Ask the Scholar

{
    "localId": "28276435",
    "label": "Volume 294, August 15 – August 19, 1940",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/28276435"
}

{
    "id": "28276435",
    "sourceUrl": "https://catalog.archives.gov/id/28276435",
    "contentType": "document",
    "title": "Volume 294, August 15 – August 19, 1940",
    "citationUrl": "https://catalog.archives.gov/id/28276435",
    "collections": [
        "Henry Morgenthau, Jr. Papers",
        "Diaries of Henry Morgenthau, Jr."
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/35/2764/28276435/content/presidential-libraries/roosevelt/FDR-MORGEN/589213/md0392.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/35/2764/28276435/content/presidential-libraries/roosevelt/FDR-MORGEN/589213/md0392.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/35/2764/28276435/content/presidential-libraries/roosevelt/FDR-MORGEN/589213/md0392.pdf",
    "imageCount": 2,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/28276435",
    "naId": 28276435,
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/35/2764/28276435/content/presidential-libraries/roosevelt/FDR-MORGEN/589213/md0392.pdf",
    "mediaId": "29632b8b253821de",
    "ocrText": "DIARY\nBook 294\nAugust 15 - 19, 1940\nRegraded Unclassified\n- A -\nBook Page\nAgnew, Sir Andrew (British oil expert)\nComing to United States - 8/16/40\n294 130\nAmerican Red Cross\nProcurement Division authorized to purchase for. -\n8/19/40\n356\nAnglo California National Bank (San Francisco)\nFederal Bureau of Investigation report concerning\ndeposit from Swedish bank payable to German\nConsulate General, San Francisco - 8/16/40\n230\nAppointments and Resignations\nHarris, Sol (Collector - Seattle, Washington):\nResignation discussed - 8/15/40\n24\nAustralia\nSee War Conditions\n- B - -\nBelgium\nSee War Conditions\nBomb Sights\nSee War Conditions\n- C - -\nChile\nSee Latin America\nChina\nSee War Conditions\nCoast Guard\nDesign for new station at Detroit discussed - 8/15/40\n26,28\nCommunist Party\nFederal Bureau of Investigation report\n230\n- D -\nDefense, National\nFoley memorandum discussing possible confusion caused by\nJoint Resolution of June 15, 1940, and Section 14 of\nAct of June 28, 1940 - 8/16/40\n106\n- F -\nForeign Funds Control\nSee War Conditions\n- G -\nGermany\nSee War Conditions\nGreat Britain\nSee War Conditions: Export Control; Military Planning;\nUnited Kingdom\nGuatemala\nSee Latin America\nRegraded Unclassified\n- H -\nBook Page\nHanly, John (Secret Service)\nSee Ingersoll, Ralph\nHarris, Sol (Collector - - Seattle, Washington)\nSee Appointments and Resignations\nHughes, Howard\nSee War Conditions: Airplanes\n- I -\nIngersoll, Ralph\nHMJr expresses enthusiastic approval of PM - 8/16/40.. 294 147\na) Ingersoll asks to borrow John Hanly (Secret Service)\nfor a month\n1) Gaston disapproves: See Book 295, page 40\n- J - -\nJapan\nSee War Conditions: Export Control\nJohnson, Louis\nStimson and HMJr discuss refusal of appointment as\nSpecial Administrative Assistant on National Defense - -\n8/15/40\n72\n- L - -\nLatin America\nChile: Welles asks HMJr to see Chilean delegate in\nHavana now in Washington - 8/15/40\n21\nGuatemala: United States exchange restrictions explained -\n8/17/40\n315,334\n- M - -\nMexico\nFederal Bureau of Investigation reports\n342,346\nMilitary Planning\nSee War Conditions\n- N -\nNational City Bank, New York\nSee War Conditions: Foreign Funds Control\nNational Defense\nSee Defense, National\nNORTHLAND\nSee War Conditions: Ship Movements\nRegraded Unclassified\n- 0 -\nBook Page\nOil\nSee also War Conditions: Export Control\nAgnew, Sir Andrew (British oil expert): Coming to\nUnited States - 8/16/40\n294 130\n- P -\nPM\nSee Ingersoll, Ralph\nPerrine, Mr.\nFederal Bureau of Investigation report\n- 227\nPhillips, Sir Frederick\nSee War Conditions: United Kingdom\nProcurement Division\nSee American Red Cross\n- S - -\nShip Movements\nSee War Conditions\nSOUTHERN CROSS, Yacht\nSee War Conditions: Ship Movements\nSpain\nSee War Conditions: Export Control\nSperry Company\nSee War Conditions: Bomb Sights\nSweden\nSee War Conditions: Germany\n- T -\nTinkham, George Holden (Congressman, Massachusetts)\nSee War Conditions: United Kingdom (Phillips, Sir Frederick)\n- U - -\nU.S.S.R.\nSee War Conditions: Export Control; U.S.S.R.\nUnited Kingdom\nSee War Conditions: Export Control; Military Planning;\nUnited Kingdom\nRegraded Unclassified\n- W -\nBook Page\nMar Conditions\nAirplanes:\nProgress reports sent to Secretaries of War, Navy,\netc. - 8/15/40\n294\n44\nHughes, Howard: Plant near Los Angeles to menufacture\nplywood planes - Hinckley's report - - 8/16/40\n89\nAustralia: Regulations for sale of United States and\nCanadian securities held by Australian nationals -\n8/15/40\n81\nBelgium: Resume of situation given Cochran by Senator\nKronacker - 8/16/40\n235\nBomb Sights: Manufacture by Sperry Company discussed in\nKnox memorandum - 8/17/40\n296\nChina:\nAid discussed by Hornbeck (State Department) and HMr\npreparatory to conference with Soong - 8/15/40\n37\nAir-raid shelter pictures, and pictures of steps in\nproduction of wood oil, sent by Chen - - 8/16/40\n153\nChen sends further letter on situation - 8/16/40\n249\nExchange market resume - 8/15/40, etc.\n27,233,\n262,361\nExport Control:\n011:\nJapanese situation covered in memorandum sent to\nFDR - 8/16/40\n120\nExports of petroleum products, scrap iron, and\nscrap steel from United States to Japan, Russia,\nSpain, and Great Britain, as shown by departure\npermits granted for week ending 8/17/40\n318\net\nIf\nIf\n8/24/40: Book 295, page 224\nM\nIf\nII\n8/31/40: Book 296, page 332\nForeign Funds Control:\nNational City Bank, New York:\nRentschler and HMJr discuss future policy of French\nbranch - 8/15/40\n60\n(See also Book 295, page 161)\nBrussels branch situation - 8/17/40\n293,360\nGermany:\nFederal Bureau of Investigation report concerning\ndeposit in Anglo California National Bank of\nSan Francisco from Swedish bank payable to German\nConsulate General, San Francisco - 8/16/40\n230\nWestrick, Gerhardt Alois (Dr.): Federal Bureau of\nInvestigation report\n263,265,281\nMilitary Planning: Reports from London transmitted by\nLothian - 8/15/40, 8/18/40\n1,319\nPurchasing Mission: Status of orders by commodities,\nweek ending 8/17/40\n309\nSee also Book 296, page 333 (8/31/40)\nPegraded\n- W - (Continued)\nBook Page\nWar Conditions (Continued)\nShip Movements:\nPort of destination in British Isles and name of\nship - omission of requested of Treasury -\n8/16/40\n294\n87\nNORTHLAND: Course discussed by State Department\nand Treasury - - 8/16/40\n116\nSOUTHERN CROSS, Yacht: Federal Bureau of Investigation\nreport\n257\nU.S.S.R.:\nCommunist Party: Federal Bureau of Investigation\nreport\n230\nUnited Kingdom:\nAgnew, Sir Andrew (British oil expert):\nComing to United States - 8/16/40\n130\nPhillips, Sir Frederick: Tinkham (Congressman,\nMassachusetts) sent copy of release at conclusion\nof visit - 8/16/40\n139\nWenner-Gren, Axel\nFederal Bureau of Investigation report\n257\nWestrick, Gerhardt Alois (Dr.)\nFederal Bureau of Investigation reports\n263,265,281\n1\nBRITISH EMBASSY,\nWASHINGTON, D.C.\nAugust 15th, 1940\nPERSONAL AND\nSECRET\nDear Mr. Secretary,\nI enclose herein for your\npersonal and secret information a copy\nof the latest report received from\nLondon on the military situation.\nBelieve me,\nDear Mr. Secretary,\nVery sincerely yours,\nLolezan\nThe Honourable\nHenry Morgenthau, Jr.,\nUnited States Treasury,\nWashington, D. C.\n2\nTelegram despatched from London\nin the evening of August 14th, 1940\nNavel\nNgrly yesterday morning three NTE's\nencountered E-boate and anti-airereft shipe off\nthe Dateh const. They engaged enemy with hand\ngranades and use and cas STD passed en s-boot\nwhich reduced her speed to 6 knots, damage to\nenemy unknown. All our NTBe returned safely.\nsemaliland.\nYesterday destroyer \"Kinberley\" and\naloop \"Amekland\" bouberded and dispersed enemy\ntroops and lorries on the coast road west\nBerbers and probably delayed enemy's advance.\none H-8 trawler bonbed and sunk in\nDowns.\n2. Reval AIP Foree.\nNight operations on August 12th-13th\nagain hampered by cloud. only small number of\naircraft bembed primary targets. Fires started\nat Getha sircraft factory, other sigeraft attacked\nacredrence as secondary torgets, Five bleaheine\nattacked seredroses north-west France, one missing\nDeeks in Northern Hollend successfully attacked,\n- mine-laying also accomplished.\nYesterday 9 out of 17 Membeins bested\nenvolvements at Jersey and north-rest France, 7\nothers abliged to abouton tack, 1 failed to return\nog/\nRegraded Unclassified\n3\n+\nor 18 Blemboine cont to attack large corodreno in\nNorth one returned early, reasisder aloning.\nLast night, 101 heavy beabers despatched\nas follows: 62 to Northern Dermany to clusinium\nworks, sircreft fastories, Failway targets. 37 to\nItaly to attack Fist aero-engine featory at Turin\nand Capront aircraft factory at Milan. All these\naireraft returned. two to make photographic\nrecommissance of dockyard and oil plant at Stattin\nand seaplane base elsewhere. six modium bembers to\nattack aerodrance is occupied French territory.\nFrom all the above operations two airereft\nmissing, crew of one safe.\n3. German Air Force.\nPurther reports of night of 12th-13th\nnotified fee casuelties and slight damage sunderlend,\nSouth vales and Flymouth. Leaflets dropped in\nDerbyshire.\nExceptional air activity throughout\nyesterday. Estimated that over 2000 enemy aircraft\nengaged operations over Great Britein during day.\nsevere enemy casualties inflicted by fighter squadrong\nfrom which 13 aircraft lost but only 5 pilots.\nAttecks began at 6 a.m. when formations crossed Sussex\nconst end raiders operated almost continuously over\nsouthern and south-sestern counties as for inkend se\nwiltshire and Serkshire. At 4.30 Pollo about 500\nenemy aircraft reported ever socat from Themes\nlatuary so reymouth. Enery attacks directed chiefly\nagainst sepairence and Southmapton where premises and\nsentents of cold-sterage building burnt out. Denage\nw\nRegraded Unclassified\n4\nto coredrance slight except at Dealing which was\nattacked by 15 dive-bombers, 8 Blemheims destroyed\non the ground, operations POOR destroyed and\nCommending officer killed. At Andover, offices and\nquarters badlydamaged, one sircraft hit. At\nMastehurch operations reen destroyed. your barrage\nballoons destroyed at Dover. Casualties determined\nlight considering extensive attacks. Enery air\nlooses 39 bombers and 36 fighters destroyed, 32\nmore aircraft probable casualties and 49 damaged.\nIn addition 3 aircraft destroyed by anti-aireraft.\nOur losses 2 Spitfires and 11 Hurricanes, only 3\npilots. Last night several anall raids by single\naircraft OF small formations over widespread area.\nOffices and tool room badly damaged at Suffield's\naero feetory, cesualties two killed, 50 wounded.\none hundred incendiary bombe dropped on Castle\nBrewwich, only elight damage.\n4. Shipping Casualties.\nA. By U-bont. swedish ship of 5,800 tone\ntorpedaed and sunk off Northern Ireland on August\n9th.\nB. By aircraft. Swedish ship of 900 tone suns\nin western Approaches on August 10th. Attack ande\non two convoys off north sectlend during lest night,\nno damage reported.\n5. Hiddle East.\nsomeliland. situation at 6.0 1.3.\nAugust 13th. After heavy attack, preseded by low\nflying E.G. fire and hombing, August 11th on HELL\nHill, in left centre, our position estride\nHargeise-Berbera road, in which we suffered some\ncasuelticas/\nRegraded Unclassified\n5\ncasualties; enemy reached the read before being\nforeed beek by our sounter-stick. Subsequently\nthe easay in heavy infestry attack supported by\ntanks compelled our evacuation of will Hill with\nless of two 3.7 inch howitzers after resoval of\nbreach blocks. Anticipated slight infiliration of\nenemy would be cleared by the morning of August\n13th, but no general counter attack contempleted\nowing to importance of maintaining poserves. Enemy\ncasualties believed heavy, ours elight except at\nwill Hill. Enemy column of 400 strong reported\nmoving aleag the coast road west of Berbore. meny\nheavy artillery ineffective, many duds. Our\ntreeps resisted stubbornly but are tired after two\ndays of fighting.\nOur Blenheiss while heavily attecking\nenemy artillery positions were intercepted by\nfighters. Two Blenheime forced-landed at Berbera\n(ome erashed), another returned to Adem but is\nprobably a \"write-off\". on August 13th three of\nour medium bombers dropped 1, tons of bombs on\nItalian aerodrames, reconnaiseance scroplane\ncalled for fire from destroyer on enemy troops and\n3 are attached targets in bettle area.\nLibya.\nCa Aggust 12th 9 blembeins with fighter\nsecort attecked floating Grane is Terbruk harbour,\ntwo small vessele hit. Total of 13 essort-fighters\nand 29 fighters have arrived tree Sicily and are\nbeing sent to Benghani.\nRegraded Unclassified\n6\nAugust 15, 1940\n10:50 a.m.\nH.M.Jr:\nHello.\nKnudsen:\nThis is Knudsen.\nH.M.Jr:\nGood morning.\nKnudsen:\nGood morning. What did you get out of that\nconference yesterday noon?\nH.M.Jr:\nOh, well, I got it that Jones was going to\ndo it just his own way.\nKnudsen:\nThat was no policy question there, was it?\nH.M.Jr:\nNo, he seemed awful sore, I don't know. I've\nnever seen Jones act quite as mad as that\nbefore.\nKnudsen:\nWell, do you think we can do this, take them\nup one at a time and have a discussion of\neach one and then give Purvis any sort of\nassurance?\nH.M.Jr:\nDo I think so?\nKnudsen:\nYes.\nH.M.Jr:\nI don't know, I tell you, Bill, I - when are\nyou going away?\nKnudsen:\nMonday.\nH.M.Jr:\nOh. I find it sort of difficult to do this\non the phone. I'd love to sit down with\nyou. Have you got any time today?\nKnudsen:\nSure.\nH.M.Jr:\nIf you want to.\nKnudsen:\nSure.\n7\n- 2 -\nH.M.Jr:\nI could do it right after lunch. I have lunch --\nKnudsen:\nI have to go over to the White House at 2:00\no'clock.\nH.M.Jr:\nAt 2:00 o'clock.\nKnudsen:\nBut say I come after I get through there?\nH.M.Jr:\nWell, I've got somebody at 3:00 and 3:45, that's\nthe only trouble.\nKnudsen:\nYes.\nH.M.Jr:\nI don't quite get what you have, but I think\nit's important. I'd be glad to sit down and\ntalk to you.\nKnudsen:\nYes. How are you later in the afternoon?\nH.M.Jr:\nI tell you what you do - how long do your\nmeetings usually last at the White House?\nKnudsen:\nWell, sometimes they only last an hour and\nsometimes they last two hours.\nH.M.Jr:\nWhy don't you, when you get through there,\ncall me up from the White House and see where\nI'm at, huh?\nKnudsen:\nAll right.\nH.M.Jr:\nHow would that be?\nKnudsen:\nFine.\nH.M.Jr:\nWhen you get through with the President, give\nme & ring.\nKnudsen:\nFine.\nH.M.Jr:\nOkay?\nKnudsen:\nYes.\nH.M.Jr:\nThank you.\nRegraded Unclassified\n8\nAugust 15, 1940\n2:35 p.m.\nH.M.Jr:\nHello.\nGuy\nVaughn:\nHello.\nH.M.Jr:\nMorgenthau.\nV:\nMr. Secretary, how are you?\nH.M.Jr:\nOh, I'm alive.\nV:\nWell, so am I. I wondered what you found out\nin Indianapolis, in a general way.\nH.M.Jr:\nWell, what I found out was this: They've got\n49 engines which have passed the Green test.\nV:\nYes.\nH.M.Jr:\nAnd they have trouble with superchargers.\nV:\nOh, yes.\nH.M.Jr:\nAnd my understanding with Mr. Evans was that\nwhen that was fixed, he would call me.\nV:\nI see.\nH.M.Jr:\nI spoke to him on Monday and I haven't heard\nfrom him.\nV:\nI see.\nH.M.Jr:\nAnd he promised that the minute he saw day-\nlight on these 49 engines, he would call me.\nV:\nI see.\nH.M.Jr:\nNow, not having heard from him, I thought\nI'd call him tomorrow morning.\nRegraded Unclassified\n9\n- 2 -\nV:\nYes.\nH.M.Jr:\nBut, that's what it is.\nV:\nWell, those are regular teething troubles that\nthey didn't expect but everybody told them\nthey'd have.\nH.M.Jr:\nWell, it's too damn bad because it - just at\nthis time - it's about as bad a time as they\ncould pick.\nV:\nIt certainly is.\nH.M.Jr:\nBut, that's the whole story.\nV:\nThat's too bad.\nNow, you know that I offered - through Alfred\nSloan we had a conference in New York about\ntwo months ago with Henry Crane.\nH.M.Jr:\nYes.\nV:\nAnd I don't know whether you know Henry Crane\nor not, but George Mead does know him very well\nand we have - I think George has great regard\nfor him and I certainly have.\nH.M.Jr:\nYes.\nV:\nWe offered him the services of our engineers.\nH.M.Jr:\nYes.\nV:\nWe told Crane at the time - he unloaded his\nengineering troubles to me, you see.\nH.M.Jr:\nYes.\nV:\nAnd General Brett was present, very fortunately.\nIt was on June 15th, to be exact.\nRegraded Unclassified\n10\n- 3 -\nH.M.Jr:\nYes.\nV:\nWe told Crane that we would be very glad to\noffer the services of our engineers, not that\nwe knew very much about it, but we'd had an\nawful lot of experience that they had not had,\nand that we might be able to help them out\nof their difficulty because we had had a similar\none which we knew had been licked in such and\nsuch a way.\nH.M.Jr:\nYes.\nV:\nThen we went back to Alfred Sloan and he had\nto get through Hunt. He said Hunt was a little\nobstinate and didn't want anybody from the out-\nside coming . - horning in.\nH.M.Jr:\nYes.\nV:\nWe have never heard another thing about it.\nH.M.Jr:\nI see.\nV:\nI still believe that whether our engineers can\nhelp them or not, that possibly some improvement\nmight be made and at least if they get together\nwe'd know that they couldn't or they would.\nH.M.Jr:\nI see.\nV:\nNow, I don't know, but it seems to me that\nsomething like that ought to be shoved down\n0. E. Hunt's craw. It doesn't seem right\nthat a man like Hunt would say, \"We won't\nhave any help from anybody when we're in a\nhell of a fix.\"\nH.M.Jr:\nWell, I get the idea, and I'll see what I\ncan do with it.\nRegraded Unclassified\n11\n- 4 -\nV:\nAnd that offer of ours still holds good.\nWe'll let them have any engineers that they\nwant who are specialists in our plant to\ngo out there and discuss - not tell them\nanything to do, but just discuss it with\nthem and then let them do as they damn\nplease. They're running their own show,\nafter all.\nH.M.Jr:\nRight.\nV:\nIf I was in trouble, I'd welcome a thing like\nthat in a minute.\nH.M.Jr:\nWell, thank you very much and I appreciate -\nit's B. very sporting offer and I'll see what\nI can do about it.\nV:\nAll right. I think it's just for the whole\nnational good, everybody's good.\nH.M.Jr:\nRight.\nV:\nNow, there's one other thing.\nH.M.Jr:\nYes.\nV:\nThe Army, on this British question that 53\nengines are still chasing around, and the\nBritish wanted us to - I believe the Army\nwere perfectly willing to divert some engines\nto them, provided we'd give up that 60-day\nspecification that we have 60 days delivery\nof motors before the delivery of airplanes.\nH.M.Jr:\nYes.\nV:\nThat is a nominal and normal time for the\nmotors to come in on the production that\nwe have.\nH.M.Jr:\nYes.\nRegraded Unclassified\n12\n- 5 -\nV:\nMr. Morgenthau, we just can't give that up\nbecause it breaks a perfectly clean-cut\nrecord of ours; it sets up a precedent; and\nit is apt to cost us a great deal of money\nat a future date.\nH.M.Jr:\nBut of course, the 53 engines don't exist.\nV:\nThey don't exist, I know. I say, they're\nstill chasing us around. That's the number\nthat they had in mind.\nH.M.Jr:\nWell, Brett was wrong, he took --\nV:\nAll the Army have to do is to not give up\nanything themselves, not take anything from\nanybody else, but just say that these engines\nare for the British instead of us; in other\nwords, put a British designation on them\ninstead of an Army designation.\nH.M.Jr:\nI get it.\nV:\nGet all the engines that the British - I mean,\ngive them all that they can in that way.\nH.M.Jr:\nYes.\nV:\nWithout disrupting - we've got a pretty good\nrecord and we're proud of it.\nH.M.Jr:\nYes.\nV:\nAnd besides that, if we give it up today, one\nyear from now we'll be forced to give it up\nagain because we did give it up.\nH.M.Jr:\nYes.\nV:\nAnd do with 20 engines or 30 engines in process\n30 days before delivery and it's going to cost\nus a lot in liquidated damages.\nRegraded Unclassified\n13\n- 6 -\nH.M.Jr:\nYes.\nV:\nDue to no fault of ours.\nH.M.Jr:\nOkay.\nV:\nI think it's perfectly fair.\nH.M.Jr:\nYes.\nV:\nThe British are willing to pay the liquidated\ndamages, but I don't think it is a very dig-\nnified thing to ask them to do.\nH.M.Jr:\nWell, all the Army has got --\nV:\nThat would upset our whole show.\nH.M.Jr:\nAll the Army has got to say is to Allison,\nlet every other engine or whatever they want\nto go, be designated British, is that right?\nV:\nThat's exactly correct. And then nobody needs\nbe disturbed, nobody give up anything or take\nanything away.\nH.M.Jr:\nWell, that's what I - that's the position I\ntook.\nV:\nAnd I do think it's a little undignified to\nask the British to pay, but that would be\nthe end of that.\nH.M.Jr:\nYes.\nV:\nThe main part is that it is going to ruin us\neventually - not ruin us, but make us suffer\nundue hardships and God knows we've got enough\nof them now.\nH.M.Jr:\nOkay.\n14\n- 7 -\nV:\nAll right, sir. Thank you very much.\nH.M.Jr:\nIf I hear anything, I'll call you.\nV:\nAll right. Thank you.\n15\nCABLE\nFROM: Treasury Attache Nicholson,\nShanghai, China.\nDATE: August 15, 1940\nFor the Secretary of the Treasury.\nShanghai market August 14 closed uncertain at 3-45/64\nfor cash and August 3-11/16 for September for sterling 5-7/16\nfor cash and August 5-3/8 for September for U.S. dollars.\nGold bars closed at 5,808 and wei wah at discount of 4.30%.\nNICHOLSON\n16\nG-2/2657-220\nRESTRICTED\nM.I.D., W.D.\nAugust 15, 1940.\nNo. 170\nSITUATION REPORT\n12:00 M.\nThis military situation report is issued by the Military\nIntelligence Division, General Staff. In view of the occasional in-\nclusion of political information and of opinion it 1s classified as\nRestricted.\nI.\nWestern Theater of War.\n1. No ground operations.\n2. Air Force Operations.\nOn the 14th German daylight operations were on a re-\nduced scale. Objectives attacked included the Dover balloon barrage,\nairdromes in south and southeast England, rail communications at\nSouthampton and the harbors of Cardiff, Weston and Portland.\nNo details are available on raids conducted by the\nBritish and Germans during the night of August 14-15,\nAccording to press reports German air activity over\nEngland was somewhat increased today, but below the level of Aug-\nust 11-13.\nII. Mediterransan Theater of War.\nNo important ground or aerial activity reported.\nIII, East African Theater of War.\n1, Ground Operations.\nBritish troops in Somaliland have retreated in the\nface of a violent Italian attack. British naval unite from Aden\nare reported to be moving to the support of the defenses of Ber-\nbera. Supply and evacuation at Berbera are rendered exceedingly\ndifficult by the seasonal monsoons now blowing.\n2. The Italian air force has attacked British troops\nsouth of Berbera and installations at Berbera itself.\nRESTRICTED\nRegraded Unclassified\n17\nAugust 15, 1940\n11:01 a.m.\nH.M.Jr:\nHello, George.\nHarrison:\nHenry, I haven't got a thing in the world on\nmy mind or to tell you, but it has been so\nlong since I talked to you, I just thought\nI'd call up and see whether there was any-\nthing we've been bad about or anything we can\ndo.\nH.M.Jr:\n(Laughs) No, you've been very good boys, as\nfar as I know.\nH:\n(Laughs).\nH.M.Jr:\nBut the - there just wasn't - as far as I was\nconcerned, I wasn't in any trouble so I didn't\nhave to talk to you.\nH:\nWell, that's been my fix.\nH.M.Jr:\nYes, things are going along fairly smoothly.\nH:\nI think so.\nH.M.Jr:\nAnd I had nothing, and I hope to go away for\nthe last two weeks in August.\nH:\nGood for you.\nH.M.Jr:\nAnd --\nH:\nDanny is away now, isn't he?\nH.M.Jr:\nHe's away on account of that, you see.\nH:\nYes.\nH.M.Jr:\nBe back Monday.\nH:\nI see.\nRegraded Unclassified\n18\n- 2 -\nH.M.Jr:\nOtherwise, I'm all right.\nH:\nWhere are you going, up to your farm?\nH.M.Jr:\nNo, we think we're going up into Canada.\nH:\nOh, good.\nH.M.Jr:\nYes, get far enough away 80 that --\nH:\nThat's the cheapest place to spend your vaca-\ntion now.\nH.M.Jr:\nThat's right. That's right.\nH:\nBetter get some cheap Canadian dollars.\nH.M.Jr:\nHow does one do that?\nH:\nWe'll get them for you.\nH.M.Jr:\nReally?\nH:\nYes.\nH.M.Jr:\nWell, I wasn't - should I take some money with\nme?\nH:\nWell, what I would do - I think you would do\nbetter to buy free dollars here, which they\nare glad to have you do.\nH.M.Jr:\nYes.\nH:\nAnd get a draft on a Montreal bank and just\ncash it when you get up there, on any bank.\nH.M.Jr:\nOh, really?\nH:\nYes.\n19\n- 3 -\nH.M.Jr:\nI didn't --\nH:\nWhereas if you take American money up there,\nyou'll get maybe, I think, & ten percent dis-\ncount, whereas here you get thirteen.\nH.M.Jr:\nIs that perfectly --\nH:\nPerfectly proper.\nH.M.Jr:\nPerfectly proper?\nH:\nYes.\nH.M.Jr:\nWell, I don't know how much I want, but with\nthe whole family, I surely need $500. How do\nI do it, send you 8. check?\nH:\nWhy, all you do is send me 8. check and ask\nme to get you a draft for $500 worth of\nCanadian dollars.\nH.M.Jr:\nYou mean send you my check.\nH:\nYes.\nH.M.Jr:\nWell, I'll give it to --\nH:\nOr your bank there in Washington can do it\nfor you.\nH.M.Jr:\nNo, I have no bank in Washington.\nH:\nWell, just send it up here, I'll do it.\nH.M.Jr:\nWhat?\nH:\nJust send it up here, we'll do it.\nH.M.Jr:\nIs that perfectly --\nRegraded Unclassified\n20\n- 4 -\nH:\nAbsolutely. I inquired, because the three\nGrayson boys have just gone up yesterday.\nH.M.Jr:\nYes.\nH:\nAnd there's no - and I spoke to Knoke about\nit and he said no objection at all, I'd like\nto have you do it.\nH.M.Jr:\nAnd then you give me - then I get a draft\nfor that on the Bank of Montreal.\nH:\nYes.\nH.M.Jr:\nShould I?\nH:\nYes, on some Montreal bank.