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    "title": "Volume 425, July 26 – July 29, 1941",
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        "Henry Morgenthau, Jr. Papers",
        "Diaries of Henry Morgenthau, Jr."
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    "ocrText": "DIARY\nBook 425\nJuly 26 - 29, 1941\nRegraded Unclassified\n- L -\nBook Page\nLasard Freree\nSee War Conditions: Foreign Funds Control\n- P -\nPortugal\nSee War Conditions: Foreign Funds Control\n- R - -\nResearch and Statistics, Division of\nReport on projects during June 1941\n425\n31\nRevenue Revision\n\"Your New Taxes\": American Forum of the Air -\n7/27/41\n96\n- S -\nSilesian-American Corporation\nSee War Conditions: Foreign Funds Control\n- T - -\nTaxation\nSee Revenue Revision\n- U - -\nUnited Kingdom\nSee War Conditions\n- W -\nWar Conditions\nAirplanes:\nWar Department report on number and disposition\nof planes on May 31 and June 30, 1941\n7\nShipments to United Kingdom and overseas commands -\nBritish Air Commission report - - 7/28/41\n118\nBelgium:\nBank of Belgium litigation against Bank of France\nconcerning $250 million worth of gold at\nDakar: Present situation discussed in Cochran\nmemorandum - 7/28/41\n127\nChina:\nHall-Patch to be appointed British member of\nStabilisation Board temporarily - - 7/28/41\n135\n(See also Book 427, page 164)\nRegraded Unclassified\n- W - (Continued)\nBook\nPage\nWar Conditions (Continued)\nExchange market resume' - 7/26/41. etc.\n425\n30,124,184,187\nExport Control:\nExports of petroleum products, scrap iron, and\nscrap steel from United States to Japan,\nRussia, Spain, and Great Britain, week ending\nJuly 26, 1941,\n126\nForeign Funds Control:\nAdministration of Executive Order 8389, as amended:\n(See also Book 411)\nConference; present: representatives of\nTreasury, State, and Justice - 7/26/41\n1\na) Discussion of\n1) Applications of Anaconda Copper\nMining Company, Silesian-American\nCorporation, and Lazard Freres\n2) General problems of Finland\n3) Revocation of outstanding license\nallowing British Purchasing\nCommission to pay Bank of Canada\nfor account of French Government\nConference - 8/2/41: See Book 427, page 180\na) SS TATUTA MARU discussed\nb) Portugal: general license discussed\nConference - 8/5/41: Book 428, page 125\na) Vah Chang Trading Corporation license\ndiscussed\nb) Representatives to Singapore, Rangoon. London,\nand Washington from Foreign Exchange Control\nin China discussed\nc) United States attitude toward trade with\nJapan discussed\n1) Asphalt exporte reviewed\nConference - 8/13/41: Book 432, page 204\na) Society for Chemical Industry (Ciba) Basel,\nSwitzerland: application discussed\nJapan:\nRegulations for exchange control as set forth in\nTokyo reported by American Embasey - 7/28/41\n153\nMilitary Planning:\nReports from London transmitted by Halifax -\n7/28-29/41\n165,212,214\nWar Department bulletin:\nGerman Panter units in Jugoslavia - 7/28/41\n170\nPurchasing Mission:\nSee also War Conditions: Foreign Funds Control\nFederal Reserve Bank of New York statement showing\ndollar disbursaments, week ending July 16, 1941\n70\nVesting order sales - 7/28/41\n122,123\nRegraded Unclassified\n1\nJuly 26, 1941\nIORANDUM FOR THE SECRETARY'S FILES:\nA meeting relative to the administration of Executive Order\n3589, as amended, was held in Mr. Foley's office at 2:00 p.m.,\nJuly 26, 1941, attended from time to time by the following:\nlessrs. Foley (Chairman), Pehle, Bernstein, Towson, Carre,\nFox, Jasa and Timmons for the Treasury, Messrs. Acheson,\nLuthringer and Miller for State, Vr. Rosenwald for Justice.\nMr. Carre, Chief of the Securities Section of the Foreign\nFunds Control, presented a summary statement of the transactions\ninvolved in three applications filed by the Anaconda Copper\nining Company, the Silesian-American Corporation and Lazard\nFreres and Company, the approval of which would result in the\ncontrol of the Silesian Holding Company and the Silesian-American\nCorporation passing to Ikap, a Swiss corporation acting for a\ngroup of Swiss bankers, some of whom remain unnamed. After a\ncareful examination of all the facts involved and E discussion\nof the various policy considerations involved in such action,\nit was unanimously agreed that the applications in question should\nbe immediately denied and a statement to that effect given to\nthe press. This was done at approximately 4:15 p.m. Mr. Pehle\nexplained that the issuance of a press release when a decision\nwas taken by the Committee had already been cleared with the\nSecurities and Exchange Commission. It was further agreed that\n& memorandum should be prepared by Monday morning outlining the\npolicy of this Covernment with respect to this and similar cases.\nThe first draft of such statement is to be prepared by Messrs.\nLuthringer and Miller of State and will be discussed with Treasury\nand Justice on Monday. Such statement is in general to explain\nthat a concerted attempt is under way by which Germany hopes to\nuse blocked or looted funds to buy out American holdings in the\noccupied countries. These schemes were not initiated prior to\nthe several invasions, but a number have now been prepared and\nare being developed to a high point of ingenuity, including\noperation through neutral exchanges, and the use of Swiss dummy\ncorporations.\nMr. Pehle then referred to three general problems which the\nFinnish Minister has discussed with officers of both the State\nand Treasury Departments. The first relates to transfers from\nRegraded Unclassified\n2\n- 2 -\norivate blocked Finnish accounts to the Finnish Central Bank.\n,pplications have been received by the Foreign Funds Control\nfor permission to effect approximately $500,000 worth of such\ntransfers, and it was pointed out that if any such applications\nwore granted, there would be many more similar applications\nTiled. The purpose of such transfers, the Finnish Minister\nexplained on several occasions, is to provide business enter-\nprises operating in Finland, notably the great Finnish pulp\nexporting firms, with local currency balances with which to\nl'inance continuing business operations. It has not been the\npolicy of the Foreign Funds Control to approve applications\nof this character, although the French in particular have argued\nstrongly that approval of such applications should be granted.\nP. .cheson suggested to Mr. Luthringer that a tentative state-\nment of policy be drawn up and discussed with the European Di-\nvision in State, to the effect that in view of the fact that\nFinland is presently in a position enalogous to occupied France,\nthe policy of the Treasury with respect to the transfers in\nquestion should not be, altered in the case of Finland. The\n/innish Minister has also requested that two Tinnish ships\npresently on their way to the United States be allowed to sell\ntheir cargoes in this country and remit the proceeds of such\nsales to the Swedish Central Bank in order to finance purchases\nby Finland in Sweden. It was agreed that this application\nshould not be approved. The Minister has raised the question\nof whether debt service will be permitted on Finnish bonds held\nin the United States. This does not appear to be a pressing\nproblem, inasmich as only old maturities are concerned and there\nare several problems that must be worked out, particularly the\npossibility that some of such bonds are held in occupied countries\nor that the coupons will be presented through neutral countries.\nIn line with present policy, the Control will proceed to license\npayment of interest in all clean\" cases.\nIr. Pehle referred to an application, Dallas 423, which was\nreceived today by phone. It relates to the exporting of 14,000\nbeles of cotton purchased by the Missho Company of Osaka, Japan,\nfor delivery in Shanghai, China. It was agreed that no action\nshould be taken on such application at this time, pending the\nreceipt of further information relative thereto.\nReference was also made to a telegram received from the\nCollector of Customs in Portland, Oregon, inquiring whether\nmerchandise to be destined for Japan could be loaded on board\nship. A telegram was despatched to the Collector stating that\nall operations connected with the export of such goods could\nDe effected only pursuant to licenses issued under the Order.\nRegraded Unclassified\n3\n- 3 -\nEr. Bernstein said that Supplement 1 of the Proclaimed\nList of Certain Blocked Nationals was being printed and\nproofread over the weekend and would be printed on Monday.\nIr. Acheson of State referred to two German newspapers in\nBolivia which have been recommended for deletion from the\nProclaimed List. Such action will, however, not be taken at\nthis time.\nThe Committee unanimously expressed its appreciation to\nMiss McGuire for her splendid efforts in handling the trans-\nportation arrangements for the group being sent to Hawaii and\nthe Philippine Islands,\nThere was a brief discussion of certain aspects of the\ntrade problems which will arise as a result of the freezing of\nJapan and it was agreed that the problems would receive further\nconsideration.\nMr. Acheson reported that the revocation of the outstanding\nlicense allowing the British Purchasing Commission to pay the\nBank of Canada for account of the French Government had been\ncleared in the State Department.\nRegraded Unclassified\n4\nJuly 26, 1941\nDear Mr. Lovett:\nIn the absence of the Secretary,\nI am acknowledging receipt of your con-\nfidential letter of July 22nd.\nI shall hold this for Mr. Morgen-\nthau's personal attention.\nYours sincerely,\nH.S.Klatz.\nH. S. Klotz\nPrivate Secretary\nHon. Robert A. Lovett,\nAssistant Secretary of War for Air,\nWar Department,\nWashington, D.C.\nRegraded Unclassified\n5\nJuly 26, 1941\nDear Mr. Lovett:\nIn the absence of the Secretary,\nI am acknowledging receipt of your con-\nfidential letter of July 22nd.\nI shall hold this for Mr. Morgen-\nthau's personal attention.\nYours sincerely,\nH.S. Klotzc\nH.S. Klots\nPrivate Secretary\nHon. Robert A. Lovett,\nAssistant Secretary of War for Air,\nWar Department,\nWashington, D.C.\nRegraded Unclassified\nJuly 26, 1941\nDear Mr. Lovett:\nIn the absence of the Secretary,\nI am acknowledging receipt of your con-\nfidential letter of July 22nd.\nI shall hold this for Mr. Morgen-\nthau's personal attention.\nYours sincerely,\n11.S. Klotz\nPrivate Secretary\nNon. Robert A. Lovett,\nAssistant Secretary of War for Air,\nWar Department,\nWashington, D. C.\nRegraded Unclassified\nWAR DEPARTMENT\nOFFICE OF THE ASSISTANT SECRETARY FOR AIR\nWASHINGTON, D.C.\nJuly 22, 1941\nHonorable Henry Morgenthau, Jr.,\nThe Secretary of the Treasury,\nWashington, D. C.\nDear Mr. Secretary:\nAttached is a schedule giving the present strength which\nthe Air Corps could have sent into combat on May 31 and on June 30.\nThis chart also shows the disposition of the planes -\nin Continental United States, at Foreign U. S. Stations, and the\nnumber grounded for modernisation, service testa or repair.\nVery sincerely yours,\nROBERT A. LOVETT\nAssistant Secretary of War for Air\nEnclosure\nRegraded Unclassified\nCOMPARATIVE\nFIR FOR USE AGAINST MODERS AIR FORCE\nSECRET\nStavy\nMedium\nLight\nDive\nBenbers\nDembers\nBeabers\nPurmit\nTotals\nmy n\nJune 30\nMay 31\nJune 30\nMay 31\nJune 30\nMay 31\nJune 30\nMy n\nIms 30\nMay n\nJames 30\nIm Continuate] D. s.\n98\n62\n54\n5\n22\n184\n266\n296\n427\nAt Foreign Stabiems (U. s.)\nn\n30\n306\n299\n337\n329\nUndergedag Mederniarkion,\nService Tests, or Repair.\na\n16\n75\n103\n123\n138\n75\n62\n294\n319\nTotals\n120\n108\n129\n190\n123\n138\n12\n565\n627\n927\n2075\nSECRET\nRegraded Unclassified\n9\nFORDEFENSE\nBUY\nFIELD ORGANIZATION News Letter\nUNITED\nSTATES\nSAVINOS\nDEFENSE SAVINGS STAFF\nBONDS\nTREASURY DEPARTMENT, WASHINGTON, D. C.\nJuly 26, 1941. Number 10.\nTO THE FIELD STAFF:\nThis is the tenth issue of NEIS LSTTER. According to reports we\nare receiving, it is serving a useful purpose. NEIS LETTER is designed\nto bring to the members of our field organization interesting items\nconcerning the activities of the various State, county, and local\nDefense Savings Committees throughout the land.\nWe are always glad to receive news items of general interest, An\nidea that has been successful in one section of the country may like-\nwise be very useful in other sections. It is on such an interchange\nof ideas that great and effective organizations are built. All of us\nare seeking the same end. We have undertaken to perform a service which\nwill have a lasting effect upon the future of this Nation.\nThe functions of the field organization may be grouped under two\nheads, The first task is to educate every man, woman, and child to the\nimportance of the Defense Savings Program, and to explain the securities\nin an understandable manner. The second task is to provide convenient\npurchasing plans for those who wish to own the Securities.\nTo accomplish these purposes a great educational program is under\nway and methods for convenient purchasing have been established. Others\nmay be developed, but at present the most popular purchasing plans are:\nDirect purchase from fiscal ngents, and by mail from the Treasury; pay\nroll allotment; the \"group agent\" plan, developed by Federal and other\nGovernmental agencies; stamp banks located in stores, shops, offices,\nend schools; and thrift clubs established by social and other groups.\nThe march of events provides ample motivation. Americans want to\ndefond their Nation. Our task is to make them realize that they can\nhelp And help now by purchasing Defense Savings Securities,\nSincerely yours,\nGALE F. JOHNSTON\nField Director, Defense Savings Staff\nRegraded Unclassified\n10\nHONORARY CHAIRMEN\nNevada, New York, and Rhode Island Governors\nAccept Appointment\nSecretary Morgenthau has announced that Governor E. P. Carville of\nNevada, Governor Herbert H. Lehman of New York, and Governor J. Howard McGrath\nof Rhode Island have accepted Honorary Chairmanship of the Defense Savings\nCommittees being organized in their states.\nLEADERS APPOINTED IN OHIO\nSecretary Morgenthau has announced appointment of Roy D. Moore, Chair-\nman of the Defense Savings Committee for the State of Ohio, and of John\nMcSweeney, Ohio State Administrator of the Defense Savings Staff,\nMr. Moore, whose home is in Canton, is the vice president and general\nmanager of the Brush-Moore newspapers. Mr. McSweeney of Wooster was formerly\nState Director of Public Welfare and member of Congress from the State of Ohio,\nIN THIS ISSUE\nFLORIDA Regional Conferences - page 3\nFLORIDA STATE Offices 100% - page 3\nA SHOW for a Stamp - page 3\nCHARLOTTE Committee Hard at Work - page 4\nMICHIGAN State Employees Enthusisatic- page 4\nCONNECTICUT Public Employees page 5\nCHAIRMEN Appointed for Minnesota Cities - page 5\nSTAMPS FOR DISHES in New Jersey - page 5\nMINNEAPOLIS Aquatennial Bond Float - page 6\nBRIDGEPORT Polish Societios Start Drive - page 6\nMISSOURI Business Publicizes Program - page 7\nSTAP BANK Made Easy to Find - page 7\nBONUS in Bonds page 7\nDEFENSE-0-GRAMS page 7\nCOUNTY FAIR Pays in Bonds - page 7\nSALARY ALLOTMENT Sweeps Missouri - page 8\nPAYROLL ALLOTENT in Indiane - page 9\nSTREET CAR and Bus Workers to Invest in Defense - page 9\nBANKS Advise Allotment Plans - page 10\nPAYROLL ALLOT ENT PLANS Described - page 11\nTEACHERS Learn of Program - page 12\nSCHOOLS to Have Special Literature - page 12\nSTAT OUTLETS Increasing page 13\nPURCHASERS The Made Headlines - page 14\nELKS ESSAY Contest Winners - page 15\nMILK BOTTLES Enlisted - page 15\nR.DIO PROGRAMS for the Week - page 16\nQUOTABLE QUOTES - page 17\n- 2 -\nRegraded Unclassified\n11\nFLORIDA\nRegional Conferences Leunch Local Orgenization\nSIX REGIONAL CONFERENCES, in the three weeks immediately following the\nfirst meeting of the Florida State Committee, storted the organization of\ncity end county committees in every part of the Peninsula State,\nMORE THAN 500 key people sttended these eix meetings. Every one of he\n67 counties wes officially represented at at least one of them. Mayors,\ncounty officials, postmasters, benkers, business end civic leaders, and\nrepresentatives of the press perticipated in the discussions. All aspects of\nthe Defense Savings Program ware explained and the groundwork Inid for on\nintensive campaign.\nLINTON E. ALLEN, President of the First National Pank of Orlando and\nChairman of the Florida Defense Savings Committee, presided et each of these\nmeetings. State Administrator John L. Fohs, Deputy State Administrator\nKarl Lehmann and field representative G. E. McCeskey of the Defense Sovings\nStaff completed the group of reguler speakers.\nHIGHLIGHTS of the meetings were tolks by the Governor and Mrs. Holland:\nCovernor Holland, Honorary Chairmon of the State Committee,\npresent at the Jacksonville conference, declared that Florida's\ngoal was 100 per cent porticipation: \"Every men, woman and\nchild in the state an investor in Defense Savings Fonds and\nStamps!\"\nMrs. Holland addressed the regional conference in Tampa, where\nshe also officially christened a new freighter.\nTHE FIRST STATE OFFICE IN TALLAHASSEE to report that overy employee had\npurchased at least one Defense Sovings Pond W38 that of Attorney General\nJ. Tom Wetson, who reported to State Administrator Fohs that all 33 of the\nemployees in his department hed purchased 1 bond and had pledged himself to\nmake a regular investment each psy day.\nOTHER OFFICES OF THE STATE GOVERNMENT reporting that all of their\nemployees are investing regularly in Defense Sevings Pondsor Stamps include\nthe Floride Industriel Commission (Divisions of Workmen's Compensation,\nUnemployment Compensation, and Employment Service) end the office of the State\nTressurer,\nA Show For A Stamp\nChildren who are regular \"Defense Savers\" will be admitted free of charge\nto Saturday morning shows given by the 110 theaters in the Sparks Circuit,\naccording to J. L. Cartwright, public relations executive for Sparks Theoters\nand member of the Floride State Defense Savings Committee. Possession of a\ncard cerrying a 10-cent Defense Sevings Stomp with the card dated to indicate\nthat at loast one stemp hes been purchased within the pest week will be \"the\nprice of admission.\"\nACTIVAMENT request\nR 3 .\nRegraded Unclassified\n12\nNORTH  CAROLINA\nCharlotte Committee Hard At Work\nAPPOINTMENT OF CHAIRMEN of the soveral divisions of the Defense Savings\nCommittee for Charlotte and Mecklenburg County has been announced by Word H.\nWood, divisions: chairman. The Mecklenburg County Connittoe includes the following\nBanks\nIndustry\nSpeakers bureau\nLabor\nGeneral organization\nMotion picture Industry\nNegro participation\nMedical profession\nMerchants\nCivic clubs\nWomen's division\nCounty communities\n20 DEFENSE SAVINGS BONDS will be awarded as prizes in an essay contest\nconducted anong children of the city and county schools, The bonds, which\nwill be of the $25 donomination, will be awarded for the best essays submitted\nby October 15 on the subject, \"Why Dofense Bonds Should Be Purchased.\" Eleven\nbanks and building and loan associations in Charlotte are giving the bonds,\n100% PARTICIPATION in the Defense Savings Program is the achievenent. of\nthe 256 employees of Charlotte's four commorcial banks. Throe building and\nloan associations likewise report that all of their employees are purchasing\nbonds or stamps.\n....\nThe Lexington Chair Company of Lexington, N. C., has given each of its\n150 employees $3 worth of Dofense Savings Stanps 18 a starter toward the\nregular purchase of Defense Savings Bonds.\n,\nI\n-\nI\nO'Crowley Cleaners of Wilnington is the first business firm in that city\nto report that all of its employees have purchased Defunse Savings Bonds or\nStamps. Paper bags used by this cleaning concern carry the message \"For\nDefense Buy United States Savings Bonds.\"\n-\n-\n-\n-\nThe North Carolina Federation of Women's Clubs has bought $3,000 worth of\nDefense Savings Bonds,\n-\nOr\n#\n#\nMICHIGAN STATE EMPLOYEES ENTHUSIASTIC\n100% PARTICIPATION is the 10001 of the Detroit Branch of the Michigan\nState Employment Service, A voluntary Defonse Savings Bond and Stamp Purchase\nPlan has been installed in this office and already practically all of the 125\nemployees have signed pledge cards.\nThe Michigan State Department of Labor has installed a similar purchase\nprogram for employees in its Lansing offices.\n- 4\nRegraded Unclassified\n13\nNEWS FROM OTHER STATES\nCONNECTICUT\nWaterbury city employees have been notified that it will be possible for\nthem to participate in the Defense Savings Program by authorized pay roll\nallotments, according to a recent announcement by Mayor Vincent A, Scully and\nCity Controller Thomas M. Conlon.\nConnecticut state employees, more than 10,000 of them, are participating\nin the state government's systematic purchase plan for Defense Securities,\nMany Ponemah workers are now having part of their wages paid in Defense\nSavings Stamps. Superintendent John E. Tobin of the Ponemah Mills of Norwich\nreported to Paul W. Franklin, Chairman of the Norwich Defense Savings Committee:\n\"There has boun an eager and enthusiastic response to this\nprogram. From now on, at least $1,000 weekly will result from\nthis system, thereby aiding the Government in its ever-\nincreasing National Defense Program and at the same time encour-\naging the habit of thrift among our employees.\"\n+ % # * * *\nMINNESOTA\nCharles F. Liscomb, insurance man and former president of the Duluth\nChamber of Commerce, has been appointed chairman of the Dofense Savings Com-\nmittee for Duluth; Robert F. Pack, president of the Northern States Power\nCompany, has been named chairman of the Defense Savings Committee for\nMinneapolis; and Ray F, Wentz, vice president of the Minnesota Federation of\nLabor and business reprosentative of the St. Paul Trades and Labor Assembly,\nhas been appointed chairman of the Defense Savings Committee for St, Paul\nand Ramsey County, Minnesota. In accepting his assointment, Mr. Wentz said:\n\"Labor and industry will work in closest harmony in this impor-\ntant effort. We are all volunteering our time because this is a\nbig task in which we all must cooperate. Our country needs our\nhelp, and it is of the utmost importance that people in all walks\nof lifu invest in their Government.\"\n*....\nNEW JERSEY\nThe West End Theater in Newark is no longer giving away dishes. Letter\nCarrier Goldenberg persuaded the manager to try giving away ten cent Defense\nSavings Stamps and to see how his customers liked the idea. They were\nenthusiastic! A representative of State Administrator Manning addressed the\ntheater audience the first night the stamps were given away. A reporter\nfrom the Nowark Evening News interviewed scores who had received their first\nDefense Stamps and had dotermined to begin saving for bonds.\n5 -\nRegraded Unclassified\nAQUATENNIAL DEFENSE BOND FLOAT\nA featured attraction in the parades held in connection with the Mionespolis Aquatennial was the flont pictured\nabove, the contribution of the Great Northern Railway\nPOLISH SOCIETIES START DEFENSE BOND DRIVE\nReposentatives of Polish lodges in\nUndgeport, Community for Defense\nNomber 05 first step in campaign to\ncurromage lodge menthers to partici-\njerre 111 atelense suvings compaign.\nFrom lotte Dr. B.L. Smy-\nchairman of the central\ncommuter; Very Rev. Charles B.\nS \"I\" D. (), O.M.C., pastor\nof SU Michael Church Anthony\nassistant trensurer of\n36, Framis Loibe: and Michael\nPolitidy, president of St. Francis\nbeige With backs to comerac C'.\nLetting Guild, assistant secretary,\nTol dobie F. Wegezyn, teller, of the\nstectanics and Furmers Savings\nBrook.\n, HOTOS OHIO - o sector\nRegraded Unclassified\n15\nMISSOURI\nBusiness Finding Many Ways to Publicize Program\nThe Public Service Company of St, Louis has contributed streetcar and\nbus cards of original and striking design to advertise the Defense Savings\nProgram. The cards remind one of the American flag, as they carry a sketch\nof the Minute Man in the center of a fiold of blue with clternating red and\nwhite stripes in which appear the words, \"Buy U. S. Savings Bonds and Stamps.\"\nThe John Taylor Dry Goods Company in Kansas City has made its \"stamp\nbank\" easy to find-red, white and blue bands and ribbons suspended from the\ncoiling, and arrows bearing the words \"Defense Stamps,\" direct traffic in the\ndepartment store to the office where Defense Savings Stamps are on sale.\nThe Stupp Brothers Bridge and Iron Company of St. Louis, working largoly\non defonse contracts, post $25 Defense Bonds as bonuses to be paid to all\nemployees present on all working days and directly participating in the month-\nly tonnage quotes.\nMerchants of Warrensburg designate \"Defense Savings Stamp Days.\" On\nthese days, Dufense Savings Stamps are given away with sales.\nThe regular weekly \"Morchants\" Drawing\" in Sturgeon awards Defense Savings\nStamps as prises. Moving pictures of such drawings are shown under the aus-\npices of the Sturgoon Defense Savings Committee at meetings where the Defense\nSavings Program is explained.\n*****\nThe Missouri Legislature has adopted = resolution endorsing the Defense\nSavings Program.\nThe annual convention of the Missouri Federation of Women's Clubs heard\nun address by Stete Administrator Dan K. New and then passed & resolution\nheartily endorsing the Defense Savings Program.\nThe \"Defense-O-Grams\" of Administrator New an being well received and\nwidely reprinted in Missouri newspapers. From Defense-O-Grum Number 4:-\n\"Be Prepared' is the alogan of one of the greatest American Youth\nOrganizations\nIt is also the watchword of America today, when\nDemocracy is being challenged. Boy Scouts, and in fact, all American\nyouth can best serve their country now by buying Dofense Savings Stamps\nWILL YOU DO YOUR PART?\n...\nSee your Postmaster today.\"\nPrizes at the Bothiny County Fair - some $5,000 will be paid in De-\nfunse Savings Bonds and Stamps this year. Postmaster Walter Bartlett, chair-\nmin of the Bethany Defense Sevings Committee, has also arranged for booths at\nthe fair grounds where Defense Savings Stamps will be sold.\n- 7 -\nRegraded Unclassified\n17\nFATRULL ALLUTMENT IN INDIANA\nSome of the largest business establishments in the state have ind1-\ncated that they have installed, or would soon install, payroll allotment\nplans for the purchase of Defense Savings Bonds. Among these large cone\ncerns are:\nBendix Aviation Corporation\nEli Lilly and Company\nNo. H. Block Company\nLincoln National Life Insurance Co.\nGeneral Motors Corporation\nPosture Research Corporation\n(Allison & Chevrolet plants in\nReal Silk Hosiery Mills, Inc.\nIndianapolis; other plants in\nH. P. Wasson & Company\nAnderson, Kokomo and Muncie)\nU. S. Rubber Company\nIndiana Power & Light Company\n(Plants in Indianapolis and\nIndianapolis Street Railways\nMishawaka)\nSTREET CAR AND BUS WORKERS TO INVEST IN DEFENSE\nIn addition to the Indianapolis Street Railways, noted above, two other\nstreet car and bus companies have installed salary allotment plans.\nThe Chicago Surface Lines' plan was announced by Charles W. Chase, who\nsaid:\n\"The Plan will serve a two-fold purpose. It provides a safe\nmedium for regular savings by employees and it furnishes an\nopportunity to aid the Government in financing of the national\ndefense program,\"\nThe Capital Transit Company in Washington, D. C. has also made it pos-\nsible for its employees to buy Defense Savings Bonds through pay allotments,\nBOTH EMPLOYERS AND EMPLOYEES BENEFIT\nHow Do Salary Allotment Plans Benefit The Employee? They provide simple,\neasy and automatic means by which the employee can save regularly any amount\nhe or she can afford. The salary allotment plan gives the employee an opportunity\nto do his or her patriotic duty. It prevents carelessness or forgetfulness,\nand assures an uninterrupted program of savings each pay period, with a mini-\nmain of effort on the part of the employee, It prevents the employee from skipping\nsavings period and spending the money for non-essentials. Remember the old\nsaying about the road being paved with good intentions.\nDoes A Salary Allotment Plan Benefit The Employer? This plan gives an\nemployer an opportunity to do a patriotic duty. It builds morale in his or-\nganization. It is safe to say that any employer who is blessed with thrifty,\nloyal, patriotic employees is for better off than one whose employees lack\nthese qualities. It is hard to imagine any employer who would desire employ-\neeg who never save a cent, or who care nothing for their country.\nFrom \"Salary Allotment Plan Applied to the\nDefense Savings Program,\" a publication of\nithe Defense Savings Staff. Now available,\n-\nRegraded Unclassified\n18\nBANKS ADVISE ALLOTMENT PLANS\nBANKS THROUGHOUT THE COUNTRY are now making a most valuable contribution\nto the Defense Savings Program by consulting and advising with employers with\nrespect to the establishmunt in their plants and offices of voluntary salary\nAllotment plans for the purchase of Dofense Savings Bonds.\nIN SEATTLE, the Seattle Trust and Savings Bank notifiod companies and\ncorporations which use its facilities:\n\"The Unitod States Government has developed a very sound program\nfor financing National Defense,\nYou can cooperate by urging\nyour officers and employees to purchase regularly United States\nDefense Savings Bonds and Stamps.\n\"We will assist you, if you wish, in installing one of several ef-\nfective and practical plans to expedite and service such purchases\nby members of your organization, without compensation or profit to\nourselves\nTHE FIRST CONCERN to take advantage of the Seattle Trust Company's\noffer was the United Nati nal Companies. This organization with 400 employees\ngave each one a 50¢ Stamp in an album and promised thom the last Stamp nec-\nessary to complete an album for exchange for a $50 Bond.\n# #\nIN HARTFORD, the Hartford National Bank and Trust Company addressed its\nbusiness and industrial customers:\n\"Adoption of n salary allotment olan for your employees would en-\nable many to purchase Defense Bonds who might not otherwise invest\nin and contribute towards National Defense. This bank is pre-\npared and anxious to aid its customers and friends with suggestions,\nforms and ideas in putting n. salary allotment plan into operation.\"\nR. B. Newell, President of the Hartford National, is Chairman of the\nDefense Savings Committee for Connecticut.\n+ 4b\nIN NEW HAVEN, nine prominent banks advertised in the nowspaper that\ntheir employees were purchasing Defense Savings Bonds through salary allot-\nment and that they united in urging all employers to adopt salary allotmont\nolans for the benefit of their employees.\nIN NEW YORK, the New York Trust Company has announced that it has do-\nvised 3 payroll allotment plan for the purchase of Series E Defense Savings\nBonds and that its\n\"facilities are available to expedite the purchase, registration and\ndelivery of these Bonds to the employees of corporations which install\nsuch plans.\"\n-\nE\n- 10 -\nRegraded Unclassified\n19\nPAY ROLL ALLOTMENT PLANS DESCRIBED\nSome of the most prominent business organizations in the United States\ngive full details of the plans permitting their employees to participate\nconveniently in the Defense Savings Program, in the pamphlets listed below:\nAMERICAN TELEPHONE & TELEGRAPH COMPANY\n\"Pay Roll Allotment Plan for United States Savings Bonds\" (Subsidiary\ncompanies have descriptive pamphlets very similar in format and content.)\nASSOCIATION OF AMERICAN RAILROADS\n\"For American Railroad Employees-A Systematic Plan for the Purchase\nof U. S. Defense Savings Bonds\" (More than 100 different railroad\ncompanies have ordered copies of this pamphlet bearing their own imprint.)\nBETHLEHEM STEEL CORPORATION\n\"Defense Savings Plan\"\nBOEING AIRCRAFT CORPORATION\n\"Voluntary Payroll Deduction Plan for Purchase of United States\nSavings Bonds\"\nCHRYSLER CORPORATION\n\"A Plan for Chrysler Corporation Employees Who Desire to Purchase U. S.\nGovernment Defense Savings Bonds Through Voluntary Pay Roll Deductions\"\nFEDERAL RESERVE SYSTEM\n\"Voluntary Pay Roll Deduction Plan for Purchase of Defense Savings Bonds\"\nGENERAL ELECTRIC COMPANY\n\"Defense Savings Plan\"\nMISSISSIPPI POWER & LIGHT COMPANY\n\"Voluntary Pay Roll Allotment Plan for Purchase of U. S. Defense\nSavings Bonds and Sale of Defense Postal Savings Stamps to Employees\nand Public\"\nMURRAY CORPORATION OF AMERICA\n\"Systematic Savings Plan for the Purchase of U. S. Defense Savings Bonds\"\nNORTHERN PACIFIC RAILWAY\n\"An Investment Opportunity for Northern Pacific Employees\"\nPHILLIPS PETROLEUM COMPANY\n\"Voluntary Pay Roll Deduction Plan for the Purchase of U. S. Defense\nSavings Bonds\"\nPUBLIC SERVICE CORPORATION OF NEW JERSEY\n\"Plan for Purchase of U. 5. Defense Savings Bonds, Series 3, By\nEmployees\"\nSTANDARD on COMPANY OF NEW JERSEY\n\"United States Savings Bonds National Defense Program - Esso Employee\nPurchase Plans\"\nUNITED AIRCRAFT CORPORATION\n\"Voluntary Pay Roll Deduction Plan for Purchase of Defense Savings Bonds\"\nU. S. RUBBER COMPANY\n\"Systematic Savings Plan for the Purchase of U. S. Defense Savings Bonds\"\nThese are only a few of the corporations which have issued pamphlets dem\ncribing their Defense Savings salary allotment plans. Others may be noted in\nlater issues of this NEWS LETTER.\n-\n11 -\nRegraded Unclassified\n20\nTEACHERS LEARN OF DEFENSE SAVINGS PROGRAM\nSTUDENTS IN SUMMER SESSIONS conducted by 800 colleges and universities\nare hearing about the Defense Savings Program. The Treasury recently wrote to\nthe deans of these summer sessions and offered to make Defense Savings\npamphlets available for distribution to their students. Almost all of the\ndeans responded by requesting a sufficient number of pamphlets to place\ncopies in the hands of all their students,\nMANY OF THESE STUDENTS WILL BE TEACHERS in the fall; hence, the impor-\ntance of bringing the Defense Savings Program to their attention is apparent.\nIt is suggested that state and local committees follow up this contact,\noffer to provide speakers for summer school assemblies, and make sure\nthat both Defense Savings Bonds and Stamps are conveniently available\nto this important group through campus postal stations, bookstores, and\nnearby banks,\nSCHOOLS TO HAVE SPECIAL LITERATURE\nWHEN SCHOOLS OPEN in September, all state and county superintendents of\nschools and all school superintendents in cities of more than 2,500 will have\nbefore them a copy of a letter from Harold N. Graves, Assistant to the\nSecretary of the Treasury, to John W. Studebaker, United Statos Commissioner\nof Education. In this letter, Mr. Graves explains:\n\"The Treasury Department is interested in the participation of\nthe public schools as the great national agency of education, more\nthan as an outlet for the sale of defense securities.\nShould\nsome school or class, of its own free will, desire to cooperate with\nthe Defense Program by instituting a plan for the purchase of bonds\nand stamps, we would welcome the patriotic purpose. But the Govern-\nment has no desire to coerce, solicit or urgently influence the\npublic schools of America tc become sales agencies for bonds and\nstamps.\n\"The Federal Government, through the Treasury Department and\nthe Office of Education, plans to furnish for use by the schools a\nseries of manuals, text and syllabi which schools can secure, with-\nout cost, for the use of their classes and school libraries.\n\"The various manuals, pamphlets, source books, and syllabi\ncan be secured by any school from the county or city Defonse Savings\nCommittee where the school is located.\n\"\nAVAILABILITY OF THE MATERIAL will be announced in the pages of the\nNEWS LETTER.\n- plactice BEFREE\n- 12 -\nRegraded Unclassified\n21\nSTAMPS\nNumber and Variety of Outlets Increasing Rapidly\nTHE VARIETY OF CUTLETS for the sale of Defense Savings Stamps is\nindicated by the following partial list of agencies which are known to\nhave them for sale:\nPost offices\nIncluding postal branches and sub-stations, there are\nabout 24,000 postal outlets.\nRural mail carriers\nAuthority for postmasters to advance Defense Savings\nStamps to their rural carriers has been granted by\nthe Post Office Department. There are about 32,000\nrural mail carriers.\nBanks and other financial institutions\nRailroad ticket offices\nRetail stores\n)\nThe number of retail outlets selling\ndrug stores\n)\nDefense Savings Stamps is increasing\ngrocery stores\n)\nrapidly. In all parts of the country\ndopartment stores\nindependent merchants and chain stores\nclothing stores\n)\nare establishing \"stamp banks\" and,\nvarioty and\n)\nthrough advertising and in other ways,\nlimited price stores\n)\npushing Stamp sales. Customers appre-\nHotels\nciate the convenience of being able\nRestaurants\n)\nto buy Defense Savings Stamps when\nMotion picture theatres\nmaking other purchases.\nFilling stations\n)\n\"BUY DEFENSE SAVINGS STALPS HERE\" plaques and replicas which the Treasury\nDepartment is providing retailers who undertake to sell Dofense Savings Stamps\nare now available. (The July 12 issue of the NEWS LETTER included the 8 x 10\ninch replica.) The distribution of these plaques, replicas, posters and signs\nLa being worked out by the Defense Savings Staff in cooperation with State and\nlocal Defense Savings Committees and various national trade associations. A\nbullotin on this subject has becn sent to all State Administrators.\n#\n42\nLOCAL COM.ITTEES will be largely responsible for the success of the cam-\npaign to sell (not merely place on salo) Defenso Savings Stamps through\nretail outlets. They will be depended upon to\n1) explain the importance of the Defense Savings Program to those\ndirectly responsible for the sale of the stamps;\n2) arouse and sustain an enlightened interest in the philosophy of\nthe Defense Savings Program;\n3) dramatize the Program in various ways.\nREPORTS FROM LOCAL COMMITTEES which give an over-all picture of and\ninteresting incidents in the Defense Savings Stamp Program in their communi-\nties will be summarized in the NOWS LETTER.\n- 13\nRegraded Unclassified\n22\nPURCHASERS THO MADE HEADLINES\nIn Bridgeport, Conn.-Sam Aronson, Russian-born pants presser, out 3100 of his\nsavings into a Defense Bond and named the U. S. Government as beneficiary\nin the event that he dies before its maturity. The Bridgeport Times-Ster\nquotes him as saying:\n\"I've enjoyed my freedom here, the opportunity to go and come\nas I please. People who grumble should look at Europe with\nits dictators and its bloodshed and take some of the world's\ngoods they've accumulated hore and invest it in the greatest\nnation on the face of the earth.\"\nIn Buffalo, N. Y.-John Paskuly, tall, husky restaurant owner, appeared in\nthe office of Assistant Postmaster John E. Keyes with three one-gallon\njars filled with pennios and said he would return later with two more\njugs, making enough \"coppers\" to complete payment for = 3500 Defonse\nSavings Bond. Asked how he happened to save all the pennics, he repliods\n\"Why, when my wife, Georgia, and I closo the restaurant each\nnight, we tako all the pennica from the each register and drop\nthem in the jars.