Volume 348, January 15 – January 17, 1940

DIAM Book 348 January 15 - 17, 1941 Regraded Unclassified - B - Book Page Bank Holding Company Legislation O'Mahoney (Chairman, Temporary National Remonic Committee) consulted about possible support for Mill - 1/15/41. 348 79 n suggests that Treasury, Federal Deposit Insurance Corporation, Comptroller of Currency. and Federal Reserve Board cooperate - 1/15/41 246 Belgium See for Conditions: Gold (France - Dekar and Hayes) - C- Canada See Var Conditions Censorship See Var Conditions China See Var Conditions: China; Export Control Caba See Var Conditions: Airplanes Currie, leuchlin 3. See Var Conditions: China - D- D laker See lar Conditions: Gold (France) - 3- 3 Reansuic Defense Board See Var Conditions - 7 - Fats; Oils See Var Conditions: Export Control Federal bureau of Investigation Ilans amorantem - 1/15/41, etc. 99,269. 270,349 Financing, Government Open Market Comittee meeting - 1/16/41 133 Defense Savings Bonds, United States: Possible offerings (Sadley memorandum) 1/16/41 260 Mr, Odegard, Inim, Foley, and Schwars discuss sevapaper clipping analysis net-up- 1/17/41 306 Prance See Mar Conditions: Airplanes: Gold French Indo-China See is Conditions: Expert Control Regraded Unclassified - G - Book Page Germany See War Conditions: Foreign Funds Control Gold See Var Conditions: France (Martinique) - I- Hungary See Var Conditions: Foreign Funds Control - I - Indo-China, French See War Conditions: Export Control Italy See War Conditions: Foreign Funds Control - J - Japan See War Conditions: Foreign Funds Control Johnson, Hugh S. (General) See War Conditions: Lend-Lease Legislation - I- - Kayes See Var Conditions: Gold (France) - L- - Latin America New joint board to handle purchases set up by War and Havy Departments; to cooperate with State Department directly and omit Treasury - - 1/16/41 348 122 a) McReynolds to be consulted Mexico: Rodrigo, Basabio: Opens account with Lawyers Trust Company; Federal"Seserve Bank of New York reports suspicions of - 1/16/41.. 171 Lend-Lease Legislation See Var Conditions Liaison Committee See Var Conditions - I - Ink he MANATTAN, 55 Beaching off Florida discussed at 9:30 meting- 1/15/41 XII 109 Bartinique See kr Conditions: Airplanes; Gold (France) Mexico See Harestics (Opium) See also latin America Murply, Francis P. (Former Governor, In Haspatire) FIR asked by HWT if be is being considered for Federal appointment and if so should income taxes be checked - 1/15/41 M a) FIF's answer calling attention to notal dialike of Murphy and Sullivan - - 1/17/41 322 2) See Marry-Go-Round story or situation the be vet to Defense Commission in charge of shoe purchases for aray: Book 349, page 266 - 5 I - - Harestics Opion in Mexico: Wallace asked about situation upon return - 1/16/41 113 - 0 - Otls: Pats See be Conditions: Export Control - P - Personnel, Division of Graves and Thompson still waiting to see BUT - 1/15/41 130 For investigation and action taken, see Book 252 Polani See h: Conditions: Gold Prance - later and Layes) - 1. I - leed, Stanley (Justice, Supreme Court) Congratulates Hr 00 Lend-Lease testimmy - 1/17/41 IN lesearch and Statistics, Division of Report of projects during December 1940. IS Sevenue Revision Suggested program (Sullivan commitme) transitted to m 1/16/41 202 Hoirigo, Insubio See latin America: Mexico Regraded Unclassified - $ - Book Page Shipping See & Conditions Silver See be Conditions Spain See Mar Conditions Steel See Mar Conditions Sweden See lize Conditions: Foreign Funds Control Bwitzerland See is Conditions: Foreign Funds Control - = - Invation See Bevenue Revision - 1- U - U.S.S.R. See Var Conditions: Foreign Punds Control Inited Kingdom See hr Conditions: Military Planning - V - le Conditions Airplanes: Cube Martinique deal: Toung reports on status - 1/17/41 348 317 Danada: Dominion-Provincial Financial Relations: Breakdown of Ottawa conference reported - - 1/16/41 207 Censorship: Knox' press release and Treasury comment thereon - 1/15/41 213 China: Durrie (Lanchlin B.) discusses with HKJr proposed trip - 1/16/41 177 Proposed stabilization agreement discussed by Soong and Cochran - 1/17/41 343 Regraded Unclassified - - (Continued) Book Page Var Conditions (Continant) Economic Defense Board: Meeting in Atterney General's office; present: representatives of Justice, together with Berle, Henderson, Ginsberg, and Berestein: Foley emerantes - 1/15/41 368 96 a) Draft of Insertive Order - 1/18/41: See Book 349, pages 54 and 358 (1/21/41): and Book 350, page 200 - 1/23/41 HMJr-Aleep conversation and eventual "good" article discussed at 9:30 meeting - 1/21/41: Book 349, page 109 a) HUr congratulates Alsop: Book 349, page 300 Conference in Berle's effice - 1/24/41: Book 350, page 258 Exchange market resume - 1/15/41, etc. 100,265,350 Export Control: Shipments to French Indo-China and Chinese parts listed for Hull - 1/15/41 62 Fats; 011s: Gaston and Hass recommend export control since it is obvious that United States exports are entering Germany - 1/16/41 251 a) Hendersm's attention called to rise in prices: See Book 349, page 267 Foreign Funds Control: See also Var Conditions: Fornamic Defense Board Germany: Transactions in New York City accounts (12/6-31/40): Federal burean of Investigation report (Elans) - 1/16/41 270 Hungary: Transaction with Guarmaty Trust Company - - 1/15/41 98 Italy: Transactions in In York City accounts (12/6-31/40): Federal Bureau of Investigation report (Elans) - 1/16/41 270 Japan: Transactions in Ter York City accounts (12/6-31/40): Federal Bureau of Investigation report (Klans) - 1/16/41 270 Sweden: Transactions in In York City accounts (12/6-31/40): Federal Burean of Investigation report (Klans) - 1/16/41 270 $witzerland: Transactions in Sex York City accounts (12/6-31/40): Federal Bureau of Investigation report (Xlans) - 1/16/41 270 U.S.S.R.: Transactions in Yes York City accounts (12/6-31/40): Federal Burtan of Investigation report (Klans) - 1/16/41 270 (Detimed) last he is Inditime (Continant) Guld: Trance: Martinique: II des se 20 Ball who will repart his quin vitida a hours - 1/16/41 348 165 laber and Iges: Gald situation ant possible shipments for inlivery to reported = V Legation, lishn - 1/16/41 205,211 a) Belgian and Mid giù included Lend-Lease Legislation: Instinery by Mr - as for - 1/15/41 1 a) Release to be size If = until HQr gives viri personally b) Schware, Ente, Diagert, and Puley to precade 3: to en c) lesal of with staff nates 4) m issues testing with XII e) Attachments to rates: (1) estimated dollar expediture and receipts of British Expire, excluding Carab, from January 1, 1941. to January 1, 1962; (z) Trital Eingion's available follar chap ussets un January 1, 1942 (entificatial): (3) estimated lang-term Into instructs outside of United States; (a) bitte - rates compared de 1938 ni prevet finance acts; (5) sritis the the MT; (5) fiscal - of trust Main for fiscal year milag March & 1942. 25,35,37, 40,43,45 1) Questions that & be and Bi: 49,50 6) Press - 56 1) Insta E 9:30 meting - 1/16/41 na a) himi loss to be consulted 1) Neeting visit Frienal Reserve, Income and British Purchasing Esta. 145,179 b) Radio - 1) Inise, Rettinies, 3: and Young discuss bill and Bir's - - 1/16/41 172 Purvis, Puillips, Bir, by long, and Cochras discuss testing - 1/26/42 179 Più postions Bir et Stinem shout "giving any the Eary" - 1/15/42 212 led (Stanley) el family of Exchaquer emgratulate BY: = - - 1/17/41 50,222 ingh employer consurting Johnson's - = MY: testimy - 1/17/41 lisism Coudttee: ledits derived to settin reported by Young to at of Bir to Hill - 1/17/41 22 Military Flaming: Reports from Into trestal to Lothian - 1/16/41.. 271,74,353 ( - I I Book Page lar Conditions (Continued) Purchasing Essim: See also lat Conditions: Lend-Lease Legislation British Requirements for Steel in United States: lass - 1/17/41 34E 313 a) Game Dun provided with estimate of requirements - 1/17/41 333 British Supply Council in North America: Persunnel - 1/17/41 315 Jones' cald reception of Purvis and Phillips reported to Stimson and Inox by BUT - 1/17/41 323,324,325 Testing Order: Official sales of British-owned dollar securities, 2/22/40-1/11/41 352 Shipping: Losses - British, Allied, and neutral - 1/16/41 196 British Merchant Shipping Situation: Chief of Staff amerandum 197 Silver: Spain: State Department asked by Cochran concerning problem of refining and paying for approximately $750,000 worth of Spanish silver - 1/17/41 320 Steel: British Requirements for Steel in United States: Hass - 1/17/41 313 a) Gano Dunn provided with estimate of requirements - 1/17/41 333 White, Harry 1, to assist Vagner BE monetary study - 1/17/41 303 Willkie, Vendall L Trip to Ingland and DEL to accompany him discussed at 9:30 seeting - 1/16/41 110,175 1 January 15, 1941 9:35 1.2. BE AID TO BRITAIN Present: Yr. Lubn Yr. White Yr. Schwars Yr. Fell Fr. Foley Yrs. nots Yr. Cochran H.M.Jr: Now, I want to find out, where is the statement now? Has it been mineographed" Thite: This is the one which includes Canada as you wished. H.V.Jr: Yes. Now, what I want to do is this. Did you (Schwarz) have this thing mineo- graphed. Schwars: Yes. H.N.Jr: I take it Foley wants to go up on the Eill, to be there now, don't you, Ed? Foley: All right. H.N.Jr: I = not going up until later. You can whome E. I a not at all well, and I E going to stay here. I want Harry White to stay and I would like to get a chance to go over some of this stuff with him, but Chick, I want you to look at me. Until I personally tell you to release this thing, Regraded Unclassified 2 - 2 - you don't give it to anybody. Schwars: I will stay right with you. H.V.Jr: No, you go up there. Schwarz: I will go up now, and wait for you. H.M.Jr: What is the other one that is there? Schwar+: There are three. (See attachments 1, 2, and 3.) H.M.Jr: Have you got them numbered* White: There are just those two. H.M.Jr: What is the third one* White: The third one is 8. list of the various Empire assets which are not confidential which you may or may not want to refer to. H.M.Jr: Have you got those mimeographed? White: Yes, but I doubt whether you want to distribute them. H.M.Jr: Just so we understand it, Chick, you go up there now so you will be up there, and you can take one of the Negro messengers with you to sit on it, or one of your boys; but if this stuff gets out until I tell you to -- Schwarz: It won't get to anybody. H.M.Jr: I won't accept any excuses, do you understand? Schwarz: Right. White: Does Mr. Feis know that? 3 - 3 - Cochran: At your request I am getting this to Feis. I was just sending it over there to his office. E.V.In: Has it gone° Cochran: Hawkey is over there. I can stor him. F.V.Jr: You had better 20 and tell him until I want the thing released, it is not to be given out. Cochran: I will stress that. Thite: You had better call him right ever. Cochran: I will get Mr. Hull's office directly because Feis is there. R.V.Jr: Tell, just get that word to them, will you? Cochran: Surely. Then come back. Schwarz: That means the committee or motody. E.V.A.: Notody until I give you the word personally. I don't want this to be given to anybody, do you understand, and I won't accept any excuses now. Schwarz: You we't be given any. E.V.Jr: All right. It went over this morning to Feis* Thite: Just now. He said he had instructions to give It to him. It was about ten minutes ago. The Fritish had a copy last night. E.V.Jr: That is all right. Tell, you (Schware) night Regraded Unclassified - 4 - es well get un and don't you (Foley) want to get up on the Hills I don't want to troop in the whole bunch at once. I will be here, 38, and you let me know how the thing is going. I mean, supposing - in any case, you rive the : call not later than 10:30. Now, where is the place Foley: It is the Eouse Ways and Means Committee hearing room, Ways and Means, where we 2° on tares, That is the new House Office building. They moved it from the Foreign Affairs Committee hearing room because It wasn't big enough, and they are holding it in the lays and Means. I don't know nho is going with you, but you can 20 end Tuhn, you go on 11" on the Hill and I think it would be useful if you would let Professor Odegarde 20 with you. Vehns All right. S.M. be tell him to listen and if he sees some- thing - now, for instance, he said one thing walking home last night. I tried out this thing on the question of collateral. Ee said one thing, Reil, if they want collateral, it seems to 26 that Angland is offering of sufficient security through the fighting that she is doing now. Take: Offering us our security as collateral. EMIC I mean just - well, she is riving us security through doing our fighting and through the Fritish fleet, but I mean I want him there in case be catches something and be cen write it out and give it to Harry White and Earry Thite will give it to ze, but anyway, it is E treat for him. I IT doing it largely for that reason, do you see' Regraded Unclassified 5 - 5 - (Mr. Cochran entered the conference.) H.V.Jr: Did you catch him? Cochran: I got Mr. Hull's office. They hadn't given it to him yet, and I told Hawkey to wait and give it to Feis personally. H.M.Jr: Hawkey? Cochran: Hawkey is my assistant. E.V.Jr: Give it to Feis? Cochran: Yes, Feis is in with the Secretary now. H.M.Jr: What message did you give to Teis" Cochran: Feis is with the Secretary, and I told him it was not to be shown to anyone except Full until you released it, until you use it yourself before Congress. H.M.Jp: That is right, and you told that to Eawkey Cochran: No, I tolé it to From who is the Secretary to the Secretary. H.M.Jr: I see. How my conies are there over there Cochran: Just one of each. H.V.Jr: Well, Hull is entitled to it. Cochran: Yes. It was understood ! should give it to him. H.V.Jr: That is right. Rom, Danny, are you going up when I 20 un or what Pell: "ell, I will leave that to you. I will go Regraded Unclassified 6 - 6 - whenever you want ne to. E.N.Jr: Tell, IV thought us this. You never know what they are going to esk, you see, end I think that your train 02 this balance sheet would be useful to III, SO when I begin to go over it, I would like you to listen and you might pick = smething. I think if you and Thite stay here, tot be prevared. Enve your own 182 2 there and have everything public then and everything. That is his name? Bell: Heffelfinger. E.V.Ir: Have him ready and I would like to ED over this stuff with you end White. Bell: All right. You mon't & tefore 10:30? No, but I 11 going to start working on this right now. Now, does enybody went to tell me anything Foley: Do you want John there I the taxes E.V.In: No. Haven't you got it? Thite: Te have it, but I thought you might - we have the table but in case you went to call him to give you a rest, let him discuss it. It might give you a few minutes' rest. E.V.Ir: What, the comaristms? Thite: If they call on $ commerison, I thought you night say that their debt is very meh larger, probably almost as much as ten, but Kr. Sullivan is here who follows that closely, and that night give you several minutes' rest, if you are being pushed. 