\nH.M.Jr:\nI see.\nH:\nOkay. So if you want me to do it, I'd be\nvery glad to.\nH.M.Jr:\nFine. I'll do it right away.\nH:\nAll right, sir.\nH.M.Jr:\nThank you for calling me.\nH:\nAnd if there's anything else I can do, let\nme know.\nH.M.Jr:\nOkay.\nH:\nGoodbye.\nH.M.Jr:\nThank you.\nH:\nGoodbye.\n21\nAugust 15, 1940\n11:10 a.m.\nSumner\nWelles:\nGood morning, Henry.\nH.M.Jr:\nGood morning.\nW:\nHenry, in a conversation that I had yesterday\nwith Seignor Schnake, the Minister of Fomento\nof the Chilean Cabinet, who is here --\nH.M.Jr:\nYes.\nW:\nHe was the Chilean delegate in Havana. He\nbrought up certain questions which clearly\ncame within the jurisdiction of the Treasury\nDepartment and I told him that I would ask\nif you would be kind enough to see him in\norder that he could lay these problems before\nyou for study by the Treasury Department.\nH.M.Jr:\nYes.\nW:\nI know you are leaving in the next day or so,\nbut I would appreciate it if you could see\nhim before you go.\nH.M.Jr:\nWell, I can see him at 11:00 tomorrow morning.\nW:\n11:00 tomorrow morning?\nH.M.Jr:\nYes.\nW:\nFine, I'll send word immediately.\nH.M.Jr:\nWould you have somebody from the State Depart-\nment present?\nW:\nI'll be very glad to, Henry. I'll have Collado\ngo over.\nH.M.Jr:\nCollado.\nW:\nYes.\nRegraded Unclassified\n22\n- 2 -\nH.M.Jr:\nYou'll have him introduce him, then.\nW:\nYes, indeed.\nH.M.Jr:\nAt 11:00 tomorrow morning.\nW:\n11:00 tomorrow morning.\nH.M.Jr:\nThank you.\nW:\nThank you so much. Goodbye.\nH.M.Jr:\nGoodbye.\nRegraded Unclassified\n23\nNote:\nCopy of this turned over to Mr. Gaston\nat 12:40 on instructions of Secretary\nMorgenthau.\nR McH\nAug. 15th\n24\nAugust 15, 1940\n11:40 a.m.\nH.M.Jr:\nHello.\nBone:\nHello, Mr. Morgenthau.\nH.M.Jr:\nHow are you?\nBone:\nFine.\nI had a talk long distance last night with\nSol Harris, the Collector out in Seattle.\nH.M.Jr:\nYes.\nBone:\nHe wants to quit out there and he rather\nattached a couple of suggestions to it\nthat made me - was the reason for my calling\nyou. He said he wants to - doesn't want to\nquit unless we both want him to quit.\nH.M.Jr:\nI see.\nBone:\nWell, I haven't any feeling one way or the\nother about it. If he wants to, why all\nwell and good but I - he, I suppose, feels\nsome sense of responsibility to me and we\nhave been very warm friends over the years.\nH.M.Jr:\nYes.\nBone:\nI guess he feels badly about the way some\nthings have gone, so now I'm merely telling\nyou and passing it on, he wants the consent\nof both of us and so you can have that in\nmind, Mr. Morgenthau.\nH.M.Jr:\nI feel just the way you do. It's immaterial\nto me. If he wants to quit, that's okay.\nI mean, it's perfectly satisfactory to me.\nI'm not, naturally, in close touch with the\nsituation, as you are.\n25\n- 2 -\nBone:\nSure. Well, I think it isn't anything out\nthere except just merely - I suppose he --\nI don't know, maybe he's discouraged with\nthe general political situation out there.--\nH.M.Jr:\nBut it's okay with me and I appreciate very\nmuch your calling me.\nBone:\nYes, well I wanted you to know this, and if\nthere is anything that you care to do, why\nit's all right with me.\nH.M.Jr:\nThank you.\nBone:\nAll right, Mr. Morgenthau.\nH.M.Jr:\nGoodbye.\n26\nAugust 15, 1940.\nMEMORANDUM\nTO: Secretary Morgenthau\nFROM: Mr. Gaston\nI talked to Admiral Johnson about the design of the Detroit\nRiver Life Saving Station and he will look into the question\nwhether it is possible to employ Dyer as consulting architect.\nHe has previously been employed by the Office of the Coast Guard\nCivil Engineer in Cleveland as an architectural draftsman, at a\nsalary of $2,000 per year. It is not possible to reemploy him\nin that status under Civil Service rules since he is more than\nseventy years old.\nThe Cleveland station, Johnson tells me, was produced under\nthe direction of Chief Engineer Gay at Cleveland by four architectural\ndraftsmen - Porter, Rasmussen, Arany and Dyer. He says that no one\nof the four is responsible for the design but they are entitled to\nabout equal credit. The general idea of developing modernistic\nstations and different types of stations adapted to the localities\nin which they are to be erected came from his office in Coast Guard\nheadquarters.\nIt may be that you would like to talk to Johnson about the\nproject. If so, he will of course be glad to come over at any\ntime.\nRegraded Unclassified\n27\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE August 15, 1940\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nconfidential\nThe only transactions in registered sterling effected today by the six\nreporting banks were purchases of £39,000 for customer account.\nThe open market for sterling was featureless, and the rate showed little\nvariation from 4.02-1/4, the first and last quotation. The reporting banks sold\n£20,000 and bought £22,000 for commercial concerns.\nThe other currencies closed as follows:\nSwise franc\n.2279-1/2\nCanadian dollar\n13-1/4% discount\nLira\n.0505\nReichsmark\n.4005\nCuban peso\n11-9/16% discount\nMexican peso\n.1992 bid, .2016 offered\nThere were no gold transactions consummated by us today.\nThe State Department forwarded to us B cable stating that the following gold\nshipments were made from England, for sale to the U.S. Assay Office at New York:\n$266,000 shipped by Samuel Montagu, London, to the Chase National Bank, New York.\n42,000 representing two shipments to commercial banks in New York.\n$308,000 Total\nThe Bombay gold price was equivalent to $33.72, off 2#.\nSpot silver in Bombay was 1/8$ lower at the equivalent of 44.964.\nIn London, the price fixed for spot silver was 23-1/24, up 1/16a, while the\nforward price was unchanged at 22-11/16d. The U.S. equivalents were 42.67$ and\n41.20# respectively.\nHandy and Harman's settlement price for foreign silver vas unchanged at 34-3/44.\nThe Treasury's purchase price for foreign silver was also unchanged at 35#.\nWe made one purchase of silver amounting to 150,000 ounces under the Silver\nPurchase Act, which represented a sale from inventory. for spot delivery.\nB.M.\nRegraded Unclassified\n28\nAugust 15, 1940\n9:30 a.m.\nGROUP MEETING\nPresent:\nMr. Gaston\nMr. Sullivan\nMr. Thompson\nMr. Cochran\nMr. Chamb erlain\nMr. Foley\nMr. Schwarz\nMr. White\nMr. Buckley\nMrs. McHugh\nH.M.Jr:\nDid you (Foley) see this clipping about\nSEC?\nHerbert?\nGaston:\nI have Admiral Johnson coming over to show\nme some plans for a new Coast Guard Life\nSaving Station in the Detroit River, Lake\nSt. Clair. Would you be interested?\nH.M.Jr:\nIs it like the one in Cleveland?\nGaston:\nI haven't seen them, but they were done before\nthat was completed.\nH.M.Jr:\nI would like to take a look at it.\nGaston:\nI've got some pictures coming through on\nthat.\nH.M.Jr:\nAnything else?\nGaston:\nNo, I don't think 80. You got this message\nthrough Mr. Cochran about the British tax\nwhich will add to the value of their products\nunless they change it?\nRegraded Unclassified\n- 2 -\nH.M.Jr:\nYes.\nCoohran:\nThat is the one you cleared.\nH.M.Jr:\nYes. Anything else?\nOneton:\nNothing clse.\nH.M.Jr:\nEd?\nFoley:\nI may want to talk to you later in the day\nabout the Curtiss-Wright deal. The RFC\nchanged the basis on which we gave the ruling\nand they have included an option to purchase\nprovision on the stipulated price in there.\nIt makes the scheme smack more of tax\navoidance than it did before, and we may\nnot be able to go along.\nNow, Curtiss-Wright said they didn't want\nit and they didn't ask for it in the original\napplication for the ruling, but they say that\nMr. Jones insisted that that provision go\nin there because he didn't want the Government\nto be in the position at any time of owning\nairplane plants and Hotchkiss indicated to\nus that if we take the position that we can't\ngive the ruling, they would have no objection\nto going along without the option.\nH.M.Jr:\nWell, if you are going to do it in view of\nyesterday's meeting I think I would call up\nJones and ask if you couldn't see him and\nexplain the difficulty BO that he doesn't\nget his back un again.\nFoley:\nYes, okay,\nH.M.Jr:\nI thought that was all settled.\nFoley:\nIt would have been if they had left that\nout and I understand that there are several\nother companies, Douglas and other companies,\nthat are just waiting to see whether this\ndeal goes through and if it goes through they\nall want to come in and get similar arrange-\nments.\nRegraded Unclassified\n30\n- 3 -\nH.M.Jr:\nWell, how do you think we had better handle\nit 80 there is no time lost?\nFoley:\nWell, I want to wait and get word from the\nBureau as to whether or not they are going\nto go along. If they say they can't go\nalong, then I think I had better call\nMr. Jones and go over and see him.\nH.M.Jr:\nAll right. Will you handle it?\nFoley:\nYes, I will handle it.\nH.M.Jr:\nAll right. Why does he do that sort of\nthing?\nFoley:\nI don't know. It 1s just petty, that is all.\nIt wasn't necessary to do it. The commany\ndidn't ask for it.\nH.M.Jr:\nAll right. If you have any trouble, let me\nknow. Anything else?\nFoley:\nNo.\nH.M.Jr:\nWhat are you doing these days, John?\nSullivan:\nOn the Hill. I am due there at ten.\nH.M.Jr:\nAre you getting anywhere?\nSullivan:\noh, Just trying to Bee how we can excuse the\nfew people left from paying tax.\nH.M.Jr:\nI sent you that so-called Henderson Plan.\nWhat happened to that?\nSullivan:\nLeon and I have discussed it.\nH.M.Jr:\nI don't have to get in on it.\nSullivan:\nI shouldn't think 80. I don't understand\nwhat has happened on the Hill.\nCochran:\nMr. Knoke telephoned me again yesterday on\nthat Bank of Canada matter. Howe has been\npressing him, and I told him we would let\nhim know Monday. The only thing, it delays\nRegraded Unclassified\n31\n- 4 -\nhim a little bit because they are having\na Board Meeting today.\nH.M.Jr:\nWell, they will have to wait.\nCochran:\nAll right.\nH.M.Jr:\nLet me just read this.\nCochran:\nStone offered that, so I think it is all\nright.\nH.M.Jr:\nAll right.\nSchwarz:\nYou may be asked in press conference this\nmerning regarding the new system of financial\nreporting set up by the President's Executive\nOrder Tuesday. Dan Bell was eager that if\nwe do say anything, we hold it to generalities,\njust that it 1s an improved system.\nH.M.Jr:\nI haven't the foggiest idea what it 1s. Do\nyou know?\nSchwarz:\nYes. It calle for more detailed reporting,\nespecially by the independent agencies and by\nthe Government corporations.\nH.M.Jr:\nIt was set up in the first instance by the\nBudget, wasn't it?\nSchwarz:\nThat 18 correct. We could refer any questions\nto them.\nH.M.Jr:\nRefer them to the Budget?\nSchwarz:\nYes.\nH.M.Jr:\nWhat else?\nSchwarz:\nThat 1s all.\nBuckley:\nWe had Mr. Cunliffe, Administrator of Aluminum\nfor the United Kingdom, entire British Empire,\nin yesterday. I took him over and introduced\nhim to Mr. Stettinius and he went over the\naluminum situation with our people. There were\nseveral problems, and I think they will be\nRegraded Unclassified\n32\n- 5 -\nworked out. He left town last night, but\nI think he will be back again. I think\nthat is the only thing I have.\nH.M.Jr:\nMr. White?\nWhite:\nThere was 8 contemplated case of dumping\nof Mexican oils to the United States which\nthe Mexicans were apparently quite interested\nin. We couldn't find any grounds for further\ninvestigation of the case, 80 we are going\nto inform them that we have dropped it. I\ndidn't know but what you might have something\nin mind now or in the future in which you\nmight want to tell them that you are doing\nthis as a favor to them, or if there 1s nothing\non foot, it will merely go through, because\nwe have no choice in the matter.\nH.M.Jr:\nI am waiting to see who 1s to be the next\npresident of Mexico.\nWhite:\nWell, it 1s Camachio.\nH.M.Jr:\nHow do you know?\nGaston:\nThey haven't had the revolution yet, Harry.\nWhite:\nYou mean he hasn't taken office yet. I don't.\nH.M.Jr:\nI thought their Congress was going to decide\nthat.\nWhite:\nOur Congress?\nH.M.Jr:\nTheir Congress.\nWhite:\nWell, I thought it was in the bag.\nH.M.Jr:\nDo you think that would help you -\nMrs. Morgenthau has a set of dishes of\neight pieces and she would like to get\nanother four. The Minister of Finance\ngave them to us.\nWhite:\nI should say it would help.\nRegraded Unclassified\n33\n- 6 -\nH.M.Jr:\nOn the strength that I would like to get\nanother four pieces. We broke a couple.\nI have been waiting for some excuse. I\ntold her I couldn't ask the Ambassador now,\nbut sometime it was a good excuse. I was\njust being silly. You remember what is his\nname gave us a set of Mexican dishes that\ncomes from his home town. The freight is\nmore than - the dishes don't cost anything.\nNever mind, I was just joking.\nGaston:\nCreighton, our Supervising Customs Agent on\nthe Border, goes down every month. He could\ntake one of those dishes down and match them.\nWhite:\nIt may be juggling, but I will see that you\nget it.\nH.M.Jr:\nWe bought some of the stuff. It doesn't cost\nanything. It 1s the freight and packing to\nget it up here.\nGaston:\nWell, he could pack it in his suitcase.\nH.M.Jr:\nIt is a couple of good offers, anyway.\nWhite:\nI will take it up with Mrs. Morgenthau.\nH.M.Jr:\nWhat did Harry say?\nSullivan:\nHe said he would take it up with\nMrs. Morgenthau.\nFoley:\nHe took it out of your hands.\nH.M.Jr:\nAll right.\nWhite:\nHornbeck is coming here at a quarter of\neleven, and I wanted --\nH.M.Jr:\nEleven o'clock and Soong at eleven fifteen.\nWhite:\nI wondered if I could see you a few minutes\nbefore Hornbeck comes in.\nH.M.Jr:\nHow many minutes?\nRegraded Unclassified\n34\n- 7 -\nWhite:\nFive.\nH.M.Jr:\nFive minutes of eleven.\nProfessor Chamberlain?\nChamberlain:\nWe haven't yet heard about that note renewal.\nI called up this morning and they say it is\non the President's desk and hasn't yet been\nsigned. You remember that letter to\nauthorize --\nH.M.Jr:\nI am seeing the President tomorrow morning.\nIf you could give me & copy of it to take\nwith me, give me another copy - a complete\nset and I will take it over at 9:30 tomorrow\nmorning.\nChamberlain:\nWe are keeping in touch with the White House\noffices, 80 if anything turns up we will let\nyou know.\nH.M.Jr:\nI am going over at 9:30 tomorrow morning\nto see him.\nChamberlain: I will see that you are informed, Mr. Secretary.\nThat is all. I am staying here at lunch.\nThompson:\nI have this letter from Mrs. Delahunt.\nH.M.Jr:\nAnd what do you think?\nThompson:\nI think we ought to continue her and I can\neasily arrange it.\nThere was a young man in yesterday looking\nfor a job. He was 8. very nice looking boy,\nand I think we could use him.as & messenger\nboy or in our photostat room.\nH.M.Jr:\nYou think you can?\nThompson:\nYes. He 1s a bright boy. I think he will\nbe all right.\nH.M.Jr:\nWrite a letter to my sister and I will\nsign it. Is that all?\nRegraded Unclassified\n35\n- 8 -\nI don't want to crow yet, but I think there\n1s something happened over in the War Department.\nAssistant Secretary Patterson is going to town\non things, and he just brushes the generals\naside. It 1s just too good to be true. We\nwill know this afternoon. Do you know\nJudge Patterson?\nChamberlain:\nJust know him. What I have heard of him is\nvery good.\nH.M.Jr:\nLike a breath of fresh air.\nChamberlain:\nAnd what I have heard of him - I have heard\nthat he was that kind of man.\nH.M.Jr:\nHe just - (accidentally striking glass)\nWhite:\nOh, he rings the bell?\nH.M.Jr:\nHe shows particular good sense by letting\nthe Treasury people write his letters for\nhim. He seemed to have known Cox when he\nwas up in New York, and Cox is over there\nnow writing & letter to Maxwell, ien't he?\nFoley:\nYes.\nH.M.Jr:\nWonderful. I will see this afternoon if\nhe really goes through with it. I think\nhe will. If we could only get somebody\nlike that in the State Department.\nWhite:\nOh, yes.\nH.M.Jr:\nAll right, thank you.\nRegraded Unclassified\nAugust 15. 1940\nfiles\nit. Coobran\nincon de Gruben. Counselor of the Nelgian telephoned he resterday\n1.- regard \" the letter which be had addressed to no 05 August 10 in regard to the\n- of Georges Thounis. I told him that after meting inquiries I\ned (evid TMS the State Department had forwerded to the Treasury Ambasender Theanis'\nof July 19. but that through insivertence this had not been received by the\nintered Telerve Rank at liev York or had been forwarded by the Treasury Department.\nConsumently I net melcod Rr. \"etle, is visase heads the letter rested, to do the\nCertam received this verning from a. Fehle - 0017 of the letter which he\ntransed #& /agust 13 for Professor Chemberlain's signature. I checked with fev Tork\nad from that 9. Enotre had received it not had referred It to Xr. Cameron for\nremin-1100 184 possible discussion with Mr. Knoke. I then telephoned Baron de Gruben\nthat the letter vos in Sev Torm and that vp. Anoke would let ne know if there VII any\nLifically la consumating the desired transmation wean the basis of this letter.\nor whether the Federal Receive Bank night have any specific surgestions to maine for\nthe future bandling by the Tubsey of transactions of this type. Daron de Graben\nour intervention. but still feels that the Federal Reserve Revis to below\ncalts lemlistic In dealing with sheee miters. lie hoped to come in and see DE\nwithin she dear future in regird to general problems of the Selgian account=,\nparticularly those of the Retional Tank of Delgiue.\nsugar 16, 1940\n1. include telephoned be today 1a regin to the letter written is Thronts under\nX fulg 19 to the Department of State which ver transmitted to the Treasury an\nWabs - - by the Treasury to the Federal Recerve Teak on 14. Kanite und this\nBiller - not assisfactory to the Faderal and that the transaction 1a question could\n1 H Heoleted on the basis thereof. Se auted be to let the Belgion lisbery how\n- that # letter similar to that written by en June 23 to the\nSecurity registing - payment of $3,300.000 to the Dwise thank Corporation by the\nReferel That of Yes Tork, be propered and sent through the astablished channels\nthe RATE 18: Pressury Departments,\ninterboand the Delgion Tabesay this -fternoon but learned that Peron de Oruben\nNew not he La 10m will Honday, when I shall communiests with binagest 19. 1940\n1 care the above information this morning to the Secretary of the Belgion lubrear,\n1- the clarace of Peron de Cruben. I also read to his the cable of August 17 from\nwillows 7 Lee Governor of the Benque Nationale Belgique.\nB.M.S\nRegraded Unclassified\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE August 15, 1940\nTO\nSecretary Morgenthau\nFROM\nMr. Cochran\nSTRICTLY CONFIDENTIAL\nAt 11 o'clock today the Secretary received Dr. Hornbeck of the Department\nof State. Measrs. White and Cochran also were present. This meeting was to prepare\nfor D. conversation with Dr. T. V. Soong of China. It was explained, principally by\nDr. Hornbock, that Mr. Welles, the Acting Secretary of State, was not willing to pro-\nnéed et present with any triangular negotiations between the United States, Russia\nand China, involving e possible facilitating of Chinese purchases of munitions from\ndursta in return for American credits extended Chine against bungsten or other pro-\nducte, in view of present diplomatic relations and negotiations between the United\nStates and Russia. Mr. Welles felt that the Russians might misunderstand any advances\nwhich we made toward them in the name of good relations with Ohina. The Secretary\ndefinitely excluded the possibility of the Stabilization Fund extending any assistance\nto China. There remained, therefore, only the chance of obtaining something from the\nEnvirt-Import Bank.\nwhen Dr. Soong joined the group at 11:15, the Secretary asked him what\niccoss he had had in this country. Dr. Soong stated that he had visited the Depart-\ncent of State and bed also enjoyed technical discussions with Dr. Herry White, but\nUSD no results had yet been achieved. In answer to the Secretary's request for an\nemplanation of the present Chinese situation, Soong stated that China needed materials\nfor the pureuit of her war against Japan and also support for her currency. If China\nshould fell either from lack of materials or from the collapse of her currency. he felt\nthat the repercussion on the other democracies of the world would be serious. When\nthe Secretary ouestioned him in regard to the facility of Chine to export and import\nesterials, Soong thought that exports could be made both through French Indo-China\nand over the Burna Road. He was not aware that the British had interposed any objection\nto emorts over Burma. In confirmation of his belief that Chinese products could be\nflivoed out through Indo-China, he cited the recent cargoes of tungsten and antimony,\nvitch the United States R.F.C. had purchased from China and shipped from Haiphong.\n(It should be recalled that this material had been in Indo-China for months.)\nThe Secretary stated definitely that he would not be warranted under lew\nto take the risks involved in the American Stabilization Fund lending direct assistance\nto Chinese currency. Ee suggested that Soong again get in touch with the Export-Import\ntank, or directly with Mr. Jones, if and when the pending legislation for increasing\nthe resources of the Export-Import Bank may be passed. It is understood that in its\nPresent form this legialation would permit further credits to China, the maximum limits\nof which under the present law have now been reached. The idea was discussed of China\npaying back any new credit through shipments of tungsten ore which Dr. Soong stated\ncould be produced to the extent of approximately 13,000 tone annually, with EL value of\n*round $13,000,000. The meeting ended, therefore, with the Secretary positively refusing\nStabilization Fund credit and leaving the matter of an Export-Import Bank credit for\nloons to take un directly with Jones if and when the present bill passes Congress.\nBMP\nRegraded Unclassified\n38\nAugust 5,1940\nPossible Agenda for 11 o'olook Conference with Mr. Hornbeck\nA. There are three possible ways of extending economic aid\nto China:\n1. A stabilization loan, provided you are willing to\naccept the risk of possible loss. (See B-1 in book)\n2. The President's proposed Three-Way Arrangement under\nwhich the R.F.C. buys manganese, chromite, asbestos,\nplatinum, etc., from Russia, making partial advanced\npayments, while Russia extends equivalent sum of credits\nto China for purchases of war materials. (See A page 2)\n3. The R.F.C. can purchase $50 million worth of wolfram\nand tin from China, paying in advance -- delivery over\nthe next five year period. (See A- page 1)\nB. The following should be discussed this morning:\n1. Does the State Department wish the Treasury Depart-\nment to push project of financial aid to China, or do\nthey wish the matter dropped. (See copy of appended\ntelegram.)\n2. Does the State Department approve of B. stabilization\nloan should the Treasury find it feasible to extend such\na loan?\n3. Does the State Department object to further explora-\ntion with the Russians of the proposal made by the\nPresident of a Three-Way Arrangement?\n4. Has the State Department any concrete suggestion to\noffer either as method of aiding China, or procedure\nin negotiations?\n5. Would the State Department actively support the\nTreasury in its attempt to secure R.F.C.'s favorable\naction in the purchase of strategic materials from\neither Russia or China?\nRegraded Unclassified\n39\nCopy of telegram given informally to\nMr. White by Mr. Soong. The telegram\npurports to be a report of Mr. Johnson's\n(U. S. Ambassador to China) comments to\nthe Chinese Government.\n40\nCOPY\nTELEGRAM FROM CHUNGKING\nJULY 31, 21:31\nNo. 1635/ July 31.\nFOLLOWING ARE SALIENT POINTS AMERICAN EMBASSY UPON\nINSTRUCTION VERBALLY CONVEYED US (1) U.S. WILL CONTINUE\nASSISTANCE TO CHINA AS FAR AS IT IS APPROPRIATE AND\nPRACTICABLE (2) U.S. SYMPATHIZES WITH CHINA'S RESISTANCE\nAND HER PRESENT PLIGHT AND WISHES MANIFESTATION SUCH\nSYMPATHY IN CONCRETE FORM (3) IMPORTANT AMERICAN\nOFFICIALS ARE CONSTANTLY STUDYING CHINA'S SITUATION\n(4) U.S. HOPE AND BELIEVE OUTCOME CHINA'S STRUGGLE\nWILL BE HER INDEPENDENCE AND POSSESSION OF LARGE\nINFLUENCE (5) CHINESE AMBASSADOR WASHINGTON IS KEEPING\nCLOSE CONTACT WITH HIGH OFFICIALS AMERICAN GOVERNMENT\nAND MUST BE REPORTING HIS OBSERVATIONS AND INTERPRETATIONS\nOF CONDITIONS IN U.S. TO HIS GOVERNMENT.\nWAICHIAOPU\nJuly 31, 1940.\nRegraded Unclassified\n41\nC\no\nP\nY\nBRITISH EMBASSY,\nWASHINGTON, D.C.\n15th August 1940.\nDear Merle,\nWith reference to\nStopford's letter to you of the 12th\nAugust, covering an extract from a\nMinistry of Economic Warfare telegram\ndated August 9th, on which you tele-\nphoned me yesterday evening, I began\ngetting further information by\ntelegram elmost immediately after our\ntelephone conversation, and I enclose\na note of this information.\nYours ever,\n(signed) Jerry Pinsent\nNote: I have put Stopford's initials\non the note, as I am doing this\nfor him.\nH. Merle Cochran,\nUnited States Treasury,\nWashington, D.C.\nRegraded Unclassified\n42\n0\nP\nI\n1.\nOn July 19th, the Twentsche Bank, Amsterdam,\ntold the Guaranty Trust of New York that their account\nwas 204,000 guilders overdrawn, and asked them to cover,\nadding that the buying rate for dollars WELB 188 3/16ths.\n2.\nOn the same date the same Amsterdam bank\nadvised the National City Bank of New York identically\nin reference to an overdraft of 81,000 guilders.\n3.\nThere was a similar recent interchange\nbetween the Rotterdamsche Bank and the Bank of the\nManhattan, who are said to be 55,400 guilders overdrawn.\n4.\nThe Manhattan Bank say that they have\nalready covered other contracts with Dutch banks. Apart\nfrom this there is no evidence to show whether any of\nthe American banks above complied with the request to\ncover the overdrafts.