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Volume 454, October 24 – October 27, 1941
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Volume 454, October 24 – October 27, 1941
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 454
October 24 - 27, 1941
Regraded Unclassified
- À -
Book Page
Appointments and Resignations
Richards, Karl: To be transferred from Customs
Service in Seattle to Defense Savings Staff
there - 10/27/41
454
201
- B -
Bolivia
Sse Latin America
Budget, Bureau of
Smith's report to Congress on economy: HMJr
disapproves as intellectually dishonest -
10/27/41
187
Business Conditions
Haas memorandum on situation for week ending
October 25, 1941
237
- C -
China
See War Conditions: China; Foreign Funds Control
Correspondence
Mrs. Forbush's resume' - 10/24/41
72
- D -
Defense, National
Appropriations, contract authorizations, and
recommendations for fiscal years 1941 and 1942 -
10/27/41
258
Defense Savings Bonde
See Financing, Government
- 3 -
Ecuador
See Latin America
- Pr. -
Financing, Government
United States Housing Administration: Temporary
financing okayed by Treasury pending legislation
clarifying $800 million borrowing limitation -
10/24/41
64
Regraded Unclassified
- 1- (Continued)
Book Page
Financing, Government (Continued)
Defense Savings Bonds:
Progress report - 10/24/41
454
66
Field Organization News Letter, No. 23 -
10/24/41
141
-
Comparative statement of sales during first
twenty-one business days of August,
September, and October, 1941 - 10/24/41
149
Wouk, Herman: Thanks HMJr for sending copy
of his poem, "The Rhyme of the BB-66" to
FDR - 10/27/41
233
Fisher, Irving
See Revenue Revision
France
See War Conditions
- G - -
Gold
See War Conditions
- H - -
Hong Kong
See War Conditions: Foreign Funds Control
Honolulu
See War Conditions: Foreign Funds Control
- I -
Inflation
See War Conditions
Iron Ore, Philippine
See War Conditions: Japan
- J -
Japan
See War Conditions: Foreign Funds Control; Japan
- K -
Klaus, Samuel
To be placed under Foley's supervision - still
to work for Gaston - 10/27/41
176
Regraded Unclassified
- L -
Book Page
Latin America
Bolivia:
Stabilization Agreement discussed by Bolivian
Minister and Dietrich - 10/24/41
454
104
Ecusdor:
Stabilization Agreement discussed by Ecuadorean
Ambassador and White - 10/24/41
105
Peru:
Japanese and German banking operations report
on - 10/24/41
106
- M - -
Manila
See War Conditions: Foreign Funds Control
- N - -
Nelson, Donald
"Will not stand up under fire": HMJr to FDR -
10/27/41
206
- 0 -
Office of Facts and Figures
Establishment of by Executive Order - - 10/24/41
54
a) MacLeish's letter to HMJr - 10/27/41
286
(See also Book 456, page 51 - - 10/30/41)
- P - -
Peru
See Latin America
Philippine Iron Ore
See War Conditions: Japan
Price Control
See War Conditions: Inflation
Procurement Division
British Purchasing Mission assigns representatives
to work in department - - 10/24/41
90
- R - -
Revenue Revision
Fisher, Irving: Blough resume' of plan not to tax
savings - 10/24/41
45
Tax Amortization Statute: Nelson, Henderson, and
Odlum suggested by Wayne Coy to FDR to carry out
responsibility of Office of Production Management
with respect to administration of - 10/27/41
250,255
Regraded Unclassified
- R - (Continued)
Book Page
Richards, Karl
See Appointments and Resignations
Rubenstein, Arthur
See War Conditions: Foreign Funds Control
- S -
Shanghai
See War Conditions: Foreign Funds Control
Switzerland
See War Conditions: Gold
- T -
Taxation
See Revenue Revision
- U -
Unemployment Relief
Work Projects Administration report for week
ending October 15, 1941
454
234
United States Housing Administration
See Financing, Government
- V -
Viner, Jacob
Suggestion that he go on "leave without pay"
status vetoed by HMJr - 10/24/41
43
- W -
War Conditions
Airplanes:
Shipments to United Kingdom and overseas
commands - British Air Commission report -
10/27/41
284
China:
Exports of United States-outline of policy--
transmitted to American Embassy, London,
for British Government - 10/24/41
120
Exchange market resume' - 10/24/41, etc
125,162,318
Export Control:
Exports of petroleum products, scrap iron, and
scrap steel from United States to Japan,
Russia, Spain, and Great Britain, week ending
October 25, 1941
294
Exports to Russia, China, Burma, Japan, France,
and other blocked countries, as reported to
Treasury during week ending October 18, 1941 -
White report - 10/27/41
295
Regraded Unclassified
- W - (Continued)
Book Page
War Conditions (Continued)
Foreign Funds Control:
Honolulu, Manila, Shanghai, and Hong Kong:
Treasury group visits in connection with
freezing in Japan and China - Foley report -
10/24/41
454
29
a) Description of trip - 11/1/41:
See Book 457, page 11
Rubenstein, Arthur: HMJr aske Pehle to help -
10/27/41
210,227
France:
Plan for continued service on French Government
7% bonds in United States discussed in
cable from American Embassy, Vichy -
10/27/41
320
Gold:
Switzerland: Transfer of part of Swiss National
Bank's gold now in United States to
Switzerland discussed in cable from American
Legation, Bern - 10/27/41
303
Inflation:
Merrillat report: Press comment on prices and
wage control following Canada's over-all
order - 10/24/41
31
Japan:
Philippine Iron Ore: Export may be stopped by
United States and simultaneously British
export of Burmese ore to be stopped -
10/25/41
153
Lend-Lease:
Mack report - 10/24/41
78
Military Planning:
Reports from London transmitted by Halifax -
10/24/41, 10/27/41
126,322,324
War Department bulletin:
German Infantry Assault Battalion -
10/24/41
129
Purchasing Mission:
Representatives assigned to work in Procurement
Division - 10/24/41
90
Vesting order sales - 10/27/41
282,283
Work Projects Administration
See Unemployment Relief
Wouk, Herman
See Financing, Government: Defense Savings Bonds
Regraded Unclassified
1
October 24, 1941
10:15 a.m.
RE FOOD SPECULATION
Present:
Mr. Haas
Mrs. Klotz
Mr. Foley
Mr. Kuhn
Mr. Pehle
Mr. Mehl
Mr. Shields
Mr. Bagnel
H.M.Jr:
What will we do for fifteen minutes?
Mehl:
Mr. Secretary, we have done a little
thinking about these small accounts. As
I indicated the other day, it is rather
8. normal thing to find dentists and doc-
tors and lawyers in the commodity markets.
We rather agree with you that in times like
this a speculative movement on the part of
the small traders can get under way simply
because some war news, excitement, - and I
don't think I told you that under our Act
me do not have power to fix margins, and
one of the breaks on speculative trading
on the part of dentists and lawyers and
barbers and that sort of people is 8 high
margin requirement.
Without debating the question of whether or
not there should be some speculation in order
to carry the hedgers, to maintain & normal
market machinery, including a system of
Regraded Unclassified
2
- 2 -
future trading, we are certainly justified
in insisting that speculators, risk carriers,
be of substantial character, that they have
enough money back of their trades to be
able to stand recessions in the market, and
try to get a little better type of trader
into the market, or rather keep out the fellows
who don't know the risk that they assume.
H.M.Jr:
Well, could I --
Mehl:
I discussed that question with Secretary
Wickard this morning, the desirability --
H.M.Jr:
You spoke to him?
Mehl:
Yes, of pushing for legislation, to give
the Government that authority, and he indicated
that we might invite your views.
H.M.Jr:
Well, let me - I have done & lot of thinking
about this thing. I went all through this
in the Farm Credit days when the President
asked me to stabilize the price of wheat.
I don't know whether you know this story or
not. He got worried one night and called
me up. Mr. Wallace came to the house at
midnight and they authorized me to buy
twenty-five million bushels of wheat. One
day in four minutes I bought six million
bushels and almost fainted. It was at five
minutes of twelve on a Saturday.
I have had a little experience. Who is in
charge in these futures?
Mehl:
Dr. Duggan.
H.M.Jr:
Let me ask you this. I know this goes
pretty deep. Let's assume that we have -
there is a fifty-fifty chance that we are
Regraded Unclassified
3
. 3 -
going to get in a war. We are in an undeclared
war now. The President issued orders September
11 to shoot on sight, so we are in an undeclared
war. Let's say we go 8. step further. I know
the story. I am looking at this thing from
the standpoint of what is good for a hundred
and thirty million people. Why must we
permit speculation in food and the staples
of life at all? I mean, why must people be
permitted to speculate in lard, potatoes and
all of these things? Supposing the Adminis-
tration said we considered that this was bad
practice and keeps the price of food fluctuating.
Let me be the proponent of that. How much
damage would-it do to the cotton mill who has
the cotton goods going through, and the miller
who has the flour going through, and so forth
and so on, if we simply said, "From now on,
no speculation in commodities"?
Mehl:
Well, in the absence of price fixing, Mr.
Secretary, I feel that the immediate effect
of prohibiting speculation in commodity
futures would immediately widen the margin
between consumer prices and producer prices.
H.M.Jr:
Have you got any experience to base that on?
Mehl:
No, but I think we have a fairly logical line
of reasoning, and that is this: Cotton and
wheat start to move from the farm in wagon-
load and truckload lots. The price risk
attached to those quantities is not great.
A local elevator, for example, will buy a
wagonload or a truckload of wheat, and a
margin of five or six cents a bushel covers
his overhead and a fair margin of profit.
It may not make much difference to the
financial stability of that company, a small
dealer who trades in those lots, if he stands
open a day, even if the market moves five cents.
Regraded Unclassified
4
- 4 -
He can't lose B. lot. But when those wagon-
loads of wheat move to the terminal markets
and move into the hands of people who have
ownership in terms of millions of bushels,
and who turn wheat, who are glad to turn
wheat in lots of two hundred and fifty
thousand bushels for a quarter of 8 cent a
bushel, they can't possibly take the risk
of a price change of five and ten cents
a bushel. It means bankruptcy. So that
these market risks concentrate and grow, you
might say, in geometric ratio as the commodity
moves into the central market. Someone has
to carry the risk.
Now, the fundamental question in my mind is,
shall we force the large handlers to take and
carry the risks that they are most anxious to
avoid?
Isn't it reasonable - true, the futures
market, you should permit these large risks
to be broken up again into small parts
and carried by those who are willing carriers,
speculators, if you please? I know you can
debate that question.
H.M.Jr:
Well, I am not at all sure, because - I
mean, let's call a spade a spade. As the
situation is now, we are willing to let the
dentist and the butcher and the gasoline
fellow take a week's contract in cotton
in order to eliminate this risk, but it is a
two-edged sword.
Now, of course you have eliminated the risk
when you put in B. floor at either eighty-five
per cent or a hundred per cent loan, so you
put a floor under that. I just wondered if
people understood the thing thoroughly, that
we are saying, "All right, boys, the Government
Regraded Unclassified
5
- 5 -
thinks it is & good thing that you go in
and speculate"?
Mehl:
Well, now, Mr. Secretary, you have provided a
floor in so far as the farmer is concerned,
and we have not had this, that when the loan
prices of other - well, the commercial price,
of course, the commodity moves into the loan
but there comes a time that the loan starts
and has got to move back into commercial
channels unless the Government is going into
the business of merchandising that stuff, and
when that happens, Mr. Secretary, you find
the hedging positions of mills and terminal
elevators going short and on the long side
you find the speculators coming in and
carrying --
H.M.Jr:
You see, I have had another experience I want
to tell you. I went all through this with
the foreign exchange people and I just wiped
them out. You see, every argument that you
are using here now was used by the man who did
business in international foreign exchange,
and we have eliminated him. He doesn't exist.
When they talk about international bankers,
people don't know what they are talking about.
What they really mean are the international
speculators in foreign exchange that are willing
to sell any country short if they thought
that that country was a little weak. They
would sell that country's exchange short and
aggravate the situation, and many a time they
brought a downfall of government, just the
way - very extra triple confidentially -
somebody has made the suggestion - I mean
this is - that we go short in Japanese yen,
to aggravate the situation, you see. Now,
who is doing that? I have got & two billion
6
- 6 -
dollar Stabilization Fund, and I am in this
business instead of the speculator. We had
a tri-partite agreement with England and
France just to eliminate this thing. Now,
what I am groping for - I mean, there was
no more vermin than the dealer in foreign
exchange. He knew no flag, he knew no
country. He was the low of the low, and his
job was to smell out if 8 certain country
was weak, and if that poor country was weak,
he just aggravated it by going short in that
exchange, and many a government fell, due to
the international speculator that had offices
in London, Berlin, Paris, and Amsterdam.
Now, we wiped that fellow out. We stabilized
the dollar and Congress has given me two
billion dollars, and I have made money at it.
Now, it isn't beyond the realms of possibility
that the Department of Agriculture should
have a Stabilization Fund to take the risk
out of cotton and wheat while this thing
is going to go through. I am just throwing
it out. Why isn't that within the realms
of possibility? And eliminate - I don't want
to call them names, but instead of encouraging
the little fellow who has taken a terrible
licking this last two weeks, to buy potatoes
and lard and so forth and 80 on - I mean,
why isn't that within the realms, that the
Department of Agriculture should be given
8. hundred million dollars in order to take this
cushion?
Mehl:
You mean to provide the price insurance
facilities that are now provided by the
speculator?
H.M.Jr:
Yes.
Mehl:
I wouldn't argue about that.
Regraded Unclassified
7
- 7 -
H.M.Jr:
What is the matter with that? Instead of
going to Congress to increase the margin,
go to Congress to get an insurance fund to
take the risk out of this thing so that
if the man buys his cotton at seventeen cents,
the commodity is going to go through, that
this thing is - that you take this risk.
What is the matter with that idea? I mean,
go the whole hog.
Mehl:
I have no objection to the Government becom-
ing the insurer and taking the place of the
speculator.
H.M.Jr:
Isn't that a good idea?
Mehl:
I don't like to be in the position of defend-
ing the speculator, because most of the time
we are jumping on them.
H.M.Jr:
You and I at the moment are. And if the
people really knew what you and I are doing,
we would have a - pardon me, Mrs. Klotz -
a hell of a time explaining. Wickard could
never explain it, no more than I can explain
what I have been doing unknowingly through
frozen funds. Wickard never could explain it.
It isn't a very good example, but we have
an insurance fund here. I wasn't going to
give all this insurance business to the
monopoly of insurance people in England.
Am I right?
Foley:
Yes.
H.M.Jr:
We have an insurance fund, and just to give
you a little story, just for a little
amusement, the Swiss thought that they
could beat the game with Lloyd's Insurance,
so they sent one brick of gold from Switzerland
Regraded Unclassified
8
- 8 -
by parcel post. It is the only brick of
gold that has ever disappeared. It was
stolen. It never happened before, and it
has never happened since. But they sent it
by parcel post insured, instead of insuring
with Lloyds. That brick of gold disappeared.
Well, it worried them naturally, so they
never did it again. So we got out and we have
the authority. We insure ourselves. We
don't go to these people, and we don't pay
that insurance. I mean, I am just using
that - just the way you can do this thing.
What do you gentlemen think?
Bagnel:
It seems to me there no question that if you
include the price fixing element, which it
seems to me is what you are doing, insurance
is in effect Government price fixing, or
at least Government price guaranteeing, then --
H.M.Jr:
No, that isn't it. I am talking about an
insurance fund which will take the risk
for the manufacturer who is processing a
commodity while it is going through his plant.
Bagnel:
Well, in effect for that manufacturer that
would be substantially 8. price guarantee,
wouldn't it?
H.M.Jr:
Well, it simply would mean that if this
fellow bought the cotton at seventeen
cents that you would give him some kind of
a guarantee that if the process takes two
weeks or three weeks, that - if it goes down,
the Government would have to take a loss,
that is all. We would guarantee him against
loss, a differential. It would be worked
out some way like that.
Mehl:
It would put the Government practically in
the position of selling privileges, wouldn't
it, options?
Regraded Unclassified
9
- 9 -
Bagnel:
Well, substantially, I would say. It would
give them a call or option on - if it did
go below seventeen cents, this manufacturer
would look to the Government to recompense
him.
H.M.Jr:
Well, I am thinking of the philosophy. I
am thinking - now take sugar coating. Where
does it leave Mr. Wickard and me? We are in
an indefensible position, if the public
really knew what we were sanctioning. They
never could explain it.
Pagnel:
Well, it has the effect, doesn't it, of passing
a risk to the Government that is now being
carried by these small speculators?
H.M.Jr:
That is right. Also removing whatever the
aggregate of these small speculators are in
pushing the thing up.
Bagnel:
I think it is clear that there is a risk
existing in any of these commodities. That
is, somebody is going to speculate. It is
either the processor or the dentist and the
barber, or the Government.
H.M.Jr:
That is right.
Ragnel:
Now, the processor doesn't want to speculate.
He doesn't want to - he lets the barber and
dentist do it for him. You would tell the
barber and the dentist,' You have got no business
doing this sort of thing, and the Government
is going to take care of it." I think that
could be done.
H.M.Jr:
I am not a technician. In the foreign exchange
thing I know how to do it. But for two
days I have been worrying about this thing,
and I find myself in an impossible position
Regraded Unclassified
10
- 10 -
on the matter of public relations if I tried
to explain it, and Mr. Wickard is in it just
ten times worse if he stops to think about it.
Shields:
Well, I am not competent to speak on this,
I don't understand it all, but doesn't what
you are saying, Mr. Secretary, really involve
either price fixing as such, or so manipulating
this fund that the price is fixed in effect?
I think our general view has been that we
think it is desirable for markets to fluctuate,
say from eighty-five per cent of parity to
a little above, so they will average out about
that.
Now, if I understand the analysis of what you
are saying, it would be that we would have
to use this fund in such & way as to fix
the price at a point - we would have to fix
it at a point. Now, isn't that true?
H.M.Jr:
You are not going to remove the thing, this
question of supply and demand, but you might -
after all, you have got a ten cent limit in
wheat now, which I think, if you don't mind,
is entirely too high, to permit a play of
ten ents.
Shields:
I think we would sort of agree with you.
H.M.Jr:
I can't look the thing up. But supposing you
said that - I keep drawing from my own exper-
ience - that over a period of thirty days that
if a man bought a contract, that that contract
might not fluctuate more than so many cents,
and that he couldn't sell it under thirty
cents.
We sell 8. man a United States Defense Bond.
If you go back to war days, he could buy it
Regraded Unclassified
11
- 11 -
and sell it. He can't sell it any more.
We make him keep it for sixty days. In
other words, we removed the speculation of
the small man in Government bonds.
Here is another case. We completely removed
the speculation, so that we won't put on the
drive and the fellow found he over-bought
and then have to sell out at eighty-three.
Now, I have successfully removed that, and
if I can do it there, I can do it in foreign
exchange. I can't write the ticket, but I
think I am on the right track. I am not a
technician in wheat, but if the fellow couldn't
get in and out the same day, if he had to keep
the contract - you say it takes thirty days
to go through a cotton mill, and if he had to
keep the contract for thirty days or two weeks
and then the price was limited, that it could
fluctuate within a few cents, something like
that.
Shields:
My point I just wanted to make, I believe
that if we could avoid it, we would like to
avoid price fixing.
H.M.Jr:
Me too.
Shields:
That is the reason we are opposed to hundred
per cent loans. It seems to me that is the
same as price fixing. I think it is very bad.
H.M.Jr:
I am glad to hear you say that.
Shields:
And we are opposed to speculating in these
markets, and I think we need more authority
than we have to stop it, such as the ten cent
limit and that sort of thing.
Regraded Unclassified
12
- 12 -
H.M.Jr:
Well, that is fixed by Mr. Mehl.
Mehl:
No, we have no authority.
H.M.Jr:
You used to be able to change it.
Mehl:
No, the exchanges did it on our suggestion.
We fought with them about it, but we never
had any legal authority to do it.
H.M.Jr:
But if you said, "Tomorrow it is five cents,"
wouldn't they do it?
Mehl:
I+ is possible under these conditions.
H.M.Jr:
Sure, they would.
Shields:
We think there are several legal powers that
we ought to have that we don't now have, and
have done some work on them in the past. We
are opposed to this speculation of the banker
and dentist and so forth, but as I see it, we
are anxious to avoid price fixing. Now, it
seems to me - I don't understand it very well -
that what you are saying is that either by law
or fiat, some way, we fix the price or else
we take 8 fund and use it in such a way as to
peg the price. Now, unless we can peg it and
peg it pretty securely, it seems to me that
what you (Mehl) have said would be true, the
margins would have to be increased because
there would be the risk. Maybe I don't under-
stand this.
H.M.Jr:
Look, this is the way I work in the Treasury.
I don't think anybody in the room will disagree
as to the fact that if knowingly or unknowingly
we encourage people to speculate in food, it
is wrong.
Shields:
Oh, yes. I think we all agree that that is
sin and we are all against sin, but the question
is just what we should do about it.
Regraded Unclassified
13
- 13 -
H.M.Jr:
Now, in the Treasury we have been able to
completely eliminate the speculator in foreign
exchange and we have been able to eliminate
the speculator in government bonds up to
five thousand dollars. Now, it took technicians
to do that, it took months to do it. I am not
a technician in the speculation of food, but
I an sure you have people who could work it out.
We didn't do it in a day. It took us three
months to work out the technical aspects to
eliminate - I mean, we were actually on the
thing three months until we worked out a way,
how to eliminate the speculation for the
small person in government bonds, but we
have done it and everybody is happy.
Bagnel:
I think it would be much more difficult to
eliminate speculative risks in a commodity
because it seems to me you have one there
based on crop conditions and all the innumerable
things, that somebody has to carry.
H.M.Jr:
And I think if we want to eliminate it until
this war is over, I think it is up to the
Government to carry it.
Mehl:
I think it is an error to assume, though, that
you can prohibit speculation by prohibiting it
in futures, by keeping out the dentist and the
doctor. I am not so sure but by that course you
drive speculation into the actual commodities --
H.K.Jr:
I will give you another example. Excuse me. I
did it in silver and I was under the most
terrific barrage, wasn't I? You can't buy a
future in silver. Handy and Harmon in New York
and all the silver people, I ruled their business
and they had their Congressmen and Senators
here and the idea was, you just can't do it.
Regraded Unclassified
14
- 14 -
Mehl:
But you did something more, Mr. Secretary,
than to prohibit trading in silver futures.
You were dealing with silver as a commodity
also.
H.M.Jr:
True, but I stopped . - did I have the law to
do it? How did I do it, Ed?
Foley:
That was before my time, Mr. Secretary.
Pehle:
It was done under regulation, but the
regulations have all been lifted and all
that is left now is the fifty percent tax
on profits, which is one of the effective
ways of stopping it.
H.M.Jr:
But I did it.
Pehle:
That is right.
H.M.Jr:
And I set the price every day at noon, from
day to day. Well, we did it through the tax.
We made it so that if you won you took fifty
percent and if you lost you took it all. All
I am saying is, and then we will get on this
other thing, it took me three months to do it
in the government bond thing, and I am sure
that the people over there are smart enough that
if Mr. Wickard says, didn't realize that I
was the current speculator in food, I want to
get out of that position" - and if he say, "Boys,
get busy and get me out of it," I am sure you
fellows can get him out of it.
Mehl:
You are right.
Shields:
I am inclined to think that we can do more,
perhaps, than we have, Mr. Secretary. I think
that is probably true - but perhaps even more
with the authority that we have. I am not a
technician. I don't know. We certainly are
with you in the objective, and want to. As to
Regraded Unclassified
15
- 15 -
this price fixing, I don't believe - if that
is what it involves --
H.M.Jr:
No --
Shields:
...wholly, I don't think we would agree with that.
H.M.Jr:
No, I wasn't thinking of that at all. Now,
could we leave this thing here and then you -
could I hear from Mr. Pehle where we stand as
speculators in food?
Pehle:
Well, we have a general license outstanding,
Mr. Secretary, as you know now. During August
1941, which is the latest month for which we
have complete figures, under that general license
we have computed the figures on the six principal
commodities and of those figures it shows that
the highest amount of any commodity in which the
transactions were conducted under this general
license was lard, where two point three percent
of the total trading was done in blocked funds.
H.M.Jr:
Lard, on my weekly chart, has had one of the
highest increases since September of any single
commodity.
Haas:
That is a fairly good sized figure. Mehl, on
your figure that you get on cotton, it is
only two or three percent of all the big
operators. That is all it amounts to, isn't it?
Mehl:
In the case of lard?
Haas:
Not lard, but cotton.
Pehle:
In cotton the percentage of blocked funds was
point eighteen of one percent.
Kuhn:
But your point is that the two point in cotton
was enough to swing the whole market.
Regraded Unclassified
16
- 16 -
Haas:
That constituted all those big operators you
get reports on. They constitute three percent
of the total trading.
Pehle:
This was eighteen one hundredths in cotton.
Haas:
Cotton, yes, but the other commodity there
was --
Pehle:
Two point three percent of the total trading
was done under - now, of that, seven million
pounds were purchased and five million pounds
sold, so two million pounds was carried over,
was the aggregate. The total trading was
three hundred twenty-three million pounds.
It was sold and it. was dealt in during the
month of August. Under our licenses, seven
million pounds were purchased and five million
pounds were sold. So that is the greatest
amount. In wheat, it was six hundredths of one
percent, the amount of blocked funds used.
In cotton, it was point eighteen percent. In
sugar, it was one point six percent; cotton-
seed oil, thirty-eight hundredths of one
percent and in soy beans, one point eight
percent.
H.M.Jr:
That is just for August?
Pehle:
That is for August, yes sir.
H.M.Jr:
Have you got anything else?
Pehle:
Yes, sir.
H.M.Jr:
What have you got?
Pehle:
In addition to what is done under the general
license, we have a number of people who are
operating under our licenses entirely who do
Regraded Unclassified
17
- 17 -
commodity futures operations under the license,
such as Laval Company, which is a blocked
national because it is owned by Louis Dreyfus,
States Grain Corporation, which we have as
a blocked national, Continental Grain, Feedley
Brothers, one or two others. All of those
in addition to those figures will be doing
some trading in commodities, although their
license limits them to trading that is in
accordance with the normal conduct of their
business.
H.M.Jr:
But they are licensed brokers?
Pehle:
They are licensed dealers, that is right, but
they deal for their own account too.
H.M.Jr:
Well, what would you gentlemen think if just as
a first move we served notice today that these
people should clean up their accounts by the
evening of the thirty-first?
Bagnel:
Would that include your special licenses, like
Continental and States?
H.M.Jr:
No --
Pehle:
I should think those ought to be treated particularly
carefully.
H.M.Jr:
Separately.
Bagnel:
It seems to me it shouldn't.
H.M.Jr:
No, the individuals. No, I would wait on
those until I got word from Mr. Wickard on his
whole policy. There is no reason why we
should treat those people for the moment any
differently than you would John Jones, who was
in the business.
Pehle:
Mr. Secretary, that is true also of some of the
Regraded Unclassified
- 18 -
18
people that are operating under this general
license. Some of those people are people who
have funds here and which they want to invest
for some reason in the market. We are treating
blocked nationals different from Americans
when we say they can't put their money into
commodity futures.
H.M.Jr:
But --
Fehle:
It is a different case, I agree, than the States
Grain and those people whose sole business is
that.
H.M.Jr:
We could do the thing in two steps.
Mehl:
I should think that dealing with the foreign
nationals can be justified on the grounds that
you are not going to permit them to dissipate
these funds through speculation in futures.
Pehle:
On the ground of dissipation, I think, is pretty
thin.
Foley:
Not on that ground.
Mehl:
From our standpoint, of course, we wouldn't
regard speculative trading on the part of nationals,
that is, individually, any more vicious than
its effect on market prices of trading by American
citizens. It is a question of whether it is
manipulative trading or whether it is in large
enough amount to distort the price structure.
H.M.Jr:
I would do this thing - I am willing to do this
thing solely on the grounds that I think it is
bad for the morale of the country to permit
people to speculate in food. Now, I can only
control those people whose funds I can control.
Mehl:
You are going to put the Department of Agriculture
Regraded Unclassified
- 19 -
19
on the spot.
H.M.Jr:
I am not going to make any public announcement.
Mehl:
No, I know.
H.M.Jr:
Because I am not coming out publicly and say
that - I mean, no public announcement will be
made in connection with this thing, but frankly,
since I found out that thing has worried me more
than anything that has happened in 8. long
time, because I have just been brought up not
to leave crusts of bread on the thing or throw
it away and I have also been brought up-to
believe that it is immoral to speculate in food.
I mean, it just goes against every grain in
me. I mean, I just can't believe in these
times, where people are hungry and we are trying
to buy food to send to England and having great
difficulty to do it, and I am aggravating the
situation.
And the lard that is going to Europe has
increased in price and so forth and so on, and
that makes it that much more difficult. To me
it is - I mean, I am not going to say what
the Department of Agriculture should do other
than the way I have today, to bring it forcefully
to your attention, but I am not going to say
anything publicly. But this is my responsibility
and I don't feel that it is moral. That is the
way I feel.
Bagnel:
In the absence of fairly complete government
control, Mr. Secretary, isn't it more a matter
of who is going to speculate than it is of
whether someone is going to speculate?
H.M.Jr:
No. I don't want to seem too preachy, but I
don't want - I mean, after all, I have just got
a little segment of this thing that is completely
Regraded Unclassified
20
- 20 -
within my control. I only heard about it when
Mr. Pehle brought it to my attention two days
ago. Now that I do know about it, I don't
want to be approving the speculation in this
way.
Bagnel:
The point I was trying to make was, it seems
to me you have this inherent price risk in
these commodities and the question is whether
that risk is to be carried by one of the three
classes we mentioned a minute ago, the processors
and merchandisers, the barber and beggar, or the
Government. It seems to me when we say the
Department or anyone else is encouraging specul-
ation, perhaps we are not entirely right, that
there is inherent speculation in the commodities
in spite of anything we can do.
Shields:
Of course, there is no objection, is there -
do you see any objection why the Secretary
shouldn't take the action which he proposes
with respect to these funds? They are in his
control and, as I see it, there is speculation.
I guess there is no doubt about that. It doesn't
arise from B. natural business transaction in
which you feel the market is playing a real part.
Bagnel:
Oh, from the point of view of these funds, it
seems to me it would be a constructive step.
H.M.Jr:
I am just talking about my own responsibility.
I have got a little piece of it. This was
brought to my attention two days ago. I worried
about it. Everybody connected with me is
worried about it now that we realize what it is.
Shields:
You agree with that, don't you?
Mehl:
Oh yes.
H.M.Jr:
Now, all I would like to do is - I don't know
Regraded Unclassified
21
- 21 -
whether you want to go higher up. Have you
people any objection to my getting out orders
tonight that I want these people to liquidate
their position by the thirty-first?
Mehl:
I see no objection to it. As a matter of fact,
I think that part of the trade would approve
that step.
Bagnel:
I think some consideration should be given to
people that Mr. Pehle mentioned, such as
Continental Grain and States and things like that.
H.M.Jr:
I want to go into that next, but I have got to
go into it with you people.
Shields:
Yes, I think that is in line with what we
would be thinking about, those kind of cases.
H.M.Jr:
That would be the next thing, but I think at
that state I would like to sit down with Mr.
Wickard.
Shields:
Yes, we would like to have a little time to mull
this over and then the Secretary, I am sure,
would like to talk to you about it.
H.M.Jr:
I would love to come out publicly but my skirts
aren't clean. I can't do it. I would love to
feed it to the press but I am not in a position
to.
Shields:
I think the effect of the whole thing would
probably be better if it was done right away,
since we are considering the rest of the
problem.
Mehl:
In fact, it would be less violent on the market
in its effect.
H.M.Jr:
Would I have to call up Mr. Wickard or is it
all right?
Regraded Unclassified
10
22
- 22 -
Shields:
I think it is perfectly all right. I will
talk to him as soon as I get back.
H.M.Jr:
Let's put it this way. I will instruct Mr. Pehle
to draw up the orders. If we don't hear from
you by two o'clock --
Shields:
Fine, fine.
H.M.Jr:
...the orders will go out, --
Shields:
Fine.
H.M.Jr:
...as affecting individuals.
Shields:
Yes, that is fine.
H.M.Jr:
And don't you think you could give a person a
week to adjust himself?
Klotz:
I think --
Pehle:
Does that mean that someone who has a position has
to get out in a week?
H.M.Jr:
Yes.
Klotz:
I think it is short notice.
H.M.Jr:
You think it is short notice?
Klotz:
I think SO.
Pehle:
Is there any reason to force people who have
taken a position to liquidate their position or
is it enough to say that beginning whatever
time we want to say --
Foley:
The thirty-first of October.
Pehle:
No one can buy under that license?
Regraded Unclassified
23
- 23 -
H.M.Jr:
No, no, I want them to get out.
Shields:
You might compromise there and say beginning
then there will be no trading, and positions
now held must be liquidated before November
first.
Pehle:
It seems to me that is a very short time to
ask them to liquidate their position in because
there will be a diminution of blocked funds
if you make a break in the market.
Shields:
I meant December first. After November first
there would be no more transactions entered
into and we would liquidate existing ones by
December first.
Mehl:
Why not issue an order, effective immediately,
prohibiting new trade in blocked accounts,
and giving a longer time in which to liquidate?
H.M.Jr:
That would be all right. That is all right.
Klotz:
That is all right.
H.M.Jr:
Well, let's say the order goes out that nobody
can put any new money into the thing and give
them until - have I got to give them all of
November?
Shields:
I don't know what is fair.
Pehle:
As long as no new money is going in, I don't
see why we can't give them all of November.
Mehl:
I think I would favor a little longer time in
which to liquidate. Otherwise, some opposing
market interest might take advantage.
H.M.Jr:
Well, then give them until November twenty-ninth
Regraded Unclassified
- 24 -
24
to liquidate. That certainly gives them -
that is five weeks, what?
Mehi:
Sounds all right to me.
H.M.Jr:
Well, let's get out orders that nobody can buy
any more stuff and we will give them until the
twenty-ninth of November to get out. Certainly
that gives them five weeks.
Ruhn:
Is this in all foodstuffs or in all commodities?
All commodities.
Pehle:
I think we would like to work on the technical
phases of that with the Agriculture people
because we haven't ipso facto any right to take
people - we can tell them what they can't do,
but we haven't any right to tell then that you
have to do this, you have to get out. What we
mean is that after the thirty day period has
expired, if you want to move, then you have got
to get a specific license and we can warn them
as to what we are going to do if they don't
get out within a thirty day period, but I think
it is something we will have to work out the
details of.
H.M.Jr:
You mean you can't force them out?
Pehle:
I think we will have to study it to be sure we
can.
Foley:
It is not our money. It is really their money.
We can restrict the uses to which they put
the money.
Pehle:
If someone had bought General Motors security
we couldn't make them sell General Motors, but
we could say, "After you hold it & certain
length of time you have got to get a specific
license before you can sell." I think that is
a delicate --
Regraded Unclassified
- 25 -
25
H.M.Jr:
Well, work on it. But certainly you can
tell them that, effective at once, they can't
buy any more.
Foley:
That is right.
Bagnel:
And even that will make many of them get out.
Pehle:
Oh - well, the turnover is tremendous each
month, so if we stop them from putting any
new money in, in a short time these contracts
will mature and they will be automatically out.
H.M.Jr:
Now, would you tell Mr. Wickard we would like
to continue the study very rapidly of these
foreign brokers that are here in these things.
I would like to study that. Then we can give
him the experience we have had in silver and
the experience we have had in foreign exchange
and we can give him the experience how we
insure gold shipments.
Shields:
Suppose I tell him the substance of our conver-
sation, Mr. Secretary, and then after we have
several days or & week, say, to mull this over,
I suggest that he call you and the two of you
have & talk about it.
H.M.Jr:
Would you do that?
Shields:
Yes, and I am sure he would like to.
H.M.Jr:
Because I really think that once he appreciates
what he is sitting on he will feel just as
strongly as I do.
Shields:
All right, I will be glad to do that.
H.M.Jr:
Thank you very much.
Regraded Unclassified
26
TREASURY DEPARTMENT
Washington
FOR ILTEDIATE RELEASE
Press Service
Friday, October 24, 1941
No. 20-22
The Treasury Department today announced the
amendment of General License No. 9 issued under the
freezing order and relating to the purchase and sale of
commodity futures contracts for the accounts of blocked
nationals. The amended license permits transactions
only for the purpose of covering short positions or liqui-
dating long positions taken prior to October 25, 1941.
-o00-
Regraded Unclassified
27
TREASURY DEPARTMENT
Office of the Secretary
October 24, 1941
GENERAL LICENSE NO. 9, A3 AMENDED,
UNDER EXECUTIVE ORDER NO. 8389, APRIL
10, 1940, A3 AMENDED, AND REGULATIONS
ISSUED PURSUANT T HERETO, RELATING TO
TRANSACTIONS IN FOREIGN EXCHANGE, ETC.
General License No. 9 18 amended to read 28 follows:
(1) A general license 1s hereby granted authorizing
the bona fide purchase and sale of commodity futures contracts
and of evidences of ownership of actual commodities on an
exchange or board of trade within the United States by bank-
ing institutions within the United States, for the account
of nationals of any blocked country, pursuant to the instruc-
tions of such nationals, and necessary transfers or other
dealings in evidences of ownership of commodities, transfers
of credit and payments between accounts in banking institu-
tions within the United States as required in conne ction
with such purchases or sales or because of fluctuations in
the market value of the commodities covered by such con-
tracts or evidences of ownership, provided that:
(a) No such purchase shall be made except for
the purpose of covering a short position taken prior
to October 25, 1941, in the account of the national
for whom the purchase 18 made;
(b) No such sale shall be made except for the
* Part 131; - Sec. 5 (b), 40 Stat. 415 end 966; Sec. 2, 48 Stat.
1; 54 Stat. 179; Ex. Order 8389, April 10, 1940, as amended
by Ex. Order 8785, June 14, 1941; and Ex. Order 8832, July
26, 1941; Regulations, April 10, 1940, as amended June 14,
1941, and July 26, 1941.
- 2 -
28
purpose of liquidating a long position taken prior
to October 25, 1941, in the account of the national
for whom the sale 1s made; and
(c) In the case of either purchase or sale the
net proceeds of the transaction are credited to a
blocked account in the name of the national for
whose account the transaction was effected and in
the banking institution within the United States
which maintains the account for which the transaction
was effected.
(2) Each banking institution engaging in any transaction
herein authorized is required to file promptly with the
appropriate Federal serve Bank monthly reports showing the
details of each such transaction, including B. description
of the commodity futures contracts or evidences of ownership
of actual commodities purchased or sold; the dates of the
purchases or sales, the persons for whose account the pur-
chases or sales were made, the price at which each purchase
was made, the name of the exchanze or board of trade on
which each such ransaction was effected, and the net market
position in the commodity in question of the national for
whose account the transaction was effected before such
transaction and a fter such transaction.
E. H. FOLEY, JR.
Acting Secretary of the Treasury.
Regraded Unclassified
29
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE October 24, 1841.
Who becretary
TO
FROM
:oley, Jr.
L. C. Aarons of my staff has just returned from
a trip to onolulu, anila, Long none, and Shanghai. I
should like to report briefly on his activities.
Aaroas left Washington on July 25, the day before
128 freezing of Japan and China. Eis function was BS head
of E Treasury proup to organize a local foreign funds control
office in lonolulu and anila. One of our principal purposes
in sendlar out these men, was to make sure that at least at
the outset no economic upheaval would be caused on the
Selands by the freezing order. The original group consisted
of two nen from W staff, two from Harry White's staff, two
from P. Fehle's, and two bank examiners.
Aarons spent five days at Sonolulu and during that
time His proup WES able to conduct an educational camnaign,
to set up an organization, to quiet the original alarm felt
for the relatively large Japanese and Chinese copulation, and
to start the issuance of licenses. At the present time we
have & staff of five at Conolulu, including two bank examiners.
At anila, Aarons and his proup worked as part of
the den Commissioner's staff. Before the freezing of Javan
and Chine there had been 8. small local staff at anila. The
increased volume and complexity of work after July 26 in
connection with the oriental problems made it necessary to
organize alons new lines at anila, to delegate much more
responsibility, and to deal with problems beculiar to the
Philippines because of the preponderance of Chinese living
there. Within less than three weeks after the arrival of
our TOUD there, the backlog of applications was cleaned up,
the banking community had been "educated" as to the new
general licenses, controls had been set un in the Jananese
banks, a system of exchange of intelligence information had
Regraded Unclassified
30
- 2 -
been arranged with the British authorities at Singapore and
Jone nong, a control of re-exports of U.S. manufactured goods
had been inaugurated (our group working with Excort Control),
and local general licenses had been issued dealing with
problems unique to the Philippines. At present there are
six Treasury men at anila, including two bank examiners.
Aarons left Manila about August 27 for Shanghai,
via hong nong. It had been intended that he would serve as
temporary adviser on freezing matters to Ir. Fox's assistant,
P. Taylor, at Shanghai. At Γ. Fox's suggestion Aarons
stayed ten days in Hong Long, during the time .r. Fox was
at anila, and while at llong Rong, Aarons familiarized himself
with the problems and background of the Stabilization Board
and with some of the effects of our freezing as applied to
How Long. When ... Fox returned to llong Kong about
September 8, Aarons proceeded alone to Shanghai (Taylor re-
maining with ox at Hong Kong).
During his three weeks at Shanghai Aarons worked
in close collaboration with the Consul General and with
r. Richolson. Me interviewed the officers of twenty-three
Shanghai banks, representatives of almost all business groups,
and quite a few individual business men. His me oranda of
these conferences and the letters and documents which he
brought back with him give us a first-hand picture of many
of the Shanghai freezing and stabilization problems. Aarons'
memoranda were also sent to Fox at Hong Rong. Aarons also
advised interested persons at Shanghai on freezing questions.
Aarons transportation was by airplane except between
done Ronn and Shanghai and between Shanshai and onolulu on
the return trip.
9.14.7L
Regraded Unclassified
TREASURY DEPARTMENT
31
INTER OFFICE COMMUNICATION
DATE October 24, 1941
Ferdinand Kuhn, Jr.
TO
FROM Herbert Merillat
PRESS COMMENT ON
PRICES AND WAGE-CONTROL:
DISSENT FROM LABOR
The Canadian decision to adopt an over-all price-control
system, including wages as well as commodity prices, produced
B. chorus of "I told you so" comment in the American press. The
Canadian experience clearly proves, say the editorial writers,
that piecemeal price control is ineffective -- that failure to
limit wage-increases and rising prices of farm commodities will
result in disaster.
The commentators find unconvincing Mr. Henderson's arguments
against following the Canadian example in this country. In the
words of the Baltimore Sun, "His argument seems to boil down to
a defense of gradualism in a case where it is admitted that grad-
ualism is ineffective." The Canadian action was hailed as bold
and courageous, in contrast with the political shilly-shallying
on price control in the United States.
Regraded Unclassified
32
- 2 -
One of the rare editorial voices raised in support of
the Henderson plan is the New York Post's. After a careful
review of the welter of arguments which has come out of the
price-control debate, the Post concluded that the Henderson
bill should be adopted "in the name of intelligent compromise,
unity and the essential requirement of speed." Even this
supporter, however, believes that changes may be necessary in
the near future, particularly with regard to wage stabilization.
Most of the press continues to demand immediate over-all
price control, including effective control of farm product
prices and wages.
The labor press meanwhile continues its campaign against
wage control. The mid-October "United Mine Workers Journal"
joined the attack, calling the move to control wages "a new
flank assault on collective bargaining." Briefly, its argu-
ments are the following: when some 50 millions have living
standards below the danger line, it is folly to maintain that
wages are too high; increased wages simply meet increased
living costs and do not contribute to inflation; the real cause
of inflation is in prices that are out of line with costs; wage
control would mean the end of collective bargaining and the
institution of forced labor.
Regraded Unclassified
- 3 -
33
"Labor," the weekly of the railroad brotherhoods, expects
the Canadian price-control measures to give impetus to demands
for the Baruch plan, and pledges the vigorous opposition of all
organized labor to any such demands.
The "C.I.O. News" also warns its readers of increasing
pressure for wage-control and calls upon organized labor to
make its strength felt in Congress. "It is of the utmost im-
portance that sufficient labor protest be registered within
the next few days with the House Banking and Currency Committee
against any legislation that would set ceilings on wage rates."
Non-defense Spending: Budget Bureau Report
There is not yet available much editorial comment on the
Budget Bureau's report outlining possible reductions in non-
defense spending to save from one to two billion dollars. Such
comment as has appeared has emphasized that economies will not
be pleasant or easy, but that in these times unpleasant changes
and dislocations must be expected. The press is agreed that
agriculture and work relief must take the heaviest cuts. It
seems that, faced with an actual schedule of reductions, the
press is much more sober in tone than it has been in the past
few months when it has been bitterly assailing Administration
and Congressional leaders for failure to economize.
Regraded Unclassified
- 4 -
34
"Labor" says that the indicated reductions would be
catastrophic. The jobless, the veterans, the farmers, and
youth, it says, would be the ones called upon to suffer.
35
October 24, 1941
10:14 a.m.
HMJr:
How's tricks for this afternoon?
Lieut.
Sinton:
The weather should be good, sir. We will
have northwest winds - head winds - but the
weather will be good.
HMJr:
What's the deadline in take-off from
Washington Hoover.
S:
About ten minutes past three, sir.
HMJr:
Ten minutes past three.
S:
Yes, sir.
HMJr:
Now, do you know - is that new Army field
back at Newburgh - is that ready?
S:
It's not completed, no, sir. There's one
runway that's usable, but not at night.
HMJr:
Not at night.
S:
No, sir. Not yet.
HMJr:
Well, then there's nothing nearer, then if
I can't get off at ten minutes past three,
there's nothing nearer than LaGuardia, is
there?
S:
No, sir, LaGuardia 18 the nearest.
HMJr:
All right. Well, if there's any change in
the weather, please let Mrs. Klotz know.
S:
Yes, sir. I'll let Mrs. Klotz know if there's
any change.
HMJr:
Righto.
S:
All right, sir. What time shall we stand
by, sir?
HMJr:
Well, you just be ready over at your station
over at the Anacostia. Be ready from two-
thirty on.
Regraded Unclassified
36
- 2 -
S:
At Anacostia.
HMJr:
Yes. Because you can come over - be over
at the Washington commercial field from
three o'clock on.
S:
Be at Washington National from three o'clock
on.
HMJr:
That's right.
S:
Yes, sir.
HMJr:
Three o'clock on.
S:
All right, sir. Ah.....
HMJr:
Go ahead.
S:
If you - well, let's see - I gave myself a
lot of margin on that deadline. We could
probably make it three-twenty.
HMJr:
Well.....
S:
Sunset is five o'clock at New Hackensack.
HMJr:
I see.
S:
And if we don't - I can check this wind for
the winds again - and if we're not going to
be held up too much, three-twenty or three-
twenty-five will be all right.
HMJr:
Well, I'd rather - if I can't get out of
Cabinet by three, I won't attempt it.
S:
Yes, sir.
HMJr:
See?
S:
Yes, sir.
HMJr:
Thank you.
S:
Good-bye, sir.
Regraded Unclassified
37
October 24, 1941
11:42 a.m.
HMJr:
I just called up to tell you how much I
appreciated your going on our program.
Secretary
Knox:
Well, that's fine, Henry. I'm glad -
dió you hear it?
HMJr:
I listened to it and I thought you were
swell.
K:
Well, that's good. And I understand that
it had a very good effect among our ship
workers and the delegation at Philadelphia
is coming in this morning to express their
appreciation and tell me what they're going
to do to carry out the suggestion.
HMJr:
Well, that's grand.
K:
Yeah.
HMJr:
I hope you do it again some time
K:
I'll be glad to, Henry.
HMJr:
because it was a swell
K:
How's the campaign going?
HMJr:
It's going fairly well. I'm not satis-
fied. It's getting a little bit better
all the time, but I wish it would go a
little bit faster.
K:
Well, what you need 1s a little war spirit -
that's what you lack.
HMJr:
Well, I guess 80, but it's this thing of
getting people mobilized
K:
Uh huh.
HMJr:
on a voluntary basis, 88 you know,
Regraded Unclassified
38
- 2 -
you getting enlistments on a volunteer
basis, it's not the same as just drafting
them.
K:
Yeah.
HMJr:
But I'm for the volunteer basis.
K:
Yeah. Well, the Navy's all volunteers.
HMJr:
I know it. That's why it's got such 8 fine
spirit.
K:
Yeah. That's one reason why we have no
problems in morale.
HMJr:
Well, I'm ever so much obliged.
K:
All right. Thank you for calling up, Henry.
Good-bye.
Regraded Unclassified
39
October 24, 1941
4:31 p.m.
HMJr:
Hello.
Operator:
Foley and Gaston.
Go ahead.
Herbert
Gaston:
Hello.
Edward
Foley:
Hello.
HMJr:
I have this letter here - are the both of
you on?
F:
Yes, I'm on.
G:
Yes.
HMJr:
from Stimson, which I'm going to send
in to Gaston and you and Foley get together,
see?
F:
Yes.
HMJr:
Now the Attorney General got me in the corner.
Then he talked with Stimson and myself, and I'm
& little bit in a fog. He says that he's asked
for this postponement of the trial because he's
waiting to hear the Treasury's side of the
case. Is that right?
G:
Yes.
F:
That's right.
HMJr:
Well, I didn't know that; so I said one of our
troubles was that we couldn't get at the trained
nurse.
F:
Yes.
HMJr:
Is that right?
G:
Yes.
HMJr:
All right.
Regraded Unclassified
40
- 2 -
F:
We haven't been able to get to the witnesses.
HMJr:
All right. Well, now I'm going to send this
letter back to you gentlemen. Have you seen
it, Foley?
G:
I have seen it. Ed has not. I had it copied
and sent a copy in to Ed. I don't know whether
he has seen it or not.
F:
I haven't seen it.
G:
I have asked I'm going to ask that the substance
of his instructions be radioed to our man in
Honolulu.
F:
I've done that. I sent the Justice communication
to the United States Attorney to Chambers just
a little while ago.
HMJr:
Yes, I'm sending it in; and then if you need
any more help, I'm tremendously interested.
(Talks aside) Take this in to Foley now.
Is everything else all right?
F:
Okay.
HMJr:
Thank you.
F:
All right. Good-bye.
HMJr:
Good-bye.
Regraded Unclassified
41
October 24, 1941
4:33 p.m.
HMJr:
Hello.
Operator:
Mr. Buffington.
Go ahead.
HMJr:
Hello.
George
Buffington: Yes, sir.
HMJr:
Buffington, have you got a pencil? I've got
a couple of suggestions to think over.
B:
Yes, sir.
HMJr:
These are not orders - these are just sug-
gestions
B:
Yes, sir.
HMJr:
and I would think that if we asked the
U. S. Chamber of Commerce to distribute
"Know Your Taxes"
B:
Yes.
HMJr:
to their local offices
B:
Yes.
HMJr:
I think they'd do it. Also, the Manu-
facturers Association.
B:
Yes, sir.
HMJr:
You might think of other associations - par-
ticularly the U. S. Chamber of Commerce.
B:
I had that in mind, sir.
HMJr:
Good. Now, the other thing I want to sug-
gest - twice a month we send out a million
and half checks to Government employees
B:
Yes.
HMJr:
and we might include this circular with
that.
Regraded Unclassified
42
- 2 -
B:
Yes.
HMJr:
We may not be able to get it into the November
first, but we certainly could the fifteenth.
B:
Yes, sir.
HMJr:
See?
B:
You knew that we were still planning to send
another two and a half million December 15
for the tax reminders from the Collector of
Internal Revenue.
HMJr:
I'm thinking of the Government employees.
B:
Yes, sir.
HMJr:
And then also, you might find out whether
you could send it to all State employees.
B:
Okay.
HMJr:
That takes a great many.
B:
Yes, sir.
HMJr:
I personally gave one to the President and
every member of the Cabinet and they all took
them.
B:
Fine.
HMJr:
So that's that. I hope you'll do these two
things.
