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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 461
November 13, 1941
- & -
Book Page
Africa, South
See War Conditions: Lend-Lease
Australia
See War Conditions: Lend-Lease
- B -
Brazil
See War Conditions: Gold
Burma
See War Conditions: Lend-Lease
- C - -
Canada
See Var Conditions: Lend-Lease
China
See War Conditions
- D - -
Defense, National
Machine Tool Allocations: Lubin report
(November 10, 1941)
461 290
Defense Savings Bonds
See Financing, Government
- 3-
Egypt
See War Conditions: Lend-Lease
- 7 -
Financing, Government
Defense Savings Bonds:
Buying of stampe in connection with purchases
discussed in Blough memorandum - 11/13/41..
162,164
a) Wallace denies sponsoring plan
Excess reserves of New York City banks and interest
rates - Haas memorandum - 11/13/41
268
Free French
See War Conditions: Lend-Lease
French Volunteer Forces (Free French)
See War Conditions: Lend-Lease
Regraded Unclassified
- G -
Book Page
Gaston, Herbert 3.
See War Conditions: Coordinator of Information
- I -
India
See War Conditions: Lend-Lease
- J -
Japan
See War Conditions: Gold
- K -
Knopf, Albert A.
Correspondence concerning possible book by HMJr -
11/13/41
461 148
- L -
Latin America
Brazil:
See War Conditions: Gold
Lubin, Isador
See Defense, National
- M -
Machine Tool Allocations
See Defense, National
Mint, Bureau of
Investigation commented on in Newsweek
(November 17, 1941)
166
Morris, Dave, Jr.
Status--present and future--on Treasury staff
discussed in memorandum to HMJr - 11/13/41..
155
a) Announcement at 9:30 meeting he is to
stay - 11/17/41: See Book 462, page 237
Morgenthau, Henry, Jr.
Tells Wallace he has "no intention of staying
here when Roosevelt leaves" - 11/13/41
47
- N -
New Zealand
See War Conditions: Lend-Lease
Newfoundland
See War Conditions: Lend-Lease
Regraded Unclassified
- 0 -
Book Page
011
See War Conditions
- P -
Portugal
See War Conditions: Gold
Postal Savings Stamps
Estimated total value and number of units sold,
May-October, 1941
461 265
- R -
Rhodesia, Southern
See War Conditions: Lend-Lease
- S -
South Africa
See War Conditions: Lend-Lease
Southern Rhodesia
See War Conditions: Lend-Lease
Spain
See War Conditions: Oil
Street, Julian, Jr.
Expresses pleasure at Treasury connection -
11/13/41
161
- T -
Taylor, William H.
See War Conditions: China
- W -
Wallace, Henry A.
HMJr tells him he has "no intention of staying
here when Roosevelt leaves" - 11/18/41
37
War Conditions
Airplanes:
Shipments to Canada, United Kingdom, and
overseas commands - British Air Commission
report - 11/13/41
312
China:
Taylor's presence in Washington, if possible,
requested - 11/13/41
323
Coordinator of Information:
Gaston to be Treasury representative on
Advisory Committee 11/13/41
151
Regraded Unclassified
- Y - (Continued)
Book Page
War Conditions (Continued)
Exchange market resume' - 11/13/41
461 327
Gold:
Possible purchases and shipments to Brazil
discussed in Dietrich memorandum - 11/13/41
317
Possible shipments from Government Banks of
Portugal and Brasil discussed in memorandum
from American Embassy, Rio de Janeiro -
11/13/41
318
Information requested from diplomatic missions
in Central and South America concerning recent
and future shipments from Japan - 11/13/41
321
(See also Book 463, pages 322-332 - 11/19/41)
Lend-Lease:
India, Burma, Australia, Canada, New Zealand,
South Africa, Newfoundland, Southern Rhodesia,
Yugoslavia, Egypt. and French Volunteer Forces
(Free French): FDR's letters to Stettinius
concerning - - 11/13/41
309
Military Reports:
Kamarck summaries - 11/13/41
328,331
Report from London transmitted by Halifax -
11/13/41
339
Oil:
Shipments to Spain - White memorandum - 11/13/41
316
(See also Book 462, page 255)
Purchasing Mission:
Statement of assets as of November 7, 1941
314
Security Markets (High-Grade):
Current Developments: Haas memorandum - 11/13/41
276
- Y -
Tugoslavia
See War Conditions: Lend-Lease
1
November 13, 1941
9:30 a.m.
RE NON-DEFENSE SPENDING
Present:
Mr. White
Mr. Kuhn
Mr. Barnard
Mr. Heffelfinger
H.M.Jr:
Make a note, Heffelfinger - what is your
first name?
Heffelfinger:
William.
H.M.Jr:
What do they call you?
Heffelfinger:
Some Bill and some Heffelfinger.
H.M.Jr:
Well, I cannot go through Heffelfinger.
See whether we want to say anything about
housing, whether there is any economy there.
Straus has quite a piece in the paper about
it. Take a look at it, will you? I mean,
how many housing agencies are there and
recommend the consolidating of them.
Heffelfinger:
There is the Housing Authority and WPA and
this Defense Housing.
H.K.Jr:
You might look it up and see how many there
are. You can get Straus' testimony.
Heffelfinger:
Why should you get into his fight now?
H.M.Jr:
I guess I had better keep out now.
Barnard:
He is doing a lot of hard talking, too,
isn't he?
Regraded Unclassified
2
- 2 -
Heffelfinger:
He is calling names and saying how bad
everybody is except himself.
H.M.Jr:
There is no real money in it.
Barnard:
I don't think you should get into it now.
There are too many people. It wouldn't
help any. I notice --
(Mr. Kuhn entered the conference.)
H.M.Jr:
Hello, Ferdinand.
Kuhn:
May I come in?
H.M.Jr:
Sure. I didn't ask you. I didn't know
whether you were ready with a speech.
Kuhn:
Yes, it is all on the way.
H.M.Jr:
Good. Then is Harry free too?
Kuhn:
I haven't seen him this morning but I should
think 80, The speech has gone to Miss Elliott
and I don't think there is much more to be
done with it.
H.M.Jr:
All right, sit down.
Heffelfinger:
This is along the lines, Mr. Secretary, of
your comments the other morning which could
serve as a basis of your testimony.
H.M.Jr:
All right. That is swell. Have you got a
copy?
Kuhn:
I have seen it. I think it is wonderful.
H.M.Jr:
Have you seen it?
Kuhn:
Yes, I think it is the best possible form
to put that in. I would only change 8. few
words.
- 3 -
3
(Mr. White entered the conference.)
H.M.Jr:
Harry, this looks like an awfully good job
that Heffelfinger has done. This is for
me tomorrow and for me to give out tomorrow
for the press, you see. You have done an
awfully good job here, Heffelfinger. When
we go out anybody may have word changes, but
as to the spirit, I think you have caught
it wonderfully. I didn't even know he was
taking notes. You 800, I talked at him,
Harry. I think he has done & swell job.
White:
This first page sounds good.
Kuhn:
It sounds so clear.
H.M.Jr:
You have arrived socially. Harry White
says one page is good. It's like I told
my wife. She has arrived in Washington
because Rosenberg not only comes to see
her, but calls her on the phone, Anna
Rosenberg. I said, "That hasn't happened
to me yet." When Anna Rosenberg comes to
see you then you are somebody.
Kuhn:
Do you know her?
Barnard:
No.
H.M.Jr:
Well, she is, amongst many other things,
whenever there is labor trouble or anything,
she is always with Fiorello. She always
does his thinking for him. Besides that,
she is retained by the Rockefellers. I have
yet to have her call me.
White:
Do you want to make any small changes now?
H.M.Jr:
Just one second. Bill, I had no idea that
you were listening 80 closely. Yes, Harry,
please.
4
- 4 -
White:
On the first page?
H.M.Jr:
It is all right.
White:
The paragraph, "Many of these inequities
have been eliminated and in many cases it
causes --"
Kuhn:
"And," you mean, instead of "or"?
White:
Well, "And in many cases." Not "or," certainly.
It ought to be, "In most instances the causes,
because there are some, I suppose.
H.M.Jr:
That kind of thing, if you don't mind again,
when it gets down to words --
White:
Oh, I thought it was going to be final.
H.M.Jr:
No, this is just as to thoughts. Have you
seen this?
Barnard:
Oh yes.
H.M.Jr:
Did you help on this?
Barnard:
Well, I went over it yesterday.
H.M.Jr:
Harry, if you don't mind --
White:
I thought you were going to release this
right away.
H.M.Jr:
The purpose is this morning, and then we have
another meeting this afternoon, you see; this
is for tomorrow morning. That is all right.
There is nothing the matter with that.
Heffelfinger:
In connection with that reclamation project,
the President just sent up a supplemental
estimate for thirty million dollars for the
Bonneville Dam. You exempt power development
- 5 -
5
here 80 that wouldn't conflict with that
recent estimate, I think.
H.M.Jr:
That is very good.
White:
That might be indicated. Is that clearly
indicated?
Kuhn:
It is, which are not necessary in connection
with the generation of power for the
defense effort.
H.M.Jr:
He has got it here. Are you through, Harry?
White:
Yes, second page.
H.M.Jr:
Isn't that good stuff?
White:
That is the tone you want to strike.
H.M.Jr:
Well now, rivers and harbors and floods, and
if you could add something about soil erosion,
if you could just make a note. That comes
in there too.
Kuhn:
You mean the livelihood as well as the safety?
H.M.Jr:
Well, the interest of lives and safety, but
reclamation work, I think of torrents of a
river washing off top soil.
Heffelfinger:
They do engage in some soil erosion activities,
whether that is the kind of thing you want
them to continue, or should that be postponed?
H.M.Jr:
For the time being I want it postponed. Doesn't
flood control work also include erosion?
Heffelfinger:
I think it does, because floods naturally
cause soil erosion.
H.M.Jr:
I think I would include it. Personally, I
6
- 6 -
would like to see them cancel it, but I
suppose carrying out the idea that they are
the re for - you wouldn't want to go so far
as to have them cancelled?
Heffelfinger:
In some cases funds have been appropriated - -
H.M.Jr:
Can't they cancel them under Resolutions?
Heffelfinger:
They probably can. It depends on how strongly
you want to go on each of these points.
H.M.Jr:
I don't like the word, "impounded."
Barnard:
Let somebody else say that.
H.M.Jr:
I would say cancel it.
Do you work without making notes?
Heffelfinger:
Yes, I did in this particular case.
H.M.Jr:
You made no notes?
Heffelfinger:
No.
H.M.Jr:
That is amazing. You see, I never worked
with you before. No notes at all?
Heffelfinger:
No.
H.M.Jr:
I think that is one of the most amazing things.
Kuhn:
Can you cancel funds?
White:
Your plea is that this work - in the first
page you state the advantages and you speak
of the fact that it builds up a backlog of
projects for employment. Presumably if the
Government appropriated it it was necessary
and desirable, and your strong plea, it seems
to me, can be based on the assumption that
Regraded Unclassified
7
- 7 -
now is not the time, but later.
Heffelfinger:
I had in mind impounding. If you appropriate
for flood control for these other projects, and
you want to cancel that in case of emergency,
perhaps they will have to release that, but
if you can impound it subject to release only
in case of emergency, that is an idea.
White:
You can say, "Work of this character which
can be delayed or postponed should be
prohibited during the period of emergency."
H.M.Jr:
He doesn't say that. What he is saying is
if there is 8 very bad flood in the Ohio
River and these funds are impounded, then
through an act of Congress --
Heffelfinger:
No, the Budget Director could release them,
or something.
Barnard:
From the standpoint of the public, "cancelled"
is the word you want to use, I think. It
probably wouldn't mean anything to them.
Heffelfinger:
It is just & detail as to how you handle it.
H.M.Jr:
No, it is an important thing.
White:
It should be prohibited until the emergency
is over.
H.M.Jr:
Well, then they can reappropriate. I will
tell you, Harry, I hate to say this thing,
but look, the Director of the Budget impounded
some funds of NYA. At Cabinet the other day
McNutt says, "I need forty million dollars
more, and the President says, "O.K., tell
Harold Smith to give it to you."
I would use the word, "cancel."
White:
Good.
Regraded Unclassified
8
- 8 -
Kuhn:
Don't you like the form of that, Mr.
Secretary? I think it is wonderful.
H.M.Jr:
Oh, this is a breath of fresh air from
Bill.
Heffelfinger:
Simplification has some advantages.
H.M.Jr:
No, this is a breath of fresh air, and
the fact that he caught what I wanted
without any notes - I don't get this
regular hundred and seventy four, WPA.
Heffelfinger:
That is under the Public Roads Bureau.
Now the WPA, out of their general emergency
relief funds, do road work, and since I
had a total up there of five billion
eight, I changed that to put it back.
H.M.Jr:
And then what does that "regular" mean?
Heffelfinger:
The "regular" is the Public Roads Adminis-
tration under the regular Federal Public
Aid program.
Kuhn:
Where is the "regular"?
Heffelfinger:
In this part.
Kuhn:
Oh.
9
- 9 -
White:
Why do you have this after your recommend-
ation?
Heffelfinger:
That is an explanation. You can't really
control that until 1944, you see.
H.M.Jr:
You wouldn't want to add, as defense projects
upon a certificate from either the Army or
Navy, or both?
Heffelfinger:
Remember they have that national defense
road bill they just passed, the one that the
President vetoed, and I think the new bill
has been enacted and approved and that
appropriates a hundred or a hundred and
fifty million dollars for defense roads.
H.M.Jr:
Are you satisfied it really is defense roads?
Heffelfinger:
Well, that is the object under which it
was enacted.
This has an appropriation in there, one part
of it, the Commissioner of Public Works is
authorized to provide construction and 80
forth of roads and bridges when such roads
are certified to the Federal Works Adminis-
tration as important to national defense
by the Secretary. of War or the Secretary of
the Navy.
Kuhn:
How do things like grade crossing eliminations
come into this? I think there are a lot of
things like that.
- 10 -
10
H.M.Jr:
Chester, talk up now.
Barnard:
I will. You are getting into page two now.
I think you ought to say, when things haven't
been started, even though the appropriation
and the allotment is set, the States ought
to be asked to withdraw from those things.
Why should the States play into this and
get it going?
H.M.Jr:
States and municipalities.
Barnard:
Even though it is technically their funds
now. The thing is in shape and they ought
to stop the project.
H.M.Jr:
Check.
Kuhn:
You read about the Westchester County thing,
fourteen and a half million that they have
just had made available for eliminating
grades on the Putnam Railroad? There are
about two trains B. day. They haven't had an
accident on the thing in ten years. It will
use hundreds of tons of steel and a lot of
labor and they should be asked to stop.
Barnard:
And Westchester is going ahead to extend the
Sawmill River Parkway and all that sort of
thing. They haven't got the idea yet.
H.M.Jr:
No, no, that is right.
Barnard:
I think it would be useful to get that in
here.
Kuhn:
You can't force them to stop.
Barnard:
But you can ask them and put a little pressure
on. It is time they wake up.
White:
You can stop all that stuff through priorities.
Regraded Unclassified
11
- 11 -
H.M.Jr:
Make B. note, Heffelfinger, that in the case
where we see, like this Westchester, that
they are talking about, the thought of my
writing a letter to somebody saying to these
people, in view of national defense - I mean,
first let me write 8. letter maybe to Donald
Nelson and say, "How come?"
White:
That is the place to hit it.
H.M.Jr:
I mean, write the thing to Donald Nelson.
"How come? Why do you permit this?" Start
there, see? Write it for me and show it to
Mr. Barnard.
Barnard:
Get the maximum voluntary cooperation you
can. Let's not rely on OPM too much to say,
"No, you can't have it." We have got to do
that so much here in this country.
Heffelfinger: We could send a copy to OPM.
White:
I don't think you will get anywhere with
voluntary cooperation.
H.M.Jr:
My thought was first to write to Nelson and
see what the facts are. If he is lukewarm
about it, we will write to the municipality.
If I do that first, Nelson will come back
and say, "Why didn't you ask me? I would
have done it for you.
A funny thing happened yesterday. I meant
to tell you. I didn't get to do it. A
Mr. McKeachie in charge of buying calls me
up at five minutes of one. He has got two
men over from Procurement working with him.
What he said very politely was, just where
did you fit into the picture and should they
report to you. So I said, "Well, it is very
simple, Mr. McKeachie. Mr. Barnard is super-
visor of Procurement for me, and if you want
12
- 12 -
me to get anything or know anything, please
keep Mr. Barnard informed."
"Well," he said, "that is all I wanted to
know. I don't know what is back of it, but
I am passing it on to you.
Barnard:
I know just what he means, but he ought to
understand that. I have been over there--
H.M.Jr:
Well, I just thought I would tell it to you.
I said, Mr. Barnard is supervising Procure-
ment for me, and anything that you have as
Procurement, I wish you would tell Mr.
Barnard.'
Barnard:
I am glad you told me that.
H.M.Jr:
Harry, please.
White:
I wondered whether some such thing might
not exist already? I am sure it does already.
But couldn't there be presented to you a
list that would be a very long list of all
the projects, highways, toll bridges, all
these grade crossings. It might fill a
book, whatever it is. And then turn that over
to some committee or some group who are
familiar with it and let them evaluate it on
the basis of what there has been already
claimed by Army and Navy. No other criteria
should be applied. As necessary to defense.
And then you could have what might be 8.
very, very impressive list of projects which
in no way contribute to defense and which are
using steel and cement and so on and so forth.
H.M.Jr:
I will tell you where you can get this with
George Haas or anybody you want to use.
There are agencies, private agencies, who
report on contracts, you see. They report
on private and public construction. It is
Regraded Unclassified
- 13 -
13
the Dodge Construction Company. George
gets those reports regularly.
White:
And also the Department of Highways have 8.
lot of information.
H.M.Jr:
It is the Dodge. George could get it for
you, you see. A list of proposed projects.
Isn't it Dodge?
Heffelfinger: Yes.
H.M.Jr:
They have heavy construction, public and
private, and also you can try the Highway
Department.
White:
And not only projects that are anticipated,
but those that are in progress, because
they can stop a good many things.
Heffelfinger: Under this Bureau of Public Roads, they have
to approach each project that the State under-
takes in advance.
H.M.Jr:
We could make a little grandstand play. The
interesting thing - I am gossiping 8. little
bit here and there. John Sullivan told me -
I don't know whether you can check with this -
but he thought the thing that griped Henderson
and Eccles the most was not that we hadn't
shown it to them, but that we had gotten
there first.
Barnard:
I don't think that griped Henderson. I think
it griped Eccles. Henderson puts it on the
other foot, that he tried to get some action
on this six or eight months ago.
H.M.Jr:
This is explanation on the second page?
Heffelfinger: Yes.
Regraded Unclassified
- 14 -
14
Kuhn:
This cannot be avoided and this can be post-
poned. I think that is just what they want.
Heffelfinger:
Next year's expenditures are already obli-
gated.
H.M.Jr:
Do you think that should come ahead of your
recommendation?
White:
It is 8 little complex in its present form.
H.M.Jr:
Don't you think it should come afterward?
Heffelfinger:
I wondered whether you want to include all
of that or just have it for your own informa-
tion.
H.M.Jr:
No, I think the public ought to have it.
Heffelfinger:
There is one point in your recommendation.
If you give it to the press do you want to
head it "Recommendations" or "Suggestions"?
H.M.Jr:
"Suggestions."
Heffelfinger:
That is why I thought you might want to
change it to "Suggestions" instead of "Recom-
mendations."
H.M.Jr:
"Suggestions." Why not in each case call it
"Economy Suggestions"?
Barnard:
That would do it.
H.M.Jr:
Just "Economy Suggestions" in each case.
"Agencies Engaged in Training Activities."
Has Aubrey Williams been after you, Harry?
White:
Not since he spoke to you.
Regraded Unclassified
- 15 -
15
H.M.Jr:
He hasn't called me yet.
Civilian, óther activities and 80 on.
Kuhn:
You don't want to say in there anything
about the Bureau of Defense Training? You
don't want to name it, spell it out?
H.M.Jr:
I think I will recommend that there be
created a Bureau of Defense Training.
Kuhn:
Or you could say, "All training activities
should be consolidated in a single agency
which might be established as a Bureau of
Defense Training."
H.M.Jr:
Or I suggest that 8. new Bureau of Defense
Training be created to absorb these activities.
White:
They wouldn't interpret that as meaning
military training, would they?
Kuhn:
No.
H.M.Jr:
Technical training program, or civilian
training.
What do you call this when 8. man is being
trained to run & machine? Is it a technical
training?
Heffelfinger:
Vocational. They have a regular program,
you know, of aid to states.
H.M.Jr:
Isn't it vocational training? It is for
a vocation. What is the matter with voca-
tional training. It is for a vocation.
Kuhn:
Would you put it in the heading, "Agencies
engaged in vocational training activities"?
H.M.Jr:
Right, Any overlapping would be eliminated.
Regraded Unclassified
- 16 -
16
Well, now, of course you are - in the
middle of the thing you say "should be
eliminated or drastically reduced."
Heffelfinger: That is the regular program of the CCC and
NYA. You see, they are the new thing.
Now, you have the old, long-term grants--
H.M.Jr:
That is all right. It gives me a little
out.
Heffelfinger: I tried to make it SO you could--
H.M.Jr:
Kind of wiggle a little bit.
Heffelfinger:
wiggle if necessary.
H.M.Jr:
Now, on this thing here, have you got that
thing that I asked you for? How much of the
two hundred and forty-seven million for CCC
goes for the clothing and feeding and into
their pockets?
Heffelfinger: We only have it on the basis of '41 estimates.
'41 was two hundred eighty million dollars for
the entire CCC program, of which a hundred and
five went to the pay of the enrollees. Sub-
sistence took another forty-one. Then medical
and hospitalization and things of that sort
came into the picture, and then the care and
construction of the camps and care of enrollees
would be 8. hundred and ninety-four million
all told.
H.M.Jr:
Is that nineteen million administrative?
Heffelfinger: The administrative expenses were twenty-one
million.
H.M.Jr:
You have got nineteen.
Regraded Unclassified
- 17 -
17
Heffelfinger: That is for '42. This was '41. You see,
they are out from two eighty to two forty-
seven, and then they estimated a smaller
expenditure this year.
H.M.Jr:
There is one thing you don't do. I would
like to say that I would like to have
challenged the various grants which are made
by the Office of Education to various insti-
tutions, or re-examined, rather than chal-
lenged. I would re-examine them.
Now, for instance, I saw the Texas A. and M.,
and, as I remember it, they are giving seven
million dollars to the Texas A. and M. For
what?
Heffelfinger: Probably to build a new stadium down there.
Kuhn:
Football team.
H.M.Jr:
I would put the lump sum. So many millions
of dollars are granted by the Bureau of
Education to institutions. I think it should
be re-examined in the light of our national
defense program, you see. It should be re-
examined in that light. I think most likely one
Mr. Jesse Jones got them seventy million dol-
lars or something like that for God knows
what.
White:
Seven million.
H.M.Jr:
Yes. Seven million, to one little university,
Texas A. and M.
White:
You might say for example.
H.M.Jr:
Well, he gave it to them. It was in that
list. You (Heffelfinger) had them there on
thatsheet you gave me.
Regraded Unclassified
- 18 -
18
Kuhn:
I had states to states, no details.
H.M.Jr:
Yes, for the A. and M.
Heffelfinger: Oh, that is general, agricultural and mechanic
arts colleges, throughout all the states. You
see, they have 8. permanent appropriation to
pay for agricultural and mechanic art.
H.M.Jr:
Anyway, I would like to say that so many
millions of dollars are granted to the various
state institutions, and in the light of our
national defense program, I would like to see
that re-examined.
White:
In all these items, they have so many good
aspects to them that I think there is another
paragraph called for here at this moment
justifying the careful re-examination of these
things, pointing out that it is - only re-
peating in & sense what is implicit there.
None the less, I think some more emphasis
is required under this item to avoid the
charge that you are striking at some very,
very important institutions, educational
activity, youth training and so on.
H.M.Jr:
Try 8. hand, Harry, but let me be as frank
as I always try to be with you. I am, I
hope, only two or three months ahead of the
President on this thing. I am saying to you
that all Federal grants three months from
now should be for the sole purpose of
vocational training and the other things
which I have B. tremendous interest in, art
work, music--
Heffelfinger: Should be laid on the shelf.
H.M.Jr:
Cultural things should be laid on the shelf.
White:
That is the sort of sentence that is needed,
- 19 -
19
that these purposes are eminently worth
while and everything should be done that is
possible, but
H.M.Jr:
Well, think about it. I think those things
have been worth while and they had my support
but while we are getting ready to defend our
country we cannot be spending money for that
kind of stuff.
Barnard:
You probably haven't read my draft yet.
H.M.Jr:
It hasn't come in to me.
Barnard:
I took a crack at a reply to that letter.
H.M.Jr:
I told Chauncey, but I haven't got it yet.
Barnard:
Well, one of the purposes of my trying to
do it was to get some ideas in that might
be useful other places, whether they were
here or not. I have got this and I am won-
dering whether somewhere it is a thing to
use here. They are taking the population
at a hundred and thirty million. I don't
know whether that is just right or not.
H.M.Jr:
That is all right.
Barnard:
Next year's expenditures amount to two hundred
eighty dollars per man, woman, and child in
this country and there is a hundred billion
dollar income. That is seven hundred and
forty or something. They have got four
hundred eighty-five dollars per person left
in this country for state and local govern-
ments, for subsistence, and for such other
saving, outside the Government, as has got
to be done. There is damn little left and
people don't realize it. It is just impossible
not to sacrifice a lot of things.
Regraded Unclassified
- 20 -
20
H.M.Jr:
Well, I don't think I will bring it in here.
Barnard:
All right.
H.M.Jr:
Do you think so?
Barnard:
No, I am just wondering whether you wanted
to use it anywhere.
H.M.Jr:
Do you think it ought to be brought in here?
Barnard:
I don't think the people realize now narrow
the margins have to be, and I think it could
be repeated and repeated.
H.M.Jr:
Well, maybe we will include it after study-
ing the thing again. Do you mind just put-
ting--
Heffelfinger: I am shaky on this farm program.
H.M.Jr:
Under the farm program which was started in
'33, you see. I mean, I want to get in the
fact that it was done in '33. I think I
would also - the only place I am suggesting
it would be - we started in '33 after the
catastrophic collapse of farm prices, which
is not any too strong, which took place
immediately before that, you see.
Heffelfinger: Sure.
Now, Mr. Haas suggested yesterday we stop
right there. He didn't want to mention
parity payments so much.
H.M.Jr:
I don't want to say "increased production."
Kuhn:
I think I agree with George on that, that
that is something like a speech and why get
into it.
21
- 21 -
H.V.Jr:
Simply say, "were designed to meet" and stop
right there. There is just one thing which
I asked George for.
Heffelfinger: Mr. Barnard has that.
Barnard:
there are two points. One is a whole list
from 1910 on, and the other starts with '21.
That comes second.
H.M.Jr:
That is even worse than I thought. We will
start with '32, and I want to run this list
in. We will start with '32. You see, Harry,
I have been doing a lot of thinking on this
thing. I want to run that table in in '32,
down through '42 and then I want to get in
and say that cash income to the farmers has
been approximately triple.
Kuhn:
Purchasing power double,
"hite:
The number of farmers increased greatly from
1910 to 1941.
H.M.Jr:
It has gone down.
White:
Well, if it has gone down, then it should be
included because it would make this - it
should be reduced to per capita per family
income.
H.M.Jr:
Well, we have time.
White:
Yes, another column. If it has gone down, then
it would make this situation --
H.M.Jr:
Let's have it in '32 and then another column
on the family.
White:
Get the number of farm families and then use
the same index and reduce it to purchasing
power per farm family.
Regraded Unclassified
- 22 -
22
H.M.Jr:
Where is your purchasing power?
Kuhn:
Last column.
White:
You see there is a lapse here of thirty years.
H.M.Jr:
It doesn't say - that isn't the purchasing
power.
White:
It is the purchasing power of the farm
income.
H.M.Jr:
But we don't have it.
It just says "Total cash income".
Heffelfinger:
You must have two different tables. Oh, no.
These are companion tables.
H.M.Jr:
Well, is that good, the purchasing power the
way we have it here? Why is that good?
White:
It isn't here.
H.M.Jr:
I mean, why is that a good figure to use?
It is eight million four as against eleven.
I don't understand it.
Heffelfinger:
He says the eleven million dollars they get
only has a purchasing power of eight million
now.
H.M.Jr:
Why doesn't eleven million buy eleven million?
Heffelfinger:
Because the prices have increased.
H.M.Jr:
Well, I wouldn't use it.
Heffelfinger:
In other words, they have an index.
H.M.Jr:
I would use farm income, but I would use
Harry's figures and try them out and see
Regraded Unclassified
- 23 -
23
whether that farm income goes to less families
or more families.
Kuhn:
I think it is important --
White:
I think you - couldn't you avoid all that
trouble? Your point was that here is a program
that was initiated in '33. Then all you say -
when you say the conditions - one indication
of the drastically altered conditions since
the program was initiated is the fact that
farm income, cash income --
Heffelfinger: In '32 was four billion six.
White:
.... has risen from four billion six in '32
to twelve billion three in '42, and I wouldn't
raise any of these other figures.
H.M.Jr:
I don't want to, but I want that column,
Government Payments. I just want these two.
Heffelfinger:
And the total, perhaps.
H.M.Jr:
The two and the total.
Kuhn:
The farmers will also come back to you and say,
"Oh, but the farmers' share of the national
income has gone down."
H.M.Jr:
Well, has it?
Kuhn:
It may have. There are fewer farmers.
White:
No, it hasn't gone down because national income
hasn't risen three times since '32.
H.M.Jr:
Well, I will tell you what let's do. Just
make 8 note. Let's have three things. From
'32 to '42, we have the cash income plus the
government payments, and then the third column,
Regraded Unclassified
24
- 24 -
a total, you see, and then a fourth column,
a percentage.
White:
Of the national income.
H.M.Jr:
Ditto.
White:
And I think you will find they have an increasing
percentage.
H.M.Jr:
Now, and then as I understand it - oh '42
is a forecast, that is all right. Just the way
it is, but add a fourth column showing the
percentage of the national income.
White:
I am also inclined to think, and this I don't
know, somebody can monkey with the figures,
that there has been a declining agricultural
population since '32, in which case the per-
centage of national income which they get would
be even greater than that shown. Haas would
work that out,
H.M.Jr:
Let Haas. That is & very good - the percentage
of the national income and the percentage of --
Heffelfinger: Farm population.
H.M.Jr:
Yes, and then the relation between the two. If
Harry is right - let's say that there were --
White:
There might be as much as a five per cent decline.
H.M.Jr:
Let's say there were ten million farm families.
I don't know how many there are.
White:
There are not as many as that. I think there
are about thirty million.
H.M.Jr:
Let me say there are ten million farm families
and now there are only seven. Well then, not
only --
- 25 -
25
Heffelfinger: The seven are getting three times as much
as the ten got back in 1932.
H.M.Jr:
Somebody in George's shop can give you that.
Heffelfinger: I think SO.
H.M.Jr:
That, Harry, is the whole point. Do you see
what I mean?
Hef elfinger: The have this other data available, of course.
Parnard:
It sounds to me a little bit too much like
attacking the farm population.
H.M.Jr:
Well, let's take 8. look at it. I would like
to know. Nobody knows. If the farm population
has increased then I am vulnerable. They will
say, "Well, that wasn't fair because there are
more people getting the same amount of money.
Barnard:
I think that is all right. I wouldn't shoot
it too hard, though.
H.M.Jr:
Well, can we explore it?
Earnard:
Yes, sir, surely.
H.M.Jr:
Let me just see. If it is nine sixty-eight
why are the benefits less than that? Bell
said the expenditures of benefits to
farmers is right around a billion dollars,
he has been tel ling me. You haven't got it
down here. You have got my sheet.
White:
What is the assumption, that some of this
doesn't go to the farmers or is not Government
payments?
H.M.Jr:
I don't get that.
Heffelfinger: No, you take something out for soil erosion
Regraded Unclassified
- 26 -
26
and marketing expenses and administrative
expenses, and so on.
H.M.Jr:
I would leave it in.
White:
The farmer doesn't get it.
H.M.Jr:
But any statistical organization that you look
at, Standard Statistics, includes that.
Heffelfinger:
Well, you see they reduced the 1942 expenditures.
Nineteen forty was over a billion dollars,
under this caption. You see, the last column
shows a billion dollars here and nearly a
billion there.
H.M.Jr:
That column is only seven.
Heffelfinger: Government payments. I don't know what figures
they used.
H.M.Jr:
But I want to use these figures, Bill.
White:
Maybe they are not payments but Government
aid.
Heffelfinger: They probably take parity payments here.
H.M.Jr:
We have got to use the same figures as the
Department of Agriculture, haven't we? These
figures which you are using here, these nine
hundred million or a billion have always been
added to the total farm income. It is the
total farm income.
Heffelfinger: Well, I will see where the --
H.M.Jr:
That is added to the farmers' income.
Barnard:
Well, soil conservation is good.
H.M.Jr:
Well, Bill, please recheck on that, will you?
Regraded Unclassified
27
- 27 -
(The Secretary held a telephone conversation
with Senator Byrd's secretary, as follows:)
28
November 13, 1941
10:18 P.M.
Hello.
Querator:
Senator Byrd is not there. I have his secre-
tery.
T.Jr:
All right.
Ocerator:
Go ahead.
Sen. Byro's
Secretary:
Mr. Morgenthou?
ANJr:
Talking.
8:
Yes, eir.
HMJr:
Who 18 this, clease?
S:
This 18 Mr. Menefee, Senator Byrd's secretary.
UMJr:
You expect the Senstor when?
S.
Yes, I excect him at twelve o'clock.
HMJr:
well, now, would you give him this message
for me, because I'm going to be in and out
ouite a lot.
B:
Yes, sir.
HMJr:
I'd like to come to some understanding with
the Senator. Have you got 8 bencil?
8:
Lee, sir.
HMJr:
Because I cannot appear tomorrow on account of
this tremendous publicity which has been given,
without being given the right to tell the news-
padere what I'm going to ses to the press. In
other words, if they want to keep it a closed
meeting, that's all right; but I know there are
going to De leeks. Hello.
S:
Yee, sir,
ANJP:
And therefore, in feirness to me, I want the
Regraded Unclassified
28
November 13, 1941
10:18 8.0.
MMJr:
Hello.
Operator:
Senator Byrd is not there. I have his secre-
tary.
HXJr:
All right.
Ocerator:
Go ahead.
Sen. Byrd's
Secretary: Mr. Morgenthau?
AMJr:
Talking.
S:
Yes, sir.
MJr:
who 1a this, please?
S:
This is Mr. Menefee, Senator Byrd's secretary.
HMJr:
You expect the Senator when?
3:
Yes, I exnect him et twelve o'clook.
HKJr:
Well, now, would you Elve him this message
for me, because I'm going to be in and out
ouite a lot.
S:
Yee, sir.
HMJr:
I'd like to come to some understanding with
the Senstor. Have you got a pencil?
S:
Les, sir.
HiJr:
Because I cannot appear tomorrow on account of
this tremendous publicity which has been given,
without being given the right to tell the news-
papers what I'm going to 88y to the press. In
other words, if they want to keep it a closed
meeting, that's all right; but I know there are
going to be leaks. Hello.
S:
Yes, sir.
MMJr:
And therefore, in fairness to me, I want the
Regraded Unclassified
29
- 2 -
privilege of giving to the newspapermen what
I present to the committee.
S:
Yes, sir.
HMJr:
See?
8:
Yes, sir.
HMJr:
Because, I mean, with those people - there are
too many people up there to tell the Senator,
who are unfriendly, and I go up there and tell
him this for me - and I'm available, but I want
him to be thinking about it - - I didn't want to
say too much before Congressman Doughton because
I didn't want to hurt his feelings; but you know
last week - you may have noticed the paper - I
appeared before Congress and Ways and Means in
executive session
S:
Yes.
HMJr:
and everybody on the committee gave his
version to the press.
S:
Yes.
HMJr:
But I'd given my word and I kept it, and I was
under terrific disadvantage. Now, I don't have
to be hit over the head twice
S:
Yes.
HMJr:
to learn my lesson.
S:
That's right.
HMJr:
But I'm not going to go through the experience
that I went through last week with Ways and
Means; and therefore, I'm asking for the privilege
when I leave the committee, to give the same
information to the press that I gave to the
committee.
S:
Yes, sir.
HMJr:
And I'm going to be fairly - I mean, insistent
on it.
30
- 3 -
S:
Yes, sir. All right, sir, I get you, Mr.
Morgenthau.
HMJr:
And I'd like to have an answer
S:
Yes, sir.
HMJr:
from the Senator or you, but explain to
him the reason I feel
S:
Yes, I understand it.
HMJr:
so strongly, because I took the most un-
godly beating from the press last week, because
I said that I'd given my word and I couldn't
talk; and I've never taken such a beating and
I'm not going to go through it again because
life is too short.
S:
(Laughs) Yes. All right, sir, I'll
HMJr:
You understand, don't you?
S:
Yes, sir, I do that. And as soon as the Senator
comes, I'll give this information to him and
he'll call you.
HMJr:
I need his help, but I can't go up there with
this terrific publicity and then have the members
of the committee give their version and then
my 1108 are sealed. You see?
S:
Yes, sir, I understand.
HMJr:
So I'm not going to go through that experience
again.
S:
All right, sir.
HMJr:
Thank you.
S:
And I'll call you back, sir.
HMJr:
Thank you 80 much.
S:
Yes, indeed.
31
- 28 -
M.M.Jr:
Now, if you don't mind, I would like to approach
this from a different angle. What I would like
to say is this: I believe that the Administra-
tion has done & wonderful job for the farmer
when they took his income and raised it, tripled
it in ten years. Now, where it was necessary
through State aid to do this thing to bring
him from four billion dollars up to twelve
billion dollars, certainly having reached
twelve billion dollars, and that the farmers'
income now is so much percentage of the national
income. There is no excuse to continue et
the same rate, you see, end the money which
we are using for this purpose, or the billion
dollars which we will be using, is sorely needed
for armaments.
Hoffelfinger: And the farmer will get his share of that, of
course.
IL.M.Jr:
And the farmer is getting his share of the total
expenditures as indicated that his income is
up to twelve billion dollars. Re is benefitting
at a higher rate. Therefore, I feel at this
time that we could very well afford to cut the
benefit payments in half.
Kuhn:
May I make B suggestion there? You say the
money is sorely needed for armaments. Couldn't
that be, the money is sorely needed for defense
and Lend-Lease requirements, which of course
includes the agricultural stuff that goes in
under Lend-Lease?
H.M.Jr:
That is right. And the farmer is getting --
and you might point out, and under Lend-Lease
he is getting a --
Heffelfinger: Subatantial share.
H.M.Jr:
Well, if you could find out. At least A bil-
lion dollars. Get that figure.
Regraded Unclassified
32
- 29 -
Kuhn:
So far.
H.M.Jr:
Yes, get that figure. Aside from everything
else, he is benefiting to the full extent from
Lend-Lease - of the first Lend-Lease. If you
could get the first and second together.
Ask Agriculture, how much of the first has been
earmarked --
Heffelfinger:
Commodity Credit has four hundred and some odd
million dollars in their figure for commodity
purchases this year.
H.M.Jr:
If you could get that, you see. We can afford
to take this because under Lend-Lease he is going
to get at least as much - I want to be very
careful, because everything is challenged --
Heffelfinger:
Use the figures they report as allocations
to Agriculture.
H.M.Jr:
And if it has been allocated - and if not, call
up Stettinius' office and say, "How much under
the second Lend-Lease is being allocated, you
see. But that would be my approach. Let me
go through it once more.
We have tripled the farmers' income. We started
in a depression. The farmers' income is at 8.
growing rate of percentage of national income.
Now, in these times when we have reached
this goal - I mean if anybody had said to me
four or five years ago, "You can get the farmers'
national income up to ten billion dollars,"
we would have all thrown up our hats and cheered.
Now, he is getting his proportion of Lend-Lease.
Now, he - and therefore he is getting his pro-
portion of expenditures under the national defense
program. Now, he shouldn't get it both - and
farm benefits.
White:
I think that is very good with the exception
Regraded Unclassified
33
- 30 -
of the Lend-Lease. I think that is vulnerable.
In the first place, he is getting A smaller
proportion of the total Lend-Lease expenditures
than he constitutes of the population. I would
leave that part out.
H.V.Jr:
Granted, Harry, but no other particular group
is getting it. I think it is important to
bring in the Lend-Lease. Let me put it in
in and we will have another shot at it this
afternoon. I think it is very important.
This explanation, I would like to have it
completely rewritten.
Barnard:
We cut it all out yesterday, but I think
it needs some substitute and that
is a good one.
f'elfinger: Yes, that was Haas' suggestion.
H.M.Jr:
Am I not through now? What?
Heffelfinger:
Then we have some farm programs which they
have shifted out of the Budget into RFC.
H.M.Jr:
Oh, yes. That is all right.
Heffelfinger:
I didn't know whether you wanted to bring
Commodity Credit into the picture or not.
H.M.Jr:
Yes, that is fine. Now, what I have got
down, I would like, if you would, to go back
to Vr. Parnard's office and continue. Harry,
I would like you to give this a little time.
Have you got any meetings?
White:
No, I can go to work on this.
R.M.Jr:
I would like to meet with you gentlemen
finally at three o'clock.
Kuhn:
Could Harry take five minutes to read that
speech before I come into your office?
Regraded Unclassified
- 31 -
34
White:
I would be glad to do it.
Kuhn:
I will send it down to you.
H.M.Jr:
Supposing you do this, Harry. Read the speech,
because Ferdie and I are going up on the Hill
at eleven fifteen to see Mr. Wallace. Read
that and then go back and join Barnard and Hef-
felfinger in Barnard's office.
White:
I have very little to add.
Heffelfinger:
Those totals you referred to here come to two
billion and a half.
H.V.Jr:
I don't want them.
Heffelfinger: You don't want the totals?
H.M.Jr:
I think it is tactically wrong.
Heffelfinger:
Well, I just wondered.
Kuhn:
You are not recommending a savings of two billion
and a half. Therefore, what is your point of
making it --
H.M.Jr:
I don't want this. I want to keep it on func-
tions. I feel fairly strongly. If anybody dis-
agrees with me - I don't want 8. list.
White:
Don't want 8 total?
H.M.Jr:
No.
White:
No, let each one interpret his own idea.
H.M.Jr:
Are you fairly happy about this as it is,
Harry?
White:
Yes. You don't mention any amounts and you
want them reexamined. I think this is perfectly
all right.
Regraded Unclassified
- 32 -
35
H.M.Jr:
Are you pleased? I mean, from my stand-
point?
White:
There are a couple of things here I would like
to look over, but on the whole, I think it is
a very good approach.
Regraded Unclassified
36
GENERAL
There are certain classes of public expenditures which consiet
in large part of construction projects, such as reclamation work, river
and harbor work, road building, etc. Reductions in activities for these
purposes will have multiple advantages, as follows:
(1) Reduction in non-defense expenditures.
(2) Release MS pover needed for defense plants, atc.
(3) Increase the supplies of materials and squipment
which CAB be deveted to defense efforts.
(4) Duild up a back-leg of projects for continued
employment in the postvar period.
There are other instances where there appear to be overlapping
and duplication of effort and expenditure of funds.
In other cases, the Government undertock programs aimed at
correcting or adjusting certain inequities which had grown up in our
economic system. Many of these inequities have been eliminated or the
causes which made the initial program necessary have disappeared.
Hovever, large visa continue to be appropriated and spent under such
≤
program.
I will refer briefly to certain specific non-defence
expenditures which I recommend to the Committee for its consideration,
WTH:mlb 11-12-41
Regraded Unclassified
37
REGLAMATION PROJECTS
(In Millions)
Fiscal years 1932 to 1941. inclusive
Total expenditures during the 10-year
period (1932-1941) amounted to about ....--
$550.0
This includes expenditures for irrigation and
water conservation under the Meergency Relief
Appropriation Acts.
Fiscal year 1941 - expended (checks issued) --
56.0
Fiscal year 1942 - estimated to be spent ....
95.0
Recommendation: Insurtines
It is suggested that all realamation work be recommined in
the light of our present defense program and its anticipated assoleration.
Wherever 11 is possible to delay oristing or postpons proposed projects
which are not necessary in connection with the generation of pover for
defense purposes, this should be done.
