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Volume 425, July 26 – July 29, 1941
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Volume 425, July 26 – July 29, 1941
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 425
July 26 - 29, 1941
Regraded Unclassified
- L -
Book Page
Lasard Freree
See War Conditions: Foreign Funds Control
- P -
Portugal
See War Conditions: Foreign Funds Control
- R - -
Research and Statistics, Division of
Report on projects during June 1941
425
31
Revenue Revision
"Your New Taxes": American Forum of the Air -
7/27/41
96
- S -
Silesian-American Corporation
See War Conditions: Foreign Funds Control
- T - -
Taxation
See Revenue Revision
- U - -
United Kingdom
See War Conditions
- W -
War Conditions
Airplanes:
War Department report on number and disposition
of planes on May 31 and June 30, 1941
7
Shipments to United Kingdom and overseas commands -
British Air Commission report - - 7/28/41
118
Belgium:
Bank of Belgium litigation against Bank of France
concerning $250 million worth of gold at
Dakar: Present situation discussed in Cochran
memorandum - 7/28/41
127
China:
Hall-Patch to be appointed British member of
Stabilisation Board temporarily - - 7/28/41
135
(See also Book 427, page 164)
Regraded Unclassified
- W - (Continued)
Book
Page
War Conditions (Continued)
Exchange market resume' - 7/26/41. etc.
425
30,124,184,187
Export Control:
Exports of petroleum products, scrap iron, and
scrap steel from United States to Japan,
Russia, Spain, and Great Britain, week ending
July 26, 1941,
126
Foreign Funds Control:
Administration of Executive Order 8389, as amended:
(See also Book 411)
Conference; present: representatives of
Treasury, State, and Justice - 7/26/41
1
a) Discussion of
1) Applications of Anaconda Copper
Mining Company, Silesian-American
Corporation, and Lazard Freres
2) General problems of Finland
3) Revocation of outstanding license
allowing British Purchasing
Commission to pay Bank of Canada
for account of French Government
Conference - 8/2/41: See Book 427, page 180
a) SS TATUTA MARU discussed
b) Portugal: general license discussed
Conference - 8/5/41: Book 428, page 125
a) Vah Chang Trading Corporation license
discussed
b) Representatives to Singapore, Rangoon. London,
and Washington from Foreign Exchange Control
in China discussed
c) United States attitude toward trade with
Japan discussed
1) Asphalt exporte reviewed
Conference - 8/13/41: Book 432, page 204
a) Society for Chemical Industry (Ciba) Basel,
Switzerland: application discussed
Japan:
Regulations for exchange control as set forth in
Tokyo reported by American Embasey - 7/28/41
153
Military Planning:
Reports from London transmitted by Halifax -
7/28-29/41
165,212,214
War Department bulletin:
German Panter units in Jugoslavia - 7/28/41
170
Purchasing Mission:
See also War Conditions: Foreign Funds Control
Federal Reserve Bank of New York statement showing
dollar disbursaments, week ending July 16, 1941
70
Vesting order sales - 7/28/41
122,123
Regraded Unclassified
1
July 26, 1941
IORANDUM FOR THE SECRETARY'S FILES:
A meeting relative to the administration of Executive Order
3589, as amended, was held in Mr. Foley's office at 2:00 p.m.,
July 26, 1941, attended from time to time by the following:
lessrs. Foley (Chairman), Pehle, Bernstein, Towson, Carre,
Fox, Jasa and Timmons for the Treasury, Messrs. Acheson,
Luthringer and Miller for State, Vr. Rosenwald for Justice.
Mr. Carre, Chief of the Securities Section of the Foreign
Funds Control, presented a summary statement of the transactions
involved in three applications filed by the Anaconda Copper
ining Company, the Silesian-American Corporation and Lazard
Freres and Company, the approval of which would result in the
control of the Silesian Holding Company and the Silesian-American
Corporation passing to Ikap, a Swiss corporation acting for a
group of Swiss bankers, some of whom remain unnamed. After a
careful examination of all the facts involved and E discussion
of the various policy considerations involved in such action,
it was unanimously agreed that the applications in question should
be immediately denied and a statement to that effect given to
the press. This was done at approximately 4:15 p.m. Mr. Pehle
explained that the issuance of a press release when a decision
was taken by the Committee had already been cleared with the
Securities and Exchange Commission. It was further agreed that
& memorandum should be prepared by Monday morning outlining the
policy of this Covernment with respect to this and similar cases.
The first draft of such statement is to be prepared by Messrs.
Luthringer and Miller of State and will be discussed with Treasury
and Justice on Monday. Such statement is in general to explain
that a concerted attempt is under way by which Germany hopes to
use blocked or looted funds to buy out American holdings in the
occupied countries. These schemes were not initiated prior to
the several invasions, but a number have now been prepared and
are being developed to a high point of ingenuity, including
operation through neutral exchanges, and the use of Swiss dummy
corporations.
Mr. Pehle then referred to three general problems which the
Finnish Minister has discussed with officers of both the State
and Treasury Departments. The first relates to transfers from
Regraded Unclassified
2
- 2 -
orivate blocked Finnish accounts to the Finnish Central Bank.
,pplications have been received by the Foreign Funds Control
for permission to effect approximately $500,000 worth of such
transfers, and it was pointed out that if any such applications
wore granted, there would be many more similar applications
Tiled. The purpose of such transfers, the Finnish Minister
explained on several occasions, is to provide business enter-
prises operating in Finland, notably the great Finnish pulp
exporting firms, with local currency balances with which to
l'inance continuing business operations. It has not been the
policy of the Foreign Funds Control to approve applications
of this character, although the French in particular have argued
strongly that approval of such applications should be granted.
P. .cheson suggested to Mr. Luthringer that a tentative state-
ment of policy be drawn up and discussed with the European Di-
vision in State, to the effect that in view of the fact that
Finland is presently in a position enalogous to occupied France,
the policy of the Treasury with respect to the transfers in
question should not be, altered in the case of Finland. The
/innish Minister has also requested that two Tinnish ships
presently on their way to the United States be allowed to sell
their cargoes in this country and remit the proceeds of such
sales to the Swedish Central Bank in order to finance purchases
by Finland in Sweden. It was agreed that this application
should not be approved. The Minister has raised the question
of whether debt service will be permitted on Finnish bonds held
in the United States. This does not appear to be a pressing
problem, inasmich as only old maturities are concerned and there
are several problems that must be worked out, particularly the
possibility that some of such bonds are held in occupied countries
or that the coupons will be presented through neutral countries.
In line with present policy, the Control will proceed to license
payment of interest in all clean" cases.
Ir. Pehle referred to an application, Dallas 423, which was
received today by phone. It relates to the exporting of 14,000
beles of cotton purchased by the Missho Company of Osaka, Japan,
for delivery in Shanghai, China. It was agreed that no action
should be taken on such application at this time, pending the
receipt of further information relative thereto.
Reference was also made to a telegram received from the
Collector of Customs in Portland, Oregon, inquiring whether
merchandise to be destined for Japan could be loaded on board
ship. A telegram was despatched to the Collector stating that
all operations connected with the export of such goods could
De effected only pursuant to licenses issued under the Order.
Regraded Unclassified
3
- 3 -
Er. Bernstein said that Supplement 1 of the Proclaimed
List of Certain Blocked Nationals was being printed and
proofread over the weekend and would be printed on Monday.
Ir. Acheson of State referred to two German newspapers in
Bolivia which have been recommended for deletion from the
Proclaimed List. Such action will, however, not be taken at
this time.
The Committee unanimously expressed its appreciation to
Miss McGuire for her splendid efforts in handling the trans-
portation arrangements for the group being sent to Hawaii and
the Philippine Islands,
There was a brief discussion of certain aspects of the
trade problems which will arise as a result of the freezing of
Japan and it was agreed that the problems would receive further
consideration.
Mr. Acheson reported that the revocation of the outstanding
license allowing the British Purchasing Commission to pay the
Bank of Canada for account of the French Government had been
cleared in the State Department.
Regraded Unclassified
4
July 26, 1941
Dear Mr. Lovett:
In the absence of the Secretary,
I am acknowledging receipt of your con-
fidential letter of July 22nd.
I shall hold this for Mr. Morgen-
thau's personal attention.
Yours sincerely,
H.S.Klatz.
H. S. Klotz
Private Secretary
Hon. Robert A. Lovett,
Assistant Secretary of War for Air,
War Department,
Washington, D.C.
Regraded Unclassified
5
July 26, 1941
Dear Mr. Lovett:
In the absence of the Secretary,
I am acknowledging receipt of your con-
fidential letter of July 22nd.
I shall hold this for Mr. Morgen-
thau's personal attention.
Yours sincerely,
H.S. Klotzc
H.S. Klots
Private Secretary
Hon. Robert A. Lovett,
Assistant Secretary of War for Air,
War Department,
Washington, D.C.
Regraded Unclassified
July 26, 1941
Dear Mr. Lovett:
In the absence of the Secretary,
I am acknowledging receipt of your con-
fidential letter of July 22nd.
I shall hold this for Mr. Morgen-
thau's personal attention.
Yours sincerely,
11.S. Klotz
Private Secretary
Non. Robert A. Lovett,
Assistant Secretary of War for Air,
War Department,
Washington, D. C.
Regraded Unclassified
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY FOR AIR
WASHINGTON, D.C.
July 22, 1941
Honorable Henry Morgenthau, Jr.,
The Secretary of the Treasury,
Washington, D. C.
Dear Mr. Secretary:
Attached is a schedule giving the present strength which
the Air Corps could have sent into combat on May 31 and on June 30.
This chart also shows the disposition of the planes -
in Continental United States, at Foreign U. S. Stations, and the
number grounded for modernisation, service testa or repair.
Very sincerely yours,
ROBERT A. LOVETT
Assistant Secretary of War for Air
Enclosure
Regraded Unclassified
COMPARATIVE
FIR FOR USE AGAINST MODERS AIR FORCE
SECRET
Stavy
Medium
Light
Dive
Benbers
Dembers
Beabers
Purmit
Totals
my n
June 30
May 31
June 30
May 31
June 30
May 31
June 30
My n
Ims 30
May n
James 30
Im Continuate] D. s.
98
62
54
5
22
184
266
296
427
At Foreign Stabiems (U. s.)
n
30
306
299
337
329
Undergedag Mederniarkion,
Service Tests, or Repair.
a
16
75
103
123
138
75
62
294
319
Totals
120
108
129
190
123
138
12
565
627
927
2075
SECRET
Regraded Unclassified
9
FORDEFENSE
BUY
FIELD ORGANIZATION News Letter
UNITED
STATES
SAVINOS
DEFENSE SAVINGS STAFF
BONDS
TREASURY DEPARTMENT, WASHINGTON, D. C.
July 26, 1941. Number 10.
TO THE FIELD STAFF:
This is the tenth issue of NEIS LSTTER. According to reports we
are receiving, it is serving a useful purpose. NEIS LETTER is designed
to bring to the members of our field organization interesting items
concerning the activities of the various State, county, and local
Defense Savings Committees throughout the land.
We are always glad to receive news items of general interest, An
idea that has been successful in one section of the country may like-
wise be very useful in other sections. It is on such an interchange
of ideas that great and effective organizations are built. All of us
are seeking the same end. We have undertaken to perform a service which
will have a lasting effect upon the future of this Nation.
The functions of the field organization may be grouped under two
heads, The first task is to educate every man, woman, and child to the
importance of the Defense Savings Program, and to explain the securities
in an understandable manner. The second task is to provide convenient
purchasing plans for those who wish to own the Securities.
To accomplish these purposes a great educational program is under
way and methods for convenient purchasing have been established. Others
may be developed, but at present the most popular purchasing plans are:
Direct purchase from fiscal ngents, and by mail from the Treasury; pay
roll allotment; the "group agent" plan, developed by Federal and other
Governmental agencies; stamp banks located in stores, shops, offices,
end schools; and thrift clubs established by social and other groups.
The march of events provides ample motivation. Americans want to
defond their Nation. Our task is to make them realize that they can
help And help now by purchasing Defense Savings Securities,
Sincerely yours,
GALE F. JOHNSTON
Field Director, Defense Savings Staff
Regraded Unclassified
10
HONORARY CHAIRMEN
Nevada, New York, and Rhode Island Governors
Accept Appointment
Secretary Morgenthau has announced that Governor E. P. Carville of
Nevada, Governor Herbert H. Lehman of New York, and Governor J. Howard McGrath
of Rhode Island have accepted Honorary Chairmanship of the Defense Savings
Committees being organized in their states.
LEADERS APPOINTED IN OHIO
Secretary Morgenthau has announced appointment of Roy D. Moore, Chair-
man of the Defense Savings Committee for the State of Ohio, and of John
McSweeney, Ohio State Administrator of the Defense Savings Staff,
Mr. Moore, whose home is in Canton, is the vice president and general
manager of the Brush-Moore newspapers. Mr. McSweeney of Wooster was formerly
State Director of Public Welfare and member of Congress from the State of Ohio,
IN THIS ISSUE
FLORIDA Regional Conferences - page 3
FLORIDA STATE Offices 100% - page 3
A SHOW for a Stamp - page 3
CHARLOTTE Committee Hard at Work - page 4
MICHIGAN State Employees Enthusisatic- page 4
CONNECTICUT Public Employees page 5
CHAIRMEN Appointed for Minnesota Cities - page 5
STAMPS FOR DISHES in New Jersey - page 5
MINNEAPOLIS Aquatennial Bond Float - page 6
BRIDGEPORT Polish Societios Start Drive - page 6
MISSOURI Business Publicizes Program - page 7
STAP BANK Made Easy to Find - page 7
BONUS in Bonds page 7
DEFENSE-0-GRAMS page 7
COUNTY FAIR Pays in Bonds - page 7
SALARY ALLOTMENT Sweeps Missouri - page 8
PAYROLL ALLOTENT in Indiane - page 9
STREET CAR and Bus Workers to Invest in Defense - page 9
BANKS Advise Allotment Plans - page 10
PAYROLL ALLOT ENT PLANS Described - page 11
TEACHERS Learn of Program - page 12
SCHOOLS to Have Special Literature - page 12
STAT OUTLETS Increasing page 13
PURCHASERS The Made Headlines - page 14
ELKS ESSAY Contest Winners - page 15
MILK BOTTLES Enlisted - page 15
R.DIO PROGRAMS for the Week - page 16
QUOTABLE QUOTES - page 17
- 2 -
Regraded Unclassified
11
FLORIDA
Regional Conferences Leunch Local Orgenization
SIX REGIONAL CONFERENCES, in the three weeks immediately following the
first meeting of the Florida State Committee, storted the organization of
city end county committees in every part of the Peninsula State,
MORE THAN 500 key people sttended these eix meetings. Every one of he
67 counties wes officially represented at at least one of them. Mayors,
county officials, postmasters, benkers, business end civic leaders, and
representatives of the press perticipated in the discussions. All aspects of
the Defense Savings Program ware explained and the groundwork Inid for on
intensive campaign.
LINTON E. ALLEN, President of the First National Pank of Orlando and
Chairman of the Florida Defense Savings Committee, presided et each of these
meetings. State Administrator John L. Fohs, Deputy State Administrator
Karl Lehmann and field representative G. E. McCeskey of the Defense Sovings
Staff completed the group of reguler speakers.
HIGHLIGHTS of the meetings were tolks by the Governor and Mrs. Holland:
Covernor Holland, Honorary Chairmon of the State Committee,
present at the Jacksonville conference, declared that Florida's
goal was 100 per cent porticipation: "Every men, woman and
child in the state an investor in Defense Savings Fonds and
Stamps!"
Mrs. Holland addressed the regional conference in Tampa, where
she also officially christened a new freighter.
THE FIRST STATE OFFICE IN TALLAHASSEE to report that overy employee had
purchased at least one Defense Sovings Pond W38 that of Attorney General
J. Tom Wetson, who reported to State Administrator Fohs that all 33 of the
employees in his department hed purchased 1 bond and had pledged himself to
make a regular investment each psy day.
OTHER OFFICES OF THE STATE GOVERNMENT reporting that all of their
employees are investing regularly in Defense Sevings Pondsor Stamps include
the Floride Industriel Commission (Divisions of Workmen's Compensation,
Unemployment Compensation, and Employment Service) end the office of the State
Tressurer,
A Show For A Stamp
Children who are regular "Defense Savers" will be admitted free of charge
to Saturday morning shows given by the 110 theaters in the Sparks Circuit,
according to J. L. Cartwright, public relations executive for Sparks Theoters
and member of the Floride State Defense Savings Committee. Possession of a
card cerrying a 10-cent Defense Sevings Stomp with the card dated to indicate
that at loast one stemp hes been purchased within the pest week will be "the
price of admission."
ACTIVAMENT request
R 3 .
Regraded Unclassified
12
NORTH CAROLINA
Charlotte Committee Hard At Work
APPOINTMENT OF CHAIRMEN of the soveral divisions of the Defense Savings
Committee for Charlotte and Mecklenburg County has been announced by Word H.
Wood, divisions: chairman. The Mecklenburg County Connittoe includes the following
Banks
Industry
Speakers bureau
Labor
General organization
Motion picture Industry
Negro participation
Medical profession
Merchants
Civic clubs
Women's division
County communities
20 DEFENSE SAVINGS BONDS will be awarded as prizes in an essay contest
conducted anong children of the city and county schools, The bonds, which
will be of the $25 donomination, will be awarded for the best essays submitted
by October 15 on the subject, "Why Dofense Bonds Should Be Purchased." Eleven
banks and building and loan associations in Charlotte are giving the bonds,
100% PARTICIPATION in the Defense Savings Program is the achievenent. of
the 256 employees of Charlotte's four commorcial banks. Throe building and
loan associations likewise report that all of their employees are purchasing
bonds or stamps.
....
The Lexington Chair Company of Lexington, N. C., has given each of its
150 employees $3 worth of Dofense Savings Stanps 18 a starter toward the
regular purchase of Defense Savings Bonds.
,
I
-
I
O'Crowley Cleaners of Wilnington is the first business firm in that city
to report that all of its employees have purchased Defunse Savings Bonds or
Stamps. Paper bags used by this cleaning concern carry the message "For
Defense Buy United States Savings Bonds."
-
-
-
-
The North Carolina Federation of Women's Clubs has bought $3,000 worth of
Defense Savings Bonds,
-
Or
#
#
MICHIGAN STATE EMPLOYEES ENTHUSIASTIC
100% PARTICIPATION is the 10001 of the Detroit Branch of the Michigan
State Employment Service, A voluntary Defonse Savings Bond and Stamp Purchase
Plan has been installed in this office and already practically all of the 125
employees have signed pledge cards.
The Michigan State Department of Labor has installed a similar purchase
program for employees in its Lansing offices.
- 4
Regraded Unclassified
13
NEWS FROM OTHER STATES
CONNECTICUT
Waterbury city employees have been notified that it will be possible for
them to participate in the Defense Savings Program by authorized pay roll
allotments, according to a recent announcement by Mayor Vincent A, Scully and
City Controller Thomas M. Conlon.
Connecticut state employees, more than 10,000 of them, are participating
in the state government's systematic purchase plan for Defense Securities,
Many Ponemah workers are now having part of their wages paid in Defense
Savings Stamps. Superintendent John E. Tobin of the Ponemah Mills of Norwich
reported to Paul W. Franklin, Chairman of the Norwich Defense Savings Committee:
"There has boun an eager and enthusiastic response to this
program. From now on, at least $1,000 weekly will result from
this system, thereby aiding the Government in its ever-
increasing National Defense Program and at the same time encour-
aging the habit of thrift among our employees."
+ % # * * *
MINNESOTA
Charles F. Liscomb, insurance man and former president of the Duluth
Chamber of Commerce, has been appointed chairman of the Dofense Savings Com-
mittee for Duluth; Robert F. Pack, president of the Northern States Power
Company, has been named chairman of the Defense Savings Committee for
Minneapolis; and Ray F, Wentz, vice president of the Minnesota Federation of
Labor and business reprosentative of the St. Paul Trades and Labor Assembly,
has been appointed chairman of the Defense Savings Committee for St, Paul
and Ramsey County, Minnesota. In accepting his assointment, Mr. Wentz said:
"Labor and industry will work in closest harmony in this impor-
tant effort. We are all volunteering our time because this is a
big task in which we all must cooperate. Our country needs our
help, and it is of the utmost importance that people in all walks
of lifu invest in their Government."
*....
NEW JERSEY
The West End Theater in Newark is no longer giving away dishes. Letter
Carrier Goldenberg persuaded the manager to try giving away ten cent Defense
Savings Stamps and to see how his customers liked the idea. They were
enthusiastic! A representative of State Administrator Manning addressed the
theater audience the first night the stamps were given away. A reporter
from the Nowark Evening News interviewed scores who had received their first
Defense Stamps and had dotermined to begin saving for bonds.
5 -
Regraded Unclassified
AQUATENNIAL DEFENSE BOND FLOAT
A featured attraction in the parades held in connection with the Mionespolis Aquatennial was the flont pictured
above, the contribution of the Great Northern Railway
POLISH SOCIETIES START DEFENSE BOND DRIVE
Reposentatives of Polish lodges in
Undgeport, Community for Defense
Nomber 05 first step in campaign to
curromage lodge menthers to partici-
jerre 111 atelense suvings compaign.
From lotte Dr. B.L. Smy-
chairman of the central
commuter; Very Rev. Charles B.
S "I" D. (), O.M.C., pastor
of SU Michael Church Anthony
assistant trensurer of
36, Framis Loibe: and Michael
Politidy, president of St. Francis
beige With backs to comerac C'.
Letting Guild, assistant secretary,
Tol dobie F. Wegezyn, teller, of the
stectanics and Furmers Savings
Brook.
, HOTOS OHIO - o sector
Regraded Unclassified
15
MISSOURI
Business Finding Many Ways to Publicize Program
The Public Service Company of St, Louis has contributed streetcar and
bus cards of original and striking design to advertise the Defense Savings
Program. The cards remind one of the American flag, as they carry a sketch
of the Minute Man in the center of a fiold of blue with clternating red and
white stripes in which appear the words, "Buy U. S. Savings Bonds and Stamps."
The John Taylor Dry Goods Company in Kansas City has made its "stamp
bank" easy to find-red, white and blue bands and ribbons suspended from the
coiling, and arrows bearing the words "Defense Stamps," direct traffic in the
department store to the office where Defense Savings Stamps are on sale.
The Stupp Brothers Bridge and Iron Company of St. Louis, working largoly
on defonse contracts, post $25 Defense Bonds as bonuses to be paid to all
employees present on all working days and directly participating in the month-
ly tonnage quotes.
Merchants of Warrensburg designate "Defense Savings Stamp Days." On
these days, Dufense Savings Stamps are given away with sales.
The regular weekly "Morchants" Drawing" in Sturgeon awards Defense Savings
Stamps as prises. Moving pictures of such drawings are shown under the aus-
pices of the Sturgoon Defense Savings Committee at meetings where the Defense
Savings Program is explained.
*****
The Missouri Legislature has adopted = resolution endorsing the Defense
Savings Program.
The annual convention of the Missouri Federation of Women's Clubs heard
un address by Stete Administrator Dan K. New and then passed & resolution
heartily endorsing the Defense Savings Program.
The "Defense-O-Grams" of Administrator New an being well received and
widely reprinted in Missouri newspapers. From Defense-O-Grum Number 4:-
"Be Prepared' is the alogan of one of the greatest American Youth
Organizations
It is also the watchword of America today, when
Democracy is being challenged. Boy Scouts, and in fact, all American
youth can best serve their country now by buying Dofense Savings Stamps
WILL YOU DO YOUR PART?
...
See your Postmaster today."
Prizes at the Bothiny County Fair - some $5,000 will be paid in De-
funse Savings Bonds and Stamps this year. Postmaster Walter Bartlett, chair-
min of the Bethany Defense Sevings Committee, has also arranged for booths at
the fair grounds where Defense Savings Stamps will be sold.
- 7 -
Regraded Unclassified
17
FATRULL ALLUTMENT IN INDIANA
Some of the largest business establishments in the state have ind1-
cated that they have installed, or would soon install, payroll allotment
plans for the purchase of Defense Savings Bonds. Among these large cone
cerns are:
Bendix Aviation Corporation
Eli Lilly and Company
No. H. Block Company
Lincoln National Life Insurance Co.
General Motors Corporation
Posture Research Corporation
(Allison & Chevrolet plants in
Real Silk Hosiery Mills, Inc.
Indianapolis; other plants in
H. P. Wasson & Company
Anderson, Kokomo and Muncie)
U. S. Rubber Company
Indiana Power & Light Company
(Plants in Indianapolis and
Indianapolis Street Railways
Mishawaka)
STREET CAR AND BUS WORKERS TO INVEST IN DEFENSE
In addition to the Indianapolis Street Railways, noted above, two other
street car and bus companies have installed salary allotment plans.
The Chicago Surface Lines' plan was announced by Charles W. Chase, who
said:
"The Plan will serve a two-fold purpose. It provides a safe
medium for regular savings by employees and it furnishes an
opportunity to aid the Government in financing of the national
defense program,"
The Capital Transit Company in Washington, D. C. has also made it pos-
sible for its employees to buy Defense Savings Bonds through pay allotments,
BOTH EMPLOYERS AND EMPLOYEES BENEFIT
How Do Salary Allotment Plans Benefit The Employee? They provide simple,
easy and automatic means by which the employee can save regularly any amount
he or she can afford. The salary allotment plan gives the employee an opportunity
to do his or her patriotic duty. It prevents carelessness or forgetfulness,
and assures an uninterrupted program of savings each pay period, with a mini-
main of effort on the part of the employee, It prevents the employee from skipping
savings period and spending the money for non-essentials. Remember the old
saying about the road being paved with good intentions.
Does A Salary Allotment Plan Benefit The Employer? This plan gives an
employer an opportunity to do a patriotic duty. It builds morale in his or-
ganization. It is safe to say that any employer who is blessed with thrifty,
loyal, patriotic employees is for better off than one whose employees lack
these qualities. It is hard to imagine any employer who would desire employ-
eeg who never save a cent, or who care nothing for their country.
From "Salary Allotment Plan Applied to the
Defense Savings Program," a publication of
ithe Defense Savings Staff. Now available,
-
Regraded Unclassified
18
BANKS ADVISE ALLOTMENT PLANS
BANKS THROUGHOUT THE COUNTRY are now making a most valuable contribution
to the Defense Savings Program by consulting and advising with employers with
respect to the establishmunt in their plants and offices of voluntary salary
Allotment plans for the purchase of Dofense Savings Bonds.
IN SEATTLE, the Seattle Trust and Savings Bank notifiod companies and
corporations which use its facilities:
"The Unitod States Government has developed a very sound program
for financing National Defense,
You can cooperate by urging
your officers and employees to purchase regularly United States
Defense Savings Bonds and Stamps.
"We will assist you, if you wish, in installing one of several ef-
fective and practical plans to expedite and service such purchases
by members of your organization, without compensation or profit to
ourselves
THE FIRST CONCERN to take advantage of the Seattle Trust Company's
offer was the United Nati nal Companies. This organization with 400 employees
gave each one a 50¢ Stamp in an album and promised thom the last Stamp nec-
essary to complete an album for exchange for a $50 Bond.
# #
IN HARTFORD, the Hartford National Bank and Trust Company addressed its
business and industrial customers:
"Adoption of n salary allotment olan for your employees would en-
able many to purchase Defense Bonds who might not otherwise invest
in and contribute towards National Defense. This bank is pre-
pared and anxious to aid its customers and friends with suggestions,
forms and ideas in putting n. salary allotment plan into operation."
R. B. Newell, President of the Hartford National, is Chairman of the
Defense Savings Committee for Connecticut.
+ 4b
IN NEW HAVEN, nine prominent banks advertised in the nowspaper that
their employees were purchasing Defense Savings Bonds through salary allot-
ment and that they united in urging all employers to adopt salary allotmont
olans for the benefit of their employees.
IN NEW YORK, the New York Trust Company has announced that it has do-
vised 3 payroll allotment plan for the purchase of Series E Defense Savings
Bonds and that its
"facilities are available to expedite the purchase, registration and
delivery of these Bonds to the employees of corporations which install
such plans."
-
E
- 10 -
Regraded Unclassified
19
PAY ROLL ALLOTMENT PLANS DESCRIBED
Some of the most prominent business organizations in the United States
give full details of the plans permitting their employees to participate
conveniently in the Defense Savings Program, in the pamphlets listed below:
AMERICAN TELEPHONE & TELEGRAPH COMPANY
"Pay Roll Allotment Plan for United States Savings Bonds" (Subsidiary
companies have descriptive pamphlets very similar in format and content.)
ASSOCIATION OF AMERICAN RAILROADS
"For American Railroad Employees-A Systematic Plan for the Purchase
of U. S. Defense Savings Bonds" (More than 100 different railroad
companies have ordered copies of this pamphlet bearing their own imprint.)
BETHLEHEM STEEL CORPORATION
"Defense Savings Plan"
BOEING AIRCRAFT CORPORATION
"Voluntary Payroll Deduction Plan for Purchase of United States
Savings Bonds"
CHRYSLER CORPORATION
"A Plan for Chrysler Corporation Employees Who Desire to Purchase U. S.
Government Defense Savings Bonds Through Voluntary Pay Roll Deductions"
FEDERAL RESERVE SYSTEM
"Voluntary Pay Roll Deduction Plan for Purchase of Defense Savings Bonds"
GENERAL ELECTRIC COMPANY
"Defense Savings Plan"
MISSISSIPPI POWER & LIGHT COMPANY
"Voluntary Pay Roll Allotment Plan for Purchase of U. S. Defense
Savings Bonds and Sale of Defense Postal Savings Stamps to Employees
and Public"
MURRAY CORPORATION OF AMERICA
"Systematic Savings Plan for the Purchase of U. S. Defense Savings Bonds"
NORTHERN PACIFIC RAILWAY
"An Investment Opportunity for Northern Pacific Employees"
PHILLIPS PETROLEUM COMPANY
"Voluntary Pay Roll Deduction Plan for the Purchase of U. S. Defense
Savings Bonds"
PUBLIC SERVICE CORPORATION OF NEW JERSEY
"Plan for Purchase of U. 5. Defense Savings Bonds, Series 3, By
Employees"
STANDARD on COMPANY OF NEW JERSEY
"United States Savings Bonds National Defense Program - Esso Employee
Purchase Plans"
UNITED AIRCRAFT CORPORATION
"Voluntary Pay Roll Deduction Plan for Purchase of Defense Savings Bonds"
U. S. RUBBER COMPANY
"Systematic Savings Plan for the Purchase of U. S. Defense Savings Bonds"
These are only a few of the corporations which have issued pamphlets dem
cribing their Defense Savings salary allotment plans. Others may be noted in
later issues of this NEWS LETTER.
-
11 -
Regraded Unclassified
20
TEACHERS LEARN OF DEFENSE SAVINGS PROGRAM
STUDENTS IN SUMMER SESSIONS conducted by 800 colleges and universities
are hearing about the Defense Savings Program. The Treasury recently wrote to
the deans of these summer sessions and offered to make Defense Savings
pamphlets available for distribution to their students. Almost all of the
deans responded by requesting a sufficient number of pamphlets to place
copies in the hands of all their students,
MANY OF THESE STUDENTS WILL BE TEACHERS in the fall; hence, the impor-
tance of bringing the Defense Savings Program to their attention is apparent.
It is suggested that state and local committees follow up this contact,
offer to provide speakers for summer school assemblies, and make sure
that both Defense Savings Bonds and Stamps are conveniently available
to this important group through campus postal stations, bookstores, and
nearby banks,
SCHOOLS TO HAVE SPECIAL LITERATURE
WHEN SCHOOLS OPEN in September, all state and county superintendents of
schools and all school superintendents in cities of more than 2,500 will have
before them a copy of a letter from Harold N. Graves, Assistant to the
Secretary of the Treasury, to John W. Studebaker, United Statos Commissioner
of Education. In this letter, Mr. Graves explains:
"The Treasury Department is interested in the participation of
the public schools as the great national agency of education, more
than as an outlet for the sale of defense securities.
Should
some school or class, of its own free will, desire to cooperate with
the Defense Program by instituting a plan for the purchase of bonds
and stamps, we would welcome the patriotic purpose. But the Govern-
ment has no desire to coerce, solicit or urgently influence the
public schools of America tc become sales agencies for bonds and
stamps.
"The Federal Government, through the Treasury Department and
the Office of Education, plans to furnish for use by the schools a
series of manuals, text and syllabi which schools can secure, with-
out cost, for the use of their classes and school libraries.
"The various manuals, pamphlets, source books, and syllabi
can be secured by any school from the county or city Defonse Savings
Committee where the school is located.
"
AVAILABILITY OF THE MATERIAL will be announced in the pages of the
NEWS LETTER.
- plactice BEFREE
- 12 -
Regraded Unclassified
21
STAMPS
Number and Variety of Outlets Increasing Rapidly
THE VARIETY OF CUTLETS for the sale of Defense Savings Stamps is
indicated by the following partial list of agencies which are known to
have them for sale:
Post offices
Including postal branches and sub-stations, there are
about 24,000 postal outlets.
Rural mail carriers
Authority for postmasters to advance Defense Savings
Stamps to their rural carriers has been granted by
the Post Office Department. There are about 32,000
rural mail carriers.
Banks and other financial institutions
Railroad ticket offices
Retail stores
)
The number of retail outlets selling
drug stores
)
Defense Savings Stamps is increasing
grocery stores
)
rapidly. In all parts of the country
dopartment stores
independent merchants and chain stores
clothing stores
)
are establishing "stamp banks" and,
varioty and
)
through advertising and in other ways,
limited price stores
)
pushing Stamp sales. Customers appre-
Hotels
ciate the convenience of being able
Restaurants
)
to buy Defense Savings Stamps when
Motion picture theatres
making other purchases.
Filling stations
)
"BUY DEFENSE SAVINGS STALPS HERE" plaques and replicas which the Treasury
Department is providing retailers who undertake to sell Dofense Savings Stamps
are now available. (The July 12 issue of the NEWS LETTER included the 8 x 10
inch replica.) The distribution of these plaques, replicas, posters and signs
La being worked out by the Defense Savings Staff in cooperation with State and
local Defense Savings Committees and various national trade associations. A
bullotin on this subject has becn sent to all State Administrators.
#
42
LOCAL COM.ITTEES will be largely responsible for the success of the cam-
paign to sell (not merely place on salo) Defenso Savings Stamps through
retail outlets. They will be depended upon to
1) explain the importance of the Defense Savings Program to those
directly responsible for the sale of the stamps;
2) arouse and sustain an enlightened interest in the philosophy of
the Defense Savings Program;
3) dramatize the Program in various ways.
REPORTS FROM LOCAL COMMITTEES which give an over-all picture of and
interesting incidents in the Defense Savings Stamp Program in their communi-
ties will be summarized in the NOWS LETTER.
- 13
Regraded Unclassified
22
PURCHASERS THO MADE HEADLINES
In Bridgeport, Conn.-Sam Aronson, Russian-born pants presser, out 3100 of his
savings into a Defense Bond and named the U. S. Government as beneficiary
in the event that he dies before its maturity. The Bridgeport Times-Ster
quotes him as saying:
"I've enjoyed my freedom here, the opportunity to go and come
as I please. People who grumble should look at Europe with
its dictators and its bloodshed and take some of the world's
goods they've accumulated hore and invest it in the greatest
nation on the face of the earth."
