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    "title": "Volume 380, March 5 – March 11, 1941",
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        "Henry Morgenthau, Jr. Papers",
        "Diaries of Henry Morgenthau, Jr."
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    "ocrText": "DIARY\nBook 380\nMarch 8 - 11, 1941\nRegraded Uclassified\n- A -\nBook Page\nAgriculture, Department of\n\"Parity price loan\" (S.935): Bankhead's plan and\nAmerican Farm Bureau Federation comment thereon -\n3/11/41\n380\n481\nAllison Engineering Company\nSee War Conditions: Airplanes (Engines)\nAppointments and Resignations\nCollector of Internal Revenue - Toledo, Ohio:\nCongressman Hunter's correspondence - 3/10/41.\n173\n- B -\nBankhead, John (Senator, Louisiana)\nSee Agriculture, Department of\nBudget\nFDR's message to Congress: Copy of Cox draft as\npresented to Hopkins . - 3/9/41\n120\nBusiness Conditions\nHeas memorandum on situation for week ending\nMarch 8, 1941\n315\n- C -\nChen, K. P.\nSee War Conditions: China\nChina\nSee War Conditions\nCollector of Internal Revenue - Toledo, Ohio\nSee Appointments and Resignations\n- 7 -\nFarm Parity\nSee Agriculture, Department of\nFinancing, Government\nRentschler tells HMJr of resolution passed by\nclearing house banks of New York \"offering\nwithout charge all possible services in\nconnection with various Government issues\" -\n3/8/41\n57\n6/15/41 financing: HMJr advocates raising $5-600\nmillion cash, at the same time as refunding\nof $500 million June notes - 3/11/41\n348\n- H -\nHalifax, Lord\nSee War Conditions: Purchasing Mission\nHarriman, W. Averill\nBon voyage from HMJr - 3/10/41\n269\nHarrison, Pat (Senator, Mississippi)\nThanks HMJr for note on anniversary of thirty\nyears legislative service - 3/11/41\n480\nHungary\nSee War Conditions: Foreign Funds Control\nRegraded Uclassified\n- I -\nBook Page\nIntelligence Service, Treasury\nOne badge with Narcotics, Secret Service, or\nInternal Revenue thereon discussed at 9:30 meeting -\n3/10/41\n380\n160\nInternal Revenue, Collector of Toledo, Ohio\nSee Appointments and Resignations\n- X -\nKreiselman, Joseph (Doctor)\nSee War Conditions: Airplanes\n- L -\nLaw Enforcement Agencies, Treasury\nOne badge with Narcotics, Secret Service, or\nInternal Revenue thereon discussed at 9:30 meeting -\n3/10/41\n160\n- M -\nMartha, Crown Princess\nSee War Conditions: Norway\n- N - -\nNorway\nSee War Conditions\n- R - -\nRevenue Revision\nNew program discussed by HMJr, Gaston, Foley, Bell,\nSullivan, Blough, and Tarleau - 3/11/41\n398,411\n- S -\nSecret Service\nFor protection of Wallace (Henry A.) see Book 380,\npage 151, and Book 381, page 79\nSecurity Markets (High-Grade)\nSee War Conditions\nShipping\nSee War Conditions\nSilver\nSee War Conditions\n- T - -\nTaxation\nSee Revenue Revision\nRegraded Uclassified\n- U -\nBook\nPage\nUnemployment Relief\nWork Projects Administration report for week\nending February 26, 1941 - 3/10/41\n380\n308\nU.S.S.R.\nSee War Conditions\nUnited Kingdom\nSee War Conditions: Military Planning\n- W -\nWallace, Henry A. (Secretary of Agriculture)\nSecret Service protection discussed at 9:30\nmeeting - - 3/10/41\n151\na) Wallace-HMJr conversation - 3/12/41:\nSee Book 381, page 79\nb) Gaston memorandum - 3/13/41:\nBook 381, page 245\nWar Conditions\nAirplanes:\nEngines:\nAllison Engineering Company: Shipments -\n3/10/41\n312,313\nOxygen device for flying up to 37,000 feet\n(Dr. Joseph Kreiselman) discussed by Towers\nand HMJr - 3/8/41\n50\nChina:\nStabilization Committee appoints Chen as chairman:\nChen's letter to HMJr - 3/8/41\n107\nKung's letter delivered to HMJr by Currie -\n3/12/41: See Book 381, page 128\nExchange market resume' - 3/8/41, etc,\n108,307,489\nExport Control:\nExports of petroleum products, scrap iron, and\nscrap steel from United States to Japan, Russia,\nSpain, and Great Britain, week ending\nFebruary 8, 1941\n314\nForeign Funds Control:\nHungary:\nTransactions with First National Bank of Boston,\nBank for International Settlements, and Guaranty\nTrust Company - 3/10/41\n304,305,306\nLend-Lease Legislation:\nSee also War Conditions: Purchasing Mission\nSenate passes bill, 60-31 - 3/8/41\n106\nBudget as discussed by FDR and HMJr reviewed by\nTreasury group - 3/10/41\n237\na) Smith-HMJr conversation - 3/11/41\n440\nMinimum legal steps required to be taken in disposing\nof defense articles under H.R. 1776:\na) First draft - 3/10/41\n247\nb) Second and final draft - 3/10/41\n254\nH.R. 1776: Act as signed by FDR - 3/11/41\n455,459\na) FDR's message to Congress and Budget: Book 381, page 2\nb) HMJr thanks George and Barkley - 3/11/41\n461,464\nc) Hopkins' letter to Purvis - 3/11/41\n467\nRegraded Uclassified\n- V (Continued)\nBook\nPage\nWar Conditions (Continued)\nMilitary Planning:\nReport from London transmitted by Halifax -\n3/10/41\n380\n331\nNorway:\nSecret Service protection of Crown Princess\nMartha discussed at 9:30 meeting - 3/10/41\n152\nPurchasing Mission:\nSee also War Conditions: Lend-Lease Legislation\n\"HMJr personally and solely responsible for the\nfact that the British continued fighting\nbetween Dunkirk and first of year\": Dean\nAcheson states this at staff meeting in Hull's\noffice - 3/8/41\n2\nBritish Financial Position:\nCash position estimated on certain assumptions\nfor near future by Phillips and discussed\nby HMJr, Foley, Bernstein, White, Cochran,\nand Bell - 3/8/41\n2,49,349,\n397,447\nPeacock definitely holding back: Frank tells\nHMJr that Bunker, of Lehman Brothers, who\nis \"195% pro-British\" has just reported\nthis - 3/8/41\n39\na) HMJr displeased with Halifax's reaction\nwhen they discuss situation - 3/10/41\n267\nNew York Investment Association and Securities\nand Exchange Commission to consider\npossibility of private organization to\ntake over en bloc British and/or Canadian\nholdings of marketable securities and also\nto consider direct investments: Cochran\ntells Gifford and asks opinion - 3/8/41\n48\na) Conference discussed by HMJr, White,\nand Cochran - 3/11/41\n445\nMemorandum highlighting British financial\nsituation prepared by White - 3/8/41\n60\nSummary of contracts of $1 million or over,\nas of February 15, 1941\n133\nFormer French contracts of $1 million or over,\nas of February 15, 1941\n134,135,136\nBritish contracts of $1 million or over,\nas of February 15, 1941\n137,138,139,\n140,141,142\nFormer French contracts where total of\nunrecovered British advances and balance of\npayments due is in excess of $10 million,\nas of February 15, 1941\n143\nBritish contracts where total of unrecovered\nadvances and balance of payments due is in\nexcess of $10 million, as of February 15, 1941..\n144,145\nRegraded Uclassified\n- V - (Continued)\nBook\nPage\nWar Conditions (Continued)\nPurchasing Mission (Continued):\nBritish Financial Position (Continued):\nResume'of HMJr's assistance to Great Britain\nand various sources of funds: Cochran\nmemorandum - 3/10/41\n380\n229,270\na) Discussed by Treasury group\n199\nFDR suggests speed in Reconstruction Finance\nCorporation taking over British payments\nmade for plants and War Department taking\nover materiel payments made by British -\n3/10/41\n234\na) HMJr's memoranda to Jones and\nStimson - 3/11/41\n345,346\nVesting order sales - 3/11/41\n488\nSecurity Markets (High-Grade):\nCurrent Developments: Haas memorandum - 3/11/41\n491\nShipping:\nPort clearance of British trade vessels: Herbert\nHoover's letter to Stimson discussed by HMJr,\nGaston, and Waesche - 3/10/41\n146\na) For Coast Guard and Maritime Commission\nreports, see Book 381, page 8\nb) Captain Callaghan reports - 3/18/41:\nBook 383, page 117\nSilver:\nNew formula for estimating production in United\nStates - 3/10/41\n274\nU.S.S.R.:\nOumansky's \"chagrin\" discussed by Loy Henderson\n(Assistant Chief, European Division, State\nDepartment) and Wiley - 3/8/41\n1\nWork Projects Administration\nSee Unemployment Relief\nRegraded Uclassified\n1\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nSTRICTLY PERSONAL\nDATE March 8, 1941\nTO\nSecretary Morgenthau\nFROM\nMr. Wiley\nLast evening Loy Henderson came to see me. He is Assistant\nChief of the European Division of the Department of State and the\nDepartment's expert on the Soviet Union -- a very competent one too.\nI gathered from him -- very discreetly - that Ousansky's chagria\nderives chiefly from the fact that some six or seven million dol-\nlare worth of oil drilling machinery has been held up. It appears\nthat the War and Navy Departments are responsible; not the State\nDepartment, which for some time has been adopting a policy of con-\nsiderable amiability towards the Soviet Embassy. The idea, I sup-\npose, is not to assist in the further development of Soviet oil\nproduction at a time when the Soviet Union is exporting oil to the\nReich.\nOumansky may also be very irritated that a charter of & ship\nhas just been revoked by the Maritime Commission. Ownansky will\nprobably blame Henderson. As a matter of fact the action was taken\non the sole initiative of the Maritime Commission.\nShould you be interested, and should you see General Maxwell,\nhe could probably give you the \"low down\" on Soviet complaints.\nAlso, you would find Loy Henderson most interesting should you ever\nhave occasion to talk to him. He is an extremely decent and trust-\nworthy person with an enormous background on the Soviet Union. His\npoint of view is professional rather than prejudiced.\nThe\nRegraded Uclassified\n2\nMarch 8, 1941\n9:30 a.m.\nRE BRITISH PURCHASING PROGRAM\nPresent:\nMr. Foley\nMr. Bernstein\nMr. White\nMr. Cochran\nMr. Bell\nH.M.Jr:\nDean said at a staff meeting in Mr. Hull's\noffice that he didn't see how anybody could say\nthat Morgenthau didn't have anything to do\nwith foreign affairs when he personally was\nentirely responsible for the fact that as\nbetween Dunkirk and the first of the year\nthat the English kept on fighting. He says,\n\"How can you say that Morgenthau has nothing\nto do with it? He has single-handedly kept\nthings going.\" He said he said it at a staff\nmeeting in Mr. Hull's presence. He said Mor-\ngenthau was solely responsible for the thing\nhaving continued. That is a pretty nice thing\nto say.\nBell:\nVery nice to say among enemies.\nH.M.Jr:\nWell, that is what he told them for, so we will\ngive him a chance.\nNow, Mr. Bell, if somebody could start in and\nbring me up to date on - this is what happened.\nSir Frederick Phillips comes in here and says\nto me, \"What are you going to do about our\nfinancial situation,\" and I said I didn't under-\nRegraded Uclassified\n3\n- 2 -\nstand it and so forth and so on and asked him\nto give me a written memorandum, which I have\nnot yet seen, and also that the Canadian thing,\nto sum up, the Canadians want to get in on the\nLend-Lease, and they have asked me what they\nshould do about their 350 million dollars worth\nof American securities and they have asked this -\nthe English have asked, should they or should\nthey not sell their gold to Canada, or should\nthey sell it to us. I don't know how many\nother problems there are, but that is about all.\nBell:\nThat is enough.\nH.M.Jr:\nThis is handed by Pinsent to Cochran in the\nTreasury and marked 7, noon. Yes. (See attachment 1)\n\"In response to the invitation of the Secretary\nof the Treasury, an attempt has been made below\nto estimate the British cash position in the near\nfuture on certain assumptions.\nI. Assumptions and their possible errors.\n1. It is assumed that the new system to be\nset up after the passage of the Lend-\nLease Bill will start coming into effec-\ntive operation by 1st April, 1941.\"\nAnd to digress a minute, there is a memo for\nBell and Foley on that that you will get this\nmorning. What, if anything, have we done in\nour shop on how this thing should operate from\na financial standpoint. Has anybody worked on\nthat?\nBell:\nWell, I take it that you have been working with\nMcCloy on the things, haven't you?\nH.M.Jr:\nI mean has any work been done in the Treasury,\nif you want to let them have a. thousand planes.\nFoley:\nYou mean from an organizational standpoint or\nRegraded Uclassified\n4\n- 3 -\nfrom the standpoint of how the thing would\noperate and how you could do it?\nH.M.Jr:\nHow it would operate and how the swaps and\ncontracts and all that would be made. Has\nanybody worked on that?\nFoley:\nYes, Oscar has b een working on it.\nH.M.Jr:\nWell, you will get a memo. We will take it up\nMonday. I don't think the President or Hopkins\nhas done anything about it, and I think that\nthat could very well be my end of the four-man\nBoard.\nWhite:\nIt should be.\nBell:\nAre Oscar and McCloy working on that together?\nFoley:\nWell, McCloy has been concentrating more on\nthe bill, but Oscar has done several things in\nthe way of memos on this very thing. He has\ngot a draft of an open-end agreement to cover --\nBell:\nThe over-all agreement?\nFoley:\nYes, kind of an open-end mortgage, and he has\ngot in mind what could be done first.\nH.M.Jr:\nWhat did you say?\nFoley:\nI didn't say anything. I say Oscar has been\nworking on that and has had that in mind for\ntwo or three weeks.\nWhite:\nOne of the important aspects of that would be\nin relation to this to see the kind of goods\nthat the British will want, food stuffs and\nother materials which cannot fall under the\nLend-Lease Bill, because that is important be-\nfore a decision is made, how much they will need\nRegraded Uclassified\n5\n- 4 -\nfor current purchases.\nH.M.Jr:\n\"As regards the goods to be included under the\nBill, the assumption made is that the whole of\nthe supplies referred to in the statement of\nrequirements already filed with the U.S. Treasury\nwill be covered. We do not yet know how far that\nassumption is correct.\n3. It is an extreme assumption that the system\ncan be brought into perfect and complete opera-\ntion from the 1st April. Delays are inevitable\nparticularly in such matters as regulating the\nprocurement of foodstuffs and miscellaneous\ngoods. In many cases goods which could be\nbought under the Bill if purchased by the U.K.\nGovernment from the U.S. Government are at\npresent the subject of contracts between suppliers\nin the U.S. and traders in the U.K. and existing\ncontracts will have to be worked off. Probably\nsome residue of orders, such as small rush orders\nfor goods over the counter to meet some special\nemergency, will never get effectively covered.\nWe shall have to continue buying for cash to\nwhatever extent is necessary. No allowance has\nbeen or can well be made for these factors at\npresent and the figures of deficits given below\nare therefore minimum figures which will be ex-\nceeded to an unknown extent in practice.\n4. It is assumed that we continue to meet our\nexisting commitments as they are estimated to\nstand on April 1st.\n5. It is assumed that newly-mined African gold\ncan go on being made available either by shipment\nor by switching. But our ability to ship is in\nfact very limited, and the amount we have avail-\nable to switch is probably less than the new\nproduction of March, April and May.\n6. We think we should be enabled to accumulate\nRegraded Uclassified\n6\n- 5 -\nwithin a reasonable time a cash working balance\nof $250 millions. Of this we propose that say\n$100 millions in gold should be reserved out of\nour new gold production and accumulated over the\nnext year to meet any calls from the Balkans and\nNear East, and $150 millions made available in\nU.S. dollars as soon as possible.\n7. Our liabilities in gold to third countries\namount to about $100 millions a year (apart from\nliabilities in dollars of about $130 millions a\nyear). After allowing for this and the accumula-\ntion of a small gold reserve as above, there\nshould be on the production figures an amount of\nfree gold remaining equal to $360 millions a year\nor $30 millions a month.\n8. It is very difficult to make any safe assump-\ntion as to the rate of sale of our capital assets.\nWe feel it unsafe to rely on more than $300\nmillions in the period March-August.\n9. It is assumed that the exports of the whole\nsterling area are maintained at their present\nlevel but this may be optimistic in the case of\nUnited Kingdom exports in view of war conditions.\n10. It is assumed that at least the great part of\nour current obligations to Canada (roughly $1200\nmillions a year) will be met by the repatriation\nof debt owed by Canada to the United Kingdom or\nby Canada buying and holding sterling.\nAt this point --\"\nI take it you have all got copies of this.\n\"At this point, two alternative assumptions are\nmade according as we pay something or nothing in\ngold to Canada:\nEither (1)\nThe available newly-mined gold, at\na rate of $360 millions a year or\nRegraded Uclassified\n7\n- 6 -\n$30 millions a month, is paid to\nCanada and used by her to reduce the\ndeficit in her balance with the\nU.S.;\nor\n(2)\nThe available newly-mined gold is\napplied towards covering our obli-\ngations in the U.S., instead of in\nCanada (this would, of course,\naccelerate the realization of Canada's\nU.S. assets, and no doubt advance the\ndate at which Canada might have to\nask for the benefit of the Lend-\nLease Bill).\"\nWhite:\nThese figures are substantially higher in many\nmore effects than those they gave us a few months\nago of the expenditures required.\nH.M.Jr:\nLet me get this first. What is the asterisk after\nthat thing?\nBell:\nThe figures are too low, \"as the wide and immedi-\nate application of the Lend-Lease system which\nhas been assumed could hardly be reached in\npractice.\" That is a footnote, sir.\nH.M.Jr:\nYou mean they figured from 650 to - oh, no.\nWhite:\nNo, they are high. Their figures of their out-\npayments. I can just cite one illustration.\nThey say, for example, that they will need a\nhundred million dollars in gold for liabilities\nto third countries. Now, on our January 1st\nstatement which they gave us, that figure was\nexclusive of Canada, one-fourth of that - was\n21 million. British Empire payments excluding\nCanada and Newfoundland outside of the U.S.,\n21 million. For the year as a whole, it was\n240 million whereas now they have upped that\n12 hundred million. If they include Canada,\nthey have doubled it, but they use that figure\nDoaradod ie\n8\n7 -\nin such a way that when they get to the Can-\nadian ones, it is not clear that it includes\nCanada, but I will take that up when I get to\nCanada. That is one of the figures that they\nhave upped. Are you interested?\nH.M.Jr:\nWhat? Well, I just - I don't want to get\ntoo many details. \"To cover our shortage up\nto August 1941 and to provide a cash balance\non the lines proposed in assumption 6 --\"\nWhere is assumption 6?\nBell:\nOn the first page.\nWhite:\nOn the first page.\nH.M.Jr:\nI,see.\nWhite:\nBottom of the first page.\nH.M.Jr:\nI see. Well, can somebody sum this up for me?\nThere is an awful lot of stuff. I mean -\nHarry, can you sum this up?\nWhite:\nI can sum the problem up. I can't sum their\nfigures up, because I just got it about 20\nminutes ago.\nH.M.Jr:\nWhy didn't you get it yesterday?\nCochran:\nI started them around last night. We didn't get\nout of the meeting on China until 5:00 o'clock.\nH.M.Jr:\nWell, why should I have to sit here when some-\nbody hasn't got these things?\nCochran:\nWell, they were around at 9:00 o'clock this\nmorning.\nH.M.Jr:\nI like people to be prepared for me. I don't\nwant them to do their home work in my presence.\nRegraded Uclassified\n9\n- 8 -\nWhite:\nI can sum the general proposition up.\nH.M.Jr:\nI came down here just for this thing this morn-\ning, and I thought that everybody would be\nready. I don't like to sit here and wait. It\narrived yesterday at 12:25.\nBell:\nBut, Mr. Secretary, everybody, I think, thought\nthat you were going to have a conference on\nSunday and we did go into this Chinese agree-\nment until right late last night.\nH.M.Jr:\nWhen did you get word that I was going to do\nthis?\nBell:\nFive minutes before I left last night.\nWhite:\nI didn't get word until I got home.\nH.M.Jr:\nWell, you can't - I did it today to save every-\nbody so you wouldn't have to work on Sunday.\nWell, who can sum this up for me?\nWhite:\nWell, I can sum it up without having reference\nto specific figures which we may or may not\nagree with. The summation is that they are in\na position of being unable to pay the adverse\nbalance which they have with Canada, which they\nnow say will be over a billion dollars if they\nmeet the schedule of payments which they were\nsupposed to have met with us and Canada states -\nstated to you, Mr. Clark stated, that they didn't\nfeel that they would be able to assist England\nto the full extent. Phillips says they have a\ncertain amount. I think it is about 400 million\ndollars of gold, which hey can give to Canada,\nbut if they give that to Canada, they will not\nbe able to meet their commitments here and their\ncurrent expenditures. Therefore, there may have\nto be found some way, I think, of taking - or\ngive them increased aid under the Lend-Lease\nRegraded Uclass\n10\n- 9 -\nBill or possibly taking over some of the com-\nmitments. They are not clear, or at least I\nam not clear on that point.\nCochran:\n\"For the rest it should not be difficult to\nselect suitable contracts up to the amount\nrequired.\" That is the main point of the\nwhole thing.\nWhite:\nThey estimated it at what?\nCochran:\nWell, they vary. It is 365 on one basis and\n185 on the other. It is whether or not we take\nthe gold from Africa and so on or permit it to\ngo to Canada.\nWhite:\nWell, I say that is the problem. Therefore, if\nthey utilize all their gold to meet their com-\nmitments here, which they feel they will need,\nthen Canada will have to come - will be unable to\nmeet her exchange commitments, dollar commit-\nments here, and it will be necessary sooner than\nwas expected, I think, by any of us, to help\nCanada out, and the amount of help to Canada\nwill have to be larger, so that the question of\npolicy, it appears to me, is whether you want\nto increase your assistance to England and no\nassistance to Canada during the first year or\nwhether you want to have England pay more gold\nand dollars here and render some assistance to\nCanada.\nH.M.Jr:\nNow, do you (Cochran) differ any from Harry?\nCochran:\nNo, I think there are just these three points.\nThere is that one. I think you have the choice\nof letting the gold go from South Africa to\nCanada, or should we send a ship over there,\nsay in another two or three weeks, and bring\nover about a hundred and twenty million dollars\nand permit a switch so that they could take care\nof their commitments here.\nRegraded Uclassified\n11\n- 10 -\nWhite:\nBut that is a subsidiary detail, isn't it?\nThe main problem would still remain, whether\nthey are to pay Canada or us?\nH.M.Jp:\nWell, I can give & horseback opinion on that.\nFoley:\nPay us.\nWhite:\nWell, I prepared a memorandum giving the pro's\nand con's on that point. (See Attachment 3.)\nFoley:\nI think as a political, public relations, prob-\nlem, it is much better for them to be paying us\nas much as they can and for Canada to be under\nthe Lease-Lend Bill.\n(Mr. White passed prepared paper to conference\nparticipants.)\nBell:\nThe net effect of it really doesn't make much\ndifference, but you told the people on the Hill\nCanada would not need any help, and I take it\nin those figures there was payment by Great\nBritain to Canada which enabled her to get\nby this year so that if you switch now, I think\nyou will have to explain it.\nH.M.Jr:\nWell, I made another statement, that England\nwas going to give us every bit of gold that she\ncould lay her hands on.\nCochran:\nYou mentioned South Africa particularly.\nBell:\nAnd they asked about that, and you pointed out\non the statement it was in there.\nH.M.Jr:\nAnd as I remember, I said it was three or four\nhundred million, didn't I?\nWhite:\nIt was about 400 million, the African and Aus-\ntralian gold.\nRegraded Uclassified\n12\n- 11 -\nH.M.Jr:\nAnd I said, \"We are going to get everything.\"\nWhite:\nThat is right.\nH.M.Jr:\nAnd if I don't do it, then this fellow, a man\nwho is riding along like Flynn, would have --\nWhite:\nThat is just the point he is making much of.\nHe claims that the British Empire, using part\nof its gold and dollar assets to meet its\ndebts to its Empire and it will be owing us\nmore.\nH.M.Jr:\nWell, it seems to me that that thing is fairly\nsimple, don't you think so, Dan?\nBell:\nI think you have got to do that.\nWhite:\nI have listed the numerous arguments in favor of\nhaving England pay us all and there are only a\nfew, that I could find, that are the other way\naround.\nH.M.Jr:\nWhat are those?\nWhite:\nThey are very minor, but they are the only ones\nI could find. One is that, if we extend the\nLend-Lease arrangements to Canada now, we will\nsoon have other dominions up, and it may be\neasier to deal with the United Kingdom alone than\nwith several units. I don't think that is impor-\ntant, but that is one item. A second one is,\ntaking a stand either way does mean that you are\ngetting involved in Empire relations, that if\nyou ask the British to pay all their gold here\nthat there may be people in England and Canada\nwho might feel that you are trying to get the\nbest of the deal.\nH.M.Jr:\nI think the thing to do is to prepare a letter\non this based on my testimony, to get my testi-\nmony out, it was before the Senate Committee,\nRegraded Uclassified\n13\n- 12 -\nwasn't it? And simply say, \"Inasmuch as I\nsaid so and so, the answer can only be that\nwe expect you to send us all of your free\ngold, wherever it is mined.\"\nCochran:\nAnd you have the other suggestion to carry on\nwith the Canadians, in which they asked us if\nthey should begin to liquidate their American\nsecurities.\nH.M.Jr:\nThat will come next. Supposing, after we break\nup, Merle, you draft a memorandum for me on this\npoint 1, with the help of whoeveryou want, which\ncan be circulated before I get around to it\nagain. Point 1 being that we feel that, inas-\nmuch as I expressed myself along those lines on\nthe Lend-Lease Bill, we expect them to send us\nall of their gold. Wouldn't you do that, Dan?\nBell:\nThat is right.\nH.M.Jr:\nThat is Point No. 1, isn't it?\nWhite:\nWell, that presupposes that they were going to\npay 600 million to Canada, so that would have to\nbe explained. You said all they had left after\nthat.\nH.M.Jr:\nNo, no. Wait a minute. They told us that they\nwere going to sell so much gold to Canada, and\nthey haven't done it. Well, that is none of our\nbusiness.\nBell:\nWell, it was in the statement that you prepared.\nThere was a Canadian British payment, wasn't\nthere?\nWhite:\nThat is right.\nBell:\nHow much money?\nRegraded Uclassified\n14\n- 13 -\nWhite:\nSix hundred twenty million. Eight hundred\neighty was what they owed them, and the\nCanadians were going to take care of 260.\nBell:\nAnd the rest gold?\nWhite:\nSix hundred twenty million of gold and dollar\ncommitments which the British were presumably\ngoing to pay to Canada and would not have\navailable to pay us. I may say, I think, after\nan examination of these figures, we will find\nthat they will be able to pay a good deal to\nCanada as well as to us.\nH.M.Jr:\nWell, Harry, that is beside the point and\nseparate for the minute. The question is &\nmatter of public policy. The Secretary of the\nTreasury of the United States - they are\noffering me, do I want them to sell us the\ngold or do they want us to sell it somewhere\nelse, and I think the answer is here, isn't it?\nIt is unanimous that they should sell it to us,\nisn't it?\nBell:\nI think that certainly to the extent that you\nexplained to the Committee, that they would sell\nit to us.\nH.M.Jr:\nThat is right.\nBell:\nYou have got to keep faith with your commit-\ntees.\nH.M.Jr:\nThat is right. I think the thing to do is to\nlook up the testimony. Bernstein, you can get\nit for him, can't you?\nBernstein:\nYes, I can.\nCochran:\nI can get it.\nWhite:\nNot only the testimony, but in the table we have\n15\n14 -\na specific amount which they were going to\nsell to us.\nCochran:\nFour hundred eighty.\nH.M.Jr:\nWell, Cochran and Bernstein and White can\ncollaborate on this thing and have something\nfor me - I mean, there is no sweat. If I\nhave it Tuesday morning, so that nobody has to\nwork on Sunday.\nWhite:\nFive hundred fifty million dollars of gold,\nAustralian and South African gold, in addition\nto what they currently have, was indicated by\nthe British as to be paid over to us.\nH.M.Jr:\nWell, anyway, I want something Tuesday morning.\nNow, the next question - all right, Dan?\nBell:\nYes, sir.\nH.M.Jr:\nNow, the next question is, is the question -\nwhat other questions are the English asking us?\nWhite:\nThe other questions --\nCochran:\nTaking over the existing contracts in this\nfinal thing.\nH.M.Jr:\nWell, they haven't answered me. I asked them\nhow much is the R.F.C. doing. They were going\nto give me a figure. I said \"How much are the\nR.F.C. going to do?\"\nCochran:\nThey just said \"provide part of the subsistence.\"\nH.M.Jr:\nI asked them.\nCochran:\nYes, sir.\nFoley:\nWhat does that mean, Mr. Secretary? I didn't\nknow the R.F.C. was doing anything.\nUclassified\n16\n- 15 -\nH.M.Jr:\nOh yes, the R.F.C., for instance, have put\nup capital assistance for a powder plant and\nthey are buying it.\nFoley:\nOh yes, I remember now.\nH.M.Jr:\nAnd there is 8. whole group of those. I don't\nknow if any of them have gone through, but\nthere was a whole group, you know.\nFoley:\nYes, I remember it now. I had forgotten what\nit was.\nH.M.Jr:\nAs I understood, they were going to do all of\nthose things.\nFoley:\nThere is no reason why that shouldn't be done.\nWhite:\nAs I understand it, there may be some reason.\nYou have already stated that they have commit-\nments on January 1st on contracts that have\nalready been made of a billion four - a billion\ntwenty-seven falling due this year, 119 million\ndue. That is what the statements said, and they\nsaid they were going to meet those commitments.\nFoley:\nWe are talking about something else, Harry,\nplant investment in this country that the\nBritish have put out that can be refinanced now\nby the R.F.C.\nBernstein:\nThe R.F.C. is going to buy it back.\nWhite:\nThe plants which are supposed to be owned by\nthem?\nFoley:\nBy the British.\nCochran:\nWell, there would have to be some contracts in\naddition to make up the total.\nUclassified\n17\n- 16 -\nFoley:\nWell, how would that work?\nBernstein:\nIs it likely to be anything like a hundred and\neighty-five million?\nH.M.Jr:\nYes, I am giving you an appointment to continue\nthis at 10:15 on Tuesday. Well, look, don't\ntake up too much of my time, you see. Let me\ntell you just the thing which is missing. I\nasked them to say how much of the money was\nthe R.F.C. going to give them. How many more\ncontracts are there that could be bought, which\nmeans capital assistance? So I think between\nnow and Tuesday we can get that figure. But\nthey don't give it to me. In other words,\nhow much are in the works? Didn't the Army do\nsome, too, over there? Didn't the Army buy\nup some contracts? Wasn't that what they call\nthe McCloy Plan?\nCochran:\nThey figured the maximum would be 50 million\ndollars, didn't they?\nH.M.Jr:\nBut McCloy was buying some.\nWhite:\nA hundred and fifty million, wasn't it?\nH.M.Jr:\nLet's find out for Tuesday, what is - one, the\ntotal amount of capital commitments plus down\npayments that they have made. That is question\none. A, and under this, how much is the Army\ngoing to take over; and B, how much is the R.F.C.;\nand C, how much is left over that can be taken\nover, and that is what they wanted to find out.\nI would like to have that by Tuesday. Shall I\nsay it again?\nFoley:\nBernstein has got it.\nH.M.Jr:\nTotal amount for capital assistance down pay-\nments, how much is the Army taking over, and B,\nthe R.F.C., and C, how much does that leave that\nRegraded Uclassified\n18\n- 17 -\ncould be taken over. There is no use of\nour guessing at it. I asked him that question.\nNow, what is the next thing?\nCochran:\nYou have a second memorandum on there which\nshows the position of their gold and so on as\nof March. (See attachment No. 2)\nH.M.Jr:\nGold? Explain that, will you?\nCochran:\nThat is the balance sheet for the whole month\nof March. Now, they count the official dollar\nbalances as of March 1 at 82. That has gone\nup quite a bit since then because of shipping\ndown that 75 from Ottawa. Then the gold as of\nMarch 1 was a hundred and two million. They\nsay there is a total of a hundred and twenty-\nthree, but they deduct from that 21 made up of\n10 in South Africa and 11 in London and\nscattered localities, which they say is ex-\ncluded because part is needed as & reserve\nagainst agreement liabilities, and the balance\ncan probably not be shipped to North America\nduring March. Now, of that balance, I know\npart of it is in Cyprus, part of it is in Paris,\nand odd places where they couldn't get it out\nat all. They switched shortly after March 1,\n52 million down from Canada, and they have in\ntransit to North America six million, and in\nSouth Africa they have another eight million.\nIn the newly-mined gold for the month, they\nfigure that at 40 million. That is the rate\nthey have been calculating for sometime, but\nPinsent told me yesterday that the gold produc-\ntion in South Africa has fallen off in the last\nmonth and is running only about 400 million a\nyear instead of 480, but they have left it at\n40 there instead of the new estimate of 33.\nWhite:\nI don't know to what extent it is our affair,\nUclassified\n19\n- 18 -\nbut gold production in Africa can very easily\nbe speeded up. They have been saving some of\nthe rich ores for sometime.\nH.M.Jr:\nJust let's pigeon hole that for the minute.\nLet me just get this, Harry. I haven't got it\nyet. That is 299 -\nCochran:\nMay I explain that one point? Sales of market\nsecurities and direct investments. They have\nbeen figuring market securities at 40 million,\nyou see, 10 a week, 40 a month, and they have\nadded on there 35 which they thought was a fair\nguess at the average, immediately, of direct\ninvestment sales, but that figure is a guess.\nH.M.Jr:\nYes.\nWhite:\nWe have got some further information that we\ngot yesterday --\nH.M.Jr:\nHarry, please let me run through this thing, and\nthen you take it up.\nWhite:\nYes.\nH.M.Jr:\nGo ahead, Merle.\nCochran:\nThat shows their cash and gold for the month of\nMarch. Then below you have the debit. They\ndivide up the expenditure by the British Pur-\nchasing Missions for this month, and the two\nitems on contracts placed by March 1, 175, and\non contracts to be placed in March, under your\nrationing system, 40.\nH.M.Jr:\nBut, Merle, that 40 isn't out of pocket.\nBell:\nAdvance payments?\nCochran:\nThey say that they have some down payments to\nmake, not just commitments.\nRegraded Uclassified\n20\n- 19 -\nH.M.Jr:\nOh, I see. Then the second balance is all the\nother gold and dollar items. That is 24. They\nstill don't include in there their 16 million\npayment to Canada - not 16, but 52, it should\nbe. That was the payment we calculated if they\npaid 620 million dollars a year, but they are\nleaving that out.\nBell:\nThey are continuing to enter into contracts.\nAre those the things Phil Young brings to you?\nH.M.Jr:\nEvery night.\nBell:\nIt is that big, is it?\nH.M.Jr:\nWell, it runs 35 million a week.\nBell:\nReally?\nCochran:\nAnd then they would have on hand at the end of\nMarch, 60 million dollars. Now, those figures\ndon't take into account this new 100 million\ndollars of gold that they are going to borrow\nfrom Belgium.\nH.M.Jr:\nYes.\nCochran:\nAnd if I could make a suggestion there, I would\nput it in that memo. I was talking to Pinsent\nthe other day. Now that they have that Belgian\ngold or can get it in Canada, it might offer a\ngood opportunity to effect a switch whereby\nwe would get this gold which is in South Africa\nnow ear-marked for the French. I mean, rather\nthan leave it there where someone could eventually\nsay it has gone to France, if we could get a\nship to bring that over - it is now 8. hundred\nand 20 million, you see, and sell it to us here,\nwe couldn't transport it from South Africa to\nCanada or any other place, only to New York, and\nlet the British switch the hundred million of\nBelgian to France in Canada, you see, to offset\nthe switch that has already been made in Africa\n21\n- 20 -\nso that would leave a hundred and twenty million\nfree to come over here. Then they could start\nswitching again in South Africa against the\nwhole amount of the French gold and do that\nwhole process over again.\nH.M.Jr:\nWait a minute, I am only a simple-minded farm\nboy. Let me just go through this thing. Let's\nstart - how much gold have they mentally ear-\nmarked in South Africa?\nCochran:\nOne hundred and twenty million.\nH.M.Jr:\nYour proposal is that they take that hundred and\ntwenty, sell it to us on board a battleship, and\nthat would give them a hundred and twenty million\ndollars additional funds. Right?\nCochran:\nWell, they have to - they can only ear-mark\nagainst 280 million dollars of French gold.\nH.M.Jr:\nWhy?\nCochran:\nThat is all the French gold they have. They could\near-mark against the Belgian. They could start\ndoing that.\nH.M.Jr:\nBut the hundred and twenty we take, that would be\nfresh money for them here?\nCochran:\nYes, give them fresh money.\nWhite:\nBut it wouldn't be additional.\nH.M.Jr:\nWhat?\nWhite:\nIt wouldn't be additional.\nCochran:\nNo, it wouldn't be additional.\nH.M.Jr:\nWhy wouldn't it be additional?\nRegraded Uclassified\n22\n- 21 -\nWhite:\nBecause they are just going to switch that,\nbut his proposal makes it possible for later,\nif they want to switch again, to do so, and\nthat might be additional.\nH.M.Jr:\nWell, then, through selling us they have got\nto cancel or mentally ear-mark - they cancel that\nby replacing the French gold - let's say, to\nuse round figures, to the extent of a hundred\nand twenty million of Belgian gold. Then every-\nthing on the slate would be wiped clean, wouldn't\nit?\nCochran:\nYes. It would mean that they have mentally\nexpended that amount of Belgian gold, but they\nwould get the hundred and twenty million pro-\nceeds here of the gold which they bring from\nSouth Africa.\nH.M.Jr:\nThe Belgians would be out a hundred and twenty,\nand they would replenish the French with a\nhundred and twenty.\nCochran:\nThat is right.\nH.M.Jr:\nAnd how much of the French is up there?\nCochran:\nTwo hundred eighty, and 351 of the Belgian.\nH.M.Jr:\nSo they could use the French all over again up\nto an amount of 280?\nCochran:\nThat is right. You see, we have to figure --\nWhite:\nAnd they haven't touched the Dutch yet.\nCochran:\nWell, there is no arrangement with them yet.\nWhite:\nNot yet?\nH.M.Jr:\nNo. Well now, what is the argument to bring up\nthat 120 a year? Why is it better to have it here\nRegraded Uclassified\n23\n22 -\nthan in South Africa?\nCochran:\nWell, we ordinarily don't hold the gold abroad,\nand we could still carry out that promise that\nwe get the South African production.\nWhite:\nIf you don't make the switch now, the gold may\nbe stuck in South Africa, and when they want\nto switch it and give you the gold, they may be\nin no position to move it, and you may not be\nin & position to get it, whereas now with 8.\nbattleship, I take it, you could get it, and\nthat means that there is that much more easily\navailable if they want to switch in the future.\nH.M.Jr:\nHow much more?\nFoley:\nI am stupid. I didn't get all of the thinking\nthat was behind it, whether it was new money or\nwhether it wasn't.\nH.M.Jr:\nLet me give it to you.\nFoley:\nWhat is the arrangement with the French and the\nBelgians?\nH.M.Jr:\nI don't blame you. What they have done is this.\nThey have got 280 million in gold with the Bank\nof Canada, which is on deposit there, to the\ncredit of the Bank of France, you see. Well,\nthey got pressed for money, so they sold us a\nhundred and twenty of that, and they said,\n\"Well, we didn't take it, \"and they set up on\ntheir books, \"Credit to the account of the Bank\nof France a hundred and 20 of gold\", but the\ngold is no longer in Canada, it is down in\nSouth Africa. Now, Belgium has some gold up\nin Canada, and I told them to get it. So they\nhave made arrangements with Belgium that they\ncan borrow a hundred million of that gold and\nthey put a piece of paper - they have put on\ntheir ledger, \"We owe Belgium a hundred million\ndollars.'\nRegraded Uclassified\n24\n- 23 -\nNow, the suggestion that Merle is making,\nin order that they can repeat this operation,\nis that we buy the hundred and twenty in South\nAfrica, give them the credit, then they take\nand say, \"Well, we can't mentally ear-mark\nit, so we pay back to the Bank of France a\nhundred and twenty of gold, but we do it with\nthe Belgian gold. Instead of owing it to\nFrance, we owe it to Belgium.\" Right?\nWhite:\nThat is right.\nH.M.Jr:\nI don't blame you, because it makes --\nBernstein:\nWhy do they owe it to Belgium, Mr. Secretary,\nbecause of what is happening in Africa?\nWhite:\nNo, Belgium has gold on ear-mark with England\nin Canada. Now, England is going to borrow it.\nIt is a different operation from the French\ngold. The French gold, they didn't borrow,\nthey merely got France's permission, presumably,\nto ear-mark gold in South Africa instead of the\ngold in Canada.\nH.M.Jr:\nNo, they never told France.\nWhite:\nWell, I thought they were going to.\nH.M.Jr:\nHarry, they created a new term in international\nbanking, which - the shades of whatever is left\nof BIS would roll over and die. A mental ear-\nmark, nothing appears.\nBell:\nIn the ground.\nCochran:\nNo, it is not in the ground, Dan.\nH.M.Jr:\nNothing appears. It is just like this, Harry,\nyou give me a hundred dollars for safe keeping,\nsee, and I don't say a word to you. I just take\nthe hundred dollars cash, you see, and I just\n25\n- 24 -\ntake it and spend it, but I say, \"Well, it is\nall right, I mentally ear-marked another\nhundred in my bank up at Fishkill for Harry,\nso he is all right. I have got a hundred\ndollars up in the bank in Fishkill which is\nmentally ear-marked for Harry.\" In the mean-\ntime, I spend your cash.\nCochran:\nThey have gone ahead, and they have mentally\near-marked an additional 52 million not in\nSouth Africa, you see. For awhile that is what\nthrew out our figures last week, but now they\nare mentally ear-marking in Australia and Argen-\ntina.\nWhite:\nUnder the assumption that the French can read\ntheir minds.\nFoley:\nWell, how far can this process go? Can it go to\nthe point instead of having a mental ear-mark for\ngold somewhere, they end up with a piece of\npaper?\nWhite:\nThat is the next step.\nFoley:\nI can see that.\nWhite:\nThey have done that with Belgium, but with\nBelgium's permission.\nCochran:\nBut with this 52 now ear-marked in various\nplaces, that makes 172 they have done this with,\nso that only leaves 108 clear up in Canada in\nthe French account, against which they can\nmentally ear-mark further; so that makes it a\nlittle urgent to start moving some of this from\nSouth Africa.\nWhite:\nThere is a difference between shifting the ear-\nmark and taking the next step. They have got\na better chance of getting their gold back if\nit is ear-marked in South Africa than they have\ngot if it is ear-marked for future delivery, to\nRegraded Uclassified\n26\n- 25 -\nbe acquired in the future.\nBell:\nMerle, have they got good facilities in Africa\nfor keeping the gold?\nCochran:\nYes.\nBell:\nI mean outside of the mine, I mean vault facili-\nties? It is well off in the mine, I appreciate.\nCochran:\nWe got the gold from a little port just outside\nof Capetown, you see. I don't know how the\nfacilities are, but the gold has been held in\nDurban, Capetown, and Johannesburg.\nBell:\nWhy is it so essential to ship - why can't we\ntake over all the gold from Canada that is\nearmarked up there for France and Belgium and\nhave Canada hold that gold in South Africa for\naccounts of Belgium and France and Holland?\nCochran:\nCanada hasn't entered into this agreement at all.\nBell:\nWhy not?\nCochran:\nWell, they have some reservations on permitting\nthe mental earmark of gold which has been ear-\nmarked with them by the Bank of France. This\nthat they are working on now was earmarked by\nthe Bank of France with the Bank of England,\nand the Bank of England moved that to Canada.\nH.M.Jr:\nLet me make that a little simpler. There are\ntwo kinds of gold.\nBell:\nI appreciate that.\nH.M.Jr:\nLet me explain it to you, because they may not\nhave got it. This thing has been kept fairly\nquiet. There is French gold on deposit with\nCanada, and there is French gold on deposit\nwith the Bank of Canada for the account of\nEngland. Now, when it comes to taking the French\nRegraded Uclassified\n27\n- 26 -\ngold which is on deposit for the account of\nCanada, Prime Minister MacKenzie King has\nrefused twice at least to do it on account\nof his French population. I wanted you to\nget that. It is MacKenzie King personally\nthat says he hasn't been able to move it, but\nwhen Canada sees this gold coming to us and\ngets no gold from England, which she has some\nnow, and has got to sell her securities, Mac-\nKenzie King will not be so worried about his\nFrench population.\nWhite:\nHe may be able to do some switching for Canada\ninstead of selling it. There is just one point\nI am wondering if it is clear. There is\nanother mental ear-mark which is a half-way\nstep, and that is to ear-mark the gold in South\nAfrica, only ear-mark it below the ground.\nThere is a lot of it there, and they can\nallocate some of it to --\nFoley:\nJust don't take that much out of the mine.\n(Laughter.)\nWhite:\nYou leave that much in.\nFoley:\nThis sounds like an agricultural plan.\nBernstein:\nWell, but why can't they --\nBell:\nI don't see why they can't take all that gold\nup there and not only ear-mark the gold down\nin Canada but give them a - or hypothecate the\nsecurities and direct assets in the United\nStates and let them pay it back when they sell\nthem.\nWhite:\nYou can.\nH.M.Jr:\nLet me tell you something. If they would take\nall the gold that is in Canada, and that was the\nRegraded Uclassified\n28\n- 27 -\nassumption I went on originally, then they\nhad enough money to pay for all the contracts\nthey had placed up to the first of January.\nWhite:\nOh, without using even their --\nH.M.Jr:\nSecurities.\nWhite:\nDirect investments.\nBell:\nThey have got enough to take care of both the\nCanadian and British?\nH.M.Jr:\nThat is why I have never been worried. When\nI told Bill Knudsen the money was there, the\ngold was there, I just think this, to answer\nBell's question, why bring it up here. I\nthink as long as we take every step to get it\nup here - they might change their minds.\nThe communications from South Africa up here\nget more difficult. A battleship might not\nbe available three months from now, and I\nthink all of those things - that with my\nrecord, \"I have never left a stone unturned,\ngentlemen of the Senate, to get everything\nthat we could in our interest.\"\nWhite:\nMoreover, three months from now a battleship\nfrom South Africa might involve a risk of\na submarine attack, because we may be involved.\nFoley:\nMore involved than we are now.\nBell:\nIt would still be our gold, on the bottom of\nthe ocean.\n(Telephone conversation with Secretary Stimson\nfollows.)\nRegraded Uclassified\n29\nMarch 8, 1941\n10:22 a.m.\nH.M.Jr:\nHello.\nHenry L.\nStimson:\nHello, Henry.\nH.M.Jr:\nHow are you?\nS:\nI'm ashamed to call you for what I am, but\nI wanted to know the name of that commentator\nthat was mentioned yesterday at the table by\nClaude Wickard. Don't you remember?\nH.M.Jr:\nOh, yes, just a second. Oh, it was Max Jordan.\nS:\nWhat?\nH.M.Jr:\nIt was either Max Jordan or Max Gordon.\nS:\nMax Jordan or Max Gordon.\nH.M.Jr:\nYeah. I couldn't tell from his pronunciation\nwhether it was a \"J\" or a \"G\", but 1t was the\nN.B.C. commentator in Berlin and either Max\nJordan or Max Gordon, I don't know which.\n#\nS:\nYes, I see. Well, that's near enough.\nH.M.Jr:\nAnd he's the N.B.C. commentator in Berlin.\nS:\nWell, that can be identified that way.\nH.M.Jr:\nYeah.\nS:\nI think Claude was right in his emphasis on\nthe necessity of getting that picture over to\nthe people before we get them mad enough to\ndo anything.\nH.M.Jr:\nRight.\nS:\nAll right. Well, thank you.\nH.M.Jr:\nAs good a way as any 1e to do the way Bill\nSchr irer did it; he did it through LIFE\nMagazine.\nS:\nBill Schoirer, yes.\nRegraded Uclassifie\n30\n- 2 -\nH.M.Jr:\nHe did it through LIFE. They ran two stories\nwritten by him in LIFE and everybody saw that.\nS:\nHow does he spell his name?\nH.M.Jr:\nI think it's S-c-h-r-e-1-r-e-r.\nS:\nS-c-h-r-e-1-r-e-r.\nH.M.Jr:\nDon't ask me on spelling. Just a minute -\nI'm writing it out. Just let me see.\nS:\nI'm trying to do the same.\nH.M.Jr:\nI think it's S-c-h-e-1-r-e-r. William Scheirer.\nS:\nYes, all right.\nH.M.Jr:\nI think that's the way it's spelled. That's\npretty close.\nS:\nYes. What was he?\nH.M.Jr:\nWell, he was also commentator in Berlin and\nS:\nFor N.B.C.?\nH.M.Jr:\nNo, I think for Columbia - Columbia Broadcasting\nCo. In any case he's in Westchester County\nwriting a book, a condensation of which was run\nin LIFE Magazine, and they ran a series of two\narticles, very well done, in LIFE, and they got\nenormous publicity on it.\nS:\nWell, thank you very much.\nH.M.Jr:\nO.K.\nRegraded Uclassified\n31\n- 28 -\nH.M.Jr:\nFor once I can remember. My memory for these\nlast few weeks has been terrible. Does any-\nbody know whether it is Max Jordan or Max\nGordon?\nWhite:\nIf the first name is Max, probably the last\nname is Gordon.\nFoley:\nThat is what I was thinking about, too.\nBernstein:\nThat is the name of the --\nCochran:\nWaxie Gordon, wasn't it?\nBernstein:\nI was going to try and suggest a preferably\nlegal method of acquiring that French gold of\nthe Bank of Canada. The Bank of France owes\na lot of gold to the Belgians and to the Poles,\nwhich apparently is somewhere in West Africa\nor other points, and if those claims were to\nbe assigned to Canada, Canada would be able to\nset it off against the gold which it holds.\nBell:\nThat is true with the English gold in Paris,\nI take it, that eight or ten million, whatever\nit is.\nCochran:\nThat is pretty small.\nBell:\nBut you could get it.\nBernstein:\nThis other sum runs up to 260 million held for\nthe Belgians.\nH.M.Jr:\nWell, as they say on the farm, \"Ruminate on it\nfrom now until Tuesday.\" Do you know what that\nmeans?\nFoley:\nRuminate?\nCochran:\nSure, they chew their cud.\n32\n- 29 -\nWhite:\nIs it a real agricultural term?\nH.M.Jr:\nSure, & COW has seven stomachs, and the food\ngoes down and comes up again, and they chew\non it.\nBell:\nChews her cud.\nWhite:\nIt is a process of re-vegetation and re-absorp-\ntion.\nH.M.Jr:\nYes, it is a pleasant idea. In & COW the stuff\ncomes down and comes up, and she chews it over,\nand the cow ruminates. So just re-digest that,\nwill you?\nBell:\nDon't founder.\nWhite:\nI think you would be interested in one of the\nitems which we learned at S.E.C.\nH.M.Jr:\nCan you just hold that S.E.C. business for a\nminute?\nWhite:\nYes, if I can hold it.\nFoley:\nHave you got the time, Harry?\nH.M.Jr:\nI wanted to just go on - just hold that a\nsecond. Now, are we all right so far? Now, I\nwon't attempt to getany battleship until Tuesday,\nuntil we hear about it.\nCochran:\nWell, they would have to subscribe to the idea.\nI think they are sounding their people out on\nit already.\nH.M.Jr:\nAll right. Now, the other thing is this. I\nwould like to go from this to Canadian securi-\nties, and before I do the Canadian securities,\ncan I have a report on what has happened at\nthe S.E.C. about my idea of forming a corpora-\nRegraded Uclassified\n33\n- 30 -\ntion to buy the English securities?\nWhite:\nDo you want to?\nFoley:\nGo ahead, Harry.\nWhite:\nWell, I had three meetings, and as a result of\nthe three meetings the feeling was that there\nwere too many difficulties, some of which would\nrun definitely counter to your own wishes in\nsetting up a corporation to handle the direct\ninvestments. They made another tentative pro-\nposal to set up a committee which would function\nin a certain manner to assist the British in the\ndisposition of those securities, and it was\nunanimously felt after consideration of that,\nthat it wouldn't do the trick. They abandoned\nthat, and they finally concluded that it was\npossible to set up a group that could take over\nthe listed securities and provide cash very\nquickly in B. manner which I will indicate in\na moment and that that would provide time during\nthe next few months for the disposition of their\ndirect investments. They seemed certain that\nthe - that several hundred million dollars of\ndirect investments could be disposed of within\nthe next few months.\noley:\nIf the British were willing.\nhite:\nIf the British were willing. He cited one case\nof a reputable man who has a hundred million\ndollars in cash to pay for the Viscose Company,\nwhich they said - which this man said was\nworth from 90 to 100 million dollars. We had\nvalued it at 108 million dollars in our books,\nso that they may be boosted up to that. And\nthe man likewise said, in response to a question,\nthat they could complete the transaction within\ntwo weeks. They were already familiar with some\naspects of the plan, that they would not run\nRegraded Uclassified\n34\n- 31 -\ninto any trust problem because they didn't\nrepresent any of the large rayon producers,\nbut some small interests, and they also spoke\nof some other items. There seemed to be a\nconsiderable question in the minds of several\nthere as to why insurance companies should be\nexcluded from the sale. Pike particularly\nseemed to feel that they should not be ex-\ncluded, that they could get a market for it\nand could be sold.\nH.M.Jr:\nWell, I didn't take that seriously. They are\nserious about it, but I am not.\nWhite:\nBut the sum total of that - the consensus was\nthat if they really meant business, they could\nraise several hundred million dollars in the\nnext few months on the direct investments\nalone, and on the listed securities, they could\narrange some groups, not necessarily corpora-\ntions, to take over the listed securities along\nyour idea of making an advance payment with\ntitle to pass. That created two difficulties\nwhich I think should be mentioned. One was,\nthey thought that such a group would not wish\nto have the decision, when to sell, how much\nto sell, rest with the British, but rather with\nthe group who took it over and made the advance\npayment; and that was one of the difficulties,\nthey didn't know whether the British would\naccede to that.\nH.M.Jr:\nLet me just get this thing, because this thing\nis awfully important. To sum up, as I get it\nfrom the S.E.C. - who sat in on this?\nWhite:\nJerry Frank, Ganson Purcell, Schenker, who is\nhead of the Investment Division, Pike was in\nat 8. couple, and their legal counsel, chief\nlegal counsel was in on one.\nFoley:\nChester Lane?\nUclassified\n35\n- 32 -\nWhite:\nYes, on two.\nFoley:\nWalter Louchheim and Ted Sheridan.\nH.M.Jr:\nWho from here?\nFoley:\nWell, Harry and Huntington and --\nWhite:\nKamarck.\nFoley:\nAnd I went once.\nH.M.Jr:\nNow, let me get - the reasons we will put again\nto one side. They are not going to do anything\nabout the direct investments, you see. Purvis\nwas at the house. There is no question that\nthey are going to sell that stuff. They are\nhaving the managements from all these concerns\ncome over from England. They are terribly up-\nset over the thing. They feel that their word\nof honor is at stake, the whole question, and\nthey have got to keep faith with me.