WTH:mlb 11-12-41
Regraded Unclassified
38
RIVER AND HARBOR WORK AND FLOOD CONTROL
(In millions)
Fiscal years 1932 to 1941, inclusive
Total expenditures during the 10-year
period (1932-1941) enounted to
$1,570.0
Fiscal year 1941 - expended (checks paid)- - - -
219.0
Piscal year 1942 - estimated to be spent ....
200.0
Recommendation:
It is recognized that certain river and harter and flood
control work must continue in the interest of the lives and safety of
our people. But all projects which Are not vital from this standpoint
or necessary for definits defense purposes should be resmained. Work
on all projects of this character which can be delayed or postponed
should be prohibited and funds heretofere appropriated should be
impounded. cancel
WTH:m1b 11-12-41
Regraded Unclassified
39
PUBLIC ROADS
(In millions)
Fiscal years 1932 to 1941. inclusive
Total expenditures during the 10-year
period (1932-1941) amounted to about
-
$5,800.0
This includes expenditures for highways, reads,
streets, etc. under the Margency Relief Appro-
priation Acts and the Public Works Adminis-
tration Act of 1938.
Fiscal year 1941 - expended (ehecks paid) Magneon
174.1
W.P.A,
485.0
659.1
Fiscal year 1942 - estimated to be spent
Regular
-
175.0
notavachable
Fiscal year 1943 - expenditures in this year vere
obligated on or before Jamary 1, 1941.
Fiscal year 1944 - expenditures is this year will
be obligated on 07 before Jamary 1, 1942.
Reportendation fassution
It is suggested that the Congress, by appropriate constment,
resulted the 1943 highway authorisation.
This would result is a reduction of expenditures for public
roads in the fiscal year 1944 (July 1, 1943 to June 30, 1944).
Any BIV reads 07 enlargement of existing read facilities
required by national defense activities sould be specifically authorized
48 defense projects.
Regraded Unclassified
. 2 -
40
Fiscal year 1948
The amount appropriated and being spent in the current
fiscal year covers the Federal-aid highway authorization of
162
$125,000,000 for the fiscal year 1941 and balances of prior years'
authorisations. These expendivares vere chligated on or before
January 1, 1940.
Fleeal year 1943.
The not of September 50 1940, contained as authorization of
39
$100,000,000 for Federal-aid highways for 1942. This authorisation
was obligated on or before Jamary 1, 1941, and there is as obligation
on the Congress to appropriate sufficient amounts in the next fiscal
year to pay these obligations. This cannot be avoided.
Fiscal year 19441
The Act of September 5. 1940 contained as authorization of
139
$190,000,000 for the fiscal year 1943. Under existing law this amount
must be apportioned among the States not later than Jamary 1, 1942.
After such apportionment specific projects are approved. the approval
of projects constitute.a contractual obligation of the Federal
Government for the payment of its pro rate share of the meet of the
projects approved. This can be postponed.
WTH:mlb 11-12-41
Regraded Unclassified
41
AGENCIES REGAGED IN TRAINING ACTIVITIES
Amounts appropriated for 1948
2011-
nated
Mainto-
1
trative
Other
ditures
Activities
Total
1940
(Ip millions).
Civilian Conservation Corps
....
$19.2
0227.5
$247.0
$200.0
National Touth Administration:
Regular
5,8
$6,0
91,8
90,0
National Defense
3.0
57.0
60.0
60.0
Office of Studation:
Regular
,
28,4
29.3
30,1
National Defense
1.2
106.9
108,1
116,8
TOTAL
$30.1
$506.1
$536.2
$498.9
Repommentations Economy Instructions.
Each of the above agencies is under the Federal Security Agency, and its
vocational
primary function is the training of youth, with emphasis during the present to the
>
training of youth preparatory to employment in defense compations.
It would seen that the regular activities of the Givilian Conservation
Corps and National Touth Administration must conflict with the more important
defense program, and should be eliminated or dractically reinsed.
All training activities should be consolidated in n-singlo-agemey. My
overlapping functions or duplication of work could be eliminated and one compro-
heasive training progres, integrated with the defense program, could be formlated
the
or savirations.
and administered 2070 communically than appears possible under present conditions.
are
WTH:mlb 11-12-41
Regraded Unclassified
FAIR PROGRAM
42
Reflected in Indust
Rependitures mainly under the 7am program which are included in the
Budget vere designed to most conditions involving 10w prices for fam
products, surplus preduction and loss of export markets.
Present conditions are redically different from these which the
Farm program WII designed to moot. Prices for farm products have increased
substantially; increased preduction of farm products must be undertaken en
a large scales and there 10 no regular large seate export market, except
in NO for as goods are going forward under the lease-lend program to
assist the countries appeaing the aggresse? nations in the present world
conflist.
Major expenditures under the Farm program are included under the
following captions:
Amenditures (In millions)
Notinated
Actual
Actual
1942
1941
1940
Surplus Marketing Administration,
and Agricultural Adjustment M-
ministration (Ast of August 24,
1935)
$240.0
$240.9
$142.6
Seil Conservation and Denestic
Allotment 408
475.0
465,1
605,1
Administration of her Ast of 1937
48.0
50.4
48.5
Price Adjustment 40% of 1938 and
198.3
215.0
Party Payments
205.0
TOTAL
9547
$968.0
Regraded Unclassified
- 2 -
43
Recommendation
It is suggested that the Farm program be recommined from the
standpeint of present conditions. Is 20 legical to pay farmers to at
the amount of acreage which they plant, what on the other hand there is
such an urgent need, to insurance production of farm products fer our
defense needs? dan we justify continued parity payments visa may farm
= products have reached or exceeded, the ostablished party price, and under
the impotes of increasing demand may - still higher?
WTH:mlb 11-12-41
Regraded Unclassified
44
FAIN PROGRAM
Not reflected in Date:
There are other phases of the Farm program involving loans for
rural rehabilitation, farm tenancy and reral electrification. Is 1941
and 1942 expenditures for these purposes have been shifted from the
Budget and transferred to the R.F.O., which has been authorized to advance
funds to the Secretary of Agriculture to enable his to make loans.
Activities of this character are as follows:
General
R.F.C.
Dudget
Funds
Expenditures:
Farm Security Administrations
Fiscal year 1940
$158.5
-
Fiscal year 1941
62.2
$111.3
Farm Tenant Acts
Fiscal year 1940
41.8
-
Fiscal year 1941
27.3
29.4
Rural Electrification Administration:
Fiscal year 1940
38.0
-
Fiscal year 1941
24.2
36.0
Estimates for 19421
Para Security Administration
60.0
134,02/
Farm Tenant Act
7.0
71.04/
Rural Electrification Administration
8.0
139.04/
w Unneed balances of authorisations.
Commodity Credit Corporation
Inter-related with the Form program are the activities of the
Commodity Credit Corporation. Expenditures have base unde by this
Corporation with funds received from the following courses:
Regraded Unclassified
- 2 -
45
Tree the Treasury
Included in the Bodget
Capital and surpluse
Piscel year 1934
$3,000,000
-
. 1936
97,000,000
I
# 1938
94,000,000
-
e 1940 (not)
-
-
76,000,000
#
. 1942
-
1,600,000
$271,600,000
Not included in the Budget
Purchase of notes (not to
Nov. 10)
120,000,000
From Public Borrowing (not to Nov. 10) 701,000,000
TOTAL
$1,092,600,000M/
2/ In addition receipts from repayments of loans and sale of commedities
are available for expenditure.
Recent estimates furnished to the Treasury by the Commodity
Credit Corporation show for the current fiscal year, the followings
Estimated disbursements
$1,100,000,000
Notimated receipts
913,000,000
Recess of disbursements, to be
covered by berreving funds
from the Treasury
------
8 157,000,000
Recommendation:
It is suggested that particular consideration be given to the
necessity for the continuance of that part of the farm program which is not
reflected in the annual budget end which is financed from funds obtained
through corporations or berrowed from the Treasury. The Congress is apt to
overleek the substantial expenditures which are not reflected in the ansual
budget. Eventually any losses which my be incurred through these programs
WTH:mlb 11-12-41
Regraded Unclassified
46
- 3 -
will become budget charges. Mach of these 14cms should be re-emmined is
the case manner that has been suggested for the farm program expenditures
which are reflected in the budget cyropes.
Regraded Unclassified
47
November 13, 1941
In calling on the Vice President this morning,
to go over my speech, he said, "I suppose you know that
whatever difficulties you have had in your present job
that when this war is over it will be more difficult
than anything you have ever had."
So I said, "Well, Henry, my arteries are getting
older and so is my heart and I think when that time
comes around they had better get a younger man. It Wallace
said, "Well, you evidently feel kind of old this morning."
So I said, When you work for Roosevelt the way I have
for 16 years, you have lived four lives". He laughed,
and I said, "I think that by the time this Administra-
tion is over, some younger man had better follow me.
I was talking from my heart, but when it was
over I was glad I said what I did because it serves
notice on him that I have no intention of staying here
when Roosevelt leaves and it should remove any possible
ulterior motive from his mind as to any actions or recom-
mendations which I may make to him.
Regraded Unclassified
19
November 13, 1941,
MEMORANDUM
TO: Secretary Morgenthau
FROM: Mr. Gaston
Bill Myers called me from Ithaca this morning.
He said L. J. Taber, Master of the National Grange, is
ill and is expected to retire and that Albert Goss is
the ablest of candidates for successor to him. He
suggested that you might be willing to consider making
some reference, in your speech at Worcester Saturday,
to the fact that as Governor of the Farm Credit Adminis-
tration you chose 8. prominent Granger, that is, Mr. Goss,
to be Land Bank Commissioner and that he did a good job.
He said Goss had been working very hard in recent months
and effectively to prevent the Grange from carrying on
B campaign to take the Farm Credit Administration out of
Agriculture and put it back in the Treasury, which would,
of course, be a slap at the Administration. I told Bill
that I thought the consideration against your doing what
he suggested was that you would not want to put yourself
in a position where you could be accused of meddling with
Grange affairs and he agreed that you naturally would not
want to make any reference to Coss unless it could be
done in an entirely natural way and not have the appear-
ance of meddling. He only wished you to consider it and
if you were not able to do it, he would understand per-
fectly.
Grry
Regraded Unclassified
49
November 13, 1941
12:24 p.m.
Jr:
Hello.
Onerator:
Senator Byrd.
HMJr:
Hello.
Senator
Byrd:
Hello, Henry.
HMJr:
How are you?
B:
Just got in.
HAJr:
Fine.
BE
How Are you?
MJr:
Well, I'm selling a few apples.
8:
Yeah, I'm selling 8 few. The market seems
to be looking up.
HMJr:
Yeah. The Mackintosh market hasn't been so
good though.
91
Mackintosh, yeah.
They've been dragging a little bit.
in
Ne're setting e dollar seventy-five out of
Staymans now.
HKJr:
That's wonderful.
a:
That 18, wrsoped.
9.Jr:
Yeah, that's wonderful.
8;
I think it's going to go up a little more.
There's 51 short crop, evidently.
MJr:
Well, they tell me - I don't know whether you've
heard it or not - out in the Northwest they had
some strike trouble.
3:
They did?
Regraded Unclassified
- 2 -
50
HMJr:
And they think that when they get cleaned up
there, that - they've been forcing them on the
market and that next spring there really ought
to be a shortage because there won't be the
western apples to compete.
B:
Well, that's fine. I hadn't gotten that. I'll
write out there and try to find out about it.
HMJr:
Yeah, they've had some strike troubles out there
and they've been - they've had to hold their
apples, some of them and the others they've had
to force on the market.
B:
Uh huh.
HMJr:
You might inquire.
B:
Yes, I will. Thank you very much for telling
me about it.
HMJr:
Harry, did you get my message?
B:
Yes, I got it, Henry. I just don't see how you
can avoid making some kind of a statement. I've
never seen such terrific demand on the part of
the newspaper people for information about this
matter.
HMJr:
That's right.
B:
I mean, not only you, but the whole thing com-
bined; and they're just razzing me to death.
I haven't given them anything at all. I didn't -
the only thing I did say, as I told you, was that
we were going to confer with you. I didn't see
any objection to that.
HMJr:
Well, is that agreeable to you?
B:
Yes, sir. What I would suggest was - suggest is -
after the executive meeting is over, that you
wait there and then you make your statement to
them.
HMJr:
After
Regraded Unclassified
51
- 3 -
B:
I think it's better for you to do it than
for somebody else.
HMJr:
Well, that's what I thought; because I didn't
want to - I don't know whether you gathered -
I didn't want to say too much to Doughton
B:
Yeah.
HMJr:
because I didn't want to hurt the old
man's feelings if I'm supposed to
B:
(Laughs)
HMJr:
but the newspaper men tell me that there
were at least five different versions they got
from at least five members.
B:
Yeah. Well, that happens nearly always.
HMJr:
So I'd rather - if it was agreeable to you -
stay afterward and then just tell the men
B:
That's right. You stay afterwards, and I would
stress very strongly, I think, Henry, the need
of this economy and non-essential spending -
I mean the general way, general lines.
HMJr:
Well, I think that the newspaper men will feel
much more friendly disposed to the work of the
committee.
B:
Yeah.
HMJr:
Otherwise, I think they're really going to be
sore.
B:
Yeah.
HMJr:
Is that all right?
B:
Yes, you bet. And what we'll do is, just 8.8
soon as the meeting 18 over, you'll stay with
me, you see, and then you tell them anything
you want. I think that's the best way to handle
it rather than come through another person.
Regraded Unclassified
52
- 4 -
HMJr:
I'd like to do it that way.
B:
Fine, Henry.
HMJr:
Thank you.
B:
I'll look forward to seeing you tomorrow.
We may not have a very full meeting. Some
of these fellows are away, and if the House
presents - I don't imagine it will be in
session tomorrow at ten-thirty, though.
HMJr:
Yeah.
B:
But I'll see you there.
HMJr:
Thank you.
B:
Thank you very much for calling me.
53
November 13, 1941
12:28 p.m.
Secretary
Ickes:
Henry.
HMJr:
In person.
I:
I understand that the large shipments of aviation
lubricating oil
HMJr:
Yeah.
I:
.....are going to Spain.
HMJr:
I don't - well, if they are.....
I:
Can you let me have your figures?
HMJr:
Aviation? Well, supposing we give you every-
thing that goes to Spain?
I:
I want to know everything that's going to Spain.
HMJr:
I'll get it over to you right away.
I:
Thanks a lot.
HMJr:
Thank you.
I:
Nothing going to Japan?
HMJr:
Zero, zero.
I:
Well, that's all right.
HMJr:
Suits me.
I:
Looks as if we had won that at last.
HMJr:
Well.....
I:
All right, Henry.
HMJr:
Thank you.
I:
Good-bye.
54
November 13, 1941
12:30 p.m.
Operator:
I have his secretary.
HMJr:
All right.
Operator:
Go ahead.
HMJr:
Who 1a this?
Mr. White's
Secretary: This 18 Mrs. Shanahan, Mr. Morgenthau.
HMJr:
Mrs. Shanahan
S:
Yes.
HMJr:
Mr. Ickes called up and would like to
have right away the latest information on
shipments of oil to Spain, particularly the
aviation lubricating oils.
S:
All right.
HMJr:
But send him anything that we have that's gone
there for the last four weeks.
S:
Anything for the last four weeks.
HMJr:
And get it over there 8.8 soon as possible.
S:
All right. And that's to Mr. Ickes.
HMJr:
Harold Ickes.
S:
Uh huh. All right.
HMJr:
Ever heard of him?
S:
Yes.
HMJr:
He raises eggs.
S:
(Laughs) Oh, yes. I've heard of him. I don't
buy them though. All right, sir.
HMJr:
Thank you.
S:
You're welcome.
55
November 13, 1941
2:35 p.m.
25 TRANSE SPEECH
Present:
Mr. Kuhn
Mr. White
Knhn:
Mr. Secretary, I haven't marked the chanzes
on your master copy, except that the last
six pages are new.
B.M.Jr:
The others will have to wait. I will tell
Bernard to wait in his office.
Kuhn:
Should I indicate where I made changes?
H.M.Jr:
I will read out loud and you just say "No".
"Today, 8.6 never before, it is an honor to be
an American farmer. The future health and
happiness of all the world depends, as never
before, upon the American farmer's work
and skill and enterprise. I am very happy,
therefore, to have this opportunity of speaking
to a great audience of American farmers, and
to accept at your hands, Mr. Taber, this pin
that certifies to twenty-five years' membership
in the National Grange.
"To anyone who lives and works with the good
earth it brings a new pride year after year
to SOW the new crop, to tend it carefully, and
to harvest it at last. Speaking to you as a
Regraded Unclassified
56
- 2 -
fellow farmer rather than as Secretary of the
Treasury, I can assure you that one of the
great satisfactions of my life is to see the
trees that I planted on my own farm twenty-five
years ago grow and blossom and bear good fruit.
And during these twenty-five years it has meant
a great deal to Mrs. Morgenthau and me to he
members of the Wicopee Grange, near our farm
in the Hudson Valley. The local Grange has given
us 8 place to discuss common problems with our
neighbors, and it always has given us the feeling
that we are a part of this great national organi-
zation which for seventy-five years has been
the friend of every farmer in the United States.
I shall wear my membership pin as 8 badge of
honor."
So far so good.
"I had intended to remind you at the very
start of this talk of the öanger of inflation
as it might affect the farmers of the United
States; but your national Master has already
spoken of the danger, and has done it eloouently."
Would you say "I had intended to remind you"?
Or would you simply say, "Your national Master
has spoken to" --
Kuhn:
It would be too abrupt. Now, on the quotation,
Mr. Secretary, Harry thinks that the quotation
or parts of it are wrong, particularly he says
there was no inflation in '32 and '33, and the
sentence, "This is one time when we dare not for-
get that wild inflation means economic disaster,"
nobody is talking about wild inflation in general
terms.
White:
If you just leave that sentence out, the rest
sounds better.
Kuhne
Suppose we put three dots after 1933 and then go
Regraded Unclassified
57
- 3 -
on, "Inflation endangers all forms of wealth"?
H.M.Jr:
O.K. Harry has to have his way.
Kuhn:
T am glad he does.
H.M.Jr:
"One of the most effective ways to fight infla-
tion is to produce more of the goods which do
not compete with our defense industries for
materials or for labor. That means, quite simply,
to produce more food" --
Is that the only way to do it, to produce more
food?
Kuhn:
Well, it means above all, to produce more food.
I can't think of anything else.
H.M.Jr:
It looks as though this is the only way.
Kuhn:
You can say, "That means above all to produce
more food.
H.M.Jr:
Well, that would help.
Kuhn:
All right, that is easy enough.
H.M.Jr:
You get what I have in mind?
Kuhn:
I do.
H.M.Jr:
I have been so damned mad, once yesterday and
once today, I could have gone down to hear those
records of those machines, you know.
Kuhn:
Cowldn't you do it?
H.M.Jr:
The man was never there when I was there. He
was always out showing a picture or something.
Kuhn:
Well, I wish you would see them sometime.
Regraded Unclassified
58
- 4 -
H.M.Jr:
I had fifteen minutes this morning, and I was
low and I thought I would go down.
"I should like to pay my tribute to the work
of Secretary Wickard and the Department of
Agriculture in the past six months" --
All right.
If
in encouraging our farmers to grow more of
the right kinds of food -- more dairy products,
vegetables, fruits and meats, the so- called
protective foods on which our national well-
being depends.
"The opportunity ahead of "merican farmers
at this time is so vast that very few of us,
I think" --
Are you feeling all right, Harry?
White:
Fine.
H.M.Jr:
I have gone four pages and you haven't corrected
anything.
White:
Well, it is good.
H.M.Jr:
If I didn't tease Harry he would get sick,
wouldn't you, Harry?
White:
That is right.
H.M.Jr:
Because he would know I was sick.
"We have prided ourselves on being the best fed
nations in the world. Europeans who have come
to our shores have marvelled at the S tacks of
fruit and vegetables in our shops and at the
abundance of the diet available to American fami-
lies. Yet we are not as well nourished as out-
ward appearances might seem to show. Only the
Regraded Unclassified
59
- 5 -
other day the President of the United States
expressed his sense of shame at the high
percentage of recruits for the army who had to
be rejected. Nearly 50 percent of two million
men examined for selective service were found
to be unfit, and of those rejected a large
number were suffering from dental defects or
other ills that probably were due to faulty
nutrition. The President was not overstating
when he described these conditions as an indict-
ment of America.
"A few years ago" --
"Indictment of America" or "indictment of the
habits of America"?
Kuhn:
He called it an indictment of America.
H.M.Jr:
"A few years ago I took part in the conception
and inception of the food stamp plan, which
was an attempt to bring some of our surplus
commodities into the hands of" --
Kuhn:
the next sentence is changed to read as follows:
"The plan was conceived at a meeting between
Vice President Wallace, Mr. Harry Hopkins,
Doctor Thomas Parran, and mys elf" semicolon.
"Later it was perfected by Mr. Milo Perkins
of the Department of Agriculture." He is
Department of Apriculture, isn't he?
R.V.Jr:
He was.
"In line with this effort Doctor Parran, who
is now Surgeon General of the United States,
and was then the head of the Public Health
Service" --
Kuhn:
He is still the head of the Public Health
Service, isn't he?
Regraded Unclassified
60
- 6 -
H.M.Jr:
Well, then he was with the Treasury. That is
what you are trying to say, or in the Treasury.
White:
With the Treasury.
H.M.Jr:
Either one. I always say they are in the Treas-
ury. That is what you are trying to say.
Kuhn:
Yes, in the Treasury.
H.V.Jr:
All right.
".... undertook an investigation into food-
buying habits and nutrition in the District of
Columbia. Here was a compact area where per
capita wealth was higher than that of any State,
yet Doctor Parran found widespread under-nour-
ishment," --
Was that interesting, that report?
Kuhn:
Not as good as it sounded. In the first place,
he took only six hundred families.
H.M.Jr:
No, but I meant the meeting you took at Wallace's
where George Haas wrote up --
Kuhn:
Yes, it was very.
H.M.Jr:
Did he show how they were afraid of it?
Kuhn:
Showed how Wallace was fighting you.
White:
Fighting the stamp plan?
Kuhn:
Well, fighting the idea of abundance. Isn't
that right?
H.M.Jr:
Yes, that is it.
That is the thing, and Hopkins, with Hopkins
fearing that this was & move to take the place
of relief.
Regraded Unclassified
61
- 7 -
Kuhn:
But it was more recent than I thought. It was
1938.
H.M.Jr:
"I suspect that similar investigations in
other parts of the country might yield a
similar result even today, when our public is
more vitamin-conscious than when Doctor Parran's
study was made."
This gives Parran a nice boost.
"This is a challenge that we as 8 government,
and we as farmers and consumers must meet toge-
ther."
Kuhn:
Harry questions the word "consumers", in there.
H.M.Jr:
I agree. Out it goes.
"The Government can help by encouraging and
promoting the production and use of the right
kinds of food, and by heavier taxation of those
goods which are not essential to health and
strength."
Kuhn:
First of all Roy wanted the taxes out, and you
and I agree that it should be in. Miss Elliott
want to show somehow that the Government is
doing a lot through nutrition education
to create a demand for better food, and I
thought if you wanted to satisfy her you could
say, "The Government can help by ensuring
and promoting the production and use of the
right kinds of food, as it is beginning to do
right now, and by heavier taxation."
H.M.Jr:
That is all right.
Kuhn:
I think that will take care of her. At least
that was her whole plea.
H.M.Jr:
Now, if you don't mind, I think if you are going
to say "by heavier taxation of those goods". -
Regraded Unclassified
62
- 8 -
I don't know what you meant. Now, if you are
going to say it, I think you ought to specify
those goods, such as cigarettes --
White:
Not cigarettes. Is that what you had in mind
here?
Kuhn:
I have in mind candy, liquor, soft drinks.
Of course, if you mention each one of these
and say they are not necessities to good health
and then the industry concerned will squawk --
H.Y.Jp:
It is all right, leave it there. Put in Miss
Elliott's piece too.
Kuhn:
"As it is beginning to do"?
H.M.Jr:
Yes. All right, Harry?
White:
Yes, I think it is better not to specify.
Kuhn:
But you wouldn't leave out the taxation?
White:
No. I am not sure that I see Roy's point.
H.M.Jr:
You don't want to say, "as they are doing under
the Consumer Section under Miss Elliott"?
Do you want to bring her in?
Kuhn:
I don't think that is what she --
H.M.Jr:
No, but I mean do you think it would be a nice
thing to do? She needs & boost.
White:
Mr. Secretary, do you want to reconsider the
elimination of taxes? As you read the paragraph
it is kind of dragged in.
H.M.Jr:
I don't care about it either way.
White:
"This is a challenge that we as a government,
Regraded Unclassified
63
- 9 -
and we as farmers must meet together. the
Government can help by encouraging and promoting
the production and use of the right kinds of
food, and the farmers can do by far the biggest
job by producing more." I think the taxes
are kind of - there isn't enough said about
them.
H.M.Jr:
We will bring in the part about --
Kuhn:
"As it is beginning to do right now."
H.M.Jr:
I would kind of like to say - she has been
so nice - "Under the leadership of Miss
Elliott".
Kuhn:
"As it is beginning to do under the leadership
of Miss Harriet Elliott of the Consumers'
Division".
H.M.Jr:
Yes. She has been awfully nice, you know.
Kuhn:
She is very good. She calls me right up on
the phone.
H.M.Jr:
Well, I would do it. You mentioned Parran and
you mentioned all these people. Why not
let's mention her?
Kuhn:
All right.
H.M.Jr:
"But farmers can do by far the biggest part
of the job by producing more -- by diverting
land and effort to the production of milk,
butter, eggs, pork products, fruits and vege-
tables. It must no longer be said of this
rich country of ours that millions of our people
still go without the food that is necessary to
good health and good morale.
"Side by side with this challenge that confronts
us at home, there has come a still more urgent
Regraded Unclassified
64
- 10 -
and insistent call from across the sea. The
British people, as you know, have had their
chief sources of food supply cut off either
by invasion, as in the cases of Holland and
Denmark, or by shipping shortages, as in
the cases of Australia and New Zealand."
Kuhn:
Meat.
H.V.Jr:
How about Africa?
Kuhn:
Oranges from South Africa.
White:
Oranges from there?
Kuhn:
That is one of their biggest sources of oranges.
H.MJr:
I thought they got them from Palestine.
Kuhn:
From Palestine at Christmas, and then from
Spain, and then from Brazil.
H.M.Jr:
Well, it makes the point.
"The British today are living under conditions
of siege. Their island home is one vast fortress,
and every man, woman and child is in the garrison,
fighting our fight as well as their own. It
is our responsibility," --
White:
Do you want to say that?
H.M.Jr:
They are, aren't they, Harry?
Kuhn:
Wickard has been saying it in those words.
H.M.Jr:
Aren't they?
Regraded Unclassified
65
- 11 -
White:
Yes, they are. I don't know, has anybody
said that?
Kuhn:
Wickard has said that in those words.
H.M.Jr:
Well, if they are not, what are they doing?
White:
They aren't doing that. Yes, I think that --
H.M.Jr:
I think it is good. They are fighting our
fight as well as their own.
I think the whole trouble with the English
today, they are entirely too subservient
to us.
Kuhn:
Well, that is certainly an accurate expres-
sion.
H.V.Jr:
I like it.
Why do you worry about it?
White:
I thought in the past there was some
objection to saying that they are fighting
our fight, but I think that is no longer
true.
Regraded Unclassified
- 12 -
66
H.M.Jr:
O.K., Harry.
White:
Yes.
H.M.Jr:
"It is our responsibility, and our high honor,
to see that they are fed, not with a trickle
of occasional shipments, but with enough
sustaining food to enable them to carry on
with health and morale --"
White:
Would you want to just say, "enable them to
carry on"? Why would it leave their morale
unimpaired? "Warm and sustaining food to
enable them to carry on."
Kuhn:
Stop.
H.M.Jr:
That is all right.
Kuhn:
"Warming food" is out.
H.M.Jr:
I don't like "warming."
Kuhn:
I am thinking of the English winter.
H.M.Jr:
"With enough sustaining food."
"American farmers are already doing a mighty
work in sending food to England in her time
of greatest need. Secretary Wickard has
already told you of the huge amounts that we
are pledged to send during 1942. It will help
us, I think, to produce those vast quantities
if we always remember that our food shipments
are bringing renewed strength and renewed
courage to those who are in the front line of
freedom."
"The front line of freedom" is good. I like
it.
"That is an achievement which must be continued
Regraded Unclassified
67
- 13 -
throughout 1942 and as long as the war may
last. It is probably the greatest single
call ever made upon American farms. If you
add it to our own requirements, it is 8. call
that will use all of our ingenuity, all our
effort, and all of the experience that we
have gained in recent years, if we are to
meet it successfully.
"In this effort the American farmer is as
vitally important as the aircraft worker who
builds a new bomber or the shipyard worker
who helps to send a new battleship on its
way. Knowing what I do of the greathearted-
ness of our farmers and of their capacity
for hard work in a great cause, I am confident
that call will be answered and that England
will be able to win the victory that is our
own hearts' desire.
"But after the victory -- what then? After
the Allies win this war -- If
This is new, isn't it?
Kuhn:
That sentence.
H.M.Jr:
Sherwood will like that.
"After the Allies win this war -- and they
are going to win it -- the opportunity for
American agriculture and the need for
colossal production of the right kinds of
food will be much greater than it is even
today. Where tens of millions in England
are depending on us now, hundreds of millions
throughout the continents of Europe and
Asia will be stretching out their hands to
us when the war is over.
White:
Does that phrase, "stretching out their hands"
Regraded Unclassified
- 14 -
68
bother you a bit?
H.M.Jr:
What would you say, "their mouths"? (Laughter)
Kuhn:
You know the African savages who have things
put in their lips to make them stretch?
National Geographic pictures them.
H.M.Jr:
He is thinking of a poster. It is all right.
Ferdie and I are a little romantic, between
us.
White:
It is a good figure.
H.M.Jr:
"I am in favor of seeing that the credit of
the United States is used to do the humanitar-
ian thing, the economic thing, the sound
thing, in putting the great food production of
the United States into the hands of the
hungry millions. I am one of those who
believe that in the long run, as Vice President
Wallace has said, service to humanity is
economically sound."
White:
Want to quote that?
Kuhn:
We don't know where he said it and he doesn't
know.
H.M.Jr:
He was very cute about it. He said, "I don't
want you to give it that way." I said, "Well,
will you suggest?" He said, "Yes, I will suggest
heart. it, Henry, If because I know you have it in your
"I am thinking not only of the actual hunger
that will be sure --"
Do you mind putting "actual hunger and misery"?
If the actual hunger and misery that will be
sure to exist when the next Armistice comes, but
Regraded Unclassified
69
- 15 -
also of the ruined agriculture of many
countries that depended upon farming for
their very existence. I am thinking of
the herds that have been slaughtered -- If
And put in the words, "fine herds.'
"...I am thinking of the fine herds that
have been s laughtered in Denmark and Holland
which lived on their exports of dairy products.
I an thinking of the scorched earth in the
great farming areas of Russia, where farm
houses and farm implements have been destroyed
in the past five months on a scale unparalleled
in all history. There will be & lack of seed,
a lack of feed for livestock, and in many
countries a lack of manpower -- If
White:
Why do you put that in, "lack of manpower"?
I just noticed it.
Kuhn:
It has been in all the way through. The
French are certainly suffering from it, and
will be after the war. It took two years
for the German prisoners to get back home.
H.K.Jr:
There were ten million people killed who
died from starvation after the last war.
Kuhn:
How many German prisoners were in France for
two years?
W.W.Jr:
In the last World War there were ten million
people either died or killed.
Kuhn:
It takes time to demobilize the soldiers.
R.V.Jr:
"It is true, as the President said recently,
that our first job now is to win the war
rather than to concentrate on blueprints of
what is to follow. I agree with him, yet I
Regraded Unclassified
70
- 16 -
think there is one great fact about the
coming democratic order in Europe which we
should do well to remember now. That is
that great masses of decent hardworking men
and women will no longer tolerate the
economic insecurity which furnished so much
of the fuel for the political turmoil of the
past 25 years.
Kuhn:
This is where the new stuff begins, partly
because of what Wallace said and then Miss
Elliott was very worried about it for fear
that you wouldn' say anything about the
duties that people are going to have to their
communities and that we have a right to
call on them for.
White:
Miss Elliott or Wallace?
Kuhn:
Both of them.
H.M.Jr:
Wallace was swell this morning. I have never
seen him more friendly to me. He hasn't
always been that way.
"They will be willing and glad to pledge
themselves to their country, but they are
also going to demand certain elementary
guarantees for B. decent life, and I think they
will be right and amply justified in their
demand.
"In order to build a better world -- and that
goes for our own country as well as for those
abroad -- we must not only call upon the citizen
to give greater service as a duty to his
community, but we must recognize his right to
have a minimum standard of food with which he
can live the life of a free man. In return
for the greater duties of citizenship, I
believe that after the war we should guarantee
to every man, woman and child the right to have
Regraded Unclassified
71
- 17 -
enough milk and butter, enough fruit and
vegetables, enough of the protective foods
of all kinds, so that everyone can be fit
to do his part in the world of tomorrow."
White:
I fail to see the sense of talking about
calling upon the citizen after the war to
give greater service to his community. I
don't see that it makes any sense. Now
is the time he is called upon for greater
service.
Kuhn:
This is all the old stuff. I have just
tried to slip in the idea that these things
balance.
H.M.Jr:
You say it twice.
White:
You can leave it out there, can't you?
H.M.Jr:
Where?
White:
"In return for the greater duties of
citizenship.'
H.M.Jr:
Where is that?
White:
In the next sentence.
H.M.Jr:
What page?
White:
Fourteen. "In order to build a better world,"
and so forth.
H.M.Jr:
The thought that somebody expressed up there
was, oh, he was just handing out the --
Kuhn:
They will say that, yes. In all the discuss-
ions of this food guarantee, they have always
balanced it against the greater calls on
people to give up a year of their lives for
Regraded Unclassified
- 18 -
72
military training or for community service
or something like that.
H.M.Jr:
Look here, I am going to be emotional or
spiritual, if you don't mind my using that
word. I am interested in this thing as a
spiritual, moral thing, and I am not asking
for quid pro quo.
Kuhn:
Well, suppose you were to say "along with
the greater services."
H.W.Jr:
No sir. Look, it ruins the whole thing.
Kuhn:
Right.
H.M.Jr:
It ruins the whole spirit of the thing. You
didn't put it in as sort of a crass thing.
Kuhn:
No, I believe that you are going to have to --
H.M.Jr:
Well --
Kuhn:
...get more in a democratic state --
H.M.Jr:
Look here, now wait a minute. What we are
saying, this thing today, with the people
in starving Poland or the people in starving
Bessarabia, you are saying, "Boys, we are
going to give you some feed if you are going
to be a better citizen. " Well, how the hell
does that sound on the shortwave? What do
you expect to give them? Arms? He doesn't
say, "Arms for the love of Allah if I am a
better citizen" in that play.
Listen, Ferdie, I don't have to argue along
these lines. I am giving a sermon here and
let me strike it on a very high moral plane
and eliminate the part about Wallace and
everything else that you put in here.
Regraded Unclassified
73
19 - -
Kuhn:
Well, there is one sentence that I think
can stay. At the bottom of page 13, about
the great masses of hardworking men and women
will no longer tolerate it, and so forth.
They will be willing and glad to pledge
themselves to greater service for their
country, but they are also going to demand
certain greater elementary guarantees.
hite:
Not "they will" but "they are willing."
H.M.Jr:
Do you want to put that in?
White:
I don't know why it belongs in at all,
H.M.Jr:
I don't agree with you, Ferdie.
Kuhn:
I believe strongly in that sentence, but
then you can go on and talk about the
guarantees.
H.M.Jr:
Ferdie, how the hell can they do greater
service for their country when they are in
this condition? You are talking about
people with a hobnailed boot on their necks.
This is to appeal to the people now, not
after the war. We are appealing to these
fellows. "Now boys, if we win this war --
and we are going to win this war -- we are
going to give you some food to put in those
empty stomachs. This is no time to talk
to people about greater service to the
country, where they can't vote, can't go to
school, can't go to church.
Kuhn:
But you are talking to the American public
as well.
White:
Not when you are guaranteeing nutritious
food. It is to people with very low incomes
who will get the benefits of that.
Kuhn:
That is right. You mean they are not to be
expected --
Regraded Unclassified
74
- 20 -
White:
In any case, why appeal to them for greater
service in this speech? It belongs in
another speech.
11.2.Jr:
Look, Ferdie, let me launch this on a very
high moral plane without any quid pro quo,
and I am not worried what they are going
to say. I would love to have them call me
a social worker. I would love it. That is
what I am.
Kuhn:
Then it will read thís way: "They are
going to demand certain elementary -- "
H.M.Jr:
It is social work, Harry.
White:
But it is not the kind of social work that
is usually meant by social workers, but it
is all right. It is social work. It is
social work as it should be.
H.M.Jr:
I am thinking of social work as out of a
settlement house.
White:
It is social work as it should be. It
attacks the roots of the problem.
H.M.Jr:
Listen, in the Henry Street Day Nursery, the
nursing service here, when a person calls
up and wants a nurse for an hour, whether it
is here in the District or out of Henry
Street, you don't say, "Will you give greater
service to your country?" You send a nurse
to make their bed and give them 8 bath and
put new bandages on. That is social service
in the terms I think of it. You don't say
to the man, "Will you be a better citizen,
before I wrap up your arm or give you a bath
or make your bed for you or give you a bottle
of milk?"
White:
I think you are unquestionably right on this.
Regraded Unclassified
75
- 21 -
H.M.Jr:
Look, you don't know this side of me, but
let me be myself for once and let Mr. Wallace,
the idealist, talk about a quid pro quo.
Kuhn:
And Miss Elliott.
II.M.Jr:
And Miss Elliott.
White:-
They can ask for more service and the Secretary
will promise them more food.
H.M.Jr:
That is wonderful, but cut out all the
greater service stuff.
Kuhn:
That is easy. "In order to build & better
world we must recognize the right of the
citizen to have a minimum standard of food
with which he can live the life of 8 free
man. I believe that after the war we should
guarantee to every man, woman and child the
right to have enough milk and butter,' and so
on and 80 forth, "so that everyone can be
fit to do his part in the world of tomorrow."
H.M.Jr:
Well, you fix it up with that in mind.
Kuhn:
But the rest of it will suit you if all
that is taken out?
H.M.Jr:
Sure, but cut out this --
White:
Go back to the way you have it before.
H.M.Jr:
Now, shall I go to 15? "We in America
decided --"
Now, what are we guaranteeing? What have
we got down? "We should guarantee that
Regraded Unclassified
76
- 22 -
after the war --"
Now, instead of saying "we" would you say,
"The world should guarantee to every man,
woman and child," or "we"?
White:
Well, that loses a good deal of force
because you have so little control over
what the rest of the countries do.
H.M.Jr:
All right.
"We should guarantee to every man, woman
and child the right to have enough milk
and butter, enough fruit and vegetables,
enough of the protective foods of all kinds,
so that everyone can be fit to do his part
in the world of tomorrow."
It is all right. It is a nice idea, and
I am glad to say it, what the hell.
Kuhn:
I would like to start Page 15 with the
words, "After all, we in America decided,"
the idea being that there is nothing so
new about all this.
Regraded Unclassified
77
- 23 -
H.M.Jr:
What this gets back to is, do you remember
the speech you helped me on, Harry, when
we went up to Philadelphia and talked about
this land of plenty and 80 forth?
White:
That is r ight.
H.M.Jr:
This gets back to the thing. Here is a way,
for instance, to produce at a maximum and
put the stuff into people's stomachs and
have a happy world.
White:
I think you will find there is B. consistent
note through all your speeches of that kind.
H.M.Jr:
"We in America decided about seventy-five
years ago, about the time the National Grange
was founded, that everyone was entitled to &
decent education as a matter of right, and
we established the greatest free school system
in the world to provide that right. We found
that it was not fair, and that it did not pay
us as a nation, to permit illiteracy on a
vast scale and to enable only those with
wealth or other advantages to have 8. proper
schooling. We have provided that schooling
with State funds, and nobody would dream of
abandoning it now.
"We decided eight years ago that every citi-
zen should have protection against unemploy-
ment or old age or disability, and we enacted
a whole series of historic measures to help
him obtain that protection as a matter of
right. We found that it was not fair and
that it did not pay us as a nation to leave
millions of our people at the mercy of
economic cycles over which they had no con-
trol. These changes have been accepted,
and I doubt whether any except the most un-
compromising Tory among us would abandon them
now.
Regraded Unclassified
78
- 24 -
"What I am suggesting would merely carry
the process further. I speak of it today
not as 8. dream but as something which I am
convinced must follow, not only in this
country but all over the world, if we are
not to revert into an endless barbarism of
wars and revolutions. It is our best hope
of ensuring the survival of the way of life
which we treasure in common with other free
peoples throughout the world.
"I have suggested it to this particular
audience because I want you to consider for
a moment what a tremendous opportunity it
brings to American farmers.'
Why say "just for B. moment"? Why not say,
"I want you to consider"? Leave out "for
a moment."
Kuhn:
"Because I want you to consider," right.
H.M.Jr:
Not just for B. moment, I want them to con-
sider.
Kuhn:
Right.
H.M.Jr:
"I want you to consider what a tremendous
opportunity it brings to American farmers.
If our people and other peoples are to be
guaranteed & minimum standard of nutrition,
which I believe is their right--"
Kuhn:
Take out the next.
H.M.Jr:
Right.
IT and we in this country will have to
produce the food that will make that minimum
standard possible."
Out goes the Wallace-Elliott commercialism.
Regraded Unclassified
- 25 -
79
White:
That is right.
H.M.Jr:
"If everyone in the United States were to
be guaranteed the very minimum of the pro-
tective foods needed for good health and
decent living, it would mean 8 vast increase
in our consumption and our farm production.
That minimum for every adult was recently
set by the National Nutrition Conference
at 41 quarts of milk per week, one egg &
day, Oue serving of meat EL day, and two daily
servings of vegetables and two of fruits.
Who is the National Nutrition Conference?
Kuhn:
That is the group that met at the White
House with Parran and all these people a
few weeks ago. They are the fellows who set
this minimum standard on which we base our
whole minimum thesis.
H.M.Jr:
This came through them?
Kuhn:
This came through a woman doctor at the
Department of Agriculture whose name was
given to me by Parran and she told me what
this minimum amounted to.
H.M.Jr:
"If we were to attain such a minimum goal,
if we were to recognize it as a right that
belonged to everyone, it would mean an in-
crease of at least forty percent in our
present consumption of milk and milk products
alone. It would mean doubling of our present
consumption of leafy vegetables and of the
fruits that are rich in vitamins. It would
mean that the farmers would have a greatly
increased market here at home - the best
kind of market, for it would not be subject
to foreign tariffs, and it would also increase
steadily as population increased."
You don't know how many more eggs?
Regraded Unclassified
80
- 26 -
Kuhn:
They couldn't tell me.
White:
That should be easy. You know how many million
eggs we produce a year. Just multiply it by
& hundred and thirty--
Kuhn:
This doesn't include children, you see. There
is a difference for children. I have only
mentioned the figures they set for adults.
White:
I think eggs ought to be figured out.
Kuhn:
And milk?
White:
It is a simple calculation.
Kuhn:
I tried to get these things.
White:
What is an adult, over twelve, fifteen,
eighteen?
H.M.Jr:
Well, there must be somebody over in the
Department of Agriculture who knows that.
Kuhn:
I will try to get it.
H.M.Jr:
This is page seventeen.
Kuhn:
I will try to get it.
White:
So many billion eggs a year.
Kuhn:
They also warned me against using the word
"production." She said so much of the trouble
is due to faulty distribution that you have
got to put it into terms of consumption.
White:
That is all right.
H.M.Jr:
But you ought to be able to get that.
Kuhn:
I will get it.
Regraded Unclassified
81
- 27 -
H.M.Jr:
And on the meat, I wonder if they couldn't
put that in to so many more cattle?
Kuhn:
Well, it depends on what kind of meat.
H.M.Jr:
Well, they can give it and who is going to
guess about it? Have you tried Dr. Stanley
over there?
Kuhn:
I tried Doctor--
H.M.Jr:
Could you call up Ezekiel and ask him? He
will get out his slide rule and give us an
answer.
White:
Sure he will.
Kuhn:
Quickly?