7 - 7 - F.V.Jr: Yes. Have you got the stuff? White: Yes. E.V.Jr: Have you (Foley) got it' Foley: Earry has got it. Be has got the charts. You can submit the charts for the record. It seems to me that no detailed explanation is necessary. E.V.Jr: No. O.E., gents. You call me in any event. Foley: I will call you in any event before 10:30. B.V.Jr: Then are you going to go up? Cochran: Do you need ne° E.V.Jr: I want you on the Hill. Cochran: When you go - E.N.Jr: That will be time enough. I will see you later. (Mr. Kuhn, Yr. Schwarz, Mr. Foley and Mr. Cochran left the conference.) H.M.Jr: Have you got 8 copy of this? White: No, I will give him one. Bell: Have you got ! prepared statement you are going to read H.M.Jr: You are going to hear it now. Nobody could give ne ! statement that I liked, so I il going to do it my own way. You people could sit both in front of me and make life $ little easier. Regraded Unclassified 8 - 6 - Have you (White) got something for Mrs. Klots" White: I was just looking for another copy. H.V.Jr: Odegarde has got an interesting mind. Just to digress & minute, the thing that interests me, he is going to do all of this studying on how to approach the thing, and he says, "Now, %. Norgenthau, do you want to do it the way the Arnor Company does? They take it and say to their employees, 'Now, you can buy these baby bonds.' Or -" this will interest you - he said, "Now, I em afraid you are not going to agree with me. Would you rather, for instance, go to the unions and have them spread it to the union members and let it come from the bottom un rather than from the employers down," so I said, "There is no choice. The whole purpose of the thing is to get the morale of the people - I at more interested in getting people interested, you see, in this thing rather than have it from the employer down;" so he said, Now let de ask you another one." I am just giving you this. I know I am killing time, but I want to. The other thing, he said, "Which way would you prefer, if a county raises a hundred thousand dollars, present them with an American flag, or would you like to say to them, "If you raise a hundred thousand dollars, that will pay for a pursuit ship." White: Well, the second. H.M.Jr: Well, I know, but I am giving it the way he is thinking, you see, so I said, "Well, me can't say honestly that that hundred thousand dollars will go, because we don't know about the bookkeeping; but you can say Regraded Unclassified 9 - 9 - that 8. hundred thousand dollars will buy 8 pursuit ship." He said, "That is correct." I just want to give you the kind of thing that he is talking to Bryan and these other fellows and when we finally get something in writing, I want you to sit in, but the fellow is approaching it -- White: A fresh approach. H.V.Jr: From the way I wanted. In other words, he is just as determined, I mean without my outting - to have the thing come from the grass roots un rather than from the banks down. It is interesting to have a man like that around. White: I would like to send for another copy of this. H.M.Jr: That is all right. He says that some of the advertising during the World War was the most God awful stuff you ever saw. Ee saw a picture of the bombing of the Woolworth Tower, the Woolworth Tower crumbling, and they say unless you buy a bond, this is what is going to hanpen, what they call fear. Bell: Yes. Of course, that was made un rather quickly. They didn't have any experience and a lot of it was terrible. H.V.Jr: When I told a few things to MacLeish last night, he said, "Gee, can I meet that man? I want to meet him. He sounds good to me." So I have arranged that he should see MacLeish. But as Harry put it, it is a fresh viewpoint. White: He has imagination. (Discussion off the record.) Regraded Unclassified 10 - 10 - S.V.Ir: You, this is not no reading copy, I home. Thite: I 11 but it is. is can have 1 larger 228 air to you. EMA That is rist les. Nots is here for. Sam you got tao more conies? Thite: Tes. Time 206 to les. Date. Estimated Dollar EDIC Receipts of the Pritish Imire, Initiar lests. That is my, ist't It" lite: It excludes est Danade gets is receipts, but It exclude nit Ingland et the rest of the British Irin ast :- 747 to and into lesis. in that in't, will you please? Bite: This encludes the Dinais 247 get :." lose. Yes retenter, 15 : toli 700, sté will probably get about 210 million dollars of poli ! per but that is M inzluded; 3 :t the include what for enamle, *ill late to TAX :- Canada, et this :: the 0217 117 It :- be extressed. ? tried it it doren different :: 2 + :: 2: 2" É the receipts X 26 Fritist Emin without -ch. I in't like to but enginity's feelings. well, = thrught they said they mated in. Thite: lell, lean is in, not not lende's receints. Canada is treated like ! foreign country, SO for !! this thing is concerned. E.Y.Jr: well, rheze is she* Regraded Unclassified 11 - 11 - Fell: low at the bottom there is 3 deficit. 7 300% understand it yet" Thite: Z think 54 will be clearer if you 20 through it and then we will go back to the title. E.% 14, inited Kingdom Payments To Be Vade in Total British Purchases From The United States. 15. Coohren returned to conference.) F.M. lete you Cochran) got 8. cocy of this Cochren: las. I just stoke to Feis in Vr. Bull's office, and be is telling Mr. Hull be has this but be is not letting him take it up to the Fill, even. Zie is afraid if be had :: in his TEDERS, it might get out; so Feis is mini to hold onto It and they will ohone 25 if they need - If they press Vr. Full for BIT Information, but they are not going to use this: and Feis is not even going to Time it to him to take un on the Hill. M.M iss Full started" Cochrate 3 VES just leaving there. They were just mitier some finishing touches on the state- ett. Thiter De bete the British order program down. P.M. Thet last thing they gave me marked January 6th not 8th, the thing that Purvis gave me which I DATE to the President, is the thing which gives the quantities but not the dollars that they will need, you see. You (Mckay) hed better find out from Young's office If be has got that un = the Hill with him. Ee is = there to be useful. If he hasn't got it, somebody Regraded Unclassified 12 - 12 - had better take it up to him. Now, "United Kingdom Payments To Be Made On Total Purchases From The United States. "1- Sums to be paid during 1941 on orders placed before January 1, 1941, one billion, 274 million. (In addition, $119 million will fall due after January 1, 1942.) "2- Imports from the United States not purchased through the British Purchasing Commission, largely on private accounts, 280 million. Total, one billion 554 million. "B., Purchases By Empire Countries (excluding U.K. and Canada) from United States during '41." Now, where have you defined Empire Countries"? White: I didn't think "Empire Countries" need to be defined, because every time we mention Empire Countries, we have to exclude Canada because Canada shouldn't be included. F.M.Jr: What are they? White: Australia, India, New Zealand, South Africa, and the Colonies, Hong Kong. H.M.Jr: Colonies? What colonies? White: Hong Kong, British West Africa. Cochran: It is really all of the British Empire except Canada. E.V.Jr: Do you know how many there are? Forty-four? White: Forty-four^ I didn't know there were that many. Regr aded Unclassified 13 - 13 - Cochran: I see, Bermuda and the Test Indies" E.V.Jr: Yes, I think there are 44. I think there are 44 governors, if 1 em not mistaken, for all these different things. "1- Commodity imports. 72- Payments for shipping, tourist expendi- tures, interest payments, etc. "C. Purchases by Empire countries, excluding Canada, from areas outside the U.S. requiring gold or dollars." That is excluding the T.S., what White: That is right. If I may have just one word of explanation, maybe it will clear it up. le have to exclude Canada every time we say the British amnire, but beyond that, the first one, A, is what the Valted Kingdom buys from United States. The second one is what other parts of the Embire buy from United States, and the thibd is what the whole Empire, always excluding Canada, buys from other countries besides United States. E.V.Jr: Purchased by the Empire countries, excluding Canada. Outside the United States. "1-Purchases by ampire countries (chiefly U.K.: from areas outside the United States and Canada requiring dollars, 247 million. "2-Payments by Empire countries (chiefly U.S.) to Canada and Newfoundland. T see. White: That is the one item they wanted to add, Regraded Unclassified 14 - 14 - and it was because of that item that # had to shift around all the -- Pell: The do they require dollars outside of -- White: Tell, they claim they have to pay dollars for Bolivian tin and Paraguayan lead, ed they say there are some things they can't buy without raying dollars or gold, end that is what It amounts to. That is not % net figure, because they also get some. That is what they pay cash. Fell: ! say there is E typographical error in E under TOT, "countries". I don't has whether you went to correct it or not. Bite: h. It is 21 little late. Fell: Yes. EACH Will anyway, "By amire countries, (chiefly in the United Kingdom to Canada and in foundland) 880,7 so the total dollar min- sent for all transactions for the year is at little over three billion dollars. Fell: That is already on the books. White: What 218 you say? Fell: This is what is already in the mill, 25 the books. White: Zell, this is their estimates of this coming year. Bell: Put the first item is just on contracts, or just 02 orders already claced White: Already in the mill, placed before Jenuary 1. Regraded Unclassified 15 : - I isst seyen four in for all Regraded Unclassified 16 - 15 - F.M. It is all right, that is just the TAY I feel. I mean, temporarily. That is your responsibility. They can place the orders, but they - they know that they can't te placed. T 873 tickled because Knudsen 287 tomorrow 70 ur and say in his testiming, " ell, Mr. Vorgentheu said : couldn't place these orders. the the then you can 387 you are %* revaltiing thes to place then because you are not certain that they will Lave the cast stail- etle to may for them. They TAT, but 701 want to -- 5.5.25 That is why I think it is sll :: the 7007. ALL right, 30 far, Def Is you see any holes" Fell: No. T have got 1 question when 700 get down to the bottom. My You see what I am proposing to no, In, is to just say 8 few words. Tow, rentlemen, = have come un here. I take : what you want to know from me is, what is the talance sheet of the United Kingdom E3 ve Late me have it and 23 the information has been viven to us by the British Treasury. Yes, for the first time in history I 17 zoin? to be atle to give you this information. I want to kind of show that this is something that has teen so secret and everything else, But I feel that the situation is such that before you rentlemen zant to vote 02 0933 02 the question of whether or not the United States Government should lend these materials to England, naturally you want to know her financial consition. Regraded Unclassified 17 - 17 - White: It is a momentous occasion for a country at war to inform the public exactly what their foreign exchange assets are. H.M.Jr: And I am doing this with the knowledge and the approval of the British Government. I mean, they have given me the permission to do this. Don't you think I ought to say that White: I think 30. Bell: Yes. Klotz: Yes. H.M.Jr: And I mean this is something which has never been done before. It wasn't done during the last war. But before you people take this step, the Administration feels that you are entitled to know the exact situation.' White: That statement is important. Would you want to say that they were a little reluctant but they realized, et cetera. H.M.Jr: No. Harry, I