\n5.\nOn July 28th the American Express Company\nof New York asked their Zurich agency to transmit a.\nmessage to Boyce, Bordeaux, asking whether in view of\nthe unrestricted dollars they were placing to his credit\nhe could not place these to the credit of the Banque de\nFrance in his books, and instruct New York to act in\naccordance with the instructions of the Banque de France\nwho should give Boyce francs. On that basis they\nproposed continuing to order payments of dollar amounts\nto Boyce paying the equivalent in france. They also\nasked whether he could still handle travellers' cheques. 16.\nRegraded Unclassified\n43\n6.\nSeveral German banking houses are recommend-\ned by German Consulates as collecting agents for\ninheritances in the United States of America. One such\nis Hoerner of Heilbron, Neckar, who have recently asked\nthe Chase Bank to transfer $220,500 to the Reichsbank's\naccount.\n7.\nWe are instructed to ask the United States\nTreasury to watch for any transfer of shares in the\nAmerican Askania Corporation, and to consult us if any\nproposal of the kind should be made.\n8.\nWe are also instructed to ask if payments\nby the British-American Tobacco Company can be held up\n(details of the payments referred to are not given but\ncan be asked for if required).\n(Initialed) R.J.S.\nBritish Embassy,\n15th August 1940.\njba\nRegraded Unclassified\nAugust 15. 1940.\nMy dear Mr. Secretary:\nI - emding you herewith, for your confidential use,\nthe following reporte:\nPart I - Airplanes\nDeliveries of and New Orders for Airplanes,\nMay 1 - August 10, 1940; Unfilled Orders\nand Estimated Deliveries or August 10, 1940.\nPart II - Airplane Engines\nDeliveries of and New Orders for Airplane\nBagines, May 1- August 10, 1940: Unfilled\nOrders and Estimated Deliveries on\nAugust 10, 1940.\nThese tables earry forward through August 10, 1940\nthe information furnished you last week.\nSincerely,\n(Signed) H. Morgenthau, J1.\nThe Honorable,\nAUG 15 1940 By Messenge\nThe Secretary of Vaz,\n3:30 P.m.\nVachington, D. c.\n9001 7Pm FILE COPY\nRegraded Unclassified\n45\ntf\nsent by measinger\nMatterson\nAugust 16, 1940.\nw in Mr. Pattermant\nI - conting you herewith, for your confidential\nuse, the following reporter\nPart I - Airplance\nSelivarias of and New Orders for Airplance,\nMay 1 - August 10, 1940; Unfilled Orders\nand Retimated Deliveries en August 10, 1940.\nPart II - Airplane Regines\nBeliveries of and New Orders for Airplane\nRegines, May 1 - August 10, 1940: Unfilled\nOrders and Retimated Reliveries on\nAugust 10, 1940.\nthese date have hase compiled from reports minitted\nw airplane and eirplane engine\nSincerely,\n(Signed) H. Morgenthau, A.\nHousechle Robert P. Patterson,\nAccident Secretary of Var,\nHashington, 3. c.\nORIGINAL FORWARDED TO ADDRESSEE\nFROM OFFICE OF THE SECRETARY\nBy Messenger AUG 16 1940\n1:25 P.M.\nGOA Am\nFILE COPY\nRegraded Unclassified\n46\nAugust 15. 1940.\nBy door Mr. Secretary:\nI an sending you herewith, for your confidential use,\nthe following reporte:\nPart I - Airplanes\nDeliveries of and New Orders for Airplanes,\nMay 1 - August 10, 1940: Unfilled Orders and\nSetimated Deliveries 02 August 10, 1940.\nPart II - Airplane Ingines\nDeliveries of and Ber Orders for Airplane\nIngines, May 1 - August 10, 1940; Unfilled\nOrders and Notimated Deliveries on\nAugust 10, 1940.\nThese tables carry fervard through August 10, 1940\nthe information furnished you last vesk.\nSincerely,\n(Signed) H. Morgenthau, J1.\nThe Nonorable,\nAUG 15 1940\nBy Messenger\n3:30 / m.\nThe Secretary of the Nevy,\nWashington, D. c.\nDA for\nFILE COPY\nRegraded Unclassified\n47\nAugust 15. 1940.\nDear Mr. Endsent\nI as sending you herewith, for your confidential use,\ntwo copies of the following reports:\nPart 1- Airplanes\nDeliveries of and New Orders for Airplanes,\nMey 1- August 10, 1940; Unfilled Orders and\nEstimated Deliveries on August 10, 1940.\nPart II - Airplane Engines\nDeliveries of and New Orders for Airplane\nEngines, May 1 - August 10, 1940; Unfilled\nOrders and Estimated Deliveries on\nAugust 10. 1940.\nThese tables carry forward through August 10, 1940 the\ninformation furnished you last vook.\nSincerely,\n(Signed) H. Mongenthau, Jr.\nMr. Villiam s. Karadoen,\nChairess, Advisory Commission to the\nAUG 15 1940 By Messenge.\nCouncil of National Defence,\n3:30 e.m.\nRoom 2262, Federal Reserve Building,\nWashington, D. c.\nWA to\nFILE COPY\nRegraded Unclassified\n18\nAugust 15. 1940.\nDear General Marchalls\nI - sending you herewith, for your confidential use,\nthe fellowing reporter\nPart I - Airplanes\nReliveries of and In Orders for Airplanes,\nMay 1 - August 10, 1940; Unfilled Orders and\nEstimated Deliveries en August 10, 1940.\nPart II - Airplane Regines\nReliveries of and New Orders for Airplane\nRegines, May 1 - August 10, 1940: Unfilled\nOrders and Retinated Deliveries on\nAugust 10, 1940.\nThese tables carry forward through August 10, 1940 the\ninformation furnished you last week.\nSincerely,\n(Signed) H. Morgenthau, JI.\nAUG 15 1940 By Messenger\nGeneral George c. Marshall,\n3:30 P.m.\nChief of Staff,\nYes Department,\nVashington, D. c.\nZOA The FILE COPY\nRegraded Unclassified\n19\nAugust 15. 1940.\nDear Mr. Mayt\nI am sending you herewith, for your confidential use,\nthe following reports:\nPart I - Airplanes\nDeliveries of and New Orders for Airplanes,\nMay 1 - August 10, 1940; Unfilled Orders and\nEstimated Deliveries on August 10, 1940.\nPart II - Airplane Ragines\nDeliveries of and New Orders for Airplane\nEngines, May 1 - August 10, 1940; Unfilled\nOrders and Estimated Deliveries on\nAugust 10, 1940.\nThese tables carry forward through August 10, 1940 the\ninformation furnished you last week.\nSincerely,\n(Signed) H. Morgenthau. dr.\nAUG 15 1940 By Messenger\nMr. Stacy May, Director,\n3:30 P. m.\nBureau of Research and Statistics,\nThe Advisory Commission to the\nCouncil of National Defense,\nWashington, D. c.\nDA\nTheir\nFILE COPY\nRegraded Unclassified\n50\nAugust 15. 1940.\nDear Admiral Stark:\nI - sending you herewith, for your confidential use,\nthe following reportet\nPart I - Airplanes\nDeliveries of and New Orders for Airplanes,\nMay 1 - August 10, 1940: Unfilled Orders and\nAstimated Deliveries on August 10, 1940.\nPart II - Airplane Ragines\nDeliveries of and New Orders for Airplane\nEngines, May 1 - August 10, 1940; Unfilled\nOrders and Estimated Deliveries on\nAugust 10, 1940.\nThese tables carry forward through August 10, 1940 the\ninformation furnished you last week.\nSincerely,\n(Signed) H. Morgenthau, J1.\nAUG 15 1940 By Messenger\nMairal Harold 1. Stark,\n3:30 P.m.\nChief of Naval Operations,\nMary Department,\nWashington, D. c.\nMA\nthe\nFILE COPY\nRegraded Unclassified\n51\nSTATES\nTHE ASSISTANT SECRETARY OF WAR\nWASHINGTON\nSTATE\nAugust 16, 1940.\nMy dear Mr. Secretary:\nI thank you very much for the\nreports on airplanes and airplane engines.\nWith best regards, I am\nSincerely yours\nHonorable Henry Morgenthau, Jr.,\nThe Secretary of the Treasury,\nWashington, D.C.\n52\nWAR DEPARTMENT\nOFFICE OF THE CHIEF OF STAFF\nWASHINGTON\nOCS 17840-203\nAugust 15, 1940.\nThe Honorable,\nThe Secretary of the Treasury.\nDear Mr. Secretary:\nThank you very much for the following\nreports which you sent me on August 15, 1940:\nPart I - Airplanes\nDeliveries of and New Orders for air-\nplanes, May 1 - August 10, 1940;\nUnfilled orders and estimated deliveries\non August 10, 1940.\nPart II - Airplane Engines\nDeliveries of and New Orders for air-\nplane engines, May 1 - August 10, 1940;\nUnfilled orders and estimated deliveries\non August 10, 1940.\nFaithfully yours,\nChief of Staff.\n53\nDEPARTMENT OF THE NAVY\nOFFICE OF THE SECRETARY\nWASHINGTON\nAugust 15, 1940\nMy dear Mr. Secretary:\nSecretary Knox wishes me to acknowledge and\nto thank you for sending him the Tables showing\ndeliveries of and new orders for airplanes and\nairplane engines, May 1 - August 10th, 1940, un-\nfilled orders and estimated deliveries on August\n10, 1940.\nSincerely yours,\nM. L. Deyo\nCaptain, U.S.Navy\nAide to the Secretary\nHon. Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\n54\nIn reply enfor to Initiale\nand No.\nNAVY DEPARTMENT\nOFFICE OF THE CHIEF OF NAVAL OPERATIONS\nWASHINGTON\n15 August 1940\nMy dear Mr. Morgenthau:\nThis will acknowledge receipt by\nAdmiral Stark of confidential reports, Part I -\nAirplanes, and Part II - Airplane Engines,\nwhich information carries through August 10,\n1940.\nYours sincerely,\nCommander,\nAide to Chief of Naval Operations.\nHonorable Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\nTIG: TIGHTAPLE\n10 5 NH MT are DADA\nTWO\nUS\n55\nUNITED AIRCRAFT CORPORATION\nEAST HARTFORD, CONNECTICUT\nOFFICE OF THE\nPRESIDENT\nAugust 15, 1940\nThe Honorable Henry Morgenthau, Jr.,\nSecretary, United States Treasury,\nWashington, D. C.\nMy dear Mr. Secretary:\nI am glad to have your letter of July 26, and\nshall await with interest any further communication on the mat-\nter which the Advisory Commission of The Council of National De-\nfense may send me.\nYours very truly,\nE. E. Wilson, President\nmd\n- MC MM\n56\nJT\nPLAIN\nLONDON\nDated August 15, 1940\nRec'd 4 p.m.\nSecretary of State,\nWashington.\n2745, August 15,\nFOR TREASURY FROM BUTTERWORTH.\nAsked in the House of Commons whether the British\nGovernment had received from the Soviet Government a\ncommunication about bank balances in the United Kingdom\nbelonging to the states of Lithuania, Latvia and Estonia,\nthe Under Secretary of State for Foreign Affairs replied:\n\"His Majesty's Covernment are at present considering the\nrepresentations of the Soviet Government in which they raise\nobjection to the prohibition imposed by order-in-council\non the transfer of the gold lying in the Bank of England to\nthe account of the three Baltic States. The Soviet point\nof view is being carefully considered in the light of the\nvarious important political, financial and legal considera- -\ntions involved.\" Asked will the fate of these gold balances\nbE considered as part of a general commercial arrangement\nwith the U.S.S.R. if such be come to in the future,\nMr. Butler replied: \"I thank WE must take it that these\nBaltic\nRegraded Unclassified\n57\n-2- #2745, August 15, from London\nBaltic questions provide a problem of their cwn. WE\nhave our point of VIEW and our interests, but\nI do not SEE why SOME settlement should not bE arrived at.\nKENNEDY\nWSB\nRegraded Unclassified\n58\nPLAIN\nKaunas\nDated August 15, 1940\nRec'd 5 p.m.\nSecretary of State\nWashington\n209, fifteenth.\nThere follows a copy of a certificate executed.\nby me today.\nAmerican Legation, Kaunas, Lithuania, August 15,\n1940.\nI certify that the Lithuanian Foreign Exchange\nCommission made available on August 8, 1940 to the\nAmericans repatriated by this Legation for lits\nten thousand five hundred six point fifty at a rate\nof lits five ninety-two to the dollar, dollars one\nthousand seven hundred seventy-four point seventy-\nfive, which were used by the Legation on behalf\nof these persons to purchase transportation to\nStockholm over Berlin at a cost in dollars of one\nthousand six hundred sixty-seven point ought six\n(lit equivalent nine thousand eight hundred sixty-\nnine) and marks five hundred and ten at a cost of\ndollars one hundred and seven point sixty-nine (lit\nequivalent\nRegraded Unclassified\n59\n- 2 -\nequivalent six hundred thirty-seven point fifty\nand I respectfully request the Treasury of the United\nStates of America to grant licenses to the Federal\nReserve Bank of New York and other banking institu-\ntions in the United States holding accounts in\ndollars of the Bank of Lithuania for the transfer\nupon the instructions of the Bank of Lithuania to\na special free dollar account of dollar funds of\nthe Bank of Lithuania in the amount of dollars one\nthousand seven hundred seventy-four point seventy-\nfive. Signed Bernard Gufler.\nGUFLER\nCSB\nCOPY\nn°\nRegraded Unclassified\n60\nAugust 15, 1940\n11:30 a.m.\nH.M.Jr:\nHello.\nRentschler: Hello, Henry, good morning.\nH.M.Jr:\nGood morning.\nR:\nHow are you?\nH.M.Jr:\nI'm all right.\nR:\nHenry, I have two things. In the first place,\nI understand you are interested in talking\nwith Pete Shorrey, who just came back from\nJapan.\nH.M.Jr:\nThat's right.\nR:\nAnd we told Pete to come down any time you\nwant him.\nH.M.Jr:\nI gave him a time, I think.\nR:\nOh, fine. Well, that's all right.\nH.M.Jr:\nHe's coming - let's see - tomorrow, at 10:30.\nR:\nThat's all right, fine.\nH.M.Jr:\nYes.\nR:\nNow, Wilshire told him to give you the whole\nstory as completely as he can.\nH.M.Jr:\nGood.\nR:\nNow, the next one is, we're having & little\ntrouble getting a license on remitting back\nto France on francs that we have to have for\nour branch there to liquidate our depositors.\nRegraded Unclassified\n61\n- 2 -\nH.M.Jr:\nYes.\nR:\nWill you take a personal look at it? The\nrequest is New York 33226.\nH.M.Jr:\nWhat number is that?\nR:\n33226.\nH.M.Jr:\n33 --\nR:\n33226.\nH.M.Jr:\nRight.\nR:\nNew York.\nH.M.Jr:\nYes.\nR:\nNow, Henry, here's what we're doing. This\nis just off the record to you, if you please.\nH.M.Jr:\nYes.\nR:\nBut no further.\nH.M.Jr:\nYes.\nR:\nOver in France, we've got ten millions\nreduced down to francs. We've got ten millions\non each side of our balance sheet, besides\nour building.\nH.M.Jr:\nYes.\nR:\nNow, of that ten millions, five million nine\nis in foreign currency deposit and that foreign\ncurrency deposit is only - we're only obligated\nto give that depositor a draft on New York.\nH.M.Jr:\nYes.\n82\n- 3 -\nR:\nAnd so that means that that five million nine\nis cash in United States dollars in New York.\nYou see?\nH.M.Jr:\nYes.\nR:\nNow, we've got three million dollars, approxi-\nmately, worth of franc deposits, which belong\nto all manners and class of people.\nH.M.Jr:\nYes.\nR:\nAnd if that three million dollars worth of\nfrancs that we're paying out as were demanded -\nthey're demanded from us.\nH.M.Jr:\nYes.\nR:\nBecause very, very much off the record between\nus, we're still outside of Paris operating\nfrom LePuy which is not in occupied territory,\nand I have a personal hunch that what we ought\nto do is when we get liquidated down to\napproximately nothing, we might want to come\nhome.\nH.M.Jr:\nI see.\nR:\nYou see what's in my mind?\nH.M.Jr:\nYes. Well, I'll take a look at it.\nR:\nYou take a look because I'd like - I don't want\nto be in the position of getting in trouble\nwith banking authorities there because we're\nnot liquidating our obligations.\nH.M.Jr:\nI see.\nR:\nSo the sum total is not a great sum total.\nThe five million nine we're not obligated\nRegraded Unclassified\n63\n- 4 -\nto give anybody except as they present drafts\nin New York.\nH.M.Jr:\nYes.\nR:\nAnd as you know, all those drafts have to be\napproved here before remittances can go back\nover there.\nH.M.Jr:\nWell, let me take 8. look at it.\nR:\nYes, you take a look at it. It would help us\na good deal if we can get this in the clear\nbecause we are running short of cash there\nnow.\nH.M.Jr:\nOkay.\nR:\nAnd that's franc cash which we ought to pay\nour franc cash depositors.\nH.M.Jr:\nOkay.\nR:\nThanks very much, Henry.\nH.M.Jr:\nOkay. Goodbye.\nR:\nGoodbye.\nRegraded Unclassified\n64\nAugust 15, 1940\n2:56 p.m.\nH.M.Jr:\nHello.\nKnox:\nHello, Henry.\nH.M.Jr:\nHow are you?\nK:\nFine.\nH.M.Jr:\nTwo things, Frank. You know, they keep\nthrowing into my face all the time that\nAdmiral Gormley told the State Department\nthat Japan has a reserve of 69,000,000\nbarrels of oil.\nK:\nWell --\nH.M.Jr:\nWell, I wondered if you couldn't find out\nwhere Gormley got his figures and what\nthey are based on.\nK:\nWell, do you know where Gormley is?\nH.M.Jr:\nI know where he is.\nK:\nYes.\nH.M.Jr:\nBut is the Navy still carrying on?\nK:\nWell, I'll find out, if I can.\nH.M.Jr:\nI mean, supposing you, as Secretary of the\nNavy, said you wanted to know - and forget\nabout Gormley - what would --\nK:\nHow many were there, 67,000,000?\nH.M.Jr:\nSixty-nine, I think they said.\nK:\n69,000,000 barrels --\nH.M.Jr:\nOf oil that Japan had on hand.\nRegraded Unclassified\n65\n- 2 -\nK:\nAll right, I've got a memorandum of that.\nNow, what else?\nH.M.Jr:\nThe other thing is, you remember when we --\nK:\nWhat?\nH.M.Jr:\nWhen we were talking, we were talking about\n& $2500 house.\nK:\nYes - $2,000 house.\nH.M.Jr:\nWell, gosh.\nK:\nHuh? It makes a difference when they're build-\ning thousands of them.\nH.M.Jr:\nAre you still interested?\nK:\nYou bet your hootin' I am!\nH.M.Jr:\nWell, these dirt foundations - I had one of\nmy boys take it up with them.\nK:\nYes.\nH.M.Jr:\nAnd they took it up with the Weyhauser lumber\npeople and they could do a hundred houses a\nweek.\nK:\nA hundred a week!\nH.M.Jr:\nYes.\nK:\nWell, what'll the house cost in quantities\nlike that.\nH.M.Jr:\nWell, I don't know, but this fellow is avail-\nable if you want to see him.\nK:\nWell, I do want to see him if you'll send him\nover here. Give me his name, now.\nRegraded Unclassified\nS6\n- 3 -\nH.M.Jr:\nWell, I think it's Davidson but I'm not\nsure. It's the Pierce Foundation.\nK:\nOh, yes, I've got that name.\nH.M.Jr:\nAnd I'll tell you, if you'll - I can have\nhim call up your secretary if you tell me\nwhat day you want to see him.\nK:\nWell, I guess I'd better see him next Mon-\nday. I'm going to be loaded to the rails\ntoday and tomorrow. I want to try to get\naway tomorrow night.\nH.M.Jr:\nWell, do you want to give me a time, just\nput down Pierce Foundation. I can't --\nK:\nAll right, what time? I'll make it --\nH.M.Jr:\nYou say the time and I --\nK:\nAll right, let me look at this book. There's\nnothing on that day at all. Well, suppose\nhe comes in here about 11:00 o'clock.\nH.M.Jr:\n11:00 o'clock, and I'll tell your man what\nhis name is, but it's the Pierce Foundation\nand they can do a hundred B. week.\nK:\nUh-huh. All right, I've got a memorandum for\nthat, too.\nH.M.Jr:\nWhat?\nK:\nFine! What else is on your mind?\nH.M.Jr:\nNot a thing.\nK:\nHave you heard the results of the latest\nmessage?\nRegraded Unclassified\n67\n- 4 -\nH.M.Jr:\nNo, I have not.\nK:\nAccepted, one hundred percent.\nH.M.Jr:\nNo!\nK:\nYes.\nH.M.Jr:\nWonderful!\nK:\nYes.\nH.M.Jr:\nWonderful! Now, what happens?\nK:\nWell, I haven't heard from the big fellow.\nH.M.Jr:\nI see.\nK:\nBut I suppose he's working on some message\nor other, I don't know. But I got that\nfrom Lothian this morning.\nH.M.Jr:\nDid it just come in?\nK:\nWell, it came in just this morning, yes.\nNo reservations at all.\nH.M.Jr:\nWell, I'll be damned! Well, things are\nlooking up.\nK:\nYes, 8. little better.\nH.M.Jr:\nDo your boys feel at all cheerful about what's\nhappening around Great Britain, the island?\nK:\nYes, the last 24 hours, I think, look better.\nThe British are taking the offensive and that -\nif anything could - was needed. That will\ncertainly establish the fact that the Germans\nhaven't established mastery in the air, or the\nBritish wouldn't be bambing French concentra-\ntions if they were unable to maintain themselves\nRegraded Unclassified\n88\n- 5 -\nover their own territory.\nH.M.Jr:\nRight.\nK:\nAnother interesting thing is that the fighting\nover England, of course, is over English soil.\nH.M.Jr:\nYes.\nK:\nAnd these fighters have now learned the trick\nof bailing out when their machine is - if they're\nnot killed, they bail out. Well, it makes quite\na difference. That goes for both sides, the\nGermans and English alike. But the German lands\nin enemy territory and is immediately captured\nand the British flier lands in home territory\nand he is in another plane the next day.\nH.M.Jr:\nI see.\nK:\nWhich makes quite a difference, especially when\nthere's a real shortage of pilots in both\ncountries.\nH.M.Jr:\nWell, thank you, Frank.\nK:\nYou'll notice in the communiques from now on, I\nthink, - it was this morning - that the British\nlist how many pilots they lost.\nH.M.Jr:\nI see.\nK:\nThat may have nothing to do with the number of\nmachines they lost.\nH.M.Jr:\nI see.\nK:\nIt makes it a little more intelligible when\nyou read a communique. Okay, Henry. Goodbye.\nH.M.Jr:\nThank you. Goodbye.\nRegraded Unclassified\n89\nAugust 15, 1940\n3:37 p.m.\nKnudsen: Hello.\nH.M.Jr:\nHello, are you back at your office?\nKnudsen: Yes.\nH.M.Jr:\nWhy do you --\nKnudsen: I called you from over there. They say you\ncouldn't be disturbed.\nH.M.Jr: Well --\nKnudsen:\nSo I came back here.\nH.M.Jr:\nI didn't - they didn't tell - I had the former\nAir Minister of France in here.\nKnudsen: Uh-huh.\nH.M.Jr:\nLa Chambre; I don't know whether you've met\nhim or not.\nKnudsen: Yes.\nH.M.Jr:\nDo you want to get together today or tomorrow?\nKnudsen:\nWell, I'd rather get together today, a little\nlater in the evening. How late are you over\nthere?\nH.M.Jr:\nWell, I'm not going to be here so awful late\ntonight.\nKnudsen:\nCan I pick you up in the morning?\nH.M.Jr:\nWell, no, I'm going to the White House the\nfirst thing in the morning.\nKnudsen: Uh-huh. Do you want me to come over now?\nRegraded Unclassified\n70\n- 2 -\nH.M.Jr:\nWell, let me just - I tell you, I got this -\njust a second, let me look & minute. I'll\nbe free at 4:15.\nKnudsen: Uh-huh.\nH.M.Jr:\nAre you tied up?\nKnudsen: Yes.\nH.M.Jr:\nYou are tied up?\nKnudsen: Yes. When do you get through at the White\nHouse tomorrow?\nH.M.Jr:\nI don't know that. You know how those\nappointments are.\nKnudsen: Well, I just came in here.\nH.M.Jr: What's that?\nKnudsen:\nI just came back.\nH.M.Jr:\nBut supposing when I get through, I call you\nup?\nKnudsen: Fine.\nH.M.Jr:\nMy first appointment tomorrow is at 10:30 and\nif I get through there, I can give you a ring.\nKnudsen:\nAll right, fine.\nH.M.Jr:\nBut he said to come over the first thing in\nthe morning.\nKnudsen: Yes.\nH.M.Jr:\nHow would that be?\nKnudsen: Sure.\nH.M.Jr: Thank you.\nRegraded Unclassified\n71\nAugust 15, 1940\n4:30 p.m.\nStimson: Hello, Henry.\nH.M.Jr:\nHow are you?\nS:\nA number of things are happening today, I\nsuppose you know.\nH.M.Jr:\nI don't know whether I do or not.\nS:\nWell, you remember our conference Tuesday?\nH.M.Jr:\nYes, I hear that there's been a good cable\ncome in.\nS:\nYes.\nH.M.Jr:\nWhat?\nS:\nYes, complete acceptance, I understand.\nH.M.Jr:\nWell, that's marvelous.\nS:\nPerfectly marvelous.\nH.M.Jr:\nYes.\nS:\nBut that isn't the only thing I wanted to\nspeak to you of.\nH.M.Jr:\nYes.\nS:\nI haven't heard anything from the White House\nyet on that, and I don't suppose you have,\nhave you?\nH.M.Jr:\nWell, I heard it from Knox, to be - that's\nwho told me.\nS:\nFrom Knox?\nH.M.Jr:\nKnox told me about this cable.\nRegraded Unclassified\n72\n- 2 -\nS:\nWell, he heard it from Lothian and Lothian\ntold me this morning.\nH.M.Jr:\nWell, I got it --\nS:\nJust got back from Aberdeen.\nH.M.Jr:\nWell, I got it from Knox.\nS:\nYes. Well, I suppose that will - we'll soon\nhear something about that.\nH.M.Jr:\nYes, I hope so.\nS:\nNow, have you seen the tape ticker?\nH.M.Jr:\nI don't know . - I have seen it, but I don't\nknow whether I've seen what you want me to.\nS:\nSomething - a matter on which you were of\ngreat help to me.\nH.M.Jr:\nWhat's that?\nS:\nI read these three lines: \"Louie Johnson today\nrejected President Hoover's offer - President\nRoosevelt's offer of an appointment as Special\nAdministrative Assistant on National Defense.\"\nH.M.Jr:\nYes.\nS:\n\"He took under advisement an offer of another\nposition in the Federal Government,\" and there's\nsome more about it.\nH.M.Jr: Yes.\nS:\nYou remember the thing.\nH.M.Jr:\nI did see that, yes, sir.\nRegraded Unclassified\n73\n- 3 -\nS:\nWell now, I want - I'd like to have you think\nabout that. Of course, I heave a tremendous\nsigh of relief. I don't know what Special\nAdministrative Assistant on National Defense\nmeans, except from the title. I don't know\nwhether it was 8. matter that the President\nhad in mind, other than as an escalator clause,\nso to speak.\nH.M.Jr:\nI don't know.\nS:\nBut if it means that he's thinking of somebody\nfor such a position, which I would take from\nthe name meant something in the nature of a\nPresidential liaison officer in regard to\nnational defense, it is a matter of great im-\nportance to the War Department and the Navy\nDepartment as to who such a person would be.\nH.M.Jr:\nYes.\nS:\nYou can see - I mean, it would have been a\nterrific jolt, if it had gone - if it had\nnot been rejected. Now, if that's going\nbegging and if it's likely to be appointed -\nthe fact that it's been named - it may be\nthat a great many patriots will be thinking\nof it and I had to think of it with reference\nto our job here.\nH.M.Jr:\nYes, of course.\nS:\nAnd in thinking of it, I wondered whether just -\nthis is just a shot in the air and I'd like\nyour reaction on it.\nH.M.Jr:\nPlease.\nS:\nA man who, S0 far as I know, from my stand-\npoint, would not at all be obstructive, but\nwould be very welcome to - that is, as such\na position, SO far as I know of him, though\nRegraded Unclassified\n74\n- 4 -\nI know him only slightly, would be Stettinius.\nH.M.Jr:\nI see.\nS:\nYou see?\nH.M.Jr:\nYes.\nS:\nI just wanted your reaction.\nH.M.Jr:\nWell, I'll tell you --\nS:\nThink it over, will you?\nH.M.Jr:\nOf course, I'll think it over, but I'll give\nyou my first reaction.\nS:\nYes?\nH.M.Jr:\nI'd - Patterson has made a tremendous hit\nwith me.\nS:\nYes.\nH.M.Jr:\nAnd I don't see what - why you and Patterson\nneed anybody between you and the President.\nS:\nWell, I don't - mind you - you misunderstand\nme. We don't. But if there is going to be\nsomeone, we don't want it to be an insulator.\nH.M.Jr:\nWell, this is - now, mind you, I haven't\ntalked to the President about this since\nthat original time, you know?\nS:\nYes.\nH.M.Jr:\nAnd I think what he was doing was to make a\njob to suit the man. See?\nS:\nThat's what I thought.