\nFoley:\nIt seems to me that it is really a political\nproblem, and the amount of help they get is\ndirectly attributable to the --\nH.M.Jr:\nWell, they appreciate it.\nFoley:\nTo the amount of cooperation.\nH.M.Jr:\nThey appreciate it. Now, let's put that aside\nfor the moment. The S.E.C. says there is a way\nof forming a group on the New York thing?\nWhite:\nYes, Mr. Frank said if you give him the green\nlight, he can contact two of the - a group of\nleaders from the important associations to get\ntheir advice on which way they think would be\nbest to handle it and whether a group would be\nwilling to take it over and still leave some\ndecision on the part of the British as to the\nrate at which to sell, and then if their advice\nRegraded Uclassified\n36\n- 33 -\nis satisfactory, he could contact that group\na second time with your permission to arrange\nto get the groups with the necessary capital\nto go forward with the arrangements.\nH.M.Jr:\nWell, is there any reason why I shouldn't call\nup Frank right now and talk to him?\nFoley:\nNone at all, except I don't think he is there.\nH.M.Jr:\nWhere is he?\nFoley:\nWell, they called up Thursday, Thursday after-\nnoon, Jerry did.\nCochran:\nThe only thing, do you want to speed up --\nFoley:\n....and wanted to know whether you wanted him\nto do this over the weekend, because if so, he\nwould stay here, and otherwise he would go, and\nI told him I didn't think we would get a chance\nto get to you until Saturday or Sunday, and he\nsaid under those circumstances, he would go out\nof town.\nH.M.Jr:\nHe will be back Monday?\nFoley:\nYes, he will be back Monday. You might try him.\nH.M.Jr:\nI will try him anyway. What is the matter?\nCochran:\nThe question is whether you are satisfied with\nthe rate at which they are selling now.\nH.M.Jr:\nI am satisfied with the rate they are selling,\nif they were selling their direct investments,\nwhich they are not.\nCochran:\nYes, but I think you have to handle them separ-\nately. I mean, this last week they had this\none transaction of 11 and 8. half million dollars,\nand they have some others lined up.\nRegraded Uclassified\n37\n- 34 -\nH.M.Jr:\nI am not satisfied, is the answer.\nCochran:\nWell, we can start on the Canadians. We\nhaven't even told them to go ahead yet.\nH.M.Jr:\nBut I would like to explore this thing. I\ndon't want to leave the thing undone. I want\nto explore everything, and if all the thing -\nI think it would help our markets, too.\nFoley:\nI think SO.' Getting that out of the way would\nrelieve a good deal of apprehension on the\npart of investors who are awfully worried about\nbuying any kind of listed securities now for\nfear that this will be dumped, and the price\nwill go down and they will get hooked.\nWhite:\nThere is one other difficulty that he mentioned\nfor your consideration, and that is that, if\nthese groups are to function on the listed\nsecurities, that they felt rather certain that\nthey would want to handle all and not parts,\nand that they would want to know what the\nsecurities were before they took them over.\nThat was one of the other difficulties.\nH.M.Jr:\nWell, that is all right. Because the reason\nthat - I just don't feel- I mean, that - I\nmean - I didn't like Phillips' attitude the\nother day at all, where he comes in and says,\n\"What are you going to do about our financial\nsituation, and if there is a way of organizing\na group now to take over these things, I would\nlike to do it.\n(Telephone conversation with Jerome Frank\nfollows.)\nRegraded Uclassified\n38\nMarch 8, 1941\n10:36 a.m.\nH.M.Jr:\nHello.\nOperator:\nMr. Frank in his office.\nJerome\nFrank:\nHello, Henry.\nH.M.Jr:\nHow are you?\nF :\nPretty good. Are you out of town?\nH.M.Jr:\nNo, I'm at the Treasury. I got to my own\ngroup on this list of securities quicker than\nI thought I would and they are sitting here\nwith me and they've told me about the three\nmeetinge with you.\nF:\nYes.\nH.M.Jr:\nNow, I would be delighted if you could sound\nout some people as to whether they would care\nto take this stuff over\nand I'm particularly anxious to find out what\nis possible because Canada has approached us\nabout their selling $350 millions worth of\nAmerican securities.\nF:\nWell, do you mean, Henry, the idea of our\ngetting some committees of these fellows\ntogether, I mean, of the investment associations.\nH.M.Jr:\nYes.\nF:\nAll right. Well, I'll get after it right away\nand try to arrange it for Monday.\nH.M.Jr:\nYes. Now, I just think this. I haven't told\nGifford that we were going to do this. Don't\nyou think we ought to tell him?\nF:\nYes, I think 80. You are now talking of the\nlisted securities.\nH.M.Jr:\nI'm talking of the listed.\nF:\nYes, I think Gifford ought to know it first.\n39\n- 2 -\nH.M.Jr:\nWhat?\nF:\nYes, he ought to know it, otherwise he'll hear\nit indirectly.\nH.M.Jr:\nYes. Well, I'll get word to him that I've\nasked you to explore this.\nF:\nWell, then I'll wait until I hear from you\nthat you've done it before I start.\nH.M.Jr:\nAll right.\nF:\nI'll try to get it going Monday.\nH.M.Jr:\nThat's right. I'll have Cochran call him up\nat once and report directly to you what his\nconversation is.\nF:\nNow, on the direct investments, Henry, the\nboys feel that there are some of those things\nthey've got that could be worked out with\nconsiderable promptness.\nH.M.Jr:\nWell, I agree. They're having a hell of a time.\nI still think that they didn't want to do it.\nI don't think that the man they brought over\nis too good at it.\nF:\nWell, Dave Schenker told me a story that was\namazing yesterday. He spoke to Bunker, that's\nLehman Brothers, who I guess wouldn't like to\nget his name dragged in but, I don't know, maybe\nhe wouldn't care. He went to see that gentleman,\nMr. P., yesterday and he left; he was absolutely\ndisgusted; he said the fellow doesn't want to\nsell. He gave him hell. He said, \"You just\ndon't understand this country and if you take\nthat attitude you're going to be in terrible\nshape.\" I mean that's very interesting because\nBunker is 195% pro-British, but he thinks this\nfellow is deliberately dragging his feet. Now\nwould you like to hear from him? From Bunker?\nH.M.Jr:\nNo, because I - both Purvis and Phillips have\nlighted a bonfire under this fellow Peacook\nand they are both just as disgusted 8.6 I am.\nF:\nWell, Peacock had better show his tail.\nUclassified\n40\n- 3 -\nH.M.Jr:\nWell, if he doesn't show some results, I'm\ngoing to ask to have him recalled. See?\nF:\nFine.\nH.M.Jr:\nI'm going to give him another week or 80 and\nthen if he doesn't make a sale, I'm going to\nask the Ambassador to have him recalled.\nF:\nNow, this fellow Bunker is loyal to the American\nAdministration effort, he's all for it, but if\nthat story got out you'd ruin the Lease-Lend\nBill.\nH.M.Jr:\nWell, as I say, if they don't show me something -\nI got a letter from Peacock, I think it was\nyesterday, he's got five deals that he's trying\nto get through, but if he doesn't get one or\ntwo of them through next week, I think I'm\ngoing to have him recalled.\n:\nVery good. Now, Henry, yesterday the Swiss\nMinister called on me as a result of something -\nI had been chatting with Henry Wallace, you know,\nwho 18 related to him.\nH.M.Jr:\nYeah, I know.\nF:\nHe said that he would like to discuss their\nsituation and I said, \"Well, it's not my\nbusiness - it's State and Treasury - - we're\nsimply giving them a little assistance.\" Well,\nhe said, would it be possible to arrange to\nhave some of your fellowe, like Harry White and\nBernetein and 80 on, and somebody from State\nand somebody from our shop sit down with him\nand one of their bankers and candidly discuss\nthe situation.\nH.M.Jr:\nWell, they've all done that.\nF:\nWell, he says he has never had an opportunity -\nfor instance, he'e never talked at length and\nin detail with some fellow, like & Swiss banker\nwho is here and knows the situation\n.....\nH.M.Jr:\nWhich one? Which bank?\n41\n- 4\nF:\nI've forgotten. Somebody that's in New York,\nand he wondered whether - - he thought it would be\nhelpful if we understood their point of view\nand 60 forth.\nH.M.Jr:\nWell, we understand it fully. I'll talk to my\ncrowd about it but, personally, I think it's\njust a waste of time.\nF:\nYou do.\nH.M.Jr:\nYes, that's just a - what do they call it - a\nfence.\nF:\nThat's what I think they are.\nH.M.Jr:\nWell, we know 80.\nF:\nThat's what I told him.\nH.M.Jr:\nThey're just a fence and we've been over it\nand I've - he got, practically, hysterics here\nin my office.\nF:\nYes.\nH.M.Jr:\nBut let me talk to my crowd. If you don't hear\nfrom us, it's just that they've been over it once.\nF:\nWell, I told him it wasn't my business and I\ncouldn't do anything unless you wanted to.\nH.M.Jr:\nWell, I'll talk to them. If you don't hear,\nthen it means that we think it's a waste of time.\nF:\nAll right. Well, I'll get busy as soon as I hear\nfrom your having contacted Gifford.\nH.M.Jr:\nWell, Cochran will call up Gifford and tell him\nwhat we're doing and he will call you within the\nhour, and I'm very much obliged.\nF:\nFine.\n42\n- 35 -\nBell:\nJay Crane says they are interested in Shell.\nH.M.Jr:\nYou see, if you people will read McCormick's\narticle on the fifth page of the New York\nTimes today, if we don't do everything\npossible like this - and I don't like the\nidea - the R.F.C. will do it, and they have\neven got the forms drawn up.\nWhite:\nThat is the point that Ed made at the meeting\nthere, and Ed thought that maybe if they knew\nthat, it might help.\nH.M.Jr:\nWell, you (Cochran) are my contact with\nGifford, aren't you?\nCochran:\nYes.\nH.M.Jr:\nSimply call up Gifford and tell him that I am\ngoing to go ahead. I have asked Mr. Frank to\ngo ahead and contact various groups to see\nwhether they would be interested in taking,\nnot only the English, but the Canadian securi-\nties, over en bloc.\nCochran:\nAre these investment bankers that he has con-\ntacted?\nH.M.Jr:\nI don't know what they are.\nCochran:\nWhat are they, Ed?\nWhite:\nThey are the heads of investments associations.\nThey presumably are men who would not, themselves,\nbe interested, but they are leaders of the pro-\nfession who would give them their opinion as to\nhow it might be handled under these conditions.\nCochran:\nAnd that you are telling the S.E.C. to go ahead\nwith it?\nH.M.Jr:\nI am telling the S.E.C. to go ahead, that this\ndoesn't mean that I am dis-satisfied with these\n43\n- 36 -\nday-to-day operations, which I am not, but\nthat I feel in view of this and the request\nfrom Canada and in view of the fact that Mr.\nPeacock has been a complete failure so far,\nI have to see that there is more money coming\nforward than the ten million dollars a week,\nbecause I don't know - if I thought that\nPeacock was going to produce, I wouldn't be\npushing this, but inasmuch as Peacock - I see\nno signs of his getting anywhere, plus the\nCanadian's wants to do it, I have got to move\non this front, but I am entirely satisfied with\nhis day-to-day operations, and then after you\ntalk with him, would you call Mr. Frank, please?\nCochran:\nYes, sir.\nH.M.Jr:\nAnybody disagree with me? I mean --\nWhite:\nI think he should make it clear that you have\nasked the S.E.C. to investigate the possibili-\nties and not go ahead and form the groups.\nH.M.Jr:\nNo, no, that they are going to investigate,\nand they are going to do it, and that just as\nsoon as they have anything, the S.E.C. and the\nTreasury will have Mr. Gifford come down and\nconsult with him.\nCochran:\nYes.\nH.M.Jr:\nDo you see?\nCochran:\nI understand.\nH.M.Jr.\nBut the thing is, one, Canada's desire to sell,\nand two, Mr. Peacock is unable to produce any-\nthing.\nCochran:\nIncidentally, part of Gifford's staff is now\nworking with Peacock trying to shove it along.\n44\n- 37 -\nH.M.Jr:\nIf we did this, maybe Gifford could devote\nall of his time to it, and they could send\nPeacock home. I think We have covered 8. lot\nof ground, don't you?\nFoley:\nDon't you think if you told these fellows that\nunless progress was made insofar as these\ndirect investments were concerned, we would\nhave to canvass the possibilities of operating\nthrough a corporation to be set up by the R.F.C.\nto take over all of this stuff and then sell\nthe stuff - I think if you told them that,\nthat would force them to do it or else, but I\nthink you have got to show some progress before\nwe go down on the Hill on this stuff.\nH.M.Jr:\nEd, let me decide one time to use the big stick.\nI have really got Purvis and Phillips really\nexercised on this thing, you see, and let me\nmake the move now on the S.E.C.\nFoley:\nSure.\nH.M.Jr:\nAnd you know I have the letter from the British\nAmbassador giving me - wanting to put it all\nin my hands, and Purvis said last night he\nthought it was one of the smartest letters he\never saw. He says, \"You do and you don't, and\nyou haven't given up anything.\" He liked the\nletter very much. He thought it was very smart.\nSo let's just move on this. I am satisfied, and\nwe will meet again Tuesday, and then on Monday\nif you could have something for me, I would\nlike to discuss the mechanics on the Lend-Lease\nBill. Is that pushing you fellows too hard?\nI mean, on the theory that the bill passes?\nFoley:\nWell, there is a chance the bill may pass to-\nnight at a night session.\nH.M.Jr:\nOh, they say it is very good.\nRegraded Uclassified\n45\n- 38 -\nFoley:\nI think if they had held a night session\nThursday night there would be no question\nabout it.\nH.M.Jr:\nHalsey was positive, last night, to me, that it\nwould go.\nWhite:\nI don't think you should wait until the bill\npasses.\nFoley:\nNo, I think you ought to have a meeting any-\nway.\nH.M.Jr:\nI am going to have a meeting Monday morning\nwith you gentlemen at 10:45. Have you got\nanything at 10:45, Bell?\nBell:\nI don't think SO. I will change it if I\nhave.\nH.M.Jr:\nTen forty-five. I am going to put down Lend-\nLease. Now, who sits in on that?\nFoley:\nCox.\nH.M.Jr:\nI see.\nWhite:\nWouldn't Young sit in? Doesn't he sit in?\nH.M.Jr:\nYes, Young. Would you (Foley) be in on that?\nCochran:\nI will come if I can be of any help.\nH.M.Jr:\nAnd Harry and you people come, plus Philip\nYoung. Would you (Foley) tell Philip?\nFoley:\nYes.\nH.M.Jr:\nAll right?\nWhite:\nOn your meeting on Tuesday, I take it, you\nwere going to see us before you saw the\nBritish again.\n46\n- 39 -\nH.M.Jr:\nOh, yes.\nBell:\nThis is only with us, isn't it, at 10:15?\nFoley:\nThat is 10:15, and the other one Monday is\n10:45.\nH.M.Jr:\nThere is nothing to inform the State Depart-\nment about, is there?\nCochran:\nI am to ask the British now for this addi-\ntional information and to draw up a note to\nthem for you to see Tuesday.\nH.M.Jr:\nBut the first thing to do is talk with\nGifford.\nThank you all.\n47\nMarch 8, 1941.\nTO:\nMR. KUHN\nFROM:\nTHE SECRETARY\nI'll be glad to see this English movie in my\ndining room at 11:00 o'clook this morning if you can\narrange it.\nMovie, \"London Can Take It,\" shown in\nSecretary's dining room at 11:00 a.m.,\nMarch 8, 1941.\nRegraded Uclassified\n48\nTREASURY DEPARTMENT\nRegraded Uclassi\n\\ 1 you\nINTER OFFICE COMMUNICATION\nDATE Harch 5, 1941\nTO\nSecretary Morgenthau\nFROM\nMr. Cochran\nSTRICTLY CONFIDENTIAL\nFollowing our Group Meeting this morning, I telephoned Mr. Gifford in New\nYork at 10:45 a.m. I told him that the Secretary vas quite pleased with the way his\nsales of marketable securities had been going, and he wanted me to let Mr. Gifford\nknow it. On the other hand, the Treasury has now been approached by the Ministry of\nFinance of Canada with respect to the possible liquidation of some $350,000,000 of\nCanadian-held United States securities. Furthermore, no liquidation has yet been made\nof British direct investments. The Secretary is anxious to explore every possibility\nfor insuring an orderly and rapid liquidation of British and Canadian investments\ntoward the end that the needed dollar proceeds may be flowing in, and that at the seas\ntime the securities market may not be adversely affected. In this spirit V6 are having\nthe cooperation of the Securities and Exchange Commission,\nI then told Mr. Gifford that the Secretary has spproved the idea that Chairman\nFrank of the Securities and Exchange Commission call to Washington 8 group from the\nJev York Investment Association to consider the possibility of setting up of scall private\norganization to take over on bloo British and/or Canadian holdings of markstable securi-\nties, and also to consider whether anything can be done with respect to direct invest-\nments. I assured Mr. Gifford that the Secretary did not want any conversations started\nbetween the Securities and Exchange Commission and New York Investment people on this\nsubject without Mr. Gifford being first made aware of the 1dea. Furthermore, there\nwould be no thought of carrying through the idea of setting up a group, if this appears\nfeasible after the initial conversations, without again consulting Mr. Gifford.\nMr. Gifford asked no to thank the Secretary for authorizing as to acquaint\nhim with developments here. Ho offered no objection whatever to Mr. Frank getting\ninto contact with the investment group along the lines above set forth. Mr. Gifford\nVas also gratified to know that the Secretary was pleased with the manner in which\nmarketable securities are being liquidated. In turn, I let Mr. Gifford know that we\nare happy to learn that his organization vas assisting Sir Edward Peacock in the\nlatter's difficult task,\nImmediately after this conversation, I telephoned Chairman Frank of the\nSecurities and Exchange Commission. I told him that I had been present when the\nSecretary had spoken with his from our meeting this morning, and I also recounted By\nconversation with Mr. Gifford. Mr. Frank said he would, therefore, proceed with his\nplan and endeavor to have a group from New York meet at the Securities and Exchange\nCommission on Monday.\nBMP\n49\nTREASURY DEPARTMENT\nMischt\nINTER OFFICE COMMUNICATION\nin\nDATE March 8, 1941\nTO\nSecretary Morgenthau\nFROM\nMr. Cochran\nSTRICTLY CONFIDENTIAL\nIn accordance with the decision reached in our Group Meeting with the Secretary\nthis morning, I telephoned the British Treasury officials at 11 a.m., and spoke with\nMr. Playfair. I referred to the conclusions reached on page 4 headed \"Final Result\"\nof the memorandum on the British cash position which had been submitted to us yesterday.\nI told Mr. Playfair that it would facilitate the Treasury in reaching an understanding\nof the situation if the British would make available to us, preferably on Monday,\nanother statement showing the total amount of commitments and down-payments for the\nperiod under consideration, together with as accurate information as possible as to\nhow much relief can be expected from the Army and how much from the R.F.C. This should\nshow then how much assistance would be required from the Treasury along the lines sug-\ngested in the British memorandum. Playfair promised to have this for us by Monday.\nB.M.\n50\nMarch 8, 1941\n11:03 a.m.\nH.M.Jr:\nHello.\nOperator:\nAdmiral Towers.\nAdmiral\nTowers:\nGood morning.\nH.M.Jr:\nHow are you, Admiral?\nT:\nVery well, thank you, sir.\nH.M.Jr:\nAdmiral, have you got a pencil?\nT:\nYes, sir.\nH.M.Jr:\nThere 18 a Dr. Joseph Kreiselman, K, like in\nkitty, K-r-e-i-s-e-l-m-a-n, who has come to me\nand says that he has a device which has been\nproven to make it possible for an aviator to\nfly up to 37,000 feet. Hello?\nT:\nYes.\nH.M.Jr:\nHe doesn't want any money, he is willing to\ngive the patent to the Navy and everything\nelse. Hello. He 1sn't interested in the\nmanufacturing rights or anything, you see.\nThe thing has been tested at Harvard University.\nHe is a man who 18 a reputable doctor\n......\nOperator:\nHello. Have you been cut off?\nH.M.Jr:\nHello.\nOperator:\nWere you cut off from Admiral Towers?\nH.M.Jr:\nYes,\nOperator:\nGo ahead, please.\nH.M.Jr:\nAdmiral?\nT:\nYes, sir. I got up to 37,000 feet and we\nwere out off.\nH.M.Jr:\nThe man wants to give it to the Government.\nHe doesn't want any money, no interests in the\nmanufacturing rights, or anything. It has\n51\n2\nbeen tested at Harvard University. Hello?\nT:\nYes, sir.\nH.M.Jr:\nWould you give him time enough yourself to\nlisten to the story because he tells me he\nhas been unable to get anybody interested.\nT:\nI'd be glad to. Is he in town now?\nH.M.Jr:\nHe lives in Washington and his name 1s in\nthe telephone book. Dr. Joseph Kreiselman.\nHe's an anesthetist. The man has had\nheart trouble 80 he can't practice any more.\nT:\nI see. I'll communicate with him.\nH.M.Jr:\nWould you see him personally?\nT:\nI will.\nH.M.Jr:\nAnd if the Navy is not interested, then I\nwant to have him see Bob Lovett because Lovett\nhas told me about this new plane that the\nArmy is getting to go up 40,000 feet.\nT:\nYes. Of course we are - confidentially, we\nare quite confident that's what happened to\nour test pilot here three days ago, who was\nkilled.\nH.M.Jr:\nWell, that's what Dr. Kreiselman says.\nT;\nThat it was oxygen failure.\nH.M.Jr:\nWell, he invented this thing for resuscitating\nbabies which is used all over America.\nT:\nWell, I have some very able specialists here\nthat I'd be delighted to have him talk with.\nH.M.Jr:\nWho is that?\nT:\nOne is Commander Poppin of the Medical Corps,\nwho has made a specialty on this, and the\nother is Lieutenant Commander Sullivan, who\nhas only recently joined the Naval Reserve,\nI mean he's an engineer.\n52\n- 3 -\nH.M.Jr:\nWell, if you would take a few minutes to talk\nto him yourself and then let me know, would\nyou, what you've done about it.\nT:\nI will. I'll try to get hold of him this\nmorning.\nH.M.Jr:\nBecause, frankly, he has been given the run-\naround.\nT:\nI see. I'll get hold of him this morning.\nH.M.Jr:\nRight. Thank you.\n53\nMarch 8, 1941\n11:44 a.m.\nH.M.Jr:\nHarry?\nHarry\nHopkins:\nHello, Henry.\nH.M.Jr:\nAre you 80 you can talk for five minutes?\nH:\nYes. I've got a terrible confession to make\nto you though.\nH.M.Jr:\nWhat's that?\nH:\nWell, I accepted a week ago a dinner invitation\nfor tomorrow night and now my secretary reminds\nme of it.\nH.M.Jr:\nI see. Well, that's my bad luck.\nH:\nYeah, I'm awfully sorry, Henry. I find I\npromised to go out to the Librarian's - what's\nhis name\n.....\nH.M.Jr:\nMacLeish.\nH:\nArchie MacLeish's.\nH.M.Jr:\nOh, yes.\nH:\nI'd forgotten all about it.\nH.M.Jr:\nWell, we can get together - Monday night I'm\nout, but you wanted to settle this sooner,\ndon't you?\nH:\nWell, I want to talk to you - no, it doesn't\nhave to be done until the first of the week.\nH.M.Jr:\nWell, I think the sooner the better. Well,\nlet me tell you what I have on my mind and\nthen you suggest a time.\nH:\nGo ahead.\nH.M.Jr:\nI told you I had Purvis last night and I've\nbeen working with Phil this morning and this\nis a suggestion I'd like to make and then I'd\nlike to have Phil come over and talk to you\nfurther about it if it's agreeable to you.\n54\n- 2 -\nIn order to get rid of this foreign thing,\nwe divided it up into sort of three blocks:\nthose countries which will come under the\nLend-Lease, which is the British Empire and\nany countries that are fighting with them,\nI mean, for the moment Greece, Norway or any\nof these countries which are part - have their\ngovernments in London, you see. Hello?\nH:\nYeah. What about China?\nH.M.Jr:\nChina too. Any of these countries who would\ncome under the thing. Then one of the worst\nheadaches is South America, see, and we were\nthinking for a better place to hand that all\nover to Nelson Rockefeller - his group. I\nmean, I'm just giving that as a suggestion,\nyou see.\nH:\nYeah.\nH.M.Jr'\nThere are about eight different committees\nworking on South America. Somebody else may\nsay give it to somebody else, but I don't see\nwhy you'd want to be bothered with that.\nH:\nNo, I'm sure I don't.\nH.M.Jr:\nThen things like Russia, Portugal, Iran or\nany of these others, just give them back to\nSumner Welles.\nH:\nLet him handle the whole business.\nH.M.Jr:\nWell, let him handle anything that isn't\nLend-Lease - you'd let him handle South America\ntoo?\nH:\nNo, not necessarily. Here's one of the -\ndid Young talk to you about what we talked\nabout?\nH.M.Jr:\nYes, he did.\nH:\nThese countries are all coming to him now\nand apparently he's got three or four people\nto do it very easily and seem to get results\nand if you're going to change all that -\nNelson Rockefeller, those fellows, God it'll\n55\n3 -\ntake them weeks to find their way around.\nI'm just thinking outloud.\nH.M.Jr:\nWell, we haven't accomplished anything for\nSouth America anyway.\nH:\nWhat do you mean you haven't accomplished?\nH.M.Jr:\nWell, very little. You've got to spend a\nmonth getting them two engines. It's all\ndamn nonsense. See? And that would leave\nPhilip\nH:\nIt isn't worth doing is your point, 80 let\nsomebody else do it.\nH.M.Jr:\nYeah, and that would leave Philip and his\ncrowd free to be entirely at your disposal.\nH:\nYeah. Of course, that would be much better.\nH.M.Jr:\nAnd they wouldn't be fussing with South\nAmerica, or Russia, or Portugal or anything\nelse, but they would be on the funds of\npeople of these democratic countries that we're\ngoing to help under the Lend-Lease. Now,\nfrom an ideal standpoint it - on paper it\ndoesn't look 80 good, but from a practical\nstandpoint .....\nH:\nWell, now, Phil knows all about this.\nH.M.Jr:\nI've talked with Phil twice today.\nH:\nWell, I'll see him before the weekend 1s out.\nH.M.Jr:\nAll right. Now, if you want to\n.......\nH:\nLet me find out what my plans are. I'll call\nyou this afternoon sometime, Henry, sometime\nwhen you are free.\nH.M.Jr:\nAll right. And I'll have Phil call you or\n.....\nH:\nOh, I'll get in touch with him. I know how\nto get him.\nH.M.Jr:\nBut how does that sound to you?\n56\n4\nH:\nWell, I'd like to talk it over as to whether\nthere are some kinks in it from the State\nDepartment point of view. I know I don't want\nanything to do with it. Now if Young 18\ngoing to help me, I'd of course much prefer\nthat Young didn't have anything to do with it.\nH.M.Jr:\nWell, I'm taking a much further position\nthat with Young helping you, that would leave\nthe tag ends over here.\nH:\nWell, you don't want all those tag ends\naround there.\nH.M.Jr\nI'm not going to do it. See?\nH:\nOh, no, no. You don't want the Minister of\nColombia coming in to see you.\nH.M.Jr:\nNo, I just can't do it, but that would leave\nYoung and his little group entirely at your\ndisposal.\nH:\nYeah. Well, I'll talk to Phil about it right\naway, Henry, old boy.\nH.M.Jr:\nThank you.\nH:\nGood-bye.\n57\nMarch 8, 1941\n11:53 a.m.\nH.M.Jr:\nHello.\nGordon\nRentschler: Hello, Henry, good morning. This 18 Gordon.\nH.M.Jr:\nHow are you?\nR:\nFine. Henry, I don't know whether it would\nbe of any help to you or not, but I'm calling\nyou as chairman of the clearing house committee\nin New York to say that I had these boys pass\na resolution which well give you, if you wish,\noffering without charge all the services of\nthe clearing house banks of New York in\nhelping you with your various issues, no\nmatter what they are, that your program is\nyou want to put out.\nH.M.Jr:\nWell, I think that's fine.\nR:\nNow, if making our gesture at the right moment\n16 of any help to bring all the other banks\nin the country in line, why we'll do it\nformally, or informally, just as you like.\nH.M.Jr:\nWell, now, we're working on that here through\nthis Savings Bond Section, you see, and we're\nworking with the A.B.A. on that.\nR:\nThat's right.\nH.M.Jr:\nMy contact right now is with the A.B.A.\nR:\nOh, fine. That's by far - that's exactly\nthe right thing to do. Of course, Randolph\nis keeping his fingers on that too, as you\nknow.\nH.M.Jr:\nAnd so I think that whatever announcement\nshould come, I'd like it to come from the A.B.A.\nR:\nWell, now, whenever you're ready - when are\nyou going to be ready with it?\nH.M.Jr:\nWell, I don't know. They think it will be\nanother couple of weeks.\nRegraded Uclassified\n58\n- 2 -\nR:\nI ses. Well, whenever you're ready, if you\nwant to couple this with the A.B.A. or let the\nA.B.A. do it on their own account, I just\nwant to\nH.M.Jr:\nWell, you're all members of the A.B.A.\nR:\nWe're all members of the A.B.A.\nH.M.Jr:\nIn good standing.\nR:\nWe're all members of the A.B.A. only it might\nbe of value for you to say that all the clearing\nhouse banks of New York had done 80 and 80,\nand then if all the other clearing houses in\nthe country, 8.8 they will, follow suit, tie\nthat into the A.B.A., it might be a little\nhelpful.\nH.M.Jr:\nWell, thank you very much.\nR:\nWell, whatever it 18, Henry, whichever way you'd\nlike to handle it, why we're agreeable to do it.\nH.M.Jr:\nAnd no charge.\nR:\nOh, yes, no charges.\nH.M.Jr:\nO.K.\nR:\nBecause I wanted to - and they were all unanimous\nin it. They wanted to be sure that that was\ncompletely understood, you see.\nH.M.Jr:\nO.K.\nR:\nWhat else do you know?\nH.M.Jr:\nWell, I think that's enough for today.\nR:\nAll right, young fellow. Are you going to be\nin Washington all next week?\nH.M.Jr:\nI'm afraid 80.\nR:\nWell, if you're going to be free on Thursday,\nI might drop in for a few minutes.\nH.M.Jr:\nWell, that's a lifetime off. Give me a ring.\n59\n- 3 -\nR:\nI'll give you a ring on Wednesday before I\nleave Boston, Henry.\nH.M.Jr:\nAll right.\nR:\nAll right. Good luck to you. You're keeping\nyourself in good health are you?\nH.M.Jr:\nOh, yes.\nR:\nGood luck to you.\nH.M.Jr:\nThank you.\nR:\nRight.\n60\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE March 8, 1941\nTO\nSecretary Morgenthau\nFROM\nH. D. White\nSubject: The British Financial Picture\n(Highlights of appended memorandum prepared by\nMr. Adler.)\n1. British Government expenditures now consume over\n60 percent of national income. Expenditures have been\nrunning at the rate of $18 billion per year for the last\nfour months and the national income for 1940 is estimated\nat about $28 billion. Expenditures for war purposes account\nfor between 80 and 90 percent of all expenditures. The\nfinancial scale of the war effort doubled between April\nand November 1940, and has since remained the same.\n2. Gross National Debt rose by $9-1/2 billion --\nfrom $34.1 billion to $43.6 billion - in the first sixteen\nmonths of war. The actual increase in the debt was probably\ngreater. For whereas before there were outstanding $2\nbillion of gold assets, these assets had been depleted with-\nout liquidating the borrowing incurred to acquire them.\n3. Despite the large increase in the Government's\nborrowing, it 1s still able to borrow at a little over\n3 percent on long-term and a little over 1 percent on short-\nterm. In fact it has been able to borrow on increasingly\nfavorable terms. The yield on 2-1/2 percent consols fell\nfrom 3.68 percent in December 1939 to 3.49 percent in June\n1940 and 3.27 percent in December 1940.\n4. Taxation has increased about 70 percent since the\nbeginning of the war.\n5. Britain is financing her war expenditures (87-1/4\nbillion in 1939-40 and probably $16 billion in 1940-41) by\nthe following means:\n1939-40 1940-41 (Estimated)\nTaxation\n58 percent\n37-1/2 percent\nShort-term borrowing\n21\n#\nabout 28\nLong-term borrowing\n12\nи\n28\n#\nLiquidation of gold holdings\n9\n#\nabout 6-1/2\nResidual\n61\nDivision of Monetary\n- 2 -\nResearch\n6. Expenditures are rising more rapidly than revenues,\nand savings are insufficient to meet the gap. Expenditures\nin 1941-2 will certainly be not less than $20 billion and\nwill probably be more.\n7. Since the beginning of the War the official whole-\nsale price index has risen more than 50 percent and the not\nvery reliable official cost of living index more than 25\npercent (the actual increase in the cost of living was\nprobably nearer 40 percent). The rise in prices, however,\nwas much sharper in the first four months of war than in\n1940.\n8. Note circulation has risen by $400 million or\nunder 20 percent and demand deposits (London clearing banks)\nby $1-3/4 billion, or 35 percent since the outbreak of war.\nThis compares with an increase of over 20 percent in our\nnote circulation and of over 25 percent in our demand deposits\n(101 reporting cities) in the same period.\n62\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE March 1, 1941\nTO\nMr. White\nFROM\nMr. Adler\nSubject: How much is Britain spending?\nI. The mounting scale of British expenditures.\n1. British Government expenditures are now consuming over 60 percent\nof the national income. Expenditures for the last three months\nhave been running at the rate of $18 billion per annum, and\nnational income for 1940 has been estimated at about $28 billion.\nOf the $49 million spent daily, between $42 and $46 million are\nfor war purposes, of which about 80 percent goes to the fighting\nservices and the remainder for supplies, shipping, food and home\nsecurity.\n2. British expenditures on the war effort just about doubled between\nApril and November 1940. They rose gradually from $17.5 million\ndaily in September 1939 to $32 million in March 1940. From\nSeptember 1939 to March 1940 the total average daily spending was\n$24.5 million - or just about half the present level. In April\nand May 1940, it fell to $23 million, but when Churchill's ministry\ntook over in June, it rose to about $38 million, at which level it\nwas maintained for the next three months. It jumped in October to\n$44 million, and since November has run at the level of $49 million.\n(Table I indicates the average daily changes in total and supply\nexpenditures and in the floating debt since the beginning of the\nwar. See Annex.)\n3. The January 1941 decline in supply expenditures to $42 million/sa daily\ncompared with $46 million in November and December 1940 is probably\ntemporary and seasonal.\n4. The current rate of expenditure of just under $50 million a day\nwill probably not only be maintained but actually increased in the\ncourse of the year. The reasons for this probable increase are:\n(a) If the war is intensified, as appears likely, the cost of\nwaging it will rise.\n(b) Government expenditures will be swollen by rising prices.\n(For convenience of interpretation, all 6 figures in this memorandum are\nrounded off and converted into dollars at $4 = to hl.)\nUclassified\n63\nDivision of Monetary\nResearch\n(c) While the enactment of the Lend-Lease Bill will undoubtedly\nrelieve England's financial burden, its effects may not be\nsufficient to counteract the cost of the intensification of\nthe war and of rising prices, and in any case it will not\nsolve England's internal financing problem.\nThe Economist plausibly estimates next year's expenditures\nat the gigantic sum of $20.5 billion. Since all previous esti-\nmates, whether official or unofficial, of future rates of\nexpenditure have been uniformly too low, this estimate also\nshould be regarded as, if anything, erring on the side of con-\nservatism.\nII. British Budgets 1939 41.\n1. There have been three British War Budgets; the first was submitted\nin September 1939 as a revised budget for the fiscal year April\n1939 - March 1940, the second in April 1940, and the third in July\n1940 as a revised budget for the fiscal year 1940-41. All three\nunder-rated the scale of expenditures necessary for the waging of\nwar and have partaken of the character of what Sir Kingsley Wood,\nthe present Chancellor of the Exchequer, has called \"interim\"\nbudgets.\nTo some extent this consistent under-estimate of the necessary\nscale of expenditures was deliberate because it was thought desir-\nable not to reveal the real magnitude of the war burden which the\nnation had to bear. Many observers believe that this official\ndesire to conceal the extent of the burden was a psychological\nerror, insofar as the public was more than willing to respond to\nany calls the Government might make. Moreover, as far as the first\ntwo budgets are concerned, it would appear that the Government was\nsimply not contemplating war on a large scale. The July 1940 Budget\nindicates a more realistic appreciation of the magnitude of the\nfinancial problem, though again it was admittedly improvised and\ndid not go to the root of the question of switching as much of the\nnation's financial and economic resources as possible to the war\neffort. On the other hand, in the rapidly changing situations\nwith which the British Government was confronted, it was very\ndifficult to anticipate correctly the actual financial needs.\n2. The following table presents these Budgets in summary form:\nRegraded Uclassified\n64\nDivision of Monetary\n- 3 -\nResearch\nBritish Budgets 1939-41\n(In millions of dollars)\nI\nII\nIII\nIV\n1939-40\n1940-1\n1940-1 Revised\nIncrease in III\nover I\nEstimated Revenue\n3,980\n4,936\n5,440\n1,460\nActual Revenue\n4,196\nEstimated Expenditure\n7,732\n10,668\n13,868\n6,136\nActual Expenditure\n7,268\nEstimated Deficit\n3,752\n5,732\n8,428\n4,676\nActual Deficit\n3,072\n3. On the basis of the flow of receipts and expenditures from April\n1940 to January 1941, the receipts for the fiscal year 1940-41\nwill be in the neighborhood of about $6 billion, or somewhat\nabove the estimated revenues, and expenditures will total approxi-\nmately $16 billion, leaving a deficit of about $10 billion, or\n$1-1/2 billion more than the estimated deficit.\n4. The increase in revenue in 1940-41 over 1939-40 is negligible as\ncompared with the increase in expenditure. Revenues for 1940-41\nwill be less than 50 percent more than in 1939-40 when there was\nalready a deficit of over $3 billion, while expenditures will be\nmore than double those of the previous year, and the gap between\nrevenue and expenditure will inevitably continue to widen for the\nduration of the War.\n5. The gross National Debt rose 28 percent in sixteen months, from\n$34,088 million to $43,608 million between September 2, 1939 and\nDecember 21, 1940. From September 2, 1939 to December 31, 1940,\nthe total Floating Debt rose from $4,670 million to $10,504 million,\nan increase of almost 125 percent. In fact the actual position\nwas worse. As the Exchange Equalization Account had purchased gold\nby issuing bills, 1.0. by Government borrowing, gold held by the\nAccount was an asset held against the debt incurred in acquiring\nit. But since the War the gold assets were depleted without any\ncorresponding reduction in the debt.\n65\nDivision of Monetary\nRegraded Uclassi\nResearch\nIII. How Britain is financing the Mar.\n1. The 1939-40 expenditures of approximately $7-1/4 billion were\nfinanced as follows:\n(a) Taxation which yielded $4.2 billion, or 58 percent of the\ntotal expenditures. The effective income tax was raised from\n25 percent to 27-1/2 percent, and customs and excise taxes\nand the charges for governmental services were increased.\n(b) An increase in the floating debt from $3,680 million on March\n31, 1939, to $5,958 million on March 31, 1940. Of this in-\ncrease Treasury Bills accounted for $2,141 million, and Ways\nand Means advances for $136 million. Actually not all the\nincreased issue of the Treasury Bills represents net Government\nborrowing as Government departments absorbed about $840 million\nof bills. Short-term borrowing, therefore, does not account\nfor more than $1,477 million, or just less than half of the\n1939-40 deficit of over $3 billion, and over a fifth of total\nexpenditures.\n(c) Long-term borrowing, which accounted for about $850 million\nof the deficit and about one-sighth of total expenditures.\nWith the inauguration of the national savings campaign in\nNovember 1939, the Government simultaneously exercising its\ncontrol over the money and capital markets and appealing to\nthe patriotism of its citizens, had no difficulty in borrowing\nat 3 percent long-term, a rate which contrasts favorably with\nthe 5 percent of 1916-18.\nNote: The existence of surpluses from extra-budgetary accounts\nsuch as the unemployment insurance fund and the accumulation of\nsterling balances in London by the Dominions and sterling area\ncountries facilitated the task of Government borrowing. The\nuse of extra-budgetary surpluses held in the form of Government\nsecurities for current needs represents deferred long-term\nborrowing, while the accumulation* of sterling balances repre-\nsents Empire credits to England. What was not met by genuine\nsavings and borrowing from these sources was met by bank pur-\nchases of Government securities.\n(d) Use of gold holdings. Sir John Simon in his Budget speeches\nindicated that U. K. gold holdings would be liquidated in\norder to finance the war. This is a residual item and would\nappear to account for between $600 and $700 million of expendi-\ntures.\n66\nDivision of Monetary\n- 5 -\nResearch\nNote: While the Government incurs an internal debt in taking\nover British-held foreign securities, it incurs no new internal\ndebt in liquidating its gold assets in the hands of the Stabiliza-\ntion Account. Therefore the liquidation of these securities\nis in a different category from the liquidation of gold assets,\nas far as internal financing is concerned.\n2. 1940-41 expenditures will probably amount to $16 billion.\nHow is this expenditure being financed?\n(a) Taxation, which will yield about $6 billion or only 37-1/2\npercent of total expenditure, as compared with 57 percent in\nthe previous fiscal year. This drop in the proportion of\nexpenditure yield by revenue and the increase in the absolute\namount of expenditure are, taken together, the best indicators\nof the magnitude of England's financial problem.\nThere have been drastic increases in taxation since the\nbeginning of the War,\nThe\nstandard income tax which amounted to 27-1/2 percent when the\nwar started, is now 42-1/2 percent; whereas at the outbreak\nof the war half an individual's income was taxed away only\nwhen he earned $68,000 or more per annum, now an individual\nreceiving $21,200 has to pay half of it in taxes. Sharp in-\ncreases have also been imposed in customs and excise taxes\nand since October 21, 1940, a purchase tax amounting to 24\npercent of the retail price in the case of luxuries and 12\npercent of the retail price on many other products has come\ninto effect. Nevertheless, increased receipts from these\nsources are, in Mr. Keynes' words, \"chicken-feed to the\ndragon of war\".\n(b) Short-term borrowing. In the nine months ending December 31,\n1940, the floating debt increased from $5,958 million to\n$10,504 million, an increase of over 75 percent. The break-\ndown in the increase of the floating debt for the last dates\navailable is as follows:\nRegraded Uclassified\n67\nDivision of Monetary\n- 6 -\nResearch\nIncrease in British Floating Debt 1/\n(In millions of dollars)\nBank of\nTreasury\nTreasury\nPublic\nEngland\nDeposits by\nTotal\nBills\nDepartments\nAdvances\nBanks\nMarch 31, 1940\n5,958\n5,711\n246\n-\n-\nDec. 31, 1940\n10,504\n8,607\n344\n202\n1,352\nThe Treasury deposits by banks are a new short-term\nborrowing device instituted on July 4, 1940, the object of\nwhich was to divert to the Treasury the surplus funds of\nthe principal banks. The Government pays the banks 1-1/8\npercent on six months non-negotiable deposit receipts. The\nreasons for the adoption of this scheme were: (1) the un-\neven spread of revenue receipts; (2) the mounting expendi-\nture; (3) the present volume of Treasury bills; (4) the fact\nthat such borrowing is less inflationary than Ways and Means\nAdvances by the Bank of England.\nThe increasing extent to which resort has been had to\nthis device is indicated in the following table:\nTreasury Deposits by Banks\n(In Millions of Dollars)\nJuly 26, 1940\n$ 120\nAugust 31, 1940\n120\nSeptember 30, 1940\n496\nOctober 26, 1940.\n798\nNovember 30, 1940\n1,078\nDecember 31, 1940\n1,352\n1/ The Economist is our regular source for current floating debt data. As\nButterworth sends us floating debt figures only intermittently, it might\nbe advisable to ask him to supply us the data, with breakdowns, regularly.\n68\nDivision of Monetary\n- 7\nResearch\nWhat proportion of total expenditures will be met by the\nincrease in floating debt in 1940-41?\nThe following table gives us a clue to the answer to\nthis question.\nThe British Budget Fiscal Year 1940-41\n(In Billions of Dollars)\nFirst 9 months\nWhole Fiscal Year\nLast Quarter\n(Actual)\n(Estimated)\n(Estimated)\nI\nII\nII - I\nRevenue\n3.0\n6\n3.0\nExpendi-\ntures\n10.8\n16\n5.2\nDeficit\n7.8\n10\n2.2\nTo this estimated deficit of $2.2 billion, for the\nJamiary-March quarter of 1941, gross savings will contribute\nabout $1.1 billion (over $4.5 billion for the whole year\nminus $3.4 billion yielded in the first nine months), leav-\ning between $1 and $1.1 billion to be yielded by & further\nrise in the floating debt, as presumably little or no gold\nnow remains to be liquidated.\nWhile the floating debt has in the past declined season-\nally in the first three or four months of the calendar year\n(it did 80 in these months in 1940 also), it may well rise\ncontra-seasonally by as much as $1 billion in the January-\nMarch quarter unless accumulated sterling balances and extra-\nbudgetary surpluses are used to buy longer-term Government\nsecurities to a greater extent than in 1939-40. This would\nbring it to a total of about $11.5 billion on March 31, 1940,\nan increase of about $5-1/2 billion for the year.\nNot all this increase, however, is incurred to meet\ncurrent expenditures. In the fiscal year 1939-40 Government\nDepartments used funds on hand to buy $840 million of Treasury\nBills, and it is possible that they will increase their\ncurrent holdings of Treasury Bills even further. If they\nincrease their holdings by approximately the amount they\nbought in 1939-40, the rise in the floating debt will account\nfor over $4-1/2 billion, or 28 percent of total expenditures\nand 45 percent of the deficit in the fiscal year 1940-41.\nRegraded Uclassified\n69\nDivision of Monetary\n8 -\nHenwerch\n(c) Long-term borrowing. The national savings campaign has\nyielded $3,688 million up to Jamary 25, and will probably\nyield over $4-1/2 billion for the whole fiscal year, or 28\npercent of total expenditures. This figure is a figure of\ngross and not of net savings, as it is swollen by the rein-\nvestment of the proceeds of vested securities, by bank\npurchases of government securities which represent the\ncreation of credit, and also by Government departments' pur-\nchases. The encouraging response to the campaign for pro-\nmoting mall savings is particularly worthy of notice.\nNote: With the decline in unemployment, the surplus from\nthe unemployment insurance fund has increased. The health\ninsurance fund, the new commodity insurance fund which\nstarted with $160 million, and the sterling balances accumu-\nlated in London by the sterling area countries and Canada\nwhich totalled about $1-1/4 billion in December, represent\nadditional sources of borrowing.\n(d) Liquidation of gold holdings which, as the Secretary re-\nvealed to the House Committee on Foreign Relations, had been\nalmost completed by the end of December 1940, and amounted\nto a reduction of approximately $1-3/4 billion in the pre-\nwar gold holdings.\nNote: Gold acquired by the Exchange Equalisation Account was\npurchased by Treasury Bills. While the sale of gold could\nhave been used to reduce the floating debt, it has actually\nbeen used to finance current expenditures./\n3. The deficit for 1941-42 will be in the neighborhood of $12\nbillion, on the basis of the Economist estimate of expenditures of $20.5\nbillion next year. This allows for an increase in revenue from $6\nbillion in 1940-41 to $8 billion in 1941-42 to ensue from further drastic\nincreases in taxation.\nIV. The present British financial situation.\n1. The Government continues to be able to borrow at favorable\nterms, paying just over 3 percent on long-term and one percent for short-\nterm. The official controls over the money and capital markets operate\nsmoothly, and gilt-edged securities have risen steadily and are now\n11 percent higher than they were in September 1939. The last two\nGovernment issues were made on terms more favorable to the Government\nthan previous war issues. The 3 percent Savings Bonds issued on\nDecember 27, 1940, have a 25 year maturity, or six years more than the\nfirst issue of the war, and the 2-1/2 percent War Bonds issue of the\nsame date has a year and a half longer life than its predecessor.\nRegraded Uclassified\n70\nDivision of Mometary\nResearch\nThe British Oovernment's ability to berrow si comperatively lew\nrates is due chiefly to its effective controls over the amay and\ncapital markets. Their position is less favorable than our own\nGovernment's to the extent that they do not have huge volumes of\nidle funds from which to draw On the other hand, through the\nTreasury and Bank of England's control, investment funds\naccruing from the sale of vested securities, for instance, are\nimmediately diverted into Government securities. The existence of\ntemporary surpluses in Government departments, the accumulation\nof Empire sterling balances in London, and the banking system's\nincreased holdings of Government bills and securities have also\nfacilitated their task. A separate memorandum on the British\nHoney Market in wartime is now in the course of preparation,\n2. Since the beginning, the official wholesale price index has\nrisen more than 50 per cent and the official cost of living\nindex by more than 25 per cent. According to our Lendon Babassy,\nthe official cost of living index underrates the rise in the\ncost of living because of the antiquated manner in which it is\nconstructed, and the actualrise in cost of living is probably\nnearer 40 than 30 per cent.\nThe rise in prices was much sharper in the first 4 months of\nwar than in 1940, during which it was quite gradual and appeared\nto be well under control, as a result of the Government's price\ncontrol measures, its subsidisation of certain essential foods to\nthe tune of $400 million & year, and to rationing.\nBritish Prices 1939-41\n(1928 - 100)\n1939\n1940\n1941\nAug. Dec. June Dec. Jan.\nWholesale Price Level 84 104 115 127 128\nCost of living\n93\n104\n109\n117.5\n118\nAs long as the rise in prices continues to be gradual the\nBritish have no reason for alarm. While the German cost of\nliving and wholesale price indexes have risen by less than\n2 and 3 percent respectively since the beginning of the War,\nthis 1s partly because the Germans had over six years' start\nin their technique of control and partly because their figures\nare much less dependable.\n3. Note circulation has risen by $400 million or under 20 parcent\nand demand deposist by $1 3/4 billion since September 1939.\nWhile the increase in demand deposits to & considerable extent\n71\n- 10-\nDivision of Monetary\nResearch\nreflects expansion of bank credit to finance Government\nborrowing, the liquidity position of the Lendon clearing banks -\n1.0., the ratio of their cash, cheques in course of collection,\nmoney at call and short notice, and bills discounted (plus\nTreasury deposit receipts) to deposit liabilities has actually\nimproved, owing to their increased holdings of Treasury bills\nand the creation of Treasury deposit receipts.\n4. While the scale of expenditures will have more than doubled by\nthe end of the year, revenue will have barely increased 50 percent,\nand the gap between the two continues to expand. The scale of\nsaving which is yielding about $100 million a week is insufficient\nin relation to Britain's needs. Furthermore her gold assets have\nbeen more or less depleted and her other foreign assets are being\ncurrently used up.\n5. But the technique of control over investment has been 80\nperfected that enormous deficits can still be financed without\nnearly 80 much strain as was the case in the last war, and at much\nlower interest rates.\n6. The Government has not yet devised an integrated economic\npolicy such as Germany's embracing the budget, price control,\nwage control, and full mobilization of resources.\n72\n- 11 -\nDivision of Monetary\nResearch\nANNEX\nBritish Government Daily Expenditures September 1939 - January 1941\n(In Millions of Dollars)\nChanges in the\nTotal Expenditures Supply Expenditures Floating Debt\n1939\nSeptember\n17.5\n14\nt 10\nOctober\n19\n14\nt 10.5\nNovember\n23\n20.5\nt 12.5\nDecember\n28\n24\nt 14\n1940\nJanuary\n25\n23\n- 5\nFebruary\n24.5\n23\n- 3.5\nMarch\n31.5\n30\n+ 1.5\nApril\n26\n23\n- 13\nMay\n28.5\n25\nt 17.5\nJune\n38\n35.5\nt 19\nJuly\n39\n36.5\nt 20.5\nAugust\n40\n38.5\n+18.5\nSeptember\n39\n37.5\n+22.5\nOctober\n44\n39\n16\nNovember\n48.5\n46\n+23.5\nDecember\n49\n46\nt 24\n1941\nJanuary\n49\n42\n-\n73\nMAR 8 1941\nMEMORANDUM\nTo:\nMr. Harry Hopkins\nFrom:\n0. S. Cox\nSubject: Major Objectives Under H.R. 1776.\nThere are several additional observations that I.\nwould like to make on the two major objectives of (1)\noutmatching the Axis Powers in both productive capacity\nand defense articles on hand, and (2) the proper relation-\nship between appropriations for productive capacity ex-\npansion and appropriations to buy finished defense arti-\ncles.\n(1)\nMargin of Safety Factor\nI know of no case in modern times where the need for\ndefense articles has been over-anticipated. The demands\nfor defense articles in times as troubled and as changing\nas the present increase rapidly. Therefore, in attempting\nto anticipate needs for defense articles, it would seem\nwise to allow an adequate margin of safety.\nRegraded Uclassified\n74\n- 2 -\nThere are two such safety factors that the United\nStates probably ought to keep in mind: (a) Our geograph-\nical situation; and (b) The productive capacity and de-\nfense articles on hand of Britain.\nIt would seem, therefore, that we ought to try to\noutstrip the Axis Powers in productive capacity and de-\nfense articles on hand without reference to what Britain\nis producing or without reference to the advantage which\nour geographical situation may give us. Thus, if the total\nproductive capacity of the Axis Powers is 60,000 combat\nplanes per year, we probably ought to shoot at that mark\nwithout relying on the British production.\nOne of the reasons for the past supremacy of the\nBritish fleet has been that it was grounded on safety fac-\ntors such as those just mentioned. Up until recent times\nthe British fleet was built and developed on the assumption\nthat it should be larger than the fleets of any possible\ncombination of enemies.\nReliance on another country for all purposes is not\nalways sound. To a large extent, the British always assumed\nRegraded Uclassified\n75\n3\nthat France and its productive capacity would be available\nin Britain's cause through France as a continuing Ally.\nIt was for this reason that until quite recently it wes\nassumed that Britain would have the use of French air\nbases in its attacks on Germany. Only very few people in\nthe British Government, as I understand it, insisted on the\nproduction of long-range bombers, on the assumption that\nthe French bases might not be available to Britain. This\ninsistence did not bear fruit soon enough, as the facts now\nindicate. That is doubtless one of the reasons why Britain\nis short of bombers with a long enough range effectively to\nbomb Germany.\nThe theater and conditions of war change so rapidly\nthat only an adequate productive capacity and an adequate\nnumber of defense articles on hand can make it possible to\nadapt to such changes. Thus, Britain, relative to the de-\nfense of the British Isles in the narrower sense, may have\nenough fighter planes. For the purposes of bombing Germany,\nit is relatively inferior. The same may also turn out to\nRegraded Uclassified\n76\n- 4 -\nbe true of Greece and Africa. If a country has a large\nnumber of planes of all types, plus a commensurate pro-\nductive capacity, it can meet such conditions and changes\nas these without being concerned too much about conserving\nwhat it has in military and naval equipment.