\"\nIn Nashville, Tonn.-Pivo prisoncrs at the State Ponitentiary-two of them\nsorving life torms for murder-purchased substantial blocks of Defonse\nSavings Bonds and Stamps, Johnny Vaughn bought 0650 worth of Bonds,\nand the Nashville Tennessean quotes him 30 saying:\n\"If I can't use the money, Unclo Sam can. Maybe it'll spell\ncurtains for Hitler.\"\nIn New York City-Camp Fire Girls from Hilloide ilomes in the Bronx visitod\nNew York's Postmaster Albort Goldman to receive his congratulations on\nbeing the first \"100% for Defense Savinga\" Camp Firo Group in the United\nStates.\nIn Orlando, Fla.-John Bravos, & naturalized American born in Grooce, who\noperates a hat cleaning establishment, purchased $300 worth of Dofenso\nSavings Bonds as an investment for his childron, and then bought Defense\nSavings Stamps for each of his employees.\nIn Washington, D. C.-Boy Scout Troop 112 of Arlington, Virginia, purchased a\nDefense Savings Bond at Treasury House from Gale F. Johnston, National\nField Director of the Defense Savings Staff. Sonior Patrol Loader David\nYagor, representing the troop, paid for the Bond with moncy saved during\nthe past year for a new troop flag and originally raised by sale of the\ntroop's mascot - a goat.\nIn Whitesboro, Texas-Ronald Edison Ranoy, 10 weeks, and Charles Alford\nTarpley, 18 months, are reported to to two of this city's youngest\nfinanciers. Both are the proud owners of Defense Savings Bonds. Young\nTarpley bought his Bond with his \"chicken and 028 money.\" His father is\nc. railroad telegraph operator.\n(#)owspapers used photographs in tolling these storios.)\n- 14\nRegraded Unclassified\nWIN DEFENSE BONDS IN ESSAY CONTEST\nMILK BOTTLES ENLISTED\nDEFENSE\nFOR\nBUY\nUnited States\nEssay Cointest Winners En Route to National Convention in Phila-\nVin Lost to right, first prize winner, Grace Langley, 17, of Red Wing,\nDefense Bonds\nprise winner. Robert Gibsun, 10, of Cornred Alene, Idaho:\nprice \" inner, Senorita Victoria Lopez, 10, of Sim Juan P.R.\nand Stamps\nLa Grandin Field, New York, for Independence Holl, and the Elke\nand Consention in Philadelphia where they received honors AS win-\nnot (ke Klve Delense Essay Contest. Prize- of $1,000, $500, 8250,\n3/00 in Defense Savings Bonds were unwarded for the four best\natte \"What Unito Sini Menus to Me.\"\nWinner of the third prive\nBecause\nWarryn Biermon, 17, of Unreisburg. Pm\nYOUR\nMONEY\nWILL\nTO\nWORK\n-\n-\n1\nwill\nsalt\nYOUR\nMONEY\nlive nother reaches for the morning milk, «he will be remitated of the\nThe\nV\nput\nSavings Program. Milk companies distributing milk in paper\n-\nThe are now proving Defense Savings intessages on one side Pic-\nIT the right i- the container by Dairy Souled, Inc. New York\n(ty, and the companies in the Borden groups\nRegraded Unclassified\n24\nDEFENSE SAVINGS ON THE AIR\nLeading Programs for the Coming Week\nTuesday, July 29\nFOR AMERICA WE SING\n7:30-8:00 P.M. (EST)\nNBC Blue Network\nA musical program featuring a 44-piece NBC symphony orchestra and chorus,\nconducted by Dr. Frank Black.\nGIEST STARS: Helen Jepson and Frank Parker.\nThis program, dedicated to Defense Savings, has been contributed by the\nNational Broadcasting Company. It will be heard regularly each week during\nthe coming year.\nWednesday, July 30\nMILLIONS FOR DEFENSE\n8:00-9:00 P.M. (EST)\n(The Treasury Hour)\nCBS Network\nGUEST STARS: Bette Davis, Jack Benny and Company, Larry Adler, Tyrone\nPower, Gertrude Neison, with Al Goodman and his band, Barry Wood and Ray\nBlock's choir.\nTime for this program is contributed by the Texas Company. This La the fifth\nin a 13-week series\nSunday, August 3\nAMERICA PREFERRED\n1,15-2,00 P.M. (EST)\nMBS Network\nNARRATOR: Pierre Van Passsen, noted author\nGUEST ARTIST: Ania Dorfmann, pianist\nForeign-born authors, artists, and other distinguished persons who\n\"preferred America\" appear on this scries of programs, contributed\nby the Mutual Broadcasting System. This is the fourth program in\na 10-wack series.\n*\n*\n#\n\"My people's freedom only dates back as far as the memory of some men\nwho are still living - and we set a higher value on liberty, perhaps, than\nthose who have known it for many generations. We know that our one hope\nfor the future lies in preserving democracy in America - and we want to\nfight for democracy in every way we can. That is why we are so strongly\nfor the United States Defense Bonds and Stamps - They give us all a chance\nto take part in the Dofense Effort. My people are not all well-to-do; but\nrich or poor, I know we will buy bonda and stamps to the limit in order to\nhelp defend our country. Our hope lies hore.\"\n-Dorothy Maynor, Famous Negro Singer, speaking\nas a guest star on \"Willions For Defonse.\"\n16\nRegraded Unclassified\n25\nQUOTABLE QUOTES--\n\"n5 I write, it is not clear whether our country is at war and it may\nnot be any clearer when you read this. But whether we are at wer or not,\neveryone knows that we are engaged in e Defense Program involving huge ex-\npenditures for arms, aircraft, ships, camps and the thousand and one things\nnecessary to prepare our country to defend itself,\nThe Defense Program has improved all business, our own included,\nand this improvement has led to better employee earnings due to longer hours,\nfuller employment and better rates.\nI recommend to you without reserve-\ntion these United States Savings Ponds and hope you will help your Government\nand yourself by buying them regularly and generously.\"\n--F. E: Pritchard, President,\nThe Stanley Works, New Britain, Conn.\n\"Billions of dollars are required by our government for national defense.\nReising this money is not too difficult; but raising it without destroying our\nnational production machinery, or without creating a period of uncontrolled\ninflation is a problem that can be solved only by the understanding cooperation\nof every citizen. It is proposed to raise the necessary funds through taxetion,\nand by berrowing, The borrowing is to be done, in part, through the sale of\nDefense Savings Bonde to as many individuals as will buy them.\n\"The more people who purchase these bonds, the less the danger of post-wer\nad justment.\n--George C. Long, Jr., President,\nPhoenix Insurance Company.\nCivilians with increased purchasing power to use in purchasing a\nrestricted supply of goods have a choice between saving and spending. If they\nsave part of their income, they must do without certain material comforts, but\nthey have something to show for it. If they spend all they earn, they boost\nprices, and are forced to accept lower living standards without having e re-\nserve fund to compensate them for their deprivations.\n--The Washington Post, Washington, D. C.\n\"The predominant duty and responsibility resting today on every banker is\nto give active, loyal and patriotic service towerds the sale of Defense Fonds,\nShould this country ever find itself unable to defend itself, your bank\nwill be of littlo meaning to you or your patrons. It will become a memory of\nhow things used to be, but no longer ere,\n\"Every banker who desires the continued respect and confidence of his\nneighborhood should identify himself with this great program to his utmost\nability and energy. What he does now will be long remambered,\"\n--Idaho Bankers Association Bulletin\n- - -\n1? -\nRegraded Unclassified\n26\nTREASURY department\nWASHINGTON\nJuly 26, 1941\nMemorandum for THE SECRETARY:\nThe following report is made of Stamp sales\nat \"Treasury House\":\nJuly 1-24\n$18,504.10\nJuly 25\n969.65\nTotal\n$19,473.75\nGRAVES\nRegraded Unclassified\n27\nTREASURY DEPARTMENT\nWASHINGTON\nJuly 26, 1941\nMemorandum for THE SECRETARY\nThe following report is made of requests received\nfor \"Any Bonds Today?\" from the experimental mailing of\n10,000 cards:\nNo. Requests\nNo. Copies\nJuly 1 - 24\n1060\n6010\nJuly 25\n16\n253*\n1076\n6263\n*200 copies requested by a librarian\nGRAVES\nRegraded Unclassified\n28\nCONFIDENTIAL\nUNITED STATES SAVINGS BONDS\nSales in July Compared with June, 1941\nOn Basis of Issue Price\nFirst Twenty-one Business Days\n(June 1-25, July 1-25)\n(Amounts in thousands of dollars)\n:\n:\nSales\nIncrease or Decrease (-)\n:\n:\nItem\nin July Compared with June\n:\n:\n:\nJuly\nJune\n:\nAmount\nPercent\n:\n:\n:\n:\nSeries 1- Post Offices\n$ 41,993\n$ 33,788\n$ 8,205\n24.3%\nSeries E 1- Banks\n78,072\n51,996\n26,076\n50,2\nSeries E - Total\n120,065\n85,784\n34,281\n40.0\nSeries F - Banks\n20.993\n25,048\n-\n4,055\n- 16.2\nSeries G - Banks\n131,287\n160,194\n-\n28,907\n- 18.0\nTotal\n$272,346\n$271,026\n$ 1,320\n0.5%\nOffice of the Secretary of the Treasury,\nJuly 26, 1941.\nDivision of Research and Statistics.\nSource: All figures are deposits with the Treasurer of the United States\non account of proceeds of sales of United States Savings Bonds.\nNote: Figures have been rounded to nearest thousand and will not\nnecessarily add to totals.\nCONFIDENTIAL\nUNITED STATES SAVINGS BONDS\nDaily Sales - July 1941\nOn Basis of Issue Price\n(In thousands of dollars)\nPost Office\nDate\nAll Bond Sales\nBank Bond Sales\nBond Sales\nTotal\nSeries Il\nSeries I\nSeries G\nSeries I\nTotal\nSeries I\nSeries 1\nSeries G\nJuly 1941\n1\n$ 9,505\n$ 2,387\n$\n957\n$ 6,160\n$\n595\n$ 8,910\n$ 1,793\n$\n957\n* 6,160\n2\n11,612\n4,066\n845\n6,701\n1,735\n9,877\n2,331\n845\n6,701\n3\n15,045\n4,903\n843\n9,299\n2,077\n12,969\n2,827\n843\n9,299\n5\n22,900\n9,589\n2,437\n10,875\n3,191\n19,709\n6,397\n2,437\n10,875\n7\n11,028\n6,315\n472\n4,242\n3,908\n7,120\n2,407\n472\n4,242\n8\n11,226\n4,867\n1,197\n5,162\n1,346\n9,881\n3,522\n1,197\n5,162\n9\n16,570\n6,277\n580\n9,413\n2,229\n14,341\n4,048\n880\n9,413\n10\n11,430\n6,018\n605\n4,808\n2,459\n8,972\n3.559\n605\n4,808\n11\n16,311\n8,504\n1,197\n6,610\n2,405\n13,905\n6,098\n1,197\n6,610\n12\n12,689\n4,482\n860\n7.347\n1,672\n11,017\n2,810\n860\n7,347\n14\n13,435\n7,754\n1,046\n4,636\n3,060\n10,375\n4,693\n1,046\n4,636\n15\n10,083\n4,754\n602\n4,728\n1,458\n8,625\n3,296\n602\n4,728\n16\n11,994\n5,541\n808\n5,645\n1,645\n10,349\n3,896\n808\n5,645\n17\n15,332\n6,213\n1,189\n7.930\n1,799\n13,533\n4,414\n1,189\n7,930\n18\n12,404\n6,730\n836\n4,837\n2,042\n10,362\n4,689\n836\n4,837\n19\n7.553\n4,513\n926\n2,114\n1,505\n6,048\n3,007\n926\n2,114\n21\n14,136\n7,105\n1,015\n6,016\n3.060\n11,076\n4,046\n1,015\n6,016\n22\n12,191\n3,820\n1,208\n7,164\n1,001\n11,191\n2,819\n1,208\n7,164\n23\n14,677\n5,018\n1,208\n8,451\n1,514\n13,163\n3,505\n1,208\n8,451\n24\n11,634\n5,382\n959\n5,293\n1,623\n10,011\n3.759\n959\n5,293\n25\n10,589\n5,828\n904\n3,857\n1,670\n8,919\n4,158\n904\n3.857\nTotal\n$272,346\n$120,065\n$ 20,993\n$131,287\n$ 41,993\n$230,353\n$ 78,072\n$ 20,993\n$131,287\nOffice of the Secretary of the Treasury, Division of Research and Statistics.\nJuly 26, 1941.\n30\n30t MIDD /\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE July 26, 1941\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nCONFIDENTIAL\nRegistered sterling transactions of the reporting banks were as follows:\nSold to commercial concerns\n£16,000\nPurchased from commercial concerns\n£ 1,000\nIn the open market, sterling was first quoted at 4.04. Shortly there-\nafter, it moved to 4.03-3/4, closing at that level, There were no reported\ntransactions.\nThe New York Exchange market suspended quotations for the Chinese yuan\nand Japanese yen today.\nClosing quotations for the foreign currencies lieted below were as fol-\nlowe:\nCanadian dollar\n11-5/8% discount\nArgentine peso (free)\n.2380\nBrazilian milreis (free)\n.0505\nUruguayan peso (free)\n.4380\nColombian peso\n.5800\nMexican peso\n.2070\nCuban peso\n1-1/48 discount\nThe New York banks reported that they had received actual quotations for\nthe dollar and British pound from Shanghai this morning. In terms of our cur-\nrency, the yuan fell 5/32# to 5-3/16#. Reflecting & relatively greater de-\ncline of the yuan against the British pound, sterling in Shanghai was quoted\nat 3.96-3/8, up 1-7/80.\nThere were no gold transactions consummated by us today.\nThe Federal Reserve Bank of New York reported that the Bank of Canada\nshipped $2,634,000 in gold from Canada to the Federal for account of the\nGovernment of Canada, for sale to the New York Assay Office.\nThe State Department forwarded a cable to us reporting that the Guaranty\nTrust Company, London, shipped $51,000 in gold from England to the head office\nin New York, for sale to the New York Assay Office.\nN.M.S.\nRegraded Unclassified\n31\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE July 26, 1941\nTO\nFROM\nMr. Mr. further\nIn response to your request of December 26,\n1939, there 1s submitted herewith for the Division of\nResearch and Statistics a memorandum listing, with brief\ndescriptions, the studies or projects completed or under\nway, and the names of persons working on each, for the\nmonth of June 1941.\n32\nDIVISION OF RESEARCH AND STATISTICS\nReport of Studies or Projects Completed or Under\nWay, and the Names of Persons Working on Each,\nfor the month of June 1941\nFor convenience of reference, the studies listed are\ngrouped under general subject heads.\nThe names shown for persons working on each project\ninclude only those who participated fairly directly, as\nexplained in the introductory note to the corresponding\nreport submitted on December 28, 1939. No attempt has\nbeen made to cover also persons whose responsibility in\neach particular case was mainly in planning, supervising,\nor consulting.\nFinancial Analysis\nI. Projects or studies completed\n1. Reviewe of current developments in the high-grade ae-\ncurities markets were prepared, and memoranda were\ntransmitted to the Secretary on June 3 and 17. - Mr. Haae,\nMr. Turner, Mr. Matlock, Mr. Barnett\nThese reviews contained, in addition to analysis of\nthe current situation, the following special studies:\n(a) The new Treasury bond (Review of June 3, page 2). -\nMr. Turner\n(b) Difference in yield between taxable and tax-exempt\nGovernment securities (Review of June 3, page 3). -\nMr. Turner\n(c) Bank holdings of Government securities (Review of\nJune 17, page 3) Mr. Turner\n(a) Canada's Third Victory War Loan (Review of June 17,\npage 4). - Mr. Matlock\n2. Yield rates on United States securities, direct and guar-\nanteed, on the basis of over-the-counter closing quota-\ntions were calculated daily. These were summarized each\nday In a table showing for each issue the closing price\nand yield that day, the change in price and yield from\nthe preceding day, and the price range since the date on\nwhich first traded and also for the year 1941 to date.\nRegraded Unclassified\n33\n- 2 -\nA chart for each issue was kept up to date showing re-\ncent daily price and yield figures, together with com-\nparative monthly data since 1934, since date of issue,\nor since the date first traded. Similar calculations\nare made daily on the basis of New York Stook Exchange\nclosing quotations on direct and guaranteed bonds of the\nUnited States, for use in preparation of the publication\n\"Market Prices and Yields of Outstanding Bonde, Notes,\nand Bills of the United States\", described under Publica-\ntions in this report. - Mr. Moody, Miss McCoy, Mr. Kroll\n3. At the request of the Secretary, arrangements have been\nmade to seoure periodically from the British Empire\npurchasing missions certain information regarding pur-\nchases in the United States by the British Empire. -\nMr. Haas, Mr. Lindow, Mr. Wagner, Mr. March\n(a) Weekly statements are received covering the item-\nized purchases by British Empire Governments\nthrough the various missions, the itemized pur-\nchases made by these Governments with the knowl-\nedge of the missions but not through their facil-\nities, and inquiries made through the missions for\nfuture purchases. Similar statements are received\nshowing, by itemized contracts, deliveries made\nwith respect to orders placed by the United Kingdom\nthrough the missions. The details with respect to\norders and deliveries are classified by some twenty-\nfive commodity groups designed especially for the\npurpose.\nThese data are reviewed and edited in the Division\neach week and a report 18 then prepared summarizing\nin dollar volume the information on orders and de-\nliveries, by commodity groups. This report con-\nsists of eight statements: the first three summarize\norders placed by the individual governments of the\nBritish Empire for the current week and the totals\nto date; the next three statements summarize total\norders of the British Empire on an historical basis;\nthe last two statements present data on deliveries\nwith respect to orders placed by the United Kingdom\nthrough the British missions. These weekly commodity\nstatements were prepared, and were transmitted on\nJune 7, 13, 20, and 27, according to instructions by\nthe Secretary.\nRegraded Unclassified\n34\n- 3 -\n(b) The Division also receives each week the data\nrequired to prepare statements giving the de-\ntails concerning the physical volume of airplane\nand airplane engine orders in the United States\nby the British Empire. The material for these\nstatements 18 contained in a group of work sheets\nprepared by the British Purchasing Commission,\nbut it 18 necessary for the Division to consoli-\ndate and coordinate the information contained in\nthe Commission's statements. The finished tables\nshow, by company and by type of plane or engine,\nthe following information: (1) summary of orders,\ndeliveries, and exports; (2) history of orders;\n(3) history of deliveries; (4) history of exports;\n(5) scheduled deliveries of unfilled orders;\n(6) options: scheduled deliveries; (7) spare parts:\norders, deliveries, unfilled orders, and options;\nand (8) secondhand units: orders, deliveries, and\nscheduled deliveries of unfilled orders. These\naircraft reports were prepared, and were transmitted\non June 7, 13, 20, and 27, according to instructions\nby the Secretary\n(o) A series of six tables has been developed at the\nrequest of the Secretary to show each week the\ndisposition of airframes and engines inspected in\nthe United States by the British purchasing m18-\nsions, and the status of airframes and engines on\nhand in the United States. One table develops by\ncompany and by model the number of units on hand.\nA second table analyses the status of these units,\nand & third table presents the physical location\nof the units awaiting export. Separate tables\nare required for airframes and for engines. These\ntables were prepared, and were transmitted on\nJune 4, 9, 16, 24, and 30, according to instruc-\ntions by the Secretary.\n(d) Reports are prepared each week showing commitments\nby the British Empire Governments for capital ex-\npenditures in the United States and for extra-\nordinary charges designed to expedite deliveries.\nThe data for these statements are provided by the\nBritish Purchasing Commission but the tables\nactually are prepared in the Division. Tables\nshowing capital commitments were prepared, and\nwere transmitted on June 7, 13, 20, and 27, ao-\ncording to instructions by the Secretary.\nRegraded Unclassified\n35\n- 4\n(e) A group of nine analytical tables on British\nEmpire orders of iron and steel 16 prepared\nmonthly. Six of these cover commercial iron\nand steel, excluding ferro-alloys and drop\nforgings, and are classified by product. One\ntable covers ferro-alloys and silicon metals,\nand also 18 classified by product. The next\ntwo tables cover drop forgings and are classi-\nfied by manufacturer. Statements showing Brit-\n1sh Empire orders of iron and steel as of May 31,\nare in process of preparation.\n(f) Arrangements have been made to receive informa-\ntion on a physical volume basis for the orders,\ndeliveries, and dates of scheduled deliveries\non unfilled orders, with respect to several other\nimportant commodities. For each of these commodi-\nties the following tables are being prepared:\n(1) current delivery status of orders; (2) history\nof orders; (3) history of deliveries; and (4) sched-\nuled deliveries of unfilled orders. The data in\nthese tables are broken down by particular products,\nparticular models in each case, and particular\nmanufacturers.\nStatements covering various commodi ty groups were\nprepared, and were transmitted according to in-\nstructions by the Secretary as follows: (a) ord-\nnance, on June 16 and 24; (b) small arms ammuni-\ntion, on June 9; (c) sub-machine guns, revolvers\nand rifles, on June 20; (d) tanks and tank\nequipment, on June 27; and (e) small arms (fully\nautomatic),on June 4 and 20. In addition, work 18\nprogressing on the preparation of tables on each\nof the following commodity groups: (a) explosives\nand propellants; (b) chemicals; (o) shells and\nbombs; (d) non-ferrous metals; (e) motor vehicles;\n(f) small boats and ships; and (g) marine engines.\n(E) Certain financial information concerning the orders\nplaced in the United States by the British Empire\n18 presented in B. monthly report. This report\nconsists of three tables, showing by commodity groups\nthe value of orders placed, the history of payments\nmade, and & forecast of future payments on unpaid\ncommitments. The report was prepared, and was trans-\nmitted on June 27, according to instructions by the\nSecretary.\nRegraded Unclassified\n36\n- 5 -\n(h) Arrangements have been made with the Citadel\nMerchandising Company, Ltd., a Canadian Govern-\nment corporation, to receive regular reports\nshowing orders placed for machine tools in the\nUnited States, and deliveries on these orders.\nFrom this information the Division will be able\nto prepare reports summarizing Citadel orders,\ndeliveries, and unfilled orders, classified by\ncompanies. Delays in the receipt of necessary\ninformation have held up completion of the planned\nreports.\n#. At the request of the Secretary, a memorandum W&B pre-\npared, and was forwarded to him on June 26, transmitting\nH sample set of documents involved in one day's trans-\nactions in connection with British purchases. - Mr. Hass\n5. At the request of the Secretary, arrangements have been\nuade to secure periodically certain information regard-\ning purchases in the United States by the Netherlands\nPurchasing Commission, and by Lindeteves, Ino. -\nMr. Hass, Mr. Lindow, Mr. Wagner, Mr. March\nStatements are received covering the itemized purchases\nby the Netherlands Purchasing Commission in the United\nStates, and the volume of deliveries made thereon.\nSimilar statements are received concerning the activ-\nities of Lindeteves, Inc., a large private commercial\norganization operating in the Dutch East Indies. The\ndetails with respect to orders and deliveries for these\npurchasing agencies are classified by the same twenty-\nfive commodity groups used for reporting orders placed\nin the United States by the British Empire.\nThese data are reviewed and edited in the Division,\nReports are then prepared for each of these agencies\nsummarizing the information on orders and deliveries,\nclassified by commodity groups. These reports consist\nof three statements: the first shows the history of\norders placed; the second shows the history of deliveries\nmade on these orders; and the third shows the current de-\nlivery status of orders. These commodity statements\ncovering orders of the Netherlands Purchasing Commission\nwere prepared, and were transmitted on June 7, 13, and 20,\nin accordance with instructions by the Secretary.\nSimilar statements for Lindeteves, Inc., were prepared,\nand were transmitted on June 7, 13, 20, and 27, also ac-\ncording to instructions by the Secretary.\nRegraded Unclassified\n37\n9 I I\n6. At the request of the Secretary on May 23, 1940, 87-\nrangements were made for securing weekly until\nSeptember 11, 1940, and since then fortnightly, from\nmore than forty airolane and airplane engine manu-\nfacturers data on deliveries, new orders, unfilled\norders, and estimated deliveries by months on the un-\nfilled orders. Analytical tables were prepared every\nother week showing this information by type of plane\nor engine and by class of purchaser. Reports for the\nfortnights ended June 7 and 21, were transmitted on\nJune 11 and 25, respectively, according to instrue-\ntions by the Secretary. - Mr. Hans, Mr. Tickton,\nMr. D. J. Leahy\n7. In response to a request by the Secretary on January 21,\nthat measures be taken to obtain information to assist\nin carrying through the defense financing program,\narrangements have been made to obtain the necessary\ndetailed statistics on the holdings of each issue of\nthe public debt and of guaranteed securities by the\nvarious classes of holders. - Mr. Haas, Mr. Tickton,\nK168 Westerman, Mrs. Wolkind, Mr. D. J. Leahy,\nMr. Mayo, Mr. Blitman, Mrs. Barnes, Mr. Alter\nA summary was prepared of the data received a.B. of\nApril 30, consisting of brief explanatory text and\nsix tables for publication in the Bulletin of the\nTreasury Department for June.\nThe information 88 of May 31 received in response to\nour letter of April 28, from 7,000 banks and insurance\ncompanies was coded, tabulated, and analyzed. A com-\nprehensive analysis was prepared, consisting of 100\ntables, showing this information, classified by type\nof institution, by issue, by geographic area, by call\nclasses, and by tax-exemption provisions.\nYes letters were sent out to the oanks and insurance\ncompanies on June 28, requesting comparable data as of\nJune 30.\n8. At the request of the Secretary on June 2, a memorandum\nWRB prepared, and was transmitted to him on June 6,\non a proposal to include a request for their cash 0081-\ntion in the monthly schedules sent to banks requesting\nthe detail of their Government bond portfolios. - Kr. Hase,\nMr. Murphy, Mr. Sancelin\nRegraded Unclassified\n38\n7\n9. At the request of the Secretary, arrangements have been\nmade to prepare current statistical reports on the sales\nof United States Defense savings bonds series E, F, and\nG, and Defense Postal savings stamps, on the basis of\nreports by the Federal Reserve Banks and the Post Office\nDepartment. - Mr. Haas, Mr. Reagh, Mr. Brown, Mr. Tickton.\nMr. Kroll, Mr. D. J. Leahy\n(a) Daily tables were prepared, showing the dollar vol-\nune, on the basis of the issue price, of sales of\neach of the three series of bonds, and stamps,\nwith totals, by Post Offices and by banks. The\ntable prepared on June 2 presented these data for\neach day of May, with totals for the month. The\nnext table, prepared on June 4, presented the totals\nfor the periods May 1 through 17, May 19 through 24,\nand May 26 through 31, for June 2, June 3, and the\ntotals from May 1 through June 3. Succeeding tables,\nbeginning with June 5, showed the data for each day\nof June, with cumulative totale. The table of\nJune 30 covered the period from June 2 through\nJune 28. The tables were transmitted according to\ninstructions by Mr. Graves.\n(b) Daily tables were prepared, beginning June 9, show-\ning the amount and percent of change in the dollar\nvolume, on the basis of the issue price, of sales\nin June compared with the sales in May, of each of\nthe three series of bonds, and stampe, with totals,\nby Post Offices and by banks. The table of June 9\ncompared the sales for the first six days of May\nand of June. The table of June 30 compared the\nsales for the first 28 days of each month. The\ntables were transmitted according to instructions\nby Mr. Graves.\n(a) Weekly tables were prepared, showing for the weeks\nending May 31, June 7, 14, and 21, the dollar\nvolume of sales, on the basis of issue price, of\neach of the three series of bonds, with totals, by\nPost Offices and by banks, classified by Federal\nReserve districts. These tables were prepared on\nJune 5, 12, 19, and 26, respectively, and were\ntransmitted according to instructions by Mr. Graves.\nCumulative tables were prepared, showing the dollar\nvolume of sales, on the basis of the issue price,\nof each of the three series of bonds, with totals,\nby Poet Offices and by banks, classified by Federal\nReserve districts. Tables were prepared for the\nRegraded Unclassified\n39\n- 8 -\nperiods from May 1 through May 31, from June 1\nthrough June 14, and from June 1 through June 21,\nand were transmitted on June 5, 19, and 26, re-\nspectively, according to instructions by Mr. Graves.\n(d) Weekly tables were prepared, showing for each week\nthe dollar volume of sales, on the basis of the\nissue price, of series E bonds, by Post Offices\nand by banks, with totals, classified by States.\nFor the weeks ending May 31, June 7, 14, and 21,\ntables were prepared, and were transmitted on\nJune 5, 12, 19, and 25, respectively, according\nto instructions by Mr. Graves.\nCumulative tables were prepared, showing from\nMay 1 through May 31, June 1 through 14, and\nJune 1 through 21, the dollar volume of sales or\nseries E bonds, on the basia of the issue price,\nclassified by States. These tables were pre-\npared on June 5, 18, and 25, respectively, and\nwere transmitted according to instructions by\nMr. Graves.\n(e) A table was prepared on June 2, showing the esti-\nmated number of units sold daily in May of savings\nbonds series E, F, and G, by Post Offices and by\nbanks, with totals. A similar table was prepared\non June 5, which included the number of unite sold\nof Defense savings stamps, for the periods May 1\nthrough 17, May 19 through 24, and May 26 through\n31, with totals. These tables were transmitted\naccording to instructions by Mr. Graves.\nA table was prepared on June 16, showing the esti-\nmated number of unite sold during May, of savings\nbonds, series E, F, and G, by denominations, by\nPost Offices and by banks, with totals. This table\nwas transmitted according to instructions by\nMr. Graves.\nTables were prepared containing estimates of the\nnumber of units of savings bonds series E, F, and\nG, by denominations, sold by Post Offices and by\nbanks, during the weeks ending June 7, 14, and 21.\nThese tables were prepared on June 16, 18, and 27,\nrespectively, and were transmitted according to\ninstructions by Mr. Graves.\nRegraded Unclassified\n10\n- 9 -\nCumulative tables showing the estimated number\nof units of savings bonds series E, F, and G,\nby denominations, sold during the periods June 1\nthrough June 14, and from June 1 through June 21,\nwere prepared, on June 18 and June 27, respec-\ntively, and were transmitted according to instruc-\ntions by Mr. Graves.\n(r) A table was prepared on June 17, showing by de-\nnominations the sales during May of Defense sav-\nings stamps in dollar volume and by number of\nunits, as estimated by the Post Office Department,\non the basie of daily reports of 111 large Post\nOffices. This table was transmitted according to\ninstructions by Mr. Graves.\n(it) A table was prepared on June 11, showing sales of\nsavings bonds series E, F, and G, for May, with\ntotals, and separately by series, by Post Offices\nand by banks, the number of bond units, the dollar\nvolume, on the basis of the issue price; the\nnumber of purchasers excluding second co-owners;\nthe number of second co-owner names; and the total\nnumber of purchaser names, counting co-owner pur-\nchasers B.S two names. This table v.a.s transmitted\naccording to instructions by Mr. Graves.\n(h) At the request of Mr. Graves on June 4, for use\nin the Secretary's speech of June 5, a table was\nprepared, and was transmitted to Mr. Graves on\nJune 4, showing sales, in dollar volume, on the\nbasis of the issue price, of savings bonds,\nseparately for series E, F, and G, and Defense\nsavings stamps, by Post Offices and by banks,\nwith totals.\n(1) Two tables were prepared showing for each of the\nseries E, F, and G, of savings bonds, the per-\ncentages of the dollar volume sold, on the basie\nof the issue price, by each denomination. The\ntables covering the periods from June 1 through\n14, and June 1 through 21, were prepared on\nJune 19 and 26, respectively, and were transmitted\nin accordance with instructions by Mr. Graves,\nRegraded Unclassified\n11\n- 10 -\n(5) The procedure for reporting sales of Defense 687-\nings bonds has been revised from the system of\ndaily and weekly wires from each Federal Reserve\nBank and 111 Post Offices to a system of monthly\nreports to be compiled by the Federal Reserve Banks\nand all Post Offices handling the bonds and Defense\nsavings stamps, as of the close of business each\nmonth, showing sales of each selling agent as shown\non their ledger accounts with such agents. A punch\ncard procedure has been formulated for classifying\nthe data. The first report on the new basis will\nbe for the combined months of May and June.\n10. Maturity schedules were prepared of the tax-exempt Be-\ncurities of the United States and of Federal instru-\nmentalities outstanding on February 28, 1941, classi-\nfied according to maturity dates and according to first\ncall dates. - Mr. Conrad\n11. A memorandum was prepared incorporating a suggestion\non the composition of the series on the daily average\nyield of long-term Treasury bonds, in the light of re-\ncent developments in tax exemption provisions, and was\ntransmitted to Under Secretary Pell on June 3. -\nMr. Turner\n12. At the request of Mr. Kilby on June 16, & memorandum\nwas prepared, and was transmitted to Mr. Broughton on\nthat date, with respect to modification of the reports\nsubmitted by Federal Reserve Banks on subscriptions\nplaced and allotments made for each public offering of\nTreasury or guaranteed bonds and notes. - Mr. Tickton\n13. At the request of Under Secretary Bell on June 13, a\nmemorandum was prepared, and was transmitted to him\non that date, with respect to the decisions made on the\nproposed tax anticipation notes 88 summarized in\nMr. Xilby's report of the meeting held in the Under\nSecretary's office on June 12. - Mr. Haas, Mr. Murphy\n14. At the request of Mr. Broughton on June 16, a review\nwas made of Draft A of the offering circular for the\nproposed series A and series B tax anticipation notes.\nApproval of the circular was indicated in & memorandum\ntransmitted to Mr. Broughton on June 17. - Mr. Head,\nMr. Murphy\nRegraded Unclassified\n42\n- 11 -\n15. At the request of Under Secretary Bell on June 26, &\nreview was made of Draft D-revised of the offering\ncircular for the proposed tax anticipation notes,\nand changes suggested in the plan for their issue\nwere incorporated in a memorandum transmitted to him\non June 26, - Mr. Heas, Mr. Reagh, Kr. Lindow,\nMr. Turner\n16. In connection with the RFC financing in June, tables\nand charts were prepared. - Mr. Murchy, Mr. Turner,\nMr. Conrad, Mr. Sandelin, Mr. Barnett\n17. At the request of the Secretary on February 3, & reply\nwas prepared for signature of Under Secretary Bell to a\nletter from the Acting Secretary of Commerce dated\nFebruary 4, transmitting certain requested data on\noutstanding securities of Federal agencies and the\namount of governmental securities held by governmental\nagencies and Federal Reserve Banks for the period 1929-\n40. The letter was mailed on June 17. - Mr. Conrad\n18. In response to letters of May 15 and 20, from Mr. John\nPhillips, Jr., Assistant Cashier of the Federal Reserve\nBank, Kansas City, a reply was prepared with respect to\nthe Droper valuation of series G savings bonds held by\nlife insurance companies. The reply was signed by the\nUnder Secretary, and was mailed on June 14. - Mr. Murphy,\nKr. Reagh, Mr. Brown\n19. In response to a letter of May 22 from Mr. William A.