B:
Fine. Thank you, sir.
HMJr:
Good-bye.
B:
Good-bye.
43
October 24, 1941.
Dear Jake:
Mrs. Klots has shown me your letter of
October 22nd, and I want to tell you bow such
I appreciate the spirit in which it was written.
However, I have not the alightest intention of
taking you off the payroll.
It 10 the quality of the work and not the
quantity, or the frequency of your visits, that
interests m. of course I an glad to see you
whenever you can come, but meamwhile I shall
preserve the status and se far as you are concerned,
and feel it an entirely satisfactory arrangement
from the viewpoint of the Treasury.
With all good viches,
Sincerely,
(Signed) Henry
Dr. Jacob Viner,
Department of Economics,
The University of Chicago,
Chicago, Illinois.
GEF/dbs
Regraded Unclassified
The University of Chicago
Department of Economics
44
October 22, 1941
Yrs. Venrietta Klotz
Office of the Secretary
Treasury Department
Washington, D. C.
Dear Mrs. Klotz:
Will you please tell the Secretary for me
that I feel guilty about not having come down more
often, but that I have found it impossible to get
away from my obligations here. I hope that with-
in e few weeks I will be somewhat freer and have
more time for Washington at my disponal.
Incidentally, would you ask Xr. Norman
Thompson to take me off the payroll temporarily -
say, on leave without pay basis - until I arain
have an opportunity to eart. my compensation.
Cordially yours,
JY-W
Jucob Viner
Regraded Unclassified
45
October 24, 1941
MEMORANDUM FOR THE SECRETARY
Subject: Professor Irving Fisher's tax proposals.
For a number of years Professor Irving Fisher of
Yale University has been writing and speaking against
taxing income which is saved and not spent. He would
like to have the income tax apply only to amounts spent
on consumers' goods and services and would tax such
spendings whether made from current income or from
prior savings.
If his proposal were followed the income tax
would be very much lighter on the larger incomes,
which are mostly saved, than under the present law.
Accordingly, to raise the same amount of total revenue,
the rates on smaller incomes would have to be heavier
than under present law.
Professor Fisher argues that to tax saved income
results in "double taxation because the amount saved
1s taxed when originally received a.e income and the
subsequent earnings derived from those savings are
also taxed. Accordingly, he maintains that savings
are discouraged by the tax.
Few economists accept his conclusions about double
taxation or are worried that such double taxation, if
it does exist, would destroy needed savings in the
light of the fact that savings have been in greater
amount than the opportunities for their profitable
investment. So far as I am aware there is practically
no support for Professor Fisher's tax proposals.
hous/Blough horp.
Regraded Unclassified
Koy Blougs what wall 46
- from the August. 1941 Jemic of TAXES 244 The Tax Michigan Magazine, AW., published and P mayrighted by Commission Clearing Unuse, Inc.,
449.
A Second Reason for Not
Taxing Savings
By IRVING FISHER*
I
N THE January, 1941, issue of this magazine was
(on double taxation) the taxes were mostly restricted
presented "A Fundamental Reason for Not Tax-
to an uncharacteristic 1% whose destructiveness would
ing Savings", namely, that when an alleged income
be almost negligible.
TAX is laid first on savings and then on the income
"Savings" are meant to include any sort of capital
vielded by those savings, "double taxation" results.
increase whether of individuals, partnerships or cor-
To this article, a second and more fundamental objec-
porations: for instance, a savings bank account
tioncis raised, namely that a tax on savings is destructive
accumulating at 2% compound interest, or the develop-
of savings and therefore (eventually) destructive of
ment, at 50% per annum compounded, of a new inven-
revenue,
tion, such as the railway, automobile, airplane, radio,
The January article (on double taxation) was
and motion picture.
criticized in the May issue by Professor W. W. Hewett
Destructiveness Magnified by Reinvestment
and by Mr. Benjamin, Certified Public Accountant,
used we made rebuttal in the same issue, The present
In such a case, typical of the origin of American
article (on destructiveness) is in part an elaboration
capital, the tax, to an unexpected and amazing degree,
of that rebutral.
destroys the savings themselves. the country's growth
We may begin with the famous dictum of Chief
of capital equipment and the income and social benefits
Justice Marshall that the power to tax is the power
therefrom, and, finally, the tax revenue itself-the
to destroy. But apparently no one has noted that
very revenue which the tax in question is supposed
this power to destroy is far greater when savings are
to enlarge.
taxed than when merely spendings are taxed. The
Moreover, because of the compounding, a yearly
chief object of this article is to make this difference clear.
tax on the yearly capital accumulation is far more
The destructiveness in question is of two sorts. One
destructive than would be a tax at the same rate on
is by discouraging the saver from making savings, the
the final total-the inheritable estate-after the ac-
other by taking over in taxes the savings which are
cumulator has finished his life work.
made. This last will be considered first and will
At first sight the opposite result might be expected,
occupy most of our attention.
namely that the government would get more revenue
These two kinds of destruction operate together.
by not waiting but by taxing the yearly increments as
four in order to throw into relief the direct destructive-
(ast as they occur-and that a 20% tax on the yearly
riess of the tax as such, we begin with the impossible
increments in advance would at any rate yield as much
of a man who does not know discouragement.
revenue as a 20% tax on the final estate.
Nature forgot to endow him in that respect. No mat-
But this is not true.
tor how much the law punishes him for being a good
It might seem still more obvious that the most rev-
over, he goes right on being a good saver,
enue of all could be obtained by taxing both the yearly
We propose, moreover, to discuss at first heavy
installments and the estate at the end of the accumu-
taxes or these chronic savers, In the January article
fator's life.
Professor of Economics. Emeritus, Yale University,
But even this is not true.
Regraded Unclassified
TAXES-The Tax Magarine
Augun,
A SECOND REASON FOR NOT TAXING SAVINGS
461
460
August. pai
Le might seens obvious of all that the higher
government. This would leave him with Exartly who
le is ulserved. in income saved quite as ruthlessly as
We conclude that, paradoxically, delay in taxing the
the tax on accumitations the mare the revenue from
he started with, $1,000. He could not enlarge
in income spent.
savings increases the revenue, while also helping the
and accumulations.
shop at all. At the end of the nett year the Miami
in the first year. the capital Increase is, as in the
siver and the public.
But exactly the opposite is the higher the tas
thing would happen--be would have only $1,000
form cample. $400. On this an 80% tax is $120,
The 100% and 60% Compared
the lower the revenue.
the same every succeeding year. Man, the lave
leaving only (W) nel capital increase after the las.
which be pays over every year would retain the King
That in design the KD% INX does not, like the 100%
If, now, we compare the results of the 100% and the
Suppose No Tax on Savings
- the twenty-first year, not $400,000, has jum the
as. inity desiroy the vapital increase, as sets the
80% TAX (as applied yearly for forty years) and count
It is said that, in . period of larty years. the for
usnal $400 and in the fortieth year neil $200,100.00
no inheritance tax. we observe another parados. The
incruase Back encremently.
of Henry Ford, despite a degree of Institue on bis
lists $400 And, after the forty years Were up be works
former of the two rates affords the higher revenue, that
savings-though für less than maday Trum di
have for himself not $700,500,000 but $1,000
However, The main paint is that the set-back is
is, the 100% tax yields during the forty years $16,000;
nes worth of $1,000 to A millions Finses 81,000 namely
commitation. The set-back in the first year has an
the 80%, $82,000.
That is, the $700,500,000 fortune embodied in Rise
a billion dollars-a abouting every Iveo years which
alim under in the next year for the fortune then starts,
Rouge plant which would have come into exastess
Also, of course, we observe that this lower tax per-
would be accomplished by a constant anount Fate of
not If $1.400 lan at $1,050, and clearly a 40% increase
mits the eventual Forward estate to rive from $1,000
had there heen no tax DO savings, has die/l a-borning
increase of 41.42%
in fact, forty times in succession.
will $1,000 is less than a 40% increase on $1,400.
(to which it was glued by a 100% sax) to $21,700, with
Bat, for the sacke of round Requires les Us take an
Rui did the government gain what the
The accord year's tax again sets back the increase,
corresponding benefit in the public.
imaginary case-the vame of a mair nained Henry
borb set-backs have after effects on the
lost? No. the taxpayer (and the country). los
Thus, lowering the tax rate on savings from 100%
Forward - a bläcksmitht 10 state with and Det him live
$700,499,000 of capital, the difference in value between
Hunt senc's capital increase. And the fourth year will
to 80% is beneficial all around-to the public. to the
in - land where assings and capital gaina of any non
the River Roage plant that might have been and a
(to) the alter effects of all three previous set-backs,
Hanry Forward estate, and to Uncle Sam.
nce except subject the income tax. Only spendings
amithy, while the government gained only $16,000
and will cumulatively.
As to this last paradox (increasing the total of annual
are taxed (and by spendings we muan spendings for
L $400 à year for forty years. That is, the given
" the end of lung years, forty successive set-backs
revenue by lowering the annual tax) let as record the
real income of living espense).
ment was really a loser too, losing, ansing úller
Kaye had their effects-not all equal, to be sure; the
revenues year-by-year for each of the two rates.
Alter 190,1 - un January i, 1901, be Converts his
things, the change to tax after forty years an estate of
last is the least and the first is the worst-and not
Government Revenue from
with shop lot making automolilles according
$700,500,000 instead of an estate of $1,000 For the
mercly (mis times worre-far more than forty times
110%
4%
to a now invention of his His nel worth at this time
area, bocause nf "compounding."
1001
400
320
salve of that $16,000 collected through forty years, der
1902
400
346
is 21,000 This proceeds EN grow at the raje of 40%
government deprived Itself of unield millions
Back year, the 8% tas knocks off thirty-two points
1003
400
371
per year so that in 1921 it reaches the $1,000,000 mark
from (he furly prints gained, so that the nel increase
1904
400
403
and at the and ní 1940 u is $700,500.000 This value
Wuest of all, the public was deprived of the indires
with embedied in 5. huge automobile plant which he
benefits of that $700.500,000 capital. It was n If de
is mly % The fortune thus grown, nut at 40% com-
Thas the 100% savings tax does yield more revenue
had communicted on River Risige
Ford plant, the General Motors plant, the Organ
pounded as il would without the 10%, but only at 8%
at first, hat in the fourth year, the 80% tax passes it,
In the first year. 1901. Henry Furward's copital
plant, and all other automobile plants had bero pro
compounded After forty such annual set-backs, each
and thereafter has an advantage which increases every
increase was from 81,000 in $1,000 o gaio of $400, In
vented by the tax from ever coming into existems
reducing # 10% increase to an 6% increase and each
year, By the end of 1940 is has brought in a total of
1921 the increase Was from $1,000,000 to $1,100,000, a
Surely, Thil government could so sorely med $400 I
cotting back all that follow it, the final fortune и not
$82,600 instead of the $16,000 of the 100% las.
year for forty years that it could not wait (ntiy year)
Ind $21,700 That is, while the 100% tax
cain of $400.000. This houtes As If there would al the
end of 1921 be $100,000 which, receber a las capital
for many millions!
destroyed exactly 100% of the potential increase, the
A Savings Tax of 50%
increase, muld be taxed.
XYS 145 desimed more than 80% of the potential
Let us now lower DUF annual savings tax from XY%
"Ab, but the government espenses must le gaid-
Dut not IF there had been such - (as during the
increase-it dostroyed 99.97% potential increase The
to 50%. The Revenue results will be as follows:
paid every year, not just once every furty your
previous years for the applications of such - las proor
This is palpably a very weak argument For the
Illile 31,000 mithy has grown, in forty years, but
Government Revenue from
only 16 A wall shop worth $21,700. not to 3 River
80%
30%
to 1921 would have prevented The $400,000 from com-
government, more easily than any other person #
1001
320
200
ing into essurance
organization, could finance itself over a
Ronge plant worth $700,500,000
1002
346
240
And, "our of" the $700,500,000 which might have
1901
373
ZXR
period. If is needed that $16,000 during thom torry
[90]
400
345
^ Savings Tax of toos
years, it could incrow it at rates so love that. of she
seco, how mach did the government get in taxes? In
1905
430
415
To above the offects of rexation, let las isaw assume
end of the forty years, it would owe less Chan $25,000
the first year it collected $320; in the second, $346 and
1906
470
407
(Instead or the thregoing assumption of no tax on
And, eyen if o bad to pay 5% interest during shoe
no nn, up to $6,437 in the last, or fortieth year-the
In this case, since the lower tas starts with a bigger
savings). that There Was much D. avings tax from the
forty years, its debi would still be only $48,120. Surh
total for the forty years being only $82,6001 That is,
immediate handicap, is requires six years TEL overtake
beginning-a las of 1000 This impossible rate is
a tritling debt could then be repaid out of the millers
the government, for the sale of getting $82,600, virtually
the higher tax as to annual results, but at the end of
chosen for DUP 6ma example for simplicity of exposi-
obtainable from an inheritance iss on $200,500,000
destroyed over $700,000.000.
the forty years, its total collections would be $1,470,000
them For rive ake excluding The indirect destruction
Even e 1% inheritance tax would pay the government
Again. the government would have done better to
instead of the $82,600 under an 80% tax, and the
from discomragement. ME shall as already indicated,
supplise that even alvis 100% tas did not deter the
UVER $7,000,000. Clearly the policy of taxing the BIT
home II would have needed to borrow only $320
fortune of Henry Forward would be $1,470,000 instead
kages as they accrue is "penny wise and pound (onlish
the first year, $346 the second, and 50 on up to $6,437
of merrly $21,700-with corresponding benefits to the
Re was livel enough, of sains enough, to keep
in the same of a 100% tax
in the fortieth, Even if it had paid on all these loans
public
un each year adding 40% to bix nei worth, despire the
as high as 5% compound interest, its accumulated
It scould be good business for the government, there-
Fact that the forthwith confiscated the
ensire increase
A Savings Tax of 80%
debt in forty years would be only $164,500. Evidently
fore, instead of collecting this $1,470,000 from Heary
IN would be "good business" to go into debt that much
Forward to borrow it elsewhere at 5% compound
To the first year, having faithfully increased bis initial
"But . 100% tax is inconceivable
in order in have, at Forward's death on December 31,
interest. At the end of forty years the government
$1,000 to $1,400, Forward paid the whole $400 over to the
Very well: try it at 20%-a tale actually approve
1940, - resulds PRIME of $700,500,000 instead of $21,700.
debt would be $2,050,000 but the fortune available for
mated mday in the higher income bracketin applied.
Regraded Unclassified
462
TAXES Tax Magazine
August, IN)
A SECOND REASON FOR NOT TAXING SAVINGS
463
veri, 1941
volveritance tax would be $700,500.000 (instend of
Most of the nation's capital equipment now exiss.
supposed could be obtained by a 20%
and such ailded taxes as are being proposed as this
$1,470,000) nis which a 50% inhéritance 16% would (if
ing-railways ships. factóries,-most, almost certainly
or
article is being written, would never have permitted
collectible) produce over $3(0),000,000 or If the give
have grown at first at much higher rales than
their chief growth occurred during their development
Muscover, it is equally unrealistic to suppose an
such developments as have actually accurred in the past
Proment wanted mily the $1,470,000, D muld get "
as new inventions. If this is accepted as correct, WH
instructance to rate no higher than the annual fax rate
On the basis et the calculations ciud above, we may
with A 10% of Less than ane-quarier of 1%
(if strings which would in practice le low when the
conclude that if We were today to repeal all our present
need not descend to a 5% growth rate to prom to
destructiveness of taxing the said growth.
ming were low. Only big savings would, in prac-
tames on capital intrease or even merely to exempt
A Savings Tax of 20%
Under a 20% tax we find the same three-fold ad
di to o lower annual savings fas eventually Miducing
de be and
from taxation that part of the earnings of corporations
vantage from lowering the 00 savings-ad-
mare PRIVARE than a higher annual surings for: The
Finally, WR have. it will be remembered, not taken
which is plowed hark-ibe undivided profits-the re-
vantages to public, Mr. Forward, and Uncle Sam. IT
never fails.
mb permit the important factor of discouragement
sult would be. in Live end, not a reduction of tas revenue
takes longer fue the 20% revenue to overtake the 50%
which lesds A saver to quit saving or redace it greatly
but a remendous increase de well as a tremendous
reventio-namely eleven years) lest (lie total tax yielded
alien the government punishes his thrift
brink to THE while economy, There would lie more
"Perpetual" Saving
Even a 1% annual tax rate ou savings would in
We may suiclude that it would. in most cases, H
immediate wavings, and consequently more future
⑉ hirty years would $160000,000 de $1,470,000
M all, pay the government to borrow up (1) the time
spendings and blgger estátes be jas. Even
(rum the 50% rare, and the Forward plant yould reach
time, yield more than a 10% rate, still more than
$66.500,000 instead of $1,470,000. And here again is
of Inbertiance rather than tax the savings annually.
if the rates for taxing them were unchanged, the tax
20% rate and still more than 50%, 80%, 100% pro
revenue from large estates would probably for multiplied
would pay the government many times over to wait,
vided only we wait long enough and the potential FATE
How much, II would pay depends on laets not su-
many times.
and Bornow eyen at 5% if necessary, such
of growth continues.
timestly available-the actual assortment of the growth
Under this plan we would theoretically be required
a Arbit at the and of The furty years would-only be
A. skeptical reader may point out that, according to
with which WE experience in America, the proper inx
go into debt for a few years last nn 38 entirely die
$20,700,000 "En pay such a delie there wind Le remited
what has just been stated, a zero QE "infinitesimal"
rates and interest rates to assume, and the average
9. tirk KFR $700,500,000 only 3%
ferent basis from that of the past ten years. For, oven
rate would eventually produce the most révenue But,
period of accumulation in a generation.
il the government would then have to Increase siate
Change she Growth Rate to 20%
to do this would réquire an "infinite" time. Here of
But we have no besitation, pending fuller smily, in
stantially, it would be "the smart thing to do." Ir
In all the foregotog a 40% annual growple
course we find ourselves entering a theorefical realm
expresing our personal belief that a no-tax-on-savings-
would actually generate more income faier besause is
of copital Was - But even whit D. 2016 growth
of mathematics. One objector insists that somebody
policy, coupled with proper inheritance and estate
would the done for the very purpose of promoting the
of there would be advantage
and his heirs might continue to save perpetually and
taxes would, in the long run, pay the government,
creation of income-producing capital. That is, we
from successively lowerkur the tax.
news spend a cent beyond the minimum of
bringing in many times what are now, or ever tan be,
would stop the fonlish practice of eating up our seed
At a 20% growth rate the forTune, if unlased, would
supposed to be exempted. In that case be and bis
milected by taxing savings annually.
com instead of planting
in forsy years amount REV $1,470,000 and would be our
heirs would be tax free indefinitely.
To Tax "Part" Yields More Than to Tax "Whole"
Why are we so analous to impuse heavy thoses now?
down by A. 100% tax to $1,000 by an HOTEL TAX, TM
Without taking the time here to diseuss the various
The only rational unswer "In order that we in this
$4,500 by # 50% in in $48,300 by a 20% tax to
theoretical implications of such an hypothesis," WE
The appended tables even show that, in general,
generation shall pay the bills of this generation and
$175,000 and by D. 10% 1xx to $750,500.
may cut the Gordian knot by stipulating that soros
more takes or be raised by taxing only accumula-
nnt leave SIT much for our successors TO pay."
Steets taxes (i, e, taxes on estates and inheritunces)
Hims at death than by taxing both the accumulations
But that argument works just the other way. "
Savings Tax, 10%
shall tie an integral part of our tax system, com-
as death and the annual increments our of which those
we are trying to help tive nest generation we can do it
Eveu in this care 2019 growth and 10% annual
plementary to the net yield EFF spendings tax. Time
ateumulations were formed.
must effectively by spending less and having more
invingo las) is would pay the government to will
could then certainly be no fear of any performally
For instance, in the case of Henry Forward, with
now, That is precisely what work! follow more
forty years The amount tax would produce be forty
untaxed savings without a perperual lifetime.
growth rate of 40% per year for forty years, a 20%
tases are ptst on spendings and less on savings. Today's
years only $03,200. if this were "passed up" and the
annual savings tas would bring in $16,600 and would
tax yield is not the importantant minsideration but
same sum Increwed (exom AF the high tate of 5%),
When Would It Not Pay the Government
cut the inheritance from $700,500,000 to $66,500,000.
importow's income To kin capital accumulation mday
the whole debe in furty years would be only $114,300
To Borrow?
Even this tas of $10,000,000 plus a 100% inheritance
means to kill the goose that hays The gublen CSR.
which contsi the easily poid by tinking al the same 10%
As to whether if would pay the Gevernment to postpone
tax on the $66,500,000 if collectible would aggregate
the estate of $1,400,000 which the annual 10% would
the far fill death and borrow in the interim.
il revenue of only $83,100,000 whereas if the estate
Today and Military Defense
half destroy.
With so law a growth rate as 10% we find, fin the
WETE allowed to reach iss potential $700,500,000 a tax of
All this argument for more saying and less spend-
Six far we have supposed only the two growth rates
first time, that it would nn longer pay the government
less than 20% would produce far more than $83,100,000
-40% and 20%.
ing applies to the present Defense problem wideh
to skip the 20% annual fax and during the Curry your
and with ample margin for interest.
demands private accomulations, even if merely to be
The Tables appended to this article give the while
borrow the equivalent at 5% compound futerell. for
Tn riue the Annual tas rate above 20% only makes
shot away. Any considerable tus ERT savings reduces
picture, the growth rate from 40% (presumably
its debt at the end would be $2,220 and the internable
mailers worse, as has been seen.
our chances of success in défending ourselves and
less than Henry Ford's) down Les 5% (which has been
estate would be only $7,040, on which 20% would
exceeded by millions of prople): and the anoual SAY:
In a less degree these same inequalities apply to the
helping to defend England.
bring only $1,408 and not even that, because of the
Inges tax rates from 100% down to 20%
case of slower accumulations, as may be seen by
It is important to encourage such savings not only
difficulty of realizing on non-liquid assets.
stamining the tables below.
in order to maximize Defense effort but also to minimize
As to destructioness: Even at know rates of accumu-
But in arriving at this checkmate we have less
latter and raxation the same destructiveness appears.
If this article were historical and if Henry Forward
the curse of credit inflation, which war and prepara-
Thus, suppose $1,000 growing at 5% for forty years
much too liberal in our hypothesis. To be realistic.
were really Henry Ford, the fact might be stressed
tion for war so readily generates.
without any annual savings tax. It would reach $7,040.
we ought to assume that the government would
that the attomobile industry was essentially established
This article la confined to the "second" reason for
But a 20% annual tax on savings would cut it to
TOW at rates far below 5% At a 3% rate in dable
liefore the American income tax began to put high
not taxing savings- But there are still others which
$4,001, thus destroying 30% of it and a 50% tax would
would be only $1,510 and at lower rates the delit would.
filles on capital increase of corporations and before
could be elaburated.
CUT o down to $2,685, destroying 60% of It
of course, be much lower, certainly lower then the
there was any personal income tax. It seems alto-
The sooner, therefore, we can drop all taxes ou
For BITTM of time, say TM Metare of Orginal end Income, e 2%
certain that socis an income fax as now in force,
capital increase, the better for
[Turn to page 468)
Regraded Unclassified
ass
TAXES- The Tax Magazine
August, 1941
Table II
A Second Reason for Not Taxing Savings
Tax Collection in Forty Years
[Concluded from page 463]
(For (priled Maler of Growth nad
all concerned This would convert nur income taxes
l'etratial
into spendings taxes, and their progression would
liate of
Annual Tax Rater of /
make them virrually taxes (III luxuries. They would
Growth of
Form
100%
M%
5%
have all the virtues of 4 elles tax but without taxing
as
4%
$16,000
$32,600
$1,470,000
the prem. The rich would he donly Taxel-on their
20%
8,000
15,000
44,200
$16,600.00
spendings and un their estates and at progressive
10%
4,000
4,750
5,990
14,400
rates, More laxes would he collected and yet more
5%
2,000
1,916
5,1%
1,660
Say
walth world le created.
Table III
Table I
Government Debt Accumulated in Forty Years
The Forward Fortune after Fony Years
the Rates of Cirretà ml
(/wisding 1% Internal, from Berrowing lasting of Collerning
e per The Preceding Fabley
l'vivatid
Rate of
/Imual Tax Raterel
Rair of
Annual Tax Rater of:
Granth of
M%
#4-
30%
20%
No Tar
Name
100%
80%
22%
MR
40%
$1100
$21,700
$1,470,000
$66,500,000
$700,500,000
like
$48,320
$164,500
$2,050,000
by
1000
$20,700.00
4,300
43,300
379,000
1,480,000
ans
24,160
37,600
80,300
HW
1000
2210
7,010
142,00
21,700
45,300
10%
12,080
13.500
14,080
3%
1000
1,400
2,645
10,20
4,801
7,040
5%
6,040
5,590
4,355
22%
Regraded Unclassified
Address of Professor Irving Fisher, Professor Emeritus
47
of Yale University,
Before The Conference Board's Round Table Session on
"Financing National Defense,"
Thursday, September 25, 1941, at the Waldorf-Astoria Hotal
Last Saturday e tax bill became law which breeks the record for magni-
tude and, in my opinion, also breaks the record for harmfulness to American
enterprise.
For three years I have been preparing n book, now nearly ready, on In-
some Tax Reform. Its conclusions are in direct conflict with at least one major
feature of the legislation just passed.
It 16 this feature which I shall almost exclusively discuss, partly
because of its importance in our problem of "Financing National Defense", portly
because its importance 10 quite generally unrealized, and partly because I have
given more attention to it than to any other part of the defense problem.
The feature to which I refer is the increased tax on the undistributed
profits of corporations. In my opinion there should have been DO such increase.
The only increase in income taxes, personal or corporate, should have been on the
Income which is distributed and spent.
It would have been extremely easy, without otherwise disturbing the tax
bill 85 drafted by the Administration, to have specifically exempted undistrib-
uted profits from any of its provisions.
Not only could this have been done but I have little doubt that it
would have been done ir those who bad the bill in charge had had the time -- or
perhaps I should say -- if they had taken the time to analyze the disastrous
affects of the heavy tex on undistributed profits.
It will be remembered that, 6. few years ago, at the instigation of Mr.
Oliphant of the Treasury Department, a special tax on undistributed profits was
placed on the statute books. But, to Mr. Oliphant's great mortification, it did
not stay there long. The business world rose up against it as one man. A Com-
mittee of the United States Chamber of Commerce had reported against It before
it was passed. Afterwerds Senators, Congressmen and, less openly, those in the
administration itself who had originally sponsored this ill-considered measure,
repudisted it, and it was repealed.
That project as such bas, apparently, no friends today. Business men
in all lines affected by the tax OD undistributed profits felt then and feel now
that its effects were harmful. Meny are still feeling its harmfulness and still
trying to rebuild what was torn down.
Why then do we now have before our syes the spectacle of virtually 78-
storing the taxes then removed?
The answer seems to be simply this; that the true ressons why the
Oliphant project was unsound were only dimly perceived. The businessmen reseted
against the Oliphent proposal by instinct rather than by reason. They ware close
enough to the economic machinery to heer it creak and strein so that they could
- 1 - Fisher
Regraded Unclassified
instinctively perceive that something was wrong without quite finding it,
48
As I see it any tax on savings, corporate or private, is unsound, and
especially today when we should all save for defense. In the 0690 of a small
tox, the harmfulness is 60 slight that it will not mrouse any feeling of special
harmfulness. But the harmfulness increases with amazing repidity as the tax rate
12 reised.
In my book on Income Tex Reform I believe 15 will be clearly shown that
the soundest income tax is one levied wholly on income spent and not at all OD
income saved, But, for practical reasons, a very small tax on sevings may have
to be tolerated.
For instance, in the present smergency, 1 agree with Professor Lutz
that a small tax on all paid incomes would be en excellent practical procedure,
although 18 would, in 8 very emall degree, necessarily involve some taxation of
private savings. But its practical advantages of simplicity and ease of collec-
tion greatly outweigh this slight disadventage.
The tax which I am edvocating 18, in effect, the same as the spendings
16% favored by the late Ogden L. Mills who, in his day, WBB recognized 65 perhaps
the leading American authority on texation.
All taxes on sevings (except es involved in the Lutz plan) would be
abolished.
By savings are meant capital-incresse of any kind. No discussion will
be entered into here regarding any temporary leg or gap between monetary savings
and their investment. I will merely note in passing that Keynes, who is 80 often
quoted as opposing savings, wrote me that he approved my plan as presented before
the Committee on Ways and Meuns. Also, as 1a well known, he advocates compulsory
navings in this War Emergency. The tax I am proposing would, I believe, accom-
plish the same purpose without any compulsion.
The proposed spendings tax would, of course,be progressive. That fact
and the minimum examptions would make it a tax not on necessary spendings but
only on luxury spendings.
We all certainly agree that, in this emergency, at loast, luxury should
be decreased end I hope we agree that savings should be incressed.
But any tax on savings decreases them and, unless the tax is very low,
decreases them enormously.
An airplane factory, for instance, should have every incentive to on-
large, But If all its earnings are taxed, including its undistributed profits
plowed back in the business, this reinvestment is thereby penalized when it ought
to be encouraged,
We should also encourage the upbuilding of our country's capital in
general. Otherwise we shall impair our national cepital, and reduce our future
national income, the source of all taxes,
Even if taxes on capital-increase did not thus discourage end reduce
that capital-eccumulation, the mere payment of 6 tax thereon automatically re-
duces the rate of that accumulation.
- 2 - Fisher
Regraded Unclassified
49
This destructive effect is enormously greater than realized. We all
know thes "the power to tax 18 the power to destroy". But the power to destroy
of a tax on savings is many times 08 great 6.8 that of a tax on spendings.
Moreover, a yearly tax on savings or capital-increase 18 far more
destructive than 6 tex on the final total, after the accumulator has finished
his work of accumulating, has died and left his accumulations in 6 greet estate.
At first sight the opposite might seem trus. It might scem that the government
would get more revenue by taxing the yearly increments than by taxing the final
estate created out of those increments, that to tax the yearly increments 16
simply to tax the estate in edvance and in installments, But this 18 not true.
It might also seem that the most revenue of all could be gotten by
taxing both the estate at the end of an accumulator's life and the yearly 10-
stellments out of which it 18 built during his life. But the opposite is true.
It might also seam that the higher the tax on savings the more the
revenue. But here again the opposite 18 true.
Savings or capitel-increases are B. very peculiar and sensitive sort
of income, if we choose to call it income. To tax it kills it and not it alone
out its future income.
All of these contentions can be substantisted methematically. Here
they will be merely illustrated by numerical examples.
Suppose at first, that the tax is 100% 60 that the whole of the
capitel-increase is confisceted. or course no one would seriously propose such
an extreme tax, knowing that it would put a stop to all savings and so yield no
revenue et all. But such an extreme 0888 is the cleerest for beginning our
exposition.
Let us also suppose that 8. certain man's net-worth increases at the
rate (before taxes) of 40% per year and that it does so for forty years.
This rete of growth 1e high but not unprecedented. It is said that
Henry Ford became a billionaire in forty years, between 1900 to 1940. If this
in true his annual rate of growth must have been much more then 40%.
Suppose first there were no tax on capital-increase so that the full
40% could be compounded for forty years. It would then be true that a little
blacksmith shop in 1900 worth 41,000 could, through that 40%, become a River
Rouge plant in 1940 worth $700,500,000. Half-way between, in 1921, the plant
would have reached the $1,000,000 mark, in our imeginery example.
At the end of the first year, in 1901, the capital-increase would be
from $1,000 to $1,400, or 400. In 1921 the increase would be from $1,000,000
to $1,400,000 or $400,000. This looks 88 if there would be $400,000 which could
be taxed in 1921.
But any tax on capital-increase would prevent that $400,000 from coming
into existence.
For the sake of argument let us suppose that the 100% tax did not deter
the sever from saving. That 18, we suppose that he was fool enough (or saint
enough) to keep on each year adding 40% to his net worth despite the fact that
the government takes it all away from him forthwith.
- 3 - Fisher
Regraded Unclassified
50
In the first year he would increase his initial $1,000 to #1,400 and,
under e 100% tex, pay over to the government the entire 400 cepital-increass.
He would then have left $1,000, exactly what be started with. Next year the
same thing would happen. He would still have only $1,000 left at the end of that
year, and of every succeeding year. In the twenty-first year his capital-incresse
instead of being 400,000 would be just the usual J400. And after the forty years
were up be would have the same $1,000, instead of the $700,500,000 which be would
have had were there no taxes!
We see that the $700,500,000 fortune which would have come into exist-
ence were there no tax on savings has died e-borning -- died, in fact, forty
times in succession. Everytime it started, the tax has destroyed it all.
But, you ask, didn't the Government gain what the texpayer lost? No,
the texpayer lost $700,499,000 and the Government gained $400 a year for forty
years, or only $16,000 in all. The Government also really lost; for it lost the
opportunity to tax an estate of $700,500,000. After its destructive taxes in
life it had only $1,000 left to tax at death. For the sake of that paltry
$16,000 the Government deprived itaolf of millions. Only one per cent on
$700,500,000 would bring in $7,000,000 which is hundreds of times as much as the
$16,000 from the 100% tex on the ennual increments out of which that huge eatate
WB # formed.
Worst of all, the public would be deprived of the indirect benefits of
that capital. It would be 58 if the Ford plant, the General Motora' plant, the
Chrysler plant, and all other automobile plants had been prevented by the Govern-
ment from ever coming into existence, all for the sake of collecting a total of
$16,000 in taxes. Our country would have practically no automobiles.
Let us now leave our impossible 100% example and substitute воя, a rate
actually approximated in the "higher bruckets" today. Assume, 88 before, that
every year's capital-morease is taxed separately, as it accruss.
In the first year, before taxes, the capital-increase is #400. On
this en 80% tax is J320, leaving only 380 net capital-increase after taxes.
This set-back to the savings has an after-offect next year; for the fortune then
starts at $1,080 instead of at $1,400 and clearly a 40% increase on $1,080 18
less than 40% on $1,400. The second year's tax again sets back the increase and
now both of these set-backs have after-effects on the third year's capital-in-
crease, The next year will feel the after-effeots of all three previous year's
set-backs, and 80 on cumulatively. At the end of forty years there are felt the
effects of forty successive set-backs.
The importent point 1e not that the power to destroy was exercised
forty times irstead of once but that for the eerlier years this power was multi-
plied later.
For instance in the first year the Government took away only 3320. This
reduced the capital from the $1,400 which it might have been at the end of the
first year to $1,080, 8 reduction of about 23%. But it also enteils reductions in
the same proportion in all later years. In the twenty-first year the $1,400,000
would be reduced to $1,080,000 and the $700,500,000 at the end to about $540,000,000.
In other words that little 8320 reduction in the first year gets magnified to a re-
duction of over $160,000,000 at the end.
To put it another way, each year, though the fortune grown by 40% be-
4 - Fisher
Regraded Unclassified
51
fore the tax knocks off 32 points, the net increase 18 only ex. The fortune thus
grows not at 40% "compound interest" 08 it would without the tax but only at ex.
After forty annual set-backs, each reducing 6. 40% to an 8% increase and each
setting back all that follows it, the final fortune 10 not $700,500,000 but only
$21,7001
And how much did the Government get in taxes?
In the first year it collected $320, in the second, $346 and 80 on,
the collection in the last, or fortieth, year being the most -- $6,437. The
total through the forty years was only $83,000 That 18, the government for the
sake of getting $83,000 virtually destroyed over $700,000,000.
Let us further pursue the tax-lowering by substituting 50% for 80%.
Again we find the lower of the two taxes the more profitable to the Government
aa it is to the taxpayer and the public.
The higher 80% tax would, it is true, yield more in the first year,
namely 3320 instead of the 3200 yielded by the 50% tax. In the second year the
80% rate also has the advantage, $346 instead of $240. But the advantage is not
so great. Year by year the 50% tax-yield creeps up on the 80% yield until it
overtakes it in six years. The Government revenues under the two systems are
contrasted for each of the six years in the following table:
Government Revenue Under
80%
50%
1901
320
200
1902
346
240
1903
373
288
1904
403
346
1905
436
415
1906
470
497
Here it takes six years for the annual revenue under a 50% tax to over-
take that under an 80% tax, in spite of a bad handicap at the start.
Under a 20% tax we find the same three-fold advantage from lowering the
tax-rate. As to government revenue, it is true that the 20% tax yields far less
revenue in the first year -- only $80 as compared with $200 under B. 50% tax, But
the 20% revenue overtakes the 50% revenue in the eleventh year, when it becomes
$1,284 es against $1,239.
In short, the lower the tex-rete the higher the tax-yield in the and.
The best results can be obtained by not taxing accumulations at all during the
life-time of an accumulator.
- 5 - Fisher
Regraded Unclassified
Cases as extreme 88 Henry Ford's are rare. But the capital equipment
52
of America is largely the product of a relatively small number of capital-cre-
store of which he 18 the extreme type. It is the result of developing inven-
tions and technological improvements in general,
The death of the accumulator usually marks the end of the rapid accumu-
lation. From 8 fiscal point of view, therefore, there is usually little, if any,
advantage in delaying beyond that point the taxation of sevings, if savings are
ever to be taxed at all; while, from a social point of view, the argument 1s
strong to appropriate most of the accumulation, when inherited. From every point
of view, therefore, the death of the accumulator marks an appropriate, in foot the
only appropriate, time to tax accumulations of capital.
If we were today to repeal all our present texes on capital-increase
or even merely to exempt from taxation that part of the earnings of corporations
which is plowed back -- the undistributed profits -- the result would be, in the
end, not a reduction of tax-revenue but a tremendous increase.
But, you say, we are seeking bigger revenues now and not simply "in
the end."
But any loss in immediate revenue would be made up many fold "in the
end." Even if, in the meantime, the Government had to borrow substantially, it
would be "the smart thing to do." It would generate 80 much more income later.
Way eat up our seed corn instead of planting 1t?
Way are we BO anxious to impose heavy taxes now? The only rational
answer is: "In order that we in this generation shall pay the bills of this
generation and not leave 80 much for our successore to pay."
But that argument works just the other way. If we are trying to help
the next generation we can do it most effectively by spending less and saving
more now. That is precisely what would follow from putting more taxes on spend-
Ings and less on sevings. Today's tax-yield is not the important consideration
but tomorrow's income. To tax capital-accumulation 18, if I may repeat for
emphasia, to kill capital accumulation -- to kill the goose that lays the golden
egg.
I have admitted that at first the tax on spendings alone would, at 5
given rate raise less revenue than a tax on spendings plus savings and would,
therefore, require, temporarily, more borrowing by the Government.
But the grester this temporery shortcoming in revenue from B spendings
tax the greater the savings, end the greater the sevings the more these sevings
can be invested in Government bonds. That is, the very forces which would in-
crease the need of this sort of Government borrowing (namely to safeguard sav-
ings) would also meet that need.
The present taxes on corporations lump together, indiscriminately,
both kinds of earning, distributed and undistributed, as if the two were alike.
They are very unlike. One standa for spendings; the other, savings. A tax on
savings is far the more destructive. he we have seen in our extreme illustra-
tive case, a tax of #320 on savings may have the effect, forty years later, of
virtually destroying $160,000,000. A tax of 380 on spendings has no such after
effect.
If a third of a corporation's earnings is distributed, e tax on that
. 5 - Fisher
Regraded Unclassified
53
third will, it is true, only yield a third of the revenue in that particular
year. But in the end any tax, year after year, on the one third distributed
will yield far more than at tax on the whole, simply because this examption of
the undistributed part allows that part to grow and to generate more taxable in-
come later as well 56 to generate bigger taxable estates.
Incidentally, if we were to take off taxes on savings W would thereby
combat inflation by generating the wherewithal for subscriptions to government
bonds out of savings instead of out of newly issued and inflationary bank credit.
One way to accelerate such subscription would be analogous to Keynes'
compulsory savings plan. Let the Government, without changing the tax law, be
authorized to give its interest-bearing notes to a corporation in return for that
part of its taxes ellocated to undistributed profits.
This, like exempting the undistributed profits, would create a strong
incentive to save more and spend less, which is what 10 needed today.
As the tax law now stands it is an outrege. Last Tuesday I attended
two directors' meetings. One of the corporations finds that its reserve for
taxes must, under the new law, be put up to 35% of its earnings. This of course
includes 35% of its undistributed earnings -- the corporate savings on which its
future capacity to pay taxes depends. The other corporation finds its reserve
for taxes will be about 48%
Such a law is especially outrageous in its incidence on the poorer
stockholders. Many of these have incomes supposedly below the examption limits.
Almost all of them are probably well below the brackets which are supposed to
pay 35% or 40%. Yet they have to pay those percentages 80 far as concerns their
income or earnings from their stock.
Someday, under B. retional spendings or luxury tax, there should be no
need of any big taxes on corporations. To must not forget that every dollar of
taxes paid by & corporation 18 really paid by its stockholders.
An ideal income tax should be only on real persons and only on what
they spend. Then the progression has real meaning. Now, with 35%, 40% and even
55% on small stockholders, progression becomes meaninglass.
In the recent tax bill the progressive rates on personal income reach
up to 77%. Such rates would not be too high if the taxable income wore solely
spent income. But, in BO far 88 these high rates discourage end destroy saving
end investment, they too will stop the up-building of our nation's capital.
The destructiveness of the present income tax system seems elmost to
spell the end of our free enterprise by throttling investment. This is a matter
of grave concern to the whole country. For, 88 Carl Snyder has emphasized, our
prosperity depends on our capital. Why destroy it, especially when this exercise
of the "power to destroy* is futile? For it destroys also the very revenue it
eims to produce. In short, by increasing the tax on undistributed profits and
on savings generally, we are repeating the Oliphant error. So WO now find our-
selves travelling in exactly the wrong direction, not only as respects our in-
mediate problem of financing defense but 08 respects the problem of a permanent
solution of government finence in general.
- 7 - Fisher
Regraded Unclassified
54
EXECUTIVE ORDER
ESTABLISHING AN OFFICE OF FACTS AND FIGURES
IN THE OFFICE FOR ELERGENCY MANAGELENT
IN IHE EXECUTIVE OFFICE OF THE PRESIDENT
By virtue of the authority vested in me by the
Constitution and the statutes of the United States, and in
order to wefine further the functions and duties of the
Office for Emergency management in the Executive Office
of the President with respect to the unlimited emergency
as declared by the President on May 27, 1941, and for the
purpose of facilitating the dissemination of factual informa-
tion to the citizens of the country on the progress of the
defense effort and on the defense policies and activities
of the Government, it is hereby ordered us follows:
1. There is established within the Office for
Emergency management of the Executive Office of the Presi-
lent an Office of Facts and Figures, at the neas 05 which
shall be a Director appointed by the President. The Director
shall discharge his responsibilities and duties under the
direction and supervision of the President. The Director
shall receive no salary or other remuneration for his serv-
ices, but shall be entitled to actual and necessary transporta-
ston, subsistence, and other expenses incidental to the per-
contance of his duties,
2. Subject to such policies and drections as
the President may from time to time prescribe, the Office
of Facts and Figures shall formulate programs designed to
facilitate a widespread and accurate understandin_ of the
status ena progres of the nutional defense effort and of
the defense policies and activities D- the Government; and
advise with the several departments 2210 agencies of the
Government concerning the dissemination of such defense
Information. Bie Office of Facts and Figures snall rely
apon We strvices are facilities of axisting agencied of
the Government for the dissimination of information.
3. The several departments and agencies or the
Government shall make svailable to the Director, upon his
request, such information and data 52 he may debat necessary
to facilitate the lost comerent am comprehensive presenta-
tion to the nation of the facts and figures of national 38*
fense.
i. stall by in the Office of Facts and
Figures an Auvisory Committes consisting of tile Director
L5 chairman and such representatives of 2: Feberal Govern-
bent and other AS 1 may determine, in memoers
of the Auvisory Committe smll serve without compensation,
PMD stall be inticles to Sensiary travely scheintence,
== other experises indicate] D in performance et their
cities.
3. Within Via linits 01 an ins 4 LA; by
Deat to L. Office di No 4% Pignes, the
linetor DAY LAC L& provision
to to ... Regraded Unclassified
55
- 2 -
Office of Facts and Figures shall use such fiscal, personnel,
and other general business services and facilities as may be
made available to it through the Office for Emergency Manage-
ment.
FRANKLIN D. RCOSEVELT
THE WHITE HOUSE,
October 24, 1941.
Regraded Unclassified
56
October 26, 1941
STATEMENT BY ARCHIBALD MacLEISH, LIBRARIAN OF CONGRESS
I deeply appreciate the President's confidence in me es ex-
pressed by my appointment to direct the Office of Facts and Figures.
As Librarian of Congress, I have been necessarily concerned with in-
formation as to the facts and figures of national defense, and I wel-
come the opportunity to render additional service in that particular
field.
The Office of Facts and Figures is established, as I under-
stand it, upon the assumption that the people of a self-governing
country are entitled to the fullest possible statement of the facts
and the figures bearing upon conditions with which their government
is faced. The essential difference between a democracy and a des-
potic form of government is that a democracy is based upon a com-
plete trust in the people and a democratic service of information
must necessarily reflect that trust. The job of the Office of Facts
and Figures, as stated in the Executive Order, is to serve as an in-
terdepartmental clearing house for information and data required "for
the most coherent and comprehensive presentation to the nation of the
facts and figures of national defense." In other words, the opera-
tion of the office will be purely within the government.
The Office of Facts and Figures will not make a practice of
issuing releases nor set up new channels for the dissemination of
information, but will "rely upon the services and facilities of
existing agencies of the government in the dissemination of informa-
tion", In other words, the establishment of the Office will in no
way change the relation between the departments and the agencies of
government and the press and radio services, nor will it alter the
reliance of the covernment upon these means of informing Regraded Unclassified
57
October 24, 1941.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
The President sent to the Senate yesterday the
name of Saul Haas to be reappointed Collector of Customs
at Seattle and the name of Representative Charles H.
Leavy of Spokane to be Federal Judge in the Western
District at Tacoma.
Several weeks ago Jim Rowe told me that Saul's
nomination was being held up because of his interference
in the judgeship situation. Saul told me last night
that Senator Bone was vexed and he had asked that both
nominations be held up until he could come to the Senate
on crutches (he is in Walter Reed Hospital) and make a
speech on the matter. Bone had joined in the recommenda-
tion of the whole delegation, except former Senator
Schwellenbach, for the appointment of Leavy as a Judge
in the Eastern District at Spokane, but Schwellenbach
WBS appointed. Bone wanted a Western Washington man
appointed for the vacancy at Tacoma. Saul said he would
probably have gone along with the appointment of Leavy
if anybody had done him the courtesy of consulting him,
particularly if the President had written him 8. nice
letter, but now he is mad and will fight it.
new
Regraded Unclassified
back meeting
58
September 2, 1941.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
Nomination for reappointment of Saul Haas as Col-
lector of Customs at Seattle was sent to the White House
Monday, August 18, after receipt of word from Ed Flynn
that he approved the reappointment. Haas had been
recommended for reappointment by Senators Bone and Wallgren.
Approval came from Ed Flynn on August 15, the day of your
departure for the North. Haas' second four-year term
as Collector at Seattle was to expire, and did expire at
midnight of August 31. Collectors of Customs, however,
hold office until their successors have qualified.
Haas, as you probably know, is Harold Graves' ad-
ministrator of the Defense Savings Staff for the State of
Washington. He is very close to Homer Bone and has been
Homer Bone's campaign manager. He is also on good terms
with Mon Wallgren of Seattle, the junior Senator, who
joined in recommending him for reappointment. Haas is
regarded 8.8 8. good Collector. He devotes more than the
ordinary amount of energy to the job. He expressed some
doubt about accepting another appointment because of
pressure of other work, but seems to have decided to go
along. He is putting in 8 lot of time on the Defense
Savings work.
mrs.
Regraded Unclassified
59
THE WHITE HOUSE
WASHINGTON
August 18, 1941.
MEMORANDUM FOR
H. M. Jr.
Will you speak to me about this?
F.D.R.
Regraded Unclassified
60
( a
THE SECRETARY OF THE INTERIOR
WASHINGTON
August 14, 1941,
My dear Mr. President:
I understand that the term of office of Saul Haas,
Collector of Customs at Seattle, will shortly expire. I
hope that you will give me an opportunity to discuss this
matter with you, if you are considering reappointing him.
I think that this is important.
Sincerely yours,
Secretary of the Interior.
The President,
The White House.
Regraded Unclassified
61
THE WHITE HOUSE
WASHINGTON
PRIVATE & CONFIDENTIAL
August 29, 1941.
MEMO RANDUM FOR
THE SECRETARY OF THE TREASURY
FOR YOUR INFORMATION AND
PLEASE RETURN FOR MY FILES.
F. D. R.
Regraded Unclassified
62
THE WHITE HOUSE
WASHINGTON
August 27, 19/1
for The President,
saul nhes
attached is the reappointment of caul none as Collector of Customs
you well know liass has always been u neadache out he always gets
painted.
it this time T mise the Neation of sending down his nomination
resure of his recent actions.
Leavy of wants to be = feberal judge in the
main district of washington. He is from the Western district but there
on over precedents, including Allred and Schwellenbach for such
termifers. A: present the three district judges in washington come from
Le Instem part of the State. In all frimess the next aspointment should
to the indem part of the State,
Leavy his the unanimous endorsement or all the washington Congressmen
Lne autorsement of Senstor (Milgron. Bane MAS publicly taken the
position - he cannot endorso Leavy because he, Bone, comes from the
setem part of LIVE State and waile be in political trouble if he endorsed
n/-. He has sais to will not oppose Leavy's nomination if the President
Survice it down.
Privately his attitude is somewhat different. sie does not want Leavy
12 - n. judge breause nass, who is Lone's Wengali, lices not want Leavy t.o
- - judge. In fact, Hass, in his usual arrogant munder, hus told Leavy
and he is sorry out he be a judge. In other words, Hous and not
Ve President of the United States the judicial appointments. The
of Hone and - is an able lawyer but is the leading sponsor
in versionest of the emerica First Committee.
I canjot pass on Leavy's intellectual unlifications. Politically,
lowever, in deserves well of this Administration and has been an unusually
supporter of it.
Postly DE we sufficient Congression to sustain your vato on the
will although it is practically political suicide for a Mastern
to vote against a road appropriation. de also voted in favor
a the extension of the Selective Service Act, being the only Washington
in to GO so, as the extension was very unpopular in the worthwest.
I have no illusions a ut Leavy's motives in voting this way but the
st 1. nis vote envee tand situations.
Lee Do Morney meral.
nas been no action on the Leavy Appointment because there have
Regraded Unclassified
63
My suggestion here, however, is that you withhold the nomination
of Saul Haas until such time as the Leavy matter has been settled one
way or the other.
SHIP
James Rowe, Jr.
Regraded Unclassified
64
Regraded Unclassified
October 24, 1941
FOR THE FILES
After talking with the Secretary about the attached
letter and at his suggestion. I called Nr. Strans in
D. s. Bousing Authority. Le being absent from the city
I talked with Mr. Rejeerling. I told Mr. Inserling that
the Secretary had signed this letter with the distinct
understanding that if the legislation now pending, which
would slarify their $800,000,000 borrowing limitation,
passed, ve would not use it but would expect new notes
to be delivered to the Treasury on November 1 and December 31,
for the obligations thes entering.
I also told Mr. Landerling about the desire of -
of the members of the Banking and Ourreasy Committee to
attach an amendment to the pending bill which would pro-
hibit the Housing Authority from using any of its unobligated
balances for expanding the housing program. I sold his
that it vas our view in the Treasury that any unobligated
balances DOV available or becoming available in the future
through cancellation of contracts or otherwise. should be
put in receive and not used for any purpose. This would
put the Authority in a position to state to the Committee
when 11 vent up for other legislation that while the Law
did not require them to do this, they understood 14 we
in accordance with the vishes of the Committee. Be mid
he would pas a memorandum in the file to this effect set
that he would advise the Administrator upon his return of
our views is the matter. la VM ware that the Administrator
would agree with this and that no further obligations reald
be incurred.
