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Volume 306, September 14 – September 18, 1940
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Volume 306, September 14 – September 18, 1940
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 306
September 14 - 18, 1940
- A -
Book Page
Allison Engineering Company
See War Conditions: Airplanes (Engines)
Argentina
See Latin America
- B -
Berwind-White Coal Mining Company
See War Conditions: France
Bohemia
See War Conditions: Germany
Bomb Sights
See War Conditions
Brazil
See Latin America
Bureau of Marine Inspection and Navigation
See Coast Guard
Business Conditions
Haas memorandum on situation for week ending 9/14/40.. 306 109
- C -
Campaign, Democratic
See Democratic Campaign
Canada
See War Conditions
China
See War Conditions
Coal
See War Conditions: France
Coast Guard
Bureau of Marine Inspection and Navigation:
Reorganization: Budget informed FDR does not wish
any action at this time - 9/14/40
11
Consolidated Aircraft
See War Conditions: Airplanes
Cuba
See Latin America
Curtiss-Wright Corporation
See War Conditions: Airplanes (British contracts)
- D - -
Democratic Campaign
Outlook discussed by Treasury group: Distinctly favorable
to Roosevelt - 9/18/40
275
- E - -
Book Page
Export Control
See War Conditions
- F -
Far East
See War Conditions: Oil
Financing, Government
Program up to December 31, 1940, and probable order
of execution: Hadley memorandum - 9/18/40
306 261
France
See War Conditions
- G -
General Counsel, Office of
Report on projects during August 1940
12
Germany
See War Conditions
Gold
See War Conditions
Great Britain
See War Conditions: Export Control; Military Planning;
United Kingdom
- H -
Haas, Saul
Appleby (Paul; Agriculture) discusses designation as
campaign manager for State of Washington - 9/18/40
193
a) Gaston memorandum
299
- I -
Italy
See War Conditions
- J -
Japan
See War Conditions: Export Control
- L -
Book Page
Latin America
British trade drive in: American Embassy, Buenos
Aires, report - 9/18/40
306
258
Argentina:
Payments agreement (draft of) with Great Britain
involving repatriation of public sterling bonds - -
9/17/40
194
"British interests reported to be blocking Argentine
purchase of American freight cars" 9/18/40
252
Discussion of monetary and exchange arrangements
in Washington suggested - 9/19/40: See Book 307,
pages 47 and 182
Brazil:
Monetary Arrangements: Broad study of possible
cooperation between United States and Brazil
promised State Department by Treasury - 9/18/40...
269
Cuba:
Monetary Arrangements: Broad study of possible
cooperation between United States and Cuba
promised State Department by Treasury - 9/18/40..
289
Layton, Sir Walter
See War Conditions: United Kingdom
- M -
Marine Inspection and Navigation, Bureau of
See Coast Guard
Martinique
See War Conditions: France
Moravia
See War Conditions: Germany
- N - -
North American Aviation, Incorporated
See War Conditions: Airplanes
- 0 -
011
See War Conditions
- R -
Reconstruction Finance Corporation
See War Conditions: Tanks
- S -
Spain
See War Conditions: Export Control
- - T - -
Book Page
Tanks
See War Conditions
Tide Water Associated Oil Company
See War Conditions: 011
- U -
Unemployment Relief
Works Progress Administration report: Employment
decline of 2000 persons during week ending
September 4, 1940
306
105
U.S.S.R.
See War Conditions: Export Control
United Kingdom
Sec War Conditions: Export Control; Military Planning;
United Kingdom
- W -
War Conditions
Airplanes:
Engines:
Allison Engineering Company: Schedule of deliveries..
2
Curtiss-Wright Corporation: British request for
release of 120 #1820 engines for use by United
States Air Corps discussed in Young memorandum -
9/18/40
221
Wright Aeronautical Corporation (Cincinnati, Ohio):
Foley memorandum reciting reasons for delay in
increased production and suggesting solution
thereof - 9/16/40
150
Bomb Sights: Morgan (President, Sperry Corporation)
discusses sufficient orders from Army and Great Britain
to make worthwhile increased set-up - 9/18/40
226
a) Patterson consulted by HMJr
b) Young memorandum: "Possible increase in production
rate of Sperry bomb sights - 9/19/40:
See Book 307, page 106
Canada: Possible loan of $2 billion by New York banking
syndicate discussed by Leon Fraser (First National Bank
of New York) and Cochran - 9/17/40
214
China: Burma's transit trade in supplies other than war
materials during August 1940
28
Exchange market resume - 9/14/40, etc.
42,134,215,304
Export Control: Exports of petroleum products, scrap iron,
and scrap steel from United States to Japan, Russia,
Spain, and Great Britain, as shown by departure permits
granted for week ending September 14, 1940
1
Iron and Steel Scrap Embargo: Proposed proclamation
a) Navy's reply - 9/17/40..197
- W - (Continued)
Book Page
War Conditions (Continued)
France:
Bank Supervision: Stricter control over all
so-called foreign banks in Paris with exception
of four American banks - 9/17/40
306
207
Coal for Delivery to French Ports in Africa:
Cochran, State Department, and Henry M. O'Bleness,
representing Berwind-White Coal Mining Company,
discuss - - 9/14/40
63
Martinique: French planes in; report of Under Secretary
of Navy - - 9/14/40
6
Germany:
Bohemia and Moravia: Discussion of laws and decrees
concerning incorporation into customs territory of
the Reich - 9/17/40
199
Gold: Importation by air; Knoke discusses possibility of
with Cochran - 9/18/40
307
a) Cochran and Post Office representative discuss -
9/20/40: See Book 307, page 221
Italy: Economic report prepared by American Embassy -
9/14/40
36
Military Planning:
Tentative Lessons from the Recent Active Campaign
in Europe: War Department bulletins
German Regulations on Anti-Aircraft Defense -
9/14/40
53
British Recommendations on Armored Vehicles -
9/14/40
60
German Anti-Tank and Anti-Personnel Mine Fields -
9/16/40
136
German Instructions for Ground Defense Against
Air-Borne Troops - 9/16/40
141
German attacks on England, etc. - 9/14/40
64,83,144,146,
149,217,301
Reports from London transmitted by Lothian - 9/14/40, etc.
66,72,78,
163,229
Naval Attache, London, dispatches - 9/16-17/40
102
Oil:
Far East: Memorandum on situation left by Agnew which HMJr
thinks was written by Lothian - 9/16/40
172
Tide Water Associated Oil Company: Letter describing
financial and corporate relationship with Mitsubishi
011 Company, of which it is half-owner - - 9/16/40
183
Purchasing Mission:
Vesting Order: Official sales of British-owned dollar
securities - 9/18/40
306
Tanks:
Financing of: Conference between Stimson, Purvis, and
Young - 9/16/40
155
Schram-Young conference concerning engine financing -
9/18/40
224
a) Schram not sure that Jones approves plan
- 1- - (Continued)
Book Page
War Conditions (Continued)
United Kingdom:
Layton, Sir Walter: HMJr and Purvis discuss
getting out of Lisbon - 9/18/40
306
267
Double taxation on official sales in United States
again discussed by Pinsent (British Embassy) and
Cochran - - 9/18/40
308
War Department
Military Intelligence Division bulletins:
See War Conditions: Military Planning
Works Progress Administration
See Unemployment Relief
Wright Aeronautical Corporation (Cincinnati, Ohio)
See War Conditions: Airplanes (Engines)
1
EXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL
FROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN
AS SHOWN BY DEPARTURE PERMITS GRANTED
Week ended September 14, 1940
:
:
:
:
JAPAN
RUSSIA
SPAIN
GREAT BRITAIN
:
:
:
:
PETROLEUM PRODUCTS
Fuel and Gas 011 (including
Diesel 011)
57,000 Bbls.
-
54,000 Bbls.
---
Crude -
Blerded or California
High Octane Crude *
268,438 Bbls.
---
--
---
All Other Crude
---
---
---
Gasoline -
Gasoline A **
---
---
---
---
Gasoline B *
122,033 Bbls.
---
75,000 Bbls.
All Other Gasoline
---
---
---
3.940 Bbls.
Lubricating 011 -
Aviation Lubricating 011 ***
---
---
---
300 Bbls.
All Other Lubricating Oil
---
---
---
694 Bble.
Tetraethyl Lead ***
---
---
---
---
"Boosters", such as Iso-
Octane, Iso-Hexane, or
Iso-Pentane
---
---
---
---
SCRAP IRON AND SCRAP STEEL
Number 1 Heavy Melting Scrap 11,677 Tons
---
---
3,465 Tone
All Other Scrap
15,382 Tons
---
---
5,815 Tons
Office of the Secretary of the Treasury, Division of Research and Statistics.
Source: Office of Merchant Ship Control, Treasury Department.
Sept. 16, 1940
Any material from which by commercial distillation there can be separated more than
3% of aviation motor fuel, hydrocarbon or hydrocarbon mixture - President's regula-
tions of July 26, 1940.
Aviation Gasoline.
As defined in the President's regulations of July 26, 1940.
Regraded Unclassified
2
ALLISON ENGINEERING COMPANY
Deliveries of Airplane Engines
:
Actual
: Estimated deliveries on
: deliveries :
existing orders
1940
January
10
May 1 - June 1
15
June 2 - 29
31
June 30 - July 6
6
July 7 - 13
18
July 14 - 20
11
July 21 - 27
15
July 28 - August 3
30
August 4 - 10
1
August 11 - 17
1
August 18 - 24
14
August 25 - 31
45
September 1 - 7
28
September 8 - 14
37
September 15 - 30
185
October
300
November
350
December
400
1941
January
400
February
416
March
416
April
414
May
408
June
437
July
400
August
369
September
431
October
47
November
45
December
45
1942
January
25
February
21
April
2
June
2
Office of the Secretary of the Treasury,
Division of Research and Statistics.
September 16, 1940.
Regraded Unclassified
3
CURTISS AEROPLANE DIVISION OF CURTISS-WRIGHT CORP.
British Contracts
:
P-40
:
P-36
: (Allison) : (Wright)
Airframes on hand September 7
86
4
Airframes completed September 7 - 14
13
O
Total airframes needing engines
99
4
Airplanes with engines shipped
September 7 - 14
0
4
Airframes on hand September 14
99*
0
Office of the Secretary of the Treasury,
Division of Research and Statistics.
September 16, 1940.
# On September 14 there were 16 Allison engines on hand for
British P-40 contracts. Of these, 5 were being installed
in some of the planes in storage.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 14, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
When Mr. Pinsent, Financial Counselor of the British Embassy, called on me
yesterday cvening, he stated that he had been preparing a. memorandum for his Ambassa-
dor, resulting from a conversation which Lord Lothian had with the President, Pinsent
told me that Mr. Steinbeck, the author of "Grapes of Wrath", had made the suggestion
to the White House that the British scatter by airplane counterfeit reichsmark our-
rency in Germany. Pinsent could not recommend this scheme from a technical standpoint,
He had noted with interest the report from Germany that the British aviatore were
dropping beetles on the German potato patches. Ee thought there might be some truth
in the report also coming from Germany that British aviators were endoavoring to set
fire to German crops with smell incendiary parcels. He also mentioned that the pro-
posal had at one time been made that fraudulent food ration cards be dropped on Germany
to complicate their food distribution situation.
Mr. Pinsent told me further that his Embassy had been visited by Mr. William
Wassermann of 40 Wall Street, New York. Wassermann claimed to be a member of
William Allen White's committee and endeavored to interest the Embassy in propaganda
in favor of the British cause, Wassermann's main idea was to start making it clear
to the American public that Great Britain does not have sufficient gold and other
resources to continue indefinitely its present scale of purchases of war materials,
and to emphasize the importance of Great Britain's victory to the United States.
Pinsent had been very guarded in an answer to Wassermann, refraining from any indica-
tion as to how long British resources would last.
In answer to Pinsent's question as to whether I knew Wassermann, I told him
that I had met him in Paris and had read some very interesting, startlingly detailed
and frank memoranda which Wassermann had written concerning his conversations with
prominent officials in England and France, including the present Prime Minister, Mr.
Churchill, This Vas some two years ago. I also referred to the publicity which Mr.
Wassermann had obtained in regard to his scheme for lending to Great Britain against
American securities held by Great Britain. It was my impression that New York had not
made any strong claim to Mr. Wassermann as one of its leading authorities on such
matters, and that there had even been some denial, as I seen to recall it, on the
part of New York bankers and stock exchange officials as to Wassermann's ability to
speak for any prominent banking or brokers' group in New York, where his office is said
to be a one-room effair.
B.M.R.
Regraded Unclassified
5
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 14, 1940.
TO
Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
At 9:45 this morning I telephoned Mr. Knoke in the Federal Reserve Bank at
New York. I told him of the confidential note which had been handed to me by the
British Embassy in regard to the Amtorg Trading Corporation having offered $7,000,000
worth of gold to the New York office of the Bank of America, concerning which there
was some suspicion that the gold may have come from the recently annexed Baltic
States. Mr. Knoke knew nothing of this shipment, but promised to give me any word
that he might have thereof.
At the same time I read to Mr. Knoke the telegram which the Director of the
Mint in Washington had today received from the Mint's San Francisco office concerning
the receipt in San Francisco from the Chase National Bank of approximately $10,500,000
worth of gold imported from Russia. Mr. Knoke did not have all of the details on this
case, but telephoned Mr. Funck of the Chase Bank while I waited, and then gave no the
following data. Approximately four weeks ago the Chase Bank was approached in regard
o gold in Vladivostok. The State Bank of Russia asked whether the Chase Bank would
buy this gold in Vladivostok. A negative answer was given. Two weeks later the
Russian State Bank asked whether the Chase would make a loan on this gold either in
Japan or when shipped from Japan by the Yokohama Specie Bank on a neutral vessel,
Another negative answer was given. Yesterday the Chase received a telegraphic message
to the effect that the gold was arriving in San Francisco. In answer to By further
inquiry, Knoke got in touch with Funck again and learned that the gold had actually
been placed aboard the steamship at Yokohama. It appears that the gold now received in
San Francisco was that originally in Vladivostok, which had been transshipped in Yoko-
hama, either because of better trans-Pacific steamship facilities from Japan, or perhaps
to avoid the publicity which attends gold shipments coming directly from Russia.
B.M.S.
9-14-40 30
THE UNDER SECRETARY OF THE NAVY
:6
FROM:
JAMES FORRESTAL
TO:
Secretary of the 7 reasury
INEVRONA
lavo 2Eb SO Vii à 12
RECEIVED at
OLEGIE
7
COPY
CONFIDENTIAL
MEMORANDUM
14 September 1940.
FRENCH PLANES at Martinique
44...Curtiss HD-77 Biplanes, of which 38 are ashore, with
intention that they become ineffective through
inattention and 6 are similarly exposed at French
seaplane hangar.
6...Brewster Fighters, low wing monoplanes, exposed on mole
between EMILE BERTIN and CUBA.
15...Curtiss H-75, monoplanes, of which 2 are in cases in
BEARN and 13 on the mole exposed.
25...Stimson "Tourisme", of little military use, in BEARN.
Purchased for training purposes; to be held for
possible disposal.
90 U. 8. Planes.
10...planes, 6 small flying boats and 4 twin float aircraft,
maintained in hangar and used for local patrol purposes.
12...planes of miscellaneous types reported at Guadeloupe,
local patrol only.
112 planes (total).
AMERICA
WII à 12
CONFIDENTIAL
or
SELIGE
8
COPY
NAVY DEPARTMENT
Bureau of Aeronautics
JHT-GB
WASHINGTON
16 September 1940
CONFIDENTIAL MEMORANDUM
To :
The Acting Secretary of the Navy.
1.
The 44 Curtiss biplanes are ex-U.S.Navy modern scout-dive bombers.
We could use all of them if deterioration due to exposure has not progressed
too far.
2.
The 6 Brewster fighters are similar to Navy type and would be
useful, if in reasonably good condition.
3.
The 15 Curtiss H-75 are a U.S.Army Air Corps type. We have none
similar and it would be difficult to maintain them unless we could get
spare parts. Army Air Corps undoubtedly would want them.
4.
Remaining planes listed are of little military value and would
not be useful.
5.
Any move towards recovery of the 44 ex-Navy dive bombers probably
would be subject to considerable Congressional and press comment, because
at the time they were turned in to Curtiss Company it was stated in an
official Navy Department Press Release that they were lacking in certain
desirable characteristics and were to be replaced by later type embodying
those characteristics.
/s/ J. H. Towers
J. H. Towers
IDENTITY
INVO so MV a
RECEIVED a
DESIGE
Regraded Unclassified
9
Refer to Initials
and No.
NAVY DEPARTMENT
BUREAU OF AERONAUTICS
fee the of
WASHINGTON
transmettal
4 September 1940
from 9/18 forestal
To $
Acting Secretary Forrestal.
SUBJECT:
Proposed adjustment of deliveries of British and
U.S.Navy PBY5 patrol planes.
In accordance with your instructions a study has been
made of schedules of deliveries of subject type of aircraft, and a
schedule which would equalize deliveries of first fifty-five 02 each
order has been worked out and is recommended for your approval.
Latest revised schedules and proposed new schedules are set forth
below. These have been checked today by our inspector and a repre-
sentative of the manufacturer and are believed to be reasonably 40⑉
curate.
U. 8. NAVY
BRITISH
Present Proposed
Present
Proposed
Sept.1940
1
1
Oct.
Nov.
6
3
1
4
Dec.
7
6
4
5
Jan.1941
10
9
9
10
Feb.
12
12
10
12
Mar.
12
12
12
12
April
12
12
13
12
I consider it most important both to British and our-
selves that we keep the first plane to work out the minor troubles
by flight tests in vicinity of factory in order that necessary
changes in subsequent planes become known and are made promptly.
(s)
J. H. Towers
Since the above was written I have learned that the U.S.-Canadian
Joint Defense Board is recommending that six PBY5 planes be made avail-
able to the Canadians by early Spring. They have some 100 on order but
their deliveries probably will not begin until late Autumn 1941. Board
recommendations could be met by taking 1 U.S. and 1 British plane per
month in January, February and March.
Regraded Unclassified
:10
G-2/2657-220
RESTRICTED
M.I.D., W.D.
September 14, 1940.
No. 194
SITUATION REPORT
12:00 M.
This military situation report is issued by the Military
Intelligence Division, General Staff, In view of the occasional
inclusion of political information and of opinion it is classified
as Restricted.
I. Western Theater of War.
1. No ground operations.
2, Air Force Operations.
Cloudy and overcast weather prevailed. The Germans
operated all day and all night with single planes and small forma-
tions. Objectives attacked were generally in the London area and
in southeast England. Widespread damage was caused in London.
Apparently the R.A.F. was unsuccessful in intercepting the scattered
planes in cloud cover or did not undertake this task.
British night bombing was directed principally at
the Channel coastal area, in France, Holland and Bolgium. Five
ports were bombed.
II. Mediterranean and African Theaters of War.
No ground operations. Some air activity along the Medi-
terranean coast. The Italians claim successful air attacks on con-
voys in the eastern Mediterranean.
RESTRICTED
Heg 11
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON, D.C.
SEP 14 1940
My dear Mr. Secretary:
/ 7th
Pursuant to your letter of July 11, 1940, I have
given further consideration to your previous proposal for
abolition of the Bureau of Marine Inspection and Navigation
and redistribution of its functions. In view of the defense
considerations referred to in your letter, I have also dis-
cussed the matter with the President who indicated that he
did not wish any action taken to bring the reorganization
before the Congress at this time.
Yours
Director
The Honorable,
The Secretary of the Treasury
TREASURY DEPARTMENT
orib
" 8 WM 91 d38 0161
SECRETARY OF OFFICE TREASURY
12
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE SEP 14 1940
TO
Secretary Morgenthau
FROM Mr. Foley
In accordance with the request contained in Mr. Thompson's
memorandum of December 26, 1939, there is attached a summary report of
studies or projects carried on in the Office of the General Counsel for
the month of August, 1940.
suth
Attachment
13
SUMMARY REPORT ON STUDIES OR PROJECTS IN
THE OFFICE OF THE GENERAL COUNSEL -
AUGUST 1940
The following matters received attention in the Office of the
Chief Counsel for the Bureau of Internal Revenue:
1. Excess Profits Tax - Second Revenue Act of 1940. Throughout
the month of August, we cooperated with Mr. Tarlesu and Mr. Beaman
in the consideration of the substance and form of the proposed
Second Revenue Act of 1940, the principal features of which, from
the revenue viewpoint, are the excess profits tax provisions and
the provision allowing taxpayers to amortize over a five-year
period the cost of war facilities. Preliminary drafts of the pro-
posed emactment have been prepared. No bill has yet been presented
to the House. It is still under active consideration before the
Ways and Means Committee.
2. Income Tax - Proposal to Amend Sec. 113(a)(8) of the Internal
Revenue Code 80 as to Eliminate Possibility of Double Deduction.
In Recommendation No. 214, approved by the Commissioner on August
19, 1940, a suggestion has been made that Sec. 113(a)(8) of the
Internal Revenue Code be amended so as to limit the basis for deter-
mining loss to the transferor's basis or the fair market value at
the time of the exchange, whichever is lower. This legislation is
suggested by the Board decision in the case of W and K Holding Cor-
poration, 38 BTA 830 (1938). In that case, the stockholders trans-
ferred to their corporation securities which had depreciated in
value and received therefor preferred stock. Such stock was redeemable
14
2 -
at an amount equal to the market value of the securities at the
time transferred to the corporation. Later the stock was redesmed
and the stockholders were allowed loss deductions on the basis of
the cost of the securities which they exchanged for the stock.
The corporation was also allowed in the same year & loss deduction
on the sale of the securities computed upon the basis of the cost
of the securities to the stockholders.
3. Income Tax - Consolidated Invested Capital. In response to the
request of Mr. Roy Blough, Head, Division of Tax Research, a repre-
sentative of the Legislation and Regulations Division attended con-
ferences in the latter's office relating to consolidated invested
capital in connection with the pending excess profits tax proposals.
The two basic approaches to invested capital were discussed, namely,
(a) the parent company balance sheet approach followed in the regula-
tions under the Revenue Acts of 1917, 1918 and 1921, and (b) the
separate company approach followed by the Board of Tax Appeals in the
Grand Rapids Dry Goods case, 12 BTA 696. The difficulties associated
with the respective approaches, especially from an administrative
standpoint, were explored in detail.
4. Gift Tax - Recommendation re Increase in Rates with Respect to
Gifts by a Donor over Sixty Years of Age. There has been prepared
draft of a memorandum suggesting certain amendments in the Gift Tax
Chapter of the Internal Revenue Code, the principal amendment
15
- 3 -
suggested being the incorporation or the levy of an additional
gift tax computed at percentages of the tax now imposed, such
percentages to begin to apply to gifts made by a donor within the
calendar year next succeeding the 60th anniversary of his birth,
and increasing yearly thereafter until the percentage attains 8.
meximum of 33-1/3 percent.
5. Estate Tax - Proposal to Exempt Small Estates of Nonresident
Aliens. There has been prepared & draft of recommendation sug-
gesting a revision of the estate tax provisions of the Internal
Revenue Code, so that there shall be exempted from taxation those
estates of nonresident alien decedents which have an aggregate net
value of less than $2,000, inasmuch as the costs of collecting an
estate tax with respect to such estates exceeds the amount of reve-
nue produced.
6. Stamp Tax - Prohibition upon Traffic in Revenue Stamps. There
has been prepared a draft of recommendation suggesting a revision
of the stamp tax provisions of the Internal Revenue Code so as to
prohibit the purchase, sale, or other traffic in internal revenue
stamps except through regularly appointed agencies of the Government
and to impose penalties for the violation of such prohibition. The
suggested revision is devoted to the purpose of preventing fraud upon
the revenue through the use of washed stamps.
All of the above matters were handled under the supervision of G. C.
Adems, Head, Legislation and Regulations Division.
16
- 4 -
The following matters received attention under the general super-
vision of Assistant General Counsel Cairns:
7. State banks and trust companies as "depositories". An opinion
on this subject was prepared by Messrs. Feidler and Gilmore end was
signed on July 31, 1940, too late for inclusion in the July report.
The opinion concludes that the Secretary has no authority under sec-
tion 3970 of Internal Revenue Code (derived from sec. 3211 of Revised
Statutes (U.S.C. title 26, sec. 1760)), to designate as depositories,
for the convenience of officers collecting internal revenue, state
banks and trust companies which are not members of the Federal Re-
serve System.
8. Applicability of Securities Transfer Taxes to a Foreign Sovereign
Government. This opinion, prepared by Messrs. Zarky, Wolf and Feidler,
was signed on August 14, 1940. The opinion concludes that where trens-
for of securities is made to the British Government the transferor may
be taxed, and if the transfer is written on the books of the corpora-
tion it may be taxed if the burden is not shifted to the British Gov-
ernment. Where transfer is made by the British Government, neither it
nor the transferee may be taxed.
9. Transfers of Military and Naval Equipment to American Republics.
This opinion was prepared by Messrs. Wolf and Feidler and was signed
on August 16, 1940. It concludes that transfers of such equipment to
American republics under the Joint Resolution of June 15, 1940, are
17
5
not subject to section 14(a) of the Act of June 28, 1940 (Public,
No. 671, 76th Congress), providing for e certificate of the Chief
of Naval Operations or the Chief of Staff of the Army.
10. Government Aid to Manufacturers of Materials Useful for
National Defense. This opinion was prepared by Messrs. Gilmore,
Zarky, and Wolf and was signed on August 16, 1940. The opinion con-
cludes that, under various acts to expedite national defense and ap-
propriation acts, there 1s ample authority to assist, by means other
than lending money, private manufacturers of materials useful for
national defense to expand their plant capacity, even though the
products of the expended plant may be sold to others than the United
States Government.
11. Wearing of Willkie or Roosevelt Buttons by Officers and Employees
of the Department. This opinion was prepared by Mr. Feidler and was
signed on August 16, 1940. The opinion concludes that, with respect
to all classes of officers and employees in the Department, the wear-
ing of such buttons would not be a violation of the Hatch Act, the Act
extending it (Act of July 19, 1940), or Civil Service Rule I.
12. Notes of Certain Railroads Given Under the Transportation Act.
1920. This opinion was prepared by Messrs. Folkerth and Sherbondy
of Assistant General Counsel Tietjens' section, was reviewed in the
Opinions Unit, and was signed on August 17, 1940. The opinion involved
the notes of the Missouri and North Arkansas Railroad Company and the
18
- 6 -
Regraded Unclas
Minnespolis and St. Louis Railroad Company given to the United
States under section 209(h) of the Transportation Act of 1920. It
indicates that such notes may properly be canceled and returned to
the carriers. The payments to carriers under section 212 of the
Transportation Act are entirely different transactions.
The following were the subject of special studies in the Opinions
Unit:
13. Customs Officers Enforcing State Liquor Laws. This study was
made with reference to certain laws of the State of Texas purporting
to regulate the size of containers of beer and liquor in Texas,
which laws the customs officials were requested to enforce against
beer and liquor coming into Texas from Mexico. The study wes completed
August 23, 1940, and concludes that under section 593(b) of the Tariff
Act of 1930 the customs officials should enforce such of the Texas
laws relating to the importation of beer and liquor as were clear and
unambiguous.
14. Equipping Armed Merchant Vessels in American Ports. A study of
this problem was completed by Miss Goode on August 19, 1940. It indi-
cated, in the light of existing administrative and legal precedents,
that it would be a violation of neutral obligations under U.S.C. title
18, sec. 24 and international law (1) to permit a merchant vessel to
install additions to defensive force within our ports, (2) to carry
away materials fitted for installation at sea, but (3) that it is not
19
- 7 -
a violation if she carries away such materials as cargo, without
having them fitted for the vessel.
15. British Purchase Tax. Messrs. Dwan and Smith of the Customs
legal staff studied and approved a proposed letter to the Secretary
of State informing him that the proposed purchase tax of the United
Kingdom would form a. part of the foreign value of merchandise 1m-
ported therefrom under existing tariff laws even though actually re-
mitted in the case of exported goods, and that the Treasury Depart-
ment is unwilling to sponsor an amendment to the tariff act in order
to eliminate such item from the dutiable value of British imports.
16. Legislation. Mr. Everett Smith of the legal section, Customs,
studied the question whether the Treasury Department should support
en amendment to the Tariff Act of 1930 proposed by Judge Brown of
the Customs Court, the effect of which amendment would be to extend
the jurisdiction of the Customs Court under section 514 of the teriff
act 80 as to permit judicial determination of certain questions not
now subject to judicial inquiry. As a result of such study a letter
was prepared by Mr. Smith and approved by the Chief Counsel declining
to support the proposed legislation. In support of the position taken
reference was made to the Supreme Court's opinion in Hadden V. Merritt,
(1885) 115 U.S. 25, holding that the determination of the value of
foreign coin is en executive rather than a judicial function and to a
report of the House Ways and Means Committee stating that judicial
20
- 8 -
determination of allowable abatements in duties for loss of or
damage to merchandise in warehouse had not been satisfactory.
16. Reliquidation. Mr. Everett Smith studied the question whether
an importer who entered goods for warehouse prior to a Presidential
proclamation under the so-called Trade Agreements Act should be de-
prived of the benefit of the proclaimed rates of duty on goods with-
drawn from warehouse after the effective date of such proclamation
by reason of the importer's omission to protest within the statutory
period the reliquidation made by the collector to give effect to a
mandate of the Customs Court in a proceeding under section 489 of
the Tariff Act of 1930. A memorandum embodying the results of such
study held that the importer's right to such proclaimed rates of
duty had not been affected by his omission to protest the "involun-
tary" liquidation of the collector. The period of limitation on re-
liquidations prescribed by section 514 of the tariff act was held
inapplicable on the ground that that section only limits the time
within which erronsous "voluntary" liquidations may be corrected.
This mesorandum was signed by the Chief Counsel, Customs, and sent
to the Commissioner of Customs.
The following matters received attention in the Legislative Section
under the direction of Assistant General Counsel Bernard:
CONTINUATION OF PROJECTS
17. Bill to Relieve the Hospitals from Double Taxation (for de-
scription 800 original report, Item 9). This bill, prepared by
21
- 9 -
Miss McDuff, has been returned from Budget with & request for a
further expression of our views in the light of the comments of
the Federal Security Administrator. In response to this request,
a letter and statement of arguments in support of the provision
establishing an occupational tax classification for hospitals has
been prepared by the Bureau of Narcotics. The statement is being
revised by this office and will be sent forward within the next
week.
18. Fidelity Bond Bill (formerly identified as "Bond Survey")
(for description see original report, Item 10). A draft of the pro-
posed fidelity bond bill and letter of transmittal to Congress were
sent to Budget on March 30, 1940. Because of the interest in this
bill of about ten other agencies, the Bureau of the Budget has not
yet been able to give it the usual clearance. In addition to a con-
siderable amount of research work, which has been completed, to sup-
port this bill, we have prepared a memorandum in anticipation of
possible attacks on the bill BO that we may be armed against them>
19. Compilation of Money Statutes (for description see original re-
port, Item 11). Miss McDuff is continuing the work on this material.
20. Compilation in Annotated Form of Laws and Regulations Affecting
Government Personnel (for description see original report, Item 13).
The Legislative Section is continuing this project.
21. Codification of Federal Regulations (for description Bee original
report, Item 16). The Treasury phases of this work are being handled
by Mr. Spingarn.
22
- 10 -
22. Codification of Anti-counterfeiting and Related Laws (for
description see original report, Item 7). Mr. Koken is continuing
his work on this matter.
23. Federal Depositary System (for description see original report,
item 6). Mr. Reeves is continuing his work on this bill. Although
it would probably be difficult to secure legislative consideration
of this bill during this session because of the complicated nature
of the subject matter and the controversial character of certain of
the bill's provisions, we are taking all possible steps to secure its
early enactment.
24. Federal Tort Claims Bill (for description see March report, Item
35). This study has been completed.
25. Acting Administrators Bill (for description see June report, Item
33). Miss McDuff is continuing her study of the necessity and feasi-
bility of general legislation to provide for acting bureau or division
chiefs in the absence of a chief.
NEW STUDIES
26. New Deal Legislation and Testimony of Secretary Morgenthau Before
Congressional Committees. At the request of the Office of the Secre-
tary, Miss McDuff is assembling and indexing the testimony of Secre-
tary Morgenthau before various committees of Congress from 1936 to
date, and assembling and indexing the major legislation of the New
Deal from 1934 (73rd Congress, 2nd Session) to date. This material
will be bound in volumes.
23
- 11 -
The following matters received attention in the office of
Assistant General Counsel Tietjens:
27. Railroad Obligations Held by the Secretary of the Treasury
Under the Transportation Act. 1920
(a) Seaboard Air Line Railway Company. Messrs. Sherbondy
and Folkerth are making a study of the value of approximately
$27,000,000 face amount of securities (14 different issues) held
as collateral for the balance owing on loans made to the Seaboard
Air Line Railway Company under section 210 of the Transportation
Act, 1920. That study is preparatory to steps being taken to as-
sure that the interests of the Treasury Department on behalf of
the United States are adequately represented in the pending re-
ceivership proceedings of the carrier.
(b) Virginia Blue Ridge Railway Company. Messrs. Sherbondy
and Folkerth have been making a study of the financial condition
of this carrier, and of four individual guarantors on the obliga-
tion of the carrier to the United States, which totals approxi-
mately $195,000. An offer in compromise of the obligation is
pending. As part of the study Messrs. Sherbondy and Folkerth in
company with Mr. Heffelfinger of the Under Secretary's office per-
sonally inspected the properties of the Virginia Blue Ridge Rail-
way Company.
24
- 12 -
The following matters were worked on under the direction of
Mr. Bernstein:
28. Foreign Exchange Control. An extensive amount of work has
been done in connection with the administration of the freesing
control, including the issuance of general licenses, the answer-
ing of voluminous correspondence relating to the Order, the prep-
aration of licenses covering diplomatic staffs and the examina-
tion of legal questions which are continually arising. The entire
staff has been engaged in this work.
A considerable amount of work was done in connection with
the question of whether certain American banks will be permitted
to send funds to their branches abroad. Members of this office
participated in conferences held with respect to this matter and
otherwise participated in the consideration of the question.
Messrs. Bernstein, Luxford, Aarons, and Friedman did this work.
This office cooperated with Customs and Secret Service in ex-
amining mail and passengers brought in on the Clippers from
Portugal for the purpose of ascertaining whether the Germans were
sending English bank notes into this country. This search was
prompted by the fact that the British have forbidden the importa-
tion of English bank notes into the United Kingdom but permitted
bank notes to be imported from the United States if they were re-
ceived by an American bank on or before August 27. Messrs. Bern-
stein and Luxford worked on this matter.
25
- 13 -
29. Banco do Brasil. The Federal Reserve Bank of New York was
requested by the Banco do Brazil to make dollars available to it
under the arrangement entered into by this Government with the
Government of Brazil in 1937. In connection with this request
of the Banco do Brazil this office prepared a cable to the
American Embassy in Brazil indicating that the Federal Reserve
Bank of New York would take the action requested upon receiving
confirmation by the Brazilian Government of the fact that the
Banco do Brazil was acting in the transaction as fiscal agent of
the Brazilian Government. Upon receipt through the American
Ambassador of the confirmation requested, this office prepared &
letter to the Federal Reserve Bank enclosing a draft of cable to
be sent to the Banco do Brasil indicating that the Federal Reserve
Bank is prepared to purchase milreis in exchange for dollars in ac-
cordance with the above-described arrangement. Mr. Friedman handled
this work.
30. Canadian Account. In cooperation with the Department of State
and the Federal Reserve Bank of New York, this office assisted in
the preparation of the necessary documents in connection with the
proposed transfer of certain funds standing in the name of the Bank
of Canada in the Federal Reserve Bank of New York to accounts in the
name of the Canadian Government. Among other documents, a memorandum
to the President with respect to this matter was prepared.
26
- 14 -
31. Belgian Account. In cooperation with the Federal Reserve
Bank of New York and the State Department, this office assisted
in having the Belgian Minister make certain representations to
the Federal Reserve Bank of New York concerning a proposed pay-
ment to be made from an account with the Federal Reserve Bank of
New York by the National Bank of Belgium.
Mr. Friedman handled the last two mentioned matters.
32. Russian Protest. The Russien Government sent a note to our
State Department protesting the failure of the Federal Reserve
Bank of New York to transfer to the account of the State Bank of
the U.S.S.R. certain gold being held in accounts of the Banks of
Latvia and Lithuania and certain gold belonging to the Bank of
Estonia held in the account of the Bank for International Settle-
ments. This office prepared a draft of reply to the Russian note,
a substantial part of which was incorporated in the note which the
State Department sent to the Russian Government. Messrs. Bernstein
and Friedman handled this matter.
33. Renewal of Gold Licenses. We worked with the Mint Bureau on
the problem of the renewal of the outstanding gold licenses which
expire on October 31, 1940. Miss Hodel and Mr. Friedman worked on
this matter.
34. Consular Mail. State referred to the Treasury copy of a note
from the German Embassy protesting the examination of mail addressed
27
- 15 -
to German consular officials and claiming, among other things,
that this Government was violating the most-favored nation clause
of the treaty with Germany. We worked on proposed replies, taking
the position that no violation of any treaty had occurred. The
matter was discussed with the State Department, which adopted our
views. We cooperated in the drafting of the reply which the State
Department sent to the German Embassy. Messrs. Bernstein, Mann,
and Friedman conducted this study.
No. 358
ATAT COPIES SENT TO DEPARTMENT BY AIR-MAIL.
28
Rangoon, Burma. September 14. 1940
SUBJECT: Burma's Transit Trade with China in
Supplies Other Than War Materials
During August, 1940.
THE HONORABLE
THE SECRETARY OF STATE,
WASHINGTON, D.C.
SIR:
I have the honor to report that the transit trade of Burma with China
in supplies other than war materials during August, 1940. amounted in value
to Rupees 11,943,199. or approximately $3,582,960 at the average rates of
exchange for the period. The total value of such trade, therefore, amounted
to Rupees 51,560,297. or approximately $15,468,090, during the first four months
of the current fiscal year, which began on April 1, 1940.
Detailed statistics relating to this trade during August, 1940, and
showing countries from which these re-exports were imported, appear in an en-
closure submitted herewith.
The aforementioned and enclosed statistics obtained from customs records
represent shipments from Rangoon of goods destined to China, rather than goods
actually exported across the border from Burma to China during the period
indicated. Statistics regarding actual exports over the border are not yet
available.
Respectfully yours,
W. Leonard Parker
American Vice Consul
Enclosures:
Statistics of trade.
Distribution:
1. In triplicate to Department.
2. Copy for Embassy, London.
3. Copy for Embassy, Chungking.
4. Copy for Consulate, Yunnanfu.
800-600
MLP/sh/mv
has, entitled "Derm's Transit Trade with China Supplies Other Them War Materials During Augusts, 1940."
to 1949, Leanard Parker, American Visa Gensul at Rangoom,
(Sourees of Supplies, Quantities, and Value of Re-Reports from Rangeom.)
French
MAFE
Datah
Mark
Famility
United
Oritzerland
States
Straits
Total
Settle-
has
1
(255)
Milk
Confectionery Cale,vegotable Liquere,vines Month Pickles = === drinkable apirite,ste+ infests & specified commed
In has
feet for
&
flow,net
à sakes
Parimassous &
feeds
&
hhhh (ortac) bhhhhh Indoi
(aod) 1.1 (m) (129) L
(48,428) is (1,752) = (see)
(45)
and
100 iliail diu
all
.....
"
(sea)
raded Unclassified
United
llonz Keng
French
Duteh East
United
China
Italy
Switsorland
India
Sweden
Straits
y
Total
Commodity
States
Quantity
Indechi
Indice
Kingdom
Quantity
Quantity
lettle=
Quantity
Value
Value
value
1
Drugs & medicines, -
I
all serts
(Rs.)
(90,661).
(575,942)
(5,310)
Spirits in drugs (Gals.)
07
1 doines
(Rs.)
Spirits, other
&
varaishes
Painters mterials
Dyeing & terming
Printers &
Mthographers'
*
Felishos, all
kinds
(3,158) (5,956) (sz) (98) (26) B.B.B.S = (16) 6 -
0ils,secential,
all serts
Semprall kinds
Insuration noter
esvere
Parumatic
+
M
(Rs.) (Gals.) mill (Rs.) milition THE II (Ree)
is 6.5, st. E (52,288) (see) (5,582) ( Bain = (4,574)
372
(69,608)
neter
M
(6,454)
(69,400) (00,000) (0,454) 372 (ii)
1.1.
(2,722)
Tial ik NB E has (604,152)
manufactures
1.. E E...
United
Hang Xang
French
Dutch Bast
Valted
Chima
Italy
Switserland
India
Broden
Straits
Commodity
States
Quantity
Indechine
Indice
Kinden
Settle-
Quantity
Value
Menufactures
of weod,ether
than fural-
ture
¥
(-)
-
-
(Rs.)
(2)
(1,788)
(1,790
Wood & timber,
net elsewhere
(Teas)
-
5
specified
(Rs.)
- (8,415)
(6,415
Paper &
stationery,in=
cluding paper
-
-
-
manufactures
(Rs.)
(51) (13,748)
(3,265)
(17,006
Leather &
beather manuf.
excluding
I
-
-
-
bests 4b shoes (Rs.)
-
(292)
-
(292
Getten, twist & (Lbse)
-
16,920
.
857,620
-
874,540
yarn,grey
(Ra.)
-
(5,382)
.
(318,985)
(818,368
Flax thread
(Lbs.)
865
-
-
.
868
for sewing
(Rs.)
(6,927)
-
-
-
(6,987
Cotton manuf.
(Lbs.)
-
-
-
I
all serte
(Ra.)
(1,067)
(12,137)
(995,255)
-
(1,440)
-
(1,007,897
Certram shirt-
ings,white,
(Ids.)
-
24,080
-
-
297,270
$21,350
dyed & colored (Rs.)
-
(3,332)
-
- (72,598)
(75,930)
Cetten piece
goods,dyed,
white &
(Yds.)
-
34,090
-
22,925
16,000
73,015
selored
(Rs.)
-
(7,525)
-
-
(8,452)
(4,020)
-
(19,997)
Berges à
(Yds.) 10,954
-
-
.
21,620
$2,554
tweeds
(Rs.) (20,052)
-
-
- (5,268)
(25,515)
date manuf.,
(--)
-
-
-
-
-
all sorts
(*
-
(22)
(22)
Regraded Unclas fied
huma's Transit Trade with China During August, 1940, Certinued . Page 4a
United
Hang
Lang
French
Dutch Mart
United
China
Italy
Switzerland
India
Sweden
Straits
Total
demodity
States
Quantity
Indoshine
Indies
Kingdom
Quantity
Quantity
Quantity
Quantity
Quantity
Settle-
Quantity
Quantity
Quantity
Quantity
Quantity
Value
Value
Value
Value
monte
AW
value
Value
Value
Quantity
Value
Other textiles(-)
-
-
name.