\nRegraded Unclassified\n75\n- 5 -\nH.M.Jr: And if Louie Johnson doesn't take this, I think\nhe'll forget about it.\nS:\nWell, I pray to heaven that he will, but I\ndidn't quite like - after these announcements.\nH.M.Jr:\nYes.\nS:\nThere was such a position. And in a Presidential\nyear with lots of patriots around, I didn't know\nwhat might happen. That was the only reason\nfor --\nH.M.Jr:\nWell, I don't know if I'll have any luck, but\nI'll try to do a little snooping.\nS:\nJust sounding.\nH.M.Jr:\nI'll try to do a little sounding.\nS:\nWell, I'll be grateful --\nH.M.Jr:\nBut I say, personally, I don't know why, unless\nthere's a case of political expedience in &\ncase like Louie Johnson's, I think the Presi-\ndent would be much better off not to have any-\nbody between you and Patterson and himself.\nS:\nDo you think he's fairly satisfied with us,\nso far?\nH.M.Jr:\nWell, I think he has every reason to be.\nS:\nWell, that's different.\nH.M.Jr:\nWhat?\nS:\nThat's different, he might not be. I hope he is.\nH.M.Jr:\nWell, the only indications he's given me have\nbeen that he's been most pleased.\n76\n- 6 -\nS:\nWell, I'm very glad of that.\nH.M.Jr:\nMost.\nS:\nBut just - I wanted you, as a man who knew\nthe situation and who has been very friendly\nand helpful, to know that and I would like\nyour - a little guidance and advice.\nH.M.Jr:\nWell, I'm hoping to see him early tomorrow\nmorning and if I do, I'll see if I can do\na little sounding.\nS:\nWell, thank you very much.\nNow, the Swedish matter has gone through\nall right and --\nH.M.Jr:\nOh, really?\nS:\nOh, yes. A letter has just been drawn. There\nwas a little question at first of power, raised\nby the Uniform Force, so to speak, but I found\na way around it...\nH.M.Jr:\nOh, really!\nS:\n....I thought, and the letter has been drawn\nto Maxwell, in regard to the licenses. You\nsent over a draft and I put in - there was a\nlittle question raised as to whether Patterson\nhad the statutory power to do it, so I assumed\nthat myself.\nH.M.Jr:\nGood for you!\nS:\nAnd let him say that he did it by my direction.\nH.M.Jr:\nWell, fine!\nS:\nHe has the power.\nRegraded Unclassified\n77\n- 7 -\nH.M.Jr:\nWell, is it far enough along that I could\ntell Arthur Purvis about it?\nS:\nWhy, I think so. I'll tell you, I'll let\nPatterson call you as soon as it's actually\nsigned.\nH.M.Jr: Oh, I see.\nS:\nI just passed the letter.\nH.M.Jr:\nI see. Well, if you'll have him do that, I'd\nappreciate it.\nS:\nI will, yes.\nH.M.Jr:\nAnd if I find out anything, I'll let you know.\nS:\nYes.\nThen in regard to the other big explosion,\nwe'll sit and hold tight.\nH.M.Jr:\nYou mean the ships?\nS:\nYes.\nH.M.Jr:\nRight.\nS:\nAll right.\nH.M.Jr:\nThank you.\nS:\nThank you.\n78\nAugust 15, 1940\n4:42 p.m.\nH.M.Jr: Hello.\nPatterson: Hello.\nH.M.Jr:\nMorgenthau.\nP:\nYes.\nH.M.Jr:\nI want to go home.\nP:\nYes.\nH.M.Jr:\nAnd I can't go home until I hear whether you've\nsigned that letter.\nP:\nI haven't, but I'm going to. It's - I had to\nmake a little change in it.\nH.M.Jr:\nYes, Mr. Stimson just called me up.\nP:\nYes, he's right here.\nH.M.Jr:\nAnd he told me about it.\nP:\nYes.\nH.M.Jr:\nBut I didn't want to go home until I heard\nfrom you.\nP:\nWell, it's okay. I'll sign it tomorrow morning.\nH.M.Jr:\nI see.\nP:\nIs that time enough?\nH.M.Jr:\nOh, sign it tonight.\nP:\nSign it tonight? All right. I'll sign it\ntonight.\nH.M.Jr:\nI'm sorry you couldn't come. I just wanted\nRegraded Unclassified\n79\n- 2 -\nto get better acquainted. Maybe we can do\nit some other time.\nP:\nI hope so.\nH.M.Jr:\nYes.\nP:\nThis is only a deferred thing, I think - I\nhope.\nH.M.Jr:\nYes, but I just - I want it very informally\nand I thought we might - you know, but when\nI get back - I'm going away for two weeks,\ntomorrow, and when I get back, I hope we can\ndo it some other time.\nP:\nWell, I want to talk over agricultural problems\nwith you.\nH.M.Jr:\nWell, there's nothing that I do better. I can\ntalk about them.\nP:\nI've been taking a course all this winter up\nat the Cornell Agricultural, by correspondence.\nH.M.Jr:\nOh, really?\nP:\nOn farm soils, and I am in arrears now on the\nlessons.\nH.M.Jr:\nWell, we'll have to have some more, but - well,\nthis is fine; I'm simply delighted, and --\nP:\nI'll send the letter off tonight.\nH.M.Jr:\nFine. The sooner Maxwell gets it, the better.\nP:\nYes, I'll send it to Maxwell.\nH.M.Jr:\nWell, isn't that who it goes to?\nRegraded Unclassified\n80\n- 3 -\nP:\nYes, I'll send it to Maxwell.\nH.M.Jr: Yes.\nP:\nAll right, I'll sign it. There's a little\nchange in it but of no importance.\nH.M.Jr:\nWell, Mr. Stimson said you're signing by\ndirection of the Secretary of War, isn't\nthat it?\nP:\nThat's right.\nH.M.Jr:\nThat's the only change, isn't it?\nP:\nThat's all.\nH.M.Jr:\nFine. Thank you.\nP:\nGoodbye.\n81\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nIA\nAugust 15, 1940.\nThe Secretary of State presents his compliments to\nthe Honorable the Secretary of the Treasury and transmits\ncopies of a letter dated August 5 from the Australian\nGovernment Trade Commissioner to an officer of the Depart-\nment of State, with enclosure, regarding sale of United\nStates and Canadian securities held by Australian nationals,\ntogether with a copy of the Department's reply dated\nAugust 12, 1940 dealing with this and an unrelated matter.\nEnclosure:\n1. From Australian Government\nTrade Commissioner, August 5. 1940,\nwith enclosure (4).\n2. To Australian Government Trade\nCommissioner, August 12, 1940 (1).\nRegraded Unclassified\n82\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nAugust 12, 1940.\nMy dear Mr. Macgregor:\nI have received from Mr. Fuqua of this Department\nyour informal communications of August 5. 1940, which\nyou addressed to me.\nWith regard to the first communication concerning\ncertain Commonwealth of Australia bonds said to belong\nto Mrs. 0. M. Middleton of Cap Martin, France, the dis-\nposition of such bonds in the United States or the pay-\nment of interest thereon from funds in the United States\nwould appear to fall under restrictions imposed by Execu-\ntive Order No. 8389 of April 10, 1940, as amended. The\nregulations provide that information concerning this\nExecutive Order and questions arising under it may be\nobtained from the Federal Reserve Bank of New York.\nWith regard to the second communication which relates\nto the order of the Australian Government for the sale by\nAustralian holders of certain American securities, I\nhave\nL. R. Macgregor, Esquire,\nAustralian Government Trade Commissioner,\n630 Fifth Avenue,\nNew York, New York.\nCopy\nRegraded Unclassified\n83\n-2-\nhave cast around without coming to any clear understanding\nas to what may be involved in the suggestions you have re-\nceived or whether it is advisable that you in any way\namend or add to what you have heretofore done. My sug-\ngestion would therefore be on this also you take occasion\ninformally to consult the Federal Reserve Bank of New York,\nhaving regard to their general competence in such matters.\nSincerely yours,\nFrederick Livesey\nAssistant Adviser on International\nEconomic Affairs\nCopy\nRegraded Unclassified\n24\nGOVERNMENT OF THE\ncomonwealth OF AUSTRALIA\nOffice of the\nAustralian Government Trade Commissioner\nIn the United States of America\n630 Fifth Avenue\nNew York.\nINFORMAL\n5th August, 1940.\nMr. F. Livesey,\nAssistant Economic Adviser,\nState Department,\nWashington, D. 0.\nDear Sir:\nORDER BY AUSTRALIAN GOVERNMENT FOR SALE BY\nAUSTRALIAN HOLDERS OF CERTAIN AMERICAN SECURITIES\nI have to advise that on the 30th of April, an\norder wes issued by the Australian authorities for the\nsale of certain American securities held by Australian\nholders under conditions stipulating that the proceeds\nof such sale are to be made over to the Federal Reserve\nBank for the account of the Commonwealth Bank of Aug-\ntralia.\nA few weeks Ago a request was received from a.\nNew York brokerage house for information as to the\ncorrect procedure to be followed in carrying out the\nAustralian regulations and this house wes suitably\nadvised. In giving the information I enquired as to\nwhether it was felt that the brokerage houses generally\nhad not been fully informed by their Australian assoc-\niates. The house in question indicated that they doubted\nwhether adequate information was available, and auggested\nthat I should advise the Secretary of the New York Stock\nExchange. A communication was addressed to the New York\nStock Exchange giving the information and asking whether\nthey would circulate it among the brokerage houses con-\ncerned, or whether it was preferred that this office should\ndo so. The reply from the Stock Exchange was a request that\nthis office should communicate with 58 brokerage houses, the\nnames of which were furnished by the Stock Exchange.\nCopy\nRegraded Unclassified\n35\nA communication was therefore addressed to the 58\nbrokerage houses concerned, as per copy attached. A\nnumber of communications have been received from the\nbrokerage houses concerned acknowledging the communi-\ncation and offering every co-operation. One house,\nhowever, Messrs. Kidder, Peabody & Company, has raised\nthe question as to whether certain official procedure\nshould not be complied with to put the matter in proper\norder. This firm suggests that whereas the majority of\nthe brokerage houses may comply with the instructions,\nthere may be some who will not do so. They envisage a.\npossibility of leakage. They also suggest the possibility\nof legal action ensuing if the procedure be not regularised.\nI enquired of Messrs. Kidder, Peabody as to whether they\nknew of such procedure having been followed by the British\nauthorities in connection with their liquidation of securi-\nties, and they advised that it was doubted as to whether\nthis had been done, although they felt that we would be\nin a stronger position if a formal procedure were followed,\nConsultation with the British Treasury representa-\ntive in New York concerned with liquidation of securities,\nelicited the information that the British authorities are\nnot issuing any instructions or following any official\nprocedure at this side but are relying entirely upon the\ncompliance by their own nationals in their own country\nwith the regulations promulgated in the United Kingdom\nand upon the penalties for non-compliance imposed by the\nBritish regulations.\nI would be grateful to you for the favour of any\ninformal advice or suggestion which you may be able to\noffer, and particularly as to whether any U. S. regula-\ntions have been promulgated, setting forth the action\nwhich should be followed by us, or if not, as to whether\nit would be prudent to take some official action or follow\nsome specific procedure in this country either for legal or\nother protection.\nYours very truly,\nL. R. MACGREGOR\nAustralian Government Trade Commissioner,\nM:D\n(c o P Y:EHS)\nRegraded Unclassified\n86\nGOVERNMENT OF THE\nCOMMONWEALTH OF AUSTRALIA\nOffice of the\nAustralian Government Trade Commissioner\nin the United States of America\n630 Fifth Avenue\nNEW YORK\n23rd July, 1940.\nDear Sirs:\nSALE OF UNITED STATES AND CANADIAN\nSECURITIES HELD BY AUSTRALIAN NATIONALS\nThe following information regarding sale of United\nStates and Canadian securities held by Australian nationals\nis being transmitted to you at the suggestion of the New\nYork Stock Exchange, viz: -\n1.\nUnder Australian Government regulations it is\nprescribed that as and when securities are sold,\nproceeds must be paid in United States dollars\nto the Federal Reserve Bank of New York for\ncredit of the Commonwealth Bank of Australia No.\n3 Account. The payment to the Reserve Bank is to\nbe accompanied by a statement setting out the full\nname of the owner, together with particulars of the\nsecurities.\n2.\nIt is required that the New York broker forward to\nthe Governor, Commonwealth Bank of Australia, Sydney,\nthe broker's contract notes showing the terms and\namount of the proceeds of the sale of the securities\ntogether with particulars of the payment made to\nthe Federal Reserve Bank in New York as above set\nforth.\nAttached hereto is a photostat of the regulations.\nI remain,\nYours very truly,\nL. R. MACGREGOR\nAustralian Government Trade Commissioner\nM:D\n(c 0 P Y:EHS)\nCOPY\nRegraded Unclassified\nS7\nAugust 16, 1940.\nMEMORANDUM\nTO: Secretary Morgenthau\nFROM: Mr. Gaston\nMA\nWe have lately received several requests from the British\nthrough different channels for cooperation and assistance in the\nmatter of ship movements.\n(1) Through Lord, Day & Lord, New York maritime attorneys,\nwe were asked to omit the port of destination in the British Isles\nfrom telegrams passing between Collectors and the Office of Ship\nMovements over commercial wires. This was done and the initials U.K.\nsubstituted in all such requests for departure.\nThrough the same charmel we are now asked to devise some means\nto obviate having the names of the ships come over commercial wires.\nI believe we can accomplish this by having the shipping agents make\ntheir requests for departure as early as possible so that the data\nmay be submitted by air mail and permit granted by use of a key number.\nWe may also be able to extend slightly the use of the teletype, which\nthe British regard as adequately protected.\n(2) Through Foley's office Pinsent asked if we couldn't find\nsome means to let them know if any German or Italian ships should put\nto sea from American ports, or show signs of putting to sea. We have\ntaken no action on this request.\n(3) Through Merle Cochran Pinsent has asked if we can not pre-\nvent the departure of two French ships - the VAN and the WISCONSIN -\nnow on the Pacific Coast. I have asked Derby to consult me before\ngranting departure permits for either of these vessels.\n(4) Pinsent presented to Cochran yesterday an inquiry whether\nwe couldn't hold ships of Esthonia, Latvia and Lithuania. I have\nnot replied to this request.\nRegraded Unclassified\n88\nAugust 16, 1940.\nMEMORAN DUM\nTO: Secretary Morgenthau\nsm\nFROM: Mr. Gaston\nAmong the ship departure permits yesterday the\nfollowing are of some interest:\n(1) Russian SS TURKSIB - New York for Murmansk -\nwith the 1939 Russian display at the\nNew York World's Fair.\n(2) Finnish SS KURIKKA - Baltimore for Petsamo,\nwith a cargo of sugar.\n(3) Greek SS EVANTHIA - New Orleans for Japan,\nwith scrap iron.\n(4) Japanese SS NIPPON MARU - San Pedro for Japan,\nwith crude oil.\n(5) Japanese SS DAISAN OGURA MARU - San Francisco\nfor Yokohama, with crude oil.\nRegraded Unclassified\nKondsen\n83\nAugust 16, 1940\nMemorandum to the Secretary:\nFrom Mrs. McHugh:\nMr. Hinckley informed me that so far they have\nbeen able to get very little information on the plant\nwhich Howard Hughs has somewhere near Los Angeles for\nbuilding plywood planes. As far as Mr. Hinckley knows,\nit is still in the experimental stage, but Hughs has\nbeen working very secretly and they haven't been able\nto find out much about it.\nThere is another plant near Los Angeles by the\nname of Timm which is supposed to be working on this same\nkind of plane, and it is rumored that Hughs is also backing\nthis company. They have one ship completed and the tests\nwere very satisfactory. Mr. Hinckley thinks the Timm\nCompany is planning to build only trainer planes.\nMr. Hinckley said he had sources of information\navailable to him and he would be glad to look into the\nmatter further if you so desire.\nThomas to MM Kmideen's\nSuretary 8/16 -.\nRegraded Unclassified\n90\nAugust 16, 1940\nTo:\nThe Secretary\nFrom:\nMr. Buckley\nSubject:\nSwedish Situation.\nI had a call at 2:05 P.M. from Colonel\nMaxwell who said that he was going over Judge\nPatterson's letter with the State Department.\nHe asked me why we thought the license\nfor the approximately $27,000 worth of spare parts\nfor Douglas DC-3 planes should be revoked. I told\nhim that dollar-wise it wasn't a very important item\nfrom our standpoint but that I believed the Army Air\nCorps had felt rather strongly that the parts could\nbe used better in this country than in Sweden.\nHe asked me if the approximately 7,000,000\nrounds of 9 mm. parabellum cartridges, to the export\nof which the letter said no objection would be made.\nrepresented the amount now manufactured. I told him\nthat our best information was that approximately\n7,250,000 rounds had been manufactured but I suggested\nthat before the exact amount to be revoked is set\nforth in a formal order it might be well to call the\nmanufacturer directly.\nf\nRegraded Unclassified\n91\nAUG 16 1940\nDear Mr. Howards\nI want to express my appreciation for the oil map\nyou submitted through Mr. Sadler, and also for the information\nin your letter of August 13, 1940. I have forwarded photo-\ngraphie copies to the Secretarios of war, Havy, and Interior.\nThe material is very helpful, and I want to thank you for\nyour kindness.\nSincerely,\n(Signed) H. Morgenthau. Jr.\nSecretary of the Treasury.\nMr. Frank do Heward,\nVice President,\nStandard Oil Company,\n30 Reckefeller Pless, Room 2800,\nles York, New York.\nORIGINAL FORWARDED TO ADDRESSEE\nFROM OFFICE OF THE SECRETARY\nHDWamd\nCarlion Copies to\n8/16/40\nMr. T hompan\nNDW FILE COPY\nRegraded Unclassified\n92\nSTANDARD On COMPANY\nes New Issues\nNEW YORR\nTRANK A HOWARD\nVim December\nAugust 13th, 1940\nThe Hon. E. Morgenthau, Jr.\nSecretary of the Treasury\nWashington, D. C.\nMy dear Mr. Secretary:\nWith reference to Mr. Sadler's letter of August 12th\nwe have prepared a set of maps which show the location, outside\nof the United States, of tetraethyl lead plants and synthetic\noil plants. These maps are being expressed to you today, to-\ngether with the maps mentioned in Mr. Sadler's letter, in a.\nsingle container, A. distinction has been made on the mape be-\ntween the hydrogenation type and the Fischer type of synthetic\noil plants.\nAttached to the maps are tables giving the location,\ncapacity, feedstock and type of products of the synthetic oil\nplants and & table giving the location of the tetraethyl lead\nplants.\nOutside of Europe the only tetraethyl lead plant con-\ncerning which we have any definite knowledge is B small one re-\ncently put into operation near Mexico City. There are certainly\nalso one or more tetracthyl lead plants in Russia but we have\nno information as to their location or size. Early this year\ncertain Japanese groups were discussing with the Ethyl Gasoline\nCorporation the possibility of a license for the manufacture\nof tetraethyl lead in Japan and assistance in the construction\nof a plant. In deference to the wishes of the State Department\nwe asked that these negotiations be suspended. We believe that\nthe result will be that the Japanese will proceed on their own\nwith the manufacture of tetraethyl lead in the near future.\nOur Japanese patents are Just about to expire.\nIf we can be of further assistance in this matter\nplease do not hesitate to get in touch with use\nVery truly yours.\nFrank A\nFAH:MF\nRegraded Unclassified\n93\nAUG 16 1940\nDear Mr. Sadler:\nI want to thank you for the information\nreceived in your letters of August 9, 10 and 12,\nin connection with various questions that arose\nduring the recent discussion on the petroleum\nsituation. The maps and tables have arrived,\nand I an sure they will be useful to us. I very\nmuch appreciate receiving this information.\nSincerely,\n(Signed) H. Morgenthau, dt.\nSecretary of the Treasury.\nMr. B. J. Sadler, Vice President,\nStandard 011 Company,\n30 Rockefeller Plasa, Room 2867,\nNew York, New York.\nORIGINAL FORWARDED TO ADDRESSEE\nFROM OFFICE OF THE SECRETARY\ncarlion copies\nto You T hompson\nWLU:dlm\n8/15/40.\nyou FILE COPY\nRegraded Unclassified\n94\nMr. Morgenthau:-\nThe attached memorandum may be of interest to you.\nE.J.S.\n95\nSTANDARD OIL COMPANY\nINCOMPORATED IN\n30 ROCKEPELLER PLAZA\nADLER.\nROOM 2867\nNEW YORK\nAug. 9, 1940.\nThe Hon. H. Morgentahu, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\n** dear Mr. Secretary:-\nBearing on the discussions at the Treasury Depart-\nment on Wednesday, I beg to advise that the representative of Mitsui &\nCompany in New York asked the Standard Vacuum Company to offer them any\nkind of avistion gasoline they might have for delivery at points other\nthan the United States for shipment over the belance of this year. This\ntelephonic request came in Tuesday and was confirmed by letter, as per\nattached copy. It would appear, therefore, that the Japs will now canvass\nthe world for supplies to replace those that they have been receiving from\nthe United States.\nWe inquired of the Shell whether they knew whether their\ncompany would be encouraged or discouraged by the British Government in mak-\ning further supplies of aviation products available to the Jepanese, and we\nwere advised by the local people that they had not information on this sub-\nject at the present time. They believed that this particular point was now\nunder consideration in Great Britain, and they believed that one attitude\nmight be assumed for their operations in the Dutch East Indies, and another\nattitude assumed for their operations in other countries outside the United\nStates, and that they would try to clear up this point.\nPhotostat in duplicate of Vitaui's letter of inquiry\nto the Standard Vacuum is attached hereto.\n5J3/LTD\n-Inclosure-\nMadhv Yours\nRegraded Unclassified\n96\nHEAD OFFICE.TOKYO,JAPAN\nANOMA\nHSINGKING\nSAIGON\nKARACHI\nSAN FRANCISCO\nKORE\nSEATTLE\n'Gable Address this Brall officer\n2\nNON\nKEELUNG\nSEMARANG\nLONDON\nSEOUL\n1\nLOS ANGELES\nSHANGHAI\ni\nVTTA\nMANILA\nSHIMIZU\nON\nMEDAN\nSINGAPORE\nMITSUI& CO.LIMITED\nTOWN\nMELBOURNE\nSYDNEY\nMINE\nSOURABAYA\n00\nMOJI\nTAIPEH\n180%\nMURDEN\nTAKAO\n/. Uitsui Bussan Jráisha. T/d)\n.\nNAGASARI\nTEHERAN\no\nNAGOYA\nTIENTSIN\nDATE\nNEWCHWANG\nTSINGTAO\nDW\nDTANU\nWARAMATSU\n350 FIFTH AVENUE, NEW YORK\nIN\nUSAKA\nYOKOHAMA\nSHIMA\nPERING\nETC.ETC.\nTELEPHONE CHICKERING 4-2900\nNONE\nHANGOON\nNEW YORK\nPLYPLEASE\nRTO\nSundry #1 Dept.\nAugust 7th, 1940.\nStandard-Vacuum 011 Company,\n26 Broadway,\nNew York City.\nDear Sirs:\nAttention: Mr. W.S. Leaper\nConfirming conversation had with you\nat your office yesterday, you are kindly requested to offer\nany type of Aviation Gasoline for delivery at other countries\nthan the United States and shipment to be made during the\nbalance of this year.\nThis morning, we have been earnestly\nrequested by our Tokyo people to secure an offering from you\npromptly. Therefore, will you please let us know as soon\nas possible if you can offer any quantity available.\nThanking you for your usual kind 00-\noperation, we remain\nVery truly yours,\n8. Nakao/FP\nS.hahao\n97\nHEAD OFFICE TOKYO, JAPAN\nJANDAIA\nHSINGKING\nSAIGON\nKARACHI\nSAN FRANCISCO\n\"bable for all office\nDT\nKORE\nSEATTLE\nNAG\nRECOUNG\nSEMARANG\nSAOR\nLONDON\nSEOUL\nwww.\nLOS ANGELES\nSHANGHAI\nSEAT\nCUTTA\nMANILA\nSHIMIZU\nSINGAPORE\nMITSUI & CO.LIMITED\n(YON\nHEDAN\nMELBOURNE\nSYDNEY\n100%\nMIJAE\nSOURABAYA\nMOJI\nTAIREH\n100\nMURDEN\nTAKAO\n/ Hitsui Bussan Tráisha, Ttd)\nwas\n:\nNAGASARI\nTEHERAN\nWD\nNAGOYA\nTIENTSIN\nDDATE\nNEWCHWAND\nTSINGTAO\nOTANU\nWAKAMATSU\n350 FIFTH AVENUE. NEW YORK\npor\nSIN\nOSAKA\nYOKOHAMA\nTELEPHONE CHICKERING 4-2900\nREKING\nETC/ETC\nSHONG\nRANGOON\nNEW YORK\n(PLY PLEASE\nCATO\nSundry #1 Dept.\nAugust 7th, 1940.\nStandard-Vacuum 011 Company,\n26 Broadway,\nNew York City.\nDear Sire:\nAttention: Mr. W.S. Leaper\nConfirming conversation had with you\nat your office yesterday, you are kindly requested to offer\nany type of Aviation Gasoline for delivery at other countries\nthan the United States and shipment to be made during the\nbalance of this year.\nThis morning, we have been earnestly\nrequested by our Tokyo people to secure an offering from you\npromptly. Therefore, will you please let us know as soon\nas possible if you can offer any quantity available.\nThanking you for your usual kind co-\noperation, we remain\nVery truly yours,\n8. Nakao/FP\nS.hahao\nAug. 9, 1940.\n98\nThe following information comes from the American representative\nof the Shell:\nHe in not informed since the shutting-off of American avistion supplies\n10 Japan from the United States what his company's procedure will be, or whet,\nIf any, instructions his company will have had from the British Government.\nIt is his conviction that the American Government is currently end fully\ninformed on decisions in this respect from the British Government.\nIt is his information that operetions in the Dutch East Indies and\nsupplies from this area to the Japs will be in a different class from supplies\nfrom other sources availableto the Shell.\nThe Shell's present avistion gesoline plent makes ebout 300 barrels\ndaily of high octane gasoline (90 to 100). (Dutch Eest Indies)\nFrom normal naphthas in the Dutch East Indies the Shell segregetes around\n4,000 barrels daily of 77 octane base stock;with 4 C.C.'S of lead this is 90\noctane. In addition, they have about 4,500 barrels daily of 74 octane gasoline,\nwhich, with 4 0.0,'S of lead goes to 87 octane.\nThe Shell have under construction a second alkylation plent in the\nDutch Last Indies which will be finished about December 31st, and will produce\n1,000 tons per month of alkylate, or about 300 barrelsdaily.\nIn the past they have probably not been delivering any aviation gaso-\nline to Japan which could be leaded to higher than about 87 or 90 octane, and\ntheir high octane production is probably all under contract to the British.\nRecently, the Dutch East Indies Government in an appeasement program\nagreed to supply Japen with 40,000 tons per month of crude, of which one cargo\n(10,000 tona) WELS to be so-called Navy quality, which would make 15 to 20% of\naviction @asoline susceptible to leading to 87 to 90 octane. The other three\ncargoes wore to be crude comparable to Kettleman Hills.