-
65
QCT 24 1941
Dear Lr. Araus:
Referring to the publicly-held one-quarter of one
percent notes of Series e of the United States Housing
nutuvrity, in the principal amount of $112,099,000,
which mature on November 1, 1941, this will advise you
that the Treasury will purchase these obligations and
will extend their maturity to December 31, 194.
This letter will also confirm our understanding
that the one-quarter of one percent Notes of Deries G
of the Authority, in the principal amount of $108,000,000,
naturing December 31, 1941, now held by the Treasury,
will be extended to the same date.
Sincerely yours,
Secretary of the Treasury.
hr. Mathan Straus, Administrator,
inited States Housing Authority,
Washington, D. C.
JJO'C.Jr/ml
10/23/41
Initiacion file
t Kill 14/20/01
Regraded Unclassified
Vene
66
10/25/41
October 24, 1941.
TO:
HAROLD N. GRAVES
SUBJECT:
PROGRESS REPORT FROM DEFENSE SAVINGS STAFF
SALE OF BONDS
Actual cash receipts from the sale of E,
F and G Bonds from October 1st through October 22nd were
$190,487,000, which is an increase of 9.6 per cent over
the same period in September. Sales from September 1st
through September 23rd were $173,727,000. Sales from
August 1st through August 22nd were $203,606,000.
DIRECT MAIL
The industrial mailing in 41 days has produced
orders for $2,529,390. Though naturally orders are
dropping off, for the past week they have averaged better
than $30,000 daily. Customer mailing orders now total
$2,080,300, with orders running approximately $85,000 8
day after 31 days of pulling.
FIELD OFFICE
Since October 17 State and local committees have
been organized in Colorado and Maine. (Status of organi-
zation nationally is shown on the map attached)
During the past week Chairmen Patterson of
Regraded Unclassified
- 2 -
67
New York and Jouett of Kentucky visited the Field
Director's office; also Administrators Lyons of Alabama,
Ford of New York; and Deputies Clements of Alabama,
Wellman of Maine, Canada of New Jersey, Burke of Massa-
chusetts, and Pritchard of West Virginia.
Two new representatives have gone into the
field on their first assignments, and a third is leaving
as of this date.
The inaugural program of the District of
Columbia, H. L. Rust, Jr., Chairman, was broadcast over
five local stations on October 23rd.
HOUSE ORGANS
A letter mailed October llth to 300 house organs
published by nationally prominent companies has brought
replies to date from 70 publications with 8. circulation
of approximately 2,500,000. More than half of the editors
indicated they would carry the Minute Man emblem, and
would be glad to receive other material. Fifteen of the
house organs replying publish magazines of sufficiently
elaborate format to be prospective users of the "Millions
for Defense" supplements designed for trade publications,
and this has been suggested to them,
RETAILERS
The Retail Advisory Committee met in Washington
October 23rd and approved all promotional material for
Regraded Unclassified
- 3 -
68
Thanksgiving and Christmas, also the bonus plan for
retailers. Membership in the committee was extended
to include trades not now represented.
MAIL ORDER HOUSES
Five mail order companies represented on the
Retailers Advisory Committee have agreed to devote two
full pages in their catalogues to promotion of Bonds and
Stamps; one a color page advertising the program, the
other an application form that may be turned in at a
post office or mailed to the Treasurer of the United
States. The companies participating are Sears Roebuck
and Company, Montgomery Ward, Chicago Mail Order, Speigel,
and Walter Field. The circulation of these mail order
catalogues is 30,000,000 and they have an estimated life
of six months.
EXHIBITS
The Buhl Planetarium and Institute of Popular
Science, Pittsburgh, is opening a three-months' defense
exhibit on November lst. Arrangements have been made
with the Army, Nevy, and other services to display equip-
ment, and B Treasury booth will be maintained for the
sale of Defense Savings Stamps.
TREASURY BOOTHS
Through October 23 sales at Washington Treasury
Regraded Unclassified
- 4 -
69
booths opened on the dates indicated have been 88 follows:
Garfinckel's
Oct. 3
Woodward & Lothrop
Oct. 6
Bonds
$506.25
Bonds
$3,581.25
Tax Notes
25.00
Tax Notes
75.00
Stamps
274.45
Stamps 1,082.10
$805.70
$4,738.35
Lansburgh's
Oct. 10
Willard Hotel
Oct. 15
Bonds
$ 675.00
Bonds
$112.50
Tax Notes
Tax Notes
Stamps
321.05
Stamps
37.30
$ 996.05
$149.80
Total Sales to Date: $6,689.90
RADIO
By arrangement with the Office of Emergency
Management we will promote the launching of OEM's Civilian
Defense Week November 11th. Reciprocating, OEM will use
rewrites of Defense Savings announcements in all their
radio programs and scripts. OEM also is being requested
to promote Defense Savings in their films.
Special Navy Day announcements have been
distributed for use fifteen minutes or more after President
Roosevelt's broadoest. "For America We Sing" will be
dedicated to the Navy on that day. Hildegarde will be a
guest singer on the program.
Wheeling Steel Makers will start promoting
Savings Bonds starting October 26th.
A meeting of sponsors of daytime programs has
been arranged for October 30 at the Treasury Department, in
which representatives of Colgate-Palmolive -Peet,
Regraded Unclassified
- 5 -
70
Prootor & Gamble, Lever Bros., General Foods, and General
Mills will participate.
Statistics and examples illustrative of the
cooperation extended to the Army, Navy and Marine Corps in
Defense Savings radio activities have been compiled.
(Herewith in three binders)
PRESS
Mailings to the labor press have been started
with a matted picture of William Green initiating union pay-
roll allotment activities in Seattle; and a cartoon
especially drawn for the Defense Savings Staff by Daniel
R. Fitzpatrick, famous cartoonist of the St. Louis Post
Dispatch.
Defense Bond emblems in color for use on covers
have been sent to the publishers of 38 magazines of large
circulation in the fiction, women's and other fields.
For use daily from November 9th until Christmas
a series of 1-col mats (one for each day) carrying "39
Shopping Days to Christmas", etc., with Minute Man emblem
and "Give Defense Savings Bonds and Stamps" is being sent
to the 1550 daily newspapers.
--
Regraded Unclassified
Alaska
RAND MENALLY
NORTH DAKOTA
SOUTH DAKOTA
WYOMING
/
UTAH
IDWA
NEBRASKA
INSURANCE
ILLINOIS
proo
%
KENTUCKY
COPYRIGHT ST SAND COMPANY CHICAGO
LOOSE LEAF OUTLINE MAP
ALABAMA
LOUISIANA
the
KEY:
State and Wcal Committees Organized
State Committees Organized
Administrators and/or Chairmen Appointed
Not started
101 80
Hawaii
UNITED STATES
. en 100
-
see
and
800 MILES
Regraded assified
72
MEMORANDUM FOR THE SECRETARY.
October 24, 1941.
Mail Report
Mail during the past week has followed the name lines
M shat abstracted B. week ago.
There has been a great falling off in comment on the 6%
statement, but the proportion of those for and against remaine
the same.
This also holds true in regard to the speech on inflation.
Many letters thanking the Secretary for copies distributed to
names on lists held by the Defense Savinge Staff have been re-
ceived and filed since no acknowledgment is necessary. However,
e separate brief abstract on these is being kept and will be
available when returns are all in.
Letters of protest continue to deal mostly with economy in
Government, and curb for Union labor.
Anti-British, Anti-Russia and Anti-Wer letters remain the
same, with a slight increase in the latter due to 8 number of
proteste against any change in the present Neutrality Act.
There have been very heavy returns to the 20,000 letters
sent out to banks in connection with the Foreign Funds Control
work. We have been receiving from 50 to 100 in every mail for
the last few days. The tenor of these letters 18 friendly and
empreciative of the offer of Treasury cooperation.
In general, all the comment mail has been much less this
VISE.
Regraded Unclassified
- 1 -
73
FAVORABLE Comments on Bonds
Miss N. Isabel Schmidt, Lexington, Ky. Your letter of Sept. 24 came,
has lain on By writing table not forgotten at any time; the reminder
it brings of the privilege that is mine, the privilege of helping, of
serving, leads to this writing today. Thank you and will you please
send in my name one $100 Defense Savings Bond Series E. Enclosed please
find my check for $75.
John H. Boogher, President, Ward County Water Improvement District #,
Grandfalls, Texas. It was & pleasure to receive your letter of Oct. 2nd,
and it has been a pleasure to stand firmly behind the Administration of
which I had a share in the making July, 1940, at Chicago. I am enclosing
a further $4,000 for which send me four U. S. Defense Bonds Series G.
Regraded Unclassified
- 2 -
74
UNFAVORABLE Comments on Bonds
Carl W. Engstron, N.Y.C. If my Government expecte me to serve and
to share in the cost of the defense program by buying Defense Bonds,
I certainly expect the Government to economise and to eliminate all
non-defense projects and, also, to do something about the strikes
that are causing interruptions and delays to the defense program and
costing the taxpayer money and the money from the Defense Bonds I am
buying used for such purposes.
Biltmore Cleaning & Laundry Service, Biltmore Hotel, Los Angeles, Calif.
We have just received B. letter from your office requesting that we in-
vest in Defense Savings Bonds. With same mail we are informed by our
local dealer that Priorities Director, Donald Nelson, has imposed rigid
controls on chlorinated solvents, and that there will be no more avail-
able to dry cleaners. If this is correct, we will be forced out of
business. It does seem that in extending all out aid to foreign countries
and making the U. S. the "Arsenal of Democracy", it might be well to
remember that "Charity Begins at Home", and take care of our own citizens
before we bankrupt ourselves on idealistic theories of salvation abroad.
Albert P. Groebl, Wester 011 Company, Big Spring. Texas. I have pur-
chased and intend to continue purchasing your bonds, and have encouraged
others to do likewise: however, I am often confronted with discussions
tothe contrary on points meriting consideration. . I am asked, "Why
does not our President deal firmly with the Radical element?" He has
the third term; 1s it necessary to play politics any longer? The English
are crying for supplies and equipment, and we are told our schedule is
behind - and 90% of the people realize it is due partly to strikes -
jurisdictional disputes.
Regraded Unclassified
- 3
75
UNFAVORABLE Comments on Speeches
Clifford H. Bissell, Berksley, Calif. I an not se much impressed by
your speech as I might be, eince this (opposition to vage control)
seems to indicate that you are opposing the very things you advocate
in it. ... I have already bought several U. S. Savings and Defense
Bonds for myself and By children, and in view of the necessary prepara-
tions to which the monster Hitler has forced us, I realise that high
taxes are unavoidable, but I AM not BO clear how prosperity is furthered
and inflation warded off by diminishing everybody's purchasing power,
in other words, by making everybody poorer. ... Everything in the
present Government set-up sooms to favor labor racksteers. Why does
not the U. 5. do something to control them? The strikes in essential
defense industries have been and are disgraceful, though of course
Hitler does not think so.
Eliot Blackwelder, Stanford University, Calif. It 1a true that buying
Government Bonde will be a big help toward checking inflation. But sell-
ing Bonds, levying heavy taxes, and enforcing the other measures which
you propose, will be wholly inadequate. Other factore, asong which farm
prices and industrial wage rates are the most important, are inscapable
factors. You seen to have no definite plan for dealing with them effec-
tively. ... I am now going to wait to buy Bonds until I ... clear
avidence that the Government is going to take adequate measures to deal
with those two elements of the problem.
Ralph Snyder, Wichita Bank for Cooperatives, Wichita, Kan. I am in
receipt of your pamphlet, "The Fight Against Inflation". ... It seems
to me that you have overlooked some essential points and have ignored
some conditions in your analysis of this situation. You say that "The
moet effective way to prevent a damaging rise in prices is, quite simply,
to release surpluses from storage". Then you go on to call the attention
of the housewife to the fact that she is paying fifteen per cont more for
flour and cotton goods when we have a heavy surplus on hand, end suggest
that we throw the gates open to importe from Canada. You compare this
situation with Cuban sugar. Let me call your attention to the fact that
we have in wheat an export commodity, supported as to price by a coopera-
tive arrangement between government and producer, while we never did
produce enough sugar in this continent to supply our needs. ... The
only way ve can expect to increase our supply of food products in by some
assurance of a fair price, based on the price of the goods ve (the farmers)
must buy. "Parity prices", which have been approximated through the offices
of the AAA, seens to be the only practical vay. ... I would like very much
to distribute any literature that will help to prevent an undus inflation,
but with the labor vage scale nearly two hundred per cent above parity, and
many other services and industrial products about as much out of line, I
bestitate to broadcast anything that attacks as a major menace agricultural
products that show but one per cent over parity prices.
Regraded Unclassified
76
GENERAL COMMENTS
Austin J. McArdle, (M. J. Corbett & Co.) I. T. C. I have just received
notice advising me that "the Secretary of the Treasury" announced that
subscriptions to the cash offering of 21% Treasury Bonds 1967/72 are
cut to 128% I as a small subscriber, and asked for $3,000 worth of these
bonds, and really wanted $3,000 worth. I suppose I should have over-
subscribed and asked for $24,000 worth. Why is it that the small man
gets squeezed on every side? On the one hand the Treasury Dept. throttles
him with taxes, and on the other hand you let the large institutions
gobble up the Treasury Dept. investments. Is there any reason why those
who subscribed up to say $5,000 worth should not get their allotment in
full, first? Can you give me one good reason?
Miss Mary A. Duffy, Jersey City, N. J. Please Mr. Secretary, let us
have a tax savings plan for the small income group. I have just re-
ceived the second folder from you covering the Tax Savings Plan. My
salary is under $1,500, and anyone who has made this small salary knows
there is never as such as $25 to put in any one thing in one month. If
the Government would evolve a plan suitable for my income group, which
would mean a saving of from $5 to $10 in units, it would not only be B.
wonderful thing for low-salaried people, but for the Government too. ...
I am on your mailing list because I own five Baby Bonds. The reason I
was able to buy these bonds is because we had a dollar-a-week savings
plan in our office. It would have been out of the question for ne to
have purchased them at $18.75 in one lump sum.
V. M. Smith, Sales Manager, Liberty Show Printing Co., Pittsburgh, Pa.
The writer knows and appreciates the fact that you, like all of us,
are having your problems these days, and as a result ve dislike adding
more burdens to your job. However, because of 8. matter of principal,
and, at the same time, a matter of a few dollars - which, after all,
are just as important to us, if not more so, than to the Government -
we would appreciate your time to consider the following. (Tells of an
order for lithographed material accepted on the basis of 2% discount,
ten days: net, thirty days. Three months elapsed since bill vas sent
and check received in payment deducted the 2%, short-changing the company
$38.) A rectification or an explanation of this matter will be appreciated.
Regraded Unclassified
Miss Chauncey
77
October 24, 1941
CONFIDENTIAL
Dear Mr. Kaske:
Permit - to acknowledge, on behalf of Secretary
Morgenthan, the receipt of your letter of October 23. 1941,
enclosing your compilation for the week ended October 15,
1941, showing dollar disbursements out of the British
Rapire and French accounts at the Federal Reserve Bank of
New York and the means by which these expenditures were
financed.
Faithfully years,
(Signed) D. W. BELL
Under Secretary of the Treasury.
Mr. L. W. Knoks,
Vice President,
Federal Receive Bank of New York,
New York, New York,
imc - 10/24/41
(Init.) P.D.
Regraded Unclassified
TREASURY DEPARTMENT
78
INTER OFFICE COMMUNICATION
DATEOctober 24, 1941
TO Secretary Morgenthau
FROM Mr. Barnard
I transmit Mr. Mack's weekly report which is somewhat changed
in form and details but is lacking data as to actual deliveries
which I have asked him to include as soon as the necessary
machinery for it can be put in shape. The substance of the first
page of the report I discussed with you yesterday.
cub
Regraded Unclassified
TREASURY DEPARTMENT
79
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
THE SECRETART:
October 24, 1941
unsnita report of lend-lease activities for the week ending
-5.
envirotion with tre _reparation of material for the Midget
Persional wearings during the vast six weeks havin to do
Incosed lend-lease purchases from Rovenber 1041, to ebroar
ice, It is insicated, will approximate monthly,
100 mede wlans for the handling of this new work. we have
talked with the tureau of the Eugget informally acout
to: regirements of proximately 200 edditional employees
Het the Seconá Lend-Lease Act has neen approcements
::: for = formal Todget hearin to octnic the wrea of
t'c III royal and E tentative date has SO set for Tuesday
Caboer 25.
mentine, however, we are otilizin ,rosent
ill positions and, imedistel: upon Quaret +1 poysl of
inistrative expenses required, steps will Le taken
the e loyees on the rolls in order that WS All neve some
vovite traising before purchase faltions are received
tuo Secund Lend-Lease Act, which we expect will reach our
roups about the middle of November.
a IN: now supplementin our purchase "roups in anticipation of
" to ram 88 the Purchase Division will Le the first Franch
staten 4 the increased load, whereas the volume will not hit the
vivision until December or early January. however, immediate
vents are being made as to personnel, space and equipment in
To be ready for the expected increase in purchase activity
the Second Lend-Lease program.
le Inspection and expediting personnel in the fieli will be
Increased to take care of the expected additional volume
Harters -roup of technical men is to be created to
Las 20 ress expediting and delivery.
Clifton 5. act.
rector 0. Procurement
-10
Regraded Unclassified
1 eport - Lause-Lend Physicas
(10/17/-1 - 10/04/41)
RESISTIONS On hand (as 01 beginding of week)
voz, 400.02
RE/DISTITONS RECEIVED DUNT. NEEK
17,478,974.50
TOTAL
$ 213,536,464.02
LESS:
AWAITING ALLOCATION OF FUNDS
$ 40,034,724.75
REQUISITIONS AWAITING CLEARANCE BY O.P.I.
17,840,702.28
REQ ISITIONS AWAITING ALLOCATIONS OF
MATERIAL BY O.F.B.
28,479,020.00
TOTAL
$ 86,354,527.73
TOTAL REQUISITIONS ON DAID AVAILABLE FOR PURCHASE
$ 127,183,936.29
PURCHASES DURING THE WEEK
6,494,439.04
BALANCE REQUISITIONS ON BAND AWAITING FINAL
PURCHASE ACTION
$ 118,689,497.25
Note: Specific information relative to deliveries and delays in deliveries is not available at
this time, but upon completion of machine tabulation arrangements which is expected shortly, such
data will be made available from the inception of the program.
As of October 16, 1941, there was a lag of approximately 40,000 tons in the October steel
delivery schedule. The steel mills were contacted and assurances received that an effort will be
made to make up the lag before the end of the month. The shortages of delivery were primarily
with U. S. Steel Corporation and Bethlehem Steel Corporation.
80
As of October 22, there were 155,000 tons of steel at shipside awaiting overseas shipment.
Regraded Unclassified
....
20-
-
00mg ACTOR'S DA 1
or
ITY
AND
OR VALUE
DA-TPS-957
General Motors Oversees
0.3.
/ 2,100.00
(Adj. Ada)
Operation
DA-7PS-963
General Votors Overseas
If
180.00
(Adj. Add)
Operation
DA-TPS-1467
SKF Steels, Inc.
If
3,437.15
(Adj. Add)
DA-TPS-1606
Oil Well Supply Co.
H
-2,088.10
(Adj. Deduct)
DA-TPS-1595
Youngstown Sheet & Tube Co.
"
605.44
(Adj. Add)
DA-TPS-1567
Heintz Hz. Co.
If
Drop Forgings
90,000 ca.483,675.00
:
---
---
Metals Reserve
China
Copper
3,000,000lbs. 352,500.00
:
---
---
Vetals Reserve
U.K.
Copper
16,000,0001bs. 1,860,800.0
DA-TPS-986
General Motors Overseas
If
-2,050.00
(Adj. Deduct)
Operations
TPS-TPS-1096
General otors Corp.
If
Drop Morgings
10,700 ea. 96,687,50
DA-TP5-529
United Aircraft Corp.
If
Drop Forgings
17,000 ea.
308,585.00
DA-TPS-1588
Atlantic Steel Co.
If
./ire Kode
-5,219.42
(Adj. Deduct)
Sharon Steel Corp.
=
DA-/TPS-1561
Rolled Strip
-2,272.03
(Adj. Deduct)
DA-TPS-1568
Bethlehem Steel Export Co.
11
Barbed ..ire
43,027.00
(Adj. Deduct)
3
American Steel Foundries
11
DA-TPS-1633
Friction Draft Gear 2,000 sets 58,000.00
DA-1PS-1672
Anaconda Sales Co.
China
Zinc Slab
618,000 lbs. 50,985.00 81
DA-TPS-1873
The New Jersey Linc Co.
If
Zinc Slab
510,000lbs
42,075.00
Regraded Unclassified
RUMBER
TOTAL VALID
04-TP5-1674
St. Jose h Lead Co.
Chine
Zinc sint
192,000lbe. o 24,090.00
D. S. Smeltin- Refinin
11
DA-TPS-1675
Zinc
80,00015s.
8,600.00
& wining Co., Inc.
DA-TPS-1678
American Zinc Co. of 111.
U.K.
Zinc Slab
2,200,0001bs.162,580.00
Du Pont de Nemours Co.
"
DA-TPS-1679
Zinc Slab
430,0001b.
32,852.00
DA-TPS-1682
Matthiessen & Hegeler Zinc Co."
Zinc Slab
760,0001b.
57,836.00
The New Jersey Zinc Co.
"
DA-TPS-1684
Zinc Slab
408,0001b.
33,660.00
DA-TPS-1685
St. Joseph Lead Co.
"
Zinc 3lab
234,000lb.
19,305.00
DA-TPS-1686
U.S. Smelting Refining &
Mining Co., Ino.
If
Zinc Slab
64,0001b.
5,280.00
DA-TPS-1702
Inland Steel Co.
If
Angle Splice Bars
-6,092.64
(Adj.Deduct)
DA-TPS-1735
Sheffield Steel Corp.
=
Track Spikes
220.84
(Adj. Add)
DA-TPS-1796
Oil Well Supply Co.
"
Fittings
1,890ea.
29,011.70
DA-TPS-1810
Wyman Gordon Co.
If
Drop Forgings
3,000ea.
237,000.00
DA-TPS-1817
Wyman-Gordon Co.
"
Drop Forgings
2,000ea
102,000.00
DA-TPS-1713
National Plywood Inc.
"
Veneer BirchAirscrew
150,000.00
DA-TPS-1183
Ducyrus-Erie Co.
"
Water wall Drills 12
100,266.75
DA-TPS-1601
Buffalo Forge Co.
"
Forges
72
6,296.40
DA-TPS-1645
The Celotex Corp.
If
Bagasse
2,750T
36,300.00
82
Regraded Unclassified
CONTRACT
5.181-
ESR
TRU
UM
UNITY
ATTIT
TOTAL AL
DA-TPS-1718
Rock it Sales e Service Inc. 1.1.
Jackrods
+ 11,968.00
DA-TPS-1722
Americ.n Radiator is Standard S 11
Radiator
270
3,348.00
SAnitery Corp.
DA-TPS-1802
The Timken Roller Bearing Co.
II
Bearing
2,243.96
DA-TPS-1811
Phelps-Dodge Copper Products Corp. If
Conductor Copper
456,794.90
DA-TPS-1462
Bucyrus Erie Co.
"
Shovels
2
96,728.00
DA-TPS-1785
American Chain & Cable Co.
"
Hoists
110
15,145.40
DA-TPS-1852
The Jaeger Machine Co.
If
Mixers
80
183,247.20
DA-TPS-1865
American Electric Furnace Co.
If
Electric Furnace
1
2,157.55
DA-TPS-1868
The Jaeger Machine Co.
If
Mixers
40
91,623.60
DA-TPS-1801
The Linde Air Products Co.
If
Plants, liquid
3
496,861.00
Oxygen
DA-TPS-1268
Caterpillar Tractor Co.
If
Tractors
6
53,419.88
Graders
2
DA-TPS-1720
Maywood Chemcal Works
#
Theobromine
50#
137.50
DA-TPS-1424
R. G. Le Tourneau Inc.
"
Scrapers
26
117,386.60
Beach Mfg. Co.
II
DA-TPS-1744
Spindle Shaper
21
12,579.00
Carrier Corp.
"
DA-TPS-1751
Air Conditioning 2
59,800.00
Chicago Pneumatic Tool Co.
"
DA-TPS-1667
Electric Nut Runner 42 sets
1,560.30
Milwaukee Electric Tool Corp.
if
Electric Hammers
2,471.00
DA-TPS-1666
83
Regraded Unclassified
CONTRAC
-
MUSER
CONTRACTOR'S MALE
nom
would
__'PAL VILLE
DA-TPS-1723
Wicholson file Co.
T.R.
icholson rand
2602 dor.
is
8,830.00
viles
DA-TPS-1556
Shell Chemical Co.
If
Acetone
525.280
36,769.60
DA-TPS-1665
Independent Pneumatic Tool Co."
Electric Drills
5,131.00
DA-TPS-975
R. J. Prentiss & Co. Inc.
If
Digatalis Seeds
- 33.60
(Adj. Deduct)
DA-TPS-1438
Lime Locomotive Works, Inc.
"
Spare Parts
6,588.55
DA-TPS-1246
Ceterpillar Tractor Co.
"
Tractors
225
1,147,965.64
DA-TPS-1726
Reminaton Rand Inc.
"
Parts for Type-
2,023.95
writers
DA-TPS-1457
Bucyrus-Erie Co.
11
Lifting cranes
10
71,056.60
DA-TPS-1730
Royal Typewriter Co., Inc.
11
Parts for Royal
720.65
Typewriter
DA-TPS-1723
Woodstock Typewriter Co.
"
Parts for woodstock
116.29
Typewriter
DA-TPS-1729
Underwood Elliott Fisher Co. "
Parts for Underwood
1129.64
Typewriter
DA-TPS-1727
L.C. Smith & Corona Typewriter If
Parts for L.C. Smith
397.60
Typewriter
DA-TPS-1858
Bowell Roller Bearing Co.
Bearings
7,742.50
DA-TPS-1867
The Torrington Co.
=
Bearings
2,245.00
il
DA-TPS-1861
Norma-Hoffmann Bearing Corp.
Bearings
660.00
SKF Industries Inc.
If
DA-TPS-1860
Bearings
8,763.00
General Lotors Sales Corp.
II
DA-TPS-1859
Bearings
4,050.00
Hyatt Bearing Division.
Regraded 84 Unclassifie
COMPODITY
JAMITY
TAL VALUE
DA-TPS-1589
inthrop chanical Co.,
1.7.
At: rine "/e let: 2000.
8,750.00
VA-TPS-1562
Cherical 10.
Il
Tannic Acia
1000#
1,130.00
MA-TPS-1563
Abcott Laboratories
11
Trinsparine Lydro- 12,000 oz. 2,160.00
chlorice Solution
DA-1PS-1577
Merck & CO., Inc.
11
Solution Zormaldenyde 450#
68.62
DA-TPS-1578
Geo. Luders & Co., Inc.
If
Oil of Citronella 1,000#
900.00
DA-TPS-1581
E. I. Du Pont de Nemours & Co. If
Alum Powdered
4,400,
193.60
DA-TP3-1587
Wellinckrodt Chem. works
"
Barium Sulphate
5500#
522.50
DA-TPS-1592
Chas. Pfizer & Co., Inc.
H
Potassium Iodide
800#
1,080.00
DA-TPS-1593
Chipman Chemical Co., Inc.
Il
Sodium Arsenate
11,200#
1,092.00
DA-TPS-1580
Heyden Chemical Corp.
If
Methyl Salicuylate 20,150#
7,455.50
DA-TPS-1579
Magnus, Mabee & Reynard Inc."
Oil of Citronella 1792#
1,632.40
DA-TPS-1450
Winthrop Chemical Co., Inc. If
Atabrine Tablets
Plasmochin
100C
3,850.00
Chas. Ofiger & Co., Inc.
"
DA-TPS-1594
Iodine Resualined 280#
560.00
/illismette Eyster Co.
If
VA-TPS-1185
Hyster CarryKrane
4,475.00
DA-TPS-1786
The Creseent Maeline Co.
IT
Crescent 4 Speed Lathes 9
3,210.75
DA-TPS-1832
J' N. wills Lunber Co.
If
Red Cak
500,000
23,750.00
Lamson Lumber Co., Inc.
n
DA-TPS-1828
Red Oak
2001 EM
12,000.00
Regraded 8 Unclassified
obilo ..iver SoW 311 00.
D.K.
sea Onlo
100
0,450.00
M-1F5-1022
American Fitch Pine xport Co. If
Red Jak
150
3,825.00
A-TPS-1823
The Atlantic Lumber SO.
"
Red oak
446211
24,525.00
DA-TPS-1824
Chicago ill & Lumber Co.
II
Red Oak
110 MM
6,820.00
DA-TPS-1825
Denkinenn Lumber Co.
"
Red Oak
100MBA
4,760.00
DA-TPS-1826
Hallett Mfg. Co.
If
Red Oak
140MbN
5,782.50
DA-TPS-1827
J. M. James Lumber Co.
If
Red Oak
15MIN
677.50
DA-TPs-1829
Miller & Co., Inc.
"
Red Oak
26,800.00
DA-TPS-1831
Robinson Lumber Co.
11
Red Oak
150 MEI
9,150.00
DA-TPS-1821
S. E. Adams Lumber Co., Inc.
If
Red Oak
16 100
1,120.00
DA-TPS-1783
Maurice 1. Grundy
"
white Ash
1,950.00
DA-TPS-1773
Anderson Tully O.
If
white Ash
25,549.50
DA-TPS-1776
Angelina Hardwood Co.
If
white Ash
7,107.00
Santee River hardwood Co.
"
DA-TPS-1777
white Ash
3,110.00
H
DA-TPS-1778
Thompson-Ketz Lumber Co.
White Ash
2,880.00
DA-TPS-1779
White lood Products Co.
IT
White Ash
29,962.50
Robinson Lumuer Co.
=
DA-TFS-1782
White Ash
23,030.00
86
Bendix Products Div.
a
DA-TPS-1551
Cerburetors F. Parts
1,454.00
Regraded Unclassified
CONTRAC,
CONTRACY.R'S AB
live,
our
TITY
OPAL VALIE
DA-TPS-1845
Birds Eye yeneer Co.
0.6
Veneer Firch
& 72,437.50
DA-TP.-1921
The Celetex Corp.
=
Fiver oard
56,158.77
DA-TPS-1920
United States Gypsum Co.
If
Fiber Board
8,010.00
DA-TPS-1784
Ingersoll Rand Co.
II
Pumps
8,040.00
DA-TPS-1933
Birds Eye Veneer Co.
It
Veneer Birch
12,144.00
DA-TPS-1748
Northfield Foundry and Mch.Co. If
Hend Feed Planing Mchs.
19,370.40
DA-TPS-1886
Bloedel Donovan Lumber Mills
If
Douglas Fir
18,000.00
DA-TPS-1885
Dant & Russell Inc.
"
Douglas Fir
59,400.00
DA-TPS91708
Wallace and Tierman Co.
Il
Chloramine
38,880.00
DA-TPS-1935
Alvey Conveyor Mfg. Co.
If
Gravity Rollers
7,666.00
DA-TPS-1374
Caterpillar Tractor Co.
If
Caterpillar Tractor
15,707.32
DA-TPS-1277
Ingersoll Rand Co.
11
Spare Parts
9,376.40
DA-TPS-1277
Ingersoll Rand Co.
11
Spare Parts
13,197.70
DA-TPS-1584
Cummins Engine Co.
=
Diesel Engines
107,331.20
DA-TPS-1791
Caterpillar Tractor Co.
If
Electric Generator sets
81,705.48
DA-TPS-1490
Swift & Co.
"
liide Butts
46,102.00
DA-TPS-1892
Haskelite Mfg. Corp.
=
Veneer Birch, Aircraft
141,280.00
87
DA-TP5-1781
Mobile River Mill Co.
=
White Ash
7,565.50
Regraded Unclassified
CONTRAS
Do
AUT
DA-TVS-1780
Lemson Lumber Co.
WAS
..hite
& 20,650.00
DA-TPS-1774
Bankster Lumber Export Co. It
hit. Ash
22,520.00
DA-TPS-1449
Chicago Rawhide Life. Co. China
Lelt Dresser and Dement
330.00
DA-TPS-1882
Mundet Cork Corp.
"
Dasket, sheet
210.00
DA-TPS-1870
American Chain & Cable Co., Inc. If
Pins, cotter, split
376.77
DA-TPS-1468
Pennwell Oil & Beltin Co. O.K.
-972.00
(Aoj- Deduct)
DA-TPS-1789
Royle Mfg. Co.
If
Drums
55 ga. 20,000 65,600.00
DA-TPS-1856
The Peck, Storo & Velcox, Co." II
Shears, foot
9
1,697.40
DA-TPS-1854
Ford Chain Flock Div. of American
Chain & Cable Co., Inc.
"
Crane,
6
634.80
DA-TPS-1952
German Lumber Co.
=
Pitch Pine
200 %
17,450.00
DA-TPS-1913
General motors Sales Corp.
II
Bearings
1,153.90
DA-TPS81911
Roller Bearing Co. of America If
Rearings
35.28
DA-TPS-1912
Rollway Bearing Co., Inc.
=
learings
1,640.00
DA-TPS-1596
Briggs a Stratton Corp.
"
Motor, gasoline 500
35,489.85
DA-TPS-1939
The Torrington Co.
=
Bearings
2,136.00
DA-TPS-1893
The John E. otter Co.
=
Veneer Birch Aircraft
52,650.00
DA-TPS-1940
The Torrington Co.
II
Bearings
2,723.70
Regraded Unclassified
is ISI-
et
MAI
110.85
CO.: CUTY
CAMITY
TOTAL VALUE
DA-TPS-1956
The Timken Roller Bearing Co. U.S.
Bearings
12,466.00
DA-TPS-1954
General Motors Sales Corp.
"
Bearings
98,522.80
DA-TPS-1953
Bower Roller Bearing Co.
If
Bearings
9,227.60
DA-TPS-1819
Dictaphone Corp.
"
Recording Mach.
20
Transcriber
6
10,640.00
DA-TPS-1840
Champion Blower & Forge Co.
It
Forges
6
1,942.50
DA-TPS-1841
The Mac Leod Co.
II
Rivet Forge
4
380.00
.1
Total Purchases 10/17-to 10/24/41. $8,494,439.04
89
Regraded Unclassified
TREASURY DEPARTMENT
90
INTER OFFICE COMMUNICATION
DATE October 24, 1941
TO Secretary Morgenthau
FROMME. Barnard
Attached for your information are letter received from
Sir Clive Baillieu, Director-General of the British Purchasing
Commission, and a copy of By reply.
CVB
Regraded Unclassified
91
218 K STREET N. W., WASHINGTON, D.C.
TELEPHONE REPUBLIC 7860
BRITISH PURCHASING COMMISSION
October 24th, 1941
Mr. Chester Barnard,
Treasury Building,
Pennsylvania Avenue and 15th Street,
Washington, D.C.
Dear Mr. Barnard,
With reference to the conversations which I end
some of my officers have had with you about arrangements for closer
coordination of the work of the Treasury Procurement Department and
this Commission, I am writing to let you know that we shall be most
happy to accept your offer that we should appoint a representative
or representatives of the Commission to work in the Procurement Department.
For this purpose we have nominated Mr. G. Archer
and Mr. A. McKim. Mr. Archer is a permanent civil servant and a
senior officer of the Raw Materials Department of the Ministry of Supply
in England. He has been with the Commission since the early part of
this year and is wellknown to many officers of the Treasury Procurement
Department. Mr. McKim, whose services have been lent to us by his firm
in Canada, has been with the Commission for some eighteen months. He
has a very complete knowledge of our organization and is also personally
known to several officers of Treasury Procurement, Mr. Archer and Mr.
McKim will be available to start work immediately in their new functions
in the Treasury Procurement Department.
Regraded Unclassified
92
- 2 -
You mentioned to me the possibility that additional
officers might be attached to individual sections of the Procurement
Department. I think experience may well prove this to be & desirable
development. I think we can, however, leave it to be explored
further by Mr. Archer and Mr. McKim in association with Mr. Mack and
his officers. Mr. Mack has suggested to us that two or more officers
of his Department should be attached to us to carry out functions
similar to those to be performed by Mr. Archer and Mr. McKim. I need
hardly say that we should cordially welcome such an arrangement.
I feel confident that these new arrangements for securing
closer coordination between the Commission and Treasury Procurement
will go 8. very long way towards securing the objective we all have
in mind - the expediting of the process of supply - and I am most
grateful to you for your help in bringing these arrangements to a
happy conclusion.
Very sincerely yours,
Chri Bailler
(Clive Baillieu)
Director-General:
OCT 241941
2:45
Regraded Unclassified
93
October 24, 1941
Sir Clive Baillieu, Director-Leneral
British Purchasing Commission
1510 X Street, Northwest
Washington, D. C.
Dear Sir Clive:
This acknowledges your letter of October 24th advising ne that Mr.
Archer and Mr. MoKin have been appointed representatives of your
Commission to work in the Procurement Division of the Treasury
Department. These appointments are quite gratifying to as and
19 are delighted with you that arrangements for better coordina-
tion of our joint endeaver are as well under way.
Mr. Mack advises se that he is assigning Mr. Froman and Mr.
Thompson to be attached to your office to carry est the functions
similar to those of Mr. Archar and Mr. Wells,
I need not add that I hope you will call on se whenever you think
I can be of help.
Yours very truly,
Chester I. Barnard
Assistant to the Secretary
Regraded Unclassified
94
October 24, 1941
Secretary Morgenthau
Mr. Barnard
Attached for your information are letter received from
Sir Clive Bailliou, Director-General of the British Purchasing
Commission, and a copy of my reply.
Regraded Unclassified
95
October 24, 1941
Sir dlive Bailliou, Director-General
British Purchasing Commission
1518 I Street, Northwest
Washington, D. c.
Dear Sir Clive:
This acknowledges your letter of October 24th advising no that Mr.
Areber and Mr. McKin have been appointed representatives of your
Commission to work in the Procurement Division of the Treasury
Department. These appointments are quite gratifying to w and
we are delighted with you that arrengements for better coordina-
tion of our joint endervor are so well under very.
Mr. Mack advises me that he is assigning Mr. Froman and Mr.
Thempson to be attached to your office to carry out the functions
similar to these of Mr. Archer and Mr. MeXin.
I need not add that I hope you will call on no whenever you think
I can be of help.
Yours very truly,
Chester I. Barnard
Assistant to the Secretary
Regraded Unclassified
COPY
96
1518 X 31., I,V,, Mashington, D.C.
Telephone Republic 7860
BAITISH PURCHASING COMMISSION
October 24th, 1941
Mr. Chester Barnard
Treasury Building
Pennsylvania Avenue and 15th Street
Washington, D. C.
Dear Mr. Barnard,
With reference to the conversations which I and come of my
officers have had with you about arrangements for closer
coordination of the work of the Treasury Procurement Department
and this Commission, I - writing to let you know that - shall be
most happy to accept your offer that me should appoint a repre-
sentative or repres entatives of the Commission to work in the
Procurement Department.
For this purpose TO have nominated Mr. 0. Archer and Nr. A.
MeKim, Mr. Archer is a perment civil servant and & cenior offi-
our of the Rev Materials Department of the Ministry of Supply in
England. Be has been with the Commission since the early part of
this year and is well known to many officers of the Treasury
Procurement Department. Mr. MoKim, whose services have been lant
to us by his firm in Canada, has been with the Commission for
some eighteen months. Be has a very complete knowledge of OUR
organisation and is also personally known to several officers
of Treasury Procurement, Mr. Archer and Mr. McKim will be
available to start work imediately in their now functions in
the Treasury Procurement Department,
You mentioned to ne the possibility that additional officers
might be attached to individual sections of the Procurement
Department. I think experience may well prove this to be a destrable
development. I think we can, however, leave it to be explored
further by Mr. Artber and Mr. McXim in association wi th Mr. Mack
and his officers. Mr. Mack has suggested to us that two or are
officers of his Department should be attached to us to carry
out functions similar to those to be performed by Mr. Archer
and Mr. MoXim, I need hardly any that TO should cordially welcome
such an arrangement,
I feel confident that these D/V arrangments for securing
closer coopdination between the Commission and Treasury Procurement
will go & very long way towards securing the objective " all have
in aind - the expediting of the process of supply - and I - most
grateful to you for your help in bringing these arrangements to
a happy conclusion.
Very sincerely yours,
(Signed) Give Buillieu
Received 10/24/41 -2145 D.M.
Cirsctor-Gen-ral
Regraded Unclassified
TREASURY DEPARTMENT
97
INTER OFFICE COMMUNICATION
DATE October 24, 1941
TO
Ferdinand Kuhn, Jr.
FROM
Alan Barth
EDITORIAL OPINION
ON FOREIGN AFFAIRS:
THE PRESS GROWS ANGRY
Politics
To editorial minds, the attack on the Kearny clinched the
case for Neutrality Act repeal. Commentators and Washington
correspondents alike appear to be in general agreement that
both Congressional and public opinion are swinging rapidly
toward the elimination of all the statutory shackles on our
foreign policy.
That sizeable segment of the press which has consistently
supported the Administration in foreign affairs, despite an
abhorrence for the New Deal, could not help rejoicing in the
fact that the motion for Neutrality repeal in the Senate came
first from B. trio of Republicans. Wendell Willkie is generally
credited with having inspired the move. It is hailed in some
comments as a shrewd political coup, in others as genuine minor-
ity leadership in the service of the nation.
Regraded Unclassified
- 2 -
98
Since many newspapers have for some time urged outright
repeal, they have no reluctance in echoing Mr. Willkie's charge
that the President has presented his international program "by
doses as though we were children." Most of them are aware,
however, that if Mr. Roosevelt has sought piecemeal revision
of the Neutrality Act, it is because Republican opposition has
hitherto fought him at every turn.
But, however transparent their delight in the "regeneration"
of the Republican Party, editorial writers insist that there
should be no politics in regard to Neutrality proposals. They
are inclined to scoff slightly at Democratic proposals for
removing the combat zone restrictions. The preponderant sen-
timent is for doing away, not merely with the Neutrality Act,
but with neutrality.
Initiative
Editorial discussion of the attacks on the Kearny, Lehigh
and Bold Venture has a very different tone from that which pre-
vailed in comment on the Robin Moor and Greer incidents. On
the earlier occasions, the press followed the lead of the
President; it urged the public to remain calm. But current
editorials are written in genuine anger and seem designed to
incite a sense of public outrage.
Regraded Unclassified
- 3 -
99
Again, as always within the broad pattern of policy which
has become generally accepted, there is a quick response to
the national leadership. The newspapers take their cue from
Secretary Hull's observation that the State Department does
not send notes of protest to international highwaymen; echoing
the President, they treat these attacks as unmitigated acts
of piracy.
The Charlotte Observer heads an editorial with the bold-
face query, "What Else Is It But War?" The Providence Journal
declares, "This is deliberate and unrestricted war against the
United States, of similar character to but more savage than
the warfare which caused President Wilson to act in 1917
There is no course open to us but to defend our rights, not
by asserting them, but by enforcing them."
The dominant demand in the press is clearly for war against
Germany, although not for a declaration of war. The Baltimore
Sun, for example, asserts: "The President and the Congress
should consider promptly the use of our navy and air force to
drive all German and Italian raiders from all the seas.... Our
national safety requires that we stop drawing imaginary lines.
The war is total. The seas are total
Our protection is
to take risks -- and strike first." The editors have had more
Regraded Unclassified
- 4 -
100
than enough news of submarine attacks on American vessels.
They want news of a Nazi raider sunk by an American destroyer.
Passive defense no longer satisfies them; they want the United
States to seize the initiative.
The same feeling is manifest in relation to Japan. "The
United States must seize the initiative from Japan ... with
acts, not words," says The Philadelphia Record. War with Japan
is commonly regarded as inconvenient at this time -- but by no
means as wholly undesirable. The Wichita Beacon, hitherto not
notably interventionist, remarks that "... the United States,
while averse to sending an expeditionary force to Europe, can
and will take direct action in the Pacific."
A flurry of uneasiness was apparent in the press over the
Maritime Commission's announcement that no more aid to Russia
would be sent via Vladivostok. If there is one thing of which
American editorial writers seem to be unanimously convinced,
it is that in the Oriental lexicon a soft answer does not turn
away wrath. "The situation demands absolute firmness," insists
The Worcester Gazette. "Anything else would be fatal."
Sensibilities
The wholesale execution of French hostages has stirred &
feeling of horror and indignation which seems to be deep and
genuine. It utterly belies the postulate on which the Neutrality
Regraded Unclassified
- 5 -
101
Act was founded -- that Americans could remain indifferent to
brutality and injustice anywhere in the world. If the news-
papers of the nation are in any sense expressive of the people
they serve, then they demonstrate unmistakably that this people
is not callous.
Earlier reprisal shootings by the Nazis were hailed here
rather joyously as evidence of 8. rebellious spirit in the con-
quered countries. But now there seems to be flowing out of
this mass cruelty some understanding of the real nature of
the Nazi menace to civilized society.
Anger is replacing fear as the motive power conditioning
American attitudes toward the war. And anger is the one
emotion which can arouse a people from lethargy.
Regraded Unclassified
102
TREASURY DEPARTMENT
United States Mint Service
San Francisco, Calif.
October 24, 1941
Secretary of the Treasury,
Treasury Department,
Washington, D.C.
Attention - Frank Dictrich
Dear Sir:
I am enclosing copy of a letter that I have today
handed to the l'ederal Reserve Bank with check - also six copies
of memorendum form 42-3.
Hoping you will find everything in order and assuring
you that I BIT: glad of the opportunity of serving you at any
time, I an -
Respectfully,
/e/ P. J. Haggerty
Superintendent.
dopy:vw:10-27-41
Regraded Unclassified
C
0
?
103
Y
October 24, 1941
Federal Reserve Bank,
San Francisco, California.
Gentlemen:
There was on October 19, 1941 delivered to the U.S.
Mint, San Francisco, 158,558.25 ounces of gold, which arrived
in San Francisco on the SS "Dneprostroy" for the account of the
State Bank of the U.S.S.R. Moscow. We were instructed by tele-
gram from D. W. Bell, Acting Secretary of the Treasury (copy of
which is attached) to instruct the Federal Reserve Bank of San
Francisco to transfer by telegram to the Federal Reserve Bank
of New York, for credit of the Secretary of the Treasury,
Special Account, and to include in the telegram the number of -
Fine Ounces
158,539.363
Dollar Value
$5,548,877.70
Mint Charges
$
158.60
Net Amount
$5,548,719.10
for which latter amount we are delivering you our check.
The amount of one-fourth of one percent (1/4%) handling
charge is $13,872.19.
Yours very truly,
/s/ P. J. Haggerty
Superintendent
Copy:vw:10-27-41
Regraded Unclassified
104
Outsber 24, 1941
Mr. D. V. Bell
Mr. Dietgich
Today there vas e meeting with the Delivian Minister regarding & stabilism
tion agreement with that ceantry. Nothing consrote vas presented by de except
that be thought that 11 would be a good 14am to have a proliminary discussion as to
just what information the Treasury would require is connection vish $ stabilization
agreement. the Minister stated that while be 414 met have the plans of Me forera-
2021, be thought that 11 would be looking for between five and eight million dollars
to stabilise their currency.
Items agreed that Mr. White weeld propare s set of invetions vhich would
be given to the Minister next week. After personal of those questions by the Ninister,
another meeting will be called.
The Ninister Inquired If as export sould be sent to Polivia to curvey the
monetagy and hearing situation M that country. Mr. White stated that there vas
nobody available is the treasury for this task at the present time bel that 14
was his impression that Gasser, who Le nov assigned to Becader, veald be available
perhaps at the one of the year. This question is to be gives further consideration.
It developed during the meeting that there will be sent to Solivia experie
to earny the minoral, agricultural and transportation fields. all of which will
oventually be grouped together at the conclusion of the earvey with a view to
establishing a leng-term program for Belivia.
FD:da:kaa 10/24/41 (3)
Regraded Unclassified
105
October 24, 1941
Mr. D. W. Bell
Mr. Districk
This afterases a meeting we hold with the Imaterion regarding
the stabilization agreement. While the Aubancador ass not effer any you-
yesal, a general disoussion use hold with his regarding the trade and finances of
Houster.
It was agreed that m. White reald P over the material on Bounder which be
has is his possession and proyare, If DISCOUNTY, a liet of questions which would w
of help be the Treasury is arriving at its decision regarding the agreement. from
questions are to be propared by meet week and mother meeting will be called.
While the letter of August 18 to State from the Finance Mater of
mentioned a maism amount of U. 6. $5,000,000, I gathered free the meeting that
this amount my be reinced to $3,000,000. $1,000,000 of which will be provided by
Bounder.
(Init.) F.D.
D: da: 10/24/41
Regraded Unclassified
C
o
P
Y
DEPARTMENT OF STATE
106
WASHINGTON
October 24, 1941
In reply refer to
y 894.5151/262
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury and
transmite herewith a copy of despatch No. 1904, dated
October 7, 1941, and B. copy of despatch 110. 1892,
dated October 3, 1941, from the American Embassy at
Lima, relating to banking and exchange transactions in
Peru on behalf of German, Japanese and Swiss interests.
The Secretary of State would appreciate the advice
of the Secretary of the Treasury as to replies to be
unde to inquiries in these despetchos.
Inclosures:
1. From Embassy, Lima,
No. 1904, October 7. 1941.
2. From Embassy, Lime,
No. 1892, October 3. 1941.
Regraded Unclassified
C
0
?
107
Lima, October 7. 1941.
No. 1904
Subject: Combination of Japanese and German Banking Operations
CONFIDENTIAL
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to refer to my despatch No. 1892 of October 3.
1941, relating to Japanese and other unusual exchange operations in
Peru, and to submit the following supplementary information supplied
by the Central Reserve Bank of Peru.
The Banco Aleman Transatlantico of Lima has just approached the
Central Reserve Bank on behalf of a "Swiss bank" with an offer to
supply Swies france for the Peruvian government's use in providing
funds for its diplomatic and consular officers in Europe.
The German bank stated that if Central Reserve would deposit
gold in Lima to the account of the German bank, the "Swise bank" in
Shanghai would supply the corresponding amount in Swiss france.
The offer is said to have been made verbally and the exact name
of the Shanghai bank could not be given. The informant did recall,
however, that it included the word "Asiatic." The German bank in
Lima would forward dollars from this country to Shanghai.
The amount of gold in question seems to be about thirty thousand
dollare, equivalent to approximately one hundred thousand Swiss
francs.
The officer of the Central Reserve Bank at first requested that
the Embassy inquire by telegram if the American government would object
to such an operation. We replied that the case could be presented
more clearly in letter form, and in any event we were inclined to
doubt if the American government would be willing to go on record with
any statement other than that all possible cooperation in such matters
would be appreciated. The officer referred to expressed full agreement
Regraded Unclassified
108
- 2 -
with this point of view and stated that the bank wanted the details
of this subject brought to the attention of Washington, and would like
to receive any comments which the American authorities might wish to
make.
It is our understanding that the object of the conversations re-
ferred to in this despatch and No. 1892 of October 3. is to obtain
Swiss france for meeting the expenses of the Peruvian officers in
Europe without dealing with German or Japanese banks, or with any
others which may be objectionable to the United States.
During the course of our most recent conversations, one of the
sub-managers of the Central Reserve Bank stated that the German bank
has no dollar credit in the Central Reserve Bank.
Respectfully yours,
R. Henry Norweb
851.6
JG/ds
Copy: 10/24/41
Regraded Unclassified
o
109
o
P
I
Lima, October 3, 1941.
No. 1892
Subject: Japanese and Other Unusual Exchange Operations in
Peru in the Recent Past.
STRICTLY CONFIDENTIAL
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to submit the following information relating
to recent Japanese and other unusual exchange operations in Peru,
which was supplied voluntarily by the Central Reserve Bank of this
country with the explanation that the bank desires to keep the
American government currently informed of such operations.