(Rs.)
(1,809)
(1,876 )
-
(3,485)
Weellen &
versted picce(Yds.)
-
-
3,204
3,204
goods
(Rs.)
-
-
(1,547)
(1,647)
Weelen manuf.
-
-
-
-
other sorts
i
(see)
(133)
(54)
(576)
Belting for
(-)
-
-
-
-
machinery
(Rs.)
-
(318)
(64)
(877)
Cerdage & repe
(Cuts.)
75
4
-
TT
(Rs.) (15,003)
(571)
-
(13,574)
Apparel
(-)
I
-
-
-
(Rs.)
-
(4,948)
(418)
(5,301)
Waterproof
I
-
-
-
-
clothing
(Rs.)
-
(1,004)
-
(1,004)
Haberdashery &
(-)
-
-
-
-
millinery
(Rs.) (4,540)
(608)
-
(5,157)
Boots & shoes,
(Prs.)
-
750
726
1,476
all sorts
(Rs.)
-
(1,927)
(1,974)
(8,901)
Dangerous
(Gals.)
615,426
241,503
5
756,933
Petroleum
(Rs.)
(371,595)
(164,457)
(4)
(536,056)
Keresene oil
(Gals.)
6,448
-
6,448
(Rse)
(4,805)
(4,805)
Fuel oil
(Gals.)
328,956
329,956
(Rs.)
(222,558)
(222,558)
Minoral sil
(Gals.)
240
12
1
$35
other serta
(Rs.)
(817)
(351)
(7)
(1,175)
ollse(0als.)
48,675
e
48,675
(No.)
-
(66,875)
.
(66,878)
50,785
100
184,895
(14,565)
(45)
(23,585)
-
(he)
(2,411)
(4,488)
(sa)
all sorts
(Rs.)
(235)
(1,000)
(ees)
egraded Unclassified
Burna's Transit Trade with China During August, 1940, Continued - Page 5.
United
Hong Xong
French
Dutch East
United
China
Italy
Switzerlend
India
Sweden
Straits
Total
Commodity
States
Quantity
Indochina
Indias
Kingdom
Quantity
Quantity
Quantity
Quantity
Quantity
Settle-
Quantity
Quantity
Value
Quantity
Value
Value
Value
Value
Value
ments
Value
Quantity
Quantity
Value
Value
Value
Quantity
Value
Iren à steel (Tons)
1,827
9,398
5,563
8
2,078
-
2
-
-
14
-
18,845
preducts
(Rs.)
(993,369)
(1,046,095)
(1,044,567)
(5,029)
(401,790)
(18)
(1,528)
-
-
(10,398)
- (3,508,794)
ignets
& other
aluminum pro- (Onts.)
4
14
-
-
-
-
-
-
-
-
-
18
duots
(Re.)
(1,325)
(14,132)
.
-
.
-
-
-
-
(15,455)
Brass & brass
(Owts.)
1,341
366
.
-
-
10
-
-
1,717
products
(Rs.)
(97,690)
(25,075)
.
-
-
(259)
-
-
.
-
(123,024)
Copper & cop-
(Gets.)
1,105
78
860
-
-
-
-
-
2,045
per products
(Rs.)
(75,113)
(11,904)
(43,000)
-
-
-
-
-
-
-
(139,017)
Load & load
(Owts.)
-
-
-
-
-
-
-
-
-
products
(Ra.)
-
(76)
-
-
-
-
-
-
(76)
Sine or spelter(Owts.) 1,006
21
-
-
-
-
-
-
-
1,087
(Rs.)
(35,537)
(739)
-
-
-
.
-
-
(34,275)
Metals,un-
(Onts.)
60
28
-
-
-
-
-
-
-
88
enumerated
(Rs.)
(30,598)
(6,519)
-
-
-
-
-
-
(37,417)
Outlery
i
-
-
-
-
-
-
-
-
(Re.)
(40)
(19)
-
-
-
-
-
-
(61)
(120)
Hardmare,all
I
-
-
-
-
-
-
-
-
.
serts
(Rs.)
(67,528)
(263,430)
(27,340)
-
(2,598)
(1,375)
(357)
(1,488)
(364,116)
Washinery &
parts all
sorts,sther
than motor
vehicles
¥
(no)
(65,618)
(951,284)
(ee,
-
(65,454)
(16,767)
(4,101)
(88,071)
(1,199,275)
Instruments &
apparates is
cluding
electrical,
exientifie,
marieal,
the
= (Now) (975,013) (1,168,197)
-
(10,000) (IN,TRY)
(44,884)
(1)
(2,215)
(1,5m)
egraded Unclassified
Durma's Transit Trade with China During August, 1940, Continued - Palgo 6.
United
Hear Kong
French
Dutch Bast
United
Chima
Italy
Ovitserland
India
Inde
Straits
Total
Commodity
States
Quantity
Indechina
Indies
Kingdam
Quantity
Quantity
Quantity
tity
Quantity
Bettle-
Quantity
Value
Quantity
Quantity
Quantity
Value
Value
Value
mate
Value
Value
Value
Value
Parts of
carriages &
(-)
-
-
earts
(Rs.)
-
(745)
.
-
(745)
Motor cars
(Nos.)
19
18
6
ST
(Rs.)
(34,294)
(50,267)
-
(17,800)
(101,701)
Moter cycles
(Nos.)
-
1
-
.
1
(Rs.)
-
(2,525)
(2,555)
Neter vehicles
imported with
(Non.)
-
23
-
bedies
(Rs.)
-
(74,542)
.
(74,342)
Motor chasses
(Nos.)
$
-$0
1
TL
(Ra+)
(107,735)
(89,786)
(9,548)
(nos,see)
Vehicles,parts
of mechanically
propelled
I
-
-
-
vehicles
(Rs.)
(52,460)
(163,254)
(215,766)
Books & printed(Owts.)
2
142
-
147
matter
(Rs.)
(1,847)
(21,226)
-
(170)
Clecks and
-
-
-
watches
(Rs.)
(1,672)
(83)
-
-
-
(1,795)
All other
1
-
-
articles
(Rs.)
(80,901)
(19,675)
(403)
(1,857)
(se) (102,098)
Total
(Rs.)
(UB$863,656) ($1.475,934)(8681.785)(8217.91)(4133.55) 4,919,778 ($131,053) ($40,748) (913,456) 40 8,182)(0 4,085) ($1,828)
3,878,854
2,272,617
726,636
445,650
638,658
165,837
44,854
87,374 18,611
4,000 11:00:10
.
Union of South Africa's share of trade in chemicals, all sorts is Rs.3,348 ($1,004).
Rupees
U.S. Dollars
Total value of transit trade in first four months of firml year
1940-41 (April to July 1940)
59,617,000
11,865,180
Total value of transfers trade in 1940,
!
norths)
Regraded Unclassified
35
EH
PLAIN
Bombay
Dated September 14, 1940
Rec'd 2:47 p.m. 20th.
SECRETARY of State,
Washington.
Fourteenth.
Silver increased in price due belief increased
Anglo-American cooperation would prolong war. Prices
went above import parity with resultant liquidation
and speculative sales. No imports reported spot high
sixty-three fifteen six, low sixty-three, close sixty-
two fifteen six, stocks 3,000 bars, daily offtake
15 bars.
Gold declined but remained above import parity
market weak due slack demand for sovertigns and over-
bought position spot high forty-two nine three, low
forty-two one, close forty-two one six, stocks tolas
150,000, daily arrivals 13,000, offtake 9,000.
Inform Treasury.
DONOVAN
TAMI
10 IF
LEONY 00
90 26 0026 St bill 15 22 1533
TVD 03/13/19 177
36
RDS
GRAY
ROME
Dated September 14, 1940
Rec'd 2:45 p.m.
Secretary of State,
Washington.
882, September 14, 1 p.m.
Italian business volume for August was reported un-
usually low a seasonal factor being the midsummer holidays
during which many stores closed for some fifteen days.
The paralyzing Effect of the war on overseas exports is
exEmplified by August Exports from Milan district to the
United States valued at $35,500 compared with none for
previous month and with $661,600 for August 1939. The
route for small Existing export trade to the United States
is via Switzerlend, France, Spain and Portugal.
Coal imports are reported as keeping up to the neces-
sary level of 1,000,000 tons per month the total for seven
months through July being 7,800,000 tons of which 6,000,000
from Germany. Reportedly resulting from improved coal
outlook previous limitations on consumption of gas have
been made less stringent and gas prices somewhat reduced.
While manufacturing for export is heavily curtailed
the high level of activity in the war industries and the
labor of harvesting crops have sustained Employment and
the
37
-2- #882, September 14, 1 p.m., from Rome.
the standard forty hour working schedule in industry has
been raised to a maximum fortysight hour basis. Current
public works initiatives include provision for prompt
reparetion of private property damaged by military opera-
tions, appropriation of 50,000,000 lire for developments
in mining regions of Arsia and Carbonia 76,000,000 for
works in occupied Enemy territory, authorization of
142,500,000 lire loan by municipality of Addis Ababa for
city planning development, 715,000,000 lire appropriation
for construction of highways, railways and housing in
Albania.
Legislative approval was given at month-End of decree
of July 1 authorizing additional appropriations in 1940-41
budget for Extraordinary Expenditures resulting from the
war amounting to 1,494,500,000 lire.
Rationing regulations continued unchanged. Additional
foods for which prices have been "blocked" are fish and
wine. Official Encouragement is being directed to increas-
ing consumption of fresh fruits particularly grapes and
to promoting rabbit production to supplement meat supplies.
Among discussions of post war Economy an article in
the POPOLO D'ITALIA of September 12 by Count Volpi, out-
standing Italian industrialist, contains the statement
that the gold problem is not urgent for Italy. "Either
the
Unclassified
08
at cie
#882, TECHN September 14, 1 p.m., from ROME.
OF
BECEINED
TMENTRA930
the present holders of gold will adapt themselves to the
new system and will consent to a gradual return of gold to
circulation through the development of their purchases of
our merchandise thus allowing gold to fulfill its natural
function as a subsidiary regulator of Exchanges or gold
will sooner or later bE Elimated from our system of EX-
changes."
REED
EMB
39
21332
GRAY
Montevideo
Dated September 14, 1940
Rec'd 10:13 a.s.
Secretary of State,
Washington.
202, September 14, 10 a.m.
The Bank of the Republic announced today quotas for
September of $271,000 controlled and $600,000 free exchange
for imports from the United States covering industrial and
agricultural machinery and parts, iron bars, sheets and
hoops, hand tools, printing materials, parts for automobiles
and trucks, lubricants, lumber, leaf tobacco, medicinal pro-
ducts, insecticides, packing house supplies, galvanized wire,
pedigree stock, vegetable seeds, raw materials first and
second categories, merchandise first, second and third
categories.
WILSON
TWV
COPY
eh
40
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 14, 1940.
TO
Becretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
At 4:15 yesterday afternoon, I received, at the request of the British Embassy,
Mr. Ace Bratt, who stated that he was the representative of the Governor of the Nor-
weglan Central Bank who is nov on a visit to this country. Mr. Bratt was connected
with Lasard Bros. & Co., Ltd. of London, being their agent at Oslo, and in now spending
part of his time with this firm's New York concern. It is my understanding that the
present Governor of the Norwegian Central Bank is Bratt's stepfather. Bratt mentioned
to me that a ship broker firm in New York had recently received an inquiry as to whether
It could take care of & shipment of one ton of Norwegian gold from Vladivostok to the
United States. This concern was the Isbrandtsen Moller Co., Inc., which operates the
Keerck Line. Mr. Bratt thought that this case was quite suspicious. He insisted that
all Norwegian gold had been gotten out of that country and shipped to the United States
and Dennda. So any gold now being passed as Norwegian through from Vladivostok might
likely be of some quite different origin.
Mr. Bratt also spoke to me of one Benno Berger of Oslo, who is now in the
nited States supposedly representing "Ferro-Metal" of Oslo, and who, according to
Bratt, recently has drawn $500 on each of two letters of credit issued by Norwegian
banks. The point Bratt made was that there was this chance for B. leak under our
giving $500 per month to arrivals from blocked countries, since they may present letters
of credit to this full limit to more than one bank.
RMP.
Regraded Unclassified
4
laytember 14, 1940
Professor
Mr. Coohrea
AS 8130 yesterday norning Mr. Shaw telephoned no free the National City Bank
in Nev York. le stated that two days previously his bank had seat 8 cablegram to
Switserland endonvoring to obtain All offer 4 to cas million belgas from that
mater, The Fational City had not found acceptable the effer obtained from Spain
for the provision of sue-half million belgas under the license which ve had
repreved days Age. The belgas available in Spain weald only be fifty percent
telegraphic archange and fifty percent paper currency, the latter to be delivered
Is Andrid. The National City had yesterday seraing reselved a reply free the Drive
Basic Corporation that it could provide the sae million belgas requested. all is
telegraphic exchange, If accepted imediately. the National City proferred to take
this offer rather than to scoopt the maller Spanish offer. Day naked If I could
expedite B decision is the premises, he agreeing to make formal application later
is the seraing for a license If I could get approval of the plan. de felt that the
Twice offer had to be acted upon during the basiness day of yesterday.
I discussed this matter with Professor Qualurisin before the 9:30 Group Neeting
yesterday and be selted no to submit 11 to the Secretary at that meeting. I and
this and - obtained the Secretary's approval to the transaction. I telephone
Rr. Rule at 10:00 and told his that be could go about os the one million belgs treat-
action, providing he filed application at once with the Federal Reserve Bank and
had 11 telephoned to Vashington so it could be seted upon by us yesterday. Is
agreed to do this.
At 12:00 nees Mr. Shaw telephoned IN back to report that he had followed ay
advice 02 the above points and that accepting was seving entisfectorily. Be then
referred to the question which he has 4 with respect to selling French france 10
corporations whose noomptement with the National City Bank in Pronee are enturing.
Be understood free Rr. Knoke that a license vould be necessary to permit the National
Ct kg to resell france to customers to cover their indebtedness to the foreign
branches of the National City. Show stated that the National City lawyers differed
from this view. I confirmed that Knoke had exyressed the Treasury's views 46 this
point. advised his to pet in the necessary applications. Hosers. Pehls and
Towern vote with be when I spoke to Mr. The this second time, and 1 conformed with
the is regard to K7 Ve tale Mr. the that the application for - yornit
to resall the frases to the cartomers should set forth the 10098 of such sustomers.
the services for seeb. and also indicate the agreement of the customers to the filing
of the application. Rr. her also sentioned that his bank was filing as application
for arthority to purchase tos million belgas when they can get them. I told his vo
would have le look into this if and when received. I reported the addresse of
this overates orally to the Control from yestering
3m
Regraded Unclassified
42
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 14, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
confidential
The six reporting banke' transactions in registered sterling were as
follows:
Purchased from commercial concerns £22,000
Sold to commercial concerns
£10,000
The Federal Reserve Bank of New York reported that it purchased £2,000
of registered sterling from a non-reporting bank.
In the open market sterling opened at 4.03-1/2 and closed at 4.03-3/4.
Transactions of the reporting banks in open market sterling were as followe:
Purchased from commercial concerns £26,000
Sold to commercial concerns
£ 2,000
The discount on the Canadian dollar continued to widen. After closing
last night at 16% the final quotation today was 17-1/2%.
The other currencies closed as follows:
Swise franc
.2278-1/2
Swedish krona
.2385
Lira
.0505
Reichemark
.4000
Mexican peso
.1996 bid, .2016 offered
Cuban peso
10-3/16% discount
There were no gold transactions consummated by us today.
The New York banks did not receive any gold or silver quotations from
the Bombay market.
The Federal Reserve Bank of New York informed us that it had made another
three-month's loan of $50,000 to the Central Bank of El Salvador. As collateral,
the Federal set aside gold valued at $56,507.70 from the Salvadorean bank's
earmarked account. The total of such loans now amount to $300.000 secured by
$340,765 in gold.
HMP.
Regraded Unclassified
Pages 43-52 missing
due to faulty numbering
machine.
Regraded Unclassified
53
CONFIDENTIAL
0-2/2657-235
M.I.D., W.D.
Tentative Lessons
Bulletin No. 47
September 14, 1940.
TENTATIVE LESSONS FROM THE RECENT
ACTIVE CAMPAIGN IN EUROPE
NOTICE
This document is being given an approved distribution
and no additional copies are available in the Military In-
telligence Division, Its reproduction in whole or in part
is subject to the provisions of letter TAG, November 15,
1939, AG 350.05 (11-1-39) M-B-M, "Dissemination of Military
Information by the Military Intelligence Division and by
Recipients of M.I.D. Information".
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and are in no sense mature studies,
GERMAN REGULATIONS ON ANTIAIRCRAFT DEFENSE
SOURCE
This bulletin is composed of extracts from German regula-
tions and official manuals translated by a British source in June,
1940.
CONTENTS
I. DEFENSE OF MOTORIZED TROOPS ON THE MARCH.
II. DEFENSE OF TROOPS IN THE ZONE OF OPERATIONS.
III. ANTIAIRCRAFT DEFENSE AND PREVENTION OF AIR
RECONNAISSANCE DURING DELAYING ACTIONS
AND WITHDRAWALS.
IV. DEFENSE AT RIVER CROSSINGS.
V. DEFENSE OF TROOP TRAINS
CONFIDENTIAL
-1-
54
CONFIDENTIAL
I. DEFENSE OF MOTORIZED TROOPS ON THE MARCH.
Antiaircraft defense must be provided for motorized troops
on the march just as it must be provided for troops moving by rail.
This defense should be based on the following principles:
A. Defense Against High Altitude Bombing.
Motorized troops require defense against high altitude
bombing only when they are in assembly areas, when they are embussing
and debussing, during rests, and at particularly dangerous points on
the line of march, such as bridges, defiles, or points at which other
motorized columns are passed.
In the zone of operations, antiaircraft defense is the
responsibility of the senior air officer at Army H.Q. Units must
notify him of their antiaircraft defense requirements in good time.
The number of antiaircraft batteries to be used will depend upon
the size of the motorized column and the number of danger points on
the line of march.
It is not possible to give a large motorized column con-
tinuous protection along its line of merch, since this would require
too many antiaircraft batteries and since the speed of the column
makes "leapfrogging" impossible.
Contimuousantiaircraft protection is in any case not
essential for motorized troops on the march because they can protect
themselves against high altitude attacks by increasing the intervals
between vehicles and thus presenting only small and difficult targets.
B. Defense Against Low Flying Attack.
For defense against Inw flying and dive bombing attacks,
motorized units must rely principally on marching in extended order
and using their own weapons--machine guns and rifles. Protection
can, however, be increased by allotting to them a certain proportion
of light antiaircraft artillery, which can be distributed throughout
the column by troops or even by single guns.
II. DEFENSE OF TROOPS IN THE ZONE OF OPERATIONS.
In attack and in defense the most important tasks for
CONFIDENTIAL
-2-
55
CONFIDENTIAL
antiaircraft artillery are as followe:
A. Engagement of reconnaissance aircraft.
B. Engagement of enemy artillery observation aircraft.
0. Antiaircraft defense for infantry positions.
D. Defense of principal artillery positions against
high altitude, low flying, and dive bombing
attacks.
B. Defense of reserves, support lines, and armored
vehicles in the support lines.
F. Protection for our own reconnaissance and
artillery observation aircraft.
Allotment of heavy and light antiaircraft batteries
throughout the corps zone will be the responsibility of the
antiaircraft artillery commander. Heavy antiaircraft batteries
should in most cases be sited near the foward artillery positions.
The engagement of enemy artillery observation aircraft is pos-
sible only when heavy entiaircraft batteries can fire well over
the enemy's lines.
The role of light antiaircraft batteries in an advance,
and to an even greater extent in defense, is the engagement of
low flying bomber and fighter aircraft over our forward defense
lines.
Antiaircraft gun positions must be coordinated with
the infantry and with other artillery positions. Liaison must
be established with the Artillery end Infantry commanders in
good time. In general, antiaircraft batteries must conform to
the infantry and artillery dispositions. In exceptional cases,
however-for an example, where the antiaircraft defense of an
Note by the British General Staff. In recent operations Ger-
man antiaircraft artillery has frequently performed duties of
other types of artillery. Apart from antitenk action, which can
be considered a normal secondary role of all German antiaircraft
artillery, it has frequently been employed against ground tar-
gets of all natures, including fortified works. The mobility of
antiaircraft artillery has in particular enabled it to support
the action of armored and motorized divisions. A remarkable
feature has been the success with which antiaircraft artillery
has been maintained in the forefront of the rapidly moving battle.
CONFIDENTIAL
+
56
CONFIDENTIAL
area 1s particularly difficult--artillery and infantry positions
may have to conform to the positions chosen for antiaircraft
batteries,
Liaison must always be maintained with the commenders
of neighboring antieircraft batteries and other units, The arce
of fire allotted to each unit must be known.
Heavy air attacks on forward defense lines and the
artillery positions must be expected both in attack and defense,
In such cases both light and heavy batteries must bring their
fire to bear on the attacking aircraft, and in the case of for-
ward defense lines, heavy antiaircraft batteries may even have
to engage targets flying at low heights. If our own fighters
go up, the antiaircraft batteries engage such enemy aircraft
as are not engaged by our fighters, and try to protect our
fighters.
Before an attack, light and heavy antiaircraft batteries
should be detailed to accompany the advanced troops and to give
them antiaircraft protection, If this is to be done, early recon-
naissance must be made and orders issued to ensure that the anti-
aircraft batteries advence at the right time.
If in the defense, antieircraft batteries are pushed
out in front of the principal line of resistance in order to hinder
the enemy's air reconnaissance, arrangements must be made to with-
draw these batteries, when necessary, behind the principal line of
resistance to prepared positions. In order that these forward
antiaircraft batteries should not be surprised by the enemy, they
must maintain the closest contact with the troopa in front of them.
By frequent change in the positions of antiaircraft
batteries and troops, it is possible during positional warfare to
make it difficult for the enemy to locate antiaircraft positions
and their effective arcs of fire.
III. ANTIAIRCRAFT DEFENSE AND PREVENTION OF AIR RECONNAISSANCE
DURING DELAYING ACTIONS AND WITHDRAWALS.
A coordinated plan must be drawn up for the employment
of heavy antieircraft batteries. In the case of a delaying action,
the most inportant point is to deceive the enemy-that is, to
hinder his air reconnaissance. In the case of B. withdrawal, how-
ever, antiaircraft protection must be provided at defiles, etc.
The withdrawal of antisircraft guns from position to position must
be coordinated with the withdrawal of the main body of the troops.
CONFIDENTIAL
57
CONFIDENTIAL
Light antiaircraft batteries may be allotted in a with-
drawal or delaying action to individual units.
IV. DEFENSE AT RIVER CROSSINGS.
A distinction must be drawn here between the defense of a
bridge and the defense of troops crossing 8 stream. In the first
case it 1s in the main a question of defending the bridge against
high or low flying attack. In the second case, however, approaches
to and routes from the crossing and assembly areas must be defended
against high and low flying attacks, and air reconnaissance.
Light and heavy antiaircraft batteries, searchlights, and
observer corps units must cross as soon as possible.
Routes and timings must be very carefully regulated, and
any congestion at crossing points must be avoided by careful traf-
fic control. Defense against low flying and dive bombing attacks
must be provided while the antiaircraft artillery is actually
crossing.
The antiaircraft artillery must keep in close touch with
the commander of the troops while they are crossing, 80 as to be
constantly informed of the time and place at which the crossing is
taking place.
V. DEFENSE OF TROOP TRAINS.
A. Antiaircraft Trucks and Their Incorporation in Troop Trains.
Two trucks with platforms for antiaircraft machine gune
or 20mm. antiaircraft guns should be requested for each train.
The train will be divided into three sections, the anti-
aircraft trucks being coupled in the middle of the first and last
sections. Only open trucks with low Inads will be coupled on
either side of the antiaircraft trucks. Passenger coaches, covered
trucks, or open trucks with high loads are best coupled in the cen-
tral section of the train.
B. Manning.
As no preliminary warnings can be given, surprise attacks
must always be expected. All antinircraft guns and machine guns will
therefore be constantly manned, and two lookouts and two air sentries
will always be posted. The duty of the lookoute will be to observe
CONFIDENTIAL
58
CONFIDENTIAL
the direction in which the train 1s travelling and to report when
it is approaching obstacles, such as trains going in the opposite
direction, tunnels, bridges, signal standards, etc.,
Air sentries will be given an observation are of 180°
in the direction of travel of the train. Arrangements must be
made for relieving the air sentries at frequent intervals. It is
of great importance to have carefully chosen and well trained men
as air sentries.
C. Action.
When travelling, the forward gun will be laid in the di-
rection in which the train is travelling, and the rear gun in the
opposite direction.
All firing, while travelling, will be with tracer ammu-
nition, since the movement of the truck would make accurate laying
impossible and the readings on the antiaircraft sight would be
shaky and inaccurate. When the train is stationary, the antiair-
craft sight will be used.
If there is time during longer halts, where the line 1s
electrified or where observation is difficult because of cuttings,
woods, etc., the guns should be dismounted and brought into action
in suitable positions with all-round vision away from the railway
line.
D. Equipment.
Detachments should be issued eye shields as protection
against wind, smoke, and soot.
E. Safety Measures.
To avoid any danger to the train, and to avoid shooting
into the sideboards of the trucks, a stop should be fixed in the
toothed elevating arcs of the guns. The height of this stop will
depend upon the height of the platform and the rails, and the
height of adjacent trucks.
When the lookouts report approaching obstacles, the guns
will immediately cease fire.
When aircraft flying parallel to the train is engaged,
care must be taken not to fire into signal standards, telephone
poles, and wires, as this would not only endanger the train, but
might also disorganize the rail service.
CONFIDENTIAL
-6-
59
CONFIDENTIAL
Antiaircraft guns on troop trains must in no circum-
stances open fire while travelling on an electrified sector
with overhead wires; otherwise there might be damage to the wires
and danger to the train. Aiming practice is also prohibited be-
cause of the danger of fouling overhead wires.
CONFIDENTIAL
-7-
60
CONFIDENTIAL
G-2/2657-235
M.I.D., W.D.
Tentative Lessons
Bulletin No. 48
September 14, 1940
TENTATIVE LESSONS FROM THE RECENT
ACTIVE CAMPAIGN IN EUROPE
NOTICE
This document is being given an approved distribution,
and no additional copies are available in the Military In-
telligence Division. Its reproduction in whole or in part
is subject to the provisions of letter TAG, November 15,
1939, AG 350.05 (11-1-39) M-B-M, "Dissemination of Military
Information by the Military Intelligence Division and by
Recipients of M.I.D. Information".
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and are in no sense mature studies.
BRITISH RECOMMENDATIONS ON ARMORED VEHICLES
SOURCE
The text of this bulletin consists of the combined recommen-
dations of two high British authorities after actual experience in
France. Their reports were made shortly after the conclusion of op-
erations on the continent.
CONTENTS
I. TYPES OF VEHICLES REQUIRED.
II. ARMOR.
III. ARMAMENT.
IV. SPEED.
V. COMMUNICATIONS.
VI. CAPACITY.
CONFIDENTIAL
1.
61
CONFIDENTIAL
I. TYPES OF VEHICLES REQUIRED.
A. The Armored Car should have a 4-wheel drive and be equipped
with 8. gun - at least a 2-pounder - for long distance reconnaiseance,
Its armor should be sufficient to keep out all small arms fire.
B. The Cruiser Tank is for employment in the armored division.
c. The Heavy Cruiser is for support of the cruiser tank in the
armored division. Like the British Infantry tank, Mark II, it is al-
BO used for cooperation with other arms in semi-mobile warfare.
D. The Fortress or Position Warfare Tank was mentioned by the
British officers as a necessary vehicle, but it was not discussed in
their reports.
II. ARMOR.
No armor basis of less than 60 mm. can be considered ade-
quate against German mobile antitank weapons, and, except for the
armored car, vehicles should be more heavily armored than heretofore.
The cruiser tank should be armored up to a 60 mm. basis
on the front and the turret. The heavy cruiser should be armored
up to 70 or 80 mm., and the fortress tank should be even more heavi-
ly armored.
III. ARNAMENT.
A. Primary.
According to one authority, experience showed that the
2-pounder with solid shot was effective in penetrating enemy tanks.
With the Germans in possession of full information on British weapons
and armor thickness, however, it is expected that enemy tanks will
be more heavily armored in the future. Thus a heavier and more power-
ful gun is needed as primary armament. The authority suggests a
6-pounder for the cruiser tank, if that weapon can be manufactured
in England, and EL 75 mm. gun for the heavy cruiser.
The second authority agrees that the 2-pounder was satis--
factory as an antitank weapon when solid shot was used, but states
that its ineffectiveness against certain types of German vehicles
was due to the fact that ammunition with a bursting charge, rather
than solid shot, was generally provided.
CONFIDENTIAL
2.
62
B. Traverse and Location of Armament.
The main armament - 2-pounder, 6-pounder, or 75 mm. gun -
must be mounted in the main turret and have 360° traverse. Exper-
ience has shown the desirability of power traverse for the main
turret, since this enables both rapid and accurate laying of the
main armament. With the increase of armor thickness, the power-
operated traversing gear is essential.
IV. SPEED.
Too much emphasis has been placed upon speed in the past,
and some reduction in performance must be accepted in order that
adequate immunity may be obtained through the use of thicker armor.
For the cruiser tank, 20 miles per hour, excluding halts, with a re-
serve of power and speed for good performance across country, is
considered adequate. For the heavy cruiser, 15 miles per hour is
adequate.
V. COMMUNICATIONS.
One authority believes that every tank, rather than just
the section commander's tank, must have two-way radio, and that the
set must be located in the turret BO that the commander may listen
in constantly.
Another states that visual signals within the brigade
have proved "reasonably satisfactory." Each tank has a set of
hand controlled semaphore apparatus of the old tank pattern and
two flags - one single flag with pole and one double flag with
pole.
Internal communication is necessary between the tank com-
mander and his crew. This should be two-way between commander and
driver.
VI. CAPACITY.
Since the tank commander must be free to carry out his
duty as such, he cannot fire, load, or perform similar tasks.
Thus there must be space in the mein turret for three men - the
commander, gunner, and loader-radio operator.
CONFIDENTIAL
3.
63
September 2½, 1940
Professor Chamberlain
Mr. Cochran
Mr. Reymend 1. Goint, Chief of the Division of Commercial Affaire is the
Department of State, referred to ne yesterday Mr. Heavy II. O'Blemess, representing
the Dervind-White Goal Mining Company of New York. Mr. O'Blemess told me that his
company had been spproached w the French Line in regard to a possible purchase w
the latter of American ceal, to the value of $100,000. including cargo and freight,
for delivery to French porte in Africa, most likely Dakar and Casablance. to be
used in bankering. There has been no definite effer but a discussion of the possi-
bilities of such a deal.
The Berwind-White Company would prefer to nake such a shipment is American res-
sels. The State Department infermed Mr. O'Bleness that it would permit shipment of
each coal in United States vessele to Dakar, but not to Casablance. When I asked
O'Bleness whether be thought he could obtain asvicerts free the British, he said
that Mr. Davis, in charge of his company's foreign business. thought that this was
very likely, since the British are interested in cooperating with and encouraging
10 French possessions in Africa to take up the British cause.
After mentioning this subject to the Control Group yesterday aftertoon. I
told Rr. O'Nlemess, when he called 20 by telephone. that a formal application for
license should be filed with the Federal Reserve Bank at New York giving all perti-
nent information, and including a statement as to the feasibility of making the ship-
sent in question If Treasury authority for the license is greated.
pmp
HMO:1ap-9/14/40
Regraded Unclassified
64
CONFIDENTIAL
Paraphrase of Code Radiegram
Reseived at the Var Department
at 18:15, September 14, 1940.
London, filed 12:56, September 14, 1940.
In the last tventy-four hours scale of German operations
has been much reduced. Daylight activity involved come 90 planes
operating on the aris Dieppe-London in a stendy streamof single
plane raids coming over at intervale of about 10 minutes. Forman
night bombing on the 13th-14th ves harassing in character and in-
volved 120 planes in two main efforts, first from France and after-
wards from Holland. Both main attacks were lausched on London
before midnight.
In the period 6 A.M., 13th,- 6 A.H., 14th, damage was is-
flicted on 61 different places in London. Major damage vas done in
Botterson where an attack evidently directed at the very important
power station did not hara the objective but where the post effice
and public library were wrecked and water mains broken. The Admiralty,
Vas office, Scotland Tard, Backingham Palace and the House of Lords
were slightly damaged by explosive and incondiary bombs. Elsewhere
in England there was some damage estimated to be minor at scattered
points including Haidstone and Mastbourne. At Cardiff a cold storage
plant was burned. No aiviromes were damaged. Civilian casualties,
as yet undetermined, are estimated as relatively small. Germa losses
given as 3 confirmed, 2 damaged. The British lest 1 plane, the pilot
of which was resourd.
CONFIDENTIAL
Regraded Unclassified
CONFIDENTIAL
65
Due to the reduction in sise of the German daylight
attacks in the past two days, British fighter pilets have received
some needed rest.
Last night the British used 110 bombers to attack as-
semblies of boate at five ports and the batteries at Cape Gris-nes.
No sinkings of ships have been reported.
Following signs heighten possibility of invesion: about
1,700 barges mobilized; mobilization of an estimated 100 merchant
vessele with a total tonnage of 300,000; continued easterly (wester-
ly , G-3) movements of German shipping.
The Commander in Chief of the Middle last reported fight-
ing on the 13th, as the result of Italian movements apparently
directed at pinching out Sollum.
LEE
Distribution:
General Watson
Secretary of Var
State Department
Secretary of Treasury
Asst. Secretary of War
Chief of Staff
Var Plane Division
Office of Naval Intelligence
+
CONFIDENTIAL
Regraded Unclassified
66
BRITISH EMBASSY,
WASHINGTON, D.C.
September 14th, 1940
PERSONAL AND
SECRET
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
(For the Ambassador)
havile Butter
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Telegram from London dated
67
September 12th, 1940
1. Havel
Our destroyers have been operating
during the night off the French and Detch coasts.
During yesterday evening His injecty's
destroyer "Atherstone", while escorting e west-
bound Channel convoy, was bonbed and hit. Be ships
in the convoy were damaged.
Dover was bombed end shelled yesterday
afternoon end two motor torpedo boats were denaged.
Two of the recently acquired American
destroyers have been damaged In collision in the
Test Atlantic and will require 1 week and 1 month
respectively to repair.
lite Majesty's submarine "sturgeon" has
reported that she Bank B 10,000 ton transport in
the Kattegat on september 2nd and attacked and
apparently sank e large U-bont on September 10th.
2. Koyal Air Force.
operations eptember 10th/12th.
At the Potedem roilway station Berlin,
6 out of 7 heavy basbers detailed for attack claim
direct lite: 12 500-10., 30 250-1b. and also
incendiary bonbs were seen to buret in the target
area. The majority of the receining bombers cerried
out the stancke needgied to them, though only e
very/
Regraded Unclassified
+
68
very light scale attack we made on Brenen docks and
Brussels reilway yords.
DAY operations sentember 11th
Due medium bonber attached a convoy off the
Belgien cosst. Ro hits were obtained, but the bridge of
one nerchant ship end mechine gunned. in the afternoon
conveys of norchant ships, escorted by N-boats, were
reported; 5 medium bombers attacked one convey off
Dunkirk, and after an explosion 1 merchant vessel
appeared to be missing. Leter 12 nedium bombers attacked
shipping off Calais, but no hite wore observed. They net
heavy anti-aircraft fire and 36 energy fighters of which
3 were shot down, and 1 energy homber damaged. Three of
our aircraft failed to return.
Last night 131 bombing dircraft were sent out.
33 heavy and 67 medium bombers to attack shipping and
barges in North-Oerman, Dutch, Belgion and Sorthern French
ports. Other objec : ves were rellway torgets in Germany,
the Anhelter reflway station at Deplin and gan-
emplacements opposite Dover. Mine-laying ISS also carried
out. Three heavy bombers are missing.
3. Gurman AP Porce.
Night of september 10th/11th. Considerable
use of incendiary bonbs caused e mumber of fires,
particularly in one of the London docks; this fire has
been surrounded. other najor and minor fires in London
urea were under control yesterday evening except one
Mater-yard in Keet Lendon. Damage to property wee
considerable but casualties such fewer.
Deports yesterday evening gave 18 killed and
280 injured.
Open nejor attack vas code yeaterday evening.
Regraded Unclassified
69
-3-
About 250 ensey aircraft crossed Hent coset, of which
about 30 penstrated to control London. About 75 also came
in over Heato. both raids were intercepted end heavy
casueltion inflicted, especially to bosbers. At a
conservative outinate air - killed OF ceptured would
emount to 250. Bonbe fell mar Geolwich Dockyord, other
damage was caused 1- South-tistern suburbe and various
London areas. An aircraft feetory et Southampton non
also hit, camuelties h2 killed and 92 wounded.
Leat night between 8.30 Date end 5.30 a.m.
about 150 enewy sireraft ware operating over London.
They approached first from the Rest and South-Host and
leter from the North-Inst. The attack VCB principally
against docks, reilways end parte of the city, although
most parto of London were visited. Light attacks were
also made in the country districts around Liverpool, and
nine leying was suspected in the Themes estuary, off the
east cosst end Bussez coast, and near the Isle of sian.
Summary of damage caused in London ares.
Docks. A report yesterday morning disclosed that, with
minor exceptions, all quay facilities in the Port of
London reasined intect. Since attacks on the dockyard
area began 18 ships have been sunk or seriously damaged
by fire and 12 have suffered minor damage.
Early this norning a fire vas started in the
Surrey Commercial Docks and sone delayed notion bombs
are suspected. 3 heavy high explosive bombo caused damage
to sheds and sank a fire float.
Refluare. Considerable dislocation was enused to
suburban lines in the south-enstern London area.
Industry. Fires were caused at 2 engineering factories,
1 flour mill and 2 other industrial factories.
Regraded Unclassified
+
no
other damage. the Central Post Office was hit: there ware
few casualties and an mergency telegraph and telephone
scheme is in operation. One 30-pump fire was started in
south-eset London.
he summary of air connalties.
Energy casualties.
By our fighters:
Restriced Probable Delivred
Bonbers
47
22
27
Fighters
33
12
17
By anti-aircraft
Unidentified.
8
-
9
Bombers
1
CO
Totals
89
34
53
British: 28 aircraft (17 pilete killed or adosing).
5. borno trade
A convoy of 19 ships has arrived eafely in
home waters. There were 10 tankers end other cargoes
incl ded steel and grain.
6. Middle Test
Egypt. Reported on deptember 10th that enery force,
estimated at one division, had sade 2. considerable nove
enstward and and helted south-west of Sollum on
Egyptian-Libya border.
On Rep .orber 10th our medium bombers attacked
about 700 mechanical transport vehicles in Libya end
started fires emonges them. dz of our fighters
engaged a formation of enemy bonbers off werse natrub and
shot down four,
Sudan: on optember 9th our heavy bombern attacked
Assara acrodrone and on september 10th appoured
fighting vehicles near Massale. Gre atrosoft was lost.
Kenve: on september 7th modium bonters of south fricen
Air/
Regraded Unclassified
71
Air Porce attached aircraft on the ground at an Italian
acrodroms. One sevois was burns and 4 others extensively
damaged. One aircraft feiled to return.
7. @editerraness.
Three Italian complenes alighted in Turkish
territorial waters on September 9th. The crew of one
sircreft comprising six, were interned and also one
officer from the erew of the other two machines. Before
the remaining personnel could be detained, they were
resourd.by two other Itelian complanes. The 3 aircreft
have been retained by the Turks.
8. France
The French are reported to be maintaining
10 divisions in unoccupied France, of which 2 colonial
divisions are on the const and 8 metropolitan divisions
in the interior. This agrees with a previous report
which stated that the French Government intended to
naintein e force of 250,000 men in France.
Regraded Unclassified
72
BRITISH EMBASSY,
WASHINGTON, D.C.
September 14th, 1940.
Personal and Secret.
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from London
on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
(For the Ambassador)
horile Butter
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
73
Telegram from London dated September 13th, 1940.
2.
Noval.
In the early morning yesterday a
British destroyer sighted a destroyer off
Cosablence steering north-west at 26 mots.
the illuminated her and opened fire but ceased
on discovering that the destroyer vos French.
No hits were made and the fire was not returned.
The save afternoon the armed merchant
cruiser "wolfe" was attacked by four energy
sircraft off Test Ireland. A delayed action
bomb fell on the deck and was thrown overboard;
one near miss did superficial demage.
of
Roynl ALP Force.
Night boobing september 11th/19th
reported as extremely successful. Righty-three
sircraft streraft attacked shipping and barge
consentrations in harbours from Handway to
Doulogne causing large fires and explosions.
Bombe fell near the boe of either the "Bromen"
OF "Duropa" et Broserhaven with unknown
results. Pour heavy boabers attacked the
Anhalter reiluay station at Dorlin and nost
bombs fell across goods yards.
Yesterday three Blenheins, escorted
Regraded Unclassified
8.
74
w three fighters, attacked fifteen merchant
vessels off to Havres one morehant ship and one
tanker wore hit.
It is reported now that on September
11th six Blenheims attacked 8 convey of seventeen
merchant vessels off Colais: one was hit and net
on fire, another probably damaged by near misson.
one enemy fighter was shot does.
last night forty heavy bonbers were sent
out to the following targets: Roden dockyard,
Brussels power station, and rollway objectives in
northern Geruany. All our sircraft have
returned.
3.
derman Air Force.
Eight of september 11th/199h
The attack on London continued for nine
hours and, although widespread, was considerably
less effective and casualties are thought to have
been such smaller than on previous night. in
outstanding feature was the Large mmber of incon-
diaries dropped and extinguished before here was
on
Another noticeable feature was that
attack on the Southern Railway was further away
from London terminess. A fire at one engineer-
ing works hes been extinguished with no damage to
plant. Several other medium and minor fires are
all under control OF extinguished. Two enemy
aircraft were shot down by anti-aireroft fire
during the night. Fire at Thereahoven has been
put out.
/Yestering
Regraded Unclassified
75
Yesterday owing to changed weather
conditions enemy activity consisted mainly of
resemeissances by single aircraft. Bombs
dropped on railway at Reading end Banbury cousing
temporary stoppages on main lines. Some inter-
ceptions were made end our fighters destroyed one
enemy bomber. Damage was caused to public
cervices at Harrogate and a barrage belloon,
breeking Idene from Coventry, did serious damage
to telephone cables at Rugby. no Hestings a
few houses were demolished and enemy aircraft
machine-gunned resoue parties at work.
