blanes distributed among the Air Corps units end 1,000 in
reserve. The program approved by you on May 14, 1940,
provides for the realization of this have of our necessary
preparedness.
b. Take the necessary steps to double the present
authorized strength 30 that such 4. force will be ready for
ontinuous combat by January 1, 1942, on the basis of
4,000 fighting lanes among our Air Corpe units and 2,000
in reserve, To achieve this objective, orders should be
placed immediately for 3,000 fighting planes, complete with
engines, armament, radio, organization 1 equipment, etc.
To do this job. the work must be performed on A three-shift
basis. Over end shove the funds now on approved program,
this would call for approximatel
$500,000,000.
Regraded Uclassified
This phase of the program also would call for personnel
training, installations, training planee, atc., to the
cost over and above amounts now on the program approved
by the President on May 14, 1940, of
$75,000,000.
Finally, this phase 5 the program calls for construction
of additional air fields, depots, etc., to the
cost of
$125,000,000.
1. Take the necessary initial steps to cuadruple
our present force so that such a force will be ready for
continuous combat by July 1, 1942, with 3,000 planee in
air combat units and 4,000 in reserve. Toward the
realisation of this phase of the program, it would be
necessary to provide for additional airplane capacity to
increase output from the present estimated capacity of
9,000 combat planes to 19,000 combat planes per year. This
would asen the construction of eight typical factories at
the approximate cost of $10,000,000 or
$80,000,000.
This phase of the program callo also for combat plane
engine capacity of some 20,000,000 horsepower in addition
to the present capacity of approximately 40,000,000
horsepower par year at a total cost of $40,000,000.
In this connection it may be desirable to create several
factories, depending upon conditions.
A third requirement under this phane of the program would
be additional training fecilities for the training of =ome
19,000 pilots per year at an approximate cont of - 2200,000,000.
8. These additional production facilities would obviously have
to be paid for by the government, either directly or indirectly, as
post-war sirplene business coûld not support them. It is believed
that the aircraft industry, in view of the critical emergency, ould
be willing to construct and operate these lants under an agency
contract, provided arrangements were included which would not leave
these clants as & sword of Democles over their heads
at the end of the war. It is definitely to the interest of
national defense to have our military lanes roduced by private
companies.
9. In all those computations an attrition factor must be
considered. Provision must be made for cements both 1: fighting
planes and in wilots. The Chief of the Air Corps feels that the
Regraded Uclassified
factor of 30% per month should be used for objective A., 20%
per month for objective k., and 15% per month for objective S.,
all based upon planes within the organization (not in reserve).
The same attrition percentages are applicable to pilots as well
as to planes.
10. Our potential in pilot training governs our plane
program. Since the maximum is 19,000, 90 adhere to a 19,000
attrition plane program in the third phase.
11. In conclusion, it 10 believed that a program of the
character outlined above should be included in your message to
Congress in addition to items already approved by you.
Louis Johnson,
The Assistant Secretary of War,
Regraded Uclassified
38
MAY 20 1940
MEMORANDUM FOR THE PRESIDENT:
I attach hereto for your signature memorandum for the
Secretary of Mar, advising him that the Treasury Department
will gladly cooperate with the War Department in the prepara-
tion of a revision of the Vinson-Transell Act.
File to Mr. Thompson
By Messenger 130 3 13 pm 30
JLS:kb
Hmp
Regraded Uclassified
39
MAY 20 1940
MEMORANDUM FOR THE PRESIDENT:
I attach hereto for your signature memorandum for the
Secretary of War, advising him that the Treasury Department
will gladly cooperate with the Tar Department in the prepara-
tion of a revision of the Vinson-Trannell Act.
ORIGINAL FORWARDED TO ADDRESSEE
FROM OFFICE OF TME SECRETARY
By Messenger
JLS.Kb
Regraded Uclassified
40
MEMORANDUM FOR THE SECRETARY OF WAR:
In your memorandum of May 14th you state the assump-
tion that the Far Department will be given an opportunity
to present its views in regard to the revision of the
Vinson-Trammell Act.
I an assured by the Treasury Department that it will
be happy to work with the Navy and Tar Departments in the
preparation of this legislation.
J.S.kb
Regraded Uclassified
-41
THE WHITE HOUSE
WASHINGTON
May 16, 1940.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
FOR PREPARATION OF REPLY FOR
MY SIGNATURE.
F.D.R.
Regraded Uclassified
copy
42
WAR DEPARTMENT
Washington
May 14, 1940.
MEMORANDUM FOR THE PRESIDENT:
With reference to your memorandum of May
8, 1940, concerning a revision of the Vinson-Trammell
Act being currently prepared by the Treasury Depart-
ment, the proposed four-year carryover of net losses,
which I assume refers to navel veesels, 1a primarily
of interest to the Navy Department and 16 not object-
ionable to the War Department.
The other proposed changes which are expected
to be considered by the next Congress will be given
careful consideration, in coordination with the Treasury
and Navy Departments. It 18 assumed that the War De-
pertment will be given opportunity to present its views
in regard thereto in due course.
(Signed) Harry Woodring.
Secretary of War.
Regraded Uclassified
43
RE AIR EXPANSION PROGRAM
May 20, 1940
3:45 p.m.
Present:
Mr. Hinckley
Hinckley:
Here is a summary on Edward P. Warner. This
is taken from Who's Who.
H.M.Jr:
Now, this is what I wanted your help on, 1f
you think it is a good idea.
Hinckley:
Here is George Mead. Now, George Mead has
the record of one of the three or four best
engine designers in the United States. He
has also been an executive for the Pratt &
Whitney Company and United Aircraft. Then he
got in some kind of a row with the new manage-
ment and he didn't like it any more.
H.M.Jr:
That is what I wanted to do. I want to get in
here four or five fellows who are not on any-
body's payroll, including the Army and Navy,
and have them come down here, just fellows that
know engines and sit around and talk, "What about
this Continental engine and what about this and
what about that," because I am not sold at all
that the Army and Navy have got the last word.
What I am trying to get is - you see, I called
up M.I.T. this morning and they suggested C. F.
and E. N. Taylor, George Mead and Hunsaker, see.
What would you think of getting those fellows?
Hinckley:
I think they would be a great help. of course,
of the three, Mead 18 tops. Mead's health has
been bad and that is one reason he retired from
Pratt & Whitney, but he 18 absolutely outstanding
in the field and recently he was put on N.A.C.A.
We are trying to set up now, before Budget, a
request for some money to go to an engine research
laboratory some place in the Middlewest. That
1s the N.A.C.A.
H.M.Jr:
Who 1s the head of that?
Hinckley:
A man by the name of Bush.
H.M.Jr:
Am I crossing wires with anybody if I ask --
14
- 2 -
Hinckley:
No, indeed.
H.M.Jr:
How about Hunsaker?
Hinckley:
You are not crossing any wires. You are calling
them not as members of the N.A.C.A. but as in-
dividuals.
H.M.Jr:
I was going to ask you to do It for me.
Hinckley:
All right.
K.M.Jr:
I tell you what I thought we might do. Do you
think you can get hold of Mead and get him down
here tomorrow?
Sinckley:
I can try. If his health is good, I think he
will come, because he 1s coming in a few days
anyway for an N.A.C.A. meeting.
M.M.Jr:
I was going to suggest 3:00 o'clock tomorrow.
Do you think that is too short notice?
Hindiley:
Well, let's see if we can get him for tomorrow
and if we can't, we will make it Wednesday.
N.M.Jr:
Then I will put this down, Hinokley, 3:00 to-
morrow. I would like Hunsaker. I have got
Mead and you mentioned some other name.
Sinckley:
No, you had Taylor there. They say there are
two Taylors. Are they at M.I.T.?
U.M.Jr:
Yes, and I said I would do this through Dr. Comp-
ton.
Winckley:
All right.
H.M.Jr:
Both C. F. and E. N. Taylor and Hunsaker is there,
too. He said 15 we would call up, he would send
them down. Now, have you got Mead --
Hinckley:
I will call Mead and you will call Compton, is
that the idea?
H.M.Jr:
No, I thought --
Regraded Uclassified
45
- 3 -
Hinckley:
You want me to call Compton?
H.M.Jr:
Do you mind?
!!nckley:
Not at all.
H.M.Jr:
I can do it. I will have Mac do it. I will
get Taylor and Hunsaker down here if you will
get Mead.
Hinckley:
All right, that 1s fine. I tell you, though,
maybe I should do it all in order to - no, I
will call Mead first and if he can come tomorrow
then we will get the other fellows --
H.M.Jr:
I would rather have you do the whole thing, if
you don't mind.
Finckley:
All right.
H.M.Jr:
I thought you could kind of keep in touch with
them for me, that we would have them meet here
and tell them what we have in mind and you
would nurse this thing on for me. Would you
be willing to do that?
Hinckley:
I will be tickled to death to do it and then
what I can do, any time I am tied down if there
1s something else and I am busy as a bird dog
on this pilot training thing, trying to get
Colonel Knox out of the woods - he has got us
all crossed up,
H.M.Jr:
Well, either you or - this isn't going to get
me in this N.A.C.A. thing?
Hinckley:
Not at all.
H.M.Jr:
You see, what I want is people not connected with
the Army or Navy or on 8 payroll in industry.
Hinckley:
But these people are not down here on research.
They are down here to give you expert advice
right now.
H.M.Jr:
That 18 right. And then I have got a call in
Regraded Uclassified
16
- 4 -
for the President of California Tech. and I
will talk to him.
Hinckley:
Clark Miller might be good on aerodynamics
instead of engine engineering.
H.M.Jr:
I told him engines. I find there is quite a
distinction.
!!inckley:
Oh yes, indeed.
H.M.Jr:
I am talking just about engines. I want to ask
these babies why the hell haven't they got a
diesel engine, is one of the things.
Hinckley:
Well, George Mead can probably tell you that.
He has been in the N.A.C.A. practically ever
since its inception in 1914.
F.M.Jr:
Can he give the answer?
Hinckley:
Sure, he can give you the whole history of
diesel engines.
H.M.Jr:
No, I just want en engine.
Hinckley:
You might ask Packard why they couldn't give us
a decent one.
H.M.Jr:
If we get these babies together, you can turn
this over to Warner if you want to, and if they
can't come at 3:00 tomorrow, you let me know.
Hinckley:
All right.
H.M.Jr:
But you think it is a good idea?
Hinckley:
It is the only way you can doublecheck it. I
agree with you.
Regraded Uclassified
47
CONFIDENTIAL
May 20, 1940
To:
The Secretary
From:
Mr. Young
I talked with Captain Collins tonight concerning
the message he had received from General Brett with
respect to Allison. Captain Collins stated that Allison
estimated it could speed up its peak production, which
calls for 400 planes per month, to & peak production of
1,000 planes per month.
This would be made possible through using the
Allison plant primarily as an assembly plant although
certain manufacturing operations would still be carried
on there. The rest of the manufacturing operations
would be farmed out to other General Motors subsidiaries.
Captain Collins is expecting a more complete report
from General Brett in a day or two,
Py.
Regraded Uclassified
48
QUADRUPLICATE
13579
LONDON, May 20, 1940
No.
5274
Subject: Supply of Industrial Diamonds for the
United States
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor
to report the following statement
which is taken from The Financial Times of May
18, 1940:
"with the exception of certain
adjustments which it is intended to
make
Regraded Uclassified
2
make in order that more qualities may
become suitable for the United States
market we have no intention of reising
prices of rough diamonds to U.S.buyers
at the sights in London next wook,"
Sir Ernest Oppenheimer, chairman of
De Beers Consolidated Mines and of the
Diamond Corporation, maid in an inter-
view yesterday.
"The Diamond Corporation and its
associated concerns between them oon-
trol over 90 per cent of the world's
diamond sales.
"'At the same time,' continued
Sir Krnest, 'we are making immediate
arrangements to secure that adequate
supplies of gem stooks suitable for
cutting and polishing are available
to the U. S. Trade. In view of the
steps taken, therefore, there is no
danger of any shortage developing.'
"He strongly asserted that De
Rears and the Tiamond Corporation
have no official agents for the sale
of diamonda in the U. S. If certain
persons, he said, have been purporting
that they are our official agents, this
is entirely untrue. e have no repre-
sentatives in America, but if we decide
to have representatives there we should
make an official announcement to that
effect.
untioned as to the future of the
important Low Countries' cutting end
polishing diamond industries, Sir Ernest
soid that in conjunction with the authori-
ties of the countries concerned, stops
were being taken to re-establish these
industries elsewhere. ay decision as
to the ultimate destination of the trede
could not, however, yet be made since it
depended on the turn of events in the
,ow Countries in the coming weeks.
"He intimated, nevertheless, that
the people chiefly concerned ay think
it more desirable to establish the indus-
Regraded Uclassified
- 3 -
try in France than in the U.K. and that
others may consider it more desirable to
Regraded Uclassified
not it up in the U.K. than in the U.S.
since there was a very natural desire on
the part of Belgian and Nethorlands
interests to retain their industry as
near to its eriginal home as possible
rather then run the risk of its being
setablished permanently elsewhere."
The following nowsiten was also published
in The Finencial Times of May 18, 1940:
*A factory designed for the outting
and polishing of diamends for export to
the United States has been opened in
Brighton by & well-known Hatton-garden
diamond merchant. The 201 engaged are
disabled ex-Service 202, They received
their training in diamond-outting after
the last were at a factory in Brighten
which subsequently closed down."
There is enclosed herewith a copy of the
annual report of the De Beers Consolidated Mines
Limited sontaining among other things an interesting
reference to the effort to develop by means of
prepaganda and advertising the market for diamonds
in the United States.
Respectfully yours,
For the Ambessafor:
Alexander V. Dye
Commercial 10 Attaché YEA
1RE
1ECHNICYC
are
Emelosure:
1. Annual Report of De Bears Consoli NOT eg eps
Mines Limited
1010
File 690
Ard-Ind
MEDIAED
EPA
DI BEERS
ONSOLIDATED MINES
INVOICE TRUR
HAM
ACHIEVEMENTS IN PAST
DECADE
-
L
-
PRIDIT
STRONG FINANCES
-
di
I
--- (MM) OFFICIENCES
1
BESUM
I
-
I
-
-
-
1
I
#
I
-
-
I
:
I
-
-
-
-
-
il
:
1
-
Regrade Uclassified
TREASURY DEPARTMENT
52
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM
Mr. Haae M.
The attached tables and chart show revised figures on
employment under the Work Projects Administration. This
employment declined by 51,000 persons, from 2,059,000 persons
for the week ended May 1, 1940 to 2,008,000 persons for the
week ended May 8, 1940.
Attachments
53
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Weekly
United States
Week Ending
Number of Workers
1939-40
(In thousands)
October 4
1,834
October 11
1,875
October 18
1,899
October 25
1,902
November 1
1,901
November 8
1,929
November 15
1,961
November 22
1,987
November 29
2,024
December 6
2,075
December 13
2,123
December 20
2,144
December 27
2,152
January 3
2,160
January 10
2,190
January 17
2,222
January 24
2,244
January 31
2,266
February 7
2,288
February 14
2,306
February 21
2,319
February 28
2,324
March 6
2,324
March 13
2,319
March 20
2,312
March 27
2,288
April 3
2,204
April 10
2,162
April 17
2,118
April 24
2,093
May 1
2,059
May 8
2,008
Source: Work Projects Administration.
54
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Monthly
United States
Number of Workers
1937
(In thousands)
July
1,569
August
1,480
September
1,448
October
1,476
November
1,520
December
1,671
1938
January
1,901
February
2,075
March
2,445
April
2,582
May
2,678
June
2,807
July
3,053
August
3,171
September
3,228
October
3,346
November
3,287
December
3,094
1939
January
2,986
February
3,043
March
2,980
April
2,751
May
2,600
June
2,551
July
2,200
August
1,842
September
1,790
October
1,902
November
2,024
December
2,152
1940
January
2,266
February
2,324
March
2,288
April
2,093
Source: Work Projects Administration.
Monthly figures are weekly figures for the latest
week of the month.
They include certified and noncertified workers.
55
WORK PROJECTS ADMINISTRATION
Number of Workers Employed
United States
55
Monthly W.P.A. Employment
Weekly W.F.A. Exployment
1937
1938
1940
-
1939
1940
1941
MAR
MAY
AREL
MAYA
MAR
SST
MY
ASPT
NOV
NAF
MILLIONS
WILLIONS
MILLIONS
or
CF
or
NORRERS
WORKERS
BORK(R)
3.4
3.4
3.3
1.3
1.2
3.2
3.2
3.2
3.1
3.1
e.B.
2.8
3.0
3.0
2.9
2.9
2.4
2.4
2.8
2.8
2.7
2.7
2.0
2.0
2,6
2.6
2.5
2.5
1.00
2.4
2.4
1.5
2.3
2.3
2.2
2.2
1.2
1-2
2.1
2.1
2.0
2.0
il
1,9
1.9
1.8
1.6
of
14
1.7
1.2
1.6
1.6
y
g
1,5
1,5
#
di
E
4
-
.
4
.
JAN.
MAR.
BAY
JULY
SEPT-
NOV.
JAM.
MAR.
MAY
JULY
SEPT.
NOY.
-
MAR.
1933
1936
-
1937
1930
1939
1940
141
1935
1940
1941
souect BOLL PROJECTS ADMINISTRATION
The al the Sectnary of the Treasury
- , - - -
2. 221 - E
Regraded Uclassified
56
EN
GRAY
Calcutta
Dated May 20, 1940
Rec'd 2:40 p.m.
Secretary of State,
Washington.
May 20, 5 p.m.
Government of India has introduced a system of control
by licenses over the importation of the number of classes
of goods among which are included the following: raw
cotton, motor vehicles, toilet requisites and soap,
proprietary and patent medicines, radios, exposed cinema-
tograph films, beer, manufactures of tobacco, fresh and
preserved fruits, jams, pickles, et cetera, stationery,
leather, rubber tires and other rubber manufactures,
wearing apparel, haberdashery, requisites for games and
sports, hardware and clocks.
All goods imported from places in the British Empire
except Hong Kong are exempt from above restriction except
proprietary and patent medicines, rubber goods, stationery
and motor vehicles. All goods listed above imported from
France are subject to license except toilet requisites,
soap and apparel.
No restriction will be applied to scheduled goods
arriving in India on or before 27th May or those ordered
before
57
-2- May 20, 5 p.m., from Calcutta.
before 15th May and shipped to India by 27th May provided
transactions are registered with Import Trade Controller,
Calcutta, Bombay, Madras or Kerachi before 20th June.
It was understood that licenses for general imports
of scheduled goods will be granted only to meet vital
requirements.
Goods imported by Central Government for defense
purposes are exempt from restrictions as are passengers
baggage.
GROTH
DDM
STRICTLY CONFIDENTIAL
TREASURY DEPARTMENT
58
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
Mr. Knoks told no at 3 o'clock this afternoon that the Federal Reserve
Bank of New York had today received three cablegrame from Paris, signed by
the National Bank of Belgium, in care of the Bank of France. In answer to
his inquiry, I told Knoke that we had not received any information from
Paris to the effect that the National Bank of Belgium had been transferred
to that city.
Knoke mentioned that one of the cablegrams authorised the payment of
$1,000,000 to Mr. Theunis. Knoke asked me the status of this gentleman. I
explained that he was an Ambassador sent to the United States on a special
mission and had been received by the State and Treasury Department in this
capacity. I offered to obtain a certificate from the Department of State as
to Theunis' status, and also to inquire of Paris in regard to the present
location of the National Bank of Belgium, if Knoke desired. Ee said he would
let me hear from him later.
At 6:30 p.m. Mr. Knoke telephoned to me the attached message. Acting on
this I telephoned Mr. Livesey in the Department of State and asked that he
send a rush mescage to the American Anbassador at Paris along the following
lines:
"Federal Reserve Bank of New York has received a
message from the Banque Nationale de Belgique c/o
Banque de France. Please cable confirmation that
Banque Nationale de Belgique is established and function-
ing in Paris."
I shall study tomorrow morning, together with Mr. Bernstein, the corres-
pondence which se have received from the Belgian Ambasandor recently, and
then consider the matter of requesting anything further from the Belgian
Ambassador with respect to the transfer of the Central Bank from Bruesels
to Paris.
p.m.
59
No Title
DRAFT
The Federal Reserve Bank of New York has today
received three cables from Paris signed Banque
Nationale de Belgique, care Banque de France,
Paris. These cables are properly tested according
to the cable test arrangement between the Federal
Reserve Bank of New York and the Banque Nationale
de Belgique. The Federal Reserve Bank of New York
suggests: 1. That the State Department request
the Belgian Ambassador to confirm that the Banque
Nationale de Belgique has moved to Paris and is
being operated from there and that this is authorised
under Belgian law; 2. That the State Department also
requests similar confirmation from the American Embassy
in Paris; and 3. That the State Department advise
the Federal Reserve Bank of New York of the receipt
of such confirmations from the Belgian Ambassador and
the American Embassy in Paris.
Takmover phone from Mr. Knoke's Sec. - May 20, 1940.
BMP.
STRICTLY CONFIDENTIAL
TREASURY DEPARTMENT
60
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
Official sales of British owned dollar securities under the vesting
order effective February 19:
No. of Shares
$ Proceeds of
Nominal Value
$ Proceeds of
Sold
Shares Sold
of Bonds Sold
Bonds Sold
May
13
1,554
127,945
Nil
Nil
14
Nil
Nil
Nil
Nil
15
Nil
Nil
198,000
121,966
16
11,230
897,389
Nil
Nil
17
Nil
Nil
Nil
Nil
18
Nil
Nil
Nil
N11
TOTAL FOR WEEK
12,784
1,025,334
198,000
121,966
Sales from
February 22 to
May 11, incl.
1,299,846
44,920,763
1,209,500
1,051,320
TOTAL FEBRUARY 22
TO MAY 18, INCL.
1,312,630
45,946,097
1,407,500
1,173,286
With reference to the transactions carried out on May 15 and 16, Mr. Gifford
told Mr. Pinsent that these were single transactions, made outside of the market,
and merely completed contracts which had been under negotiation before the market
slumped.
While the British officials have made no comment to me on the point, it is,
of course, understood that the British have already suffered quite & loss in the
value of the American securities which they obtained under the second vesting
order, and paid for on the basis of the market value then obtaining. It remains
to be seen whether they will make any sales at present prices, other than those
necessary to complete contracts, or whether they will await an upturn in the
market.
Regraded Uclassified
STRICTLY CONFIDENTIAL
TREASURY DEPARTMENT
61
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
Mr. Knoke told me by telephone this morning that the Minister of Sweden
vas to call at the Federal Reserve Bank this afternoon in regard to a very
secret transaction. It appears that the State Department has written the
bank directly in regard to & plan whereby the accounts of the Sveriges Riksbank
would be transferred to the Swedish Minister.
70.M.S.
TREASURY DEPARTMENT
62
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
At 1:35 on Saturday, May 18, Mr. Gaston told me that Mr. Welles had tele-
phoned from the State Department to ask us to arrange for President Harrison
of the Federal Reserve Bank of New York to receive the Rumanian Minister on
Monday.
The Minister desires assistance in obtaining insurance on $90,000,000 of
gold which is to be shipped to New York to be placed under earmark.
I called the Federal Reserve Bank at New York at 1:45. I was not able to
reach any officer, but gave Mr. Liddy the message, with the request that it
be placed before Messrs. Harrison and Knoke the first thing Monday morning.
B.M.S.
TREASURY DEPARTMENT
63
INTER-OFFICE COMMUNICATION
CONFIDENTIAL
DATE May 20, 1940
TO
Secretary Morgenthau
FROM
Mr. Haas MA
Subject:
The Business Situation,
Week ending May 18, 1940.
Conclusions
(1) The improving business outlook has been strengthened
by the expansion and speeding up of the Administration's arma-
ment program, which will provide additional volumes of new or-
ders for suoh important products 8.8 steel, textiles, and build-
1ng materials, that were not contemplated 8. week ago. Increased
foreign orders can also be expected, since the invasion of the
Low Countries has out off important sources of steel and other
products. Purchasing agents are planning to increase their buy-
ing of materials likely to be affected by the defense program.
(2) The general improvement in business activity has con-
tinued for the third successive week. The New York Times index
in the second week of May rose to an FRB equivalent of 105,
which compares with a figure of 102 in April.
(3) Further improvement is indicated for the following
week:
(a) Aided by increased new orders, steel activity
has increased sharply to 70 per cent of capacity, and a
further advance to 73 per cent 18 indicated by schedules
for the current week.
(b) The usual seasonal decline in automobile produc-
tion has been retarded by an improvement in sales during
the first period of May, and production has instead been
increased slightly.
(4) Swift declines in security and commodity prices last
week, reflecting a fear that the war might quickly be ended
by e. German victory, have added an uncertain psychological
element to the business picture that cannot at this time be
accurately appraised. Its effect on business activity will
depend in large degree on whether or not the German successes
prove transitory.
Regraded Uclassified
84
Secretary Morgenthau - 2
Defense program strengthens business outlook
The expansion and speeding up of the national armament
program will contribute toward a further strengthening of the
business outlook, particularly if the program gets quickly
under way. While it is obviously difficult to translate the
program in terms of its effect on the business picture, it
seems likely that it will have some immediate psychological
influence in strengthening business activity, in advance of
its eventual effect on actual orders for such important mater-
iale as steel products, textiles, and building materials.
Press reports indicate that purchasing agents are giving
attention to the possibility of a rise in prices for strategic
materiale affected by the defense program, and are planning to
increase their forward purchases of such materials in advance
of Government buying. The president of the Purchasing Agents'
Association of New York suggeste that inventories of commodi-
ties primarily affected by the armament program be increased
to six months' requirements. Difficulties are said to have
already developed in obtaining freely such materials &s quick-
silver, toluol, and pioric acid.
Business improvement continues
Weekly business indices have shown general improvement
for the third successive week. Our weekly estimate of the FRB
index based on the New York Times index of business activity,
after holding unchanged at 102 during the four weeks of April,
rose to 103 in the first week of May and to 105 in the week
ended May 11. An additional increase seeme probable during
the following week, since both steel production and automobile
production (seasonally adjusted) have shown further substantial
improvement,
A decline in the FRB index to 102 in April, 8.8 compared
with 104 (revised) in March, has been followed by increased
activity in steel and some other lines during May, according
to a statement last week from the Federal Reserve Board.
The New York Times index for the week ended May 11 rose
1.1 points to 94. 7, or about 2 points above the low reached
early in April, with increases shown in all components except
electric power production. The principal factor in the advance
was a marked contra-seasonal increase in steel ingot production.
Regraded Uclassified
85
Secretary Morgenthau - 3
Freight car loadings again moved ahead as a result of further
gains in shipments of ore down the Great Lakes, although &
contra-seasonal increase in miscellaneous carloadings also
contributed to the better showing. Confirming the trend shown
by the New York Times index, Barron's index of business activ-
ity for the week ending May 11 advanced to 102.3 from 101.0 in
the previous week.
Change in war outlook breaks security and commodity prices
In a steep decline, recalling the break that followed
President Wilson's peace note in December 1916, security
prices last week responded to B. radical shift in public senti-
ment. The widely-held belief in 8. prolonged war followed by
a victory for the Allies was replaced suddenly by the serious
possibility of a quick ending of the war with & German victory.
The resulting heavy liquidation of stocks held largely or part-
ly as a war speculation dropped the Dow-Jones industrial stock
average 16 per cent in 7 days. This compares with & decline of
15 per cent in 11 days in December 1916. Commodity prices, led
by wheat, also suffered severely.
It is not possible at this time to appraise the change in
the war situation in terms of its effect on our business out-
look, since the picture obviously could be radically altered
by an improvement in the Allied position. On the other hand,
in the event of & German victory a complete re-appraisal of
our business situation in the light of a changed world economy
would be called for.
To some extent, however, the break in prices will tend
to disturb business confidence, and may lead to (1) partial
liquidation of inventories that had been carried at somewhat
higher than normal levels as a wartime insurance against in-
creased prices, and (2) some curtailment in consumer buying
of luxury-type goods due to the present uncertainty.
On the other hand, there seems a tendency to over-estimate
the seriousness of the price decline. Actually, industrial
stock prices have declined slightly less than they did in March
and April 1939, although the break which took & month in 1939
was accomplished this year in one week. Had it not been for
the unusually weak speculative situation in wheat, basic com-
modity prices as a group would doubtlees have declined less
steeply.
Regraded Uclassified
56
Secretary Morgenthau - by
Commodity prices sharply lower
A precipitous decline in basic commodity prices last
week was centered largely in foodstuffs, which had previously
been supported by the general expectation of B. prolonged war.
(See Chart 1) Wheat was the leader in the downturn, followed
by other grains, fate and oils, and cocoa; while hogs and
coffee showed resistance to the decline. Prices of raw indus-
trial materials averaged higher for the week, largely because
of advances in the price of steel scrap. A comparison of
prices last Thursday with those of the preceding Thursday also
shows advances for rubser, silk, wool, burlap, tin, and copper.
Price movements of individual commodities in the agricul-
tural group are shown in Chart 2, and those in the industrial
group in Chart 3. Steel scrap prices are shown in Chart 4,
Wheat futures, weakened by heavy speculative buying dur-
ing April, declined the permissible limit on three days last
week. It would appear from "open interest" data that the en-
tire speculative account built up during April, representing
futures contracts mede available by the hedging of loan wheat,
has now been liquidated. In five days this week, the open
interest in wheat futures has been reduced by 31,000,000
bushels, carrying the total to 93,500,000 bushele, which 18
below the total et the beginning of April. The present figures
suggest that the open interest has now been reduced to below
the level of the visible supply, and 1e therefore less than
the amount required to hedge the existing stock of wheat in
commercial channels.
Cotton prices have declined more than s cent a pound
this week on the realization that the invasion of Holland and
Belgium has further reduced the export market for this com-
modity. A serious weakening in cotton prices may be seen by
the time the 1940 crop reaches the market, owing to the impact
of & prospective increase in world production at e. time when
excort markets are seriously curtailed. Prices currently are
supported by a relatively small available supply outside the
Government loan stocks, but distant futures are selling a
cent 8. pound below the near-month future.
Regraded Uclassified
67
Secretary Morgenthau - 5
The domestic sugar futures contract showed relative
stability in price, while the world contract declined to a
new low for the season in nearly all future months. The
world contract apparently ignored the potentially bullish
effect of destroyed sugar beet fields and damaged sugar
refineries in Europe.
Hide futures prices lost almost 2 cents on Friday and
ended at the lowest level of the year on fear of increased
sales of hides in the United States from South America, due
to the cutting off of important European markets.
Gum rosin prices dropped substantially below Government
loan values for the 1940 crop, because of the loss of foreign
markets.
Steel orders expanding
New orders reported by the United States Steel Corporation
for the week ended May 9 increased to the equivalent of 67 per
cent of capacity from 52 per oent the previous week. Since
that date, the invasion of Belgium and Holland is reported to
have brought increased export inquiries in the steel markets
here.
Responding to the higher level of orders, steel operations
last week were raised to 70 per cent of capacity, with sharo
improvement in a number of important districts. (See Chart 4)
A further increase to 73 per cent of capacity is indicated by
schedules for the current week. Steel scrap prices (shown on
the chart) have risen further, bringing the Iron Age composite
price to within & few cents of the average at the beginning
of the year.
Some indication that the steel companies have been pro-
ducing steel in advance of orders, however, is seen in a
suspension of all open-hearth operations last week by one
company at Buffalo, due to an excessive supply of raw steel.
Our studies also indicate & greater than normal accumulation
of mill stocks by the United States Steel Corporation
Regraded Uclassified
88
Secretary Morgenthau - 6
Automobile buying improves
New orders for automobiles during the first period of May
were higher than general expectations, holding steady at a
time of normal seasonal decline, which has retarded the usual
seasonal decline in production and, instead, has led to a slight
increase in output during the week ended May 11. Retail sales
reported by General Motors Corporation held at a daily average
of 6,100 cars, the same 8.8 in the last period of April. In
both 1938 and 1939, sales declined during the first period of
May.
Sales by General Motors during the entire month of April
likewise showed 8. more favorable month-to-month comparison
than in either of the two previous years. ( See Chart 5)
Business commentatore have mentioned the current high
level of new and used car stocks as an unfavorable factor in
the automobile outlook. Our analysis of stocks as reported
by the General Motors Corporation, on the contrary, shows
them to be at conservative levels in relation to the volume
of sales. (See Chart 6) Factory and dealer stocks of new
care (upper section of chart) have been running consistently
lower this season, in relation to sales, than in either of
the two previous years. Stocks of used cars (lower section
of chart) are in about the same relative position as in the
1939 model season.
New orders index higher
Our weekly index of new orders ( shown in Chart 7) has
again been increased by the rise in steel orders, while orders
for other products on the whole have held unchanged.
Regraded Uclassified
63
BUSINESS ACTIVITY AND PRICES OF RAW INDUSTRIAL MATERIALS AND FOODSTUFFS
Chart 1
1940
1939
1940
FEBRUARY
MARCH
APRIL
MAY
JAN.
MAR.
BAY
JULY
SEPT.
4
H
16
25
3
10
17
24
31
7
14
21
20
5
12
19
26
SEPT
NOV,
10
11111
PER
PER
FER
PER
CENT
CENT
CENT
EDIT
(PRICES)
(AUSINESS)
108
Weekly
152
Daily
124
124
148
106
BUSINESS ACTIVITY
N.Y. TIMES, EST. NORMAL 100 ADJ.
122
104
144
122
102
140
120
120
100
136
PRICES OF RAM INDUSTRIAL MATERIALS
B.L.S. AUG. 1939 - 100
PRICES OF
116
se
Ram INDUSTRIAL MATERIALS
132
118
B.L.S. AUG. 1939 - 100
96
128
116
116
94
124
114
92
120
114
PRICES OF FOODSTUFFS
B.L.S. AUG. 1939 - 100
90
116
112
112
Be
112
PRICES or FOODSTUFFS"
S.L.S. AUG. 1939 - 100
110
se
108
110
BA
104
108
106
52
100
106
DO
96
106
12
19
26
4
11
16
25
3
10
17
24
31
7
14
21
20
5
SEPT.
MOV.
JAN.
MAR.
MAY
JULY
SEPT.
APRIL
MAY
1939
1940
FEBRUARY
MARCH
1940
*FIVE DAY AVERAGE FOR PRICES
Offer - the Secretary of the Treasury
c 310
Tread - and Invistice
Regraded Uclassified
PRICES OF SELECTED AGHICULTURAL COMMODITION
Daily Putures
Workly AVERAGE# (Putures)
IN40
1548
APRIL
MY
MPI:
$
MAI.
-
JULY
SEPT.
14
21
zu
12
A
CENTE
CERTS
CAMES
an
FLI
FER
No
PER
FORMS
Cotton
-
MARE
N/A
12
12
Outton
17
"
"
=
10
10
IB
10
#
9
:
9
9
8
e
MY all., SET. FVIVM
8
a
7
7
SENTS
BIRTH
com
PER
COTS
PER
Wheet
FCA
E
1
1
WING
Winet
no
110
110
110
100
100
30
X
100
100
80
80
to
90
70
a
serve
DENTS
Lard
FEB
PER
FOURD
FOAD
CENTS
com
PER
no
POURS
FOURD
Lard
7,0
1.0
a
e
6,5
5.5
7
7
0.0
5.0
5
6
5,5
15
5
5
65
8,5
9
9
Cottomered 011
5,0
4,0
Cottonssed 011
6
8
7x5
7-5
1.0
7.0
7
7
6.5
6.5
.
6
5.0
6.0
5
3
7-0
7.0
Coffee
Coffee
7
7
6.5
6.5
6.0
6.0
é
é
5.8
1.5
5
$
5.0
5.0
2.8
2.8
Bugar
Super
2.3
2.3
14
2.6
2.4
2.4
2,1
2.1
1.2
2.2
2.0
2.0
149
14
ia
1.8
1,7
1,7
1-4
1.6
serv. - NEV., - FUTURE
14
1.4
AAY
1,5
1-5
SDT.
NOV,
-
NM.
SAY
JULY
MPT.
14
21
at
$
12
19
20
il
,
18
23
30
1939
1940
APRIL
MAY
ARE
1942
- MPT. - NA. FUTURES -
PART FUTURES
BAT PURINES
-
MPI. FUTURES
-
NA.
FUTURES
FUTURES
I
EMPT. FUTURES
70
(corrom, OCT. FUTURE)
(ffice - the Sentary e -
- of - - New
F 100
Regraded Uclassified
PRICES OF SELECTED INDESTRIAL MATERIALS
taily Futures
increase Futures)
APRIL
MAY
JAM
-
JULY
SAFT.
**
con
21
a
CENTS
:
12
1>
a
VENT
E
PER
PER
---
-
-
-
12
Rubber
22
Bubber
20
20
20
we
18
16
19.
:
16
14
E4
14
BILLARS
BOLLARS
15
16
PER
PER
FOUND
Bilk
PARD
BOLLARS
BOLLARS
PER
PER
4.00
4.00
POUND
FORD
Bilk
2.40
2.60
3.50
3.50
2,40
2.40
3.00
3.00
2.20
2.20
2.50
2.50
2.00
2.00
CENTS
CERTS
2
PER
com
CENTS
FOUND
FOURD
PER
PER
POUND
fildes
FOURS
Hides
15
is
16
16
14
14
14
14
13
13
12
12
12
12
- - APRIL, AME FUTURE
10
10
Oupper
"
11
11
13
Coyper
12
12
10
10
11
"
9
9
10
10
y
.
a
.
B
.
50
60
52
M
Tia
Tis
55
as
48
48
50
50
45
44
H
&
&
40
8
$
7.0
7.0
Zinc
6.0
6.0
1.3
6.5
Zime
6.0
a.c
3,0
5,4
5.5
5.5
1.4
3,2
5.2
5,0
4.5
4.5
4d
1.5
4.2
7
5.8
S.A
6.5
6.5
Load
Land
5.0
6.0
2
2
1.3
1.5
4,8
J
5.8
3.0
4.5
M
M
4.5
4.0
4,0
MY
sert,
NOV.
-
-
NAT
JULY
SEPT.
4.0
1.6
14
21
X
$
12
19
1939
26
2
9
1940
16
29
30
APRIL
-
1940
AND
ALPT.
ME. FUTURE
MY FUTURES
MPY, FUTURES
MS.
four FUTURE
FUTURES
FUTURES
(HIND), -
MI-
"NOT.
71
(ffice of - Service, # - 1
- - - - N/N
P - 140
Chart 3
STEEL OUTPUT AND SCRAP PRICES
Ingot Output in Percent Capacity
WEEKLY
F M - M a 1 A 5 o N D J. F M A M 2 J. A 5 D N D J F
PER
DOLL AR
CENT
PER TON
U.S. Average
90
22.50
80
20.00
70
17.50
Scrap Prices
60
15.00
50
12.50
Ingot Output
40
1000
30
7.50
20
5,00
J F M A M J J A 5 o N D J F M A M J à A S o N D , F M
1939
1940
1941
PRINCIPAL PRODUCING DISTRICTS
1939
1940
1941
1939
1940
1941
AFMAMJJASONOJFMAMJJASONDJFM
JFMAMJJASONOJFMAMJJASONOJFM
PER
DOLLARS
PER
DOLLARS
CENT
PER TOM
CENT
PER TOM
Pittsburgh
Chicago
80
25
80
20
Inget Output
Ingot Output
60
20
60
15
Scrop Prices
40
15
40
10
Scrop Prices
20
10
100
25
Philadelphia
Youngstown
RO
25
80
20
**
20
60
15
40
15
40
10
-
100
30
100
30
Cleveland
Buffalo
se
zs
80
25
so
20
40
20
40
is
40
15
20
10
10
10
100
Wheeling
30
IDD
Birmingham
25
so
25
60
20
40
20
so
is
40
is
40
10
10
J F M A M J J A 3. o N 0 J F M A M J , A $ o N D , # M
10
20
$
J F M A M J J A $ o N a of F M A M , J A $ o N D J F M
1939
1940
1941
1939
1940
1941
72
. Lorgualy due - reduction in capacity
- # - berrary el - -
- - -
C-190-0
Chart 4
Regraded Ucla
GENERAL MOTORS
Retail Sales of New Care during Model Years 1938 - 40
SEPT.
OCT.
NOV.
DEC.
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
AUG.
CARE
CARS
THOUSANDS
THOUSANDS
200
200
1940 MODEL YEAR
175
175
150
150
125
125
1939 MODEL YEAR
100
100
75
75
1938 MODEL YEAR
50
50
25
25
o
o
SEPT.
OCT.
NOV.
DEC.
JAN.
FCO.
MAR,
APR.
MAY
JUNE
JULY
AUG.
CONFIDENTIAL
Chart 5
3
Office of the Secretary of the Treasury
of - and
73
1 - 121
Regraded Uclassified
Chart 6
CONFIDENTIAL
GENERAL MOTORS
74
Stocks of New and Used Care, Ratio to Sales
SEPT.
NOV.
JAN,
MAR.
MAY
JULY
PER
PER
CENT
DENT
New Care
300
300
250
250
1938 MODEL YEAR
200
200
150
150
1939 MODEL YEAR
100
100
1940 MODEL YEAR
50
50
o
o
SEPT.