The specific request was made that the Central Reserve Bank be
informed if this procedure is in any way inimical to the policies
of the American government. The operations were effected for the
purpose of facilitating & sale of Peruvian cotton, wool and certain
other products. The local authorities felt that the needs of
domestic exporters could be satisfied in this way, and that the
nature of the transactions could not be considered as opposing any
important objective of the democratic nations. However, the officers
of the bank stated that their perspective is limited and that the
opinion of the Department would be very valuable.
Imports of gold: The Japanese vessel "Noto Maru" on September
22 disembarked in Callao seven boxes containing fourteen bars of
gold containing 6,775.581 fine ounces valued at $/1,506,821.74,
which were purchased by the Central Reserve Bank of Peru, Peruvian
paper currency against this gold shipment was paid out to cotton
exporters.
Regraded Unclassified
110
- 2 -
exporters. Over one million soles was for Japanese cotton purchases,
& considerable amount of which VAN sold by Anderson, Clayton & Co.,
5. L. and Alexander Eccles & Company, according to officers of the
Central Reserve Bank.
The Central Reserve Bank has now been informed that an additional
shipment of gold will arrive in Callao during the first half of
October. This shipment vill be composed of thirty-eight bare contain-
ing 17,931.477 fine ounces, valued at $627,601. The proceeds will be
used for purposes similar to those explained above.
The officers of the Central Reserve Bank asserted that if the
American government has any objection whatsoever, this shipment of
gold will be rejected and returned to Japan, although they expressed
the opinion that they could forsee nothing of the sort in the cir-
cumstances which at present are known to them.
It was stated that the gold bars received in the first shipment
were stamped with the Japanese assay mark,
Operations in yen currency: During July, August and September,
the commercial banks of Peru sold s/12,383,909 of yen and purchased
$/9,589,108 of yen, according to the compilations of the Superintend-
ent of Banks. A more detailed statement of these operations in given
on one of the enclosures to this despatch.
Account opened by the State Bank of the U.S.S.R.: While speaking
of the subjects described above, the officers mentioned parenthetically
an interesting development which took place earlier in the year while
the Russians were still associated with Germany.
Although it 10 assumed that the Department will have been informed
of the operation owing to the fact that the Chase National Bank of New
York vas involved in the same, it is mentioned here as a matter of
record. Under date of Jamary 1 the State Bank of the U.S.S.R. in-
formed the Central Reserve Bank of Peru that it was willing to open a
free dollar account. There were further communications, and on April 3.
1941, e. current account of one thousand dollars was opened through the
Chase National Bank of New York, A specimen signature and a code were
forwarded. It is essumed that the account current vas opened for the
purpose of effecting mercantile operations-possibly with reference to
sugar for Russia or for transactions on the behalf of Germany.
The account has been idle and there has been no further corre-
spondence on the subject since the Russians began hostilities against
Germany. At the time this account vas opened the Central Reserve Bank
consulted
Regraded Unclassified
111
- 3 -
consulted the British authorities and accepted the same with the con-
sent of the British, according to statements made at the bank.
Difficulty in obtaining Swiss france: The Central Reserve Bank
authorities discussed in some detail an obstacle which has been
encountered in transmitting funds for the expenses of the Peruvian
diplomatic and consular officers in continental Europe. The Federal
Reserve Bank of New York had been supplying Swies france, but several
weeks ago informed the Central Reserve Bank of Peru that the supply
of that currency in New York was low. According to the Central
Reserve Bank authorities, the Federal Reserve Bank of New York
suggested or intimated that Swies france might be obtained from the
Swiss National Bank in New York, the latter supplying a certain
amount of that currency for use of the officers in Europe referred to.
The Swine National Bank subsequently informed the Central
Reserve Bank that it did not care to receive further amounte of gold
to be deposited in the United States, but suggested that the Buenos
Aires branch of the Swise bank is in a position to accept such
deposits of gold bars. On the poesibility of transferring gold bare
to the Banco Central de la Republica de Argentina, the latter in-
formed the Central Reserve Bank of Peru that the Argentine institution
could not receive deposits of gold bars other than those bearing the
assay marks which are recognized in Argentina.
Consequently, the Central Reserve Bank requested the Federal
Reserve Bank of New York to transfer to the Banco Central de la
Republica de Argentina gold bare representing a value of approximately
$100,000. The corresponding credit would be transferred to the Buenoe
Aires branch of the Swime National Bank, and the central office of the
latter in Zurich would make the Swiss france available to the Peruvian
government officers.
The last communication on the subject from the Federal Reserve
Bank of New York was & telegram dated October 1, which is quoted in
the copy of the Central Reserve Bank's letter of October 3 enclosed
herewith.
The authorities of the Central Reserve Bank have requested that
the Embasey bring this matter to the attention of the Department of
State with a request for such cooperation as may be properly rendered
to this Peruvian institution in its efforts to care for the needs of
the Peruvian diplomatic and consular officers in continental Europe.
At
Regraded Unclassified
112
- 4 -
At the time this request was made, we inquired if the Central
Reserve Bank had in mind any financial operations other than those
relating to the needs of the Peruvian foreign service officers in
Europe. The reply was that naturally the bank would not use any
funds requested of the American government for purposes other than
those declared.
Respectfully yours,
R. Henry Norweb
Enclosures:
1 - Copy of letter to Federal Reserve Bank
of New York from Central Reserve Bank
of Peru dated October 3, 1941.
2 - Recent sales of yen by commercial banks
of Peru.
851.51
JG/ds
Copy:ime
10/24/41
Regraded Unclassified
TRANSLATION
113
Enclosure No. 1 to despatch No. 1892 of October 3, 1941,
American Embassy, Lime, Peru.
COPY
Lima, October 3, 1941.
Federal Reserve Bank of New York,
New York.
Dear Sirs:
SHIPMENT OF GOLD TO BUENOS AIRES
We thank you for your cablegram of the 1st instent reading
B.S. follows:
"YOUR NUMBER 20 APPLICATION NOT APPROVED BY treaSury
STOP TREASURY ADVISES WIll CONSIDER NEW APPLICATION
WHEN AND IF REQUEST TO EFFECT TRANSFER OF GOLD IS
MADE BY YOU"
by which we understand that the Treasury has not given its
approval to the sending of about $100,000 in gold of that which
we hold in custody in your power to the Banco Central de la
Republica Argentina of Buenos Aires.
As you are aware through out previous correspondence on
this subject, according to our letters of July 12 and 21, August
28 and September 20 last, our sole purpose is to deposit this
gold in Buenos Aires in the name of the Banque Nationale de Suisse,
Zurich, for credit to our account for that sum in Swiss france, in
order to meet the monthly payments which we have to make to our
Diplomatic and Consular Service on the European Continent.
We have discussed this subject with the Commercial Attache
to the Embassy of the United States at Lima, who has promised
Regraded Unclassified
-2-
114
us to write to the Treasury Department regarding the matter.
As you advise us in your cablegram that the Treasury would
consider a new application to make this transfer of gold, if
and when it is made by us, we shall be grateful if you will
inform us of the procedure we must follow in order to submit
the direct application which the Treasury suggests to us.
Thanking you for taking the trouble which we are causing
you and awaiting your reply which we beg you to send by air
mail, we remain,
Yours very truly,
BANCO CENTRAL DE reserva DEL PERU
AV-MVC
Tr:JVM:HSF
Copy:bj:10-24-41
Enclosure 2 to despatch No. 1892 of October 3. 1941, American Embassy,
0
Lima, Peru.
?
I
115
SALES OF YEN BY THE COMMERCIAL BANKS OF PERU DURING
THE MONTHS MENTIONED:
July
1941
Yen
841,452.-
Less: Swaps
If
40,000.-
Yen
801,452.-
August
1941
Yen
3'629,732.-
Less: Swape
#
47,944.-
If 3'581,788.-
September 1941
Yen
8'000,669.-
#
8'000,669.-
Yen 12'383,909.-
PURCHASES OF YEN BY THE COMMERCIAL BANKS OF PERU DUR=
ING THE MONTHS MENTIONED:
July
1941
Yen
783,767.-
Less: Swaps
#
779,880.- Yen
3,887.-
August
1941
Yen
3'617,728.-
Less:
Swaps
213.-
Cancella-
tions 74,501.- Yen
74,714.- # 3'543,014.-
September 1941 Yen 7'930,485.-
Less:
Swaps 602,897.-
Cancella-
tions
1'285,381.- Yen 1'888,278.- # 6'042,207.-
Yen... 9'589,108.-
Lima, October 3. 1941
Copy:ec:10-24-41
Regraded Unclassified
Reed upm.
10/24
116
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE October 24, 1941.
TO
Secretary Morgenthau
FROM
H. D. White
As you suggested, I inquired of Mr. Currie
as to the request by Dr. Soong for an interview
with the President. Currie informed me that he
tried to get an interview with the President for
Soong a couple of weeks ago but was informed
that Soong should see Stettinius. It was also
Currie's impression that Mr. Corcoran had since
then arranged the interview with the President
but he was not certain about it.
Regraded Unclassified
117
Catabor m. 1991
Dr. Fele
m. Motrich
with reference to the cable delivered to you last sight for transmission
to the American 'for backer from the Secretary of the Treasury'
regarding M midross w dahn L. fullivan, in account paragraph of this meage
the fellowing should be substituted "geveremental treasuries" is please of
"the Federal treasury".
I apello to Nice Leasville by whome this norming and requested that the
substitution be cabled as non as persible.
Mr. Boy Blough case in this norning and requested that the above our-
rection be nade.
(Init.) F.D.
Flick
10-24-197
Regraded Unclassified
118
TELEGRAM SENT
DES
GRAY
October 24, 1941
Noon.
AMEMBASSY,
LONDON.
4685.
Department's 4670, October 23, 10 p.m.
FOR CASADAY FROM SECRETARY OF THE TREASURY.
QUOTE. In second paregraph substitute "govern-
mental treasuries" in place of "the Federal Treasury".
END QUOTE.
HULL
(FL)
FF:FL:VCL
Regraded Unclassified
PARAPHRASE OF TELEGRAM RECEIVED
119
FROM: American Consulate General, Hong Kong.
DATE: October 24, 1941, 4 p.m.
NO. : 445.
THIS KESSAGE IS IN STRICT CONFIDENCE TO THE SECRETARY
OF THE TREASURY FROM FOX. MESSAGE TF-H.
The telegram which you sent on October 18, no. 350,
should have been sent to Chungking. This telegram was
repeased to Chungking although until it was relayed to
Hong Kong I did not ⑉ it. Although I have not as yet had
an opportunity to study all of the sections in telegram
no. 350, under reference, I do believe that all of the
questions raised in this telegram except that which involves
the Banque Belge are answered in telegram TF-E, dated the
15th of October, from Cochran and Fox from Hong Kong and
telegram no. 423 from Coohran, sent from Chungking on the
20th of October. I have not had an opportunity to discuss
that with Hall-Patoh although I all sure that Whillips who
is in Washington is informed. Before he left for Shanghai
Mr. Cochran received sections one to five of the Department's
telegram no. 350. The other 10 sections are being sent to him
today by cable. Until further advided all cabled should be
addressed to me at Hong Kong.
OCI
SOUTHARD
ss
REN
THE
17*60
Regraded Unclassified
P
Y
DEPARTMENT OF STATE
120
Washington
In reply refer to
II 511.20 (D) Regulations/4876
October 24, 1941
The Secretary of State presents hie compliments
to the Honorable the Secretary of the Treasury and
refere to the formers letter dated August 29, 1941
transmitting a peraphrase of telegram No. 3915, from
the Ancrican Embasey at London, dated August 27, 1941.
relating to control of exports to China. The Secretary
of State transmite herewith with further reference to
this subject paraphrases of telegrame No. 3947. dated
September 19, 1941, and No. 4551, dated October 18,
1941, from the Department of State to the American Embassy
at London, and 8 copy of telegram No. 4755, dated October 6,
1941, from the American Embassy et London.
Enclosures:
1. To American Embassy, London,
No. 3947. September 19, 1941.
2. To American Embassy, London,
No. 4551, October 18, 1941.
3. From American Embessy. London,
No. 4755, October 6, 1941.
eh:copy
10-25-41
Regraded Unclassified
0
P
Y
PARAPHRASE OF TELEGRAM SENT
121
TO:
American Embassy, London, England.
DATE: September 19, 1941, 6 p.m.
NO.: 3947.
The courtesy of the British Treasury in supplying us with information
concerning British treatment of exports to China is appreciated by the
Department. You may convey to the British Government the following infor-
nation concerning our policy as to exports to Chinat
Such control may be exercised under the terms of either Executive Order
No. 8389, as amended, or the Export Control Act of July 2, 1940.
The export of all war materials and all other important items with the
exception of raw cotton are covered by Proclamations which have been issued
under the Export Control Act. It is believed that the British Government
is fully informed with respect to this matter. In so far as the adminis-
tration of this control 1s concerned, no licenses are being issued for the
exportation of commodities on the export control liet to Japanese consignees
in China. Nor are export licenses being granted to ship commodities on the
list to other consignees in Shanghai and other Japanese occupied areas except
when the shipments contemplated appear essential to the preservation of
property operated or owned by British or American citizens, or when the ship-
ments have some relation to the operation of local public utilities or to
public health or in cases involving insignificant amounts of commodities.
It should be noted that for some time the only licenses which have been
issued for export to Japanese-occupied areas have been licenses for exports
to Shanghai. Licenses are freely issued in the case of exports of controlled
commodities to areas in China which are not occupied or controlled by the
Japanese.
Regraded Unclassified
- 2 -
122
General License No. 58 issued under Executive Order No. 8389
authorizes under certain conditions all transactions incident to the import
and export of goods between any part of China other than Manchuria and the
United States. Refer in this connection to the text of the General
License. Consideration is currently being given to the modification of this
General License in the near future 60 as to make it more restrictive. It
may be noted in this connection that representatives of the Treasury
Department, the State Department, and the British Government are now
considering the whole problem of integrating the freezing and financial
controls of Great Britain and the United States with the financial controls
of China.
With respect to the inquiry of the British Government as to our
policy with regard to cotton exports, cotton is not on our export control
list and may, therefore, under General License No. 58, be exported to all
areas of China with the exception of Manchuria. The Department is
considering the problem of cotton exports and hopes to be in a position
soon to send you further information.
HULL
511.20 (D) Regulations/4672A
FF:GL:ME
ch:copy
10-25-41
PARAPHRASE OF TELEGRAM SENT
123
TO: American Embassy, London, England.
DATE: October 18, 1941, 7 p.m.
NO. : 4551.
Although there is no issuance of licenses for the
exportation of goods to Japanese consignees resident in
China, the rejection or approval of license applications
is not in general based on the criterion of nationality
of the consignee but on the criterion of the use to be
nade of the commodity: that is whether the use is one
of those specified in the fourth sentence of the third
substantive paragraph of the Department's telegram of
September 20 (No. 3947). In addition when a shipment
is for manufacture by reputable Chinese, British or
American concerns in Shanghai and when the products BO
manufactured would not be of substantial assistance to
the Japanese war effort, it is considered that the ship-
ment would be put to a legitimate use. The American
Consul General in Shanghai furnishes the Department
with information with regard to the reliability of
consignees and the use to which material is to be put.
Export licenses are granted only if it appears reasonably
certain that materials will not be resold to Japanese
nationals or persons who might in turn sell the materials
to the Japanese.
eh:copy
10-25-41
Regraded Unclassified
124
BS
GRAY
LONDON
Dated October 6, 1941
Rec'd. 6:40 p.m.
Secretary of State,
Washington.
4755, October 6, 11 p.m.
STRICTLY CONFIDENTIAL
FOR TREASURY FROM CASDAY
Department's 3947, September 20, 6 p.m.
Waley was pleased to receive the information
transmitted in the above but now asks for an inter-
pretation of the term "Japenese consignees" in the
third paragraph of the above. He asks, "Does it
mean firms controlled from Japan, or controlled
by Japanese nationals in China, or merely any firm
suspected for having a Japanese interest in it?"
He would also appreciate any general comments as
to criteria used in selecting consignees in China
and as to methods of obtaining information about
prospective consignees.
WINANT
PEG
eh:copy
10-25-41
Regraded Unclassified
For Miss Chaunoey
TREASURY DEPARTMENT
125
INTER-OFFICE COMMUNICATION
DATE October 24, 1941.
TO Secretary Morgenthau
CONFIDENTIAL
FROM Mr. Dietrich
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£45,000
Purchased from commercial concerns & 4,000
Open market sterling was again quoted at 4.03-1/2. While no transactions
with commercial concerns were reported, we were advised that one of the New York
banks sold £2,000 to & bank in Colombia.
The Uruguayan free peso, which has shown a firm tendency 80 far this month,
declined 50 points (1/2#) today to close at .4625.
In New York, closing quotations for the foreign currencies listed below
were as follows:
Canadian dollar
11-1/16% discount
Argentine peso (free)
.2368
Brazilian milreis (free)
.0505
Colombian peso
.5775
Mexican peso
.2070
Venezuelan bolivar
.2630
Cuban peso
1/8% discount
There were no purchases or sales of gold effected by us by foreign countries
today.
No new gold engagements were reported.
In London, both spot and forward silver were again quoted at 23-1/2d,
squivalent to 42.67#.
The Treasury's purchase price for foreign silver was unchanged at 35#.
34-3/44. Handy and Harman's settlement price for foreign silver was also unchanged at
We purchased 400,000 ounces of silver from the Bank of Canada. Today's vas
the first silver bought from that source in October under our regular monthly
agreement to purchase up to 1,200,000 ounces.
D
Regraded Unclassified
126
BRITISH EMBASSY,
WASHINGTON, D.C.
October 24th, 1941
PERSONAL AND
SECRET
Dear Mr. Secretary,
I enclose herein for
your personal and secret
information a copy of the latest
report received from London on
the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
he Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded Unclassified
127
Telegrem from London dated October 23rd, 1941.
H.M.S. "Aurania" has arrived in Clyde.
In convoy reported attacked 21st, one
British ship 4,099 tons was terpedoed and sunk and
one British ship 5,281 tons, is missing. Several
aircraft of Coastal Command took action against four
U-posts sighted in vicinity of this convoy.
Day of 21st aweepe were carried out over
St. Omer area in the course of which 13 enemy fighters
were destroyed and 4 damaged. 21 Blenheims attacked
one motor vessel of 1500 tone and one schooner of 600
tone off the East Tunisian coast using 21 tons of
bombs; schooner blew up and sank, motor-vessel was
set on fire,
Night of 21at/22nd twenty-four wellingtons
made successful attacks on Naples. About 120 aircraft
bombed Bremen, targets including Deutsche Schiff werke
and eight Hudsons started good fires at Aarhue petrol
harbour. Night of 22nd/23rd 161 aircraft despatched
to deliver a heavy attack on Mannheim light attack
on Havre and Breat. Enemy employed about 40 aircraft
in widespread attacks over United Kingdom. Night
fighters shot down 3 certain and one probable; no
serious damage was caused.
Russia,
On 22nd October Molotov who had arrived from
Moscow with other members of Soviet Government
outlined situation to Ris Majesty's Ambassador as
follows:
(1)/
Regraded Unclassified
128
+
(1) Leningred. Seviet Government were very concerned
and were trying to improve their position. Germane had
crossed Volkhov and were trying to advance Northeast
but were being hold.
(11) Moncow. Germens' break-through near Moshaisk
October 14 was responsible for decision to evacuate
Government authorities and diplomatic corps on October
15th. This break-through had now been held; Germans had
only advanced a few kilometres and that only at expense
of great losses. Although Germans had taken Kallinin a
week ago, fighting was still going on there with Soviet
infantry and tanks in occupation of Southern outskirts.
Germans held the centre. West of Moscow bitter fighting
was proceeding in the approaches to City but there had
been no noticeable German advance since October 15th.
(111) Southern Front. Position difficult, Germans
advancing slowly towards Restov.
(IV) Crimes. Germans were held on Isthmus but pressure
was great.
(v) Kharkov. Position steady.
(VI) Molotov stressed that fighting spirit of people
was quite unbroken.
Regraded Unclassified
RESTRICTED
129
MILITARY INTELLIGENCE DIVISION
TENTATIVE LESSONS BULLETIN
WAR DEPARTMENT
No. 166
Washington, October 24, 1941
MID 461
NOTICE
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and in no sense mature studies.
This document is being given an approved distribution,
and no additional copies are available in the Militery Intel-
ligence Division. For provisions governing its reproduction
see Letter TAG 350.05 (9-19-40) M-B-M.
GERMAN INFANTRY ASSAULT BATTALION
SOURCE
This bulletin is based upon a report submitted on July 19,
1941, by an American official observer in Berlin. The translated
article, which was contained in the report, originally appeared in
the Militär Wochenblatt, a semi-official German military publication.
CONTENTS
1. INTRODUCTION
2, CAPTURE OF VARENNES
3. COMMENTS BY OBSERVER
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- 1 -
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130
GERMAN INFANTRY ASSAULT BATTALION*
1. INTRODUCTION
a. The translated article describes the action of an assault in-
fantry battalion, with an exposed left flank, as it crossed the Marne
River near Jaulgonne and captured Varennes, about 1000 yards south of
the river. To comprehend the action fully, it should be recalled that
the German infantry battalion 1s organized in general as follows:
Headquarters, composed of
Staff,
1 signal platoon, consisting of
Headquarters,
4 back pack radio sets - 3 men each,
2 telephone squads;
3 rifle companies, each company composed of
Headquarters,
3 platoons - each containing four rifle squads and one
light mortar squad;
1 machine gun company, composed of
Headquarters,
3 machine gun platoons - each containing two sections of
two squads each,
1 heavy mortar platoon - - three sections of two squads each,
each section equipped with 81-mm. mortar.
The companies in an infantry regiment are designated numerically.
The 1st, 2d, 3d, and 4th Companies constitute the 1st Battalion: the
5th, 6th, 7th, and 8th Companies constitute the 2d Battalion: the 9th,
10th, 11th, and 12th Companies constitute the 3d Battalion. The 13th
Company is the infantry cannon company, and the 14th Company is the
regimental antitank company. The 4th, 8th, and 12th Companies are
machine gun companies.
The following article deals with the action of an assault
"Two sketches, showing troop positions And movements, are attached at
the end of this bulletin. The key which accompanies the sketches is
based on British official information concerning German symbols,
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131
RESTRICTED
infantry battalion which had been held up by strong hostile resistance.
The commander of one of the rifle companies in this battalion, on his
own initiative, moved his unit into the zone of an adjacent assmilt
battalion and attacked the hostile resistance from the rear. thus
enabling his own battalion eventually to accomplish its assigned mission.
3. CAPTURE OF VARENNES
"On June 10, 1940, certain elements of the 2d and 3d Battalions
of the 35th Infantry Regiment were rushed in trucks from the heights
south of the Oureq to a front line point near Jaulgonne, on the Marne,
They arrived at their destination too late - the enemy had blown up
the bridge there at the last moment. The 10th Company of the 3d
Battalion, however, attempted to gain a crossing near the destroyed
bridge and became involved in A stubborn fight which lasted until
evening. In the meantime, Chasseurs d'Ardennes and Colonial troops
wore being cleaned out of Jaulgonne. A few divisional antitank weapons
went into position along the Marne Valley Road and engaged hostile
positions on the south bank of the river with high explosive projectiles,
while Jaulgonne itself was baing bombed by enemy airplanes.
"The hostile - southern - bank was strongly fortified, the
onemy being installed in well-camouflaged field positions which were
connected by trenches, Almost vertically, the banks on both sides of
the river dropped down to the water's edge, six to eight feet below.
"The 2d Battalion occupied the heights, just egst of Jaulgohne,
from which A five-mile bend in the Marne could be observed. This
steeply sloped hill, about 475 feet high. dominated the river bend and
the adjacent valley. The left flank of the battalion was open. The
battelion observation post WAB established on that part of the high
ground occupied by the 8th Company.
"In this position on the heights, the 8th Company, which WELE
the machine gun company of the 2d Battalion, experienced the most
satisfactory close-range employment of ita entire service on the Western
Front. It used its heavy nortars to force the enemy from his prepared
positions and then fired on hin with heavy machine guns,
"The enemy's fire from his river positions continued to decrease
throughout the afternoon until finally only intermittent nachine gun
firs came from around Varennes and the woods enst of it. Fire from our
OWD infantry accompanying gune and our artillery fell on Verennes, while
enemy artillery fire was directed on Jeulgonne, especially on Its
northeastern erit,
"We observed hostile trucks continually moving reinforcements
into Varennes from the west, These reinforcemente were worth-while
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132
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targets for the 150-mm. weapons of our infantry accompanying gun platoon.
"At 3:10 P.M., the battalion assistant adjutant returned from
the regimental command post with orders to reconnoiter at once for
battalion crossings. He also had information that later in the day
an assault group was to be sent against Varennes to determine whether
the village was occupied, and if 60, how strongly. If the hostile force
in Varennes were weak, the village and the heights south of it were to
be captured at once by the 2d Battalion; in case Varennes were held in
force, B bridgehead south of the Marne was to be established,
"A crossing point was discovered near the eastern exit of
Jaulgonne. The enemy continued to occupy B. few of his riverbank posi-
tions, but the 6th Company (see Sketch No. 1), with a reconnaissance
detachment attached, was ordered to carry out the detailed reconnais-
sance for this crossing.
"Four small inflated rafts arrived at 5:35 P.M. The machine
gun company remained in position on the heights northeast of Jaulgonne,
and elements of the 6th Company, from positions near the north bank,
prepared to cover the crossing operations, The first pneumatic raft
was lowered into the water at 6:20 P.M., and a sergeant with four
riflemen and two light machine guns crossed over. A few enemy machine
gun nests opened fire, but these were promptly silenced by our auto-
matic weapons which were concealed along the north bank, and the nests
were quickly cleared out by the men from the first two rafts. Soon
raft after raft was crossing, and our troops were fanning out on the
south bank on both sides of the crossing point. By 7:30 P.M. the 2d
platoon of the 6th Company had crossed. More pneumatic rafte arrived,
and by 8 P.M. the let platoon of the 6th Company and one heavy machine
gan platoon were on the south bank.
"At 8:30 P.M., after receiving last-minute instructions from
the company commander, the assault group deployed, and at about 8:45 P.M.
it started across the valley plain towards Varennes. It crossed the
railroad track without encountering enemy resistance and continued to
the northern edge of the village. There enemy fire came from every
window, attic, and cellar, and bullets even whistled out of gardens
and trees; the right flank of the group became engaged in house to
house combat. It was Boon learned that Varennes was very strongly
held, and when darkness set in a little later, the group withdrew to
take cover along the railroad embankment. One antitank platoon, one
heavy machine gun equad, and the remaining platoon of the 6th Company
were sent across to reinforce the bridgshead along the railroad em-
bankment. In accordance with orders from the regimental commander, the
battalion commander remained on the north bank of the Marne during
this assault.
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133
RESTRICTED
"About 11:30 P.M. an enemy counterattack from Varennes was
repulsed (see Sketch No. 1). Antitank guno were used in this ection
and some prisonere were brought in. At the same time, the 7th Company,
with another heavy machine gun squad as well as a platoon of the 5th
Company, crossed over and joined the 6th Company (see Sketch No. 1).
"The enemy made another unsuccessful counterattack at 12:30
A.M. (see Sketch No. 1). Reports from prisoners brought in during the
night indicated that Varennes as well as Courtemont and the inter-
vening ground were strongly held by Chasseurs d'Ardennes and Zousves,
who were being reinforced continually. The enemy had become aware of
our threat to his defenses and WILB bombarding the crossing point.
"During the night, the 6th Company, with R heavy machine gun
platoon, furnished protection to the front and right flank from a
position based on the railroad cut, The 7th Company furnished similar
protection to the front and left flank from a position (see Sketch
No. 1) on the other side of the railrond viaduct, which served as the
boundery between the two companies. The lst platoon of the 5th Company
protected toward the left rear. The 7th Company was charged with de-
fense along the Marne. One antitank gun was placed in position on the
approach to the viaduct.
"At 5:45 A.M. the battalion adjutant was called to the regimental
command post, where he received the regimental order which designated
Verennes and the heights south of it as the attack objectives. The
2d and 3d Battalions were to attack abrenst, with the 3d Battalion on
the right. Upon the return of his adjutent, the battalion commander
issued orders to the attached light infantry-gun platoon - 75-mm. - to
pay particular attention, during the attack of the 2d Battalion, to
targets appearing on the left flank which could not be taken under
fire by artillery. Soon the battalion staff and the heavy mortar
platoon of the 8th Company crossed over.
"The company commanders were ordered to assemble at 8:45 A.M.
at the battalion command post on the south bank of the Marne (see
Sketch No. 2). There the battalion commander issued the following
oral attack order:
"Battalion order for the attack against Varennes and the
heights south of it: Enemy defends himself along the heights
northeast of Varennes. Varennes, and the heights south of it,
are strongly fortified. 35th Infentry attacks with 3d Bat-
talion on the right and 2d Battalion on the left.
Regimental attack objective: the heights, 5 kilometers
south of Varennes, just beyond those woods.
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134
RESTRICTED
Initial attack objective of this battalion: the height
just south of Verennes. Boundaries... (see Sketch No. 2).
The left flank is exposed because adjacent unit has not yet
caught up. Attack begins at 10:05 A.M. The artillery fire
upon Varennes, which began at 8:30 A.M., will increase to its
highest rate from 9:35 A.M. to 9:45 Д.И. From 9:50 A.M. to
10:05 A.M. dive-bombing planes will operate against Varennes
and the country south of it.
Battalion attack formation: 6th Company in front on the
right; 7th Company in front on left: 5th Company follows 200
meters on the left rear of the 7th Company and, above all, pro-
tects the left flank. One heavy machine gun platoon remains
attached to each of the assault companies; heavy machine guns
from another infentry regiment give fire protection from
heights north of the Marne. The attached light infantry-gun
platoon, from position north of the Marne, fires upon targets
of opportunity - above all, on any enemy appearing on the
left flank, for which it already has individual order - and
displaces forward after the battalion arrives at Varennes.
Artillery lisison unit accompanies me; I follow the 7th
Company. Next Battalion command post yonder, in front, at
the railroad embankment. Radio to 6th Company.
"The company commanders gave their orders And organized their
companies. Our own artillery fire increased steadily, aided by
artillery observation planes. The enemy artillery was shelling Jaul-
gonne, the heights east of it, the observation post of the attached in-
fantry-gun platoon, and the 1st Battalion command post - regimental
reserve.
"The artillery fire reached its peak at 9:45 A.M., and exactly
at 9:50 A.M. the dive-bonbing planes arrived and began their attack.
Varennes disappeared in smoke and dust.
"At 10:05 д.м., the 2d Battalion formed for attack, and at
first, only the 6th Company received nachine gun fire from Varennes.
Targets could not be distinguished, because everything was still en-
veloped in smoke, After a brief halt, the commander of the 6th Com-
pany noticed that the 3d Battalion, on the right, was making un-
hindered progress. He decided, therefore, to bear over to the right
into the zone of this battalion and thus detour around Varennes (see
Sketch No. 2).
"The smoke and haze vanished, and hell sudienly broke loose
in the 7th Company's zone. Deadly hostile fire vas received from the
front, from the left, and from the left rear. The 5th and 7th
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135
RESTRICTED
Companies were pinned to the ground in their zone of action, on the
fint men terrain, which WAS covered with clover and grain up to 20
centineters - about 8 inches - in height. The northern edge of
Warenes and the edges of the woods to the east and northeast of it
were strongly occupied.
"The battalion commander could find no trace of the 6th Con-
pany. The radio group which had been ordered to advance with this
company did not answer, and messengers and reconnaissance patrols sent
to the 6th Company did not return. Connection with the regiment was
also broken at this time, but toward 11 A.M. the following written
message was sent to the regimental command post:
"Battalion advance held up by strong hostile flanking
movement from the woods northeast of Varennes. No connection
with 6th Company. Request employment of 1st Battalion to re-
lieve left flenk.
"A duplicate of this message was dispatched et 11:16 A.M.,
since it was so doubtful whether a messenger could cross the open
terrain in the valley. The regimental telephone detail arrived at the
reilroad embankment about 12 noon, but immediately afterwards, hostile
artillery fire broke the connection at the point where the telephone
Iines crossed the tracks.
"The 7th Company first coved its left and center platoons to
the right in order to free themselves from the enemy and then con-
timied cheed on the right,
"The back pack radio detail, which had remained with the bat-
talion in order to make contact with the 6th Company, finally succeeded
after e long effort in contacting the regiment about 2:10 P.M. Com-
-itment of the let Battalion on the left WAE announced by regiment.
The following written message cane into the 24 Battalion command post
at about 3:30 P.M. from the 6th Company:
"Time sent: 12:10 P.M.: 6th Company reached first attack
objective at 12 noon. No contact with 7th Company.
"The messenger from the 6th Company reported that in contrast
to the situation in the forenoon, the western enge of Varennes and
the group of trees west of it were now strongly occupied. It had,
therefore, taken him more than three hours to transmit the message.
This meseenger on his return, accompanied by a battalion messenger,
carried the following written order to the 6th Company:
"Leave security groups behind, move south around Varermes,
and attack the enemy from the rear.
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136
RESTRICTED
"Meanwhile, the reconnaissance patrols of the 6th Company,
which had been sent out to contact the 7th Company, observed an enemy
motor column halted in a sunken road south of Varennes. By 2:30 P.N.
this column had been put out of action. (See Sketch No. 2).
"Beginning at 5 P.M., the noise of heavy firing coming from
an easterly direction was heard at the battalion command post. The
1st Battalion had moved from the east into the woods east of Varennes.
The machine gun fire from the left rear ceased; the 6th Company assault
groups were doing their work, The explosions of hand grenades and the
shouts of an asseult were heard coming from Varennes at 5:30 P.M. and
from the woods east of the city at 5:45 P.M.
"Hostile resistance decreased in the face of the 7th Company's
advance into the woode. The enemy was surrounded, and the 6th and 7th
Companies broke his last resistance with close-range fighting. The
central and western parts of Varennes were still occupied, however,
and the 5th Company was ordered to nop up the village. After hard,
hand-to-hand fighting, some 600 prisoners, mostly black, were captured.
"Meanwhile, the battalion recrganized and renewed the advance
without meeting much resistance. About 10 P.M., the battalion com-
mander reported orally by radio to the regiment: 'The day's objective
has been reached!'"
3. COMMENTS BY OBSERVER
a. This article discloses another instance in which the Germans
used antitank weapons on artillery missions. The Germans consider
such action to be practical when there is no hostile tank threat, and
the same procedure, under similar circumstances, applies to their
antiaircraft-artillery weapons. Antitank and antiaircraft crews,
therefore, are provided with amminition appropriate to their probable
targets.
b. The inclusion of B heavy mortar platoon in the battalion
machine gun company proved satisfactory against the French defenses
on the south bank of the Marne. The mortars cooperated with the
nachine guns by firing upon the French emplacements, causing the de-
fenders to leave them, When the defenders were thus exposed they were
taken under fire by the Germen machine gune.
c. The Germans have made extensive use of their pneumatic rafts
to overcome water obstacles promptly.
d, The use of the various wespons within the German infantry
regiment, including the 75-cm. and 150-m. infantry accompanying guns,
are illustrated in this article. The Germans believe in exploiting
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137
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the fire power of their weapons to the utmost, both before and during
the exposure of their assault troops to hostile fire.
e. The oral attack order of the 2d Battalion Commander indicates
that the attack on Varennes was preceded by an artillery preparation
lasting one hour and thirty-five minutes. The artillery preparation
was supplemented by dive-bombing planes which operated on the village
for 15 minutes immediately preceding the time of attack.
f. At 8:45 A.M. the battalion commander issued his oral order
for the attack which began at 10:05 A.M. The order was therefore
issued after the artillery preparation began.
5. In this and other published accounts of German combat ex-
periences on the Western Front, it is frequently stated that radio
communication failed, especially in battalion and lower units. No
explanation for this deficiency is given nor is any known.
RESTRICTED
- 9 -
Regraded Unclassified
138
KEY
Shizze1
a.
The Scale is la Metera
N
Las
A
7.
Sylize
Sketch
libbe
Height
e
Jaulgonne
6.
mine Birth
Steen
About
$0.6. 10.00 Uhr
261 (rug)
Platoon
a
Gegenengriff
Counterattack
o
15
13,30 Ohr
11:30 P.M. The aketches use the
:
Barzy
European time system. based on
na
5. Home
24 hours beginning at midnight.
TOTAL
E
I/35 etc.
1st Battalion of 35th Regiment
= /85 etc.
7th Company of 35th Regiment*
- LIMIT
Battalion Readquarture
7/35
@
Light machine gun
Light machine gun in position
6.
Heavy machine gun
7.
Heavy machine gun in position
Antitank gun
Dist.
Antitank gun in position
co., squire
Infentry gun company
11.6.
o
any
₹
n
e
forman
Infantry gun company in position
a
3
Chalsov
Heavy nortar
Phierty
e
sen
Varennes
Railroad
not Counternal
It
Collecting stations for walking
wounded
Sketch No. 1
See PTF. 1-3 for the explenation of how companies
are designated within the battalion and regiment.
Regraded Unclassified
139
2012
III
3
More
10,000
5./35
The Scale is in Maters
harme
Skinse
Sketch
3
2
6
Hähe
Haight
1./50
Stoastrupp
Asseult group
23.30 Uhr
11:30 P.M. The sketches use the
European time system, based on
6.135
24 hours beginning at midnight.
E
Car Jeur
5,83
I/35 etc.
1st Battalion of 35th Regiment
201
#./35 etc.
7th Company of 35th Regiment*
10.05 Unr
7/35
Corpe boundary
o
Battalion boundary
E
Vorennes
Company boundary
Battalion Headquarters
Light machine gun
Light anchine gun in position
6,/35
Courtement
17,00 Uhr
Heavy machine gun
0/55
14.30 Uhr
Reavy machine gun in position
Bhf.
Station
0./35
not - Uni
Railroad
Skizze of
It
Collecting stations for walking
vounded
NI
Light motor transport column
e
e
*See pp. 1-2 for the explanation of how companies
are designated within the battalion and regiment.
Sketch No. 2
Regraded Unclassified
140
RESTRICTED
0-2/2657-220; No. 527 M.I.D., W.D. 11:00 A.M., October 24, 1941
SITUATION REPORT
I. Eastern Theater.
Ground: Desperate fighting continues on the Moscow front.
The Germans claim to have reached the western out-
skirts of Kharkov. North of the city the Germans have reached the
Kharkov-Kursk reilway and to the south have reached the line of the
Donote river.
The Germans have crossed the Nikatovks-Taganrog
railroad on a broad front north of Rostov.
The Germans claim to have further extended their
bridgehead in the Crimes.
Air: Large scale bombing of Moscow featured air activity in
this theater.
II. Western Theater.
Air: Hamburg and Xiel, and Brost, Cherbourg and Le Havre,
in Prence, were attacked by the R.A.F. last night.
London admitted a raid by German sircraft on northern
Scotlend last night, but said only one German plano was sighted.
III. Middle Eastern Thoater.
Air: Naples and Cotrone (Southern Italy) were bombed
last night by the R.A.F.
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Regraded Unclassified
141
PORTEFENSE
FIELD ORGANIZATION News Letter
BUY
LISTED
STATES
DEFENSE SAVINGS STAFF
-
TREASURY DEPARTMENT, WASHINGTON, D. c,
OCTOBER 25, 1941
NUMBER 23
TO THE FIELD STAFF:
There are hundreds upon thousands of Americans who would walcome
the opportunity to buy E Bond a month. You yourself, in the course of
. week, are in contact with scores of such folks.
Many mean to set up this easy, sure method of aiding defense and
providing a reserve against future financial uncertainty, but the demon
of inertia, or of forgetfulness, or pressure of personal or business mat-
ters often gets in the way, Reminders are sorely needed,
Individual members of the Field Staff can do much in the way of mis-
sionary work to dissolve this forgetfulness. They can provide reminders
not only of the availability of Defense Savings Bonds, but also of the
three easy ways of purchasing a Bond a month. Every member of the Field
Staff knows these three ways:
1. Through payroll allotment - the method whereby the coopera-
tion of employers is enlisted to provide the Bond-A-Month op-
portunity for employees.
2. Through the bank depositors' draft plan-whereby the indi-
vidual depositor arranges with his bank to earmark his account
for regular Bond-A-Month payments.
3. Through direct mail to the Treasury Department-shereby
the individual mails to Washington his Bond-A-Month payments
upon receipt of a reminder.
You will agree, we think, that there are many people who do not M
yet fully "realize" that these three methods are available. You will
agree, too, that "if" they knew of these methods they would probably be
Bond-A-Month purchasers, through one of them.
Why don't you personally 800 to it that those within the circls of
your personal and business acquaintance really know these three methods?
You would thus be stepping up your personal contribution to the field of-
fort; in addition, you would be doing your acquaintances an appreciated
favor.
Sincerely yours,
GALE P. JOHNSTON,
Field Director, Defense Savings Staff.
Regraded Unclassified
News Letter
News Letter
142
FIELD ORGAMIZATION TINA .
IDAHO
Governor Crowns Bond Queen: Local Committees Have "Action Manual"
Chairmen Appointed in Maryland, Utah and See Tork City
Two more distinguished civic leaders have recently been added to the
GOVERNOR CHASE A. CLARK, Ronorary Chairman of the Idaho Defense Sev-
poeter of chairmen of state Defense Savings Comitteee, and a chairman
ingo Committee, participated in the Jarome County Fair this year by crown-
for the New Tork Metropolitan Area has also been appointed.
ing Miss Madelyn May Sanberg "Defence Bond and Stemp Queas." The queen
was selected by the votes of those who bought Defense Bonde and Stamps at
In MARTLAND, Charles H. Boloson, Jr., president of the Central Dour-
the Fair booth.
ance Company of Baltiarre, will head his state's Defense Savings Committee.
Mr. Roloson is wall known in Baltimore civic affaire and is president or
à FOURTEEN-PAGE "ACTION MANUAL," prepared especially for actibery of
the Baltimore Association of Commerce.
the Ideho Committee by State Administrator John R. Vilay and Deputy Admint-
strator John Churchill, outlines specifically just what each member of a
In NEW YORK, Lawie William Douglas has been appointed to the State
local committee can do to promote the sale of Defense Bonds and Stampe.
Committee as co-chairman for the New York City Area. Mr. Douglas, - former
Separate pages of the manual are devoted to outlining the function, person-
Member of Congress and Director of the Budget, is president of the Mutual
nol, and methods of each of the following divisions of . typical condittee
Life Insurance Company of New York.
1. Hanking and Finance
In UTAH, the nealy appointed chairean is Charles L. Smith, president
2. Education (achools and colleges)
of the First National Bank of Salt Lake City,
3. Fublic Employees
4. Industry
5. Nomen's Organisations
Five les Administratore
6. Labor
7- Agriculture
Defense Savings Administrators have recently been appointed or desig-
8. Information (publicity)
nated in the following states and territories: ALABAMA, Joseph M. lyons,
9. Trades (retail and service)
Collector of Customs, Mobile) ALASKA, Governor Ernest H. Gruening: DISTRICT
10. Service Clubs and Organisations
OF Nelson, COLUMBIA, Hugh Lynch; UTAM, Charles R. Maber; and VIRGINIA, Robert F.
11. American Legion
12. American Legion Auxiliary
13. Speakers Bureau
14. Boy Scoute
IN THIS ISSUE
IDAHO Reports - Page 3
LOCAL COMMITTEES, which have been formed in all of Idaho's 4d counting,
CONNECTICUT Pair Has Bond Booth Page A
are DOW organizing sub-committees and divisions along the lines suggested In
the Action Manual.
MAINE Lione Invest for Defense - Page &
FLORIDA Reports - Page 5
"AMERICA SPEAKS" - BASS mestings with impressive ceremonies are to be
OKLAHOMA Reports - Page à
held in every towa in the State during the Winter months, under the
- YORK Committee Introduced Page 7
ship of State and local Defense Savings Committees.
A 7 OF L Hears Address by Assistant Secretary Herbert E. Gaston and
INVESTMENT OF $2500 OF LEGIOS FUNDS in Defense Bonds vas recently cop-
Endorses Allotment Plan Page 8
FEDERAL Employees Like Systematic Sevings - Page 9
summated by officials of the Idaho Department of the American Legion in e
transaction which was pictured La many Idaho newspapers. John Schoonover,
PAYROLL ALLOTMENT Developmente in Minnesota, Indiana and
Chairman, represented the Idaho Defense Savings Committee.
Other States - Pages 10 and 11
TO THE LAUIES - Page 12
CLERES in acce Ideho stres wear cardboard tage readings
RETAILERS and Defense Savings Page 13
PORTLAND Enlists Hellsapoppin Stare - Page 14
"Buy Your Defense Savings Stampe Bees" OF
RADIO Programs for Coming Ted: - Page 15
"Buy Tour Defense Savings Stamps From Ven
4 LETTER from the Secretary - Page 16
(This 1a & simple but effective way of boosting the sale of Defmae
Stamps. May not get a local druggist or other merchant, or marchants, to
try it?)
- 2 -
- 3.
Regraded Unclassified
News Letter
News Letter
143
COMMECTICUT NOTABLES A2 DANHURY PAIR
FLORIDA
State Committee Holds Second Meeting) Program Moving Forward
WENSE
SAVINGS
THE FLORIDA STATE COMMITTEE convened for the second seeting October 15,
in Jacksonville, with State Chairman Linton E. Allen presiding. Guest of
honor was Field Director Gale P. Johnston, who brought with his from Wash-
ington for each committeenan certificates of membership, the first to be
Bank
STATES
CONNECTICUT
Buy A Share
distributed. These membership certificates, which are signed by Secretary
IN
Morgenthau, will be presented to all state committemen as the state organi-
sations are completed.
REPORTS ON THE PROGRESS of the program were made by State Administrator
John L. Fahe and Deputy State Administrator Karl Lehann. Some highlights
from their reporter
5VERY COUNTY now has a Defense Savings Committee. In addition, in five
of the largest counties, there are nine city committees.
MORE THAN 1,000 MEN AND WOMEN are serving on these committees.
Defense Bond booth at the Danbury. Comedticut Fair. From left to right,
A STATE-WIDE NSGRO DEFENSE SAVINGS COMMITTEE is now being organized in
John S. Cawley, Deputy Collector of Internal Revenue; William Hanna, Mayor
Florida, with Dr. J. R. K, Lee, president of the Florida Agricultural and
of the City of Denbury: 0. Gordon Fisher, Defense Savings Staff; Mrs. Hanna;
Mechanical College, as Chairman.
Governor Robert 4. Burley: Mrs. Hurley: Brigadier-General 1. B. DeLacour and
three members of the Fife Drun Corps of the Danbury Hatters' Union. The
girls served SLE attendants at the booth.
SOME FLORIDA FIRSTS:
BONDS OF FREEDOM
WATEHVILLE LIONS CLUB INVESTS IN DEFENTE
FIRST COUNTY SCHOOL SYSTEM to report that every school board member,
tascher, bus driver, and janitor had invested in Defense Stampe
was the school system of Handry County. C. B. Weaver 1a chair-
man of the Education Division of the Hendry County Defense Sav-
ings Committee.
FIRST LARGE CONCERN to report that every employee had purchased at
least one Bond was the Southern Food Stores of Mismi and Tampa,
756 employees.
FIRST POST OFFICE in Florida to have every employee buying Bonde OF
Stamps regularly 1a the Clerment Post Office, Mrs. Florence Bow-
The largest single sale of De-
Defense Bond purchased by the Lions Club
200, postmistress.
fense Bonds in Hantramck, Mich-
of Waterville, Maine, is formally present-
igan, was recently reported when
ed to the officers of the Club by George
IRST COUNTY COURTHOUSE in the state to announce 100% employee partici-
D. Regarty. State Committeement for Serv-
Council #122, of Polish National
pation in & plan for the regular purchase of Defense Bonds and
Alliance invested $10,000 in
ice Organisations. From left to rights
Stamps was the ONE in Tevares, county seat of Lake County, George
Series , Bonds. Above: Anthony
Dr. Paul J. Sephart, Secretary and Louis
J, Dykes, Clerk of the Circuit Court there, is chairman of the
Enrommarayk, President of Council;
Bartlett, President of the Club; George
Public Employees Division of the Lake County Committee.
2. Biernacki, Executive Chairman
D. Regarty: Dr. Clinton A. Clauson, State
of the Bautrasck Defense Savings
of Maine Defense Sevings Administrator:
FIRST CITY to announce the installation of a salary allotment plan is
Committee: and Alois Chronnweld,
and Howard Staples, Club Treasurer.
New Sayrna Beach, Mayor Y, E. Swoope and City Auditor I. V. White
Bank Cashier,
are working out the details.
Regraded Unclassified
News Letter
News Letter
144
OKLAHOMA
"Bay For Victory* Plan Outlined
Introducing the members of the
DEFENSE SAVINGS COMMITTEE FOR THE STATE OF E YORK
DELARIMA'S *BUT FOR VICTORY" program is outlined briefly in the October
issue of the Defense Savings Bulletin issued by the Oklahoma State bead-
HONORARY CHAIRMANT
quarters. State Administrator H. C. Jones ie now visiting each of the states
Governor Berbert H. Labran
eight districte and holding meetings to explain the plan in dotail to county
administrators, city and town chairmen and other active workers.
CHAIRMANT
CO-CHATEMAN (for the
Richard C. Patterson, Jr.
*VICTORY FOR OKLAHOMA® says the bulletin "starts in your town. The
Metropolitan Area),
Chairman of the Board, Radio Keith
Lewis W. Douglas
goal 181 everyone buying a security, be it a ten cent stamp or
A $100 bond, every month."
Orphoum Corp., New York City
President, Mutual Life Insurance
Company of New York
FOUR SALES APPROACHES: (1) salary allotment (a) group Agent (3) Buy-
CO-CHAIRMAN (for Up-State New York),
s-Bond-s-Month and (4) retail sale of Defense Stamps are all to
Edward B. Latchworth
VICE-CHAIRMAN (Director of Women's
General Counsel, Marine Trust
Activities):
be stressed.
Company, Buffalo
Mrs. Lytle Hull
Hhipebeck
TRAINING COURSES are to be offered to sembere of the local commitiess
OTHER MEMBERS:
who will specialise in these anles methode.
OTHER MEMBERS (Continued)
Henry Bruere
A SCHOOL PLAN is to bring the message of thrift and seving to every
school child.
President, Bowery Savings Bank,
Arthur Endner
Now York City
President, Arthur Rudner, Inc.,
INSURANCE MEN, as part of B. nation-wide program of support to Defense
Advertising, New Tork City
Bagana C. Donovan
Savings, will work closely with local committees in Oklahoma's
President, Sew York State Bankere
Thomas J. Lyons
larger cities including Oklahoma City, Pulea, Enid, Moskogee and
Association
Stillwater.
President, New York State Federa-
tion of Labor
Guy Imereon
Vice-President, Bankers Trust
William I. Myers
PROGRESS NOTES:
Company, New York City
Bead, Department of Agricultural
Economics and Farm Management,
Arthur Getman
Full page newspaper advertisements for Defense Savings Stemps appeared
College of Agriculture, Cornell
in 35 Oklahoma cities during "Retailers for Defense Week".
Chief, Agricultural Education
University. Ithaca
Bureau, New York State Department
of Education
One of the largest buyers of Defense Stamps at the recent City
Bayard Pope
Pair VAI Senator Elmer Thomas who bought stampe for his two grandchildren.
Vice-Chairean, Executive Committee,
Banks, building and loan associations, the Oklahoma Chain Store Associations,
Walter 5. Gifford
Marine Midland Trust Company .
and the Oklahoma Gas & Electric Company all had stemp booths at this fair.