In Buffalo, N. Y.-John Paskuly, tall, husky restaurant owner, appeared in
the office of Assistant Postmaster John E. Keyes with three one-gallon
jars filled with pennios and said he would return later with two more
jugs, making enough "coppers" to complete payment for = 3500 Defonse
Savings Bond. Asked how he happened to save all the pennics, he repliods
"Why, when my wife, Georgia, and I closo the restaurant each
night, we tako all the pennica from the each register and drop
them in the jars."
In Nashville, Tonn.-Pivo prisoncrs at the State Ponitentiary-two of them
sorving life torms for murder-purchased substantial blocks of Defonse
Savings Bonds and Stamps, Johnny Vaughn bought 0650 worth of Bonds,
and the Nashville Tennessean quotes him 30 saying:
"If I can't use the money, Unclo Sam can. Maybe it'll spell
curtains for Hitler."
In New York City-Camp Fire Girls from Hilloide ilomes in the Bronx visitod
New York's Postmaster Albort Goldman to receive his congratulations on
being the first "100% for Defense Savinga" Camp Firo Group in the United
States.
In Orlando, Fla.-John Bravos, & naturalized American born in Grooce, who
operates a hat cleaning establishment, purchased $300 worth of Dofenso
Savings Bonds as an investment for his childron, and then bought Defense
Savings Stamps for each of his employees.
In Washington, D. C.-Boy Scout Troop 112 of Arlington, Virginia, purchased a
Defense Savings Bond at Treasury House from Gale F. Johnston, National
Field Director of the Defense Savings Staff. Sonior Patrol Loader David
Yagor, representing the troop, paid for the Bond with moncy saved during
the past year for a new troop flag and originally raised by sale of the
troop's mascot - a goat.
In Whitesboro, Texas-Ronald Edison Ranoy, 10 weeks, and Charles Alford
Tarpley, 18 months, are reported to to two of this city's youngest
financiers. Both are the proud owners of Defense Savings Bonds. Young
Tarpley bought his Bond with his "chicken and 028 money." His father is
c. railroad telegraph operator.
(#)owspapers used photographs in tolling these storios.)
- 14
Regraded Unclassified
WIN DEFENSE BONDS IN ESSAY CONTEST
MILK BOTTLES ENLISTED
DEFENSE
FOR
BUY
United States
Essay Cointest Winners En Route to National Convention in Phila-
Vin Lost to right, first prize winner, Grace Langley, 17, of Red Wing,
Defense Bonds
prise winner. Robert Gibsun, 10, of Cornred Alene, Idaho:
price " inner, Senorita Victoria Lopez, 10, of Sim Juan P.R.
and Stamps
La Grandin Field, New York, for Independence Holl, and the Elke
and Consention in Philadelphia where they received honors AS win-
not (ke Klve Delense Essay Contest. Prize- of $1,000, $500, 8250,
3/00 in Defense Savings Bonds were unwarded for the four best
atte "What Unito Sini Menus to Me."
Winner of the third prive
Because
Warryn Biermon, 17, of Unreisburg. Pm
YOUR
MONEY
WILL
TO
WORK
-
-
1
will
salt
YOUR
MONEY
live nother reaches for the morning milk, «he will be remitated of the
The
V
put
Savings Program. Milk companies distributing milk in paper
-
The are now proving Defense Savings intessages on one side Pic-
IT the right i- the container by Dairy Souled, Inc. New York
(ty, and the companies in the Borden groups
Regraded Unclassified
24
DEFENSE SAVINGS ON THE AIR
Leading Programs for the Coming Week
Tuesday, July 29
FOR AMERICA WE SING
7:30-8:00 P.M. (EST)
NBC Blue Network
A musical program featuring a 44-piece NBC symphony orchestra and chorus,
conducted by Dr. Frank Black.
GIEST STARS: Helen Jepson and Frank Parker.
This program, dedicated to Defense Savings, has been contributed by the
National Broadcasting Company. It will be heard regularly each week during
the coming year.
Wednesday, July 30
MILLIONS FOR DEFENSE
8:00-9:00 P.M. (EST)
(The Treasury Hour)
CBS Network
GUEST STARS: Bette Davis, Jack Benny and Company, Larry Adler, Tyrone
Power, Gertrude Neison, with Al Goodman and his band, Barry Wood and Ray
Block's choir.
Time for this program is contributed by the Texas Company. This La the fifth
in a 13-week series
Sunday, August 3
AMERICA PREFERRED
1,15-2,00 P.M. (EST)
MBS Network
NARRATOR: Pierre Van Passsen, noted author
GUEST ARTIST: Ania Dorfmann, pianist
Foreign-born authors, artists, and other distinguished persons who
"preferred America" appear on this scries of programs, contributed
by the Mutual Broadcasting System. This is the fourth program in
a 10-wack series.
*
*
#
"My people's freedom only dates back as far as the memory of some men
who are still living - and we set a higher value on liberty, perhaps, than
those who have known it for many generations. We know that our one hope
for the future lies in preserving democracy in America - and we want to
fight for democracy in every way we can. That is why we are so strongly
for the United States Defense Bonds and Stamps - They give us all a chance
to take part in the Dofense Effort. My people are not all well-to-do; but
rich or poor, I know we will buy bonda and stamps to the limit in order to
help defend our country. Our hope lies hore."
-Dorothy Maynor, Famous Negro Singer, speaking
as a guest star on "Willions For Defonse."
16
Regraded Unclassified
25
QUOTABLE QUOTES--
"n5 I write, it is not clear whether our country is at war and it may
not be any clearer when you read this. But whether we are at wer or not,
everyone knows that we are engaged in e Defense Program involving huge ex-
penditures for arms, aircraft, ships, camps and the thousand and one things
necessary to prepare our country to defend itself,
The Defense Program has improved all business, our own included,
and this improvement has led to better employee earnings due to longer hours,
fuller employment and better rates.
I recommend to you without reserve-
tion these United States Savings Ponds and hope you will help your Government
and yourself by buying them regularly and generously."
--F. E: Pritchard, President,
The Stanley Works, New Britain, Conn.
"Billions of dollars are required by our government for national defense.
Reising this money is not too difficult; but raising it without destroying our
national production machinery, or without creating a period of uncontrolled
inflation is a problem that can be solved only by the understanding cooperation
of every citizen. It is proposed to raise the necessary funds through taxetion,
and by berrowing, The borrowing is to be done, in part, through the sale of
Defense Savings Bonde to as many individuals as will buy them.
"The more people who purchase these bonds, the less the danger of post-wer
ad justment.
--George C. Long, Jr., President,
Phoenix Insurance Company.
Civilians with increased purchasing power to use in purchasing a
restricted supply of goods have a choice between saving and spending. If they
save part of their income, they must do without certain material comforts, but
they have something to show for it. If they spend all they earn, they boost
prices, and are forced to accept lower living standards without having e re-
serve fund to compensate them for their deprivations.
--The Washington Post, Washington, D. C.
"The predominant duty and responsibility resting today on every banker is
to give active, loyal and patriotic service towerds the sale of Defense Fonds,
Should this country ever find itself unable to defend itself, your bank
will be of littlo meaning to you or your patrons. It will become a memory of
how things used to be, but no longer ere,
"Every banker who desires the continued respect and confidence of his
neighborhood should identify himself with this great program to his utmost
ability and energy. What he does now will be long remambered,"
--Idaho Bankers Association Bulletin
- - -
1? -
Regraded Unclassified
26
TREASURY department
WASHINGTON
July 26, 1941
Memorandum for THE SECRETARY:
The following report is made of Stamp sales
at "Treasury House":
July 1-24
$18,504.10
July 25
969.65
Total
$19,473.75
GRAVES
Regraded Unclassified
27
TREASURY DEPARTMENT
WASHINGTON
July 26, 1941
Memorandum for THE SECRETARY
The following report is made of requests received
for "Any Bonds Today?" from the experimental mailing of
10,000 cards:
No. Requests
No. Copies
July 1 - 24
1060
6010
July 25
16
253*
1076
6263
*200 copies requested by a librarian
GRAVES
Regraded Unclassified
28
CONFIDENTIAL
UNITED STATES SAVINGS BONDS
Sales in July Compared with June, 1941
On Basis of Issue Price
First Twenty-one Business Days
(June 1-25, July 1-25)
(Amounts in thousands of dollars)
:
:
Sales
Increase or Decrease (-)
:
:
Item
in July Compared with June
:
:
:
July
June
:
Amount
Percent
:
:
:
:
Series 1- Post Offices
$ 41,993
$ 33,788
$ 8,205
24.3%
Series E 1- Banks
78,072
51,996
26,076
50,2
Series E - Total
120,065
85,784
34,281
40.0
Series F - Banks
20.993
25,048
-
4,055
- 16.2
Series G - Banks
131,287
160,194
-
28,907
- 18.0
Total
$272,346
$271,026
$ 1,320
0.5%
Office of the Secretary of the Treasury,
July 26, 1941.
Division of Research and Statistics.
Source: All figures are deposits with the Treasurer of the United States
on account of proceeds of sales of United States Savings Bonds.
Note: Figures have been rounded to nearest thousand and will not
necessarily add to totals.
CONFIDENTIAL
UNITED STATES SAVINGS BONDS
Daily Sales - July 1941
On Basis of Issue Price
(In thousands of dollars)
Post Office
Date
All Bond Sales
Bank Bond Sales
Bond Sales
Total
Series Il
Series I
Series G
Series I
Total
Series I
Series 1
Series G
July 1941
1
$ 9,505
$ 2,387
$
957
$ 6,160
$
595
$ 8,910
$ 1,793
$
957
* 6,160
2
11,612
4,066
845
6,701
1,735
9,877
2,331
845
6,701
3
15,045
4,903
843
9,299
2,077
12,969
2,827
843
9,299
5
22,900
9,589
2,437
10,875
3,191
19,709
6,397
2,437
10,875
7
11,028
6,315
472
4,242
3,908
7,120
2,407
472
4,242
8
11,226
4,867
1,197
5,162
1,346
9,881
3,522
1,197
5,162
9
16,570
6,277
580
9,413
2,229
14,341
4,048
880
9,413
10
11,430
6,018
605
4,808
2,459
8,972
3.559
605
4,808
11
16,311
8,504
1,197
6,610
2,405
13,905
6,098
1,197
6,610
12
12,689
4,482
860
7.347
1,672
11,017
2,810
860
7,347
14
13,435
7,754
1,046
4,636
3,060
10,375
4,693
1,046
4,636
15
10,083
4,754
602
4,728
1,458
8,625
3,296
602
4,728
16
11,994
5,541
808
5,645
1,645
10,349
3,896
808
5,645
17
15,332
6,213
1,189
7.930
1,799
13,533
4,414
1,189
7,930
18
12,404
6,730
836
4,837
2,042
10,362
4,689
836
4,837
19
7.553
4,513
926
2,114
1,505
6,048
3,007
926
2,114
21
14,136
7,105
1,015
6,016
3.060
11,076
4,046
1,015
6,016
22
12,191
3,820
1,208
7,164
1,001
11,191
2,819
1,208
7,164
23
14,677
5,018
1,208
8,451
1,514
13,163
3,505
1,208
8,451
24
11,634
5,382
959
5,293
1,623
10,011
3.759
959
5,293
25
10,589
5,828
904
3,857
1,670
8,919
4,158
904
3.857
Total
$272,346
$120,065
$ 20,993
$131,287
$ 41,993
$230,353
$ 78,072
$ 20,993
$131,287
Office of the Secretary of the Treasury, Division of Research and Statistics.
July 26, 1941.
30
30t MIDD /
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE July 26, 1941
TO
Secretary Morgenthau
FROM Mr. Cochran
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£16,000
Purchased from commercial concerns
£ 1,000
In the open market, sterling was first quoted at 4.04. Shortly there-
after, it moved to 4.03-3/4, closing at that level, There were no reported
transactions.
The New York Exchange market suspended quotations for the Chinese yuan
and Japanese yen today.
Closing quotations for the foreign currencies lieted below were as fol-
lowe:
Canadian dollar
11-5/8% discount
Argentine peso (free)
.2380
Brazilian milreis (free)
.0505
Uruguayan peso (free)
.4380
Colombian peso
.5800
Mexican peso
.2070
Cuban peso
1-1/48 discount
The New York banks reported that they had received actual quotations for
the dollar and British pound from Shanghai this morning. In terms of our cur-
rency, the yuan fell 5/32# to 5-3/16#. Reflecting & relatively greater de-
cline of the yuan against the British pound, sterling in Shanghai was quoted
at 3.96-3/8, up 1-7/80.
There were no gold transactions consummated by us today.
The Federal Reserve Bank of New York reported that the Bank of Canada
shipped $2,634,000 in gold from Canada to the Federal for account of the
Government of Canada, for sale to the New York Assay Office.
The State Department forwarded a cable to us reporting that the Guaranty
Trust Company, London, shipped $51,000 in gold from England to the head office
in New York, for sale to the New York Assay Office.
N.M.S.
Regraded Unclassified
31
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 26, 1941
TO
FROM
Mr. Mr. further
In response to your request of December 26,
1939, there 1s submitted herewith for the Division of
Research and Statistics a memorandum listing, with brief
descriptions, the studies or projects completed or under
way, and the names of persons working on each, for the
month of June 1941.
32
DIVISION OF RESEARCH AND STATISTICS
Report of Studies or Projects Completed or Under
Way, and the Names of Persons Working on Each,
for the month of June 1941
For convenience of reference, the studies listed are
grouped under general subject heads.
The names shown for persons working on each project
include only those who participated fairly directly, as
explained in the introductory note to the corresponding
report submitted on December 28, 1939. No attempt has
been made to cover also persons whose responsibility in
each particular case was mainly in planning, supervising,
or consulting.
Financial Analysis
I. Projects or studies completed
1. Reviewe of current developments in the high-grade ae-
curities markets were prepared, and memoranda were
transmitted to the Secretary on June 3 and 17. - Mr. Haae,
Mr. Turner, Mr. Matlock, Mr. Barnett
These reviews contained, in addition to analysis of
the current situation, the following special studies:
(a) The new Treasury bond (Review of June 3, page 2). -
Mr. Turner
(b) Difference in yield between taxable and tax-exempt
Government securities (Review of June 3, page 3). -
Mr. Turner
(c) Bank holdings of Government securities (Review of
June 17, page 3) Mr. Turner
(a) Canada's Third Victory War Loan (Review of June 17,
page 4). - Mr. Matlock
2. Yield rates on United States securities, direct and guar-
anteed, on the basis of over-the-counter closing quota-
tions were calculated daily. These were summarized each
day In a table showing for each issue the closing price
and yield that day, the change in price and yield from
the preceding day, and the price range since the date on
which first traded and also for the year 1941 to date.
Regraded Unclassified
33
- 2 -
A chart for each issue was kept up to date showing re-
cent daily price and yield figures, together with com-
parative monthly data since 1934, since date of issue,
or since the date first traded. Similar calculations
are made daily on the basis of New York Stook Exchange
closing quotations on direct and guaranteed bonds of the
United States, for use in preparation of the publication
"Market Prices and Yields of Outstanding Bonde, Notes,
and Bills of the United States", described under Publica-
tions in this report. - Mr. Moody, Miss McCoy, Mr. Kroll
3. At the request of the Secretary, arrangements have been
made to seoure periodically from the British Empire
purchasing missions certain information regarding pur-
chases in the United States by the British Empire. -
Mr. Haas, Mr. Lindow, Mr. Wagner, Mr. March
(a) Weekly statements are received covering the item-
ized purchases by British Empire Governments
through the various missions, the itemized pur-
chases made by these Governments with the knowl-
edge of the missions but not through their facil-
ities, and inquiries made through the missions for
future purchases. Similar statements are received
showing, by itemized contracts, deliveries made
with respect to orders placed by the United Kingdom
through the missions. The details with respect to
orders and deliveries are classified by some twenty-
five commodity groups designed especially for the
purpose.
These data are reviewed and edited in the Division
each week and a report 18 then prepared summarizing
in dollar volume the information on orders and de-
liveries, by commodity groups. This report con-
sists of eight statements: the first three summarize
orders placed by the individual governments of the
British Empire for the current week and the totals
to date; the next three statements summarize total
orders of the British Empire on an historical basis;
the last two statements present data on deliveries
with respect to orders placed by the United Kingdom
through the British missions. These weekly commodity
statements were prepared, and were transmitted on
June 7, 13, 20, and 27, according to instructions by
the Secretary.
Regraded Unclassified
34
- 3 -
(b) The Division also receives each week the data
required to prepare statements giving the de-
tails concerning the physical volume of airplane
and airplane engine orders in the United States
by the British Empire. The material for these
statements 18 contained in a group of work sheets
prepared by the British Purchasing Commission,
but it 18 necessary for the Division to consoli-
date and coordinate the information contained in
the Commission's statements. The finished tables
show, by company and by type of plane or engine,
the following information: (1) summary of orders,
deliveries, and exports; (2) history of orders;
(3) history of deliveries; (4) history of exports;
(5) scheduled deliveries of unfilled orders;
(6) options: scheduled deliveries; (7) spare parts:
orders, deliveries, unfilled orders, and options;
and (8) secondhand units: orders, deliveries, and
scheduled deliveries of unfilled orders. These
aircraft reports were prepared, and were transmitted
on June 7, 13, 20, and 27, according to instructions
by the Secretary
(o) A series of six tables has been developed at the
request of the Secretary to show each week the
disposition of airframes and engines inspected in
the United States by the British purchasing m18-
sions, and the status of airframes and engines on
hand in the United States. One table develops by
company and by model the number of units on hand.
A second table analyses the status of these units,
and & third table presents the physical location
of the units awaiting export. Separate tables
are required for airframes and for engines. These
tables were prepared, and were transmitted on
June 4, 9, 16, 24, and 30, according to instruc-
tions by the Secretary.
(d) Reports are prepared each week showing commitments
by the British Empire Governments for capital ex-
penditures in the United States and for extra-
ordinary charges designed to expedite deliveries.
The data for these statements are provided by the
British Purchasing Commission but the tables
actually are prepared in the Division. Tables
showing capital commitments were prepared, and
were transmitted on June 7, 13, 20, and 27, ao-
cording to instructions by the Secretary.
Regraded Unclassified
35
- 4
(e) A group of nine analytical tables on British
Empire orders of iron and steel 16 prepared
monthly. Six of these cover commercial iron
and steel, excluding ferro-alloys and drop
forgings, and are classified by product. One
table covers ferro-alloys and silicon metals,
and also 18 classified by product. The next
two tables cover drop forgings and are classi-
fied by manufacturer. Statements showing Brit-
1sh Empire orders of iron and steel as of May 31,
are in process of preparation.
(f) Arrangements have been made to receive informa-
tion on a physical volume basis for the orders,
deliveries, and dates of scheduled deliveries
on unfilled orders, with respect to several other
important commodities. For each of these commodi-
ties the following tables are being prepared:
(1) current delivery status of orders; (2) history
of orders; (3) history of deliveries; and (4) sched-
uled deliveries of unfilled orders. The data in
these tables are broken down by particular products,
particular models in each case, and particular
manufacturers.
Statements covering various commodi ty groups were
prepared, and were transmitted according to in-
structions by the Secretary as follows: (a) ord-
nance, on June 16 and 24; (b) small arms ammuni-
tion, on June 9; (c) sub-machine guns, revolvers
and rifles, on June 20; (d) tanks and tank
equipment, on June 27; and (e) small arms (fully
automatic),on June 4 and 20. In addition, work 18
progressing on the preparation of tables on each
of the following commodity groups: (a) explosives
and propellants; (b) chemicals; (o) shells and
bombs; (d) non-ferrous metals; (e) motor vehicles;
(f) small boats and ships; and (g) marine engines.
(E) Certain financial information concerning the orders
placed in the United States by the British Empire
18 presented in B. monthly report. This report
consists of three tables, showing by commodity groups
the value of orders placed, the history of payments
made, and & forecast of future payments on unpaid
commitments. The report was prepared, and was trans-
mitted on June 27, according to instructions by the
Secretary.
Regraded Unclassified
36
- 5 -
(h) Arrangements have been made with the Citadel
Merchandising Company, Ltd., a Canadian Govern-
ment corporation, to receive regular reports
showing orders placed for machine tools in the
United States, and deliveries on these orders.
From this information the Division will be able
to prepare reports summarizing Citadel orders,
deliveries, and unfilled orders, classified by
companies. Delays in the receipt of necessary
information have held up completion of the planned
reports.
#. At the request of the Secretary, a memorandum W&B pre-
pared, and was forwarded to him on June 26, transmitting
H sample set of documents involved in one day's trans-
actions in connection with British purchases. - Mr. Hass
5. At the request of the Secretary, arrangements have been
uade to secure periodically certain information regard-
ing purchases in the United States by the Netherlands
Purchasing Commission, and by Lindeteves, Ino. -
Mr. Hass, Mr. Lindow, Mr. Wagner, Mr. March
Statements are received covering the itemized purchases
by the Netherlands Purchasing Commission in the United
States, and the volume of deliveries made thereon.
Similar statements are received concerning the activ-
ities of Lindeteves, Inc., a large private commercial
organization operating in the Dutch East Indies. The
details with respect to orders and deliveries for these
purchasing agencies are classified by the same twenty-
five commodity groups used for reporting orders placed
in the United States by the British Empire.
These data are reviewed and edited in the Division,
Reports are then prepared for each of these agencies
summarizing the information on orders and deliveries,
classified by commodity groups. These reports consist
of three statements: the first shows the history of
orders placed; the second shows the history of deliveries
made on these orders; and the third shows the current de-
livery status of orders. These commodity statements
covering orders of the Netherlands Purchasing Commission
were prepared, and were transmitted on June 7, 13, and 20,
in accordance with instructions by the Secretary.
Similar statements for Lindeteves, Inc., were prepared,
and were transmitted on June 7, 13, 20, and 27, also ac-
cording to instructions by the Secretary.
Regraded Unclassified
37
9 I I
6. At the request of the Secretary on May 23, 1940, 87-
rangements were made for securing weekly until
September 11, 1940, and since then fortnightly, from
more than forty airolane and airplane engine manu-
facturers data on deliveries, new orders, unfilled
orders, and estimated deliveries by months on the un-
filled orders. Analytical tables were prepared every
other week showing this information by type of plane
or engine and by class of purchaser. Reports for the
fortnights ended June 7 and 21, were transmitted on
June 11 and 25, respectively, according to instrue-
tions by the Secretary. - Mr. Hans, Mr. Tickton,
Mr. D. J. Leahy
7. In response to a request by the Secretary on January 21,
that measures be taken to obtain information to assist
in carrying through the defense financing program,
arrangements have been made to obtain the necessary
detailed statistics on the holdings of each issue of
the public debt and of guaranteed securities by the
various classes of holders. - Mr. Haas, Mr. Tickton,
K168 Westerman, Mrs. Wolkind, Mr. D. J. Leahy,
Mr. Mayo, Mr. Blitman, Mrs. Barnes, Mr. Alter
A summary was prepared of the data received a.B. of
April 30, consisting of brief explanatory text and
six tables for publication in the Bulletin of the
Treasury Department for June.
The information 88 of May 31 received in response to
our letter of April 28, from 7,000 banks and insurance
companies was coded, tabulated, and analyzed. A com-
prehensive analysis was prepared, consisting of 100
tables, showing this information, classified by type
of institution, by issue, by geographic area, by call
classes, and by tax-exemption provisions.
Yes letters were sent out to the oanks and insurance
companies on June 28, requesting comparable data as of
June 30.
8. At the request of the Secretary on June 2, a memorandum
WRB prepared, and was transmitted to him on June 6,
on a proposal to include a request for their cash 0081-
tion in the monthly schedules sent to banks requesting
the detail of their Government bond portfolios. - Kr. Hase,
Mr. Murphy, Mr. Sancelin
Regraded Unclassified
38
7
9. At the request of the Secretary, arrangements have been
made to prepare current statistical reports on the sales
of United States Defense savings bonds series E, F, and
G, and Defense Postal savings stamps, on the basis of
reports by the Federal Reserve Banks and the Post Office
Department. - Mr. Haas, Mr. Reagh, Mr. Brown, Mr. Tickton.
Mr. Kroll, Mr. D. J. Leahy
(a) Daily tables were prepared, showing the dollar vol-
une, on the basis of the issue price, of sales of
each of the three series of bonds, and stamps,
with totals, by Post Offices and by banks. The
table prepared on June 2 presented these data for
each day of May, with totals for the month. The
next table, prepared on June 4, presented the totals
for the periods May 1 through 17, May 19 through 24,
and May 26 through 31, for June 2, June 3, and the
totals from May 1 through June 3. Succeeding tables,
beginning with June 5, showed the data for each day
of June, with cumulative totale. The table of
June 30 covered the period from June 2 through
June 28. The tables were transmitted according to
instructions by Mr. Graves.
(b) Daily tables were prepared, beginning June 9, show-
ing the amount and percent of change in the dollar
volume, on the basis of the issue price, of sales
in June compared with the sales in May, of each of
the three series of bonds, and stampe, with totals,
by Post Offices and by banks. The table of June 9
compared the sales for the first six days of May
and of June. The table of June 30 compared the
sales for the first 28 days of each month. The
tables were transmitted according to instructions
by Mr. Graves.
(a) Weekly tables were prepared, showing for the weeks
ending May 31, June 7, 14, and 21, the dollar
volume of sales, on the basis of issue price, of
each of the three series of bonds, with totals, by
Post Offices and by banks, classified by Federal
Reserve districts. These tables were prepared on
June 5, 12, 19, and 26, respectively, and were
transmitted according to instructions by Mr. Graves.
Cumulative tables were prepared, showing the dollar
volume of sales, on the basis of the issue price,
of each of the three series of bonds, with totals,
by Poet Offices and by banks, classified by Federal
Reserve districts. Tables were prepared for the
Regraded Unclassified
39
- 8 -
periods from May 1 through May 31, from June 1
through June 14, and from June 1 through June 21,
and were transmitted on June 5, 19, and 26, re-
spectively, according to instructions by Mr. Graves.
(d) Weekly tables were prepared, showing for each week
the dollar volume of sales, on the basis of the
issue price, of series E bonds, by Post Offices
and by banks, with totals, classified by States.
For the weeks ending May 31, June 7, 14, and 21,
tables were prepared, and were transmitted on
June 5, 12, 19, and 25, respectively, according
to instructions by Mr. Graves.
Cumulative tables were prepared, showing from
May 1 through May 31, June 1 through 14, and
June 1 through 21, the dollar volume of sales or
series E bonds, on the basia of the issue price,
classified by States. These tables were pre-
pared on June 5, 18, and 25, respectively, and
were transmitted according to instructions by
Mr. Graves.
(e) A table was prepared on June 2, showing the esti-
mated number of units sold daily in May of savings
bonds series E, F, and G, by Post Offices and by
banks, with totals. A similar table was prepared
on June 5, which included the number of unite sold
of Defense savings stamps, for the periods May 1
through 17, May 19 through 24, and May 26 through
31, with totals. These tables were transmitted
according to instructions by Mr. Graves.
A table was prepared on June 16, showing the esti-
mated number of unite sold during May, of savings
bonds, series E, F, and G, by denominations, by
Post Offices and by banks, with totals. This table
was transmitted according to instructions by
Mr. Graves.
Tables were prepared containing estimates of the
number of units of savings bonds series E, F, and
G, by denominations, sold by Post Offices and by
banks, during the weeks ending June 7, 14, and 21.
These tables were prepared on June 16, 18, and 27,
respectively, and were transmitted according to
instructions by Mr. Graves.
Regraded Unclassified
10
- 9 -
Cumulative tables showing the estimated number
of units of savings bonds series E, F, and G,
by denominations, sold during the periods June 1
through June 14, and from June 1 through June 21,
were prepared, on June 18 and June 27, respec-
tively, and were transmitted according to instruc-
tions by Mr. Graves.
(r) A table was prepared on June 17, showing by de-
nominations the sales during May of Defense sav-
ings stamps in dollar volume and by number of
units, as estimated by the Post Office Department,
on the basie of daily reports of 111 large Post
Offices. This table was transmitted according to
instructions by Mr. Graves.
(it) A table was prepared on June 11, showing sales of
savings bonds series E, F, and G, for May, with
totals, and separately by series, by Post Offices
and by banks, the number of bond units, the dollar
volume, on the basis of the issue price; the
number of purchasers excluding second co-owners;
the number of second co-owner names; and the total
number of purchaser names, counting co-owner pur-
chasers B.S two names. This table v.a.s transmitted
according to instructions by Mr. Graves.
(h) At the request of Mr. Graves on June 4, for use
in the Secretary's speech of June 5, a table was
prepared, and was transmitted to Mr. Graves on
June 4, showing sales, in dollar volume, on the
basis of the issue price, of savings bonds,
separately for series E, F, and G, and Defense
savings stamps, by Post Offices and by banks,
with totals.
(1) Two tables were prepared showing for each of the
series E, F, and G, of savings bonds, the per-
centages of the dollar volume sold, on the basie
of the issue price, by each denomination. The
tables covering the periods from June 1 through
14, and June 1 through 21, were prepared on
June 19 and 26, respectively, and were transmitted
in accordance with instructions by Mr. Graves,
Regraded Unclassified
11
- 10 -
(5) The procedure for reporting sales of Defense 687-
ings bonds has been revised from the system of
daily and weekly wires from each Federal Reserve
Bank and 111 Post Offices to a system of monthly
reports to be compiled by the Federal Reserve Banks
and all Post Offices handling the bonds and Defense
savings stamps, as of the close of business each
month, showing sales of each selling agent as shown
on their ledger accounts with such agents. A punch
card procedure has been formulated for classifying
the data. The first report on the new basis will
be for the combined months of May and June.
10. Maturity schedules were prepared of the tax-exempt Be-
curities of the United States and of Federal instru-
mentalities outstanding on February 28, 1941, classi-
fied according to maturity dates and according to first
call dates. - Mr. Conrad
11. A memorandum was prepared incorporating a suggestion
on the composition of the series on the daily average
yield of long-term Treasury bonds, in the light of re-
cent developments in tax exemption provisions, and was
transmitted to Under Secretary Pell on June 3. -
Mr. Turner
12. At the request of Mr. Kilby on June 16, & memorandum
was prepared, and was transmitted to Mr. Broughton on
that date, with respect to modification of the reports
submitted by Federal Reserve Banks on subscriptions
placed and allotments made for each public offering of
Treasury or guaranteed bonds and notes. - Mr. Tickton
13. At the request of Under Secretary Bell on June 13, a
memorandum was prepared, and was transmitted to him
on that date, with respect to the decisions made on the
proposed tax anticipation notes 88 summarized in
Mr. Xilby's report of the meeting held in the Under
Secretary's office on June 12. - Mr. Haas, Mr. Murphy
14. At the request of Mr. Broughton on June 16, a review
was made of Draft A of the offering circular for the
proposed series A and series B tax anticipation notes.