\nHill, Jr., Newark, Hew Jersey, a reply was prepared\nand mailed on June 10, giving the mathematical formula\nto determine the approximate investment yield on the our-\nchase price of series E savings bonds from issue date to\nthe beginning of each half-year period, - Mr. Reagh,\nMr. Brown\n20, At the request of Under Secretary Bell on May 10, an\nanalysis was made of a proposal by Mr. G. Lee Camp\nof a means of prepaying taxes, and was transmitted to\nhim in a memorandum on June 4. - Mr. Turner\n21. At the request of Under Secretary Bell on May 10, an\nanalysis was made of a proposal by Mr. Hedges MacDonald\nfor encouraging the ourchase of Government securities\nby the grant of a tax credit, and was transmitted to him\nin a memorandum on June 4. - Mr. Turner\nRegraded Unclassified\n43\n- 12 -\n22. At the request of Under Secretary Bell on May 27, a\nreview was made of an editorial entitled \"To Uncle\nSam I Bequeath\", submitted by Mr. C. C. Luhnow of\nMrusts and Estates\", and a reply prepared for signa-\nture of the Under Secretary was transmitted to him\non June 10. - Mr. Murphy, Mr. Turner\n23. A table was prepared showing Government borrowing of\nthe United Kingdom from September 2, 1939 to April 26,\n1941, and was transmitted to Mr. Theodore Goldsmith\non June 20. - Mr. Matlock\n24, At the request of Under Secretary Bell on June 30,\nassistance was given in preparation of a radio address\nto be made by the Under Secretary on July 1, in connec-\ntion with the dedication and acceptance of \"The Treasury\nHouse\". - Mr. Hass, Mr. Murphy\n25, At the request of Under Secretary Bell on Kay 1, B\nmemorandum was prepared and was transmitted to him on\nJunell, concerning the amendments to the United States\nHousing Authority Act which were proposed by the\nAuthority last year. - Mr. Lindow\n26. At the request of the Legal Division on May 27, a re-\nview was made of a proposed reply prepared by the\nGeneral Counsel's office, Bureau of Internal Revenue,\nto a letter from Senator Harrison dated May 21, re-\nquesting a report on S. 1178, a bill to be known AB the\nGeneral Welfare Act\", to amend the Social Security Act\n80 as to extend coverage thereunder to all groups and\nall classes, to amend the Internal Revenue Code so as\nto provide a pay-as-you-go basis for pensions, and for\nother purposes. The reply was approved, and was forwarded\nto Mr. Blough on June 2. - Mr. Murphy, Mr. Reagh\n27. At the request of Under Secretary Bell on June 14, a\nreview was made of a proposed reply prepared by the\nLegal Division to a letter from Senator Wagner dated\nMay 26, requesting a report on S. 1553, a bill to\nprovide for loans to Federal Land Banks for refinancing\ncertain Farm Loan bonds by the Farm Mortgage Corporation,\nand changing the method of fixing interest rates on land-\nbank mortgages. The letter was approved, and was trans-\nmitted to Mr. Heffelfinger on June 23. - Mr. Murphy\nRegraded Unclassified\n44\n- 13 -\nII. Projects or studies under way\n1. A etudy is being made of the relative interest coste\nof short- and long-term borrowing. - Mr. Barnett\n2, A study 16 being made of the available sources of funde\nfor Treasury financing. - Mr. Villard\n3. A memorandum 18 being prepared on a negotiable \"tap\"\nsecurity. - Mr. Sandelin, Mr. Turner\n4. A study 18 being made of a new type of Defense annuity\nsavings bond. - Mr. Reagh, Mr. Brown\n5. A memorandum 18 being prepared on the relationship be-\ntween public debt operations and bank reserves. -\nMr. Turner\n6. A study is being made of the probable excess reserves\nin 1941-42. - Mr. Turner, Mr. Barnett\n7. Tables are being prepared which will present various\ndata on new Treasury notes and bonds and on guaranteed\nnew issues. - Mr. Conrad\n8. A memorandum 18 being prepared on the advantages and dis-\nadvantages of increasing the short-term debt. - Mr. Foy\n9. A revision 1s being made AB of June 30, 1941, of the\nestimates of the ultimate increase in interest costs\nwhich would result from removal of the tax-exemption\nprivilege from all public securities. - Mr. Turner\n10. A memorandum WAB received from Mr. Tarleau on May 31,\nstating that it is his understanding that if the\nTreasury's recommendation regarding the surtax on\ncorporations is adopted it will be advisable to have\ncorporations holding partially tax-exempt obligations\namortize the premium or discount by which such obliga-\ntions were obtained, and requesting a memorandum regard-\ning the extent of the revision of the law which will be\nrequired with respect to the bond interest for income\ntax purposes. - Mr. Murphy\nRegraded Unclassified\n15\n- 14 -\n11. A memorandum is being prepared recommending legislation\nterminating miscellaneous types of tax exemption\nanalagous to the exemption of interest on Federal Be-\ncurities, but unaffected by the Public Debt Act of 1941. -\nMr. Turner\n12. é study 16 being made of war-financing measures in bel-\nligerent countries in the present war. - Kr. Matlock\n13. A comparison 18 being made of the British Fiscal Program\n1941-42 with the Keynes plan proposed in \"How to Pay for\nthe War\", by Mr. J. M. Keynes. - Mr. Matlock\n14, At the request of Under Secretary Bell on June 9, a re-\nview 16 being made of 8. memorandum and draft of & pro-\nposed bill prepared by Mr. Broughton on the redemption\nof \"old series\" currency and the adjustment of the\namount outstanding. - Mr. Turner\n15. A review 1e being made of a proposed reply prepared by\nMr. Broughton to a letter from Mr. S. E. Foster dated\nJune 12, with respect to the Circulation Statement of\nUnited States Money, and an alternative reply 18 being\nwritten. A memorandum to the Under Secretary 18 in\npreparation suggesting certain changes in the Statement. -\nMr. Murphy, Mr. Turner\n16. At the request of Under Secretary Bell on October 14, a\nmemorandum 16 being prepared on a memorandum submitted\nby Mr. John Evans, President of the First National Bank\nof Denver, Colorado, in reference to United States Govern-\nment bonds now owned by the Federal Reserve System and\nits member banks, and suggestions concerning a refunding\nand change in form which would appear to be in interest\nof the Treasury Department, the Federal Reserve System,\nthe member banks, the Federal Deposit Insurance Corpora-\ntion, and the public generally whose money is deposited\nIn member banks. - Mr. Murphy\n17. In response to a request by Under Secretary Bell on\nJanuary 27, comments are being prepared on a memorandum\nby Mr. George Eddy to Mr. White, in regard to a plan of\nMr. N. E. Peterson, entitled, \"A Means of Financing the\nDefense Program\". - Mr. Turner\nRegraded Unclassified\n46\n55 I I\n18. At the request of Under Secretary Bell on February 5,\nan analysis 18 being made of his plan for investing\nsavings banks' and insurance companies' funds in special\n2 percent Treasury certificates. - Mr. Ticaton\n19. At the request of Under Secretary Bell on February 11,\na memorandum 18 being prepared to the Secretary regard-\ning a letter from Mrs. Sylvia F. Porter, New York Post,\ndated January 22, suggesting a plan for the distribution\nof United States Government securities. - Mr. Haas,\nMr. Murphy, Mr. Turner\n20. An analysis 1s being made of a study of savings bond\nmortality by Miss Hilda Hoffman, Bowery Bavings Bank,\ntransmitted by Mr. Theodore R. Goldsmith on March 13. -\nMr. Turner\n21. At the request of Under Secretary Bell on Anril 21, a\nmemorandum is being prepared on Mr. Salant's memorandum\non \"Limitation on Purchases of Defense Savings Bonds\". -\nMr. Murphy\n22. At the request of Mr. Heffelfinger on June 17, a review\n19 being made of a proposed reply prepared in the Bureau\nof the Public Debt, to a letter from Mr. T. T. Malleson,\nBrooklyn, New York, concerning the redemption values\nprior to maturity of United States Defense savings bonds,\nseries G, - Mr. Reagh, Mr. Brown\n23. Material 16 being prepared for Representative Taber in\nresponse to his request on June 18, concerning the\neffect of sales of United States Defense savings bonds\non bank deposits and reserves. - Mr. Haas, Mr. Turner\n24, At the request of Under Secretary Bell replies are being\nprepared to certain questions asked by the Wagner Committee\npreparatory to its investigation of banking and monetary\nconditions pursuant to Senate Resolution 125. - Mr. Haae,\nMr. Murphy, Mr. Turner, Mr. Foy\n25. At the request of Under Secretary Bell on May 24, coopera-\ntion is being given Mr. Bartelt and Mr. Blough in prepar-\ning replies to the list of questions accom anying & letter\nfrom Senator Tydings of May 5. -The replies are for use\nby the Senate Committee created to find ways and meaná of\nautomatically balancing the Federal Budget in times of\npeace. - Mr. Murphy\nRegraded Unclassified\n17\n- 16 -\nRevenue Estimates\nI. Projects or studies completed\n1. The regular monthly statement was prepared for the\nBureau of Accounts, showing the latest revised esti-\nmates of receipts, by months and by principal sources\nof revenue, for the period June 1941-June 1942, and\nwas transmitted on June 3. - Mr. Delcher\n2, The regular monthly summary comparison was prepared,\nshowing estimated receipts and actual receipts in\nNay 1941 on the daily Treasury statement basis. -\nMr. Delcher\n3. The regular monthly detailed comparison was prepared,\nshowing estimated and actual receipts in May 1941,\nand for the period July 1940-May 1941, based on the\ncollections classification. - Mr. Delcher\n4. A. revision was completed of the forecast of the monthly\ndistribution of estimated revenue on the basis of the\nApril revision of the 1942 Budget estimates, for the\nfiscal years 1941 and 1942. - Mr. O'Donnell, Mr. Daggit,\nMr. Leahey, Mrs. May, Mr. Bronfenbrenner, Mr. Butters,\nMr. T. L. Smith, Mr. R, R. Smith, Miss Hagedorn\n5. In connection with the revising of the revenue laws in\n1941, 8 number of revenue estimates, listed below, were\nprepared for use of Assistant Secretary Sullivan and\nthe Division of Tax Research. - Mr. O'Donnell, Mr. Leahey,\nMr. Bronfenbrenner, Mr. Butters\n(a) Revised estimates were prepared, and were trans-\nmitted to Mr. Blough in a memorandum on June 5,\nof the revenue effects, at income levels forecast\nfor the calendar year 1941, of the capital stock\nand the declared value excess-profits tax, both for\ncorporations with net income, by net income classes,\nand for corporations with no net income.\n(b) Estimates were prepared, and were transmitted to\nto Assistant Secretary Sullivan in 8. table on June 3,\nof the increase or decrease in income tax liabilities,\nat net income levels forecast for the calendar year\n1941, from two proposals submitted by the Joint\nCommittee on Internal Revenue Taxation. These were\nRegraded Unclassified\n48\n- 17 -\nshown compared with the yield estimated from\nthe Treasury plan presented to the Committee\non Ways and Means on May 19. The first pro-\nposal contained the following provisions:\nImposition of a corporation surtax of 5 per-\ncent on surtax net income of $25,000 or less\nand 6 percent on surtax net income in excess\nof $25,000; the computation of the excess-\nprofits tax prior to the corporation normal and\nsurtax with a reversal of deductions, and allow-\nance to invested capital corporations of an ex-\ncess-profits credit of g percent on the first\n$5 millions of invested capital and 7 percent\non the balance of invested capital, and in-\ncreasing the excess-profits rates in each\nbracket of the present law by 10 percentage\npoints; and individual income tax changes as\nsuggested by the Joint Committee on Internal\nRevenue Taxation on April 24.\nThe second proposal contained the following pro-\nvisions:\nImposition of a corporation surtax of 5 per-\ncent on surtax net income of $25,000 or less\nand 6 percent on surtax net income in excess\nof $25,000; allowance to invested capital\ncorporations of an excess-profits credit of\n7 percent on the first $5 millions of invested\ncapital and 6 percent on the balance of their\ninvested capital, and increasing the present\nlaw excess-profits tax bracket rates by 15 per-\ncentage points in each bracket; and individual\nincome tax changes 8.8 suggested by the Joint\nCommittee on Internal Revenue Taxation on\nApril 24.\n(c) The estimates of yield from the two proposals\ndescribed above under (b) were revised to sub-\nstitute the yield from the individual income tax\ncomputed according to the Treasury plan submitted\nto the Committee on Ways and Meane on April 24.\nThis revision was transmitted to Assistant Secretary\nSullivan in a table on June 4.\nRegraded Unclassified\n- 18 -\n(a) Estimates were prepared, and were transmitted to\nAssistant Secretary Sullivan, in & table on\nJune 5, of the yield, at income levels forecast\nfor the calendar year 1941, from proposals to:\nimpose a surtax of 5 percent on net income of\n$25,000 or less and 6 percent on the excess:\ncompute the excess-profits credit as the average\nof the invested capital and average earnings\nmethods; and increase individual income tex rates\nas proposed by the Treasury on April 24.\nA tabulation was prepared, and was transmitted to\nAssistant Secretary Sullivan on June 5, showing\nthe revenue effects, at income levels forecast for\nthe calendar year 1941, of proposals to: impose a\ncorporation surtax of 5 percent on net income of\n25,000 or less and 6 percent on the excess; die-\nallow the income tax as a deduction for excess-\nprofits tax computation and allow the excess-\nprofits tax as a deduction for income tax computa-\ntione; allow a credit of 6 percent on invested\ncapital (10 percent on new capital); tax at 10 per-\ncent the difference between the rate of return in\nthe base period and the lower of (a) the sum of\nthe excess-profits credit plus the unused excess-\nprofits credit computed on the proposed law basis\nor(b) the excess-profits net income in the taxable\nyear less the $5,000 specific exemption; and increase\nindividual income tax rates as recommended by the\nTreasury to the Committee on Ways and Means on\nApril 24.\n(e) Two individual income surtax schedules were pre-\npared, and were transmitted to Assistant Secretary\nSullivan in a memorandum on June 6, in accordance\nwith suggestions made by Representative Cooper,\nSchedule A being based on a proposal to average\nthe rates in the surtax schedules submitted to the\nWays and Means Committee on April 24, by the\nTreasury and by the Joint Committee on Internal\nRevenue Taxation, and Schedule B approximately\naveraging the revenue obtained from the various\nsurtax net income classes under the proposals Bub-\nmitted by the Treasury and the Joint Committee.\nRegraded Unclassified\n50\n- 19 -\n(f) An additional individual income surtax schedule,\nSchedule C, was prepared designed to approximate\nthe total yield and burden distribution of the\nJoint Committee proposal of April 24, while re-\ntaining present credits against the surtax. A\ntable was prepared comparing the surtax rates under\nthe present law, Schedule A, Schedule B, and\nSchedule C. These tables and Schedules A and B\nwere mimeo graphed, and were transmitted to\nAssistant Secretary Sullivan for presentation to\nthe Committee on Ways and Meane on June 7.\n(g) Estimates were prepared, and were presented to the\nCommittee on Ways and Means on June 7, of the in-\ncreased yield from individual income taxes with\npersonal exemptions for married persons reduced\nfrom $2,000 to 1,800, under each of the following\nsurtax schedules: the Treasury plan, Schedule B,\nand Schedule C.\n(h) A table was prepared, and was transmitted to\nAssistant Secretary Sullivan on June 13, showing\nthe estimated individual income tax liabilities\nunder specified surtax rate schedules, at income\nlevels forecast for the calendar year 1941, under\nvarious proposals for changing the law, including\na proposal to require the mandatory filing of\njoint returns. With slight changes, this table\nwas mimeographed for distribution to the Committee\non Ways and Means.\n(1) Two tables were prepared, and were mimeographed\nfor distribution to the Committee on Ways and\nMeana on June 18, giving the revenue effects at\nincome levels forecast for the calendar year 1941,\nof (1) various proposed changes in corporation\nincome taxes, and (2) various proposed changes in\ncorporation Income taxes and in individual income\nsurtax rates. The latter table included the ef-\nfects if separate returns are permitted and if\njoint returns are mandatory. The proposed corpora-\ntion income tax revision included the following\nprovisions:\nCommon to all Aete of proposals:\n(1) Impose corporation surtax of 5 percent on\nsurtax net income of 25,000 or less and\n6 percent on excess.\nRegraded Unclassified\n31\n- 20 -\n(2) Disallow income tax (including surtax)\nas a deduction in computing excess-\nprofits net income and allow the ex-\ncess-profits tax as a deduction for in-\ncome tax (including surtax).\nProposal A --\n(3) Allow invested capital credit of 8 percent\n(10 percent on new capital)\n(4) Retain present law brackets and rates.\nProposal B --\n(3) Allow invested capital credit of 8 per-\ncent on first $5 millions and 7 percent\non excess.\n(4) Retain present law brackets and rates.\nProposal o -\n(3) Allow invested capital credit of 8 per-\ncent (10 percent on new capital)\n(4) Retain present law brackets and rates and\nimpose special excess-profits tax of 10\npercent on the difference between the rate\nof return in the base period and the lower\nof (a) the sum of the excess-profits credit\nplus the unused excess-profits credit com-\nputed on the proposed law basis or (b) the\nexcess-profits net income in the taxable\nyear less the specific exemption of $5,000.\nJoint Committee Proposal --\n(3) Allow invested capital credit of & percent\non first 65 millions and 7 percent on ex-\ncess.\n(4) Increase excess-profits tax rates by 10 per-\ncentage points in each bracket computed\nunder present law).\n(3) A table was prepared, and was mimeographed for dis-\ntribution to the Committee on Waye and Means, show-\ning the estimated increase in net Federal revenues\nfrom the imposition of varying assumed corporation\nsurtax rates based upon calendar year 1941 tax\nliabilities. The table was presented on June 14.\n(x) Estimates were prepared, and were presented orally\nto the Committee on Ways and Means on June 17, of\nthe revenue effects, at income levels forecast for\nthe calendar year 1941, of imposing a surtex of\n5 percent on net income of $25,000 or less and\n6 percent on excess; computing the excess-profits\ntax as an average of the invested capital method\ntax and average earninge method tax; and increasing\nthe individual income tax rates 8.6 proposed by the\nTreasury on April 24.\nRegraded Unclassified\n52\n- 21 -\n(1) Three tables were prepared, and were mimeographed,\nsummarizing the proposals before the Committee on\nWays and Means on June 18, with reference to the\ncorporation and individual income taxes. The\ntables were presented to the Committee on that date.\n(m) A tabular presentation was prepared, and WEB trans-\nmitted to Mr. Blough in a memorandum on June 25,\ngiving the estimate of the income tax collections\nfrom corporations and individuals in the fiscal\nyears 1941 and 1942, the latter figure including\nestimated collections from all changes in the in-\ncome tax laws approved by the Committee on Ways and\nMeans through June 23.\n(n) A tabular presentation was prepared, and was trans-\nmitted to Assistant Secretary Sullivan in B memo-\nrandum on June 26, of the revenue effects, at in-\ncome levels forecast for the calender year 1941, of\ncombining the corporation income and individual in-\ncome tax changes tentatively agreed to by the Com-\nmittee on Ways and Meana through June 23, with the\nadditional change of reducing to 80 percent from\n95 percent the base period earnings allowed as en\nexcess-profite credit for corporations using the\naverage earnings method.\n(o) A table was prepared, and was transmitted to Assist-\nant Secretary Sullivan on June 26, showing the esti-\nmated increase in liabilities, at income levels\nforecast for the calendar year 1941, due to proposed\nchanges in corporation income and individual income\ntaxes as tentatively agreed upon by the Committee on\nWays and Means through June 23, together with esti-\nmated total collections for the fiscal year 1942.\n6. New studies were made of the following projects for revis-\ning and improving methods of estimating revenues from the\ntaxes listed below: - Mrs. May, Mr. R. R. Smith\n(a) Gasoline tax.\n(b) Rectification tax.\nRegraded Unclassified\n53\n- 22 -\nII. Projects or studies under way\n1, At the request of the Division of Tax Research on\nJuly 12, 1940, an estimate 18 being made of the addi-\ntional revenue which would be derived if mutual in-\nsurance companies other than life insurance companies\ntaxable under Section 207 of the Internal Revenue Code\nwere made taxable in the same manner AB stock insurance\ncompanies other than life insurance companies taxable\nunder Section 204, and at the same time the exemption\nunder Section 101(11) were restricted to local mutual\ncompanies of the assessment type. - Mr. Leahey\n2. An analysis 16 in preparation of each component of the\nApril 1941 estimate, AB revised in May 1941, of m1s-\ncellaneous internal revenue, excluding capital stock,\nestate, and gift taxes, for the fiscal years 1941 and\n1942. - Mrs. May\n3. For use in revenue estimating data are being assembled\non collections of taxes now repeal ed which may be re-\nenacted according to testimony at Congressional hearings. -\nMrs. May, Miss Spiegel, Mr. R. R. Smith\n4, In connection with the revising of the revenue laws in\n1941, the revenue estimates listed below, are in\npreparation for use of Assistant Secretary Sullivan\nand the Division of Tax Research. Mr. Leahey,\nMr. Bronfenbrenner, Mr. Butters, Mr. T. L. Smith\n(a) Estimates are being prepared of the revenue ef-\nfacts under the present law and under Treasury\nproposals of: (1) Representative Charles S. Dewey's\nproposals for estate tax prepayment through Federal\nestate tax anticipation receipts; and (2) The\nLonergan proposal, whereby insurance could be 80-\ncumulated for estate tax payment and excluded from\nthe taxable estate up to the amount of the estate\ntax liability.\n(b) Estimates are being prepared of the revenue from\na proposed estate tax schedule, showing separately\nthe amounts attributable to the estate tax and\nthe gift tax before and after the defense tax.\nRegraded Unclassified\n54\n- 23 -\n(c) Estimates are being prepared of the revenue\nfrom & second proposed estate tax schedule,\nshowing separately the amounts attributable to\nthe estate tax and the gift tax before and after\nthe defense tax.\n(d) An estimate 18 being prepared of the revenue in-\ncrease which would result from raising the rate\nof tax on firearms, shells, and cartridges\n(Sec. 3407) from 11 percent to 20 percent.\nle) Estimates are being prepared of the additional\nrevenues from the following excise taxes:\n1. Wines, cordials and liqueurs: Increase\nthe rates to the following schedule:\n(a) Still wines\nTax per gallon\nNot more than\n15 cents\n14 percent alcohol\n14 to 21 percent\n35 cente\nalcohol\nMore than 21 percent\n65 centa\nalcohol\nTax per 1/2 pint\n(b) Sparkling wines\n7 cents\n(c) Artificially car-\n3* cents\nbonated wines\n(d) Liqueurs, cordials, etc. 38 cents\n2. Gasoline: Increase the rate 1 cent per gallon.\n3. Soft drinks: (a) A tax of 32 cents per gallon\non all finished or fountain syrups, of the\nkind used in manufacturing, compounding or\nmixing soft drinks, sold or used by the\nmanufacturer or importer.\n(b) A tax of 20 cents per pound on all car-\nbonic acid gas in liquid, solid, or gaseous\nform, sold by the manufacturer or importer\nthereof, or by a dealer in such gas, for use\nin the preparation of soft drinks.\nRegraded Unclassified\n55\n- 24 -\n4. Automobile tax: A tax of 15 percent on items\ncovered in section 3403(b); excepting that\nbuses are to be excluded from the base, but\nautomobile trailers are to be included.\n5. Automotive parts and accessories: A tax of\n10 percent on items covered in section 3403(c),\nexcepting that automobile radio sets and parts\nare to be excluded from the base.\nD. Buses, trucks and certain tractors: A tax of\n10 percent on items covered in section 3403(a),\nexcepting that buses and truck trailers are to\nbe included in the base.\n7. Tires and tubes: Increase rates from 21 and\n43 cents to 5 and 9 cents.\n5. Telephone, telegraph, cable, etc.: Revise\nrates under section 3465 as follows:\nOn messages for which the charge 16\n15 cents or more and less than 50 cents, a\ntax of 5 cents; 50 cents or more and less\nthan $1.00, 10 cents; $1.00 or more and lass\nthan $1.50, 15 cents; $1.50 or more and less\nthan $2.00, 20 cents; $2.00 or more, 5 cents\nfor each additional 50 cents or fraction\nthereof.\nThe tax on telegraph, cable and radio\ndispatches and messages to be on the same\ngraduated rate as set forth above with re-\nspect to telephone conversations (instead of\nthe present rate of 5 percent of the amount\ncharged for telegraph messages and 10 cente\nfor each radio and cable message).\nThe phrase \"any leased wire or talking\ncircuit special service\" which 18 now sub-\nJect to tax of 5 percent of the amount paid\nfor such service should be defined to include\ncertain services which may not now be classed\nas leased wires or special talking circuits,\nsuch aa furnished in connection with news or\nstock quotation tickers, teletypewriters,\nburglar alarm systems, and similar services.\nRegraded Unclassified\n55\n- 25 -\n9. Jewelry: A tax at 10 percent of the retail\nsales price, allowing no exemptions and in-\ncluding retail sales of clocks, watches and\nparts therefor.\n10. Photographic apparatus and materials or\nprojective apparatus: A tax of 10 percent\nof the manufacturers' sales price.\n11. Mechanical refrigerators; Increase the rate\nunder section 3405 from 5% to 10 percent, and\nextend base to include commercial type re-\nfrigerators and parts therefor and air condi-\ntioning equipment and parts therefor.\n12. Radio sets and parts: Increase the rate\nunder section 3404 from 5 to 10 percent, and\nrevise base to tax the completed eets; the tax\non parts applies only when they are not sold\nfor use in the further manufacture of completed\nsets. Automobile radio sete and parts also are\nto be included in the revised base.\n13. Phonographe and records: 10 percent of the\nmanufacturers' sales price.\n14. Toilet preparations: Repeal the existing\nstatute section 3401 and enaot in lieu there-\nof a tax of 11 percent on sales of toilet\npreparations at wholesale by manufacturers,\nimporters, producers, and dealers to retailers\nfor resale at retail. Sales by taxpayers at\nretail are to be taxed at the wholesale basis.\n5. Further progress was made on the following projects for\nrevising and improving methods of estimating revenues\nfrom the taxes listed below: - Mrs. May, Mr. R. R. Smith\n(a) Admissions to theaters, concerts, cabarets, etc.\n(b) Passenger automobiles and motorcycles.\n(c) Distilled spirite, domestic and imported combined.\nRegraded Unclassified\n57\n- 26 -\nEconomic Conditions Related to Fiscal\nand Revenue Matters\n1. Projects or studies completed\n1. Memoranda on the business and price situation were pre-\npared, and were transmitted to the Secretary on June 2,\n9, 16, 23, and 30. - Mr. Haas, Mr. Daggit, Mrs. May,\nMr. Chevraux\nThese memoranda contained in addition to analysis of\nthe current situation the following special studies:\n(a) Heavy construction awards and structural steel\norders from January 1939 to date. (Chart in\nmemorandum of June 2. Also described below under\nEconomic Conditions, I, as item 10). - Mr. Chevraux,\nMiss Hagedorn\n(b) Indexes of consumer demand and potential consumer\ndemand from January 1935 to date. (Chart in\nmemorandum of June 9. Also described below under\nEconomic Conditions, I, as item 7). -\nMr. Daggit, Mrs. May, Mr. Colclough\n(c) A study of purchases of food products by the Depart-\nment of Agriculture from March 15 through June 14,\ncompared with average production and changes in\nprices since March 15. (Chart in memorandum of\nJune 23. Also described below under Economic Condi-\ntions, I, as item 5). - Mr. Daggit, Mrs. May,\nMiss Hagedorn, Mr. Colclough\n(d) A study of shipbuilding from January 1939 to date.\n(Chart in memorandum of June 23. Also described\nbelow under Economic Conditions, I, 8.8 item 14). -\nMr. Chevraux\n(e) Price movements of selected fats and oils from\nJanuary 1934 to date. (Chart in memorandum of\nJune 23. Also described below under Economic\nConditions, I, as item 6). - Mrs. May\n(f) Price movements of all commodities and foods during\nthe current war compared with those during the first\ntwo years of the World War. (Chart in memorandum\nof June 30. Also described below under Economic\nConditions, I, as item 8). - Mr. Daggit, Mrs. May,\nMr. Smith\nRegraded Unclassified\n58\n27 I I\n(g) Prioe movements of All commodities and of raw\nmaterials in the United States and the United\nKingdom from January 1939 to date. (Chart in\nmemorandum of June 30. Also described below\nunder Economic Conditions, I, a.B item 9). -\nKr. Daggit, Mrs. May, Mr. Colclough\n2. Memoranda on employment under the Work Projects Admin-\nistration were prepared, and were transmitted to the\nSecretary on June 2, 9, 16,23, and 30.- M168 Hagedorn\n3. At the request of the Secretary, a table is prepared\neach week summarizing exports of petroleum products,\nscrap iron, and sorap steel, from the United States\nto Japan, the U.S.S.R., Snain, and Great Britain, a8\nindicated by departure permits reported daily by the\nOffice of Merchant Ship Control, The tables were Dre-\npared for the weeks ending May 32, June 7, 14, 21, and\n28, On June 2, 9, 16, 23, and 30, the original and\n13 photostats were transmitted to Assistant Secretary\nGaston, In addition, each week two photostats were\ntransmitted wMr. Young, one of which was for Mr. Purvis. -\nMr. Tickton, Mr. D. J. Leany\n4. Compilations wore made of daily quotations on selected\ncommodities and daily and weekly figures on selected\nbusiness indexes, foreign and domestic security trans-\nactions, security prices, exchange rates, A8 well as\nother data for the Secretary's chart book. - Mr. Chevraux\n5. A study was made of selected purchases of food products\nby the Department of Agriculture in the period from\nMarch 15 through June 14, compared with annual average\nproduction in the ten-year period from 1929 to 1938,\nand percentage changes in the wholesale prices of these\nproducts since March 15. An illustrative table was used\nin connection with the business memorandum of June 23. -\nXr, Daggit, Mrs. May, Miss Hagedorn, Mr. Colclough,\nMr. Smith\n6. An analysis was made of the movement of prices of selected\nfats and oils, monthly, from January 1934 to date. A\nchart showing the quotations used in the BLS 28 basic\ncommodities index for cottonseed oil, tallow, lard, and\nbutter was used in connection with the business memorandum\nof June 25. - Hrs. May\nRegraded Unclassified\n39\n28 I I\n74 À study was made of the indexes of consumer demand and\npotential consumer demand, in physical volume, on the\nbasis that 1935-39=100, seasonally adjusted, based on\ndepartment store sales, rural retail sales, automobile\nsales, and sales of beef and veal, pork, butter, cheese,\noleomargarine, cigarettes, and cigars. A chart show-\nin these indexes from January 1935 to nate, was used\nin connection with the business memorandum of June 9. -\nur. Daggit, Mrs. May, Mr. Cololough\n5, / comparison was made of the price movements of all\ncommodities and foods, both BLS indexes, during the\ncurrent war, on the basis that August 1939=100, and\nduring the first two years of the World War, on the\nbasis that July 1914=100. A chart showing monthly\nfigures was presented with the business memorandum of\nJune 30. - Xr. Daggit, Mrs. Kay, Kr. Smith\n\" A comparison was made of the price movements of all\ncommodities and rew materials in the United States and\nthe United Kingdom, monthly, January 1939 to date,\non the basis that August 1939=100. A chart showing\nthe BLS all-commodity index and Moody's raw materials\nindex for the United States, and the British Board of\nTrade index of all commodities, and Reuter's raw\nmaterials index for the United Kingdom, was presented\nwith the business memorandum of June 30. - Rr. Daggit,\nMrs. May, Mr. Colclough\n10. A new chart was prepared showing daily average heavy\nconstruction awards, as compiled by the Engineering\nNews Record, and structural steel orders, as com-\npiled by Iron Age, from January 1939 to date, weekly.\nThis chart was used in connection with the business\nmemorandum of June 2. - Mr. Chevraux, Miss Hagedorn\n11. At the request of the Secretary, a letter to the\nPresident was prepared for his signature with respect\nto the suggested expansion program for the steel in-\ndustry. The letter WBB transmitted to the President\non June 6. - Mr. Haes, Mr. Daggit\n12. At the request of the Secretary, a statement was pre-\nhared concerning items of Federal expenditures for aid\nto sgriculture which might be curtailed during the\nnational emergency, and was transmitted to him on\nJune 11. - Mr. HARS, Mr. Daggit, Mrs. May\nRegraded Unclassified\n3\n- 29 -\n13. At the request of Mr. Graves on June 18, a comparison\nWAB made of salaries and wages, Department of Commerce\nseries, with estimated payrolls in manufacturing, and\nin retail and wholesale trade, computed from BLS data,\nand was transmitted to him in B memorandum on June 18. -\nare. May\n14. A study was made of shipouilding activity from January\n1939 to date, monthly, consisting of the FPB index of\nshipbuilding, adjusted, and the American Bureau of\nShipping series on merchant vessels under construction\nor contract (excluding vessels not built to American\nureau of Shipping classification). A chart showing\nthe trend was presented with the business memorandum of\nJune 23, - Mr. Chevraux\n15. À study has been made of payrolls, totals and per capita,\nby States, in manufacturing, retail, and wholesale trade,\nfor March 1941 as compared with March 1940. This 18\nbased on census totals by States for 1939, covering\nemployment and payrolls and on percentage changes in\nthese figures as reported by the Bureau of Labor\nStatistics. Two charts were transmitted to the\nSecretary on June 17. A similar comparison has been\nande for April 1941 and Aoril 1940. - Nr. Daggit,\nKr. May, Mr. Colclough, Miss Hagedorn\n16. A letter WAB prepared, and was mailed on June 3, to\nMr. J. L. Snider, describing the kind of business fore-\ncasting done in the Treasury Department and its relation\nto the revenue estimatin by the Department. - Xr. Hass,\nKr. Daggit\n17. York has been suspended on the composite index of unfilled\norders based on data from individual industries, because\nof developments under the Defense program. - Mr. Daggit\n18. The project concerning forces determining trends of\nbasic commodity prices, involving a study of (1) the\ncordes determining eneral commodity prices and (2) the\nCorces determining the prices of individual commodities,\nDAB been superseded for the present by studies of com-\nmodities more currently related to problems of the Defense\nprogram. - kr. Deggit, Mrs. May, Mr. Smith, Miss Hagedorn\nRegraded Unclassified\n6!\n- 30 -\n19. The developing of 8. better index of inventories of\nfinished goods as an indication of business malad-\njustments has been suspended owing to a change in\nemphasis arising from the Defense program. - Mr. Daggit\nII. Projects or studies under way\n1. A project on measures of consumer buying 18 under way\nwith the object of developing three indexes: (a) and\n(b) two indexes to measure the buying power of con-\nsumera in terms of physical volume of purchases; and\n(c) an index to measure changes in total consumer ex-\npenditures, in dollar volume. These indexes will\nsupplement our present \"index of sales\", which is de-\nsigned to measure the \"off-take\" of manufactured goods\ninto verious consumption channels.\n(a) Computation was revised of the physical volume\nindex of consumer buying power, entitled \"Index\nof consumer demand for B. selected group of con-\nsumer goods\". This index 18 corrected for the\neffect of price changes from 1935 to date.\n(b) Computation was revised also of the second physical\nvolume index of consumer buying power, entitled\n\"Index of potential consumer purchasing power\".\nThis index 16 corrected both for the effect of\nprice changes and for the effect of changes in the\nnational income.\n(=) With respect to the \"Index of consumer expendi-\ntures, in dollar value\", further progress has\nbeen made in developing individual series, in\ndetermining their suitability for inclusion and\nthe necessary adjustments. These series have\nbeen classified in two broad groupe: durable\ngoods and non-durable goods. The purpose of the\nindex is to cover a.a large as possible a proportion\nof the purchases of ultimate consumers. During the\nmonth further progress was made in selecting ap-\npropriate series with & view to making this index\nmore useful in connection with defense studies. -\nXrs. May, Mr. Cololough\nRegraded Unclassified\n62\n- 31 -\n2. A study of the volume of installment buying and con-\nsumer credit has been nearly completed. This study\n18 designed eventually to provide 8. monthly index of\nthe volume of buying on deferred payments, which at\ntimes 18 an important business factor. Newly-published\ndata from the Department of Commerce and the National\nBureau of Economic Research have been assembled. A.\npreliminary study is under way to determine how they\nmay be used in a combined index. Further work 18 await-\ning additional data to be released by the Department of\nCommerce. - Mrs. May\n3- A project in process 18 designed to develop an index of\nindustrial production that will indicate week by week\nthe approximate level of the FRB index. It will include\na larger number of weekly series than are included in\nany current business indices, with weightings and seasonal\nadjustments approximating those in the FRB index. -\nMr. Daggit, Mr. Smith\n4. Progress was made on a study of the relationship between\nthe New York Times revised index of business activity\nand the new FRB index of industrial production in an\nattempt to forecast the weekly level of the FRB index\nfrom the New York Times index. - Mr. Daggit, Mrs. May,\nMr. Colclough\n2. A study is being made of the selling prices of commodities\non which taxes are imposed, in order to determine the per-\ncentage which the tax represents of the actual price. -\nMrs. May, Mr. Smith\n5. An analysis 18 being made of sales of United States De-\nfense savings bonds, series E, by States, in relation to\npayrolls, income, and per capita retail sales by States.\n-\nMr. Haas, Mr. Daggit, Mrs. May, Mr. Cololough, Mr. R.R. Smith\n7. At the request of Under Secretary Bell on January 29, 8.\nmemorandum for the Secretary 1a being prepared, illustrated\nby five charte, on the possibility of a freight car short-\nage in October 1941, when car loadings are at their\nseasonal peak, and containing a forecast of freight car\nloadings for October, a forecast of the number of freight\ncars that may be required, and outlining steps which\nwould alleviate or prevent such a shortage. - Xr. Daggit,\nKr. Chevraux\nRegraded Unclassified\n63\n- 32 -\nActuarial Problema\nI. Projects or studies completed\n+ In response to a request in a letter on May 23, from\nKr. George B. Buck, Chairman of the Board, a draft\nwas reviewed and approved of the 20th Annual Report\nof the Board of Actuaries of the Civil Service Retire-\nment and Disability Fund. The Report was submitted to\nthe Civil Service Commission on June 13. - Mr. Reagh,\nKr. Brown\n2, At the request of the Devartment of Justice on May 16,\nassistance was given in the preparation of a tax case\ninvolving the proceeds of an insurance policy paid to\nthe beneficiary in instailments over a period of years.\nSeveral conferences were held and questions and answers,\ntogether with schedules, were prepared for use in the\ntrial held in Richmond, Virginia on June 11. Mr. Reagh\nageared as a Government witness. - Mr. Reagh, .r. Kroll\n3. At the request of Mr. Robert H. Hinckley, Assistant\nSecretary or Commerce, on March 22, assistance\nWas given with respect to proposed legislation for\nthe retirement of inspectors and other similar\ntechnical personnel of the Civil Aeronautics Admin-\nistration. Several conferences have been held, and\na bill was drafted for consideration by the officials\nof the Civil Aeronautics Administration. - Mr. Reagh\nH. A review was completed of an article by Rr. J. Douglas\nSrown, entitled, \"Dismissal Compensation in a War\nEconomy\". No written report will be made. -\nMr. Reagh\n5. At the request of Under Secretary Bell on May 27,\na review was made of B. manuscript entitled \"Proposed\nProvisions for a Compulsory Dismissal Compensation\nProgram\", by E. D. Hawkins, Mt. Holyoke College,\nAn acknowledgment prepared for signature of Under\nSecretary Bell was transmitted to him on June 30. -\nKr. Reagh\nRegraded Unclassified\n63\n33 # ,\nII. Projects or studies under way\n1. The Board of Actuaries of the Civil Service Retirement\nAnd Disability Fund 18 laying out detailed plans for\ntabulating and processing data for use in preparing\nthe regular five-year valuation of the Civil Service\nRetirement Fund for the purpose of determining the\nliabilities of the Government under the Civil Service\nRetirement law. Under the law, such a valuation must\nbe prepared as of July 1, 1940. - Mr. Reagh, Mr. Brown\n2. The Foreign Service Retirement law, as approved April 24,\n1939, Section 26(m), provides that the \"Treasury Depart-\nment shall prepare the estimates of the annual appropria-\ntions required to be made to the Foreign Service Retire-\nment and Disability Fund and shall make actuarial valua-\ntion at intervals of five years, or oftener if deemed\nnecessary by the Secretary of the Treasury An outline\nof the data required for making an actuarial valuation\nhas been submitted to the State Department. On June 25,\na conference W&B held with representatives of the State\nDepartment and final plane were made for preparing the\ndata. - Mr. Reagh, Mr. Brown\n3. Several years ago a committee was organized for the\npurpose of studying ways and means to extend retire-\nment ben-fits to all Government employees regardless\nof Civil Service status. The working committee, the\nSubcommittee on Retirement, has again become active\nand is attempting to draft legislation which would\ncoordinate the provisions of the Social Security Act\nwith the Civil Service Retirement Act. A draft of a\nproposed bill has been prepared for consideration by\nthe committee. - Mr. Reagh\nAt the request of Under Secretary Bell on June 30, A\nreview 18 being made of a proposed reply prepared by the\nBureau of Accounts to a letter from the Bureau of the\nBudget dated June 14, requesting the viewa of the\nTreasury Department on S. 1396, a bill rep aling section\n611 of the National Service Life Insurance Act of 1940. -\nMr. Reagh\n5. In response to B. request contained in a letter from\nKr. George Buchan Rooinson of May 11, several articles\non Social Security written by the writer and published\nin the Annalist are being reviewed. - Mr. Reagh\nRegraded Unclassified\n65\n- 34 -\nOther Projects or Studies\n1. Publications\n(a) For the June issue of the Treasury Bulletin data\nwere prepared on average yields of long-term\nTreasury bonds and high-grade corporate bonde. -\nMr. Turner, Mr. Barnett\nAll the material submitted for the June issue\nwas reviewed and edited.