NOV.
JAN.
MAR.
MAY
JULY
200
200
Used Care
1938 MODEL YEAR
150
150
1939 MODEL YEAR
100
100
1940 MODEL YEAR
50
50
0
o
SEPT.
NOV.
JAN.
MAR.
MAY
JULY
of the Secretary of the Treasury
1 of - - -
I 122
Regraded Uclassified
75
5
INDICES OF NEW ORDERS
Combined Index of New Orders and Selected Components
1938
1939
1940
#
M
o
IN
D
PERCENTAGE
PRESENTAGE
POINTS
POINTS
160
160
150
150
140
140
130
130
Total (combined index)
1936 . 100
120
120
110
110
100
100
90
30
BO
BO
70
70
60
(A)
Total excluding Steel and Testiles
50
36
40
40
Steel Orders
A
30
NO
20
20
TO
Textile Orders
:
o
SONDJFUAMU.ASO
N
D
J
,
M
A
=
J
J
A
-
o
N
D
1938
1939
1940
11 of 1% the
I - 85 - C
- -
Regraded Uclassified
TREASURY DEPARTMENT
76
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
At 2 o'clock on Saturday Mr. Pinsent telephoned me at the Treasury to the
effect that B. message had been received from his Government which he desired to
communicate to us that day. Accordingly, I received Mr. Pinsent at my home at
5:30 p.m. the same day. and he handed to me & memorandum, a. copy whereof is
attached.
It will be noted that President Trip of the Netherlands Bank has suggested
that the United States should prohibit the importation of bearer securities until
cessation of hostilities, with exceptions to be made whereby securities which
the allied governments desire shipped to this country could be licensed. The
French Financial Attache in London agreed with the above idea, which WBS also
expressed in the message which Leroy-Beaulieu gave us on Saturday morning, and
which is described in another memorandum. Mr. Pinsent realized that we were
doing quite a lot to check possible sales by Germans of dollar securities which
they may obtain in invaded territory, but was anxious to learn if we might see
fit to do anything along the line suggested by Dr. Trip.
10.00
Regraded Uclassified
77
(Handed by Mr. Pinsent to Mr. Cochran
at 5:30 p.m. on Saturday, May 18.)
In order to prevent bearer
securities stolen by Germans in Holland being
sold in United States it was suggested by
Herr Trip Governor of Netherlands Bank just
before Dutch LT surrender7 that United States
Government should prohibit import of bearer
securities until cessation of hostilities.
We think it very desirable that immediate
action on these lines should be taken
provided import under license is allowed
and that you are satisfied that licenses
would G de fecto7, for duration of war, be
given bearer securities certified by His
Majesty's Government and French Government
and that there would not be delays OF
difficulties in disposing of our securities.
We should not wish to endorse proposal if
you feel any doubts on these points.
Treasury have spoken to French Financial
Attach& in London who agrees in above.
TRICTLY CONFIDENTIAL
78
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO Secretary Morgenthau
FROM Mr. Cochran
At 3:45 this afternoon Mr. Pinsent handed to me the attached memorandum
based upon a cablegram received by the British Embassy in Washington from the
British Legation at Stockholm. The message from Stockholm was dated May 18,
1940.
10mg
Regraded Uclassified
(Handed by Mr. Pinsent to Mr. Cochran
at 3:45 p.m., May 20.)
79
According to confidential information which
has just reached us, but which we have not yet been
able to verify, a number of German accounts including
official funds are being transferred from Insurance
Companies in the United States of America to Banks
in Sweden.
According to our informant telegraphic instructions
have been sent from Germany to the U. S. A. on this
subject yesterday.
Regraded Uclassified
STRICTLY CONFIDENTIAL
80
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
By appointment Mr. Pinsent, Financial Counselor of the British Embassy,
called on me at 3 o'clock this afternoon. He stated that one day last week
the President in conversation with Lord Lothian, had asked the latter how
the United States could cooperate with the British. The Ambassador has now
drawn up a letter setting forth certain lines along which cooperation would
be appreciated by the British, It was understood that this letter would be
presented by Lord Lothian to Secretary of State Hull this afternoon, with
the hope that it would be passed on directly to the President, without
circulation in the Department of State,
Mr. Pingent said the Ambassador wanted the Secretary of the Treasury to
be familiar with his discussion with the President, and the ensuing letter,
since some of the points involved have already been taken up with the
Treasury Department, most particularly the matter of prohibition of import
of bearer securities, except under license.
I told Mr. Pinsent that a group of us had been studying this morning
the memorandum which he had handed to me last Saturday on this question of
prohibiting import of bearer securities.
Mr. Pinsent telephoned me at 6 o'clock this afternoon that he would
endeavor tomorrow morning to send me copies for the Secretary of the Treasury
of the documents which the Ambassador delivered this afternoon to Secretary
Hull,
The points upon which the British have requested our cooperation are:
1. Prohibition of import of bearer securities except
under license.
2. Blocking of German assets.
3. Possibility of cooperation with regard to navicerts.
4. Possibility of joint arrangement for restricting
supplies of key materials to Germany.
5. Restriction of exports of toluol to Italy.
A.M.S.
Regraded Uclassified
TREASURY DEPARTMENT
81
INTER-OFFICE COMMUNICATION
DATE May 20, 1940
TO
Secretary Morgenthau
FROM
Mr. Cochran
CONFIDENTIAL
Weekend political news, such as reports that the Allies were stiffening their
resistance to the German thrust in Northern France, had a favorable effect on the
sterling quotation today. After opening at 3.24-1/2, three cents higher than
Saturday's closing rate, the pound moved steadily upward today, reaching a high
of 3-28-1/4 at the close,
Sales of spot sterling by the six reporting banks totaled L359,000. from
the following sources:
By commercial concerns
1152,000
By foreign banks (Europe and South America)
1217,000
Total
1369.000
Purchases of spot sterling amounted to 1477.000. as indicated below:
By commercial concerns
1141,000
By foreign banks (Europe, Far East and Near East)
1336,000
Total
1477.000
The following reporting banks sold cotton bills totaling L18,000 to the British
Control on the basis of the official rate of 4.02-1/2:
L15,000 by the National City Bank
3,000 by the Bankers Trust Company
L18,000 Total
Developmente in the other important currencies were as follows:
The French franc moved with sterling on the basis of a cross
rate of 176.40 france per pound and closed at .0186-1/8.
The Swies franc was unchanged all day at .2243.
The Canadian dollar had a alightly firmer tone today. The
closing discount was 20-3/8%.
The reichamark closed at .4005.
The yuan in Shanghai experienced a further improvement today. Against sterling,
it was quoted at 4-1/4d, up 1/8d, and in terms of dollars, the rate was 5-3/40. up
5/16#. It is interesting to note that the pence value of the yuan is now elightly
above the 4-1/8d level which prevailed for B. considerable period prior to the drop
in that currency on May 2.
Regraded Uclassified
- 2 -
32
de sold $500,000 la gold to the Lithuanian Bank, to be added to its earmarked
account.
le purchased the following amounts of gold from the earnarked accounts of the
was indicated:
$40,000.000 from the Bank of France
25,000,000 from the Bank of England
700,000 from the Central Bank of the Colombiau Republic
$65,700,000 Total
the Federal Reserve Bank of New York received cables from the B.I.S. requesting
11 to obtain license to transfer, from its account No. 2 to the account of the
Sattonal bank of the Kingdom of Tugoslavia, two lote of gold whose combined value
are completely $3,390,000. Gold in B.I.S. account No. 2 is the property of that
institution. The Federal also received e cable from the Tugoslavian bank instructing
1: to receive and earmark this gold. The Treasury authorised the Federal Reserve
cani b saice these transfers.
The Federal Beserve Bank of New York reported that the Bank of England and
shij ad 4626,000 in gold from England. This gold, consigned to the Federal, is to
be armarked for account of the B.I.S.
the State Department forwarded to us cables stating that the following gold
whin state hed been mde:
1198,00 from Hong Kong, shipped by the Chartered Bank of India, Australia and
Ohine, Hong Song, to the Bank of California N.A., San Francisco, for
sale to the U. S. Mint.
41.000 from England, shipped by Sharps and Wilkins. London, to the Chase
National Bank, Sew York, for sale to the U. S. Assay Office.
242,300 Total
will in Boabay was reported to have been priced at $36.63 today, about 21#
TOWER this Saturday's price.
the mot silver quotation in Bombay worked out to the equivalent of 44.921.
off , 10/-
The upward movement in London silver prices, which began on May 9. vas
revorsed today, Spot silver declined 7/8d to 22-5/8d, and the forward price was
fixi at 22-3/8d, off 5/84- A comment received from London stated that there vas
Pd) general selling on the introduction of the British licensing system for silver.
It in probable that the Pritish Government will benceforth require that silver
Exports met be paid for-10- certain foreign currencies or in sterling obtained at
to official rate, If such & requirement is put into effect. the London silver
pricerary be expected to DOVE further downward, since non-Empire purchaserswill tend
so le dissouraged by the sudden increase in the equivalent of the pence price. For
spartle, the U. 8, equivalent of today's spot price, on the basis of the official
sterling-dollar rate, 19 over 417, as compared with today's "open-maricot equivalent"
of about 32-3/44.
CONFIDENTIAL
Regraded Uclassified
confidential
- 3 -
83
Handy and Harman's settlement price for foreign silver, which has remained
unchanged at 34-3/44 since December 26, 1939, today was raised to 35#, no doubt
reflecting the local market's reaction to the current upward movement in Indian
silver prices. The Treasury's purchase price for foreign silver was unchanged
at 35#.
There were no purchases of silver made by us today.
84
GROUP MEETING
May 20, 1940
11:45 a.m.
Present:
Mr. Bell
Mr. Graves
Mr. Harris
Mr. Haas
Mr. Young
Mr. Sullivan
Mr. Schwarz
Mr. McReynolds
Mr. Cochran
Mr. White
Mr. Viner
Mrs Klotz
3.V.Jr:
Here 1s a short order for Sullivan. I don't
know what he can give me, The President wants
B. report on this legislation from Louie John-
son. It has to do with military affairs. If
you can give me something by five minutes to
one, I will take it over with me.
Sullivan:
Yes, sir.
H.N.Jr:
You and Foley.
MoR:
I guess Foley is up on the Hill.
H.M.Jr:
I guess John will have to do it.
Dan, have you and what's-his-name got that thing
for the President in answer to his request on
debt, taxes?
sell:
Well, I have my tables ready, yes.
S.K.Jr:
Are you together on it?
Hell:
I haven't tied it in with this tax thing that
John just sold you.
H.M.Jr:
I will do this when I get over there. I will
ask the President - I haven't got time to assimi-
late it - whether he will let you and John come
over.
Bell:
We will be ready.
H.M.Jr:
Well, when I get in I will call up the Treasury
and leave word for you two people if he wants
Regraded Uclassified
85
- 2 -
to see you at a quarter of 2:00, because I just
can't assimilate it. But you will be ready?
Bell:
Yes, sir.
H.M.Jr:
Is there anything else very pressing, Dani
Bell:
No, I haven't anything that needs to be taken
up. You asked me about the gold - moving the
gold to Fort Knox. The President approved the
memorandum and the Budget used that as a basis
for & message to Congress.
The other thing was, you asked me to get ready
to discuss this Swiss problem of securities. I
am ready, but I have never heard anything from
anybody. I just wondered where that was coming
from.
H.M.Jr:
Well, Wallace was to tell his brother-in-law.
Bell:
Then I will just wait?
H.M.Jr:
Yes.
Have you heard anything from the Swiss?
Cochran:
No, sir.
H.M.Jr:
Mac, everything all right?
McR:
I am having a luncheon conference at half past
12:00 on this bringing in the CCC and National
Youth, personnel survey for training program.
I have told the Navy what we are doing.
H.M.Jr:
Well, you had better tell Hopkins, because I
gathered from talking last night that Hopkins
is in on that, too. Go ahead and see what
Hopkins has to say. You do it your way.
McR:
I will call him.
H.M.Jr:
I think Harry is in on that, too. This is
aviation pilots, isn't it?
36
- 3 -
McR:
No, this is for workers. We are not going to
touch the aviation now, because they have got
that covered in their program, I mean training
pilots. We are interested in mechanics and
trained, skilled workers and things of that
kind. We will survey industrial boys 8.8 well
B.S other kinds of people and we are trying to
keep the boys who are working on the production
capacities informed of what we are doing 50
there can't possibly be any clash.
H.M.Jr:
Harold?
George?
Haas:
This is just that report.
H.M.Jr:
Send it up to the house.
Chick, how did things go?
Schwarz:
They turned out fine, thanks. It 1s over. It
was pretty hot, but they worked out well and they
responded pretty well to General Brett's talk.
H.M.Jr:
Did you hear him?
Schwarz:
Yes, sir.
H.M.Jr:
Was it your impression that it was good?
Schwarz:
It was very good. It was quite general, but he
was pounding away for speed and he said that
more orders would be the answer for them and he
hoped that they would act quickly when they got
them and they all said they would. It was a
good morale.
H.M.Jr:
You don't think they went away feeling it was
a dud?
Schwarz:
No, I don't believe 80. I talked to some of
the manufacturers' representatives.
E.M.Jr:
Harry, anything important?
White:
I have this report on your request about the
U. S. Steel products company. The company that
Regraded Uclassified
87
- 4 -
made the investigation in Brazil is about -
and then I also happened to meet socially
the chief engineer of the Boeing Airplane
and he gave me some information that I have
jotted down here and I think he is very worth
while to talk with, if you have & few minutes.
He 18 here for the next day or two.
H.M.Jr:
It isn't U. S. Steel products that I wanted.
White:
Well, they are the concern that had the engineers
that made that investigation. I have the inves-
tigation here.
H.M.Jr:
No, what I want is Davis --
Young:
Ford, Bacon and Davis.
H.M.Jr:
Yes, Ford, Bacon and Davis is the one I want.
White:
I will look them up but they are not the ones
who made that investigation, a copy of which
I have.
H.M.Jr:
0. K.
Jake, have you got enough --
White:
I have two other minor questions. One 18, the
State Department called up and wanted this depart-
ment to prepare legislation on the Inter-American
Bank. I said before we did anything I wanted to
speak to you.
R.M.Jr:
Do what?
White:
Prepare the legislation for the Inter-American
Bank.
H.M.Jr:
In the Cabinet, the President said that Jesse
Jones should do it.
White:
Shall I transmit that to the State Department?
H.M.Jr:
Mr. Hull heard the President say so. I don't
want anything to do with it. It is entirely
in the hands of Jesse Jones.
Regraded Uclassified
88
- 5 -
White:
They are also requesting somebody to go to
Ecuador.
H.M.Jr:
Take it up with Bell and you fellows decide.
I don't give a damn.
White:
That is all.
H.M.Jr:
Jake?
Viner:
Could I have B. minute with you afterwards?
H.M.Jr:
Not right after this, but sometime after lunch.
Would you tell McKay when I come back from the
White House, please?
Phil, are you all right?
Merle?
White:
Pardon me, did you want me to investigate that
company or --
H.M.Jr:
No, I have got --
White:
The information.
H.M.Jr:
I tell you, I am working with Dr. Compton of M.I.T.
Viner:
That was the advice on that that I had, was that
you talk to him and that you talk to the Presi-
dent of Cal. Tech. That is all right. Those
are the two men.
H.M.Jr:
Isn't it just as easy to talk to one?
Viner:
The only point is that Cal. Tech. has been
specializing in airplane engineering.
H.M.Jr:
California Tech.?
Viner:
Yes, sir.
H.M.Jr:
You don't know who it is?
Viner:
I have forgotten the name.
29
9 I I
9.M.Jr:
Where are they located?
Vinor:
Pasadona.
I have heard of it. What about the people I
have already got? I have got George Meed
and the two Taylors. Now if I get California
Tech. I am all right, but I have talked to
them today.
More:
That is what I was going to advise you. You
are ahead of me. It is all right.
Areatmen:
At the request of the State Department, I
arranged for the Federal Reserve Bank people
in New York to receive the Roumanian Minister
this afternoon. He wants to arrange about
a shipment of 90 million dollars of gold to
be placed under earmark. They are also re-
ceiving the Swedish Minister this afternoon.
He is getting a power of attorney that has
been cabled through the State Department, so
he would have control over it as far as the
Sveriges Riksbank is concerned.
The third message 1 had was the message which
Pinsent handed to me on Saturday night that
WBS the suggestion which originated with
President Trip of the Netherlands Bank just
before the Netherlands surrendered, that we
be asked to put on 8. block forbidding the entrance
into this country of bearer securities.
I am not getting any of 1t.
Cochron:
Well, I have taken it up with Dan.
Take it up with Dan. I Bm not getting any of
it.
WIL:
It isn't in writing, Mr. Secretary, but ke have
discussed it this morning.
MAIN
Well, you have got enough people here. Dr. Viner
is here.
Regraded Uclassified
-90
- 7 -
Bell:
Dr. Viner was in on this discussion.
H.M.Jr:
You will just have to handle it. I can't.
Sullivan:
What time do you want this thing!
H.M.Jr:
Five minutes of 1:00.
Sullivan: Yes, sir.
91
HSM
GRAY
Milan
Dated May 20, 1940
Rec'd 12:50 P. m.
Secretary of State,
Washington.
35, May 20, 5 p. me
FOR TREASURY DEPARTMENT.
Today's prices as follows: 191.50; 332; 507;
not listed; 975; 195.75; 1610; 59.75; 219.50. Volume
104,500.
Market active but quiet. Prices recovered
steadily and closed generally higher than Saturday
due renewed confidence.
SHOLES
CSB
Regraded Uclassified
ADORESS OFFICIAL COMMUNICATIONS TO
THESECRETARY OF STATE
WASHINGTON, p.e.
92
DEPARTMENT OF STATE
WASHINGTON
May 20, 1940.
My dear Mr. Secretary:
I am enclosing for your information & copy
of paraphrase of strictly confidential telegram
No. 765 of May 20 from the American Embassy,
Paris.
Sincerely yours,
llerbert this
Herbert Feis
Adviser on International
Economic Affairs
Enclosure:
Paraphrase, No. 765
of May 20 from Paris
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
Regraded Uclassified
33
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Paris, France
DATE: May 20, 1940, 1 p.m.
NO.: 765
STRICTLY CONFIDENTIAL.
FOR THE TREASURY.
An Embassy staff member just visited Cariguel about
the authentication of certificates for securities which
are destroyed. Cariguel told him that the necessary instruc-
tions would be issued to the banks for preparing such
certificates. As for having the securities destroyed in
the presence of banking officials whose signatures are
registered with the New York Federal Reserve, Cariguel
said that would be practically impossible, in view of the
fact that the Federal Reserve has on file comparatively few
signatures, and those Bank of France officers whose sig-
natures are known to it would probably be too busy to
witness the securities' destruction. Because of all this
the banks will be told that should it be necessary to
destroy securities, a ranking bank officer, such as a
director or under director should witness the destruction.
Cariguel said they had "long ago" removed to B place of
safety all the American securities which are held by the
Bank of France.
All the gold in the Ruhr, Cariguel stated, has been
taken away and placed in vaults in the southern part of
France.
84
- 2 -
France. They have also transported to "a place of
safety" all the bank notes in excess of current needs.
They have evacuated to the South an "advance guard" of the
personnel of the Bank, but unless the situation should
become more critical, the principal Bank officers do not
intend to leave the City; as far 88 he knew, for the present
the Ministry of Finance also intends to remain in Paris.
Since Thursday, he said, there had been changed into
French france approximately 100,000,000 Belgian france,
and there were no signs of abatement of this movement.
Cariguel said that the line in front of the Bank of France
nearly a half a block long, which the Embassy staff member
had observed, was composed of Belgian refugees.
Cariguel was inclined to criticize the Belgian National
Bank, asserting that not enough banknotes to meet an emergency
had been prepared by the Bank, and this was why funds could
not be withdrawn by many Belgian refugees. The Bank of
France, despite instructions to the contrary, was exchanging
Belgian silver currency for france although the rate for
Belgian banknotes 1s slightly higher. Such conversions
are made by the Bank of France only for refugees who do
not have Belgian banknotes in their possession.
The number of refugees coming into France, from Belgium,
Cariguel said, was considerably greater than it had been
in
Regraded Uclassified
95
- 3 -
in 1914 because a "taste of German occupation" had already
been experienced by the Belgians.
BULLITT.
E a R
for
EA:LWW
OFFICIAL COMMUNICATIONS TO
THE SECRETARY OF STATE
S6
WASHINGTON, #. c.
DEPARTMENT OF STATE
WASHINGTON
May 21, 1940.
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury, and
encloses for his confidential information one copy
of paraphrase of Section Three of telegram No. 765
of May 20 from the American Embassy, Paris.
of
Regraded Uclassified
97
PARAPHRASE OF TELEGRAM RECEIVED
SECTION THREE, TELEGRAM NO. 765 OF MAY 20, 1940 FROM
PARIS.
STRICTLY CONFIDENTIAL.
Reference is made to telegram of May 17, No. 725
from Paris. The Belgian National Bank has moved from
Ostend but Cariguel did not disclose where it was at present.
He merely remarked that at present the Governor, Under-
Governor and several other officers of the Belgian Bank
are here in Paris.
Cariguel said that since Thursday the run on French
franc deposits has not been as great as it was in September
of last year.
On Thursday afternoon he said the Bank of France had
received an order from the Government that all its records
should be burned, but it had not yet complied with this
order. Cariguel was inclined to be critical of Baudoin,
whom he does not consider as a man who can be relied on
in an emergency situation.
In conclusion Cariguel said that this morning he thought
the military situation was a little better.
END MESSAGE.
BULLITT.
EA:LWW
38
ITALIAN STOCK PRICES
(Milan)
Dec. 31, 1927 = 100
Weekly
Daily
*
1939
1940
1940
JULY
AUG,
SEPT.
OCT.
NOV,
DEC
JAN
APKIL
FED.
MAR,
APR
MAY
MAY
JUNE
PER
È
JUNE
JULY
o
13
20
27
PER
4
11
16
25
B
15
22
PER
CENT
PER
CENT
CENT
CENT
210
210
170
170
200
200
165
165
IW
190
160
no
160
180
176
170
155
155
la
160
150
150
150
150
145
145
140
140
SHARES
SHARES
THOUSANDS
THOUSANDS
200
Volume
150
200
130
129
120
100
100
Hg
110
JULY
0
o
Allias
SEPT.
OCT.
NOV.
DEC.
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
6
13
20
27
4
11
16
25
I
B
15
N
1939
1940
APRIL
MAY
JUNE
1940
DAILY FOR LATEST WEEK ONLY
- of the (manury
- being
FO - 141 - TA
Regraded Uclassified
89
CANADIAN LEGATION
WASHINGTON
May 20, 1940
Private and Confidential
My dear Mr. Secretary,
You were kind enough to receive me this
morning to convey to you personally & message from
the Prime Minister of Canada which was communicated
to me in a telegram reading as follows:
"I should be obliged 1f you would
inform Mr. Morgenthau personally that I
took first opportunity of communicating
to Prime Minister of United Kingdom the
views that he had expressed during our
conversation in Washington, and have now
had EL reply that expresses the apprecia-
tion of communication and adding that it
has been brought to the attention of the
members of the British Government immedi-
ately concerned with the question."
I am, my dear Mr. Morgenthau,
Yours sincerely,
Genelant Walenes
де Hon. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D.C.
100
20
MEMORANDUM FOR THE SECRETARY
MAY ¥, 1940.
Shipping Situation.
The Port of New York Authority announces that there is
moving through New York export traffic comparable in volume to the
monthly average of 1918, the peak year of the World War. In April
1940, 475,000 tons of export freight were delivered to ships. This
is only 6% less than the 1918 monthly average.
Exports to Europe in March 1940 through New York were
valued at $100,000,000. compared with $92,500,000. in February 1940
and $50,000,000.in March 1939.
The number of cars of freight lightered for export on
May 16th was 676.
The number of export cars awaiting lighterage
on May 16th was 3666 compared with 3472 on May 6th. Export freight
in railroad storage facilities on May 16th was 4289 cars compared
with 4213 on May 9th.
Approximately two thirds of the storage facilities of the
reilroads at the port are unused.
Lighters on demurrage May 16th
numbered 70.
Grain in railroad cars, elevators and boats is practically
unchanged from the previous week, about a million and a quarter bushels.
Carloadings for the week ending May 11th were the highest
for any week this year and were 105% of the average for the corresponding
week of the ten preceding years.
Steel output increased about four points and is currently
running at 70% of capacity. Pronounced increase in the export steel
business is anticipated, not only to belligerent countries but to
neutrels as well who have been drawing large quantities from Belgium.
Regraded Uclassified
101
-2-
There was naturally no berth business in grain to
Antwerp.
Grain rates from the River Plate to Ireland and the
United Kingdom continue to decline. The grain rate on liners
from the River Plate to north of Hatteras has dropped from $10.50
to $9.00 per ton.
Chartering on net form or time basis is inactive,
offering rates in general having decreased approximately 20%,
equivalent to about 2714 net form from North Atlantic and 30¢
from Gulf ports.
Danil Kamis
TREASURY DEPARTMENT
102
INTER-OFFICE COMMUNICATION
DATE May 20, 1940.
TO
Secretary Morgenthau
FROM
Mr. White
In a conversation with the chief engineer of Boeing
Airplane Company (an acquaintance of one of the men in my shop),
I obtained the following information that may be of interest in
connection with contemplated survey of air plant location possi-
bilities:
1. A special committee was appointed, he believes by
General Arnold, several months ago to make & study of the air-
plane industry under the auspices of the National Academy of
Science, with a view to determining and evaluating the various
factors that enter into the cost of producing airplanes. This
committee 1s headed by Colonel Horner and 1s supposed to consist
of E staff of engineers who are contacting the various airplane
manufacturers and surveying such matters 8.6 cost of labor, trans-
portetion, material, availability of raw materials, etc.
2. W. J. Austin Company of Cleveland, Ohio, 1a the largest
firm specializing in location selection and construction of
seronautical buildings.
3. Coverdale and Colpits, an industrial engineering survey
organization, is tied up with some of the airplane lines and 18
supposed to be experienced in problems of location and construc-
+1on of airplane factories.
Regraded Uclassified
103
TREASURY department
WASHINGTON
May 20, 1940.
MEMORANDUM FOR THE SECRETARY:
The Italian Steamship FORTUNATA, loading at 16th Street,
Hoboken, is now expected to clear Thursday morning, May 23rd, and
sail late that same day for Italy. From her export declaration
she expects to load 370 tons of glycerine and 3,450 tons of toluol.
Basil Karris
THE WHITE HOUSE
WASHINGTON
May 20, 1940.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
FOR YOUR INFORMATION AND
RETURN FOR OUR APPOINTMENT FILE.
F.D.R.
no! no.!
Manette!
1/m.J.
Regraded Uclassified
THE WHITE HOUSE
WASHINGTON
May 20, 1001,
memorandule FOR
THE SECRETARY OF THE TREASURY
FOR YOUR INFORMATION AND
RETURN FOR CUR APPOINTMENT FILE.
:
no!
Hanette /
/
CONFIDENTIAL MEMORANDUM
May 18, 1940
THE WHITE HOUSE
Big President
Mar 18 " 11 "UN"
Jerome N. Frank, Chairman
Securities and Exchange Commission
would 11kg respectfully to suggest that con-
stion be given to using Floyd Odlum in some
Leportant position. I know from conversations with
his last fall that he would be willing to drop his
rusiness and do anything to help in the crisis.
He is one of the most imaginative financial men
in the country. He 18 not an operating utility man,
but he had a lot to do, first as a lawyer and then as
financial man, with building up some of the utilities.
Perhaps a good place for him would be on the
tional Power Policy Committee, assuming that it la
to play an important part in expanding and coordinating
power production. His ingenuity in helping to finance
such a program would be invaluable.
Regraded Uclassified
CONFIDENTIAL MEMORANDUM
May 18, 1940
TO: The President
FROM: Jerome N. Frank, Chairman
Securities and Exchange Commission
I would like respectfully to suggest that con-
sideration be given to using Floyd Odlum in some
important position. I know from conversations with
him last fall that he would be willing to drop his
business and do anything to help in the crisis.
He is one of the most imaginative financial men
in the country. He is not an operating utility man,
but he had a lot to do, first as & lawyer and then as
financial man, with building up some of the utilities.
Perhaps a good place for him would be on the
National Power Policy Committee, assuming that it is
to play an important part in expanding and coordinating
power production. His ingenuity in helping to finance
such a program would be inveluable.
Regraded Uclassified
TWO COPIES FOR
TREASURY
11876
108
VRH
PLAIN
Shanghai, via N. R.
Dated May 20, 1940
Rec'd 2:50 p.m.
Secretary of State,
Washington.
NOT TO BE WINHOUS
IHR OGNEENT OF COMMERCE
436, May 20, 5 pame
FROM COMMERCIAL attache. Special financial.
Shanghai open market foreign exchange rates continued
their firming tendency this morning due to lessening
desire on part of hourders to hold foreign currencies
in light of reported German gains to Europe. Interbank
spot selling closed at noon at five three quarters and
four seven thirty second (latter rate highest since
February 19), May delivery five Eleven sixteenths and
four three sixteenths, June delivery five one half and
four one sixtemths. SElling orders increasing and
Anglo-Chinese stablization committee is believed to
have recovered Equivalent one million pounds sterling
on Saturday and this morning's trading, thus easier
cash conditions EXPECTED. Technical position of exchange
market confused as it is uncertain whether market is
now overbought or oversold. Chinese financial circles
bELIEVE that should European news favorable to Allies
develop
Regraded Uclassified
109
-2- # 536, May 20, 5 pame, from Shanghai, via N. R.
dEVElop it is likely to cause Easier *ates as greater
faith in sterling and United States dollars is then
likely to recur, also believe that control unlikely
for time being to set any definite level for stabilization
thus to compel speculators to EXERCISE caution. How-
ever April Shanghai recorded adverse trade balance
with non yen bloo countries is estimated to have been
more than United States dollars sixteen million, but
much of the imports may bE for hoarding purposes rather
than for consumption thus smaller imports near future
not unexpected. Inform Commerce. Repeated to Chungking
and Priping.
BUTRICK
CSB
Regraded Uclassified
110
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATEMAY 20, 1940
TO
Secretary Morgenthau
FROM W. H. Hadley
TREASURY BILL OFFERING
Aver. on 1st 100 Aver. on 1st 100 mil. Aver. for
Total tenders
mil, New York
MY & Chi. last week
country last wk.
recd. New York
91-day bills 0.039
0.019
0.016
$126,895,000
May 20, 1940
MEMORANIUM FOR THE SECRETARY:
Pacific Cosst Shipping Situation
The Pacific Coast freight and charter market
continued in a state of unrest last week and, if anything, was
softer under the impact of war developments.
The time charter market moved up and down between
$4.25 and $5.50, depending on length of charter, but late in
the week it was reported that charterers ideas were around 44
to $4.50. Most of the time activity was taking place in New
York, and the Pacific range remained relatively dead.
In the Oriental range two vessels were fixed at $16
and $18 respectively, for case oil to Siam and Bangkok. After
these fixtures were closed the market was said to have weakened
considerably and shippers were offering around $14 for the same
type of business. No time charters for Oriental business were
reported. Scrap was offering in fair volume and the berth lines
were quoting $16 for melting and around $14 for rails. Space for
general cargo was fairly tight. Lumber from the Pacific Northwest
was quiet due to restricted space conditions, and B. soft market.
A steamer was taken at $4.25 on a time basis for lumber
to North Hatteras, and another vessel was taken for lumber on a trip
at undisclosed terms. Although space for general cargo in the
eastbound intercoastal trade was slowly becoming easier, the lumber
operators could not get enough to fill requirements. Westbound
offerings seemed to be holding well, but the tendency was for an
easier market due to seasonal decline.
Basil Karris
Regraded Uclassified
112
IDENTIAL
May 20, 1940
To:
The Secretary
Prom:
Hr. Young
Seporting on the success of shadow factories in the
Birmingham area, Mr. James R. Wilkinson, American Consul,
statem as follows:
"The war has seen more private industrial
alant in the Biruingham area become idle than new
:lantbuilt. Private industrialists, for several
reasons, rether adapt old plant to var purposes
than exnand. If the Government has B hand in er-
nansion, the industrialist fears loss of indepen-
donce. Expansion gives rise to two serious labor
problems: (1) That of finding workpeople at all
and (2) that of finding the kind of workpeople who,
under labor union rules, are eligible for the jobs
unde available through expansion."
Kr. Wilkinson goes on to state that shadow factory
operations have fallen about 40 per cent short of what they
Vere expected to do. Difficulty with the supplying of
unterial accounts for about 5 per cent and trouble with
labor accounts for about 95 per cent of this inefficiency.
The statement is minde further that it is the general
attitude of organized British labor not to permit the en-
playing classes to use the WAT as an excuse for impairing
the results of the progress which has been made in obtaining
fair treatment for British working people nor to relax efforts
to further the interest of such working people during the var.
Hr. Wilkinson made the following general comment:
"The industrialists are, AS a class, not directly
concerned about the matter B.5 shadow factories are
operated by the Government which, they hold. can, when
Regraded Uclassified
113
- 2 -
it is considered expedient, tell labor what it is to
do and make labor do it. They have, however, pointed
to the fact that, as a result of the attitude labor
has adopted regarding shadow factory problems, the
United Kingdom is spending millions upon millions of
pounds sterling in the United States and Canada for
aircraft, and add that, though shadow factory plans
looked well on paper, they warned the Government
that they could, if left to their own devices, more
satisfactorily from all points of view do the work
shadow factories were expected to."
PY.
Regraded Uclassified
114
May 20, 1940
Told Foley to see Christy Sullivan, leader of
Tammany Hall, and say that I wanted the two votes
in New York on Banking and Currency; first for the
Treasury against RFC and second in connection with
the Housing Bill.
If we get these two that will give us five
Democratic votes which is two more than we need.
115
COPY
Paraphrase of telegram No. 218 from Bucharest, May 20, 1940
Secretary of State,
Washington.
By revalusing the national bank's gold stock at
299,999 lei per kilogram instead of 153.333. a premium of
50% the Rumanian Government by decree of May 19 completed
the de facto devaluation of the leu which vas begun in March.
Subsequent to the eleventh of April this premium has been
paid on new gold purchased. More than twenty-one billion
lei vas reported in the gold stock as of April twenty-seventh
so the profit from devaluation amounts to more than ten and
& half billion lei. According to the provisions of B supple-
mentary decree five billion seven hundred million lei will
be expended in the repayment of state loans from the national
bank and the remainder will be expended on national defense.
The banks gold D coverage for several months has been
near the thirty-five per cent legal limit of sight oblign-
tions, so there is legalised by this decree a. fifty percent
inflation of the currency if it is considered necessary. It
seems inevitable that there will be a considerable degree of
further inflation because of the mounting costs of national
defense and the increasing cost of imports. Since August there
has been an increase of two and & half billion in the subsidiary
coinage against which reserves are not required. or more than
fifty percent. There has been an increase since August of
forty
Regraded Uclassified
116
- 2 -
forty percent in the retail price index in Bucharest.
Owing to political developments lately there has
been a jump in the illegal rate, though the official dollar
buying rate has remained at 211.65 lei.
GUNTHER
DCA: GHK: MEX
117
VM
PLAIN
London
Dated May 20, 1940
Rec'd 4:25 p.m.
Secretary of State
Washington.
1279, Key 20.
FOR TREASURY FROM DUTTERWORTH.
The quotations in the London Stock Exchange hear no
relation either to reality or to the mood of the city for
it is impossible to deal in any significant amounts.
Although dividends are bEing reditted to neutral foreign
non-residente the Effect of the formalities imposed by
the licensing system is restricting foreign sales of
British securities which is playing its part in upholding
the free sterling rate. The Br tish Treasury is improvis-
ing right and left to meet the situation created by Holland
and BElgium becoming Allied powers pending the conclusion
of definitive agreements, and on the major question of
expenditure is apparently authorizing anything that is
coked for.
KENNEDY
CSB
TREACORY RECEIVE
-10
Regraded Uclassified
118
REB
TELEGRAH SENT
GRAY
May 20, 1940
9 P. m.
MERICAN EMBASSY
PARIS
RUSH
422
FROM treasury.
The Federal RESErVE Bank of NEW York has received
a message from the Banque de BElgique in care of Bank of
France, Paris. Please cable confirmation that the
Banque de BElgique is Established and functioning in
Paris.
HULL
(HF)
E.:FL:LWW
Regraded Uclassified
119
JR
GRAY
Paris
Dated May 20, 1940
REC'd 2:48 p.m.
Secretary of State,
Washington.
777, May 20, 6 p.m. (SECTION ONE)
FOP THE TREASURY.
The magazine ECONOMIE FRANCAISE has just published
its unofficial index of the French wholesale prices in
April of 45 foodstuffs and industrial raw materials.
On the basis of prices in the months immediately preceding
the war equal to 100 the index for April is placed at
139 an increase of one point over the March estimate
and a figure Eight points above that for DECEMBER. Imported
foodstuffs are placed at 143 and domestic at 142.
Imported industrial raw materials are Estimated at 155
and domestic at 121.
BULLITT
CSB
120
REB
GRAY
Paris
Dated May 20, 1940
Rec'd 2:09 p. m.
Secretary of State,
Washington.
777, May 20, 6 p. m. (SECTION TWO)
Food ration cards are now being distributed. Bread
is the only commodity thus far covered by them.
The securities market was irregular today. Rentes
gained fractionally EXCEPT for the 1925 sterling exchange
guarantee issue and the 1937 dollar Exchange guarantee
issue which lost 3.70 francs and 4.25 francs respectively.
French industrial stocks WERE irregular a few showing
fairly substantial gains while others sustained moderate
losses. SUEZ rose 1325 points on the strength of Italy's
statement yesterday regarding its non-belligerent status.
(END OF MESSAGE)
BULLITT
CSB
Regraded Uclassified
121
COPY
Rio de Janeiro, May 20, 1940
No. 3024
Subject: British Negotiations for a Payments
Agreement with Brazil, likely to be
carried on in London.
ORIGINAL AND THREE COPIES BY AIRMAIL - CONFIRMATION
COPY BY STEAMER.
CONFIDENTIAL
The Honorable
The Secretary of State,
Washington, D. C.
Sir:
Although the Brazilian Government wished to have discussion
of the payments agreement recently proposed by the British Govern-
ment carried on in Rio de Janeiro as well as in London, as reported
in my despatch No. 2998 of May 11, 1940, I have the honor to report,
for the Treasury Department also, that an official of the Ministry
of Foreign Affairs said this morning that it now appears that the
negotiations will probably be carried on entirely in London as de-
sired by the British Government. They are still in the stage of
preliminary discussion, he said.
Respectfully yours,
317 07
For the Ambassador:
DO 2019
Ware Adams,
Second Secretary of Embassy
Extra copy for American
Embassy, London.
File No. 631
WA:AM
Regraded Uclassified
122
CONFIDENTIAL
May 20, 1940
&
The Secretary
Prunt
Mr. Young
Conference in General Brett's office at 2:00 P.K. with
Mr. Keller and Mr. Hutchinson of Chrysler. In addition to
General Brett, Measrs. Keller, Hutchinson, and Young, also
present were Captain Kraus, and Colonel Echols (General
Bratt's Chief Engineer).
General Brett asked me to outline the purpose of the
meeting, which I did in general terms, and then asked
Mr. Keller to outline in more detail the situation as it
hed developed from his conference with you this morning.
Xr, Keller gave a brief summary of the Continental Motors
situation outlining the difficulties which would confront
Chrysler if the latter attempted to buy it.
Be montioned the fact that Continental had B. book value
of approximately $6,000,000 but 8. speculative market value
of about $12,000,000. Further that certain asseta included
in the book value could only be regarded as doubtful. In
Addition, Continental had approximately 22,000 stockholders
due the fact that development work on A large motor had not
201 progressed sufficiently to nut such & motor on a produc-
tion basis.
Mr. Keller mentioned the possibility of building the
Rolls Royce engine which was R comparable type. A deal with
Rolle Royce would be very much simpler and would expedite the
troduction of motors. General Brett interrupted Mr. Keller's
remarks by stating that he wished to talk B. little about the
Continental background before discussing the Rolls Royce
consibility in order that Mr. Keller could truly appreciate
the situation.
Ceneral Brett went on to say that the Army had put a
cast deal of money into financing the development of this
Regraded Uclassified
123
- 2 -
Continental motor. Further, that the Continental cylinder
when properly developed would be far superior to any now
available. It was primarily because of the cylinder design
that the Army was BO anxious to see some one like Chrysler
with its management and engineering ability take hold of
that motor and really push it.
Mr. Keller inquired as to what the legal situation was
on the Continental motor and as to whether or not it were
a patented design. General Brett replied that it vas not
patented but that the Army held the rights, On being ques-
tioned further by Mr. Keller, however, the General made the
statement that it had never been the practice of the Army to
withdraw the manufacture of such A product from the company
which had been doing the developmental work.