Approval of the circular was indicated in & memorandum
transmitted to Mr. Broughton on June 17. - Mr. Head,
Mr. Murphy
Regraded Unclassified
42
- 11 -
15. At the request of Under Secretary Bell on June 26, &
review was made of Draft D-revised of the offering
circular for the proposed tax anticipation notes,
and changes suggested in the plan for their issue
were incorporated in a memorandum transmitted to him
on June 26, - Mr. Heas, Mr. Reagh, Kr. Lindow,
Mr. Turner
16. In connection with the RFC financing in June, tables
and charts were prepared. - Mr. Murchy, Mr. Turner,
Mr. Conrad, Mr. Sandelin, Mr. Barnett
17. At the request of the Secretary on February 3, & reply
was prepared for signature of Under Secretary Bell to a
letter from the Acting Secretary of Commerce dated
February 4, transmitting certain requested data on
outstanding securities of Federal agencies and the
amount of governmental securities held by governmental
agencies and Federal Reserve Banks for the period 1929-
40. The letter was mailed on June 17. - Mr. Conrad
18. In response to letters of May 15 and 20, from Mr. John
Phillips, Jr., Assistant Cashier of the Federal Reserve
Bank, Kansas City, a reply was prepared with respect to
the Droper valuation of series G savings bonds held by
life insurance companies. The reply was signed by the
Under Secretary, and was mailed on June 14. - Mr. Murphy,
Kr. Reagh, Mr. Brown
19. In response to a letter of May 22 from Mr. William A.
Hill, Jr., Newark, Hew Jersey, a reply was prepared
and mailed on June 10, giving the mathematical formula
to determine the approximate investment yield on the our-
chase price of series E savings bonds from issue date to
the beginning of each half-year period, - Mr. Reagh,
Mr. Brown
20, At the request of Under Secretary Bell on May 10, an
analysis was made of a proposal by Mr. G. Lee Camp
of a means of prepaying taxes, and was transmitted to
him in a memorandum on June 4. - Mr. Turner
21. At the request of Under Secretary Bell on May 10, an
analysis was made of a proposal by Mr. Hedges MacDonald
for encouraging the ourchase of Government securities
by the grant of a tax credit, and was transmitted to him
in a memorandum on June 4. - Mr. Turner
Regraded Unclassified
43
- 12 -
22. At the request of Under Secretary Bell on May 27, a
review was made of an editorial entitled "To Uncle
Sam I Bequeath", submitted by Mr. C. C. Luhnow of
Mrusts and Estates", and a reply prepared for signa-
ture of the Under Secretary was transmitted to him
on June 10. - Mr. Murphy, Mr. Turner
23. A table was prepared showing Government borrowing of
the United Kingdom from September 2, 1939 to April 26,
1941, and was transmitted to Mr. Theodore Goldsmith
on June 20. - Mr. Matlock
24, At the request of Under Secretary Bell on June 30,
assistance was given in preparation of a radio address
to be made by the Under Secretary on July 1, in connec-
tion with the dedication and acceptance of "The Treasury
House". - Mr. Hass, Mr. Murphy
25, At the request of Under Secretary Bell on Kay 1, B
memorandum was prepared and was transmitted to him on
Junell, concerning the amendments to the United States
Housing Authority Act which were proposed by the
Authority last year. - Mr. Lindow
26. At the request of the Legal Division on May 27, a re-
view was made of a proposed reply prepared by the
General Counsel's office, Bureau of Internal Revenue,
to a letter from Senator Harrison dated May 21, re-
questing a report on S. 1178, a bill to be known AB the
General Welfare Act", to amend the Social Security Act
80 as to extend coverage thereunder to all groups and
all classes, to amend the Internal Revenue Code so as
to provide a pay-as-you-go basis for pensions, and for
other purposes. The reply was approved, and was forwarded
to Mr. Blough on June 2. - Mr. Murphy, Mr. Reagh
27. At the request of Under Secretary Bell on June 14, a
review was made of a proposed reply prepared by the
Legal Division to a letter from Senator Wagner dated
May 26, requesting a report on S. 1553, a bill to
provide for loans to Federal Land Banks for refinancing
certain Farm Loan bonds by the Farm Mortgage Corporation,
and changing the method of fixing interest rates on land-
bank mortgages. The letter was approved, and was trans-
mitted to Mr. Heffelfinger on June 23. - Mr. Murphy
Regraded Unclassified
44
- 13 -
II. Projects or studies under way
1. A etudy is being made of the relative interest coste
of short- and long-term borrowing. - Mr. Barnett
2, A study 16 being made of the available sources of funde
for Treasury financing. - Mr. Villard
3. A memorandum 18 being prepared on a negotiable "tap"
security. - Mr. Sandelin, Mr. Turner
4. A study 18 being made of a new type of Defense annuity
savings bond. - Mr. Reagh, Mr. Brown
5. A memorandum 18 being prepared on the relationship be-
tween public debt operations and bank reserves. -
Mr. Turner
6. A study is being made of the probable excess reserves
in 1941-42. - Mr. Turner, Mr. Barnett
7. Tables are being prepared which will present various
data on new Treasury notes and bonds and on guaranteed
new issues. - Mr. Conrad
8. A memorandum 18 being prepared on the advantages and dis-
advantages of increasing the short-term debt. - Mr. Foy
9. A revision 1s being made AB of June 30, 1941, of the
estimates of the ultimate increase in interest costs
which would result from removal of the tax-exemption
privilege from all public securities. - Mr. Turner
10. A memorandum WAB received from Mr. Tarleau on May 31,
stating that it is his understanding that if the
Treasury's recommendation regarding the surtax on
corporations is adopted it will be advisable to have
corporations holding partially tax-exempt obligations
amortize the premium or discount by which such obliga-
tions were obtained, and requesting a memorandum regard-
ing the extent of the revision of the law which will be
required with respect to the bond interest for income
tax purposes. - Mr. Murphy
Regraded Unclassified
15
- 14 -
11. A memorandum is being prepared recommending legislation
terminating miscellaneous types of tax exemption
analagous to the exemption of interest on Federal Be-
curities, but unaffected by the Public Debt Act of 1941. -
Mr. Turner
12. é study 16 being made of war-financing measures in bel-
ligerent countries in the present war. - Kr. Matlock
13. A comparison 18 being made of the British Fiscal Program
1941-42 with the Keynes plan proposed in "How to Pay for
the War", by Mr. J. M. Keynes. - Mr. Matlock
14, At the request of Under Secretary Bell on June 9, a re-
view 16 being made of 8. memorandum and draft of & pro-
posed bill prepared by Mr. Broughton on the redemption
of "old series" currency and the adjustment of the
amount outstanding. - Mr. Turner
15. A review 1e being made of a proposed reply prepared by
Mr. Broughton to a letter from Mr. S. E. Foster dated
June 12, with respect to the Circulation Statement of
United States Money, and an alternative reply 18 being
written. A memorandum to the Under Secretary 18 in
preparation suggesting certain changes in the Statement. -
Mr. Murphy, Mr. Turner
16. At the request of Under Secretary Bell on October 14, a
memorandum 16 being prepared on a memorandum submitted
by Mr. John Evans, President of the First National Bank
of Denver, Colorado, in reference to United States Govern-
ment bonds now owned by the Federal Reserve System and
its member banks, and suggestions concerning a refunding
and change in form which would appear to be in interest
of the Treasury Department, the Federal Reserve System,
the member banks, the Federal Deposit Insurance Corpora-
tion, and the public generally whose money is deposited
In member banks. - Mr. Murphy
17. In response to a request by Under Secretary Bell on
January 27, comments are being prepared on a memorandum
by Mr. George Eddy to Mr. White, in regard to a plan of
Mr. N. E. Peterson, entitled, "A Means of Financing the
Defense Program". - Mr. Turner
Regraded Unclassified
46
55 I I
18. At the request of Under Secretary Bell on February 5,
an analysis 18 being made of his plan for investing
savings banks' and insurance companies' funds in special
2 percent Treasury certificates. - Mr. Ticaton
19. At the request of Under Secretary Bell on February 11,
a memorandum 18 being prepared to the Secretary regard-
ing a letter from Mrs. Sylvia F. Porter, New York Post,
dated January 22, suggesting a plan for the distribution
of United States Government securities. - Mr. Haas,
Mr. Murphy, Mr. Turner
20. An analysis 1s being made of a study of savings bond
mortality by Miss Hilda Hoffman, Bowery Bavings Bank,
transmitted by Mr. Theodore R. Goldsmith on March 13. -
Mr. Turner
21. At the request of Under Secretary Bell on Anril 21, a
memorandum is being prepared on Mr. Salant's memorandum
on "Limitation on Purchases of Defense Savings Bonds". -
Mr. Murphy
22. At the request of Mr. Heffelfinger on June 17, a review
19 being made of a proposed reply prepared in the Bureau
of the Public Debt, to a letter from Mr. T. T. Malleson,
Brooklyn, New York, concerning the redemption values
prior to maturity of United States Defense savings bonds,
series G, - Mr. Reagh, Mr. Brown
23. Material 16 being prepared for Representative Taber in
response to his request on June 18, concerning the
effect of sales of United States Defense savings bonds
on bank deposits and reserves. - Mr. Haas, Mr. Turner
24, At the request of Under Secretary Bell replies are being
prepared to certain questions asked by the Wagner Committee
preparatory to its investigation of banking and monetary
conditions pursuant to Senate Resolution 125. - Mr. Haae,
Mr. Murphy, Mr. Turner, Mr. Foy
25. At the request of Under Secretary Bell on May 24, coopera-
tion is being given Mr. Bartelt and Mr. Blough in prepar-
ing replies to the list of questions accom anying & letter
from Senator Tydings of May 5. -The replies are for use
by the Senate Committee created to find ways and meaná of
automatically balancing the Federal Budget in times of
peace. - Mr. Murphy
Regraded Unclassified
17
- 16 -
Revenue Estimates
I. Projects or studies completed
1. The regular monthly statement was prepared for the
Bureau of Accounts, showing the latest revised esti-
mates of receipts, by months and by principal sources
of revenue, for the period June 1941-June 1942, and
was transmitted on June 3. - Mr. Delcher
2, The regular monthly summary comparison was prepared,
showing estimated receipts and actual receipts in
Nay 1941 on the daily Treasury statement basis. -
Mr. Delcher
3. The regular monthly detailed comparison was prepared,
showing estimated and actual receipts in May 1941,
and for the period July 1940-May 1941, based on the
collections classification. - Mr. Delcher
4. A. revision was completed of the forecast of the monthly
distribution of estimated revenue on the basis of the
April revision of the 1942 Budget estimates, for the
fiscal years 1941 and 1942. - Mr. O'Donnell, Mr. Daggit,
Mr. Leahey, Mrs. May, Mr. Bronfenbrenner, Mr. Butters,
Mr. T. L. Smith, Mr. R, R. Smith, Miss Hagedorn
5. In connection with the revising of the revenue laws in
1941, 8 number of revenue estimates, listed below, were
prepared for use of Assistant Secretary Sullivan and
the Division of Tax Research. - Mr. O'Donnell, Mr. Leahey,
Mr. Bronfenbrenner, Mr. Butters
(a) Revised estimates were prepared, and were trans-
mitted to Mr. Blough in a memorandum on June 5,
of the revenue effects, at income levels forecast
for the calendar year 1941, of the capital stock
and the declared value excess-profits tax, both for
corporations with net income, by net income classes,
and for corporations with no net income.
(b) Estimates were prepared, and were transmitted to
to Assistant Secretary Sullivan in 8. table on June 3,
of the increase or decrease in income tax liabilities,
at net income levels forecast for the calendar year
1941, from two proposals submitted by the Joint
Committee on Internal Revenue Taxation. These were
Regraded Unclassified
48
- 17 -
shown compared with the yield estimated from
the Treasury plan presented to the Committee
on Ways and Means on May 19. The first pro-
posal contained the following provisions:
Imposition of a corporation surtax of 5 per-
cent on surtax net income of $25,000 or less
and 6 percent on surtax net income in excess
of $25,000; the computation of the excess-
profits tax prior to the corporation normal and
surtax with a reversal of deductions, and allow-
ance to invested capital corporations of an ex-
cess-profits credit of g percent on the first
$5 millions of invested capital and 7 percent
on the balance of invested capital, and in-
creasing the excess-profits rates in each
bracket of the present law by 10 percentage
points; and individual income tax changes as
suggested by the Joint Committee on Internal
Revenue Taxation on April 24.
The second proposal contained the following pro-
visions:
Imposition of a corporation surtax of 5 per-
cent on surtax net income of $25,000 or less
and 6 percent on surtax net income in excess
of $25,000; allowance to invested capital
corporations of an excess-profits credit of
7 percent on the first $5 millions of invested
capital and 6 percent on the balance of their
invested capital, and increasing the present
law excess-profits tax bracket rates by 15 per-
centage points in each bracket; and individual
income tax changes 8.8 suggested by the Joint
Committee on Internal Revenue Taxation on
April 24.
(c) The estimates of yield from the two proposals
described above under (b) were revised to sub-
stitute the yield from the individual income tax
computed according to the Treasury plan submitted
to the Committee on Ways and Meane on April 24.
This revision was transmitted to Assistant Secretary
Sullivan in a table on June 4.
Regraded Unclassified
- 18 -
(a) Estimates were prepared, and were transmitted to
Assistant Secretary Sullivan, in & table on
June 5, of the yield, at income levels forecast
for the calendar year 1941, from proposals to:
impose a surtax of 5 percent on net income of
$25,000 or less and 6 percent on the excess:
compute the excess-profits credit as the average
of the invested capital and average earnings
methods; and increase individual income tex rates
as proposed by the Treasury on April 24.
A tabulation was prepared, and was transmitted to
Assistant Secretary Sullivan on June 5, showing
the revenue effects, at income levels forecast for
the calendar year 1941, of proposals to: impose a
corporation surtax of 5 percent on net income of
25,000 or less and 6 percent on the excess; die-
allow the income tax as a deduction for excess-
profits tax computation and allow the excess-
profits tax as a deduction for income tax computa-
tione; allow a credit of 6 percent on invested
capital (10 percent on new capital); tax at 10 per-
cent the difference between the rate of return in
the base period and the lower of (a) the sum of
the excess-profits credit plus the unused excess-
profits credit computed on the proposed law basis
or(b) the excess-profits net income in the taxable
year less the $5,000 specific exemption; and increase
individual income tax rates as recommended by the
Treasury to the Committee on Ways and Means on
April 24.
(e) Two individual income surtax schedules were pre-
pared, and were transmitted to Assistant Secretary
Sullivan in a memorandum on June 6, in accordance
with suggestions made by Representative Cooper,
Schedule A being based on a proposal to average
the rates in the surtax schedules submitted to the
Ways and Means Committee on April 24, by the
Treasury and by the Joint Committee on Internal
Revenue Taxation, and Schedule B approximately
averaging the revenue obtained from the various
surtax net income classes under the proposals Bub-
mitted by the Treasury and the Joint Committee.
Regraded Unclassified
50
- 19 -
(f) An additional individual income surtax schedule,
Schedule C, was prepared designed to approximate
the total yield and burden distribution of the
Joint Committee proposal of April 24, while re-
taining present credits against the surtax. A
table was prepared comparing the surtax rates under
the present law, Schedule A, Schedule B, and
Schedule C. These tables and Schedules A and B
were mimeo graphed, and were transmitted to
Assistant Secretary Sullivan for presentation to
the Committee on Ways and Meane on June 7.
(g) Estimates were prepared, and were presented to the
Committee on Ways and Means on June 7, of the in-
creased yield from individual income taxes with
personal exemptions for married persons reduced
from $2,000 to 1,800, under each of the following
surtax schedules: the Treasury plan, Schedule B,
and Schedule C.
(h) A table was prepared, and was transmitted to
Assistant Secretary Sullivan on June 13, showing
the estimated individual income tax liabilities
under specified surtax rate schedules, at income
levels forecast for the calendar year 1941, under
various proposals for changing the law, including
a proposal to require the mandatory filing of
joint returns. With slight changes, this table
was mimeographed for distribution to the Committee
on Ways and Means.
(1) Two tables were prepared, and were mimeographed
for distribution to the Committee on Ways and
Meana on June 18, giving the revenue effects at
income levels forecast for the calendar year 1941,
of (1) various proposed changes in corporation
income taxes, and (2) various proposed changes in
corporation Income taxes and in individual income
surtax rates. The latter table included the ef-
fects if separate returns are permitted and if
joint returns are mandatory. The proposed corpora-
tion income tax revision included the following
provisions:
Common to all Aete of proposals:
(1) Impose corporation surtax of 5 percent on
surtax net income of 25,000 or less and
6 percent on excess.
Regraded Unclassified
31
- 20 -
(2) Disallow income tax (including surtax)
as a deduction in computing excess-
profits net income and allow the ex-
cess-profits tax as a deduction for in-
come tax (including surtax).
Proposal A --
(3) Allow invested capital credit of 8 percent
(10 percent on new capital)
(4) Retain present law brackets and rates.
Proposal B --
(3) Allow invested capital credit of 8 per-
cent on first $5 millions and 7 percent
on excess.
(4) Retain present law brackets and rates.
Proposal o -
(3) Allow invested capital credit of 8 per-
cent (10 percent on new capital)
(4) Retain present law brackets and rates and
impose special excess-profits tax of 10
percent on the difference between the rate
of return in the base period and the lower
of (a) the sum of the excess-profits credit
plus the unused excess-profits credit com-
puted on the proposed law basis or (b) the
excess-profits net income in the taxable
year less the specific exemption of $5,000.
Joint Committee Proposal --
(3) Allow invested capital credit of & percent
on first 65 millions and 7 percent on ex-
cess.
(4) Increase excess-profits tax rates by 10 per-
centage points in each bracket computed
under present law).
(3) A table was prepared, and was mimeographed for dis-
tribution to the Committee on Waye and Means, show-
ing the estimated increase in net Federal revenues
from the imposition of varying assumed corporation
surtax rates based upon calendar year 1941 tax
liabilities. The table was presented on June 14.
(x) Estimates were prepared, and were presented orally
to the Committee on Ways and Means on June 17, of
the revenue effects, at income levels forecast for
the calendar year 1941, of imposing a surtex of
5 percent on net income of $25,000 or less and
6 percent on excess; computing the excess-profits
tax as an average of the invested capital method
tax and average earninge method tax; and increasing
the individual income tax rates 8.6 proposed by the
Treasury on April 24.
Regraded Unclassified
52
- 21 -
(1) Three tables were prepared, and were mimeographed,
summarizing the proposals before the Committee on
Ways and Means on June 18, with reference to the
corporation and individual income taxes. The
tables were presented to the Committee on that date.
(m) A tabular presentation was prepared, and WEB trans-
mitted to Mr. Blough in a memorandum on June 25,
giving the estimate of the income tax collections
from corporations and individuals in the fiscal
years 1941 and 1942, the latter figure including
estimated collections from all changes in the in-
come tax laws approved by the Committee on Ways and
Means through June 23.
(n) A tabular presentation was prepared, and was trans-
mitted to Assistant Secretary Sullivan in B memo-
randum on June 26, of the revenue effects, at in-
come levels forecast for the calender year 1941, of
combining the corporation income and individual in-
come tax changes tentatively agreed to by the Com-
mittee on Ways and Meana through June 23, with the
additional change of reducing to 80 percent from
95 percent the base period earnings allowed as en
excess-profite credit for corporations using the
average earnings method.
(o) A table was prepared, and was transmitted to Assist-
ant Secretary Sullivan on June 26, showing the esti-
mated increase in liabilities, at income levels
forecast for the calendar year 1941, due to proposed
changes in corporation income and individual income
taxes as tentatively agreed upon by the Committee on
Ways and Means through June 23, together with esti-
mated total collections for the fiscal year 1942.
6. New studies were made of the following projects for revis-
ing and improving methods of estimating revenues from the
taxes listed below: - Mrs. May, Mr. R. R. Smith
(a) Gasoline tax.
(b) Rectification tax.
Regraded Unclassified
53
- 22 -
II. Projects or studies under way
1, At the request of the Division of Tax Research on
July 12, 1940, an estimate 18 being made of the addi-
tional revenue which would be derived if mutual in-
surance companies other than life insurance companies
taxable under Section 207 of the Internal Revenue Code
were made taxable in the same manner AB stock insurance
companies other than life insurance companies taxable
under Section 204, and at the same time the exemption
under Section 101(11) were restricted to local mutual
companies of the assessment type. - Mr. Leahey
2. An analysis 16 in preparation of each component of the
April 1941 estimate, AB revised in May 1941, of m1s-
cellaneous internal revenue, excluding capital stock,
estate, and gift taxes, for the fiscal years 1941 and
1942. - Mrs. May
3. For use in revenue estimating data are being assembled
on collections of taxes now repeal ed which may be re-
enacted according to testimony at Congressional hearings. -
Mrs. May, Miss Spiegel, Mr. R. R. Smith
4, In connection with the revising of the revenue laws in
1941, the revenue estimates listed below, are in
preparation for use of Assistant Secretary Sullivan
and the Division of Tax Research. Mr. Leahey,
Mr. Bronfenbrenner, Mr. Butters, Mr. T. L. Smith
(a) Estimates are being prepared of the revenue ef-
facts under the present law and under Treasury
proposals of: (1) Representative Charles S. Dewey's
proposals for estate tax prepayment through Federal
estate tax anticipation receipts; and (2) The
Lonergan proposal, whereby insurance could be 80-
cumulated for estate tax payment and excluded from
the taxable estate up to the amount of the estate
tax liability.
(b) Estimates are being prepared of the revenue from
a proposed estate tax schedule, showing separately
the amounts attributable to the estate tax and
the gift tax before and after the defense tax.
Regraded Unclassified
54
- 23 -
(c) Estimates are being prepared of the revenue
from & second proposed estate tax schedule,
showing separately the amounts attributable to
the estate tax and the gift tax before and after
the defense tax.
(d) An estimate 18 being prepared of the revenue in-
crease which would result from raising the rate
of tax on firearms, shells, and cartridges
(Sec. 3407) from 11 percent to 20 percent.
le) Estimates are being prepared of the additional
revenues from the following excise taxes:
1. Wines, cordials and liqueurs: Increase
the rates to the following schedule:
(a) Still wines
Tax per gallon
Not more than
15 cents
14 percent alcohol
14 to 21 percent
35 cente
alcohol
More than 21 percent
65 centa
alcohol
Tax per 1/2 pint
(b) Sparkling wines
7 cents
(c) Artificially car-
3* cents
bonated wines
(d) Liqueurs, cordials, etc. 38 cents
2. Gasoline: Increase the rate 1 cent per gallon.
3. Soft drinks: (a) A tax of 32 cents per gallon
on all finished or fountain syrups, of the
kind used in manufacturing, compounding or
mixing soft drinks, sold or used by the
manufacturer or importer.
(b) A tax of 20 cents per pound on all car-
bonic acid gas in liquid, solid, or gaseous
form, sold by the manufacturer or importer
thereof, or by a dealer in such gas, for use
in the preparation of soft drinks.
Regraded Unclassified
55
- 24 -
4. Automobile tax: A tax of 15 percent on items
covered in section 3403(b); excepting that
buses are to be excluded from the base, but
automobile trailers are to be included.
5. Automotive parts and accessories: A tax of
10 percent on items covered in section 3403(c),
excepting that automobile radio sets and parts
are to be excluded from the base.
D. Buses, trucks and certain tractors: A tax of
10 percent on items covered in section 3403(a),
excepting that buses and truck trailers are to
be included in the base.
7. Tires and tubes: Increase rates from 21 and
43 cents to 5 and 9 cents.
5. Telephone, telegraph, cable, etc.: Revise
rates under section 3465 as follows:
On messages for which the charge 16
15 cents or more and less than 50 cents, a
tax of 5 cents; 50 cents or more and less
than $1.00, 10 cents; $1.00 or more and lass
than $1.50, 15 cents; $1.50 or more and less
than $2.00, 20 cents; $2.00 or more, 5 cents
for each additional 50 cents or fraction
thereof.
The tax on telegraph, cable and radio
dispatches and messages to be on the same
graduated rate as set forth above with re-
spect to telephone conversations (instead of
the present rate of 5 percent of the amount
charged for telegraph messages and 10 cente
for each radio and cable message).
The phrase "any leased wire or talking
circuit special service" which 18 now sub-
Ject to tax of 5 percent of the amount paid
for such service should be defined to include
certain services which may not now be classed
as leased wires or special talking circuits,
such aa furnished in connection with news or
stock quotation tickers, teletypewriters,
burglar alarm systems, and similar services.
Regraded Unclassified
55
- 25 -
9. Jewelry: A tax at 10 percent of the retail
sales price, allowing no exemptions and in-
cluding retail sales of clocks, watches and
parts therefor.
10. Photographic apparatus and materials or
projective apparatus: A tax of 10 percent
of the manufacturers' sales price.
11. Mechanical refrigerators; Increase the rate
under section 3405 from 5% to 10 percent, and
extend base to include commercial type re-
frigerators and parts therefor and air condi-
tioning equipment and parts therefor.
12. Radio sets and parts: Increase the rate
under section 3404 from 5 to 10 percent, and
revise base to tax the completed eets; the tax
on parts applies only when they are not sold
for use in the further manufacture of completed
sets. Automobile radio sete and parts also are
to be included in the revised base.
13. Phonographe and records: 10 percent of the
manufacturers' sales price.
14. Toilet preparations: Repeal the existing
statute section 3401 and enaot in lieu there-
of a tax of 11 percent on sales of toilet
preparations at wholesale by manufacturers,
importers, producers, and dealers to retailers
for resale at retail. Sales by taxpayers at
retail are to be taxed at the wholesale basis.
5. Further progress was made on the following projects for
revising and improving methods of estimating revenues
from the taxes listed below: - Mrs. May, Mr. R. R. Smith
(a) Admissions to theaters, concerts, cabarets, etc.
(b) Passenger automobiles and motorcycles.
(c) Distilled spirite, domestic and imported combined.
Regraded Unclassified
57
- 26 -
Economic Conditions Related to Fiscal
and Revenue Matters
1. Projects or studies completed
1. Memoranda on the business and price situation were pre-
pared, and were transmitted to the Secretary on June 2,
9, 16, 23, and 30. - Mr. Haas, Mr. Daggit, Mrs. May,
Mr. Chevraux
These memoranda contained in addition to analysis of
the current situation the following special studies:
(a) Heavy construction awards and structural steel
orders from January 1939 to date. (Chart in
memorandum of June 2. Also described below under
Economic Conditions, I, as item 10). - Mr. Chevraux,
Miss Hagedorn
(b) Indexes of consumer demand and potential consumer
demand from January 1935 to date. (Chart in
memorandum of June 9. Also described below under
Economic Conditions, I, as item 7). -
Mr. Daggit, Mrs. May, Mr. Colclough
(c) A study of purchases of food products by the Depart-
ment of Agriculture from March 15 through June 14,
compared with average production and changes in
prices since March 15. (Chart in memorandum of
June 23. Also described below under Economic Condi-
tions, I, as item 5). - Mr. Daggit, Mrs. May,
Miss Hagedorn, Mr. Colclough
(d) A study of shipbuilding from January 1939 to date.
(Chart in memorandum of June 23. Also described
below under Economic Conditions, I, 8.8 item 14). -
Mr. Chevraux
(e) Price movements of selected fats and oils from
January 1934 to date. (Chart in memorandum of
June 23. Also described below under Economic
Conditions, I, as item 6). - Mrs. May
(f) Price movements of all commodities and foods during
the current war compared with those during the first
two years of the World War. (Chart in memorandum
of June 30. Also described below under Economic
Conditions, I, as item 8). - Mr. Daggit, Mrs. May,
Mr. Smith
Regraded Unclassified
58
27 I I
(g) Prioe movements of All commodities and of raw
materials in the United States and the United
Kingdom from January 1939 to date. (Chart in
memorandum of June 30. Also described below
under Economic Conditions, I, a.B item 9). -
Kr. Daggit, Mrs. May, Mr. Colclough
2. Memoranda on employment under the Work Projects Admin-
istration were prepared, and were transmitted to the
Secretary on June 2, 9, 16,23, and 30.- M168 Hagedorn
3. At the request of the Secretary, a table is prepared
each week summarizing exports of petroleum products,
scrap iron, and sorap steel, from the United States
to Japan, the U.S.S.R., Snain, and Great Britain, a8
indicated by departure permits reported daily by the
Office of Merchant Ship Control, The tables were Dre-
pared for the weeks ending May 32, June 7, 14, 21, and
28, On June 2, 9, 16, 23, and 30, the original and
13 photostats were transmitted to Assistant Secretary
Gaston, In addition, each week two photostats were
transmitted wMr. Young, one of which was for Mr. Purvis. -
Mr. Tickton, Mr. D. J. Leany
4. Compilations wore made of daily quotations on selected
commodities and daily and weekly figures on selected
business indexes, foreign and domestic security trans-
actions, security prices, exchange rates, A8 well as
other data for the Secretary's chart book. - Mr. Chevraux
5. A study was made of selected purchases of food products
by the Department of Agriculture in the period from
March 15 through June 14, compared with annual average
production in the ten-year period from 1929 to 1938,
and percentage changes in the wholesale prices of these
products since March 15. An illustrative table was used
in connection with the business memorandum of June 23. -
Xr, Daggit, Mrs. May, Miss Hagedorn, Mr. Colclough,
Mr. Smith
6. An analysis was made of the movement of prices of selected
fats and oils, monthly, from January 1934 to date. A
chart showing the quotations used in the BLS 28 basic
commodities index for cottonseed oil, tallow, lard, and
butter was used in connection with the business memorandum
of June 25. - Hrs. May
Regraded Unclassified
39
28 I I
74 À study was made of the indexes of consumer demand and
potential consumer demand, in physical volume, on the
basis that 1935-39=100, seasonally adjusted, based on
department store sales, rural retail sales, automobile
sales, and sales of beef and veal, pork, butter, cheese,
oleomargarine, cigarettes, and cigars. A chart show-
in these indexes from January 1935 to nate, was used
in connection with the business memorandum of June 9. -
ur. Daggit, Mrs. May, Mr. Cololough
5, / comparison was made of the price movements of all
commodities and foods, both BLS indexes, during the
current war, on the basis that August 1939=100, and
during the first two years of the World War, on the
basis that July 1914=100. A chart showing monthly
figures was presented with the business memorandum of
June 30. - Xr. Daggit, Mrs. Kay, Kr. Smith
" A comparison was made of the price movements of all
commodities and rew materials in the United States and
the United Kingdom, monthly, January 1939 to date,
on the basis that August 1939=100. A chart showing
the BLS all-commodity index and Moody's raw materials
index for the United States, and the British Board of
Trade index of all commodities, and Reuter's raw
materials index for the United Kingdom, was presented
with the business memorandum of June 30. - Rr. Daggit,
Mrs. May, Mr. Colclough
10. A new chart was prepared showing daily average heavy
construction awards, as compiled by the Engineering
News Record, and structural steel orders, as com-
piled by Iron Age, from January 1939 to date, weekly.
This chart was used in connection with the business
memorandum of June 2. - Mr. Chevraux, Miss Hagedorn
11. At the request of the Secretary, a letter to the
President was prepared for his signature with respect
to the suggested expansion program for the steel in-
dustry. The letter WBB transmitted to the President
on June 6. - Mr. Haes, Mr. Daggit
12. At the request of the Secretary, a statement was pre-
hared concerning items of Federal expenditures for aid
to sgriculture which might be curtailed during the
national emergency, and was transmitted to him on
June 11. - Mr. HARS, Mr. Daggit, Mrs. May
Regraded Unclassified
3
- 29 -
13. At the request of Mr. Graves on June 18, a comparison
WAB made of salaries and wages, Department of Commerce
series, with estimated payrolls in manufacturing, and
in retail and wholesale trade, computed from BLS data,
and was transmitted to him in B memorandum on June 18. -
are. May
14. A study was made of shipouilding activity from January
1939 to date, monthly, consisting of the FPB index of
shipbuilding, adjusted, and the American Bureau of
Shipping series on merchant vessels under construction
or contract (excluding vessels not built to American
ureau of Shipping classification). A chart showing
the trend was presented with the business memorandum of
June 23, - Mr. Chevraux
15. À study has been made of payrolls, totals and per capita,
by States, in manufacturing, retail, and wholesale trade,
for March 1941 as compared with March 1940. This 18
based on census totals by States for 1939, covering
employment and payrolls and on percentage changes in
these figures as reported by the Bureau of Labor
Statistics. Two charts were transmitted to the
Secretary on June 17. A similar comparison has been
ande for April 1941 and Aoril 1940. - Nr. Daggit,
Kr. May, Mr. Colclough, Miss Hagedorn
16. A letter WAB prepared, and was mailed on June 3, to
Mr. J. L. Snider, describing the kind of business fore-
casting done in the Treasury Department and its relation
to the revenue estimatin by the Department. - Xr. Hass,
Kr. Daggit
17. York has been suspended on the composite index of unfilled
orders based on data from individual industries, because
of developments under the Defense program. - Mr. Daggit
18. The project concerning forces determining trends of
basic commodity prices, involving a study of (1) the
cordes determining eneral commodity prices and (2) the
Corces determining the prices of individual commodities,
DAB been superseded for the present by studies of com-
modities more currently related to problems of the Defense
program. - kr. Deggit, Mrs. May, Mr. Smith, Miss Hagedorn
Regraded Unclassified
6!
- 30 -
19. The developing of 8. better index of inventories of
finished goods as an indication of business malad-
justments has been suspended owing to a change in
emphasis arising from the Defense program. - Mr. Daggit
II. Projects or studies under way
1. A project on measures of consumer buying 18 under way
with the object of developing three indexes: (a) and
(b) two indexes to measure the buying power of con-
sumera in terms of physical volume of purchases; and
(c) an index to measure changes in total consumer ex-
penditures, in dollar volume. These indexes will
supplement our present "index of sales", which is de-
signed to measure the "off-take" of manufactured goods
into verious consumption channels.
(a) Computation was revised of the physical volume
index of consumer buying power, entitled "Index
of consumer demand for B. selected group of con-
sumer goods". This index 18 corrected for the
effect of price changes from 1935 to date.
(b) Computation was revised also of the second physical
volume index of consumer buying power, entitled
"Index of potential consumer purchasing power".
This index 16 corrected both for the effect of
price changes and for the effect of changes in the
national income.
(=) With respect to the "Index of consumer expendi-
tures, in dollar value", further progress has
been made in developing individual series, in
determining their suitability for inclusion and
the necessary adjustments. These series have
been classified in two broad groupe: durable
goods and non-durable goods. The purpose of the
index is to cover a.a large as possible a proportion
of the purchases of ultimate consumers. During the
month further progress was made in selecting ap-
propriate series with & view to making this index
more useful in connection with defense studies. -
Xrs. May, Mr. Cololough
Regraded Unclassified
62
- 31 -
2. A study of the volume of installment buying and con-
sumer credit has been nearly completed. This study
18 designed eventually to provide 8. monthly index of
the volume of buying on deferred payments, which at
times 18 an important business factor. Newly-published
data from the Department of Commerce and the National
Bureau of Economic Research have been assembled. A.
preliminary study is under way to determine how they
may be used in a combined index. Further work 18 await-
ing additional data to be released by the Department of
Commerce. - Mrs. May
3- A project in process 18 designed to develop an index of
industrial production that will indicate week by week
the approximate level of the FRB index. It will include
a larger number of weekly series than are included in
any current business indices, with weightings and seasonal
adjustments approximating those in the FRB index. -
Mr. Daggit, Mr. Smith
4. Progress was made on a study of the relationship between
the New York Times revised index of business activity
and the new FRB index of industrial production in an
attempt to forecast the weekly level of the FRB index
from the New York Times index. - Mr. Daggit, Mrs. May,
Mr. Colclough
2. A study is being made of the selling prices of commodities
on which taxes are imposed, in order to determine the per-
centage which the tax represents of the actual price. -
Mrs. May, Mr. Smith
5. An analysis 18 being made of sales of United States De-
fense savings bonds, series E, by States, in relation to
payrolls, income, and per capita retail sales by States.
-
Mr. Haas, Mr. Daggit, Mrs. May, Mr. Cololough, Mr. R.R. Smith
7. At the request of Under Secretary Bell on January 29, 8.
memorandum for the Secretary 1a being prepared, illustrated
by five charte, on the possibility of a freight car short-
age in October 1941, when car loadings are at their
seasonal peak, and containing a forecast of freight car
loadings for October, a forecast of the number of freight
cars that may be required, and outlining steps which
would alleviate or prevent such a shortage. - Xr. Daggit,
Kr. Chevraux
Regraded Unclassified
63
- 32 -
Actuarial Problema
I. Projects or studies completed
+ In response to a request in a letter on May 23, from
Kr. George B. Buck, Chairman of the Board, a draft
was reviewed and approved of the 20th Annual Report
of the Board of Actuaries of the Civil Service Retire-
ment and Disability Fund. The Report was submitted to
the Civil Service Commission on June 13. - Mr. Reagh,
Kr. Brown
2, At the request of the Devartment of Justice on May 16,
assistance was given in the preparation of a tax case
involving the proceeds of an insurance policy paid to
the beneficiary in instailments over a period of years.
Several conferences were held and questions and answers,
together with schedules, were prepared for use in the
trial held in Richmond, Virginia on June 11. Mr. Reagh
ageared as a Government witness. - Mr. Reagh, .r. Kroll
3. At the request of Mr. Robert H. Hinckley, Assistant
Secretary or Commerce, on March 22, assistance
Was given with respect to proposed legislation for
the retirement of inspectors and other similar
technical personnel of the Civil Aeronautics Admin-
istration. Several conferences have been held, and
a bill was drafted for consideration by the officials
of the Civil Aeronautics Administration. - Mr. Reagh
H. A review was completed of an article by Rr. J. Douglas
Srown, entitled, "Dismissal Compensation in a War
Economy". No written report will be made. -
Mr. Reagh
5. At the request of Under Secretary Bell on May 27,
a review was made of B. manuscript entitled "Proposed
Provisions for a Compulsory Dismissal Compensation
Program", by E. D. Hawkins, Mt. Holyoke College,
An acknowledgment prepared for signature of Under
Secretary Bell was transmitted to him on June 30. -
Kr. Reagh
Regraded Unclassified
63
33 # ,
II. Projects or studies under way
1. The Board of Actuaries of the Civil Service Retirement
And Disability Fund 18 laying out detailed plans for
tabulating and processing data for use in preparing
the regular five-year valuation of the Civil Service
Retirement Fund for the purpose of determining the
liabilities of the Government under the Civil Service
Retirement law. Under the law, such a valuation must
be prepared as of July 1, 1940. - Mr. Reagh, Mr. Brown
2. The Foreign Service Retirement law, as approved April 24,
1939, Section 26(m), provides that the "Treasury Depart-
ment shall prepare the estimates of the annual appropria-
tions required to be made to the Foreign Service Retire-
ment and Disability Fund and shall make actuarial valua-
tion at intervals of five years, or oftener if deemed
necessary by the Secretary of the Treasury An outline
of the data required for making an actuarial valuation
has been submitted to the State Department. On June 25,
a conference W&B held with representatives of the State
Department and final plane were made for preparing the
data. - Mr. Reagh, Mr. Brown
3. Several years ago a committee was organized for the
purpose of studying ways and means to extend retire-
ment ben-fits to all Government employees regardless
of Civil Service status. The working committee, the
Subcommittee on Retirement, has again become active
and is attempting to draft legislation which would
coordinate the provisions of the Social Security Act
with the Civil Service Retirement Act. A draft of a
proposed bill has been prepared for consideration by
the committee. - Mr. Reagh
At the request of Under Secretary Bell on June 30, A
review 18 being made of a proposed reply prepared by the
Bureau of Accounts to a letter from the Bureau of the
Budget dated June 14, requesting the viewa of the
Treasury Department on S. 1396, a bill rep aling section
611 of the National Service Life Insurance Act of 1940. -
Mr. Reagh
5. In response to B. request contained in a letter from
Kr. George Buchan Rooinson of May 11, several articles
on Social Security written by the writer and published
in the Annalist are being reviewed. - Mr. Reagh
Regraded Unclassified
65
- 34 -
Other Projects or Studies
1. Publications
(a) For the June issue of the Treasury Bulletin data
were prepared on average yields of long-term
Treasury bonds and high-grade corporate bonde. -
Mr. Turner, Mr. Barnett
All the material submitted for the June issue
was reviewed and edited.