mustn't do anything to criticize them. White: Well, that won't be criticism. It would show the importance of the data. H.M.Jr: Well, I want to say that it was only after careful deliberation. Cochran: They left it to your discretion, do you want to put that in? H.M.Jr: No, and this is going to be just as much a surprise - just as much news to their own people as it is going to be to the people Regraded Unclassified 18 - 18 - of the United States, But we feel, et least I do, that the first thing before you pentlemen take any sters at all, you are entitled to know what is the consition of the Fritish present. Thite: That is the important statement. An/ at vertainly steet zoine to nake the mistakes that 26 made curitr the last You see, (73. said something I can't cuite marathrase. She sald to me, "Rency, unless you tell these reorle every- thing, we 826 no ilfferent than S. :, Morran 755 during the last 117. Thite: Do you think they will understand what you mean by not going to make the same mistakes unless you 20 02 and emlain that, because they are liable to think you are referring to the mistake if letting money? You might no into 5 further ex-lanation. S.M.Jr: The point that I want to ret over, here is something that in been guarded 30 secretly that notody it. As far 19 I know, never in the history of the world bes one government completely its tooks to another covernment, but the situation hein- -- litte: The hasn't trenti her books. in by Seven't there Thite: They have nade = statement. E.I.In: will, it is the information that is in the books. White: Yes, but Té caven't seem it. Regraded Unclassified 19 - 19 - B.V.Jr: Well -- White: I mean protect yourself that way, that is all, that this is information they have given you. E.V.Jr: But I want to give this a little build-up, see. Pall: I don't want to disturt your line of thought that you worked out, but I would change the term balance sheet' to show them the financial status of the Fritish Government AS it relates to the United States dollar, because they were very particular in their cable, as I understand it, that this doesm't sean that they are out of cash internally, and the other thing is that this is not 8 balance sheet, it it more in the nature of an operating state- ment, see, call it = financial status. Thite: Financial status in relation to the United States dollar. That is 8 good one. It is the financial status. Fell: In relation to the dollar only. It is financial status of the Pritish Government as to their dollar position. Thite: Yes, that is all right. Status and position. H.V.Jr: As to their dollar - as to their dollars. As to their dollar position. Bell: You could say as to the dollar. White: As to their dollar position. Bell: That is all right. Regraded Unclassified 20 - 20 - You speak of taking the position in dollars and taking the position in sterling. Cochran: It is the dollar position. M.D: This is the financial status of the Fritish Government as to their doller position. Or, ES to their dollar needs. Thite: Dollar assets and needs. Well -- Tell: Position covers the needs and assets. E.M.Ir: Well, a word won't matter. 13 to their dollar position. Thite: Put you are going to say it orally. I.V.Ir: Tell, I 12 roing to have this, but I En going to say it orally. hite: It is not going to te in the printed statement at all E.M.In: No. Doller Receipts. The Dollar reneints by U.K. from U.S. "]- 7.3. emports of merchandise to 7.S., 165. V- Tet talance these 428 all estimates, aren't they^ Thite: These are all their estimates. E.V.Vo: I will out that down as soon as I get the other sheet. These are all estimates, are they* Regraded Unclassified 21 - 21 - Nots: It says so on top. Well then, why not say "The financial status" Thy not say, Estimated financial status" Thite: Well, I think that is implied when you say Tinancial status.' Fell: Your statement will carry that through, because this, I take it, will be inserted in the record. Thite: Yes. Any dollar receipts by United Kingdom in United States. "1- U.K. exports of merchandise to U.S. "2- Net balance from U.S. to U.K. on shipping, tourist expenditures, interest payments, etc. "B. Dollar receipts by Emoire countries (excluding Canada) "]- Commodity exports." Thite: That is rubber, tin, wool. E.M.Ir: I see. "2- Australian gold exports to U.S. "S- South African exports of gold." You separated those two for some reason Thite: well, some comes direct to United States and the others get to United States eventually, through Great Britain. E.M.Ir: Now, "Canadian assistance to U.K." What is that? Regraded Unclassified 22 23 1 I White: That is in the form of repatriated securities. That is, England expects to pay Canada during the year 260 million dollars in her own securities. She will give back securities which Englishmen had owned. It is just the way she give us back our securities. E.V.Jr: What happens to the Canadian gold? Thite: Well, they say it isn't there, it is Canada's. H.M.Jr: Yes, but what does Canada do with it? White: Canada's position with United States, Canada will in her relations with us gain gold. She will have about 200 million dollars more at the end of this year than she has now. she has a favorable balance. Bell: Even in spite of her war purchases in '41° White: Yes. I have her sheet if they ask for it. I didn't want to bring it up. H.M.Jr: You had better not. But she has? Thite: Yes. That is one of the reasons why they may not like to include it. But they have a. surplus of United States dollars to be received by Canada during 1941, 198 million dollars. H.M.Jr: Harry, just remember this, we don't have the permission of the Canadian Treasury to release their figures. Wait a minute, just 8 second, take it easy now, so therefore if I have to stall I can simply say, "Gentlemen, I an not prepared, but in a week I can come back again if you want me to, to give the Canadian position." Regraded Unclassified 23 - 23 - White: That is 8. good way to do it. Then you won't have to tell them you haven't got permission to give it. H.M.Jr: Oh no. Check, Dan? Bell: Yes, it is very good. White: But I think you could say, Yr. Secretary, if they do ask, that they are not in the same position as England. They don't one us - give them a general idea what it is. H.M.Jr: I can say this. "I have simply been assured by Mr. Clark, representing the Canadian Treasury, that as far as they are concerned for this year, they are all right." White: They are in 8. different position. They are all right. Bell: They can take care of their requirements up to September. White: For next year? H.M.Jr: For this year. That is what he said. White: And then you can give them the exact data. H.M.Jr: And then if they say, Well, why doesn't Canada help England more?" "Well, they are buying back their securities as fast as they can." White: They are buying back -- H.M.Jr: I can say that is a matter between Canada and England, and I am not prepared to talk about it. Regraded Unclassified 24 25 I I Thite: I think so, because there may be some doubt is to whether she is buying then back so fast. B.N.Ir: They tell M yesterday, just to digress a minute - you were here, Dan - that the night before last this syndicate offered 80,000 shares of Nontgonery Ward et three o'clock st the price it closed at the market, and inside of 8. dem minutes the whole thing WES sold. White: They probably could have done that any time. E.V.Jr: And this 182 of Dominick & Dominick, "You know, Yr. Morgenthau, it is the easiest thing I ever SET and none of us can explain it. le can't understand why E group will buy 80,000 shares of Nontgemery Ward at the market's close, cas nimite after market closed, but they won't by it one minute before, so I said, Tell, maybe there is something wrong with the Iem Tark Stock Exchange if they don't want to buy it." And I thought Schenker would fall out of his chair with laughter. Ee loved it. Be thought it was marvelous. Thite: I told Sir Frederick over the phone because be raised the question again about Lever brothers and I told him what our information was ed be said be was surprised, he didn't know it. be dim't say it wasn't so, he just said be us surprised. H.M.Jr: Yes. White: I think you are - to "C", Dollar Receipts. H.M.Jr: °C. Canadian assistance to U.K. 260. Total dollar receipts by tambire countries excluding Canada, the billion 155 million. Total deficit to countries other than Canada during '41, 844." Regraded Unclassified 25 - 25 - That means - total dollars to other countries. Does that mean other countries in the Empire? Thite: No, we are now talking of the whole empire. Countries other than Canada. H.V.Jr: Does that mean the whole world? White: Yes. Fell: Including the United States? White: Every country. H.V.Jr: Ind then the total dollar deficit with Canada, 620. They want to make that stick out, do they? Fell: That is the difference between the sale of securities, 260 and the 880, see. It shows right up. in England. S.V.Jr: There is the 880° White: On the expenditure side. Bell: The last item. White: Payments ty Canada. H.M.Jr: Total deficit of the British Empire, one tillion, 460. Gee whis, they raised that on ne, didn't they? Now, before R go on, do you want to say anything, Dan Bell: Vine relates to the next statement. We show = deficit of one billion 464, and I take it that what you are trying to show here is that the British can't place any more orders because they have just got enough liquid assets in the billion 775 to take care of the one billion 464. Regraded Unclassified 26 - 26 - Mr. St, nut it the other RET around, if you don't mind. What I £1 trying to show with all the power that I have got in ne, is that they have got enough may to pay for the orders they have already placed. Bell: That is right. Put 20 new orders. Tow, shere 15 go from here -- That is the point. -ellt :- other words, the goint they will raise, b. Secretary, they are all right, they have got plenty of money to meet their deficit and they have got 300 million dollars left over from these statements without explanation. Itst is right. But I en willing to say, "Pat these figures, the direct investments, 900 million, I don't know bow moch they can cash in on then. It is going to take time and - but the point is, gentlenen, that if they were able to get a hundred cents 02 the dollar, of which I have grave doubts, they have got enough money to finance then- selves to the end of the year. White: And they have to have some working balance. But what I have been trying to show you is that the reason se need this Hll is that these requirements that they want - zer orders that they need SO desperately to continue fighting, they haven't got the mmey. Thite: That is right. Un They just haven't got the 20087. Cochren: There has already been $ retardation in the placing, hasn't there Regraded Unclassified 27 - 27 - S.V.Jr: Oh yes. White: I have something on that that I would like to give you after that, but I called Sir Frederick about that billion dollars. The direct investments" Thite: Direct. I said, To: must have S. firure." Ee wanted to make it lower, and It finally compromised 02 the 900 million, because you had used it before; ni I said It wasn't far from what Jones De others might use, and we nade it about. & weld Date preferred to S&T "not to exceet, because be thinks It will be closer to sir or 700, so the only difficulty between this and what we would have liked is, they have firect investments, of about 900; and he mild Late liked to 387 "not to exceed, but I thise be is mier- stating. Say, that 205 has struk since yesterday. Tasn't it more the that Thite: Lell, me were including some gold that If mon't -et here since leary, 245, SO TE decided me had better DATE it ES of Junuary 1 and exclude that. The British Government has 33 million dollars of gold scattered In various carts of the morld. Most of this gold, however, is in areas from which it cannot be shipped quickly or safely to the United States. "British tanks, private tersons and corporations have balances in the inited States of 305 million. The British Government feels that these balances are at the sinima level necessary for the continued conduct of business, and are therefore not available for use by the Pritish Government." Regraded Unclassified 28 -11- 25 - I think it is all right. Bell: You SET the gold is not included, Harry, which will me in lawy White: To. That galt is indubled in their regular receipts during 2 pe. Dell: The 105° White: 29 with Mi - ,19 a 11. DE they will late to net that Bell: The enterts im left tin mily mined" White: Yes. Bell: That is ET estimate if the nines. That isn't smilable imelistaly de. It is over the year. In that statement there, you were worrying about E state If you wanted to - the rther Zi, to financial status. Tou amli MT ES melp = estimated, As nearly EST THE CET extimate 50 this time." White: It is the British that has estimated must of it - III to orders, but the other. Im DEI IT, is may as can be estimated, this fign If tarior securities recorted by britisi IS n° January f, 616 millim inllars, that thes not include 140 millim inllars of arims types of securities which they ET not retain DEL the marketed easily. In fact, to in't think they could be easily. in IT Australian dollar securities." H.V.Jr: Sey that quin. White: There is 140 tillin in - Regraded Unclassified 29 - 23 - L.I.Jr: In the 515° Thite: In addition to the 516. There is 140 million dollars which has been