White:
He will get it out and Bea will correct it
and they will strike an average.
H.M.Jr:
Will you?
White:
Yes, right away. Meat and eggs.
H.M.Jr:
When we have finished this, you can read that
over to him.
White:
That is a very effective paragraph because
each farmer will immediately--
H.M.Jr:
I would read him the whole thing and tell
Ezekiel we have got to have it in an hour
and by the time you get this first stuff--
White:
I will go right out and find it.
H.M.Jr:
Wait a minute. While I am getting Barnard
in you can do that, Harry.
White:
Yes.
Regraded Unclassified
82
- 28 -
Kuhn:
We are on page eighteen, middle of page
eighteen.
H.M.Jr:
I think you ought to do that. I really do.
I think that is the whole thing.
Kuhn:
I think it improves it already--
White:
If they translate that into actual terms,
that means something to the farmer.
H.M.Jr:
Do you want my page?
White:
No, I know what is necessary.
H.M.Jr:
"There need be and there must be," that is
kind of clumsy. "There need be and there must be
no repetition," is that right?
Kuhn:
You can leave the "and" out. "There need be,
there must be no repetition."
H.M.Jr:
Isn't it stronger to say, "There must be no
repetition"? I would leave out the "need."
I have got to work myself up to a fever here.
"There must be no need - no repetition of 1920
and '21 which, as you know - which, as you and
I know."
Kuhn:
Good. You are a farmer talking to them.
H.M.Jr:
"... which, as you and I know from bitter
experience - which as you and I know were
black years for the American farmers.'
Now, instead of "black years," would you
say almost hopeless years"?
White:
"Black" is more - if it is true of 1920.
H.M.Jr:
Well, Wallace is very insistent on this.
Regraded Unclassified
83
- 29 -
Kuhn:
You talked in the preceding sentence about
misery and darkness, and then you talk
about black years.
H.M.Jr:
"The opportunities ahead of free people are
unlimited. The future of a free people is
bright if we only have the wisdom to use
those opportunities well."
Damn it, Ferdie, give me 8. last sentence. I
don't like that.
White:
I don't like that last sentence either. It
is kind of 8. let-down.
Kuhn:
Let me make 8 suggestion. Take this whole
paragraph on page eighteen where you say,
"If We could provide & minimum food standard
for everyone, you see, that middle paragraph
there. "And our farm lands have the capacity
to provide it - there would be a greater
length of life for all our people." Stop.
That would be the last thing in your speech.
H.M.Jr:
That is much better.
Kuhn:
Would that do it? It will read: "Certainly
there need be no agricultural misery. There
must be no repetition, which as you know was
8. black year, if we can provide a minimum
food standard - " or "if we provide a minimum
food standard for everyone, there will be
less illness.
H.M.Jr:
Someone here, Bullitt today, was criticizing
the fact, for instance, that Stalin and
Churchill all say the worst is over with and
so forth and so on. I say, "We are not head-
ing into a period of misery and darkness."
I think we are, but I think we are going to
come out of it when the war is over.
Regraded Unclassified
84
- 30 -
Kuhn:
Well, by period you mean - most people mean--
H.M.Jr:
I would stop right there.
"If we could provide a minimum food standard
for everyone, our farm land has the capacity
to provide it. There would be less illness
due to faulty nutrition, there would be a
greater output from our workers, and there
would be a R greater length of live for all
our people.
Kuhn:
Then you don't want to say anything about
1920 and '21? I would just take the little
paragraph you like about "all our people" and
make that your last paragraph and cut out the
last two sentences, you see,
H.M.Jr:
What are the last two sentences?
Kuhn:
"The opportunities ahead of free peoples and
the future of free peoples," and all that.
H.M.Jr:
Where are you going to put those others?
Kuhn:
The other goes in right after it.
H.M.Jr:
You mean ahead?
Kuhn:
This little paragraph here, "It would also
increase steadily as population increased.
I have never been one of those who believe,"
and so forth. "Certainly there need be no
misery, see. "There must be no repetition
of '20 and '21. If we provide a minimum
food standard, there will be less illness,
greater output and a greater length of life
for all our people."
White:
You could say, "A greater demand for foodstuffs
means a prosperous farmer and a prosperous
farmer means--"
Deeraded
85
- 31 -
H.M.Jr:
Wait a minute. "There must be a greater length
of life for our people and a real future for
the farmers of America," something like that.
See?
Whiter
"An assured future."
H.M.Jr:
And an assured future."
Kuhn:
Yes, you can do it this way. "If we provide
a minimum food standard for everyone, and our
farm lands have the capacity to provide it,
there will be less illness due to faulty
nutrition, a greater output from our workers,
8 greater length of life for all our people,
and an assured future for the farmers of
America.
H.M.Jr:
Well, "for the American farmer."
Kuhn:
Is that what you meant?
H.M.Jr:
Yes, "For the American farmer.'
Kuhn:
Is that what you meant?
H.M.Jr:
Yes. Now, what I will do is give you a breath-
ing spell. I want to listen to Mrs. Morgenthau.
I will see Barnard, and you fellows at a
quarter of four. That gives Harry a chance
to phone and gives you a chance to do a little
work and it gives you twenty-five minutes and
you come back and we will do Barnard at 8
quarter of four.
Regraded Unclassified
at meeting 11/13/41-2:35
DRAFT OF SECRETARY MORGENTHAU'S ADDRESS
86 P.M.-
TO THE NATIONAL GRANGE
WORCESTER, MASS., NOVEMBER 15, 1941
Today, a.8 never before, it is an honor to be an
American farmer. The future health and happiness of
all the world depends, as never before, upon the
American farmer's work and skill and enterprise. I
am very happy, therefore, to have this opportunity of
speaking to a. great audience of American farmers, and
to accept at your hands, Mr. Taber, this pin that cer-
tifies to twenty-five years' membership in the National
Grange.
To anyone who lives and works with the good earth
it brings a new pride year after year to SOW the new
crop, to tend it carefully, and to harvest it at last.
Speaking to you as a fellow farmer rather than as
D-C
Regraded Unclassified
87
- 2 -
Secretary of the Treasury, I can assure you that
one of the great satisfactions of my life is to see
the trees that I planted on my own farm twenty-five
years ago grow and blossom and bear good fruit. And
during these twenty-five years it has meant a great
deal to Mrs. Morgenthau and to me to be members of
the Wicopee Grange, near our farm in the Hudson Valley.
The local Grange has given us a place to discuss com-
mon problems with our neighbors, and it always has
given us the feeling that we are a part of this great
national organization which for seventy-five years has
been the friend of every farmer in the United States.
I shall wear my membership pin as a badge of honor.
D-C
88
- 3 -
I had intended to remind you at the very start
of this talk of the danger of inflation as it might
affect the farmers of the United States; but your
National Master has already spoken of the danger, and
has done it eloquently. May I quote a few sentences
of what he said?
"Next to the suffering on the battlefield and
the anguish of those at home, inflation is one of the
calamities of war
...
How could any farmer forget
1921 and '22, or 1932 and '339 This is one time when
we dare not forget that wild inflation means economic
disaster. Inflation endangers all forms of wealth,
every bank deposit, and, in fact, all of the established
accumulations of generations."
D-C
Regraded Unclassified
89
- 4 -
One of the most effective ways to fight infla-
tion is to produce more of the goods which do not
compete with our defense industries for materials or
for labor. That means, quite simply, to produce more
food in the interests of the consumer and the farmer
as well. I should like to pay my tribute to the work
of Secretary Wickard and the Department of Agriculture
in the past six months in encouraging our farmers to
grow more of the right kinds of food -- more dairy
products, vegetables, fruits and meats, the so-called
protective foods on which our national well-being de-
pends.
The opportunity ahead of American farmers at this
time is 80 vast that very few of us, I think, can
D-C
90
- 5 -
conceive it. We have prided ourselves on being the
best fed nation in the world. Europeans who have
come to our shores have marvelled at the stacks of
fruit and vegetables in our shops and at the abundance
of the diet available to American families. Yet we
are not as well nourished as outward appearances might
seem to show. Only the other day the President of
the United States expressed his sense of shame at the
high percentage of recruits for the army who had to
be rejected. Nearly 50 percent of two million men
examined for selective service were found to be unfit,
and of those rejected a large number were suffering
from dental defects or other ills that probably were
due to faulty nutrition. The President was not over-
D-C
91
- 6 -
stating when he described these conditions as an in-
dictment of America.
A few years ago I took part in the conception
and inception of the food stamp plan, which was an
attempt to bring some of our surplus commodities into
the hands of the underprivileged. The plan was begun
at a meeting between Vice President Wallace, Mr. Harry
Hopkins, Doctor Thomas Parran, and myself, In line
with this effort Doctor Parran, who is now Surgeon
General of the United States and was then the head of
the Public Health Service, undertook an investigation
into food-buying habits and nutrition in the District
of Columbia. Here was a compact area where per capita
wealth was higher than that of any State, yet Doctor
D-C
92
- 7 -
Parran found widespread under-nourishment, especial-
ly in milk, green vegetables and citrus fruits. I
suspect that similar investigations in other parts
of the country might yield a similar result even to-
day, when our public is more vitamin-conscious than
when Doctor Parran's study was made.
This is a challenge that we as a government, and
we as farmers and consumers, must meet together. The
Government can help by encouraging and promoting the
production and use of the right kinds of food, and by
heavier taxation of those goods which are not essen-
tial to health and strength. But farmers can do by
far the biggest part of the job by producing more --
by diverting land and effort to the production of milk,
D-C
Regraded Unclassified
93
- 8 -
butter, eggs, pork products, fruits and vegetables.
It must no longer be said of this rich country of ours
that millions of our people still go without the food
that is necessary to good health and good morale.
Side by side with this challenge that confronts
us at home, there has come a still more urgent and in-
sistent call from across the sea. The British people,
as you know, have had their chief sources of food
supply cut off either by invasion, as in the cases of
Holland and Denmark, or by shipping shortages, as in
the cases of Australia and New Zealand. The British
today are living under conditions of siege. Their
island home is one vast fortress, and every man, woman
and child is in the garrison, fighting our fight as
D-C
94
- 9 -
well as their own. It is our responsibility, and
our high honor, to see that they are fed, not with
a trickle of occasional shipments, but with enough
warming and sustaining food to enable them to carry
on, with health and morale unimpaired
American farmers are already doing a mighty work
in sending food to England in her time of greatest
need. Secretary Wickard has already told you of the
huge amounts that we are pledged to send during 1942.
It will help us, I think, to produce those vast quan-
tities if we always remember that our food shipments
are bringing renewed strength and renewed courage to
those who are in the front line of freedom.
D-C
95
- 10 -
That is an achievement which must be continued
throughout 1942 and as long as the war may last.
It is probably the greatest single call ever made
upon American farms. If you add it to our own
requirements, it is a call that will use all of our
ingenuity, all our effort, and all of the experience
that we have gained in recent years, if we are to
meet it successfully.
In this effort the American farmer is as vitally
important as the aircraft worker who builds a new
bomber or the shipyard worker who helps to send a
new battleship on its way. Knowing what I do of the
greatheartedness of our farmers and of their capacity
for hard work in a great cause, I am confident that
D-C
Regraded Unclassified
- 11 -
96
that call will be answered and that England will be
able to win the victory that is our own hearts' desire.
But after the victory -- what then? After the
Allies win this war -- and they are going to win it --
the opportunity for American agriculture and the need
for colossal production of the right kinds of food
will be much greater than it is even today. Where
tens of millions in England are depending on us now,
hundreds of millions throughout the continents of
Europe and Asia will be stretching out their hands
to us when the war is over.
I am in favor of seeing that the credit of the
United States is used to do the humanitarian thing,
the economic thing, the sound thing, in putting the
great food production of the United States into the
D-C
Regraded Unclassified
- 12 -
97
hands of the hungry millions. I am one of those who
believe that in the long run, as Vice President Wallace
has said, service to humanity is economically sound.
I am thinking not only of the actual hunger that
will be sure to exist when the next Armistice comes,
but also of the ruined agriculture of many countries
that depended upon farming for their very existence.
I am thinking of the herds that have been slaughtered
in Denmark and Holland which lived on their exports
of dairy products. I am thinking of the scorched
earth in the great farming areas of Russia, where
farm houses and farm implements have been destroyed
in the past five months on a scale unparalleled in
all history. There will be a lack of seed, a lack
of feed for livestock, and in many countries a lack
D-C
Regraded Unclassified
- 13 -
98
of manpower to tend the farms. Again, as in the past,
American agriculture can save Europe from hunger and
from the anarchy that comes with hunger on such a
scale.
It is true, as the President said recently, that
our first job now is to win the war rather than to
concentrate on blueprints of what is to follow. I
agree with him, yet I think there is one great fact
about the coming democratic order in Europe which we
should do well to remember now. That is that great
masses of decent hardworking men and women will no
longer tolerate the economic insecurity which fur-
nished so much of the fuel for the political turmoil
of the past 25 years. They will be willing and glad
D-C
99
- 14 -
to pledge themselves to greater service for their
country, but they are also going to demand certain
elementary guarantees for a decent life, and I think
they will be right and amply justified in their
demand. If we are to build a better world -- and that
goes for our own country as well as for those abroad --
we shall have to recognize that the citizen should be
guaranteed a minimum standard of food with which he
can live the life of a free man. My own feeling is
that we should guarantee to every man, woman and child
the right to have enough milk and butter, enough fruit
and vegetables, enough of the protective foods of all
kinds, 80 that he can be fit to do his part in the
world of tomorrow.
D-C
- 15 -
100
After all, the governments of free countries
decided about 100 years ago that every citizen was
entitled to police and fire protection as a matter
of right. Our police departments and fire depart-
ments were established with State funds to give to
the citizen an essential service which he could
not afford to provide for himself.
We in America decided about 75 years ago, about
the time the National Grange was founded, that every-
one was entitled to a decent education as a matter
of right, and we established the greatest free
school system in the world to provide that right.
We found that it was not fair, and that it did not
pay us as a. nation, to permit illiteracy on a vast
D-C
Regraded Unclassified
- 16 -
101
scale and to enable only those with wealth or other
advantages to have a proper schooling. We have
provided that schooling with State funds, and nobody
would dream of abandoning it now.
We decided eight years ago that every citizen
should have protection against unemployment or old
age or disability, and we enacted a whole series of
historic measures to help him obtain that protection
as a matter of right. We found that it was not fair
and that it did not pay us as a nation to leave
millions of our people at the mercy of economic cycles
over which they had no control. These H changes, like
the others, have been accepted, and I doubt whether
any except the most uncompromising Tory among us
would abandon them now.
D-C
102
- 17 -
What I am suggesting would merely carry the
process further. I speak of it today not as a dream
but as something which I am convinced must follow,
not only in this country but all over the world, if
we are not to revert into an endless barbarism of
wars and revolutions. It is our best hope of ensuring
the survival of the way of life which we treasure in
common with other free peoples throughout the world.
I have suggested it to this particular audience
because I want you to consider for a moment what a
tremendous opportunity it brings to American farmers.
If our people and other peoples are to be guaranteed
a minimum standard of nutrition, which I believe is
D-C
Regraded Unclassified
- 18 -
103
their right, then we in this country will have to
produce the food that will make that minimum standard
possible. If we were to guarantee a minimum in the
protective foods for everyone in the United States
it would mean a vast increase in our consumption.
If everyone in the United States were to have the
very minimum needed for good health and decent living,
it would require an increase of almost 50 per cent in
our production of milk and milk products alone. It
would mean that the farmers would have a greatly in-
creased market here at home -- the best kind of market,
for it would not be subject to foreign tariffs, and
it would also increase steadily as population increased.
If we could provide a minimum food standard for
everyone -- and our farm lands have the capacity to
D-C
Regraded Unclassified
- 19 -
104
provide it -- there would be less illness due to
faulty nutrition, there would be a greater output
from our workers, and there would be a greater
length of life for all our people.
I have never been one of those who believe that
we are heading into a period of misery and darkness.
Certainly there need be no agricultural misery in
our country after this war. There need be and there
must be no repetition of 1920; which, as you will
know from bitter experience, was a black year for
American farmers. The opportunities ahead of free
peoples are unlimited. The future of free peoples
is bright if we only have the wisdom to use those
opportunities well.
D-C
These mere only
- 14 -
new Draft pages of Fouth
to pledge themselves to greater service for their country, 105
but they are also going to demand certain elementary
guarantees for a decent life, and I think they will be
right and amply justified in their demand.
In order to build a better world -- and that goes
for our own country as well as for those abroad -- we must
not only call upon the citizen to give greater service as
8. duty to his community, but we must recognize his right
to have a minimum standard of food with which he can live
the life of 8. free man. In return for the greater duties
of citizenship, I believe that after the war we should
guarantee to every man, woman and child the right to have
enough milk and butter, enough fruit and vegetables, enough
of the protective foods of all kinds, 80 that everyone can
be fit to do his part in the world of tomorrow.
Regraded Unclassified
- 15 -
106
We in America decided about 75 years ago, about the
time the National Grange was founded, that everyone was
entitled to a decent education as a matter of right, and
we established the greatest free school system in the world
to provide that right. We found that it was not fair, and
that it did not pay us as a nation, to permit illiteracy
on a vast scale and to enable only those with wealth or
other advantages to have a proper schooling. We have provided
that schooling with State funds, and nobody would dream of
abandoning it now.
We decided eight years ago that every citizen should
have protection against unemployment or old age or disability,
and we enacted a whole series of historic measures to help
him obtain that protection as a matter of right. We found
Regraded Unclassified
- 16 -
107
that it was not fair and that it did not pay us as a nation
to leave millions of our people at the mercy of economic
cycles over which they had no control. These changes have
been accepted, and I doubt whether any except the most
uncompromising Tory among us would abandon them now.
What I am suggesting would merely carry the process
further. I speak of it today not as a dream but as some-
thing which I am convinced must follow, not only in this
country but all over the world, if we are not to revert
into an endless barbarism of wars and revolutions. It is
our best hope of ensuring the survival of the way of life
which we treasure in common with other free peoples through-
out the world.
I have suggested it to this particular audience
because I want you to consider for 8. moment what a tremendous
- 17 -
108
opportunity it brings to American farmers. If our people
and other peoples are to be guaranteed a minimum standard
of nutrition, which I believe is their right, in return for
the greater service which I believe is their duty, then we
in this country will have to produce the food that will
make that minimum standard possible.
If everyone in the United States were to be guaranteed
the very minimum of the protective foods needed for good
health and decent living, it would mean a vast increase
in our consumption and our farm production. That minimum
for every adult was recently set by the National Nutrition
Conference at 41 quarts of milk per week, one egg 8. day,
one serving of meat a day, and two daily servings of vegetables
and two of fruits.
If we were to attain such a minimum goal, if we were
to recognize it as a right that belonged to everyone, it
- 18 -
109
would mean an increase of at least forty percent in our
present consumption of milk and milk products alone. It
would mean a doubling of our present consumption of leafy
vegetables and of the fruits that are rich in vitamins.
It would mean that the farmers would have 8. greatly increased
market here at home -- the best kind of market, for it would
not be subject to foreign tariffs, and it would also increase
steadily as population increased.
If we could provide a minimum food standard for
everyone -- and our farm lands have the capacity to provide
it -- there would be less illness due to faulty nutrition,
there would be 8. greater output from our workers, and there
would be a greater length of life for all our people.
I have never been one of those who believe that
we are heading into a period of misery and darkness.
Certainly there need be no agricultural misery in our
Regraded Unclassified
- 19 -
110
country after this war. There need be and there must be
no repetition of 1920 and 1921, which, as you know from
bitter experience, were black years for American farmers.
The opportunities ahead of free peoples are unlimited. The
future of free peoples is bright if we only have the wisdom
to use those opportunities well.
111
November 13, 1941
3:50 p.m.
RE NON DEFENSE SPENDING
Present:
Mr. Kuhn
Mr. Barnard
Mr. Heffelfinger
Mr. Schwarz
Mr. White
H.V.Jr:
Now, does this have any changes? Shall I
read them all?
Heffelfinger: There are a few.
H.M.Jr:
"There are certain classes of non-defense
expenditures which consist in large part
of construction projects, such as reclama-
tion work, river and harbor work, road building,
etc. Reductions in activities for these purposes
will have multiple advantages, as follows:
(1) Reducing non-defense expenditures.
(2) Releasing man power needed for defense
plants.
(3) Increasing the supplies of materials and
equipment which can be devoted to defense
efforts.
(4) Building up 8 back-log of projects for
continued employment in the postwar period.
"There are other instances where there appear
to be overlapping and duplication of effort
and expenditure of funds.
Regraded Unclassified
112
- 2 -
"In other cases, the Government undertook pro-
grams aimed at correcting or adjusting certain
inequitie a which had grown up in our economic
system. Some of these inequities have been
eliminated and circumstances which made the
initial program urgent have altered. Never-
theless, large sums continue to be appropriated
and spent under such programs despite the sharply
reduced justification for such expenditures
during the period of defense expansion."
Heffelfinger: Mr. White suggested that in there. We didn't
have that in there this morning.
H.M.Jr:
Did he put that in, "despite the sharply reduced" --
Barnard:
He and I tried to wangle out the same idea, but
it is an awkward phrase.
(Mr. Schwarz entered the conference).
H.V.Jr:
Sit down and listen, Chick, so you will get the
hang of it. I have got Byrd's permission.
Schwarz:
For an open meeting?
H.M.Jr:
No, that I will stay behind afterward. Just
listen to this. I don't like the word "sharply".
Burnard:
Why not cut it out? It is strong enough without
it, isn't it? "Despite the reduced justification."
Kuhn:
Or "despite the lessened need."
Barnard:
All right.
H.M.Jr:
That isn't as strong. Did Harry put in the
words "sharply reduced"?
Barnard:
Yes.
Heffelfinger: We tried writing everything on sharply.
Regraded Unclassified
113
- 3 -
(Mr. White entered the conference).
H.M.Jr:
Harry, I am amazed at this sentence of yours,
"despite the sharply reduced justification for
such expenditures.
White:
Page what?
Heffelfinger:
Near the bottom of page one.
H.M.Jr:
"Despite the sharply reduced"?
White:
Yes. That is, these large sums are continuing
to be spent, even though the justification
is much less.
H.M.Jr:
You say "sharply reduced".
White:
Well, it isn't a very happy phrase, "sharply
reduced justification". "Sharply reduced need",
if you like.
H.V.Jr:
You want to leave "sharply" in, do you?
White:
Yes, because I think it is sharply reduced
justification. There is a four million increase
in employment in one year.
H.V.Jr:
All right, I am just amazed at you. You even
go further than I would, you old conservative
you.
White:
Well, there are some other sentences toward the
end on the other side.
H.M.Jr:
"Greatly reduced". All right, Barnard?
Barnard:
Yes.
Heffelfinger: Do you want to use that word "economy suggestion"
on each one of these pages?
Regraded Unclassified
114
- 4 -
H.M.Jr:
I like that.
Kuhn:
Would you like to head the whole thing, "Economy
Suggestions Submitted by Secretary Morgenthau
to the Joint Congressional Committee"?
H.M.Jr:
Yes.
Kuhn:
On such and such a date.
Thite:
I think it is - I would like it without the
word "economy", particularly if you have it
in the title.
H.M.Jr:
Are you willing to have it in the title?
White:
Yes, it is all right in the title, because
that is what the burden of the whole piece is,
but to keep repeating it this way --
H.M.Jr:
then let's have it - is it a little like rubbing
it in?
White:
It is like high pressure salesmanship of
advertisers. I don't know.
Barnard:
I would put it in. It needs high pressure
salesmanship on this job.
White:
O.K. It is just a matter of feeling.
Earnard:
We won't have anything done without it.
H.W.Jr:
In the first place, let's have it in the
title instead of the word "general".
Kuhn:
"Economy suggestions submitted by Secretary
Morgenthau to the Joint Congressional
Committee."
H.V.Jr:
That is right.
Regraded Unclassified
115
- 5 -
White:
Why not merely "Reductions for non-defense
expenditures submitted by" --
Kuhn:
They were. They were only suggestions.
H.M.Jr:
"Suggestions for the reduction in non-defense
expenditures submitted by" - either one.
Well, wait a minute. It is an important
thing.
Barnard:
No. "Economy". That is the word the country
is thinking of, "economy"
Heffelfinger:
Of course you get non-defénse in the name of
the committee.
Kuhn:
"Joint Committee for reduction of non-defense
expenditures." I would put it in the title,
Mr. Secretary.
H.M.Jr:
All right. And I like it down through. I
like it through.
Heffelfinger:
Of course each of these pages can almost stand
by itself.
H.M.Jr:
That is right.
Barnard:
Well, if somebody is going to take out some
of these pages and not the others. The news-
papers will.
H.M.Jr:
That is right. I like it. You don't want to
say after this page two, inasmuch as this is
a matching proposition most likely it would mean
that a corresponding amount by the states would
be dropped? Because it is a matching proposi-
tion.
Barnard:
That is right, it is a good point.
Regraded Unclassified
116
- 6 -
H.M.Jr:
I mean ahead of that, you see, right in there,
inasmuch as it is a matching proposition, the
result would most likely be that most states
would save an equal amount. You get that.
My language isn't good, but it is B. matching
proposition.
Heffelfinger: That is right.
H.M.Jr:
Unless you tell these newspaper men, spell it
out to them, they don't know it.
White:
On these expenditures, highway expenditures of
WPA, are those WPA producers?
Heffelfinger: Yes.
White:
For the money that they get? Does that mean that
if you were to reduce all WPA receipts by that
much?
Heffelfinger: Of the money WPA spent last year, four hundred
eighty-five million was on streets, roads,
highways and so forth.
H.M.Jr:
WPA spent or received?
Heffelfinger: No, they spent from the appropriated monies.
White:
Well, they spent them in wages, didn't they?
Heffelfinger:
Wages and material.
H.M.Jr:
Then this is a reduction in WPA, not in roads?
Heffelfinger; Well, you see WPA's money is spent for roads
and different things.
White:
I don't know if I understand that.
Heffelfinger: Well, WPA spent a billion and some million
dollars last year.
Regraded Unclassified
117
- 7 -
White:
Well, they spent a lot for tennis courts and
a lot of other stuff.
Heffelfinger: But of that billion plus, four hundred eighty-
five million went to roads.
Kuhn:
Don't they spend some on rivers and harbors?
Heffelfinger: Yes, things of that sort.
White:
Then, the point is that you didn't want
the rolls and that is why you had WPA. You
wanted to have WPA and they had to do something,
so they built roads.
H.M.Jr:
I don't get what you are driving at.
White:
If I understand this correctly, what this
would seem to imply, you can break down
all WPA expenditures into highways, and I
suppose into --
Heffelfinger: This is the breakdown, highways, roads, and
streets, public buildings, housing projects,
public recreation facilities, conservation
work, electric utilities and water and sewerage
systems, education for special projects, mis-
cellaneous. Their whole program falls in one
of those categories.
White:
They are all unnecessary.
Heffelfinger: Well, we are not touching on the WPA here, but
when we say we spent five billion eight hundred
million in roads that includes what WPA spent
for roads and to make it comparable --
H.M.Jr:
That is right.
Heffelfinger: Otherwise you would have to reduce the totals.
Kuhn:
Anyway, you are talking about a saving for the
year 1944, Harry.
Regraded Unclassified
118
- 8 -
White:
I don't know, I should think the mere fact
that WPA people worked on roads, that it
wasn't because there was an appropriation
for roads, it was an appropriation for WPA and
part of WPA expenditures, part of the labor --
Heffelfinger: For example, last year the Public Roads Adminis-
tration spent a hundred and seventy-four million for
roads, and WPA four hundred and sixty. If
you cut out public roads, a hundred and seventy-
four, the regular road program, you have got
the WPA into the picture. In other words,
in ten years the WPA spent three and a half
billion dollars for roads and Public Roads
Administration only spent two and 8 quarter.
White:
Is there this difference? Maybe I miss the
point completely. But in the one case you have
got an appropriation for highways, for roads.
Heffelfinger:
That is right.
White:
You want to reexamine those and take what is
necessary. You have got an entirely different
category of expenditures, namely, to WPA and
they make the best possible use they can of them,
but those aren't the things that you are consider-
ing, I take it, in this arrangement.
Heffelfinger: No, but we show how much we have spent for
roads and how much is estimated next year for
roads. Unless you want to reduce that five
billion eight --
White:
You see, what the implication here is, what it
seems to me to be, is that you examine all the
expenditures of the WPA and if these rolls
are not necessary you cut out the WPA expenditures.
Now, I thought the WPA was going to be left out
of this. It could be 30 done by saying these
expenditures do not of course include highways
which were built with WPA labor.
Regraded Unclassified
119
- 3 -
H.M.Jex
Well, Harry, the intention wasn't to do what you
are afraid We are doing, but now that you have
pointed it out, I am very glad to do it in this
left-handed way. Could I be any more honest
than that?
White:
No, no, that is all right.
H.V.Jrt
That wasn't my intention, I didn't tell them
to put it in, but now it is in here. I am
willing in a left-handed way to do it, because
that points the way. If we cut out the one
thing, well, we spend six hundred and fifty-
nine million dollars' worth --
Kuhn:
But the saving isn't until 1944 fiscal year,
anyway.
Heffelfinger:
lie speak of the savings on Federal highways,
but ne make no reference to VPA. Now, with
their cut in their WPA program this year --
E.M.Jr:
Bill, I take it you didn't intend to do
this, at least I didn't tell you to, but
in a left-handed way I would point this much to
WPA.
white:
Yes, that is what you do here all right.
H.M.Jr:
I mean, that is what you are afreid of?
White:
Yes, because the implication here is that you
are recommending that that be cut and I thought
VPA expenditures were going to be out, but
if you are willing to put them in --
R.M.Jri
Well, I am willing to put them in that much.
Meffelfinger:
You started in with your argument, we have spent
nearly six billion dollars for public roads.
To follow that out, you have to put that in,
but if you want to start out and say we have
spent two and a quarter billion --
Regraded Unclassified
120
- 10 -
H.M.Jr:
I want the overwhelming figure of five
eight, and I can't get it without WPA.
Harry White is pointing out something which
wasn't intentional, but I am very glad it
is there.
Heffelfinger:
I didn't have that WPA in the first draft.
I put it in this morning.
Kuhn:
WPA doesn't suffer any reduction.
White:
The Secretary sees the point. It is settled.
H.M.Jr:
We are - we try to be honest around here.
Next? Now, economy suggestions and so forth.
You admit that, is that it, 'with the emphasis
during the present to employment in defense
occupations."
I am reading on this page.
"Its primary function is the vocational train-
ing of youth with the emphasis - " the emphasis
should be in.
Heffelfinger: No, they are emphasizing at present their
defense, but the Office of Education has
four times more money for defense than the
regular.
Kuhn:
Do you like the phrase "with emphasis during
the present to employment"? or "with present
emphasis on employment in defense occupa-
tions"?
H.M.Jr:
That would be smoother.
"A new Bureau of Defense Training." I would
like that "Bureau of Defense Training" under-
lined by mimeograph.
Regraded Unclassified
121
- 11 -
Heffelfinger: Now, Mr. White suggested 8. further para-
graph.
White:
Instead of the last sentence here on this
page.
H.M.Jr:
I would go al ong with that but I would question
the last sentence. It kind of weakens the
whole thing, that last sentence.
Kuhn:
It is apologetic.
H.M.Jr:
I think it is good, all except the last
sentence.
Harry, an hour ago I was doing the one thing
and the other thing - you know, you are deal-
ing with two different people.
White:
Yes. (Laughter)
H.M.Jr:
I will take that as it is leaving off the
last sentence. If you say it on this, you
have got to say it on everything. I am going
to take care of youth by giving them more
eggs and grassy fruits.
White:
You can't give them more eggs. (Laughter)
H.M.Jr:
I listened to Mrs. Morgenthau, and the thing
that stood right out - it was terribly funny -
you say, "and the people from Europe should
stretch their arms across for more eggs,
meat, and so forth and so on. She said that
right in the speech.
Kuhn:
She said that in her speech?
H.M.Jr:
Sure.
Kuhn:
I wonder where she got it.
H.M.Jr:
But right out in the middle of it. Had you
Regraded Unclassified
122
- 12 -
forgotten that she said that?
Kuhn:
It isn't copyrighted. It is all right.
H.M.Jr:
It is between husband and wife. She said
it first.
Now, this table is important. "Government
payments." Damn it, you still only give me
six hundred fifty million.
Heffelfinger: That is accounted for, Mr. Secretary, by the
fact that in the entire farm program are
expenditures for this disposal of surplus
commodities and things.
H.M.Jr:
Who does that go to?
Heffelfinger:
That is paid jobbers and middle men. It
doesn't go directly to the farmer.
H.M.Jr:
All right.
Barnard:
But it is already in the farmers' income.
H.M.Jr:
All right. "Thirteen billion."
"Net income from Agriculture." What is
the eight billion six?
Heffelfinger:
The boys state that you have to relate the
farm income to a net basis to make it com-
parable to the national income.
Kuhn:
I think the last two columns are wonderful.
They take the argument right out of the
farmers' mouth.
H.M.Jr:
Which two?
Kuhn:
Where you show that though the net income from
Regraded Unclassified
123
- 13 -
agriculture has declined somewhat since
1937, the percentage of total population
represented by farmers has gone down more
substantially.
H.M.Jr:
Which one - which column are you looking at?
White:
It doesn't look very impressive.
H.M.Jr:
Are you going to use eight billion six?
White:
I think we had better use & percentage figure.
Barnard:
I don't think you want to use 8 table in any
publicity. This is to back up your general
statements which are quoted in here.
H.M.Jr:
This is all right. The net income from
agriculture, I don't think I want to use
that.
Heffelfinger:
If you want to relate it to national income,
the boys in Research state that you have got
to use the net.
H.M.Jr:
I don't want to use that middle column, you
see.
Now, "Farm population as a percentage of
total population."
White:
I have another suggestion. Since you are
going to use so little, isn't it better to
confine yourself maybe to just two figures,
what the farm - cash farm income was in '32
and what it is in '41, what it might be in
'42, and then the Government payments, just
for those two years, and total them, and that
will avoid making it appear that you are
giving a complete picture because if you are
giving a complete picture, somebody will
riase the question why didn't you use net
Regraded Unclassified
124
- 14 -
income and so on.
H.M.Jr:
No, Harry, I am sorry. I would use this
table here, see, (indicating) and I would
like to use that, that the farm population
is two percent off.
White:
What is the difference between the gross -
what is that main figure?
Heffelfinger: The gross includes the cost of production,
which is expenses. They take that out of
gross to get another figure, and then they
add to that what is consumed on the farm.
H.M.Jr:
Well, look, let's leave those middle points
out. Wouldn't you, Harry?
White:
I would put - I would put as few figures as
possible.
H.M.Jr:
I like these here from '32 to '42. They show
a steady increase.
White:
But supposing somebody comes back at you and
says that gross income includes what the
farmer has to pay out for seed. What does
that mean? It is gross business, you see.
It isn't income.
H.M.Jr:
Well, there is no reasonwhy not to use the
farm population that has gone down.
Barnard:
But the improvement in conditions as presented
is just the same whether you take the net or
the gross. It is about three times as good
either way.
H.M.Jr:
You are right. Well, I think this is enough,
Chester, don't you think so, to use this and that?
Barnard:
Yes. I agree with Harry, though, you will get
your stuff over if you get two figures that
are strongly contrasted instead of columns.
Regraded Unclassified
- 15 -
125
H.M.Jr:
All right, use thirty-two and forty-two.
White:
That is right. Then you can use the net
income or any figure and it will still show
an increase.
Barnard:
You will find in the text here some increases
of the other figures.
H.M.Jr:
Use thirty-two and forty-two.
Barnard:
I think it is better.
Kuhn:
Then use all five or six tables?
White:
I wouldn't make a table of it.
H.M.Jr:
Use thirty-two and forty-two and how about
the farm population from --
Heffelfinger:
Why not look at the attachment that follows
that?
H.M.Jr:
All right. Tripled it to ten years?
Kuhn:
We could make that sentence, "I believe the
Administration has done a wonderful job for
the farmer in taking his income and tripling
it in ten years.'
H.M.Jr:
Check. Total population of the country,
that is all right.
Barnard:
That comes out of those last columns you
eliminated and I don't think you want them,
but they are the basis of these statements.
Heffelfinger:
If we just use thirty-two and forty-two that
will appear up there.
H.M.Jr:
There does not appear to be any reason to
Regraded Unclassified
- 16 -
126
continue spending at the same rate.
White:
Though it is necessary.
H.M.Jr:
What are you saying, Harry?
White:
It should be "though" instead of "whereas.
Kuhn:
"Although."
H.M.Jr:
This is especially important, and so forth.
Instead of saying "sorely" let's say "is 80
badly needed. TI Of the amount of one billion
dollars already allocated under the Lend-Lease
program for agriculture and industry and
other commodities, about five hundred million
dollars have been allocated for agricultural
commodities.
Agricultural and industrial commodities?
Heffelfinger:
You see, they had 8. limitation under Lend-
Lease for those three groups of commodities.
H.M.Jr:
Why not simply cut that all out and say
about five hundred million dollars have been
allocated for agricultural commodities.
Heffelfinger:
You see, there are three billion dollars total
provided and they have allocated a billion
dollars of that three billion total. Of
the amount they have allocated, half has gone
to Agriculture.
H.M.Jr:
I would simply say about five hundred million
dollars has been allocated for agricultural
commodities. It makes it simpler.
Heffelfinger:
Check.
H.M.Jr:
It sticks out. That is what I want to do.
Regraded Unclassified
127
- 17 -
Will you fix that up, Bill?
E.M.Jr:
Yes.
B.M.Jr:
Check, everybody?
White:
I am afraid you will have to change that
twelve billion dollar figure on farm income.
Somebody will challenge you and you will
just have to back track. It is a gross
income. It is just like the total business
a man does, a corporation does.
Heffelfinger:
Yes. We should have put that down to about
eight and a half.
hite:
Either put eight or say the gross income, if
you like.
E.C.Jr:
Well, it is just as good to talk from three,
two to eight, six.
Barnard:
Yes. It is really the more intelligent way
to put it, isn't it?
H.V.Jr:
I am just as willing.
Heffelfinger:
Good.
H.M.Jr:
If when I get through you are all not too
tired, I would like you to go over it once
more, because I haven't even done half my
mail. I have never been in such a jam in
my life. "Aid to those other groups or
for those other purposes." I would like to
add this. Distinctions should be made in
helping those - wholly inadequate nutrition
and who don't own their own farm. In other
words - Harry, just pay particular attention
to this. I want to get in 8 sentence
there. I am for re-settlement of farms.
white:
Farm Security, isn't it? That cales later.
Regraded Unclassified
- 18 -
138
That is not in this budget, if I understand
it correctly.
It isn't? All right. Well, what does that
mean, aid to other groups for other purposes?
.hite:
Well, we just wanted to make this consistent
with your speech.
-
What does that mean, "and aid to other groups
for other purposes"?
Mite:
Well, you give aid to a lot of - parity
payments, for example, are aid to farmers.
Why not stop there? It could mean anything.
They will say, "What do you mean?" Well, I
don't know what I mean. Put a period after
nutrition.
Whlte:
We will have to change the sentence then.
We can say a distinction should be made between.
And to aid other groups for other purposes.
That might mean - that opens the door wide.
Wite:
No, a distinction should be made on the one
hand - maybe it isn't well stated. You
don't want to include aid to the lowest
income groups from wholly inadequate nutrition
but you do want to eliminate aid to other
groups or for other purposes.
Well, that isn't clear.
It has got to be clear.
That is not clear.
Whiter
Then instead of "a distinction should be made"
I think you should say, "Exemptions should be
Regraded Unclassified
129
- 19 -
made," and then you don't need the rest
and you cut out, "aid to other groups
for other purposes." Exceptions should
be made, of course, for those expenditures.
H.M.Jr:
Yes, for helping the --
White:
Which are for the purpose of helping.
H.M.Jr:
That is all right. Am I going too fast,
Bill?
Heffelfinger:
No indeed.
H.M.Jr:
Well, now, this on the last page doesn't --
Heffelfinger:
Here is the suggestion Mr. White has.
H.M.Jr:
Who wrote these for you, Harry?
White:
I wrote those.
H.M.Jr:
Did you write those?
White:
Yes. Do they seem foreign to me?
H.M.Jr:
I didn't know that you had time.
White:
It only takes a minute.
H.M.Jr:
Well now, I do not refer to the bulk --
White:
There is quite & list in this category.
Heffelfinger:
The bulk of their expenditures are for
rehabilitation.
H.M.Jr:
How much is that amount?
lleffelfinger:
Well, they had A hundred million and they
carried over some thirty-five million. There
Regraded Unclassified
130
- 20 -
is about a hundred and thirty-five million
available this year for loans.
H.M.Jr:
If you could say this ^gain, use the same
word that you did in the other thing to make
it perfectly plain, something like this. I
draw the same distinction in expenditures for
helping those in the lowest income group, you
see.
White:
And make the same exceptions.
H.M.Jr:
The same exceptions, you see, and therefore I
would like to say something that it should be
under - in other words, bring this thing in.
I like Harry's paragraph but I again want to
say that the man in distress, the man that hasn't
got 8. home, the man that can't borrow enough
money to make a crop, that I think that kind
of fellow should be helped, you see. I don't
think that the Farm Bureau member or the
Grange member who owns his own home and has
always made these things should be continued,
but we have only bought ten thousand farms
for these fellows and loaned to them. I
think we ought to buy a million farms when
the time comes, you see, and give these
fellows a chance to have their thirty or
forty acres or ten acres or whatever it is,
and through the South particularly; and let
these fellows - and the record on them is
excellent. I mean, the record on the rehabili-
tation.
In other words, the rehabilitation program, if
you can get something in there that I am for
the rehabilitation of the lowly farmer, the
poor fellow, the sharecropper, that fellow,
I am for that and it doesn't cost an awful
lot, you see. It doesn't cost an awful lot.
I mean, the hillbilly and the fellow that hasn't
got a home.
131
- 21 -
Gee whiz, if this fellow is going to live,
we have got to have a country of farm
owners, that is the point, you see. We
have got to have a country of farm owners
and all the records show we are having less
and less farm owners and bigger and bigger
farms. Now, if you can get that spirit into
that last paragraph, I would like it.
Now, gentlemen, if you could do this for me,
life would be very sweet.
Mr. Schwarz will not go to bed tonight. He
hasn't done that in a long time.
Schwarz:
This is worth it.
H.M.Jr:
I don't want to wait until the last minute
and all the rest of the stuff. You have got
two jobs. In the mail tonight has to go my
speech and this thing has to be ready for
me at five minutes of ten and not at five
minutes of eleven.
Schwarz:
I will have you a reading copy of this --
H.M.Jr:
Yes, and you ought to have a hundred copies.
Schwarz:
Mimeographed.
Kuhn:
How do you feel about sending it out? Is
it a complication, sending it out to a little
group of leading economic writers on this
subject, columnists and 50 on, 80 that when
this comes out on the ticker they will
have the thing in front of them? You can't
put this on the wire. There is too much of it.
H.M.Jr:
I am for it. Now, Mr. Harry White, do you
mean to say this thing, this program, means
no more eggs, no more milk, no more chicken?
- 22 -
132
White:
No, just the eggs and the meat. Milk and
leafy vegetables, as stated, are accurate
and it sounds to me - but they say their
figures --
H.M.Jr:
But leafy vegetables?
White:
That is all right.
Kuhn:
We had that in. We said we would have to
double our consumption of those things.
H.M.Jr:
Right now the Treasury's biggest question is
how many eggs we are able to eat.
Kuhn:
You missed the show.
H.M.Jr:
May I thank everybody very, very much and
I want to be sure that Schwarz doesn't go
to bed until this is finished tonight, Mr.
Schwarz.
Schwarz:
Mr. Schwarz is sure, too.
Heffelfinger:
We will have some photostats of the basic
tables for the committee members but they
are not to give out. They are all public
figures, as & matter of fact.
H.M.Jr:
That is all right.
Barnard:
What do you want me to do tomorrow?
H.M.Jr:
I want you to go up on the Hill, and you, too,
Harry. If you see that Byrd is doing something,
you can slip me a note. Have you got something
on tomorrow?
White:
No.
Regraded Unclassified
133
- 23 -
H.C.Jr:
I would like you very definitely to go.
I am sure you can make & contribution.
white:
All right. I will be glad to be there.
Heffelfinger:
Should we go prepared for all this general
stuff, like interest rates on the public
debt and everything?