\n(2)\nThe Proper Relationship Between Appropriations\nfor Expansion of Productive Capacity and Appro-\npriations to Purchase Defense Articles.\nAt the rate at which we are making actual expenditures\nfor defense, it is clear that we are going to have great dif-\nficulty in spending, in the fiscal year 1941, the moneys\nwhich are already appropriated for that fiscal year. From\nJuly 1, 1940 through March 4, 1941, we have expended, through\nthe Army and Navy, for national defense the amount of\n$2,947,518,849. There has been already appropriated well in\nexcess of 10 billion dollars for the Army and Navy for the\nfiscal year 1941. More will doubtless be appropriated for the\nfiscal year 1941.\nThe expenditures for defense on March 4 amounted to 24\nmillion dollars. This figure is probably not representative\nof the defense articles which we are procuring or paying\nRegraded Uclassified\n77\n- 5 -\nfor because of the heevy cantonment building that is now\ngoing on. In this connection, it is interesting to note\nthat the British war effort is now costing about 12 million\npounds per day.\nThe daily rate of spending for defense will doubtless\nincrease as more and more tooling-up takes place and more\nand more plants come into production. However, if nothing\nis done about the situation by expanding the capacity for\nraw materials, machine tools and for munitions plants, the\nrate will not increase fast enough to give us adequate se-\ncurity or Britain adequate help.\nThe present major back-log of orders and procurement\nmoney can doubtless sustain and utilize further expansion\nin productive capacity. It can sustain and utilize this\neven more so if the productive capacity is expanded for the\ndouble purpose of making faster use of the present appro-\npriations for procurement, as well as those under H.R. 1776,\naimed at the major target of outstripping the Axis Powers\nas quickly as possible.\nRegraded Uclassified\n78\n- 6 -\n(3)\nThe Time Factor\nThere is need not only for having adequate appropria-\ntions for production and procurement, but constant emphasis\nhas to be placed on the time factor: We have to get the\nbest available defense articles as fast as it is humanly\npossible to do SO. In a practical way, it seems likely\nthat a better job can be gotten out of OPM and the Army and\nNavy if they are told that we want a productive capacity of\n60 thousand combat planes a year than if they are asked to\ntell how many they can get produced per year. If OPM is told\nin unequivocal terms what the aim is and that it is its job\nto meet the aim, there is a reasonable probability that it\ncan be done. This is so particularly if enough funds are\navailable for expanding the sources of raw materials, machine\ntools, and plant capacity. Over and above this, of course,\nother changes in productive methods are available to the pro-\nduction experts to get the stated order filled within the\nspecified time. Thus, for example, it can be left to the\nproduction and procurement offices to decide or to pass on\nRegraded Uclassified\n79\n- 7 -\nsuch questions, in the case of aireraft, for example, as\nto whether it would not speed up production to standardize\ndown the number of models in the different types of air-\ncraft so that we have one or two pursuit ships in approxi-\nmately mass production, rather than X different types being\nproduced.\nTo carry this out and fully utilize existing personnel\nand plants, it is conceivable that OPM and the Army and Navy\npeople will decide that the Curtiss P-40, for example, is\nthe best available pursuit ship and that Vultee, Bell,\nRepublic and the others who make pursuit ships should also\nbe manufacturing the P-40 instead of their own types. In\nconsidering such questions as these, the production and pro-\ncurement agencies can, of course, decide what effect such\nstandardization will have on the production of the engines\nfor the planes, etc.\nThe important thing seems to me to be not the precise\nmethod by which the target can be met within the specified\ntime, but the fact that & time limit is given to the pro-\nduction and procurement people. Like most humans, they are\nRegraded Uclassified\n80\n- 8 -\n=\nlikely to adjust to a time limit and get. the job done\nfaster than they would if they were open-ended as to time.\ns\nOSC:aja\n3/7/41\nTyped: djb - - 3/8/41\nRegraded Uclassified\n81\nBUDGET MESSAGE OF THE PRESIDENT\nTo the Congress of the United States:\nThe request for appropriations to carry out H.R. 1776\nfor the fiscal year ending June 30, 1941, and for the fis-\ncal year ending June so, 1942, which I transmit herewith,\nportrays the additional effort required for our national\ndefense and security. This request is the first major\nstep in carrying out the deep-felt want and need of our\npeople for the complete defense of our nation through\nsupplying effective material aid to those countries who\nare valiantly resisting the forces of aggression.\nAdequate total defense means more than just supplying\nour own military and naval forees with equipment. It\nmeans that the people of our land must have health, stamine,\nand the overpowering desire to preserve their democratic\nway of life. It also means a people with an awarennes of\nthe objectives and the methods of the distators that are\nloose in the world and an understanding of the major ob-\njectives which the Government must meet adequately and\nefficiently to safeguard the nation.\nRegraded Uclassified\n82\nor I I\nwith long properation, the insatiable aggressors\nhave proceeded in details One by one, they have swallowed\nup country after country by the four now familier steps\nof truculence, treaty, treachery, and tyranny. Whether\nthe method was an endlessly repetitive protestation about\na past peace treaty, a cry for \"lebeneraum\", a promise of\nno more ambitions, threats of force or foree itself, the\naggressors have marched on, while the peoples of the\ndemocracies have been slow to learn that the defense of\nthe democracies must be as total as the attack on them\nis total. United in purpose and in each one's effective\ncontribution to that purpose, the democracies stand;\nsingly they fall.\nOur people and the people of the democracies, as well\nas the people in the very aggressor countries themselves,\nmust be united in the major objective that the free and\npeaceful way of life will prevail. They must be united\nby this abiding faith, and they must show--as can be shown--\nthat a free people have the brains and the imagination,\nthe vision and the efficiency to outmatch the distators,\nRegraded Uclassified\n83\n- 3 -\nnot only in faith alone, but also in the material sinews\nof war. We can and no should develop an industrial capacity\nto manufacture all of the materiel necessary for our defense\nin the shortest possible time. We can and we should have\non hand, with the greatest possible speed, for ourselves\nand for those who are giving battle to the dictators,\nenough defense materiel finally to quiet the forces of\naggression, so that free men and women can again live and\nwork in peace and quietude.\nThe Objectives of Our\nNational Defense Program.\nTo secure the defense of our nation it is necessary\nto keep in mind every possible situation. In effectively\ndefending our land we can not deal in certainties or even\nin probabilities alone. Nations do not survive against\naggressors on a majority vote of the chances. We have to\nprepare ourselves not only against a fifty-one per cent\ndanger, but also against & one per cent risk.\nRegraded Uclassified\n84\nRegraded Uclassifie\nThe Congress has already authorised large expenditures\nfor our military, naval and air forces, and - are already\non the way to total defense. When we start and are -\nbarked on such a program, it behooves us to ask: Against\nwhat are we defending?\nWe all know the answer to this question, if 16 keep\nin mind that we are trying to safeguard ourselves against\nall possible dangers. We are making ourselves strong\nenough to meet the possible and potential danger of the\naggressor nations.\nIt is not enough to think of tactical units of infantry,\nof a fleet of ships, or squadrons of aircraft. We must\nbe in a position as soon as possible to outstrip any com-\nbination of our possible or potential enemies in both the\nproductive capacity for defense materiel and in the amount\nof such materiel on hand. That is the smallest amount of\ninsurance that - are justified in carrying for the people\nof this nation.\nThe needs for defense materiel in times as troubled\nand as changing as the present increase rapidly. In\n85\n- 5\nforecashing our needs, it is wise to allow a margin of\nsafety. Two things me should keep as the staims safety\nfactors: Our geographical situation; and the fighting\nspirit and productive capacity of the nations which are\nresisting the aggressors. Our major aim should be to\noutstrip the aggressor nations in productive capacity and\ndefense articles on hand, without reference to what the\nother democracies are doing and producing or without ref-\nerence to the advantage which our geographical situation\nmay give us.\nOne of the reasons for our longstanding supremacy has\nbeen that we have always had such margins of safety over\nand above our own military and navel forces and equipment.\nOne of the reasons for the past supremacy of the British\nFleet has been that it was built and developed on the\nassumption that it should be larger and better than the\nfleets of any possible combination of enemies.\nReliance on snother country for all purposes is not\nalways sound. To n large extent, Britain assumed that\nFrance and its productive capacity would be available to it.\nRegraded Uclassified\n86\nw . .\nBut the French air bases and the French productive\ncapacity are no longer available to Britain. And, in\nconsequence, Britain does not, for example, have enough\nlong-range bombers. By the same token, France was certain\nthat its Maginot Line and its army were invulnerable. Ware\nare not won on such certainties.\nConditions change so rapidly that only an adequate\nproductive capacity and an adequate number of defense\narticles on hand can make it possible to adapt to such\nchanges. For this country an adequate productive capacity\nand an adequate number of defense articles on hand means\nenough of its own productive capacity and equipment to\noutmatch any possible combination of enemies.\nThe Defense of These Nations Whose\nDefense is Vital to Our Defense.\nThe outposts of our defense today are in Great Britain,\nin Greece, in China, and in those countries which are now\nbeing threatened by the aggressors. The aggressors are our\npotential enemies. We could, if we abandoned all the lessons\nRegraded Uclassified\n87\n- 7 -\nof history and experience, withdraw our defenses from\nPearl Harbor, from Newfoundland, or even from Governor's\nIsland. But we have learned over a long period that,\nas we move our defenses outward, we lessen the dangers\nof attack on San Francisco, Boston or New York.\nWe can have outposts of defense without owning land\nor without military or naval bases. We can have out-\nposts of defense that do not require the utilization of our\narmed forces in combat. We have such outposts of defense\ntoday in the battle spote of the world.\nEvery gun, and every ship, and every tank, and every\nbomber we make available to the democracies tends to weaken\nor defeat our potential enemies. If Britain, and China,\nand Greece prevail--and we hope they will--our blood and\ntreasure will not have to be spent in combat. If they\nfail, we shall have to continue spending billions upon\nbillions more to safeguard our security and way of life,\nand no man can say that our youth will then not have to\nfight for what we all treasure 80 much.\nThe heart of H.R. 1776 is defense equipment--equipment\nwhich remains under the control of the United States\nRegraded Uclassified\n88\n8\nGovernment until it is ready for disposition. As long\nas the fighting democracies hold out, each gun, each plane,\nand each ship that we dispose of to them is worth more to\nus in their hands than it would now be in our own. Not\nonly does this equipment in the hands of the resisting\ndemocracies weaken our potential enemies, but no gain precious\ntime within which to develop our productive capacity to the\npoint where we can meet every possible contingoney. Should\nthe sad day arrive when any one or all of these countries\nresisting aggression go down, the defense articles which\nwe are producing, and our capacity to produce them, will\nbe the most valuable assets that a free people can have.\nDefense Expenditures and\nOur Defense Program.\nIn my budget message to the Congress of January 3, 1941,\nI summarized the progrem for the fiscal years 1940, 1941,\nand 1942. The present request is, of course, an additional\npart of this same program.\nIf we do not increase our present rate of actual ex-\npenditures for defense, we can not be completely sure that\nRegraded Uclassified\n89\na # #\nwe will be ready in time to meet all possible threats to\nour national security.\nFrom July 2, 1940 through March 4, 1941, to expended,\nthrough the War and Navy Departments, the amount of\n$2,947,518,849 for national defense purposes. As was\nstated in my budget message of January 3, 1941, appropri-\nations, authorizations, and recommendations have already\nbeen made for a total of $28,480,000,000 for the defense\nprogram.\nThe daily expenditures for defense have been steadily\nmounting and are reflected in the steadily increasing num-\nbers of guns, ships, tanks, and airplanes that are coming\noff the lines. However, NO are not getting fast enough for\nall possible needs the essential equipment which we require.\nOne of the greatest single factors which affects the\nrate at which we get this essential equipment is our capacity\nto produce. To make guns, and ships, and airplanes, we need\naluminum and tin, machine tools, and machinery, plant space,\nand, above all, trained men and women. We have rapidly ex-\npended our capacity for all of these things. But if 10 want\nRegraded Uclassified\n90\n- 20 -\nto be assured of having finished defense equipment in time,\nwe must still more greatly expand our productive capacity\nfor raw materials, for machine tools, for plant space, and\nfor training personnel. We must do this not only to be sure\nthat the moneys appropriated and requested are translated\ninto equipment in time, but also to make sure that the funds\ngranted by the Congress pursuant to this request are put\nto the most effective use with the greatest possible speed.\nThat is the reason that 80 comparatively large a portion\nof the present request is for the expansion of such produe-\ntive capacity.\nThe Benefits to the United States\nand the Present Request.\nThe present request is admittedly large. But, the\npeople of France and the people of those other countries\nthat have been swallowed up might once have felt that their\ndefense expenditures were large. Now, they doubtless feel\nthat they are as nothing compared to the yoke of the aggressor.\nIf the life of our nation is worth the blood of our people\nRegraded Uclassified\n91\n- 11 -\nin the case of attack, it is certainly worth the premiums\nrequired to be paid to forestall the possibility of such\nattack.\nThe appropriations which Congress grants in response\nto this request will have many advantages. The defense\narticles procured with such appropriations will be used to\ndefeat or weaken our possible enemies. They will give us\nirreplaceable time within which to develop our productive\ncapacity to the point where we can obtain and replenish the\nmaterials of war faster and better than our potential enemies.\nThey will put us into $ position where - can safeguard our-\nselves against any possible combination of enemies.\nTo us as a people and as & nation, these benefits can\nnot be appraised in dollars--they are of a value far beyond\nmoney or other similar tangible considerations. However,\nthe framework of H.R. 1776 and the administration of it will\ndoubtless result in many additional benefits of a monetary\nand similar character. Even though no deal in the most\ngenerous manner--as we expect to--with the heroic peoples\nRegraded Uclassified\n92\n- 12 -\nwho are fighting in our own defense as well as their own,\nwe can still receive many such additional benefits. We\ndo not need the rules of the market place to receive bene-\nfits freely and generously offered by the democracies in\nreturn for a similar generosity on our part. I an sure\nthat when this Government considers with the governments\nwhich we are to assist under H.R. 1776 the whole range of\npaw materials, trade concessions, military and naval bases,\nand other property or consideration which they will gladly\noffer to transfer to us, we will find that we have reaped,\nin security and in more tangible benefits, more than we\nhave sown. The democracies can and will show that they can\nstand together in time of dire need to their overlasting\nmutual benefit. In this way, they shall always keep their\nbanners flying.\nOSC:djb:aja\n3-9-41\nRegraded Uclassified\nFebruary 27, 1941\n93\nto:\nE. H. Foley, Jr.\nFrom:\nO. S. Cox\nSubject: Financial Terms of Disposition to Britain Under H.R. 1776.\nIt may be desirable to start giving consideration\nnow to some of the following possible financial arrange-\nments with Britain under the Lend-Lease Bill: 1) A Master\nAgreement of Trusteeship; 2) Types of Special Agreements\nto be used either in connection with or independently of\na master agreement.\n(1)\nMaster Agreement\nThe Master Agreement might provide the following:\na) The United States Government to be\nthe trustee of all of the property of the\nBritish Government and its nationals in the\nWestern Hemisphere. It may also be desirable\nto include the British Fleet in this trusteeship.\nb) The management, etc. of this property\nis to continue as it now is, or as determined\nby the now owners.\nRegraded Uclassified\n94\n- 2 -\nc) The United States is to have the\noption or power to require the owners to\nliquidate not more than, for example 2%\nor X% of the property of British nationals\nin the United States or in the Western\nHemisphere within a year.\na) The United States is to have the\noption or power to require the payment\nover of not more than 5% or X% of the\nnet income of the property each year to\nbe credited against the dollar value of\ndefense articles disposed of to Britain\nunder H.R. 1776.\ne) Any consideration turned over to\nthe United States by Britain, such as tin,\nrubber, rare books of private dealers, etc.,\nis to be credited against the value of de-\nfense articles transferred to Britain.\nf) If Britain is successful, as de-\nfined in the trustee indenture, the United\nRegraded Uclassified\n95\n- 3 4\nStates Government is to have the discre-\ntion to release the trusteeship immediately,\nor after a certain percentage of the value\nof the defense articles transferred to\nBritain is paid for out of part of the net\nincome of the property.\ng) If Britain is defeated, as defined\nin the trust indenture, the United States\nGovernment is to have the option: To take\nthe full title to the property; to hold it\nuntil the debt for defense articles is li-\nquidated; to return it to its owners or to\ndispose of it in any way that the United\nStates Government sees fit.\nh) It may also be desirable to get\nBritain to agree that it will guarantee the\nMonroe Doctrine by helping to protect the\nWestern Hemisphere from European aggression.\nThe foregoing are only some of the possible provisions\nthat might be included in the Master Agreement.\nRegraded Uclassified\n96\n- 4 -\nIn the drafting of the Master Agreement, great\ncare should doubtless be exercised in seeing to it that\nthe British are not shylocked, and at the same time to\ngive the United States Government a degree of control\nwhich will be of benefit to the United States. Such\na degree of control would doubtless be of great effect\nin restraining the appeasers, because of the hope that\nby not appeasing they could get their property back.\nSuch a degree of control would also probably be of much\nmore advantage in determining the post-war situation in\nEurope in relationship to our own interests than any\npeace treaty. Normally, the people who own property\nof this kind are the people who have a good bit of polit-\nical power, and, if the discretion were in the United\nStates Government to turn back or not to turn back the\ntrusteeship, our Government could well have a decisive\ninfluence on the post-war situation.\nFrom the standpoint of public opinion, the Master\nAgreement would also seem to have advantages. The public\nhas assumed that most of the equipment to be disposed of\nRegraded Uclassified\n97\n- 5 -\nunder the Lend-Lease Bill would be given away. If shortly\nafter the enactment of the Bill, the public finds that\nnot only is there a Master Agreement providing security\nbut the means of paying for the defense articles, it is\nlikely to be more receptive to the appropriation requests\nand the other steps that have to be taken under the Bill.\nOver and above her dollar exchange requirements,\nthere are many things that the British have which could\nbe used as credits against defense articles disposed of,\nand charged up under the Master Agreement. For example,\nif the British Government took over, let us say, 10% of\nthe rare books that private collectors living in the\nBritish Isles own, and turned them over as part considera-\ntion, so that they might be owned by the Government through\nthe Library of Congress, we would get a tangible benefit\nand, at the same time, we would not be pressing British\nnationals too hard. There are, of course, many other\narticles of benefit to us which could be acquired without\ndisrupting our domestic markets or exerting too much\npressure on British nationals. These articles could be\ntaken over under the terms of the Master Agreement and\nRegraded Uclassified\n98\n- 6 -\n& credit given to the British Government as against\ndefense articles transferred to it. In other words, each\nparticular disposition of defense articles to Britain\nwould not require either a determination on or provision\nfor financial conditions. The financial transactions\ncould be handled under the Master Agreement from time\nto time, and as the occasion arose.\nOf course, a trusteeship of the British Fleet would\nnot mean very much, except that it gives the color of\nlegal right to exercise our sovereign powers if and when\nwe can put our hands on the British Fleet, in case Britain\nis defeated or is operating under a Moseley or other type\nof Government.\nSimilarly, a provision in the trust indenture, such\nas a requirement that Britain guarantee the Monroe Doctrine\ncould only be effectively enforced if Britain is success-\nful, and we have strings on the property of her nationals.\nThe technical, legal job of working out the Master\nAgreement, if it were decided as 8. matter of policy to\nhave one, would not be insuperable. Thus, in some cases,\nRegraded Uclassified\n99\n7 -\nin addition to the trusteeship indenture, it might be\ndesirable to hold the stock certificates in American\ncompanies, or the evidence of ownership in direct invest-\nments, as part of the trust agreement.\n(2)\nSpecial Agreements\nIt is possible, of course, to have special agreements\nwhich are either an integral part of the Master Agreement\nor part of it.\nAs a part of the Master Agreement, special agreements\non such raw materials as tin, rubber, nickel, lead, etc.\ncould be worked out, providing that, at the United States\nGovernment's option, it could require deliveries of such\ncommodities over a long term or period. The dollar value\nof the delivered commodities could, of course, be charged\nagainst the account of the British for defense articles\npreviously transferred to them under H.R. 1776. It should\nbe noted in this connection that, if the United States\nis interested in breaking up the international cartels\nin tin, rubber, etc., it would probably have the power to\ndo 50 under the Lend-Lease Bill.\nRegraded Uclassified\n100\n- 8 -\nAnother possibility is to not have a Master\nAgreement and to handle each disposition of defense\narticles by itself. Both from the standpoint of public\npolicy and administration, this would not seem to be as\ndesirable as the Master Agreement method.\nIn giving consideration to the special agreement\nmethod, either as an interrelated part of the Master\nAgreement or as separate from it, it might be desirable\nto make a survey of all the strategic, critical and\nessential raw materials which are produced in the British\nEmpire, as well as of the exports of the British Empire.\nIn this way, specific articles and commodities can be\nselected for inclusion in the benefits to be received\nby the United States without disrupting our own domestic\nproduction or markets, and, at the same time, without\npinching Britain too much.\nOSC:djb\n2-27-41\nRegraded Uclassified\n3/5/4/101\nSTRATEGIC, CRITICAL AND ESSENTIAL MATERIALS\nThe basic idea behind our building up stock piles is\nthat we should have enough strategic, critical and essential\nmaterials available for military and naval needs in case of\nwar or other blockage of the sources of supply.\nIt has been evident for some time that the estimates\nof strategic, critical and essential materials needed for\nboth current production needs and stock-pile purposes have\nbeen incorrect. The present inadequacy of tungsten for cur-\nrent needs and the necessity for dipping into the stock piles\nillustrate the problem.\nSeveral fundamental considerations were not give ade-\nquate weight in estimating our stock-pile needs. It is evi-\ndent from the requests for appropriations for these purposes\nthat they were based primarily on the existing Army and Navy\nrequests for appropriations or contemplated appropriations.\nThe amount of nickel or tungsten, for example, that is re-\nquired for stock-pile purposes is in large part also a\nfunction of what is needed for current production purposes.\nRegraded Uclassified\n102\n- 2 -\nIt goes without saying that the amount of nickel and tungsten\nrequired when the Army and Navy appropriations are $2 billions\nis much less than when their appropriations are $10 billions.\nAlso, the civilian uses of such materials as nickel, tungsten,\nmagnesium, vanadium, etc., are affected as the national income\nincreases as the result of additional defense spending. When\nthe national income is $40 billions, the consumption of nickel,\ntungsten, and the other strategic materials is of a different\nmagnitude than when the national income is $75 billions or\n$100 billions.\nIt seems quite evident that a resurvey should be made of\nour needs for strategic, critical and essential materials for\ncurrent purposes, as well as for stock-pile purposes, and that\nthe necessary appropriations therefor should be requested. In\nestimating the needs, the fact that there have already been\nmore than seventeen appropriation acts for the Army and Navy\nalone in the fiscal year 1941 should be kept in mind in trying\nto predict what further appropriations there are likely to be\nfor this year and the fiscal year 1942. In addition, a margin\nof safety factor should doubtless also be added, not only to\nRegraded Uclassified\n103\n- 3 -\naccount for errors in prediction, but also to include the as-\nsistance which may be given to Britain, etc., under the Lend-\nLease bill.\nOne of the great difficulties with the handling of\nstrategic, critical and essential materials for both current\nand stock-pile purposes is that the needs have not been antici-\npated far enough in advance. Shortages of these materials\nmay create critical bottlenecks in production and thus mate-\nrially slow it up. Also, dipping into the stock piles is\ndangerous because in the event of war or blockage of trans-\nportation in the Far East we might be in an exceedingly vul-\nnerable position.\nThe development of new sources of supply of strategic\nand critical raw materials is not carried out in normal times\nin those cases where a particular source of supply is more\nuneconomical than another. This is illustrated in the case\nof Bolivian tin. Up to now it has seemed desirable to get\nmost of our tin from the Far East but recently it has become\nevident that there are other considerations besides price in\nthe defense program which would warrant the further develop-\nment of Bolivian tin mines as well as the construction in\nRegraded Uclassified\n104\nthis country of smelting and refining plants to handle the\nparticular kind of tin ore that comes from Bolivia. The\ncase of tin, however, is only illustrative. The same prob-\nlem in varying degree applies to other materials such as\nmercury, tungsten, zine, antimony, platinum, vanadium, etc.\nIt happens that the Western Hemisphere has most of these\nraw materials, In meeting our defense in stock-pile needs,\nas well as in building up our good neighbor policy, there is\nprobably no other single course that would be more effective\nthan to expand the development and purchases of strategic,\ncritical and essential materials from the American republics\non a much larger scale than has heretofore been done or con-\ntemplated.\nIt should also be kept in mind that in connection with\nthe financing terms to be worked out with Britain under the\nLend-Lease bill, it is conceivable that some of the British\nassets in South America and Mexico can be used in part to pay\nfor the development and purchase of such strategic, critical\nand essential materials.\nOne other thought should also be kept in mind in this\nconnection. If Germany should win, there is of course some\nRegraded Uclassified\n105\n5 -\nchance that by reason of their barter system, our gold may\nnot be quite as useful as it will be if Britain wins, One\nway to minimize this possible risk is to shift the trade\nbalances in favor of the Western Hemisphere countries as much\nas possible and at the same time have on hand large supplies\nof non-deteriorating strategic, critical and essential mate-\nrials. In terms of the dollars spent, such raw materials\nwould result in less of a loss to us than any depreciation\nin the value of gold.\nLarger appropriations for the development and procure-\nment of strategic, critical and essential materials could\nprobably be obtained more easily than for anything else ex-\ncept possibly finished Army and Navy equipment.\nOSC:mp:aja\n3/8/41\nTyped: aja:djb\n3/8/41\nRegraded Uclassified\nFLASH\nSEMATE PASSES SE BRITISH AID bill BY A VOTE OF 60 TO 31.\n3/8--W0737P\n107\nKWANG PU CHEN\nShanghai Commercial & Savings Bank,\nChungking, China.\nMarch 8, 1941.\nThe Honorable Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D. C., U. S. A.\nDear Mr. Morgenthau:\nWhen this letter reaches you, Dr. Lauchlin B. Currie\nmust have arrived in Washington for some days. I under-\nstand he carried with him Dr. H. H. Kung's letter advising\nyou of my appointment as the chairman of the new stabili-\nzation committee. While I deeply appreciate your kind\nsuggestion of my appointment, I cannot but realize the\nheavy responsibility that has fallen on my shoulders and\nthe difficult task that is confronting me.\nYou will no doubt be informed by Dr. Currie of the\ndivergent views prevalent on the question of currency\nstabilization. I an sure I shall have to depend much on\nmy good collaborator whom your government will soon name\nas the American member on the committee. With his able\nassistance, I hope I may yet be able to carry out the\nterms and conditions of the loan agreement now under\ndiscussion and in that way to justify your confidence\nplaced in me.\nOwing to my prolonged absence from China during the\npast years, I have somewhat got out of touch with the\ndetail workings of our stabilization fund. I am therefore\nnow making studies to acquaint myself with its operations\nin the past, and planning to take a short trip to Hongkong\nto confer with the people in charge thereof. If time\npermits, I shall visit Lashio, Bhamo and Rangoon again to\ncomplete my last year's tour of inspection which was\nunfortunately interrupted by my illness.\nWith best personal regards,\nSincerely then yours,\nKPC:W\n108\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nSecretary Chaunces\nDATE March 8, 1941\nMorgenthmu\nTO\nYOU\nFROM Mr. Cochran\nCONFIDENTIAL\nRegistered sterling transactions of the reporting banks were as follows:\nSold to commercial concerns\n£37,000\nPurchased from commercial concerns\n£ 7,000\nOpen market sterling remained at 4.03-1/2, and there were no reported\ntransactions.\nIn New York, the closing rates for the foreign currencies listed below were\nas follows:\nCanadian dollar\n14-7/8% discount\nSwies franc (commercial)\n.2323\nSwedish krona\n.2384-1/2\nReichsmark\n.4005\nLira\n.0505\nArgentine peso (free)\n.2300\nBrazilian milreis (free)\n.0505\nMexican peso\n.2066\nCuban peso\n6-3/4% discount\nIn Shanghai, the yuan in terms of our currency was unchanged at 5-1/24.\nSterling Vas 2# lower at 3.91.\nThere were no gold transactions consummated by us today.\nNo new gold engagements were reported.\nA Bombay gold price equivalent to $35.15 was received by one of the New York\nbanks this morning. This was 5# lower than the quotation of March 6.\npml\n109\nMarch 8, 1941\nI wish to be reminded, Monday, to speak to Sullivan\nand tell him about the discussion at Cabinet. The President\nwants two tax bills right away.\nTaken care of 3/10/41\nRegraded Uclassified\n110\nMarch 8, 1941\nTO:\nMR. BELL\nFROM:\nTHE SECRETARY\nI don't remember whether I told you or not,\nbut when I saw the President Thursday, he approved car\nplan for the new 8 defense savings bonds.\nRegraded Uclassified\n111\nMarch 8, 1941\nTO:\nMRS. KLOTZ\nFRMM\nTHE SECRETARY\nPlease draw Arthur Purvis' attention to the\narticle in today's NewYork Times by John MacCormic, on\npage 5, and tell him particularly to read the last para-\ngraph. Tell him I do not know the source of the story\nbut I am trying to find out.\n(Taken care of 3/8/41)\nRegraded Uclassified\nCOLLATERAL PLAN\nWAITS ON AID BILL\nWd\nhgton Would Hold Brit,\nain's Direct Investments Here\nAgainst Loan of Munitions\nDISPOSAL NOW DIFFICULT\nMeanwhile Sale of Holdings in\nLiquid American Securities\nIs Proceeding Steadily\nBy JOHN MacCORMAC\nSpecial to THE New YORK TIMES.\nWASHINGTON, March 7-One\nplan for aid to Great Britain when\nthe lease-lend bill becomes law calls\nfor the handing over of Britain's\ndirect investments in this country\nto the United States Government as\ncollateral against the defense ma-\nterials furnished to her.\nThe sale of the $615,000,000 of\nliquid American securities which\nthe British still had on Jan. 1 has\nbeen proceeding steadily, the 203,-\n127 shares of United States Steel\nstock were sold this week for $11,-\n500,000 being the largest transac-\ntion to date.\nThe disposal of the direct invest-\nments, such as American branches\nC British firms, is a more difficult\nmatter. Although negotiations have\nbeen carried on for weeks with\ngroups of investment bankers, no\nconclusion has yet been reached.\nSome financial and administrative\nopinion holds that It would not pay\nthe United States, in the last analy-\nsis, to strip Britain of all her hold-\nInge here since she is in war or\npeace the best customer of the\nUnited States.\nAs an alternative it has been sug-\ngested that she put up her direct\nInvestments as collateral for their\nestimated worth of munitions and\nequipment. Then, if after the war,\nBritain were able to repay in some\nother form, such as the return of\nan equal value of munitions, ships\nor such commodities as tin and rub-\nber, she could be allowed to keep\nher direct Investments here as a\nfuture source of American ex-\nchange. It is understood that the\nTreasury favors this solution.\nThe first asset of which Britain\nwill dispose under the lease-lend\nbill is her Investment In United\nStates airplane and munitions\nplants. Money was lent by Britain\nand France to American manufac-\nturers to build or enlarge plants for\nthe purpose of filling Allied war\norders and France's obligations\nwere taken over b ythe British\nwhen France collapsed.\nThe British Purchasing Commis-\nsion has been negotiating for some\ntime with Jesse Jones, Federal\nLoan Administrator, for their dis-\nposal and there has been some dif-\nference of opinion regarding the\nvalue to be put on the machine\ntools Installed in the plants to be\nturned in.\nFrom some quarters has come the\nsuggestion that not only Britain's\ndirect Investments in the United\nStates but her Investments in South\nAmerica should be posted as col-\nlateral for aid under the lease-lend\nbill. The idea in not to strip Brit-\nain of all her holdings In this hemi-\nsphere but to insure that in case\nof her defeat they would not fall\ninto Germany's hands,\nRegra\n112\nGRAY\nGHW\nBusnos Aires\nDated March 8, 1941\nRec'd. 2:50 p.m.\nSecretary of State,\nWashington.\n183, March 8, 1 P.M.\nThe press reports that an Argentine credit to\nSpain for purchases of agricultural products chiefly\nwheat and meat is nearing completion. It is reported\nthat Spanish interest in a local power company,\nCompania Argentina de Electricidad, is involved as\nsecurity for the loan. Immediate shipments of wheat\nand meat to a value of 35,000,000 to 40,000,000 pesos\nis contemplated according to the report.\nARMOUR\nLMS\nch:copy\n10\n111-11-22\n113\nRESTRICTED\n0-2/2657-220\nM.I.D., W.D.\nNo. 334\nMarch 8, 1941\n12:00 M\nSITUATION REPORT\nI. Western Theater of War.\nAir: German. Limited offensive activity directed\nprimarily against shipping.\nBritish. No offensive operations.\nII. Balkan Theater of War.\nGround: Bulgaria. No change.\nAlbania. The Greeks report successful\noperations in the central sector with air force cooperation.\nIII. Mediterranean and African Theaters of War.\nGround: Abyssinia (Ethiopia). British patrols on\nthe Gondar Road are operating east of Amanit.\nThe Italians are withdrawing from Burye\nwhich is about 165 miles northwest of Addis Ababa.\nAir: No operations reported.\nNote: This military situation report is issued by the Military In-\ntelligence Division, General Staff. In view of the occasional in-\nclusion of political information and of opinion it is classified as\nRestricted.\nRESTRICTED\nCONFIDENTIAL\n114\nPurchase of Code Indicgram\nReserved as the\nat 8:20, March a, 1943.\nLenion, filed 13:35, March s, 1941.\n1. a Priday, March 1, bonbers of the British\nCoastal Commail carried out a raid a a - nevel designará of Holder\nand sent a cargo best to the bottem off the Hook of Holland. In\naddition, Constal benbers socret. direct bite an hangurs during M\nattack - the airfield at Ochernburg (1). During the proceding might as\nBritish planse vere over the Ombiness because of adverse vesther onli-\ntime.\n2 I I I 1 1 1 a % Receipt of\nattachs on Flymouth, Falmouth, ont Orfertance. - of the Gernan\ncreaked but m - unto w the British fighters that not\nthe attachers. During the proceding day sisse wwo pleated is the Borth\nSee off the mouth of the Rober River w - aircraft. - str\nabtacks www curried out egainst British cash const morehand shipping and\nagainst airfields in Lineclushire, Norfolk and Buffelk. German plane\nlocase wase two confirmed and - damaged. There www as Leases of British\nplanes and as BOTORO damage to military installations.\n3. Activities of the British to Middle Enstern theaters www as\nfollows: Italian artillery positions in the - of Alberta\nvero benbed by British please from Greece; British treeps have compled\nForfer, Italian Semaliand, about mo miles north of Magnáiscio and have\nput the sirfield at this city in a usable condition; in the Britrean thester\nthe British have explared positions 18 alles north of Haven and Reyal Air\nCONFIDENTIAL\nRegraded Uclassified\nCONFIDENTIAL\n115\nForee planse bosted nater transporte and milarys in the Assure-Even area.\n4. a Murch 7 Britten planse interespted and drove off a franties\nof 14 Germa planes attempting to attack Milta. The Britden destrayed - of\nthe German attechers. During the proceding night Helto was reided - 12\nGerman planse but there vas - damage to military installations. It has nov\nbeen determined that the Comman used 40 fighter planou and 60 bookers in the\nattack on Malte en March 5. All of the British please as the Mal par airfield,\nwhich we severely damaged during this raid, were per out of operation -\npowerily and four of the please as the ground wase complete leases. - of\nthe 11 British fighters which ware - to interespt this attack - shat\ndown but German leases as a result of the activities of these British fighters\nwas eight and fear damged. In addition, also - planes wire\nshot dom and four others - damged w ankistremft fire.\n5. While it is estimated w the Ver Office that no German divisions\nvere along the Remanisn-Palgarion border, 12 10 thought that only eight of\nthese divisions were actually a Bulgarian soil w March 5. It is believed\nthat the year condition and congestion of highways and reilrents was respon-\nsible for this. 4a March 3 the first lest mits arrived at the\nGreek berder. On March 5 the min belies of the - units began erviving\nin the visimity of Petrick in the Stress River valley and in the Jambeli-\nGliven region. In this latter area 10 is believed that there is a considerable\ncommentration of Geruna heavy tamin. Resignerters of the Bulgarian foress is\nbelieved to be at Stare Engare. the distribution of divisions of the Bulgarian\nAmy 10 as follows: - division 10 feeling the southern Debraja frentier,\nnine are on the Turidak border, five are fasing Fageslavia, and - are on\nthe border.\nCONFIDENTIAL\nRegraded Uclassified\nCONFIDENTIAL\n116\n6.\nI\n1\nin\nI\ncoursy\nI I a 1 a I 1 1 I I e z s I\nI I age 1 I I I\nDistribution:\nSecretary of Mr\nAsst. Secretary of Mar\nChief of Staff\nState Department\nSecretary of Treasury\nVer Plans Division\nOffice of Nevel Intelligence\nAir Garge\n0-3\n-3-\nCONFIDENTIAL\nRegraded Uclassified\n117\nCONFIDENTIAL\nParaphrace of Code Rediagree\nReselved at the Ver Department\nat 7:35, March 9, 1941.\ntenden, filed 15:18, March 9, 1941.\n1. On Saturday, March 8, the harber facilities at Holder\nvare bonked with unobserved results w British planse. the Geresa\nbeabers vere shot down w British fighter planes that carried out\npatrols along the Maglish Channel. During the night of March 7-8\n20 British planes vere over the Continent because of adverse weather\nconditions.\n2. During the night of March 8-9 the German Mr Force\nmade videly separated raids on targets in the southeastern counties\nand in Morfelk and Suffolk. s fairly severe reid vie made against\nPortamouth. The extent of damages from these reids has not been\ndetermined. The Germans carried out an extremely severe attack on\nLendon. The many fires that vere started were quickly pub out but\nthere were a number of civilian casualties and considerable damage\nto private property from high emplosive bonks. During day21ght\nhours of March 8 single Common planes were platted over Alawlek,\nCardiff, Fife Ness, Fortemouth, the Original Islands, and the Themes\nNetuary. Six Cerana planes were active against targets in Lincoln-\nshire, Norfelk and Suffelk.\n3. British planes based in Gresse supported the opera-\ntions of Grock land forces in the Albertan theater. Highways in\nMritrea and the Asuara-Keren railway vare attacked w British benbers,\nCONFIDENTIAL\nRegraded Uclassified\nCONFIDENTIAL\n118\n4. as March 8 neval stores at Malta were damaged ear-\ning M attack os $20 Island by 18 German planse.\n5. Hous stories indicating that German foress in south-\n672 Italy total 500,000 cannot be confirmed in London and it is\nthought by the British Var Office that these stories como from the\nGermans. According to the mest resent British estimates there are\nonly two small German armored divisions in Tripoli at the present\ntime. On March 5 British armored motor vehicles contacted Germa\narmored care from reconnaissance write in the Libyan theater just\nwest of Aghelia. The German units withdrew to the west.\n6. It is believed that the partial mobelisation of the\nTugeslav Army which 10 nov going on will result in a total strength\nof 600,000 by March 10.\n7. Seurces thought to be reliable have informed the\nBritish Var Office that Kohlek Bay which is on the Gulf of sism,\n140 miles south of Banglosk, will be suarded to the Japanese as a\npartial payment for their efforts at mediation. Insilities are\nsvailable on this bay and in the surrounding area for the operation\nof both land and semplanes.\ns. On March 8 a total of 33 German divisions were in\nor ness Bulgaria. Twelve of these divisions vere just asrees the\nfrontier in Runsaia and the other no are actually in Pulgaria.\n9. The possibility of an attack w the Germane on the\nFaree Islands or on Iseland is indicated w Norwagian reports of\n+\nCONFIDENTIAL\nRegraded Uclassified\n119\nCONFIDENTIAL\norders w the Comman and of properablemo being made w\nI\nSCANLON\nDistribution:\nSecretary of Mar\nState Department\nSecretary of Treasury\nAsst. Secretary of War\nChief of Staff\nWas Plans Division\nOffice of Neval Intelligence\nIntelligence Branch\nAir Corpo\n6-5\n+\nCONFIDENTIAL\n120\nMiss Chancey\nHere' a copy for your\nfilent ASHH. The original an\n3/1/41.\na.H. Bash\nMR. COX\n121\nRegraded Regraded Uclassified Uclassified\nSUDGET MESSAGE OF THE PRESIDENT\nTo the Congress of the United States:\nThe request for appropriations to carry out H.R. 1778\nfor the fiscal year ending June 30, 1941, and for the fis-\ncel year ending June 30, 1942, which I transmit herewith,\nportrays the additional effort required for our national\ndefense and security. This request is the first major\nstep in earrying out the deep-felt want and need of our\npeople for the complete defense of our nation through\nsupplying effective material aid to those countries who\nare valiantly resisting the forces of aggression.\nAdequate total defense means more than just supplying\nour own military and naval forces with equipment. It\nmeans that the people of our land must have health, stamins,\nand the overpowering desire to preserve their democratic\nway of life. It also means a people with as awareness of\nthe objectives and the methods of the distators that are\nloose in the world and an understanding of the major ob-\njectives which the Government must meet adequately and\nefficiently to safeguard the nation.\n122\nRegraded Uclassifie\n- 2 -\nwith long preparation, the insatiable aggressors\nhave proceeded in details One by one, they have swallowed\nup country after country by the four now familier steps\nof truculence, treaty, treachery, and tyranny. Whether\nthe method was an endlessly repotitive protestation about\na past peace treaty, a ery for \"lebensraum\", a promise of\nno more ambitions, threats of force or force itself, the\naggressors have marched on, while the peoples of the\ndemocracies have been slow to learn that the defense of\nthe democracies must be as total as the attack on them\nis total. United in purpose and in each one's effective\ncontribution to that purpose, the democracies stands\nsingly they fall.\nOur people and the people of the democracies, as well\nas the people in the very aggressor countries themselves,\nmust be united in the major objective that the free and\npeaceful way of life will prevail. They must be united\nby this abiding faith, and they must show--as can be shown--\nthat & free people have the brains and the imagination,\nthe vision and the efficiency to outmatch the dictators,\n123\n3 -\nnot only in faith alone, but also in the material sinews\nof war. We can and we should develop an industrial capacity\nto manufacture all of the materiel necessary for our defense\nin the shortest possible time. We can and we should have\non hand, with the greatest possible speed, for ourselves\nand for those who are giving battle to the dictators,\nenough defense materiel finally to quiet the forees of\naggression, so that free men and women can again live and\nwork in peace and quietude.\nThe Objectives of Our\nNational Defense Program.\nTo secure the defense of our nation it is necessary\nto keep in mind every possible situation. In effectively\ndefending our land we can not deal in certainties or even\nin probabilities alone. Nations do not survive against\naggressors on a majority vote of the chances. We have to\nprepare ourselves not only against a fifty-one por cent\ndanger, but also against a one per cent risk.\nRegraded Uclassified\n124\n- 4 -\nThe Congress has already authorized large expenditures\nfor our military, naval and air forees, and - are already\non the way to total defense. When we start and are eth-\nbarked on such a program, it behooves us to asks Against\nwhat are we defending?\nWe all know the answer to this question, if - keep\nin mind that we are trying to safeguard ourselves against\nall possible dangers. We are making ourselves strong\nenough to meet the possible and potential danger of the\naggressor nations.\nIt is not enough to think of tactical units of infantry,\nof a float of ships, or squadrons of aircreft. We must\nbe in a position as soon M possible to outstrip any 0000>\nbination of our possible or potential enemies in both the\nproductive capacity for defense materiel and in the amount\nof such materiel on hand. That is the smallest amount of\ninsurance that - are justified in carrying for the people\nof this nation.\nThe needs for defense materiel in times as troubled\nand as changing as the present increase rapidly. In\nRegraded Uclassified\n125\n50 + I\nforeeasing our needs, it is wise to allow n margin of\nsafety. Two things = should leep as the minimum safety\nfactors: Our geographical situation; and the fighting\nspirit and productive capacity of the nations which are\nresisting the aggressors. Our major aim should be to\noutstrip the aggressor nations in productive capacity and\ndefense articles on hand, without reference to what the\nother democracies are doing and producing or without ref-\nerence to the advantage which our geographical situation\nmay give us.\nOne of the reasons for our longstanding supremacy has\nbeen that we have always had such margins of safety over\nand above our own military and naval forces and equipment,\nOne of the reasons for the past supremacy of the British\nFleet has been that it was built and developed on the\nassumption that it should be larger and better than the\nfleets of any possible combination of enemies.\nReliance on another country for all purposes is not\nalways sound. To a large extent, Britain assumed that\nFrance and its productive capacity would be available to it,\nRegraded Uclassified\n126\nBut the French air bases and the French productive\ncapacity are no longer available to Britain. And, in\nconsequence, Britain does not, for example, have enough\nlong-range bombers. By the same token, France was certain\nthat its Maginot Line and its army were invulnerable. Ware\nare not wan on such certainties.\nConditions change so rapidly that only an adequate\nproductive capacity and an adequate number of defense\narticles on hand can make it possible to adapt to such\nchanges. For this country an adequate productive capacity\nand an adequate number of defense articles on hand means\nenough of its own productive capacity and equipment to\noutmatch any possible combination of enemies.\nThe Defense of Those Nations Whose\nDefense is Vital to Our Defense.\nThe outposts of our defense today are in Great Britain,\nin Greece, in China, and in those countries which are now\nbeing threatened by the aggressors. The aggressors are our\npotential enemies. We could, if we abandoned all the lessons\nRegraded Uclassified\n127\n,\nof history and experience, withdraw our defenses from\nPearl Harbor, from Newfoundland, or even from Governor's\nIsland. But we have learned over a long period that,\nas we move our defenses outward, we lessen the dangers\nof attack on San Francisco, Boston or New York.\nWe can have outposts of defense without owning land\nor without military or neval bases. We can have out-\nposts of defense that do not require the utilisation of our\narmed forces in combat. We have such outposts of defense\ntoday in the battle spots of the world.\nEvery gun, and every ship, and every tank, and every\nbomber we make available to the democracies tends to weaken\nor defeat our potential enemies. If Britain, and China,\nand Greece prevail--and we hope they will--our blood and\ntreasure will not have to be spent in combat. If they\nfail, we shall have to continue spending billions upon\nbillions more to safeguard our security and way of life,\nand no man can say that our youth will then not have to\nfight for what we all treasure 80 much.\nThe heart of H.R. 1776 is defense equipment--equipment\nwhich remains under the control of the United States\nRegraded Uclassified\n128\nB\nGovernment until it is ready for disposition. is lang\nas the fighting democracies hold out, each gun, each plane,\nand each ship that the dispose of to them is worth more to\nus in their hands than it would now be in our own. Not\nonly does this equipment in the hands of the resisting\ndemocracies weaken our potential enemies, but we gain precious\ntime within which to develop our productive capacity to the\npoint where we can meet every possible contingency. Should\nthe sed day arrive when any one or all of these countries\nresisting aggression go down, the defense articles which\nwe are produsing, and our capacity to produce them, will\nbe the most valuable assets that a free people can have.\nDefense Expenditures and\nOur Defense Program\nIn ay budget message to the Congress of January 8, 1941,\nI summarized the program for the fiscal years 1940, 1941,\nand 1942. The present request is, of course, an additional\npart of this same program.\nIf - do not increase our present rate of actual ox-\npenditures for defense, we can not be completely sure that\nRegraded Uclassified\n129\nno will be ready in time to meet all possible threats to\nour national security.\nFrom July 20 1940 through March 4, 1941, 100 expended,\nthrough the Har and Navy Departments, the amount of\n$2,947,518,549 for national defense purposes. is was\nstated in w budget measage of January 3, 1941, appropri-\nations, authorisations, and recommendations have already\nbeen made for a total of $28,480,000,000 for the defense\nprogram.\nThe daily expenditures for defense have been steadily\nmounting and are reflected in the steadily increasing -\nbore of gans, ships, tanks, and airplanes that are coming\noff the lines. However, we are not getting fast enough for\nall possible needs the essential equipment which we require.\nOne of the greatest single factors chich affects the\nrate at which we get this essential equipment is our capacity\nto produce. To make guns, and ships, and airplanes, we need\naluminum and tin, machine tools, and machinery, plant space,\nand, above all, trained men and women. The have rapidly 02-\npended our capacity for all of these things. But st 10 want\nRegraded Uclassified\n130\n- 10 -\nto be assured of having finished defense equipment in time,\nwe must still more greatly expand our productive capacity\nfor raw materials, for machine tools, for plant space, and\nfor training personnel. We must do this not only to be sure\nthat the moneys appropriated and requested are translated\ninto equipment in time, but also to make sure that the funds\ngranted by the Congress pursuant to this request are put\nto the most effective use with the greatest possible speed.\nThat is the reason that so comparatively large a portion\nof the present request is for the expansion of such produe-\ntive capacity.