Mr. Keller was considering the possibility of the Aray
turning over the Continental motor to Chrysler without the
latter having to buy out the Continental Company. Mr. Keller
seemed to be pretty much of the opinion that if the Army knew
the design and type which it wished developed Chrysler would
just BE soon start from the ground up and develop a new motor
with the help of the Army engineers.
Mr. Keller inquired as to whether or not there was a
Continental motor available for inspection in order that
Chrysler right determine, not only production difficulties
which might be involved, but also potential cost. It turned
out that the only Continental motor of the large size, although
ovned by the Army, was being tested at the Continental plant;
& situation which might be embarrassing if Chrysler walked in
to inspect it.
With respect to the Rolls Royce motor, the Army knew very
little. Two of these engines are due at Wright Field at Dayton
some time next week, one for test purposes, and the other to be
disassembled for inspection. Thus, it would seem that at the
present time little progress can be made until Mr. Keller and
his engineers have a chance to inspect in detail both the Rolls
Royce and Continental engines.
It was arranged that Mr. Keller should send his engineers
to Wright Field AS soon as he receives word from Colonel Echola
that the Rolls engines have arrived. At that time his engineers
would also discuss in detail with the Army engineers the poten-
tialities of the Continental engine. Às soon As this study and
Regraded Uclassified
- 3 -
124
Investion has been made At Wright Field, you will receive
report from Mr. Keller outlining his recommendations. In
the meantime, Mr. Keller is continuing A selling trip through
Yes England and New York State, returning to his office in
Datroit on Saturday. Attached is A. detailed schedule of his
for this week.
I see little hope for expediting development of the Con-
:laintal motor ns long as General Brett sticks to his present
-aldey. On the one hand, Continental evidently has not the
resources, the management ability nor the engineering
-Nlity to develop the large Continental motor within a reason-
abio time: on the other hand, the Army. although it owns the
-ldits to the notor and has financed a large part of the develop-
mit costs, states that it cannot turn over the job to another
If this is truly an emergency and the development of that
THERE is nucessary, more independent money must be out into
Continental and adequate management and engineering ability
kired, or some going concern with the necessary resources must
be -ermunded to make what looks like an unvise business invest-
2818 by buying control of Continental, or the Army must set BY
procédent by withdrawing that motor from Continental and giving
It to some one else,
In this connection, I might ndd that it was stated definitely
Chtyelor at this time does not contemplate establishing B. nerma-
Mat aircraft division. Knufrecture of aircraft engines by that
would be regarded solely R8 n. temorary operation during
NO emergency period. This voint of view necessarily raises the
Address question AS to whether Chrysler should be asked to
mb in any major capacity on such & basis. Probably other Auto-
Mile unaufacturers, such P.S Ford, Packard, and Studebaker,
could also be consulted to see if they were interested from a
base term noint of view.
All
Regraded Uclassified
INTER-COMI CORRESPONDENCE
RECEIVED
125
TO
FROM
MR. I.T. Keller
Asst. Director of Advertising
DEPT. President, Chryaler Corporation
x
FREIGHT
Plymouth
PLANT Highland Park
DATE
May 13, 1940
SUBJECT: CERYSLER CORPORATION DAY BUSINESS LUNCHEON MEETINGS - May 21,22,23 & 24, 1940
Mr. Cosart has requested me to inform you that arrangements have been com-
pleted for Chrysler Corporation Day Business Luncheon Meetings as follows:
BOSTON, MASSACHUSETTS:
On Tuesday, May 21st, at Seiler's Ten Acres, at 12 o'clock Noon. Seiler's
Ten Acres is located at Wayland, Massachusetts, about fifteen miles west
of Boston on the Old Boston Post Road.
PORTLAND, MAINE:
On Wednesday, May 22nd, in the Eastland Hotel, Main Ballroom, at 12 o'clook
Noon.
SPRINGFIELD, MASSACHUSETTS:
On Thursday, May 23rd, in the Hotel Kimball Bellroom at 12 o'clock Noon.
SYRACUSE, NEW YORK:
On Friday, May 24th, in the Onondaga Hotel, Grand Ballroom, at 12 o'clock
Noon.
Eastern Daylight Saving Time is in effect at all the above places.
At all four points the Chrysler Corporation Erecutives' group will meet
with members of the press and perhaps a few bankers and other influantial
citizens, at 11 o'clock, in a separate room at the place where the
luncheons will be held. The rooms for these 11 o'clock meetings are as
follows:
Boston, Terrace Room, Seiler's Ten Acres; Portland, Private
Dining Room 2, Bastland Hotel; Springfield, Parlor A, Hotel
Kimball; Syracuse, Parlor D, Onondaga Hotel.
A. private Pullman car has been arranged for to accommodate all members of
the executive group. The name and number of this car, the Pullman space
assigned to you and proper identification so that you can have 800088 to
the car at all times during the trip, will be forwarded to you later.
All railroad tickets and Pullman space have been arranged for you from
the time you leave Detroit at 4:53 P.M. Monday, May 20th, until you arrive
back in Detroit Saturday, May 25th, at 7:20 A.M.
We are informed that a copy of the chartered car schedule has been for-
worded to you by Mr. vanDerZee.
Regraded Uclassified
26
MEMORANDUM
May 20, 1940.
TO:
The Secretary
FROM# Mr. Sullivan
Conference with Secretary Morgenthau, President Keller of
Chrysler Motors, Mr. Hutchinson of Chrysler, Philip Toung, and
Assistant Secretary Sullivan.
Keller reported that since talking with the Secretary on the
telephone he had investigated the situation in Continental Motors.
The stock in this company is widely scattered, so much 80 that it
would be very difficult to obtain control of it or to secure an
option. There is also now being considered by the SEC the formation
of & new company to take over the eviation end of Continental Motors.
After discussing the terms of such a transaction he stated that it
would be entirely impracticable for Chrysler to attempt to take
on this engine and that Chrysler could undoubtedly do better by
starting from scratch and developing a motor.
The Secretary then suggested to him that there were in this
country two Rolls Royce - Merwin airplane engines. This is 8 liquid
cooled engine which is performing well under combat conditions.
The Secretary asked Keller if his company would be interested in
building these for our Government either under its own financing
or in Government-owned plants leased to Chrysler. Keller said that
he thought his company would be interested but they would like to
see the motor or at least the designs.
Arrangements were made for Kr. Keller, kr. Hutchinson and
Vr. Young to meet with General Brett and Captain Kraus at General
Brett's office at 2 p.m. today.
The Secretary offered to handle the licensing problem for
Chrysler and attempt to communicate with Mr. Purvis. Mr. Keller
said he imagined be would be able to get adequate relief from other
commitments to the U. S. Army for shell cases, fuses, and recoils.
The Secretary believed that be would.
The Secretary moked Keller to look at the motor and then to
submit estimates as to the cost and speed of production of this motor
in units of 100, 200, 300, 400, 500 per month. Mr. Keller was to do
this and report back on these schedules on the basis of private
financing and on the basis of leased Government property and equipment.
ILS
Regraded Uclassified
127
May 20, 1940
5:24 p.m.
H.M.Jr:
Mr. Morgenthau. How did things go today?
General
Brett:
Oh, I thought they went beautifully.
H.M.Jr:
You did.
B:
Yes, I hope I didn't say anything I shouldn't have
said.
H.M.Jr:
Well, I haven'
B:
And yet everybody seemed to be -- of course they were
calling for one thing that I couldn't give them,
and that was 8. program.
H.M.Jr:
Or some orders.
B:
You see. Now, we're just working -- the Air Corps
18 working just as tight as they can go on a program.
H.M.Jr:
Well, I think it worked out all right.
B:
What's that?
H.M.Jr:
I think it worked -- the day worked out all right.
B:
Yeah, I really felt very, very satisfied when I got
through. I went in very dubious.
H.M.Jr:
Yeah.
B:
But I thought everything worked out beautifully before
we got through.
H.M.Jr:
Good. I'm glad you're happy. General
B:
Yeah.
H.M.Jr:
8.8 a matter of -- Mr. Young 18 sitting here
with me.
B:
I'm sorry, sir. I can't hear you.
H.M.Jr:
On this Rolls-Royce engine, couldn't you put somebody
on your staff -- get one person to trace that
thing through 60 we could rush it through?
Regraded Uclassified
128
- 2 -
B:
I'm having it traced just 88 fast AS I can, sir.
I had that conference with Chrysler and I gave them
all the background on the Continental -- that 18,
I mean our background.
H.M.Jr:
Yes.
B:
Now, we're getting -- we're rushing those other
engines as fast 88 possible. We hope to have a
conference out there about Monday or Tuesday.
H.M.Jr:
Oh, that's
in
You see? Now, they at that time -- they will go into
the engineering background on the Continental and we
hope to have the Rolls in B. position where they can
take a look at that.
H.M.Jr:
Couldn't you speed that conference up until about
three days?
B:
Well, I'm afraid not, sir. Simply because they have
got to -- they are insistent upon looking at the
engine.
H.M.Jr:
Yeah. Well, I mean, couldn't they get 8. look -- see,
quicker.
B:
Well, except the engines are on freight. Ae near 88
we can find out they're between New York and Dayton
right now.
E.M.Jp:
Listen, if you can find out where they are and hold
that car tomorrow, I'll have a truck there -- I don't
know where, and I'll take them off and I'll put them
into Dayton in ten hours.
B:
Well, fine. I'll look that up right away and let you
know.
H.M.Jr:
If you can have that car put on 8. siding tomorrow
morning.
A
Yes, sir.
H.M.Jr:
I'll have a truck there and back them up and
run them in a truck immediately to Dayton.
Regraded Uclassified
129
- 3 -
B:
O.K., sir.
H.M.Jr:
If you'll just let me know the first thing tomorrow
morning, or let Philip Young know, see?
B:
Yes.
M.M.Jr:
You let Philip Young, if you can -- they can catch
that car somewhere and have it somewhere tomorrow
morning, we'll get a truck -- if you'll have an
Army officer or somebody there to open the car,
80 that B. Treasury truck can back up to that thing
and take the things out.
B:
Well, I'll do my best to locate those engines right
away.
H.M.Jr:
Well, we'll either get a -- I'll get a truck --
either 8. Treasury truck or a Chrysler truck.
B:
Yes, sir.
H.M.Jr:
Or I'll send one of my farm trucks.
B:
Yes, sir, I'll have them traced right now and see if
I can get any locate on them -- and if I can get a
location on them -- I mean, where they're plugging
right along, why if they're pretty near there why
O.K., but otherwise not. Now, we just made that --
this -- one of the gentlemen who has to do the
talking apparently was on 8. trip and he was planning
to go to Portland -- up to Boston and Portland and
he was
H.M.Jr:
Well, I'll get them back. Now, the President of the
United States wants a complete answer on this thing
on Friday and he's not going to take any alibis.
B:
All right, sir.
H.M.Jr:
He wants an answer Friday. He wants a program Friday.
B:
O. K., sir. That'll be done.
H.M.Jr:
And I'm no Englishman.
B:
Yes, sir. That'll be done.
130
- 4 -
R.V.Jr:
0. K.
B:
Now, did Cantain Collins call you about the Evene --
the Allison setup.
H.V.Jr:
No, he didn't.
B:
on expansion. I think, as I told Cantain Collins,
that I do believe that you should talk to Mr. Evens
and tell him -- his possible plan 18 to regard
increased plant capacity and increased production
R.S an entirely different setup from the Wright and
Pratt and Whitney. That 18 purely for your own
information.
",",Jr:
This 18 Evens of
B:
Evens of Ceneral Motors.
4.9.3m:
Well, I'm evailable. I don't know what happened to
Collins.
BI
Well, I don't know, but I believe that for your
own information you should just get A nicture of
what he would plan to do under similar circumstances.
C. K. All right. I'll -- I'll find out why Collins
didn't tell me.
E:
All right, sir.
And then you're going to put B. fellow
B:
I'll out e man on this right away, sir.
'Attaboy.
3:
O.K.
Thank you.
in
Righto.
Regraded Uclassified
131
CONFIDENTIAL
May 21, 1940
To:
The Secretary
From:
Mr. Young
Re: Rolls Royce Engines.
In accordance with your instructions to General Brett,
namely, to locate the two Rolla engines and to expedite their
delivery to Wright Field, General Brett called ne about 6
o'clock last night to say that the engines were supposed to
be on St. Mary's dock", New York, and that he was esking one
of bis Army people to investigate the situation as he presumed
the enginee were probably still tied un with Customs.
I located Mr. Basil Harris at home and asked him if he
could arrange to have the engines cleared through Customs
immediately, so that the Treasury would have no responsibility
for delay. After a good deal of difficulty both on the part
of %ajor Johnson of the Air Corps stationed at Mineola, L.I.,
and on the part of Mr. O'Keefe of Customs, the engines were
located at Pier 90. North River, and Mr. Harris advised ne
at 10:15 last night that they were clear of Customs and ready
for shipment.
In talking with General Brett shortly thereafter I was
informed that the engines would leave Sew York early this
morning by exprese for Wright Field where they should arrive
Inte tonight and be ready for initial inspection early Wednes-
day morning.
General Brett seemed hesitant about calling Mr. Keller,
so I telephoned Mr. Keller about 11:30 last night at the Ritz-
Carlton Hotel in New York and explained the situation. He
promised that his engineers would be at Wright Field at a
o'clock Wednesday morning ready to go over the Rolls engine
end to talk with the Army engineers about the Continental engine.
You will receive some kind of a report from Mr. Keller by Friday
morning. Mr. Keller emphasised, hovever, that the time vas very
short to nake any kind of a complete survey but that you would
receive the best report he could make in the time allowed him.
Regraded Uclassified
132
May 21, 1940
3:58 p.m.
H.M.Jr:
Hello.
Operator:
General Brett 18 in General Marshall's office.
Shall I get him there?
H.M.Jr:
Yes, please.
0:
Right.
4:00 p.m.
0:
Go ahead.
E.M.Jr:
Hello.
General
Brett:
Yes, sir.
H.M.Jr:
General Brett....
a
Yes, sir.
H.M.Jr:
Morgenthau. I have brought down here several
civilians to advise me, people like Dr. George Mead.
""
:
B
Yes, sir.
H.V.Jr:
And some other people from California Technology.
R:
Yes, sir.
H.".Jr:
Now, they'll be here tomorrow and I'm having them
sort of heard together by, I think it's Warner, of
Civil Aeronautics, you know.
B:
Yes, sir.
H.M.Jr:
Now, I've given them what I've got in my mind and
what I'm trying to do to be helpful, but I'd like
to get them -- have them get directly also what
you see -- the problem, particularly on engines.
B:
Yes, sir.
H.M.Jr:
And this big engine, and licensing. I've told them
the whole business and I'd like you and Kraus to
see them sometime tomorrow morning.
Uclassified
133
- 2 -
B:
Yes, sir.
H.M.Jr:
Now, what time could you and Kraus see them?
3;
Why I could -- I could be there at any time, sir.
H.M.Jr:
No, they'll come to your office.
B:
oh, they'll come to my office?
H.V.Ir:
Yeah.
B:
Well, let's make it at half past nine.
9.1.Jr:
9:30.
9:
Yes, sir. Now, you, want me to get in touch with
Cantain Kreus?
H.V.Ja:
Would you mind?
B:
No, sir. I'll arrange that with him.
M.".Jr:
Would you mind? It saves me one telephone call.
is
No.
S.M.Jr:
And I'll tell these gentlemen to come to your
office at 9:30 and I'll have Mr. Warner bring them.
is
Yes, sir,
H.W.Jp:
You know Warner of Civil Aeronautics.
9:
Yes, sir. Now, exactly what do you want me to
specifically go into, Mr. Morgenthau?
H.M.Jr:
Well, what I'd like you to 20 -- is this question of
another -- well, in the first place I'm going to ask
Mr. Mead to 20 out to Allison. That's number one.
And take B. look et it.
B:
Yes.
H.M.Jr:
I mean, what he thinks is the matter out there. I
also want them to tell me what they think is the
best bet for another in-lined liquid cooled engine,
a big one.
Regraded Uclassified
134
- 3 -
B:
Yes, sir.
H.M.Jr:
Also, we're going to license who they think 1s the best.
Yes, sir.
E.".Jr:
In other words, I'm setting un B little group to
advise me on these sort of matters. The things
that you and I have been talking about about engines
B:
Yes, sir.
H.Y.Jr:
I'd like this little group to know, because I'm
going to use them because I know so little about it.
B:
Yes, sir.
H.M.Jrs
See?
B:
Yes, sir.
E,",Jr:
So
B:
Well, of course, that subject should gradually develop,
sir; 88 they begin to pick up information
E.M.Jr:
Right.
B:
why then we can feed them additional data, which
will put them in a much better position to make
recommendations.
H.V.Jr:
I understand. Now, the other thing, I'd like them to
have permission to go out to Dayton and Bee the
is,
Rolls-Royce on the test block.
B:
Yes, sir.
H.M.Jr:
If you would arrange that.
R:
Well that'll -- you got the message on that.
F.Y.J.:
Yes. (Hearty laughter) I got R good laugh out of
that too?
B:
Why?
Regraded Uclassified
135
- 4 -
H.M.Jr:
It was down on the docks they tell me.
B:
Yeah, it was on the dock.
H.M.Jr:
Yeah, not on the railroad train.
B:
No, sir. It was on the dock but it's being delivered
at Dayton tomorrow morning at 7:25.
H.M.Jr:
Well, I think that's very snappy and I congratulate
you.
B:
I -- believe me, it took me a good part of the night
to do that, but it was done.
H.M.Jr:
Well, that's the way -- but we've all got to move
faster these days. But as much -- I'm delighted it's
there.
B:
Yes, sir.
H.M.Jr:
Now, I'll have these men at your office at 9:30 just
so they can talk, ask some questions, check up --
they'll want to check up on what I've told them.,
and then I'm going to see them again in the afternoon.
B:
Yes, sir.
H.M.Jr:
And I took the liberty of giving them a copy of the
memorandum you sent me on the program.
B:
Yes, sir.
H.M.Jr:
So I'll be seeing you soon.
B:
Yes, sir. O. K., I'll attend to them.
H.M.Jr:
Thank you BO much.
B:
Righto.
Pull
ADDRESS REPLY TO
WAR DEPARTMENT
AIR CORPS
MATERIEL DIVISION
136
Washington, D. C.,
May 21, 1940.
FOR - Lieutenant E. S. McKay
Recently comparative tests on the P-40 and the Spitfire
26:0 conducted in Ottawa, Canada, by personnel of the Air Corps
Interial Division.
Righ speed runs at altitude could not be obtained due to
conditions existing during the entire period of tests.
Howover, the following conclusions are drawn from the flight
testa conducted:
1, The high speed of the P-40 and the British Spit-
live Lre substantially the same, with the P-40 eight to
miles fustor at its best altitude.
2. The rate of clint of the P-40 is definitely su-
ordor to the Spitfire due in part to the constant speed
propeller of the P=40 against the two-position propeller
of the Spitfire.
3. The airplanes are equally maneuverable, the minimum
relius of turn being dependent in each case on the capacity
of the pilot to withstand the high acceleration forces en-
countered.
The data requested on the Merlin engine is being compiled and
mill to fornished at an early date.
C.S
Lajor, Air Corps.
Regraded Uclassified
137
Excerpt from meeting held on May 21, 1940,
at 9:15 a.m., at which were present Purvis,
Bloch-Laine, Jacquin, Young, Ballantyne,
and Mrs. Klotz
H.M.Jr:
I want to tell you something before you start in
with me. In order to save time and save a day, I
called up Mr. Kennedy at a quarter past six this
morning and asked him if he wanted to go and see
the Air Ministry because if I waited to see you
I would lose 8. day. He said he would see the Air
Ministry at once. I said in order to save time I
wanted to know if His Majesty's Government would
license the American Government to manufacture the
Rolls-Royce engine. Then I had some other manu-
facturer in mind. I did not know whether the engine
was one we could use or not, but in order to save
time would they get a very capable person and
give him all the papers and plans to duplicate
the engine and let him come over? Furthermore I
thought, as an ace-in-the-hole for the British
Government to have those plans in this country, was
worth something. I don't want to be gloomy, but
if you had 8. complete set of plans in the United
States -- he's going to call me back this afternoon
as of London time, but that does not in any way
conflict
Purvis:
No, no. Anything that will save time.
HN,Jr:
That saves time and he can go right into the Air
Ministry and he will have an answer for me by
this afternoon, because, well, our Army isn't help-
ing me any. Have we heard where the Rolls Royce
is?
Young:
Yes, I got her on the train this morning, going by
express to Dayton, and will be there tomorrow.
H.M.Jr:
Just to show you, the Army was going to send it by
slow freight.
Young:
They never even got it out of New York. They
were on the dock. I got Mr. Harris out of bed.
H.M.Jr:
They went by express last night?
Regraded Uclassified
138
- 2 -
Young:
Early last night and they are on their way now
and should be there tonight.
E.V.Jr:
They were still on the docks. How long had they
been there?
Young:
I don't know. They did not even know when they came
in.
h.M.Jr:
They are going to have this demonstration Monday
or Tuesday and they will be there tomorrow.
Young:
Late tonight.
Regraded Uclassified
239
RE AIR EXPANSION PROGRAM
May 21, 1940
3:30 p.m.
Present:
Mr. Hunsaker
Mr. Hinckley
Mr. Mead
Mr. Johnston
Mr. Warner
Mr. Young
Mr. McReynolds
Hinckley:
All of this group, Mr. Secretary, are in Govern-
ment and Mr. Warner, of course, as you know, is
in Civil Aeronautics and Dr. Mead and Mr. Johnston
are with the N.A.C.A. and they are there because
the Government feels and industry feels that they
are the best men in aviation.
H.M.Jr:
Let me just get this. I want to know this. It
shows how little I know, at least about aviation.
Now, this N.A.C.A., 1s that financed - out of
what appropriation?
Hinckley:
They have their own appropriation, an independent
agency, National Advisory Committee for Aeronautics,
responsible to the President, in charge of all
aeronautical research for the Government.
MOR:
It was started many years ago.
Hinckley:
By Wilson in 1915.
MeR:
And has B. very high standing from 8. scientific
standpoint.
H.M.Jr:
Now, Mr. Mead is on that, aren't you?
Mead:
Yes, sir.
Hunnaker:
Mr. Mead 18 Vice Chairman of it.
H.M.Jr:
And Mr. Johnston is on it?
Johnston:
Yes, sir, coordinator of research, not as a member
of the Committee.
H.V.Jrt
But you are on their payroll?
Johnston: Yes.
Uclassified
160
- 2 -
H.M.Jr:
And Mr. Hunsaker is up at M.I.T.T
Hunsaker:
The members of the N.A.C.A. are on no one's
payroll.
B.V.JP:
Where do you get your money from?
Hunsaker:
We don't get paid.
E.M.Jr:
Then you are paid by M.I.T.T
Hunsalcer:
For being a Professor, not for working for the
Government in Washington.
H.M.Jr:
And Mr. Johnston is paid by --
Johnston:
by the Government.
E.N.Jr:
And Mr. Mead?
Mead:
Nobody.
12.1m
You are just --
Gamer:
There are fourteen members on the Committee, of
whom eight are ex officio representatives of
various Government departments, six, including
Dr. Mead, Dr. Hunsaker and myself, being
appointees of the President to give only a part
of their time to the Committee.
Well, I asked Mr. McReynolds to sit in and keep
me straight, because he is Administrative Assist-
ant to the President and I just wanted to get -
he is on leave with me for two weeks. I wanted
to make sure I wasn't overlapping on anybody.
Now, I asked three other gentlemen to come down
and they may be on this committee, too, from
California. That is Carmon, Milliken and Lombard.
Do you know these people?
Mend:
Yes.
They are all good on 1t?
Regraded Uclassified
141
- 3 -
Mead:
Yes, they are, I don't know Lombard.
Warner:
Yes.
H.M.Jr:
He is engines?
Warner:
No, Lombard is a specialist in aerodynamics.
He went back to California to take his PhD
about two years ago.
H.M.Jr:
Milliken?
Warner:
He 18 Professor of Aeronautical Engineering
there. He is also in aeronautical aerodynamics.
H.M.Jr:
And Carmen?
Hunsaker:
He is also aerodynamics.
H.M.Jr:
Now, what will there be here tomorrow, anyway?
What I am trying to do for the President 80
we can find a better way to do it, he has got
me coordinating this Army and Navy program,
plus the Allied Purchasing program and I am
working directly with General Brett and Captain
Kraus on purchases of planes. We have got the
job of getting the planes for the Army and Navy
which are in the present bill, plus the job of
trying to make B. plan, if you want to produce
50,000 planes, to have the engines and so forth
and so on, and how to do it. The thing that
I wanted - and incidentally, I have got money,
Mr. McReynolds tells me, so we can pay any of
you people - we can pay $22 a day.
McR:
Yes, and transportation expenses and $5 per diem,
plus $22.22 a day.
H.M.Jr:
So, 1f anybody is not being paid, I can pay that
from now until the first of July. I have funds.
Right?
McR:
That is right. A little over 20 thousand. You
wouldn't spend that much.
H.M.Jr:
I don't think this crowd will, but I just wanted
to let you know I had it.
112
- 4
Now, here is the thing. It will take me EL
couple of minutes and then you can cross-
examine me. Maybe everything I am saying is
being done.
In this program as it was tenatively given to
me by General Brett and Captain Kraus, they
want so many engines - I forget, 24 or 25 hundred
enginess for the trainers and in that connection
they have recommended that we get B. license from
Pratt & Whitney and Curtiss, from Pratt & Whitney
on their R-1340 and their R-985 and from Curtiss
their R-975, and both of these companies recom-
mend against it, but the contracts are being
drawn to give the license to the Government,
the Government to reassign these to any person
they want. Now, it gets down to which factories
can best - should be the factories who should
be licensed and can go shead and make these
400 or 450 or 600 horsepower. That is one problem.
A lot of suggestions have been made. Fratt &
Whitney have at favorite that they would like to
give it to. Curtiss-\/right have their OWN sugges-
tions. I have no Favorites.
Then the Army desperately needs B. big engine,
in line, liquid cooled. The only thing that
they have gotten today is the so-celled Con-
tinental flat engine which at present, I believe,
has 50 hours on it and I think - you people can
correct me - it develops B. thousand horse.
Inchlwy:
You are talking in addition to the Allison?
Yes. And the thousand horse is no good and they
want a 1500 horse. Kow, again I see in the
morning's papers that Lycoming hes e flet engine
which they announce in the newspapors, but
neither the Army nor the Navy wants us to put
any particular money into it at this time. They
are desperately anxious that the Administration
put B lot of money in this Continental. They
would like to order 1500 of them.
One of the first things I want to ask you people
19, that 1f ne want to - this is the only place
Regraded Uclassified
143
IQ I .
where maybe I have notions and you can knock
them out of my head. We have two good radial
aircooled engines. We have one liquid cooled
engine, Allison. They have produced six engines
so far, but God knows when they will produce
any more and then they don't know whether they
will get them flying, & lot of them, or whether
they will develop weaknesses. My thought was
to try to develop for the Army and Navy another
in line liquid cooled engine 80 we would have
something else to depend upon besides General
Motors and Allison. We have started with the
British Government to get the license for Rolls
Royce and the two Rolls Royce engines were picked
off the dock in New York last night and are being
sent by express today to Dayton to be available
to be seen. Is that Wednesday they are going
to be available?
Young #
They are on the train now. They will be there
at 7:29 tomorrow morning.
E.M.Jrs
We picked them off the dock last night. The
Army thought they were on & freight train and
didn't know where they were and I raised hell
and Phil Young finally discovered them on the
docks and we got the Commissioner of Customs
out of bed and on his way down there.
I am giving you the stuff and this may be all en
old story. You people may have heard this all;
it may be all an old story, but et least I am
giving it to you as of today. We are working on
what 18 the best in line aircooled engine for
the Army. Are they right that they want another
one? The ones that are available, in the process,
they claim the only one available is Continental.
The Continental Company is in very bad financial
shape and bad off in management. I asked Chrysler
to look in to see whether they would buy it and
they said well, they were buying an empty shell
and didn't think it was worth the money.
Runscker:
May I interrupt, Mr. Secretary! My information
doesn't go inside the Army and Navy as much as
it might. Are the Army and Navy both satisfied
Regraded Uclassified
144
- 6 -
that this Continental engine 1a ready for pro-
duction, has passed all the tests?
H.M.Jr:
Well, I have talked with Brett and Kraus and
they gave me & joint memorandum recommending --
Hunsaker:
I would accept their word for anything of this
nature.
H.M.Jr:
Well, they gave me a joint memorandum recommending
that - I think it was that we buy 1500, wasn't
it?
Young:
Yes, sir.
H.M.Jr:
Around 1500 of these Continental engines, of
1500 horsepower each.
Warner:
Continental, as I understand it, has only now
reached the point - the trouble that is now
developing - are the difficulties with the All1-
son supposed to be irremediable?
H.W.Jr:
Mr. Sloan 18 coming down Monday morning to talk
to me about it, of General Motors. There is
another thing. There is another engine called
the Bristel engine which the English Government
are themselves considering having manufactured
in- Canada. I am just letting you know - I guess
you (Young) have got the whole thing.
Here is the thing. Can I get from you people,
plus these people tomorrow, a recommendation
and one of the first things, I think, would be
to take & look at this Rolls Royce engine to see
what it can do. It seems to me that one of the
first things would be to look at that, to tell
me so that I can tell the President of all the
in line liquid cooled engines, which is the best
one that the Government should back as e. - so we
won't be entirely dependent upon Allison. It
seems to me that is about the first problem.
Hinckley:
That would mean taking B. good look at this Lycoming,
too.
Regraded Uclassified
145
- 7 -
The Lycoming, Continental, and Rolls Hoyce,
those three.
Marmer:
here are two more or less incommensurable
problems. In the case of the Lycoming and
Continental, the risk is that of bringing into
large production an engine that hasn't been
tested, or only to a very limited extent, and
the qualities are as yet indeterminate. The
problems - the Rolls Royce is known to be &
good engine, but there is e problem of adapting
a European design to an American engine. Dr.
Mead has had a good deal of experience.
valid
I presume you want engines - at least, I feel
the country needs them and having gone through
the last war trying to cake engines in large
quantities, I think it is much better to start
with something we have. The bugs in something,
as we call it, are more readily eradicated than
to start from the bottom up. Now, parallel to
that undoubtedly 11 would be wise to have
another liquid cooled engine, but I should think
if the immediate need was to get quantity that
we ought to try some way to see that Allison got
into large production. That ought not to be
an insurmountable problem.
Couldn't you do both of those things?
oh, simultaneously, yes.
Coulon't everything be done to help Allison, if
there is any way of helping them, so we are not
completely dependent upon one company and one
engine, ann start another one going?
Absolutely.
Is that impractical?
No, but I wouldn't rely on the second source for
the immediate production.
Granted.
Because we had the experience in the last war
of taking French engines which were all designed -
Regraded Uclassified
146
- B -
we had samples like your Rolls Royce and I
chased one all over the United States BO I
can visualize the problems that we had. We
had the best automobile company here building
Simplex automobiles, B. crowd that knew what
they were doing, and in B. year we didn't pro-
duce any engines. It was only in the second
year when we began to produce engines and we
had everything to do it with, so that it was
really three years before a large quantity
came out of that plant.
H.M.Jr:
Well, what suggestions would you have that the
Government would do to help Allison get under-
way?
Mead:
Well, I would like to know what Allison's problems
are, not that I feel egotistical and able to solve
them, but perhaps 1f we knew what they were we
could better deal with them as to how soon they
could be solved and whether it 1s 8 matter of en-
tirely redesigning the engine or whether it is
just something they don't know and the rest of
the crowd do know and they could be told.
H.M.Jr:
Well, I am not going to attempt to tell you. I
was at the plant and as a layman walking through,
it seemed to me that the trouble was organization,
They haven't had enough engines out to know yet
whether they will fly, but it 1a an organization
problem. Now, do you think that some of you
gentlemen could be helpful by going out there and
looking the thing over?
Mead:
Well, in order for me to tell you anything in-
telligent, of course, I would have to know what
the problem was and I may be able to find it out
from Kraus or Brett. I haven't talked to them
about it.
H.M.J.:
They don't know. I think it would be a waste
of time, but don't take my word for it.
Mead:
Of course, if I might continue on that general
subject a moment, I am concerned, having been
abroad quite a little and seen what was done
Regraded Uclassified
147
- 9 -
in our own industry there, that we must move
fast and if you take B. leaf out of their book,
which is perfectly simple, you don't find any
plant making more than one or two models of
engine.
Now, are Wright and Pratt-Whitney - and I happen
to have been chief engineer of both of them in
my lifetime - building a large number of engines,
which naturally spread your thinking? Now,
neither the Germans nor the English are doing that.
Rolls are building just one engine, that is the
regular thing, and so are the Germans building
just one engine in each plant and it is very
desirable, I think, to do, as you spoke of to
begin with, split off certain things which are
not so important to the fighting forces and let
those companies who originated the engines carry
on with them, Wright and Pratt-Whitney, on, say,
two models and this smaller engine that Kraus
and Brett recommend being put elsewhere, I would
certainly think is very sensible because there
19 a training engine that doesn't need to be
made so beautifully and somebody else could cor-
tainly make it.
And carrying it out, I suggested to Brett that
the Army and Navy adopt the same 400-horsepower
engine for both their needs instead of one big --
Meadt
Well, that is the other thing I would like to see
done if we could only have a small group to sit
down and iron out some of these things, where
the two services will order almost the same thing
but not quite.
H.V.Jri
Well, the time has arrived that - they are ready
to do anything that they are asked to do. The
way they do, one buys B. 400 and the other buys
et 450, each from a separate company. From now
on they are willing to both buy one or the other,
whichever way it works out. They will forget
their favorities.
Breads
of course, I don't know what your plan 1s, but
both Wright and Pratt & Whitney build two engines
Regraded Uclassified
148
- 10 -
that are in large production and have been used
extensively in military aircraft. I think if
they could concentrate on those, it would be a
b1g step.
H.M.Jr:
You are talking of small horsepowers?
Mead:
No, big engines.
H.M.Jr:
Oh, the thousand horse?
Read:
Yes, from 1200 to 2000.
E.M.Jr:
Well again, the thought was not to interfere with
their present production in the 400 and 600 horse
class until we got another plant going and when
the new plant came into production, say that we
gave any one of these companies this business
as soon as this new thing was delivering what you
need. Then you tell Pratt & Whitney and Wright
to stop that engine and concentrate on the stuff
over a thousand horse, that was the idea, but
not to tell then to stop that until you had
somebody else actually producing. Does that sound
sensible?
Meas:
That sounds sensible as long as you don't keep on
giving them orders.
H.M.Jr:
Well, they could - you see, we are fortunate in
that - I say again for the time being I have sort
of a supervision over both the Allied Purchasing
and this other, 30 that we can swing it any way
we want and purchasing power is so tremendous
that they will listen.
Head:
You are holding the whip hand, all right.
H.M.Jr:
I mean we have been very - I have tried to listen
and not to be arbitrary and I have had B. nice re-
lationship with all of them so far and I would
like to keep it that way, but we can do it, you
see, and then this whole question when we get
into this licensing thing - I mean, everybody
in the Army and Navy said it couldn't be done,
but under this 1918 Act we just can take this
stuff and let them sue us in the Court of Claims,
Regraded Uclassified
149
- 11 -
so 1f we want to be arbitrary we could Just
take the stuff and then let them sue the
Government and they would get their money
later, but we don't want to do that and every-
body has been lovely and there has been no
trouble and everybody has cooperated and it
has been B. splendid spirit and I haven't had
to use this vast power that I have temporarily
and don't want to.
Would you gentlemen like to talk to Brett and
Kraus, sort of have a talk with them and then
maybe - how would you like to work?
limssMors
As to the work on the Allison problem, I don't
believe any of us here are in a position to
give any intelligent advice. My own knowledge
of Allison's development is second and third-
hand, but it has been unsatisfactory for about
seven years. They are elways getting the engine
along and always having trouble and curing that
trouble and discovering another and we have
thought some time ago that the engineering per-
sonnel may have been not quite on the job, who
have had to learn such a hard and slow way, but
now if there is production trouble I don't know
what that is. Certainly the motor companies
must know more about that than anybody in the
world, 30 there must be some engineering bug in
it which ought to come out on the tests. I think
the Army did place orders last year before the
engine had gone through all of its tests, did
they not, Ed? They took B. chance.
memor:
I think part of the trouble in the seven years
has been repeated redesigns, trying to catch
up with the times. It has always taken a little
longer than anticipated to bring the engine
to the point of production and by the time it
is ready, it seems to have been obsolete so they
have taken a fresh start. There has been EL
succession of models.
linckley:
You mean, Dr. Hunsaker, that you would really
have to go out there --
Regraded Uclassified
.50
- 12 -
Hunsaker:
I personally am not enough of an expert engine
designer to go out and do any good.
Hinckley:
Or Dr. Mead could go out there.
Hunsaker:
Mead, I think, would do well. I think that
other people - it is pretty hard to get experts
out of the Wright Company and the Pratt-Whitney
Company to help Allison. They aren't set up
to do 1t. You might get Eddie Taylor. I would
take Eddie Taylor's views on that.
Binckley:
Well, Dr. Mead is detached enough from both
companies, don't you think?
Hunsaker:
Yes, a combination of Mead and Taylor to make
an engineering inspection of the situation. I
would agree with anything those two men would
find.
Warner:
I think, Mr. Secretary, possibly it would be
helpful 1f it could be clearly defined what
this group is and what it is expected to do.
I, for one, didn't know and I don't believe
that Dr. Mead and Dr. Hunsaker, both of whom
received information about today's meeting from
me, knew just what was desired except that we
talk on engine production. I don't think any
of us knew whether it was policy or proceeding
or methods or the non-adaptability of aircraft
factories to aircraft work that was in prospect.
On the details of engine design construction,
I will withdraw myself. I have no qualifications
in that field. I know of many of the engineering
problems, but 30 far as I am engaged in engineering
work at all, or have been, I am primarily an air-
plane man. That is equally true of all three of
the men you have from California and Dr. Hunsaker,
and Mr. Johnston has been engaged in research, but
the only real engine specialist you have so far
is Dr. Mead, who is qualified to do all of these
things. But if you want a committee to actually
work on looking into the fitness of any particular
engine for production, you probably need to seek
farther for some different personnel.
Regraded Uclassified
151
- 13 -
Well, I have told you what I have before me
and I keep saying repeatedly I am doing this
temporarily for the President and what I want
is advice, because I am in the fortunate position
that I don't have any preconceived notions on
airplane engines, 80 you are dealing with EL per-
son who is willing to listen and the things are -
I will go over it again so you can see what I
have.
I have got here before me on top of this - here
comes a memorandum from Brett called "Aircraft
Engine Facilities," and this goes toward &
Government owned and operated factory, its ad-
vantages and disadvantages, private owned and
operated factories, Government owned and privately
operated factories, the whole question of the
additional plant capacity necessary for this
program and also stand-by factories.
Now, again I just don't want to take - without
any slight to General Brett - I don't want to
take his word as the last word on what is the
way to do this, and I went engineering advice
outside Army and Navy, outside of - not connected
with the industry.
Let me list the problem and then you people tell
me. Now, I think - I would almost say the first
problem is, what can we do to help Allison. Now,
who can help me? Dr. Mead?
Dr. Mead could do that, here or elsewhere for
that matter.
Can you get people to help you?
I would suggest this, that the first thing is to
know what the problem is and then if it 1s en-
gineering, that 1a all right. If it is production,
it is Dr. Hunsaker or perhaps you had suggested
that maybe a man of their own organization --
Well, the first thing is to have somebody go out
there and take B. look at the factory and say,
"Well now, these are the things," and until you
get these things cured you are not going to get
Regraded Uclassified
152
- 14 -
anywhere and then you would have the whole pur-
suit program of the Allied Governments tied up
in Allison. The whole God damned program is
tied up in Allison. They have delivered six
engines in the last several months.
Mead:
I would be very glad to do what I can, which
would be to start by talking to the people here
and then go there and tell you what I find and
do it right away.
H.M.Jr:
Well, and will you take the responsibility of
getting anybody that you need to help you?
Mead:
Yes, 1f you can give me some way to do that.
I can, through Kraus and Brett, I know.
Oh, I see what you mean, to help me get to a
decision, yes,
H.M.Jr:
If you don't mind, I will arrange - I don't suppose
it is necessary, as far as getting into the factory,
but I want to go outside the Army and Navy, because
they have wrestled with this problem and here we
are, so I think it takes outside brains.
Mead:
What I meant to be clear was that I would have to
get permission to get there properly and I could -
once having that, get some additional help to do
the work.
H.M.Jr:
We will send you out in a Government plane with the
proper escorts and everything else.
Mead:
Well, that isn't important --
H.M.Jr:
No, but I will get you in there - Philip Young
will see that the Army and Navy and everybody
approves your going.
Mead:
That 18 all I need.
H.M.Jr:
I will take care of that, but I meant as to anybody
else that you need besides yourself.
ere ied
153
- 15 -
Mead:
I don't think of anything in that line at the
minute, but If I do I can get them, I am sure,
H.M.Jr:
When would you be ready to go?