L.S.Jr:
You be ready for everything and when we get
in a pinch Mr. White will give his story
about the sandwich, which takes forty-five
minutes.
Regraded Unclassified
134
AGENCIES SNOULD IN VOCATIONAL ACTIVITIES
America appropriated for 1942
nots-
nated
Adminis-
Expen-
trative
Other
ditures
Activities
Total
1942
(In Millions)
Civilian Conservation Corps ....
$19.2
$227.8
$247.0
8200.0
National Youth Administration:
Asgular
-
5.8
86.0
91.0
90.0
National Defense
3.0
57.0
60.0
60.0
Office of Iducation:
Regular
.9
25.4
29.3
30.1
National Defense
1.1
106.9
108.1
130.8
TOTAL
130.2
$506.1
$536.2
Leonary Purcessions
Fach of the above agencies is under the Federal Security Agency, and
its primary function is the vosational training of youth, with emphasis during
the present to employment in defense occupations.
It would - that the regular activities of the Civilian Vonservation
Corps and National Teath Administration must conflict with the corn important
defense program, and should be aliminated or drastically reduced.
It 1e suggested that all vocational training activities be consolidated
is a new Sureen of Defense Training. Any overlapping functions or duplication
of work could be eliminated and one comprehensive training progres, integrated
with the defense program, could be formulated and administered nore secomisally
than appears possible under the present organizations,
Particularly, it is auggested that grants by the Office of Education
to States and educational institutions be reviewed, I an in sympathy with the
cultural activities made possible by them grants but de W should be
devoting our major efforts to defense they should be put acide,
Regraded Unclassified
TAXIL
135
Reflected in Budget
Expenditures included in the Bodget under the Parm program
which was initiated in 1933, after the catastrophia fall In prices
in 1932, ware designed mainly to neet conditions involving low
prices for farm products, surplus production and loss of exports
markets.
Present conditions are redically different from those
which the l'arm program vas designed to meet,
Major expenditures under the Form program are included
under the following captiens:
(In Billione)
Satimated
Astual
/stual
1942
1941
1940
Purplus Marketing Administration,
and Agricultural "djustment
Administration (Ast of
August 24, 1935).
$240.0
8240.9
$142.6
Soil Conservation and Domestic
Allotment Act
475.0
465.1
605.1
Administration of Sugar Act of 1937
48.0
50.4
48.0
Price /djustment let of 1938 and
Parity Payments
205.0
198.3
215.0
TOTAL
1968.0
1954.7
22031.5
Regraded Unclassified
11/13/41
+
136Y P. 211
OTHERAL
was
There are certain classes of non-defense expenditures
which consist in large part of construction projects, such as
realamation work, river and harbor work, road building, etc.
Heductions in activities for these purposes will have multiple
advantages, as follows:
(1) Reducing non-defense expenditures.
(2) Releasing seo power needed for defense plants.
(3) Increasing the supplies of materials and equipment which
- be devoted to defense efforts.
(4) Building up a back-leg of projects for continued employ-
sent in the poster period.
There are other instances where there appear to be overlapping
and deplication of effort and expenditure of funds.
In other cases, the Government undertook programs admed
at correcting or adjusting certain insquities which had grown up
in our counomie system, Bone of these inequities have been elimi-
nated and sircumstances which made the initial progrem urgants
have altered. Novertheless, large - continue to be appropriated
and spent under such progress despite the sharply reduced justifica-
Mon for each expenditures during the period of defense expension.
1
I shall refer briefly to certain specific non-defense
expenditures which I recomend to the Condittee for its consideration,
Regraded Unclassified
137
+
RECLAMATION PROJECTS
(In Hillions)
Fiscal years 1932 to 1941, inclusive
Total expendi. tures during the 10-year
period (1932-1941) amounted to about .... $880.0
This includes expenditures for irrigation and
water conservation under the Emergency Relief
Appropriation Acts.
Fiscal year 1941 - expended (checks 1ssued)- - 86.0
Fiesal year 1942 - estimated to be spent ... 95.0
It is miggested that all reclamation work be No
emained in the light of our present defense program and its
anticipated acceleration, therever 18 is possible to delay existing
or postpone proposed projects which are not necessary in commestion
with the generation of power for defense purposes, this should be
done,
Regraded Unclassified
138
RIVER AND PARBOR work AND FLOOD CORTROL
(In Villiens)
Fiscal years 1932 to 1941, inclusive
Tetal expendivares during the 10-year
period (1932-1941) ascurated to
-------
$1,870.0
Fiscal year 1941 - expended (ebscke paid) -- - -
219.0
Fiscal year 1942 - estimated to be spent ---
200.0
Secreasion,
It is resegnised that certain river and harber flood
éentrol and seil createn work must continue in the interest of the
lives and safety of our people. Dat all projects which are not
vital from this standpeint or Decessary for definite defense
purposes should be resumined. York on all projects of this
character which cm be delayed or postpaned should be prohibited
and funds heretafore appropriated should be cancelled,
Regraded Unclassified
139
PUBLIC ROADS
(In millions)
Fiscal years 1932 to 19kg includive
Total expenditures during the 10-year
period (1932-1941) amounted to about
$5,800.0
This includes expenditures for highways,
roads. streets, etc. under the Managemery
Relief Appropriation Acts and the Public
Vorks Administration Act of 1938.
Fiscal year 1941 - expended (checks paid):
Regular -
W.P.A., etc.
699.1
Fiscal year 1942- estimated to be spents
Regular
175.0
W.P.A.
Net Available
Fiscal year 1943 - expenditures in this year ware
obligated on or before January 1. 1941.
Fiscal year 1944 - expenditures in this year will
be obligated on or before Jamery 1, 1942
The amount appropriated and being spent in the current fiscal
year covers the Federal-aid highway, grade erossing, etc. authorisation
of $162,000,000 for the fiscal year 1941 and balances of prior years'
authorizations. These expenditures were obligated on or before
Jamery 1, 1940.
Regraded Unclassified
140
- 2 -
Fiscal year 1943
The Act of September 50 1940, contained M authorization of
$139,000,000 for Federal-aid highways, etc. for 1942. Whis authorism-
tion was obligated on or before January 1, 1941, and there is all
obligation on the Congress to appropriate sufficient amounts in the
next fiscal year to pay these obligations. This cannot be avoided.
Fiecal year 19441
The Ast of September 50 1940 contained - authorization of
$139,000.000 for the fiscal year 1943. Under existing 1aw this amount
met be apportioned anong the States not later than Jamery 1. 1942.
After each apportionment specific projects are approved. the approval
of projects constitutes a contractual obligation of the Federal
Government for the payment of its pro rate share of the cost of the
projects approved. This on be postponed.
Name Suggestions
It is engrested that the Congress, by appropriate enostment,
resein& the 1943 highway authorisation. This would result in a retustion
of expenditures for public reads in the fiomal year 1944 (July 1, 1943
to June 30, 1944).
State and legal authorities should be requested to defer
undertaking bev projects, even though allotments have already been mis
for them Other major projects already under my which can be
appropriately discontimed or ourtailed should be
Any DOV reads or enlargement of existing road facilities
required by national defense activities could be spocifically authorised
as defense projects.
Regraded. Unclassified
farm income and population, in relation to actional totals.
1932 - 1942
Grace cash fare income
From fare
Government
Total
Net income from Agriculture
Farm population
Year
marketings
payments
Percent of
- a percentage
($ millions) ($ millions) ($ willions)
Amount
national
of total
($ millions)
income
population
1932
4,682
0
4,682
3,232
8.1
24.9
1933
5,278
131
5.409
3.924
9.2
25.3
1934
6,273
44
6,317
4,507
9.0
25.2
1935
6,969
573
7.542
6,117
11,0
25.1
1936
8,212
257
8,499
6.534
10.0
24.9
1937
8,788
367
9,155
7.341
10.3
24.7 w
1938
7,652
482
8,134
6,144
9.5
24.6
1939
7,861
807
8,668
6,404
9.1
24.6
1940
8,354
766
9,120
6,544
8.6
23.2
1941
10,550
650
11,200
5,600 3/
9.7
22.6
1942
12,350 3/
650 3/
13,000
1/ Notimate, subject to revision.
2/ Setimated by the U. 8. Department of Agriculture.
3/ Approximate.
Sources Agricultural income data from Department of Agriculture: national Income and population date
from the Department of Commerce, except fare population for inter-gensus years which are
Department of Agriculture estimates.
141
Regraded Unclassified
142
1 believe that the Administration has done a wonderful
job for the farmer when it took his income and reined 12, tripled
it in ten years. It 10 estimated that in 1941 the farmer's share
of the total national income will be 20% greater than in 1932,
notwithstanding a reduction of about 205 in the propertion of the
farm population to the total population of the country, Here 11
- necessary through governmental aid to bring the farmer's not
income from three and one-fourth billion dellars up to eight and
one-haif billion dollars or more in 1941, certainly after having
reached this goal there does not appear to be my reason to ecotime
spending at the sine rate. This is especially important step the
may we are using for this purpose is sorely needed for
and land-lease aid, The fareer is getting his share of the total
expenditures made by the Government as is indicated from the fact
that his income is expected to reach more than twelve billion
dollars next year. of the amount of one billien dollars already
allocated under lend-lease program for agricultural, industrial
and other commedities, about five hundred million dollars have
been allocated for agricultural commodities. In view of all
these circumstances I feel at this time that we could well
afford to make drastic outs in our agricultural expenditures.
A distinction should, of course, be made between these
expenditures which are for the purpose of helping the 1 cwest
income group which suffers from wholly imadequate natrition, and
aid to other groups or for other purposes.
Regraded Unclassified
143
FARM PROGRAM
Not reflected in Delays
There are other plasse of the Parm program involving loans for
rural rehabilitation, farm tenney and rural electrification. In 1941
and 1942 expenditures for these purposes have been shifted from the
Budget and transferred to the R.F.O., which has been authorized w name
funds to the Secretary of Agriculture to enable his to make loans.
Activities of this character are as follows
Twenty
R.P.O.
Budget
Time
Expenditures:
Farm Security Administrations
Fiscal year 1940
$150.5
Fiscal year 1941
62.2
$111.3
Fam Tenant Acts
Fiscal year 1940
42.8
-
Fiscal year 1941
27.3
29.4
Rural Mestrification Administrations
Fiscal year 1940
38.0
Fiscal year 1941
24.2
36.0
Estimates for 19421
7am Security Administration
60,0
134,0M
Farm Tenant Act
7.0
72.04/
Rund Electrification Administration
s.o
139.0W
2/ Unuced balances of authorizations.
Commedity Oradit Corneration
Inter-related with the Farm program are the activities of the
Commodity Credit Corporation. Rependitures have been made w this
Corporation with funds reseived from the following sources)
Regraded Unclassified
144
- 2 -
From the Treasury
Included in the Budget
Capital and surpluss
Fiscal year 1934
$3,000,000
.
- 1936
97,000,000
#
# 1938
94,000,000
#
. 1940 (not)
76,000,000
#
# 1942
1,600,000
$271,600,000
Not included in the SpAges
Purchase of notes (not to Nov. 10)- - 120,000,000
From Public Borrowing (not to Nov. 10)- -- 702,000,000
TOTAL -
$1,092,600,000W
w In addition receipts from repayments of loans and mis of commodities
are available for aspenditize.
Recemb estimates Aurnished to the Treasury by the Commodity
Credit Corporation show for the current fiscal year, the followings
Notimated disbursements
$1,100,000,000M/
Notimated receipts
913,000,000W
of disbursements, to be
covered by borroving funds
from the Treasury
$ 157,000,000
2/ Include Immanations under the lease-lend program
Economy Surgestion:
It is suggested that we resumine the need for continuing
that part of the fats program which is not reflected in the annual
budget and which is financed from funds obtained through corporations
or borrowed from the Treasury. The Congress is apt to overleak the
substantial expenditures which are not reflected in the and budget,
Regraded Unclassified
145
- 3 -
Eventually any losses which may be insurred through these programs will
become budget charges. Each of these Items should be reamined in the
entie manner that has been suggested for the Farm program expenditures
which are reflected in the budget proper.
Regraded Unclassified
146
November 13, 1941
Dear Eleanor:
I am enclosing herewith for
your information a one-page statement
showing that food costs in October of
this year were 16 percent over those
of last year.
Yours sincerely,
(Signed) Henry
Mrs. Franklin D. Roosevelt,
The White House.
By Measenger
n.m.c.
Strenges 4:15
Regraded Unclassified
147
Regraded Unclassified
Food costs in October 16 percent over last year
The housewife of the moderate income family spent, on
an average, 16 percent more money for food in October this
year than she did a year earlier, and 19 persent more than
in the pre-war month of August 1939, according to retail
price data for 51 large cities potiently released by the
Bureau of Labor Statistics.
And the trend continues upward. Retail food prices
in October averaged nearly 1 percent higher than in the
previous month. Prices of bread and milk again advanced
in many cities, and prices of fresh fruits and vegetables
(which account for about one-sirth of the average working
man's food budget) rose 31 percent in the one month.
In some cities, the increase since last year was even
greater than 16 persent, with the rise in food prices
running to over 20 percent in Norfolk, Richmond, Mobile,
and Portland. The cost of food during October was at the
highest level since January 1931. The following is & list
of BOMO of the outstanding increases since last year:
Article
Increase since October 1940
(persent).
Lard
67
Shortening in eartons
51
Fresh green beans
49
Whole has
34
Salt pork
31
Cheese
30
Coffee
27
Oranges
25
Pork chops
25
Evaporated milk
24
Egge
&
Potatoes
23
Flour
20
Office of the Secretary of the Treasury, November 13, 1941.
Division of Research and Statistion.
147
Food costs 10 October 16 persent over last year
The housewife of the moderate income family spent, on
an average, 16 persent more money for food in Ostober this
year than she did a year earlier, and 19 persent more than
in the pre-war month of August 1939, according to retail
price data for 51 large cities redently released by the
Bureau of Labor Statistics.
And the trend continues upward. Retail food prices
in October averaged nearly 1 percent higher than in the
previous month. Prices of bread and milk again advanced
in many cities, and prices of fresh fruits and vegetables
(which account for about one-sixth of the average working
man's food budget) rose 34 percent in the one month.
In 8038 cities, the increase since last year was even
greater than 16 percent, with the rise in food prices
running to over 20 percent in Norfelk, Richmond, Mobile,
and Portland. The cost of food during October was at the
highest level since January 1931. The following is a list
of some of the outstanding increases since last year:
Article
Increase since October 1940
(persent)
Lard
67
Shortening in eartons
51
Fresh green beans
49
Whole has
34
Salt pork
31
Cheese
30
Coffee
27
Oranges
25
Pork chops
25
Evaporated milk
24
Lgge
24
Potatoes
23
Flour
20
Office of the Secretary of the Treasury, November 13, 1941.
Division of Research and Statistics.
Regraded Unclassified
148
November 13, 1941
Dear Mr. Knopf:
It was very thoughtful of you to send me some
of your recent volumes and I shall read them at the
earliest opportunity.
Mr. Gaer told me of your interest in my book
and, as soon as we arrive at a definite publication
plan, I shall communicate with you about my decision.
Thanking you again for sending me these books,
I am
Yours sincerely,
(Signed) 1. Bergenthme, 39%
Mr. Alfred A. Knopf,
501 Madison Avenue,
New York, N. Y.
file n.m.c
Regraded Unclassified
149
101701
BOOKS
Alfred A Knopf Incorporated
November 6th, 1941
of Madison Avenue
NEW YORK
Dear Mr. Secretary,
I have had two very interest-
ing and pleasant talks with Mr. Gaer and I an
hoping very much indeed that things will work
out in such 8. way that I become your publisher.
Meanwhile, in the belief that
you might be interested in looking over some of
our books, I take pleasure in sending the follow-
ing to you under separate cover with my compliments:
WINTER IN VERMONT
BACKBONE OF THE HERRING
HANNA, CRANE AND THE MAUVE DECADE
NO OTHER ROAD TO FREEDOM
Regraded Unclassified
150
- 2 *
LANTERNS ON THE LEVEE
THE STRUGGLE FOR JUDICIAL SUPREMACY
ZONES OF INTERNATIONAL PRICTION
TAPIOLA'S BRAVE REGIMENT
With sincere regard, I am
Yours faithfully,
amingiment
Alfred A. Knopf
The Hon. Henry Morgenthau Jr.
The Secretary of the Treasury
Washington, D. C.
1
P. 8. I am sending also copies of THE BORZOI READER
and AAK.
"Nf
Regraded Unclassified
COORDINATOR OF INFORMATION
WASHINGTON, D.C.
November 13, 1941
Henry:
Thank you very much for your letter. I
11 communicate with Mr. Caston and let him
now the date of our first meeting.
I want to thank you, too, for Lieutenant
ones. He will be a big help to us.
Sincerely,
Bill
William J. Donovan
The Honorable
The Secretary of the Treasury
Washington, D. C.
Regraded Unclassified
NOVIE 1941
Dear Mr. Gaston:
At the request of the President, Colonel Donovan
10 organizing an advisory committee to be made up
of Assistant Secretaries of State, Treasury, War,
Justice, and Navy.
You are hereby designated as the Treasury
member of this committee.
Sincerely yours,
(Signed) n. Dorgenthau. Js.
Secretary of the Treasury.
R
Honorable Herbert E. Gaston,
Assistant Secretary of the Treasury.
Teaja
7Am
Regraded Unclassified
WOV 10 1941
Implying to year letter of November 3rd,
/
to advise you that I have designated
/
Becretary Herbert E. Gaston to be
I
member of the advisory committee to
1
up of Assistant Secretaries of State,
!
V. Mar, Justice, and Navy.
Sincerely,
[Signed] E. Bergenthau, 30,
William J. Donovan,
e
her of Information,
pean, D. c.
Am
Regraded Unclassified
COORDINATOR OF INFORMATION
WASHINGTON, D.C.
November 3, 1941
Dear Henry:
I talked with you briefly the other
night about the President's request that I
organize an advisory committee to be made up of
Assistant Secretaries of State, Treasury, War,
Justice, and Navy.
I would be very grateful if you
would make such a designation so that you could
be kept fully advised not only on the activity
but on the policy of our unit.
Sincerely,
Rue Donnan
William J. Donovan
The Honorable
The Secretary of the Treasury
Washington
Regraded Unclassified
155
TREASURY DEPARTMENT
WASHINGTON
nov /3, 1941
Dear mr Secretary
While I realize how much
harder a written word can come back to
bite me, if it is a poor one, than can an
enrecorded spoken one, nevertheless, I also
know from sad experience that, difficult
as it is to express myself clearly on paper,
it is often even more difficult forme
to do so in conversation On balance therefore,
the scale seems to me to favor the
crystalizing "in black and white "f my
thoughts with regard to my working
for you. This I have done on the enclosed
memorandum.
Regraded Unclassified
156
TREASURY DEPARTMENT
WASHINGTON
I hope they mut with your
approval, but if not I should
appreciate the privilege of exploring with
you the question as to whether it is
my language or my basic ideas which
are at fault In either such case, I
neerely trust the fault can be corrected
so that I can be of real use and help
to you during this "emergency"
Very sincerely Dave Honning yours,
The Honorable Henry morgenthan I
-ccretary of the Treasury,
Washington, DC
Regraded Unclassified
157
TREASURY DEPARTMENT
WASHINGTON
11/13/01
When war first broke out in Europe
fri the summer of 1939 many of my generation
immediately felt the usa would eventually
se involved and wanted to volunteer in
some capacity to get prepared for whatever
ame Those who, like myself, land
including myself) had had prior military
naval service explored the possibility
è
getting back into such service In most
"ases we were too old; but we did what
we could by going to the 1940 Plattaburg,
taking the "Plattsburg Extension Course in the
following winter, and joining the
Ten York guard (and if any of us
could have one wish granted, it would
Regraded Unclassified
-2-
158
to to do some actual personal fighting
against the Natzis)
at various times and took various jobs
Some of us came to Washington
it the beginning practically any job
considered a suitable outlet for
satriotic was zeal. However, as time went
on several things became clear On
the one hand, it was obvious that some
people were simply using the emergency
as an excuse to be "in Washington". On
the other hand, the amount of sacrifice
made by some people was substantially
dis proportionate to the actual contribution
possible through the job at land just
because of the inherent limitations in certain
yob.
certainly one would not want
to be in the first category; and it would
Regraded Unclassified
in 1
159
seem unduly harsh on one's family to
stick at one in the second category However,
when a setuation develops in which
me can be of real and important use
in actual practice, and regardless of
any technicalities or "trimmings", then
any bearable sacrifire is well worth while
specifically, and personally, it
appears to me that as long as the
secretary can use my services in direct
und to him in carrying out his immediate
duties, then it is both my duty and my
pleasure to serve him. However, of at any
time, for any reason, my services become
only of use as a member of the Treasury's
general operating staff, then even if the
Regraded Unclassified
-4-
160
wish
Secretary should s me to stay, I do not
feel that the amount of good I could do
would fairly compensate for the sacrifice
imposed on my family and I feel I should
immediately be allowed to return to new york Dramg
Regraded Unclassified
TREASURY DEPARTMENT
161
WASHINGTON
DEFENSE SAVINGS STAFF
november 13, 1941,
Dear mr. mor genthau,
Iam writing this brief
note because I want you to know
how very interesting this work you ,ve
assigned me is becoming. It's also
a very great pleasure to world with
a swup who appear 20 generinely
devoted to the objectives of the job
they are doing.
Pery suncerely yours.
Juhan Sheet.j.
Regraded Unclassified
162
November 13, 1941
MEMORANDUM
To:
The Secretary
From: Mr. Blough
The Associated Press papers last night and this
morning describe a proposal, said to have originated
with Vice President Wallace, to
"Require the retail purchasers of desig-
nated commodities to pay for a fixed
quantity of defense savings stamps in
order to obtain possession of the article
they were buying. Thus a man who desired
to get a emall $10 radio might be forced
to buy $1 worth of defense savings stamps
in order to complete his purchase. When
a consumer had accumulated sufficient
stamps, he could turn these in on a Gov-
ernment bond which would be cashable
after the emergency ended."
This proposal 18, in effect, for a retail sales
tax to be returned after the emergency. If the tax
were limited to luxuries 8.8 suggested, the yield and
the anti-inflationary effects would be relatively emall,
while enforcement difficulties would be great, in the
light of experience during the World War. Luxury items,
moreover, are not necessarily the kinds of goods the
purchase of which needs to be restricted. Moreover, if
the tax is limited to luxury items there may be little
reason to provide for its later repayment.
If the tax were general, constituting a general
retail sales tax, the burden would be regressively
distributed, falling heaviest on the poor. The exemp-
tion of food would reduce the regressivity somewhat at
the lower end of the income scale, The plan would have
all the enforcement difficulties of a retail sales tax
imposed on the stamp plan. These difficulties are
comparable to the difficulties of EL withholding tax.
Regraded Unclassified
162
November 13, 1941
MEMORANDUM
To:
The Secretary
From: Mr. Blough
The Associated Press papers last night and this
morning describe a proposal, said to have originated
with Vice President Wallace, to
"Require the retail purchasers of desig-
nated commodities to pay for a fixed
quantity of defense savings stamps in
order to obtain possession of the article
they were buying. Thus e man who desired
to get a small $10 radio might be forced
to buy $1 worth of defense savings stamps
in order to complete his purchase. When
a consumer had accumulated sufficient
stamps, he could turn these in on a Gov-
ernment bond which would be cashable
after the emergency ended,"
This proposal 18, in effect, for a retail sales
tax to be returned after the emergency. If the tax
were limited to luxuries as suggested, the yield and
the anti-inflationary effects would be relatively small,
while enforcement difficulties would be great, in the
light of experience during the World War. Luxury items,
moreover, are not necessarily the kinds of goode the
purchase of which needs to be restricted. Moreover, if
the tax 18 limited to luxury items there may be little
reason to provide for its later repayment.
If the tax were general, constituting a general
retail sales tax, the burden would be regressively
distributed, falling heaviest on the poor, The exemp-
tion of food would reduce the regressivity somewhat at
the lower end of the income scale. The plan would have
all the enforcement difficulties of 8 retail sales tax
imposed on the stamp plan. These difficulties are
comparable to the difficulties of a withholding tax.
Regraded Unclassified
1G3
- 2 -
The compulsory savings feature would have the
same disadvantages as compulsory saving under the
withholding tax, among them the following:
(1) It would be difficult to increase
taxes after having made provision
for compulsory savings in the 08.88
of this tax;
(2) Persons in the higher and middle
income brackets could simply sub-
stitute this form of saving for
other savings, thus eliminating
the burden entirely for them. This
defect cannot be removed as it can
in the withholding tax, by limiting
the saving feature to the low income
groups;
(3) The purchase of defense savings bonds
would probably diminish very greatly;
(4) It would be necessary after the war
to raise funds to pay off the bonds.
RoyBlough
Regraded Unclassified
164
November 13, 1941
MEMORANDUM
To:
The Secretary
From: Mr. Blough
This memorandum has further reference to my
memorandum of this morning, about the compulsary
savings plan attributed to Vice President WalTace.
Mr. Schwarz has communicated with the Vice
President who says that he has not presented and
18 not supporting any tax plan. He said that the
story probably originated with 8. non-committal
memorandum prepared by Mr. Louis Bean and sub-
mitted to Senator McNary by the Vice President.
RB
Regraded Unclassified
NOV 13 1941
try dear Chande:
Let - essgratulate you - your action in requesting the
reductions is price flustuation limits 60. commodity futures.
I note that the Chienge Beard of Trade and the Sew Tork Coston
Exchange promptly complied with your request. The reduced
price limite should help to prevent sudden price breaks due to
a temporary lack of buying orders, ouch as that in whent a few
weeks age, and 11 may have some similar influence in preventing
unduly share price advances.
I reosgnise that at present you have MP legal authority to
compel somedity exchanges to fix margin requirements on futures
transactions, and I appreciate that there might be somewhat more
reluetance to increase margine than to retues price limits. Murt
the recent reduction in margin requirements - settensed oil by
the Dew Tork Preduce Exchange - to ne so clearly centrary to
Administration policy with respect to inflation control that an
effort might well be made to have the reduction rescinded - the
basis of voluntary seoperation as in the case of the reduction
of price limits. That de you think of the Idea?
Sincerely,
(518000) lienry
The Honorable,
The Secretary of Agriculture,
Tashington, D. C.
GCHIAVE 11-12-11
Regraded Unclassified
TREASURY DEPARTMENT
166
INTER-OFFICE COMMUNICATION
DATE November 13, 1941.
TO
Secretary Morgenthau
FROM
Mr. Schwarz
@
The Newsweek correspondent, Wesley McCune, says
he hes instructions from New York to ask at this morning's
press conference for comment on the story in the box on
the attached page from the issue of Newsweek out this
morning. Harold Graves and Norman Thompson say that
a joint investigation conducted by the Civil Service
Commission and our Intelligence Unit has been under way
for some months, that we have received no report yet and
obviously will not comment until we do. They say that
in no instance has there been any ellegation involving
public funds, that most of the individuals involved were
temporary employees who are accused of not teking Civil
Service regulations seriously enough.
For Dan Bell, Heffelfinger reminds that you
wished to tell this morning about imressing bill
offerings to $200,000,000.
Would you announce to the press, please,
your telk Saturday before the 75th annual meeting of
the National Grenge at Worcester, Mess.?
Regraded Unclassified
XVIII.
40
Newsweek
167
NOVEMBER 17, 1941
The Periscope il.
What's Behind Today's
time-that Rousevelt will arrange to have
varlier interpretations of important under-
the company By playes lo Russia by way
News, and What's to be Expected
of Aboka. Organizational details would las
standing-and the capital hum't forgot-
true
in
Tomorrow's
similar to those for the African delivery
service.
National Notes
Soviet-U. Gesture
F.D.R. has approved sending aunther
U.S. War Role
100 volunteer Army pilots to instruct in
If advance word from Moseow is correct,
China, sugmenting 100 already sent
Bandly experience here's the Twist avail-
a dramatic gesture of Soviet willingness
GOP Chairman Martin, disapproving Will-
Wele picture of Administration plans re-
to cooperate with the U.S. in postwar ne-
kie's support of Romevelt foreign policy
survice the European war INI of today:
construction will be made about the time
but seeking to avoid a Republican aplit.
Reserved is Uninking in terms of internitied
Litvinuff takes over as new ambassador
has been working load backstage to stop
naval warbon and inf later sending a U.S.
here. It will amount to full endorsement of
the efforts to read Willie out of the party
air to Britain (not before mid-194d,
Roosevelt planned to appoint Dean
Date it's improlisable that 60 effective air
Landis of Harvard Law School as Treas-
are could In- with to Europe before
Philadelphia Mint Scandal
tity Under Secretary to succeed Bell, who's
(nine) IL. anw lian no intention of
becoming permanent Assistant Secretary.
su \KP to Koroper, although
The (id has been kept lightly shut
But Senator Walsh of Massachisetts
any a lew merhanized divisions
an fac, hat a whopping political sean-
warned he would exercise his Sensiorial
to vell to Africa to help the British.
dal will be uncovered in the Phila-
prerogative and block the confirmation.
De Pressdent believes that, harring com-
delphia Mint before many months
Milve collapse. the efforts of
Investigators from several
hir and naval forces,
Vederal agencies have been on the
Trends Abroad
the effect of American
seene checking into political manip-
acquisitions in the walls will gendually con-
utation, juggling of public funds,
Last week's news stories about a
time the German poople that they have
wholesale violation of the Hatch
"comiteroffonsive" were overoptimiatics
misled and part't win This, le hopes,
Act. and other unsaviry practices
Military men regarded the Russian muves
eventually loral to overthress of the
Since the inquiry started. the inves-
AX. at mod, counterattacks; fejt that while
Saling and eduldishment of n. new German
tigators have been threatened. of-
Brown could continue to resist, il mubt
overdiment which will approve a "juxt
fored lat bribes, and subjected to
not launch an offensive
Unwassomable
1
heavy political pressure. At least
heat and continued sandstorms have been
two prominent political figures have
the main factor holding up the expreted
Washington Trends
tried to quash the investigation. The
Libyan campaign
Signa are that the
case now seems certain to rock both
much-dennanced Nazi Ambassador to Ar-
The Administration to rushing really
state and Federal polities in Perm-
gentina. Baron von Thermann, won't be
W preparations in the Parific as
sylvania.
outed but may take an extended "leave of
of the (lan for stand up to Jupio
Botain's food problem this
Large license forces are being
winter will be further cased because its
welled in P.S. sitimate
Signs are
Wae so-called Atlantic Charter, with Stalm,
nwn farm production this year is the high-
will the Noutrality Act fight out of
in Weet. promising to adopt more demo-
est in history,
Will's the Administration will finally
cratic policies, Rest information in that
Mane much litter about defense strikes,
Stalin was prepared to tuake the gesture
De Gaulle's Political Plans
stalling on price con-
when F.D. R. announced the billion-dollar
bil, and alout the defense effort in general
Working backstage, Free French Gen-
Lend-Lease arrangement, then decided to
The majurity of Congressional Re-
eral de Gaulle is trying to get a British
withhold it until Litvined's arrival.
Main un BTW "furting themselves" on
commitment that he will represent France
issues. Most are coming to
in any postwar settlement. So lar, Church-
lieve the test position for them political.
Litvinoff Record
ill has refused, holding that the decision is
not infationist, on) outright interven-
Washington's "cordial welcomes" to Am-
not Britain's alone and that there is no
but "reju stop behind The Prosi-
bassador Litvinoff almoud las discounted
need for it to be made now, Intimates say
Despite the President's appeal.
He's preferred to the unpopular Ownansky
de Gaullo in worried alout his political
lages won't be reacted before newt
and is considered the most capable Rus-
future, fearing that in the event of a Hitler
werrity tax invreases are 2019
stan for dealing with the U.S., but Amer-
collapse several French statesmen highly
income las deducted from wages
learn officials think lie pulled some fast
regarded by Britain and the U. S. will
Bely-but Deiller of them much
uses when here in 1098-34 to negotiate
moye in at the peace table.
for U.S. renguition of Russin and for
other Soviot-American understandings.
Weygand Caution
ew Plane Route
State Department and RFC people still in-
General Weygand is still playing engey
aist he changed the terms of AB agreement
in North Africa. Just (br he has done be-
surpoised if l'an American Air-
for wettting the old exarist debt after previ-
fore, Weygand refused to commit himself
State undertakes mother giant op-
in like lle present task of delivering
ously approving the proposal In F. D. 16.'s
on his future policy when he met sccretly
la the Middle East via Africa There
presence. As " result. the debt negotiations
with a British emissney just before his last
they hints-without formal confirma-
fell through. There are other cases in which
trip to Viehy. The British tried to sound
Washington claims Litvinoff altered his
him nal on line attitude should British and
(Nn part of cAse OF the meet paye may be reproduced without written
Regraded Unclassified
168
CURTISS-WRIGHT CORPORATION
30 ROCKEFELLER PLAZA
NEW YORK
OFFICE OF THE PRESIDENT
November 13th, 1941.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D.C.
Dear Secretary Morgenthau:-
I have your letter of November 6th
and am very glad indeed the matter submitted will be
of assistance to you.
I shall drop in to see you the next
time I am in Washington, in accordance with your
suggestion.
Sincerely,
GWV:JS
M.Paugham
Regraded Unclassified
169
November 6, 1941
My dear Mr. Vaughan:
I received your letter of Nov. 5th
with the three enclosures.
Please accept my thanks for the
admirable manner in which this material was
prepared. It will be most useful.
The next time you are in Washington
I would appreciate your dropping in to see
me so we can have a chat.
Yours sincerely,
(Signed) 1. Forgesthas. and
Mr. G. W. Vaughan,
Curtiss-Wright Corporation,
30 Rockefeller Plasa,
New York, N. Y.
File n. m.c.
Regraded Unclassified
170
CURTISS-WRIGHT CORPORATION
30 ROCKEFELLER PLAZA
NEW YORK
OFFICE OF THE PRESIDENT
November 5, 1941
Honorable Henry Morgenthau,Jr.
Secretary of the Treasury
Treasury Department
Washington,D.C.
Dear Secretary Morgenthaus
I am sending you herewith, by special messenger,
the material which you asked for with respect to the
negotiation of Government contracts since the first of
January, 1941. I asked each of the three divisions (air-
plane, engine and propeller) to prepare this material with
respect to all contracts of $100,000. or over as I assume
that you would not be interested in a. multitude of smaller
contracts relative to spare parts, etc.
While this material was prepared in great haste,
it seems to cover what I understand you want and I hope that
you will find it fills your needs.
Sm. Very G. W. truly Pangram Vaughan. yours,
Regraded Unclassified
IT!
WRIGHT AERONAUTICAL CORPORATION
1A DIVISION OF CURTISS WRIGHT CORPORATION)
PATERSON. NEW JERSEY
5. 5 i
CONTRACT NEGOTIATIONS WITH GOVERNMENT
FOR
ENGINES AND PARTS
Negotiations for engine contracts with the Government are con-
ducted in two stages) first, the establishment of basic price of each
engine type and of the major details, the combinations of which will
constitute an engine model, second, the discussion of the elements of e
specific contract.
In preparation for price negotiations for Army contracts,
Wright prepares an analysis of its actual cost experience together with
cs careful study of probable future trends. This is submitted to the
l'ateriel Division, Air Corps, which in turn makes its own analysis
based upon Air Corps audits of Wright's accounts, and advises Wright
as to those elements of wright's cost analysis which it considers too
high or not allowable. A conference is then called between the Muteriel
Division and Wright representatives for the purpose of reaching a mutu-
ally acceptable price. Three such conferences, lasting several days
each, have been held this year, one each in January, June and October,
as changing cost experience indicated a need for revision of prices.
Acceptable prices having been established for definite quan-
tities and production schedules, the negotiations of contracts become
principally B. matter of specifications and delivery dates. The record
of the details of this stage are set. forth in the attached data, in no
far as they are shown by documentary records. Visits of Government
officials and oral conferences at our plant and at Wright Field are not
indicated as full records are not available.
The data furnished are those pertaining to contracts amounting
to more than $100,000., which excludes a considerable number of small
contracts - mostly for maintenance parts and miscellaneous services -
the Banoling of which involves a minimum of negotiation. Data relating
to parts contracts amounting to more than $100,000.have been included.
In the majority of cases, the contract formalities have been
completed or have progressed to the stage where the contract nimber has
Deen determined and this number hus been used es the means of identifying
USE AIR TRANSPORTATION
Regraded Unclassified
172
WRIGHT AERONAUTICAL CORPORATION
+
the negotiations. If no contract number has yet been assigned but a
formal Invitation to Bid has been issued, the number of the latter is
used. In the few instances where no identifying number is available,
reference is made to the governmental procuring agency involved.
There have been one or two cases in which, after negotiations
for certain engines have been initiated, the changes in tactical re-
quirements based on combat experience in the present conflict have
necessitated B. modification of the specifications with a consequent de-
lay in the final execution of the contract. It is worthy of note, how-
ever, that regardless of whether or not such a condition may be considered
B. delay in negotiations, there has been, to date, no delay or interruption
in our production or deliveries of engines attributable to the lack of
formal contracts. Our deliveries have been limited only by our ability
to produce.
"USE AIR TRANSPORTATION"
Regraded Unclassified
173
WRIGHT AERONAUTICAL CORPORATION
CONTRACTS FOR ENGINES
W535AC-16288 SUPPLEMENT
April 3, 1941
-
Dayton representative of Wright Aeronautical Corporation
advised by Materiel Division of its desire to procure
additional engines by supplement to contract W535AC-16288.
April 4, 1941
-
Wright wired its Dayton representative to advise the
Division that it was agreeable to Wright to amend the
original contract to call for these additional engines
at the same estimated cost as in the original contract.
May 16, 1941
-
Supplemental contract forwarded to Wright by Materiel
Division.
(Received by Wright May 19th).
May 28, 1941
- Wright returned signed contract to Materiel Division,
Juno 20, 1941
-
Materiel Division wired Wright that contract had been
approved by Under Secretary of War on June 17th.
July 2, 1941
- Materiel Division forwarded executed copy of contract to
Wright,
(Received and acknowledged by Wright July 7th).
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
174
W535AC-17348
Nov. 26, 1940
- Materiel Division wired to Wright a request for quotation
on & number of engines.
Nov. 27, 1940 - Wright wired quotation to Materiel Division.
Jan. 3, 1941
- Materiel Division forwarded contract to Wright.
(Received by Wright Jan. 6th).
Jan. S, 1941
- Wright returned signed contracts to Materiel Division.
Jan. 27, 1941
- Materiel Division advised Wright that contract had been
approved Jan. 24th by Under Secretary of War.
(Received by Wright Jan. 29th).
reb. 7, 1941
- Materiel Division forwarded executed copy of contract to
Wright.
(Received and acknowledged by Wright Feb. 10th).
Apr. 24, 1941 - Materiel Division requested Wright to quote on additional
engines.
May 15, 1941
- Wright forwarded quotation to Materiel Division.
June 11, 1941 - Materiel Division forwarded Change Order, increasing quantity
of engines, to Wright.
(Received by Wright June 16th).
July 2, 1941
- Materiel Division advised Wright that Change Order had been
approved by Under Secretary of War on June 27th.
(Received by Wright July 7th).
Sept. 4, 1941 - Executed copy of Change Order received by Wright.
The lepse of time between approval of the Change Order and delivery
of the executed copy to Wright was due to the necessity for furnishing
an increase in the bonds to correspond to the increase in the amount
of the contract.
CHIP
"USE AIR TRANSPORTATION"
Regraded Unclassified
175
WRIGHT AERONAUTICAL CORPORATION
W535AC-17838 (Short form)
Jan. 7, 1941
- Materiel Division requested Wright to quote on a number
of engines.
Jan. 23, 1941
- Wright forwarded quotation to Matericl Division.
Jan. 30, 1941
- Materiel Division called to attention of Wright, Douglas'
questions as to suitability of engines quoted on as regards
installation in various DC-3 airplanes.
Feb. 7, 1941
- Wright forwarded revised quotations, as required to
Materiel Division.
Feb. 25, 1941 - Materiel Division authorized Wright to proceed with assurance
that quotation was accepted.
Mar. 27, 1941
- Materiel Division forwarded contract to Wright.
(Received by Wright April 1st).
Apr. 14, 1941
- Wright returned signed contract to Materiel Division,
proposing changes in detail specifications.
May 12, 1941
- Materiel Division forwarded executed contract to Wright.
(Received and acknowledged by Wright May 16th).
"USE AIR TRANSPORTATION
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
176
W535-AC-18071
July 11, 1940
- Materiel Division requested Wright to furnish spec-
ifications and price quotations on an indeterminate
quantity of engines of a certain type.
July 27, 1940
- Materiel Division requested Wright expedite action on
above request.
Aug- 12, 1940
-
Wright forwarded quotations on various modela of
requested type.
Aug. 21, 1940
- Materiel Division advised Wright that proposed delivery
schedule would not be satisfactory.
Sept. 13, 1940 - Wright submitted to Materiel Division revised delivery
schedule.
Nov. 26, 1940
- Materiel Division forwarded to Wright formal invitation
to bid on a definite number of engines, with an option
to obtain a certain additional quantity.
Dec. 19, 1940
- Materiel Division requested Wright to advise as to when
bid would be submitted.
Dec. 26, 1940
- Wright advised Materiel Division that bid was expected
to be ready in about two weeks.
Jan. 30, 1941
- Wright forwarded bid to Materiel Division.
Feb. 4, 1941
- Wright, in response to telephone call from Materiel
Division, forwarded revised specifications to correct
an omission.
Feb. 19, 1941
- Materiel Division forwarded to Wright contract for a
quantity of engines of two models with arote that funds
were not then available but that it was desired to have
the contract in order 50 as to be ready to go ahead
when the funds were made available.
Feb. 24, 1941
- Wright returned signed contract.
Mar. 28, 1941
- Materiel Division wired Wright requesting quotation on
the same quantity but all of the same model.
Mar. 31, 1941
- Wright wired quotation as requested.
pr. 2, 1941
- Materiel Division forwarded revised contract to Wright
for these engines, but noted that funds were not yet released.
lay 7, 1941
- Wright returned signed contract.
une 10, 1941
- Materiel Division forwarded executed contract to Wright.
(Received by Wright June 12th and acknowledged June 16th).
"USE AIR TRANSPORTATION"
Regraded Unclassified
177
WRIGHT AERONAUTICAL CORPORATION
W535AC-18667
Jan. 8, 1941
-
Materiel Division requested Wright to quote on a number
of engines of one model.
Feb. 26, 1941
-
Wright submitted quotation to Materiel Division.
Apr. 8, 1941
-
Materiel Division forwarded to Wright contract for
these engines.
May 7, 1941
-
Wright returned executed contract.
June 5, 1941
-
Materiel Division forwarded executed contract to Wright.
(Received by Wright June 7th and acknowledged June 10th).
SPEEN
D
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
178
W535AC-19028
Feb. 13, 1941
-
At B. conference between engineering personnel of
the Materiel Division and Wright it was agreed that
Wright would submit to the Materiel Division a
proposal on one or two engines with fuel injection.
Mar. 17, 1941
-
Wright submitted to Materiel Division a proposal
which provided that the government furnish the fuel
injector and controls.
Mar. 25, 1941
I
Matoriel Division wired request that Wright quote on
furnishing the injector and controls.
Apr. 2, 19/1
-
Wright, by wire to Materiel Division, quoted additional
charge for injector and controls.
June 19, 1941
-
Materiel Division forwarded to Wright contract for 2
engines with injectors and controls.
(Received June 23rd by Wright).
June 23, 1941
-
Wright returned executed contract to Materiel Division.
July 1, 1941
-
Materiel Division wired Wright that contract had been
approved by Under Secretary of War on June 27th.
July 16, 1941
- Materiel Division forwarded executed contract to Wright,
(Received by Wright July 18th and acknowledged July 21st).
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
179
W535AC-19438
Feb. 12, 1941
-
Materiel Division forwarded to Wright a formal invitation
to bid on a number of engines, with option to procure
additional engines.
Mar. 5, 1941
- Wright representative at Materiel Division advised latter
that Wright desired to change some details of the spec-
ification.
Sir. 18, 1941
-
At a conference between engineering personnel of the
Materiel Division and Wright, the changes in the spec-
ifications were agreed upon.
Yor. 19, 1941
- Materiel Division requested Wright to expedite submission
of bid.