frequently mentioned here. That is what kind of securities? Thite: Well, it is instrulian and New Dealand and dollar securities, or optional dollar. They doubtless LEVE stome value. there are the properties located late: They are loans of other countries - the investments EN not in the United States. They are loans that have been floated in dollar securities. well, if - Wite: There is E little bit more velvet is all. LA: What do they call Australis" Thite: Comonwealth of Australia. If they vanted to torros 10 million dollars, they night late borrowed it in Sen York. White: That is right gi flosted 1 dollar loan. Some of then are ortional. Now, they do have some market value, SO that in case -- Bell: Fell, that in't the kind of 8. -- Onchran: I think It is mre. Bell: That is not the kind of an obligation you are talking about. Regraded Unclassified 30 - 30 - White: They floated an Australian loan in dollars. Bell: I take it that Australia may have borrowed, say, from Belgium, in Belgian francs, and there is & provision in the bond that the Belgians, the holders, can get American dollars. White: That is optional. There are 8. lot of them and all together they make 140 million. F.V.Jr: I think when I get through, I have got to say this, "Now look, gentlemen, this is at rough estimate. I may be off 50 or a hundred million dollars, 07 I may be off 200 million dollars, but this is as good - you have got the best that I can give you." White: And you got it from the British Government. E.N.Jr: "And I got it from the British Government." Thite: They accept the responsibility for these things. E.V.Jr: "I got this from the British Government. I may be off a couple of hundred million dollars, but at least I am giving you the best that I have got; and if, while the bill is in the progress of going through Congress I get any additional information, I will furnish it to you promptly. White: Or if you want any information that we can get. H.M.Jr: See? Bell: They may come back with the question, "Tell, have you checked these figures and do you feel them fairly reliable?" Regraded Unclassified 31 - 31 - Thite: They are very apt to ask you that question. Tow -- H.M.Jr: I know how to enswer that. White: It is 8 difficult question. E.V.Jr: I can answer that. "I went to say that in 17 dealings with the British Government during the past seven years, at no time have they ever wilfully misled De. Thite: is far 8.5 I know." E.N.Jr: Tell, I nean -- Bell: No, be can't say that. Cochran: You have no evidence of ever being misled. M.I.Ir: I 17 going to say, "In AT dealings with the British Treasury, I have been entirely satisfied and I have never known an instance where -- ..' White: That is right, "You have never known = instance where they have given you misin- formation. E.M.Jr: Ind I have DO reason to believe that this information they have given ne ism't correct within the realns of human margin of error. Bell: That is not unusual in this kind of state- ments. E.V.Jr: And I will 387, "After all, you gentlemen have zot to remember that they are being bombed daily' and can I say - they have sever said it, you know - "You know the British Treasury is -is it 11 Downing Street? Do you know it has been completely destroyed? Regraded Unclassified 32 - 32 - Thite: So, I didn't know that. M. All their records and everything. fell: Is that right* MM Sure, he told me this when he came here. Be said to ze, "You know, Yr. Morgenthan, you asked ne for these things. Tell," be said, "the Pritish Treasury is DO more. Contras: You see, it faces on Thitehell, Earry. I: is just around the corner from No. 10 Downing. The It would be very interesting if you coulé say that. Unrecorded telephone conversation riti lr. Foley.) Thite: The President wrote part of Full's state- mest. Min Ee 258° Thite: Some preliminary portion, I don't ba in mch. Tell: There did you get that from? Thite: Berle. Pell: Trote whom White: the President contributed part of the state- nett. They were still revising there whet I talked to then both times. I suppose for ne to 80 this ET is just unheard of, but I an not going to get calé feet at this time. Regraded Unclassified 33 & I I White: Oh, I think that this is indeed the best my. Particularly after his prepared state- ment. I don't see what you could add. This is the important information. The minute the Press gets this, they will disappear and come back later. E.M.Jr: Noz, have you got your South American stuff* Thite: Yes. E.M.Jr: There is that White: I would like to take up something with you before that, if I may. E.Y.Jr: The President of the United States calls ne !!! st 20 minutes to eleven to tell ze what to say. He calls me us and said, "I just wanted to kid you. And then he proceeds to tell me what to say. I don't know if I understood what he said, but be seid, "Non, don't be too definite" and so forth and so 02 and be sure of what Vr. Full says and if they offer any islands as security, rementer that they had better pay us to take the islands." I says, "Don't worry stout that. I know how you feel about the islands.' Well anyway, I can't - (Unrecorded telephone conversation with Kr. Foley.) H.M.Jr: Anyway, I told the President what I proposed to do about By statements, and everything Regraded Unclassified 34 - 34 - else, and he said, "That is all right." White: Mr. Secretary, Mr. Bloom is going to ask you some questions which me planted with him, and I have got to have time in the car to tell you what they are. I don't know if you can do it right now. H.V.Jr: No, do it in the car. Estimated Dollar Expendituris did Receipts of 35 Pritish Empire, Excluding Cannie, from January 1, 1941 to Jonuary.) 1942. (in Milions of U. S. Dollars) Dollar Expenditures 1. C.S. payments to be made on total purchases from the E. B. La Sums to be paid during 1941 on orders placed before Jan. 1, 1941. .$1,274 (In addition, $119 million will fall due after Jan. 1, 1942) E. Imports from U. 3. not purchased through the British Purchasing Commission, largely on private accounts. 280 $1,554 B. Purchases by Empire countries (excluiing C.E. and Canada) from U.S. during 1941 1. Commodity imports. 333 2. Payments for shipping, tourist expendi- ture, interest payments, etc. 5 338 C. Purchases by Empire Countries, excluding Canada, from aress outside the C.S. requir- Ing gold or dollars 1. Purchases by Empire countries (chiefly J.E.) from areas outside the 7,5, and Canada requiring dollars. 247 2. Payments by Empire Countries (chiefly U.L. to Canada and Newfoundland. 580 1,127 Total dollar requirements for all transactions. $3,019 Dollar Receipts de Dollar receipts by U.K. from U.S. 1. 7.4. exports of merchandise to C.S. .$ 165 2. Net balance from U.S. to U.L. or shipping, tourist expenditures, interest payments, etc. 15 $ 180 3. Dollar receipte by Empire countries (exclud- LOS Canada) 1. Commodity exports 560 2. Australian gold exports to U.S. 75 3. South African exports of gold 450 1,115 C. Canadian assistance to U.E. 260 Total dollar receipts by Empire countries, excluding Canada. $1,555 Total dollar deficit with countries other than Canada during 1941 J. Total dollar deficit with Canada during 1941 620 Total dollar deficit of British Empire, excluding Sanada, during 1941 1,464 Total receipts and deficit CEI operations with all countries other that Canada during 1941 $3,019 Treasury Department, Varuary 14, 1941. Division of Monetary Research. Regraded Unclassified 36 2 CONFIDENTIAL UNITED KINGDOM'S AVAILABLE DOLLAR EXCHANGE ASSETS OK JANUARY 1, 1941 (In Millions) Gold in U. S. or en route $ 205 Official dollar balances 54 American securities -- reported by British as of January 6 616 Total liquid assets 675 Direct and other investments about 900 Total dollar exchange assets $ 1,775 The British Government has $33 million of gold scattered in various parts of the world. Most of this gold, however, is in areas from which it cannot be shipped quickly or safely to the United States. British banks, private persons and corporations have balances in the United States of $305 million. The British Government feels that these balances are at the minimum level necessary for the continued conduct of business and are therefore not available for use by the British Government. Treasury Department, January 14, 1941. Division of Monetary Research. Regraded Unclassified 3 37 Estimated Long-Term Foreign Investments of the United Kingdom Outside the United States The following estimates are based on a number of studies, most of which were made by British economists before the outbreak of var. Most of the investments are in sterling securities; a large part of the Canadian investment 16 in Canadian dollars, and some of the other investments are in the respective domestic currencies. However, for convenience of presentation, the estimated nominal value of the investments has been converted into sterling. The market values, where given, are calculated from current market quotations of the securities. Since market quotations are not available for 8 large part of the investment, no total market value can be calculated. Even where estimates of market value have been nade, they have only a limited significance, for the future market or collateral value will depend on the rapidity with which the socurities are liquidated, on the general course of the war, and on many other unpredictable factors. Of course, the figures of nominal value are of even more limited significance. (Million Founds) Government Railways Other Total In British Empire Canada Nominal 75 187 219 481 Market (70) Australia Nominal 425 3 75 503 Market (410) New Zealand Nominal 131 1 14 146 (125) India Nominal 300 250 550 Market (250) British Africa Nominal 188 250 438 Malaya Nominal 6 78 84 Other Nominal 31 Total in British Nominal 1,125 191 886 2233 Empire Regraded Unclassified 38 - 2 - (Million Pounds) Government Railways Other Total In Latin America Argentina Nominal 45 263 83 390 Market (32) (52) Brazil Nominal 75 38 47 160 Market (14) ( 5) (22) (41) Chile Nominal 20 20 65 105 (2) ( 5) Uruguay Nominal 18 14 10 42 Market ( 8) (1) (12) (21) Mexico Nominal 38 90 # 173 Market (1) (1) Peru Nominal 6 1/ 23 28 Market (2) (4) ( 5) 25 Cuba Nominal 2 25 (2) 28 Market (2) ( 1) Venezuela Nominal Nil 3 18 20 Market 0.2 (17) (17) Colombia, Ecuador Bolivia,Paraguay, Central America Nominal 50 International Nominal 6 Total in Latin America Nominal 204 451 317 1002 In Asia China Nominal 200 Japan Nominal 50 Netherlands East Indies Nominal 50 Philippines Nominal 8 Total Ásia 308 Regraded Unclassified 39 - 3 - In Europe Nominal 250 In Other Areas 2/ Nominal 75 Total U.K. Investments outside United States - Nominal Value 3868 Not shown separately. Mainly Iran, Egypt, Iraq and Portuguese East Africa. Treasury Department, January 14, 1941. Division of Monetary Research. Regraded Unclassified 40 COPY COMPARISON OF BRITISH TAX RATES UNDER THE 1938 AND PRESENT FINANCE ACTS 1. Personal income ter rates and exemptions (2) Exemptions 1938 Present Single person 10 100 is 100 Married person 180 170 Each child 60 50 (b) Earned income credit 20% 16-2/3% (Maximun (Maximum + 300) 6 250) (e) Normal or standard rates On first if 135, 1938 Act and first b 165, present Act 8-1/35 25% On balance 25% 425% (a) Surtax rates First bracket 6 2,000 to to 2,500 52% 10% Varimm 415 472% (on over 1 50,000) (On over 1 20,000 (e) Amount of normal and surtax for married couple, three children : Tax : Percent Income : 1938 : : Present Increase : Act = : if 6 1 2,000 343 579 68.8% 4,000 1,065 1,698 59.4 10,000 4,062 5,985 67.3 20,000 9,975 14,548 45.8 100,000 63,875 86,548 35.5 2. Corporation income tax rates 1938 Present 25% 4258 Regraded Unclassified 41 - 2 - 3. Excess profits tax No excess profits tax was in effect under the Finance Act of 1938. There was, however, a National Defense Contribution equal to 5 percent of profits in the case of corporations and 4 percent in the case of individuals and partnerships. The Finance (No. 2) Act of 1939 enacted an excess profits tax at the rate of 60 percent. This has been increased to 100 percent of profits in excess of base period earnings for certain years 1935-1937. 4. Purchase tax Under the Finance (No. 2) Act of August 22, 1940 the British imposed a purchase tax of 33-1/3 percent on the wholesale value of certain lururies and 16-2/3 percent on certain goods in common use, exempting food. 5. Excise taxes = 2 : Percent : 1938 : Present : Increase Spirits, domestic, per Imperial proof gallon £3,12s, 6d L4,17s,6d 34.5% Beer, domestic, per bbl. of 36 Imperial gallons fal, 4a 14, ls 237.5 Cigarettes, per thousand weighing 3 lbs. 61, 8s, 6d 12, 18s, 6d 105.3 Tea, Empire, per lb. 6d 6d I Coffee, per cwt. 14s 14s - Regraded Unclassified 42 well, gentlemen, there is the story. To understand it fully, BE must also remember what is happending to British resources at home. The Fritish, with one-third our population, are spending at a rate of $12,000,000 a day OC this mr. they are spending sixty percent of their national income for war purposes. Their annual rate of expenditure is between four and five billion pounds - an anount that would be between forty-eight and sixty billion dollars a year if we, with three times their population, were putting forth the same effort. of this colossal expenditure the British are meeting over coe and one-fourth billion pounds, or about one-third of their annual burden, out of taxation. The normal income tax rate in Greet Britain today is 42.5 percent, compared with about 4.4 percent for us. 1 married man in Regland with to children, earning $1,600 a year, pays $65 a year in income tax; a married - with two children, earning $10,000 a year, pays $3,450 a year to his Government. 