\nThe Benefits to the United States\nand the Present Request.\nThe present request is admittedly large. But, the\npeople of France and the people of those other countries\nthat have been swallowed up might once have felt that their\ndefense expenditures were large. How, they doubtlees feel\nthat they are as nothing compared to the yoke of the aggressor.\nIf the life of our nation is worth the blood of our people\nRegraded Uclassified\n131\n- 11 -\nin the case of attack, it is certainly worth the premiums\nrequired to be paid to forestall the possibility of such\nattack.\nThe appropriations which Congress grants in response\nto this request will have many advantages. The defense\narticles procured with such appropriations will be used to\ndefeat or weeken our possible enemies. They will give us\nirreplaceable time within which to develop our productive\ncapacity to the point where we can obtain and replenish the\nmaterials of war faster and better than our potential enemies.\nThey will put us into a position where we can safeguard our-\nselves against any possible combination of enemies.\nTo us as a people and as a nation, these benefits can\nnot be appraised in dollars--they are of a value far beyond\nmoney or other similar tangible considerations. However,\nthe framework of H.R. 1776 and the administration of it will\ndoubtless result in nany additional benefits of 8 monetary\nand similar character. Even though - deal in the most\ngenerous manner--as we expect to--with the heroic peoples\nRegraded Uclassified\n132\nn . $\nwho are fighting in our own defense as well as their own,\n- can still receive many such additional benefits. We\ndo not need the rules of the market place to receive bene-\nfits freely and generously offered by the demeeracies in\nreturn for & similar generosity on our part. I an sure\nthat when this Government considers with the governments\nwhich no are to assist under H.R. 1776 the whole range of\nraw materials, trade concessions, military and naval bases,\nand other property or consideration which they will gladly\noffer to transfer to us, we will find that we have reaped,\nin security and in more tangible benefits, more than -\nhave sown. The democracies can and will show that they can\nstand together in time of dire need to their everlasting\nmutual benefit. In this way, they shall always keep their\nbanners flying.\nOSC:djb:aja\n3-9-41\nRegraded Uclassified\n133\nEXIMENT\nm PURCHASING\nof CONTRACTE or 2,00,00. = as\nVALIME to - L\n4a At 15, INI\nSTRICTLY CONFIDENTIAL\nDA Time of Address\nValue\nat\n- N K\nNOW of\nsúm\nProduct\ntotal\nACTIVE\nDeliverias\nBettles\nIndellevent\nCapital\n=\nPredent\nTotal\nCapital\nProbat\ntital\nTiguida 7\ntreat\nAirline\n,\n205,973,449.01\n205,70,449.00\n42,465,752.79\n-\n20,899,711.85\nstryland Eagines\n-\n119,05,994.60\n219,933,958.60\n-\n$0,510,000.33\n73,096,712.03\n-\n18,978,557.62\n18,978,557.41\n-\n-\n12,196,908.07\n130,049,011.26\n-\n5,730,314.63\n5,730,316.63\n.\n4,974,537.00\n10,648,380.90\nAirest Products\n#\n469.459.551.27\n161,149,809.18\n-\n43,008,586.30\n43,108,986.10\n-\n96,306,877.80\n96,306,877.00\nMashine hols\n#\n24,704,297.75\n16,704,297.72\n24,537,961.77\n-\n-\n5,000,000.00\n1,966,354.70\n3,960,354.70\n-\n5,038,000.00\n-\n-\n2,166,335.95\n(==)1,800,018.75\n-\n946,000.00\nSquipment\n1,487,265.00\n17,729,486.73\n946,000.00\n.\n.\n-\n19,124,761.73\n7,220,161.09\n414,066.25\n5,000,000.00\n1,389,560.00\n1,803,626.25\naur Takinine\n-\n21,985,625.53\n21,185,825.53\n1,073,198.75\n123,701.50\n1,196,902.23\n19,650,175.78\n10,519,353.74\ny,006,090,74\n.\n$27,545.00\n1,629,244.00\n427,565.00\n-\nNotale\n-\n1,619,264.00\n1,203,303.34\n766,222.90\n766,222.90\n1,935,149.75\n341,461.85\n-\n-\n-\n.\n-\n7,04,000.00\n.\n-\nProducts\n7,625,000.00\n133,680.66\n133,680.66\n-\n-\n,\n.\n.\n-\n7,624,000.00\n7,434,000.00\nTotal Investment Pridade\n1,47,255.00\n79,922,883.98\n414,066.25\n7,129,479.70\n7,543,545.95\n1,073,196.75\n1,963,125.15\n27,218,220.10\n19,199,0.6.00\nCest 5/90\n1.487.168.00\n539.374.435.25\n540.899.700,25\n614,006.25\n51,738,065.00\n1,073,198.75\n97,191,801.20\n98,270,002.99\n315,128,582.19\n175.193.650.19\n512,000.00\n659,184,914.70\n80,971,650.33\n237,137,753.97\nAirplace Supire\n54,078,471.00\n237.670.221.58\n322,799,366.73\n578,213,264.31\n376,877,037.75\n108,432,803.02\nAirplace\n160,583,052.51\n3,140,000.00\n46,747,446.90\n296.230.941.90\n169,726,360.39\n2,296,043.12\n7,142,000.10\n20,244,153.01\n22.384.153,01\n44,651,383.86\nTvtal Advents Pribote\n36,430,471.00\n1,085,722,199.13\n109,796,138.32\n366,216,711.99\n620,677,627.10\n919,095,990.11\nBacklos Timis\n-\n26,213,886.29\n16,212,088.29\n4349,010.80\n-\n4,03,000.00\nExploine &\n6,05,686.02\n22,476,800.00\n63.179.03.76\n15.648.192.08\n1,720,781.81\n34.590.030.27\n3,968,30.80\nAmerica\n61,506,462.07\n20,956,0,8.19\nREPORT'S\n16,066,219.56\n10,689,525.18\n$4,683,240.90\nSystement\n37,374,766.08\n36,763,300.70\n195,542,984.66\n232,306,205.16\n99,033,968.84\n63,289,052.62\n11,581,103.31\n28,697,063.24\n62,278,168.57\nThese & Tack Apdyment\n8,303,400.00\n165,433,088.00\n198,233,932.06\n173,736,578.00\n106,739,064.17\n2,687,200.50\n6,896,210.00\n30,309,196.74\nHolor Fekisles\n37,205,404.74\n1/2,748,887.50\n17,803,374.48\n17,800,376.28\n7,173,852.70\n-\n3,092,542.50\nbefirms details\n3,030,542.50\n10,629,223.78\n2,750,000.00\n24,882,01.44\n29,630,01.44\n7,590,961.38\n17.10.420.13\n1,300,000.00\n3,660,348.06\n8hlp e write Zytipment\n3,760,348.00\n9,530,990.51\n$,179,000.00\n100,376,000.00\n108.575.000.00\n8,58,60.00\n2,029,848.70\n3,500,000.00\n22,074,933.33\nEleatrical Sydpent\n25,576,933.33\n98,346,151.30\n-\n1,896,569.33\n00.970.217,97\n1,896,544.33\n-\n379,323.87\nany Har\n379,313.87\n-\n1,070,091.60\n1,896,569.33\n1,070,092.60\n1,070,098.60\n1,517,255.46\n-\n-\n-\n-\n.\nProducts\n108.007.903.54\n673.793.399,20\n782.661.301.78\n115,729,486.22\n94,564,871.36\n124,002,734.47\n358,063,910.96\n48,346,196.03\n- D/M1\n165,699,374.50\n1,762,645,127.03\n190,237,466.14\n699,225,253.13\n1,07,159,509.09\n1,00,488,130.34\n- Total - Presis a\n107,185,409.58\nI\n29,769,481.60\n52,728,005.00\n0.19.19.05\n97,04,270.86\n777,08,25.00\nI\nFormating\nInstitud livision, Bay THE\nFebruary 25, 192\nherized are \" ATTAL\nRegraded Jolassified\n134\nthe\nILLIVE to = \" antigre\nAND CONTACTS OF of NO\n- 1\nde AS Felenary 15, Par\nSTRICTLY CONFIDENTIAL\nTital We of\nValue\nand\nbénome tax DMBL of\nValue 4F\nContract -\nSupplier\nRistal\nCepttal\nof\nProduct\nTitle)\nTrank Member\ncum Hours\nto\nCapital\nProduct\ntime\nTystem\nTotal\nlistad\nDue\nFUL +\ncarp.\n754 thunk Airfram\n-\n1,057,189.60\nles 1. 1.\n1,257,189.62\n1,031,071.00\n-\n-\n-\n-\n-\n-\n1,318,60\n5,325.40\nN°\nConstituted airest Carry\n28-5-07 Flaire e\n-\n4,432,130.81\nSan Stege, Culde,\n6,60,10.21\n1,490,131.63\n-\n3,20,366.99\n#\n1,356,635.00\n1,336,635.00\n3,377,796.50\n1-129\nInited Aircraft name\nV-156 2im &\n-\n2,772,280.00\n2,772,280.00\nsan Cress.\n329,454-10\n-\n1,600,750.75\n1,000,730.79\n-\n561,202.15\n561,202.35\n2,662,88.90\n1,050,872,80\nDouglas Aircraft Dorju\nAirplanes spare Propeilizes\n-\n13,333,130.21\nSarta Indos, Callf,\n23,333,130.23\n33,310,828.76\n-\n-\n-\n#\n-\n-\n22,353.45\n22,509.45\n3-277\nSteen 1. artis its,\nCartia Model 167-F, Parte\n-\n27,453,123.11\nSaltimers, M.\n27,451,129.13\n-\nand signipment.\n777,286.52\n-\n4,386,333.97\n4,386,331.97\n12,90,106.00\n7,637,501.60\nMm\nComp.\nPursult Flame, Titas e\n-\n10,952,638.38\n10,952,638.38\nles Twis, M. Y.\n5,979,748.00\n-\nTubes\n775,234.80\n77,205.80\n-\n-\n-\n1,973,890.34\n1,198,854.58\nwith AMERICAN aviation,\nM-4 Tradelag\n#\n3,174,840.70\n1,174,560.70\ninglamat, Galif.\n3,077,777.33\n.\nEnglass a\n25,012.21\n23,012.22\n#\n,\n-\n77,062.00\n33,250.00\n-\nbots American aviailem,Inn.\nmost - Propellers,Ingiam,\n-\n997,523.63\nCalif.\n797,523.51\n962,218.63\n-\n-\nSpares\n-\n.\n1,016.05\n1,014.05\n35,606.90\n33,990.13\n7-2%\nOrman Airents Corp.\nPundt Flame,\n-\n4,671,588.26\n6.091,648.26\nBelts E. T.\n6,679,200,33\n-\n-\n-\n-\n7,348.11\n7,348.11\n12,487.93\n1,139.82\nN%\nCouglas sirenth Corp.\nUgal\n,\n18,977,163.30\nunles, Callf.\n10,977,143.30\n-\nBost\n234,976.59\n$34,396.59\n-\n407,029,00\n477,029.00\n1,539,300.31\n091,676.72\nF-472\nBostag Aircraft Ca.\n240 03-78 Airplanes and\nI\n30,582,735.96\n-\n-\nDettile, fash,\nSpares\n5,916,000.00\n3,916,000.00\n-\n10,530,973.12)\n30,582,720.26\n14,135,777.90\n1-177\nConsolidated attent Copy.\nLa 30 Spares\n,\n38,711,311.74\n38,721,311.74\n-\n.\n(Ma Plago, Callf.\n1,837,500.00\n1,837,500.00\n-\n14,999,790.71\n36,711,311.74\n21,873,091.03\nMIL\nunique Airents Corp,\nthat Morthrop A-37A Planne,\n,\n1,619,759.52\n3,619,729.32\n3,619,710.52\nE\n-\n-\nlanta fallf,\n-\n-\n-\nI\n-\n.\nN/M\nIsro American aviation,Inc.\nTrainer Flanes, Fratt à\n-\n18,481,778.60\n18,001,778.65\n#\n-\nRegistrat, Callf,\n4,096,477.00\ninglane\n4,096,403.00\n-\n1,789,986.31\n4,769,966.31\n18,481,776.50\n9,615,389.29\nlonglas direct Corp.\n10-72 Airplanes, Spares\n-\n30,138,180.81\n30,538,180.82\n-\n-\nSasta Calif,\n3,871,000.00\n3,971,000.00\n-\n13,509,631.00\n13,509,611.00\n30,538,182.62\n13,157,545.81\ntotal\n-\n205,973,449.01\n205,973,449.03\n51,459,952.79\n-\n20,097,711.86\n20,899,711.1\n-\n50,510,872.33\n73,096,912.03\nAirplans\nCarp.\nCyclane Engines\n-\n1,969,728.00\n3,989,728.00\n2,953,745.27\n=\n611,773,20\n611,777.26\n.\n.\nYes Tork, 1. 1.\n-\n604,009.97\nF-1/0\ndreaft Corp.\nPratt & Ritney 7win -\n-\n7,450,776.00\n7,450,776.00\n7,450,776,00\n-\n-\n-\nSurt Nurtherd, Dan.\n-\n-\n-\n,\n-\nJr. Englaee\nNN\n.\nCrited Airent Cury.\nPratt & Whitery they 574-4\n-\n4,189,720.28\n6,188,720.18\n6,288,720.28\n-\n-\n-\n-\n.\n.\n-\nan lartford, Date\n-\nInglass\n.\nleise Aircraft Corry.\nPrett & Whitevey tesp 5304-0\n-\n7,177,439.50\n7,177,639.50\nlast liartfied, Seen,\n7,177,639.50\n-\n-\n-\n-\n-\n+\n-\n-\n.\nEnglose\nValted Airmit Curp.\nfairp 0044 Englase\n.\n5,791,989.00\n5,791,989.00\nbot Number, -\n5,791,989.00\n-\n-\n-\n-\n#\n-\n-\n,\n.\nintlud Urensft Carp.\nPaid Date Englines\n-\n7,273,099.00\n7,273,059.00\n7,273,059.00\n-\n-\n-\nF\n1\n1\n-\n-\nBurt Hartfund, Dan,\nNR\nUnited airmit Carp.\nTwing ingines\n-\n8,602,087.00\n8,82,007.00\n7,628,300.82\n-\n790,050.14\nan Berthed, Crass.\n790,050.14\n#\n17,4%.02\n17,4%.03\n1,773,786.18\n566,242.00\n-\nbetts Aviation Carp.\nzom & 27.30 Engine Starters\n-\n2,180,083.20\n2,180,083.30\n538,937.60\n-\n013,000.07\n+\n-\n-\nbests, 3, J.\n1,641,145,70\n827,653.77\n- .\nlaters Corp.\n9-2720-015 Buglose\n-\n2,001,000.00\n2,001,000.00\n2,001,000.00\n-\nF\n-\n1\n-\n-\n-\nI\nfork, F. I,\nNO\nGeneral Drtes Corp.\n9-2720-015 English\n-\n12,180,000.00\n12,180,000.00\n4,495,516.92\n.\n3,535,625.00\n3,535,625.00\n*\n301,517.50\nPara Delk, M. I,\n301,517.50\n7,734,183.18\n3,887,340.38\n(-))\nUnited Airents Corp.\nThey are Registe\n-\n1,522,675.00\n1,322,879.40\n1,322,879.10\n-\n-\n-\n.\n#\n-\n-\n-\nlast Come,\nNO\nInital Airmitt Corp.\nligare Paris for Enginee\n-\n1,616,899.34\n1,616,839.34\n1,393,772.33\n-\n64,072.72\n64,071.72\n.\n71,000.29\n71,953.29\nlast Partford, Com.\n223,06/7.83\n47,072.00\nI\nValted Aircraft Corp.\nfuny Indian\n-\n34,667,775.10\n34,647,779.00\n4,720,389.35\n-\n7,249,548.04\n7,249,545.04\n-\nlast Nartford, Come.\n10,117,172.54\n10,319,172.56\n29,967,381.66\n11,140,068.07\nNo\nGeneral Intore Dairy,\nVartina Tocia # Spare Parts\n-\n1,546,915.36\n1,534,915.36\n175,560.77\n.\n-\n1\n-\n665,846.81\n665,646.01\n1,349,356.79\n640,507.00\nI've York, N. T.\n1-37\nUnited Airwark Carry,\nRun N-1830 Englose\n-\n4,907,381.90\n4,907,551.90\n20,000.00\n-\n1,06,342.79\n1,616,342.79\n-\n1,114,257.31\n1,114,097.31\n4,866,333.47\n1,135,903.37\nCast Hartfund,\n-\nUnited Airends Carj,\nRate - Englase\n-\n2,306,702.40\n2,306,752.10\n2,306,902.10\n-\n-\n-\n-\n-\n-\n-\n-\nan Hartfied, Dan,\n-\nCarp.\n1-200 Cyclane buglam\n-\n108,034,530.68\n118,034,510.68\n14,02,129.0\n-\n3,477,659.69\n3,497,699.69\n-\n27,781,431.00\n27,792,433.00\n83,214,380.00\n$1,912,268.16\nBes lers, I, T.\n/-\nInited Airman Dary,\nSpare Parte for Bigine\n-\n2,09,672.32\n2,539,672.32\n1,64,301.62\n-\n-\n-\n-\n511,00.95\n561,529.93\n$95,290.90\n354,266.99\nlist lartfant, Come,\nTotal\n.\n-\n15,976,537.53\n18,778,537.01\n-\n132,049,011.36\n77,245,985.36\n135\nTHE NATURE PRODUCTED -\nFURER mos CORPLACES - =\nValue to = 5. INLIATE\n\" at Telenary 1% 150\nSTRICTLY CONFIDENTIAL\nPage #\nTotal failure of Distract\nValue\nto Credit if\nWas 5\nShale\nand\nof\nNEW -\nDestruct -\nSupplier\nMarial\nmiss\nnum -\nundivid\ny\nDelhi\nTotal\nDeliveria\nCapital\nProducts\nTotal\nCapital\nProbect\nTotal\nTimela -\nUnited\nNO\nDouglas aireraft OF\nAskd are ring united\n-\n3,112,731.50\n3,112,731.50\n.\n-\nF\n,\nSanta allr,\nMIT .\nCorp.\nList Tratsers, are\n-\n2,066,340.19\n2,064,540.39\n-\n-\n-\n-\n1.1.\nparte\n$35,070.10\n170,140.27\nIn-bile\nCofted Airentt Corp.\nfamilition Standard Prepations\n,\n3,806,538.73\n5,600,558.73\n3,553,176.00\n-\n500,064.40\n500,066.20\n-\n379,046.50\n539,866.58\n2,253,185.00\nSeet Hartford, Com.\n1,111,771.87\n-\nbefor aviation Cerp.\nAircraft Signe Blarters\n-\n9,300,038.00\n7,299,838.60\n1,792,800.00\n-\n1,621,158.50\n-\n3,2%,173.50\n7,294,375.50\n5,007,238.40\n3,090,036.40\nSmitts, M. 2.\nNA\nUnited Aircraft City,\nSpare Parts &\n.\n1,299,253.56\n1,279,233.56\n199,466.18\n-\n6,531.0\n6,531.41\n-\n-\n-\n1,108,767.00\n1,000,295.09\nlast Martford, Dam,\nfor sero Englass\nCurtize-Rright Corp.\nPropellors, including\nIf\n11,897,201.00\n11,687,201.00\n5,407,698.35\n-\n2,905,802.50\n2,935,802.50\n-\n310,265.00\n350,265.00\n6,179,502.85\n3,103,435.35\nSee York, 11, 1.\nvarious additions\nTotal\nI\n33,550,143.58\n33,590,143.50\n12,196,908.97\n-\n5,730,316.63\n5,730,316.63\n-\n4,974,137.08\n4,976,537.00\n21,19,234.81\n10,644,380.90\nTotal Aircraft Products\n-\n659,499,551.27\n454,459,351.27\n161,369,809.18\n-\n45,608,586.10\n43,608,586.10\n-\n96,306,877.80\n297,909,742.09\nTrails\nF-250 *\nR.F. Sachine Tval Oc. Tathem\n-\n1,171,443.60\n1,671,441.50\n1,171,443.00\n-\n-\n-\n-\n-\nI\n-\n-\nlaw Tark, 3, 1.\nMW .\nEmail & Tranker Carp.\nvilling Machine & Equipment\n-\n13,352,07.76\n13,152,017.76\n11,877,900.00\n-\n3,602,003.21\n3,602,003.20\n-\n-\n-\n1,474,110.96\n1,127,952,24(e)\nWis,\nT-NA .\ntrue a Starge\nServe Washines\n-\n1,799,754.00\n1,799,754.00\n1,799,754.00\n-\n.\n-\n-\n-\n-\n-\n-\nProvidence, B. I.\nP-Y71 .\nUnited Engineering &\nSpdgemt for Alundre\n-\n7,099,266.63\n3,699,266.63\n-\n-\n-\n-\n-\n.\n-\n-\nCa.\nKilla\nPittsburg, 7a.\nF-(1) .\nlantis Tool Co.\nOrinders, Flamers, etc.\n-\n1,738,054.03\n1,738,084.03\n1,580,214.00\n#\n113,031.00\n113,031.00\n-\n+\n.\n157,849.95\n44,200.00\n7a.\nMM .\nCioclarati Willing Markins\nOristing à Willing Mastines\n-\n1,196,036.20\n1,196,026.20\n979,491.90\n-\n$6,000.00\n88,458.00\n-\n-\n+\n217,534.30\n129,036.30\n& Clarimatt\nCinctenatt, this\nMill .\nliveld Navidas Co.\netc.\n-\n2,037,895.00\n2,037,855.00\n1,861,576.26\n-\n109,012.50\n109,012.50\n,\nI\nI\n176,278.74\n47,266.26\nRess,\nP-647 .\nLeland-Cifford Or,\nDrilling Mackines, etc.\n.\n1,213,852.50\n1,213,852.51\n1,073,290.50\n-\n53,750.00\n$3,750.00\n-\n-\n-\n140,562.00\n86,212,00\nSurcestor, lians,\nTotal\n,\n36,704,297.72\n26,704,277.72\n14,537,961.77\n-\n3,966,354.70\n3,964,354.70\n-\n-\n-\n2,166,335.99\nAmmittion\n9\n1-115 .\nPollack mr. De.\nVetallic Parte fir Plass\n2,838,000.00\n2,838,000.00\n-\n#\n346,000.00\n*\n-\n-\n-\na,838,000.00\n1,892,000.00\nArlington, a. 4.\n24/11 ETC.\nP-174\nTrangetom Short a Tule Ca.\nShall Quality Steal Inste\n2,200,000.00\n2,200,000,00\n-\n-\n-\nF\n#\n-\n-\n.\na,200,000.00\n2,200,000.00\nfile\nTotal\n-\n5,038,000.00\n5,038,000.00\n-\n#\n946,000.00\n946,000.00\n-\n-\n-\n5,036,000.00\n6,092,000.00\nPrinance\nP=5L\nSperry Cyrosenja\nlearthlights, Ind Location,\n-\n2,433,933.25\n2,633,733.28\n1,236,826.50\n-\n0.976\n49,976.51\n-\n-\n-\n197,106.33\n147,129.74\nBrooklyn, N. T.\nBarbase & times\nM .\nInternational Constral\nSearchlight Squipment,\n2,368,232.00\n2,168,132.00\n1,129,532.16\n.\n7,174.95\n7,171.8\n-\n-\n-\n-\n36,699.84\n31,526.89\nElsetrie Ce.\nFortalde Fresh Flarte\nSee York, N. I.\nF-675\nPatent Fire Are\nOma & Spare\n1,477,215.00\n5,637,625.00\n7,124,890.00\n705,337.32\n614,066.25\n1,26,40.03\n1,710,515.88\n1,073,198.75\n123,703.30\n1,196,902.25\nafg. Co.\nllurtford, Come.\nP-688\nSparty Dyroseope Ge,Ins.\nComplete\n4,642,171.78\n6,463,171.79\n1,378,462.38\n-\n19,354.70\n19,356.70\n#\n-\n-\n3,003,709.40\n3,066,356.70\n-\nBrooking, N. T.\nN/W 4\nInternational\nPartable\n-\n2,857,534.70\n2,887,536.70\n$67,784.23\n-\n16,236.11\n16,204.11\n.\n-\n-\n2,297,750.47\n2,272,546.36\nDectric Co.\nPrese Plants\nle York, y. T.\nTotal\n1,447,265.00\n17,739,496.73\n19,226,761.73\n7,130,142.99\n414,066.25\n1,399,560.00\n1,007,626.25\n1,073,198.75\n123,703.50\n1,196,903.15\n10,519,353.74\n9,006,090.24\nSiction Tettales\nINCI\n.\nGeneral\nThat Change\n-\n15,280,711.50\n15,280,711.50\n13,348,461.75\n107,563.00\n627,565.00\n-\n764,223.90\n764,222.90\n1,935,269.79\n-\nles Tork, a. x,\n7\nMARK International inter\nTask Train & Spare\n1,646,000.44\n3,646,000.16\n-\n-\n-\n-\n-\n-\n-\n1,46,000.00\n-\n-\nTrank Cory.\nParta\nLong Inland am N.t.\n1-5%\n.\nThe Matte Motor Go,\nTrusks, total 92\n-\n1,617,805.30\n3,627,805.30\n-\n-\n-\n-\n-\n-\n.\n-\n3,617,805.30\nSim ton, N, I.\nCaterpillar truster Da.\n1,018,304.29\n1,016,300.29\n1,018,308.29\n,\n#\n-\nF-728 .\n-\nTruston\n-\n4\n#\n-\n-\nPearla, m.\nTotal\n-\n21,585,423.53\n19,650,575.78\n,\n$27,165.00\n827,565.00\n-\n155,200.00\n706,327.90\n1,935,249.75\n30,461.95\n136\nTE BRITISH PERCLASING MISSIONS\nPage 3\nFORMER FRENCH CONTRACTS OF $1,000,000. OR OVER\nas At Fabruary 15, 1%1\nSTRICTLY CONFIDENTIAL\nWe is 1. - Dollars\nTotal Value of Contract\nValue\nAdvences Outstanding To Credit of Rissions\nValue of\nBelance\nClassification\nof\nFrench Advances\nJUM Advances\nIndulivered\nof\nand\nSupplier\nNaterial\nCapital\nProduct\nTotal\nDeliveries\nCapital\nProduct\nTotal\nCapital\nProduct\nTotal\nNaterial\nPayments Due\nContract No.\nMetale\nCopper Export Ass's.\nAnsconda Electrolytic\n-\n1,419,264.00\n1,419,264.00\n1,285,383.34\n-\n-\n-\n-\n-\n-\n133,880.66\n133,880.66\n22\n.\nSet York, N. T.\nZine\nTotal\n-\n1,419,264.00\n1,419,264.00\n1,285,383.34\n-\n-\n-\n-\n-\n-\n133,880.66\n133,680.66\npetroles Products\niviation Casoline\n-\n5,292,000.00\n5,292,000.00\n-\n-\n-\n-\n-\n-\n-\n5,292,000.00\n5,292,000.00\nNI (a) Due 011 Co.\nPhiladelphia,Pa.\n(a)\nCompagnie Industrialle\nAviation Casoline\n-\n2,134,000.00\n2,134,000.00\n-\n-\n-\n-\n-\n-\n-\n2,134,000.00\n2,134,000.00\nV-89\ndes Patroles\nles York, 5, T.\nTotal\n-\n7,426,000.00\n7,426,000.00\n-\n-\n-\n-\n-\n-\n-\n7,426,000.00\n7,426,000.00\nTotal Non-tircraft\n1,487,265.00\n79,912,883.98\n$1,400,148.98\n52,694,063.88\n414,066.25\n7,129,479.70\n7,543,545.95\n1,073,198.75\n689,926.40\n1,963,125.15\n27,218,820.10\n19,199,414.00\nOrand Total French\n1,487,265.00\n539,372,435.25\n540,859,700.25\n214,243,873.06\n414,066.25\n52,738,065.80\n53,152,132.05\n1,073,198.75\n97,196,804.20\n98,270,002.95\n325,128,562.19\n175,193,692.19\n. Contracts being completed by April 30, 1941.\n(a) Contracts in process of Cancellation,\nBritish Purchasing Commission\nStatistical Division, See York\nFebruary 25, 1941\nRevised March 9, 1941\nRegraded Uclassified\n137\nPage -\nno BUYING Missions\nORITING CONTRACTS OF $,000,000, or wa\nWill La u; a. Dellars\na at Fationality 15, 19d\nSTRICTLY CONSIDENTIAL\nTotal Value of Contract\nValue\nAdvances - Credit at Wisstons\nValue of\nMes\nand\nof\nUndelivood\nif\nContract Br.\nSuppliar\nMaterial\nCapital\nProduct\nTital\nDelivaries\nDepital\nProduct\nTotal\nMaterial\nPayments De\nAirfrease\nA=37\nConsulidated Aircraft Cary.\nfiring Sexte\n-\n16.250.598.03\n16,259,08.03\n240,875,16\n-\n10,205,488.61\n10,205,488.61\n15,018,764.87\n5,613,276.26\nSea Diago, Calif\n1-67\nLockbred Aircraft Cary.\nHadem I, II . m\n-\n22,381,810.59\n20,981,810.57\n22,328,990.90\n-\n207,426.76\n202,646.26\n252,819.69\n50,773.15\ncallf.\nA-68\nLockboad Aircraft Curp.\nSingle Sent Pightere\n-\n30,566,978.29\n30,566,778.29\n.\n7,271,994.34\n7,277,991.14\n17,190,871.03\nBurlank,\nI-75\nDeventer corr.\nbuffalows, Naming too\n-\n12,190,396.37\n12,190,376.37\n3,060,350.44\n-\n3,588,381.00\n7,100,045.93\n1,90,000.93\nin The N. T.\nA-14\nOurtier-Rright Corp.\nliast CA & 87A\n-\n(3,331,628.88\n29,002,930.46\n-\n10.120.107.97\n10.420.107.97\n7,408,990.45\nYes form, 5, T.\n4-07\nDonglas Aircraft Corp.\nDiatim Benders\n-\n62,120,155.43\n22,128,194.43\n52,781.20\n-\n14,794,021.47\n27,081,336.36\nSanta Mondal, SALE\n1-16\nBirth American Ariation\nHarvarda\n-\n24,507,560.78\n-\n3,193,517.80\n3,193,517.80\n13,573,700.50\n9,280,182.50\nBaglemod,Callf.\nA-150 .\nCookheed Attents Durp.\nPlanse\n-\n1,500,000.00\n1,500,000.00\n20,10.01\n-\n-\n-\n1,130,596.79\n1,138,958.79\nturback, CALLE\n-\nDall Aircraft Corp.\n-\n11,910,927.50\n11,010,927.50\n17.55\n-\n4,850,900.00\n4,740,000.70\n11,710,374.55\n6,150,399.35\nquitain, 1. Y.\n4-2%\nGiam L. Wartin D,\nliabers Modal 127\n464,000.00\n11,213,00,0\n55.677.531.40\n-\n132,667.51\n32,880,317.01\n22,797,316.39\nBaltimore, No.\n1-20\nLookheed Aircraft Curp.\nModel 322\n150,000.00\n51,523,928.13\n51.978.926.12\n.\n.\n15,462,177.22\n19,462,177.32\n51,328,928.11\n36,536,750.90\nBurbank, Callf.\n4-250\nNorth America Aviation\nN.A. 73's\n-\n14772,784.30\n14,772,794.30\n-\n-\n3,697,304.76\n14,772,796.30\n11,113,427.32\nEnglamed, Calife\nA-344\nLookhered Aircraft Corp.\nModal 37's\n-\n33,033,460.50\n33,033,660.40\n.\n-\n11,106, 29.96\n11,504,429.96\n33,013,560.00\n21,127,000.44\nBurber Chilf,\n- -\nLeakhand Aircraft Corp.\nMidel\n-\n2,154,347.39\n2,532,347.39\n-\n26,138.61\n57,180.72\nBurback,\n-\nforth Aviation\nII\n-\n1,578,510.51\n3,970,510.51\n111,01.91\nP\n1,504,983.51\n1,604,193.61\n3,607,066.70\nEnglawood, Celle.\nInvelor Corp.\nSingle Seat Pightare\n,\n1,371,385.89\n1,371,325.39\n1,371,315.99\n-\n.\n1\n-\n-\nSee York, N. 1.\n1-00 -\nhalgian Government\nStagle Sest Pightare\n-\n1,192,101.10\n1,192,140.10\n1,192,166.10\n1\n.\nF\n-\n,\n6-157\nfulles Aircraft Corp.\nDive lisabure & Spare\n-\n64,395,612.50\n44,395,512.50\n-\n.\n15,400,513.50\n15,40,513.50\n44.395.623.50\n27,795,099.00\nVulten Field, Galif,\nBremiar Aerosantical Darp.\nDive\n-\n35.439.412.50\n35,939,412.50\n-\n.\n17,861,576.90\n27,861,576.90\n35,939,02.30\n15,075,533.40\nNew York, M, To\nMill\n.\nBorth Aviating\ndipare Peria - [arvard I\n-\n1,274,574.35\n1,274,976.85\n254,257.80\n.\n503,531.03\n103,573,03\n1,020,319.05\n516,596.32\nEnglawod, Calif.\nLOST\nPao America Airways\nFiging Boste\n3,328,986.00\n3,328,986.00\n-\n-\n-\n1,553,100.00\n1,193,100,00\n3,328,986,00\n1,775,860.00\nlime York, M. 1.\nA-1340\nDell Aircraft Corp.\n2.400\n-\n9,875,000.00\n9,975,000.00\n-\n-\n5,307,500.00\n5,307,500.00\n9,875,000,70\n4,587,300.00\nBuffalo, 4. T.\n4-3-51\n.\nLockheed Abroad Corp.\nCodestar Airplaner\n-\n1,143,568.87\n1,123,568.87\n306,013.45\n-\n236,508.17\n238,508.72\n677,553.42\n199,047.20\nBurlmak, CALLE,\n6-1276\nBell Carp.\nAireclente\n-\n13,893,000.00\n13,991,280.00\n-\n-\n6,757,066.30\n6,252,066.00\n13,973,680.00\n7,60,000\nautrain, & 1.\n1-3/20\ninvester Americantical Corp.\npar lites\n20.191,709.00\n20,291,709.00\n-\n-\n-\n4,512,844.34\n4,512,546.34\n20,291,709.00\n13,779,066.54\nSee York, a. T.\n1-1/93\nNorth Amertano Aviation Inc.\n9473 Airplanes\n-\n11.292.677.50\n15,292,677.50\n-\n-\n6,764,119.00\n6,264,119.10\n15.192.677,50\n9,026,558.10\nEnglament, Cellf.\ntrumes dircraft & Engineering Gorp.\n0-35A Purvuit Fiance\n-\n6,381,556.00\n4,381,586.40\n-\n-\n2,943,587.50\n1,943,587.50\n3,438,098.70\nPage, N. T.\nAircraft Corp.\nVultam Dive Sundaire\n17,511,330.50\n17,511,330.70\n-\n-\n-\n6,817,058.00\n4,817,056.00\n10,794,274.50\ninstrums, DALLE\n--1*36\nValitam Aircraft Curp.\n48-C Pureuit Flacho\n-\n10,186,791.38\n10.186,795.38\n-\n-\n5,687,967.49\n1,007,567.59\n10,186,795.30\nField, Callf,\n1-1748\nLookheed Corp.\nPlaces\n-\n0,229,862.50\n61,229,862.50\n-\n-\n12,825,000.00\n13,815,000.00\n(1,229,862.30\nSurback, CALLE\n4-17 19\nLockheed Atrantt Copy.\nthe D a Airliness\n-\n42.595.649.31\n62,395,649.31\n2,921,967.43\n-\n17,338,186.74\n17,138,186.78\n39,073,579.93\n22,131,493.05\nCalif.\nJ-1835\nObtise-Rright Corput\n07A Airframes\n-\n23.11.067,20\n22,414,007.70\n-\n-\n10,850,000.00\n10,850,000.00\n23.014.047,20\n11,164,087.20\nkee Tork, a. 1.\nCortise-Rright Orrgo\n754 - in 3 Mark Sparas\n-\n1,154,359.69\n1,158,399.49\n121,271.09\n-\n201,532.17\n1,035,008.60\nNew hrs, a. 1.\n4-2587\nAirents\nnytie losts\n-\n1,05,000.00\n1,05,000.00\n1,635,000.00\n-\n-\n-\n-\n-\nJas Diags, CALLE\n1-5068 .\nLiberator Airplanes\n2,44738.50\n1,0479.00\n6,754.87\n-\nAttnum Corpo\n-\n1,152,701.93\n2,262,741.93\n2,477,984.15\n145,742.22\nSAL Calle,\nTotal\n612,000.00\n659,184,714.70\n659.796.924.70\n132,667.61\n237,537,753.97\n237.670,121.58\n578,213,264.35\n341.154.842.77\nRegraded Uclassified\n138\ne (\nTHE BUTTER PINCIASING\nBUTTER contracts OF $ 000,000. in one\nValue La 9, 1. follows\nM at Patenary 15, 1941\nSTRICTLY CONFIDENTIAL\nClassification\nTotal Value of Contract\nTelm\nat\nAdvance in Credit of classics\nValue of\nValages\nDestract Mr.\nSupplier\nMaterial\nof\nCepital\nProduct\nUndeltrund\n&\nTotal\nDelivries\nCapital\nProduct\nTotal\nMaterial\nPayments -\nAirgine Ingines\nUnited Aircraft Ourp.\nF. & R. BC36 Inglass 4 Propalisms\n-\n1,113,931.60\n1,115,931.60\nNortford, Over.\n1,115,931.60\n#\n-\n.\n-\n-\n1-75\nDurties-Mright Corp.\nCHISED & 26008\n-\n20,342,400.00\n20,362,400.00\nEav Tork, N. 1.\n12,252,111.60\n#\n3,635,596.60\n5,635,995.10\n8,000,288.60\n4-196\nOurtine-Reight Corp.\nfurioda Biginess\n16,305,200.00\n64,894,161.50\n81,201,361.50\nSev Tark, 5. T.\n3,077,659.35\n14,450,700.00\n32.261.130.68\n46,711,830.48\n61.615,701.95\n51,432,071.47\n4-196\nGeneral Motore Corp.\nAlliem Englass\n4,465,837.00\n63,190,680.00\n69,657,517.00\nNew York, N. 1.\n6,393,113.90\n36,820,613.90\n34,325,311.57\n23,971,335.07\n4-284\nDustad Aircraft Corp.\nP. & R. name\n6,406,634.00\n14,300,140.00\n20,906,374.00\nbut Hartford, Come\n26,950.25\n6,400,634.00\n8,286,490.00\n14,592,914.00\n6,184,707.72\n4-532\nDurtine-Bright Corp.\nRagis Spares\n-\n2,792,847.65\n2,792,547.53\n1,178,601.39\n-\nNew Terk, N. I.\n791,892.07\n791,892.07\n1,614,246.36\n882,354.19\nA-787\nParkard Motor Da.\nSolle Boyee Barlin II Inginee\n24,900,000.00\n110,000,000.00\n134,900,000.00\n-\nDetrait, Wish,\n26,900,000.00\n19,549,904.56\n44,449,904.36\n110,000,000.00\n90,450,099.44\n4-5093\nOutled Airoraft Corp.\nFrutt & Whitesy Ragione\n-\n45,921,206.00\n45,921,201.00\n-\n.\nlast Hartford, Come\n11,480,201.50\n11,480,301.50\n43,921,204.00\n34,460,904.30\nTotal\n54,078,471.00\n322,759,366.75\n26,528,424.85\n52,156,247.50\n108,637,805.01\n160,583,052.51\n296,230,961.90\n189,726,360.39\nAirgine Answesorten\n4-257\nCorp.\nPropellare\n2,140,200.00\n15,556,840.00\nI've Tork, N. T.\n17,696,640.00\n325,863.08\n2,140,000.00\n7,613,288.34\n9,733,280.54\n13,230,076.40\n7,617,688.38\n4-320\nUnited Aircraft Gorp.\nPropellars\n-\n10,408,233.00\n10,408,353.00\n519,299.56\n-\nlast Barkford, Come\n3,944,921.04\n5,944,991.04\n9,899,053.16\n3,546,138.00\n4-324 .\nSperry Qyroscope Go,\n-\n1,260,000.00\n1,260,000.00\n1,105,333.75\n-\nBrowdyn, a. 1,\n17,403.74\n17,403.74\n76,466.23\n$7,262.51\nd-521\nFairebild Aviation Corp.\nOthers Thise\n-\n2,485,610.15\n2,685,610.15\n-\n-\nJamaine, 9. I.\n1,242,805.00\n1,262,805.08\n1,262,905.07\n4-1453\nFairshild Aviation Dary.\nQuants Nacidas -\n-\n1,160,198.15\n1,160,198.15\n116,436.75\n.\nJamina, M. T.\n515,506.56\n$14,504.56\n1,00,751.40\n538,256.84\nA-2551\nInited Aircraft Corp.\nPropallars\n-\n4,458,120.00\n4,458,120.00\n.\n-\n1,114,530.00\nDat Barkford, Come\n1,114,330.00\n4,458,120,01\n3,343,390,00\nA-2553\nUnited Airoraft Corp.\nPropaliers, Complant Syret Contrile\n-\n1,797,600.00\n1,797,600.00\n-\n-\nlast Hartford, Come\n710,040.00\n719,040.00\n1,797,600.00\n1,078,360.00\n6-2552\nUnited Airoraft Corp.\nPropelliers\n-\n1,268,760.00\n1,268,760.00\n-\n-\nDate Burkford, Coun-\n507,504.00\n507,504.00\n1,268,750,00\n761,236.00\n4-2555\nUnited Alreraft Corp.\nPropellers\n-\n1,110,523.00\n1,110,523.00\n-\n-\nMat Sert/and,\n277,630.75\n277,600.75\n1,110,523.00\n€12,892.25\n4-2556\nlibitted Alreraft Corp.\nPropellars\n.\n2,813,400.00\n1,813,400.00\n-\n-\nand Nart/ord, Come\n1,125,360.00\n1,123,MA,00\n2,813,400.00\n4-2557\nUnited Aircraft Carp.\nPropallare\n-\n1,519,236.00\n1,519,236.00\n-\n.\n-\n-\nDuet Come\n1,519,236.00\n1,519,236,00\n4-50%\nSperry Do.\nDosbeights, anything nam, ato\n*\n1,390,542.68\n1,590,542.66\n-\n-\n5.60.095.30\n540,055.30\nBrooklyn, x, T.\n1,590,542.60\n1,050,007.38\n4-31.07\nCorp.\nPropellare\n#\n1,518,266.00\n1,518,264.00\n149,130.00\n-\n626,110.00\nlive Tat. 4. I.\n626,110.00\n1,309,134.00\n70,000.00\nTotal\n-,140,000.00\n46,947,446.98\n49,097,446.99\n1,296,063.12\n2,140,000.00\n20,244,253.01\n20,384,153.01\n24,417,230.85\nTotal Aircraft Products\n56,830,471.00\n1,028,891,728.13\n1,003,722,199.13\n109,796,136.32\n56,422,915.12\n366,214,711.99\n620,637,627.10\n919,093,590.11\n555,278,434.01\nRegraded Uclassified\n139\nIf NAITING namero came\nGUYES OF EL,000,00 2\nAge +\n- at Ninary 15, 1942\nSTRICTLY CONFIDENTIAL\nQualified's\nTotal Value et District\nfilm\nto\nWho of\nbelance\ncall\nGistrest Box\nReterial\nat\nSupplier\nCapital\nCondit st\nintellived\nof\nfroduct\nTotal\nIndiverial\nCopital\nProduct\nTotal\nWherld\nPaymentle Dire\nMachine Their\n6-415 .\nLouis a. Issues Gas,\nTwile\n-\n1,277,250.30\n1,277,294.00\n1,277,050.00\n-\n-\n-\n#\n-\nChicago, 111,\nA-707 .\nLendo a. terms City\nDead Trule\n-\n1,275,000,00\n1,273,000.01\n1,227,050.00\n-\n#\n-\nChinge, 111.\n17,190.00\nL-PIT ,\nInternational markins Nd Dr.,\nLather\n-\n1,037,352.50\n-\n-\nLast.\n1,037,362.50\n518,585.22\n$13,585.00\n1,037,368.50\n518,777.38\n4-1000\nSee Machine Down\nServe Buckines\n-\n1,310,600.00\n1,310,600.00\n-\n-\nline Britale, -\n773,03.00\n790,675.00\n1,310,600,00\n417,125.00\n-\n4-1212\nkrim Co.,\n-\n1,420,870.84\nBurnetar, BMI.\n541,409.30\n-\n327,845.04\n327,843.04\n881,201.56\n933,776.50\n4-1719\nMilling Recking Gas,\nMilling Manhine\n-\n1,196,166.50\nCinsinsai, Ohio\n1,396,166.90\n97,411.50\n-\n60,72.50\n647,990.30\n1,298,300\n6-20-2 .\nLenda N. terms Co.,\nGast Bachine Tocks\n-\n1,05,000.00\n1,235,000.00\n1,205,450.02\n-\nDisage, n.\n1,870.00\n5,870.00\n29,250.00\n23,480.00\nA-2300\nBakinnal - a,\nCheaking Menhines\n-\n1,962,673.00\n1,962,075.00\n-\n-\nClassland, Chile\n$64,651.00\n$64,082.00\n1,982,875.00\n1,097,993.00\nA-3362\nCinsissati Billing Machine Dive\ndilling Bechines\n-\n3,755,235.60\n3.755.235.60\n-\n-\nCustiments, Chio\n1,251,745.20\n1,151,745.20\n3,755,235.60\n1,503,490.40\nA-3375\nClabult Markins CA.,\nforget Latime * Epilyment\n-\n2,622,000.00\n2,622,000.00\n.\n-\nMidleon, Elet,\n€74,000.00\n$74,000.00\n2,642,000.00\n1,748,000.00\n1-3629\n& Sensary\nLäthes & Equipment\n.\n2,167,125.00\n2,167,125.00\n-\n-\n-\n-\nClaveland, Class\n1,187,125.00\n2,167,125.00\n6-3436\nWeshine Gast\nLather & Spipment\n.\n1,072,781.85\n1,672,761.83\n-\n-\n197,573.95\nMediaso, Res.\n557,993.95\n1,672,781.85\n1,115,187.90\n6-352\n4 Treder Corp.,\nBilling Dattar Arbers\n-\n2,782,033.00\n2,782,033.00\n-\n-\n-\n-\n3,784,003.00\n2,782,013.00\n4-3527\nNational - Go.,\nAutomatic Serve Bachine\n-\n1,290,000.00\n1,290,000.00\n-\n-\n322,500.00\nClaveland, Galo\n312,300.00\n1,290,000.00\n967,503,00\n6-3579\nInternational Machtas 2 One,\nfarret Latine\n.\n1,007,190.00\n1,007,190.00\n-\n-\n251,797.50\n251,797.50\nIndianapolis, 1\n1,007,190.00\n755,382.50\nTotal\n-\n26,212,886.29\n26,212,888.29\n4,349,020.80\n-\n25,442,101.08\nExplaine à Propellaste\n1-27\nare Feeter Co.,\nTelleTs\n667,000.00\n2,000,000.00\n2,567,000.00\n741,072.97\n222,333.33\n-\nFilsington, Del.\n222,773.33\n1,258,927.03\n1,703,990.70\n4-80\ndilas Ferder Da.,\nT.N.T.\n760,000.00\n2,000,000.00\n3,760,000.00\n199,360.00\n257,333.33\n#\n253,333.33\nWilmingto, Dal.\n1,804,640.00\n2,311,306.67\n1-111\nMarvales Portar Days\nBicle Fundar\n3,015,633.76\n4,336,000.00\n7,551,633.76\n3,878.64\n3,025,633.76\n1,750,000.00\n6,760,633.76\nWilmington, Dal.\n4,534,131.30\nA-174 .\nE.I. dePost de fairure & Go, Inc.\nPrite\n-\n1,308,800.00\n1,308,800.00\n782,00.16\n.\n(79,130.00\nEllatagica, Dale\n478,150.80\n526,329.66\n67.899.06\n1-676\nIve January Funden Cove\nF.B.T. à Restations Rifle for\n-\n13,832,000.00\n12,831,000.00\n-\n.\n1,740,000.00\n1.740,000.00\nIsevil, New Jareey\n12,832,000.00\n11.092.000,00\nA-502\nFooter Date\nFlast Rependion\n25,004,000.00\n,\n25,474,000.00\n-\n25,279,000.00\n-\n23,279,000.00\n#\nThe\n215,000.00\n(Mill .\nSex James Evenber Go.,\nFlank Repartion\n10,166,000.00\n-\n10,566,000.00\n-\n9,827,730.45\n-\n7,827,730.43\n-\n[sert], New Junes\n738,269.59\nTotal\n40,509,433.76\n21,676,800.00\n63.179.433.76\n1,720,781.61\n38.198.030.87\n3,968,200.00\n20,956,018.19\nAmmilia\n4-212\nAmericas Day a Printry Date\n1,096,000.00\n7,548,000.00\n3,64,000,00\n509,484.40\n1,096,000.00\n.\n1,096,000.00\nBareish,\n6,408,515.60\n6,650,315.60\n4-236\nBridgeport - Dov.\nDurtridge Dates\n325,000.00\n1,469,000.00\n1,750,000.00\n261,383,45\n325,000.00\n300,916.65\n625,926.65\n-\n1,303,446.53\n502,701.90\n1-190 .\nVerturs Certify Dr.,\n45 Cartridges\n-\n1,174,176.00\n1,174,175.00\n1,174,176.00\n-\n-\n-\n-\nBut Altra, m.\n-\n4-3,36\nOur us. Day\n$ Shalla\n424,000.00\n2,485,000.00\n2,780,000.00\n260,932.53\n$21,000.00\nNove Tork, 1. L\n738,590.07\n1,910,06,60\n+-31)\nBeters a\n-303 Caricidge\n-\n6,127,500.00\n6,127,900.00\n3.239.176.79\n-\n.\n-\nlast live, m.\n4-305 .\nImagingion Are -\n42 Carteridge\n-\n1,430,755.20\n1,430,755.20\n1,009,465.21\n-\n407,861.19\nBridgepart, -\n607,001.19\n421,289.99\n13,406.00\n-\nArea Sex:\n.90 Certridge\n315,030.00\n1,352,266.00\n5,668,116.00\n165,808.25\n315,000.00\nBridgeport, Code\n1,80,507.96\n3,156,542.94\n5,136,477.75\n1.10.799.51\n-09 .\nBurrisberg Stand Corp.,\n1\n-\n1,107,781.35\n1,207,781.35\n3,107,781.38\n-\n,\n-\n-\n-\nPass.\nA-MI\nDate Dritimes Registers, Tax.,\n1\n-\n10,097,200.00\n10,097,500.00\n3,510,016.25\n-\nOlais\n99,45.00\n989,05.00\n4.987.431.75\n5,598,008.73\nHM\nRestagion known 05.,\n30 Sall\nDridgeport, -\n938,501.00\n8,750,000.00\n9,000,500.00\n369,567.00\n925,000.40\n5,607,508.25\n6,352,408.25\n4-779 .\nL 1. Blise 4\nThe Return Certify a\n1.11670.80\n-\n1.3670610\n#\n572,048.21\n-\n-\nBreklyn, L L\n742,056.50\nA-002\n! I\n3\nby liver, Com.\n1560673\n-\n1,962,187.60\n2,01,642.35\n6,083,000.00\n2,100,000.00\n140\nTHE\nPum 7.\nCONTRACTE or $1,000,000 - NO\n- et Petruary 15, that\nSTRICTLY CONFIDENTIAL\nTotal Value of Contrast\nOutstanting Le\nPaline of\nbelame\nand\nof\nCredit of Redeme\nIndelivered\nof\nNo.\nAuppliser\nNaturial\nCapital\nProduct\nTotal\nDellerdam\nCapital\nPrvitiret\nTotal\nNational\nPayments the\n- (Contime)\nCarter Co.\nProse\n1\n-\n1,171,472.00\n1,171,472.85\n$99,990.00\n.\n118,637.42\n118,637.40\n611,000.05\n493,245.45\n21. Louis, -\nMII\nCurter Carbureter Co.,\nPoses\n347,212.00\n4,223,800.00\n4,471,012,00\n-\n$47,212.00\n644,760.00\n1,091,972.00\n4,225,800.00\n3,379,040.00\nSt. Louis, Mo.\nRoebLing Netal Corp.\nPleasing a Prontair Ret\n-\n10,000,000.00\n10,800,000.00\n-\n-\n2,700,000.00\n2,700,000.00\n10,800,000.00\n8,100,000.00\nMiddletom, Com.\nA-LID\nS.A. Fooda Machine Co.\n-75 = Shalle\n914,881.00\n3,840,000.00\n6,754,801.00\n-\n$94,732.19\n1,471,814.00\n2,366,546.19\n3,840,000.00\n2,389,336.01\nDe. Boston, Sear.\nA-LND\nNetional Co.\n37 - Fistreing Shirt\n150,000.00\n1,420,000.00\n1,580,000.00\n-\n-\n395,000.00\n395,000.00\n1,420,000.00\n1,169,000.00\nliew Tork, 1, T.\nA-LMG\nIridgeport Brans Ce,\nCartoridge Canse\n#\n1,103,400.00\n1,103,200.00\n282,750.00\n-\n275,850.00\n279,450.00\n$20,650.00\n$44,800.00\nBridgeport, Com.\nA-1562\nSeatern Cartridge D.\nJos Bille Cartridges\n1,850,000.00\n11,095,000.00\n13,745,000.00\n1,000,833.83\n1,804,000.00\n1,829,250.00\n3,633,250.00\n10,371,164.18\n9,090,716.18\nlast Altan, 111.\nd-1447\nTrajas Porter Co.,\nAssechling, Louding 10 1b. Bonks\n-\n1,600,000.00\n1,600,000.00\n-\n1\n400,000.00\n400,000.00\n1,600,000.00\n1,200,000.00\nAllantews,\n6-1720\nBridgeport trues Da.\n20 - Cartridge These\n-\n1,578,150.00\n1,578,130.00\n-\n-\n394,537.50\n394,537.30\n1,578,150.00\n1,183,612.50\nBridgeport, Come\n6-2263\nPollmo Standard Car Et. Osy\nShalle\n385,000.00\n2,675,000.00\n1,060,000.00\nI\n385,000.00\n672,500.00\n1,057,500,00\n2,875,000.00\n2,002,300.00\nSee Tark, y, T.\nA-2731\nTokheis all Task & Pap Co.\nInstallation of Special Equip.\n206,768.00\n2,167,500.00\n2,374,268.00\n-\n206,768.00\n327,125.00\n331,093.00\n2,167,300.00\n1,842,370.00\nPart Rayne, Ind.\nHOW\nCrooker Cheeler Electric Mrg. Do,\n10 1h, Mortar Donte\n161,000.00\n2,153,637.00\n2,312,637.00\n-\n101,000.00\n$37,909.00\n695,909.00\n2,151,677.00\n1,813,708.00\ndes Tark, 5, E,\nwin\nArea Co.\n,30 Dalibre\n1,831,000.00\n1,169,000.00\n3,000,000.00\n-\n1,831,000.00\n1,169,000.00\n3,000,000.00\n1,169,000.00\n1\nArtigsport, Com.\n1-27695\nVertam Cartridge Do,\n45 Callbre\n-\n2,378,250.00\n2,376,250.00\n195,206.51\n.\n1,070,213.50\n1,070,212.50\n2,183,043.49\n1,112,000.99\nDAIS Alson, m.\nL. 1, Alles & Co.\nMarhine Tosis for Turgedose\n1,000,000.00\n6,250,000.00\n7,250,000.00\n-\n$80,000.00\n775,000.00\n1,273,000.00\n6,250,000.00\n3,977,000.00\nBrooklyn, N. T.\nHW)\nMaterbury Block Co.\nPlace\n177,398.57\n3,490,000.00\n3,647,398.57\n-\n-\n622,300.00\n622,500.00\n2,490,000.00\n2,044,008.57\nWaterbury, Cons.\n-\nNational Fireworks Iss.\nLeading à Aaranh Ling 75 - Omplete\n-\n3,892,000.00\n3,992,000.00\n-\n-\n300,000.00\n300,000.00\n3,892,000,00\n3,592,000.00\nTest Recorder,\nRande\n1-2998\nBridgeport Breas Oa,\nan - Cartridge Cases\n$25,000.00\n1,750,000.00\n2,275,000.00\n-\n$25,000.00\n-\n523,000.00\n1,710,000.00\n1,750,000.00\nBridgeport, Com,\n4-17%\nNational Fireworks Inv.\nShalle\n32,690.00\n1,720,000.00\n1,742,690.00\n,\n22,640.00\n397,000.00\n379,600.00\n1,720,000.00\n1,363,000.00\nFast Secret, Mass,\nTotal\n12,349,479.12\n115,019,188.40\n128,268,667.52\n16,068,214.46\n10,609,525.18\n26,685,240.90\n37,374,766.08\n99,832,968.82\nOrdinance\n1-3\nTourry Cyrcatope Da,\nPreditions\n-\n1,295,623.00\n1,295,625.00\n988,350.00\n-\n-\n-\n307,075.00\nProoklyn, N. T.\nColl's Patent Fire Are Or,\nMarkine Gune, visa,\n001,835.00\n6,112,549.41\n6,913,344.41\n507,324.01\n000,025.00\n1,273,743.58\n2,074,578.50\n3,605,225.60\n4,331,401.00\nNartford, Down,\n4-312\nNote Intrance\nSub-tachton Dues\n-\n5,672,237.50\n3,471,237.50\n5,473,237.50\n-\n-\n-\n-\n-\nExe Two N. T.\n4-411 .\n\" 5, Steed Require\nRiflee,Cartridges, Predice . Tasks\n-\n49,174,864.40\n49,174,864.40\n49,174,864.40\n-\n-\n.\n-\n-\nfor Tera, N. I.\n6-LTI .\nAsto Ordines Corp.\nGuns\n-\n3,250,000.00\n3,250,000.00\n2,757,040.00\n-\n276,980.00\n278,980.00\n492,960.00\n213,980.00\nNew N. T.\n6-470 .\nNote Ordinance Darp.\nRegistrar\n-\n1,750,000.00\n3,850,000.00\n1,850,000.121\n-\n-\n-\nF\n-\nNew Toek, H. T.\n4-560\n6 Inc.\nCome\n-\n1,795,000.00\n1,785,000.00\n17,360.00\n-\n441,957.50\n661,957.50\n1,767,640.00\n1,325,702.50\nNot,\n4-422\nSteal a. of America\nProgram\n$09,850.00\n2,150,000.00\n2,959,850.00\n-\n728,001.00\n643,000.00\n1,373,861.00\n2,130,000.00\n1,585,985.00\nNew Tork, H. T.\n-\nCittle Felant Fire Area One\n-50 Calline Adveraft Nechine Game\n8,516,005.00\n8,512,009.46\n17,426,174.46\n-\nM,914,005.00\n3,883,335.78\n6,512,009.46\n4,608,753.68\nlactford, Dona,\n-\nNational Postamic Day\nAnkl-Mak Rquipment\n273,050.00\n1,240,493.00\n1,513,543.00\n-\n238,537.50\n310,123.25\n548,660.75\n1,240,493.00\n$64,882.25\nRdw Tark, N. T.\nWheel Go.\nAircraft Workins General\nlatratt, Bah.\n$,000,000.00\n9,445,577.79\n17,445,577.79\n-\n6,100,000.00\n2,376,875.96\n0,476,875.96\nA-1380\nPHONES Wt. Co.\nLinks, .30 & -10 Calibre -\n650,000.00\n451,066.60\n931,066.60\nincreato, N. T.\n500,000.00\n1,031,000.00\n2,131,000.00\n426,796.00\n1,202,203.99\n771,137.39\n-\nTerry Пуссаворе Do.\nPredictors\n-\n1,713,000.70\n1,713,000.00\n,\n-\n600,250.00\n600,250.00\n1,715,001,00\n1,114,750.00\n4-1522*\nbrowlys, \". T.\nDroxby co.\nRegulation\n-\n1,100,000.00\n1,100,000.00\n600,000.00\n-\n$23,000.00\n125,000.00\n500,000.00\n375,000.00\n-\nN. T.\nus Standard are. Co.\n30 Californ Date\n3,723,000.00\n8,199,036.00\n11,822,036.00\n297,993.43\n3,323,000.00\n3,337,239.00\n1,560,259.00\n0,20,112.37\n3,943,433.37\n4-13%\nName One,\ninsur & Ins.\nReviewere, 5\"\n-\n1,623,500.00\n1,523,300.00\n17.90\n-\n.\n-\n1\n1,625,482.10\n1,623,482.10\nfortagfield, Mans.\nRegraded Uclassified\n141\nCOVISE COMMINITOR\nCONTRACTO e $1,000,000 on OVER\nTables is 9. s. Dollare\nAM at Faturary 15, 1941\nSTRICTLY CONFIDENTIAL Tage 4.\nRedication\nTutal Palse of Gestrable\nto Credit of Entime\nfalse of\nRelation\nand\ninformationed\nof\nContract No.\nSuplier\ndeterial\nCapital\nProbast\nTotal\nDeliverias\nCepital\nFrank\nTotal\nRefertal\nPagerota Date\nAcquest (Cont'd.)\n-\nbilfale Lre Ga,\n-30 falilite Gals Aireraft Day\n5,552,040.00\n6,931,270.10\n12,783,510.10\n#\n1,852,040.00\n1,995,327.50\n7,847,357.50\n6,931,270.10\n4,133,952.10\nhas Tark\nMAIS\nTark Safe 4 Lost Covy\n37 - Carriages\nI\n1,250,000.00\n1,260,000.00\n-\n.\n315,000.00\n315,000.00\n1,260,000.00\n965,000.00\nfort, Pa.\n6-2966\nTrue Foundare Inc.,\n31 - - 9. 1. Army Design\n750,000.00\n5,500,000.00\n6,250,000.00\n-\n750,000.00\n2,800,000.00\n3,250,000.00\n5,500,000.00\n3,000,000.00\nEllasbeth, #. 2.\n1-2252\nCary..\nfor & Dra Nagurations for\n-\n1,8,0,001,00\n1,840,000.00\n1,092,720.70\n-\n461,505.00\n243,505.28\nN7,273.30\n525,748.08\nBre form, a. 1,\n1-220\nDate\n-\n2,691,000.00\n2,691,000.00\n-\n-\n$1,850.00\n961,850.00\n2,691,000.00\n1,719,150.00\nBrooklyn, #. 1.\nCorp.,\nThompson Gas Notel 26-A\n-\n6,931,332.00\n6,901,332.00\n125,237.47\n=\n0,309,175.37\n1,309,175.37\n6,805,009.53\n4,690,923.96\nles fork, 8. E.\nPational Ou,\nTask Date . Spare Parta\n550,000.00\n1,560,360.00\n2,110,360,00\n-\n$50,000.00\n390,050.00\n560,090.00\n1,560,360.00\n1,170,270.00\nles In, ». 1.\nA-200\nCruditio Mail & of Amries\nForgiage for Topie Barrale\n1,889,729.00\n4,300,000.00\n4,189,329.00\n-\n1,700,756.13\nI,250,000.00\n1,990,756.11\n6,300,000.00\n3,198,972.89\nAre In, 1, I.\n1-2795\nMerisan Gerry,\n20 - Date Banda\n$38,350.00\n5,469,210.00\n6,307,560.00\n-\n285,000.00\n1,209,060.00\n1,488,050.00\n5,449,230.00\n4,829,500.00\nNo Tark, F. T.\nA-3457\nSeptire Contration Cory,,\n- - Tack Change\n,\n6,175,000.00\n6,175,000.00\n-\n-\n1,568,125.00\n1,368,125.00\n6,175,000.00\n4,606,875.00\nRev Turk, 1. r.\n1-2773\nknow Only,\n.30 lifies\n2,764,861.70\n13,812,000.00\n36,976,861.70\n-\n2,766,851.70\n1,235,138.30\n4,000,000.00\n23,812,00.00\n32,576,261.70\nCoss.\n1-779\nStrethers Malla Situarille Chirp.\n4\" - m Star a 1,7 M. . 0 Que\n1,497,500.00\n4,236,640.00\n5,714,340.00\n-\n1,129,125.00\n1,054,210.00\n2,197,335.00\n4,216,840.00\n5,577,005.00\n7a.\nBarrida\n6-308\nRepire Carp.,\nto 75 - Task Dues\n-\n7,000,000,00\n7,000,000.00\n-\n-\n700,000.00\n700,000.00\n7,000,000.00\n4,300,000.00\nNew fun, N. 1.\n4-547\nRegize Intrance Date.,\nNeed) for 79 - Tank -\n-\n3,000,000.00\n3,000,000.00\n-\n-\n300,000.00\n300,000,00\n3,000,000.00\n2,700,000.00\nfee York, 3. To\nTotal\n36,763,300.70\n199,562,981.56\n231,900,385.36\n63,289,052.42\n33,181,105,32\n28,697,063.28\n62,278,144.77\n106,739,064.17\nTaxe & Task Sydgement\n4-111\nTradito Discher Co.\n95,000.00\n1,325,000.00\n1,00,000.00\n1,325,000.00\n95,000.00\n1\n95,000.00\n-\n-\nFimilar, Oble\nMA\nTractice Ribert Details\nTransmistions\n£0,000.00\n3,004,015.00\n1,124,045.00\n212,845.00\n-\n1,375,600.00\n1,372,600.00\n2,571,200.00\n1,335,600.00\nFinilar, Ohio\nHIS\nles date à Lody Go.,\nCo-orial Missidiage\n25,000.00\n1,115,773.72\n1,140,773.00\n431,388.00\n25,000.00\n212,095.50\n237,695.50\n663,989.00\n471,289.50\nfork, Fax\nW%\n-\nAmino Cap 4 Funday Date\nhaspination Unite\n19,800.00\n1,108,605.00\n1,128,405.00\n513,930.10\n-\n100,150.00\n108,150.00\n396,574.90\n506,306.90\nPa.\n6-190\nOur Mr. Date,\nN-3 Taste\n1,500,000.00\n25,000,000.00\n26,500,000.00\n-\n1,332,520.00\n5,500,000.00\n6,832,520.00\n25,000,100.00\nDusage, I.I.\nContinuial Motor\nWright 6-97)\n-\n24,934,340.00\n24,924,340.00\n-\n-\n5,800,000.00\n3,800,000.00\n$4,924,340.00\n19,124,340.00\nRick.\n4-17%\nGeneral Stan1 Cestings Corp.,\nAnive Cartings\n-\n2,520,000.00\n2,520,000.00\n-\n-\n07,689.74\n07,089.24\n2,520,000.00\n2,082,510.76\nPm.\n4-17M\nPressed Steal Date Do.,\nI-) Tacks\n1,500,000.00\n25,000,000.00\n26,500,000.00\n-\n100,000.00\n3,500,000.00\n6,007,000.00\n25,001,000.00\n20,500,000.00\nFitteburgh, Fax\n6-1(60\nBaldwin Dov.\n8-3 Tacks\n150,000.00\n39,253,925.00\n39,423,925.00\n-\n#\n3,685,000.00\n5,685,000,80\n27,253,925.00\n33,718,925.00\nAbbystone, he\n44,460\nRes Loomotive Bunks,\nI-3 Tenks\n725,000.00\n22,000,000.00\n22,325,000.00\n-\n725,000.00\n4,400,000.00\n5,125,000,00\n32,000,000.00\n17,600,000.00\nLiam, as\nA-2125\nOil,\nfor Task Turreta\n105,000.00\n1,050,000.00\n1,155,000.00\n-\n75,000.00\n658,730.00\n533,750.00\n1,050,000.00\n621,250.00\nPittsburgh, 7a.\nGamitell Pyant Quent Twentry Date,\nTask Parks\n18,690.00\n1,231,800.00\n1,250,490.00\n4,097.40\n18,090.00\n311,310.00\n150,000.00\n1,217,764.00\n896,452.60\nMinlergen, us,\n4-2ave\nRepublic Mast carp.,\nHeal Flate For Tamile\n4,125,021.00\n17,880,000.00\n33,945,000.00\n4,125,000.00\n500,000.00\n6,625,000.00\n17,630,000.00\nI\n17,300,000.00\nContant, Ode\nTotal\n8,303,490.00\n168,133,058.00\n173,756,578.00\n2,487,200.50\n6,096,210.00\n30,309,194.74\n37,209,404.74\n133,843,972.76\nRelie\n4-7)?\nCaryalar Signes Comp.,\n5,188,007.00\n-\nDrigo Tranks\n-\n#\n-\n-\n-\nDetroit, Rich,\n441395\nThe Visal Detre -\nTrue\n3,102,000.59\n3,100,008.59\n1,433,262.14\n02,000.00\n470,889.44\n1\n.\n1,175,856.43\nVisa,\n4-1597\na\nTour Thes) Drive Co.,\nhas Road Drive 2-03 Date\n1\n3,061,362.16\n3,062,362.16\n-\n169,317.06\n669,317.00\n3,061,362.18\n-\n2,198,045.26\nDistorrille, Est,\n4-322\nDaryalar Regist am.,\nDatge Trusks\n-\n3,008,535.52\n3,068,505.52\n-\n915,409.01\n113,409.01\n3,068,909.52\n2,132,996.31\n-\nDetends, 11th.\n4-3033\nMaria Rig. Carp.,\nTax The Medic Trusks\n#\n1,100,000.59\n3,10,001.39\n232,502.20\n-\n72,726.97\n774,726.97\n2,870,910,19\n1,096,183.22\nLong Island Qty, #. 1.\nTotal\n+\n17,03,376.18\n17,003,375.48\n7,170,852.70\n-\n1,032,542.30\n1,000,50.50\n10,629,523.78\n7,196,903.30\nRegraded Uclassified\n142\n= POSSIBLE -\n, -\nBITTON INVOICE CF 40,000,000. . -\nValue in 5. 1. Dollars\n- - Newsy 1% 2943\nSTRICTLY CONFIDENTIAL\nClassification\nTotal Riw at Contrest\nValue\nAdvices Outstanding W Chedit if Union\nValue <\nand\nName\nIntertal\nor\nDetract By\nSupplier\nCapital\nProduct\nTotal\nDeliveries\nif\nCapital\nProbact\nTotal\nDue\nmetale\n-\nNE\nGo, of\nlote. a\n-\n2,302,045.60\n1,342,78.60\nles Type city, 1, L\n1,630,450.87\n-\n073,558.00\n673,958.40\n358,056.13\n6-377 #\nassociate Rize à Cable Co.\nDopper Time Rode\n-\n1,075,200.00\n1,075,200.00\n1,075,200.00\n-\nSet Tark City, N. I.\n-\n-\n-\n-\nA-610 .\nAmerican Dráss Co₂\nCartridge Brans Strip\n-\n1,176,000.00\n1,176,000.00\n1,095,345.09\n-\nMaterbury, Come\n30,154.21\n20,136.23\n80,654.92\n60,500.70\nHM .\nBridgeport true Co₂\nCarteridge Itress Strip\n-\n2,352,000.00\n2,352,000.00\n2,352,000.00\n-\nBridgeport, Conn.\n-\n-\n-\n-\n- .\nlimite Copper & Brann One\nDertridge breas Strip\n.\n2,352,000.00\n2,352,000.00\n2,352,000.00\n-\nNot Twele City, 1. T.\n-\n/\n#\n.\n1-140 .\nAmerican trues Co,\nCartinlige Trais Strip\n-\n1,176,000.00\n1,176,000.00\n1,079,076.60\n-\nUniverbary, Genn.\n52,636.25\nR.6%\n96,923.40\n4287.15\n$100 .\nDate Brans & Copper Ce,\nCartridge Brass durip\n*\n1,175,000,00\n1,176,000.00\n1,176,000.00\n-\n-\nWaterbury, Com.\n-\n-\n.\n1-1444 -\nAmerican Breas Date\nCarterLige Drass Strip\n-\n3,920,000.00\n3,920,000.00\n2,824,936.01\n-\nBaterbury, Country\n980,000.00\n960,000.00\n1,073,065.00\n115,065.99\n.\nlavore Dopper & final Go,\ncertifye Breas Burly\n-\n1,176,000.00\n1,176,000.00\n772,414.36\n-\nles Tork City, 1, I,\n294,000,00\n294,000.00\n403,585.64\n109,885.46\n4-145 .\nhavers Copper & Druss Die\nCarietAge Imas Strip\n-\n3,136,000.00\n3,136,000,00\n3,136,000,00\n-\n-\nNew York, X. T.\n-\n-\n-\nd-1536\nDow Chemical Co,\nVigation Ingota\n-\n1,536,000.00\n1,530,000.00\n-\n-\nMidiand, no.\n360,000.00\n360,000.00\n1,536,000.00\n1,176,000.00\nwas\nDow Dr.\nSuperine far Ingote\n2,750,000.00\n2,100,000.00\n4,850,000.00\n-\nKidlend, Rich,\n1,300,000.00\n-\n1,300,000.00\n2,100,000,00\n3,550,000.00\n6-1037\nReports Metals Do,\nlist . Ber\n-\n1,195,040,00\n1,195,040.00\n-\n-\nRev Tork, M. T.\n$40,000.00\n240,000,00\n1,193,040.00\n955,040.00\n4-5075\nReynolds Metale Go,\nSharts\n-\n1,123,524.24\n1,123,826.24\n.\n-\n-\nSex Tark, N. T.\ni\n1,123,876.24\n1,123,814.34\nA-5082\nAlunteum Code of Amriso\nNod * Alloy lars\n-\n1,046,281.60\n1,046,251.60\n-\n-\nlieu York, N. L\n#\n1\n1,046,281.60\n1,046,281.60\nTotal\n2,750,000.00\n25,882,411.44\n29,432,411.44\n17,343,420.93\n1,300,000.00\n2,660,368.56\n3,760,348.86\n9.538,990.51\n8,528,641.65\nShips & Birina Redpect\n4-345\nheard Notor Car a\nBarine Engine\n-\nDeteroit, Mith,\n2,360,000.00\n2,360,000.00\n2,029,348.70\n-\n83,600.00\n$2,600.00\n330,151.30\n247,551.30\nin\nStarling Ingine Com\nEnginee\n-\n1,375,000.00\n1,375,000.00\n-\nBuffalo, R. T.\n458,333.33\n458,333.33\n1,373,000.00\n716,666.67\nA-1032\nPassant Motor Car Go,\nMarica Englose\n.\nDetendit, Rich.\n2,360,000.00\n2,360,000.00\n=\n-\n590,000.00\n590,000.00\n2,360,000.00\n1,770,000.00\n1-2356\nFaciard Mrtor Car One\nMarine Dagines\n-\nDetails, Mich,\n4,720,000.00\n4,720,000.00\n-\n.\n944,000.00\n944,000.00\n6,720,000.00\n3,774,000,00\nHall=Scott Motor Car Co.\nMarine Suplome\n-\nDerkalar, Calif.\n1,774,000.00\n1,774,000.00\n-\n-\n-\n.\n1,774,000.00\n1,774,000.00\nTodd-Bath Shipbuilding Corpo\nDate Stamate\nde094,000,00\n44,742,000.00\n40,836,000.00\n-\nBouth Portland, Mather\n2,020,000.00\n10,000,000.00\n12,000,000.00\n44,742,000.00\n36,836,000.00\nA-316\nTodd-Califormia Shipbuilding Curp,\nDarge Statement\n4,105,000.00\n43,945,000.00\n47,150,000.00\n-\nCakland, calle,\n1,500,000.00\n10,000,000.00\n11,500,000.00\n43,045,000.00\n35,650,000.00\nTotal\n5,199,000.00\n100,776,000.00\n100,575,000.00\n2,029,848.70\n3,500,000.00\n22,074,933.33\n25,574,933.33\n98,346,151.30\n80,970,217.97\nRequirement\nNM\nlistle Corp.\nEpare Natio Instruments\n-\n1,896,569.30\n1,896,569.33\n-\n1\nMd.\n379,313.87\n379,313.87\n1,896,569.77\n1,517,255.42\nTotal\n-\n1,896,569.33\n1,896,569.33\n-\n-\n379,313.07\n379,313.17\n1,896,509.33\n1,517,255.00\nALL She\n.\nHandard 021 Ca., of N. 4,\nPayments to credit of Angle American\n-\nline bei, = T.\n1,070,092.60\n1,070,000.60\n1,070,092.60\n-\n-\n.\n#\nall Co.,\n-\ntotal\n-\n1,070,092.40\n1,070,092.40\n1,070,092.60\n-\n-\n-\n.\n-\nMAI\n108.887.903.58\n673,793,399.20\n782,662,302.78\n115,729,680.22\n74,564,871.36\n324,023,754.67\n448.344.196.53\nRAD NTA. BITDE\n165,696,374.58\n1,702,685,127.63\n1,86,303,502.21\n225,525,618.54\n148.067.784.27\n639,725,253.13\n1,277,159,509.09\n1,003,632,430.14\n. Contraste being completed by April 30, 1941.\nVittal Mirchasing Comission\no\nMillation: livision, law Tork\nNeury 25, 19d\nMine % 1941\nRegraded Uclassified\n143\nEXHIBIT\nTHE - PURCHASING WIDSIONS\nPOLMCE FRENCE CONTRACTS THE TOTAL OF DESTION ADVANCES\nSTRICTLY CONFIDENTIAL\nTage 1.\nAND BALANCE OF PAYMENTS DUE IS IN RECEIVED OF $10,000,000\nValue to Thousands of U. 1. Dollare\nAs AS February 15, 1941\nRetirated Payments\nTrial of\nTotal -\nClassifteation\nAdvances Outstanding to Credit of\nBalance\nbille\nBrittle & Fresh\nSupplier\nMaterial\nFrench Advances\nbitter Advances\nY\nPub.\ni\nand\nApr.\nmy\nJune\nJuly-\nAfter\nAdvance 6\nAdvenue à\nNo.\nCapital\nProduct\nTotal\nCapital\nProduct\nTotal\nPayments Doe\n16 28\nis\nDate\nbalance\nDas\nDas\nGlenn L. Martin Do.\nMartin Model 167-7,\n-\n877\n877\n-\n4,386\n4,386\n7,640\n034\n1,800\n1,800\n1,800\n1,606\n-\n-\n1-272\n12,036\n12,903\nSaltimore, M.\nParta & Dysipment\n1-472\nBowing Aircraft Do.,\n240 00-70 Airplanes\n-\n5,916\n5,916\n-\n10,531\n10,531\n14,136\n-\n-\n-\n300\n600\n13,236\n-\n24,667\n30,583\nSeattle, Wash,\n& Spares\nM77\nConsolidated Aircraft Corp.\nSombers 18-30 Operas\n-\n1,434\n1,838\n-\n15,000\n15,000\n21,874\n-\n1,620\n980\n1,820\n2,100\n15,154\n-\n36,074\n36,712\nSan Diage, Callf.\nP-7%\nNerth Aviation, Inc.\nTrainer Planse,\n-\n4,0%\n4,096\n-\n4,770\n4,770\n9,615\n-\n-\n-\n-\n-\n7,935\n1,680\n14,385\n18,481\nInglawood, Callf.\nPratt & Whitney Bagines\nF\nP-719\nDonglas Aircraft Corp.,\n10-79 Airplanes,\n-\n3,871\n3,871\n-\n13,510\n13,510\n13,158\n-\n-\n-\n-\n2,200\n10,958\n-\n26,668\n30,539\nSanta Sonice, Calif.\nSpares\nTotal\n-\n16,598\n16,598\n-\n48,197\n48,197\n66,423\n634\n3,620\n2,760\n3,920\n6,506\n47,283\n1,680\n114,620\n191,218\nAirplant Includes\nP-211\nUnited Aircraft Corp.,\nTasp Ingines\n-\n7,250\n7,250\n-\n-\n10,317\n10,317\n12,381\n912\n2,400\n2,000\n1,500\n1,500\n4,069\n-\n22,690\n29,968\nEast Hartford, Coun,\n7-296\n(1) Ourtine-Wright Corp.\nB-2600 Cyclone Engines\n-\n3,498\n3,498\n-\n27,792\n27,792\n51,923\n1,028\n5,441\n5,135\n5,796\n6,208\n16,598\n11,717\n79,715\n0,213\nNew Tark, N. T.\nTotal\n-\n10,765\n10,748\n-\n38,109\n38,109\n64,304\n1,940\n7,841\n7,135\n7,296\n7,708\n20,667\n11,717\n102,413\n113,161\nTrial Presch Contracts\n-\n27,346\n27,346\n-\n86,306\n66,306\n130,727\n2,574\n11,461\n9,915\n11,216\n14,214\n67,950\n13,397\n217,033\n246,979\n(1) Includes that partion of A-5103 which - forwely the option - P-296.\nBrittsh Purchasting Commission,\nStatistical Division, les York\nBreh 1, 1941\nBevised Barch % 1941\nRegraded Uclassified\n144\nTHE PERCHASING MISSIONS\nBUYIN CONTRACTS THE THE TITAL OF ADVANCES\nThey a\nAND PALARCE OF PATIENTS X IS IN EXCESS OF $10,000,000\nSTRICTLY CONFIDENTIAL\nTHE Le Through of Y. 5. Dollars\nis AL Fatriery 15, 1961\nAdvense\nRestarted Payments\nTotal of\nto Credit of\nNalance\nFab.\n2dy-\nAfter\nAdvances &\nand\nSupplier\nDestription\ntrittle Advances\nThis\n16-22\nBir.\nApr.\nby\nJune\nDate\nDas.\nBalance\nSuitent So,\nCentral\nProduct\nTotal\nDate\nAw??\nConsolidated Airoraft com.,\nFiyles Doete\n-\n10,205\n10,205\n5,913\n73\n291\n2%\n479\n379\n3,611\n675\n16,018\n545 Diago, Callf.\nA-68\nLookbeed Aircraft Comp.,\nSingle Seat Fightars\n-\n7,278\n7,278\n17,591\nW/O\n3,054\n3,197\n3,147\n2,914\n4,384\n-\n24,869\nDurbank, Calif.\n-\nOurtine-Wright Corp.,\nHawki SEX. & 97A\n.\n10,420\n10,420\n7,909\n408\n2,222\n2,501\n2,779\n,\n-\n-\n10,379\nline York, N. T.\nA-87\nDouglas Aircraft Corp.,\nBorton Bonders\n-\n14,3%\n14,394\n27,681\n35\naus\n926\n1,534\n3,992\n18,669\n3,499\n42,075\nRanta Monies, Celif,\n1-25\nNorth American tristion, Into,\nHarvards\n.\n3,194\n3,194\n9,280\n595\n3,129\n2,682\nand\n424\n1,782\n-\n12,474\nInglewood, Callf,\nA-218\nMill Airereft Carp.,\nAiranstras\n-\n4,%0\n4,860\n6,151\n-\n905\n1,631\n1,410\n1,446\n759\n-\n11,711\nBuffalo, Sew Tork\n1-22L\nGless L. Martin Co.\nBedars this] 187\n13)\n32,747\n32,880\n22,797\n105\n507\n1,956\n2,623\n3,165\n14,381\n#\n55,877\nRaltimore, M.\n1-242\nLockheed Aircraft Company\nMain? 322\n-\n15,462\n15,462\n36,537\n-\n3,271\n3,301\n4,463\n4,645\n20,777\n-\n51,979\nBurtenk, Calif,\n6-250\nNorth American Aviation, Ins.,\nN.A. - 73's\n-\n3,659\n3,659\n11,113\n-\nme\n1,63\n2,060\n2,084\n4,510\n-\nam\nInglewood, Dalif.\n1-346\nLockheed Aircraft cary,,\nModel 37%\n-\n11,507\n11,507\n21,527\n-\n71\n-\nas\n715\n20,526\n-\n33,034\nBurbank, Calle,\n4-557\nVultee Aircraft Corp.,\nDive Brabere à Spares\n-\n16,401\n16,401\n27,995\n1,923\n402\n675\n46\n507\n9,420\n15,022\n64,796\nVultee Plaid, Calif,\n1-662\nEnwater Aeronantical\nDive Desters\n-\n17,064\n17,864\n18,076\n-\n2,018\n2,420\n2,130\n2,420\n0,798\n--\n35,960\nNew Tark, N. T.\n6-1675\nTall Aircraft Corp.,\nAirecutras\n-\n6,252\n6,252\n7,641\n-\n696\n-\n-\n-\n3,476\n5,473\n13,093\nBuffalo, \", T.\n4-1692\nPresster Aeronautical Corp.,\n300 Dive\n-\n4,713\n4,513\n15,779\n812\n812\n612\nma\n812\n7,425\n4,794\n20,292\nNew Tark, N. T.\n4-1493\nNorth Imprison Aviation, Ind.,\n9.1.73 Airplanes\n-\n6,264\n6,264\n9,029\n458\n451\nASS\nAN\n-\n4,473\n2,745\n15,293\nInglawood, Calif,\n4-1555\nAcrthrop Aireraft Cary,,\nVultee Dive Boabers\n=\n6,817\n6,817\n10,7%\n1952\n831\n-\n-\n-\n4,152\n4,959\n17,612\nHartborne, alls.