President, American Telephone &
You York City
Telegraph Company
The 25,000 Oklahoma City WORED who attended the annual cooking school
Robert 0. Rouse
Heary H. Heimann
sponsored by the Oklahoman and Times, had the message of Defense Savings
Vice-President, Federal Reserve
brought home to thes in 6. particularly forceful way:
Executive Manager, National
Bank of Not York
Association of Credit Men
"Aunt Susan," the home sconomist and lecturer who conducted the
Rose Schnelderman
Dewald Ensuth
five day school took AS her theme saving money through the proper
Secretary, New York State
preparation of food. Every time she saved A dine or a quarter by
President, Associated Dry Goods
Department of Labor
Corporation of In York
some now method, ehe look the Defense Bond Stamp Book from the
Eschen cabinet and descnstrated how that saving could be put 10-
to 8. Defense Bond, By the and of the week she had seved enough
Quatave Strebel
to buy a $25 bond and purchased one on the stage from a represent-
President, Nove York State Industrial Council.
stive of a local bank.
Congress of Industrial Organizations
Regraded Unclassified
News Letter
News Letter
145
VOLUNTART PUBLICAST PLAN ENVIDGLASTICALLY RECEIVED
NATIONAL CONTENTION OF THE AMERICAN TELERATION OF LABOR
BY VETERANS ADMINISTRATION IMPLOYEES
ENDORSES DEFENSE SAVINGS FROGRAM
The sore than 43,000 employees of the U. 5. Veterans administration are
ON OCTOBER 15, 10 Beattle, at the annual convention of the American
enthusiaatic about their regular purchase plan for lovesting in Defense Bonds
Federation of Labor, A ringing endorsement of the Defense Savings Program
and Stamps and already 66.4 per cent have pledged themselves to purchase
was adopted. After appropriate references to the gravity of the present
bonds or stamps regularly, either directly or through designated "group
situation the resolution of sndorsement concluded:
agents". Here are the units of this large establishment in which on Septem-
ber 20 - after the plan had been in operation only two months - 80% or acre
"THEREFORE, BE IT ERSOLVED
that every union and avery member
of all employees were participating
of organised labor purchase as many defense bonds as possible,
CENTRAL OFFICE:
Y. 4. FACILITIES (Costimued)
*AND BE IT FURTHER RESOLVED, That the American Fedaration of Labor
Insurance Claims Council
100.0%
Lake City, Fla.
90.7%
endorses and applends the voluntary principle upon which the pro-
Construction Service
93.0
Batavia, N. Y.
90.4
pus of Defense Savings is based and its approval is aspecially
Board of Veterans' Appeale
83.0
Bay Pines, Fla
89.7
exlended to voluntary Payroll Allotment Plane as sponsored by
Amarillo, Texas
69.3
individual unions and entered into freely in accordance with sound
REGIONAL OFFICES:
Fort Bayard, X. Mez,
88.6
trade union principles."
Jackson, Miss.
100.0%
Biloxi, Mins.
88,5
Fhiladelphia. Pa.
100,0
Inarville, Iown
88.6
THE CONVENTION we addressed by Herbert 3. Gaston, Assistant Secretary
Seuttle, Vash.
100.0
North Little Rock, Ark.
87,8
of the Treasury, who pointed outr
See Orleans, LA.
100.0
Tuscaloosa, Ala.
87.7
Little Rock, Ark.
98,4
Northampton, Mass,
67.6
The kind of investment that " need now, and need most urgently.
Denver, Colo.
95.6
Boseburg, Ore.
87.3
14 the systematic investment of esvings as of the current earnings
Boston, Vans.
96.1
Des Moines, Iows
87.1
of millions of Americans. I sean by that, that those who are earn-
Sinur Falls, 8, D.
94,7
Brecksville, Ohio
85.5
ing steady pay and higher pay today - to contribute acet effective.
Muskogee, Okla.
86.5
ly to defense and to serve their own interests by helping to prevent
L 1. FACILITIES:
Oteen, N. c.
85.7
inflation - should zake every effort to put at least 6 part of that
Summount, Y. Y.
98.44
Butland Heights, Year.
85.6
02128 pay into Defense Sevings Bonds and Stamps and should do 14
regularly.
Jargo, N. D.
98,1
Oclumbia, S. c.
84.7
Montgomery, Ala.
97.9
Legion, Texas
84.4
"Your President and other leaders of the American Federation of
Murfreesboro, Tom.
94.4
Outwood, Ey.
83.9
lahor understand those truths and have said repeatedly that they
Excelsior Springs, No.
94,1
Pittsburgh, Pa.
82,6
Atlants, On.
93.4
Wichita, Kansas
81,3
would like the rank and file to understand them too, The plan
which 98 think the most efficient, and which many of the unious have
Northport, L. I., V. T.
93.0
Merghis, Tenn.
81.0
already accepted, is one by which the individual workers ask to have
Lincoln, Neb.
91.8
a. certain amount set aside from their pay each week toward the pur-
chase of Defense Savings 3code.
REPORTS FROM OTHIR FEDERAL DEPARTMENTS:
X plan to you today 14 that AE BOOK as you get home from this cop-
Treasury: 91% of the 62,702 employees in Washington and 10 the field
vention and meet your fellow sembers of your own unions you discuss
are now participating to the purchase pledge program. Particularly outstand-
with the the adoption by each local of 4 plan similar to this and
146 is the record of the Internal Bevenue Service: 37,385 employees and 99%
do what you can to forward 11a adoption.
participation
INGOIDIATELY FOLLOWING Mr. Gaston's address, William Orean. President of
Government Printing Office: 81.6% of the 7329 employees ace participat-
the 4. 7. of L., added his personal endorsement in these words,
log la the 0. 2. 0. employees' voluntary purchase plan.
"No are all deeply impressed by the must which Assistant Secre-
Agriculture, 95.2% of the 803 employees of the Soil Conservation
lary Gaston brought to us this afternoon. 7a are in thorough ac-
Service in Washington and nearby Beltaville, Md., have signed purchase pledges.
cord, wholehearied accord. with the sentiments be expressed. and
Large percentages of participation are also reported by Federal Crop Insurance
the suggestions and recomendations made in the address be delivered."
Corporation (92.6%): Commodity Credit Corporation (81%): Agricultural Market-
ing Service (80%) and Rural Electrification Administration (76.75). These
are reports as of September 23,
9
Regraded Unclassified
News Letter
News Letter
146
PATROLL
INDIANA (Continued)
Important Developments in Minnesota, Indiana And Other States
The L Co Atking & Company of Indianapolie with approximately 1600
With the Minnespolis Committee's program to axtend the allotment plan
employees reports that nearly 90% are purchasing Defense Bonda either through
to all large concerns there in full swing (ace KENS LETTER, October 11), the
the payroll allotment plan or the socumulation of Defense Stamps.
It. Panl Committee has away into action under its General Chairman, Day 7.
Wents, and the Chairman of
the ni Lilly Company of Indianapolis, which has one of the most
its Industrial Division.
developed payroll allotment plans in the State, reporte that its 3000 employ-
John L. Connolly.
- laid aside approximately $12,000 during the month of September towards
Defense Bonds. Approximately half of the firm's employees are participating
More than 70 St. Paul
in the allotment plan.
concerns had announced
allotment plans by October
The Schecht Hubber Company of Noblesville, Indians, estimates that its
10, and a series of lunch-
900 employees will purchase about $60,000 worth of Defense Bonds during the
son meetings were being
coming twelve months.
held by Vents and Connolly
and Federal Esserve Bank
ALLOTMENT PROGRESS IN OTHER STATES:-
President John N. Payton,
to bring the objectives :
CONNECTICUT. With nearly 90% participation in as allotment plan, the
the program and the details
United Aircraft Corporation has hung up a mark for other large concerns to
of the plan to all other
shoot at. More than 27,000 of the 31,000 employees in the firm's East Bart-
large concerns.
ford, and Stratford, Connsoticut plants (including Hamilton Standard Pro-
pellors, Vought-Sikorsky and Prett & Whitney) have enrolled as regular Defense
"Making Defense Bonds
Savera and total allotments amount to about $225,000 monthly. Our congratule-
easily available to the work-
tions to Martin 7. Burke and his associates Junius Cooper. R. 1. Russell.
are in these industries
Joseph Parr. Charles 2. Is Tim. W. R. Hobbins. John P. Buith and Ired Dewson
Herman Anderson, employee of the Smith Welding
should provide & great the
who are reported to have worked hard for this recordl
Equipment Corporation, Minnespolis, is shown
lus to the Defense Bond
here receiving from Lee Johnson, shop foremen,
sale," said Chairman Vents.
NEW JERSEY. The Wright Ex-Service Men's Club is assisting in placing
the first of the many Defense Bonds that work-
"Imployers are to be coment-
the details of the allotment plan before each employee of the Fright-Aero-
are in the plant have bought through the D9W
ed for the enthusiass they
cantioal Corporation (plante in Paterson, Y. in and Cincinnati, Ohio).
payroll allotment plan now under my in Minne-
have shown. These plans
Sam Sharpley, former comander 16 Chairsan of the Wright Defense Bond Comit-
apolis. 2. E. Smith, President, looks on at
involve both added work and
too, Wright is advertising in local papersi "New Jersey Puts 120 In The
the attress right,
expense but 80 far they lan
Mr.
Let's Keep in Flying.
Buy
Defense
Bonds.
cheerfully assumed this extra
burdan.*
faie fine statement is expecially noteworthy AS Mr. Wents is one of the
THE SECRETARY ATTENDS A UNICE MERTING
recognised leaders of organised labor, being the business representative of
the St. Paul Trades & Labor Assembly and Vice-President of the Minnesota
Workers in the Risher Body Flant of General Motors, members of Local
State Federation of Labor.
596, United Automobile Workers, c. I. O., in Postiac, Michigan, recently
heard a talk on the Defense Savings Program by Frank M. labay, Michigan
Many Indiana Piras Now Have Allotment Plans
State Chairman after which the payroll allotment plan and various other
features of the program were discussed.
From Indiana, State Administrator Will E. Beith reporte that by the
middle of October, 20 firm bad reported to his that they had installed
At the rear of the hall, unknown to all but the union's Secretary,
allotment plans. Impressive records for participation in the Defense Savings
D. 1. Cote, was an Interasted observer - Secretary Morgenthan.
Program have already been hang up by the employees of BOM of these companies.
Most outstanding are the records of:
"I came away from the meeting," the Secretary was quoted
in a Detroit paper, "convinced that - are on the right
The J. D. Adams Manufacturing of Indianapolis. This firs with
track and that it can be done on a voluntary basis."
than 900 employees reports 100% participation.
- 10 -
- 11 -
Regraded Unclassified
147
News Letter
News Letter
TO 111 LADIES
AND DEFENSE BAVINOS
LIMITED STATES STAMPS
AND BONOS,
"Evary Clubwoman a. Bond-Owner*
"RETAILESS FOR DEFENSE* WEEK leanched the sale of Defense Stamps in
State and local Defense Savings Counities
countlees retail outlete throughout the country, It 14 expected that a
work can expect intelligent cooperation from the
large majority of these retail stores will continue to make these etamps
- - Insure
Presidents of state and local units of the Gen-
conveniently available and also to help State and local Defense Savings
eral Federation of Women's Clube. is early as
Committees promote their sale. Ou October 23, ambere of the Defense BAT-
last June, delegates to the national conference
inga Staff's Retailers Advisory Committee gathered in Washington to our-
of that organization. held in Atlantic City,
sider this problem and to discuss ways and more of accomplishing the de-
heard A representative of the Defense Savings
sired objective - the sale of a large and standy volume of Defense Stamps
Stamps. Staff speak on the subject of Defense Bonds and
through retail outlets.
NEW DISPLAY MATERIAL. For TRANS CIVING and CHRISTMAS, special posters,
This Fail, Mrs. John L. Whiteburst, President
decalcomania transfers, and other pieces of display materials have
of the orwe, sent out 6. direct request to each of
been prepared and will be distributed to approximately one willion retailers
the 14,500 presidents of member clubs, urging
in the near future. Distribution will be handled by local Defense Savings
Use to participate in the Defense Savings Pro-
Committees. State Administrators have received & field amorandos (No. 135)
gras. A month later, this You followed by a
which outlines the distribution procedure in detail.
National Defense Club Program Elt. This contained 5. plan of work for the are
Stamp and Bond Committees. It also made reference to Defense Savings materials
A "CARD OF INTENTION* will be enclosed with the pacicage of display
Washington. that could be secured by writing to State Defense Savings Beadquarters, or to
material which each retailer receives. On this card, retailars will be given
at opportunity to state that:
Chairman of the National Defense Department of the GIVC is Mrs. Harold
V. Willigan, Chairman of the GFWC Defense Bond Committee is Mrs. John D.
145 PART OF OUR SERVICE during the National Emergency 11 is our inten-
tiom
Robinson, who 16 also A member of the State Defense Savings Committee for North
Carolina. Motto for the year 18, "Every Clubwoman . Bond-Owner.'
"1. To pay all bomeses to employees in v. 8. Defense
Savings Bonds and Stamps.
The Women Follow Through
12. To offer facilities at all times to our customers and
In Kansas, Mrs. Albert Fushner, who is state president of the Banena
employees for purchasing U. 8. Defense Starps in our store,
Federated Women's Clubs as well as a member of the State Defense Savings lbs-
"3, To promote the public sale of U. S. Defense Stampe until
mittes, has been touring the state saking speeches at club conventions on the
the and of the Fational Energency."
Defense Savings Progres. A couple of weeks ago, abs predicted that by the end
of October, the 13,000 Kansas club woman will have bought at least one stamp
spiece. The KWC has had the following assage printed in bright red on 5.
small sticker suitable for use on correspondence;
1200 STORES GIVING AWAY "ANY BONDS TODAY!"
"Yansas Fedaration of Women's Clubs Urges You
in Detroit, Curningham's Drug Stores are giving away thousands of
To Buy U. 5. Stamps and Bonds.
engles of the souvenir adition of "Any Bonds Today which they have no-
Down in Texas, Mrs. J. 9. Walker, who as president of the Texas Federa-
printed "by permission of the copyright owner" - the Secretary of the
has tion of Women's Clubs is & member of the State Defense Savings Committee,
Treasury.
personalized har campaign to sell Bonds and Stamps. In her purse she
carries several partially filled Stamp Books. On her speaking tours, she
In the near future, other drug chains will also print copies of this
displays thes at every opportunity to her audiences,
song for free distribution to their customers. Among the chains which have
indicated their intention to doing this are:
Minnesota State Federation devoted I luncheon session recently to Defense
The California Federation of Name Clubs se going to buy Bonds. The
Marshall Drug Company of Ohio, stores throughout that state:
Savings, In Colorado, the imadinte past president of the State Federation,
Mrs. Henry Bruse Teller, has been drafted to serve as Director of the Wormal's
Liggest Drug Company of Yes Tork, stores throughout the Middle Weste and
Division of the Defense Savings Committee of that State,
Ow1 Irrue Company of California, wish stores throughout the he Yest.
- 12
13
Regraded Unclassified
News Letter
148
News Letter
HELLZAPOPPIN STARS SELL DEFENSE STAMPS IN PORTLAND
DE7XX53 BAVINGS 08 THE AIR
Leading Programs for the Comine Wenk
The broadway stage success "Hellrapoppin" reached Portland, Oragon
recently and State Administrator Ted R. Gamble AS the saying goes, EAR
bis opportunity and seiged it."
Menday, October 27
FUB AMERICA WE SING
9:30-10:00 P, M. (EST)
KBC Blue Network
Arrangements were made for the principal members of the cast to appear a
Tuesday, October 29
MILLIONS FOR
an outdoor stage in front of the Pioneer Poet Office in the heart of the city
8,00-9:00 P. M. (IST)
at noon and put on an impromptu show to soll Defense Stampe,
(The Treasury Hour)
NBC Blue Network
Below are two views of the crowd which gathered to listen to the show's
Saturday. November 1
AMERICA PREFERRED
9:15-9:45 P. M. (1ST)
non comedians, Billy House and Eddie Carr and to hear Bobby Jarvis, Arleen
Nutual Network
mabers. Anderson, Marylin Robbins and other stare of the show in various specialty
LAST THE *MILLIONS FOR DEFENSE" featured Secre-
tary of the Navy Frank Khax: Noel Coward and Robert
- - -
Montgomery, speaking from London; Bing Croaby and other
stars. We can't tell you the program for this week,
"MILLIONS FOR
but it will be worth listening to. Incidentally, Tues-
DEFENSE"
day evening might be a. good time to schedule meetings
= - -
of your local committees.
WJTN
600P. MI
- -
The advertisement from the Jamestown, N. Y. Post,
reproduced at the right in its original size was one-
fourth of a full newspaper page.
Mayor Marl Riley addressed the crowd briefly and purchased the first
WITH FOOTBALL vary much to the fore these days. the Radio Section of
dispensed. stamp. Bundreds of others followed wuit until more than $800 worth had been
the Defense Savings Staff reporte that, on a. recent week-end, the specially
prepared Defense Bond football announcements were used 500 times over 150
stations. Tidewater 011 Company and the Atlantic Befining Company, which
Members of the cast including Billy House (*** above) acted as salessen
sponsor broadcasts of 35 games each week over 78 stations, use these
for the stamps. They were assisted by members of the Junior Chamber of Com-
announcensnte regularly.
merce. The Jaycee Committee responsible for this event was composed of Jack
Shields. James Tecmas and Martin Blakaley.
A typical football announcement reads in part M follows:
The Fire Department's disaster car broadcast the event.
"Willions of Americans have enjoyed football gassa this week-
end. America must be kept free to enjoy its national sports
The first performance, Wednesday noon, was so well received it was repeat
and the countless liberties with which 9a are blessed. The
ed on Thursday noon and members of the Hellaspoppin cast say that they want to
roar of the football crowds is loud-but it's only & whisper in
do the same thing in other cities they visit a their tour.
comparison with the roar of our industrial plants. Today
our country is one team in its determination to preserve our
democratic idanls. Get on that team and fighti Back
your country to the limit by buying United States Defense Bonds
A large booth at the Pacific International Live Stock Exposition
and Stamps. Invest a part of your earnings regularly to
Portland October 4 to 11 Fax devoted to the sale of Defense Bonds and The
take our taxes the world's best, Let's snowp down the field
Associations provided personnel to staff the booths at all times.
Gas à Coke Company donated the space and Portland Savings Stamps, and Loan
to victory and take Uncle Sam's the strongest team in the world."
- 14
- 15
Regraded Unclassified
News Letter
"A LETTER FROM SECRETARY MORGENTHAU"
(Originally published on the Fditorial Page of the
Boston Sunday Post, September 28, 1941).
John Q. Citizen came home from work the other night a bit upset. The
headlines in the paper had not been heartening.
...
Besides, he had had an
argument on the train with a fellow passenger.
Both were for defense.
But on the means to that end they had differed, mildly at first, and then -
well, they were not speaking when John got off the train.
In the hallway, on the little table were a few letters. "Bills," John
muttered. Then his heart stopped. Here was a long envelope bearing the
notation. "Tressury Department. Washington, D. 0."
That Was bad. What had he done? Why should the Treasury send him a
letter?
The envelope opened easily. It contained a couple of pamphlets,
But there was a letter also. Gingerly he unfolded it. It was addressed to
him, "John Q. Citizen," and the address was right. It was even meant direct-
ly for him. For it didn't say, "Dear Sir." It said, plainly enough, "Dear
Mr. Citizen." Then he read the first line and gasped.
"I am writing to thank you personally for your patriotic co-
operation in buying United States Savings Bonds."
Quickly his eye ran to the bottom of the letter, to the ending which
read: "Very truly yours, H. Morgenthau, Jr., Secretary of the Treasury."
"Gosh," was all John could think, "Gosh, the Secretary
of the Treasury writing to mel"
He hadn't expected this. Of course, he had bought a bond because he
wanted to do something to help defense. After all, it was the thing for
Americans to do. But a personal letter.
It was down on the record, Ee
had done something more than argue about the defense of America. No, this
wouldn't stop him from arguing how the defense should be carried out. But
it showed he was for the main idea, that he wanted to help and that he had
demonstrated his confidence in the future of America.
He tucked the letter in the inside coat pocket, very carefully.
Where
did he stand? Well, that letter would show where John stood, right on the
line, alongside of Uncle Sam, shoulders back, chin out, looking the rest of
the world straight in the eye and ready to quote that potent paragraph from
the Secretary's letter:
"Now, as never before, I believe that all of us are
ready to demonstrate, in concrete form, our partner-
ship with the government -- & partnership, as the
,1001
President said, which is entered into to safeguard
and perpetuate all those precious freedoms which the
AHOS
founders of our republic gave us as our heritage."
DEPARTMENT PRINTING OFFICE
- 16
Regraded Unclassified
UNITED STATES SAVINGS BONDS
Comparative Statement of Sales During
First Iventy-one Business Days of August, September, end October. 1941
(August 1-25, September 1-25, October 1-24)
On Basis of Issue Price
(Amounts in thousands of dollars)
:
:
Amount of Increase
:
Percentage of Increase
Sales
:
=
or Decrease (-)
:
or Decrease (-)
Item
:
1
:
:
October
: September
:
October
2 September
: October
:
September
:
August
:
over
:
over
:
over
:
over
:
:
1
:
September
I
August
:
September
:
August
Series 3 - Post Offices
$ 32,864
$ 32,374
$ 34,349
$ 490
-$ $ 1,975
1.5%
- 5.7%
Series In - Banks
63,369
56,289
64,003
7,080
- 7,714
12.6
- 12.1
Series E - Total
96,233
88,663
98,352
7.570
- 9,689
8.5
- 9.9
Series I - Banks
17,571
14,633
16,978
2,938
- 2,345
20.1
- 13.8
Series G - Banks
95,948
89,336
104,905
6,612
- 15,569
7.4
- 14.8
Total
$209,753
$192,632
$220,235
$17,121
-$27,603
8.96
- 12.5%
Office of the Secretary of the Treasury, Division of Research and Statistics,
October 25. 1941.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of
sales or United States Savings Bonds.
Note:
Figures have been rounded to nearest thousand and will not necessarily àdd to totals.
Regraded Unclassified
CONTIDEN
UNITED STATES SAVINGS BONDS
Daily Sales - October 1941
On Basis of Issue Price
(In thousands of dollars)
Post Office
Bond Sales
Bank Bond Sales
an Bond Sales
Date
Series I
Series E
Series F
Series G
Total
Series E
Series 7
Series G
Total
October 1941
1
$ 1,450
$ 3,029
$ 1,286
$ 8,271
$ 12,587
$ 4,479
$ 1,286
$ 8,271
$ 14,036
2
1,870
2,786
867
4,324
7,977
4,656
867
4,324
9,847
3
2,150
3,299
1,065
6,323
10,687
5,449
1,065
6,323
12,837
4
1,270
1,696
612
6,400
8.707
2,966
612
6,400
9.978
6
3,449
4,778
1,444
9,286
15,508
8,226
1,444
9,286
18,956
7
1,207
2,595
572
2,913
6,080
3,802
572
2,913
7,287
8
1,363
3,674
821
3,611
8,106
5,037
821
3,611
9.469
9
1,652
4,270
903
3,654
8,827
5.923
903
3,654
10,479
10
1,495
3,672
989
5,272
9.933
5,167
989
5,272
11,428
11
1,291
2,400
632
4,098
7,129
3,690
632
4,098
8,420
13
2,515
3,624
1,164
4,989
9.778
6,139
1,164
4,989
12,293
14
437
1,022
261
511
1,794
1,459
261
511
2,231
15
879
2,175
759
3,482
6,417
3,055
759
3,482
7,296
16
1,376
3,054
724
3,908
7.685
4,429
724
3,908
9,060
17
1,422
3,609
860
4,969
9,438
5,031
860
4,969
10,861
18
1,180
2,424
846
3,013
6,283
3,604
846
3,013
7,463
20
2,827
3,395
895
3,800
8,091
6,222
895
3,800
10,918
21
887
2,029
436
2,959
5.425
2,917
436
2.959
6,312
22
1,284
3,316
835
5,880
10,032
4,600
835
5,880
11,316
23
1,496
3,201
882
5,322
9.406
4,697
882
5,322
10,901
24
1,364
3,320
718
2,963
7,001
4,684
718
2,963
8,365
Total
$ 32,864
$ 63,369
$ 17,571
$ 95.948
$176,889
$ 96,233
$ 17,571
$ 95,948
$209,753
Office of the Secretary of the Treasury, Division of Research and Statistics.
October 25, 1941.
Source: All figures are deposite with the Treasurer of the United States on socount of proceeds of sales of
United States Savings Bonds.
Note: Figures have been rounded to nearest thousand and will not necessarily add to totals.
Regraded Unclassified
151
12:28 p.m., October 25, 1941.
Kr. Louchheim of the SEC dictated the following over the
telephone. He said it was a teletype received from Commodity
Expert in New York answering his inquiry R.B. to the effect of
amendment to General License No. 9,
General feeling seems to be that Treasury Order has
removed a source of very unwholesome speculation. Result will
probably be 8. smaller volume but a. trading market instead of
sharp run-upe caused by foreigners' bullishness. Also believe
that selling and attendant casiness today due to the action.
À partner of a large firm which has many commodity
accounts as well a.s blooked accounts said: "The Treasury action
caused some selling. Blocked accounts were more conscious of
inflation than Americans. The Order was probably designed to
limit speculation and to keep prices down. In the long run
probably a. good thing."
The principal market news service attributed easiness
this morning mostly to Treasury action.
Regraded Unclassified
152
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE October 25, 1941
TO Secretary Morgenthau
FROM V. F. Coe
Subject: Clippings on Women's Work in En land -- Sent
by Casaday
1. The Government is making an intensive drive
to recruit women for work in war industries.
They are askin older women to volunteer before
the: are called up. They are shifting all women twenty
to twenty-five from shops -- making an exception only
of food shous.
2. The Army is intensifying its advertising in
order to get more women into the A.T.S.
women nas made an irritating issue out of the unequal
3. The much more important industrial role of
compensation paid to women for war injuries.
Regraded Unclassified
153
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE October 25, 1941
TO
Secretary Morgenthau
FROM
Mr. White
Subject: Exports of Philippine Iron Ore to Janan
1.
A decision was reached some time ago by the Metals
Reserve Corboration to preclusively purchase suproximately
one million tons of Philippine ore -- the amount normally
shipped to Japan in B year.
2.
The British had agreed to stop the export to Japan
of Burmese ore if we stopped the flow of Philippine ore.
7.
The State Department preferred to purchase the ore,
rather than stop its export; but postponed sction.
Mr. Perkins, however, withheld export licenses.
Mr. Milo Perkins her notified us that a directive
has been signed by him requiring special affidavits in
connection with the exports of certain commodities, in-
cluding iron ore, from the Philiopines. He believed this
directive would stop the flow of ore to Janan.
4,
As 8 result of export control together with e lock
of enipoing, Janan received no Philippine ore after the
beginning of August.
5.
Recent statistics of Philippine ore production and
exporte to Japan:
Production
Exports to Janan
1940 - 12 months 1,235,000 metrio tons 1,191,600 metric tons
Regraded Unclassified
154
Division of Monetary
- 2 -
Research
By Months
Production
Exports to Japan
1940
September
102,400 metric tons
not available
91,000
"
If
If
If
October
November
96,000
#
II
a
Il
83,700
#
II
11
#
December
1941
January
124,000 metric tons
168,000 metric tons
$6,000
H
II
53,000
a
"
February
121,700
If
II
99,000
"
"
March
136,100
#
II
118,000
II
11
April
111,100
H
"
May
150,000
II
11
70,000
et
If
150,000
Il
"
June
57,000
If
n
July
128,000
II
n
August
not available
none
lst. 6 months-1940
678,700 metric tons
624,000 metric tons
lst. - months-1941
648,900
#
"
738,000
#
"
Consul 6. at Manila, the Philippine iron mines announced closure early
According to a cable of August 11, 1941, from the U. S.
in August because of a. lack of shipping space.
Regraded Unclassified
155
?
Y
FEDERAL RESERVE BANK
03 NEW YORK
October 25, 1941.
Siri
Attention: Mr. Frank Dietrich
We have today received the following tested telegram dated
October 24, 1941 from the Federal Reserve Bank of San Francisco:
"WE CREDIT 25TH $5,548,719.10 FOR CREDIT
TO THE 'SECRETARY OF THE TREASURY SPECIAL
ACCOUNT', REPRESENTING PROCEEDS OF 158,539.363
FINE OUNCES GOLD RECEIVED BY MINT HERE ON
OCTOBER 19 ON S. S. 'DNEPROSTROY' FOR ACCOUNT
OF THE STATE BANK CF U.S.S.R. MOSCOW.
DOLLAR VALUE $5,548,877.70 LESS MINT CHARGES
OF $158.60. AMOUNT OF REGULAR 1/4 OF 1
PERCENT HANDLING CHARGE WOULD BE $13,872.19"
In accordance with the above telegram and pusuent to our
telephone conversation of today we have credited the Secretary of the
Treasury, Special Account on our books $5,548,719.10 and have made
the appropriate entries in the transcript of the Secretary of the
Treasury Special Account to reflect the 1/4 of one per cent charge
of $13,872.19 29 = handling charge on gold.
Respectfully,
/s/ L. V. Droke
L. W. Knoke,
Vice President.
The Eonorable,
The Secretary of the Treasury,
Treasury Department,
Washington, D. C.
Inc.
Copy:vw:10-27-41
Regraded Unclassified
156
October 25. 1941
Dr. Feis
Mr. Districh
will you please use the fellowing sable to the American General at Zong Keng:
*Fer Fex from the Secretary of the freasury.
Reference Opagent's sable of September 27 20 mager of Bong Long
effice of American Express Company. It is suggested that you take
this matter no with 1. Stonerson (or his successor) Foreign Manager of
the long Zong office of American Express Company with & view to having
Chinese manager discharged If facts varrent wash action. Ve will
support your insistence that each perces be discharged."
(Init.) P.D.
FD: 10/25/41
Regraded Unclassified
157
PARAPHRASE or TELEGRAM SKNT
TO: American Consul, Rong Leng, China.
DATA: Cetober 25, 1941, 7 p.m.
NO.1 de number.
THE FOLLOWING IS FROM THE SECRETARY OF THE TREASURY
FOR FOX.
Reference 19 made to spagent's cable under date of
the 27th of September regarding the manager of the Apert-
can Axpress Company at the Rong Kong office. The matter
in question should be taken up with the Foreign Manager,
J. tenersen, or his successor, of the Company's Hong Bong
office, no as to have the Chinese manager removed from
the office if fasts in the atter reveal that such setion
should be taken. Your insistence that the Chinese wannger
be discharged vill be supported by us.
RULL
(FL)
e
Regraded Unclassified
158
PD
GRAY
Hong Kong via N.R.
Dated October 25, 1941
Rec'd 10 n.m. 28th
Secretary of State,
Washington.
447, October 25, noon (SECTION ONE)
CONFIDENTIAL.
FROM FOX FOR SECRETARY OF THE TREASURY:
TF- I have further examined your 350 of October
18 and an in thorough accord with objectives L3 I CJT SUDE
are the Chinese Government and Board members. Host
irrnestly plead that sorly action bE taken. Am
reasonably certain that had Manila plan been com-
pleased most of recent Shanghai developments would net
lieve occurred. Majority of objections reised by
British to Manila plan had litcle valility. Your
new plan now has the approval of all members of the
Sourd and Chinese authorities, Furthermore, Hieneyer
Bonter, and Cochran participated in discussions with
Socra members end Cochron in discussions with the Chinese
authorities. SEE no PERSON why BiLE plan cannot be put
into Effect immediately. would hElp pratly if it WERE.
Am in complete accord with the principle Enuncitted
in station six
Regraded Unclassified
159
-2- #477, October 25, noon (SECTION ONE) from Hong Kong
via N.R.
in sEction six in 350 regarding licensed banks. Do
not EXPECT too high degree of cooperation from
Shanghai banks. REPEATED Evidence to the Effect that
spirit of cooperation is lacking Especially from
American banks.
SOUTHARD
CSB
Regraded Unclassified
160
TRB
GRAY
Hong Kong vic. U.R.
Dated October 25, 1941
Rec'd 9:46 a.m., 26th.
Secretary of State,
Washington.
447, October 25, noon, (SECTION TWO).
They continue to believe in the spirit of
Mackay's September 17 letter. Rumors persist that
both Chase and National City Bank have been recently
submitting bank notes to black market in Shanghai.
I have reported that together with suggestion for
checking flow of bank notes into China. Cannot of
course obtain definite EVIDENCE but reports come
from sufficiently reliable source to have some
credence.
I was quite Embarrased recently when in Chungking
to have manager of the Central Bank hand me bid for
purchase of United States Treasury check issued by
officer of the United States navy. This particular
check was sold to an unlicensed bank ct unofficial
rate. I reported on September 12 that United States
Government officials WETE selling their checks at
unofficial rates but to date no action has been taken.
Understand that
Regraded Unclassified
161
-2- 447, October 25, noon, (SECTION TWO), from
Hong Kong.
Understand that British regulations forbid dealing
at unofficial rates. Why cannot all Washington DE-
partments notify their (official?) officials in China that they
must deal only at unofficial rates. It is true
that prices in China are high and are rapidly rising,
but this situation should bE taken care of in some
other way than in dealing in the black market. It
is most ambarrassing and it is certainly a situation
that can Easily bE taken care of in Washington and
could have been long ago."
(END OF MESSAGE).
SOUTHARD
CSB
Regraded Unclassified
TREASURY DEPARTMENT
162
INTER-OFFICE COMMUNICATION
DATE October 25, 1941
TO Secretary X
CONFIDENTIAL
FROM Mg. Dietrich
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£14,000
Purchased from commercial concerns
£7,000
Joen market sterling remained at 4.03-1/2, and there were no reported
transections.
In lev York, closing quotations for the foreign currencies listed below
were P.E. follows:
Canadian dollar
11% discount
Argentine peso(free)
.2368
Brazilian milreie (free)
.0505
Colombian peso
.5775
Mexican Deso
.2070
Uruguayan peso (free)
.4625
Venezuelan bolivar
.2630
Cuban Deso
1/8% discount
There were no purchases or sales of gold effected by 116 with foreign
countries today.
The Federal Reserve Bank of New York reported that the Central Bank of
the Colombian Republic shipped $2,100,000 in gold from Colombia to the
Faderal for its account, disposition unknown.
The Federal Beserve Bank's report of October 22, listing deposits of
becks in Asia with the New York agencies of Japanese banks, showed that
such deposits totaled $58,468,000, an increase of $727,000 since October 15.
Also reported were selected items from the statement of the Yokohame Specie
Bank's New York Agency, which revealed that an increase of $702,000 in
Jananese and Kanchurian bank deposits was accompanied by 8. decline of $778.000
in U. 3. Treasury bills, commercial order, etc. held by the Agency for
account of such banks.
Regraded Unclassified
163
RESTRICTED
3-2/2657-220; No. 528 M.I.D., W.D. 11:00 A.M., October 25, 1941
SITUATION REPORT
I. Eastern Theater.
Ground: Hard fighting continues along the entire front.
The German High Command claims the capture of
Kharkov and Belgorod (50 miles north of Kharkov).
The Germans apparently are pressing their ad-
vance on a line from Rostov, north to Makeyevka.
II. Western Theater.
Air: The Air Ministry reports that squadrons of R.A.F.
bombers raided the Rhineland and other targets in western Germany,
as well as the Brest docks, during last night. This made the fifth
consecutive night of British planes to operate over Germany proper.
Great Yarmouth was agains last night the target of
a German attack. Germany also claimed to have sunk large quantities
of British shipping during the night.
III. Middle Eastern Theater.
Air: The Italian communique indicated that Naples had been
raided for the third time in four days, and also that Ragusa and Li-
cata, in Sicily, had been attacked. The sinking of a large British
freighter in the Mediterranean by Italian torpedo planes was claimed.
RESTRICTED
Regraded Unclassified
PUBLICATION OF
THE ZIONIST ORGANIZATION OF AMERICA
164
The New Palestine
The American Zionist Weekly Devoted to Jewish Affairs
1720 SIXTEENTH STREET, N. W.,
WASHINGTON, D.C.
October 26, 1941
Mr. Henry Morgenthau, Jr.,
The Secretary Of The Treasury
Washington, D. C.
Dear Mr. Morgenthau:
Thank you for your note on Justice Brandeis. It will
occupy a feature position in the November 14th Brandels
Memorial issue of The New Palestine.
I shall see to it that copies are sent to you upon
publication.
Carl yours,
Carl Alpert alpert
Managing Editor
CA:eg
Regraded Unclassified
October 20, 1941
1
For New Palestine
165
Regraded Unclassified
During my formative years everyone is the United States use
stirred from time to time by the legal battles of the great humanitarian
Louis D. Frandsis. In 1907 he fought for and was the limitation of the
length of the verifiey for visa. the yours earlier he had already become
promisent in his fight for the sotchlishment of Savings That Insurance,
which was according to the principle he counsiated, in order
that: The thrifty vorking man, like people of larger needs, should have
the opportunity of obtaining life insurance as more nearly 110 associaty
cost." Thereby he anticipated social security legialation w fully thirty
years. Five years later he use again cooking legislation of otill mother
aspect of social security, assoly, 014 Age Pension. Rie Ideas as this 10-
m, as on the rights of labor, the of trusts, the need for statem
vage love, federal control of injustry insefer as 10 affects the velfare
and pockstbook of the - the consermtion of natural researces,
price and competition, M well as all the other major Locase on which Mr.
Brandeis expressed himself and fought for before he became 8 Justice of
the Deprese Court. were founded on mest legic and good humanity. Ris No-
card after he because a Justice vse a natural development of the - greet
talent and devoted to the improgmable fortification of our Constitution
which guarantees the rights, the from and the opportmaities of all the
people under it.
Justice Louis D. Brandsis' attainments is constitutional law shall
reads forever to guide the perplemed: and his ave life shall for long no-
sain & symbol and a model for all who aspire to be good Americans.
Heary Morganthan, Jr.
o
0
P
166
Y
PD
PLAIN
Stockholm
Dated October 26, 1941
Rec'd 1:35 p.m.
Secretary of State,
Washington.
688, Twenty-sixth.
New three months Treasury bills issued for
75 million crowns at one point 349 percent discount.
Final budget deficit fiscal year 1940-41 1609
million crowns increasing deficit in budget equal-
isation fund as of June thirty 1941 to 2368
million crowns. Ricebank report October 23 gold
reserves 807, foreign exchange 865, loans discounts
769, note circulation 1449, all million crowns.
Inform Treasury, Commerce.
GREENE
HPD
Copy:bj:10-28-41
Regraded Unclassified
167
October 27, 1941
9:36 a.m.
5MJr:
Hellc.
Secretary
Stimson:
On Saturday I got word indirectly through Foley
that you were afraid still - even after my telegram
to the authorities - the military authorities in
Hewaii - that pressure would be brought by them
to prevent the continuance when the case came up
for trial. I've forgotten whether it was to come
uo Saturday or today.
AND:
Well, I haven't seen Foley 80 I don't know - I
spoke to him after Cabinet when I came back, and
told him about my conversation with you and the
Attorney General. I believe we have 8 nostpone-
ment for two weeks.
=
Well, all right then. But I just wanted to tell
you that I called us on the telechone the Commanding
General out there
HMJr:
on, really?
and told him that I had had this word and
while I had sent the telegram, and was sure that
he was obeying it, I wanted to be perfectly certain
that they were not - that none of the subordinates
were doing anything in it, and he at once seld
that
H/Jr:
Hello.
SI
He at once said that my orders would be obeyed.
HMr:
Yes.
is
But I have had B long telegram from him, which
indicates that there's a great deal of feeling
out there that the attack WAS entirely unprovoked
and also he givee me the sequence of evente which
shows some things that you might look into on
your side.
Regraded Unclassified
168
- 2 -
HMJr:
Good.
8:
I mean, he starts off the telegram by saying -
I've got it before me here - "Thie headquarters
has taken no part in the prosecution nor made
any appearances in the proceedings requesting
continuance - made no appearings in the proceedings
requesting continuance of the trial."
HMJr:
Yes.
S:
The prosecution of the case and the resistance
to continuance has been solely in the hands of
the Territorial District Attorney, Mr. Cassidy,
who has from time to time requested and has been
furnished the full information possessed by these
headquarters.
HiJr:
Yes.
S:
And Mr. Cassidy has today expressed hie complete
satisfaction BE to the cooperation rendered. On
the other hand, the local Customs office has deviated
from the rule of interested spectator and it is
quite apparent here that strenuous efforts are
being exerted on behalf of the accused, that they
are leaving no stone unturned to have their man
found either only guilty of the lesser charge of
manslaughter or to have him go Scott-free
HMJr:
Yes.
S:
on the theory that the shooting was in the
line of duty either in self-defense or to prevent
the commission of a felony.
HMJr:
Yes.
S:
Then he says - he calls my attention to the fact -
that it was the duty of the Army, of course, to
have what t they call a "death board" investigation
of the murdered officer.
HMJr:
Yes.
S:
And that board did reach the conclusion that the
killing was unjustified, and the facts show I'm
Regraded Unclassified
169
- 3 -
reading now, "beyond B reasonable doubt that the
slayer could not be considered 8.8 having noted in
line of duty or by color of his office."
HMJrt
Yes.
"And it 1e believed that these views are concurred
in by the local United States Attorney, Mr. Taylor,
and furnish the reason for his declining to join in
the slayer's defense."
HiJr:
Yes.
S:
Then he goes on reading about the point that you
brought uo about that Army witness.
HMJr:
Yes.
in
He says, "I desire to point out that when the two
Wavy and the one Army witness were formally examined
at police headquarters, both Mr. Hiberle -" I think
that's one of your men, isn't it?
HMJr:
I don't know.
8:
Yes. "Both Mr. Hiberle and Mr. Riley, his investi-
gator, were present. They are therefore fully
cognizant of the testimony which will be given
by these witnesses at the trial."
MJr:
Yes.
S:
"Bearing in mind that these men are the identical
witnesses - that these are the identical witnesses
which they now claim have been denied to them by
this headquarters, this headouarters has not at
any time prior to receipt of your radio, discussed
this case with the two Navy witnesses; and today
these witnesses stated that no one from the local
Customs offices had ever requested the statement
from them." Then comes this - a little further
down - but as regard to the Army witness -"as
regard to the witness, the Army nurse, she is
primarily B. witness for Mr. Cassidy, the prosecutor,
and in addition, she has testified before the
Grand Jury which indicted the accused. Therefore,
Regraded Unclassified
170
- 4 -
when Mr. Riley requested that this headquarters
order her to give him a formal statement prior
to the trial, the request was under the circum-
stances denied on the grounds of propriety."
EMJr:
Yes.
8:
"Our views in this regard were likewise conveyed
to Mr. Caseidy and he stated to the effect that
his policy regarding witnesses prior to the trial
was one of hands-off, and to let the opposition
interview them as they pleased."
HMJr:
Yes.
en
"And it was legally a matter for the witness
to decide, and that therefore there was no legal
method of compelling any witness to be interviewed
against his will prior to the trial. These views
were also conveyed to Mr. Riley and later Mr.
Riley admitted that he diá not wish to interview
the nurse a.e a part of any official investigation
by the Customs Department, but purely for the
purpose of assisting the accused defense counsel."
Well, if that 18 80, why, of course, Riley was
asking for something that under the law, BE I
understand it, he wouldn't have a right to,
HMJr:
Well, I don't know, Harry, but
S:
I mean, in other words, what they've done is to
leave the witness alone to her own decisions
HMJr:
Yes.
St
and they're very emphatic in regard to that,
and not to put any Army compulsion either one way
or the other on her; and inasmuch as they feel
pretty strongly about it, I think they have leaned
over backwards - not leaned over backwards - but
they've stood up straight.
HKJr:
Well, I appreciate your taking all this personal
interest in it, and I will see Gaston and Foley
Regraded Unclassified
171
- 5 -
immediately and ask them where the thing stands
and tell them what you have told me.
Well, my whole object was to see that our people
5:
don't interfere with the proper trial there.
HMJr:
Well, that's all I'm asking. That's all I'm
asking.
S:
I know that's all you're asking, and I have perhaps
gone further than I would ordinarily do
HMJr:
Yes.
S:
to follow up a telegram with a telephone
.....
talk on the subject.
HMJr:
Well, I think what you've done is only what I
would expect you would do under similar circum-
stances, knowing you
S:
And I thought I would also tell you that there
18 another side to it out there
HMJr:
Yes.
8:
and that these officers of the Army who didn't
know this young man at all - he had just come from
the Philippines - feel very strongly that he was
shot without provocation
HMJr:
I see.
S:
on the evidence that they've heard there.
HMJr:
Well that, of course, I wouldn't attempt to
pass on that, because I don't
S:
I don't either. I just wanted you to know that
there was another side.
HMJr:
Oh, I'm sure there 18.
S:
These are respectable men - Short - - General Short
out there, is an able man and I just asked about
Regraded Unclassified
172
- 6 -
him - I don't know him personally - but General
Marshall says that he 18 an able fellow and will
do what's ordered.
HMJr:
Goesip has it - and this 16 pure gossip - that
this man had been ordered back from the Philippines
because he was mentally deranged. Now, that's
pure gossin.
S:
Well, they - in this long telegram, Short says
that your man made that statement out there,
and that he doesn't have any of it to that effect
at all.
HMJr:
I £ee. Well
S:
So that evidently, if he was mentally deranged,
this branch of the Army hadn't heard of it.
HMJr:
Well, anyway, Harry, you've done everything that
anybody could possibly ask for. The man will get
a fair trial.
3:
Yes, he'll - I'm sure he'll get a fair trial.
HMJr:
Now, whether he's guilty or whether he shot without
provocation, I don't know and I don't care, but
S;
Yes. You're only seeking a fair trial.
HMJr:
That's all I'm seeking, and
S:
And I was trying to helo you to get it.
HMJr:
Well, I think you have. I think you've done
everything anybody could ask.
S:
I think 80 far 88 these - as the Army authorities
there are concerned, you and I'll get it all right.
HMJr:
Well, and - if anything turne up and I feel that
we don't and I'm sure of my facts
S:
Yes.
HMJr:
I'll communicate with you.
Regraded Unclassified
173
- 7 -
S:
All right.
HMJr:
Thank you.
Regraded Unclassified
174
October 27, 1941
9:45 a.m.
GROUP MEETING
Present:
Mr. Foley
Mr. Kuhn
Mr. Graves
Mr. Gaston
Mr. Bell
Mr. Thompson
Mr. Blough
Mr. Morris
Mr. Buffington
Mr. Barnard
Mr. Schwarz
Mr. Jullivan
Mr. Heas
Mr. White
Mrs. Klotz
H.M.Jr:
The reason I was delayed - I an sorry - was
that Mr. Stimson had me on the wire ten minutes.
I will talk to you people about it afterward.
Gaston:
Right.
E.M.Jr:
lie not only sent his telegram but he called up
the Commanding General from the District on the
telephone.
Foley:
Well, I called licCloy about 12:30 on Saturday
after I had talked with Chambers, so that the
Army wouldn't interpose through the Commandant
out there an objection to a continuance for a
month, as Chambers thought they might do.
Regraded Unclassified
175
- 2 -
H.M.Jr:
I couldn't tell him what you had been doing,
but Stimson called up the Commanding General
on the telephone and he said, "I want my
orders carried out." The Commanding General
said, "They will be." And then a lot of stuff
which I don't want to go into now. Who is
Cassidy?
Gaston:
As I recall, that is one of the Navy Lieutenants.
Connally was the man that was shot.
H.M.Jr:
Well, whoever is going to do the prosecuting --
Foley:
Cassidy is the territorial prosecutor.
H.M.Jr:
And he is refusing to prosecute because he
thinks that our man was in the wrong.
Foley:
Yes. Out there the Army views this as cold
blooded murder. That is what Chambers said.
H.M.Jr:
Well, anyway, if you people will stay behind, --
Thompson:
I have got a letter that Mr. Kuhn sent for your
signature.
H.M.Jr:
Oh yes. I hear by Peter Odegard that Barth
has decided to stay with us.
Kuhn:
That is right.
H.M.Jr:
Now, who lets Stettinius know?
Kuhn:
I believe Oscar Cox.
H.M.Jr:
Who tells Oscar Cox?
Kuhn:
Barth.
H.M.Jr:
I don't have to do anything?
Kuhn:
No, sir.
Regraded Unclassified
176
- 3 -
H.M.Jr:
It is all right with me. Have you got anything
else?
Thompson:
I have sent over to the Bureau of the Budget of
the Budget B. deficiency extimate of approximately
four million dollars for Foreign Funds for the
rest of this year.
H.M.Jr:
How much?
Thompson:
A little over four million dollars. Our approp-
riation is a million, two hundred fifty thousand,
and it has gone up to five million more.
H.M.Jr:
What else?
Thompson:
That is all.
H.M.Jr:
I have got a follow up here for Messrs. Foley,
Gaston and Thompson, that they were going to
get together and decide the fate of one Sam
Klaus.
Thompson:
We have had a number of meetings.
Gaston:
That has been decided.
Foley:
And the order is in process of writing it and
we will bring it in to you as soon as the job
is finished.
H.M.Jr:
What are you doing with him?
Gaston:
We are putting him under Mr. Foley's jurisdiction
with the provision that he will continue to do
substantially the same things for me that he
has been doing heretofore.
H.M.Jr:
Sounds like Leon Henderson, the way they fixed
him. He says the only difference in the job was,
he had to walk from one end of Washington to
the other but he still had the same responsibility.
Regraded Unclassified
-, 4 -
177
Gaston:
Well, the question of responsibility is &
little different here. Ed gets the responsibility.
Foley:
He (Gaston) gets the benefit and I get the
responsibility. (Laughter)
H.M.Jr:
Just as long as I continue to hear the gossip.
Gaston:
I won't comment on that.
H.M.Jr:
We know you know what is happening to Klaus.
Thompson:
I would like to get your permission to move Mr.
Klaus to the Washington Building. I have no more
space in this building.
H.M.Jr:
He is responsibile to Mr. Foley.
Thompson:
Well, he told me I could move him.
H.M.Jr:
From now on, don't come to me about Sammy Klaus.
I know what makes Sammy run. (Laughter) Don't
ask me, if that is the way your set-up is.
Thompson:
Well, we will work it out. Sammy probably will
come to you.
H.M.Jr:
No, if it is a signed order that (Foley) is his
boss. That answers that argument. You just
start in.
Foley:
John says keep him in the district.
Sullivan:
It looks to me as though Sam is getting an
awful trimming around here. (Laughter)
H.M.Jr:
Any time, Barnard, they wish fifteen or twenty
economists on you and you want a ringmaster,
send for Sanmy Klaus. He will take care of them.
Barnard:
I had better get acquainted with him quick.
(Laughter)
Regraded Unclassified
- 5 -
178
Sullivan:
Yes, quick.
Bell:
You should have known him last week, shouldn't
you?
H.M.Jr:
Here is that request on the mail survey still
pending.
Thompson:
I have a man making a very thorough survey of
the mail. He is covering the whole Department
and setting up new procedures. I will have a
preliminary report from him tomorrow on this.
H.M.Jr:
All right. I asked Thompson to prepare and
Mr. Foley to approve a le tter to the Attorney
General requesting instructions from the
President if the Treasury is to turn personnel
investigations over to F.B.I.
Thompson:
That letter has been drafted, and Mr. Foley
thought he had better wait until he sees J.
Edgar Hoover.
H.M.Jr:
He is supposed to be coming in this afternoon.
Mr. Ickes went to town on J. Edgar Hoover and
said he wasn't going to have J. Edgar Hoover
investigating his office.
Foley:
Yes, his man called me up and wanted to know
if he could get together with us on some
suggested modifications of that procedure.
H.M.Jr:
Who is that man?
Foley:
Felix Cohen.
H.M.Jr:
What I said was this --
Foley:
There is that statute I thought you might want
to have in front of you.
H.M.Jr:
Ickes had it. What I said was this, that there
Regraded Unclassified
179
. 6 .
were some two thousand cases that we had asked
under O.E.M. for Hoover to investigate and he
had only investigated about a hundred and
twenty-seven. So that they wouldn't pick me
up, I said that may be ten percent off, one
way or the other, that what reason had I to
believe that he could do these if he can't do
the other, 80 to my amazement, in & stage
whisper, the Attorney General whispered that
the reason he didn't do the two thousand is
that he doesn't want you to have that part of
the work.