1 standard brand of cigarettes in England costs thirty cents a pack today, all of the increase in price having been due to taxation. A purchase tax of 33-1/3 is added to the váolesale price of all luxury goods, and of 16-2/3 on many other commodities. I could go on, but I think I have made Ky point. That I wanted you to rember is that the British people are not only dodging the bombs and fighting for their existence, but that they are also micing a stupendous effort to pay for this mar by themelves. Regraded Unclassified 43 British Expenditures since the Har (in billions of pounds) Sept. 3, 1939 through Ang. 31, 1940 2.61 Sept. 1, 1940 through Dec. 31, 1940 1.39 Total expenditure since the war 4.00 Expenditures in At the annual rate of approximately June, 1940 L 3.5 October, 1940 4.0 December, 1940 4.5 Budget Estimate 1940-41 (July, 1940) Expenditure L 3,467 willion Revenue 1,360 # Loans 2,107 . Regraded Unclassified 44 British Government Debt as of November 30, 1940 (in billions of pounds) Gross Debt L 10.62 Funded Debt 8.18 Flosting Debt 2.44 Growth of British Government Debt (in billions of pounds) March II, 1936 7.80 . 1937 7.80 - 1938 8.03 . 1939 8.16 - 1940 8.94 November 30, 1940 10.62 Regraded Unclassified 45 Estimated revenues of Great Britain for the fiscal year ending March 31, 1941 : Estimate for 1940-41 = (willions of dollars 2/) Ordinary Reverne: Inland Rovenue Income tax $ 1,872 Surtax 332 Estate duties 344 Stamps 76 National Defense Contribution) Excess profits tax 280 Other inland revenue duties 4 Total inland revenue $ 2,908 Customs and Excise Customs 1,141.6 Excise 765.6 Total customs and excise $ 1,907.2 Motor vehicle duties 140 Total receipts for taxes $ 4,955.2 Treasury Department, Division of Tax Research y The estimates do not include any revenue from the Purchase Tax. The Inland Revenue figure is based on Excess Profits Tax at 60 percent rate; the rate of Excess Profits Tax was raised by the Finance Act of 1940 to 100 percent, but the resulting additional yield will not be received by the Exchequer, except to a very minor degree, until 1941-42. 3/ Pound converted at $4.00. Source: Financial Statement (1940-41), Supplementary Fisancial Statement (1940-41). 46 January 15, 1941 10:49 1.1. H.M.Jr: Hello. Operator: Stimson. Henry L. Stimson: Hello, Heary. H.M.Jr: Harry, I got your request that you wanted to know about a statement. I have no state- sent but this is what I'm gring to M. S: Well, sozeone else has asket for n. I didn't know it but I'm very glad to hear what you're going to III. H.M.Jr: Well, I have before se visa: I all the financial status of the tritish Government as to their dollar predition, and they authorized ne at 7:00 s'elock last night that I could use it. Sew In stoply reading from that. S: You're reading from that H.M.Jr: From that. It's actually their position as to their needa for the not if this year and --- S: It's a - balance sheet? H.M.Jr: Well, I just call it their financial status ..... S: Of the British Expire. H.M.Jr: Yes, as it relates = thair millar position. S: Relating to dollar pretim. H.M.Jr: And it shows what their deficit is and that they have resources affident to nover those for the balance of this year. But my whole discussion will be in relation to this and I have nothing prepared other than these sheets of X which relate purely to figures, pm m. S: Yes, I see. Well, DOW I'm mying as I Regraded Unclassified 47 - 2 - start out that I assume - here are the words - ay language, I was just finishing my paper. "In what I have to say upon this bill I propose to confine myself as far as possible to the matters which have come under my observation as Secretary of Var. In respect to the wider aspects of world conditions which the bill 16 designed to meet, I assume that you gentlemen have been fully advised by the Secretary of State; and in respect to the financial questions of credit, security and international exchange which may be involved in the transactions proposed by the bill - covered by the bill - I assume that you have been advised by the Secretary of the Treasury." You see? E.K.Jr: Well, that's right. in So I'm not going to go into those questions. I'm going in to show the need of this concentration of authority of the competing various purchasing commissions and in the interests of the United States, and in the interest of speed particularly. E.N.Dr: Well, there'll be no conflict because as I say I'm going to keep purely on the financial. in Yes, I see. Well, I'm keeping purely on the mechanics of production and procurement. S.M.Jr: 0. K. 3: All right. E.M.Jy: I wish you luck. S: Same to y ou. When do you go on? B.M.Jr: After Hull, whenever that 1s. I'm going up there now in about five minutes. 5: Ies, I see. He went on at 10:00 didn't he? S.H.Jr: Yes, but they say he VBS late getting started. Regraded Unclassified 48 - 3 - S: I see. You'll be through probably this morning, won't you? H.M.Jr: I will if they put me on. S: Yes. Well, they've called for me at 2:00 o'clock. H.M.Jr: But my own guese is that they'll not get through with Hull this morning. S: Oh, you think he's going to take the full morning probably. S.M. Jr: That's my guess, but we'll know. S: I know. They're having it in the Ways and Means Room are they? H.M.Jr: I don't know, Harry. B: I think so, yes. H.M.Jr: I don't know. My secretary has it. 3: Apparently Sol just missed the chance of having a first-rate, full, 3-ring circus. H.M.Jr: 0. K. Well, I'll be seeing you later. S: All right. H.M.Jr: Thank you. S: Thank you. Regraded Unclassified 49 January 15, 1941 Cody of the questions to be asked the Secretary at the Hearing before the Foreign Affairs Committee this norning on the Bill (Aid to Britain). L. loss Ingland have may to pay American manufacturers for the orders that she has already placed? 2. los England have my more orders she wants to place? 3. DEZ the French collapse est dom the mey that the allies had planned to use for American WE? orders? 4. law march is the mer costing England $ day? 5. law is England raising this money? 6. How ines the English tax burden C cumpare with ours? 7. has Ingland increased her tax rates to help pay for the mr! 8. How does it happen that the British Empire has so little realy cash left? 9. Supposing England is no longer able to get military surplies in this country, how long do you think she will be able to continue fighting? Regrade Uncla ssified Treasury Department Division of Monetary Research 50 Date 1-15-41 19 To: Mrs. flots The Secretary and I have a wager (a bottle of Argentine wine) as to the tumber of questions that appear in the annended document that he will be asked during the course of the hearings in both the House and the Senate, I stated that be would be asked at least 50 of the enclosed, and he is betting the that he will not. MB. WHITE Branch 2058 - Room 210 51 PRIMARLE quartions that X - w ⑉ sometant = & 110 1 I I 1 as i a i 1 in doos she have? 2. Does that include the cash ml goid of the brittle Expire? 3. in much yold does the British Supdro produce 6 year? that happons to all the british gaid - ties? 4. In mach each and gaid have Britein's Allies? m cas't England berrer - of 110 5. Im't ⑉ of the French gold in with territary and cas't England - are 6. Doesn't England have other assets beathles and al gald? 7. for about Britich holdings of United States mark- ties and plants is this country? s. that about Constion and other Supire heldings of United states securities? 9. that 10 the value of British foreign involued outside the United States and particularly in a Vestern 10. too sech eash, gold and other foreign unto has England used w already? 11. Dees Ingland have my other valuable until that 1 I 1 a I imp di Étal processions is the Testers Regraded Unclassified 52 - 2 . a. not is the probable of the aid to Britein stamp " Day unler 1. - mash is Britain currently buying is this country) 2. in má of this is abo is a position be pay for free her m resourcest 3. have you any Men have mob England vill vent to buy in the United States on aredit during the next years 4. It Britain nov unable to place any orders because of Lesk of funds? 5. Under the Land-Lease Bill, will England pay for non- ement purchases herselft Is England able to pay for all her purchases other than areaments? 6. Do you intend to lend England the many to buy farm supplaces as well M aressents? 7- Are lease going to be made only to England or to the Deminious and Allies as well? a. they can't Canada produce 2020 of England's needs? my doem't England borrow mare free Canada N that the will have to berrow less from us? 9. for does England pay for her parchases from Canada? 10. Are Comedian parchases is this country going to be handled is the same way as British purchases? c. that 10 the likelihood of our being paid beet and have will It be done? 1. Rave the British proposed my arthot of repayment? 2. Do you anticipate that they will pay " back in the - kinde of goods that we lead theet 3. in de you propose that they will pay back the garden been that they have used - the shells that are exploied, the planes that are creaked, and the - that are vera out! Regraded Unclassified 53 - , - Regraded Unclassified 4. After all, Mr. Secretary, 10m't this going to be am outright gift? they not give it to them 5. will DE what repayment is kind after the vap -- sidering that our ove areased industry will be n big? 6. If England pays us back in goods, what 10 the United goods? States Covernment going to do with the (a) will any of those goods be competitive with our OVE output? (b) How will England be able to buy the things she will need after the var if also gives " the important part of her exports? 7. will the goods they pay us back in have to pay import dutiest who vill pay the import daties? s. If Ingland can pay us in goods which " vast, why can't the sell - the goods ve want and pay in may? 9. Are these lease going to bear say interest 10. les may years are they going to be gives to pay it beck? 11. Supposing England Leess, visit change have 90 then of being paid beak? 12. If England is 00 exhansted at the end of the var that abo cannot pay, are " going so vipo 1t off as a total loss? 13. the do you think England is & good credit risk If the hom't paid book her last var debtt 14. Box much does England - us free the last wart 15. Box me) 414 England OVER pay us on shat she berreed in the last veri 16. Suppecing England good socialist, what INFERENCE is you king that they will pay back any of these dobta? it 6 --- M --------- Itsue paid I 1. L in 21 a L. & pay w pt a M land a mu 1 I - = = - L unined 1ER7 ⑇ i 4 - - - 5 - I 1 3 - 20 I I as $ I -- I s -- I I - - 5 - 1 M ----- Regraded Unclassified 55 - 5 - 11. De you propese to change year tax program If this bill good through se M to get note taxes! 12. that taxes would you recoment be increased 13. How such of our Amount Plant Expansion has England financed) 14. Since 16 archaving difficulties filling our - orders for planes, tasks, ets., how are W going to fill additional British orders for the SARE things! :3. cut would happen so the Security Market if ingland tried to unload all her :, 5. securities instead of purchasing on credits extended by the U. $, Government! 16. Could England get & fair price for her investments here at a forced sale' 17. Couldn't the 1. P. C. take these securities over and hald the for sukile! 13. rouldn't it be better to have Regland leave her marl- thes and investments M collateral spint a leas this to try to sell the and 19. APO you going to require the British to put up all their V. S. cosurities or securities is other countries M sollateral for the lean? % APO you going to take a seripage en her future produc- ties of rebber, tia, gald and other pay anterials? 21. wouldn't it be better for this country to take securi- ties and investments which the British have rather than gold? 22. Is there say PRIN why - shouldn't take over her Argentine securities 23. Nov may compities have the British sold already! 24. Fee't w really be financing England's wast 25. Res't American saldiers fellow American dellars' 26. will this bill be in keeping with the spirit of the Idease Ast? Regraded Unclassified 56 6 - 27. If this Loan Le - in stad, a langs, will - I I to = a ITTM I = X I I á $ $ a I a E E I the President's introtion the pd rid of the silly dollar sign? 28. Isn't this the begining st before trade? 29. the net use the Relistin Pand to myst may for with - 1. Are the British total there our to NJ the Date needs without borrowing tra WE 1. New mush La the leited lington many is the present an 2. Bow mah have - and the other Deminions and in this - 3. liev does it - with that Minis and her x a 1 1 n i 1 I I 1 I = 1 1 I 1 a a 20 Jii Y an 1 1 E I fisml your à 27 I a 1 I total the I 5 I 1 a . a ! s 1 E PARKING cell M that - Benkephare 6. Is England incometing - - tusties be pay to the wirl 7. New less the bills - burden - with mm! 1. Next is ligital's Imagest deflats for the - fiscal your 9. that is the billish you dobt - - - Inc 12 increased during the - 10. Dose legital - inflation - 11. will RP aid to leginal work inflation is legal 12. Are all the bills - that and fureign - mills to the w offert? Regraded Unclassified 88 - 7 - !!. APV within other Allies using their assets? :4 in shout the dollars which English individuals and have is this country) the can't they be well 15. Is inflam poing to sell all her American socurities before the lend-lease plan good into operation? 