\nA-1156\nValtes direraft Corp.,\nModel 48-0 Pureuit Planse\n-\n1,686\n5,668\n4,499\n-\n-\n193\n245\n315\n3,806\n-\n10,187\nValtee Field, Oalif.\n4-1748\nLockheed Aircraft Corp.,\nTenture Places\n-\n12,625\n12,825\n28,405\n855\n1,031\n1,031\n1,031\n1,073\n7,163\n16,202\n41,230\nBurbank, Calif,\n4-1749\nLockheed Aircraft Corp.,\nHoloca II I Airfrance\n-\n17,538\n17,538\n22,135\n3,026\n7,324\n4,717\n3,483\n4,760\n1,825\n-\n39,073\nDurbank, Calif.\nA-1035\nOurtine-Wright Corp.,\nOTA Bank AirPrases\n-\n10,850\n10,850\n11,564\n-\n-\n48\n129\n164\n5,963\n5,260\n22,414\nNew Tark, N. Y.\nTotal\n133\n218,718\n216,851\n322,316\n11,137\n24,747\n28,690\n28,000\n28,005\n145,398\n56,331\n542,187\nAltriam\n4-294\n(1) Curtise-Wright Curp.,\nR2600 A Enginee\n14,451\n32,261\n46,712\n31,412\n15\n2,783\n3,80\n4,207\n4,101\n12,669\n3,795\n78,124\nRew fork, N. T.\nAM\nGeneral fotors Corp.,\nAlliem Englase\n6,393\n30,428\nM,821\n23,972\n906\n4,374\n3,704\n3,122\n1,081\n6,195\n-\n60,793\nName York, 1. I,\nA-280\nUnited Aircraft Corp.,\nP. 4% R2600 Enginee\n6,406\n5,207\n14,693\n6,184\n16\n572\n775\n932\n1,240\n2,647\n-\n20,877\nTast Hartford, Comm.\n6-7-7\nPackard Motor Co.,\nRolls layer Marlin 11 Engines\n24,900\n19,550\n44,450\n90,450\n-\n10,000\n10,000\n20,000\n20,000\n30,450\n-\n136,900\nDetroit, Mish,\n1-5015\nUnited Aircraft Corry.,\nPratt . Whitney Engines\n-\n11,480\n11,480\n34,40\n6,888\n4,592\n,\n-\n-\n11,7%\n11,567\n45,923\nfast Bartford, Conn.\nTotal\n52,150\n102,006\n154,156\n186,159\n7,827\n22,321\n18,321\n20,251\n25,222\n66,145\n15,362\n340,615\nExclusives N Propellacts\n6-674\nles Jersey Power Co.,\nTNI à Rifle Powder\n-\n1,740\n1,740\n11,092\n-\n500\n500\n1,000\n1,000\n5,0%\n2,016\n12,052\nLarril, I.V.\n4-502\nPowder Do.,\nPlant Expansion\n25,279\n-\n25,279\n215\n-\n30\n50\nse\n45\n-\n-\n25,494\nMemphis, Tean,\nwn\nfee Jeriey Portage Co.,\nPlant Expensive\n1,000\n-\n9,628\n730\n600\n158\n,\n-\n-\n-\n-\n10,566\nfamil, 1. J.\nTotal\n35,107\n1,740\n36,847\n12,045\n600\n788\n$\n1,050\n1,06\n5,076\n2,016\n46,892\nRegraded\nTHE one NOTICE\n145\nWRITIER CONTRACTS THE TOTAL OF PRESCOTERED ADVANCES\nNP ,\n450 PALANCE OF PAYMENTS DUE If IN EXCESS or $10,000,000\nTalles in Thousanda of 1, E, Dollars\nAs AS February 15, 1962\nSTRICTLY CONFIDENTIAL\nAdvances Ortatanding\nBettemind Physents\nTotal =\nClassification\nto Credit of Miscione\nBalance\nPob.\nAfter\nMission a\nand\nSupplier\nDemoription\ntrittsh Advisors\nDue\n16-29\nmr.\nApr.\nBay\nJune\nJuly-Dec.\nDes.\nPalance\nContract Mo.\nCapital\nProduct\nTotal\nDate\nAmerican\nA-1028\nHosbling Metal Darp,\nAmour Pispeing\n-\n2,700\n2,700\n8,100\n-\n550\n600\nTOO\n750\n2 Prinder that\n1,500\n-\n10,000\nMiddletom, Com.\n4-1562\nfeatern Cartridge Ca.\n,303 Rifle Cartridges\n1,804\n1,829\n3,633\n9,091\n1,757\n1,512\n1,119\n1,177\n1,176\n2,350\n-\n12,724\nTast Altan, ni.\nTotal\n1,804\n4,529\n6,333\n17,191\n1,757\n2,062\n1,719\n1,877\n1,926\n7,850\n-\n23,524\n1-962\nColl's Patent Pice Area Co.\n.50 Calibre Aireraft\n8,914\n3,883\n12,797\n4,629\n-\n-\n387\n-\n-\n1,158\n3,0%\n17,426\nHartford, Coan.\nMachine Dune\nA-1265\nWhesl Do,\nAircraft Machine Ouns\n6,100\n2,377\n5,477\n0,969\n-\n600\n600\n700\n-\n3,496\n3,573\n17,446\nDetroit, Mich.\nA-1559\nBigh Standard Rt. Do.\n,50 Calitre Machine Dune\n3,323\n2,237\n5,560\n5,964\n-\n-\n-\n300\n500\n2,950\n2,214\n11,524\nin Harren, Conn.\n4-1600\nMuffalo lese Co.\n,50 Calline Calt Aircraft\n5,652\n1,995\n7,547\n4,935\n-\n-\n-\n967\n124\n1,755\n2,069\n12,782\nBuffalo, N. T,\nOune\nL-2773\nRandngton Area Co.\n,30 Riflee\n2,765\n1,235\n4,000\n32,577\n-\n1,005\n1,005\n1,005\n1,000\n6,532\n20,030\n36,577\nBridgeport, Como,\nTotal\n26,954\n11,727\n38,681\n57,074\n.\n1,605\n1,992\n2,992\n1,624\n17,091\n30,970\n95,755\nTake à\nA-1382\nPullass-Standard Car Eg. Co.\nM-3 Tanks\n1,333\n5,500\n6,833\n19,667\n-\n1,500\n1,500\n1,500\n1,500\n9,045\n4,622\n26,500\nChiengo, m.\n4-1465\nContinental Notor Co.\nBright B-775 Engines\n-\n5,800\n5,800\n19,124\n1,120\n700\n700\n700\n1,150\n8,320\n6,434\n24,924\nMuskagen, Ech.\n4-1795\nPressed Steel Our Co.\nII-) Tanks\n500\n5,300\n6,000\n20,500\n-\n2,500\n2,500\n2,000\n2,000\n7,600\n3,900\n26,500\nPittaburgh, Prima,\n6-1960\nSaldwin Commotive Do.\nM-) Tanka\n-\n5,685\n5,685\n33,719\n.\n2,300\n2,200\n2,300\n2,300\n11,000\n13,719\n39,404\nEddystone, Peson,\n4-1962\nLim Losomotive Parts\nM-3 Tacks\n725\n4,600\n5,125\n17,600\n-\n1,000\n2,000\n2,000\n1,400\n5,600\n5,600\n22,725\nLim, Chie\n6-2MA\nRepublie Steel Corp.\nSteel Plate the Tasks\n4,125\n300\n4,625\n17,320\n141\n1,100\n1,700\n1,700\n1,700\n6,000\n4,079\n21,965\nCleveland, Chie\nTotal\n6,683\n27,385\n34,068\n127,930\n1,261\n9,100\n10,600\n10,200\n9,950\n47,565\n39,254\n161,998\nStize\n4-3165\nTodd-Bath Shipheilding Corp.\nCargo Steasers\n2,000\n10,000\n12,000\n36,836\n1,717\n2,642\n3,192\n2,500\n2,500\n12,100\n12,185\n48,836\nSouth Portland, Maine\n4-3166\nTold-Bath Shipbeilding Corp.\nCargo Stanets\n1,500\n10,000\n11,500\n35,650\n1,000\n3,255\n2,200\n2,500\n2,500\n12,000\n12,195\n47,150\nDakland, Calif,\nTotal\n3,500\n20,000\n23,500\n72,486\n2,717\n5,877\n5,392\n5,000\n5,000\n24,100\n24,380\n95,986\nIntal british Contracts\n126,111\n386,105\n12,436\n795,501\n25,299\n66,520\n67,372\n77,380\n75,792\n314,825\n168,313\n1,307,937\n(1) Includes that parties of A-3303 which - forwarly the optim - 4-196.\nPritish Purchasing Commission\nStatistical Division, Shee Turk\nMary's 1, 1941\nintent, March 9, 1941\nRegraded Uclassified\n146\nMarch 10, 1941\n9:15 a.m.\nRE PORT CLEARANCE OF BRITISH TRADE VESSELS\nPresent:\nMr. Gaston\nAdmiral Waesche\nH.M.Jr:\nAt Cabinet the question came up, and I\nhaven't got it, and Herbert, if you would\ncall up Stimson's office and ask him for\na copy of a letter which evidently Herbert\nHoover wrote to Stimson, and that is what\nbrought up the whole thing, in which he\ntalked about this delay in turning over\nships; and if we would turn it out and\nspeed up, it would make 80 many more tons\navailable, you see. If you can get the letter\nfrom Stimson's office.\nSo the President turned to me and said,\n\"What about it?\" And I said it was under\nus. The President wanted us to look into\nit and see what could be done, and any\nother agency like Commerce, whoever else -\nwho else besides Commerce does inspection?\nOh yes, there is a 60-day - some kind of\nlabor contracts. I am not familiar with\nit. It is on the unloading, stevedores\nor something.\nWell, anyway, I want you to get out a cable.\nthis morning to all your port captains and\nsay, \"How long are ships being held in the\nharbor, what is the average delay,\" you see.\nI want a quick report and what are the causes\nof the delay.\n147\n- 2 -\nWaesche:\nAnd that, of course, is just on the turn-\naround to England?\nH.M.Jr:\nWell, wherever they go.\nWaesche:\nSouth American ports, too?\nH.M.Jr:\nWhy not let's get the delay on all ships;\nbut let's start in with the English flag\nships. Let's start with the English flag\nfirst, and then follow it up with the\nothers.\nThe amusing thing, when I was in the Navy,\none of the jobs that I had - there were\nthese delays in these coal colliers that were\ncoming up there. Remember the ones that --\nWaesche:\nLike the Cyclops?\nH.M.Jr:\nAnd they sent me down there, and they were\ncoming up from Norfolk. It took eight to ten\ndays to turn them around. I turned them\naround in two days. So I am back to my old\njob again, shirt sleeves to shirt sleeves.\nBut I turned them around in two days.\nGaston:\nAt Norfolk?\nH.M.Jr:\nNo, New York Harbor. Two days, where it was\ntaking six to eight days.\nNow, Herbert Hoover has some figures, but I\nwould like to step on this and get a report\nfrom the President.\nWaesche:\nAll right, we will get at it right away.\nH.M.Jr:\nThat is the trouble. I think you will run\ninto trouble -- you will find out there is\n148\n- 3 -\nsomething with the stevedores. I had the\nsame thing. It was hard to get them to work\ncontinuously on the unloading.\nWaesche:\nWell, they usually like overtime.\nH.M.Jr:\nI went all through that. I got to be pally\nwith those fellows. I got the results. But\nI wish you could get it out. New York would\nbe the first place. Have you got a good port\ncaptain in New York?\nWaesche:\nYes, Baylis.\nH.M.Jr:\nFind out what the hell the trouble is.\nGaston:\nHarry Durning can probably be helpful in\nthose things.\nH.M.Jr:\nAnd - of course, the trouble may be that\nthey go from New York up to Halifax and lay\nover up there. You may have to send 8. man\nup to Halifax to find out.\nWaesche:\nOf course, we do know that there is a delay\nin Halifax, in that they congregate there\nand form the convoy, and they hold them there\nuntil some of the ships get together to form\nthe convoy.\nH.M.Jr:\nHow long do they keep them there?\nWaesche:\nThe time varies. They keep them until they\nget the number of ships to make up the convoy,\nand the time varies.\nH.M.Jr:\nCould you find out who runs the convoys,\nwho controls them, makes them up?\nWaesche:\nI think the British Shipping Minister in\nNew York has 8. lot to do with it.\n149\n4\nH.M.Jr:\nThe man in Canada is the C.P.R. Sir Edward\nBehy has it in Canada, and he controls\nMontreal and Halifax. But can you get into\nit and get a picture fairly fast?\nGaston:\nOh yes. We can get a preliminary picture\non Halifax probably from this Customs man\nwe have got up there on the C.P.R. docks.\nH.M.Jr:\nI would like something pretty fast, kind\nof an over-all report. They might be\nclearing the harbors in New York very quickly.\nThen they go up and lay around in Halifax\nfor God knows how long. I don't know whether\nthey accumulate ships for convoy for Bermuda\nor not.\nWaesche:\nThat is right, I don't know.\nH.M.Jr:\nAnd how many ships are they sending down to\nAfrica? I mean, the first thing is how long\nare they delayed in American harbors, United\nStates harbors. Let's get that first.\nWaesche:\nThen follow them right through.\nH.M.Jr:\nLet's get that first, how long are they\nhere?\nGaston:\nYes. There is some stuff going from the\nGulf, too.\nH.M.Jr:\nBut how long - what is the average length\nin number of days from the time a British\nflag ship comes in until she turns around\nand departs. That oughtn't to take terribly\nlongi where is the delay?\nGaston:\nShips in the British trade, that includes\nsome Norwegian ships and Dutch.\nRegraded Uclassified\n150\n- 5 -\nH.M.Jr:\nWell, will you get on it?\nWaesche:\nYes, sir.\nH.M.Jr:\nYou ought to have something for me tomorrow\nmorning.\nWaesche:\nI think we can give you a preliminary report\ntomorrow morning.\nH.M.Jr:\nYou ought to have something for me.\nGaston:\nA preliminary report this afternoon on it.\nThen they can get into trying to break the\njam after that.\nH.M.Jr:\nI have heard nothing from the President. I\ngave him this last letter. You have heard\nnothing from the President either?\nWaesche:\nNo.\nH.M.Jr:\nOr from the English?\nGaston:\nNo.\nH.M.Jr:\nO.K., gents, thank you.\n151\nMarch 10, 1941\n9:30 a.m.\nGROUP MEETING\nMr. Bell\nPresent:\nMr. Haas\nMr. Young\nMr. Gaston\nMr. Thompson\nMr. Sullivan\nMr. Graves\nMr. Kuhn\nMr. Schwarz\nMr. Pehle\nMr. Wiley\nMr. Cochran\nMrs. Klotz\nMr. White\nMr. Foley\nH.M.Jr:\nSchwarz, just as a matter of interest,\nsee where George Morris says that Morgenthau\nis opposed to the aid to farmers. I mean,\nI am just curious to see if that comes\nout of the Department of Agriculture. I\ndon't think Mr. Wickard would say that.\nSchwarz:\nI will talk to them.\nH.M.Jr:\nHerbert, do we or don't we?\nGaston:\nWe have no obligation.\nH.M.Jr:\nOn Wallace, you mean?\nGaston:\nYes.\n152\n- 2 -\nH.M.Jr:\nBut does he want it?\nGaston:\nNot himself, but a group of his intimate\nfriends are terribly worried about the --\nH.M.Jr:\nDoes he want it?\nGaston:\nHe does not.\nH.M.Jr:\nThen I would forget about it.\nGaston:\nSo Dave Coyle says. He wants to be left\nalone. They are worried about the fact\nthat he wanders around alone and won't be\ncautious and he won't accept any protection.\nH.M.Jr:\nDid you send somebody to see Wallace?\nGaston:\nNo, I didn't.\nH.M.Jr:\nI would suggest that you do have Chief\nWilson call on him and tell him that if\nhe would care to accept protection, we\nwould be very glad to give it to him. Will\nyou do that?\nGaston:\nYes.\nH.M.Jr:\nI would let Wilson call on him and say if\nhe wants protection, we would be glad to\ngive it to him.\nGaston:\nYes.\nH.M.Jr:\nHow many men have we got looking after\nPrincess Martha and her children? I don't\nknow how many we have got. We have got at\nleast three, and maybe more.\nSullivan:\nI saw one of them on the street the other\nday, and he says it is a great job. She\n153\n- 3 -\nis one of the nicest people he ever met.\nH.M.Jr:\nWho said that?\nSullivan:\nOne of the guards who used to be here. Our\ncars were parked together at 8. traffic\nlight.\nH.M.Jr:\nWe ought to look after Henry Wallace, too.\nGaston:\nA young lady in Stimson's office said that\nshe had put that letter in the mail Saturday\nnight, but she is sending another one over\nby messenger.\nH.M.Jr:\nO.K. Anything else?\nGaston:\nNo, I haven't anything else.\nH.M.Jr:\nJohn?\nSullivan:\nI don't whink we have a meeting of the minds\non this tax returns of people in the foreign\ndiplomatic service, because the facts aren't\nat all what you indicated. Here is a memorandum\non it. Here are the returns of all --\nH.M.Jr:\nLet's you and I sit down on it some time.\nShall we?\nSullivan:\nAll right.\nH.M.Jr:\nYou ask for an appointment, and I will sit\ndown with you some time.\nSullivan:\nYes, sir. That is all.\nH.M.Jr:\nThat is all you have?\nSullivan:\nThe boys are working getting ready for\nGulick and getting out all of the studies\n154\n- 4 -\nthat have been made in the last five years.\nH.M.Jr:\nBefore he comes down, could I sit down with\nyou and --\nSullivan:\nYes, I would like very much to.\nH.M.Jr:\nAnd have a sort of a preview.\nSullivan:\nRight.\nH.M.Jr:\nI would like to go to school on that.\n(Mr. Bell and Mr. Foley entered the conference.)\nSullivan:\nAnd when are you going to sit down on the\nbill?\nH.M.Jr:\nWell, I thought tomorrow - these fellows are\nbusy on the House. I thought just as soon as\nthis Lend-Lease got through the House that\nI would get - ask them - I wish you would be\nthinking, should we simply do it with the\nHouse side or should we try to get the House\nand the Senate?\nSullivan:\nI think you and I should have a pretty\ndefinite idea of what we want to do, and\nI think it should be cleared with the\nPresident before we talk with them.\nH.M.Jr:\nHe won't talk about it this week.\nSullivan:\nHe won't?\nH.M.Jr:\nI don't want to talk to him about it. I\nwould rather talk with you and then with\nthem.\nSullivan:\nThen I think you and I had better get\ntogether.\nRegraded Uclassified\n155\n- 5 -\nH.M.Jr:\nWell, here is Lend-Lease this morning and\nEnglish finances tomorrow morning. How\nsoon are you ready?\nSullivan:\nI will be ready whenever you are.\nH.M.Jr:\nAre you sure?\nSullivan:\nYes, sir.\nH.M.Jr:\nThree o'clock tomorrow.\nSullivan:\nYes, sir.\nH.M.Jr:\nAll right.\nSullivan:\nI think you would want some others in on\nthat, too.\nH.M.Jr:\nWell, you fix it up. You arrange for\nwhoever you want, will you?\nSullivan:\nYes, sir.\nH.M.Jr:\nAll right.\nCochran:\nAfter our meeting Saturday morning, I\ntelephoned Mr. Gifford and that suggestion\nwas agreeable to him, and I got to Frank;\nand he is having 8. group come down today\nto talk it over. The British promised that\nsupplementary statement today.\nH.M.Jr:\nI spoke to Frank last night. He was going\nto give me a ring before my four o'clock\npress conference. He is having those men\ncome down this afternoon. He said he would\nlet me know what happened.\nCochran:\nI told Mr. Gifford that the group would not\n156\n-6 -\nbe set up without consulting with him\nfurther, that We would talk with him now.\nH.M.Jr:\nExploratory?\nCochran:\nThat is right.\nH.M.Jr:\nWhat else?\nCochran:\nThat is all.\nH.M.Jr:\nWould you some time before lunch go over\nto the State Department and have 8. look-see\nat the cables?\nCochran:\nAnd see --\nH.M.Jr:\nYes.\nPehle:\nNothing.\nH.M.Jr:\nAre you sort of following this correspondence\nbetween Hoover, President Hoover and the\nEnglish?\nPehle:\nYes.\nH.M.Jr:\nFerdie?\nKuhn:\nI have nothing.\nH.M.Jr:\nPhilip?\nYoung:\nNothing.\nH.M.Jr:\nGeorge? Are you feeling all right again?\nHaas:\nYes, I am feeling better this morning,\nthank you, Mr. Secretary.\n(Handing reports to Secretary) Did you\nwant to see this?\nRegraded Uclassified\n157\n- 7 -\nH.M.Jr:\nThat is right, until you hear from Knudsen\nor Meigs. Have you heard from either of\nthem?\nHaas:\nNeither of them.\nH.M.Jr:\nI wonder if Allison will ever really begin\nto manufacture engines?\nHaas:\nThey will probably have a slow-down again\nwhen they switch over, you see.\nH.M.Jr:\nYes. I might as well get this off my desk.\nFerdie, this is something - somebody told\nme that Wilson's address on Lincoln, they\nthought there might be something you could\npick out of there for some slogans.\nKuhn:\nOh, I didn't know what you wanted that for.\nH.M.Jr:\nFor Defense Savings Bonds.\nKuhn:\nThank you.\nH.M.Jr:\nAnything else, George?\nHaas:\nI have nothing else.\nH.M.Jr:\nHarry?\nWhite:\nNothing.\nSchwarz:\nThe UP in the morning ticker has a weekend\nstory saying Treasury officials predicted that\n1940 incomes would return three billion in\ntaxes, and I asked Knowlton. I said I didn't\nthink we had any such estimates. He said,\n\"Well, we got it out of the Budget and we\nforgot that the Budget and Treasury weren't\nthe same any more.\"\n158\n- 8 -\nH.M.Jr:\nAnything else?\nSchwarz:\nThat is all.\nH.M.Jr:\nHarold? What contracts are you letting\ntoday?\nGraves:\nWe are advertising today for the albums,\nand we are trying also to get our copy\nto - finished for these booklets for\nbanks and post offices.\nI think we are going to do that, possibly\nat the Government printing office this\ntime. We will take out the color and\nso on.\nH.M.Jr:\nAnd how many stamps is the Post Office\ngoing to order?\nGraves:\nWell, that is under discussion with them\nnow.\nWe are thinking of 30 million of these\nalbums, and the post offices --\nH.M.Jr:\nEach album holds how many?\n159\n- 9 -\nGraves:\nTwenty-five fifty in dollar stamps. Each album\nwould hole 75 and five dollar stamps, fifteen.\nH.M.Jr:\nWhat would be the total?\nGraves:\nWell, the 25-cent stamp a 25-dollar bond and the\n50-cent a 50-dollar bond and the 75-cent stamp\na 75-dollar bond and a one-dollar stamp a 100-\ndollar bond. The Post Office gave us their\nestimate for stamps, and they were incredibly\nlow, and we have got to study that with them\nagain. Of course, there is no particular hurry\nabout getting the Post Office Department esti-\nmates for stamps because we are manufacturing--\nH.M.Jr:\nHave you started?\nGraves:\nYes, they are engraving now.\nH.M.Jr:\nAnything else?\nGraves:\nThat is all.\nBell:\nAre you going to the Government Printing Office\nfor speed, is that the idea?\nGraves:\nWe will when--\nBell:\nCutting out the colors for speed?\nGraves:\nWe will go there only in case we can get assured\ndelivery on time, Dan, but the reason why we\nhave not gone there before is the colors that\nhave been in these--\nBell:\nYes, I realize that, and I wondered if you were\ncutting out the colors for speed.\nGraves:\nNo.\nRegraded Uclassified\n160\n- 10 -\nBell:\nYou don't like them?\nGraves:\nWe figure that for information books, for\npeople who come to the counter at 8, bank or\npeople who come to the counter at & post of\nfice and make inquiry about these bonds, we\ncan eliminate the color, simplify the circu-\nlar.\nH.M.Jr:\nI made a criticism of the American eagle push-\ning a flag along, and Harold said it was too\nlate. I think it is unfair to the American\neagles.\nGraves:\nWe are just bond to go ahead not later than\nthe next day or two and advertise. I was\nafraid that we might get involved in delay.\nH.M.Jr:\nAll right.\nBell:\nI have this list I would like to go over with\nyou right after this meeting if I can have two\nminutes.\nH.M.Jr:\nI will give it to you. You want two minutes\nafter this meeting?\nBell:\nYes.\nH.M.Jr:\nSo do I. What have you got?\nThompson:\nElmer Irey has been anxious for sometime to get\n& new badge. That is a design for it. Mr.\nGaston thinks the stars in the border should be\ntaken out and put in the center.\nH.M.Jr:\nWhy couldn't you do this? I have got an idea.\nSome people around the Treasury wanted some\nsort of coordination, you know, which I have\nalways been against. Why couldn't you have one\nbadge--\nRegraded Uclassified\n161\n- 11 -\nGaston:\nI thought you were for coordination. I think\nyou started that. (Laughter)\nH.M.Jr:\nWhat I was just thinking, if you were going to\nchange it, why couldn't you have a Treasury\nDepartment Intelligence Service and then just\nsomewhere, Narcotics or Revenue or Secret\nService?\nThompson:\nHave them all alike but--\nGaston:\nThat is 8 good idea.\nH.M.Jr:\nSo you know this is a Treasury man coming in,\nbut that is the Bureau he belongs to. Treasury\nDepartment Intelligence or something, you see,\nand then just - then just in one place would\nbe the word \"Narcotics,\" or \"Secret Service.\"\nGaston:\nWhat is the matter with that badge for that\npurpose, \"Treasury Department, United States,\"\nthen they have \"Narcotics.\" All you need\nthere would be \"Intelligence Unit,\" or whatever\nit is.\nH.M.Jr:\nI think so.\nGaston:\nI kind of like the eagle on top. Don't you?\nH.M.Jr:\nYes.\nWell, here under here would be \"Internal Reve-\nnue, Intelligence,\" or just the word \"Internal\nRevenue.\" They don't need \"Intelligence.\"\n\"Internal Revenue, the Treasury Department,\nUnited States.\" If you could get in a Treasury\nseal, it would make that \"United States\" stand\nout. I like the \"United States\" standing out,\nbut how about in the background, instead of the\neagle, having a Treasury seal? I mean the\nTreasury seal in the background.\n162\n- 12 -\nThompson:\nDo you like the round one better than you do this\nother one?\nH.M.Jr:\nWell, it is a question of - that on top, is that\ngoing to catch on anything? It would be sort\nof a nuisance.\nGaston:\nI don't care too much for that. It looks to\nmuch like an ordinary police department badge\nwith an eagle on top.\nH.M.Jr:\nBut if you just had the Treasury Department with\nthe Treasury seal in the background and the\nnames under here.\nWhere is my Treasury seal?\nBell:\nNo Treasury seals. (Laughter)\nGaston:\nI like the thing, if you could get the United\nStates - have the Treasury seal instead of the\neagle.\nH.M.Jr:\nI would like the Treasury seal in the background.\n\"Treasury Department, If and then just stick the\n\"United States\" right over that. That is what\nI would suggest. Then everybody would have the\nsame. Gaston and Harold Graves won't like this\nbut (Laughter)\nThompson:\nI think that is a darn good idea.\nH.M.Jr:\nWe get an idea once in a while.\nThompson:\nI will have a design made.\nH.M.Jr:\nI didn't get anywhere with my eagle pushing a\nflag. Maybe I will get somewhere on this.\nThompson:\nCoast Guard have a Second Lieutenant in the\nReserves who is a cryptanalyst. They need him\nRegraded Uclassified\n163\n- 13 -\nfor their own work down there, and I would\nlike to get a deferment for him, putting him\nin the Reserve Officers' pool.\nH.M.Jr:\nWhy, if he is in the Coast Guard?\nThompson:\nHe is a civilian officer, but he is a lieutenant\nin the Reserve Corps.\nH.M.Jr:\nWhy don't they put him in the Coast Guard Reserve?\nThompson:\nHe has been a civilian officer for sometime.\nH.M.Jr:\nO.K.\nThompson:\nIf you approve, I will send it over. I think\nit is a good case. That is all I have.\nH.M.Jr:\nYou (Foley) came in since we started?\nFoley:\nI came in with Dan. I was in Dan's office talk-\ning about the meeting yesterday.\nH.M.Jr:\nIs that right? (Laughter)\nBell:\nYes, I had him in there at a quarter of nine.\nGaston:\nHere is the Stimson-Hoover thing.\nH.M.Jr:\nOh, nothing else?\nFoley:\nNothing.\nH.M.Jr:\nAll right.\nRegraded Uclassified\n164\n/\nCOPY\nBRITISH EMBASSY,\nWASHINGTON, D.C.\nMarch 10, 1941.\nMOST URGENT - BY HAND\nDear Cochran,\nI enclose the data regarding our\nexisting contracts for which you asked on\nSaturday.\nYours sincerely,\n(Signed) E. W. Playfair\nM. Merle Cochran, Esq.,\nU. S. Treasury,\nWashington, D. C.\nReceived made R.M.\n10.15\ndm\n165\nRegraded Uclas\nCOPY\nEXISTING CONTRACTS\nA. Statistical Data.\nTable I below gives estimates of all the contracts of the British\nPurchasing Missions as of February 28.\nTable II, compiled on the same lines as Table I, gives figures for\nall contracts whose total value is over $1,000,000, as of February 15.\nTable I covers several thousand contracts, many of them very small,\nand has been compiled statistically; it is a close estimate, but not\naccurate to the last cent. Table II, on the other hand, has been compiled\nfrom the actual contracts, and, subject to any error, is exact. The full\ndata on which it is based is contained in Exhibit A, attached to this note.\nThe contracts covered by Table II are 242 in number, and cover nearly\n90% of the outstanding value of all the contracts.\nExhibit B gives fuller details regarding those contracts where the\npayments due after February 15 plus the advances standing to the credit of\nthe British Government exceed $10,000,000. These contracts, 50 in number,\ncover about 70% of the outstanding value of all the contracts.\nTable III gives estimates of the periods within which the payments\nremaining to be made on all the contracts fall due.\nB, The application of these data.\nAssuming that it is possible simply to assign contracts as they stand\nfrom the British Government to the U. S. Government, the liability which\nthe U. S. Government would assume would be the original value of the contract\n166\n- 2 -\n1000 the value of deliveries already made (Item 3 of Tables I and II). Dat\nwhen this resulted in the repayment to the Dritish Government of any advance\nmade by the French (Item 4). these would have to be paid to the State of\nFrance. Such payment is made by placing dollars to the credit of the State\nof France in an account at the Bank of Canada. France cannot withdraw such\nfunds, but they are lost to the United Eingdom, so that the benefit which\nthe British Government would receive from the assignment to the United States\nwould be reduced by that amount (Item 5). This benefit would consist of (a)\nthe repayment to them of advances made by them standing to their credit with\nthe contractor, including capital payments (Item 5 (a) ) and (b) the fact\nthat they would be relieved of future liability on these contracts (Item 5 (b) ).\nIn practice, the procedure for transferring contracts may not be BO\nsimple as suggested above. If the U. S. Departments concerned find it\nnecessary to negotiate fresh contracts, leaving us to cancel ours, there\nmay be cancellation charges, etc., to pay, depending on the terms of each\ncontract, and the benefit to the British Government say be correspondingly\nreduced (of. the case mentioned in paragraph 6 of Section C of this note).\nOwing to the amount of work involved, it has not been possible to\ncompile Tables I and II as of the same date. But it is not thought that the\ndifference in the outstanding value of the contracts between February 15\nand February 28 will be great, since increases in the total value of contracts\nplaced during that period are offset by the value of deliveries received.\n0. Assignment Negotiations now in train.\nThe following paragraphs give details of the negotiations for transfer\nof contracts presently in train. The outstanding value of these contracts\nis shown in Table IV.\n167\n3\n1. Ourties-Wrisht Corporation.\nThe R.F.C. has examined this property and some negotiations have com-\nmenced. However, the condition of the title and other complications make\nit deubtful that & sale can be concluded with R.F.C.\n2. General Motors Corporation.\nThis has been mentioned to the R.F.C. as a possible case, but the\nBritish Purchasing Missions had no knowledge of any current negotiations\nwhich R.F.C. may be considering.\n3. Tennessee Powder Company.\nArrangements for the sale of the Tennessee Powder Company plant have\nreached the stage of agreement in principle and papers may shortly be executed.\nThe net cash realization which will be available after completion of plant\n(expected to be in May, 1941) will be approximately $20,000,000. after setting\naside certain funds withheld as security for rent, insurance, etc.\n4. New Jersey Powder Company.\nNegotiations have been commenced for the sale of New Jersey Powder\nCompany and may proceed after Tennessee Powder Company has been concluded\nas a prototype case.\n5. Packard Motor Company.\nThe R.F.C. has stated that this should be & fairly simple matter to con-\nclude in view of their present ownership of other Packard properties, but\nnegotiations have not progressed.\n6. Colt's Patent Fire Aras Company.\nThis and the other three machine gun contracts that follow are in an\nadvanced state of negotiation on the following lines:\nRegraded Uclassified\n168\n- 4 -\n(a) The Army Ordnance Department is negotiating now contracts\nfor the product which, when concluded will leave the British\nPurchasing Commission free to negotiate cancellation of the\nexisting product contracts. The cash recovery on cancellation\nwill be less than the advance product payments owing to\ndifference in price between old and new contracts, disappearance\nof royalty payments in new contracts and other cancellation\ncharges to be settled between British Purchasing Commission\nand the suppliers.\n(b) The R.F.C. is concurrently negotiating for the purchase of the\nplant facilities. The realization will be less than the value\nof the capital advance due to the elimination of special tools,\npersonnel training cost and other intangible items, and in any\nevent payment will not occur until after each plant has been\ncompleted in the latter half of 1941.\nThe above machine gun negotiations involve numerous complications remain-\ning to be resolved. It may not be possible to finalise the contracts until\nsome time in April.\n7. Oerlikon Gun Subcontracts.\nThe British Purchasing Commission has proceeded to execute certain sub-\ncontracts for the manufacture of parts for the Oerlikon gun. The United\nStates Navy is carrying on negotiations with the principal supplier to whom\nthese subcontracts are to furnish certain parts. It is contemplated that\nthese subcontracts will be taken over by the United States Navy after the\nbasic contract has been concluded.\nWashington\nMarch 10, 1941.\nRegraded Uclassified\n169\nTABLE I\nTotal outstanding advances & estimated future payments as\nof February 28, 1941, on all existing contracts.\n(In millions of U. S. dollars)\nCapital\nProduct\nTotal\nOriginal value of British commitments\n180\n2840\n1.\n3020\nfor capital + product. (including British\nliability to French state for capital and\nadvances).\nLess 2.\nValue of product deliveries (including pro\n795\n795\nrata repayment by British of French\nadvances).\n3.\nTotal capital commitment plus value of\n180\n2045\n2225\nundelivered product (including balance\nof British liability to French state for\ncapital + advance).\ness\n4.\nBalance of British liability to French\n15\n65\n80\nstate for capital and advances.\n5.\nNet British commitment for capital + un-\n165\n1980\n2145\ndelivered product (after deduction of\nBritish liability to French state for\ncapital + advance).\nVis\n(a) Payments made by British on account\n155\n660\n815\nof capital and undelivered product.\n(b) Payments due to be made by British on\n10\n1320\n1330\naccount of capital and undelivered\nproduct.\nRegraded Uclassified\n170\nTABLE II\nTotal outstanding advances & estimated future payments, as of\nFebruary 15, 1941, on all existing contracts whose value is over $1,000,000\n(in millions of U.S. dollars)\nCapital\nProduct\nTotal\n1.\nOriginal value of British commitments\n167.2\n2,242.0\n2,409.2\nfor capital + product (including British\nliability to French state for capital\nand advances).\nLess 2.\nValue of product deliveries (including\n439.8\n439.8\npro rata repayment by British of French\nadvances).\n3.\nTotal capital commitment plus value of\n167.2\n1,802.2\n1,969.4\nundelivered product (including balance\nof British liability to French state\nfor capital + advance).\nLess\n4.\nBalance of British liability to French\n0.4\n52.7\n53.1\nstate for capital and advances.\n5.\nNet British commitment for capital +\n166.8\n1,749.5\n1,916.3\nundelivered product (after deduction of\nBritish liability to French state for\ncapital +.advance.)\nViz\n(a) Payments made by British on account\n150.1\n587.4\n737.5\nof capital and undelivered product.\n(b) Payments due to be made by British\n16.7\n1,162.1\n1,178.8\non account of capital and un-\ndelivered product.\n171\nTABLE III\nEstimate of sums payable by the British Purchasing Missions in\nrespect of all outstanding contracts, as of February 28, 1941.\n( In millions of United States dollars )\nMarch\n165\nApril\n135\nMay\n130\nJune\n130\nJuly - August\n220\nSeptember - December\n370\nJanuary - August 1942\n265\nSeptember - December 1942\n25\n1440\nNote: The total of $1440 millions is composed of the figure of #1330\nmillions shown under heading 5(b) of Table I, plus $30 millions out-\nstanding reimbursement due to the French State as of February 28, 1941\n*Plus $80 millions shown under heading 4 of Table I\nRegraded Uclassified\nBRITISH CONTRACTS, THE TRANSFER OF WHICH HAS BEEN\nUNDER DISCUSSION\nAs at February 15. 1941\nTotal of advances\nAdvances Outstanding\nBalance\nOutstanding and\nContract\nSupplier\nMaterial\nCapital\nProduct\nTotal\nDue\nBalance Due\nNumber\nA-194\nCurtise-Wright Corp.,\nR2600A Engines\n14,450,700.00\n32,261,130.48\n46,711,830.48\n31,412,071.47\n78,123,901.95\nNew York, N. Y.\n172\nA-196\nGeneral Motors Corp.,\nAllison Engines\n6,393,113.50\n30,427,500.00\n36,820,613.50\n23,971,535.07\n60,792,148.57\nNew York, N. Y.\nA-502\nTennessee Powder Co., Plant Expansion 25,279,000.00\n-\n25,279,000.00\n215,000.00\n25,494,000.00\nMemphis, Tenn.\nA-633\nNew Jersey Powder Co., Plant Expansion\n9,827,730.45\n-\n9,827,730.45\n738,269.55\n10,566,000.00\nKenvil, N. J.\n1-787\nPackard Motor Co.,\nRolls Royce\n24,900,000.00\n19,549,904.56\n44,449,904.56\n90,450,095.44\n134,900,000.00\nDetroit, Mich.\nMerlin -\nII Engines\n1-844\nColt's Patent Fire\nAircraft Machine\n8,914,085.00\n3,883,335.78\n12,797,420.78\n4,628,753.68\n17,426,174.46\nArms Mfg.Co.,\nGuns\nHartford, Conn.\nA-1265\nKelsey-Hayes Wheel Co.,Aircraft Machine\n6,100,000.00\n2,376,875.96\n8,476,875.96\n8,968,701.83\n17,445,577.79\nDetroit, Mich.\nGuns\n1559 High Standard Mfg.Co., Machine Guns\n3,323,000.00\n2,237,259.00\n5,560,259.00\n5,963,853.37\n11,524,112.37\nNew Haven, Conn.\nA-1600\nBuffalo Arms Co.,\nA ircraft Machine 5,852,040.00\n1,995,317.50\n7,847,357.50\n4,935,952.60\n12,783,310.10\nBuffalo, N. Y.\nGuns\nAm2795\nAmerican-Oerlikon\nCerlikon Gun\n285,000.00\n1,203,060.00\n1,488,060.00\n4,819,500.00\n6,307,560.00\nGayda Corp.9ubcontracts\nTOTAL 105,324,668.95 93,934,383.28 199,259,052.23 176,103,733.01 375,362,784.24\nRegraded Uclassified\n173\nsend\nMarch 10, 1941.\nMEMORANDUM\nTO: Mrs. Klotz\nFROM: Mr. Gaston\nWith reference to the attached letter, Congressman Hunter\ncame in to see the Secretary at 10:30 this morning and I was\npresent at the Secretary's request. Mr. Hunter recited some\nof the circumstances of the political situation in Ohio and\nexpressed the view that he ought to have the privilege of naming\nthe Collector of Internal Revenue at Toledo. The Secretary\ntold him that he could not undertake to decide these political\narguments but that he would cheerfully carry out any directions\ngiven him by the White House. There seems to me to be no\nneed of any other reply to the letter. Mr. Hunter wrote me\npractically the same letter, with the same enclosures, which I\nhave in our personnel file.\nMD\nRegraded Uclassified\nCH\n174\nMOTOR al di\nJOHN F. HUNTER\n- Denect OMI\nGETTINER at CARROLL\nCOMMITTEES:\nCongress of the United States\nAGRT. -\n- - THE EXECUTIVE\nHouse of Representatives\nof - Vex PRESENT,\n- - Concerns\n- WORNTR. MD MAASURER\nw. я I\nDistrict IF COLUMBA\nMarch\nseventh\n1941\nThe Honorable Henry Morgenthau, Jr.\nSecretary of the Treasury\nWashington, D. C.\nMy dear Mr. Morgenthau:\nAnticipating that a decision is near on the appointment of\na Collector of Internal Revenue in the Toledo(Ohio) office, it is\nmy desire to call your attention to certain facts which I consider\npertinent.\n1. Mr. Ralph 0. Snyder, whom I have indorsed, was first\nproposed in August, 1940, by Senator Vic Donahey. At that time\nthere was some publicity in the newspapers of Ohio; and I am\ninformed that many letters were sent to the Senator, expressing\napproval of his choice. It is not probable that many letters from\nthe district were sent to any other source, as it was considered by\nDemocrats of the district that the Senator's recommendation would be\nfollowed.\nLater, when Ohio newspapers carried stories that there was\na contest and that Frazier Reams had some backing for the position,\nthe newspapers all stated that the decision would be made by\nHonorable Edward J. Flynn, Chairman of the Democratic National\nCommittee.\nI have been informed that a great amount of mail has reached\nMr. Flynn's office from persons in Ohio who urged Mr. Snyder's\nappointment. Copies of some of these letters have been forwarded\nto me.\nThere is one letter written by Tom Stahl, Ottawa County\nChairman, American Legion, and Chairman of the Democratic War\nVeterans of Ottawa County, which I would particularly like you to\nread as it conveys a plain indication of where some of the opposi-\ntion to Mr. Snyder is arising.\nRegraded Uclassified\n175\nHon. Henry Morgenthau, Jr.\n-2-\nMarch 7, 1941\nThere is another letter in Mr. Flynn's files of which I have\nno copy but which I am sure you can obtain from Mr. Flynn's office.\nThis letter was written by Mr. 0. L. Teagarden, Chairman of the\nOttawa County Democratic Committee, in which he tells of requesting\nJr. Reams to take part in the recent political campaign and of Mr.\nReams' refusal to speak for the President. I am informed of this\nletter by Mr. Charles Scherer, Chairman of the Ottawa County Demo-\ncratic Campaign Headquarters, who also wrote Mr. Flynn.\nI would like to request that letters in Mr. Flynn's file be\nsecured and given consideration by your Department.\n2. I am recommending Mr. Snyder because I believe his\nexperience, training and understanding of the public will make him\nan outstanding Collector if he is appointed.\nI have the utmost respect for Mr. Reams, but I do not\nconsider legal training alone makes him an outstanding candidate for\nthe position of Collector.\nFrom the political viewpoint alone, these angles must be\nconsidered: Mr. Snyder has been extremely active for the Democratic\nparty during recent years; he is known and respected throughout the\nentire Northwestern Ohio.\nMr. Snyder's wife, Babette, was organizer of Roosevelt-\nWallace clubs in that district during the 1940 campaign.\nOn the other hand, Mr. Reams has taken no part in politics\nin the last four years-even refusing to address meetings in behalf\nof the President during the 1940 campaign, as attested by letters\nin Mr. Flynn's possession.\nWe will concede that he was active prior to 1936. However,\nany obligation incurred on behalf of the Party has already been paid\nmany times over. In the first place, Mr. Reams was given a license\nfor a radio station of which he is now president and general manager.\nHis law partner has been given a United States commissionership.\nHis law office also has had a large portion of the legal work of the\nHome Owners' Loan Corporation and other Federal agencies and depart-\nments in the city of Toledo. This fact can easily be ascertained.\nUnder the circumstances, any claim that Mr. Reams has earned further\n\"pay\" at the hands of the Administration seems to be greatly\nexaggerated.\nRegraded Uclassified\n176\nHon. Henry Morgenthau, Jr.\n-3-\nMarch 7, 1941\n3. For more than seven years, while the late Charles\nGraves was Collector in the Toledo office, it was common knowledge\nthat Mr. Graves spent less than a day a week in the office or on\nCollector's duties, devoting his time to his own law business and\nother interests. In making my recommendation of Mr. Snyder, I\nrecommended a capable man who I knew would be prepared to devote\nfull time to this important position.\nThe opposition candidate is a very busy member of a law\nfirm handling a great deal of Federal business, and is president\nand active in the management of a radio station. I am sure that\nyou have no desire to name men to important positions who are\nprepared to devote very little of their time to the duties of the\noffice.\nI have presented these few points as briefly as possible\nin order to clarify a situation that has been considerably confused\nby inter-party difficulties in Ohio. I know you will give them\nyour personal consideration.\nWith best personal wishes, I am,\nJohn Very truly yours,\nJFH:SC\nRegraded Uclassified\n177\nOak Harber, Ohio, Jun. 18, 1941\nHon. Edward J. Flynn,\nDemecratic National Comittee,\nMayflower Hotel,\nWashington, D. C.\nDear Mr. Flynn,\nIn connection with the appointment of Collector\nof Internal Revenue, Tolede, Ohie, at a meeting of\nour committee held last evening, they endorsed Mr. Ralph\nSnyder of Telede and requested me to advise you of their\naction. This, of course, is in further confirmation of\nthe endorsement of Mr. Snyder by the writer, about last\nAugust 15th, 1940.\nour committee is of the opinion, in view of Mr. Snyder's\nendorsement by our congressman, Home John Hunter, and of\nour Congressman at Large Non Stephen Young, Cleveland, Ohio,\nthat their recommendation should be followed and we request\nyour favorable consideration of this gentleman.\nWe believe that it is time that the leaders of the two\nfactions in Ohio reelise the necessity of harmony in the\nparty, and we believe that for the best interest of the\nDemocratic Party in Ohio, both Mr. Sawyer and Mr. Bittinger\nshould resign and pomeone be named who can secure the\nsupport of all.\nPlease accept the writers best wishes\nYours very truly\n(Signed) 0. L. Tegarden\nRegraded Uclassified\n178\nWESTERN UNION TEIE GRAM\nCelina, Ohio\n1940 Aug 19\nHon Vic Denahey US Senater\nMercer County Executive Committee endorses Ralph Snyder\nfor Internal Revenue Cellector\nClyde Rutledge, county chairman\nWESTERN UNION TELEGRAM\nDefiance, Ohio\nHonorable John Hunter 200 House of Reps\n1940 Nov 27\nDear Mr. Hunter We recommend Ralph O. Snyder of Toledo for\nappointment as Internal Revenue Collector at Toledo, Ohie.\nDan Batt, chairman Defiance County Executive Come\nRichard Laudick, chairman Putnam County Executive Come\nWilliam Mentser, chairman Paulding County Executive Come\nRegraded Uclassified\n179\nWESTERN UNION TELEGRAM\nVan Wert, Ohio\n1940 Aug 15\nSenater Vic Denahey\nWashington, D. C.\nVan Wert County Committee recommends appointment Ralph\nSnyder to succeed Graves, Internal Revenue Collector.\nC. 4. Springer, chairman\nWESTERN UNION TELEGRAM\nWapakoneta, Ohio\n1940 Aug 15\nHon. A V Donahey, Senator\nI hereby endorse Ralph O₂ Snyder of Toledo to pesition\ncollector of internal revenue Telede district to succeed\nCharles Graves deceased.\nY. P. Killian, chairman Auglaise County\nDemecratic Executive Committee\nWESTERN UNION TELEGRAM\nSidney, Ohio\n1940 Aug 17\nSenater Vic Benahey\nOur endorsement and recommendation of Ralph Snyder for\nCollector Internal Revenue office Tenth District Ohio\nLeo J. McFarland, chairman (Shelby County)\nDemocratic Committee\nRegraded Uclassified\n180\nRESTER\nUNION\n1940 Aug 15\nHom. Vie Denahey\nSenate Office Bldge Washington, D. C.\nEndorse Ralph Snyder Telede to be collecter of Internal\nRevenue to succeed Charles Graves. Your assistance\nhis behalf will be appreciated.\nA. L. Teagarden, chairman Ottawa County\nDemocratic Central Committee\nL\nRegraded Uclassified\n181\nTHE DARK COUNTY\nDEMOCRATIC CENTRAL-EXECUTIVE COMMITTEE\nGREENVILLE, OHIO\nAugust 16, 1940\nThe Hone Vic Donahey,\nWashington, D. C.\nDear sir:\nWe the undersigned efficers of the\nDarks County Central Executive Committee\nappointed to make indorsements for vacancies\nhereby recemmend and endorse Ralph Snyder to\nfill vacancy caused by the death of Chas.\nGraves, the pesition of Internal Revenue\nCollecter.\nChairman\nB.B. MoGriff\nRegraded Uclassified\n182\nSeptember 19, 1940\nHonorable Franklin De Roosevelt\nThe President of the United States\nWashington, D.C.\nNY dear Mr. President:\nOn August 23rd, I suggested the name\nof Mr. Ralph O₂ Snyder of Tolede, Ohio, to you\nfor the vacancy exisiting in the Toledo office\nof Collector of Internal Revenue. The death of\nHonorable Charles H. Graves left this post vacant\nand it is of importance to the political well\nbeing of Northwestern Ohio that the nest be filled.\nCommissioner Helvering advises do your\nfull approval is awaited n this connection and\nthat a tentative investigation had been made of\nMr. Snyder. Snyder was the Secretary of Congress-\nman John Fa Hunter and 18 IS vital to the interests\nof Congressman Hunter the only democratic Repre-\nsentative in Congress obvering all the northwest\ndistricts of thirty some counties, and as well as\nto Ohio that determination be reached before election.\nIt is hoped confirmation might be had before\nadjournment.\nWould you please inquire into this matter\nand advise me the present status in order to favor\nMr. Hunter in this regard.\nWith sincere regards and best wishes,\nI remain\nSincerely yours,\nVic Denshey\nRegraded Uclassified\n183\nCOPY\nTHE ALLEN COUNTY DEMOCRATIC EXECUTIVE COMMITTEE\nHeadquarters 527 Dominion Building\nLima, Ohio\nAugust 17, 1940\nHone Vic Denahey,\nUnited States Senate\nWashington, D. C.\nDear Senater Denahey:\nA vacancy has occurred in the effice of the Collecter\nof Internal Revenue of the Telede Districts A fine\ncapable Democrat by the name of Ralph Snyder who is\nsecretary to Congressman Hunter is a candidate for\nthis position.\nI want to assure you that if you have any doubts as\nto Mr. Snyder's ability and his integrity I have known\nhim for a good many years and feel that he is well\nqualified to hold this position. As State Central\nCommitteeman from the Fourth District and as Chairman\nof Allen County it gives me great pleasure to endorse\nMr. Snyder.\nwith kindest regards, I am\nYours very truly\n(Signed) Francis We Durbin\nChairman\nRegraded Uclassified\n184\nCOPY\nDEMOCRATIC EXECUTIVE COMMITTEE\nWOOD COUNTY, OHIO\nSeptember 10th, 1940\nHone Vis Denshey,\nU.S. Senator-Ohic,\nWashington, D. C.\nMy Dear Senater:\nMy attention has been directed to\na vacancy that exists in the effice of Collector\nof Internal Revenue, 10th District with Headquarters\nin Toledo, Ohie. This vacancy was caused by the recent\ndeath of Mr. Graves.\nIn this connection it is my pleasure to\nrecommend the name of Mr. Ralph Snyder, Tolede, Ohio\nfor consideration as appointment for this position.\nMr. Snyder is well qualified to perform the duties\nrequired and his past connections present him as an\nasset to the position.\nThanking you in advance for any consideration\nextended to Mr. Snyder, I remain\nSincerely Yours,\n(Signed) Theodore R. Black\nChairman, Wood County DEC\nRegraded Uclassified\n185\nALLIED INSULATING &\nBUILDING CO. INC.\nTOLEDO, OHIO\n(COPY)\nJanuary 17, 1941\n(COPY)\nHon. Edward J. Flynn, Chairman,\nDemocratic National Committee,\nMayflower Hetel,\nWashington, D. C.\nDear sir:\nMay I, as a business man and war veteran, endorse the\nappointment of Mr. Ralph Snyder as Collector of Internal\nRevenue for the 10th Ohio District.\nI have known and respected Mr. Snyder for the Past\n15 years, both as a newspaper man and as secretary to the Hon.\nJohn F. Hunter, Congressman from my home district and state of\nOhio.\nMr. Snyder has always been unfailing in his duties\nto the public of this district and has brought credit and\nprestige to the Democratic party of this district and state.\nAs a life long Democrat, I believe it is my duty\nto endorse this appointment of an able and efficient\nDemocratic official.\nVery truly yours\n(signed) DENNIS G. BURNS\nRegraded Uclassified\n186\nCOPY\nMarch 4, 1941\nRegraded Uclassified\nMr. Edward Je Flynn,\nChairman\nDemocratic National Committee,\nMayflower Hotel\nWashington, D. C.\nity dear Mr. Flynn:\nI an writing to you with the hope that I may be able to\ngive you some information relative to the fight that has como\nup between Ralph Snyder and Fraser Reams for the Cellecter of\nInternal Revenueship at. Tolede, Ohio.\nBoth Mr. Reams and Mr. Snyder are personal friends of\nmine, but I feel that because of the backing that Mr. Reams\nhas that he should not be entitled to this position, and here\nis why I say this.\nI am enclosing herewith a letter which I will mark Exhibit\nA, which I sent out in behalf of John Hunter during the last\ncampaign. I am also sending you a copy of a letter marked\nExhibit B, sent out by Mr. Hunter's oppenent.\nThis copy, marked Exhibit B, was made from a letter handed\nto a voter by Mr. William Zeis, an appointee of Charles Sawyer\nand working out of Mr. Sawyer's headquarters, and paid by the\nNational Democratic Executive committee. These letters were\ncarried about with him and shown to different veterans, especially\nveterans when Mr. Zeis queried and found to have received one of\nthe copies of Exhibit A as sent out by m. When Mr. Zeis found\nthat they had received such a copy, he made a personal attack on\nm, alleging that I was a drunkard, and them handed to them a\nletter sent out by Mr. White of which I have enclosed a copy as\nmarked Exhibit B. Now Mr. Zeis at this time was working out of\nMr. Sawyer's Democratic headquarters, was an employe of the\nDemocratic Executive committee, and receiving Demecratio money.\nUp until that time I had always been a supporter of Charles\nSawyer, but when I found that he was employing this sert of men\n187\nwith Demecratic funds, I felt as I de new that it was to the\nbest interest of the Demecratic party to get rid of him,\nIt seens to - that the opposition to Mr. Ralph Snyder is\nnot because of his personal integrity or lack of integrity, to but\nis opposition en the part of Mr. Sawyer and his ceherts any-\nthing that Cengressman Hunter wants.\nIn By humble opinion, now that Martin L. Davey has taken\nhimself out of the picture by illness, I feel that if Mr.\nSawyer were taken out of the picture by you, we would again\nbe able to get together in Ohio and start to go some place.\nSincerely yours\n(signed) Tem D. Stahl\nChairman\nDemocratic War Veterans of\nOttawa county.\nRegraded Uclassified\n188\nRegraded Uclassifie\nJanuary 20, 1941\nHon. Edward Flynn, Chairman\nDemocratic National Committee\nWashington, D. C.\nDear Mr. Flyant\nI claim no political influence. I control no votes other than by\nown. But I have been a consistent Democratic voter in Lucas County, even\nat times when I had to make excuses for candidates offered locally by the\nDemocratic party. I have dons this because of my/hellef in the party's\nprinciples and on the supposition that the national party would function\nmore advantageously with local Democratic administrations than otherwise,\nI isagine that many more of the 80,000 who voted Democratic in Lucas County\nin November felt the same way I did.\nWe were a bit disgusted with the intex party fight between Sawyer\nsupporters and Davey supporters which carried on right through the presi-\ndential campaign. We were 60 fed up oh of the local candidates that\nTO shed no tears over the defeat of two Democratic county cnadidates put\nup by the local Quinlivan-Galvin machine. Tie resented the undercover\nattacks by that machine on our naminee for Congress, John Hunter, and TO\nhelped give him a 15,000 majority over his Republican opponent.\nWe have resented the strong arm method of controlling political jobs\nin Lucas County, which has resulted in the rather bitter jest common among\nDemocrato here that you can't get a political job unless you are related to\none of the \"Six Families.\"\nThe Toledo Blade of Jan. 18th says that there is a dispute over the\nappointment of a collector of revenue in Toledo. This is no surprise\nbecause Congressman Hunter has never accepted the \"Six Family\" tradition\nand has attempted to make appointments according to merit and qualifications.\nWe have an outstanding example of this in the appointment of a. career man\nas postmaster in Toledo and by the appointment of boys to Annapolis and West\nPoint after competitive examinations. Democratic voters have applauded\nthese actions and have given Mr. Hunter growing majorities in his elections\nas a result, while the \"Six Families\" lost the only two county offices\ncontested for in the election two years ago, and two additional county\noffices in the last election.\nTwo years ago John Quinlivan, head man of the \"Six Families\" was a\ncandidate for ward committeeman. His only opponent was & boy of 23 who\nhad no job and who had never been active in politics. Quinlivan lost\n189\nPage 2\nby & two to one vote. Reams was a candidate in the primary for the\nnomination for attorney general-and lost. Sawyer was a candidate\nfor governor-and lost.\nNow, Quinlivan, in the best\"Six Family\" tradition, proposes\nReams, a member of the \"Six Families\" in good standing, to Sawyer as a\ncandidate for collector of internal revenue in Toledo. Sawyer, accord-\ning to the Toledo Bhade has followed tradition and made the recommendation\nto you.\nDemocratic voters of Lucas County are waiting to see whether you\nwill accept the recommendations of two persons they have repudiated\nwho are recommending a third person whom the voters also have repudiated.\nOr will you follow the recommendations of the Congressman the\nDemocratic voters have elected to his third term by a greatly increased\nmajority, and whose popularity is at least partly due to the high caliber\nof the appointees he has placed in public positions.\nI am certain many loyal Democratic voters are awaiting your decision\nwith great interest.\nC Very truly yours,\n/a/ Frank M. Fisher\nRegraded Uclassified\n190\nALBERT M. MATTHEWS\nAttorney at Law\n1217 Sylvania Ave.\nToledo, Ohio\nJanuary 17, 1941\nHon. Edw. J. Flynn\nChairman of Democratic National Committee\nMayflower Hotel\nWashington, D. C.\nDear Sir:\nI wish to express my earnest desire, as an active\nDemocrat in Toledo for the past fifteen years, that you will\nappoint Ralph Snyder as the new Collector of Internal Revenue\nin Toledo, Ohio.\nThe fact thatt he is endorsed by John F. Hunter,\nthe only Democratic Congressmen from the district, should merit\nthe appointment. The long record in public office and at the polls\nhase proven John F. Hunter, to be the most popular and outstanding\nDemocrat in this district of Ohio.\nTo deprive kim of his just right to make the\nappointment would be extremely ungrateful and cause much\ndissension. I am safe in asserting that the vast majority\nof the local Democrats are wholeheartedly behind John F. Hunter\nand likewise his candidate Ralph Snyder for Collector of\nInternal Revenue in Toledo, Ohio.\nRespectfully yours\n/s/ Albert M. Matthews\nRegraded Uclassified\n191\nAMOS L. CONN\nAttorney at Law\n921 Edison Building\nToledo, Ohio\nAugust 20th, 1940\nMy dear Senator Donahey:-\nMay I bear a word of testimony on behalf of\nmy long time friend, Mr. Ralph H. Snyder Executive Secretary for\nCongressman John F. Hunter, of the 9th District, who is a receptive\ncandidate for United States Collector at Toledo, there being & vacancy\ndue to the untimely passing of our mutual friend, the Honorable Chas.\nH. Graves?