Thompson:
Mr. Irey told me that Lucey now is going to
try to lay the blame on McGuire. Matthew
McGuire was there and he was handling that
and told Lucey and Lucey told Elmer Irey that
McGuire was holding all of our requests on
his desk.
H.M.Jr:
Has Mr. Hoover started the investigation on
the fifty so-called Communists?
Thompson:
Not that I know. I checked that list of thirty-six
and sixteen names washed out. There are twenty
we have never investigated at all. Twelve of
them are no longer in the Treasury, two of them
are wives of Treasury employees, four of them
have never been in the Treasury. That is the way
it checks out, so that there are twenty left
that we never made any check on at all.
H.M.Jr:
Then doesn't it get down to really three organ-
imations?
Gaston:
Six organizations.
H.M.Jr:
Are there six? But I mean, most of them are the
Friends of Democracy.
Foley:
The League for Democracy and the Washington Bookshop
are the two most prominent. As far as the
Regraded Unclassified
180
- 7 -
Bookshop is concerned, you can get books
cheaper there than you can any place else,
and that is one of the reasons why some of
our people belong and get books from that
shop. I don't know anything Communistic
about the organization.
H.M.Jr:
Well, anyway, I think Mr. Hoover is coming in
this afternoon. All right?
Thompson:
That is all.
Bell:
We got two hundred ninety-seven million on the
three hundred RFC.
H.M.Jr:
Two-seventy-nine?
Bell:
Two-ninety-seven and we got two hundred and
one million of the two hundred and four million
of the Commodity Credit.
H.M.Jr:
That is a record, isn't it?
Bell:
It is very close to a record. It is very good.
This is B. matter of information. The Swiss
earmarked another twenty million dollars worth
of gold on the twenty-first. That makes about
ninety-four million.
H.M.Jr:
What is that?
Bell:
Switzerland earmarked another twenty million
dollars of gold last week and that makes about
ninety-four million dollars they have earmarked
within the past ten months. There seems to be
some gold coming in to South America, particularly
Argentina, from Japan. The Argentine Ambassador
has asked us whether or not --
H.M.Jr:
I passed on that once.
Bell:
That gold comes up to standard. You say you have?
Regraded Unclassified
181
- 8 -
H.M.Jr:
Yes. Didn't you speak to me about it?
Foley:
I spoke to you about it on Friday.
H.M.Jr:
And this committee. Will you two get together?
Bell:
Yes.
H.M.Jr:
How does it come to you?
Bell:
The Argentine Ambassador and the mint.
H.M.Jr:
Well, will you and Foley get together? Foley
said he wanted to take it up on his committee
and we discussed it.
Bell:
Well, he apparently wants to take it up with
his committee to try to find out how much gold
and whether or not it is going to eventually
go into dollars.
Foley:
That is right, as a means of avoiding our
controls. I raised it with Dean and he has
got it under consideration over in the State
Department now.
Bell:
Well, I guess I gave it to Bernstein.
Foley:
You gave it to Bernie and Bernie brought it
right to me and then we have got a couple of
other angles on it too that came directly to us
in the way of intercepts.
Bell:
I thought I would try to find out the amount
for the Ambassador and tell him that it stands
up very well under the refinancing processes.
Foley:
I think we ought to find out the amount and the
purpose.
H.M.Jr:
I have got to read this to you.
Foley:
I think what he is trying to find out, Dan, is
whether or not we have any objection to buying
that gold from Argentina if they buy it from Japan.
Regraded Unclassified
182
- 9 -
B.M.Jr:
May I read you a very personal letter from
the President? It is marvelous. It shows
his humor. I will see if there are any
words you people wouldn't understand. He
refers to & man by the name of Townsend who
is the former Democratic chairman, but he
isn't any longer.
"In the life of the Secretary of the Treasury
there stands out a historic anniversary
usually celebrated toward the end of each
October. It is the day of thanks-offering
that he may throw his loving appreciation to
the great Dimithratic Party of Dutchess
County which gave him birth. It gives him
opportunity to keep his foster mother in
health and strength for just one more year.
"In other words, 'Cough up.' Townsend is
after me. I have as usual bought a meal
ticket for Mommer. Please do the same.
F.D.R."
..lotz:
Mama, M-o-m-m-e-r.
M.E.Jr:
Will you see that it is taken care of?
Xiotz:
Yes.
H.M.Jr:
Isn't that marvelous? Wonderful. Don't
tell Ham Fish about it.
Jall:
That is all I have. Here is a letter you
might read some time.
H.D.Jrs
I think you had better do It before tomorrow,
too.
Klotz:
Had you anticipated that?
H.H.Jr:
I was waiting. I thought it might slip by.
You now know who is Democratic chairman of
Regraded Unclassified
183
- 10 -
Duchess County.
Who writes you letters, John?
Sullivan:
I am glad you mentioned that. I have got a
city election a week from tomorrow.
H.M.Jr:
This is for Haas and Barnard, a chart on
Procurement.
Barnard:
I have it here.
H.M.Jr:
All right, when we get around to you. Is
that all, Dan?
Bell:
Yes.
E.M.Jr:
Harold, how is good old New Orleans? How
is the Louisiana Purchase? Did we get stuck?
Graves:
Kind of. I think I would like to have, if
you could give it to me, ten or fifteen
minutes to tell you about that and a few
other things.
E.M.Jr:
Well, your pal, Elmer, is in here at ten-
fifteen. Ten-thirty?
Graves:
Fine.
R.M.Jr:
I was told - oh, I know who told me, Sol Haas.
Carl M. Richards is deputy in Seattle and
gets thirty-five hundred. He says all the
other deputies get & minimum of forty-six
hundred, and he says this boy is really good.
Gaston:
I have been talking to Harold about that.
Carl Richards is the man that we brought
back from France, and he had some very
interesting adventures with the German Army.
He has been lecturing on these adventures
out there with very great success, and he
Regraded Unclassified
184
- 11 -
has been transferred over as an assistant
to administrator, Sol Haas, but he is still
on the Customs payroll at thirty-six hundred
dollars a year. The Customs people don't
feel that as a Customs man they could ad-
vance him beyond that. I think the best
thing to do, and I think Richards would
accept it, would be this: to let him resign
as a Customs agent to be transferred to the
Savings Bond roll and they could give him
& higher rate, and then I think that the
chances of taking him back again on the
Customs roll would be all right when he
got through with that work, but there
doesn't seem to be any way to raise him in
Customs without putting the Customs ratings
out of line.
H.M.Jr:
Well, both Sol Haas and Anna Boettiger spoke
to me about him.
Gaston:
He is very fine and doing effective work.
H.M.Jr:
Supposing you (Graves) talk to me when I see
you at ten-thirty.
Graves:
Yes, sir.
H.M.Jr:
And also about Richards.
Graves:
Yes, sir.
H.M.Jr:
I thought you were going to see Dietz today.
Buffington:
Well, Mr. Kuhn suggested that I wait until
after that letter that he was sending to
him.
H.M.Jr:
I am not going to write that letter.
Kuhn:
Did you see it, Mr. Secretary?
Regraded Unclassified
185
- 12 -
H.M.Jr:
Yes. You will have to see me.
Kuhn:
All right.
Buffington:
I was planning to go on Wednesday. We had
mailed out by late Saturday afternoon
twenty-three and a half million copies of
"Know Your Taxes, If which represents all
mailing.
H.M.Jr:
Wonderful.
Buffington:
I am not sure that we have hit all the
right people, but I am working on that
chamber of commerce and national associa-
tion. I am preparing a condensed circular
in that "Know Your Taxes." We have suggested
that if people want more information, they
get a copy from the bank of 667, which is
the official circular. I would like to get
a discussion with these men about a con-
densed circular, because I think we will
have a good many inquiries from people who
have received that "Know Your Tax" circular.
We may want later to include a condensed
circular in the payroll envelopes.
H.M.Jr:
I wish you would get somebody with a car
from Norman Thompson to go out for a week
anywhere and just call at banks and find
out their reaction to this circular. Let
them spend a week calling on as many as
they can a day.
Buffington:
I am planning to do that same thing through
the Chamber with nine hundred thousand
corporations, with the heads of nine hundred
thousand corporations.
H.M.Jr:
But I mean if you can get a man that can
just go and call for 8 week on banks and
seo if they get this, what they are going
Regraded Unclassified
- 13 -
186
to do about it. Just drop in and check
up, to get the reaction from the field on
this thing. Will you do that?
Buffington:
Yes. Did you see the publicity that we
got on this release?
H.M.Jr:
No, I did not.
Schwarz:
We got a good play yesterday. Many of the
papers used two or three or even four of
the tables.
E.N.Jr:
In the papers I read I didn't see it. Will
you send it in to me?
Schwarz:
Yes, sir. I sent it to Norman. I will see
that you get those copies.
N.M.Jr:
To Norman?
Thompson:
Well, I have been working with sir. Kuhn
on weeding out of the clippings.
Schwarz:
We will see that you get them.
H.M.Jr:
You got my note on the Reston story?
Schwarz:
Yes. We will have memo for you.
H.M.Jr:
They charged the whole three million
three, Harold, to publicity.
Kuhn:
Mr. Secretary, I can explain that. Not
to publicity, but to promotion of all kinds,
and the field organization which makes speeches,
contacts labor unions and so forth, is all
trying to sell this program to the country,
and that is why it was included. We were
saved on that story from a fate worse than
death because there is a budget report that
shows that the Treasury has six hundred
Regraded Unclassified
- 14 -
187
seventy-two full-time employees on publicity,
information, and so on, and six hundred and
sixty-one part-time, and the writer of this
article rang me up about that. They had
included all the addressograph people, and
all the Internal Revenue people, and so on.
H.M.Jr:
Well, have you told that to Bell?
Kuhn:
No.
H.M.Jr:
I wish you would tell Bell, because I would
like to have him call up the Director of
the Budget. Every time they get a chance to
take a shot at us, they do.
Kuhn:
If that had been an unfriendly writer of
an article, he could have made hay with us
on that Budget report.
Bell:
Did it come out of the Budget?
H.M.Jr:
Yes.
Schwarz:
Out of the Budget to the House Appropriations
Committee.
Kuhn:
Yes, very bad.
H.M.Jr:
One of these days I am going to come out
publicly and say something about Harold Smith.
I would love to say something about his
report to Congress on economy. Of all the
weak-kneed dishwater I ever read in my life,
his report on that thing was the most
supine, intellectually dishonest thing I
have read in a long time. Did you read it?
Bell:
Yes, I read it.
H.M.Jr:
My God, it turned my stomach. Otherwise I
- 15 -
188
I thought it was good. I am just sick and
tired of having that man shoot at us all
the time, and you know every time you call
him he apologizes or blames somebody else,
so if you get this story and call him.
Bell:
I take it this was a routine report, wasn't
it, on estimates?
Thompson:
It was, yes.
Bell:
It is about in the same form as what all other de-
partments' estimates go un in, is that right?
Graves:
I don't know about this, Dan.
Kuhn:
But it puts us in such a vulnerable posi-
tion, Dan.
H.M.Jr:
Tell Bell the story they got from the Budget
and then Bell is going to call up Harold
Smith for me and ask him how come, because
if Reston can get it, anybody can get it.
Kuhn:
Sure, Frank Kent or anybody can get it.
H.M.Jr:
And it is up there before Congress. Will
you do that for me?
Bell:
Yes, sir.
Schwarz:
It includes all the people working on
statistics of income, which is a large
number.
Kuhn:
More than three hundred.
H.M.Jr:
I understood from Odegard he had to start
charging either twelve or thirteen hundred
men on publicity.
- 16 -
189
Kuhn:
Six hundred seventy-some full time and
six hundred sixty-some part time. It
included two hundred twenty-eight full
time people in the mail room.
Thompson:
They gave us a form on which to make
reports, and they wanted to know the
people who work on preparing annual
reports, statistics of income, mailing
lists and those things.
When you give them all those details,
it adds up to those man hours of employees.
All departments reported on that basis
and without explanation it looks bad.
H.M.Jr:
I will say it looks bad.
Anything else, Chick?
Schwarz:
The American Automobile Association is
asking for a message from you for their
meeting next month, asking people to use
some of their surplus for traveling around
the country.
H.M.Jr:
You tell them I am in favor of the discon-
tinuance of the manufacture of all pleasure
cars.
- 17 -
190
Schwarz:
I told them we would like to sell some
bonds and tax notes.
H.M.Jr:
Just tell them that is my message.
Schwarz:
That takes care of them.
That is all.
H.M.Jr:
I hope you have a sense of humor. I mean
it, but I don't - (Laughter) I mean, that
is what I think should happen, but I don't
think I would announce it just yet.
Schwarz:
We will take care of them.
H.M.Jr:
Harry?
White:
In attempting to guess how much the new
tax proposals, forced savings proposals,
will reduce the ordinary purchase of baby
bonds, we have very little information to
go on. I was wondering whether it wouldn't
be worth while if George could have a
survey made of an appropriate sample of
the purchasers of baby bonds to determine
what income classes they fall into. He
might make a preliminary survey to see how
much it would cost, but I think that we need
more information now, and I think that as
time goes on, more information will become
increasingly important.
191
- 18 -
H.M.Jr:
I want to tell Graves he had better find out
what is going on during the week that he is
gone, to find out what effect this whole thing
that is being developed under Barnard will
have on the Baby Bonds.
You had better get in on that, Harold.
Graves:
Yes, sir.
H.M.Jr:
It is up to you to find out what effect it
would have on savings bonds. I assure you
it won't help your sales.
Pell:
That is right.
H.M.Jr:
But you can do It that way. Anything else,
Harry?
White:
Nothing.
H.M.Jr:
George?
(Mr. Haas handed reports to the Secretary).
H.M.Jr:
I have got to tell a story on Harry. Harry
last night was arguing with me for deducting
fifteen per cent cent at the source from
everyone's payroll. I said, "Harry, I thought
that you were opposed to forced saving." He
said, "Oh, I only was opposed to it when I
didn't think it would be effective."
White:
Are you sure the joke is on me? (Laughter).
H.M.Jr:
For the moment.
White:
I still think I am right.
H.M.Jr:
I think it is on you.
Sullivan:
You had better not put it to a vote.
Regraded Unclassified
- 19 -
192
H.M.Jr:
Ed thinks it is on you.
Barnard:
I have the reports on Procurement. They
show pretty good improvement in the last
six weeks, and pretty good efficiency except
on special metals and on machinery.
H.M.Jr:
Do you mind explaining those to me at eleven
o'clock? I think George had better come in,
too. Do you suppose you could get Mack over
here at eleven?
Barnard:
Yes, I think SO.
H.M.Jr:
I would like to go over those with you and
Haas and Mack.
Anything else?
Barnard:
That is all.
H.M.Jr:
noy?
Blough:
I believe not.
H.M.Jr:
Make up your mind, Roy (laughter).
Kuhn:
A hundred things, but none of them important.
Foley:
You look surprised.
H.M.Jr:
Take the cushion out of that seat and give
him a little more room.
Morris:
It is out.
Kuhn:
I have nothing.
Morris:
I had a very good trip, and I had some very
interesting thoughts on the question of the
paper, "Know your Taxes", (handing cartoon to
the Secretary).
Regraded Unclassified
193
- 20 -
H.M.Jr:
I will see you. You ask for an appointment.
Morris:
All right.
Sullivan:
Mr. Anderson and Mr. Evans got here from
Chicago this morning. Do you want to see
them?
H.M.Jr:
I will tell you, when Mr. Barnard is through -
has somebody received them?
Sullivan:
They came to my office just as I was leaving
for the nine thirty meeting, and they are
still waiting. It is too bad I didn't have a
chance to start them going. I am going to
work on them as soon as we get out of this
meeting.
H.M.Jr:
When Barnard is through reporting at eleven,
I will ask them to come in and I will have 8.
little talk with them myself. But they are
there waiting?
Sullivan:
They are in my office, yes, sir.
H.M.Jr:
Will you remind me, Barnard?
Barnard:
Yes.
Sullivan:
I am wondering if we shouldn't have some talks
with Mr. Doughton and Senator George and find
out whether they are going to take this
recess, and whether or not --
H.M.Jr:
I saw that whole statement of Doughton's in
in the paper. I didn't know whether it had
anything to do with your going on the Hill
or not. It followed your going on the
Hill.
Sullivan:
No. I told you about my conversation with
John McCormack and Sam Rayburn. Then the boys
up on the Hill began to let it leak out they
thought they were going to have 8 recess.
Regraded Unclassified
194
- 21 -
George Bryant went to Mr. Doughton and Doughton
said "No", that he hadn't asked that this be
postponed. Then I understand that Senator
George became very much disturbed and went to
see Doughton because he wants this Administrative
bill in this fall.
H.M.Jr:
Well, John, I have hopes that Bornard and
the group that is working with him will have
something for me in a few days, and then if
we do, I will be in a much better position
to talk. I would like to wait for a few days
and then I hope I know where I am at.
Sullivan:
I realize that it is going to be a lot easier
if you know which thing you want to do, but
I think we have to talk with them before the
end of the week, or we may lose out.
H.M.Jr:
We have to. I have to know which way I am
going before the end of the week.
Sullivan:
Congressman Gore has a profit limiting bill
similar to the one that Vinson introduced, and
they asked for reports on both of those, and
in accordance with our previous conversation,
I told them that we didn't want to make up
our minds or take a position until we saw what
was in the report the Vinson investigating
committee was turning in. He said he would
like very much to have a temporary, tentative
report, and I said we didn't like to do
that, because we might be obliged to reverse
our position when we learned the facts. He
might speak to you about it.
H.M.Jr:
Let's just sit tight for B. day or two.
Sullivan:
Right. That is all I have to report.
Foley:
Here is a little memorandum from Louchheim
of the SEC on the effect of the modification
Regraded Unclassified
- 22 -
195
of general license number nine, speculation
of commodities.
H.M.Jr:
What does it say?
Foley:
Well, he says it is a good thing to do, and
it caused the market to sag a little bit on Sat-
urday, but on the whole there was trading in
commodities on the part of these people, and
it was a good thing to shut it off.
H.M.Jr:
Well, you are investigating --
Foley:
I wanted to know whether or not it would be
all right for Joe to talk to some of the people
at the SEC.
H.M.Jr:
Sure. But I want those grain houses, foreign
grain houses, investigated.
Foley:
Oh.
H.M.Jr:
Promptly.
Foley:
Yes. And then pursuing the same idea a little
farther, as to how to take speculation out
of the whole business.
H.M.Jr:
But will you move fast on those grain houses?
Foley:
Yes, that havethe general license.
H.M.Jr:
The only paper I saw was the Tribune, that had
a story.
Foley:
It was all right.
Kuhn:
The Post had it, Mr. Secretary, and the Times
had it, I think.
H.M.Jr:
It was all right, wasn't it?
Regraded Unclassified
196
- 23 -
Xuhn:
Very inconspicuous, but it was all right.
johwerze
The Star yesterday had a story that it had hit
the market Saturday.
E.V.Jr:
Lit the market in what?
Schwartz:
That the market had declined.
H.M.Jr:
In commodities?
Schwarz:
Yes.
H.M.Jr:
Take a look at it, George, and see how much.
HAHST
There were some other factors in the thing.
The WAll Street Journal wrote it up as one of
the factors.
Foley:
These letters that have come in in reply
to your general letter to all the banks.
H.M.Jr:
Yes.
Foley:
We would like to handle it this way. The
replies from the secretaries of state banking
associations that require attention, the
answers to be prepared for my signature, the
replies to the letters from the presidents
of the banks that require attention, for
John's signature, and then we would like to
turn all the letters over to Merillat if
Merillat is available.
E.M. Jr:
Tell Thompson about it. I don't want to be
bothered with it.
Foley:
All right.
H.M.Jr:
Just clear it with Norman Thompson. Whatever
you fellows decide. Is that right?
Regraded Unclassified
- 24 -
197
Klotz:
Yes.
H.M.Jr:
I don't want to be bothered with it.
He is doing the mail investigation and this
comes right in it. I turned Merillat over
to you.
Foley:
I haven't got him yet.
H.M.Jr:
It is not my .fault.
Foley:
That is one of the reasons I am bringing it
up here.
H.M.Jr:
I said Merillat was yours a week or ten days
ago.
Kuhn:
As soon as he could be replaced. I am trying
to replace him. Ed has got him three days a
week, anyway.
Bell:
Friday, Saturday, and Sunday (laughter).
Foley:
John Pehle says"I should appreciate your advice
as to whether Mr. Merillat is available for
this work."
H.M.Jr:
I simply said yes that he was yours the next
day.
Foley:
I have got him with 8 mortgage (laughter).
I haven't got clear title.
Sullivan:
Is he still on my payroll? They took him
from me in the first place. This is very
amusing to see them fighting over him.
H.M.Jr:
All right, what else, Ed?
Foley:
That is all.
Regraded Unclassified
198
- 25 -
H.M.Jr:
I go back to say, Ferdie said you could have
him.
Foley:
That is what I thought too, but then Ferdie lost
another man and he wasn't able to replace him,
and he has hung on to him. I don't blame Ferdie,
but --
Kuhn:
As soon as I can get somebody who can do those
letters.
Foley:
We will use him if we only can get him.
H.M.Jr:
Ferdie will give you an appointment and you
can talk it over. What else?
Foley:
Here is a memorandum on the conversation
Paul Shorb had with Kades on this unemploy-
ment compensation plan. Apparently Colt talked
to Pratt and Whitney. Pratt and Whitney want
to know all about it and want a ruling. Chuck
told them that we didn't have any Colt plan
and if they wanted a ruling they had better
submit something, so Shorb is apparently going
to get some plan together and get a ruling.
He said Ferguson of Colt had talked to him about
it.
Gaston:
You asked me about the future of Coast Guard
in connection with the Navy. That has all
been worke a out some time ago. It is known
in the Coast Guard as Plan one. All that is
necessary to do to put it into effect is
sending a message, "Plan one acknowledged."
In general, it provides for the operation
as a bureau somewhat similar to the Marine
Corps. However, the local areas will be under
the command of the Navy Commander, District
Commander, as to certain functions and supply
and personnel and so on.
Regraded Unclassified
199
- 26 -
H.M.Jr:
Would you and Waesche come up tomorrow and
explain it to me?
Gaston:
Yes.
H.M.Jr:
It has never been explained. Would you
ask Fitz outside?
Gaston:
Yes.
H.M.Jr:
I have never seen it. I would like Norman
Thompson to see it. It was never cleared with
me.
Gaston:
Well, of course the Navy - - if that happens
it is entirely within the Navy's power to do
just as they please.
H.M.Jr:
No, it is up to the President of the United
States. I thought we had a plan where we
were going to keep Waesche here and keep
the Great Lakes and the inshore stuff and every-
thing else. That was the last I heard, that
it would be taken and reassigned back to us.
That was what the President said he wanted.
Gaston:
I didn't understand that to be true in case
of war.
H.M.Jr:
Oh, yes, sure, that he would take it and then
we had a legal ruling that the President could
reassign it, and there was something like that
during the world war. Some bureau was reassigned
back by Wilson, wasn't it?
Foley:
Yes.
H.M.Jr:
Don't you remember something about that?
Foley:
Yes, I remember it now.
H.M.Jr:
I mean, I have made this fight for nine years
for Coast Guard and I thought that was the
Regraded Unclassified
- 27 -
200
understanding, that they would take it and
then the President - that is what the Presi-
dent has in mind, that he would give it back.
I had never heard of a plan one.
I will get this stuff to you people about
Stimson. I don't want to stop now. I will
give you some notes on it.
Foley:
All right.
TREASURY DEPARTMENT
201
WASHINGTON
October 27, 1941
MEMORANDUM FOR THE SECRETARY:
I talked this morning with Mr. Wait, in
Florida, about Karl Richards who is working
for Mr. Haas in Seattle.
Mr. Wait gave Mr. Richards a clean bill
of health in every particular.
I am arranging to have Mr. Richards trans-
ferred from the Customs Service to the Defense
Savings Staff at Seattle for the duration of
the emergency.
GRAVES
Regraded Unclassified
TREASURY DEPARTMENT
202
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM Mr. Thompson
I have placed Mr. Larson, one of our trouble shooters, in
Chick Schwarz' office with instructions to so organize the work
that it may flow effectively. I am also assigning to the office
William L. Lynch, an experienced young man, to work with Mr. Larson
and to become office manager when Mr. Larson completes his assign-
ment. Lynch is a young fellow who knows how to get things done.
for
Regraded Unclassified
TREASURY DEPARTMENT
203
INTER OFFICE COMMUNICATION
DATE 10-27-41
TO
Secretary Morgenthau
FROM
Mr. Schwarz
The New York Times story this morning on defense
Information activities of the Government listed as a
Treasury information expenditure all of the $3,300,000
allotment to the Defense Savings Staff from the current
fiscal year's appropriation for Expenses of Loans.
This allotment covers much work that should be
described as "promotional" rather than as the cost of
running an "information department."
From the efforts of this staff we are getting as
patriotic contributions radio, newspaper, magazine and
motion picture advertising worth more than $3,000,000
a month. Moreover, when considering that the allotment
is sustaining a program of more than $3,000,000,000,
the cost of promotional work 1s running at a rate of
less than 11/100 of 1 per cent. In 1918, with the
nation engaged as a belligerent in the first World War,
total expenses of $13,757,000 were incurred in the
six-weeks campaign for the Fourth Liberty Loan, which
raised almost $7,000,000,000.
The current allotment 1s paying for millions of
posters and pamphlets which have done much to stimulate
the sale of Defense Bonds and Stamps. It is also
drawn upon to pay the salaries and expenses of 175
field workers, who are providing valuable contacts with
banks, insurance companies, business, labor, farm and
social organizations, women's groups, schools and
colleges, etc. While a small part of their time [8
devoted to delivering speeches on the Defense Savings
program, they must give considerable attention to
practical sales work and to developing the actual
mechanics of payroll allotment plans for workers in
industry and business and systematic savings arrangements
for others.
Regraded Unclassified
204
October 27, 1941
10:57 a.m.
HMJr:
That's marvelous.
Grace
Tully:
(Laughs)
HMJr:
How much did he cough up?
T:
Yes, sir, he did.
HMJr:
How much?
T:
He coughed uo plenty.
H.Jr:
Five hundred?
T:
Yesh.
HMJr:
What?
T:
Five hundred for Townsend and a hundred and
fifty to Killmer; of course, that's the Hyde
Park local thing - the other is the Democratic -
Dutchess County Democratic Committee. Five
hundred.
4MJr:
Yeah, that's what he - five hundred to
:
Townsend.
HMJr:
And a hundred and fifty in his district?
I:
Yeah. He gave it to Killmer - a hundred and
fifty.
HMJr:
I never could - I just hate to do it - it's
Just the most wasteful money I spend.
I:
Well, maybe it showe results, I don't know.
AMJr:
Well, I've never seen any yet.
2:
No, you never see them really very much. I
said, "Oh, you don't have to give all that."
And he eaid, "Yes, I always do." (Laughe)
Regraded Unclassified
205
- 2 -
HMJr:
Well, I think - well, I'll give them six fifty,
but whether I give them a hundred and fifty
in my town, I don't know.
T:
Uh huh.
HMJr:
It's the moet wasteful money, but we'll do it
today, anyway.
T:
All right, fine.
HMJr:
Now, that appointment for tomorrow.....
T:
Yeah.
HMJr:
.....
did that include Stacy May?
T:
Yes, sir.
HMJr:
It does.
T:
You and Stacy May and Harry Hopkins and the
President.
HMJr:
Right.
T:
That's as you suggested and as he said would
be all right.
HMJr:
Right.
T:
And I sent a memo to Harry saying that he was
expected.
HMJr:
Now, one other thing that you might tell the
President when he's alone.
T:
Yes, sir.
HMJr:
He asked me the other day about two people.
T:
Yes.
HMJr:
One of them was Donald Nelson.
T:
Yes.
Regraded Unclassified
- 3 -
206
HMJr:
And you might say to him that from personal
experience that I've had with Donald Nelson,
he just will not stand up under fire.
T:
Uh huh.
HMJr:
Under - or put under pressure.
T:
Yeah.
HMJr:
He seems sort of doubtful.
T:
Uh huh.
HMJr:
You've got somebody in your room, huh?
T:
No, no. No, I haven't. I know what I'm
saying.
HMJr:
You're surprised at what I'm saying?
T:
Yes, I am a little, uh huh.
HMJr:
Well, so I gathered, but
T:
It's
HMJr:
What?
T:
never been my impression is the only
reason why I picture him.
HMJr:
Well
T:
but I don't know a great deal about it.
HMJr:
Well, under pressure he'll not stand up.
T:
Uh huh.
HMJr:
And this is not heresay.
T:
Uh huh.
HMJr:
Now he asked me about one other person. I
haven't had a chance.
Regraded Unclassified
207
- 4 -
T:
I see.
HMJr:
But I'd like - this is terribly confidential.
T:
Yes.
HMJr:
See?
T:
Yes, I know it.
HMJr:
What?
T:
Yeah.
HMJr:
So sometime when you're alone with him, and
if he wants to ask me what I mean, he can ask
me.
T:
Yes, sir. All right, fine.
HMJr:
I didn't want to say it in front of anybody
else.
T:
No. All right, fine.
HMJr:
You will tell him that, won't you?
T:
Indeed I will.
HMJr:
And you will keep it confidential?
T:
Yes, sir. All right, sir, I will.
HMJr:
Thank you.
T:
All right.
Regraded Unclassified
208
October 27, 1941
12:00 Noon
HMJr:
I have something here, and I didn't know
whether you could just pick it up or not
to bring it over at one o'clock. I wondered
-
have you a bencil?
Stady
key:
Yes.
H.Jr:
whether your office knows (1) what ie
the total production of aluminum and magnesium
in this country at present.
M:
Yes, we have it.
How much of it 18 needed for the airplane
industry - that's planes and rengines - what
do they need?
14:
Yes.
HMJr:
And what at present goes for other ourposes
than airplanes or engines.
X:
Yes.
HNJr:
And how much 1s the airolane and the engine
production at present retarded due to the
shortage of aluminum and magnesium.
M:
All right, eir. I'll bring it All over.
9MJr:
Wonderful. What e man!
be:
(Laughs)
HNJr:
And.
MI
The last one is the sketchier one, sir, but
I can bring you substantially that story.
HMJr:
And I thought we'd have a little dress reheareal
at lunch. You're included in this nine-thirty
tomorrow morning.
Regraded Unclassified
- 2 -
209
M:
At nine-thirty. Fine, sir.
HMJr:
Just Hopkins, you and I.
M:
oh, that's grand, sir.
HMJr:
Yes.
M:
Fine.
HMJr:
Right.
M:
Good-bye.
Regraded Unclassified
210
October 27, 1941
2:55 0.0.
HMJr:
Hello.
Oberator:
Mr. Pehle.
H/Jr:
Hello.
John
Pehlet
Yes, Mr. Secretary.
HMJr:
John, Mr. Arthur Rubinstein, the pianist,
is here.
F:
Un huh.
HMJr:
And he does business 57th Street in New York,
Park Avenue, National City Bank.
P:
Uh huh.
HMJr:
And he's having some troubles, and they may have
let him have the money when they shouldn't and
they're worried. Now, who looks after that for
you?
P:
Why, I look after it myself.
HMJr:
Well, now, the point 18 that we want to do
everything we can for Mr. Rubinstein, end -
let me just tell you. He's got two problems.
He's got, one, as I understand it, his normal
checking account 16 with the National City's
57th Street and Park Avenue, and then this other
thing 18, he wants to build a house in Los
Angeles.
P:
Uh huh.
EXJr:
It's practically finished. (Talke sside) Is
it paid for? Well, then what are you worrying
about?
He wants money to live on.
P:
That doesn't sound like any problem.
Regraded Unclassified
211
- 2 -
HMJr:
Now, that's what he 18 - - he's an alien here
with a quota.
P:
Yeah.
HMJr:
Now, let me just find out. (Talks aside)
Well, John, if I sent Mr. Rubinstein over,
what time could you see him and let's settle
it this afternoon. He's leaving town at
eleven tonight.
P:
Well, if he comes over right now I'll see
him.
HMJr:
He's to come right over now?
P:
That's right.
HMJr:
And fix him up 80 he doesn't worry, 80 he
can go ahead and play the piano
P:
Right.
HMJr:
.....and not have any worries, and live on
the money he earns here.
P:
That's right.
HMJr:
See? He shouldn't be worried.
P:
No, there won't be any problem about that.
HMJr:
No problem?
P:
No, sir.
HMJr:
All right. Well, fix him up and when he leaves -
when he gete ready to leave - let him call me
from your office, because I want to hear if he's
stopped worrying.
P:
All right, I'll do that.
HMJr:
When he gete ready to leave, put him on the
phone and let me talk to him to make sure
Regraded Unclassified
- 3 -
212
that everything is all right. Not that I
doubt you, but I want to hear his voice.
P:
All right. I'll do that.
HMJr:
Okay?
P:
Yes, sir.
HMJr:
He'll be over there in ten or fifteen minutes.
P:
All right.
HMJr:
Thank you.
Regraded Unclassified
213
October 27, 1941
4:03 p.m.
HMJr:
Mr. J. Edgar Hoover just left here.
Norman
Thompson:
Yes, sir.
HMJr:
And he said that he doesn't want to do this
investigating of OEM. He'd like us to do it.
T:
I see.
HMJr:
Hello.
T:
Yes, sir.
HMJr:
And I think strictly that whenever we run
into anything that looks of & subversive
nature, send the name over and he would look
into it, and report to us.
T:
I see.
HMJr:
I told him I wanted him to do the whole thing,
and he said he didn't want to.
T:
Uh huh.
HMJr:
I wouldn't give him an answer until I had a
chance to talk to you people about it.
T:
Yes.
HMJr:
Ana ne says that he has the written record of -
six times he tried to get the thing from Judge
McGuire and McGuire wouldn't give a clearance.
T:
Well.
HMJr:
Six times. And he said the Attorney General
knew it at Cabinet and it didn't clear him,
and looked as though he was hanging the thing
up. He was unable to get it off McGuire's
desk.
Well, so much for that.
T:
Yes.
Regraded Unclassified
214
- 2 -
HMJr:
Now, on the people - on the fifty-six people
from the Treasury
T:
Yes.
HMJr:
he will examine them in a room designated
by you in the Treasury.
T:
I see.
HMJr:
He'll not ask them to come over to his office
the way he intended to.
T:
I see.
HMJr:
He will simply examine them - they can sign
it or not, as they want to, and then the
report comes to me for me to decide what to
do.
T:
I see.
HMJr:
The decision rests entirely with me.
T:
That's right.
HMJr:
And then after I've decided, just to let
him know.
T:
Yes.
HMJr:
All they're going to do is to conduct the
investigation; no recommendations of any
kind.
T:
I see.
HMJr:
What's the matter with that?
T:
Well, I think that's all right.
HMJr:
Well, think it over, and.....
T:
I think that's all right.
HMJr:
He said he cleared the whole thing with
Regraded Unclassified
215
- 3 -
Mr. Baldwin of the Civil Liberties Association.
T:
I see.
HMJr:
You might not know him, but he's Roger Baldwin.
He's a great liberal.
T:
Yes.
HMJr:
He went over the whole thing with Roger
Baldwin and Roger Baldwin's approved the
whole plan.
T:
Well, I can't see any great objection to that.
HMJr:
No fining, and only in the cases where they're
sure that there's something, and they'll con-
duct the investigation in a room in the Treasury
after office hours 80 that nobody will be dis-
turbed or excited or persecuted.
T:
Well, we can arrange that, all right.
HMJr:
I think it sounds fair, and after all, he has
been given the job by Congress.
T:
Well, I'd like to talk to Mr. Gaston and
Mr. Foley and Elmer about it and let us Bee
how we feel about it.
HMJr:
Righto.
T:
All right, sir.
Regraded Unclassified
216
October 27, 1941.
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
Norman Thompson has told me of your conversation
with J. Edgar Hoover on the matter of character Investi-
gations of Defense candidates. It seems to me that it
is strictly up to Justice to make the next move. The
situation is that an order is lying on the President's
desk, written by McReynolds at the request of Ugo Carusi,
as representative of the Attorney General, asking that
the investigations be transferred back to F.B.I. If
Justice now desires a different action, it seems to me
that it is up to the Attorney General to inform the
President.
The job is very much heavier than we counted on
when we took over the work. We were told that there
would be about 4,000 investigations. We have already
reported on approximately that number and there are an
equal number pending for investigation. We were for B.
brief time this summer disposing of cases as rapidly as
they came in, but recently they have been coming in at
the rate of approximately 400 a week (for the last six
weeks) and we are handling them at the rate of 125 a week.
We have 80 agents and 25 clerks on the job. We understand
that O.E.M. is holding back 500 cases while waiting to
see whether the work is switched to F.B.I. It is obvious
that we shall have to double our crew and in addition get
money in much more substantial amounts from O.E.M., but
I don't think we ought to try to beg off, even though the
dimensions of the job were greatly under-estimated at the
start. That we should have expected.
nor
Regraded Unclassified
217
October 27, 1941
4:20 p.m.
HMJr:
Hello.
Howard
Deitz:
Hello, Mr. Morgenthau.
HMJr:
How are you?
D:
oh, I'm all right, thank you. How are you?
HMJr:
Good. I got your letter with the suggestion
about the thing that was written by Hecht and
McArthur.
D:
Yes.
HMJr:
Well, I think that any way that we could use
it would be fine.
D:
Yes.
HMJr:
See?
D:
Yes.
HMJr:
Now, I had another thing that I called you up
about, was this. I know that you've been
terribly busy with your own affairs
D:
Yes.
HMJr:
and that therefore you haven't been able
to give us as much time on either
D:
AB I'á like to.
HMJr:
the radio or movies.
D:
Yes.
HMJr:
And I just wanted to first - how you felt the
radio program was coming along.
D:
Well, I thought it started off on the NBC
pretty badly.
HNJr:
Yes.
Regraded Unclassified
218
a 1 1
D:
And I think it's picking up now,
AMJr:
You do.
D:
I think last week would have been a great
program if it hadn't been for a series of
unfortunate mechanical things.
HAJP:
Yes.
D:
Sometimes they are a little beyond our control,
but the effort was good there; and it was an
slmost
9MJr:
Well, are you going to
D:
very great program. I mean, Secretary
Knox spoke more than we figured on.
HiJr:
That's right.
D:
It threw us, you know, a little askew: and
then this stuff coming in from London - you
can't quite figure what you're going to get.
HMJr:
No.
D:
But, it was 8 distinguished program. And I
think this - I think tonight - tomorrow night
is going to be very good.
EMJr:
Yeah.
Well, now, are you going to be able to give
us much time from now on?
D:
Well, it's - frankly, I'll try to give it 6.9
much as I can.
HWr:
Yeah.
DL
I don't neglect that we've got a set-up there.
Have you anything in mind? I mean, anything
you think of 19
HMJr:
Well, the only thing that I have in mind WEE
Regraded Unclassified
- 3 -
219
this. They've suggested that we get an
additional person to help out. This man
Murray. I don't know who he 1s.
D:
We re agreeable on that. I mean, there's
no - I have no personal feeling about it
at all.
HMJr:
Well, do you think he's good?
D:
Think who?
HMJr:
Murray.
D:
Oh, B111 Murray?
HMJr:
Yes.
D:
Well, I think he's very good. The only trouble -
thing about Bill Murray 18, he's not exactly
thinking of our angle all the time.
HMJr:
He's not.
D:
He's a damn good worker though. I mean, it
was a great help in our first program when I
got him.
HMJr:
Well, you see, after all, my arrangement is
personal between you and me; and I don't want
to make any major change without talking to
you.
D:
Yes, I understand that.
HMJr:
Because you've done B. swell job and I greatly
appreciate what you've done.
D:
Well, I tell you frankly. I mean, some times-
I mean, this ie my own estimate - some times
I've done a very good job, sometimes I haven't;
and some times circumstances have combined to
make it difficult for me to do exactly what
I wanted to do; but I think on this program,
our problem 1e not very much a problem of
talent, it's a problem of deciding what we
Regraded Unclassified
- 4 -
220
want to do.
HMJr:
Yes.
D:
If we knew very clearly what we wanted to do
at all times, we could go boldly ahead in doing
it.
HMJr:
Yes.
D:
For instance, there's almost nobody in the
talented field that we cannot get.
HMJr:
That's right.
D:
With the proper approach.
HMJr:
That's right.
D:
But - and I don't think - take Bill Murray -
I think he's a great help to us in getting the
talent and I'm glad to have him. On the other
hand, what we need 18 a decision as to what is
to be said in this program.
HMJr:
Yes.
D:
Now, we're going along on the borderline of
everything
HMJr:
Yes.
D:
never quite knowing what we want, whether
we want to dig up something out of past American
patriotism, whether we want to inspire the
Atheniane into something. We don't quite -
we're not cuite sure of ourselves. But we're
going ahead and giving it entertainment and
throwing in a commercial here and there, and
it comes over sometimes distinguished, some-
times a little emasculated, sometimes we don't
know what.
HMJr:
Yeah.
D:
Now, I would like to Bee - if we had somebody
Regraded Unclassified
- 5 -
221
who was important in the program, and I'd
like it very much, I'd like to see them come
to us with something that told us what to do.
HMJr:
Yeah.
D:
I - I mean, I'm not saying that - I am not
admitting defeat
HMJr:
Yeah.
D:
but what I am saying, we have been doing
it now for about 18 or 19 weeks
HMJr:
Yeah.
D:
and constantly, you know, like beating
the sheriff to the program.
HMJr:
Yeah.
D:
It's a very luxurious thing to be able to
sit back and think what you're going to do.
HMJr:
Yeah.
D:
It's another thing to say, "Well, next week
is next week."
HMJr:
Yeah.
D:
Now, I would like - I mean, what I'd like to
eee is somebody analyze the shortcomings of
the program in terms of what they want. I
think that, for instance, when you say, Bill
Murray, I'm delighted; I think we should have
Bill Murray. I think we should have everybody.
HMJr:
Yeah.
D:
But when you're talking about something more
than that, which is a sort of a directing force,
which I can be, but which I cannot be all the
time, then you're stating the problem.
Regraded Unclassified
- 6 -
222
HMJr:
Well, do I
D:
I hope I've expressed myself so that you under-
stand.
HMJr:
When will you be back?
D:
I'll be back in about ten days.
HMJr:
Well, suppose
D:
It can wait until then.
HMJr:
Of course, it can.
D:
And it's a long pull. Suppose I come to
Washington on my return.
HMJr:
That's what I'd like you to do, and then we
could spend an evening together.
D:
And have an over-all discussion of it.
HMJr:
That's right.
D:
And let's also list what we want to do in the
future.
HMJr:
That's right.
D:
And I think that would be very fine.
HMJr:
Could I throw out little suggestions like
Gertrude Lawrence and having other plays
in New York which I think were good?
D:
Well, I did throw a little wrench in that,
because it's a complication of unions and
everything.
HMJr:
Yes.
D:
And costly. It's very costly to have it wired
backstage. Also, we cannot get the indi-
vidual player to work with the other people
on our program, because they are isolated
Regraded Unclassified
223
7 -
in a theater.
HMJr:
Yes. But they are going to try to
....
D:
We've even now got Gertrude Lawrence now
coming to the broadcasts at last. That means
she cen talk to Boyer.
HMJr:
Is she coming?
D:
186.
HMJr:
oh, I thought she was going to do it from
the theatre.
2:
Well, they decided that it would impractical.
They had to move pianos onto the stage.
HMJr:
Ch, I see.
D:
And other things like that before the audience
starts to come in.
AMJr:
Oh, I see. Well, that's Just a minor detail.
Now, let me ask you and then
D:
Well, they're all minor. The only objections
to it are minor details.
HMJr:
Yeah, The point is - you're cuite right. It
can wait until you come back. If you'll let
me know when you come back by Washington, we'll
have an evening together.
D:
Well, that's very nice, and I'll tell you exectly
when I'm returning.
HMJr:
Will you?
D:
Yes.
HMJr:
Now the other thing.....
D:
I only arrived just this minute, 80 I can't
be definite.
Regraded Unclassified
30 I I
224
HMJr:
Well, that's all right. Now the other thing
ie, I've out in B. CALL for New York; and then
the other thing 18 - - which I've been trying to
get - is this - the movie industry haen't given
us another good movie on the bonds for a long
time.
D:
That's what I was going to talk to you about.
HMJr:
And I want something.
D:
Well, that's - what do you think of teking that
McArthur thing and dramatizing it. It could
make quite 8 good little short, I think. At
least I was going to talk it up with the people
here who are our introduction.
HMJr:
I'm not
D:
You aren't enthusiastic.
HMJr:
No, no. I don't think I - my wife can take &
play and read it and get something out of it.
I can't.
D:
Yes, I see what you mean.
HMJr:
I mean, it's a technique which I don't have
and I know it.
D:
Well, actually we're going ahead and making
the short.
H4Jr:
Yes.
D:
And I'll have something to show you very soon.
HMJr:
Good.
D:
That's the best way to do this.
HMJr:
Well, I'm going to leave it to the industry
to give me something else to follow up that
other - that picture "America Preferred."
D:
Good. Okay, well, you'll have something.
Regraded Unclassified
- 9 -
225
HMJr:
And I want something if I can fairly soon.
D:
You'll have something very soon.
HMJr:
And that was the purpose of my call.
D:
That's - all right, fine. And good wishes.
HMJr:
Thank you.
D:
Righto.
HMJr:
Good-bye.
D:
Good-bye.
Regraded Unclassified
TREASURY DEPARTMENT
226
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM
Vincent F. Callahan
I have made sure that there will be no
duplications of the songs sung by Gertrude
Lawrence and Hildegarde.
Gertrude Lawrence is singing only one
number, "Jenny". Because of the time element,
she will be unable to sing the other song you
requested.
Vincent Calloha
Regraded Unclassified
TREASURY DEPARTMENT
226
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM
Vincent F. Callahan
I have made sure that there will be no
duplications of the songs sung by Gertrude
Lawrence and Hildegarde.
Gertrude Lawrence is singing only one
number, "Jenny". Because of the time element,
she will be unable to sing the other song you
requested.
Vincent 7 Calloha
Regraded Unclassified
227
October 27, 1941
4:35 p.m.
HMJr:
Hello.
Arthur
Rubinstein: Mr. Secretary, here is Rubinstein again.
HMJr:
Yes, Mr. Rubinstein.
R:
I couldn't telephone you before because
you were busy, but I must thank you from
all my heart for your enormous kindness.
HMJr:
Yes. Are you all right?
a:
Wonderful.
HMJr:
Good.
R:
Everything is perfectly well settled, and
I'm so much more obliged for my Door banker friend.
HNJr:
And you can go shead and play now?
R:
Yes, I think I can again.
HMJr:
Fine.
R:
And thank you once more, very, very much;
and please count me absolutely 8.8 your - what-
ever you like to use me for, for your bonds
end anything you want.
HMJr:
Thank you so much.
R:
Please count on me,
HMJr:
Thanks.
R:
Thank you very much, Mr. Secretary.
4MJr:
Good-bye.
of
Good-bye.
Regraded Unclassified
228
October 27, 1941
Dear Frank:
This is just to tell you how much
we all appreciated your fine talk on our
radio program, and also the stirring
music of your band.
You were more than generous in
helping to make our program a success,
and all of us are deeply grateful.
Sincerely,
(Signed) Henry
The Honorable,
The Secretary of the Havy,
Washington, D. C.
FK/ogk
st.
D.M.C.
Regraded Unclassified
229
October 27, 1941
My dear Mr. Kern:
I was delighted to receive your
letter of October 25th and to learn
that you are making such good progress.
I am anxiously looking forward to re-
ceiving the phonographic recording of
your song.
You might be interested to know
that working with musicians like your-
self and Oscar liammeratein is one of
the few cheerful, encouraging moments
in my day.
Yours sincerely,
(Signed) 1. Bergesthau. is.
Mr. Jerome Kern,
917 North Whittier Drive,
Beverly hills, California.
P. S. I hope you will send the
record by air mail express.
in
in mail
n.m.c
Regraded Unclassified
230
JEROME KERN
917 North Whittier Drive
Beverly Hills, California
October 25, 1941
Henry Morgenthau, Jr.
Secretary of the Treasury
ashington, D. C.
Dear Mr. Morgenthau:
Your generous wire of the 21st must
have Deen the spur and incentive ne needed, for I now
Lasten to Poport definite progress, even though Oscar
erstein's and my collaboration 1a conducted ovor the
lang distance telephone.
Rather than to just send you & piano-
forte copy with words, Which, 110 atter how cerefully
mrked, might easily become the innocent victim of a
falso interpretation at your end, I think it better to
propare a simple orchestral accompaniment and salce a
recording of a good vocalist, conched and researsed by
yours truly, and then sand you n. record which you AJ
play on any ordinary, household phonograph, and blooding
get to good, lucid idea of what no proffer.
To this and, I already have SAd D
sobsion with Tony Martin, the well-known, 418h17 gifted
baritone, who, I an Clad to say, in most onthusisstic over
vist 150 have so far accomplished. All being well, we
should have D. complete song by Monday, and I alroady have
pencilled in a recording date for either Tuesday or Mednes-
day next. This means that a record should roach you before
the and of noxt week, the mauk of October 27th.
All concerned are proud of and [ratoful
for the opportunity to serve.
Yours sincerely,
Regraded Unclassified
TREASURY DEPARTMENT
231
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM
Vincent F. Callahan
We are asking Emanuel Feuermann, a German,
who is appearing on "America Preferred", Thursday
night, November 6, to speak in both English and
German. We will ask artists on succeeding programs
to do the same thing. In some instances, the artists
have told us that they do not wish to speek et all.
I an telling you this because you will realize that
these people are volunteers and all we can dois
simply make 8 request of them.
The change in day for the "America Preferred"
program came after our weekly advance sheet had been
set up. Such changes occur very often, and it is not
possible for us to keep the advance sheet 100 per cent
accurate.
"Americs Preferred" has been changed from Saturday
to Thursday night at the request of Mutual. This came
about because of new commercial programs going on
Mutual on Saturday night, and there was no room left
for "Americs Preferred".
Regraded Unclassified
TREASURY DEPARTMENT
232
INTER OFFICE COMMUNICATION
- 2 -
DATE October 27, 1941
TO
Secretary Morgenthau
Vincent F. Callahan
FROM
I think that the Thursday night time is
much better than Saturday because I believe
we will have a much bigger audience. In any
event, the change was beyond our control.
Deems Taylor will continue to be Master of
Ceremonies.
Vincent 7. Calloha
Regraded Unclassified
233
TREASURY DEPARTMENT
WASHINGTON
DEFENSE SAVINGS STAFF
October 27 1941
Mr. Henry Morgenthau, Jr.
Secretary of the Treasury,
Washington D. C.
Dear Mr. Secretary:
Ferdinand Kuhn has informed me that you were kind
enough to send B bound copy of my poem, "The
Rhyme of the BB-66, n. to President Roosevelt. I
cannot tell you how thrilled I am that you thought
my slight work worthy of such notice.
It has been a privilege to be called upon to do
this work, and to receive such recognition 18 en
unexcected double recompense.
Please accept my sincere gratitude for your kind-
ness.
Respectfully yours,
Hama Herman Wont Wouk
HT:HS
Regraded Unclassified
234
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM Mr. Hass M
Employment under the Work Projects Administration in-
creased from 1,037,000 to 1,040,000 persons during the week
ended October 15, 1941.