16. Is ate gaing to sell all her branch plants in the 1. 5. before the lend-lease plan goes into operation! as unit they pole their securities and branch Name 2171 readily that ner 679 being taken 10 are 101 that the bill will M and with & alaims met to the :- Is an MI) financial POLICE why the powers granted use the lend-lease bill should not be limited to 1 years' ?, a then any financial reason why I limit should not x pet If the sermit of aredit extended under the lend- :- Mill? :- If legined is going to be permitted to buy non-war rests, M well At what limit is going to be ml se net purchases 4, a will determine the priority of American and English see-ta 5. 7111 all the british Empire be able to buy whatever gots they at under this bill! " est stops are being taken 10 make were that prises 59 keys reasonable! T- If - are willing LIVE to lend goods and money to England, will they to expert to w all the goods they -, or will they BIG their emerts for dumping in retur emeries in competition with American experts! 1. APR WI gaing to fines England's purchases in Latin Maria as wall M is the Palted states! 1. that unreadable is there that England will got all she - tre her - Empirel Regraded Unclassified 58 January 15, 1941 The material contained in this mimeographed attachment was the only prepared material the Sec- retary had when he appeared before House Foreign Affairs Committee to testify on H.R. 1776 (Lend- Lease Bill). He had typewritten copies of pages 1 and 2 with him but left them with the Chairman. 59 Estimated Dollar Expenditures and Receipts of British Empire, including Camada, from January 1, 1941 to January 1, 1942. (In Villions of U. 3. Dollars) Dollar Expenditures 1. 1. L payments to be made on total purchases from the 1. 5. 1. Suns to be paid during 1941 en orders placed before Jan. 1, 1941. $1,274 (In ailitim, $119 million will fall the after Jan. 1, 1942) 2. Importe frur I. 5. not purchased through the Mist Purchasing Commission, - largely IIII private accounts. 250 $1,554 3. Purchases Y Emire countries (excluding LL end Danada) from U. 5. during 1941 L. Creamility imports. 333 2. Payments for shipping, tourist expendi- hre, Interest payments, etc. 5 338 C. Purchases by Empire Countries, excluding Canada, from ETTRE outside the U.S. requir- ing mli If inllars 1. Purchases by Empire countries (chiefly T.L.) frum ETBLE outside the U.S. and Camaia requiring dollars. 247 2. Payments by Empire Countries (chiefly V.S. to Danada and Newfoundland) 880 1,127 Total inllar requirements for all transactions. $3,019 Dollar Receipts do Dollar receipts by LL from U.S. 1. U.S. exports of merchandise to U.S. .. i 165 2. let balance from T. 3. to U.S. CO shipping, tourist expenditures, interest payments, etc. 15 $ 180 3. Dollar receipts by Empire countries (exclud- ing Canada) 1. Commity exports 560 2. Instrulian gold exports to U.S. 75 3. Smith African exports of gold 480 1,115 260 0. Canadian assistance to U.L. Total dollar receipts by Empire countries, $1,555 excluding Danada Total itllar deficit with countries other 84 than Canada during 1941. Total dellar definit with Canada during 520 1941 Total iollar deficit of British Empire, 1,454 excluding Deniade, during 1941. Total receipts and inficit on operations with all countries other than Canada $3,019 during 1941. 60 CONFIDENTIAL UNITED KINGDOM'S AVAILABLE DOLLAR EXCHANGE ASSETS OF JANUARY 1, 1941 (In Millions) Gold in U. S. or en route $ 205 Official dollar balances 54 American securities - reported by British as of January 6 616 Total liquid assets 875 Direct and other investments about 900 Total dollar exchange assets $ 1,775 The British Government has $33 million of gold scattered in various parts of the world. Most of this gold, however, is in areas from which it cannot be shipped quickly or safely to the United States. British banks, private persons and corporations have balances in the United States of $305 million. The British Government feels that these balances are at the minimum level necessary for the continued conduct of business and are therefore not available for use by the British Government. Treasury Department, January 14, 1941. Division of Monetary Research. 61 Estimated Long-Term Foreign Investments of the United Eingdom Outside the United States Da following estimates are based = at number of studies, dost if vica were nade by British economists before the outbreak of 137, Xist of the investments are in sterling securities; an large part of the Canadian investment 1s in Canadian dollars, and some of the other investments are is the respective domestic currencies. Envere, for convenience :f presentation, the estimated nominal Tile of the investments has been converted into sterling. The market values, viere given, any calculated from current writet purtations of the securities. Since market quotations are act avrilable for a large part of the investment, no total market miss 080 be calculated. Irea visare estimates of market value have been nade, they LITE mly 2. limited significance, for the future artist 07 collateral value will depend ce the rapidity with visa the socurities are liquidated, 00 the general course of the war, and to my the unpredictable factors. DE course, the figures of notical value are of even zore limited significance. (Millite Founds) Railways Other Total It British Emire lanais Sominal RE 187 219 451 Market Acstralia Nonimal 3 75 503 Market (412) : Sev Tealand Nominal 1 14 146 (125) Inita Socinal y 250 550 Parket (250) Eritish Africa Sominal 168 1/ 250 438 Malaya Nominal 6 78 84 Staar Nominal 31 - - Total :- British 1,125 191 386 2233 impire Regraded Unclassified 62 - 2 - (Million Pounds) Government Railways Other Total In Latin America Argentina Nominal 45 263 83 390 Market (32) (52) Brazil Nominal 75 38 47 160 Market (14) ( 5) (22) (41) Chile Nominal 20 20 65 105 ( 2) ( 5) Truguay Nominal 18 14 10 42 Market ( 8) ( 1) (12) (21) herico Nominal 38 90 44 173 Market ( 1) ( 1) Peru Nominal 6 1/ 23 28 Market (2) ( 4) ( 5) 25 Cuba Nominal 2 25 ( 2) 28 Market (2) ( 1) Venezuela Nominal Nil 3 18 20 Market 0.2 (17) (17) Colombia, Ecuador Bolivia, Paraguay, Central America Nominal 50 International Nominal 6 Total in Latin America Nominal 204 451 317 1002 In Asia China Nominal 200 Japan Nominal 50 Netherlands East Indies Eominal 50 Philippines Nominal 8 Total Asia 308 Regraded Unclassified 63 M I I In Europe Nominal 250 In Other Areas 2/ Nominal 75 Total U.K. Investments outside United States - Nominal Value 3868 Not shown separately. 2/ Mainly Iran, Egypt, Iraq and Portuguese East Africa. Treasury Department, January 14, 1941. Division of Monetary Research. Sey Mergenthan's resturn 64 w LOAN LEASE HEARING SECRETARY HORSENTRAU SHIRITTED A STATEMENT w ESTIMATED BOLLAR NO RECEIPTS or THE BRITISH DIPIRE IN 1941 INDICATIONS IT WILD it SHORT If $1,464,000,000 OF THE AMOUNT EDD инк THE TEAR. 1/15--RS351P w LOAN LEASE HEARING as HORGENTEAU TOOK THE STAND HIS AIRES GAVE OUT a STATEMENT SHOWING THE ESTIMATED DOLLAR EXPENDITURES MD RECEIPTS OF THE BRITISH DIPIRE, EXCLUSIVE of CASABA, VEICE INDICATED THAT $3,019,000,000 would It mp TO PAY FOR IN THIS COUNTRY MRING THE CALEMBAR YEAR, or WHICH $1,464,000,000 was LISTED as TES *TOTAL DOLLAR DEFICIT or THE MITISM DIPIRE, EXCLUDING CAMADA, MORE 1941." THIS was TOLLOWED If A STATEMENT BARKED "CONFIDENTIAL" WHICH SHOULD THAT THE UNITED KINGDON'S AVAILABLE DOLLAR EXCHANGE ASSETS ON JAM, 1, 1941, AMOUNTED TO 81,775,000,000. THE ASSETS VIRI HAD ⑉ as FOLLOWS: COLD IN THE 5. s. 42 DI BOUTE--6205,000,000. "OFFICIAL DOLLAR BALABCES--654,000,000. *AMERICAN If BRITISH as or JAM. 6--8616,000,000. TOTAL LIQUID ASSETS $875,000,000.) "DIRECT MD OTHER INVESTMENTS. ... ABOUT --$990,000,000. "TOTAL DOLLAR EXCLAINE ASSETS--41,775,000,000. M-A Regraded Unclassified w LOAN LOCASE HEARING 65 A THERE STATEMENT SUBMITTED If INSEDITEAD LISTED ESTIMATED LONG- TON FORKIGN INVESTMENTS of THE WITD KINGDOM OUTSIDE THE WHITED STATES AT 3,868,000,000 POURS STEALING. 1/15--BS405P 20-0 DI LOAD LEASE HEARING IN LISPONSE TO A QUISTION VERTHER BRITAIN was IN a POSITION TO PAY FOR ITS PERCHASES, SAID: "THIS FINANCIAL PICTURE VRICE I'M GIVEN YOU I'M SATISFIED WILL PAT THIS YEAR FOR WEAT ALREADY HAS ID BOOGYT. VID IT CONTS TO FINDING THE DOLLARS TO PAY FOR ANYTHING LIKE WEAT THEY MAY NEED, TEST JUST HAVEN'T GOT IT." 1/15-RS412P 432 LOAN LEASE KIARING, IN THE "COMPIDENTIAL" STATEMENT OF THE BUTER KINGDOW'S AVAILABLE DOLLAR LICEANGE ASSETS ⑉ JAN. 1, 1941, IT WAS STATED: THE BRITISH GOVERNMENT HAS 833 MILLION or COLD SCATTERD IM VARIOUS PARTS OF THE FORLD. NOST or THIS COLD, SWIVER, IS IN MIAS 720m VEICE IT CANNOT K SHIPPED QUICKLY on SAFELY TO THE WITD STATES. "MITISH BAILES, PRIVATE PERSONS 10 CORPORATIONS HAVE BALANCES IN THE WITER STATES or $305,000,000. THE BRITISH GOVERNMENT FEELS THAT THESE BALANCES ARE AT THE LEVEL NECESSARY FOR THE CONTINUED CONDUCT or DISINESS MB ARE THEREFORE BUT available FOR USE IT THE MITISH GOVERNMENT." A. NOTATION REVEALD TRAT THE TIGURES VIRI FROM THE TREASURY'S DIVISION OF MONITARY RESEARCH. 1/15-90422P CASTEINE Regraded Unclassified 66 w LOAN LEASE KEARING. IN SUBMITTING TXI LIST n BRITISH ASSETS IN OTHER NATIONS, INCLUDING SOUTH MERICA, HORGENTHAU EXPRASIZED THAT THEY VERE IN STEDLING, NOT DOLLAR BALANCE, MD THAT THEIR LIQUID VALUE WOULD UPON WORLD CONDITIONS AT THE TIME TREY VERE CONVERTED TO DOLLARS, AND THE RATE AT VEICE THEY WERE SOLD. XI was ASKED IF THE FRENCH HAD AMIS CONNITMENTS HERE THAT THE BITISH COULD TAKE OVER. IMPORTER ABSVERED THAT LAST JULY 1, SHORTLY AFTER FRANCE FILL, THE BRITISH TOOK OVER THE EXISTING FRENCH CONTRACTS. of NIGHT POINT OUT," II SAID, THAT AT THAT TIME FRANCE HAD DOLLAR BALANCES HERE THAT VERE ABOUT TUICE WHAT THE ENGLISH HAD." II TOLD REP. HAMILTON FISH THAT THE BRITISH HAD PAID OUT AND TAKEN DELIVERY BY JAB. 1 W 61,337,800,000 OF MATERIAL. FISH VANTED TO KNOW NOV NUCK DOLLAR BALANCES - SECURITIES INCLUDING COLD THE BRITISH MIGHT HAVE IN LONDON e OTHER PARTS of INCLARD, THAT NIGHT BE *TRANSFERRED HERE FOR apit.' "I HAVE LISTED HERE EVERYTHING THAT THE UNITED KINGDOM MAS," SAID. "I MII ADVISED BY 1 STATEMENT If THE FEDERAL RESERVE DOARD THAT BRITAIN HAS III SOMETHING OVER $7,000,000,000," FISH SAID. их TO THE LAST REPORT of THE BOARD. ABSURED THAT THIS INCLUDED CENTRAL GOLD RESERVES OF THE DOMINIONS AMOUNTING TO $2,735,000,000, ALSO DOLLAR BALANCES 07 THE DOMINIONS AMOUNTING TO several BILLION. "THESE FIGURES, AS FAR as I KNOW, ARE NOT IN COMFLICT," KE SAID, POINTING OUT THAT THE RESERVE DEARD FIGURES WERE BASED ⑉ INFORMATION AVAILABLE LAST AUGUST BEFORE THE "BATTLE OF BRITAIN" BECAU. "I HAVE - REASON TO BELIEVE THAT THESE FIGURES I HAVE GIVEN YOU ARE NOT ACCURATE," INSCRIPTION SAID. 1/15--0043P CASTER Regraded Unclassified G2 ABD LOAN LEASE HEARING. FISH ASKED MORGENTRAU VESTHER THE BILL BOULD GIVE THE PRESIDENT POWER TO SKIZE FOREIGN SHIPS IN 9HR PORTS AND GIVE THEN TO ANOTHER COUNTRY. -160,* SAID NORGENTHAU. FISH ASKED WRETHER IT CONFERRED POSER TO ORDER THE CONVOY OF SHIPS. *NY INTERPRETATION IS THAT IT DOESN'T GIVE WIN ANY POWER KE DOESN'T NAVE," MORGENTHAU REPLIED. *DOES IT AUTHORIZE NIN to GIVE AWAY ANY PART OF THE IN REPLY MORGENTHAU READ FISH THE LANGUAGE OF THE BILL AUTHORIZING THE SALE, LOAN, OR "TRANGFER" OF DEFENSE ARTICLES. NE ALSO READ THE SECTION WHICH DESCRIBES THE TERMS AND CONDITIONS FOR SUCH ACTION, REQUIRING A DIRECT OR INDIDECT BENEFIT TO THE UNITED STATES. "I WOULD not SAY II COULD GIVE THEN AWAY," MORGENTHAU SAID. "DOES THIS BILL CANCEL THE JOHNSON ACTT FISH ASKED. *IM THE TREASURY," SAID MORGENTHAU, VI FEEL IT DOES NOT." "DOES IT CANCEL THE MEUTRALITY ACT1* "IT DOES ALTER IT, YES, AS FAR AS THE CREDIT PROVISIONS ARE CONCERNED." WHEN FISH REFERRED TO THE AUTHORITY TO REFIT AND OUTFIT BELLIGERENT SHIPS, MORGINTHAU SAID THERE WAS "MOTHING IN THE NEUTRALITY ACT IN REGARD TO REFITTING A SHIP so I BON'T SEE THAT THIS CHANGES THAT." "VOULD YOU OBJECT TO THE PLACING IN THE BILL OF A CEILING AS to THE AMOUNT--SAY $2,000,000** FISH ASKED. *I THINK THAT IS A MATTER FOR THE COMMITTEE TO DECIDE," MORGENTHAU SAID. *1 THINK THE SITUATION CHANGES so RAPIDLY THAT MOBODY I'VE COME IN CONTACT WITH CAN SAY WEAT THE CEILING SHOULD BE, NOT ONLY AS TO OUR OWN DEFENSE BUT AS TO OTHER COUNTRIES." Regraded Unclassified 68 "DON'T you REALIZE," ASKED FISH, "TEAT IT MES NOT PUT ANY LIMIT 005 PUTTING INTO THE HAMDS of ⑉ MM POWER TO SPEND WILINITED FURST *SOMEBODY WILL HAVE TO APPEAR INTORE THE APPROPRIATIONS CONNITTEE," MORGENTHAU REPLIED. NO TIGURE IS NONTLANER IN THE BILL BECAUSE IT BOES NOT CARRY AM APPROPRIATION." 