\nSubstantial revisions were made in the June issue\nin the tables on the Treasury survey of the owner-\nship of Government securities by large banks and\ninsurance companies, securities held by govern-\nmental corporations and credit agencies and by\ntrust funds, and in the statement of assets and\nliabilities of governmental corporations and\ncredit agencies. In addition, there was compiled\nand inserted for the first time a cumulative index\nfor the first six months of the calendar year. -\nMr. Lindow, Mr. Lyne:\n(b) For the publication Market Prices and Yields of\nOutstanding donas, Notes, and Bills of the United\nStates, computations were made and copy wes pre-\npared for the issue covering the month of May.\nThis publication shows by securities the rates of\ninterest, maturities, interest payment dates, and\namounts outstanding; and for each day of the month,\ntogether with a monthly average, closing market\nquotations (accrued interest to be added), and\nyields. - Mr. Moody, Miss McCoy\n10) At the request of Under Secretary Bell on June 25,\na draft of the proposed Review of the Month dealing\nwith Treasury financing and the budget for the July\nFederal Reserve Bulletin was reviewed, and was re-\nturned to him on June 27, with a cover letter pre-\npared for his signature. - Mr. Haas, Miss Michener,\nMr. O'Donnell, Mr. Leahey, Mr. Tickton\nRegraded Unclassified\n66\n- 35 -\n2. Correspondence\nReplies were prepared to letters received on subjects\nrelating to the work of the Division, and letters\ndrafted elsewhere and submitted to the Division for\nthat purpose were reviewed. - Miss Michener,\nMiss Ziegler, and other members of the staff in\nappropriate fields of work.\nDuring June 635 letters were received in the Division\nand 740 were handled as required.\n3. Charts\nCharts are prepared and continually brought up to date\nfor use in memoranda and in chart books on special\nsubjects, and corresponding photographic, photostatic,\nand multilith work 18 carried on. This 18 done in the\nGraphic Section under the supervision of Mr. Banyas.\nA statistical report on the work of the Graphic Section\nfor the month of June is attached.\nRegraded Unclassified\n67\nWork completed in the Graphic Section, Division of\nResearch and Statistics, during June 1941\nFor Division\nFor\nType of work\nof R&S\nOthers\nTotal\nOraphic:\nYou charts:\nTotal charts completed\n42\n6\nhe\nBond book charts completed\n1\n-\n1\nCharts brought up to date:\n3 bond chart books brought up to date\n20 (times)\n-\n25 (s)\nAll other charte brought up to date\n681\n36\n717\nMiscellaneous:\nTotal jobs\n24\n5\n29\nPhotographic:\nPhotographs:\nTotal jobs\n53\n23\n76\nNumber of-\nNegatives\n158\n114\n272\nContact prints\n178\n129\n307\nEnlargements\n60\n64\n124\nPhotostats:\nTotal jobs\n151\n30\n161\nNumber of-\nLettersize copies\n2,116\n1,239\n3,355\nAll other copies\n9,571\n1,973\n11,544\nMultilith:\nTotal jobs\n20\n1\n21\nNumber of-\nZinc plates\n133\n1\n134\nMiscellaneous:\n16\n6\n22\nTotal jobs\nLBiwlt\n7-10-41\nRegraded Unclassified\nStatistical Report on W.\nCompleted by the\nGraphic Section, Division of Research and Statistics, by months,\nbeginning January 1941.\nI\n#\n:\n:\n:\n:\n:\nType of work\nJan.\nFeb.\nMarch\nApril\nMay\nJune\nTotal\n:\n#\n1\n2\n:\n:\n:\nA.\nGraphic\nNew charts completed\n50\n57\n45\n52\n43\n45\n295\nCharte brought up to date\n734\n740\n727\n782\n723\n717\n4,423\nBond book charts completed\n-\n60\n2\n65\n2\n1\n130\n3 bond books brought up to date\n26\n(times)\n22\n(t)\n26\n(t)\n26\n(t)\n26\n(t)\n25 (t)\n151 (t)\nMiscellaneous jobs\n36\n36\n32\n39\n24\n29\n195\nB.\nPhotographic:\nPhotographs:\nTotal jobs\n105\n121\n128\n150\n75\n76\n655\nNumber of-\nNegatives\n153\n232\n218\n251\n169\n272\n1,295\nContact printe\n224\n247\n772\n729\n224\n307\n2,503\nEnlargements\n209\n608\n160\n474\n225\n124\n1,800\nPhotostats:\nTotal jobs\n167\n164\n216\n194\n161\n181\n1,083\nNumber of-\nLettersise copies\n746\n1,588\n2,936\n4,035\n1,627\n3,355\n14,287\nAll other copies\n10,828\n10,948\n11,336\n14,737\n8,605\n11,544\n67,998\nMultilith:\nTotal jobs\n8\n15\n10\n9\n9\n21\n72\nNumber of-\nZino plates\n100\n91\n91\n112\n128\n134\n656\nMiscellaneous:\nTotal jobs\n16\n31\n28\n18\n13\n22\n128\nLBswlt\n68\n2-3-41\n3-5-41\n4-1-41\n5-1-41\n6-2-41\n7-3-41\nRegraded Unclass\nFor Miss Chauncey\n69\nJuly 26. 1941\nCONFIDENTIAL\nDear Mr. Rouse:\nI have pleasure in acknowledging the receipt,\non behalf of Secretary Morgenthau, of your letter of\nJuly 24, 1941. enclosing your compilation for the week\nended July 16, 1941, showing dollar disburcements out\nof the Britich Empire and French accounts at the\nFederal Reserve Bank of New York, and the meas by\nwhich these expenditures were financed.\nFaithfully yours,\n(Signed) H. Merle Cochran\n1. Marle Cechran\nTechnical Assistant to the Secretary.\nRebert 0. Rouse, Require,\nVice President,\nFederal Reserve Bank of New York,\nNew York, New York.\nHMC:1mc-7/26/41\nRegraded Unclassified\n70\n0\nFEDERAL RESERVE BANK\nof New York\nJuly 24, 1941.\nCONFIDENTIAL\nAttention: Mr. E. Merle Cochran\nDear Mr. Secretary:\nI - enclosing our compilation for the week\nended July 16, 1941, showing dollar disbursements out of\nthe British Empire and French accounts at this bank and\nthe means by which these expenditures were financed.\nFaithfully yours,\n/a/ Robert G. Rouse\nRobert 6. Rouse,\nVice President.\nNonerable Heary Morgenthan, Jr.,\nSecretary of the Treasury,\nVashington, D.O.\nEnclosure\nCopy:MEW 7/26/41\nRegraded Unclassified\nMy 16, 1941,\nStrie\nConfidential\nOF LAND (BRITIER COVERIMENT)\nDIBITS\nCREDITS\nDEBITS\nProceeds of\nNet Incr.\nGreit\n(=) or\nGirt\nSales of\nProceeds\n(+)\nntal\nExpendi-\nOther\nTotal\nOther\nDear. (-)\nTotal\nSecurities\nExpendi-\nOther\nTotal\nof Gold\nOther\nDeor. (-)\nPERIOD\nDebits\ntures(s)\nDebits\nCredits\nGold\n(Difichl)(b)\nCredits(c)\nin Balance\nDebita\ntures (8)\nDebits\nCredito\nSales\nCredits\nin Balance\nFirst year of war\n(6/29/39-8/26/40)*\n1,793.E\n605.6\n1,187.61\n1,828.2\n1,356.1\n52,0\n420.1\n+ 35.0\n566,3(e)\n416,6 (0)\n449,7\n1,095,3(e)\n900.2\n195.1(e)\n+229.0\n1940\nAug. 29 - Oct. 2\n516.8\n244.5\n72.5\n308.9\n271.5\n6.0\n31,4\n- 7.9\n8.6\n4.4\n4,2\n1.3\n-\n1.3\n- 7.3\nOct. 3 - 30\n196.7\n167.8\n23,9\n198.5\n160.5\n6,0\n32.0\n+ 1.8\n0,5\n0,3\n0,2\n0,5\n-\n0.5\n-\nOct. 31 - Nov. 27\nS41.0\n201.1\n39.9\n259.5\n210,0\n18.0\n31.5\n+ 18.5°\n0,8\n0.1\n0,7\n0,7\n1\n0,7\n- 0,1\nNOT. 26 - Deo, 31\n234,6\n206,8\n27.8\n198.0\n111,4\n26.0\n60,6\n- 36,6\n2.1\nI\n2.1\n0.5\n1\n0.6\n- 1.5\nWar parted through Dec.\n2,762.3\n1,425.6\n1,355,72,793.1\n2,109.5\n108,0\n575.6\n+ 10.8\n878.3\n421.4\n456.9\n1,098.4\n900.2\n196.2\n+220.1\n1941\nJan. 2 - 29\n197.4\n162.7\n34.7\n259.9\n176.2\n52,0\n31.7\n* 62.5\n1.7\n-\n1.7\n0.5\nI\n0,5\n- 1.2\nJan. 30 - Feb. 26\n164.6\n137.8\n25.8\n101.4\n26.6\n26.0\n48.8\n- 63.2\n0.2\n-\n0.2\n0.2\n.\n0.2\n-\nFeb, 27 - Apr. &\n229.7\n157.6\n58.1\n237.9\n103,7\n78.0\n62.2\n+ 8.2\n0,7\n-\n0.7\n1,6\né\n1.6\n- 0.9\nApr. 3 - Apr. 30\n126.0\n101.9\n24.1\n228.9\n125.6\n15.0\n78.3\n+92.9\n0,9\n-\n0,9\n0,9\n-\n0,9\n.\nMay 1- May 28\n122.6\n90.6\n32.0\n91.0\n6.3\n32.0\n52.7\n-31.6\n0.4\n-\n0.4\n0.8\n-\n0.8\n+ 0.4\nMay 29 - July 2\n140.5\n113.8\n26.1\n105.1\n1.9\n11.0\n92.2\n-35.4\n21.5\n-\n21.5\n0.9\n-\n0.9\n- 20.6\nJuly 3 - July 30\nJuly 31 - AUGs 27\nSmood year of war\n(8/29/40-8/27/41)\nAug. 28 Oct. 1\nOct, 2- Oct, 29\nOct. 30 - Des, 3\nDoo. 4 - 31\nMEX ENDED:\nJane 25\n24.3\n15.8\n8.5\n12.5\n1.8\n2.0\n8.7\n- 11.7\n0.7\n#\n0.7\n0.1\n-\n0.1\n- 0,6\nJuly 2\n29.9\n27.5\n2,4\n2.9\n0.1\n-\n9.8\n- 20.0\n-\n-\n-\n0.1\n-\n0.2\n+ 9,2\n,\n24.5\n15.7\n8,8\n12.5\n-\n1.0\n11.5\n- 12,0\n-\n-\n.\n-\n-\na\n#\n16\n21.5\n11.1\n4,4\n18.9\n.\n2.0\n16.9(1)\n- 2.6\n-\n-\n#\n0.1\n-\n0.1\n+ 0.1\nAvorage Mookly Expenditures Since Outbreak of War\nTransfers from British Purchasing Commission to\n(See footnotes on reverse side)\nFrénce (through June 19)2940 $19.6 million\nBank of Canada for French Account\nEngland (through June 19)1940 27.6 million\nWeek ended July 16, 1941\n-\nmillion\nEngland (since June 19)1940 47+3 million\nCumulation from July 6\n162.7\nmillion\n-\nFor monthly breakdown seo tabulations prior to April 23, 1941.\n1948\nRegraded Unclassified\ncontinued\n(a) Includes payments for account of British Purchasing Commission, Brit inh Air Ministry, British Supply Board, Ministry or\nSupply Timber Control, and Ministry of Shipping.\n(b) Estimated figures based on trunsfere from the New York Agency of the Bank of Montreal, which apparently represent the\nproceeds of official Brit ish sales of American securities, including those offected through direct negotiation. In addition\nto the official selling, substantial liquidation of securities for private British account occurred, particularly during the\nearly months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According\nto data supplied by the Britiah Treasury and released by Secretary Morgentheu, total official and private British liquidation\nof our securities through December, 1940 amounted to $334 million.\n(o) Includes about $85 million received during October, 1939 from the accounts of British authorized banke with New York banks,\nprecumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,\n1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently secruing dollar\nreceipts.\n(d) Includes payments for account of French Air Commission and French Purchasing Commission.\n(e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.\n(s) About $11 million transferred from accounts of British Authorised banks with New York banks) $6 million of this amount represented the\nproceeds of exports from Singapore.\nRegraded Unclassified\nBANK\nOF\nCANADA\nDEBITS\nCREDITS\nDEBITS\nTransfers\nTransfers from Official\nTransfers\nto\nProceeds\nBritish A/C\nNet Incr.\nto\nProceeds\nNot Incr.\nTotal\nOfficial\nOther\nTotal\nof\nOther\n(+) or\nTotal\nOfficial\nOther\nTotal\nof\nOther\n(+) or\nDebits\nBritish\nDebits\nCredito\nGold\nFor Own\nFor French\nCredits\nDeer. (-)\nDebite\nBritish\nDebite\nCredits\nGold\nCredits\nDecr. (=)\nPERIOD\nA/C\nSales\nA/C\nA/C\nin Belance\nA/C\nSales\nin Balance\nirst year of war\n8/29/39-8/28/40)*\n323.0\n16.6\n306.4\n504.7\n412.7\n20.9\n38.7\n32.4\n+181,7\n31.2\n3.9\n27,3\n36.1\n30.0\n6.1\n. 4,9\n1940\n29 - Oct. 2\n44.3\n-\n44.3\n43.9\n16.4\n-\n27.3\n0.2\n- 0.4\n8.7\n2.5\n6,2\n8,0\n6.7\n1,3\n- 0.7\n3 - 30\n26.7\n-\n26,7\n28,6\n14.0\n-\n14,3\n0.3\n+ 1.9\n10.1\n7.5\n2.6\n7.9\n6.5\n1.4\n- 2.2\n31 - Nov. 27\n35.2\n-\n35.2\n69.6\n49.2\n,\n16.7\n3.7\n+ 34.4\n3.1\n0.6\n2,5\n3.6\n8.1\n1.5\n+ 0.5\nby, 28 - Dec. 31\n48.0\n#\n48.0\n60.6\n42.5\n-\n13.7\n4.4\n+ 12.6\n4,8\n-\n4.8\n6.8\n4.8\n2.0\n+ 2.0\nbe period through Don.\n477.2\n16,6\n460.6\n707.4\n534,8\n20.9\n110.7\n41.0\n+230.2\n57.9\n14.5\n43.4\n62.4\n50,1\n12,3\n+ 4.5\n1941\nan. 2 - 29\n33.7\n-\n33.7\n33.9\n16.9\n-\n15.0\n2.0\n+ 0.2\n4,8\nI\n4.8\n6.8\n5.1\n1.7\n+ 2.0\n30 - Fob. 26\n31.1\n-\n31.1\n24.3\n14.3\n-\n6.8\n3.2\n- 6,8\n5.0\n1.7\n3.3\n3.2\n0,6\n2,6\n- 1,8\neb. 27 - Apr. =\n60,9\n-\n60.9\n46,0\n23.1\n-\n19.1\n3.8\n- 14.9\n5.8\n0,8\n5.0\n13,7\n12.5\n1,2\n+ 7,9\n3 - Apr. 30\n34.9\n-\n38.9\n35.9\n12.5\n-\n10.5\n12.9\n+ 1.0\n2.8\n-\n2.8\n5.9\n4.6\n2.3\n+ 3.1\n1 - May 28\n39.2\n-\n39,2\n25.6\n15.8\n-\n0.5\n9.3\n- 23.7\n5.4\n-\n5,4\n4.9\n4,1\n0,8\n- 0,5\n29 - July =\n43.2\n-\n43.2\n48.2\n16.3\n-\n-\n31.9\n+ 5.0\n10.1\n-\n10.1\n5.8\n4.5\n1.3\n- 4.3\n3 - July SC\n31 - Aug. 27\nsoond year of war\n(11/42/8-07/63/8\n28 - Oct. 1\n2- Dote 29\n30 - Doc. 3\n4 31\nWEEK ENDKD:\n,\nJune 25\n4.1\n-\n4.1\n5.4\n2,9\n-\n-\n2.5\n+ 1.3\n0.9\n-\n0,9\n4.4\n4,3\n0,1\n+ 3.5\nJuly 2\n10.3\n-\n10.3\n2.9\n2,5\n-\n-\n0.4\n- 7.4\n2.2\n-\n2,2\n0.4\n0.2\n0.2\n- 1.8\n9\n1.9\n-\n1,9\n5.8\n3.9\n.\n-\n1,9\n+ 3.9\n1.2\n-\n1.2\n0.1\n-\n0.1\n- 1.1\n16\n9.1\n-\n9.1\n6.2\n33\n-\nИ\n2.9\n- 2.9\n2.4\nI\n2.4\n5.4\n4.8\n0.6\n* 3.0\nsekly Average of Total Debits Since Outhreak of War\nThrough July 16, 1941\n7.4\nmillion\nFor monthly breakdown see tabulations prior to April 23, 1941.\nRegraded Unclassified\n74\nAF\nPLAIN\nLondon\nDated June 26, 1941\nRec'd 2:15 p.m.\nSecretary of State,\nWashington.\n2663, twenty-sixth\nFOR TREASURY\nl. Considerable anxiety has been evident in\nthe press of late over the negotiations for the pur-\nchase by Warner Brothers of a block of shares in the\nAssociated British Picture Corporation owned by the\nlate John Maxwell. The TIMES city column yesterday\ncontained the following paragraphs on the negotiations:\n\"It has already been authoritatively stated in\nconnection with the negotiations proceeding for the\nsale of half of the ordinary shareholding of the late\nJohn Maxwell in the Associated British Picture Cor-\nporation, that the proposed transaction will in no\nSENSE involve the transfer of the control of the cor-\nporation to an American company. On the contrary\nit is expressly contemplated that control shall re-\nmain in this country.\n\"It should\nRegraded Unclassified\n75\n-2-\n2663, June 26 - from London.\n\"It should bE made clear that the control of the\nGaumont-Britiah Picture Corporation 1a not affected\nby the proposed sale Either. Though it is believed\nthat Mr. Maxwell in 1936 acquired a five-year option\non behalf of Associated British on a majority interest\nin the 'A' voting shares of the Metropolis and Brad-\nford Trust (which controls the Gaumont-British), this\noption is now worthless to Associated British and there\nis no prospect whatsoever of it bEing EXERCISED. Nor\nis there any question, it 1s understood, of Messrs,\nWarner Brothers using any remittable sterling balances\nin this country for the proposed transaction or going\nin any other way outside the agreement of last October\nbetween the Board of Trade and the Treasury and all\nAmerican Companies.\n\"The mutual advantages of the suggested share-\nholding interest between two companies which are already\nin a trade sense mutually dependent must bE obvious,\nBut it is clear that both parties have also shown 8\nreadingss in the negotiations to recognize that more\nthan mere commercial interests are involved,'\n2. Press comment today welcomes the announcement\nof the contemplated Reconstruction Finance Corporation\nloan against British direct and other investments in\nmuch\nRegraded Unclassified\n76\n⑉3⑉ 2663, June 26 - from London,\nmuch the same terms as those reported in the Embassy's\nno. 1835 of May 9. The TIMES city editor notes that\nthe loan \"Would avoid the sort of situation in which,\nbecause of the inevitable foroed-sale atmosphere about\npigosmeal realizations, there is likely to bE a dis-\ncrepancy between market values and real values\" and\nobserves that \"the question at what values the assets\nwould bE taken for the purpose of the collateral in\nany such arrangement is clearly important\".\n3. When presenting a vote of credit for L1,000\nmillion to the House of Commons the Chancellor of the\nExchequer stated that the vote for 61,000 million\npassed on February 6 (reported in the Embassy's tele-\ngram no. 465 of February 7) 18 now approaching Exhaus-\ntion, HE stated that up to June 21 some 6810 million\nof the previous vote had been issued and that 1f EX-\npenditure continues at an increasing rate the February\nvote will be exhausted early in July. Over the five\nWEEKS to June 21 the average rate of Expenditure was\n612 million a day. Of this war Expenditure had been\nabout L10-1/4 million per day, which compared with\n10-1/2 million for the five WEEKS previous to February\n6, the small reduction having occurred not in the vital\nbut in miscellaneous SERVICES such as Evacuation,\nMinistry\nRegraded Unclassified\n77\n-4-\n2663, June 26 - from London,\nMinistry of Food and Ministry of Transport, eto.\nBut he pointed out that the figure given for the\nlater period when compared with that given for the\ncarlier period indicated not a decline but an increase\nin the rate of war Expenditure at home, the supplies\nnow available under the Lease-and-Lend Act being EX-\ncluded in the present fiscal year's figures. The\nChancellor of the Exchequer further stated that since\nthe presentation of the budget on April 7 weekly\naverage subscriptions to war loans large and small at\nL39.3 million had increased by 30 per cent compared\nwith the corresponding figure for the months preceding\nthe budget and by 82 per cent OVEr the weekly average\nin the first year of the savings campaigh. Since\nthis increase was due in part to the London war weapons\nWEEK which Ended on May 24, it afforded no ground for\ncomplacency but hE Expressed his confidence that an\nincrease in the rate of genuine savings could bE achie-\nved which would fulfill the Expectations on which the\nbudget was based. HE asserted that the Government\nwould endeavor to borrow only by methods consistent\nwith a sound financial and Economic basis and would\ncontinue to borrow as cheaply as possible. HE also\nannounced that a new savings drive to extend groups\nof small savers 18 about to bE launched.\nIncidentally\nRegraded Unclassified\n78\n⑉5⑉\n2663, June 26 - from London.\nIncidentally the strength of the gilt-Edged market\nis now such that it has given rise to suggestions that\nthe government is in so atrong a position that it can\nopen up a new era of cheop money. The FINANCIAL TIMES\nindex of Government securities (November 15, 1926 equals\n100) which was already 112.2 on February 23, or 11.3\npoints above the level at the outbreak of war (SEE the\nEmbassy's no. 707 of February 24) now stands at 113.3\nhaving remained over 113 since May 1 EXCEPT for B\nslight set-back in the first WEEK of June when the Crete\nevocuation affected sentiment.\nWith 2-1/2 per cent on tap national war bonds\nnow being dealt in at a premium the termination of the\npresent issue is EXPECTED daily and speculation as to\nthe nature of its successor ranges from a possible si-\nmilar security of longer term to suggestions that the\ntime is propitious for a major step comparable to the\nwar loan conversion of 1932 on a smaller soale.\nIn reply to questions in the House of Commons\nyesterday, asked no doubt with the recent increases in\ncoal miners' wages in mind, the Chancellor of the Ex-\nchequer stated that \"the policy of the Government ns\nwas explained at length in my budget speech is to\nguard against such dangers (inflation) by a varisty of\nmeasures\nRegraded Unclassified\n79\n⑉6⑉\n2663, June 26 - from London.\nmeasures and in particular to create conditions to\nEnable the wages situation to bE held about where it\nthen was, The government propose to maintain that\npolicy. 11\nWINANT\nRR\n80\nRS\nGRAY\nBERLIN\nDated July 26, 1941\nRec'd 10:20 p.m.\nSECRETARY of State,\nWashington.\n2986, July 26, 2 p.m.\nThe press this afternoon reports with considerable\nprominence the freezing of Japanese assets by the United\nStates and the British Empire and Japan's intention\nto take counter measures. Brief aditorial comment\nsays that the initiative for this step obviously came\nfrom Washington and that it constitutes a new \"flagrant\nprovocation\" in President Roosevelt's alleged world\nwide policy of aggression. It is insisted that Tokyo\nand Vichy have acted within their legitimate rights\nin regard to Indochina and confidence is expressed\nthat Japan \"1s determined not to allow itself to bE\nintimidated.\"\nMORRIS\nDAS\nRegraded Unclassified\nyes\nC\n0\n81\nP\nY\nPARTIAL PARAPHRASE OF TELEGRAM SENT\nTO:\nAmerican Embassy, Chungking, China, via N.R.\nDATE: July 26, 1941, 7 p.m.\nNO.: 167\nTHE FOLLOWING IS FROM THE SECRETARY OF THE TREASURY\nFOR FOX.\n(Not in paraphrase) Extension of freezing order to\nChina and Japan. New Executive Order simply applies usual\nfreesing control to China and Japan. By general license\nJapanese and Chinese living in the United States since\nJune 17, 1940 are unfrozen. All trade between the United\nStates and free and occupied China excluding Manchuria\nhas been generally licensed. All American, British,\nBussian, Dutch and Chinese Governmental banks in Chine have\nbeen given general licenses covering their own transactions\nand also covering transactions relating to trade between\nChina and the United States, British Empire, Dutch East\nIndies, Latin America and Russia on account of persons\nliving in China excluding Manchuria. (End of non-paraphrased\nsection.)\n(In paraphrase.) Permission has been granted for the\nclearings of other Chinese banks with the generally\nlicensed banks to be made through the Central Bank of China.\n(End of paraphrased section.) General license given to\nthe Chinese Government and Central Bank in effect take them\nout of the freezing order and also permit all funds in the\nUnited States of Chinese nationale to be transferred to\naccounts\nRegraded Unclassified\n82\n- 2 -\naccounts in the names of Chinese Government and the Chinese\nCentral Bank. A general license has also been given to\nthe China Defense Supplies Company, the Universal Trading\nCompany and the New York Branch of the Bank of China.\nAlthough Hongkong is not a part of China within the meaning\nof the freezing order since 80 many Chinese and Japanese\noperate out of Hongkong a. general license has been issued\napplying the general license to Hongicong to the same extent\nP.O. though Hongkong were a part of China.\nAs far as Japan is concerned no general licenses have\nbeen given to agencies in the United States of Japanese\nbanks except those agencies which are also banks of deposit.\n(In paraphrase) Examiners of the Comptroller's Office have\nbeen stationed in banks of deposit to which general licenses\nhave been issued by the Comptroller's Office. (End of para-\nphrased section.) Trade between the continental United States\n(including Hawaii) and Japan will be handled on & specific\napplication basis.\nA series of general licenses has been issued covering\nthe relationships between the Philippines and China and\nJapan. The general licenses cover all Japanese and Chinese\nbanking and business institutions in the Philippines and\nall trade between the Philippines and Japan and China.\n(In paraphrase.) In regard to our attitude toward Japan\nand China, we will adhere to B. policy of liberality and\ncontinuity of normal business for the present time in the\nPhilippines.\nRegraded Unclassified\n83\n- 3 -\nPhilippines. (End of paraphrased section.) In Hawaii\ngeneral licenses have been furnished to Japanese and\nChinese banks and business institutions. Hawaiian trade\nwith Japan will require specific applications. Hawaiian\ntrade with China is covered by the general trade license.\nWe will try to forward to you as soon as possible copies\nof the general licenses.\nWELLES, ACTING\n(DA)\nA-A:DH:MFA\nEA:PAK\nCOPY:MEW 7/31/41\nRegraded Unclassified\nC\n84\n0\nP\nY\nCONFIDENTIAL\nPARAPHRASE\nA telegram (no. 1096) of July 26, 1941 from the\nAmerican Ambassador at Tokyo reads substantially as follows:\nAmerican firms in Tokyo have during the past few\ndays received visits from officials of the Ministry of Finance\nwho demanded that they be supplied with full reports in\nregard to all financial and business transactions, including\ndetails concerning property holdings, bank balances and\nreserves. It was demanded that these reports be submitted\nby July 25. It was demanded also that by July 31 a detailed\nreport be submitted concerning the personal property of\nAmerican individuals. This procedure was begun apparently\nas & prelude to extending freezing control to the credits\nof Americans in Japan as a retaliatory measure against\nthe expected extension of freezing control by the United\nStates to Japanese credits.\nCopy:bj:8-2-41\nRegraded Unclassified\nC\n85\n0\nP\nGRAY\nY\nTOKYO\nDated July 26, 1941\nRec'd 1:47 p.m.\nSecretary of State,\nWashington.\n1100, July 26, 9 p.m.\nIn a note handed to the Japanese Foreign Minister\nthis afternoon the British Ambassador served notice of\nthe termination of the Treaty of Commerce and Navigation\nof April 3, 1911, between Japan and Great Britain, and of\nthe conventions regarding commercial relations and trade and\ncommerce between India, Burna and Japan of July 12, 1934,\nand June 7, 1937, respectively, on the grounds that these\ninstruments can no longer be regarded as fulfilling the\nobjects which the British, Indian and Burman Governments\nhad in view at the time of their conclusion. The note\nstates that in accordance with the terms of the treaty and\nconventions the Treaty of Commerce and Navigation with Great\nBritain will expire one year and the conventions six months\nfrom today's date.\nGREW\nWSB\nRegraded Unclassified\n86\nMP\nPLAIN\nTokyo\nDated July 26, 1941\nRec'd. 7:08 a. m.;\nSecretary of State,\nWashington\n1095, July 26th.\nTonight's ASAHI, MIYAKO, HOCHI carry identical\narticle commenting American Government's action\nfreezing Japanest credits declaring move not unexpected\nand that Japan fully prepared take counter measures.\nGrave Effect on Japanese trade not only with United\nStates but also Latin America and British Empire\ntermed inevitable. Japanese Government will watch\nalertly further developments and will take proper\naction.\nGREW\nEMB\nRegraded Unclassified\n(CONFIDENTIAL)\n87\nPARAPHRASE\nA telegram of July 26, 1941 from the American Legation\nat Canberra reads substantially as follows:\nFreezing of Japanese assets and unqualified cessation\nof trade will be announced soon by the Australian Government\naccording to Hodgson.\nCopy:bj:7-30-41\nRegraded Unclassified\n88\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Consulate General, Singapore,\nStraits Settlements\nDATE: July 26, 1941, 1 p.m.\nNO.: 179\nReference telegram of July 26, 11 a.m., no. 178 from\nthe Consulate General.\nThe Colonial Secretary has Just informed me that\nthe freezing order on assets of the Japanese in the Straits\nSettlements will probably be issued in the very near future.\nThis telegram has been sent to the Department and\nrepeated to Tokyo, Saigon, Batavia, and Chungking.\nPATTON.\n10 1ME\nVGA\nwill\nLECHUE\nENT I 201 20 VW 11 20\nEA:LWW\n18+\nRECEIVED\nRegraded Unclassified\nCOPY\nTELEGRAM SENT\nTO: AMERICAN LEGATION\nTANGIER (MOROCOD)\n26\nME_VMA\nDATE: July 83, 1941.\nNO.: 95\nYour 254, July 17, 10 a.m,\nOn July 23 the Treasury Department issued General\nRuling No. 9 which reads as follows:\nQUOTE Inquiry has been made AS to whether a person\nwithin Tangiers may engage in transactions purwant to\nGeneral License No. 52 relating to Spain. General\nLicense No. 52 does not permit such transactions and,\naccordingly, any such transactions which are not authorized\nby a general license other than General License No. 52\nmay only be effected pursuant to a specific license. UNQUOTE.\nThis in effect means: (a) that the General License\nrelating to Spain does not apply to transactions of residents\nof Tangier and (b) that Tangier 1s frozen under Executive\nOrder No. 8389 as amended. Hence transactions specified\nin the Executive Order between the United States and residents\nof Tangier cannot be carried out except under individual\nlicense applications, with the exception of certain classes\nof transactions permitted under General Licenses other than\nGeneral License No. 52 relating to Spain.\nIt is the understanding of the Department that General\nRuling No. 9 conforms clossly with the suggestions contained\nin your telegram under reference.\n840.51 Frozen Credita/2550\nWELLES, ACTING\nEA: GL: CAD CAD EU II\n(na)\nRegraded Unclassified\n90\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy, R10 de Janeiro, Brazil\nDATE: July 22, 1941, 10 p.m.\nNO.: 910\nA transfer 1s being made by the Yokohama Specie Bank\nfrom its dollar balance held in the Bank of Brazil of\n$1,000,000 to the Peruvian Central Reserve Bank. This amount\n1s then to be transferred again, $550,000 to Buenos Aires\nto the Bank of the Republic, and the rest to the Banco Italiano,\nthrough the Chase National Bank.\nThis telegram was repeated to the American Embassy at\nLime and to the American Embassy at Buenos Aires.\nIt is requested that the Treasury be informed of the\nabove,\nCAFFERY.\nYNL\nEvi 70° 3V bW 31\n13\nBECTIVED\nEA:LWW\nRegraded Unclassified\nRESTRI CTED\nG-3/2657-220; No. 651\nM.I.D., W.D.\n12:00 M., July 26, 1941.\nSITUATION REPORT\nI. Eastern Theater.\nGround: Russians are counterattacking Finns at Petrosevonak.\nNew German advances, probably slight, towards Leningrad from West, South-\nwest, and Southeast.\nGermans acknowledge strong Rissian counterattacks in\nSmolensk sector. Russian reserves have been brought up to VYAZMA\nCapture of Odessa seems imminent.\nAir: German bombing of Moscow appears to have damaged defense\nindustry seriously.\n11. Western Theator.\nAir: German+ Slight activity.\nBritish. Limited daylight operations. Normal night\noperations, centered on Hanover and Hamburg, Berlin was attacked by a\nfew heavy bombers. British admit lone of nine bombers in all.\nIII, Moditerranean Theater,\nGround and Air: Unimportent activity.\nNaval: The British convoy which fought its way through the\nRediterranean, has arrived at Malta. There the British report repulse\nof an Italian torpedo boat attack on the ships.\nRESTRI CTED\nRegraded Unclassified\nCONFIDENTIAL\n92\nof Code Cablegues\nReserved at the Ver Department\nat 12:01, July 26, 1941.\nLouisu, filed 16:15, July 26, 1941.\n1.\n2. A total of 106 teas of high explesive beste\nvere dropped as follows: fifters 2000 pound erner-piereing and fifty-three\n500 yound cont-ormar-pierving on the Schurahorst, 16 tome of high explosives\non Charboarg, twenty 2000 yourd arnor-pierelag base - the include.\n2. % teams of high explosives and 6000\nincendiaries were droyped - 0a Kiel 47 seas of high explosives,\nincluding five 1900 pound bombo and three 4000 pound booths, and 3300\ninsendiaries were drogged.\n1. Par of July 25. No bonbing activity due to bed wather.\nThe fighter differt consisted of s total of 499 fighters on missions as\nfollows: 149 - interception: 541 protection of chipping: 30 - a special\npetrol - \" - offensive operations.\n4. A total of 109 beabers very ⑉ at\nas follows: 43 to the relivery center at Manberg, \" to the have railway\nowner, 2 to Males, and 7 Stirlings end two Halifax bookers to the infastrial\ncenter of Borlin.\n2.\na. 10 recommissiones aircraft and 15 1mg\nreage baten wire employed.\n1. 24-05. , recommisence aircraft, 10 fighters\n1 I 2 I I I\nCONFIDENTIAL\n-\nRegraded Unclassified\nCONFIDENTIAL\n93\n1. Operations on a relaced seals, emaisting\nof recommissence of shipping and the mintenease of fighter patrols\ncoverred.\n1. German night fighters operated in the\nareas of Lincolashire, Torkshire, Suffelk and Borfalk.\n3. Aircraft Lesses Reported.\n1. British losses. Losses during the night of July 85-26 were\nM follows: , bonkers unreported and 1 bonker creaked in the raid against\nlearner, 1 beater unreported and 1 down at ⑉ is the Ranburg raid, and\n2 Stirlings and 1 Halifax unreported from the raid on Berlin. No fighters\nwere lost an July 85.\nLIER\nDistribution:\nState Department\nAssistentShief of staff, 0-8\nVar Plans Division\nOffice of Neval Intelligence\nG. a. Q.\nChief of the Any Air Foress\nSecretary of Treasury\nAssistant Becretary of Var for Air\nAssistant Chief of Staff, 0-3\nAir Corpo\n+\nCONFIDENTIAL\nRegraded Unclassified\n94\nCONFIDENTIAL\nParaphrase of a Code Cablegram\nReceived at the War Department\nat 12:01, July 26, 1941.\nLondon, filed July 26, 1941.\nThe following is a. summary of British Military Intelligence\ninformation to the morning of July 26,\n1. Japan. On July 24, twelve Japanase troop ships embarked\nat Bainan for saigon. The increased troop novements by rail from\nTokio to Siigata are taken to mean that the Japanese in Korea or\nManchukus are to be strengthemed by may of Seishin.\n2. Libya. Om the might of July 23-24, patrols were active\nin the neighborhood of Tobruk. On July 24, a. dause sandstorm resulted\nin an interruption to all troop activities.\n3. Russia.\nas Southern Sector. German advances is the sector south\nto southwest of Kiev are thought to be aiming at making liaison with\nAxis forces which have pressed beyond the Iniester and are presseding\neast of Podolsk--Mogilev with a mederately extended front. Another\nGerman advance to the southeast from south of Kiev has also been\nrevealed.\nbe Central Sector, In the northern and southern vicinity\nof Seelemsk, German columns are pressing to widen the salient and\nthroughout this area German activity is in the nature of mopping up.\nNortheast of the city German advances are being mistained.\nINFORMATION CO21\nCONFIDENTIAL\nRegraded Unclassified\n95\nCONFIDENTIAL\n0. Northern Sector. Nasi troops appear to be making an\neffort to consolidate their lines along the railroad south of Due.\nLEE\nDistribution:\nState Department\nAssistant Chief of Staff, G-2\nWar Plans Division\nOffice of Naval Intelligence\nG. H. Q.\nSecretary of Treasury\nG-3\nAir Corps\n- 2 -\nINFORMATION COPY\nCONFIDENTIAL\nRegraded Unclassified\n96\nTHE\nAMERICAN\nFORUM\nOF THE AIR\nVel. 3\nSUNDAY, JULY 27, 1941\nNo. 30\n\"Your New Jaxes\"\nREPRESENTATIVE ROBERT L. DOUGHTON\nof North Carolina\nREPRESENTATIVE ALLEN T. TREADWAY\nof Massachusetts\nREPRESENTATIVE JERE COOPER\nof Tennessee\nREPRESENTATIVE FRANK CROWTHER\nof New York\nREPRESENTATIVE WESLEY E. DISNEY\nof Oklahoma\nREPRESENTATIVE THOMAS A. JENKINS\nof Ohio\nRansdell Inc.\nPrinters and Publishers\nWashington, D.C.\nCopyright 1941 by THEODORE GRANIK, Director of the American Forum\nRegraded Unclassified\nInsurancer Fronk Blair: WOL and WOR present over the Mutual net-\nwork the \"American Forum of the Air,\" arranged and directed by Theodore\nTrank. attorney and nationally syndicated newspaper columnist. Copies of\nsonight's program which emanates from the Hotel Willard in the Nation's\nCapital, may be obtained from Ransdell Incorporated, printers and pub-\nlishers in Washington, D. C. And now your chairman, Mr. Granik.\nChairman Granik: Thank you, Mr. Blair,\nTonight the United States is under full steam ahead, in the greatest\npracetime mobilization of military resources, in its history. Every day,\nevery hour, HERE recapons for the defense of America guns, tanks,\nplanes, buttleships flow, in ever increasing numbers, into the\nhands of our land and naval forces.\nThe nation is building its defenses, but the cost of arming (§ nation is\ngreat. Same forty billion dollars has already been appropriated for that\npurpose. Other billions will follow. So far, most of the money for defense\nhas come from government borrowing. But now the time has come, as if\nwant. when part of the cost of our huge defense program must be raised\nthrough direct taxation.\nMindful of this necessity, the Ways and Means Committee of the House\nof Representatives has labored countless hours in the post three months,\ntrafting W/M lar legislation. The fruit of their efforts, the \"Revenue Act of\n1941.\" and formally introduced in the House branch of Congress yesterday.\nThe bill is far-reaching. In its present form it will affect virtually\ncury wage carner and consumer in the country. Debate on this all in-\npurtant faz measure is scheduled to start on Tuesday. And tonight the\n\"American Forum of the Air\" brings you a preview of expected House\naction (MI \"Your New Tazes.\" Our speakers, three Democrats and three\nRepublicans, are all members of the Ways and Means Committee.\nThey are: Congressman Robert L. Doughton (D.) of North Carolina,\nChairman of the Committee; Congressman Allen T. Treadway, of Massa-\ncharetts, Ranking Republican Member; Congressman Jere Cooper (D.),\nof Tennesse: Congressman Wesley E. Disney (D.), of Oklahoma; Congress-\nwe Fronk Crowther (R.), of New York; and Congressman Thomas 4.\nJenkins (R.), of Ohio.\nFollowing short opening statements by Congressmen Doughton and\nTreadway, ICE will continue with an informal round-table panel discussion.\nWe invite your letters and comments on tonight's presentation. And\nnow Congressman Doughton.\nADDRESS BY REPRESENTATIVE ROBERT L. DOUGHTON\nLadies and Gentlemen: My subject tonight is national defense and\ntaxation. The national defense program is of paramount interest to the\nAmerican people, In addition, peoples in every part of the world, to whom\nfreedom of action, freedom of speech and freedom of spirit are dear, are\ntremendously concerned in the success of our preparedness effort.\nThe tax bill, which the Committee on Ways and Means has just re-\nported to the House, is a vitally necessary part of this program. Taxation\nis the very life blood of governmental finance. All other methods of finance\nare Im delayed taxation and the anticipation of future taxes. If any\ngovernmental program is to be brought to a successful fruition, it must\nhave viowly integrated with its other aspects an adequate plan of taxation.\nWar today is, to a great degree, mechanical. Enormous numbers of\nmachines are necessary to successfully stand against the engines of aggres-\nPAGE THREE\nRegraded Unclassified\nkion. Ships, planes, tanks, guns, and the countless other accoutrements of\nmodern wurfare are fabulously expensive.\nneed for concerted emergency action demands it, and that 4€ democracy\nRegardless of the cost, the American people are united in their deter\n(an function quickly and effectively when their safety is threatened.\nThis tax bill is without parallel in the amount of revenue it will pro-\nmination to have these implements, and the trained personnel to man them,\nin a. quantity and of a quality sufficient to make our safety certain, The\nduce. It lays a substantially increased burden upon the American people\nscope of the expenditures contemplated to complete this program expands\nand will entail considerable sacrifice. Not only will the burden of this bill\nbe heavy but even heavier levies evidently will be necessary before we have\nalmost daily. We now have appropriations, authorizations, and recommenda.\nattained success in our defense undertaking.\ntions for national defense totaling 50 billions of dollars. This does not\nIf I understand the temper of the American people, however, I can any\nmean that this entire sum is to be spent in this fiscal year. It means simply\nwith assurance that they place no dollar sign on their LIBERTY AND\nthat our defense program, as far as we can see today, calls for the eventual\nFREEDOM and will uncomplainingly bear any burden that is considered\nexpenditure of this amount.