Last night for the first time for
several days the weather vas continuously over-
cast. Energy activity was on a reduced scale
although more dispersed; nevertheless about
100 enemy sircraft were operating principally
over London. Damage was appreciably less than
on previous nights and for the second time a
strong anti-aircraft barragé hampered reiders;
one telephone exchange was put out of action
end three operators hilled. Two medium fires
were caused but both are under control.
4.
of air casualties.
Energy: one bomber destroyed and three
bombers damaged by our fighters.
Unidentified: one destroyed, one
damaged by our anti-aircraft; one destroyed w
our balloons.
Totals: 8 destroyed. 4 dasaged.
British casualties nil.
Regraded Unclassified
76
5.
one British ship of 9800 tons was mined
and mak off Humber yesterday norning.
6.
Hiddle Beet
Name and Libya
on September 11th nine Blenhoins attacked
6 column of 300 mechanical transport near Rest
Libyan frontier and obtained direct hits and
started fires. AS the came time a herbour, e
seeplene base end two lending-grounde were attacked
and bombe were seen to fall near objectives.
Yesterday a Blenheim fighter shot down en Italian
bomber into the see off Alexandria.
on September 11th three formations of
Italian bombers attacked sidi Barrani, which is
unoccupied.
Sudan.
on september 10th nine enemy attacked
thartoun serodrome causing slight damage. Bame
evening 30 bombe were dropped at Atbara and one
on railway to Port Sudan.
Eritrea-
Three Blenheims from Aden dropped bonts
on harbour works at Assab on Sepember 18th and
obtained direct hits.
7.
Recent reports of British bonking in
enemy territory state that at Dortmund damage
estimated at three-quarter of & million marks was
caused at an asbestos and rubber works at Mannheim
and a chemical works has been coverely damaged.
The Fiet works on the night of August 10th/14th were
more seriously damaged than the Caproni plant. The
Regraded Unclassified
77
s
damage was sainly to buildings most of the
acchinery was intact and has been removed to
other shops. Casualties to workere were
fortyfour killed.
Regraded Unclassified
78
BRITISH EMBASSY,
WASHINGTON, D.C.
September 15th, 1940.
Personal and secret.
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Lolazin
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
79
Telegram from London dated September 14th.
1. Naval.
During the night of the 12th/13th
sweeps by light neval forces along Britanny,
the coast between Cape Berfleur and Le Havre
and between Calais and Boulogne were un-
productive. The three destroyers sweeping
in the last-named sector were ineffectually
engaged by shore betteries.
Yesterday afternoon nine aircraft
of the Fleet Air APE attacked oil cisterns at
Bergen but were driven off with loss of two
aircraft. A merchant vessel was set defire
as e result of this attack.
Two convoye totalling 62 ships have
arrived safely in United Kingdom porte. Cargoes
included fuel oil, grain, iron are, steel and
bauxite.
2. Royal Air Force.
Owing to unfavourable weather during
the night of 12th/13th our operations were
reduced and several aircreft returned with
their bombs. Six machines attacked Emden dock
direct hits were obtained along the harbour an
on one ship. Lightweight attacks were made (
reilway targets at one of which Reggaded Unclassified
so
started. Individual aircraft attacked
Flushing deek, a seeplane bose, and two 0870-
drance. Fires and explosions were caused at
a Proceels marchalling yard.
During yesterday a number of sussess-
ful recommeissances end attacks were cade by 25
medium bombers on enemy shipping in the
Channel ports. All aircraft returned safely.
Last night 91 medium end heavy bombers
were sent out to attnek shipping in Dutch
Channel ports. Two have not returned. Mine-
laying was successfully carried out.
3. German All Force.
During the night of 12th/13th enemy
raiding vas very widespread although London
was again the primary objective. Casualties so
far reported from London erea are 40 killed and
58 wounded. Sime dislosation was caused on
railways especially the Southern; 38 the Great
Western railway the two min lines reported as
temporarily blocked yesterday are already open
to traffic. Reported evening of 13th that all
fires in the London area amounting to 27 medium
and 279 mill fires were extinguished or under
control.
Yesterday enemy activity was confined
to about 20 aircraft soting individually over
the London area probably on combined reconnaise-
ance and bombing duties. A further 25 were
reported in the Bristol area come of which went
to Liverpool. Bad visibility made inter-
ception very difficult but 1 enemy bomber was
destroyed/
Regraded Unclassified
81
destroyed by our fighters and three more were
dom god.
I Hurricane was lost but the pilst
so safe. Buckingham Palace vas bombed. two
1.1. bonbo full in the quedrangle and 2 on the
reyal chapel but damage was slight. Some
incondiary bombo fell in Downing street and in
whitchell area but very slight damage vas caused.
A school in nest Ban was bombed where the
occupants were ovacuated families; 50 essualties
have been reported. Reports have been received
of damage to property in several localities;
some of 18 included industrial premises but
there are no reports of major damage. Outside
the London area there vas little bombarding of
importance.
Early morning an unsuccessful attack
vas made on shipping in Belfast Lough and
later on an casey circraft dropped incendiary
bonks in County Down which caused no damage.
Last night meny activity was on
approximately the come seale as the previous
night and lasted for about st hours. Prelimin-
ary reports indicate that damage caused was
less serious and casualties at present only
amount to between 30 and 40. one enemy circraft
was shot down by 8 Blenheim fighter and another
destroyed by anti-sireraft fire. Main damage
was as follows: Claphem Junetion temporarily
dosed ewing to unexploded bomb; an electrical
generating sub station damaged and one suburben
post-office set on fire. At Cardiff 8 cold
storage/
Regraded Unclassified
82
storage plant was gutted and damage was caused to
streets and gas mains.
4. Middle East.
Lybia. Reference to summary of 12th
paragraph 6. Throughout September 11th forward
movements or Italian units towards the frontier
continued. Four columns of mechanical transport
were located each containing from 200 - 350
vehicles. In addition there was greet air
activity against our forward troops throughout the
day. During the past month Italians have adopted
- plan of gradual approach to the frontier on a
line south of the main constal road. This plan
was probably adopted with the dual purpose of
preventing our patrols from crossing the frontier
and of establishing
forward bases and supply
dumps in preparation for an advance.
on September 13th the C. in C. Middle
East reported that the enemy had occupied Mussid
during the night and an attack had developed on
Halfaya; our forward post thdrew and Royal Tank
Regiment engaged the enemy at midday. Six hundred
and fifty mechanical transport vehicles reported
in the vicinity of Capusso and enemy infentry and
mechanical transport started to move northeast from
Sidiomar at 11.0 1.3. on the 13th. Enemy's inten-
tion appears to be to pinch out Sollum.
On September 12th three medium bombers
made 8 dusk attack on a concentration of about 400
mechanical transports et Sidiomer and fires were
started.
Regraded Unclassified
83
CONFIDENTIAL
Paraphrase of Code Cablegram Received at the
War Department 10499 Molley Suph. 15, 2960
Landen, Filed 10:33, September 15, 1940
The following information is in response to your eahled
requests
The British cotimate that German production of strewt
is now about 1600 a month. It is my opinion that the British one-
mates of Gensen aircraft production are - mere than educated guesses
arrived at w peoling all available information and opinions and
averaging the results. It is my commistion, however, that - of
their information is very recent and that 11 is appreximate only.
I also believe that British officials show considerable weight, par-
hape too much, to the difficulty of obtaining - materials in Germany
and to the interruption of production by bestardeent by British air-
eraft. Certainly men of the large member of ensing aircraft explared
give my indications that they are deficient in material.
British aircraft production has recently passed 1,000 a
month and continues to rise. Their aircraft fasterias are almost
intest at this time, but if they should be effectively beated it would
seriously affect production.
The present output of pilots from the training system is
not sufficient to met requirements. If the air bettles increase in
intensity or if they over continue as the present rate for a -
elderable period, the Royal Mr Feres will be hard pressed to maintain
CONFIDENTIAL
84
CONFIDENTIAL
its process comber strength. Under either of these conditions the
Air stinistry will certainly not be able to divert the Large must of
trained pilets necessary to provide for the training and combet write
for the greatly increased Air Force which they must have if they expect
to defent Germany in the future. The - situation arisse with respect
to the subers of coubet crom, such as radio operatore, (TIMATE and
navigators.
During the month of August the output of contat pilots as
most exastly equalled losses. It 10 my opinion that Dritain will
insuitably have & great shortage of pilots - the end of the presents
winter if she dess not develop training facilities beyond these now
in sight. If battle wastage increases this shortage will - before
that time. Pilot training in England is steadily becoming - dif-
ficult onling to the shorter days, the winter climite, and the Inter-
ference with training w the cossey activities.
LES
Copies to: General Naturn
Secretary of Her
State Dept.
Secretary of Treasury
Asst. Secretary of Ver
Chief of Staff
ONI
UPD
CONFIDENTIAL
Regraded Unclassified
85
GROUP MEETING
September 16, 1940
9:30 a.m.
Present:
Mr. Gaston
Mr. Haas
Mr. Young
Mr. Graves
Mr. Sullivan
Mr. Chamberlain
Mr. Thompson
Mr. Bell
Mr. Cochran
Mr. White
Mr. Schwarz
Mr. Foley
Mrs Klotz
H.M.Jr:
What have you got, Herbert?
Gaston:
I haven't anything.
H.M.Jr:
I am going down at 5:00 o'clock this after-
noon with the President to Alabama, so I
will be out of circulation for a day or two.
Ed Foley thought I ought to go. He thought
it would help him on the Hill. I got a
call at 11:00 o'clock last night that no
fooling, I was to go. That was the second
call I got. I thought we would call off the
press conference, with all this excitement
today.
Schwarz:
You don't have much time between coming back
and the departure of the train, anyway.
H.M.Jr:
No. That fellow is working out fine.
Gaston:
That is good.
H.M.Jr:
I saved at least five minutes on the take-off.
Gaston:
You have got an unusually well-equipped crew,
with that co-pilot being a chief radio elec-
trician.
85
- 2 -
H.M.Jr:
Very good.
Mr. Foley?
Foley:
Here are a couple of memos - three memos.
This is on that requisition bill you asked
me to report on that I told you about.
H.M.Jr:
In case I run out of detective novels - I.
have got two detective novels - we will
take this on the train.
Foley:
This is that question that Knudsen raised.
H.M.Jr:
All right.
Foley:
This is the memo on the imposition of anti-
dumping, in 80 far as the petroleum products
are concerned from Mexico. Harry and Her-
bert and I looked into it and we think that
a thorough investigation at this time wouldn't
be warranted, but we suggest that the State
Department refer to us the facts that they
have to see whether or not they have informa-
tion that hasn't been made available to us.
H.M.Jr:
Anything else?
Foley:
No.
H.M.Jr:
I see the Packard contract is all signed.
Evidently, my letter was satisfactory.
Foley:
They reduced, I understand, from seven to
six percent, the fee that Packard is to
get on each motor.
H.M.Jr:
Mr. Jones called me and I invited him for
lunch tomorrow. That is off. It is very
amusing. All he said was, "I want to talk
to you about the possibility of this financing,"
and so forth and so on, and he said, "I want -
87
- 3 -
I really want to put it up to the President
now." He called me.
Sullivan:
I think that that is something that should
be straightened out. We have been getting
more kick-backs. Navy understands that the
reason for this plan of reimbursement --
Foley:
It is number two that Biggers described to
us.
Sullivan:
....that Treasury is against putting up the
money themselves in the first instance, and
if we can spread it over five years --
H.M.Jr:
The Treasury is against what?
Sullivan:
The idea of allowing & manufacturer to put
up - the Treasury is against the idea of
the Government building the plant itself.
The whole thing is being misrepresented
around town.
Foley:
I thought if it was agreeable with you, I
would set down in a chronological way the
circumstances in so far as that Curtiss-Wright
deal goes, and have that before you and then
point out 8 little bit of what this plan
number two is.
H.M.Jr:
That is all right.
Foley:
And then when you are talking to Knox and
Stimson and Jones, perhaps you can bring
them around to your way of thinking. I
don't think they like it any better than
we do.
H.M.Jr:
Will you have it ready by 4:00 o'clock to-
night?
Foley:
Yes, sir.
88
- 4 -
H.M.Jr:
4:00 o'clock?
Foley:
Yes.
H.M.Jr:
You might let Philip Young see it, and John.
Sullivan:
We have had conferences on Curtiss-Wright
and they change the contract every few
minutes.
H.M.Jr:
I think if you three gentlemen --
Foley:
Curtiss-Wright is willing to go ahead now
and have the Government build the plant
exactly as the Chrysler tank plant is being
built, and not go through all this rigamarole
of their using their own money and being re-
imbursed by the Government, and I think it
is just Biggers in the Defense Commission
that represents this point of view. The
rest of the Administration feel that they
have to go along with it, because --
Gaston:
The manufacturers own --
Foley:
And Curtiss-Wright doesn't want it.
Gaston:
Douglas doesn't want it.
Foley:
That is right.
H.M.Jr:
I just wanted you to know we are putting extra
barbers - the one that has been cutting my
hair. Where will we set up a barber shop?
Thompson:
We will set it up somewhere.
H.M.Jr:
Look at Ed. Couldn't there be one in the
corner of the hall somewhere, just with a
screen around it?
89
- 4(a) -
Thompson:
That is right.
H.M.Jr:
You fell for that, didn't you? As a matter
of fact, Foley, you have got a good barber
right outside your door now.
Foley:
That is what he says. I never trusted him,
but he comes around with his tools every
once in a while. He says he out the Presi-
dent's hair.
H.M.Jr:
What else?
Foley:
That is all.
H.M.Jr:
Well, don't worry.
I just wonder, Bell, if you couldn't do this
for me while I - I talk as if I were going
to be gone for a long time - if you couldn't
get White and Cochran together. We get a
lot of information, supposedly, on the money
that goes to the German Embassy and the
money that goes to the Russian Embassy. The
rest is kind of sketchy and the balances -
and so forth and so on. I think it is im-
portant enough that we should hire all the
time a very, very able fellow and pay him
out of the Stabilization Fund to just watch
the funds that go to the German Embassy and
the German Consulates and the German balances,
the same for the Russians; one fellow just
sitting there with this stuff, and then if
there are any pieces which are missing that
he - but stuff keeps coming in all the time
and I don't think that we have it, and I
think it is important enough that one per-
son should just watch that maze of stuff,
see. The way it is now, the J. Edgar Hoover
people see Cochran. I arranged that. If
anybody wanted any additional information -
Gaston ought to sit in it because he is -
you ought to sit in on this, Gaston.
so
- 5 -
Gaston:
I have a letter on my desk now on it.
H.M.Jr:
I would like one man to give his whole
time to the money that goes to the Ger-
man Embassy and the German Consulates,
what we know, or what the missing pieces
are, and the same thing would go for the
Russian Embassy and the Amtorg. We will
start on that and I may want to add others
to it. Let's add Italy now, see, but it
is worthy. I mean, the man may not be very
busy the first week or so, but I want a
fellow who knows foreign exchange and who
is smart, has got a sense of smell, you
know. He may be & foreign exchange man,
a lawyer, an accountant, it might be some
of these people that are coming back from
the foreign service, but I just want one
fellow who will just have all of the stuff,
and if there is something extra, he can say
to Mr. Cochran, "Now, won't you -." What
is this fellow's name that you see in FBI?
Cochran:
Kimball is one.
H.M.Jr:
But if you and Gaston and Cochran get to-
gether and just - I don't think foreign
funds come in on that, do they?
Chamber'n:
No, I don't think so. Mr. Cochran could
watch that, anyway.
H.M.Jr:
Get Sammy for that. Put Sammy on one of
these.
Foley:
That would be all right.
Bell:
Who?
H.M.Jr:
Sam Klaus. He has got 8. nose.
91
- 6 -
Bell:
Can he do the whole job?
H.M.Jr:
No, he can just do one country. Let him
do Russia.
Bell:
He has got a nose, all right.
H.M.Jr:
He will set a speed for the fellow who is
doing the German one. He is the fellow that
has been on Moe Annenberg for two years. He
is a born detective.
Foley:
Sure, he could do both, I think.
H.M.Jr:
Well, do you mind?
Foley:
No.
H.M.Jr:
Okay. Let him set the pace on the Russians.
Klotz:
There is something going on between the two
of them on Sammy.
H.M.Jr:
Well, anyway, Sammy goes on Russia.
Bell:
He is clever.
Sullivan:
It is the toughest break Russia has had in
a long time.
(Secretary left the room for a telephone
call)
H.M.Jr:
Where were we?
Cochran:
Do we get back from Mrs. Klotz those reports
we had from Mr. Hoover?
H.M.Jr:
They go to Mr. Gaston.
Cochran:
And then they go to your files.
92
- 7 -
H.M.Jr:
Well, you people straighten it out. Every
report I get from J. Edgar Hoover goes to
Mr. Gaston. What Mr. Gaston will do from
now on - the letters that affect Russia will
go to Sammy Klaus, and the ones that affect
Germany will go to Mr. "X" or if you want to
see them first - work it out.
Cochran:
Sure.
H.M.Jr:
But I do want two men on this.
White:
The Treasury Secret Service is not the appro-
priate agency to handle that instead of the
FBI?
H.M.Jr:
No. Ask Mr. Gaston what we went through on
that. All right?
Cochran:
Yes, sir.
H.M Jr:
Chick, you are all right?
Schwarz:
Yes.
H.M.Jr:
Philip Young?
Young:
Do you want to see Mr. Morgan of Sperry Wednes-
day or Thursday?
H.M.Jr:
Let's say Thursday afternoon, maybe around
3:00.
Klotz:
Thursday?
H.M.Jr:
Yes, Mr. Morgan. He is President of Sperry.
Phil, do you suppose you could get from
George Mead - he must have now what he calls
his master chart on orders for airplanes.
Young:
You mean the production schedule up to
April '42?
93
- 8 -
H.M.Jr:
Yes.
Young:
I have their schedules for both engines
and planes now, which I got the other
day.
H.M.Jr:
Is that by companies, or how is that?
Young:
All different ways. Every conceivable
breakdown.
H.M.Jr:
Maybe after lunch I could go over it with
you and George Haas.
Young:
Just like all those charts, it is never
final.
H.M.Jr:
I would like to go over it some time this
afternoon with you and George. Anything
else?
Young:
That is all. I talked to Major Fleet on
Saturday.
H.M.Jr:
Oh, did you?
Young:
I will give you a memorandum on it.
H.M.Jr:
Was he at all cooperative?
Young:
Oh, very cooperative.
H.M.Jr:
Will you stay behind a minute? I would like
to hear about it.
Young:
All right.
Chamber'n:
Mr. Secretary, we understand that nothing
has been done - I am speaking on the French
request to pay for their Embassies - yet.
94
- 9 -
H.M.Jr:
Well, that is cleared for the United States,
isn't it?
Chamber'n:
That is taken care of.
H.M.Jr:
The deal is this. It was made at Cabinet.
Mr. Hull is to hold this as a carrot before
the nose of the French for release of the
planes at Martinique. That was not my sug-
gestion. It was Mr. Roosevelt's suggestion
to see whether we can't get those planes off
the island of Martinique, and the whole thing
is in Mr. Hull's hands.
Chamber'n:
Then we await notice?
H.M.Jr:
We wait until he tells us what we do. In
the meantime, he is to try to trade the
French this money for the planes which are
on Martinique, and so if anybody asks you,
tell them --
Chamber'n: We don't know anything about it.
H.M.Jr:
Yes, or tell them to go to Mr. Hull.
Chamber'n:
All right. I understand Mr. Alphand was
satisfied with the arrangement he worked out
with us.
H.M.Jr:
Well, the President wouldn't have it. He just
wouldn't have it, and he wants something for
it.
Chamber'n:
Oh, I mean on the other.
H.M.Jr:
Oh, on the United States?
Chamber'n:
Yes. We thought the amount he asked was not
exceedingly high.
H.M.Jr:
He wants to do a little trading.
95
- 10 -
Gaston:
Maybe we had better get tough and start
starving them a little bit.
Chamber'n: That is all.
H.M.Jr:
Allison engines, George?
Haas:
Looking a little better.
H.M.Jr:
Now, let's take a guess at this.
Haas:
On that figure?
H.M.Jr:
Well, 37! I wouldn't have guessed that
many.
Foley:
He said 35.
H.M.Jr:
Did he? 37, that helps.
Haas:
And they are actually going to get some
P-40's and engines this week. They have
got 16 of them up there.
H.M.Jr:
How many are they going to get?
Haas:
They have got 16 of them up there for the
British, and five of the engines are now
being put in five of the planes which are
in storage of that 99, and I presume the
balance, 11, are going in planes which
will be produced this week off the line.
H.M.Jr:
Well, they are supposed to produce six a
day and take three out of storage and give
them nine a day, that is the program.
Anything else?
Haas:
That is all.
96
- 11 -
H.M.Jr:
Dr. White, I read your stuff on Chile.
Me no likee. You are too honest in this
report. There are too many loopholes.
White:
Well, you can't get away from the fact
that there is a risk.
H.M.Jr:
Yes. I mean, I was surprised how fair you
were.
White:
I thought I indicated there was a risk.
H.M.Jr:
You did all right. I can't go along with
that.
White:
You can't go along with it?
H.M.Jr:
Oh, not on the stabilization fund. I mean,
it is a straight subsidy to make up the
difference each month on the difference be-
tween what their deficit is in exchange
funds.
White:
I guess I didn't make myself clear in the
memorandum, because I don't think that con-
clusion is justified.
H.M.Jr:
You get no guarantee.
White:
Yes, you get both the guarantees of the Govern-
ment and the central banks.
H.M.Jr:
Not in your memo. You said they had to get
special legislation.
White:
Not with respect to guarantees. Special
legislation with respect to their pledging
their gold or their agreement to utilize
their gold.
H.M.Jr:
Well --
97
- 12 -
White:
But there is a risk.
H.M.Jr:
Too risky for me.
White:
Well, I think that needs further discussion.
H.M.Jr:
I will give it further discussion.
White:
Because I don't think the risk is so great
as to warrant conclusion without examination.
H.M.Jr:
Well, we will have a talk.
White:
That raises this second point, then. The
State Department has telephoned this draft
of a cable which they want to send to Ar-
gentine. We have made some corrections here
as to what might be satisfactory. However --
H.M.Jr:
Well, I can't do it now. They will just
have to wait.
White:
They have been pressing us for Saturday on
it.
H.M.Jr:
Oh, Harry, if Mr. Hull can wait for three
months, I can wait until afternoon.
White:
All right.
H.M.Jr:
After all, I can wait certainly until after-
noon. Who is pressing you?
White:
Well, Collado is the man who telephoned. He
claims that Welles is pressing him.
H.M.Jr:
Tell them both to take a walk.
White:
I can do that very easily.
H.M.Jr:
All right. I am sick and tired of being
98
- 13 -
pressed by them, and when it comes to the
Swedish thing and it gets into hot water,
they dump it all on Philip Young. I don't
think - if I can talk to you about Chile
this afternoon, it is fine, and Mr. Argen-
tine can wait, most likely, until I get
back.
White:
Well, the Argentine will have to wait until
the Chile, because if you feel pretty strongly
on the Chilean thing, I don't think it is
wise to give the Argentines any further en-
couragement, 80 I think this had better await
further discussion on Chile.
H.M.Jr:
I don't know how I am fixed this afternoon,
but we will make it the first appointment.
I don't know how long this thing will last
on the Hill. I will give you ample time.
3:00 o'clock, tentatively. I want Mr. Bell
in here and Mr. White and Mr. Cochran and
Mr. Gaston, and I would like you to sit in,
Ed, if you get back in time.
Foley:
Can I bring Bernie?
H.M.Jr:
If you will.
White:
Here is a brief memo.
H.M.Jr:
Have I overlooked anybody.
Dan?
Bell:
Of course, you saw in the paper where the
National Defense Commission was supposed
to have given out estimates on the expendi-
tures for 1941 national defense program. I
can't find out who gave it out. Everybody
denies it. It is only about four billion
two fifty, whereas the statements we gave
the Committee were five billion.
93
- 14 -
H.M.Jr:
I thought you told me that if you gave them
to the Defense Commission, it would be secret
and everything else.
Bell:
I am trying to get Leon Henderson's office
to see if he gave them out, but I don't think
he did. The Budget is trying every way to
see who did it, and so is Mac, but nobody
will admit it.
How about the financing program?
H.M.Jr:
Have to let it go for a couple of days.
Bell:
Until you get back? There is nothing you can
do, anyway. That is all.
Thompson:
I have nothing.
H.M.Jr:
Well, as I say, I go up on the Hill at 12:00
and I am back, and I eat, and I will be ready
at 3:00 for this meeting on Chile. The train
leaves at 5:00 this afternoon.
100
SEP 16 1940
The President,
The White House.
Dear Mr. President:
You will be interested to know that, as the result
of the transfer of the functions of the Federal Aloohol
Administration to the Alcohol Tax Unit of the Bureau of
Internal Revenue, pursuant to Reorganization Plan No. 3,
savings will be effected amounting to about $175,000 out
of a total of $415,000 available for the ourrent fiscal
year.
The activities formerly engaged in by the Federal
Alcohol Administration have now been largely decentral-
ized to the field offices of the Aloohol Tax Unit, al-
though certain supervisory, administrative, and legal
functions have necessarily been retained in the Washing-
ton headquarters. The work is in satisfactory condition.
Faithfully yours,
(Signed) H. Morgenthan, JT
HNG/mff
a to mr Thompson
Ity Name 1145
Regraded Unclassified
10.
SEP 16 1940
The President,
The White House.
Dear Mr. President:
You will be interested to know that, as the result
of the transfer of the functions of the Federal Alcohol
Administration to the Alcohol Tax Unit of the Bureau of
Internal Revenue, pursuant to Reorganization Plan No. 3,
savings will be effected amounting to about $175,000 out
of a total of $415,000 available for the current fiscal
year.
The activities formerly engaged in by the Federal
Alcohol Administration have now been largely decentral-
ized to the field offices of the Aloohol Tax Unit, al-
though certain supervisory, administrative, and legal
functions have necessarily been retained in the Washing-
ton headquarters. The work is in satisfectory condition.
Faithfully yours,
(Signed) H. Morgenthan, Jr.
HNG/mff
By
Regraded Unclassified
Dispitable from name attache London
16-17 Sept.
102
DISPATCHES FROM ALUSWA LOWDOW TO OPMAY
CONFIDERTIAL
ATTRINELY DIFFICULT TO SWEEP ARE THE MOCRED ANTENNA WINES WITH TWO WAY FIRING
CIRCUIT WHICH THE WAZIS ARE NOW USING I MAZIS ALSO USING ANTI-SWEEP DEVICE
6 FATHOWS 5/8 INCH STUD LINK CHAIN WITH LINES THREE INCHES WIDE CARRYING CUTTER
TILADE I CHAIN IS BEYOND CAPACITY PRESENT EXPLOSIVE CUTTERS BEING DEVELOPED BOW
TO CUT FOUR PARTS 5/8 INCE ROD THREE CUTTERS ON SINGLE FRAME I ASSUMING GREAT
IMPORTANCE IS DEVELOPMENT DETACHED CUTTERS I THE DEVISING OF IN ARRANGEMENT FOR
CARRYING BOW PARAVANE TOW POINT ABOUT 4 FEET HELOW THE KEEL AND FORWARD OF THE
STEM IS now THING ATTEMPTED XAS PART PROTECTION SHORTER TOW ROPES ARE BEING USED TO
INCREASE ANGLE X IT IS AGAINST ANTENNA MINES THAT THESE TOW ROPES ARE BEING so
USED FOR\PART PROTECTION
PJR is INDETERMINATE PERIOD LTCOM BARTMAN IN HMS SOUTHAMPTON IS GOING TO SEA
THE FOLLOWING ARE THE OUTSTANDING FEATURES OF THE BRITISH ASDIC DEVICE: THE
ENPLOYMENT OF A STREAMLINED OUTER FREE FLOODING CASING WHICH PERMITS THE
PROTECTOR ROTATING WITHIN TO ROTATE IN DEAD WATER X A PERMANENT RECORD OF THE
ATTEX IS GIVEN CONTINUQUSLI AND VISIBLY BYA GRAPHIC RECORDER X EQUIPMENT IS
CANABLE or "UANTITY PRODUCTION BEING CHEAPER AND SIMPLER THAN OURS I EQUAL
RESULTS PROBABLY EQUIVALENT TO OUR OWN INDICATED FROM DISCUSSION
THERE ARE IN THE ENGLISH NAVY TODAY A TOTAL OF 1,500 GRADUATES OF SOUND SCHOOL.
OF THICH, 1,000 HAVE FINISHED 7 WEEK COURSE, 400 HAVE COMPLETED ADDITIONAL 3
MONTHS COURSE, ANOTHER 100 HAVE FINISHED ADDITIONAL 1 YEAR COURSE. 150 ENLISTED
STUDENTS ARE AT SOUND SCHOOL AT PRESENT. COMMANDING OFFICER PLUS ONE ADDITIONAL
OFFICER ABOARD EACH DESTROYER HAVE COMPLETED 1 WEEK COURSE. THE DEMEDIATE
EXPANSION OF TRAINING FACILITIES OUR UNDERWATER SOUND PERSONNEL IS DEFINITELY
INDICATED. BEST FEATURE OF SCHOOL IS SIMPLE ATTACK TEACHER. ONE PART CONSISTS
OF COMPLETE SET-UP OF DESTROYER BRIDGE INCLUDING ASDIC CONTROL AND OTHER PART
IS THE PLOTTING ROOM WITH GLASS-TOPPED TABLE WITH MECHANISM BENEATH. BY
CRANKING IN SPEED AND COURSE OF DESTROYER AND SUBMARINE THIS MSCHANISM PLUS
LIGHT SOURCE MIRRORS AND PHOTOCELL PROJECTS ARROWS OF LIGHT ON CLASS TOP WHICH
NOVE. WHEN ASDIC IS KETED A DOT OF LIGHT TRAVELS AWAY FROM DESTROYER AND IF
TRAINED ON CORRECT BEARING HITS ARROW REPRESENTING SUBMARINE. THE ECHO PRODUCED
INDICATES RANGE ON GRAPHIC RECORDER. DURING ATTACK THE INSTRUCTOR PLOTS THE
RESPECTIVE POSITIONS DESTROTER, SUBMARINE AND SIMULATED DEPTH CHARGE BARRAGE.
CONNING OFFICER, CONTROL OFFICER AND SOUND OPERATOR ANALYZE PLOT UPON COMPLETION
OF ATTACK
171532 TOUR 162130 SERIAL RECEIVED TWENTISEVEN AUGUST HAVING BEEN SENT VIA
PARIS BOTH OTHERS APPROPRIATELY REFERRED REPLY PENDING WILL ENDEAVOR EXPEDITE
ALL
Regraded Unclassified
103
DISPATCHES FROM ALUSWA LONDON TO OPHAV (CONT'D)
Regraded Unclassified
THE COMFIDENTIAL REPORT OF THE AIR MILISTRI COMPIRMS THE PRESS REPORT THAT
186 GERMAN PLANES WERE DESTROYED YESTERDAY AND THAT THE ENGLISH LOSSES NERS
25 AIRCRAFT AND 13 PILOTS
ON THE 15TH OF SEPTEMBER GERMAN SUBS AND PLANES OPERATED TO WESTWARD or
SCOTLAND AND THESE OFERATIONS RESULTED IN THE SUBMARINES SINKING 2 MERCHANT
SHIPS AND LATER DAMAGING 3 MORE
ALSO ON THE 15TH THE SLOOP DONDEE WAS TORPEDOED IN THE NORTHWESTER APPROACHES
SHE WAS TAKEN IN TOW AND LATER SUNX TWO HUNDRED AND FORTY MILES WEST OF
HEBRIDES
OFF FREE TOWN 12TH JULY HERMES RAMMED BY BRITISH MERCHANTMAN CORFU AND
DAMAGED X PROCEEDED TO SIMONS TOWN CAPE PROVINCE IN CONVOY
- ETIENNE BOEGNER REPRESENTING COMPAGNIE OPTIQUE ET PRECISION DELEVALLO
IS MAKER OF OPTICAL AND FIRE CONTROL INSTRUMENTS PRESENTED LETTER INTRODUCTION
FROM COMRONFORT AND DESIRES PROCEED US WITH VIEW ESTABLISHING MANUFACTURE
PRODUCTS THERE. UNDERSTAND OF SUPPLY HERE DISAPPROVES ATTEMPT THESE
ISLANDS BUT FAVORABLY DISPOSED CANADIAN SETUP. BORGHER PREFERS INDEPENDENT
EFFORT USA BUT CANNOT GET VISA HERE ONLESS WASHINGTON APPROVES. REASON IS
ALL FINANCIAL CONNECTIONS PLUS DOMICILE ESTABLISHED LISBON AND PASSPORT
ROUTINE HERE PREVENTS VISA WITHOUT COMPLIANCE WILL ESTAHLISHED PROCEDURE. IF
YOU ARE INTERESTED SUGGEST DEPT STATE BE APPROACHED OBTAIN SPECIAL CONSIDERATION.
MANS PAPERS IN ORDER AND AUTHENTICITY ACCEPTED. PLEASE ADVISE AS HIS PLANS
DEPEND YOUR REPLY.
AN EXTENSIVE PROGRAM IS UNDERWAY ONE DEVELOPMENT OF VARIOUS TIPES LANDING BOATS
LIGHTERS AND SPECIAL FERRIES IT IS HERE SUPERVISED BY JOINT COMMITTEE OF
THREE SERVICES
MI ASSISTANTS ARE WITNESSING A FULL SCALE LANDING TESTS ON THURSDAY OF
COMPREHENSIVE NATURE
I HAVE BEEN INFORMED THAT THIS EQUIPMENT WAS OF GREAT VALUE IN THE ORIGINAL
LANDING AT NARVIK AND ESPECIALLY DURING THE EVACUATION FROM THERE
DURING THIS EVACUATION IT WAS STATED THAT SERIOUS LOSSES OF NEW AND STORES ETC
WAS AVOIDED SOLELY BECAUSE LANDING BOATS WERE AVAILABLE.
IN VIEW OF THE ABOVE IT IS REQUESTED THAT AN OFFICER BE ASSIGNED WHO IS FULLY
QUALIFIED AMPHESIAN WARFARE AND FAMILIAR WITH BOAT DESIGN FOR THIS OFFICE
THERE IS SOME ADVANTAGE HAVING MARINE CORPS FILL SUCH À BILLET OR SEND THQ
OFFICERS ONE OF WHICH IS A MARINE
104
G-2/2657-220
RESTRICTED
M.I.D., W.D.
September 16, 1940.
No. 195
SITUATION REPORT
12:00 M.
This military situation report is issued by the Military
Intelligence Division, General Staff. In view of the occasional
inclusion of political information and of opinion it is classified
as Restricted.
I. Western Theater of War.
1. No ground operations.
2. Air Force Operations.
On the day of the 14th two large German concentrations
endeavored to break through the London defenses. Both were inter-
cepted, but small percentages reached the metropolitan area and in-
flicted considerable damage. Brighton and Eastbourne were also
bombed. During the night of the 14th-15th there were widespread
raids by single planes and small formations, totalling about 175
machines in all. In daylight on the 15th three large waves of Ger-
man planes attacked the London area, were successfully intercepted
and suffered heavy losses. Another German daylight attack on Liver-
pool apparently met no fighter opposition. On the night of the 15th-
16th harassing attacks on the London area continued. German bombers
are active over London today.
The offensive effort of the Royal Air Force appears to
have been somewhat increased. On the 14th-15th Channel ports and
German communications in rear thereof were widely bombed. Reports on
the 15th-16th are fragmentary, but there were two alerts in Berlin.
II. Meditorranean and African Theaters of War.
1. Sollum, Egypt, was occupied by the Italians on the 14th.
The strength behind this movement is still undisclosed.
2. The Italian Air Force has been active along the Medi-
terranean coast of Egypt. There has been widespread sporadic activity
over Italian East Africa and the Sudan.
RESTRICTED
105
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 16, 1940
TO
Secretary Morgenthau
FROM
Mr. Haas
Reports of the Work Projects Administration employment
show a decline of 2,000 persons to 1,690,000 during the week
ended September 4, 1940.
Attachments
106
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Weekly
United States
Week ending
Number of Workers
1940
(In thousands)
February 7
2,288
February 14
2,306
February 21
2,319
February 28
2,324
March 6
2,324
March 13
2,319
March 20
2,312
March 27
2,288
April 3
2,204
April 10
2,162
April 17
2,118
April 24
2,092
May 1
2,059
May 8
2,008
May 15
1,970
May 22
1,945
May 29
1,925
June 5
1,859
June 12
1,785
June 19
1,714
June 26
1,666
July 3
1,611
July 10
1,619
July 17
1,659
July 24
1,689
July 31
1,700
August 7
1,709
August 14
1,708
August 21
1,699
August 28
1,692
September 4
1,690
Source: Work Projects Administration.
107
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Monthly
United States
Number of Workers
1938
(In thousands)
January
1,901
February
2,075
March
2,445
April
2,582
May
2,678
June
2,807
July
3,053
August
3,171
September
3,228
October
3,346
November
3,287
December
3,094
1939
January
2,986
February
3,043
March
2,980
April
2,751
May
2,600
June
2,551
July
2,200
August
1,842
September
1,790
October
1,902
November
2,024
December
2,152
1940
January
2,266
February
2,324
March
2,288
April
2,092
May
1,925
June
1,666
July
1,700
August
1,692
Source: Work Projects Administration.
Monthly figures are weekly figures for the latest
week of the month.
They include certified and noncertified workers.
WORK PROJECTS ADMINISTRATION
Number of Workers Employed
United States
Monthly W.P.A. Employment
Weekly U.P.A. Exployment
1933
1936
1937
1938
1939
1940
41
1939
1940
1941
#
M
x
MAR
MAY
JULY
SEPT.
BOY
was
MAY
WAY
MILLIONS
REPT
NOV.
MAR
MILLIONS
MILLIONS
or
or
OF
or
WORKERS
WORKERS
WORKERS
MORKERS
3.4
3.4
3.3
3.3
3-2
3.2
3.2
3.2
3.1
3.1
2.8
2.8
3.0
3.0
2.9
2.9
2.4
2.4
2.8
2.0
2.7
2.7
2,0
2.0
2.6
2.0
2.5
2,5
1.6
1.6
2,4
2.4
2.3
2.3
2.2
2.2
1.2
1.2
2.1
2.1
2.0
2.0
-
J
1.9
1,8
1.8
1.8
-4
.4
1.7
1.7
1,6
1.6
o
0
1.5
1011
1.5
-
$
.
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-
-
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.
-
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#
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.
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-
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=
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#
.
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MAR.
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JULY
SEPT.
NOV.
JAN.
MAR.
L
#
JAM.
MAR.
MAY
JULY
SEPT.
NOV.
1515
1936
1937
1938
1939
1940
41
1939
1940
1941
SOURCE WORK PROJECTS ADMINISTRATION
Offer at The Secretary of the Treasury
Date é - and States
2. 221 BZ
109
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
CONFIDENTIAL
DATE September 16, 1940
TO
Secretary Morgenthau
FROM
Mr. Haas BA
Subject:
The Business Situation,
Week ending September 14, 1940.
Summary
(1) A rising business trend 18 indicated by increasing
activity in defense industries, by rapidly expanding auto-
mobile output, and by a rising volume of consumer buying,
despite some interruption to new ordering and production over
the Labor Day holiday.
(2) A recent tendency toward increased forward buying
of commodities, together with rising prices of industrial
materials, bears out previous indications of & more optimistic
feeling among industrial buyers. To what extent this may be
adversely affected by the intensified bombing of England re-
mains uncertain, but the relatively slight effect on stock
prices 80 far suggests that no important relapse in confidence
has yet occurred.
(3) Blast furnace operations in August, at 89.9 per cent
of capacity, exceeded the highest annual rate of the World War
period, which was 86.7 per cent in 1916. It is doubtful that
this rate can be appreciably exceeded, owing to the necessity
for relining and repairs. Since the present blast furnace
capacity is about the same as the average during the World War,
it is possible that this may prove a limiting factor to the
rapid expansion of armament production. The situation may be
partially relieved by increased use of steel scrap in place
of pig iron.
The present situation
While the recent holiday somewhat decreased the volume
of new orders in the first week of September, and holiday
influences have reduced the significance of current statis-
tice, the indications of (1) increasing activity on defense
Regraded Unclassified
110
Secretary Morgenthau - 2
orders, (2) rapidly expanding automobile output, and (3) a rising
volume of retail sales, leave little doubt that the trend of
business 18 upward.
Automobile output last week, despite the holiday, rose
23,600 units to & total of 63,200 units. This figure was not
reached last year until two weeks later, and in 1938 not until
five weeks later. All three major automobile producers are now
in volume operation and accelerating rapidly, with dealer orders
reported far in excess of present production. It 18 not yet
clear whether the dreft may later in the fall have an unfavor-
able influence on retail sales of automobiles and other durable
consumers' goods.
Department store sales in the last three weeks reported
have shown increased gains over the previous year, averaging
11.1 per cent higher 8.8 compared with an average gain of
6.9 per cent in the previous 3-week period.
Defense orders stimulate business
Factory employment and payrolls in New York State showed a
much greater than seasonal increase in August, employment rising
3.4 per cent and payrolle 4.9 per cent, according to the State
Labor Department. In a number of industries the major portion
of the gains were directly attributed to Government orders for
military supplies.
Business in industrial centers 18 showing a particularly
encouraging upturn. In the Detroit area, for example, for the
first time since late 1936, every member of the Purchasing Agents
Association reports his firm's business during the past month as
better than in the previous month. Reflecting a more optimistic
outlook, the forward buying of materials and supplies by members
of that association 18 being extended, and hand-to-mouth buying
le being reduced. In August, 21 per cent of purchases were
reported to cover requirements 6 to 9 months shead, as compared
with 19 per cent in July and 6 per cent in August 1939.
The awarding of Navy contracts last week for 201 ships cost-
ing over $3,800,000,000, a new peak in defense awarde, will
strongly affect activity in many industries.
What effect the intensified bombing of Great Britain may
have on buying policies of industrial concerns and retail buy-
ing 1s yet to be determined. Its relatively slight effect on
the stock market BO far may provide some indication of e. minor
reaction on public confidence.
Regraded Unclassified
Secretary Morgenthau - 3
Steel orders slightly lower in August
New orders reported by the U. S. Steel Corporation in
August were slightly below the July total, while shipments
increased nearly to the level of new orders. (See Chart 1,
upper section.) As a consequence, the estimated backlog of
unfilled orders at the end of the month (lower section of
chart) was but slightly larger than at the end of July.
One reason for the downturn in new orders was the reduced
takings of steel by the automobile industry during the month.
The rate of steel output scheduled for the current week
shows a further slight rise to 92.9 per cent, which compares
with 91.9 per cent last week.