Mead:
Well, I can go anytime, right away. If possible,
I would like to get & quick general idea, whether
today or tomorrow, on the program as a whole so
that I can judge a little better --
H.N.Jr:
You mean stay with me for another day or so? I
think it would be good.
Mead:
If I can listen in, I would like to know more
about it.
H.W.Jr:
But you are going to take care of Allison?
Mead:
All right.
H.N.Jr:
Which of you gentlemen can go out and take 8 look
at the Rolls Royce and say if it 1s any good?
Warner:
That is again a design problem for which you need
an engine design specialist. Again, it is true
that Dr. Mead is the only one here. There are
others who are not here, but there are not very
many outside the industry. Dr. Hunsaker has
mentioned one man.
Hunsaker:
That is Professor Taylor of M.I.T., who is as
competent an engineer as could be found outside
the industry. I would think that to judge the
difficulty - we know the Rolls Royce engine is
good, there is no question of that, and we know
its performance. I am sure that Wright feels
that the Army has had samples and know about it.
H.E.Jr:
Rolls Royce? They only get there tomorrow.
Hunsaker:
Haven't they had samples in the last couple of
years? They are worse than I thought they were.
B.R.Jr:
If they have, they certainly haven't had the
information for & year because they have tried
Regraded Uclassified
154
- 16 -
for six months and couldn't get it and I had
to personally get them two engines.
Mead:
I spent several days in Rolls plants, so I
know pretty much about the engine already.
Hunsaker:
I think it is Mead again on this judgment
as to the difficulties of adapting the Rolls
Royce engine to American - finishing and
assembling and I imagine the parts cur people
can make.
Terner:
Would you find it useful to draw on production
men outside the aircraft industry, presumably
as this expansion goes on? Are there any pro-
duction men in the automobile factories you
would like to take on to check the engine with
you for American production? Do you know
whether Roy Fedden is in this country? He is
the chief engineer and really the presiding
genius of the Bristol Company.
E.M.Jr:
He was here. He left at noon today. He had
B. hurry-up call. He left at noon, didn't he,
Phil?
Young:
Yes, sir.
H.W.Jet
Re left on some means of transportation at noon
today. Am I right?
Trang:
Yes, sir.
H.M.Jr:
lie left at noon today. The one word that he left,
that he sent to me, above everything else, is to
go to the biggest engine that you can go to, the
two thousand horsepower if possible. He spent
last night with Keller, president of Chrysler.
Be went over the whole thing last night with
Keller but he said, "You must go to the big horse-
power. Don't fool with --" what was it, less
than two thousand?
Young:
Eighteen hundred, seventeen or eighteen hundred,
no less than that.
155
- 17 -
Mead:
Well, you have got one engine about ready to
go into large production on two thousand horse-
power rating.
H.M.Jr:
What 18 that?
Mead:
That is the 2800 Pratt & Whitney and the Cyclone
2600, Wright engine, is something less than that.
E.M.Jr:
Well now, the Allison is one and then the other
thing is to have somebody look at the Rolls Royce.
You say that 18 Dr. Mead again?
Mead:
Well, Dayton and Indianapolis are fortunately
close together.
H.M.Jr:
He is going to be A busy man. Then the question,
which factories are best equipped to take these -
one, say, to take B. 400 horse engine and the
other to take B. 600 horse engine, Wright and
Pratt & Whitney, which factories are the best
equipped.
Hunsaker:
I take it your Rolls Royce problem has to be
discussed with the factory people who are likely
to try to make it.
H.M.Jr:
They will be there. The Chrysler engineers will
be on the ground.
Hunsaker:
I think it would be a smart thing to have the
Chrysler people assigned to that thing and not
be shoving around among all of them.
H.M.Jr:
No, the Chrysler people - I asked them whether
they would do this and Mr. Keller is very much
interested and he was in charge of production
of the Liberty engine for General Motors. We
went all through that. He is with General Motors.
He is going to be there and their engineers are
all going to be there and he is personally taking
an interest.
Hunsaker:
I should think Mead's discussion with the Chrysler
engineers would be the most useful one. The
Chrysler people, if anything, are likely to be
156
- 16 -
too optimistic and to underestimate the difficulty
of adaptability of that Rolls Royce.
To get them to do this, we are just going to have
to push them. They don't want to get any airplane
engines. They don't like it. I think you will
find they will find all kinds of fault why they
shouldn't go into it. He went through that on the
Liberty engine. He doesn't like the business and
doesn't want to get into it, but time will tell.
Toanc:
He is also talking on the Continental with the
Army engineers out there.
S.H.JP:
Oh, yes. Now, there is a question. Should the
Government put a lot of money into the Continental
flat engine? That is what the Army wants us to
do. And then there is the Lycoming engine.
Minchley:
It would be starting back from the ground up.
That is right, and there 1s the Lycoming engine
and you people may know of other engines around
which haven't been called to my attention.
Mand:
I should think it would be wise to look into the
question of letting those companies you just men-
tioned make some of these training engines which
we need bedly. Now, the Rolls, engineeringwisc,
is a pretty good engine. It is only the difficulty
of having to start from the beginning, but the
Allison engine, as far as I know, ought to be a
solvable problem, so there you would have your
two liquid cooled engines. On the other hand,
they are not very large units. or course, being
8.8 the Cermans are fighting with - that is,
not the Allison, the Allison is a - well, the
Allison and Rolls are just about the same,
sunsaker:
Eleven hundred horse.
Mead:
Both of them are small compared with the Germans'.
h.l.Jr:
The Germans' are above eleven hundred?
157
- 19 -
Mead:
The Germans have & big engine in the matter
of bored stroke and they run slowly and they
get considerable altitude performance out of
them, while the Allied engines have to be pushed
very hard.
Hunsaker:
The same order of power with both of them.
H.M.Jr:
And then there is this other thing, the question
of this factory business.
Mead:
I think you have got more work than any one of
us could reasonably undertake and that the only
thing we could do to be helpful would be to go
into a huddle and see if we can't figure out &
group that could really solve these problems
for you in 8 reasonable period. Otherwise, I
think it would take a long time, don't you,
Harry?
H.N.Jr:
I am going to give you in confidence this memo-
randum which I have not yet read from General
Brett which - and then these people I should
think would be - Dr. Milliken said he would
arrive early Wednesday morning. We have plenty
of room in the Treasury. Would you gentlemen
like to meet here or would you like to meet
over at Civil Aeronautics?
Warner:
We might meet here for the time being. There
might be something more to communicate with
you this afternoon.
H.M.Jr:
Mac, where 1s there a room?
McR:
They can meet in 296.
H.M.Jr:
When they go down, will you show them where that
is? And then what we will have to do when these
with these people because I have booked myself
gentlemen come in tomorrow, put them in touch
up for tomorrow and I won't be available until
2:30 tomorrow afternoon, I mean for an uninterrupted
hour. Possibly you people in the morning would
like to meet with Brett and Kraus. I could get
them to come over here.
Regraded Uclassified
158
- 20 -
Head:
I would, very much, because they would be able
to save a great deal of time in getting us up
to date on where the problem rests.
Marmor:
It might be better to go where they are. They
have all the information in the files.
Phil, will you arrange that at & time agreeable
to these people and to General Prett and Captain
Kraus for tomorrow morning?
Young:
Yes, sir.
M.V.Jr:
And will you explain to General Brett what I am
trying to do or should I explain it to him?
I think I will call him and tell him myself and
I will ask him for what time tomorrow. I will
do it now. What do you think, Bob, do you think
that is about right?
Minchley:
I think you are starting right.
As I understand, Dr. Warner 1s going to kind of
see me through on this thing, right?
Namer:
I will help if I can.
Are you overworked?
Einckley:
Yes, he is overworked.
Worner:
I am not a specialist in design.
M.V.Jr:
or would you rather let somebody from N.A.C.A. --
Binchley:
I think Ed can go along and keep us --
Somebody, so that when they want to contact
me through some one person, you call me and
I can call on the person.
Surner:
I will do that for the time being.
E.L.Jr:
I am ever so much obliged. I hope you realize
how much --
Regraded Uclassified
159
- 21 -
Warner:
If we come to any decisions this afternoon, can
we see you again?
H.M.Jr:
Yes, just call Phil Young. It is ever 80 kind
of you to come down.
Hunsaker:
Well, Mr. Secretary, I am glad to give any help
I can, but this would be out of my knowledge
and acquaintance. I am not an engine designer.
H.M.Jr:
But stick with us another day. Don't you want
to stay with us another day?
Hunsaker:
I don't see that I can do any good. I think the
thing is to depend on George Mead and my advice
to George Mead is to get Ed Taylor.
Mead:
Well, I think if we could get you for another -
B. little while, it would be a great help because
you have got such a general knowledge, Jerry,
and you have lived through the last war with
the rest of us,
Hinckley:
I think you can spend another day.
Mead:
Don't leave us all alone. I am not a superman,
you know.
H.M.Jr:
What about this man Wright you were speaking of,
C. P. Wright.
Warner:
He is an airplane specialist.
Hinckley:
He is associated now with --
H.M.Jr:
It is engines, isn't it?
Hinckley:
Pratt-Whitney, isn't he? No, Curtiss-Wright.
Mead:
He is Vice President of Curtiss-Wright.
H.M.Jr:
Engines, that is the trouble. The time that I
spend on this thing right now, on these engines --
Hunsaker:
You will have to get the engine fellows to do
the job, not Ed Warner and me and Paul Johnston.
Regraded Uclassified
160
- 22 -
H.M.Jr:
Well, talk it over and I am in good hands and
I will listen to you.
Warner:
It is exclusively an engineering problem at
the present time. Aircraft production will
come along more rapidly than the engines.
l'incitley:
I think that is correct, of course, in this
engine problem. You have got to discover
some plant facilities and who are you going
to farm this lower horsepower stuff out to?
Munsaker:
I think that 18 a continual job.
inckley:
It is B. continual job and of course on that
front, I think C. P. Wright would be willing
to - 1f he would be willing to sever his pre-
sent connection, would be B. very helpful
person.
Mead:
On the engine problem.
Minckley:
I am talking about engine production. Re is
a production man.
Warner:
lio --
H.K.JP:
Wright builde engines now.
Mead:
May we think in terms, as I am efraid we must,
in some sort of B. continuing small group to
lend a hand and we can go after it on that
basis.
W.M.Jr:
That is right. Whoever does this thing for
Mr. Roosevelt, it will be B. continuing job.
I mean for the moment, he has got me doing
it, but whoever has got any sense, he will
have to leave - B. gentleman of your experience -
I am just not going - this is no disrespect to
the Army and Havy, but I am not going to let
them write the ticket without checking it,
any more than I am going to let any particular
engine company write the ticket. I am a great
believer in college professors.
Mead:
Well, you have got some good ones here. That
lets me out.
Regraded Uclassified
161
- 23 -
H.M.Jr:
Well anyway, they have helped. I never could
have done this job if it hadn't been for the
Universities.
Treasury Department
162
TELEGRAPH OFFICE
2w
WY2 M 19 NT
B MAY TI AM 83!
PASADENA CALIF MAY 20 1940
HENRY MORGENTHAU JR
SECRETARY OF THE TREASURY
KARMAN MILLIKAN AND LOMBARD PLAN TO ARRIVE WASHINGTON EARLY
WEDNESDAY MORNING AND WILL COME AT ONCE TO YOUR OFFICE..
R A MILLIKAN
740A
Regraded Uclassified
163
May 21, 1940
Kr. Sullivan reported the Navy Bill in the
House does away with all social legislation. He
135 an annointment with the President nt 12:30 pm
today.
Regraded Uclassified
164
May 21, 1940
4:15 p.m.
Mr. Welles called HM,Jr over the White House
phone at 4:15 D. m. and said they were considering
the Pepper. amendment and, leaving out the implica-
tions of neutrality and international law, Welles
wanted to know how I felt about.
(The following is HM,Jr's side of the conver-
sation. )
"I received a long list today from Purvis of
what their needs are. They want every airplane that
we have. I turned over the list to General Marshall
and he was going to advise us, from the standpoint of
national defense, as to what we can do for them. We
did turn them down on the P-36's several days ago.
General Marshall wrote me a two page memorandum saying
that it was impossible. He has the rest of the stuff
right now. If this situation gets worse, we may want
to give it to them. The way the law 1s it is diffi-
cult to give them anything without using trickery.
Leaving out the international law and all of its 1m-
plications, if the Chief of Staff would recommend this
and if this resolution passed, it would make it possible.
Simply from that angle I have no objection. It would
be helpful if we wanted to doit."
Regraded Uclassified
165
May 21, 1940
11:27 a.m.
H.M.Jr:
Hello.
Sloan:
Hello.
H.M.Jr:
Mr. Sloan?
S:
Yes,
H.M.Jr:
Henry Morgenthau, Jr.
S:
Yes, Mr. Secretary.
H.M.Jr:
Mr. Sloan, the reason I'm calling you
S:
I don't hear that, Mr
H.M.Jr:
The reason -- can you hear me now?
S:
O. K.
H.M.Jr:
Hello?
S:
Yes, O. K.
H.M.Jr:
I'm calling you because I'm very much worried about
production at Allison Motors.
S:
Yeah.
H.M.Jr:
And I'd like to talk to somebody -- you, or whoever
you designate, to talk that situation over.
S:
Well, that's fine. of course we'll do anything
we can, Mr. Secretary. I want to point out to you,
however, that the -- it's almost out of the realm
of possibility to start a new plant and to have
everything coming the way it ought to within a
period of 60 days after one gete into the plant.
H.M.Jr:
True, but I was out there and -- about two weeks
ago and went through the plant and BO much depends
upon this both for ourselves and for the Allies that
I do want to talk it over with somebody.
166
- 2 -
S:
That's ell right. I think you have every reason --
every right to, and I'll be awfully glad to 800 that
that's done immediately and that you're given every
information -- bit of information AB possible. If
there was anything there that -- I'm very much con-
cerned with it also. Not concerned 80 much about the
present situation, because I think that's inherited
with that we're trying to do, but more particularly
on the great responsibility from the standpoint that
you're talking.
H.M.Jr:
Well now, who is it
S :
But nobody has got that -- I want to assure you that
nobody has got that more at heart than I have.
B.V.Jr:
Well that's why I wanted to talk to you rather than
to have -- have B. half en hour rather than with some
subordinate and just
S:
Well, all right -- all right then. That's fine.
Now, I'd like to say this, however, thet I could --
my conversation with you would have to be in terms
of generalities to some extent rather than policy;
rather from the standpoint of whether day after
tomorrow we're going to
H.Y.Jr:
Well, I understand and
8:
If you understand that why that would be fine.
H.M.Jr:
Well, I'm very -- it'll have to be generalities for
me to understand.
8;
Yes, that's right. I -- because I wouldn't -- I'm
familier with the general trend of things and that
sort of thing but
But I want to look you in the eye and see how much
interested you are in this.
S;
(Laughs) Well, all right. I wish I could -- I wish
-- I tell you frankly that there aren't words in the
English language to express how I feel about it.
Well now, how soon and how early could you come down?
Regraded Uclassified
167
- 3 -
S:
Well now, let me see now. Would Thursday morning do?
R.M.Jr:
Thursday morning would do.
S:
Now, you're awfully tied up -- do you what to make
a date with me -- say -- say in the -- two o'clock?
Well listen, Mr. Secretary, you're a lot more busy
than I am.
H.M.Jr:
Well, we're on standard time.
S:
Well, whenever you say now.
H.M.Jr:
Well
S:
You just set the time.
H.M.Jr:
Well, are you coming by -- do you come down by train?
S:
I'll come down by plane.
H.M.Jr:
By plane? Well
S:
Don't put it to my convenience, Mr. Secretary, for
God's sake. It's too important. Put it to your --
your
H.V.Jr:
Yes. Well, I think you'll find that you can get 8.
plane and get here at eleven.
S:
Get there at eleven.
",",Jr:
At eleven o'clock?
S:
That's -- that's Washington city time?
H.M.Jr:
Yes,
S:
I'll be there, and I'll be at your office at 11:15.
R.M.Jr:
You could -- no, I mean -- no, you can get a plane
that will get you to my office by eleven.
S:
on, it'gets to your office by eleven. All right then.
H.M.Jr:
Just a minute -- wait 8. minute, I can ask.
(Brief pause.)
168
- 4 -
H.M.Jr:
Hello.
S:
Yes.
H.M.Jr:
They say if you leave on a plane that leaves at
ten o'clock New York City time -- you see that gets
you here a little after ten o'clock standard time.
S:
That's right.
H.V.Jr:
Would that -- and that would get you here to my
office by eleven.
S:
And I have an appointment with you then, at eleven
o'clock on Thursday morning, day after tomorrow.
H.M.Jr:
Right.
S:
O. K.
H.M.Jr:
Now, Mr. Sloan
S:
Yes.
H.M.Jr:
as a matter of fact, Mr. Purvis 18 in the room
here with me now and I want to talk to you about the
possibility of your Canadian corporation doing some-
thing for the Allies on a -- on a Bristol engine up
there.
S:
Well, I'm -- did Mr. Purvis tell you that he's had
a conference with me on it?
H.M.Jr:
Yes, but he's asking us here how the Government would
feel about -- and the question of machinery
S:
Well, I made it clear to him that -- that there's a
question arises there, Mr. Secretary, that I wish
you would discuss with Mr. Purvis while he's there,
if I may make such 8. suggestion.
H.M.Jr:
Go ahead.
S:
Pardon me?
H.M.Jr:
Please do.
Regraded Uclassified
169
- 5 -
S:
And that 18 this. That I think that from the stand-
point of the time element there's a tremendous gain
that could be made if that development could take
place in the United States.
R.M.Jr:
Well, that -- I'd like to talk the whole thing, and
I don't know -- your Mr. Evans sent me 8. message
about additional plant capacity at Indianapolis, and
RO forth and 60 on and I don't know just what he had
in mind.
S:
Well, I wouldn't -- this would be -- this project 18
60 momentous it would be an entirely separate thing.
H.V.Jr:
Yes.
8:
I think we'd better -- I think it's awfully important;
I think we should sit down and talk it through.
",V,Jp:
I'd like to because
S:
And -- all right. Now, another thing, Mr. Secretary,
I'm -- this thing -- I have been discussing this
thing with my governing group here this afternoon
and I think probably by Thursday I can tell you
pretty generally what our attitude is toward it.
H.M.Jr:
Well, that will be very helpful.
S:
But I want to emphasize the fect, Mr. Secretary, that
I -- we wouldn't touch this under any consideration
unless it was from the pure standpoint of patriotism.
E.V.Jr:
I understand.
S:
There isn't any amount of money that would -- with
the things that we have to contend with and all,
there's -- any amount of money that would justify
us doing it except pure patriotism.
H.M.Jr:
Now, which thing are you talking about?
S:
What did you say?
Which one are you talking about.
8:
I'm talking about the -- I'm talking about the new
project.
Regraded Uclassified
170
- 6 -
H.M.Jr:
Oh, the new project. Well, I -- I'm glad to know
that and
S:
And there's nothing -- in other words, -- honestly,
Mr. Secretary, If the British Government would pay
me tens of millions of dollars I wouldn't throw
that responsibility on my organization and I wouldn't
take the headaches and the -- and the
difficulties that might come out of it. Just pure
patriotism and I'm coming down to discuss it with you.
",",Jr:
And feel free to bring anybody with you that you want.
S:
All right. Thank you, Mr. Secretary. Eleven o'clock
Thursday.
H.".Jr:
That's eastern
S:
O.K.
H.",Jr:
All right.
Regraded Uclassified
171
May 21, 1940
11:45 a.m.
H.M.Jr:
Hello.
Onerator:
The British Ambassador 1e with Mr. Welles. Would
you like to wait or
H.M.Jr:
No, he could just as well listen.
0:
All right.
F.M.Jr:
There's nothing but what he can hear.
0:
I'll have him in just 8. second.
(Brief pause)
H.M.Jr:
Hello.
D:
Mr. Welles.
4.V.Jr:
Hello.
Sumner
Welles:
Good morning, Henry.
H.M.Jr:
Good morning, Sumner. Mr. Purvis 18 sitting here with
me
W:
Yes.
H.M.Jr:
and they're now ready to move on 8. powder
factory, end it seems that the procedure heretofore
has been for Dupont to go to your Mr. Green.
W:
Yes.
H.M.Jr:
And they're sending down Mr. Yancey -- Y-a-n-o-e-y --
to see Mr. Green. It Beems that -- that's the way
they've always done it.
W:
Mr. Yancey from Dupont?
H.M.Jr:
Yes, Now, when he comes in tomorrow, if you could
tell them to refer them over to me, I'd appreciate
it. I think I can accelerate it.
W:
He's to be referred to you?
Regraded Uclassified
172
- 2 -
H.M.Jr: Yes.
W:
All right.
H.M.Jr:
And I'll try to accelerate it, but I've been on this
powder thing now for several months.
W:
Yes, Henry, I'll be very glad to see that that's done.
H.M.Jr:
Thank you 80 much.
W:
Not a bit. Goodbye.
- REPLY TO
one OF THE AIR CORPS
- DEPARTMENT
p.c.
WAR DEPARTMENT
6/7/40
OFFICE OF THE CHIEF OF THE AIR CORPS
WASHINGTON
173
May 21, 1940.
MEMORANDUM FOR: The Honorable Henry Morgenthau,
Secretary of the Treasury.
SUBJECT:
Aircraft Engine Facilities.
There are three methods of expanding the aircraft engine
facilities for the production of military engines:
(1) Government-owned and operated factories
(2) Privately owned and operated factories
(3) Government-owned and privately operated factories.
Government-owned and operated factories
Advantages: (1) Theoretically it is a means of protecting the
government from profiteering.
(2) It provides for a potential capacity for the
repair and maintenance of engines in normal times.
Disadvantages: (1) It places the government in direct competition
with private industry.
(2) It would require government management,
technical personnel, and manufacturing personnel, which
would have to be diverted from present military establiments.
(3) It would require the augmentation of the
Army and Navy technical forces by commandeering management
end technical staffs from the going aircraft industry.
Privately owned and operated factories
Advantages: (1) It would provide for continuity of management
and increased capacity in the minimum time as compared to
other methods proposed, and with a minimum of disruption of
the present industry.
Regraded Uclassified
174
To: The Honorable Henry Morgenthau
Subject: Aircraft Engine Facilities
May 20, 1940.
(2) It would provide for continued production on a strictly
competitive basis, regardless of whether authority is granted
to waive advertising or not.
Disadvantages: (1) It would result in the unequal expansion of
the aircraft industry and the concentration of the entire
potential production capacity in a few manufacturers.
(2) Strategic locations would be largely governed
by the location of the present major engine manufacturers.
Covernment-owned and privately operated factories
Advantages: (1) A direct and rapid means of providing required
expansion.
(2) It eliminates the objections to government-caned
and operated plants.
(3) It provides plant capacity suitable for repair
and maintenance purposes in peace time, thereby maintaining
stand-by productive capacity available for emergency at all
times.
(4) It does not place the government in direct competi-
tion with private industry.
(5) It provides for the strategic location of added
aircraft engine facilities, both from a military and industrial
point of view.
Disadvantages: (1) The delays incident to the construction of
suitable plants to best meet the needa of the individual manu-
facturers for the increased production of proven types of
engines.
Management Contract: A management contract based upon the principles
set forth in the attached draft would remove the disadvantages
incident to the government's undertaking the direct supervision
of the construction of government-cwed plants.
In sensideration of all the foregoing, it is recommended:
be adopted for sugmenting the present production facilities for military
(1) That plan 3 for government-owned and privately operated plants
engines.
-2-
Regraded Uclassified
175
Tot The Honorable Henry Morgenthan
Subject: Aircraft Engine Facilities
May 21, 1940.
(2) That the construction of new plants and the installation of
necessary equipment be undertaken by management contracts with:
Pratt and Whitney Aircraft Division
of United Aircraft Corporation
Wright Aeronautical Corporation
Allison Engineering Сощраду,
Division of General Motore Corporation
Lycoming Division of Aviation
Manufacturing Corporation
Continental Motors Corporation
for increasing their present capacity for engines now in production.
(3) That the first increment of increased production capacity
should provide for the following:
Pratt & Whitney - Approximately 300,000 sq. ft., equivalent
to 400 1000 HP engines per month
Wright Aeronautical - Approximately 400,000 8Q. ft., equivalent
to 400 1000 bp engines per month
Allison Engineering - Approximately 400,000 8q. ft., equivalent
to 400 1000 hp engines per month
Lycoming Division - Approximately 200,000 aq. ft., equivalent
to 400 500 hp engines per month
Continental Motors - Approximately 200,000 aq. ft., equivalent
to 400 1000 hp engines per month.
(4) That the attached form of management contract be considered
as a basis for negotiations with the foregoing companies.
In accordance with your instructions, this matter was discussed with
Captain Kraus, who concurs in the principle and the means advocated for the
immediate expansion of the aircraft engine industry.
SH/mtt
GRO. H. BRETT,
Regadier General. Air Corp*
Chief, Material Division
1 Incl.
-3-
Regraded Uclassified
176
NOTES ON MANAGEMENT CONTRACTS
1. There are several forms of contracts that can be utilized, where-
under the Government may construct airplane and engine plants and
make such establishments available to selected airplane and engine
manufacturers to operate for the benefit of the Government under a
management contract.
2.
Precedent for management contracts are contained in the following:
8. War-time contracts.
b. Educational order contracts to which domestic concerns and
foreign Government purchasers are parties.
3. The adopted war-time contracts do not appear to be altogether ap-
plicable to the proposed premises. However, they contain provisions
that are applicable and useful to the purposes contemplated.
4. The simplest and most clean-cut way to expand the engine facilities
is to enter into contracts with the manufacturers concerned for
enlargement of facilities and the necessary equipment therefor, the
Government to assume the actual cost of such construction, which is
substantially in accord with the contracts now entered into between
domestic manufacturers and foreign purchasers. A more complicated
method is for the Government to undertake the actual construction
and installation as a separate undertaking, and thereafter make the
same available to private industry under appropriate management con-
tracts. This method would lose to the Government the advantage of
having the parent company undertake the management of actual con-
struction.
Regraded Uclassified
177
May 21, 1940
9:15 a.m.
Present:
Mr. Purvis
Mr. Bloch-Laine
Col. Jacquin
Mr. Young
Mrs. Klotz
Mr. Ballantyne (later)
HM,Jr: Sorry I AM late, but I went to have myself
looked over.
Mr. Purvis: Not a bad 1dea. Very sensible.
HM,Jr: Yes, once a week.
Mr. Purvis: I think I shall institute the system.
HM,Jr: It's really worth it. If anything is wrong
you get it in the beginning.
I want to tell you something before you start in with
me, In order to save time and save a day, I called up
A. Kennedy at a quarter past six this morning and asked
his if he wanted to go and Bee the Air Ministry because
if I waited to see you I would lose a day. He said he
would see the Air Ministry at once. I said in order to
save time I wanted to know if His Majesty's Government would
license the American Government to manufacture the Rolls-
Royce engine. Then I had some other manufacturer in mind.
I A10 not know whether the engine was one we could use or
not, but in order to save time would they get a very capable
serson and give him All the papers and plans to duplicate
the engine and let him come over? Furthermore I thought,
RE AD ace-in-the-hole for the British Government to have
these plans in this country, was worth something. I don't
vant to be gloomy, but if you had a complete get of plans
in the United States -- he's going to call ne back this
afternoon na of London time, but that does not in any way
conflict
Regraded Uclassified
178
- 2 -
Mr. Purvis: No, no. Anything that will save time.
HM,Jr: That saves time and he can go right into
the Air Ministry and he will have an answer for me by this
afternoon, because, well, our Army 1sn't helping me any.
Have we heard where the Rolls-Royce 1s?
Mr. Young: Yes, I got her on the train this morning,
going by express to Dayton, and will be there tomorrow.
HM,Jr: Just to show you, the Army was going to send
it by slow freight.
Mr. Young: They never even got it out of New York.
They were on the dock. I got Kr. Harris out of bed.
HM,Jr: They went by express last night?
Mr. Young: Early last night and they are on their
way now and should be there tonight.
HM,Jr: They were still on the docks. How long
had they been there?
Mr. Young: I don't know. They did not even know
when they came in.
HK,Jr: They are going to have this demonstration
Monday or Tuesday and they will be there tomorrow.
Mr. Young: Late tonight.
Mr. Purvis: I think this gives me a chance to tell
you something, which, if you are proceeding long that line,
you should know. In the first place, Mr. Feddon, has been
over here. He's the senior technician of the Bristol,
we have the Rolls-Royce and the Bristol. He arrived on
Seturday afternoon -- no, Sunday morning -- and he's sail-
ing this afternoon, having been recalled by Beaverbrooks.
The object of his coming WE.B to come and talk with me in
regard to the possibility of doing something in Canada with
the Bristol engine, the point being, and I take it this
from the North American setup might be a good 1dea, was
that Bristol engine might be made, new plant put down,
deliveries to start at the end of September, 1941, which
12 the quickest it could be done
Regraded Uclassified
179
- 3 -
even under war conditions that obtained in Canada where
you can force the issue.
(Mr. Ballantyne came in at this point.)
Mr. Purvis: That plant would be a very b1g plant
If it was done. It would be of the order of -- it would
be some 5,800 machine tools. It would need 10,000 workmen.
It would mean a very big thing. It would put into North
America one more engine factory.
HM,Jr: May I say, that's all to the good. May I
just ASK this question. I will ask it of Colonel Jacquin,
Inst's the difference between the Bristol engine and the
Rolle-Royce?
Mr. Purvis: One 18 liquid cooled and the other 18
AIT cooled.
HM,Jr: Which 1s liquid?
Mr. Purvis: The Rolls-Royce and the air cooled 1B
the Bristol.
HM,Jr: Is the Bristol a radio engine?
Mr. Purvis: Yes. This brings me to Feddon. Feddon
"nows 38 much about as engines OR anybody in Grest Britain
and had he not been recalled my intention was to esk you to
have a talk with him. The need for him et home evidently
has become very great in the minds of the Air Ministry, but
be wants one central point and it has a bearing on any scheme
you put down and that is the engine that 1e made in any
new plant should be of greater power than they are thinking
of. Next year, at the time anything can come into produc-
tion that you may be making, would be a great mistake if
you built on today's car models because they will not be
the nee which are used later on to fight a war.
HM,Jr: That's right. And this afternoon and tomorrow
am surrounding myself with five or six people who are not
in the Army and Navy and no engine companies, who are the
best engineers in the United States, Massachusetts Insti-
tite of Technology and California Aviation School, and by
today or tomorrow I am going to have five or six. I don't
Regraded Uclassified
180
- 4 -
know where my list 1s. Do you know Hunsaker? These are
the very tops and I am going to have them -- for instance,
when this Rolls-Royce engine goes on the block I want
them to 80 and see it. I want them to see the engine.
They talk so much about Continental. I want them to see
Lycoming and of course we don't have a Diesel engine in
this country.
Mr. Purvis: We don't feel it is doing very well.
Col. Jacquin: It is not employed.
Mr. Purvis: It 1s not being used.
HM,Jr: You mean by the Germans?
Col. Jacquin: No, by the Allies.
HM,Jr: But the Germans are using it. I thought the
Dolnier boat
Mr. Purvis: I know there was talk about it, but I
don't know of any going into use.
HM,Jr: If you had the Bristol in Canada and the
Rolls-Royce here, let's say in Detroit
Mr. Purvis: And the other in Windsor just across
from Detroit, I think it might be R good idea. I was 80
impressed by what Feddon had to report in 11ght of the
last experience in engine-making in England under war
conditions that I got him in the other day with Keller
and Hutchinson at my house and there 1s at least one
American who understands his language, who haen't got a
doubt in the back of his mind.
HM.Jr: You mean Keller?
Mr. Purvis: Keller.
HM,Jr: Wonderful.
Mr. Purvis: He's the man who has risen from the
production shops end and I think the thing that impressed
him was what -- was speaking AS a man who was only desirous
Regraded Uclassified
181
- 5 -
that anything you do over here shall not be wasted money
and wasted effort as it could easily be if smaller engines
were made.
HM,JI On the Continental, we are talking in terms
of 1500 horsepower.
Mr. Purvis: It's low.
You must think
in terms of 1800 or 2000 horsepower.
HM,Jr: On flat engines?
Mr. Purvis: Now you are getting a little beyond me.
But Keller will have this subject down pat for you.
Col. Jacquin: Lycoming 1s very small inside. Number
of the engine means size of the cylinder. Lycoming 18
1430 or something like that.
Mr. Purvis: Cubic centimeters.
Col. Jacquin: 1430 for Lycoming. Allison 1s 1710.
Mr. Purvis: And you must go to 2000 if you are going
to be suitable for the conditions that will obtain
by the time these engines can be made and I cannot be too
impressive because Feddon has completely convinced me.
HM,Jr: It's too bad that Feddon didn't meet any of
our Army people.
Mr. Purvis: It's 8. tragedy from his point of view.
He said before he came from England, "You cannot send me."
They are desirous of getting something started on this side
of the water. They send him over, and then they ran into
the very thing they arned him about. He has had no sleep
and he told them he must come back, but what I have done
1a have him feed all his information into Paris and
also into Sloan in case General Motors were willing to help
us, which they were, only if asked by us and blessed by
your Government to produce in Canada the Bristol. If we
could have the Bristol with a great organization like
General Motors back of it
82
- 6 -
HM,Jr: Why don't you use Ford in Canada?
Mr. Purvis: That's another one still.
HK,Jr: The reason I say Ford 1e because General
"storo has indigestion now.
Mr. Purvis: Yes, but don't forget there is something
quite different here which 1s important. The Bristol
Airplane Company would undertake to provide a complete
technical staff on this side, and they would only have to
pick un production engineers. It's much more difficult
Do get a man who only has twelve hours to Ford's place to
talk with him than it 18 to set him to Sloan. It is for-
tunate Feddon could feed Keller and Sloan his
information.
HM,Jr: I don't know how Ford feels about this war.
Mr. Purvis: That's another thing. After all, one
can't have any rishs on that. As Feddon outs it, this
engine building needs a fire-enter because it's a difficult
che.
HM,Jr: That was B good evening that Feddon had with
Keller.
Mr. Purvis: A good evening and if Feddon by any
chance is delayed I would like to send him down for you
or anybody here.
HM,Jr: I want to see him.
Mr. Purvis: Then one other thing, in that cage could
: -- here's a point that Sloan made to us yesterCay. He
ente, "Morris, we are not prepared to consider making an
effort at this time unless (1) the British Government asked
Ug to do it
"
HM,Jr: In Canada?
Mr. Purvis: Yes, in Canada. Officially. And "(2)
that the United States Government 18 willing to tell us that
:: has their approval, because we really believe end that
the Canadian Government does the same thing because we
really believe -- we already have got the Canadian Govern-
ment approval -- the British Government I think will
Regraded Uclassified
183
- 7 -
probably be very prepared to make the request." But
before he went any further with his crowd, he wanted to
make quite sure that there was no cutting across your
policy.
HM,Jr: Well, how soon does he want an answer?
Mr. Purvis: As far as he was concerned, they are
pressing him of course to tell us in principle whether
he will do it today or tomorrow and I told him I would
see you today and he feels that -- General Motors, after
all, has had its differences, et cetera, with the Govern-
sent. He wants not to do anything that you would feel
WAB wrong.
(At this point HM, Jr sent for Lieut. McKay and
told him to call up Mr. Sloan and ask him
if it would be convenient for him to come
down to see HM, Jr tomorrow. He said he
wanted to telk to him about Allison and the
possibility of his building the Bristol
Airplane Engine in Canada. If ten clock
isn't convenient when would be.)
Mr. Purvis: Support for such things, help with
machine tools and materials will be very important.
Mr. Bloch-Laine: One thing I did not tell you, in
the same direction, 18 that an awfully big engine making
factory in France 18 starting preliminary conversations
with Studebaker and Studebaker seems rather anxious to
have a license for their motor.
HM,Jr: I did not know about 1t. To make what motor?
Mr. Bloch-Laine: The Gnome Rhone. That 1s one of
the two b1g ones.
Col. Jacquin: This engine would be 1500 horsepower
and they negotiate on this basis: If, for example, some
source of supply was destroyed in France, get the Govern-
ment to help.
HM,Jr: Is that liquid cooled?
Col.Jacquin: That 18 air cooled, a double one.
Regraded Uclassified
184
- 8 -
HM,Jr: Well, I don't know what the situation 16 in
Studebaker now. I don't know how strong
Mr. Bloch-Laine: Better.
Mr. Young: I think they are in pretty good shape -
that 16 wood engineering staff.
HM,Jr: I an not going to do anything about Studebakr
or the French at this time. I will talk to General Motors.
Mr. Purvis: In order to make the Canadian thing
coré concrete I've put into your hands information which
Peddon, at high pressure, has gotten out with his techni-
class, 8 complete list of machine tools, materials, the
nan-power required, degree of skilled labor and types and
everything here for the output of 300 of these a month in
Conada of 2000 horsepower. These are things we would want
your help in allowing us to get. Because a lot would come
from the United States, it would be a North American
effort. But I think that would be of real value to you
because it's almost the specifications.
HM,Jr: I will look at it afterwards.
Mr. Purvis: To some extent it's confidential.
Because it's a document of the urgency of the situation
and general needs, we are all concerned
HK,Jr: Have not been any leaks yet.
Mr. Purvis: Correct. Shall we leave engines now?
HM,Jr: Surely.
Mr. Purvis: Or shall we touch for one moment on
five very special engines that Colonel Jacquin 18 anxious
about.
Allison has fallen down on monthly deliveries of
some engines. By the way, I talked thi 6 with Sloan yes-
terday. I think you will find him reasonable, reassuring,
BB far as the head man can be. of course, then
there are others, but there are five engines that are
short, two for delivery May 15th, one May 22nd, one May
24th, one May 31, and those are of very, very special
185
- 9 -
urgency and Colonel Jacquin will make the story.
Col. Jacquin: We knew the schedule of Allison
engines would be 8. little late, BO we made arrangements
to have the engine not to go to the Curtiss plant, to
to directly to New York, so we save B. little time, but
for the first engine we would like five for test purposes,
HM,Jr: I can't do anything.
Col. Jacquin: Then there will be B delay of two
months.
HM,Jr: Here's the great General Motors! When we
called them down we wanted to help them on tools. They
did not need any help from this Administration and they
did not come down. Everything was lovely. Pratt Whitney
came down and Wright came down and I saw them at my house
Sunday night and they have said they never would have
been where they are if it had not been for the help I
have given on the machine tools. But Allison did not want
any help and I understand that altogether they have de-
livered six engines, four to Curtise and two to Lockheed,
or vice versa. I'll ask them tomorrow but the whole thing
gets down to the great Mr. Sloan.
Mr. Purvis: What you (Jacquin) were hoping to get
wes the release of the first five because it makes a two-
months' interval in the whole program because of the teste
that have to be run of the first few. It actually sets
back the later deliveries because no tests have been made
as to the way the engine fits into the plane.
HM,Jr: Let me ask you. Five Army engines needed
for five airplanes for France. These airplanes must be
delivered complete.
(HM,Jrreading from A memo:) "Five engines needed
in Buffalo: two, - May 15, 1940; one - May 22, 1940;
one - May 24, 1940; one - May 31, 1940; a total of five.
First five Allied engines to replace are available:
one - June; four - July."
This makes a difference of how much?
Regraded Uclassified
186
- 10 -
Col. Jacquin: Two months.
Mr. Purvis: Because they are test engines.
HM,Jr: We have no engine in the Curtiss P-40?
Mr. Purvis: Those are coming along.
Col. Jacquin: I know that there are 45 engines.
HM,Jr: We received one. One on the floor and one
in the air.
Col. Jacquin: I know that at that moment there will about
be 45.
Mr. Purvis: You mean by the end of May. Otherwise
they are now coming through.
HM,Jr: You want five?
Mr. Purvis: Just for tests.
HM.Jr: Where do they go?
Col. Jacquin: To Buffalo. We have not exactly the
same armaments.
HM,Jr: Where do they go? The Curtiss P-40?
Col. Jacquin: That's right.
HM,Jr: We can find out. I will try anything. All
right. This 1s number one question.
Mr. Purvis: I am afraid. this 18 a long list. I an
sorry.
HM,Jr: That's all right.
Mr. Purvis: It is very important simply because they
are test engines.
On the next figures issued
187
- 11 -
HM.Jr: Excuse me. You put on here this delay means
two months' delay to you?
Col. Jacquin: Yes, because they have to test, they
have to be sure that the guns will fit all right.
Mr. Purvis: It's B. difference in armament, dif-
ference in guns, difference in weight. That kind of thing.
HM.Jr: All right. Now what else?
Mr. Purvis: The next big thing that we want 18 to
know whether we can secure full service priorities on the
P40 to be delivered in the next few months and some of the
bonbers, Douglass and Glenn Martin particularly. Is that
right Col. Jacquin?
Col. Jacquin: Yes.
Mr. Purvis: About 250 bombers coming out.
HM,Jr: Have you got a list?
Mr. Purvis: Yes. Would it be best to deliver to
the Secretary after this meeting a list of that separately
or have you something else?