Substantial revisions were made in the June issue
in the tables on the Treasury survey of the owner-
ship of Government securities by large banks and
insurance companies, securities held by govern-
mental corporations and credit agencies and by
trust funds, and in the statement of assets and
liabilities of governmental corporations and
credit agencies. In addition, there was compiled
and inserted for the first time a cumulative index
for the first six months of the calendar year. -
Mr. Lindow, Mr. Lyne:
(b) For the publication Market Prices and Yields of
Outstanding donas, Notes, and Bills of the United
States, computations were made and copy wes pre-
pared for the issue covering the month of May.
This publication shows by securities the rates of
interest, maturities, interest payment dates, and
amounts outstanding; and for each day of the month,
together with a monthly average, closing market
quotations (accrued interest to be added), and
yields. - Mr. Moody, Miss McCoy
10) At the request of Under Secretary Bell on June 25,
a draft of the proposed Review of the Month dealing
with Treasury financing and the budget for the July
Federal Reserve Bulletin was reviewed, and was re-
turned to him on June 27, with a cover letter pre-
pared for his signature. - Mr. Haas, Miss Michener,
Mr. O'Donnell, Mr. Leahey, Mr. Tickton
Regraded Unclassified
66
- 35 -
2. Correspondence
Replies were prepared to letters received on subjects
relating to the work of the Division, and letters
drafted elsewhere and submitted to the Division for
that purpose were reviewed. - Miss Michener,
Miss Ziegler, and other members of the staff in
appropriate fields of work.
During June 635 letters were received in the Division
and 740 were handled as required.
3. Charts
Charts are prepared and continually brought up to date
for use in memoranda and in chart books on special
subjects, and corresponding photographic, photostatic,
and multilith work 18 carried on. This 18 done in the
Graphic Section under the supervision of Mr. Banyas.
A statistical report on the work of the Graphic Section
for the month of June is attached.
Regraded Unclassified
67
Work completed in the Graphic Section, Division of
Research and Statistics, during June 1941
For Division
For
Type of work
of R&S
Others
Total
Oraphic:
You charts:
Total charts completed
42
6
he
Bond book charts completed
1
-
1
Charts brought up to date:
3 bond chart books brought up to date
20 (times)
-
25 (s)
All other charte brought up to date
681
36
717
Miscellaneous:
Total jobs
24
5
29
Photographic:
Photographs:
Total jobs
53
23
76
Number of-
Negatives
158
114
272
Contact prints
178
129
307
Enlargements
60
64
124
Photostats:
Total jobs
151
30
161
Number of-
Lettersize copies
2,116
1,239
3,355
All other copies
9,571
1,973
11,544
Multilith:
Total jobs
20
1
21
Number of-
Zinc plates
133
1
134
Miscellaneous:
16
6
22
Total jobs
LBiwlt
7-10-41
Regraded Unclassified
Statistical Report on W.
Completed by the
Graphic Section, Division of Research and Statistics, by months,
beginning January 1941.
I
#
:
:
:
:
:
Type of work
Jan.
Feb.
March
April
May
June
Total
:
#
1
2
:
:
:
A.
Graphic
New charts completed
50
57
45
52
43
45
295
Charte brought up to date
734
740
727
782
723
717
4,423
Bond book charts completed
-
60
2
65
2
1
130
3 bond books brought up to date
26
(times)
22
(t)
26
(t)
26
(t)
26
(t)
25 (t)
151 (t)
Miscellaneous jobs
36
36
32
39
24
29
195
B.
Photographic:
Photographs:
Total jobs
105
121
128
150
75
76
655
Number of-
Negatives
153
232
218
251
169
272
1,295
Contact printe
224
247
772
729
224
307
2,503
Enlargements
209
608
160
474
225
124
1,800
Photostats:
Total jobs
167
164
216
194
161
181
1,083
Number of-
Lettersise copies
746
1,588
2,936
4,035
1,627
3,355
14,287
All other copies
10,828
10,948
11,336
14,737
8,605
11,544
67,998
Multilith:
Total jobs
8
15
10
9
9
21
72
Number of-
Zino plates
100
91
91
112
128
134
656
Miscellaneous:
Total jobs
16
31
28
18
13
22
128
LBswlt
68
2-3-41
3-5-41
4-1-41
5-1-41
6-2-41
7-3-41
Regraded Unclass
For Miss Chauncey
69
July 26. 1941
CONFIDENTIAL
Dear Mr. Rouse:
I have pleasure in acknowledging the receipt,
on behalf of Secretary Morgenthau, of your letter of
July 24, 1941. enclosing your compilation for the week
ended July 16, 1941, showing dollar disburcements out
of the Britich Empire and French accounts at the
Federal Reserve Bank of New York, and the meas by
which these expenditures were financed.
Faithfully yours,
(Signed) H. Merle Cochran
1. Marle Cechran
Technical Assistant to the Secretary.
Rebert 0. Rouse, Require,
Vice President,
Federal Reserve Bank of New York,
New York, New York.
HMC:1mc-7/26/41
Regraded Unclassified
70
0
FEDERAL RESERVE BANK
of New York
July 24, 1941.
CONFIDENTIAL
Attention: Mr. E. Merle Cochran
Dear Mr. Secretary:
I - enclosing our compilation for the week
ended July 16, 1941, showing dollar disbursements out of
the British Empire and French accounts at this bank and
the means by which these expenditures were financed.
Faithfully yours,
/a/ Robert G. Rouse
Robert 6. Rouse,
Vice President.
Nonerable Heary Morgenthan, Jr.,
Secretary of the Treasury,
Vashington, D.O.
Enclosure
Copy:MEW 7/26/41
Regraded Unclassified
My 16, 1941,
Strie
Confidential
OF LAND (BRITIER COVERIMENT)
DIBITS
CREDITS
DEBITS
Proceeds of
Net Incr.
Greit
(=) or
Girt
Sales of
Proceeds
(+)
ntal
Expendi-
Other
Total
Other
Dear. (-)
Total
Securities
Expendi-
Other
Total
of Gold
Other
Deor. (-)
PERIOD
Debits
tures(s)
Debits
Credits
Gold
(Difichl)(b)
Credits(c)
in Balance
Debita
tures (8)
Debits
Credito
Sales
Credits
in Balance
First year of war
(6/29/39-8/26/40)*
1,793.E
605.6
1,187.61
1,828.2
1,356.1
52,0
420.1
+ 35.0
566,3(e)
416,6 (0)
449,7
1,095,3(e)
900.2
195.1(e)
+229.0
1940
Aug. 29 - Oct. 2
516.8
244.5
72.5
308.9
271.5
6.0
31,4
- 7.9
8.6
4.4
4,2
1.3
-
1.3
- 7.3
Oct. 3 - 30
196.7
167.8
23,9
198.5
160.5
6,0
32.0
+ 1.8
0,5
0,3
0,2
0,5
-
0.5
-
Oct. 31 - Nov. 27
S41.0
201.1
39.9
259.5
210,0
18.0
31.5
+ 18.5°
0,8
0.1
0,7
0,7
1
0,7
- 0,1
NOT. 26 - Deo, 31
234,6
206,8
27.8
198.0
111,4
26.0
60,6
- 36,6
2.1
I
2.1
0.5
1
0.6
- 1.5
War parted through Dec.
2,762.3
1,425.6
1,355,72,793.1
2,109.5
108,0
575.6
+ 10.8
878.3
421.4
456.9
1,098.4
900.2
196.2
+220.1
1941
Jan. 2 - 29
197.4
162.7
34.7
259.9
176.2
52,0
31.7
* 62.5
1.7
-
1.7
0.5
I
0,5
- 1.2
Jan. 30 - Feb. 26
164.6
137.8
25.8
101.4
26.6
26.0
48.8
- 63.2
0.2
-
0.2
0.2
.
0.2
-
Feb, 27 - Apr. &
229.7
157.6
58.1
237.9
103,7
78.0
62.2
+ 8.2
0,7
-
0.7
1,6
é
1.6
- 0.9
Apr. 3 - Apr. 30
126.0
101.9
24.1
228.9
125.6
15.0
78.3
+92.9
0,9
-
0,9
0,9
-
0,9
.
May 1- May 28
122.6
90.6
32.0
91.0
6.3
32.0
52.7
-31.6
0.4
-
0.4
0.8
-
0.8
+ 0.4
May 29 - July 2
140.5
113.8
26.1
105.1
1.9
11.0
92.2
-35.4
21.5
-
21.5
0.9
-
0.9
- 20.6
July 3 - July 30
July 31 - AUGs 27
Smood year of war
(8/29/40-8/27/41)
Aug. 28 Oct. 1
Oct, 2- Oct, 29
Oct. 30 - Des, 3
Doo. 4 - 31
MEX ENDED:
Jane 25
24.3
15.8
8.5
12.5
1.8
2.0
8.7
- 11.7
0.7
#
0.7
0.1
-
0.1
- 0,6
July 2
29.9
27.5
2,4
2.9
0.1
-
9.8
- 20.0
-
-
-
0.1
-
0.2
+ 9,2
,
24.5
15.7
8,8
12.5
-
1.0
11.5
- 12,0
-
-
.
-
-
a
#
16
21.5
11.1
4,4
18.9
.
2.0
16.9(1)
- 2.6
-
-
#
0.1
-
0.1
+ 0.1
Avorage Mookly Expenditures Since Outbreak of War
Transfers from British Purchasing Commission to
(See footnotes on reverse side)
Frénce (through June 19)2940 $19.6 million
Bank of Canada for French Account
England (through June 19)1940 27.6 million
Week ended July 16, 1941
-
million
England (since June 19)1940 47+3 million
Cumulation from July 6
162.7
million
-
For monthly breakdown seo tabulations prior to April 23, 1941.
1948
Regraded Unclassified
continued
(a) Includes payments for account of British Purchasing Commission, Brit inh Air Ministry, British Supply Board, Ministry or
Supply Timber Control, and Ministry of Shipping.
(b) Estimated figures based on trunsfere from the New York Agency of the Bank of Montreal, which apparently represent the
proceeds of official Brit ish sales of American securities, including those offected through direct negotiation. In addition
to the official selling, substantial liquidation of securities for private British account occurred, particularly during the
early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
to data supplied by the Britiah Treasury and released by Secretary Morgentheu, total official and private British liquidation
of our securities through December, 1940 amounted to $334 million.
(o) Includes about $85 million received during October, 1939 from the accounts of British authorized banke with New York banks,
precumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently secruing dollar
receipts.
(d) Includes payments for account of French Air Commission and French Purchasing Commission.
(e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(s) About $11 million transferred from accounts of British Authorised banks with New York banks) $6 million of this amount represented the
proceeds of exports from Singapore.
Regraded Unclassified
BANK
OF
CANADA
DEBITS
CREDITS
DEBITS
Transfers
Transfers from Official
Transfers
to
Proceeds
British A/C
Net Incr.
to
Proceeds
Not Incr.
Total
Official
Other
Total
of
Other
(+) or
Total
Official
Other
Total
of
Other
(+) or
Debits
British
Debits
Credito
Gold
For Own
For French
Credits
Deer. (-)
Debite
British
Debite
Credits
Gold
Credits
Decr. (=)
PERIOD
A/C
Sales
A/C
A/C
in Belance
A/C
Sales
in Balance
irst year of war
8/29/39-8/28/40)*
323.0
16.6
306.4
504.7
412.7
20.9
38.7
32.4
+181,7
31.2
3.9
27,3
36.1
30.0
6.1
. 4,9
1940
29 - Oct. 2
44.3
-
44.3
43.9
16.4
-
27.3
0.2
- 0.4
8.7
2.5
6,2
8,0
6.7
1,3
- 0.7
3 - 30
26.7
-
26,7
28,6
14.0
-
14,3
0.3
+ 1.9
10.1
7.5
2.6
7.9
6.5
1.4
- 2.2
31 - Nov. 27
35.2
-
35.2
69.6
49.2
,
16.7
3.7
+ 34.4
3.1
0.6
2,5
3.6
8.1
1.5
+ 0.5
by, 28 - Dec. 31
48.0
#
48.0
60.6
42.5
-
13.7
4.4
+ 12.6
4,8
-
4.8
6.8
4.8
2.0
+ 2.0
be period through Don.
477.2
16,6
460.6
707.4
534,8
20.9
110.7
41.0
+230.2
57.9
14.5
43.4
62.4
50,1
12,3
+ 4.5
1941
an. 2 - 29
33.7
-
33.7
33.9
16.9
-
15.0
2.0
+ 0.2
4,8
I
4.8
6.8
5.1
1.7
+ 2.0
30 - Fob. 26
31.1
-
31.1
24.3
14.3
-
6.8
3.2
- 6,8
5.0
1.7
3.3
3.2
0,6
2,6
- 1,8
eb. 27 - Apr. =
60,9
-
60.9
46,0
23.1
-
19.1
3.8
- 14.9
5.8
0,8
5.0
13,7
12.5
1,2
+ 7,9
3 - Apr. 30
34.9
-
38.9
35.9
12.5
-
10.5
12.9
+ 1.0
2.8
-
2.8
5.9
4.6
2.3
+ 3.1
1 - May 28
39.2
-
39,2
25.6
15.8
-
0.5
9.3
- 23.7
5.4
-
5,4
4.9
4,1
0,8
- 0,5
29 - July =
43.2
-
43.2
48.2
16.3
-
-
31.9
+ 5.0
10.1
-
10.1
5.8
4.5
1.3
- 4.3
3 - July SC
31 - Aug. 27
soond year of war
(11/42/8-07/63/8
28 - Oct. 1
2- Dote 29
30 - Doc. 3
4 31
WEEK ENDKD:
,
June 25
4.1
-
4.1
5.4
2,9
-
-
2.5
+ 1.3
0.9
-
0,9
4.4
4,3
0,1
+ 3.5
July 2
10.3
-
10.3
2.9
2,5
-
-
0.4
- 7.4
2.2
-
2,2
0.4
0.2
0.2
- 1.8
9
1.9
-
1,9
5.8
3.9
.
-
1,9
+ 3.9
1.2
-
1.2
0.1
-
0.1
- 1.1
16
9.1
-
9.1
6.2
33
-
И
2.9
- 2.9
2.4
I
2.4
5.4
4.8
0.6
* 3.0
sekly Average of Total Debits Since Outhreak of War
Through July 16, 1941
7.4
million
For monthly breakdown see tabulations prior to April 23, 1941.
Regraded Unclassified
74
AF
PLAIN
London
Dated June 26, 1941
Rec'd 2:15 p.m.
Secretary of State,
Washington.
2663, twenty-sixth
FOR TREASURY
l. Considerable anxiety has been evident in
the press of late over the negotiations for the pur-
chase by Warner Brothers of a block of shares in the
Associated British Picture Corporation owned by the
late John Maxwell. The TIMES city column yesterday
contained the following paragraphs on the negotiations:
"It has already been authoritatively stated in
connection with the negotiations proceeding for the
sale of half of the ordinary shareholding of the late
John Maxwell in the Associated British Picture Cor-
poration, that the proposed transaction will in no
SENSE involve the transfer of the control of the cor-
poration to an American company. On the contrary
it is expressly contemplated that control shall re-
main in this country.
"It should
Regraded Unclassified
75
-2-
2663, June 26 - from London.
"It should bE made clear that the control of the
Gaumont-Britiah Picture Corporation 1a not affected
by the proposed sale Either. Though it is believed
that Mr. Maxwell in 1936 acquired a five-year option
on behalf of Associated British on a majority interest
in the 'A' voting shares of the Metropolis and Brad-
ford Trust (which controls the Gaumont-British), this
option is now worthless to Associated British and there
is no prospect whatsoever of it bEing EXERCISED. Nor
is there any question, it 1s understood, of Messrs,
Warner Brothers using any remittable sterling balances
in this country for the proposed transaction or going
in any other way outside the agreement of last October
between the Board of Trade and the Treasury and all
American Companies.
"The mutual advantages of the suggested share-
holding interest between two companies which are already
in a trade sense mutually dependent must bE obvious,
But it is clear that both parties have also shown 8
readingss in the negotiations to recognize that more
than mere commercial interests are involved,'
2. Press comment today welcomes the announcement
of the contemplated Reconstruction Finance Corporation
loan against British direct and other investments in
much
Regraded Unclassified
76
⑉3⑉ 2663, June 26 - from London,
much the same terms as those reported in the Embassy's
no. 1835 of May 9. The TIMES city editor notes that
the loan "Would avoid the sort of situation in which,
because of the inevitable foroed-sale atmosphere about
pigosmeal realizations, there is likely to bE a dis-
crepancy between market values and real values" and
observes that "the question at what values the assets
would bE taken for the purpose of the collateral in
any such arrangement is clearly important".
3. When presenting a vote of credit for L1,000
million to the House of Commons the Chancellor of the
Exchequer stated that the vote for 61,000 million
passed on February 6 (reported in the Embassy's tele-
gram no. 465 of February 7) 18 now approaching Exhaus-
tion, HE stated that up to June 21 some 6810 million
of the previous vote had been issued and that 1f EX-
penditure continues at an increasing rate the February
vote will be exhausted early in July. Over the five
WEEKS to June 21 the average rate of Expenditure was
612 million a day. Of this war Expenditure had been
about L10-1/4 million per day, which compared with
10-1/2 million for the five WEEKS previous to February
6, the small reduction having occurred not in the vital
but in miscellaneous SERVICES such as Evacuation,
Ministry
Regraded Unclassified
77
-4-
2663, June 26 - from London,
Ministry of Food and Ministry of Transport, eto.
But he pointed out that the figure given for the
later period when compared with that given for the
carlier period indicated not a decline but an increase
in the rate of war Expenditure at home, the supplies
now available under the Lease-and-Lend Act being EX-
cluded in the present fiscal year's figures. The
Chancellor of the Exchequer further stated that since
the presentation of the budget on April 7 weekly
average subscriptions to war loans large and small at
L39.3 million had increased by 30 per cent compared
with the corresponding figure for the months preceding
the budget and by 82 per cent OVEr the weekly average
in the first year of the savings campaigh. Since
this increase was due in part to the London war weapons
WEEK which Ended on May 24, it afforded no ground for
complacency but hE Expressed his confidence that an
increase in the rate of genuine savings could bE achie-
ved which would fulfill the Expectations on which the
budget was based. HE asserted that the Government
would endeavor to borrow only by methods consistent
with a sound financial and Economic basis and would
continue to borrow as cheaply as possible. HE also
announced that a new savings drive to extend groups
of small savers 18 about to bE launched.
Incidentally
Regraded Unclassified
78
⑉5⑉
2663, June 26 - from London.
Incidentally the strength of the gilt-Edged market
is now such that it has given rise to suggestions that
the government is in so atrong a position that it can
open up a new era of cheop money. The FINANCIAL TIMES
index of Government securities (November 15, 1926 equals
100) which was already 112.2 on February 23, or 11.3
points above the level at the outbreak of war (SEE the
Embassy's no. 707 of February 24) now stands at 113.3
having remained over 113 since May 1 EXCEPT for B
slight set-back in the first WEEK of June when the Crete
evocuation affected sentiment.
With 2-1/2 per cent on tap national war bonds
now being dealt in at a premium the termination of the
present issue is EXPECTED daily and speculation as to
the nature of its successor ranges from a possible si-
milar security of longer term to suggestions that the
time is propitious for a major step comparable to the
war loan conversion of 1932 on a smaller soale.
In reply to questions in the House of Commons
yesterday, asked no doubt with the recent increases in
coal miners' wages in mind, the Chancellor of the Ex-
chequer stated that "the policy of the Government ns
was explained at length in my budget speech is to
guard against such dangers (inflation) by a varisty of
measures
Regraded Unclassified
79
⑉6⑉
2663, June 26 - from London.
measures and in particular to create conditions to
Enable the wages situation to bE held about where it
then was, The government propose to maintain that
policy. 11
WINANT
RR
80
RS
GRAY
BERLIN
Dated July 26, 1941
Rec'd 10:20 p.m.
SECRETARY of State,
Washington.
2986, July 26, 2 p.m.
The press this afternoon reports with considerable
prominence the freezing of Japanese assets by the United
States and the British Empire and Japan's intention
to take counter measures. Brief aditorial comment
says that the initiative for this step obviously came
from Washington and that it constitutes a new "flagrant
provocation" in President Roosevelt's alleged world
wide policy of aggression. It is insisted that Tokyo
and Vichy have acted within their legitimate rights
in regard to Indochina and confidence is expressed
that Japan "1s determined not to allow itself to bE
intimidated."
MORRIS
DAS
Regraded Unclassified
yes
C
0
81
P
Y
PARTIAL PARAPHRASE OF TELEGRAM SENT
TO:
American Embassy, Chungking, China, via N.R.
DATE: July 26, 1941, 7 p.m.
NO.: 167
THE FOLLOWING IS FROM THE SECRETARY OF THE TREASURY
FOR FOX.
(Not in paraphrase) Extension of freezing order to
China and Japan. New Executive Order simply applies usual
freesing control to China and Japan. By general license
Japanese and Chinese living in the United States since
June 17, 1940 are unfrozen. All trade between the United
States and free and occupied China excluding Manchuria
has been generally licensed. All American, British,
Bussian, Dutch and Chinese Governmental banks in Chine have
been given general licenses covering their own transactions
and also covering transactions relating to trade between
China and the United States, British Empire, Dutch East
Indies, Latin America and Russia on account of persons
living in China excluding Manchuria. (End of non-paraphrased
section.)
(In paraphrase.) Permission has been granted for the
clearings of other Chinese banks with the generally
licensed banks to be made through the Central Bank of China.
(End of paraphrased section.) General license given to
the Chinese Government and Central Bank in effect take them
out of the freezing order and also permit all funds in the
United States of Chinese nationale to be transferred to
accounts
Regraded Unclassified
82
- 2 -
accounts in the names of Chinese Government and the Chinese
Central Bank. A general license has also been given to
the China Defense Supplies Company, the Universal Trading
Company and the New York Branch of the Bank of China.
Although Hongkong is not a part of China within the meaning
of the freezing order since 80 many Chinese and Japanese
operate out of Hongkong a. general license has been issued
applying the general license to Hongicong to the same extent
P.O. though Hongkong were a part of China.
As far as Japan is concerned no general licenses have
been given to agencies in the United States of Japanese
banks except those agencies which are also banks of deposit.
(In paraphrase) Examiners of the Comptroller's Office have
been stationed in banks of deposit to which general licenses
have been issued by the Comptroller's Office. (End of para-
phrased section.) Trade between the continental United States
(including Hawaii) and Japan will be handled on & specific
application basis.
A series of general licenses has been issued covering
the relationships between the Philippines and China and
Japan. The general licenses cover all Japanese and Chinese
banking and business institutions in the Philippines and
all trade between the Philippines and Japan and China.
(In paraphrase.) In regard to our attitude toward Japan
and China, we will adhere to B. policy of liberality and
continuity of normal business for the present time in the
Philippines.
Regraded Unclassified
83
- 3 -
Philippines. (End of paraphrased section.) In Hawaii
general licenses have been furnished to Japanese and
Chinese banks and business institutions. Hawaiian trade
with Japan will require specific applications. Hawaiian
trade with China is covered by the general trade license.
We will try to forward to you as soon as possible copies
of the general licenses.
WELLES, ACTING
(DA)
A-A:DH:MFA
EA:PAK
COPY:MEW 7/31/41
Regraded Unclassified
C
84
0
P
Y
CONFIDENTIAL
PARAPHRASE
A telegram (no. 1096) of July 26, 1941 from the
American Ambassador at Tokyo reads substantially as follows:
American firms in Tokyo have during the past few
days received visits from officials of the Ministry of Finance
who demanded that they be supplied with full reports in
regard to all financial and business transactions, including
details concerning property holdings, bank balances and
reserves. It was demanded that these reports be submitted
by July 25. It was demanded also that by July 31 a detailed
report be submitted concerning the personal property of
American individuals. This procedure was begun apparently
as & prelude to extending freezing control to the credits
of Americans in Japan as a retaliatory measure against
the expected extension of freezing control by the United
States to Japanese credits.
Copy:bj:8-2-41
Regraded Unclassified
C
85
0
P
GRAY
Y
TOKYO
Dated July 26, 1941
Rec'd 1:47 p.m.
Secretary of State,
Washington.
1100, July 26, 9 p.m.
In a note handed to the Japanese Foreign Minister
this afternoon the British Ambassador served notice of
the termination of the Treaty of Commerce and Navigation
of April 3, 1911, between Japan and Great Britain, and of
the conventions regarding commercial relations and trade and
commerce between India, Burna and Japan of July 12, 1934,
and June 7, 1937, respectively, on the grounds that these
instruments can no longer be regarded as fulfilling the
objects which the British, Indian and Burman Governments
had in view at the time of their conclusion. The note
states that in accordance with the terms of the treaty and
conventions the Treaty of Commerce and Navigation with Great
Britain will expire one year and the conventions six months
from today's date.
GREW
WSB
Regraded Unclassified
86
MP
PLAIN
Tokyo
Dated July 26, 1941
Rec'd. 7:08 a. m.;
Secretary of State,
Washington
1095, July 26th.
Tonight's ASAHI, MIYAKO, HOCHI carry identical
article commenting American Government's action
freezing Japanest credits declaring move not unexpected
and that Japan fully prepared take counter measures.
Grave Effect on Japanese trade not only with United
States but also Latin America and British Empire
termed inevitable. Japanese Government will watch
alertly further developments and will take proper
action.
GREW
EMB
Regraded Unclassified
(CONFIDENTIAL)
87
PARAPHRASE
A telegram of July 26, 1941 from the American Legation
at Canberra reads substantially as follows:
Freezing of Japanese assets and unqualified cessation
of trade will be announced soon by the Australian Government
according to Hodgson.
Copy:bj:7-30-41
Regraded Unclassified
88
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate General, Singapore,
Straits Settlements
DATE: July 26, 1941, 1 p.m.
NO.: 179
Reference telegram of July 26, 11 a.m., no. 178 from
the Consulate General.
The Colonial Secretary has Just informed me that
the freezing order on assets of the Japanese in the Straits
Settlements will probably be issued in the very near future.
This telegram has been sent to the Department and
repeated to Tokyo, Saigon, Batavia, and Chungking.
PATTON.
10 1ME
VGA
will
LECHUE
ENT I 201 20 VW 11 20
EA:LWW
18+
RECEIVED
Regraded Unclassified
COPY
TELEGRAM SENT
TO: AMERICAN LEGATION
TANGIER (MOROCOD)
26
ME_VMA
DATE: July 83, 1941.
NO.: 95
Your 254, July 17, 10 a.m,
On July 23 the Treasury Department issued General
Ruling No. 9 which reads as follows:
QUOTE Inquiry has been made AS to whether a person
within Tangiers may engage in transactions purwant to
General License No. 52 relating to Spain. General
License No. 52 does not permit such transactions and,
accordingly, any such transactions which are not authorized
by a general license other than General License No. 52
may only be effected pursuant to a specific license. UNQUOTE.
This in effect means: (a) that the General License
relating to Spain does not apply to transactions of residents
of Tangier and (b) that Tangier 1s frozen under Executive
Order No. 8389 as amended. Hence transactions specified
in the Executive Order between the United States and residents
of Tangier cannot be carried out except under individual
license applications, with the exception of certain classes
of transactions permitted under General Licenses other than
General License No. 52 relating to Spain.
It is the understanding of the Department that General
Ruling No. 9 conforms clossly with the suggestions contained
in your telegram under reference.
840.51 Frozen Credita/2550
WELLES, ACTING
EA: GL: CAD CAD EU II
(na)
Regraded Unclassified
90
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, R10 de Janeiro, Brazil
DATE: July 22, 1941, 10 p.m.
NO.: 910
A transfer 1s being made by the Yokohama Specie Bank
from its dollar balance held in the Bank of Brazil of
$1,000,000 to the Peruvian Central Reserve Bank. This amount
1s then to be transferred again, $550,000 to Buenos Aires
to the Bank of the Republic, and the rest to the Banco Italiano,
through the Chase National Bank.
This telegram was repeated to the American Embassy at
Lime and to the American Embassy at Buenos Aires.
It is requested that the Treasury be informed of the
above,
CAFFERY.
YNL
Evi 70° 3V bW 31
13
BECTIVED
EA:LWW
Regraded Unclassified
RESTRI CTED
G-3/2657-220; No. 651
M.I.D., W.D.
12:00 M., July 26, 1941.
SITUATION REPORT
I. Eastern Theater.
Ground: Russians are counterattacking Finns at Petrosevonak.
New German advances, probably slight, towards Leningrad from West, South-
west, and Southeast.
Germans acknowledge strong Rissian counterattacks in
Smolensk sector. Russian reserves have been brought up to VYAZMA
Capture of Odessa seems imminent.
Air: German bombing of Moscow appears to have damaged defense
industry seriously.
11. Western Theator.
Air: German+ Slight activity.
British. Limited daylight operations. Normal night
operations, centered on Hanover and Hamburg, Berlin was attacked by a
few heavy bombers. British admit lone of nine bombers in all.
III, Moditerranean Theater,
Ground and Air: Unimportent activity.
Naval: The British convoy which fought its way through the
Rediterranean, has arrived at Malta. There the British report repulse
of an Italian torpedo boat attack on the ships.
RESTRI CTED
Regraded Unclassified
CONFIDENTIAL
92
of Code Cablegues
Reserved at the Ver Department
at 12:01, July 26, 1941.
Louisu, filed 16:15, July 26, 1941.
1.
2. A total of 106 teas of high explesive beste
vere dropped as follows: fifters 2000 pound erner-piereing and fifty-three
500 yound cont-ormar-pierving on the Schurahorst, 16 tome of high explosives
on Charboarg, twenty 2000 yourd arnor-pierelag base - the include.
2. % teams of high explosives and 6000
incendiaries were droyped - 0a Kiel 47 seas of high explosives,
including five 1900 pound bombo and three 4000 pound booths, and 3300
insendiaries were drogged.
1. Par of July 25. No bonbing activity due to bed wather.
The fighter differt consisted of s total of 499 fighters on missions as
follows: 149 - interception: 541 protection of chipping: 30 - a special
petrol - " - offensive operations.
4. A total of 109 beabers very ⑉ at
as follows: 43 to the relivery center at Manberg, " to the have railway
owner, 2 to Males, and 7 Stirlings end two Halifax bookers to the infastrial
center of Borlin.
2.
a. 10 recommissiones aircraft and 15 1mg
reage baten wire employed.
1. 24-05. , recommisence aircraft, 10 fighters
1 I 2 I I I
CONFIDENTIAL
-
Regraded Unclassified
CONFIDENTIAL
93
1. Operations on a relaced seals, emaisting
of recommissence of shipping and the mintenease of fighter patrols
coverred.
1. German night fighters operated in the
areas of Lincolashire, Torkshire, Suffelk and Borfalk.
3. Aircraft Lesses Reported.
1. British losses. Losses during the night of July 85-26 were
M follows: , bonkers unreported and 1 bonker creaked in the raid against
learner, 1 beater unreported and 1 down at ⑉ is the Ranburg raid, and
2 Stirlings and 1 Halifax unreported from the raid on Berlin. No fighters
were lost an July 85.
LIER
Distribution:
State Department
AssistentShief of staff, 0-8
Var Plans Division
Office of Neval Intelligence
G. a. Q.
Chief of the Any Air Foress
Secretary of Treasury
Assistant Becretary of Var for Air
Assistant Chief of Staff, 0-3
Air Corpo
+
CONFIDENTIAL
Regraded Unclassified
94
CONFIDENTIAL
Paraphrase of a Code Cablegram
Received at the War Department
at 12:01, July 26, 1941.
London, filed July 26, 1941.
The following is a. summary of British Military Intelligence
information to the morning of July 26,
1. Japan. On July 24, twelve Japanase troop ships embarked
at Bainan for saigon. The increased troop novements by rail from
Tokio to Siigata are taken to mean that the Japanese in Korea or
Manchukus are to be strengthemed by may of Seishin.
2. Libya. Om the might of July 23-24, patrols were active
in the neighborhood of Tobruk. On July 24, a. dause sandstorm resulted
in an interruption to all troop activities.
3. Russia.
as Southern Sector. German advances is the sector south
to southwest of Kiev are thought to be aiming at making liaison with
Axis forces which have pressed beyond the Iniester and are presseding
east of Podolsk--Mogilev with a mederately extended front. Another
German advance to the southeast from south of Kiev has also been
revealed.
be Central Sector, In the northern and southern vicinity
of Seelemsk, German columns are pressing to widen the salient and
throughout this area German activity is in the nature of mopping up.
Northeast of the city German advances are being mistained.
INFORMATION CO21
CONFIDENTIAL
Regraded Unclassified
95
CONFIDENTIAL
0. Northern Sector. Nasi troops appear to be making an
effort to consolidate their lines along the railroad south of Due.
LEE
Distribution:
State Department
Assistant Chief of Staff, G-2
War Plans Division
Office of Naval Intelligence
G. H. Q.
Secretary of Treasury
G-3
Air Corps
- 2 -
INFORMATION COPY
CONFIDENTIAL
Regraded Unclassified
96
THE
AMERICAN
FORUM
OF THE AIR
Vel. 3
SUNDAY, JULY 27, 1941
No. 30
"Your New Jaxes"
REPRESENTATIVE ROBERT L. DOUGHTON
of North Carolina
REPRESENTATIVE ALLEN T. TREADWAY
of Massachusetts
REPRESENTATIVE JERE COOPER
of Tennessee
REPRESENTATIVE FRANK CROWTHER
of New York
REPRESENTATIVE WESLEY E. DISNEY
of Oklahoma
REPRESENTATIVE THOMAS A. JENKINS
of Ohio
Ransdell Inc.
Printers and Publishers
Washington, D.C.
Copyright 1941 by THEODORE GRANIK, Director of the American Forum
Regraded Unclassified
Insurancer Fronk Blair: WOL and WOR present over the Mutual net-
work the "American Forum of the Air," arranged and directed by Theodore
Trank. attorney and nationally syndicated newspaper columnist. Copies of
sonight's program which emanates from the Hotel Willard in the Nation's
Capital, may be obtained from Ransdell Incorporated, printers and pub-
lishers in Washington, D. C. And now your chairman, Mr. Granik.
Chairman Granik: Thank you, Mr. Blair,
Tonight the United States is under full steam ahead, in the greatest
pracetime mobilization of military resources, in its history. Every day,
every hour, HERE recapons for the defense of America guns, tanks,
planes, buttleships flow, in ever increasing numbers, into the
hands of our land and naval forces.
The nation is building its defenses, but the cost of arming (§ nation is
great. Same forty billion dollars has already been appropriated for that
purpose. Other billions will follow. So far, most of the money for defense
has come from government borrowing. But now the time has come, as if
want. when part of the cost of our huge defense program must be raised
through direct taxation.
Mindful of this necessity, the Ways and Means Committee of the House
of Representatives has labored countless hours in the post three months,
trafting W/M lar legislation. The fruit of their efforts, the "Revenue Act of
1941." and formally introduced in the House branch of Congress yesterday.