U. 8. Steel orders during the week ended September 5,
affected by the holiday, were reduced to 76 per cent of capa-
city from 107 per cent in the previous week. Trade reports
mention continued light buying by the automobile companies
and the tin plate industry, which contrasts with heavy British
orders for semi-finished steel, increasing domestic demand for
plates, and for structural steel for plant expansion.
The downturn in steel orders, together with a substantial
decline in textile ordere during the holiday week, has caused
a sharp drop in our weekly new orders index. (See Chart 2.)
Other effects of the holiday are seen in the export freight
data for the North Atlantic area, both receipts and exports
being down sharply in that week.
Pig iron capacity limitations
An analysis of capacity data for the steel industry, in
the light of our experience during the World War, suggests
that pig iron capacity may prove a limiting factor to the
rapid expansion of armament production in this country and
Canada, unless steel scrap can be substituted for pig iron in
sufficient quantity to alleviate the situation.
The highest annual rate of blast furnace operations
reached during the World War period was 86.7 per cent of
capacity in 1916, but this was not maintained, and the tonnage
output of pig iron fell off in the following year despite the
increased steel requirements of our war preparations.
Regraded Unclassified
112
Secretary Morgenthau - 4
In recent months we have already exceeded the average
1916 rate of pig iron output, the blast furnaces in August
having operated at 89.9 per cent of capacity, and last
November as high as 90.3 per cent. It is doubtful if this
rate can be appreciably exceeded, owing to the recurring
necessity for relining and repairs. Our present pig iron
capacity is not much larger than that during the World War,
the total capacity of 55,700,000 tons as of December 31, 1939,
comparing with 50,400,000 in 1915 and 58,000,000 in 1920. The
capacity has been tending slightly downward in the past two
years.
Inability to produce sufficient pig iron is already
tending to hamper steel production in the Birmingham district,
according to current reports. A partial remedy for a pig
iron shortage 18 the use of increased proportions of steel
scrap in making steel. The steady rise of scrap prices in
recent weeks may indicate that this 1s being done. The Iron
Age composite price on September 10 had risen to the year's
high of $19.92 a ton, and further increases have been reported
at Pittsburgh since that date.
The importance of our pig iron capacity to hemisphere
defense 1s suggested by the fact that Canada has apparently
reached its practical limit of steel production, and will
need to import larger quantities of basic materials from the
United States to expand armament production. Exports of pig
iron to Canada, which were negligible at only 81 tone as re-
cently as April, have expanded sharply since then. The vol-
ume in July was 10,311 tons, twice as large as in June.
Exports of steel ingote and steel scrap to Canada have also
greatly increased in the past several months.
Industrial material prices higher
Prices of industrial materials were somewhat stronger
last week, especially those that are most likely to feel
the influence of defense buying, such as hides, print cloth,
wool, burlap, and steel scrap. Foodstuffs were lower, re-
flecting declines in spot prices of wheat, hogs, steers,
lard, and cottonseed oil. (See Chart 3.)
143
Secretary Morgenthau - 5
The very heavy buying of zine in the past several weeks
has carried spot prices sharply above the August average, in
line with the indications provided by our "estimated basic
price" derived from demand and supply data for August. (See
Chart 4, upper section.) The bullish price factors have been
8 steady rise in demand, as indicated by deliveries, combined
with & reduction in available supplies. Zinc deliveries (in
cluding exports) in August showed a strong increase, while
production declined because of a strike, and stocks fell to
8. new low level since 1937. (See lower section of chart.)
Deliveries of refined copper (including exports) also
increased in August, totalling 97, tons AB compared with
74,758 tons in July. The report of increased deliveries,
together with reduced production in August, provided the in-
centive for an increase in futures prices at the end of last
week, in contrast to a sagging tendency earlier in the week.
Deliveries for export in August were only 1,561 tons as com-
pared with 3,532 in July.
Residential construction at new high
Date on construction contract awards for August, just
made evailable by the F. W. Dodge Corporation, reveal a con-
tinuation of the high level of construction activity noted in
the previous month. Total construction awards moved slightly
higher to attain B. new peak since June 1930, while residential
awards (Bee Chart 5) also moved up to a new high. In fact, the
level reached by residential construction contracts in August
was the best since July 1929. Although mortgages selected for
appraisal by the F.H.A. in August did not rise above July 88
sharply 8.8 in the two preceding years, they were less than
6 per cent below the peak reached in May, and seem to assure
& satisfactory level of residential building for some months
shead irrespective of the requirements for defense housing.
The number of new homes started under F.H.A. inspection
(see chart 6) continued at a high level during August, in line
with the increasing number of residential projects reported
by F. W. Dodge. A seasonal decline has occurred over the Labor
Day holiday.
Non-residential contruction (other than public works and
utilities) in August receded from the high levels of July, but
WAB still more than 70 per cent above August 1939. This large
114
Secretary Morgenthau - 6
gain over year-earlier levels reflects the awarding of numerous
contracts in connection with the national defense program.
Total publicly-owned projects, which were running behind year-
earlier levels up to June, have since been stimulated by the
national defense program and in August showed a gain of more
than 23 per cent over the corresponding month in 1939. The
trend of construction contract awards during August 1s sum-
marized in the following table:
Per cent change in daily average
construction contract awards
August 1940
August 1940
from July 1940
from August 1939
Total
t 0.2
+32.9
Residential
t 4.9
420.3
Non-residential
-17.4
770.6
Public works
+34.1
/25.4
Utilities
-32.9
716.4
Weekly business indexes
Due almost entirely to an extremely sharp gain in the
adjusted index of automobile production, the New York Times
index of business activity during the week ended September 7
rose 0.5 to 105.8. However, because of the customary diffi-
culty in making accurate allowance for the Labor Day holiday,
the figures mentioned must be regarded with less assurance than
usual.
The adjusted index of automobile production continued to
reflect the unusually early start and rapid upturn this year
in the production of new model cars, which brought a gain of
nearly 60 points in this index in the September 7 week. The
only other components to show gains were the indexes of freight
car loadings, which advanced only fractionally.
The principal factors tending somewhat to offset the
sharp gain in the index of automobile production were declines
in steel ingot and electric power production. In addition,
the adjusted index of cotton mill activity turned down after
Regraded Unclassified
115
Secretary Morgenthau - 7
rising for four consecutive weeks, and the index of lumber
production also receded. The significance of this last
named decline, however, 18 minimized by the fact that new
orders for lumber in recent weeks have been running substan-
tially ahead of production.
Barron's index of business activity for the week ended
September 7 rose more sharply than the Times index, increas-
ing to 111.4 as compared with 109.5 in the previous week.
Preliminary data for the week ended September 14 reveal
a slightly greater than seasonal increase in steel ingot pro-
duction and another greater than seasonal rise in automobile
production, which totalled 63,200 units. Ward's Automotive
Reports forecasts a further rise in production during the
current week to a total of around 85,000 units.
NEW ORDERS, SHIPMENTS AND ESTIMATED UNFILLED ORDERS
OF THE U.S. STEEL CORPORATION
TONS
TONS
THOUSANDS
THOUSANDS
2000
2000
NEW ORDERS
1600
1600
1200
1200
SHIPMENTS
800
800
400
400
o
0
1935
1936
1937
1938
1939
1940
TONS
TOMS
MILLIONS
WILLIONS
4.0
4.0
3.5
3.5
3.0
3.0
ESTIMATED UNFILLED ORDERS
2.5
2.0
N
2,5
2.0
1.5
1.5
1.0
1.0
.5
.5
0
0
1935
1936
1937
1938
1939
1940
116
CORRECTED TO TAKE ACCOUNT OF CANCELLED ORDERS
Office of the Secretary of the Treasury
Division of beach and Ration
I-100
Chart 1
117
INDICES OF NEW ORDERS
Combined Indax of New Orders and Selected Componente
Chart 2
CONFIDENTIAL
1938
1939
40
PERCENTAGE
o
POINTS
PERCENTAGE
POINTS
160
160
150
150
140
140
1.30
130
Total (combined index)
1936 - 100
120
120
110
110
100
100
so
90
50
BO
70
70
60
3
Total excluding Steel and Textiles
so
50
40
40
Steel Orders
50
30
à
20
L.
10
Textile Orders
.
a
o
o
N
D
M
F
-
A
M
J
el
A
$
o
N
D
J
F
M
A
M
J
J
A
$
o
#
D
1938
1939
1940
# the have
- - -
1-85-C
113
PRICES OF RAW INDUSTRIAL MATERIALS AND FOODSTUFFS
Chart 3
1940
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
5
12
19
26
2
9
16
23
30
7
14
21
28
DECEMBER
A
11
18
X
-
8
15
22
29
6.
13
20
27
3
10
17
24
-
a
15
22
29
PER
PER
CENT
CENT
Daily
124
124
122
122
120
120
116
118
116
116
114
114
PRICES OF RAW INDUSTRIAL MATERIALS
B.L.S. AUG. 1939 = 100
112
112
110
110
108
106
106
106
104
104
102
102
PRICES OF FOODSTUFFS
B.L.S. AUG. 1939=100
100
100
50
96
you
5
12
56
19
26
2
9
16
23
30
7
14
21
28
4
11
18
25
-
8
15
22
29
6
13
20
27
3
10
17
24
1
8
15
22
29
MAY
JUNE
JULY
AUGUST
SEPTO/SER
OCTOBER
NOVEMBER
DECEMBER
1940
Office el the Secretary of the Treasury
- of Femarch set Statteties
P 194
IINC PRICES, PRODUCTION. DELIVERISS AND STOCES
1230
1537
1930
19.19
1940
CERTS
PER
FEB
POUND
POUND
7.5
7.5
7.0
7.0
heal it
Spot Prices, St. Louis,
6.5
6,5
6,0
6.0
5,5
5.5
5,0
5.0
4.5
4,5
4.0
4.0
Retimated Basic Price .
3.5
3.5
3.0
3.0
1935
1936
1937
1938
1939
1940
TONS
TOMS
THOUSANDS
THOUSANDS
80
BO
Deliveries
70
INCLUDING EXPORTS
TO
60
60
50
50
40
40
30
30
Production
20
20
10
10
o
o
1935
1936
1937
1938
1939
1940
160
160
Stocks at Smelters
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0
o
1935
1936
1957
1938
1939
1940
S
113
*
COMPUTED FROM AVERAGE RELATIONSHIP or 2180 PRICES TO U. S. PRODUCTION,
SHIPMENTS, AND STOCKS of ZIMC.
Office of the Secretary of the Treasury
of - - -
P 193
Chart #
RESIDENTIAL CONTRACT AWARDS AND F.H.A. MORTGAGES
1935
1939
1940
-
,
-
A
.
A
5
o
-
D
J.
#
M
A
-
J
,
A
DOLLARS
$
0
N
D
F
M
A
M
à
o
a
WILLIONS
DOLLARS
(AMARDS)
MILLIONS
Mortgages Selected for Appraisal
(MORTGAGES)
138
and F.W. Dodge Awarde
130
Monthly
126
120
114
110
102
100
90
90
78
80
F. #. DODGE AMARDS
66
70
MORTGAGES SELECTED FOR
APPRAISAL, F. H. A.
54
60
42
50
30
40
18
30
J
,
M
A
M
J
J
A
$
o
N
D
J
F
M
A
M
J
J
A
$
o
M
D
J
F
-
A
-
J
J
A
$
o
N
D
1938
1939
1940
DOLLARS
JAN.
MAR.
MAY
JULY
SEPT.
NOV.
DOLLARS
MILLIONS
MILLIONS
40
Mortgagee Selected
40
for Appraisal, F.H.A.
Weekly
35
35
30
30
25
25
19394
20
20
,
15
15
1940
1938
10
10
5
5
o
o
JAM.
MAR,
MAY
JULY
SEPT.
NOV.
120
Office of the Secretary of the Transury
Division of Resers and State
C - 260 - A
Regraded Unclassi
RESIDENTIAL AWARDS AND F.H.A. HOMES STARTED
1939
1940
D
M
J
A
SON.
HOWES
(F.H.A.)
36,000
5,000
34,000
4,750
32,000
4,500
30,000
4,250
28,000
4,000
New HOMES STARTED UNDER
F.H.A. INSPECTION
(WEEKLY)
26,000
3,750
24,000
3,500
22,000
3,250
20,000
3,000
18,000
2,750
16,000
2,500
14,000
2,250
12,000
2,000
10,000
1,750
NUMBER OF RESIDENTIAL PROJECTS
(F.W.Doose, MONTHLY)
8,000
1,500
6,000
1,250
J / M A M J J A 5 o N D J F M A M J J A 5 o # D
1939
1940
Office of the Secretary of the Treasury
of - end Statement
C 307
12
Regraded Unclass
Strictly Confidential
122
PARAPHRASE
Telegram received from Buenos Aires
Dated September 16, 1940, 3 p.m.
No. 415
Reference Department's 203, September 8, 2 p.m.
The Minister of Finance inquired again this
morning whether word concerning the procedure for
discussing proposed monetary and exchange arrangements
had been received by the Embassy from the Department.
Please inform me what message in this respect I may
convey confidentially to the Minister.
GIVEN
RA:EGC:MJC
comert
bouth
=
- 1
123
CORRECTION
JR
September 16, 1940
In message 347, September 13, from Hong Kong,
for Treasury, line 14 make reads "imports 306 all from"
Etc.
DIVISION OF COMMUNICATIONS AND RECORDS
IEV
10 THE 2.10 (YYA
BW 2Eb S Mb I 1 55
Regraded Unclassified
124
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
ZA 840.51 Frozen Credits/572
/ September 16, 1940
The Secretary of State present his compliments to
the Honorable the Secretary of the Treasury, and encloses
a copy of a telegram from Vichy concerning the transfer
to Switzerland of funds in the United States belonging
to the Rumanian Ambassador to France and the release of
funds in the United States belonging to his wife
Marie Franasso Vici.
Enclosure:
From Vichy, no. 567,
September 14, 1940.
125
VRH
GRAY
(Paris)
Vichy
Dated September 14, 1940
Rec'd 10:20 a.m., 15th.
Secretary of State,
Washington.
567, September 14, 7 p.m.
The Rumanian Ambassador Franasso Vici asked me today
whether anything could be done to facilitate the unblocking
of five personal checks for which licenses were requested
"several days ago" through the Banque de Credit Suisse
at Berne, the funds to be made available to him in
Switzerland. Four checks are on the Irving Trust Company
and one on the Chase National Bank. He, likewise, asked
that a license be issued covering $30,000 which his wife,
Marie Franssso Vici, has in the Guaranty Trust Company
in New York. He said that these funds are entirely personal
and have nothing to do with his government.
MATTHEWS
LMS
C
0
P
Y
3
$
126
0
?
I
DEPARTMENT OF STATE
Washington
September 16, 1940
In reply refer to
EA
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury, and
transmits herewith a copy of an informal communication
from the Latvian Minister at Washington regarding
funds in the United States of Mr. V. Sumanis, a Latvian
national.
Enclosure:
From Latvian Legation,
Washington, D. C.,
September 6, 1940.
127
(COPY:MGS:Ru)
COMPARED
)
LATVIAN LEGATION
Washington, D. C.
No. 701/646
September 6, 1940.
Mr. Loy W. Henderson
Assistant Chief
Division of European Affairs
Department of State
Washington, D. C.
Dear Mr. Henderson:
A couple of days ago I received a personal letter from
Mr. V. Sumanis, our former Minister to Telliun, Estonia, who
was able to escape from Soviet occupied Latvia to Switzer-
land. I know the handwriting and signature of Mr. Sumanie
well and therefore have no doubte as to the authenticity of
the letter. In it he writes that his personal savings are
deposited in the National City Bank of New York, City Bank
Farmers Branch, 22 William Street, New York City, under the
name W. Schumans, Latvian Minister, Tallian. In view of the
presidential order freesing all deposits belonging to Latvian
citizens Mr. Sumanis is unable to drew upon his account, As
this is his only means of livelihood at present, Mr. Sumanio
has anked me to do something to have the ruling freezing his
deposits lifted, In view of the circumstances I would greatly
appreciate it if you could masist Mr. Sumanie in this matter.
As you know, he 1s a well known Letvian diplomat who has done
such to foster friendly relations between Latvia end the United
States, and Mr. Coleman and Mr. Wiley will be able to furnish
you with personal references regarding him. Mr. Sumania in-
forms ae that he has already written to the above mentioned
brunk in the matter. His present address Le: M. W. Schumens,
5 Avenue de la Paix, Geneve, Switzerland.
Thanking you in advance for your kindness and with best
regards, I an
Very sincerely yours,
DR. ALFRED BILMANIS
Latvian Minister
5
Regraded Unclassified
128
RDS
GRAY
BERLIN
Dated September 16, 1940
Rec'd 5:30 p.m.
Secretary of State,
Washington.
4023, September 16, 4 p.m.
FOR TREASURY FROM HEATH AND FOR DEPARTMENT'S INFORMA-
TION.
Announcement has been made of the conversion of the
7% preferred shares of the German State Railways into 4%
bonds. There are 1,081,000,000 marks of these shares
outstanding of which an unknown portion is in the hands
of Government agencies or held abroad.
Holders of these preferred shares are given the
following two options: (OnE) cash settlement of 120%
of the face value to bE paid in full by July 1, 1942 the
20% premium being in accordance with the terms on which
the shares were issued plus dividends of 1940; (Two)
Exchange of the preferred shares for 4% bonds with twenty-
five year maturity interest beginning as of October 1,
1940 at the rate of 120 marks in bonds for 100 marks in
preferred shares. In the event of Exchange the holders
also receive B cash premium of 7 1/2% but lose their
dividends
Regraded Unclassified
129
-2- #4023, September 16, 4 p.m., from Berlin.
Evidends for 1940.
THE TRABLE TRUPART
2Eb
The new State Railway bonds offered in Exchange for
BECEINED
the preferred shares are in general in line with the pro-
visions of recent Government bonds although their maturity
is five years longer than the 4% Treasury certificates
now being issued. The comment is made in the press,
however, that in spite of the fact that market conditions
are at present favorable for of conversion of these shares
some surprise has been occasioned since it had been anti-
cipated that these shares would not bE converted until
1949 when the premium would have been reduced to 10%.
The State Railways will S&VE 23,790,000 marks per annum
interest through this conversion since in future 4% in-
terest on 1,297,200,000 marks will bE paid instead of
(7?)% on 1,081,000,000 marks.
KIRK
EMB
130
FEDERAL RESERVE BANK
OF NEW YORK
?
I
September 16, 1940
Treasury Department,
Washington, D. C.
Attention: Mr. H. Merle Cochran
Subject: Importation of Gold
by Parcel Post
Dear Sirs:
I enclose for the information of the Department copy of a
memorandum prepared in this bank dealing with the importation by
parcel post of two gold bare valued at $27,257.
This being the first such case brought to our attention,
we inquired of the Custom Division of the Post Office and also of
officials of the Custom House and were told that similar exceptions
had recently been granted in a number of cases.
Respectfully,
(Signed) L. W. Knoke
L. W. Knoke,
Vice President,
Inc.
da
Regraded Unclassified
131
FEDERAL RESERVE BANK
OF NEV YORK
OFFICE CORRESPONDENCE
Date September 14, 1940.
To Mr. Knoke
From
P. Lang
(Copies sent to Messrs. McKeon and Cameron)
Às requested by you in our recent telephone conversation, I
have prepared for your use, in case you wish to take the matter up with
the Treasury Department, an outline of the action that has been taken
in the past with respect to importations of gold by parcel post:
1) During the period August, 1938 to March,
1939, more than $90,000,000 of gold was im-
ported via parcel post. You will recall that
sometime in February, 1939, Mr. Bolton had
brought up the question in a telephone conver-
sation with you and had asked whether there vas
any way to put B. stop to such shipments.
2) Subsequently, on April 8, 1939, the follow-
ing amendment to the U.S. postal laws and regu-
lations vas issued:
"Order No. 12761. Section 2233 of the
Postal Laws and Regulations is amended,
effective upon the giving of due notice
to the respective countries, 60 as to
add paragraph 3. as follows: '3. The
transportation in the regular mails or
parcel post from any foreign country into
the United States of any consignment of
gold coin, gold bullion, or gold dust,
having a value in excess of $50, is pro-
hibited.
3) On January 3, 1940, Customs Regulations per-
taining to mail importations were amended by
Treasury Decision 50061, the pertinent section
of which reads as follows:
"The transportation in the regular mails
or parcel post from any foreign country
into the United States, of any consign-
ment of gold bars, gold bullion, or gold
dust, having a value in excess of $50, is
prohibited.
132
N * ,
4) About two or three weeks ago, a gentleman
from Hallgarten & Co. came in to see us relative
to the manner of handling some gold which had been
consigned to them by a firm in Switzerland, In
the course of the conversation I learned that the
gold had been shipped via parcel post, and I is-
mediately drew his attention to Treasury Decision
50061 referred to above, and warned him that the Poet
Office might refuse to permit the importation of the
gold. Nothing further was heard by us on this mat-
ter until September 9, when Hallgarten presented to
us the usual affidavit in duplicate, together with
a Customs certificate indicating that 2 gold bars,
valued at $27,257 had been imported from Switzerland
by parcel post. Before sending our letter to the
Assay Office suthorizing the purchase of this gold,
we checked with both the Customs Bureau and the Post
Office Department in order to find out how the gold
was permitted to enter the United States, in view
of the Postal and Customs regulations referred to
above. We learned that a special exception had been
made in this case by the Second Assistant Postmaster
General in Washington, and were also informed that
a number of other shipments of gold by parcel post
had been permitted to enter the country recently.
As no other parcel post shipments of gold had
come to our attention, it 1e likely that gold other
than fine gold bars was involved and therefore, the
relative affidavits and Customs certificates went
directly to the Assay Office.
5) A copy of the letter received by the Postmaster
at New York from the Second Assistant Postmaster
General in Washington is attached, and the second
paragraph of that letter reads as follows:
"As an exceptional measure, you are auth-
orised to deliver the parcels to the ad-
dressere provided there 1s no objection
on the part of the Customs."
In speaking to the Customs representatives on the
telephone, they gave no the impression that they
never raise any objection if the Post Office was
willing to release the gold. Another point that
may interest you is the fact that although the
third paragraph of the attached letter specific-
ally requests that the addressees be advised
with respect to the prohibition against the 12-
portation into this country, in the mails, of
gold in excese of $50, Hallgarten & Co. tell ne
that they have received no such advice, either
oral or written, from the Post Office or from
the Customs.
Regraded Unclassified
COPY
133
813-E12
ision of Interna-
POST OFFICE DEPARTMENT
tional Postal Service.
Second Assistant Postmaster General
Washington
August 29, 1940.
Postmaster,
New York, N. Y.
The receipt is acknowledged of your letters dated
August 26 and 27 (FOR 813-E12) relative to the receipt
at your office from Switzerland of two parcel post packages
containing gold bullion mailed by J. Vernon, Grauer Com-
pany, Geneva, addressed to Hallgarten Company, 44 Pine
Street, your city.
As an exceptional measure you are authorized to de-
liver the parcels to the addressees provided there is no
objection on the part of the customs.
At time of delivery it is requested that the ad-
dressees be advised with respect to the prohibition
against the importation into this country in the mails
of gold coin, gold bullion, and gold dust in excess of
$50.
For the Second Assistant.
(Signed) J. E. Lamiell,
Director.
dm
Regraded Unclassified
134
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 16, 1940
TO
Secretary Morgenthau
CONFIDENTIAL
FROM Mr. Cochran
Today's transactions in registered sterling by the six reporting banks
were as follows:
Sold to commercial concerns
168,000
Purchased from commercial concerns
196,000
The purchases represented, for the most part, funds resulting from the export
of cotton to Great Britain.
The Federal Reserve Bank sold $9,000 to a non-reporting bank.
In the open market, sterling was quoted this morning at 4.03-1/2. During
the afternoon, the rate advanced to 4.03-3/4, and later to 4.04, where it closed.
The amounts of sterling purchased were reported to have been very small, Buyers
apparently found paying the higher rates preferable to incurring the expense and
delay involved in obtaining free sterling from the British authorities at 4.03-1/2.
Transactions of the reporting banks in open market sterling were as follows:
Sold to commercial concerns
L14,000
Purchased from commercial concerns & 9,000
The Canadian dollar, which underwent a marked depreciation last week,
experienced a small recovery. Às against the current low of 17-1/2% discount,
which was reached on Saturday, that unit closed at 17% today.
The improvement in the Cuban peso, which began last Thursday, continued
today, The peso was quoted at 9-3/8% discount, as against 10-3/16% on Saturday.
The other currencies closed as follows:
Swiss franc
.2278-1/2
Swedish krona
.2386-1/2
Lira
.0505
Reichamark
-3995
Mexican peso
.1996 bid, .2016 offered
There were no gold transactions consummated by us today.
135
- 2 -
The Federal Reserve Bank of New York reported the following shipments of
gold:
$5,629,000 from Japan, representing two shipments by the Yokohama Specie Bank
to its San Francisco agency, for sale to the U.S. Mint there.
416,000 from Peru, shipped by the Central Reserve Bank of Peru for its own
account to the Federal Reserve Bank of New York, disposition unknown.
$6,045,000 Total
The Bombay prices for gold and silver both showed declines from last
Friday's quotations. The equivalent of the gold price was $33.97. off 16¢, and
silver WSS equivalent to 44.76#. off 1/84.
In London, the price fixed for spot silver was 1/16d lower at 23-3/8d. The
forward quotation, on the other hand, advanced 1/16d to 23-5/16d. The dollar
equivalents were 42.444 and 42.33$ respectively.
Handy and Harman's settlement price for foreign silver was unchanged at
34-3/4#. The Treasury's purchase price for foreign silver was also unchanged at
35#.
We made two purchases of silver totaling 125,000 ounces under the Silver
Purchase Act, both of which consisted of new production from foreign countries,
for forward delivery.
70mg
confidential
Regraded Unclassified
136
CONFIDENTIAL
G-2/2657-235
M.I.D., W.D.
Tentative Lessons
Bulletin No. 49
September 16, 1940
TENTATIVE LESSONS FROM THE RECENT
ACTIVE CAMPAIGN IN EUROPE
NOTICE
This document is being given an approved distribution
and no additional copies are available in the Military In-
telligence Division. Its reproduction in whole or in part
is subject to the provisions of letter TAG, November 15,
1939, AG 350.05 (11-1-39) M-B-M, "Dissemination of Military
Information by the Military Intelligence Division and by
Recipients of M.I. D. Information."
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and are in no sense mature studies.
GERMAN ANTITANK AND ANTI-PERSONNEL MINE FIELDS
SOURCES
Information in this bulletin on the general subject of
mine fields is from German regulations of October, 1939, while
information as to their location and destruction is from a German
pamphlet of January, 1940. Both documents were translated by
British sources.
CONTENTS
I. GENERAL PRINCIPLES.
п. LOCATION OF MINE FIELDS.
III. CROSSING AND MEUTRALIZATION OR DESTRUCTION OF
MINE FIELDS.
CONFIDENTIAL
-1-
137
CONFIDENTIAL
I. GENERAL PRINCIPLES.
A. The German Engineers, who constitute a combatant arm
destined for service in the foremost positions, are the only
troops authorized to establish mine fields. The effective use
of mine fields demands a high standard of discipline, training,
and offensive spirit.
B. Mine fields must be used on a definite plan and laid with
adoquate supervision. Without this, they are & danger to friendly
troops. They are placed:
1. In front of the defensive position.
2. In the neighborhood of the main line of resistance.
3. In the position in depth.
Enemy artillery can destroy well placed antitank mine
fields only at the expense of a very large concentration of fire.
In such an event, engineer troops armed with antitank mines should
be ready to hold up the attacks of tanks which have penetrated
the position.
Anti-personnel mines are used only in advance of the
main line of resistance and are never placed in the inner portion
of the defensive position. Anti-personnel mines which are not
mixed with antitank mines can be destroyed by armored vehicles
without risk. The destruction of nixed mine fields composed of
antitank and anti-personnel mines is 8. difficult and dangerous
operation requiring considerable time. If it is intended to pass
from the defensive to the attack, definite orders must be given
regarding the placing of anti-personnel mines.
C. Mine fields must be marked on sketch plans and maps, and
these must be distributed in accordance with detailed orders.
Mixed mine fields of anti-personnel and antitank mines must be
specially marked, and the relative positions of each type of
mine shown,
D. Electric firing of anti-personnel mine fields is in-
effective if enemy projectiles out the cable. It has the advantage
of allowing friendly troops to cross the mino fields without risk.
This method must be employed in the course of & premeditated
retreat and for defense of water lines. The blowing up of these
fields can be followed with great advantage by a countorattack.
II. LOCATION OF MINE FIELDS.
Mine fields are located by the following means:
CONFIDENTIAL
&
138
CONFIDENTIAL
A. Freliminary Reconnaissance,
A study of the map and a general survey of the ground
will indicate the position in which mine fields are likely to
be found. For this purpose enemy movements should be watched,
particularly with regard to selection of paths, tracks, etc.
An apparently unnecessary detour or twist in e. track may in-
dicate the presence of a mine field. Included under this head
are statements from prisoners and local inhabitants, which may
also provide very useful information.
B. Air Reconnaissance.
Mine fields cannot be located from the air unless they
are badly camouflaged. On the other hand, tracks and troop
movements can be spotted, and from these certain deductions may
be drawn as indicated above.
C. Ground Reconnaissance,
When n mine field has been located roughly or a piece of
ground is suspected of being mined, the exact position and extent
of the mine field and individual mines must be determined by
reconnaissance on the ground. The particulars which this re-
conneissance should endezvor to obtain Include the type, position
and extent of the nine field; gaps which may exist, and the methods,
used, if any, for marking gaps and boundaries of the mine field;
possible detours, approaches; whether approaches are under cover
from observation or from fire, and if not, the position of enemy
O.P.'s and pillboxes. Aide to the location of mines on the ground
include.
1. Electric detectors with sound indicators; these
give a rapid but only approximate indication.
2. Stakes or feelers pushed vertically into the
ground; these can only be used when time permits, and
cannot be used when the ground is frozen. It should be
noted also that they may set off anti-personnel mines,
3. Special forks or probes pushed horizontally into
the surface of the ground; these will also spot bounding
mines.
Note by the British General Staff. This is & form of anti-
personrel mine which is operated by means of a trip wire. The
nine is blown out of the ground by a small charge, and it detonates
some feet above ground level.
CONFIDENTIAL
-3-
Regraded Unclassified
139
CONFIDENTIAL
Mines which are operated by means of a trip wire are
located by visual inspection.
III. CROSSING AND NEUTRALIZATION OR DESTRUCTION OF MINE FIELDS.
According to present information, mine fields other than
German which are composed only of antitenk mines can be crossed
with safety by Infantry. If the type of mine in a mine field is
not known for certain, Infantry should advance in extended formation.
Fresh paths or tracks should be followed as far as possible,
particularly those which twist and turn; troops following in the
rear should endeavor to follow the tracks of those in front who
have passed through the mine field successfully.
If a pessage through an anti-personnel or antitank mine
field cannot be found, one or more will have to be formed by
the following means:
A. Engineer Units.
If mines are covered by direct enemy fire, B. passage
should be cleared by successive explosion of charges equal in
length to the width of the passage to be cleared; otherwise the
mines can be dug up or exploded individually. If operations have
to be carried out at night, it is necessary that the passage to
be cleared, as well as the exact position of the mines, be clearly
marked beforehand.
Mines operated by trip wire are exploded by pulling the
wire with a grapnel and heaving line.
As French antitank mines have en area of effect up
to several hundred meters*, it is necessary to provide a shelter
for Engineers carrying out these tasks; if an armored vehicle
can be used for bringing up the working party, it can give them
covering fire during work and provide a shelter during the ex-
plosion of the mines.
B. Artillery Fire.
An artillery shoot can be used for clearing a passage
through a mine field, but heavy concentrations of fire are necessary.
The 105 mm. gun-howitzer and 210 mm. mortar firing instantaneous
percussion fuse can be used, as well as the 150 no. howitzer with
slight delay action percussion fuse. At medium ranges, the
following are required to clear EL path of 20 to 40 yards wide and
M-
1.0., effect against personnel. 0-2.
CONFIDENTIAL
1/1
Regraded Unclassified
140
CONFIDENTIAL
100 yards deep: 120 rounds of 210 mm. mortar, 400 rounds of 150
m. howitzer, and 600 rounds of 105 mm. gun-howitser. The latter
are to be used only as a last resort. By this means, mines are
exploded, destroyed, or thrown aside,
C. By Air Bombardment.
A stick of 110 lb, bombs is recommended, If heavier bombs
than these are used, the craters may be too large for tanks to
negotiate. Present experience indicates that in order to form
a passage 50 to 100 yards wide and 200 yards deep, it is necessary
to drop nine hundred 110 lb. bombs in sticks. Ground indication
should be given of the path to be cleared.
Neither artillery nor aircraft can be relied upon to
clear a path completely of mines; the task must be completed by
Engineers. If the passage is to be used before completion by
the Engineers, it is recommended that the tanks follow a path
from crater to crater.
Note by the British General Staff: "The General Staff is of the
opinion that these notes are unduly optimistic regarding the ease
with which a mine field can be crossed. For instance, if mine
fields are properly sited and covered by fire, it should not be
possible for the enemy to mark them during the day (See Para-
graph III. A.)
"It is suggested that, if mine fields are properly laid,
the German instructions would be extremely difficult to carry out."
CONFIDENTIAL
-5-
Regraded Unclassified
141
CONFIDENTIAL
G-2/2657-235
M.I.D., W.D.
Tentative Lessons
Bulletin No. 50
September 16, 1940
TENTATIVE LESSONS FROM THE RECENT
ACTIVE CAMPAIGN IN EUROPE
NOTICE
This document is being given an approved distribution,
and no additional copies are available in the Nilitary In-
telligence Division. Its reproduction in whole or in part
is subject to the provisions of letter TAG, November 15,
1939, AG 350.05 (11-1-39) M-B-M, "Dissemination of Military
Information by the Military Intelligence Division and by
Recipients of H.I.D. Information".
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and are in no sense nature studies.
GERMAN INSTRUCTIONS FOR GROUND DEFENSE
AGAINST AIR-BORNE TROOPS
SOURCE
These instructions are from a German document trans-
lated by the British late in June, 1940.
CONTENTS
I. NATURE OF ENEMY ATTACKS.
II. ORGANIZATION OF THE DEFENSE.
III. ANTIAIRCEAFT COOPERATION.
CONFIDENTIAL
-1-
142
CONFIDENTIAL
I.
NATURE OF ENEMY ATTACKS.
A. Parachutists, air-borne troops, or both, might land from
aircraft at dusk or during the night. They would drop from con-
siderable heights from aircraft in sparsely inhabited but never-
theless important military districts.
B. They would attempt to destroy important military or
industrial plants, railways, bridges, locks, overhead cables,
transformer stations, and telegraph cables.
II. ORGANIZATION OF THE DEFENSE.
A. The command of the defense is in the hands of senior
district officers in their capacity as regional defense commanders.
3. The regional defense commanders report to District
Command X. They investigate, sound alarms, and issue operational
instructions to available military units and to the police.
III. ANTIAIRCRAFT COOPERATION.
A. All available arms are to be used to the full extent
of their range - that is, gunfire and rifle fire. In addition,
consideration must be given to the advisability of throwing out
defense squads, if necessary, by motorcycle or light motor car,
but only in GO far as this does not interfere with their duties
on antiaircraft defense. Air-borne troops are most vulnerable
while in the air.
B. After a landing has been made, contact with the enemy
is to be maintained by scouts or motorcyclists.
C. Particularly important is immediate reporting to
regional defense commanders. This can be done by telephone
message (special priority call), by post office telephone service,
or by the air force signal circuits, with the caller first
announcing "Parachute call". It can also be done through police
or railway authorities. Every soldier observing such landings
is expected and entitled to put through such calls.
The report should include:
1, Strength of the enemy.
2. How armed.
3. Position of landing.
CONFIDENTIAL
-2-
Regraded Unclassified
143
CONF IDENTIAL
40 Time of landing.
5. Presumed objective.
6. Position and immediate movements of the men
reporting.
D. Further action should be as follows:
1. Prisoners are to be guarded, segregated and
handed over to the nearest unit for trans-
mission to air administration areas. They
are not to be questioned.
2. Enemy aircraft and instruments are to be well
guarded.
3. Troops should be made acquainted with any
potential objects of attack in sight of the
firing base. They should also be informed of
the name of the senior district officer.
CONF IDENTIAL
-3-
144
CONFIDENTIAL
Paraphrase of Code Cablegram Received at the
Mar Department 00:48 a Sept. 16, 1940
Lendon, Filed 5:55, September 16, 1940
During the night of September 14-25 British aircraft benbed
enemy shipping concentrations and railread yards.
Enemy daylight attacks during the 14th were directed chiefly
against London. There were two raids taking the route, Kent-Thames
River, the first consisting of about 150 and the second of about 100
planes. Both consentrations were intercepted by British fighters and
small percentages only reached London. It is estimated that & total
of about 400 German aircraft operated over Britain during the day.
German activities during the night of September 14-15 were
alight although the weather was favorable. They consisted mostly of
mine planting and small, erratic raids, with a total of about 175 planes,
In London water and somer nains were burst in Lambeth] and
gas tanks were set afire, the Southern Railroad was hit, and major
damage was done to flour mills in Batterssa. The big power station
at Battersea, which provides one of the best targets in the Lendon
area, was repeatedly and unsuccessfully attacked, with but one hit
effecting minor damage. In Harrington, Lancashire, two bombs struck
a recreation ground, burying 150 workers in the nreckage of & canteen,
with 14 killed and 21 injured. Extensive property damage resulted from
two raids on Eastborns, with three dead. In Brighton 21 high explosive
bombs struck & cinems, killing 32 and injuring 157. The energy bombed
163 widely separated localities during the past 24 hours, with minor
damage only.
CONFIDENTIAL
Regraded Unclassified
145
CONFIDENTIAL
German sireraft looses during the 244b www 16
19 probable and 12 damged. The Britich lost 22 planse and four
pilets. The total miss of civilian casulties is se yet
In Egypt the Italians explared the Salum Barresks yesterday
afternoon, with their advance continuing in three colume. No depth
of advance is apparent.
There is no additional significant information bearing #:
the ensuy plans for an invasion; nor is there anything new to report
on the morale of the civilian population.
Four cargo boats, totalling (garbled) tons were mark or
seriously damaged. One naval aloop escerting a Canadian convey we
damaged by a terpedo.
The most pussling feature of the military operations during
the past month is the misuse and dissipation of their air power by
the Germans. It can only be concluded that the energy is badly in-
formed as to the temper of the British people and as to the extent
of damages inflicted by his benbardemt. If invasion requires the
crippling of British industry and public determination and the me
tralization of the Havy and the Air Force, Hitler is further from
5106655 than he was during the middle of August.
LEE
Copies to: General Watson
Secretary of War
State Department
Secretary of Treasury
Asst. Secretary of War
Chief of Staff
ONI
NPD
CONFIDENTIAL
Regraded Unclassified
146
CONFIDENTIAL
Paraphrase of Code Cahlegram Received as the
war Department 2:01 pemo, Sept. 16, 1940
London, Filed September 16, 1940
During the might of September 15-16 162 British sto
tacked enezy shipping concentrations and nearby reilread centers on the
Continent. Power stations in the vest part of Berlin were attacked by
four bombers. The Coastal Command sent out 19 nine laying and benting
planes.
Reliable reports indicate that orders mero issued yesterday
suspending all leaves in the combat units of German Air Force until
the termination of operations against England. This would - to
indicate that invasion is still a distinct threst. German dive benbers
are still inactive.
London suffered two major attacks during daylight hours of
September 15, while Portland and Southampton received smaller attacks.
Two major attacks consisted of about 250 planes each, of which about
100 got through to London during the first attack and about 70 during
the second.
During the night of September 15-16 German activity command
at about 8 pome and continued for about nine hours. A total of about
15 raids were ande on the Bristol Channel, South Nales, the Midlands
and Liverpool.
It is estimated that about 600 German planes took part in
yesterday's daylight attacks, with the mamber operating last night unknown.
Hombs fell at about 60 places on London, with major damage
CONFIDENTIAL
Regraded Unclassified
147
CONFIDENTIAL
M follows: In Lamboth & company mamufacturing telephenes was forced
to suspend production 8 account of delayed action boobs, and school
buildings, as and water mains were damaged. In Declamban the East
Croydon Railway was blocked and the power station was hit but is still
operating. In Batterwa & railroad bridge between Clapham Justian
and Victoria, the Nest London Extension line and plants menufacturing
projectiles were all hit; in the Strand the central tower of the
Shell-Max House was desolished and the top story of the building is
at point of collapse, the Strand is blocked from Adams Street to
Alwich, and near the Calety Theater a water main was burst. The
Unbridge and Hameranith road was blocked and water and never sains
ruptured. The Shephards Sush electric sub-station was rendered 100
active by poser failure and there is no current on the Hamarmith
activity line. At the Vauxhall Bridge Road the Westminster Bridge was
blocked by debris and beeb craters. The Lambeth, Guy and St. Thomas's
hospitals suffered hits but no casualties. Bombs again directed at
Buckinghan Palace. During the Southampton raid Thorneyeroft's (prob-
ably motor truck factory - (0-2) received alight damage and - bembe
fell near the Supermarine Avistion Works (where Spitfire fighters are
built - 0-2).
Shipping lesses total 23,000 tons, with five ships damaged
or make by basbers and submarines. The sloops reported damaged yester-
day have sunk.
British air losses were 25 planes and 13 pilots. Energy
plans losses were 186 sonfirmed (of which 110 were benbers), 42 probable
CONFIDENTIAL
Regraded Unclassified
148
CONFIDENTIAL
and 72 damaged. Nritish civilian casualties were 134 injured,
49 killed.
The weather, which has favored the Germans up to this Mm.
is showing signs of change. It is now cold and rainy.
Major Studler returned today from a. trip through the 10.00
lands and reports that there has been very little damage done to
industry.
Civilian morale remains estisfactory.
LEE
Copies toi General Watson
Secretary of har
State Department
Secretary of Treasury
Asst. Secretary of har
Chief of Staff
ONI
APD
CONFIDENTIAL
Regraded Unclassified
149
of
CONFIDENTIAL
Paraphrase of Code Cablegram Received at the
Nar Department 1:58 Sept. 16, 1940
name, Filed 19:25, September 26, 1940
A reliable source reports with reference to Italian partici-
patien in the attack on England that Italian advance ground orean are
new assing air fields in the Nethorlands on which the Italian units
joining German forces will be based. These units are organized into
an air flest which includes both pursuit and besbardment aviation and
totals about 450 planes.