"-r. 24, 1941
-
Wright advised Materiel Division that revised specifications
were being prepared on high priority basis and it hoped to
submit bid by end of month.
Apr. 5, 1941
-
Materiel Division requested Wright to expedite submission
of bid.
Apr. 16, 1941
-
Wright advised Materiel Division that specifications were
being discussed with engineering personnel of the Materiel
Division and that it hoped to submit bid in 10 days.
toy 5, 1941
- Materiel Division inquired of Wright as to when bid would
be submitted.
May 9, 1941
- Wright forwarded bid to Materiel Division.
May 28, 1941
- Materiel Division forwarded to Wright contract for the
desired engines.
(Received by Wright June 4th).
June 5, 1941
-
Wright returned executed contract to Materiel Division.
July 3, 1941
-
Materiel Division forwarded executed contract to Wright.
(Received and acknowledged by Wright July 7th).
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
180
W535AC-19764 (Short form)
May 2, 1941
-
Materiel Division wired request to Wright to submit
quotation on various quantities of engines of one model.
May 9, 1941
-
Wright wired quotations as requested.
May 20, 1941
-
Materiel Division forwarded to Wright formal invitation
to bid on a definite number of engines.
June 2, 1941
-
Wright submitted bid to Materiel Division.
June 9, 1941
-
Contracting Officer, Materiel Division, accepted the bid.
June 17, 1941 -
Under Secretary of War approved the contract.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
181
#535AC-20096 (Short form)
April 15, 1941
-
Materiel Division forwarded to Wright formal invitation
to bid on a number of engines for a certain model of
airplane.
May 6, 1941
- Wright wired Materiel Division inquiring whether, in
view of a recent decision to use a different model
engine in these airplanes, the Division still desired
bide.
May 21, 1941
- Materiel Division wired Wright that engines were to be
used on another project and hence bid should be submitted.
June 2, 1941
-
Wright submitted bids as requested. It was noted, however,
that the destination set forth in the invitation was no
longer appropriate in view of the change in project.
June 9, 1941
- Materiel Division forwarded to Wright B. modified invitation
(short form contract) with revised destination.
June 17, 1941
- Wright submitted bid as requested.
June 24, 1941
- Contracting Officer, Materiel Division, accepted bid,
June 27, 1941
- Under Secretary of Wer approved the contract.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
182
W535AC-20295 and
DA-M535-164
June 16, 1941
- Wright called attention of Materiel Division that no
Letter of Intent had been issued with respect to certain
models which were on Wright's production schedule.
June 27, 1941
-
Wright, in response to telephone request from Materiel
Division, submitted price quotation on these engines.
This quotation was presented in person by Wright officials
and 8 Letter Contract was druwn up and accepted by these
officials on the same day.
July 7, 1941
-
Materiel Division wired Wright that the letter contract
had been approved by the Under Secretary of War on June 30th.
July 15, 1941
-
Material Division forwarded approved letter contract to
Wright.
(Received by Wright on July 18th).
Aug. 29, 1941
-
Materiel Division wired request for extension of time for
preparation of formal contract to Sept. 30, 1941. Wright
granted extension by wire on same day.
Aug. 30, 1941
- Materiel Division forwarded to Wright formal contract for
execution.
(Received by Wright Sept. 2nd).
Sept. 17, 1941 - Materiel Division inquired of Wright as to when Wright
would execute contract.
Sept. 30, 1941 -
Materiel Division wired Wright inquiring as to reason for
delay in executing contract. Wright wired reply on same
day that delay w8s due to time required to determine changes
in price due to changes in engine details and assured the
Division that work on the engines WAB in no way being delayed.
Oct. 14, 1941
-
Wright returned contract to Materiel Division unexecuted and
requested that it be revised to incorporate the latest engine
specifications and corresponding prices.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
183
1535AC-20296 and
DA-W535AC-165
June 10, 1941
-
Materiel Division advised Wright of its intention to
purchase certain engines and authorized Wright to
proceed with production. This letter of intent had
been approved by the Under Secretary of War on June 11th.
(Received by Wright on June 16th.)
June 16, 1941
I
Wright accepted the letter of intent.
June 27, 1941
-
Tright submitted to the Materiel Division price quotations
for the enginee covered by the Letter of Intent.
This quotation was presented in person by Wright officials
and a letter contract drawn up and accepted by Wright on
the same day,
July 7, 1941
-
Materiel Division wired Wright that the letter contract
hed been approved by the Under Secretary of War on June 30th.
July 15, 1941
I
Material Division forwarded approved letter contract to
Wright.
(Received by Wright July 17th).
Aug. 29, 19/1
-
Materiel Division wired request for extension of time for
preparation of formal contract to Sept. 30, 1941. Wright
granted extension by wire on same day.
Askgr- 30, 1941
-
Materiel Division forwarded to Wright formal contract for
execution.
(Received by Wright Sept. 2nd).
Sept. 17, 1941 - Materiel Division inquired of Wright as to when Wright
would execute contract.
Sept. 30, 1941 - Materiel Division wired Wright inquiring 8.6 to reason for
delay in executing contract. Wright wired reply on same
day that delay WAB due to time required to determine changes
in price due to changes in engine details and assured the
Division that work on the engines was in no way being delayed.
Oct. 14, 1941
I
Wright returned contract to Materiel Division unexecuted and
requested that it be revised to incorporate the latest engine
specifications and corresponding prices.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
184
W535AC-16234 Supplement
Aug. 20, 1941
-
Materiel Division requested Wright to quote on a number of
engines of one model.
Oct. 6, 1941
-
Wright submitted quotation on a greater quantity of this
model in view of understanding that in the interim need
for additional engines had arisen.
About Oct. 20,
1941
-
Wright was advised verbally by the Materiel Division that
it WELS planned to procure these engines by supplement to
contract No. 16234 but no formal documents have been
received by Wright as yet.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
185
1535AC-22003
Aug. 20, 1941
-
Materiel Division requested Wright to quote on several
types and models.
Oct. 13, 1941
-
Wright submitted a quotation on definite quantities of the
desired types and models.
About Oct. 20,
1941
-
Wright was advised verbally by the Materiel Division that
contract No. 22003 had been assigned to this order but
the contract has not yet been received by Wright.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
186
Air Corps Inquiry
Oct. 30, 1941
-
In response to request of Materiel Division, Wright
submitted price quotations on various types and models.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
187
II-741 - Ord-6158 - Supplements Nos. 5 and 6
June 2 & 3, 1941 - Ordnance Dept. 'phoned Wright requesting quotations
on additional tank engines similar to those procured
by the original contract. Wright quoted by 'phone
and confirmed by letter of June 4th.
June 25, 1941
- Ordnance Dept. delivered by hand to Wright & Letter
Contract dated June 18th and approved by the Under
Secretary of War on June 20th covering the purchase
of these engines. Wright indorsed its acceptance on
the same day end a fully executed copy was returned
to Wright on June 28th.
Note: This Letter Contract was incorrectly designated
as Supplementary Agreement No. 2 but, by letter of
Oct. 17, the Ordnance Dept. advised Wright that it
should be No. 5.
Oct. 20, 1941
- Wright requested Ordnance Dept. to issue the formal
supplement, which is understood to be identified BB
Supplemental Agreement No. 6.
"USE AIR TRANSPORTATION"
Regraded Unclassified
188
WRIGHT AERONAUTICAL CORPORATION
W-741-Ord-6158 - Supplements #7 and #8
July 14, 1941
-
Ordnance Dept. 'phoned Wright requesting quotation on B.
second additional quantity of engines similar to those
procured by the original contract. Wright wired quotation
on same day and confirmed by letter on July 15th.
Aug. 22, 1941
-
Ordnance Dept. forwarded to Wright a Letter Contract dated
Aug. 19th covering these engines.
(Received by Wright Aug. 23rd).
Dept. 27, 1941 - Ordnance Dept. requested Wright to expedite acceptance of
Letter Contract.
Sept. 30, 1941 - Wright accepted the Letter Contract and forwarded it to
Ordnance Dept.
Oct. 23, 1941
-
Ordnance Dept. forwarded to Wright, fully executed copy
of Letter Contract, approved by Under Secretary of War
Oct. 10th. This Letter Contract is identified as Supplementary
Agreement No. 7.
(Received by Wright October 24th).
Formal agreement not yet received, but under date of October 17th
the Ordnance Dept. advised that it would be identified as Supplemental
Agreement No. 8.
"USE AIR TRANSPORTATION"
Regraded Unclassified
WRIGHT AERONAUTICAL CORPORATION
189
Urdnance Inquiry for Tank Engines
Sept. 13, 1941
- N.Y. Ordnance District requested Wright to quote
on a number of tank engines.
Sept. 18, 1941
-
Wright submitted quotation as requested.
No contract has as yet been received by Wright but one
engine is scheduled for delivery early in November.
"USE AIR TRANSPORTATION"
WRIGHT AERONAUTICAL CORPORATION
190
Contracts for Engine Parts
Negotiations in the case df parts contracts generally proceed
in the following manner. The governmental procuring agency submits to
the contractor a list of the parts and quantities which it desires to
purchase and requests the contractor to quote thereon. In the case of
standard form contracts, 16 the quotation is acceptable, and the government
desires to expedite performance, it may forward e. letter of intent and/or
notice of award to the contractor in advance of the completion of the
formalities of the contract. Otherwise the government forwards in due
course copies of the contract for execution by the contractor. The
contract is then executed by the government (including approval by the
Under Secretary) and a copy forwarded to the contractor. In the case of
short form contracts, indorsement of acceptance of the bid by the government
(including approval of the Under Secretary) and return of the bid so indårsed
complete the formalities.
The dates of these various steps in the negotiations for parts
contracts are set forth in tabular form below.
"USE AIR TRANSPORTATION"
Regraded Unclassified
PARTS CONTRACTS
-
SMY AIR CORPS
Contract Recd. by
Contract Executed
Contract Approved
Executed Contrac
Contract
Request to Bid
Bid
R.A.C. for
and forwarded
by Under Secretary
Received by
Number
Recd. by W.A.C.
Submitted
Execution
by W.A.C.
of Ker
E.A.C.
W535AC-17376
11-4-40
11-26-40
12-30-40
1-7-41
1-15-41
1-29-41
17823
1-6-41
1-16-41
2-19-41
3-5-41
3-7-41
3-20-41
18245
1-20-41
2-4-41
3-17-41
3-18-41
3-28-41
4-18-41
18392
2-24-41
3-4-41
3-17-41
3-19-41
3-21-41
4-4-41
18521
3-5-41
3-27-41
4-24-41
5-7-41
5-21-41
6-13-41
18798
3-13-41
3-28-41
4-21-41
4-25-41
4-28-41
5-12-41
19412
5-12-41
5-26-41
Exec. at Wright Fld.
6-27-41
6-30-41
7-10-41
19679
5-12-41
5-15-41
6-23-41
6-23-41
6-27-41
7-21-41
20022
6-2-41
6-11-41
Short form
Short form
6-19-41
6-26-41
20274
6-16-41
6-24-41
7-25-41
8-12-41
8-14-41
8-25-41
21192
7-10-41
8-11-41
9-20-41
10-3-41
10-14-41
10-29-41
21074
7-25-41
8-11-41
9-18-41
10-7-41
-
-
21912
8-18-41
9-9-41
10-6-41
10-22-41
I
-
Invitation to Bid
W42-2568
9-19-41
10-27-41
-
-
DA-W535AC-11
4-28-41
4-30-41
5-26-41
5-28-41
6-4-41
6-16-41
62
5-17-41
6-13-41
(1)6-23-41
6-27-41
6-30-41
7-12-41
118
6-2-41
6-18-41
(2)8-4-41
8-7-41
8-20-41
9-2-41
214
6-19-41
7-9-41
8-4-41
8-7-41
8-23-41
9-4-41
299
7-16-41
7-23-41
8-20-41
9-2-41
9-6-41
9-25-41
421
7-28-41
8-16-41
9-17-41
9-25-41
10-2-41
10-20-41
(1) Letter of Intent rec'd. 6-19-41
(2) Letter of Intent rec'd. 6-26-41
191
Regraded Unclassified
Corp.
PARTS CONTRACTS
Contract Recd.
Contract Executed
Request to Bid
Bid
by W.A.C. for
and Forwarded
Contract Number
Recd. by W.A.C.
Submitted
Execution
by W.A.C.
NAVY
N156s - 18848
2-25-41
2-17-41
2-27-41
3-14-41
19771
4-11-41
5-14-41
6-6-41
6-18-41
20500
6-19-41
6-30-41
8-13-41
9-3-41
20640
7-7-41
7-11-41
(1) 7-24-41
9-2-41
(1) Notice of Award recd. 7-21-41
ORDNANCE
R.I.A. Inquiry
9-15-41
10-6-41
11
192
Regraded Unclassifie
193
Curtise-Wright Corporation
CURTISS PROPELLER DIVISION
November 4, 1941
Contract Degotiations with the Material Division, Air Corps
Bright Field, Dayton, Ohio
During the Year 1941
The first War Department contract entered into during 1941 was for N.
quantity of Curtise controllable pitch propellers intended for Air Corps'
use. The init prices specified in the contract were maintained the sale
All these arrived at during negotiations beld in the month of lloverber 1940,
when 8 previous contract had been awarded for the same model propeller.
In April 1941, this contractor was requested to furnish informal quo-
taillers on all current production models, to serve as a basis for negotiations
through which new prices would be established for procurement then being con-
templated. These data were forwarded on April 27 and subsequent negotiations
established new prices for the models involved.
Subsequent to the establishment. of prices as indicated above, various
outracts were in the course of preparation when it was learned by this
contractor that the office of the Secretary of War had ruled against the
CB) of the average hourly eernings in the Avistion Industry as the labor
Indroe for computation of changes in labor costs. Since the contracts then
in preparation contained price adjustment clauses and unit prices which had
ten correlated on the basis of an index discarded before the contracts had
been executed, it became necessary to re-negotiate prices for all propeller
addio. These negotiations required considerable time, and no mitally
acceptable combination of th it prices and labor adjustment provisions was
arrived et until late in June, at which time, basic prices were coupled with
I lebor index based on the Durable Goods Industry. All contracts which have
bose awarded to this contractor by the Mar Department since that time, have
been entered into on this basis.
while negotiations on proposed contracts have frequently required con-
siderable time in which to work out a price structure acceptable to the Air
Corgo, both parties have realized the urgency of the situation and made
every effort to reach an agreement as promptly as possible, and in no case
has the time consumed in these negotiations been the cause of any delay in
production.
Regraded Unclassified
194
Contract DA W535 ac-49
June 23, 1941 to)
-
Propeller Division representative negotiated
June 25, 1941
)
prices for various propeller models at con-
ference held at Materiel Divison, Wright Field.
June 30, 1941
- Short-form contract, covering certain propellers
and controls for which prices had been established
in previous conference, executed by Propeller
Division representative.
June 30, 1941
- Short-form contract approved by the Government
and advance copy forwarded to contractor's
representative.
July 21, 1941
- Material Division forwarded contractor's executed
copy of short-form contract to Propeller Division.
July 24, 1941
- Propeller Division received contractor's executed
copy of short-form contract from Materiel Division.
July 24, 1941
- Materiel Division forwarded formal contract to
Propeller Division for execution.
July 31, 1941
- Materiel Division forwarded rewritten pages for
insertion in formal contract because of necessity
for setting up unit and total prices not appearing
in original pages.
August 18, 1941
-
Materiel Division requested, by letter, that
the execution and return of the formal contract
be expedited.
August 21, 1941
-
Contractor executed formal contract and returned
it to Materiel Division by Propeller Division
representative.
September 10, 1941 -
Materiel Division wired Propaller Division that
formal contract had been approved by Under Secre-
tary of War on September 6, 1941.
September 25, 1941 -
Material Division forwarded executed copy of
contract to the Propeller Division.
Regraded Unclassified
195
RACT DA W535 Ba-65
June 23, 1941 to
)
- Propeller Division representative negotiated prices for
June 25, 1941
)
various propeller models at conference held at Materiel
Division, Wright Field.
June 30, 1941
- Short form of contract, covering certain quantities of
propellers for which prices had been established during
the above mentioned conference, signed by Propeller Division
representative at Wright Field.
June 30. 1941
- Advance copy of short form contract delivered to Propeller
Division representative at Wright Field.
July 14. 1941
- Contractor's copy of original short form contract forwarded
to the Propeller Division.
August 26, 1941
- Proposed formal contract forwarded by Materiel Division to
contractor for execution.
August 28, 1941
- Proposed formal contract received by Propeller Division.
September 8, 1941
- Letter from Materiel Division requested contractor to
expedite return of contract.
September 17, 1941
- Propeller Division representative conforred with Materiel
Division regarding change in number of tool kits specified
in proposed contract as compared with basis on which short
form contract was negotiated.
September 30, 1941
- Materiel Division wired contractor requesting advice on
status of contract,
October 1, 1941
- Contractor advised Materiel Division that executed contract
was going forward on this date.
October 23. 1941
- Materiel Division wired Propeller Division that contract had
been approved on October 20, 1941.
November 3. 1941
- Contractor's copyof executed contract received.
Regraded Unclassified
196
CONTRACT DA W535 00-143
June 23. 1941 to) - Propeller Division representative negotiated prices for
June 25, 1941
)
various propeller models at conference held at Materiel
Division, Wright Field.
June 30, 1941
- Short form contract, covering certain propellers for
which prices had been established in previous conference,
executed by Propeller Division representative.
June 30, 1941
- Short form contract approved by the Government and advance
copy forwarded to contractor.
July 14, 1941
- Contractor's executed copy of short form contract received
by Propeller Division.
August 13. 1941
- Materiel Division forwarded formal contract to Propeller
Division for execution.
September 3. 1941
- Propeller Division forwarded executed copies of formal
contract to the Materiel Division.
October 2, 1941
- Contractor notified of approval of formal contract.
October 20, 1941
- Contractor's copies of formal contract returned to the
Propeller Division by the Materiel Division,
197
Contract DA W535 ac-171
June 14, 1941
- Propeller Division received Materiel Division
letter dated June 12, 1941 requesting quotation on
overhaul tools.
June 24, 1941
- Propeller Division forwarded quotation.
June 30, 1941
- Propeller Division received short-form contract
for execution.
July 10, 1941
- Contract executed and returned to Materiel Division.
July 24, 1941
- Propeller Division received executed contract.
September 5, 1941 - Propeller Division received formal contract for
execution.
September 17, 1941 - Materiel Division letter received requesting that
formal contract be executed and returned.
September 22, 1941 - Propeller Division representative discussed
inclusion of advance payment clause with Material
Division.
October 2, 1941
- Contract executed and returned by Propeller Division.
October 7, 1941
- Formal contract approved by the Government.
October 27, 1941
- Copy of approved contract received by Propeller
Division.
198
Contract DA-W535 ac-172
April 23, 1941
- Materiel Division forwarded a letter of intent
covering the purchase of substantial quantities
of various controllable pitch aircraft pro-
pellers.
May 5, 1941
- Propeller Division returned executed letter of
intent to the Materiel Division.
June 28, 1941
- Materiel Division forwarded advance copy of
short form contract to the Propeller Division.
July 11, 1941
- Materiel Division forwarded original signed
short form contract
Regraded Unclassified
199
CONTRACT W535 ac-16957 (Supplemental)
June 23, 1941 to)
-
Propeller Division representative negotiated
June 25, 1941
)
prices for various propeller models at con-
Field ference held at Materiel Division, Wright
June 30, 1941
-
Short form contract covering certain pro-
pellers and controls for which prices had
been established in previous conference,
executed by Propeller Division representative,
June 30, 1941
-
Short form contract approved by Government.
July 14, 1941
-
Materiel Division forwarded contractor's copy
of executed copy of contract.
July 16, 1941
-
Contractor's copy of executed contracts
received by Propeller Division.
Regraded Unclassified
200
CONTRACT W535 ac-17243 (Supplemental)
June 23, 1941 to)
-
Propeller Division representative negotiated
June 25, 1941 )
prices for various propeller models at con-
ference held at Materiel Division, Wright
Field.
June 30, 1941
-
Short form contract covering certain pro-
pellers and controls for which prices had
been established in previous conference,
executed by Propeller Division representative.
June 11, 1941
-
Materiel Division forwarded contractor's
copy of executed contract.
July 14, 1941
-
Contractor's copy of executed contract
received by Propeller Division.
201
ract W535 a0-17807
December 14, 1940 - Propeller Division received wire from Materiel Division
requesting delivery schedule and decrease in contract
price which would result from substitution of model 05328
propellers for model 05428 on Contract W535 ac-14143.
December 18, 1940)- Revised prices and delivery schedule wired to Materiel Division
December 20, 1940) as requested.
January 17. 1941 - Materiel Division advised contractor by letter, that proposal
to substitute different model propellers on Contract W535 80-14143
was believed impractical and that a new contract would be initiated.
January 31, 1941 - Proposed contract W535 ac-17807 covering purchase of 05328 pro-
pellers forwarded by Materiel Division.
February 1, 1941 - Proposed contract W535 ao-17807 received by Propeller Division.
February 1, 1941 - Contract executed and returned to Materiel Division.
February 4, 1941 - Contract approved by Materiel Division.
February 18, 1941 - Contractor's copy of approved contract forwarded by Materiel
Division.
February 20, 1941 - Contract received and acknowledged.
202
RACT 1535 ac-18281
February 25, 1941 - Propeller Division quoted spare blade assemblies by telephone
in reply to an urgent request to Propeller Division representative
at Wright Field.
March 6. 1941
- Contract received by Propeller Division for execution.
Maroh 6, 1941
- Contract executed and returned to the Materiel Division.
March 10, 1941
- Contract approved.
March 21, 1941
- Executed copies of contract received by Propeller Division.
June 17, 1941
- Materiel Division wired requesting quotation and deliveries for
contemplated exercise of option.
June 18, 1941
- Propeller Division wired, quoting same price, contained in option
and furnishing delivery dates.
June 25, 1941
- Materiel Division, forwarded Change Order. Received by Propeller
Division June 27. 1941.
June 28, 1941
- Change Order executed and returned.
June 30. 1941
- Change Order approved.
July 24, 1941
- Copy of approved Change Order received by Propeller Division.
203
Contract W 535 ac-19046
March 4, 1941
- Propeller Division received request for
formal bid covering governor assemblies.
April 4, 1941
- Materiel Division telegraphed requesting
return of bid,
April 7, 1941
- Propeller Division advised that prices and
deliveries were being investigated and bid
would be furnished as analysis could be
completed,
April 26, 1941
- Propeller Division forwarded bid.
May 17, 1941
- Propeller Division received contract, for
execution, contract contained modified
Price Adjustment Clause.
June 2, 1941
- Materiel Divison forwarded letter request-
ing execution and return of contract be
expedited. 'ontractor advised sontract
being held pending final decision regarding
Price Adjustment Clause.
June 18, 1941
- Material Divison telegraphed requesting
execution and return of contract.
June 19, 1941
- Propeller Division replied advising
representative would visit Materiel Division
June 23, 1941 to discuss contract.
June 23, 1941
- Propeller Division representative negotiated
to
prices based upon use of modified Price
June 25, 1941
Adjustment Clause.
June 29, 1941
- Propeller Division representative executed
contract.
June 30, 1941
- 0'ontract approved by Government.
July 12, 1941
- Propeller Division received contractor's copy
of executed contract.
Regraded Unclassified
204
ract W 535 ac-19224
March 29, 1941
- Materiel Divison telegraphed request for
quotation covering & quantity of controllable
pitch propellers.
April 27, 1941
- Propeller Division forwarded quotation by letter.
May 23, 1941
- Materiel Division forwarded formal contract for
execution. Contract held pending decision re-
garding Price Adjustment Clause.
June 16, 1941
- Materiel Divison forwarded letter requesting
execution and return of contract be expedited.
June 23, 1941
- Propeller Division representative negotiated
to
prices based upon use of modified Price
June 25, 1941
Adjustment Clause.
June 30, 1941
- Contract executed by Propeller Division represent-
ative
July 8, 1941
- Materiel Division forwarded Contractor's approved
copy of contract.
July 10, 1941
- Approved Copy of contract received by Propeller
Division.
Poaradod nclassified
205
Contract W535 ac-19634
May 12, 1941
- Materiel Division forwarded Propeller Division
an invitation to bid on substantial quantity
of controllable pitch aircraft propellers.
May 20, 1941
- Propeller Division forwarded bid to Material
Division.
June 23, 1941
- Material Division forwarded formal contract
for execution by Propeller Division.
June 24, 1941
- Propeller Division received execution copies
of formal contract.
June 25, 1941
- Propeller Division returned executed copies
of the formal contract through its repres-
entative.
June 30, 1941
- Contract approved by the Government.
July 8, 1941
- Materiel Division forwarded executed copies
of the contract to the Propeller Division.
July 10, 1941
- Propeller Division received executed copy of
the contract.
206
Contract W535 ac-20391
June 23, 1941
- Propeller Division received from Material
Division an invitation to bid on various
assemblies comprising parts of a controll-
able pitch aircraft propeller.
July 3, 1941
- Propeller Division forwarded bid to the
Materiel Division.
July 22, 1941
- Materiel Division forwarded copies of the
proposed formal contract to the Propeller
Division for execution.
August 21, 1941
- Contract executed by Propeller Division and
forwarded to Materiel Division by contractor's
representative.
August 27, 1941
- Propeller Division notified of approval of
the contract by the Government.
September 5, 1941
- Propeller Division received executed contract
which had been forwarded by the Materiel
Division.
Regraded Unclassified
207
ARMY - AO 15802 0.0.7
1000 - P-40F
Regraded Unclassified
208
NEGOTIATION SUMMARY
CONTRACT NO. W535 ДО 15802
Change No.7
Installation of Rolls Royce Engines
December 4, 1940 - We received Air Corps letter dated December 3rd, signed by
Colonel E. W. Xennedy (then Major) stating that the Govern-
ment elected to exercise the option to install the Rolls
Royce Marlin engine in the last 1,000 P-40E type airplanes
and requesting our quotation.
December 5-27, 1940 - In view of the tremendous undertaking of placing Rolla
Royce engines in production in the United States so that
they would be suitable for installation in American built
aircraft with these engines using American accessories and
standards, the installation design information essential
for the airplane manufacturer could not be as readily obtained
as would have been the case had the engine been of American
design and manufacture in the first place. This information
was obtained by Curtias engineering personnel from the Packard
Company and the Rolle Royce representative stationed there, as
it became available from time to time, but the information was
wholly insufficient to enable us to make a quotation,
Deceater V, 1940 - Curties Wright telegraphed Air Corps and requested that the
option be exercised covering only the last 236 airplanes,
BO that production could continue without the change until
the engine work was complete on the airplanes changes nec-
essary to accommodate the new engine.
Detember 91, 1940 - Mr. W. J. Crosswell interviewed Colonel K. B. Wolfe (then
Major) at Wright Field concerning the possibility of 10-
ducing the quantity of airplanes to have the Rolle Royce
engine. Colonel Wolfe advised that the Rolle Royce instal-
lation was essential on the last 1000 airplanes, and that
in view of the fact that there would be necessarily an in-
terruption in our production on this contract while the
changes were being made in the airplane to accommodate this
engine other orders would probably be placed, covering air-
plane types which we then had in production so that there
would be no idle period.
Senuary 3, 1941 - Mr. P. N. Jansen, General Factory Manager of the Airplane
Division of Curtise-Wright, telephoned Colonel Wolfe to
discuss further the probable delay which would be occasioned
by the Rolls Royce installation. An agreement was reached
that we would still submit the proposal as agreed upon at
the December 31, 1940 conference.
Regraded Unclassified
209
Jan. 3 - 20, 1941 - Study continuing of production requirements in connection
with Rolls Royce installation in last 1000 airplanes.
Engineering personnel were, meanwhile, continuing their
endeavors to obtain balance of design information on
installation of Rolls Royce engine from the Packard
Company and Rolls Royce representative stationed there.
Jan. 20, 1941 -
Mr. W. J. Crosswell telephoned Colonel K. B. Wolfe
with reference to possible relief from additional
orders to fill the probable idle period caused by
the change in engines for the last 1000 airplanes.
January 22, 1941 - Curtiss prepared proposal letter covering production
schedules of the last 1000 P=40E airplanes with Rolls
Royce engines installed.
January 23, 1941 - Mr. W. J. Crosswell visited Dayton and submitted
Curtise-Wright proposal letter dated January 22, 1941,
which outlined the suggestion for additional airplanes
of the P-40E type in the event the Rolla Royce instal=
lation was required in the last 1000 airplanes as set
forth in the letter. General Kenney (then Colonel)
discussed the subject of the engine change with Mr.
Crosswell and expressed the opinion that the change-
over was necessary in view of the necessity for
greater altitude performance, but gave his approval
to further discussion of the subject by Curtise-Wright
personnel with Air Corps personnel in Washington.
January 24, 1941 - Mr. Crosswell and Mr. Jansen further discussed the
seriousness of the Rolls Royce change-over with
Colonel Volandt of the Chief of Air Corps Office,
Colonel Wolfe from Wright Field and Major Timber-
lake in Washington. At the conference it was
agreed that if possible Curtise would receive a
letter of intention, which later proved impossible
in view of insufficient funds being available then,
for additional P-40E airplanes to fill the idle
period created by the Rolla Royce Change-over,
Contract No. W535 AO 15802
Change No. ?
Regraded Unclassified
210
January 30, 1941 - General Kenney requested Mr. E. L. Noonan, Dayton repre-
sentative for Curtiss-Wright, to have Curtiss submit
A
quotation based on the Air Corps furnishing full heat
rejection data for the Rolls Royce engine by February 10,
1941, and on the further basis that Curtise would proceed
with production with the Air Corps accepting full respon-
sibility for cooling of the installation.
Fabruary 3, 1941 - Following further studies and proceeding with the design
of the Rolls Royce installation, Mr. Jansen and Mr. Cross-
well attended a conference at the Packard Company in Detroit
between General Echols, Colonel Wolfe, Major Doolittle, and
Major Irvine of the Air Corps at which it was agreed that
Packard would make every effort to determine their best
delivery schedule of engines. Pending this no further
production delivery schedules would be submitted by
Curtiss.
Fabruary 6, 1941 - Mr. Crosswell called General Kenney at Wright Field to
advise him that in view of the decision at Packard to
determine their most accurate delivery schedule of en-
gines, no further schedule would be submitted by Curties
pending this determination.
Fabruary 11, 1941 - Colonel K, B. Wolfe advised Mr. Berlin, Director of Military
Engineering of the Airplane Division of Curtiss-Wright that
the original Packard engine delivery schedule was considered
the most accurate it was possible to estimate.
impruary 14, 1941 - The Air Corps telegraphed heat rejection and other engin-
eering data concerning the engine to Curtiss; Curtiss, mean-
while, was considering the best delivery schedule with the
Air Corps accepting responsibility for cooling.
Fabruary 17, 1941 - The Materiel Division, Air Corps, telegraphed the Curtiss
Company authorizing proceeding on the basis of installing
the Rolls Royce engines in the last 1000 P-40E airplanes,
advising definitely further, that 312 additional airplanes
to be powered with Rolls Royce engines would be ordered and
granting authority to Curtiss to make an experimental Rolls
Royce engine installation in one P-40E airplane.
Fatruary 18, 1941 - Curtiss submitted its proposal letter, giving the new
delivery schedule based on the Air Corps accepting respon-
sibility for cooling, showing a two months earlier initial
delivery if this were done, over what would maintain if
Curtiss had to accept responsibility for satisfactory cool-
ing of the installation.
February 21, 1941 - Materiel Division furnished additional heat rejection data
for the Rolls Royce engine by telephone.
Contract No. W535 AC 15802
Change No. 7
Regraded Unclassified
311
February 22, 1941 - Curtiss advised the heat rejection figures satisfactory
providing they were acceptable to the Rolls Royce repre-
sentative at Packard and providing certain conditions
of our proposal letter were accepted by the Air Corps.
February 27, 1941 - Mr. F. E. Flader, Chief Engineer, Buffalo Plants, Air-
plane Division of Curtiss-Wright had further agreements
with representatives of the Air Corps, including Colonel
Wolfe, Major B. S, Kelsey and Major Bradley based on
a procedure, to the effect that Curtiss would release
for production and that the Air Corps would accept res-
ponsibility for cooling, provided Curties constructed
the installation in accordance with a drawing to be
approved by the Air Corps.
Warch 4, 1941
- Mr. Crosswell had discussed the detailed considerations
of the change order to the contract with Major Kelsey and
agreement was reached to prepare a new proposal letter
accordingly, which would supercede the proposal letter
of February 18, 1941.
March 9, 1941
- Proposal letter was submitted following coordination with
the attorneys and other interested people.
March 10, 1941 - Mr. Crosswell discussed further details of the change
order with Major Bradley and it was agreed that prepara-
tion of change order to the contract would proceed on
the basis of installing the Rolls Royce engine in the
last 1000 P-40E airplanes.
March 20, 1941 - Mr. Crosswell telephoned Mr. John Schwinn, Contract Ad-
ministrator at Wright Field who advised that the change
order was being prepared in accordance with Curties
proposal.
March 21 to April 8, 1941 - Change order in preparation at Wright Field.
April 11, 1941 - Change Order received at Buffalo.
April 18, 1941 - Change order No. 7 to the contract dated April 8, 1941,
providing for the Rolls Royce installation was executed
and forwarded this date following its receipt by Curties
by one week which was necessary for coordination with
attorneys prior to its execution.
May 3, 1941
- Contract change approved by War Department.
Contract No. W535 AC 15802
Change No. 7
Regraded Unclassified
212
ARMY - AC18685
312 P-40 F
Regraded Unclassified
213
NEGOTIATION SUMMARY
CONTRACT - 535 AO 18685
November 28, 1940 - Material Division letter of this date requested
quotation covering 312 airplanes (Rolls Royce
Engine). Since these airplanes would of neces-
sity have to be produced following the 1000 air-
planes covered by change No. 7 to Contract
HW 535 AO 15802 no quotation could be submitted
until negotiations have been completed with
reference to the change order.
February 18, 1941 - Proposal submitted following parallel proposal
on Contract # 535 AO 15802.
Feb.18 - Mar.9, 1941- Negotiations taking place with reference to
change No. 7 to Contract #W 535 AC 15802.
March 9, 1941 -
Revised proposal submitted.
Mar.9 - Apr.8, 1941-
Contract being prepared by Army.
April 8, 1941 -
Contract received for signature.
Apr.8 - 22, 1941 -
Change Order No. 7 to Contract #W 535 AO 15802
being reviewed. No action on this contract
could be taken until change order executed.
April 22, 1941 -
Contract signed by Curtiss and returned to War
Department.
May 3, 1941 -
Contract approved by War Department.
Regraded Unclassified
214
ARMY - 19164
1 - C-55
Regraded Unclassified
215
NEGOTIATION SUMMARY
CONTRACT NO. 19164
lanuary 22-23, 1941 - Mr. Smith visited Dayton and discussed with General
Kenney the utilization of the C-55 airplane. Proposal
was requested giving a price both as a separate pur-
chase and as the delivery of the first production C-46
with outline of our desired program for demonstration,
etc. A-1-D Priority was also discussed.
unuary 24-February 18, 1941 - Steps were immediately taken to obtain the
necessary engineering data for preparing the proposal
requested by General Kenney. Following the receipt
of the necessary information, estimates were made up
and all details coordinated for preparing the proposal
letter.
Fabruary 19, 1%1 - Messrs. Crosswell, Noonan, Warren met with General
Kenney, Major Cooke and Mr. Roush to advise that
Curtiss proposed offering the C-55 "as is" on an
additional contract rather than as the first article
on the C-46 contract. There was further discussion
as to details. Mr. Crosswell stated that the price
would be the average price of one C-46 airplane plus
a service charge, $25,000, plus equipment installed
In lieu of O.F.E.
February 20-24, 1V41 -In line with the discussion at the previous meeting
the proposal was then prepared.
February 25, 1941 - The proposal letter was delivered to the Materiel
Division at Wright Field.
Fabruary 26-March 5, 1941 - Army considering our proposal. Several con-
ferences were held regarding the Army's taking the
C-55 immediately.
March 5, 1941
-
Following a conference of Mr. Crosswell and Department
Reads at the St. Louis Plant, Mr. Crosswell telephoned
Major Morgan at Wright Field and arranged for him to
visit the St. Louis Plant on Monday, March 10, 1941,
with an inspection board for the purpose of inspecting
the airplane.
Varia 13, 1V41
-
Major Morgan visited St. Louis and conferred with Mr.
Scott and Mr. Moles, It was agreed for us to remove
or alter various installations.
Regraded Unclassified
216
March
17, 1941 - Major Morgan informed Mr. Scott by telephone that the
C-55 would be taken "as is" and have additional fuel
tankage added to have total tankage amount to 3,000
gallons fuel and 120 gallons oil. Weights and per-
formance were also discussed.
March
18,
1941 - Lt. Coupland phoned Mr. Page and advised that General
Arnold desired us to proceed at once with the prepara-
tion of provisions for a 3600 mile range. This was a
definite go-ahead to proceed with the project.
March 19, 1941 - Mr. Warren telephoned Mr. Koepnick, Major Morgan's as-
sistant, relative to the visit of technical group.
March 20, 1941 - Mr. Smith visited Washington and discussed with General
Eccles our proposal for altering the fuel system in the
airplane to provide additional range.
March 20, 1941 - Messrs. L. Koepnick, L. L. Aspelin, E. V. Argabright and
H. Harrington of the Air Corps visited St. Louis and
conferred with Messrs. Page, Wolford, Blount, Moles,
Chaffee, Parks, Talley of Curtiss-Wright, relative to
long range provisions, equipment, e tc.
March 24, 1941 - Major Morgan verified by phone conversation with Mr. Smith
that 2500 gallons of fuel was sufficient for the long range
proposal, and approved cabin installation of the tanks,
Vareb 24, 1941 - Telegram was received from Materiel Division constituting
our authority to proceed with revision of fuel system.
Varch 28, 1941 - Major Morgan and Major Thurlow visited St. Louis to confer
on long range airplane. They were accompanied by Mr.
Weatherford. Conference was held with Air Corps personnel
and was attended by Messrs. Smith, Page, Wolford and Moles.
Messrs. Moore, Rumph, Chaffee, Forster and Rugge were
present for part of the conference.
April 4, 1941 - Mr. Scott conferred in Dayton with Major Morgan relative
to Army cooperation with the C. A. A. in their inspection
of the power plant installation at our plant.
April 5-9, 1941 - Work proceeding on proposal letter as a result of above
conferences.
April 10, 1941 - Curtiss-Wright proposal letter to purchase of C-55 with
long range provisions.
April 10, 1941 - Messrs. Scott and Moles, with Materiel Division personnel
discussed long range provisions with Major Morgan at C. A. A.
meeting in Kansas City.
April 10-15, 1941 - Army considering our proposal letter.
Contract No. 19164
Regraded Unclassified
217
April 15, 1941 - Major Morgan called Mesers. Warren and France on quo-
tation, saying that it was too high.
April 15-19, 1941 - Estimates were carefully gone over and all factors in
the make up of our quotation given careful consideration.
April 19, 1941 - Mr. France confers with Project Officer on Training,
Production Engineering Section, by telephone on price
of above quotation,
April 19-22, 1941 - Studies continue on our quotation.
April 22, 1941 - Curtiss-Wright Forwarded letter to Division reducing
price for long range fuel, oil and navigation to an
amount of $44, 592.00, also agreeing to revise speci-
fication.
April 22-28, 1941 - Work progressing as agreed on the revised specifica-
tion.
April 28-29, 1941 - Mr. 3mith and Mr. Scott conferred with Mr. Kellhofer and
Lt. Coupland on tentative program:
Abandon attempts for C. A. A. license
Later C-46 for flight test for license.
Delivery to Air Corps for acceptance test 60 days
from date of signing contract.
Payment upon completion of Air Corps acceptance tests.
April 29, 1941 - Mr. Page spoke to Major Morgan on engineering changes.
Major Morgan informed that airplane is laid up because
of mishap.
April 30-May 7, 1941 - Army considering new proposal and revised specifica-
tion.
May 7, 1941
- Mr. Noonan received advance copy to Contract W535 AC19164
and immediately forwarded it to St. Louis.
May 8, 1941 -
- Contract studied and conferences held concerning it.
May 13, 1941
May 13, 1941
- Mr. Crosswell and Mr. Warren at the Materiel Division at
Wright Field agreed to the contract as written with certain
modifications.
May 16, 1941
- Executed contract forwarded to Wright Field with modifi-
cations.
May 29, 1941
- Contract approved.
Contract No. 19164
Regraded Unclassified
218
ARMY - AC 19174
120 - 0-46
Regraded Unclassified
219
NEGOTIATION SUMMARY
CONTRACT NO. W 535 AC 19174
February 19, 1941 - Mr. E. A. Warren, Sales Manager of the St. Louis Plant of
Curtiss-Wright Corporation, talked with Vr. Roush of the
Contract Section of the War Department at Wright Field.
Mr. Roush suggested that Curtiss-Wright Corporation, St.
Louis Plant, prepare a proposal covering an additional 120
C-46 airplanes.
The necessary steps were immediately taken to set in motion
the machinery for submitting a proposal. It has been pre-
viously stated that deliveries would not begin on this con-
tract until December 1942, a. long time in the future, and it
was extremely difficult to try and prognosticate the cost at
that far distant date. As a result numerous conferences were
necessary with the Director of Sales, Mr. V.J.Crosswell, Jr.,
the Production Departments and the Estimating Departments.
Kardh 1, 1941
-
Mr. C. W. France, Vice President and General Manager of the
St. Louis Plant received a telephone call from Captain (now
Major) Morgan, War Department at Wright Field, requesting that
We prepare estimates and quotations for an additional 234 air-
planes (C-46) instead of the quantity of 120 previously requested
by Mr. Roush. He asked that quotations be made on a. normal basis
with no expediting fees and with no more facilities involved.
Vardi 3, 1941
-
Mr. E. A. Warren talked with Major Morgan at Wright Field who
confirmed in detail his telephone conversation with Mr.
France on March lst.
March 4-31, 1941-
Steps were immediately taken to prspare a. completed estimate.
This required a great amount of detailed work. Numerous dis-
cussions and conferences were held with the Department Heads
affected.
March 31, 1941 -
A tentative proposal letter was taken to Buffalo by Mr. E.A.
Warren for discussion with Mr. Crosswell. It was decided to
rewrite the proposal and revise it asking for a cost-plus-
fixed-fee contract.
April 2, 1941
-
Mr. Crosswell, Mr. E. A.- Warren and Mr. E, L. Noonan, Curtiss-
Wright Corporation representative at Wright Field, discussed
with Mr. Roush at Wright Field the pros and cons of a fixed
price contract versus a. fixed fee contract.
Mr. Crosswell and Mr. Warren took the position that most of
the deliveries under the contract would be in the year 1943
and 1t was impossible to accurately forecast general costs
and the condition 0.8 to labor rates that far in advance; that
Regraded Unclassified
220
the 200 0-46 airplanes now under contract are not sufficiently under-
way in production so that we have any production cost data on
which to base our extimates; that sany Defense Contracts were
being let on a cost-plus-fixed-fee contract basis and as a re-
sult of which We would be at a disadvantage in competing for
personnel at that future date under 8. fixed price contract.
April 3, 1941 -
Mr. Crosswell called Mr. Burdette 8. Wright, Vice President
and General Manager of the Airplane Division, and informed
him that Mr. Roush wanted a fixed price contract, Mr. Wright
gave Mr. Crosswell a proposition on the basis of a fixed price
contract for further discussion.
April 8, 1941 -
Mr. Warren advised Mr. Crosswell that the Army now wished to
have our proposal written on the basis of a smaller number of
airplanes with an option for the balande.
April 9, 1941 -
The St. Louis Plant forwarded to Mr. Crosswell an estimate for
256 C-46 sirplanes plus 12/- spares. The estimate was revised
to conform with various agreements arrived at by Mr. Crosswell
and Mr. Warren with Mr. Roush at Wright Field on April 3.
We received the following wire from the Materiel Division of
the Air Corps:
"WITH REFERENCE PROCUREMENT ADDITIONAL
257 0-46 AIRPLANES MONEY IS AVAILABLE FOR 137
AIRPLANES ONLY AT PRESENT TIME AND FUNDS WILL BE
AVAILABLE FOR ADDITIONAL 120 AIRPLANES IN THE NEAR
FUTURE STOP CONTRACT WILL BE WRITTEN FOR 137 AIRPLANES
WITH OPTION FOR 120 AIRPLANES TO BE EXERCISED IN NINETY
DAYS FROM CONTRACT DATE STOP THIS REVISED BREAKDOWN
SHOULD BE INCORPORATED IN PROPOSAL LETTER NOW BEING
COMPILED BY CONTRACTOR."