The bill is far-reaching. In its present form it will affect virtually
cury wage carner and consumer in the country. Debate on this all in-
purtant faz measure is scheduled to start on Tuesday. And tonight the
"American Forum of the Air" brings you a preview of expected House
action (MI "Your New Tazes." Our speakers, three Democrats and three
Republicans, are all members of the Ways and Means Committee.
They are: Congressman Robert L. Doughton (D.) of North Carolina,
Chairman of the Committee; Congressman Allen T. Treadway, of Massa-
charetts, Ranking Republican Member; Congressman Jere Cooper (D.),
of Tennesse: Congressman Wesley E. Disney (D.), of Oklahoma; Congress-
we Fronk Crowther (R.), of New York; and Congressman Thomas 4.
Jenkins (R.), of Ohio.
Following short opening statements by Congressmen Doughton and
Treadway, ICE will continue with an informal round-table panel discussion.
We invite your letters and comments on tonight's presentation. And
now Congressman Doughton.
ADDRESS BY REPRESENTATIVE ROBERT L. DOUGHTON
Ladies and Gentlemen: My subject tonight is national defense and
taxation. The national defense program is of paramount interest to the
American people, In addition, peoples in every part of the world, to whom
freedom of action, freedom of speech and freedom of spirit are dear, are
tremendously concerned in the success of our preparedness effort.
The tax bill, which the Committee on Ways and Means has just re-
ported to the House, is a vitally necessary part of this program. Taxation
is the very life blood of governmental finance. All other methods of finance
are Im delayed taxation and the anticipation of future taxes. If any
governmental program is to be brought to a successful fruition, it must
have viowly integrated with its other aspects an adequate plan of taxation.
War today is, to a great degree, mechanical. Enormous numbers of
machines are necessary to successfully stand against the engines of aggres-
PAGE THREE
Regraded Unclassified
kion. Ships, planes, tanks, guns, and the countless other accoutrements of
modern wurfare are fabulously expensive.
need for concerted emergency action demands it, and that 4€ democracy
Regardless of the cost, the American people are united in their deter
(an function quickly and effectively when their safety is threatened.
This tax bill is without parallel in the amount of revenue it will pro-
mination to have these implements, and the trained personnel to man them,
in a. quantity and of a quality sufficient to make our safety certain, The
duce. It lays a substantially increased burden upon the American people
scope of the expenditures contemplated to complete this program expands
and will entail considerable sacrifice. Not only will the burden of this bill
be heavy but even heavier levies evidently will be necessary before we have
almost daily. We now have appropriations, authorizations, and recommenda.
attained success in our defense undertaking.
tions for national defense totaling 50 billions of dollars. This does not
If I understand the temper of the American people, however, I can any
mean that this entire sum is to be spent in this fiscal year. It means simply
with assurance that they place no dollar sign on their LIBERTY AND
that our defense program, as far as we can see today, calls for the eventual
FREEDOM and will uncomplainingly bear any burden that is considered
expenditure of this amount.
pressury to assure to us and to our children the blesings handed down to
For this fiscal year 1942 our total expenditures are expected to exceed
12 billions of dollars. The financing of these expenditures can be accom.
0% by our forefathers.
plished only by two methods, taxation and borrowing, and the latter must
Chairman Granik: Thank you, Chairman Doughton.
also be met by taxation in the end. There can be no doubt but that We
And NOW 100 present Congressman Allon T. Treadway.
should pay as much as our economy will justify as we go. This limit, a
matter of judgment, nbout which opinions differ, has been given very care-
ADDRESS BY REPRESENTATIVE ALLEN T. TREADWAY
Inl consideration.
From taxes now in force, it is estimated that we will secure $9,400.-
MR. TREADWAY: Due to the critical condition of the national finances
000,000 in the fiscal year 1942, This would be about 43 percent of the an-
resulting from past governmental extravagances-which is now aggra-
Licipated expenditures. The tax bill just reported to the House will pro-
vated by the necessity of making staggering outlays for defense-a sub-
due 3% billion, annually. With this additional revenue, our total receipts
stantial increase in the tax burden at this time is inescapable,
will be more than 60 percent of our total expenditures for all purposes.
During the last several years, it has been the practice to present the
The Grure, 316 billion, was agreed to at the outset of our deliberations by
American people with at least one new tax measure each year.
representatives of the Committee on Finance, the Committee on Ways and
The tax load has now grown to such an extent that during the present
Means. and officials of the Treasury Department, and represents the added
fiscal year, approximately 9 billion 400 million doflars will he collected
Burden which, in our best judgment, should be imposed at this time.
under existing tax laws.
In its consideration of this bill during the last three months, the Com-
This amount is 50 per cent more than the highest receipts mider the
mitter OR Ways and Meaus has continually kept in mind the principles of
world War Revenue Acts. Neveretheless, it is far from adequate to movt
equity and fair play, It was urged by some that we adopt this or that
the present cost of Government.
extreme, and by others that we resort to some novel or fanciful method and
Apropriations for national defense have already reached the 43 billion
that mitried plan. In general, we endeavored to steer a middle course,
dollar mark, not including some 7 billions of recent requests for supple
distributing the weight of the tax burden as carefully as we could amount
mental items, and there is no telling how much more will THE required in
the various classes and types of taxpayers.
.he future.
In this connection, I wish to thank the American people for the splendid
Fortunately for the Treasury, not all of this amount will be spent
attivade they have evidenced during the consideration of this bill, A
in one year.
STREET deal of futerest has been shown. Many thousands of letters and tele-
Actual expenditures for national defese in the period beginning July 1,
grams have been received. clearly demonstrating the willingness of our
1941 and ending June 30, 1942 will be in the neighborhood of 15% billions.
people to mointile the burden which the bill imposes.
Including non-defense functions, the total cost of Government this
The hill in of course, not perfect, nor is the fruit of any democratie
year will be more than 22 billions.
notion. It does not represent precisely the result of anyone of us, working
Thus. without additional tax revenues, and in the absence of any
independently. would have achieved. That fact alone constitutes a con-
economy in expenditures, the Treasury would be faced this year with a
siderable virtue. I cam assure you that the bill as presented represents the
deficit of nearly 13 billions.
very mitter best offorts and considered judgment of the membership of our com-
Even under the most favorable conditions. It deficit of this size would
be alarming. It is particularly so at this time when we have just completed
In the entire 16 years during which I have been a member of the Com-
the eleventh successive year of unbalanced budgets.
mitter on Ways and Means I have never seen the committee work quite
MAK hard OF more conscientionsly to achieve 8 just goal. While there were
to this period, expenditures have exceeded revenus by 32 billions. The
many differences of opinion to be reconciled by deliberation and débate, I
national debt has been piled up to a total of 50 billions. making further
take great pride in the fact that never once was there shown the slightest
borrowing extremely hazardons from the staudpoint of the national credit.
degree of partisanship in debate or in the votes taken by the committee.
Therefore, we must hold it to a minimum-to what we cannot avoid after
No observer of our deliberations could have ascertained from the actions
increasing taxes and reducing expenditures.
of The members any indication of their party affiliations.
In view of the heavy taxes already imposed, there in N. limit to how
This I take to be a convincing proof of the success of the democratic
much further we can go without unduly burdening the people or crippling
process It demonstrates that unity can be had under our system when the
production. Moreover, we have to face the fact that the available sources
of Federal taxation have been pretty much exhausted in the apparently
PAGE FOUR
PAGE pive
Regraded Unclassified
futile effort to try to keep pace with the ever-increasing cost of Government
diction of appropriation matters, I CBD not refrain from mentioning this
in the pre-emergency period.
aubject briefly. Secretary Morgenthau told the committee that in his opinion
Under the new tax bill-which in the largest single revenue measure
he Government ought to be able to reduce non-defense expenditures by one
ever presented-it is proposed to increase existing taxes by 3½ billions
oillion dollars. Other responsible persons and organizations have made
This will bring the total tax load to approximately 13 billions, or more than
even higher estimates of possible savings, It seems to me that if the citizens
double the World War burden. Even with this increase, however, the Gov.
of the country are to be required to make sucrifices for defense, the civil
ernment will spend this year approximately 10 billions more than it collects
agencies of the Government should do likewise, From the standpoint of
in revenue,
preserving the Nation's credit, the reduction of non-defense expenditures
Although the bill contains less than 100 pages of text, it has been some
is DO less imperative than the proposed increase in taxation.
three months in preparation. Public hearings began on April 24th and ex.
tended for a month. Over 200 witnesses appeared before the committee, and
Chairan Granike Thank you, Congressman Treadway.
nearly 2,000 pages of testimony were taken. For two months, the committee
And now we continue with our informal round-table panel discussion.
has been engaged in the actual drafting of the bill, which was just com.
Congressman Cooper, will you open the panel?
pleted on Wednesday of last week.
CONGRESSMAN COOPER: Ladies and Gentlemen It is my purpose very
There of course is not time, in the brief period allotted to me, to go into
briefly to diseuss some of the provisions of the pending tax bill. Realizing
any details concerning the bill as presented to the House of Representatives
the interest manifested by the people throughout the country, we feel that
Needless to say, the task of finding ways and means of raising 3½ billions
members of the committee, charged with the responsibility of drafting the
in new revenue was IS difficult one. In considering various tax proposals
legislation, should convey as much information as possible to the people
the committee had always to keep in mind the necessity of equitably spread-
who will have to pay the taxes.
ing the burden among the different classes of taxpayers.
The new bill provides for the additional taxes to be effective January
For the most part, the additional revenue will come from raising the
first of this year. The present 10 per cent defense tax is made permanent.
rates on individual and corporate incomes, from higher excess-profits taxes,
Personal exemptions of $800 for single persons and $2,000 for married per-
higher estate and gift taxes, and from increasing the rates of most of the
sons are continued. Likewise, the $400 credit for dependents is continued.
existing excise levies. In addition, new excise taxes are imposed on a Dum-
Surtax rates are increased substantially under the provisions of this bill,
ber of articles of every-day use.
beginning at 5 per cent on the first $2,000 and graduated on upward. RO as
Some criticiam has been made of the bill in that it places the increased
to apply to the first dollar of net income.
burden too much on existing taxpayers instead of spreading it more gen-
The present normal corporation tax is continued under the provisions
erally upon the people. In this connection, I might say that the committee
of this bill. The new bill imposes upon corporations a surtax of 5 per cent
considered the question of broadening the income-tax base by lowering the
on the first $25,000 and 6 per cent on the balance. The surtax is employed
exemptions, but a majority opposed such action, principally on the ground
as the only means of reaching income from the large volume of partially tax-
that the amount of revenue to be derived from 80 doing would not much
exempt Federal securities held by corporations of the country.
more than pay the cost of collection.
The present rates are increased 10 percentage points in the excess
On the other hand, it may very well be argued that even if this were
profits tax, which applies only to corporations. An important change in
NO. it would be worth while since it would make our citizens more tax con
this respect is the difference in the method of computation of the excess
scious if they were required to make il direct contribution for the support
of their government,
profits tax. Under the present law, you deduct the normal corporation tax
before you deduct the amount of income subject to excess profits tax. This
Of course at the present time they are now paying touch more than
is changed so that you compute the excess profits tax before the deduction
they suspect in indirect levies, and this is a further argument which is used
of normal tax.
against the proposition of lowering the income-tax exemptions. One Govern-
The present exemptions for the estate and gift taxes above $40,000 in
ment agency has estimated that even the lowest paid wage-earner pays from
continued, and the rates are increased NO as to yield $152,000.000 additional
18 to 21 cents out of every dollar he earns in hidden taxes.
revenue.
One of the most controversial provisions of the bill is that which makes
With respect to individual income tax payers and directly on the sub-
husbands and wives file a joint income-tax return, thus bringing their income
jeet announced for this discussion, "Your New Taxes" mean that people
into a higher surtax bracket. The committee had two principal motives in
with net income of about $15,000 will be required to pay double or more the
including this provision, namely, to prevent tax avoidance and to raise 300
amount of taxes now paid. People with $50,000 net income will be required
millions of revenue which would otherwise have to be imposed on persons
to pay 40 per cent more; $100,000 net income people will be required to pay
less able to pay. It has been vehemently criticized on the false ground that
23 per cent more.
it will encourage divorce and immorality. Secretary of the Treasury Mor-
As was indicated by Mr. Treadway, one of the questions receiving very
genthau effectively disposed of this argument when be said that "when A
serious consideration of the committee was that with respect to lowering
man's wedded life depends on his tax return, it hangs on a pretty slim
the exemptions for personal income tax. I remember that Dr. Crowther, of
thread.' It should be pointed out that where the joint income does not
New York, has taken a special interest in this, and I feel sure that he will be
exceed $4,000, no increased tax liability results from combining the income
glad to give us some further information on that point.
in one return.
CONGRESSMAN CROWTHER: Well, Mr. Cooper, the matter of exemptions
Although the tax bill contains no item in reference to economy in es-
is a matter that has been considered by all committees writing tax bills.
penditures, due to the fact that the Ways and Means Committee has no juria
Exemptions are based on the question of subsistence. It was finally decided
PAGE --
PAGE BEVEN
Regraded Unclassified
that $800 for a single person and $2,000 for a married man, whether or DOL
with family, but particularly with family, certainly could be considered
day that we are collecting. That will be thirty million dollars a day that
nothing more than subsistence. A great many people object to exemption
5 we spend, but we are going to spend in the next year $100,000,000, How
of any character and think that they ought to be removed altogether, and
are we going to do it! How are We going to reach it? I any to you that we
the complaint has been made in the press and by the commentators and
call economize $100,000,000 n year on non-defense expenses, and we could
others that the committee is politically cowardly and that they don't dare
economize is billion dollars 8 year also in defense expenses:
CONGRESSMAN DISNEY: How are you going to do that, anyhow! I
to reduce the exemptions because the proletariat, the body politie, that
would be affected, vote. There is no rhyme or resson in that sort of charge.
have been talking for six weeks or two months on that subject, and I made
The fact is-and I can state it very briefly-last year we reduced the BI
such a motion in the committee and got my eye shot. out with a point of
emptions for married people $500, and we reduced the exemptions for à
order, which was probably properly sustained. What plan have you got to
do that very thing you are talking about!
single person $200. The net result of that was that there came to the
CONGRESSMAN JENKINS: You can't formulate a plan like that in a
Treasury-not to Washington, but in the field of the Internal Revenue
offices-some ten and a half million new tax returns, and out of the ten and
minute. I made a speech upon the floor of the House a day or two ago,
a half million, only two million had any tax return to the Treasury, vary
going into full detail. I will cite you one instance.
CONGRESSMAN DISNEY: Another question: How are you going to do
ing from eleven cents up to seven, eight, or nine dollars. The total amount
it when the Ways and Means Committee raises the money, on the one hand,
collected was between twelve and thirteen million, and it cost eight million
dollars to collect it and required 3,900 new employees in the Internal
and the Appropriations Committee spends it on the other, without any
Revenue Department, which was probably 8 very joyous thing for my
sign of n chance on the part of either committee to have anything to say as
colleagues who had the opportunity of naming some of them.
to spending or as to collecting!
CONGRESSMAN TREADWAY: If Mr. Jenkins will allow me to answer that
CONGRESSMAN COOPER: Doctor, I am sure you will also recall that the
question my way, I have had a resolution before the House for a long time
present exemptions mean the person receiving $15 a week as a single person,
and 838 n. week as a married person.
covering that very point, setting up a committee, from the Ways and Means
CONGRESSMAN CROWTHER: Yes, and then there is another thing to be
Committee and the Appropriations Committee, to coordinate the expendi-
tures and appropriations. It is a matter that ought to be done in the interest
taken into consideration. When the critie says that these people don't pay
of trying to economize in government and 1 hope some day that the Congress
any taxes, you must remember that the Brookings Institute and the National
Life Insurance Company, about three or four years ago, made a very com-
will see fit to pass such a resolution, because it in n method that everybody
uses in their own business and in their own family.
plete study of the hidden taxes on gasoline and on oil and on tobacco and
CONGRESSMAN DISNEY: What would you have that committee dot Up
on liquor, and such things, and they found that the person who bad an
to the Civil War, the Ways and Means Committee raised the money and
income of $1,800 a year, $150 B month, who doesn't go on many champagne
spent it. What would your committee do! Would you have a new
parties, and whose wife doesn't buy many fur coats, paid *235 in hidden
committee!
taxes, which are included largely in our excise taxes.
CONGRESSMAN DISNEY: Doetor, what do you think of the suggestion
CONGRESSMAN TREADWAY: What you are endeavoring to secure being
of $500 a head for all dependents in lieu of the exemptions that have
done, namely, to coordinate expenditures and appropriations!
been made?
CONGRESSMAN DISNEY The main thing is just to stop non-defense ex-
benditures. That won't be n hig job.
CONGRESSMAN CROWTHER: That might be a compromise, but I think
CONGRESSMAN CROWTHER: Let me say, gentlemen, that that is a big
that We ought to stick to the old rule, providing a sum that really means
job. It is a hig job to stop these non-defense expenditures, because all
subsistence. That isn't a very great thing to brag about, but you have to
through them for a period of years there has run the theme of Santa Claus.
have il figure starting somewhere.
That is one of the hardest things to defeat in the world. It is a very difflcult
CONGRESSMAN JENKING: Mr. Granik, I think that the disoussions so
proposition.
far have been very elucidating and very interesting. This tax subject is a
CONGRESSMAN DISNEY: Only 25 per cent of this money goes for govern-
tremendous subject. It is difficult for anybody, in the length of time We
ment per se, that is, the protection of life and property. The rest of it goes
have, to scratch even the surface, but, you know, somehow I think that the
for things that are not government per se.
people in this country are more interested than the members of this tax
CONGRESSMAN CROWTHER: Let me say to the Gentleman from Okla-
committee in the matter of economy. Just as Mr. Treadway and Mr.
Doughton both have said, this is the heaviest tax bill ever levied on the
homa that cutting down non-defense expenditures is just like stopping
American people. From the very beginning in the discussion of this bill
taxes. Everybody says they want to do taxed, but they came before our
committee and told as of the responsibility and the difficulty they had
before the committee, I took the position, and sometimes by myself, that 1
raising the money and didn't want us to feel that they were shirking their
thought the tax bill need not necessarily be this great colossal sum of three
and a half billion dollars and we shouldn't lay this load on the people until
responsibility. Then they usually humped their backs to show the load they
we had economized. I have maintained-and the members of this panel and
were carrying. Everybody wants somebody else to be taxed and thinks
of the House (especially on the Ways and Means Committee) have stood
they can earry it. It is just BB hard to stop these non-defense expenditures.
with us in that position-that that Administration-not because it is the
It is harder than you have any idea.
opposite party from ours-has been too extravagant. It has been too ex-
CONGRESSMAN JENKINS: Then I conclude that the Gentleman from
pensive; it is too expensive now. Whenever we get this tax bill passed, that
New York doesn't quite agree with the Chairman when be said that every-
will mean ten million dollars a day in addition to the twenty million dollars
body in the country is going to accept the next tax bill graciously.
CONGRESSMAN CROWTHER: I don't think NO, unless they are assured
PAGE EIGHT
PAGE NINE
that there will be some reduction in expenditure, and I don't know how
you will assure them.
the libraries contain the report of e commission that went into the subject
CONGRESSMAN JENKING: Don't you think that the only way to ourbail
thoroughly many years ago.
expenses, the way it is set up now, with the Bureau of the Bndget operating
The practical effect of this proposal is to prevent legal tax avoidance.
directly under the President, is for the President himself to take the
Summed up in a nutshell, that is what it amounts to, in my judgment, It
initiative
makes for tax equality. It prevents 5. small number of people from having
CONGRESSMAN COOPER: Mr. Chairman, everybody knows that every
& tax advantage over the larger portion. You of the radio audience should
dollar that is taken in by the Government and every dollar that is paid out
remember that you can't divide your salary and earnings to get a tax
by the Government has to be by no net of Congress. You talk about what
advantage over the other fellow (except in the eight community property
the President can do and what be can't do! It is the action of the American
States), but you can divide your income-producing property, like stocks
people, through their representatives in Congress, that determines the ques.
and bonds, by the simple process of giving it to your spouse, paying a gift
tion of revenue and expenditures, and the people pass upon their represent-
tax, which is paid only once, and from then on, with the income divided,
atives every two years.
you can defeat annual surtaxes by the divided income.
Another important question that bas been under discussion in this bill
From 1932 to 1938 gifts in the United States, according to certain eal-
which I feel sure that people would like to have some information on is that
eulations, have amounted to the enormous sum of $4,792,399,000, where gift
with respect to the mandatory joint returns. Mr. Disney has given special
taxes were paid. Certain gifts are tax free, so some authorities figure that
attention to that, and I feel sure that he will be interested in discussing
the total gifts, both tax-paid and free, will run over seven billion dollars in
that briefly,
that period of time. It is clear to me that a large portion of this amount
CONGRESSMAN DISNEY : I thought Mr. Jenkins was going into that sub-
represents family transfers.
jeet first. He acted like it.
CONGRESSSMAN JENKING: Will you yield to me a minute, Wesley!
CONGRESSMAN CROWTHER: May I say, before you start, that all the
While I am against compulsory joint returns of husband and wife-
money that is paid out isn't always by Congressional setion. A lot has been
CONGRESSMAN DISNEY (Interposing): Let me finish here just a minute
paid out by Executive Order, by Executive Decree, that wouldn't have
before we get into a discussion, will you!
been paid out.
CONGRESSMAN JENKINS: Yes.
CONGRESSMAN DISNEY: Originally it had to be voted by Congressmen
CONGRESSMAN DISNEY: A widow wrote Chairman Doughton that she
elected by the people.
and her husband had been making separate returns until he died. Now she
CONGRESSMAN CROWTHER: That is true, but you and I (1 think you
has the whole estate and has to pay the regular surtaxes. She lost both her
were) were opposed to the giving of blank checks which make such condi-
husband and her separate return advantage. She is not complaining.
tions possible.
Would our friends advise that she rush out and marry some man in order
CONGRESSMAN JENKINS: So was I.
to have the advantage of separate returns!
CONORESSMAN DOUGHTON: There is 8 good deal of criticism of the New
For example, a. $10,000 income represents a tax of $1,166. If it were
Deal for extravagance and lavish expenditures, and doubtless some of it is
divided equally, the total tax would be only $880. In other words, the hus-
justified. At the same time, the Members of Congress are not in much
band and wife who separate their returns get a tax advantage of $286. A
position to cast stones, because they are not without sin on the subject.
50,000 income represents a tax of $20,002. Divided equally between hus-
CONGRESSMAN JENKINS: Mr. Disney asked me a question awhile ago.
oand and wife, the tax would be $13,956, or N tax advantage of nearly $7,000.
Here is one item I remember outlining in my speech the other day, where
On the other hand, H. Marine sergeant from Tulsa, married, with a wife
an item was put in as a matter of national defense, and we appropriated
and two babies, told me that of his monthly wage of $66, $6 went to his
$838,000,000 for material and child welfare under the heading of national
widowed mother, $25 a month for the cheapest rent, for his little family, pos-
defense. I wonder how that could be under national defense.
sible at the Marine Base at Quantieo, Virginia, and $10 a month for milk
CONGRESSMAN DISNEY: Well, I noticed that the W.P.A., according to
for the babies. Asked what he had left, he said, plseasantly, Cigarette
an article this morning, is going into the subject of social disease as well,
money, but I have my family."
that is, the Works Projects Administration. So, we run into 6 lot of things
CONGRESSMAN JENKINS: Let me ask you this, Wesley. As I said before,
that are alleged to be defense that are really non-defense subjects.
while I am opposed to this compulsory joint return, I am not opposed to it
Mr. Jenkins, are you going to discuss this matter of joint returns?
so strenuously on the ground that it might create divorces and things that
CONGRESSMAN JENKINS: No. I know a little about it, and I am
cause divorces and things of that sort, but I am against it on this ground.
against it.
You are a lawyer and a good one-
CONGRESSMAN DISNEY Go ahead, then.
CONGRESSMAN DISNEY (Interposing): I plend guilty to that.
CONGRESSMAN JENKINS: I think Mr. Disney ought to have the floor.
Congressman JENKINS: -and you don't agree with me. We lawyers
He hasn't had the floor yet in his own right.
know that in this country for a bundred years from the beginning of the
CONGRESSMAN DISNEY: Some of our friends are disturbed about this
Government, the women made B battle to get themselves free economically.
proposal of mandatory joint returns for husband and wife, arguing that it
It used to be that when a women married 8 man. she was almost a chattel.
puts a premium on divorce and 8. burden on marriage, Well, sometimes
That was a shame. They fought their way up to freedom, and in every state
both of those things are burdens, but it hasn't worked that way in England.
in the Union, without exception, there are statutes that give to the wife
England has had the compulsory, mandatory returns upon husband and
absolute freedom from her husband 88 far as her property is concerned.
wife since 1914, no if anybody wants to be really informed on the subject,
This is the first time that that program has ever been invaded.
CONGRESSMAN DISNEY: All right, let me answer that.
PAGE This
PAGE ELEVEN
Regraded
If you do defeat the surtax, by dividing property, the rest of the las.
payers who have not done likewise have to take up the slack, NO it is (er
after our experience, that there is no such thing 08 A good fax bill, and you
tinent to find out who does take up the stack when somebody else is no
will remember Chief Justice Marshall's admonition that the power of tax is
paying the taxes. The figures showed that 5.77 per cent of the people, by
he power to destroy, and that is something we have got to keep in consid-
Gling separate returns. avoid the surtax. So the remaining 94,23 per cess
eration. People complained and many of them asked us why we didn raise
lurve to take up the slack and pay the taxes thus avoided, England stopped
more money. There is a limit to taxation, if you are going to keep business
that long ago. and this proposal will stop it in this country.
going and continue the capitalistic system, with its desire for profit. If you
CONGRESSMAN JENKINS: Westey, you realize the fact. however, don't
destroy it, there is no telling where we may go, We have (birteen billions
which are going to be collected in taxes this year, thirteen billions in the
you. that in our committee we are going to raise $323,000,000 through this
1942 fiscal year. That is about one-sixth of the entire general revenue for
process? In our committee, as on every other proposition, We gave every.
borly that was interested opportunity to be heard, but not a woman in this
that period.
whole United States had a chânce to come in and present her caline in this
CONGRESSMAN COOPER: Of course, Doctor, you will bear in mind that
groat problem.
with the enactment of this revenue measure, it will mean that this defense
CONGRESSMAN CROWTHER: We didn't have any witnesses to appear
program will be paid for about 60 per cent out of tax revenue, During the
either, for or against taxes on the radio, and we didn't have anybody about
World War we only attempted to pay for one-third of the expenses of the
billboards. We had plenty of witnesses on tobacco and beer and ganoline N)
war by IAX revenue, and the other two-thirds were by borrowing. We are
as not to have any taxes on them.
now endenvoring to pay 60 per cent of the cost of the defense program by
CONGRESSMAN TURADWAY: May I add one sentence!
tax revenue and only borrow 40 per cent.
CONTRESSMAN DOVGHTON: It wasn't a one-sided question as fur as the
CONGRESSMAN CROWTHER: That is a very Invilable ambition that may
committee was concerned.
lead HK into a better place. When we got through with the other war.
CONGRESSMAN COOPER: I nm sure you will recall, Mr. Chairman, that
remember, folks, we owed twenty billion dollars. We paid eleven billion
the committee has repeatedly held special hearings on this subject alone, and
of il off in eleven months. That left fifteen billion dollars, which is still
reports have been made from time to time throughout the year,
standing in the present debt as attributable to the World War, and we have
CONGRESSMAN JENKINS: That was years ago, and that WAS on the joint
paid in that time, up to Inst December, fifteen billion dollars in interest.
return in those states like Culifornia that have compulsory-
CONGRESSMAN COOPER: Will you yield, Doctor, 11 will be remembered,
CONGRESSMAN DISNEY (Interposing) -community property laws,
Doctor, that already in sight you have two and 44 half times HM much expense
CONTRESSMAN JENKINS: And like Oklahoma. But we never had Il
for the present emergency as you Ind For the World War. We already 24747
hearing of this session of Congress on this proposition where any innn of
Billy billion dollars in sight now.
woman and n. chance to come before the committee.
CONGRESSMAN JENKINS: Bilt that is for this emergency. Mr. Cooper,
CONGRESSMAN CROWTHER: And we never advocated such Il polley
and the World War cost us twenty billion dollars.
this before When we did diseuss it, it was not a proposal of this kind.
CONGRESSMAN CROWTHER: That is what 1 410 eatting to your attention.
CONSURESMAN TREADWAY: Mr. Granik, I think that we have gone far
What will the picture be twenty years after this HK regards the interest
enough to this round table here in the last three-quarters of an hour to CODE
charge and the continuation of deficit financing!
vinco the midione listening in toniglit, both in this room and outside, of th
tremendous task the Ways and Means Committee has had in the last few
CONGRESSMAN DISNEY: Are you trying to make everybody feel good!
months, and I think it is only fair to invite them to participate in the dis-
CONGRESSMAN JENKINS: With reference to what you said about 60.10,
of these subjects during the next three days on the Floor of the
that is not going to work out that way, It is just 41 supposition that soirnda
House, I want just to add this one word. if I may, Mr. Granik, and that is
pretty good in the report, but it will not work out that way.
that Chairman Doughton and I have participated under your auspices on
CONGRESSMAN DOUGHTON: We all admit that as long as we have a
previous necasions. and this is a unique occasion in that we are in total
national income of ninety billion dollars, fifteen billion or twenty billion of
accord, There is no partisanship here and 110 polities. We are simply inter
Federal taxes would not be a staggering assessment. We admit we are in a
ested in the well-being of the American people, and it is a pleasure to have
better position to pay taxes. Our ability to pay is far superior to what it
preficipated with you and him here tonight.
has over been before.
CONGRESSMAN DOUGHTON: We are all trying to write an excellent tos
CONGRESSMAN CROWTHER: That may sound all right. Mr. Chairman, but
bill To impose the burden necessary for national defense ou the people as I
instional income is not a sound process of figuring nitt what tax returns
whole, nx economically and as reasonably as it is possible for the Committee
stould be, and it is not so considered by economists.
1111 Ways and Means to do, I concur in what Mr. Treadway, my good frieud
CONGRESSMAN DOUGHTON: Income is a sound yardstick to govern how
has said. Unit every effort has been made to put the consideration of this
I and able to pay taxes.
tax bill on " high plane and to divorce it entirely and segregate it from the
CONGRESSMAN CROWTHER: That depends on prices and their effect on
question of partisan polities. I think the committee has made il worderful
the individual, agriculture and otherwise. It is a very poor basis to use
for figuring,
success in that respect, and I feel under obligation to every member. mi-
nority and majority. for their fine cooperation and effort to arrive at an
CONGRESSMAN DOUGHTON: What would be your basis?
honest, non-partisan fax bill,
CONGRESSMAN CROWTHER: The same basis that we tike now.
CONGHESSMAN DOUGHTON: That is exactly what we are doing.
CONGRESSMAN CROWTHER: Now that "The biscuits have been passed.
CONGRESSMAN CROWTITER: We are not figuring these on national in-
Pappy" by both sides, I want to say that you realize, the same as we all do
come, not by any means,
PAGE TWELVE
PAGE THIRTEEN
Regraded Unclassified
the national income.
CONGRESSMAN DOUGHTON: On the national income, which constitutes
when we put the five-dollar tax on automobiles.
CONGRESSMAN CROWTHER: On ability to pay, and we threw that awa:
And now for a final word from our announcer, Mr. Blair.
Chairman Granik: I'm sorry but our time is up. Thank you, gentlemen.
Announcer Blair: The American Forum of the Air" is a Public Serv-
ice Feature of WOR and WOL. This series is arranged by Theodore Granik,
attorney and nationally syndicated newspaper columnist. Ransdell In.
of the entire proceedings. When requesting copies by mail, kindly onclose
corporated-printers and publishers, distribute a limited number of copies
ten cents to defray mailing costs. Address your request to Ransdell Incor-
American Forum of the Air" emanated from the Hotel Willard in Wash-
porated, that is R-A-N-S-D-E-L-L Incorporated, Washington, D. C. "The
through the facilities of WOL in the Nation's Capital.
ington, D.C. You are invited to witness these broadcasts which originate
Frank Blair, speaking. This is the Mutual Broadcasting System.
PAGE FOURTEEN
Regraded Unclassified
97
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate General, Singapore,
Straits Settlements
DATE: July 27, 1941, 1 p.m.
NO.1 180
Yesterday an order was made effective for freezing assets
of the Japanese in Malaya. This order is applicable to
all territory of the Japanese - including mandated and leased
islands - B.B well as to the Republic of China, with Manchuria
included. The Government here has given authorization that
contracts which were concluded before July 26 may be carried
out. The Consulate General is told by the Controller of
Restricted Exports that shipments of iron ore from mines which
are owned and operated by the Japanese here in this country
are not covered by the order. However, instructions on this
question are awaited.
There 16 unqualified approval and general satisfaction
here over the retaliatory measures which the United States
and Britain have taken against the Japanese. A feeling of
relief that & definite stand against aggression by the
Japanese has been taken 18 unquestionably evident.
This telegram has been forwarded to the Department
and repeated to Saigon, Indochina, and to Tokyo.
PATTON.
BSI VA va
EA:LWV
Regraded Unclassified
98
RS
PLAIN
TOKYO
Dated July 27, 1941
Rec'd 1:25 p.m.
Secretary of State,
Washington.
1102, July 27, 4 p.m.
Today's press reports decision Japanese Govern-
ment retaliate against foreign freezing Japanese assets
and credits, partinent regulations to bE promulgated
July 28 under authority foreign exchange control law.
Regulations applicable nationals, corporations and
residents of "designated countries," presumably United
States including Philippines and Britain, and provide
comprehensive prohibitions against financial trans-
actions, including acquisition and disposal Japanese
currency EXCEEDING five hundred yen monthly, without
permission Finance Minister.
Vernacular newspapers consider American freszing
order occasioned by conclusion Indochina Joint DE-
fense Agreement but assert American attempto COETCE
Japan by Economic pressure merely harden Japanese
determination pursue its immutable policy. KOKUMIN
reports Finance Minister Ogura statement to Effect
since
Regraded Unclassified
99
-2-, No. 1102, from Tokyo July 27, 1941; 1:25 p.m.
since freezing anticipated Japanese holdings in United
States already greatly reduced and furthermore since
American-Japanes: trade already greatly curtailed by
increasing American export control, Effect upon Ja-
panese Economy latest American move will bE compara-
tively slight and already adequate preparations made
cope with this development. ASAHI suggrats as possible
added motive American intention disrupt Japanese trade
with Central South Americans through control dollar
Exchange. Special article ASAHI deplores American
misunderstanding which led to freezing but Expresses
belief that if not followed by oil embargo or other
Economic sanctions, road to adjustment relations still
not closed.
CHUGAI points out manner in which United States
will apply freezing order to Japan cannot bE fore-
told but ASAHI mentions possibility that it may bE
used to halt trade as completely as with other Axis
Powers,
Commenting British abrogation trade treaties no
serious new developments anticipated since war condi-
tions already have largely disrupted Japanese British
trade but it is emphasized this action and British
freezing Japanese credits coinciding American freezing
order demonstrate British American solidarity and de-
termination act in concert to curb Japan.
Editorial
Regraded Unclassified
100
-3-, No. 1102, from Tokyo July 27, 1941; 1:25 p.m.
Editorail comment joint defense Indochina pro-
claims defensive character of agreement and accuses
third powers of intrigues to alienate French Colony
by encouraging DE Gaullist Separatist movement. MIYAKO
attributes French confidence in Japan to Japan's Eminent-
ly fair attitude demonstrated toward Indochina during
past year. Agreement intended to forestall Efforts
Encircle Japan and sabotage prosperity sphere.