According to the Har stinistry operations started a September 13
at daylight against British forces in Egypt. A fast-moving Italian
column 10 advancing rapidly. The British have destroyed smitions
and supplies and are retiring. They are suffering heavy losses from
bembardment(s) and assult aviation. Front of attack and depth of
advance to date were not disalosed.
PAINE
Copies tos General Watson
Secretary of Has
State Department
Secretary of Treasury
Asst. Secretary of Har
Chief of Staff
ONX
APD
CONFIDENTIAL
Regraded Unclassified
150
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Berlin, Germany
DATE: September 17, 1940, 10 a.m.
NO.: 4028
Authoritative sources have informed the Embassy that
in the near future, perhaps the first of October, it may
be expected that the protectorate will be included in the
German customs zone, and that shortly after that some form
of closer monetary union may follow.
Well-informed quarters are under the impression that
in Berlin the authorities are also giving consideration to
another change in the political status of residual Bohemia
and Moravia, tying in with the move for establishing
more permanent forms of German rule in some of the other
territories now occupied by Germany. It is commonly
believed that one of the aims of Germany in establishing
the protectorate was to segregate the territory concerned
until price levels and living costs in the protectorate
could be adjusted to those of Germany proper. The fact
that abolition of the customs boundary 18 under consideration
again would indicate that the German authorities believe
such adjustment has been substantially completed. There
is a possibility that this 18 another factor leading the
Germans to take up again the arrangement of political and
administrative affairs in that area at this time.
Will you please inform the Treasury of the foregoing.
KIRK.
EA:LWW
Regraded Unclassified
151
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 16, 1940
TO
Secretary Morgenthau
FROM
E. H. Foley, Jr.
Wright Aeronautical Plant at Cincinnati, Ohio-
The purpose of this memorandum is to recite the delays which have
prevented the increase in productive facilities for armament and other arti-
cles desired by the Government, with a. view to pointing the way to a satis-
factory solution of the problem. For this purpose the Government's effort
to provide a method for increasing facilities for the manufacture of air-
craft engines by Wright Aeronautical Corporation 1s used as an illustration.
On December 6, 1939, you stated in 8 memorandum to the President
that it W&S your considered opinion that "it would be far better to spend
millions for defense than to use the tax lawa to subsidize private munitions
makers," and stated that the problem of increasing productive facilities
facing the Far and Navy Departments could be solved "by erecting plants
similar to the 'shadow factories' in Great Britain and leasing such plants to
private industry."
On May 30, 1940, in order to utilize existing facilities for the
production of aircraft engines, you asked officers of Wright Aeronautical
Corporation to grant to the Government a non-exclusive right to manufacture
aviation engines of any type manufactured by Wright and also to license any
corporation to be designated by the Government to manufacture Wright engines,
and you made the same request of officers of United Aircraft Corporation.
Such licensing agreements were drafted by this office in cooperation with the
two companies, and on June 5, 1940, offers to license were made by the com-
panies which you transmitted to the Advisory Commission on June 7, 1940.
United Aircraft Corporation has used this agreement to license Ford Motor
Company to build aircraft engines of Pratt and Whitney, according to 8. Letter
dated August 21, 1940, from United Aircraft.
On May 30, 1940, you also discussed with G. 1. Vaughan, President
of Curtisa-Wright, the construction of a new plant with a capacity to produce
1,100 engines per month and to cost about $45,000,000. The history of the
proposed construction and financing of this plant is recounted below:
On June 11, 1940, Mr. Knudsen submitted B. proposal under which the
R.F.C. would advance Wright $50,000,000 to build and equip the new plant.
Under kr. Knudsen's proposal, the plant equipment would be owned by the R.F.C.
and would be leased to Wright for 3½ years, Wright having the option to buy
the building and equipment for one-half of the difference between its cost
and the rent paid. Rent being computed at $585 per engine, with 24,200
engines contemplated, the purchase price would have been $18,000,000.
Regraded Unclassified
152
- 2
On June 12, 1940, I stated to Mr. Knudsen that giving such an option
yours be very doubtful since to depreciate a plant of this character by 36 per
cent in 3) years would be difficult to justify, especially since an additional
28 por cent of the cost (returned to the Government as rent) TAB to be included
by right in the price charged the Government for the engines. I advised Mr,
that his plan was otherwise sound.
On June 13, 1940, Mr. Knudsen submitted a proposal that the R.F.C.
igna right the sum sufficient to pay for the cost of the plant and the
ment, title to the plant to be vested in Wright, and the loan to be re-
one counding to the number of units produced. Under this proposal, the amount
= the Iniebtedness would be spreed over the total units produced BO that the
vice of each unit would include its pro ruta share of the debt, and no
could be had to the general assets of the manufacturer.
In June 14, 1940, la rough ireft of an agreement intended to carry
allot this suggestion of Mr. Knudaen WEB submitted to him et 15. confer-
15 your office.
On June 17, 1940, a revised form of agreement intended to carry into
2018 plan of financing the new plant wis submitted to Mr. Knudsen with
Tostions suggested st the conference on June 14.
On June 17, 1940, et a conference in Mr. Knudsen's office, at which
and Nelson were present, I discussed in detail the draft agree-
all and alternative proposals. Nothing was definitely decided except
- 16 THE thought that the remedy of the R.F.C., in the event of default,
in restricted to the demolition of additions to existing buildings and
Eng of machinery acquired with the proceeds of a loin from the
On June 19, 1940, the Federal Loan Administrator Jones <rote Mr.
Liut the R.F.C. would lend Wright $28,000,000 to build and equip a
Dear producing 500 airplane motors, the loan to IL ture in eight years and
durtined at the rate of $600 per motor se the motors are menufactured
see further stated that the manufacturer should have the right, if the
wint words become idle through cancellation or completion of orders, to ra-
1000 the unpaid balance of indebtedness to the fair market value of the proper-
is 1% invoved by the President.
On June 20, 1940, Federal Losn Administrator Jones wrote Mr. Gordon,
The President of -right Aeronautical Corporation that the R.F.C. would lend
of Bright $33,500,000 to construct and equip EL new plant, the
2011) by he repaid within eight years, to be amortized at the rate of $300 of
and to be secured by a first mortgage on the plant and equipment.
Regraded Unclassified
153
- 3 -
On June 24, 1940, a tentative draft of an agreement embodying the
understanding reached by Messrs. Knudsen, Biggers, Jones and representatives
of Fright on the financing of the new facilities was submitted to Mr. Knudsen,
Mr. Hotchkies, attorney for Wright, and Mr. Schram, Chairman of the Board of
Directors of the R.F.C.
On July 3, 1940, Mr. Van Anda, attorney for Wright Aeronautical
Corporation, requested from the Commissioner of Internal Revenue a ruling
and closing agreement concerning the tax effect of this tentative agreement,
with the sole exception that the loan WEB reduced by approximately $150,000
which would be used by the R.F.C. to acquire the land on which the new plant
would be built, such land to be then leased to a subsidiary of Wright for an
eight year period with the right to renew for eight years.
On July 12, 1940, the Commissioner ruled that for federal income
and excess profits tax purposes, the subsidiary of Wright would be entitled
to amortize the cost of the new plant and permanent equipment over the
sight year life of the lease from the R.F.C. With the consent of Wright,
I submitted this ruling to Mr. Jesse Jones on the morning of July 12, 1940,
in his offices before it Web announced, and Mr. Jones indicated that he
thought the ruling was very sound and would be useful in many situations.
On July 22, 1940, the ruling was published in the Internal Revenue
Bulletin and received wide publicity. Under the plan ruled upon, the build-
ings and permanent equipment placed upon the tract of land leased by the
subsidiary of Wright from the R.F.C. would revert to the R.F.C. upon the ter-
sination of the lease.
On July 26, 1940, Mr. Van Anda stated to the officials of the Bureau
of Internal Revenue that the R.F.C. desired that the lease should run for
five years instead of eight years and requested a ruling that the cost of the
buildings and permanent equipment B.B. well as the machinery could be amortised
over a five year period instead of an eight year period as heretofore agreed
upon. On the same day, Mr. Van Anda was advised that the facts did not justify
the Commissioner in stating that a five year lease would not be renewed and
that the efforts of the Treasury to cooperate in the defense program were
being frustrated by such EL material change in the facts made almost simultan-
eously with the issuance of the ruling, and tended to discredit the original
ruling.
On August 9, 1940, Wright Aeronsutical Corporation submitted still
another request for a ruling because negotiations between Wright and the R.F.C.
resulted in the R.F.C. granting to Wright an option to buy the plant site at
its cost, thus permitting Wright for the price of the land (now increased to
$200,000) to acquire plant and equipment costing $37,000,000.
Regraded Unclassified
154
On August 21, 1940, the Commissioner issued a ruling favorable to
Wright under which the cost of the plant equipment could be amortised over the
eight year term of the lease, notwithstanding the option to purchase ou the
condition that Wright would include in gross income the 810088 of (1) the fair
market value of the plant and permanent equipment over (2) the cost of the
plant and equipment Less the amount of amortization previously allowed.
On September 4, 1940, Mr. Hotchkiss, attorney for Wright, advised Mr.
Kades that the R.F.C. had notified Wright that the Advisory Commission had ro-
quested the R.F.C. in financing national defense plants to use the no-called
five year plan of the Advisory Commission (sometimes known as Plan II) under
which the War or Havy Department, as the case might be, would reimburse the
manufacturer for the full cost of a new plant and equipment in annual install-
ments of 20 per cent of such cost over a five year period. Under this plan the
manufacturer always has legal title to the plant, with the Government retaining
certain rights, but the Government's interest is hardly definite enough to be
capable of legal definition.
On September 4, 1940, a draft of the five year plan was received by
Wright.
On September 6, 1940, Wright requested a ruling from the Commissioner
of Internal Revenue based upon a revised draft of this plan which Wright had
received on the same day.
On September 11. 1940, the Treasury was advised that the Advisory Com-
mission was revising the draft of September 6, 1940, and today it 1a understood
that a further revision of the plan 15 being prepared. This constant revision
of the method of constructing and financing new defense fucilities makes it in-
possible for the Commissioner of Internal Revenue to issue a ruling and tender
a closing agreement with any degree of assurance that he is not making a ruling
upon a hypothetical state of facts embodied in a plan already abandoned by the
Advisory Commission and the R.F.C.
Valuable time would be saved if the original proposal of Mr. Knudsen
were reverted to under which the R.F.C. would advance funds to Wright to build
a plant owned from the beginning by the Government. Such an arrangement has
already been made by du Pont with the War Department under which du Pont will
construct, as agent for the War Department and with funds supplied by it, a
powder plant which will be owned by the Government. Upon completion of the
powder plant, du Pont will manufacture powder in the plant in return for a
management fee, Chrysler will build a tank factory and operate it for the Gor-
ernment on the same basis.
A variation of this method 1a the arrangement between the British
Government and Wright Aeronautical Corporation under which Wright, with funds
advanced by the British Government, acquired land, constructed additional build-
ingo and purchased machinery and tools, title to the land, buildings, machinery
and tools being retained by the British Government. Wright leased these facil-
ities from the British Government at a. rent equal to local property taxes and
manufactured engines as ordered by the British Government, without any option to
purchase.
E.Nth.
Regraded Unclassified
155
September 16, 1940.
To:
The Secretary
From: Mr. Young
Subject: Stimson-Purvis Tank Financing Conference
Friday, September 13, 1940.
Mr. Purvis and I met with Mr. Stimson at 11 o'clock to
ascertain whether the War Department would certify as to the
necessity for a tank production capacity larger than the
capacity required immediately by the Army.
I explained to Mr. Stimson that perhaps preparedness
should demand a tank production capacity somewhat in excess of
capacity required to build only those tanks for which appropri-
ations had been received. I added that the Ordnance Department
had already given some indication that it would approve a
production capacity of 20 tanks per day although it had
appropriations for only 10 per day. Further it was my belief
that the RFC would finance any production capacity which the
Army believed to be in the interest of national defense and
that the RFC would have no objection to the use of excess
capacity by the British, of course, recognizing the fact that
the Army had the right to take over that excess capacity at
any time.
Mr. Stimson said that he thought it made sense 50 he
called in Judge Patterson and explained the situation to him.
Judge Patterson also agreed and asked that Mr. Purvis and I
talk with him and the Ordnance officers.
In Judge Patterson's office Mr. Purvis and I net with
General Harris and Colonel Lewis and we talked specifically
about financing Continental tank engines. Both General Harris
and Colonel Lewis told Judge Patterson a production capacity
of 20 tank engines a day was in the interest of national
defense so Judge Patterson agreed to write a letter to the RFC
making that commitment. A copy of this letter is attached for
your information.
Regraded Unclassified
156
- 2 -
Although Mr. Knudsen has already written a letter to
the RFC stating that a production capacity of 20 tank engines
per day would be desirable, I an having that letter withdrawn
and a new one substituted similar to that of Judge Patterson's
as the language of the Knudsen letter is not sufficiently
forceful. This new certification by Mr. Knudsen should be in
the hands of the RFC on Tuesday.
The result of this procedure is simply that the RFC
finds itself confronted with the situation where both the War
Department and the Advisory Commission certify that a pro-
duction capacity of 20 tank engines per day is essential to
the national defense of the United States. The RFC can
hardly refuse to finance the facilities for such a program as
it has no objection to the British using the excess capacity
amounting to 10 tank engines per day.
---o0o---
After I had left Mr. Stimson's office to talk with Judge
Patterson on tank engines, Mr. Purvis took up with Mr. Stimson
a matter of the new Sperry bomb sight. Mr. Stimson told Mr.
Purvis that according to best information this new bomb sight
would not be available for six months, therefore, it could not
be considered in connection with any possible use which the
British might wish to make of it immediately.
In accordance with your request to get an independent
check upon this information, I have asked Mr. Thomas Morgan of
the Sperry Gyroscope Company to meet with you next week.
P4.
Regraded Unclassified
157
COPY
BOL:ms
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY
September 13, 1940
Honorable Emil Schram,
Chairman, Reconstruction Finance Corp.,
Washington, D. C.
Dear Mr. Schram:
The creation of manufacturing capacity capable of producing
twenty Medium Tank Engines per day by the Continental Motors
Corporation of Detroit, Michigan, is essential to the National
Defense of the United States.
Sincerely yours,
(Signed) ROBERT P. PATTERSON
Robert P. Patterson,
The Assistant Secretary of War.
orig of This givents m Forestal.
158
September 16, 1940.
To:
The Secretary
From
Mr. Young
Subject: Major Floot and Consolidated.
I finally got in touch with Major Floet late Friday evening
and arranged to meet him at the office Saturday morning. Major
Floot assured me that in connection with the production of
Consolidated planes all the technical difficulties with the Army
and Havy were being ironed out quite satisfactorily. He seemed
to think that there was nothing no could do to help on that angle,
Then, he went on to point out that there were four major
problems confronting the City of San Diego which had a direct
effect upon the production of Consolidated as the largest comercial
employer in that community. Consolidated now has on its books -
132 Million Dollars worth of business
25 Million for the Navy
26} Million for the Army
80 Million for foreign
He expects to receive an additional
al Million Dollars worth of business from
the Army
106 Willion Dollars worth from the Havy
or an additional 187 Million Dollars worth of business, making the
total 319 Million Dollars. He stated he expected his business to
increase to almost One Million Dollars worth, in about the next
two years.
Consolidated, to date, has built more than three times the
wember of planes with a wing-spread of 100 feet or more than all
other United States aircraft manufacturers combined.
Regraded Unclassified
159
- 2 -
Consolidated employe approximately 10 thousand may it
expects to employ 15 thousand by January 1941, and 30 thousand by
May 1, 1941.
Bajor Floot advised no that he did not sea how Consolidated
could handle its increased business and maintain its production
schedules unless adequate housing, adequate vocational schools,
adequate water supply and adequate sevengs disposal system
could be established in Ban Mego.
In response to ay inquiry as to why Consolidated could
not establish another plant in another commity, Vajor Flest
and it was impossible due to the lack of management and supervisory
personnel. To illustrato this he stated that supervisors at the
,resent time wro actually over-seeing forty times the amount of
work that they had Las the past. Premmably this problem has
been recognized because he has received permission to go ahoad
an build MI new plant next to his present plant.
In order to place these four problems in their proper
perspective, it is necessary to recognize the fact that the Navy
holds approximately 54 percent of the property of San Mego.
This only 40 percent of the city 10 subject to taxation for
the support of such utilities, as noted above.
In adition to the need (or bounding facilities and
vocati and schools by Consolicated, the Bavy itself can well take
advantage of an increased water supply and an adequate sevage
disposal system.
T/an
Regraded Unclassified
160
- 3 -
It should also be rembered that there
are two other companies, Ryan (aireraft) and Solar (aircraft
exhaust manifolds) in Seen Mage, both of which are also
expanding rapidly.
HOUSING
San Mego has a total of 48 thousand single occupancy
dwellings of which 25 thousand are owned and 23 thousand
rented. Only 7 hundred or 13 percent are unoccupied, a rate
which is the lowest in the country.
Major Fleet estimated that by January 1, one thousand
new dwellings would be needed, and by May 31, 1941, approximately
5 thousand dwellings. In comparison the normal rute of growth
would be 8 hundred by January 1 and 18 hundred w May 31,
1941.
Thus due to the tripling of the muber of Consolidated
employees, due to the 14 thousand increase in Havy personnel
(artisans, mechanics, etc.,) and due to the presence of 15
thousand more son when the Havy ships are at San Diego base,
it is stated that at least 6 thousand housing units are
necessary, plus accomodations (barracks) for 4 thousand single
non.
It is my understanding that this situation has been
considered by Federal Housing, by Mr. Charles P. Palmer,
Housing Coordinator, and by Mr. Y. S. Kmxisen. It is the
attitude of Federal Housing that housing facilities necessary
for the additional personnel required in San Diego can only
be considered from an emergency point of view and would not
be economic from a long range point of view.
In this connection, however, it is estimated that only
approximately 10 million dollars would be necessary to case the
situation. Money for such a purpose has already been provided
to the President under Section 201 of the Appropriation Act
(H.R. 10263).
VOCATIONAL SCHOOLS
Due to the increase in burdness which Consolidated must
absorb, it 10 necessary that new employees receive approximately
5 weeks schooling before they can be employed in the factory.
At the present time, Major Floot informed me that his
supervisors, etc., were worlding 14 hours a days 8 hours in the
factory and 6 hours teaching in the vocational schools
already established in San Mego. In order to train an increased
Regraded Unclassified
161
number of employees, there schools sust be expended at a cart
of approximately one and & half million dollars. This antter
has already been taken up with Studebalor, Comissioner of
Education, who is very sympathetic and has made the informal
statement that be would like to do it 15 the money is
supplied for such 8 purpose. An appropriation for such a
purpose is now being considered by Congress,
In this connection, Consolidated will contimus to furnish
instructors to these schools so that the petential employees
will be more efficiently trained for the job for which they
will be employed.
SEWAGE DISPOSAL
A few years ago the San Diego river was diverted by the
Mar Department from the harbor of San Mego so that it now
empties into the ocean, three miles from its original mouth.
As a result, landlocked San Diego harbor has no natural cleaning
facilities. This situation becomes especially serious when
the Fleet returns to the Naval base.
The only solution, so Hajor Fleet tells me, is the build-
ing of a sowage disposal plant, to which the Government should
contribute atleast 50 persent. Presumably W.P.A. could
contribute 45 percent of the cost of such 4 plant, but the
financial resources from San Diego are such that it could not
support the reasining 55 percent. It has been proposed that
this balance of 55 percent should be divided equally between
San Diego and the Havy. I have been informed that Secretary Knox
has in his possession a complete study and analysis of this San
Diego sevage situation.
WATER SUPPLY
San Mego is the fourth largest city in the State of
California, but it has no water supply other than that procured
from local mountain springs and strees.
Los Angeles offered to lot San Diego utilise the now
water supply procured from the Colorado river project, but only
at a cost of 20 million dollars. A sur which the taxable part
of San Mego could not afford.
It is my understanding that San Diego is now considering
attempting to raise three and a half million dollars for another
local dan in order to relieve the water situation, but this
Regraded Unclassified
162
- 5 -
would seem to be only & temporary relief.
It has been suggested that the Government should 000-
tribute 50 percent or more of the 20 million dollars required
by Los Angeles in order to put San Mago in on the Colorado
river system.
Major Floot advised me, off the record, that if the
President could secure the 20 million dollars for Los Angeles
and an adequate water supply at San Liego, that be could
probably carry Californial
PI/mm
Regraded Unclassified
for
163
BRITISM EMBASSY,
WASHINGTON, D.C.
September 16th, 1940
PERSONAL AND
SECRET
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Lolazon
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
164
Relation from London dated
- teacher 15th, 1940
Renal Air Fores
1.
The majority of the aircraft
despetched during the night of 13th/14th
successfully attacked barges end shipping in
Dutch end Chennel porto. Direct hits were seen
on all targets and it is considered that
extensive damage was inflicted.
Lest night 154 bombing aircraft were
sent to attack the following objectives:
Berges and shipping in butch and Channel
ports
Reilway turgets in North Ceruany end Belgium
Gun emplacements opposite Dover and Chateau
d'Argenteuil, believed to be Field Marshall
Gooring's headquarters.
A22 our aircraft except one returned
safuly.
2. Repuse Air Perce.
Industriel damage additional to that
reported on September 13th vas caused nt one
Lendon oil company, where fires are under
control and at an engineering works
where severe darage was done to buildings.
During the night of September 19th/
14th more recent reports indicate that enemy
aircraft were less setive than usual. Rough
estimate/
Regraded Inclassified
165
+
astimate of susualize in London 1706 are 25 killed and
19 counted. the fire sentioned at - suburban past office
is under control, not che telephone exchange, which was
hit, has resumed services. Some serious fires compred
but all were reported yeaterday evening as under control.
some dauage 188 caused to dock area end also to insustrial
premises st Cardiff.
Testerday morning, enemy setivity was confined
to reconnaissance flights by individual aircraft making
use of cloud cover. two of these were shot down. In the
afternoon 2 raids were directed against London via Kent
and Threes Estuary respectively. About 150 operated in
the first, and about 200 in the second. A few of these
penetrated inner artillery zone on both occasions, but
interesptions were ende by our fighters and casualties
were inflicted. Damage is reported ⑉ follows. Although
Battersea Power Station received direct hit, the damage
was confined to the control room and plant is not healy
affected, but A suspected unexploded bomb has
temporarily suspended working. 1000 seaside towns on the
South and Heat Coast were attacked, end extensive damage
to property and some casualties occurred at Knothourne.
At Brighton & direct hit on - cineme killed 32 people
and seriously wounded 82, and at Warrington 2 Relle boobs
dropped on 6. recreation ground, where a gain performance
was in progress, killed 14 people and seriously wounded 21.
Lest night although weather conditions were
favourable energ activity vas slight. Several mell reide,
sataly of single sircraft operated over INSURY, Kent,
last Anglie and North (idlands, and - own Londonv
The country Qty A 50 jump fire was
started in one London district, and about 50 casualties
are/
Regraded Unclassified
166
are reported from earther. Otherwise, no reports of
damage or casualties have been received.
AIP training activity in Baltie continues at a
high level.
3. submary of air completing.
There
Destroyed Probable Damaged
by fighters
Bombers
la
-
6
fighters
11
3
6
by anti-airereft fire
type unknown
2
-
I
Totals
16
3
12
British: 12 aircraft (4 pilots killed or missing).
h. shipping Cosueltion.
By U-best: on September 4th an Irish ship
(1,000 tons) was sunk by gun fire in South Western approaches.
on September 7th 8 Norwegien ship (4,200 tone) was
torpedoed and sunk in North Western approaches, and on the
11th 8 British ship (5,00 tons) was sunk by torpedo in
Sestern Atlantic.
5. Middle Seat
Libya. Reference summary of the 13th, peregraph 4. The
situation on the Libyan front at 5 Belle on the 14th wee
sollum barrecks was in Italian hands. Energy were
infilitrating down the escarpment and advancing in 3 columns.
2 squadrons of let bettalion of the Royal Tank Regiment were
engaging the columns.
There still appears to be no depth to Italian
advance end there to at present no evidence of any other
troops having been brought up to replace those that have
now noved forward.
on september 13th, 3 Blenheims bombed the bonba
seeplene/
Regraded Unclassified
167
+
seeplane base, and 13 more again attacked mechanical
transport concentrations at Bidi Omer, causing fires.
Abyasinia, on the 12th 3 medium bombers of the South
African Mr Force attacked en Italian acrodrome, making
direct hits on buildings and on enemy aircreft on the
ground, one of which was burnt. However, they were
intercepted by 4 energy fighters, and one machine
crashed. in flames, while e second is missing.
On the same day, 4 sircreft attacked an
serodrome South test of Addie Ababa, registering direct
hits on hangers and destroying one aircraft.
Regraded Unclassified
168
CONSOLIDATED AIRCRAFT CORPORATION
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:
1941
:Deliveries on
:
Sept.
: estimated :present orders
Model and Purchaser
14
Sept.
:
:
:
deliveries : estimated to
:
15-30 Oct. Nov. Dec. Jan. Feb. Mar. :Apr. May June : Sept. 15, 1940:be made after
:
1940
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
B-24 type four-engine bomber
2
3
*
4
4
4
VI
21
U. 3. Army
106
+
+
+
4
+
+
T
10
10
53
53
British*
180
3
5
3
3
A
x
7
14
16
41
139
7
//A
Total B-24 type
286
3
5
3
3
5
5
6
14
24
26
94
192
26
PBY-5 type two-engine Navy bomber
it
U. S. Navy
220
6
10
11
15
16
19
17
20
26
24
164
56
British**
238
1
3
3
8
9
8
10
12
15
10
79
159
Total PBY-5 type
458
7
13
14
23
25
27
27
32
41
34
243
215
PB2Y-2 four-engine Navy bomber
U. S, Navy
7
2
1
1
2
1
7
Total Army, Navy and British
751
12
19
18
28
31
32
33
46
65
60
344
407
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 16, 1940.
British orders of this model are reported as LB-30.
-- British orders of this model are reported 88 28-5ME and 28-5AME.
169
DOUGLAS AIRCRAFT COMPANY
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
:
1941
: Sept.
: estimated :present orders
Model and Purchaser
:
Sept.
:
:
:
:
:
:
:
:
:
:
14,
: deliveries : estimated to
15-30 Oct. : Nov. : Dec. Jan. : Feb. Mar. Apr. : May June : Sept. 15, 1940 be made after
:
1940
:
:
:
:
:
:
:
:
:
:
:-June 30, 1941 July 1, 1941
A-20, A-20A type two-engine
attack bomber
U. S. Army
228
8
15
28
34
49
52
39
3
228
British*
758
27
55
30
8
19
29
45
97
57
135
502
256
Total A-20. A-20A type
986
35
70
58
42
68
81
84
100
57
135
730
256
SBD-1 scout bomber
U. S. Navy
157
11
27
20
22
35
29
13
157
B-23 two-engine bomber
U. S. Army
2
2
2
British (spares)
4
1
2
1
It
Total B-23
6
3
2
1
6
XB-19 experimental bomber
U.S. Army
1
1
1
0-5 two-engine transport
U. S. Navy
3
1
1
1
3
Total Army, Navy and British
1,153
50
100
81
64
103
110
97
100
57
135
897
256
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 16, 1940.
. British orders of this model are reported as DB-7, DB-7A and DB-7B
170
BOEING AIRCRAFT COMPANY
:Unfilled:
Estimated deliveries
: Orders :
1940
:
Total
:
1941
:Deliveries on
Model and Purchaser
: Sept.
:
:
Sept.
:
:
estimated :present orders
:
:
:
:
:
:
14,
deliveries : estimated to
: 1940
:
15-30 Oct : Nov. : Dec. Jan. : Feb. : Mar. Apr. : May June: Sept. 15, 1940:be made after
:
:
:
:
June 30, 1941: July 1, 1941
Flying fortress
U. 8. Army
359
7
10
9
6
10
16
10
5
13
26
112
247
DB-7B two-engine bomber
British
288
7 16
23
265
XB-29 two-engine bomber
U. S. Army
2
0
2
XPBB two-engine patrol bomber
U. S. Navy
1
0
1
Total Army, Navy and British
650
7
10
9
6
10
16
10
5
20
42
135
515
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 16, 1940.
171
GLENN L. MARTIN CO.
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
1941
: Sept.
: estimated :present orders
Model and Purchaser
Sept.
:
:
:
:
:
:
:
:
:
:
:
14
deliveries : estimated to
: 1940
15-30 : Oct, : Nov. : Dec. Jan. : Feb. Mar. :Apr. : May : June: Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:
June 30, 1941: July 1, 1941
B-26 two-engine bomber
U.S.Army
201
1 6 14 24 26 24 26 26
147
54
PBW-1 two-engine bomber
U. S. Navy
26
1 47122
26
M-167-F4 two-engine light bomber
British
158
1 15 39 44 40 19
158
M-187 two-engine medium bomber
British
600
1 12 40 50 57 57 57
274
326
XPB2M-1 four-engine bomber
U. S. Navy
1
1
H-167-F3 two-engine light bomber
British
1
1
1
Total Army, Navy and British
987
1 6 23 58 72 104 95 81 83 83
606
381
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 16, 1940.
172
September 16, 1940
This, quite obviously, was written by Lothian
because it practically is verbatim what Lothian told
me when he was in to see me the other day.
173
This was given to the Secretary
by Sir Andrew Agnew on Sept. 13th.
174
September 12th, 1940
The Par East - 011
An important factor in the oil issue in the Far East
at the moment is whether or not Great Britain and the United
States can puraue & parallel course of action. Obviously
we are in a far weaker position than the United States, and
we will require American support in any measures of resis-
tance to Japanese pressure which may be taken. Such support
can only be forthcoming if the U.S.G. and the American public
feel that we are not selling them down the river. If, on
the other hand, the United States takes the lead and we again
are accused, however unjustly, of taking the line of appease-
ment, then ill-will between the two countries may arise.
2.
The question of oil supply for Japan is, of course,
all important in itself and it raises a subsidiary point of
equal importance, viz., the fact that it may either prevent
or help to bring about British and American co-operation in
the Far East. If the United States Government continue to
intensify their strong line of action in the Pacific, it
would appear to be most important that step by step we should
be advised - before the event - otherwise & position may
arise where the two countries are not following a parallel
course. Even under consultation it may not be possible for
the two countries to walk in step because of the political
position elsewhere, but at any rate an exchange of views
before taking action is likely to prevent misunderstandings
by showing that the line we are taking in oil is as strong
a one 88 we feel possible and not merely a scheme to take
advantage of American restrictions.
3.
American oil policy in regard to Japan is now a
restrictive one, with the object not of preventing supplies
and thus encouraging drastic action but of limiting them
in quantity, quality and period of commitments. However,
definite restrictions, amounting in practice to an embargo,
have 60 far been applied only to aviation spirita, aviation
lubricants and certain classes of crude oil. These res-
trictions, added to the fear of further action, have caused
the Japanese to exert strong pressure on the Dutch, British
and, to a much amaller extent, American companies operating
in the Far East and to canvass the world, outside the United
States, for oil.
4.
In fact, Japanese pressure had already been felt
before the American export licensing system was applied to
011, and negotiations were already proceeding between British-
Dutch companies and the Japanese for increased deliveries
from the East Indies. In addition, earlier this year the
Anglo-Iranian (controlled by H.M.G.) had, for the first time,
contracted to supply a certain quantity of crude oil to Japan.
These negotiations and commitments were entered into at a
time when the American market was entirely open to the
Japanese. America has always been, and still is the major
supplier of oil to Japan. The action taken by the Adminis-
tration in its application of the licensing system to embargo
certain special products had two effects. It intensified
Japanese pressure for supplies of all oils from elsewhere,
and it threw a spotlight on the sales made and under nego-
tiation by British and Dutch interests. In fact, the
quantity of oil sold or under negotiation by the British-
Dutch interests is only a small proportion of that currently
Regraded Unclassified
-2-
175
being supplied by American companies, not only from the
United States but also from other sources, e.g., Saudi
Arabia and Peru. The Japanese demands upon the British-
Dutch interests have by no means been met although, in
fact, it would appear that the Government of The Nether-
lands are concerned to see that the oil companies go 8
long way in meeting the Japanese demands.
5.
The facts surrounding British-Dutch sales have
been exaggerated and distorted to appear as if, when the
Americans took conorete action to limit certain supplies
to Japan, we and the Dutch took advantage of the situation
to increase our sales. We have been criticized by the
State Department, but Sir Andrew Agnew has clarified this
situation with the United States authorities, However,
if, as they did in July, the United States authorities
again take sudden and more drastic action without colla-
boration with us, we may again be subject to unjust
criticism.
6.
We have been, and are being severely criticized
not only in the press but in public utterances by prominent
oil men, especially in California and the Southwest. In
some cases the statements made are blatantly untrue; for
example, the reported sale by the Anglo-Iranian of aviation
spirit which, it was implied, had caused the U.S.G. to give
up its own policy as useless. This specific report was
denied from London but there has been no general answer to
the charge that we are not only selling U.S. Far Eastern
oil policy down the river but also are taking American
trade in 80 doing.
7.
Obviously the situation changes in detail from
day to day, and obviously the specific commercial transac-
tions, even if they can be determined at any particular
time, cannot be openly discussed. However, when the
time is ripe, it is desirable to clear up the existing
misunderstanding over oil, 80 that oil will not roughen
further the troubled waters and prevent collaboration in
the larger issues at stake. The U.S.G. has many other
powerful weapons which it can exercise upon Japan, but
the oil policies and practices of the British, Dutch and
American Governments should either be reconciled on
general lines or the factors surrounding them sufficiently
understood to prevent recrimination.
8.
In the Far East two sets of negotiations are now
in progress, in both of which British, Dutch and American
companies are involved.
9.
In Yokohama, negotiations with British-Dutch in-
terests are in progress regarding sales of oil to Japan.
Apparently commitments extending over a year are being
considered. However, attempts are being made to keep
the period of such contracts down to 8 maximum of six
months. These attempts may not be successful, 88 the
British and Dutch in the final issue are not likely to
be able to contemplate the possibility of military action
in the Far East. What will then be the position? Will
the American company get the State Department approval of
their participation in such supply contracts?
10.
Regraded Unclassified
176
-3-
10.
In Batavia, a Commission has arrived apparently
to negotiate for the sale of producing oil properties by the
British, Dutch and American interests involved, and also
perhaps for additional deliveries of oil. The Japanese
are exerting their pressure primarily on the British-Dutch
interests. Here again, when negotiations reach a critical
point, it would be helpful to know what line the U.S.G. will
take.
11.
& British company has made a contract for the sale
of oil to Japan from Iran the Anglo-Iranian which is con-
trolled by the British Government). Here again, the quan-
tities involved are not very large, and particular circum-
stances were involved. For instance, the exports of oil
from Iran have been sadly reduced due to the war, but the
Shah's appetite for royalties has by no means suffered a
similar diminution. It has been reported that the Japanese
went behind the back of the Anglo-Iranian and exerted
pressure to a highly receptive Shah for increased deliveries,
and the Shah even threatened to cancel the Anglo-Iranian
concession.
12.
Both British and American companies are at present
delivering against contracts made some time ago from Peru
and Ecuador. However, the main source of oil supply for
Japan is still the United States, excepting now for those
limited categories for which licenses are being refused.
13.
Thus the situation in detail is complicated and
the time may not be ripe for any further steps than those
being taken by Sir Andrew Agnew. In general, however, we
need (a) to clear up the misunderstanding of our oil posi-
tion in regard to Japan; (b) to suggest that the U.S.G.
does not take further and drastic steps which will throw
our actions more out of line in relation to their policy
without at least giving us warning; and (c) to ensure
that the U.S.G. should understand, even it if does not
approve, the commitments which the Dutch and ourselves
may be forced to make.
Regraded Unclassified
177
September 16, 1940
Ny dear Hr. Ambassador:
Thank you very much for sending
me the memoranda in relation to counter-
feit money.
Mr. John Steinbeck put the pro-
posal up to me. I told him I was abso-
lutely opposed to it as I thought it was
crooked and I am delighted to learn that
the British Government agrees with me.
Yours sincerely,
(Signed) R. Morgestion, Jt.
His Excellency,
The British Ambassador.
By 445 4
178
September 16, 1940
My dear Hr. Ambassador:
Thank you very much for sending
me the memoranda in relation to counter-
feit money.
Mr. John Steinbeck put the pro-
posal up to me. I told him I was abso-
lutely opposed to it as I thought it was
crooked and I an delighted to learn that
the British Government agrees with no.
Yours sincerely,
(Signed) B. Morgenthau, Jo.
His Excellency,
The British Ambassador.
By Messengez
Regraded Unclassified
179
September 16, 1940
My dear Mr. Ambessador:
Thank you very much for sending
M the memorande in relation to counter-
foit money.
Mr. John Steinbeck put the pro-
posal up to me. I told him I was abso-
lutely opposed to it as I thought it was
crooked and I am delighted to learn that
the British Government agrees with no.
Yours sincerely,
augued) R. Morgenstic, Jr
His Excellency,
The British Ambassador.
By Messonger
Regraded Unclassified
180
BRITISH EMBASSY,
WASHINGTON, D.C.
September 12th, 1940
Dear Mr. Secretary,
With reference to our
conversation of today, you may be
interested to see a memorandum which
sets forth the views reached by the
British Government when the proposal
you mentioned was considered by them
some little time ago.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Lolation
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
181
MEMORANDUM
The suggestion that counterfeit Reichamark
notes should be dropped from aeroplanes over Germany was
exhaustively considered by the British Government some
time ago, At that time it WRB thought that this would
be regarded by the world At large as B. particularly
odious and dishonest method of warfare, and if this
argument has to any extent lost its force since then
there are other arguments which seem decisive.
The fact that such notes were being dropped
would certainly be known without delay. to the German
authorities. In a country ruled in the way Germany is
ruled, it would not be difficult for the authorities to
organize the collection by Party or official
organisations of the notes dropped, and to frighten the
population 80 that they would not dare to collect these
notes and retain and use them themselves. Precautions
have probably been taken already by the German
Government.
Even insofer as the population were able
to retain and use such notes the effect would probably
be disproportionately amall. In Germany nearly all goods
are either rationed or are simply not obtainable; the
holders of these counterfeit notes would not be able to
spend them to more than a limited extent and it is
probable that they would flow to a cons! derable amount
into savings bank accounts, etc. The German Government
could increase their borrowing accordingly from these
banks, and decrease their borrowing on the markets,
To overcome these objections in such 8 way
as to cause a substantially increased demand for goods
which would endanger the German price control, or 88
Regraded Unclassified
182
-2-
to create distrust among the population in the
currency, would require the scattering of counterfeit
notes on such a large scale 88 might be beyond the
capacity of the Royal Air Force if it is not to limit
its attacks on military objectives to an undesirable
degree.
Lastly, if Great Britain started this
method of warfare and Germany retaliated in kind,
it is not improbable that the effect on Great Britain,
where we have not the same totalitarian methods of
government, might be greater than the effect on
Germany.
12
21th September, 1940
Regraded Unclassified
183
SEP 16 1940
Dear Mr. Humphrey:
I want to thank you for your letter of
September 11th.
The information and opinions expressed in
your letter are useful in helping us to under-
stand the problems involved in the petroleum
situation. I also appreciate your desire to 00-
operate with the Government, as well as your
offer of further assistance in the event that 10
need additional information.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Mr. William F. Humphrey,
President, Tide Water Associated 011 Co.,
17 Battery Place,
New York, New York.
w to Mr. Thompson
WLU:ls
FILE COPY
HPN 9/12/40
Regraded Unclassified
184
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 13, 1940
TO
Secretary Morgenthau
FROM Mr. White
bject: Tide Water Associated Letter of September 11, 1940.
This letter confirms verbal statements made by officials
of the company in the meeting of August 8, 1940. It presents
no new information.
1. The letter principally describes the company's
financial and corporate relationship with the
Mitsubishi 011 Company, of which it 1s & half-
owner.
2. It notes the capacity of Mitsubishi's refineries.
3. It estimates Japanese stocks at 20 million
barrels (probably not including Naval stocks)
on the basis of Mitsubishi's stocks.
4. It offers cooperation with the Government, together
with any additional information we desire.
Letter appended for Secs' signature
185
TIDE WATER ASSOCIATED OIL COMPANY
17 BATTERY PLACE
NEW YORK
WILLIAM RESIDENT ». NUMPUBER
September 11, 1940
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Treasury Building,
Washington, D. C.
My dear Mr Secretary:
At your invitation, I was pleased to confer with you
at Washington on August 8th last, at which time it was my
privilege to meet Honorable Frank Knox, Secretary of the Navy,
Honorable Harold Ickes, Secretary of the Interior, and Messra
Frey and Holland of the Department of the Interior, and Dr.
White.
As you stated, the purpose of the meeting was to
ascertain generally the relationship of the Tide Water Asso-
ciated 011 Company with the Mitsubishi 011 Company of Japan,
and also the quantity of crude petroleum and its products sold
by Tide Water Associated 011 Company to Mitsubishi 011 Company.
I gladly gave the desired information that was available at
that time. This information was supplied with the understand-
ing that I was calling on my memory for transactions and events
which occurred during a period of more than 17 years. In view
of the fact that a record was being made of the conference, you
will recall that I reserved the privilege of reviewing my state-
ment and of submitting a summary for your consideration. Much
of the information upon which my statement was based had to be
checked in San Francisco and some was not available for check-
ing. With your permission may I therefore repeat in narrative
form, with any necessary corrections, substantially all of the
information submitted at the meeting. I hope the facts submit-
ted will excuse the length of this letter.
Mitsubishi-Sha, as I am informed, 1s an important hold-
ing company existing under the laws of the Empire of Japan and has
one or more subsidiaries in every important branch of industrial
activity in that Empire. Among the subsidiaries is Mitsubishi
Shoji Kaisha, Ltd., or 8.8 it 18 known, the Mitsubishi Trading Com-
pany. Late in the year 1923 Mitsubishi Trading Company entered
into an agreement with Associated 011 Company, a California corpora-
tion, pursuant to which it we.a granted the exclusive rights to pur-
chase from Associated Oil Company orude oil and the products of
crude oil for use or resale in the Empire of Japan, Korea, Formosa,
that portion of the Island of Saghalien under Japanese control,
Regraded Unclassified
Honorable Henry Morgenthau, Jr.
186
September 11, 1940
-2-
Manchuria, Siberia, and Asiatic Russia. In the year 1924 and
cleo in the year 1925 some changes were made in the arrangement
but finally on June 8, 1926 a formal contract was made. This
mitten contract likewise was changed in some particulars from
time to time. However, 8 copy of it and of the modifications
thereto are on file with the Securities and Exchange Commission
st Washington, D. 0. 8.8 exhibits attached to the registration
statement of Tide Water Associated Oil Company filed with that
Commission in the early part of the year 1937. This agreement
ie still in force and effect, Over 9 period of more than sixteen
years Associated Oil Company sold, oursuant to such contract, on
AT snnual average, approximately 8. million barrels of crude oil,
about 54, barrels of ordinery motor gasoline, about
barrels of kerosene, 15,549 barrels of lubricating oil, and
1,200,000 barrels of fuel oil.