Attachments
Regraded Unclassified
235
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Weekly
United States
Week ending
Number of Workers
1941
(In thousands)
March 5
1,806
March 12
1,764
March 19
1,736
March 26
1,708
April 2
1,662
April 9
1,634
April 16
1,607
April 23
1,586
April 30
1,560
May 7
1,519
May 14
1,497
May 21
1,474
May 28
1,464
June 4
1,442
June 11
1,423
June 18
1,410
June 25
1,368
July 2
1,172
July 9
1,030
July 16
1,016
July 23
1,025
July 30
1,036
August 6
1,041
August 13
1,042
August 20
1,043
August 27
1,045
September 3
1,043
September 10
1,037
September 17
1,035
September 24
1,033
October 1
1,032
October 8
1,037
October 15
1,040
Source: Work Projects Administration
Regraded Unclassified
235-A
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Monthly
United States
Number of Workers
1939
(In thousands)
January
2,986
February
3,043
March
2,980
April
2,751
May
2,600
June
2,551
July
2,200
August
1,842
September
1,790
October
1,902
November
2,024
December
2,152
1940
January
2,266
February
2,324
March
2,288
April
2,092
May
1,926
June
1,665
July
1,701
August
1,691
September
1,704
October
1,779
November
1,821
December
1,878
1941
January
1,895
February
1,867
March
1,708
April
1,560
May
1,464
June
1,368
July
1,036
August
1,045
September
1,033
Source: Work Projects Administration
Monthly figures are weekly figures for the latest
week of the month.
They include certified and noncertified workers.
Regraded Unclassified
236
WORK PROJECTS ADMINISTRATION
Number of Workers Employed
United States
Monthly V.P.A. Employment
Faskly V.P.A. Deployment
1936
1938
1939
1540
é
1940
(94)
1942
SM.
MAY
OST
SEPT.
MIX
JAB
MI,
MAY
asce
E
BILLING WILLIONS
MMA
of
NICLIONS
or
or
mains
or
MORRING -
MORRERS
2.7
2.7
1.2
2.4
2.6
3.2
2.5
2.5
2.4
2.4
2.8
2.8
1.1
2-3
2.2
2.2
2.4
2.4
2.1
2.1
2.0
2.0
2.0
.2.0 1,9
1.9
1.8
1.0
7.6
140
1+7
1.7
T.B.
1,6
1-5
1.5
14
has
1.1
1.4
1.5
1.3
-
.8
1-2
1.4
1.1
1.1
...
A
1.0
1.0
.9
.9
D
o
LE
-8
1
M
el
.
M
$
.
4
a
M
.
-
at
-
E
-
.
a
il
MAR.
à
JULY
SEPT.
NOT,
MAR,
MAY
24LY
NOV.
-
MI.
was
1946
1837
1938
1539
1940
1941
*42
1540
1541
1942
sourcet MORE PROJECTS ADMINISTRATION
- of - Seretary al m Treaty
= to e
- - - - -
Regraded Unclassified
TREASURY DEPARTMENT
237
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATEOctober 27, 1941
to
Secretary Morgenthau
FROM
Mr. Haas 104
Subject: The Buainess Situation,
Week ending October 25, 1941.
Summary
(1) Basic commodity prices last week rallied sharply
from the previous week's severe decline, strongly influenced
by proposed legislation for loans on basic farm crops at
100 percent of parity, and endorsement by the Secretary of
Agriculture of ceilings on farm products at not less than
110 percent of parity. Prices turned somewhat weaker
Saturday on reports of Administration opposition to the
100 percent loan and on the Treasury order restricting com-
modity speculation with blocked funds.
(2) General commodity prices continued to advance in the
weer before last (ended October 18), despite the break in
orices of farm products. The BLS all-commodity index in
that week rose 0.1 point to 91.7, influenced by a 9 percent
rise in prices of motor vehicles and by moderate price in-
creases in a considerable number of other sub-groups.
(3) High prices of farm products have raised the cash
income of farmers to $1,325,000,000 in September, or 46 per-
cent above the previous September. This increase 15 even
greater than the increase in factory payrolls over the same
period. The rise in farm incomes is reflected in 5. strong
increase in retail sales in rural areas.
(4) The FRS index of industrial production for September
has been revised downward to 160, which places It at the same
level as in July and August. Production during the month was
characterized by & greater than seasonal rise in durable
goods, offset by less than seasonal gains in nondurable goods
and minerals.
(5) Factory employment rose further in September, accord-
ing to confidential BLS figures. The employment index rose
to 134.8 from 132.5 in August, end compares with 111.4 in
September last year. Payrolls rose more rapidly.
Regraded Unclassified
238
- 2 -
Basic commodity prices recover
Following the previous week's severe setback, prices of
agricultural commodities last week made substantial recover-
ies, influenced chiefly by two developments: (1) The endorse-
ment by the Secretary of Agriculture on Tuesday of price
ceilings on farm products at not less than 110 percent of
parity, and (2) the approval by the House Agriculture Committee
on Thursday of a bill providing for crop loans at 100 percent
of parity on the five basic farm crops, to apply to crops of
1942 and 1943.
Recalling the bullish effect of the 85 percent loan
legislation on prices of farm products last spring, a heavy
buying movement developed in commodity futures, particularly
in the grains. The Dow-Jones futures index (see Chart 1)
regained fully one-half of its extreme decline from the early-
September high. Spot prices of commodities, as measured by
Moody's index, showed & less pronounced recovery.
The Treasury order prohibiting the use of blocked funds
in futures speculation caused considerable selling in cotton-
seed oil on Saturday, according to trade reports, and was a
factor in downturns in other commodities. A report that the
President would veto the 100 percent loan bill, if passed by
Congress, was also B. bearish factor.
Recent decline largely in agricultural products
A breakdown of the BLS index of 28 basic commodities
into the two groups, raw industrial materials and foodstuffs,
shows the extent to which the recent price decline has been
confined to agricultural products and foods. (See Chart 2.)
It will be noted that prices of industrial materials have
held practically unchanged throughout September and October,
while foodstuff prices have declined sharply in the first
important reaction since the long upturn began in August
1940.
Among the industrial materials, ootton was the only com-
modity last week to show a pronounced price rise. (See lower
section of Chart 2.) Among the foodstuffs, many of which re-
covered from the previous week's decline, cottonseed oil and
other oils and fate rose strongly in response to proposed
plane for a Government buying and crop loan program to raise
the price of cottonseed and its products.
Regraded Unclassified
239
- 3 -
BAE foresees more commodity speculation in 1942
Commenting upon the extent of recent speculation in
agricultural commodities, the Bureau of Agricultural Economics
mentions in its October report on demand and prices that
speculative buying and withholding of commodities, which
"has been an important factor in the demand for farm
products in 1941", will probably become even stronger next
year if the rise in the general price level continues, as
1e expected.
The experience of the World War period is cited, when
prices of some commodities were bid up to levels considerably
above those which might have been justified by demand and
supply conditions, because of "artificial" speculative demand
which did not represent the demand of final consumers. The
BAE believes that present conditions are such that if prices
were left to themselves "there 1a little doubt that prices
in general would continue to rise rapidly and reach B. point
probably as high as during World War I, if not higher."
Farm income 45.9 percent over last September
The high level of agricultural prices this year has been
a major factor in raising farm income in September to
$1,325,000,000, or 45.9 percent over the income in September
1940. (See Chart 3, upper section.) This represents an
even greater gain than the increase of 45.4 percent in total
factory payrolls for the same period, mentioned below.
The rapidly rising incomes of farmers have brought a
broad expansion in rural retail sales. (Lower section of
Chart 3.) Sales in rural areas in August rose very sharoly
to 43 percent over 1940, in response to the same rush of
anticipatory buying that characterized department store
sales in cities. Rural sales during September rose some-
what further but showed less than 8 seasonal gain over the
previous month.
Rise in industrial production merely seasonal
A downward revision of 1 point in the preliminary esti-
mate of the FRB index for September reduces it to 160, the
same as in July and August. (See Chart 4.) Thus, after
allowance for the normal seasonal expansion which carried
actual production up to & record high in September, the
seasonally adjusted index held unchanged throughout the
third quarter.
Regraded Unclassified
40
4
A greater than seasonal rise in the production of dura-
ble goods in September (see lower section of Chart 4) Just
offset less than seasonal gains in the output of nondurable
goods and minerals. It will be noted that industries
closely associated with the defense program, such as transpor-
tation equipment, machinery, etc., showed further gains,
while nearly all other groups declined.
With aircraft production and shipbuilding activity rising
noticeably, an even sharper gain would have been scored by
the transportation equipment group if automobile production
had not fallen short of the usual seasonal increase. The de-
cline in textile output was largely due to a further sharp
reduction in silk mill activity, although both cotton and
rayon declined moderately. Output of fuels rose slightly
less than seasonally, due partly to labor troubles at anthra-
cite and bituminous coal mines.
Civilian couper use ourtailed
Production in non-defense industries will suffer from
restrictions imposed by the OPM last week on the use of con-
per. The OPM recently estimated that unrestricted demand
for copper in 1942 would total 2,400,000 tons, as compared
with an estimated supply of only 1,650,000 tons. To reduce
this disparity between supply and demand, the OPM has issued
an order curtailing the use of copper in non-defense indus-
tries. The use of copper, brass or bronze in nearly all
civilian goods industries is reduced immediately to 60 or
70 percent of 1940 levels, and its use in more than 100 non-
Refense products 18 banned after January 1.
Factory employment continues to increase
Despite priorities unemployment in various industries,
confidential preliminary figures from the Bureau of Labor
Statistics show that total factory employment continued to
increase in September. The index of factory employment
rose 2.3 points to 134.8, which compares with 111.4 in
September last year, and with only 102.5 in May 1940, at the
initiation of the defense program. (See Chart 5, middle
line.) The increase from the previous month, however, 1s
less than in any of the previous 5 years except 1937.
Factory payrolls (solld line on chart) showed B. larger
advance than employment, since average weekly earnings per
worker have increased because of higher wage rates and longer
hours worked. The BLS index of factory payrolls, according to
confidential data, rose to 162.3 in September from 157.0
Regraded Unclassified
241
- 5
in August. It shows a. gain of 45.4 percent over September
last year, and a gain of 66.0 percent since the initiation
of the defense program in May 1940.
Department store sales decline further
Retail sales by department stores have declined for the
second week, following their early October peak, and in the
week ended October 18 the reported dollar total was only 6.5
percent higher than sales by the same stores in the correspond-
ing week last year. This compares with a gain of 34.8 percent
in the first week of the month. In physical volume, the sales
were probably less than last year, since retail prices have
risen 13 percent, according to the Fairchild retail price
index for September.
Rise in carloadings bolsters weekly business indexes
A rise in freight carloadings to a new peak for the year
at 923,000 cars bolstered weekly business indexes in the
week ended October 18. Barron's index of business activity
rose 1.3 points to 139.5. The New York Times index, never-
theless, declined 0.3 point to 126.2, with substantial down-
turns in the indexes of automobile, electric power and lumber
production, and in cotton mill activity.
New orders index lower
Our weekly index of new orders for the third week of
October dropped back to around recent low levele, owing to
declines in orders in all three component groups. (See
Chart 6.)
Labor troubles haraes steel industry
Although steel operations last week were scheduled to
show a decline of only 0.6 point to 97.8 percent of capacity,
the industry continued to be plagued by sporadic labor
troubles. The strike at the Great Lakes Steel Corporation
continued until near the end of the week, and out the Iron
Age estimate of steel ingot production for the Detroit die-
trict to 39 percent of capacity, AB compared with 107.5 per-
cent before the strike began. Around the middle of the week,
a strike at the coke by-products plant of the Sloss-8heffield
Steel and Iron Company in the Birmingham district caused &
temporary shut-down of 4 blast furnaces and 2 iron ore mines.
In addition, numerous other plants in the area dependent on
the steel company for gas also had to close down.
Regraded Unclassified
- 6 -
242
This week starts with the industry rate scheduled at
99.9 percent of capacity, the highest since July 1, when
operating rates were shifted to the high capacity basis.
The greatest present threat 1s the strike of 53,000 workers
in the "captive" coal mines, which supply one-half or more of
the coal used by the steel industry. Trade commentators
believe that unless this strike, which was put into effect
this morning, 1s settled within the next week, it will force
a severe curtailment in steel production. The steel companies
affected by the strike are reported to be producing about
80 percent of the steel needed by the defense program.
Regraded Unclassified
COMMODITY PRIOR INDEXES IN U.S. AND U.E.
243
Chart 1
Weskly
(AVERANE If BAILY)
Daily
1940
1541
1941
JAB
SAF.
i
JULY
SEPT.
MDV.
JAMI,
MAR,
MAY
-MALY
SEPT.
-
SEPTEMEZ
OCTOBER
FLR
PER
ID
R
PER
13
27
4
22
DENT
ni
USAT
CENT
I
REVTER,
SEXT
entry
-
254
-
253
a
as
-
240
&
J46
as
246
a
240
90
243
e
- FUTURES
2,84
79
240
el
is
76
237
a
74
254
222
TV
216
72
251
70
IN
e
as
77
66
225
16
204
66
222
75
-
Del
219
74
IS
DOMICION FUTURER
1924 126 = 100
E
216
73
The
REUTER'S INDIA in
DO
213
12
180
KoT. 10, 1651 - TOO
58
216
F
1/4
- INDIAN
is ...
56
207
2
TMI
accepts nex IN -
-- $1, nor - 100
54
204
as
112
a
201
MI
150
50
1M
67
152
4d
195
66
144
46
192
E
1A6
44
185
$
FOR
SEVTER'S INDICE
- D.K.
C
42
164
Ive
Y
e
40
153
%
a
18
190
i
a
N°
-
23
50
&
is
R
27
4
=
18
a
(**)
NAT
JULY
SEPT.
NOV.
-
-
-
MPT+
AUGUST
LEFTER
INSTEMER
JAB.
1241
1941
1940
P the - 4.
of the of 2
- of - -
Regraded Unclassified
MOVEMENT OF BASIC COMMODITY PRICES
Raw Industrial Materials and Foodstuffs
244
Chart 2
AUGUST 1939-100
PER
PER
PER
PER
CENT
Weekly Average
CENT
CENT
Daily
CENT
170
170
170
170
160
160
165
165
12 Foodstuffs
150
150
160
160
12 Foodstuffs
140
140
155
155
16 Raw Industrial
16 Raw Industrial
130
130
150
150
Materials
Materials
120
120
145
145
110
110
140
140
100
100
135
135
A S o N D J F M A M J J A S o N D J F
&
13
20
27
4
Il
is
25
,
a
IS
22
29
4
ID
20
17
SEPT.
OCT.
NOV.
DEC.
1940
1941
1942
1941
Percentage Change for Individual Commodities. Aug. 1940 Low to Oct. 17 and to Oct. 24,1941
PER
PER
CENT
16 Raw Industrial
CENT
I2 Foodstuffs
Materials
Tallow 157.1%
150
Shellac 110.3%
150
Burlop 72.9%
Cottonseed Oil /40.2%
Cotton 71.4%
125
125
Print Cloth 71.2%
Rosin 62.3%
Lard 96.2%
100
Wides 59.0%
100
Cocoa 95.5%
Wool 51.3%
Coffee 94.5%
Zinc 30.1%
75
75
Lead 22.2%
Wheat 66.0%
Flaxseed 23.1%
Hogs 61.5%
50
Silk 21.0%
50
Barley 56.5%
Rubber 16.9%
Sugar 341%
Copper 11.8%
25
Steel Scrap dom. 8.7%
25
Butter 29.2%
Corn 13.0%
Tin 3.0%
Steers 12.5%
o
Steel Scrap. exp. 2.7%
0
Aug 1940
Oct.
Oct.
Aug. 1940
Oct.
Oct.
17
24
Low
17
24
Low
Source B. LS
P-187-36
Offer of the Incretary of - Transary
- # - - -
Regraded Unclassified
FARM INCOME AND RURAL SALES OF GENERAL MERCHANDISE
JAN,
FEB,
MAR.
APR.
MAY
JUNE
JULY
AUS.
SEPT.
OCT.
NOV,
DEC.
DOLLARS
DOLLARS
MILLIONS
MILLIONS
Farm Income
INCL. RENTAL AND BENEFIT PAYMENTS
1300
1300
1200
1200
1100
1100
1000
1000
900
900
800
800
1941
700
700
1940
A
a
1939
600
me
600
1938
500
500
JAN.
FCB.
MAR.
APR.
MAY
JUNE
JULY
AUG,
SEPT.
OCT.
NOV.
DEC.
PER
PER
CENT
Rural Sales of
CENT
General Merchandise
1929 - '31 = 100 UNADJ.
220
220
200
200
180
180
160
160
140
140
1941
1940'
120
120
1939
100
100
1938
BO
80
$
JM.
FEB.
MAR.
APR.
MAY
JUNE
JULY
8
AUG.
SEPT.
OCT.
BOY.
DEC.
.
DEPT. OF COMMERCE INDICA OF DOLLAR SALES or GENERAL
MERCHANDISE IN SMALL TOWNS AND RURAL AREAS
Chart
Office of the Secretary of the Transury
Divises of Reserved 1
C-273-8
Regraded Unclassified
FEDERAL RESERVE BOARD INDEX OF INDUSTRIAL PRODUCTION
1935-39=100
1939
1940
1941
1942
JFMAMJ J A $ o N D J F M A M J J A S o N D J F M A M J J A 5 o N D J F M. AM J
PERCENT
PERCENT
Seasonally Adjusted
165
165
160
160
155
155
150
150
145
145
140
140
135
135
130
130
125
125
120
120
115
115
110
110
105
105
100
100
95
95
J F M A M J J A S o N D J F M A M J J A s o N D J F M A M J J. A S o N o J F M A M J
1939
1940
1941
1942
Selected Components
Aug. and Sept 1941 Compared with 1935-39 Average
PER
CENT
Seasonally Adjusted
Transportation Equipment
225
Machinery
200
from and Steel
Nonferrous Metals
175
COMBINED INDEX
Textiles
150
Stane. Clay and Gloss
Chamicals
Lumber, etc.
Rubber Products
Manufactured Foods
125
Fuels
Printing and Publishing
Leather, atc
100
1935-39
Aug Sept.
100
1941
246
- # - - of - -
C-B83-C
- el - - -
Chart 4
Regraded Unclassified
FACTORY EMPLOYMENT, PAYROLLS AND WAGES
FIRST 6 MONTHS or 1939 o 100, UNADJUSTED
1939
1940
PER
1941
1942
CENT
PER
CENT
220
220
200
200
180
180
PAYROLLS)
160
160
140
140
EMPLOYMENT
120
120
100
100
AVERAGE WEEKLY EARNINGS
OF FACTORY WORKERS
80
1
J
M
M
J
$
N
M
M
J
3
N
J
M
M
J
5
N
1939
J
M
80
M
1940
J
&
M
1941
1942
247
CONFIDENTIAL
Chart 5
Source: B.L.S.
Other el the because at the Premeury
Date of - and -
C 414
Regraded Unclassified
Regraded Unclassified
9 chart
248
a
9
01
- agreeme
01
02
or
or
or
- LOVER
or
$
$
MM
R
8
&
of
oz
a
Total escluding disel and Testiles
8
os
wh
N
06
001
001
011
014
DCI
nei
ori
orr
Dai
OFF
051
is
E
091
OCI
and
INI
E
061
00/
002
for
001 VOST
Total [combind Indext
012
ore
are
are
DEZ
DEZ
Der
one
052
052
098
our
are
oz
our
our
are
067
THE
sime
a
-
o
5
,
.
.
.
à
F
=
-
-
1
a
F
a
o
1
1951
D 5 T.
SEXI
Combined Index of New Orders and Selected Components
INDEXES OF NEW ORDERS
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
249
DATE
TO
Secretary Morgenthau
Oct.27.1941
FROM
Mr. Foley
On Saturday morning Mr. Peul Shorb of Covington, Burling,
Cublue, Acheson & Shorb, telephoned Chuck Kades and said ne was
trying to ascertain the facts concerning a proposed plan for
the issuance of dismissal wage certificates which Shorb under-
stood #ás being considered by the Treasury.
Shorb said that United Aircraft Corporation had inquired
02 him about the proposed plan, saying that United had been ap-
proched by officials of Colt's Patent Firearms Manufacturing
Company. Shorb read an extract from a letter stating that a
r. "erguson, of Colt's Patent Firearms, had conferred with
... Barnard, who had been receptive though noncommittal.
Shorb stated he was particularly interested in learning more
nicot the nature of the proposed dismissal wage certificates
Mich he understood would be analogous to tax anticipation notes,
as well as the legal theory which would permit the purchase price
oz such certificates to be deducted as a business expense. lie
said that he had inquired of the Bureau of Internal Revenue but
that the officials there said they knew nothing about it and he
Had been referred to the office of the General Counsel.
Kades told him that all ne knew was that there had been some
talk of a Colt dismissal wage plan but because Colt had been so
vague and indefinite no ruling was under consideration. He told
Shorb that no ruling would be given on a purely hypothetical plan.
Shorb said he knew it was the Treasury policy only to issue
ralings in specific cases but that inasmuch as United Aircraft
mated to go ahead, he intended to prepare a plan and submit it
to the Bureau for 8. ruling.
9.14.7h
Regraded Unclassified
V
250
OCT at 1941
MEMORAN DOM FOR THE PRESIDENT:
I have your memorandum of October 25th to Nayne Coy,
asking that I give clearance on your letter to William S.
Knudsen, Director General of the Office of Production Vanage-
ment relative to the appointment of a committee to represent
OPV in dealing with policy problems surrounding the granting
of the tax amortisation privilege. Inasmuch as this 10 & matter
of primary concern to the war and Navy Departments and to the
Office of Production Management, and since no direct tax question
is involved, I interpose no objection to the proposed letter to
Vr. Knudsen. You night, however, wish to clear this with the
other Departments involved, Mar and Navy.
(Signed) 1. Worgenthaw. 22.
Octioned n.m.c. by hut have
JLS
Regraded Unclassified
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE FOR EMERGENCY MANAGEMENT
251
WASHINGTON, D.C.
October 25, 1941.
My dear Mr. Morgenthau:
You will note from the attached corres-
pondence that the President would like clearance
from you prior to signing the letter to Mr. Knudsen,
as the matter has to do with taxes.
Sincerely,
Sidney Sherwood,
Acting Liaison Officer.
The Honorable Henry Morgenthau, Jr.
Secretary of the Treasury.
Regraded Unclassified
THE WHITE HOUSE
252
WASHINGTON
October 25, 1941.
MEMORANDUM FOR
WAYNE COY
Will you get clearance on
this from the Secretary of the
Treasury, as it has to do with
taxes?
F. D. R.
Regraded Unclassified
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE FOR EMERGENCY MANAGEMENT
WASHINGTON,D.C.
October 25, 1941.
My dear Mr. Morgenthaus
You will note from the attached corres-
pondence that the President would like clearance
from you prior to a igning the letter to Mr. Knudsen,
as the matter has to do with taxes.
Sincerely,
Sidney Sherwood,
Acting Liaison Officer.
The Honorable Henry Morgenthau, Jr.
Secretary of the Treasury.
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
October 25, 1941.
MEMORANDU... FOR
WAYNE COY
Will you get clearance on
this from the Sear tary of the
Treasury, DE it has to do with
taxes?
F. D. R.
Regraded Unclassified
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE FOR EMERGENCY MANAGEMENT
WASHINGTON, D.O.
October 23, 1941
MEMORANDUM TO THE PRESIDENT:
From:
Wayne Coy ter
The Congress has just passed a Joint Resolution amending
section 124 of the Internal Revenue Code - the tax amortization
statute. There has been considerable discussion and disagrement
all summer about this matter and the legislation as passed by the
Senate does not reflect the agreement reached by the Army, end
Navy and me as Secretary of the Advisory Commission. It was
finally accepted on the basis of an agreement between me and the
service departments that the regulations issued under the Act,
with your approval, would recognize the responsibility of the
Office of Production Management to examine the tax amortisation
work of the service departments in order that the administration
of the statute may be in conformity with the Administration's
policy and that the Office of Production Management would from
time to time assist in the direction of the policy of the service
departments and in addition, make recomendations to the Secretary
of War and the Secretary of Navy or to the President for changes
in regulations as such changes may be necessary.
The legislation will be coming to you for your signature
Regraded Unclassified
- 2 -
very shortly and quickly thereafter the regulations will be coming
to you for your approval.
It is my suggestion that you designate the heade of
three divisions of the Office of Production Management to carry
out the responsibility of the Office of Production Management with
respect to the administration of the tax amortization statute. My
suggestions are Mr. Donald M. Nelson, Executive Director, Supply,
Priorities and Allocations Board; Mr. Leon Henderson, Director of
Civilian Supply, and Mr. Floyd B. Odlum, Director of Contract
Distribution, and that Mr. Odlum serve as chairman of this group
because of his interest in seeing that there is no unnecessary
expansion of facilities without exhausting all of the possibilities
of subcontracting and conversion. I think it would be advisable to
appoint this committee now 80 that they may work with the War
Department and Navy Department in the development of the regulations
and in the establishment of the small organization to look after
their continuing responsibility with respect to the administration
of the statute by the War and Navy Departments.
I an attaching herewith for your signature a letter to
Mr. Knudsen, ssking him to appoint the committee. I should appreciate
having a copy returned to me when you have signed it.
Attachment.
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
Mr. William S. Knudsen,
Director-General,
Office of Production Management,
Washington, D. C.
Dear Bill:
In order to give substance to an agreement between the
Advisory Commission and the Mar and Navy Departments concerning the
general administration of Section 124 of the Internal Revenue code
as amended, I wish you to appoint 5. Tax Amortization Committee com-
posed of three members, which will be charged with the responsibility
that the Office of Production Management shares with the War and Navy
Departments in dealing with pollcy problems surrounding the granting
of the tax amortization privilege.
This committee should be appointed now in order that they
may work with the War and Navy Departments in the development of the
regulations, as I should like them to pass upon all such regulations
prior to my approval. They will also be expected to recommend to the
Secretary of War and the Secretary of the Navy, or to the President,
necessary changes in regulations.
In view of the importance of insuring that there is no
unnecessary expansion of facilities without exhausting all of the
possibilities of subcontracting and conversion, I should like Mr.
Floyd Odlum, Director, Division of Contract Distribution, to serve
as Chairman of the committee, with Donalé Nelson, Director, Supply,
Priorities and Allocations Board and Leon Menderson, Director,
Civilian Supply, serving as co-members.
Mr. Cdlum should be authorized to arrange for personnel
necessary to carry out the policy determinations of the committee and
to maintain lisison with the Departments of War end Navy.
Very sincerely yours,
Regraded Unclassified
Avpropriations, Contryct Authorizations, one Rocompendationa for Dofence
Fisori Years 1971 onl 1942
(As of September 27, 1941)
Army
Havy
Other Agencies
Total
Fiscal year 1941:
Appropriations enacted
$8,480,613,877
$3,548,748,345
$1,282,171,908
$13,311,534,130
Contract authorizations enacted
5,006,589,651
946,098,112
389,000,000
6,341,687,763
Subtotal
13,487,203,528
4,494,846,457
1,671,171,908
19,653,221,893
Deduct cash included to liquidate 1941
contract authorizations
203,626,456
28,560,000
75,000,000
307,186,456
Net total, 1941
13,283,577.072
4,466,286,457
1,596,171,908
19,346,035,437
Fiscal year 1942:
Appropriations enacted
14,645,279,287
5,683,847,907
1,640,332,250
21,969,459,444
Contract authorizations enacted
183,145,695
41,448,894
1,287,000,000
1,511,594,589
Pending before Congress:
Appropriations
-
120,996,000
16,957,725
137,953,725
Subtotal
14,828,424,982
5,846,292,801
2,944,289,975
23,619,007,758
Deduct cash included to liquidate 1941
contract authorizations
3,357,373,076
615,453,690
235,653.000
4,208,479.766
Net total, 1942
11,471,051,906
5,230,839,111
2,708,636,975
19,410,527,992
Net total, 1941 and 1942
24,754,628,975
9,697,125,568
4,304,808,883
38,756,563,429
Defense Aid Appropriation Act, 1941
7,000,000,000
Additional Defense aid (pending)
5,985,000,000
Appropriations recuired beyond 1942
to complete construction of the ex-
panded Havy
8,413,000,000
Total
60,154,563,429
1/
Represents estimate of the Navy Department.
Source : Bureau of the Fudget.
Regraded Unclassified
DIVISION of AID EXPIRES
AMALYSIS of APPROPELATIONS, ALLOCATIONS, ONLIGATION. U:
1920 THE INVESTS ATD APPROPRIATION ACT, 1948
AM If an 15. 1941
CONFIDENTIAL
259
AMERT
ALLOCATIONS
MANATIONS
-
IF
DIRECTATED
THIS PRITE
TO DATE
APPROPRIATIONS
7515 PERIOD
- an
ALTOCATIONS
- must
APPROVIATION
515 PERIOD
en DATE
OFLIGATIONS
(Delum ! visa
. alima
T Address
Crime %)
7)
(1)
(3)
Coloma to)
($)
(5)
19)
(5)
(1)
(#)
(9)
(10)
nat
NAME ASD stores
1,343,008,000.00
as Department
13,560,500.00
$73,140,250.00
7,572,672.50
32,507,554.50
$40,672,695.50
539,440.00
912,690.00
31,594,854.50
DO
142,670,644.00
763,229,761.00
65,307,716.82
632,798,520.02
1,754,101.13
3,918,640.20
126,512,600.78
service Commission
14,020.00
14,000.00
14,500.00
Total
1,343,000,000.00
156.297.148.00
1,036,429,011.00
206,570,987.00
168,938,795.48
071,445,215.52
5,289,541.83
now: ASD ADDITATICAL NATERIAL
2,014,000,000.00
Datey Department
18,359,500.00
6,261,620.32
6,338,085.16
146,220,284.02
+
-
4,156,001.10
far Department
7,951,046.00
1,809,967,667.00
102.074.173.95
456.475.186.09
1,351,481,200.91
.
Maritize Conclasion.
102,000.00
102,000.00
102,000.00
Treatury Department
1.430,000.00
4,470,000.00
#67.11
1,81,008.25
2,576,370.75
1,853,684.18
Total
2,054,000,000.00
1,997,098,035.00
109,138,761.34
666,705,298.52
1,500,390,736.44
597,937-94
1,193,680.16
- orea VEHICLES
162,000,000.00
23,426,240.00
111,407,080.00
90,960,034.43
115.339.250.00
-
=
HAP
115.198.250.60
Milline
4,750,000.00
4,750,000.00
4,750,000.00
-
-
Department
257,170.00
574,175.00
36,994.38
535,230.62
1
16,254.38
-
Total
362,000,000.00
115,435,144.98
201.593.110.00
56,000.38
16,094.18
119.99.20.50
19761 AS: -
629,000,000.00
ANY Department
TL.926,800.00
122,877,140.00
14,285,460.00
29,416,798.65
91,460,341.35
114,000.00
265,500.00
-
1,150,000.00
501,183,800.00
24,613,922.01
445.405.532.23
55.756.20.17
2,453,600.10
treasury Desartment
450,000.00
13.300.00
43,300.20
406,700.00
41,400.00
Total
529,000,000.00
71,075,500.00
629,488,940.00
5,111,050.00
149.623.309.12
$74,565.46
2.719.100.10
477,146,330.78
MILITART RELINGT
260,000,000.00
50,000.00
12,039,000.00
12,713,001.00
-
.
Mary Department
:- 17,190,520.00
$1,067,383.00
15,319,270.68
75,748,112.32
11.213.100.71
to Department
Tymetry Department
3,725,000.00
14,056.79
3,640,945.21
16,054.70
Total
250,000,000.19
in 12,180,630.00
107,031,385.00
152,568,617.00
1,000,000
91.688.057.53
55,726.52
11,097,657.50
AND
152,000,000.00
27,000,000.00
-
78,631,007.00
-
-
SATY Department
16,630,000.00
100.331.971.00
137,836,759.00
2,509,600-37
2,505,500.97
135.391.186,03
-
-
2,500,000.00
far
50,000,000.00
43,781,054.00
6,211,945.00
1,027,118.38
suitize Completico
753,000,000.00
127,131,971.00
264,466,759.00
487,531,211.00
7,505,600.97
46,291,099.37
1,304,339.71
Total
1-2 CONNEDITIES
1,350,000,002.00
£2,000,000.00
67.000,000.00
14,461,079.19
354,197.35
1,910,171.44
22.528.796.47
am imartant
7,401,030.00
9.912.139.00
436,680.00
$36,680.00
3,47e,058.00
-36,680.00
TM Department
1,400,000.181
-
-
1,400,000.00
1,400,000.00
196.914.747.00
9,011,741.24
184,06-,569.64
61,177,150.40
Transure Department
18,935,900.00
73,427,900.00
14,302,232.68
31,404,250.63
22.020.349.37
$4,402,550.03
- of Aginiture
TWIAL
1,150,000,000.00
63,735,*88.50
344.050.386.00
44,564,012.73
255,424,057.70
e., or APTICLES
111,66.72
€,011,000.00
NO,809,000.00
4,285,235.66
havy
15,307,208.00
far Creams
14,374,224.00
18,863,108.00
3,694,438.25
1,075,499.34
1,811,955.00
13,596,936.00
9,116,548.94
Appllies Commission
2.103,961.74
Total
207,000,000.00
14,713,154.00
73,005,004.00
9,341,424.50
51,579,409.14
3,007,000.16
Le - LO WEAR
40,000,000.00
1,300,000.00
.
!
-
-
-
TO
L,380,200.00
1,300,000.00
11.601.506.00
-
-
-
vsr
1,427,901.00
11,601,5%.00
-
25A,000,00
-
-
264,000.00
264,500.00
254,000.00
- Commission
5,000.00
-
-
SMALL Department
5,100.00
-
264,000.00
12,906,506.00
-
-
254,000.00
Total
40,000,000.70
10.127.901.00
11,170,506.00
254,000.00
ASSOCIATION REPRESE
16,000,000.00
-
$25,000.00
,
-
-
1
- -
529,000.00
$25,000.00
-
3,300,000.00
THE Importment
1,300,000.00
-
5,100,000.00
294,000.00
,
-
-
-
204,000.00
-
-
4,754.71
12,941.14
1,539.29
3,903.00
1,800.00
11,327.56
Department
-
20,289.00
2,305.00
$50.50
1,147.20
1,107.50
50.5%
1,197.20
- of Agriculture
-
7,004.25
25,304.95
124,095.00
1,896.73
3,941.41
21,963.57
Combine Office of the President
25,000.00
150,000.00
5,304,426.00
4,057,143.96
6,106.54
9,082.45
29,147.59
4,614.50
58,430.00
Total
10,000,000.00
3,650,000.00
4,095,574.00
1,609,475.32
2,320,154.56
103.702.541.19
- a REPARTMENTS
7,000,000,000.00
50,460,747.35
105,577,698.75
- Department
132,952,800.00
746.892.758.00
2,454,957,801.08
1,109,000.35
6,000,308.17
4% -
1,177,546,033.00
290,115,064.39
74,882,852.02
2,530,754.23
6,633,958.55
490.525.85.43
- Dominision
9,207,936.10
571,582,736.00
29,974,511.57
11,564,753.64
1,235,345.02
3,567,489.06
11.301.284,54
1 Department
26,077,327.50
206,153,151.00
9,027,746.44
51,803,747.83
27,021,457.17
150.50
1,197.20
51,802,550.63
14,301,083.16
of Agriculture
7,004.35
25,900.58
124,095.02
1,896.71
3,991.91
21,963.57
14,934,900.00
require Office of the Prevident
29,931.00
150,000.00
791,408,161.16
1,392,164,205.50
1,776,990,574.50
0,188,154.17
16,771,082.95
aux TOTAL
7,000,000,000.00
693,747,083.50
4,771,159,923.00
Regraded Unclassified
260
October 27, 1941
Honorable Harry Hopkins
The White Rouse
Washington, D. C.
Dear Harry:
I think you will be interested in the attached letter and
the accompanying charts which I have sent to Mr. Stettinius, (10-27)
and I - mending them to you for your information.
Very truly yours,
(Stenal) 1. in
Secretary of the Treasury
only sent
more din
1/27/21
CIB:BLB
By Memover 7:20 Veech
nme.
Regraded Unclassified
261
OCT 27 1941
Dear Ed:
Following our discussion relative to lend-lease pur-
chasing by the Treasury Procurement Division, I had charts pro-
pared, which are being sent along with this letter, showing
the time taken to make purchases. The charts show a picture of
all lend-lease purchases from the inception of the program.
The record of all lend-lesse purchases for October 1-22 shows
averages of 6.9 days for missellaneous purchases; 5.1 days for
metal purchases) and the purchase of agricultural equipment ye-
quired less than & day. These are all-over averages and include
difficult purchases as well as routine transactions.
You will recall that during a conference at my office on
September 10, I speke of certain difficulties which the Procure-
ment Division was having because of the policy of the Office of
Production Management to allocate for but one month whereas the
British orders specified quantities for future deliveries over
a period of three, six and nine months, or longer. This neces-
sarily resulted in 1 substantial volume of "frosen" funds which
could not be used for purchases until the Office of Production
Management's allocations of materials unre received. It is Ky
understanding that this matter is now being straightened out
and that you stated at your meeting on October 22 that you would
request the Office of Production Management to allocate metals
for three-month periods or lenger rather than monthly alless-
tions as heretofore.
The weekly report of lend-lease activities received by
as from the Procurement Division for the period ending October
24 shows the following:
Awaiting allocation of funds
$40,084,724.75
Requisitions awaiting elear-
anee by OPM
17,840,782.98
Requisitions swaiting allow-
tioms of material by OPM
28,479,020.00
Total
$86,354,527.73
Regraded Unclassified
+
262
The first item again raises the question of fund prosedure,
which also was discussed at the meeting on September 10, and,
I understand, changes were made to expedite it, nevertheless
I also understand that the original plan of requiring & PO-
quest for funds to cover each Individual requisition is still
being followed. I an advised, however, that this matter is
now being studied by Mr. McCabe of your organization and it
scems to no that the present practice of allotting funds for
purchases can be revised to provide a more workable process.
You appreciate, I an sure, that the Treasury Procurement
Division is purchasing commercial items of a very wide scope
and the procedure of requiring the allocation of funds for
each requisition must necessarily be involved and is not in
line with usual procurement practice.
I think that the fund procedure is something you might
want to go into personally.
Sincerely yours,
(Signed) 1. Bergenthan, 29.
Secretary of the Treasury.
Mr. E. R. Stettinius, Jr.,
Lend-Lease Administrator,
512 - 22nd St., N. W.,
Washington, D. C.
a Memore
5:15
nime
Regraded Unclassified
TREASURY DEPARTMENT
263
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM Mr. Barnard
Attached is latter to Mr. Stettinium which was prepared by
Mr. Mack in accordance with our conversation and your
instructions this morning. It seems to me satisfactory.
CVB
Regraded Unclassified
204
AGRICULTURAL EQUIPMENT ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease. and Date Order Was Placed
H Orders
20 Orders
26 Orders
87 Orders
5 Orders
44 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
Monthly Average
12
12
8
B
4
4
Less Than One Day
0
o
4
16
23
10
27
1
10
17
24
31
7
14
21
28
5
12
19
26
2
4
"
a
25
I
8
IS
22
29
6
13
20
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
3. October Purchase Negotiations Completed Prior to Clearance
"we - from
2-294
I -
Regraded Unclassified
265
AUTOMOTIVE EQUIPMENT ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
No Orders
13 Orders
6 Orders
6 Orders
3 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
Monthly Average
20
20
16
16
12
12
8
8
4
4
Less Than One Day
o
0
2
9
16
23
30
10
17
24
31
7
14
21
28
5
12
19
26
4
II
8
25
I
8
15
22
29
é
13
20
27
3
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
Z-297
el IN levrurg if the Transary
- el - et -
Regraded Unclassified
266
CHEMICAL ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
5 Orders
5 Orders
34 Orders
17 Orders
9 Orders
8 Orders
DAYS
DAYS
Bars are Averages of All Orders
:
1
Placed on the Same Day
36
36
32
32
28
28
24
24
Monthly Average
20
20
16
16
12
12
B
8
4
4
Less Than One Day
0
o
9
16.
13
30
31
7
14
2)
20
5
12
19
26
2
4
11
a
25
I
e
is
22
29
é
13
20
27
3
10
17
24
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
Z-202
of - Treasury
- 4 - -
Regraded Unclassified
267
MACHINERY ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
5 Orders
22 Orders
47 Orders
26 Orders
30 Orders
24 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
Monthly Average
20
16
16
12
12
8
0
4
4
Less Than One Day
0
0
2
9
is
23
17
24
11
7
:
21
zo
5
12
19
26
20
4
=
19
25
I
-
IS
22
29
6
=
02
27
3
OI
OCT.
NOV.
MAY
JULY
AUG.
SEPT.
JUNE
1941
2-291
Miss of the Sectery of the Trusay
1 % I I I
Regraded Unclassified
268
MISCELLANEOUS ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
7 Orders
19 Orders
6/ Orders
48 Orders
56 Orders
44 Orders
DAYS
DAYS
a 1
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
Monthly Average
16
16
12
12
B
8
4
4
Less Than One Day
0
0
%
16
23
31
7
14
21
28
5
12
19
26
2
30
-
11
a
25
I
B
15
22
29
6
a
20
27
3
10
17
24
SEPT.
OCT.
NOV
MAY
JUNE
JULY
AUG.
1941
2-296
- e - increase M like Transury
- if % - I
Regraded Unclassified
269
ALL METAL ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
23 Orders
7/ Orders
222 Orders
137 Orders
280 Orders
139 Orders
DAYS
DAYS
36
36
32
32
28
28
24
24
20
20
16
16
Monthly Average
12
12
8
6
4
4
Less Than One Day
0
0
26
2
9
16
23
so
10
17
24
31
7
14
21
28
5
12
19
4
Il
-
25
I
a
15
22
29
6
13
20
27
1
OCT.
NOV.
AUG.
SEPT.
MAY
JUNE
JULY
1941
Z-283
- all the et the Transmary
1 I [ % T
Regraded Unclassified
270
CARBON STEEL ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
28 Orders
55 Orders
55 Orders
145 Orders
25 Orders
DAYS
DAYS
1
Bars are Averages of All Orders
:
=
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
Monthly Average
B
8
4
4.
Less Than One Day
0
16
23
10
0
31
7
14
21
20
5
12
19
26
2
9
4.
0
18
zs
I
IS
22
13
20
27
3
10
17
24
-
29
6
SEPT.
OCT.
NOV.
MAY
JUNE
JULY
AUG.
1941
2-295
% N havey e - Treasury
el Preva et
Regraded Unclassified
271
ALLOY STEEL ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
2 Orders
54 Orders
18 Orders
43 Orders
a Orders
DAYS
DAYS
:
1 2
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
Monthly Average
12
12
B
8
4
4
Less Than One Day
o
R
16
23
30
0
Is
21
28
in
12
19
as
2
4
II
ID
25
I
a
15
22
29
&
13
20
27
3
ID
17
24
31
7
OCT.
NOV.
JUNE
JULY
AUG.
SEPT.
MAY
1941
2-293
- of TM Secreary - Teasuary
- - - and Value
Regraded Unclassified
272
MISCELLANEOUS STEEL AND STEEL PRODUCT ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
7 Orders
10 Orders
7 Orders
18 Orders
25 Orders
No Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
,
32
32
26
28
24
24
20
20
16
16
Monthly Average
12
12
8
8
4
4
Less Than One Doy
o
o
4
"
:
25
16
23
I
a
15
22.
29
á
13
20
27
3
10
17
24
34
7
14
21
28
5
12
19
26
2
,
30
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
Mill el the Secretary of the Treasury
- of - - I
2-284
273
STEEL SCRAP ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease. and Date Order Was Placed
5 Orders
5 Orders
2 Orders
No Orders
No Orders
No Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
B
8
Monthly Average
4
4
Less Than One Day
o
2
9
16
23
30
D
7
14
21
20
5
12
19
26
a
II
-8
25
I
e
IS
22
29
6
13
20
27
3
iD
17
24
31
JULY
AUG.
SEPT.
OCT.
NOV.
MAY
JUNE
1941
2-289
THE if - Treasury
- el - - -
Regraded Unclassified
274
TIN PLATE ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
3 Orders
16 Orders
14 Orders
24 Orders
90 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
Monthly Average
20
20
16
16
12
12
8
8
4
4
Less Than One Day
o
0
2
.
16
23
10
17
24
31
7
is
21
20
5
12
19
&
30
4
=
in
25
-
8
15
22
29
6
a
20
27
3
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
* October Purchase Negotiations Completed Prior to Clearance
Z-286
Zip # in Services of the Insury
1 = J I 1
Regraded Unclassified
275
DROP FORGING ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease. and Date Order Was Placed
No Orders
No Orders
62 Orders
17 Orders
18 Orders
3 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
Monthly Average
20
20
16
16
12
12
8
8
4
4
Less Than One Day
0
0
9
Is
23
30
3
10
17
24
3f
7
In
21
ze
5
12
19
IF
2
4
11
a
25
I
a
IS
22
29
6
13
20
27
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
- é the leases et the Trusen
Z-265
1 = 1 I 1
Regraded Unclassified
276
ZINC ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
// Orders
6 Orders
// Orders
12 Orders
15 Orders
15 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
Monthly Average
B
8
4
4
Lass Than One Day
o
0
9
16
23
20
17
24
31
7
I
21
28
5
12
19
26
2
4
"
a
25
-
8
IS
22
29
6
13
20
27
3
10
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
1 of the Secretary el the Treasury
Z-200
- of - el I
Regraded Unclassified
277
COPPER ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
5 Orders
3 Orders
2 Orders
/ Order
2 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
Monthly Average
8
8
4
4
Less Thon One Day
o
2
9
16
23
30
o
31
7
=
21
28
5
12
19
25
4
Il
IB
25
(
a
is
22
29
6
13
20
27
3
10
17
24
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
2-281
Pie el the Security at the Truney
lines and
Regraded Unclassified
278
LEAD ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
/ Order
/ Order
No Orders
No Orders
No Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
8
B
Monthly Average
4
4
Less Than One Day
o
0
2
9
16
21
31
7
14
21
28
5
12
19
26
30
+
"
IB
25
-
6
15
22
29
6
a
20
27
3
10
17
24
OCT.
NOV.
MAY
JULY
AUG.
SEPT.
JUNE
1941
Z-207
TY or Honey 2 -
buy - - e Prize
Regraded Unclassified
279
MISCELLANEOUS METAL ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
10 Orders
8 Orders
/ Order
DAYS
9 Orders
/ Order
DAYS
Bars are Averages of All Orders
:
36
Placed on the Same Day
36
32
32
28
28
24
24
20
Monthly Average
20
16
16
12
12
8
8
4
4
Less Than One Day
0
0
4.
Il
IS
25
16
23
-
8.
15
22
29
&
D
20
27
3
a
17
24
31
7
I
21
28
5
12
19
26
2
9
30
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
- et The Servey of N Tramary
- el - -
2-292
280
PIG IRON ORDERS
EFFECTED BY THE PROCUREMENT DIVISION MAY I TO DATE
Days Elapsed Between Date of Clearance by OPM and Lend-Lease, and Date Order Was Placed
No Orders
/ Order
3 Orders
No Orders
No Orders
No Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
32
32
28
28
24
24
20
20
16
16
12
12
8
8
4
4
Monthly Average
Less Than One Day
o
0
2
9
is
23
31
7
14
21
28
5
12
19
26
30
4
II
25
I
8
15
22
29
13
20
27
3
10
17
24
16
6
OCT.
NOV.
MAY
JULY
AUG.
SEPT.
JUNE
1941
2-290
- # the et We Trumpy
- el - - -
Regraded Unclassified
281
October 27, 1941
MEMORANDUM
To:
Secretary Morgenthau
From:
Messrs. Foley and Pehle
At the opening of business on Monday, October 27,
1941 there were 2440 pending applications in the Foreign
Funds Control.
JWhale 9.11.70lmg 2
Regraded Unclassified
TREASURY DEPARTMENT
282
INTER-OFFICE COMMUNICATION
Channess
DATE October 27. 1941.
TO Secretary Worgenthau
FROM Mr. Bell "200B
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
$ Proceeds of
$ Proceeds of
Shares Sold
Bonds Sold
Total
Oct. 20
22.707
1,000
23,707
21
48,613
2,887
51,500
22
9.376
-
9.376
23
13,326
-
13,326
24
6,767
48,991
55.758
25
3,354
-
3.354
104,143
52,878
157,021
Sales from
Feb.22,1940 to
280,809,659
37,217,194
318,026,853
Oct,18,1941.
Total
Feb,22,1940 to
280,913,802
37,270,072
318,183.874
318,183.874
Oct.25,1941.
$ proceeds of non-vested securities sold
Oct. 13, 1941 to Oct. 18, 1941.
300,000
$ proceeds of non-voated securities sold
Sept. 1, 1939 to Oct. 11, 1941.
235,500,000
$ proceeds of non-vested securities sold
Sept. 1, 1939 to Oct, 18, 1941.
235,800,000
235,800,000
GRAND TOTAL
553,983,874
9 Units sold from Aug. 18, 1941 to Oct.25,1941 for
$42
11 Shares Stock Dividend sold from Aug.18,1941 to Oct.25,1941 for
$123
55.772 Rights sold from July 24,1941 to Oct,25,1941
$102,853
Regraded Unclassified
TREASURY DEPARTMENT
283
INTER-OFFICE COMMUNICATION
For Miss Chauncey
DATE October 27. 1941
Secretary Morgenthau
TO
FROM
Mr. Bell
End
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
No. of Shares
$ Proceeds of
Nominal Value
$ Proceeds of
Sold
Shares Sold
of Bonds Sold
Bonds Sold
Oct. 20
789
22,707
1,000
1,000
21
1,410
48,613
5,000
2,887
22
430
9.376
Nil
Nil
23
400
13,326
Nil
Nil
24
200
6.767
52,000
48,991
25
40
3,354
Nil
Nil
3,269
104,143
58,000
52,878
Sales from
Feb.22,1940 to
Oct.18,1941
9,818,832-1/2
280,809,659
45,320,016
37,217,194
Total
Feb.22,1940 to
Oct.25,1941
9,822,101-1/2
280,913,802
45,378,016
37,270,072
Regraded Unclassified
284
BRITISH AIR COMMISSION
1785 MASSACHUSETTS AVENUE
WASHINGTON, D. c.
TELEPHONE HOBART 9000
PLEASE QUOTE
REFERENCE NO
With the compliments of British Air Commission,
who enclose Sta tement No. 3, covering aircraft
shipped, for week ended October 21, 1941
The Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
October 27, 1941
Regraded Unclassified
285
STATEMENT NO, 3.
AIRCRAFT DESPATCHED FROM THE UNITED STATES.
WEEK ENDED OCTOBER 21, 1941
TYPE
DESTINATION ASSEMBLY POINT BY SEA BY AIR FLIGHT DELIVERED
FOR USE IN
CANADA
BLL
Airacobra
U. K.
U. K.
5
--
:
DEING
Boston III
U. K.
U, K.
1
:
--
ESSNA
Canada
----
--
--
19
T-50
NSOLIDATED
Catalina
Australia
"elbourne
:
1
:
Liberator II
U. K.
U. K.
--
9
--
TRTISS
Kittyhawk
Middle East
Port Sudan
30
:
--
--
9
Canada
----
OUGLAS
10
-
--
Poston III
U. K.
U. K.
6
--
Middle East
Port Suden
:
OCKHEED
--
1
-
Hudson V
Canada
----
LENN MARTIN
Baltimore
Middle East
Port Sudan
3
--
DRTH AMERICAN
Karachi
4
--
:
Barvard II
Bombay
4
--
:
Middle East
Port Sudan
-
Durban
30
-
S. Africa
6
--
--
Mustang
U. K.
U. K*
99
10
29
TOTAL
E -tish Air Commission,
October 27, 1941,
Regraded Unclassified
D
THE LIBRARIAN OF CONGRESS
286
D.C.
needs Washington, rice unsuring 1/24/20
October 27, 1941
My dear Henry:
Please find enclosed a copy of an Executive Order issued by
the President on October 25, creating a new agency, to be known as the
Office of Facts and Figures, operating under the direction of the Presi-
dent.
The President has honored me by naming me the Director of
the new agency, and I am hopeful of beginning operation immediately. I
am writing you this letter, therefore, to ask for your cooperation and
the cooperation of your department in achieving the President's objective,
as expressed in his Executive Order. I realize the Office of Facts and
Figures cannot be successful without the complete assistance and constant
advice of all agencies of the government dealing with the defense program
and defense policies.