HM,Jr: From what you sent mehere
Mr. Purvis: We can reduce it to much better form.
HM,Jr: Will you give it to me like that?
Mr. Purvis: I will. Very shortly after this meeting.
Mr. Bloch-Laine: May I try to bring you, in broken
English, a French telegram saying an airplane carrier for
the French Navy will be in Halifax about May 27th. Can
take about 80 pursuit planes. or 40 pursuit planes and
30 bombing planes with the wings clipped off. Give priority
to fighting planes. Take all measures to send the planes
and foresee means of putting them on the ships. Second,
referring previous to Monnet, please ask Mr. Morgenthau if
we could have AS much AS possible on 200 Curtiss P30's,
balance of the order of the American Army, also 40 Bell
P39's; try to get maximum Douglas A20, Glenn Martin B26
128
- 12 -
and North American B25, deliveries August, 1940.
Mr. Purvis: That we will give you in memorandum
form.
HM,Jr: If you could do it on one page.
Mr. Purvis: I think it would be better to divide
it into two orges, one effecting priorities in regard to
deliveries to come in the future, the other affecting
possible obtaining of something out of stock. There are,
A9 you have pointed out to me, there are some P36's which
you require for training.
HM,Jr: On the P36's I have a formal memorandum
from the Chief of Staff that it's impossible. No one could
have been nicer or more considerate or given it more at-
tention, but it 18 impossible. This 1s the statement on
the P36. This might as well go in my file. It's out.
It's imbossible. That 18 from General Marshall, Chief
of Staff, and he gave it two days' thought.
Mr. Purvis: There is one other possibility which
might not interfere with you; that 18, 144 Northrup A37-A
plance.
HM,Jr: Is that Swedish?
Col. Jacquin: Army.
Mr. Purvis: And they would be very useful if we
could get some of those.
HM,Jr: If you give me this thing
Mr. Bloch-Laine: In fact, if I may say 80, there
are two classes of things that we are coming to ask you
about and discuss with you. The things that are urgently
needed and the other will come, if they could be had,
immediately, and it seems the only source of supply in
this country would be Army stock. Also on rearmament
tre have e list and are ready to submit it to you.
HM,Jr: For immediate.
Mr. Bloch-Laine: For immediate. Second, 18
priorities on things that Are actually heing made or
Regraded Uclassified
189
- 13 -
helping 116 along to get as quickly as possible some of
the things that we have already ordered and where we
find some difficulties or some hi t ches and that's the
thing, the list, that of course we are ready to submit
to you if we are not imposing on you. That might be
studied by the technicans. I had a long list pre-
oared for both the French and the British, but got an
order of immediate urgency.
HM,Jr: What you want in the next 30 days?
Mr. Bloch-Laine: Yes, that's right, such AB getting
riflee and things, if it can be done.
HM,Jr: Give me the things you would like to have
between now and the first of July.
Mr. Purvis: Yes, I have them but they need typing.
HM,Jr: Make that one list.
Mr. Bloch-Laine: You may say, "No, sorry, or
"Yes, perhaps", but I think we can put it before you.
HM,Jr: I know, but I have to have it in a form
I can work with.
Mr. Purvis: Just mentioning to you 35 -- you
remember the question of possible civil planes. There
were 35 DC3's on order. If they could get some of those
that were going to be delivered in the next month on
transport lines. Is that a possibility?
HM, Jr: That's R. possibility. Incidentally, have
you gotten the list and the names?
Mr. Purvis: 11,000.
HM,Jr: Have you got the names?
Mr. Purvis: Yes, they sent over the whole thing.
Colonel Jacquin, will you tell me if trainers, we think
there might be use for. Combat planes he feels definitely
not.
190
-14 -
HM.Jr: I am not trying to sell it to anybody, but
I just wanted to be able to tell the President that you
have it.
Mr. Purvis: We have it and Jacquin had it 2.8 soon
88 I got it and if there 18 anything you (Jacquin) are
oing to advise me?
Col. Jacquin: Yes.
HM,Jr: The President said somebody remarked as to
the wisdom and it was not up to us to decide. It was un
to the Allies. But you've got it?
Mr. Purvis: We have it. Thank you very much. I
have it. As a matter of fact, an interesting way yesterday.
Skelton had sent down Mr. Keenleyside at MacKenzie King's
request to try to get some trainers.
HM,Jr: 300, and they go directly to the President
on that. I don't know whether MacKenzie King phoned the
President.
Keenleyside (?)
Mr. Purvis: He sent down/
and I said if I
can help you at any time, here I am. I said, "Colonel
Jacquin has arranged for that list to be gone over and
there may be trainers in that."
HM,Jr: Let me know if you need any help.
Mr. Purvis: Now then, 1f we may go to some of the
other trifles that are put down here. Subject of guns,
small arms.
HM,Jp: Have you signed with Pratt Whitney?
Mr. Purvis: I meant to say that. We agreed to
sign last Monday. They went away to make the contract.
I mean Monday a week. On Friday night things broke down
again -number of their planes had gone down, number of
engines gone down, price had gone up from $8, 100,000
to $10,500,000 for capital assistance and the options
that we would enjoy from that capacity which we had
financed would go down from 400,000 units of horsepower
to 200,000 units.
Regraded Uclassified
191
- 15 -
Mr. Bioch-Laine: 150,000.
Mr. Purvis: That's including spares. So I got
acoId of Gordon Rentschler immediately. He came to my
office the first thing yesterday morning and I simply
1021 him those three things since I hed come into it
rith him AB the ones who would steer it. He sold, "their
I said, "I want it clearly understood we said
THE sould sign. I brought my people to your terms, which
MINE cirficult, but I brought them on Monday of last week.
"E - the just prepared to sit and sign on the terms we then
thought were wise." He said it's un to me, He went out
of TMP office. He phoned back about three hours' later
that unfortunately Wilson was cown here end he said, "The
-inute Wilson sete back from Washington I really think I
--- bring them back to the line you talked about. So
this afternoon they are meeting in the hope they can -1/7:
-tep contract. Put we have not changed e bit.
S. Floch-Laine: The delay 10 not of our doings.
HM,Jr: Lot me know when it is signed, because I
She't want to talk to them about additional business until
224 Are through.
in. Purvis: I understand that.
HX,Jr: Incidentally, the deal I put across Sunday
night was -- contract might be drawn today or yesterday --
02 Pratt Whitney and Wright 'inve agreed to give us
licenses on any engines we need. They argued about it and
for about a week end in the meantime the contract
MIII be signed, but I'll want the contract in my pocket.
Mr. Purvis: If we can get the Pristols in Canada
Here the Rolle Royce in the United States
HM,Jr: Planning to license to other manufacturers
28 the 400 - 600 for trainers, to bring in other manufac-
thrers. That's the class we are Doine to license. Not
the b16 ones. Let Pratt Whitney and Wright concentrate
V. the types.
Xr. Purvis: Good.
Regraded Uclassified
192
- 16 -
HM,Jr: Let them continue manufacturing the small
business until the other gets into production and then
take all the small business away from them.
Mr. Purvis: That might accelerate deliveries of
combat engines later on.
HM.Jr: Oh, yes. As soon as the other fellow gets
into production we will try to take all the 400 - 600 away
from them and let them concentrate on the big ones. Does
it sound sensible?
Col. Jacquin: That's very nice.
Mr. Purvis: Have you the original copy of that list
that was made because I think the original should be in the
Secretary's hands.
HM,Jr: Give me fifteen or twenty minutes and you
gentlemen go down to Young's office.
00 O 00 O 00
may 21/40
- 1
193
new
an & Haz
with
as 9am meeting
INDEX
of
Summary of New Aero Engine Factory
1, General Summary of Factory Size - - Cost and Number of
Employees.
2. Schedule of Staff and Employees.
3. General Summary of Materials.
4. Schedule of Material Requirements.
5. Schedule of Special Machine Tools.
Regraded Uclassified
194
1.
SUMMARY
o I
Requirements for a Production Factory to produce
three hundred 2000 HP Engines per month.
£6,500,000
1. Factory - Plant & Buildings (less land)
32,000,000 dollars
2. Factory Area
1,000,000 sq. ft.
3. Site
70 acres
4. Electricity
750,000 units per week,
5. Gas
4,000,000 cubie feet per week
6. Water
1,500,000 Imperial gallons per week
7. Machine Tools
2,000 general
8. Machine Tools (special purpose)
400
9. Office Staff
830
10, Plant Employees
8,320
Regraded Uclassified
+ 195
2.
Schedule of Staff & Employees
1. Office Staff
830
2. Machine Operators
3,300
3. Machine Shop Fitters
700
4. Engine Fitters & Erectors
1,000
5. Engine Testers
150
6. Process-Heat Treat-Plate-Polish
750
7. Inspectors
1,000
8. Storekeepers,Electricians,Canteen Laborers 1,000
9. Tinsmiths
120
10. Timekeepers - Process & Progress
300
Total
9,150
Regraded Uclassified
196
3.
General Summary of Materials
Per Annum
Alloy Steel Stampings
6,400 tons
Light-alloy Stampings
5,000 tons
Magnesium Castings
500 tons
Magnetos
7,200
Carburettors
3,600
Electric Starters
3,600
Petrol Pumps
3,600
Sparking Plugs
108,000
Controllable Pitch Airscrews
3,600
No allowance for extras or spares on finished components
except sparking plugs.
197
4,1
19V40
2000 HP Engine
1, Steel Stampings
Range of
No, of
No. of
Billet Wt.
Mat'l.
Stamping
Stgs.per
Diff.
per 300 Eng.
Description of Parts
Speci,
Weight
Engine
Patterns
tons
Lbs.
C/shaft Front
8.11
100
1
1
30
C/shaft Rear
S.11
to
1
1
30
Airscrew Shaft
DTD.306
200
1
1
30
C/shaft Centre
DTD.306
50
1
1
15
Connecting Rod
BAcE 21
to
2
1
21
Bevel Gears
S.82
100
2
2
23.25
Stationary Gear
S.90
1
1
6.75
Red in Gear Drvg.Wheel S.90
25
1
1
4.5
Bevel Pinion
S.82
to
3
1
12.75
Bearing Housing
S.11
50
1
1
4,5
Articulated Rod
BAcE 21
10
16
1
42.
Chankshaft Gear
S.90
to
1
1
4.5
Centrifuge Gear
S.90
25
2
1
3.0
Buring Drive Gear
8.82
1
1
3.3
8.6
20.25
8.11
10.5
8.14
6.
Miscellaneous
8.15
1
175
65
6.75
8,28
to
1.5
Stampings
S.82
10
21,
8.90
39
DTD 299
4.5
Misc.
.5
TOTAL
All speci,
1-200
209
80
341.55
Sleeves (if forged) BAcE 52
85
18
1
210
s.6
20.25
S,11
75.
8.14
6.
8.15
6.75
8,28
1.5
Summary of
8.82
60.3
8.90
57.75
Total Billet
DTD 299
4.5
DTD 306
45.
Requirements
BAcE 21
63.
Misc.
1.5
Regraded Uclassified
198
19.v.40
4.2.
2000 H.P. Engine
Steel Bars
Specification
Range of Sizes,
Weight per
Weight per
Round & Hex.
Engine. Lbs
300 Engines
Tons
S.1
1/8" - 24"
50
6.75
S.ll
3/16" - 3"
325
45.
S.14
3/8" - 3½"
25
3.375
S.65
à" - 2-1/8"
85
12.
S.80
§" - 2½"
5
0.75
$.82
~~
(
1-3/4"CT 1½"
2"
CT 1-3/4"
100
13.5
8.90
1" - 2-3/4"
105
14.25
DTD 49
3/8" - 1-1/8"
20
3.
DTD 306
3/8" - 2-3/8"
25
3.375
TOTAL
740
102.
-
Regraded Uclassified
19.v.40
39
2000 H.P. Engine
Aluminium Stampings
Description
Specification
Renge of
No. of
No. of
Weight
of Parts
Stamping
Stampings
Different
per
Weight
per
Patterns
300
Lbs.
Engine
Engines
Tons
Invoice
1-mt
DTD.246
126
1
I
17.25
Centre
DTD.246
228
i
1
30.75
(renkuse
THE
DTII.246
150
1
1
20.25
liston
BACE.79
10
18
1
24.
TylAnder
BACE.62
60
18
1
150.
seluction
Geo! Case
DTD.410
50
1
1
6.75
Iny-dier
DTD.10
20
1
1
3.36
L.40
0 - 5
50
8
1,5
an
DTD.297
TOTAL STAMPINGS
91
15
253.86
-
ALUMINIUM CASTINGS
Cylinder Bead
(Top)
L.35
9.75
18
1
24.
Cylinner Reed
(Bottom)
L.35
4.5
18
1
11.25
Viscelleneous
DTD.133
0 - - 20
15
7
6.
TOTAL CASTINGS
51
9
41.25
i
ATUMINIUM BARS
TOTAL BARS
L.1
3/16" -
1-7/8"
1.89
Round &
Hex.
TOTAL STAMPINGS
CASTINGS & B/38
297-
Regraded Uclassified
200
4.4
19.v.40
2000 H.P. Engine
MAGNESIUM CASTINGS
Description of
Specn.
Range of
No. of
No. of
Weight
Parts
Casting
Castings
Different
per 300
Weight
per
Patterns
Engines
Lbs.
Engine
Tons
Volute Casing
DTD.136
75
1
1
10.5
Front Cover
DTD.136
40
1
1
5.4
Blower Casing
DTD.136
90
1
1
12.15
Rear Cover
DTD.136
20
1
1
2.85
Miscellaneous
DTD.136
0 - 20
51
26
9.0
BACE.47
TOTAL CASTINGS
-
0 - 75
55
30
39.9
Regraded Uclassified
4.5.
201
19 V-40
2,000 H. P. Engine
Bronze Castings, Stampings, Bars And Tubes
No. of St'gs
No. of
Weight
Description
Spec'n.
Range of
or Castings
Differ-
per 300
of Parts
St'g. Wt.
Per Engine.
ent Pat-
engines
terns
Tons
Miscellaneous
DTD 164
30
11
19.5
Stampings
DTD 197
BACE 22
Miscellaneous
Castings
B.8
20
3
2.25
Miscellaneous Bars
B.6
3/32"-
8.25
and Tubes
DTD 78
4 1/2"
DTD 160
round
DTD 197
& Hex.
DTD 267
Total Stampings
Castings, Bars
and Tubes
30.0
Regraded Uclassified
6
19 V-40
302
2,000 H. P. Engine.
Summary of Material Requirements
Material.
Rough Material
Requirement for
lbs. / Engine
300 engines per
month. Tons
Per month
Steel Billets &
3,600
480 (440)
Bars (less Centri-
cast sleeves)
Aluminium Stamp-
ings & Castings.
2,350
315 (297)
Magnesium Castings
270
36 (40)
Above figures are a check based on Hercules. Figures in
brackets based on foregoing tables.
Regraded Uclassified
203
19 V-40
.7
Particulars of Non-Standard Materials
B.A.C.E. 21
B.N.D. Air Hardening Steel 105 Tons/si
ultimate..3C; .2281; .43 Mn;.01S .012P;
4.4N1; 1.33 Cr.
B.A.C.E. 52.
Nichel manganese chrome steel.
B.A.C.E. 79.
Aluminium Alloy Similar to RR.59
B.A.C.E. 62
D. D. 324. 12% Si Al-alloy.
B.A.C.E. 47
Magnesium Tin Alloy
6% So; 3% Al. Magnesium.
B.A.C.E. 22
?
Regraded Uclassified
204
19.v.40
5.
SCHEDULE OF
SPECIAL MACHINE TOOLS
Approximate Total No. of Machine Tools
...
...
2,400.
Of these 400 are special machines as follows:-
Genevoise Jig Borers
Heald Double and Single ended Bormatics
Cincinatti Multi Spindle Hydrotel
11
Auto Millers
Profile Millers
External Centreless Grinders
Internal
"
If
11
Spherical
If
Honing Machines
Multi Spindle Vertical Borers
Single and Multi Drills and Tap Machines
Maxi-Cut Multi Tool Lathes
Horizontal Barrel Boring Machines
Duplex Horizontal Boring Machines
Regraded Uclassified
205
May 21, 1940
11:25 a.m.
Present:
Mr. Purvis
Mr. Ballantyne
Mr. Young
Mrs. Klotz
Mr. Purvis: Now, we have the agenda. Part one,
aircraft and engines; part two, armaments; part three,
general war supplies.
HM,Jr: All right. Part number one, aircraft and
engines.
(At this point HM, Jr spoke to Mr. Sloan.)
HM,Jr: He will be here at eleven.
Mr. Purvis: I think you will find him an extra-
ordinarily enthusiastic, interested party.
HM.Jr: He said on Bristol it will have to be pure
patriotism and his Government 18 going to have to tell
him to do the things; otherwise he 1s not interested.
Mr. Purvis: He wants our Government to invite
them and know it has your approval.
HM.Jr: He thought we should do it here instead of
in Canada.
Mr. Purvis: This is the other side. This 18 be-
tween $40,000,000 and $50,000,000 to make 200 horsepower
engines per month and I cabled, since you told me this
morning, and suggested the importance of your having
any license that you get covering the large type of engine.
But it's n. b1g proposition if we do it in Canada.
HM,Jr: You mean giving me a license on the biggest
horsepower?
Regraded Uclassified
206
- 2 -
Mr. Purvis: Exactly. I think that's important and
that's why I cabled, using Feddon's impressive thing on
it. The next thing was this 16 between $40,000,000 and
$50,000,000. If it 18 done in Canada we can probably get
a Canadian order for putting it up. Number two, we don't
have to pay for delivery of engines when they go out of the
country. Those may offset any disadvantages as there might
be, if we get your real blessing on the thing, but it makes
it more than ever important to get the feeling the United
States Government would take the broad view, to have another
engine plant in North America would be a protection for
the Americas as a whole.
HM,Jr: Let me see if I understand this thing. Is
this five engines in here?
Mr. Purvis: That's in "C". Jacquin has now added
six more.
HM,Jr: I am having General Marshall here for lunch
and I will give him this stuff. Incidentally, he's a
great soldier and very sympathetic.
Mr. Purvis: Is he?
HM,Jr: But cold-blooded, the way a soldier should
be.
Mr. Purvis: Correct.
HM,Jr: But intelligent and entirely sympathetic.
Mr. Purvis: Good. That's the type that should look
at it.
HM,Jr: Just to digress a matter. While I was shaving
this morning I suddenly remembered that there were some
Rolls-Royce engines over in this speedboat which are air-
plane engines. I em finding out where they are and what
the tests are so that I can turn that over to Mr. Keller.
There are three of them, but nobody seems to even think
about it, but this boat we bought from the Electric
Boat Company -- everybody has seen it. The other
thing I am trying to find out is your report on your
207
- 3 -
Spitfire that went up to Canada.
Mr. Purvis: I understand five officers went up
last week to follow it.
HM,Jr: I am asking for a report.
Mr. Purvis: The wheels of the Gods grind slowly.
I am glad to know the Spitfire got into the air.
HM,Jr: You don't say how many.
Mr. Purvis: No, because frankly my cable says
anything you can give us we will take.
HM,Jr: This 18 very good. Is there more than one
copy?
Mr. Purvis: I have given an extra copy to Mr. Young.
HM,Jr: I want this 80 I can give my copy to General
Marshall when I am at lunch. You (Young) let me have this.
Mr. Purvis: We will have a further and better
analysis.
HM,Jr: I want to give him this at lunch.
Mr. Purvis: Exactly.
HM,Jr: This 1s clear.
Mr. Purvis: I think we have got it now. As & matter
of fact, in a way this is the embodiment of the lists which
you have been receiving giving the status as of today of
many, many projects.
HM,Jr: Perfectly clear. That will be in the hands
of the Chief of Staff by one o'clock. I can't go any faster
than that. I am going to ask him to break it down.
Mr. Purvis: If he could suggest a procedure, we will
of course have here anybody that would be useful to bring,
because naturally they are very anxious on the other side.
Monnet phoned me again.
#
HM,Jr: He moves very fast.
Mr. Purvis: Fine.
Now then, may I ask one or two separate matters.
In the first place, the other ay you were god enough to
imlicate on the explosives matter that if we knew and were
prepared to say that we were [oing to put down the new
lant hare -- and I may say negotiations are moving as
ragily as I can get them to move -- that we
with Manada. So what I arranged was, as Dupost suggested,
the next day I arean ed for a Cansuien contractor to address
a recuest to Dupont to change, to reconsider, their previous
natural to give information that we wanted. One has then
bean sent that way, sent in the form of a letter to the
unont Company. now, I understand from the general manager
of the explosive end of Junont that he will be in touch,
nowing no other channel for him, with the State Depart-
mont, Mr. Green, tomorrow.
HX,Jr: oh, 8001.
Mr. Purvis: Now, I've stated the proper channels.
Se 9811, "On, yes We have always done that and we don't
want to offend enybody. II and the thing is that I want
you to wait BO that Mr. Morgentheu knows that this 18 what
you are 20198 to do. The program in the past on an explosive
matter they E° to the State Department and say, "Will you
ascertain from the Army anl Navy what we are allowed to Co?"
That nas been the long established way of 101n things. And
I immediately had the rea tion that you had and -a1d, "Don't
:- It until Mednesday. That's the letter the contractor
aldrassed to the Dupont Company giving specific information
wild Yancey wanted specific authority to release to them
todorrow.
Mr. Young: I think Joe Green is out of town
Mr. Purvis: I thou nt 15 you had any advance infor-
setton ca exactly what hai been askel, perhaps we could
ATOOF It.
M,Jri Who finds this? You 009
Regraded Uclassified
209
- 5 -
Mr. Purvis: No, it is found by the man in Canada.
HM,Jr: But Yancey is going to see Joe Green?
Mr. Purvis: I think he rings him on the telephone
and says, "Can you steer this?" He may address a formal
letter.
HM.Jr: Got much more?
Mr. Purvis: Not a great deal.
The next thing is in putting down this factory.
HM,Jr: Excuse me. Our stock exchange is only off
seven points today.
I've decided not to listen to the radio any more.
I have stopped listening.
Mr. Purvis: It is harrowing.
(At this point HM, Jr spoke to Sumner Welles.)
HM,Jr: It's done. Now when Yancey comes, you let
me know.
Mr. Purvis: That's exactly what I felt like. If
I could steer it that way we would keep it in channels.
In putting up a new plant it has been suggested
by Dupont that we set up a company that would have to
have, of course, British and French money. Now, I have,
therefore, put out a memorandum of what we propose to do
with the request, because we thought if a foreign govern-
ment -- owning stock in a company which was making military
supplies -- it's a new question and we have to get your
sign of approval.
HM,Jr: (To Young) Let Sullivan read that and when
Yancey comes over I will have Sullivan see him. If
Sullivan has any doubts, let A.A. Berle see it too.
Mr. Purvis: The next 1s one I would likeyour advice.
The situation 18 this. We are expecting to put down a
plant at Memphis, Tennessee, which seems to be the site
200
- 6 -
which everybody, including perhaps the Army, would like to
Dee used. Now then, the difficulty arises in this. To
put it at Memphis, Tennessee, means Dupont, who has the
site, which 18 good from our viewpoint, because they know
most about nitrocellulose powder, but they also want some
mitrocellulose for the French -- that 18 gun cotton from
which nitrocellulose powder 16 made -- before the end of
the year. The only way to get that would be to use some
other contractor, such as Hercules, who can, by accident
of circumstances, deliver 2000 tone of nitrocellulose be-
fare the end of the year. That means making a sort of
hybrid animal, 12,000 tons of nitrocellulose made at Hercu-
les, 12,000 powder made at Memphis, and the balance made by
Dupont at Memphis. It makes a hybrid animal which could
be much imporved if we could have it centrally for the
whole thing. Could that be? We have to find 2000 tons
of nitrocellulose gun cotton for the French. We are
exploring every way we can. We know one way which would
be very helpful. Apparently 125 tons a month are going
to the Army at the present time from Hercules. If that
could be released, we would then have a better kind of
lant from the U.S. Army view and BO again 8. picture on it.
HM,Jr' Yes. This thing 18 8. good report.
Mr. Purvis: Now, you want this in a memorandum?
HM,Jr: And before Yancey comes in you had better
ive me the whole picture. You want so much from Hercules,
80 much from Dupont, so much from the Army.
Mr. Purvis: May I explain another item? Dupont
says there is another way in which they could get over
the difficulty. I believe as a result of the Army and
Dupont Company working together some two years ago they
got a lot of powder equipment. That powder equipment,
which is the bottleneck in making this thing
HM,Jr: Who owns 16?
Mr. Purvis: The United States Government. It
can't be turned back to the Company?
HM,Jr: No. The Army won't do it. Absolutely
adamant.
Regraded Uclassified
211
- 7 -
Mr. Purvis: Even if it hurts them?
HM.Jr: Well, put it in the picture.
Mr. Purvis: I knew you would say no, but I will put
it in the picture.
The next item, and a very important one
HM,Jr: How many more have you got?
Mr. Purvis: There are sheaves of others. Cables are
arriving faster than I can read them. The other 1s the Colt?
HM,Jr: That's the last one before lunch.
Mr. Purvis: If I might come again
HM, Jr: Is it something you want me to take up with
the Chief of Staff andhave you got it on a piece of paper?
Mr. Purvis: Not in this form. In EL nutshell, wewere
about to sign 8. contract with Colt, no capital expansion
involved, but at that point the Army comes in. They now want
$2,500,000 from us and we are not placing one more guns than
we have already made a deal with. May I give it to you
formally? May I have your assistance again?
HM,Jr: As I understand it those are guns that,
Mr. Purvis: Those are aircraft and we had arranged
our program 80 we would have no capital building at all.
The intention of the United States Government was to super-
impose on what we had done rather than come in and cut in
underneath.
HM,Jr: That's right. What are your plans for the
rest of the day?
Mr. Purvis: I shall be around in case there 16 some-
thing more you wanted. I shall probably stay downtown of
tomorrow.
HM Jr: If I want to see you, it will be sometime
after 3:30.
212
- Oa -
Mr. Purvis: Good. Thank you very much. I am ever
so much obliged.
00 o 00 O 00 0 00
From to 213
ATTACHED
arthus Purvis
MAIL
and
may 21. 1940
Priorities from orders en which deliveries new pending
for D. 8. Any and Mary.
Supplies from stocks - hand with U. s. Amy.
Prierity for 5 Alliena Engines, and for 6 Pratt
and Whitney engines.
1
Supplies urgently required from ordere placed and/or
stocks on hand with U. 8. Any and Mary.
Supplies for which priorities or help needed.
Regraded Uclassified
1 214
PART N°I
-
AIRCRAFT and ENGINES
A
215
Anglo-French Purchasing Board Aeroplanes.
List "A"
Aeroplemes on order for United States Services
for which priorities are desired.
Pursuit planse
200
P-40
Curtise of which It is understood deliveries
will be unde to the United States Army
monthly from June onwards.
30
P-38
Lockheed of which deliveries to the United
States Army are expected from July onverds.
40
P-39
Bell of which déliveries to the United States
Army are expected from July onwards.
BOMBERS
180
A-30
Douglas for which deliveries are beginning
shortly.
200
D-28
Gleun Martis for which deliveries are beginning
in August.
Transport planse
35
DO-3
Douglas planse for transport use due for delivery
to the Air Lines in the sext three sonths.
General
hanoport
All/to be squipped with United States guns and
amminition bombs, boubsights and bowbranks.
Regraded Uclassified
B 216
SEGUATURE URGENT
Aeroplanes in stock with U. a. Any and Nevy Service
which the Allied Governments would be glad to take
any imediately (partly in aircraft cerriers due at
Halifax in a for days).
(164) A-17-A Northrup live
(If these could be obtained, 100 Vultee Vanguard
Pureuit planes could probably be obtained in exchange-
ex Swedish orders on hand.)
General
These planes would have to be equipped with U. s. guns,
amunition, bombs, bombeights, and bombresks.
Beason for Extreme Urgeneys
The conditions embasine the extress
E existing Army stooks.
Regraded Uclassified
c'
217
Liss "C" FIVE ADMY ENGINES NREDED YOR FIVE
81-A AIRPLANES 70R FRANCE.
Delays which have suddenly developed at the Allison
-lant in delivering the first five engines required for lest
surposes will involve the Allied Governments in & loss of
two months because they vere the preliminary deliveries
required to be fitted to the airframes for testing purposes
(adjustments very often necessary).
Can the Army therefore spare five out of the first
batch delivered to them in May (estimated at A total of
40 - 45 engines) so na to save the situation.
5 Enginee needed in Buffalo
2 - May 15, 1940
1 -
May 22, 1940
1
- May 24, 1940
1 -
May 31, 1940
B
Total
First 5 Allied engines to
replace are available
1 - June
4 - July
Regraded Uclassified
c:
218
Six Army Engines Needed for Test
Purposes in France on French
Aeroplanes.
The French Government has placed orders with Pratt and
Whitney for the production of Double Vasp engines, to be
delivered in 1941. The French Government needs six of these
engines, as soon as possible in order to do the engineering
work and prepare the installation of such engines on French
prototype.
The first deliveries to the Army start in August 1940.
It would be very helpful if the Aray would think possible
to release to the French orders six of their engines, sub-
jest to further replacements in April or May, 1941.
Regraded Uclassified
PART N°II
219
May 20, 1940
SUPPLIES URGENTLY REQUIRED.
1.
37 and Anti Tank guns, with spare barrels
and
Possible supplierst-
National Pneumatic Co.,
Rahway, N.J.
National Forge a Ordance.,
Irvine, Pa.
The U.S. Government may have stocks or orders
placed which may be released.
Regraded Uclassified
220
2.
3 inch Asda guns with spare barrela and aumunition.
The U.S. Government may have stocks
or orders placed, which may be released.
Regraded Uclassified
221
3.
Other types of short range gund (with caliber above
303) for TO murposes.
We understand no stocks available with
manufacturers. There is already a large programme
in development for delivery through 1940 and 1941.
No believe the U.S. Government may
have a large supply in stock, which might be avail-
able for release.
Regraded Uclassified
222
40
feall Area and Ampitis
(a) .30 Browning Light Machine Dun
These are manufactured by Colts, who have no stocks
and whose existing sapacity is at present fully
occupied.
U.S. Government may have stocks of these, and also of
amunition.
(b) Browning automatic rifle M.1918 42
We understand that there are no available stocks
outside those held by the U.S. Government.
(e) Thomuson sub-machine sun
with the Auto Ordnance Corp.
Large orders have been placed for these suns, but we
are fearful of delays in their delivery.
It may be that the U.S. Government has stocks of these,
which perhaps could be released.
(a) Rifles - C.C. Springfield
We are informed that a large stock (said to be 1,500,000
of Lee Enfield .30 caliber rifles) is held by the U.S.
Government which may be considered as surplus to their
requirements.
An application for the release of part of these rifles
has already been submitted by the French Mission, but has
been rejected.
There are also stocks, W believe, held by the U.S. Gov-
ernment of other types which are now considered
standard, and night also be released.
(e) Colts automatic vistols
Be understand the U.S. Government is holding a substantial
stock of these pistols, and also has more in process of
manufacture at Colts.
It is considered essential that adequate
supplies of amunition for all these arms
is also available and released at the
time,
Regraded Uclassified
223
5.
75
Owns
It is suggested that the U.S. army
has large surplus stocks of these guns, together
with the necessary ammunition.
Mortar
The U.S. Government may have some
also
stocks of Mortars and amsumition and might/be in
& position to release some manufacturing capacity
which is at present occupied for their account.
224
PART № III N°
Anything which the United States
Administration can do to ensure the utmost
accelleration of delivery of orders already
placed for warlike stores and explosives in
the United States through the Angle/French
Purchasing Board so as to expedite delivery
would be extremely helpful.
Enclosed are our particulars of
the most urgent orders.
Enet
Regraded Uclassified
225
1. Searchlights. Bound Locators and Predictors from
the DOTTY Ovroscope Co.
Orders have been placed with the Sperry
Gyroscope and International General Electric for
deliveries up to January 1941. Bome deliveries have
already been delayed, and it is of the utmost import-
ance that production be accelerated.
2. (a) 9.2-1nch Shalls from the American Car A Foundry Co.
Orders for 200,000 of these shells have
been placed with the American Car & Foundry Co., with
deliveries starting in September 1940. These supplies,
are urgently required.
(b) 6-1noh shalls from he W. Bliss Ca.
Orders for 50,000 of these shells have been
placed with E. W. Bliss Co., of which over 40,000 remain
to be delivered.
3. A.A. Spare Harrels and Field Artillery Own Liners
(a) We have on order 50 д.д. Spare Barrels with the
Midvale Co; these are already substantially delayed.
(b) Tubes. Forgings b Liners of 90 a/a
Educational orders have been placed with Crusible
Steel and Bethlehem steal. The results with
Crusible Steel being astisfactory, we have placed
an order for 350 tube forgings and 700 liners. If
the results with Bethlehes are satisfactory, 10
shall also give them an important order. It is
of
the utrest importance that no obstacle interfere
with early deliveries.
(a) Tubes of 47 m/a
h wish to place an order for 1,000 tubes. The
principal manufacturers are Bethlehem Steel, Crucible
Steel and Midvale, whose capacity seens to be fully
occupied, and us fear 16 shall not be able to obtain
our requirements at an early date. Priority is
very necessary.
4. Tank Parta
Substantial orders have been placed with ABOT-
ican Car & Foundry, Buckeys Traction Ditcher and the York
Safe & Look Company. Deliveries are scheduled June 1940 to
January 1941. Production urgently required and priorities
necessary.
Regraded Uclassified
226
- 2 -
5. Cartridge and Shell Rodies
(a) We ordered 10,000,000 cartridge cases from the
Bridgeport Drass Co., deliveries to start August 1940.
(b) 10,000,000 shell bodies of 20 and 25 m/a for
Aircraft Gms and А.Д. guns have been ordered
from Burgess, Light Battery and National Pnsumatic
Companies.
The foregoing are urgently required. The
daily output of each nonufacturer could be greatly
increased provided any interference from other orders
is removed.
6. Puge Parts
We are about to place an order for 12,000,000
with the Pollack Manufacturing Co. and the Carter Carbur-
ottor Company. The need for these is very urgent, but
owing to shortage in the supplies of brass rods of the
manufacturers, we are fearful of delays in production.
7. Brass Rode and String
Important orders have already been placed with
Mueller Brass, Bridgeport, Revere Copper, American Brass,
Chase Bress & Copper, Seymen Manufacturing, and no have
a. further order of 18,000 tone to be placed.
We are advised that the need is extremely urgent,
and any assistance which night be given to stimulate pro-
duction and remove interference from other orders would be
very helpful.
8. Machine Tools
We have lately encountered greater difficulties
in the placing of machine tool orders. For example: one
of our important suppliers, Brown & Sharpe, have advised us
that they cannot accept new orders because of expected requests
from the U.S. Government. The orders which are at present
in production with many suppliers are substantially in delay
at the present time, and apparently the only way in which our
requirements could be not would be through the granting of
priorities.
Regraded Uclassified
227
, -
9. Special Steel
Due to the closing down of factories in
Belgium and on the French Eastern Frontier, there will
be a large demand for special steel for production of
Airplane Engines, Tanks, Armoured Trucks and Guns.
A priority over American requirements would facilitate
the meeting of our needs which will be most urgent.
The following order has been placed:
Hartford Steel Ball Co. - 100,000,000 balls
to be delivered between May and November,
and we are about to place orders for Thrust
Ball Bearings, which, since S.K.F. in Sweden
cannot make further deliveries, can only be
obtained from B.K.F. in the United States and
Tisken. These two firms receive very import-
ant orders from all sides, and it is most
important that priority should be given over
domestic business or other foreign orders.
10. Explosives
The following is the programme for the pur-
chase of explosives:
(a) Bifle and Heavy Mashina Grm Powder
Contract with the Hercules Powder Company for 300 tons
per month, deliveries to start in November 1940 for
one year.
(b) Cannon Powder
2,000 tons from Du Pont and Rercules, deliv-
eries from May 1940 to August 1941. some intituties are
still required from n.s. Govt
(c) I. 1. X.
2,000 tons purchased from the Atlan Company, deliveries
May 1940 to January 1941.
9,000 tons purchased from the Atlas Company from DEW
facilities to be constructed, deliveries September 1940
to December 1941.
(a) Bitro-Calluless
American Cyanamid Company 6,000 tons, deliveries July
1940 to September 1941.
Seroules Powder Company 1,600 tons deliveries June 1940
to December 1940
Regraded Uclassified
- 4 -
228
Kitro-Collulose (continued)
These contracts are now being consluded.
Inquiries are DOW being made from the Nercules
Powder Company for/1,200 tons per annum of Nitro-
Collulose to be produced from new facilities.
Hereules Powder Company is at present producing 125
tons a month for the Picatinny Arsenal. It would
be very helpful if the United States Government would
give & release to the Heroules Powder Company for this
amount.
Inquiries are also in progress with the Monsanto Chem-
ical Company for small quantities of Nitro-cellulose.
These enquiries have not yet been concluded.
(e) Cannon Powder
Negotiations are being concluded with Du Pont for
20,000 tons per Annual of sannon powder. Production
from new facilities is expected to commence in January
1941.
We are negotiating for the production of 12,000 tons
from Defence Industries Limited, Canada, and the
assistance of the United States Covernment is required
for providing the necessary technical assistance to
enable this programme to be developed.
Regraded Uclassified
23
11. Light Metals and Alloys
(a) Aluminum
Orders placed I Tubes
...
...
...
427 tons
Bods & Hexagonal Bare
2,675
-
Forging Stock...
1,000
-
...
Further orders are at present under negotistion for
Tubes . 800 tons, and Rods etc. - 4,850 tons, making
B. total of all requirements of 9,752 tons.
Ingots All recent orders accepted by Alusinus Company
have been subject to provision that the time may come
when they may not be able to supply the necessary ingot,
They have inferred that they must protect the ingot
stock because of U.S. Government requests and other
domestic requirements.
The manufacturing capacity for Tubes is not, at present,
equal to our requirements. If general priority were
granted over domestic business for Tubes, it is consid-
ored that this would be helpful, although it is question-
ned, as it is felt that the domestic Tube orders are
probably from manufacturers who are building planes for
the Allies.
(b) Magnesium
Orders have been placed with the Dow Chemcial Company
for 1,800 tons, and with the Aluminum Company of America
for 50 tons, deliveries extending to December 1941.
Additional production is urgently needed to the extent
of an additional 200 tons per month up to September 30,
1940, the need for which is very pressing. The Dow
Chamical Company has its entire production absorbed by
domestic requirements until September 30, 1940. It is
suggested that the U.S. Government might grant priorities
over any requirements that they may have.
(a) Duralusin
Orders have been placed for sheets, rods and extrusions
totalling approximately 15,000 tons with the Aluminum Co.
of America and Reynolds. Deliveries extend to March
1941.
There is also an urgent requirement for approximately
2,000 tons of bars and rods for fuses, airframes, engines,
etc. and 350 tons of tubes, which 16 have not u yet
susceeded in placing.
Regraded Uclassified
- . 0
230
Any curtailment of domestic requirements other
than for plane manufacture would be very helpful
in expediting the production for our needs.
12. Instruments
(a)
5,000 generators are required, but 100 have been
informed that a potential bettle-neck may occur
due to heavy U.S. Naval demands, as well as
domestic industrial requirements. Priorities
in this instance would be very helpful.
We understand that enquiries have been received
by U.S. manufacturers (Westinghouse Electric)
from the Japanese for comparable generators.
(b) Binesulars
Orders have been placed for 4,600 pairs of binoculars
with Bosch & Lomb. Deliveries on an increasing
basis up to December 1940. Bosch & Lomb are the
only manufacturers capable of meeting specifications
and deliveries. The International Research Coporation
of Ann Harbour, Michigan expect to have samples of
bineculars by June 1. They are now in Washington
seeking assistance for mass production, which they
place at 250 pairs per week.
M
Regraded Uclassified
231
Phe young has - has into -
MEHORANDUM
copyot
yes
Explosives - Nitrocellulose Powder
The present production of the American powder and
nitro-cellulose industry cannot meet the needs of the
British and French Governments. These Governments must
therefore provide facilities to the injustry in the United
Etates for the expension of its production.
However, the American companies to which the
Allied Governments can apply for supplies of powder and
nitro-cellulose: Du Pont de Nemours, American Cyanswid
Consery, Heroules Powder Company, do not wish to undertake
for their own account the task of increasing their present
glant production for war purposes. They see, on the con-
trary, no objection to building 600 operating powder plants
and nitro-cellulose plants for the account of the two
Governments interested.
In there circumstances, there is no other way for
the Allied Governments than to own the powder end nitro-
cellulose plents to be erected in the United States. It
is proposed to increase the capacity of en existing plant
at Maynard, Massachusetts, owned by American Cyanamid
Company, and to arrange with Du Pont de Nemours to build
L new plant it Memphis, Tennessee, and possibly to arronge
with Hercules Powder Company to build another plant at
Parlin, New Jersey.