\nYou know Mr. Smyder as well or perhaps better than\nI do. However, I would like to say a word of commendation and recom-\nmend him to your favor consideration. He is a man of good character\nand is well and favorable known in this community. He is clear-headed\nand has large capacity in getting things done. He is conscientious and\na man of strong convictions He has all the vigor and energy of youth,\nplus the understanding and wisdom that comes with wide experience and\nknowledge of men.\nI feel that Mr. Snyder would fill this important\nposition with honor and dignity, be a credit to the Party, and render\na public service of such high character that will at all times justify\nthe confidence reposed in him. Your favorable consideration will be\ngreatly appreciated.\nPlease accept my good wishes and my assurances of\nrespect and esteem.\nCordially yours,\n/s/ A. L. Conn\nRegraded Uclassified\n192\nTHE EAST TOLEDO DEMOCRATIC CLUB\nToledo, Ohio\nAugust 19, 1940\nHon. Vic Donahey\nU. S. Senate - Ohio\nWashington, D.C.\nT\nMy dear Senator:\nAs an organization of long standing\nand which has the esteem of the Democracy of this\nCounty, I beg to inform you that are heartily endorse\nthe candidacy of one Ralph 0. Snyder, able secretary\nto Congressman J. F. Hunter for the office of Internal\nRevenue Collector this district.\nWe kindly urge you to place his name\nbefore President Roosevelt.\nThanking you beg to remain,\nSincerely,\n/s/ S. J. Saxon\nPresident\nSJS:JJH\nRegraded\n193\nCLARENCE J. MATTHEWS\n2352 Georgetown Avenue\nToledo, Ohio\nJanuary 17, 1941\nEdward J. Flynn\nChairman Democratic National Committee\nMayflower Hotel\nWashington, D.C.\nT\nDear Mr. Flynn:\nBecause of the interest and importance of the position of\nInternal Revenue Collector in our district and because of\nmy desire to see harmony in the ranks of the local demo-\ncratic organisation; I as writing xau on behalf of the\nappointment of Mr. Ralph Snyder for the position of Inter-\nnal Revenue Collector in our district.\nMr. Ralph Snyder is a democrat respected and well quali-\nfied and surely deserving of such consideration.\nHowever, whoever may receive this appointment should\ncertainly have the unqualified endorsement of the leading\ndemocrat in our district, and that is our 9th District\nCongressman, the Honorable John F. Hunter.\nIt is my sincere hope, and with no anticipation of personal\nbenefit, that Mr. Ralph Snyder will be recognised and that\nMr. John F. Hunter will be given the credit that is right-\nfully his from the national organisation. I thank you for\nthis consideration.\nSincerely yours,\n/a/ Clarence J. Matthews\nCJM:B\nRegraded Uclassified\n194\nJanuary 15, 1941\nHon. Edward J. Flynn, Chairman\nDemocratic National Committee\nMayflower Hotel\nWashington, D. C.\nDear Mr. Flynn:\nAs I have been actively engaged in\nDemocratic Politics for a number of years\nI an anxious that those who have labored\nearnestly and diligently on behalf of the\nparty are properly rewarded.\nAn appointment is soon to be made to\nfill the vacancy caused by the death of\nCharles H. Graves, Collector of Internal\nRevenue for this district, and would very\nmuch appreciate you densidering Ralph Snyder,\nSecretary to Congressman John F. Hunter. Mr.\nSnyder has been very active in democratic\npolitics throughout this district for a number\nof years, very courteous and highly esteemed\nby all who know him.\nI feel that the appointment of Ralph\nSnyder would not only be a compliment to\nhimself, but a credit to the Treasury Department.\nVery truly yours,\nMyron A. Rosentreter\nmarjfuw\nRegraded Uclassified\n195\nJanuary 15th, 1941\nHon. Edward J. Flynn,\nChairman\nNational Democratic Executive Committee,\nMayflower Hotel,\nWashington, D. C.\nDear Chairman Flynn:\n1\nWhen the matter of the vacancy in the office of U. S.\nCollector at Toledo, Ohio, came OR for consideration (due\nto the untimely death of our friend Charles H. Graves),\nI lent what influence I had in Favor of Mr. Ralph 0. Snyder,\nExecutive Secretary to Congressman Hunter, as a well qualified\nman to assume the duties of this important office.\nIntervening events have strengthened my conviction as to\nthe all-round fitness of Mr. Shyder for this position.\nMr. Snyder is hard working Democrat in all kinds of weather,\nand he is a man of recognized ability, wide experience, and what\nis perhaps of greater importance, a man of good character. We\nbelieve that your favorable consideration and your recommendation\nof Mr. Snyder's appointment will be in the interests of public\nservice and tend to strengthen the Democratic Party in this dis-\ntrict.\nWith assurances of esteem, we remain\nYours respectfully,\nAmos L. Conn\nALC:EVD\nRegraded Uclassified\n196\nOak Harbor, Ohio\nDec. 6, 1940\nHon. Chas. Sawyer,\nColumbus, Ohio\nDear Mr. Sawyer:-\nIn view of stories which have appeared in\nthe newspapers recently regarding Federal patronage in Ohio,\nI believe I an justified in assuming that you will have addi-\ntional influence in Washington from now on.\nThere is one matter directly concerning our\nCounty in which you might assist us, this 10 in the appoint-\nment of a Revenue Collector for the Tenth Treasury District\nwith headquarters at Toledo. Four months ago bur Committee\nendorsed Mr. Ralph 0. Snyder of Toledo, Ohio, for this posi-\ntion; he also received the endorsement of Senator Donahey,\nCongressman Hunter and a majority of the County Committees\nin the District. For some reason the appointment has never\nbeen made. Congressman Hunter is the only Democratic Con-\ngressman elected in the entire Instrict and I believe you\nwill see the necessity of backing his endorsements in such\nmatters.\nThis appointment has been delayed 80 long\nthat I urge you to help bring it to the proper conclusion by\nconcurring with Congressman Hunter's recommendation without\nfurther delay.\nWith kindest personal regards, I remain\nYours very truly,\n/s/ 0. L. Teagarden\nChairman\nOLT:A\nRegraded Uclassified\n197\nJOHN McSWEENEY\nAttorney-at-Law\nWooster, Ohio\nNovember 11, 1940\nMr. Ralph Snyder\nHouse of Representatives\nWashington, D. C.\nDear Ralphs\nI hope that you, Congressman, Mark and all\nT\nwill realize how deeply grateful 1 and for\nyour kindnesses to me.\nI was very glad that John war reelected,\nand for me to share the enthusiastic help\nof you friends was a wonderful advantage,\nas the returns from Lucas Dounty show.\nI hope some day I may show my appreciation.\nMost Sincerely your Friend,\n/s/ John McSweeney\nJM:HMS\n(Democratic candidate for U.S. Senate in\nthe 1940 campaign.)\nRegraded Uclassified\n198\nDEMOCRATIC NATIONAL COMMITTEE\nHotel Biltmore\nNew York City\nRoosevelt-Nallace Clubs\nHarry M. Washington\nDirector\nOctober 18th, 1940\nMrs. Babette P. Snyder, Dist.Mgr.,\nRoosevelt-Wallace Clubs,\n1413 Eleanor St.,\nToledo, Ohio\nDear Mrs. Snyder:\nT\nMay I thank you for your prompt 00-\noperation with the Roosevelt-Wallace Clubs Division.\nI can readily see by the aggressive way\nin which you have developed this program, that you will\nget splendid results in your Songressional District.\nA Ht of campaign material is being sent\nyou similar to that which **11 be sent to other Clubs as\nsoon as their names and addresses together with the name of\nthe executive officer are received here.\nAgain thanking you and assuring you that\nwe will co-operate from here in every way possible, I am\nSincerely yours,\n12/ Harry M. Washington\nHarry M. Washington,\nDirector.\nRegraded Uclassified\n199\nMarch 10, 1941\n10:45 a.m.\nRE AID TO BRITAIN\nPresent:\nMr. White\nMr. Bell\nMr. Cochran\nMr. Young\nMr. Foley\nMr. Cox\nMr. Kuhn\nMr. Gaston\nH.M.Jr:\nI thought I would start this meeting off -\nI am having lunch with the President today,\nso it is fortunate we are having this meeting.\nI asked this morning, Cochran to - if he\ncould by this time give me a summary of the\nvarious things that I did with England, the\nvarious sources that I had in connection\nwith their finances. I didn't give you much\ntime. Have you got something?\nCochran:\nIt is all dictated, and I think it will be\nin while this meeting is going on. (See\nattachment A.)\nH.M.Jr:\nThen we will just skip that.\nBell:\nI asked Phil to do it, too. I don't know\nwhether he had a little more time.\nH.M.Jr:\nHave you got something, Phil?\nYoung:\nDanny called me about 10:15 and I dictated a\npage just on the general aspect of what our\nRegraded Uclassified\n200\n- 2 -\noffice does down there on foreign purchasing.\n(See attachment B.)\nH.M.Jr:\nThis is a result of our eight o'clock meeting,\nDan. Well, when does yours come off your\nmachine?\nYoung:\nIt ought to be in in just a minute, I think.\nH.M.Jr:\nThen we will skip you.\nYoung:\nIt is very general in its nature.\nH.M.Jr:\nWell, let's wait until it comes in. I per-\nsonally explained to Cochran what I wanted.\nHow soon do you think yours will be in,\nCochran?\nCochran:\nIt is not awfully short. It will be a couple\nor three pages. It will take half an hour.\nH.M.Jr:\nWell, we will wait. How long?\nCochran:\nTwenty minutes. (Laughter)\nH.M.Jr:\nWhen did you finish dictating? Do they\nknow we are waiting for it?\nCochran:\nYes, but I finished dictating it just before\nI came in.\nH.M.Jr:\nAll right. Professor Foley, what have you\ngot? Is yours off the machine?\nFoley:\nWell, all we have got is conversation,\nMr. Secretary.\nH.M.Jr:\nAll right. (Laughter) Let's have what you\nhave got.\nFoley:\nIt seemed to us that now that the Byrd amend-\nment is in the bill, that the problem breaks\nRegraded Uclassified\n201\n- 3 -\ndown in so far as financial considerations\nare concerned into a deal that would be worked\nout for the billion three hundred million\ndollars of defense articles on hand, which\ncould be made available and a deal which could\nbe worked out in so far as new defense articles\nare concerned which will be acquired through\nappropriations Congress will make from time\nto time to carry out the purposes of the\nLend-Lease Bill.\nStarting from there, it seemed to us that\nunder no circumstances should we be put in\nthe position of taking over any existing com-\nmitments that the British have. In other\nwords, for us to take them out of any contracts\nand agree to pay American manufacturers for\ndefense articles for which the British have\nagreed to pay American manufacturers would\nnot sit very well with the country.\nH.M.Jr:\nThe fact that I am quiet doesn't mean I\nagree. I thought I would let you run through\nyour story.\nFoley:\nYes. And that is substantially what you told\nthe committees when you appeared before the\ncommittees, and to go back on that might be\nunfortunate.\nNow, the British have advanced to American\nmanufacturers for land, for buildings, and\nfor machine tools, approximately a hundred\nand thirty-four million dollars, and that\ninvestment --\nH.M.Jr:\nHave you got that figure?\nCochran:\nNo, sir.\nH.M.Jr:\nWhat is that figure again? The British have\nwhat?\nRegraded Uclassified\n202\n4 -\nFoley:\nA hundred and thirty-four million dollars.\nH.M.Jr:\nA hundred and thirty-four represents what?\nFoley:\nWell, for instance --\nH.M.Jr:\nYou mean this is capital or down payment?\nFoley:\nWell, let's take the powder plant in Tennessee.\nThey have made a total payment of $21,459,000.\nThe land is & million three, the building is\nfive million eight, the machine tools are\neighteen million.\nThe land, the buildings and the equipment\nare owned by the Tennessee Powder Company,\nwhich is wholly owned by the United Kingdom.\nH.M.Jr:\nBut I thought that was one of the ones that\nthe RFC --\nFoley:\nAnd that is being operated by DuPont. Yes,\nthis is one of the ones that they are talking\nabout with the RFC.\nNow, they are talking about that with the\nRFC as a means of raising additional dollars.\nIt seems to us that they don't need those\nadditional dollars in order to pay for commit-\nments that they have already made in the light\nof the figures that we got, as analyzed by\nHarry yesterday. All of that plant investment\ncould be made available against 80 much of\nthe billion three of existing defense articles\nthat could be made available to the British\nat once. In addition to that, we could take\n& certain portion of their exports to the\nUnited States of tin and rubber, strategic\nmaterials.\nH.M.Jr:\nLet's just stop right there. What I have\nasked for is this. You are getting down into\nUclassified\n203\n- 5 -\ntoo many details now. You give me a figure\nhere of a hundred and thirty-four million\ndollars, which I take it is down payments\nand property and tools and 80 forth that\nthey have advanced.\nFoley:\nLand, buildings and tools.\nH.M.Jr:\nNow, this breaks into two things. One thing,\nI asked whether the Army is negotiating for\npart of this.\n(Unrecorded telephone conversation.)\nH.M.Jr:\nSomebody calls up for Harriman a few minutes\nago and said he wanted to talk to me to thank\nme for my message, and then when I said I\nwas busy, \"Well, Mr. Harriman is just about\nto leave.\" The Clipper left two hours ago.\nI don't understand it.\nNow, let me just get this thing straight.\nI am not going to get tied up with a lot of\nfigures. The RFC - I wanted the figure, I\ny\nmay not get it - is negotiating for the pur-\nchase of the English --\nFoley:\nPlant investment in this country.\nH.M.Jr:\nAnd how much does that amount to?\nFoley:\nOne hundred and thirty-four million dollars.\nH.M.Jr:\nAre they negotiating for the whole amount?\nFoley:\nYes.\nH.M.Jr:\nThen of this hundred and thirty-four, the\nRFC is trying to buy the whole bunch, is\nthat right?\nFoley:\nThat is right, take them out of what they\n204\n- 6 -\nput into plants in this country.\nH.M.Jr:\nA hundred thirty-four.\nFoley:\nA hundred thirty-four.\nH.M.Jr:\nIs that the figure?\nFoley:\nThat is the figure.\nH.M.Jr:\nRFC in process of buying one hundred thirty-\nfour million of English plants, munitions\nplants in U.S.A.\nNow, of the hundred and thirty-four, have\nthey concluded anything?\nFoley:\nI don't believe they have concluded & thing\nyet, and they are not taking it up on the\nover-all basis. They are taking it up in\nconnection with specific plants that our\nArmy or our Navy could use and could reim-\nburse the RFC for it if the RFC took the\nBritish out. It may all add up to the one\nhundred thirty-four. That is the over-all\ncommitment.\nH.M.Jr:\nNow, the thing that I call the McCloy plan,\nwhere the Army is trying to buy it, like\nthat Kelsey Wheel thing, is that in the\nhundred and thirty-four?\nFoley:\nNo, that is separate.\nCox:\nThat is mainly & take-out on orders and not\non plant.\nH.M.Jr:\nHow much does that amount to?\nCox:\nWell, the total figure on the ones they are\nnegotiating on now is a little over five\nmillion.\nBegraded\n205\n- 7 -\nH.M.Jr:\nBut I thought it was a couple of hundred\nmillion.\nCox:\nNo, they are taking the Kelsey Hayes and\none other as a pattern, and they are working\non that with the theory that if they get\nthat executed they can step it to a much\nlarger dollar amount of present existing\norders.\nH.M.Jr:\nHow much?\nCox:\nI don't think McCloy knows the figure on\nthat.\nH.M.Jr:\nDoesn't anybody know? This RFC and then\nUnited States Army. They are buying up\ncontracts, too, aren't they?\nFoley:\nYes, and that is the phase of it we thought\nwe ought not to go into.\nH.M.Jr:\nWell, I have asked for this for tomorrow.\nI don't know why it is so difficult to get\nthis. Buying up English munitions contracts\nas against plants, is that right?\nCox:\nThat is right.\nFoley:\nThat is right, supply contracts.\nH.M.Jr:\nAnd how much that amounts to you don't know?\nCochran:\nPlayfair told me he would give us their\nfigures today on both the RFC and the Army.\nH.M.Jr:\nNow, Ed, as far as I am concerned, I would\nnot interfere in this, and I say I don't\nwant to get bogged down. I don't want to\ntake the idea of stopping this and leaving this\nas 8. mortgage against - that the powder plant\nis an asset against what we are going to\nRegraded Uclassified\n206\n- 8 -\nlend-lease. My answer to you on that is\ndefinitely no. I mean, this is in the\nprocess that they are counting on the money\nthat they are getting from these things to\nuse for English specification things, and\nthey are going to need that.\nFoley:\nWell, I --\nH.M.Jr:\nAnd this has all been agreed on over a period\nof months, and I don't care what Harry says.\nI mean, it doesn't -- I have got my - I\nhave got a definite understanding with these\npeople that the money that they get - we\nwent through hell on this thing, and now we\nsuddenly say no, that we don't want this\nthing, and then they come back and say,\n\"What are we going to use for money to buy\nEnglish specification stuff?\" I don't know\nwhere Harry gets his ideas. This is & thing -\nit is peanuts, anyway.\nWhite:\nWell, apparently there was an agreement among\nsix of us. It isn't only my idea. We were\ndiscussing it.\nH.M.Jr:\nWell, I mean it isn't worth discussing. I\nam trying to get a formula for several billions,\nand here --\nFoley:\nWell, a billion three, Mr. Secretary.\nH.M.Jr:\nWell, let's start - no, I want a formula\nfor billions.\nCox:\nRight, but look, can we argue to that point\n& minute?\nH.M.Jr:\nWhat?\nCox:\nTo the powder plants in this country? It\nRegraded Uclassified\n207\n9 -\nseems to me that - and I think most of us\nwere agreed - that on the first disposition\nwithout disclosing what the equipment was\nthat you were disposing of because it might\nbe & military secret, you might still want\nto say to the public who had been led to\nbelieve that all this stuff is being given\naway that as to those things which are\nexhaustible like bullets and 80 forth, we\nare getting powder plants and 80 forth.\nH.M.Jr:\nDoesn't appeal to me at all. It is chicken\nfeed.\nCox:\nI know it is chicken feed, but --\nH.M.Jr:\nWell, do you mind? It is part of the other\npicture, which I have agreed to, and it\nwould upset Stimson, it would upset Jones.\nIt has all been agreed that they should\nwork on this thing and this should flow into\nthe pot to be used to give the English money\nfor new orders to be used for English speci-\nfications, you see. We are sort of back-\ntracking, and it just isn't worth it.\nWhite:\nDoes the Lend-Lease Bill exclude the purchase\nhere of items which satisfy British require-\nments but not our own? I didn't gather that\nit did.\nH.M.Jr:\nYes, it does.\nWhite:\nWell, the lawyers don't feel that way.\nH.M.Jr:\nWell, they are wrong. Certainly the Army\nfeels that way. I mean, to give you an\nexample, I will give you a specific example.\nThere was a certain kind of plane, I can't\njust think of the name, but maybe Philip\ncan. Knudsen said to me, \"Now, the English\n208\n- 10 -\nwant a certain kind of plane.\"\nYoung:\nTyphoon?\nH.M.Jr:\nWell, I don't know, & dive bomber or something.\nLet's say type \"X\", Knudsen has been the most\ndifficult on this. He says, \"Now, we don't\nhave this plane. They want six different\ntypes. We don't have two types. I am talking\ngenerally.\" He said, \"All right, until we\nget it, I, Knudsen, will say that we will for\nsix months build the kind of plane that the\nEnglish want, because we don't have that\nkind of a plane and we will try to develop\none ourselves; but for six months I will\nmake a strictly English type plane because\nthey need it, you see.\"\nNow, that was crossed - Philip, you were\nthere on that stuff. Did you hear what I\nsaid? Am I telling it about right?\nYoung:\nYes, sir. Knudsen did say at one point that\nwhen we first talked about the lend-lease\nthing that he visualized placing orders\nhimself for British type goods.\nH.M.Jr:\nWell, I know he did in this case.\nFoley:\nThat would be with appropriations that would\nbe made to carry out the Lease-Lend Bill.\nYoung:\nOut of the theoretically floating part of\nthe fund as distinguished from a specific\nWar and Navy appropriation.\nFoley:\nYes, but as I see it, Phil, I mean the dis-\ncussions we had out at the Secretary's that\nday, have been cut across now by the Byrd\namendment, and the Byrd amendment makes it\nnecessary, and I believe that they have\nRegraded Uclassified\n209\n11 -\nacquiesced in it, Harry Hopkins and Smith,\nof going down and asking for a lump sum\nappropriation to carry out the Lease-Lend\nBill and not appropriations to the Army\nand not appropriations to the Navy to carry\nout the Lease-Lend Bill. That is the fight\nthat we made, and we lost when Jimmie Byrnes\nagreed to the Byrd amendment, and now they\nare going to agree to it in conference.\nH.M.Jr:\nWell, Ed, I am still groping for the thing\nand I don't see that there is very much\ndifference - I mean, start with & billion\nthree. Supposing the President says, \"I\nwon't wait until we get an appropriation\nbill. I want to act up to 8. billion three.\"\nLet's just take that.\nFoley:\nYes.\nH.M.Jr:\nAnd he says, \"All right, Henry, now we\nwant to operate on that.\"\nFoley:\nWe will make up a consideration that I can\nannounce to the American public that I am\ngetting this billion three.\nH.M.Jr:\nThen he will say, \"On the billion three, I\nwant to give them so many ships and planes\nand that and the other.\"\nFoley:\nNow, what can we get?\nH.M.Jr:\nWhat can we get and what legal form can\nit take? That is what I am groping for\ntoday.\nFoley:\nWell, that is what we are trying to give\nyou, Mr. Secretary. Now, we thought --\nH.M.Jr:\nI don't like this RFC stuff, I don't like\nRegraded Uclassified\n210\n- 12 -\nthe Army stuff, because I think it has all\nbeen done once, and I don't want to disturb\nit because I don't want to disturb Jones,\nI don't want to disturb Stimson, and I don't\nwant to disturb the Purchasing Commission.\nFoley:\nAs far as the Army is concerned, the supply\ncontracts are not in this at all. This\nwouldn't cut across anything the Army was\ntrying to take them out of, and in so far\nas the RFC is concerned, it might be a much\nmore feasible and much more effective way\nof getting the whole thing, because the RFC\nmay end up by taking only so much of the\nstuff as could be disposed of in this country.\nA lot of this machine tool stuff they may not\nwant to touch. They would only want to touch\nwhat they could put a mortgage on.\nH.M.Jr:\nI don't want to get on that basis either. I\nget what you have in mind. Let's just forget\nit.\nFoley:\nWe were going to suggest that plus a portion\nof their tin and their rubber exports over\na period of five years.\nBell:\nWell, can he lease or lend the material under\nthe billion three?\nFoley:\nYes.\nBell:\nWell, what do you have to have? You don't\nhave to have dollar for dollar, something\ncoming back, do you? It is either a re-\npayment in kind or a payment of rentals.\nGaston:\nYou don't have to have anything but a promise.\nBell:\nThat is all you have to have, is a promise.\n211\n- 13 -\nFoley:\nWe thought the problem broke down as to\nthe billion three, and as to the new stuff\nand as to the billion three if you want\nto make it all available to them right\nnow, it might sit better with the American\npublic to show that you had worked out 8\ngood sound financial arrangement and got\ngood consideration for so much of those\ndefense articles on hand as you made avail-\nable at the present time.\nBell:\nI have had 8. little difficulty --\nFoley:\nThen so far as the new appropriations are\nconcerned, you go into the more intangible\nvalues such as the British fleet and such\nas what happens if the British go down and\nwhat happens if the British win the war.\nBell:\nI have a little difficulty distinguishing\nbeteeen what goes out under the billion\nthree and what goes out under the Lend-Lease\nappropriations.\nFoley:\nWell, I don't blame you. The only distinction\nthat you make is because of the distinction\nmade by the Byrd amendment. The Congress has\nsaid that ten per cent of the articles pur-\nchased with appropriations made prior to the\npast bill may be disposed of, and that creates\na difference between articles on hand and\narticles to be procured in the future.\nBell:\nOnly as to limitation.\nFoley:\nOnly as to limitation.\nGaston:\nI don't think it will sit better with the\nAmerican public that we have made a chiseling\nbargain by which we are going to get back\nthe value of what we are going to give them.\nRegraded Uclassified\n212\n- 14 -\nI think what is going to sit best with the\nAmerican public is the impression that we\nare doing something to aid England.\nBell:\nI think 80 too. I don't think that - what\nis coming back amounts to a tinker's damn in\nthe public mind.\nCox:\nNow wait a minute, you are going to have\npending an appropriation request when these\nfirst dispositions are made, and it seems\nto me you ought to state in the financial\nterms of the disposition your two policy\nthings, that is, that it isn't 8. Shylock\ndeal by which you squeeze somebody that is\nin need, and secondly, that in addition to\nthe intangible benefits which the United\nStates gets, it is also as to things which\nare exhausted, getting something that is\ndirect and tangible by which the British\nreally give up very little except the pos-\nsibility of dollar exchange; and secondly\nthat as to the lease-lend end of the thing,\nyou are going to negotiate that out on both -\non a governmental basis, that it isn't only\na straight business transaction, that what\nyou are going to do is look after the benefit\nof the United States as to that.\nNow, I don't think that on the first disposition\nyou could have ready a complete financial docu-\nment which will cover the rest of the billion\nthree or the appropriations up to \"X\" billion,\nwhich will come under the new bill, and it\nis just a question of what you first present\nto the public on the first disposition, on\n\"A\", possibly something concrete, and \"B\",\nsomething which you possibly can't answer\nfor this time.\nH.M.Jr:\nJust hold yourself for 8 minute. I want to\nRegraded Uclassified\n213\n- 15\n-\nask two things. What is the last position\n-\nwhat are the commitments of England in this\ncountry, do you know? The last figure I\nheard was a billion, their contracts. Has\nanybody got it?\nYoung:\nYou mean unpaid balances?\nH.M.Jr:\nYes, how much do they owe American contractors?\nYoung:\nIt is about a billion three, isn't it, Harry?\nWhite:\nIncluding these additional orders it must\nbe at least that.\nH.M.Jr:\nLast I heard it was around a billion.\nWhite:\nBut they have given about two hundred and\neighty-five million dollars worth of contracts\nsince January 1, new contracts.\nH.M.Jr:\nTwo hundred and how much?\nWhite:\nAbout two hundred and eighty-five million.\nBell:\nThat made a billion six to liquidate.\nWhite:\nAnd then they have paid off some of the old.\nHow much they have paid off I don't know,\nbut I imagine it must be two hundred million\ndollars or something of that order.\nH.M.Jr:\nWould I be safe to say that it is around\n8 billion three or a billion four they still\nowe us?\nWhite:\nI should think SO. You might be a hundred\nmillion too high, but it is about a billion\nthree, I think.\nYoung:\nThat is about right.\nRegraded Uclassified\n214\n- 16 -\nH.M.Jr:\nNow, let me just come back 8. minute to\nthis, which I would like to get. If I\ncould only get my hands on this. Never\nmind what we are going to get in exchange\nfor the minute. If you want to have some-\nthing in mind, let's say we are going - for\na billion three they are going to give us\na mortgage on Bermuda, let's say. I don't\nwant to run it, but just we have got first\nmortgage on Bermuda. What I want to get,\nif I can, desperately, Dan, for Bermuda\nwe are going to give them ten Coast Guard\nCutters, you see.\nNow, what kind of piece of paper is that\ncontract written on? That is what I want\nto know. That is what I have been groping\nfor first. Under this thing there are\ngoing to be ten Coast Guard Cutters and in\nexchange for that we are going to take 8.\nmortgage on Bermuda. How would that be\nwritten?\nWhite:\nI think it is impossible for a soverign\ncountry to give away a mortgage.\nBell:\nYou would have to put it under --\nH.M.Jr:\nI don't care what it is, but I mean - the\nBritish fleet. I mean, I am not saying\nany particular thing. I am just trying to\nsay there has to be some kind of & contract,\nsome kind of 8. document, and I take it the\nTreasury is going to prepare that document.\nCox:\nWell, that has both legal and psychological\nquestions, depending upon the kind of property.\nNow, if it were going to be the British fleet,\nyou could draw the legal document by which you\nset up under what conditions you get possession\nas well as title of the British fleet under\nRegraded Uclassified\n215\n- 17\nthe mortgage and then you would have the\nquestion of whether you want the President\nand the Prime Minister of Britain to sign\nit or whether you want the President to\ndelegate it to somebody and Churchill to\ndelegate it to somebody to be signed.\nOn the other hand, if you - going back for\nillustration to these powder plants, the\nBritish Purchasing Commission apparently\nhas the full authority to sign without\ngoing back to the government.\nH.M.Jr:\nWell, let's take in the case of Bermuda,\nit would be what, the State Department?\nThey did these other bases, didn't they?\nCox:\nYes, but you have got to be careful there\nas to whom you get to sign the thing, because\nthe closer you get to something that is like\na treaty, then you have got to go back to\nthe Senate for confirmation or approval, and\nyou tend to open again the whole discussion.\nH.M.Jr:\nYou see, I know what the President has in\nmind, up until the last time he talked to me\nabout it, which was last week, because I\nmentioned the fact to him that Canada wants\nto get under the Lend-Lease and they wanted\nonly the engines, but they didn't want to\nsign.\nSo he said, \"Well, in case of engines,\" he\nsaid, \"we get something back.\" He has got\nan idea that if we are going to give them\nsome planes, they will replace it with planes.\nIf we give them ships, they will replace it\nwith ships. That is the way he has talked\nup to now.\nDearaded\n216\n- 18 -\nWhite:\nWell, it seemed to me that we had a state-\nment that might cover that, aside from the\nlegal papers.\nH.M.Jr:\nI am not through with that --\nWhite:\nAny legal document, it seems to me, would\nhave to be in terms of either the identical\nplanes or of an equivalent number of planes,\nneither of which would be possible or feasible,\nor, what would be feasible, have & plane of\nequal value. It would have to be set in\nterms of dollars.\nIf that were true, it seems to me you are\ndriving just the kind of hard bargain that\nI gather the others feel --\nH.M.Jr:\nA plane of equal value wouldn't be dollars.\nThe President wants to get away from the\ndollars, that is the whole point.\nWhite:\nYou can't use an identical plane.\nH.M.Jr:\nNow mind you, just so nobody misunderstands\nmy position. My position, which I stated\nbefore the Lend-Lease Bill ever was intro-\nduced, 80 there can be no misunderstanding,\nif I was left alone to write this thing, I\nwould give it to them, 80 don't anybody mis-\nunderstand me.\nWhite:\nBut I don't think the American public will\nunderstand that.\nH.M.Jr:\nI just want you to know where I stand per-\nsonally. If it was to me, I would give it to\nthem and I wouldn't go through all this monkey\nbusiness; but just 80 that nobody gets an\nidea that I am trying to drive a hard bargain,\nif left to me, I would give the stuff.\nRegraded Uclassified\n217\n- 19 -\nAfter all, by the time they fight it and\nit is their lives which are at stake and\nnot ours, I think the important thing is\ndone when they put the boys in to fight the\nthings and I think when we begin to talk\nabout getting something back in addition\nto having the men fight this thing while\nwe get time, I think we are driving too\nhard a bargain; so if it was just left to\nme, I would give them the stuff, 80 don't,\nHarry, get any idea --\nWhite:\nI am thinking exclusively from the point of\nview of being able to help them most, and\nI think that our view was that you will be\nable to help them most and be closer to\nthe very objective which you stated of wanting\nto give them more if the initial transaction\nwere made to abide by two principles, one\nto make the American public think they are\nnot giving it away; second, to make the\nBritish public and their allies and their\npotential allies not feel that they are\ngiving anything up in order to encourage\nthem, something to abide by both those\nprinciples, and I thought we had something\nthat might work.\nH.M.Jr:\nWell, let me show you where I disagree with\nyou totally. Let's say that - if I understand\nyou gentlemen correctly, on the billion three\nwhile the appropriation bill is going through,\nwe want to make 8. wonderful showing to show\nwhat we have got for the billion three, is\nthat right?\nWhite:\nWithout having the British sacrifice anything\nso the British won't feel they are giving up\nanything they want. In other words, we get\nsomething and they are not giving anything.\n218\n- 20 -\nThat is possible, I think, in this way.\nWe thought we would break down the problem\ninto three parts.\nH.M.Jr:\nWhat are you going to give them, the pixies?\nWhite:\nYou are going to give them such things as\nCoast Guard Cutters and 80 on, which will be\nin terms of a lease and in which you will\nget back the same cutters, and certainly\nno British will object to that. They will\nsay to themselves, \"You can have it back.\"\nIt doesn't mean anything out of their skins.\nAt the same time the American public will\nfeel that goods of that character, they are\ngoing to get it back and depreciation can\neither be allowed or thrown in the kitty.\nThat is one thing which the American people\nfeel they are going to get back and which\nthe British people feel they are not giving\nanything when they give it back to us.\nA second character was the American plants\nwhich are in the United States. Now, the\nAmericans would say, justly, \"We would be\nglad to get these plants back. They are\nplants we otherwise would not have had, and\nwe really are getting something for them.\nThey are in the United States and they can\nproduce these commodities.\"\nSo far as the British or the Greeks or Chinese\nare concerned, they would say to themselves,\n\"Well sure, we got the use of those plants.\nWe already wrote those off. It is only\nreasonable that you should have ammunition\nplants that are in your country,\" and I\ndon't think they would regard that as giving\nup anything.\nAs regards the third character, I thought\nRegraded Uclassified\n219\n- 21 -\nwe concluded on that one that we ought to\nbe vague and merely say, \"The discussions\nare going forward with respect to quid\npro quo's on other items,\" 30 that you\nwould have two real items which the American\npublic would be impressed with.\nH.M.Jr:\nLet's just for a minute say I took it just\nas you gave it, and let's say that Ed Foley\nhad to go up to testify on this bill because\nI am not going, you see, and Ed Foley goes\nup and 3ay3 - now, he explains this. They\nsay, \"That is wonderful, that is something.\nNow, Mr. Foley, you are asking for another\nfive billion dollars. Would you mind telling\nus what you are going to get for that?\"\nFoley:\nYes, and I think that simplifies the problem,\nbecause until you get this stuff out of the\nway --\nH.M.Jr:\nYes, but --\nFoley:\nAnd you come to Congress and say we have gotten\nthe stuff --\nH.M.Jr:\nThen what --\nFoley:\nThis is a tangible value that we can get.\nWe have gotten a certain portion of their\nexports, we have gotten their plant invest-\nment in this country, we have gotten these\ntangible assets of ours that we made available\nto them, we have got them to agree to give\nthem back to us when they get through with\nthem.\nH.M.Jr:\nNow what are you going to get with the five\nbillion?\nFoley:\nNow we are asking for five billion dollars\nfor bullets and ammunition and guns, things\nRegraded Uclassified\n220\n- 22 -\nthat can't be returned, things that are\nused up.\nH.M.Jr:\nWhat are you going to get for that?\nFoley:\nAnd we are going to get an agreement that\nwe will work out with the British whereby\nif Britain is overrun and conquered, what\nis left of their war machine comes to us,\nso that we can take up the burden there of\ncarrying on.\nH.M.Jr:\nMay I interrupt you?\nFoley:\nYes.\nH.M.Jr:\nAfter Britain is conquered, we are going to\nget their war machine? What do you mean,\nMr. Foley?\nFoley:\nWell, we have an agreement with Mr. Churchill\nand the British Cabinet whereby orders will\nbe given to their captains to bring their\nships into American ports if the British are\nconquered.\nH.M.Jr:\nHave you got anything else?\nFoley:\nThat is the French Navy situation and it\nwasn't done with France. The British had\nto go in and shoot them up. We don't want\nto have to send our ships in to shoot the\nBritish.\nH.M.Jr:\nWhat else are you going to get besides the\nBritish Navy?\nFoley:\nWe are going to get whatever is left of\ntheir fighting equipment, whatever we can get\nout of there, the planes they can fly out,\nthe bombers they can get over to this country,\nRegraded Uclassified\n221\n- 23 -\nwhat they have in Canada that is being\nmanufactured and gotten ready to take\nover to Great Britain, all of the remnant\nof the war machine that is left should\ncome here and in addition to that, their\nholdings in the western hemisphere, New-\nfoundland, British Guiana, the islands in\nthe West Indies, Canada is released. If\nCanada wants to throw in with us, she\ncomes to us. All of their ownings and\ntheir holdings in the western hemisphere\nwe fall heir to, and that is the kind of\nan agreement that we will have to work out;\nand we are going to make the very best\ndeal we can in consideration of this five\nbillion dollars.\nH.M.Jr:\nAre you --\nFell:\nI wonder if the Appropriations Committee\nis going to ask you what kind of a deal\nyou are going to make for this money that\nyou are going to spend for Great Britain?\nI think you are anticipating something that\nwon't come up.\nFoley:\nDan, there is a certain amount of Yankee\ntrading that you have got to be able to\ndemonstrate to this committee, that is going\nto make the appropriation, that you have gone\nthrough, and they have gotten rid of their\nfixed investments in this country. They\nhave liquidated them. They have liquidated\ntheir marketable securities and then in\naddition to that, we have taken what we can\nget of their plant investments for war\npurposes, and their exports to this country.\nWe have gone through all that, and we have\ntaken what we can get out of that, and from\nthere in, it is & question of working out\nthe most statesmanlike arrangement that we\ncan work out.\nIclassified\n222\n- 24 -\nBut I think that Congress is going to be\nmuch more disposed to grant appropriations\nfor things that we never expect to get back\nin order to keep Britain going. Once\nCongress realizes that we have made & sincere\neffort to --\nWhite:\nThat is right, to get what is available.\nFoley:\nTo take over what is available in this\ncountry, and I think until we do that, the\nWoodrums and the rest of these fellows are\ngoing to say, \"Well, by golly, we have got\nenough to do getting ourselves ready with-\nout appropriating taxpayers' hard earned\nmoney to carry on 8. war in Great Britain.\nBell:\nI think all you have to do is carry out 8.\nstatement the Secretary made before the\ncommittees in Congress, that they are going\nto liquidate their investments in this\ncountry.\nFoley:\nWhen, Dan?\nBell:\nTo meet their contracts.\nFoley:\nWhen?\nBell:\nWell, they are in the process of doing it\nnow.\nFoley:\nWe don't want to make any more appropriations\nto carry out this bill until that has been\ndone.\nBell:\nI don't believe Congress will take that\nattitude.\nFoley:\nWell, they may.\nWhite:\nI think we are talking about the same thing,\n223\n- 25 -\nDanny. Those investments which the\nSecretary spoke of, Ed isn't referring\nto. They are supposed to be sold and\npaying for their past debt. That is out\nof the picture. They no longer have them\nin the discussion. What he had reference\nto were these plants which they have\nbought, only, as far as the United States\nis concerned.\nH.M.Jr:\nOne hundred and thirty-four million dollars.\nBell:\nYes, one per cent of the - even the property\nlimitation of the bill.\nH.M.Jr:\nOne hundred and thirty-four million.\nWhite:\nIt is a small amount, and that is why they\nwon't object; and yet it seems to me - well,\nthe opposition won't have anything good which\nthey can ask you to take. You put them on\nthe defensive instead of being on the de-\nfensive. You have taken everything that is\nreasonable, and even though it is small,\nat least that is the best under the circum-\nstances. Anything beyond that involves\ngrave difficulties which they themselves would\nbe reluctant to advise, and I don't see why\nthe British would object.\nBell:\nIt seems to me all we have got to do in this\npicture is to see that you have kept faith\nwith the Congress in your statement before\nthe two committees. We have also got to\nsee that the British --\nFoley:\nMore than that.\nBell:\nThat the British do not lay up any surplus\nfunds during the period that we operate\nunder the Lease-Lend Bill, and I take it\n224\n26\nthat there will be many articles - even\nfood items, that you can't get under the\nLease-Lend Bill that the British will have\nto pay for from their cash resources. I\nwouldn't want to see the British come at\nthe end of the year and the war end and\nthem have a half billion dollars in dollar\nresources built up in this country and have\na lease-lend operation of four or five\nbillion. I don't think we want to see\nthat.\nH.M.Jr:\nI don't think you will.\nBell:\nAnd I think that is all we have got to\nprevent.\nH.M.Jr:\nLet's just stop here a minute. Can you\n(Cochran) read your memorandum, please?\nCochran:\nI am not sure this helps very much. It\nsummarizes what we have been doing.\nH.M.Jr:\nWell, let me hear it, will you please?\nLet me decide.\nCochran:\nAnd there is one last paragraph that is\ncoming yet.\nH.M.Jr:\nLet's just hear it, and see, because I have\ncertain objects in mind.\n(Mr. Cochran read the document which is\nAttachment A of this transcript.)\nCochran:\nNow, there are 8. couple of more paragraphs\nwhich are just the same as a memo I drew up\nlast fall when we were thinking of this\nbill. They are on national defense and\nstatistics. Do you want me to read them?\n225\n- 27 -\nH.M.Jr:\nNo, it will come in with the other.\nCochran:\nYes.\nH.M.Jr:\nThis is all right, I can use this for what\nI want. This is all right. I can condense\nit. The other one will be in?\nCochran:\nYes, sir.\nH.M.Jr:\nNow let me just - let me just think a minute.\nWhat I have got to do at one 'clock with\nthe President is simply say, \"Now look,\nMr. President - see if we agree on this.\nas I see it, these are the steps you can\nimmediately on the signing of the bill go\nto work on, on the transfer, up to a billion\nthree.\"\nCox:\nYes.\nH.M.Jr:\n\"And if it is possible on the signing of\nthe bill to announce what you are going\nto do up to a billion three, of course, I\nthink the psychological effect would be\nwonderful. I mean, if it was ready. I\ndon't suppose it is physically possible.\nAnd then after all, what do you want? How\nis your mind running, what you want in\nexchange for the billion three? And then\nif you have made up your mind whether you\nare going to have a lump sum or whatever\nyou are going to have, what do you want in\nexchange for that?\" And with this discussion\nwhich I have had here, which is helpful,\nI hope to be able to get what he has in\nmind, if he has, and I would be very much\nsurprised if he didn't have it clearly in\nmind.\nThen I can come back and we will try to go\nRegraded Uclassified\n226\n1\n- 28 -\nto work. The way I an thinking, if you\nask me, as far 68 listed securities and\nthe direct investments they have got in\nthis country, those are all earmarked to go\nto the payment of outstanding commitments,\nand any chicken feed that they can pick up\nthrough the RFC sales of plants, they need\nall of that for the payment for things which\nthey find they won't be able to get through\nthe lend-lease, and there will be plenty of\nthose. There isn't a day - they buy planes\nand then they suddenly find they want de-\nicers on those planes.\nWhite:\nAre you sure of that statement, Mr. Secretary,\nthat there are things which they can't buy\nunder the lend-lease? Because the lawyers\nhave a very different opinion. They claim\nthe way the bill is written you can buy\nanything you want for them, food and 80\non. That is as a matter of law, and not\nas a matter of policy.\nH.M.Jr:\nI am talking not as a matter of policy or\nlaw, I am talking of the matter of the\nhuman frailty of mind that they have got\nto go up against. By the time they get the\nthing through all the agencies and all the\ncriss-crosses and get the stuff out, they\nare going to say to themselves, \"Well, we\nhad better buy this ourselves. I am not\narguing with you as to the law.\nBell:\nI should think the committee might say that to\nthem. \"You have got money enough, why don't\nyou buy this directly?\"\nH.M.Jr:\nI am sure the President hasn't thought this\nall through, but I don't see that I can go\nmuch further today than we have now until\nI find out what he has got in mind. When\nI talked to him originally about the lend-\nRegraded Uclassified\n227\n- 29 -\nlease and came back from lunch, he had it\nvery clearly in mind and gave me enough\nthat we could go ahead and draw & bill and\nthe bill which we originally drew didn't\ndiffer very much from the way it finally\ncame out.\nCox:\nThere is only one incidental psychological\npoint on this RFC thing. Suppose when the\nappropriation is pending that it gets out\nthat the RFC or the Government through the\nRFC has given dollars in exchange for these\nplants in addition to what they are going\nto get under the Lend-Lease Bill?\nH.M.Jr:\nAnd so what?\nCox:\nWell, that is just 8. question of public\nreaction and what effect it will have on\nyour appropriations.\nH.M.Jr:\nI think you fellows are making a mountain\nout of a mole hill. I don't - hasn't Jones\nannounced publicly that he was doing this?\nCox:\nNo.\nH.M.Jr:\nHe hasn't?\nWhite:\nAnd I am not sure that if he did the public\nwould understand it, but sooner or later\nsome of the committeemen would understand\nit, and it seems to me they can put you on\nthe defensive when I don't see any reason\nin the world why you should be, because if they\nneed any money later, you can make it up in\nother ways. The Lend-Lease Bill is broad\nenough 80 that you can take care of any of\ntheir subsequent requirements without being\nvulnerable to the slightest criticism --\nH.M.Jr:\nI am not vulnerable. I am not going to\nRegraded Uclassified\n228\n- 30 -\ngoing to fight over 8. hundred and thirty-\nfour million dollars. I say it is peanuts.\nWhite:\nThat is why it shouldn't --\nH.M.Jr:\nHarry, let's drop it. I mean, I am not\ngoing to - this is Jones' contribution, and\nhe has announced again in the Cabinet, what\nhe is doing, and this is his baby.\nNow, let's call a spade a spade. If we take\nit away from him, he is going to be sore,\nand he is going to put up a big fight. He\nis going to say we are doing this to dis-\ncredit him and all that, and he immediately\nhas something and begins to go to work\nagainst the whole thing, and that is what\nI have got in my mind.\nWhite:\nI thought the way you outlined it he was\ngoing to do it anyway, only he doesn't\ngive them dollars, he just gives them - he\njust gives them credit as part of the quid\npro quo, but everything he has done up to\ndate and everything he contemplates doing\nwill take place anyway.\nFoley:\nThat is right, the only thing he doesn't\ndo is give them dollars.\nH.M.Jr:\nWell, I will go over and see what he has\nand 8.8 soon as I come back, I will let you\nknow. I hope he has got it clearer in\nmind than I have.\nRegraded Uclassified\n229\nMarch 10. 1941\nsecretary Margesthen\nMr. Coderan\nthe following peragraphs not forth the functions performed by the treasury\nDepartment in the field of lisison between the incrious and Brittsh Governments:\nFINANCES\nUnion all arrangment suggested W the Treasury Department shortly after the ver\nbecke est is 1939 the Chanceller of the Ruchequer had the Beah of Regiant open a\nspecial assount with the Federal Reserve Deak of Dev Tert to be utilised esalusively\nfor wr yorchases in the United states. 20 was agreed that the Secretary of the\nfrequenty should have personal and confidential AGREES to those coverate. fince the\ncetting w of this arrangement the Federal Receive Tesk has provided the decretary\nweddly with full transcripts of the operations curried « under this special account.\nThe Secretary the knowe the excet total and sevenent of funds is the assount, includ-\ntag the identity of payees. the Federal Reserve Bank of New York charges BE countration\nfor carrying this account. As Fiscal Agent of the Treasury, the Federal Receive Test\nof New York also provides the Treasury vesitly with a statement showing all disburse-\nboth through the Britter Purchasing Commission and otherwise, sale from the\naccounts of the withsh deverment ml Bank of Regiond with the Federal Receive Beals\nof See Term. This gives is detail the secress of each funds. whether contre free\nsales of gaid or compities er from other credits. this analysis above total debite\nand credits and Government expenditures. the Treasury Department has\nfor reselving reports from Foreign Service Officers throughout the world chearer\nsold skipments to the United States are made. From the british Treasury efficials\nit obtaine is senfilmes such information as the Brittich have with respect to their\n- end foreign sold holdings, and particularly date as to the ment and location of\none belonging to the Brittch Government.\nIn the Summer of 1940 Mr Frederick Phillips. Under ferretary of the Britten\nTreasury, with when the Treasury has had also relations for the part several years.\n- to the United States for an exchange of views with this Treatury. Be returned\nagain to Revember 1940, and 10 00111 in Washington. Be has with de two Treasury\nexperis, ⑉ of then a specialist on statistics. Through senstent Maises with\nNr Proderisk Phillips and has assistants. including Mr. Pincest, the Financial\nof the Brittish Fabruary. the Treasury Le is a position to be mays currently\ninformet is regard to the British finescial position. the Brittsh Treasury efficials\nhere other dable or telephone Leadon whenever 99 require any special information.\nBroup this themael the treasury vas able so compile the extensive date cubmitted to\nCongress is semestion with the beare-head Bill.\nState 1934 the Treasury has availed stools of the cervices of all American Foreign\nService officer is bondsa to submit special reports upon financial and neastary nb-\nlease. Seah officer has also been used for linicen functions with the\ntruesay is leadon. Since the contug of str Proterisk Phillips and his accistants\nRegraded Uclassified\n230\n- 2\nRegraded Uclassified\n* w - mater. yes all of - Maters = be = performed in\nSHOULD\nM 6 result of enggrations w the treasury, working to conjemption with the\nsecurities and Inchange Complexion, the Chanseller of the Vachogner seet to the\nthisted States in the interest of 1939 s Brittich security expert be - the calo is\nthis country of dollar compities be which the Brittsh Covernment we taking title.\nThis representative continues to dispose of efficially comed compltties. carefully\nwrothing any operations which night adversely affect - market, solletting mach\nprofessional africe as may be desired, and keeping the Treasury currently inferset of\nMe transactions. Sevard mah ond, the security agent in Nov Term provides the\nTreasury. through the British lister is Washington, daily with ⑉ statement showing\ntotal sales of securities, inflesting the under of shares and the dollar procesis.\nand security - itented list w - end - of all committes mid each day.\nthe Nev York branch of a details talk corree as the depositary to the committee\nhandled unless this grates. At the beginning of this arrangment, the Zrittsh threesary\nprovided the American Treasury with & detailed list of all American securities regis-\ntopod with the Brittsh Government. the agent is New York Leases w the proce 6 etate-\neast of those securities which are rested from time to time, and has - a month since\nthe beginning of the present year given ont statements as to those compities which\nare completely liquidated.\nDIRBOT Investments\nM the regrestion of the freesury the Brittsh dovernment seet to this country at\nthe esd of Junuary. Six Must Peasonk, a director of the Dan't of Bagland and host of\nthe tesiding fire of During Brothers to eversee the liquidation of British direct\ninvortments is the United Rates. Assisted w the shaff of Mr. differe. the agree\nwho to disposing of listed compities. Sir Must Passeck has now begin Me efferts\nsevent ovaluating and selling british direct investments. Be has conferred clossly\nwith the freesury and the s. 8. 8. and his various propositions are having the utuly\nof the Treasury's General Counsel before being consumerated.\nPURCHASE\nUpon the Pressury's recommendation. the Prosident est up is November 1939 an\nInformal comittee w be the exclusive lisison body w this Deversment dealing with\nthe representatives of foreign Governments intervated is the yarchase of w materials\nin the Walted Mates. Representative of the Treasury. Ver and Revy Departmento -\nvistute this comittee, visit reports be the President through ⑉ of his Mataleire-\nsive accistants. the three primary purposes of this committee vero be study end\nafvice es the availability of the destred articles: to orrengo priorities; and be\ncoordinate purchases is such a namer as to roinse price sports that night result from\nand competitive purchasing. st has been the Treasury's policy $6 n.\n- the British devernment to ecmá to this sountry a qualified purchasing -\nsiscien be represent that Government is buying ver autorials. the Secretary Masclf\nhas close personal contact with the head of this consission.\n231\n- 3 -\nRegraded Uclassified\nREFEREE\nM the national defense program of the United Mates developed, together with\nvar, is because orident that increasing attention wast be given to Integrating within\nthe increasing desends of the within Repire for area, committen, end motorials of\npurchases with three of the United States. 90 this of the Treasury, through the\nrepresentative on the President's Statem Condition, bee vericed continuencly with the\nwith Purchasing wish the following general objectives: the actablishment\nof 4 wroten of prolimingly discress as orders to be placed 00 that they could be\nconsidered and noted upon in conjunction with Army and Have purchases of the -\nitems or from the - suppliers: the institution of a system, through the Advisory\nCommission to the Commetl of National Defense, of investigating alternative /\nof earply at as to avoid evacentrating Brittsh orders is have suppliers who vere\nalready overlbaded: the development with representatives of the British Furchasing\nCommission of long-range programs for various products to assist the Advisory\nComission to the Council of National Defense and the Any and May is determining\nproduction bettlemecks which would have to be remodied through additional plant\nexpensions the institution of standardisation conferences intended to consentrate\nUnited States and British orders en products of identional design # that additional\nespecity created to the with for their ordere would be useful to the Faited States\nis --- of morgeney.