April 17, 1941 -
Mr. Crosswell and Mr. Warren delivered our proposal letter
(dated April 16, 1941) covering the manufacture and delivery
of 137 0-46 airplanes and 10% spares. This proposal included
option for exercise within ninety days for an additional 120
0-46 airplanee and 10% spares. This proposal was made on the
basis of B. fixed price with an egcalator clause and stated
that it was our preference that the contract be on a cost-
plus-fixed-fee basis and went into great detail explaining
our reasons for this.
pril 24, 1941 -
Mr. Crosswell at Wright Field, Dayton, telephoned Mr. Wright
in Buffalo for approval on a unit cost estimate and a. unit
fixed fee as the basis for a cost-plus-fixed-fee contract.
Mr. Wright talked with Mr. France and both approved the unit
cost estimate as the basis for said contract.
Dril 25, 1941 -
Mr. Crosswell advised the Air Corps of Mr. Wright's and Mr.
France's decision. It was then stated that the contract would
be delivered to Mr. Noonan on the following Wednesday, May 7th.
ontract No.//W 535 AC 19174
Regraded Unclassified
221
May 7, 1941 -
Three copies of Contract # 535 AC 19174 were transmitted
to us by the Air Corps, by letter dated May 7, 1941.
May 9, 1941 -
Mr. Crosswell advised Mr. France that he and Mr. Wright
had checked the contracts and they were satisfactory.
May 13, 1941 -
After carefully checking the contract, Mr. E. A. Warren
advised Mr. Roush that the contracts were generally satis-
factory and would be signed and returned with & letter taking
exception to some few minor details.
May 14, 1941 -
Mr. France, Mr. 0. 1. 8. Boott (St. Louis) contacted Mr.
Kellhofer and Captain Coupland, War Department Representative
at Wright Field, and discussed with them some engineering
items in connection with the 0-46 contract.
May 16, 1941 -
We returned Contract ## 535 AC 19174 signed by the proper
officials of Curtise-Wright Corporation, in triplicate, to
the contracting officer with the minor exceptions outlined
in our letter of transmittal.
June 12, 1941 -
The signed contract was received by Curtise-Wright Corporation,
St. Louis Plant.
July 22, 1941 -
Air Corps exercised option in contract for 120 additional
airplanes by change order No. 1.
Contract No. # 535 AC 19174
Regraded Unclassified
222
ARMY - AC 18551
1 - XP-60
Regraded Unclassified
223
NEGOTIATION SUMMARY
CONTRACT NO. W535 AC 18551
inteber 28, 1940 - Major Bogert (now Colonel) and Captain Swafford (now Major)
discussed with Mr. Flader the possibility of including a
laminar flow wing on the XP-53 airplane.
notober 29-November 18, 1940 - Curtiss conducting studies.
November 18, 1940 -Curtise proposes to Air Corps an additional airplane to
have the laminar flow wing and be powered by the Rolls
Royce Merlin engine.
November 19-December 3, 1940 - Curtiss conducting additional studies and
awaiting Air Corpa action.
December 2, 1940 - Air Corps agreed with Curtiss proposal and designated one
additional airplane.
lecember 5-6, 1940 - Mr. Berlin in conference with Major Bogert regarding
engineering matters pertaining to the airplane.
December 7-10, 1940 - Curtiss conducting further studies.
December 10, 1940 -Mr. Berlin called Major Bogert and, among other matters
discussed, proposed the price of $300,000. and approxi-
mately an eight months delivery of the airplane and
agreed to immediately start preparation of preliminary
specification.
Décember 11-23, 1940 - Curtiss further considers design and proceeds with
preparation of preliminary specification.
Recember 23, 1940 -Mr. Flader in conference at Wright Field to discuss
further design matters.
December 24-January 12, 1941 - Curtiss further studying design and currently
working with Wright Field on certain possible modifica-
tions to the design.
anuary 13, 1941 - Mr. Flader and Mr. Berlin in conference with General
Rehols, Colonel Kenney and Major Bogert at Wright Field,
where General Echols definitely established that the
XP-60 and XP-53 airplanes would be identical, except
that the XP-60 would include the Rolls Royce engine
instead of the Continental and that production P-60
airplanes would be capable of accommodating either
engine.
Regraded Unclassified
224
January 14-23, 1941 - Curtise proceeding with further design studies in
preparation of preliminary specification.
January 23, 1941 - Mr. Crosswell and Mr. Flader at Wright Field - Negotiated
price for two airplanes and delivered the preliminary
specification (purchase of the second airplane still
doubtful).
January 24-28, 1941 - Curtiss continuing with design studies.
January 28, 1941 - Mr. Wright telephoned Major K. B. Wolfe at Dayton
proposing that Curtiss proceed with production engineering
for P-60 airplanes in advance of the XP-60 completion,
so as to make possible earlier production deliveries.
Major Wolfe agreed and further advised that he was working
up a program for 1943 calling for P-60 production.
January 28-February 6, 1941 - Curtiss begins preparation of final specifica-
tion and data.
February 6, 1941 - Curtisa formal proposal forwarded to Materiel Division,
confirming negotiations of January 23, 1941.
February 7-26, 1941 - Curtisa engineering personnel currently discussing
specification requirements with Materiel Division engin-
eering personnel.
February 27, 1941 - Mr. Flader visited Wright Field and in conference with
Materiel Division personnel agreed on final specification
covering the XP-60 airplane. At this conference Mr. Flader
was advised that the Army intended to procure 1300 P-60
production airplanes.
March 1, 1941 -
Materiel Division confirmed the program established in the
conference with Mr. Flader.
March 1-26, 1941 - Curtiss proceeding with the design of the production air-
planes.
March 26, 1941 - General O. P. Echols and Colonel B. E. Meyers visited
Buffalo and were in conference with Colonel Simonin,
Messrs. Flader, Jansen, and Crosswell. At this confer-
ence it was confirmed that the XP-60 contract would soon
be forthcoming and that Curtiss was proceeding with the
design of the XP-60 airplane and meanwhile carrying on
parallel production design. General Echols urged that
this program continue as rapidly as possible and further
emphasized the desirability of having both experimental
and production airplanes accommodate either the Rolls
Royce or Continental engine.
Contract No. W535 AC 18551
Regraded Unclassified
225
March 27-April 3, 1941 - Curtiss continuing the engineering work on the XP-60.
April 3, 1941
- Curtiss received the contract for the XP-60 airplane
(covering 1 airplane only), forwarded with Materiel Divi-
sion letter, dated March 31, 1941.
April 4-10, 1941 - Certain necessary specification deviations were not clearly
covered in the contract, which were being studied by Curtiss.
April
11,
1941
- Additional data requested by Curties.
April 11-16, 1941 - Further coordination and study of contract by Curtise.
April 17, 1941
- Mr. Flader visited Wright Field for conferences regard-
ing necessary specification deviations not covered in the
contract.
April 18-21, 1941 - Agreements reached by Mr. Flader being coordinated with
reference to contract.
April 22, 1941 - Contract provisionally executed and returned to Wright
Field, its acceptance by Curtias predicated on specifi-
cation deviations discussed in Mr. Flader's conference
at Wright Field of April 17th being accepted by Army.
April 22-30, 1941 - Air Corps studying specification deviations.
April 30, 1941 - Materiel Division verbally requested Mr. Noonan to have
Curtiss cancel the April 22d letter forwarding the con-
tract.
May 1, 1941
- Materiel Division telegram received formally requesting
this cancellation and giving specification deviations
which are probably acceptable to Curties.
May 1-6, 1941 -
Curtiss studying specification deviations proposed by
Air Corps.
May 6, 1941
-
Curtiss and Materiel Division agree to specification
deviations by telegram.
May 6-19, 1941 -
Curtiss all along had proceeded with design and now be-
gan inclusion of design changes according to agreements
reached. Curtiss also awaiting Army action on contract
approval.
May 19, 1941
-
Contract approved.
Contract No. W535 AC 18551
Regraded Unclassified
226
ARMY - DAW535A0-3
1500 P-40E-1
227
NEOOTIATION SUMMARY
CONTRACT NO. DAN 535 AC 3
As early as April 1940 the British Government had expressed
67 (Stention to purchase 600 additional Hawk 87A airplanes over and above what
truey then had on order with us. Options for this number of airplanes were in-
cluded in letters of intention then in force with the British Government.
Negotiabions with the British continued for several months for the additional
airplanes, with the British giving every assurance that option for the full
mantities would be taken up. In September 1940 there was a conference at
between executives of the Curtiss Company and General Arnold of the
Fr Carps, Mr. Knudsen of OPM, and Mr. Fairey of the British Purchasing Commis-
at which it was again definitely stated the British would take up our
potton for the full quantity of Hawk 87A airplanes. During September 1940 the
section exercised the option for 180 of the airplanes covered by options leav-
inc a balance of 420 airplanes. The British during October 1940 requested
vraission of the Treasury Department to purchase these additional 420 airplanes,
which permission was given by Mr. Philip Young's letter dated October 15, 1940.
Negotiations continued with the British from approximately that time until the
site of December 1940 at which time they definitely informed Curtiss that they
enold not purchase the airplanes until certain procedures of finance then being
considered within the U. S. Government had matured. The British assured Curtiss,
Lawever, at this time that the airplanes would be purchased by someone and that
they, the British, definitely wanted the airplanes.
In view of the situation which would call for interrupted pro-
Action unless Curtiss proceeded with the placing of orders for materials Ln
strate of definite contract commitments, Curtiss decided to place material
iriars on January 1, 1941, and proceeded accordingly. Prior to this, assurances
that been obtained by Curtiss from Government officials, including General Echols
to Air Corps and Mr. Philip Young of the Treasury Department that the orders
definitely be forthcoming.
During the month of January 1941, Mr. Crosswell contacted Str.
may Young several times and Mr. Lovett of the Office of the Assistant Secretary
N wer with reference to a contract covering these 420 airplanes and received
Akilmances from both that a contract would eventually be forthcoming. During
of January 1941 the British finally advised Curtiss definitely that they would
unside to, themselves, place the order for the 420 airplanes, but that they
wanted the airplanes.
Amary 24, 1941-Mr. Crosswell and Mr. Jansen were in conference with Colonel
Volandt, Colonel K. B. Wolfe, Major Timberlake, all of the
Office of the Chief of Air Corps in Washington on the subject
of the 420 airplanes, at which conference it was agreed that
Curtiss would be given a letter of intention covering the
airplanes providing this could be done. There was tome doubt
Regraded Unclassified
228
that it was possible to cover the entire number of 420 by a
letter of intention in view of funds not being available.
However, there was definite authorisation for 100 airplanes.
Jan. 25 - Feb. 4, 1941 - Curties awaiting Army action.
Feb. 5, 1941 - Mr. Crosswell telephoned Major Timberlake in the Office of
The Chief of Air Corps requesting information as to the
progress and was informed that a letter of intention cover-
ing 420 airplanes had been prepared which it vas contemplated
the Army would cover with funds borrowed from RFC. The letter
of intention, however, would not be issued until the funds had
actually become available. Major Timberlake advised that Ourtias
should receive information from Wright Field at & reasonably
early date.
Feb. 6 - 7, 1941 Curtise awaiting Army action.
Feb. 8, 1941 - Curties received telegram from the Materiel Division requesting
quotation on 100 P-40E airplanes.
Feb. 9 - 12, 1941 Ourties preparing quotations.
February 12, 1941 Crosswell telephoned Major I. B. Wolfe at Wright Field, when
Major Wolfe requested quotation on 400 P-40E's.
Feb. 13 - 16, 1941 - Curtise preparing quotation in accordance with Colonel
Wolfe's request of 2/12/41.
Feb. 17, 1941 - Mr. Crosswell delivered Curties letter, dated February 16, 1941
to Wright Field proposing the 400 P-40E-1 airplanes.
Feb. 18 - 20, 1941 - Curtiss awaiting further Army action.
Feb. 21, 1941 - Mr. Crosswell telephoned Major Timberlake in Washington who
advised the 400 P-40E airplanes would be purchased on a letter
of intention from the RFC following Wright Field's approval of
negotiation for the airplanes.
Feb. 22, 1941 - Mr. E. L. Noonan, Daybon Representative for Ourtiss-Wright, was
advised by Wright Field that the quantities stated in our letter
of February 16th were in error and that the number should have
been 334 airplanes, plus 20% spares.
Feb. 23, 1941 - A further proposal was prepared on the basis of Mr. Noonan's
advice.
Feb. 24, 1941 - Mr. Crosswell visited Wright Field with the proposal letter
and at that time found that the quantity had again been changed
to 420 P-40E airplanes, plus 20% spares. Mr. Crosswell prepared
a new proposal letter in Dayton, based on the new quantities,
dated September 24th and submitted ssae. At this time the desig-
nation became P-40B-1. Mr. John Schwinn, Contract Administrator
at Wright Field, requested additional data concerning price.
Contract No.DAW 535 AO 3.
Regraded Unclassified
229
Feb. 26, 1941 - This additional date was forwarded to Wright Field as I'm
quested by Mr. Schwinn.
Feb. 28, 1941 - Mr. E. L. Noonan was advised by Wright Field that the pro-
curement had again been changed, pending passage of the Lend-
Lease Act and that & contract would be prepared covering 100
airplanes with option covering 1026 additional airplanes.
At the same time Mr. Noonan was advised of the likelihood
that & contract for 320 airplanes would be offered us by the
Defense Supplies Corp.
Mar. 1, 1941 -
Curties awaiting Air Corps action on the contract for 100
Mar. 9, 1941
airplanes and on the Dafense Suppliss Corporation contract and
Defense Supplies Corporation's convenience for conference.
Mar. 10, 1941 - Mr. Paul Van Anda, Council for Curties-Wright, and Mr. Crosswell
were in conference with Mr. George Hill of Defense Supplies
Corporation and Mr. Warren Ege of the Assistant Secretary of
War's Office, at which conference the proposed contract with
the Defense Supplies Corporation was presented by Mr. Hill.
Curtise objected seriously to certain provisions of the contract
and it was necessary to further consider the matter.
Mar. 12, 1941 - Mr. Crosswell telephoned Mr. Ege and set a further conference
tentatively for March 18th. Meanwhile Curtiss and Defense
Supplies would further consider the proposed contract.
Mar. 18, 1941 - & conference between Messrs. Crosswell, Van Anda, Hill and Ege -
certain objections to the contract which Curtiss-Wright raised
could not be granted by Defense Supplies Corporation. Accord-
ingly the conference was concluded with the understanding that
Curtiss would consider further the pointe in question.
Mar. 19, 1941 - After further coordination, Mr. Crosswell telephoned Mr. Hill
and proposed that the Defense Supplies Corporation contract
be held in abayance for a period of 10 days to 2 weeks pending
the passage of the Lend-Lease Act which would probably permit
the Air Corps to enter into a contract with Ourtiss for the
airplanes and it might therefore be unnecessary to enter into
the Defense Supplies contract at all (the intent of the Defense
Supplies contract was ultimately to transfer to an Air Corps
contract) with which Mr. Hill was in complete agreement.
Mar. 20, 1941 - The Air Corps had meanwhile been proceeding with preparation
of a contract for 100 P-40E-1 airplanes. Mr. Crosswell tele-
phoned Mr. Schwinn with reference to progress on this date.
Mr. Schwinn advised that the contract was ready and would be
forwarded this date or the following day.
Mar. 21, 1941 - Contract W 535 AC 18496 for 100 P-405-1 airplanes plus 20%
spares with option for 1026 additional airplanes was forwarded
to Curtiss by Wright Field.
Contract No. DAW 535 AC 3.
Regraded Unclassified
230
Mar. 22, 1941 - The contract was executed and forwarded to Mr. Noonan.
Mar. 24, 1941 - Contract was delivered to Wright Field by Mr. Noonan.
Mar. 25 - April 2, 1941 M Curtise awaiting Army further action on contract.
April 3, 1941 - Mr. John Schwinn negotisted 8. price with Mr. Crosswell for
the airplanes covered by the option of the contract, no price
for which was stipulated therein.
April 4, - April 16, 1941 - Curtise awaiting further Air Corps action on
contract.
Apr. 17, 1941 - Mr. Crosswell and Mr. Jansen discussed with General Kenney
and Colonel Wolfe at Wright Field, Curties' future production
requirements, at which conference it was agreed that Curties
would submit a complete statement of future requirements up
through the end of 1942.
Apr. 18 - 23, 1941 - Curtiss preparing statement.
Apr. 24, 1941 - Mr. Crosswell was in Dayton and presented Ourties letter,
dated April 23, 1941 containing the statement of production
requirements for the Buffalo plants. A conference was held
between General Kenney and Colonel Wolfe, Mr. D. R. Berlin,
Mr. E. L. Noonan and Mr. W. J. Crosswell with reference to
data contained in letter. At this conference it was brought
out that Curtiss had originally been scheduled for delivery
of 350 pursuit units per month, but in view of certain read-
justments of the other airplanes requested of Curties and
certain increased productive efficiency on the part of Curties,
a capacity had become available for 520 pursuit airplanes per
month of the P-40E type. At the conference, however, General
Kenney and Colonel Wolfe advised Curtiss should hold the pur-
suit capacity to approximately 350 airplanes per month, the
remaining capacity to be absorbed by other types. At this
conference Curtiss was also advised that 2000 P-40E airplanes,
which number would include the 420 airplanes, were to be ordered
by the Army for the British. Curtise at this time was also
advised that the funds covering Contract W 535 AO 18496 covering
the 100 airplanes had been withdrawn, but that with the Lend-
Lease funds becoming available, the contract would be reworked
to cover 420 airplanes, plus 20% spares with option for 1580
additional airplanes plus 20% spares.
Apr. 25, 1941 - The reworked contract was forwarded to Curties.
April 26, 1941 - Curtise executed the contract and forwarded same to Wright Field.
Apr. 26 - May 12, 1941 - Ourties awaiting Air Corps action on approval of contract.
May 12, 1941 - Contract approved by War Department.
Contract No. DAW 535 AO 3.
Regraded Unclassified
330
MAT. 22, 1941 - The contract was executed and forwarded to Mr. Noonan.
Mar- 24, 1941 - Contract was delivered to Wright Field by Mr. Noonan.
Mar. 25 - April 2. 1941 - Curtiss awaiting Army further action on contract.
April 3, 1941 - Mr. John Schwinn negotisted 8 price with Mr. Crosswell for
the airplanes covered by the option of the contract, no price
for which was stipulated therein.
spril 4, - April 16, 1941 - Curtise awaiting further Air Corps action on
contract.
Apr. 17, 1941 M Mr. Crosswell and Mr. Jansen discussed with General Kenney
and Colonel Wolfe at Wright Field, Curtiss' future production
requirements, at which conference it was agreed that Curtiss
would submit E complete statement of future requirements.up
through the end of 1942.
Apr. 18 - 23, 1941 - Curtiss preparing statement.
Apr. 24, 1941 - Mr. Crosswell was in Dayton and presented Curties letter,
dated April 23, 1941 containing the statement of production
requirements for the Buffalo plants. A conference was held
between General Kenney and Colonel Wolfe, Mr. D. R. Berlin,
Mr. E. L. Noonan and Mr. W. J. Crosswell with reference to
data contained in letter. At this conference it was brought
out that Curtise had originally been scheduled for delivery
of 350 pursuit units per month, but in view of certain read-
Justments of the other airplanes requested of Curtisa and
certain increased productive efficiency on the part of Curtias,
a capacity had become available for 520 pursuit airplanes per
month of the P-40E type. At the conference, however, General
Kenney and Colonel Wolfe advised Curtise should hold the pur-
suit capacity to approximately 350 airplance per month, the
remaining capacity to be absorbed by other types. At this
conference Curtise was also advised that 2000 P-40E airplanes,
which number would include the 420 airplanes, were to be ordered
by the Army for the British. Curtiss at this time was also
advised that the funde covering Contract W 535 AC 18496 covering
the 100 airplanes had been withdrawn, but that with the Lend-
Lease funds becoming available, the contract would be reworked
to cover 420 airplanes, plus 20% spares with option for 1580
additional airplanes plus 20% spares.
Apr. 25, 1941 - The reworked contract was forwarded to Curtiss.
April 26, 1941 - Curtise executed the contract and forwarded same to Wright Field.
Apr, 26 - May 12, 1941 - Curtise sweiting Air Corps action on approval of contract.
May 12, 1941 - Contract spproved by War Department.
Contract No. DAW 575 AO 9.
Regraded Unclassified
231
June 19, 1941 - The Air Corps requested Curtise extend option an additional
30 days.
June
26, 1941 - General Kenney advised Mr. Crosswell that British had out
their requirements from 2000 to 1500 airplanes and proposed
to Mr. Crosswell that the Air Corps would exercise the option
for 1080 additional P-40E-1 airplanes providing Curtise would
agree to further option calling for last 500 airplanes to be
equipped with improved supercharger to which Mr. Crosswell
verbally agreed.
June 27, 1941 - Curtise formally confirmed to Wright Field that the terms of
the further option would be satisfactory.
June 28, 1941 - A change order covering the exercising of the option was given
to Mr. Noonan at Wright Field by the Air Corps, who proceeded
to Buffalo. The change order was executed this date and Mr.
Noonan returned to Dayton.
June 29, 1941 - Mr. Noonan delivered the executed change order to Wright Field.
June 30, 1941 - The Change order approved by the War Department.
Contract No. DAW 535 AC 3.
Regraded Unclassified
232
ARMY - Ac 22239
1 - 24B Flying Model
Regraded Unclassified
233
NEGOTIATION SUMMARY
CONTRACT NO. AC 22239
Jan. 23, 1941 - Mr. Smith conferred with Major Simms of Experimental Section
at which time he said the Division would be anxious to get a
complete report and discussion of the airplane's status,
together with our Engineering schedule showing how and when
we could handle this project without interfering with produc-
tion -- that with this information they should be able to recom-
mend procurement with their spring experimental funds.
May
20, 1941 - Mr. France in Dayton has a conference with Major Craigie,
Captain Moyer, Major Simms. Mr. France was accompanied by
Mr. Scott. The Division favors Curtiss-Wright building a
flying model - suggesting that certain wind tunnel testing
be done - and suggests Curtiss-Wright submit a proposal letter.
Curtiss gave an approximate cost of $150,000 and Air Corps
seemed agreeable.
Vay 20-29, 1941 - Proposal letter being prepared by Curtiss.
May 29, 1941 - Curtiss-Wright's proposal letter: "Proposal for Building a
Full Scale Flying Model XP-55 Type Airplane" forwarded to
Division. Price of airplane tested and delivered given as
$169,740.00.
May 29-July 10, 1941 - Air Corps studying Curtiss' letter of proposal.
June 6, 1941 - Mr. Smith visited Major Bogert, who stated he was anxious to
see us supply pressure to obtain all possible results from
wind tunnel testing, to answer the Division's doubts as to
stability, etc. Specification left with Major Bogert, who
said be would hold this until the wind tunnel results were
obtained from MIT.
June 6-July 10, 1941 - Engineering Department working on design study for
flying model. During the course of these studies a proposal
was made to the Army that the Mengel Box Company build the
flying model.
July 10, 1941 - Air Corps reply to above proposal dated May 29, price out of
line, request restudy and resubmittal, mentioning figure of
$125,000.
July 10-29, 1941 - Contract for building the wings of the flying model
awarded to the Mengel Box Company. Experimental Department
proceeding with the work of building the fuselage and engine
mounts.
Regraded Unclassified
234
July 29, 1941 - Curtise resubmittal of proposal: Estimated Cost, $117,924.53,
fixed fee, $7,075.47.
July 29 - Sept. 17, 1941 - Engineering Department proceeding with the design
and production work for the flying model and the construction
work of the flying model going on.
Sept. 17 - 19, 1941 - Mesars. Scott and Smith conferred with Major Bogert and
Major Roth, who informed them they were anxious to push through
flying model proposal. Scott went over specifications with
them and agreed on changes. As soon as this printed and for-
warded authorization will be issued, as general contract terms
were agreed upon.
Sept. 22, 1941 (approximately) - Telephone call between Mr. R. A. Rugge and
Lt. Col. Lewis on assignment of radio frequencies for use at
Muroc Dry Lake.
Sept. 25, 1941 - Major Roth to Mr. Smith via telephone: A propeller brake con-
sidered satisfactory on 24B as means of reducing hazard of
emergency parachute jump, include in specifications.
Sept. 29 - Oct. 9, 1941 - Army considering proposal
Sept. 29, 1941 - Mr. Smith took specifications and letter to Materiel Division
(trip devoted to other projects).
Oct. 9, 1941 - Notification by Contract Branch of award of Contract 1 535 AC 22239
of above project. A-1-D priority given.
Contract No. AC 22239
Regraded Unclassified
235
NAVY - 88659
1 - XSB3C-1
236
NEGOTIATION SUMMARY
CONTRACT #88659
January 10, 1941 - Received Bureau of Aeronautics letter dated January 8, 1941,
seking if Curtise is interested in participating in the
design of an experimental scout bomber. The letter advised
that the Bureau expected that if the design were suitable,
experimental contracts would be awarded very shortly there-
after for two or more prototype airplanes which contracts
were to be negotiated under authority of Section 10K of the
Act approved July 2, 1926. It is understood this same letter
was sent to a number of other manufacturers.
January 12, 1941 - Curties forwarded letter signifying its interest in partici-
pating in the design competition.
February 9, 1941 - Curtise received confidential information pertaining to design
requirements of the type.
Feb.10 - Apr.27,1941 - Curtiss preparing design data with accompanying documents
for submitting to the Navy Department.
April 28, 1941 -
Curtise mailed its proposal with enclosed data of this date
to the Chief of Bureau of Aeronautics.
Apr.30 - May 25,1941 - Navy considering Curtiss proposal.
May 25, 1941 -
Mr. R. C. Blaylock was requested to discuss specifications
in detail for the new development. Mr. Crosswell on this
date was also requested to see Commander L. B. Richardson,
Procurement Officer of the Buresu of Aeronautics, with ref-
erence to agreement as to price, looking toward a contract
for the project.
May 26, 1941 -
Mr. Orosswell collected data in preparation to discussing
the price with Commander Richardson on May 27, 1941.
May 27, 1941 -
Mr. Crosswell and Mr. J. A. Williams discussed the price
at some length with Commander Richardson. Commander Richardson
desired additional data presented.
May 28, 1941 -
Mr. Crosswell submitted additional data requested by Commander
Richardson.
May 29, 1941 -
Mr. Crosswell telephoned Commander Richardson to inquire whether
there had been any decision and was informed at that time there
had been no decision.
May 29, June 2, 1941 - Awaiting Navy action.
Regraded Unclassified
237
June 2, 1941 -
Commander Richardson telephoned Mr. 0. 0. Emerson, Washington
Representative for Curtise-Wright Corporation, and advised of
8 price on the project which would be satisfactory to the
Navy Department. Later in the day Mr. Crosswell telephoned
Captain Webster in the Bureau of Aeronautics, being unable to
reach Commander Richardson, to discuss the matter with him and
finally in this telephone conversation agreed to the price
which Commander Richardson had stated to Mr. Emerson.
June 3 - June 20, 1941 - Awaiting processing of papers.
June 21, 1941 -
Received Bureau of Supplies and Accounts Schedule, No. 500-3490,
with accompanying letter dated June 20, 1941, calling for bide
on the airplane.
June 23 - June 26, 1941 - Bid being prepared by Curtiss.
June 26, 1941 -
Bid forwarded to Bureau of Supplies and Accounts.
June 30, 1941 -
Notice of award of contract received by Curtise in accordance
with our bid.
Contract No. 88659
Regraded Unclassified
238
NAVY - 76925 EXT.
150 - SNC-1
Regraded Unclassified
239
NEGOTIATION SUMMARY
EXTENSION TO CONTRACT NO. 76925
August 27, 1941 - Mr. Crosswell informally advised by Commander Miles that
we would be requested to submit quotation on 150 additional
SNC-1 airplanes plus 20% spares.
August 30, 1941 - Navy Bureau of Supplies and Accounts letter to Curtiss-
Wright, letter of intent, extension to Contract 76925 for
150 additional SNC-1s plus 20% spares.-
6% Fixed Fee or $249,300
Total price not to exceed $4,404,300
August 30- September 11, 1941 - Curtiss coordinating letter of intent with
Department Heads and attorneys and studying price and
delivery schedules.
September 12-13, 1941 - Messre. Warren and Crosswell contact Navy and accept
letter of intent with letter of exception dated September
12th, taking exception to the ceiling on price stated by
Navy in letter of intent. Executed copies of letter left
with Navy September 13th. This at Lease-Lend Contract for
Great Britain.
Mr. Warren contacted Mr. Micotti of the Specification Sec-
tion on September 13th but Bureau of Aeronautics not pre-
pared to enter into detailed specification negotiations
as of this date although stated the repeat order will be
for an airplane known as the SNC-1B.
September 13-22, 1941 - Awaiting word from Mr. Micotti of the Specification
Section on detailed specification negotiations.
September 17, 1941 - Messrs. Crosswell, Clark, Wadsworth and Warren contacted
Commander Miles, Procurement Officer. Agreement reached on
extending costs to apply on additional quantity on current
76925 contract. No particular engineering changes contem-
plated.
Mr. Warren contacted Mr. Torbert of the Procurement Section
who states that our letter of exception dated September 12,
appears satisfactory.
September 22, 1941 - Messrs. Warren, Driefke and Page contact Mr. Micotti of
the Specification Section. Curtiss to rewrite Specification
279 and submit a letter of description on the Lease Lend
Airplane. The rewritten version shall include all changes
made in accordance with Trial Board review.
Regraded Unclassified
240
Mr. Warren and Mr. Driefke contacted Lieutenant Richardson
of the Electrical Section on electrical changes in the air-
plane.
September 22, 1941 - Curtias letter "Expenditure Authorization, Materials,
Labor, Engineering and Tools - 150 airplanes Plus 20%
spares, Model SNC-1" forwarded to Navy, Bureau of Supplies
and Accounts.
September 25, 1941 - Curtiss letter "Contract 76925 - SNC-1 Airplanes and
Spares - Additional Procurement" forwarded to Navy, asking
that award be made not later than October 15, 1941.
September 29, 1941 - Navy, Bureau of Aeronautics letter giving Preference
Rating of A-1-D to 150 additional airplanes.
October 2, 1941 - Navy Bureau of Supplies and Accounts letter "Preliminary
Award of Extension to Contract No. 76925, for 150 SNC-1
Airplanes also Authorization for procurement of materials".
Navy accepted Curtiss figures of our letter of September 22d.
October 3, 1941 - Curtiss immediately proceeds with arrangements for procure-
ment of materials.
October 15, 1941 - Navy Bureau of Supplies and Accounts letter "Contract
No. 76925 - SNC-1 Airplanes and Spare Parts - Extension
to cover Additional Quantity" giving A-1-D Priority, in
agreement as to price with our letter of September 25th,
deliveries through August 1942, beginning April 1942.
October 17, 1941 - Curtiss-Wright letter to Procurement Office, Bureau of
Aeronautics questioning Priority Rating, revising delivery
dates of airplanes.
Contract No. 76925
Regraded Unclassified
241
NAVY - - 76800
250 - 8030-1
INFLAMMABLE
NON
242
NEGOTIATION SUMMARY
CONTRACT NO. 76800
August 27, 1941 - Mr. Crosswell informally advised by Commander Miles that we
would be requested to submit quotation on 250 additional
S03C-1 type airplanes - 200 for Navy, 50 for British.
September 2, 1941 - Received Navy Department letter, dated August 29, 1941,
requesting a quotation for 200 additional airplanes, plus
20% spares.
September 2-12, 1941 - Preparing price estimates based on an extension of
Contract 76800 to cover 250 additional airplanes and
20% spares, coordinating this with our proposal dated
September 3 covering additional SB2C-1 airplanes and
the change-over of the basic contracts (76800 and 79082)
from fixed price to cost plus fixed fee.
September 6, 1941 - Received Navy Department letter dated August 30, 1941,
confirming the advice previously furnished as to inten-
tion to purchase 50 additional airplanes and 20% spares,
and requesting estimates of maximum cost of materials
necessary for the construction of these airplanes and
spares.
September 9, 1941 - Forwarded acceptance of the procedure outlined in Navy
Department letter of August 30, and submitted our estimates
of material costs.
September 12, 1941 - Mr. 0. B. Clark, Sales Manager at the Curtiss-Wright
Corporation, Airplane Division, Columbus Plant and Mr.
W, J. Crosswell, Director of Military Sales, Airplane
Division, Curtiss-Wright Corporation, discussed the
price for the additional airplanes with Commander Miles,
Procurement Officer of the Bureau of Aeronautics. Com-
mander Miles desired additional data which we agreed to
furnish.
September 17, 1941 - Following preparation of the data Mr. G. B. Clark and
Mr. J. Wadsworth, Assistant to the Director of Personnel
for the Airplane Division of Curtiss-Wright, and Mr. 1. J.
Crosswell discussed the additional data requested at the
former negotiation by Commander Miles. Mr. Crosswell later
discussed the data jointly with Captain Krauss, Chief of
the Materiel Division of the Bureau of Aeronautics of the
Navy Department, and Captain Webster, Assistant Chief of
the Materiel Division of the Bureau of Aeronautics. Later
Mr. Crosswell discussed the costs again with Commander Miles
Regraded Unclassified
243
at which time Commander Miles informed Mr. Crosswell that
the Navy would not recognise the payment by the Navy De-
partment of any royalty to Handley Page Limited for
Curtiss' use of alotted wings. Since this matter would
require further coordination with attorneys Mr. Crosswell
advised Commander Miles that the question would be dis-
cussed at a later date when it had been properly coor-
dinated with attorneys.
September 19, 1941 - Mr. W. E. Valk, Patent Attorney for Curtiss-Wright,
discussed the question of Handley Page royalty with
Commander Miles and Commander Caldwell, the latter
of the Judge Advocate General's Department of the Navy,
at which time Commander Caldwell agreed to consider the
matter and render a decision within several weeks.
September 24, 1941 - Following coordination with attorneys Mr. Crosswell
telephoned Commander Miles and advised that the Curtiss-
Wright Corporation would accept the estimated cost for
the additional airplanes which was established by Com-
mander Miles in the September 17th conference as being
acceptable to the Navy Department, and that the matter
of the Handley Page royalty would be left open. Mr.
Crosswell further advised that our formal letter con-
firming negotiations would be prepared and forwarded
forthwith.
Commander Miles informed Mr. Crosswell that in view
of this the arrangements would be satisfactory to the
Navy Department and that he would immediately commence
processing of the contracts for the change-over from
the fixed price to cost plus a fixed fee on the basic
contracts, Nos. 79082 and 76800 with the extensions
to cover the additional SB2C-1 and 5030-1 airplanes,
plus spares.
September 25, 1941 - Formal proposal letter in confirmation of negotiations
mailed to the Navy Department.
September 26-30, 1941 - Curtiss-Wright Corporation and Navy Department
both giving further consideration to the Handley Page
royalty question, meanwhile above referred to processing
of basic papers was proceeding.
September 30, 1941 - Received Navy Department letter dated September 25,
giving authorization to proceed with purchase of mater-
ials for construction of the 50 additional airplanes for
the British plus 20% spares.
Contract No. 76800
Regraded Unclassified
244
October 2, 1941 - Mr. W. E. Valk discussed the Handley Page royalty question
with Commanders Miles and Caldwell, Mr. Schmidt of the
Bureau of Aeronautics, and Mr. McLean of the Judge Advocate
General's Office, at which conference it was agreed that a
letter would be submitted to the Navy Department covering
the Handley Page royalty question.
October 2-10, 1941 - The letter was in preparation with the coordination of
all interested parties.
October 10, 1941 -The letter covering the Handley Page royalty question was
forwarded to the Chief of the Bureau of Aeronautics by
Mr. W. J. Crosswell.
October 17, 1941 - Mr. Crosswell and Mr. Clark discussed with Mr. Custer of
the Bureau of Supplies and Accounts the inclusion of
provisions for advance payments in the contracts and
further the time that awards of additional quantities
of S03C-1 and SB2C-1 airplanes could be made, the awards
carrying the change-over from fixed price to cost plus a
fixed fee of the basic contracts, Agreement was reached
that Curtiss-Wright would submit a letter requesting the
advance payments.
October 18, 1941 - Mr. G. B. Clark submitted the letter requesting advance
payments to Mr. Custer and was informed that the letters
of award would be available on October 21, 1941.
October 21, 1941 - Mr. G. B. Clark was informed by Mr. Custer that the
originals of the letters of award, extending the two
basic contracts, had been mailed that day and Mr. Clark
was given copies.
October 22, 1941 - Letter of award was received at Buffalo.
Contract No. 76800
Regraded Unclassified
245
NAVY - - 79082
287 - SB20-1 (Add'tl)
Regraded Unclassified
246
NEGOTIATION SUMMARY
CONTRACT NO.79082
July 28, 1941 - Bureau of Supplies and Accounts letter of July 24, 1941 was rem
celved which requested quotations on 287 additional 8820-1 air-
planes plus 18% spares.
July 29 - Aug.4, 1941 - Estimates were being prepared.
August 5, 1941 - Mr. 1. J. Crosswell discussed with Commander Miles, Lt. Commander
Dowell and Mr. Gorman of the Navy Department & contract for the
airplanes on & fixed price basis. In view of no apparent meeting
of the minds as to a satisfactory price, Mr. Orosswell discussed
an alternate proposition of accepting the additional airplanes on
a cost plus 4 fixed fee basis, providing the basic contract and
Contract 76800 would both also be changed from fixed price to a
cost plus a fixed fee, so that the contract covering the additional
airplanes would be an extension of the basic contract.
August 6, 1941 - Mr. Crosswell continued negotiations with Commander Miles,
Commander Miles requesting additional data substantiating the
anticipated costs.
August 7, 1941 - The data requested by Commander Miles was being prepared at Buffalo.
August 8, 1941 - Mr. Crosswell discussed with Commander Miles the additional data
which had been prepared at Buffalo on the previous day. Commander
Miles desired still further data which Mr. Crosswell agreed to
furnish.
Aug. 9 - 11, 1941 - Mr. Crosswell returned to Buffalo to prepare the studies re-
quested by Commander Miles.
Aug. 12, 1941 - Mr. Crosswell and Mr. J. A. Williams discussed these additional
data with Commander Miles. All data to date was discussed again
with Captain Webster and Commander Miles and at the same time the
proposal to accept the additional airplanes on & cost plus fixed
fee basis, predicated on changing over the two basic contracts
referred to above was also discussed. Captain Webster desired
still additional data prior to rendering any decision which Mr.
Crosswell agreed to prepare.
August 13, 1941 - Mr. Crosswell was preparing the requested data.
August 14,1941 - Mr. Crosswell again saw Captain Webster at which time he wanted
still additional data which Mr. Crosswell agreed to prepare.
August 16, 1941 - Mr. Crosswell presented the additional data requested by Captain
Webster to Commander Miles.
Regraded Unclassified
247
Aug. 17 - 26, 1941 - The Navy Department was considering the data and the pro-
posed change-over presented. During this time Mr. Crosswell
1941. arranged for a further meeting with Consander Miles on August 27,
Aug. 27, 1941 - Mr. Crosswell and Commander Miles reached an agreement that
Contract 76800 and Contract 79082 would both be changed from
fixed price to cost plus a fixed fee type of contract and
additional 8B20-1 airplanes would be accepted on an extension
to Contract 79082 at the estimated cost agreed upon.
Aug. 28, 1941 - September 2, 1941 - Mr. Crosswell was preparing Curtise-Wright's
proposal letter confirming negotiations, coordinating the letter
88 necessary with Department Heade and Attorneys.
Sept. 3, 1941 - The proposal letter, prepared in accordance with negotiations, was
forwarded.
Sept. 4 - 24, 1941 - No action was taken by the Navy Department on the proposal
letter, pending reaching agreements on additional 8030-1 airplanee
to be covered by an extension to Contfact 76800.
Sept. 24, 1941 - Mr. Crosswell telephoned Commander Miles with reference to the
8030-1 Contract 76800 agreement, at which time Commander Miles ad-
vised he would immediately start processing the papers through the
Navy Department.
Sept. 25 - Oct. 16, 1941 - Papers being processed in the Navy Department.
Oct. 17, 1941 - Mr. Crosswell and Mr. Clark discussed with Mr. Ouster of the
Bureau of Supplies and Accounts the inclusion of provision
for advance payments in the contracts and further discussed time
that awards of the additional airplanes would be made, the awards
carrying the change over from fixed price to cost plus fixed fee
of basic contract. An agreement was reached that Curtise-Wright
would submit letter requesting advance payment.
Dct. 18, 1941 - Mr. Clark submitted the letter requesting advance payments to
Mr. Custer and was informed the letters of award would be
available October 21, 1941.
Oct. 21, 1941 M Mr. Clark was informed by Mr. Ouster that the originals of
the letters of sward had been mailed that day and Mr. Clark
was given copies.
Oct. 22, 1941 - Letters of Award received at Buffalo.
Contract No. 79082.
Regraded Unclassified
248
NAVY - 88195
1 - XF14C-1
249
NEGOTIATION SUMMARY
CONTRACT NO.88195
August 19, 1940 - Commander 1. M. Pennoyer (now Captain) asked Mr. Crosswell
whether or not the Curtiss Company would be interested in
negotiating a contract with the Navy Department for the
development of a shipboard fighter, powered by the highly
experimental Lycoming engine. Mr. Crosswell agreed to
coordinate the matter with the Ourtise Company.
August 20, 1940 - Mr. Crosswell telephoned Commander Ostrander, being unable
to reach Commander Pennoyer, and advised the Curtise Oom
pany was definitely interested and made an appointment for
Mr. Berlin to discuss the matter further with Commander
Pennoyer on August 22d.
August 22, 1940 - Mr. Berlin discussed the project with Commander Pennoyer,
Lieutenant Commander Stevenson and Lieutenant Commander
Pearson.
Aug. 23 - Sept. 30, 1940 - Based on Mr. Berlin's original conference and
other subsequent conferences between Ourties and Navy
Engineering personnel, a proposal was prepared for sub-
mitting to the Navy Department.
October 1, 1940 - The proposal was aubmitted and conference was held between
engineering personnel of the Navy and Curtims. At this
conference other design considerations were agreed upon
which were not covered by the proposal.
Oct.2 - Dec.12, 1940 - In view of the highly experimental nature of the
airplane and the limitations imposed by its shipboard use,
it was necessary to hold frequent conferences between en-
gineering personnel of the Navy and Ourties in order to
crystallise the design features of the airplane. Several
conferences were held during this period with Curties pre-
paring additional data as a result of each.
December 12, 1940 - Conferences held between Commander J. B. Pearson, Mr.
Berlin, Mr. Clark, Mr. Flader and other members of the
Curties Engineering Department, which served to crystallize
still further the design of the sirplane. However, many
questions were still left open including whether or not the
engine would be equipped with two speed propeller gear, which
feature would have a serious effect on the wind area and
other features of the airplane.
Regraded Unclassified
250
December 13, 1940
January 10, 1941 - Further investigations continuing with coordination
with Navy.
January 11, 1941 - Preliminary specification received.
January 12-23, 1941 - Curtiss studying detailed specification.
January 24, 1941 - Curtiss received a letter from the Bureau of Aeronau-
tics giving decisions as to many open items but not
completely establishing the design.
January 25-February 16, 1941 - Curties further studying detailed speci-
fication.
February 17, 1941 - Curtise forwarded its comments on the detailed speci-
fication.
February 18 - 20, 1941 - Navy considering Curtiss comments.
February 20, 1941 - Conference held at Buffalo between Commander Pearson,
Lieutenant Nieman, Mr. Berlin and Mr. Wedberg in which
details of the specification were further discussed and
it was requested that we consider certain additional de-
sign items and submit a. proposal accordingly.
February 21-May 4, 1941 - Curtiss was further considering the items discussed
at the conference and meanwhile studying the alternate in-
stallation of an air cooled engine in view of the highly
experimental nature of the Lycoming engine. At the same
time Curtise was proceeding as rapidly as possible with
the design of the airplane insofar as this was permitted
by the extent of the crystallization of the design.