GREW
ALC
Regraded Unclassified
8/4/41
101
HM Jr said at group meeting this morning
ist in view of the President's letter to
coles, dated 8/1/41, on this subject,
ne was not going to do anything about
Henderson's letter.
Regraded Unclassified
102
July 28, 1941
Dear Leens
In the absence of the Secretary I
acknowledge receipt of your letter of July 25.
1941, regarding the proposed executive order
to control consumer credit under the administra-
tion of the Federal Receive Board.
The Secretary will not return to the
Treasury until the first of sext week, at
which time I shall be glad to bring your letter
to his attention.
Very truly years,
st
Nonemble Leen
Administrator, Office of Price
Administration and Civilian Supply,
Machington, D. 0.
WHITE
Regraded Unclassified
COFY
103
OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY
Washington, D. C.
July 25, 1941
The honorable
Henry Morgenthau, Jr.
Secretary of the Treasury
Washington:
Re: Proposed Consumer Credit Order
Dear Henry:
I have been discussing the proposal of the Treasury De-
partment for 8 veto power under the consumer credit Order with
several members of my staff who have been working on the Order.
Among them are Rolf Nugent of the Russell Sage Foundation and Frank
Hubschek, a lawyer long prominently associated with legislation and
litigation in the consumer credit field, both of whom are acting as
OPACS consultants. I have known them both for a long time and have
great confidence in their knowledge of the facts and their judgment
on this matter. This fact and the grave necessity for prom action
in this field impel me to pass their comments од to you.
Both Nugent and Hubachek assure me that they can see no
way in which any action within reason which might be taken by the
Federal Reserve Board under the proposed Order could interfere with
Treasury financing or general fiscal policy. On the contrary, they
believe that action taken under the order would, to the extent that
it effects the Treasury at all, almost necessarily be helpful. The
only foreseeable effects of the intended program on Treasury are
indirect and rather remote. It is an ares in which rulings and
interpretations will be frequently required and time will be an
important factor in effective edministration. Knowing that the
regulation of consumer credit will be difficult at best, they have
considerable sympathy with ar. Eccles' unwillingness to take on the
job unless he has undivided administrative authority and responsi-
bility.
It seems to me that the interests of the Treasury would
be adequately safeguarded by changing the present provision to read
48 follows:
"The Board shall also maintain such lisison with
the Secretary of the Treasury, the Federal Loan Admini-
strator, and with other departments and agencies of the
Federal Government and with such other public or private
agencies and persons, as the Board may deem necessary OF
appropriate to carry out the purposes of this Order."
Regraded Unclassified
104
- 2 -
OPACS has a substantial stake in whatever action might
be taken by the Board under the proposed Order. Nevertheless, we
are willing to leave the administrative power with the Board in
the belief that administration must be the responsibility of one
agency, th. t this job which deals with credit comes naturally
within the Board's field, and that the Board is better equipped
than any other agency to undertake the task. The final veto power
on any action taken by the Board lies, of course, with the President
who can at any time rescind or amend the Order and I believe that
both of us can rely on our right of appeal at the top should it be-
come desirable. This would seem to make unnecessary the unusual
power of veto by one executive agency or another.
OPACS already has a considerable investment of time and
energy in exploring the use of consumer credit controls to further
our program and we are very anxious to get whatever help we can
from this plan as promptly as possible. Consequently, I hope you
can see your way clear to go along without insisting upon 8 veto
power over the Board's Regulations.
Sincerely yours,
(Signed) Leon
Leon Henderson
Administrator
Regraded Unclassified
105
TREASURY DEPARTMENT
Washington,
July 28, 1941
Dear Mr. Secretary:
This is 8. first report on what has been done to carry
out the radio suggestions you made on July 25. Graves,
Odegard, Callahan and I think that most of them are good
suggestions. At least four out of the six can be put into
effect easily, and two of them are already "in the works".
Perhaps I had better number my items as you did.
(1) The Life of George Gershwin, with "Rhapsody in
Blue" and other excerpts from Gershwin music, will be a
part of the Treasury Hour on August 27.
(2) The John Philip Sousa number is now being prepared
by the Treasury Hour people in New York, and should be pro-
duced early in September.
(3) Paul Munroe is 8 close friend of Ira Gershwin, and
is going to take up with him the matter of a new Treasury
Bond song, perhaps with Cole Porter as collaborator.
(4) Adolf Busch has already promised to play for us on
one of our Sunday musical programs, and as Serkin often AC-
companies him, there should be no difficulty in getting both
of them for a single occasion.
(5) Yehudi Menuhin has also agreed tentatively to
play for us one Sunday in the near future. The Mendelssohn
violin concerto is out of the question, as It lasts for ap-
proximately thirty minutes, and, what is more, we have no
symphony orchestra at our disposal. The same purpose might
just as well be served, however, by asking Yehudi to play
one of the Mendelssohn violin and piano sonatas. We could
easily point out that this music is "verboten" in Germany.
We also are thinking of B German program in connection with
the "Songs of America" on the Treasury Hour, B. program
Regraded Unclassified
106
- 2 -
reminding people of the old, romantic Germany of pre-Nazi days. Vie
might have the chorus sing the Lorelei by Heine, whose poems are
likewise "verboten".
(6) The Beethoven Fifth Symphony is the only one of
your six suggestions that is going to be difficult and expensive.
For one thing, we have no program on which a big symphony lasting
approximately fifty-five minutes could be played. We would have
to arrange EL special broadcast for it. The practical difficulty
Ls that we have no symphony orchestra at our disposal. Al Goodman
has about twenty musicians in the Treasury Hour; Frank Black has
forty-four in the N. B. C. program, but they constitute a "band"
rather than a real orchestra, and they probably would murder
Beethoven. Moreover, the N. B. C. half-hour on Tuesday evenings
Is devoted to American songs exclusively, and the Beethoven Fifth
would be entirely out of place.
A symphony orchestra of sixty pieces, the minimum number
that could do justice to Beethoven, would cost at least $3,000 for
& single performance. If we want to bear this expense, we might
call on Mrs. Hull, our vice-chairman in New York, who is also
prominent on the board of the New York Philharmonic. She might
(
get the Philharmonic to appear for us, but AS the orchestre al-
ready operates at a huge deficit, I don't see how we could ask
the Philharmonic to contribute. The musicians themselves are
unionized and would have to be paid by someone.
My other suggestion, which seems more practicable, is
to wait until the Fall when both the New York Philharmonic and
the N. B. C. Symphony orchestra will be playing regularly on the
radio. It would be an easy matter to get either of these organi-
zations to dedicate one of their programs to Defense Savings, and
to play the Beethoven Fifth, perhaps with Mr. MacLeish as nar-
rator.
Greetings from all of us here.
Fusinand Kuda Jr.
Son. Henry Morgenthau, Jr.
0/0 Mr. Sam Lewishon,
Twin Ponds,
Malone, New York.
Regraded Unclassified
107
July 25, 1941
MEMORANDUM FOR: MR. HAROLD GRAVES
MR. KUHN
MR. ODEGARD
MR. CALLAHAN
FROM:
THE SECRETARY
I suggest on the Treasury Hour Wednesdays
we do:
(1) The Life of George Gershwin, Oscar
Levant to be interlocutor, and play "Rhapsodie
in Blue", excerpts to fit his life from "Lady Be
Good", "Strike up the Band", "Porgy", etc.
(2) The life and works of John Philip Souse,
treated similarly to Irving Berlin program.
At an appropriate hour - preferably the
Treasury Hour, - have Menuhin do the Mendelsschn
violin concerto -- someone to state that both
artist and composer are "Ferboten" in dictator
countries today and could not be heard.
another Treasury Bond song and get suggestions from him
That we get Ira Gershwin to write words for
who could write music to them, possibly Cole Porter?
That on Tuesday evening, NBC, vthsymphony of
Beetheven. Archibald MacLeish to explain V Symbol.
This to be played soon.
That Busch (violinht) and Serkin, pienist, be
used on & Sunday program.
Please write me your reaction. I want ACTION!
Regraded Unclassified
108
TREASURY DEPARTMENT
WASHINGTON
Columbia, S. C.
July 28, 1941
Honorable Henry Morgantheu, Jr.
Secretary of the Treasury
Wington, D. C.
Deer fr. Morgenthau:
Last week at the regular meeting in your office, I mide some
mention of the fact that quite fi number of the smaller state benice through-
out the country had failed to qualify us issuing agents for Series E
Defente Bonde. These are being followed up actively through the state
sspociations and through the ABA and its committees, etc., and I think
that quite 5. large percentage of the missing ones will be in with us in
the neur future,
You Buid something about my speeking to Mr. White and soliciting
his help. I thought of this three months ago and had planned to have 8
meeting of the Executive Committee of the State Supervisors Association to
to into the situation with them fully and solicit their cooperation through-
out the entire nation. The meeting, however, did not materialize, because
those who were thinking of calling the meeting for me decided to postpone
it for 5 while due to a matter of friction about which I would rather tell
you then write.
Since talking with you last week, I have been told that this
meeting would be called now if we wanted it, and I em planning to request
t'st it. be done. They have promised to bring in all twe. ve members of the
Executive Committee and also some twelve or fifteen other state supervisors,
20 L' we can get twenty or twenty-five of these gentlemen together in
schington and put the situation definitely before them, it no doubt will
accomplish some good.
With my best regards, I am
truly Yours,
B. M. Adwards
Assistant to the Secretary
ENS:mtb
Covy to:
Mr. Harold N. Graves,
1set. to the Secretary,
Wushington, D. C.
Regraded Unclassified
109
TREASURY DEPARTMENT
WASHINGTON
July 28, 1941
Memorandum for THE SECRETARY:
The following report is made of Stamp sales
at "Treasury House":
July 1-25
$19,473.75
July 26
595.90
Total
$20,069.65
GRAVES
Regraded Unclassified
110
TREASURY DEPARTMENT
WASHINGTON
July 28, 1941
Memorandum for THE SECRETARY:
The following report is made of Stamp sales
at "Treasury House":
July 1-26
$20,069.65
July 27
152.30
Total
$20,221.95
GRAVES
Regraded Unclassified
111
TREASURY DEPARTMENT
WASHINGTON
July 28, 1941
Memorandum for THE SECRETARY
The following report is made of requests received
for "Any Bonds Today?" from the experimental mailing of
10,000 cards:
No. Requests
No. Copies
July 1 - 25
1076
6263
July 26
4
15
Total
1080
6278
GRAVES
Regraded Unclassified
112
CONFIDENTIAL
UNITED STATES SAVINGS BONDS
Sales in July Compared with June, 1941
On Basis of Issue Price
First Twenty-two Business Days
(June 1-26, July 1-26)
(Amounts in thousands of dollars)
:
: Increase or Decrease (-)
:
Sales
: in July Commared with June
Item
:
:
:
:
:
July
:
June
:
Amount
:
Percent
Series 3 - Post Offices
$ 43,296
$ 35,138
$ 8,158
23.2%
Series E - Banks
81,189
54,259
26,930
49.6
Series I - E - Total
124,485
89,396
35,089
39.3
Series Pr - Banks
21,467
25,788
1
4,321
- 16.8
Series G - - Banks
137,543
167,021
- 29,478
- 17.6
Total
$283,495
$282,204
$ 1,291
0.5%
July 28, 1941.
Office of the Secretary of the Treasury,
Division of Research and Statistics.
Source: All figures are deposits with the Treasurer of the United States
on account of proceeds of sales of United States Savings Bonds.
Note: Figures have been rounded to nearest thousand and will not
necessarily add to totals.
Regraded Unclassified
Daily Sales - July 1941
On Basis of Issue Price
(In thousands of dollare)
Post Office
All Bond Sales
Date
Bond Sales
Bank Bond Sales
Total
Series z
Series F
Series G
Series E
Total
Series E
Series I
Series G
July 1941
1
$ 9.505
$ 2,387
$
957
$ 6,160
$
595
$ 8,910
$ 1,793
$
957
$ 6,160
2
11,612
4,066
845
6,701
1,735
9,877
2,331
845
6,701
3
15,045
4,903
843
9,299
2,077
12,969
2,827
843
9,299
5
22,900
9,589
2,437
10,875
3,191
19,709
6,397
2,437
10,875
7
11,028
6,315
472
4,242
3,908
7,120
2,407
472
4,242
8
11,226
4,867
1,197
5,162
1,346
9,881
3,522
1,197
5,162
9
16,570
6,277
880
9,413
2,229
14,341
4,048
880
9,413
10
11,430
6,018
605
4,808
2,459
8,972
3,559
605
4,808
11
16,311
8,504
1,197
6,610
2,405
13,905
6,098
1,197
6,610
12
12,689
4,482
860
7.347
1,672
11,017
2,810
860
7,347
14
13,435
7.754
1,046
4,636
3,060
10,375
4,693
1,046
4,636
15
10,083
4,754
602
4,728
1,458
8,625
3,296
602
4,725
16
11,994
5,541
808
5.645
1,645
10,349
3,896
808
5,645
17
15,332
6,213
1,189
7.930
1,799
13,533
4,414
1,189
7.930
18
12,404
6,730
836
4,837
2,042
10,362
4,689
836
4,837
19
7.553
4,513
926
2,114
1,505
6,048
3,007
926
2,114
21
14,136
7,105
1,015
6,016
3,060
11,076
4,046
1,015
6,016
22
12,191
3,820
1,208
7.164
1,001
11,191
2,819
1,208
7,164
23
14,677
5,018
1,208
5,451
1,514
13,163
3,505
1,208
8,451
24
11,634
5,382
959
5,293
1,623
10,011
3,759
959
5,293
25
10,589
5,828
904
3,857
1,670
8,919
4,158
904
3,857
26
11,149
4,420
474
6,256
1,303
9,846
3,117
474
6,256
Total
$283,495
$124,485
$ 21,467
$137.543
$ 43,296
$ 240,199
$ 81,189
$ 21,467
$137,543
Office of the Secretary of the Treasury. Division of Research and Statistics.
July 28, 1941.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of
113
United States Savings Bonds.
Note: Figur have been rounded to nearest thousand and will not necessarily add to totale.
Regraded Unclassi
114
>
7/28/41
A supply of this form letter was sent to the Federal
Reserve Bank in each district and they in turn addressed
them to the banks within their district.
Regraded Unclassified
115
THE SECRETARY OF THE TREASURY
WASHINGTON
July 28, 1941
You have doubtless learned through the press or
your district Federal Reserve Bank the bagic features of
the two tax series of Treasury notes which I propose to
offer for sale on August 1. The Series A-1943 notes in
the denominations of $25, $50 and $100, providing B re-
turn of about 1.92 percent a year, are designed to be at-
tractive to the small taxpayer and their presentation in
payment of income taxes will be limited to $1,200 from
any taxpayer in any one tax year. The Series B-1943 notes
will be issued in denominations of $100, $500, $1,000.
$10,000 and $100,000. they will provido a return of about
0.48 percent a year, and the amount of these notes which
can be presented in payment of taxes will be limited only
by the amount of taxes due.
A table of values appears on each note and in
Treasury Department Circular No. 667 governing the Espoe,
It should be understood that principal and accrued inter-
est will be credited by the Collector of Internal Revenue
against the owner's tax liability at the value stated in
the table for the month in which the notes are presented
in payment of that liability. If the owner purchases more
notes than he requires for his tax payments, or 1f for any
other reason
he ishes to cash the notes in, he will get
back only the purchase price paid for the notes. Cash re-
demption may be accomplished only through the Federal Re-
serve Bank of issue and under the conditions specified in
the official circular,
I have asked the Federal Reserve Bank of your
district to send you copies of the official offering oir-
cular, a booklet giving the salient features of the notes,
for quick reference purposes, and 6. supply of application
forms. It 1e my feeling that the procedure to be followed
Regraded Unclassified
116
-2-
in handling the sale of these notes should be very sini-
lar to that now in effect with respect to United States
Savings Bonds of Defense Series F and G. I very much
appreciate the valuable assistance being rendered in that
connection by the banking institutions of the country as
vell as in the handling of our regular Treasury issues.
I nm certain that I can count on your cooperation in this
further important phase of the National Defense Program.
It is important that the taxpayers of the Nation
become aware of the unprecedented taxes they will have to
pay next year on this year's income, and they should be
encouraged to set aside funds now with which to neet those
later payments. The new tax series notes provide an orderly
method of laying astde the amounts each taxpayer will require
for that purpose. I would therefore appreciate it if the
Treasury could have your continued cooperation in acquaint-
ing your customers with the facts concerning these tax notes
and your assistance in handling their applications and remit-
tances with your Federal Reserve Bank.
Very truly yours,
Secretary of the Treasury.
Regraded Unclassified
A23
117
MEMORANDUM
FROM
British Supply Council in North America
TO
Mrs. Henrietta Klotz
Compliments of E.N. Gray
Regraded Unclassified
118
STATEMENT NUMBER 25.
AIRCRAFT SHIPPED TO U. K. AND OVERSEAS COMMANDS
TYPE
DESTINATION
ASSEMBLY POINT
By Sea
By Air
during
during
Week ending Week ending
July 5,41. July 27,41.
Airacobra
U. K.
U. K.
4
-
URTISS
Tomahawks
Middle East
Port Sudan
20
-
LAS
Boston III
U. K.
U. K.
18
-
LOCKHEED
Hudson V
U. K.
U. K.
-
27
(via Gander)
TOTALS
42
27
British Air Commission,
July 28, 1941.
Regraded Unclassified
July 23. 1941
Files
Mr. Cookram
Mr. Devley of the British Treasury called on - at 10:15 this noraling. During
bie visit be contioned that Mr. Archer of the Brittsh Purchasing Commission had
reported to his carlier is the seraing that his purchases of TEN materials and
agricultural machinery were being hold 40. They thought this case as a result of
the question which had been relead by the Secretary of the Treasury concerning
pessible profite made by private distributors is England of goods which wase Load-
Leased by the United States. Mr. Bowley caked If - arrangements could not be
más to arrange for this situation temperarily, my for e period of ten days. will
Mr. Leynon, who Le leaving the Daited States tenerrow, my have the to arrive is
London and work out this problem.
After returning to his office, Mr. Bowley called Be back to give as the for-
ther information which I had requested. that was, whether Mr. Archer felt that the
requisitions were being held up by our Precurement Division. through which 10 is
understand that the goods under reference are being sought, OF by the Lond-Lease
authorities. Mr. Bowlay stated that he had again talked with Mr. Archer and led
learned from the latter that the requisitions had been placed with the Programent
Division of the Treasury but that Mr. Mack had felt that he east have some further
instructions is the premisss. Hr. Kack had passed them along to Mr. Cox with this
and 19 10 understand they are NOV hald up in the office of Kr. Doz. After
message, speaking with Acting Secretary Bell at 12:30 seen, I have endorsered throughout the
day to talk with Mr. Cox, but have not succeeded.
July 30. 1941
of the Procurement Division had passed edition to his certain Brittek requisitions but
AS 10:15 a.m. yesterday Mr. Osz returned my call, 20 confirmed that Mr. Mask
had refrained from recommending approval thereef because of the position which the
Secretary of articles obtained W the British under head-lanes. Mr. Dear
of the Treasury had taken - days age with respect to possible profit
on stated the distribution that his office we draving - . letter addressed to the British which read wight
possibly be used as the basic for all interia arreagement. Be presided to a
copy of this draft to Acting Secretary Bell during the day.
Mr. " 10:20 yesterday tars. that Mr. Parris and received a letter from the
serving I telephoned Mr. Secley to report the above Mr. progress. Philip
Devley told no. is that Lend-Lease and Treasury efficials would discuss that problems 11
Towng 10 the effect Secretary's question above not forth. Bowley pointed out found that
releed is under the of the requisitions NY is question since " is of
shipping urgent space to clear will some be available is August to transport all important quality the
articles now requested.
EMC:lap-7/29/41
Regraded Unclassified
120
- 2 -
Mr. Doving neationed that Mr. Enymes had left harriedly for New Yerk to
catch his plane and had not had the time to call of the Treasury to my geodige.
Jull
Regraded Unclassified
121
his se. 1941
Files
Mr. Geshrom
Vasa talking w telephone with Mr. Bowley of the British Treasury at 11:30
this merning I asked whether be had any recent verd as to the plaze of Sir are
Nieneyer. Dowlay teld me that Assistant Secretary Asbecon of the Department of
State had saked his some tea days up whether 10 use planned that sir Cite would
be the British representative ea the Stabilization Board. If mt. Adresse is-
quired whether 10 would be legical for the Valted States to est another -
nist to China to be Niemayer's opposite under as as commis advisor, country
that Fox vould give his attention to the stabilization leard. Mr. Bouley has
received a reply from Landen, be has net yet had as opportunity to Mary
to Achosen, to the effect that Vienaper will not be a mober of the Stabilization
hard. His temperary visit to China will be for brooder consente engresentions.
desecquently, the Britten thought that como imerican other then Mr. 7es night be
legically selected as Niemayer's apposite number. Visa I raleed the question as
to whether the situation night net now be changed w freesing of Chinese assets
W the British and Americans, Bowley admitted this, agreeing with M that the
operations of the Stabilization Beard might be loss important, and not require
all of Mr. Fox' time.
mH
EMC:lap-7/28/41
Regraded Unclassified
122
For Miss Chauncey
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
July 28, 1941
Secretary Morgenthau
TO
Mr. Cochran
FROM
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
$ Proceeds of
$ Proceeds of
Shares Sold
Bonds Sold
Total
July 21
199,417
28,513
327,930
22
215,541
11,988
227,529
23
183,577
36,152
219,729
24
144,723
43,765
188,488
25
205,114
44,404
249,518
26
5,167
Nil
5,167
953.539
164,822
1,118,361
July 22
Gift to Treasury
6
28
34
953,545
164,850
1,118,395
Sales from
Feb.22,1940 to
July 19, 1941
274,923,912
36,317,343
311,241,255
Total
Feb.22,1940 to
July 26, 1941
275,877,457
36,482,193
312,359,650
312,359,650
$ proceeds of non-vested securities sold
July 14, 1941 to July 19, 1941
500,000
$ proceeds of non-vested securities sold
Sept. 1, 1939 to July 12, 1941
229,200,000
$ proceeds of non-vested securities sold
Sept. 1, 1939 - July 19, 1941
229,700,000
229,700,000
GRAND TOTAL
542,059,650
$ proceeds of rights sold - 1,500 for $18,937 - July 24
1,500 for $18,703 - July 25
3,000
$37,640
75ml
Regraded Unclassified
For Miss Chaungey
123
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE July 28, 1941
Secretary Morgenthau
TO
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
No. of Shares
$ Proceeds of
Nominal Value
$ Proceeds of
Sold
Shares Sold
of Bonds Sold
Bonds Sold
July 21
8,860
199,417
35,000
28,513
22
8,969
215,541
20,000
11,988
23
9,523
183,577
44,500
36,152
24
6,712
144,723
45,000
43,765
7,521
205,114
57,000
44,404
25
26
100
5,167
Nil
Nil
41,685
953.539
201,500
164,822
July 22
(
Gift to Treas.
2
6
66
28
41,687
953,545
201,566
164,850
Sales from
Feb.22,1940 to
July 19, 1941
9,605,563-1/2
274,923,912
44,175,650
36,317,343
Total
Feb.22,1940 to
July 26, 1941
9,647,250-1/2
275,877,457
44,377,216
36,482,193
July 24, 1941
1,500 rights sold for
$18,937
July 25, 1941
1,500 rights sold for
$18,703
3,000
$37,640
Regraded Unclassified
124
- -
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 28, 1941
TO
Secretary Morgenthau
FROM Mr. Cochran
confidential
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£31,000
Purchased from commercial concerns
£10,000
Open market sterling was quoted at 4.03-1/2. The only reported transactions
consisted of £10,000 sold to commercial concerns.
In New York, closing quotations for the foreign currencies listed below were
AS followe:
Canadian dollar
11-1/2% discount
Argentine peso (free)
.2380
Brazilian milrois (free) .0505
Uruguayan peso (free)
.4380
Colombian peso
.5800
Mexican peso
.2070
Cuban peso
1-1/4% discount
The Chinese yuan and Japanese yen were not quoted in New York today.
Actual quotations for the dollar and British pound were again received from
Shanghai today, according to New York banks. In terms of our currency, the yuan
remained unchanged at 5-3/16#, and sterling was again quoted at 3.96-3/8.
There were no purchases or sales of gold effected by us today.
The Treasury issued licenses under both the Gold Reserve Act and Executive
Order No. 8389, 8.6 amended, permitting the Federal Reserve Bank of New York to
effect the following transfer of gold in its vaulte:
$200,506 from the Bank of Portugal's Gold Account G to the ordinary
account of the Bank of Portugal. Gold in Account G is the
property of the Fortuguese Government.
To understand that the Portuguese Bank purchased the above amount of gold from the
Government.
No new gold engagemente were reported.
A price of 23-7/16d was again fixed in London for both spot and forward silver,
equivalent to 42.55$.
Regraded Unclassified
125
-2-
The Treasury's purchase price for foreign silver was unchanged at 35#.
Handy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.
Tie made five purchases of silver totaling 400,000 ounces under the Silver
Purchase Act. Of this amount, 300,000 ounces represented new production from various.
foreign countries, purchased for forward delivery. The remaining 100,000 ounces
represented inventory silver, for spot delivery.
The Federal Reserve Bank's report of July 23, listing deposits of banks in
Asia with the New York agencies of Japanese banks, showed that such deposits totaled
$55,765,000, an increase of $3,398,000 since July 16. Most of the change in deposits
took place on the books of the Yokohame Specie Bank's New York agency. The latter's
principal dollar liabilities to and dollar claims on Japanese banks in Asia stood as
follows on July 23:
Change from
July 23
July 16
Liabilities: Deposits for Japan and Manchuria
$39,925,000
+ $5,165,000
Deposits for China
10,235,000
- 1,330,000
"
: U.S. Treas. Bills, comm. paper, etc
25,730,000
- 3,808,000
Claims
: Loans
$18,573,000
+ $4,967,000
if
: Other - mainly Jan. import bills
6,836,000
-
32,000
It will be noted that, despite further Agency loans of $4,967,000, the Agency's dollar
liabilities to banks in Japan, Manchuria and China increased no more than $27,000 on
balance. This suggests the withdrawal of $4,940,000 during the week ended July 23,
in comparison with the apparent withdrawal of nearly $8,500,000 in the preceding week.
and
CONFIDENTIAL
Regraded Unclassified
EXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL
126
FROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN
AS SHOWN BY DEPARTURE PERMITS GRANTED
Week ended July 26, 1941
:
JAPAN
:
RUSSIA
:
SPAIN
:
GREAT BRITAIN
:
:
:
:
FITROLEUM PRODUCTS
Fuel and Gas Oil (including
Diosel 011)
254,400 Bbla.
:
:
716,500 Bbls.
Crude -
Blended or California
High Octane Crude*
56,000 Bble.
:
:
:
All Other Crude
68,820 Bbls.
--
--
:
Gasoline -
Gasoline A**
--
-
I
245,500 Bble.
Gasoline B*
98,328
1
--
409,000 Bble.
All Other Gasoline
:
-
-
-
C
bricating 011 -
Aviation Lubricating 011***
--
-
-
6,762 Bbla.
All Other Lubricating 011
1,213 Bbls.
:
I
83,260 Bbls.
Tetreethyl Lead***
:
--
:
I
"Boosters", such as Iso-
Octane, Iso-Hexane, or
Iso-Pentane
-
:
--
-
SCRAP IRON AND SCRAP STEEL
Number 1 Heavy Melting Scrap
--
-
16,098 Tons
--
All Other Scrap
--
1
6,296 Tons
-
Office of the Secretary of the Treasury, Division of Research and Statistics.
July 28, 1941.
Source: Office of Merchant Ship Control, Treasury Department.
Any material from which by commercial distillation there can be separated
more than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon
mixture - President's regulations of July 26, 1940.
Aviation Gasoline.
Às defined in the President's regulations of July 26, 1940.
Regraded Unclassified
daily 28, 19k1
Files
Kr. Dechras
STRICTLY CONFIDENTIAL
Kr. incleas, as efficer of the National Bank of Belgium with present head-
quartors is Lenden, salled on De today. at 11:15 a.m. Mr. has hom is
Bev Tork recently to press the litigation of the Bank of Balgium against the Teak
of France in connection with the alleged failure of the latter to enfogrard -
$250,000,000 worth of gold which had been entrusted to 11. This was the gold
which had been taken from Transe to Daker at the time of the collepse of the
French Republic.
Mr. Ansinux seld as that the case had been baken under deliberation - few
days ago by the Suprese Court of Now Terk. A decision 10 expected free this court
senstime within the sext few days. The immediate decision will stmply deal with
the point as to whether the above-mentioned court is competent to hear the case.
If the decision 10 is the affirmative, 11 is anticipated that the Bank of France
will appeal therefrom. It is expected that the case will be tried on its merits
is about November. at which time Mr. Ansiaux will again be in the United States.
Ute present plass are to leave for Lendon within the next fortnight.
In anover 10 w inquiry, Mr. ABSIAUX said that the gold heldings of the
National Bank of Belgium are sev all abread. The principal reserves are is the
United States and Canada, with a small amount earnarized in the Central Task of
South Africa. The gold with the South African bank resulted from gold produced
is the Belgian Genge being shipped to South Africa between the date that Ragland
entered the var and that or which Belgium came late the war. Since Belgium autored
the war gold produced is the Belgian Cange has been made available to the British
against sterling. The Belgian holdings with the Bank of Seath Africa. therefore,
will net increase above the present small figure.
Kr. Ancieux informed B9 for the first time that Mr. Janeson, who was Governor
of the National Bank of Belgium when the war broke eat and who was later interned
In Trance, died in the month of June is Belgium, to which country be had returned
from Trance seme menths ago. Mr. insians said that Severear Jameson had been 111
for several weeks prior to his death. Mr. Amelaux speke in highest terms of
Governor Janason, saying that he had really been the strangest leader La Belgium
against Germany since his return to Drussels.
Mr. Anciaux said that the National Bank of Belgion in Brassels is for all
present purposes only a demostic bank. Vith Mr. Inviseyas and hinself is Lendon
with Minister of Finance Datt, the foreign holdings and business of the National
as representatives of the National that of Belgium, verking in cless scoperation
officials Belgium is Lendon are have been mking funds available to the British any
Bank of handled from London. Mr. Amelanx let me that Government. the Belgiss
These DATE first ozt of deposits is Lendon, but Belgian stocke there are
Regraded Unclassified
128
- I -
calumated. There 10 as plan to distaich the Belgion gold stocks is the Waited
States. as the contrasy, the purpose to to conserve the stocks fee the Belgian
people when the var 10 terminated. Mr visiter was particularly proof of the
showing that has been nade w the Belgion Gongo is providing gold, coppor, and
other researces of much help to Great Britein is the purpuit of ver activities,
and also is showing the self-sufficiency of this Belgion colony which, yoter to
the var, use considered a liability rather then a national asset.
me
EM0:lap-7/29/41
Regraded Unclassified
429
COFY
PARAPHRASE OF TELEGRAM RECEIVED
TROM: American Embassy, London
DATE: July 28, 1941, 10 p.m.
NO. : 3252
SECTION ONE
THE pollOwing IS CONFIDENTIAL FROM (7) COE FOR THE SECRETARY 03 THE
TREASURY.
Today. July 28, I sat in at B. conference which WGB held with the
Chinese Ambassador by officials of the British Treasury and the Bank of
England. The Chinese Ambassador was informed by the British that all
Chinese accounts in the sterling area were being frozen today. The British
also told the Chinese Ambassador that they expected to bring Hong Kong into
the sterling area tonight.
Às was explained to the Chinese Ambassador, the freezing was a friendly
action; the British Government would have to look to the Chinese Government
for considerable advice as to the accounts which are to be unfrozen.
Tonight the British will unfreeze for payment within the sterling area
the accounts of the Chinese Government and its organs and the accounts of
the four Government banks and of American and British banks residing in
China which possess balances in the sterling area.
The inclusion of Hong Kong in the sterling area, it was noted, would
place the dollar as well B.B the sterling balances which Hong Kong holds under
the control of the British.
A number of inquiries were suggested to the Chinese Ambassador by the
British: inquiries which the Ambessador might wish to nake of his Government.
À copy of these inquiries should reach me tomorrow, and I sholl telegraph
them at once for the information of the Treasury Department.
AA:PAK
WINANT
Regraded Unclassified
130
COPY
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, London
DATE: July 28, 1941, 10 p.m.
NO. : 3252
SECTION TWO.
One of the points which the British suggested the
Chinese Ambassador inquire about was whether the Ministry
of Finance, the Bank of China, the Stabilization Board or
some other agency would be the organization constituting
the Chinese Exchange Control. Another was what Chinese
agencies or organizations in Shanghai, Hongkong, Singapore,
Rangoon, and other places would be available to make
(
recommendations to the British on the treatment Chinese
balances held in those places should be accorded.
It was explained to the Ambassador that, unlike the
United States freezing control which contemplates a control
of transactions, the British control as now constituted
1a a control of accounts, so that when the Chinese told
the British that certain accounts should be free, the
British would understand this to mean that it was the
wish of the Chinese that all transactions in relation
to those accounts should be allowed to take place.
The British told Coe they feel that the British
Government and the United States Government should kaep
one another closely informed in detail as to what action
each is taking with respect to Chinese balances.
Regraded Unclassified
131
- 2 -
This Embassy has no copies of the general licenses
issued under the United States Government orders freezing
Chinese and Japanese property. It would be of assistance
to the Embassy if the contents of these general licenses
could be provided the Embassy by telegraph, if the licenses
are not too long.
End of message.
EA:FL:PAK
Copy:MEW 7/30/41
Regraded Unclassified
132
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
EA 893.51/7255
July 28, 1941.
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and encloses
six copies of a paraphrase of a telegram from the American
Consulate General at Hong Kong, China, dated July 23, 1941,
11 a.m., which gives the itinerary of Mr. A. Manuel Fox
and his associates.
Enclosure:
From Consulate General,
Hong Kong, July 23, 1941.
(Six Copies.)
Regraded Unclassified
133
C
0
P
Y
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate General, Hong Kong,
China, via N.R.
DATE: July 23. 1941, 11 a.m.
This is to inform the Department that For and his associates
will leave this p.m. for Chungking.
This message was sent to Chungking and also repeated to the
Department for its information.
BRUINS
EA:PAX
893.51/7255
Copy:alm 7-28-41
Regraded Unclassified
131
C
o
P
Y
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy. Chungking, China, via N.R.
DATE: July 28, 1941, 3 p.s.
NO.: 311
THE FOLLOWING IS CONFIDENTIAL FOR THE SECRETARY OF THE TREASURY FROM FOX.
We are greatly handicapped by the delay in making available the services
of a private secretary. There 1a a scarcity of competent and reliable help
here. Difficulty in securing available service in Chungking is being ex-
perienced by the Board even to the extent that it has found it necessary to
appeal to Doctor Kung for the loan of his private secretary to help with the
work, Although the Consulate in Hong Kong has been most helpful, be could
make avuilable--part-time-only one stenographer.
The need for and the advisability of obtaining confidential male secre-
tary from the United States is readily confirmed by E. P. Chen and Ambassador
Gouss.
Ie there some difficulty which prevents Hewlett from being sent? He
has worked with Frese and the latter thinks he would do the work satisfactorily.