\nContinuous contact is solutained Y the freesury Department with the statistical\nstuff of the British Purchasing Commission. Information is obtained periodically\nfrom the Commission regarding purchases in the United States w the Brittich Repire\ninformate. Weekly statements are received convering is dollar volume the Atenised\npurchases w the British Empire deveraments through the Commission the Stenined\npurchases nado w these Governments with the knowledge of the Commission bet not\nthrough 190 facilities, and inquiries made w the Commission or with its invividge\nfor fature purchases. Similar statements are received showing. w Stenized contracts.\nthe dellar volume of deliveries made with respect to orders placed by Great Britain\nthrough the Commission. the date with respect to contracts for anidelivaries of\nsirplance and sirplane parts are specially detailed and neeful is connection with\nthe incrican defense program. Book week there 10 a report showing commitments to\nBritish Empire Governments for capital expenditures is the United States and for\nextressionary charges designed to empodite deliveries from American companies. A\nseathly statement shows the amount w Brittsh payments nade to date, the value of\norders to date, and the residual amount of balances ins, together with the actimated\nschedule of future payments.\nJul\nRough Secretary Draft - not presented & the 232 B\nMarch 10, 1961\n901\nthe Secretary\nFrom:\nMr. Young\nRe: Foreign Purchasing Operations\nThe work of the Likison Consittee can he divided into\nthree najer catagories (1) Readling all rentine requeste:\n(a) Reporting activities: and (8) Participation in defense\ncommittee activities.\n(1) Mandling All Routine July 1, 1940,\nthe Limison Committee has headled approximately 2000 requests\nfrom about twenty-one countries in eddition to the British and\nDaten Empires. of these, over 1000 were British, 700 Datch, and\nthe balance miscellansous. Practically all of these sountries\nfile requests on a reutine form known as Preliminary Negotialism\nReport, which is circulated through the Veg Department, the Newy\nDepartment, and the Office of Production Management. & constant\ncheck is also maintained on these requests with the State Depart-\nment and with Export Centrol. the elearance of a PER basically\nmeans as allocation of United States production capacity for a\nforeign order.\nIn addition to these requests a BAY system has been to\noperation for six vesks for the handling of foreign prierities.\nApproximately eighty-five priorities cases have already been\nhandled.\n(a) Reporting Activities.-The Research and Statistics\nDivision of the Treasury compiles in cooperation with the Linisen\nCommittee detailed reports on all phases of British Purchasing\noperations as well as on the operations of the Notherlands her\nchasing Commission, and Limisteves, Ima., a Datch Bast Indice\nexport firm. In addition to reutine periodic reports, special\nstudies are usde from time to time. they affort is being mate\nto compile in case spot a survey of foreign orders for ver materials\nplaced in the United States in order that the impact of such\norders on our economy my be adoquately studied and coordinated\nwith national production planning.\nRegraded Uclassified\n233\n- 2 -\n(3) Participation in Defense Committee Activities.-In\naddition to the foregoing the Maison Committee holds membership\nea the Advisory Committee of the Administrator of Report Gentral,\non the Export Control Sub-Ocumittee on legislation, Preclemations,\nall Regulations, the Joint Aircraft Commit-\ntoo, the Joint Aircraft Sub-Ocumittee on Standardisation and\nAllecation of Deliveries. and the Joint York Pleaning Condition.\nParticipation in these activities vas más measury in order that\nforeign orders night be coordinated with the defense program.\nIt should be noted that the office of the Treasury momber\nof the Linison Committee, which nov has a staff of twelve, is the\nadministrative office and the fecusing point for foreign purchas-\ning operations. no Wer, Navy, and Export Centrol members of the\nCommittee serve M contacts in the regrestive agencien for carrying\non the work of the Committee. Further, as the PER elearance yrs-\ncedure noted under (1) above was originally instituted at the request\nof Mr. Kandsan, a very close relationship has been vorked ont and\nmaintained between the activities of OPN and the Linison Committee.\nRegraded Uclassified\nHMD.\nBecause of The general\nfinancial picture Our your\nharry up\n(a) RFC. taking uses of\nBritish payments made\nfor plants\n(b) Was Dept. taking me,\nof material payments\nmail? by the British\n1 bl\nat Runch march 10th 1941.\n-\n235\nMarch 10, 1941\n2:16 p.m.\nH.M.Jr:\nHello.\nOperator:\nChairman Ecoles.\nH.M.Jr:\nHello, Marriner.\nMarriner\nEccles:\nOh, Henry\n.....\nH.M.Jr:\nI apologize but I was just all tied up in a\nknot this morning.\nE:\nWell, it isn't anything very special. I\nsuppose you saw it in the paper, but we got\nthat Chicago thing fixed up.\nH.M.Jr:\nNo, I did not see it in the paper.\nE:\nWell, I called you Saturday\n.....\nH.M.Jr:\nI know you did.\nE:\n.....\nand I just thought you'd like to know\nwhat the result was. After I last talked to\nyou we had another session over here with\nCummings - somewhat of a knock-down and drag-\nout - and the result of it was, however, we\ntold him where to head in in no uncertain terms\nand he went back and they finally elected Young,\nwho has been in the bank for nearly twenty years.\nH.M.Jr:\nI missed that.\nE:\nHello.\nH.M.Jr:\nHello.\nE:\nI say they went back and elected Young, who\nhas been in the bank for about twenty years, as\nPresident and Preston, they retained him as\nfirst vice president.\nH.M.Jr:\nI see.\nE:\nThey didn't go outside at all, and they have\ntwo men who are experienced and competent and\nI feel that can carry on.\n236\n- 2 -\nH.M.Jr:\nYeah.\n5:\nAnd they wouldn't go outside to any other\nDistrict; they stayed within the bank.\nH.M.Jr:\nWell, I congratulate you.\nE:\nNow, I think it really was the thing to do\nrather than to go outside and bring somebody\nin who is entirely unexperienced at this time.\nH.M.Jr:\nIt sounds like a very happy solution.\nE:\nThere is one other thing that I want to mention.\nI notice by the paper that you're in favor of,\nif they report you correctly, of getting more\nrevenue from taxation and less from borrowing;\nthat as much as two-thirds of our expenditures,\nif possible, from taxation looking to '42 and\nmore like a third from borrowing.\nH.M.Jr:\nWell, two-thirds from revenue. Yes, that's\ncorrect.\nE:\nWell, I was just going to say that I'm so\nthoroughly in accord with it that I was delighted\nto read that and I'd like to be able to do any-\nthing I can to - in connection with revenue -\nto support that kind of a policy with all of\nthe economic reasons that I can help to devise.\nH.M.Jr:\nWell, I can't tell you how pleased I am and\nI'll get in touch with you Thursday or Friday.\nE:\nWell, that's fine, because if I can help in\nconnection with the Hill and legislation or\nanything, I'll be glad to go right to the bat,\nbecause I think it's terribly important from\nan inflationary standpoint. Taxation I have\nalways felt is the one way, if there is a way,\nto deal with it.\nH.M.Jr:\nWell, nothing would please me more than to have\nyou - to work with you.\nE:\nWell, I just wanted to let you know the way I\nfelt about it.\nH.M.Jr:\nI'll be getting in touch with you.\nE:\nFine.\n237\nMarch 10, 1941\n2:45 p.m.\nRE AID TO BRITAIN\nPresent:\nMr. Kuhn\nMr. Bell\nMr. Cox\nMr. Gaston\nMr. Cochran\nMr. White\nMr. Foley\nMrs. Klotz\nH.M.Jr:\nWell, this is all extra confidential. I had a\nvery satisfactory talk to the President of the\nUnited States and I wanted to introduce my\nremarks by saying that the criticism that I\nhad of either Bell or Foley for not being\nprepared after talking with the President,\nI would say, was unjustified, because neither\nis he. (Laughter)\nFoley:\nWell, that is not 80 simple.\nH.M.Jr:\nI told you if I was not justified, I would tell\nyou so. Again, I can't overemphasize the\nnecessity for secrecy. Harold Smith came out\nas I went in, and when I saw the look on his\nface, I just burst out laughing. I said, \"You\nhad better go and get yourself 8 drink of\nwhiskey.\" He looked as though he had been\nthrough three keyholes. He says, \"You go on\nin and get yours.\"\nWhen I came in I was still laughing, and the\nPresident says, \"What is so funny?\" And I\nRegraded Uclassified\n238\n- 2 -\nsaid, \"The face on the Director of your\nBudget.\" So he says, \"I will let you enjoy\nyour lunch and give you the figure afterward.\"\nWhat they have got in mind is seven billion\ndollars for the Lend-Lease, most likely all\ncontractual money. Is that what you call it?\nFoley:\nYes, not dividing it up.\nH.M.Jr:\nDivided up into about seven items. He is having\nme over tomorrow when he sees the Finance people\nfrom the Hill.\nBell:\nAppropriations people?\nH.M.Jr:\nYes, and I will try and take you with me, if I\ncan.\nGaston:\nIs that supposed to be a year?\nH.M.Jr:\nJuly 1, '42.\nBell:\nAvailable until that time?\nH.M.Jr:\nWell, he was very much surprised that the\nleaders he saw this morning took it so well, 80\nI told him maybe we plowed the ground when we\nwent up with the debt limit and showed fifty-\neight and seven made sixty-five and everybody\nguessed it was for the Lend-Lease.\nBell:\nThey will know now that we knew what it was.\nH.M.Jr:\nSure, just the way I said the day after election\nwe needed sixty-five for the debt limit. (Laughter)\nWe have been lucky. So we always had this in\nmind.\nBell:\nYes, you dreamed it.\n239\n- 3 -\nH.M.Jr:\nOn the billion three hundred million, he\nevidently has made out his list, when he said\nhe would show me Wednesday. He is thinking -\nfor instance, he talked in terms of four cutters.\nWe will say they are worth two million new and\nworth a million now. And within five years\nafter the war is over, England should return\nus a million dollars worth - well, four cutters,\nfour million dollars worth of ships to be speci-\nfied at the time in United States value. If\nthey can build them for less, all right, but\nin United States value. He isn't interested\nin the Islands, he is not interested in their\nfleet. All of this is terribly confidential.\nHe is not going to make any deal on the seven\nbillion at this time. He hasn't thought it\nthrough. Amongst ourselves, he just hasn't\nthought it through.\nSo the only thing I am going to do is, I am\ngoing to order the stuff, see, and then we have\ngot to get it and talk about what we are going\nto do with it afterward, but he has nothing in\nmind. I am giving you the only example he gave\nme on the cutters, you see.\nHe said, \"Henry, you and I know 88 much as\nanybody what a cutter is worth. Maybe a two\nmillion dollar cutter is worth & million. Well,\nwe say within five years after the war is over\nwe want a million dollars of some kind of ship\nback.\"\nAs to the paper work and contract work and all\nthat, he expects it to be done in the Treasury.\nI mean, as to the forms. I didn't get it\nbecause I - I pressed him pretty hard. I don't\nthink he really had thought through who was going\nto place the value and who was going to do the\nswapping, you see. I am sure he hasn't, be-\ncause I really pressed him awfully hard. I\nRegraded Uclassified\n240\n4 -\nknow he is not thinking of these other things.\nI had an ample chance to tell him what we are\ndoing on the finances. I told him about the\n\"Harry White Plan\" for the hundred and thirty-\nfour million - no, I just mentioned a hundred\nand thirty-four million over there, that as\nfar as I knew we hadn't gotten anything yet\nand the Army and Navy five. And without my.\nasking he said, \"I will give you something,\"\nwhich is priceless. He wrote down, \"H.M.Jr:\nBecause of the general financial picture, can\nyou hurry up, A, RFC taking over British pay-\nments made for plants, plants on the line;\nB, War Department taking over material on the\nline, payments made by the British. FDR.\"\nThat is for me to show Jones and Stimson. I\ngot over to him that my understanding with\nthe British was that their direct investments\nand the sales from their securities was to be\nused for existing contracts, that any money\nthey got from the RFC and the War Department\ncould be used for British standard. He said,\n\"That is right, that is good.\"\nI got over the story about the Belgian gold and\nthe mental earmarking and got all that over.\nHe listened very closely, and I had plenty of\ntime. He didn't hurry me. I said, Now, my\nposition is, I am going to keep pressing the\nEnglish to sell their securities and invest-\nments to pay for their contracts.\" I told him\nI thought they had enough money to last until\nApril 1. He said he had always thought May 1,\nthat was the figure he carried in his mind.\nHe is going to give me 8. cruiser to go down\nto South Africa. So I don't - right now, I\ndon't see that there is much that we can do.\nThe appropriation bill, the drafting of it,\nis being handled by Harold Smith. You lawyers\n241\n5 -\nought to be concentrating on some kind\nof forms 80 that, for instance, if we\nlend-lease them four cutters, what kind\nof papers you are going to have. I think\nyou ought to concentrate on contracts.\nFoley:\nOscar has got an outline here that Harry\nHopkins asked for that might be helpful\nfor you to read. You could read it aloud,\nmaybe, to the rest of the people.\nH.M.Jr:\nHow long is it?\nCox:\nIt is very short. It shows the minimum\nlegal requirements.\nH.M.Jr:\nIs it more than & page?\nCox:\nYes.\nH.M.Jr:\nWell, I have got O'Neal outside. How long\nwill it take you to read it?\nCox:\nOh, I can tell you very briefly.\nH.M.Jr:\nTell it to me, and we will need & copy for\nthe files.\nCox:\nOn the minimum legal requirements, one is the\nPresident has to authorize either the Secretary\nof War, Navy or Treasury or whatever department\nis concerned to dispose of it. Secondly, he\nhas to have evaluation. Thirdly, you have to\nhave an agreement from the British Government\nthat they won't transfer this stuff to any\nother country without the consent of the\nPresident, and fourthly, you need a record\nfor a reporting element to Congress. Fifthly,\n242\n- 6 -\nan agreement to show what the financial\nterms are if it is anything other than a\ndisposition or 8 memorandum to agree later.\nWhat we have tried to do is to put in one\ndocument most of the steps so that the thing\nwill initiate from the Secretary of War and\nNavy saying that so and so equipment, giving\nit in detail, is available. The Chief of\nStaff --\nH.M.Jr:\nTalk a little louder. O'Neal is outside,\nof the Farm Bureau Federation. (Laughter)\nCox:\nThe Chief of Staff and the Chief of Naval\nOperations have been consulted, and they\nrecommend the transfer. Then the Secretary\nof War, Navy or Treasury signs. The Chief\nof Staff indicates that he has been consulted.\nThen the President approves. So that that one\ndocument will take all that part except the\nfinancial agreement. Then you ought to have\na note from the British Ambassador, including\nthese two other things, that property won't\nbe transferred without the consent of the\nPresident and if it is necessary to protect\nAmerican patent holders, the British Government\nwill do so if requested by the President or his\ndesignee to do 80.\nH.M.Jr:\nWhen did you get the request for this?\nCox:\nYesterday.\nH.M.Jr:\nCan I have a copy of that?\nCox:\nYou can have the original. A formal document\nis being typed now.\nH.M.Jr:\nWell, Bell, what do you see now after what I\nhave told you people what we can do?\nRegraded Uclassified\n243\n7\nBell:\nThat is all.\nH.M.Jr:\nYou are giving 8 copy to Bell?\nCox:\nYes.\nBell:\nI did & little work this morning on a form,\nBartelt and I did. I think you have got to\nwork out first whether you are going to have\nmaster agreements first and what is going to\nbe the evidence attached to that master agree-\nment. I was trying to work up something to be\nsigned by an Army officer and, say, a British\nofficer when this material comes off the line\nand it goes over to the British. There ought\nto be some document signed right then, it\nseems to me, as an invoice or something. Then\nthat ought to come some place as a formal part\nof this agreement.\nH.M.Jr:\nI got the President's approval, and I am telling\nHalifax tonight that by the end of the week if\nSir Edward Peacock doesn't show results, I will\nask for his recall. The President approved\nheartily. I have arranged to see Halifax either\ngoing or coming.\nBell:\nOn this seven billion dollars, you said it was\nall contractual authorization. Isn't there\ngoing to be a large sum of it in the form of\nan appropriation and the balance contractual?\nH.M.Jr:\nI meant all appropriation.\nBell:\nOh, you meant all appropriation?\nH.M.Jr:\nAll appropriation.\nBell:\nNo contractual authorization?\nH.M.Jr:\nAll appropriations, and then he is going to\nsee Sullivan and me Thursday on the tax bill.\nRegraded Uclassified\n244\n- 8 -\nDid you (Young) take care of Meigs?\nYoung:\nYes. He is going to send over his report,\nhis new aircraft report tonight or tomorrow.\nHe wanted to bring it himself. I suggested\nhe send it over and let us look at it first\nand then you could talk to him about it,\neither ask him questions about it or whatever\nyou decide to do with it, after we have a\nchance to go over it.\nH.M.Jr:\nThat is all right.\nGaston:\nThat will be the four cutters of the Modoc type?\nH.M.Jr:\nI imagine so. He evidently had read the thing\nand had those in mind, Herbert.\nGaston:\nYes.\nWhite:\nDo you think it would be helpful to have 8.\nmemorandum for yourself in which all the possible\nreasonable quid pro quos that you have been\ntalking about are listed with the various dis-\ncussions of pros and cons of each one, because\nsome of them that you have been talking about\nhave disadvantages which are not patent on the\nsurface. If he is going to make up his mind\nwithin the next couple of days what to ask for\nfor this billion three, it would be helpful.\nIf he is not, it doesn't matter.\nH.M.Jr:\nCan't do any harm by listening. From the way\nhe talked this morning, he is, but it doesn't\ndo any harm to listen. All right, gents.\nWhite:\nDid you want anyone from the Treasury to go\nto the SEC? They have got & meeting right\nnow. I didn't know whether you wanted anybody\nto participate in it or not. They are asking\nfor somebody right away. They have got the\n245\n- 9 -\nleaders of the two associations there and they\nhave called up twice.\nH.M.Jr:\nWhat do you people think?\nCochran:\nI would let them go ahead, I think, on it.\nWhite:\nI think he feels a little sore.\nCochran:\nHe telephoned at noon. Jerry and Purcell tell\nme that he had talked with the other Commissioners\nand they preferred that nothing be given out at\nthe press conference.\nH.M.Jr:\nI got that, but what about having somebody at\n10:00?\nWhite:\nHe called me up this morning. I referred him\nto Cochran. Then he called up again saying\nthey wanted somebody. I said I wasn't certain -\nat least I felt that I thought they ought to\ncarry the ball on that. He said, \"Well, the\nleast you can do is send somebody.\"\nH.M.Jr:\nI think we should have somebody over there.\nYou had better go, Harry.\nWhite:\nI thought of Cairns.\nH.M.Jr:\nAll right, Caims.\n246\n3/12'41\n9:55 a.m.\nMiss Chauncey:\nMr. Cox says that there\nis an enclosure for \"(3)\", but he\nwill have to get it (he doesn't now\nhave and hasn't yet had) and when\nhe receives it he, Cox, will send\nto you.\nAs I told you yesterday,\nthis was written again in the after-\nnoon of the 10th. They are making\nanother run of the second draft and\nwill send the original copy of the\nrewrite to you. The first original\nof the Second Draft was given to\nHarry Hopkins by Mr. Cox.\nHM\n1\n247\n3-10-41\nfirst drest\nMinimum Legal Steps Required To Be Taken\nIn Disposing of Defense Articles\nUnder H.R. 1776\nThe following minimum legal steps are required to be\ntaken under H.R. 1776:\n1) An authorization by the President to the\nSecretary of War, the Secretary of the Navy,\netc., to dispose of the defense articles;\n2) A valuation of the defense articles trans-\nferred to Britain, etc.\n3) A short overall representation by the British\nAmbassador, etc., that he agrees on behalf of\nhis government that every contract or agree-\nment made for the disposition of defense arti-\ncles or defense information shall be deemed to\ninclude a clause that His Majesty's Government\nundertakes that it will not, without the con-\nsent of the President or someone designated by\n248\n- 2 -\nhim for that purpose, transfer title to or\npossession of such defense articles or in-\nformation or permit its use by anyone not\nan officer, employee or agent of the British\nGovernment. The note from His Majesty's\nAmbassador should also contain a representa-\ntion that, where, as a result of the transfer\nto his Government of defense articles or de-\nfense information, it is necessary to protect\nfully the patent rights of American citizens,\nit will do so when so requested by the Presi-\ndent or his designee.\n4) For record purposes, it should be indicated\nthat the Chief of Staff or the Chief of Naval\nOperations, or both, have been consulted in\nconnection with the disposition of defense\narticles obtained out of appropriations made\nbefore H.R. 1776 is passed.\nRegraded Uclassified\n249\n- 3 -\n5) For record purposes, and in order to make\nthe necessary reports to the Congress and\nthe Administrator of Export Control, a rec-\nord should be kept of the defense articles\nand defense information disposed of under\nthe Bill, showing the quantities, character,\nvalue, terms of disposition, and destination\nof the articles and information exported.\n6) If the defense articles or defense information\nare to be disposed of by gift, no separate\nagreement is required to embody the financial\nterms. If it is desired to cover the finan-\ncial terms, an agreement deing so will be neces-\nsary.\n(1), (2), (4), and (5).\nAs a practical matter, it may be desired to have the\nproposal to dispose of the defense articles come originally\nfrom the Secretary of War, the Secretary of the Navy, or the\nRegraded Uclassified\n250\n- 4 -\nhead of the department or agency concerned.\nThus, for example, if it is desired to provide Britain\nwith ten mosquito boats, the Secretary of the Navy might\nprepare & memorandum listing such boats, giving their value,\nand stating that, in his opinion and in the opinion of the\nChief of Naval Operations, their disposition to Britain would\nbe in the interests of our defense.\nThe President could then indicate his approval on such\na memorandum.\nA memorandum of this type would, therefore, cover in one\nmotion the steps (1), (2), (4), and (5).\nIn the interests of reducing the number of steps re-\nquired, there is annexed hereto & form of such a memorandum\nwhich may be used.\n(3)\nAnnexed is a form of note which the British Ambassador\ncan send to the Secretary of State.\nRegraded Uclassified\n251\n- 5 -\n(6)\nAny such agreement will, of course, be dependent on\nwhat kind of consideration, if any, the United States Govern-\nment wishes to obtain. Once this major policy decision is\nmade, the agreement can be drafted fairly quickly. Its\nnegotiation with and signature by the British may, of course,\nrequire some time, depending on the kind of property that is\nintended to be conveyed.\nIf speed is desired, it is possible to enter into a\nmemorándum to agree, leaving the detailed terms to further\nnegotiation.\nRegraded Uclassified\n252\nNAVY DEPARTMENT\nDisposition Under the Act of March 12, 1941,\nof Defense Articles and Defense Information\nProcured from Appropriations Made Prior to\nThat Act.\n(1) The defense of Great Britain is vital to the defense\nof the United States.\n(2) The effect of the recommended transfer, annexed hereto,\nupon the resources of the United States Navy has been investi-\ngated in the light of our national defense.\n(3) The Chief of Naval Operations has been consulted in\nconnection with the recommended transfer.\n(4) The defense articles and defense information set\nforth in the annexed schedule have been valued in accordance\nwith the provisions of the Act of March 12, 1941.\n(5) It will be in the interests of our national defense\nto transfer such defense articles and defense information, and\nit is 80 recommended.\nSecretary of the Navy.\nChief of Naval Operations.\nApproved:\nThe President of the United States.\n253\nDefense Articles and Defense Information\nType of\nTerms of\nDefense Articles\nQuantity\nValue\nDisposition\nDestination\nType of\nTerms of\nDefense Information\nQuantity\nValue\nDisposition\nDestination\nRegraded Uclassified\n254\nfirst at to and zids 51.0\nMAR 10\npersonal\nMinimum Legal Steps Required To Be Taken\nIn Disposing of Defense Articles\nUnder H.R. 1776\nThe following minimum legal steps are required to be\ntaken under H.R. 1776:\n1) An authorization by the President to the\nSecretary of War, the Secretary of the Navy\netc., to dispose of the defense articles;\n2) A valuation of the defense articles transferred\nto Britain, etc.\n3) A short overall representation by the British\nAmbassador, etc., that he agrees on behalf of\nhis government that every contract or agree-\nment made for the disposition of defense arti-\ncles or defense information shall be deemed to\ninclude a clause that His Majesty's Government\nundertakes that it will not, without the con-\nsent of the President or someone designated by\nRegraded Uclassified\n255\n- 2 -\nhim for that purpose, transfer title to or\npossession of such defense articles or in-\nformation or permit its use by anyone not\nan officer, employee or agent of the British\nGovernment. The note from His Majesty's\nAmbassador should also contain a representa-\ntion that, where, as a result of the transfer\nto his Government of defense articles or de-\nfense information, it is necessary to protect\nfully the patent rights of American citizens,\nit will do so when so requested by the Presi-\ndent or his designee.\n4) For record purposes, it should be indicated\nthat the Chief of Staff or the Chief of Naval\nOperations, or both, have been consulted in\nconnection with the disposition of defense\narticles obtained out of appropriations made\nbefore H.R. 1776 is passed.\nRegraded Uclassified\n256\n3 -\nΓ\n5) For record purposes, and in order to make\nthe necessary reports to the Congress and\nthe Administrator of Export Control, a reo-\nord should be kept of the defense articles\nand defense information disposed of under\nthe Bill, showing the quantities, character,\nvalue, terms of disposition, and destination\nof the articles and information exported.\n6) If the defense articles or defense information\nare to be disposed of by gift, no separate\nagreement is required to embody the financial\nterms. If it is desired to cover the finan-\ncial terms, an agreement doing so will be neces-\nsary.\n(1), (2), (4), and (5).\nAs a practical matter, it may be desired to have the\nproposal to dispose of the defense articles come originally\nfrom the Secretary of War, the Secretary of the Navy, or the\nRegraded Uclassified\n257\n4\nhead of the department or agency concerned.\nThus, for example, if it is desired to provide Britain\nwith ten mosquito boats, the Secretary of the Navy might\nprepare & memorandum listing such boats, giving their value,\nand stating that, in his opinion and in the opinion of the\nChief of Naval Operations, their disposition to Britain would\nbe in the interests of our defense.\nThe President could then indicate his approval on such\na memorandum.\nA memorandum of this type would, therefore, cover in one\nmotion the steps (1), (2), (4), and (5).\nIn the interests of reducing the number of steps re-\nquired, there is annexed hereto a form of such a memorandum\nwhich may be used.\n(3)\nThe note which the British Ambassador sends to the\nSecretary of State should conform to the two sections 4 and\n7 of the Act of March 12, 1941.\nRegraded Uclassified\n238\n- 5 -\n(6)\nThe Financial Terms\nAny agreement on the financial terms will, of course,\nbe dependent on what kind of consideration, if any, the\nUnited States Government wishes to obtain. Once this major\npolicy decision is made, the agreement can be drafted fairly\nquickly. Its negotiation with and signature by the British\nmay, of course, require some time, depending on the kind of\nproperty that is intended to be conveyed.\nIf speed is desired, it is possible to enter into B.\nmemorandum to agree, leaving the detailed terms to further\nnegotiation.\nOSC:aja:djb\n3/10/41\nRegraded Uclassified\n259\nMAR 10 1941\n.....\n(1) The defense of Great Britain is vital to the defense\nof the United States.\n(2) The effect of the recomended transfer, annexed hereto,\nupon the resources of the United States Mary has been investi-\ngated in the light of our national defense.\n(3) The Chief of Haval Operations has been consulted in\nconnection with the recommended transfer.\n(4) The defense articles and defense information set\nforth in the annexed schedule have been valued in accordance\nwith the provisions of the Act of March 12, 1941.\n(5) It will be in the interests of our national defense\nto transfer such defense articles and defense information, and\nit is BO recommended.\nSecretary of the Havy.\nChief of Havel Operations.\nApproved:\nThe President of the United States.\nRegraded Uclassified\n260\nNAVY DEPARTMENT\nDefense Articles and Defense Information\nRecommended for Transfer Under the Act of\nMarch 12, 1941.\nType of\nTerms of\nDefense Articles\nQuantity\nValue\nDisposition\nDestination\nType of\nTerms of\nDefense Information\nQuantity\nValue\nDisposition\nDestination\nRegraded Uclassified\n261\nMarch 10, 1941\n3:35 p.m.\nH.M.Jr:\nHello.\nClaude\nWickard:\nAre you going to come over and eat lunch with\nme Thursday?\nH.M.Jr:\nOh, Thursday 18 a lifetime off.\nW:\nIs what?\nH.M.Jr:\nThat's too far off.\nW:\nIt is. Well, you said something about we\nwere going to lunch this week and I'm just\n.....\nH.M.Jr:\nAre you busy Wednesday?\nW:\nYes, I am.\nH.M.Jr:\nAll right, Thursday.\nW:\nThursday.\nH.M.Jr:\nNow, here's the only trouble, Claude, what am\nI going to tell your friend Bankhead between\nnow and Thursday.\nW:\nDo you have to tell him between now and then?\nH.M.Jr:\nWell, not unless he calls me up.\nW:\nHere's what - I talked to the Bose about his\nproposition; that is, you know, very generally\nand the Boss has agreed to see Bankhead and\nFulmer.- Fulmer is chairman of the House Committee\non Agriculture - the last of this week. Now, I\ndon't know what the Boss is going to say but\nin some ways, what the Boss said the other day\nto me, looks like that he might go along in\ngeneral with Bankhead, but he's not going to,\nI know, approve the high loans - loans as high,\nat least, as Bankhead is talking about.\nH.M.Jr:\nWell, I can sit tight here until something\nhappens. Your friend, Ed O'Neal, just left\nhere.\nW:\nHe did?\n262\n- 2 -\nH.M.Jr:\nYeah.\nW:\nDid he sell you a bill of goods?\nH.M.Jr:\nWell, he was on the director - farm director\nfor the Federal Reserve.\nW:\nOh.\nH.M.Jr:\nThat's what he came for.\nW:\nHe has a candidate?\nH.M.Jr:\nThree.\nW:\nHe has three.\nH.M.Jr:\nYeah. Want to know who they are?\nW:\nYeah.\nH.M.Jr:\nWell, one is Bill Myers, Earl Smith, and\nR.E. Short.\nW:\nOh, none of them are our kind of people, are\nthey, unless it would be Short.\nH.M.Jr:\nI don't know.\nW:\nWhat about Myers?\nH.M.Jr:\nWell, he used to be all right; I don't know\nwhere he was in the last election.\nW:\nWell, he wasn't on our side.\nH.M.Jr:\nI see. Well, I'm only for fellows who voted\nfor Roosevelt three times.\nW:\nYeah, that's good. Now you and I are getting\nsome place.\nH.M.Jr:\nWhat do you mean you and I? Good God! where do\nyou think I've been the last 24 years?\nW:\nWell, (laughs), there are a lot of other people\nwho don't remember that far back.\n263\n- 3 -\nH.M.Jr:\nWell, don't forget I rode with him on the day\nbefore election five times - twice for governor\nand three times for President.\nW:\nWell, all right.\nH.M.Jr:\nIn an open car where everybody could see me.\nW:\nWell, listen, I belong to the B.C. Club too\nbefore Chicago.\nH.M.Jr:\nYeah, five times I've campaigned for him.\nW:\nWell, now listen, let's sew that thing up\nlike you said now. We're not going to let\nany of these fellows - and I doubt whether\nany of these fellows mentioned or not, unless\nit would be Short - could qualify.\nH.M.Jr:\nWell, you get busy. My candidate is Campbell,\nof Montana.\nW:\nThe hell you did.\nH.M.Jr:\n(Laughs). That's my fellow, Campbell of\nMontana.\nW:\nWell, I'll shoot you.\nH.M.Jr:\nSay, you've got to get up early. I think he's\na swell guy.\nW:\nYou do?\nH.M.Jr:\nSure, American agriculture representative at\nthe Court of St. James.\nW:\n(Laughs).\nH.M.Jr:\nHeh, heh, heh.\nW:\nAll right. Well, I'll talk to you about that\nThursday. When is that thing going to be decided?\nH.M.Jr:\nOh, I don't know.\nW:\nWho else - who have you got in mind - anybody?\n264\n- 4 -\nH.M.Jr:\nNobody. We stick strictly to Treasury matters.\nW:\nYeah. (Laughs). Oh, yes, I notice you've been\ndoing that.\nH.M.Jr:\nYeah.\nW:\n(Laughe).\nH.M.Jr:\nAll right, Claude.\nW:\nLast week you did an awful good Job.\nH.M.Jr:\nAll right, Claude.\nW:\nThanks, and I'll see you Thursday. You come\nover here Thursday.\nH.M.Jr:\nI will.\nW:\nAll right.\nH.M.Jr:\nGood-bye.\nW:\nSay, one other thing. You notice the President\nmade a point or two about getting appropriation\nlanguage fixed up along the lines that he talked\nabout in Cabinet.\nH.M.Jr:\nYeah.\nW:\nI wonder if it wouldn't be a good idea for one\nor two of our men to come over and see your\nman Cox to see about that appropriation language.\nH.M.Jr:\nYou'd better go see the Director of the Budget.\nHe's got it.\nW:\nBetter go 800 him?\nH.M.Jr:\nYeah.\nW:\nWell, I didn't know. Is he working on the\nlanguage now?\nH.M.Jr:\nYeah, he's got it.\nW:\nWell, all right. I'll call up Harold.\n265\n- 5\nH.M.Jr:\nYeah, you call up Harold.\nW:\nWho's doing the work on it. Do you know?\nH.M.Jr:\nIt's all in his shop.\nW:\nI didn't know who he had assigned to it is\nthe only thing. I'll call him up. Thanks.\nH.M.Jr:\nRight. Thank you.\n266\nMarch 10, 1941\nMr. D. W. Bell\nSecretary Morgenthau\nPlease keep after me to give Senator Bankhead\nan answer. I think you and I ought to talk with the\nSecretary of Agriculture and find out where he stands.\n3/11/11\nTunch tommonw.with\nSecy. Nuckard-\nRegraded Uclassified\n267\nMarch 10, 1941\nThis evening on my way to the Australian Legation, I\nstopped in to see Lord Halifax. He asked me to come up for\n& minute, and I told him that after discussing the matter\nwith the President at lunch I felt that if Sir Edward Peacook\ndid not produce some results on the sale of English-owned\nsecurities in this country by the end of the week, I wished\nthey would put somebody else in charge.\nHalifax's eyebrows went up, indicating amazement. I\nthen explained to him that the President would be sending up\nan appropriation message within a day or so, and we then would\nhave to testify. I said, \"I don't know whether you have read\nmy testimony, but one of the questions they are going to ask\nme is, 'What about the direct investments?' and I will have to\nsay that you haven't done a thing.\"\nI told Halifax that this isn't like B. bolt coming out\nof a clear sky because Cochran had told Pinsent and Phillips\nhow upset I was about a week ago, and I was sure they repeated\nthe conversation to Halifax. He gave me no indication 8.8 to\nwhether they did or didn't tell him, so I repeated to him,\n\"They must have told you how I felt.\" Then I said, \"As &\nmatter of fact, Purvis and Phillips are 80 upset about this\nthing that they went up to New York the other day to see whether\nthey could not push Peacock to do something.\"\nLord Halifax was quite upset and I said, \"After all, I\nthink you know by now that I am a friend of England's, and\nthis request that I am making is to save me the embarrassment\nof having to disclose that you have done nothing.\" I said,\n\"You appear before Parliament every day and we only go up to\ntestify occasionally, but then they concentrate all their\nfire on us at that time.\"\nThen Halifax made 8. remark which always shocks me when I\nhear it. He said, \"Well, you know Sir Edward Peacock has\nvery powerful friends in England and he is very close to the\nGovernor of the Bank of England and has strong underlying\npolitical backing.\" In other words, they are afraid of him.\nHe said, \"Oh, if we withdraw him, the reaction back home would\nbe very bad.\nRegraded Uclassified\n268\n- 2 -\nWell, all I can say is, \"How about the reaction in this\ncountry?\" But the point that gets me is that they always\nthink in terms of political affiliations and not in terms\nof winning the war. Halifax tried his best to get me to\nback down, but I gritted my teeth and I did not give an inch.\nThen he told me that he was going to have Purvis, and I think\nhe said either Phillips or Pinsent, at the Embassy at 10:30\ntonight, and he asked me whether I wanted him to discuss this\nwith them. I said, \"I most certainly do.\" He said, \"Well,\nI understand that Peacock has tried every way possible to\nsell these things,\" and I said, \"Now look. He could consummate\na sale and leave the ultimate price to some kind of arbitration,\nand by doing this, it would show that England intends to go\nthrough with this thing.\"\nDriving over to the Legation in the car, Halifax said\nthat he appreciated my frankness. I told him that I hoped\nI hadn't been too frank but I didn't know any other way of\npresenting the matter. After dinner when we got up to leave\nhe asked me what time I left in the morning as he would like\nto see me. I told him I was afraid that I left too early\nbecause I usually leave the house around 8:30. Then he wanted\nto know what time I got home in the evening, and I told him\naround 5:30 or 6:00. Well, he said that he would phone me\nduring the day if he had anything and would try to arrange to\nsee me. I said, \"Fine.\"\n269\nH MORGENTHAU JR PERSO NAL\nMARCH 10, 1941\n(RADIO CORPORATION OF AMERICA)\nV AVERILL HARRIMAN PASSENGER\nPANAIRCO\nLISBON PORTUGAL\nWISH YOU GOOD LUCK AND SUCCESS YOUR MISSION REGARDS\nHENRY MORGENTHAU JR\nRegraded Uclassified\n3/10/+1 10mg\n270\nRegraded classified\nMarch 10, 1941.\nSecretary Morgesthen\nMr. Cochran\n(abridged by 7. 1.)\nThese are the charmels through which the Treasury obtains detailed inform-\ntion about the British financial position:\nPINANCES\n(1) Ever since the Fall of 1939 the Secretary has had confidential access to\nthe accounts of the Bank of England's special fund in the Federal Recerve Bank of\nNew York for the purchase of war materials here. The Federal Reserve Bank reports\nto his weekly as to the exact total and novement of funds in this account, includ-\ning the identity of payees.\n(2) The Federal Reserve Bank supplies the Treasury weekly with & statement\nshowing all disbursements, through the British Purchasing Commission and otherwise,\nmde from the accounts of the British Government and the Bank of England with the\nPederal Reserve Bank of New York, This gives in detail the sources of sush funda,\nwhether coming from sales of gold or securities or from other credite.\n(3) Foreign Service Officers report to the Treasury whenever gold shipmente\nto the United States are made.\n(4) Constant lisison with Sir Frederick Phillips and his assistants in Wash-\nington has enabled the Treasury to obtain such information as the British have No\ngarding (a) their om and foreign gold holdings, (b) the amount and location of gold\nbelonging to the British Government, and (c) any special information we my require.\nThe Treasury is kept informed daily of the activities of the security expert\nsent here by the British Government to manage the sale of efficially owned securities.\nAt the start of this arrangement, the British provided the American Treasury with &\ndetailed list of all American securities registered with the British Government. The\ndaily report shows, (1) total sales of securities, indicating the maber of shares\nand the dollar proceeds, and (2) an itemized list by name and amount of all secur-\nities sold each day.\nDIRECT EVENTS\nThe Treasury and the 8. L c. are in close touch with Sir Edward Pascook, who\nwas sent to this country at the end of January to eversoe the liquidation of British\ndirect investments in the United States. His various proponitions are studied w the\nTreasury's General Counsel before being consumented.\nCOMMITMENTS\nFor the past two months the British Purchasing Commission has sent the Treasury\n& daily list of the contracts it would like to place. Bach such list is counter-\nFlood by Sir Frederick Phillips to indicate that funds are available. The British\nare not free to proceed with these contracts witil they have the approval of the\nSecretary of the Treasury in each case.\n271\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE Karch 10, 19k1\nSecretary Morgenthau\nTO\nFROM\nMr. Coohran\nThe following paragraphs set forth the functions performed by the Treasury\nDepartment in the field of liaison between the American and British Governments:\nPINANCES\nUnder an arrangement suggested by the Treasury Department shortly after the war\nbroke out in 1939 the Chancellor of the Exchequer had the Bank of England open a\nspecial account with the Federal Reserve Bank of New York to be utilized anclusively\nfor var purchases in the United States. It was agreed that the Secretary of the\nTreasury should have personal and confidential access to these accounts. Since the\nsetting up of this arrangement the Federal Reserve Bank has provided the Secretary\nweekly with full transcripts of the operations carried on under this special account.\nThe Secretary thus knows the exact total and movement of funds in the account, includ-\ning the identity of payees, The Federal Reserve Bank of New York charges no commission\nfor carrying this account. As Fiscal Agent of the Treasury, the Federal Reserve Bank\nf New York also provides the Treasury weekly with a statement showing all disburse-\nments, both through the British Purchasing Commission and otherwise, made from the\naccounts of the British Government and Bank of England with the Federal Reserve Bank\nof Sev York. This gives in detail the sources of such funds, whether coming from\nsales of gold or securities or from other credits. This analysis shows total debits\nand credits and Government expenditures. The Treasury Department has arrangements\nfor receiving reports from Foreign Service Officers throughout the world whenever\ngold shipments to the United States are made. From the British Treasury officials\nit obtains in confidence such information as the British have with respect to their\nown and foreign gold holdings. and particularly data as to the amount and location of\ngold belonging to the British Government.\nIn the Summer of 1940 Sir Frederick Phillips. Under Secretary of the British\nTreasury, with whom the Treasury has had close relations for the past several years,\ncame to the United States for an exchange of views with this Treasury. He returned\nagain in November 1940, and is still in Washington. He has with his two Treasury\nexperts, one of them a specialist on statistics. Through constant lisison with\nCounselor of the British Embasay, the Treasury is in R position to be kept currently\nSir Prederick Phillips and his assistants. including Mr. Pinsent, the Financial\ninformed in regard to the British financial position. The British Treasury officials\nhere either cable or telephone London whenever we require any special information.\nThrough this channel the Treasury vas able to compile the estensive date submitted to\nCongress in connection with the Lease-Lend Bill.\nervice Officer in London to submit special reports upon financial and monetary mb-\nSince 1934 the Treasury has availed itself of the services of an American Foreign\nJects. Such officer has also been used for liaison functions with the British\nTreasury in London. Since the coming of Sir Frederick Phillips and his assistants\nRegraded Uclassified\n272\nto the United States, practically all of the linison work has been performed in\nWashington.\nSECURITIES\nis a result of suggestions made by the Treasury, working in conjunction with the\nSecurities and Exchange Commission, the Chancellor of the Exchequer sent to the\nUnited States in the Autumn of 1939 a British security expert to manage the sale in\nthis country of dollar securities to which the British Government was taking title.\nThis representative continues to dispose of officially owned securities, carefully\navoiding any operations which might adversely affect our market, soliciting such\nprofessional advice as may be desired, and keeping the Treasury currently informed of\nhis transactions. Toward such end, the security agent in New York provides the\nTreasury. through the British Embasy in Washington, daily with one statement showing\ntotal sales of securities, indicating the number of shares and the dollar proceeds,\nend secondly an itemized list by name and amount of all securities mold each day.\nThe New York branch of a Canadian bank serves as the depositary for the securities\nhandled under this system. At the beginning of this arrangement, the British Treasury\nprovided the American Treasury with a. detailed list of all American securities regis-\ntered with the British Government. The agent in New York issues to the press a state-\nment of those securities which are vested from time to time, and has once & month since\nthe beginning of the present year given out statements as to those securities which\nare completely liquidated.\nDIRECT INVESTMENTS\nAt the suggestion of the Treasury the British Government sent to this country at\nthe end of January, Sir Edward Peacook, a director of the Bank of England and head of\nthe banking firm of Baring Brothere to oversee the liquidation of British direct\ninvestments in the United States. Assisted by the staff of Mr. Gifford, the agent\nwho is disposing of listed securities, Sir Edward Peacock has now begun his efforts\ntoward ovaluating and selling British direct investments. He has conferred closely\nwith the Treasury and the S. B. C. and his various propositions are having the study\nof the Treasury's General Counsel before being consummated,\nPURCHASES\nUpon the Treasury's recommendation, the President set up in November 1939 an\ninformal committee to be the exclusive lisison body of this Government dealing with\nthe representatives of foreign Governments interested in the purchase of war materials\nin the United States. Representatives of the Treasury. War and Kavy Departments con-\nstitute this committee, which reports to the President through one of his Administra-\ntive assistants. The three primary purposes of this committee were to study and\nadvise on the availability of the desired articles; to arrange priorities; and to\ncoordinate purchases in such a manner as to reduce price upsets that might result from\ndisorganised and competitive purchasing. It has been the Treasury's policy to en-\ncourage the British Government to send to this country a qualified purchasing com-\nmission to represent that Government in buying var materials. The Secretary himself\nhas close personal contact with the head of this commission.\nRegraded Uclassified\n273\nNATIONAL DEFENSE\nAs the national defense program of the United States developed, together with\nthe increasing demands of the British Empire for arms, ammunition, and materials of\nwar, it became evident that increasing attention must be given to integrating British\npurchases with those of the United States. To this end the Treasury, through its\nrepresentative on the President's Liaison Committee, has worked continuously with the\nBritish Purchasing Commission with the following general objectives: The establishment\nof 8 eystem of preliminary clearance on orders to be placed 80 that they could be\nconsidered and acted upon in conjunction with Army and Navy purchases of the same\nitems or from the same suppliers; the institution of a system, through the Advisory\nCommission to the Council of National Defense, of investigating alternative sources\nof supply 60 as to avoid concentrating British orders in large suppliers who were\nalready overloaded; the development with representatives of the British Purchasing\nCommission of long-range programs for various products to assist the Advisory\nCommission to the Council of National Defense and the Army and Havy in determining\nproduction bottlenecks which would have to be remedied through additional plant\nexpansion: the institution of standardization conferences intended to concentrate\nUnited States and British orders on products of identical design 80 that additional\ncapacity created by the British for their orders would be useful to the United States\nin case of emergency.\nSTATISTICS\nContinuous contact is maintained by the Treasury Department with the statistical\nstaff of the British Purchasing Commission. Information is obtained periodically\nfrom the Commission regarding purchases in the United States by the British Empire\nGovernments. Weekly statements are received convering in dollar volume the itemised\npurchases by the British Empire Governments through the Commission the itemised\npurchases made by these Governments with the knowledge of the Commission but not\nthrough its facilities, and inquiries made by the Commission or with its knowledge\nfor future purchases. Similar statements are received showing, by itemised contracts,\nthe dollar volume of deliveries made with respect to orders placed by Great Britain\nthrough the Commission. The date with respect to contracts for amideliveries of\nairplanes and airplane parts are specially detailed and useful in connection with\nthe American defense program. Each week there is a report showing commitments by\nBritish Empire Governments for capital expenditures in the United States and for\nextraordinary charges designed to expedite deliveries from American companies. A\nmonthly statement shows the amount of British payments made to date, the value of\norders to date, and the residual amount of balances due, together with the estimated\nschedule of future payments.\nRegraded Uclassified\nTreasury Department\n274\nDivision of Monetary Research\nDate April 3, 1941\n19\nSecretary Morgenthau\nApplying a new formula for estimating silver\nproduction in the United States (devised by\nMr. Gunter of this Division) our estimate is that\nthe production of silver in the United States in\n1941 will be 74 million ounces (U.S. produced\nabout 72 million ounces in 1940) provided no\ndrastic changes occur in the international situa-\ntion.\nUnder circumstances of an expanding busi-\nness activity, such economic justification as\nmay have existed for the purchase of domestic\nsilver has disappeared. Even the political con-\nsideration, which in the past has been decisive,\nhas, I believe, greatly diminished in importance.\nI am wondering whether the time is not ap-\npropriate to initiate a move to alter existing\nlegislation to return to the discretionary price\nfor domestic silver (by Presidential Proclamation)\nso that the price paid for domestic silver can be\nreduced. The financial and business community\nwould be pleased and the public would interpret\nit as additional protection against inflation.\nMR. WHITE\nBranch 2058 - 210\n275\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE March 10, 1941\nMr. White\nTO\nFROM\nJohn 11. Gunter\nSubject: A new equation for ostimating silver production in\nthe United States.\nIn order to facilitate the prediction of silver production\nin the United States, an estimating equation was developed on\nthe basis of the data for the period from 1924 through 1940.\nThe fundamental problem in formulating a reliable equation for\nestimating silver production is to determine what factors are\nmost closely associated with silver production. It is also\nnecessary that the magnitude of these factors be predictable\nwith considerable accuracy 50 that a reliable forecast can be\nmade.\nThere is no great difficulty in selecting the factors\nclosely associated with the production of silver. Quite ob-\nviously, the output of silver is likely to vary with the price\nof silver, the production of copper, lead, and sinc, and indus-\ntrial production. Calculation of the coefficients of correlation\nfor each of these variables supports the expectation of their\nclose association with silver production. Over the whole period\nfrom 1924 to 1940, the coefficient of correlation of the price\nof silver and silver production is .81, of copper production\nand silver production, .85, and of lead production and silver\nproduction, .60. A comprehensive variable, industrial production,\nwas considered because such a variable is easier to predict than\na simple variable, such as copper production. Here a coefficient\nof .86 was obtained. Apparently the price of silver, copper pro-\nduction and industrial production are worthy of further considera-\ntion for our purposes.\nFor convenience, the following symbols were assigned the\nvarious variables:\nX₁\n= silver production in million ounces\nX₂\n= price of silver (Mint price)\n=\nIg\ncopper production (Federal Reserve\nindex)\n= lead production (Federal Reserve\nI₄\nindustrial index) production (Federal\nI5\nReserve index)\n276\nDivision of Monetary\n- 2-\nResearch\nSimple correlations of these factors with silver production are as\nfollows:\n=\n*12\n.81\n=\nr13\n.85\n=\nI4\n.60\n=\nr15\n.86\nThe next step in the formulation of an estimating equation is\nto determine how these variables act jointly, as shown by multiple\ncorrelations. Multiple correlations involving X₁, X2, X3, and X₁,\nX₂, X5 were calculated. The results are as follows:\nR1.23\n=\n.97\nR1.25\n=\n.91\nThe estimating equations are:\nI.\nX₁\n=\n-2.043\n+\n.5273X₂\n+ .2425%3\nII.\nX₁\n= -21.985\nt\n.4185X2\nt\n.5639X5\nThe probable range of error as shown by the standard errors of estimate\nare:\nSI\n=\n± 3.65\nSII\n11\n+ 6.52\nSuperior results with copper production and the price of silver indicate\nthat Equation I is preferable for our purposes, in spite of the fact\nthat greater difficulty must be experienced in forecasting copper pro-\nduction than in forecasting industrial production.\nAnother aspect of the problem was considered without satisfactory\nresults. An examination of the data reveals that there is apparently\nsome tendency for silver production to become more inelastic at higher\nRegraded Uclassified\n277\nDivision of Monetary\n- 3 -\nResearch\nprices. Attempts to allow for this tendency were made by substi-\ntuting roots, logarithms, and exponents for the arithmetic price\nof silver in these equations. The question will require additional\nconsideration in a future study of the effect of changes in the\nprice of silver on production.\nA significant improvement in our results was obtained by lagging\nthe effect of silver prices on silver production. On theoretical\ngrounds a distributed lag seemed reasonable. It is normal to expect\nthat a period of gestation will elapse before a rise in the price of\nsilver exerts its full effect on production. And similarly, a fall\nin the price of silver will not have its full effect immediately as\nconsiderable disinvestment could take place only slowly. An exam-\nination of previous results suggested a three-year distributed lag.\nA change in price was allowed to have 50 percent of its effect the\nfirst year, 75 percent by the second year and 100 percent by the\nthird. The results were quite satisfactory as the new multiple\ncoefficient was .99/. Calling the new variable I6, the estimating\nequation is\nIII. X₁ = -7.623 + .1781X3 + .7308X6\nThe estimates based on this equation, compared with actual silver\nproduction, are given in Table I. It will be noted that the mard-\nMUST error is only 3.6 million ounces, an error of 5 percent. The\nstandard error, \"III, is 2.07 million ounces. Two standard errors\nare a. sufficient range to include all the errors.