On June B, 1928 Associated Oil Company and Mitsubishi
snoji Yaiaba, Ltd. entered into a memorandum whereby they jointly
avreed to organize a corporation under the laws of the Empire of
Janan for the purpose of constructing and operating an oil refinery
in Japan and for the sale of the products of that refinery. On
Movember 5, 1929 this memorandum was superseded by B. formal agree-
ment with the same general objectives, which WAB executed by Mit-
subishi Goshi Kaisha, Miteubishi Mining Company, Mitsubishi Shoji
Keisha, Ltd., as parties of the first part, and Associated Oil
Company, 8 California corporation, party of the second part. This
agreement contained, among other provisions, a covenant to the
effect that the Articles of Incorporation and the By-Laws would
contain such necessary provisione ae would assure the Mitsubishi
Imprests and Associated Oil Company an equal number of Directors
and require unanimous consent for any corporate action. This
covenant wae written into the By-Laws and Articles of Incorpora-
tion and has always been respected, however, it might not be effective
in opposition to B. command of the government of Japan. A copy of
tile screement is also on file with the Securities and Exchange
Commission at Washington, D. C. as one of the exhibite to the afore-
goid registration statement. Pureuant to this agreement Mitsubishi
SIL Company was organized and a refinery with a daily rated capacity
of 3,000 barrels of light crude oil was constructed at Kawasaki,
near Tokyo, Japan. This refinery was completed late in December
1331 and placed in operation about 8 month later. I am informed
that Litsubishi Coshi Kaisha is now known as Mitsubishi-Sha, and
that the other two parties of the first part, are among its aub-
#idiaries. The agreement of November 5, 1929, as indicated above,
614 not absorb or cancel the agreement of June 8, 1926.
About March 1, 1933, to enable Mitsubishi Oil Company to
comply with the so-called control laws enacted by the Japanese
Covernment it was compelled to increase its capital from 100,000
Alares with a par value of ¥5,000,000 to a capital of 140,000
Dates with 8 par value of ¥7,000,000. The Mitsubishi Intereste
subscribed for one-half of the increased capital and Associated
Regraded Unclassified
187
Honorable Henry Morgentham, Jr.
September 11, 1940
-3-
Q11 Company subscribed for the other half. Associated paid for
the 20,000 shares it acquired ¥1,000,000 equal at the then rate
of exchange to $209,637.50. The proceeds realized from increas-
ing the capital of the company were used in building the necessary
storage facility and in purchasing the amount of crude oil that
the company was required to carry in storage. The oil company's
business increased rapidly and early in the year 1937 the
Litsubishi Interests desired to enlarge the capacity of the
refinery so that it would be able to process about 5,000 barrels
of light crude oil daily. Associated hesitated to invest
additional money in the enterprise in view of its unrealized
1088 of approximately ¥1,670,000 or approximately $467,000 at the
then rate of exchange, due to the depreciated value of the Japan-
ese yen. To compensate Associated partly for its apparent loss
due to the depreciation of the yen the Mitsubishi Interests con-
tributed to Associated out of their treasury a total of ¥800,000
aqual at the then current rate of exchange to about $231,400 in
United States currency, and also caused Mitsubishi 011 Company
to declare a dividend on its capital which yielded Associated an
additional ¥870,000. Associated finally assented to the proposal
and Mitsubishi 011 Company's capital was increased from 140,000
shares to 200,000 shares, or from ¥7,000,000 to ¥10,000,000, and
Associated subscribed ¥1,500,000 for 30,000 shares of the increased
capital stock. Of course this subscription was paid in yen out
of the fund of ¥1,670,000 created 5.8 above stated, and no money
for this investment was sent from this country.
Associated 011 Company WBB merged with and into Tide
Water Associated Oil Company on November 30, 1936 and as 8 result
of the merger Tide Water Associated Oil Company succeeded to all
the rights of Associated Oil Company under and pursuant to the
contract of June 8, 1926, 88 amended, and also to Associated 011
Company's interest and rights in and to the shares of the capital
stock of Mitsubishi Oil Company.
Later on the Witsubishi Interests, owners of one-half
of the capital stock of Mitsubishi Oil Company, desired to increase
further the light crude oil capacity of the refinery by the
addition of & combination crude distillation and cracking unit
with a daily rated capacity of 3,000 to 4,000 barrele of light
crude oil. Rather than again increase the company's capital Tide
Water Associated Oil Company insisted that the increased capital
be provided in Japan and the Mitsubishi Interests then arranged B.
bank credit for Mitsubishi 011 Company against which that company
borrowed several times, the maximum loan being at one time in excess
of ¥10,920,000 upon which interest was paid at the rate of 4-1/2%
Der annum. When the loan was made it was anticipated that it would
be refunded by the issuance and sale in Japan of long-term debentures
or other securities, but the Japanese-Chinese war prevented the
accomplishment of this plan. Therefore, about several months ago
Lt was decided to liquidate the bank loan by increasing the company's
capital from ¥10,000,000 to ¥20,000,000 and the issuance and sale
Regraded Unclassified
OIL AND GAS JOURNAL
INTERNATIONAL NUMBER
DECEMBER 28, 1939
JAPAN
Alkoku Oll Co., Kawaski, Kanagawa
Kawasaki
2,000
S-C
1,000
None
Op.
Asahl Seklyu Kabushiki Kaisha (Ashi Petroleum Co., Ltd.), No. 6
Itchome, Marunouchi, Kojimachi-Ku, Tokyo
Tokyo
500
S
None None
Op.
Asahi Seklyu Kabushiki Kaisha (Ashi Petroleum Co., Ltd.). No. 6
Itchome, Marunouchi, Kojimachl-Ku, Tokyo
Hikoshima, Jamaguchi
500
S
None
None
Op.
Hayama Oil Co., Sekiya, Nigata
Kawasaki
2,000
S-C
1,000
None
Op.
Imperial Japanese Navy
Kudamatsu
3.000
S-C
1,500
None
Op.
Chosen Sekiyu Kaisha, Genzan, Korea
Genzan
5,000
Comp.
1,250
Cross
Op.
Mitsubishi On Co., Ltd., Yaesu Building, Marunouchi, Tokyo
Kawasaki
C. T. Tsunoda
5,000
S-C
4,000 Cross
Op.
Nippon Oil Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Amagasaki
4,000
S-C
1,500
None
Op.
Nippon on Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Kashiwazaki, Nilgata
2,800
S
None
None
Op.
Nippon on Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Nilgata
2,800
S-C
1,000
Cross
Op.
Nippon Oil Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Akita
4,000
8
None
None
Op.
Nippon Oil Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Tsuruml, Kanagawa
6.000
Comp.
1,000
Dubbs
Op.
Nippon on Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Kudamatsu, Ya'aguch!
4,000
Comp.
1,000
Cross
Op.
Nippon on Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Karukawa, Hokkaido
300
S
None
None
Op.
Nippon on Co., Ltd., Yuraku-Kan, Marunouti, Tokyo
Byoritsu, Tatwan
200
S
None
None
Op.
Ogura Oil Co., Ltd., Kobunacho, Nihonbashi-ku, Tokyo
Yourumt, Kanagawa
7,000
S-C
1,000
Cross
Op.
Ogura Oil Co., Ltd., Kobunacho, Nihonbashi-ku, Tokyo
Tokyo-Oshima
3,500
S-C
2,000
Jenkins-Cross
Op.
Total Japan
32.600
16.250
Regraded Uncla 188
189
Honorable Henry Morgenthau, Jr.
September 11, 1940
at par of 200,000 additional shares of capital stock. Tide Water
Associated 011 Company decided that at the present time it would
not increase its investment in the venture and proposed, which
proposal was accepted, that the Mitsubishi Interests subscribe
and pay par for the additional 200,000 shares, reserving, however,
to Tide Water Associated 011 Company the right and privilege of
purchasing from Mitsubishi Interests at par without interest, at
any time prior to January 1, 1948, 100,000, or one-half, of the
additional shares, with the understanding that during the interim
Mitsubishi Oil Company would continue to operate as in the past
and that the Mitsubishi Interests and Tide Water Associated would
continue to have equal representation on the Board of Directors
BO that no corporate act could be taken over the objection of any
Director. Although the proposal was tentatively accepted and a
formal agreement prepared the agreement has not, as yet, been
executed.
Tide Water Associated 011 Company's investment in
Mitsubishi 011 Company aa of June 30, 1940, based on the then
rate of exchange, including the ¥1,500,000 provided as above, was
$1,409,818, and that sum 1a in excess of the book value of the
investment. The total earnings of Mitsubishi 011 Company since
its organization and up to and including March 31, 1940, are
¥6,662,818.93. Since Mitaubishi Oil Company started operations
in the early part of 1932 up to and including August 2, 1940, this
Company has received in American currency as dividends on the
shares of the capital stock of Mitsubishi Oil Company owned by it,
the sum of $521,363.67. The last dividend was declared on July
26, 1940 of which Tide Water Associated 011 Company's share was
¥150,000. Three permits were issued by the Japanese authorities
for the transfer of this dividend to this Company in America, in
three equal installments, one-third in August, one-third in Septem-
ber and one-third in October. The August transfer was completed
and the amount of the dividend in United States ourrency was paid
in this country on the second day of August. The September install-
ment has also been paid.
The present refinery of Mitsubishi Oil Company includes
combination units for commercial distillation and cracking of
about 8,000 barrels per day of light crude. In addition, it has
8. lubricating oil unit capable of processing daily 1,000 barrels
of heavy crude. At the conference I stated that I had been told
that all refineries operating in Japan could process in excess of
60,000 barrels of light crude oil per day. Annexed hereto is a
photostat of a schedule taken from the 011 and Gas Journal, Inter-
national Number, dated December 28, 1939, which indicates my guese
was low by approximately 8,850 barrels. It appears from the
photostat copy of the schedule that the refineries then operating
in Japan could process more then 68,850 barrels of light crude oil
daily while Mitsubishi 011 Company's refinery 1s limited to a
capacity of 8,000 barrels. There are at least two refineries in
Japan that are larger than the Mitsubishi 011 Company's refinery.
Regraded Unclassified
190
Honorable Henry Morgenthau, Jr.
September 12, 1940
One has a daily capacity of 28,286 barrels and another 13,500
barrels. Tide Water Associated Oil Company and its predecessor,
Associated 011 Company, have sold to Mitaubishi 011 Company from
the date it started operations to and including June 30, 1940,
approximately nine million barrels of orude oil of which 6,778,178
barrels were of Kettleman and Belridge crude. I am informed that
none of the Kettleman or Belridge crude was used for the manu-
facture of aviation gasoline, and I am also told that neither of
these crudes is suitable for the manufacture of aviation gasoline
in commercial quantities. In addition to the above nine million
barrels of crude oil, the Company also sold during the last few
years 492,174 barrles of blended crude oil and 934,031 barrels of
Midway crude oil. It has also sold to Mitsubishi 011 Company
approximately 146,213 barrels of ordinary motor gasoline. Neither
this Company nor its predecessor, Associated Oil Company, ever
sold any aviation gasoline to the Mitsubishi 011 Company.
Mitsubishi 011 Company, under a license granted by the
Universal Oil Products Company, recently completed an iso-octane
plant. The plant, I am informed, has not been able to produce
at more than one-half of its rated capacity. It was built by local
Japanese construction engineers and was not designed by this Com-
pany's engineera, nor did any of this Company's representatives
superintend its construction. The original refinery, completed in
1931, was constructed under the supervision of engineers of
Associated 011 Company. However, at this time Tide Water Associated
Oil Company has no engineers in Japan nor are any of its representa-
tives supervising the refinery operation. It has B sales representa-
tive in Tokyo, Japan.
Since our meeting I have learned that the Mitsubishi
Interests desire to expend ¥800,000 for constructing a hydrogenation
plant in connection with the iso-octane unit for the purpose of in-
creasing the production of the iso-octane plant. According to our
information the plant will be designed in Japan and will be built
by Japanese engineers. It will be entirely financed in Japan.
On the adjournment of the meeting of August 8th you
requested me to arrange for Mr. Hyde, in charge of the Research
Department of the Western Division of this Company, to meet with
Dr. White. I attended 8. meeting between these gentlemen end I
believe that Mr. Hyde furnished Dr. White with all the information
he then desired.
You will recall that I stated I had never been in Japan
and could not even approximate the quantity of crude oil or gasoline
in storage in that country. However, on the assumption that the
quantity in storage at the Mitsubishi 011 Company bears the same
relationship to the total storage in the Empire as Mitsubishi 011
Regraded Unclassified
Honorable Henry Morgenthau, Jr.
191
September 11, 1940
-6-
Company sales bear to the total sales of the Empire, my associates
estimate that there would be approximately twenty million barrels
of all kinds of petroleum and its products in storage, as
Mitsubishi Oil Company, as this Company's representatives estimated,
had in storage about the date of the meeting approximately 700,000
barrels of all kinds of crude oil and products.
Tide Water Associated Oil Company shipped to Mitsubishi
Oil Company heavy Coalinga oil but that oil could not be, and we
understand was not, used for the manufacture of aviation lubricants
of the desired specifications.
While this Company's relationship with the Mitsubishi
Interests has been pleasant and these interests, in all dealings,
have been extremely fair and equitable, may I say in closing as
I said at the conference, Tide Water Associated 011 Company always
has had the policy that the public good and public safety are
paramount to all personal, business or other relationships and
that it and its officers desire at all times to cooperate with the
United States Government in all actions in the public interest,
and if there is any further information which you may desire on
the subject of the conference, I shall be glad to have you advise
me.
Respectfully,
All an
192
September 18. 1940
Files
Mr. Cochran
At 11:00 this serning I reminded Mr. Pehle that no action had yet been taken
by the Foreign Funds Centrol on the application set forth in its enblegram No. 108
of Septem les 6 by the Bank of France for the transfer of a certain amount of gold
from the Bank of France to the Swies National Bank. I asked that this transaction
be expedited. since 10 merely completed a transaction which had been previously
approved by our Group.
At the same time I asked that early consideration be given to a telegraphic
application from the Bank for International Settlements made en September 12 for a
license to sell a certain amount of gold hold is the United States.
MM
ENC:lap-9/18/40
Regraded Unclassified
193
September 18, 1940
4:30 p.m.
Paul
Appleby:
Hello, Mr. Secretary.
H.M.Jr:
Hello.
A:
Paul Appleby.
H.M.Jr:
How-do-you-do.
A:
I'm calling on a rather peculiar mission.
Ed Flynn gave me an assignment that's outside
my usual field. He is wanting to designate
as campaign manager in the State of Washington
H.M.Jr:
State of what?
A:
In the State of Washington, Saul Haas. Now,
I suspect that behind that are suggestions
that went to the President from Judge Rosenman
who had been out there, John Boettiger and
probably Justice Douglas and he asked me,
because he was talking to me about this and
other matters on the phone this morning, if
I would request in his behalf that you call
Saul in here to talk over business and give
him an opportunity to talk to the President
about the campaign in Washington.
H.M.Jr:
Well, now, Appleby, do you mind if I switch
you over to Gaston?
A:
No, not a bit.
H.M.Jr:
Because he's been talking to Senator Bone
about Saul Haae and he knows all about it and
I don't, and there's some mix-up on this whole
business of Saul Haas and Senator Bone. Hello?
A:
Yes.
H.M.Jr:
So if you don't mind, let me switch you over to
Gaston, and Gaston 16 up on this and I'm not.
A:
All right.
H.M.Jr:
Just a moment
194
TREASURY
22821
TRIPLICATE
Buenos Aires, September 17, 1940.
No. 1265
POSSIBLE NEW PAYMENTS AGREEMENT WITH
GREAT BRITAIN INVOLVING REPATRIATION OF
PUBLIC STERLING HONDS
The Honorable
The Secretary of State,
Washington.
Sir:
22306
with reference to the Embassy's despatch no. 1236 of
September 13, 1940 regarding the possible conclusion of a
new payments agreement between Argentina and Great Britain,
involving the repatriation of Argentine sterling bonds, I
have the honor to report that the Ministers of Agriculture
and Finance informed the Argentine press last night that
the proposed £40,000,000 deal is still "under study".
Dr. Ocantos Acosta, the head of the Interministerial
Committee which is charged with the negotiations, would
throw
Regraded Unclassified
195
DE . .
throw no further light on the situation. However, Noticias
Gráficas stated that it was in a position to affirm that
the British proposal had been accepted and that Argentina's
answer would be given during the course of the current week.
The paper went on to say that owing to the reserve of
the authorities it is not yet known officially what are the
real content and conditions of the British proposal. How-
over, it claims that the British proposal contemplates the
purchase of meat, livestock by-promets and various cereals
of which the British market is a habitual consumer. The
paper adás that the British Government has proposed that
payment be made in three ways: (a) in goods, (b) in discount-
ing the debt service which Argentina periodically pays in
London, and (c) in Argentine bonds. The paper continued
as follows:
"The operation, according to a high official
who was actively involved in the preparation of
the Argentine answer outlining conditions, has
its difficulties. Discounting the debt services,
(the only figure known), it was necessary to 68-
tablish the amount of goods to be acquired as
part payment, and the sum in bonds that would be
accepted by our Government. British goods, although
they find e ready market here and the need is felt
for some of them which are out of stock, present
the disadvantage of price increases through the wer
and shipping risks. It was necessary to establish
the actual stock. This is proceeding now.
on the amount of British merchandise in the
country will depend the balance to be met by In-
ternal debt bonds, which will land entirely in the
hand of British exposters, presenting the problem
of their redemption. These amounts, our semi-
official informant added, will be determined at any
moment, and the answer in London will be given by
our Embassy there at the latest this week."
Reverting to the excerpt from the la Prensa editorial,
which was quoted in the penuitimate paragraph of the Embeasy's
despatch under reference, it is noted that the suggestion
that
Regraded Unclassified
196
- 3 -
that the United States extend financial assistance in this
matter is reminiscent of the Wilcox plan
TIt is known that Mr. Wilcox discussed his ideas
in great detail with Dr. Federico Pinedo, the present Minis-
ter of Finance; and it is therefore not inconceivable that
the Argentine Government will approach Mr. Pierson vd. th re-
not FOR PUBLICATION
gard to the proposed Anglo-Argentine deal during the course
of his conversations in Buenos Aires.7
-
Respectfully yours,
S. Pinkney Tuck
Charge d'Affaires a.i.
CMR:jk
851
Qn.
& true copy of
the PR oried-
TECHNICVE
OFFICE Ot THE
10 THE
EI e MA 8 TOO ONE)
IBEV2081 BECEINED
Regraded Unclassified
197
THE SECRETARY OF THE NAVY
WASHINGTON
CONFIDENTIAL
17 September 1940.
(SC)L11- 4/JJ46.
My dear Mr. Secretary:
Reference is made to your letter dated September 11,
1940 enclosing a proposed memorandum to the President and a
proposed Proclamation extending the classes of iron and steel
scrap to be subject to export license.
The Department has no objection to the extension of
license control to the other grades and classifications of iron
and steel scrap. However, as it is understood that the Admin-
istrator of Export Control is now preparing new regulations that
will include these categories of iron and steel scrap to the
Proclamation of July 26, 1940, it is recommended that this matter
be referred to the Administrator.
Sincerely yours,
Famestal
James Forrestal,
Acting Secretary of the Navy.
The Honorable,
The Secretary of the Treasury.
198
Regraded Unclassified
September 17, 1940
Professer Qualerisis
Rr. Ceckran
At 10:00 yesterday feremoon the Svice Minister telephemed no. Be stated that
be had instructions from his Deverament to visit the State Department again for the
purpose of saking sev representations is regard to the failure of the Treasury
Department to suprove the transfer of certain funds from the Bank of France to the
Bank of Switserland account with the Federal Recerve Bank at Bev York, covering
service on French Government leans floated is Switzerland. I asked the Minister to
refrain from making any representations yesterday, explaining to his that I thought
all early decision is the premises would be reached. I premised to telephone his later
in the afternoon.
as the Group secsion yesterday afternoon the two applications is question were
approved and a telegraphic authorization to the Federal Reserve Desk at New York was
initialed. After returning from the meeting, I endosvered to reach the Svice
Ninister by telephone. but was not successful.
M 9145 this norming 1 informed the Swice Minister by telephone that telegraphic
authorization had been sent to the Federal Receive Bank at Bev Tork last night 4
proving the transfer of $454,545.45 from the account of the Bank of France to the
account of the Swice National Bank, to provide cover for the coupons due August 1
on the French w loan of 1939, and also the - of $407,744.88 to be similarly trans-
forred to provide cover for the coupons naturing # September 1 of 4-1/23. 1937
French loan. the Minister was very appreciative of the action which we had taken.
In talking with the Swice Minister I teld his specifically that these two treas-
fore had been approved exseptionally, and that they should net be considered to
constitute a presedent. That is, if the question of secting esspens on wash lease
five 07 six months from nov arises. the question will have to 10 game into sev.
and our decision nov doss not blad the to take this - action subsequently. The
Ninister stated that be understood this perfectly.
B.MS
HMO:lap-9/17/40
199
EH
GRAY
Berlin
Dated September 17, 1940
Rec'd 4:40 pame
Secretary of State,
Washington,
4036, September 17, 5 p.m.
(SECTION ONE)
My telegram No. 4028, September 17, 10 a.r.
The publication of the laws and decrees concerning
the incorporation of the Protectorate of Bohemia and l'oravia
into the customs territory of the Reich is EXPECTED in the
course of the next few days.
An authoritative statement published yesterday in the
Prague press points out that through the abolition of cus-
toms bariers between the Protectorate and the Reich, the
industry of Bohamia and Moravia will obtain free access
to the German market but in order to safeguard it against
the danger of competition from the Reich, agreements have
been concluded between certain industries of the Protectorat
and the Reich for the protection of the respective terri-
tories against mutual competition. The statement stresses
that the war of Economic regime which has subjected many
Essential commodities to stringent control has facilitated
the
Regraded Unclassified
200
EH -2- 4036, September 17, 5 pame (SECTION ONE) from Berlin.
the abolition of the customs frontier.
In relation to foreign countries, the Protectorate
will become part of the Reich's customs territory and
German tariff laws regulations and agreements will apply
to the Protectorate as well the neighbor states. Agreements
have been concluded with some foreign countries which safe-
guard the special interests of the Protectorate after its
inclusion in the Reich's customs territory.
(END OF SECTION ONE)
KIRK
LMS
201
EH
GRAY
Berlin
Dated September 17, 1940
Rec'd 5:20 pame
SECRETARY of State,
Washington.
4036, September 17, 5 p.m. (SECTION TWO)
It is reported that in some cases where the impossi-
bilities of the Reich's customs tariff are considerably
higher than the rates of the Protectorata, lower duties
will bE levied for imports to the Protectorate for a
transition period in order to facilitate the adjustment of
the Protectorate's industry to the new condition.
After the abolition of the customs frontier, payments
between the Reich and the Protectorate will bE free in
principle, according to the statement published in the
PRAGHOLLAM PRESSE. It is also reported that the Czach
crown will remain local currency at the present rate of
reichsmark but that the quotations of foreign currencies
in terms of crowns will bE adjusted to this ratio. It is
stated that exporters in the Protectorate will receive com-
pensation for Exchange losses resulting from this change
but only on condition that they collect their foreign
balances within the shortest possible time.
At
202
EH -2- 4036, September 17, 5 pame (SECTION TWO) from Berlin.
At present the dollar is quoted EN Prague at 29.25
Czech while on the basis of the Existing rate between the
dollar and the reichmark (2.50 marks to the dollar) the
Czech Exporter would only obtain 25 crowns per dollar and
would, therefore, suffer a loss of about 14% on the rate
of Exchange. After the realization of the tariff union
and the readjustment of the foreign exchange rates in
Prague, the exporter will apparently obtain compensation
for this Exchange loss.
Turnover and consumption taxes in the Protectorate
are to bE fixed at rates identical with those prevailing
in the REICH.
The police border on the other hand is to bE retained
and special permits will still bE necessary for travel in
and out of the Protectorate.
(END OF MESSAGE)
KIRK
LMS
1
203
0-2/2657-220
RESTRICTED
M.I.D., W.D.
September 17, 1940.
No. 196
SITUATION REPORT
12:00 M.
This military situation report is issued by the Military
Intelligence Division, General Staff. In view of the occasional
inclusion of political information and of opinion it is classified
as Restricted.
I. Western Theater of War.
1. No ground operations.
2. Air Force Operations.
Bad weather with extensive cloud cover prevailed.
There was slight German activity over England in the forenoon, but
this was greatly intensified during the afternoon and night. Opera-
tions were limited to single planes and to small formations. The
London area was steadily bombed, with considerable damage inflicted
in the West End and in the suburbs. The Germans continued to attack
London docks and port facilities. Attacks were also made in the
Midlands. Liverpool was attacked during the night. Losses to both
sides in aircraft apparently were small.
Attacks on the London area are continuing today.
The British communiques did not mention their own
offensive operations.
II. Mediterranean and African Theaters of War.
1. The Italian advance into Egypt has reached the vicin-
ity of Buqbuq, some thirty miles inside the frontier. The British
are reported to have organized a delaying position in this vicinity.
2. The Italian Air Force is bombing the British rear areas
in northern Egypt and the R.A.F. is harassing the Italian advance on
Buqbuq.
RESTRICTED
204
DEPARTMENT OF STATE
Washington
In reply refer to
September 17, 1940
RA 840.51 Frozen Credits/573
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury, and encloses
a copy and translation of a note from the Brazilian
Embassy in the United States requesting the release of
funds on deposit in the National City Bank of New York
for payment of the expenses of the Embassy of Brazil at
Brussels.
Enclosure:
From the Brazilian Embassy,
with translation,
September 12, 1940.
COPY
imc
Regraded Unclassified
205
EMBAIXADA DOS ESTADOS UNIDOS DO BRASIL
Washington, en 12 de Setembro de 1940.
N° 185/7(82).(46)
Senhor Secretario de Estado,
Tenho a honra de levar ao connecimento de Vossa
Excelencia de que a Secretaria de Estado das Relacoes Exteriores
acaba de me informar ter sido bloqueada pelo Governo americano,
no "National City Bank of New York", a quantia de dolars $2.668,32,
destinada as despesas de pessoal e material da Embaixada do Brasil
em Bruxelas.
2.
Rogo a Vossa Excelencia o obsequio, que de ante-
mao agradeco, de providenciar junto as autoridades competentes
para desbloquear a referida quantia e autorisar o "National City
Bank of New York" a transferi-la para o Reichsbank, em Berlim.
Aproveito a oportunidade para renovar a Vossa
Excelencia 08 protestos da minha mais alta consideracao.
(a) Carlos Martins Pereira e Sousa
A Sua Excelencia o Senhor Cordell Hull,
Secretario de Estado dos Estados Unidos da America.
I.K.S.
Regraded Unclassified
206
(TRANSLATION)
EMBASSY OF THE UNITED STATES OF BRAZIL
Washington, September 12, 1940.
No. 185/7(82).(46)
Mr. Secretary of State:
I have the honor to advise Your Excellency that the Secretary
of State for Foreign Affairs has just informed me that the sum of
$2,668.32. intended for the personal and material expenses of the
Embassy of Brazil at Brussels, has been blocked by the American
Government in the National City Bank of New York.
I request of Your Excellency the kindness, for which I thank
you in advance, of taking steps with the competent authorities to
unblock the sum mentioned and to authorise the National City Bank
of New York to transfer it to the Reichsbank, in Berlin.
I take the occasion to renew (etc.)
CARLOS MARTINS PEREIRA E SOUSA
His Excellency Cordell Hull,
Secretary of State of the
United States of America.
E.K.S.
Tr:AVA:HSF:SS
Regraded Unclassified
207
RDS
GRAY
(PARIS)
VICHY
Dated September 17, 1940
Rec'd 7 plm.
Secretary of State,
Washington.
481, September 17, 5 p.m.
FOR THE TREASURY FROM MATTHEWS.
My telegram No. 233, August 2, 5 p.m.
The German Office of Bank Supervision has begun to
EXERCISE a stricter control over all so-called foreign
banks in Paris with the Exception of the four American
banks. In the Ottoman Bank, for instance, an official
of the German Office of Bank Supervision has been placed
and has given instructions that no transaction of any sort
involving over 200,000 francs shall bE negotiated without
his approval. The so-called foreign banks (many of which
have of course substantial French interests in them)
have been requested to furnish full general reports con-
cerning the nature of their business, their principal
clientale, Et cetera, to bE supplemented by weekly reports
of transactions.
The Banking syndicate has transmitted a circular
letter stating that correspondence from banks in unoccupied
France
Regraded Unclassified
208
-2- #481, September 17, 5 p.m., from (Paris) Vichy.
France to their respective offices at Paris may bE trans-
mitted under certain conditions and with no guarantee of
prompt delivery. Such letters must bE "of an unquestion-
able importance and must concern Exclusively Economic
questions"; they must bE brief and "submitted to Examina-
tion of the banking syndicate and of the Ministry of
Finance as well as of the French and German censors." (The
banks hope, however, that they may continue to transmit
some mail by bank officials still permitted--with in-
creasing difficultiss--to make occasional trips between
occupied and unoccupied France).
MATTHEWS
EMB
Regraded Unclassified
209
TELEGRAM SENT
EM
GRAY
September 17, 1940
6 p.m.
AHENEASSY
OF 5 5
VICHY
485
FROM THE TREASURY FOR MATTHEWS.
REference your 549, September 12, 6 p.m.
Please communicate the following to Barrett from Loree:
QUOTE. General program outlined in accord with our
ideas END QUOTE.
HULL
(HF)
EA:HF:INW
210
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 17, 1940
TO
Secretary Morgenthan
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
At 5:15 yesterday afternoon, Mr. Pinsent, Financial Counselor of the British
Embessy, telephoned me that his Embassy had received a complaint from a represents-
tive in this country of a Scottish tweed company. The company in question had
telegraphed its representative to turn in to the Bank of America all of his English
bank notes. The representative had gone to the Wiltshire Chatesu Branch of the
Bank of America in Los Angeles to turn in his sterling bank notes, but the bank
would not accept this currency, disclaiming any knowledge of the circumstances re-
guiring residents of the United States to submit their sterling currency for return
to Great Britain within 8 specified time. The representative had then written the
British Embasay, which had given him full information in the premises, but it vas
then too late for the matter to be straightened out prior to the termination of the
for days of grace for turning in British currency.
Rr. Pinsent states that this representative is now complaining about the branch
of the Bank of America failing to accept British currency. Pinsent is uncertain as
what to do and inquired of me as to whether the Bank of America was at fault in not
giving its branches full information on the subject. In answer to my inquiry,
Pinsent stated that he had not yet taken this matter up with his own exchange authori-
ties.
In talking with Mr. Knoke by telephone this morning I mentioned this matter.
He confirmed my understanding that the Federal Reserve Bank of New York had communi-
cated the Bank of England instructions to the eleven other Federal Reserve Banks
which presumably would pass this information on to the other banks. Knoke insisted,
however, that no American bank was obliged to accept British currency, even if it
vas familiar with the British regulations. As 8. matter of fact, American postal
regulations under the Neutrality Act make it practically impossible for American
banks to forward British currency turned in under the British regulations to London
for redemption. As a. consequence, foreign banks in the United States have been hand-
ling this business, and even the Canadian branches were reluctant to participate
therein, 80 that one or two of the British banks. particularly Berclay's, did most
of the business. Mr. Knoke felt. therefore, that there was no blame on the part of
the American bank, and this was purely & matter for the British to settle. He pre-
dicted that there would be a number of cases of this type.
I gave the foregoing information to Mr. Pinsent this morning.
AMP.
Regraded Unclassified
211
PARAPHRASE OF TEIEGRAM SENT
TO: American Embasay, Berlin, Germany
DATE: September 17, 1940, 4 p.m.
NO.: 2502
You are requested to prepare a report on arrangements
of an economic and financial nature which have developed
between the institutions of those countries which German
forces now occupy - with the exception of France, Luxembourg
and Czechoslovakia - and the regimes which the occupying
forces have established.
This report should include the following:
(1) Developments in monetary and banking fields.
(2) Price control, and production of commodities and the
distribution of commodities.
(3) An account of such relationships of a trade and payments
nature as have been developed with other countries and with
Germany, including tripartite arrangements or arrangements
for multilateral payments or clearing arrangements.
(4) Any other developments considered pertinent by the
Embassy.
The Department suggests that you make up your report
by countries rather than by subjects, and that you base it
on such material as is already available to you, together
with any information which offices in occupied countries can
furnish.
The Department suggests further that you telegraph a
summary
Regraded Unclassified
212
- 2 -
summary of your report, and that you mail the complete
report.
HULL
(AAB)
EA:GL:EHS:VCL
COPY
aja
213
Replember 17. 1940
Assistant Secretary Garbon
Mr. Coshran
STRICTLY CONFIDENTIAL
After talking with Mr. Gasten at 9:30 this nersing I telephened Nr. Stone in
the office of the Secretary of Mate, with reforence to the cablegram addressed to
the Belle Barush by Oustens Attache Bailer is Trance.
I told Mr. Stone that - Saturday merning Mr. Barach had telephoned the
Treasury directly, asking for the Commissioner of Customs. in Comissioner Johnson's
absence, Assistant Commissioner Dev had talked with Rr. Barech. The latter initeated
his interest 1a the Batler case. Mr. Dev explained the situation, pointing out the
element which Mr. Butler bad assed the treasury Department. Mr. Barush had
been under the impression that the Treasury Department vas discharging Rs. Patler.
When informed this was not the case, Barach inquired whether the matter could not be
straightened out by Butler discharging his Chinese servant. Dev replied that this
was the request that the Treasury had made and with which he understend Butler was
complying. Baruch seesed satisfied with this explaination, bet said be reale be is
"ashington vithia the next ton days and would like to talk the astter over with
49671. Johnson and Dev. I told Mr. Stone further that the Customs people would
like to keep the correspendence which Mr, Stone had referred to us until such time as
Kg. Baruch visits the Treasury Department. Mr. Stone agreed to this, stating that
Rr. Hall had already speken with Mr. Barush by telephone and 20md told the latter that
the untier had been referred to the Treasury.
nm
EMC:lap-9/17/40
Regraded Unclassified
214
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 17, 1940
TO Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
At 11:45 yesterday forenoon Mr. Leon Praser, President of the First National
Bank of New York, telephoned me to the effect that there were rumors current in
New York, and that the New York Sun of yesterday evening would carry the story, to
the effect that EL New York banking syndicate was to issue a loan of two billion
dollars to Canada. The Canadian Government would give its guarantee to the banks
and would pledge as collateral securities which it has taken over, in the full
amount of the loan plus a ten percent margin of safety. Fraser had been asked
whether the First National would participate in this transaction if the Attorney
General of the United States said that it was permissible.
I told Mr. Fraser that the Treasury knew absolutely nothing of any such con-
templated loan. I reminded him of reports of a somewhat similar nature, with
respect to prospective loans by Great Britain and France, which had circulated in
the past. I thanked Mr. Fraser, however, for his thoughtfulness in telephoning
the above information.
When with the Secretary at a conference yesterday afternoon at 3:15, I gave
his the above information. He, in turn, asked me to communicate it to Mr. Schwars,
which I did at 3:30 p.m. At 5:30 yesterday evening Mr. Schwarz telephoned to tell
se that the information had been quite useful, since the local representative of
the New York Sun had just telephoned him, presumably on instructions from New York,
with respect to this story.
BMP.
Regraded Unclassified
215
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE September 17, 1940
TO
Secretary Morgenthan
FROM
Mr. Cochren
CONFIDENTIAL
The six reporting banks executed the following transactions in registered
sterling:
Sold to commercial concerns
£202,000
Purchased from commercial concerns
-0-
Of the sterling sold, £182,000 vas disposed of by the Guaranty Trust Company to
Louis Dreyfus & Company, New York. It vas reported that some time ago this
firm's Buenos Aires office sold the above amount of sterling for the account of
Louis Dreyfus & Company, Paris. Due to lack of communication with their Paris
office, the New York office is stepping in to cover this transaction on behalf
of Paris.
The Federal Reserve Bank sold £11,000 in registered sterling to two non-
reporting banks.
In the open market, sterling vas first quoted at 4.03-3/4. Although the
rate advanced to 4.04 in mid-morning, it subsequently returned to 4.03-3/4,
where it closed. Transactions of the reporting banks in open market sterling
were as follows:
Sold to commercial concerns
£14,000
Purchased from commercial concerns £ 3,000
The Cuban peso discount narrowed to 8% today, the best rate that has been
quoted for some time. The current strength in that currency has been attributed
to short covering and speculative buying in anticipation of the granting of an
Export-Import Bank credit to the Cuban Government. It is also believed that a
Cuban law enacted yesterday, authorising & bond issue of 5,664,400 pesos to pay
so-called "gold obligations", has had a strengthening influence on the rate.
According to press reports, two American firms are among the principal
beneficiaries of the bond issue.
The other currencies closed as follows:
Swiss franc
.2279
Canadian dollar
17% discount
Swedish krona
.2385
Lira
.0505
Reichsmark
.3997
Mexican peso
.1996 bid, .2016 offered
Regraded Unclassified
216
CONFIDENTIAL
- 2 -
There were no gold transactions consumented by us today.
The Federal Reserve Bank of New York reported that the Bank of Canada
shipped $2,998,000 from Canada to the Federal for its own account, for sale
to the U. S. Assay Office at New York.
The Bombay gold price was equivalent to $33.82, off 15#. Silver vas
equivalent to 44.42#. off 3/8#.
In London, the price fixed for spot silver was 1/8d higher at 23-1/24.
The forward quotation advanced 1/16a to 23-3/8d. The dollar equivalents were
42.67$ and 42.44 respectively.
Handy and Harman's settlement price for foreign silver was unchanged at
34-3/44. The Treasury's purchase price for foreign silver vas also unchanged
at 35#.
We made two purchases of silver totaling 100,000 ounces under the Silver
Purchase Act, both of which consisted of new production from foreign countries,
for forward delivery.
H.M.S.
CONFIDENTIAL
217
Paraphrase of Code Cablegram Received at the
War Department 12:04 p.m., Sept. 17, 1940
London, Filed 17:11, September 17, 1940
Unfavorable weather caused the Royal Air Force to cancel
the bombing operations scheduled for the night of September 16-17.
One large scale German raid consisting of about 350 bombers
passed over the Coast during daylight hours of the 16th but did not
reach London. The enemy reconnoitered the whole coast line through-
out the day.
The bombing during the night of the 16th-17th was more in-
tense than during recent nights, Attacks based on France made before
midnight hit London, Liverpool, the Midlands and Wales. Those after
midnight concentrated on London and the southeast coast. Many of
these bémbers were from the Low Countries. "All clear" was announced
at 2:40 a.m., but another attack from France lasted from 3:30 to
5:40 a.m.
Minor damages only and few casualties resulted from the
daylight raids. The night attacks started several large fires and
damaged many buildings, both in the city and in the West End. Some
communications were interrupted but no vital targets were hit. At-
tacks were made on nine factories or airfields, but the only results
were that one factory was temporarily shut down because of an unexploded
delay bomb and one airfield was put out of commission temporarily.
German plane losses were two destroyed and one damaged.
The British lost one plane but the pilot escaped. Civilian casualties
were 130 killed and 400 injured.
CONFIDENTIAL
Regraded Unclassified
218
CONFIDENTIAL
Three merchant vessels totalling 11,900 tons were lost,
The morale of the civilian population remains high.
The westward movement of German shipping continues. Large
numbers of barges remain in the ports of the Low Countries.
LEE
Copies to: General Watson
Secretary of War
State Department
Secretary of Treasury
Asst. Secretary of War
Chief of Staff
ONI
WPD
CONFIDENTIAL
&
Regraded Unclassified
219
THE UNDER SECRETARY OF THE NAVY
WASHINGTON
September 18, 1940
My dear Mr. Secretary:
I have the honor to transmit a
memorandum prepared for me by Admiral Towers
with reference to the schedule of production
of the Navy PBY5 patrol planes which was dis-
cussed at Cabinet on the 13th.
With kind personal regards, I am
Sincerely yours,
The Secretary of Treasury Wb
The Honorable
Washington, D.C.
220
State to Instials
and No.
NAVY DEPARTMENT
BUREAU OF AERONAUTICS
WASHINGTON
14 September 1940
MEMORANDUM
To :
Acting Secretary Forrestal.
SUBJECT:
Proposed adjustment of deliveries of British and
U.S.Navy PBY5 patrol planes.
In accordance with your instructions a study has been
made of schedules of deliveries of subject type of aircraft, and a
schedule which would equalize deliveries of first fifty-five on each
order has been worked out and is recommended for your approval.
Latest revised schedules and proposed new schedules are set forth
below. These have been checked today by our inspector and a repre-
curate. sentative of the manifacturer and are believed to be reasonably ac-
U, S. NAVY
BRITISH
Present Proposed
Present
Proposed
Sept.1940
1
1
Oct.
Nov.
6
3
1
Dec.
4
7
6
4
Jan.1941
5
10
9
9
10
Feb.
12
12
10
12
Mar.
12
12
12
12
April
12
12
13
12
I consider it most important both to British and our-
selves that we keep the first plane to work out the minor troubles
by flight tests in vicinity of factory in order that necessary
changes in subsequent planes become known and are made promptly.
J. H. Towers
Since the above was written I have learned that the U.S.-Canadian
Joint Defense Board is recommending that six PBY5 planes be made avail-
able to the Canadians by early Spring. They have some 100 on order but
their deliveries probably will not begin until late Autumn 1941. Board
recommendations could be met by taking 1 U.S. and 1 British plane per
month in January, February and March.
Regraded Unclassified
221
Herry knows
about this -
file.
September 18, 1940.
P.Y
To:
The Secretary
From: Mr. Young
Subject: Allocation of Aircraft Engines
A few days ago The Advisory Commission requested the
British to release 120 Curtiss-Wright #1820 engines for
use by the U. S. Air Corps.
Yesterday morning George Mead called me to arrange a
meeting between the Defense Commission, the Advisory
Commission, the Air Corps, the Navy Bureau of Aeronautics
and the British for the purpose of talking about this
requested release, and allocating engine deliveries between
the Aray, Navy and British up to April 1942. This meeting
was held at the Advisory Commission yesterday afternoon
at 3 o'clock. Prior to that meeting, Mr. Fairey called
upon me to ask my advice.
You will recall that in July at a meeting in Mr.