The Allied Governments would accordingly wish to
mo: .hether the U. S. Government has any objection to their
organizing one or more United States Corporations, under the
less of Massachusetts, New Jersey, Tennessee, or any other
state, to buy, build or operate munitions factories in the
United States. The capital would be furnished by the
British and French Governments, and there would be no ques-
tion of credit given by American banks or industrialists to
the Governments for that purpose.
aBP
Regraded Uclassified
(The following letter - given over the telephon by Mr.Graville
Saith, who advised that the original letter wes going forward by air sell to-do
CANADIAN INDUSTRIES LIMIRED.
Montreal, P.Q.
May 18th, 1940.
Mr.E.B.Yancey,
General Manager,
Explosives Department,
E.I.Du Pont de Nemours and Co.,
Wilmington.
Dear Sir,
You will recall our discussion and correspondence
carlier this year concerning the possibility of your Company making
available to us complete plant and manufacturing information for the
production of Nitrocellulose Smokeless powder in Canada, At that time
your Company decided after full consideration it W-S.B. unable to supply
the information to us.
The manufacture of Nitrocellulose Powder in Canada
has recentl, been the subject of further discussion between the Department
of Munitions and Supply and ourselves. While we are aware of the con-
sideration given to this matter by Du Pont on the action of our previous
request for information, #0 should be pleased if your Company would
review the irc.motances with a view to re-consideration of the position
If possible.
In the event the Du Pont can release the information,
we are outlining below for refe ecce the acope of the assistance -
requested earlier. Owing to the employment of our engineers and drafts-
sen 00 other projects of national importance, we should like The Pont 4. to
prepare is complete plant layout and detailed designs,and in summary
form of assistance se should like to receive is as follows:-
1. Design and full detailed plans of - plant capable of
producing 1,000 toas of N.O.T., per month.
2. 411 information relative to the anufstturing processes
and operation of plant.
3. The loan to the Canadian Contractor of 10 Technicians
for El period of three months.
L The training by the United States Manufacturer of Len
Canadian Techniciens for 54 pariod of three months.
5. Such information RE to sources of supply of special
machinery and appliances, and such assistance in 114
produrements a.B may be possible.
8. Buch continuing liaison betwein the United States
Manufacturers and the Canadian Contractor no aay
necessary for the auccessful development of production.
A site for the plant has been tentativaly selected by
ware authorised so should suggest Du Pont engineers visit the proposed
the Department of Munitions und Supply and immediately the projects
site to obtain the necessary information to lay out the plant.
As this is a matter of considerable urgency, 13 should
greatly appreciate if your Company could give the earliest possible con-
sideration to this request.
Tours instancily,
Regraded Uclassified
les
meeting
233
Anglo-French Purchasing Board
Colt Guns for New Aircraft Programme
Just as we were about to sign our contract
with Colt (the negotiations had been completed) the
question of United States Army needs intervened.
Up to that time no capital assistance
was required by Colt from the Allied Governments as
Colt's were able to meet our schedule from existing
plant.
On Friday, May 17th we were advised that new
United States Army requirements necessitated plant
expansion to the amount of $2,148,100 (possibly plus
10%) which the Allies must therefore pay.
We feel this is not consonant with the
policy declared and trust we can be relieved of the
burden.
The situation is urgent.
Regraded Uclassified
234
Anglo-French Purchasing Board
Specification and Inspection Problems
Two types of problems have emerged:
(a) We are unable to obtain United States Govern-
ment specifications, when on the restricted list,
until after we have placed our contract with the
contractor, and other than from the contractor, who
may or may not disclose to us the whole story.
Inspection is therefore made very difficult.
(b) The United States Navy is so rigid in
enforcing their regulations as to result in situations
which in practice prevent our making inspection. For
instance in the Bethlehem Steel Works a screen had to
be erected by the contractor around his shell forging
machinery. Now that the weather is too warm the work-
men have insisted upon the screen coming down. This
means our inspector cannot watch the forging work.
Could the regulations governing these two situations
be relaxed a little.
Our Directors of Inspection are available for any
necessary discussion.
May 21, ¹⁹₄0
DATE
Regraded Uclassified
235
Anglo-French Purchasing Board
Explosives Programme
Manufacture in the United States
Nitrocellulose and
Nitrocellulose Powder
Negotiations are in active train as follows:
With the DuPont Company for the erection and
operation of a new plant at Memphis, Tennessee
(subject to verification of water supply now
in process) for:
24,000 tons per annum of nitrocellulose
powder including 12,000 tons of the
nitrocellulose required for this
powder.
With the American Cyanimide Company for expansion of
their plant at Maynard, Massachusetts, to make
6,000 tons of nitrocellulose to be shipped as
such to France.
Negotiations may also have to be undertaken for the ex-
pansion of the Hercules Powder Company plant at Parlin, New
Jersey, or at Hopeville, Virginia, for the balance of the
Regraded Uclassified
236
2.
12,000 tons of nitrocellulose required to supply the
projected Memphis nitrocellulose powder plant.
We would much prefer to make this additional
12,000 tons of nitrocellulose at Memphis, Tennessee, so as to
give a balanced operation.
The object of turning to Hercules for half the
nitrocellulose requirement is to help in supplying a
vital French requirement of 2,000 tons of nitrocellulose
in 1940. Hercules can expand their plant quicker than
DuPont can build a new one. If that 2,000 ton requirement
could be otherwise met, we could do the whole operation
at Memphis.
There are two possible ways to meet the situation,
at least partially:
(a) To find some way of overcoming the legal
difficulty of transferring nitrocellulose
producing equipment held by the U.S. Army
as "Spares" to the DuPont Company, thus
accelerating their nitrocellulose plant
completion prior to end of 1940. This equip-
ment is the bottleneck.
(b) To obtain a further release of 125 tons
monthly of nitrocellulose which Hercules
Powder Company is now delivering to Picattiny
Arsenal.
Regraded Uclassified
3.
237
In the interests of building a balanced plant at
Memphis can these two things be done?
May 21, 1940
OBVI303A
CARI IS YALI
National) maint
2007 - is
338
May 15, 1940
To Purvis
From Monnet
The British Ministry of Supply
and the French Armaments Ministry have now agreed
to discontinue the present method for British and
French purchases of steel and to make 11 such
purchases through the Anglo-French Purchasing Board
in New York.
2.
Before this decision is put into
effect it is necessary to ensure that the necessary
technical knowledge is at the disposal of the Board.
For this purpose an Anglo-French Mission of experts
is leaving for New York in the middle of next week.
This Mission will study the situation or. the sgot and
make, in agreement with you, Whatever technical
arrangements my be necessary end on its departure
will leave behind in New York British end French ex-
perts the will be appointed members of the British
and French Missions respectively.
3.
Mennwhile the British having exist-
ing contracts for the surily estim ted to be needed
t111 the end of the ye F. do not intend buying any
further steel in the U. .A. except that they may
t-ke DD an option which they have on 100,000 tons of
steel. If they do so you will be informed. The fol-
lowing urgent purchases on the French account which
are at present under necotiation will ?also? have to
be finalised before arrangements for mekine purchases
through the Board can be completed:
Tubes rounds (sic)
(for making bombers)
21,000 tons
Cold rolled strips
4,000 tons
Presks
400 tons
4. satisfactory to you and to the American Administra-
We trust these arrangements will be
tion both no- and for the future. You are authorised
to inform Mr. Morgenthau of the contents of this tele-
gram.
Secretary of
Regraded Uclassified
THE WHITE HOUSE
WASHINGTON
May 21, 1940.
LANDUM FOR
SECRETARY MORGENTHAU:
To speak to me about.
F.D.R.
Regraded Uclassified
FEDERAL WORKS AGENCY
PUBLIC BUILDINGS ADMINISTRATION
SUPERVISING ARCHITECT
WASHINGTON
lieve us-
THESE LETTERS
SA-
EA
Any
The President
The White House
My donr Mr.
There in 7 usend survice which - - ENTA the you
can render 117 this tisin, artivity, it in to "
pictorial TO/TI- of the power of our country to tain
offset the WEYO of defortier in which the country 10
wallowing. To every out the lan, I would mobilize t. of
the best artists in thin country to point IN serior n° insures
that yould effectively show that "it can he cone". within this
general theme the ortisté themselves and our on miration 00110
develop the in for receming myc.
We orcrate 45,000 noet offices in this
country and the daily attentance runs into the millions. Without
addition to the present States of roat offices end through the
cooperation of the Post Office Department, we could circulate
the Dictures reaching 02 large n miblic 06 the nail
itself. It secure to ne there 12 y imique meana for sublicity in
a program of this kind both through nost office exhibitions and
the demand them understodly be from und the press
for pàinti mild Frie artoctive visual evidence of your
defense To every nut such D and re mire All
minute fraction - 10/F une 100 cent 1000 in provertion to the
construction N°F completed with rearmement.
If you envoye of the Icea. which I hope you will, I
think we entry it out 11thous taking any 02 your time.
Edwarstruce Very respectfull
Unier of the section of Fine Arts
Regraded Uclassified
241
May 21, 1940
4:07 p.m.
H.V.Jr:
Hello.
Onerator: I have Mr. Purvis.
H.V.Jr:
Thank you.
0:
G₀ shead, please.
H.",Jr:
Hello.
Arthur
Purvis:
Good evening.
H.M.Jr:
How are you?
:
Fine, thank you.
M.M.Jr:
Look, I have everything that you gave me to General
Varshall.
P:
Yes.
P.V.Jp:
And I have not yet heard anything from him but he
16 working on it.
:
Yes, quite.
F.M.Jr:
And as he gets B. chance toolear any of it he's going
to send it over to me, so I'm going to beg off the
rest of the day because I've not nothing more.
P:
No, I think quite right too.
And then if -- are you going to be in Washington
tomorrow?
P:
I -- I think what I shall do 18 to stay over BAY
until after lunch tomorrow then I think I would --
unless there was something that would make it wise
for me to etay more, I would run un -- get my --
keep my stuff un there, and then come down
again the minute you felt it would be useful to
do it.
Now, I didn't get that,
242
- 2 -
P:
I thought that I would stay down until after lunch
say tomorrow, anyway; then if by that time there
doesn't seem to be any reason for staying any longer
I would run up to New York, get my stuff into good
shape again, and hold myself ready there for the
Institute told me that something could be usefully
done here. Then I would come back.
H.M.Jr:
Now, those last three memorandum that you gave me
just before lunch.
e.
Yes.
H.M.Jr:
I only had one copy of each end I gave those all to
General Marshall.
e:
I think I've given others to Young but I'll check on
that, and I'll see that you get further copies.
H.M.Jr:
Well, I'll ask him and if not should he get in touch
with Ballantyne?
P:
Yes, Well, I'll see the t Ballantyne gete in touch
with him. I'll ring Ballantyne straightaway.
H.M.Jr:
Thank you BO much,
P:
And I do feel -- I don't know whether it -- it's over-
anxiety at all, but it does seem to me now that --
good heavens, any help they can give, maybe P. valuable
thing for this side 85 well 8.8 the other. Am I wrong
in thinking that?
H.M.Jr:
What?
e:
That really any help that can be straved to give us
now -- I mean, if they can find ways AB for 28
technical difficulties in any way -- the fire 18
burning and I do hope that the legalities of things
can -- lawyers are 80 awfully good in finding lood-
holes in their own shoes.
H.M.Jr:
My dear Arthur, I have felt this way for a year and
a half.
e:
I'm sure you have, Henry.
243
- 3 -
H.M.Jr:
And I don't have to begin.
P:
No, I'm sure of it.
A.M.Jr:
So if -- if it's humanly possible
P:
it'll be done.
H.M.Jr:
But that's a big order you gave us.
P:
I know. Oh, it's a tremendous order.
H.M.Jr:
And General Marshall left here and said he would
start at once on it.
P:
Oh, and I'm sure he will too.
H.M.Jr:
And he works fast.
P:
Good!
H.M.Jr:
So just see the sights of Washington and keep out
of trouble and I'll talk to you in the morning.
P:
Good work. Fine. Thank you very much. Good night.
C44
May 21, 1940.
MEMORANDUM FOR THE PRESIDENT:
I am enclosing herewith a memorandum setting forth in
brief our objections to H. R. 9822, a Bill to expedite
naval ship building and for other purposes. I feel very
strongly that this legislation is unnecessary, undesirable
and definitely objectionable.
(Signed) H. Morgenthan. 3r.
ORIGINAL runwAnder Incolet
FROM OFFICE OF THE SECRETARY
By Messenger 500 few
JL3:kb
Regraded Uclassified
245
MAY 1940
MEMORANDUM FOR THE PRESIDENT:
I have for the first time this morning seen a copy of
ila R. 9822 which was introduced by Mr. Vinson yesterday afternoon.
Consequently, I have not been able to make a thorough study of all
of the provisions of the Bill. However, even a very hasty examine-
tion discloses that it is & thoroughly objectionable measure.
Section 1 of the Bill provides that during the period of
national emergency the Secretary of the Navy may advance to con-
tractors up to 30% of the contract price. Though I do not ses
the necessity for such a provision I interpose no objection to it.
Section 2 provides that during a national emergency the
Secretary of the Navy may negotiate contracts without the necessity
of competitive bidding. The objections to lack of competitive bid-
ding are unnecessary to state. It may be that under the present
circumstances the provisions of Section 2 can be justified. However,
I feal that if such a provision is adopted, in order to protect the
profit limiting provisions of the Vinson-Trammell Act, it is advis-
able to make further provision 80 that the profit will be limited to
a percentage of cost of wall as to a percentage of the contract price.
Section 3 abrogates the provisions of the Walsh-Healey Act and
Section 6 modifies the provisions of the Wages and Hours Act. In 4)
opinion there is no necessity, but indeed a positive danger in modi-
fying the provisions of the Wages and Hours Act and in suspending
the Valah-Hoaley Act. The attitude of labor and its continued 00-
operation are seriously threatened by such hasty action with respect
to Lass affecting labor rights.
Section 4 provides that during the period of national emergency
the provisions of the Vinson-Tramell Act shall apply only to contracts
and subcontracts in excess of $25,000. The present limitation is on
contracts and subcontracts in excess of $10,000. In RV opinion this
Regraded Iclassified
- 3 -
Regraded Uclassified
section 10 sbjectionable and offere a serious leophole valess at
anandment along the following lines is added:
"Provided, however, that the contracts of
any contractor or subsontraster receiving awards
in excess of $25,000 is any cas year shall be
subject to all of the provisions of the aforessid
note."
Section 5 provides for the determination by the Secretary of
the Navy of cost of special facilities for the profit limiting pur-
poses of the Vinson-Trammell Act and the amount to be charged to
a particular contract. We have previously vigorously objected to
such an amendment and on February 2, 1940, Chairman Vineen wrote
to no that a similar prevision in 1. R. 8026 would be withdrawn
from consideration. Such a provision would completely demoralize
the efficient workings of the profit limiting provisions of the
Tinson-Trammell Act. It would remove cost determination from the
Treasury Department which is from every vievpoint best qualified
to determine cost and which is entrusted with the administration
of the profit limiting provisions of the Ast.
Sections 7. 8 and 10 affect personnel and employees of the
Navy Department and the neval establishments, and with respect se
such personnel and employees permits suspension of provisions
of the Civil Service Act and other Acts affecting their employment.
I have no information as to whether or not the policy involved is
these sections in a desirable one.
Section 9 adds se the authorisation $50,000,000 provided for
by the Act of July 80, 1937, an amount equal to the additional
costs regulting from the provisions of this Bill. Whatever the
policy my be with respect to increasing the authorization of the
beforementioned 408, it is certainly undesirable to have the La-
crease phrased is such astigneus language. the additional sosts
resulting from the provisions of this Bill are in my opinion a
standard for an additional appropriation that it practically 10-
possible to determine.
Section 10 confore upon the President of the United States
authority to suspond the Civil Service Act. This law is entirely
superfluous as under existing legislation you have edeguate
authority to great exemption. the enactment of Section 10 of the
law will create troublessme patronage difficulties which to tura
vill result in friction and cenfusion.
247
- 8 -
Section 11 provides that the "national - shall be
docume to include the limited national energency desilared to exist
en September 8, 1989. Section 12 provides that the provicious of
shall be effective for a period of three years beginning = with
date of the suproval of this Ast. The extent to which these
already marked to not alear. we - is be clearly determined
sections, when read jointly, retreactively affect contrasts
what will be the effect - contracts avarded during the three-
year period and M to which as cost determination has been made
prior to the expiration of mah period.
TREASURY DEPARTMENT
248
INTER-OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
May 21, 1940
FROM
E. H. Foley, Jr.
Congressman Vinson, Chairman of the House Naval Affairs Committee,
has introduced a bill which would, if it becomes law, effectively sabotage
the provision of the Vinson Trammell Act insofar as Treasury control is
concerned. The provisions of the bill would permit the Secretary of the
Navy, subject to the approval of the President, to determine the proportion
of the cost of special additional equipment and facilities which would not
be included in determining the profit limitations imposed by the Vinson-
Trammell Act. In other words, the Secretary of the Navy, subject to the
approval of the President would have final say as to the cost of plant
expansion and additional equipment which would be allowed to manufacturers
outside the Vinson-Trammell Act. Under existing law such determination must
be made by the Secretary of the Treasury. The provision is subject to the
construction that it would apply to all contracts entered into by the Navy
subsequent to September 8, 1939. This means that all of the effective work
which we have done in connection with holding down the profits to be realized
on Navy contracts by Consolidated Aircraft, Electric Boat and many other
companies would be mullified.
I understand that Chairman Vinson discussed this provision with the
President at noon today and obtained his qualified approval. I am told
that action will be taken on the bill tomorrow morning.
You might want to consider saking the President to call Chairman
Vinson and request that he withhold action on the legislation until the
President has had an opportunity to hear the views of the Secretary of the
Treasury on the matter.
I am attaching a copy of the bill and have marked the provision in
question.
John Sullivan and I will be available this evening should you want
to talk to us about it.
E.r.th.
Attachment
3
249
1
SEC. 3. The President of the United States is hereby
2 authorized during any national emergency declared by him
3 to exist to suspend, with respect to naval contracts, the pro-
4 visions of the Act approved June 30, 1936 (49 Stat. 2036;
5 U.S. C., Supp. V, title 41, sees. 35-45), whenever, in his
6 judgment, compliance therewith would be prejudicial to the
7 national defense.
8
SEC. 4. The provisions of section 3 of the Act of March
9 27, 1934 (48 Stat. 505). ns amended by the Acts of June
10 25, 1936 (49 Stat. 1926). and April 3, 1939 (53 Stat.
11 560; U. S. C., Supp. V, title 34, sec. 496), shall, during
12 the period of any national emergency declared by the Presi-
13 dent to exist, be limited to contracts or subcontracts where
14 the award exceeds $25,000.
15
SEC. 5. During any national emergency declared by the
16 President to exist the decision of the Secretary of the Navy
17 as to the necessity and the cost, including the proportion
18 thereof to be charged against the particular contract, of
19 special additional equipment and facilities required to facili-
20 tate the completion of any naval vessel or aircraft, or parts
21 thereof, in private plants shall be final, subject to review
22 only by the President and the Federal courts. This decision
23 may be made nt any time after the contract is awarded if
24 in the judgment of the Secretary of the Navy sufficient data
25 are available to permit of reasonable accuracy: Provided,
4
5
1. That the Secretary of the Navy shall report to the Congress,
1 ernmeut employees; and to similar classes of employees of
2 al the beginning of each regular session, the cost of such
2 contractors and subcontractors: Provided further, That in
3 special equipment and facilities to be horne by the Govern-
3 determining the overtime compensation of per annum Gov-
4 nent under ench contract.
4 ernment employees the pay for one day shall be considered
5
SEC. 6. Notwithstanding the provisions of any other law
5 one three-hundred-and-sixtieth of their respective per annum
6 the regular hours of labor for employees of the United States
G salaries: Provided further, That the hours of labor in any
7 Government, and of contractors and subcontractors, when
7 one week shull not exceed forty-eight nuless the President
H such employees are engaged in work in connection with noval
8 shall declare it necessary in the interest of the national
9 vessels or aireraft or parts thereof or other work incidental
9 defense: Provided further, That the President of the United
10 thereto, shall, during the period of my national emergency
10 States is authorized to suspend during the period of any
11 declared by the President to exist, be a five-day week of
11 national emergency declared by him to exist, the provisions
12 eight hours per day and forty hours per week: Provided,
12 of the Act of March 3, 1931 (46 Stat. 1482), if in his
13 That these hours may be exceeded and that such employees
13 judgment such course is necessary in the interest of the
14 shall receive compensation for their employment in excess
14 national defense: And provided further, That the Secretary
15 of the hours above specified at a rate not less than one and
15 of the Navy is authorized to modify existing contracts
10 me-balf times the regular rate at which they are employed:
16 accordingly.
17 Provided further. That such compensation for overtime
17
SEC. 7. Notwithstanding the provisions of section 204
18 shall apply only to per diem, hourly, professional, and sub-
18 of the Act of June 30, 1932 (47 Stat. 404; U. S. C., title
19 professional employees and to blue printers, photostat and
19 5, sec. 715), the Secretary of the Navy is authorized to
20 retoprint operators, inspectors, supervisor planners, esti-
20 reemploy during the period of any national emergency de-
21 Diators, and progressmen, and assistants to shop and plant
21 clared by the President to exist, retired employees of the
22 superintendents of the CAF service, all as defined by the
22 Navy Department and the Naval Establishment, under
23 Classification Act of March 4, 1923 (42 Stat. 1488; U.S. C.
23 such rules and regulations us may be agreed upon by the
34 5. eb. 13), ns amended, and by the classification rules of the
24 Navy Department and the Civil Service Commission. Such
25 United States Civil Service Commission in the case of Gov-
25 reemployment studl be without prejudice to any rights to
Regraded Uclassified
6
T
1 retirement or annuity heretofore or bereafter accruing to
1 to suspend such portions of the Civil Service Act or the
2 such employee, as provided by law, except that the pay-
2 civil-service rules as may be necessary to prevent any delay
3 ment of such annuity shall be suspended for the duration
3 in obtaining required acceptable civilian employees in the
4 of the reemployment.
5
4 Navy Department and the field service thereof.
SEC. 8. The Act of March 14, 1936, entitled "An Act
5
SEC. 11. As used in this Act, the words "national emer-
6 to provide for vacations to Government employees and for
6 gency" shall be deemed to include the limited national
7 other purposes" (49 Stat. 1161) is hereby ameuded by
7 emergency declared by the President on September 8, 1939.
8 adding, after section 7 a new section to read as follows:
8
SEC. 12. The provisions berein contained shall be effec-
9
"Sec. 8. Employees of the Navy Department and the
9 tive for a period of three years beginning with the date of
10 Naval Establishment may, during the period of any national
10 approval of this Act.
11 emergency declared by the President to exist, be employed
12 during the time they would otherwise be on vacation with-
13 out deprivation of their vacation pay for the time so worked.
14 Employees who forego their vacations in accordance with
15 the provisions of this section may be paid, in addition to
16 their regular pay, the equivalent of the pay they would
17 have drawn during the period of such vacation. The pro-
18 visions of this section shall be applicable only to employees
19 in those trades and occupations wherein a shortage exists."
20
SEO. 9. The limit of cost of the vessels authorized by
21 the Act of July -30, 1937 (50 Stat. 544), is hereby
22 increased by an amount equal to additional costs resulting
23 from the provisions of this Act.
24
Smc. 10, During any national emergency declared by
25 him to exist the President of the United States is authorized
Regraded Uclassified
TOTA CONGRESS
3p SESSION
H. R. 9822
IN THE HOUSE OF REPRESENTATIVES
are
MAY 20, 1040
I #
Mr. VINSON of Georgia introduced the following bill: which was referred
to the Committee on Naval Affairs
Referred to the Committee on Naval Affairs
MAY 20, 1940
By Mr. VINSON of Georgia
vasodand
To expedite naval shipbuilding, and for other
A BILL
H. R. 9822
A
BILL
To expedite naval shipbuilding, and for other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tines of the United States of America in Congress assembled,
3 That whenever in the opinion of the President of the United
4 States such course would be in the best interests of national
5 defense during any national emergency declared by the
6 President to exist, the Secretary of the Navy is authorized
7 to advance, from appropriations available therefor, payments
S to contractors in amounts not exceeding 30 per centum of
9 the contract price, upon such terms as he shall prescribe,
10 and he shall require adequate security for the protection of
11 the Government for the payments so made. He is further
Regraded Uclassified
2
1 authorized in his discretion to make partial payments on the
2 balance of the contract price from time to time during the
3 progress of the work, such partial payments not to exceed
4 the value of the work already done, but to be subject to a
5 lien as provided by the Act of August 22, 1911 (37 Stat.
6 32; U. S. C., title 34, sec. 582), entitled "An Act author-
7 izing the Secretary of the Navy to make partial payments
8 for work already done under public contracts": Provided,
9 That the Secretary of the Navy shall report to the Congress
10 at the beginning of each regular session the advance pay-
11 ments made under the authority of this section.
12
SEC. 2. That whenever deemed by the President of the
13 United States to be in the best interests of the national
14 defense during any national emergency declared by the
15 President to exist, the Secretary of the Navy is hereby an-
16 thorized to negotiate contracts for the acquisition, construe-
17 tion, repair, or alteration of complete naval vessels or nir-
18 craft, or any portion thereof, including plans, spare parts,
19 and equipment therefor, that have been or may be author-
20 ized, and also for machine tools and other equipment, with-
21 ont competition: Provided, That he shall determine the price
22 to be fair and reasonable: Provided further, That the Secre-
23 tary of the Navy shall report to the Congress at the begin-
24 ning of each regular session the contracts entered into under
25 the authority of this section.
Regraded Uclassified
THE WHITE HOUSE
file 250
WASHINGTON
May 21, 1940.
MEMORANDUM FOR
SECRETARY MORGENTHAU:
To speak to me about.
F.D.R.
are for then with thes
251
EG
GRAY
London
Dated May 21, 1940
Rec'd 1 p.m.
Secretary of State,
Washington.
1303, May 21, 5 p.m.
FOR THE SECRETARY OF STATE.
Amid the welter of immediate things let me give
you for what it may be worth my conclusions as to what
WE should not do in our rearmement program if WE want
to avoid the mistakts which I have SEEN the British
make.
One. Not to understimate the punching power of
n. collectivist system.
Two. Not to plan & rearmament program picommeal.
Three. Not to fail to face up to the capital out-
lay problem, 1.E. Either by giving large enough orders
initially so that private manufacturers can SEE their
way clear to undertake the required plant expansion or
Else subsidize that plant expansion directly, paying
the management a fee for operating. The strategic
location of new plant in terms of its defense as well
as the proximity of its sources of supply must also be
considered. The importance of quantity production
capacity
Regraded Uclassified
2
-2- #1303, May 21, 5 pim. from London
capacity at any given time should not be forgotten
and provision of quantity capacity should not be de-
layed for considerations of new improvements no matter
how important the development of designs may appear to
be.
Four. Not to fail to face the absolute necessity
of unification of supply purchases, to avoid competitive
bidding for labor, material and finished products, and
the need for demarcation as between civilian requirements
and armament requirements. A conconitant of this lies in
alleviating skilled labor bottlenecks by undertaking,
before required, training of such, not forgetting that
the fighting services may also suddenly require large
numbers of mechanics with just such training and EX-
perience.
Five. Above all not to imagine that n formidable
armament program can bE done cheaply and that waste can
bE avoided by cutting out or down requirements which the
fighting services regarded 18 assential.
KENNEDY
HPD
Regraded Uclassified
253
May n. 1940.
Dear Mr. Keechin:
On behalf of the Secretary. I vest
to acknowledge your letter of May 13th,
which encloses a copy of one dated April 8th
and received by you from Mr. Van Patter in
China.
Mr. Morgenthau appreciates having
this, and the material will be very
carefully studied.
Sincerely yours,
(Signed) H. S. Klotz
E. 8. Klets,
Private Secretary.
Mr. J. L. Keeshin, President,
Keeshin Freight Lines, Inc.,
221 West Roosevelt Read,
Chicago, Illinois.
GEF:lmf
Regraded Uclassified
254
KEESHIN FREIGHT LINES, INC.
J.L.KEESHIN
221 WEST ROOSEVELT ROAD
PRESIDENT
CHICAGO
May 13, 1940
Hon. Henry J. Morgenthau, Jr.
Secretary of the Treasury
Treasury Building
Washington, D.C.
My dear Mr. Secretary,
I am enclosing herewith
a copy of 8. letter which I received from
Mr. C. W. Van Patter, from Kweiyang, China
written under date of April 6, 1940, which I
know you will find interesting.
With kindest regards,
Sincerely yours,
J. L. Keeshin
JLK:LR
Enc.
COPY
April 8th, 1940 255
Kweiyang, China
i. L. Ressipa
221 N. Noosewolt Road
Illinois
Mr. years your
I have unglected to make any late reports concerning my activity here in China
the kg. Sheahen was returning with all the necessary information pertaining to
or nork.
on April Fourth, I left Kunming and arrived in Kweiyang on the fifth. May Pan
1 travelled by motor car and we noted with pleasure that the highway has section been in-
------ El acctionably since our trip over it last September, particularly the been from
bearer to Tweiyang. The t wenty four turns just west of Annan have also improved
mesiderably extent, with the hair pin turno being widened and guard rails installed
all or the dangerous points.
The following will give you a. fairly clear understanding of the present main-
teelly activity here in China,
La limp Buildingsand Equipment
(a) Holakward - located on the Yunnan Surma highway. It will be approximately
forty days before these buildings are completed in every detail. However, the repair
have been finished which will permit this a dministration to maintain the new trucks
will such time 86 the machine shop building is ready for use. This shop will by far be be
The larguat the Burma route so therefore all of the major work and rebuilding will
conducted at on this location. It is thought that they will operate trucks between Wanting
and Reinkwon, while the tractor trailer may be used on the Eastern section of this to high-
wey. properly extablish this shop has been transported in from Lashio, Burma and is now in stored the
horn than sixty five percent of the shop equipment that will be necessary
The of the repair shede. The remaining equipment will be brought into China
may MAT Inture.
equipment been distributed to this location and are now being used to B. good
tastern station Kumming of Kunming - are completed and also ninety five percent of the advan- and
(b) The B shop or garage buildings which are located in the tools extreme
are, It 701 -176 B. good maintenance program has been put into effect with very satisfying
results.
The AN shipp and equipped with the necessary tools end machinery well to as all
- located on the Kunning Kweiyang highway seven kilometers East of do
the work body building on the motor vehicles that are assigned to and all A
complete of the exchange units for the garage located in Kunming as the
more or Before I left Kunming the power plant had been installed be
Interence. Loal The motor driven equipment was all checked to of both in
order wiring and completed. for use, A meeting WEE held b. the maintenance men and put
PAY
aftern. the afore-mentioned facilities are adequate to maintain the present further num-
FILL is of basic ready principale for maintenance procedure were discussed
and Chese busses to Kunming. However, it was suggested that ex- of
A shop may assigned be necessary to compensate for any additional consolidation
rehicles.
12) the Iwelyang garage have been completed while more than ninety operating percent
- The buildings which are located six kilometers five out of
ime time has and been in view of the obstacles encountered here in China
Kunming highway installed and in use. This establishment has been at the
Regraded Uclassified
+
256
time 1 think they are doing 8. very good job. The therefore supervisors I have and mechanics high hopes have that
revent to a great extent within the past two months within so M short tire.
stored (1) shop will take its place among the better ones very
Kunming (c) H, ghway have been completed and in encountered use. This establishment here in China at the present operating
Kweiyang - The garage buildings which are locates six kilometers has out been of Kweiyang
0 the some time and in view of the obstacles and mechanios have improved
of quite think they are doing a very good job. The supervisors that thisshop will to
IM 1 extent within the past two months within 80 therefore short 1 have time. high hopes
take great its place among the better ones a very
shop is not yet operating but the machine shop building is now work. completed It is and
are moving that within the next three months this shop will be operating transferred to this location sixty
The & in and setting up the necessary squipment for the rebuilding on a fifty to
wreent April 11. I will stay in Kweiyang úntil thisshop has been established operation.
The mechanics have been trained and will be and in
(d) Chungking - The buildings st the A shop located 14 KM. south of moved Chungking into the are
Coroules secoine shop power plant which 10 now enroute. The maintenance and running repair is now
sompleted and tool room. This shop will be ready for operation on work
and must of the equipment has been transported from Kunming and arrival of the
in effect at this location.
The a eighty shop percent of the necessary machinery and tools have arrived to put this into
buildings at Ewn-Lung-Chino, a. suburb of Chunking are completed and while
approximately imrediate use. The remaining twenty percent of equipment that has been assigned
shop are enroute from Kunming.
Lanchow and Paochen - On the North West highway. The shop and garage this buildings highway
which are thought recently. The shop machinery and tools for the However, I
(e) to be adequate to maintain the motor vehicles operated over Northwest Adminis-
tration have had were word crated since that time that part of them have been loaded on trucks are en-
love teen completed and only checked at the Kunming Stores before I 1fet that city. and now
route to their destination.
(f) Luhsien for this location. The necessary tools and equipment necessary to
- In view of the present truck operation it was thought that a. have garage been
service would be sufficient and are now in use to a good advantage. It will contemplated be
trucked in from Kunming facilities in this city at 6. later date due to . four months. tractor
expand and trailer the maintenance operation which will no doubt be put into effect within the next
since Spring for expansion and better equipment reasonable
the (g) Hwanghsien of 1939. It is capable of maintaining the present have vehicles been
- The shop in this city has been established number and in of operation motor
That rade are for arrigned this shop to but that in territory. view of the Plans present conditions, it 1: thought be be
to wait until some future date before putting them into effect.
II CONDITION OF THE MOTOR TRUCKS AND BUSSES
isnoted in the condition of the trucks being and also performed the road by
service calls & alight are less improvement which verifies that better maintenance is now
Tert of the
shops and garages. has shown very little improvement partly due the to torturous the fact roads that
the 8061es The bus operation in comparison to the motors and chassis director for of CTC has con-
that they have were to too be large operated over. to this Mr. serious Y. C. Chen, croblem managing and it W&B decided that before they twenty would
build suited the with bus Mr. bodies Bassi to in accommodate regard sixteen passengers and baggage whereas
four to twenty six people was the usual load.
Regraded Uclassified
757
711 PART AND SUPPLIES
The shortage of parts has been quite & problemto the motor vehicle operation.
easy trucks will be out of service until such time that an evil adequate the flow establish= of parts
in lact, China can be assured. Steps have been taken to correct this before by this has any
set 1210 e . large supply depot. But apparently it will be some time
corteratio offect.
IV PARTS MANUFACTURING SHOP
Duildings edequate in size for the esteblishment of B. parts manufacturing to
enop equip this shop was purchased last year in America under and has been More re-
were erocted in Chungking previous to October 1938. The machinery the UTC necessary loan.
than lossed sixty DD vrucks routed to Chungking. It is thought to be very doubtful benefit
properly persent of the equipment has arrived in China via Kumming if much
all -- cerived from this enterprise within the next six months.
in addition to the afore-mentioned maintenance facilities, small service of stations
earing 100 been repairs and service calls on the vehicles passing through territory.
V. extablished aporoximately one hundred kilometers apart which are their capable
will te in Kweiyang until the twenty-third of this month and will then proceed will
M. provel 10 to V.IS ng city by motor car and return on a plane a few days after the of
I For a short period before accompanying Mr. Bassi to Lanchow. fifteenth We
you.
NWED trip an Repeful to America ana also extend my best wishes to you and yours. I also with
1 that Measrs. Sheahan, Dr. Pen and Dr. Buck had a very pleasant
" realn,
Sincerely yours,
(signed) C. n. Van Patter
- of SEED
Regraded Uclassified
STRICTLY CONFIDENTIAL
258
(Confidential)
PARAPHRASE
- telegram of May 21, 1940, to the American Embassy
at Paris reads substantially as follows:
American Consul Reed reports from Henoi under date
LEJ 16 to the following effect: On account of the uncer-
tain conditions preveiling in the Far East and the alleged
need of keeping a stock of trucks which may be pressed
into service in case there is an adverse development in
the situation, for the time being the Governor General of
Indochina has forbidden the exportation to China of trucks,
according to information reaching Consul Reed. This ac-
tion affects about 650 trucks which are at Haiphong now
and which were bought through the Universal Trading Company
as & result of the Export-Import Bank credits.
The Ambassador is re uested, unless he has reason
for not taking such action, to convey this report to the
French Foreign Office in such 8 way as seems appropriate
to him. ne is also desired to request with emphasis that
arrangements be made to make sure that purchases made in
this country under the credits in question be allowed to
proceed without hindrance to China.
Regraded Uclassified
1729
JOHN EDGAR HOOVER
DIRECTOR
259
Rederal Sureau of Investigation
United States Department of Bustier
Washington, B.C.
PERSONAL AND
CONFIDENTIAL
May 21, 1940
The Honorable
The Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
I thought you might be interested in the following
information concerning conditions at two plants of the Carnegie-
Illinois Steel Corporation in Ohio.
Information has been received from an official of the
above corporation, which is, itself, a subsidiary of the United
States Steel Corporation, to the effect that recently apparent
attempts were made to deliberately injure the gears in one of
the mills in the McDonald Works of this company at McDonald,
Ohio, by placing four steel chisels and twelve loose metal
rivets in the bottom of the gear box. It was indicated that
the gears in question are used to operate a. skid table, which
is approximately ninety fest long and twelve inches wide, and
this skid table serves as a conveyor in moving steel to the
furnaces located inside the plant. It was indicated that,
fortunately, an inspection of the gear box in question revealed
the above condition prior to the occurrence of actual injury,
whereupon the foreign material was removed and the gear box
properly cleaned. The above mentioned official advised that
the discovery of this condition in the gear bax undoubtedly
prevented serious injury to the gears and that the replacement
thereof would have antailed considerable delay and difficulty.
It was indicated that approximately 125 employees
ordinarily have access to the portion of the plant in which
the gear box in question is located and, further, that such
tools 35 steel chisels and metal rivets could be secured by
any employee from various tool baxes in the plant with
comparative 6856.
It was also indicated that upon another recent
occasion apparent sabotage attempts were undertaken in this
plant, inasmuch as a portion of ten-gange bundling wire
approximately four feet long was discovared with one end
Regraded Uclassified
260
The Honorable
The Secretary of the Treasury
Page 2
securely fastened to the jumper on the stator of a 2,500 horse-
power electric motor within the plant, the other end of the wire
being attached to the slip ring bus bar on the rotor of such
motor. It was indicated that this wire was undoubtedly attached
in the above fashion during a period when the motor was not in
operation and that the condition was fortunately discovered be-
fore the motor was placed in operation, for which reason no
actual damage occurred. According to available information, the
stator to which one end of the wire was attached normally carries
about 6,600 volts of electricity and it was indicated that
operation of the motor in the above mentioned condition probably
would have resulted in fire of sufficient intensity to cause
considerable damage within the plant.
Upon another recent occasion, a 21-inch metal bolt
approximately lt inches in diameter was allegedly discovered
between the teeth of a small pinion gear designed to mesh with
a large drive gear within the Ohio Works of the above mentioned
corporation, located in Youngstown, Ohio. This bolt was al-
legedly discovered prior to commencement of operations by the
early morning shift, for which reason no appreciable amount of
damage occurred, although it has been indicated that fortunate
discovery undoubtedly prevented serious injury.
Information has been furnished to the effect that ex-
tensive efforts on the part of the company to ascertain the
identity of the individual or individuals responsible for the
above occurrences have proved entirely unavailing. It is stated
that the company in question has not experienced any recent
labor difficulties, the opinion having been voiced that these
occurrences did not result from labor disorders.
Both of the above mentioned plants upon some occasions
are engaged in manufacturing materials for the Army and the
Navy, although the above described occurrences did not entail
or threaten actual injury to or destruction of any Government
property or property being manufactured for the War or Navy
Departments,
Regraded Uclassified
261
The Honorable
The Secretary of the Treasury
Page 3
These data are also being furnished to Brigadier
General Sherman Miles, Assistant Chief of Staff, G-2, War
Department, and to Rear Admiral Walter S. Anderson, Director,
Naval Intelligence, for their information.
Sincerely yours,
Jone ohn Edgar Hoover
La. Hower
Director
XMM EDGAR HOOVER
DIRECTOR
Federal Surrau of Investigation
Regraded Uclassified
United States Department of Dustice
Mashington, D.C.
PERSONAL AND
COMPIDENTIAL
May 21, 1940
The Menerable
The Secretary of the Treasury
Washington, D. C.
My dear *. Secretary:
1 thought you might be interested in the following
information concerning conditions at two plants of the Carnagie-
Illinois Steel Corporation in Chio.
Information has been reseived from an official of the
above corporation, which 1a, itself, a subsidiary of the United
States Steel Corporation, to the effect that recently apparent
attempts mrs made to deliberately injure the gears in one of
the mills in the McDonald Works of this company at McDonald,
Ohio, by placing four steel chisels and twelve loose metal
rivete in the bottom of the gear box. It was indicated that
the guars in question are used to operate & skid table, which
is approximately ninety fest long and twelve inches wide, and
this skid table serves as a conveyor in moving stool to the
furnaces located inside the plant. It was indicated that,
fortunately, an inspection of the gear bax in question revealed
the above condition prior to the occurrence of actual injury,
wherespon the foreign material was removed and the gear box
properly cleaned. The above mentioned official advised that
the discovery of this condition in the gear box undoubtedly
prevented serious injury. to the gears and that the replacement
thereof would have entailed considerable delay and difficulty.