\nThe deliveries of such crudes may docrease to some extent the production\n= the Dutch East Indies by the Shell of the 74 and 77 octane base stocks which\nare noted above as being current production.\nThe Japs, since the American embargo, want to incresse the one cargo a\nmonth of Havy quality crude to three cargoes a month. This will probably not be\npossible, and the alternative of increasing product deliveries of gasoline\nDiesel oil and fuel oil may be worked out.\nAfter the 40,000 ton monthly agreement was made with the Dutch Zest\nIndies, en inquiry WB 9 made by the Japs for a million tons 6. year, but nothing\nstems to have come from this inquiry.\nThe information of the party referred to is that the Jeps will probably\nplan to attack and keep the Dutch EastIndies if they are not otherwise able to\nobtein everything which the Dutch Zest Indies produces and which Japan requires.\nThe party referred to above has been yestorday at the British Legation\nin Weshington.\nETS/LTD\nWilhinson\nRegraded Unclassified\n99\nSTANDARD OIL COMPANY\n(INCORPORATED IN\n30 ROCKEFELLER PLAZA\nROOM 2667\nADLER.\nDE PRESIDENT\nNEW YORK Aug. 9, 1940.\nThe Hon. H. Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\nMy dear Mr. Secretary:-\nBearing on the inquiries made Wednesday at the\nTreasury Department, we find that the Japs are willing to pay very high\nprices for petroleum coke in the Dutch East Indies which they use, ac-\ncording to our information, with bauxite in the production of aluminum\nin Japan, largely for use in airplane construction. It is possible\nthat they are purchasing similar petroleum coke on the Pacific Coast.\nWe are not clear that the petroleum coke is indispensable in the production\nof aluminum, but it appears at the present time to be important to the\nJaps.\nWe believe that some of the petroleum companies\non the Pacific Coast who have been important suppliers to the Japs in the\npast are perhaps negotiating with them at the present time in looking to\nco-operation in supplying Japan's needs of petroleum products. This 1s,\nhowever, a matter of hearsay, and one which the Treasury Department can\nprobably clear up through its own channels, if it is interested.\nEJS/LTD\nalladur Yours very truly\nP.S.- The naps which you requested are in the course of preparation.\nRegraded Unclassified\n100\nSTANDARD OIL COMPANY\n(INCORPORATED IN NEWJERSET)\n30 ROCKEFELLER PLAZA\nROOM 2867\nADLER.\nPRESENT\nNEW YORK Aug. 10, 1940.\nThe Hon. H. Morgenthau, Jr.\nSecretary of the Treasury,\nWashington, D.C.\nMy dear Mr. Secretary:-\nIn connection with my note to you with\nrespect to the use of petroleum coke in Japan, I am able to give\nyou additional information in regard to exports of petroleum coke\nto Japan for the year 1938, as per following quotation from a\nmemorandum given me under date of August 9th:\n\"As per your request this morn-\ning, the exports of petroleum coke from United\nStates to Japan for the year 1938 were 11,455\nlong tons. The value of this product was $212,456,\nwhich is roughly $18.66 per ton. There is no\nbreakdown given for the raw and calcined product,\nbut we are attempting to get a division on same.\nFor the year 1939 the United States\nexported 47,871 long tons. No value is obtainable\non this amount as yet, as we took the latter figure\nfrom the Socony-Vacuum statistical division.\"\nEJS/LTD\nElladur Yours very truly,\n101\nSTANDARD OIL COMPANY\nINCORPORATED IN NEWJERSET)\n30 ROCKEFELLER PLAZA\nROOM 2867\nADLER.\nEX PRESIDENT\nNEW YORK Aug. 10, 1940.\nThe Hon. H. Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\nMy dear Mr. Secretary:-\nI am now able to give you the exact\nfigures on sales of the Standard Vacuum and of the Shell people\nin Japan for the year 1939. These figures, of course, include\nonly the sales of these companies and affiliates in the Japanese\nmarket.\nJanes\nEJS/LTD\n81.0 BI 0 MA SPINAG 06\n-Enclosure-\n102\nYEAR 1939\nJAPAN TERRITORY\n(Bbls.42's)\nTotal\nS.V. Sales\nShell Sales\nS.V. & Shell\nGasoline *\n857 537\n1 187 987\n2 045 524\nKerosene\n299 518\n278 167\n577 685\nFuel & Diesel - Ind.\n298 501\n1 560 622\n1 859 123\n- Bunkers\n45 199\n1 111 453\n1 166 652\nLubg. Oils\n139 139\n65 962\n205 101\nTotal\n1 639 894\n4 204 191\n5 844 085\nMitsui Sales\nFuel & Diesel - Ind.\n1 319 955\n- Bunkers\n1 297 499\nTotal\n2 617 454\n# Includes Aviation - S.V. - 28 117 Bbls. (1,211 bbls. from N.E.I. to Formosa/\nDairen on Exoh., Balance from Calif.)\nShell - 13 794\nAbove does not include\nEmergency Aviation Sales -\ns.v. - 52 960 bbls. F.O.B. Calif. in drums\nNo record of Shell.\nCrude 011 Imports - Year 1939\nFrom General Pet. California -\n865 434 Bbls.\nStraight Crude\n. Shell\nU.S.A.\n191 774\n.\n-\nTopped Crude\n#\n-\n391 951 #\nLube Crude\nMiri\n-\n595 455\n#\nTopped Crude\nTotal Shell\n1 179 180\nTotal General & Shell\n2 044 614\nStatistical & Distribution Dept.\nAugust 9, 1940\nRegraded Unclassified\n103\nYEAR 1939\nJAPAN TERRITORY\n(Bbla.42's)\nTotal\ns.v. Sales\nShell Sales\nS.V. & Shell\nGasoline *\n857 537\n1 187 987\n2 045 524\nKerosene\n299 518\n278 167\nFuel & Diesel - Ind.\n577 685\n298 501\n1 560 622\n- Bunkers\n1 869 123\n45 199\n1 111 453\nLubg. Oils\n1 156 652\n139 139\n65 962\nTotal\n205 101\n1 639 894\n4 204 191\n5 844 085\nMitsui Sales\nFuel & Diesel - Ind.\n1 319 955\n- Bunkers\n1 297 499\nTotal\n2 617 454\n. Includes Aviation - S.V. - 28 117 Bbls. (1,211 bble. from N.E.I. to Formosa/\nShell - 13 794\nDairen on Exch., Balance from Calif.)\nAbove does not include\nEmergency Aviation Sales -\nB.V. - 62 960 bbls. F.O.B. Calif. in drums\nNo record of Shell.\nCrude 011 Imports - Year 1939\nFrom General Pet. California -\n865 434 Bbls.\n\" Shell\nStraight Crude\nU.S.A.\n-\n191 974 -\nTopped Crude\n#\n-\n391 951 #\nLube Crude\nMiri\n-\n595 455 .\nTopped Crude\nTotal Shell\n1 179 180\nTotal General b Shell\n2 044 614\nStatistical & Distribution Dept.\nAugust 9, 1940\nRegraded Unclassified\n104\nSTANDARD OIL COMPANY\n(INCOMPORATED IN NEW JERSET)\n30 ROCKEFELLER PLAZA\nROOM 2667\nER.\nRESIDENT\nNEW YORK Aug. 12, 1940.\nThe Hon. H. Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\nMy dear Mr. Secretary:-\nPursuant to your request when we were in\nWashington last Wednesday, we are sending you by express a set of\nmaps showing the petroleum producing areas and the refining areas\noutside the United States as well as the existing pipe lines.\nThere are tables attached to the maps\ngiving additional information as to the ownership of producing and\nrefining activities, using the figures for the year 1939.\nIn addition to these maps, Mr. Howard is also\nsending maps showing the tetra-othyl lead plants and the synthetic oil\nplants outside the United States, making a distinction between hydro-\ngenation plants and Fischer process plants.\nAs these maps are rather large, they are\nbeing sent separately by express.\nYours very analy,\nEJS/LTD\nis\nVISUAL\n-\ncount\nOMBIGUA\nto\n-\nRegraded Unclassified\n105\nSTANDARD OIL COMPANY\n(INCOMPORATED IN NewJERSET)\n30 ROCKEFELLER PLAZA\nROOM 2867\nER.\n1\nNEW YORK Aug. 14, 1940.\nThe Hon. H. Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D.C.\nMy dear Mr. Secretary:-\nThe maps you requested were sent by\nexpress yesterday afternoon, and I would be pleased to know\nthat they were received without delay and confidentially.\nThey were sent as valuable papers with a declared value of\n$100.00 to insure, as far as we were able, that they were\ncarefully handled.\nYours very truly,\nEJS/LTD\n106\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE AUG 1 6 1940\nTO Secretary of the Treasury\nFROM General Counsel\nA question has been raised whether provisions of the\nJoint Resolution of June 15, 1940 (Public Res. No. 83, 76th\nCongress) are limited by the provisions of section 14 of the Act\nof June 28, 1940 (Public, No. 671, 76th Congress). The pertin-\nent provisions of the Joint Resolution of June 15, 1940, read as\nfollows:\n\"(a) the President may, in his discretion,\nauthorize the Secretary of War to manufacture\nin factories and arsenals under his jurisdiction,\nor otherwise procure, coast-defense and anti-\naircraft matériel, including ammunition therefor,\non behalf of the government of any American re-\npublic; to sell such materiel and ammunition to\nany such government;* :\n\"(b) The President may, in his discretion,\nauthorize the Secretary of the Navy to construct\nvessels of war on behalf of the government of\nany American republic in shipyards under his\njurisdiction; to manufacture armament and equip-\nment for such vessels on behalf of any such gov-\nernment in arsenals under his jurisdiction; to\nsell armament and equipment for such vessels to\nany such government; to manufacture antiaircraft\nartillery and ammunition therefor, on behalf of\nany such government in factories and arsenals\nunder his jurisdiction; to sell antiaircraft\nartillery and ammunition therefor to any such\ngovernment; ... And provided further, That no\ntransaction authorized herein shall result in expense\nRegraded Inclassified\n107\n- 2 -\nRegraded Uncla\nto the United States, nor involve the extension\nof credits by the United States: And provided\nfurther, That no contract shall be entered into\nunder the terms of this joint resolution which\nshall interfere with or delay the United States\nin the full use of its shipyards, srsenale,\nmunition plants, and other equipment for its own\npurposes.\"\nSection 14 of the Act of June 28, 1940, provides:\n\"Sec. 14. (a) Notwithstanding the provision\nof any other law, no military or naval weapon,\nship, boat, aircraft, munitions, supplies, or\nequipment, to which the United States has title,\nin whole or in part, or which have been contracted\nfor, shall hereafter be transferred, exchanged,\nsold, or otherwise disposed of in any manner what-\nsoever unless the Chief of Naval Operations in the\ncase of naval material, and the Chief of Staff of\nthe Army in the case of military material, shall\nfirst certify that such material is not essential\nto the defense of the United States.\n\"(b) The Secretary of War and the Secretary of\nthe Havy as the case may be are hereby requested\nand directed to furnish or cause to be furnished\nto the respective chairmen of the Committees on\nMilitary Affairs and the Committees on Naval Affairs\nof the Senate and House of Representatives a copy\nof each contract, order, or agreement covering ex-\nchange of deteriorated, unserviceable, obsolescent,\nor surplus military or naval equipment, munitions,\nor supplies exchanged for other military or naval\nequipment, munitions or supplies, and a copy of\neach contract, order, or agreement shall be fur-\nnished regarding any other disposition of military\nor naval equipment, munitions and supplies by which\nthe title passes, either de jure or de facto, from\nthe United States, or by which delivery of material\nthereunder is deferred, where the original cost of\nsuch military or naval equipment, munitions or sup-\nplies exceeded or exceeds $2,000. The copies of each\ncontract, order or agreement herein referred to shall\nbe transmitted to the respective chairmen of the\ncommittees not later than twenty-four hours after\nsuch contract, order or agreement is made, and the\n108\n- 3 -\nchairman of each committee shall consider such\ncontracts, orders or agreements confidential un-\nless a majority of the members of his committee\nshall direct the particular transaction to be\nmade public.\"\nI shall assume, first, a set of facts whereby, under the\nprovision of the Joint Resolution of June 15, 1940, certain mili-\ntary and naval equipment is constructed and manufactured in Govern-\nment factories, arsenals, and shipyards, or otherwise procured,\non behalf of the government of an American republic, and which\nfrom the very beginning of its construction or manufacture is\nbeing made for the American republic. It is clear, in my opinion,\nthat under that set of facts the transfer of such constructed,\nmanufactured, or procured equipment to the American republic\nwould not be subject to the conditions set forth in section 14\nof the Act of June 28, 1940.\nSubsection (a) of section 14 refers to equipment \"to\nwhich the United States has title, in whole or in part\". Subsec-\ntion (b) of section 14 refers to the \"disposition of military or\nnaval equipment, munitions and supplies by which title passes,\neither de jure or de facto, from the United States\". Under the\nfacts assumed above in connection with the Joint Resolution of\nJune 15, 1940, it will probably be true that during the construc-\ntion or manufacture of the equipment or when the equipment is\nprocured on behalf of the American republics title thereto will\nRegraded Unclassified\n109\n- 4 -\nRegraded Unclas\nbe vested in the United States. Although there is nothing in\nthe terms of the Joint Resolution which would necessitate that\nfact, the contracts with the American republics will probably\ncontain provisions to that effect for sound business reasons or\nfor purposes of convenience. It would seem, therefore, that under\nthe literal terms of section 14 of the Act of June 28, 1940, when\nthe equipment now under consideration is finally delivered to the\nAmerican republics, there would have to be compliance with the\nconditions set forth in section 14. However, section 14 of the\nAct of June 28, 1940, when read in the light of its legislative\nhistory, presupposes a situation where the materials therein men-\ntioned have been ordered for the use of the United States or are\nactually a part of the equipment of the military or naval estab-\nlishments of the United States. 86 Cong. Rec., June 21, 1940, at\n13314 et seq. Since, under the assumed facts, from the initial\nstages of the transactions the equipment will have been constructed,\nmanufactured, or procured for the American republics, it is evident\nthat the situation thus arising is entirely different from that with\nwhich section 14 of the Act of June 28, 1940, is concerned. There-\nfore, although title to the equipment involved under the assumed\nfacts would be lodged in the United States Government for certain\npurposes, it is not believed that section 14 should be construed as\n110\n- 5 -\napplying to the ultimate transfer of such equipment to the American\nrepublics.\nSupposition may be made of a second set of facts involv-\ning the transfer of war and naval equipment to an American republic\nunder the provisions of the Joint Resolution of June 15, 1940. The\ncase might arise where it would be desired to complete, on behalf\nof the government of an American republic, the construction or\nmanufacture of equipment which is being constructed or manufactured\nfor use in the military or naval establishments of the United States.\nThere would appear to be no doubt that the provisions of the Joint\nResolution are broad enough to authorize such a transaction provided,\nof course, that proper arrangements with the American republic were\nmade with regard to the expense involved. In addition, the Joint\nResolution contains an authorization for the sale to the government\nof an American republic of certain limited war and naval equipment\nwhich is a part of the military and naval establishments of the United\nStates.\nIt might be inferred, from what has previously been stated,\nthat the transfer of such equipment to an American republic is the\ntype of transfer contemplated by section 14 of the Act of June 28,\n1940. However, whether the transfer of even such equipment to an\nAmerican republic, under the Joint Resolution, is subject to the con-\nditions set forth in section 14 of the Act of June 28, 1940, is open\nto question.\nRegraded Unclassified\n111\n- 6 -\nIn view of the propositions set forth in the Monroe\nDoctrine, the United States is, of course, committed to the policy\nthat the protection of the American republics from outside &\ngression is essential to the defense of the United States. Indeed,\nthe authorizations contained in the Joint Resolution of June 15,\n1940, are, in a real sense, a recognition and reaffirmation of\nthat policy. In a letter dated June 5, 1939, addressed to the\nChairman of the Committee on Foreign Affairs, House of Representa-\ntives, the bill which later became the Joint Resolution of June 15,\n1940, was approved by the Secretary of War. In that letter it vas\nstated, among other things:\n# * * It is the opinion of the War Depart-\nment that these measures will result in closer\ncooperation among American republics on matters\npertaining to defense and will bring about &\nbetter understanding of our common defense prob-\nlem. Also, the utilization by American republics\nof similar types of equipment for defensive pur-\nposes will simplify the munitions problem in any\ncommon defense in which American republics may\nbe engaged.\" (1939) H.R. Rep. No. 1231, 76th Cong.,\n1st Sess. 2.\nIn connection with the same bill, Admiral Leahy, Chief of the Bureau\nof Naval Operations, made the following statement to the Committee\non Foreign Affairs, House of Representatives:\n\"It is my personal opinion that closer\nrelations between the navies and the armies of\nthe American republics will bring about a\nbetter understanding of our common defense\nproblems and a closer relationship between\nthe peoples.\n112\n- 7 -\n\"Improvements in the naval material of\nany or all of the South and Central American\nrepublics will make more difficult and dis-\ncourage aggression against this continent from\noverseas, and should it become necessary for\nAmerica to support the Monroe Doctrine with\nits navies, the burden to be borne by the\nUnited States Navy will be reduced in exact\nproportion to the number of efficient ships\navailable to the other Republics of America.\"\n(1939) 84 Cong. Rec. 9860.\nReferring to the same bill, Mr. Sumner Welles, the then Acting Secre-\ntary of State, stated to the press on March 14, 1939:\n\"Cooperation between the United States and\nthe other American republics in the defense of\nthis hemisphere would be to the distinct ad-\nvantage of this country. To make possible such\ncooperation is a logical corellary of the 'good-\nneighbor policy'.\n\"The proposed joint resolution, if enacted,\nwould enable the governments of the other Ameri-\ncan republics to obtain in the United States,\nwithout expense to this Government, vessels of\nwar, coast and antiaircraft artillery of modern\ntypes at the same prices as those at which they\nare obtained by the Government of the United\nStates. It would also enable this Government\nto cooperate with the governments of the other\nAmerican republics in the construction of vessels\nof war in their own shipyards. Its enactment\nwould foster the growing spirit of American\nsolidarity and would constitute a further and\na necessary step in the interests of the national\ndefense.\" (1939) H.R. Rep. No. 1231, 76th Cong.,\n1st Sess. 3.\nIn view of the expressions quoted above it may reasonably be argued\nthat the Joint Resolution of June 15, 1940. 1s concerned with transfers\nof equipment to American republics for purposes of our own national\nRegraded Unclassified\n113\n- 8 -\ndefense. In cases, therefore, where such transfers are made, the\nChief of Naval Operations and the Chief of Staff of the Army\ncould not accurately make the certifications required by section\n14(a) of the Act of June 28, 1940, that the equipment \"18 not\nessential to the defense of the United States\" since the Congress\nseems to have recognized that the transfers, and thus the equip-\nment involved in those transfers, are essential to the defense of\nthe United States. It is believed that no intent should be at-\ntributed to the Congress to render substantially ineffective, by\nsection 14(a) of the Act of June 28, 1940, the transfer provisions\nof the Joint Resolution of June 15, 1940. Under the above argument,\ntherefore, it may be said that the transfers involved in the second\nset of facts hereinbefore set forth and with which we are now con-\ncerned would not be subject to the provisions of section 14(a) of\nthe Act of June 28, 1940.\nAlthough a conclusion, based on another ground, has been\nreached regarding the transfers involved in the first set of facts\ndiscussed above, it is evident that the above argument is equally\napplicable to such transfers.\nIt is not without significance, in connection with the\nforegoing argument, that prior to the time of the transfers, the\nPresident, in the exercise of the discretion granted to him by the\nJoint Resolution of June 15, 1940, could determine whether the\nequipment would better serve the interests of the United States in\nthe military or naval establishments of this country or in those\nRegraded Unclassified\n114\n- 9 -\nof another American republic. It is not to be assumed that the\nPresident would abuse the discretion thus granted to him.\nWith respect to section 14(b) of the Act of June 28, 1940,\nrequiring transmittal of information to the House and Senate concern-\ning certain transfers, there is reason to believe that, since it is\nso closely related to section 14(a) of that Act, it applies only to\nthose transfers which are covered by section 14(a) and which involve\nequipment originally costing in excess of $2,000. Support for that\nview may be found in the debates which occurred in the Senate on\nJune 21, 1940, when, on the floor of that body, section 14 was first\nintroduced as an amendment to H.R.9822, the Bill which later became\nthe Act of June 28, 1940. 86 Cong. Rec., June 21, 1940, at 13368\net seq. In addition, the Bill was sent to conference, and in the\nreport of the Conference Committee to the House, on June 22, 1940,\nit was stated that section 14:\n\"Prohibits the disposal of any military or\nnaval weapon, ship, boat, aircraft, or other\nmilitary supplies without certification of the\nChief of Naval Operations or the Chief of Staff\nof the Army that such material is not essential\nto the defense of the United States. It pro-\nvides that the Secretary of War and the Secre-\ntary of the Navy shall notify the chairman of\nthe respective congressional committees the de-\ntails of any transfer of any such material or\nequipment within 24 hours when the value exceeds\n$2,000 with copies of the contracts, orders, or\nagreements. on (Underscoring supplied.) (1940)\nH.R. Rep. No. 2706, 76th Cong., 3rd Sess. 7.\nIt is also to be noted that the circumstances surrounding the passage\nof the Act make it reasonably clear that one of the primary purposes\nfor the insertion of section 14 was to prohibit and discourage, on\nthe part of the executive branch of the Government, transfers of\nRegraded Unclassified\n- 10 -\n115\nmilitary and naval equipment belonging to the United States when those\ntransfers tended, in the views of the legislative branch of the Government,\nto weaken our national defense. See 86 Cong. Rec., June 21, 1940, at13314\net seq. Whatever may be the situation with regard to transfers to Europeen\nstates, it has previously been pointed out that the transfers under the\nJoint Resolution of June 15, 1940, may not be considered as being transfers\nwhich would weaken our national defense. While the matter is not entirely\nfree from doubt, I feel that it may well be argued that the transfers now\nunder consideration would not be subject to the provisions of either\nsection 14(a) or section 14(b).\nFinally, it should be noted that 80 far as the sale to an\nAmerican republic of arms, ammunition, or implements of war 1s concerned,\nsection 3 of the Public Resolution of June 15, 1940, provides that all con-\ntracts of sale must contain a provision that the American republic receiving\nthe arms, ammunition, or implements of war will not dispose of them to any\nstate other than an American republic. Thus, it is clear that the arms,\nammition, or implements of war sold to the American republics will not\nfall into the hands, by subsequent transfer, of any of the European belli-\ngerents.\nGeneral\nRegraded Unclassified\n116\nAugust 16, 1940\n4:05 p.m.\nGROUP MEETING\nPresent:\nMr. Gaston\nMr. White\nMr. Schwarz\nMr. Cochran\nMr. Chamberlain\nCapt. Puleston\nMr. Thompson\nMr. Haas\nMr. Buckley\nMr. Graves\nMr. Foley\nMrs. McHugh\nH.M.Jr:\nHerbert - two things for you. You had\nbetter get a pencil. Ralph Ingersoll of\nP.M. would like you to give John Handley,\nSecret Service, a month's leave of absence\n80 he could work with a man doing a serial.\nI said that as far as I was concerned I\nwas sure we could give it.\nGaston:\nAll right.\nH.M.Jr:\nWhat does this fellow know about that?\nGaston:\nI guess his father knows this fellow he\nis to work with.\nH.M.Jr:\nThen, the Northland, Sumner Welles called\nup and she is west of Cape Farewell, to\ngo to Julianeshaab tonight.\nGaston:\nShe is there.\nH.M.Jr:\nYou are to keep her there until further\nnotice, because the English want her to\nRegraded Unclassified\n-117\n- 2 -\ngo up - instead of going through that\npass between Iceland and Greenland -\nwhat is it called?\nGaston:\nDenmark Strait.\nH.M.Jr:\nThey want her to go via the Faeroe Islands.\nGaston:\nThe English notified us about --\nH.M.Jr:\nThe point is you are to hold her and not\nlet her proceed any further until - - because\nhe said we did not have - what do you call\nthis --\nGaston:\nParavanes?\nH.M.Jr:\nWe do not have paravanes.\nGaston:\nNo. We were definitely assured by the State\nDepartment before she left here that it was\nall right.\nH.M.Jr:\nWell, Denmark Strait 1s supposed to be mined.\nGaston:\nThat 18 what I told the State Department and\nthen the State Department came back and said\nit would be all right.\nH.M.Jr:\nWell, now they have said it is all right.