May 5, 1941 -
Curtiss submitted all final comments on detailed specifi-
cation covering all items and changes todate.
May
5-12, 1941 - Navy considering Curties specification comments. Mean-
while Curties proceeded with design of the experimental
airplane.
May 12, 1941
-
Curtiss received Schedule 500-3069 to formally bid on the
experimental contract for the airplane.
May 13, 1941
- Mr. Crosswell negotiated a price for one airplane to be
bid upon in the schedule and a price on a second airplane,
option for which was to be included in our bid.
May 18, 1941
- Mr. Crosswell and Mr. Flader telephoned Lieutenant Commander
Stevenson with reference to performance guarantee negotia-
tions. Curtiss formal bid was submitted this date, includ=
ing an agreement to furnish an alternate air cooled engine
installation, should the Navy so desire.
Contract No. 88195
Regraded Unclassified
251
May 19-June 4, 1941 - Curtiss proceeding with design of the airplane but
meanwhile awaiting Navy action with reference to the
bid.
June 4, 1941 - General conference was held in the Bureau of Aeronautics,
at which the final design of the airplane was crystallized.
June 5-26, 1941 - Additional negotiations with reference to details of the
contract were conducted between Curtiss and the Navy
Department.
June 27, 1941 - Notice of award of Contract 88195 was received by Curtiss.
Contract No. 88195
Uncle
ARMY - AC 19440
1 - XP-62
253
NEGOTIATION SUMMARY
CONTRACT NO. W 535 AC 19440
Jan. 6, 1941 - Conference at Washington - Messrs. Vaughan, B. 5, Wright,
General Arnold, Spaats and Echols. Curtise proposed and
Air Corps agreed to purchase experimental pursuit of cer-
tain performance characteristics designed around W. A. C.
3350 engine. It was further agreed that the proposal is
to be submitted as soon as possible.
Jan. 6-16, 1941- Curtiss making further design studies.
Jan. 16, 1941 - Materiel Division forwarded a letter assigning designation
XP-62 and gave various additional data for study and prep-
aration of proposal.
Jan. 16-21, 1941 - Curties submitted preliminary drawings and performance
data.
Jan. 21-April 1, 1941 - Curtiss engineers coordinating design data with
Materiel Division engineers and preparing the specification.
April 1, 1941 - Materiel Division telegram requesting definite date when
proposal will be submitted. Curtiss advised Engineering
will be finished about April 15.
April 1-23, 1941 - Preparation of specification proceeding.
April 23, 1941 - Curtiss forwarded letters to Materiel Division submitted
specification, drawings and comparison between turbo VS.
two-stage.
NOTE: At the original conference on January 6 only
preliminary proposal data had been prepared.
From that date to April 23 Engineering worked
steadily on studying and further crystallis-
ing the design.
April 24, 1941 - At conference between Curtiss and Materiel Division engin-
eering personnel, Materiel Division advised they wanted
one airplane with two-stage engine, one with exhaust driven
turbo. A quotation was also requested on the installation
of standard type engine since dual rotation engine would
not be available.
April 25-29, 1941 - Quotation and formal proposal being prepared.
April 29, 1941 - Proposal submitted basis of fixed price contract.
CONFIDENTIAL
Regraded Unclassified
254
Apr. 30 - May 12, submitted. 1941 - Army studying design and quotation which were
May 13, 1941 - On request of Army, Mr. Crosswell proceeded to the Materiel
Division and negotiated the price with Majors Craigie and
Swofford. Agreement on fixed price was not reached. There-
fore negotiations proceeded on basis of a cost plus fixed fee type
of contract where agreement was reached. Mr. Crosswell on this
date submitted a new proposal confirming negotiations.
May 14 - June 1, 1941 - Army further studying data.
June 2, 1941 - Wright Field advised Mr. Flader that the turbo supercharger
was desired on both airplanes in lieu of the two-stage
supercharger in one airplane.
June 3 - 17, 1941 - Army preparing contract.
June 18, 1941 - Materiel Division forwarded the contract for execution by
Curties.
June 19, 1941 - Contract being studied by Curties.
June 20, 1941 - Contract executed by Curtiss and forwarded to Wright Field.
June 21 - 27, 1941 - War Department processing contract.
June 27, 1941 - Contract approved by War Department.
Contract - 535 AC 19440
CONFIDENTIAL
Regraded Unclassified
255
Regraded Unclassified
256
AVIATION INDUSTRY
Many large Detroit automobile manufacturers have received sizeable
contracts for the production of bombers and bomber parts. The Murray
Body Corporation, for instance, has turned over a large section of its
floor space to the manufacture of wing sections for Dougles and Boeing
Bombers. The Brigge Manufacturing Corporation is also engaged in the
manufacture of wing sections on sub-contracts from the same compenies.
These companies are already fully tooled up for bomber production. A
large labor force has been trained. However, only one out of three main
production lines in the Murray Aircraft Corporation is now at work.
Information from UAW-members, as well as designers and engineers em-
ployed by Briggs Aircraft, indicate that the whole flow of production is
being checked by a lack of certain vital parts. Essential parts received
from outside vendors by the Murray Aircraft Corporation must pass through
three separate inspections: (1) by a Murray Aircraft inspector, (2) by a
United States Army inspector, (3) by a Douglas Aircraft inspector. Reports
indicate that parts received are approved by the Murray inspector and the
Army inspector, but in practically all cases such parts are rejected by
inspectors for Douglas Aircraft.
This has meant that nearly completed wing sections are stacked up in
the Murrey Aircraft Corporation while sweiting a few essential parts neces-
sary to their completion. The same situation exists, we are advised, in
regard to parts produced in the Murray Aircraft plant itself. Again approval
18 received from Murrey inspectors, from Army inspectors, but representatives
of the Dougles Aircraft Company refuse to give approval. Murray workers toll
of B. number of instances in which such parts, rejected by Dougles inspectors,
have been taken back and submitted without any alteration of any kind for a
second inspection. On such second inspection they have received approval from
Douglas inspectors.
Regraded Unclassified
257
-2-
The conclusion has been drawn, therefore, that the Douglas Aircraft
Company 18 not anxious to cooperate with the Murray Corporation in the
development of that company's aircraft production levels. The conviction
1a strong that Douglas fears competitive complications from any considerable
success in the aircraft production activities of automobile plants.
We are advised also that the Murray Aircraft Corporation was forced to
wait for a period of four months before receiving from Douglas a master
checking jig essential to the production of aircraft wing sections. It
should be edded also that similar difficulties with inspectors from Douglas
Aircraft have been encountered by the Briggs Corporation in its sub-contract
work.
The technical experience and supervisory skill of companies long enguged
in sircraft manufacture should be placed et the disposal of companies newly
entering that field of production, The engineering experience, for instance,
of the General Motors Corporation in the production of Allison engines should
be placed at the disposal of the Packard Motor Company. This company WHB
supposed to be in production by last February on Rolls Royce Liquid-Cooled
Avistion Engines. However, through e whole series of technical fiascos Pack-
ard has not yet been able to swing into engine production in any appreciable
quantity. An analysis of the Packard experience would indicate that the major
ahare of its problems could have been avoided or solved in 8 minimum time had
the services of experienced aircraft engineers been evailable even in a super-
visory capacity to that company. Packard's engineering staff is et the present
time composed almost oxclusively of engineers whose experience has been limited
to the automobile field. Only one member of their staff hes had previous expers
ience with the modern aircraft industry, and this individual's background was
limited to the field of light aircraft engines.
Regraded Unclassified
258
AVIATION INDUSTRY
Many large Detroit automobile manufacturers have received sizeable
contracts for the production of bombers and bomber parts. The Murray
Body Corporation, for instance, has turned over a large section of its
floor space to the manufacture of wing sections for Douglas and Boeing
Bombers. The Briggs Manufacturing Corporation is also engaged in the
manufacture of wing sections on sub-contracts from the same companies.
These companies are already fully tooled up for bomber production. A
large labor force has been trained. However, only one out of three main
production lines in the Murray Aircraft Corporation is now at work.
Information from UAW-members, as well as designers and engineers em-
ployed by Briggs Aircraft, indicate that the whole flow of production is
being checked by a lack of certain vital parts. Essential parts received
from outside vendors by the Murray Aircraft Corporation must pass through
three separate inspections: (1) by a Murray Aircraft inspector, (2) by a
United States Army inspector, (3) by a Douglas Aircraft inspector. Reports
indicate that parts received are approved by the Murray inspector and the
Army inspector, but in practically all cases such parts are rejected by
inspectors for Douglas Aircraft.
This has meant that nearly completed wing sections are stacked up in
the Murray Aircraft Corporation while awaiting a few essential parts neces-
sary to their completion. The same situation exists, we are advised, in
regard to parts produced in the Murray Aircraft plant itself, Again approval
is received from Murray inspectors, from Army inspectors, but representatives
of the Douglas Aircraft Company refuse to give approval. Murray workers tell
of a number of instances in which such parts, rejected by Douglas inspectors,
have been taken back and submitted without any alteration of any kind for 28.
second inspection. On such second inspection they have received approval
from Douglas inspectors,
Regraded Unclassified
259
- 2 -
The conclusion has been drawn, therefore, that the Douglas Aircraft
Company is not anxious to cooperate with the Murray Corporation in the
development of that company's aircraft production levels. The conviction
is strong that Douglas fears competitive complications from any considerable
success in the aircraft production activities of automobile plants.
Ne are advised also that the Murray Aircraft Corporation was forced to
wait for a period of four months before receiving from Douglas a master
checking jig essential to the production of aircraft wing sections. It
should be added also that similar difficulties with inspectors from Douglas
sircraft have been encountered by the Briggs Corporation in its sub-contract
work.
The technical experience and supervisory skill of companies long engaged
in aircraft manufacture should be placed at the disposal of companies newly
entering that field of production. The engineering experience, for instance,
of the General Motors Corporation in the production of Allison engines should
be placed at the disposal of the Packard Motor Company. This company was
supposed to be in production by last February on Rolls Royce Liquid-Cooled
Aviation Engines. However, through a whole series of technical fiascos Pack-
ard has not yet been able to swing into engine production in any appreciable
quantity. An analysis of the Packard experience would indicate that the major
share of its problems could have been avoided or solved in a minimum time had
the services of experienced aircraft engineers been available even in a. super-
visory capacity to that company. Packard's engineering staff is at the present
time composed almost exclusively of engineers whose experience has been limited
to the automobile field. Only one member of their staff has had previous exper-
ience with the modern aircraft industry, and this individual's background was
limited to the field of light aircraft engines.
Regraded Unclassified
260
SOME ASPECTS OF DELAYS IN BOMBER PRODUCTION
IN THE DETROIT AREA
Prepared For:
MR. LEE PRESSMAN
Under the direction of
Richard T. Frankensteen
National Director of Aviation
U.A.W.-C.I.O.
Regraded Unclassified
261
Factual information contained herein was obtained from committees of workers
actually employed in the manufacture of bomber parts.
Brizza Manufacturing Company
-get approhiation date.
It is now, more than a year since the Briggs Manufacturing Company started
tooling up for airplane production in its Conners Avenue Plant, in the City of
Detroit, the first of the automobile giants to enter the airplane field. And yet
at this late date, there ia just a mere dribble of airplane parts flowing from
the O.K. ends of their production lines.
Brigge are manufacturing parta on sub-contracts for BOEING, SIKORSKY,
MARTIN AND DOUGLAS BOMBERS.
Murray Corporation get opport
Eight months ago the Murray Corporation started its tooling program
for Dougles center wing sections and only last week were the first pair com-
pleted and okayed. While their plant is progressing in the manufacture of
parts and sub-assemblies, the day is still far distant it appears, when the
completed assemblies will flow from their production line, as definite assets
to the National Defense Program if the present delays continue,
Murray Corporation has sub-contracts for DOUGLAS and BOEING bomb parts.
Chrysler Corporation date
The Chryaler Corporation obtained their sub-contracts for parts for
Martin Bombers six months ago. They are not building a new plant but are utilizing
floor space leased from the Graham Paige Co. There are presently approximately
400 men employed in the Bomber Plant; 2/3 of these are trainees being trained
for executive or supervisory positions. The rest are tool-makers and main-
tenance men, (millwrights, painters, carpenters, etc.) New machinery and
equipment is coming in and being placed, daily. Tools, jiga, fixtures, etc.
are not in sight at this time.
Hudson Motor Car Company get offeriation kati
Hudson has been working on its sub-contract for parte for Martin Bombers
for months. A tooling program is about completed but production is very
meager.
Ford Motor Company
The Ford Motor Company received its contract for the manufacture of
complete Consolidated 4-Motored Bombers, and bomber parts, some six months
ago. This Company appears to be the only one in the Detroit area that is
really getting things done. A few weeks ago, Willow Run was a barren field;
today, machinery and tools and being installed into this, the largest, most
nodern airplane assembly plant in the world. Tool and die jobbing shope in
the Detroit area are humming with activity, building tools, dies, fixtures
and guages for the Ford Bomber Program on sub-contracts from Fords.
Regraded Unclassified
262
From time to time the activities of these jobbing shops are stopped by the
War Department ordering changes in design. Unless the War Department soon
freezes this model to allow the Ford Motor Company to get into production,
many thousands of dollars in tools will be scrapped and priceless months of
production will be sacrificed. If the War Department could be induced to
freeze the Ford Bomber design immediately, it is our opinion that production
of bombers would start around the end of February. A colossal achievement]
It is quite apparent from the brief report on Bomber production in
the Detroit area, that with the exception of the Ford Motor Company, project,
something is radically wrong with the methods presently pursued.
An analysis of information which we have obtained from "on the job"
participants in Bomber production lead us to conclude:
1. Automobile Manufacturers have exhibited an unwillingness to enter
National Defense production as long as they were permitted to
build automobiles.
(a) From Sept. 1940 until Sept. 1941, the two giant automobile
manufacturers, General Motore and Chrysler had transferred
a relatively small portion of their facilities for car
manufacture to National Defense Production.
(b) During the Automobile Tooling program for 1942, in early
summer 1941, several Automobile Tool and Die Departments,
with both defense work and automobile work, stopped all
defense work in order to tool up for their civilian pro-
duction. When Army and Navy officials made a tour inspec-
tion of these plants, they hurriedly and at great expense
set up all their machines with defense jobs, 50 that when
the Army and Navy inspection passed through their plants
these large departmente of skilled men were all working
feverishly on defense work. After the inspectors departed,
the defense jobs were again ripped off the machines and
replaced by automobile tooling jobs.
(c) In the spring of 1941 representatives of the Tool and Die
Jobbing Shops in the Detroit area were called to Washington,
D.C. and told to inspect various arsenals and select work
they could do in their plants. They all hesitated about
their selections, because of their fear that the other jobbers
were withholding selection of government work in order to be
free to take anticipated automobile work with its higher
profit. As a consequence very little defense work was pro-
cured by Tool and Die Jobbers in the Detroit area until
AFTER the tooling for Automobile was completed. We believe
the Automobile Manufacturers were responsible for this,
(d) A large automobile manufacturer last September brought
several hundred castings for dies and tools for 8 bomber
into its Die shop, the week AFTER their production reached
a normal level on automobiles for 1942. WAS THIS COINCIDENTAL
OR PLANNED?
(a) There has been much hue and cry from the Automobile Manufacturer
that their machinery and men were not adaptable to the close
limits (tolerances) required for Aircraft Tooling and produc-
tion. This (our Tool and Diemakers inform us) is all bunk.
They say it is just as easy to work to tenths of thousandsthe
as it is to thousandths of an inch.
Regraded Unclassified
263
The contention that a high percentage of automobile
machine tools are single purpose machines is also not
true in fact. Most of the so-called single purpose
machinery can be adapted to Defense work by removing
fixtures and Jigs used in auto production; and re-tooling
for Defense jobs.
It is our contention that these arguments were raised
in order to permit the manufacture of Automobiles on a
"Business as Usual" basis.
We predict that with the anticipated drastic curtailment of
civilian production, the auto manufacturers are going to
suddenly, develop ways and means of using a very high per-
centage of their equipment for National Defense purposes.
2. Managements representatives within the Office of Production Management
have acted AS "buffers" between Government and Industry.
(a) Industry still pays the salaries of their Executives who are
now working full time for the O.P.M. Industry has never been
known to spend largs sums of money without a return on their
investment. This is especially true in the light of the fact
that Industry is very hostile "to our present government in
Washington."
(b) The National Defense effort bogged down during 1940-41. The
experts on O.P.M. knew the reasons, but did not dare make them
public. It would hurt their people. Consequently the President
was forced to re-organize O.P.M. on several occasions. The
problem is not yet solved, but curtailment of civil production
will shortly leave the experts free to act, and solve the pro-
blem.
(c) The O.P.M. got the Automobile Manufacturers to agree to a. 20%
curtailment of production on 1942 models. But it was Leon
Henderson not a member of the O.P.M. who demanded the 50%
curtailment and got it.
3. Lack of coordination of effort between the holders of the prime con-
tracts and the sub-contractors.
(a) The principal delay in the tooling program of sub-contractors
has been the long period of time they must wait before receiving
Master jigs from the prime contractor. (Murray Corporation was
forced to wait four months before receiving Master Jigs from
Douglas, the prime contractor.)
(b) All parts, including those from vendors, are inspected by
inspectors representing the sub-contractor, the prime contractor
and the Army or Navy. There have been many cases where shipments
of parts have been passed by inspection of the sub-contractors
and the Army or Navy, only to be rejected by the prime contractor's
inspector.
(c) Many small tools are obtainable only through the prime contractor.
Delays in obtaining these small tools have impeded production
progress.
(d) The Murray Corporation is already tooled up to manufacture center
wing sections for the Douglas Bomber; The Brigga Mfg. Company is
still tooling up for the wing tip or outside half of the same
wing assembly. With the size of the Murray product prohibiting
Regraded Unclassified
264
storage of very many of them, it follows that Murray's
production will necessarily have to wait a comparable
production at Brigga to allow utilisation of the production
of both parts plants at final assembly.
The same conditions exist between the Hudson production
and Chryaler Corp. production on Martin Boabers. Hudson's
are in production, Chryaler 1a just beginning to install
machinery. Production from both plants are to be assembled
into one unit.
THE RESULT I DELAY.
400 Sub-contracting not on a broad enough scale:
1, Both prime contractors and broad scale sub-contractors are
attempting to do too much of their tooling program and manu-
facturing in their own plant.
(a) There are approximately 450 jobbing tool and die shops in the
Detroit area. If more of the Bomber work were let out and 8.
program of pooling the facilities of these plants were worked
out, a more rational approach to the tooling program might be
had. Many of these jobbing shops are taking any kind of work
they can find, while the prime contractore and sub-contractors
are back-logged with tool work. Length of time for tooling
could be reduced at least 50% by "farming out" the work.
(b) There are some 16,000 small stamping plants in this country,
& major portion of whom will be forced to close their plants
unless more work is sub-contracted by the larger firm. These
small plants could keep a. continuous flow of parts, pouring
into the assembly plants.
In the final analysis, we believe that if the Automobile Industry were
given & larger share of the Bomber Program, insisting that they develop sub-
contracting for Bomber work through the same channels that they used for
Automobile work, both for tools and parts, that the Bomber program could be
put on the same comparable high production basis as Automobiles, The Ford
Bomber program 1s & good illustration of this point. We believe that Ford
will be in production and at & higher rate, many months before the companies
on the West Coast.
But we also are of the opinion that no type of manufacturing program can
prove effective until both the War Department and the Aircraft Companies cease
making countless numbers of changes in design. We believe that only design
changes necessary to improve the production of the job or for safety factors
should be permitted; and then, only if absolutely necessary.
We believe that if the Government would adopt a policy of allowing exist-
ing manufacturing companies actual cost to remove non-defense machinery and
assembly lines and conveyors from their plants, and storage; and also actual
cost for restoring the equipment after the Defense effort is concluded, that
such valuable time and vast sums of money now being used to build new build-
ings could be saved.
Example: It might cost $3,000,000 to dismantle the Dodge Plant in the
City of Detroit and possibly $5,000,000 to restore it afterwards, but it would
cost upwards of $60,000,000 to build a new building with comparable floor space.
During the Defense efforts many millions of feet of floor space in the Body,
Trim, Paint and Final Assembly Departments in automobile plants are going to
lie idle because they have no utility in the Defense Program.
Prepared by:
George W. Miller
CO-ORDINATOR FOR NATIONAL DEFENSE
International Union, UAW-CIO
Regraded Unclassified
POSTAL SAVINGS STAMPS
265
Estimated Total Value and Number of Unite Sold
by Denominations and by Months
May - October, 1941
(All figures in thousands)
:
:
:
Number of Units by Denominations
:
Denomination
Total Value
:
:
:
:
:
:
:
:
May
June
July
August
September
October
Total
:
:
:
:
:
:
:
:
$ .10
2,444
1,557
1,739
2,666
3,951
4,626
16,982
$ 1,698
.25
5,170
5,595
7,859
10,131
11,840
14,406
55,001
13,750
.50
1,169
855
1,111
1,221
1,264
1,504
7,124
3,562
1.00
673
457
571
765
659
781
3,906
3,906
5.00
111
60
51
56
66
65
412
2,059
Total
9,567
8,524
11,331
14,838
17,780
21,385
83,425
Total Value
$3,349
$2,738
$3,520
$4,454
$4,978
$5,936
$24,975
Office of the Secretary of the Treasury, Division of Research and Statistics.
November 10, 1941.
Source: Division of Postal Savings, Post Office Department. Total dollar salee for May, June and July are audited
figures. Number of units by denominations for these months, a.e estimated from reports of 111 larger post
offices, are prorated to agree with audited dollar sales. Dollar sales and number of units for August are
estimated from unaudited reports of approximately 1,300 first class post offices; for September and October,
they are complete but unaudited reports of first class offices and district accounting offices.
Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. For the same reason,
the sum of units times denominations does not necessarily agree exactly with total value.
Regraded Unclassifi
UNITED STATES SAVINGS BONDS
Comparative Statement of Sales During
First Nine Business Days of September, October, and November, 1941
(September 1-11, October 1-10, November 1-12)
On Basis of Issue Price
(Amounts in thousands of dollars)
I
:
Amount of Increase
: Percentage of Increase
:
Sales
:
or Decrease (-)
:
or Decrease (-)
Item
:
:
:
: November
: October
:
November
I
October
: November
:
October
:
September
:
over
:
over
:
over
:
over
:
:
:
:
October
: September
:
October
:
September
Series 1- Post Offices
$ 16,583
$ 15,906
$ 15,361
$ 677
$ 545
4.3%
3.5%
Series I - Banks
27,677
29,798
25,275
- 2,121
4,523
- 7.1
17.9
Series 1. Total
44,260
45,705
40,636
- 1,445
5,069
- 3.2
12.5
Series 1- Banks
8,019
8,559
6,790
- 540
1,769
- 6.3
26,1
Series G - - Banks
50,762
50,054
44,529
708
5,525
1.4
12.4
Total
$103,041
$104,317
$ 91,954
1,276
$12,363
- 1,2%
13.4%
Office of the Secretary of the Treasury, Division of Research and Statistics.
November 13, 1941.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of
sales of United States Savings Bonds.
Note: Figures have been rounded to nearest thousand and will not necessarily add to totals.
Regraded Unclass
UNITED STATES SAVINGS BONDS
Daily Sales - November 1941
On Basis of Issue Price
(In thousands of dollars)
Post Office
Bond Sales
Bank Bond Sales
All Bond Sales
Date
Series E
Series 1
Series 7
Series G
Total
Series E
Series F
Series G
Total
November 1941
1
$ 1,017
$ 1.750
$
567
$ 4,201
$ 6,518
$ 2,767
$ 567
$ 4,201
$ 7.535
3
3.377
3.421
1,442
9,092
13,954
6,798
1,442
9,092
17,332
4
1,061
2,818
738
7,205
10,761
3,879
738
7,205
11,822
une
5
1,175
1,694
744
3,794
6,232
2,869
744
3,794
7,407
6
1,968
3,899
988
6,962
11,850
5,867
988
6,962
13,818
7
2,062
4,278
1,258
9,280
14,816
6,340
1,258
9,280
16,878
8
1,289
3,113
352
1,457
4,922
4,402
352
1,457
6,211
10
2,452
3,383
994
3,459
7,836
5,835
994
3,459
10,288
12
2,181
3,321
936
5,312
9,569
5,502
936
5,312
11,750
Total
$ 16,583
$ 27,677
$ 8,019
$ 50,762
$ 86,458
$ 44,260
$ 8,019
$ 50,762
$103,041
Office of the Secretary of the Treasury, Division of Research and Statistics.
November 13, 1941.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of
United States Savings Bonds.
Note: Figures have been rounded to nearest thousand and will not necessarily add to totals.
Regraded Unclassifi
TREASURY DEPARTMENT
268
INTER OFFICE COMMUNICATION
DATE Nov. 23, 1941.
TO
Secretary Morgenthau
FROM
Mr. Haas BH
Subject: Excess Reservee of New York City Banks and Interest Rates
Summary
Excess reserves of New York City banks have been much
harder hit by the developments of the past year than excess
reserves of all member banke. Excess reserves of New York
City banks amounted, on November 5, to $773 millions, and
are expected to decline further by about $250 millions to
about $523 millions on December 24. After some pause during
the seasonal decrease of money in circulation, this decline
1s expected to continue with the end not yet in sight.
Excess reserves of New York City banks occupy & criti-
cal position in the money market. The deteriorating reserve
position of the New York City banks has already caused &
substantial rise in short-term money rates. This rise 16
likely to go further and may possibly affect long-term rates.
I. Recent and Prospective Changes
in Excess Reserves
Excess reserves of all member banks declined from an
all-time high of $6,940 millions reached on October 23, 1940,
to $4,600 millions on October 29, 1941, the last reporting
date before the increase in reserve requirements became ef-
fective. On November 5, the first reporting date after the
increase became effective, excess reserves of all member
banks amounted to $3,410 millions. This ie a decline of
51 percent from the all-time high.
Excess reserves of member banks in New York City declined
from an all-time high of $3,675 millions reached on June 19,
1940, to $1,345 millione on October 29, 1941, just preceding
the increase in reserve requirements. On November 5, the
first reporting date after the increase in requirements, ex-
cess reserves of member banks in New York City amounted to
8773 millions. This 18 8 decline of 79 percent from the
all-time high.
Regraded Unclassified
269
Secretary Morgenthau - 2
These movements of excess reserves, both for all member
banks and for those in New York City, are shown in Chart I.
The deoline in excess reserves during the past year has
thus hit New York City banks much harder than out-of-town
banks. On October 23, 1940, when excess reserves were at
their all-time high, 51 percent of such reserves were held by
New York City banks. On November 5, 1941, excess reserves of
New York City banks amounted to only 23 percent of the total.
of the decline of $3,530 millions in excess reserves which
had occurred in the intervening period, $2,747 millions, or
78 percent, had occurred in New York City. The comparative
movements of excess reserves inside and outside of New York
City between June 19, 1940, the date when excess reserves of
New York City banks attained their all-time high, and Novem-
ber 5, 1941, are shown in the attached table.
The vulnerability of the present excess reserve position
of the New York City banks 1s also emphasized by the fact
that they held as of November 5, $3,664 millions of deposits
of domestic banks, or about $4.75 of such deposits for each
dollar of their own excess reserves. As shown in Chart I,
these deposits have not been drawn down 8. great deal during
the past six months. They would be subject to very sub-
stantial withdrawale, however, should out-of-town banks ex-
pand their loans and investmente to the point where they de-
sired to bolster their own reserve positions.
Mr. Roelse of the Federal Reserve Bank of New York
expects that exosse reserves for the country 8.8 a whole will
decline another $375 millions to $3,035 millions on Decem-
ber 24, the probable date of the seasonal high of ourrency in
circulation. of this decline, he expects that $250 millions
will occur in New York City, reducing excess reserves there
to $523 millions, or 86 percent below their all-time high.
During the period from December 24 to the end of January,
Mr. Roelse expects excess reserves of all member banks, aided
by the seasonal decline of ourrenoy in circulation, to in-
crease by about $175 millions. During this period he expects
New York City banks will just about hold their own. Commenc-
ing about the first of February, he expects the decline in
excess reserves to be resumed, slowly in the 08.80 of all
member banks and more rapidly in the case of New York City
banks, with the end not yet in sight.
270
Secretary Morgenthau - 3
II. Significance of the Reserve Position
of New York City Banks
The excess reserve position of New York City banks 10
of critical importance -- in many respects of greater im-
portance than that of all member banks -- because New York
City 18 the central money market of the country, and it 18
here that interest rates, particularly short-term interest
rates, are made. It is, therefore, of great interest to in-
quire what effect the change in the reserve position in New
York City has had and is likely to have upon the investment
policy of New York City banks and upon money rates generally.
Chart II shows the deposits of all member banks and of
weekly reporting banks inside and outside of New York City,
respectively. Deposite of all member banks and of weekly re-
porting banke outside of New York City are still rising to
new highs. Deposite of weekly reporting banks in New York
City reached an all-time high of about $12.0 billions on
May 28, 1941. On November 5 they amounted to about $10.9 bil-
lions, a decline of $1.1 billions. During this same period
the New York City banks increased their loane and investments
by about $400 millions, drawing down their reserves at the
Federal Reserve Banks by a total of about $1.4 billions, or
$300 millions more than the deoline in deposite. Such a
course of action clearly oannot last long. If the deposits
of New York City banks continue to decline, they will have
to liquidate loans and investments.
As shown in Chart III, the holdings of United States se-
curities of New York City banks have remained about unchanged
since the end of May. The $400 millions increase in total
loans and investmente occurring during this period was en-
tirely in loans and in other investments (about four-fifthe
of it in loans).
It appears, therefore, that the tightening reserve po-
sition of New York City banks has already barred them from the
United States security market, and ie likely soon to induce &
liquidation in total loans and investments. If this occurs,
the brunt of the liquidation is likely to fall on United
States securities, and particularly on short-term United States
securities which are especially concentrated in New York City
banks.
Regraded Unclassified
271
Secretary Morgenthau - 4
The effect which the tightening reserve position in New
York City has already had on short-term money rates may be
seen by 8. comparison of the yields of three Treasury securi-
ties of widely varying maturity classes as of September 23
(the day before the announoement of the increase in reserve
requirements) and November 10, respectively.
Changes in Yields of Treasury Securities
September 23 - November 10, 1941
:
:
Sept. 23
:
Nov. 10
:
Change
:
:
(Percent)
2-1/2's of 3/15/56-58
2.15
2.08
-.07
3/4's of 9/15/44
.60
-75
+.15
91-Day bills (Average yield
.04
.20
+.16
at issue)
As appears from the above table, yields of long-term Be-
curities have continued to fall since the announcement of the
increase in reserve requirements and are now at about their
all-time lowe (high prices). Short-term rates, on the other
hand, have tightened appreciably during this period.
What will happen from here on 16 hard, as always, to pre-
dict. It is very likely that short-term rates will continue
to tighten. Whether this tendency will spread to long rates
18 more questionable. The Federal Reserve Board appears to
believe that it will not. It is interesting to note, however,
that, on the occasion of the increase in reserve requirements
in 1937, when a similar expectation was had by the Board, long-
term bond prices finally broke sharply after continuing strong
and reaching new highs for three months during which short-
term securities had been acutely weak.
Attachments
Regraded Unclassified
Comparative Movement of Excess Reserves
Inside and Outside of New York City
:
:
October 23,
:
May 28,
:
June 19,
October 29,
November 5.
:
:
1940
:
1941
:
1940
1941
1941
:
:
:
:
:
(Millions of dollars)
Banks in New York City
3,675
3,520
2,535
1,345
773
Banks outside of New York City 3,092
3,420
3,289
3,255
2,637
Total
6,767
6,940
5,824
4,600
3,410
Note - The dates used in this table are as follows:
June 19, 1940
- All-time high of excess reserves in New York City.
October 23, 1940
- All-time high of excess reserves in all member banks.
May 28, 1941
- All-time high of deposits in weekly reporting member banks
in New York City.
October 29, 1941 - Last reporting date before increase in reserve requirements.
November 5, 1941 - First reporting date after increase in reserve requirements.
272
Regraded Unclassified
EXCESS RESERVES AND INTERBANK DEPOSITS
DOLLARS
DOLLARS
BILLIONS
BILLIONS
7
7
6
6
Excess RESERVES,
ALL MEMBER BANKS
5
5
DOMESTIC INTERBANK DEPOSITS,
N.Y.C. BANKS
4
4
3
las
EXCESS RESERVES,
N.Y.C. BARKS
2
2
-
I
o
o
$
N
J
M
M
J
1.
Rd.
J
M
-
J
5
-
J
=
1939
1940
1941
1942
Office of the Secretary of the Treasury
273
F-219
of Research and Statistes
Regraded Unclassified
Chart 41
MEMBER BANK DEPOSITS
DOLLARS
DOLLARS
BILLIONS
BILLIONS
All Momber Banks
56
56
52
52
48
48
44
44
40
40
5
M
J
M
M
J
5
#
J
-
M
J
$
-
J
.
1939
1940
1941
1942
DOLLARS
DOLLARS
BILLIONS
BILLIONS
Weekly Reporting Momber Banks
19
19
18
IS
BANKS OUTSIDE NEW York CITY
274
17
17
16
16
15
15
14
14
13
13
NEW York CITY BANKS
12
12
11
11
10
10
9
9
8
8
$
-
J
M
a
J
a
#
J
.
M
J
5
-
4
-
1939
1940
1941
1942
.
DEPOSITS FOR ALL MEMBER BANKS ARE MONTHLY AVERAGES OF NET DEMAND
PLUS TIME DEPOSITS. DEPOSITS FOR WEEKLY REPORTING MEMBER BANKS
Office of the Secretary of the Treasury
ARE WEDNESDAY FIGURES FOR ADJUSTED DEMAND PLUS TIME DEPOSITS.
F 213
- of - ml -
Regraded Unclassified
LOANS AND INVESTMENTS OF VEBELY REPORTING MEMBER BANKS
DOLLARS
DOLLARS
BILLIONS
BILLIORS
Banks Outside of New York City
10
18
17
17
TOTAL LOANS AND
INVESTMENTS
16
16
15
IS
14
14
10
10
9
9
LOANS AND OTHER
INVESTMENTS
8
9
U.S. SECURITIES
7
7
6
6
3
#
J
-
#
J
$
#
J
M
-
J
3
M
J
M
1939
1940
1941
1942
275
DOLLARS
DOLLARS
BILLIONS
BILLIDES
New York City Banks
13
13
12
12
TOTAL LOANS AND
INVESTMENTS
11
Il
10
10
9
9
7
7
U.S. SECURITIES
6
6
LOANS AND OTHER
INVESTMENTS
5
5
-
4.
3
3
5
M
al
E
M
J
$
M
,
.
-
J
5.
.
-
1939
1940
1941
1942
. INCLUDING QUARANTEED SEQURITIES
Office of the Secretary the Transary
Division of hand - -
Regraded Unclassified
TREASURY DEPARTMENT
276
INTER OFFICE COMMUNICATION
DATE November 13, 1941
TO
Secretary Morgenthau
FROM
Mr. Hass
subject: Current Developments in the High-grade Security
Markets; Relationship of Long- and Short-term
Interest Rates.
SUMMARY
(1) Intermediate Treasury bonds have advanced during
the past two weeks, while Treasury notes and long-
term bonds have declined Chart I). Taxable Treasury
securities have manifested greater strength than com-
parable tax-exempts.
(2) New public offerings of bonds in the New York market
totaled $93.6 millions for the two weeke ending
November 7. The Treasury average yield of high-grade
corporate bonds was 2.57 percent at yesterday's close
Chart II). Meanwhile the Dow-Jones average yield of
municipal bonds reached 1.91 percent, only three
basis points above its record low yield (Chart III)
(3) Yields of long-term Government securities are now
somewhat lower (prices higher) then et the previous
peak in the market reached on December 26, 1940.
Yields of short-term securities are markedly higher
(prices lower) than st that time, however (Chart IV)
This is due in part to extraneous factors, particu-
larly the deflation of rights values on the shorter
securities, but 18 principally due to a shift in the
real relationship of long and short rates. This, in
turn is due primarily to the weakened reserve poal-
tion of member banks, particularly those in New York
City.
(4) Loans of weekly reporting member banks increased by
32.7 billions between August 7. 1940 and October 15,
1941 (Chart V). Since that date they have shown little
change. New York City banks have shown aa little re-
straint upon loan expansion as other banks, despite
their deteriorating reserve position.
Regraded Unclassified
277
Secretary Morgenthau - - 2
I. United States Government Securities
Trading in the Government security market during the
past two weeks was quiet to moderately active. The Federal
Reserve Bank of New York reports that swap transactions and
insurance company buying of new 2-1/2 percent Treasury bonds
of 1967-72 accounted for the bulk of the volume.
During the past two weeks prices of Treasury notes have
continued the decline and intermediate Treasury bonds have
continued the advance which began in the latter part of
September (Chart I). Prices of long-term Treasury bonds, on
the other hand, have ceased their advance and have eased
slightly during the past two weeks.
In all maturity classes taxable Treasury securities have
displayed greater strength than tax-exempt Treasury securities.
The comparative changes are presented in the following table:
:
Average price change
:
October 29 November 12
: Taxable : Tax-exempt : All issues
(In thirty-seconds)
Notes
1 - 3 years
- - ML 5 3
- 7
- 6
3 - 5 years
-11
DO 1
Bonds
5 - 15 years to call
+ 7
+ 4
+ 5
15 years and over to cell
+ 7
- 9.
- 4
Regraded Unclassified
278
Secretary Morgenthau - 3
The average yield of long-term partially tax-exempt
Treasury bonds, moving inversely to prices, has risen to
1.84 percent from the all-time low of 1.82 percent achieved
about two weeks ago (Chart II).
II. Other Domestic High-grade
Security Markets
New public offerings of bonds in the New York market
totaled $93.6 millions for the two weeks ending November 7-
This marked a very sharp upturn in the volume of offerings
as the previous two-weeks' total had been only $5.4 mil-
lions.
The bond market continued firm with the Treasury aver-
age yield of five high-grade corporate bonds declining to
2.57 percent at yesterday's close (Chart II). This is
down one basis point in the past two weeks and 1e the lowest
level for this average since January 22, 1941.
Prices of municipal bonds strengthened meantime with
the Dow-Jones average yield of twenty 20-year bonde deolin-
ing two basis points to 1.91 percent, or three basis points
above the all-time record low yield (high prices). This is
shown in Chart III.
The offerings consisted principally of four issues --
$38.0 millions Central Illinois Public Service Company
30-year bonds, $30.0 millions State of Arkansas highway re-
funding bonds due 1944-72, $10.2 millions Asbury Park, New
Jersey serial bonds, and $10.0 millions Beneficial Industrial
Loan Company 15-year bonds. The Arkansas issue is part of a
total of $136.3 millions issued in February and sold at that
time to the Reconstruction Finance Corporation. Including
the present offering, the Corporation has now disposed of
$122.2 millions of these bonds, reportedly at 8 substantial
profit. Although not many new municipal offerings are in
prospect -- due in large part to the impact of priorities
and building restrictions on local government public works
-- several sizable industrial and utility issues are in
prospect.
Regraded Unclassified
279
Secretary Worgenthau - 4
III. Recent Changes in the Relationships
of Long- and Short-term Interest Rates
The yields on long-term Government bonds are now con-
siderably lower (prices higher) than at the time of the
previous peak of the Government bond market reached on
December 28, 1940, just prior to the issuance of the Federal
Roserve statement recommending various restrictive monetary
measures, including increases in reserve requirements. This
13 not true of yields of shorter-term Government securities,
which are now higher (prices lower) than at that time. As
shown in Chart IV, yields of Government securities with
maturities or first call dates of less than about eleven years
Are now higher than last December, while yields of securities
with maturities or first call dates longer than about eleven
years are now lower.
This change in the relative position of long-and short-
term securities 18 certainly due in part to a deflation of
rights values on the shorter securities, and may also be due
in nert to enhanced scarcity value on the part of the longer-
term partially tax-exempt securities. (All of the yielde
shown on the chart are those of partially tax-exempt securi-
ties Ln order to assure the maximum dogree of comparability.)
The main cause of the shift, however, appears to be a
real change in the relative level of long- and short-term
interest rates, rather than extraneous factors such 8.8 those
Just montioned. This change appears to be due, in turn, to
B. reduced absorptive capacity of banke (the principal demandere
of short-term securities), due to lower excess reserves, and
more particularly to the almost complete elimination of the
net absorptive capacity for Government securities of New York
City banks due to sharply reduced excess reserves in New York
City,
The chart also shows the pattern of interest rates for
Treasury bonds on August 4, 1937, the date of the low in
excess reserves of all member banks following the 1936-37
increases in reserve requirements. (Excess reserves for all
member banks amounted to $704 millions on that date as compared
with 33, 110 millions on November 5 of this year. Excess
reserves of New York City banks amounted to $96 millions
during the week including that date, as compared with 6773 mil-
lione on November 5 of this year.)
Regraded Unclassified
280
Secretary Morgenthau - 5
As shown by the chart, interest rates were generally
higher on August 4, 1937, than on either of the more recent
dates. The relationship of long and short rates at that
time and on each of the recent dates 8.6 read off the curves
on the chart is shown in the following table:
:
:
:
5 years
:
10 years
15 years
August 4, 1937
1.78%
2.50%
2.72$
December 28, 1940
.63
1.49
1.91
November 10, 1941
99
1.55
1.84
IV. Changes in Loans of Weekly Reporting
Member Banks
Loans of weekly reporting member banks experienced a
long and rapid rise of $2.7 billions between August 7. 1940,
and October 15, 1941 (Chart V). Of this increase. 82 per-
cent was due to a rise in commercial* loans and the balance
to all other types of loans. During this same period hold-
inga of Government securities, direct and guaranteed, rose
32.4 billions.
"Commercial" loans include loans for "commercial, industrial
end agricultural purposes" and open-market paper. Real
estate and security loans and other loans (including per-
sonal and small loans) are excluded.
Regraded Unclassified
281
Secretary Morgenthau - 6
The peak of the rise in loans was $11.2 billions reached
on October 15, 1941. It was higher than the previous post-
depression peak of $10.0 billions in September 1937, and
was equal to loans held in July 1932.
For the past few weeks -- October 15 to November 5 --
little change has occurred in total loans of all weekly
reporting banks or in those of any major group -- 1.0., banks
in New York City, Chicago, or in all other cities. It 1s
difficult to determine what significance there may be in
this leveling off of loan expansion.
Although the excess reserve position of the New York
City banks is much tighter than that of other member banks,
New York City banks do not appear as yet to have shown any
greater restraint upon lending than reporting banks in other
oities. As indicated in & separate memorandum of today's
date, the deterioration of the reserve position of New York
City banks may force some liquidation of total loans and in-
vestments by these institutions. If this occurs, however,
it 1e probable that the brunt of the liquidation will be
borne by Government securities, while loans may even con-
tinue to increase if attractive lending opportunities pre-
sent themselves to the banks.
Attachmente
Regraded Unclassified
282
Chart I
CHANGES IN THE PRICES OF U.S. SECURITIES
Pointe Plotted Represent the Difference from December 25, 1940 Price of Each Naturity Class
1941
1941
1942
SEPTEMBER
OCTOBER
NOVEMBER
JAM.
MAR.
MAY
JULY
SEPT.
NOV.
JAN.
5
13
20
27
4
10
25
POINTS
I
H
22
mists
DI
TT
POINTS
LACE burret)
(RET CHARRE)
Daily
(REY CHANGE)
Saturday Quotations
+11
-16
+3
+3
+1
+1
+2
+2
+1
4. #
++
# #
-1
+1
+1
NOTES
di à
3-5 Yes,
NOTES
1-5 Yes.
o
0
o
o
à
NOTES
*
1-3 Yes.
-1
V
-1
+
*
hores
-
3-5 Yes
I
I
+2
4
-1
Boies,
-1
Over 15 Yes
To CALL
- It
18
-3
-8
Boass,
-H
-11
5-15 Yes, TO CALL
Bonds,
1
5-15 Yes,
1
-11
19
TO CALL
Bowns,
-2
-2
-5
Over IS Yes.
-5
TG CALL
25
-26
6
9
24
-24
H
-21
-7
-7
-3
-3
38
+L
9
-N
H
->)
R
&
M
-M
T
4
-4
÷
-10
#
-42
4d
all
-11
-41
JAN.
6
13
20
27
4
If
:
a
-
a
15
22
29
JM,
BAR.