It was indicated that approximately 125 employees
ordinarily have access to the portion of the plant in which
the gear box in question 1a located and, further, that such
tools as steel chisele and metal rivete could be secured by
any employee from various tool boxes in the plant with
comparative ease.
It will also indicated that upon another recent
occasion apparent sabotage attempts were undertaken in this
plant, insuruch M a portion of ten-gange bundling wire
approximately four feet 10mg was dissovered with one end
263
the Memorable
The Secretary of the Treasury
Page 2
securaly fastened to the Jumper on the stator of & 2,500 -
power electric motor within the plant, the other end of the wire
being attashed to the slip ring bus bar on the retor of such
motor. It was indicated that this wire was undoubtedly attached
in the above fashion during a period when the motor was not in
operation and that the condition was fortunately discovered be-
fore the motor was placed in operation, for which reason no
actual damage occurred. According to available information, the
stator to which one end of the wire we attached normally carries
about 6,600 valte of electricity and it was indicated that
operation of the notor in the above sentioned condition probably
would have resulted in fire of sufficient intensity to cause
considerable damage within the plant.
Upon another recent occasion, a 21-inch notal bolt
approximately it inches in dianster was allegedly discovered
between the teeth of a small pinion year designed to nesh with
A large drive gear within the Ohio Works of the above montioned
corporation, located in Ioungstown, Chio. This holt vas al-
legedly discovered prior to commencement of operations by the
early norming shift, for which reason no appreciable mount of
danage occurred, although it has been indicated that fortunate
discovery undoubtedly prevented serious injury.
Information has been furnished to the effect that -
tenaive efforts on the part of the company to ascertain the
identity n the individual or individuals responsible for the
above have proved entirely unavailing. It is stated
that the company in question has not experienced any recent
labor difficulties, the opinion having been voiced that these
occurrences did net result from laber discrders.
Both of the above mentioned plants upon BOW ossaniers
are engaged in manufacturing materials for the Army and the
Havy, although the above described occurrences did not estail
or threaten astual injury to or destruction of my Government
property or property being narmfactured for the Har R Hary
Departments.
Regraded Uclassified
264
The Hemorable
The Secretary of the Treasury
Page 3
These data are also being furnished to Brigadier
General Shorman Miles, Assistant Chief of Staff, 0-2, Var
Department, and to Rear Admiral Walter 3. Anderson, Director,
Naval Intelligence, for their information,
Sincerely yours,
John Higar Hoover
Director
4M EDGAR HOOVER
DIRECTOR
265
Federal Burrau of Investigation
United States Department of Justice
Washington, D. C.
May 21, 1940
Personal and
Confidential
The Honorable
The Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
Relative to your letter of May 14, 1940,
referring to information concerning Mar Rozan
and Henry Unschuld, I have turned over to a
representative of the Secret Service Division
of your Department a complete summary memoran-
dum upon Unschuld together with all information
contained in the Bureau's files relative to
these individuals.
Sincerely yours,
J Hower
"REASURE
12252
AC
PLAIN
266
Tokyo via Shanghai and N. R.
Dated May 21, 1940
Rec'd 6:36 Dem., 23rd.
Secretary of State
Washington
ATTACHE COMMERCE.
74, May twenty-first.
During past WEEK there has been growing realiza-
tion in Japanese business circles that recent European
developments may have far-reaching and unfavorable
influences on nations fortign trade, and Economy as
result of inevitable strengthening of import and
export controls by neutral as WEll 08 belligerent
nations. Indications point to probable necessity of
revising current materials mobilization plan to meet
situation, since plan primarily concerned with securing
adequate supplits for military replenishment and in-
dustrial productivity Expansion schenes in Japan and
other yen bloc areas. According statement Finance
Minister May thirteenth there is little likelihood
that barter arrangement with sterling bloc would operate
due fact Japan requires war materials rather than gener-
al merchandise, Officials have also emphasized nec-
tssity making satisfactory arrangements for importation
vital
Regraded Uclassified
287
JT
-2-
1174, May 21 from Tokyo
vital materials under present conditions although little
hope Entertained that Europeans supplies will bE in
position malce further shipment due intensity hostilities.
Stook market operations of past WEEK have been characteri-
zed by cautiousness due continued uncertainty regarding
status future trade relations with Wetherlands Indies.
Apprehension prevailing regarding future supplies imported
rav materials procted unfavorably on Industrial share
quotations and prices averaged opproximately deoline one
point during week. YEN starling rates fluctuated between
ONE s'illing five and ONE Eighth pence and one Live and
Whirteen internths. Yen dollara rater unolanged. DUE
fact seventy per cent income from Japanese CEEP sea :hip-
ping moutes received in sterling, recent climp starling
reportedly causing concern in local shipping circles and
there has been 3072 agitation in favor quoting freight
votes in dollars. Press reports state all shipping com-
penits will join movement if exchange rates fall to ONE
shilling sixpence. In further effort support valué Japan-
ESE vilitary notes circulating in China, Central China
lialson office of China affairs board plans introduce
definite measures including restriction of bank loans of
military notes and extension scope existing commodities
Exchanges, through which goods obtained for military notes,
to
Regraded Uclassified
268
-3- #74, May 21 from Tokyo
to include control of commodity distribution. Blook
five hundred million China incident bonds floated May
fifteenth of which two hundred million taken by deposits
bureau and balance by Bank Japan. Bank Japan's note
circulation May Eighteenth reported at three one three
naught million, decline six four million past WEEK. Loans
fell by thirteen million to four nine three point Eight
million. RECENT firmness money market reportedly resnon-
sible for difficulty which South Manchurin railway EX-
periencing in debenture flotations with result that for
first time recent years concern forced sect financial aid
for banking institutions and negotiations reportadly
under way with industrial bank for thirty million. Further
sharp Expansion bank loans noted during April although
net increase total louns which amounted two five four
SEVEN five eight thousand over previous months was slightly
below increase in deposito which totaled two six two two
six one thousand. Total outstanding loans all banks except
Bank Japan amounted one one eight two one one five eight
thousand End April, increase two nine four five five
naught three thousand over comsamper. Aggregate deposits
same date reached one five nine three seven eight five
nine thousand, increase three four four five five SEVEN
haught thousand over comsamper. Banks security holdings
dropped by nine naught five three thousand during April to
Eight
Regraded Uclassified
269
-4- #74, May 21 from Tokyo
eight SEVEN six four naught Eight Eight thousand but
increased one four four five four naught three over
comsumper. April bill olearings all Japan totaled four
two four three five three one valued one ZEro SEVEN
two Eight five SEVEN zero thousand yen, decline one five
per cent volume but increase one point nine per cEnt
value compared previous month period compared comsamper,
April clearings registered GEVEN point three per cent
volume and four six point naught per cent value increase.
Failure bill clearings show usual seasonal decline value
following fiscal year End settlements March reportedly
attracting attention financial circles as further indica-
tion inflationary trend. Total clearings first four
months reached one six five SEVEN Eight thousand valuad at
four zero SEVEN four zero million yen, increase Eight
point one per cent volume forty point Eight per cent value
over comsamper. Bank Japan's index Tokyo retail prices
Hay fifteenth reported at two six two point SEVEN, ad-
vance one point three per cent during month. Of hundred
items surveyed Eight increased nine declined balance un-
changed. Foodstuffs advanced one point one per cent
clothing one point nine per cent other one point six
per cent fuels unchanged. Bank Japan's Tokyo wholesale
index April reported three one three point nine, advance
point six percent over previous month. Government re-
portedly
Regraded Uclassified
270
-5= #74, May 21 from Tokyo
portedly intends revoke Article thirty-one of national
general mobilization law which authorizes officials to
inspect commodity stocks hEld by firms or private Indi-
viduals. MOVE prompted by desire for accurate information
regarding stocks important cormodities withheld from
market as unofficial military survey principal cities has
indicated evidences of hoarding. Ministry Commerce and
Industry reportsdly considering monstary levy on warehouses
textile export goods to stimulate shipments. Plan under
consideration provides for taxation, yarn stores over
two months, finished cloth over three months and plain
cloth over five months. Considerable opposition de-
veloping from sugar interests and large consumers to
Commerce Ministry's plan for sugar rationing from July
first on grounds that proposal to introduce system.first
in large centers and eventually to agrarian areas will
further intensify prevailing shortages in labor areas,
Sugar interests are urging Government to adopt ration
plan drafted by Council for cooperation in central price
control which provides for synchronous enforcement
throughout nation and individual quota of point six five
pounds months instEad of point SEVEN Eight pounds. DUE
difficulty anticipated in securing adequate oil supplies
view European situation Railways l'inistry has ordered
further out gasoline quotas from June first. Taxi allot-
ment
Regraded Uclassified
271
⑉6⑉ 174, May 21, from Tokyo
ment reduced from two and one half gallons to two gallons
daily. Reported Raw Cotton Dealers Association has decided
cancel prohibition on sale raw cotton to cotton mills
immediately. Following deliberations on Central Raw
Silk Association plan for enforcement raw silk stabili-
sation plan, the Japan Raw Silk REELERS Federation agreed
to proposals outlined in last weekly cable and is gener-
ally anticipated that formal approval agricultural au-
thorities will shortly be forthcoming and measures made
Effective from July first. Official Estimate of spring
silkworm brushing at five six two two nine thousand
grams, decline four point two per cent below comsamper
and lowest yield recent years. Press reports attribute
decreased production to lower mulberry leaf production
originated from labor shortage and unfavorable weather
conditions. Compulsory rice buying scheduled for intro-
duction Aichi prefecture from May twenty-fifth. Foreign
trade second ten days read thousands exports one naught
nine two nine seven, imports nine naught six naught five
nine. Hokkaido spruce Exporters reportedly flooded with
orders from world markets as result hostilities in
Scandinavian countries and Expansion milling capacity
underway to handle increased business. Government also
reportedly assisting Exporters of veneer chests by
supplying metal strips, nails, and lumber required,
First
Regraded Uclassified
272
-7- #74, Ha" 21, from Tokyo
First quarter shook shipments all types totaled three
two six three thousand sets, increase approximately
sixty per cent over comsumper. Industrial share prices
Eightsenth average ninety four point ninety six index
ninety SEVEN point thirty two WEEKS average ninety five
point forty two index ninety SEVEN point seventy nine.
(END) Signed Smith.
INFORM COMMERCE.
GREW
LMS
273
RWR
GRAY
PARIS
Dated May 21, 1940
Rec'd 4:55 a.m.
Secretary of State,
Washington.
RUSH
782, May 21, 10 a.m.
FOR THE treasury
The Bank of France confirms that the head of the
Banque DE BElgique is now located in Paris and may bE
addressed in care of the Bank of France, Paris.
BULLITT
REP
Regraded Uclassified
274
HSM
GRAY
Milan
Dated May 21, 1940
Rec'd 1:44 P. me
Storetary of State,
Washington.
36, May 21, 5 p. m.
FOR TREASURY.
Today's prices as follows: 189; 322;502; not listed;
959; 189.75; 15100; 58.75; 213.50. Volume 113,925.
Active selling drove practically all quotations to
new low levels for the year apparently due to pessimism
over political outlook.
SHOLES
WWC
Regraded Uclassified
275
CK
GRAY
Berlin
Dated May 21, 1940
Rec'd 9:45 p.m.
Secretary of State
Washington
1447, May 21, 5 p.m.
My No. 1232 of May 18, noon.
FOR TREASURY FROM HEATH AND FOR DEPARTMENT'S
INFORMATION.
The launching of offensive military operations
during the second WEEK of May had no striking reper-
cussion on the Reichabank to judge from its statement
for May 15. Its total investments in commercial and
Government bills, securities and collateral loans and
its note circulation declined 83 is usual in the first
half of the month although the deoline was small in
comparison to the large increase in these items during
the fourth WEEK of April. Total investments on May 15
stood at 12546 million marks as compared with 128003
million marks on April 30. Offsetting in part however
the decrease in investments of the Reichsbank was an
Expansion in the 1tem miscellaneous assets which contrary
to the usual movement during the first half of the month
rose
Regraded Uclassified
276
-2-#1447, May 21, 5 p.m. from Berlin.
rose from 1927 million marks on April 30 to 2087 million
marks on May 15 presumably as a result of an increase in
direct Government borrowing from the Reichsbank.
Note circulation at the mid month was 12105 million
marks as contrasted with 12479 million marks on April
30 and 11737 million marks on April 15. Note circulation
would undoubtedly have shown a steep rise had it not been
for the fact that the pay and Expenses of troops moving
into Belgium, Holland and France were being paid by script
issued by the Reichskreditkesse (BEE my telegram No. 1443
of May 21, 2 p.m.) which is authorized to loan the Reich
(I.E. Issue script) up to 3 billion marks for its Expenses
in Norway Denmark, Holland, Belgium, Luxemburg and occupied
France. Offsetting in part the decrease in note circulation
was nn increase of sight deposits from 1714 million marks
on April 30 to a total of 1925 million marks on May 15
which is the highest figure for sight deposits since
December 31 (2018 million marks) 1 date on which under
normal circumstances both sight deposits and note
circulation reach the highest point of the year.
KIRK
EMB
277
HSM
PLAIN
London
Dated May 21, 1940
Rec'd 2:14 P. III.
Secretary of State,
Washington.
1304, May 21, 6 D. Ille
FOR TREASURY FROM BUTTERWORTH.
TAE British security markets closed unaffected by
today's war developments because the British censor hEld
un the news until after that time. In the crucial Im-
mediacy of this moment Economic considerations are irrele-
vant, much less finance which in any CASE in war is merely
canouflage requisition.
KENNEDY
AIC
Regraded Uclassified
278
May 21, 1940
My dear Mr. Hoover:
I acknowledge, with thanks, your
letter of May 18th with respect to recent
activities of the Communist Party. I ap-
preciate your offer to furnish se with
additional information when it is avail-
able and shall be most interested in having
it.
Yours sincerely,
(Signed) H. Morgenthau, Jr.
Mr. J. Edgar Hoover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. c.
279
May 21, 1940
My dear Mr. Noover:
I acknowledge, with thanks, your
letter of May 18th with respect to recent
activities of the Communist Party. I ap-
preciate your offer to furnish - with
additional information when it is avail-
able and shall be most interested in having
it.
Yours sincerely,
(Signed) E. Morgenthau, Jr.
Mr. J. Edgar Hoover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. c.
Regraded Uclassified
280
May 21, 1940
My dear Mr. Noover
I acknowledge, with thanks, your
letter of May 18th with respect to recent
activities of the Communist Party. I ap-
preciate your offer to furnish - with
additional information when it is avail-
able it. and shall be most interested in having
Yours sincerely,
(Signed) H. Morgesthan, Jr.
Mr. J. Edgar Neover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. c.
- EXAL HOOVER
231
DIRECTOR
Federal Burrau of Investigation
United States Department of Justice
Washington, D. C.
May 18, 1940
The Honorable
The Secretary of the Treasury
Washington, D. C.
MV dear Mr. Secretary:
Information has been received from a
confidential source by one of the Field Divi-
stons of this Bureau concerning the Communist
Party Convention held at San Francisco on May
12th.
William Schneiderman, Secretary for
the 13th District, began his address with the
following "Not a man, not a cent, not a gun for
imperialist and military preparations." He
further indicated that the Communist Party and
the C.I.O. will combine to carry the Party
program out effective immediately, concentrat-
ing their activities on delaying production in
aircraft factories, chemical plants and ship-
yards. Orders will be given to the section
leaders who will follow their own initiative
in delaying production.
After the President's address before
Congress, a local Party official advised propa-
ganda against the Government would be intensified.
William Schneiderman made a statement on May 17,
1940, that activities would be redoubled against
the Douglas, Vultee and Lockheed aircraft manu-
282
- 2 -
facturers, as "President Roosevelt is not going
to get 50,000 aircraft a year while workers are
starving in America."
Upon receipt of additional informa-
tion concerning the above, you will be immediately
advised.
Sincerely yours,
J. edgan Mooner
283
OFFICIAL
DR. ROBERT M. HUTCHINS
PRESIDENT UNIVERSITY OF CHICAGO
CHICAGO ILLINOIS
MAY 21, 1940
IN VIEW OF SERIOUS SITUATION ABROAD WOULD GREATLY
APPRECIATE IF YOU WOULD AGAIN MAKE DR JACOB VINERS
SERVICES AVAILABLE TO THE TREASURY STOP DR VINER
IS RETURNING TO CHICAGO TONIGHT AND WILL GET IN
TOUCH WITH YOU DIRECTLY KIND REGARDS
HENRY MORGENTHAU JR
Regraded Uclassified
284
NC
GRAY
PARIS
Dated May 21, 1940
Reo'd 4:26 p.m.
Secretary -I State
Washington
796, May 21, 7 p.m.
SECTION ONE.
FOR THE TREASURY.
The Bank of France has instructed the banks to limit
the amount of Belgian banknotes which may bE converted
into French francs to 2000 Belgian francs per individual
per fortnight. Heretofore, the limit for an individual
was the same as that for a family namely 5000 Belgian
francs per fortnight, please SEE Embassy's telegram No.
755 May 19, 6 pame This new limitation Entered into
Effect this morning. Barrett of the Guaranty Trust who
conveyed this information to a member of my staff last
Evening also said that the accounting section of the
Foreign Exchange office had been moved to Vichy yesterday.
HE believed that other sections of the Foreign Exchange
office would remain in Paris for the time being.
END OF SECTION ONE.
BULLITT
IMS
285
JT
GRAY
PARIS
Dated May 21, 1940
Rec'd 3:55 p.m.
Secretary of State,
Washington.
796, May 21, 7 p.m. (SECTION TWO)
Today's Journal Officiel publishes three decrees de-
signed to increase the Government's gold and foreign EX-
change resources. The first stipulates that the American
or Canadian dollar bank notes owned by any French national
who is B. resident of France or any French "moral person"
(i.E. corportation, partngrship, company, Et estera) or
the French branch of any foreign "moral person" must Either
bE turned over to the foreign Exchange office before June
30, 1940 or deposited before that date to the credit of a
dollar account carried on the books of a bank in France.
The Minister of Finance will designate the banks which
may hold accounts of this type.
BULLITT
CSB
Regraded Uclassified
286
EH
GRAY
Paris
Dated May 21, 1940
Rec'd 4:38 p.m.
Secretary of State,
Washington.
796, May 21, 7 pam. (SECTION THREE)
Foreign nationals who are residents of France mist
also deposit in such accounts the American or Conadien
dollar bank notes which they hold in France. As from
June 30, 1940 no French or foreign resident of France
and no French "moral person" or the French branch of any
foreign "moral person" may hold American or Canadian bank
notes without special authorization of the Minister of
Finance.
The second decree provides that all French "moral per-
son" and all French "moral person" whose principal field
of activity is in France or French possessions must turn
over to the Bank of France before June 30, 1940 all gold
in bullion bars or coins owned by them in France or abroad.
BULLITT
KLP
Regraded Uclassified
287
MP
GRAY
Paris
Dated May 21, 1940
Rec'd 4:35 P. m.
Secretory of State,
Washington
796, May 21, 7 P. m. (SECTION FOUR)
The third decree stipulated that all American or
Canadian securities held in France or abroad by any French
national who is a resident of France or any French "moral
person" or the French branch of any foreign "morel person"
must bE deposited with certain banks to be designated by
the Minister of Finance. Similarly the American or
Canadian dollar Exchange held abroad "in accounts or in
any other form" by the individuals or entities mentioned
sbove must bE transferred to the credit of on secount in
their name carried by one of the bonks to be designated
by the Minister of Finance.
BULLITT
KLP
288
EH
GRAY
Paris
Dated May 21, 1940
Rec'd 5:58 p.m.
Secretary of State,
Washington.
796, May 21, 7 p.m. (SECTION FIVE)
The Journal Official also publishes a series of
decrees providing that the "property rights and interests"
in France of French possessions belonging to Dutch,
Luxemburg or Norwegian nationals must bE declared and
authorizes the Covernment to sequestrate such holdings.
The above provisions are only applicable to nationals of
these countries who are now residing in occupied or Entmy
territory. It will be recalled that similar measures were
introduced in regard to the possessions of Brigian, Danish
and Czechoslovak nationals (please SEE Embassy's telegram
number 542, April 29, 6 p.m.)
In a notice to intermediarits appearing today the
Foreign Exchange Office announces that certain 'approved
intermediaries' have been authorized to ship abroad,
previously referring the matter to the Foreign Exchange
Office 'Class D foreign securities' (1.E. securities issued
in 'hard' currency countries (in order that such securities
may bE
Regraded Uclassified
289
-2- 796, May 21, 7 p.m. (SECTION FIVE) from Paris.
may bE sold for 'Class A foreign currencies' (1.E. 'hard'
foreign currencies). The proceeds from such sales must bE
turned over to the Foreign Exchange Office within two
months.
KLP
BULLITT
290
MP
GRAY
Paris
Dated May 21, 1940
Rec'd 6:52 P. m.
Secretary of State,
Washington
796, May 21, 7 p. m. (SECTION SIX)
A communique of the Ministry of Finance published in
today's press states that all refugees from Belgium
Luxemburg and the Netherlands must bring to "an approved
intermediary of the Foreign Exchange Office" within Eight
days following their entry into France all stocks and
bonds, securities and coupons and means of payment "which
they carried with them on entering France". "Means of
payment" are defined as "French, colonial or foreign coins
and bank notes, checks, letters of credit, bills, drafts
and other sight or short term credits of the same type
Expressed in any currency whatsoever (with the exception
of coupons and government securities and other negotiable
securities of a fixed maturity)." The approved inter-
mediary will return these financial holdings to the owner
after having drawn up a list of them and certified to
its correctness. One copy of this list will bE given
to the owner and must bE shown any time foreign "means of
payment
Regraded Uclassified
291
MP -2- #796, May 21, 7 p. m., from Paris
payment" are sold for French francs.
(END OF MESSAGE)
BULLITT
KLP
232
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Paris
DATE: May 21, 1940, 5 p.m.
NO.: 791
FOR THE SECRETARY AND THE SECRETARY OF THE TREASURY.
The Belgian Finance Minister, Camille Gutt, and
George 8. Janssens, Governor of the National Bank of
Belgium called on me this morning to ascertain whether
Cudahy had received instructions regarding the authentication
of security destruction certificates similar to those
contained in the Department's telegram 404, May 18,
3 p.m. (Rueff had disoussed the matter with them yesterday).
I told them that I did not know if such instructions
had been sent to the Brussels Embassy. They then
asked if we would repeat the text to Cudahy. I said
that we were unable to communicate with Brussels and
added that the Germans undoubtedly would punish
severely any Belgian who attempted to have a certificate
of this type authenticated by our consular officers.
They agreed that it was probably too late to take any
action in the matter and said that the only possibility
open was for Belgiane in occupied areas to "perforate"
the American securities in their possession.
Strictly Confidential
Regraded Uclassified
293
-2-
STRICTLY CONFIDENTIAL
One of my staff was informed by Gutt that in his
opinion there had been B. removal to France, prior to
German occupation of Belgium, of the majority of
American securities held by the three main banks of
Belgium. He was also informed by Gutt that before it
was invaded Belgium had sent its total reserve of gold
to France. It was the feeling of both Gutt and Janssens
that around & third of the Netherlands reserve of gold
had been left in the Netherlands. Neither Janssens nor
Gutt knew the whereabouts of the stabilization-fund gold
of the Netherlands.
The Embasey was informed by Mr. Janssens that
he would furnish it with B copy of & letter just sent
by him to the Fedebal Reserve Bank of New York with respect
to the status of the National Bank of Belgium at the
present time.
BULLITT
EA:MEG
Regraded Uclassified
294
May 21, 1940
5:55 p.m.
(HM,Jr telephoned the following from his home.)
I just talked to Jerome Frank and he said
he wanted to close the New York Stock Exchange
tomorrow and so did Mr. Eicher, but the other two
members did not. I told him as of tonight my
recommendation was that we do not close, that we
keep it open. He said, "What about it if the
war news was worse tomorrow morning?" I said
I would be at my office tomorrow at 8:30 and to
talk to me then. He said the Federal Reserve
Board recommended to keep it open tomorrow.
295
HSM
GRAY
Berlin
Dated May 21, 1940
Rec'd 10:10 P. Ile
Secretary of State,
Washington.
1443, May 21, 2 P. Me
115 1308, May 12, 9 a. E.
FOR TREASURY FROM HEATH AND FOR THE DEPARTMENT'S
INFORMATION.
By two decrees dated May 15 the scope of activity
of the Reichskreditkasst Established on May 3 to issue
German mark scrip for the pay and EXPENSES of the German
forces of occupation in Norway and Demmark (SEE my tele-
gran under reference) has been Extended not only to GOVEr
issuance of scrip for military and administrative Expenses
1.1 Holland, Belgiun, Luxenburg and occupied France, but
apparently also to assume central banking functions since
it is empowered "to regulate monetary payments and credit
transactions" in these areas, In addition it is authorized
to Engage in such ordinary banking operations as: (one)
purchase and salt of bills and checks, (two) loans on the
security of commercial bills, securities and merchandise,
(three) loans to public institutions, (four) acceptance of
non-interest
Regraded Uclassified
236
ham -2- No. 1443, May 21, 2 p. m., from Berlin
non-interest bearing deposits and performance of monetary
(five) acceptance of objects of value for safe
keeping and administration and finally, (oix) carrying out
"banking commission transactions of all kinda Especially
collection of bills (drafts) and other paper".
The functions of the new Kreditkossen as expanded in
the decress of May 15 approximate those accorded the
Reichskreditkassen set up in occupied Poland but which
tiere later supplanted by C new Polish bank of issue in
General Government Poland (SEE my telegram No. 1512,
September 30, 1939, noon, and No. 80, January 11, 9 G.m.)
HOWEVER the Polish Reichskreditknsse was not authorized
to buy and sell or loan against commercial bills, to accept
valuable objects for safe keeping and administration nor
to Engage in banking connission transactions,
The Reichskreditkasst for Poland was authorized to
loan the Reich up to 1,000,000,000 marks and the present
Reicholreditkuase as originally constituted for Demark
and Norway 500,000,000 marks. The new decree authorizes
the institution to increase its loan to the Reich to a
total of 3,000,000,000 marks. In other words the institu-
tion can pay out to the military and administrative authori-
ties 3,000,000,000 marks in scrip. In this connection It
is to bE noted that the loans of the Reichskreditkasse are
not included in the monthly statement of the Reich's debt.
In
Regraded Uclassified
297
ham -3- No. 1443, May 21, 2 P. m., from Berlin
In Poland and in Norway and Denmark Reichskreditkasoen
scrip was not issued in denominations of less than 50
pfennigo. Now however 5 and 10 pfennigs coins will bE
issued.
To date no branches of the Reichakreditkasse have
been established in Norway and Dennark the scrip being
issued directly from the institution's headquarters in
Berlin. Branches are now bEing set up however in Arnheim,
Maastricht, Groningen, Herzog, Enbusch and Utrecht in
Holland and in the city of Luxemburg. The rates of exchange
for the new mark scrip are: 1 Dutch guilder Equals 1.50
marks; 1 Belgian franc 10 pfennigs; 1 Luxemburg franc 10
pfennigs; 1 French franc 5 pfennigs. These rates of
Exchange contrast with the following Berlin official rateo
on May 9: 1 Dutch guilder Equals 1,327 marks; 1 Belgian
franc 8.36 pfennigs; 1 Luxemburg franc 10.45 pfennigs;
1 French franc 5.605 pfennigs (internal clearing rate).
KIRK
EMB
Regraded Uclassified
- OFFICIAL COMMUNICATIONS TO
THE SECRETARY OF STATE
WASHINGTON, D.C.
298
DEPARTMENT OF STATE
WASHINGTON
STRICTLY CONFIDENTIAL
May 21, 1940.
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury, and
encloses for an indication of the reply thereto a
memorandum regarding certain gold holdings of the
Vatican.
Enclosure:
Memorandum.
J.
Regraded Uclassified
MEMORANDUM
299
STRICTLY CONFIDENTIAL
Mr. Myron Taylor has reported to the President
that the Vatican State would like to ship to New York
for deposit and safekeeping with New York bankers a
sizeable amount of gold bars which it does not wish to
sell. The Vatican asks of the United States Government
such assurance as other states with deposits in America
are granted that the gold will be intact and free. The
Vatican very much desires to avoid any publicity on
the matter.
Mr. Taylor urgently requests a reply to be in his
hands at Rome Thursday morning, the twenty-third.
Regraded Uclassified
700
May 21, 1940
Hear Severnors
I have pleasure is transmitting herewish a copy of a
third person note from the Department of State, dated May n.
1940 and initialed by Assistant Segretary of State Adalf A.
Serle, Attached to this copy of the note you will find & copy
of & letter addressed under date of MAY 21, 1940 by the Delgins
Anbassador to the Secretary of State, stating that the Banque
Nationale de Belgions has transferred its administrative seat
to Paris, and le operating there legally under the provisions
of the Belgian "Arrote 101" of February 2, 1940. There is sise
anclosed - copy of the aforesaid law, M received from the
Department of State,
Under separate cover I as forwarding you a copy of cable-
(7%) 1782. dated 10 s.s. May 21, 1940. in which the American
Ambassador at Paris reports upon the Banque Nationale de
Belgique.
Sincerely yours,
(Signed) D. W. BELL
Lesing decretary of the Treasury
Noclosures.
Mr. George be Harrison,
President, Federal Reserve Bank of for York,
33 Liberty Street,
Rev York, I, Y.
(Init.) I. I. 0.
BB
Regraded Uclassified
301
OPI
DEPARTMENT OF STATE
Is reply refer to
Washington
h
May 21, 1940
the Secretary of State presents his compliments to the
Honorable the Secretary of the Treasury and in compliance
with the request made of an efficer of the State Department
over the telephone by Mr. 1. Marle Cochrane the Belgiam Ambase
sader has, in a note of May 21, 1940, informed me that the
Banque Nationale de Belgique has transferred its administrative
seat to Paris and is operating there legally under the previsions
of Belgian law. & copy of this note together with a copy of the
enclosure thereto is enclosed herevith.
Anclosure:
From Belgian Ambassador
May 21, 1940
(Initialed) AAB
Regraded Uclassified
302
OPT
Techington, May 21st., 1940.
D. 5167
No. 1721
Sir,
I have the honor to inform Your Emeellency
that the "Banque Nationale de Beligique" has transferred
its administrative cost to Parts, and 10 operating
there legally under the previsions of the Belgiam
A (
"Arrete Leis of February 2nd. 1940, of which copy 10
enclosed herewith.
I avail myself, Sir, of this occusion, to
renov to Your Excellency the of my highest
consideration.
The Honorable
The Secretary of State
Department of State
Washington.
(Gepy)
303
No. 57 - 2 fevrier 1940 - ARRETE-LOI rela If a l'administration, es
OPI
temps de guerro. des societes commerciales 20 a form commercials,
EAPPORT DO NOI
Sire,
Le projet d'arrete-loi que le convernement 4 l'honneur de
proposer a la signature du 201 & pour objet d'assurer le fonctionnement
dos societes comerciales.
Les dispositions qu'11 contient ont notement pans but de
faciliter, en cas de besoin. le transfert du singe social. Kiles
regient, pour 00 cas, les conditions de le convocation des comemile
d'administration, 4a gerance, de liquidation ou de controle et celle
doe assembless generales.
Keur evons l'honneur d'osse,
Sire,
de Vetre Majeste,
les troe respectuous
et tree fideles serviteurs,
(Salvent les signatures de tous les *inictree)
LEOPOLD III, Roi der Relgas,
A tone. presents et a venir, SALUT.
To l'article 10r, 3°. de la 101 du 7 Septembre 1939.
domant AR Roi des pouvoire extraordinaires:
Considerant qu'll est urgent de pourvoir our necessites
de l'adainistration des societes. an teste de guarre:
fur la proposition de Ron Ministree, qui en ent delibere
en Conseil,
Hous EVONE arrete et arretomal
/...
Regraded Uclassified
- 2
304
Article 107. to sings social de tentes societes belges.
commerciales ou a form commerciale, pout, same que la societs perde
- nationalite, stre transfere proviseirement en tout antre entroit
que solui fise dans l'acte social, nome a l'stranger, par simple
decision do l'organe charge de l'administration de la societe, conseil
d'administration, gorant ou conseil de gerents.
is decision dolt stre declares as registro du commerce et
stro publice, aussitet que possible, anx annexes du Moniteur belge.
Art. 2. la cas de meconsite, 11 pent stro deroge a tentes
les dispositions determinant les medalitos de la convecation du conseil
d'administration, du conseil dos gerants, du college des liquidateure
et du college des commissaires, ainei que le lieu de la reunion.
Art. 3. Le Ret pout, on 68.00 de necessite, dereger any
dispositions legales ou statutaires concernant les modalites de la
convocation de l'assembles generale et 10 lieu de ss reunion.
Art. 4. Dans le eas on, on raison des circonstances, l'assemblee
des associos on des actionnaires no peut stre tenue & l'epoque fire
par les statute. los mandate des administrators, des gerants et dos
commissires vome & expiration sont proroges de plein droit jusqu'em
a cette assembles pourre stre terms.
Art. 5. L'aussmblee generale peut, & tout moment, delegaer
ses penveirs au conseil d'administration or aux gerants, sanf en 00
qui concerne les modifications aux statute.
B1 l'assenblee DE pout etre senveques en raison de circonstances
de foree majoure, 10 conseil peut exercor d'effice les pouvoirs provue
a l'alines 1er du present article.
Regraded Uclassified
305
3
be tout sous reserve de in decharge a donner MP 1'ma-
seables generale anx administreteurs, gornabe st sommissires,
des que les eireonstances lui pormettront de se reunir normale-
sect.
Art. 6. Le conseil d'administration, les gerants
et le college des liquidatours peuvent delegner pour le as
d'evenention or d'ossuration d'une partie du territoire, .
une or plusieurs personnes choisies ou non dans leur etam, des
pouvoire depassant la gestion journaliere des affaires 4a is
sociate.
Art. 7. Les pouvoirs de l'assembles generale, des
administrateurs etc, en general de tour cour qui, a - titre
incleonque, ont le droit de disposer des biens ou des droits
de la societe cont suspentus on tast que cette assemblee
no results ou que ces personnes recident dans une partie In
territoire compee par une pulsence ennomie et qu'il e'ngit
de biens ou de droits se trouvant en debors de cette partie
du territorie.
Art. 8. Los monistes dont la torms emire an temps
de guarro sont prorogees de plain droit pour the dures
prenent fin six note ADTOS que la present arrate-lot sare
0000 d'etro en vigneur.
?outefoin, si avant l'expiration by detai sinsi
proroge, l'assembles generale decide no nouvelle prorogation
do some social, sello-ci ne person depasser trante and a
compter du jour on la proregation prevas par le present article
NETS yris BOTTS.
Regraded Uclassified
306
- 4 -
Les droits due a l'oconsion de la proregation sent
nesis our les alements imposables existent lors de la desision
de l'accembles st persons sinsi qu' 11 est die any articles 8 a
11 de l'arrete reyal du 22 nost 1934, or, a partir du 1ᵉʳ
forrier 1940, & l'article 119 de l'arrete reyal No. 64 4a
de 30 novembre 1939.
Art. 9. Lee dispositions du present arrete-lei
entreat on viguour le jour de sa publication et le resterent
Jusqu'as jour fine per arrete royal pour Is resise de l'arnes
ver pied de paix.
Notre Winistre de la Justice est charge de l'execution
to present arrote
Donne a Bruxelles, 10 2 ferrier 1940.
LEOPOLE
(Suivent les signatures 4e tous les Winistres.)
(Publie par le Moniteur belge du 7 fevrier 1940, No. 38.)
Regraded Uclassified
307
ITALIAN STOCK PRICES
(Milan)
Dec. 31, 1027 = 100
Weekly
Daily
1939
JULY
AVE,
1940
1940
PER
SEPT.
OCT.
NOV,
DEC
JAN,
res.
MAR.
APRIL
MAY
JUNE
APR.
MAY
JUNE
JULY
CENT
6
13
20
27
4
11
18
25
B
15
PER
PER
22
PER
CENT
CENT
210
CENT
210
170
170
200
200
190
165
165
190
150
160
160
180
170
170
155
155
160
160
150
150
150
150
145
140
145
140
SHARES
SHAKES
THOUSANDS
130
200
Volume
THOUSANDS
200
130
120
120
100
100
110
JULY
AUG,
SEPT.
OCT.
110
NOV.
DEC.
JAN.
o
FEB.
MAR.
APO.
MAY
0
1939
JUNE
JULY
1940
6
13
20
27
4
11
16
25
1
B
15
22
APRIL
MAY
JUNE
1940
DAILY FOR LATEST WEEK DNLY
Office of the Secretary of the Treasury
Devision of -
Regraded
Uclassified
308
treasury department
WASHINGTON
May 21, 1940.
MEMORANDUM FOR THE SECRETARY:
The S/S PRUSA, scheduled to sail from New
York May 22d, is carrying 3,866 aluminum ingots for
Lausanne, Switzerland.
Banl Kanis:
RUDY
Regraded Uclassified
G
TOT
2 - to
The Secretary
The AP is asking for
information on your
discussions with John
Biggers, speculating on
the possibility that he
may be called in to help
organize industrial fecilities
for evistion. Do you wish
to comment?
5)
a
From: MR. SCHWARZ
Regraded Uclassified
310
GROUP MEETING
May 21, 1940
2:30 p.m.
Present:
Mr. Sullivan
Mr. McReynolds
Mr. Graves
Mr. Gaston
Mr. Haas
Mr. Schwarz
Mr. Young
Mr. Foley
Mrs Klotz
H.M.Jr:
You (Young) are going to get those things back
to me, aren't you?
Young:
Yes, sir.
H.M.Jr:
Now, you (Sullivan) spoke to Mrs. Klotz about
John Biggers, or did somebody talk to you about
John Biggers?
Sullivan:
Lauch Currie talked to me and wanted to know if
& man had been selected and I said I didn't know,
I thought it was being negotiated and he said,
"Well, the President asked me to see Floyd Odlum
at 4:00 and I hope nothing definite has been
done," and I said, "I don't know."
H.M.Jr:
Floyd Odlum for me?
Sullivan:
No, the President asked him to see Odlum and get
a line on it.
H.M.Jr:
Is it all right for me to call up Lauchlin?
Sullivan:
Certainly.
H.M.Jr:
What else are you worrying about? Get your legis-
lation all in shape?
Sullivan:
No, sir. There was a meeting this morning at the
White House at 12:30 in regard to the new Navy
bill, which I think is extremely bad. It provides
for the suspension of the Walsh-Healy, Wages and
Hours, and Civil Service and is retroactive on
the Navy supervision of contracts to last September.
Here is a memo on it.
H.M.Jr:
All right.
(Telephone conversation with Lauchlin Currie follows:)
Regraded Uclassified
311
- 2 -
H.M.Jr:
Personally, I would rather have his wife.
Sullivan:
I will see what I can do.
H.M.Jr:
Is Jacqueline her name?
Gaston:
Jacqueline Cochran.
H.M.Jr:
Sure, we need an aviator around here. What do
I do about this?
Sullivan:
That is a memorandum to the President telling
him how little you think of that Navy bill.
M.M.Jr:
It is unnecessary, undesirable and definitely
objectionable. Otherwise, it is a swell bill.
Sullivan:
That is right. So far as the Bureau and Treasury
are concerned, there 18 no objection to the pro-
posal of the British owning their own explosive
plants here. I think the State Department defi-
nitely will object. I have called Mr. Berle
and he is out and he is going to call me back.
H.M.Jr:
Well, hold on to that, will you?
Klotz:
I would like to have a copy of that, because I
didn't get it at first.
Melt:
In due course.
H.M.Jr:
All right, can you wait? I am glad you are
able to.
Klotz:
It is too fast for me. I can't keep up with it
all.
H.M.Jr:
Say that again and make a note when we get on
to powder, we will take it up at that time.
(Telephone conversation with Lauchlin Currie follows:)
Regraded Uclassified
312
May 21, 1940
2:35 p.m.
H.M.Jr:
Hello.
Operator: Mr. Currie.
H.M.Jr:
Hello.
Lauchlin
Currie:
Hello, Mr. Secretary.
H.M.Jr: How are you?
C:
Fine, thank you.
".".Jr:
Lauch, I hear via Mr. Sullivan that you're going to
interview Mr. Floyd Odlum.
C:
Yes, he's with me now.
H.M.Jp:
oh. There isn't some place you could talk to me?
0:
Yeah.
N.V.Jr:
Could you call me back?
C:
I will, yeah.
E.".Jr:
Could you do it now?
C:
Yeah.
H.Y.Jr:
Thank you.
C:
All right.
2:37 p.m.
Operator: Go ahead.
H.M.Jr:
Hello.
C:
Hello, Mr. Secretary.
M.M.J.: Lauch
C:
Yeah.