\npressury to assure to us and to our children the blesings handed down to\nFor this fiscal year 1942 our total expenditures are expected to exceed\n12 billions of dollars. The financing of these expenditures can be accom.\n0% by our forefathers.\nplished only by two methods, taxation and borrowing, and the latter must\nChairman Granik: Thank you, Chairman Doughton.\nalso be met by taxation in the end. There can be no doubt but that We\nAnd NOW 100 present Congressman Allon T. Treadway.\nshould pay as much as our economy will justify as we go. This limit, a\nmatter of judgment, nbout which opinions differ, has been given very care-\nADDRESS BY REPRESENTATIVE ALLEN T. TREADWAY\nInl consideration.\nFrom taxes now in force, it is estimated that we will secure $9,400.-\nMR. TREADWAY: Due to the critical condition of the national finances\n000,000 in the fiscal year 1942, This would be about 43 percent of the an-\nresulting from past governmental extravagances-which is now aggra-\nLicipated expenditures. The tax bill just reported to the House will pro-\nvated by the necessity of making staggering outlays for defense-a sub-\ndue 3% billion, annually. With this additional revenue, our total receipts\nstantial increase in the tax burden at this time is inescapable,\nwill be more than 60 percent of our total expenditures for all purposes.\nDuring the last several years, it has been the practice to present the\nThe Grure, 316 billion, was agreed to at the outset of our deliberations by\nAmerican people with at least one new tax measure each year.\nrepresentatives of the Committee on Finance, the Committee on Ways and\nThe tax load has now grown to such an extent that during the present\nMeans. and officials of the Treasury Department, and represents the added\nfiscal year, approximately 9 billion 400 million doflars will he collected\nBurden which, in our best judgment, should be imposed at this time.\nunder existing tax laws.\nIn its consideration of this bill during the last three months, the Com-\nThis amount is 50 per cent more than the highest receipts mider the\nmitter OR Ways and Meaus has continually kept in mind the principles of\nworld War Revenue Acts. Neveretheless, it is far from adequate to movt\nequity and fair play, It was urged by some that we adopt this or that\nthe present cost of Government.\nextreme, and by others that we resort to some novel or fanciful method and\nApropriations for national defense have already reached the 43 billion\nthat mitried plan. In general, we endeavored to steer a middle course,\ndollar mark, not including some 7 billions of recent requests for supple\ndistributing the weight of the tax burden as carefully as we could amount\nmental items, and there is no telling how much more will THE required in\nthe various classes and types of taxpayers.\n.he future.\nIn this connection, I wish to thank the American people for the splendid\nFortunately for the Treasury, not all of this amount will be spent\nattivade they have evidenced during the consideration of this bill, A\nin one year.\nSTREET deal of futerest has been shown. Many thousands of letters and tele-\nActual expenditures for national defese in the period beginning July 1,\ngrams have been received. clearly demonstrating the willingness of our\n1941 and ending June 30, 1942 will be in the neighborhood of 15% billions.\npeople to mointile the burden which the bill imposes.\nIncluding non-defense functions, the total cost of Government this\nThe hill in of course, not perfect, nor is the fruit of any democratie\nyear will be more than 22 billions.\nnotion. It does not represent precisely the result of anyone of us, working\nThus. without additional tax revenues, and in the absence of any\nindependently. would have achieved. That fact alone constitutes a con-\neconomy in expenditures, the Treasury would be faced this year with a\nsiderable virtue. I cam assure you that the bill as presented represents the\ndeficit of nearly 13 billions.\nvery mitter best offorts and considered judgment of the membership of our com-\nEven under the most favorable conditions. It deficit of this size would\nbe alarming. It is particularly so at this time when we have just completed\nIn the entire 16 years during which I have been a member of the Com-\nthe eleventh successive year of unbalanced budgets.\nmitter on Ways and Means I have never seen the committee work quite\nMAK hard OF more conscientionsly to achieve 8 just goal. While there were\nto this period, expenditures have exceeded revenus by 32 billions. The\nmany differences of opinion to be reconciled by deliberation and débate, I\nnational debt has been piled up to a total of 50 billions. making further\ntake great pride in the fact that never once was there shown the slightest\nborrowing extremely hazardons from the staudpoint of the national credit.\ndegree of partisanship in debate or in the votes taken by the committee.\nTherefore, we must hold it to a minimum-to what we cannot avoid after\nNo observer of our deliberations could have ascertained from the actions\nincreasing taxes and reducing expenditures.\nof The members any indication of their party affiliations.\nIn view of the heavy taxes already imposed, there in N. limit to how\nThis I take to be a convincing proof of the success of the democratic\nmuch further we can go without unduly burdening the people or crippling\nprocess It demonstrates that unity can be had under our system when the\nproduction. Moreover, we have to face the fact that the available sources\nof Federal taxation have been pretty much exhausted in the apparently\nPAGE FOUR\nPAGE pive\nRegraded Unclassified\nfutile effort to try to keep pace with the ever-increasing cost of Government\ndiction of appropriation matters, I CBD not refrain from mentioning this\nin the pre-emergency period.\naubject briefly. Secretary Morgenthau told the committee that in his opinion\nUnder the new tax bill-which in the largest single revenue measure\nhe Government ought to be able to reduce non-defense expenditures by one\never presented-it is proposed to increase existing taxes by 3½ billions\noillion dollars. Other responsible persons and organizations have made\nThis will bring the total tax load to approximately 13 billions, or more than\neven higher estimates of possible savings, It seems to me that if the citizens\ndouble the World War burden. Even with this increase, however, the Gov.\nof the country are to be required to make sucrifices for defense, the civil\nernment will spend this year approximately 10 billions more than it collects\nagencies of the Government should do likewise, From the standpoint of\nin revenue,\npreserving the Nation's credit, the reduction of non-defense expenditures\nAlthough the bill contains less than 100 pages of text, it has been some\nis DO less imperative than the proposed increase in taxation.\nthree months in preparation. Public hearings began on April 24th and ex.\ntended for a month. Over 200 witnesses appeared before the committee, and\nChairan Granike Thank you, Congressman Treadway.\nnearly 2,000 pages of testimony were taken. For two months, the committee\nAnd now we continue with our informal round-table panel discussion.\nhas been engaged in the actual drafting of the bill, which was just com.\nCongressman Cooper, will you open the panel?\npleted on Wednesday of last week.\nCONGRESSMAN COOPER: Ladies and Gentlemen It is my purpose very\nThere of course is not time, in the brief period allotted to me, to go into\nbriefly to diseuss some of the provisions of the pending tax bill. Realizing\nany details concerning the bill as presented to the House of Representatives\nthe interest manifested by the people throughout the country, we feel that\nNeedless to say, the task of finding ways and means of raising 3½ billions\nmembers of the committee, charged with the responsibility of drafting the\nin new revenue was IS difficult one. In considering various tax proposals\nlegislation, should convey as much information as possible to the people\nthe committee had always to keep in mind the necessity of equitably spread-\nwho will have to pay the taxes.\ning the burden among the different classes of taxpayers.\nThe new bill provides for the additional taxes to be effective January\nFor the most part, the additional revenue will come from raising the\nfirst of this year. The present 10 per cent defense tax is made permanent.\nrates on individual and corporate incomes, from higher excess-profits taxes,\nPersonal exemptions of $800 for single persons and $2,000 for married per-\nhigher estate and gift taxes, and from increasing the rates of most of the\nsons are continued. Likewise, the $400 credit for dependents is continued.\nexisting excise levies. In addition, new excise taxes are imposed on a Dum-\nSurtax rates are increased substantially under the provisions of this bill,\nber of articles of every-day use.\nbeginning at 5 per cent on the first $2,000 and graduated on upward. RO as\nSome criticiam has been made of the bill in that it places the increased\nto apply to the first dollar of net income.\nburden too much on existing taxpayers instead of spreading it more gen-\nThe present normal corporation tax is continued under the provisions\nerally upon the people. In this connection, I might say that the committee\nof this bill. The new bill imposes upon corporations a surtax of 5 per cent\nconsidered the question of broadening the income-tax base by lowering the\non the first $25,000 and 6 per cent on the balance. The surtax is employed\nexemptions, but a majority opposed such action, principally on the ground\nas the only means of reaching income from the large volume of partially tax-\nthat the amount of revenue to be derived from 80 doing would not much\nexempt Federal securities held by corporations of the country.\nmore than pay the cost of collection.\nThe present rates are increased 10 percentage points in the excess\nOn the other hand, it may very well be argued that even if this were\nprofits tax, which applies only to corporations. An important change in\nNO. it would be worth while since it would make our citizens more tax con\nthis respect is the difference in the method of computation of the excess\nscious if they were required to make il direct contribution for the support\nof their government,\nprofits tax. Under the present law, you deduct the normal corporation tax\nbefore you deduct the amount of income subject to excess profits tax. This\nOf course at the present time they are now paying touch more than\nis changed so that you compute the excess profits tax before the deduction\nthey suspect in indirect levies, and this is a further argument which is used\nof normal tax.\nagainst the proposition of lowering the income-tax exemptions. One Govern-\nThe present exemptions for the estate and gift taxes above $40,000 in\nment agency has estimated that even the lowest paid wage-earner pays from\ncontinued, and the rates are increased NO as to yield $152,000.000 additional\n18 to 21 cents out of every dollar he earns in hidden taxes.\nrevenue.\nOne of the most controversial provisions of the bill is that which makes\nWith respect to individual income tax payers and directly on the sub-\nhusbands and wives file a joint income-tax return, thus bringing their income\njeet announced for this discussion, \"Your New Taxes\" mean that people\ninto a higher surtax bracket. The committee had two principal motives in\nwith net income of about $15,000 will be required to pay double or more the\nincluding this provision, namely, to prevent tax avoidance and to raise 300\namount of taxes now paid. People with $50,000 net income will be required\nmillions of revenue which would otherwise have to be imposed on persons\nto pay 40 per cent more; $100,000 net income people will be required to pay\nless able to pay. It has been vehemently criticized on the false ground that\n23 per cent more.\nit will encourage divorce and immorality. Secretary of the Treasury Mor-\nAs was indicated by Mr. Treadway, one of the questions receiving very\ngenthau effectively disposed of this argument when be said that \"when A\nserious consideration of the committee was that with respect to lowering\nman's wedded life depends on his tax return, it hangs on a pretty slim\nthe exemptions for personal income tax. I remember that Dr. Crowther, of\nthread.' It should be pointed out that where the joint income does not\nNew York, has taken a special interest in this, and I feel sure that he will be\nexceed $4,000, no increased tax liability results from combining the income\nglad to give us some further information on that point.\nin one return.\nCONGRESSMAN CROWTHER: Well, Mr. Cooper, the matter of exemptions\nAlthough the tax bill contains no item in reference to economy in es-\nis a matter that has been considered by all committees writing tax bills.\npenditures, due to the fact that the Ways and Means Committee has no juria\nExemptions are based on the question of subsistence. It was finally decided\nPAGE --\nPAGE BEVEN\nRegraded Unclassified\nthat $800 for a single person and $2,000 for a married man, whether or DOL\nwith family, but particularly with family, certainly could be considered\nday that we are collecting. That will be thirty million dollars a day that\nnothing more than subsistence. A great many people object to exemption\n5 we spend, but we are going to spend in the next year $100,000,000, How\nof any character and think that they ought to be removed altogether, and\nare we going to do it! How are We going to reach it? I any to you that we\nthe complaint has been made in the press and by the commentators and\ncall economize $100,000,000 n year on non-defense expenses, and we could\nothers that the committee is politically cowardly and that they don't dare\neconomize is billion dollars 8 year also in defense expenses:\nCONGRESSMAN DISNEY: How are you going to do that, anyhow! I\nto reduce the exemptions because the proletariat, the body politie, that\nwould be affected, vote. There is no rhyme or resson in that sort of charge.\nhave been talking for six weeks or two months on that subject, and I made\nThe fact is-and I can state it very briefly-last year we reduced the BI\nsuch a motion in the committee and got my eye shot. out with a point of\nemptions for married people $500, and we reduced the exemptions for à\norder, which was probably properly sustained. What plan have you got to\ndo that very thing you are talking about!\nsingle person $200. The net result of that was that there came to the\nCONGRESSMAN JENKINS: You can't formulate a plan like that in a\nTreasury-not to Washington, but in the field of the Internal Revenue\noffices-some ten and a half million new tax returns, and out of the ten and\nminute. I made a speech upon the floor of the House a day or two ago,\na half million, only two million had any tax return to the Treasury, vary\ngoing into full detail. I will cite you one instance.\nCONGRESSMAN DISNEY: Another question: How are you going to do\ning from eleven cents up to seven, eight, or nine dollars. The total amount\nit when the Ways and Means Committee raises the money, on the one hand,\ncollected was between twelve and thirteen million, and it cost eight million\ndollars to collect it and required 3,900 new employees in the Internal\nand the Appropriations Committee spends it on the other, without any\nRevenue Department, which was probably 8 very joyous thing for my\nsign of n chance on the part of either committee to have anything to say as\ncolleagues who had the opportunity of naming some of them.\nto spending or as to collecting!\nCONGRESSMAN TREADWAY: If Mr. Jenkins will allow me to answer that\nCONGRESSMAN COOPER: Doctor, I am sure you will also recall that the\nquestion my way, I have had a resolution before the House for a long time\npresent exemptions mean the person receiving $15 a week as a single person,\nand 838 n. week as a married person.\ncovering that very point, setting up a committee, from the Ways and Means\nCONGRESSMAN CROWTHER: Yes, and then there is another thing to be\nCommittee and the Appropriations Committee, to coordinate the expendi-\ntures and appropriations. It is a matter that ought to be done in the interest\ntaken into consideration. When the critie says that these people don't pay\nof trying to economize in government and 1 hope some day that the Congress\nany taxes, you must remember that the Brookings Institute and the National\nLife Insurance Company, about three or four years ago, made a very com-\nwill see fit to pass such a resolution, because it in n method that everybody\nuses in their own business and in their own family.\nplete study of the hidden taxes on gasoline and on oil and on tobacco and\nCONGRESSMAN DISNEY: What would you have that committee dot Up\non liquor, and such things, and they found that the person who bad an\nto the Civil War, the Ways and Means Committee raised the money and\nincome of $1,800 a year, $150 B month, who doesn't go on many champagne\nspent it. What would your committee do! Would you have a new\nparties, and whose wife doesn't buy many fur coats, paid *235 in hidden\ncommittee!\ntaxes, which are included largely in our excise taxes.\nCONGRESSMAN DISNEY: Doetor, what do you think of the suggestion\nCONGRESSMAN TREADWAY: What you are endeavoring to secure being\nof $500 a head for all dependents in lieu of the exemptions that have\ndone, namely, to coordinate expenditures and appropriations!\nbeen made?\nCONGRESSMAN DISNEY The main thing is just to stop non-defense ex-\nbenditures. That won't be n hig job.\nCONGRESSMAN CROWTHER: That might be a compromise, but I think\nCONGRESSMAN CROWTHER: Let me say, gentlemen, that that is a big\nthat We ought to stick to the old rule, providing a sum that really means\njob. It is a hig job to stop these non-defense expenditures, because all\nsubsistence. That isn't a very great thing to brag about, but you have to\nthrough them for a period of years there has run the theme of Santa Claus.\nhave il figure starting somewhere.\nThat is one of the hardest things to defeat in the world. It is a very difflcult\nCONGRESSMAN JENKING: Mr. Granik, I think that the disoussions so\nproposition.\nfar have been very elucidating and very interesting. This tax subject is a\nCONGRESSMAN DISNEY: Only 25 per cent of this money goes for govern-\ntremendous subject. It is difficult for anybody, in the length of time We\nment per se, that is, the protection of life and property. The rest of it goes\nhave, to scratch even the surface, but, you know, somehow I think that the\nfor things that are not government per se.\npeople in this country are more interested than the members of this tax\nCONGRESSMAN CROWTHER: Let me say to the Gentleman from Okla-\ncommittee in the matter of economy. Just as Mr. Treadway and Mr.\nDoughton both have said, this is the heaviest tax bill ever levied on the\nhoma that cutting down non-defense expenditures is just like stopping\nAmerican people. From the very beginning in the discussion of this bill\ntaxes. Everybody says they want to do taxed, but they came before our\ncommittee and told as of the responsibility and the difficulty they had\nbefore the committee, I took the position, and sometimes by myself, that 1\nraising the money and didn't want us to feel that they were shirking their\nthought the tax bill need not necessarily be this great colossal sum of three\nand a half billion dollars and we shouldn't lay this load on the people until\nresponsibility. Then they usually humped their backs to show the load they\nwe had economized. I have maintained-and the members of this panel and\nwere carrying. Everybody wants somebody else to be taxed and thinks\nof the House (especially on the Ways and Means Committee) have stood\nthey can earry it. It is just BB hard to stop these non-defense expenditures.\nwith us in that position-that that Administration-not because it is the\nIt is harder than you have any idea.\nopposite party from ours-has been too extravagant. It has been too ex-\nCONGRESSMAN JENKINS: Then I conclude that the Gentleman from\npensive; it is too expensive now. Whenever we get this tax bill passed, that\nNew York doesn't quite agree with the Chairman when be said that every-\nwill mean ten million dollars a day in addition to the twenty million dollars\nbody in the country is going to accept the next tax bill graciously.\nCONGRESSMAN CROWTHER: I don't think NO, unless they are assured\nPAGE EIGHT\nPAGE NINE\nthat there will be some reduction in expenditure, and I don't know how\nyou will assure them.\nthe libraries contain the report of e commission that went into the subject\nCONGRESSMAN JENKING: Don't you think that the only way to ourbail\nthoroughly many years ago.\nexpenses, the way it is set up now, with the Bureau of the Bndget operating\nThe practical effect of this proposal is to prevent legal tax avoidance.\ndirectly under the President, is for the President himself to take the\nSummed up in a nutshell, that is what it amounts to, in my judgment, It\ninitiative\nmakes for tax equality. It prevents 5. small number of people from having\nCONGRESSMAN COOPER: Mr. Chairman, everybody knows that every\n& tax advantage over the larger portion. You of the radio audience should\ndollar that is taken in by the Government and every dollar that is paid out\nremember that you can't divide your salary and earnings to get a tax\nby the Government has to be by no net of Congress. You talk about what\nadvantage over the other fellow (except in the eight community property\nthe President can do and what be can't do! It is the action of the American\nStates), but you can divide your income-producing property, like stocks\npeople, through their representatives in Congress, that determines the ques.\nand bonds, by the simple process of giving it to your spouse, paying a gift\ntion of revenue and expenditures, and the people pass upon their represent-\ntax, which is paid only once, and from then on, with the income divided,\natives every two years.\nyou can defeat annual surtaxes by the divided income.\nAnother important question that bas been under discussion in this bill\nFrom 1932 to 1938 gifts in the United States, according to certain eal-\nwhich I feel sure that people would like to have some information on is that\neulations, have amounted to the enormous sum of $4,792,399,000, where gift\nwith respect to the mandatory joint returns. Mr. Disney has given special\ntaxes were paid. Certain gifts are tax free, so some authorities figure that\nattention to that, and I feel sure that he will be interested in discussing\nthe total gifts, both tax-paid and free, will run over seven billion dollars in\nthat briefly,\nthat period of time. It is clear to me that a large portion of this amount\nCONGRESSMAN DISNEY : I thought Mr. Jenkins was going into that sub-\nrepresents family transfers.\njeet first. He acted like it.\nCONGRESSSMAN JENKING: Will you yield to me a minute, Wesley!\nCONGRESSMAN CROWTHER: May I say, before you start, that all the\nWhile I am against compulsory joint returns of husband and wife-\nmoney that is paid out isn't always by Congressional setion. A lot has been\nCONGRESSMAN DISNEY (Interposing): Let me finish here just a minute\npaid out by Executive Order, by Executive Decree, that wouldn't have\nbefore we get into a discussion, will you!\nbeen paid out.\nCONGRESSMAN JENKINS: Yes.\nCONGRESSMAN DISNEY: Originally it had to be voted by Congressmen\nCONGRESSMAN DISNEY: A widow wrote Chairman Doughton that she\nelected by the people.\nand her husband had been making separate returns until he died. Now she\nCONGRESSMAN CROWTHER: That is true, but you and I (1 think you\nhas the whole estate and has to pay the regular surtaxes. She lost both her\nwere) were opposed to the giving of blank checks which make such condi-\nhusband and her separate return advantage. She is not complaining.\ntions possible.\nWould our friends advise that she rush out and marry some man in order\nCONGRESSMAN JENKINS: So was I.\nto have the advantage of separate returns!\nCONORESSMAN DOUGHTON: There is 8 good deal of criticism of the New\nFor example, a. $10,000 income represents a tax of $1,166. If it were\nDeal for extravagance and lavish expenditures, and doubtless some of it is\ndivided equally, the total tax would be only $880. In other words, the hus-\njustified. At the same time, the Members of Congress are not in much\nband and wife who separate their returns get a tax advantage of $286. A\nposition to cast stones, because they are not without sin on the subject.\n50,000 income represents a tax of $20,002. Divided equally between hus-\nCONGRESSMAN JENKINS: Mr. Disney asked me a question awhile ago.\noand and wife, the tax would be $13,956, or N tax advantage of nearly $7,000.\nHere is one item I remember outlining in my speech the other day, where\nOn the other hand, H. Marine sergeant from Tulsa, married, with a wife\nan item was put in as a matter of national defense, and we appropriated\nand two babies, told me that of his monthly wage of $66, $6 went to his\n$838,000,000 for material and child welfare under the heading of national\nwidowed mother, $25 a month for the cheapest rent, for his little family, pos-\ndefense. I wonder how that could be under national defense.\nsible at the Marine Base at Quantieo, Virginia, and $10 a month for milk\nCONGRESSMAN DISNEY: Well, I noticed that the W.P.A., according to\nfor the babies. Asked what he had left, he said, plseasantly, Cigarette\nan article this morning, is going into the subject of social disease as well,\nmoney, but I have my family.\"\nthat is, the Works Projects Administration. So, we run into 6 lot of things\nCONGRESSMAN JENKINS: Let me ask you this, Wesley. As I said before,\nthat are alleged to be defense that are really non-defense subjects.\nwhile I am opposed to this compulsory joint return, I am not opposed to it\nMr. Jenkins, are you going to discuss this matter of joint returns?\nso strenuously on the ground that it might create divorces and things that\nCONGRESSMAN JENKINS: No. I know a little about it, and I am\ncause divorces and things of that sort, but I am against it on this ground.\nagainst it.\nYou are a lawyer and a good one-\nCONGRESSMAN DISNEY Go ahead, then.\nCONGRESSMAN DISNEY (Interposing): I plend guilty to that.\nCONGRESSMAN JENKINS: I think Mr. Disney ought to have the floor.\nCongressman JENKINS: -and you don't agree with me. We lawyers\nHe hasn't had the floor yet in his own right.\nknow that in this country for a bundred years from the beginning of the\nCONGRESSMAN DISNEY: Some of our friends are disturbed about this\nGovernment, the women made B battle to get themselves free economically.\nproposal of mandatory joint returns for husband and wife, arguing that it\nIt used to be that when a women married 8 man. she was almost a chattel.\nputs a premium on divorce and 8. burden on marriage, Well, sometimes\nThat was a shame. They fought their way up to freedom, and in every state\nboth of those things are burdens, but it hasn't worked that way in England.\nin the Union, without exception, there are statutes that give to the wife\nEngland has had the compulsory, mandatory returns upon husband and\nabsolute freedom from her husband 88 far as her property is concerned.\nwife since 1914, no if anybody wants to be really informed on the subject,\nThis is the first time that that program has ever been invaded.\nCONGRESSMAN DISNEY: All right, let me answer that.\nPAGE This\nPAGE ELEVEN\nRegraded\nIf you do defeat the surtax, by dividing property, the rest of the las.\npayers who have not done likewise have to take up the slack, NO it is (er\nafter our experience, that there is no such thing 08 A good fax bill, and you\ntinent to find out who does take up the stack when somebody else is no\nwill remember Chief Justice Marshall's admonition that the power of tax is\npaying the taxes. The figures showed that 5.77 per cent of the people, by\nhe power to destroy, and that is something we have got to keep in consid-\nGling separate returns. avoid the surtax. So the remaining 94,23 per cess\neration. People complained and many of them asked us why we didn raise\nlurve to take up the slack and pay the taxes thus avoided, England stopped\nmore money. There is a limit to taxation, if you are going to keep business\nthat long ago. and this proposal will stop it in this country.\ngoing and continue the capitalistic system, with its desire for profit. If you\nCONGRESSMAN JENKINS: Westey, you realize the fact. however, don't\ndestroy it, there is no telling where we may go, We have (birteen billions\nwhich are going to be collected in taxes this year, thirteen billions in the\nyou. that in our committee we are going to raise $323,000,000 through this\n1942 fiscal year. That is about one-sixth of the entire general revenue for\nprocess? In our committee, as on every other proposition, We gave every.\nborly that was interested opportunity to be heard, but not a woman in this\nthat period.\nwhole United States had a chânce to come in and present her caline in this\nCONGRESSMAN COOPER: Of course, Doctor, you will bear in mind that\ngroat problem.\nwith the enactment of this revenue measure, it will mean that this defense\nCONGRESSMAN CROWTHER: We didn't have any witnesses to appear\nprogram will be paid for about 60 per cent out of tax revenue, During the\neither, for or against taxes on the radio, and we didn't have anybody about\nWorld War we only attempted to pay for one-third of the expenses of the\nbillboards. We had plenty of witnesses on tobacco and beer and ganoline N)\nwar by IAX revenue, and the other two-thirds were by borrowing. We are\nas not to have any taxes on them.\nnow endenvoring to pay 60 per cent of the cost of the defense program by\nCONGRESSMAN TURADWAY: May I add one sentence!\ntax revenue and only borrow 40 per cent.\nCONTRESSMAN DOVGHTON: It wasn't a one-sided question as fur as the\nCONGRESSMAN CROWTHER: That is a very Invilable ambition that may\ncommittee was concerned.\nlead HK into a better place. When we got through with the other war.\nCONGRESSMAN COOPER: I nm sure you will recall, Mr. Chairman, that\nremember, folks, we owed twenty billion dollars. We paid eleven billion\nthe committee has repeatedly held special hearings on this subject alone, and\nof il off in eleven months. That left fifteen billion dollars, which is still\nreports have been made from time to time throughout the year,\nstanding in the present debt as attributable to the World War, and we have\nCONGRESSMAN JENKINS: That was years ago, and that WAS on the joint\npaid in that time, up to Inst December, fifteen billion dollars in interest.\nreturn in those states like Culifornia that have compulsory-\nCONGRESSMAN COOPER: Will you yield, Doctor, 11 will be remembered,\nCONGRESSMAN DISNEY (Interposing) -community property laws,\nDoctor, that already in sight you have two and 44 half times HM much expense\nCONTRESSMAN JENKINS: And like Oklahoma. But we never had Il\nfor the present emergency as you Ind For the World War. We already 24747\nhearing of this session of Congress on this proposition where any innn of\nBilly billion dollars in sight now.\nwoman and n. chance to come before the committee.\nCONGRESSMAN JENKINS: Bilt that is for this emergency. Mr. Cooper,\nCONGRESSMAN CROWTHER: And we never advocated such Il polley\nand the World War cost us twenty billion dollars.\nthis before When we did diseuss it, it was not a proposal of this kind.\nCONGRESSMAN CROWTHER: That is what 1 410 eatting to your attention.\nCONSURESMAN TREADWAY: Mr. Granik, I think that we have gone far\nWhat will the picture be twenty years after this HK regards the interest\nenough to this round table here in the last three-quarters of an hour to CODE\ncharge and the continuation of deficit financing!\nvinco the midione listening in toniglit, both in this room and outside, of th\ntremendous task the Ways and Means Committee has had in the last few\nCONGRESSMAN DISNEY: Are you trying to make everybody feel good!\nmonths, and I think it is only fair to invite them to participate in the dis-\nCONGRESSMAN JENKINS: With reference to what you said about 60.10,\nof these subjects during the next three days on the Floor of the\nthat is not going to work out that way, It is just 41 supposition that soirnda\nHouse, I want just to add this one word. if I may, Mr. Granik, and that is\npretty good in the report, but it will not work out that way.\nthat Chairman Doughton and I have participated under your auspices on\nCONGRESSMAN DOUGHTON: We all admit that as long as we have a\nprevious necasions. and this is a unique occasion in that we are in total\nnational income of ninety billion dollars, fifteen billion or twenty billion of\naccord, There is no partisanship here and 110 polities. We are simply inter\nFederal taxes would not be a staggering assessment. We admit we are in a\nested in the well-being of the American people, and it is a pleasure to have\nbetter position to pay taxes. Our ability to pay is far superior to what it\npreficipated with you and him here tonight.\nhas over been before.\nCONGRESSMAN DOUGHTON: We are all trying to write an excellent tos\nCONGRESSMAN CROWTHER: That may sound all right. Mr. Chairman, but\nbill To impose the burden necessary for national defense ou the people as I\ninstional income is not a sound process of figuring nitt what tax returns\nwhole, nx economically and as reasonably as it is possible for the Committee\nstould be, and it is not so considered by economists.\n1111 Ways and Means to do, I concur in what Mr. Treadway, my good frieud\nCONGRESSMAN DOUGHTON: Income is a sound yardstick to govern how\nhas said. Unit every effort has been made to put the consideration of this\nI and able to pay taxes.\ntax bill on \" high plane and to divorce it entirely and segregate it from the\nCONGRESSMAN CROWTHER: That depends on prices and their effect on\nquestion of partisan polities. I think the committee has made il worderful\nthe individual, agriculture and otherwise. It is a very poor basis to use\nfor figuring,\nsuccess in that respect, and I feel under obligation to every member. mi-\nnority and majority. for their fine cooperation and effort to arrive at an\nCONGRESSMAN DOUGHTON: What would be your basis?\nhonest, non-partisan fax bill,\nCONGRESSMAN CROWTHER: The same basis that we tike now.\nCONGHESSMAN DOUGHTON: That is exactly what we are doing.\nCONGRESSMAN CROWTHER: Now that \"The biscuits have been passed.\nCONGRESSMAN CROWTITER: We are not figuring these on national in-\nPappy\" by both sides, I want to say that you realize, the same as we all do\ncome, not by any means,\nPAGE TWELVE\nPAGE THIRTEEN\nRegraded Unclassified\nthe national income.\nCONGRESSMAN DOUGHTON: On the national income, which constitutes\nwhen we put the five-dollar tax on automobiles.\nCONGRESSMAN CROWTHER: On ability to pay, and we threw that awa:\nAnd now for a final word from our announcer, Mr. Blair.\nChairman Granik: I'm sorry but our time is up. Thank you, gentlemen.\nAnnouncer Blair: The American Forum of the Air\" is a Public Serv-\nice Feature of WOR and WOL. This series is arranged by Theodore Granik,\nattorney and nationally syndicated newspaper columnist. Ransdell In.\nof the entire proceedings. When requesting copies by mail, kindly onclose\ncorporated-printers and publishers, distribute a limited number of copies\nten cents to defray mailing costs. Address your request to Ransdell Incor-\nAmerican Forum of the Air\" emanated from the Hotel Willard in Wash-\nporated, that is R-A-N-S-D-E-L-L Incorporated, Washington, D. C. \"The\nthrough the facilities of WOL in the Nation's Capital.\nington, D.C. You are invited to witness these broadcasts which originate\nFrank Blair, speaking. This is the Mutual Broadcasting System.\nPAGE FOURTEEN\nRegraded Unclassified\n97\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Consulate General, Singapore,\nStraits Settlements\nDATE: July 27, 1941, 1 p.m.\nNO.1 180\nYesterday an order was made effective for freezing assets\nof the Japanese in Malaya. This order is applicable to\nall territory of the Japanese - including mandated and leased\nislands - B.B well as to the Republic of China, with Manchuria\nincluded. The Government here has given authorization that\ncontracts which were concluded before July 26 may be carried\nout. The Consulate General is told by the Controller of\nRestricted Exports that shipments of iron ore from mines which\nare owned and operated by the Japanese here in this country\nare not covered by the order. However, instructions on this\nquestion are awaited.\nThere 16 unqualified approval and general satisfaction\nhere over the retaliatory measures which the United States\nand Britain have taken against the Japanese. A feeling of\nrelief that & definite stand against aggression by the\nJapanese has been taken 18 unquestionably evident.\nThis telegram has been forwarded to the Department\nand repeated to Saigon, Indochina, and to Tokyo.\nPATTON.\nBSI VA va\nEA:LWV\nRegraded Unclassified\n98\nRS\nPLAIN\nTOKYO\nDated July 27, 1941\nRec'd 1:25 p.m.\nSecretary of State,\nWashington.\n1102, July 27, 4 p.m.\nToday's press reports decision Japanese Govern-\nment retaliate against foreign freezing Japanese assets\nand credits, partinent regulations to bE promulgated\nJuly 28 under authority foreign exchange control law.\nRegulations applicable nationals, corporations and\nresidents of \"designated countries,\" presumably United\nStates including Philippines and Britain, and provide\ncomprehensive prohibitions against financial trans-\nactions, including acquisition and disposal Japanese\ncurrency EXCEEDING five hundred yen monthly, without\npermission Finance Minister.\nVernacular newspapers consider American freszing\norder occasioned by conclusion Indochina Joint DE-\nfense Agreement but assert American attempto COETCE\nJapan by Economic pressure merely harden Japanese\ndetermination pursue its immutable policy. KOKUMIN\nreports Finance Minister Ogura statement to Effect\nsince\nRegraded Unclassified\n99\n-2-, No. 1102, from Tokyo July 27, 1941; 1:25 p.m.\nsince freezing anticipated Japanese holdings in United\nStates already greatly reduced and furthermore since\nAmerican-Japanes: trade already greatly curtailed by\nincreasing American export control, Effect upon Ja-\npanese Economy latest American move will bE compara-\ntively slight and already adequate preparations made\ncope with this development. ASAHI suggrats as possible\nadded motive American intention disrupt Japanese trade\nwith Central South Americans through control dollar\nExchange. Special article ASAHI deplores American\nmisunderstanding which led to freezing but Expresses\nbelief that if not followed by oil embargo or other\nEconomic sanctions, road to adjustment relations still\nnot closed.