MAY
JULY
SEPT.
MOV,
SEPTEMBER
OCTOBER
NOVEMBER
1941
1947
1941
Office et the Secretary of the Transury
Dross - - -
Regraded Unclassified
383
Chart II
AVERAGE YIELDS OF LONG-TERM TREASURY AND CORPORATE BONDS
1940
1941
JAR " FEE MAR 18 - APR - D MAY a - JUNE 1 - JULY $ = AUG in If SEPT is " OCT. " a NOV . ⑉ DEC. BE * JAM. - FEE $ MAR * BY APR MAY JUNE 1941 JULY AUG SEPT. OCT. NOV. DEC.
WEPT
OCT
40V
or
IN
-
-
en
is
M
-
#
11
=
.
⑉
a
-
4
a
.
-
#
#
inverted Scale
Inverted State
Inverted Beale
PER CENT
PER CENT
PER CENT
WEEKLY. Saturday Quotations
1,5
18
LB
2.0
20
2.0
Long Term
Treasury
2.2
22
22
Partially tax-exempt
Treasury Bonds
(NE yours or mars - service -
2.4
24
2.4
-
2.6
2.6
26
Corporate
26
28
20
High-Grade
so
Corporate Bonds
3.0
3.0
32
12
as
34
3.4
8.4
36
3.6
3,6
PER
PER
PER
CENT
CENT
CENT
1.00
100
100
Spread between Treasury
and Coporate Bonds
80
so
80
60
Spread!
60
60
40
40
40
20
20
20
o
o
o
.
is
a
If
.
#
#
-
,
,
e
=
-
-
JAN - . FEB If # MAR is 10 APR. 18 ET MAY " JUNE July AUG #: SEPT. - OCT NOV " DEC JAN. FEL MAR - APR - - MAY JUNE 41 1941 JUD AUG 14 - SEPT is at DET. = NOV - * DEC -
SEPT
OCT.
NOV.
1940
1941
. Change in composision of long Term Treasury overage
- of - Secretary of N Treasury
1-044
- - - -
Regraded Unclassified
AVERAGE YIELDS OF LONG-TERM TREASURY AND MUNICIPAL BONDS
Yielda Based on Saturday Quotations
IV40
1941
JAN
YES,
MAR
APR
MAY
AND
JULY
AUG
MPT
oct
NOV
DEC
JAN
FEB
MAR
ARE
MAY
JUNE
JULY
AUG.
SEPT
OCT
NOV
DEC
if
⑉
-
=
:
"
a
as
17
14.
2a
12
24
"
el
.
is
:
of
it
25
it
:
Y
Di
.
-
,
e
10
=
ET
If
19
a
Inversed Scale
Inverted Scale
PER CENT
PER CENT
Partially tax-erempt Treasury Bonds"
1.6
(if years an more is survice call data)
1.5
20
2.0
22
2.2
24
2.4
26
2.6
Dow-Jones Average
Twenty 20-Year Municipal Bonds
28
2.0
30
3.0
32
32
PER
PER
CENT
CENT
Spread between Treasury
40
and Municipal Bonds
40
20
20
o
o
20
. is
IF
,
#
-
-
#?
re
&
"
.
et
if
-
-
24.
a
is
o
n
-
,
«
1
a
e
en
E
:
at
%
"
.
10
2
If
"
20
JAM
TES
MAR
APR
OCT
:
N
MAY
204
MY
AUG
un
MOV:
DEC
JAM
FLB
-
-
MAR
APR
MAY
JUNE
JULY
AUG
SEPT
OCT
NOV.
DEC
1940
1941
- - enforted change - companitor of Long Term Treasury manage
284
- di the Secretary of the inmary
- el - - -
7-134-5
Regraded Unclassified
Chart IV
YIELDS OF TREASURY BONDS* .
YEARS TO MATURITY OR CALL
5
10
15
20
25
PER
PER
CENT
CENT
3.2
3.2
2.8
2.8
AUGUST 4, 1937
2.4
2.4
2.0
2.0
DECEMBER 28, 1940
NOVEMBER 10, 1941
1.6
1.6
1.2
1,2
.5
.8
-4
o
5
15
0
10
20
25
YEARS TO NATURITY 08 CALL
285
. BASED ON PARTIALLY TAX-EXEMPT BONDS ONLY.
Office of the Secretary of the Treasury
- of - - limito
F-118-Q
Regraded Unclassified
286
Chart V
LOANS - WEEKLY REPORTING MEMBER BANKS
MONTHLY
WEEKLY
1940
1929
1931
1935
1937
1941
1933
1939
1942
1941
J F M A M J J A 5 o N D J F M A M J J A 5 o N DI J F
DOLLARS
DOLLARS
DOLLARS
Billions
Billions
Billions
18
18
12
12
16
16
=
=
ID
10
14
14
TOTAL
TOTAL
9
,
12
12
8
8
10
10
7
7
6
a
è
é
Commercial
Commercial
Commercial
6
Did Behies
b
New Series
New Carres
5
All Other
5
4
New Series
4
All Other
All Other
4
4
on Bener
--- Server
2
2
3
-
a
J F M A M J di A 5 o N D J F M A M J J A S o N D J F M
6
a
0
o
1929
1931
1933
1935
1937
1939
1941
12
12
7
7
1.0
10
Cities other than
6
New York and Chicago
6
Citras other than
8
8
New Vord and Chicago
5
5
6
6
4
4
New York City
4
4
3
5
Chicogo
New York City
2
2
I
I
Chicago
o
o
0
o
1929
1931
1933
1935
1937
1939
1941
J. F M A M J J A 5 o N. D J F M A M J 4 A $ o N D J T M
1940
1941
1942
- - - - -
FM. C
-
Regraded Unclassified
287
Treasury Department
Division of Monetary Research
Date
Nov. 13, 1941
19
To: Secretary Morgenthau
25
Appended is the report from
Mr. Lubin that you asked for last
week on machine tool production.
There is also appended a
memorandum by Mr. Ullmann comment-
ing on Mr. Lubin's report.
H.D.W.
MR. WHITE
Branch 2058 - Room 2141
289
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE November 13, 1941
TO
Mr. White
FROM Mr. Ullmann
Comments on Mr. Lubin's emorencum
1.
It appears, on the basis of Yr. Lubin's figures, that the machine
tool industry is using only about one-half its capacity -- if measured
on the basis of three-shirt operation.
The fact that the avera S. worker in machine tools is working
fourteen hours per week overtime suggests that the industry is working
at full capacity during the main shift. However, this implication is
not necessaril correct, since the avera may be heavily weighted by
2 few large plants in which a large amount of overtime is worked, ex-
cluding plants representing substantial capacity where work is less
intense. More data is needed on this point before a definite conclusion
can be dram as to whether or not the rain shift is working at fill
capacity.
The second shift employs only one-third the number of workers en-
saved in the main shift, which would indicate that two-thiros of the
lant capacity is idle during the second shift.
The situation is werse in the third shift, which employe only
one-tenth as many workers as are working in the main shift.
In other words, if the machine tool industry were operating in
second and third shifts on as high a level as it is functioning in
the main shift, it would employ twice as many orkers. To put it in
another may, the machine tool industry is working at roughly one-half
capacity (on a three-shift basis).
The situation may, in fact, be worse than that incicated. because
the figures we use are those of a sample of the most important machine
tool plants. It is possible that the less important plants would make
a poorer showing. In addition, as ointed out above, thore is no proof
that the plants are operating at full capacity on the main shift -- and
all the other calculations are based on the main S ift's employment
conditions.
Regraded Unclassified
289
Division of Monetary
- 2 -
Research
2.
Mr. Lubin notes that there has been "some improvement in
multiple shift operations since June".
A comparison of the September figures of labor distribution
to the June data (from the Bureau of Labor Statistics) indicates
that the improvement has been negligible.
Distribution of Workers in the Industry
September
June
Main Shift
67.6%
68.6%
Second Shift
25.0%
24.6%
Third Shift
7.5%
6.8%
3.
There is no indication that machine tool production has in-
creased during the last few months. September production figures
are not yet available to us but the July and August figures are;
and they show that machine tool output in terms of volume (which,
after all, is the important thing) may have declined in July and
August. The value of output rose 2% over June and increased by 4%
in August, but the price index of machine tools rose slightly dur-
ing the same period. A report by the Commerce Department on machine
tool production questions the validity of the price indexes and has
stated that "It is freely commented by sophisticated buyers that the
August price index is not representative of the average level of all
types".
4.
Mr. Lubin believes that some machine tools are being delivered
to non-defense uses, despite the claim to the contrary. In this
connection, it is interesting to note that it is still possible to
purchase lathes and drill-presses on the counters of hardware stores
and mail-order stores.
5.
According to the Department of Commerce report, the machine
tool industry is complaining about a shortage of adequately skilled
labor. There is no evidence, however, that any serious effort has
been made to tap the large body of skilled machinists and craftsmen
in the machine shops and small plants of the country, or those en-
gaged in the precision machine work involved in durable consumer
goods industries, such as automobile factories, which are curtailing
operations.
Regraded Unclassified
290
THE WHITE HOUSE
WASHINGTON
November 10, 1941
MEMORANDUM
To:
Mr. White
From:
Mr. Lubin
Subject: Machine Tool Allocations
Under an order issued by the Director of Priorities,
January 31, 1941, no machine tool builder is supposed to get material
or supplies to make machine tools for any except defense purposes.
Theoretically under this order, no machine tools are
being delivered to any but defense industries.
Of the 9,430 machine tools shipped in September, 2,708
went to defense contractors with an A-1a rating; 2,455 with an A-1b
rating and 1,687 with an A-1c rating. The balance went to con-
tractors with ratings below A-lc.
Despite the ruling of January 31, it is hard for me to be-
lieve that nachine tools are not being delivered to non-defense
contractors. There is a whole series of small machine tools that
are made by specialized manufacturers who must be finding 25 market
for their production. Moreover, the manner in which priorities were
allocated convinces ne that a lot not of people have high priority
ratings for machine tools that are, absolutely essential for defense
work.
Unless a textile mill, for example, is devoting its entire
capacity to Army or Navy needs, it would be next to impossible to
determine whether & machine tool it purchased was necessary for de-
fense. Similarly, in the case of the textile machine manufacturer,
one could not determine whether a given machine tool that be ordered
is necessary to complete certain looms which are required by a. firm
that has an order for government cloth.
Regraded Unclassified
291
THE WHITE HOUSE
WASHINGTON
November 10, 1941
MERORANDUM
TO:
THE SECRETARY OF THE TREASURY
FROM:
R. LUBIN
SUBJECT:
MACHINE TOOL OPERATIONS IN SEPTEMBER
A sample of the 79 most important machine tool plants
shows that five were operating on a one-shift basis in September;
48 operated two shifts and 26 operated three shifts.
The one-shift plants employed about 2% of the total
labor force. In terms of the actual employment on all shifts, it
is significant to note that 67.6% of all the workers were on the
first shift and approximately 25% of all the workers in the industry
were employed on the second shift. Only 7.5% of the workers were
employed on the third shift.
It should be noted, however, that there has been some
improvement in multiple shift operations since June. However, the
progress has been relatively slow. It la worthy to note that the
number of workers employed on Sundays increased from 5.7% of the
total in June to 9.8 of the total plant force in September. 96%
of the workers worked overtime. They averaged 14 hours per week
in overtime work.
Regraded Unclassified
292
No distribution made of this set of charts.
233
:-
ALL 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
54 Orders
137 Orders
403 Orders
32/ Orders
386 Orders
527 Orders
DAYS
144 Orders
DAYS
36
Monthly Average
36
Weekly Average
Indicates less than
32
one day
32
28
28
24
24
20
20
16
16
12
12
6
6
4
4
0
o
is
23
30
"
25
a
IS
22
29
6
0
20
27
3
IO
17
24
31
7
14
21
28
5
12.
19
26
2
9
4
(§
-
MAY
JUNE
JULY
AUG.
SEPT.
OCT,
NOV.
1941
- at the Servicery of - lisends
2-298
of - Inline
Regraded Unclassified
234
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
31 Orders
10 Orders
DAYS
DAYS
:
1
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32:
one day
28
28
24
24
20
20
16
16
12
12
8
B
4
4
0
o
23
30
15
22
29
é
13
20
27
3
10
17
24
31
7
14
21
20
5
12
19
26
2
9
16
+
II
18
25
1
a
JUNE
JULY
AUG
SEPT.
OCT.
NOV.
MAY
1941
- 47 the Treasury
2-243
Freed M New - -
Regraded Unclassified
235
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
59 Orders
13 Orders
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4
4
0
o
21
30
4.
u
16
25
I
a
IS
22
29
6
13
20
27
3
10
17
24
31
7
14
21
28
5
12
19
26
2
9
is
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
- el by " the Transury
2-295
- e Fund and -
Regraded Unclassified
296
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
5 Orders
6 Orders
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
e
8
4
4
o
0
is
10
a
20
27
3
10
17
24
3/
7
14
21
28
5
12
19
26
2
9
23
4
"
IS
25
-
8
is
22
29
6
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
The Services el the Date:
2-205
- el have et I
Regraded Unclassified
297
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
137 Orders
33 Orders
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4
4
o
0
16
23
30
15
22
29
6
13
20
27
3
10
17
24
31
7
14
21
28
5
12
19
25
2
9
4
II
is
25
I
a
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
* Purchase Negotiations Completed Prior to Clearance
M The Secretary of the Treasury
Z-286
- Remark - Invide
Regraded Unclassified
298
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
26 Orders
47 Orders
2/ Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4.
4
o
o
23
10
4
il
18
25
.
is
22
29
6
13
20
27
3
ID
17
24
21
7
14
21
28
5
12
19
26
2
9
=
#
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
the et the Surrery of - Treasury
2-284
- a hand - I
209
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
3 Orders
4 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
B
e
4
4
0
o
16
13
13
20
27
3
10
17
24
IE
7
14
21
28
5
(2
14
26
2
9
30
4.
n
IB
25
I
8
15
22
29
6
JUNE
JULY
AUG.
SEPT.
OCT
NOV.
MAY
1941
all The Services of - Insury
2-201
- a of -
Regraded Unclassified
300
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
/ Order
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
-----
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
B
B
4
4
o
o
16
23
30
(3
20
27
3
10
17
24
31
7
14
21
29
5
12
19
26
2
9
4.
If
ill
25
-
a
15
22
29
6
JUNE
JULY
AUG.
SEPT.
OCT,
NOV.
MAY
1941
2-207
n V like Salversing of - Treasury
/ of - et Enclume
Regraded Unclassified
301
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
16 Orders
a Orders
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
B
8
4
4
0
o
16
23
22
29
6
13
20
27
3
10
17
24
31
7
14
21
28
5
12
19
26
2
9
20
4
"
IS
25
I
e
15
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
- of the Secretary of the Treasury
2-200
- of -
Regraded Unclassified
302
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
9 Orders
.
Orders
DAYS
No Orders
DAY!:
- If
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
0
8
4
4
o
0
10
4
If
-
25
I
0
15
22
29
&
13
02
27
3
10
17
24
If
7
14
21
28
5
12
19
26
2
9
is
23
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
"N glike Secretary of - Treasury
2-292
Birder of - et Income
303
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
302 Orders
96 Orders
DAYS
DAYS
36
Monthly Average
36
Weekly Average
Indicates less than
32
one day
32
28
28
24
24
20
20
16
16
12
12
8
8
4
4
0
.
#
23
20
0
3
10
17
24
31
7
14
21
20
5
12
19
26
2
4
"
IS
25
-
e
15
22
29
&
13
20
27
OCT.
NOV.
MAY
JUNE
JULY
AUG.
SEPT.
1941
2-200
Other of the Secretary of the Treasury
- of - and -
Regraded Unclassified
304
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
DAYS
52 Orders
2 Orders
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4
4
#
-
0
o
4
#
IS
25
I
0
15
22
29
6
13
20
27
$
10
17
24
31
7
14
21
28
5
12
19
26
2
9
16
23
30
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
* Purchase Negotiations Completed Prior to Clearance
- et the Secretary of the
2-294
- of - and -
Regraded Unclassified
305
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
17 Orders
6 Orders
DAYS
DAYS
Bars are Averages of All Orders
Placed on the Same Day
36
36
Monthly Average
---
Weekly Average
32
Indicates less than
32
one day
13
28
28
24
24
20
20
16
16
12
12
e
8
4
4
o
0
12
ID
17
24
31
7
14
21
20
5
19
26
2
,
16
23
30
4.
Il
is
25
.
8
15
22
29
&
13
20
27
3
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
Office all The Secretary of the Transary
2-297
- of Remark and I
Regraded Unclassified
336
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
DAYS
9 Orders
9 Orders
5 Orders
DAY S
#
Bars are Averages of All Orders
:
#
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
one day
32
28
28
24
24
20
20
16
16
12
12
8
8
4
4
0
0
4
0
a
25
-
9
15
22
29
6
(3
20
27
3
ID
17
24
31
7
14
a
20
5
12
19
26
2
9
is
23
10
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
- of the TM Transary
2-282
Inter M freest and I
Regraded Unclassified
307
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
73 Orders
11 Orders
DAYS
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4
4
0
a
0
9
16
+
II
10.
ES
.
IS
zz
29
&
is
20
27
3
10
17
24
31
7
14
21
26
5
12
19
26
2
23
30
I
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
1941
May of the Surretary of the treasury
2-291
- of found - -
Regraded Unclassified
308
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
61 Orders
48 Orders
56 Orders
DAYS
74 Orders
24 Orders
DAYS
Bars are Averages of All Orders
36
Placed on the Same Day
36
Monthly Average
---
Weekly Average
32
Indicates less than
32
one day
28
28
24
24
20
20
16
16
12
12
8
8
4
4
o
0
20
4
=
in
25
a
15
22
29
6
is
20
27
3
10
17
24
31
7
14
21
28
5
12
19
2A
2
9
16
23
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV
1941
" The Secretary of the Trademy
2-296
el - - -
Regraded Unclassified
309
OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D.C.
E.R. Stettinius, Jr.
Administrator
November 13, 1941
Honorable Henry Morgentheu, Jr.
Secretary of the Treasury
Washington, D. 0.
Dear 1/r. Secretary,
For your information and use, I
am sending 701 herewith two photostatic
copies of the two letters *igned by the
President on November 11, 1941.
With best wishes,
Sincerely yours,
Stettinius Jr.
Attachments
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
November 11, 1941
My dear Mr. Stettinius:
For purposes of implementing the authority con-
ferred upon you as Lend-Lease Administrator by Executive
Order No. 8926, dated October 28, 1941 and in order to
enable you to arrange for Lend-Lease aid to all nations
already receiving aid in such manner as I shall have
directed, whether directly or by way of retransfer, I
hereby find that the defense of the following countries
is vital to the defense of the United States:
1. India, Burma, the Dominions of Australia,
Canada, New Zealand and South Africa,
(including mandated territories under
Dominion mandate) Newfoundland, Southern
Rhodesia and the British colonial depen-
dencies (including mandated territories
under British mandate).
2. The Kingdom of Yugoslavia.
3. The Kingdom of Egypt.
Very sincerely yours,
Timester Marcuals
The Honorable
E. R. Stettinius, Jr.
Lend-Lease Administrator
10010
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
November 11, 1941
My dear Mr. Stettinius:
For purposes of implementing the authority COD-
ferred upon you as Lend-Lease Administrator by Executive
Order No. 8926, dated October 28, 1941, and in order to
enable you to arrange for Lend-Lease aid to the French
Volunteer Forces (Free French) by may of retransfer from
His Majesty's Government in the United Kingdom or their
allies, I hereby find that the defense of any French terri-
tory under the control of the French Volunteer Forces
(Free French) is vital to the defense of the United States.
Very sincerely yours,
The Honorable
E. R. Stettinius, Jr.
Lend-Lease Administrator
! 3
Regraded Unclassified
312
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 statement No. 6, covering aircraft
shipped, for week ending November 11, 1941
The Hon. Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, W. C.
November 13, 1941
Regraded Unclassified
313
STATEMENT NO. 6.
AIRCRAFT DESPATCHED FROM THE UNITED STATES.
WEEK ENDED NOVEMBER 11, 1941.
TYPE
DESTINATION ASSEMBLY POINT BY SEA BY AIR FLIGHT DELIVERED FOR
USE IN CANADA,
CESSNA
T-50
Canada
-
-
-
24
CONSOLIDATED
Catalina
U. K.
U. K.
-
2
I
Liberator II
U. K.
U. *.
-
1
-
CURTISS
Kittyhawk
Middle East Port Sudan
30
-
-
Canada
-
-
4
DOUGLAS
Boston III
Middle East Port Suden
5
-
-
U.K.
U.K.
6
-
-
GLENN MARTIN
Baltimore
Middle East Port Sudan
2
-
-
NORTH AMERICAN
Harvard II
Middle East Port Sudan
6
-
-
Canada
-
-
12
PITCAIRN
Autogiro
U.K.
U.K.
2
-
-
TOTAL
51
3
40
British Air Commission,
November 13, 1941.
Regraded Unclassified
THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA
314
Box 680
TELEPHONE: REPUBLIC 7860
BENJAMIN FRANKLIN STATION
WASHINGTON, D. c.
November 13, 1941
SECRET
Dear Dr. White:
The figures at the close of business on "ovember
7th are as follows:
Total Gold (Including Belgian
366
Official dollar balance
119
Total gold and dollars
485
Less: Belgian Gold
105
Scattered Gold
33
Reserve against
immediate liabilities
10
AVAILABLE GOLD AND DOLLARS
337
The increase in the dollar balance reflects a
further instalment of $100 millions on the R.F.C. Loan
partly which has already been spent.
Yours
sincerely,
GV
T.m.Sculay T. K. Bewley
Dr. H.D. White
1001
VD2
Director of Monetary Research
United States Treasury
Washington, D.
C.
Regraded Unclassified
11/13/41
315
Sent directly to Secretary Ickes by
Mr. White's office today.
316
November 13, 1941
Secretary Morgenthau
Mr. White
Subject: 011 Shipments to Spain
U. 8. exporte of petroleum products to Spain in the
four weeks ending November 8 have been 0.8 follows:
(In Thousands of Barrels)
Total
In week ending
4 Weeks
Nov. 8
Nov. 1
Oct. 25
Oat. 16
> Aviation Lubriceting on
40.5
40.5
-
-
-
Other Labricating 011
1.2
1.2
1
-
-
Aviation Gasoline
1.6
-
1.6
#
-
High Octane wasoline
66.0
-
-
66.0
.
Fuel and Gas 011
172.5
127.7
44.8
-
-
Source: V. 5. Treasury Department, Office of Merchant Ship Control
WLU:as
11/13/41
Regraded Unclassified
317
Regraded Unclassifie
Revember 13. 1942
Mr. Berastein
Mr. Metrich
Mr. Goben of Holeen Reckefeller's office called no and inquired whether, If
Brasil violed to purchase old here and then instructed that the gold be skipped
to Brasil, cach transmotion would be allowed. I sold m. Goban that the Federal
Receive Back of Inv Terk has a lierase to ournerk and ship currerhed 6914 but that
be should resember that is times like the prosent all wash transmations are
ceretiniesd w the treasury.
I asked w. Cohon what - rise be his inquiry and be sald that Brastl vas
⑉ of the countries dollar exchange as & result of ast being able
to purchase all the goods " would libe to is the United States and that b.
Rechefeller's office was considering - vary of immobilizing the 420000 dollars
of Maril, to also mentioned that nothing definite had been done about this
miter but that they vere explaring pecsibilities.
I told Mr. Goben that recently vo had concumsted a purchase of milrois was
our stabilization agreement with Brasil and that gold had been plodged as collatoral,
In view of this transaction I sold Mr. Gobes that purkage at the prosent time the
Brasilisms vere short of dollar exchange or if they had dollars available they yrs-
forred not to the them but to obtain dollars from " under the stabilization agree-
meat. I also explained that the Brasilians my be retaining part of their dollar
balances to cover dollar assounts which they are carrying ⑉ their ova beaks. Mr.
Cohen expressed surprise to hear this and said that Me office reald delve into
the matter of Brasilian balances mine thoroughly.
Mr. Ochen brought 4 the question of the use of seld by South American
countries and $ told Ma there vse as application under consideration whereby the
Central Boak of Pera viohes to this gold overt by 11 to Busans Aires, vbich to to
be hold for assount of the Grice National Bank. Be said be was girl to got the
information that I had given as is threv additional 11ght on the question of
building up dellar balances is the United Stated by South inerican countries.
R
PD: da: 11/13/41
C
o
P
Y
318
DEPARTMENT 02 STATE
WASHINGTON
November 13, 1941
In reply refer to
FF 853.515/40
The Secretary of State presents his compliments to
the Konorable the Secretary of the Treasury and encloses
five copies of the paraphrase of telegram No. 1634, dated
November 1, 1941, from the American Embassy, Rio de Janeiro,
Brazil, and five copies of the parenhrase of telegram No. 1041,
dated October 29, 1941. to the American Embassy, Rio de
Janeiro, Brazil, concerning the Government Banks of Portugal
end Switzerland informing the Bank of Brazil that they may
ship gold to Brazil for safekeeping.
These telegrams have further reference to telegram No.
1553. Copies of the perschrase of telegram No. 1553 from the
American Embassy, Rio de Janeiro, Brazil, dated October 21, 1941,
were sent to the Secretary of the Treasury in this Department's
letter of October 24, 1941.
Enclosure:
1. From Embassy, Rio de Janeiro,
Brazil, No. 1634, November 1,
1941, 3 p.m.
2. To Embassy, Rio de Janeiro, Brazil,
No. 1041, October 29, 1941, 5 p.m.
Regraded Unclassified
0
0
319
P
Y
PARAPHRASE OF TELEGRAM RECEIVED
From: American Embassy, Rio de Jansiro
Dated: November 1, 1941. 3 p.m.
No.: 1634
This is in reference to telegram no. 1041 sent by
the Department on the twenty-ninth of October. Further
inquiries from Switzerland and Portugel have not as yet
been received by the Bank of Brazil. I know, however,
that this matter has been discussed with Aranha by the
Ambassador of Portugal here.
Portuguese and Swiss banks have been informed by
the Bank of Brazil that although it will receive the
gold, it will be returned only to QUOTE rightful owners
UNQUOTE.
CAFFERY
FF:FL:MOW
Copy:1c:11/15/41
Regraded Unclassified
0
0
P
Y
320
PARAPHRASE OF TELEGRAM SENT
TO:
American Embassy, Rio de Janeiro, Brazil.
DATE: October 29, 1941, 5 p.m.
NO.: 1041.
Reference is made to the Embassy's telegram
No. 1553. 9 p.m., under date of the 21st of October.
It is the Department's wish that you follow as
closely as possible any further developments in this
matter, Has the Bank of Brazil received any indica-
tion as to the probable origin of the gold to be shipped
to Brazil? That is, whether shipments of gold would
be from the United States or Europe?
HULL
(FL)
COPY:hmd:11/15/41
321
Revember 13, 1941
Mr. Livesey
Mr. Bistrich
will you please send the following cable:
90 - DIPLONATIO MISSIONS IN CENTRAL AND SOUTH AMERICA.
"Ylease tailors Department for transmission to Treasury regurd-
tag my recent and all fature shipments of gold from Japan. Vith
reference to these shipments, 10 is desirable to know If they are
is yerment for goods delivered OF for the establishment of exchange
accete for future purchases. Information urgently neoded."
A
Note: Mr. White's division stated that this instruction should be
cont to Philip Beasel. Chief of Division of American Republics.
FD:dm:11/13/41
Regraded Unclassified
T
322
TREASURY DEPARTMENT
UNITED STATES GOASE CHANGE
Washington
122222
13 November, 1941.
(3:05 s.a. 6.0.2.)
From:
Sysgest, Shanghai, China.
4 I
Secretary of the Preasury.
Cockson left Hongless via the clipper on the
twelfih. Be asks that Pun-American, Machington, safeguard
his prierity through to for Francisco.
Reselved Veshington
13 Nevember, 1941
(6.31 a.m.)
NOTE: Mr. Biotrich contacted Mr. Rethrock at Pen-Amerions
Aireage who said that Mr. Cookram's prierity was
severed to in Francisco.
chroopy - - 11.13.42
Regraded Unclassified
323
November 13. 1941
Mr. Livesey
Mr. Bistrick
wall you please send the fellowing cable to the American Consulate.
Hong Keng:
"Fer For from the Secretary of the Treasury.
If the Board can spare Mr. Englor's services without too much
intervenience I would appreciate 10 if Mr. Tayler could be cent to
Washington for a consultation visit. Infern us as seen as necessary
approval to obtained."
D
FD:dm:11/13/41
Regraded Unclassified
321
TELEGRAM SENT
MA
GRAY
November 13, 1941
9 p.m.
CONSUL,
HUG KONG, (CHINA) VIA N. R.
406.
VOP FOX FROM THE SECRETARY OF THE TREASURY.
QUOTE If the Board can spare Mr. Taylor's
without too much inconvenience I would 20-
priciate it if Mr. Taylor could be sent to Washing-
ton for a consultation visit. Inform U.S. as soon as
necessary approval is obtainsd. END QUOTE
HULL
(FL)
FF:VCL
Regraded Unclassified
325
November 13. 1941
Rr. Livesey, State Department
Mr. Dictrich, Decretary's Office
will you please coul the fellowing sable to the American Babancy, Loadon:
*For Lauren V. Casaday from the Secretary of the Treasury.
Please propare at once and transmit by sable the pree and come
of the procent British ...... profite tax paying attention also to
the fact that 100 persent is collected and also that 20 percent 1s
savings. If you can, summarise the reactions of business, labor,
and government officials as to the tax and its workings. try to and
a proliminary cable is a few days and follow 11 with additional sables
and if accessary with a comprehensive memorandum on the subject by
sireail."
FD:dm:11/13/41
Regraded Unclassified
nec
TELEGRAM SENT
LET
GRAY
November 13, 1941
10 p.m.
AMENBASSY,
LONDON, (ENGLAND)
5169
FOR LAUREN W. CASADAY FROM THE SECRETARY OF THE
TREASURY.
QUOTE PLEASE prepare at ONCE and transmit by
cable the Dros and cons of the present British EX-
CESS profits tax paying attention also to the fact
that one hundred per cent 1s collected and also that
twenty DET cent is savings. If you can, summarize
the reactions of business, labor, and government
officials as to the tax and its workings. Try to
send a preliminary cable in a few days and follow
it with additional cables and if necessary with a
comprehensive memorandum on the subject by airmail.
UNQUOTE.
HULL
(FL)
FF:FL:BMcB
Regraded Unclassified
TREASURY DEPARTMENT
337
INTER-OFFICE COMMUNICATION
DATE November 13. 1941
TO
Secretary Morgenthau
FROM Mr. Districh
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£51,000
Purchased from commercial concerns £115,000
of the latter amount, 75.000 represented the proceeds of machinery exports.
In the open maricet, sterling opened and closed et 4.03-1/2, with 4.00
being caid eround noontime. Reported transactions consisted of £2,000 sold to and
,000 :urchased from commercial concerns.
The Uruguayan free nego advanced 50 nointe (1/2=) to reach a new high of
.11725.
In New York, closing quotations for the foreign currencies listed below
were 85 follows:
Canadian dollar
11-1/21 iscount
Argentine peso (free)
.2385
Brazilian milreis (free) .0505
Colonbian DBEO
.5775
Mexican Deso
.2070
Venezuelan bolivar
.2530
Cuben nesc
1/8 discount
The Federal Reserve Bank of New York reported that it purchased 214,000
Sviss france in New York by order and for account of the Central Bank of the
Uruguayen Republic. According to the latter, the Swise france are needed to
rest overdrafts arising from commercial transactions,
We purchased 21,680,000 in gold from the earmarked account of the Bank
of .exico. Yesterday, we made a similar gold purchase valued at 31,687,000.
No дем gold engagements were reported.
In London, spot and forward silver were again fired at 23-1/2d, equivalent
to 42.670.
The Treasury's purchase price for foreign silver ME E unchanged et 3%.
Sendy and Harman's settle ent -rice for foreign silver VES also unchanged at
We made no silver purchases today.
D
Regraded Unclassified
TREASURY DEPARTMENT
UCP
INTER OFFICE COMMUNICATION
DATENOVEMBER 13,1941
TO
Secretery Morgenthau
FROM
Mr. Kamarok
Subject:
Militery Report: Developmente in the Last Three Weeks
(Based on conference with M.I.D.)
Russo-German War
1. The major development in the war in the last three
weeks was the almost complete halt of the German offensive.
Aside from the Crimea and & sector near Leningrad there were
no important gains made by the Germans in this period.
Lack of progress in the north and the center might be
discounted as due mainly to bad weather, but the absence
of any sizeable progrese in the southern sector is the real
surprise. While Colonel Bette, Situation Officer, was not
willing to advance it 88 an absolute certeinty, he believes
it to be very probable that the enormous German casualties
Are at last having an effect. Colonel Bette even thought
that it was doubtful whether the Nazie will have enough
energy left, should they break through at Rostov, to make
e. large-scale attempt to gain the Caucesus this winter.
When it 1e recalled what Axis spokesmen were seying
at the start of the offensive, the lack of German progress
in recent weeke showe it to be a real Nezi set-back.
(a) Six weeks ago, on October 2, Hitler issued an
order of the day to his soldiers initiating
the offensive, stating:
"During these three and one-helf months,
my soldiers, the pre-condition at lesst
has been created for a lest mighty blow
which shall crush this opponent before
winter sete in.
"All preparations, 60 far as human beings
can foresee, have been made. Step by
step has been prepared planfully to man-
euver the opponent into such 8 position
that we can now strike a deadly blow,
Regraded Unclassified
329
Division of Monetary
- 2 -
Research
"Today begins the lest great, decisive battle
of this year. It will hit this enemy destruc-
tively end with it the instigator of the en-
tire War, England herself.
"The German people, therefore, will be with you
more than ever before during the few ensuing
weeks.
"With bated breath, the blessing of the entire
Germen homeland accompanies you during the
hard days shead. With the Lord's sid you not
only will bring victory, but also the most
essential condition for pesce."
(b) On October 9, the Reich press chief, Dr. Otto
Diedrich, after a conference in Hitler's field
headquarters, announced in Berlin:
the last complete Soviet armies, those of
Marshal Semyon Timoshenko defending Moseow,
are looked in two circles and face inescapable
destruction.
the southern armies of Marshal Semyon
Budenny are routed, and virtually the only
hindrance to further German conquest there
is the human and mechanical factor of how
fest men can drive machines.
"The military decision has already fallen. The
rest of the operations will take the course
we wish them to. For all military purposes
Soviet Russia 18 done with. The British dream
of B. two-front war 18 deed."
2. It 1e becoming generally agreed that German casualties
are running at 8. minimum of 12,000 B. day or 1,800,000 to date.
This represents about a third of the German Army. With such
losses, the absence of the old German energy and drive in the
south 1e understandable.
The Rumanian Army has largely withdrawn from the war, The
bulk of the army (19 divisions) 1s now back in Rumania and
probably will be demobilized. Only a few token divisions have
been left to help the Germans. In view of the German need for
more troops, the return home of the Rumanian Army must indicate
a bad internal situation in the country and among the troops.
Regraded Unclassified
330
Division of Monetary
- 3 -
Research
3. Because of the weather, we can expect a stalemate
to set in around the first of December for the winter along
most of the northern and central fronte.
Far East
Aeide from 8 concentration of Japanese troops in northern
French Indo-China during the past ten days, there have been
no major developments. There are no evidences, 8.8 yet, of an
imminent Japanese attack on Siberis.
The Japanese, now, have about 20,000 soldiers in northern
Indo-Chine. While there 18 some talk that these are designed
for an attack on the Burma Road, it is hardly likely. In
view of the terrain difficulties in Yunnan province, much more
than this number of troops would be necessary for such an ex-
pedition.
Other more likely purposes of this concentration are an
invasion of Thailand or the creation of 8 strategic reserve
in Indo-China. The most favorable weather for an invasion
of northern Thailand 1e the early part of December end this
force might be designed for such a task. Northern Indo-China
18 also e fairly good location for B. strategic reserve of
troops for possible defense or offense in the South China Sea.
Regraded Unclassified
TREASURY DEPARTMENT
w
INTER OFFICE COMMUNICATION
331
DATENOVEMBER 13,1941
TO
Secretary Morgenthau
FROM
Mr. Kamarok
Subject:
Summary of Military Reports
Russo-German War
The British state that the morale of the garrison
and population of Leningrad is reported to be very good.
(U.K. Embassy, London Telegram, November 10, 1941)
In order to relieve the ehortage of supplies of
their troops on the Russian front, the Italian Government
has ordered them to live 88 much as possible on the
resources of the country. Supplementary provisions are
being sent to the troops by air. (This report shows
that the Russian "scorched earth" policy 1e of real value.)
(U.K. Embassy, London Telegram, November 11, 1941)
Battle of the Atlantic
On November 8, aircraft from the "Audacity" (not
listed in Jane's, may be a small aircraft cerrier), shot
down two Focke Wulf four-motor bombers. A Grumman Mart-
lot was lost. (The British are incressingly providing
their convoys with air protection. Since the long-range
German bombers cannot be protected by fighters, fighter
planes carried by the convoy sscort should be particularly
effective.)
(U.K. Embassy, London Telegram, November 10, 1941)
According to the following figures, only B. little
over half of the ship sinkinge have been caused by sub-
marines. Airplanes accounted for 17 per cent of the
total loases, while mines and raiders each took B. toll
of 11 per cent.
Regraded Unclassified
332
Division of Monetary
- 2 -
Research
Causes of U.K., Allied, and Neutral
Merchant Marine Losses
(From September 3, 1939 - October 31, 1941)
Gross Tone
% of Total Losses
Submarines
4,384,000
53
Air attack
1,426,000
17
Raiders
942,000
11
Mines
915,000
11
Capture
291,000
4
All other causes, and
cause unknown
303,000
4
8,261,000
100
(Office of Navel Intelligence, Table M-IV)
Regraded Unclassified
333
BRITISH EMBASSY
WASHINGTON, D.C.
November 12th, 1941.
Personal and Secret.
Dear Mr. Secretary,
I enclose herein for your personal
and secret information 5 copy of the latest
report received from London on the military
situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifer
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded Unclassified
334
Tologram from London dated November 11th.
1.
Naval. His Majesty's Submarine Trident reports
the following attacks vicinity North Cape a.m. November
3rd scored hit on eastbound convoy escorted by trawlers;
shortly afterwards scored probable hit on 2,000 ton
veasel proceeding westward from the same convoy. Night
of November 6th/7th scored hit on sscorted vessel which
turned away but was not seen to sink.
2.
His Majesty's Ship Quantook shot down Dornier
215 off Whitby p.m. November 10th.
3.
on October 23rd His Majesty's Submarine Truant
in the Adristic south of Italy attacked southwest bound
convoy 3 merchant ships 1 AUC; 1 ship of 3500 tone tor-
pedoed and sunk AMO 8000 tons also hit proceeded at 10
knots. On October 24th Truant failed to torpedo 3500
tons ship 80 set vessel on fire by gunfire; still burning
9 hours later. On October 3lst, south east of Ortona
she scored hit on convoy of 3 tankers and 1 destroyer.
Military.
4.
Russia. Leningred sector Germane claim that
their forces operating between Lake Ladoge and Lake
Ilmen have captured Tikhvin on Leningrad Vologda Railway
may well be true. The Crimea, German drive towards
Kerch is continuing.
5.
Italy. To relieve shortage of supplies of their
troops fighting in Russia Italians have ordered them to
live as much as possible on the resources of the country
and are sending supplementary provisions by air.
Royal Air Force.
6.
United Kingdom. Night of November 9th/10th
Hamburg 96 tone of H.E. bursts seen on Blohm and Voss
shipyards. Other targets identified and successfully
attacked/
Regraded Unclassified
335
-2-
attacked several large fires started.
Total of 22
tons of H.E. on Ostend and Dunkirk. Day of November
10th. Hudson claimed two hits on 10,000 tone merchant
vessel southeast of Egersund. Night of November 10th/
11th. No bombing operations owing to weather.
7.
viddle East. Night of November 9th/10th.
Attacks on ,submerine base at Augusta and power station
at Messina; also 6 hours nuisance raid on Naples.
Regraded Unclassified
336
BRITISH EMBASSY
WASHINGTON, D.C.
November 11th, 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
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
337
TALIDRAN FROM LONDON DATAD BOY 4852 Josh, 1943.
On 9th floot tug Buscancer with battle
practice target is too bothed and damaged off Nontrass.
&
Result of attack on Italian convey cast of
Messina Streits during night of 8th/9th two destroyers
ausk, ... damaged, sine merchant vessels not on fire and
sunk. One large tasker left heavily on fire sensidered
total loss; sighted still burning on 9th. No survivors
picked up. Our ships were undamaged. A.M. 9 enemy
aireraft made tergedo attack ea British force without
success.
3.
On 9th Nie Majesty's Submarine "Upholder"
attacked enemy force cost of Messine seak cas destroyer,
damaged smother.
i
K.M.Submarine "Thresher" fired torpedo at 800
tom schooner off Benghasi on October 26th: though M
hits scored crew abandoned ship which was susk by guafire.
5.
On 8th, aircraft from "Audesity" shot down two
Pocks wulf soo aircraft; cae Martlet lost.
6.
Military.
THE Russian counter-attacks in Nurmanck
sector have driven Germans back to River Liten. Lasin-
and merale of garrison andpopulation is reported to
be very good. Kelinin sector: German attempts to cross
river Nara have been unsuccessful. Tule, Germans have
made beavy attacks with mechanised forces but the situs-
tion is in hand. Donets Besin: German attempts to cross
river Donets have failed. Bontett seator! Germane are
attacking north vest of the town. Crimes: Germans have
reached Telts and made seme progress towards Kerch.
9.
Novel Air Ferse.
United Kingdom. Night 8th/9th, Seeen 45 tone
of M. Denkirk so tons, Optend 18 tons. Might of yea/
Regraded Unclassified 10th
338
8.
10th main operations Hemburg (100) and small forees
against Ostend and Dunkirk.
8.
Middle Heat. Night of 7th/8th. Brindisi
attacked (so tone H.E.) hits claimed on aircraft
factory, torpedo beat base and railway centres: Maples
(20 tone H.S.) fires started railway centres and near
torpedo factory: targets in Sicily including Bitumen
Factory at Ragues and gun powder factory near Comiso.
9.
On 7th, night of 7th/8th and following day
Harbour and Work shops at Derna and Benghasi were attacked.
10.
On 7th and 8th: Blenheims attacked two medium
merchant ships escorted by one destroyer first 180
miles W.S.W. Cape Natapan, later about 180 miles north
of Benghasi. During first attack one chip was hit by
four 250 lb. bombs. After second attack one merchant
ship seen on fire, the other stationary with crew abandon-
ing ship.
Regraded Unclassified
339
BRITISH EMBASSY
WASHINGTON, D.C.
November 13th, 1941
PERSONAL AND SECRET
Dear Mr. Secretary,
I enclose herein for your
personal and secret information &
copy of the latest report received
from London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D. C.
Regraded Unclassified
340
Telegram from London dated November 12th, 1941.
Naval. Night of 8th 9th. Norwegian ship 3655
tons in convoy was sunk by enemy aircraft off
Flamborough Head.
Royal Air Force.
United Kingdom. Day of 11th. Power station
and railway targets attacked in Northern France.
Coastal aircraft sank 900 tons merchant vessel
off Den Helder.
Middle East. Night of 9th 10th. Attacks on
Bengasi, Berca, Bardia, and dumps and и.т. at
Bir Hacheim south-south-west of Tobruk. Night
of 10th 11th Naples, Brindisi, Bianco bombed.
Regraded Unclassified
341
RESTRICTED
0-2/2657-220; No. 543 M.I.D., W.D. 11:00 A.M., November 13, 1941
SITUATION REPORT
I.
Eastern Theater.
Ground: There is no change in the situation at Lenin-
grad and Moscow.
No information is available covering operations
in the Donets Basin.
The Germans are mopping up the Crimea and are
closing in on Sevastopol and Kerch.
II. Western Theater.
Air: Bad weather curtailed R.A.F. activity last night
for the third successive night. London reports that only one Nazi
plane appeared over England last night.
III. Middle Eastern Theater.
Air: The R.A.F. in North Africa was reported to be fur-
nishing support to a British land force assault on the Italian gar-
rison at Gondar, in Ethiopia.
RESTRICTED
Regraded Unclassified