Regraded Uclassified
313
- 2 -
H.V.Jr:
All I wanted to know was the President isn't thinking
of taking Mr. Odlum and sending him over here, 18 he?
C:
No, no. I'm partly -- I'm afraid I'm the guilty one
here, Mr. Secretary. I was speaking the other night
to the President and mentioned the name of the man
I knew quite well whom I thought might have some
very good ideas through long association with the
industry, and he said, "Why don't you talk to him
and see what his 1dees are?" So that's all I'm doing,
see? And I thought if I picked un anything I'd pass
him along to you.
E.M.Jr:
Because he tried to put across this phony deal with
Curtiss-Wright, you know, just last month and it
fell through.
C:
Yeah. It
V.V.Jr:
He'e just a. speculator.
C:
He's a very able man, Mr. Secretary. I mean, I've
had some dealings with
".".Jr:
Well, lots of speculators are.
0:
Yeah. (Laughs) He's very shrewd, and if I think un
any interesting ideas or enything good why
R.M.Jr:
Just -- and then I hear you -- you don't like Biggers?
c:
I didn't know anything of him. This 18 the first
I've heard of him.
V.M.Jr:
Oh. on.
C:
The
".".Jr:
Well, anyway, on Odlum I just wanted to make sure
that he wasn't being recommended to me, because
C:
No, the only thing was I was to 806 what his ideas
were and if there wes anything helpful I could pick
un because he knows e great deal about the personal-
ities and the setup of the industry, and he may have
a slant
H.M.Jr:
O. K.
Regraded Uclassified
314
- 3 -
C:
......that's helpful. That's all.
H.M.Jr: Thank you.
C:
All right, Mr. Secretary.
315
- 3 -
H.M.Jr:
Oh gosh, thank heavens we can all laugh. Well,
you can send this back to the President for his
appointment file. I will put on, "No, No, Nanette!"
Herbert, how is the world?
Caston:
They had a successful graduation up there.
H.M.Jr:
Did everything go --
Gaston:
Everything went through all right as far as I
could see, We had 8. very beautiful day and
very impressive exercises and got back home
safely. I am wondering 1f we might not be called
upon for something in connection with this pre-
paredness program. They were planning --
H.M.Jr:
I wish you had a picture to take of Ed Foley.
We will get you (Foley) a doll.
Schwarz:
We need a candid camera.
K.M.Jr:
I refuse to be too serious. Don't they have
nice big dolls?
Gaston:
Yes, there are several sizes, big and little.
Klotz:
Life-size.
Gaston:
They were thinking about taking in 8 hundred boys
this fall. I think we ought to crowd them to
take in all they can, 120 or 125,
H.M.Jr:
0. K. by me, Mister.
Gaston:
We need more room up there. That reservation
isn't big enough. We need more buildings. We
have got a training station there at Fort Trum-
bull that is an absolute disgrace, buildings
that go back to before the Civil War and we
have got people housed in there as thick as
they can stick. I don't know why the thing
has waited so long.
H.M.Jr:
All right.
Gaston:
Then maybe we can slip some thing else by. I
316
- 4 -
thought maybe we could take some of these
emergency preparedness funds for some con-
struction up there. It would be very valuable
for that purpose.
H.M.Jr:
O. K.
John?
Sullivan:
The machine tool people are disappointed that
they haven't been called down yet. They have
got their bags all packed and waiting for a
call.
H.M.Jr:
Yes, General Brett called and said they need
a coordinator on machine tools. Well, we
will just have to wait. There is no use calling
any more people down until we have got something
to talk about.
Sullivan:
The Pratt & Whitney attorneys were in this morning
to work with Mr. Kades and they had instructions
to discuss only one motor, the 300-horsepower Wasp,
and I didn't understand that that was the situation
and I talked with Wilson and got him in New York
and he had the notes of your first telephone call
and he said that was his understanding with you
at the time and that he wasn't prepared to say
whether they would be willing to discuss the other
matters or not and I told him I would check with
you and call him back.
H.M.Jr:
Pratt & Whitney?
Sullivan:
That is right.
H.M.Jr:
Got a pencil?
Sullivan:
Yes, sir.
H.M.Jrt
Wasp, R-1340. Wasp, Jr., R-985. Curtiss-Wright
Whirlwind, R-975. Those are the ones that the
Army and Navy are asking for.
Sullivan:
I didn't get the Wasp - the first number.
Regraded Uclassified
317
- 5 -
H.M.Jr:
The Wasp, R-1340 and the Wasp, Jr., R-985 and
Curtiss-Wright Whirlwind, R-975.
Gaston:
Those are all light motors, 500-horsepower motors.
H.M.Jr:
And for your thing, the 1340 is 600-horse, the
R-975 is 450 and the R-985 is 400.
Sullivan:
He is right, then.
H.M.Jr:
Who is right?
Sullivan:
Pratt-Whitney, that those are the ones you dis-
cussed.
H.M.Jr:
These are two separate engines.
Sullivan:
Yes, sir. We want the license on 1340 and 975,
both.
H.M.Jr:
Let me check and be sure. Did I say Pratt-Whitney,
985 and 1340?
Sullivan:
That is right.
H.V.Jr:
And Wright engine, 9759
Sullivan:
Right. I found out there are very definite pre-
ferences on a licensee, which is Packard.
H.M.Jr:
They want to license Packard?
Sullivan:
Yes.
H.M.Jr:
We haven't crossed that step yet. Get me the
contract first, will you?
Sullivan:
Yes, sir. Now, Mr. Smith in the Budget called
Mr. Bell yesterday to discuss the reorganization
of the Federal Alcohol Administration and said
that he had had a memorandum from the President
that indicated it should be set up as a separate
bureau and then Mr. Bell asked me to call Mr.
Smith and I did and told him I didn't think it
could legally be done under the law and he was
to send B. man over to talk about it today.
Regraded Uclassified
318
- 6 -
H.M.Jr:
Incidentally, if you want the two best experts
in the United States on alcohol, they are sitting
there (indicating McReynolds and Graves), bar
none.
Sullivan:
They have been through it.
H.M.Jr:
I mean in the administration.
McR:
I think it would be terrible 1f you let that out.
Sullivan:
We were prepared to abolish the filing of --
H.M.Jr:
Listen, on this question of alcohol tax, you will
have to do the best you can. I am perfectly
serious. These men helped set it up and run it
and everything else and with the advice of those
two men, anything that the three of you do, I will
take.
Sullivan:
They have already approved the reorganization they
planned on.
H.R.Jr:
Don't bother me with it, please.
Sullivan:
All right. I just wanted to inform you.
H.M.Jr:
I am not interested.
Sullivan:
Very well. We are planning on eliminating the
duplicate tax.
H.M.Jr:
If you want to know how to mark straight whickey
and blended, and all the rest of it, there is
really nobody better than these fellows.
Sullivan:
We are planning on eliminating duplicate tax
returns and we were going to break it next
week at a meeting of the tax commissioners.
H.M.Jr:
What do you mean, duplicate tax returns?
Sullivan:
The extra copy that is filed is not being used
as much 8,5 heretofore.
H.M.Jr:
All right, break it.
Regraded Uclassified
319
- 7 -
Sullivan:
And we were going to break it next week, but
with possible additional features that might
be involved --
R.M.Jr:
I am not interested.
Millivan:
and the lack of publicity, I think we had
better postpone it.
Poley:
Eddie Greenbaum has been trying to get us to
do that for more than a year. He thinks it
is a tax irritant that is needless.
Sullivan:
We agree that it should be done, but I think
we had better wait another --
F.I.Jr:
Sully, it is yours.
Swllivan:
Thank you, sir.
H.W.JP:
C. K.
Sullivan:
Yes, sir.
H.M.Jr:
Got everything you want?
Sullivan:
So far.
Young:
I have no problems.
Rlots:
He is not going to ask for any.
H.M.Jr:
Tell the story on Sullivan, what happened Sunday
night. Do you mind?
Bullivan:
Not at all.
You tell it, Ed.
Sulliven:
I thought that was on Foley.
Gaston:
You had better get Ed to tell it, then.
Foley:
Well, we were - we had supper out at the Secre-
tary's house and these fellows were there
Regraded Uclassified
330
- 8 -
from Pratt-Whitney and Wright, Curtiss-Wright,
and the Secretary said, "Now, 1f you don't
mind, gentlemen, I am tired and I start my
day very early and I am going to go to bed."
John jumped up and said, "I will drive you
down, I will drive you down." The Secretary
looked at me and he said, "Wait, I want to
talk to you and Phil B. minute." So John was
on the hook then and couldn't get off. So
he took them down.
Inilivan:
They got off.
Maley:
We were sitting around just gossiping and all
of a sudden in the door comes a streal: and here
was John back again. The Secretary looked up
and said, "My Josh, are you back? I thou ht we
had sent you down town.' He said, "I just wanted
to tell you one thing, just one thing, what I
learned taking these fellows down, so after se
got out in front of the house afterwards the
Secretary said, "You know, Ed, what I an going
to do? I am going to go upstaire and I an
going to lock my door so that fellow Sulliven
doesn't come running in again."
059:
Don't worry, John, he has been talking that way
about me for five or six years.
cullivan:
I came pretty near running in this morning, I
will tell you that.
You know, the funniest thing was - he gave us
an excuse. Re said, "You know, they said 30-
and-so and so-and-so to me and I thought you
ought to know this and that is why I name
back," and Ed says, "No they didn't, they told
you that at lunch.
Milivan:
No, he was wrong about that.
T.S.Jr:
But that 18 what he said.
Bullivan:
That is what he salo. I hate to spoil E good
story, but he was wrong about that one.
Regraded Uclassified
321
- 9 -
H.M.Jr:
But it really was terribly funny and we were
just sitting there and in comes this streak
of red. He was afraid he was missing some-
thing.
Klotz:
That is the funniest story.
H.M.Jr:
All right, what else?
Chick?
Schwarz:
Nothing.
H.M.Jr:
George?
Haas:
I have nothing.
H.M.Jr:
Have you heard anything from these businesses?
Haas:
U. S. Steel replied and Fleming signed the tele-
gram and said their new order for last week
would be in tomorrow but that Stettinius was going
to see you and he would go over the situation.
H.M.Jr:
O.K.
Haas:
Maybe in view of the crowd they have seen around
the hall, maybe we will get a similar reply
from all of them.
H.M.Jr:
Harold?
Graves:
Nothing.
H.M.Jr:
Did anybody sign off any more - incidentally, I
made the statement - how much was it he won, was
it 25 or did he bring back 25?
Graves:
In poker, he made 36 thousand in the Philippines,
he said. He brought it back - he brought back
75 thousand.
H.M.Jr:
But 36 was at poker?
Graves:
Yes, he said.
H.M.Jr:
All right.
322
- 10 -
Graves:
He brought back 75 thousand, including --
H.M.Jr:
Talking here in the room, you have been com-
plaining to me about Procurement management
and I an looking to you, if it is as bad 8.8
you say it is, to put some management in there,
I wish you would talk about it to Mac. Mac
used to run it and he used to tell me it was
a swell organization. If it is as bad as you
say it 18, I think you had better put some
management in there. I am serious. Talk it
over with Mac. It used to be his pet.
McR:
The boss doesn't remember that B. few years
ago I suggested that we go in and make a sur-
vey of it and he said, "Wait."
Klotz:
You said that? No, it was the other way around.
MeR:
Well, he is gone.
H.M.Jr:
Well, between you, get me some management over
there, will you please?
Craves:
We are trying to supply that. I think our
present difficulty, as I have said to you, is
the financial one.
H.M.Jr:
Well anyway --
Craves:
That is the acute problem we are trying to
solve.
U.M.Jr:
The management, too.
Mac?
McR:
I have nothing.
H.M.Jr:
Mac, I would like you to sit in "on this 3:00
o'clock meeting, because you may have some
ideas. These people are coming in and I don't
know enough about - you most likely do - about
the National Aeronautical Association and all
the rest of those things. You know which is
which. I don't want to overlap. You pick it
up as we go along, see. If I am overlapping,
Regraded Uclassified
323
- 11 -
doing something - what I am trying to do is, I
have got three men coming in today, three the
next day, who are aeronautical engineers and
who are not connected with the Army and Navy
or any airplane company. I just don't want to
duplicate anything that the Government is al-
ready doing, so would you stay?
McR:
Yes.
H.M.Jr:
And you two gentlemen (Sullivan and Young). 0, K.
Sullivan:
How about Mr. Berle on that other contract? You
said you were going to take that up later.
H.M.Jr:
That is up to you.
Sullivan:
Yes, sir.
H.M.Jr:
Just get to him. I think he is in the other room
with Dan Bell.
TREASURY DEPARTMENT
224
INTER-OFFICE COMMUNICATION
DATE May 21. 1940.
TO
Secretary Morgenthau
FROM Mr. Cochran
CONFIDENTIAL
Today's var developments had a depressing effect upon the principal
foreign exchanges today. Both sterling and French france experienced appreciable
declines, and it is interesting to note that the French franc moved downward at
a faster rate than did the pound this afternoon, owing to the appearance in the
New York market of Italian bank orders to sell substantial amounts of francs.
From an opening of 3.25-1/2, the pound moved downward to a low of 3.14-1/2
in the mid-afternoon. Toward the close, it developed a firmer tendency. At
3.17-1/2, the final quotation was nearly 11¢ lower than last night's close,
During the past several months, the Federal Reserve Bank has received,
from time to time, orders from the Royal Bank of the Kingdom of Tugoslavia to
sell sterling in New York for its account. Today, however, an order received
from that source directed the Federal to purchase 630,000.
Sales of soot sterling by the six reporting banks totaled L361,000, from
the following sources:
By commercial concerns
L171,000
By foreign banks (Europe and South America)
1190,000
Total
L361,000
Purchases of spot sterling by these banks and by the Federal Reserve Bank
of llew York amounted to L424,000, as indicated below:
By commercial concerns
6245,000
By foreign banks (Far East, Europe, and South America)
L149,000
By the Federal Reserve Bank of New York (for Fugoslavia)
I 30,000
Total
1424,000
The following reporting banks sold cotton bills totaling 210,000 to the
British Control on the basis of the official rate of 4.02-1/2:
L 6,000 by the Guaranty Trust Company
2,000 by the Bank of Manhattan
2,000 by the National City 3ank
110,000 Total
Until mid-afternoon, the French franc moved with sterling on the basis of
4 cross rate of 176.40 france per pound. At the time sterling touched its low
of 3.14-1/2, the franc vss quoted at .0178-1/4. In contrast to sterling's sub-
sequent improvement to 3.17-1/2 at the close, the French franc noved further down-
ward to a low and final rate of .0176-1/2. The final cross rate was therefore
about 179.88 france per pound. One New York bank recorted that this afternoon
Regraded Uclassified
325
- 2 -
it had received orders from an Italian bank to sell 11,000,000 French france,
which the New York bank attempted to execute, with only partial success, in
this market.
Developments in the other important currencies were as follows:
The Swime franc remained steady at .2243 during the morning session.
In the mid-afternoon, 8 mall amount of business went through at .2229,
but the rate then moved back to close at .2240.
The Canadian dollar weakened further, touching a new record low of
22-1/16% discount at the close.
The reichmark closed at .4000.
The yuan had an easier tone in Shanghai today. The pence quotation of
4-1/16d was 3/16a below yesterday's rate. Against dollars, the yuan moved off
3/16# to 5-9/16#.
We purchased $20,000,000 in gold from the sarmarked account of the Swise
National Bank.
The Federal Reserve Bank of New York reported that the Bank of England made
the following shipments of gold to it from England:
$6,099,000 to be sarmarked for account of the Bank of England.
2,248,000 for account of the Swiss National Bank. The disposition of this ship-
ment is unknown at the present time.
$8,347,000 Total
The dollar gold price received from Bombay by 8 New York bank today vas
$36.71, slightly higher than yesterday's quotation.
The Bombay spot silver price declined the equivalent of 3/44 to 44.16#.
In London, the price fixed for spot silver was 22-9/16d. off 1/16d. The
forward quotation. however, moved up 1/16d to 22-7/16d. The U. S. equivalents,
calculated at the open market rate for sterling, were 33.33# and 32.894
respectively. On the basie of the official sterling-doller rate, the spot price
would be equivalent to 41.024.
Handy and Harman's settlement price for foreign silver vas unchanged at 35$,
The Treasury's purchase price for foreign silver vas also unchanged at 354.
Although no purchases of silver were made by us in the Fev York market today.
we bought 50,000 ounces from the Bank of Canada under our regular monthly agree-
ment,
BMR.
CONFIDENTIAL
Regraded Uclassified
326
May 21, 1940
10:22 a.m.
H.M.Jr:
Hello.
Onerator: J. Edgar Hoover.
H.M.Jr:
I can take it.
0:
Right. Go ahead.
H.M.Jr:
Hello.
J. Edgar
Hoover:
Yes, Mr. Secretary. Hoover talking.
H.M.Jr:
Are you in Washington?
M
Yes, I am.
H.M.Jr:
Did you get any message vesterday?
H:
I got word from the Attorney General that 8. message
was coming over from the White House. I haven't as
yet received it. It was sent to him end I imagine
he will probably convey it this morning, but he said
he didn't know what the provisions of it were except
that he understood it released us from the restrictions
that we've been under.
H.M.Jr:
That's right.
X:
And I certainly want you to know how much I appreciate
that.
H.M.Jr:
Was that fast enough?
H:
That certainly was fast. It was much faster than
anything I've ever seen work down here.
P.M.Jr:
Well, 88 a matter of fact, the orders were -- the
verbal orders were to give you a release on it at
once and it would be followed up with a written
memorandum.
H:
I see. Well, it really was one of the finest things,
I think, that could nossibly have been done. I mean,
from the safety and the security of the country, I
don't think anything could have been more important
at this particular time.
Regraded Uclassified
327
- 2 -
H.M.Jr:
Well now, look
H:
Yes.
H.M.Jri
by tonight if you don't get that, you give me B.
ring between four and five.
I will.
H.M.Jr:
Because the orders were that you were to have been
released 88 of yesterday.
Yes, Well, if I don't get that before -- I'm going
to New York at noon, and if I don't get it by noon
or by evening by the time I reach there, I'll give
you a ring.
H.M.Jr:
Yeah, because you should have had it.
R:
Yes.
H.".Jr:
Now, the other thing which bothers me 18 this. You
sent me this report, for instance, on the conditions
in Boeing.
H:
Yes.
H.M.Jr:
And you say you're not doing anything about it. Well,
who in the hell 16?
H:
Well, that -- of course that's a. situation that just
as soon AB we move in on 8. thing of that kind out
there we'll have our LaFollette Committee or the
National Labor Relations Board -- the position that
the Boeing people take 18 the fact that they don't
dare make any move because they can't diemise for
any causes of that kind.
H.M.Jr:
Well, who's responsibility 16 that?
H:
There's no one responsible, Mr. Secretary. In other
words B thing of that kind -- all that we can do and
all that we're doing right now 18 to keep ourselves
informed about it. Nothing 18 being done, of course,
to correct it as such. Of course the best way to
handle it, in my estimation, although the thing I
think probably 18 impractical at the present time,
the thing we lack today 18 able labor
leadership.
328
- 3 -
H.M.Jr:
Yeah.
H:
If you could call, for instance, John L. Lewis and
Just sit down between the four walls of an office
end tell him some of these things that are happening
there would be no doubt that the matter could be
corrected if he was in the right attitude. But he's
got this fellow Pressman, who 18 Just a mouthpiece
for A lot of these subversive groups.
E.M.Jr:
I know.
F:
And of course, Green on the other side 18 one of
these colorless individuals. Now, I Just got word
this morning - I'm sending you a memorandum on it
because I thought you ought to know about it -
I don't know whether this 18 true or not but I got
word from one of our informants that Madam Perkins
has appointed a man by the name of Walter Ruther
to head the safety device board to make inquiry into
factories through the country as to safety devices.
Now, Walter Ruther 18 one of the Ruther brothers,
C.I.O. Communist he 18, who WAB educated at the
propaganda college in Moscow, and was sent over to
this country about eight or nine years ago and was
very active in the Detroit area. He's an avowed
Communist. Now, this assignment that he's been
given, allows him to go into any factory in this
country to make his survey and to look over safety
devices.
H.M.Jr:
Look, why don't you tell Madam Perkins that?
H:
Well, you know I can't get to first base with her,
Mr. Secretary. I mean, she doesn't believe that
-- I don't believe -- that there's 8 Communist in
this country. That's a rather extreme statement.
What I was doing was I was sending you e copy and
I WAB sending General Watson a copy.
H.M.Jr:
Well then he's got to doit.
So that General Watson could probably take It up
either with her or with the President. But it's
Just a thing of that kind -- you can just see what
kind of & structure that 16 and how that sets the
picture up.
Dearaded
329
- 4 -
H.M.Jr:
Well, I think -- confidentially I think the President
expects to bring in one or two labor leaders 88 of
-- on -- put them on his staff.
H:
Yes.
H.M.Jr:
They -- thet -- all of this sort of thing would --
they could handle it.
H:
That would be the way. It would really be the practical
way to handle it because et this stage for the Govern-
ment try to step in and do something, you'd be charged
right away with violation of civil rights, whereas if
it could be donewithin labor, just as we're trying to
do it on this newspaper correspondent situation.
We found in New York City a most atrocious condition
there. I think there were nearly 70 per cent persons
holding credentials for the press who were not entitled
to them and with the State Department and
in this bureau, have worked out B. plan
whereby through the press associations we're going
to have them censor their own memberships, 80 to speak,
and tie in locally with an officer of the -- of the
Intelligence Services.
F.V.Jp:
Well look
Yes.
on this thing that you're waiting to hear from,
let's -- because -- let's BAY by tomorrow morning
if you don't hear give me a ring.
I'll certainly give you e. ring.
By tomorrow morning.
Yes. Yes, now I'm sending over to you this morning
also a copy of a letter that just came to me from
an employee in the Glenn Vartin factory in Baltimore
that I thought you ought to see.
0. K.
It's a very amazing letter. We're investigating it,
of course, but the statements in it were just rather
startling and rather shocking.
Regraded Uclassified
330
- 5 -
H.M.Jr:
Thank you.
H:
Fine.
H.M.Jr:
Cherrio.
H:
Thank you, very much indeed. Goodbye.
331
May 21, 1940
10:15 a.m.
H.M.Jr:
Hello.
Onerator: Mr. Arnold will be in his office about eleven and I
might reach him at home now. I'm not sure.
H.M.Jr:
Yes, try to get him et home. It's important.
0:
All right.
10:30 a.m.
0:
Go ahead.
H.M.Jr:
Hello.
Thurman
Arnold:
Hello.
9.M.Jr:
Thurman?
A:
Yes.
H.M.Jr:
Henry Morgenthau.
A:
Yes,
H.M.Jp:
How in the hell are you, you big.
A:
Fine, never better.
H.Y.Jr:
big trust-buster. Listen, I've got e fellow
in ------ the outside office that I brought down here with
the hearty approval of the President to help me on
the aeroplane business
A:
I see.
H.M.Jr:
by the name of John Biggers, President
A:
Yeah. You mean the Pittsburg
H.M.Jr:
Yeah.
A:
Fine -- yeah, I know him.
Regraded Uclassified
- 2 -
332
H.M.Jr:
Now, I brought him down because he's got nothing to
do with aeroplanes.
A:
Yeah.
H.M.Jr:
And he said, "Now, before you tell me anything,
Mr. Morgenthau, I'm under investigation."
A:
Well, he's -- he's absolutely O. K.
H.M.Jr:
You'll give me
A:
He's under investigation but he's been most coopera-
tive.
H.M.Jr:
And you're perfectly willing that I take him.
A:
And I would be delighted to have you take him.
H.M.Jr:
Well, that's all I wanted
A:
And I'd like to, at your convenience -- I'd like to
have a talk B0 that I won't get in your way any.
I think I can straighten out any possible future
relationships with respect to it.
H.M.Jp:
Well now how -- what would you suggest, Thurman?
A:
Well, I -- I'd like to have a talk with you any time
you say.
H.M.Jr:
Well, you name it.
A:
Well, let me see. This afternoon?
H.M.Jr:
O. K. You mean in regard to Biggers?
A:
Oh, no, no. Not in regard to Biggers. Any time that
-- in regard, generally the relationship of the Anti-
Trust Division and your Purchasing program.
H.M.Jr:
Fine. How -- well now look, if it isn't Biggers I'm
-- how about eleven o'clock tomorrow morning?
A:
Fine.
H.M.Jr:
Is that all right?
Regraded Uclassified
333
- 3 -
A:
Fine, and as far as Mr. Biggers 18 concerned you tell
him for me that we don't know of any businessman
under investigation who has been 80 completely co-
operative and 60 anxious to work along with us; in
snite of the fact that he's been under investigation
I'm just delighted you got him.
Now, Ed Foley 18 sitting here with with me and he's
made this suggestion. Mr. Biggers said ishis own
time going to be taken up defending a lewsuit.
A:
What's that?
H.V.Jp:
Is he going to be kept busy defending his company?
R
Well, I don't think 60. I'll inquire about that.
I don't think he 18.
H.M.Jr:
Well, if -- if he gets e call I'm going to tell him
to go over and Bee you.
A:
Well, I'm -- I'll look un that Plate Glass thing,
but it seemed to ne when we were talking about it
last that he wouldn't be and 1t Beems to me that
-- my impression WAB that it was perfectly O.K.
H.V.Jr:
Well, what
A:
I think that can be ironed out. I think he thinks
80 too.
E.V.Jr:
Yeah. Well, he said this. He said he didn't went
to -- he told your people he didn't want to be
subpoensed; he wanted to RO along; he consulted
you before he engaged Blackwell Smith or one of
your men; and he said he's giving your people every-
thing that they're asking for on a volunteer basis.
A:
That's right, be is.
H.M.Jr:
But there will be considerable publicity for his
coming down here to help me on this and we're all
one family and if you had the slightest doubts I'd
tell him thank you end ask him to 20 home.
A:
Well, I'll -- just offhand, I don't see any reason
why there'd be anything in connection with that.
334
- 4 -
I'll see how far it has gone and check up, but the
matter has been proceeding in such a friendly manner
and he has been so cooperative that I think we can
iron that thing out all right.
H.M.Jr:
Would it be asking too much if you called un your
office and called me back?
A:
I'm going right down to the office -- I'm working
this morning. I'll 20 right down -- I'm le aving --
you caught me out at my car and I'm going right down.
I'll call you back and straighten that thing out.
H.M.Jr:
You'll call me back before twelve?
A:
What?
H.M.Jr:
You'll call me back
A:
Well, I'll tell you, we'll fix that thing un somehow.
I'll -- if you need this man we'll work out some
doggone thing in that situation.
H.M.Jr:
I tell you, Thurman, why I need him. He came down
here to Washington end did that census Job for the
President and he's 8. businessman that can get along
with the Government. Hello?
A:
Yeah.
H.M.Jr:
And you know there are BO -- a lot of these business-
men come down and they're B bust.
A:
Yesh.
E.V.Jr:
And this fellow made good under very difficult cir-
cumstances, and everybody that I've talked to says
he's & New Dealer and he's O.K.
A:
Well, he's -- he's been awfully good with us, and if
we can't work that out somehow --, You see, we've
got -- we've been having B. grand jury and I haven't
kept up with the grand jury but I'll fix that some
darn way or other.
B.M.Jr:
Well, that's -- then it's entirely agreeable to you
that I take him on.
Regraded Uclassified
335
- 5 -
A:
Not only agreeable; I think that from my own relation-
ship with him I'm enthusiastic about it.
H.M.Jr:
Well, I'll tell him that.
A:
Because -- you see his company has been under
investigation and they're -- there are proceedings
against it -- I don't mean proceedings, but all
sorts of things, and he's been very cooperative.
He's been anxious to help us out. He's never shown
the slightest resentment at the thing and I think
it's up to us to do something when he's taken that
cooperation.
H.M.Jr:
Fine.
A:
And I'm going to try to do that. Now, I think I
could guarantee to leave him out personally.
H.M.Jr:
Right.
A:
I can't guarantee his company just now over the
phone.
H.M.Jr:
I understand.
A:
Because that depends on B. lot of other things, but
I think we can -- I think I can pull him out per-
sonally by some hook or crook and -- in fact, it
never has been at all likely that he'd be in it
personally.
H.M.Jr:
Yeah.
A:
Now, the company I can't at this moment give such a
guarantee, although I-- I have -- it has been my
belief all along that - the company thing would be
all straightened out -- that's my guess.
R.M.Jr:
Well, I -- you see I -- what he said to me 18 this.
He said, "Now, Mr. Morgenthau, I'll come down here,"
-- I don't think he's going to got any pay, but he
said, "If my company 16 going to have to go on trial
I've got to give my company my time first."
A:
Well, let's -- let me look into that. It doesn't --
it's just one of those things that you just -- it's
awfully difficult to give a blanket promise because
& man 18 taken on for the Government. You know
- 6 -
336
it's one of those things, figuring the grand jury
and all that, might cause us some kind of a scandal.
H.M.Jr:
Well, Thurman
A:
But I can -- I can guarantee practically that he
won't be in it and I think that with any amount of
cooperation we can handle the company.
H.M.Jr:
Well, I'm not putting
A:
H.M.Jr:
I'm not going to put any pressure on you, see?
A:
Oh, I know you're not. I -- I'm really like-- you
tell him I'd really like to see him down, because
I think he's the kind of a fellow that -- particularly
with this -- these pressures on the -- which will be
on the Department of Justice who has gone through this
thing with us and understands the point of view, he'd
be the kind of a man I'd like to deal with. It isn't
8. question of pressure, I like him myself.
H.M.Jr:
Well, to sum up, what do you advise me?
A:
I advise you to take him on.
H.M.Jr:
O. K.
A:
I advise you -- you can tell him that I want him
taken on. Tell him that so far as he's personally
concerned there isn't anything that I know of. So
far a8 his company 1s concerned there's a remote
chance there's some involvement, and I'll check up
that. But I don't -- I can't believe it's going to
be serious enough to Justify paying any attention
to it.
H.M.Jr:
Well, the thing -- you see, this aeroplane thing --
getting this straightened out 16 B. matter of e month
or two, and
A:
Oh, there's not going to be anything doing within a
month or two.
H.M.Jri
Well, that's -- then there's no reason why -- I mean,
by a month or two I'll either have made a success
Regraded Uclassified
- 7 -
337
or a failure of this aeroplane program.
of two
A:
Yeah. Well, 80 far as A month/is concerned, I'll
give you & guarantee.
H.M.Jr:
0. K.
A:
All right.
H.M.Jr:
Make it three.
A:
What?
H.M.Jr:
Make it three. (Laughs)
A:
Well, let me -- let me call my Pittsburg people in
and get you back and I'll see you tomorrow about it.
You see, I'm going to have to call up Pittsburg and
find out just where it 18. I haven't thought about
it for two or three months.
H.M.Jr:
Well, anyway, I'm going to tell him just what you
said. Ed's here, he's heard the whole conversation,
Ed Foley.
A:
Yeah.
H.M.Jr:
And I'm going to tell him just what you've said and
tell him that you're enthusiastic. I'd like to have
him come to work. There's a remote possibility of
something about his company but he personally 18 not
involved and that you -- you'd like to have him come
here and help me out. Is that right?
A:
And tell him that we're hopeful about the company but
I just can't tell you over the phone
H.M.Jr:
Well, I won't say anything about the company.
A:
All right. Fine.
H.M.Jr:
I won't say anything about the company.
A:
All right. Fine.
H.M.Jr:
Ever 80 much obliged, and I'll see you at eleven tomorrow.
A:
All right. Fine.
338
May 21, 1940
11:55 a.m.
H.M.Jr: Hello.
Onerator: Mr. Irey is in Mr. Upham's of fice. I have him on the
line.
",",Jr: All right.
0:
C₀ ahead.
Einer
Trey:
Hello.
E.M.Jr: Elmer?
I:
Yes, Mr. Secretary.
What, are you going in for foreign exchange? They
tell me you're in Upham's
(Balance of conversation not recorded)
Regraded Uclassified
339
May 21, 1940
12:40 p.m.
H.M.Jr:
Hello.
Operator: Mr. Frank. Go ahead.
H.M.Jr:
Hello, Jerry.
Jerome
Frank:
Yes, Henry.
H.M.Jr:
D₀ you went
F:
I had called you and then I got word from Miss LeHand
that the President wanted me to talk to you about
the market.
H.M.Jr:
Go ahead. Danny Bell 18 here, nobody else.
F:
What do you think about it?
H.M.Jr:
Well, I tell you how I feel. I think I'd stick 8.
little longer. I just saw Dow Jones said that
-- just had a flash that B little buying 10 coming in.
F:
Oh, there's a little bit in some things, Henry. I
think -- see, I phoned the stock exchange to get
their viewa.
H.M.Jr:
Yeah, well I
F:
And I think probably that's one reason for it. You
800 they -- hell put in a few buy orders just to make
it look good, but I think we're having A steady
melting away of values here. I'm not talking of
margin customers. They're not ponderable in quantity,
but what you're doing 18 -- I mean, this 1s one aide
of the argument. You're reducing the values of
thousands of people who aren't selling, not the
sellers, but the people who don't want to sell.
And, I think looking at the economy and what 18
ahead of us, that they're selling below values
that are justified by what conditions will be.
Now, that's a guess, of course. The other side of
the argument is that if you close you hurt morale.
Also I talked to Marriner and one of the considera-
tions that affects both you and him is the effect
Regraded Uclassified
340
- 2 -
of closing the market on the government bond market.
H.V.Jr:
Well, that's -- don't worry about that.
F:
Well, he's fearful that it might out pressure on the
high-grade bonds and government bonds because you
couldn't close the market on government bonds.
H.M.Jr:
Well, that would -- I'd cross that bridge when we
come to it.
F:
Yeah. Well, the President Bent word through Lauch
to me about an hour azo that he didn't want to close
it because of the fear of the effect on the morale
over across the water. Well, those are high con-
siderations that I can't -- I'll leave up to him.
H.M.Jr:
Well, my hunch 18 and I haven't talked to anybody
but you see?
F:
Yes.
H.M.Jr:
I mean, 80 I don't know what the street feels.
F:
Well, they want to keep it open.
H.M.Jr:
They do?
F'
Yes. That 18 the big -- all the big fellows. The
pressure for closing it 1s coming from smaller
persons.
H.M.Jr:
Well, this 18 my hunch and I won't leave the building
until the market closes. It's e cuarter of two up
there. You've got another hour and fifteen minutes
to go, haven't you?
F:
Yes.
H.M.Jr:
My hunch 18 if you leave it open for the rest of the
day
F:
Yeah.
H.M.Jr:
and then let's ask the President if he won't
see us. Go on over afterwards and have 8 little
talk,
341
- 3 -
F:
Yeah, I think that's right.
H.M.Jr:
But my hunch 18 -- let me just ask Bell -- he's
sitting -- (Aside: Have you got any hunch, Bell?)
Dan agrees with me.
F:
Well, supposing we do this. After it closes I'll
get all the data available and give you & ring and
maybe we'd better get together with some of our
staff. Now, I should tell you that inside the
Commission Leon and Judge Healy are very much on-
posed to closing until such time as there are
pockets -- that 18, where there is not what is
called orderly selling. Eicher and I feel that
you can have it damn nice and orderly but you can
melt away values awfully fast even though there are
takers.
H.M.Jr:
Yeah.
F:
And that that's merely looking at mechaniem and not
results, 80 I don't know what the Commission 8.8 an
entity will recommend, but the President 18 the
boss BO far as I'm concerned.
H.M.Jr:
Well
F:
He has to be anyhow because we couldn't close it
without his approval, but I mean I wouldn't think
of even suggesting anything until I
H.M.Jr:
Well, Jerry, my best hunch 18 that for another hour
and 8. cuarter keep it open.
F:
Yeah.
H.M.Jr:
But if -- If something -- you say there are no pockets.
F:
Not a8 yet, no.
R.M.Jr:
Well, now I'm -- I will not be out of the building
from now -- for the next hour and fifteen minutes
and I'll leave word if you want me I'll come right
to the phone.
E:
All right. Well, I've got to run out. I've got to
see the Court of Appeals but I'll be -- I'll be gone
342
- 4 -
for a short time. I'll be back right after -- shortly
after closing.
H.M.Jr:
Well, you
F:
I'll give you a ring then, Henry.
H.M.Jr:
But you won't close it without talking to me.
F:
Oh, no. No, we can't without the President's approval
anyhow.
H.M.Jr:
All right.
F:
O. K.
343
May 21, 1940
2:19 p.m.
H.M.Jr:
Hello.
Tom
Beck:
Hello. Secretary Morgenthau?
H.M.Jr:
Yeah.
B:
This 1s Tom Beck of Colliers. How-do-you-do.
H.M.Jr:
Hello, Tom. How are you.
G:
I'm fine. I've got a favor to ask of course.
H.M.Jr:
Yeah.
B:
You know I'm general chairman of this Aviation
Forum that's going to be on the 27th, 28th and 29th.
H.M.Jr:
No, I
B:
And it has the blessing of our Chief, the President.
H.M.Jr:
Right.
B:
And an exhibit at Bolling Field, and it's all Govern-
mental or non-profit.
H.V.Jr:
Right.
B:
We're very anxious to have a sign at the head of
Pennsylvania Avenue, which would be on the fence --
or just behind the fence of the Treasury where you're
looking up from the Capitol -- a neon sign which would
say "Attend the Aviation Forum at Bolling Field."
It's a moving sign. There'll be no destruction
even of lawn or anything.
H.M.Jr:
Well now, listen
B:
And no commercial, no sign -- no
H.M.Jr:
Now look, old man
B:
Huh?
H.M.Jr:
I don't know whether you're serious, but to call me
on 8. sign I think 18 kind of silly.
344
- 2 -
B:
They've called you what?
H.M.Jr:
To call me about a sign, -- I don't have anything to
do with signs.
B:
No. Oh, they told us that you had to approve such
a thing.
H.M.Jr:
Well, I mean, I don't do those things.
B:
Well, who should I see, Henry?
H.M.Jr:
Well, talk to Mr. McReynolds.
B:
McReynolds.
H.M.Jr:
McReynolds, yes.
B:
Thank you, I'm sorry to have disturbed you.
H.M.Jr:
That's all right.
B:
How are you?
H.M.Jr:
I thought it was something important.
B:
Oh, I'm very sorry.
H.M.Jr:
That's all right.
B:
But they told me that they had to get it from you.
I was misguided.
H.M.Jr:
No. (Laughs)
B:
How are you?
H.M.Jr:
I'm all right. I've still got a sense of humor.
B: ...
Thank you.
H.M.Jr:
All right.
B:
Goodbye.
345
May 21, 1940
3:51 p.m.
Ed
Foley:
He says the man hasn't got any sense end he'd
drive everybody crazy that he worked with and he
wanted me to nass that along to you.
H.M.Jr:
Wait B. minute. Say it again. I want Mrs. Klotz to
hear it.
F:
Yeah. Thurman, after spending an hour with him,
says he's impossible. He would drive enybody crazy
that had to work with him, and he wanted to withdraw
his enthusisstic recommendation that he made to you
this morning on the telephone
Well, I
F:
which was prompted he said, by the cooperation
that he has shown 80 far. He says he's not involved
but if he was he's 80 scared to death he'd sign a
consent to plead anything. But just as en
administrator end B. businessman charged with the
responsibility of carrying out e. program of -- like
you've got -- he Just would be impossible, Thurman
says.
H.M.Jr:
Well -- and that 1sn't because -- he 1en't doing that
because he dien't think I -- because he thought I
didn't want him?
F:
No, no. No, no. He said he just spent an hour with
him.
And he drives you crazy.
F:
That's right.
H.M.Jr:
Well, I was with him for A helf an hour and I had
one of my sick headaches this morning end I seld,
"WEll, maybe it's me."
F:
Yeah.
H.Y.Jr:
Then I got to thinking about it and I said, "No."
F:
No, that -- it's doublechecked now.
Regraded Uclassified
346
- 2 -
H.M.Jr:
Well, then they're coming -- you're coming in with
him at four?
F:
Yeah, he's outside my office.
H.M.Jr:
Well, you
F:
Is there anything you want me to say?
H.M.Jr:
Well, I don't care. You bring him back here and I'll
simply tell him that I think that everybody around
-- that'it's best to -- that -- not to come down,
that's all.
F:
Yeah. We tried to do this in the Government, or
something like that.
H.M.Jr:
I'll just tell him -- in order not to have you
sitting outside of my office, I'll give you a ring
when I'm ready.
F:
All right. Thank you.
H.M.Jr:
Ever BO much obliged.
F:
Thank you.
CABLE
517
#1299. May 21, 3 P.M., from London
CONFIDENTIAL FOR THE SECRETARY.
I have just had a meeting with Lord Beaverbrook in charge
of airplane production and the President of the Rolls Royce
Company. I have explained your desires and Beaverbrook has
asked for an appointment with the Prime Minister this after-
noon to discuss the matter with him and will let me know at
his earliest convenience. He 10 & man of action so be will
recognise need for speed.
Will advise as soon as I have information.
KENNEDY
Received by phone from Mr. Renchard of
State Department
May 22, 1940 - 11:00 A.M.
Regraded Uclassified