\nAs a matter of fact this American Legion 1s\ncoming back here. They are running her through\nthe Faeroe Islands instead of north of\nIceland, and the Germans have told them they\nwon't guarantee her free passage, but she\nleft last night. I wouldn't mention that\nout of the room. I had to do quite a little\narguing to keep our ship there, because the\nidea was, well, just let her go up but be\ncareful. But my God, to go up through Denmark\nStrait if that is mined --\nGaston:\nI thought when we got that word back -\nyou see the British put out an official\nnotice they had mined the Strait. I\nthought when we got that word back it\nRegraded Unclassified\n118\n- 3 -\nwas all right. It must have been just mined\nfor publicity, but apparently that is not\nthe fact. Then we will hold her at\nJulianeshaab until we get further notice,\npresumably it will be from the White House\nor State Department.\nH.M.Jr:\nState Department, but I would be very much\nopposed - I put up a fight today. I don't\nwant her to go on.\nGaston:\nClear across the ocean. I think that 1s\nbad business.\nH.M.Jr:\nAnd to just let her go on up through the\nDenmark Straits when it is mined I think\nis awful business.\nGaston:\nYes.\nH.M.Jr:\nSo I think I would keep her there for\nawhile and then let her come back.\nGaston:\nIf the British mined that Strait, I think\nit 18 up to them to look after those\nIslands along the east coast of Greenland.\nThere are about a dozen villages there.\nH.M.Jr:\nThe other thing - I communicated with\nColonel Maxwell. I am going to call Mr. Purvis\nas soon as I get through here. The Swedish\ndeal is through, and Colonel Maxwell thanked\nme for getting him off the hot spot.\nBuckley:\nI think that 18 marvelous.\nH.M.Jr:\nAnd Mr. Welles said he had always been for it.\nWhite:\nNow all that is necessary is for the Swedish\nto say they are glad and it will be a perfect\nscore.\nH.M.Jr:\nSo unless somebody else has some emergency\nmatter, I say good-bye and hope you all\nhave a good time for the next two weeks.\nNow, Ed, you are going away for two weeks?\nFoley:\nIf you tell me to I will.\nRegraded Unclassified\n119\n- 4 -\nH.M.Jr:\nAnd, Harry, I am telling you. Who else\nwould like to go away?\nHaas:\nIt is as good a time as any, I think.\nH.M.Jr:\nAnybody else?\nGraves:\nIf you don't mind I think I will take a\nlittle official trip.\nH.M.Jr:\nAll right.\nGaston:\nIs there anybody who would like to stay here?\nSchwarz:\nI will stay in town, but I would like to be\naway from the office a few days.\nH.M.Jr:\nIt is all right.\nBuckley:\nI would like to take a day to catch my\nbreath after Phil gets back.\nH.M.Jr:\nAll right. If you stay behind a minute you\ncan hear what I have to say to Purvis. Well\nanyway, good-bye.\n111\n120\nAUG 16 1940\nMy dear Mr. President:\nI an transmitting herewith for\nyour consideration a memorandum re-\ngarding the petroleum situation in\nJapan.\nFaithfully yours,\n(Signed) H. Morgenthau. Jr.\nBy Messonger AUG 16 1940\n4:45 p.m.\nThe President,\nThe White House.\ncarbon copies to\nT hompson\nHDN\nNIN:1s\nFILE COPY\n8/16/40\nRegraded Unclassified\n121\nAugust 14, 1940\nMEMORANDUM FOR THE PRESIDENT\nSubject: Petroleum Situation in Japan\nThe conference on the oil situation held last wook\nat the Treasury was attended by Secretaries Knox, Ickes\nand worgenthau, and by numerous officials of Standard 011\nand Tidewater Associated ted 011 Companies in charge of foreign\nmarketing. The company officials left copies of various\ncharte and tables, among which were saps giving the location\nof refineries in Japan and other foreign countries. Copies\nof the se documents were forwarded to the Secretaries of xar,\nHavy and Interior.\nThe following important points were made by the 011\nsen:\n1. Japaness petroleum stocks are believed to be\nabout 20 million barrels, or equivalent to six or\nseven months' requirements at Japan's present rate\nof consumption.\n2. Japan is now planning to obtain a greatly in-\ncreased share of its petroleum from the Netherland\nEast Indies. (Standard 011 officials have been ad-\nvised from London that Motherland officials are now\nnegotiating for the sale to Japan of 3 million bor-\nrele of orude immediately, plus 14 million annually,\nor a total amount equal to almost A half of Japan's\nyearly requirements.)\nJapen has been importing three-quarters of its\noil supply from the United States.\n3. The Standard 011 officials report that former\nplans to destroy East Indies production facilities\n(in ORGE of attack) have been abandoned. They be-\nlieve the & German pressure on relatives of Dutch\ncolonial officials, together with England's efforts\nto appease Japan, will result in the East Indies\nsupplying oil to Japan. Shell, however, bes informed\nStandard 011 that the British Government has not yet\nexpressed RS attitude toward contemplated transactions.\nRegraded Unclassified\n- 2 -\n4. Japan also plane to obtain increased supplies of\norude oil from Venezuela and Colombia. Our State\nDepartment, I AB informed, has indicated it had no\nobjection to sales of crude oil to Japan from these\ntwo countries, but did wish to discourage sales of\neviation gasoline. Some of the oil officials felt\nthat even though British and American companies would\n+1ah to cooperate, if asked, in not exporting oil to\nJapen from their Latin American properties, that the\nLatin American Governments having final jurisdiction\nnd faced with loss of revenue might force such exports.\n(Lost year Continental Europe, now a lost mrket to\nLatin America, took approximately 70 million barrels\nof Latin American 011.)\n5. The Japanese will probably DE able to unke most of\ntheir avistion gasoline If they can obtain tetraethyl\nlead. They may be able to purchase tetreethyl lead\n(which le produced in England, France, Germany, Itely,\nMexico, U.S.S.R.) or any be able to make it. Both\nStandard Oil end Tidewater officials believe th t Japan\nCAN make tetraethyl, though the experts disagree as to\nthe difficulty involved.\nJapan can get suitable orude petroleum for making\ninto base stock for avistion gasoline from the Metherland\nEast Indies or from Latin America. It 1e reported that\nsuitable erude can Also be obtained from the United\nStates, despite the export control.\n6. Japaa may De able to purchase aviation gasoline\nin finished form from the East Indies, which produces\n3.7 million barrels per year -- .7 million of straight\n100 octane gasoline, and 3 million barrels leaded\n87 octane gasoline. (The streight 100 octane has all\nbeen going to England.)\nThe Japanese have rsked ItanGard 011 to inform\nthem of any aviation gesoline it holde outside the\nUnited States available for purchase. (Standard's\nreply is not available.)\n7. Tidewater officials believe that Japen, with 1tr\npresent plants, can produce sviation lubricating 011\nfrom crude petroleum, from fuel oil, or from ordinary\nlubricating oil (all of which it oan still import\nfrom the United States.) Standard 011 officials be-\nlieve Japen could do It, but with considerable dif-\nfieulty.\nRegraded Unclassified\n123\n- 3 -\n8. Standard officials pointed out that fuel oil\nwas one of Japan's most important import items.\nNot only is it necessary for ships and tanks, but\nit can be cracked and refined into gasoline and\nblending agents. (Japan can refine 24 million bar-\nrels of crude annually, or two-thirds of its general\nrequirements.) Tidewater representatives said that\nfuel oil could be made into aviation lubricating\noil. They complained, however, that the export\nregulation covering products that can be converted\ninto aviation gasoline is written so broadly that\nit might be used to embargo many petroleum products\nintended for non-aviation purposes.\nHDW: VBC :WLU:lrs\n8/14/40\nRegraded Unclassified\n124\nAugust 16, 1940.\nMy dear Mr. Secretary:\nI am transmitting herewith for your\ninformation copy of a memorandum which I\nhave sent to the President regarding the\ntroleum situation in Japan.\nSincerely yours,\n(Signed) 1 Jr.\nm Manager 16 1940\n4:45 Am.\nHonorable Harold L. Ickes,\nSecretary of Interior.\ncopy 8 enclosure\nattached to letter\nto President s the\nsame date.\nRegraded Unclassified\n125\nAugust 16, 1940\nMy dear Mr. Secretary:\nI am transmitting herewith for your informa-\ntion copy of a memorandum which I have sent to\nthe President regarding the petroleum situation\nin Japan.\nSincerely yours,\nfilligned to conther. Jr.\nHonorable Henry L. Stimson,\nBy Messenger\nAUG 16 1940\nSecretary of War.\n4:45 P.m.\nCopy of enclosure\nattached to letter\nto President of the\nsame date.\nRegraded Unclassified\n126\nAugust 16, 1940.\nMy dear Mr. Secretary:\nI am transmitting herewith for your\ninformation copy of a memorandum which I\nhave sent to the President regarding the\npetroleum situation in Japan.\nSincerely yours,\n(Signed) H. Morgesthau. Jr.\nBy Messenger AUG 16 1940\n4:45 p.m.\nHonorable Frank Knox,\nSecretary of the Navy.\nCopy 8 enclosure\nattached to letter\na President 8 The\na same date.\nRegraded Unclassified\n-127\nAUG 16 1940\nMy dear Mr. Secretarys\nThere are transmitted hereeith photographic copies\nof several confidential mage and tables which have been\nsubmitted by the Standard 011 Company (N. de). The\nmaterial indicates the oil extracting and refining facili-\nties of Europe, Asia, Cossmia, South insuries, and Africa,\nas well as the European equipment for manufacturing\ntetracthyl load.\nSincerely,\n(Signed) H. Morgenthau, Jt.\nORIGINAL FORWARDED TO ADDRESSEE\nFROM OFFICE OF THE SECRETARY By Messenger AUG 16 1940\n4:45 P. m.\nThe Nonarable Mary L. Stimpem,\nSecretary of War,\nWashington, D. C,\ncopies of mape\nin Harry 3 hite's office.\nCarbon copies to\nHDWard\nFILE COPY\nm Thompson\n8/16/40/HOW\nRegraded Unclassified\n128\nAUG 16 1940\nMy dear Mr. Secretary:\nThere are transmitted herewith photographic copies\nof several confidential mage and tables which have been\nsubmitted by the Standard oil Company (N. de). the\nmaterial indicates the eil extracting and refining facili-\nties of Europe, Asia, Oceania, South America, and Africa,\nas will as the Buropean equipment for manufacturing\ntetracthy] lead.\n(Signed) E Monganthau. Jr.\nthe Honorable Frank Know,\nBy Messenger AUG 16 1940\nSecretary of Havy,\n4:4 5 P.m.\nWashington, D. 0,\nInclosures.\nCopies & mape\nin Harry white's office\nCarbon copies C\nmr. T hampeon\nHOWard yow FILE COPY\n8/16/40\nRegraded Unclassified\n129\nAUG 16 1940\nMy dear Mr. Secretary\nThere I I I & explain\nof several esufidential nape and tables which have been\nsubmitted by the Standard 012 Company (N.J.). The\nmaterial indicates the sil extresting and refining\nfacilities of Europe, Asia, Opensin, South America,\nand Africa, as wall as the Duropean equipment fee\nnaminaturing tetracthyl lead.\n(Signed) H. Morgestion. Jr.\nORIGINAL FORWARDED TO ADDRESSEE\nFROM OFFICE OF THE SECRETARY By Messenger\nAUG 16 1940\n4:45 p.m.\nThe Emerable Harold be Ickes,\nSecretary of Interier,\nWeakington, D. a\ncopies of make\nin Harry white's office\ncarbon copies L\nHDWard 8/16/40 HDW FILE COPY\nme. ihompam\nRegraded Unclassified\n130\nAugust 16, 1940\nMy dear Mr. Ambassador:\nI was delighted to receive your\nletter of August 15th informing me that\nSir A. Agnew, your oil expert, is sail-\ning on August 17th and should reach\nNew York about a week later. Thank\nyou very much for furnishing me with\nthis information.\nYours sincerely,\n(Signed) H. Morganthau. Jr.\nHis Excellency,\nBy Messenger AUG 16 1940\nThe British Ambassador.\n4:45 P.m.\nRegraded Unclassified\n131\nAugust 16, 1940\nMy dear Mr. Ambassador:\nI was delighted to receive your\nletter of August 15th informing me that\nSir A. Agnew, your oil expert, is sail-\ning on August 17th and should reach\nNew York about a week later. Thank\nyou very much for furnishing me with\nthis information.\nYours sincerely,\n(Signed) H. Morgesthau, Jr.\nBy Messeneer AUG 16 1940\nHis Excellency,\n4:45 p.m.\nThe British Ambassador.\nRegraded Unclassified\n132\nBRITISH EMBASSY,\nSECRET\nWASHINGTON, D.C.\nAugust 15th, 1940\nDear Mr. Morgenthau,\nYou will be glad to hear that\nSir A. Agnew, our oil expert, is sailing on\nAugust 17th and should reach New York\napproximately a week later. Either Purvis\nor I will bring him to see you as soon as he\narrives.\nI am also informing Mr. Welles of\nhis impending arrival.\nYours sincerely,\nholuza\nThe Honourable\nHenry Morgenthau, Jr.,\nUnited States Treasury,\nWashington.\nCOPY\n133\nATP\nPLAIN\nOSLO\nDated August 16, 1940\nRec'd 10:45 a.m.\nSecretary of State,\nWashington.\n921, Sixteenth.\nFollowing for Guaranty Trust Company, New York\nfrom Norenberg and Belsheim \"Have signed order duly\nexecuted before Consul Oslo transfer ten thousand\ndollars from our account to Irving Trust Company,\nNew York, for account of Kjobmandsbanken, Oalo.\nIf license necessary apply Estrin or Rowe or Irving\nTrust.\"\nPRESTON\nKLP\n134\nATP\nGRAY\nSTOCKHOLM\nPated August 16, 1940\nReo'd noon\nSecretary of State,\nWashington\n840, August 16, noon.\nAccording to documents shown to the Legation\nSkandinaviska Banken, Malmo, transforred 6th of\nApril $73,543.41 to National City Bank, NEW York,\nfor account DENNORSKE Credit Bank, Oslo by error.\nMistake being fully explained, all three banks\nwilling to reverse transfer but license American\nauthorities refused.\nPlease ask Treasury to investigate and advise\nwhat steps may bE taken to permit license. STCOR.\nGREENE\nDDM\n135\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nTA 840.51 Frozen\nCredits/463/464\nAugust 16, 1940\nThe Secretary of State presents his compliments\nto the Honorable the Secretary of the Treasury and\ntransmits copies of translations of two notes from the\nMexican Ambassador in Washington, regarding a license\nfor the transfer of funds held in the United States.\nEnclosures:\nFrom Mexican Ambassador,\nAugust 7, 1940. (2)\ncopy\nRegraded Unclassified\n5033\n136\n[Translation]\nEMBASSY OF MEXICO\nWashington, D. C., August 7. 1940.\nExcellency:\nWith reference to the note verbale No. 4877 which this\nEmbassy addressed to the Department of State on August 2,\n1940, I am taking the liberty of asking Your Excellency very\nrespectfully to amplify the request made therein so as to include\nin the permit which the Embassy desired as a matter of urgency\nthe amount of $1,235.84, which is to be drawn by the National\nCity Bank of New York at Bucharest, Rumania, on the account of\nour Government, to pay the Mexican diplomatic officials at that\nplace.\nAt the same time, I respectfully ask Your Excellency that\nif possible a global permit be granted to the said Bank up to\n$60,000.00 per month, which will cover the necessities of the\nMexican service in Europe, for there have really been serious\ndifficulties in the financial management of such payments, the\namounts and the identifiable destination of which appear to\njustify the granting of the permit referred to.\nI offer to Your Emellency the assurances of my high and\ndistinguished consideration.\nF. CASTILLO NAJERA\nAmbassador.\nHis Excellency\nCordell Hull,\nSecretary of State,\nEtc., etc., etc.\nTR:\n:JP:IML\nCOPY\nRegraded Unclassified\n137\n5029\nI Translation]\nEMBASSY OF MEXICO\nWhahington, D. C.,\nAugust 7. 1940.\nExcellency:\nOur Fiscal Delegate in New York communicates to us that\nthe Mexican Consulate General at London has informed him us\nfollows:\n\"The Fiscal Delegation of the Department of Hacienda\nat Brussela sent me several checks for the payment of\nexpenses and salaries of this General Office and that\nof Liverpool during the months of April and May, some\nof which checks on their presentation for collection\nin New York at the National City Bank, on which they\nwere drawn by the same bank at Brussels, were protested,\nI being notified as follows: 'Checks drawn by National\nCity Bank of New York, Brussels, on their New York\noffice, unpaid with the answer: Unpaid on account\nPresidential Proclamation. Drawee applying for license\nto pay' Protest fees $1.37 and $1.27.\" - and consequently\nthey were not paid, thus causing injury and expense to\nthe interested parties. I take the liberty of communi-\ncating the foregoing to you with the very respectful\nHis Excellency\nCordell Hull,\nSecretary of State,\netc., etc., etc.\nRegraded Unclassified\n138\n-2-\nrequest that you be good enough to intervene in the\nappropriate quarter to the end that payment be\neffected in the understanding that these checks were\npresented by the Guaranty Trust Company of New York\nof that city, in the name of Martin's Bank of London,\nand others through the channel of the said National\nBank at London.\"\nIn view of the foregoing data I request Your Excel-\nlency most respectfully that if possible the Treasury\nDepartment address the National City Bank of New York for the\npurpose of authorizing it to pay the said amounts.\nI avail myself of the opportunity to renew to Your\nExcellency (etc.).\nF. CASTILLO NÁJERA\nAmbassador.\nTR: :JP:IML\nCOPY\nRegraded Unclassified\n139\nANG\n16 1840\nMy dear Congressment\nI have pleasure in referring to your letter of\nAugust 12 in which you inquired as to whether 47 recent\nconferences with Sir Frederick Phillips, Undersecretary\nof the British Treasury, included \"some consideration\nof the possibility of coordinating British purchases in\nthe United States with the United States OVD are pro-\npul, and if 80, \"what arrangements, if any, vere made\nto effect the desired purpose\".\nFor your information, I an happy to enclose a\ncopy of the statement which was issued to the Press on\nJuly 19, 1940, at the termination of the meetings which\nvere hold between Sir Frederick Phillips and myself.\nAny reference that say have been made in these meetings\nto the subject of British purchases in the United States\ntouched only the banking and monetary problems in-\nvolved.\nVery sincerely yours,\n(Signail) - J1\nSecretary of the Treasury.\nEnclesure.\nI FORWARDED TO ADCRESSEE\nNonerable George Holden Tinkham, FROM OFFICE OF THE RECRETARY\nHouse of Representativer,\nVashington, D. c.\nk\nMeasenger\nAUG\n16 1940\n1:25 p.m.\nJOB/S\nCarbon Copies\nthe to Mr. Thompson\nRegraded Unclassified\nTREASURY DEPARTMENT\n140\nWashington\nFOR IMMEDIATE RELEASE,\nPress Service\nFriday, July 19, 1940.\nNo. 21-65\nConferences during the past week between Sir Frederick\nPhillips, Under Secretary of the British Treasury, and Secretary\nMorgenthau have provided en opportunity for the discussion of\nquestions of mutual interest to the British and American\nTreasuries.\nThe British Under Secretary was able to assure Secretary\nMorgenthau that, while Great Britain is now obliged by the\nexigencies of war to resort to exchange control and other tempor-\nary measures affecting international transactions, his Government\nplans to return to liberal monetery and trade policies as soon as\npossible after hostilities cease. Such temporary measures in-\nclude the arrangement between the financial centers of London and\nNew York insururated on July 18 for 8 system of registered sterling\naccounts, which should tend toward stabilizing the sterling rate\nend help protect the American market.\nProspective British purchases in the United States were con-\nsidered in detail and their effects on the balance of payments\nbetween the two countries during the next twelve months were care-\nfully exemined,\nThe controls by the two Governments, AS they effect their\nrespective netionals, over assets of invaded countries held in\nGreat Britain and the United States were given attention.\n-000-\nRegraded Unclassified\nTREASURY DEPARTMENT\n141\nWashington\nFOR IMMEDIATE RELEASE,\nPress Service\nFriday, July 19, 1940.\nNo, 21-65\nConferences during the past week between Sir Frederick\nPhillips, Under Secretary of the British Treasury, and Secretary\nMorgentheu have provided en opportunity for the discussion of\nquestions of mutual interest to the British and American\nTreasuries.\nThe British Under Secretary was able to assure Secretary\nMorgenthau that, while Greet Britain is now obliged by the\nexigencies of war to resort to exchange control and other tempor-\nary measures affecting international transactions, his Government\nplans to return to liberal monetary and trade policies as soon as\npossible after hostilities ceese. Such temporary measures in-\nclude the arrangement between the financial centers of London and\nNew York insugurated on July 18 for B system of registered sterling\naccounts, which should tend toward stabilizing the sterling rate\nend help protect the American market.\nProspective British purchases in the United States were con-\nsidered in detail and their effects on the balance of payments\nbetween the two countries during the next twelve months were care-\nfully examined.\nThe controls by the two Governments, as they effect their\nrespective nationals, over asseta of invaded countries held in\nGreat Britain and the United States were given attention.\n-000-\n142\nGEORGE HOLDEN TINKHAM\na c. HAMELIN\nvery Diffect MASSACHUSETTS\nSECRETARY\n- OF FOREIGN AFFAIRS\nCongress of the United States\nHouse of Representatives\nMashington, D. €.\nAugust 12, 1940\nThe Honorable Henry Morgenthau, Jr.\nSecretary of the Treasury\nWashington, D. C.\nMy dear Mr. Morgenthau:\nIn the July 12 edition of THE TIMES (London) there\nappeared an article bearing upon a conference which was to\ntake place between you and Sir Frederick Phillips, and Under-\nSecretary of the British Treasury. Referring to \"the field\nof possible topics\" the article stated: \"it may include\namong other things some consideration of the possibilities\nof coordinating British purchases in the United States with\nthe United States own arms programme.\"\nI should like to know (1) if the topics dis-\ncussed at the conference in question included \"some con-\nsideration of the possibilities of coordinating British pur-\nchases in the United States with the United States own arms\nprogramme\" and (2) if so, what arrangements, if any, were\nmade to effect the desired purpose.\nWith appreciation of your attention and advice,\nI remain\nSincerely yours,\nGEORGE HOLDEN TINKHAM\n8\nRegraded Unclassified\nTHEASURY-Procurement Div. Attn: Mr. W.S. Leaycraft,\n143\nATP\nGRAY\nLONDON\nDated August 16,1940\nRec'd 10:55 a.m.\nSecretary of State,\nWashington\n2762, August 16, 3 p.m.\nThe Embassy has received the following informal communica-\ntion from the Ministry of Economic Warfare:\n\"You will remember that it was arranged that Russell of\nthe Chrome Company should suggest to the Turks that they\nmight try and sell chrome to America. We have now received\na telegram from Ankara informing us that:\n(1). Russell approached the Eti Bank and learned that\nthe Mutual Chemical Company, the agents for the Eti Bank\nin America, are offering a minimum of $23.50 per ton F.O.B.\nfor guleman ore (sic-presumably they are offering ore at\nthis price)\n(2). Russell is suggesting the United Kingdom contract\nprice with possibly $22 for considerable quantities.\n(3). If we could give some indication of the quantities\nwhich the United States of America would be willing to take,\nalso maximum price and delivery requirements, it would\nfacilitate his efforts.\nThe\n144\n-2-\n2762,\nAugust 16, 3 p.m.\nfrom London\nThe telegram also mentions that the present freight\nrate to America is about $16, and correspondingly higher\nvia Suez.\nIf you care to let us have the information asked for we\nwill be glad to pass it on to Russell. Otherwise you may\nwish to get your people to instruct your Embassy in Ankara.\nÀs regards shipping we have discussed this here. Chrome\nis such a valuable substance to the axis that we do not like\nto see it pass within their reach, If other things were\nequal we should prefer that it went round the cape but as\nthis would put up the cost we do not wish to press for this.\nTe think it would be desirable to arrange, however, that\nnot more than one shipload should be afloat in the\nMediterranean at one time; that is to say, ship A should\nnot sail until ship B has safely reached Gibraltar.\".\nKENNEDY\nWSB\n145\nAugust 16, 1940\n4:05 p.m.\nH.M.Jr:\nHello.\nOperator:\nGeneral Watson.\nH.M.Jr:\nThank you.\nWatson's\nSecretary: Colonel Maxwell is standing right here, but\nthe General is not here.\nH.M.Jr:\nThat's all right. Okay, put Maxwell on, please.\nWatson's\nSecretary:\nAll right, Colonel Maxwell, sir.\nH.M.Jr:\nHello. Hello.\nMaxwell:\nYes? Colonel Maxwell.\nH.M.Jr:\nMorgenthau.\nMaxwell:\nYes, sir.\nH.M.Jr:\nMr. Welles said in Cabinet that he'd cleared\nthat matter of the cancellation on the Swedish\nstuff?\nMaxwell:\nYes, sir. Well, I've just delivered the in-\nstructions to the State Department and left\na copy with General Watson.\nH.M.Jr:\nWell then, I'm free to tell the Purchasing\nMission to go ahead.\nMaxwell:\nThat's correct, yes, sir.\nH.M.Jr:\nAll right.\nMaxwell:\nAnd I want to thank you very much for the way\nyou took action.\nRegraded Unclassified\n146\n- 2 -\nH.M.Jr:\nWell, that's very kind of you. I figured\nthe way to do it was through the Secretary\nof War.\nMaxwell:\nThat's fine?\nH.M.Jr:\nWhat?\nMaxwell:\nThat saved things for me very nicely.\nH.M.Jr:\nIt made it easy for you, didn't it?\nMaxwell:\nYes, sir.\nH.M.Jr:\nWell, that's one less worry.\nMaxwell:\nYes, sir.\nH.M.Jr:\nThank you for your cooperation.\nMaxwell:\nWell, we'll do the best we can.\nH.M.Jr:\nGood luck.\nMaxwell:\nAll right, sir.\nH.M.Jr:\nGoodbye.\n147\nAugust 16, 1940\n4:07 p.m.\nH.M.Jr:\nHello.\nOperator:\nMr. Ralph Ingersoll.\nH.M.Jr:\nAll right. Hello.\nOperator: Go ahead.\nIngersoll:\nHello, Secretary Morgenthau.\nH.M.Jr:\nTalking.\nI:\nThis is Ralph Ingersoll.\nH.M.Jr:\nHow do you do?\nI:\nDo you remember me?\nH.M.Jr:\nWell, I certainly do and I've been reading\nyour editorials and I've been meaning to\nwrite you because I think they've been\nsimply swell.\nI:\nWell say, that's very good of you to say\nthat.\nH.M.Jr:\nYes.\nI:\nI hoped I'd be in Washington today because\nI wanted to see you for a minute. I have a\nvery odd request of you that I'm putting up\nto you.\nH.M.Jr:\nWell go ahead, take a chance.