\nA comparison of these results shows that the estimates based\non Equation III are best in 9 cases, intermediate in 6 cases, and\nworst in 2 cases. Moreover, the total amount by which it was\nsuperior in the 9 cases is more than twice the total amount by\nwhich the other equations were superior in the other 8 cases.\nRegraded Uclassified\n278\nDivision of Monetary\n- 4 -\nResearch\nTable I\nActual Silver Production Compared with Estimates\n1924 - 1940\n(Millions of ounces)\n: Silver\n: Estimating :\n$ Estimating:\n2 Estimating :\n:\nYear\n,Production\n1\nEquation\n1 Error\n$\nEquation\n:\nError\n=\nEquation\n: Error :\n:\n$\nI\n1/\n:\n:\nII\n2/ 1\n:\nIII\n=\n#\n1924\n65.4\n64.1\n1.3\n52.3\n13.1\n64.0\n1.4\n1925\n66.2\n67.1\n-0.9\n58.2\n8.0\n66.1\n0.1\n1926\n62.7\n64.6\n-1.9\n58.1\n4.6\n64.8\n-2.1\n1927\n60.4\n59.7\n0.7\n55.0\n5.4\n61.4\n-1.0\n1928\n58.5\n63.9\n-5.4\n58.1\n0.4\n61.5\n-3.0\n1929\n61.3\n64.9\n-3.6\n62.2\n-0.9\n61.2\n0.1\n1930\n50.7\n44.9\n5.8\n45.2\n5.5\n47.2\n3.5\n1931\n30.9\n33.4\n-2.5\n32.4\n-1.5\n34.2\n-3.3\n1932\n24.0\n22.0\n2.0\n22.4\n1.6\n21.8\n2.2\n1933\n23.0\n24.7\n-1.7\n31.6\n-8.6\n21.8\n1.2\n1934\n32.7\n35.4\n-2.7\n42.5\n-9.8\n34.4\n-1.7\n1935\n45.9\n51.8\n-5.9\n58.0\n-12.1\n48.6\n-2.7\n1936\n63.8\n62.9\n0.9\n68.7\n-4.9\n63.9\n-0.1\n1937\n71.9\n71.8\n0.1\n74.4\n-2.5\n72.7\n-0.8\n1938\n62.7\n54.1\n8.6\n54.8\n7.9\n61.0\n1.7\n1939\n65.1\n62.0\n3.1\n67.4\n-2.3\n64.2\n0.9\n1940\n71.7\n69.8\n1.9\n75.4\n-3.7\n68.1\n3.6\nSI = 3.65\nSII\n= 6.52\nSIII\n= 2.07\nIndependent variables are silver price and copper production\nIndependent variables are silver price and industrial production\n3/ Independent variables are silver price with distributed lag and copper\nproduction.\nSource: Minerals Yearbook and Computations.\nRegraded Uclassified\n279\nDivision of Monetary\n- 5 -\nResearch\nEstimated silver production for 1941\nThe experience of 1924 to 1940 indicates that Equation III\ncan be used with considerable assurance in forecasting the produc-\ntion of silver. Our estimate of the production of silver in the\nUnited States in 1941 is based on the assumption that the present\nprice of silver will continue and that copper production will reach\na new high level. Table II shows the effect that various increases\nin copper production are likely to have in accordance with Equation\nIII.\nTable II\nPercent Increase\n$ Expected silver = Increase over expected\n#\nin copper production\n+\nproduction\n1 in 1940 (68.1)\n1\n5\n70.1\n±\n4.1\n2.0\n10\n71.3\n±\n4.1\n3.2\n15\n72.6\n#\n4.1\n4.5\n20\n73.8\n±\n4.1\n5.7\n# Margin of error is 2 standard errors or approximately the 95\npercent fiducial limits. Unit is million ounces.\nIn 1940 silver production was 71.7 million ounces. This is 3.6\nmillion ounces above the output expected in 1940. It would seem from\nthis situation that factors not considered in Equation III were opera-\nting in 1940 to cause production to be above what normally would be\nexpected in accordance with Equation III. This statement assumes that\nthis margin of error is not random (due to errors of measurement, etc.)\nIf this assumption is true, it would be possible to make a forecast by\nadding the movement indicated by Equation III to the actual production\nin 1940, rather than the expected. The results are shown in the follow-\ning table:\nTable III\nPercent increase in\n--\nExpected silver\n:\ncopper production\n:\nproduction\n-\n5\n73.7\n10\n74.9\n15\n76.2\n20\n77.4\nRegraded Uclassified\n280\nDivision of Monetary\n- 6 -\nResearch\nThe first method of forecasting is preferable since the\nstandard error provides a range to take care of either random\nfluctuation or variation due to real factors not accounted for\nin Equation III. In view of conditions in 1940, it is likely\nthat production will be above normal in 1941. A reasonable\nestimate at this time will be 74 million ounces.\n281\n-March 10, 1941\nMr. George Hass\nSecretary Morgenthan\nWhen may I expect from you on analysis of the\nGano Dunn report on steel capacity of this country?\nThursh\nFri.-\nReport submitted\n3/14/41-\nRegraded Uclassified\n282\nMarch 10, 1941\nMr. George Hass\nSecretary Morgenthau\nI would like to write a letter to the President\nabout the my imported commodities have steadily increased,\nand as far as I know we are not doing anything about it.\nIt seems to m that we certainly ought to do something\nabout those particular imported commodities, such as sugar\nand 00002, or any other commodities which come from either\nCentral or South America. I do not see why they should go\nup if there isn't speculation going on. I can understand\nthat there night be a good reason why commodities coming\nfrom India should be going up in price, but certainly not\nfrom either Central or South America if there is not specula-\ntion in futures. (See letter to Pres. dated 3/11/41)\nRegraded Uclassified\n283\nMarch 10, 1941\nby dear General:\nI would like to see the President\nThursday morning (March 13th) with John\nSullivan to talk about the Tax Bill. I\nwill need about half an hour.\n#\nplease.\nSincerely,\n(agd) Henry\nGeneral Edwin и. Watson,\nSecretary to The President,\nThe White House.\n500\nRegraded Uclassified\n284\nMarch 10, 1941\nMy dear General:\nI would like to 660 the President\nThursday morning (March 13th) with John\nSullivan to talk about the Tax Bill. I\nwill need about half an hour.\n,\nplease.\nSincerely,\n(agd) Henry\nGeneral Edwin M. Eatson,\nSecretary to The President,\nThe White House.\nm\nI\nRegraded Uclassified\n285\nMarch 10, 1941\nw doar General:\nI would like to ... the President\nThursday morning (March 13th) with John\nSullivan to talk about the Tax Bill. I\nwill need about half an hour.\nSincerely, , please.\n(agd) Henry\nGeneral Edwin 11. Watson,\nSecretary to The President,\nThe White House.\nRegraded Uclassified\n286\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nenveMarch 10, 1941\nTO Mrs. Klotz\nFROM Mr. Morgenthau\nI want to send a copy of my letter to the\nPresident telling him of the cash-on-the-barrelhead\nera coming to an end to Secretaries Knox and Stimson.\nI believe that one went to Secretary Hull via Dean\nAcheson, but you can check up on that. I would also\nlike to send one to Hopkins. Please prepare letters\nof transmittal in each case for my signature.\n(Copies sent to Secretaries\nKnox and Stimson and Harry\nHopkins on 3/10/41)\n287\ns\nMarch 10, 1941\nDear Harry:\nFor your confidential information,\nI an enclosing herewith copy of a letter\nwhich I sent to the President on March 5th.\nYours sincerely,\n(Rugree) Henry\nHonorable Harry Hopkins,\nThe White House.\nn\nRegraded Uclassified\n288\nMarch 10, 2941\nDear Harrys\nFor your confidential information,\nI - enclosing herewith copy of s letter\nwhich I sent to the President on March 8th.\nYours sincerely,\n(signed) Henry\nHonorable Harry Hopkins,\nThe White House-\nRegraded Uclassified\n289\ncory\nMarch 5, 1941\nMy dear Mr. President:\nwith the signing of the Lend-Lease Bill the period of\ncash-on-the-barrelheed will come to an end for the great bulk\nof foreign government orders in this country. Your appointment\nof an advisory committee, to assist you in administering the\nprovisions of the bill, means that a vital new phase of our ef-\nfort has begun. I shall be delighted to serve as a member of\nthis comittee.\nComplete coordination of all foreign buying will, in my\nopinion, be even more necessary under the new system then under\nthe old cash sales plan. You may remember that at the first\nmeeting of the newly constituted advisory committee, on March 1,\nI brought to your attention the problem of Russian purchasing,\nand you said that you felt this came within the scope of the new\ncommittee's work. I think that the same considerations should\napply just as much to the Dutch and the Canadians, who will con-\ntinue to pay cash, as to the British end others who will come\nunder the Lend-Lease procedure. It seems to be that all foreign\ngovernment purchasing, commercial as well as military, can be\nhandled more efficiently and fitted more smoothly into United\nStates production if this purchasing is coordinated in one place.\nTherefore, I should like to suggest that all the complex\nliaison work on foreign purchases, which has been dons in the\nTreasury for the past two and & quarter years, should be consoli-\ndated immediately and completely with the work to be dons by\nHarry Hopkins as Secretary of the new advisory committee. This\nwill relieve me of all direct responsibility with respect to\nforeign purchases, except for the great and continuing responsi-\nbility that now faces all the committee members alike. I have\nalready begun to turn over to Harry Hopkins & part of the\nforeign purchase work we have been doing, and; complying with\nthe request stated in your letter of February 25, I have offered\nhim the assistance of anyone he needs in the Treasury.\nFaithfully,\n(signed) H. Morgenthau, Jr.\nThe President,\nThe White House.\nRegraded Uclassified\n290\nMarch 10, 1941\nDear Frank:\nFor your confidential information,\nI am enclosing herewith copy of a letter\nwhich I sent to the President on March 5th.\nYours sincerely,\n(Ray ) Henry\nHonorable Frank Knox,\nSecretary of the Navy.\nBy Memorager 1255\nRegraded Uclassified\n291\nMarch 10, 1041\nBear Franks\nfor your confidential information,\nI - enclosing herewith copy of a letter\nwhich I sent to the President on March 5th.\nYours sincerely,\n(agd) Henry\nHonorable Frank Inc.\nSecretary of the Harry.\nRegraded Uclassified\nMarch 10, 1941\nDear Henry:\nFor your confidential information,\nI an enclosing herewith copy of & letter\nwhich I sent to the President on March 5th.\nYours sincerely,\n(pyred) Henry\nHonorable Henry L. Stimson,\nSecretary of War.\nRegraded Uclassified\n293\nMarch 10, 1941\nDear Henry:\nFor your confidential information,\nI an enclosing herewith copy of a letter\nwhich I sent to the President on March 5th.\nYours sincerely,\n(signed) Henry\nHonorable Henry L. Stimson,\nSecretary of War.\na\n294\nWAR DEPARTMENT\nWASHINGTON\nMarch 10, 1941.\nDear Henry:\nI have received the copy of your\nconfidential letter to the President of March 5th.\nI think you have every reason for feeling gratified\nthat you have been able to carry so well this\ncritically important and heavy burden during the\ntwo years that it has been lying on your shoulders.\nI congratulate you.\nFaithfully yours,\nHenry h Stenson\nSecretary of War.\nHon. Henry Morgenthau, Jr.,\nSecretary of the Treasury.\nDraft 5th Mash, 1541\n(Received from Mr. Pinsent in the British Labasey by Under Secretary Bell 295\nat 10 a.m., March 26, 1941.)\nR\nAGREEMENT MODIFYING \"INTER-BANK\" AGREEMENT\nOF 10TH OF MARCH, 1939\nTHIS AGREEMENT 1s made the\nday\nof\n1941 BETWEEN THE HONGKONG AND\nSHANGHAI BANKING CORPORATION a Company incorporated under\nand by virtue of Ordinances of the Colony of Hong Kong whose\nLondon Office 1s situate at 9 Gracechurch Street in the City\nof London (hereinafter called \"the Hongkong Bank\") of the\nfirst part THE CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA\nwhose registered office is situate at 38 Bishopsgate in the\nCity of London (hereinafter called \"the Chartered Bank\") of\nthe second part THE BANK OF CHINA a Company incorporated\nunder the laws of China whose registered office is situate at\nKunming in the Republic of China and whose London Office is\nsituate at 85 Gracechurch Street aforessid of the third part\nand THE BANK OF COMMUNICATIONS a Company incorporated under\nthe laws of China whose registered office is situate at\nChungking in the Republic of China of the fourth part and is\nsupplemental to an Agreement (hereinafter referred to as \"the\nPrincipal Agreement\") dated the 10th day of March 1939 and\nmade between the same parties\nWHEREAS by an Agreement (hereinafter called \"the\nNew Agreement\") dated the\nday of\n1941 and made between the National Government of the Republic\nof China of the first part, the Central Bank of China of the\nsecond part and the Commissioners of His Majesty's Treasury\n(hereinafter referred to as \"the Treasury\") of the third part\nfurther provision has been made and a New Fund set up for checking\nundue fluctuations in the exchange value of the Chinese yuan in\nrelation to sterling\nAND WHEREAS by an Agreement dated the\nday of\n1941 and made between the National\nGovernment of the Republic of China of the first part, the\nCentral Bank of China of the second part and the Secretary of\nRegraded Uclassified\n296\nthe Treasury of the United States of the third part, provision\nhas been made and a New Fund set up for the stabilization of\nthe Chinese yuan in relation to United States dollars.\nAND WHEREAS the British Banks and the Chinese Banks\nare entering into this Agreement with 8 view to co-ordinating\nthe operation of the said New Funds and of the Fund set up\nunder the Principal Agreement (which last mentioned Fund is\nhereinafter referred to as \"the 1939 Fund\").\nNOW IT IS HEREBY AGREED as follows :-\n1.\nAS from the date on which this Agreement comes into force\nuntil the determination of the New Agreement the 1939 Fund\nshall be managed and controlled and its assets applied by the\nStabilization Board (hereinafter called \"the Board\") established\nfor the purposes of the New Agreement in accordance with the\nprovisions of the New Agreement and accordingly during that\nperiod the Sterling Account, the Chinese Dollar Accounts and\nthe Sterling Income Account opened under the Principal\nAgreement shall be under the control of the Board and shall\nbe operated in accordance with the directions of the Board.\n2,\nTHE Principal Agreement is hereby renewed for a period\nof six months from the 31st day of March 1941 and thereafter\nfor such further periods of six months as are necessary to\nensure that it does not expire until not less than seven days\nafter the determination of the New Agreement but as from the\ndate on which this Agreement comes into force until the\ndetermination of the New Agreement all the provisions of\nthe Principal Agreement and the powers and duties of the\nManagement Committee thereunder are suspended,\n3.\nON the date of the determination of the New Agreement\nthe provisions of the Principal Agreement shall revive in\nfull force subject only to the modifications set out in the\nfollowing clause of this Agreement and shall apply, in the\n2,\nRegraded Uclassified\n297\nabsence of any other appointments and so far 0.9 practicable,\nto the Management Committee as it was constituted immediately\nbefore such suspension and to the 1939 Fund, the Sterling\nAccount, the Chinese Dollar Accounts and the Sterling Income\nAccount as they stand after all operations thereon and\napplications thereof have been made under the provisions of\nthe New Agreement.\n4.\nTHE modifications of the Principal Agreement which are\nto take effect on the revival of the Principal Agreement\nunder Clause 3 are as follows :-\n(a) Clause 3 shall be amended by adding after the word\n\"Shanghai\" the words \"and on such other markets as the\nManagement Committee, with the consent of His Majesty's Treasury\nmay direct\".\n(b) Clause 4 (a) shall be amended by substituting for the\nwords \"Shanghai or Hong Kong for account of the Fund in the\nHongkong Bank or the Chartered Bank or in both such Banks\"\nthe words \"such place or places and in such Bank or Banks\nas the Management Committee may with the consent of His\nMajesty's Treasury direct\".\n(c) Clause 18 shall be amended :\n(a) by substituting in paragraph (a) thereof for the\nword \"standing\" the words \"remaining after applica-\ntion under the provisions of an Agreement dated the\nday of\nand made between the\nNational Government of the Republic of China of the\nfirst part, the Central Bank of China of the second\npart and the Commissioners of His Majesty's Treasury\nof the third part\"\n(b) by adding in paragraph (b) thereof after the word\n\"assets\" the words \"remaining as aforesaid\" and\n(o) by substituting in paragraph (b) thereof for the\nword \"standing\" the words \"remaining as aforesaid\".\n5.\nTHIS agreement shall come into force on such date--, not\nearlier than the date on which the Board is established, as\nthe Treasury may determine by notice in writing given to the\nBritish Banks and the Chinese Banks.\nRegraded Uclassified\n298\n- OFFICIAL COMMISSIONERS TO\nTHE SECRETARY OF STATE\na di 1\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nEA 811.24 Raw\nMarch 10, 1941\nMaterials/1541\nThe Secretary of State presents his compliments to\nthe Honorable the Secretary of the Treasury and encloses\na copy of telegram no. 34 dated March 10, 1941 from the\nAmerican Consul at Hanoi, French Indochina, reporting\nthat the steamship Ensley sailed March 8 with balance\nof rubber purchased under the contract of December 2,\n1940 but without the 350 tons of trade rubber covered by\nthe Department's telegram no. 8 of March 7.\nEnclosure:\nNo. 34 from Hanoi,\nMarch 10.\n22\n299\nPAW\nGRAY\nHANOI VIA N.R.\nDated March 10,1941\nRec'd 5:20 a.m.\nSecretary of State\nWashington\n34, March 10, 8 a.m.\nDepartment's telegram No. 8, March 7, 4 p.m.\nSaigon informs me ENSLEY sailed March 8th and prior\nto receipt of Department's telegram with balance of contract\nrubber.\nREED\nKLP\n300\n(CONFIDENTIAL)\nPARAPHRASE\nA confidential telegram dated March 10, 1941 from\nConsul Reed at Hanoi reads substantially as follows:\nIndochina and the Netherlands East Indies are con-\ncluding an arrangement according to which the exports\nof rubber to Japan will be limited to Japan's established\nneeds for domestic consumption. In 1941 Indochina will\nexport to Japan approximately 25,000 tons of rubber and\nthe Netherlands Indies and Malaya will so reduce their\nrubber exports to Japan that Japan's established needs\nof rubber will not be exceeded.\nch:copy\n301\nTHIRTY THREE LIBERTY STREET\nNEW YORK\nMarch 10, 1941.\nDear Secretary Morgenthau:\nLast Friday I was a guest at the luncheon of the\nEastern Regional Conference of the American Bankers Association.\nThere were about one thousand people present, W. Randolph\nBurgess was the speaker, but I was asked to respond to my\nintroduction to the group. I spoke only for a few minutes, but\nas the meat of what I said referred to Treasury financing, and\nas it has been commented upon a little in the press, I thought\nyou might like to know just what your \"fiscal agent\" was talking\nabout. This 1s the way it went, I think:\n\"There are one or two things I would\nlike to say to you however. You are having\nas part of your conference program a discussion\nof the banks and the financing of national\ndefense. I assume that the financing of\nplant facilities and of defense contracts\nhas been a subject of your consideration.\nThere 18 another aspect of the financing\nof national defense in which the banks\nhave an important part to play. I am\nspeaking of the financing of the government\nitself. You have also discussed this\nsubject, but generally there has not been\nmuch time given to the place of the banks\nin this area of the defense effort.\n\"Perhaps it is because the financing\nof the government 1s so clearly secondary\nto the primary job of increasing our\nmilitary establishment. The expansion\nhas to be financed and that 18 that. If\nwe do not do it one way, we will do it\nanother.\n\"The ways of doing 1t, except in their\ndetails, are few. The tremendous sume\nwhich the government 1s spending and 1s\nRegraded Uclassified\n2.\nHonorable Henry Morgenthau,\nMarch 10, 1941.\n302\ngoing to spend can be financed by taxation,\nby borrowing the savings of the country, and\nby the use of bank credit - that 18 leaving\nout the printing press. Now, rightly I think,\nthe emphasis has been on increasing the\ngovernment's revenue through taxation and on\nborrowing the accumulated and current savings\nof the country. But, of course, there will\nstill be financing to be done through the\ncredit system. The credit system will have\nto be used because of its convenience and\nflexibility as a source of short-term funds,\nand it may have to be used to obtain some\npart of the funds of longer term.\n\"Here it seems to me 18 an opportunity\nfor the banks to look beyond their own\nimmediate interests and to determine what\n18 their proper part in the national financial\nprogram. The floating of successive issues\nof government securities in this emergency\ncannot be a continuous game of poker between\nthe Treasury and the banks or other purchasers.\nIt has got to be a part of the defense program\nin which government and business work together,\nJust as they are now doing in the field of\nproduction. That requires fair dealing on\nboth sides and bankers must be clear as to\ntheir part and their role. I commend this\nsubject to you for your consideration. You\nwould not want, you cannot afford, even to seem\nto try to extract an unwarranted profit out of\nthe pressing needs of your government in the\ngreatest crisis our world has ever known.\"\nI thought that would be a useful note to strike with the\nbankers at this time.\nYours faithfully,\n(Signed) Allan Sproul.\nHon. Henry Morgenthau, Jr.,\nSecretary of the Treasury,\nWashington, D. C.\nRegraded Uclassified\n303\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nSTRICTLY CONFIDENTIAL\nDATE March 10, 1941\nTO\nSecretary Morgenthau\nFROM Mr. Wiley\nFBI reports that for the period between January 2 and 31, 1941, the Banco\ndi Napoli Trust Company withdrew from the Corn Exchange Bank $3,305,000, mainly\nin denominations of $20, $50, and $100, insisting upon old bills. Furthermore,\nfor the two weeks ending January 29 and February 5, 1941, the Banco di Napoli\nsold $3,151,000 of domestic bonds for foreign account and delivered $2,500,000,\napparently of the proceeds, mostly in bills of small denomination to Luigi\nPodesta, Director of the Italian Exchange Institute in the United States. Mr.\nMcKeon of Federal Reserve says that the cash withdrawals by the Banco di Napoli\nwere very much more than would be required by the usual operations of the Bank\nand says this may be a violation of the Emergency Banking Regulation No. 23 and\nthe anti-hoarding statute.\nTow\nRegraded Uclassified\n304\nTREASURY DEPARTMENT\nmeacher\nINTER OFFICE COMMUNICATION\nDATE March 10, 1941\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nSTRICTLY CONFIDENTIAL\nThe Federal Reserve Bank of New York reported the following transaction in the\naccount of the Central Corporation of Banking Companies, Budapest, maintained with\nthe First National Bank of Boston, Boston, Kassachusetts.\nDate\nAmount Debited\nPaid To\nMarch 10\n$800,000\nRiggs National Bank, Wash-\nington, D. C., for account\nof the Hungarian Legation,\nWashington, D. C.\nNMH\n305\nor Nics Chauncey\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE March 10, 1941.\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nSTRICTLY CONFIDENTIAL\nThe Federal Reserve Bank of New York reported the following transaction in the\naccount of the Bank for International Settlements, Basle, by order of the National\nBank of Hungary, Budapest.\nDate\nAmount Debited\nPaid To\nMarch 10\n$600,000\nRiggs National Bank, Wash-\nington, D. 0., for account\nof the Royal Hungarian Lega-\ntion, Washington, D. C., by\norder of the National Bank of\nHungary, Budapest.\nM.M.S.\n306\nTREASURY department\nINTER OFFICE COMMUNICATION\nChaunce\nDATE March 10, 1941.\nTO\nSecretary Morgenthau\nFROM Mr. Cochran FOR\nSTRICTLY CONFIDENTIAL\nThe Federal Reserve Bank of New York reported the following transaction in the\naccount of the Central Corporation of Banking Companies, Budapest, maintained with\nthe Guaranty Trust Company of New York.\nDate\nAmount Debited\nPaid To\nMarch 10\n$100,000\nRiggs National Bank, Wash-\nington, D. C., for account\nof the Hungarian Legation,\nWashington, D. 0.\nB.M.P.\n307\nTREASURY DEPARTMENT\nCommony\nINTER OFFICE COMMUNICATION\nDATE March 10, 1941\nOF\nSecretary Morgenthau\nFROM Mr. Cochran\nCONFIDENTIAL\nRegistered sterling transactions of the reporting banks were as follows:\nSold to commercial concerns\n£73,000\nPurchased from commercial concerns\n£ 8,000\nOpen market sterling was again quoted at 4.03-1/2. The only reported transaction\nconsisted of at sale of £1,000 to & commercial concern.\nThe Argentine free peso rate in New York remained at .2300. It was reported\nthat the first suction of foreign exchange for \"non-essential\" imports into Argentina\ntook place last Friday in Buenos Aires, and that the Argentine branch of an American\nbank made substantial purchases of dollars for account of its clients at an average\nrate of 4.44 pesos to the dollar ( equivalent to $.2252). The dollar exchange used\nin the auction, it will be recalled, represents the proceeds of certain Argentine\nexports, which had to be surrendered under the new regulations to the Argentine Control\nIt 4.2182 pesos to the dollar ($.2370).\nIn New York, the closing rates for the foreign currencies listed below were as\nfollows:\nCanadian dollar\n15% discount\nSwiss franc (commercial)\n.2323\nSwedish krons\n.2384-1/2\nReichsmark\n.4005\nLira\n.0505\nBrasilian milreis (free)\n.0505\nMexican peso\n.2066\nCuban peso\n6-5/8% discount\nIn Shanghai, the yuan in terms of our currency was unchanged at 5-1/24, and\nsterling moved off to $.89, & decline of 24-\nThere were no gold transactions consummated by us today.\nNo new gold engagements were reported.\nThe prices fixed in London for spot and forward silver were again unchanged\nat 23-3/8d and 23-5/16d respectively. The U.S. equivalents were 42.44₫ and 42.33$.\nHandy and Harman's settlement price for foreign silver was unchanged at 34-3/4#.\nThe Treasury's purchase price for foreign silver was also unchanged at 35¢+\nTo made one purchase of silver amounting to 75,000 ounces under the Silver Purchase\nAct. This consisted of new production nm from foreign countries, for forward delivery.\n308\n8rd\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE March 10, 1941\nSecretary Morgenthau\nTO\nFROM\nMr. Haae M\nThe attached tables and chart indicate that a decline\nof 16,000 from the preceding week brought Work Projects Ad-\nministration employment to 1,869,000 persons during the\nweek ended February 26, 1941. This represents a decrease\nof 26,000 from the number employed at the end of January.\nAttachments\n309\nWORK PROJECTS ADMINISTRATION\nNumber of Workers Employed - Monthly\nUnited States\nNumber of Workers\n1938\n(In thousands)\nJuly\n3,053\nAugust\n3,171\nSeptember\n3,228\nOctober\n3,346\nNovember\n3,287\nDecember\n3,094\n1939\nJanuary\n2,986\nFebruary\n3,043\nMarch\n2,980\nApril\n2,751\nMay\n2,600\nJune\n2,551\nJuly\n2,200\nAugust\n1,842\nSeptember\n1,790\nOctober\n1,902\nNovember\n2,024\nDecember\n2,152\n1940\nJanuary\n2,266\nFebruary\n2,324\nMarch\n2,288\nApril\n2,092\nMay\n1,926\nJune\n1,665\nJuly\n1,701\nAugust\n1,691\nSeptember\n1,704\nOctober\n1,779\nNovember\n1,820\nDecember\n1,878\n1941\nJanuary\n1,895\nFebruary\n1,869\nSource: Work Projects Administration\nMonthly figures are weekly figures for the latest week of\nthe month.\nThey include certified and noncertified workers.\n310\nWORK PROJECTS ADMINISTRATION\nNumber of Workers Employed - Weekly\nUnited States\nWeek ending\nNumber of Workers\n1940-41\n(In thousands)\nJuly 3\n1,608\nJuly 10\n1,620\nJuly 17\n1,659\nJuly 24\n1,690\nJuly 31\n1,701\nAugust 7\n1,709\nAugust 14\n1,708\nAugust 21\n1,698\nAugust 28\n1,691\nSeptember 4\n1,690\nSeptember 11\n1,687\nSeptember 18\n1,689\nSeptember 25\n1,704\nOctober 2\n1,747\nOctober 9\n1,762\nOctober 16\n1,768\nOctober 23\n1,776\nOctober 30\n1,779\nNovember 6\n1,783\nNovember 13\n1,785\nNovember 20\n1,806\nNovember 27\n1,820\nDecember 4\n1,832\nDecember 11\n1,855\nDecember 18\n1,872\nDecember 25\n1,878\nJanuary 1\n1,880\nJanuary OR\n1,887\nJanuary 15\n1,893\nJanuary 22\n1,896\nJanuary 29\n1,895\nFebruary 5\n1,892\nFebruary 12\n1,893\nFebruary 19\n1,885\nFebruary 26\n1,869\nSource: Work Projects Administration\n311\nBORK PROJBOTO ADMINISTRATION\nNumber of Vorkare Exployed\nUnited States\nMonthly W.P.A. Exployment\nWeekly W.P.A. Exployment\n1935\n1936\n1937\n1938\n1939\n1940\n41\n1939\n1940\n1941\nMAA\nMAY\nJULY\nMEL\nNOX\nARE\nNAME\nMI\n5\nMILLIORE\nMILLIONS\nWILLIONS\nMILLIONS\nor\nof\nor\nor\nWORKERS\nWORKERS\nMORRERS\n3.4\n3.4\n3.3\n3,3\n3-2\n3.2\n3.2\n3.2\n3.1\n3.1\n2.8\n2.8\n3.0\n3.0\n2.9\n2.9\n2.4\n2.4\n2.8\n2.8\n2.7\n2.7\n2.0\n2.0\n2.6\n1.6\n2.5\n2.5\n1.6\n1.6\n2.4\n2.4\n2.3\n2.3\n12\n2.2\n2.2\n1.2\n2.1\n2.1\n2.0\n2.0\n-\n.8\n1.9\n1.9\n1.8\n1.8\nA\nA\n1.7\n1.7\n1.6\n1.6\n0\nJ\n.\no\n1,5\nKILL\nELL\nL\n#\n1.5\n.\n-\nal\nW\n-\n.\n7\nM\nJAN.\nNOV.\nJAB.\n1935\nMAR.\nMAY\nJULY\nSEPT.\nNOV.\nJAM.\nMAR.\nMAY\nJULY\nSEPT.\nMAS.\n1936\n1937\n1936\n1939\n1940\n41\n1939\n1940\n1941\nsource: - PROJECTS ADMINISTRATION\nOffice of the Secretary of the Travy\n- el - and -\n2-221-12\nRegraded Holassified\nTRICTLY CONFIDENTIAL\n312\nALLISON SHIPMENTS\n:\nBritish\n:\n:\n:\n:\nArmy\n:\nGrand\n:\nC\n:\nE\nTotal\nC\nE\nF\ntotal\n:\n:\nTotal\nDec. 29 - - Jan. 4\nOR\n-\nOR\n1\n3\n-\n4\n12\nJan. 5 - - 11\n83\n-\n83\n-\n2\n-\n2\n85\nJan. 12 - - 18\n41\n-\n41\n-\n2\n-\n2\n43\nJan. 19 - - 25\n33\n-\n33\n-\n-\n-\n-\n33\nJan. 26 - - Feb. 1\n31\n-\n31\n-\n1\n-\n1\n32\nFeb. 2- - 8\n60\n-\n60\n25\n1\n-\n26\n86\nFeb. 9 - - 15\n30\n1\n31\n32\n2\n1\n35\n66\nFeb. 16 - - 22\n-\n-\n-\n77\n2\n1\n80\n80\nFeb. 23 - - Mar. 1\n-\n-\n-\n88\n3\n-\n91\n91\nar. 2 - - 8\n6\n-\n6\n69\n2\n-\n71\n77\nTOTAL Dec. 29 - - Mar. OR\n292\n1\n293\n292\n18\n2 312\n605\nOffice of the Secretary of the Treasury,\nDivision of Research and Statistics.\nMarch 10, 1941.\nRegraded Uclassified\nRICTLY CONFIDENTIAL\n313\nALLISON ENGINEERING COMPANY\nShipments of Airplane Engines\n:\nActual\n:\nEstimated shipments\n: shipments\n:\non existing orders\n1940\nJanuary\n10\nMay 24 - June 22\n28\nJune 23 - July 20\n43\nJuly 21 - Aug. 17\n47\nAug. 18 - Sept. 14\n140\nSept. 15 - Oct. 12\n263\nOct. 13 - Nov. 9\n233\nNov. 10 - Dec. 7\n154\nDec. OR - Jan. 4\n228\n1941\nJanuary 5 - 11.\n85\nJanuary 12 - 18\n43\nJanuary 19 - 25\n33\nJanuary 26 - February 1\n32\nFebruary 2 - OR\n86\nFebruary 9 - 15\n66\nFebruary 16 - 22\n80\nFebruary 23 - March 1\n91\nMarch 2 - 8\n77\nMarch 9 - 31\n332\nApril\n408\nMay\n456\nJune\n500\nJuly\n475\nAugust\n550\nSeptember.\n625\nOctober\n750\nNovember\n800\nDecember.\n800\n942\nJanuary\n529\nFebruary\n304\nMarch\n225\nApril\n225\nMay\n225\nJune\n124\nffice of the Secretary of the Treasury,\nDivision of Research and Statistics.\nMarch 10, 1941.\nRegraded Uclassified\n314\nEXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL\nFROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN\nAS SHOWN BY DEPARTURE PERMITS GRANTED\nWeek ended March 8, 1941\n:\nJAPAN\n:\nRUSSIA\n:\nSPAIN\n:\n:\n:\nGREAT BRITAIN\n:\n:\nTROLEUM PRODUCTS\nFuel and Gas Oil (including\nDiesel 011)\n100,594 Bbls.\n--\n---\nCrude -\nBlended or California\nHigh Octane Crude*\n72,250 Bbls.\n--\n--\n--\nAll Other Crude\n23,000 Bbls.\n:\n--\n--\nGasoline -\nGasoline A**\n--\n--\n--\n15 Gals.\nGasoline B*\n12,759 Bbls.\n--\n--\n113,100 Bbls.\nAll Other Gasoline\n--\n--\n--\n--\nbricating 011 -\nAviation Lubricating 011***\n784 Bbls.\n--\n--\n7,500 Bols.\nAll Other Lubricating 011\n26,181 Bbls.\n--\n--\n30,054 Bbls.\nTetraethyl Lead***\n--\n--\n--\n--\n\"Boosters\", such as Iso-\nOctane, Iso-Hexane, or\nIso-Pentane\n--\n:\n--\n--\nRAP IRON AND SCRAP STEEL\nNumber 1 Heavy Melting Scrap\n--\n--\n--\n8,150 Tons\nAll Other Scrap\n--\n--\n--\n1,750 Tons\nfice of the Secretary of the Treasury, Division of Research and Statistics.\nMarch 10, 1941.\npurce: Office of Merchant Ship Control, Treasury Department.\nAny material from which by commercial distillation there can be separated\nmore than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon\nmixture - President's regulations of July 26, 1940.\nAviation Gasoline.\nAs defined in the President's regulations of July 26, 1940.\nRegraded Uclassified\n315\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nCONFIDENTIAL\nDATE March 10, 1941\nTO\nFROM\nMr. Haas and\nSecretary Morgenthau\nSubject: The Business Situation,\nWeek ending March 8, 1941\nSummary\n(1) Adjusted indexes of business activity rose sharply\nin the last week of February and moved slightly above previous\nrecord high levels.\n(2) Prices of imported commodities continued to increase\nsteeply last week carrying the BLS price index of 11 imported\nmaterials up about 10 per cent since early February. Ocean\nfreight shortage was a primary influence. Prices of domestic\ncommodities were also somewhat higher.\n(3) Steel orders increased in volume during February and\ndelivery dates have been extended further into the future.\nThe steel scrap situation 18 assuming increasing importance\nin view of the growing tightness in market supplies of pig\niron. Difficulties are being encountered in obtaining adequate\nsupplies of scrap at the price levels set by the Defense\nCommission.\n(4) Industry and trade have shown an expansion in inven-\ntories, but due to the heavy volume of business, the ratio of\nstocks to shipments and sales has actually declined. However,\nat the end of January, according to the Conference Board com-\npilations, manufacturers' inventories on a seasonally adjusted\nbasis were in excess of 1937 peak levels.\n(5) Exports of United States merchandise in January rose\nslightly above the previous month, due largely to a rise in\naircraft exports to a new record figure. Agricultural ex-\nports dropped slightly under the previous low of last September.\nRegraded Uclassified\n316\n2 -\nThe general situation\nAfter showing a tendency to level out in the middle of\nFebruary, weekly business indexes took a spurt at the end of\nthe month and moved into new high ground by a narrow margin,\nDuring the past week, scheduled steel production reached a\nnew record high, and automobile output was maintained at very\nhigh levele despite slight impediments to production caused\nby minor parte shortages. In addition to the high rate of\noperations prevailing in heavy industry AB & result of the\ndefense program, textile mille are reported to be unusually\nbusy and such basic indicators of business activity 8.8 elec-\ntrio power production and freight carloadings are making B.\nstrong showing.\nFollowing the priorities recently imposed on aluminum\nand machine tools, industry-wide priorities were imposed\nduring the past week on magnesium, nickel and neoprene (a\nsynthetic rubber), while it was indicated that maximum\nprices soon would be set for steel scrap somewhat below\npresent market prices and lower than the prices requested\nsome time ago by the Defense Commission.\nThe stock market has continued to move in 8 narrow\nrange on a emall volume of trading, but commodity price in-\ndexes have moved higher, largely under the influence of fur-\nther strength in imported commodities arising in large part\nfrom the tight situation in ocean shipping.\nInventories rise but ratio to business volume declines\nWith sales volume rising, and concern being felt over\npriorities and other factors affecting availability of ma-\nterials, a tendency toward inventory accumulation 18 to be\nexpected. Thus the seasonally-adjusted index of manufac-\nturers' inventories compiled by the National Industrial\nConference Board showed 8. further rise of 2.2 per cent in\nJanuary to a level slightly above the 1937 peak, and 13.8 per\ncent above the January 1940 figure. However, due to the un-\nusually high rate of manufacturers' shipments (33 per cent\nabove January 1940), the ratio of inventories to shipments is\nstated to have been the lowest since 1929.\nA decline in the ratio of stocks to sales despite an in-\ncrease in inventories also 18 shown in data relating to whole-\nsale trade compiled by the Department of Commerce. Figures\ncovering the operations of 2,732 wholesalers showed that al-\nthough inventories in January were 6 per cent higher than a\nyear earlier, sales were up no less than 18 per cent. As a\nresult, the stocke-to-sales ratio dropped to 165 from 184 in\nJanuary 1940.\nRegraded Uclassified\n317\nDepartment store stocks have risen at a slower rate\nthan either manufacturers' or wholesalers' inventories.\nThus the seasonally-adjusted index of department store\nstocks by January of this year had risen to only 71 per\ncent of the 1923-25 average from 68 per cent a year earlier,\nwhile sales on the same basis had risen to 101 from 92.\nDuring the depression years, department stores substantially\ncut down on stocks, and thus far have shown little inclina-\ntion to build stocks up to pre-depression levels despite the\nrising volume of sales.\nNew orders remain high\nOur new orders index declined somewhat for the week\nended March 1 although it remained at a high level. All\ncomponents were somewhat lower. (See Chart 1.)\nSales of cotton textiles increased markedly last week,\naccording to market reports, print cloth sales being esti-\nmated at 70,000,000 yards, more than three times the current\nweekly output of mills.\nThe steel situation\nRecent developments in the steel situation provide no\nevidence to support an optimistic picture of steel capacity.\nThe volume of orders for steel increased further in February,\naccording to trade reports, the Iron Age reporting an in-\ncrease of 10 to 25 per cent over the January volume.\nMonthly sales figures of the U. S. Steel Corporation have not\nyet been received. The average rate of steel operations,\nhowever, increased only fractionally further to 96.3 per cent\nof rated capacity in February from 96.1 per cent in the pre-\nvious month.\nThe result has been a further congestion of unfilled or-\nders, which the Iron Age characterizes as bordering on\nindigestibility. Delivery dates have been extended further\ninto the future, and an increasing number of mills are booked\ninto the fourth quarter. In plates and sheets, in which\norder backlogs are heaviest in relation to capacity, new busi-\nness now 1s quite commonly listed for October and November\ndelivery.\nNickel alloy steels, which are specified in much of the\nArmy and Navy orders, are most severely restricted for c1-\nvilian consumers, and in these steels a modified form of\npriority 1s in effect, without official announcement. It 18\nfelt in the trade that some change in specifications may\nhave to be made soon in defense orders for steels of this\nRegraded Uclassified\n318\n- 4 -\ntype to alleviate the ourrent situation. In some quarters\nit 18 feared that automobile production this spring may be\nseriously hampered by a shortage of certain types of steels.\nMarket supplies of pig iron, upon which steel mills not\nfully integrated must depend for part of their material, are\ngetting tighter but are not yet critical. Blast furnaces are\napparently operating near the practical limit of capacity,\nand repair shutdowns are taking a greater toll, Thus only\n202 furnaces were in operation on March 1, as compared with\n205 on February 1, and the daily average output was reduced\nto 149,924 tons in February from 150, 441 tons in the previous\nmonth. During the two-day strike at the Lackawanna plant of\nBethlehem Steel, all 5 blast furnaces were banked, and only\n6 of the 30 open-hearth steel furnaces were in operation.\nIn view of the growing tightness in pig iron supplies,\nthe supply of steel scrap, which may be substituted for pig\niron in making steel, is assuming a position of increasing\nimportance. A critical conflict has arisen between the\nnecessity of increasing the collection of steel scrap and\nthe desire of the Administration to forestall price inflation.\nThe action of the Defense Commission some time ago to reduce\nscrap prices by suggesting lower quotations has been effect-\n1ve in holding prices down, but it apparently has slowed up\nthe collection of scrap. In view of this situation, the\nannouncement of the Defense Commission last week that max-\n1mum prices on steel scran would soon be set at prices be-\nlow current quotations, although it may encourage some selling\nof scrap currently held by dealers, may further slow up the\nmovement of scrap to market.\nRailroad traffic and earnings improving\nThe high rate of operations at steel mills and in other\nheavy industries has contributed greatly to a continuing 1m-\nprovement in railroad freight traffic and earnings. Thus,\nfreight carloadings in the week ended March 1 rose more than\nseasonslly to the highest level since the beginning of last\nNovember, while net railway operating income figures reported\nfor January showed the best results for that month since 1929.\n(See Chart 2.) Due to seasonal factors, reilroad earnings\nnormally show B. decline in Januery from the previous month.\nHowever, in comparison with the same month of the previous\nyear, January net railway operating income showed B. gain\nof 36 per cent.\nRegraded Uclassified\n319\n- 5 -\nRecently the Transportation Commissioner of the National\nDefense Commission estimated that freight carloadings for the\nyear 1941 would show an increase of 9.4 per cent over 1940.\nThus far in 1941, freight carloadings have run 11.2 per cent\nabove 1940. This gain over year-earlier levels appears\nlikely to widen in the near future, as freight traffic made 8.\nrelatively poor showing last March and April. Later on in\nthe year, wide gains over year-earlier levels will be more\ndifficult to maintain because of the improvement that occurred\nin freight traffic after April 1940. On the other hand, a\nfurther tightening of the ocean shipping situation could\npossibly divert considerable additional freight to the railroads.\nIn keeping with the improvement in traffic and earnings,\nrailroad equipment purchases have been stepped up in recent\nmonths. However, the spurt in freight car orders in January\nwas followed by a decline in February, although orders were\nstill more than twice as large as in February 1940. New\nfreight cars on order at the beginning of February totaled\n41,600 or about 7,000 more than on February 1, 1940, and the\nlargest number for that date for any time in the past 15 years.\nLocomotive orders rose to 127 in February from 78 in the\nprevious month. This volume of locomotive orders has been ex-\nceeded in only three months since January 1930.\nRecord aircraft shipments feature January exports\nDue chiefly to a rise in aircraft exports to the highest\nmonthly figure on record, total exports of United States\nmerchandise in January ran counter to the usual seasonal\ntrend and exceeded the previous month by 1 per cent. As a\nresult, exports in January totaled $318,000,000 as compared\nwith $315,000,000 in the previous month and $361,000,000 in\nJanuary 1940 -- the peak month since the outbreak of the war.\nAlthough moderate declines occurred in exports of such\nimportant items as machinery and iron and steel, war mate-\nrials industries continued to play the leading role in our\nexport trade, while movement of agricultural products to\nforeign markets fell to a new low. (See Chart 3.)\nThe gain in aircraft exports carried the January figure\nfor this item to $41,000,000, or 9 per cent above the pre-\nvious record high reached last August. (Refer to Chart 3.)\nOn the other hand, machinery exports declined moderately due\nto a drop of $4,000,000 in metal working machinery, while\niron and steel exports receded to the lowest level since last\nRegraded Uclassified\n320\n- 6 -\nJuly. Exports of steel sorap continued the deoline which\nbegan with institution of embargo measures last October and\namounted to less than $1,000,000 for the first time since\nJanuary 1937.\nChiefly as & result of a further decline in cotton ex-\nports, agricultural products shipped to foreign markets in\nJanuary declined 14 per cent below December's figure and\ndipped a trifle under the previous low touched last September.\nThe war has cut into our export trade in agricultural prod-\nucts to such an extent that they comprised only 7 per cent\nof total exports in January, as compared with an average of\n22 per cent in the 12 months prior to the outbreak of hostil-\nities in September 1939.\nFurther increase in freight awaiting export in New York Harbor\nLighterage freight in storage and on hand for unloading\nin New York Harbor climbed to a new high of 11,511 carloads\nlast week (see Chart 4), in spite of the fact that carloads of\nfreight exported from New York rose very sharply to the high-\nest in our records. (See Chart 5.) Although 5,569 carloads\nwere exported, receipts of freight for export at New York\n(see Chart 5)were even higher, 5,703 cars for the week, another\nnew high. Receipts of freight for export at 9 other North\nAtlantic ports increased moderately.\nNonagricultural employment B new January record\nNonagricultural employment in January was at the highest\nlevel on record for that month, being 3 per cent over January\n1929 and 5 per cent over January 1940. The following individ-\nual industries employed more workers in January 1941 than in\nany month on record (back to 1923):\nPercent\nJanuary 1940\nJanuary 1941\nIncrease\nSteel\n473,300\n533,600\n13\nFoundries\n386,400\n465,500\n20\nAircraft\n63,700\n138,500\n117\nShipbuilding\n74,800\n129,600\n73\nBrass, bronze and copper\n88,300\n112,000\n27\nMachine tools\n55,700\n80,700\n45\nEngines\n40,000\n71,100\n78\nRegraded Uclassified\n321\n- 7 -\nPrices of imported commodities 10 per cent over early February\nPrices of imported commodities continued the steep climb\nwhich has been apparent since early February, the daily price\nindex for this group showing a gain of 10 per cent in that pe-\nriod. In the week ended March 7 the following individual\nprice changes were reported (see Chart 6, lower section) :\nCocoa: Spot prices increased 12 per cent. Futures higher.\nNew York importers believe the shipping situation 18 serious\nand likely to become more 80, Further ocean freight rate\nincreases expected. Proposed quota arrangement still an\ninfluence. Russia said to have bought 2,000 tons, and to\nhave purchased not only most spot and afloat cocoa but also\na considerable quantity out of warehouse.\nBurlap: Sharp price increase. London announced that a ship\nbound for North Atlantic ports was unlikely to arrive. The\nship carried 1,500 bales of burlap and 7,200 bales of jute.\nShellac: No change in spot price. Included in export license\nlist last week. Still quoted at nominal levels with few\nofferings.\nPrices of domestic commodities somewhat higher\nPrices of domestic commodities were also higher for the\nweek ended March 7. (See Chart 6, lower section.) The fol-\nlowing individual price changes were reported:\nPrint cloth: Spot prices increased 6 per cent. Sales in one\nday last week 30,000,000 yards. Sales in January the larg-\nest since September 1939. Unfilled orders will require the\ncurrent rate of production through June. Buying of print\ncloth mainly reflects civilian demand,\nCottonseed oil: Spot price increased. Futures higher. Ex-\npectation of reduced imports of vegetable oils from Far East,\nespecially palm and coconut 011, the main influence. Accord-\n1ng to Presidential proclamation last week, coconut, palm\nkernel 011, copra and palm kernels were placed under export\nlicensing control.\nLard: Spot price increased. Futures higher. The trade be-\nlieves that Britain will make large purchases in the United\nStates of foodstuffs including lard after the passage of\nthe lend-lease bill.\nRegraded Uclassified\n322\n8 -\nLead: Price raised $2.00 per ton last week, following recent\n$3.00 increase, initiated by American Smelting. Lead has\nbeen placed on export licensing list. Imports of foreign\nlead averaged 17,068 tons per month in the last 6 months\nof 1940 compared with 4,326 tons per month in the first\n6 months.\nZino: No change in spot price, which 18 nominal. Futures\nprices sharply higher. Trading in zinc futures 1e now\nbanned except for liquidation of open positions. Galvanized\nsheet production for the week ended March 1 dropped to 71\nper cent of capacity, a new low for 1941, as compared with\n77 per cent in the preceding week, due to shortage of zinc.\nWeekly business indexes\nAll but two components of the New York Times index of\nbusiness activity showed gains after allowance for seasonal\nfactors in the week ended March 1. As 8. result the index\nrose 1.0 to 122.6, thereby very slightly exceeding the pre-\nvious record high for the index.\nThe principal factors in the rise were contra-seasonal\ngains in paperboard and electric power production. The only\ncomponents to decline were the adjusted indexes of automobile\nand lumber production. The former declined only elightly,\nwhile the latter dropped 5 points due to a contra-seasonal\ndecline in actual lumber production.\nBarron's index of business activity confirmed the rise\nin the Times index and advanced to a new high at 131.0 from\n130.0 in the previous week.\nPreliminary data for the week ended March 8 reveal a\ndecline in the adjusted index of automobile production due\nto a slight decrease in output to 126,000 units, attributed\nto some shortage of parts and materials, and a rise of ap-\nproximately seasonal proportions in steel ingot production.\nDuring the current week steel operations are scheduled at a\nnew high of 98.8 per cent of capacity, as compared with 97.5\nper cent in the previous week.\nRegraded Uclassified\n323\nINDEXES OF wgw ORDERO\nCombined Index of How Orders end Selected Components\n1940\nChart 1\nCONFIDENTIAL\n1939\n.\nD\nF\nM\nA\n-\nA\n5\n-\nPERCENTAGE\nCODENTABLE\nPOINTS\nPOINTS\n220\n220\n210\n210\nTotal [combined index)\n1956 - 100\n200\n200\n190\n190\n160\n180\n170\n170\n160\n160\n150\n150\n140\n140\n130\n130\n120\n120\n110\n110\n100\n100\n90\n90\n60\nTotal excluding Steel and Textiles\n80\n70\n70\n60\n8\n50\n50\n40\n8\nSteel Orders\n30\n30\n20\n20\n10\nTextile Orders\n10\no\nA\n-\no\n.\ne\n.\nA\nM\nA\n-\n0\n.\nD\nd\nF\nM\n&\n0\n.\ndi\n.\nA\n.\no\n.\na\n1939\n1940\n1941\n- # the Secretary of - Treasury\n- of - will -\n1-M-D\nRAILROAD SITUATION\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nOCT.\nNOV.\nDEC.\nCARS\nCARS\nTHOUSANDS\nTHOUSANDS\nFreight Carloadings\nWEEKLY AVERAGES\n900\n900\n800\n600\n'40'\n'4li\n700\n700\n600\n600\n1'39\n500\n500\n400\n400\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nOCT.\nNOV.\nDEC.\nDOLLARS\nDOLLARS\nMILL IONS\nMILLIONS\nNet Railway Operating Income\nCLASS I RAILROADS\n100\n100\n80\n80\n'41\n'40\n60\n60\n40\n40\nV39\n20\n20\no\no\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nocT.\nNOV.\nDEC.\nCARS\nCARS\nTHOUSANDS\nTHOUSANDS\nNew Freight Car Orders\n20\n20\n'39\n'40\n'41\n15\n15\n10\n10\n5\n5\n0\no\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nOCT.\nNOV.\nDEC.\nJAN.\nFEB.\n324\nno Chart\nOffice of the Secretary of the Transury\nDivides of - and\nRegraded'Uclassi\nU.S. TOTAL TRADE AND EXPORTS. BY COMMODITIES\nDate\nHIS\n(FII\n1932\nop\n1935\n11th\n-\nHIS\n-\n-\nDOLLARS\nDOL(+98\nskillipme\n-\n400\nTOTAL TRADE\nAno\n480\n410\n400\nare\n350\n110\nExports\nImports\n-\n300\n100\n250\nass\n200\n:00\n130\n156\n190\n100\n150\nHE\nTrade Balance\nHOO\n-\nso\n-\n6\n-\n-so\n-\n-400\nF\n-\n1938\nHM\nTHE\n-\n1984\nFREE\n1936\n-\n-\n1939\n1942\n1541\nEXPORTS OF U.S. MERCHANDISE\nTotal Nonagricultural\nSolected Nonagricultural Commodities\nDOLLARS\nDOLLARS\nDOLLARS\nDOLLARS\n!\nMilliane\nMilliams\nMilliams\nMillians\nMechinary\n- and\ntren and Stael loss\nAN\n49\n(Ind lines)\n18\nà\n325\n44\n:\n10\n-\nM\n\"\n11.\n.\n9\nYes\n300\nNO\n10\n.\n-\nè\n%\nMI\n.\n4\n-\n45\n29\n14\n275\nNine ARE\n40\n20\nse\n-\n281\n11\nis\n45\n250\n2F\nan\nin\n42\nF\n-\n29\n5\nes\n125\n-\n20\na\nIN\n2\n.\n.\n-\n-\ne\n-\nP\n77\n18\n40\n\"\n200\nAutomabiles\n18\nis\n10\n175\n.\n\"\nHI\nM\n30\ne\n\"\n10\n-\nF\n-\nA\nM\nof\n+\nA.\n$\no\n-\nB\nin\n150\n\"\n10\n.\nAircraft\n\"\n\"\n-\na\nA\n.\nP\n125\n45\n18\nIN\nComi\n45\n.\nis\n*\n100\n\"\n#\na\n#\na\nA\n#\n.\n-\n,\ne\n.\ne\nR\n-\n=\nit\na\n-\ne\ne\n=\n75\nW\nChammals\n\"\n=\n21\nCappar\n\"\n10\n20\n50\n-\n:\n\"\n18\n\"\n.\ny\nis\n10\n10\n25\n20\n,\n1\n.\n28-\n-\na\n@\ne\na JAM. MAR MAY JULY SEPT. NOV.\n4\n*\nM\nA\n-\n/\n4\nA\n.\n-\n.\n/\n-\n*\nA\n-\ne\n-\nTotal Agricultural\nSelected Agricultural Commodities\nDOLLARS\nDOLLARS\nDOLLARS\nDOLLARS\nT\nMillians\n-\nMillions\nCotton\nTobacco\nWheet and Time\nse\nis\n10\n-\n150\n15\nja\n\"\n38\n\"\n.\n125\n11\na\n45\n,\nM\n4d\n=\n20\nCom\n100\n-\n=\n19\n240\n10\n18\nan\nF\n75\n29\n,\n.\n20\nas\n.\n5\n,\n-\n2.\na\n,\n.\na\n.\nso\nVM\n18\n\"\n\"\n39\nMISSLE and LAFE\nfruits Snall -\n5\n18\n16\n16\nCamel\n25\n29-\n7%\n2.\n.\nil\n%\no\n6\n0\n-\nNOV.\n,\n#\n-\n-\n+\n-\n9\n-\nà\n#\nA\na\nJAM\nMAIL\nMAY\nJULY\nMAT\n€\nC-MP\n- - - -\n-\nI\nRegraded Uclassifi\nLIGHTERAGE FRE\nIN\nSTORAGE\nAND ON HAND FOR UNLOADING IN NEW YORK HARBOR®\n1939\n1940\n1941\nNOV.\nDEC.\nJAN.\nFEB.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nOCT.\nNOV.\nDEC\nJAN.\nFEB\nMAR,\nAPR.\nCARLOADS\nGARLGABS\nTHOUSANDS\nTHOUSANDS\n12\n12\n11\n11\n10\n10\n9\n9\n8\n8\n7\n7\n6\n6\n5\n5\n4.\n4\n3\n,\n28\nII\n25\n9\n23\n6\n20\n3\n17\n2\n16\n30\n13\n27\n11\n25\n822\n6\n20\n3\n17\n31\n14\n28\n12\n26\n9\n23\n7\n21\n4\n18\nI\n15\n-\n15\n29\n12\n26\nmov.\nDEC.\nJM.\nro.\nMAR.\nAPR.\nMAY\nJUNE\nJULY\nAUG.\nSEPT.\nocT.\nNOV.\nDCC.\nJAB.\nÉ\nMAS.\nAPC.\n1939\n1940\n1941\nLABILY EXPORT FACTORY, BUT ABOUT 10E REPRESENTS PREIENT FOR LOCAL\nAND COASTAL SHIPMONT. FIGURES EXCLUDE GRAIN.\n326\nChart 4\nOlline of the Security of the Treasury\n- of - of -\nC-303-A\nRegraded Ucla\nEXPORT FREIGHT MOVEMENT\n1939\n1940\n1941\nM\nD\nJ.\nF\nM\nA\nM\nA\no\nN\nD\nJ\nF\nA\n#\nCARLOADS\nCARLOADS\nTHOUSANDS\nTHOUSANDS\nExports\n6\n6\nFrom Now York\n5\n5\n4.\n4\n3\n3\n2\n2\n.\na\nJ\n,\nH\nA\nM\nJ\nJ\nA\n$\no\nN\nD\nJ\nF\nM\nA\n.\n+\n1939\n1940\n1941\nPAPLOADS\nGARLOADS\nHOUSANDS\nTHOUSANDS\nReceipts for Export\n7\n7\n6\n6\n5\n5\n4\nAmr AT Now York®\n4\n3\n3\n2\n2\nAT 9 OTHER NORTH\nATLANTIC PORTS**\nI\nI\no\no\n.\nD\nJ\n/\nM\nA\nM\nJ\nJ\nA\n$\no\nN\nD\nJ\nF\nM\nA\nM\na\n1939\n1940\n1941\nAS ESTIMATED FROM DATA or GENERAL MARAGERS' ASSOCIATION OF NEW YORK.\nPRASSOCIATION or AMERICAN BAILBOADS.\n327\nOffice of the Secretary of 4a Trumy\nC-382\n- of and\nRegraded Uclassifi\nChart 5\nNOVEMENT OF BASIC COMMODITY PRICES\nDomestic and Imported\n328\nChart 6\nAUGUST 1939 - 100\n1940\n1941\n1941\nJ\nF\n.\nA\nM\nJ\nA\na\no\n.\nB\nJ\n,\nJANUARY\nM\nA\nM\nFEBRUARY\nJ\nMARCH\nPER\n4\nPER\nPOR\n16\n25\n8\n15\n22\nAPRIL\na\n15\n22\n29\n5\n12\nCENT\n19\n26\nWeekly Average\nCENT\nCENT\nPER\nDaily\nCENT\n135\n135\n132\n132\n130\n130\n128\n128\n11 IMPORTED\n125\n125\nCOMMODITIES\n11\nIMPORTED\nCOMMODITIES\n124\n124\n120\n120\n120\n115\n120\n115\n17 DOMESTIC\nCOMMODITIES\n116\n17 DOMESTIC\n110\n110\nCOMMODITIES\n116\n105\n105\n112\n112\n100\nJ\n,\nM\nA\nM\nJ\nJ\nA\n$\no\nN\nD\n100\nJ\nF\nM\nA\n108\nM\nJ\n4\n11\n1940\n16\n25\n1\n1941\n6\n15\n22\nI\n108\n8\n15\n22\n29\n5\n12\n19\n26\nJANUARY\nFEBRUARY\nMARCH\nAPRIL\n1941\nPercentage Change for Individual Commodities, August 1940 Low to February 26, 1941, and to March 7, 1941\nPER\nCENT\nPER\nCENT\n0000A 67.95\n17 DONESTIC COMMODITIES\n11 IMPORTED COMMODITIES\n50\nTALLOW 50.0%\n50\n400L 52.3%\nVEHICLLAS 48.3%\nBIRLAP 45.9%\n40\n40\nAPRINT OLOTH 11.0\n33.25\n30\nALARD 26.4%\n30\nCOTTONICES OIL\n26.4\nSOFFEE 27.9%\n\"MINICAT\n25.0%\nI\n21.4%\nTRUSAR 22.4%\n20\n21.1%\nPLASSEE 21.3\nMARLEY\n15,2%\n20\nANGLIN\n15,2%\nAZIN\n15.1%\nSCRAP, DOM.\n14.5%\n-BUTTER\n13.2%\n- 12.45\n10\n*STEERS\nDE\nCOFFEE\n11.4\n10\n100TTOR\nB-25\nMILK 5.9%\nTETEL SOMP, DF. 5.5%\n4718 2.2%\no\no\n100M -2.7%\n-10\n-10\nAug. Low\nFce.26 Man.7\nAug. Low\nFca.28 Man.7\nOffice of the Secretary of the Treasury\nDivision of Reserved and Statentics\nP - 199 - 6\nRegraded Uclassified"
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