Knudsen's office, a policy was established whereby, regardless
of ownership of either frames or engines, any waiting air-
frame should get any surplus engine, thus no engines would
be taken either by the U.S. or the British and stored as
surplus. Where there was more than one waiting frame for
one engine an allocation would be made at the time between
the interested parties.
In my discussion with Mr. Fairey, the latter pointed
out that while the British have no surplus of Wright 1820's
it did have an immediate surplus of Pratt and Whitney
1830's, which is a comparable type.
Of this surplus of about 400 engines, 50 percent or
200 were needed in England for British air-frames, leaving a
balance in this country of 200, from which it might be
possible to relase 120 to the Air Corps. This release, how-
ever, could not be made without Beaver Brook's permission.
Regraded Unclassified
222
- 2
Mr. Fairey pointed out further that if possible he
would like to ship all the surplus engines to England due to
the need for an immediate reserve for an additional number
of spare engines because of the current War conditions.
Vr. Fairey asked me what he should do.
After thoroughly discussing the situation, I suggested
the British not only refuse to even consider the release
of any engines, but also ask The Advisory Commission and the
Air Corps to release an additional mumber of theirs as
soon as possible in order to build a spare engine reserve
in England.
This request would be based upon the fact that War
conditions have changed materially since July, when the
original policy was established, and upon the fact that it
was understood in July that policy was always subject to
re-consideration by all parties involved.
At the meeting yesterday afternoon were -
George Mead
Captain Kraus
A. J. Lombard
Ted Wright, for the Advisory Commission
General Brett
Major Lyon
Major Powell, for the Air Corps
Captain Webster
Captain Anderson, for the Navy
and
Mr. Fairey
Colonel Cave
Mr. Ballantyne and
Mr. Gray, for the British Purchasing Commission
Mr. Mead attempted to secure from Mr. Fairey a schedule
for the allocation of engines over the whole period up to
April 1942, but Mr. Fairey responded that because of the un-
certainty of British frame and engine production he could
only indicate for the next six months as to what British
engine requirements would be.
Mr. Fairey adopted my suggestion of asking for additional
engines to build up a surplus in England, with the understanding
that such a surplus would be almost immediately absorbed by
223
- 3 -
by British frame production and by the need for reserve
engines under existing War conditions.
I would like to say that Mr. Fairey did a beautiful
job of presentation and showed all the proper degrees of
enotion and enthusiam at the proper times. The net
result of this meeting, which was extremely friendly and
cooperative on the part of every one, was that Mead
thought the U.S. should not only allow the British to
ship all of their surplus engines as soon as possible, but
also release an additional 600 Pratt and Whitney 1830's
and 600 Wright 2600's in order to let Fairey build up his
reserve in England, For this release on the part of the
U.S. the british should release some of their Wasp Jr.
training engines to the Air Corps.
I understand that this release on the part of the
British is quite feasible due to the numbers they have on
order. Of course, in this connection, it would be
interesting if the British release these training engines
and they were then used on a joint basis to train both
American and Canadian pilots.
Goorge Mead called me on the telephone this morning
to discuss this situation inasmuch as I had left the neeting
yesterday before it was over, Mead said that Fairey wanted
to get a total of 2200 more combat engines than were
allowed to the British over the next six months. Mead
considered this possible if some of the training engines
could be released by the British. If this excess number
desired by the British were projected, however, in the
same proportion over the whole period of April 1942, it
would create a total maximum shortage for everybody of
approximately 22 thousand engines.
There is to be & meeting of the Airplane Standardisation
and Delivery Committee on Friday to discuss this phase of the
problem. In the meantime, George Mead said that "instead
of arguing about it, I an going to go ahead and study the
preliminary steps necessary to see how our engine production
can be increased during this period".
P4
Regraded Unclassified
224
Hm 6. knowledget
this this-file file
September 18, 1940.
PU
To:
The Secretary
From: Mr. Young
Subject: Tank Engine Financing.
Yesterday afternoon I spent about an hour with Mr.
Schram of the RFC going over the tank engine finance
situation. Mr. Schram had not seen either the letter from
Judge Patterson or that from Mr. Knudsen certifying that
a tank engine production capacity equal to 20 engines
per day was necessary in the interest of national
defense.
Mr. Schram himself is quite ready to go ahead and
have the RFC finance such a plant expansion leaving the
British entirely out of the picture. There are evidently
three things, however, which are holding it up at the
moment.
1. Mr. Schram is not sure as to whether
Mr. Jones is in accord with such a
financing plan, although Mr. Jones
has admitted to Mr. Schram that it
is far superior to the Packard
deal.
2. Mr. Schram feels that if this financing
plan were put in operation and then
the excess capacity used by the
British, such a move should have the
approval of Mr. Jones, Mr. Knudsen,
Mr. Stimson and yourself. Further, if
these four agreed that it was a practical
plan of operation it should only be
done with the knowledge and concurrence
of the President.
3. Despite the fact that this plant
expansion is being financed in the interest
of national defense, Mr. Schram would
feel easier if he had an opinion from
the Attorney General to the effect that
the use of the excess capacity by the
British would not be a violation of the
Johnson Act.
225
- 2 -
I pointed out to Mr. Schram that he had every
tangible evidence as to the feeling of Messrs. Knudsen and
Stimson in the two letters which he had received certi-
fying that this additional engine capacity was necessary
and Mr. Schram agreed there should be little difficulty
in putting such a plan across.
I feel quite certain that if the four persons
mentioned above agreed that the British could use such
excess capacity, and that if the President did not dis-
prove it, an excellent financing pattern would be
established which would be of great benefit to the
British.
pu.
226
September 18, 1940
3:45 p.m.
H.M.Jr:
Hello.
Operator:
Mr. Patterson.
H.M.Jr:
Hello.
Robert
Patterson:
Yes.
H.M.Jr:-
Bob Patterson.
P:
Right.
H.M.Jr:
How are you?
P:
Fine, Henry.
H.M.Jr:
Look, I have here in my office with me now
Mr. Morgan, president of Sperry Corp.
P:
Yes.
H.M.Jr:
And you remember Donovan came to Sir Ridgeley
on this bombsight. Here's the story. He has
an order from the Army for 100 bombsights
known as 0-1. Then he goes on to a more
improved bombsight later on.
P:
Yes.
H.M.Jr:
The suggestion that I'd like to make is that
we might try and do something like you worked
out in connection with Curtiss on the P-40's.
He says if he could get a real order from both
the Army and the English he could give you real
production and cut the price - I don't want to
hold him to it - but he's guessing maybe 30 or
40% or more, and get up to 100 a month.
P:
Yeah.
H.M.Jr:
He says that the other bomb-sight which he's
going to make for you has certain refinements
but it always keeps changing, you see?
227
- 2 -
P:
I know.
H.M.Jr:
And I was thinking of the possibilities of a
joint order. Then he can really go to work and
give you some and what the hell you're going to
do with only 100 bomb-sights I don't knów.
They don't know why you're not asking for many
more.
P:
I don't either.
H.M.Jr:
So I think here's a chance for you to do a
job the way we did up in Buffalo and giving him
a good order and letting him stay on this 80-
called old one until the bugs are out of the
other one.
P:
I agree.
H.M.Jr:
Now, he's leaving my office to go over
.....
P:
Will you send him over here?
H.M.Jr:
Well, he's going at 4:30 to the Council of
Defense with that - 4:30. I don't know how
late you work.
P:
I'll be here until 6 or 7.
H.M.Jr:
Well, could he - at 5:30?
P:
Oh, fine.
H.M.Jr:
I'll ask him. (Talks aside) He'll be there
at 5:30 and he has with him his vice president
in charge of production.
P:
Right. I'll be very glad to see them about it.
H.M.Jr:
And he'll tell you - you know Donovan is the
fellow that got me started on this.
P:
Yeah.
H.M.Jr:
He'll tell you - all these changes all the time
he can't get any production and can't give you
a decent price.
228
- 3 -
P:
I know. Same old game.
H.M.Jr:
And also the point which is important 1s that
he's delivered 400 anti-aircraft to the Directive
which he says are much more complicated, and
the Army released that.
P:
Yeah.
H.M.Jr:
And inasmuch as he's got something better
coming along, I don't see why the Army couldn't
release this to the English.
P:
Yeah.
H.M.Jr:
So if you would see him at 5:30 I think it
would be for general good.
P:
Very glad to.
H.M.Jr:
Thank you so much.
P:
Thank you. I want to see you. Could I see you
tomorrow?
H.M.Jr:
Sure.
P:
On something I think is of fair importance.
H.M.Jr:
Sure. When?
P:
Any time you say. 10 o'clock?
H.M.Jr:
Well, I'm going to see the President at 9:30
and I've got press at 10:30.
P:
11 o'clock.
H.M.Jr:
11 o'clock would be perfect.
P:
I'll come over.
H.M.Jr:
11 o'clock would be perfect.
P:
Thank you.
H.M.Jr:
Thank you.
HSIC
229
BRITISH EMBASSY,
WASHINGTON, D.C.
18th September 1940.
Secret
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Loluzin
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
230
Tolegram from London dated 17th September 1940
Royal Air Force.
During the night of September 15th/
16th extensive damage was done by our aircreft
to docks, shipping and barges at Boulogne,
Dunkirk, Calais, Ostend, Antwerp and Havre.
Many direct hite also obtained on marsholling
yards in North West Germany and at Bruscels.
Heaburg ship-building yards, Berlin west power
station, gun emplacements at Cap Gris Bes,
nevel docks at Wilhelmshaven and shipping at
Terechelling were all successfully attacked.
Direct hit on enery cruiser claimed at
Terschelling. Yesterday Blenhein aircraft
carried out offensive reconnaisesness over
French, Belgion and Dutch coaste and dropped
bombs at Calais, Dunkirk, ostend, mecbrugge and
at Heanstode aerodrans. Coastal commend air-
craft senk aerchant vessel in enemy convoy
west of Borkum.
Lest night all operations cancelled
owing to unfavourable weather conditions
rendering booking of specific targets impossible.
di
Gergen Air Force.
Energy air activity on the night of
/September
Regraded Unclassified
231
September 15th/20th resulted in further danage
to reiluays in Lendon. All Southern Reflwaye
Lendon tensini are temporarily closed. All
electrical supplies are being maintained.
Fires caused at st. Thomas's, Guy's and
Lanbeth Hospitals. 200 factories in London
damaged; negligible damaged caused to Woolwish
Araenel. one pier-head hulk not on fire in
vest India Dook. All fires reported under
control 0600 hours September 10th. Approximate
casualties in London area were 130 killed and
400 injured. Borsbe also dropped at Avonuouth,
Cardiff, Liverpool and in the lidlends, and in
South last England, causing - for comulties
but no important damage.
Two reids comprising 280 aircraft
crossed the Kentish coast early yesterday, but
were turned back before reaching London. During
mest of the reasinder of the day enear activity
was confined to single aircraft operating mainly
in themes end Thases natury areas. No intor-
ceptions reported. Unexploded boubs dropped on
Southern Hailway Am south London caused suspension
of traffic.
A for bombe dropped in south Hast
England.
Cosumities believed elight.
Last night London received the trunt
of the attack, though the uidlands and south
vales were also bonbed. Large mater of fires
started to London oroo, but all now reported
under control.
Regraded-Unclassified
232
of A2p Commities
manage Destroyed one bonber by balloon
barrage, one sempleme. Total s.
Demaged one bonber by fighters.
British: 2 Spitfire - pilot nafe.
4.
shipping.
Casualties by aircraft.
Two British ships
(8,300 and 6,600 tona) and one Danish ship
(1,200 tone) aunk in have waters.
Convey of 35 ships arrived in home
ports.
Cargoos 9 of oil and 6 of steel.
8.
By the evening of september 20th too
enemy columns reported in occupation of sidi
Barrani covered by force of ensoured fighting
vehicles Bouth and lest of the village. Yester-
day enemy sustained heavy casualties from
hareseing action by our tanks and artillery fire.
How suspected probable that three Italian
divisions have crossed the frontier. Air
still discloses no important nove-
mont towards hardie from the went.
on september 10th nritish fighters
intercepted 20 Italian bombers over Bids Barrent.
meny jettisoned bonbs end 6 aircraft shot dom
(confixmed). Another 2 being probable
casualties. the lost one Gladistor. Attacks
by Blenhoims on the night of september 15th/10th
Regraded /coused Unclassified
233
consed petrol fires emongst Italian
mechemical transport moving towards sidi
Borrand.
No indication at present of any
major enemy offensive against suden.
6.
Projected action against the United
Kingdom
Coastal movement to the Westward,
particularly of enemy merchant vessels up to
5,000 tons, still continues. Large assemblies
however of various types of craft and barges
still reasin at Flushing, Antwerp, Leobrugge
and Ostend. General conclusion is that there
is no change in the situation regarding
imminence of the invusion.
Regraded Unclassified
234
NORTH AMERICAN AVIATION, INC.
Unfilled:
Estimated deliveries
:
Total
:
Orders :
1940
Deliveries on
1941
:
estimated
Model and Purchaser
:
Sept
present orders
:
Sept
:
:
:
14
:
deliveries
Oct,
:
estimated to
:
: 1940
15-30
Nov.
Dec.
Jan.
Feb.
Mar
Apr
:
May
June : Sept. 15, 1940:be made after
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
AT-6 type advanced trainer
U. 5, Army
716
1
10
64
68
78
88
98
98
98
98
701
15
U. S. Navy*
30
2
6
6
7
8
1
30
British**
1,384
15
87
89
91
93
95
95
95
75
35
770
614
Total AT-6 type
2,130
18
97
159
165
178
191
194
193
173
133
1,501
629
BT-14 type basic trainer
U.S. Army
9
9
9
British
4
4
4
Total BT-14 type
13
13
13
B-25 two-engine bomber
U. S. Army
184
1
3
7
13
19
21
24
24
24
136
48
NA-73 pursuit
British
384
1
5
21
43
55
55
180
204
Experimental models
U. S. Army
2
1
1
2
Total Army, Navy and British
2,713
31
98
162
172
193
215
237
260
252
212
1,832
881
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
. Navy orders of this type are reported as SNJ-2.
se
Some British orders of this type are reported as NA-66.
235
235
GRUMMAN AIRCRAFT ENGINEERING CORP.
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
=
Orders :
1940
1941
Model and Purchaser
:
Sept.
: estimated :present orders
:
Sept.
:
:
:
:
:
:
:
:
:
: deliveries : estimated to
:
14,
:
15-30
Oct.
:
Nov.
:
Dec.
Jan.
Feb.
:
Mar.
Apr.
:
May
1940
June: Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
F4F type single seat fighter
U. 8. Navy
384
28
36
37
38
41
33
36
36
285
99
British*
170
15
29
16
10
12
12
12
12
14
14
146
24
Total F4F type fighter
554
15
29
44
46
49
50
53
45
50
50
431
123
JRF-1 utility amphibian
U. S. Navy
12
22323
12
Experimental models
U. S. Army (XP-50)
1
1
1
U. S. Navy (XTBF-1)
2
2
2
(
J. S. Navy (XF5F-1)
1
1
1
Total Army, Navy and British
570
16
31
47
49
51
53
53
45
50
52
447
123
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
# British orders of this type are reported as G-36-A and G-36-B.
236
CURTISS-WRIGHT, BUFFALO
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
:
1941
:
estimated
Model and Purchaser
: Sept.
:present orders
Sept.
:
:
:
:
:
:
:
:
:
:
deliveries : estimated to
:
14,
15-30
Oot
Nov.
Dec.
Jan,
:
Feb.
Mar.
Apr.
:
May
:
: 1940
June Sept. 15, 1940: be made after
:
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
P-40 Pursuit
U. S. Army
69
51
18
69
British (H-81A)
530
30
83
126
107
106
48
30
530
Total P-40 pursuit
599
81
101
126
107
106
48
30
599
P-40D Pursuit
U. S. Army
350
1
22
21
28
37
37
146
204
British (H-87)
380
3
18
35
51
107
273
Total P-40D pursuit
730
1
22
24
46
72
88
253
477
P-360 Pursuit
British
12
4
4
4
12
800-4 Dive bomber
U. S. Navy (via U. S. Army*)
60
6 20 24 5 5
60
0-52 Scout observation
U. S. Army
210
1 2 11 17 47 54 51 27
210
Other models
U. S. Army - experimental
3
1 1
2
1
U. S. Navy - experimental
1
1
1
U. S. Navy - scout
360
360
Total Army, Navy and British
1,975
81 106 131 113 124 107 126 106 128 115
1,137
838
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
In accordance with exchange agreement between U. S. Army and U. S. Navy.
237
BELL AIRCRAFT CORP.
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
: estimated present orders
Model and Purchaser
: Sept.
:
:
:
:
:
:
:
:
14
15-30 Sept. Oct Nov. : Dec. Jan, Feb. Mar Apr. : May : June : Sept. 15, 1940: be made after
:
deliveries : estimated to
: 1940
:
:
:
:
:
:
:
:
:
June 30, 1941: July 1, 1941
Airacobra pursuit
U. S. Army
92
6
6
6
6
09
32
60
British*
450
5
20
30
45
50
50
50
50
300
150
Total Airacobra
542
6
6
11
26
38
45
50
50
50
50
332
210
Airacuda fighter
U. S. Army
4
4
4
XFL-1 Fighter
U. S. Navy
1
1
1
tal Army, Navy and British
547
11
6
11
26
38
45
50
50
50
50
337
210
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
. British models of this type reported as P-400.
238
LOCKHEED AIRCRAFT CORP.
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
1941
:
estimated
Model and Purchaser
: Sept.
present orders
:
Sept.
:
:
:
:
:
:
:
:
:
: deliveries : estimated to
:
14,
15-30
Oct.
Nov,
Deo.
Jan,
Feb.
Mar
Apr
:
May
1940
June : Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:-June 30, 1941: July 1, 1941
P-38 type two-engine pursuit
U. 8. Army
79
1
2
5
OR
20
21
22
79
British*
800
5
21
30
75
117
116
364
436
Total P-38 pursuit
879
1
2
5
OR
25
42
52
75
117
116
443
436
414 two-engine reconnaissance
bomber
British
589
60
77
82
73
78
51
50
46
42
30
589
37 two-engine medium bomber
British
360
1
2 13 36
52
308
Other models
( U. S. Army (XP-49)
1
1
U. S. Navy (18)
2
1
1
2
British (commercial)
45
11
OR
14
5
4
1
43
2
Total Army, Navy and British
1,876
72
88
101
87
107
95
102
123
172
182
1,129
747
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
. British orders of this type reported as model 322.
239
BREWSTER AERONAUTICAL CORP.
:Unfilled:
Estimated deliveries
:
Total
: Orders :
:Deliveries on
1940
:
1941
Model and Purchaser
: Sept.
: estimated :present orders
:
Sept.
:
:
:
:
:
:
:
:
14,
deliveries : estimated to
:
:
15-30
Oct
Nov.
:
Dec.
Jan.
:
Feb.
:
Mar.
:Apr.
:
May
:
: 1940
June : Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
F2A type fighter
U. S. Navy
153
30
15
1
14
30
40
23
153
British*
204
11
25
43
48
32
33
12
204
Total F2A type
357
41
40
43
48
32
34
26
30
40
23
357
SB2A-1 one-engine scout bomber
U. S. Navy
493
1
2
3
490
340 one-engine dive bomber
British
540
1
7
38
64
89
70
269
271
Froerimental models
0. S. Navy
3
2
1
3
Total Army, Navy and British
1,393
43
40
44
48
33
42
66
94
129
93
632
761
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
British orders of this type are reported as model 339-E.
240
VOUGHT-SIKORSKY AIRCRAFT
:Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
:
1941
Model and Purchaser
Sept
: estimated :present orders
:
Sept.
:
:
:
:
:
:
:
:
:
:
14,
deliveries : estimated to
:
15-30
Oct.
Nov,
:
Dec.
Jan,
:
Feb.
:
Mar.
:Apr.
:
May
:
1940
June: Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:
:
:-June 30, 1941: July 1, 1941
0S2U type one-engine observation
U. S. Navy
232
24 21 26 29 41 46 45
232
One-engine scout bomber
U. S. Navy (SB2U-3)
68
1
5
19
20
23
68
British (V-156-F)
50
3
7
11
12
15
2
50
Total scout bomber
118
1
5
19
20
26
7
11
12
15
2
118
Total Navy and British
350
25
26
45
49
67
53
56
12
15
2
350
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
241
CESSNA AIRCRAFT COMPANY
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
: Sept.
: estimated :present orders
Model and Purchaser
:
Sept.
:
:
:
:
:
:
:
:
: deliveries : estimated to
:
14,
15-30
Oct.
Nov.
:
Dec.
Jan.
:
Feb.
Mar.
Apr.
:
May
:
June: Sept. 15, 1940 be made after
: 1940
:
:
:
:
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
Trainers
U. S. Army (AT-S)
33
1 2 3 4 4 4 4 5 6
33
British
(T-50)
180
6
12
18
24
30
30
30
150
30
Total Army and British
213
1
2
9
16
22
28
34
35
36
183
30
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
242
VULTEE AIRCRAFT, INC.
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders
:
1940
:
1941
:
estimated :present orders
Model and Purchaser
:
Sept.
Sept.
:
:
deliveries : estimated to
:
14,
:
15-30
Oct.
Nov,
Dec.
Jan.
Feb.
Mar.
Apr.
:
May
:
June
: Sept. 15, 1940 be made after
:
1940
:
:
:
:
:
:
:
June 30, 1941: July 1, 1941
Trainers
U. S. Army (BT-13)
773
35 65 80 93 105 120 135 140
773
72 Dive Bomber
British
200
1
3 10 18
32
168
Total Army and British
973
35
65
80
93
105
121
135
143
10
18
805
168
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
243
STINSON AIRCRAFT
Unfilled:
Estimated deliveries
:
Total
: Orders :
1940
:Deliveries on
:
1941
:
Model and Purchaser
: Sept
estimated present orders
:
Sept.
:
:
:
:
:
:
:
:
:
:
14
:
deliveries
: estimated to
:
Oct
15-30
:
Nov.
:
Dec
:
Jan,
:
Feb.
Mar.
Apr.
:
May
:
June
: 1940
: Sept. 15, 1940: be made after
:
:
:
:
:
:
:
:
:
:
:
June 30, 1941: July 1, 1941
0-49 Observation
U. S. Army
148
4 5 10 15 15 16 17 18 19
119
29
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
244
SPARTAN AIRCRAFT COMPANY
:Unfilled:
Estimated deliveries
:
: Orders :
Total :Deliveries on
1940
:
1941
Model and Purchaser
:
Sept
: estimated :present orders
:
:
:
:
:
:
15-30 Sept Oct Nov : Dec Jan : Feb Mar. :Apr : May : June: Sept. 15, 1940:be made after
:
:
:
14,
deliveries : estimated to
:
1940
:
:
:
:
:
:
:
:
:
: -June 30, 1941: July 1, 1941
Trainers
U. S. Navy (NP-1)
201
1 3 5 10 16 19 20
74
127
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
245
STEARMAN AIRCRAFT
:Unfilled:
Estimated deliveries
: Orders :
:
Total
1940
;Deliveries on
:
1941
Model and Purchaser
: Sept.
:
: estimated :present orders
:
:
:
Sept.
:
:
:
:
:
:
:
:
14,
:
Oct.
deliveries : estimated to
:
15-30
Nov.
:
Dec.
:Jan.
:
Feb.
Mar.
Apr.
May
1940
:
June: Sept. 15, 1940:be made after
:
:
:
:
:
:
:
:
:
:-June 30, 1941: July 1, 1941
Trainers
U.S.Army
527
32
60
45
40
70
70
80
80
36
14
527
Philippine Army
12
12
12
Total
539
32
60
45
40
70
82
80
80
36
14
539
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
246
RYAN AERONAUTICAL CORP.
:
Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
:
Model and Purchaser
: Sept.
estimated :present orders
:
Sept.
:
:
:
:
:
:
:
deliveries
:
estimated to
:
14,
15-30
Oct
Nov
:
Dec
Jan.
:
Feb
Mar.
Apr.
:
May
:
:
1940
June: Sept. 15, 1940:be made after
:
:
:
:
:
:
:
June 30, 1941: July 1, 1941
Trainers
U. S. Army (PT-20A)
110
17
7
27
27
32
110
U. S. Navy (NR-1)
120
15
18
18
18
18
18
15
120
Total Army and Navy
230
17
22
45
45
50
18
18
15
230
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
247
REPUBLIC AVIATION CORP,
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
: estimated :present orders
Model and Purchaser
: Sept.
:
Sept.
:
:
:
:
I
:
:
:
:
:
deliveries : estimated to
:
14,
:
15-30
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
:
May
June : Sept. 15, 1940:be made after
: 1940
:
:
:
:
:
:
:
:
:
:
: -June 30, 1941: July 1, 1941
P-44 Pursuit
U.S.Army
81
1
2
3 6 12 12 15 15 15
81
XP-43 Pursuit
U. S. Army
14
1
2
6
5
14
P-35 Pursuit
U. 8. Army
OR
4 4
ga
XP-47 Pursuit
U. S. Army
1
1
1
tal Army
104
2
4
6
OR
7
12
16
19
15
15
104
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
248
BEECH AIRCRAFT CORP.
:Unfilled:
Estimated deliveries
:
: Orders :
1940
Total
:Deliveries on
:
1941
Model and Purchaser
: Sept
: estimated
:
:present orders
Sept.
:
:
:
:
:
:
:
:
:
:
14,
deliveries
Oct.
Nov.
:
estimated to
:
:
15-30
:
Dec.
Jan.
:
Feb.
:
Mar.
:Apr.
:
May
: 1940
June : Sept. 15, 1940:be made after
=
:
:
:
:
:
:
:
:
: -June 30, 1941: July 1, 1941
Trainers
U. S. Army (AT-7)
72
3 8 9 11 10 11 10 10
72
Transports
Philippine Army (188)
1
1
1
U. S. Navy
(JRB-1)
5
3
2
5
Total Army and Navy
78
3 3 3 8 9 11 10 11 10 10
78
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
249
BELLANCA AIRCRAFT CORP.
Estimated deliveries
:
Orders :
1940
:
Total
:Deliveries on
:
1941
Model and Purchaser
:
Sept.
:
estimated
:
Sept
:
:
present orders
:
14,
:
:
deliveries
:
:
15-30 : Oct. : : Nov. : Dec. : Jan. : Feb. : Mar. :Apr. : May : June: Sept. 15, 1940:be : made after
estimated to
1940
:
:
:
:
: -June 30, 1941: July 1, 1941
Y0-50 Observation
U. S. Army
3
1 1 1
3
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
250
CURTISS-WRIGHT, ST. LOUIS
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
Model and Purchaser
: Sept.
: estimated :present orders
:
Sept.
:
:
:
:
:
:
:
:
:
: delivered
: estimated to
:
14,
:
15-30
Oct.
:
Nov.
:
Dec.
Jan.
:
Feb.
:
Mar.
Apr.
:
May
:
June : Sept. 15, 1940:be made after
: 1940
:
:
:
:
:
:
:
:
:
-June 30, 1941: July 1, 1941
Trainers
U. S. Army (AT-9)
150
1
3 5 OR 12 16 20
65
85
Other models
U.S. Army (C-46)
46
46
U. S. Army (P-249)
1
1
Total Army
197
1
3 5 8 12 16 20
65
132
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
251
FAIRCHILD ENGINE AND AIRPLANE CORP.
:Unfilled:
Estimated deliveries
:
Total
:Deliveries on
: Orders :
1940
:
1941
: estimated present orders
Model and Purchaser
: Sept.
:
Sept.
:
:
:
:
:
:
:
:
:
:
deliveries : estimated to
:
14,
15-30 Oct. Nov. : Dec. Jan. : Feb. : Mar. Apr : May : June : Sept. 15, 1940:be made after
: 1940
:
:
:
:
:
:
:
:
:
-June 30, 1941 July 1, 1941
Trainers
U. S. Army (PT-19)
281
29 43 43 43 43 40 40
281
Office of the Secretary of the Treasury, Division of Research and Statistics.
September 18, 1940.
Treasury
252
sier
TRIPLICATE
Beenos Aires, September 18, 1940.
No. 1879
BRITISH INTERESTS REPORTED TO BE BLOCKING
ARGENTINE PURCHASE OF AMERICAN FREIGHT CARS
The Honorable
The Secretary of State,
Washington.
Sir:
with reference to the Embassy's despatch no. 1274 of
September 18, 1940, regarding the British trade drive in
Latin America, I have the honor to report that Ing. Nogués,
head of the Argentine State Railways, is reliably quoted
as having attributed the current blocking of Argentina's
purchase of 500 American freight cars ($1,200,000) to the
British Embassy in Buenos Aires.
The Department will recall that the Argentine State
Railways has been in the market for freight cars since the
beginning
Regraded Unclassified
253
- 2 -
beginning of 1938(1)a that the order for which bids were
opened on December 12, 1938(2) finally awarded in an
extensive barter deal to Germany(3), but that the business
was not conmunited owing to the outbreak of the war.
On September 4 Ing. Nogués is reported to have told
Mr. Louis E. Young of the Pullman Standard Export Corpora-
tion and Ing. Jorge J. Handley of the American Car and
Foundry Company that in view of the war, and the concomitant
inefficiency of calling for public bids, he felt free to
limit his study to consideration of American offers on
500 American freight cars but would require five years
credit. Messrs. Young and Handley telephoned their head
offices in New York suggesting that the latter communicate
with Mr. Pierson to ascertain whether the terms contemplated
under the $20,000,000 Export Import Bank credit to the
Argentine Central Bank could be modified 80 as to satisfy
the State Railways' desire for five years, instead of
three, in which to pay for the cars. Mr. Pierson alleged-
ly replied that the railway order had already been included
under the twenty million dollar credit, that the five year
period had already been provided for and that the Central
Bank has all the details.
On September 5 Ing. Nogués called Messrs. Young and
Handley again and told them that he had found that he does
not require credit, that he has about 2,000,000 pesos in
cash
Note (1) See enclosure No. 5 to the Consulate General's
despatch no. 87 of September 15, 1938.
Note (2) See despatch no. 277 of February 14, 1939).
Note (3): See despatch no. 329 of March 10, 1939.
Regraded Unclassified
254
cash, which would revert to the Treasury if he did not use
them, and that therefore he would like to know whether the
American companies could guarantee delivery of 250 freight
cars f.a.g. New York before the end of the current calendar
year. He said his cash on hand would cover 250 freight
cars and he expected sufficient funds in his 1941 appro-
priation to take care of the balance. Messrs. Young and
Handley learned from their head offices that delivery
could be made as desired and this information was confirmed
to Ing. Nogués.
The several pertinent "informes" were then drawn up
by the State Hailways on September 7 and it was expected
that the decree authorizing the purchase would be issued
by September 14. (The upset date set for the American
offers totaling $1,200,000 was September 20).
However, Ing. Nogués was worried about the availability
of exchange and asked Messrs. Young and Handley to endeavor
to interest the Embassy in do taining assurance from Dr.
Pinedo(4) and/or the Central Bank that when the State
Railways pays for the freight cars, sufficient dollar 02-
change would be made available. It should, he said, be
agreeable to Dr. Pinedo to authorise the use of a part of
the twenty million dollar Export Import Bank credit for
this purpose, since the amount ($1,200,000) would be repaid
in full by March, 1941.
The question of the availability of dollar exchange
was
Note (4): Ing. Mogués allegedly quarreled with Dr. Pinedo
some time ago and therefore does not want to
ask him for anything.
Regraded Unclassified
255
- 4
was presented to Dr. Pinedo on September 9. Dr. Pinedo
Regraded Unclassified
said he would not reject the proposal of using $1,200,000
of the twenty million dollar credit to cover the exchange
requirements in this deal, provided two or three conditions
were met. He would have to be satisfied that the dollars
involved would only be tied up until March 1941; or that
Argentina's credit requirements would not be limited to
$20,000,000, or that the country as a whole needed the
freight cars more than a number of other goods such as m-
chinery and materials for Argentina's industrial develop-
ment.
This information was conveyed confidentially to
Messrs. Young and Handley who in turn passed it on to Ing.
Nogués. The latter allegedly brought it to the attention
of President Ortis, a close friend of long standing, with
the result that the question was allegedly discussed in I
cabinet meeting on September 14, 1940.
On September 16 Messrs. Young and Handley informed the
Embassy that Dr. Salvador Oria, the Minister of Public
Works, had refused to approve the State Railways' request
that an appropriate decree authorizing the purchase be
drawn up for the Cabinet's consideration. Dr. Oria's
alleged reason was that the State Railways had not called
for public bids.
However, Ing. Nogués learned that the real resson was
that certain influential persons had pointed out that
Great Britain must be given every opportunity to satisfy
Argentine requirements and it was not clear that British
firms could not furnish the 500 freight cars, Ing. Nogués
then called in Dr. Fernandez, one of President Ortis's
private
256
5 -
private secretaries, to not as a witness while he ealced
Mr. Lowades, head of the reilroad division of Evans Thorten,
representing the Netropolitan Wagon and Carriage Co.,
whether his organization desires to compete for the freight
car order, and Mr. Lowades later informed Messrs. Young
and Handley that he had answered in the negative.
There remained to be similarly asked Mr. Nixon, head
of Alfred Herbert representing the Birmingham Car and
Carriage Co+, and Mr. George Mayne, Manager of Percy Grant
representing the Roberts Car Builders; and it is expected
that these gentlemen will have replied by September 20.
ToOday the Embassy learned from Ing. Handley that
his brother-in-law, Ing. Belfiors, Chief Engineer of the
State Railways, had been told by Ing. Nogués that the in-
fluential persons who had blocked Dr. Oria's approval of
the State Railways' request for authorization to buy the
500 American freight cars were "the British Embassy in
Buenos Aires."
It would seem that if the United States is to be
called upon to facilitate the disposition of Argentina's
exportable surpluses, and the British are to be aided in
purchasing needed foodstuffs and raw materials in this
market, it should be clearly understood that British in-
terests in Argentina shall no longer exercise their 10-
fluence here to the disadvantage of American trade.
It is recalled in this connection that during our
trade agreement negotiations with Argentina the Department
considered taking up with the British Government this
same question of British influence (Department's telegrams
no.
Regraded Unclassified
257
- 6 -
no. 223 of November 18, 4 P.M. and no. 236 of December 2,
5 P.m.).
Respectfully yours,
S. Pinkney Tuck
Charge d'Affaires a.1.
CMR:jk
877
4
A. true copy of
the signed origi-
nal.
Regraded Unclassified
TREASURY
200
nee
TRIPLICATE 2676
258
No. 1874
Beanos Aires, September 16, 1940,
ARITISH TRADE DRIVE IN LATIN AMERICA
The Honorable
The Secretary of State,
Washington.
Sir:
With reference to the Embassy's despatch no. 1265
of September 17, 1940 regarding a prospective Anglo-
Argentine agreement providing for British purchases of
some £50,000,000 to £40,000,000 sterling of Argentine
products, I have the honor to report that according to
the press an official British mission is being sent to
Latin America Eas a vital part of Britain's war time trade
drive".
It
Regraded Unclassified
259
- 2 -
It is stated in a United Pross despatch from London,
dated September 17, 1940, that this mission will be 000-
posed of about twelve persons headed by a distinguished
statemen and accompanied by approximately twenty experts
and secretaries. It is expected shortly to embark on a
two to three months' Latin American tour, "establishing
close contact with the different governments and investi-
gating all means of enlarging trade and adapting it to war
conditions."
The U.P. despatch adds that the mission will be the
most significant of three moves in the British trede cam-
paign in South America. The first was the official
announcement that Messrs. R. A. Lister and Henry Faller
of the United Kingdom Commercial Corporation would soon
sail to Argentina to establish a trade promotion organisa-
tion there, which, to supplement normal deliveries of
British goods to South American markets, "would facilitate
the holding in South America of adequate stocks of United
Kingdom goods to cover requirements."
The third feature, it is said, will be an extensive
British trade exhibition to be shown throughout Latin
America.
The U.P. despatch emphasizes that these strong bids
for Latin American trade have not been designed to challenge
United States commercial interests in these parts and that,
in fact, the British authorities desire to develop Britain(s
Latin American trade in cooperation with Washington. The
despatch presumes that this British policy harmonizes with
the spirit of the Habana Conference, one of the purposes
of which was to solve problems arising from South America's
loss
Regraded Unclassified
260
- 3 -
loss of continental European markets. Thus it is argued
that "any British purchases of Latin American export our-
pluses would support the policy which Washington is pur-
suing south of the Rio Grande."
It is recalled that the increase of the capital of
the Export Import Bank is primarily intended for the pur-
chase of Latin American exportable surpluses and the U.P.
assumes that a similar purpose would be in the minds of the
British official mission.
This seemingly fits in with the report submitted in
the Embassy's telegram no. 417 of September 17, 4 p.m.,
indicating that the Argentine Government is considering
the feasibility and the advisability of asking our Govern-
ment to assist it financially in the matter of an Argentine
credit to Great Bri tain which would enable the British to
purchase between £30,000,000 and £40,000,000 sterling of
Argentine foodstuffs and raw materials.
Respectfully yours,
S. Pinkney Tuck
Charge d'Affaires a.i.
CMR:jk
851
Qn.
- true gosy of
the stand origi-
BECEINED
net DESNETMENT
AE 11 MA 2 T20
LICE OE THE
THAT2128A JADINHORT
10 THE SECREIVED
Regraded Unclassified
261
September 18, 1940
MEMORANDUM OF POSSIBLE TREASURY FINANCING BEFORE DECEMBER 31, 1940,
AND THE PROBABLE ORDER OF EXECUTION
1.
Refund 13% Treasury notes maturing December 15, 1940,
in the amount of $737M.
List of bond issues into which these notes might be
refunded is attached.
2.
Cash offering of U. S. Housing Authority notes, probably
a 5-year maturity in the amount of $100M to $200M.
3.
Cash offering of Reconstruction Finance Corporation notes,
probably a 3-year maturity in the amount of $300M to $400M.
4.
Cash offering of Treasury notes, $750M to $1,000,000,000.
In view of small balance of borrowing authority under
general debt limitation of $45,000,000,000, these notes must
be "defense series" with maturities of not to exceed 5 years.
5.
Refund 13% Treasury notes maturing March 15, 1941, in
amount of $677M. and possibly at the same time refund 3-3/8%
Treasury bonds of 1941-43 in the amount of $545M, which may
be called for payment on March 15, 1941.
262
TREASURY department
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
Late Market Close
FROM W.H.Hadley
TREASURY BONDS
Approx.
Estimated
Maturity
Coupon
Yield
Mkt, Price
Premium
12-14 yrs.
2 $
1,86
101.15
1 pt. 15/32
(9/15/52-54)
1,88
101.9
1 pt. 9/32
12-15 yrs
2 %
1.87
101,12
1 pt. 12/32
(9/15/52-55)
1.89
101.6
1 pt. 6/32
12 1/2-14 1/2 yrs.
2 %
1.88
101,11
1 pt. 11/32
X
(3/15/53-55)
1.89
101.7
1 pt. 7/32
14-17 yrs.
2-1/8%
1.99
101.20
1 pt. 20/32
(9/15/54-57)
2,01
101.12
1 pt. 12/32
14 3/4-16 3/4 yrs.
2-1/8%
2.02
101.10
1 pt. 10/32
(6/15/55-57)
2.04
101.2
1 pt. 2/32
17-20 yrs.
2-1/4%
2.14
101.18
1 pt. 18/32
(9/15/57-60)
2.16
101.9
1 pt. 9/32
17 1/2-19 1/2 yrs.
2-1/4%
2,14
101.20
1 pt. 20/32
(3/15/58-60)
2,16
101.10
1 pt. 10/32
18-20 yrs.
2-1/4%
2.16
101.11
1 pt. 11/32
(9/15/58-60)
2.18
101.1
1 pt. 1/32
TREASURY NOTES
5 years
7/8%
0.72
100.23
23/32nds
0.74
100.21
21/32nds
Note:
The 2-1/40 of 1954-56 are now quoted 103.18 bid. À reoffering at 102-1/4
X
would give a premium of 1 pt. 10/32.
263
COPY
(Handed by Mr. Pinsent of the British Embassy to Mr. Cochran in the Treasury
at 12:45 p.m., September 18, 1940.)
Note to the Secretary of the Treasury.
SECRET
With reference to the memorandum
handed to Mr. Morgenthau by Sir Frederick Phillips on
July 19th (Monthly Changes in Foreign Exchange Position),
the drain on Great Britain's gold and United States
dollar resources in August 1940 amounted to $228 million.
BRITISH EMBASSY.
18th September 1940.
da
- **
mut,
264
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
When Mr. Pinsent, Financial Counselor of the British Embasay, called on no
at 3:00 yesterday afternoon, he asked that I inform Commissioner of Customs Johnson
of the interest of the Secretary of the Treasury and of the President in cooperation
between the United States and Great Britain with respect to Latin American trade.
Pinsent reminded me that this subject had been broached to Sir Frederick Phillips
by the President and Secretary Morgenthau, and that the initiative which Great
Britain is now taking in sending a trade commission to Latin America and in carrying
on conversations with State Department officials has resulted primarily from the
above-described initiative. Pinsent stated that Mr. Summerscale, Secretary of the
British Embassy, has been talking with Commissioner Johnson on the subject of Latin
American trade, and it was thought that such conversations would be facilitated if
the Secretary's interest in this problem were made known to Commissioner Johnson.
B.M.P.
265
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
Mr. Ray Atherton called me from the Department of State at 9:45 this morning
to learn whether the Treasury was aware of any new developments in the situation
with respect to the utilization of official French funds in the United States. I
told Mr. Atherton that the Secretary had confidentially informed me, following the
Cabinet Meeting of last Friday, that the question as to whether funds should be
released from frosen dollar accounts in the United States to facilitate payments
for diplomatic and consular expenses in America and Europe had been referred to the
Secretary of State. It vas understood that the Treasury was to take no action on
this problem pending some advice from the State Department. I told Atherton that
we had gone ahead with the license to permit France to take care of her diplomatic
and consular officers in the United States and its possessions and with licenses
for the more routine accounts which the French officials are operating. Ve have
not, however, taken any action on the problem above cited, and have had no word
from Alphand or from the French Embassy since the day of the Cabinet Meeting.
n.m.
266
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENT.
The office of the General Counsel referred to my office yesterday an inquiry
from Mr. Hugh Cumming of the State Department with respect to the holdings with the
Federal Reserve Bank in New York of the Royal Netherlands Government and the
Netherlands Bank. This information was desired in connection with the study of the
financing of the purchase of $16,000,000 worth of armaments in the United States for
shipment to the Netherlands East Indies, which subject was discussed in my memorandum
of August 24, 1940.
I telephoned Mr. Cumming and gave him in strictest confidence, and only to be
used orally in his conversation with Assistant Secretary Berle, the figures he
desired as of the close of business on September 16.
B.M.P.