\nI:\nThe fellow that's working on our Benedict\nArnold stuff, Henry Painter, he's an old\nlifelong friend of a man who works for you.\nH.M.Jr:\nYes.\nRegraded Unclassified\n148\n- 2 -\nI:\nWhose name is John Handley. He's in the\nSecret Service.\nH.M.Jr:\nOh, surely.\nI:\nAnd Painter came to me and said if he could\nget this fellow to work with him, if he could\nget him a leave of absence for & month from\nthe Treasury Department, it would be a wonder-\nful help to him.\nH.M.Jr:\nYes, I see.\nI:\nWell, is that an impertinent way to --\nH.M.Jr:\nNo, it's not impertinent. Does Handley want\n8. leave of absence?\nI:\nI believe Painter has talked to him and asked\nhim if he would do it if it could be done\nand I think he said yes, although the motive\npower came from Painter.\nH.M.Jr:\nWhat's Painter's first name?\nI:\nHenry.\nH.M.Jr:\nHenry. Well, I'll tell you what I'll do. I'm\nseeing Herbert Gaston in two minutes.\nI:\nYes.\nH.M.Jr:\nAnd I'll tell him - the Secret Service comes\nunder him.\nI:\nYes.\nH.M.Jr:\nAnd I'll tell him it's all right with me, he\nshould get in touch with Handley and if Handley\nwants a leave of absence for a month, to give\nit to him.\nI:\nSay, that's perfectly great. The reason I\n149\n- 3 -\nfelt at liberty to call you was because he's\nworking on things that I know you approve\nand believe in.\nH.M.Jr:\nRight.\nI:\nAnd it's in the cause.\nH.M.Jr:\nGood. I'm going to - I hope - I'm going away\nfor a little holiday and any time you come\ndown, after Labor Day, if you'd let me know\na day or two in advance, I'd love to have you\nhave lunch or supper with me.\nI:\nOh, I will do that, certainly.\nH.M.Jr:\nBecause my whole family is reading your paper\nand we're very enthusiastic.\nI:\nI couldn't be more pleased.\nH.M.Jr:\nSo if you're down here any time after Labor\nDay, let me know a day or two in advance.\nI:\nFine. I'll do that, and we'll have lunch,\nand thank you very kindly.\nH.M.Jr:\nAll right, goodbye.\nI:\nGoodbye.\nRegraded Unclassified\n150\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE August 16, 1940\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nSTRICTLY CONFIDENTIAL\nAt the Group Meeting yesterday morning I reminded the Secretary of the memorandum\nwhich I had written the previous evening in regard to the desire of Mr. Knoke to\nobtain before yesterday noon a decision as to our attitude on the question of the\nFederal Reserve Bank accepting gold deposits from the Canadian, British and\nNetherlands Governments, in order that the matter could be definitely submitted at\nthe Thursday meeting of the Directors of the New York bank. I called Mr. Knoke back\nat noon and let him know that this matter would have to wait until Monday. I am to\nalce up with Under Secretary Bell on that day, and inform Mr. Knoke of the decision\nwhich may be taken.\nBMX.\n151\nLEGATION OF THE\nUNITED STATES OF AMERICA\nOTTAWA\nAugust 16, 1940.\nMy dear Mr. Secretary:\nI am delighted to know that you are\ncoming to Canada to spend your vacation,\nand hope very much that you and Mrs. Mor-\ngenthau get a real rest. I can imagine\nthat there is nothing that you crave as\nmuch as getting away from people, tele-\nphones, etc. However, if there 18 any-\nthing that I can do for you, I should be\ndelighted to have you let me know. I\nneed hardly add that if at any time the\nspirit moved you to motor this way, - and\nOttawa 18 only 50 miles distant, - my wife\nand I would be only too delighted if you\nwould lunch or have tea with us either\nalone or with anybody that you might want\nto\nThe Honorable\nHenry Morgenthau, Jr.,\nThe Seigniory Club,\nP.Q.\n152\n152\n)\n- 2 -\nto see.\nBoth Mr. Howe and Graham Towers\nhave told me how kind you have been to\nthem during their trip to Washington.\nWith every good wish to you and Mrs.\nMorgenthau, in which Lilla Joins,\nAs ever, yours,\nRegraded Unclassified\nach'd 9/11/40 Neept\nack or 153\nKWANG PU CHEN\nShanghei Commercial &\nSavings Bank,\nKunming, China,\nAugust 16, 1940.\nThe Honorable Henry Morgenthau, Jr.,\nSecretary of The Treasury,\nWashington, D.C.,\nU. S. A.\nDear Mr. Morgenthau,\nI nm enclosing two snepshots, one of which WAS taken\noutside one of the doors of the air-raid shelter in the Foreign\nTrade Commission. It was taken when we were loitering outside\nthe cave after the alarm WRS sounded but before the enemy planes\narrived. The temperature in the cave is et least ten degrees lower\nthan the outside. You will notice that we are all carrying extra\nclothes which was to be put on after we enter the cave. The second\nshapshot is a picture showing people entering the air-raid shelter\nbehind the house of 8. wealthy Chungking contractor.\nUnder separate cover I am sending you a set of pictures\ntaken from an illustrated magazine published in China. Inade-\nquate as they are, they illustrate, in 8 vague WAY, the various\nsteps in the production of woodoil. I am hoping to make some\npictures that will give you 8. clearer idea of this important\nindustry and of the activities of Foo Shing Corporation.\nWith the kindest personal regards to you and\nMrs. Morgenthau,\nWhen Sincerely Yours,\nRegraded Unclassified\nWOOD OIL\nGREAT CHINESE EXPORT CROP\nAccounting - - of (NAT international unde file noth and\nall - - grevint infindual rejury during that par, whing wp\n10% of the Gul. The public of this or bex - - for less\n-flacted by - nai, - de Auf growing sinis - will is au\nhands De the of have less generally\nimproved with due and al experts by the givernment in SMOKER\nToman. Hupch AND when provider where de sung the\nThe givernment's - nil for the riport of 70,000\n- of of apposity.\nL'HU'LE DE GRAINS D'ALEURITES CORDATA-UNE\nDES PRINCIPALES EXPORTATIONS DE LA CHINE\nL'huils de proliss d'alession of MAE de pcs production\nprincipales a - who plant in Importante dama le commerce\nimportant D'apits les instructions du - International de\n1938. Finale de pie condata europe la première place,\nat pour - de l'expertation mealr. Depuis la per de\n- l'immen, las pays productions v'hant para envalle\npar - como, l'exparation de Think de graine d'eleurites contra\n- pas changement. Two your l'mourage\n- du personal qui a développé et amflier la plantation\neurdina dam in provious de Yunnet, Human\n\" Hisper. la quantity de production a visiblement augmenti el\nprobibliment - - pur 48. Les de sex\nreprésentations \"a planotive d'airuntes cordits d la production de\nHow\nCBSCH04 MAGGO ГААВЛИЙ ЭКСПОРТКИЙ ПРОДУКТ KITAR\nCorasono roprosas Haran o\n34\n1938 P., дрависное\npepaos MBOTO средя инспортима продуктов страям .\n27 scaru ascoupta.\nПроизводств store Speguers до ERI nop pe пострад\nMO . pollow, TAX KAX районы eno\nпродувідм продолжант OCTABITOR . pysax. Hand\nopoT, метоли and обработки DOCTURED улучшается .\nправительство document спедивлистов $9 nos MRCTG\nрождения - 50209 уровайность.\nuse мегодний\nBUNGS 75,000 VTOPO MACAN заграницу.\nMode of Chin's boy I/WES grow in\nL'alcurité cordita ell de have gifte et . de grandes feuilles.\nБольшинство доровьев \"ryn\" pacTyT 3 провиция Сичуаль.\n******\nThe truet from which work! el . provided.\nThe plane has a long - and large leaves.\nLes prim on la trame d'un sew, - I'm time à l'buile.\nLes feuilles - la last e one prime, WITE une Impue up.\nПлод, wa BoTopoΓo прессуется древесное масло.\nPactorse AM507 даилимй стебель E большие дистья.\nMARRAN BARSMA-\nNEGUE\n-\n\"\ncand\nthe dieso funcier of draits, Juli all which yold el\nTury Stowns in NO blace\nComp do grains d'aleurites\nUnive product la\nПять copToB nadzos двлжих ценный продухт-\nЦвети дерева \"ryn.\nNENNE\nMUMERRO GROUN?\nHOW WOOD OIL IS PRODUCED\nTin a drail by baking\nStrings au in des graim\nIt = ground - powder.\nBroyage des pain.\nПлод сушатся = novas.\nOn растарается , порошок.\n-\nThe is again heared and deved,\nOM method of pursong al from the desd powister\nMéduge én prains\nMise en provir (le clishi la -\nПоровов CHOBA просуживается.\nСтарий способ прессовжи wacas #2 порошка.\nme\nRAIN\nThe ml 11 of - buentie be -\nThe matte resideng der ne all # cigrest il make which make a pod\nEn PT un Lembe Bank un manor.\nResidu de Phoile unit d'engrais\nVacao проводится » бочки uepes трубм.\nUCTATOR досде прессовия MAGIA - преврасное удобрения для\nAMAR. -\n-\nRegraded Unclassified\nLA FRODUCTION. DE L'HUILE DE GRAINS D'ALEURITES\nHAR ПРОИЗВОДИТСЯ ДРЕВЕСНОЕ MACIO\nCORDATA\n# a\nWood oil ready for shipment abroad.\nOn the way to the ship,\nOn scelle les forneaux contenunt de Phanle:\nLa transportation par les portelais.\nMacao 9 виспортной упаковке.\nDepaut STAR экспорта.\n1 ****-\nKRANNA\nPhotoe by HaYs Chas,\nReady to F\nL'arrivée au pert d'exportation par les\nB permoro зарохода.\n*******\nRegraded Unclassified\n158\nSeptember 11, 1940.\nang, 16 litter litter indeped\nchem\nDear Mr. Chens\nI have received your letter of August 16th,\nand the two snapshots which you were so good as to\nsend no. I am very mush interested to see these\nand appreciate your thought in forwarding them to no.\nI have also received the pages from the illustrated\nmagazine, showing the various steps in the production\nof woodoil. This is most informative and I - glad to\nhave it.\nwith cordial regards and all good vishes,\nSincerely,\n(Signed) H. Morgenthan, Sr.\nMr. Kwang Pu Chem,\nShanghai Commercial & Savings Bank,\nKunsing, China.\nGEF/dbs\nRegraded Unclassified\n159\nSeptember 11, 1940.\nDear Mr. Chen:\nI have received your letter of August 16th,\nand the two snapshote which you vere so good as to\nsend no. I AM very such interested to ⑉ these\nand appreciate your thought in forwarding them to no.\nI have also received the pages from the illustrated\nmagazine, showing the various steps in the production\nof woodoil. This is most informative and I - glad to\nhave 10.\nwith cordial regards and all good vishes,\nSincerely,\n(Signed) H. Morgenthan, Jr.\nMr. Kwang Pu Chen,\nShanghai Commercial & Savings Bank,\nKunsing, China.\nGEF/dbs\nRegraded Unclassified\n5/16/40\nBritish Purchasing Commission\n160\nMemorandum Re Tanks\nIt is understood that the United\nStates Government has now in manufacture light\ntanks Type M2 A-4.\nThis type of tank is considered one\nwhich would be most suitable for immediate use\nin the Middle East. Such tanks are urgently\nrequired for this purpose and would be of inestimable\nvalue if they could be obtained for the United\nKingdom.\nFifty such tanks would equip one tank\nbattalion and twenty would be the normal reserve.\nIt is believed that the United States\nmilitary authorities might welcome an opportunity\nof trying out this tank under service conditions\nin the Middle East.\nThe Director General of the British\nPurchasing Commission therefore desires to enquire\nwhether seventy such tanks with appropriate stores\nand ammunition could be made available now either\nfrom stocks or from priorities.\nA.B.P.\nAugust 16, 1940\nRegraded Unclassified\n161\nMemorandum Re Chemical Warfare\nThere is a strong possibility that\nthe United Kingdom will desire to place contracts\nwith American manufacturers for finished products\ncoming under Category VI of the President's\nProclammation of May 1, 1937 which is set out in\nthe fourth annual report of the National Munitions\nControl Board for the year ended December 31, 1939.\nIn view of the strong possibility of such\norders being placed, it is desired to now know whether\nin the event of the manufacture of such products\nthey would be licensed for export sale to the United\nKingdom.\nWe would be obliged if you could clear this\nmatter for us now because without such knowledge it\nwill be impossible to decide upon a course of\naction.\nC.T.B.\nWashington\nAugust 16, 1940\nRegraded Unclassified\n162\nAugust 16, 1940\nTo:\nThe Secretary\nFrom:\nMr. Buckley\nLieutenant McKay turned over photostate of\nthe attached memoranda from the British Purchasing Com-\nmission covering:\nits - 1. Tanks\nNo - 2. Chemical Warfare\nwith a note which seemed to indicate that a copy of each\nshould be sent to Mr. Knudsen.\nObviously the tank memorandum ought to go to\nMr. Knudsen but I do not believe that at this stage the\nmemorandum on chemical warfare ought to be transmitted.\nWill you please advise me as to your wishes in this matter.\nRP\nRegraded Unclassified\n163\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE August 16, 1940\nTO\nSecretary Morgenthau\nFROM\nMr. Cochran\nSTRICTLY CONFIDENTIAL\nIn accordance with an arrangement which I made directly, at the Secretary's\nrequest, with Vice President Howard Sheperd of the National City Bank, Mr. Arthur C.\nShorey, Assistant Vice President of that bank, called this morning and vas received\nby the Secretary at 10:45. Messrs. White and Cochran were present. Mr. Shorey sum-\nmarized to the Secretary his views upon the economic situation in Japan, which country\nhe had visited only recently, and was then taken to the office of Dr. White for a\nfurther conference.\nBMR\nRegraded Unclassified\n164\nAugust 16, 1940\nPrefesser Chamberlain\nMr. Cechran\nAS 10 e'cleck yesterday ferences I received Mr. Bernard 8. Carter, a\npartner in the Paris fire of Morgan & Co., together with Messrs. Alexander and Miskle\nof J.P. Morgan 6 Co., Inc., of Bev York. I took these gentlemen to Professor\nChamberlain's office, w sppointment, where Mr. Carter related to Prefesser Chamber-\nlain the difficulties experienced w his bank is Paris, and also provided information\nin regard to the operation of American benevolent institutions is France. Neasrs.\nFriedman and Towson subsequently, I understand, received Meesrs. Alexander and Miskie.\nThere 10 attached a copy of a letter which I have today received from Mr.\nCarter, referring to the visit which be had with u.\nBMR\nENC:dm:8.17.40\nRegraded Unclassified\n185\nAugust 16, 1940\nProfessor Chamberlain\nMr. Cechran\nMr. Zeltewski, Financial Counseler of the Polish Robasey, telephoned me\nat 5:30 this ovening from Bev York. Re referred to application for license Be. 30547\nwhich had been filed w the Guaranty Trust Company is behalf of cas Resetecki, which\nnatter I had made the subject of a after a conversation seus days age with\nMr. Seltewski. The Attache now tells no that he has reseived a cablegram free Leaden\nprotesting that the approval which the Treasury gave did not facilitate the transfer\nof the stock is question into the hands of the ovner, but merely into the agency of\nthe Guranty Trust. This left the situation no better than it was a month ago. Goa-\nsequently, Leltowski salted urgently that we de something to great satisfaction to the\napplicant.\nJun\nHMC:dm:8.17.40\nRegraded Unclassified\n186\nAugust 16, 1940\nProfessor Chamberlain\nMr. Cechrem\nMr. Robert Levett, a partner in Brown Brothers Harrima Co., New Terk,\ntelephoned no this mean that a vire from the Bask for International Settlements at\nChatesa d'Oez, Svitserland, had been received August 15 w Brown Brothers Services\n00.1\n\"Our vire of August 8 our you explain why delay as payment\nconstitutes simple transfer of proceeds natured notes our owner-\nship to account of 3. 1. 8. with Federal Reserve Bank of New\nYork, New York City net involving sky third party's interest.\"\nOriginal cable received August 8:\n\"Value eighth this month please pay $250,000 to Federal\nReserve Bank of New York 8462.\"\nBrown Brothers Harrinan made application as that date, August 8, quoting\nthe cable and stating also is the application that the Federal Recerve Bank of Bev\nTork has instructions to receive the above amount. The New York number of the appli-\ncation is 36506.\nI brought this case to the attention of Mr. Pehle, who informed no this\nafternoon that as approval of the application was being net to New York this ovening.\nConsequently I telephoned this information at 4:30 p.m. to Mr. Levett's effice is New\nYork,\nAMS\nEMC:dm:8.17.40\nRegraded Unclassified\n167\nAugust 16, 1940\nProfesser Chamberlain\nMr. Cechran\nAs reported at today's Group Meeting, Mr. Livessy of the Department of\nState telephened se at 2:35 this afterneen to the effect that the Bear Mastern Divi-\nsion of the State Department had inquired urgently as to what action had been taken\nW the Treasury Department en two cablegrame recently received free the American\nGoneal General at Beirut, Syrin, conserning the blocking of Hyrian balances is the\nUnited States.\nAugust 19, 1940\nOn Saturday, August 17. Mr. Livesey telephoned as again about the\nabove cablegrams. The Near Bastern Division of the Department of State Ima\nrefted & tentative reply, which will be hold pending come vost from w, which is\nurgently desired.\nB.M.P.\nMC:dm:8.17.40\nRegraded Unclassified\n168\nAugust 16, 1940\nProfessor Chamberlain\nMr. Cochram\nMr. Toungs, of Desinick a Dominick is New York, called or as this after-\nnoon at 2:30. Be left with se the attached accuration, and asked that vs do enything\npossible to expedite favorable consideration of application Be. 17,725. made w Me\nconsern with respect to some securities by Pictet & Co. of Switzerland. Be told -\nthat the Svies were quite concerned over the provibility of United States freesing\ntheir assets is this country, and that their inability to obtain action with respect\nto the securities is each cases as that under reference tends to confirm their fears\nthat 11 will be difficult for then to withdraw their assets from the United States.\nIs this connection Younge thought that the rise is the Svice frame this past week\nhad resulted to come extent from Svice conceras which have their capital funds ea this\nmarket vithireving them sad converting them into thrice france, is order that they MY\nhave such funds available for their accessary operations is Ovitserlend in case Ovitser-\nlead night be included under our blocking regulations.\nH.MS.\nEMC:dm:8.17.40\nRegraded Unclassified\n189\nAugust 16, 1940\nProfesses Quateriain\nMr. desirent\nR. lievate Shoperá, Fice President of the National City Bank of Rev Terk, called\n= yesterday at 10:00 W telephone to inquire whether the Treasury had taken any\naction on the two applimities filed w that institution is consection with the\nbusiness of its Pario organisation, copecially la the light of the engast collegen\nwhich had boon received from Manager Fearee. SW France. and which b. thousand not\ncommunicated to me the proceding day. I teld Mr. theyerd that as action had yet\nbeen taken, bet that I vould bring the matter to the afterness cossies of the\nCentrol droup as an urgent case.\nRegraded Unclassified\n170\nAugust 16, 1940\nProfessor Chamberlain\nMr. Cechram\nIn accordance with the understanding of our Group, I took up with the\nLegation of Uragnay is Vashington several days age the attached application No. 27583\nof the French incrican Banking Corporatisn. the Minister premised to cable his Severa-\nset is regard therete.\nAt 11 e'cleck today the Minister told no that he had received a reply free\nNontevideo to the effect that the transaction was a bone fide purchase actually made\nby the Government of France and that the Frigerifice Nacional of Menterides expected\npayment of the $210,000 is question. the Minister therefore recomended 11 to us as\n8. purchase of Uraguayan products for which he hoped payment would be duly fesilitated.\n30 vsa villing to give as a formal letter through the Department of State If we required\n11. I a to inform his when the transaction Le definitely approved.\nB.MS\nEMC:dm:8.17.40\nRegraded Unclassified\n171\nAugust 16, 1940\nProfesser Chamberlain\nMr. Cookram\nMr. Pineest of the British Roberry telephoned BE yesterday overing. Me referred\nto a nemeranden left with se W Mr. Hoyford, and dated August 8. which referred to\nthe importation of seld and securities W Clipper skips. Pineest states that they\nare decired that this note be altered, since the original communication had been\nbesed as sisinfermation. It is net & question of stepping gold shipments. the British\nhaving as knowledge that there are any imports of gold Late this country by airplane\nfrom Barepe. The Brittch de desire, bewever, that w probibit the importation w\n011yper ships of securities and other valuables, neet particularly disnemês, since\nthey have been advised that the Germane are organising the traffic line this country\nof dissendo to be smagled en Clipper ships.\nSMY\n1\nRegraded Unclassified\n172\nAugust 16, 1940\nProfessor Chamberlain\nRr. Cochress\nTestorday staning Mr. Levis Clark of the Department of State telephoned se that\n. despatch had been received from Prence enclosing All affidavit essecuted by as\nincrican vomes in Paris in regard to the destruction is the presence of two officers\nof our State Department establishment in that city of certain securities belonging\nto her. These included no United States Government bonds, but American industrial\nsecurities. This setion had been taken following the telegraphic instructions which\nand been Issued by the Department of State, in accordance with the 1deas of the\nTreasury Department. for the guidance of individuals is areas threatenet with German\ninvasion. It will be recalled that the advice vo.e that one copy of the affidavit be\nretained by the owner of the securities: that one copy be filed with the American\nConsular Office at which 10 is executed, and that the third be forwarded to the\nSepartment of State at Vashington.\nNo. Clark states that the evaer of the securities whose destruction vas\ncoorded desires that the American towning conserns is the United States be actified\nof each destruction. the question arises, therefore, me to whether the Department of\nMale should scouse this tank: whether the Treasury Department should accept the\ndaty: or whether ve can suggest some other eyetem. It seems imperative, bowever,\nthat E practice should nov be instituted which may be uniformly maintained.\nI sald My. Clark that I would call his back after consulting with KY colleagues\nos this subject.\n13.mg\nEMC:1ag-8/16/40\nRegraded Unclassified\n173\nAugust 16, 1940\nPrefessor Chamberlain\nMr. Cochras\nSenstor Henderson of the 2. P. 0. telephened no this noraing is regard to the\nquestion as to whether the dollar proceeds of tin imported Late this country from\nChina w the Bank of Indo-China branch at Tunnan and w one Readen world be free.\nI explained that if the tia is seld w parties recognised as French under m\nfreesing orders, the process would serually @ into a blooked assount. 1 explained\nfurther the arrangement wherely branches is the Far Rest of the Bank of Inde-Ohine\nat present are permitted to draw out ene-fourth of their dollar assets, plus are\ndeposite. I contiened his that this arrangement was provisional, being subject be\nrenoval from month to month. Furthernere I made the point that we had as Insuledge\nof the nationality of Readon, and commequently could net my just what the situation\nwould be if a sale should be consumnated jointly w Readon and the Bank of Indo-Chine.\nThe Senator stated that he would pass en to Remien, who is new is New York, ay advice\nthat he call personally at the Federal Reserve Bank of New York to obtain full infer-\nution for his guidence.\nB.M.S\nRegraded Unclassified\n174\nAugust 16, 1940\nProfessor Chamberlain\nMr. Cochran\nA few days age we asked the Britich Robesey to give us any information in regard\nto the Ranque Belge et Internationale is Reypt. having branches at Gaire and\nAlexandria. Mr. Pinsent informed no last ovening that this matter had been sabled\nto Lendon and he is now informed that the British Government is making inquiries at\nCairo. Re will let us know the results thereef.\nBMP\nEMC:lap-8/16/40\nRegraded Unclassified\nAugust 23, 1940\n175\nAt the Secretary's request, a copy\nof this letter and 8. copy of Mr.\nFoley's opinion were given to Mr.\nYoung to give to Judge Patterson.\nMrs. McHugh\n176\nAUS 16 1940\nDeath Mr. Knuison:\nI thought you would be interested in the enclosed\nopinion of my General Counsel bolding that the United States\nmay lawfully assist the manufacturer in obtaining plant\nexpansion (by means other than the lending of noney) even\nthough the expanded plant any be used in part to produce\nmilitary supplies and equipment for sale to others than the\nUnited States. This complements Hr. Folay's opinion dealing\nwith the powers of the Reconstruction Finance Corporation\nto finance, by say of loan, additional plant capacity for\nastional defense where part of such expanded facilities may\nbe used to produce equipment for sale to other countries.\nThe enclosed opinion is applicable to situations\nsuch as the new tank plant to be built on behalf of the\nTer Department and operated by the Chrysler Corporation,\nwhich was announced yesterday.\nVery truly yours,\n(Signed) H. Morgenthatt. JI.\nSecretary of the Treasury.\nHon. William S. Knuden\nBy Messeuger\nAUG 16 1940\nAdvisor on Industrial Production\nAdvisory Commission of the Council\n4:45 p.m.\nof National Defense\nfinth YHE tax\nTashington, D.C.\n8/16'20\nRegraded Unclassified\n177\nAUG 1 B 1900\nMy dear Mr. Secretary:\nThe T Company, which name/atheres supplies and materials\nuseful for national defense, is desiress of enlarging its present\nplant especity and equipment, The T Company 18, and will be, pro-\ndusing such supplies and materials for the Government of the United\nStates and also for the Government of Great Britein. the progres\nof expansion my monstat of nov buildings or now makingry and\nequipment, or both. Tea have Inquired whether the of\nthe United States my lawfully assist the T Company in obtaining\nthat plast expension (by - other than the leading of money)\noven though the expended plant my be used in part to produce sill-\ntary supplies and equipment for sale to others then the United\nStates.\n18 is understeed, of course, that is the event the United\nStates needs the entire output of the I Company's plant, sush out-\nyes will be available to the United States.