The President's Executive Order expresses very clearly the
purpose and authority of the Office of Facts and Figures. I should like,
However, to emphasize five points:
1. The strength of a democracy lies in the knowledge and under-
standing of its people. Unlike the government of a totali-
tarian state, we can take the people into the confidence of
the government, and explain the whys and wherefores. The
fundamental purpose of the creation of an Office of Facts
and Figures is to help to make available to the average citi-
zen a maximum of information on the defense program and
policies, consistent with the public interest. I am sure no
one can quarrel with this objective.
2. The requirements of the Office of Facts and Figures are ex-
tremely simple. The operation of the Office will be almost
completely within the government. It will not duplicate
nor supercede any existing information facility. It will not
alter the present relationship between newspaper and radio
representatives and the various departments and agencies. The
Office of Facts and Figures will clarify, end we hope make
more effective, the efforts of agencies already in the field.
The job is one of coordination, not of control or regulation.
Regraded Unclassified
287
- 2 -
3. In order to perform its duties, the Office will, of course,
depend upon information supplied by the various departments
and agencies. In turn the Office will make suggestions under
the direction of the President, as provided in the Executive
Order, to the various departments end agencies.
4. The details of the organization of the Office and the methods
by which it will maintain liaison with other departments and
agencies have not yet been worked out. As soon as a pro-
cedure can be proposed, I should like to discuss it with you
and to receive your suggestions and advice.
5. The Office of Facts and Figures will not use bally-hoo methods.
We will deal with information in the absolute literal sense
of the word - i.e., accurate facts and figures. It is the duty
of the Office to help this information to flow freely and
rapidly through the natural channels of the government, and I
can promise that the facts and figures will be neither perverted
nor colored.
The Office of Facts and Figures, which 1a an independent agency
operating under the President, is an outgrowth of the plan which Civilian
Defense Director F. H. LaGuardia submitted to you in a memorandum under date
of August 14. Mr. LaGuardia has been of invaluable help and is largely
responsible for the final plan that the President evolved and which is con-
tained in the Executive Order.
I shall not attempt in this letter to spell out to you in
greater detail the functioning of the Office of Facts and Figures. My only
purpose now is to give you a broad outline of my thinking and to ask whether
it will be convenient for you to discuss this entire matter with me at some
time in the near future. If your secretary will be good enough to suggest
to my office in the Library of Congress an hour which will be convenient
for you, I shall make every effort to make my convenience meet yours.
Faithfully yours,
durine moduli
Archibald MacLeish
Director, Office of Facts and Figures
The Honorable
Henry Morgenthau
Secretary of the Treasury
Washington, D. C.
Regraded Unclassified
288
HOLD FOR RELEASE
HOLD FOR RELEASE
HOLD FOR RELEASE
OCTOBER 27, 1941
CAUTION: The rolloving dédress of the President, to be delivered
at the Airmer to be hold nt the Mayflover Hotal in colebration of
"Navy Total Defense Dey", WGT EM HEID IN STRICT CONFIDENCE
UNTIL REIFASED,
2054
NOTE:
Release to editions of all newspapers appearing on the
otrooto not cerlier than 10:00 P.M., E.S.T., October 27, 1941. The
same release of the text of the address also applies to radio an-
noumers and nows commentators.
CARE MUST BE EXERCISED TO PREVENT PREMATURE PUBLICATION,
STEPHEN EARLY
Secretary to the President
Five months ago tonight I proclaimed to the American people
the existence of a state of unlimited emergency,
Stnce then much has happened. Our Army and Navy are tompo-
rarily in Iceland in the defense of the Western Homisphere.
Hitler has attacked shipping in areas closs to the Americas
in the North and South Atlantic,
Many American-owned merchant ships have been sunk on the
high BOAS, One American destroyer wee attacked on September fourth.
Another destroyer vas attacked and hit on October asventeenth, Eleven
brave end loyal men of our Havy vere killed by the Nazia.
Wo have vished to avoid shooting. But the shooting has
started. And history has recorded who fired the first shot. In the
long run, however, all that vill metter 18 who fired the last shot.
America has been attacked. The U.S.S. Esarny is not just
5 navy ship. She belongs to every can, woman and child in this
nation.
Illinois, Alabama, California, North Carolina, Ohio, tou-
istana, Texas, Pennaylvania, Georgia, Arkansas, New York, Virginia
those are the home guates of the honored dead and wounded of the
Kearny, Hitler's torpedo was directed at every American, whether he
lives on our 808 coasts or in the innormost part of the nation, far
from the seas and far from the 5:210 and tanks of the marching hordes
of would-be conquerors of the world.
The purpose of Eitler's attack was to frighten the American
This 1s not the first time he has misjudged the American apirit. That
people off the high seas - to force us to maice a trembling retreat,
spirit is now arouned.
If our national policy were to be dominated by the fear of
shooting, then all of our ships and those of our sister Republice
would have to be tied up in home harbore, Our Navy would have to re-
main respectfully -- abjectly -- behind any line which Hitler might
decree on any ocean as his OVD dictated version of his own war zone,
We reject it because of our own sclf=interent, because of cur own golf-
Naturally vo reject that abourd and insulting suggestion.
respect, because, most of all, of our own good faith. Freedom of
the BORD 10 now, 68 it has always been, B fun/lamental policy of your
government and rine.
Ritler has often protested that his plans for conquest do
not extend across the Atlantic Ocean. But his submerines and raiders
prove otherwise, do doca the entire doolgn of his nov Regraded verlá order. Unclassified
- 2 -
289
For example, I have in my possession a secret nap made
in Germany by Hitler's government by the planners of the new
world order. It is e map of South America and 8 part of Central
America, as Hitler proposes to reorgenize 1t. Today in this area
there are fourteen separate countries. The geographical experts
of Berlin, however, have ruthlessly obliterated all existing bound-
ary lines; and have divided South America into five vassal states,
bringing the whole continent under their domination, And they have
also 80 arranged it that the territory of one of these now puppet
states includes the Republic of Panama and our great life line -
the Panama Canal.
That 1a his plan. It will never go into effect.
This map makes clear the Nazi design not only against
South America but against the United States itself.
Your government has in its possession enother document
made in Germany by Hitler's government. It 18 = detailed plan,
which, for obvious reasons, the Nazia did not wish and do not vish
to publicize just yes, but which they are ready to impose -- a
little later -- on & dominated world -- 11 Titler vine. It la n.
plan to abolish all existing religions -- Protestant, Catholic,
Mohammedan, Hindu, Buddhist and Jewish alike. The proporty of all
churches will be meized by the Reich and ita puppets. The cross
and all other symbols of religion are to be Forbidden. The clargy
are to be forever silenced under penalty of the concentration camps,
where even now 60 many fearless men are being tortured because they
have placed God above Hitler.
In the place of the churches of our civilization, there 18
to be set up an International Nazi Church -- #: church which vill be
served by crators sent out by the Nazi Government, In the place of
the Bible, the words of Moin Kampf will be imposed end enforced BB
Holy Weil. And in place of the cross of Christ will be put two sym-
bole -- the awastika and the naked aword.
A God of Blood and Iron will take the place of the God. of
Love and Mercy. Ist us well ponder that statement which I have unde
tonight,
These grim truths which I have told you of the present and
future plans of Hitlerism will of course be hotly dended tonight and
tomorrow in the controlled press and radio of the Axle Powere. And
acme Americana - not may -- will continue to insiet that Litler's
plans need not vorry us -- and that we should not concern ourselves
with anything that goos on beyond rifle shot of our own shores.
The protestations of these American citizens -- few in
number vill, as usual, be paraded with applause through the Arto
press and radio during the next fev days, in an effort to convince
the world that the majority of Americans are opposed to their duly
chosen Government, and in reality are only waiting to jump on Hitler's
band vagon when it comes this way.
The motive of such Americans 1a not the point at issue, The
fact 1e that Nazi propaganda continues in desperation to seize upon
such isolated statements as proof of American disunity.
The Nagis have made up their own list of modern American
heroes. It is, fortunately, 8. short list. I am glad that It does
not contain my name.
All of us Americans, of all opinions, are faced with the
choice between the kind of world vo want to live in and the kind of
world which Hitler and his hordes would impose upon us.
Name of us vants to burrow under the ground and live in total
darkness Like 8 comfortable nole.
Regraded Unclassified
5
230
The forward march of Ritler and at Hitleric can be
stopped -- and It vill be stopped.
Very simply end very Muntly -- we are piedged to pull
our own cer in the destruction of Hitlerian.
And when ve have helped to end the curse of Hitlerie:
we shall help to establish a nov peace which vill give to decent
people everywhere 8 better chance to live and prosper in security
and in freedom and in faith.
Each day that passes we are producing and providing more
and more arms for the non who are fighting on actual battle-fronts.
That in our primary tack.
And it ie the nation's vill that these vital erns end
supplies of all kinds shall neither be looked up in American harbore
nor sent to the bottom of the con. It 10 the nation's will that
America shall deliver the gooda. In open defiance of that vill, our
ships have been sunk and our mailore have been Filled.
I say that ve do not propose to take this Lying down,
Our determination not to take it lying down has been 000-
pressed in the orders to the American Navy to ahoot on sight. Those
orders stand.
Furthermore, the Houms of Representatives has already voted
to apend part of the Neutrality Act of 1937, today outmoded by force
of violent circumstances, The Sonate Committee on Foreign Relations
has also recommended elimination of other hunstringing provisions in
that Act. That 1e the course of honsety end of realism.
Our American merchant ships must be armad to defend them-
selves against the rettlesnakes of the Bea.
Our American merchant shipo must be from to carry our
American goode into the harbora of our friends.
Our American merchant shipe must be protected by our
American Navy.
It can never be doubted the the goods will be dolivered
by this nation, whose Navy believes in the tralltion of "Dean the
torpedoes; full speed ahead!"
Yes, our nation will und must speak from every assembly line.
You, from every coal mine -- the all-inclusive whole of our vast indus-
trial rachino. Our factories end our shipyards are constantly expend-
Ing. Our output must be multiplied.
It cannot be hempered by the selfish obstruction of any small
but dangerous minority of industrial managers who perhaps hold out for
artra profits, or for "business B.B. usual". It cernot be hempered by
the selfiah obstruction of & small but dangerous minority of labor
lenders who are E. menace -- for labor BE E. whole love that that small
minority is B. menace -- to the true cause of labor 18001f, as well BE
to the nation AS a whole.
The lines of our essential defense now cover all the вела;
and to meet the extraordinary domands of today and tomorrow our Havy
units of 1t in the Atlantic patrol are in action. Its officere end
grows to unprecedented size, Our Navy is ready for action. Indeed,
men need DO preice from no,
Our new Army 16 steadily developing the strength needed to
withitand the aggressors. Our soldiers of today are worthy of the
proudent traditions of the United States Army. But traditions cannot and
shoot down dive bombers or destroy tanks, That is why ve must
not morely 0.0 good but better than that of any other army on earth,
chall provide, for every one of our soldiers, equipment and vespons
And V6 are doing that right now.
Regraded Unclassified
291
For this - and all of this -- 16 What ve nean by total
national defense.
The first objective of that defense in to stop Nitler. Re
can be stopped end can be compelled to dig in. And that will be the
beginning of the end of his downfall, because dictatorship of the
Hitler conquasts, type can live only through continuing victories -- increasing
The facte of 1918 are proof that B nighty German army and
a tired Gorman people can crumble rapidly and go to pieces when they
ATO faced with successful resistance,
Lobody who admiree qualities of courage and endurence on
rail to be stirred by the full-fledged recistance of the Russian
people, The Russiana are fighting for their own soil and their own
homes, Russie needa all kinds of help -- planes, tanks, sums, mad-
ical supplies and other aids -- toward the successful defense against
the invadore, From the United States and from Britain, ahe 1e getting
great quantities of those eccential supplies. But the needa of her
huge army vill continue -- and our help and British halp will have to
continue!
The other day the Secretary of State of the United States
vas asked by a Senator to justify our giving aid to Ruasia, His reply
veg: "The answer to that, Senator, depends on howardous = person 1s
to stop end destroy the march of Eitler to his conquest of the world,
If he were ancious enough to defeat Hitler, he vould not varry about
who was helping to defeat him".
Upon our American production falls the colossal taak of
squipping our own armed forces, and helping to supply The British,
the Russians end the Chinese. In the performance of that task ve
dare not fail. And ve will not fail.
It ans not been easy for us Americans to adjust ourselves
to the chocking realities of a world in which the principles of com-
mon humanity end common decency are being moved down by the firing
equada of The Gestapo, We have enjoyed many of God's blessings. We
have lived in E. broad and abundant land, and by our Industry and
productivity ve have made it flourish.
There are those who any that our great good fortune has be-
trayed us -- that we are now no match for the regimented masses who
have been trained in the Spartan ways of ruthless brutality. They say
that we have grown Set, and flabby, and lazy -- and that vo ere documed.
But thone who say that incw nothing of Americe or of American
life,
They do not know that this land 18 grost because it in a
land of endless challenge. Our country was first populated, and it
has boon steadily developed, by non and wash in whom there burned
the spirit of adventure and restlessness and individual independence
which will not tolorate oppression.
Ours has boon e. story of vigorous challenges which have
been accepted and overooms -- challenges of unchhursed seas, of wild
foresta and decort plains, of raging floods end withering drought, of
foreign tyrants and domestic strifo, of ataggering problems -- social,
economic and physical; and WO have come out of then the most powerful
nation -- and the freest -- in all of history.
Today in the face of this nevest and greatest challenge of
them all ve Americans have cleared our decks and taken our battle etc-
tions. We stand ready in the defense of our nation end the faith of
our fathers to do what God has given us the power to 366 se our full
duty.
Regraded Unclassified
292
THE WHITE HOUSE
WASHINGTON
PERSONAL
October 27, 1941.
Dear Mr. Secretary:
You may wish to add the enclosed to
your file on "Why the British Can't Lose".
It would be amusing, if it weren't for the
fact that Owen Lattimore, our political
adviser to Chiang Kai-shek, tells me that
the British Ambassador 1a assiduously
trying to build up Niemeyer and run down
Fox, end Lattimore is putting in his licks
for Fox.
Sincerely,
Land Card
Lauchlin Currie
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Regraded Unclassified
233
CHINESE NEWS SERVICE
1250 6TH AVENUE
NEW YORK, N. Y,
Phone: Clicle 6.5215
Cable Address: SINONEWS
New York, October 81, 1941
VOICE OF CHINA
(China Cove by Shortwave Radio)
Sconomic
VIENEYER, COCHR/UE IN CHUNGKING SAY
MISSION SYMBOLIZES AID-CHINA POLICY
CHUNGKING, Oct. 18 (CNS)
The arrival of the long-awaited Auglo-
merican Financial and Economic lission to China has been in the last two
days nil avent which has held the attention of official circles and the people
WILKO. It in the expressed feeling of beth the visiting exports and their
heat that 15 the work of the mission a further stop will have boon Accom-
plashed in Chineno-British-Amorioan economic co-oporation as woll M in
strengthoning the world democratic front in general.
Apply Anglo-Lmarioun Exporioneo
In an intorview granted the Chinceo and foreign prode yesherday Str
Otto Miamoyer, head of the visiting mission and is Director of the Bank of Sn:-
land, mádo the following statement:
"Our mission is puruly in an advisory capacity. We hope to upoly
the experience wo have loarned in Europo und olsowhere to your problems. I
MEVE been sont from the other side of the world to 1 moment then my country
12 deoply eng.ged in war and has 123 OWEL difficulties. My in Chung
Xing is L symbol of the very roal to line that La in my coustry Cor U.LE
country. No hope to contribute whocher vo can to the Chiruso account in e
docire to promoto those onds. The presched of Xr. Cochrane ni.d bys-If If in is
line with the policy of both our cour trice to namist ONLY.
Mr. H. Morlo Cochrano, Tuchnion] Assistant to the Joitod St:,10c
Sucrytary of the Treasury tr.4 a number of the mission, told the prote that
he is Mapy to work with Sir Octo Kicmayer edjo has recontly hand is qualifies and
the /ad had witched for himself how the Andrican Government in pushine
with 1% "Ma Donocracy" policy.
To Solve Currency Problems
Sir Otto doclared that the St.bilization Fund for Chicago curromary
British export said, is to holp in giving them. This stubilisation States
is any ono phase of the problems of foreign oxchange. Our cale object, fund the has
not is also new. "But the instruments are there," ho scid, St.b1- if
boon working very Long, to Sir otto, und the United "
wo Probaing osn holp system you." He added that the Currency
lization Board still has ample Pundo.
plano from Hong Kong on Thursday morning (Dot. 16). The party Government.
The Angle-Amoricon Financial-Pect.com Mission crrived in included, Changking
Mr. Penuel Fox, American penble of the Curroncy Stabilization they are
by bosides Sir Otto und life Coohraso, Mr. Jenus Baxter of the Burna Bourd, ru-
rived turned to Oct. 9, Sir Ottc and Mr. Coohrene conforred with British serbers Colonge
no Chungking on the serio planow mills in Hong Kong, where of the
Currency at the discussions concurned stabilization reablem.
or, Stabilization Board who vore at that tino in the of the Chinged
Quoations dollar raised the control of frozon assets LA woll us other aconomic -
and that the mission would spond most of its two welling 11th
Sir Otto revocled Meady the numbers here began e suries of consultations
Original authorities.
Octobur 21, 1241
Regraded Unclassified
EXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL
FROM THE UNITED STATES TO JAPAN, RUSSIA. SPAIN, AND GREAT BRITAIN
AS SHOWN BY DEPARTURE PERMITS GRANTED
294
Week ended October 25. 1941
:
JAPAN
:
:
RUSSIA
:
1
SPAIN
:
:
GREAT BRITAIN
:
BOLEUM PRODUCTS
uel and Gae 011 (including
Mesel 011)
I
7.000 Bola.
I
508,223 Bble.
rude -
Blended or California
High Octane Crude*
:
I
--
I
All Other Crude
I
I
--
I
asoline -
Gasoline A**
1
43.286 Bbls.
I
296,100 Bbls.
Gasoline B*
:
I
66,000 Bbls.
270,800 Bble.
All Other Gasoline
I
I
I
95,000 Bbls.
ibricating 011 -
aviation Lubricating 011***
-
I
I
11,352 Bbls.
All Other Lubricating 011
1
719 Bbls.
-
:
streethyl Lead***
-
:
-
I
Sopaters". such as Iso-
Octane, Iso-Hexane, or
Iso-Pentane
-
I
I
327 Bble.
P IRON AND SCRAP STEEL
mber 1 Heavy Melting Scrap
--
:
-
-
1 Other Scrap
-
I
-
1
ce of the Secretary of the Treasury, Division of Research and Statistics.
October 27. 1941.
ce: Office of Merchant Ship Control, Treasury Department.
Any material from which by commercial distillation there can be separated
more than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon
sixture - President's regulations of July 26, 1940.
Aviation Gasoline.
As defined in the President's regulations of July 26. 1940.
Regraded Unclassified
TREASURY DEPARTMENT
295
INTER OFFICE COMMUNICATION
DATE October 27, 1041.
Secretary Morgenthau
TO
Mr. White
FROM
Subject:
Exports to Russia, Chine, Burna, Japan, France and
other blocked countries, AF reported to the Treasury
Department during the week ending October 18, 19-1.
Exports to Russie
Sxport= to Russin 08 reported to the Treasury during the week
with October 18, 1941 amounted to only $1,924,000 98 compared "1th
30, 300 the previous week. Aviation pasoline and ant1-knock
commounds accounted for more than 80 per cent of the total exports.
see Appendix C.)
2,
Smorts to China And surma
Exporte to Free China as reported during the week under review
Taclined even more sharoly than exports to Russia, acounting to only
35,000, Exports to Occupied China Also declined, but considerably
the amount to Free China. (See Appendices D end E.)
During the weer endine October 1% 1941, exports to Burma
smounted to only $35,000. Petroleum well-drilling anneratus was
the chief item. A large percentage of exports to Burde Are pre-
Decause of their consignees, to be for reexport to Free Chine.
isem Annendix F.)
Exports to Janen
No exports to Janan were reported during the week ending
Detober 18, 1941. Of course, Japan T.e.y very well be the ultimate
Restination of much of the goods exported to Occupied Chine.
Exports to France
No exports to France - occupied and unoccupied - were reported
during the week ending October 18, 1941.
5.
Exports to other blocked countries
exports to other blocked countries are given in Annendix A.
Regraded Unclassified
296
SUMMARY OF UNITED STATES
DINESTIC EXPORTS TO SELECTED COUNTRIES
AS REPORTED TO THE TREASURY DEPART ENT
FROM EXPORT DECLARATIONS RECEIVED
DURING THE PENIOD INDIATED 1/
July 28 to October 25, 1941
(In thousands of dollars)
July 28
to
Week ended
Week ended
Total
Oct, 11
October 18
October 25
Domestic Exports
is 2. S. L.
$29,220
$ 1,924
, 5,623
$36,767
Dominied China
8,521
267
396
9,184
Proo India
11,545
5
269
11,819
depen
2/
1,864
S/
-
1,864
vurva
3/
3,407
35
403
3,845
>rance
4'
6
I
5/
6
Tree Trance
als
-
1
ah
Insta
1,572
6
31
1,669
Smitzerland
3,483
20
5
4,508
Proden
6,702
79
108
6,889
French Indochina
249
4
50
303
Treasury Department, Division of Honetary Research
October 30, 1941
Vany of the export declarations are received with a lag of several days or
more. Therefore this compilation does not accurately represent the actual
aligments of e particular week. The longer the period covered the closer
will these figures come to Department of Commerce revised figures.
July 28 - August 23, 1941 - exports thoreafter less than 8500. All this
material was shipped prior to freezing orders.
21 September 11 - October 25, 1941 - it is presumed that a large percentage
0" material listed here, consigned to Burma, is destined for Free China.
Includes both occupied and Tree France through week ending October 4, 19/1.
Less than $500.
Regraded Unclassified
Appendix B
Exports from the U. 8. to China, Burma, Japan and U.S.S.R. as reported to the
Treasury Department, July 28, 1941 -- October 18, 1941
462
(Thousands of dollars)
Exports to China
Total
To Japanese
To Chinese
Exports
Exports
Exports
controlled
controlled
to
to
to
ports
ports
Burma 3/
Japan
U.S.S.R.
July 28 - Aug. 2
937
542
395
1,657
4,523
Aug. 4 - Aug. 9
2,794
2,794
:
159
551
Aug. 11 - Aug. 16
1,278
969
309
42
986
Aug. 18 - Aug. 23
1,352
1,350
2
6
2,735
Aug. 25 - Aug. 30
736
735
1
...
1,023
Sept. 2 - Sept. 6
897
693
204
4,280
Bept. 8 - Sept.13
3,038
757
2,281
5,217
Sept.15 - Sept.20
3,978
156
3,822
1
752
Sept.22 - Sept.27
462
352
110
449
2,333
Sept.29 - Oct. 4
1,305
80
1,225
684
---
323
Oct. 6 - Oct. 11
5,864
552
5,312
1,157
---
6,845
Oct. 13 - Oct. 18
272
267
5
35
---
1,924
Total
22,913
9,247
13,666
2,325
1,864
31,492
These figures are in part taken from copies of shipping manifests.
2/
Figures for exports to Free China during these weeks include exports to Rangoon which are
presumed to be destined for Free China.
3/
It 10 presumed that a large percentage of exports to Burms are destined for Free China.
Treasury Department, Division of Monetary Research
October 28, 1941.
Regraded Unclassified
Appendix C
298
Principal Exports from U. S. to U.S.S.R.
as reported to the Treasury Department
during the week ending October 18, 1941.
(Thousands of dollars)
Total exports
$ 1,924
Principal Items
Aviation gasoline
1,174
Anti-knock compounds
461
Metallic containers (drums)
143
Carbon black
116
Toluol
30
Treasury Department, Division of Monetary Research Oct. 28, 1941
Regraded Unclassified
Appendix D
299
Principal Exports from U. S. to Free China
as reported to the Treasury Department
during the week ending October 18, 1941.
(Thousands of dollars)
Total Exports to Free China
$ 5
Principal Item
Insulated copper wire
4
Treasury Department, Division of Monetary Research Oct. 28, 1941.
Regraded Unclassified
Appendix E
300
Principal Exports from U. S. to Occupied China
88 reported to the Treasury Department
during the week ending October 18, 1941.
(Thousands of dollars)
Total Exports to Occupied China
$ 267
Principal Iteme
Leather
50
Leaf tobacco
37
Malt
32
Cigarettes
28
Wrapping paper
23
Newsprint paper
18
Raw cotton
13
Treasury Department, Division of Monetary Research
Oct. 28, 1941.
Regraded Unclassified
Appendix F
301
Principal Exports from U. S. to Burma
as reported to the Treasury Department
during the week ending October 18, 1941.
(Thousands of dollars)
Total Exports
$ 35
Principal Items
Petroleum well-drilling
14
apparatus
Auto replacement parts
Potassium Xanthate
Other paint
Salmon and sardines
Asbestos brake lining
Vitamins
1 1 2 2 5 2
Other X-Ray apparatus
Treasury Department, Division of Monetary Research Oct. 29, 1941.
Regraded Unclassified
Appendix G
302
Principal Exports from U. S. to French Indochina
8.8 reported to the Treasury Department
during the week ending October 18, 1941.
(Thousands of dollars)
Total Exports
$ 4
Principal Item
Cigarettes
4
Treasury Department, Division of Monetary Research 28,
Oct. 1941.
Regraded Unclassified
TREASURY department
303
INTER-OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM Mr. Dietrich
The attached cable from Berne, No. 229, was received late this afternoon and
in view of its confidential character it was shown only to Under Secretary Bell.
I assume that you will want the usual distribution made to the persons interested
in this matter.
A
Bell
Hele
White Foley
for
copiests mease R.OC
foley V white - 11/28pt 1020 him
Regraded Unclassified
(Am) MI USCRETARY
0011
304
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Legation, Bern, Switzerland.
DATE: October 15, 1941, 9 a.m.
NO. : 229.
THIS TELEGRAM IS STRICTLY CONFIDENTIAL FOR THE
UNDER SECRETARY AND THE SECRETARY.
I have been informed by Mr. Piletgolaz that the
Federal Council is concerned because of the present
ratio of the gold reserves of the Swies National Bank
and this has led him to instruct the Swiss Minister at
Washington to request permission to transfer rert of
the bank's gold now in the United States to Switzerland.
Mr. Pilet hopes that favorable consideration will be
given to this request.
It was pointed out by Mr. Pilet that the National
Bank as was previously its practice has even since the
freezing of Swies funds been careful not to refuse
purchases of dollare even though the Bank had no direct
interest in such purchases which were to the advantage of
the United States rather than Switzerland and that the
National Bank has been careful to facilitate operations
between the two countries. He cited B. payment of the
American contribution to the International Institute of
Agriculture in Rome as an example of such cooperation.
He said that although the Bank was glad to continue to
Regraded Unclassified
-2-
305
be of service it could not continue indefinitely to pay
out Swiss france here against the purchase of blocked
dollars without some counterpart being received. The
Bank is required by law to maintain in Switzerland gold
coverage of 40 per cent of the taper money in circula-
tion. In addition the Bank must provide gold for use
in the internal market. An important use of this
character is the requirements of the watch industry,
many of the products of which are exported to the Western
Hemisphere. The paper money of the Bank in circulation
now totale 2,100 million Swiss france and the minimum
coverage of gold that must be held in Switzerland amounts
to 840 million gold france (40 per cent of 2,100 million
francs). At the present time there is in fact a shortage
of some 150 million (1.e. the equivalent of 30,000
kilograms) of gold since the actual gold coverage here
in only 690 million. The strictly confidential character
of the foregoing information was particularly emphasized
by Mr. Pilet. The Bank would have repatriated gold to
meet this shortage had it not been for difficulties of
transportation but since Switzerland now has her own
flag ships the transportation of the gold to Switzerland
has become possible. Repatriation of gold through Genoa
is now proposed. Switzerland will ask srecial Italian
consent to this and has every reason to believe that the
Regraded Unclassified
- 3 -
306
request will be granted by Italy. The National Bank
intends to repatriate 10,000 kilograms of gold at once.
After this has been done successfully the National Bank
will arrange to bring gold coverage up to the minimum
required by law by repatriating the remaining two-thirde.
Switzerland will still have even after the repatria-
tion of 30,000 kilograms of gold more gold in the United
States than is held in Switserland, since gold held by
Switzerlend in the United States nov amounts to 1,040
million Swiss france or the equivalent of 200,000
kilograms. The desire of Switzerland for repatriating
part of its gold held in the United States 1s explained
in part by the unusual demande for gold in this market.
While these demande have now subsided they may be resumed
at any time. Added to the demand for gold for industrial
uses in Switzerland there must be taken under considere-
tion the export of gold to pay for transportation facili-
ties and to pay for purchases of merchandise in foreign
countries. If the Government of Switzerland continues to
accumulate reserves in foreign countries it will undoubtedly
become vulnerable to criticism. particularly if such reserves
are blocked rather than free. It should be noted that the
Swise National Bank is continually faced with demande
that it purchase dollars in the United States in order that
it may effect the remittance to Switzerland of the dividends
Regraded Unclassified
307
- 4 -
and interest on Swiss investments in South America, and
in North America, that it effect individual payments in
Europe, that it meet the requirements of the United
States Government in Europe and that it effect the
transfer to Rome of various payments which are made by
Catholic Institutions. It is my opinion that since
Switzerland is not our capital debtor our interests
would be best served at this time if the Swiss request
is granted. The granting of this permission would also
in my opinion strengthen the independent position of
Switzerland.
HARRISON
Copy:bj:1c:10/27/41
Regraded Unclassified
Office or Date = well. Jr.
Received: Date
Rent
308
October 31, 1941.
CIOBANDOM ON
The Transfer of swiss-owned Cold in the United States
In September, 1941, the Swine National Bank attempted to
obtain permission from the If asury to export from New York to
cortugal 2 million in gold. The reason given by the Swiss -inister
for the transaction was the need for this gold to make payments due
to ortugal and the fact that Switzerland could not rolease gold
for this purpose from her reserves in Switzerland. After careful
consideration, this application was decied by the Interdepartmental
indittee on Forei Funds.
on October 10, 1941, the Swine national Bank cabled the
Federal Reserve Bank to obtain a license to transfer 11.5 million
in cold from the sarnarked account of the Swice National Sank to
the surmarked account of the Bank of Portugal. In this cable the
wiss National Bank stated:
"As you see, Banco A Portugal7 has consented
now to such transfer instead of asked shipment from
liew York. No therefore hope to get now very promptly
the license asked for."
Subseq ently. a cable was received on Datober 14 by the
Federal Reserve Bank from the Sens of Portugal stating,
"According to cable you will have received
from Banque Nationale Suisee, %urich, please do
necessary to transfer from their to our gold 80-
count with you 10,000 kilos fine gold bare as vs
are delivering Banque Nationale Suisse, Zurich,
equivalent acount from our gold deposit with thes
at Barne."
The Swies cable of October 10, fairly read, indicated that
the transfer of the earnarked Cold in liew York was for payments
which the Swiss wished to make in Cortugal. is were not told the
very material fact that this transaction was Fundamentally an 11.
port of 2020 from in York to Jwitserland.
Regraded Unclassified
309
-
Regraded Unclassified
A third application is pending requesting a. license to
release $100,000 in gold from the account of the Central Reserve
Bank of Peru for shipment is Argentina where it would be credited
to the Account of the Swine National Bank in return for a corres-
ponding credit of Dates france in Zurich.
In a communication to the Under Secretary of State, the
Swine Minister states that the Swien National Bank must transfer
30,000 kilograms of gold (about $84 million) from this country
to Switzerland. Further, the American Subasay in Mexico reports
that a Mexican bank has received an Inquiry from a Swies bank
with respect to the price of freely exportable gold bars against
dollars, and the American Embassy in Brasil reports that the Bank
of Brasil has been informed that the Swise National Bank may ship
gold to Brasil for safekeeping.
These applications and inquiries show conclusively that the
Uniss Government is determined to withdraw gold from the United
States, directly or indirectly, for the purpose of increasing its
gold holdings in Europe. The transfer of such large quantities
of gold to Europe at this time is contrary to the vital interests
of the American Government and to the long-range interests of the
Swiss Government.
Sixty percent of the gold reserves of Switzerland are in the
United States. According to the Swine Minister: "The reasons
why the Swiss National Bank accumulated such an important part of
its reserves in this country was the confidence which Switzerland
placed in the Government of the United States of America as well
as the co viction that in no other country could the reserves of
a small independent nation be better safeguarded than in America."
The soundness of this view is clear. In May and June, 1940, the
Swies Government asked the United States to facilitate the ship-
ment of all of its gold reserves from Switsorland to this country.
Must has happened since to make Europe a safe place in which to
hold the gold reserves of a small nation?
The first roason Given by the Swies Minister for transferring
gold to Switzerland 10 the need for 034 million in gold to provide
sufficient reserves for the note issue. As Swine banknotes are not
310
- 3 -
Regraded Unclassified
convertible into gold and as Swine gold reserves are held solely M
assurance of the seundness of the eurrency, it would seem that this
purpose could be better served by retaining the gold reserves in
this country where they are safe from seizure by invadors. The
welfare of Switzerland would be better served by keeping to & sisime
its reserves of gold in Europe and by basing its note issue on Mr.
marked gold in this country. This is a practice new followed by may
countries and by the Swiss Satienal Bank prior to 1929. In May ml
June, 1940, the Swice apparently were not troubled by the existence
of any statute requiring that gold reserves be held in Switserland.
The present large gold reserves in Switzerland are an
invitation to the invader seeking lest. The direct transfer of gold
to Switzerland comet be regarded as in the interest of this country
or stat in the ultimate interest of & free Switzerland. The 60.00
objection applies to an increase in the gold reserves of Switserland
which will result from a switching transaction of earmarked gold to
Portugal is See York is return for earnarked gold from Portugal is
Borne.
The second reases given by the Swies Minister for the transfer
of gold to Switserland is the need for such gold in settlement of
adverse trade balences. Switzerland is importing res materials and
seni-finished goods from the loss-developed parts of Europe for
conversion late procision instruments and other highly fabricated war
goods for export to Dermay. Not only is Switserland providing
Germany with urgently needed goods but it 1a providing these goode 60
sredit. According to the Swine Minister, under the elearing agreement
Avitserland is financing export credits to Germany at the rate of 400
million france a year. The actual credite under the clearing agreement
may in fact tura out to be such larger. It 10 admitted by the Swies
Minister that Switzerland 10 helpless to alter this situation. Be says:
"As & recult of the developments of this var, it is entirely surrounded
by inis-dominated countries." Its imports and exports can continue only
9a the sufference of Germany.
Transfer of earmarked gold in New York from Switzerlend to
Portugal is only one part of the transmotion. Corresponding to this
transfer, there is another transfer abread from Portugal to Switzerland,
resulting in an increase in the gold reserves at the disposal of
Switzerland. Under present eircumsteness, such a transaction would
result in BD. assoleration of Switzerland's economic contribution to
Germany's war effort. The United States cannot imperil its vital
interests by permitting Dwitserland to withdrew gold from this country,
directly or indirectly, for the purpose of expending its contribution
to the German was effort.
311
Regraded Unclassified
Ives if Deliverland, for the purpose of liquidating its
obligations to Portugal, chould desire be transfer to Pertugal gold
in Now York to be left there under Partugal's earmark, - should not
approve the transfers, particularly se long M Switzerland has energh
gold in Europe to discharge 140 Burepean obligations. It should be
remembered that a substantial part of the materials heretofore or
hereafter acquired by Switeerland from Portugal, will be used by
Switserland to goods for Germany or otherwise help Germany
in 1ts was offert.
The Bwise Deverament has indicated that the Italian Government
is propared to great free transit of gold from New York to Switzerland
by my of Gones, It would be surprising if the Italian Government
followed may other course. The Amis countries will miss certain that
Bwice gold will be used to the fullest extent to further Germany's
will 1 even If seisure or a threat of seizure is necessary for
this purpose. It is 80 obvieusly be Germany's advantage to 100 an
increase is the gold reserved hold by Switserland in Europe that the
British Overnment has not greated a sevisort for any of the proposed
shipments of gold. It is interesting to observe that when the Swiss
were considering moving all their gold to the United States in June,
1940, Somary, the Bwies representative, said be was willing to ship
$250,000,000 of gold through as Italiam port even if the Italians
agreed by treaty to allow Switzerland to use Genes during the was.
Somey noted that this amount of gold was more than the gold holdings
of the Bank of Italy. What has happened since to miss Italy a cafe
place through which to transport Brice gold?
Our gold policy is in as way involved in refusing to allow
Owitzerland to withdraw its gold from this country or to transfer
earmarked gold is New York to the earmark of another country. The
Treasury is continuing to bay and cell gold from Switzerland and -
as very recently. Our policy with respect to Swice-emed gold
does not differ from our policy with respoct to other Owine-emed
dollar assets and proporty in this country. or course, our freezing
control policy regulated the use of gold but that has been true ever
since April, 1940. The are not singling out gold but simply treating
it the same my - treat all other form of blooked proporty.
This Deversment approxiates the confidence the Drine town-
net has shows is this country and is its free institutions by
mistaining a large part of its univery reserved in the United
States. The sympathetic manner in which 10 have considered the
312
- 6 -
sconomie and mentary problems of Switserland is ovidenced by our
granting then a General License. There is nothing in the long
history of our relations with Switzerlend or our current views with
regard to the rights of small countries to cause Switserland to fear
that her interests will be undermined by the United
States.
In return R hope that the Swies Government will recognise
that we are seting in their interest and will continue to rely on
our good faith by accepting dollar funds and by retaining earmarked
gold and other Owiss-owned assets in this country.
EMB;BB;nrd - 10/31/41.
Regraded Unclassified
Office of ware H. Morris, Jr.
C
Received: Date U.S.A Bour 9:15
o
P
I
November 3, 1941
313
Amt
Mr. Achesons
Memorandum: Transfer of Swins-owned gold in
the United States to the Banco de Portugal
AS I understand the transaction, it is as follows:
(1) The Swine National Bank desires to transfer gold held by
it in America to the Banco de Portugal, which in turn will hold is
under earmark in the United States.
(2) It is assumed that there will be some sort of transfer of
gold or other American exchange from Portugal to Bern. This last
is not spelt out.
If an arrangement could be worked out by which we permit
Switzerland to transfer earmarked gold in the United States to an
earmarked Portuguess account, also to be hald in the United States,
thus satisfying Swise obligations to Portugal, 1 see no objection to
it. Unless it is established that thereupon the Portuguese treasfer
dollars or gold to Switzerland, it would seem that no material damage
to our interesto took place.
Actually, my distinct impression in that our interests would be
served if the gold could be brought into Portuguase costrol. Portugal
10, in my judgment, in far greater danger of invasion then Switzerland.
Should this occur, the Portuguese Government sould undoubtedly take
refuge
Regraded Unclassified
314
- 2 -
refuge in the Asores, and the greater its assets in the United States,
the better we could support the hand of that government. There is
less reason to invade Switzerland; and in any case supporting a Swime
government in exile assuming such & government existed - - would be
& mere political gesture, whereas there are material advantages which
would accrue in the conduct of the as if We were in e position to
support the Portuguese situation, as I an pretty clear we would.
The assumption, however, is that by transfer of this gold
Switzerland will buy in Portugal tangible materials which it will
then bring into Switzerland, and will use for manufacture of materials
much of which will go into Germany under the prevailing German-Swise
economic arrangements. This is E question of fact, to decide it
would turn on an accurate knowledge of the supplies Switzerland is
drawing and can draw from Portugal.
I agree wholly with Mr. Bernstein that there seems to be no
reason for transferring gold to Switzerland to serve 68 a base for
Swine note issues) or to accist the Bank of Portugal in transferring
gold it holds in Barn to Swiss account.
The conclusion is that the application for license ought to be
denied, unless it were accompanied by assurances astisfactory to us
from Partugal that they would not transfer an equivalent amount of
assets to Swins account.
A. 4. Barle, Jr.
Regraded Unclassified
CONFIDENTIAL
315
Hotel Richemond,
Geneva.
27 October 1941.
My dear Mr. Secretary,
The enclosed copy of 8. letter to the Secretary
of State will tell you about the two memoranda
I am sending you by the same pouch that takes this.
I believe that no peace 16 likely to last long
unless Central and South-East European economic
frontiers are wisely drawn. The 1919-1920 set-up
must on no account be confirmed by the settlement
that follows the present war. The memoranda I am
sending you now contain B further development of
the 1deas I tried to express in the Notes on Self-
Determination I sent you on the 4th instant.
with my kindest regards,
Sincerely yours,
Reyall Tyler
Royall Tyler
Enclosure:
Copy of A letter to the Secretary of State.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D.C.
Regraded Unclassified
CONFIDENTIAL
316
Hotel Richemond,
Geneva.
27 October 1941.
My dear Mr. Secretary,
I am sending to you by the same pouch that
takes this:
(1) Bome notes on political and economic
frontiers in Central and South-East Europe, as it
seems to me they ought to be drawn after this war.
I am not showing these notes to anyone here.
(2) A first draft of & memorandum on the
economic organization of Central Europe, with
particular reference to the Danube Valley, which
I am doing at the request of the Secretary General
of the League of Nations, and which goes in some
detail into the economic havoe caused by the 1919-
1920 customs-barriers. This memorandum may be sent,
privately, to some of the League Governments. The
Secretary General has not yet had time to consider
what he wishes to do with it, or whether he wante
changes made in it, so for the present at any rate
it also had better be regarded as confidential.
I am, with kind personal regards, Mr. Secretary
Respectfully yours,
Royall Tyler
The Honorable
The Decretary of State,
Washington, D.C.
Regraded Unclassified
TREASURY DEPARTMENT
317
INTER OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary Morgenthau
FROM
George Buffington
It has been suggested by Mr. Vincent T. Callahan
that I make a fifteen minute talk regarding the Tax
Savings Plan over a national radio hookup the early
part of November. I have discussed the matter with
Messrs. D. W. Bell, Sullivan, Kuhn, and Odegard and
they feel such a talk advisable. You may prefer to
have it done by an official of the Treasury Department.
May I have 8. decision from you in order that I may have
the script prepared and approved.
QB.
mould
9th
to have
best
This
do
be Bell
pr
j
W.
Regraded Unclassified
TREASURY DEPARTMENT
318
INTER-OFFICE COMMUNICATION
DATE October 27, 1941
TO
Secretary unigenthan
Miss
FROM BAF. Districh
confidential
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
6110,000
Purchased from commercial concerns à 16,000
Open market sterling was again quoted at 4.03-1/2. The only reported
transactions consisted of $4,000 sold to two commercial concerns.
The Canadian dollar, which closed at 11% discount on Saturday, improved
to a final quotation of 10-7/8% today.
In New York, closing quotations for the foreign currencies listed below
were as follows:
Argentine peso (free)
.2363
Brazilian milreis (free)
.0505
Colombian peso
-5775
Mexican peso
.2070
Uruguayan peso (free)
.4625
Veneruelan boliver
.2610
Cuban peso
1/8% discount
There were no purchases or sales of gold effected by us with foreign
countries today.
No new gold engagements were reported.
In London, both spot and forward silver remained at 23-1/2d, equivalent
to 42.67#.
Handy and Harman's settlement price for foreign silver was also unchanged at 34-3/44.
The Treasury's purchase price for foreign silver was unchanged at 35#.
We made no silver purchases today.
A
Regraded Unclassified
C
0
P
Y
319
October 27, 1941
IN. 27/1/10/41
Bank of Portugal, Lisbon, notified Banco do
Brasil, Rio de Janeiro, on September 22, 1941, they
would like to know:
1. Under what conditions bank is prepared to receive
and to keep in safe custody Gold which may be sent
for account of Bank of Portugal.
2. If the export of Gold is free.
3. If they could deposit Gold in Bank under the con-
dition that it might be freely exported at any time.
4. Under what terms would Bank undertake to assist in
effecting such export.
J.M.
Copy:vw:10-29-41
Regraded Unclassified
C 0 P Y
DEPARTMENT OF STATE
320
Washington
In reply refer to
October 27, 1941
IF 851.51/2914
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and transmits
herewith a copy of the paraphrase of telegram no. 1363,
dated October 24, 1941, from the American Embassy at Vichy,
transmitting a message from Morgan and Company, Chatel
Guyon, France to J. P. Morgan and Company, New York,
regarding service on French Government 7% bonds in the
United States.
A paraphrase of the message has been transmitted to
J. P. Morgan and Company, New York, by the Department of
State.
Enclosure:
No. 1363 from Vichy,
October 24, 1941.
Copy:ec:10-27-41
Regraded Unclassified
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Vichy, France,
321
DATE: October 24, 1941, 10 a.m.
NO.: 1363.
It is desired by Mr. Arragon, of Morgan and Company, Chatel
Guyon, France, that a paraphrase of the following message be sent
to the New York office of J. P. Morgan and Company:
Desirous of assuring continuous service in the United States
on the 7% bonds even if, as a result of events beyond the Ministry's
control, there should be an interruption of communications and the
French Financial Attache should be iplated, the French Ministry of
Finance, with this end in view, asks that you examine the possibility
of accepting powers from the French Government in a form to be de-
cided upon under which you would act for its account and perform all
acts of administration connected with the service of the loan cover-
ing both the semi-annual coupon payments and the annual sinking fund
reimbursement of bonds, including drawings, publication and signing
of notices, and the other such formalities. The French Financial
Ministry believes that in view of your present status as fiscal
agents and sinking fund trustees you can best discharge these funo-
tions. I understand that the powers would be irrevocable unless and
until by mutual agreement other arrangements should later be made but
that the powers would involve no financial responsibility beyond
handling funds which you already have on deposit.
A reply through the American Embassy at Vichy is requested.
With reference to this matter the Department and Treasury are
asked to refer to telegram no. 1299 which was sent by the Embassy at
noon on the 13th of October.
LEAHY
Copy:hr:10-27-41.
Regraded Unclassified
322
BRITISH EMBASSY,
WASHINGTON, D.C.
October 27th, 1941
PERSONAL AND
SECRET
Dear Mr. Secretary,
I enclose herein for
your personal and secret
information a copy of the latest
report received from London on
the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Helifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded I
323
TXTEGRAM ruce LONDON MAT D OCTOB. Bath. 1941,
H.M.S. GRAT has arrived in harbour in tow.
M.M.S. MAORI was torpedeed night 22ad/2ard
10 miles South Southwest Cape St. Vineent while escort-
ing homeward bound convoy. Forward part completely
wreeked and, though possibility of towing was expected,
later report states H.M.J. MAORI was sinking.
H.M.S. UNG& reports hite on two ships off
KURIAT island Tunisian Coast.
H.M.S. UNIVE torpedoed Italian A.m.C. CATTA DI
OBNOVA Class 54 13 tons 2.M./14 off Naplem. Later ship
appeared to have sunk.
R.Y.A. DACKDALE tanker 8,145 tons sank after
explosion in it. Helena Harbour night of 21st/22nd.
Believed she was torpedoed by U-Boat.
Night of 21st/22nd 111 tons of line including
6 of 4000 lbs. and 6000 incendiaries were dropped on Bremon.
38 tons of H. . including 4 of 4000 lbs. were dropped on
Eaples; reports claim large fire, many buildings destroyed
and railway station well alight.
Day of 22nd Blenheims attacked barracks at Home,
Libys, many burets being seen among buildings.
Night of 22nd/23rd approximately 130 aircraft
attacked Mannheim, 20 attacked Havre and Drest where bombs
were seen to buret is visinity of buttle eruisers.
Day of gard 4 Blenheims attacked small merchant-
veasel so miles -.N.W. of marittimo island scoring hits
near funnel and two near misses.
Night of 23rd/24th 140 aircraft were despatched
from the United Kingdom. over 100 attacked Kiel, 9 Sterlings
attached Brest, light attack also made on herbourg.
Regraded Unclassified
324
BRITISH EMBASSY,
WASHINGTON, D.C.
October 27th, 1941.
ersonal and
Secret.
Dear Mr. Secretary,
I enclose herein for
your personal and secret infor-
mation 8 copy of the latest report
received from London on the military
situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
(in IL above of
dont Halifax)
The Honourable
Henry Morgenthau, Jr.,
R.J.Campbell R.J. pbell
United States Treasury,
Washington, D. C.
Regraded Unclassified
325
Telegra
de
London dated October 29th.
Correction to telegram gree dated October 24th, in
assond paragra,t for H.M.S. "Mart" read H.W.S. "Cossask"
and for "10 miles" read "110 miles". (Latest reports state
that H.M.S. Oceasek is proceeding to harbour in tow).
Night 20th/21at a cruiser foree bombarded meny
battery east of Fobruk and destroyers boabarded Bardie Harbour.
on October 24th a medium size German merchant
vessel off the south coast of Norway was set on fire by .
Beaufort,
Two mineewesping trawlers were mined and sunk in
the Thanes estuary on October 24th.
Partly due to B ships sunk in homeward-b.und
Canadian sonvey shipping loases were heavier during last
week, U-boate being mainly responsible.
Heavy weather in the Atlantic caused damage to
several destroyers.
Casualties during last week in sir operations over
and from this country: Royal AIP Force 24 bombers 14 fighters,
German Air Force 4d. bonbers destroyed, 1 probable, 3 damaged,
21 fighters destroyed, 8 probable, 6 damaged; siddle Goat,
Royal Air Force 4 bombers destroyed, 3 damaged, 2 fighters
destroyed, German Air Force 3 fighters, 1 probuble, 1
damaged, Italian Air Force 1 bomber destroyed.
On the ni nt of 20th/21st and the following day
. total of over 25 aircraft dropped 26 tons of B.S. on
Beughosi harbour, hits being scored on moles and railway
sidings.
on the night of 2nd/23rd 61 tone of H.3. and
3600 incendiaries were dropped on annheim, 27 tone of H.E.
on the dooks at Havrs, 20 tone on Brest.
Regraded Unclassified
326
On the night of 23rd/24th the min target was
kiel and musl foress also reided Havro, Charbourg and Brest.
on the night of the 24th/25th. 101 aircraft reided
Frankfurt and sttacks were also mde on Cherbourg, Inden
and Brest. One aircraft is missing.
966 ships were escorted in convoy during the work
ending October 22nd; 789,286 tons were imported in sonvoye
during the week ending October 18th.
Malta has been reinforced with aircraft.
During the past week night bombing operations
have been hampered by reather. may air activity has
again been alight.
Russia.
Heavy fighting continues on the HOBOOW front;
there is bad weather and more evidence of Gornal supply
difficulty. Kharkov appeare in immediate danger. German
armoured troops are within 20 miles of Rostev but are meeting
vigorous resistence. Germen attack on Crimes is continuing.
Corwan difficulties in advancing scroes the niver Dom theneo
into the Causasus must not be underrated.
Information received so far confirms suscess of
Russian policy of evacuation of key armament factories from
Western areas. There 10 considerable evidence of destruc-
tion of buildings and installutions of factories by
retreating Runsian troops.
Regraded Unclassified
327
RESTRICTED
G-2/2657-220: No. 529 M.I.D., W.D. 11,00 A.M., October 27, 1941
SITUATION REPORT
I. Eastern Theater.
Ground: Heavy fighting is reported along the entire front.
Bad weather continues to impede military operations.
Nothing definite is reported from the Moscow area.
In the south the Germans are pressing the advance
through the Donets River basin.
II. Western Theater.
Air: British fighters renewed their attacks on German bases
in northern France this morning. Other groups of 4-cannon Hurricanes
headed for Boulogne.
Last night the R.A.F. heavily bombed the docks of the
German port of Hamburg. Other targets last night were Cherbourg,
Nantes, and Egersund, in southern Norway.
Only a few Germen planes were said to have appoared
over Britain last night.
III. Middle Eastern Theater.
Air: German and Italian sources each claim credit for the
sinking of a British cruiser in the Mediterranean. There is no British
confirmation. The British raided Tripoli and Benghazi.
RESTRICTED
Regraded Unclassified