1/15--MASTP CASTER ADD LOAN LEASE HEARING. REP. CHARLES KATON ASKED TO CITE THE *COMPELLING REASONS FOR THIS PARTICULAR BILL AT THIS PARTICULAR TINE." MORGINTHAU CITED THE BRITISH FINANCIAL POSITION. *THEY NEED VAST ARMAMENT IN THIS COUNTRY," X SAID. "THIS 18 THE ONLY PLACE TREY CAR CET THEM. THEY HAVEN'T GOT THE DOLLAR EXCHANGE TO PAY FOR TED." HE SAID THE BRITISH, GIVEN TO THE no OF THE YEAR, WOULD M IN A POSITION TO PAY FOR ALL ORDERS THEY HAVE PLACED. "VE'VE NEW HEARING a GREAT BURRAN ABOUT GIVING THINGS TO BRITAIN," EATIN SAID, AND P TO - VE'VE NEW HAKING ID PAY THROUGH THE WOSE, HAVEN'T WE." NORCENTRAU SAID THE EMILISH W BEEN FORCED TO PAY CASH FOR EVERYTHING. "so, IF BRITAIN IS our FIRST LINE or DEFERSE, we MAVEN'T COVERED OURSELVES WITH ANY PARTICULAR GLORY," KATON SAID. *I AGREE WITH YOU," THE SECRETARY REPLIED. TINKHAM ASKID VITY BRITAIN SHOULD SELL SOME or ITS LISTED SECURITIES. MORGENTHAN REPLIED E was NOT ATTEMPTING AND HAD BO AUTHORITY TO SAY "WEAT BRITAIN SHOULD 02 SHOULD NOT N° BUT ONLY was GIVING THE CONNITTEE THE FINANCIAL PICTURE or THE BRITISH EXPIRE. CASTER 1/15--805052 Regraded Unclassified 6'd ND LOAN LEASE HEARING. TINKRAM ASKED IF MORGENTEAD VOULD AGREE TO AMEXIMENTS REQUIRING THE BRITISH TO PUT UP COLD "To SECURE THE AMERICAN TAXPAYER." *1 AM VERY SORRT TO SAT I HAVEN'T THE SAME CONFIDENCE IN THE PRESIDENT TOU HAVE," TIMERAM SAID. *IF YOU WILL PARDON MY SAYING 50,0 MORGENTHAU SAID, *TOU ARE PROBABLY IN THE HINORITY." REP. ROBER 3. CHIPERFIELD WANTED TO KNOV THE FULL EXTENT of FINANCIAL COMMITMENT INVOLVED IN THE BILL. MORGENTHAU SAID II WAS NOT PREPARED TO SAY NOV SUCH MONEY WOULD If REQUIRED TO CARRY OUT THE POLICY INVOLVED IN THE BILL. REP. JOHN N. verys TOLD NORCENTHAU HE WAS "TRANKLY AMAZED* AT THE SMALLNESS OF MITISH ASSOURCES. NORCENTEAU SAID " HAB INCLUDED IN HIS FIGURES "IVERYTHING THE BRITISH COVERNMENT CAN LAT ITS RANDS or TO PAY FOR VAR SUPPLIES. MORGENTHAU ABMITTED THAT THE BILL WOULD MODIFY THE BEST LIMIT *TO THE EXTENT THAT THE PRESIDENT WILL SAVE TO BORROW FOR OUR OUN DEFENSE* AND TO CARRY OUT THE BILL. II EXPLAINED BOUIVER THAT *IF YOU PASS THIS BILL AS IT IS WRITTEN THE DEBT LIMIT WILL STAY JUST WEERE IT IS.* 1/15--V0523P CASTER REP. JOHN N. VORTS, AFTER HEARING SECRETARY MORGENTRAU PRESENT A PICTURE OF GREAT MITAIN'S IMABILITY TO PAY FOR FURTHER PURCHASES IDI, DUBBED THE ARMS MEASURE THE "LEB-LOSE" BILL. He SAID RIS 12-TEAR-OLD see HAD COINED THE PERASE. 1/15--W0324P Regraded Unclassified 70 ABD LOAN-LEASE REARINE. IS RESPONSE TO QUESTIONS n шенот, THE SECRETARY SAID "THERE IS VIRTUALLY NO COLD LEFT IN INCLARD EXCEPT AS IT MELONUS TO OTHER COUNTRIES." III SAID WHATEVER was LEFT WAS "INCLUDED IF TOO ITEMS -- $203,000,000 COLD IN THE 1. s. 00 in $33,000,000 COLD *SCATTERED IN VARIOUS PARTS n THE WORLD." *I DON'T BLANE YOU FOR ASKING THE QUESTION," MARCENTRAD SAID. THE FIGURE IS ALMOST unselievably LOW. HUNDT ASKED IF A *CEILING* or LIMIT TO THE AUTHORIZATION SHOULD at WRITTEN INTO THE MILL. NORCENTHAU SAID III HAD LEARNED *NOT TO ATTEMPT TO ADVISE A LEGISLATOR ABOUT HIS BUSINESS," AND THAT was FOR CONGRESS TO DETERMINE. ASKED BY REP. MARTEL de JOHNMAN WERTHER THE BILL CARRIER THE IMPLIED POVER TO DELIVER BEFENSE ARTICLES IN AMERICAN SHIPS, MORGENTRAN SAID: "WY COUNSEL SAYS 10.° JONKHAN ASKED RIN VECTURE THERE WAS NOT IMPLIED POWER TO *SELL, EXCHANGE OR TRANSFER* ANYTHING PRODUCED WITH THE $17,000,000,000 ALREADY APPROPRIATED FOR NATIONAL DIFERSE. AFTER CONSULTATION WITH HIS AIDES MORGENTHAU REPLIED: "IN THE TREASURY DEPARTMENT'S OPINION THE ANSWER IS YES. "INCLUDING WARSHIPS1® ASKID JONEMAN, "THAT'S OUR OPINION," morgentrau SAID. "OTHER DEPARTMENTS MAY DIFFER WITH US.* FISH ASKED IF THE STABILIZATION no HAD BEEN USED TO EXTEND CREDITS TO BELLIGERENTS. IT HAS NOT BEEN USD, norgenthan SAID, WITH THE EXCEPTION or LOANS TO ARGENTINA AND CHIMA. THESE LOANS vers NEGOTIATED ONLY AFTER THE MATTER was TAKEN UP WITH THE HOUSE AND SEMATE BANKING AND CURRENCY CONNITTEES AND *THEY CAVE us A VOTE or CONFIDENCE. Regraded Unclassified FISH ANNOUNCED THAT THE FOLLOWING PERSONS HAVE ACCEPTED uis INVITATION TO TESTIFY JAN. 21 AND 221 WINDELL WILLKIE, JOSEPH KOMEST, HAMFORD MACHIBER, ISSUMAN THOMAS, WILLIAM J. GRACE, CHAIRMAN, CITIZENS KEEP AMERICA OUT or WAR COMMITTEE, CHICAGO, GERALD L. K. SMITH, NATIONAL CHAIRMAN of THE COMMITTEE OF OUT MILLION, DETROITS VERNE MARSHALL, CHAIRMAN OF THE NO FOREIGN WARS COMMITTEE; AND KUGH s, JOHNSON, 1/13--W0602P CASTER ADD LOAM-LEASE HEARING. IN RESPONSE TO A QUESTION FROM BLOOK, MORGENTHAU SAID THE VAR IS COSTING BRITAIN 12 HILLION POUNDS A DAY, OF UNICE ABOUT FIVE WILLION, or ABOUT 40 PER CENT, IS RAISED THROUGH TAXES UD THE REMAINER IT BORROWING. WHEN BLOOM ASKID FOR A COMPARISON OF BRITISH AND AMERICAN TAXES, MORGENTHAU SAID "THIS IS COING TO If A STOCK TO SOME of YOU. KI READ OFF A COMPARATIVE LIST OF VIGURES SHOWING THAT IN DISLAND A NAN WITH A $5,000 INCOME WOULD PAY $1,496 IN TAXES COMPARED TO 875 IN THE UNITED STATES, AND so on UP TO THE BAN WITH A $100,000 INCOME who IN ENGLAND WOULD PAY $76,000 AND IM THE 8. s. $43,000. 1/15--V0605P CASTER Regraded Unclassified 72 COMMENT ON SECRETARY MORGENTHAU WJSV 6:00 January 15, 1941. Bob Trout: Secretary's financial statement was that Great Britain has not nearly enough dollars to pay for anything like they might need. Great Britain will be nearly E. billion and one half short of that amount. Edwin C. Hill: No comment in regard to Secretary Morrenthau. All comment was in regard to Secretary Hull's speech. 10:30 Kews Secretary Morgenthau's testimony on Britain's financial set-up disclosed the following findings: That Britain vill be able to pay cash for three billion isllars' worth of var material ordered BUT when it comes to finding the dollars for anything like what they say need, they just haven't got it. Morgenthau's statement also shows that the United States 18 the only country where Britain cen get enough Var material to continue fighting. Great Britain faces 8. financial dilemse which only President Roosevelt's lend bill can prevent. -00000- Regraded Unclassified 73 COMMENT ON SECRETARY MORGENTHAU WJSV 6:00 January 15, 1941. Bob Trout: Secretary's financial statement was that Great Britain has not nearly enough dollars to pay for anything like they might need. Great Britain will be nearly a billion and one half short of that amount. Edwin C. Hill: No consent in regard to Secretary Morgenthau. All comment was in regard to Secretary Hull's speech. 10:30 love Secretary Morgenthan's testimony on Britain's financial set-up disclosed the following findings: That Britain will be able to pay cash for three billion dollars' worth of war material ordered BUT when it comes to finding the dollars for anything like what they may need, they just haven't got it. Morgenthau's statement also shows that the United States is the only country where Britain can get enough war material to continue fighting. Great Britiga faces a financial dilema which only President Ressevelt's lend bill can prevent. -00000- Regraded Unclassified 74 Paul Sullivan, 6:30 P.N., BJST Secretary Morgesthan, too, is in favor of passage of the bill to aid Britain. On the basis of the financial statement be submitted, be said that Britain would pay for everything bought, but that the does not have enough dollars. She simply does not have mough for big-scale purchases. Secretary Morgenthau said Great Britain already had paid out $1,337,000,000 for United States supplies, She is paying out or will pay out, be said, another a of $1,393,000,000. He also said that Great Britain has in the United States gold balances, securities and investments monting to $1,775,000,000, also that the United States is in favor of helping Great Britain. John Kennedy, WAL, 9:30 P.K. Secretary Morgenthan reported today that Great Britain is about broke, el are going to do the same as the people in the book of Oliver Telst, ask for mre. At least 50 percent of their hr Debt is paid but France and Germany passed the debt up entirely. KIST, 8:55 P.M. Secretary Morgestion stated today that he use matisfied that Britain could pay for the planes and supplies she already has ordered, but that when it COMBIE to paying with dollars, Britain does not have them, Be submitted a balance sheet of British assets. Regraded Unclassified 75 Jamuary 15, 1941 Leds, Jr., KL. 7:00 P.M. There vi DE valice is what Mr. full arid today in support of the President's program. be made it rather clear that he considers that circumstances not avents make it necessary to go into a program of this del at this time, a progrem which involves a revolutionary departure from American tradition of the past. But Mr. Hull said today that the situation is unlike any we have over faced in the past: therefore, 11 requires more drastic action than - have ever taken in the past. le said the only reason Germany has been unable to cross the Biglish Channel and invade the islands is because those waters are still under centrol of the British Mary and that 90 must have complete main! of the high sess at all lines. According to Mr. Hull, if we Loss control, Germany may be able to m/m 8 direct attack on the festern Senisphere. For 5. Secretary of State, Mr. Full used some very blunt and simple legap today. Se left the soft gloves of diplomatic language in his dest at the State Department today. is read his six and one-half page statement and naturally it had been carefully edited in advance and been agrord by the White Louse. Se went into the historical background of the present war and be named names--he called Germany, Germany, Italy. Italy and Japan, Japan. Be said this Government has tried, on numerous comsiros, to convince Japan that the only wise course for it to follow - the course of fair treatment with equal rights to all nations in- volved. Be said Japan had, time after time, disregarded the rights of the United States and other Governments in the Far last, and the official Expanse Government had openly declared its intention was the exclusive domination of the Par Last, the next step be said will Italy's seizure of Ethiopia and Albasia. Be said the Ritler Government had steadily followed a course of making promises and breaking them. He said her course was to make even greater desands the moment earlier demands have been art, 30 said there is ne hope of a peace understanding because there is no hope of a. guarantee or way of getting one, that the Aris powers will live ap to the agreement they make. " seid that this legislation to ase Britain is absolutely Deces- sary: be know of no other legislation that will accomplish these of jectives and be considered this bill to be nacessary itself. Mrs. Egith form Rogers asked Hall if be objected to the committee calling in former debessadors Wilson, Bullitt and Kennedy. He said the decision is is their bands, if they wish to testify. and the only restriction mile be that they could not divulge diplomatic, confidential inform- tim. Otherwise they could My skat they wanted to say. here has been a rather peculiar situation developing in the Foreign Affairs Committee. It seems that the Ranking Republican on that committee is Representative Saxiltom Fish, of Sew York. He has given out & list of vitzesses who, be BRYS, will appear before the committee next week, including the - of Mr. Wendell Willkie and various other people. Regraded Unclassified - 2 - int >sirman 310m says it's all news to tis. 31 usual rule of procedure 11 for the Chairman to decide et the should be and when called. Mr. Fish has no more power the anymody else or the committee so Mr witnesses may or my act me. Secretary Morgenthau remained = the rat until nearly six o'clock tonight. Secretary Hull was, incidentally, all None when be testified. Ee est os the chair in the Hays and - and unswered all questions himself. E. Morgenthau, on the contrary, MI flanked with advisers on both sides and every time a question was used be would whisper to them, get advice, confer with them before accepting kr. Morgenthan said the war is costing Great Britain about $60,000.000 B day. which the gritish Government is paying $40,000,000 by texation and borrowing the other $30,000,000. Be said the British have sufficien cash available to DAT for the war another year to come, smilable or in prospect, but after that time their cash will be exhausted. in seid the Brittah had about $3,000,000,000 in the United States is montille assets at the opening of the R. that 10, securities and assets maily turned into cash. Be said they had already spent $1,300,000,000 12 this country on materials >lready purchased and had had shipped " time, and that they had placed orders for additional materials and to about another $1,300,000,000. Dont makes $2,600,000,000 of the $3 billion already come and : he said that British fais in this sustry are Just about started Ee said taxation in Great Britate at the present time 19 singrering-that the average nac is the ritret, the everage wither- the income tax charged him is approximately tez time the income tax that is charged in this country. Perhaps the most important statement by le. Morgenthan today was one of policy. One member observed that lest Britain is still getting tremendors gold reserves out of Africa not the with anked Mr. Morgenther whether that gold should be shipped to the Exital States in part payment, at least, for the materials we provide it the the Mr. Morgenthau said he bes think #0; in fact, be said true Britain should do every- thise := her power to sake part payment for the morials we surply. It manection with Vr. Hull's statement stert mistaining control over the bigh sens there was one highlight that wight interest you. Am Agairal testified before the committee and und for morey for mosquito craft, revier from 70 to 120 feet leag. redit in speedboat design, and depending 02 speed for defense. Regraded Unclassified 77 Throse - V.M.A.L., 6:45 Delhip 1/15/41. Secretary of State Bull VIB having an interesting time with the Foreign Affairs Committee today. He said Germany can easily C7089 the Atlantic If Britain 1s defested. Fe was asked if be considered the aid to Britain bill absolutely Decessary to our