Others have also given good recommendations.
GAUSS
LAIFL:PAK
Copyralm 7-29-41
Regraded Unclassified
C
135
0
P
Y
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Chungking, China, via N.R.
DATE: July 28, 1941, 4 p.m.
NO.: 312
THE FOLLOWING IS FOR THE SECRETARY OF THE TREASURY
FROM FOX.
"I have been confidentially informed that Hall Patch
will be appointed as the British member temporarily."
GAUSS
EA:PAK
Copy:MEW 7/29/41
EN
21
Regraded Unclassified
Delivered to Treas. by Customs
136
SHANGHAI
JULY 28, 1941
TO:
DIVISION OF INVESTIGATION AND PATROL
FROM:
CAMPBELL
HAVING JUST RETURNED FROM HANOI OUR FRENCH INDO CHINA CONTACT
SAYS THERE IS GROWING DISSATISFACTION AMONG FRENCH GOVERNMENT
EMPLOYEES OVER GOVERNOR GENERAL DECOUX STRONG VICHY ATTACHMENT
STOP FIRST ACTION OF JAPS WILL PROBABLY BE TO STOP EXPORTS OF
RICE FROM THAI KANG AND INDO CHINA WHICH WILL ADVERSELY AFFECT
CHINESE AND VICINITY STOP RECENTLY ARRIVING IN INDO CHINA WERE
TWO THOUSAND MEN FROM FRENCH FOREIGN LEGION
0
Copy:bj:7-29-41
Regraded Unclassified
137
o
o
?
Y
GS
PLAIN
Teingtac via N.R.
Dated July 28, 1941
Rec'd 4 a.m.
Secretary of State,
Washington.
RUSH
40, Twenty-eighth
Japanese armed forces this morning placed under protective cus-
tody or in some cases actually occupied the properties of American
and British firms. Principle American firms affected are Standard
Vacuum 011 Company, Texas Company and Universal Leaf Tobacco Company.
Ingress and egrees by staffe of American firms not denied but re-
noval of stocks and property prohibited. Funds in Japanese banks
belonging to American and British firms have been frozen. Please
inform head offices.
It is reported that beginning tomorrow all Japanese firms will
be prohibited from dealing with American firms except under special
permit.
Local Japanese Consul General refused to see me and the British
Consul General this morning.
Sent to the Department. Repeated to Peiping and Chungking.
MEYER
EMB
Copy:1g 7/30/41
Regraded Unclassified
138
(
C
0
P
Y
(CONFIDENTIAL)
PARAPHRASE
A telegram of July 28, 1941 from the American Embassy at
Peiping reads substantially as follows:
In view of the situation and the possibility of confiscation
the National City Bank, located in the Legation quarter, urgently
requests authority to destroy, in the presence of a consular of-
ficer attached to the American Embassy. United States notes to the
(
value of $160,000 which it has in its vaults. Approximately half
of these notes are official funds of the United States Marine
Corps on deposit.
Copy:1g 7/30/41
Regraded Unclassified
C
0
139
P
GRAY
Y
Swatow via N. R.
Dated July 28, 1941
Rec'd. 11:40 a.m.
Secretary of State,
Washington.
17, July 28, noon.
Chinese puppet police were stationed outside
the Hong Kong Shanghai Banking Corporation "British"
last night and this morning their places were taken
by Japanese plain-clothes men. Persons entering and
leaving the bank are searched and are unable to take
money into or out of the bank. Several foreignare had
to remove their shoes during the examination. These
measures were taken without advance notice.
As no American bank ie located at Swatov most
merchants in the drawn work industry, and this Censu-
late, depend on the British bank although some firms
began to transact business with the Japanese Bank of
Taiwan about 8 months ago. They are now concerned
over present measures which prevent their obtaining
funds to meet obligations including the payment of
wages to native workers.
Launches proceeding up the harbor this morning,
carrying handkerchief materials to the interior for (*).
Regraded Unclassified
140
- 2 -
were turned back by the authorities. Foreign mer-
chants are preparing a shipment of merchandise for
the United States, scheduled to leave Swatow on Aug-
ust two for Shanghai by Japanese vessel, but it is now
uncertain whether shipment will be made. The Foreign
Drawn Work Association is negotiating with the Japanese
agency handling the ship and the Department will be in-
formed of further developments.
Sent to the Department, repeated to Peiping,
Chungking, Hongkong, Shanghai.
YEARN
CSB
(*) Apparent omission.
Copy:dtg:8-1-41
Regraded Unclassified
C
0
141
P
Y
CONFIDENTIAL
PARAPHRASE
A telegram (no. 4) of July 28, 1941 from the
American Consul at Chefoo reads substantially as follows:
Acting under orders from the Japanese military mission
Japanese gendarmes and Chinese police are now engaged in
closing the Hong Kong and Shanghai Banking Corporation,
Bank of China and Bank of Communications, and also all
American and British firms. In order to stop all business
activities armed guards are being placed on (?)
Copy:bj:8-2-41
Regraded Unclassified
(CONFIDENTIAL)
142
PARAPHRASE
A telegram (no. 8) of July 28, 1941 from the American
Consul at Chefoo reads substantially as follows:
Without communicating even with the American and
British Consulates the police detained the Chinese and
foreign staffs of all American and British firms on the
premises until Japanese authorities obtained information
in regard to assets and completed inventories. These
restrictions affect the Standard-Vacum 011 Company,
the Texas 011 Company and three other American firms.
The firms were told that no business activities of any
kind can be carried on and no stocks can be moved. Code
messages from American citizens and British subjects are
refused by the telegraph office in Chefoo.
Regraded Unclassified
143
o
0
P
Y
TEM
PLAIN
Tokyo
Dated July 28, 1941
Rec'd 9:09 a.m.
Secretary of State,
Washington.
1106, July 28, 1 p.m.
According today's press Finance Ministry yesterday
issued following statement regarding Japanese ordinance
freezing American Philippine assets: "The present step
against United States has been taken as counter-measure
to American ordinance freezing assets. As for policy
of ite operation, we shall take full cognisance of
manner in which freezing order is enforced in United
States and by means of general licensing and other
methods we shall give it as much flexibility as possible
so that the effect upon economic relations between Japan
and United States may be minimized."
GREW
PEG
Copy;rg 7/31/41
Regraded Unclassified
144
TEM
GRAY
Tokyo
Dated July 28, 1941
Rec'd 10:25 a.m.
Secretary of State,
Washington.
1108, July 28, 8 p.m. (SECTION ONE)
A Finance Ministry ordinance setting forth "reg-
ulations for the control of transactions concerned with
forcigners" was today promulgated. The ordinance consists
of 31 articles and numerous addenda, the complete trans-
lation of which runs into more than 5,000 words. The
following summary has therefore been propared and the
complete text in translation will be forwarded via air
mail to Shanghai for transmission to the Department by
Naval Radio unless the Embassy is otherwise instructed:
One. The regulations will effect nationals and jur-
idical persons of nationalitics to be designated by
the Ministor of Finance. Certain other juridical porsons
whose capital or management 18 controlled by nationals
of the designated country or who have certain connections
with the designated country will likewisc como within
the purview of the ordinance.
Two. Designated foreign nationals may not acquire
or dispose of the following:
GREW
ALC
Regraded Unclassified
145
LET
GRAY
Tokyo
Dated July 28, 1941
Rec'd. 1:52 p.m.
Secretary of State,
Washington.
1108, July 28, B p.m. (SECTION TWO)
Immovable property; perpetual leases; movable
property valued at yen 100 or more; capital, pledge,
mortgage, mining, fishing, deforestation, or indus-
trial property rights; copyrights; business invest-
ments and enterprises; negotiable securities exceed-
ing yen 20 in value (railroad, ship or other tickets
for travel within Japan excluded); domestic exchange;
foreign currency.
Three. Designated foreign nationals may not
perform the following acts without permission of the
Ministry of Finance:
Dispose of obligations in foreign or Japanese
currency (including offsetting); acquire obligations
in Japanese currency; assume or guarantee obligations;
consign or receive consignment of immovables, movables
valued at yen 100 or more, or negotiable securities
valued at yen 20 or more; execute or transfer loans,
or acquire or dispose of lease rights in the cases of
immovable
Regraded Unclassified
146
-2- 1108, July 28, 8 p.m. (SECTION TWO)
immovable property, movable property valued at yen
100 or more, or negotiable instruments valued at yen
20 or more; extend or collect loan; make or withdraw
deposits.
GREW
HSM
14V
147
LET
GRAY
Tokyo
Dated July 28, 1941
Rec'd. 3:45 p.m.
Secretary of State,
Washington.
1108, July 28, 8 p.m. (SECTION THREE)
Four, Designated foreign nationals may not
acquire or dispose of Japanese currency exceeding
yen 500 monthly (one household will be entitled only
to yen 500) without permission from the Ministry of
Finance.
Five. Permission of the Ministry of Finance 18
not required for the payment of taxes, salaries of
Japanese employees residing in Japan and in special
cases designated by the Minister of Finance.
Six. The restrictions provided in the ordinance
shall apply equally to persons executing acts on be-
half of designated foreign nationals or who are party
to such acts except in case of receipt of taxes or in
cases designated by the Finance Minister.
Seven. Persons not designated foreign nationals
may not without permission of the Minister of Finance
sell foreign exchange in case the payer is a designated
foreign national or for export of goods to a designated
foreign country.
Eight,
Regraded Unclassified
148
-2- 1108, July 28, 8 p.m. (SECTION THREE), From Tokyo
Eight. Designated foreign nationals shall report
within two weeks the amount of their property and
holdings.
GREW
CSB
149
LET
GRAY
Tokyo
Dated July 28, 1941
Rec'd. 1:12 p.m.
Secretary of State,
Washington.
1108, July 28, 8 p.m. (SECTION FOUR)
as of the day of designation of the country by the
Minister of Finance and at the end of each succeeding
month any increase or decrease in these holdings.
Nine. Any person who is a creditor or debtor
to a designated national shall report the amounts of
such debts or credits within two weeks of the designa-
tion of the foreign country and the status of these
debits and credits at the end of each succeeding month.
Ten. The Minister of Finance may when necessary
waive the restrictions stipulated in this "ordinance."
(END OF MESSAGE)
GREW
HSM
Regraded Unclassified
150
DES
GRAY
TOKYO
Dated July 28, 1941
Rec'd 11:48 a.m.
Secretary of State,
Washington.
1111, July 28, 11 p.m.
Embassy's 1108, July 28, 8 p.m., numbered paragraph
four.
The attention of the Department is called to the
fact that whereas the American Government's order freez-
ing Japanese assets restricts monthly Expenditures of
Japanese nationals to $500, the Japanese ordinance
provides for a sum of only 500 yen.
GREW
HSM
Regraded Unclassified
151
ML
PLAIN
Tokyo via N.R.
Dated July 28, 1941
Rec'd 1:10 p.m.
Secretary of State
Washington
1110, twentyeighth 10 p.m.
Tone of pross comment today American British
freezing orders continues non-inflammatory moderate.
ASAHI states American British actions against Japan not
unexpected in VIEW previous cooperative policy these
nations aimed at defent Japan's co-prosperity sphere
plans. American Government's action freezing Chinese
assets reveals complete misunderstanding trend develop-
ments China. !merica reaped only tripartite alliance
from her abrogation Trade Treaty with Japan can expect
no contribution Pacific peace through present action.
NICHI NICHI states Britain's abrogation commercial
treaties welcomed Japan since most favored nation
clauses compelled Japan accord hostile nations gome
special treatment given co-prosperity sphere countries.
British American action will spur Japan overcome resultant
grave difficulties and develop East Asia resources.
YOMIURI
Regraded Unclassified
152
ML-2- Telegram from Tokyo via N.R. #1110 July 28,1941
REC'd 1:10 p.m.
YOMIURI calls British American Economic measures
egainst Japan challenging motivated political designs
but anticipated. Scope American fratzing order will de-
pend Far Eastern diplomatic developments and Japan can
now bE neither optimistic nor pessimistic. Japan will
never take offensive but proper counter measures will
meet further British or American steps.
KOKUMIN emphasizes calm reserved attitude Japanese
people in face British American Economic measures,
points out Japanese determination face situation with
unity strength.
GREW
HPD
Regraded Unclassified
153
C
o
P
Y
TK
FLAIN
Tokyo via Shanghai & N.R.
Dated July 28, 1941
Rec'd 10:55 p.m.,
August 3.
Secretary of State
Washington.
Attache Commerce
35, July 28.
Order freezing Japanese credits in U. S. A. over-
shadowed all other developments. While not wholly un-
expected yet move came as heavy blow business financial
circles. Result stoppage of sharp limitation Japanese
American trade will seriously effect following Japanese
industries: (one), three from curtailed imports from
U. S. A.: spinning and weaving, lumber, rayon and
stapel fiber, transportation, fisheries, aviation,
shipping, all industries using gasoline lubricating
and fuel oil, three using steel manufactures and iron
and steel advanced manufactures, those using copper
zinc and lead, machine tool and metal working machinery,
Industrial chemical especially those using borax and
carbon black, fertilizer, leather, rubber, and asbestos
Regraded Unclassified
154
-2-
products industries. (Two), three from curtailed exports
to U. S. A.; raw silk, canned fish, fur, bristle, rubber
soled footwear, spinning and weaving, hat braid, hat porcelain,
alide fastener, electric lamp, camphor, toy and brush industries.
Also numerous foodstuff items for Jayanese residents in U.
S. A. One of most serious blows will fall on shipping industry
if American ports closed to Japanese ships. Cessation trade
with British Empire will deprive Japan main source supply wool,
wheat, nickel, iron, manganese, tanning materials and sizable
quentity of cotton, zine and lead. Cutting off trade with N.E.I.
Japan will lose supplies of rubber tine copra nickel and bauxite.
Interruption trade with Latin America will be serious blow
export general merchandise lines and will cut off needed supplies
cotton from Brazil and concentrates from Chile. In general
Japanese industrial economic financial structure will be very
substantially weakened through inability maintain those foreign
trade relations upon which her prosperity depends. Rice rubber
and tea which Japan can now obtain from French Indochina and
Thailand will in apprecable measure componsate for the above
mentioned trade loses. Japan has taken retaliatiory measures
freesing all American British and N.E.I. assets in Japan Manchuria
and occupied areas China effective twenty eighth. Press adopted
moderate tone critisims and expressed some satisfaction and hope
flexibility American order and interprets this as possibility
continuation trade relations on basis license eystem. Upon
Regraded Unclassified
155
-3-
receipt news on twenty sixth American freezing order stock
exchange prices broke sharply with Tokyo new dropping from
one naught one point fifty to ninety four point eighty,
lowest since October nineteen hundred thirty one when reim-
position gold embargo occurred. Many other issues lost from
two to three yen. Decline undoubtedly would have been sharper
had Concord Security Company not bought heavily on Government
order. Textile prices dropped from apprehension over freezing
order and general world situation. Sharp gain American raw
cotton utterly ignored. Silk prices tumbled with trade offering
to sell at one four five naught for July. Both Yokohama and
Kobe futures market suspended transactions and were still
closed on twenty sighth. Money market somewhat strenghtened
but approaching month end settlement. Bank Japan note issue
four naught two one two six nine thousand yen up one six seven
eight eight two thousand over nineteenth. Ministry Agriculture
estimates this year's crop wheat barley and naked barley Japan
proper at one three naught million bushels representing increase
twelve million over average production past five years but decline
four point four million bushels from last year's production and
fourteen million from goal set by Ministry for nineteen hundred
forty one. Press announced stapel fiber output August September
will show decline from thirty to forty percent compJune due de-
crease about fifty percent in supply caustic soda and gloomy out-
look result strenghthened trade control.. Ministry Commerce whole-
sale commodity price index June one seven six point six representing
Regraded Unclassified
156
-4-
rise one point six percent compMay and six point four percent
comsamper. Textiles rose eight point four percent compMay while
building materials chemicals and fuel registered lesser advance.
Provision metal goods and fertilizer dropped slightly. Industrial
share prices twenty sixth average seventy one point twenty seven
index seventy three point seventy five weeks average seventy one
point eighty one index seventy four point thirty two. (END) Signed
Williams. Inform Commerce.
GREW
CSB
= & N ave
Copy:bj:8-5-41
Regraded Unclassified
(CONFINENTIAL)
157
C
o
P
Y
PARAPHRASE
À telegram of July 28, 1941 from the American Consul
at Dairen reads substantially as follows:
According to information received from the manager
of the Dairen branch of the National City Bank of New York,
he has been informed by the manager of the Dairen branch
of the Yokohama Specie Bank that it was decided at a meeting
on the morning of July 28 of Japanese bankers called by the
Governor of the Kwantung Leased Territory that (a) clearing
house facilities for the National City Bank are suspended;
(b) the National City Bank may males no payments to depositors
(
of any nationality pending the receipt of further instructions;
(c) the bank must report to the authorities by the morning
of July 29 the name and nationality of each depositor, the
type and amount of the deposit, the date on which the de-
posit was made, and in the case of time deposits the due
date. The name and nationality of every borrower must be
reported at the same time together with the amount and date
of the loan, the security offered and the due date.
It was hinted that before long there will be evolved
a formula for paying all depositors with the exception of
British and Americans and that there will be a reasonable
provision made for British and American depositors to obtain
sufficient money for living expenses. According to the
Regraded Unclassified
-2-
158
manager of the Dairen branch of the National City Bank,
Chinese owing the bank who tried to obtain from Japanese
banks in Dairen cash to repay loans now due to the National
City Bank were refused cash for such use. These measures
amount practically to a closing of the bank, the manager
says. The measures all apply also to the Hong Kong and
Shanghai Banking Incorporation. In response to an inquiry
from the manager of the Dairen branch of the Yokohama
Specie Bank as to how the American Consulate was to obtain
cash for current expenses, the Government of the Kwantung
Leased Territory is said to have asked for a delay of a
day or two before this matter is brought up.
Cogy:bj:8-5-41
Regraded Unclassified
159
C
o
P
Y
CONFIDENTIAL
A telegram (no. 90) of July 28, 1941 from the American Consul
General at Batavia reads substantially as follows:
A decision in regard to freezing of Japanese assets was reached
by the Netherlands Indies Government after it had remained in confer-
ence all day and almost all night on July 27. Van Mook sent for the
American Consul General immediately after the decision was reached
and informed the Consul General to the following effect:
All transactions in foreign exchange between the Netherlands
Indies and Japan are temporarily suspended beginning on July 28.
Banks must not pay to or receive money from Japanese subjects with-
out special permits from the Director of Economic Affairs. Special
permits will be required for all exports to the Japanese Empire,
"Manchukuo", China and Indochina from the Netherlands Indies. Money
and goods traffic with Japan are frozen by these measures. It was
not the intention to put any obstacles in the way of domestic opera-
tions of Japanese firms in the Netherlands Indies. Van Mook said.
According to Van Mook, importe from Japan had practically
ceased by July 20 as a result of the new export restrictions which
the Japanese Government promulgated on July 7. 1941. although
Netherlands purchasers in Japan were required to pay for and take
delivery of goods when goods were delivered to warehouses in Japan,
Copy:lg 7/30/41
Regraded Unclassified
160
Noted
03VI3038
1.1. Cochran
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate General, Singapore,
8A 11 MA OF JULTAB
Straits Settlements
DATE: July 28, 1941 5 p.m.
CITY
NO.:
181
TRATE
2
SHT
OT
Reference is made to telegram of July 27, 1 p.m.,
no. 180 from the Consulate General.
The Embasey is told by the Controller of Foreign Exchange
that the order for freezing Japanese assets will effectively
serve to out out all trade, (imports and exports) between
the Japanese Empire and Malaya - subject to any arrangemente
for barter which might be negotiated in cooperation with the
Government of the U.S.
The Controller said that this will apply to exports of
iron ore for which payment was not made - at a fixed rate
of exchange - before the twenty-sixth day of July, the
effective date of the freezing order. The Government here
16 taking up the question of whether to permit the export
of such iron ore as had been paid for before the twenty-sixth
of July. The Government here will not permit any shipments to JAps
of rubber and tin at all, no matter when payment therefor was
made.
The Consulate General understands that Japanese residents
who leave Malaya cannot take with them more than the equivalent
of 100 Straits dollars when they leave.
This telegram was repeated to the Embassy at Tokyo, Japan.
PATTON.
EA:LWV
Regraded Unclassified
161
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Ankara, Turkey
DATE: July 28, 1941, 5 p.m.
NO.: 276
Reference is made to telegram of July 12, 2 p.m.,
no. 25 to Istanbul from the Department.
(1) No information is available either in Ankara or in
Istanbul about the reported purchase by German bankers of
holdings in Turkey of interests in French and Belgian hands.
We have learned from the correspondent in question that
he got his information from a French banker whom he knew
in Paris, and that he had run into him by accident here in
Ankara. However, the interest of the Treasury in this
matter will be kept in mind by the Embasey. Inquiries will
be made in banking circles when the opportunity arises.
(2) The Embassy does not think that efforts would be
made by Germany to get control of the rest of the concessione
belonging to the French and Belgians in Turkey, as there
are not many of them, and their size 1s small. Furthermore,
the fixed policy of the Turkish Government has been to
repurchase foreign concessions in Turkey. The transfer of
such concessions to another foreign government would un-
doubtedly be opposed by the Turkish Government.
Inquiry was made by the Embassy about the acquisition
of obligations of the Turkish Government which were issued
to replace the debt obligations of the Ottoman Government,
which
Regraded Unclassified
162
- 2 -
which are held for the most part in France and Belgium, and
whose service 18 now paid with Turkish pounds in Turkey,
which sums are to be utilized for buying goods to export
to France. A responsible officer on the staff of the French
Embassy here has told the Embassy that there 1s no evidence
that these obligations are being acquired by the Germans.
He said no such evidence appeared in the recent correspondence
on the servicing of these obligations which has taken place
between Vichy and the French Embassy here.
MACMURRAY.
10 THE 260SEIVBA
LECHNICY
OFFICE 06 THE
BVI mr 30 VN II ve
EA:LWW
IBEVENSA
BECEINED
Regraded Unclassified
163
COPY
DEPARTMENT OF STATE
WASHINGTON
July 28, 1941.
In reply refer to
SA 840.51 Frozen Credits/2617
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and encloses
six copies of a paraphrase of telegram No. 339, dated
July 22, 1941, from the American Embassy at Mexico, in
regard to the measures taken by Germans in Mexico in
preparation against possible freezing action by Mexico.
Enclosure:
From Embassy, Mexico,
No. 339, July 22, 1941.
Regraded Unclassified
164
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Mexico City, Mexico
DATE: July 22, 1941, 4 p.m.
NO. : 339
The Germans have withdrawn practically all of their
bank deposits and such funds have been invested in mortgage
and other types of bonds payable to bearer in view of the
fact that they fear the Mexican Government might take measures
which would freeze German accounts. Heavy purchases of
Swiss francs are being made through Shanghai by the Germans.
Today, Lockett was informed that foreign clients had
been advised by the Chase Bank in New York to buy Swiss
france through Shanghai instead of New York. This has
opened for German funds an avenue of escape.
DANIELS
EA:PAK
Copy:bj:7-28-41
Regraded Unclassified
165
BRITISH EMBASSY,
WASHINGTON.
PERSONAL
AND SECRET
28th July, 1941.
Dear Mr. Secretary,
I enclose herein for your per-
sonal and secret information two copies
of the latest reports received from London
on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
Regraded Unclassified
166
TELEGRAM FROM LONDON
DATED JULY WOTH
Strongly escorted convoy of six merchant ships
carrying stores and reinforcements arrived safely at Malta
after continuous high-level and dive-bombing and torpedo
bombing but only one ship (already reported) of over
18,000 tons hit by E boat torpedo in early morning. Her
speed reduced to 10 knots out her careo suffered little
damage.
2.
A.K. July 23rd explosion in number 1 bay of
Alexandra Dook, Hull, damage to merchant ship, sank three
lighters and was attributed to mine reported on night
Eng 3rd, May 4th.
3.
Royal Air Force, Daylight June 24th. Heavy
=ir attack on Prest, medium =ttock on Cherbourg, 11ght
Attack on LA Pallice: except for latter fighters provided
sacort. Claims made that Gnelsenau, Prince Sugen end
Scharnhorst were straddled by sticks of bombs. Smoke
screen made observation difficult therefore no hit could
be ascertained. Merchant ship 10,000 tons may also have
been hit. Heavy sir fighting resulted in destruction by
our bombers of 22 enemy fighters certain, four probably,
eight damaged. Our fighters destroyed 12 enemy fighters
certain, 5 probably, six damaged. Fle lost 16 bombers,
? fighters. Off Norvegian coast A.M. July 24th small
merchant ship nit by coastal command aircraft left
beached and burning. Another small ship was attacked;
crew Abendoned the ship though bombs not seen to explode.
Night/
Regraded Unclassified
167
-2-
Night of July 24th-25th bombers attacked Kiel and Emden
with catisfactory results. A.M. July 25th small force
despatched five hours to attack Scharnhorst at La Pallice,
results (word omitted). Four missing.
4.
Military. Japanese making military prepara-
tions Manchoukuo where Northern movements of troups is
reported.
5.
Russia. Germans apparently trying to consoli-
date position along railway running south from Porkhov
area. No further advance towards Leningrad reported.
German pressure continues north east of Smolensk also south
of Kiev where thrust 1s south eastwards. terman advance
east of Mogilev Podolsk apparently on fairly wide front.
Regraded Unclassified
168
TELEGRAM FROM LONDON
DATED JULY 27TH
1.
Achates mined July 25th 40 miles south east Iceland
(o) arrived in harbour.
2.
British oruiser on July 25th intercepted Derman
Erlangen 6000 tone 480 miles south east Montevideo. She was
set on fire and flooded while endeavour was being made to save
her.
3.
Grienex batteries unsuccessfully attempted to shell
channel convoy night of July 25th/July 26th.
4.
Attempt to locate schernboret on July 25th failed.
Fifty reconnaissance Brest and I.a Pallice also uneucceseful.
5.
0500/26 Grand herbour walta heavily attacked by
E-boats and one-man T/Bs. St. Elmo mobile viaduet damaged by
torpedo. About 10 E-boats and one-wan T/Be sunk by shore
batteries and Royal Air Force fighters. Twenty prisoners
omptured and various bodies recovered.
6.
ROYAL AIR FORCE Night of July 24th/July 25th attacks
on Kiel and Enden satisfactory especially in Deutsch and
Krupp's shipyards. Night of July 25th/26th medium attack
Hanover and Hamburg and light attack on Berlin. Nine bombers
missing.
7.
MEDITERRANEAN July 23rd.
An E-boat east of Pantelleria left sinking by Beau
fighters which also destroyed two dive-bombers. One Beau
fighter missing. your Blenheims attacked shipping at
Trapani Sicily. One merchant vessel about 7000 tone lest
acen heavily on fire; another merchant vessel sbout 3000
tons received two direct hits, set on fire, believed sunk.
on July 25th at walts Hurriesnes shot down 5 enemy aircraft;
one/
Regraded Unclassified
169
-2-
one enemy fighter fell into cellar of demolished shop at
Valetta.
8.
RUSSIA German efforts directed mainly north east
of Smolensk and clearing up Mogilev area. Russian forma-
tions west of armoured spearheads apparently still offering
considerable resistance to enveloping forces.
Regraded Unclassified
170
RESTRICTED
MILITARY INTELLIGENCE DIVISION
TENTATIVE LESSONS BULLETIN
WAR DEPARTMENT
No. 137
Washington, July 28, 1941
G-2/2657-235
NOTICE
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and in no sense mature studies.
This document is being given an approved distribution,
and no additional copies are available in the !!ilitary Intel-
ligence Division. For provisions governing its reproduction,
see Letter TAG 350.05 (9-19-40) M-B-L.
GERMAN PANZER UNITS IN JUGOSLAVIA
SOURCE
This bulletin is based upon the report of an American
official observer in Berlin, dated May 5, 1941, containing a
translation of an article appearing April 27, 1941, in Voelkischer
Beobachter, a Berlin daily newspaper.
CONTENTS
1. GENERAL
2, EN ROUTE TO BELORADE WITH TANKS
3. COICENT
RESTRICTED
-1-
Regraded Unclassified
171
RESTRICTED
GERMAN PANZER UNITS IN JUGOSLAVIA
1. GENERAL
In spite of mountainous terrain with numerous defiles, and
the limited number of suitable routes for supply and advance to
combat, the Germans employed an undetermined number of tank and
motorized divisions during their operations in Jugoslavia. llost
of the divisions of this type operated under the command of
Colonel General von Kleist.
Some of these divisions moved northwest from the area around
Sofia and reached the Morava River valley, near Nich, on April 9.
These units then continued northwest to Belgrade, arriving there
on April 13, Northwest of Nish, near Krusevac, a part of this
force branched off and moved toward Sarajevo, eventually gaining
contact with Italian forces near Mostar on April 15.
Another motor-mechanized force, also a part of von Kleist's
group, moved southweat from the Sofia area into the Vardar River
valley and reached Uskub and Veles on April 8. The Uskub column
continued west to Tetova, arriving there on April 9, and then
turned south; some of its elements gained contact with elements
of the Italian XI Army near Ochrida on April 11.
It is believed that the Veles column continued bouthwest
and southeast after passing Veles. One part of it, moving southwest
through Prilep on April 9, pushed on through Monastir into Greece;
the other part headed southeast down the Vardar River valley toward
Saloniki,
2. EN ROUTE TO BELGRADE WITH TANKS
While the powerful German attack on Uskub was separating
the Serbians from the Oreco-British forces, Colonel General von
Kleist's panser troops advanced toward Belgrade, A participant in
these operations gives the following description of his experiences:
"The von Kleist panser group, which began to advance on
April 6, encountered Serbian units that fought stubbornly. While
the armored divisions were moving along the main highway toward
Wish, infantry and mountain divisions in the lead forced their way
into the mountains. Although this was the first time that these
divisions had taken part in a battle, they broke enemy resistance
after a struggle lasting two days. On the second day the weather
became bad and continued so until just before the leading elerents
reached Belgrade. During that period, the panzer group advanced
in heavy snow storms and pouring rain over highways covered with
mud.
RESTRICTED
-2-
Regraded Unclassified
172
RESTRICTED
"By the time Nish was reached, the fighting spirit of the
Serbs had been broken. Their units retreated into the forests,
leaving only their antitank weapons - drawn by oxen - to continue
the fight against our tanks.
"These tanks advanced BO far ahead of the other troops that
the supply columns, which had been considerably impeded by the
Serbians, followed at a distance of 20 to 25 miles. In this field
of operation the baggage trains encountered more resistance than
the tanks. The latter, however, had all they could do to overcome
the difficulties incident to the bad condition of the highways.
Vehicles and wheels sank into the mud, often up to the axles, and
hours of effort were required to dig them out,
"The Serbians had estimated that the principal effort of
the Germans would come from the north; they had thought it impor-
sible for a tank division to advance from the southeast, through
this difficult terrain. For that reason the tanks were able to
advance to Nish and take the city completely by surprise, so
completely that freshly prepared food was found in the barracks,
The panser divisions then rushed on to the north, while other units
moved toward Bor and secured the copper mines there, the largest in
Europe.
"In the meantime the Serbian regiments were beginning to
disband, Soldiers came out of the woods by the thousands and gave
up their rifles when they saw that all important points on the
highways were occupied by Germans. It was not even necessary to
send them to the rear under guard; signs in the Serbian language,
pointing out the route to the prison camps, were all that was needed,
"Although English propaganda had tired to convince the
Serbians that the Germans would kill all young nen, it soon became
apparent that the Serbs trusted their conquerors. In many cases
they proved helpful in pulling vehicles out of the mud. Prisoners
who came from Belgrade gladly marched to the north immediately in
rear of the panzer columns. About 35 miles from Belgrade, elite
groups from the Officers' School and the Royal Guards offered strong
resistance. But these were also subdued - the armored division
wished to be the first unit in Belgrade and its men did their utmost
to accomplish this desire.
"On the Saturday before Easter, the panzer division was about
20 miles south of Belgrade. During the night the weather changed
very suddenly; the rain stopped, and on Sunday morning the sun was
shining from a blue sky. Reconnaissance detachments which had
entered Belgrade during the night discovered that the city had
been evacuated, and the panzer units marched without opposition
into the Serbian capitol.
RESTRICTED
-3-
Regraded Unclassified
173
RESTRICTED
"Complete anarchy prevailed in Belgrade. Neither policemen
nor firemen were at their posts. Plunderers, including numerous
gypsies, had stolen everything they could get their hands on,
especially in the parts of the city which had been bombed. Power
plants and water works had been destroyed.
"In the meantime the Serbians tried to open negotiations
for an armistice conference. A major reported first as a negotiator,
but as he did not possess full authority he was sent back, He was
followed by a general who stated that he had been in three wars,
but had never experienced anything like this one, The general said
that he had been led from the Serbian lines through positions held
by Gernan troops and then through an area occupied by the Serbians.
As evidence of his authority he carried a paper on which was written:
'You have full authority. Simovich,
"Soon afterwards Simovich fled, and a little later he arrived
in Athens accompanied by King Peter."
3. COMMENT
a. The second section of this bulletin indicates that infantry
and mountain troops cleared the way through the mountain defiles
for the armored units, The Germans probably had previous knowledge
of the inadequato antitank defonses of the Jugoslavian Army.
b. Using the same tactics that they used on the Western Front,
German panzer units, once committed, continued to advance whenever
possible, leaving infantry and supplies to follow in rear as best
they could. It should be kept in mind that such procedure was
possible not only because hostile defense was weak, but also because
the panzer divisions themselves were capable of considerable defensive
action. when this system is used, supply trains should be provided
with defensive fire.
RESTRICTED
Regraded Unclassified
174
RESTRICTED
0-2/2657-220: No. 452
M.I.D., W.D.
12:00 M.. July 28, 1941
SITUATION REPORT
I. Eastern Theater.
Ground The situation on the Finnish-Russian front 10 not
lasown.
German mechanized troops have reached the area of
Volosovo, 45 miles eouthwest of Leningrad, In this area it therefore
appears that the Luga River has been crossed.
Elements of the armored force of Colonel General
Guderian which had advanced on Moscow without supports are isolated
in an area immediately west and northwest of Moscow. These troops
are being supplied and reinforced from the air, Their situation was
not deemed critical by Berlin on July 26th. German troops advancing
northeast from Smolensk on Moscow reached the area, west and south-
vest of Viasma on July 25th. Near Mohilev the Germans report the
capture of 23,000 men belonging to two Russian divisions.
Axis forced hold the line of the Dniester rivers
from Tighina to the Black Bea. Behind the front in southern Bescarabia,
Bussian forces of considerable size have been surrounded but are re-
sisting strongly.
Air) No change in the general situation. Russian bombing
of Rumanian oil shifted to Constansa.
II, Western Theater.
Air: German. London was lightly raided on the night of the
27th-28th.
British, Relatively limited activity by day and night.
III. Mediterraneen Theater.
Ground: Nothing of importance.
Air: Normal harassing raids.
RESTRICTED
Regraded Unclassified
175
TREASURY DEPARTMENT
Washington
For PELBAUL, LORNING MISSPAPERS,
Press Service
Tuesday, July 29, 1941.
No. 26-77
7/28/41
The Secretary of the Treasury announced last evening that the
tenders for $100,000,000 or thereabouts, of 91-day Treasury bills,
to be deted July 30, and to mature October 29, 1941, which were
offered of July 25, were opened at the Federal Reserve Banks on
July 20:
The details of this issue are 68 follows:
Total applied for - $266,617,000
Total accepted - 100,015,000
Range of accepted bids:
High
- 100.