\nCHUGAI points out manner in which United States\nwill apply freezing order to Japan cannot bE fore-\ntold but ASAHI mentions possibility that it may bE\nused to halt trade as completely as with other Axis\nPowers,\nCommenting British abrogation trade treaties no\nserious new developments anticipated since war condi-\ntions already have largely disrupted Japanese British\ntrade but it is emphasized this action and British\nfreezing Japanese credits coinciding American freezing\norder demonstrate British American solidarity and de-\ntermination act in concert to curb Japan.\nEditorial\nRegraded Unclassified\n100\n-3-, No. 1102, from Tokyo July 27, 1941; 1:25 p.m.\nEditorail comment joint defense Indochina pro-\nclaims defensive character of agreement and accuses\nthird powers of intrigues to alienate French Colony\nby encouraging DE Gaullist Separatist movement. MIYAKO\nattributes French confidence in Japan to Japan's Eminent-\nly fair attitude demonstrated toward Indochina during\npast year. Agreement intended to forestall Efforts\nEncircle Japan and sabotage prosperity sphere.\nGREW\nALC\nRegraded Unclassified\n8/4/41\n101\nHM Jr said at group meeting this morning\nist in view of the President's letter to\ncoles, dated 8/1/41, on this subject,\nne was not going to do anything about\nHenderson's letter.\nRegraded Unclassified\n102\nJuly 28, 1941\nDear Leens\nIn the absence of the Secretary I\nacknowledge receipt of your letter of July 25.\n1941, regarding the proposed executive order\nto control consumer credit under the administra-\ntion of the Federal Receive Board.\nThe Secretary will not return to the\nTreasury until the first of sext week, at\nwhich time I shall be glad to bring your letter\nto his attention.\nVery truly years,\nst\nNonemble Leen\nAdministrator, Office of Price\nAdministration and Civilian Supply,\nMachington, D. 0.\nWHITE\nRegraded Unclassified\nCOFY\n103\nOFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY\nWashington, D. C.\nJuly 25, 1941\nThe honorable\nHenry Morgenthau, Jr.\nSecretary of the Treasury\nWashington:\nRe: Proposed Consumer Credit Order\nDear Henry:\nI have been discussing the proposal of the Treasury De-\npartment for 8 veto power under the consumer credit Order with\nseveral members of my staff who have been working on the Order.\nAmong them are Rolf Nugent of the Russell Sage Foundation and Frank\nHubschek, a lawyer long prominently associated with legislation and\nlitigation in the consumer credit field, both of whom are acting as\nOPACS consultants. I have known them both for a long time and have\ngreat confidence in their knowledge of the facts and their judgment\non this matter. This fact and the grave necessity for prom action\nin this field impel me to pass their comments од to you.\nBoth Nugent and Hubachek assure me that they can see no\nway in which any action within reason which might be taken by the\nFederal Reserve Board under the proposed Order could interfere with\nTreasury financing or general fiscal policy. On the contrary, they\nbelieve that action taken under the order would, to the extent that\nit effects the Treasury at all, almost necessarily be helpful. The\nonly foreseeable effects of the intended program on Treasury are\nindirect and rather remote. It is an ares in which rulings and\ninterpretations will be frequently required and time will be an\nimportant factor in effective edministration. Knowing that the\nregulation of consumer credit will be difficult at best, they have\nconsiderable sympathy with ar. Eccles' unwillingness to take on the\njob unless he has undivided administrative authority and responsi-\nbility.\nIt seems to me that the interests of the Treasury would\nbe adequately safeguarded by changing the present provision to read\n48 follows:\n\"The Board shall also maintain such lisison with\nthe Secretary of the Treasury, the Federal Loan Admini-\nstrator, and with other departments and agencies of the\nFederal Government and with such other public or private\nagencies and persons, as the Board may deem necessary OF\nappropriate to carry out the purposes of this Order.\"\nRegraded Unclassified\n104\n- 2 -\nOPACS has a substantial stake in whatever action might\nbe taken by the Board under the proposed Order. Nevertheless, we\nare willing to leave the administrative power with the Board in\nthe belief that administration must be the responsibility of one\nagency, th. t this job which deals with credit comes naturally\nwithin the Board's field, and that the Board is better equipped\nthan any other agency to undertake the task. The final veto power\non any action taken by the Board lies, of course, with the President\nwho can at any time rescind or amend the Order and I believe that\nboth of us can rely on our right of appeal at the top should it be-\ncome desirable. This would seem to make unnecessary the unusual\npower of veto by one executive agency or another.\nOPACS already has a considerable investment of time and\nenergy in exploring the use of consumer credit controls to further\nour program and we are very anxious to get whatever help we can\nfrom this plan as promptly as possible. Consequently, I hope you\ncan see your way clear to go along without insisting upon 8 veto\npower over the Board's Regulations.\nSincerely yours,\n(Signed) Leon\nLeon Henderson\nAdministrator\nRegraded Unclassified\n105\nTREASURY DEPARTMENT\nWashington,\nJuly 28, 1941\nDear Mr. Secretary:\nThis is 8. first report on what has been done to carry\nout the radio suggestions you made on July 25. Graves,\nOdegard, Callahan and I think that most of them are good\nsuggestions. At least four out of the six can be put into\neffect easily, and two of them are already \"in the works\".\nPerhaps I had better number my items as you did.\n(1) The Life of George Gershwin, with \"Rhapsody in\nBlue\" and other excerpts from Gershwin music, will be a\npart of the Treasury Hour on August 27.\n(2) The John Philip Sousa number is now being prepared\nby the Treasury Hour people in New York, and should be pro-\nduced early in September.\n(3) Paul Munroe is 8 close friend of Ira Gershwin, and\nis going to take up with him the matter of a new Treasury\nBond song, perhaps with Cole Porter as collaborator.\n(4) Adolf Busch has already promised to play for us on\none of our Sunday musical programs, and as Serkin often AC-\ncompanies him, there should be no difficulty in getting both\nof them for a single occasion.\n(5) Yehudi Menuhin has also agreed tentatively to\nplay for us one Sunday in the near future. The Mendelssohn\nviolin concerto is out of the question, as It lasts for ap-\nproximately thirty minutes, and, what is more, we have no\nsymphony orchestra at our disposal. The same purpose might\njust as well be served, however, by asking Yehudi to play\none of the Mendelssohn violin and piano sonatas. We could\neasily point out that this music is \"verboten\" in Germany.\nWe also are thinking of B German program in connection with\nthe \"Songs of America\" on the Treasury Hour, B. program\nRegraded Unclassified\n106\n- 2 -\nreminding people of the old, romantic Germany of pre-Nazi days. Vie\nmight have the chorus sing the Lorelei by Heine, whose poems are\nlikewise \"verboten\".\n(6) The Beethoven Fifth Symphony is the only one of\nyour six suggestions that is going to be difficult and expensive.\nFor one thing, we have no program on which a big symphony lasting\napproximately fifty-five minutes could be played. We would have\nto arrange EL special broadcast for it. The practical difficulty\nLs that we have no symphony orchestra at our disposal. Al Goodman\nhas about twenty musicians in the Treasury Hour; Frank Black has\nforty-four in the N. B. C. program, but they constitute a \"band\"\nrather than a real orchestra, and they probably would murder\nBeethoven. Moreover, the N. B. C. half-hour on Tuesday evenings\nIs devoted to American songs exclusively, and the Beethoven Fifth\nwould be entirely out of place.\nA symphony orchestra of sixty pieces, the minimum number\nthat could do justice to Beethoven, would cost at least $3,000 for\n& single performance. If we want to bear this expense, we might\ncall on Mrs. Hull, our vice-chairman in New York, who is also\nprominent on the board of the New York Philharmonic. She might\n(\nget the Philharmonic to appear for us, but AS the orchestre al-\nready operates at a huge deficit, I don't see how we could ask\nthe Philharmonic to contribute. The musicians themselves are\nunionized and would have to be paid by someone.\nMy other suggestion, which seems more practicable, is\nto wait until the Fall when both the New York Philharmonic and\nthe N. B. C. Symphony orchestra will be playing regularly on the\nradio. It would be an easy matter to get either of these organi-\nzations to dedicate one of their programs to Defense Savings, and\nto play the Beethoven Fifth, perhaps with Mr. MacLeish as nar-\nrator.\nGreetings from all of us here.\nFusinand Kuda Jr.\nSon. Henry Morgenthau, Jr.\n0/0 Mr. Sam Lewishon,\nTwin Ponds,\nMalone, New York.\nRegraded Unclassified\n107\nJuly 25, 1941\nMEMORANDUM FOR: MR. HAROLD GRAVES\nMR. KUHN\nMR. ODEGARD\nMR. CALLAHAN\nFROM:\nTHE SECRETARY\nI suggest on the Treasury Hour Wednesdays\nwe do:\n(1) The Life of George Gershwin, Oscar\nLevant to be interlocutor, and play \"Rhapsodie\nin Blue\", excerpts to fit his life from \"Lady Be\nGood\", \"Strike up the Band\", \"Porgy\", etc.\n(2) The life and works of John Philip Souse,\ntreated similarly to Irving Berlin program.\nAt an appropriate hour - preferably the\nTreasury Hour, - have Menuhin do the Mendelsschn\nviolin concerto -- someone to state that both\nartist and composer are \"Ferboten\" in dictator\ncountries today and could not be heard.\nanother Treasury Bond song and get suggestions from him\nThat we get Ira Gershwin to write words for\nwho could write music to them, possibly Cole Porter?\nThat on Tuesday evening, NBC, vthsymphony of\nBeetheven. Archibald MacLeish to explain V Symbol.\nThis to be played soon.\nThat Busch (violinht) and Serkin, pienist, be\nused on & Sunday program.\nPlease write me your reaction. I want ACTION!\nRegraded Unclassified\n108\nTREASURY DEPARTMENT\nWASHINGTON\nColumbia, S. C.\nJuly 28, 1941\nHonorable Henry Morgantheu, Jr.\nSecretary of the Treasury\nWington, D. C.\nDeer fr. Morgenthau:\nLast week at the regular meeting in your office, I mide some\nmention of the fact that quite fi number of the smaller state benice through-\nout the country had failed to qualify us issuing agents for Series E\nDefente Bonde. These are being followed up actively through the state\nsspociations and through the ABA and its committees, etc., and I think\nthat quite 5. large percentage of the missing ones will be in with us in\nthe neur future,\nYou Buid something about my speeking to Mr. White and soliciting\nhis help. I thought of this three months ago and had planned to have 8\nmeeting of the Executive Committee of the State Supervisors Association to\nto into the situation with them fully and solicit their cooperation through-\nout the entire nation. The meeting, however, did not materialize, because\nthose who were thinking of calling the meeting for me decided to postpone\nit for 5 while due to a matter of friction about which I would rather tell\nyou then write.\nSince talking with you last week, I have been told that this\nmeeting would be called now if we wanted it, and I em planning to request\nt'st it. be done. They have promised to bring in all twe. ve members of the\nExecutive Committee and also some twelve or fifteen other state supervisors,\n20 L' we can get twenty or twenty-five of these gentlemen together in\nschington and put the situation definitely before them, it no doubt will\naccomplish some good.\nWith my best regards, I am\ntruly Yours,\nB. M. Adwards\nAssistant to the Secretary\nENS:mtb\nCovy to:\nMr. Harold N. Graves,\n1set. to the Secretary,\nWushington, D. C.\nRegraded Unclassified\n109\nTREASURY DEPARTMENT\nWASHINGTON\nJuly 28, 1941\nMemorandum for THE SECRETARY:\nThe following report is made of Stamp sales\nat \"Treasury House\":\nJuly 1-25\n$19,473.75\nJuly 26\n595.90\nTotal\n$20,069.65\nGRAVES\nRegraded Unclassified\n110\nTREASURY DEPARTMENT\nWASHINGTON\nJuly 28, 1941\nMemorandum for THE SECRETARY:\nThe following report is made of Stamp sales\nat \"Treasury House\":\nJuly 1-26\n$20,069.65\nJuly 27\n152.30\nTotal\n$20,221.95\nGRAVES\nRegraded Unclassified\n111\nTREASURY DEPARTMENT\nWASHINGTON\nJuly 28, 1941\nMemorandum for THE SECRETARY\nThe following report is made of requests received\nfor \"Any Bonds Today?\" from the experimental mailing of\n10,000 cards:\nNo. Requests\nNo. Copies\nJuly 1 - 25\n1076\n6263\nJuly 26\n4\n15\nTotal\n1080\n6278\nGRAVES\nRegraded Unclassified\n112\nCONFIDENTIAL\nUNITED STATES SAVINGS BONDS\nSales in July Compared with June, 1941\nOn Basis of Issue Price\nFirst Twenty-two Business Days\n(June 1-26, July 1-26)\n(Amounts in thousands of dollars)\n:\n: Increase or Decrease (-)\n:\nSales\n: in July Commared with June\nItem\n:\n:\n:\n:\n:\nJuly\n:\nJune\n:\nAmount\n:\nPercent\nSeries 3 - Post Offices\n$ 43,296\n$ 35,138\n$ 8,158\n23.2%\nSeries E - Banks\n81,189\n54,259\n26,930\n49.6\nSeries I - E - Total\n124,485\n89,396\n35,089\n39.3\nSeries Pr - Banks\n21,467\n25,788\n1\n4,321\n- 16.8\nSeries G - - Banks\n137,543\n167,021\n- 29,478\n- 17.6\nTotal\n$283,495\n$282,204\n$ 1,291\n0.5%\nJuly 28, 1941.\nOffice of the Secretary of the Treasury,\nDivision of Research and Statistics.\nSource: All figures are deposits with the Treasurer of the United States\non account of proceeds of sales of United States Savings Bonds.\nNote: Figures have been rounded to nearest thousand and will not\nnecessarily add to totals.\nRegraded Unclassified\nDaily Sales - July 1941\nOn Basis of Issue Price\n(In thousands of dollare)\nPost Office\nAll Bond Sales\nDate\nBond Sales\nBank Bond Sales\nTotal\nSeries z\nSeries F\nSeries G\nSeries E\nTotal\nSeries E\nSeries I\nSeries G\nJuly 1941\n1\n$ 9.505\n$ 2,387\n$\n957\n$ 6,160\n$\n595\n$ 8,910\n$ 1,793\n$\n957\n$ 6,160\n2\n11,612\n4,066\n845\n6,701\n1,735\n9,877\n2,331\n845\n6,701\n3\n15,045\n4,903\n843\n9,299\n2,077\n12,969\n2,827\n843\n9,299\n5\n22,900\n9,589\n2,437\n10,875\n3,191\n19,709\n6,397\n2,437\n10,875\n7\n11,028\n6,315\n472\n4,242\n3,908\n7,120\n2,407\n472\n4,242\n8\n11,226\n4,867\n1,197\n5,162\n1,346\n9,881\n3,522\n1,197\n5,162\n9\n16,570\n6,277\n880\n9,413\n2,229\n14,341\n4,048\n880\n9,413\n10\n11,430\n6,018\n605\n4,808\n2,459\n8,972\n3,559\n605\n4,808\n11\n16,311\n8,504\n1,197\n6,610\n2,405\n13,905\n6,098\n1,197\n6,610\n12\n12,689\n4,482\n860\n7.347\n1,672\n11,017\n2,810\n860\n7,347\n14\n13,435\n7.754\n1,046\n4,636\n3,060\n10,375\n4,693\n1,046\n4,636\n15\n10,083\n4,754\n602\n4,728\n1,458\n8,625\n3,296\n602\n4,725\n16\n11,994\n5,541\n808\n5.645\n1,645\n10,349\n3,896\n808\n5,645\n17\n15,332\n6,213\n1,189\n7.930\n1,799\n13,533\n4,414\n1,189\n7.930\n18\n12,404\n6,730\n836\n4,837\n2,042\n10,362\n4,689\n836\n4,837\n19\n7.553\n4,513\n926\n2,114\n1,505\n6,048\n3,007\n926\n2,114\n21\n14,136\n7,105\n1,015\n6,016\n3,060\n11,076\n4,046\n1,015\n6,016\n22\n12,191\n3,820\n1,208\n7.164\n1,001\n11,191\n2,819\n1,208\n7,164\n23\n14,677\n5,018\n1,208\n5,451\n1,514\n13,163\n3,505\n1,208\n8,451\n24\n11,634\n5,382\n959\n5,293\n1,623\n10,011\n3,759\n959\n5,293\n25\n10,589\n5,828\n904\n3,857\n1,670\n8,919\n4,158\n904\n3,857\n26\n11,149\n4,420\n474\n6,256\n1,303\n9,846\n3,117\n474\n6,256\nTotal\n$283,495\n$124,485\n$ 21,467\n$137.543\n$ 43,296\n$ 240,199\n$ 81,189\n$ 21,467\n$137,543\nOffice of the Secretary of the Treasury. Division of Research and Statistics.\nJuly 28, 1941.\nSource: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of\n113\nUnited States Savings Bonds.\nNote: Figur have been rounded to nearest thousand and will not necessarily add to totale.\nRegraded Unclassi\n114\n>\n7/28/41\nA supply of this form letter was sent to the Federal\nReserve Bank in each district and they in turn addressed\nthem to the banks within their district.\nRegraded Unclassified\n115\nTHE SECRETARY OF THE TREASURY\nWASHINGTON\nJuly 28, 1941\nYou have doubtless learned through the press or\nyour district Federal Reserve Bank the bagic features of\nthe two tax series of Treasury notes which I propose to\noffer for sale on August 1. The Series A-1943 notes in\nthe denominations of $25, $50 and $100, providing B re-\nturn of about 1.92 percent a year, are designed to be at-\ntractive to the small taxpayer and their presentation in\npayment of income taxes will be limited to $1,200 from\nany taxpayer in any one tax year. The Series B-1943 notes\nwill be issued in denominations of $100, $500, $1,000.\n$10,000 and $100,000. they will provido a return of about\n0.48 percent a year, and the amount of these notes which\ncan be presented in payment of taxes will be limited only\nby the amount of taxes due.\nA table of values appears on each note and in\nTreasury Department Circular No. 667 governing the Espoe,\nIt should be understood that principal and accrued inter-\nest will be credited by the Collector of Internal Revenue\nagainst the owner's tax liability at the value stated in\nthe table for the month in which the notes are presented\nin payment of that liability. If the owner purchases more\nnotes than he requires for his tax payments, or 1f for any\nother reason\nhe ishes to cash the notes in, he will get\nback only the purchase price paid for the notes. Cash re-\ndemption may be accomplished only through the Federal Re-\nserve Bank of issue and under the conditions specified in\nthe official circular,\nI have asked the Federal Reserve Bank of your\ndistrict to send you copies of the official offering oir-\ncular, a booklet giving the salient features of the notes,\nfor quick reference purposes, and 6. supply of application\nforms. It 1e my feeling that the procedure to be followed\nRegraded Unclassified\n116\n-2-\nin handling the sale of these notes should be very sini-\nlar to that now in effect with respect to United States\nSavings Bonds of Defense Series F and G. I very much\nappreciate the valuable assistance being rendered in that\nconnection by the banking institutions of the country as\nvell as in the handling of our regular Treasury issues.\nI nm certain that I can count on your cooperation in this\nfurther important phase of the National Defense Program.\nIt is important that the taxpayers of the Nation\nbecome aware of the unprecedented taxes they will have to\npay next year on this year's income, and they should be\nencouraged to set aside funds now with which to neet those\nlater payments. The new tax series notes provide an orderly\nmethod of laying astde the amounts each taxpayer will require\nfor that purpose. I would therefore appreciate it if the\nTreasury could have your continued cooperation in acquaint-\ning your customers with the facts concerning these tax notes\nand your assistance in handling their applications and remit-\ntances with your Federal Reserve Bank.\nVery truly yours,\nSecretary of the Treasury.\nRegraded Unclassified\nA23\n117\nMEMORANDUM\nFROM\nBritish Supply Council in North America\nTO\nMrs. Henrietta Klotz\nCompliments of E.N. Gray\nRegraded Unclassified\n118\nSTATEMENT NUMBER 25.\nAIRCRAFT SHIPPED TO U. K. AND OVERSEAS COMMANDS\nTYPE\nDESTINATION\nASSEMBLY POINT\nBy Sea\nBy Air\nduring\nduring\nWeek ending Week ending\nJuly 5,41. July 27,41.\nAiracobra\nU. K.\nU. K.\n4\n-\nURTISS\nTomahawks\nMiddle East\nPort Sudan\n20\n-\nLAS\nBoston III\nU. K.\nU. K.\n18\n-\nLOCKHEED\nHudson V\nU. K.\nU. K.\n-\n27\n(via Gander)\nTOTALS\n42\n27\nBritish Air Commission,\nJuly 28, 1941.\nRegraded Unclassified\nJuly 23. 1941\nFiles\nMr. Cookram\nMr. Devley of the British Treasury called on - at 10:15 this noraling. During\nbie visit be contioned that Mr. Archer of the Brittsh Purchasing Commission had\nreported to his carlier is the seraing that his purchases of TEN materials and\nagricultural machinery were being hold 40. They thought this case as a result of\nthe question which had been relead by the Secretary of the Treasury concerning\npessible profite made by private distributors is England of goods which wase Load-\nLeased by the United States. Mr. Bowley caked If - arrangements could not be\nmás to arrange for this situation temperarily, my for e period of ten days. will\nMr. Leynon, who Le leaving the Daited States tenerrow, my have the to arrive is\nLondon and work out this problem.\nAfter returning to his office, Mr. Bowley called Be back to give as the for-\nther information which I had requested. that was, whether Mr. Archer felt that the\nrequisitions were being held up by our Precurement Division. through which 10 is\nunderstand that the goods under reference are being sought, OF by the Lond-Lease\nauthorities. Mr. Bowlay stated that he had again talked with Mr. Archer and led\nlearned from the latter that the requisitions had been placed with the Programent\nDivision of the Treasury but that Mr. Mack had felt that he east have some further\ninstructions is the premisss. Hr. Kack had passed them along to Mr. Cox with this\nand 19 10 understand they are NOV hald up in the office of Kr. Doz. After\nmessage, speaking with Acting Secretary Bell at 12:30 seen, I have endorsered throughout the\nday to talk with Mr. Cox, but have not succeeded.\nJuly 30. 1941\nof the Procurement Division had passed edition to his certain Brittek requisitions but\nAS 10:15 a.m. yesterday Mr. Osz returned my call, 20 confirmed that Mr. Mask\nhad refrained from recommending approval thereef because of the position which the\nSecretary of articles obtained W the British under head-lanes. Mr. Dear\nof the Treasury had taken - days age with respect to possible profit\non stated the distribution that his office we draving - . letter addressed to the British which read wight\npossibly be used as the basic for all interia arreagement. Be presided to a\ncopy of this draft to Acting Secretary Bell during the day.\nMr. \" 10:20 yesterday tars. that Mr. Parris and received a letter from the\nserving I telephoned Mr. Secley to report the above Mr. progress. Philip\nDevley told no. is that Lend-Lease and Treasury efficials would discuss that problems 11\nTowng 10 the effect Secretary's question above not forth. Bowley pointed out found that\nreleed is under the of the requisitions NY is question since \" is of\nshipping urgent space to clear will some be available is August to transport all important quality the\narticles now requested.\nEMC:lap-7/29/41\nRegraded Unclassified\n120\n- 2 -\nMr. Doving neationed that Mr. Enymes had left harriedly for New Yerk to\ncatch his plane and had not had the time to call of the Treasury to my geodige.\nJull\nRegraded Unclassified\n121\nhis se. 1941\nFiles\nMr. Geshrom\nVasa talking w telephone with Mr. Bowley of the British Treasury at 11:30\nthis merning I asked whether be had any recent verd as to the plaze of Sir are\nNieneyer. Dowlay teld me that Assistant Secretary Asbecon of the Department of\nState had saked his some tea days up whether 10 use planned that sir Cite would\nbe the British representative ea the Stabilization Board. If mt. Adresse is-\nquired whether 10 would be legical for the Valted States to est another -\nnist to China to be Niemayer's opposite under as as commis advisor, country\nthat Fox vould give his attention to the stabilization leard. Mr. Bouley has\nreceived a reply from Landen, be has net yet had as opportunity to Mary\nto Achosen, to the effect that Vienaper will not be a mober of the Stabilization\nhard. His temperary visit to China will be for brooder consente engresentions.\ndesecquently, the Britten thought that como imerican other then Mr. 7es night be\nlegically selected as Niemayer's apposite number. Visa I raleed the question as\nto whether the situation night net now be changed w freesing of Chinese assets\nW the British and Americans, Bowley admitted this, agreeing with M that the\noperations of the Stabilization Beard might be loss important, and not require\nall of Mr. Fox' time.\nmH\nEMC:lap-7/28/41\nRegraded Unclassified\n122\nFor Miss Chauncey\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE\nJuly 28, 1941\nSecretary Morgenthau\nTO\nMr. Cochran\nFROM\nSTRICTLY CONFIDENTIAL\nOfficial sales of British-owned dollar securities under the vesting order\neffective February 19, 1940:\n$ Proceeds of\n$ Proceeds of\nShares Sold\nBonds Sold\nTotal\nJuly 21\n199,417\n28,513\n327,930\n22\n215,541\n11,988\n227,529\n23\n183,577\n36,152\n219,729\n24\n144,723\n43,765\n188,488\n25\n205,114\n44,404\n249,518\n26\n5,167\nNil\n5,167\n953.539\n164,822\n1,118,361\nJuly 22\nGift to Treasury\n6\n28\n34\n953,545\n164,850\n1,118,395\nSales from\nFeb.22,1940 to\nJuly 19, 1941\n274,923,912\n36,317,343\n311,241,255\nTotal\nFeb.22,1940 to\nJuly 26, 1941\n275,877,457\n36,482,193\n312,359,650\n312,359,650\n$ proceeds of non-vested securities sold\nJuly 14, 1941 to July 19, 1941\n500,000\n$ proceeds of non-vested securities sold\nSept. 1, 1939 to July 12, 1941\n229,200,000\n$ proceeds of non-vested securities sold\nSept. 1, 1939 - July 19, 1941\n229,700,000\n229,700,000\nGRAND TOTAL\n542,059,650\n$ proceeds of rights sold - 1,500 for $18,937 - July 24\n1,500 for $18,703 - July 25\n3,000\n$37,640\n75ml\nRegraded Unclassified\nFor Miss Chaungey\n123\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE July 28, 1941\nSecretary Morgenthau\nTO\nFROM\nMr. Cochran\nSTRICTLY CONFIDENTIAL\nOfficial sales of British-owned dollar securities under the vesting order\neffective February 19, 1940:\nNo. of Shares\n$ Proceeds of\nNominal Value\n$ Proceeds of\nSold\nShares Sold\nof Bonds Sold\nBonds Sold\nJuly 21\n8,860\n199,417\n35,000\n28,513\n22\n8,969\n215,541\n20,000\n11,988\n23\n9,523\n183,577\n44,500\n36,152\n24\n6,712\n144,723\n45,000\n43,765\n7,521\n205,114\n57,000\n44,404\n25\n26\n100\n5,167\nNil\nNil\n41,685\n953.539\n201,500\n164,822\nJuly 22\n(\nGift to Treas.\n2\n6\n66\n28\n41,687\n953,545\n201,566\n164,850\nSales from\nFeb.22,1940 to\nJuly 19, 1941\n9,605,563-1/2\n274,923,912\n44,175,650\n36,317,343\nTotal\nFeb.22,1940 to\nJuly 26, 1941\n9,647,250-1/2\n275,877,457\n44,377,216\n36,482,193\nJuly 24, 1941\n1,500 rights sold for\n$18,937\nJuly 25, 1941\n1,500 rights sold for\n$18,703\n3,000\n$37,640\nRegraded Unclassified\n124\n- -\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE July 28, 1941\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nconfidential\nRegistered sterling transactions of the reporting banks were as follows:\nSold to commercial concerns\n£31,000\nPurchased from commercial concerns\n£10,000\nOpen market sterling was quoted at 4.03-1/2. The only reported transactions\nconsisted of £10,000 sold to commercial concerns.\nIn New York, closing quotations for the foreign currencies listed below were\nAS followe:\nCanadian dollar\n11-1/2% discount\nArgentine peso (free)\n.2380\nBrazilian milrois (free) .0505\nUruguayan peso (free)\n.4380\nColombian peso\n.5800\nMexican peso\n.2070\nCuban peso\n1-1/4% discount\nThe Chinese yuan and Japanese yen were not quoted in New York today.\nActual quotations for the dollar and British pound were again received from\nShanghai today, according to New York banks. In terms of our currency, the yuan\nremained unchanged at 5-3/16#, and sterling was again quoted at 3.96-3/8.\nThere were no purchases or sales of gold effected by us today.\nThe Treasury issued licenses under both the Gold Reserve Act and Executive\nOrder No. 8389, 8.6 amended, permitting the Federal Reserve Bank of New York to\neffect the following transfer of gold in its vaulte:\n$200,506 from the Bank of Portugal's Gold Account G to the ordinary\naccount of the Bank of Portugal. Gold in Account G is the\nproperty of the Fortuguese Government.\nTo understand that the Portuguese Bank purchased the above amount of gold from the\nGovernment.\nNo new gold engagemente were reported.\nA price of 23-7/16d was again fixed in London for both spot and forward silver,\nequivalent to 42.55$.\nRegraded Unclassified\n125\n-2-\nThe Treasury's purchase price for foreign silver was unchanged at 35#.\nHandy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.\nTie made five purchases of silver totaling 400,000 ounces under the Silver\nPurchase Act. Of this amount, 300,000 ounces represented new production from various.\nforeign countries, purchased for forward delivery. The remaining 100,000 ounces\nrepresented inventory silver, for spot delivery.\nThe Federal Reserve Bank's report of July 23, listing deposits of banks in\nAsia with the New York agencies of Japanese banks, showed that such deposits totaled\n$55,765,000, an increase of $3,398,000 since July 16. Most of the change in deposits\ntook place on the books of the Yokohame Specie Bank's New York agency. The latter's\nprincipal dollar liabilities to and dollar claims on Japanese banks in Asia stood as\nfollows on July 23:\nChange from\nJuly 23\nJuly 16\nLiabilities: Deposits for Japan and Manchuria\n$39,925,000\n+ $5,165,000\nDeposits for China\n10,235,000\n- 1,330,000\n\"\n: U.S. Treas. Bills, comm. paper, etc\n25,730,000\n- 3,808,000\nClaims\n: Loans\n$18,573,000\n+ $4,967,000\nif\n: Other - mainly Jan. import bills\n6,836,000\n-\n32,000\nIt will be noted that, despite further Agency loans of $4,967,000, the Agency's dollar\nliabilities to banks in Japan, Manchuria and China increased no more than $27,000 on\nbalance. This suggests the withdrawal of $4,940,000 during the week ended July 23,\nin comparison with the apparent withdrawal of nearly $8,500,000 in the preceding week.\nand\nCONFIDENTIAL\nRegraded Unclassified\nEXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL\n126\nFROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN\nAS SHOWN BY DEPARTURE PERMITS GRANTED\nWeek ended July 26, 1941\n:\nJAPAN\n:\nRUSSIA\n:\nSPAIN\n:\nGREAT BRITAIN\n:\n:\n:\n:\nFITROLEUM PRODUCTS\nFuel and Gas Oil (including\nDiosel 011)\n254,400 Bbla.\n:\n:\n716,500 Bbls.\nCrude -\nBlended or California\nHigh Octane Crude*\n56,000 Bble.\n:\n:\n:\nAll Other Crude\n68,820 Bbls.\n--\n--\n:\nGasoline -\nGasoline A**\n--\n-\nI\n245,500 Bble.\nGasoline B*\n98,328\n1\n--\n409,000 Bble.\nAll Other Gasoline\n:\n-\n-\n-\nC\nbricating 011 -\nAviation Lubricating 011***\n--\n-\n-\n6,762 Bbla.\nAll Other Lubricating 011\n1,213 Bbls.\n:\nI\n83,260 Bbls.\nTetreethyl Lead***\n:\n--\n:\nI\n\"Boosters\", such as Iso-\nOctane, Iso-Hexane, or\nIso-Pentane\n-\n:\n--\n-\nSCRAP IRON AND SCRAP STEEL\nNumber 1 Heavy Melting Scrap\n--\n-\n16,098 Tons\n--\nAll Other Scrap\n--\n1\n6,296 Tons\n-\nOffice of the Secretary of the Treasury, Division of Research and Statistics.\nJuly 28, 1941.\nSource: Office of Merchant Ship Control, Treasury Department.\nAny material from which by commercial distillation there can be separated\nmore than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon\nmixture - President's regulations of July 26, 1940.\nAviation Gasoline.\nÀs defined in the President's regulations of July 26, 1940.\nRegraded Unclassified\ndaily 28, 19k1\nFiles\nKr. Dechras\nSTRICTLY CONFIDENTIAL\nKr. incleas, as efficer of the National Bank of Belgium with present head-\nquartors is Lenden, salled on De today. at 11:15 a.m. Mr. has hom is\nBev Tork recently to press the litigation of the Bank of Balgium against the Teak\nof France in connection with the alleged failure of the latter to enfogrard -\n$250,000,000 worth of gold which had been entrusted to 11. This was the gold\nwhich had been taken from Transe to Daker at the time of the collepse of the\nFrench Republic.\nMr. Ansinux seld as that the case had been baken under deliberation - few\ndays ago by the Suprese Court of Now Terk. A decision 10 expected free this court\nsenstime within the sext few days. The immediate decision will stmply deal with\nthe point as to whether the above-mentioned court is competent to hear the case.\nIf the decision 10 is the affirmative, 11 is anticipated that the Bank of France\nwill appeal therefrom. It is expected that the case will be tried on its merits\nis about November. at which time Mr. Ansiaux will again be in the United States.\nUte present plass are to leave for Lendon within the next fortnight.\nIn anover 10 w inquiry, Mr. ABSIAUX said that the gold heldings of the\nNational Bank of Belgium are sev all abread. The principal reserves are is the\nUnited States and Canada, with a small amount earnarized in the Central Task of\nSouth Africa. The gold with the South African bank resulted from gold produced\nis the Belgian Genge being shipped to South Africa between the date that Ragland\nentered the var and that or which Belgium came late the war. Since Belgium autored\nthe war gold produced is the Belgian Cange has been made available to the British\nagainst sterling. The Belgian holdings with the Bank of Seath Africa. therefore,\nwill net increase above the present small figure.\nKr. Ancieux informed B9 for the first time that Mr. Janeson, who was Governor\nof the National Bank of Belgium when the war broke eat and who was later interned\nIn Trance, died in the month of June is Belgium, to which country be had returned\nfrom Trance seme menths ago. Mr. insians said that Severear Jameson had been 111\nfor several weeks prior to his death. Mr. Amelaux speke in highest terms of\nGovernor Janason, saying that he had really been the strangest leader La Belgium\nagainst Germany since his return to Drussels.\nMr. Anciaux said that the National Bank of Belgion in Brassels is for all\npresent purposes only a demostic bank. Vith Mr. Inviseyas and hinself is Lendon\nwith Minister of Finance Datt, the foreign holdings and business of the National\nas representatives of the National that of Belgium, verking in cless scoperation\nofficials Belgium is Lendon are have been mking funds available to the British any\nBank of handled from London. Mr. Amelanx let me that Government. the Belgiss\nThese DATE first ozt of deposits is Lendon, but Belgian stocke there are\nRegraded Unclassified\n128\n- I -\ncalumated. There 10 as plan to distaich the Belgion gold stocks is the Waited\nStates. as the contrasy, the purpose to to conserve the stocks fee the Belgian\npeople when the var 10 terminated. Mr visiter was particularly proof of the\nshowing that has been nade w the Belgion Gongo is providing gold, coppor, and\nother researces of much help to Great Britein is the purpuit of ver activities,\nand also is showing the self-sufficiency of this Belgion colony which, yoter to\nthe var, use considered a liability rather then a national asset.\nme\nEM0:lap-7/29/41\nRegraded Unclassified\n429\nCOFY\nPARAPHRASE OF TELEGRAM RECEIVED\nTROM: American Embassy, London\nDATE: July 28, 1941, 10 p.m.\nNO. : 3252\nSECTION ONE\nTHE pollOwing IS CONFIDENTIAL FROM (7) COE FOR THE SECRETARY 03 THE\nTREASURY.\nToday. July 28, I sat in at B. conference which WGB held with the\nChinese Ambassador by officials of the British Treasury and the Bank of\nEngland. The Chinese Ambassador was informed by the British that all\nChinese accounts in the sterling area were being frozen today. The British\nalso told the Chinese Ambassador that they expected to bring Hong Kong into\nthe sterling area tonight.\nÀs was explained to the Chinese Ambassador, the freezing was a friendly\naction; the British Government would have to look to the Chinese Government\nfor considerable advice as to the accounts which are to be unfrozen.\nTonight the British will unfreeze for payment within the sterling area\nthe accounts of the Chinese Government and its organs and the accounts of\nthe four Government banks and of American and British banks residing in\nChina which possess balances in the sterling area.\nThe inclusion of Hong Kong in the sterling area, it was noted, would\nplace the dollar as well B.B the sterling balances which Hong Kong holds under\nthe control of the British.\nA number of inquiries were suggested to the Chinese Ambassador by the\nBritish: inquiries which the Ambessador might wish to nake of his Government.\nÀ copy of these inquiries should reach me tomorrow, and I sholl telegraph\nthem at once for the information of the Treasury Department.\nAA:PAK\nWINANT\nRegraded Unclassified\n130\nCOPY\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy, London\nDATE: July 28, 1941, 10 p.m.\nNO. : 3252\nSECTION TWO.\nOne of the points which the British suggested the\nChinese Ambassador inquire about was whether the Ministry\nof Finance, the Bank of China, the Stabilization Board or\nsome other agency would be the organization constituting\nthe Chinese Exchange Control. Another was what Chinese\nagencies or organizations in Shanghai, Hongkong, Singapore,\nRangoon, and other places would be available to make\n(\nrecommendations to the British on the treatment Chinese\nbalances held in those places should be accorded.\nIt was explained to the Ambassador that, unlike the\nUnited States freezing control which contemplates a control\nof transactions, the British control as now constituted\n1a a control of accounts, so that when the Chinese told\nthe British that certain accounts should be free, the\nBritish would understand this to mean that it was the\nwish of the Chinese that all transactions in relation\nto those accounts should be allowed to take place.\nThe British told Coe they feel that the British\nGovernment and the United States Government should kaep\none another closely informed in detail as to what action\neach is taking with respect to Chinese balances.\nRegraded Unclassified\n131\n- 2 -\nThis Embassy has no copies of the general licenses\nissued under the United States Government orders freezing\nChinese and Japanese property. It would be of assistance\nto the Embassy if the contents of these general licenses\ncould be provided the Embassy by telegraph, if the licenses\nare not too long.\nEnd of message.\nEA:FL:PAK\nCopy:MEW 7/30/41\nRegraded Unclassified\n132\nDEPARTMENT OF STATE\nWASHINGTON\nIn reply refer to\nEA 893.51/7255\nJuly 28, 1941.\nThe Secretary of State presents his compliments to\nthe Honorable the Secretary of the Treasury and encloses\nsix copies of a paraphrase of a telegram from the American\nConsulate General at Hong Kong, China, dated July 23, 1941,\n11 a.m., which gives the itinerary of Mr. A. Manuel Fox\nand his associates.\nEnclosure:\nFrom Consulate General,\nHong Kong, July 23, 1941.\n(Six Copies.)\nRegraded Unclassified\n133\nC\n0\nP\nY\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Consulate General, Hong Kong,\nChina, via N.R.\nDATE: July 23. 1941, 11 a.m.\nThis is to inform the Department that For and his associates\nwill leave this p.m. for Chungking.\nThis message was sent to Chungking and also repeated to the\nDepartment for its information.\nBRUINS\nEA:PAX\n893.51/7255\nCopy:alm 7-28-41\nRegraded Unclassified\n131\nC\no\nP\nY\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy. Chungking, China, via N.R.\nDATE: July 28, 1941, 3 p.s.\nNO.: 311\nTHE FOLLOWING IS CONFIDENTIAL FOR THE SECRETARY OF THE TREASURY FROM FOX.\nWe are greatly handicapped by the delay in making available the services\nof a private secretary. There 1a a scarcity of competent and reliable help\nhere. Difficulty in securing available service in Chungking is being ex-\nperienced by the Board even to the extent that it has found it necessary to\nappeal to Doctor Kung for the loan of his private secretary to help with the\nwork, Although the Consulate in Hong Kong has been most helpful, be could\nmake avuilable--part-time-only one stenographer.