national defense. He replied that he had been unwillingly compelled to believe that it 1e. He said that it 1a not 8 violation of the Johnson Act. Se admitted that that bill :- in violation of the Eague Conference but explained it would sot apply in the present VET, Germany and Italy are not parties to that Convention and Germany and Italy have paid no attention to such principles of international law. -- said it 1s ideal for 25 to rely on the rules and principles of neutrality for safety but that the German program 1s one of world-movement and the only course for us to follow is to all Britain and ne used these words: "I cannot in good conscience sivice my fellows to follow the course of Holland and Belgium". Appeasement - Ball ridiculed the idea that German, Italy or Japan could be agressed. Representative Fish disagreed with the idea that Germany could RC easily cross the Atlantic. Representative Tinkhan said passage of the bill would set up E. dictetorship. Representative Bloom came to Hull's rescue and rebuted the Representative from Massachusetts (Tinkham). Tinkham then wanted to know if we would rush to the help of Russia if the need arose. Bull answered that the question vas 100 theoretical for Tinkham asked if ve had abandoned all neutrality. Hull answered 20, but that the law of self-preservation had begun to asqert itself. One point made by Congressman Tinkham was that the war aid bill would give the Fresident the power to create an act of war. Ball answered that the President -- Secretary of the Treasury Morgenthau followed Secretary Hull and showed the Congress statements of Great Britain's financial standing, showing that the British would be unable to pay for war orders placed is the U.S. this year. --- In other words the British will be short about $1,664 million. Regraded Unclassified V.R.C., 7:45 p.m., following foreign news: 78 Washington: The Administration told the story today why the President has asked for unlimited aid order. There was laid before the Congressional Committee on Foreign Affairs, by two Cabinet Officers who have the inside on the story - Morgenthau and Hull - information which has come to them concerning the financial standing of the British. Hull, Secretary of State, of course, did not deal in dollars. Bull's main argument vas propounded in the question as to whether control of the high seas shall pass into the hands of aggressor powers. He said Germany could easily cross the Atlantic if Britain is defeated. Neutrality offers no protection for any man now. He thinks guns are safer. W.O.L., 9:00 p.m., Heatter. Wednesday, January 15, will occupy a permanent page in American history in years to come. - Some will certainly say that January 15th Secretary of State Hull virtually proclaimed a new policy for America. Be said that the old law of self preservation has begun to awsert itself. In years to come Americans will read about Bill 1776, a bill in behalf of American safety. Hull said passage of the measure would not mean dictatorship. - Mr. Hull spoke quietly: "I must be frank, in my opinion there is danger. Peace or war for America, no man can say." There are 3 groups in Congress tonight: Wheeler group, who say if you vote for Bill 1776 you vote to kill the Johnson Act, to kill neutrality, to move transports and convoys.-- Men who say very frankly that ensuring victory for England would mean war -- The 3 groups in Washington might be characterized as the group otill on the fence. They want amendments, they don't want Congress to do anything opposed by the Constitution - They don't want to give Roosevelt extraordinary powers. Some say that we should help England to insure Hitler's defeat, and will guarantee it will keep America out of var. Come men on the fence ask what kind of British are we underwriting aid for? They have heard of B. socialist England. Som men in Washington wonder if it means out and out socialism. Churchill knew that question would come up, he picked Halifax for Washington. Regraded Unclassified 79 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 15, 1940 Secretary liorgenthen FROM = Foley, Jr. is 7th suggested, I had lr. talt to Senator hairman of the Temporary Intimal Enonomic Committee, - = back holding company legislation ni the possibility =: be exi is Comuittee night be shle to in sume support to - WIL The Senator took the vesition that the President's monopoly tassage excluied the bank bolding If wils from the scope of = learnery National Lecnonic Committee investigations, inasmuch as :: the imediate extrat et has billing company legislation for reasons well set out in the messare itsed. is also felt that the HILL, ance introduced, wali be = deri to the Banking and Comitte and that it muli the become E legislative atter into which the Temporary Intirnal Committee could inject itself mly rità doubtral propriety. is further pointed -:: that expires on Amil I of this per and THE extended to that date only for the purpose of drix the Committee ad- titimal time to prepare of finalment. the no finel lecision has been mis, it is not emectal that ENF more hearings will be held, but rather that the realing peribi of life of the Comittee will be taken E rith the prepartion BI n° its report to lages, The Senator did indicate that la was personally in fevor :: the objectives of bank holding - Legislation and, without hinself to up particular = Hill, indicated that la vould 3e inclimed to support such legislation "unless it con- tained something of which he as noticing mi to which he would object.' 9N7L EN Regraded Unclassified 80 Secretary Morgenthau JAN 15 1941 I. H. Foley, Jr. As you suggested, I had Ir. O'Connell talk to Senator 0'Mahoney, Chairman of the Temperary National Economic Committee, about our bank holding company legislation and the possibility that he and his Committee night be able to give some support to the bill. The Senator took the position that the President's monopoly massage excluded the bank holding company problem from the scope of the Temporary National Reonomic Committee Investigations, Inasureh as it urged the immediate essetment of bank holding company legislation for reasons well set out in the message itself. He also felt that the bill, once introduced, would be eferred to the Banking and Currency Committe and that it would then become a legislative matter into which the Temporary National Economic Committee could inject itself only with doubtful propriety. He further pointed out that TNEC expires on April 1 of this year and was extended to that date only for the purpose of giving the Committee ad- ditional time to prepare a finalreport. Although no final decision has been made, it is not expected that any more hearings will be held, but rather that the remaining period of life of the Committee will be taken up with the preparation of its report to Congress. The Senator did indicate that he was personally in favor of the objectives of bank holding company legislation and, without committing himself to any particular form of billg indicated that be would be inclined to support such legislation unless it con- tained something of which he bus nothing and to which he would object." (Initialed) Be H. In Its 1/14'41 Regraded Unclassified 81 GRAY GIOW for Saigun Dated Junuary If, X 3nc'i 9:45 LL, in = Secretary of State, Washington. 3, January 15, 11 a.m. A new customs tariff became effective is Inis this If of law X Duties are wholly (1) ranging from 500 to 1305 sizime = guis too e countries including France. General rates are three times the din Free and prohibited products are subsidiary as before as ET to - cations though less subdivided. The internal consumption = main in effect. On the basis of prices in Indochina visima value vill in for merchandise below which imports will not be assessed. Goods which left their country of origin before Invoice 3 # is consummated under the old or new tariff. Temporarily the minimum dutyon trucks is 28, sutombile 12 the iron steel and medicines are free. The American trade agreement readins effective the III - - replacing the former and the intermediate being counted Tariff and covering despatch following is critinary will: 17 will be sent air mil if desired. Sent to Carite for restition to to Department, Hong Kong, Shanghai, Trade Commissioner FLOOD WSB Copy:bj Regraded Unclassified 82 JMII 15 1941 I of 3 w June per 1 B E 6 for mindle a - of transition dispute d smith from the Relited be Incl al be Mare yerks. afa be s } I 1 d I I 1 - 1 = I 1 . I a # -- rs 1 1 I - r $ I I n a i I , 1 1 1 $ 1 I I , 1 Signed - n. - I r a I I a - to - d Main, - 1/2/8 Regraded Unclassified 83 H 8 I a 3 1 I s 1 1 a - 1'Inischine, and to affect papers) W debiting the free - of the have to l'Indechine with the French implement Busing Corporation for to the dectimations indicated NO 1 Islue Institution IT 76724 Plates and tools for $ 650.00 Inte-Shite machines to verit lockber ekine IT TYPES fire takes and oil 4,482.00 Inte-Rine betteries IT 51797 Neel Filse 1,850.00 If 02997 96 normalation al I Inde-Rite 1,000 - ylates IT 06499 7,000 filse - 5,688.00 daten a air IT 99012 = I reduce - 10,000.00 Inte-Ridan 1 If 90015 188-tex - joint É 1 E IT vaset Read tilting crusibles, 1,390.00 Info-thine 18 1 dime chirren If sum 1 returnable dising making 4,680.00 If visas 1 i 1 1,690.60 oprings II vasee 1 1 149.04 equipment Regraded Unclassified 84 I 1 1 Jaine I 1 - tape mile, tables $ 6,189.69 Info-Ridas 1 I a I 1 I I I I 1 details 1 daten I - = MM 1 I 1,000.00 1 1 . É of - . s rellere for cala 10,000.00 Inte-Orias apr griaten - I - 1 1 4 - 1 15,000.00 Into-Chine I wt. 1 $ - 49,000.00 I MIF $ I 1 - 1 Into-Rim I I 1 E - 8 - qual 5,000.00 il at 1 E - 1 5 1 51,000.00 Inte-frite B I I no = taxe of ple tree 11,000.00 I NN $8,150.00 Info-thite se - of Include 5 - R NBI to 1 us 900.00 respond see al 18 1 any outs and Regraded Unclassified - 8 85 1 I Jaine I If - Charicals . 207.79 n 01790 Microto of 1,000.00 Info-Chite returnium if 82704 125 filse of 00.000 collegalise If 91.856 so tose enighate 675,00 of studes If - so tome - 1,900.00 Info-fidas sulpless If 95182 180 eylinders 6,200.00 Shanghai,Chise liquid chlorine If - Sulpler 1,999.00 Inte-Chine If - Pharmacentic 7,750.00 Inde-Skine products If - Chierise of I Inte-Shine magneta I If 01790 Radio takes 3,150.00 Inte-thine If 51790 latte emiting 1,950.00 a 1 into If 04694 s taxe hope 6,700.00 Info-Rine If 99694 w tene 5,000.00 droine = I 10,000,000 12,000 (to million) bettle espe II. a following applications sook to debit the Medical - of the I a a I x 1 2 s a $ / in - of from the United Maton to French Inde-Shire M infinated Regraded Unclassified 86 6 1 1 sma w - . 1,80.0 I 1 1 2719 $ taxe of des 10,000.00 1 dute 57 me 10 - of deviced 1,553.00 1 1 If 2725 1 1 $ 1,000.00 1 assessarion If 2726 Spate parts the 1,200.00 I traders III. the fellowing applications nt to and a 1 listed to chipments as indicated 1 " 00441 1 I a I I 5 1 and of Mr. Transis $ I Y Maritvilliers $ the Bothlohm - Injust Injury BY 00029 the Medical - 3,55 permis 5 by 1 in = 5 I % Phrtivilliers - the bilds Red inport forgerstion If 83174 the Weeked - 199 1,645 - of the United - liquid Corporation with the date Inter I I BY 1ECHING this I when S - 1 I 1 the hape hip - of R 1 1 ARE 1 If - I $ BECEINED Regraded Unclassified 87 PARAPHRASE OF TELEGRAM RECEIVED American Legation, Belgrade, Yugoslavia MI: January 15, 1941, 5 p.M. E.: 22 1s made to telegram of January 6, 10 p.m., II. 184 the the Department, and telegram of January 14, 9 P.M., II. 7 tra the Department. This morning it was informed orally by the Finance tate of Ingoslevia that the National Bank is interested II period TO from the Bank for International Settlements 500 Hope of gold. This transaction, he assured me, III unly for the purpose of liquidating Yugoslav obligations in to Inited States, and was not for the benefit of the lense Invernment or any other foreign government. It is, in the words, Just a bookkeeping transaction, due to the initility of the Government of Yugoslavia to transfer púi to the United States because of physical reasons. LANE. Z 0.00 88 PLAIN 28 London Dated January 15, 1941 Rec'd 9:36 c.m. Scoretary of State, wahington. 150, 15th. POR TREASURY. 37 way of encouraging the investment of non-residents' sterling funds in Britisn securities the Bank of England innounces that thy non-resident having starling in the Inited Kingdom and wishing to invest it in registered or inscribed starling securities here will at the time of his purchase be given = form (form m) which will constitute license to SELL those securities on any British Stock Exchange. Hitherto permission to sell such stocks hr.s earty been given to non-residents since the restrictions on security soles WETE imposed ca reported in the Embossy's No. 1525 of June 6: The license will DE valid for in indefinite period. Only the some type of sterling vill be credited to n non-resident selling the securities 13 he originally used for their purchase. The arrengement dots not (repect not) cpply to blocked sterling accounts CS described in the Embnasy's telegroms Nos. 3815 end 3830 of November 22 and 23. The inducement to invest is regarded Regraded Unclassified 89 -2- #150, Jenuary 15, from London. regrded ns fortified by the fact that wherees non-residents may not withdraw capital EXCEPT in certain circumstances, interest on securities held here may bE remitted as noted in the Embassy's telegrom No. 1525 of June 6. JOHNSON HPD Regraded Unclassified