267
September 18, 1940
4:35 p.m.
H.M.Jr:
Hello.
Operator:
Mr. Purvis.
H.M.Jr:
Hello.
Arthur
Purvis:
Hello. Good afternoon.
H.M.Jr:
How are you?
P:
Very well, thank you. And you?
H.M.Jr:
Fine. Arthur, your man talked to Phil Young
about Sir Walter Layton - getting him out of
Lisbon.
P:
Oh, yes. I wondered whether - I have to trouble
you about that, but we are really quite anxious
to get him if we can.
H.M.Jr:
Well, here's the point. It really is something
to do it and I just wondered how much it means
to you.
P:
Well, what I feel is this, it's this Tripp
alignment and the feeling of irritation which
1s growing up in the U. S. Army people at our
inability to get ourselves forward. Now, it's
not that Layton can make the decisions but
it's, as I said to you earlier, it's my belief
that we shall be able to utilize him as a tool
to force the issue in London.
H.M.Jr:
Well, I wish they had mentioned it earlier
because to do it tonight or tomorrow morning
is damn hard.
P:
It 1s, 18 it?
H.M.Jr:
Yeah. I'm going to try it but if they'd only
told us earlier.
P:
Yes. Well, what happened was that up until
yesterday they told us that he would get on
board, and then today a cable has come in
268
- 2 -
saying that it looks as if the same thing
that happened last Friday may happen tomorrow.
Now our people telephoned Tripp and unfor-
tunately couldn't reach Tripp in New York
today when this cable came in and his
secretary said that that would have to be
an instruction, but we haven't been able to
reach Tripp. That's my trouble.
H.M.Jr:
Well, we'd do it through Washington here.
P:
Wouldyou? Now I don't want to - it's just
that .....
H.M.Jr:
Well, the only reason I'm calling you 1s -
I mean, I don't often say this - I mean, some
of these - one relatively unimportant person
- I mean, I've got to use my influence and I
can only do it so often.
P:
I know exactly what you mean and yes, I agree.
Well, I honestly believe it has a real value
to us.
H.M.Jr:
0. K. Then we'll 80 after it.
P:
I'm awfully sorry.
H.M.Jr:
Because I just wanted to make sure that it was
important.
P:
Yes, I think it really 1s because I think the
atmosphere here 1s getting really difficult
because of my inability to make them move on
a very important thing.
H.M.Jr:
Well, we'll see what we can do.
P.
Thank you 80 much.
H.M.Jr:
Right. I'll see you at quarter of eight.
P:
Thank you very much. I'm looking forward to it.
269
SEP 18 1940
My dear Mr. Berle:
This 10 in reply to your letter of September 10,
1940, suggesting that the Presilian Government feels
it will need assistance to meet a difficult exchange
situation and requesting that the Treasury Department
undertake & broad study of possible cooperative mone-
tary arrengements between the United States and
Brasil.
The Treasury Department has already indicated
its willingness to cooperate with and to assist
Brasil in certain monstary undertakings and will
immediately initiate studies of the type suggested
in your communication.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Nonorable Adolph A. Berle, Jr.,
Assistant Secretary,
Department of State.
a tom. Thompson
By Messenger 415
FILE COPY
9/18/40.
Regraded Unclassified
control OFFICIAL COMMUNICATIONS TO
THE SECRETARY OF STATE
w di I
270
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
RA 832.5151/1579
September 10. 1940
My dear Mr. Secretary:
The American Ambassador at Rio de Janeiro has
reported that the Brazilian exchange situation 1s becoming
acute, quoting the Director of Exchange of Brazil as
stating that the Bank of Brazil can continue the present
exchange regime for a few more weeks, but stressing the
need for exchange cooperation and assistance later.
Brazilian-American monetary and exchange relationships
have been the subject of study and cooperation for a
number of years: in 1937 you entered into an agreement
with the Brazilian Minister of Finance providing for
certain monetary facilities and cooperation, while in 1939,
88 you will of course recall, the arrangements entered
into with the Brazilian Minister of Foreign Affairs
provided for a short-term Export-Import Bank credit to
facilitate the liquidation of exchange arrears due to
American
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
271
-2-
American exporters and the establishment of a liberal ex-
change regime. In addition, you indicated your readiness
to participate, if requested, in cooperative efforts to
reorganize the Brazilian monetary system and establish a
central bank.
As you know, a number of considerations have delayed such
a request for a loan of gold in connection with the establish-
ment of a central bank. The Brazilian Government, however,
has informally indicated on a number of occasions, both to
American diplomatic officials at Rio de Janeiro and to
members of the Delegation of the United States at the
recent Habana Meeting, that it will need further assistance
in order to maintain those satisfactory exchange relation-
ships with the United States which are necessary for the
continuance of mutually beneficial commercial and
financial intercourse between the two nations. The
suggestion has been made that the Export-Import Bank extend
additional facilities to replace the short-term advance which
is rapidly being repaid.
It 1e the Department's belief that a more fundamental
long-term monetary and exchange cooperation with Brazil
would be desirable. I request, therefore, that, if you
share this view, the Treasury Department undertake a
broad
272
-3-
broad study of Brazilian-American monetary and exchange
relationships and possible cooperative arrangements. The
resources of this Department to assist in such a study are
of course at the command of the Treasury.
Sincerely yours,
certify Adolf A. Berle, Jr.
Assistant Secretary
OABI01932
to minivid
273
HSM
PLAIN
London
Dated September 18, 1940
Rec'd 12:13 Pe n.
Secretary of State,
Washington,
3117, September 18.
FOR TREASURY FROM butterworth.
The City is struggling to adjust itself to air-raid
conditions and it is performing its functions but slowly
and under considerable difficulties.
Aside from the bortb damage to the City itself it is
difficult and in some Cases impossible for its personnel
to get there because of transportation breakdowns due to
destruction and time bombs. At least half the day is
spent in air raid shalters, most of which are not squipped
to permit much Effective work to bE done. TELEPHONE and
postal communications are correspondingly slowed up. The
stock Exchange is to close at two to permit personnel to
get home to have dinner and prepare for the nightly raid.
Security prices and the bill rate have EASED though
not appreciably but the turnover is nominal in amount.
The decentralization readjustments made at the out=
break of war, particularly the Evacuation to the country
of
Regraded Unclassified
274
ham -2- No. 3117, September 18, from London
of many appropriate units and sub-divisions of banks and
businesses are standing the City in good stead and no
doubt many further adjustments in this Wise will have to
occur. For those who remain to work in the City Equivalent
adjustments will have to bE made in methods and hours of
labor. In this topsy-turvy situation it is symptomatic
that many of us are now sleeping in our basement kitchens
and cooking in our upstairs dining rooms.
In these circumstances I have not occupied the British
Treasury by discussions of general situations but in the
past week I have seen Phillips, Waley and BEWLEY about
particular local Cases, HOWEVER, if from your point of
vantage there is anything you wish me to pursue I should
appreciate the suggestion.
KENNEDY
KLP
275
September 18, 1940
3:00 p.m.
GROUP MEETING
Present:
Mr. Sullivan
Mr. Foley
Mr. Cochran
Mr. Graves
Mr. Bell
Mr. Gaston
Mr. Thompson
Mr. Schwarz
Mr. Young
Mrs. Klotz
H.M.Jr:
Herbert?
Gaston:
I tried to communicate with "Pa" Watson on
the subject of two political matters. One
1s the Collectorship in Ohio and the other
1a the Collector of Customs in Vermont, and
I couldn't get him on the phone and I wrote
him a note, and all the satisfaction I got
was a note back from him saying that he
thought you had better talk to the President
about it.
H.M.Jr:
I am seeing the President at 9:30 tomorrow.
Gaston:
I will give you a memo on it.
H.M.Jr:
Well, give it to me.
Gaston:
Yes.
H.M.Jr:
I don't know whether you all saw the excerpts
on politics in today's Gallup Poll.
Gaston:
Oh yes.
H.M.Jr:
Everybody see it?
276
- 2 -
Bell:
Yes.
H.M.Jr:
New York, Pennsylvania, and New Jersey.
Gaston:
Ernest Lindley told me --
Foley:
Illinois.
H.M.Jr:
Not on this.
Gaston:
Ernest Lindley told me that he had seen
the complete Gallup Poll for the 48 states
which is coming out Friday, and as a result
of that he modified his own review of the
situation upward in favor of Roosevelt.
The new Gallup Poll coming out Friday 1s
much more Roosevelt than anything that has
come out before.
H.M.Jr:
Well, with New York, Pennsylvania, and
New Jersey --
Gaston:
Yes, that 1s a good tip-off as to what the
contents of the Poll will be on Friday.
H.M.Jr:
If by any chance we could have Illinois --
Gaston:
The gains have been general all through the
country, I should judge, in the new Polls
coming up.
H.M.Jr:
According to Walter Winchell - - I read his
column in the paper - - Fortune dropped it
all out.
Gaston:
They gave it to the Press.
H.M.Jr:
It 1sn't in the magazine.
Gaston:
Fulton Lewis was taking a poll of newspapermen
in the Press Club today 8.8 to who they thought
would be elected. He had 19 Roosevelt and 4
Willkie at the time.
H.M.Jr:
Nineteen what?
277
- 3 -
Gaston:
Nineteen Roosevelt and 4 Willkie at the time.
H.M.Jr:
How often did you vote?
Gaston:
Unfortunately, I didn't get a chance to vote,
but he showed me what he had. I guess he 1s
going to use it tonight on his program.
H.M.Jr:
What else?
Gaston:
That is all except the new slogan 18, "We want
Willkie to make more speeches."
H.M.Jr:
Anything else?
Gaston:
That is all.
Klotz:
Excellent.
H.M.Jr:
Foley?
Foley:
I have nothing. Dan had a call from the
Federal Reserve Board, and they want Bernie
to go down to the Senate Banking and Currency
Committee tomorrow on that legislation which
permits banks to pay out when a foreign
government requisitions Central Bank assets
on deposit with the Federal. Bernie is
familiar with it, and if it 1s all right
with you --
H.M.Jr:
Are you familiar with it?
Foley:
No, I haven't been working on it.
H.M.Jr:
Can you get familiar with it?
Foley:
Yes, I can.
H.M.Jr:
You had better go up.
Foley:
All right.
H.M.Jr:
What else?
Foley:
That is all.
Regraded Unclassified
278
4
H.M.Jr:
Mr. Sullivan?
Sullivan:
They have been fighting today about the
Brown Amendment. Brown thinks he is going
to carry it. I think it is going to be
very close. I wouldn't be very surprised
if he got licked. They recessed a little
while ago until 3:15, and I am going up to
Brown's just as soon as the fellows come
up from the trip. I doubt if they are going
to get a vote on the bill tonight. It looks
as if they are going to take the Connally Bill
into conference.
H.M.Jr:
What 1s that?
Sullivan:
That is the new rates for taxes that will go
into effect if war is declared. The Defense
Commission has been calling ov er and asking
us to expedite the closing agreement on
Curtiss-Wright.
(Mr. Young entered the conference.)
H.M.Jr:
Are you the forgotten man?
Young:
No, sir.
H.M.Jr:
Just busy?
Young:
I am sorry. Swedish machine guns. Just a
change from the Swedish plans.
Sullivan:
And they are very anxious to get that in a
terrific hurry. They have been changing the
terms of the contracts --
H.M.Jr:
Which contract? I didn't hear.
Sullivan:
Curtiss-Wright.
H.M.Jr:
Oh yes. I got a memorandum from Foley.
Sullivan:
They have changed it and changed it and
changed it, and I understand now from
Mr. Foley that one reason they are 80
279
- 5 -
anxious about this is that they asked this
Congress to give them 300 million dollars
to reimburse different people and they want
something something. to show they are really doing
H.M.Jr:
Is it going to be Plan 2?
Sullivan:
Yes.
H.M.Jr:
Where do we come in the picture?
Sullivan:
Merely on the closing agreements.
Foley:
Whether it is income or whether it is a
capital contribution.
Sullivan:
The difficulty 1s this, that we execute &
closing agreement and it is going to be
very difficult to explain that we are merely
passing on the tax features and everybody
1s going to interoret it as & Treasury
approval of the general plan itself, and
it is going to be almost impossible to
explain now or five years from now that
we didn't think this was a good plan.
H.M.Jr:
Well, knowing Schwarz it innocent, I can
look at him. I also read Pearson and Allen.
Of course, I know you (Schwarz) didn't give
it out. I am trying to focus on you. Do
you know where they got it from?
Schwarz:
No. I did a little checking around this
morning and I may have something.
H.M.Jr:
The story is pretty accurate. They used
the word "baloney", but other than that --
Schwarz:
They had a pretty close idea of it.
H.M.Jr:
I thought 80. The point of my story being,
why worry if they get this Curtise-Wright
contract as long as Pearson and Allen get
B. direct version from the Treasury Staff?
Sullivan:
We think it is serious. We think it 18 being
done in Just about the worst possible way.
Regraded Unclassified
280
- 6 -
H.M.Jr:
I am at a disadvantage. The light is behind
both of you fellows.
Sullivan:
Maybe it 1s Just us, not behind us.
H.M.Jr:
One of you come and tell papa afterward.
Sullivan:
You (Foley) tell papa. I am going back on
the Hill. You didn't see Pearson and Allen
today, did you?
H.M.Jr:
Not today, no.
Sullivan:
They went on about this situation and said
that I felt compelled to make a statement
and Harrison agreed to let me and was sorry
afterward because I gave the elder statesmen
a dressing down such as has seldom been heard
on Capitol Hill.
Schwarz:
Which 18 all right, too.
H.M.Jr:
This one was very favorable to me about my
meeting with the National Defense.
Klotz:
Oh yes.
Sullivan:
They also said that Clay Williams had come
up here and camped on old Muley's doorstep
all summer 80 old Muley wasn't like he used
to be.
H.M.Jr:
Where did they get that from?
Sullivan:
I don't know.
Bell:
That was pretty accurate, too.
Gaston:
We don't need much more evidence, do we?
H.M.Jr:
Any other good news?
Sullivan: No.
H.M.Jr:
All right, run along, little boy.
Sullivan:
I have got a little while.
Regraded Unclassified
281
- 7
H.M.Jr:
Oh, you have?
Sullivan:
Oh yes, I want to get the dirt.
H.M.Jr:
He is usually in such a hurry. All right.
Cochran:
Ray Atherton telephoned this noon to see if
the French had made any further protest to
us on that fund business which you spoke of
at Cabinet last week. It went back to the
State Department. I told him we had had
nothing. They are still working on it.
H.M.Jr:
Good. Anything else?
Cochran:
No, sir.
H.M.Jr:
Chick?
Schwarz:
We have taken care of the Merry-Go-Round, and
that 18 all I have.
H.M.Jr:
I haven't seen today's. Would you send &
copy up to the house tonight for me? If there
18 something good on Sullivan, I would like
to see it.
Schwarz:
It has a lot about Sullivan. I sent you
the Kintner-Alsop piece about Sullivan in there.
H.M.Jr:
That was very good about Sullivan. You (Sullivan)
can!t expect - I thought the Kintner-Alson one
was excellent.
Sullivan:
So did I.
Foley:
That was the best I have seen about anyoody.
H.M.Jr:
Yes. That was very nice.
Foley:
They decided we were going to be here for
four more years. They just found out.
Sullivan:
And then the day Alsop came out with Foley,
he said, "I am getting soft."
H.M.Jr:
Who did?
Regraded Unclassified
282
- 8 -
Sullivan:
Kintner.
H.M.Jr:
It was a very nice article.
You (Young) were going to give me that
confidential memorandum on Captain Balfour
which was loaned to you. You never did.
Young:
I have it.
H.M.Jr:
And I would like to have it, because I have
a personal letter from him now. It 1s from
Balfour. It just came by Clipper.
Young:
I will get it.
H.M.Jr:
And your memorandum to me on Mr. - Major Fleet,
I let Jim Forrestal read it. He was 80
interested he asked whether he could keep
it and I told him yes, providing he did not
circulate it and he said he wouldn't. He
said it was quite interesting and he felt
it was up to the Navy to do something about
it.
Young:
Yes, I think that is quite true if what Fleet
says is 80.
H.M.Jr:
He said --
Young:
That is Fleet's story, after all.
H.M.Jr:
He says he understands the different airplane
companies have been divided up between Army
and Navy. He thinks Consolidated was given
to the Navy and if it is, he thinks it 18 up
to him to do it, not Defense Council, but
himself, and would you give Mrs. Klotz an
extra copy?
Young:
Yes.
Sullivan:
You know, he 1s the fellow we had all the
trouble with.
H.M.Jr:
I know, but the memorandum he gave, the things
that he asked for, were perfectly reasonable.
Regraded Unclassified
283
- 9 -
He wants houses, he wants a place to have
the people trained, and he wants decent
drinking water and A sewage disposal plant.
I mean, all those are things which are perfectly
reasonable before he can get any more help.
Gaston:
It must be Navy, because Consolidated 1s making
all those long-range patrol boats for Navy.
That 18 their principal job.
H.M.Jr:
Phil?
Young:
I have got several items here. A memo on a
conference I had with Mr. Schrom yesterday
on the tank engines,
H.M.Jr:
I tell you what I will do. Why don't you
stay behind after Mr. Morgan leaves and give
it to me and I can read it before tonight.
Young:
Right. I also have some more airplane tables
similar to the four which you took.
H.M.Jr:
Good. I want those definitely. I am seeing
the President on it tomorrow morning. I would
like to have those --
Young:
I have them right here.
H.K.Jr:
Harry? I had several opportunities to telk
with Mr. Jease Jones and we were sitting there
over dinner. Jesse in front of me had a dieh
of apple pie and a dish of 10e cream, and
Ickes, who was riding Jones all the while,
said, "Which 1s for the Loan Administrator
and does the Secretary of Commerce get the
pie or the ice cream?" So quick as a flash
Jones dumped the ice cream on the pie and
says, "Now, are you satisfied? I get both
of them."
But Ickes was riding him all of the time.
But I had a chance to tell him when we got
on South America that of all the loans he
could make, that I felt the first loan should
be to China, and he agreed with me.
Regraded Unclassified
284
- 10 -
White:
Fine.
H.M.Jr:
I thought you were waiting for it. Then I
repeated it in front of Mr. Sumner Welles
and Sumner Welles wouldn't say a word, but
I did have the chance and he 1a going to
Bee T. V. Boong and somehow orother, I don't
know how, he has seen that I have said to
T. V. Soong there was a question about his
credentials. I don't know where he got it
from and he 1s planning to make him & loan
against tungsten. Now, I told him if there
was any question about his credentials, to
ask the State Department and Welles said
there was no question about his credentiale.
White:
He was supposed to have had a letter which
he said he gave to the President.
H.M.Jr:
I am just passing along the report to you.
Jones said he knows nothing about Chile.
I think it 1s silly to start all these things
with me and then Jones gets sore and they
come to me after a lot of people have messed
around with them. He didn't even know there
was a Mission here.
White:
Well, it is very curious how it is partly
somebody's fault, I suppose, and partly their
own. Costa Rica is here, and they claim they
have approached them and yet they say the
Export Import Bank has asked them no questions,
has very little information about it and 80
on, BO it may be that you may get an opportunity
some time in the near future to take up the
question of the --
H.K.Jr:
Welles spoke to me about Costa Rica. He
mentioned Costa Rica today. The highway,
ien't it?
White:
The highway is one thing and the million
dollar loan is an additional matter.
H.M.Jr:
Well then, we have got something here about
giving them that as a basis for their
currency.
Regraded Unclassified
285
- 11 -
White:
That is right.
H.K.Jr:
He asked me about it and I wouldn't answer, and
I told him - he said he was going to give me
a formal memorandum. He wants to ask Treasury's
advice.
White:
Welles said he was going to?
H.M.Jr:
No, Jones.
White:
You may have noticed in this morning's Wall
Street Journal there was a front page story
about the rise in the price of scrap iron
and steel and the rise of the price of steel.
H.M.Jr:
I didn't see that.
White:
It bears on the matter --
H.M.Jr:
I saw the Roanoke Enterprise and the Birmingham
News.
White:
It hasn't reached there yet.
Here 1s an answer to a letter from Secretary -
Undersecretary Welles that we make a study of
the Cuban situation.
H.M.Jr:
Do you say anything?
White:
Only that we are always glad to cooperate.
H.M.Jr:
Usual.
White:
Same thing to Berle about Brazil.
H.M.Jr:
Right.
White:
We are initiating steps.
H.M.Jr:
Wonderful.
White:
Here is the answer to the Argentines, if you
want to take it up. They are still pressing
us. I understand that our Ambassador to
Argentina 1s here and would like to see you.
Regraded Unclassified
286
- 12 -
They asked me to make the appointment and I
told them to get in touch with you directly
through the State Department, which they may.
H.M.Jr:
That 1s right.
White:
We had two meetings, one on copper and one
on nitrate, with the Council of Defense experts
and with Nelson's committee et cetera this
morning. We have another one tomorrow. I
don't know where we will get, but we are going
to go ahead; and after we get through, I think
we will take advantage of your offer and maybe
you can get in touch with Stettinius and have
him come to lunch or something.
H.M.Jr:
Stettinius 1s sick. He has had some kind of
an accident, hasn't he?
Klotz:
Sprained back.
H.M.Jr:
I heard Will Clayton was in town, 80 I asked
who he was helping and I hear on the train
they say he has joined "Rockefeller Center."
White:
That 18 right. He was there at this meeting.
He 16 an advisor to Rockefeller.
H.M.Jr:
He joined Rockefeller Center.
White:
He 1s on the same group with Mr. Ravinsky,
who 1a also advisor. Some more dollar-a-year
men.
H.M.Jr:
Don't ever put down Will Clayton except for one
of the shrewdest fellows you ever met.
White:
Oh, he 1s very able. So 1s Ravinsky. They
are shrewd.
H.M.Jr:
You bet your life.
White:
That 18 why they are working for 8 dollar
a year. That is all.
H.M.Jr:
All right.
Bell:
Senator Guffey wrote to the Comptroller about
Regraded Unclassified
287
- 13 -
receivership appointments in Pennsylvania
and then sent you a copy of that letter
and you asked Cy. to see you about it. Now,
the Comptroller has prepared a reply to
Guffey for his signature.
H.M.Jr:
Let it go.
Bell:
Before you see it?
H.M.Jr:
Why should IT It 1s the Comptroller's baby.
Bell:
Well, you said to Cy. --
H.M.Jr:
I know, but I think your way 1s much better.
I accept your suggestion.
Bell:
Okay. The market is just going out the window.
H.M.Jr:
Which way?
Bell:
Up. I take it they are --
H.M.Jr:
Could you give me between nine and nine fifteen
an up-to-the-minute memo, how far out can we
go on a 2%9
Bell:
I have it now.
H.M.Jr:
Could I have it in the morning?
Bell:
Yes. You will be here at the office?
H.M.Jr:
Yes, I will come in first.
Bell:
All right. I have it now. We can go to 53-55.
H.M.Jr:
Wonderful. You people might be interested in
Wallace's comment on the West, which was a
surprise to me. He had been talking out
through Minnesota and Nebraska and Iowa.
This is Just in the room. He is not at all
sure of Iowa and not sure of Minnesota. The
thing which I don't know, which 1a news to
me, 40% of the farmers in Nebraska are Germans
and, much to his surprise, are very pro-Hitler.
He says that as soon as you get West of Chicago,
Regraded Unclassified
288
- 14 -
this whole business about England - it just
haen't reached them. He says the older
generations and the county chairmen would
say to him, "Now, lay off Hitler." Bo I
made the suggestion to the President that he
try Bill Bullitt out in Omaha. Nebraska was
evidently - he thought it was a swell suggestion
and if it went well, he had better talk other
places, but I didn't get the feeling from the
way Wallace was talking that he was very
confident. I am surprised.
Foley:
Claude Pepper said he talked in Danville, Illinois,
on Saturday at a County Fair, and he said there
was a very large turn-out and the crowd was very
enthusiastic and Wallace had been through there
and Wallace made a good impression.
H.M.Jr:
He didn't talk about Illinois. He was talking
about Iowa and Nebraska and Minnesota.
Thank you all.
Regraded Unclassified
289
SEP 1 8 1940
My dear Mr. Under Secretary:
This is in reply to your letter of September 14, 1940,
your reference RA, indicating that the State Department is
interested in resuming with Cuba discussions over certain
financial proposals, and requesting that in connection there-
with the Treasury Department make bread studies of Cuba's
monetary, banking, and fiscal situations in relation to her
whole economic structure.
As usual, the Treasury Department is ready to cooperate,
and in accordance with the suggestion contained in your letter
will immediately undertake studies of Cube's financial and
general economic situation.
Sincerely,
(Signed) H. Morgenthau, Jt.
Secretary of the Treasury.
The Honorable Summer Helles,
Under Secretary of State.
cc to mr. Thompson
HRS:lrs
/18/40
FILE COPY
By Messenger 4'5
Regraded Unclassified
ADDRESS OFFICIAL COMMUNICATIONS TO
290
THE SECRETARY OF STATE
WASHINGTON, 0,2.
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
RA
September 14, 1940
My dear Mr. Secretary:
During the last two or three years, as you are
aware, the Department has on numerous occasions
discussed many phases of Cuban economic affairs with
the Treasury and other appropriate agencies of this
Government. Such discussions have included, among other
things, reform and reorganization of the Cuban tax and
fiscal systems; reorganization of the Cuban monetary and
banking system, including the question of the exchange
relationship between the Cuban peso and the dollar; the
development of any new productive facilities in Cuba;
and the carrying out of much needed public works,
including the reconstruction of the Habana water works.
The carrying out of any of these projects has in
the past been postponed due to the delay of the Government
of Cuba in settling on a satisfactory basis a number
of
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
291
-2-
of problems outstanding between the two nations. During
the last few days, however, the Cuban Congress has
adopted legislation settling one of the most troublesome
issues, that of the obligations to American contractors
who constructed public works in Cuba in the twenties.
The Department now believes that, when this legislation
becomes law, this Government should be prepared to consider
and discuss with the Cuban Government a number of the
projects mentioned above which are of special interest
to Cuba.
The Department therefore requests that, in anticipation
of discussions in the near future of many phases of Cuban-
American economic relations and the Cuban economy, the
Treasury undertake a broad study of the Cuban monetary,
banking and fiscal situations in relation to the whole
Cuban economic structure. The Department is of course
prepared to render every possible assistance in such a
study. The Department is also requesting in anticipation
of the forthcoming discussions, that the Export-Import
Bank review its files with regard to the Habana water works
and other projects.
Sincerely A yours,
Tells 01 98 Only
Under Secretary
Regraded Unclassified
292
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate General, Beirut.
DATE: September 18, 1940, 6 p.m.
NO. : 91.
This 1s in reference to my telegrams numbered 46, 74,
76 and 83, concerning frozen French credits.
MR
DELVE
I have been informed by the Banque de Syrie that its
license permitting partial release of its funds deposited
with the French-American Banking Corporation will expire
on September 20, and that a similar license concerning
their funds in the Chase National Bank will expire on
September 27. The Banque de Syrie has communicated with
these American banks by telegraph, requesting that these
licenses be renewed. Because of the essential requirements
of this mandated territory, the importance of this was
stressed by the High Commissioner in a conversation which
I had with him today.
PALMER
HPD
EA:VCL
Regraded Unclassified
293
MN
TELEGRAM SENT
GRAY
September 18, 1940
3 p.m.
AMERICAN EMBASSY
MOSCOW.
556.
No. 320 from Riga, August 23, noon.
Licenses issued freeing the five accounts.
HULL
(HF)
840.51 Frozen Credits/489
EA:GL:VCL
10 THE
LECHNICYT
20 30 301190
10 A M9 el 938 ONG
IVEY WA DELIVERENT
BEDEIAED
294
EH
PLAIN
Casablanca
Dated September 18, 1940
Rec'd 6:20 P.M.
Secretary of 3tate,
Washington.
127, Eightsenth.
American Fondouk FEZ entirely without funds must
close unless patition Mrs. Mary Lyon whose address
First National Bank, NEW York speedily acted upon.
GOOLD
NK
10 VAL
THE yver
000 8Eb St on 15 30
295
0
0
P
Y
DEPARTMENT OF STATE
Washington
September 18, 1940.
In reply refer to
EA
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury, and
transmits a copy of a Pro Memoria, dated September 17,
1940 from the Bulgarian Minister at Washington, request-
ing the licensing of a transfer of funds to effect
payment for imports of oil into Bulgaria from Rumania.
Enclosure:
Pro Memoria from
Bulgarian Minister,
September 17, 1940.
COPY
296
ROYAL BULGARIAN LEGATION
Weshington, D, 0,
PRO MEMORIA
According to the existing trade agreements between Bulgaria and
Rumania part of the payment for oil imported into Bulgaria from Rumania
was required to be effected in dollars in New York.
The transfer of the necessary amounts in dollars was done through
the Gallia Petroleum Maatschappij N. V. Amsterdam, Spuistraat 198-212,
whose holdings in dollars were with the Nederlandsche Bank voor Zuidafrica
account in the Irving Trust Company, New York.
On the 10 of May of this year the Bulgarian National Bank had with
the above firm, Gallia Petroleum Maatschappij N. V. & credit for the
above mentioned purpose of $119,693.00 which had to be used in payment
for supplies of oil shipped to:
1. To the Bulgarian Cooperative and
Agricultural Bank
$88,500.00
2. War Ministry, Sofia
15,136.00
3. To the Cooperative (Napred)
3,054.00
4. To Penko Ivan Boyadjieff Bros. &
Co.
3,503.00
5. To the Alliance of the Bulgarian
Cooperatives
4,200.00
6. same
5,300.00
Total
$119,693.00
The above amount although appearing as a Dutch holding in the United
States is actually a Bulgarian credit to be effected for the payment of
Rumanian oil, ordered and supplied before the 10 of May, 1940.
The Bulgarian Government would much appreciate if the necessary steps
are taken for the granting of a license freeing the above amount and trans-
ferring the same to the account of the Bulgarian National Bank with the
Irving Trust Co.
September 17, 1940.
No. 851.
297
Paraphrase of Telegram no. 420 of September 18, 1940
9 D.M., from the Embassy at Buenos Aires.
According to a reliable exchange broker, all of his
recent applications for prior permits to import American
merchandise on the approved list were today returned to
him marked to be resubmitted for further consideration after
15 (in some cases 30) days.
It will be recalled that the suspension of imports
from the United States beginning January 1939 was matter
which can admit a similar notation.
The proximity of the arrival of the President of the
Export-Import Bank of Washington and the publicity re-
garding the increase of the capital of the Bank may have had
a pertinent bearing on this matter.
is N9 05 08
ДЕСНИКУТ LYRE
YRA 3MT or 3HT OT
RA:Donovan: CBT
eh
mr
298
September 18, 1940.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
SUBJECT: Politics - Pennsylvania.
Gardner Jackson called me Tuesday morning to say that the
contest for Majority Leader was nip and tuck between John McCormack
and Pat Boland. He hoped if we had any opportunity we would use
our influence for Pat. He said the selection of Boland would help the
President materially in Pennsylvania, while the selection of McCormack
would not do any good anywhere.
299
FROM: MR. GASTON'S OFFICE
The Secretary
TO:
Paul Appleby said Ed Flynn had asked him
to ask us to get Saul Haas to come to Wash-
ington so that he could have a conference
with the President and Homer Bone and then
assume command of the campaign in the State
of Washington. Flynn, according to Appleby,
said the President wanted this. Appleby was
apologetic about the call, saying he couldn't
understand why Flynn didn't call us, but
supposed it was because he knew Haas and Bolle
quite well.
Appasently both Bone and Haas are a little
reluctant; but shouldn't we get our orders
direct from the President?
Saul would, of course, have to resign to run
the campaign.
Sept. 18.
ms
gave to to take gasten care
an of
CONFIDENTIAL
300
Paraphrase of Code Radiogram
Received at the Har Department
at 2:00 P.M., September 18, 1940
Bacharest, Filed 14:10, September 18, 1940.
is a result of the Rumanian request for German assistmes
in reargenisation of her armed forces, General Tippelskirch in und-
form has arrived in Bucharest. The latest reports indicate that the
Rumanian Army is to be reduced to & streamlined force of 100,000 man
armed, equipped and instructed by Germans. Airfields are being in-
spected by German experts and arrangements are being made for their
we by the German Air Force in an emergency.
Russian intentions are not trusted by German efficials
Inc.
RATAY
Distribution:
Aide to the President
Secretary of Har
State Department
Secretary of Treasury
Asst. Secretary of War
Chief of Staff
War Plans Division
Office of Naval Intelligence
CONFIDENTIAL
301
CONFIDENTIAL
Paraphrase of Code Radiogram
Received at the War Department
at 12:26 P.M., September 18, 1940.
London, filed 17:00, September 18, 1940.
During the night of September 16-17 208 British benbers
operated against ensay railroad yards and shipping concentrations.
During devlight hours of the 17th three British planes vere dis-
patched on reconnaissance missions.
During deylight hours of the 17th about 356 German air-
craft operated over lest Kent, Kenley, Biggin Hill and the Lendon
area.
During the night of September 17-18 there vas a continuous
stream of raiding planes, mostly flying singly, operating over all
parte of London from 8 P.M., until daylight. The bombardment of the
city vas widespread, with some 70 districts affected. It vali re-
ported that some usgnetic sines were dropped in the suburbs. The
use of incendiary bombe vas more extensive than heretofore. Other
attacks were made over South Wales, Liverpool and Scotland.
The daylight attacks on the 17th damaged the York Hill
Quar in Glasgov, the cruiser Sussex (9,830 tons) vas not on fire,
and civilian establishments were danaged in Greenwich, Caterhan,
Speke, Woolwich, Liverpool and Portamonth. The attacks last night
resulted in minerous najor fires in widely dispersed places in the
Leadon area. The worst were in the West Indies Docks, the Siemena
CONFIDENTIAL
Regraded Unclassified
CONFIDENTIAL
302
factory at Weelvich, and a large shop on Oxford Street. High
explosive bombo caused severe casualties at the Marble Arch.
Many streets were blocked and there are a large number of delayed
action bombs all over the city.
German aircraft losses vere ten confirmed, four probable
and two damaged. The British lost five fighter aircraft but only
one pilot.
The casualties to the civilian pepulation were heavy but
have not yet been determined.
The morale of the people is satisfactory
There is no change in the evidences of an invasion.
Three ships, totalling 21,500 tons, were lost.
LEE
Distribution:
General Vatson
Secretary of Ver
State Department
Secretary of Treasury
Asst. Secretary of Var
Chief of Staff
Var Plane Division
Office of Naval Intelligence
-2-
CONFIDENTIAL
Regraded Unclassified
303
G-2/2657-220
RESTRICTED
M.I.D., W.D.
September 18, 1940.
No. 197
SITUATION REPORT
12:00 M.
This military situation report is issued by the Military
Intelligence Division, General Staff. In view of the occasional
inclusion of political information and of opinion it is classified
as Restricted.
I, Western Theater of War.
1. No ground operations.
2. Air Force Operations.
German operations over the London area began in bad
weather late in the afternoon of the 17th and continued throughout
the night. They claimed to have attacked docks, waterworks, gas-
works and railroad stations. It is clear that widespread damage
was inflicted throughout the area. The Germans also reported
attacks on Liverpool (probably heavier than on the day before), on
Glasgow (probably from Norway) and on airfields in the London area.
British night bombing took place along the Channel
coast, and some planeo operated over Germany. A German convoy
was attacked in the Channel in daylight.
Plane losses were low on both sides.
II. Mediterranean Theater of War.
1. The Italian ground advance has moved rapidly and is
now in the Sidi Barrani area, 55 miles inside the Egyptian frontier.
There are rumors of Italian ground activity farther to the South.
2. The Italian Air Force continued its attacks on British
troops. The R.A.F. is concentrating on Italian communications and
in particular has bombed Bardia and Beughazi,
RESTRICTED
304
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
CONFIDENTIAL
FROM Mr. Cochran
Today's transactions in registered sterling by the six reporting banks were
as follows:
Sold to commercial concerns
650,000
Purchased from commercial concerns
19 1,000
The Federal Reserve Bank of New York purchased 35,500 from two non-reporting
banks.
In the open market, sterling remained at 4.03-3/4 throughout the day. Trans-
actions of the reporting banks in open market sterling were as follows:
Sold to commercial concerns
113,000
Purchased from commercial concerns
126,000
Although the Cuban peso weakened to 9-1/16% discount this morning, it subsequently
recovered part of the ground lost and closed at 8-5/8%.
The other currencies closed as follows:
Swise franc
.2278-1/2
Canadian dollar
16-5/8% discount
Swedish krona
.2385
Lira
.0505
Reichsmark
.3992
Mexican peso
.1996 bid, .2016 offered
We purchased $52,569,000 in gold from the earmarked account of His Brittanic
Majesty's Government.
The State Department forwarded to us a cable stating that the National City
Bank, London, shipped $476,000 in gold from England to its head office at New York,
for sale to the U.S. Assay Office.
The Bombay gold price was equivalent to $33.90, up 8$. The silver equivalent
MB.8 44.56#. a gain of 1/84.
In London, spot silver moved off 1/16a to 23-7/16d. Forward silver, on the
other hand, advanced 1/16d to 23-7/16d. The dollar equivalent of 23-7/16d is 42.56#.
Regraded Unclassified
305
- 2 -
Handy and Harman's settlement price for foreign silver was unchanged at 34-3/4#.
The Treasury's purchase price for foreign silver was also unchanged at 35#.
We made one purchase of silver amounting to 25,000 ounces under the Silver
Purchase Act. This represented new production from foreign countries, for forward
delivery.
The report of September 11, received from the Federal Reserve Bank of New York
giving foreign exchange positions of banks and bankers in its district, revealed that
the total position of all countries was short the equivalent of $10,612,000. a decrease
of $438,000 in the short position. The net changes in the positions are as follows:
Short Position
Short Position
Decrease in
Country
September 4
September 11
Short Position
England*
$ 1,480,000
$ 1,082,000
$ 398,000
Europe
4,563,000
4,642,000
79,000 (Increase)
Canada
145,000 (Long)
278,000 (Long)
133,000
(Increase in
Long Position)
Latin America
381,000
457,000
76,000 (Increase)
Japan
3,750,000
3,777,000
27,000 (Increase)
Other Asia
1,020,000
1,025,000
5,000 (Increase)
11 others
1,000
93.000 (Long)
94,000 (Increase in
Short Position)
$11,050,000
$10,612,000
$ 438,000
*Combined position in registered and open market sterling.
R.M.S.
CONFIDENTIAL
Degraded
306
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19:
No. of Shares
$ proceeds of
Nominal Value
$ Proceeds of
Sold
Shares Sold
of Bonds Sold
Bonds Sold
September 9
5.370
132,826
Nil
Nil
10
15,823
351,421
3,000
2,728
11
1,742
88,148
116,000
75,885
12
10
929
22,000
13,095
13
2,655
150,519
14,000
7,660
14
475
19,955
22,000
12,049
26,075
743.798
177,000
111,417
Sales from
February 22 to
September 7
1,459,905
51,053,790
4,195,000
3,436,244
TOTAL FEBRUARY
22 TO SEPTEMBER 14
1,485,980
51,797,588
4,372,000
3,547,661
Mr. Pinsent reported sales of non-vested securities for the week ended
September 7 totaled $745,000.
B.MS
307
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
Mr. Knoke talked with me by telephone yesterday afternoon in regard to his
letter of September 6 reporting the exceptions which have recently been made by
the Custom Division of the Post Office to permit importation of gold by air. I
told Mr. Knoke that this correspondence was being brought to the attention of our
General Counsel and of the other officials in the Treasury who are interested in
this subject.
Mr. Knoke mentioned incidentally that gold coins which were some time ago
elling at a high premium in Switzerland are now at a heavy discount in that
country. At present such discount is said to be between fifteen and twenty percent.
Mr. Knoke was a little surprised that the Post Office was making the exceptions
under reference, and observed that ve are receiving enough gold through regular
channels.
10mg
308
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE September 18, 1940
TO
Secretary Morgenthau
FROM Mr. Cochran
STRICTLY CONFIDENTIAL
When Mr. Pinsent, Financial Counselor of the British Embassy, called on me
this morning he asked the status of the Treasury's study of the memorandum sub-
mitted by the Bank of Montreal agency in New York in regard to the Treasury's
possible handling of the present double taxing of official British security sales
in this country. Mr. Pinsent had received a request from London on this subject.
After talking with Mr. Cairns, I telephoned Mr. Pinsent this afternoon that the
Bureau of Internal Revenue had completed its study of the question and that the
apers were reported to be ready for discussion between the Chief of that Bureau
and Mr. Cairns. I promised to let Mr. Pinsent know whenever some decision might
be reached by the Treasury on the points involved.
BMR.
309
September 18, 1940
Professor Chamberlain
2. Cookran
4 3:45 this aftermen Mr. Bernard Carter telephened me from 8. P. Mergan and
Company effices is New York. No acked what action the Treasury was teking on the
application for a license for $10,000 to meet the expenses of the Anno Morgan
group in France. This amount was to come from the American Friends of Trance, who
have raised $150,000 in the United States. Mr. Carter is ansious to have some
word in the premises w tenerrow men, since the New York comittee is necting
tenerrow aftermeen to discuss plans for the future. Mr. Carter is Treasurer of
the fund. Be explained to as that the $10,000 in question is urgently assãed w
Miss Mergan to meet day to day. and even hand to mouth, expenses.
I brought this question up at the Foreign Funds Control Group Meeting this
afterneon. After thorough discussion thereof Professor Chamberlain stated that be
would consult the Secretary tenerrow merning on the policy involved.
Lust
HMC:1ap-9/18/40
310
September 18, 1940
Filse
Mr. Ceckren
lb. King of the Foreign Funds Centrol telephened me at 5 e'eleck this after-
moon that he had endorsered in vain to identify the transaction concerning which
the Suise Minister stated a license had been applied for w the Chase National
Bank. The Minister had said that this invelved a contract between the Chase and
the Svice Bank Corporation. covering a Svice frame. Dutch florin exchange eperation.
The number which the Swice Minister had given no was 12,612. After talking with
Mr. King I called the Swice Minister. He teld as that the mater was actually
12,616. I de not know where the error was, but I have given this correct sumber
to Mr. King.
just
HMC:1ap-9/18/40
3+1
September 18, 1940
Prefessor Chamberlain
Mr. dechrea
I distributed yesterday to the members of the Centrol droup a nonorandum dated
September 16 free the Department of state, covering cablegram No. 567 of September 14
from Charge d'Affaires Nathews at Vichy. Mr. Luthringer of the State Department
has today informed no that the name of the individual was given erroneously the the
telegres under reference as Francess Vici. Mr. Authringer is nov informed that the
name of the - in question is Franassevici.
me
EMC:1ap-9/18/40
Regraded Unclassified