\nThe need for and the advisability of obtaining confidential male secre-\ntary from the United States is readily confirmed by E. P. Chen and Ambassador\nGouss.\nIe there some difficulty which prevents Hewlett from being sent? He\nhas worked with Frese and the latter thinks he would do the work satisfactorily.\nOthers have also given good recommendations.\nGAUSS\nLAIFL:PAK\nCopyralm 7-29-41\nRegraded Unclassified\nC\n135\n0\nP\nY\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy, Chungking, China, via N.R.\nDATE: July 28, 1941, 4 p.m.\nNO.: 312\nTHE FOLLOWING IS FOR THE SECRETARY OF THE TREASURY\nFROM FOX.\n\"I have been confidentially informed that Hall Patch\nwill be appointed as the British member temporarily.\"\nGAUSS\nEA:PAK\nCopy:MEW 7/29/41\nEN\n21\nRegraded Unclassified\nDelivered to Treas. by Customs\n136\nSHANGHAI\nJULY 28, 1941\nTO:\nDIVISION OF INVESTIGATION AND PATROL\nFROM:\nCAMPBELL\nHAVING JUST RETURNED FROM HANOI OUR FRENCH INDO CHINA CONTACT\nSAYS THERE IS GROWING DISSATISFACTION AMONG FRENCH GOVERNMENT\nEMPLOYEES OVER GOVERNOR GENERAL DECOUX STRONG VICHY ATTACHMENT\nSTOP FIRST ACTION OF JAPS WILL PROBABLY BE TO STOP EXPORTS OF\nRICE FROM THAI KANG AND INDO CHINA WHICH WILL ADVERSELY AFFECT\nCHINESE AND VICINITY STOP RECENTLY ARRIVING IN INDO CHINA WERE\nTWO THOUSAND MEN FROM FRENCH FOREIGN LEGION\n0\nCopy:bj:7-29-41\nRegraded Unclassified\n137\no\no\n?\nY\nGS\nPLAIN\nTeingtac via N.R.\nDated July 28, 1941\nRec'd 4 a.m.\nSecretary of State,\nWashington.\nRUSH\n40, Twenty-eighth\nJapanese armed forces this morning placed under protective cus-\ntody or in some cases actually occupied the properties of American\nand British firms. Principle American firms affected are Standard\nVacuum 011 Company, Texas Company and Universal Leaf Tobacco Company.\nIngress and egrees by staffe of American firms not denied but re-\nnoval of stocks and property prohibited. Funds in Japanese banks\nbelonging to American and British firms have been frozen. Please\ninform head offices.\nIt is reported that beginning tomorrow all Japanese firms will\nbe prohibited from dealing with American firms except under special\npermit.\nLocal Japanese Consul General refused to see me and the British\nConsul General this morning.\nSent to the Department. Repeated to Peiping and Chungking.\nMEYER\nEMB\nCopy:1g 7/30/41\nRegraded Unclassified\n138\n(\nC\n0\nP\nY\n(CONFIDENTIAL)\nPARAPHRASE\nA telegram of July 28, 1941 from the American Embassy at\nPeiping reads substantially as follows:\nIn view of the situation and the possibility of confiscation\nthe National City Bank, located in the Legation quarter, urgently\nrequests authority to destroy, in the presence of a consular of-\nficer attached to the American Embassy. United States notes to the\n(\nvalue of $160,000 which it has in its vaults. Approximately half\nof these notes are official funds of the United States Marine\nCorps on deposit.\nCopy:1g 7/30/41\nRegraded Unclassified\nC\n0\n139\nP\nGRAY\nY\nSwatow via N. R.\nDated July 28, 1941\nRec'd. 11:40 a.m.\nSecretary of State,\nWashington.\n17, July 28, noon.\nChinese puppet police were stationed outside\nthe Hong Kong Shanghai Banking Corporation \"British\"\nlast night and this morning their places were taken\nby Japanese plain-clothes men. Persons entering and\nleaving the bank are searched and are unable to take\nmoney into or out of the bank. Several foreignare had\nto remove their shoes during the examination. These\nmeasures were taken without advance notice.\nAs no American bank ie located at Swatov most\nmerchants in the drawn work industry, and this Censu-\nlate, depend on the British bank although some firms\nbegan to transact business with the Japanese Bank of\nTaiwan about 8 months ago. They are now concerned\nover present measures which prevent their obtaining\nfunds to meet obligations including the payment of\nwages to native workers.\nLaunches proceeding up the harbor this morning,\ncarrying handkerchief materials to the interior for (*).\nRegraded Unclassified\n140\n- 2 -\nwere turned back by the authorities. Foreign mer-\nchants are preparing a shipment of merchandise for\nthe United States, scheduled to leave Swatow on Aug-\nust two for Shanghai by Japanese vessel, but it is now\nuncertain whether shipment will be made. The Foreign\nDrawn Work Association is negotiating with the Japanese\nagency handling the ship and the Department will be in-\nformed of further developments.\nSent to the Department, repeated to Peiping,\nChungking, Hongkong, Shanghai.\nYEARN\nCSB\n(*) Apparent omission.\nCopy:dtg:8-1-41\nRegraded Unclassified\nC\n0\n141\nP\nY\nCONFIDENTIAL\nPARAPHRASE\nA telegram (no. 4) of July 28, 1941 from the\nAmerican Consul at Chefoo reads substantially as follows:\nActing under orders from the Japanese military mission\nJapanese gendarmes and Chinese police are now engaged in\nclosing the Hong Kong and Shanghai Banking Corporation,\nBank of China and Bank of Communications, and also all\nAmerican and British firms. In order to stop all business\nactivities armed guards are being placed on (?)\nCopy:bj:8-2-41\nRegraded Unclassified\n(CONFIDENTIAL)\n142\nPARAPHRASE\nA telegram (no. 8) of July 28, 1941 from the American\nConsul at Chefoo reads substantially as follows:\nWithout communicating even with the American and\nBritish Consulates the police detained the Chinese and\nforeign staffs of all American and British firms on the\npremises until Japanese authorities obtained information\nin regard to assets and completed inventories. These\nrestrictions affect the Standard-Vacum 011 Company,\nthe Texas 011 Company and three other American firms.\nThe firms were told that no business activities of any\nkind can be carried on and no stocks can be moved. Code\nmessages from American citizens and British subjects are\nrefused by the telegraph office in Chefoo.\nRegraded Unclassified\n143\no\n0\nP\nY\nTEM\nPLAIN\nTokyo\nDated July 28, 1941\nRec'd 9:09 a.m.\nSecretary of State,\nWashington.\n1106, July 28, 1 p.m.\nAccording today's press Finance Ministry yesterday\nissued following statement regarding Japanese ordinance\nfreezing American Philippine assets: \"The present step\nagainst United States has been taken as counter-measure\nto American ordinance freezing assets. As for policy\nof ite operation, we shall take full cognisance of\nmanner in which freezing order is enforced in United\nStates and by means of general licensing and other\nmethods we shall give it as much flexibility as possible\nso that the effect upon economic relations between Japan\nand United States may be minimized.\"\nGREW\nPEG\nCopy;rg 7/31/41\nRegraded Unclassified\n144\nTEM\nGRAY\nTokyo\nDated July 28, 1941\nRec'd 10:25 a.m.\nSecretary of State,\nWashington.\n1108, July 28, 8 p.m. (SECTION ONE)\nA Finance Ministry ordinance setting forth \"reg-\nulations for the control of transactions concerned with\nforcigners\" was today promulgated. The ordinance consists\nof 31 articles and numerous addenda, the complete trans-\nlation of which runs into more than 5,000 words. The\nfollowing summary has therefore been propared and the\ncomplete text in translation will be forwarded via air\nmail to Shanghai for transmission to the Department by\nNaval Radio unless the Embassy is otherwise instructed:\nOne. The regulations will effect nationals and jur-\nidical persons of nationalitics to be designated by\nthe Ministor of Finance. Certain other juridical porsons\nwhose capital or management 18 controlled by nationals\nof the designated country or who have certain connections\nwith the designated country will likewisc como within\nthe purview of the ordinance.\nTwo. Designated foreign nationals may not acquire\nor dispose of the following:\nGREW\nALC\nRegraded Unclassified\n145\nLET\nGRAY\nTokyo\nDated July 28, 1941\nRec'd. 1:52 p.m.\nSecretary of State,\nWashington.\n1108, July 28, B p.m. (SECTION TWO)\nImmovable property; perpetual leases; movable\nproperty valued at yen 100 or more; capital, pledge,\nmortgage, mining, fishing, deforestation, or indus-\ntrial property rights; copyrights; business invest-\nments and enterprises; negotiable securities exceed-\ning yen 20 in value (railroad, ship or other tickets\nfor travel within Japan excluded); domestic exchange;\nforeign currency.\nThree. Designated foreign nationals may not\nperform the following acts without permission of the\nMinistry of Finance:\nDispose of obligations in foreign or Japanese\ncurrency (including offsetting); acquire obligations\nin Japanese currency; assume or guarantee obligations;\nconsign or receive consignment of immovables, movables\nvalued at yen 100 or more, or negotiable securities\nvalued at yen 20 or more; execute or transfer loans,\nor acquire or dispose of lease rights in the cases of\nimmovable\nRegraded Unclassified\n146\n-2- 1108, July 28, 8 p.m. (SECTION TWO)\nimmovable property, movable property valued at yen\n100 or more, or negotiable instruments valued at yen\n20 or more; extend or collect loan; make or withdraw\ndeposits.\nGREW\nHSM\n14V\n147\nLET\nGRAY\nTokyo\nDated July 28, 1941\nRec'd. 3:45 p.m.\nSecretary of State,\nWashington.\n1108, July 28, 8 p.m. (SECTION THREE)\nFour, Designated foreign nationals may not\nacquire or dispose of Japanese currency exceeding\nyen 500 monthly (one household will be entitled only\nto yen 500) without permission from the Ministry of\nFinance.\nFive. Permission of the Ministry of Finance 18\nnot required for the payment of taxes, salaries of\nJapanese employees residing in Japan and in special\ncases designated by the Minister of Finance.\nSix. The restrictions provided in the ordinance\nshall apply equally to persons executing acts on be-\nhalf of designated foreign nationals or who are party\nto such acts except in case of receipt of taxes or in\ncases designated by the Finance Minister.\nSeven. Persons not designated foreign nationals\nmay not without permission of the Minister of Finance\nsell foreign exchange in case the payer is a designated\nforeign national or for export of goods to a designated\nforeign country.\nEight,\nRegraded Unclassified\n148\n-2- 1108, July 28, 8 p.m. (SECTION THREE), From Tokyo\nEight. Designated foreign nationals shall report\nwithin two weeks the amount of their property and\nholdings.\nGREW\nCSB\n149\nLET\nGRAY\nTokyo\nDated July 28, 1941\nRec'd. 1:12 p.m.\nSecretary of State,\nWashington.\n1108, July 28, 8 p.m. (SECTION FOUR)\nas of the day of designation of the country by the\nMinister of Finance and at the end of each succeeding\nmonth any increase or decrease in these holdings.\nNine. Any person who is a creditor or debtor\nto a designated national shall report the amounts of\nsuch debts or credits within two weeks of the designa-\ntion of the foreign country and the status of these\ndebits and credits at the end of each succeeding month.\nTen. The Minister of Finance may when necessary\nwaive the restrictions stipulated in this \"ordinance.\"\n(END OF MESSAGE)\nGREW\nHSM\nRegraded Unclassified\n150\nDES\nGRAY\nTOKYO\nDated July 28, 1941\nRec'd 11:48 a.m.\nSecretary of State,\nWashington.\n1111, July 28, 11 p.m.\nEmbassy's 1108, July 28, 8 p.m., numbered paragraph\nfour.\nThe attention of the Department is called to the\nfact that whereas the American Government's order freez-\ning Japanese assets restricts monthly Expenditures of\nJapanese nationals to $500, the Japanese ordinance\nprovides for a sum of only 500 yen.\nGREW\nHSM\nRegraded Unclassified\n151\nML\nPLAIN\nTokyo via N.R.\nDated July 28, 1941\nRec'd 1:10 p.m.\nSecretary of State\nWashington\n1110, twentyeighth 10 p.m.\nTone of pross comment today American British\nfreezing orders continues non-inflammatory moderate.\nASAHI states American British actions against Japan not\nunexpected in VIEW previous cooperative policy these\nnations aimed at defent Japan's co-prosperity sphere\nplans. American Government's action freezing Chinese\nassets reveals complete misunderstanding trend develop-\nments China. !merica reaped only tripartite alliance\nfrom her abrogation Trade Treaty with Japan can expect\nno contribution Pacific peace through present action.\nNICHI NICHI states Britain's abrogation commercial\ntreaties welcomed Japan since most favored nation\nclauses compelled Japan accord hostile nations gome\nspecial treatment given co-prosperity sphere countries.\nBritish American action will spur Japan overcome resultant\ngrave difficulties and develop East Asia resources.\nYOMIURI\nRegraded Unclassified\n152\nML-2- Telegram from Tokyo via N.R. #1110 July 28,1941\nREC'd 1:10 p.m.\nYOMIURI calls British American Economic measures\negainst Japan challenging motivated political designs\nbut anticipated. Scope American fratzing order will de-\npend Far Eastern diplomatic developments and Japan can\nnow bE neither optimistic nor pessimistic. Japan will\nnever take offensive but proper counter measures will\nmeet further British or American steps.\nKOKUMIN emphasizes calm reserved attitude Japanese\npeople in face British American Economic measures,\npoints out Japanese determination face situation with\nunity strength.\nGREW\nHPD\nRegraded Unclassified\n153\nC\no\nP\nY\nTK\nFLAIN\nTokyo via Shanghai & N.R.\nDated July 28, 1941\nRec'd 10:55 p.m.,\nAugust 3.\nSecretary of State\nWashington.\nAttache Commerce\n35, July 28.\nOrder freezing Japanese credits in U. S. A. over-\nshadowed all other developments. While not wholly un-\nexpected yet move came as heavy blow business financial\ncircles. Result stoppage of sharp limitation Japanese\nAmerican trade will seriously effect following Japanese\nindustries: (one), three from curtailed imports from\nU. S. A.: spinning and weaving, lumber, rayon and\nstapel fiber, transportation, fisheries, aviation,\nshipping, all industries using gasoline lubricating\nand fuel oil, three using steel manufactures and iron\nand steel advanced manufactures, those using copper\nzinc and lead, machine tool and metal working machinery,\nIndustrial chemical especially those using borax and\ncarbon black, fertilizer, leather, rubber, and asbestos\nRegraded Unclassified\n154\n-2-\nproducts industries. (Two), three from curtailed exports\nto U. S. A.; raw silk, canned fish, fur, bristle, rubber\nsoled footwear, spinning and weaving, hat braid, hat porcelain,\nalide fastener, electric lamp, camphor, toy and brush industries.\nAlso numerous foodstuff items for Jayanese residents in U.\nS. A. One of most serious blows will fall on shipping industry\nif American ports closed to Japanese ships. Cessation trade\nwith British Empire will deprive Japan main source supply wool,\nwheat, nickel, iron, manganese, tanning materials and sizable\nquentity of cotton, zine and lead. Cutting off trade with N.E.I.\nJapan will lose supplies of rubber tine copra nickel and bauxite.\nInterruption trade with Latin America will be serious blow\nexport general merchandise lines and will cut off needed supplies\ncotton from Brazil and concentrates from Chile. In general\nJapanese industrial economic financial structure will be very\nsubstantially weakened through inability maintain those foreign\ntrade relations upon which her prosperity depends. Rice rubber\nand tea which Japan can now obtain from French Indochina and\nThailand will in apprecable measure componsate for the above\nmentioned trade loses. Japan has taken retaliatiory measures\nfreesing all American British and N.E.I. assets in Japan Manchuria\nand occupied areas China effective twenty eighth. Press adopted\nmoderate tone critisims and expressed some satisfaction and hope\nflexibility American order and interprets this as possibility\ncontinuation trade relations on basis license eystem. Upon\nRegraded Unclassified\n155\n-3-\nreceipt news on twenty sixth American freezing order stock\nexchange prices broke sharply with Tokyo new dropping from\none naught one point fifty to ninety four point eighty,\nlowest since October nineteen hundred thirty one when reim-\nposition gold embargo occurred. Many other issues lost from\ntwo to three yen. Decline undoubtedly would have been sharper\nhad Concord Security Company not bought heavily on Government\norder. Textile prices dropped from apprehension over freezing\norder and general world situation. Sharp gain American raw\ncotton utterly ignored. Silk prices tumbled with trade offering\nto sell at one four five naught for July. Both Yokohama and\nKobe futures market suspended transactions and were still\nclosed on twenty sighth. Money market somewhat strenghtened\nbut approaching month end settlement. Bank Japan note issue\nfour naught two one two six nine thousand yen up one six seven\neight eight two thousand over nineteenth. Ministry Agriculture\nestimates this year's crop wheat barley and naked barley Japan\nproper at one three naught million bushels representing increase\ntwelve million over average production past five years but decline\nfour point four million bushels from last year's production and\nfourteen million from goal set by Ministry for nineteen hundred\nforty one. Press announced stapel fiber output August September\nwill show decline from thirty to forty percent compJune due de-\ncrease about fifty percent in supply caustic soda and gloomy out-\nlook result strenghthened trade control.. Ministry Commerce whole-\nsale commodity price index June one seven six point six representing\nRegraded Unclassified\n156\n-4-\nrise one point six percent compMay and six point four percent\ncomsamper. Textiles rose eight point four percent compMay while\nbuilding materials chemicals and fuel registered lesser advance.\nProvision metal goods and fertilizer dropped slightly. Industrial\nshare prices twenty sixth average seventy one point twenty seven\nindex seventy three point seventy five weeks average seventy one\npoint eighty one index seventy four point thirty two. (END) Signed\nWilliams. Inform Commerce.\nGREW\nCSB\n= & N ave\nCopy:bj:8-5-41\nRegraded Unclassified\n(CONFINENTIAL)\n157\nC\no\nP\nY\nPARAPHRASE\nÀ telegram of July 28, 1941 from the American Consul\nat Dairen reads substantially as follows:\nAccording to information received from the manager\nof the Dairen branch of the National City Bank of New York,\nhe has been informed by the manager of the Dairen branch\nof the Yokohama Specie Bank that it was decided at a meeting\non the morning of July 28 of Japanese bankers called by the\nGovernor of the Kwantung Leased Territory that (a) clearing\nhouse facilities for the National City Bank are suspended;\n(b) the National City Bank may males no payments to depositors\n(\nof any nationality pending the receipt of further instructions;\n(c) the bank must report to the authorities by the morning\nof July 29 the name and nationality of each depositor, the\ntype and amount of the deposit, the date on which the de-\nposit was made, and in the case of time deposits the due\ndate. The name and nationality of every borrower must be\nreported at the same time together with the amount and date\nof the loan, the security offered and the due date.\nIt was hinted that before long there will be evolved\na formula for paying all depositors with the exception of\nBritish and Americans and that there will be a reasonable\nprovision made for British and American depositors to obtain\nsufficient money for living expenses. According to the\nRegraded Unclassified\n-2-\n158\nmanager of the Dairen branch of the National City Bank,\nChinese owing the bank who tried to obtain from Japanese\nbanks in Dairen cash to repay loans now due to the National\nCity Bank were refused cash for such use. These measures\namount practically to a closing of the bank, the manager\nsays. The measures all apply also to the Hong Kong and\nShanghai Banking Incorporation. In response to an inquiry\nfrom the manager of the Dairen branch of the Yokohama\nSpecie Bank as to how the American Consulate was to obtain\ncash for current expenses, the Government of the Kwantung\nLeased Territory is said to have asked for a delay of a\nday or two before this matter is brought up.\nCogy:bj:8-5-41\nRegraded Unclassified\n159\nC\no\nP\nY\nCONFIDENTIAL\nA telegram (no. 90) of July 28, 1941 from the American Consul\nGeneral at Batavia reads substantially as follows:\nA decision in regard to freezing of Japanese assets was reached\nby the Netherlands Indies Government after it had remained in confer-\nence all day and almost all night on July 27. Van Mook sent for the\nAmerican Consul General immediately after the decision was reached\nand informed the Consul General to the following effect:\nAll transactions in foreign exchange between the Netherlands\nIndies and Japan are temporarily suspended beginning on July 28.\nBanks must not pay to or receive money from Japanese subjects with-\nout special permits from the Director of Economic Affairs. Special\npermits will be required for all exports to the Japanese Empire,\n\"Manchukuo\", China and Indochina from the Netherlands Indies. Money\nand goods traffic with Japan are frozen by these measures. It was\nnot the intention to put any obstacles in the way of domestic opera-\ntions of Japanese firms in the Netherlands Indies. Van Mook said.\nAccording to Van Mook, importe from Japan had practically\nceased by July 20 as a result of the new export restrictions which\nthe Japanese Government promulgated on July 7. 1941. although\nNetherlands purchasers in Japan were required to pay for and take\ndelivery of goods when goods were delivered to warehouses in Japan,\nCopy:lg 7/30/41\nRegraded Unclassified\n160\nNoted\n03VI3038\n1.1. Cochran\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Consulate General, Singapore,\n8A 11 MA OF JULTAB\nStraits Settlements\nDATE: July 28, 1941 5 p.m.\nCITY\nNO.:\n181\nTRATE\n2\nSHT\nOT\nReference is made to telegram of July 27, 1 p.m.,\nno. 180 from the Consulate General.\nThe Embasey is told by the Controller of Foreign Exchange\nthat the order for freezing Japanese assets will effectively\nserve to out out all trade, (imports and exports) between\nthe Japanese Empire and Malaya - subject to any arrangemente\nfor barter which might be negotiated in cooperation with the\nGovernment of the U.S.\nThe Controller said that this will apply to exports of\niron ore for which payment was not made - at a fixed rate\nof exchange - before the twenty-sixth day of July, the\neffective date of the freezing order. The Government here\n16 taking up the question of whether to permit the export\nof such iron ore as had been paid for before the twenty-sixth\nof July. The Government here will not permit any shipments to JAps\nof rubber and tin at all, no matter when payment therefor was\nmade.\nThe Consulate General understands that Japanese residents\nwho leave Malaya cannot take with them more than the equivalent\nof 100 Straits dollars when they leave.\nThis telegram was repeated to the Embassy at Tokyo, Japan.\nPATTON.\nEA:LWV\nRegraded Unclassified\n161\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy, Ankara, Turkey\nDATE: July 28, 1941, 5 p.m.\nNO.: 276\nReference is made to telegram of July 12, 2 p.m.,\nno. 25 to Istanbul from the Department.\n(1) No information is available either in Ankara or in\nIstanbul about the reported purchase by German bankers of\nholdings in Turkey of interests in French and Belgian hands.\nWe have learned from the correspondent in question that\nhe got his information from a French banker whom he knew\nin Paris, and that he had run into him by accident here in\nAnkara. However, the interest of the Treasury in this\nmatter will be kept in mind by the Embasey. Inquiries will\nbe made in banking circles when the opportunity arises.\n(2) The Embassy does not think that efforts would be\nmade by Germany to get control of the rest of the concessione\nbelonging to the French and Belgians in Turkey, as there\nare not many of them, and their size 1s small. Furthermore,\nthe fixed policy of the Turkish Government has been to\nrepurchase foreign concessions in Turkey. The transfer of\nsuch concessions to another foreign government would un-\ndoubtedly be opposed by the Turkish Government.\nInquiry was made by the Embassy about the acquisition\nof obligations of the Turkish Government which were issued\nto replace the debt obligations of the Ottoman Government,\nwhich\nRegraded Unclassified\n162\n- 2 -\nwhich are held for the most part in France and Belgium, and\nwhose service 18 now paid with Turkish pounds in Turkey,\nwhich sums are to be utilized for buying goods to export\nto France. A responsible officer on the staff of the French\nEmbassy here has told the Embassy that there 1s no evidence\nthat these obligations are being acquired by the Germans.\nHe said no such evidence appeared in the recent correspondence\non the servicing of these obligations which has taken place\nbetween Vichy and the French Embassy here.\nMACMURRAY.\n10 THE 260SEIVBA\nLECHNICY\nOFFICE 06 THE\nBVI mr 30 VN II ve\nEA:LWW\nIBEVENSA\nBECEINED\nRegraded Unclassified\n163\nCOPY\nDEPARTMENT OF STATE\nWASHINGTON\nJuly 28, 1941.\nIn reply refer to\nSA 840.51 Frozen Credits/2617\nThe Secretary of State presents his compliments to\nthe Honorable the Secretary of the Treasury and encloses\nsix copies of a paraphrase of telegram No. 339, dated\nJuly 22, 1941, from the American Embassy at Mexico, in\nregard to the measures taken by Germans in Mexico in\npreparation against possible freezing action by Mexico.\nEnclosure:\nFrom Embassy, Mexico,\nNo. 339, July 22, 1941.\nRegraded Unclassified\n164\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Embassy, Mexico City, Mexico\nDATE: July 22, 1941, 4 p.m.\nNO. : 339\nThe Germans have withdrawn practically all of their\nbank deposits and such funds have been invested in mortgage\nand other types of bonds payable to bearer in view of the\nfact that they fear the Mexican Government might take measures\nwhich would freeze German accounts. Heavy purchases of\nSwiss francs are being made through Shanghai by the Germans.\nToday, Lockett was informed that foreign clients had\nbeen advised by the Chase Bank in New York to buy Swiss\nfrance through Shanghai instead of New York. This has\nopened for German funds an avenue of escape.\nDANIELS\nEA:PAK\nCopy:bj:7-28-41\nRegraded Unclassified\n165\nBRITISH EMBASSY,\nWASHINGTON.\nPERSONAL\nAND SECRET\n28th July, 1941.\nDear Mr. Secretary,\nI enclose herein for your per-\nsonal and secret information two copies\nof the latest reports received from London\non the military situation.\nBelieve me,\nDear Mr. Secretary,\nVery sincerely yours,\nHalifax\nThe Honourable\nHenry Morgenthau, Jr.,\nUnited States Treasury,\nWashington, D.C.\nRegraded Unclassified\n166\nTELEGRAM FROM LONDON\nDATED JULY WOTH\nStrongly escorted convoy of six merchant ships\ncarrying stores and reinforcements arrived safely at Malta\nafter continuous high-level and dive-bombing and torpedo\nbombing but only one ship (already reported) of over\n18,000 tons hit by E boat torpedo in early morning. Her\nspeed reduced to 10 knots out her careo suffered little\ndamage.\n2.\nA.K. July 23rd explosion in number 1 bay of\nAlexandra Dook, Hull, damage to merchant ship, sank three\nlighters and was attributed to mine reported on night\nEng 3rd, May 4th.\n3.\nRoyal Air Force, Daylight June 24th. Heavy\n=ir attack on Prest, medium =ttock on Cherbourg, 11ght\nAttack on LA Pallice: except for latter fighters provided\nsacort. Claims made that Gnelsenau, Prince Sugen end\nScharnhorst were straddled by sticks of bombs. Smoke\nscreen made observation difficult therefore no hit could\nbe ascertained. Merchant ship 10,000 tons may also have\nbeen hit. Heavy sir fighting resulted in destruction by\nour bombers of 22 enemy fighters certain, four probably,\neight damaged. Our fighters destroyed 12 enemy fighters\ncertain, 5 probably, six damaged. Fle lost 16 bombers,\n? fighters. Off Norvegian coast A.M. July 24th small\nmerchant ship nit by coastal command aircraft left\nbeached and burning. Another small ship was attacked;\ncrew Abendoned the ship though bombs not seen to explode.\nNight/\nRegraded Unclassified\n167\n-2-\nNight of July 24th-25th bombers attacked Kiel and Emden\nwith catisfactory results. A.M. July 25th small force\ndespatched five hours to attack Scharnhorst at La Pallice,\nresults (word omitted). Four missing.\n4.\nMilitary. Japanese making military prepara-\ntions Manchoukuo where Northern movements of troups is\nreported.\n5.\nRussia. Germans apparently trying to consoli-\ndate position along railway running south from Porkhov\narea. No further advance towards Leningrad reported.\nGerman pressure continues north east of Smolensk also south\nof Kiev where thrust 1s south eastwards. terman advance\neast of Mogilev Podolsk apparently on fairly wide front.\nRegraded Unclassified\n168\nTELEGRAM FROM LONDON\nDATED JULY 27TH\n1.\nAchates mined July 25th 40 miles south east Iceland\n(o) arrived in harbour.\n2.\nBritish oruiser on July 25th intercepted Derman\nErlangen 6000 tone 480 miles south east Montevideo. She was\nset on fire and flooded while endeavour was being made to save\nher.\n3.\nGrienex batteries unsuccessfully attempted to shell\nchannel convoy night of July 25th/July 26th.\n4.\nAttempt to locate schernboret on July 25th failed.\nFifty reconnaissance Brest and I.a Pallice also uneucceseful.\n5.\n0500/26 Grand herbour walta heavily attacked by\nE-boats and one-man T/Bs. St. Elmo mobile viaduet damaged by\ntorpedo. About 10 E-boats and one-wan T/Be sunk by shore\nbatteries and Royal Air Force fighters. Twenty prisoners\nomptured and various bodies recovered.\n6.\nROYAL AIR FORCE Night of July 24th/July 25th attacks\non Kiel and Enden satisfactory especially in Deutsch and\nKrupp's shipyards. Night of July 25th/26th medium attack\nHanover and Hamburg and light attack on Berlin. Nine bombers\nmissing.\n7.\nMEDITERRANEAN July 23rd.\nAn E-boat east of Pantelleria left sinking by Beau\nfighters which also destroyed two dive-bombers. One Beau\nfighter missing. your Blenheims attacked shipping at\nTrapani Sicily. One merchant vessel about 7000 tone lest\nacen heavily on fire; another merchant vessel sbout 3000\ntons received two direct hits, set on fire, believed sunk.\non July 25th at walts Hurriesnes shot down 5 enemy aircraft;\none/\nRegraded Unclassified\n169\n-2-\none enemy fighter fell into cellar of demolished shop at\nValetta.\n8.\nRUSSIA German efforts directed mainly north east\nof Smolensk and clearing up Mogilev area. Russian forma-\ntions west of armoured spearheads apparently still offering\nconsiderable resistance to enveloping forces.\nRegraded Unclassified\n170\nRESTRICTED\nMILITARY INTELLIGENCE DIVISION\nTENTATIVE LESSONS BULLETIN\nWAR DEPARTMENT\nNo. 137\nWashington, July 28, 1941\nG-2/2657-235\nNOTICE\nThe information contained in this series of bulletins\nwill be restricted to items from official sources which are\nreasonably confirmed. The lessons necessarily are tentative\nand in no sense mature studies.\nThis document is being given an approved distribution,\nand no additional copies are available in the !!ilitary Intel-\nligence Division. For provisions governing its reproduction,\nsee Letter TAG 350.05 (9-19-40) M-B-L.\nGERMAN PANZER UNITS IN JUGOSLAVIA\nSOURCE\nThis bulletin is based upon the report of an American\nofficial observer in Berlin, dated May 5, 1941, containing a\ntranslation of an article appearing April 27, 1941, in Voelkischer\nBeobachter, a Berlin daily newspaper.\nCONTENTS\n1. GENERAL\n2, EN ROUTE TO BELORADE WITH TANKS\n3. COICENT\nRESTRICTED\n-1-\nRegraded Unclassified\n171\nRESTRICTED\nGERMAN PANZER UNITS IN JUGOSLAVIA\n1. GENERAL\nIn spite of mountainous terrain with numerous defiles, and\nthe limited number of suitable routes for supply and advance to\ncombat, the Germans employed an undetermined number of tank and\nmotorized divisions during their operations in Jugoslavia. llost\nof the divisions of this type operated under the command of\nColonel General von Kleist.\nSome of these divisions moved northwest from the area around\nSofia and reached the Morava River valley, near Nich, on April 9.\nThese units then continued northwest to Belgrade, arriving there\non April 13, Northwest of Nish, near Krusevac, a part of this\nforce branched off and moved toward Sarajevo, eventually gaining\ncontact with Italian forces near Mostar on April 15.\nAnother motor-mechanized force, also a part of von Kleist's\ngroup, moved southweat from the Sofia area into the Vardar River\nvalley and reached Uskub and Veles on April 8. The Uskub column\ncontinued west to Tetova, arriving there on April 9, and then\nturned south; some of its elements gained contact with elements\nof the Italian XI Army near Ochrida on April 11.\nIt is believed that the Veles column continued bouthwest\nand southeast after passing Veles. One part of it, moving southwest\nthrough Prilep on April 9, pushed on through Monastir into Greece;\nthe other part headed southeast down the Vardar River valley toward\nSaloniki,\n2. EN ROUTE TO BELGRADE WITH TANKS\nWhile the powerful German attack on Uskub was separating\nthe Serbians from the Oreco-British forces, Colonel General von\nKleist's panser troops advanced toward Belgrade, A participant in\nthese operations gives the following description of his experiences:\n\"The von Kleist panser group, which began to advance on\nApril 6, encountered Serbian units that fought stubbornly. While\nthe armored divisions were moving along the main highway toward\nWish, infantry and mountain divisions in the lead forced their way\ninto the mountains. Although this was the first time that these\ndivisions had taken part in a battle, they broke enemy resistance\nafter a struggle lasting two days. On the second day the weather\nbecame bad and continued so until just before the leading elerents\nreached Belgrade. During that period, the panzer group advanced\nin heavy snow storms and pouring rain over highways covered with\nmud.\nRESTRICTED\n-2-\nRegraded Unclassified\n172\nRESTRICTED\n\"By the time Nish was reached, the fighting spirit of the\nSerbs had been broken. Their units retreated into the forests,\nleaving only their antitank weapons - drawn by oxen - to continue\nthe fight against our tanks.\n\"These tanks advanced BO far ahead of the other troops that\nthe supply columns, which had been considerably impeded by the\nSerbians, followed at a distance of 20 to 25 miles. In this field\nof operation the baggage trains encountered more resistance than\nthe tanks. The latter, however, had all they could do to overcome\nthe difficulties incident to the bad condition of the highways.\nVehicles and wheels sank into the mud, often up to the axles, and\nhours of effort were required to dig them out,\n\"The Serbians had estimated that the principal effort of\nthe Germans would come from the north; they had thought it impor-\nsible for a tank division to advance from the southeast, through\nthis difficult terrain. For that reason the tanks were able to\nadvance to Nish and take the city completely by surprise, so\ncompletely that freshly prepared food was found in the barracks,\nThe panser divisions then rushed on to the north, while other units\nmoved toward Bor and secured the copper mines there, the largest in\nEurope.\n\"In the meantime the Serbian regiments were beginning to\ndisband, Soldiers came out of the woods by the thousands and gave\nup their rifles when they saw that all important points on the\nhighways were occupied by Germans. It was not even necessary to\nsend them to the rear under guard; signs in the Serbian language,\npointing out the route to the prison camps, were all that was needed,\n\"Although English propaganda had tired to convince the\nSerbians that the Germans would kill all young nen, it soon became\napparent that the Serbs trusted their conquerors. In many cases\nthey proved helpful in pulling vehicles out of the mud. Prisoners\nwho came from Belgrade gladly marched to the north immediately in\nrear of the panzer columns. About 35 miles from Belgrade, elite\ngroups from the Officers' School and the Royal Guards offered strong\nresistance. But these were also subdued - the armored division\nwished to be the first unit in Belgrade and its men did their utmost\nto accomplish this desire.\n\"On the Saturday before Easter, the panzer division was about\n20 miles south of Belgrade. During the night the weather changed\nvery suddenly; the rain stopped, and on Sunday morning the sun was\nshining from a blue sky. Reconnaissance detachments which had\nentered Belgrade during the night discovered that the city had\nbeen evacuated, and the panzer units marched without opposition\ninto the Serbian capitol.\nRESTRICTED\n-3-\nRegraded Unclassified\n173\nRESTRICTED\n\"Complete anarchy prevailed in Belgrade. Neither policemen\nnor firemen were at their posts. Plunderers, including numerous\ngypsies, had stolen everything they could get their hands on,\nespecially in the parts of the city which had been bombed. Power\nplants and water works had been destroyed.\n\"In the meantime the Serbians tried to open negotiations\nfor an armistice conference. A major reported first as a negotiator,\nbut as he did not possess full authority he was sent back, He was\nfollowed by a general who stated that he had been in three wars,\nbut had never experienced anything like this one, The general said\nthat he had been led from the Serbian lines through positions held\nby Gernan troops and then through an area occupied by the Serbians.\nAs evidence of his authority he carried a paper on which was written:\n'You have full authority. Simovich,\n\"Soon afterwards Simovich fled, and a little later he arrived\nin Athens accompanied by King Peter.\"\n3. COMMENT\na. The second section of this bulletin indicates that infantry\nand mountain troops cleared the way through the mountain defiles\nfor the armored units, The Germans probably had previous knowledge\nof the inadequato antitank defonses of the Jugoslavian Army.\nb. Using the same tactics that they used on the Western Front,\nGerman panzer units, once committed, continued to advance whenever\npossible, leaving infantry and supplies to follow in rear as best\nthey could. It should be kept in mind that such procedure was\npossible not only because hostile defense was weak, but also because\nthe panzer divisions themselves were capable of considerable defensive\naction. when this system is used, supply trains should be provided\nwith defensive fire.\nRESTRICTED\nRegraded Unclassified\n174\nRESTRICTED\n0-2/2657-220: No. 452\nM.I.D., W.D.\n12:00 M.. July 28, 1941\nSITUATION REPORT\nI. Eastern Theater.\nGround The situation on the Finnish-Russian front 10 not\nlasown.\nGerman mechanized troops have reached the area of\nVolosovo, 45 miles eouthwest of Leningrad, In this area it therefore\nappears that the Luga River has been crossed.\nElements of the armored force of Colonel General\nGuderian which had advanced on Moscow without supports are isolated\nin an area immediately west and northwest of Moscow. These troops\nare being supplied and reinforced from the air, Their situation was\nnot deemed critical by Berlin on July 26th. German troops advancing\nnortheast from Smolensk on Moscow reached the area, west and south-\nvest of Viasma on July 25th. Near Mohilev the Germans report the\ncapture of 23,000 men belonging to two Russian divisions.