\nIt 10 my spinien that there is ample statelery authority\nfor the Government of the United States be seciet the T Company\n(W seens other than the leading of may) is obtaining that sidi-\ntional plant espacity, and that there would be 20 legal objection\nIf the Y Company were to - such expect ty in the namer proposed.\nRegraded Unclassified\n178\n- 2 -\nSection 54 of the Resonstruction Finance Corporation\nAct, 18 anouded (U.S.C., Sup. 1. title 15. 100. 6060). M added\nto by section 5 of the Act of June 25. 1940 (Fublie, Zo. 60, 76th\nGengrees, 3rd Sees.). provides, in parts\n\"In order to aid the Covernment of the\nUnited States in its national-defense pregram,\nthe [Reconstruction Finance) Corporation to\nauthorized ...\n\"(2) Than requested by the Federal Lean\nAdministrator, with the approval of the Presi-\ndeat, so create or to organize a corporation\nor corporations. with power (a) to produce,\nsequire, and carry strategic and critical\nmaterials as defined w the President. (b)\nto purchase and lease lead, to purchase, lease.\nbuild, and expand plants, and to purchase and\npreduce equipment, supplies, and machinery, for\nthe manufacture of arms, ammunition, and imple-\nmosts of var. (e) to lease such plants to pri-\nvate corporations to capage in mush unsufacture,\nand (a) if the President finds that 10 is 20000-\nmay for a Government agreey to sagage is such\nremfecture, to engage is such manufacture itself.\nThe Corporation may sake leans so, or purchase\nthe capital stock of, any such corporation for\nsay purpose within the powers of the corporation\nAS above set forth related to the national-\ndefense program, a such terms and conditions\n40 the Corporation my determine.\"\nTitle II of the first Supplemental National Defense\nAppropriation Act, 1941. not of June 26, 1940 (Public, No. 667,\n76th Congress, 3rd Seen.), provides, in parti\neye enable the Secretary of far, upon the\nrecommendation of the Council of National Do-\nfease and the Advisory Commission thereof, and\nwith the approval of the President, and without\nreference to section 3709, Revised Statutes, to\nexpedite the production of equipment and supplies\nfor the Agay for quergency national defense\nRegraded Unclassified\n179\n- 3 -\nyurgeses, including all of the objects and\npurposes specified under aach of the appro-\nprintions available to the Var Department\nduring the fiscal year 1941, for procurement\nor preduction of equipment or empplies, for\nerection of structures, n fer asquisition\nof load; the furnishing of Government-owned\nfacilities at privately evact plants; the pro-\ncurement not training of civilian personnel in\ncommention with the production of +quipment\nand micrial and the use and operation thereef;\nand for any other purposes which in the discro-\ntion of the Secretary of Mar are desirable is\nexpediting production for military purposes and\nare recomented by the Copacil of National Der\nfense and the Advisory Commission thereof, and\napproved by the President, $150,000,000, to be\nimmediately available, . : and, in addition,\nthe Secretary of Mar. upon the recomendation of\nthe Connetl of National Defense and the Advisory\nCommission thereef, and with the approval of the\nPresident, is authorised to enter into contracts\nprior to July 1. 1941. for the same purposes to\nas amount not exceeding $50,000,000 ....\nSection 1 of Act of July 2. 1940 (Public, No. 703. 76am\nCongress, 3rd Sess.), provides, is parts\n*(a) is order to expedite the building up\nof the national defense. the Secretary of Var\nis authorised, out of the menaye appropriated\nfor the Var Department for national-defence par-\nposse for the fiscal year ending Im 30, 1941,\nwith or without advertising, (1) se provide for\nthe assessary construction, rehabilitation, -\nversion. and installation at military posts, do-\npote. stations, or other localities, of pleate,\nbuildings. facilities, utilition, and apparten-\nander thereto (including Government-owned facill-\nties at privately owned plants and the expansion\nof make plants, and the acquisition of make land,\nand the purchase or lease of smoke structures, as\nmy be necessary), for the development, manufac-\ntare, unintenance, end storage of military equip-\nmeat, munitions, and empplies, and for shelters\n(2) to provide for the development, parchase,\nmanufacture, shipment. mistemasse, and starage\nof military equipment, munitions, and supplies,\nRegraded Unclassified\n180\n- 4\nand for shalter, at such plaase and under as\nconditions as he my does accessary; eat (3)\nto enter into such contracts - . \", and to\namount or supplement such scieting contracts,\nas be may doem necessary to carry out the yes\nposse specified in this sections . .\n*(b) The Secretary of Was is further anth-\norised, with or without advertising, to provide\nfor the operation and mintemance of any plants,\nbuildings. facilities, utilities, and apparten-\nasses thereto constructed pursuant to the author\norisations contained in this ecotion and scotten\n5. either w means of Government personnel or\nthrough the agency of selected qualified comer-\ncial manufacturers under contracts entered Late\nwith them, and, when be doems 14 necessary in\nthe interest of the national defense, to lease.\nsell, or otherwise dispose of, say such plants,\nbuildings. facilities, utilities, appartements\nthereto, and land, under much terms and condi-\ntiens as he my does advicable, and without №\nan to the provisions of section 321 of the Act\nof June 30, 1932 (47 Stat. 412).-\nSection 5 of that Act provides, is parts\n\"The President is authorized, with or with-\nout advertising, through the appropriate agencies\nof the Government (1) to provide for amergencies\naffecting the national security and defense and\nfor each and every perpose counseled theirowith,\nincluding all of the objects and parposes speed-\nfied under say appropriation available or to be\nmade available to the Var Department for the fis-\neal years 1940 and 1941, (2) to provide for the\nfurnishing of Government-owned fesilities at pri-\nvately owned plants; .\nAppropriations in terms prestically identional with the Insti-queted\nauthorization are contained in the Military Appropriation A62, 1941,\nAet of June 13. 1940 (rublic, No. 611. 76th Congress, 3rd scao.).\nand the appropriation net for the May Department for the fiscal\nyear saling June 30. 1941, Act of June 11, 194D (Fublie, Zo. 508,\n76th Congress. 3rd Sees.).\nRegraded Unclassified\n181\n- 5 -\n10 to apparach that by the foregoing statutes the Congress\nintended to provide methods and sesne to increase the capacity w\nthe nation to produce articles necessary to the defense of the United\nstates. In By opinion to you dated July 23. 1940, 11 was pointed\nout that the authority granted to the Reconstruction Plaants Corpora-\ntion w section 5(1) of the Act of June 25. 1940 (Petate, no. 69,\n76th Congress, 3rd sees.), w nake leans to private industry *ter\nplant construction, expension and equipment\" to be used in the -\nfacture of equipment and supplies necessary to the national defense,\ncontempleted, not only the impodiate needs of the United States for\nsuch equipment and supplies, but also the present preparation of the\nindustries of the United States for such production is possible no\nture merganetes. It I clear that the industrial preparation\ncontemplated w the statutes now under consideration also to -\nfor meeting these future emergencies as will as for meeting the\npresent needs of the United States.\nwith respect to section 5(2) of the Act of Im 25, 1940,\nquoted above, what was stated in my opinion of July 23. 1940, ⑉\ncorning the extent of the industrial preparation with - ember\nplated by the Congress under section 5(2) of that Ast, and GOLDER\ning sales to others that the United States 10, of course, equally\napplicable. The only material difference is the too particas\nof that Act conseras the mothod of ashisving the preparation.\nRegraded Unclassified\n182\n6\nThat the Congress contemplated the use of the famis\nappropriated in the previoucly-quoted porties of the First Dup-\nplemental National Defense Appropriation sot, 1941. for the above\ntype of industrial preparation is indicated W the legislative\nhistory of that Act. The pertions of the President's message to\nthe Congress en May 31. 1940, which were quoted to ay opinion to\nyou of July 23. 1940, were set forth is part in the Report of the\nHouse Committee on N.R. 10055, the bill which became the ACT nov\nunder consideration, as being \"pertinent to the appropriations\"\nrecommended therein. (1940) 1.1. Rep. No. 2497. 76th Gong., 3rd\nSeas. 3. In those pertiens of the President's message strees me\nplaced on the need for the United States to prepare industrially\n\"ro meet possible fature emergencies\". In addition, the Committee\nstated with reference to the $200,000,000 item contained in the\nabove-quoted provision is the First Supplemental Acts\nno . . The purpose of the appropriation is\nto smable the War Department to be is position\nto provide additional casufacturing capacity\neither at Government arsemals, existing conner-\nsial plants, or W now plants all leaking so\nmajor national-defense requirements. The terms\nof the appropriation as approved w the counities\nrequire approval of projects w the Secretary of\nVar upon recommendation of the Genneil of National\nDefense and the Advisory Commission of the Coun-\neil and final approval by the President. This\nfund is not contemplated for noe in consection\nwill the production C military matériel for\nwhich appropriations are contains {n_thie_bil}\nor for which are contained in the military\nappropriation 1111 for 1941. in the latter bill\nRegraded Unclassified\n183\n- 7 -\nis contained as energency fund to the President\nof $66,000,000 is direct appropriation and\n$66,000,000 in contractual authority, or\n$132,000,000 of obligating authority, for sind-\nlar purposes.\n\"the present fuel of $200,000,000 looks\nto the future and so the procurement of facili-\nBice which vill be needed for var purposes,\nwhich do not exist for normal commarcial Mr.\nmile, and which take a very long time to\ncreate. The committee is advised that if the\nUnited States is to prepare for major antional\ndefense within the next 2 years it is 20000-\nsary to create additional mamfacturing capacity\nto fill is the gape and deficiencies of our\nmunitions production. . . on (1940) H.R. Hop.\nNo. 2497, 76th Geng., 3rd Sess. 10. (Under-\nscoring supplied.)\nIt is to be noted that there is nothing in the terms of\nthe statute now under consideration which would restrict the use\nof the facilities which are authorised to be created to the produc-\ntion of supplies and equipment for the United States Government.\nIndeed, 11 is not reasonable to believe that the Congress intended\nthat the industrial capacities authorized to be created by that\nstatute, if not immediately needed to fill orders placed by the\nUnited States Government, should 110 1410 until the \"possible future\nemergencies\" arice. The creation by the Dovernment of the fheilities\ncontemplated by the statute and their authorised installation is\nprivately owned plants requires the cooporation of the owners of\nthe plants and, in may cases, a vast physical recrgnaisation of the\nplants. If that is be be accomplishad at the present time and a\nRegraded Unclassified\n184\n- E -\nreasonable obtained w the Government, 10 to only\nreasonable to - that the Congrees ass not intend to forbid\nthe utilization of the fasilities to the extent accessary to fill\norders that might be placed w others than the Government of the\nUnited States. Drea spart from such the - ⑉\nclusion may, is w opinion. be reached w considering that the\noperation of the fasilities would provide a mothod of giving value\nable training to personnel, a memossary step in any industrial\nproparedness program and - which to recognized in several of the\nmrs above nentioned, including the statute - under considers-\ntiem.\nwith respect to the presise question of using the\nfasilities to fill orders placed w Great Britain. your atten-\nties is directed to a statement mile w Representative Woodrum\nduring the debatos in the House on that partion of 1.2. 10055\nwhich is new under consideration. Be stated:\n- are propering to reader to the Allies\nevery possible assistance that can w rendered\nw a nation that is going to remain a neutral\nnation. We are going to cont then supplies. We\nV 10 has previously been pointed one, of course, that the entire\noutput of the plant would be available to the United States If postal.\nSee, is this commention, section 2(a) of the Act of July 26, 1940\n(Public, Be. 672, 76th Congress, 3rd sees.). which provides, is the\ndiscretion of the President, for prierity to be given is the filling\nof Army and Havy contracts w orders over all deliveries for private\naccount or for empost.\nRegraded Unclassified\n185\n- , -\n670 going to send them planos and equipment. to\nare going to and them whatever ONE be cost to\nthese countries \" long as 90 can without actually\nentering this conflist.\" as Cong. 200.0 same 12,\n1940, at 12245.2\nIn view of the foregeing discussion, 10 my be concluded\nthat 10 would be legally proper to use the appropriation and\nauthorization is the First Supplemental National Defense Appropria>\ntien Act, 1941. to assist the # Company to calarge its present\nplant especity and equipment and that there could w no valid of\njestion If such plant capacity and equipment were used w the T\nCompany for the proposed purposes.\nTurning to sections 1 and 5 of the Act of July 2, 1940,\nall not to expedite national defense, not out above, 10 is orident\nfrom the wording of those sections that the authority therein\ngranted 10. all 10 conserns the question under consideration, at\nbread as the authority contained is the previously considered per-\nties of the First Pupplemental National Defense Appropriation we\n1941. Vades the language of that Act. the Secretary of Var is\nauthorised to provide for who expansion of such [privately owned]\nplants\". and to provide for the furnishing of Government-ovned\nfacilities at privately anned plants. the is given authority \"under\nsuch conditions as he my doom necessary* to provide for the\n2/ Representative Weedrum wes is charge of the MII a the floor\nof the House. Experitory statements w those in charge of legisle-\ntim my, of course, be used all on aid is the interpretation of\nthat legislation.\n(1937) 300 U.S. 400, 463.\nRegraded Unclassified\n186\n- 10 -\nnamefasture of munitions and supplies. the authority to expend\nprivately and plants on the condition that they my soll any part\nof their product not needed w the United States would clearly -\nto be included. It will be noted that is subsection (b) of sestion\n1 of the July 2 Act authority is given to the Secretary of w \"\nlease. sell, or otherwise dispose of\" plants, buildings, facilities,\nutilities, sppartenences therete, and land \"under such terms and\nconditions as he my does advisable.\"\nthe Act of July 2, 1940, was prosed within a for days\nof the ensolment of the First Supplemental National Defense Appro-\npriation Act, 1941, and 10 would, therefore, coon to be unversented\nto read into the former Act, which is terms and import is 00 broad,\nrestrictions which the Congress did not desire to include in the\nlatter Act. In wg opinion, therefore, the authority and funds\ngranted in sections 1 and 5 of the Act of July 2. 1940. my validly\nbe used is assisting the T Company is the proposed manner.\nIt 10 w conclusion. therefore, with respect to each of\nthe above-cited Acts. that suple authority exists whereby the\nGovernment of the United States my assist the T Company is the\ncontemplated plant expansion, and that there is no requirement. in\nabsence of need thereof w the deverument of the United States. that\nthe output of such plant be cold enclusively to 19.\nVery truly yours.\n- s. 1. - w\nGeneral Commol.\nthe Nonerable\nthe Secretary of the Treasury.\nJAG:HPZ1PJW - M\n8-3-40\nRegraded Unclassified\n- - COMMUNICATIONS TO\nTHE SECRETARY OF STATE\n187\nWASHINGTON, B. c.\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nEA 840.51 Frozen\nCredits/456\nAugust 16, 1940\nThe Secretary of State presents his compliments to\nthe Honorable the Secretary of the Treasury and transmits\n& copy of a note dated August 14, from the Peruvian\nAmbassador in Washington, requesting the licensing\nof transmittal of funds to Peruvian diplomatic and\nconsular officers in territories occupied by Germany.\nEnclosure:\nFrom Peruvian Ambassador,\nAugust 14, 1940.\nrs\n188\nPERUVIAN EMBASSY\nWASHINGTON, D, c,\nAugust 14, 1940.\nYour Excellency,\nIn view of the difficulties encountered by the\nPeruvian Consulate General at New York in forwarding their salaries\nto the Peruvian diplomatic and consular officers resident in the\nEuropean countries now occupied by Germany, I have the honor to\nти\nS\nrequest that Your Excellency be so good as to obtain, H possible,\nfrom the competent United States Department authorization empowering\nva\nthe Central Hanover Bank to remit those funds.\nOFFICE 05\nDE\nTHE 2EC\nal DUA\nBECEI\nThe Peruvian Consulete General at New York acts in\n0\nthis instance as the Government's disbursing agency, and tensacts\nbusiness through the said Central Henover Bank. I may add that the\namount to be remitted monthly is not large. as the diplomatic and\nconsular officers in question are few.\nThanking Your Excellency in advance, I have the\nhonor to renew the assurances of my highest consideration.\ner de Fuyro zg S.\nHis Excellengy\nCordell Hull.\nSecretary of State,\nDepartment of State.\nWashington.\nRegraded Unclassified\n189\nAugust 16, 1940\nTo:\nThe Secretary\nFrom:\nMr. Buckley\nFeA\nSubject:\nMeeting on Allison Engines and Swedish Export\nSituation - August 13, 1940.\nThis meeting VAS attended by Mr. Patterson, Major Smith\nand Mr. Buckley. Discussions under the two headings were as fol-\nlowa:\nALLISON ENGINES\nThere was outlined for the benefit of Mr. Patterson\nthe shocking situation that the Allison plant produced\nonly one engine last week and they cannot, at the\npresent time, give any assurances as to future deliveries.\nUntil production makes up a back-log of 24 engines due\non Army orders, as of the week beginning August 12, and\nis maintained at 15 per week for the Army thereafter,\nthe British will get none of these engines under the\npresent arrangement. Tet the British have about 40 air-\nframes at the Curties plant at Buffalo awaiting Allison\nengines.\nSuggestion was made that beginning at once every other\nengine produced be made available to the British, so\nthat these airframes awaiting at Buffalo could be\nutilized quickly. This will mean a slight delay for the\nArmy, but will make available to the British some pur-\nsuit ships which are vitally needed.\nMr. Patterson said that he was not at all familiar with\nthe situation, but was impressed by the need for some\naction and would take it up with General Brett and\nGeneral Arnold at the War Department.\nSWEDISH EXPORT LICENSES\nIt was explained to Mr. Patterson that the Swedes have\non order about 115 Republic pursuit planes, for 22 of\nwhich an old export license is outstanding. About 40\nof these planes have been completed and are on hand at\nthe Republic plant.\nRegraded Unclassified\n190\n- 2 -\nIn addition, Sweden has on order 156 Vultee pursuit\nplanes, on which order delivery is to begin in\nSeptember.\nDiscussion brought out that export of the planes to\nSweden would be contrary to our present policy. In\nfact, the Swedish Minister has already been advised\ninformally that no licenses would be granted for the\nVultee planes or for the Republic planes not\ncovered by the present licenses.\nRecommendation W&B made to Mr. Patterson that Colonel\nMaxwell revoke the export licenses on 22 Republic\nplanes and that a method be worked out by which the\nplanes could be sold to Canada or Great Britain,\nboth of whom stand willing to take them.\nMr. Patterson expressed himself in favor of this pro-\ncodure and agreed to take it up immediately with\nthe men in the War Department and attempt to secure\napproval on the procedure recommended.\nA discussion was then had 6.6 to the 211 Pratt and\nWhitney airplane engines for Sweden still covered by\nan export license. It we pointed out that these\nengines were badly needed by our own air force for\npursuit planes and certainly should be kept here for\nthem. rather than exported to Sweden.\nMr. Patterson expressed himself as heartily in accord\nwith this view, and agreed that an effort should be\nmade to have Colonel Maxwell revoke this export license,\nThe remaining items for which export licenses are\nstill in effect for Sweden were discussed briefly and\nit was the concensus of opinion that the Administrator\nof Export Control, because of the nature of the items,\nshould revoke all licenses with the possible excep-\ntion of those covering E. small amount of spare parts\nfor Douglas DC-3 commercial sirplanes; those covering\n10,000 rounde of rifle ammunition; and those covering\napproximately 7,000,000 rounds of 9 mm. parabellum\ncartridges which have already been manufactured, are\nswaiting shipment, and cannot be used by the U. S.\nArmy.\nRegraded Unclassified\n191\n- 3 -\nThere is attached a copy of a table showing the export\nlicenses for Sweden which are still in effect. This tabulation Yes\nthe basis for discussion at this meeting.\nCOPY\n192\nRe: Swedish Export Licenses\nThe following 18 a complete analysis of undelivered balances\nof export licenses now in effect for shipment to Sweden:\nAirplanes\n22\nRepublic 2 PA pursuit ships are covered by\nlicense out of a total of 115 still to be\ndelivered on an old order. 34 of these\nships were on hand complete with engines\nready for delivery on August 9.\nNo export license exists for 156 Vultee\npursuit planes on which delivery will begin\nin September, The Swedes have asked Vultee\nto offer these planes to the U. S. Army.\nEngines\n211\nPratt and Whitney aircraft engines suitable\nfor pursuit ships are covered by existing\nexport licenses.\nPropellers\n106\nHamilton Standard Hydromatic propellers\n36\nHamilton Standard propeller blades\n60\nHamilton propeller hub forgings\n65\nHamilton propeller blade forgings\nAll the above are covered by existing export\nlicenses.\nSpare Airplane Parts\n$193,602.00\nworth of spare parts for the Republic\n2 PA pursuit ships are covered by an\nexisting export license.\n$ 29,091.67\nworth of spare parts for Douglas DC-3\ncommercial planes are covered by existing\nexport licenses.\nRegraded Unclassified\n193\n- 2 -\nCartridges\n23,150,000 rounds of 9 mm. parabellum ammunition\nsuitable for Swedish, British, Canadian\nand German pistols are covered by existing\nexport licenses.\n10,000\nrounds of rifle bullets are covered by\nexisting export licenses.\n184\nAugust 16, 1940\nTo:\nThe Secretary\nFrom:\nMr. Buckley &\nSubject:\nMeeting on Allison Engines and Swedish Export\nSituation - August 14, 1940.\nThis meeting was attended by Mr. Patterson, Assistant\nSecretary of War, and Messrs. Foley, Cox and Buckley.\nIt was emphasized in the discussion that the objective\nat the moment was to get to the British as much material as possible\nwithin the next 60 days. To this end, Mr. Patterson was again ap-\nprised of the desperate situation with regard to deliveries of Allison\nengines and he agreed to do everything possible to secure agreement\nfrom the Army Air Corps to the allocation of every other Allison\nengine to the British.\nMr. Foley pointed out certain alternatives with reference\nto the disposition of the Swedish planes now on order. These were:\n(1) They could be sold to the U. 3. Army which\ncould trade them back in, leaving the manufacturers\nfree to re-sell them to the British or Canadians,\n(2) Export licenses being revoked, the manufacturers\nwould be free to dispose of the planes.\nIf they disposed of them to Canada, it would be in line\nwith our general policy of hemisphere defense and should not embarrass\nthe State Department. Mr. Patterson agreed that the second alternative\nwas the better of the two, and will make every effort to secure agree-\nment in the War Department to that end.\nMr. Patterson again reviewed the items for which export\nlicenses are still outstanding. and agreed that with the possible\nexception of the spare parts for Douglas DC-3 commercial planes, the\nrifle amminition and the 7,000,000 rounds of 9 mm. parabellum\ncartridges which have already been manufactured, the licenses ought\nto be revoked. He said that he would arrange to have a recom-\nmendation go to the Administrator of Export Control from the War\nDepartment, recommending such revocation.\nRegraded Unclassified\n195\nAugust 16, 1940\n9:08 a.m.\nGeneral\nBrett:\nYes, sir.\nH.M.Jr:\nGeneral, could you just explain to me -\nI have before me my table here, and what\nis the Allison V-170-27?\nB:\nThe V --\nH.M.Jr:\n1710.\nB:\n1710, dash --\nH.M.Jr:\n27.\nB:\nWell, I haven't my book right here, sir.\nI could call you right back. I'm up at\nthe head office and my book's down in\nmy other office. I could call you right\nback and give you exactly the purpose of\nthat --\nH.M.Jr:\nWell, there's another, there's a 27-29 and --\nB:\nWell, I'll tell you, the 27-29 may be & small\nchange from the standpoint of the method of\nsupercharging, the method of ignition, or\nwhether it's. a ram-controlled engine or\nwhether it's a straight carburetor engine.\nI mean, and also, for instance if we're in-\nstalling an engine in a P-39, it's a little\nbit different than the P-30 and the P-40.\nNow, the P-40 engine is a little bit different\nthan the P-14 engine.\nH.M.Jr:\nCould you go to your office and call me?\nB:\nWell, I can call you within three minutes.\nH.M.Jr:\nI'd appreciate it.\nRegraded Unclassified\n196\n- 2 -\nB:\nI'm going right on down now.\nH.M.Jr:\nThank you.\nB:\nOkay."
}