Low
- 99.872 Equivalent rate approximately 0.111 percent.
Average
If
=
"
0.094
If
price - 99.976
(29 percent of the amount bid for at the low price was accepted)
- 000 -
Regraded Unclassified
176
TREASURY department
WASHINGTON
July 29, 1941.
MEMORANDUM FOR THE SECRETARY:
*
I have your memorandums of July 25 and 28,
making a number of suggestions with regard to the
Treasury Hour programs.
At my request, Mr. Kuhn has consented to take
these matters in hand, and he will report to you
in due course.
I enclose a memorandum from Mr. Callahan giv-
ing the "artist schedule" for the Treasury Hour
for July 30, August 6, and August 13.
GRAVES.
# NOTE: Your memo of 7/25 was the airmail letter with
suggestions re George Gershwin, John Philip Sousa,
Menuhin, wtc.
The memo of 7/28 was the suggestion that William
Shirer, of Berlin Diary, appear on some Treasury
hour; consider Deems Taylor as one of the musical
advisers.
n.m.c.
Regraded Unclassified
177
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE July 28, 1941
TO
Mr. Graves
FROM
Mr. Callahan
Attached you will find the artist schedule for
the "Treasury Hour - l'illions for Defense" for July 30th,
August 6th, and August 13th.
MR
Enclosure
Regraded Unclassified
178
TREASURY HOUR - MILLIONS FOR DEFENSE
July 30th
Jack Benny and Company, including Mary
Livingstone, Claudette Colbert, and
Don Ameche
Tyrone Power
Jane Frohman
Bette Davis - in special play written by
Arch Oboler
August 6th
John Charles Thomas
Robert Ripley
Miriam Hopkins
Fannie Brice as "Baby Snooks"
August 13th
Al Jolson
Charlie McCarthy and Edgar Bergen (tentative)
Bidu Sayao
Joan Crawford
Regraded Unclassified
179
TREASURY department
WASHINGTON
July 29, 1941
Memorandum for THE SECRETARY:
The following report is made of Stamp sales
at "Treasury House":
July 1-27
$20,221.95
July 28
828.20
Total
$21,050.15
GRAVES
Regraded Unclassified
180
treasury department
WASHINGTON
July 29, 1941
Memorandum for THE SECRETARY
The following report is made of requests received
for "Any Bonds Today?" from the experimental mailing of
10,000 eards:
No. Requests
No. Copies
July 1 - 26
1080
6278
July 28
19
91
Total
1099
6369
GRAVES
Regraded Unclassified
181
CONFIDENTIAL
UNITED STATES SAVINGS BONDS
Sales in July Compared with June. 1941
On Basis of Issue Price
First Twenty-three Business Days
(June 1-27, July 1-28)
(Amounts in thousands of dollars)
:
: Increase or Decrease (-)
Sales
:
: in July Compared with June
Item
:
:
:
:
July
June
Amount
Percent
:
:
:
:
Series E - Post Offices
$ 46,279
$ 36.803
$ 9,476
25.7%
50.6
Series E - Banks
85,192
56,558
28,634
Series I - Total
131,471
93,361
38,110
40.8
Series ? - Banks
22,576
26.774
- 4,198
- 15.7
Series G - Banks
144,497
170,635
- 26,138
- 15.3
Total
$298,545
$290.770
$ 7.775
2.7%
July 29, 1941.
Office of the Secretary of the Treasury,
Division of Research and Statistics.
Source: All figures are deposits with the Treasurer of the United States
on account of proceeds of sales of United States Savings Bonda.
Note: Figures have been rounded to nearest thousand and will not
necessarily add to totals.
Regraded Unclassified
On Danie of Issue Price
(In thousands of dollars)
Post Office
All Bond Sales
Bond Sales
Bank Bond Sales
Date
Total
Series E
Series F
Series G
Series E
Total
Series E
Series F
Series G
July 1941
1
$ 9,505
$ 2,387
$
957
$ 6,160
$
595
$ 8,910
$ 1,793
$
957
$ 6,160
2
11,612
4,066
845
6,701
1,735
9,877
2,331
845
6,701
3
15,045
4,903
843
9,299
2,077
12,969
2,827
843
9,299
5
22,900
9.589
2,437
10,875
3,191
19,709
6,397
2,437
10,875
7
11,028
6,315
472
4,242
3,908
7,120
2,407
472
4,242
to
11,226
4,867
1,197
5,162
1,346
9,581
3,522
1,197
5,162
9
16,570
6,277
880
9,413
2,229
14,341
4,048
880
9,413
10
11,430
6,018
605
4,808
2,459
8,972
3,559
605
4,808
11
16,311
8,504
1,197
6,610
2,405
13,905
6,098
1,197
6,610
12
12,689
4,482
860
7.347
1,672
11,017
2,810
860
7.347
14
13,435
7.754
1,046
4,636
3,060
10,375
4,693
1,046
4,636
15
10,083
4,754
602
4,728
1,458
8,625
3,296
602
4,728
16
11,994
5,541
808
5,645
1,645
10,349
3,896
808
5,645
17
15,332
6,213
1,189
7,930
1,799
13,533
4,414
1,189
7.930
18
12,404
6,730
836
4,837
2,042
10,362
4,689
836
4,837
19
7.553
4,513
926
2,114
1,505
6,048
3,007
926
2,114
21
14,136
7,105
1,015
6,016
3,060
11,076
4,046
1,015
6,016
22
12,191
3,820
1,208
7,164
1,001
11,191
2,819
1,205
7,164
23
14,677
5,018
1,208
8,451
1,514
13,163
3,505
1,208
8,451
24
11,634
5,382
959
5,293
1,623
10,011
3.759
959
5,293
25
10,589
5,828
904
3,857
1,670
8,919
4,158
904
3,857
26
11,149
4,420
474
6,256
1,303
9,846
3,117
474
6,256
28
15,050
6,986
1,109
6,954
2,983
12,067
4,003
1,109
6,954
Total
$298,545
$131,471
$ 22,576
$144,497
$ 46,279
$252,266
$ 85,192
$ 22,576
$144,497
Office of the Secretary of the Treasury, Division of Research and Statistics.
July 29, 1941.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of
United States Savings Bonds.
Note: P1 res have been rounded ta nearest thousand and will not necessarily add to totals.
Regraded Unclass
183
TREASURY DEPARTMENT
WASHINGTON
July 29, 1941
Dear Mr. Morgenthau:
Following your suggestion about calling in
Mr. White, Supervisor of the New York State Banks,
I wish to advise that the Federal Deposit Insurance
Corporation is calling a meeting of the Advisory
Committee of the State Supervisors of Banka to be
held in Washington August 12. Mr. White is a
member of this Committee, along with the State
Supervisors of eleven other states.
In addition to the Committee, the State
Supervisors from ten other states are being
invited.
I believe that we will be able to cover the
situation fully in this way.
With sincere regards, I am
Cordially yours,
B.M. Edwards
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Regraded Unclassified
184
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE July 29, 1941
TO
Secretary Morgenthau
FROM Mr. Cochran
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£34,000
Purchased from commercial concerns
£17,000
Open market sterling held steady at 4.03-1/2. The only reported transaction
consisted of £4,000 purchased from a commercial concern.
In New York, closing quotations for the foreign currencies listed below were
81 followe:
Canadian dollar
11-1/2% discount
Argentine peso (free)
.2380
Brasilian milreis (free) .0505
Uruguayan peso (free)
.4380
Colombian pego
.5800
Mexican peso
.2070
Cuban peso
1-3/16% discount
In Shanghai, the yuan advanced 1/32# to 5-7/324. Sterling was quoted at
3.94-3/4. off 1-5/80.
There were no gold transactions consummated by us today.
No new gold engagements were reported.
In London, spot and forward silver were fixed at 23-1/24, up 1/16d.
The U.S. equivalent of this price 18 42.67$.
Handy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.
The Treasury's purchase price for foreign silver was unchanged at 354.
To made three purchases of silver totaling 300,000 ounces under the Silver
Purchase Act. of this amount, 200,000 ounces represented inventory silver,
purchased for spot delivery, and the remaining 100,000 ounces consisted of new
production from Peru, bought for forward delivery.
Regraded Unclassified
185
- 2 -
CONFIDENTIAL
The report of July 23 received from the Federal Reserve Bank of New York,
giving foreign exchange positions of banks and bankers in its district, revealed
that the total position of all countries was short the equivalent of $5,068,000.
an increase of $14,000 in the short position since July 16, Net changes were as
follows:
Short Position
Short Position
Change in
Country
July 16
July 23
Short Position*
England**
$ 627,000
$ 447,000
- $180,000
Europe
2,878,000
2,982,000
+ 104,000
Canada
475,000 (Long)
469,000 (Long)
+ 6,000
Latin America
172,000
237,000
+ 65,000
Japan
48,000
57,000
+ 9,000
Other Asia
1,819,000
1,914,000
+ 95,000
All others
15,000 (Long)
100,000 (Long)
- 85,000
Total
$5,054,000
$5,068,000
+ $ 14,000
*Plus sign (+) indicates increase in short position, or decrease in long position,
Mims sign (-) indicates decrease in short position, or increase in long position.
**Combined position in registered and open market sterling.
Simil
Regraded Unclassified
186
RESTRICTED
0-2/2657-220; No. 453 M.I.D., W.D. 12:00 M., July 29, 1941
SITUATION REPORT
I. Eastern Theater.
Ground: There is no further information from the Finnish-
Russian front.
The German forces south of Leningrad did not ad-
vance on July 28. The front extends on a line between 45 and 50
miles south of Leningrad.
The great battle between Smolensk and Viasma con-
tinues. There is no evidence that the main German forces have made
contact with the armored spearheads of Colonel General Guderian,
isolated to the west and northwest of Moscow.
The situation in the Ukraine is obscure. Balta,
a city in the southern Ukraine 50 miles east of the Dniester River,
has been captured by the Axis. Citeata Alba (Ackerman), a Bessara-
bian town at the mouth of the Dniester, has been captured by a Rou-
manian division.
Airt No change in the general situation.
II. Western Theater.
Air: German. Extremely light activity.
British. Apparently no offensive operations.
III. Mediterranean Theater.
Ground: No developments.
Air: British raids on Benghasi and on airfields in
Sicily.
RESTRICTED
Regraded Unclassified
187
TREASURY DEPARTMENT
FOX Miss Chauncey
INTER-OFFICE COMMUNICATION
DATE July 30, 1941
TO
Secretary Morgenthau
CONFIDENTIAL
FROM
Mr. Cochran
Registered sterling transactions of the reporting banke were B.B. follows:
Sold to commercial concerns
£68,000
Purchased from commercial concerns
284,000
Open market sterling was again ouoted at 4.03-1/2, and there were no
reported transactions.
In New York, closing quotations for the foreign currencies listed below were
M.M. follows:
Canadian dollar
11-3/8% discount
Argentine peso (free)
.2380
Brazilian milreis (free)
.0505
Uruguayan peso (free)
.4380
Colombian peso
.5800
Mexican peso
.2070
Cuben peso
1-1/8% discount
In Shanghai, the yuan advanced 1/32# to 5-1/46. In contrast to its
improvement against the dollar, the yuan declined in terms of the British
cound, with the result that sterling rose 6-1/4# to 4.01.
There were no gold transactions consumated by us today.
The State Department forwarded e cable to us reporting the following gold
shipments from Australia, which will be sold to the San Francisco Mint upon
arrival:
16,559,000 shipped by the Commonwealth Bank of Australia. Sydney, to the
Federal Reserve Bank of San Francisco.
185,000 shipped by the Bank of New South Wales, Sydney, to the American
Trust Company, San Francisco.
15,744,000 Total
A price of 23-1/24 VAR again fixed in London for spot and forward
silver, squivalent to 42.67d.
Regraded Unclassified
188
CONFIDENTIAL
- 2 -
The Treasury's purchase price for foreign silver was unchanged at 35#.
Handy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.
Ye purchased 225,000 ounces of silver from the Bank of Canada under our
regular monthly agreement. Today's purchase raises the total amount of silver
bought from that source during July to 1,200,000 ounces, or the agreed monthly
limit.
M.M.
Regraded Unclassified
189
C
DEPARTMENT OF STATE
o
P
Washington
Y
July 29, 1941.
My dear Mr. Secretary:
I enclose herewith a paraphrase of a message to you
from Ambassador Winant in London (no. 3251 dated July 28).
Sincerely yours,
18/ Herbert Feis
Herbert Feis
Adviser on International
Economic Affairs
Enclosure:
No. 3251 from
London.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
Copy:alm 7-29-41
Regraded Unclassified
190
0
0
PARAPHRASE OF TELEGRAM HECEIVED
P
FROM:
American Embassy, London, England
DATE:
July 28, 1941, 9 p.m.
NO.:
3251
The following telegram is strictly confidential for the Secretary of the
Treasury.
Reference, telegram of July 18, 3 p.m., no. 2657 from the Department.
This morning I talked with the Chancellor of the Exchaquer: Sir John
Anderson, Privy Council head; Lord Woolton, Food Minister, and the Deputy
Minister of Supply, Lord Portal. We discussed the handling of goods under
the Lease-Lend Act. Consideration was also given to the question of the export
of products from Great Britain which the British are asking the United States
to supplement for their own use and for which a shortage in the United States
exists.
The British authorities promised that they would give us & statement
vithin the next two days; it is my belief that a. genuinely sincere effort to
meet the situation is being made by the British. The statement from Anderson
vas 80 limited in scope that I believe complete information should be contained
in the memorandum promised by the Chancellor of the Exchequer. It is my
belief that such will be the case, and that appropriate action vill support it.
I am being helped by Coe, and as soon as the promised information is
available, ve will forward it for your criticism and comment.
WINANT.
EA:LWW
Copy:alm 7-29-41
Regraded Unclassified
191
BS
PLAIN
London
Dated July 29, 1941
Rec'd. 1:55 p.m.
Secretary of State,
Washington.
3274, Twenty-ninth.
FOR TREASURY.
As will be seen in despatch being sent Treasury
by air the first renotion of the Landon press concern-
in joint freezing of Japen was that oppensement WAB
ENGEC ane that no n. result of freezing Japanese world
trade would be almost completely stopped. Today a
long and well informed article in the TIMES Cisplays
more uncertainty no to the may in which the freezing
controls will be qualied. The following are Excerpts
from this article Carling with this question of policy:
"The economic CERBURES taken by Gre-t Britain and
the United States of America against Japan form a total
weapon. Whether the weapon will be used totally at
once rests largely with the 23 ressor in the Far Enst."
"The innedinte Effect of the finan dal freezing
is A complete cessation of trade with Japan but un-
less the Jhonnesse nake it impossible it 16 likely that
licenses will be granted by both Britain and America to
Enable
Regraded Unclassified
192
-2- #3274 July 29 from London
Enable a certain amount of trade to continue. How
much it is too soon to say."
"Should sone trade still be possible, silk,
canned salmon and cotton piece-goods for India night
be taken in Exchange for, say, some cotton, surplus
Australian whent and other foodstuffs. Acerican
supplies of cil to Japan pay not be reduced much
inne.intely and assurance of full backing would bE
needed by the Netherlands East Indies if they were
to refuse to supply say +11 to Japan. Should the
neasures taken by the two siCES be Applied in full
and resolutely, on balance Japan will suffer and
suffer severely. As for as our trade with Japan
CREP it may bE uncomfortable for the Doninions,
India and the Colonies but far from ruinous; whereas
for Japan complete loss of oil, cotton, wool anc other
commodities would DE fatal in a year or BOD
VINANT
WSB
Regraded Unclassified
193
BS
PLAIN
London
Dated July 29, 1941
Rec'd. 1:53 p.n.
Secretary of State,
Washington.
3278, 29th.
The full text of Churchill's production state-
ment in the HOUSE of Commone 16 bring sent by air.
There WETE several passages dealing with the un-
fortunate Effect in the United States and Else-
where of criticisms of Britain's production. The
Prime Minister said in Effect that other countries
would get the impression that Britain was not making
a full Effort.
HE vas evidently referring to recent inquiries
when hE said: "We have of course to COME to very clean
cut agreements with our American friends and helpers.
They are making an effort for the common cause
and they naturally ask for the very fullest and clear-
Est information about what is happenin to their goods
and whether there is waste or misdirection. It 18
our duty to satisfy them that there is no mucile or that
muddle is reduced to n. minimum and that they are getting
value for their money. The improvement in the ordering
of imports
Regraded Unclassified
194
-2- # 3278 July 29 from London
of imports and of the British purchases in the
United States and in the relati ne of the very
large number of competent persons who work night and
cay on both BIGES of the ocean in this sphere 1s, I
am plac to say, stracy and progressive.
The Prine Minister also denlt with a charge
which kne been MACE by Garro Jones in the July 9 and
10 production debate that Accident airplanes WETE
lying around unproked because the British Government
has not ordered the necessary complementary Equip-
cent one spare parts when it ordered the planes, EE
Cented that this statement yas true of any aircraft
ordered by the British Government. HE said that the
circraft which had arrived. in Britain as a result of
the thing over of French ordero in the United States
had Incked spare Engined Ind had been built for
French Guns, with vireless ne other instruments that
could not be used. Consequently there had been delay
in using these aircraft. The Prine Minister enic
that ns swiftly ne anible these aircraft were being
nocifie' m. Brought into USE nn° that many are now
in efficient -peration. (END SECTION ONE)
MINANT
VSB
Regraded Unclassified
195
AF
GRAY
London
Dated July 29, 1941
Rec'd 1:51 p.m.
Secretary of State,
Washington.
3278, July 29 (SECTION TWO)
Please send copy of this telegram to Treasury
and General Bureau of Hopkins' Office.
Three. Copy of the full report of the debate
follow by air. (END OF MESSAGE)
WINANT
WSB
Regraded Unclassified
196
PARAPERASE OF TELEGRAM RECEIVED
FROM: AMERICAN CONSULATE, Chefoo, Ohina, via 1.3.
DATE: July 29, 1941, 11 p.m.
NO.1 9
A survey has been completed by the representatives
of the Japanese special military mission of the assets of
United States and British firms and staffs who have LOGGGE
to premises. In order to prevent the removal of stocks
and other property, police guards are still stationed on
the premises. Clients were prevented from leaving the
Hong Kong and Shanghei Bank because of the pickets. There-
fore, in order to avoid insidents, the bank closed its doors.
Morsover, all of the British and U.S. credits appear
to be frozen. No definite information in regard to the
policy is dealing with frozen assets at Chefoo is available.
However, it Vas stated by minor officials of the Japanese
special military mission that firms would be allowed to
withdraw funds that are available in order that, at the
end of the month, vages and salaries might be paid.
Yesterday morning, telephones and electric power were
out off at British and American places. They were restored
at British and American Consulates on the afternoon of the
twenty-eighth.
Kanshex, a British steamship, which vas held at Chafee
more than twenty-four hours was allowed to sail today for
Shanghal. After twenty-four hours, the Hair Paking, a British
steamer, was released from quarantine. British and American
nationals ()
Regraded Unclassified
197
nationals (1) are to visit steamers in port or to " on
wharves.
The mail for both the Americans and the British is
detained, It is believed that it is being sent for
consering to Peiping,
This telegram was sent to the Department for its
information; repeated to Chungking, Shanghai, and Peiping.
BUTRICK
KA:PAK
of THE
Drl vne 50 bill 2 sa
BECEINED
Regraded Unclassified
198
C
0
P
Y
BS
PLAIN
Amoy
Dated July 29, 1941
Rec'd. 6:20 a.m. 30th.
Secretary of State,
Washington.
35, July twenty-nine.
In what is described in local press as retaliatory measure against
American Government action in freezing Japanese credits in United States,
the Japanese sponsored Amoy Municipal Government issued late yesterday
regulations effective immediately governing foreign trade and installing
licensing system which press claimo extends to International Settlement
Kulangsu. The regulations are detailed, cover small as well an large
transactions and authorize Mayor to issue licenses. It is reported
that local Japanese Consul General issued regulations of similar nature
at same time.
Notwithstanding new regulations, for past two years no merchant
vessel has been able to enter or depart from Amoy harbor, or to discharge
or load cargo without specific approval of Japanese Navy.
In so far as Consulate is aware only American assets in Japanese
occupied holdings of Philippine Chinese on Amoy Island.
No indication thus far of interference with normal operations of
American or other firms on Kulangsu.
Sent to the Department. Repeated to Chungking, Peiping and Shanghai.
PILCHER
KLP
Copy:bj:8-6-41
Regraded Unclassified
(CONFIDENTIAL)
199
PARAPHRASE
A telegram (no. 1119) of July 29, 1941 from the
American Ambassador at Tokyo transmite B. message of
July 25 from the Consul at Kobe which reads substantially
as follows:
General passes bearing photographs which are now re-
quired for entry to the docks have been refused to Japanese
and foreign personnel of the President Lines. However,
the authorities say that when needed specific passes may
be issued to such personnel for visits to particular ships.
The Consul General of the Netherlands estimates there
are approximately ten million guilders tied up in cotton
goods awaiting shipment for which the Japenese authorities
will not issue export permits.
During the last few days west-bound traffic on the
railway has been especially heavy. Each day there is an
average of possibly eight freighters departing from Osaka
Bay, including some troop transports, the troops also
sailing from Kobe. On July 24 the Tjisaroes, which sailed
from Yokohama, was forced to carry Japanese pilot, (7)
having stayed on board while anchored at Kobe.
Cogy:bj:8-6-41
Regraded Unclassified
o
200
0
P
Y
CONFIDENTIAL
PARAPHRASE
A telegram (no. 1120) of July 29, 1941 from the
American Embassy at Tokyo transmits a telegram of July 28
from the American Consul General at Singapore which reade
substantially as follows:
According to information received by the Controller
of Foreign Exchange the freezing order will serve effectively
to do away with all export and import trade between the
Japanese Empire and Malaya, subject to any barter arrangemente
which may be made in cooperation with the Government of the
United States. The Controller of Foreign Exchange said also
that this applies to exports of iron ore for which payment
had not been made (exchange fixed) prior to July 26.
The Government is now considering the matter of allowing
iron ore for which payment had been made before July 26
to be exported. Regardless of date of payment, shipments
of tin and rubber vill not be allowed to be made to Japan.
Japanese residents leaving Malaya will not be permitted
to withdraw a sum greater than the equivalent of $100
(Straits currency), it is understood.
Regraded Unclassified
201
(COPY)
GRAY
Foochow via N.R.
(CONFIDENTIAL)
Dated July 29, 1941
Rec'd 3:40 a.m.,30th
Secretary of State,
Washington.
July 29, 6 p.m.
The head of the Japanese army special service section
this afternoon informed me he had received preliminary
instructions that American assets in Japanese occupied
territory including the Foochow area were to be frozen as
of July 28. He stated sales of American property and
financial transactions involving Americans will require
prior approval of his section, that Americans will be
allowed limited sume for "living expenses", that he will
furnish further details when they are available and that
British interests will be accorded similar treatment.
He stated he desires that Americans prepare and
furnish customs authorities preferably through this
Consulate and prior to August 5th lists showing valuations
of American owned real estate and at such customs offices
more valuable movable property as American nationals and
firms may wish later to sell or transport from this area.
I pointed out that he was furnished lists of the principal
American real properties in Foochow in connection with a
request that he accord them protection, that it is not taken
Regraded Unclassified
202
- 2 -
as (?) valuations (7) and that I would have to be guided
by my superiors with reference to the matter of preparation
and submission of lists of movable property.
The Embassy's instructions are respectfully requested.
Sent to Peiping, repeated to the Department and
Chungking.
RICE,
DCA:MGS
copy:jba - 8-6-41
Regraded Unclassified
203
JT
PLAIN
Tientsin via N.R.
Dated July 29, 1941
Rec'd 10:42 a.m.
Secretary of State,
Washington.
82, July 29, 11 B.M.
According to DOMEI yesterday Japanter Consul
General here issued regulations prohibiting Japanese
from engaging without his permission in practically all
kinds of business transactions with nationals of the
United States and its possessions, the Philippines and
Great Britain; similar regulations governing Chinese
issued by North China Folitical Affairs Commission.
As full regulations carried in press report they will
not bE telegraphed unless instructed.
The Federal RESERVE Bank of China at Tientain
yesterday ceased issuing export and import permits
pending instructions from its head office in Peiping.
Sent to Department; repeated to Peiping, Chungking
Shanghai. Air mail to Tokyo,
CALDWELL
HPD
Regraded Unclassified
204
DES
PLAIN
PEIPING VIA N.R.
Dated July 29, 1941
Rec'd 3:05 p.m. 30th.
Secretary of State,
Washington.
189, July 29, 5 p.m.
In retaliation against the freezing of Japanese and
Chinese assets by the United States and Great Britain, the
North China Political Affairs Commission promulgated yester-
day (published in local vernacular newspapers today) new
regulation antitled "provisional procedure for restricting
special transactions", of which the following is a summary.
(Begin summary) Unless permission first be obtained
from the Federal RESERVE Bank of North China either the
Government of the United States, the Government of the
Philippine Commonwealth, the citizens or juristic persons
thereof, no British subject and juristic persons shall bE
permitted to (one) receive or dispose of immovable property,
personal property valued over FRB five hundred, businesses
or investments therein, securities, foreign or domestic
exchange, foreign currencies, and domestic currencies EX-
ceeding FRB dollars five hundred a month including checks;
(two) grant or recall loans, borrow money or repay debts,
deposit or withdraw monty from banking institutions, and
offset or guarantee loans or debts; and (three) receive or
dispose
Regraded Unclassified
205
-2- 189, July 29, 1941 from Peiping via N. R.
dispose of assets other than those mentioned in (one)
and (two). The only clearly specified Exception to the
above are the payment of rents, taxes, and similar levies
and the payment of salaries and wages of employees of the
Government, nationals, and juristic persons mentioned.
The term "juristic persons" includes joint-enterprises
of which any of the nationals mentioned controls, or
manages the enterprises or owns more than one half of the
capital.
Application for permission to do any of the acts
prohibited must be on prescribed form and submitted to
the head office or branches in North China or the Federal
RESErVE Bank.
Penalties for violations range from total or partial
confiscation of the money or other property involved to
punishment prescribed by the "law governing offices dis-
turbing the money market" (End of summary).
In on interview with local Chinese and fortign press-
men here yesterday Mr. Wang I-Tang, chairman of the North
China Political Affairs Commission, reportedly described
the new regulations as "necessory counter measures adopted
by North China in VIEW of the action of United States, the
Philippints, and Great Britain in freezing the assets of
China and our friendly neighbor".
Sent to the Department, repeated to Chungking, Tientsin
and Shanghai. Air mail to Tokyo.
BUTRICK
CSB
Regraded Unclassified
0
206
LET
0
GRAY
P
Y
Swatow via N.R.
Dated July 29, 1941
Rec'd. 2:45 p.m.
Secretary of State,
Washington.
18, July 29. 5 p.m.
My 17, July 28, noon.
The local banking situation remains unsatisfactory
as no funds can be taken to or from the British bank.
The Japanese Consul states that the question of obtain-
ing funde from the bank was being studied by "higher
authorities" but did not know what measures would be
taken. Ee indicated that such measures if any would
be similar to those taken by the United States but
claims local authorities uninformed concerning the
situation in the United States and the extent of the
exemptions given Japanese subjects and Consular Officers
residing there in the matter of obtaining funds for the
payment of living expenses, salaries of personal and
official employees, et cetera.
In connection with further discussions of this
subject on behalf of consular employees and local
American residente it 1s respectfully suggested that
the Department supply information by redio concerning
the exemptions being granted Japanese subjects, Consu-
lar Officers and employees in the United States.
Sent to the Department.
TEARNS
JRL
Copy:rg 7/31/41
Regraded Unclassified
C
207
o
P
Y
TRB
GRAY
Swatow
Dated July 29, 1941
Rec'd. 10:40 a.m.
Secretary of State,
Washington.
19, July 29, 6 p.m.
Japanese authorities have notified the Foreign
Drawn Work Association merchandise mentioned in my
telegram 17 July 28, noon cannot be shipped from
Swatow. The drawn work business is at a standstill
and conditions at the British bank unchanged today.
Japanese gendarmes visited a few firms and asked
General Ungui regarding stocks, the number of workers
and the operation of the industry.
Sent to the Department, repeated to Peiping.
Chungking, Shanghai, Hong Kong.
YEARNS.
WSB
Copy:rg 7/31/41
Regraded Unclassified
208
DES
PLAIN
SHANGHAI VIA N.R.
Dated July 29, 1941
Rec'd 6:53 p.m.
Secretary of State,
Wushington.
963, Twenty-ninth.
Yesterday afternoon the Japanese Consulate General
issued a notice to Japantst placing under immediate
control all transactions by Japanest with American
citizens. The text of the notice CB carried by Domei
is quoted below:
"As regards control of transactions involving for-
signers, transactions which come under such control are
those involving United States nationals, including citizens
of United States territories and the Philippine Commonwealth,
and applicable to United States corporations, United States
controlled corporations, and residents in United States
territories.
Transactions which come under control in accordance
with the above notice follow: (one) rights regarding
immovable property; (two) enterprises, busintss and funds
usable in business; (three) sureties valued at more than
yen twenty; (four) foreign and domestic exchange and (five)
coquirement or transfer of Japenese military notes or its
equivalent
Regraded Unclassified
209
-2- 963, July 29, 1941 from Shanghai via N. R.
equivalent in Chinese currency amounting to more than
yen five hundred monthly."
Another restrictive measure taken yesterday by the
Japantos WGB the posting in the Shanghai customs of the
following notification:
Applications for exportation (including transshipments,
resport and shipment Ex-bond) abroad (excluding Japan)
and interport exportation for Chinese ports (excluding
occupied ports) of following goods should be temporarily
referred to me before bring released: (one) machingry;
(two) provisions; (three) 0118; (four) chemicols; (five)
certals and fodder; (six) fertilizers; (seven) cotton picce
goods and yarn; (cight) metal and ores; (nine) chemicals
including medicine (including Chinese-made); (ten) cotton;
(Eleven) analine dyes. Signed Koyamada for Administrative
Commissioner".
INFORM COMIERCE.
Sent to the Department, repeated to Chungking, Peiping,
by air mail to Tokyo.
LOCKHART
GW
Regraded Unclassified
C
o
P
210
Y
DEPARTMENT OF STATE
Washington
In reply refer to
EA 840.51 Frozen Credits/2667
July 29, 1941.
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury, and
encloses 7 copies of paraphrase of telegram no. 76
of July 26, 1941, from the American Legation, Pretoria,
Union of South Africa, reporting on an order freezing
Japanese assets in the Union of South Africa.
Enclosure:
no. 76 of July 26
from Pretoria.
Copy:dtg:7-30-41
Regraded Unclassified
211
C
O
P
I
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Legation, Pretoria, Union of South
Africa
DATE: July 26, 1941, 6 p.m.
NO.: 76
An order was issued today by the Government of the U. of S.A.
whereby all assets of the Japanese in the Union of South Africa
are frozen.
KEENA.
EA:LWW
10.1NE
Copy:alm 7-30-41
OVI 60 SR
BECEIVED
Regraded Unclassified
212
BRITISH EMBASSY,
WASHINGTON, D.C.
PERSONAL AND
SECRET
July 29th, 1941
Dear Mr. Secretary,
I enclose herein for
your personal and secret information a
copy of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
213
TELEGRAM RECEIVED FROM LONDON
Cated My 95th. 1941
NAVAL
Photographs of Breat p.m. July 27th show
battle eruisers and Prina Eugen all in dry dook.
Camouflage netting over Scharnhorst.
of
P.M. July 27th, three squadrons of fighters
operating off Calais destroyed one enemy aircraft
and probably destroyed three more, one Hurricane
is missing.
3.
Yesterday enemy I boat of Le Troport
appeared to be severely damaged after attacks by
Spitfire.
4.
Last night small raid by airoraft made
Dunkirk dooks. Considerable mine laying was
carried out by Royal Air Force. One aircraft
missing.
s.
Engry raids night of July 27th/28th on
United Kingdom larger scale than recently. About
60 aircraft South Eastern area) London main abo
jective, Bombing London widespread but not severe
three incidents of damage to railways. Casualties
not heavy. Night fighters destroyed three and
damaged one
6. TOBRUE
Night of July 25th/26th. Indian patrol
attacked enemy posts killing 95 mestly with bayoneti
Allied other patrols active and successful,
To nussia- Little change.
Regraded Unclassified
214
BRITISH EMBASSY,
WASHINGTON, D.C.
PERSONAL A ND
SECRET
July 29th, 1941
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a copy
of the latest report received from London
on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
TELEGRAM RECEIVED FROM LONDON
2/5
DATED JULY
Eis imjesty's submarine Union now
presumed lest.
is
Reference Optel of July 26th, 65
ratings missing from Achates. German s.s.
Erlangen has sunk, Scharnhorst located at Brest
sorning of 26th/27th.
3.
Considerable shipping camualties
suffered by enemy shipping from our air attacks.
Comparatively successful passage of supply convey
United Kingdom to Malta all covering forces have
returned to Gibralter safely except Fearless.
During these operations one E-boat was sunk and
at least 12 energy aircraft destroyed.
4.
ROYAL AIR FORCE.
Daylight 26th, one Fortress bombed
Eraden starting fires.
Night 25th/26th, results Hamburg
particularly successful.
Night 24th/25th, Royal Air Force bombed
Benghasi. 25th enemy air activity over the United
Kingdom remains very slight,
Night 24th/25th. Alexandria attacked
by 5 enemy aircraft. Some bembe fell in town and
nines believed to have been dropped.
SYRIA, Suwside in Jabel Druse occupied
My 24th.
RU IAs No important changes reported.
Regraded Unclassified
CONFIDENTIAL
216
Paraphrase of a Code Cablegrum
Received at the War Department
at 13:10 July 29, 1041
Lendan, filed July 29, 1941.
1. British Alr Activity over the Continut,
as Eight of July 17. 15 teas of high explosives and
720 incendiary bambe were dropped on Dunkirk,
b. Day of July 28. Xe bomber missions carried out due to
bad weather, Total of 306 fighters disputched as follows, 146 on
shipping protection, on interception mission 102, 30 operating on
offensive missions and so on special missions. (No casualties
sustained.)
" Right of July 28. 15 IN wining in Kiel area, 15 to
nine Falmara charmel, 12 to Selt of Langeland.
2. German Mr Activity over Britain.
a. Day of July 27. 10 long range bambers and 20 recen-
naissance planes.
b. Right of July 27. There more 46 leng range bombers
and only 5 recommissance planes. 15 fighters on effensive adssion.
It Le indicated that twin eagine fighters which are usually assigned
to fighter operations, earried a bomb load of 8 to 10 kilograms and
took part in a raid on London,
s. Day of dely 28. All sperations on a small scale, only
recommaissance over the sen and defensive patrols carried out.
4. Bickt of July 20. small scale activity directed against
shipping off That inglisue Ceast.
CONFIDENTIAL
INFORMATION COPY
Regraded Unclassified
217
CONFIDENTIAL
s. Aircraft Lesses Reported.
a. British lesses. One on mining mission, with
three unreported.
LEE
Distribution:
State Department
Assistant Chief of Staff, G-2
War Plans Division
Office of Naval Intelligence
0. H. do
Chief of the Army Air Forces
Secretary of Treasury
Assistant Secretary of War for Air
CONFIDENTIAL
Regraded Unclassified