\nAxis forced hold the line of the Dniester rivers\nfrom Tighina to the Black Bea. Behind the front in southern Bescarabia,\nBussian forces of considerable size have been surrounded but are re-\nsisting strongly.\nAir) No change in the general situation. Russian bombing\nof Rumanian oil shifted to Constansa.\nII, Western Theater.\nAir: German. London was lightly raided on the night of the\n27th-28th.\nBritish, Relatively limited activity by day and night.\nIII. Mediterraneen Theater.\nGround: Nothing of importance.\nAir: Normal harassing raids.\nRESTRICTED\nRegraded Unclassified\n175\nTREASURY DEPARTMENT\nWashington\nFor PELBAUL, LORNING MISSPAPERS,\nPress Service\nTuesday, July 29, 1941.\nNo. 26-77\n7/28/41\nThe Secretary of the Treasury announced last evening that the\ntenders for $100,000,000 or thereabouts, of 91-day Treasury bills,\nto be deted July 30, and to mature October 29, 1941, which were\noffered of July 25, were opened at the Federal Reserve Banks on\nJuly 20:\nThe details of this issue are 68 follows:\nTotal applied for - $266,617,000\nTotal accepted - 100,015,000\nRange of accepted bids:\nHigh\n- 100.\nLow\n- 99.872 Equivalent rate approximately 0.111 percent.\nAverage\nIf\n=\n\"\n0.094\nIf\nprice - 99.976\n(29 percent of the amount bid for at the low price was accepted)\n- 000 -\nRegraded Unclassified\n176\nTREASURY department\nWASHINGTON\nJuly 29, 1941.\nMEMORANDUM FOR THE SECRETARY:\n*\nI have your memorandums of July 25 and 28,\nmaking a number of suggestions with regard to the\nTreasury Hour programs.\nAt my request, Mr. Kuhn has consented to take\nthese matters in hand, and he will report to you\nin due course.\nI enclose a memorandum from Mr. Callahan giv-\ning the \"artist schedule\" for the Treasury Hour\nfor July 30, August 6, and August 13.\nGRAVES.\n# NOTE: Your memo of 7/25 was the airmail letter with\nsuggestions re George Gershwin, John Philip Sousa,\nMenuhin, wtc.\nThe memo of 7/28 was the suggestion that William\nShirer, of Berlin Diary, appear on some Treasury\nhour; consider Deems Taylor as one of the musical\nadvisers.\nn.m.c.\nRegraded Unclassified\n177\nTREASURY DEPARTMENT\nINTER OFFICE COMMUNICATION\nDATE July 28, 1941\nTO\nMr. Graves\nFROM\nMr. Callahan\nAttached you will find the artist schedule for\nthe \"Treasury Hour - l'illions for Defense\" for July 30th,\nAugust 6th, and August 13th.\nMR\nEnclosure\nRegraded Unclassified\n178\nTREASURY HOUR - MILLIONS FOR DEFENSE\nJuly 30th\nJack Benny and Company, including Mary\nLivingstone, Claudette Colbert, and\nDon Ameche\nTyrone Power\nJane Frohman\nBette Davis - in special play written by\nArch Oboler\nAugust 6th\nJohn Charles Thomas\nRobert Ripley\nMiriam Hopkins\nFannie Brice as \"Baby Snooks\"\nAugust 13th\nAl Jolson\nCharlie McCarthy and Edgar Bergen (tentative)\nBidu Sayao\nJoan Crawford\nRegraded Unclassified\n179\nTREASURY department\nWASHINGTON\nJuly 29, 1941\nMemorandum for THE SECRETARY:\nThe following report is made of Stamp sales\nat \"Treasury House\":\nJuly 1-27\n$20,221.95\nJuly 28\n828.20\nTotal\n$21,050.15\nGRAVES\nRegraded Unclassified\n180\ntreasury department\nWASHINGTON\nJuly 29, 1941\nMemorandum for THE SECRETARY\nThe following report is made of requests received\nfor \"Any Bonds Today?\" from the experimental mailing of\n10,000 eards:\nNo. Requests\nNo. Copies\nJuly 1 - 26\n1080\n6278\nJuly 28\n19\n91\nTotal\n1099\n6369\nGRAVES\nRegraded Unclassified\n181\nCONFIDENTIAL\nUNITED STATES SAVINGS BONDS\nSales in July Compared with June. 1941\nOn Basis of Issue Price\nFirst Twenty-three Business Days\n(June 1-27, July 1-28)\n(Amounts in thousands of dollars)\n:\n: Increase or Decrease (-)\nSales\n:\n: in July Compared with June\nItem\n:\n:\n:\n:\nJuly\nJune\nAmount\nPercent\n:\n:\n:\n:\nSeries E - Post Offices\n$ 46,279\n$ 36.803\n$ 9,476\n25.7%\n50.6\nSeries E - Banks\n85,192\n56,558\n28,634\nSeries I - Total\n131,471\n93,361\n38,110\n40.8\nSeries ? - Banks\n22,576\n26.774\n- 4,198\n- 15.7\nSeries G - Banks\n144,497\n170,635\n- 26,138\n- 15.3\nTotal\n$298,545\n$290.770\n$ 7.775\n2.7%\nJuly 29, 1941.\nOffice of the Secretary of the Treasury,\nDivision of Research and Statistics.\nSource: All figures are deposits with the Treasurer of the United States\non account of proceeds of sales of United States Savings Bonda.\nNote: Figures have been rounded to nearest thousand and will not\nnecessarily add to totals.\nRegraded Unclassified\nOn Danie of Issue Price\n(In thousands of dollars)\nPost Office\nAll Bond Sales\nBond Sales\nBank Bond Sales\nDate\nTotal\nSeries E\nSeries F\nSeries G\nSeries E\nTotal\nSeries E\nSeries F\nSeries G\nJuly 1941\n1\n$ 9,505\n$ 2,387\n$\n957\n$ 6,160\n$\n595\n$ 8,910\n$ 1,793\n$\n957\n$ 6,160\n2\n11,612\n4,066\n845\n6,701\n1,735\n9,877\n2,331\n845\n6,701\n3\n15,045\n4,903\n843\n9,299\n2,077\n12,969\n2,827\n843\n9,299\n5\n22,900\n9.589\n2,437\n10,875\n3,191\n19,709\n6,397\n2,437\n10,875\n7\n11,028\n6,315\n472\n4,242\n3,908\n7,120\n2,407\n472\n4,242\nto\n11,226\n4,867\n1,197\n5,162\n1,346\n9,581\n3,522\n1,197\n5,162\n9\n16,570\n6,277\n880\n9,413\n2,229\n14,341\n4,048\n880\n9,413\n10\n11,430\n6,018\n605\n4,808\n2,459\n8,972\n3,559\n605\n4,808\n11\n16,311\n8,504\n1,197\n6,610\n2,405\n13,905\n6,098\n1,197\n6,610\n12\n12,689\n4,482\n860\n7.347\n1,672\n11,017\n2,810\n860\n7.347\n14\n13,435\n7.754\n1,046\n4,636\n3,060\n10,375\n4,693\n1,046\n4,636\n15\n10,083\n4,754\n602\n4,728\n1,458\n8,625\n3,296\n602\n4,728\n16\n11,994\n5,541\n808\n5,645\n1,645\n10,349\n3,896\n808\n5,645\n17\n15,332\n6,213\n1,189\n7,930\n1,799\n13,533\n4,414\n1,189\n7.930\n18\n12,404\n6,730\n836\n4,837\n2,042\n10,362\n4,689\n836\n4,837\n19\n7.553\n4,513\n926\n2,114\n1,505\n6,048\n3,007\n926\n2,114\n21\n14,136\n7,105\n1,015\n6,016\n3,060\n11,076\n4,046\n1,015\n6,016\n22\n12,191\n3,820\n1,208\n7,164\n1,001\n11,191\n2,819\n1,205\n7,164\n23\n14,677\n5,018\n1,208\n8,451\n1,514\n13,163\n3,505\n1,208\n8,451\n24\n11,634\n5,382\n959\n5,293\n1,623\n10,011\n3.759\n959\n5,293\n25\n10,589\n5,828\n904\n3,857\n1,670\n8,919\n4,158\n904\n3,857\n26\n11,149\n4,420\n474\n6,256\n1,303\n9,846\n3,117\n474\n6,256\n28\n15,050\n6,986\n1,109\n6,954\n2,983\n12,067\n4,003\n1,109\n6,954\nTotal\n$298,545\n$131,471\n$ 22,576\n$144,497\n$ 46,279\n$252,266\n$ 85,192\n$ 22,576\n$144,497\nOffice of the Secretary of the Treasury, Division of Research and Statistics.\nJuly 29, 1941.\nSource: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of\nUnited States Savings Bonds.\nNote: P1 res have been rounded ta nearest thousand and will not necessarily add to totals.\nRegraded Unclass\n183\nTREASURY DEPARTMENT\nWASHINGTON\nJuly 29, 1941\nDear Mr. Morgenthau:\nFollowing your suggestion about calling in\nMr. White, Supervisor of the New York State Banks,\nI wish to advise that the Federal Deposit Insurance\nCorporation is calling a meeting of the Advisory\nCommittee of the State Supervisors of Banka to be\nheld in Washington August 12. Mr. White is a\nmember of this Committee, along with the State\nSupervisors of eleven other states.\nIn addition to the Committee, the State\nSupervisors from ten other states are being\ninvited.\nI believe that we will be able to cover the\nsituation fully in this way.\nWith sincere regards, I am\nCordially yours,\nB.M. Edwards\nHonorable Henry Morgenthau, Jr.\nSecretary of the Treasury\nRegraded Unclassified\n184\nTREASURY DEPARTMENT\nINTER-OFFICE COMMUNICATION\nDATE July 29, 1941\nTO\nSecretary Morgenthau\nFROM Mr. Cochran\nCONFIDENTIAL\nRegistered sterling transactions of the reporting banks were as follows:\nSold to commercial concerns\n£34,000\nPurchased from commercial concerns\n£17,000\nOpen market sterling held steady at 4.03-1/2. The only reported transaction\nconsisted of £4,000 purchased from a commercial concern.\nIn New York, closing quotations for the foreign currencies listed below were\n81 followe:\nCanadian dollar\n11-1/2% discount\nArgentine peso (free)\n.2380\nBrasilian milreis (free) .0505\nUruguayan peso (free)\n.4380\nColombian pego\n.5800\nMexican peso\n.2070\nCuban peso\n1-3/16% discount\nIn Shanghai, the yuan advanced 1/32# to 5-7/324. Sterling was quoted at\n3.94-3/4. off 1-5/80.\nThere were no gold transactions consummated by us today.\nNo new gold engagements were reported.\nIn London, spot and forward silver were fixed at 23-1/24, up 1/16d.\nThe U.S. equivalent of this price 18 42.67$.\nHandy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.\nThe Treasury's purchase price for foreign silver was unchanged at 354.\nTo made three purchases of silver totaling 300,000 ounces under the Silver\nPurchase Act. of this amount, 200,000 ounces represented inventory silver,\npurchased for spot delivery, and the remaining 100,000 ounces consisted of new\nproduction from Peru, bought for forward delivery.\nRegraded Unclassified\n185\n- 2 -\nCONFIDENTIAL\nThe report of July 23 received from the Federal Reserve Bank of New York,\ngiving foreign exchange positions of banks and bankers in its district, revealed\nthat the total position of all countries was short the equivalent of $5,068,000.\nan increase of $14,000 in the short position since July 16, Net changes were as\nfollows:\nShort Position\nShort Position\nChange in\nCountry\nJuly 16\nJuly 23\nShort Position*\nEngland**\n$ 627,000\n$ 447,000\n- $180,000\nEurope\n2,878,000\n2,982,000\n+ 104,000\nCanada\n475,000 (Long)\n469,000 (Long)\n+ 6,000\nLatin America\n172,000\n237,000\n+ 65,000\nJapan\n48,000\n57,000\n+ 9,000\nOther Asia\n1,819,000\n1,914,000\n+ 95,000\nAll others\n15,000 (Long)\n100,000 (Long)\n- 85,000\nTotal\n$5,054,000\n$5,068,000\n+ $ 14,000\n*Plus sign (+) indicates increase in short position, or decrease in long position,\nMims sign (-) indicates decrease in short position, or increase in long position.\n**Combined position in registered and open market sterling.\nSimil\nRegraded Unclassified\n186\nRESTRICTED\n0-2/2657-220; No. 453 M.I.D., W.D. 12:00 M., July 29, 1941\nSITUATION REPORT\nI. Eastern Theater.\nGround: There is no further information from the Finnish-\nRussian front.\nThe German forces south of Leningrad did not ad-\nvance on July 28. The front extends on a line between 45 and 50\nmiles south of Leningrad.\nThe great battle between Smolensk and Viasma con-\ntinues. There is no evidence that the main German forces have made\ncontact with the armored spearheads of Colonel General Guderian,\nisolated to the west and northwest of Moscow.\nThe situation in the Ukraine is obscure. Balta,\na city in the southern Ukraine 50 miles east of the Dniester River,\nhas been captured by the Axis. Citeata Alba (Ackerman), a Bessara-\nbian town at the mouth of the Dniester, has been captured by a Rou-\nmanian division.\nAirt No change in the general situation.\nII. Western Theater.\nAir: German. Extremely light activity.\nBritish. Apparently no offensive operations.\nIII. Mediterranean Theater.\nGround: No developments.\nAir: British raids on Benghasi and on airfields in\nSicily.\nRESTRICTED\nRegraded Unclassified\n187\nTREASURY DEPARTMENT\nFOX Miss Chauncey\nINTER-OFFICE COMMUNICATION\nDATE July 30, 1941\nTO\nSecretary Morgenthau\nCONFIDENTIAL\nFROM\nMr. Cochran\nRegistered sterling transactions of the reporting banke were B.B. follows:\nSold to commercial concerns\n£68,000\nPurchased from commercial concerns\n284,000\nOpen market sterling was again ouoted at 4.03-1/2, and there were no\nreported transactions.\nIn New York, closing quotations for the foreign currencies listed below were\nM.M. follows:\nCanadian dollar\n11-3/8% discount\nArgentine peso (free)\n.2380\nBrazilian milreis (free)\n.0505\nUruguayan peso (free)\n.4380\nColombian peso\n.5800\nMexican peso\n.2070\nCuben peso\n1-1/8% discount\nIn Shanghai, the yuan advanced 1/32# to 5-1/46. In contrast to its\nimprovement against the dollar, the yuan declined in terms of the British\ncound, with the result that sterling rose 6-1/4# to 4.01.\nThere were no gold transactions consumated by us today.\nThe State Department forwarded e cable to us reporting the following gold\nshipments from Australia, which will be sold to the San Francisco Mint upon\narrival:\n16,559,000 shipped by the Commonwealth Bank of Australia. Sydney, to the\nFederal Reserve Bank of San Francisco.\n185,000 shipped by the Bank of New South Wales, Sydney, to the American\nTrust Company, San Francisco.\n15,744,000 Total\nA price of 23-1/24 VAR again fixed in London for spot and forward\nsilver, squivalent to 42.67d.\nRegraded Unclassified\n188\nCONFIDENTIAL\n- 2 -\nThe Treasury's purchase price for foreign silver was unchanged at 35#.\nHandy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.\nYe purchased 225,000 ounces of silver from the Bank of Canada under our\nregular monthly agreement. Today's purchase raises the total amount of silver\nbought from that source during July to 1,200,000 ounces, or the agreed monthly\nlimit.\nM.M.\nRegraded Unclassified\n189\nC\nDEPARTMENT OF STATE\no\nP\nWashington\nY\nJuly 29, 1941.\nMy dear Mr. Secretary:\nI enclose herewith a paraphrase of a message to you\nfrom Ambassador Winant in London (no. 3251 dated July 28).\nSincerely yours,\n18/ Herbert Feis\nHerbert Feis\nAdviser on International\nEconomic Affairs\nEnclosure:\nNo. 3251 from\nLondon.\nThe Honorable\nHenry Morgenthau, Jr.,\nSecretary of the Treasury.\nCopy:alm 7-29-41\nRegraded Unclassified\n190\n0\n0\nPARAPHRASE OF TELEGRAM HECEIVED\nP\nFROM:\nAmerican Embassy, London, England\nDATE:\nJuly 28, 1941, 9 p.m.\nNO.:\n3251\nThe following telegram is strictly confidential for the Secretary of the\nTreasury.\nReference, telegram of July 18, 3 p.m., no. 2657 from the Department.\nThis morning I talked with the Chancellor of the Exchaquer: Sir John\nAnderson, Privy Council head; Lord Woolton, Food Minister, and the Deputy\nMinister of Supply, Lord Portal. We discussed the handling of goods under\nthe Lease-Lend Act. Consideration was also given to the question of the export\nof products from Great Britain which the British are asking the United States\nto supplement for their own use and for which a shortage in the United States\nexists.\nThe British authorities promised that they would give us & statement\nvithin the next two days; it is my belief that a. genuinely sincere effort to\nmeet the situation is being made by the British. The statement from Anderson\nvas 80 limited in scope that I believe complete information should be contained\nin the memorandum promised by the Chancellor of the Exchequer. It is my\nbelief that such will be the case, and that appropriate action vill support it.\nI am being helped by Coe, and as soon as the promised information is\navailable, ve will forward it for your criticism and comment.\nWINANT.\nEA:LWW\nCopy:alm 7-29-41\nRegraded Unclassified\n191\nBS\nPLAIN\nLondon\nDated July 29, 1941\nRec'd. 1:55 p.m.\nSecretary of State,\nWashington.\n3274, Twenty-ninth.\nFOR TREASURY.\nAs will be seen in despatch being sent Treasury\nby air the first renotion of the Landon press concern-\nin joint freezing of Japen was that oppensement WAB\nENGEC ane that no n. result of freezing Japanese world\ntrade would be almost completely stopped. Today a\nlong and well informed article in the TIMES Cisplays\nmore uncertainty no to the may in which the freezing\ncontrols will be qualied. The following are Excerpts\nfrom this article Carling with this question of policy:\n\"The economic CERBURES taken by Gre-t Britain and\nthe United States of America against Japan form a total\nweapon. Whether the weapon will be used totally at\nonce rests largely with the 23 ressor in the Far Enst.\"\n\"The innedinte Effect of the finan dal freezing\nis A complete cessation of trade with Japan but un-\nless the Jhonnesse nake it impossible it 16 likely that\nlicenses will be granted by both Britain and America to\nEnable\nRegraded Unclassified\n192\n-2- #3274 July 29 from London\nEnable a certain amount of trade to continue. How\nmuch it is too soon to say.\"\n\"Should sone trade still be possible, silk,\ncanned salmon and cotton piece-goods for India night\nbe taken in Exchange for, say, some cotton, surplus\nAustralian whent and other foodstuffs. Acerican\nsupplies of cil to Japan pay not be reduced much\ninne.intely and assurance of full backing would bE\nneeded by the Netherlands East Indies if they were\nto refuse to supply say +11 to Japan. Should the\nneasures taken by the two siCES be Applied in full\nand resolutely, on balance Japan will suffer and\nsuffer severely. As for as our trade with Japan\nCREP it may bE uncomfortable for the Doninions,\nIndia and the Colonies but far from ruinous; whereas\nfor Japan complete loss of oil, cotton, wool anc other\ncommodities would DE fatal in a year or BOD\nVINANT\nWSB\nRegraded Unclassified\n193\nBS\nPLAIN\nLondon\nDated July 29, 1941\nRec'd. 1:53 p.n.\nSecretary of State,\nWashington.\n3278, 29th.\nThe full text of Churchill's production state-\nment in the HOUSE of Commone 16 bring sent by air.\nThere WETE several passages dealing with the un-\nfortunate Effect in the United States and Else-\nwhere of criticisms of Britain's production. The\nPrime Minister said in Effect that other countries\nwould get the impression that Britain was not making\na full Effort.\nHE vas evidently referring to recent inquiries\nwhen hE said: \"We have of course to COME to very clean\ncut agreements with our American friends and helpers.\nThey are making an effort for the common cause\nand they naturally ask for the very fullest and clear-\nEst information about what is happenin to their goods\nand whether there is waste or misdirection. It 18\nour duty to satisfy them that there is no mucile or that\nmuddle is reduced to n. minimum and that they are getting\nvalue for their money. The improvement in the ordering\nof imports\nRegraded Unclassified\n194\n-2- # 3278 July 29 from London\nof imports and of the British purchases in the\nUnited States and in the relati ne of the very\nlarge number of competent persons who work night and\ncay on both BIGES of the ocean in this sphere 1s, I\nam plac to say, stracy and progressive.\nThe Prine Minister also denlt with a charge\nwhich kne been MACE by Garro Jones in the July 9 and\n10 production debate that Accident airplanes WETE\nlying around unproked because the British Government\nhas not ordered the necessary complementary Equip-\ncent one spare parts when it ordered the planes, EE\nCented that this statement yas true of any aircraft\nordered by the British Government. HE said that the\ncircraft which had arrived. in Britain as a result of\nthe thing over of French ordero in the United States\nhad Incked spare Engined Ind had been built for\nFrench Guns, with vireless ne other instruments that\ncould not be used. Consequently there had been delay\nin using these aircraft. The Prine Minister enic\nthat ns swiftly ne anible these aircraft were being\nnocifie' m. Brought into USE nn° that many are now\nin efficient -peration. (END SECTION ONE)\nMINANT\nVSB\nRegraded Unclassified\n195\nAF\nGRAY\nLondon\nDated July 29, 1941\nRec'd 1:51 p.m.\nSecretary of State,\nWashington.\n3278, July 29 (SECTION TWO)\nPlease send copy of this telegram to Treasury\nand General Bureau of Hopkins' Office.\nThree. Copy of the full report of the debate\nfollow by air. (END OF MESSAGE)\nWINANT\nWSB\nRegraded Unclassified\n196\nPARAPERASE OF TELEGRAM RECEIVED\nFROM: AMERICAN CONSULATE, Chefoo, Ohina, via 1.3.\nDATE: July 29, 1941, 11 p.m.\nNO.1 9\nA survey has been completed by the representatives\nof the Japanese special military mission of the assets of\nUnited States and British firms and staffs who have LOGGGE\nto premises. In order to prevent the removal of stocks\nand other property, police guards are still stationed on\nthe premises. Clients were prevented from leaving the\nHong Kong and Shanghei Bank because of the pickets. There-\nfore, in order to avoid insidents, the bank closed its doors.\nMorsover, all of the British and U.S. credits appear\nto be frozen. No definite information in regard to the\npolicy is dealing with frozen assets at Chefoo is available.\nHowever, it Vas stated by minor officials of the Japanese\nspecial military mission that firms would be allowed to\nwithdraw funds that are available in order that, at the\nend of the month, vages and salaries might be paid.\nYesterday morning, telephones and electric power were\nout off at British and American places. They were restored\nat British and American Consulates on the afternoon of the\ntwenty-eighth.\nKanshex, a British steamship, which vas held at Chafee\nmore than twenty-four hours was allowed to sail today for\nShanghal. After twenty-four hours, the Hair Paking, a British\nsteamer, was released from quarantine. British and American\nnationals ()\nRegraded Unclassified\n197\nnationals (1) are to visit steamers in port or to \" on\nwharves.\nThe mail for both the Americans and the British is\ndetained, It is believed that it is being sent for\nconsering to Peiping,\nThis telegram was sent to the Department for its\ninformation; repeated to Chungking, Shanghai, and Peiping.\nBUTRICK\nKA:PAK\nof THE\nDrl vne 50 bill 2 sa\nBECEINED\nRegraded Unclassified\n198\nC\n0\nP\nY\nBS\nPLAIN\nAmoy\nDated July 29, 1941\nRec'd. 6:20 a.m. 30th.\nSecretary of State,\nWashington.\n35, July twenty-nine.\nIn what is described in local press as retaliatory measure against\nAmerican Government action in freezing Japanese credits in United States,\nthe Japanese sponsored Amoy Municipal Government issued late yesterday\nregulations effective immediately governing foreign trade and installing\nlicensing system which press claimo extends to International Settlement\nKulangsu. The regulations are detailed, cover small as well an large\ntransactions and authorize Mayor to issue licenses. It is reported\nthat local Japanese Consul General issued regulations of similar nature\nat same time.\nNotwithstanding new regulations, for past two years no merchant\nvessel has been able to enter or depart from Amoy harbor, or to discharge\nor load cargo without specific approval of Japanese Navy.\nIn so far as Consulate is aware only American assets in Japanese\noccupied holdings of Philippine Chinese on Amoy Island.\nNo indication thus far of interference with normal operations of\nAmerican or other firms on Kulangsu.\nSent to the Department. Repeated to Chungking, Peiping and Shanghai.\nPILCHER\nKLP\nCopy:bj:8-6-41\nRegraded Unclassified\n(CONFIDENTIAL)\n199\nPARAPHRASE\nA telegram (no. 1119) of July 29, 1941 from the\nAmerican Ambassador at Tokyo transmite B. message of\nJuly 25 from the Consul at Kobe which reads substantially\nas follows:\nGeneral passes bearing photographs which are now re-\nquired for entry to the docks have been refused to Japanese\nand foreign personnel of the President Lines. However,\nthe authorities say that when needed specific passes may\nbe issued to such personnel for visits to particular ships.\nThe Consul General of the Netherlands estimates there\nare approximately ten million guilders tied up in cotton\ngoods awaiting shipment for which the Japenese authorities\nwill not issue export permits.\nDuring the last few days west-bound traffic on the\nrailway has been especially heavy. Each day there is an\naverage of possibly eight freighters departing from Osaka\nBay, including some troop transports, the troops also\nsailing from Kobe. On July 24 the Tjisaroes, which sailed\nfrom Yokohama, was forced to carry Japanese pilot, (7)\nhaving stayed on board while anchored at Kobe.\nCogy:bj:8-6-41\nRegraded Unclassified\no\n200\n0\nP\nY\nCONFIDENTIAL\nPARAPHRASE\nA telegram (no. 1120) of July 29, 1941 from the\nAmerican Embassy at Tokyo transmits a telegram of July 28\nfrom the American Consul General at Singapore which reade\nsubstantially as follows:\nAccording to information received by the Controller\nof Foreign Exchange the freezing order will serve effectively\nto do away with all export and import trade between the\nJapanese Empire and Malaya, subject to any barter arrangemente\nwhich may be made in cooperation with the Government of the\nUnited States. The Controller of Foreign Exchange said also\nthat this applies to exports of iron ore for which payment\nhad not been made (exchange fixed) prior to July 26.\nThe Government is now considering the matter of allowing\niron ore for which payment had been made before July 26\nto be exported. Regardless of date of payment, shipments\nof tin and rubber vill not be allowed to be made to Japan.\nJapanese residents leaving Malaya will not be permitted\nto withdraw a sum greater than the equivalent of $100\n(Straits currency), it is understood.\nRegraded Unclassified\n201\n(COPY)\nGRAY\nFoochow via N.R.\n(CONFIDENTIAL)\nDated July 29, 1941\nRec'd 3:40 a.m.,30th\nSecretary of State,\nWashington.\nJuly 29, 6 p.m.\nThe head of the Japanese army special service section\nthis afternoon informed me he had received preliminary\ninstructions that American assets in Japanese occupied\nterritory including the Foochow area were to be frozen as\nof July 28. He stated sales of American property and\nfinancial transactions involving Americans will require\nprior approval of his section, that Americans will be\nallowed limited sume for \"living expenses\", that he will\nfurnish further details when they are available and that\nBritish interests will be accorded similar treatment.\nHe stated he desires that Americans prepare and\nfurnish customs authorities preferably through this\nConsulate and prior to August 5th lists showing valuations\nof American owned real estate and at such customs offices\nmore valuable movable property as American nationals and\nfirms may wish later to sell or transport from this area.\nI pointed out that he was furnished lists of the principal\nAmerican real properties in Foochow in connection with a\nrequest that he accord them protection, that it is not taken\nRegraded Unclassified\n202\n- 2 -\nas (?) valuations (7) and that I would have to be guided\nby my superiors with reference to the matter of preparation\nand submission of lists of movable property.\nThe Embassy's instructions are respectfully requested.\nSent to Peiping, repeated to the Department and\nChungking.\nRICE,\nDCA:MGS\ncopy:jba - 8-6-41\nRegraded Unclassified\n203\nJT\nPLAIN\nTientsin via N.R.\nDated July 29, 1941\nRec'd 10:42 a.m.\nSecretary of State,\nWashington.\n82, July 29, 11 B.M.\nAccording to DOMEI yesterday Japanter Consul\nGeneral here issued regulations prohibiting Japanese\nfrom engaging without his permission in practically all\nkinds of business transactions with nationals of the\nUnited States and its possessions, the Philippines and\nGreat Britain; similar regulations governing Chinese\nissued by North China Folitical Affairs Commission.\nAs full regulations carried in press report they will\nnot bE telegraphed unless instructed.\nThe Federal RESERVE Bank of China at Tientain\nyesterday ceased issuing export and import permits\npending instructions from its head office in Peiping.\nSent to Department; repeated to Peiping, Chungking\nShanghai. Air mail to Tokyo,\nCALDWELL\nHPD\nRegraded Unclassified\n204\nDES\nPLAIN\nPEIPING VIA N.R.\nDated July 29, 1941\nRec'd 3:05 p.m. 30th.\nSecretary of State,\nWashington.\n189, July 29, 5 p.m.\nIn retaliation against the freezing of Japanese and\nChinese assets by the United States and Great Britain, the\nNorth China Political Affairs Commission promulgated yester-\nday (published in local vernacular newspapers today) new\nregulation antitled \"provisional procedure for restricting\nspecial transactions\", of which the following is a summary.\n(Begin summary) Unless permission first be obtained\nfrom the Federal RESERVE Bank of North China either the\nGovernment of the United States, the Government of the\nPhilippine Commonwealth, the citizens or juristic persons\nthereof, no British subject and juristic persons shall bE\npermitted to (one) receive or dispose of immovable property,\npersonal property valued over FRB five hundred, businesses\nor investments therein, securities, foreign or domestic\nexchange, foreign currencies, and domestic currencies EX-\nceeding FRB dollars five hundred a month including checks;\n(two) grant or recall loans, borrow money or repay debts,\ndeposit or withdraw monty from banking institutions, and\noffset or guarantee loans or debts; and (three) receive or\ndispose\nRegraded Unclassified\n205\n-2- 189, July 29, 1941 from Peiping via N. R.\ndispose of assets other than those mentioned in (one)\nand (two). The only clearly specified Exception to the\nabove are the payment of rents, taxes, and similar levies\nand the payment of salaries and wages of employees of the\nGovernment, nationals, and juristic persons mentioned.\nThe term \"juristic persons\" includes joint-enterprises\nof which any of the nationals mentioned controls, or\nmanages the enterprises or owns more than one half of the\ncapital.\nApplication for permission to do any of the acts\nprohibited must be on prescribed form and submitted to\nthe head office or branches in North China or the Federal\nRESErVE Bank.\nPenalties for violations range from total or partial\nconfiscation of the money or other property involved to\npunishment prescribed by the \"law governing offices dis-\nturbing the money market\" (End of summary).\nIn on interview with local Chinese and fortign press-\nmen here yesterday Mr. Wang I-Tang, chairman of the North\nChina Political Affairs Commission, reportedly described\nthe new regulations as \"necessory counter measures adopted\nby North China in VIEW of the action of United States, the\nPhilippints, and Great Britain in freezing the assets of\nChina and our friendly neighbor\".\nSent to the Department, repeated to Chungking, Tientsin\nand Shanghai. Air mail to Tokyo.\nBUTRICK\nCSB\nRegraded Unclassified\n0\n206\nLET\n0\nGRAY\nP\nY\nSwatow via N.R.\nDated July 29, 1941\nRec'd. 2:45 p.m.\nSecretary of State,\nWashington.\n18, July 29. 5 p.m.\nMy 17, July 28, noon.\nThe local banking situation remains unsatisfactory\nas no funds can be taken to or from the British bank.\nThe Japanese Consul states that the question of obtain-\ning funde from the bank was being studied by \"higher\nauthorities\" but did not know what measures would be\ntaken. Ee indicated that such measures if any would\nbe similar to those taken by the United States but\nclaims local authorities uninformed concerning the\nsituation in the United States and the extent of the\nexemptions given Japanese subjects and Consular Officers\nresiding there in the matter of obtaining funds for the\npayment of living expenses, salaries of personal and\nofficial employees, et cetera.\nIn connection with further discussions of this\nsubject on behalf of consular employees and local\nAmerican residente it 1s respectfully suggested that\nthe Department supply information by redio concerning\nthe exemptions being granted Japanese subjects, Consu-\nlar Officers and employees in the United States.\nSent to the Department.\nTEARNS\nJRL\nCopy:rg 7/31/41\nRegraded Unclassified\nC\n207\no\nP\nY\nTRB\nGRAY\nSwatow\nDated July 29, 1941\nRec'd. 10:40 a.m.\nSecretary of State,\nWashington.\n19, July 29, 6 p.m.\nJapanese authorities have notified the Foreign\nDrawn Work Association merchandise mentioned in my\ntelegram 17 July 28, noon cannot be shipped from\nSwatow. The drawn work business is at a standstill\nand conditions at the British bank unchanged today.\nJapanese gendarmes visited a few firms and asked\nGeneral Ungui regarding stocks, the number of workers\nand the operation of the industry.\nSent to the Department, repeated to Peiping.\nChungking, Shanghai, Hong Kong.\nYEARNS.\nWSB\nCopy:rg 7/31/41\nRegraded Unclassified\n208\nDES\nPLAIN\nSHANGHAI VIA N.R.\nDated July 29, 1941\nRec'd 6:53 p.m.\nSecretary of State,\nWushington.\n963, Twenty-ninth.\nYesterday afternoon the Japanese Consulate General\nissued a notice to Japantst placing under immediate\ncontrol all transactions by Japanest with American\ncitizens. The text of the notice CB carried by Domei\nis quoted below:\n\"As regards control of transactions involving for-\nsigners, transactions which come under such control are\nthose involving United States nationals, including citizens\nof United States territories and the Philippine Commonwealth,\nand applicable to United States corporations, United States\ncontrolled corporations, and residents in United States\nterritories.\nTransactions which come under control in accordance\nwith the above notice follow: (one) rights regarding\nimmovable property; (two) enterprises, busintss and funds\nusable in business; (three) sureties valued at more than\nyen twenty; (four) foreign and domestic exchange and (five)\ncoquirement or transfer of Japenese military notes or its\nequivalent\nRegraded Unclassified\n209\n-2- 963, July 29, 1941 from Shanghai via N. R.\nequivalent in Chinese currency amounting to more than\nyen five hundred monthly.\"\nAnother restrictive measure taken yesterday by the\nJapantos WGB the posting in the Shanghai customs of the\nfollowing notification:\nApplications for exportation (including transshipments,\nresport and shipment Ex-bond) abroad (excluding Japan)\nand interport exportation for Chinese ports (excluding\noccupied ports) of following goods should be temporarily\nreferred to me before bring released: (one) machingry;\n(two) provisions; (three) 0118; (four) chemicols; (five)\ncertals and fodder; (six) fertilizers; (seven) cotton picce\ngoods and yarn; (cight) metal and ores; (nine) chemicals\nincluding medicine (including Chinese-made); (ten) cotton;\n(Eleven) analine dyes. Signed Koyamada for Administrative\nCommissioner\".\nINFORM COMIERCE.\nSent to the Department, repeated to Chungking, Peiping,\nby air mail to Tokyo.\nLOCKHART\nGW\nRegraded Unclassified\nC\no\nP\n210\nY\nDEPARTMENT OF STATE\nWashington\nIn reply refer to\nEA 840.51 Frozen Credits/2667\nJuly 29, 1941.\nThe Secretary of State presents his compliments\nto the Honorable the Secretary of the Treasury, and\nencloses 7 copies of paraphrase of telegram no. 76\nof July 26, 1941, from the American Legation, Pretoria,\nUnion of South Africa, reporting on an order freezing\nJapanese assets in the Union of South Africa.\nEnclosure:\nno. 76 of July 26\nfrom Pretoria.\nCopy:dtg:7-30-41\nRegraded Unclassified\n211\nC\nO\nP\nI\nPARAPHRASE OF TELEGRAM RECEIVED\nFROM: American Legation, Pretoria, Union of South\nAfrica\nDATE: July 26, 1941, 6 p.m.\nNO.: 76\nAn order was issued today by the Government of the U. of S.A.\nwhereby all assets of the Japanese in the Union of South Africa\nare frozen.\nKEENA.\nEA:LWW\n10.1NE\nCopy:alm 7-30-41\nOVI 60 SR\nBECEIVED\nRegraded Unclassified\n212\nBRITISH EMBASSY,\nWASHINGTON, D.C.\nPERSONAL AND\nSECRET\nJuly 29th, 1941\nDear Mr. Secretary,\nI enclose herein for\nyour personal and secret information a\ncopy of the latest report received from\nLondon on the military situation.\nBelieve me,\nDear Mr. Secretary,\nVery sincerely yours,\nHalifax\nThe Honourable\nHenry Morgenthau, Jr.,\nUnited States Treasury,\nWashington, D.C.\n213\nTELEGRAM RECEIVED FROM LONDON\nCated My 95th. 1941\nNAVAL\nPhotographs of Breat p.m. July 27th show\nbattle eruisers and Prina Eugen all in dry dook.\nCamouflage netting over Scharnhorst.\nof\nP.M. July 27th, three squadrons of fighters\noperating off Calais destroyed one enemy aircraft\nand probably destroyed three more, one Hurricane\nis missing.\n3.\nYesterday enemy I boat of Le Troport\nappeared to be severely damaged after attacks by\nSpitfire.\n4.\nLast night small raid by airoraft made\nDunkirk dooks. Considerable mine laying was\ncarried out by Royal Air Force. One aircraft\nmissing.\ns.\nEngry raids night of July 27th/28th on\nUnited Kingdom larger scale than recently. About\n60 aircraft South Eastern area) London main abo\njective, Bombing London widespread but not severe\nthree incidents of damage to railways. Casualties\nnot heavy. Night fighters destroyed three and\ndamaged one\n6. TOBRUE\nNight of July 25th/26th. Indian patrol\nattacked enemy posts killing 95 mestly with bayoneti\nAllied other patrols active and successful,\nTo nussia- Little change.\nRegraded Unclassified\n214\nBRITISH EMBASSY,\nWASHINGTON, D.C.\nPERSONAL A ND\nSECRET\nJuly 29th, 1941\nDear Mr. Secretary,\nI enclose herein for your\npersonal and secret information a copy\nof the latest report received from London\non the military situation.\nBelieve me,\nDear Mr. Secretary,\nVery sincerely yours,\nHalifax\nThe Honourable\nHenry Morgenthau, Jr.,\nUnited States Treasury,\nWashington, D.C.\nTELEGRAM RECEIVED FROM LONDON\n2/5\nDATED JULY\nEis imjesty's submarine Union now\npresumed lest.\nis\nReference Optel of July 26th, 65\nratings missing from Achates. German s.s.\nErlangen has sunk, Scharnhorst located at Brest\nsorning of 26th/27th.\n3.\nConsiderable shipping camualties\nsuffered by enemy shipping from our air attacks.\nComparatively successful passage of supply convey\nUnited Kingdom to Malta all covering forces have\nreturned to Gibralter safely except Fearless.\nDuring these operations one E-boat was sunk and\nat least 12 energy aircraft destroyed.\n4.\nROYAL AIR FORCE.\nDaylight 26th, one Fortress bombed\nEraden starting fires.\nNight 25th/26th, results Hamburg\nparticularly successful.\nNight 24th/25th, Royal Air Force bombed\nBenghasi. 25th enemy air activity over the United\nKingdom remains very slight,\nNight 24th/25th. Alexandria attacked\nby 5 enemy aircraft. Some bembe fell in town and\nnines believed to have been dropped.\nSYRIA, Suwside in Jabel Druse occupied\nMy 24th.\nRU  IAs No important changes reported.\nRegraded Unclassified\nCONFIDENTIAL\n216\nParaphrase of a Code Cablegrum\nReceived at the War Department\nat 13:10 July 29, 1041\nLendan, filed July 29, 1941.\n1. British Alr Activity over the Continut,\nas Eight of July 17. 15 teas of high explosives and\n720 incendiary bambe were dropped on Dunkirk,\nb. Day of July 28. Xe bomber missions carried out due to\nbad weather, Total of 306 fighters disputched as follows, 146 on\nshipping protection, on interception mission 102, 30 operating on\noffensive missions and so on special missions. (No casualties\nsustained.)\n\" Right of July 28. 15 IN wining in Kiel area, 15 to\nnine Falmara charmel, 12 to Selt of Langeland.\n2. German Mr Activity over Britain.\na. Day of July 27. 10 long range bambers and 20 recen-\nnaissance planes.\nb. Right of July 27. There more 46 leng range bombers\nand only 5 recommissance planes. 15 fighters on effensive adssion.\nIt Le indicated that twin eagine fighters which are usually assigned\nto fighter operations, earried a bomb load of 8 to 10 kilograms and\ntook part in a raid on London,\ns. Day of dely 28. All sperations on a small scale, only\nrecommaissance over the sen and defensive patrols carried out.\n4. Bickt of July 20. small scale activity directed against\nshipping off That inglisue Ceast.\nCONFIDENTIAL\nINFORMATION COPY\nRegraded Unclassified\n217\nCONFIDENTIAL\ns. Aircraft Lesses Reported.\na. British lesses. One on mining mission, with\nthree unreported.\nLEE\nDistribution:\nState Department\nAssistant Chief of Staff, G-2\nWar Plans Division\nOffice of Naval Intelligence\n0. H. do\nChief of the Army Air Forces\nSecretary of Treasury\nAssistant Secretary of War for Air\nCONFIDENTIAL\nRegraded Unclassified"
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